By Dr. Pitchfork
For me, one of the highlights of 2010 was the day I was able to help out a friend who really needed it, while simultaneously depriving Jamie Dimon of thousands of dollars in mortgage fees and interest income. This was the day that my wife and I became subprime lenders.
But the story of my career as a banker really begins in the fall of 2008. Most of us remember that time quite vividly. Fannie and Freddie had been nationalized in all but name, Lehman Brothers was gone, AIG was posting losses the likes of which the world has never seen, and the stock market was in free fall, taking much of our life savings with it. If you didn’t really understand what was happening back then (or even if you did), it was a very scarey time. I confess, I didn’t fully understand the need for a massive bank bailout, but it was clear to me that Congress didn’t understand it either. And in ignoring the massive public opposition to the bailout, the ruling elites made it crystal clear that what the American people wanted didn’t really matter. What we thought about bank bailouts (or anything else) was just a temporary obstacle standing between the elites and whatever it was they desired. Of course, the last two years have done nothing but confirm this fact. The bankers continue to get what the bankers want. Obama has proven to be no better than Bush, and the newly elected Congress may turn out to be even more cozy with the banks than the last one.
Getting back to our story, although I was initially annoyed about the bailout, it wasn’t until I started learning more and more about what had happened, and why it happened the way that it did, that I started to become more and more angry. For most of us, it didn’t take a financial crisis and a massive bailout to make us aware of the kind of cronyism that rules in Washington, but the sheer scale of the bailout dwarfed anything seen before. No-bid contracts and sweetheart deals for the well connected seemed like small potatoes compared to the trillions of dollars our government was willing to spend in order to prop up the financial system. It’s been long forgotten now, but before FAS 157 (the rule governing mark-to-market accounting) was changed, and before “extend and pretend” had had a chance to work its magic, there was serious talk of setting up a “bad bank” to hold all the banks’ non-performing assets, there were plans for running the PPIP scheme on a trillion-dallar scale, and there were earnest discussions of using SDR’s to replace the dollar as the world’s reserve currency. In other words, Paulson, Bernanke and Geithner were more than willing to bleed us white in order to save the largest commercial and investment banks. Extend and pretend has been relatively painless so far, but the “bad bank,” PPIP, and everything else our rulers contemplated in late 2008 and early 2009 was just brazen in the contempt it showed for the American people. People have forgotten, but our rulers were willing to pay a very high price – indeed, any price -- to bail out the banks, regardless of whether that money was paid back or not. And there were never any plans in place to punish, or even fire, those who were responsible. The more I read and learned about the financial crisis, the angrier I became. As fall turned to winter, that anger turned into something more like rage.
I remember one day in particular. It was early December in 2008. I’ll admit it, the spectacular crash of the stock market in September and October was exhilirating to watch. It was like some kind of financial war (or maybe terrorism). However, by late November, the crash was over and the markets seemed to have reached a temporary bottom. At the same time, the economy was shedding jobs at a rate of 600-700K per month and the face of economic reality was starting to become visible in both the raw data and in anecdotal evidence.
This one particular day, my wife and I were babysitting for some neighbors who were away for a couple of days (not the same family we ended up giving a mortgage) and we decided to get the kids pizza for dinner. We have several authentic, Chicago-style pizza joints in our area, but for some odd reason the neighbors’ kids will only eat Papa John’s. Yes, it’s disgusting, but whatever. Babysitting for three other kids is bad enough – the last thing I want to see is a room full of kids whining about their pizza. Anyhow, when I drive out to the nearest Papa John’s, I find that it’s tucked inside an old, absolutely decrepit shopping mall. Except for Papa John’s and one other store, both of which sit right by the main entrance, the entire mall was empty. In fact, they didn’t even have the lights on in the rest of the mall which had been blocked off by an assortment of benches, folding metal chairs and the kind of concrete planters that were all the rage in malls, circa 1986. In economic terms, it was one of the most depressing things I have ever seen. And everything about it was just perfectly symbolic of the economic conditions we were facing. Even the weather that day was dark and gloomy.
It was while driving back home with the pizza that I started putting some of the pieces together. Here I was looking at signs of serious economic decline, while at the same time knowing that there was much more to come. By this point in time, I had learned enough to know that we were facing something like an economic depression. Most of our friends and neighbors had no idea what was coming down the pike, but I did. Aside from the data and economic indicators, you could just feel it in the air. The whole economy seeming to be grinding to a halt, and it wasn’t the fault of those who were going to suffer the consequences. But you could see it coming and there was nothing you could do. I felt so sorry for those kids that night, and I worried for their future. Their parents were barely scraping by as it was and I had a feeling that things could get much worse as the unemployment rate continued to rise.
Meanwhile, everyone at Goldman and AIG and JP Morgan, etc. had been bailed out by the taxpayer. They were still getting paid. They weren’t losing their jobs. And the top dogs at those bailed out institutions would soon be collecting multi-million-dollar bonuses. It would be a serious misrpresentation to call this situation “unfair.” It was more than unfair, it was perverse. And it was the officially sanctioned policy of our government. This same family for whom we were babysitting that night ended up moving a few months later out of the apartment in which they had been living and into their parents’ basement. Until quite recently, both the husband and wife were unemployed, and at the moment they only have part-time work to help them get by. A couple of months ago, they were delighted to move their family of six out of their parents’ basement and into a used mobile home. These are college-educated people who have simply been unable to find decent-paying jobs, not members of the permanent underclass.
But why were they in this situation? You couldn’t blame any one person or institution directly, but it was becoming clear to me that the economic hardship people were suffering was the result of the very same decisions that had allowed a handful of well connected individuals to make ungodly amounts of money during the boom. And here I was, as a taxpayer, being asked forced to bail them out! The value of my mutual fund holdings had been pole-axed and I was effectively being forced to write checks to bail out the people who did it. In all my life, I have never been so angry, so full of rage, for such an extended period of time, as I was in the winter of 2008-2009. In Part 2, I’ll explain how I first discovered The Daily Bail, and how I stopped having Howard Beale moments on a daily basis.
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From Network in 1976...
Video - I'm mad as hell
Peter Finch wins best actor Oscar from this speech...
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Beware: the banking lobby is at it again
A recent Slog piece took readers through the fairly obvious fact that banks are gradually becoming richer and more powerful than governments. Sometimes it’s easy to see conspiracies where there aren’t any, and sometimes whether it’s a conspiracy or not is pretty much irrelevant. But over the last few months, the only thing required to prove the banking lobby’s desire to get business back to normal is Google. Simply Google ‘stop bashing banks’, and 1.3 million results come up. Add the filter ‘News’, and you will discover the startling fact that, since December 13th, there have been 55 articles in the mainstream national press of the UK, EU and US, all saying ‘banks need your support, not more bashing’.
http://hat4uk.wordpress.com/2011/01/04/beware-the-banking-lobby-is-at-it-again/