It is not technocratic economists who will win the day and pull us out of our cul-de-sac, but angry Irishmen and Spaniards who challenge, on moral terms, the right of German bankers to impose vast deadweight costs on current activity because they lent greedily into what might easily have been recognized as a property and credit bubble.
- Steve Randy Waldman, Interfluidity
I’ll tell you a secret: when the Irish crisis was at its worst (so-far worst, I suppose would be accurate,) I quietly hoped that somebody in Ireland would make some kind of stand that would scuttle all the bailouts, all the forced concessions, that would really expose the bankers to the losses sitting on their balance sheets, and once and for all get this crisis to where it must eventually go: recognizing losses wherever they lie, clearing out all the bad bets and lifting the governmental protections from the favored classes.
It didn’t happen. So far, at least. Hey, it didn’t happen here in the U.S. either, and the biggest problem with the credit crisis is that it remains so far unresolved. The Fed, two administrations and now two Congresses merely succumbed to pressure from the banking lobby, threw trillions at the system, saved the banks from their own recklessness, codified the notion of too-big-to-fail, and put the weight of all the bailouts on the backs of the taxpayers. But it didn’t solve any of the underlying problems.
That’s how I read the last three years. That’s why I don’t buy all this recovery talk.
Now, I’m no economist. I’m just an untrained journalist. But it doesn’t take a Ph.D. in economics or political science to understand that something very, very wrong went down. The argument sold to us at the time — that while distasteful, the bailouts were necessary to prevent a wider melt-down — hasn’t exactly held its own against the weight of time, as fully 10% of the work force remains unemployed, as even more millions are stuck in low-paying part-time jobs, as millions more are seeing their wages held down, all while Wall Street returns to its free-wheeling and massively profitable ways
Meanwhile, the debt bombs haven’t been defused, they’ve just been move up the ladder, from individuals and corporations to central banks and sovereign states.