Gregg's Reviews > Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America

Griftopia by Matt Taibbi
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Jan 22, 12

bookshelves: financial-crisis
Read in January, 2012

Disclaimer: When it comes to money and the business world, I rank somewhere between a pacifier-sucking infant and college freshman stoned on paint fumes in terms of comprehension. Ask me about my financial portfolio and I'll just blink and stare at you. Talk to me about derivatives and I'll most likely suffer an acute case of diarrhea so I can run to the safety of the nearest bathroom. I try to keep these things in my head, I really do. But they leak out.

(Sorry--that was not an intentional reference to diarrhea.)

Still, when the Occupy Wall Street movement erupted, I found myself torn. On the one hand, roll my eyes though I might, it was hard to completely discount sneering cable pundits' reports of "lazy slacker deadbeats" or whatever the phrase was, antagonistic at the haves because they worked for what they had. On the other hand, memories of huge taxpayer-funded giveaways are fresh enough even in my mind to make myself wonder, "Well, why not occupy Wall Street?"

I mean, it's hardly a secret that federal bailouts have been doing on for decades, and from what I can tell, the beneficiaries keep reporting record profits. Didn't Reagan, that paragon of free markets, bail out the S&Ls in the eighties? Didn't he install high tariffs to protect American corporations against the Japanese?

And then there's Newt Gingrich, who, when Speaker of the House, presided over a district that got more federal subsidies than any other district in the U.S. outside the District of Columbia. For him to go on about the free market when the dividend returns were...oh god, excuse me. I have to go to the bathroom.

Well, clearly, I'm not the guy to listen to. But I think I found someone who is.

Matt Taibbi's book on the financial collapse and the egregious sins of banking and government that not only led up to it but actively encouraged it has made my list of Books I Have Read that Really Make Me Angry (see Eric Alterman's What Liberal Media? and Joel Bakan's Childhood Under Siege for other examples). It's maddening to get a glimpse of what truly passes for power, as opposed to the four-year cyclic sideshow we call elections, and even more maddening when the truth is groaning with the weight of financial procedure and economic theory that even the author, with his accessible style and breakdown of the basics, admits is a bitch to unravel for the uninitiated.

Taibbi begins his book in September, 2008, when Sarah Palin accepted the Republican nomination for VP and when we were (unknown to the mainstream media) inches away from complete financial collapse. This is no accident, but it doesn't take long to realize that his axe to grind is nowhere near driving distance of partisan. Taibbi starts by arguing that the Tea Party encourages the anti-government-meddling attitude that fuels efforts to repeal acts like the Consumer Financial Protection Agency Act (which he argues is weak at best) while simultaneously waving a negligent hand at big-government bailouts of banks engaging in insane borrowing and speculative gambling that results in economic bubbles, inflated prices, artificial value and eventual busts that cost jobs and livelihoods.

He also points out that the Democrats are just as deep in the pockets of the banks for their elections, and that Obamacare is a huge giveaway to the pharmaceutical companies in a way completely anathema to the president's campaign promises. He ranges from the policies of the Fed under Alan Greenspan, to the mortgage and tech bubbles to the backdoor shenanigans of Goldman-Sachs, Bear Stearns and the other Banking Masters of the Universe. When his points are laced with jargon and technical language, he explains it, and he manages to keep a tone that swings between erudite and angry-guy-at-the-end-of-the-bar:
With the $13-plus trillion we are estimated to ultimately spend on the bailouts, we could not only have bought and paid off every single sub-prime mortgage in the country (that would only have cost $1.4 trillion), we could have paid off every remaining mortgage of any kind in this country--and still have had enough money left over to buy a new house for every American who does not already have one.

But we didn't do that, and we didn't spend the money on anything else useful, either. Why?...Because we're no good anymore at building bridges and highways or coming up with brilliant innovations in energy or medicine. We're shit now at finishing massive public works projects or launching brilliant fairy-tale public policy ventures like the moon landing...What are we good at? Robbing what's left.
With polemic like this, the devil, of course, is in the details, and I can't even hope to know where to begin. Banks pressured the government to raise limits on dollar-to-debt ratios? They ignored long-term risks, even at the expense of investors? They lied to investors? And to homeowners? They took trillions in federal bailouts and walked away rich as hell and scot-free? Rick Santelli is a tool of the finance industry and his Tea Party-creating rant was more full of bullshit than a cattle farm? Elections are a sham? Lousy homebuyers were encouraged and enabled by fake credit ratings? Honest homebuyers were swindled?

In the end, even as my head is spinning trying to keep it all straight, the essentials remain: we've not only been lied to about what's wrecking our markets. We're not even part of the equation.

Even to me, not all of this is exactly news, not in the light of the past year of alternative media. But having Taibbi to take you by the hand and walk you through the financial fundamentals is another matter. Yes, he's vulgar and loads his prose with invective (Greenspan is the "biggest asshole in the universe," for example, while Goldman Sachs guards dubious investment plans with "mid-level state employees with substandard salaries and profound cases of financial penis envy"). Yes, this gets in the way sometimes. But he's pretty persuasive, and I've found no serious rebuttals of his work, beyond the non-denial denials that tend to dog the best muckrakers when they're on to something.

Some other nuggets he dishes out: Mayor Richard Daley's giveaway of Chicago's parking meters to foreign companies (a growing trend that almost included the Pennsylvania Turnpike); the mortgage-backed securities scam; Goldman Sachs holding Texas pensions hostage in order to force the government to bail out AIG; the commodities bubble and how it spiked up oil prices despite politicians' claims about greedy SUV-guzzling Americans and the need for offshore drilling; Greenspan's Ayn Rand-fueled fuckups with the Fed; and pretty convincing glimpses of upper-echelon players like AIG's Win Neuger and his maniacal pursuit of short-term profits at the expense of long-term investors. There's more, but you get the idea: the scams abound, and while we're just figuring them out, these guys have moved on to five other scams by the time the earlier ones hit the press.

Critics argue that Taibbi offers no solutions to the mess. I disagree. Towards the end, he points out that, yes, the economic world is a complicated thing and it takes tremendous amounts of time to figure out the basics. But awareness is a first step, and once you're past that step, you're much less likely to get suckered in by the partisan rhetoric (i.e. drilling for oil in Alaska vs. buying a hybrid). My record of belief in the importance of the informed, responsible voter is pretty clear, and Taibbi shares it with no less zeal:
We still know very little about what really went on during (the past few years), who was calling whom, what bank was promised what... We need to know what the likes of (Henry) Paulson, (Timothy) Geithner and (Ben) Bernanke were doing those key stretches of 2008.

But we probably never will, because the country increasingly is forgetting that any of this took place. The ability of its citizens to lose focus so quickly and to be distracted by everything from Lebronamania to the immigration debate is part of what makes America so ripe for this type of corporate crime. We have voters who don't pay attention, a news media that either ignores key subjects or willfully misunderstands them, and a regulatory environment that bends easily to lobbying and campaign financing efforts.
Getting our heads out of the sand won't fix the problem overnight. But until we do, no solution is possible. So, at the very least, I'll be chugging the Pepto and poring over the business pages. That's one American down.
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Hannah Honey I wish this book were required reading in high schools.


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