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Lesson not learned

December 7, 2011

From Bloomberg:

German Chancellor Angela Merkel criticized market speculation against the euro, saying that financial institutions bailed out with public funds are exploiting the budget crisis in Greece and elsewhere.

In a speech in Hamburg, she hit out at currency speculators, who she said are taking advantage of debt piled up by euro-area governments to combat the financial crisis.

“The debt that had to be accumulated, when it was going badly, is now becoming the object of speculation by precisely those institutions that we saved a year-and-a-half ago. That’s very difficult to explain to people in a democracy who should trust us.”

This story ran nearly two years ago, but I did not see it at first, and for just a moment, I actually took some comfort in Ms. Merkel’s frankness and apparent frustration over the theft by our financial institutions that has been going on. What is ironic is that since the too-big-to-fail banks have been bailed out, the situation has only gotten worse as they have taken the bailout money to bet against those who bailed them out. Why? Because financial institutions know how screwed the countries are, the same ones they advised during their accumulation of debt—which is now crushing Europe.

We are living in unprecedented times folks. The real story here is the fact that government leaders recognized what they created in the too-big-to-fail banks was a real problem two years ago and have done nothing to correct it.

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