I want to bring an article to your attention. This was mentioned in a linky Open Thread from Laura Clawson on Sunday a few days ago, but I don't think that it got the attention it deserves. If it had, we'd still be discussing it. This is the article you can send out to your friends and family to help them understand the cost of the financial crisis. It was published in The Nation, written by Nomi Prins and Christopher Hayes, and is called "Meet the Hazzards" -- as in "moral hazard."
I realize that I'm probably going to have to sell you on it. All right, that will be my pleasure.
Here's how the authors explain the financial crisis: by creating an analogy to a family in financial trouble -- they call them Joe and Katie Hazzard -- and they go through all of the ways that the government would be bending over backwards to help them, if they had had the good sense to be born as lending institutions rather than as human beings.
One thing they point out is that the total tab to aid the corporate analogues of the Hazzards is not, as thrown around, a mere $700 million of TARP money. We wish. Instead,
TARP was but a small fraction (roughly 4 percent) of the full $17.5 trillion bailout and subsidization of the financial sector. See image. The details of this total bailout are complicated, but the basic mechanisms aren't beyond the average citizen's grasp. We're going to walk you through it.
And walk you through they do, even if it leaves you staggering. The total cost of the bailout and subsidization of the financial sector is ... ready for it? ... $17.5 trillion. That sort of puts the "ONOZ, a public option could cost as much as a trillion dollars" into perspective, doesn't it?
Now I accept, as more or less do the authors, that due to the bungling of previous regimes over the years (yes, both Democratic and Republican, but generally at the instigation of the Republicans), some amount of spending on financial stabilization was necessary to stave off an economic collapse. You may disagree; that's fine. We will never know exactly what happened in the counterfactual world where the U.S. Government said "ah, to hell with it" a year ago and just let the system collapse. We may never even know what has actually happened with the funds that were spent, which is itself a huge problem. But we should all agree on is this: if we truly spent $17.5 trillion on bailing out the financials -- and at the end of the process the financials still have us by the throat -- then something is deeply wrong and screams out to be fixed.
My own favored solution might be something like "TARP Bonds." By taxation and refunds, raise taxes on the wealthy and pay them back the money in negotiable bonds that are worth what the financials claim they are worth. The wealthy were the ones who did so well on the upswing -- if people say that the economy has truly healed, let the wealthy now be the ones to take the risk that it hasn't by owning that debt at its stated value. That might be very interesting to see.
Perhaps that idea is madness -- but if it's madness, I've been driven to it honestly. Read the Prins and Hayes article -- take a moment to Meet the Hazzards -- and see if you're driven mad as well. Then: pass on that link!