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Friday, January 15, 2010  

Gold Stars All Around

Alongside the point I made below about the politics of bank bailouts, I would add that I am surprised at the general sense in media reports that the big financial institutions are somehow chastened by the experience of bringing the American economy to the brink of total ruin and being yanked back at the eleventh hour by the taxpayers. As Matt Yglesias points out, while mistakes were certainly made in the not-losing-billions-of-dollars department, the big banks actually have every reason to count themselves successful:

The really jaw-dropping thing, though, is that even in retrospect [JP Morgan Chase CEO Jamie] Dimon has been a nearly perfect CEO and JP Morgan basically a perfectly-run company. During the boom, they all got filthy rich. During the bust, a bunch of their competitors went out of business. Thanks to the bust millions of people around the country are now unemployed. Hundreds of thousands of children have been pushed below the poverty line and are suffering consequences from it that will last a lifetime. The entire younger generation is going to suffer because of the massive debt-overhang. But Dimon and the Morgan crowd are still getting filthy rich in part thanks to government emergency measures designed to mitigate the crisis.

Obviously I don't care about free market purism when it came to the bailouts, since free market purism is a moral and empirical disaster. But I did care about the social justice and moral hazard problems associated with ladling out endless cash to the stupidest bankers in the history of stupidity. And lo, despite making substantial improvements in the composition of our elected leadership with respect to social justice, the people who have lost livelihoods, homes, or the chance to get more education are all still in very bad shape. Meanwhile Jamie Dimon is richer than God, still employed, and may even get another chance to hold a financial gun to our collective head when he and his jolly team of incompetents leverage their way into another disaster.

posted by Benjamin Dueholm | 3:09 PM
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