Two words for you people: Labor Unions. Get your offices organized and get some leverage to balance against those who think that the top 5% aren’t yet rich enough.

Also, a very good article at Alternet that discusses how we never really left the recession of 2001. When you look at the “growth” of the GDP over the last 7 years, you find that it is actually less than the rate of gov’t and personal debt over the same time frame. The economy hasn’t grown for the better part of a decade!

i don’t necessarily disagree with what you say, but your trying to pigeonhole a huge story into one narrative: “the big guys make mistakes that the little guys end up paying for.”

sure that’s happened before, its also not happened before…with once dominant banks like drexel and kidder going under. the very example you give, bear sterns, does not quite fit the “bail out” narrative, as the company was sold at a bankruptcy auction price. a lot of bankers at bear, which was like 30% employee owned, lost the bulk of their life savings.

i’m sure you don’t feel sorry for jimmy cayne, who worked his whole life at bear to accumulate stock worth over a billion dollars, only to see it disappear overnight. the fed bailout amounted to him selling his stock at a bankruptcy price. the point is if he where a scam artist he would’ve sold his stock prior to when the shit hit the fan, like the enron guys did. but he was not a scam artist, rather he was just a fool, and the old saying came true again: a fool and his money…

first it was corporate america screwing the little guy. there’s some truth lurking in that but to view it purely thru this paradigm is very misleading, for the obvious reason that the screwers got their clocks cleaned, which you now admit.

Er, no. What I’m “admitting” is exactly what I said: the big guys make mistakes that the little guys end up paying for. Wall Street will reshuffle (as they’ve already started doing with the Bear Stearns and Countrywide acquisitions) and then hold out their hands for taxpayer money. It has happened before (we can’t let the savings and loans fail) multiple times (we can’t let the airlines fail!) and it will happen again. You’re looking at the very beginning of the cycle and trying to convince us that maybe this time Lucy won’t pull the football away. Anything short of another financial collapse like the Great Depression will see the cycle reset and start over again, with only taxpayers being the true losers.

What do you mean, “eaten alive”?

well look at the citi stock price. or, a bit off the radar for the mainstream press, the hedge funds left holding the bag on these securities. they’ve taken huge losses and more than a few have gone under. or the former ceo of bear sterns, jimmy cayne, once a billionaire, now worth only 10′s of millions. if he was a scam artist, he wasn’t very good at it.

They’re getting handouts of taxpayer money to keep them afloat.

Can we stop referring to corporate america as one entity? this is one of the the most dynamic economies in the world. i suppose you mean bear shareholders. the government insured deal was done at a price that a bankruptcy proceeding would have occurred (arguably), for the obvious reason that the fed didn’t want to bail our bear. the beneficiary of this was jpmorgan, so you would have a case there, to be fair.

As usual, they’ve privatized the gains and socialized the losses

well, at least you’re admitting they took losses. look, you’re trying to fit this scandal into a narrative, like ideologues do. first it was corporate america screwing the little guy. there’s some truth lurking in that but to view it purely thru this paradigm is very misleading, for the obvious reason that the screwers got their clocks cleaned, which you now admit.

the other narrative is that the govt will bail them out. again, there is some truth to this but there are also coutertruths, like reliance technologies ( a giant hedge fund) taking huge losses or aqr capital withdrawing its ipo. the people who lost the most $$ were not the ibankers or even the subprime banks themselves (b/c as thomas pointed out, the loans where repackeged and sold on the the secondary market) or most borrowers obviously (since it isn’t their money to lose) but these relatively small unknown hedge funds which is where the real money lies on wall street these days.

this is not say there isn’t truth in what you’re saying, just that is a half-truth, like gerry ferraros weird statements about obama ;-)

this wasn’t a classic case of predatory lending since the predators got eaten alive.

What do you mean, “eaten alive”? They’re getting handouts of taxpayer money to keep them afloat. All that’s happening is that the megabanks like Bank of America are buying the smaller guys like Countrywide.

As usual, they’ve privatized the gains and socialized the losses. If they make money, they scream about having to pay taxes, but they sure come running to Uncle Sam with a sob story if they fuck themselves over and need the rest of us to bail them out.

He’s a well known “libertarian”/Reichwing-apologist/troll over at Pandagon. If you figure out what drives him to be such a dick, please let us all know…

It’s not as if they didn’t do anything wrong.

Thomas: they didn’t do anything “wrong” in the sense that it wasn’t a scam like some of the Internet and telecom ipos, where ibankers sold worthless companies to the general public at outrageously inflated prices.

Here, the lender, ibankers, and hedge funds all lost a lot of money. After all, if you lend someone money and they don’t pay you back, who gets hurt the most?

the brokers did ok but they make doctor and lawyer $$, not ibanker league. some borrowers got scammed others did the scamming (no doc loans). you’re right, like the long therm capital management fiasco, the models are at fault, but this wasn’t a classic case of predatory lending since the predators got eaten alive.

The reason that loans backed by crap were made is that there was a secondary market for them. They could be securitized at all only because they could be packaged into complex arrangements of strips that could be argued to have hedge risks using regional diversity; so that strips of crap were matched with strips of similar crap from different piles. But the models that allowed so much of this crap to get investment-grade ratings presumed no short-term deviation from the historic home-price growth rates. A stagnation, let alone a decline, in nationwide home sales, would throw defaults into the A ranges. The chain of irresponsible lending did not start and end with homeowners and some person at a desk in a branch. It goes all the way up the the major banks that wrote and sold the CDOs and CDO-squared securities that were tailor-made to model as very safe while giving off high returns, but to common-sense scrutiny were highly sensitive to a change in home prices. That’s why the crisis cost Stanley O’Neil and Chuck Prince their jobs. It’s not as if they didn’t do anything wrong.

FWIW, I started joking about hedging my home equity in 2005.

Yes, subprime is supposed to refer to loans to borrowers who are less than perfect, but subprime loans have, according to the Wall Street Journal, those loans were going to many people who should have been getting prime loan terms.

Subprime Debacle Traps Even Very Credit-Worthy