Wednesday, September 17, 2008

Schadenfreude

The irony in this story is hilarious.

"They were always producing negative reports about Venezuela," Chavez told reporters. "They forgot about themselves ... and 'boom!' they were bankrupt."


For years, we've been listening to the Americans trashing Hugo Chavez, but as he rightly points out, the American government and the large financial institutions haven't exactly been doing a good job of stewardship where their economy is concerned.

I may not agree with everything Chavez says or does, but in this case I'd say he's earned the right to poke the current meltdown in the US financial sector.

The tally so far?

Taken over (for all intents and purposes) by the US government:

Fannie Mae
Freddie Mac
AIG

Bankrupt:

Lehman Brothers

Bailed Out By US Government: (not sure if control moved or not)

Bear Sterns

That's quite a list of failures. I'm not actually sympathetic to any of these businesses - they hung their fates on the 'subprime mortgage' hook, and it fell off the wall.

What does surprise me is that they were foolish enough to do that in the first place. It doesn't take a genius to figure out that the terms of the sub-prime mortgages were predatory, nor does it take a lot to realize that giving people credit when they can't support it is going to sooner or later backfire.

The entire US economy has relied entirely on consumer spending since 2000/2001, and what gains were to be had after 2004 were almost entirely based on debt-funded consumer spending. You had to know that this was going to be messy.

It really does put paid to the standard right-wing shtick about good fiscal management. Every time we see a paleoCon government, the economy ends up tanking, it seems. It was a mess in Canada throughout the Mulroney era, and under Bush II, the US economy is being left in a deplorable state as a result of short-sighted policy and a dogma about not intervening in the so-called 'free market'.

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