Before we start?a show of hands. Which of youse (I revert to my old Queens neighborhood word for more than one person) understands this whole financial mess and can give clear, comprehensive answers to the causes, effects and possible solutions to it?
After all the news and explanations in the papers and on television stations (and the web, of course) we should all have a kind of basic understanding right now.
But I still don’t understand?may never understand?these financial “instruments” (makes me think of instruments of torture or a set of nasty things the dentist lines up when you sit down).
I’ve talked to many people, otherwise very intelligent and well-educated, who can’t really explain “derivatives” and “bundled” mortgage instruments/mortgage back securities?all the other euphemistic words and phrases for: Guess what?I just sold you garbage and made a lot of money!
For myself, I can’t even balance a checkbook (the few times I’ve tried to in my life). I have trouble with the simplest math and certainly will never really understood and larger economic concepts?i.e., balance of trade, The dollar’s value vs. foreign currencies, futures markets, short-selling…
I don’t understand the way bonds are traded, how stocks are valued, what’s the difference between preferred and common stock…
However, after making my usual confessions of ignorance. I will say that, based on past experience observing such things, there are few things about this great disaster that seem to be coming fairly clear?
People in Congress?especially those in charge of the very committees responsible for overseeing the actions of the financial industry didn’t see what was coming?and out of sheer negligence?and did nothing about it.
Or, they really didn?t understand (like most of the rest of us) what they were seeing.
Or they were bribed (took donations to their campaigns/were lobbied) to turn a blind eye to what was going on by the very industries (banks, mortgage institutions, lenders, investment houses, etc.) that they were charged with monitoring.
And, of course, the inevitable: There were (and obviously still are, as we can all see with the current negotiations on this bail-out) political considerations. They wanted to make the other party looked bad (always easier to do with the Republicans) or they wanted not to be the ones responsible for doing something that would make their candidate for President look bad. And then, of course, the most important thing of all? They wanted to do whatever was necessary?the rest of the country be damned?to get themselves re-elected.
People high up in government, quasi-governmental corporations, regular corporations and financial oversight groups (The Treasury Dept., The Federal Reserve, The SEC, Fannie Mae, Freddie Mac, etc. etc.) didn’t see what was coming out of sheer negligence. That is very hard to believe and really frightening if its true. Or these officers and experts were “persuaded” by their own financial interests and businesses to overlook what was going on right under their noses.
As I say, some of the people above had straight-out financial reasons for doing this?They were getting a lot of money or other gifts and considerations, either flat-out illegally or semi-legally?through their by connections to these corporations, lobbyists, banks, etc. etc? For instance, they had investments in them, or they were given donations, or (most of them having come from these very same places before they were appointed to their administrative jobs) were probably going to go straight back to these corporations when they did their stint of public “service”.
A simple review of who’s in charge of this whole mess and, in large part, responsible for it, shows that their relationship is so incestuous that you’d have to have an electron microscope to distinguish any division between them and the people they are supposed to monitor/discipline.
A perfect example of this is Henry Paulson, who was the head of Goldman Sachs before he became Treasury Secretary.
The list of such people is endless… They come from business, their friends are all in these businesses, their money is invested in these businesses, and they are going to go right back to these businesses when they leave their current jobs.
Why ever would they want to interfere with these business’s ability to make the largest possible profits? It would be like cutting their own arm off.
Same principle applies in most areas of Government, especially in the current administration…
Because I’m connected to radio I know that for decades, the commissioners of the FCC were either from lobbying firms representing large media corporations or worked directly for these corporations. And, generally, after serving on the FCC board of Commissioners (busy giving away the public airwaves to large media corporations) they went straight back to high executive positions in other lobbying firms or media corporations… Why ever would they prevent these corporations from doing anything they pleased?Screw the idea of free-speech and public access to real facts or information?
What’s that got to do with profit?
Maybe if we check the Constitution there is a provision?some article or amendment we must have overlooked?that defines the requirements for who gets to run a government agency, especially one that has to do with Business (and that covers most agencies, one way or another?especially?and famously?the Defense Department).
Or maybe we didn’t overlook it? Maybe its in there but was written in special ink?visible only to the select few that own and run the country.
And that provision is: The only people who can be appointed to Government to supervise and guide the financial institutions of this country MUST have first served as executives in the very businesses they will be supervising?and, upon retiring from their public position, must then immediately return to a similar or equivalent position in business.
Same goes for political campaigns? It seems like almost every (or every other) high-level financial advisor to both campaigns (and this, typically, goes far more for Republicans than Democrats) is connected at the highest levels to some lobbying group or large corporation.
The perfect (and most egregious example) of this is the man in charge of John McCain?s campaign: Rick Davis. His lobbying company (from which he still makes a profit) was paid millions of dollars by the very institutions that are now crashing and taking all of us with them. Rick Davis was paid huge amounts of money to lobby for Fannie Mae and Freddie Mac. And he received these bribes right up until a few weeks ago.
If some newspaper hadn?t exposed his sleazy behavior, no doubt he would still be doing it.
Rick Davis (before being appointed to run McCain’s presidential campaign) was hired to persuade influential Congress-people, and specifically John McCain?to do favors for Fannie and Freddie (sound like nice old folks up the block); i.e., to let their absurd and dangerous loans go ahead. Davis was also hired to get people like McCain and all his Republican friends to de-regulate (eliminate) government control and sway over Fannie and Freddie’s behavior?not so hard since McCain and his friends favored letting corporations getting away with murder for decades already?
And, speaking of the odious and immoral John McCain, let us not forget that great human being: Phil Gramm. He was McCain’s financial advisor till he called Americans “A nation of whiners” (referring to people’s terrors over the housing and mortgage collapse. Phil Gramm (along with his best buddy John McCain was the high priest of de-regulation for a couple of decades. It was his bill, signed by Clinton in 1998?that let the foxes straight into every chicken coop in the country.
Mr. Gramm now makes millions as a VP of UBS bank?advising extremely rich people on how to get even richer. I?m sure his initial piece of advice is to
give him a hundred thousand dollar retainer so he fly out to one of John McCain?s eight houses to talk to him.
That?s Phil Gramm? And McCain, if he got elected, was going to Gramm Treasury Secretary!
And, as a (temporarily silenced footnote), there is McCain’s other major corporate business advisor, Carly Fiorina… She was fired from Hewlett-Packard for practically running it into the ground. Thousands of people lost jobs, regular people lost hundreds of millions in stock value and Ms. Fiorina, after being fired as incompetent, left with 42 millions dollars.
The foxes are not only guarding the chicken coops in all areas of government now? They built the chicken coops in the first place (no-bid contracts to their friends) so that the coops had Fox-sized entrances. Then they bankrupted and ran off all the farmers just in case anybody got it into their heads to go foxhunting.
There are decent people who just happen to believe in The Free Market System.
I’m sure many of them are responsible people who are self-employed, who worked hard and built up small or medium-sized businesses? People who don’t cheat everyone and pay relatively decent wages. They believe in supply and demand; in credit and loans and paying the loans back. These people are bewildered and angry now.
What went wrong? It couldn’t be the system itself?the “Free” Market? Could it be the Republicans?the party of business? No? They couldn’t be responsible for this disaster…
Of course!! If everything is going to pieces now, it must be the Liberals, or The Democrats, or The Communists, or The Islamo-fascists, or fluoride in the water or?
Yes, the system works great when it works? And when there are responsible people in control; watching it and reporting on it and punishing people who abuse it.
But the real, powerful, high-up “Free” Market/De-regulation crew?? Well, they are just plain criminals.
Imagine all the biggest drug-dealers and their murderous crews in any city, given complete control of the city council, occupying the mayor’s office and heading up all its agencies, and then firing every single cop and padlocking all the courthouse doors.
That’s what the Republicans want?have always wanted?to do with our financial system.
We had to descend to the awful suffering and chaos of the 30’s before humane people were able to reestablish rules and laws to keep businesses and businessmen (and their bribed lackeys) from pulling us into hell permanently. And, in the end, it took a World War to really revive our economy.
Same old, same old…. The arrogant, powerful, greedy, lawless and dishonest in the human race, succeed in pulling us into chaos. Then, when whole nations are starving and in a hysterical panic, you find some evil scapegoat (The Jews, The Blacks, The Muslims). Then you give a uniform and a weapon to every poor fool that lost their job and their house in the inevitable financial collapse and declare war on anybody in the immediate vicinity. This sure as hell will take their minds off their suffering and, as an added bonus, build up industry and business.
Once they are built up (owned, usually, by the same people as before) they become?as before?laws unto themselves, taking over the government? And the whole tiresome, awful cycle starts all over again.
Republicans make a religion out of The Free Market.
And people in this country have the same disaster happen to them?either small scale or monstrously large?every 20 or 30 years. The Free Market?i.e., a combination of uncontrolled greed and no government “interference”, got so out of control? like a virulent plague?that it gave us the Great Depression of the 1930’s. And now the same thing, for the same reasons, is happening again.
A “Free” Market the way wealthy Republicans (and some Democrats like Bill Clinton I guess) see it?is not free at all. Its an illusion that the rest of us saps buy into out of our own desire to get rich… If so many of us weren’t so inherently greedy (or even dishonest) these Free Market fundamentalists would be revealed as the sleazy con men they are. Greed and money cover out eyes like cataracts?
As in all great disasters of the sort that is going on now (and might easily get worse), its not just the bad guys at the top? Rick Davis, Phil Gram, Dick Cheney, Henry Paulson, Bill Clinton, etc. ?It?s all the rest of us as well.
This country is built on many things?some great, some terrible. But certainly greed is an infection that afflicts (in dormant or rampant state) most Americans. God knows, I have it myself… Who is immune? Wanting something for nothing is a leftover infantile desire (and here, I REALLY know what I?m talking about). Its part of growing up to understand you have to pay for things? Houses, cars, trips, children, love? Everything has a price?something you have to give up to get it. Civilization, when there is any, is based on this principle.
My rough estimation is that for every 100 people you see on the street, there are about five fully realized grown-ups who understand this principle. The rest of us fall on a continuum of knowing and accepting this?
I don?t know if it had always been this way in America, but the idea, the feeling?the belief? that we should have anything we want and not really have to pay for it is one of the dominant themes in our society these days.
There’s nothing wrong with borrowing money to start a business or get an education or, just because you’re just plain broke and down on your luck. But there has got to be some real intention and reasonable assumption that you will be paying it back. If not, the whole system crashes. When the government or a bank loans you money, its really all the rest of us that are doing the loaning. Stiffing the government or the banks is just stiffing your fellow citizens, and, finally, yourself.
Now we are seeing, with frightening clarity, just exactly how that karmic principle applies?
It?s not just the banks and the investment firms and the criminals and negligent fools who run them. And it?s not just the criminals and negligent fools who oversee them for the government that are to blame? Who are the tens of millions of people who borrowed huge amounts of money to buy houses, (even second houses); big, unnecessary cars, and ridiculous things like giant televisions, leisure vehicles, power-boats, and God knows what else? when they had no real idea that they could ever pay for these things?
Who doesn’t have a credit card? And how many people have run up debt on their credit cards that may never be paid back? (I’m not exempting myself).
Yeah, we?re hard-pressed, most of regular humans, to survive. So difficult, it is just to make it from week to week, month-to-month?
We elect people to government to look after us so we can go on with our daily lives… But when we elect (and re-elect) people who are so obviously dunces and criminal, then whose fault is it when the criminals destroy the government and the institutions and industries and the government is supposed to control to protect us?
And the final nail in the coffin that we are now about to lie in, is that these pirates we elected revised the very laws that regulated the news industry. Now there is no control over how many television stations, radio stations and newspapers one person or corporation can own?even in the same city.
The FCC, which is supposed to look out for out for our interests; the same congressional committees that are supposed to protect us?have allowed a handful of corporations (like Rupert Murdoch’s News Corporation) to own almost every electronic and print media outlet in the country.
And between huge salaries paid to the poodles and lap-dogs who “moderate” the news and the narrowness of media ownership in the hands of powerful, conservative people, Americans rarely get to hear the truth about anything.
How can a completely uninformed citizenry understand the slightest thing about the crimes that are occurring every
where in government every day? Well, they can’t and that is just exactly the way the owners of the country want things to be. Our ignorance is their strength.
And last, but not least (I know, I just said that before, but so what?) —And this goes toward the desire by the powerful and in most of the rest of us to be just entertained and not bothered with the hard truth about anything) is the rapid devolution of American culture; where even the very places people go to get the “news” are merely silly entertainment programs?all make up and whirling cartoon graphics and Barbie and Ken anchors and reporters?who, like children, dress up in Mommy and Daddy’s clothes and play ?News?.
When did it become absolutely necessary for every single person delivering the news?even liberal, intelligent people like Rachel Maddow, to smile and smirk every moment they are on the air? (To be fair to her?on of my favorites?she does get appropriately serious when speaking with guests.)
I know, I know, it?s so awful that you have to smile in amazement sometimes or just laugh out loud, lest the state of things dissolves your brain. But enough of the smiling and laughing and smirking? Tone it down?it will be easier to take you seriously if you do? Remember, Jon Stewart?s program is deliberately supposed to be satire?even if you do get more real facts and truth there than on most regular news networks.
And, (for my second ?last point?)? Let us, Americans, Never Forget! Time Is Money?got to fit in all those commercials for things no one needs and can no longer afford to buy. So you get thirty seconds of information from some expert and then back to some smiling idiotic child or doll-like creature impersonating a reporter. Who could learn anything from that?
All that remains in this information desert, is the Internet?
At least there you might find, if you try, a sampling of fact and opinion that might even give you some idea of the truth…
Well, that’s all for my present raving (really)?
Been staring at the screen for too long and I?m dehydrated and have lost what little vitamin B I had in me.
Having concluded his remarks, the prosecution naps…
– Mike Feder (New York City – October 1, 2008)