The True Cost of the 2008 Financial Crisis–$12.8 Trillion

Mark Gongloff: Financial Crisis Cost U.S. $12.8 Trillion Or More: Study

The 2008 financial crisis cost the U.S. economy at least $12.8 trillion, a new study found — and that’s a “very conservative number,” according to the authors.

The study, timed to coincide with the fourth anniversary of the Lehman Brothers bankruptcy, is a direct counter to the banking industry’s relentless warnings of the potential costs of new financial regulations.

The cost of letting the banks wreck the global economy again is far, far higher.

The crisis-cost estimate, generated by Better Markets, a non-profit group lobbying for financial reform, is only a measure of actual and potential lost economic growth due to the crisis. It does not include many other costs, including the costs of extraordinary government steps taken to avoid “a second Great Depression.” It does not include unquantifiable costs like the “human suffering that accompanies unemployment, foreclosure, homelessness and related damage,” the authors noted.

Mark Gongloff: Financial Crisis Cost U.S. $12.8 Trillion Or More: Study


Most people believe that TARP costs 700 billion and that’s what the crisis cost Americans. Wrong. It is 12.8 trillion dollars. That’s a little bit more. We all took a hit.

I’m not going to do an ethics analysis. If you can’t see an ethics problem here, I don’t know what I can do for your thinking.

James Pilant

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Looking for Alternatives after the Wisconsin Vote

Political Animal – Could Climate Hawks Replace Labor?

The big discussion today is the long, seemingly unstoppable death of the labor movement. We seem to be faced with an insurmountable concentration of influence in corporations and the very wealthy. Plutocrats use their influence to swing elections, and then use the power there obtained to further eviscerate countervailing interest groups, so they can strip even more of the country’s wealth into their own pockets. Rinse and repeat. Ordinary middle class non-unionized workers seem to resent public sector unions and covet their benefits, instead of realizing that their lives could be easier if they were so organized. (I also think it’s important to recognize that public unions played no small part in their own downfall through greed and overreach.)

In any case, it seems unlikely that labor is going to rise from the dead. It took the Great Depression to break the power of the plutocratic elite last time around, and with this financial crisis elites have managed to keep the system from completely collapsing, though only just.

Political Animal – Could Climate Hawks Replace Labor?

The attacks on labor unions over the past decades has proven successful in public opinion, in law and in the courts. If progressive politics is to survive, one method would be to find new allies and new terrain to fight on. This isn’t a bad idea but environmentalists are currently under the same kinds of attacks that have impaired labor unions. An alternative media is necessary to put out progressive ideas but more important we need a new generation of progressive thought and investment in think tanks and other organizations to develop long terms plans for the decades. Planning needs to be long term to be effective.

James Pilant

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America’s Financial Sector, Infested with Criminals?

Charles Ferguson: How Financial Criminalization Crashed the Economy, and the Culprits Got Off Scot-Free

It is no exaggeration to say that since the 1980s, much of the American (and global) financial sector has become criminalized, creating an industry culture that tolerates or even encourages systematic fraud. The behavior that caused the mortgage bubble and financial crisis was a natural outcome and continuation of this pattern, rather than some kind of economic accident.

It is important to understand that this behavior really is seriously criminal. We are not talking about neglecting some bureaucratic formality. We are talking about deliberate concealment of financial transactions that aided terrorism, nuclear weapons proliferation, and large-scale tax evasion; assisting in concealment of criminal assets and activities by others; and directly committing frauds that substantially worsened the worst financial bubbles and crises since the Depression.

Charles Ferguson: How Financial Criminalization Crashed the Economy, and the Culprits Got Off Scot-Free

I agree with Charles Ferguson. I’ve been following our financial disasters over the last five years and they are in many ways criminal enterprises, not that the Obama Administration seems to care.

We live in a nation with two standards of justice, one for the little people and one for a privileged elite.

I do not think I need to tell you of the horrible effects of injustice. The criminals will break the law again. The criminals will gain in power. The criminals will become even richer.

That is quite the lesson for our children and the larger society. Don’t work. Don’t labor. Steal. That’s the way of American Investment banking.

James Pilant

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Is a New Movement in American Politics Being Born?

I have been thinking about whether or not the Wall Street Protests now spreading nation wide are the beginning of a significant turning point in American history.

I believe the answer is “probably.” I would prefer a ringing “Yes, this is it!” but after the Obama campaign of 2008, I have lost faith in what are supposed to historical turning points. In that case, we elected a leader who promised real change but who turned out to be a pitiful caricature of his promises. I remember reading Will Durant, an essay he wrote after he felt the disappointment of Woodrow Wilson’s Administration. The Progressives, Durant among them, came out and fought for Wilson’s election only to find he had only limited use for them and their policies. He wrote that you can’t place dependence on any one man when you are part of a political movement. I forgot that lesson of history during the 2008 election. I promise I will not be so foolish again.

But this new movement has several things going for it. One is timing. The United States is suffering under a recession which is highly likely to turn into a full scale depression with the big D. The people of this country who are witnessing the day to day collapse of small businesses, they personally out of work or having direct knowledge of their friends and family out of work are not beguiled by the word of record corporate profits. That money does not flow to them and they are well aware of it. (You are aware the bottom 50% of the citizens of our great democracy have 2.5% of the wealth?)

My local paper is replete with stories of how the real estate market has turned or will turn around – all this while a rational person watches housing prices continue to fall. The local real estate captive paper is more useful for training a dog than as a provider of useful information.

Another thing the movement has going for it is the ability to use the new media effectively. I use a desktop computer and that is the end of my desire for electronics. I don’t want to be communicated with all the time. I like my privacy. But these individuals are quite clever with these new devices using them in a manner more advanced than those who advocated change this Spring in the Middle East and China. They have an amazing web presence.

My third and last reason for the movement’s likely success is the international political climate. The neoliberals of the Chicago School of Economics have been driven from South America and their policies found to be the height of madness and lunacy in Ireland and Iceland. The great philosophical adventure of free market absolutism is dying although I am well aware this beast of prey still has teeth to harm the middle class and poor. Their corporate support is unabated and the money they continue to receive from the looney billionaires who feel oppressed will continue. But being repudiated in much of the world is going to cause the movement many problems most of them long term.

So, I have some hope and a little faith. This may be a turning point in American politics.

James Pilant

Sara Kenigsberg writing in the Huffington Post has a new article:

Occupy Wall Street Protests Ignite Progressive Political Fire In Washington

Leaders at the conference also pressed progressives to focus their energy beyond Obama, highlighting broad dissatisfaction with an administration that has repeatedly derided liberals, dismissing many of the activists present at the conference as “the professional left.” The message from progressive leaders — who included Jones, economist Robert Reich and The Nation publisher Katrina vanden Heuvel, among others — was clear: Neither political party in Washington is listening to working Americans struggling through the worst recession since the Great Depression. Progressives will have to continue hosting events like Occupy Wall Street that bring voters into the streets and pressure political leaders to take action on the jobs crisis. Progressive members of Congress have already taken note, with the Progressive Caucus — the largest alliance of House liberals — endorsing Occupy Wall Street amid the conference cheerleading.

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Does History Repeat Itself – The Stock Market Crash?

“The past is prologue?” Are we in the same place that America was in during the first years of the Depression? I worry that this economic downturn is just the beginning of long term destabilization of the economy.

(You should probably avoid my blog if you want to put a happy face on the economic situations because I find it hard to find things just to be content about.)

I found a wonderful set of history films about the early days of the Great Depression. They provide a lot of insight into how people thought and reacted to the events as they unfolded day by day. We look at what people were saying, what they were reading, what music they were listening to. We can wonder if we wouldn’t have done the same things. It’s a better way to understand history than the summaries in textbooks.

If you listen to the incredible confidence that the moneyed and political class had in the economy and the sureness they had in an immediate recovery, you have to wonder about those in out system today, who say we’ve turned the corner.

We have not.

Part 1 –

Part 2 –

Part 3 –

Part 4 –

Part 5 –

I want to be wrong about all this. I want the economy to thrive, everyone to have a job, and as much as possible for people to become prosperous.

We’ll see.

James Pilant

Hardship Withdrawals Reach Ten Year High

These kinds of withdrawals indicate sever financial distress. They are an absolute last resort in most households.

Quoting from the articleTo be eligible for a 401(k) hardship withdrawal, individuals must demonstrate an immediate and heavy financial need, according to IRS regulations. Certain medical expenses; costs relating to the purchase of a primary home; tuition and education expenses; payments to prevent eviction or foreclosure on a primary home; burial or funeral expenses; and repair of damage to a primary home meet the IRS definition and are permitted by most 401(k) plans.

Forty five percent of those seeking a hardship withdrawal this year got one last year.

It’s another sign that his economy is not getting better. It’s getting worse.

During the last great depression, the government created jobs and increased spending, developing enormous projects like the Tennessee Valley Authority and the Hoover Dam.

America will not recover until there are jobs for every American who wants one.

James Pilant

Photos From Our Last Great Economic Crisis

This picture is from the American Memory Project at the Library of Congress. This is from a photo collection of the Great Depression.

From The Great Depression

Now, take a look at a more hopeful poster –
Speaks for itself, doesn't it?

This is from a huge collection of pictures. You might take a look.

James Pilant