The government’s bailout plan destroyed capitalism. In a capitalist system, those who stood to gain–and already made off with large gains—would have to bear the risk. The bailouts represented a corruption of capitalism. Crony capitalism violates the spirit of democracy established by the Founding Fathers of the republic known as the United States. I expressed these sentiments in a letter to the Financial Times on September 29, 2008.
– Janet Tavakoli
The following article by Janet Tavakoli is an excellent reminder of the extraordinarily destructive coup pulled off by financial oligarchs in fall of 2008, when the rule of law was suspended and total theft institutionalized. I have written many times about my experience on Wall Street when the bailouts happened. How I ranted and raved on the trading desk about how TARP marked the end of any semblance of free markets and that there was no turning back. How I was told to “take a walk around the block” to cool off.
All of the suffering and hardships the majority of Americans are experiencing today are directly related to the coup pulled off by the crony financial oligarchs in the fall of 2008, and all of the media and political minions that helped them do it. People realize we have become a Banana Republic and they have now lost all hope. That said, there should always be hope and we can certainly restore society to better days, but not until we remove our domestic cancers from their positions in the highest offices of government, finance and corporate America. That is what we must peacefully achieve. Now here’s Janet Tavakoli:
In November 2008, President Obama was elected, and he was sworn in January 2009. The country was promised change and reform. Recently two democrats close to the top of President Obama’s administration made excuses to me for the lack of financial reform in the United States. Their separately related versions were remarkably similar, so similar they seemed scripted:
The administration made a bargain, and I’m not sure it was the right decision. The world was teetering on the edge of collapse. There was a crisis of confidence. There would have been unimaginable consequences. So bad even your imagination can’t handle the truth?
It was the lesser of two evils to let a lot of people get away scot free than to risk a collapse in confidence. There were only two choices according to this narrative.
It was better to let a lot of people get away scot free than to have the first African American president take on the establishment while the country was deeply divided and he needed agreement on big things like ending wars, health care, Supreme Court nominees (and LGBT rights). There were lots of battles without taking on the financial establishment. It seems to me that reforming our financial system is a big thing. As for at least two of the narrative’s big issues: health care costs are zooming up, and it looks as if we’re rattling our swords for another military conflict.
The president was elected in part on his promise to effect change on the really tough issues, and there was no better time than when the crisis was fresh, and he had a groundswell of popular support.
The most amusing thing about all of this is that people wanted President elect Obama to stick it to the financial oligarchs. Instead, he gave them trillions and offered immunity. More from Janet:
Instead of TARP, handing out money to cover banks’ losses, we could have forced creditors to accept a restructuring plan. This is what was done during the Great Depression. Creditors, i.e., debt holders including credit default swap counterparties, would have been compelled to accept a restructuring plan. That required partial forgiveness of debt in many cases and/or a debt for equity swap.
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Presidents should get the power to declare economic emergencies along the lines to declare war, said former Federal Reserve Chairman Ben Bernanke on Monday.