Matt Tabbi’s take on the economic meltdown

March 21, 2009 | By | 4 Replies More

I’ve long-admired Matt Tabbi’s thought-process and writing style.   This week at Rolling Stone, Tabbi weighs in on what he thinks is really going down in Washington DC and on Wall Street:

People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.  The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess . . . .

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

In the process of writing this article, Tabbi shows no mercy for AIG or any other company dabbling in CDO’s (collateralized-debt obligations) or CDS’s (credit-default swaps).   This feels right to me:  Showing no mercy to those who dabbled in speculative financial instruments as if they were conservative investments.   After all, those financial “gurus” who made these decisions were highly educated people with legions of financial and accounting experts working for them.  They should have known better.   They have no excuses.

Nor does the federal government have excuses.   Case in point:  Who was regulating AIG?   One inept guy.

Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world’s largest insurer!

I don’t know enough about economics to really weigh in on this crisis.   I am highly suspicious about the need for these “bailouts,” however.   I do know that this money is already gone and that there is almost no accountability for the money we’ve paid out.   I do know that the government has almost no hope of tracing the use of the trillions it is spraying out, almost all of it to proven irresponsible politically-connected financial bigshots.   And I do know enough to understand that far too many prominent economists are looking and acting bewildered.   I also suspect that many Wall Street power brokers, the same ones that got us into this mess, are still in charge.   I know enough to understand that many people who seem to be well-positioned to understand this mess are looking clueless.

I hope I’m wrong in all my assumptions.


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Category: Economy, Politics

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (4)

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  1. Erich Vieth says:

    Paul Krugman doesn't give me any reason for optimism:

    Bob Schieffer of CBS asked Summers the simple question that has haunted the American public since the bailouts began last fall: “Do you know, Dr. Summers, what the banks have done with all of this money that has been funneled to them through these bailouts?” What followed was a monologue of evasion that, translated into English, amounted to: Not really, but you little folk needn’t worry about it.

    Yet even as Summers spoke, A.I.G. was belatedly confirming what he would not. It has, in essence, been laundering its $170 billion in taxpayers’ money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Société Générale and Deutsche Bank abroad.

  2. Erich Vieth says:

    These disagreements by reasonable people give me no confidence that Obama-Geithner have any idea of what to do about our economic crisis.

    I'm not being critical of Obama. He inherited this huge mess and he's trying hard to get the right people to offer a workable solution, but I'm not convinced that there is any person on Earth who really knows a way out of this mess.

  3. Niklaus Pfirsig says:

    There's an old saying: "It's not the fall that kills you. It's the sudden stop at the bottom."

    I think Obama et al know they can't stop the fall, but are just trying to soften the landing in order to minimize the damage.

  4. Hondo says:

    Does anyone remember the movie "Network?" Can you say "Fox News????"

    It is so evil how the rich can steal billions with a computer and a pen and not even be investigated. The American middle class and the poor are violated daily by the Republican party and yet they still believe their bullshit and vote for them.

    Fox news was used to promote and fund the tea party which like the GOP will continue to screw them mercilessly.

    Veterans voted overwhelmingly for GOP and tea party candidates who clearly intend to privatize the Veterans Administration then rape the budget for all they can.

    Ths majority of seniors vote the same way and the GOP/teaparty plans to privatize and rob the Social Security System.

    We are being cleverly manipulated into voting against our own interest and loving the idiots that are selling us "political and economic crack".

    The poet Pogo was right "We have met the enemy and they is us”

    Our collective mass hypnosis and political and economic illiteracy is a real danger to our future. The tea party is just the Republican party re-branded. Nixon, Exxon, BP,Bush the idiot prince??????

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