Want to understand the whole banking crisis thing? Go listen to the most recent episode of This American Life:
The collapse of the banking system explained, in just 59 minutes. Our crack economics team—the guys who explained the mortgage crisis, Alex Blumberg and NPR’s Adam Davidson—are back to help all of us understand the news. For instance, when we talk about an insolvent bank, what does it actually mean, and why are we giving hundreds of billions of dollars to rich bankers who screwed up their own businesses? Also, two guys go to New Jersey to look at a toxic asset.
I’m far from being an economist, but this put it all into perspective for me. It also brought home just how fucked we are. This is going to hurt regardless of how it’s handled the only question will be how much will it hurt and that depends on how it’s handled. The idea that we, as taxpayers, will see the government recoup the money they’ve given the banks is probably a bit of false hope given out to make the bailouts more palatable. We’re going to end up paying either way.
The surprising bit is the fact that Americans, as a whole, are at least partially responsible for the mess. Sure the banks shouldn’t have been handing out some of the loans they have, but the truth is most of us have been living beyond our means for a long time now. Which is particularly frustrating to someone like myself who has been doing his best to live within his means for years and is still going to get hurt by the financial melt down.