Matt Taibbi and Yves Smith: How the Wall Street Mafia Holds America -- and the World -- Hostage
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And that when the crisis hit, you both had a big drop in tax revenues. You had bank bailouts. And these countries had decent social safety nets so that, you know, things like, you know, unemployment insurance went up. And so the budget crisis they're having is the direct result of the financial crisis. And yet it's somehow being treated as if they're separate events. Like somehow these governments were profligate and that borrowers were irresponsible –
Matt Taibbi: Social safety net.
Yves Smith: Safety net.
Matt Taibbi: Exactly. Right. That's clearly going to be the place that is going to take the brunt of the damage. I mean, I think the most direct example here in America was a lot of unions and state pension funds were primary victims of the sort of broad fraud scheme to sell fraudulent mortgage backed securities.
So they, a lot of these institutional investors were buying these bad mortgages, huge pools of mortgages from all these, the usual suspects, the big banks. And then when they decreased in value and suddenly there they don't have, it's harder for them to meet their obligation and suddenly the finger is pointed at them and everyone saying, "Oh, look at those pens, the state pensioners or look at those union employees, they're they cost too much money. We have to cut their services. We have to cut pensions. We have to do all these things."
Whereas, in fact, they were buying a fraudulent product from Wall Street and that's why they're in such bad shape now. And I think, but politically, the direction is always going to be let's blame-
Bill Moyers: The poor.
Matt Taibbi: That person. The poor.
Bill Moyers: The guy on the pension. The woman on the pension –
Matt Taibbi: Right. And we'll never point the finger in the other direction.
Yves Smith: Well, in fact, the implications, that's true. But the implications are actually quite grim, and they're not being discussed honestly. We're talking about old people dying faster. We're talking about children being homeless and not getting education, and we're talking about grim outcomes like that.
And they're not even part of the discourse. I mean, you look, Greece is the extreme example. But in Greece, the hospitals are breaking down. Garbage is not being picked up. And if you look at the results of the last election, what you saw is even with the efforts to scare people into staying in the euro, you see this polarization where the Nazi Party got seven percent of the vote even after there was an incident in a TV station where there was literally an on-air fight where a Nazi Party member beat up on somebody basically I think it was on camera, you know?
So you've got a real social polarization with radicalization going on. And I've seen a number of reports out of Greece saying that it's basically on knife edge of breakdown.
Bill Moyers: Could it happen here?
Yves Smith: If things, if we have another crisis and things aren't addressed, I could see this definitely happening maybe not nationally but in significant regional pockets. I mean, you know, this is a country full of guns. And people don't like to think about what happens when people are pushed, you know, I mean, the kind of random violence, the sort of, you know, going postal phenomena?
Matt Taibbi: When I was in a foreclosure court last year. I spent a week in a foreclosure court in Jacksonville.