Compared to Wall Street the US government and the Fed nuked the economy, the dollar and any bright future that the people in the US might have had. The people will experience the fallout very soon.
The ‘Greatest Depression’.
Cynthia McKinney is spot-on :
(This guest post comes from Tavakoli Structured Finance)
If a high-on-crack driver crashed his speeding rental car into your house and killed your spouse, you would be outraged if law enforcers took bribes and gave the driver a pass on a blood test. If the judge then merely fined the killer and ordered you to pay it, you would appeal, wondering what happened to justice. If the government then handed the crack-driver keys to a bigger rental car and presented you with the rental bill, you would certainly protest.
How is it, then, that you have remained largely silent in the face of the same sort of behavior by Wall Street and Washington? Bonus-seeking bankers careened off the right path and ran Ponzi schemes that nearly ruined our economy. Bureaucrats and elected officials bailed them out without demanding consequences. Bankers are revving their engines again.
Bankers Get Bonuses, the USA Gets the Great Recession
Taxpayers are asked to believe that over-borrowing by U.S. consumers created a global financial crisis. This myth aids and abets Wall Street. The economy was nearly destroyed because banks borrowed massively, and they borrowed many multiples more than they could afford. Wall Street pumped the Fed’s cheap money through financial meth labs, and deceptive financial vehicles ran over securities laws at top speed.
More than 20% of mortgage loans–including originally sound loans–are underwater, meaning the borrower owes more than the home is worth. Official unemployment numbers hover at around 10%. If you include underemployment, it is around 18%. In depressed areas where the nation’s poorest–chiefly minorities–have been hurt the most, unemployment has soared past 30%. For this destitute group, unemployment combined with underemployment exceeds 50%.
As U.S. soldiers fought wars in Iraq and Afghanistan, Wall Street flattened Main Street. Our foreign wars drag on, while the U.S. battles a crippling recession at home.
Global Ponzi Scheme
Fraud by borrowers, fraud on borrowers, and speculation by people who thought home prices would rise forever have all tarnished mortgage lending. Yet this pales compared to the epidemic of predatory lending.
Predatory snipers committed financial murder as deliberately as British soldiers sold smallpox contaminated blankets to Native Americans. Honest homeowners were systematically targeted and actively misled into bad mortgage products. Loans were presented as gifts, but these Trojan horse loans hid destructive risk. “Disclosures” were acts of malice.
When Wall Street packaged these loans and sold deceptive “investments,” documents did not specifically disclose that credit ratings were misleading. If you know or should know a car’s gas tank will blow up, you cannot use a misleading third-party consumer report as an excuse. Yet bonus-seeking bankers used this sort of excuse to get through a few more highly-paid bonus cycles, before it all fell apart. Only the elite crowd of insiders prospered.*
This was the most massive Ponzi scheme in the history of the global capital markets. U.S. taxpayers became unwilling unsophisticated investors when we bailed out the financial system. We must hold Wall Street accountable for its fraud.
More Bonuses for Bankers, a Deeper Recession for the USA
Banks that contributed to our economic distress are heralded as geniuses at risk management, after taxpayers saved them from ruin. Wall Street escaped prosecution (so far), and Congress gave it a faster and more powerful car.
Paul Volcker suggested reforms, and special interest groups successfully lobbied to make them meaningless. His proposal to limit “proprietary” trading–a small step in the right direction–has been thwarted by banks claiming they engage in high risk trades on behalf of customers. Washington seems to have already forgotten that AIG nearly went bankrupt–and nearly took the entire financial system down with it–because of Wall Street’s “customer” trades. Wall Street and AIG insiders grew rich on bonuses based on a myth, and taxpayers funded AIG’s $180 billion bailout.
Wall Street now makes most of its “profits” from high-risk trading, and rewards risk with huge bonuses. It has unfettered access to more U.S. taxpayer money than in the history of the United States. Traditional banking suffers; it cannot generate enough revenue to “justify” massive bonuses. Bankers get billions in bonuses based on a myth, and U.S. taxpayers get a deeper recession and more risk.
Reform Starts with the President and Congress
Congress has protected Wall Street and passed on the costs to hard-working taxpayers. “Too-big-to-fail” financial institutions are too big to exist, and it is past time to break them up. They currently enjoy around $13 trillion of taxpayer-funded support, including tens of billions of FDIC debt guarantees for each of the too-big-to-fail banks and more than $2 trillion in nearly zero-cost funding from the Fed.
President Obama has not yet condemned Wall Street’s massive fraud, and Congress’s bailout methods rewarded Wall Street’s malicious mischief. The House just passed a bigger bailout bill that will give too-big-to-fail Wall Street banks access to $4 trillion dollars the next time they crash the economy.
Congress must start again from scratch, and give us real reform. Washington needs to get back in the driver’s seat, and voters need to make Congress steer straight this time by calling and writing representatives and senators.
* In a control fraud, only insider agents prosper. The losers are financial institutions’ shareholders and debtors, investors, borrowers, and the U.S. taxpayer. Banks covered-up indefensible lending–enabled by complicit rating agencies, “creative” accounting at related mortgage lenders, crooked CDO “managers,” venal hedge funds, crony accountants, and captured regulators. They parked the risk on their own balance sheets, on the balance sheets of Fannie Mae or Freddie Mac, in off-shore vehicles, or on unwary investors around the globe. Sometimes banks “transferred” risk with credit derivatives backed by phony securities that harmed “sophisticated” insurers like AIG, Ambac, MBIA, FGIC, and ACA–all of which were either bankrupted or damaged.
Janet Tavakoli | Feb. 15, 2010, 7:41 AM
Source: The Business Insider
The US government and the Fed are destroying America:
– How to invest for a global-debt-bomb explosion; Prepare for an apocalyptic anarchy (Market Watch)
– Marc Faber on CNBC: All Governments Will Default On Their Debt, Including The US
– Report: 1 in 5 US Homeowners Underwater; Foreclosures at Record High
Another lie:
– President Obama’s Pledge Never to Raise Taxes on Anyone Making Less Than $250,000 a Year
– Paul Craig Roberts: It Is Now Official: The U.S. Is A Police State
– Prof. Russell Roberts Testifies Before House Committee: ‘I Want My Country Back!’
– Director of National Intelligence Says US May Kill Americans Abroad
– President Obama Ups Pakistan Drone Strikes in Assassination Campaign
– The New Vision of the Obama Administration: War Without End
– Pentagon’s New Record Black Budget Tops $56 Billion
– Rep. Ron Paul on Obama seeking to assassinate ‘US citizens’ he labels as terrorist
– White House to Paint Grim Fiscal Picture: Another Record Budget Deficit
– US: GDP Mirage – The Last Hurrah
– Controller: Pennsylvania Capital Should Weigh Bankruptcy
– Marc Faber: Obama Makes Bush Look Like a Genius
– Obamanomics: Why Did the ‘Stimulus’ Fail to Help the US Economy?
– Paul Craig Roberts: How Wall Street Destroyed Health Care – Greed, Be Thou My God
– Ron Paul: US Foreign Policy is Bankrupting America
– Rep. Ron Paul: State of the Republic Address – ‘Dangerous Times Indeed.’
– America’s Impending Master Class Dictatorship! (MUST-READ!)
– The CFR Controls American News/Media
– US: Unfunded Benefits Dig States’ $3 Trillion Hole
– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street
– Peter Schiff: The Lunacy of US Government Programs
– Former Dean of Harvard College Harry R. Lewis: Larry Summers, Robert Rubin: Will The Harvard Shadow Elite Bankrupt The University And The Country?
– Experts: Dollar Crisis Looms if US Doesn’t Curb Debt
– Marc Faber on Coming Sovereign Debt Crisis: Next Countries to Default are the US, Japan and the ‘PIIGS’
– Fitch: US Must Cut Spending To Save AAA Rating; US December Deficit Nearly Doubles
– The Coming Sovereign Debt Crisis
– US slides deeper into depression as Wall Street revels
– PIMCO’S Bill Gross: ‘Let’s Get Fisical’ (… or why the US will not make it.)
– Barack Obama’s Health Care Lies And Reversals
– US sheds 85,000 jobs in December; Record 40% Of Unemployed Without Job For 27+ Weeks
– US: Public Pensions Face $2 Trillion Deficit
– U.S. Avoids Technical Default By Three Days
– As an American, I refuse to buy mandatory health insurance … that supports Big Pharma
– Prof. Dr. David Michael Green: Now I’m Really Getting Pissed Off … With Obama
– US Treasuries Post Worst Performance Among Sovereign Markets In 2009
– US losses will top $400 billion on Fannie Mae and Freddie Mac
– US: More Ammo For The Treasury Bazooka
– US government wants farmers to use coal waste on fields
– The No.1 Trend Forecaster Gerald Celente: The Terror And The Crash of 2010
– We’re Screwed! Hyperinflation like in the Weimar Republic; Great Depression worse than in the 1930s
– US Congress: Banksters Get $4 Trillion Gift From Barney Frank
Traitor in chief:
– Treason: Obama gives INTERPOL immunity from the Constitution (Amending Executive Order 12425)
– Peter Schiff on Obamacare, Freddie Mac & Fannie Mae: The Nightmare Before Christmas
– Obama administration backs Fannie Mae and Freddie Mac no matter how big their losses may be
– Rep. Dennis Kucinich: US War Presidents ignore Congress and Constitution
– Obamacare: Big payoffs to senators on health bill stoke public anger
– US: Trillions Of Troubles Ahead
– Chinese central banker Zhu Min: ‘The world does not have so much money to buy more US Treasuries.’
– Obamacare: Change Nobody Believes In
– Obama’s surge comes at a cost: At least $57,077.60 per minute
– US National Debt Tops Debt Limit
Hypocrite in Chief (Funny):
– President Obama: Another Busy Day in The Oval Office!
– Fascism in America: By Political Definition The US Is Now Fascist, Not A Constitutional Republic
– John Williams of Shadowstats: Prepare For The Hyperinflationary Great Depression
Liar in Chief (NOT funny!!!):
– Barack Obama Lies 7 Times In Under 2 Minutes!!!!!
– Rep. Dennis Kucinich: ‘These Wars Are Corrupting The Heart Of Our Nation!’
– Famous Investor Jim Rogers: Incompetence In Washington, Abolish The Fed And The Treasury
– Rep. Dennis Kucinich: The Truth About Afghanistan
– Obama’s Big Sellout (Rolling Stone Magazine)
– Obama administration to lift debt ceiling by $1.8 trillion
– Climategate: President Obama’s rule by EPA decree is a coup d’etat against Congress, made in Britain
– Obama administration tells Pakistan: Tackle Taliban or we will
– MSNBC Rachel Maddow: War President Obama
– Ron Paul: ‘Obama is Actually Preparing Us For Perpetual War’
– Afghanistan Surge to Cost At Least $40 Billion, That Is $1.333.333 For One US Soldier Per Year
Liar in Chief (Over 300 soldiers died in 2009 because of this lie!!!):
– Obama: ‘I will promise you this, that if we have not gotten our troops out by the time I am President, it is the first thing I will do. I will get our troops home. We will bring an end to this war. You can take that to the bank.’