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    • The murder of two NY policemen in retaliation—
      at least ostensibly for the police murders of Garner and Brown has ignited a frenzy.   The murderer, Brinsley, was a violent man who had committed other crimes. I will simply note that such tragic events are the inevitable result of systemic injustice.  Those who wish less murders, should work for justice. That includes police.   [...]
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Twitter campaigns necessary but probably insufficient.

There’s a “Hands up/ Don’t shoot” Friday campaign going on over at Twitter. It’s a nice gesture, no pun intended. But I can’t help thinking about how much more powerful the message would be if we could get ordinary Americans, not just the social media savvy and political activist types, out on the sidewalks banging pots together.

I used to think that internet campaigns would be enough.  Not anymore.  Non-violent, but non-silent demonstrations are probably the way to go.

MLK Jr. would approve.

Update: My sisters-in-law were a little uncomfortable with me using the word “thug” to describe Michael Brown in a post the other day.  I see their point.  I based my assessment on the video that was released of his actions in the convenience store.  One of the things that struck me as I watched it was that I really couldn’t tell what was going on with him and the clerk behind the counter.  Reaching over the counter to get something doesn’t mean stealing, not that stealing something in a convenience store is justification for getting shot 6 times.  It’s not, by the way.  This is not 18th century Williamsburg where a servant could be hanged for stealing a silver spoon.  But I couldn’t tell with any certainty what was transpiring at the counter. Plus, the volume on the video was off so for all I know, he might have had a perfectly friendly interaction with the proprietor.  There just wasn’t sufficient data for me to determine what was going on there.  I would not be friendly to the prosecution on a jury if the charge was shoplifting or robbery based on that video.

No, what bothered me was when he left the store and roughed up the clerk on the way out.  The clerk clearly looks distraught and Brown’s actions looked aggressive and unnecessary.  I don’t think there’s anything wrong with pointing that out.  But “thug” is a right wing word, apparently.  I’m not a cable news junky so I’m going to have to rely on the SILs here when they tell me to refrain from using it to avoid looking like a right wing nutcase.  Maybe “bully” would be more appropriate.  Still not a killing offense, though probably more prosecutable than we can feel comfortable with, considering what happened shortly afterwards.  It looked like a minor assault to me.  I guess it would have been up to the clerk as to whether it was worth pursuing.  For sure Brown needed a stern talking to, but, um, not 6 shots to the torso.

I’m troubled by this piece of footage for many reasons.  Matt Taibbi’s book, The Divide, describes so many instances of young black men being arrested and harassed just for being in the wrong place at the wrong time, like on the sidewalk or the stoop in front of their apartment buildings.  And the trouble they face because of these arrests is unconscionable.  Really, it’s overkill and debilitating.  Then I see this video and I think, that kid definitely needed correction.  Maybe not jail, and not a mark on his permanent record and certainly not death, but something.  Like, maybe his grandmother should have been sent that tape so she could see he wasn’t a choirboy.  Shaming your grandmother might have been enough.

So, this one time, I’m correcting my language from the right wing “thug”, which I came to independently of cable news based on my first impressions, to “bully”, because that’s what Brown’s actions show.

We shouldn’t be afraid to tell it like it is though.  That kind of behavior is unacceptable.  Not worth dying for but certainly not good.  It doesn’t diminish the horrible and unnecessary impact of Brown’s death.  Or of Eric Garner’s death as he was chokeholded by police.  Or any of a number of tragic deaths at the hands of people who think black people are less than human.

So, to all you Fox News watchers out there, there is a reason why racism is not acceptable, in thought, word and deed.  If you are thinking it, it becomes OK to hurt people who are not like you.  You need to ask yourselves if it’s Ok to be an anti-semite in your head as well.  Of course it’s not OK.  What we are seeing in Ferguson is a variation of the dehumanization and malignant behavior described by Phillip Zimbardo based on his Stanford Prisoner Experiment and his investigation of Abu Graihb in his book The Lucifer Effect: Understanding How Good People Turn Evil.

It starts in your head when you allow yourself to think other people are less than you are and it’s all downhill from there.

Don’t start down that road.

 

Supercitizens

Michael Brown was a thug who was caught on video doing some thuggish things in a deli.  He was also shot 6 times by a cop.

I don’t like the way the internet is taking over from the justice system.  Regardless of what Michael Brown may have done or what the police officer might have done, this story is starting to resemble a mediathon event a la Nancy Grace.  And I really don’t like Nancy Grace.

You know what would be great?  It would be great if we let the justice system do the work here.  And yet, after I read Matt Taibbi’s recent book, The Divide, before it devolved into yet another obligatory polemic against Bill Clinton who seems to have been the only politician in the last twenty years with any agency, I realized that there really isn’t justice in this country anymore.  Once you have committed a crime, even a small one or one you didn’t know existed, you’re pretty much screwed.  The system is set up to find you guilty if you don’t have a small fortune to prove your innocence.  It’s prepared to throw you in jail and deprive you of all you own at the slightest provocation.

On the other hand, if you’re wealthy and well connected, you can ruin people’s lives with impunity, risk other people’s retirement funds without consequence, and practice the equivalent of global and domestic economic terrorism and get away with it.  No one shows up at your door to arrest you for loitering where you shouldn’t or threatens your livelihood or keeps putting you back on the Start square in a real life game of Sorry!  Once you reach a certain level of wealth, you are untouchable.  (Well, at least until some clever vigilante individuals figure out how to circumvent the neo-feudal curtain walls.  It’ll happen eventually.)

But if you are a person of color or a woman or just poor, your life and belongings are inconsequential.  You’re not entitled to anything.  You’re lucky if you escape with your life.  And if you complain, the system will bring out a militarized police force and technology that will make you sick, to put you back in your place.  I saw it in Denver in 2008 (where was Claire McCaskill during the convention?) and at Zucotti Park in 2011.  And now we are watching it happen in Ferguson.

That’s because Americans have been allowed to indulge themselves in thinking that some people “deserve” better treatment than others.  But to the Supercitizen, no one below them is deserving of anything.  The dehumanization of the average American starts with race and women and poor people but sooner or later if things keep devolving at this pace, everyone but the supercitizen will be affected.

Internet coverage is not the same as due process, evidence, trials and justice.  And a justice department that has settled for weregild when it comes to global economic catastrophes and corruption, while bringing down the hammer on ordinary people has lost all credibility. It’s part of the problem.

When you’re deep in a hole, stop digging.

Non-fiction day: The Divide and The Lucifer Effect

I’m not quite finished with Matt Taibbi’s new book, The Divide: American Injustice in the Age of the Wealth Gap, but I thought I’d review it now because, a.) I’m pretty sure of my impressions of the book and b.) it should be read in conjunction with another book, The Lucifer Effect: Understanding How Good People Turn Evil by Phillip Zimbardo.  I dunno, maybe I should read the Taibbi book to the end to see if he makes the connection but I’m beginning to get outrage fatigue, which is why it’s probably a good idea to read the more clinical prose in Zimbardo’s book to gain perspective.

So. Much. Morality.

The premise of Taibbi’s book is that the justice system is divided into two parts in this country.  If you are a member of the bonus class or oligarchy, your possession of the One Ring makes it nearly impossible for the justice system to prosecute you.  You’re invisible to the powers of accountability for one reason or another.  On the other hand, if you are a member of the working class, that is, anyone not living off their investments, the justice system can make your life a living hell.  Just breathing wrong can get you into trouble and that trouble is excessively punitive, relentless, expensive, arbitrary and seemingly endless.  It doesn’t take much to fall down the rabbit hole but it takes even less if your are a member of a minority population.

Sidenote: We have experienced this in our own family when a cousin’s persistent drug problem lead to direct interaction with the justice system.  He needed rehab- quickly.  What he got instead resembled Les Miz.  In the end, the legal system and it’s self-replicating fees, coupled with unmerciful punishment of every imaginable variation, put him in a hole he could not climb out of, made him homeless, broke and despondent.  He committed suicide.  So, you know, we definitely know what Matt is talking about. You don’t have to be black or hispanic. All that is required is that you have no money and live in a country where the public has been trained to be completely unsympathetic to what is happening to you.

Taibbi alternates the book with stories from each side of the divide.  We swing from bankers on Wall Street who got away with murder to “stop and frisk” detentions of young black men who are just standing outside their apartments at the wrong time.  Where the justice system seems willing to take a “boys will be boys” attitude towards the bankers, it comes down on the loiterers with a vengeance, depriving them of their dignity in the courtroom and subjecting them to endless hours of waiting around, mounting fees and coercion to plea to crimes they didn’t commit that ultimately deprive them of their right to public housing and student loans.

Taibbi doesn’t write with the same snap and clarity as Michael Lewis or Neil Barofsky  when describing the machinations of the Wall Street criminals.  His prose tends to meander, feels insidery (is that a word?) and it was difficult to follow who did what to whom.  This only pertains to the case studies in the upper justice system but I think his editor should have pulled him aside and asked him to tighten these sections up. He could never have gotten those case studies published in the kind of peer reviewed journals the science community is subjected to. Both Lewis and Barofsky have demonstrated that complexity doesn’t have to be confusing, even in an audio book.  But if you’re going to plow through Taibbi’s book, you’re probably better off getting the ebook version so you can make notes, leave book marks and create a flowchart.

On the other hand, Taibbi’s case studies of what happens on the bottom half of the justice system are easy to understand and  heartbreaking, probably because the infractions are so minor but the reaction is so severe.  It’s like the American justice system is chock full of turbo charged law and order types who carry out punishment with ruthless and brutal inefficiency.  And there was something about depersonalizing experiences of the victims and the anonymity of flawed computer systems of the justice system that reminded me of the Stanford Prison Experiment that Phillip Zimbardo carried out in the 70’s.

In case you aren’t familiar with the experiment, Zimbardo, a psychology professor at Stanford, wanted to replicate the experience of prison in order to figure out how the accused reacted to incarceration and depersonalization.  So, he recruited a couple dozen students to take the roles of prisoners and guards.  He randomly assigned the students to one of the groups and had the prisoners arrested and processed by real police.  In the makeshift prison, the prisoners were stripped of their clothes and given numbers instead of names.  The guards hid behind mirrored sunglasses and were given very few instructions. The warden was hands off.  Well, it didn’t take long before the guards started exercising authority and the prisoners started to crack.  We’re talking days.  It turns out that when one group of people is given all of the power and another group of people is subjected to that power, depersonalization and lack of oversight, it can lead even the blandest guy on campus to become indistinguishable from one of the guards at Abu Ghraib. The guards imposed capricious, humiliating and sadistic punishment while the prisoners became more and more despondent and stressed.  Zimbardo went on to testify as an expert witness in the Abu Graib trials.  He concludes that even the most decent, moral people are capable of evil behavior when the situation is right.  Group dynamics, conditioning to authority and dehumanization contribute to the kind of evil we saw at Abu Ghraib and, it seems, the excessively punitive experiences of the victims in the lower half of the American justice system.

The more I read Taibbi’s book, the more I was reminded of Zimbardo’s book.  So, I recommend you read Zimbardo’s book first and follow it up with Taibbi’s.  In fact, that’s the only reason I would recommend Taibbi’s book.  Without a proper context, it lacks the force it needs to land a powerful blow.  And that’s why I’m going to finish it even though the stories of “getting away with evil” followed by “getting away with nothing” are somewhat monotonous.  Taibbi might make the connection in the final chapters and have that eureka moment that will make it all worth while.  But I’m almost done with the book and see no evidence of it yet.  I’m afraid that the lefty community will miss the larger point that could propel it out of its fecklessness.  Instead, it might fall back on the “Bill Clinton is to blame for all of this!” crap they’ve been mindlessly vomiting for the past decade (as if Newt Gingrich and his Contract On America never existed {{rolling eyes}}).  What a horribly wasted, missed opportunity to see the world as it truly is.

3 Sponges for The Divide

4 Sponges for The Lucifer Effect (it can bog down with too many details in the first part)

PS. The left should study part 2 of Zimbardo’s book to understand how to resist situational influences.  It’s going to come up again in 2016.  Let’s not get fooled again, m’kay?

Oh, and here’s a concept that we should all learn about: malignant narcissism.  Don’t throw it around indiscriminately though.  It’s the kind of thing that Fox News and Rush Limbaugh types will seize on and dilute.  (it’s what they do)  But the next time an oligarch whines about how the rest of us are mean to them and envy their wealth, think about malignant narcissism.  They’re on the spectrum.

 

 

 

{{snicker}}

Matt Taibbi writes:

Minds are changing on Too Big to Fail. A month ago, it was just something in the air. Now, it looks like we’re headed for a real legislative confrontation. And man, is the finance sector freaking.

Last week, on April 24th, Democratic Senator Sherrod Brown of Ohio and Louisiana Republican David Vitter introduced legislation called the “Terminating Bailouts for Taxpayer Fairness Act of 2013 Act,” or the “Brown-Vitter TBTF Act” for short. The bill is a gun aimed directly at the head of the Too-Big-To-Fail beast.

[…]

The S&P report, entitled “Brown-Vitter Bill: Game-Changing Regulation For U.S. Banks”, is so incredibly hysterical in its tone that, reading it, one cannot help but deduce that people on Wall Street are genuinely afraid of this bill. The paper essentially hints that forcing banks to retain more capital could lead to world financial collapse, the onset of a new Ice Age, mammoths roaming Nebraska, etc. “The ratings implications of the Brown-Vitter bill, if enacted, for all U.S. banks would be neutral to negative,” the report read. In the second paragraph, it reads:

If congress enacts the bill as proposed, Standard and Poor’s Ratings Services would have concerns about the economic impact on banks’ creditworthiness stemming from the transition to substantially higher capital requirements.

Having a ratings agency bent to monopolistic bank influence give a bad rating to a piece of legislation designed to . . . curb monopolistic bank influence is a bad surrealistic joke, like a Rene Magritte take on lobbying – Ceci nest pas une Too-Big-To-Fail!

Of course, the Democrats are bound to blow this one.  They always do.  Heavy sigh.

And why do they always manage to blow it?  Greg Sergeant at The PlumLine provides a clue:

The New York Times and CBS News have released new poll findings that again confirm what other polls have showed: Large majorities agree with the Democratic position, and disagree with the Republican position, on key issues facing the country. But before delving into those numbers, I wanted to highlight this quote from a Republican voter — given to the Times in a follow up interview — because it perfectly captures what is currently causing all the gridlock and stalemate in Washington:

“Rick Buckman, 52, a Republican and an electrical engineer from Dallas, Pa., said that while he supported stricter gun legislation, he did not necessarily approve of the president’s approach. “I was really ticked off that the law didn’t pass,” Mr. Buckman said. “But I thought it was wrong of President Obama to get in front of the public and use people who had been damaged by gun violence as props.””

Obviously one doesn’t want to read too much into what one voter says, but this is just perfect. This Republican supports stricter gun laws, and was “ticked off” that they didn’t pass. But to this voter, when Obama gets out there and advocates for what he supports, the president is just grandstanding. What’s more, this voter has been seduced by a ridiculous and lurid line pushed by far right Senators and right wing media — that there’s something nefarious and cynical about Obama’s alliance with Newtown families in pushing for gun control, even though better gun laws are exactly what those families want, and even though they themselves first contacted the White House to get involved in the campaign to push for it.

Greg then goes on to suggest that this is because the president can talk a good game but can’t really do anything at the executive level.

I’m not buying it.  I think the real reason voters like the one quoted turn against Obama and the Democrats is because the right wing noise machine knows that its audience LOVES kicking losers when they’re down.  It’s human nature.  Democrats are always forced to compromise.  If  Democrats get caught doing sexytime without a license, they’re forced to resign, unlike Republicans who manage to turn indiscretions into milestones on their journey to self-discovery.  And punching Dirty Fucking Hippies has become a national pastime.  Democrats are praised for decking their own.  It makes Democrats look weak and who the hell wants to sit with a bunch of fricking losers?  Kicking, punching and dissing weak people develops a momentum of its own.

I’ve said before that Democrats have to develop some muscularity, grow a unibrow and start taking prisoners.  Once we start screaming that we’re reinstituting Habeas Corpus, closing Guantanamo and approving Plan B for 2 year olds, whether right wing nuts like it or not, things will change.

Our biggest problem is convincing the student body types who populate the Democratic caucus to stop being such suckers and sell outs, and punch someone out.

David Brooks is seriously f%^&ed up

Matt Taibbi has a brilliant take down of David Brooks’ latest column on the perils of gay marriage.  According to Brooks, marriage is bad for gay people because it imposes constraints on their animal instincts and what freedom loving, irresponsible hedonist would want that?:

Ostensibly, the column purports to make a single ironic point, which is that by petitioning the Supreme Court for the right to marry, gays and lesbians were not expanding their freedoms – and thus continuing, as Brooks implies, a long and perhaps-regrettable winning streak for people’s right to “follow their desires” that dates back to those hated Sixties – but rather constraining them. Brooks puts it this way:

But last week saw a setback for the forces of maximum freedom. A representative of millions of gays and lesbians went to the Supreme Court and asked the court to help put limits on their own freedom of choice. They asked for marriage.

Brooks here apparently expects his gay and lesbian readers to scratch their heads here and think, “Gosh, what does he mean by that? I thought we were seeking new freedoms with this campaign?”

What does he mean? Well, the self-appointed hetero-in-chief is here to enlighten us as to what marriage is – and he’s here to tell you, it’s no bowl of freedom-cherries!

Marriage is one of those institutions – along with religion and military service – that restricts freedom. Marriage is about making a commitment that binds you for decades to come. It narrows your options on how you will spend your time, money and attention.

Gee – really? Boy, those gays and lesbians are sure going to be in for a shock when they find out that being in a committed relationship involves constraints on behavior. That’ll be some unpleasant new ground they’ll be breaking there.

What an asshole!

I can only assume that Mrs. Brooks is illiterate.

Wait, why does David Brooks suddenly remind me of this character?:

I think what we’re seeing here is a glimpse into David Brooks’ blighted soul.  The guy would seriously love to lose the tie and let what’s left of his his hair down but it’s been beaten out of him and now he has to play the part of whip kisser extraordinaire for the rest of the world.  Maybe he assumes that everyone is like him, secretly harboring desires that dare not speak their names.  Without the mental chastity belt, we would all just throw off our chains of civilization and get down and dirty in the mud in a frenzy of orgiastic freedom and never get any work done because, let’s face it, work is drudgery and who wants to do that all day when you could be having lots of sex?

Or, here’s my new theory.  Republicans are going to abandon their opposition to marriage equality because they see the writing on the wall demographically and have to make up their numbers, replacing the dying religious conservatives with a potentially large group of voters with money- gay couples.  What better way to attract gay couples than with a militantly anti-tax message?  And where does that leave David Brooks?  Well, there’s always abortion to rail against since women are the LAST people on earth who will ever be allowed a taste of freedom and equality.  But people in Brooks’ class think discussing money is gauche otherwise he’d be writing silly, offensive screeds for the Wall Street Journal.

Well, whatever.

His attitudes about gay people and marriage equality are about as informed as any white supremacists and twice as ignorant.

People like Brooks need to be shunned by polite society.

Uncomfortable conclusions

Matt Taibbi has a follow up to his Secrets and Lies of the Bailout article in the Rolling Stone.  This one, called “One Broker’s Story” is about the consequences of the bailout to ordinary brokers as a result of asymmetric information.  Neil Barofsky hinted at this in his book Bailout when he described all of the money that the government let the banks have access to.  It amounts to trillions and trillions of dollars.  It’s a little like opening the bank vault doors to people who have a habit of setting money on fire and telling them, “We know you didn’t mean to burn up everyone’s nest eggs.  Now, don’t do it again.”

Trillions and Trillions.  Imagine all of the money that the Republicans are constantly going on about in the deficit crisis hysteria and multiply it my several times over.  The social security shortfall requires a minor adjustment, a teensy tweak.  But the amount of money we have thrown at bankers and allowed them to access whenever they want is vastly, vastly larger.  When it comes right down to it, the bankers pretty much own the money supply.  They can tap into it whenever they want, charge interest on money they lend to others on money they got virtually interest free, and they don’t have to tell you about it.

The hapless broker in Taibbi’s story didn’t know that the bank he worked for, Wells Fargo, had access to all this cash.  He was looking at the fallout of the 2008 disaster, estimated the financial solvency of all of the major banks and decided to short them because he figured it was only a matter of time before they started falling like dominos due to the weight of all their bad assets.  But the broker didn’t know that all these banks had nothing to worry about because not only did the US government bail them out, it covered up their problems and then opened the money sluice to them in perpetuity.  So, stocks continued to climb in spite of all evidence to the contrary and the broker lost his shirt and everyone else’s shirts he did business with.

He only found out when Bloomberg filed a FOIA to obtain information on where all the bailout programs money was going.  The banks and the Treasury (and the White House, I’m sure) were hoping to keep it a secret as long as possible.

What the stock market is showing everyday is an illusion.  The banks are doing well because they’re being propped up by our money.  That is the observation.  The question is, why?  Why are we allowing the banks to have so much money?  Why aren’t we letting the market suffer?

I think it comes back to the 401K and IRAs again.  So many of us have so much of our money locked into the market instead of pensions that if the government let the market sink to its natural level, there would be a social and political crisis.  It is a vicious circle.  And we can’t take our money out to start new businesses or pay debts or just live without paying punitive taxes.  Those taxes virtually guarantee that the money stays in the market.  So, the government has to prop up the market until it can’t be propped up anymore.  That should happen when the next bubble bursts on Wall Street.

Taibbi finishes the post like this:

This is the real problem with the bailouts, and the issue we tried to underscore with the “Secrets and Lies” piece. With their hide-and-seek policies, bogus stress testing and stubborn insistence on calling failing banks healthy and publicly endorsing other such fibs, the architects of the federal rescue (from both the Bush and Obama administrations, as well as from the Federal Reserve) created a two-tiered market. The new economy has two classes of investors: those who know the real numbers, and those who don’t.

So while the proponents of the bailout will argue they were a success, and the covert and overt federal support helped bring the Dow all the way back from below 7,000 to above 13,000 – seemingly a good thing no matter how you look at it – there’s another bitter reality, which is that the bailouts officially created a sucker class.

When banks started making fortunes again in 2009 and beyond, it wasn’t a victimless situation. There were losers in this trade, too. Hartzman and his clients are examples of the kind of people who lost when the government made decisions about who’s entitled to the truth and who wasn’t. As one former hedge fund manager put it to me recently, “Joe Sixpack has no chance in this market.”

We are the sucker class.  Well, some of us are suckers.  Some of us weren’t suckered into voting for Obama either time.  Ultimately, the responsibility for this fiasco falls on his shoulders and those of the people he hired.  And the people who unquestioningly supported him.

********************************************

And about that $1Trillion platinum coin, mint the damn thing already.  As Krugman pointed out yesterday:

There seem to be two kinds of objections. One is that it would be undignified. Here’s how to think about that: we have a situation in which a terrorist may be about to walk into a crowded room and threaten to blow up a bomb he’s holding. It turns out, however, that the Secret Service has figured out a way to disarm this maniac — a way that for some reason will require that the Secretary of the Treasury briefly wear a clown suit. (My fictional plotting skills have let me down, but there has to be some way to work this in). And the response of the nervous Nellies is, “My god, we can’t dress the secretary up as a clown!” Even when it will make him a hero who saves the day?

The other objection is the apparently primordial fear that mocking the monetary gods will bring terrible retribution.

It sounds like another civility bluff to me.  The bullies announce they are going to steal your lunch money, push you down in the dirt and stomp on your face but if you protest or come up with some clever workaround, they start heading to the fainting couch with the vapors.

Normally, I’d say that this kind of silliness with the coin is just going to make the matter worse because who in the world will take us seriously.  But there shouldn’t be any real economic fallout, so mint the damn coin.

On the other hand, maybe we should just call their bluff.  Let them wreck the economy, pull down our credit rating, sow chaos and confusion and ruin people’s lives.  I’m sick of Republicans pulling this shit.  They need to be terrified of the consequences of their actions for a change.  If you mint the coin, they’ll just come back with something else to hold hostage.  So, let the babies have their way and get the end of the financial world over with.  It’s out of control and an unmitigated disaster and it’s going down eventually anyway.  Why prolong the suffering.  Let’s just lance the boil now and start over.   I want a capitalism without exploitation.

Reboot.  Do it now.

Read the latest Matt Taibbi article on the bailout

Secret and Lies of the Bailout

It’s got two very colorful opening paragraphs:

To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?

Wrong.

It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.

I haven’t read the whole thing yet but if Taibbi is consistent with Sheila Bair, Ron Suskind and Neil Barofsky, Tim Geithner is going to look pretty bad.  There was a point in Barofsky’s book when I finally realized the magnitude of the scam that just made my jaw drop and made me want to join the Doomsday Preppers.  It really is that bad.

There will be a quiz.

More…

This part is good.  I mean bad:

To guarantee their soundness, all major banks are required to keep a certain amount of reserve cash at the Fed. In years past, that money didn’t earn interest, for the logical reason that banks shouldn’t get paid to stay solvent. But in 2006 – arguing that banks were losing profits on cash parked at the Fed – regulators agreed to make small interest payments on the money. The move wasn’t set to go into effect until 2011, but when the crash hit, a section was written into TARP that launched the interest payments in October 2008.

In theory, there should never be much money in such reserve accounts, because any halfway-competent bank could make far more money lending the cash out than parking it at the Fed, where it earns a measly quarter of a percent. In August 2008, before the bailout began, there were just $2 billion in excess reserves at the Fed. But by that October, the number had ballooned to $267 billion – and by January 2009, it had grown to $843 billion. That means there was suddenly more money sitting uselessly in Fed accounts than Congress had approved for either the TARP bailout or the much-loathed Obama stimulus. Instead of lending their new cash to struggling homeowners and small businesses, as Summers had promised, the banks were literally sitting on it.

Today, excess reserves at the Fed total an astonishing $1.4 trillion.”The money is just doing nothing,” says Nomi Prins, a former Goldman executive who has spent years monitoring the distribution of bailout money.

Nothing, that is, except earning a few crumbs of risk-free interest for the banks. Prins estimates that the annual haul in interest­ on Fed reserves is about $3.6 billion – a relatively tiny subsidy in the scheme of things, but one that, ironically, just about matches the total amount of bailout money spent on aid to homeowners. Put another way, banks are getting paid about as much every year for not lending money as 1 million Americans received for mortgage modifications and other housing aid in the whole of the past four years.

It’s like the guys who made up these rules on the bailout never had to deal with children or adolescents.  I guess that kinda makes sense, given that they are all guys who probably have wives and nannies to do that stuff.

 

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