Back in the early 80s, a fellow senate staff member darkly warned me of the consequences to “the American Financial System” if we didn’t bail out the NY banks from their failed Latin American loans.
I asked, “what happened to those loan officers? Were they punished? Tried?”
He grimaced and walked away. Of course, because of their fantastic **success** (millions in new loans as **assets** on the bank’s balance sheet!), they all got promoted long before the bill came due. And, as Sol Sanders testified, all those billions the USG sent from the New York Fed to “ailing” Latin America had a “rubber band” on them — they came right back to the private accounts of the New York banks that had made the failed loans in the first place.
Given the coming depression, Bernanke and my former colleague (who is still at it — Hi, Hans!!) are the civilian counterparts to the military geniuses who decide that they have to destroy the village (or the economy) in order to save it.
But the trough-dwellers thrive. Never forget that. In other countries, in other eras, they were hanged en masse from the street lights. But we’ve come a long way since then, apparently.
Lucky for them.10:45 am on April 3, 2008 Email Christopher Manion