Obama lashes out at the innocent to protect the guilty

Immediately after losing a senate seat to a Republican populist, Obama the next day proceeded to go populist.  He, is, he tells us, going to punish those unregulated wall street fat cats who caused the crisis.

He is going to tax the banks, and restrict proprietary trading by banks.  But proprietary trading had little to do with the crisis.

All the things that caused the crisis are still going:  the continuing misbehavior of Fannie, Freddie, and the FHA, the continuing regulatory pressure on banks to lower credit standards for non Asian minorities, and the continuing government created opportunity for banks to unload dud mortgages on the taxpayer.

Past private misbehavior was facilitated by the hedge fund activities of  too-big-to-fail AIG selling naked CDSs, and too-big-to-be-defaulted-on Goldman and Sach, purchasing naked CDSs.  These activities enabled banks to unload the dud politically correct loans that they made.

The misbehavior of AIG and Goldman was downstream of the center of the problem ? banks made dud loans, and then unloaded them thanks to the hedge fund activities of too-big-to-fail businesses, primarily AIG.  The problem was that the government wanted, and still wants, banks to make dud loans, and will do whatever it takes to get them to make dud loans.  When too-big-to-fail hedge funds ceased to facilitate dud loans, this was a crisis, which crisis the government has swiftly acted to remedy.

Today banks get to unload their dud loans directly on the government. The taxpayer is “stabilizing” the market for unwanted mortgages, which is a huge off the books housing subsidy to minorities, irresponsible borrowers, irresponsible lenders, and bums with no credit rating.

Precisely because AIG and Goldman have stopped their bad conduct, bad conduct that the government needed and wanted, government stepped in, and is now doing exactly the stuff that AIG and Goldman were doing.

The lesser hedge funds did the right thing throughout, and the smaller they were, the more right they were – naturally so, because if a smaller hedge fund screws up, no one bails them out.

The one populist intervention against fat cats that would be both effectual and popular is a special tax or special restrictions on businesses that are too big to fail, and this one populist and popular intervention is not proposed, and is highly unlikely.

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