1) In 2008 and 2009, the Federal Reserve functioned as the central bank for the entire world. Documents pried from the Federal Reserve in November show that dozens of foreign banks and an astonishing number of foreign governments lined up to get handouts from the Fed, who kept its client list a deeply protected secret. The recipients included most of Europe’s major banks: Barclay’s Bank, Bank of Scotland, RBS, Societe Generale, Dresdner Bank, Bayerische Landesbank, and Dexia. Also on the list are the central banks of Australia, Denmark, Mexico, Norway, Switzerland, Sweden, South Korea, Britain, and Japan.
If it had been publicly known at the time what the true, global extent of the crisis really was, the world’s economy would have completely collapsed. This is the biggest story of the year, perhaps of the entire past decade, but it’s received zero attention from the US press.
2) The Fed’s current policy of “quantitative easing” (QE I and QE II) are an under-the-table bailout of US corporations. By buying up medium- and long-term treasury bonds, the Fed is keeping interest rates near zero so US corporations can refinance a record amount of junk bonds that were set to come due in 2012, 2013, and 2014 (a total of $700 billion). Some corporations have been able to refinance their debt by issuing 50- or 100-year bonds. That’s insane. Most companies don’t stay in business for 10 years, much less 100 years.
3) The IMF rises from the dead…just in time to impose austerity measures on Greece, Ireland, and a host of other European Union countries. Of course, the one country that’s most responsible for the global economic crisis—the United States—doesn’t fall under the IMF’s purview. Instead, we get to do the opposite: extend the Bush tax cuts, extend the war in Afghanistan to at least 2014, and run up a record government deficit.
4) The financial industry is too big. Way too big. In the mid 1990’s it accounted for about 17% of the gross domestic product of the US. Now it accounts for over 60%. How did that change happen? Well, blame it on the worst Bush era tax cut ever devised: the 15% capital gains and dividend tax rate. When you give a tax cut for dividends and capital gains, you’re subsidizing the investment industry, which is now mostly composed of speculation: money in search of profits taxed at only 15%. So we get huge amounts of money invested in non-productive areas of the economy: derivatives, currency trading, speculation in commodities markets, hedge funds, and stupid venture capital investments that will never make a profit or provide a necessary service (i.e., Pets.com on steroids). Too big to fail? Yes, but it’s also too big to even comprehend.
5) More banks failed in 2010 than in 2009. The FDIC told us that 2009 would be the worst year of the crisis, but this year small and mid-sized banks continued to fail in record numbers. In 2008 the FDIC closed 25 banks; in 2009 the total was 140. As of November, the total for 2010 was above 150 and counting. Clearly, we still haven’t seen the worst of the crisis.
6) Meanwhile, the biggest banks are still misbehaving. From refusing to modify mortgage loans to using robo-signers and filing defective paperwork with bankruptcy courts, to sending a huge posse of lobbyists to Washington DC to gut the financial reform bill, the biggest banks have been operating as if the financial crisis never happened. And they’ve been racking up record profits and paying out enormous bonuses to their top management. Guess who’s really running this country?
7) Low-interest loans + bad banks = new perfect storm on the horizon. I won’t say more, or it will depress you.
8) Flash crashes are the wave of the future in the stock markets. (Yes, you read that right. “Stock markets,” plural. There are more than a dozen in the US alone.) If you don’t know what a “flash crash” is, then you should sell your stock right now and stick your money in your mattress, because you don’t know enough about investing to keep from losing your shirt. If computers have made it possible for everyone, including your grandma, to play the stock market, they’ve also made it possible for a few big sharks to crash the markets within milliseconds. And nothing’s being done to stop them.
9) Microcredit banks, which were heralded as the saviors of the poor in developing nations, are headed for a major collapse. It turns out that the nonprofits that extended small loans to poor people in developing nations from India to Sub-Saharan Africa have been operating just like the big US banks that caused the 2008 economic collapse. They saw a way to make a profit off the poor, and they went for it. Guess who’s going to pay for it all in the end?
10) It’s the end of 2010 and nobody’s been prosecuted for the mortgage meltdown, banking crisis, or the economic collapse. No one’s even been charged with a crime. Obama’s Financial Crisis Inquiry Commission has turned out to be toothless, powerless, and invisible.
If George Orwell could have seen the real dimensions of our Brave New World, he wouldn’t have been worried about governmental control. In fact, maybe we ought to give Barack Obama a break: there’s only so much you can get away with before your boss gets really pissed off.
The question is: who’s the real boss? Is it Citigroup, Bank of America, Morgan Stanley, and Goldman Sachs? Or is it you and me?
Maybe it’s time to stand up and show ‘em who’s boss.