Recently, there was a very eye-opening interview on Democracy Now! conducted by Amy Goodman with Matt Taibbi. The transcript of the interview was posted today on AlterNet. Here's a small portion to whet your appetite and, possibly, blow your mind.
AMY GOODMAN: Well, we’re seeing these mass protests in Madison, Wisconsin, and there’s other protests that are happening. We see the working poor, the middle class, under tremendous stress, and yet they’re the ones who are being hit hardest, not Wall Street. Explain what has happened. Why isn’t Wall Street in jail?I should note that I recently purchased Taibbi's new book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America, so you can expect to see some quotes from the book showing up here in the weeks to come. Of course, before I get to Griftopia, I'm working my way through Naomi Klein's The Shock Doctrine: The Rise of Disaster Capitalism.
MATT TAIBBI: Well, it’s an incredible story. I mean, just to back up and provide some context, I think, for this Wisconsin thing, and especially for the Ohio thing, given what their governor used to do for a living—
AMY GOODMAN: Explain.
MATT TAIBBI: Well, he was an employee for Lehman Brothers, and he was—
AMY GOODMAN: This is Governor Kasich.
MATT TAIBBI: Governor Kasich, yeah, and he was intimately involved with selling—getting the state of Ohio’s pension fund to invest in Lehman Brothers and buy mortgage-backed securities. And of course they lost all that money. And this, broadly, was really what the mortgage bubble and the financial crisis was all about. It was essentially a gigantic criminal fraud scheme where all the banks were taking mismarked mortgage-backed securities, very, very dangerous, toxic subprime loans, they were chopping them up and then packaging them as AAA-rated investments, and then selling them to state pension funds, to insurance companies, to Chinese banks and Dutch banks and Icelandic banks. And, of course, these things were blowing up, and all those funds were going broke. But what they’re doing now is they’re blaming the people who were collecting these pensions—they’re blaming the workers, they’re blaming the firemen, they’re blaming the policemen—whereas, in reality, they were actually the victims of this fraud scheme. And the only reason that people aren’t angrier about this, I think, is because they don’t really understand what happened. If these were car companies that had sold a trillion dollars’ worth of defective cars to the citizens of the United States, there would be riots right now. But these were mortgage-backed securities, it’s complicated, people don’t understand it, and they’re only now, I think, beginning to realize that they were defrauded.
AMY GOODMAN: Explain what the crime is. Who has profited? Who should be on trial?
MATT TAIBBI: Well, you know, again, the broad crime in all of this was just fraud. They were taking—these banks were taking, again, these subprime mortgages, and they would have these billion-dollar pools of mortgages where, in some cases, 70 or 80 percent of the loans were to people who had no identification or no jobs or who had put no money down into the mortgage. And then they were taking these loans and applying this phony baloney, hocus pocus math, these derivative instruments, and turning them into AAA-rated investments. And they were marketing, again, these securities to, say, state pension funds as AAA-rated investments, which means credit risk almost zero. So they took the stuff that they knew was very, very risky and very, very likely to default, and they were going to the state of Wisconsin, the state of Ohio, the state of New York, and saying, "Hey, this is almost as safe as—or in fact, it is as safe as United States Treasury bonds. You should buy this, and you’ll earn a little bit more than you’ll earn if you buy T-bills." The reality was, they were just taking absolutely worthless stuff and sticking it with these people and then fleeing the scene. This is no different than drug dealers who take a bag of oregano and sell it to you as, you know, a pound of weed. That’s exactly the same scam...