Saturday, March 21, 2009

Matt Taibbi in Rolling Stone

Read it here.

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. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

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.

1 comment:

Anonymous said...

I couldn't agree more. The loss of money and many other things is a "symptom," the real problem is the current system. Better regulations is fine...will delay the next catastrophic economic meltdown by few years - smart, cunning people will figure out ways to circumvent regulations and in few years people will forget about it all hence allowing for sociopaths to return to their old ways.

The change required is deeper and it is not just economist who should suggest ways out. In fact, social scientists should be the 1st to put up a new model and economist should "modulate" it. Of course Obama cannot achieve any of this since it is hard for him to achieve even the limited change he is currently trying for.

we will not have a revolution since we are NOT fully destroying ourselves so people have too much to lose. So I think we are in the age of the accordion, i.e. we will not completely destroy existing systems like civilizations did in the past since we DO have checks and balances which prevent us from hitting rock bottom. However, the system is complex and opaque enough that we are doomed to flirt with disasters. I am afraid this is the best we are going to achieve for a while.