Friday, October 16, 2009

It Takes a Pillage

Nomi Prins. It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street. Hoboken New Jersey: John Wiley and Sons, 2009.

Reviewed by T. Hatch

A trillion here, a trillion there, the next thing you know.... $19.3 trillion dollars is the current price tag for the bailout of the nation's banking system according to author, and former managing director at Goldman Sachs, Nomi Prins. That robust total includes everything chipped in from the Federal Reserve, the Department of the Treasury, The FDIC, and from Congress, to save capitalism as we know it. Prins has labeled this event as “the Second Great Bank Depression.” It is the single largest transfer of wealth in human history; we watched while it happened.

The magnitude of this brazenness is difficult to get one's mind around. Quantified a little differently, one million dollars in cash (i.e. 10,000 one hundred dollar bills) weighs about 144 lbs. Therefore $19.3 trillion weighs 2,779,200 pounds. A fifty-three foot semi trailer holds approximately 46,500 pounds of load; this is enough currency to fill sixty of these trucks. How far this cash would stretch into outer space if placed end-to-end is an open question.

Prins is clearly angry and it shows in her writing. While this contempt is understandable, and shared by almost everyone who is not a CEO with a Wall Street Bank, it does become somewhat tiresome. If the subject were the Holocaust or the Atlantic slave trade no rational or moral person would defend either practice. But to condemn the evil on every page wears the reader out and detracts from the larger argument.

This is a solid book because it is thoroughly researched and Prins has the technical expertise to make sense of the subject matter. Several themes are developed in some depth in this work. Bipartisanship may seem like it has disappeared from Washington but it remains alive and well when it comes to providing the banking industry with all of the taxpayer funds they need to sustain the current casino environment on Wall Street. The Fed is a highly secretive organization that operates with impunity in providing liquidity to the members of the financial elect. The removal of critical and effective regulation (especially the Glass-Steagall Act) was a disaster. And, allowing banks that were too big in the first instance to further consolidate through merger and acquistion is pouring gasoline on the fire. Finally, since almost nothing has changed structurally in our financial system there is bound to be another melt-down even worse than the current crisis, sometime in the not to distant future.

Prins also provides updated information on her website showing where, and how much, money is going to various financial institutions. It is clear from the information on the website and reading It Takes a Pillage that free markets are anything but free.

On order for Burling Library

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