We have been told by our leaders and representatives that some banks are too big to fail and for that reason the treasury was gutted to rescue some of the largest investment banks from the folly of their investments. This really isn’t true and risk and failure is the very special purview of any investment… there is no guarantee against failure. Nevertheless, the taxpayer bailed out these firms when their risky adventures threatened to topple the richest of the rich but would it have made any difference to the economy if they had been allowed to fail? No, says Sheila Bair formerly of the FDIC explains to the NY Times that Citibank, AIG, and others could have gone the way of Washington Mutual and IndyMac and depositors wouldn’t have lost a penny –

“Let’s face it,” she said. “Bear Stearns was a second-tier investment bank, with — what? — around $400 billion in assets? I’m a traditionalist. Banks and bank-holding companies are in the safety net. That’s why they have deposit insurance. Investment banks take higher risks, and they are supposed to be outside the safety net. If they make enough mistakes, they are supposed to fail. So, yes, I was amazed when they saved it. I couldn’t believe it. When they told me about it, I said: ‘Guess what: Investment banks fail.’ ”

Michael Hudson, president of the Institute for the Study of Long-Term Economic Trends explains to Democracy Now how the Republican proposal dubbed the “cut, cap, balance” bill is horrible legislation and that Obama is manufacturing a crisis to play ball with Wall Street instead of Main Street.

is an awful piece of legislation, and it’s too bad that Mr. Obama supports it. But you could see it all coming even before Mr. Obama took office, when he appointed the Deficit Reduction Commission. He appointed opponents of Social Security to the commission: Republican Senator Simpson and Bowles, who was Clinton’s chief of staff. Obama really believes in trickle-down economics. He believes that Wall Street are job creators, not downsizers and outsourcers and foreclosures. That’s the tragedy of all this.

Now, how—the question is, how can a Democratic president put forth a Republican program? There has to be a crisis. Now, in reality, there is no crisis at all. In reality, the raising the debt ceiling has been done for a hundred years automatically. There is no connection between raising the debt ceiling and arguing over tax policy. Tax policy takes many years to work out. All of a sudden, Mr. Obama is going along with the charade of saying, “Wait a minute, let’s create a crisis.” As his former manager, Rahm Emanuel, said, a crisis is too important an opportunity to waste. And Wall Street doesn’t like real crises, so there’s an artificial non-crisis that Obama is treating as a crisis so that he can put forth the recommendations of the Deficit Reduction Commission to get rid of Social Security that he has supported all along. That’s the problem. He believes it.

In other words, the first black president, elected by progressives is really a shill helping Wall Street plunder the US treasury.