The economy is sound... It could never happen... They're too big to fail...
Did you trade in any of these empty clichés last year? As someone who bought gold more than ten years ago, my skepticism about the world economy was firmly entrenched. Rampant speculation in assets and derivatives and massive public and private debt were swamping the economy. Free trade agreements like NAFTA were sending our jobs overseas. For almost forty years we watched manufacturing in America dwindle away, replaced by paper pushing and fast food chains. No real wealth was being created. What else could’ve happened except for the bubbles to burst and the walls to come tumbling down?
No, this isn’t End of Days. It has nothing to do with Mayans neglecting to finish their calendar. This was the result of bad policy, all the way around. From left to right, from Democrats to Republicans. And the people who pull their strings: the speculators, centered mainly in places like Wall Street and London's "City" district and the offshore banking empire. They did this to us, and now some of their minions are trying to blame it on YOU. You the homeowner. You the mortgage holder. You the schlub who was tricked into adjustable-rate mortgages or coaxed to refinance so that your paper could be sold off to some other institution. When the bubbles burst, they lost little. YOU lost a place to work and live--or at least a huge chunk of your savings.
These deregulation rats found ways to make a whole lot of quick bucks at the expense of our homes and our savings. And then they emptied the Treasury to ply the same financial institutions with bailouts while we helplessly watched.
Most of us aren’t sophisticated enough to know how the economy works--or why it no long does. This is not because we're stupid. Naïve perhaps, but not stupid. As ordinary grunts who work for a living, pay our mortgage or rent on time, budget our expenses, etc., most of us don’t understand financial speculation. We can't conceptualize making money on debt. But that is in fact what Wall Street and other speculators do every day. They make money out of thin air, off of computer screens, and concoct oddball investment "products" meant to make profits for everyone smart enough to sell them to the next sucker before the mystique is unraveled--and the last man holding the bag takes the fall. And for this we reward them by bailing them out.
Remember Enron? The entire world of finance and regulation agreed Enron was a miracle company until someone had the guts to point out that the emperor was naked. Enron's asset values were grossly inflated through mark-to-market accounting principles; i.e., assign values to company assets based on what you hope to make when they are sold. Enron not only did this, they traded energy like a futures trader would trade pork belly contracts, bid up the price, created blackouts in California, and then stuck customers in that state with gouging prices. Even the emails and recorded phone calls of Enron traders showed they knew it was a house of cards, and that when it collapsed, they hoped someone else would be holding the bag.
Only the most dishonest among us operate this way. Yet this type of thinking was standard for top executives of what was on its way to becoming the world's largest corporation!
President Obama should not continue the Bush-Cheney policy of trying to resuscitate lending by looting our Treasury. It's criminal, and it won't work.
Sunday, April 12, 2009
Thursday, February 26, 2009
Mission Statement:
This Web log is devoted to thinking individuals who know that what's behind today's news is what matters. Rather than accept verbatim explanations drummed at us daily by major media outlets, both liberal and conservative, The Truth Sleuth seeks to turn the important issues of the day inside out to examine the facts, the motives, and the myths.
Sunday, December 21, 2008
New York Governor Cracks Austerity Whip
Governor David Paterson has vowed harsh austerity in an effort to shore up the state's $15 billion budget deficit. Paterson's budget proposes higher sales taxes and fees, cuts in funding for education and health, and placing a greater burden on local and regional governments. He even seeks to strip Native Americans of their longstanding sales tax exempt status. While New York's middle and lower classes will bear the brunt of these measures, no plan exists to increase taxes on wealthy New Yorkers.
Paterson was the former lieutenant governor who became New York's chief executive last March in the wake of a scandal involving Governor Eliot Spitzer and a high-priced Washington, DC call girl. Many applauded the new governor: Spitzer's popularity was already in the tank, and some looked dewy-eyed on the fact that New York's new governor, David Paterson, was not only the first black governor, but the first legally blind one as well.
But after Paterson announced his new budget, that novelty has worn off.
Bankers and Bimbos
Paterson was lieutenant governor under Governor Eliot Spitzer. Stretching back to his days as New York's attorney general, Eliot Spitzer had gained the reputation as the "Sheriff of Wall Street", fighting corruption and conflict of interest among the banks and investment firms of lower Manhattan. He was responsible for NYSE Chairman Richard Grasso's downfall. Spitzer's reputation remained undiluted when he became governor, and the people at the helm of those same venerable institutions weren't happy about it.
So, when Spitzer conducted a bank money transfer to the escort service in preparation for his Valentine's Day weekend dalliance, someone on the Street found out about it--perhaps because they were proactively tracking his movements to begin with--and that information found its way into the hands of the Bush-Cheney Justice Department.
The ensuing newspaper headlines were damning--"Governor Caught in Prostitution Ring"--conjuring up sinister images. Spitzer was made to look not merely like a typical john patronizing a hooker, but an active participant of some grand criminal conspiracy. Allegations of "money laundering" followed, based on the conjecture that the way the money was transferred violated money laundering statutes. These allegations later turned out to be false, but no matter, they had done the necessary damage: Governor Spitzer resigned.
Spitzer was an easy mark at the time. His plan to grant drivers licenses to illegal aliens was largely responsible for his ebbing popularity. This no doubt presented a green light to the scandal.
What's interesting is that days later the Bear Stearns collapse was announced, and Fed chairman Ben Bernanke bankrolled its takeover by JP Morgan Chase for mere pennies on the dollar. Something Eliot Spitzer, the Sheriff of Wall Street, would have fought to prevent.
A few months later the monetary system collapsed. And a monumental bailout of some of Wall Street's most revered institutions occurred--hundreds of billions handed to bankers who were responsible for destroying their own banks! A lot there for Eliot Spitzer to frown upon.
Go Quietly--or Else
Spitzer was given the choice offered to most targets of a cold coup: "Go quietly--or else." In his stead is David Paterson, the sightless man whose blindness serves as a palpable metaphor for his see-no-evil approach to the Wall Street corruption that would soon come to light. What Spitzer might very well have viewed as abominable--the Bear Stearns takeover and the bailout of other Wall Street actors--remained entirely outside David Paterson's myopic vision. Now New Yorkers and the entire nation are suffering the consequences of not only the bankers' speculative antics, but the looting of the Treasury that was bottled and sold as its snake-oil cure.
And Wall Street can rest assured that the money New York borrowed from its banks will be paid back to help make up for speculators' losses.
New Yorkers, perhaps we were better off with the arrogant, prostitute-patronizing philanderer than with the affable, tax-mad budget-slashing Paterson.
Paterson was the former lieutenant governor who became New York's chief executive last March in the wake of a scandal involving Governor Eliot Spitzer and a high-priced Washington, DC call girl. Many applauded the new governor: Spitzer's popularity was already in the tank, and some looked dewy-eyed on the fact that New York's new governor, David Paterson, was not only the first black governor, but the first legally blind one as well.
But after Paterson announced his new budget, that novelty has worn off.
Bankers and Bimbos
Paterson was lieutenant governor under Governor Eliot Spitzer. Stretching back to his days as New York's attorney general, Eliot Spitzer had gained the reputation as the "Sheriff of Wall Street", fighting corruption and conflict of interest among the banks and investment firms of lower Manhattan. He was responsible for NYSE Chairman Richard Grasso's downfall. Spitzer's reputation remained undiluted when he became governor, and the people at the helm of those same venerable institutions weren't happy about it.
So, when Spitzer conducted a bank money transfer to the escort service in preparation for his Valentine's Day weekend dalliance, someone on the Street found out about it--perhaps because they were proactively tracking his movements to begin with--and that information found its way into the hands of the Bush-Cheney Justice Department.
The ensuing newspaper headlines were damning--"Governor Caught in Prostitution Ring"--conjuring up sinister images. Spitzer was made to look not merely like a typical john patronizing a hooker, but an active participant of some grand criminal conspiracy. Allegations of "money laundering" followed, based on the conjecture that the way the money was transferred violated money laundering statutes. These allegations later turned out to be false, but no matter, they had done the necessary damage: Governor Spitzer resigned.
Spitzer was an easy mark at the time. His plan to grant drivers licenses to illegal aliens was largely responsible for his ebbing popularity. This no doubt presented a green light to the scandal.
What's interesting is that days later the Bear Stearns collapse was announced, and Fed chairman Ben Bernanke bankrolled its takeover by JP Morgan Chase for mere pennies on the dollar. Something Eliot Spitzer, the Sheriff of Wall Street, would have fought to prevent.
A few months later the monetary system collapsed. And a monumental bailout of some of Wall Street's most revered institutions occurred--hundreds of billions handed to bankers who were responsible for destroying their own banks! A lot there for Eliot Spitzer to frown upon.
Go Quietly--or Else
Spitzer was given the choice offered to most targets of a cold coup: "Go quietly--or else." In his stead is David Paterson, the sightless man whose blindness serves as a palpable metaphor for his see-no-evil approach to the Wall Street corruption that would soon come to light. What Spitzer might very well have viewed as abominable--the Bear Stearns takeover and the bailout of other Wall Street actors--remained entirely outside David Paterson's myopic vision. Now New Yorkers and the entire nation are suffering the consequences of not only the bankers' speculative antics, but the looting of the Treasury that was bottled and sold as its snake-oil cure.
And Wall Street can rest assured that the money New York borrowed from its banks will be paid back to help make up for speculators' losses.
New Yorkers, perhaps we were better off with the arrogant, prostitute-patronizing philanderer than with the affable, tax-mad budget-slashing Paterson.
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