Taxpayer ouch: "Bill Gross and Pimco reportedly made a profit of eight billion dollars in one day on the bailout of Fannie Mae and Freddie Mac by speculating on their bonds. This was a wealth transfer from holders of US dollars to Pimco and did nothing on net for the real economy, except to drain valuable resources and mindshare." (more)
This letter from a GOP voting Wall Streeter was published on US News. It is consistent with the current reliance on taxpayer to shore up failed, incompetent, corrupt and unsustainable business practices; basically he is with-holding his money from supporting the GOP unless they give Wall Street a blank check. It appears the neo-liberal conservatism in the US is really premised on the transfer of wealth from taxpayers to industry. That is not free market; that is not liberal; it is not republican.
I suspect the outcome of this will be that the shadow banking industry and investment banks will be regulated or an incoming SEC secretary will enforce the regulations that are on the books. Germany apparently warned the US to start enforcing some of the regulations, but the Bush Administration passed on it; we have not heard of large German banks going to the wall.
This won't be the death of neo-liberalism; too much wealth stems from free markets and their self-organisation. It is likely that he correct liberal response will be to put into place some limited regulations to avoid the type of volatility that continued banks can cause.
