The Big Takeover: A Must-Read from Rolling Stone's Matt Taibbi

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55 Responses to “The Big Takeover: A Must-Read from Rolling Stone's Matt Taibbi”

  1. Big Ed Dunkel says:

    Old bogeymen die hard, as this article’s continued obsession with Wall Street goes to show. It’s this kinda populist outrage against Wall Street that leaves the financial community with one impression: Stay the fuck away.

    The Obama administration desperately needs the private sector to play a central role in fixing the economy. And after months of criticizing Wall Street, they have been scrambling to woo top bankers & financiers to back its bailout plan.

    What healthy bank, hedge fund, private equity firm, etc. wants to take part in an Obama plan to sell off toxic assets, or to revive consumer lending, with the knowledge that they might eventually be part of Washington’s (or Rolling Stone’s) newest lynching?

    Now somebody pony up $7 million for George W. Bush’s memoirs, goddamnit.

  2. Takuan says:

    heh! Joe Cassano’s in the UK eh?

  3. Frank W says:

    @ #5 busydoingnothing:

    Is there a quick and dirty rundown of what all this shit means for the Average American(TM) to digest?

    It’s over — we’re officially, royally fucked.

  4. urshrew says:

    I don’t know what people mean by saying “raping the America Dream.” These people didn’t assault the American dream, they took it to its logical conclusion.

  5. Robert says:

    The only thing that keeps me going is the hope that I’ll see the end of scarcity in 2045, and thus the end of all these economic games.

  6. mdh says:

    whom we allowed to gang-rape the American Dream

    Before any concern trolls even go there, this actual rape victim agrees entirely with the analogy as posited.

  7. HPHovercraft says:

    #2 – Truthfully, in this case I’m not sure the analogy is valid. Our regulators have been quite brazenly wearing fishnets for years, and not once did any of ‘em actually say no to the assault.

    At the risk of seeming unsympathetic, it seems pretty clear that our government totally wanted it.

  8. justanotherusername says:

    @ #24 Antinous / Moderator

    It’s a link to an opinion piece, just like the one by Taibbi. I don’t see the problem. People do it all the time on here.
    But if you say so.
    I suppose the subject was controversial, but is it taboo? Only opinions are allowed that you agree with? Are you under orders from higher up? ;)

  9. Lucifer says:

    One motivation for the government WANTING the dollar to keep falling is to prevent a wealth transfer to China – which is currently holding trillions worth of our treasury bills.

    The American people will suffer as a result of seeing the buying power of the dollar fall but the administration would prefer some pain at the domestic level if it means punching a giant hole in the value of the Chinese holdings.

    Remember the real estate bubble in hawaii in the late 80s? The Japanese were buying up land there like no tomorrow. The Japanese were buying property in Manhattan too. Prices skyrocketed. The American people were peeved that the Japanese invasion was taking over, but in the end, the money went to the Americans and prices dropped precipitously, leaving the Japanese holding the bag when noone could afford to buy back the investment properties at the prices they purchased them in the first place.

    It’s sort of like that, except instead of land, it’s treasury bills, and instead of Japan, it’s China.

    This time, it’s gonna hurt Americans some, but if they protect their asses by keeping some of their money in a stable place like say gold or silver, the coming dollar collapse should be survivable.

  10. busydoingnothing says:

    I’m at section two and for the life of me, I still don’t fully understand any of this shit. Economics was the only class I withdrew from in my stint at college. I understand it a little more than I did before, but still…my brain is melting.

    Is there a quick and dirty rundown of what all this shit means for the Average American(TM) to digest?

    I do say, though…I like his style.

  11. urshrew says:

    @#45 NY13

    “No where else in the world is there so much opportunity and sense of limitless possibility than in this country.”

    If you believe that, I have bridge in Brooklyn to sell you real cheap too.

    You should re-read that article, if you actually read it in the first place. Mr. Tabbi was not talking about getting rid of financial institutions or whatever the heck you thought he was talking about, he was writing about a direct conspiracy between the government and large financial institutions to deregulate the market so that these organizations could gamble like it was going out of style, and make us, all, pickup the bill.

    Or is gambling wildly and making the government pay for it part of your ‘limitless opportunity?’

  12. timquinn says:

    As that Cheetos dude would say, “Blah, Blah, Blah”

  13. historyman68 says:

    It definitely scared the hell out of me but I wish he was not quite so obsessed with bald men. It was just a little too ad hominem for my taste – if you can attack someone for being bald and white, it’s only a thin line to attacking someone for racial characteristics – and that’s where the accusations of crypto-anti-Semitism come in.
    (Not that I’m saying he’s anti-Semetic, it’s just that it feels a little too close to comfort for me.)

  14. Takuan says:

    well busy, do you understand what collateral for a loan is?

  15. Davin says:

    This is some pretty feel-good reading shit right here. Yikes. Makes the blood boil.

  16. mdh says:

    #3 – I can only assume you didn’t read to the end of the article.

    As Taibbi points it out in the last ‘graf – it really doesn’t matter what kind of underwear we’re wearing.

  17. mdh says:

    Busy –

    From the article: There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates.

    read to the end, please.

  18. nixiebunny says:

    To sum it up, the folks who enjoy making money for the sake of making money tend to go too far if left to their own devices. Unfortunately, they also happen to be buddies with (or they are) the folks who actually run the government. This results in any laws that are designed to protect us from them to be systematically removed because they get in the way of the process of getting rich.

    So when the sh** hits the fan, the folks who cause the problem by gambling with our retirement accounts end up collecting their bonuses anyway and we’re left holding the bag.

    There’s really no need to understand the mechanism by which the dirty deeds are done. The methods are opaque on purpose.

  19. d913 says:

    #5: It has probably been mentioned on BB previously, but I’d recommend listening to the This American Life episode broadcast a few weeks ago, “Bad Bank”: http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1285

    I thought it explained the whole fiasco rather well in less than an hour.

  20. JoshP says:

    Preach it brother, preach it.

  21. Falcon_Seven says:

    Basically it works like this, America needs money to finance its debt-based growth. We don’t have the ‘money’ so the Treasury issues bonds/bills/notes -which are a promise to pay the bondholder back at a future time with interest. So the people who we gave all our money to, the Chinese -because we buy virtually everything from them now, buy our bonds. So, we got our money back from them but we promised to give ‘our’ money back to them a few years from now plus a little extra because we’re such good sports -the American way and all that.
    So 1/3/5/10/30 years from now, when those bonds/bills/notes mature, we will have paid them for letting us use ‘our’ money and then they get it back to do with as they please -like buying up, say, the entire state of California. So we lose again. And again. The only way we can ever get our moneys-worth from them is to allow them to invest in this country by buying hard assets and then tanking the asset’s value so they get less than they paid for it. Just like we did to the Japanese in the eighties.

  22. Takuan says:

    gee, maybe if corporate greed hadn’t gutted American manufacturing and pandered to the Walmart consumer’s personal greed to get everything for free, China wouldn’t be holding all that American paper. Fact is, China can survive total upheaval and revolution better than the States. Plenty of Chinese that have direct memory of hell and damned few (if any) Americans.

  23. Anonymous says:

    So everyone, want to take bets how long before society collapses and we all simply start shattering windows and burning people alive?

  24. Fiddy says:

    #3 The investment bankers and hedge fund managers want this kind of stuff to sound complicated and opaque, just as Taibbi claims. The less you understand, the more they can obscure what they’re doing with your money. It pays to become financially literate, but this often requires self-study, since this kind of economics is generally not taught in public schools.

    Find a copy of G. Edward Griffin’s meticulously researched history of the Federal Reserve System called The Creature from Jekyll Island. You may think it’s all about wild conspiracy theories and Illuminatis trilogy fiction, and that is why I dismissed the book the first time I saw it in the late 1990s, but now everything he described has come frighteningly true.

    Witness Timothy Geithner’s testimony before congress yesterday, when he absolutely refused to answer certain uncomfortable questions because, well, by law, he doesn’t have to tell Congress anything. Bernanke has done the same thing. The charter of the Federal Reserve prevents it from ever being audited, so you will never know what they are doing with your money. As #10 NixieBunny pointed out, this is all by design.

  25. Anonymous says:

    @ 15
    “So everyone, want to take bets how long before society collapses and we all simply start shattering windows and burning people alive?”

    Society ends when the class division that used to look like this:
    Upper out of sight: 2%
    Upper class: 8%
    Upper Middle Class: 20%
    Middle Class: 20%
    Lower Middle Class: 20%
    Upper Proletariat Class: 15%
    Lower Proletariat Class: 5%
    Poor: 8%
    Lower out of sight: 2%

    Starts looking like this:
    Upper out of sight: 2%
    Upper class: 8%
    Poor class: 90%

    It might happen sooner, depending on the rate of inflation and the rate of unemployment. It’s all about when the mob grows too large.

  26. NY13 says:

    I actually found this article rather self indulgent, noninformative, and lacking constructive criticism. Perhaps we should let AIG fall, but I think there’s still a place for structured finance in creating new sources of capital. We need more disclosure on the financial statements, tighter margin restrictions, better rating agencies policing of the mortgage backed securities, and shareholder say in compensation. We are still a country of passionate, spirited, inovators. No where else in the world is there so much opportunity and sense of limitless possibility than in this country. We are still living a dream compared to the rest of the world. I say quit whining Matt; shift the focus to leaders with good ideas that we’ll rally around.

  27. BastardNamban says:

    This article was the best written explanation I have ever seen on how WallStreet & the Federal Reserve works, and why everything is collapsing-
    it really was, in large part, the fault of one man, heading the financial products division at AIG.

    Joe Cassano.

    Rip that bastard out of his penthouse in London and break the fucker’s legs. His name needs to enter the American lexicon as some sort of new swearword, along with “AIG” & something with Bernard Madoff. I propose “Madoffian” as a new word for an unprecedented level of lying/trickery.

    He didn’t screw up- he basically invented an entire new level of opacity & stange obfuscation of wealth & earning in WallStreet, and the financial world as a whole. I’m utterly speachless that, upon understanding how finance & banking works, that this man nearly singlehandedly reinvented so many new ways of obfuscation of risk & wealth. Criminal is a word that doesn’t apply strongly enough here. We need a new word for this level of shitpilism.

    And the Federal Reserve, the OTC regulatory commision, & Paulson all need to BURN. They are just as guilty.

    I am going to email this article to everyone I know, buy a pitchfork, light a torch, and march on DC.

    Who’s with me?

  28. Ugly Canuck says:

    Hey! That’s the second time a poster has used “blah blah blah” as a phrase – that’s two different posters – in two separate threads on Boing Boing about the economy and the Investment Bankers’ takeover of the Government of the USA…apparently, they are trying to dis-courage and de-moralize discussion and its participants….co-incidence? Psy-ops?
    Reminds me of the “realists for legalizing State torture” guys.

  29. presterjohn says:

    if you feel you don’t understand the economy, try watching this Peter Schiff speech:

    http://www.youtube.com/watch?v=EgMclXX5msc

    Also second the recommendation for “The Creature From Jekyll Island” – I’ve recommended it before.

    Are we now done with saying that complaining about bankers is crypto-anti-semitism? Good!

  30. Ugly Canuck says:

    After all, it is ONLY by discussion and sharing of ideas and experiences that plans can be made, and pursued to fruition, by people, great or small.
    I’m sure the phrase “blah blah blah” is often used in Bank Boardrooms…to aid the discussion, right? lol.

  31. jonjonz says:

    Wht mst f y trst fnd kds dn’t rlz s that is the start of a massive contraction in wealth. What used to be a comfortable level, where most tfk’s exist, is about to be wiped out as more and more cash is sucked up by a shrinking cadre of con-men at the top.

    You can’t stop it, the game has been reduced to it’s most basic form. The end game is a handful of crooks owning the rest of us, tfks and all.

  32. busydoingnothing says:

    @11: Thanks, I’ll have to check that out.

    @6: Collateral is something you offer when you get a loan so that if you don’t pay the loan, the person giving the loan can take that collateral away to recoup something from the loan gone bad, right?

  33. ill lich says:

    I like how he mentions that we spent “eight straight years … devoted to frantically chasing the shadow of a terrorist threat to no avail.” If Bin Laden’s goal was to destroy the USA by tricking us into an un-winnable land war in central Asia, he wasted his time and efforts; he just need to wait and our own greed would do the job for him.

  34. Takuan says:

    yup. Now you, a little person, can’t borrow a hundred bucks without three hundred in real collateral. AIG and other big people, can borrow a billion on a promise. Can you see how this might break down?

  35. justanotherusername says:

    >> Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG’s 2008 losses).

    That’s because the psychopaths that control Wall Street are the ones who really govern.

  36. skatanic says:

    First off, that was quite a (long) read. That said, I do feel I am better off having read it.

    This little snippet gave me an idea:
    “These people [Wall Street Fat Cats] need their trips to Baja, their spa treatments, their hand jobs,” says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. “They don’t function well without them.”

    I propose putting a bounty on the testicles of these idiots. Each one a call girl manages to nab would be worth an average wall street bonus ($1-2 million?), to be paid from the government bailout money. Obviously this won’t solve anything but at least we will know our tax dollars are going towards a good cause.

  37. robulus says:

    Really interesting article in WIRED this month touting radical transparency as the way forward.

    In a nutshell the author, Daniel Roth, proposes that companies be required by law to report a series of specific financial indicators, always publicly available in an xml style format.

    The idea is that the sort of opaque economic concepts described here could be better understood if there were an agreed set of indicators that were always publicly available, and that with this level of transparency the market would self regulate in a more informed way.

    IANAE, but it sounds like a very promising idea to me.

  38. jackm says:

    “The sky is falling! Avian bird flu! Y2K! The USA is a fallen empire! WORLD ECONOMIC DOOM!”

    Yawn.

    Wake me up when Boingboing stops flying its own agenda flag and starts reporting interesting news again.

  39. lost feliz says:

    Let’s call it “Geithner and Bernanke are Dead.”

  40. Takuan says:

    interesting indeed Robulus. But let me ask this: The latest banditry did not happen in a vacuum. There were any number of minor functionaries, smaller than remora, no more consequential than pilot fish, who witnessed the thieving and conniving by their masters and kept their mouths shut. Because they waited for their usual crumbs? Or because there was no one to report it to?

  41. Anonymous says:

    Canuck:

    As a former govt “teat sucker” (retired cop), I feel compelled to say that I am proud to be lumped in with soldiers. Not so much the others you include in the group. You can sweat ’til your heart’s content knowing that someone else will do the bleeding when the time comes for it.

  42. Ugly Canuck says:

    TFK?
    Some of us are very well acquainted with earning our bread by the sweat of our brow ( instead of off the Govs teat like all those cops soldiers guards bankers judges….)

  43. Ugly Canuck says:

    Welcome to the third world!
    How long before the soldiers join the cops in shooting Americans? You know, like all those “right-wing” dictatorships (like Guatemala in the 70s & 80s) Reagan et al were so proud of propping up with “military aid” paid for by US middle class taxpayers?

    http://www.salon.com/opinion/greenwald/

  44. Brainspore says:

    The reason we keep getting ripped off so badly is that nobody wants to give up on the dream of wealth without work. Think Enron: if you can’t see where the money is really coming from, it’s probably based in an illusion.

  45. robulus says:

    Takuan, yes, the devil is in the detail. I think the success of this idea would hinge on exactly what metrics companies were required to report.

    They would have to be sufficient so that no one could look the other way. You would basically have web sites that just graphed live feeds of current public company data as “health charts”, and these would need to be devised so that anomolous behaviour was flagged.

    I have no idea how you’d do that. But I’d love to see it done!

  46. dorkhero says:

    I give up. I really don’t care anymore. Between this, and the destruction of our biosphere at our own hands, I’m seriously thinking about leaving this damned little planet. The only thing keeping me from exercising my ’9mm Opt Out’ plan is the fact that I really love disaster fiction. Who needs ‘The Road’ when you have 24 hour cable news networks. What I see each night is far better than anything Irwin Allen ever put on the screen, and much more realistic. Once I find out how the hero dies, I’m out of here.

  47. Anonymous says:

    Another good way to get up to speed is Jonathan Jarvis’ Crisis of Credit Visualized” a ten minute video with lots of great data visualization.
    I would also highly recommend the latest issue of Harper’s (sorry, subscription needed, but totally worth it, you’ve got to start paying for journalism somewhere, might as well start here), with a great piece by a labor lawyer Tom Geoghegan about how (in addition to everything Taibbi mentions) the lack of regulation of interest rates and fees that banks charge (credit cards, etc) contributed to this mess, by making it so easy for the banks to make money on loans, and helped to change the logic of loans (i.e. you don’t need to get paid back the principal, if you are charging 30%, in fact, you don’t actually want to be paid back). Geoghegan describes how this sort of practice led to an explosion of the financial sector, and a brain-drain, where most bright college-educated people started applying their talents to designing financial instruments in New York, rather than dashboard instruments in Detroit. He also points to the lack of organized labor as a pivot point in how we lost manufacturing expertise as all the human capital went into the financial sector.
    One great line from someone who used to work for GM: “It was as if we were only selling cars so that we could make loans”

    Cedar

  48. Anonymous says:

    People were equally bombastic about the 90s dotcom bubble.

  49. Fritz Bogott says:

    Where are anti-coup protesters meeting up?

  50. busydoingnothing says:

    @Takuan: Makes sense to me. So they were essentially giving out loans to people who had nothing to back it on more than a wing and a prayer, and both said wing and prayer got flushed down the shitter?

  51. Roach says:

    Much as I hate Taibbi’s “I’m so cool because I use ‘fuck’ and ‘shit’ in an article about economics” writing style, that was an excellent rundown of the situation and hopefully got the idea further out there that the privileged overclass needs to get taken down.

  52. 4649 says:

    A question:

    Is is more correct to say that

    …the company lost more than $27 million every hour. That’s $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second…

    –or is it more correct to say that “the company discovered every hour that it did not actually have $27 million that it had previously thought it had. That’s $465,000 a minute, [etc.]“?

    or is it somewhere in between? I mean, I watched a PBS thing about this last night, whence I gather that the stocks of AIG and others were trampled by investors leaving in a panic. Is “lost $27 million every hour” how fast the stock price tanked or how fast they overpaid for worthless assets? Or how fast things they already had bought came to be recognized/regarded as worthless, or what?

    A cookie and my gratitude to her (or him) who takes the time to answer. :)

  53. zandar says:

    >the privileged overclass needs to get taken down.

    Couldn’t agree more, but unfortunatly there will be no spoils. None of any real use, anyway. Except their arable land, but how many wall street bankers have usable rural pasture?

    Let’s sharpen our pitchforks and find out, shall we?

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