Here we go again: our rotten to the core financial system on the brink to screw us one more time.

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https://www.theatlantic.com/magazine/archive/2020/07/coronavirus-banks-collapse/612247/

In 2007-08 it was CDO’S, banks and ratings companies. Now it is CLO’s, banks and ratings companies.

Loopholes in the laws and a generally an out of control financial “system” that demands autonomy and free markets, then shows over and over how they just can’t help themselves. And with the pandemic, major failures are on the horizon.

And, we have not set aside a nickel during the last 3 years. Instead, we have borrowed trillions in 2018 tax cuts to boost the DOW. The “swamp” is overflowing and we still had 42% of our jobs paying at or less than $15/hr., which is effectively the new minimum wage.

Wealth is political power.

“When those with immense wealth and power learn how to pay themselves from the national treasury and we let them, we are done for”. L. Rothman, 2020.

My advice is to declare yourself a bank, cheat a lot, sell fraudulent investments, take ratings executives to dinners, then wait for the treasury to send money your way.

IMHO

Published by lenrothman

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21 thoughts on “Here we go again: our rotten to the core financial system on the brink to screw us one more time.”

  1. The phrase, “Those who forget history are doomed to repeat it.” kept running through my brain the entire time I spent reading this piece.

    Gotta find a peaceful mantra to get that one out of my head.

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  2. “When those with immense wealth and power learn how to pay themselves from the national treasury and we let them, we are done for”

    How does that work? How do people “pay themselves from the national treasury”?

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    1. Where do the bank bailouts come from? Where do the subsidies to farmers affected by the tariff shenanigans come from? Where do business owned in part by Congressional Representatives get PPP funds? (We may never know about that one unless Mnuchin decides that transparency is a good thing WRT to those loans, or oversight is allowed over the program by Congress)

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      2. Where do welfare payments come from? Are they part of the problem? How about payments to defense contractors?

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        1. Questioning the social safety net programs as well as defense expenditures is not what this is about. But hey, you can be as obtuse as you want. It is still a free country. For now.

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        2. RE: “But hey, you can be as obtuse as you want.

          There’s nothing obtuse in my questions. I challenge you to show how welfare recipients and defense contractors “pay themselves from the national treasury.” I suspect that you and Mr. Rothman don’t have a sufficient grasp of the economics of government spending to be able to tell the difference between specific recipients.

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        3. Those are both expenses that the country has agreed to pay for. One is a social safety net in a capitalist economy allowing the risk takers to innovate, succeed or fail without necessarily creating financial hardship for employees and non-investors.

          Defense is a similar purchase that protects us and our way of life.

          Now are there problems with either of those? Of course, but that is another issue.

          My premise is that the political muscle to protect risky investments and practices in the financial sector is really a way of sacking the treasury. Privatizing success and socializing failure. Now if we think that is a good idea in our economy, then we need to shore up the treasury with revenue not deplete it with tax cuts, particularly those that don’t generate any promised revenue.

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        4. RE: “My premise is that the political muscle to protect risky investments and practices in the financial sector is really a way of sacking the treasury.”

          I understand the premise. What I don’t understand is how the sacking is done.

          As best as I can make out, your argument is that some forms of “privatizing success and socializing failure” are acceptable because you agree with the objective (welfare and defense spending, for example) but other forms are not acceptable (certain people getting tax breaks). What I’m looking for is the rule I can use to tell one from the other.

          Without such a rule I’m inclined to apply simpler reasoning, such as noting that deficits are caused by too much spending.

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          1. You are playing with words.

            Of course too much spending causes deficits. We need to pay for what we want. If we cut revenue to the treasury, but still spend, we create debt. Bush did it. Trump did it. Republicans do it as a matter of course.

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    2. In addition to Adam’s examples, we have tax cuts that are paid for by increasing the national debt, which must be paid for by future revenues, i.e., the American taxpayers.

      Pension funds in the private sector that over time have been eroded through a variety of loopholes and accounting shenanigans that favor investors and top executives are partially protected by taxpayers in the Pension Guaranty Fund.

      Hedge fund managers that do not pay federal income taxes.

      We even have a history of tax evasion within the Trump family as shown in a detailed analysis by NYT a few years ago.

      KPMG was caught about 10 years ago with a series of tax evasion schemes marketed to wealthy people. Not too many folks were charged or paid penalties. But taxpayers, again, had to make of the lost revenue.

      Even the most recent bailout had a retroactive tax adjustment affecting people making $1 million per year, Retroactive to 2018.

      And the list goes on, and on and…

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      2. I don’t follow your reasoning: When someone gets a tax cut the money they don’t pay was theirs to begin with.

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          1. How so?

            If we as a nation have decided that a budget of a few trillion is what we need to operate this nation, whatever fall short of that is a deficit for the year and a debt for the future.

            If we purposefully cut the tax revenue either through changes in rates or new “loopholes”, then we have to borrow to make up the difference.

            The whole selling point of Republican tax cuts is that they will pay for themselves, which they never do.
            But that certainly requires that the tax cuts will be paid for somehow.

            The claim that the Democrats are tax and spend is not really an insult. It just means that if we want to spend on this and that, we need to raise the revenue to cover it. Ideally.

            The conservative mantra is really bogus. They push for tax cuts with the idea that spending will also be trimmed. Of course, they never do that. So we borrow.

            Taxes are not a “penalty” as the right always seems to imply. It is the cost of living and working in this country. If someone thinks the benefits of that are not worth paying taxes, as the Trump family obviously did, then they are 1) making others pay for them and 2) they are not good Americans.

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          4. Tax cuts, without spending cuts DO cause deficits. Check the facts AFTER Bush and Trump tax cuts were passed.

            Again, the phrase “Those who forget history are doomed to repeat it.” keeps coming back.

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          5. “The idea that tax cuts have to be “paid for” is nonsensical.”

            If that is the case, why is it whenever a tax cut is proposed, we are told repeatedly by the supporters of it that it will “pay for itself.”?

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