It’s been about a year since the bailout parade truly began following the collapse of Lehman Bros and the domino effect that followed. I remember these events vividly as Paulson and Bernanke held these secret meetings to determine the financial system’s fate. After Lehman’s collapse, Paulson proposed the first version of TARP to a disgusted public. The response was truly remarkable as the public mobilized, expressing their disapproval of the legislation, and effectively killed the bill. I voiced my own excitement at its failure in Bailout Voted Down!!!. Unfortunately, Team Bailout prevailed and successfully guided this bill through Congress and started a process which has spiraled out of control since. One might have expected angrier public reaction but fear and a “trust in the experts” tempered the gut feelings of most Americans. A year later, how is America feeling?
I think this one best sums the consensus…
**Note: I don’t advocate people not paying perfectly legitimate debts. I think the woman from this clip will regret her actions after receiving all the late fees, collection calls, lower credit, and eventual recovery lawsuits. As long as she fails to pay, she deserves everything that is coming. I also don’t advocate 30% interest rates but still don’t see this as an excuse not to pay. The purpose of this is to illustrate a growing resentment from Main Street and a positive trend towards doing something about it. Making videos like these are important to spreading the word and mobilizing an angry populace.**
Great video and hopefully more will follow. The woman from this video should be happy to learn indictments are looking like a real possibility for those involved in the Bank of America- Merrill Lynch merger. Stay tuned for more on this story.
Protests have been nothing new, as the Tea Party protests have been successful throughout the country…
They claim to be a grassroots movement, but critics call them astro-turf. In either case, the Tea Party movement is quickly shaking off its “greenness” to become a force that some coalition members contend is more effective than the Republican Party.
“This movement has done more to give conservatives a voice than the GOP has in the past eight years,” said Dana Loesch, a conservative radio talk show host and member of the Nationwide Tea Party Coalition. “Republicans have been following the Tea Party’s lead since February.”
“I think it’s fair to say this is not a Republican-sponsored movement,” said Brendan Steinhauser,an organizer who described supporters as “conservatives, independents, and libertarians” concerned over the “size and scope of the government.”
Tea Partiers got their start last fall as a disorganized bunch of disaffected voters who were furious about the Bush administration’s Wall Street bailout. Then, Steinhauser said, these opponents of excessive government spending were pushed over the edge by President Obama’s call for a $787 billion stimulus.
Using a dozen social networking sites to mobilize constituents opposed to big-government spending, the movement took root in February after a group of individuals used Twitter to react to CNBC on-air editor Rick Santelli’s “rant,” in which he accused the government of “promoting bad behavior” in regard to the Homeowners Affordability and Stability Plan, and raised the idea of a “Chicago Tea Party.”
Muwabi is a strong supporter of these protests and is happy to see the level of enthusiasm and participation throughout the country. I linked this article specifically because it references how this particular movement has been more representative and effective than the Republican party on this issue. The GOP has been largely ineffective at mobilizing the public (outside their core base) despite having a golden opportunity for a true message of change. I expect the movement to eventually take over the Republican party or offer a legitimate chance of a third party development.
Not only is the general public participating in the protesting… the media is even beginning to ask questions and take a sarcastic tone. (let me stress the word beginning)…
Dear Esteemed Chairman and Savior of the World Economy:
On behalf of your many Chinese friends and all of the Chinese people, we wish to congratulate you on your recent reappointment as Chairman of the American Federal Reserve. We could not be more pleased to know that the man who saved the value of our Fannie Mae mortgage-backed securities last year will be the Great Monetary Helmsman for another four years.
We also note with satisfaction, and admiration, your many recent assurances, via the Wall Street Journal and various eloquent speeches, that you and the Fed have no intention of permitting a revival of dollar inflation. This is a source of great reassurance to the Chinese people, not to mention the bureaucracy in Beijing that made the decision to invest $1 trillion or more in dollar-denominated securities.
This is good stuff… but the WSJ didn’t stop there!…
Using the financial crisis as a pretext, the Obama administration is determined to enact massive financial regulatory reforms this year. But the centerpiece of its proposal—putting the Fed in charge of regulating or monitoring systemic risk—is a serious error.
The problem is the Fed itself can create systemic risk. Many scholars, for example, have argued that by keeping interest rates too low for too long the Fed created the housing bubble that gave us the current mortgage meltdown, financial crisis and recession.
Regardless of whether one believes this analysis, it is not difficult to see that a Fed focused on preventing deflation in the wake of the dot-com bubble’s collapse in the early 2000s might ignore the sharp rise in housing prices that later gave us a bubble.
There is also the so-called Greenspan put. That’s a term that refers to investors taking greater risks than they otherwise would because they believed the Fed would protect them by flooding the financial system with liquidity in the event of a downturn. If there really was a Greenspan put, it has now been supplanted by a “Bernanke put.”
Blogs have been echoing this sentiment for months but it’s nice to see it work its way into a mainstream publication.
Finally, Barry Ritholtz at the Big Picture makes a great point about how the current administration is making a big mistake in its policy agenda…
There was a narrow window to effect a full regulatory reform of Wall Street, the Banking Industry and other causes of the collapse. Instead, the White House tacked in a different direction, pursuing health care reform.
This was an enormous miscalculation.
I’m not sure who to blame, but the leading suspects (in order) are Larry Summers, Rahm Emmanuel, Tim Geithner, and (perhaps) David Axelrod. Instead of a populist clean up of The Street (ala Eliot Spitzer circa 2,000), Obama advisors allowed a smoldering resentment to take hold and build amongst the electorate. The massive taxpayer wealth transfer to inept, corrupt, incompetent bankers has created huge resentment amongst the populace — regardless of political affiliation.
There was widespread popular support for a full reform of finance. What the White House should have pursued was: 1) Reinstatement of Glass Steagall; 2) Repeal the Commodity Futures Modernization Act; 3) Overturning SEC Bear Stearn exemption allowing 5 biggest firms to leverage up far beyond 12 to one; 4) Regulating the non bank sub-prime lenders; 5) Continuing high risk trades to be compensated regardless of profitibility; 6) Mandating (and enforcing) lending standards, etc.
All of this could have been accomplished in the first 6 months of the Obama administration. The consumer protection stuff could have been tossed in as well, though it was not the cause of the collapse.
What we got instead, was the usual lobbying efforts by the finance industry. They own Congress, lock stock and barrel, and they throttled Financial Reform. It did not help that the Obama economic team is filled with defenders of the Status Quo — primarily Summers, but it appears Geithner also — the dynamic duo that fiddled while the economy burned.
Well said Barry!
In the next year, I expect the Fed’s activities to be exposed through Bloomberg’s inquiries or a full audit, and the recovery efforts to prove ineffective in dealing with unemployment, credit access, and and deflation. If we’re already seeing signs of public outrage, what can we expect when the evidence mounts higher and higher? To say the least, it will be interesting to witness.