Tina Brown Quotes
The 2008 financial crisis is usually attributed to vampire squid greed. There was certainly a lot of that. But it was also just as likely to have been caused by the chaos of process created by those big, sexy bank mergers when, in the name of 'economies of scale,' critical members of the trust and responsibility chain were cavalierly eliminated.
Brown, Tina. [Commentary on the 2008 Financial Crisis]. The Daily Beast, IAC, 2009.
She had warned about the unregulated derivatives 10 years earlier, but to no avail. See {637987}. Then when she had been proven prescient in the Meltdown of 2008, Congress was more interested in how she thought they could prevent future problems with derivatives. Some were adopted but not all. The financial institutions claimed that they needed derivatives to hedge positions and hence “stabilize” the system. Of the members of Congress who voted on this issue, almost none understood derivatives and credit default swaps were and how they worked. But some were sure they were bad, and others were sure that they were necessary for stability. Derivatives can, and did, get so complicated that the people who originally created them sometimes cannot tell whether they are at risk or not. Even computer cannot calculate the value and risks of these instruments because the values and risks depend on what happens to other companies or instruments which themselves have derivatives insuring them. See {620038} for a good description of the difficulty.
When the Meltdown hit America, the crisis drew attention to the fiscal solvency and stability of banks in most of the world. The Irish banks were much more overextended than those of most counties and when that came to light there was a bank panic in Ireland. Ahern and the Irish Dail (parliament) decided to bail out the Irish bank at a very great cost to the rest of the Irish economy and people. He believed if Lehman Brothers had been bailed out, as America did with other institutions, the Irish bank bubble would not have burst. It is not known whether he actually meant to use the word “testicles” or he made a gaff intending to use the word “tentacles”. Both have relevant meaning in the situation with a significant shade of difference in meaning between the two.
Volker was trying to reform the excesses of the banking industry in the aftermath of the Great Recession where the banks had to be bailed out by the American taxpayers.
The Meltdown of 2008 and Great Recession that it caused
While Stockman and some others believe that the Meltdown of 2008 would have “run its course” if the government didn’t bail out financial institutions, the very conservative Republican Secretary of the Treasure Paulson and the Chairman of the Federal Reserve told President Bush, Congress, and incoming President Obama that if there was not a quick bailout, the economy of the nation would crash with a depression resulting as bad if not worse of the Hoover Depression of 1929. Bush and Obama and the majority of Congress agreed and took action to avoid that. There is no way of knowing whether they were right or Stockman was. However, the people with the responsibility of governing and safeguarding the nation clearly did not want to take a chance that the advocates of no action might be wrong.
Despite this warning, and the hundreds of billions of dollars of people’s money that was lost on derivatives, and recommendations for not allowing derivatives to bought or sold by institutions who invest the public’s money, derivatives were not outlawed by Congress in its efforts to reregulate the financial industry.
Christina Hambley Brown CBE, is a journalist, magazine editor, columnist, talk-show host, and author of The Diana Chronicles, a biography of Diana, Princess of Wales. Born a British citizen, she now holds joint citizenship after she took United States citizenship in 2005, following her emigration in 1984 to edit Vanity Fair. By marriage, she is legally titled Lady Evans.
