Monday, September 29, 2008

The Creation of Financial Crisis

Few if any politicians, Wall Street moguls, economists, or writers have been straightforward with America about the economic down cycle and the latest $700 Billion corporate bailout proposal (HR 3997). It's hard to know what to believe, but these people have a track record of deceiving the working class. The tab so far has been $30B for Bear Stearns, $ 9B for Indy Mac, $300B for Fannie Mae/Freddie Mac, and $85B for AIG.

Thomas Wolfe describes the lives of the "Masters of the Universe," hedge fund managers who took the money and ran as the house of cards they created, the false economy, collapsed.

There have been a few who talked of the dangers of unfettered markets: liberal economists Nouriel Roubini, Robert Shiller, and John R. Talbott* and historian Stephen Mihm, on the academic side. But the information was drowned out by louder imprudent voices.

This last among many so-called "crises" took decades to be created (see 3-14-08 post on Upper Class Welfare). Unfortunately, radical economists, who could probably provide the most thorough historical analysis, have been marginalized.

Citigroup purchased Wachovia Bank assets today, leaving an unknown amount of losses for the public. It is only another step in a series which privatizes profits, socializes losses, and undermines the working class. [Update 10-3-08: Wells Fargo bought Wachovia Bank after a federal deal was scrapped. Ailing Citigroup is considering filing a lawsuit to stop the deal.]

*Talbott's 2003 book was titled "The Coming Crisis in the Housing Market."

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