Barely two years later, I’m still amazed by a few things about the financial crisis of 2008. It doesn’t help that it was a complicated mess, and we have propagandists using it for their own ends, and yeesh that midterm election, but they boil down to this:
1) Most Americans have no idea how close to the cliff we came, and
2) How much of the bailout money has been paid back, and
3) What life would be like in this country without it.
Every so often when I’m on Facebook, I drop in on my former Indiana congressman, who has discovered the joys of social networking. I don’t dare friend him — it’s not him, it’s his commenters — but he’s capable of insight here and there, and it was fascinating, earlier this week, to see him trying to school his talk radio-listenin’ former constituents on just how essential TARP was. This being a Facebook thread, it’s pretty incoherent taken a piece at a time, but it would seem Mark Souder, bless his wicked little heart, gets it:
One of his friends says: Who touted the $700 billion? Obama and his “the sky is falling” GOP whimp friends. Members of Congress have no idea of what things cost when they pass bills like this. Don’t revise history.
Souder replies: I’m sorry to be aggressive on this but we absolutely do know. For example, National City Bank (number one at the time in our area) was toast and would have taken down much of our area’s businesses. We were getting a call a day of businesses having their loans foreclosed. Instead of a bank run, the govt floated cash and forced a merger. …It was incredibly scary. I got phone calls and e-mails at all hours of the day. It was Its A Wonderful Life on all fronts. …Stop acting like everyone in Congress is stupid. Too many liberals but most knew exactly what we were doing. The Republican members kicked all staff, including leadership staff, out of the room and argued for four and one-half hours. Business majors were furious at all the lawyers – bluntly said – who were clueless. But, unfortunately, many who knew better just told you what you wanted to hear. EVERY SINGLE MEMBER of Congress knew that 700 billion was a credit card limit, not the actual spent. It was useful for political purposes to smear the Democrats by acting like 700 billion was spent – unless you wanted to have to defend yourself, like I did, to the Tea Party groups.
“It was useful for political purposes to smear the Democrats” — heh heh. Yes, it was, and it would have been nice to have heard a few more honest Republicans speak to this, but ah well.
If you’re not inclined to go spelunking on Facebook, try this NYT piece based on Fed documents, which gives you more information:
As financial markets shuddered and then nearly imploded in 2008, the Federal Reserve opened its vault to the world on a scope much wider and deeper than previously disclosed.
Citigroup, struggling to stay afloat, sought help from the Fed at least 174 times during one remarkable 13-month period. Barclays, the British bank, at one point owed nearly $48 billion to the Fed. Even better-off banks like Goldman Sachs took advantage of Fed loans offered at rock-bottom rates.
The Fed’s efforts to stave off a financial crisis reached far beyond Wall Street, touching manufacturers like General Electric, the Detroit automakers and Harley-Davidson, central banks from Britain to Japan and insurers and pension funds in Sweden and South Korea.
I remember listening to a “This American Life” piece from the time that spoke of what happened when, one scary fall day in 2008, the U.S. banking system “broke the buck,” i.e., had NO money to lend. I recommend it to anyone who thinks enormous multinational corporations should run their finances the way your grandma does — i.e., McDonald’s shouldn’t roll out cappuccino machines in all its stores until it has saved the money in that coffee can in the cupboard. Everybody likes the car metaphor when it comes to economies these days. When I think of economics at this level, I think of early cars, how you had to be a mechanic yourself to keep one running, how a purring engine was a matter of manually adjusting fuel and air and spark juuuust right, then readjusting, then readjusting again, and being prepared to start from scratch when need be.
Economics is complicated. There’s a reason people get doctorates in it, and why so much of its study involves theory, theories that frequently don’t pan out. I only wish we had someone willing to break this stuff down in ways average people can understand, and then explain it on prime time. Kind of like the way Glenn Beck wraps his racism up in nostalgia for the good ol’ days.
As it shakes out, the TARP program will end up costing closer to $25 billion, not $700 billion. As for these nitwits who think the economy would be better off “in the long run” if it had been allowed to go off the cliff, I have this to say: Fuck you. Even Mark Souder agrees with me on that:
Bankruptcy (of the automotive companies) was discussed in depth, many times. Chrysler is much more marginal than GM. But for car companies, it was not understood by most Members initially about the Pension Guarantee Fund that people pay into. If a company goes bankrupt, those on pensions only get half their pension amount (we have far more people on pensions in our area than employed at the big companies) and the govt pays the whole thing. It would have cost far, far, far more for the govt to cover the pensions. And that is just one small part (unemployment, medcaid, GM is the largest employer of people with disabilities in america – most who would have then become taxpayer dependent, and on and on).
OK, it’s getting late. A little bloggage?
Via MMJeff, a heartbreaker about a survivor of a terrible crash between a distracted tractor-trailer driver (cell phone) and several vehicles, including a van carrying a group of Amish people. The survivor is Amish; she forgave, didn’t sue and tried to recover. Alas, the rest of the world doesn’t work that way:
“English people told us not to worry about it, they would be paid,” Eicher said, using the term the Amish bestow on outsiders. “We assumed they were paid.”
Then, this fall, the same bills started up again. One letter seemed particularly menacing, printed on bright fuchsia paper.
Pay up, the letters said.
She owes $23,273 to the hospital and $2,360 to a radiology group. She can’t see her chiropractor anymore because the insurance company just rejected $6,624 billed since the crash.
New Yorkers, spill: Is Andrea Peyser really as crazy as Gawker regularly makes her out to be?
No one is saying what’s wrong with Aretha Franklin, but everybody’s praying for her.
If you ask me, blind items and the internet were a match made in heaven.
At Wayne. Gotta go. Have a swell one, all.