I was working around the house and had C-SPAN's booktv.org streaming over the PC.
It was an interview of Peter Schweizer, author of
Architects of Ruin, talking about the current state of economic affairs.
http://booktv.org/Program/11086/After+Words+Peter+Schweizer+author+of+Architects+of+Ruin+interviewed+by+Rep+Michele+Bachmann.aspxhttp://frontpagemag.com/2009/11/10/architects-of-ruin-by-david-forsmark/He mentioned some incidents that I recalled back when they occurred: the Mexico gov't bailout, the S Korea bailout, and the Russian bailout during the Clinton years. (BTW, this is not an anti-Clinton thesis, as GWB also was partly responsible for the latest bailouts.)
What did not penetrate at the time was that these bailouts were not "Mexican" or "Korean" or "Russian" bailouts.
They were bailouts of American investment firms, most notably Goldman-Sachs.They took great risk investing in these locales and when the investments went tits up, Uncle Sam stepped in to socialize/nationalize the losses and even provide the firms a tidy profit. It got to the point that many referred to Goldman-Sachs as "Government Sachs." The smart money followed G-S's riskiest (but highest-paying until busted) investments because if they went completely bust, Uncle Sam would step in to make the losses go away and provide a profit.
This sort of thing is a "moral hazard" where investors do not properly assess risk in the light of probable gov't bailouts.
The 2008/2009/2010 bailouts of Wall street investment firms, Fannie, Freddie, AIG, etc. are of a part with the previous bailouts, but with a racial twist and gov't pressure. A "carrot & stick approach." The gov't passed laws & regs that made using the old-school lending standards illegal or liable to serious gov't action when lending to minorities (stick). Gov't determined to buy up the bad loans via Fred & Fan, thus relieving the lenders of some of hte downside risk after making thier profit on generating the loan (carrot).
[The point of this post is not to rehash the means of the latest ruinous mess, but to demonstrate that "bailout nation" has a history.]
I think that our financial sector will not change its ways unless gov't:
1. Takes the pressure off them to make high-risk loans to people on the basis of race.
2. Determines NOT to bail out firms that invest in high-risk places/sectors.
What do y'all think?