Subscribe to Common Dreams News Updates
Most Popular This Week
Popular content
Today's Top News
As Big Banks Fall: The Bear Has Fallen and the Bull Is Gone
Why the Financial Crisis Is Not Just About Finances
NEW YORK -- If you walk through London's High Gate cemetery and wander over to the grave of the late Karl Marx and then listen closely with your ear to the ground, you might hear a repetitive murmur of the phrase "I told you so" in a distinctly German inflected accent.
You might also see the earth moving ever so slightly as what's left of the bones below turn over in the realization that capitalists, not the proletariat, are the ones bringing down the system.
Fellow blogger Ian Williams, a former disciple of the bearded prophet, is now chanting, "Shareholders of the world unite" in recognition of the way the world is changing. The fall of Bear Stearns and the collapse of confidence in our financial system is a profound turning point.
When you turn this rock over -- and not just England's Northern Rock bank that failed earlier -- you see a seamy swamp of delusion and deception, with `Wall Street worms slithering off to their condos in Colorado or their hangouts in the Hamptons.'
This could be the end of an era of legalized greed, aided and enabled by the deregulation policies of the Busheviks with the active complicity of so many bi-partisan worshippers at the temple of the Free Market. Alas, it is not just Republicans who were implicated or who rely on funding from Hedge Fund and FIREcrats: the Finance, Insurance and Real Estate industries.
If you were a fellow banker on The Street this past Sunday, you realized that your master of the universe days may be over. "Layoff Fear in Stox Shocks" was the headline in the New York Post. Prosperity has been displaced by panic.
8000 jobs had been lost before "the Bear," the nation's number #5 broker, was sold at a ridiculous discount, bought with $30 billion pumped through JP Morgan, who picked up what was left of the firm at $2 a share. (It had been trading a day earlier at $170).
Many more and other dominoes are expected to fall.
Some experts believe that JP Morgan overpaid because the shares they bought actually had no value. The money was used to monetize junk sub-prime holdings not yet written off-- so much for the doctrine of moral hazard" that holds speculators should not be rewarded. In fact, there is evidence not only of unethical practices but Enronesque illegal ones.
A week earlier, Bear Stearn's former CEO bought a Manhattan condo for $28 million, no mortgage needed. In December, compromised Wall Streeters walked off with $31 billion in bonuses, just a billion below the record set a year earlier.
The resumes are flying now with fears of mass layoffs spreading. The people who will be hurt initially are the lower paid back office workers.
The pain will not remain there.
How you understand these fast moving developments depends on where you sit in our highly stratified culture and how much you know about why a Wall Street crash can ripple into all of our lives.
If your name is Hank Paulson or Ben Bernanke, you have been huddling in alarm with the White House's "Plunge Protection" team coming up with inventive new rationalizations for printing new money and bailing out bankers. With the President directed to sound upbeat, the ex-Banker and former Professor are contradicting all their earlier assurances that the market would correct itself.
If your name is Max Wolff, a New School professor and brilliant young economist, you were on a panel at the Left Forum in New York about "the Coming Depression" explaining how the derivative game had been repackaging fraudulent mortgages and then, slicing, dicing and "Securitizing" them off quickly with 72 hours to buyers all over the world.
Those buyers were mesmerized by the high returns but then found there were no assets behind these "asset-based securities." Once turned on by Wall Street, they are now turning on it. The law suits blaming our Suits are coming. Foreigners have lost their confidence in how assets are valued.
If your name is Nicklaus Skaggs of Vacaville California, you are one of tens of thousands of homeowners who are walking away from your homes and their mortgage burdens.
Reported the San Francisco Chronicle
"As their home values tumble and their mortgages rise, these "walk away" homeowners" decide to cede their houses to their lenders. "It's throwing good money away after bad" to pay an escalating mortgage on a home that's plunging in value, said Army Sgt. 1st Class Nicklaus Skaggs.. He and his wife, Tishara, stopped paying their mortgage in February. They signed up with a new company called You Walk Away to help guide them through the multi-month foreclosure process."
Other homeowners are so angry that they trashing or burning their own homes. Still others are moving into tent cities springing up near Los Angeles. It took a British media outlet, the BBC, to report on that.
Has our media prepared us for this disaster? Yes, there are headlines now since these developments can't be ignored. But where were the TV networks and the press when all these practices which we now hear denounced were first taking place and building steam?
Where were the warnings and the outcry against the engineered dropping of the dollar and the likelihood that the interest rate cuts would drive up prices and lead to the stagflation we are now experiencing. Unfortunately this was not a celebrity sex scandal. Those worries were buried.
The business press told us about the ups and downs of the market, not how the underlying debt burden and all the subcrime game playing could destroy our economy. Concludes Dean Starkman in the Columbia Journalism Review, "Today, as the credit crisis unravels, the business press can be fairly blamed for inattentiveness to the growing strains on middle-income borrowers. Maybe that's why so many middle-income people don't read it."
If they had, they would have seen the chorus of complementary coverage of Alan Greenspan who was lionized as a genius. Now critics point to how his policies created the housing bubble. Today, he says the economy is at its "worst points since WW2." One blogger dismisses him as "Mr. Obvious."
I met him -- and have less amusing words to describe him.
But what are we seeing in the rest of the press and TV media? More and more ads selling us deceptive mortgages and credit cards. The media is always more about selling (and buying) than telling the truth. Their failure as watchdogs helped bring about this economic failure not to mention the Iraq War now marking its fifth year. And they make money on the misery. Even today, it's hard to get a critical narrative out on these issues. Some months ago, the Independent Film Channel told me they would broadcast In Debt We Trust (Indebtwetrust.com), the documentary I made warning of the crisis. Late last week, they killed it. No real reason given. On the same day, John Conyers, chairman of the House Judiciary Committed had staffers meet with me to schedule a screening on the Hill. He thinks members of Congress should see it urgently.
This is part of the media-reality disconnect we have to confront. You can't trust the financiers or the media that gave them a pass. We have to arm ourselves with information and prepare for the possible catastrophe to come.
News Dissector Danny Schechter edits Mediachannel.org. He is looking for a publisher for WE ARE SCREWED, a new book he's written about the crisis. Comments to dissector@mediachannel.org
85 Comments so far
Show AllThis goes back way farther than Greenspan. Milton Friedman and the Chicago School of Economics is ultimately responsible for reversing the Keynesian "regulated market" approach that had held sway since the New Deal.
At least according to Naomi Klein, author of "The Shock Doctrine." It's a great read if you want to understand how deep this disease is entrenched in the world financial system.
The financial crisis that is currently erupting is THE result of a quarter century of financial industry deregulation, combined with a quarter century of increasing corporate welfare. Greenspan enabled this environment and Ben Bernanke is institutionalizing it.
Every time a financial crisis arises, the reaction is more deregulation which in turn results in subsequent crisis' that keep costing US taxpyers more and more to bail out.
The ONLY solution is to immediately re-apply New Deal era regulations on the financial industry. To date nobody is even mentioning that solution, so the next financial crisis will cost US taxpayers even more .
fall mountain, just dont fall on me
What is the price of rope these days?
When the press is reporting that the surviving investment banks have 'better than expected quarterly earnings', does that mean they're profitable after inflation is taken into account? And who exactly were the accountants who audited those 'better than expected' results? Did they perhaps once work for Arthur Anderson?
It doesn't affect the veracity of the other
statements, but the price of the stock a day
earlier was $40 (high of $45 during the trading
day) and a yearly high of $99.90. Picking numbers
out of the air like $170 is something we expect
the repugs and friends to do, not something we
should be doing.
The economy is collapsing and there's no more cheap energy to pull the industrial base out of it. Inflation (the gov't printing more and more worthless money) is driving up the price of everything, especially fuel and food. Had enough imperialism yet?
It's time to transition to our energy-constrained future. Let's start living locally.
There is a real chance, now that the excrement has hit the fan, that the whole rotten and phony economic system of this country - a generation in the making - is going to go over the cliff and crash on the rocks 400 feet below. When McCain debates whichever Democrat gets the nomination and yells "terror", "socialism", "regulation" . . . what is that 50% or so of drooling, knuckle dragging morons who gave us George Wanker Reagan and now George Wanker Bush going to do? Don't bet on them taking a flame thrower to this house of cards. They'd rather have a beer with McCain than any Democrat. The Republicans should change their mascot from an elephant to a shovel - the one they've dug this nation's grave with.
"Some months ago, the Independent Film Channel told me they would broadcast In Debt We Trust... Late last week, they killed it. No real reason given."
Really? Could it be that IFC "partnered" with Blockbuster about the same moment - Blockbuster as in Viacom as in Bushcultist Sumner Redstone? Think that might be the reason?
Dan Rather worked for Redstone, too. Remember?
On the IFC website it says "IFC is ALWAYS uncensored." Ha. Ha. Ha.
The calf was fatted, dressed for the kill, paraded before the cannibals - and then eaten. Although civilized people would hardly call their practices "dining". The carnage after the cannibals were thru was unbelievably ugly - so they sent the clean up bill to us.
BTW, if someone wanted to take an entire population back to the 19th century, the first thing they'd have to do is steal all their money and force them out of their homes. Not so difficult when you own the entire political class, the media, the courts, the regulatory agencies, the military, and the WH, and Wall Street of course.
After the general population is pauperized, illiterate, short life expectancy, and sick (due to the poisoned food, water, earth, and air), the Slave Masters can do anything with the meat they want. And they do.
As things turn increasingly barbaric in the US and the fires start to burn, you may hear talk of a domestic Phoenix Program for dissenters. Just ignore it. Mere rumors. This is America. Couldn't ever happen here. COINTELPRO was after all, just a momentary mistake in judgement by a few "bad apples", quickly corrected. Of course.
Pieces of 8.
With just the amount of the Iraq budget of 2007, $138 billion, the government could instead have provided Medicaid-level health insurance for all 45 million Americans who are uninsured. What's more, we could have added 30,000 elementary and secondary schoolteachers and built 400 schools in which they could teach. And we could have provided basic home weatherization for about 1.6 million existing homes, reducing energy consumption in these homes by 30 percent.
But the economic consequences of Iraq run even deeper than the squandered opportunities for vital public investments. Spending on Iraq is also a job killer. Every $1 billion spent on a combination of education, healthcare, energy conservation and infrastructure investments creates between 50 and 100 percent more jobs than the same money going to Iraq. Taking the 2007 Iraq budget of $138 billion, this means that upward of 1 million jobs were lost because the Bush Administration chose the Iraq sinkhole over public investment.
http://www.alternet.org/waroniraq/79988/
The Iraq War Is Killing Our Economy
I simply want to reduce each and every corporation to the size where I can drag it into the bathroom and drown it in the bathtub.
The way to a prosperous economy lies at the bottom of the economic pyramid. The name of the place where you pump the money in has a big sign above the door. JOBS
When I was a kid, and it was cold and rainy outside, we often stayed in and played Monopoly. I enjoyed all the buying and selling and trading, there was a certain flow to the process. But eventually one or two players managed to "monopolize" the board and the game became boring, finally when someone landed on Park Place and if it had a hotel on it, the game was over.
I don't know the players that now own hotels on Park Place but America just landed there and there's no money left to pay the debt. The game is over.
When financial advisers and editors from Bloomberg TV are saying that we are facing a possible "catastrophic" meltdown, that the situation is "dire", then you know that the system is about to blow. Those guys never talk like that.
"WE" are fiscally ABUSED! Economically victimized with the splintered broken-off handle of a worn out broom. The middle class is stripped off equity and plunged, along with the working poor, into long-term economic indentured servitude. The next reports on the growth of the gap between rich and poor will stun even the rich. Bear-Sterns was 1/3rd owned by its employees, who were financially ruined along with investors in Bear Sterns because some ONE(S) engineered a run on the investment bank that eliminated its liquidity in less than 8 working days. 14,000 employees have no idea if they will have a future. The layoffs will be staggering once the deal is "approved." This is going to continue.
What is needed is a Forensic Audit of the United States of America simultaneously with a Forensic Audit of where, exactly, the several hundred Billion the Federal Reserve pumped into the system went and EXACTLY WHO got it. Whomever runs on that plank wins, be it Republican or Democrat.
Jan Steinman and JohnF. Butterfield, Amen! Good posts.
P.S. Jan,
Did your group ever check out www.ringingcedars.com?
rebelnow, You bring back many memories of the monopoly games we use to play. The world has finally wised up to the subterfuge of the American financial scandal. We haven't seen nothin' yet!
Bank regulation has been under assault for decades, starting with states racing to lift interest caps on deposits and given a big boost by - who else - good ole Bill Clinton signing the interstate deregulation bank act in 1993. The final blow was - again Bill Clinton - signing the repeal of the Glass Steagall Act in 1999, enacted in 1933 so we would not have another Wall St crash and barring banks from becoming investment brokers. So guess what, here we are. And guess who's picking up the tab? Right again, the taxpaying suckers while the CEOs run for the hills with their ill-gotten gains, and all that extra printed money to pay for all this sends inflation through the roof. Of course, hyperinflation isn't being registered, because food and energy are excluded, being considered "volatile". Those just happen to be the two items we can't cut back on, but oh, well... Just like living in alcoholic families, it's the appearance of success that counts.
I really don't know how Obama would deal with this disaster, but he wouldn't ignore it like Hillary or McCain, both of whom have gotten rich under these policies which Hillary's husband Bill signed into being. So, how many of you want more of the same?
kathyodat
and who's got a plan out of the mess?
"Its the economy stupid" - was expressed dyslexically.
"Its the stupid economy" or
"Its the economy of stupidity"
Another world is possible - the economy of reciprocity which, underneath it all, is what actually functions. Human beings rather than 'consumers'. Profit depends on the negation of value in acquisition and production in order to sustain margin at the 'product' end.The concept of profit as 'necessary' will probably go down in history as one of the most delusional constructs ever twisted by humankind. It is the materialization of the presence of negation.
I read this out loud to someone in the room and when I came to this passage ...
"A week earlier, Bear Stearn's former CEO bought a Manhattan condo for $28 million, no mortgage needed. In December, compromised Wall Streeters walked off with $31 billion in bonuses" ....
he said "What are their names, and where do they live?"
Good question, Kloro. I say cut off the financial hemorrhage to Iraq and war contractors, tax the rich - they've got all our money anyway, reduce our trade balance - people can't afford to buy anything anyway, use tax cuts and deficit spending to rebuild American industry and infrastructure and support education and we can grow our way out of this mess. Over time. We're facing pain no matter which way we turn. But right now these rescue attempts are not solving any long term problems. But, that's the American way. Never think about the future. Well, that's my take, I'm no economist.
kathyodat
You're funny, Gene Therapy!
kathyodat
These people who are walking away from their homes, no jobs, layoffs, is there any reason for them or anyone for that matter to stay here anymore? The dollar is in freefall, the debt load of this country is staggering what with multiple bailouts over the last several decades and military spending. The attitude is 'I'm getting mine, devil take the hindmost.' Do people here really want to live that way? We are told that life here is so much better than anywhere else. But in how many other countries is the sense of community so nonexistent?
The "business press" is always just cheerleaders for business. They rarely do any hard reporting. Typically they just report press releases by companies and do very 'softball' interviews with CEO's.
Remember, these are the people who were also praising Enron for being an innovative and profitable company right up until the crash. Same again for this.
Also remember, the mortgage firms and the credit card companies invest heavily in advertising on these same media outlets. There's not a chance that a 'business reporter' is going to be critical of these same firms and thus risk that revenue.
BeForKids,
kathyodat, Good points but didn't Ronnie Raygun deregulate banks? If I remember correctly, banks were only charted for the states they were in and couldn't branch out with interstate branches.
I second the Gene Therapy comment. There's some angry folks in Dodge.
nicnews, Wait until we need a wheelbarrel ful of money to buy a loaf of bread.
And, if they can't afford to buy bread, "let them eat cake!"
I guess history is a repeat of cycles.
peoplefirst,
You wrote:
Picking numbers out of the air like $170 is something we expect the repugs and friends to do, not something we should be doing.
There was an error but the number was not picked "out of the air." It turns out that $170 was the all-time high. I suspect Schechter made a sloppy edit and did not later doublecheck his work. But it is still a very good piece of writing.
As for the substance of the article, haven't the capitalists proved that the "free market" and capitalism itself go against human nature? That is what they are always saying about leftist policies, but I think the shoe fits better on the other foot.
These are great posts. Someone above mentioned "In Debt We Trust" and here's a link to a rather long and related two-part video, with the last 30 or minutes being the most important: it's near the bottom of the page.
http://www.democracyforum.co.uk/international-politics/40195-who-controls-our-money-supply-who-money-masters-5.html
This is a good article on bank deregulation.
http://www.counterpunch.org/martens03172008.html
I do remember one back to the Reagan era that let banks go across state lines. But the really key one to this crisis is the one pushed through by the Clintons in 1999. That repealed the Depression era reforms known as Glass-Steagal. Before the Clintons changed that law, there was a firm block between a 'bank' acting like an 'investment firm'.
Say thanks to Clinton and the Dems and the way they'll do anything for anyone who makes big bribes ...uh, contributions, to their campaigns (or Presidential library or legal defense firms or ....)
Dump the Greenback
dump your green backs now
dump the inflated fickle Fed fiat
no need to prime the war machine
dump the greed backed green
the renegade rogue is running lean
dump the Fed... dump the feeble fiat
the winking all seeing eye knows
the pyramid is standing on it's head
strength is it's destruction running red
like the bankrupt eagle bird of prey
perched for 'guns and butter' prayer
for destruction is it's only faire
is bleeding blood and ink these days
dump the green back
unwind the doomsday clock
put 'guns for butter' on the docket
send our 'war fare' leaders to the Hague
but save the bank room banker boys the plague
COMarc, You beat me to the punch. I was just going to post Martens' article. Good observer.
empirePie, I like the poem.
Here's another article from the 'International Tribune' about the coward-in-chief's comments on the economy.
www.iht.com/articles/2008/03/18/opinion/edcollins.php
Like any Ponzi scheme, the Global Credit Balloon should have worked out just fine... If it wasn't for those meddling kids...
By some accounts, we are witnessing the end of an era of speculative lending that dates back to 1694. Yup, 1694. Type the number into Google News, a couple of current articles take on this idea.
The shock doctrine is now being applied to the US. Create a massive debt and economic collapse which shocks people, then sell off(privatize) all public assets for pennies on the dollar. Those same oligarchs who deliberately destroyed our economy will now buy up all public assets on the cheap at some future date. We are not far away from Yelztin's Russia, where oligarchs used the state to buy up public resources for a tiny fraction of their value. Create a state of shock through deliberately destructive policies, then move in and buy up all the public resources for a fraction of their value.
The Bear may have fallen but the Bull has not fully gone, the Bull shit remains.
Humpty Dumpty played on the rising Wall Street tide
Became a financial genius and stock broker guide.
On peoples debt he grew mightily fat,
Until his big bubble burst with a wet splat
As the cockroaches and rodents escaped from inside.
It is interesting, is it not, to see the champions of the "Free Market" aided and abetted by the political party of "Personal Responsibility" running to the government for handouts,oops, I mean bailouts.
President Bush should be the poster child of this bunch. He has never suffered the consequences of a lifetime of bad decisions. There has always been someone there to bail him out.
Are the slicers and dicers of toxic financial sludge going to wind up in tent city along side the poor folks who have lost their homes? As much as we'd like to see these bastards selling oranges by the freeway on-ramps and living in cardboard boxes, I wouldn't bet on it.
As thru this world you ramble you meet some funny men
Some will rob you with a six-gun, some with a fountain pen
As thru this world you ramble and thru this world you roam
You'll never see an outlaw drive a family from their home.
Woody Guthrie, 1936
I think the poems here are so cute. Here's my first:
There once was a world that loved credit
To pay all their bills, they would get it
When the credit ran dry,
The banks said "bye bye
The money's all ours, so forget it!"
McDee,
You wrote:
President Bush should be the poster child of this bunch. He has never suffered the consequences of a lifetime of bad decisions. There has always been someone there to bail him out.
Mr. Arbusto has come a long way from bankrupting small oil companies. Now he is bankrupting whole countries, and, if he manages it just right, he might wreck the entire world economy.
The DOW is still over 10,000 (what is it at 14,000 now?) and we do have actual asset-backed value in infastructure, resale and manufacturing in this country.
Of course, if the DOW goes back b.c. (before Clinton) to under 5,000 (and similar instances in other markets).....
Of course, our infastructure is being maintained, but at a seemingly pitiful rate, and what if the real price of gas doubles
Of course, now that major parts of our infastructure are being privatized and sold offshore...
I can sometimes forsee a 1930-40's lifestyle in our future, one with small homes filled with many people, one old car, no college, less beef, less medical care, no retirement, maybe even breadlines.
But we do have educated people in this country. We do have infastructure. We have a lot of things.
Peaceman, from what I read, deregulation was a piecemeal affair, beginning in 1975, but the final step in deregulating interstate banking was signed in 1993 by Clinton. And his repeal of Glass-Steagall essentially guaranteed the disaster we have today. Regulation has a purpose. Business greed cannot restrain itself, as has been repeatedly proven.
kathyodat
The Elder Bush and "The New World Order", and then the Billaries.
They gave us Deregulation, and Privatization. Through the Bushco
Corporation called, "The Carlyle Group", they have bought out most
businesses in this country. They are now buying companies in France.
They have ruined our industrial base and will do the same in Europe.
Where are the Presidential Candidates on this issue that is clear as
daylight.Where is the Mainsteam press?
Paul Craig Roberts has a great article on CounterPunch "A Bankrupt Superpower: The Decline of the American Empire." Sorry to play the pessimist, but I see the return of Hoovervilles.
What a bummer.
I read the headline that the Bull is gone, and thought Cheney and Bush had resigned.
Cost of an illegal occupation: $1-3 trillion
Cost of junk bond debt: $52 trillion
Cost of foreign debt: $300 + billion
Seeing George the Inferior, Dick "the Destroyer" Cheney, and Ben "I am a Bad Ass" Bernanke go to jail: priceless.
Our country is financially broke.
You realize we've been conned, don't you? We've been set up by the money-grubbers who weren't satisfied with being ultra-rich, they wanted to be obscenely rich! And they did.
And now, while their con is fragmenting, are they the ones who are paying the price? No way. They knew what was coming and sold out at high prices and have their...no, our money safely stacked away in gold ingots.
No, we're the ones who'll pay the price, the workers, the serfs, the ones who always get conned.
Of course, we could always take our money back, couldn't we?
www.dangerouscreation.com
Funny thing! A couple of you are absolutely predictable. I wondered how you would try to slam Hillary for the financial problems. I would have thought that you would talk about the war, but instead you went back to Bill Clinton's administration to find the cause for the bear market. If anyone did a story on maple trees dying, I am sure that there would be some of you writing about how Hillary is to blame, and probably all by herself. And, of course, Obama would have voted against maple trees dying. What a laugh you are. . .
What won't these wallstreet bankers and brokers think of next in order to fleece the simpleminded taxpayers and investing public! Now they can finance their crooked schemes with your tax money by borrowing it directly from the Fed at a low rate of interest until their next crooked scheme falls apart. Meanwhile they will use your money to pay themselves billions in bonuses and salaries. All thanks to a little stock manipulation and intimidation of Administration officials. This is the second time in recent days that they have gotten their way by setting the market up for a crash over the weekend. The Fed (in addition to opening the vaults to your money ,not yet printed,) lowered interest rates to the banks by 3/4% today in addition to the 1/4% over the weekend, and wallstreet rejoiced. A 420 point advance by the market in the DJ. Now they can steal all they want from you and you don't even have to invest a dollar. Now they can steal from ordinary taxpayers, not just investors such as the dopes who believed in Bear Stearns. $170. in mid January 07, and $2. on Sunday night, 3/16/08, after closing at $30. Friday, down from $60. on Thursday. And who gets the prize? Why who else but the big bank Morgan-Stanley with the Fed's blessing and your money.
Of course we must remember that "The Fed" is not really the Federal Government. It is a group of private banks empowered by the Federal Reserve Act of 1913 to have money printed and lend it to the Government and get paid interest on the money by the taxpayers, another interesting story in itself.
As posted earlier by another contributor, we can thank good old "smiling" Bill Clinton for killing the Glass-Steagall Act which kept Banks separated from Brokerages. Bill Clinton must have heard what some famous movie actor said, that you can do any thing you want and get away with it as long as your smiling while you do it.
Well thanks to all the players, Bernanke, Paulson, Bush et al for postponing the inevitable, but building a house on sand doesn't work.
A good reference is an article in MARKETWATCH today "Brokerage firms cheer access to government loans" by Alistair Barr.
It is interesting to note that interest rates aren't coming down for the little guy.
Here's an article that gives some insight into the way the sub-prime securities avoided market valuation. It includes the quote below.
http://www.informationclearinghouse.info/article19555.htm
"The Feds effectively handed a Federal Reserve ATM card to JPMorgan to funnel your tax dollars to the teetering Bear Stearns brokerage firm to address counterparty risks that have been building for at least 4 years as the Feds snoozed. Counterparty risk is the trillions of dollars of insurance contracts (credit default swaps and other derivatives) taken out by Wall Street firms on each others' (counterparty) bonds, bundled mortgage and commercial debt (collateralized debt obligations). The firms have used unregulated over-the-counter contracts to perform this risk transfer alchemy and funded their own company, Markit Group Ltd., to take the place of a regulated exchange for price discovery."
Nice going, American bankers.
BeForKids, Thanks for the reminder about Clinton and Glass-Steagall.
I think you nailed it on the head with, "Regulation has a purpose. Business greed cannot restrain itself, as has been proven." Excellent, Kathyodat.
I'll add, "A capitalist has an insatiable desire for more and more, and is never satisfied."
Great points: OLD GOAT, PROFESSOR TRUTH & CLAUDIUS.
HENRI: I remember when Phil Donahue had on Stephen Pizzo, co-author of the book, "Inside Job: The Looting of America's Savings and Loans." That was the blueprint, my friend. Enron did a similar use of bait and switch to work deregulation to its fiscal advantage; then Arthur Anderson's accounting firm tried creative use of numbers games, too. By the time this mortgage crisis became the pyramid of falsely valued entities, these types of capitalists were already expert in the ways and means for having their "investments" backed by us taxpayers. Add this to the billions that have either disappeared, gone to unregulated/no bid contracts in Iraq, and/or war profiteers, the taxcuts to the rich, and the whole recipe has been one of unmitigated disaster for all but the very elite, and soulless. Keep in mind a few very wealthy types did speak out against these tax cuts, and while it is easier for a camel to pass through the eye of a needle than for a rich person to offer up his/her wealth... some indeed do retain that priceless of priceless entities: a soul.
While beleagured homeowners and their families have been told to go to hell by Bush, Bear Stearns and their criminal thug CEO get treated like a tsunami victim. Imagine getting rewarded billions of dollars in bail out money just for lying. Only in America. Could American priorities be any more fucked up?