Let Them All Fail

As the results of the stress tests leak out (with all the professionalism of high school rumor mongering) and we know that banks are still severely undercapitalized, I harken back to my September 20 article Overheard At The Wall Street Bar & Grill. This is not a system worth saving.

We’d be a lot better off if government had never intervened, if big banks that blew it had been annihilated by their own mistakes, if your tax dollars hadn’t been thrown down a bottomless banking pit, if we stopped allowing former Goldman Sachs bigwigs to run our Treasury. It was Robert Rubin who helped clear away the regulations that would have prevented the subprime meltdown, and Hank Paulson who orchestrated the great giveaway last fall that Team Obama has simply kept in progress. Both Rubin and Paulson were from Goldman, and Tim Geithner learned from them. At least you know who puts the gold in Goldman: you do, via taxes.

Instead of propping up the corrupt system that did fail, we should have let it disappear and created a new one that wouldn’t. It would have been cheaper, and only the very tiniest sliver of society would have suffered. Almost all citizens would have been fine as long as their deposits were kept intact, which would have been far cheaper to insure than this increasingly catastrophic bailout.

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