A Paranoid Interpretation of the International Banking Crisis.

[kentuck]

The panic was created by George W Bush and Henry Paulson. There was no crisis until they came out in public to announce that the entire financial system would collapse by that Friday if they did not get a bailout of $700 billion dollars with no strings attached.

Indeed, there were severe problems with a few banks like WAMU and Wachovia and Goldman Sachs, but by the time they got their bribe from the US Congress, most of the banking problems had already been stabilized so they had to figure out another way to spend the money or give it back. So they divvied it up amongst themselves and never had any intention of paying off the "bad assets" loans. That was only an excuse to get the money in the first place.

Then, when they saw how easy it was to get $100's of billions of dollars with no questions asked, they kept coming back for more and more, with Citigroup only being the latest. "Free money" is hard to turn down, especially when it comes with no questions asked. Only a fool would not try to get into this lottery. This is a man-made crisis that was avoidable. This is just one paranoid interpretation..

[ixion]

1. anytime someone tells you they need money now or else, you can be sure

that it's a con or a robbery, generally speaking.

In this case, that's exactly what it is: a con and a robbery.

[kentuck]

3. One would think the Congress would be a bit skeptical...

after Iraq lies and after the $700 billion dollar scam? But they seem to be the gift that keeps on giving. Their naivete does not instill confidence, to say the least.

[OffWithTheirHeads]

2. Yup! Fucking robber Barron's strike again.

and the serfs get screwn again. Personally, I think it's torches and pitch forks time. These people should be strung up and their assets should be looted and re distributed.

[JackRiddler]

4. No.

You would be correct to say that Bush policy opened the door and contributed to the severity of the crisis, and that earlier Clinton-Republican policy helped pave the way in the 1990s (Gramm's repeal of the Glass-Steagal regulations as a key point).

You would be correct to say that when the crisis hit (starting in Aug. 2007 but really coming down in Sep. 2008) it was taken as the opportunity by Bush and Paulson to pull off a pure heist of the Treasury (and the Federal Reserve), a strategy that did nothing to help alleviate the crisis but enriched the bankers who now control a semi-privatized Treasury and always had their way with the Federal Reserve system.

But the crisis results from financial institutions writing phantom values into existence by leveraging something like 100 times the value in bogus securities and derivatives out of a section of the total housing and consumer debt. This was possible thanks to wild-west deregulation and completely uncontrolled capitalism opening the way for a financial sector dominated by Ponzi schemes. Underlying that is a crisis of capitalism in which financial speculation replaces failing profit from production, and 30 years of trickle-down neoliberalism that replaced wage rises for the middle class with "easy" credit, in turn creating endless US trade deficits that flooded the rest of the world with dollars for speculation.

In part, the fulfillment of the Ponzi scheme came through the trillions in Treasury-Fed bailouts, which substitute real money for the fictional assets written by the banks.

[RoyGBiv]

5. Yes, that's certainly paranoid.

Your premise is the problem: The panic was created by George W Bush and Henry Paulson.

No, not in the way you mean it. The Bush administration has been attempting to cover up the depths of the problem for a long time, but it finally got too big. Intricate maneuvering of a few numbers here and there were no longer working. What you saw with Phil Gramm's "nation of whiners" outburst was the last, dying breath of a strategy employing the primary tactic of sticking one's head in the sand and farting into the wind.

The panic struck when the world caught the smell.

Please understand this is not a United States problem. The is a global problem. It is massive, beyond a scale our minds are easily able to grasp, much less accept. A bunch of Bush cronies lining up at the most recently filled pig trough is only one, relatively small part of this story, and it's going to get much worse before it gets any better. The banks are not "stabilized" over a long-term. The larger ones were prevented, for a moment, from catastrophic failure.

Also understand this. Obama is going to spend a helluva a lot more than Bush/Paulson did. It's going to hurt, and we're going to scream, but then that's the nature of harsh medicine that nonetheless has to be taken.