From the savings-and-loan meltdown to the dot-com boom and bust to the housing boom and bust, Americans have been floating up or down based on the gambling of fat cats since 1980 started the era of financial deregulation.
One of my favorite writers, Matt Taibbi, has written about how investment banks (especially Goldman Sachs) have been ripping off Americans since the Great Depression in his article “The Great American Bubble Machine.” They profit by peddling shit (IPOs, houses, crap mortgages), and then short-sell the American Dream. Then they buy off members of both parties (especially Democrats). The yuppie Democrats of the Clinton years have all prospered handsomely like Lawrence Summers, Robert Rubin, and Rahm Emmanuel. Even Tim Geithner, who didn’t work in the private sector, is deeply conflicted given who he worked with at the New York Federal Reserve.
This follows his excellent expose of how the London division of American International Group destroyed the world economy with collateralized debt obligations. It starts like so:
It’s over — we’re officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
If the economy of post-Reagan America has been a sandcastle built on a foundation of debt and speculation, is it possible that America can have actual economic growth (as opposed to wild bubbles and crashes)? We should ask Dr. Doom first.