In the 1990s, Bill Clinton ended welfare as we know it. After three full decades of the War on Poverty, Americans were sick of federal handouts to the poor. After all, what incentive was there to be an upstanding taxpayer if the feds were doling out cash to idle scroungers? Thus, with a mighty stroke of his pen, Bill Clinton ended America's culture of dependency. No longer would Americans permit self-serving scoundrels to take advantage of the nation's welfare system.
Ironically, in 2008, George W. Bush once again ended welfare as we knew it. However, as opposed to the Clinton initiative, George Bush altered welfare by dramatically increasing spending, while simultaneously redefining the nature of "welfare." Whereas welfare had once been a system of social safety nets designed to moderate distress among the poor, during 2008, the federal government retooled welfare to bail out an entirely new cohort of economic bunglers: corporate America.
Following decades of deregulation, America tumbled into the twenty-first century amidst a climate of intemperate financial speculation. Nowhere was this more pronounced than in the housing market. Ultimately, lending became so frenzied that mortgage companies began approving "liar loans" for high-risk customers. In their frantic pursuit of short-term gain, mortgage companies literally threw money away on insolvent customers. Due to the pitfalls of such practices, banking executives recognized that they needed some means of reducing their exposure to financial ruin. Incredibly, rather than seizing the opportunity to implement more responsible lending practices, bankers elected to diffuse the risk of their unsound business practices throughout the entire financial system. Thus, via the magic of credit default swaps, bankers covered their butts by putting the entire economy at risk.
Of course, the beauty of this plan was that, by imperiling the entire economy, bankers could pursue insanely risky financial practices without fear of loss. Banks that were insured through credit default swaps could rest assured that, though individual banks might fail, the federal government could never allow the entire financial system to crash. Thus, the insolvency of any single bank, so long as its toxic assets had been systemically insured, would invite a swift and certain federal bailout.
In the end, I suppose it's a good thing that Clinton kicked all those poor folks off of welfare, or else there might not be enough room at the federal teat for corporate America.
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