Here are some numbers for you. There were approximately $1.4 trillion worth of subprime loans outstanding in the United States by the end of 2007. By May of 2009, there were foreclosure filings against approximately 5.1 million properties. If it was only the subprime market's fault, $1.4 trillion would have covered the entire problem, right?
Yet the Federal Reserve, the Treasury, and the FDIC forked out more than $13 trillion to fix the "housing correction," as Hank Paulson steadfastly referred to the Second Great Bank Depression as late as November 20,2008, while he was treasury secretary. With that money, the government could have bought up every residential mortgage in the country--there were about $11.9 trillion worth at the end of December 2008--and still have had a trillion left over to buy homes for every single American who couldn't afford them, and pay their health care to boot.
Think about those numbers for a minute. The difference between the problem ($1.4 trillion) and the solution ($13 trillion--which is incidentally almost equal to our country's accumulated national debt, and about as much money in adjusted dollars as we have spent cumulatively on all the wars in our nation's history) is how far under water the banks had gone--how much leverage they had taken on--in their desperate efforts to make themselves obscenely rich. Those are billions of dollars which the banks borrowed or created out of nothing and then put down on rigged schemes and fraudulent speculation in expectation of huge payoffs. And it's worth reminding ourselves that these government bailout funds to plug the holes of a criminal enterprise are not moneys we actually possessed; given that we're borrowing about 1/3 of our government's total expenditures for this year, the bank bailouts represented an increase in debt. (This is the kernel of what caused Matt Taibbi to write Griftopia and Prins to write It Takes a Pillage.)
If the banks had made good on this scheme--which they did for a time--would the country have realized some benefit? Fat chance. Jesus, we can't even get these guys to pay a fair share of taxation on their obscene compensation! But when things turned south the people of this country were told, not asked, to pony up to the tune of $13 trillion to cover their bets. (And actually, we weren't even told. It was just done with no real discussion or public awareness.)
How is this not criminal behavior? By my (admittedly crappy) calculations, $13 trillion divided by a population of 330 million works out to be just shy of $40,000. That's almost $40,000 for every person in this country paid out to the people who already control the great bulk of this country's wealth. This is what was taken from us--now a debt to which each of us is obligated--to keep the financial services industry from taking down our entire economy. More than this, it kept these bankers and executives in unconstrained salaries and ludicrous bonuses despite their criminal activity. We suffer so they don't have to.
How many things are we unable to do in this country because we are told we cannot afford them? Improve our schools? Cover our citizens' health care costs? Pay for a high speed rail infrastructure that rivals, say, Europe or Asia? Fix our crumbling roads and bridges? Put more money into space exploration?
And conservatives have the gall to declare that taxing the very rich is "class warfare," that regulating this criminal activity is "socialism." You know what? Count me in. I'll happily wear a socialism button at this point.