Matt Yglesias and Kevin Drum say the right thing about revelations that big banks got very easy terms during the 2008 financial crisis: the real scandal isn’t so much that those banks got rescued as that the rest of the population didn’t.
Recently, in an article for Slate titled “How the Fed’s Generosity Made $13 Billion for America’s Biggest Banks,” Mr. Yglesias writes: “It was always clear that massive emergency lending of some kind was going on and also that some people would regard this lending as a dastardly ‘bailout’ that kept banks in business. But what’s really coming into view now is that this lending was not at a penalty rate. It was ultra-cheap money that allowed banks to earn profits designed to help resolve fundamental solvency problems.”
Mr. Drum, a commentator at Mother Jones, wrote on Nov. 28 that he agrees with Mr. Yglesia’s observations and that “massive financial crashes always produce some inherent unfairness. For some reason, though, we were willing to overlook that unfairness when it was Wall Street that came begging but became obsessed with it when all the rest of us came begging.”
(Image: CartoonArts International / The New York Times Syndicate)
For sure, the Federal Reserve and United States Treasury should have driven harder bargains. I think the political landscape would look different and better right now if the Obama administration had in fact taken at least one big bank into receivership. But in the crisis, money had to flow freely, and the truth is that the gifts bankers received are more a source of annoyance than a source of current problems.
What’s unforgivable is the way policy makers, both at the Fed and elsewhere, basically declared Mission Accomplished as soon as the panic in financial markets subsided and stocks were up again. When spring rolls around, we’ll reach the third anniversary of a declaration from Ben Bernanke, chairman of the Fed, that “green shoots” were making an appearance — and there will still be 4 million Americans who have been out of work for more than a year. Yet there has been no sense of urgency about dealing with unemployment; indeed, most of the elites’ conversation has been about stuff like cutting Social Security payments a decade or two from now.
As Mr. Drum says, that’s the true radicalizing experience.
Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.
Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.
Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including “The Return of Depression Economics” (2008) and “The Conscience of a Liberal” (2007).
Copyright 2011 The New York Times.
Help us Prepare for Trump’s Day One
Trump is busy getting ready for Day One of his presidency – but so is Truthout.
Trump has made it no secret that he is planning a demolition-style attack on both specific communities and democracy as a whole, beginning on his first day in office. With over 25 executive orders and directives queued up for January 20, he’s promised to “launch the largest deportation program in American history,” roll back anti-discrimination protections for transgender students, and implement a “drill, drill, drill” approach to ramp up oil and gas extraction.
Organizations like Truthout are also being threatened by legislation like HR 9495, the “nonprofit killer bill” that would allow the Treasury Secretary to declare any nonprofit a “terrorist-supporting organization” and strip its tax-exempt status without due process. Progressive media like Truthout that has courageously focused on reporting on Israel’s genocide in Gaza are in the bill’s crosshairs.
As journalists, we have a responsibility to look at hard realities and communicate them to you. We hope that you, like us, can use this information to prepare for what’s to come.
And if you feel uncertain about what to do in the face of a second Trump administration, we invite you to be an indispensable part of Truthout’s preparations.
In addition to covering the widespread onslaught of draconian policy, we’re shoring up our resources for what might come next for progressive media: bad-faith lawsuits from far-right ghouls, legislation that seeks to strip us of our ability to receive tax-deductible donations, and further throttling of our reach on social media platforms owned by Trump’s sycophants.
We’re preparing right now for Trump’s Day One: building a brave coalition of movement media; reaching out to the activists, academics, and thinkers we trust to shine a light on the inner workings of authoritarianism; and planning to use journalism as a tool to equip movements to protect the people, lands, and principles most vulnerable to Trump’s destruction.
We urgently need your help to prepare. As you know, our December fundraiser is our most important of the year and will determine the scale of work we’ll be able to do in 2025. We’ve set two goals: to raise $104,000 in one-time donations and to add 1340 new monthly donors by midnight on December 31.
Today, we’re asking all of our readers to start a monthly donation or make a one-time donation – as a commitment to stand with us on day one of Trump’s presidency, and every day after that, as we produce journalism that combats authoritarianism, censorship, injustice, and misinformation. You’re an essential part of our future – please join the movement by making a tax-deductible donation today.
If you have the means to make a substantial gift, please dig deep during this critical time!
With gratitude and resolve,
Maya, Negin, Saima, and Ziggy