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    • What May’s Brexit Deal Tells Us About The EU and Britain’s Future
      So, May has a Brexit deal. It’s a terrible deal, which makes the UK subject to many EU laws, and which doesn’t allow Britain to withdraw from the deal if the EU doesn’t want it to. This has caused ministerial resignations, and Corbyn has come out against it. But the interesting part is what the […]
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Thursday: A Series of Unfortunate Events

There has been plenty of finger pointing in the past couple of days.  Tim Geithner is getting his under-the -bus moment this morning on the front page of the NYTimes.  What did Tim know about the AIG bonuses and when did he know it?  The WH is starting to float the “complete confidence” meme, which is sort of the equivalent of “Have you thought about resigning?  No, no, take your time.  We’ve got about a week as these things go.  Has anyone seen Sheila Bair?”

In the whole scheme of things, the $165 million is drop in the bucket, as those who like those drops are quick to point out.  But people who have studied scandals know that at some point, they have a life of their own.  This scandal has legs and it’s getting the royal treatment in the media.  Unlike the more esoteric scandals of the Bush administration where the offense had something to do with some obscure violation of historical significance, this scandal is one that the common man can relate to: Those finance guys are getting money for royally f^&*ing things up and while we’re forced to give up compensation benefits.  Our hard earned money that could have been used to fund major healthcare reform and badly needed infrastructure projects, is getting sucked up by the same obscenely rich people that got to do whatever they wanted under the Bush administration.   We voted for a Democrat who turned out to be *what* exactly?

(It was all sadly predictable but we won’t go there for our new readers who may have voted for the messiah.)

Planet Money was busy yesterday trying to put the anger in perspective.  There are three possible culprits for the accelerating meltdown: Washington, Wall Street and the macroeconomic moment complicated by the “Greenspan Put”.  I’m not sure I totally understand this last concept.  Maybe Dakinikat can unpack it but from what I gather, Alan Greenspan brought the Fed interest rate down to something like 1% so the Giant Pool of Money that investors had back in the late 90’s and 00’s couldn’t make money off of US Trearsury bonds.  The money had to go somewhere so it got rolled into risky instruments.  At some point in there, Alan Greenspan hinted (obscurely to us but loud and clear to people in the know) that the US would guarantee these risks.  And Voile!  Here we are, guaranteeing like there’s no tomorrow.  It’s rather puzzling coming from a Randian fan like Greenspan to have the government step in and bail investors out but finance has a logic of its own.  There’s probably internal self-consistency to Greenspan’s philosophy that our small minds simply cannot grasp.

Well, that is why we are the little people and are not given the power to do anything.  We might use it recklessly.  For instance, did you know that even though we taxpayers own something like 80% of AIG, guardians have been appointed on our behalf to actually administer the company? Yep, there are three trustees who are supposed to look over AIG lest we get our grubby, unsophisticated mitts on it and take away all of the bonuses.  And we aren’t allowed to say what happens to the rest of the money that went to Goldman Sachs and other banks either.  We might put a stop to it, doncha know.  It would be unseemly.  Wasn’t it nice for the Bushies and the Obama adminstration to appoint these Mr. Poe’s of Mulctuary Money Management for us?

Don’t worry your pretty little heads.

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