The Extortion Economy

Credit Suisse received a call from the Federal Reserve. The Fed, the voice on the other end chirped, was calling to congratulate the international financial giant on its prudence, Credit Suisse having admirably avoided becoming enmeshed in the subprime mortgage debacle. Bureaucracies not typically being in the business of issuing gold stars, the call was out of character.

The Fed’s representative continued, “Now we’ll need you to buy up some of the toxic assets”. But why would Credit Suisse do that, their employee asked, when they were one of the few major financial firms wise enough to avoid the investments in the first place? The Fed’s response was chilling: “Because someday you’ll need us”.

Welcome to the extortion economy.

The heavy hand of government works in mischievous and devious ways. Troy Senik points out some of the shenanigans.