51tvu53eefl_sl500_aa240_.jpgPlease welcome Matt Taibbi, author of The Great Derangement, in the comments — jh

Timothy Geithner says that our vexing economic state is due to bankers taking "risks they did not understand," but that explanation sounds rather feeble in the face of mounting evidence that suggests we’re living in the time of the oligarchs.  Last week, the arrival of Matt Taibbi’s perfectly-timed article on AIG in Rolling Stone let us all know in plain but elegant language just how royally fucked we were: 

By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you’ve never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there’s also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.

While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn’t taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.

No one knows who’s getting that money or exactly how much of it is disappearing through these new holes in the hull of America’s credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.

Chinese premier Wen Jiabao says he’s “a little bit worried” that we’ll pay back their $1.2 trillion in depreciated dollars.  The Europeans and the Canadians don’t want to put any more money into the financial system until we take steps to keep it from being looted all over again.  The only one who doesn’t seem to be worried is Timothy "what, me worry?" Geithner, who has no backup plan if his trillion dollar gift to the banks (with no compensation limits) doesn’t do the trick.

Yesterday white collar criminologist William Black said that we need a Pecora Commission to look into major reform of the American financial system.  Marcy Kaptur echoed that on the floor of the House today.  We sure need something.   Very much looking forward to hearing what Matt has to say on the subject.