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Economic crash can be viewed from a number of perspectives ranging from causes and effects to the 2008 Crash's resemblance to the Crash of 1929, which began the Great Depression. This paper will consider the 2008 recession from the standpoint of the financial banking industry, which, according to economic journalists like Matt Taibbi (2010), played a major and significant role in the crumbling of the nation's economy -- just like it did in the Lawless Decade also known as the Roaring Twenties.
Big Banking Meets Big Government
What has now become known as the Era of De-Regulation actually had its beginnings in the 80s decade known just as much for its rampant excess as the early 20s were known for their unbridled lawlessness. Yet, while the latter enjoyed the snubs-to-the-law bootlegging speakeasies, the former enjoyed the merging of the financial sector with the political -- which began during Reagan's tenure in the White House. President Reagan started what became a tradition of employing the biggest names from the biggest banks as Treasury Secretary of the United States, a position that consistently allowed self-interest to govern and transform market regulations. Reagan's appointment of Donald Regan (CEO of Merrill Lynch) heralded the end of the kind of regulation that had kept companies like Goldman Sachs from ruining the economy through big short-term gains. Two Goldman Sachs alumni followed Regan to the seat of Secretary of the Treasury: Robert Rubin and Henry Paulson, the latter of whom helped finagle the public out of its earnings by pushing through the TARP $700 billion bailout of companies like AIG -- which, in turn, handed over their shares of the bailout to none other than Goldman Sachs, while Goldman Sachs competitors (like Lehman Brothers were allowed to be crushed without receiving any bailout whatsoever). The U.S. Treasury Secretary position was finally capped off by Timothy Geithner's accession to the throne (for which he abandoned the one given him at the Federal Reserve). All of this means, essentially, that the kind of big government so hated by members of the Tea Party is actually very cozy with the big business so loved, ironically, by the same Party.
The problem with the Tea Party is that it views de-regulation of big business as a good thing. But de-regulation has been happening for the past three decades and all it has ever yielded have been economic crashes: it happened in 1987; in 1991, the Commodity Futures Trading Commission (CFTC) opened up a loophole for Goldman Sachs subsidiaries and the like to go from speculators to physical hedgers (a big reason prices are so high now); the Internet bubble, the housing bubble, and the credit bubble are all the result of government de-regulation of the finance industry (Taibbi 2010). Bernie Madoff is a prime example of the kind of history-repeats-itself story (see Charles Ponzi of 1920) that tends to make our age have so much in common with the 1920s (Sann).
Charles Ferguson, director of the Academy Award-winning (for Best Documentary 2011) Inside Job, gave perhaps the most public indictment on live television during his acceptance speech, which addressed the issue that remains the heart of what caused the American economy to finally implode in 2008: "Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that's wrong" (AP/HuffPost).
Ferguson understood what most economic journalists simply refused to examine: the fact that the country had been hijacked by a group of Wall Street bankers who were virtually untouchable -- in the same way the old trusts had been, like Standard Oil and Continental Railroad. While members of the press were expressing their outrage at seeing the government divvy up the bailout to programs of little significance, the reality was that these programs were only getting a fraction of the money that was going into the pockets of investment banks like Goldman Sachs.
Back in February 2009, the U.S. Congress passed an $862 billion "economic stimulus" bill to help the struggling American economy recover from the horrible financial crisis of 2007 and 2008. Right now, federal agencies are spending this stimulus money at the rate of approximately 196 million dollars an hour, and they will continue to spend it in staggering amounts up until the September 30, 2010 deadline. ("Stimulus Waste")
"Stimulus Waste" had plenty of problems with the hundred thousand dollars…[continue]
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