trunkage said:
Some people have been pointing to issue like this since Lockheed was bailed out in the seventies. Other American banks/ investor groups have been bailed out between now and then but not on the scale of the GFC. They also bailed out a bunch of Mexican banks after poor investments by them, because Americans had a bunch of money tied up in them in '95 (I think). They was a whole heap of bailing out during Savings and Loans crisis and dotcom bust. The noose has been there for a long time. It's been slowly pulled tight.
Some of the worst things from the GFC was: there were hundreds of thousands who committed fraud on mortgage forms (as asked by mortgage brokers). NO one went to jail. The credit agencies were paid off to give higher results on mortgages. No one went to jail. FDIC is meant to protect a certain proportion of your savings, so you didn't go bankrupt immediately during the crisis. But Bush and Obama paid everyone's deposits, including those who made the bad investments. The bailout also made sure that most bad debt was paid out at 100 cents in the dollar. No haircuts. And no cuts to boards, who made this mess. All paid by the tax payer.
You're getting some events and causality mixed up in your head.
With Mexico, you're talking about the debt crisis which was an early '80s-'90s thing. Mexico's debt to GDP ratio exploded on the back of petrodollars to fuel rapid infrastructure development and import-substitute industrialization, so when the energy crisis hit leading to global stagflation, Mexico could no longer service its sovereign debt due to high interest rates. The IMF bailed Mexico out, but a precondition to this was austerity, abandoning ISI, and ratifying NAFTA. Thanks to NAFTA, Mexico initially saw a surge in foreign private investment money, but the Zapatista revolution and nomination and assassination of presidential candidate Colosio "caused uncertainty" in the Mexican "market" (read, American banks and investment funds were in danger of not being able to completely assrape a sovereign state and get away scot-free); Mexico was in danger of defaulting again, and had to devalue the peso and receive another IMF bailout.
If you've ever heard the term "economic terrorism", the situation with Mexico between '82-95 is a pretty clear-cut example of it. Look into the Chase Manhattan bank memo if you want a real glimpse into the psychology of American financial institutions when it comes to outmoded concepts like state sovereignty. Hell, there are still conspiracy theories -- with a fair amount of support -- that Colosio's assassination was at least facilitated on behalf of American lending institutions and/or the CIA.
With the S&L crisis, honestly, it was the global financial crisis' proof of concept test. Wave of expansive deregulation allowed lending institutions to overleverage in risky real estate loans, and junk bonds and securities. Instead of being forced into bankruptcy, insolvent lending institutions were allowed to go into forbearance, the end result of which was further consequence-free overloading of bad debt. Basically Countrywide, except way, way bigger. The primary difference between the S&L crisis and '08 was the repeal of Glass-Steagall, and the subsequent mass consolidation wave.
Which is the key salient issue for today. We never broke up the banks, and never implemented anything approaching sane financial regulation. We did some stuff that
looked like it (Dodd-Frank) but had zero real impact on how the financial sector operates. If anything, today's economy is an even bigger house of cards than it was in '05. TARP and ARRA may have prevented a global depression
then, but it simply delayed the inevitable, and for it guaranteed a bigger, worse depression further down the line.
Google SLAB securities. I called it a decade ago, and predicted then if the financial sector was allowed to do it, inside five years we'd be in a global depression that would make the '30s look like a walk in the park. It started around '16 or '17 if I remember right.
