Saturday, March 21, 2009

The Economy in a Nutshell

You, too, can understand the economy once it's broken down to it's easily component parts. Really!

(Bullet points always help.)

  • We wouldn't be upset about AIG execs getting bonuses from taxpayers if there hadn't been a bailout.
  • AIG wouldn't have needed bailing out if it hadn't been too big to fail.
  • AIG wouldn't have been too big to fail if it hadn't become a giant corporate mixture of insurance, banking, and investment house.
  • AIG wouldn't have been able to become a giant corporate mixture of insurance, banking, and investment house if there hadn't been deregulation of Wall Street that allowed firms to get like that.
  • There wouldn't have been deregulation of Wall Street that allowed firms to get like that if there hadn't been the Republican political philosophy that preached that regulation was bad and that deregulation was good.
  • There wouldn't have been the total deregulation of Wall Street if it weren't for the Graham-Leach-Bliley Act of 1999, introduced by those three Republicans.
  • The Graham-Leach-Bliley Act of 1999 tore down the separation of commercial banks from investment banks from insurance companies that had been in place since the Great Depression.
  • That's how Citibank gobbled up Travelers Group Insurance to become Citigroup and AIG added the various banking measures to its insurance business by insuring banking and mortgages it knew were bad. BUT WHO WAS GOING TO STOP THEM? Nobody, thanks to the Republicans.
  • Banking and mortgage companies gave outrageous mortgages to unqualified buyers because they got insurance for them (that was totally worthless). BUT WHO WAS GOING TO STOP THEM? Nobody, thanks to the Republicans.
  • Then there came the Commodities Futures Modernization Act of 2000 (with the famed "Enron Loophole") which exempted high-risk actions from any regulation whatsoever. Not only was it legal from the 1999 act, but now it couldn't even be overseen. It was another action by Phil Graham and the Republicans.
The Great Depression of the 1930s was repaired by the Democrats with the formation of the FTC (Federal Trade Commission), the SEC (Securities and Exchange Commission) to provide oversight and control, and the New Deal (a federal investment in job-creating and economic-stimulating infrastructure) to correct unregulated, Republican failures.

Can we now finally learn from our mistakes?

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