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Matt Taibbi says that as stupid as the AIG shareholders' lawsuit against the government is, there is a kernel of truth to their complaints. Sure, AIG was bailed out by the government, and sure it would almost certainly not even exist today if it weren't for over $180 billion in government largesse, but when you compare it to the mountains of money and favors and guarantees the other companies got:
The Fed, the U.S. Government, and the less-completely-fucked Wall Street powers like Goldman and Barclays and Citigroup absolutely did conspire to seize AIG and then use a monstrous mixture of AIG's assets and public money to keep themselves alive. In essence, AIG was the helpless fat guy in the lifeboat who got eaten when the rest of the survivors ran out of food. […]

One of Greenberg's sour-puss claims is that the government denied AIG access to the Fed's discount window in July of 2008 – in other words, that the Fed didn't simply hand over a bunch of cash to AIG for free to allow it to escape its self-inflicted problems that way, instead of the government essentially taking over the company in exchange for a $182 billion rescue.

This would be ridiculous, were it not for the fact that the government did precisely that for other companies, including Goldman and Morgan Stanley, two investment banks which have been allowed to pose fictitiously as commercial banks for nearly half a decade now so that they could have access to the discount window.

AIG was the worst actor in a sea of bad actors (that AIG head Hank Greenberg was not indicted, convicted, sentenced to life in prison on a newly refurbished Alcatraz island and then had the entrance to his cell methodically bricked over is yet another reminder of our nation's great generosity to this collection of financial terrorists), but our gifts towards Goldman Sachs, Citigroup, and other major players have been so lavish that you can see why the sociopath is now bent out of shape that his world-shaking fuck ups didn't net quite as many government favors. We have very effectively nationalized each of the too-big-to-fail banks, or at least their debts, while doing little to nothing to dissuade them from the same behavior. On the contrary, we're still told that dissuading them from the same behavior is anti-American, anti-free-markets, and possibly socialism. We have created huge territories within the United States—the Republic of Goldman, the Principality of JP Morgan Chase—whose economies are guaranteed by the federal government, and thereby our own wallets, but who operate under a set of laws different from smaller institutions, are subject to little to no meaningful new oversight, and whose myriad rulers can and do continue to reward themselves, lavishly, no matter how much of a wreck or a wasteland their personal little kingdoms might become.

The generosity has treated each of the top banks very, very well. Post-TARP, the largest banks are now larger than they were at the beginning of the crisis. The danger to the economy they pose, if one were to again threaten to topple, is even greater. And we have effectively guaranteed their success, thereby giving each even more incentive to gamble aggressively, as aggressively as they like, knowing that they can pocket the rewards but not pay a penny towards the losses—so long as their losses are spectacular enough. We won't finance their small gambles, mind you, but we'll cover big, enormous, world-risking ones dollar for dollar.

Are we stupid, or what?

Robert Reich notes that there may be more widespread support for breaking up the large institutions than popularly believed. It still would require champions, however, people in government willing to actually do that, and there seems no stomach for being the general of that particular army. It would require going up against a set of institutions whose eternal wellbeing has been guaranteed by the government itself, whose top figures cycle in and out of that same government with regularity, and are there now, and who could mobilize any and all necessary political countermovements with the stroke of a pen. Even lesser reforms, like transaction taxes to discourage the worst of high frequency trading or (dare we dream) penalties for large-scale fraud that involve something a bit more substantive than paying a small fine, seem challenging enough. Dodd-Frank was passed while anger at Wall Street was at its peak, and still ended up as, if not a paper tiger, a declawed one.

The other possibility seems just as likely. Eventually, our implicit guarantees to the large Wall Street gambling firms will become so inviolate that each of them will, after each successive bout of grift or swindling or outright incompetence, sue the government for not granting them even greater favors to compensate for their losses. A straight question—does anyone think they would not be so sociopathic as to do such a thing?

No, Hank Greenberg may be on the cutting edge of something here.



Blast from the Past. At Daily Kos on this date in 20041,000 jobs created in December:

1,000 jobs created in December.

Let me say that again. 1,000 jobs were created in December. In all of the U.S.

The expectations were 100,000 to 150,000 new jobs for the holiday season.

But no. We came in slightly under those estimates. For a total of 1,000.

Before the market opened, the Labor Department (search) reported that the nation's unemployment rate dropped to 5.7 percent in December, but that companies added only 1,000 new jobs in an anemic holiday-hiring performance.

Analysts had been expecting a gain of 100,000 to 150,000.

"It's certainly negative for market sentiment," said Edgar Peters, chief investment officer at PanAgora Asset Management. "The 1,000 jobs is like no jobs, and people seem to consider that an important indicator of the recovery."

Although December's unemployment rate was the lowest in 14 months, it reached that level because fewer people were looking for work, the department said. More than 300,000 people gave up their search for jobs and dropped out of the pool of available workers, the department said.

This is just ghastly. Let the administration trumpet the nation's GDP growth, because it just points to one unescapable fact -- someone is making out well in this economy. But it sure ain't the American worker.



Tweet of the Day:

GOP to block Malia Obama prom date. #TweetsFromTheFuture
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