Why Did The Big Banks Get Bailed Out In 2008 While The Middle Class Lost Jobs And Homes?
{Editor’s Note: This is the 16th installment of a series of articles attempting to address the 32 questions posed by Ron Paul in his recent farewell speech given in front of Congress. Check out the previous installment, "Why Does Changing The Party In Power Never Change Policy?"}In late 2008, many of us had our first experience with a major financial crisis. The housing bubble popped resulting in millions of Americans losing their homes while some politically connected bankers received billions in bailouts. Lehman Brothers' bankruptcy, the bailout of AIG, and a few days of 400+ point drops in the Dow led to a $700 billion bailout package presented by the very same wise rulers who didn't see the crisis coming in the first place.The first iteration of then-Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke's bailout plan failed in the House on September 28th due to an overwhelming response from American citizens. Trusting their gut, and not the bankers or politicians, Americans sent thousands of emails and phone calls to their 'representatives' in protest of a bailout that Rep. Jim Bunning (KY) called 'financial socialism and un-American.' But then, on October 3rd, as they usually do, the bankers and the politicians got their way -- and hundreds of billions in loot from the taxpayer. Thirty-three Democrats and twenty-four Republicans who had previously voted against the bailout supported the banker heist on the second vote. Maybe the threat of martial law had something to do with it.Despite former Goldman Sachs CEO Paulson and Chairman Bernanke's reassurance that the fundamentals of the economy were sound, there were plenty of economists who saw the crisis coming. Peter Schiff made Youtube fame with a collection of hits where he predicted the bursting of the housing bubble -- while being laughed at. And the good Dr.Ron Paul was praised on MSNBC for accurately predicting the crisis in 2003. These Austrians and many others are set to appear in a Spring 2013 documentary The Bubble, which sets out to explain what happened and why. An event that resulted in $7.38 trillion in homeowner losses deserves a good explanation, right?Perhaps the unlimited amount of paper money coming from a secretive central bank had something to do with the 2008 financial crisis. The Federal Reserve's artificially low interest rates, which is really counterfeiting, set in motion the boom sewing the seeds of the inevitable bust; it wasn't the free market. 'Philanthropic' government intervention like the Community Reinvestment Act (CRA) forced banks to make risky loans they wouldn't otherwise make. Here we have the State meddling in the market with distorted interests rates, which serve as important signals to entrepreneurs, and 'well-intended' legislation that interferes in normal market practices.Watch the bubble burst:[youtube http://www.youtube.com/watch?v=nSH9KEF8Rso&w=420&h=315] Why did the big banks, the large corporations, and foreign banks and foreign central banks get bailed out in 2008 and the middle class lost their jobs and their homes?If we look at the 2008 bailout from the Libertarian perspective, it makes sense. Criminal gang activity within the public sector starts just like criminal gang activity in the private sector: through the initiation of force. The common thief may break into your house and steal your valuables, but at least he has the decency to leave you alone afterwards. When the State initiates force, in this particular instance with artificially low interest rates (inflation, counterfeiting, theft), it results in a boom-bust cycle that destroys the middle class. But unlike the burglar who stole your Xbox, the State sticks around, continuously pushing buttons and pulling levers to prop up the failing fiat system, which only furthers the destruction of the dollar. To be sure, there are many bankers and politicians who make a pretty penny off the bailouts and stimulus programs.As George Carlin put it, "It's a big club... and you ain't in it."Receive access to ALL of our EXCLUSIVE bonus audio content – including “Conspiracy Corner”, “Degenerate Gamblers” and the “League of Liberty Podcast” by joining the Lions of Liberty Pride and supporting us on Patreon!
