Thus begins an excellent review by James Freeman in the WSJ 6/3/11. The book is an accurate and damming incitement of America’s financial toxic twins Freddie Mac and Fannie Mae, but it struck me that it is really only half the story.
Yes, the government was promoting easy mortgage acquisition but Wall Street was hungry for mortgage fodder and wanted all the mortgagees anybody could write because they were making a fortune bundling them as securitized investments. Then after Wall Street packaged up these securitized mortgages, AIG (the primary culprit in the financial meltdown) was making a fortune insuring these bundles of shit (the infamous “credit default swaps”).
When writers and pundits go looking for the boogie man under the financial crisis bed the answers are easy to predict. The right wants the government to be the bad guys (they are!) and the left wants Wall Street to be the bad guys (they are!). But when you examine all the evidence and watch the flow of money you see a hideous marriage of business and government designed to line everybody's pockets at the brutal expense of the American taxpayer and economy. Wall Street made a fortune and the Senate Finance Committee collected millions in campaign contributions.
Of course the sad thing is that it could all happen again tomorrow - only difference will be that Dodd-Frank Financial Reform will have institutionalized the “bail out” so there will not have to be any sick charade in Congress to get the money. Welcome to the new system of American free enterprise (of you have enough money to buy in) = privatized wealth and socialized failure - heads I win, tails you lose!
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