What has the economic crisis cost the American people?

“For every dollar the banks earned during the industry’s most prosperous years,” the Times noted, “they have now wiped out $1.06.”

Commenting in measured terms on the collapse of what amounts to a gigantic Ponzi scheme perpetrated by the most powerful financial firms, Richard Sylla, an economist and financial historian at the Stern School of Business at New York University, said, “The losses now are showing that in some sense the profits reported in earlier years were not real, because they were taking too much risk then.”

This was a reference to the proliferation of exotic and opaque speculative financial instruments—collateralized debt obligations, structured investment vehicles, credit default swaps—that were devised by the wizards of Wall Street to generate super profits based on a mountain of debt backed by virtually no real value. On the basis of these paper values, they rewarded themselves with salaries and bonuses in the tens and hundreds of millions of dollars.

Now, standing in the midst of the ruins of their own firms and the onset of an economic catastrophe for millions of working people in the US and around the world, these very same bankers are declaring that they have no intention any time soon of using the billions in taxpayer money handed them by the government to resume lending and unfreeze the credit markets—the ostensible purpose of the bailout measures whose estimated cost to the American people has risen to $2.25 trillion.