Economist says banks could be scheming for a bailout

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Bloomberg is reporting this comment from Washington University in St. Louis economist, David K. Levine:

"I suspect that part of what we’re seeing in the freezing
up of lending markets is strategic behavior on the part of big
financial players who stand to benefit from the bailout."

Earlier this week, I linked to the Credit Suisse First Boston memo from the California Energy Crisis, in which the company essentially acknowledged that blackouts didn’t have much to do with power shortages and instead were strategic moves to scare politicians into to ponying up vast quantities of cash.

Let’s start at the end: the rolling blackouts in California are more
likely intended to soften up the Legislature and the voters to the need
for rate increases than they are indicative of a permanent "when the
lights went out in California" scenario.  — January 18, 2001

The rogues who gave California its energy deregulation debacle (the since-jailed leadership at Enron, other energy producers and traders, the state utilities and a host of investment banks) were willing to plunge California into darkness for a mere tens of billions of dollars in bailouts, overpayments and long term contracts.  I can only imagine the depths to which the big bankers are wiling to sink our economy to turn their business failure into the richest bailout in America’s history.

There’s a patriot sitting in some Wall Street office who is going to blow the whistle.  Hopefully before taxpayers start forking out the billions. (If you’re holding onto the memo, you can send it to [email protected].)

Consumer Watchdog
Consumer Watchdog
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