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Wall Street did not let the Lehman Brothers crisis go to waste. The banks that have paid the largest fines for financial fraud are now much bigger and more profitable. The victims of their junk mortgage loans are poorer, and the economy is facing debt deflation.

Was it worth it? What was not saved was the economy.

Today’s financial malaise for pension funds, state and local budgets and underemployment is largely a result of the 2008 bailout, not the crash. What was saved was not only the banks – or more to the point, as Sheila Bair pointed out, their bondholders – but the financial overhead that continues to burden today’s economy.

Also saved was the idea that the economy needs to keep the financial sector solvent by an exponential growth of new debt – and, when that does not suffice, by government purchase of stocks and bonds to support the balance sheets of the wealthiest layer of society. The internal contradiction in this policy is that debt deflation has become so overbearing and dysfunctional that it prevents the economy from growing and carrying its debt burden.

Trying to save the financial overgrowth of debt service by borrowing one’s way out of debt, or by monetary Quantitative Easing re-inflating real estate, stock and bond prices, enables the creditor One Percent to gain, not the indebted 99 Percent in the economy at large. Therefore, from the economy’s vantage point, instead of asking how the banks are to be saved “next time,” the question should be, how should we best let them go under – along with their stockholders, bondholders and uninsured depositors whose hubris imagined that their loans (other peoples’ debts) could go on rising without impoverishing society and preventing creditors from collecting in any event – except from government by gaining control over it.

A basic principle should be the starting point of any macro analysis: The volume of interest-bearing debt tends to outstrip the economy’s ability to pay. This tendency is inherent in the “magic of compound interest.” The exponential growth of debt expands by its own purely mathematical momentum, independently of the economy’s ability to pay – and faster than the non-financial economy grows.

The higher the debt/income ratio rises, the more interest, amortization payments and late fees are extracted from the economy. The resulting debt burden slows the economy, causing defaults. That is what happened in 2008, and is accelerating today as debt ratios are rising for corporate debt, state and local debt, and student debt.

Neither legislators, academics nor the public at large recognize a corollary Second Principle following from the first: An over-indebted economy cannot be saved unless the banks fail. That means writing down the financial claims by the One to Ten Percent – in other words, the net debts owed by the 99 to 90 Percent. Wiping out bad debts involves writing down the “bad savings” that are the counterpart to these debts on the asset side of the balance sheet. Otherwise the economy will suffer debt deflation and austerity.

“Recovery” since 2008 has been much slower than earlier recoveries because debt deflation is siphoning off more and more personal and corporate income. To make matters worse, the bailout’s policy of Quantitative Easing to re-inflate asset prices has reduced rates of return for pension funds, insurance companies and employee retirement savings. This means that more state and local government income must be diverted to meet retirement commitments.

Something has to give, and it is not likely to be the savings of the donor class at the top of the economic pyramid. As a result, the economy at large is threatened with an exponentially expanding erosion of disposable income and net worth for most people and companies. Investment managers are warning of a financial meltdown, given today’s historically high price/earnings ratios for stocks and also for rental properties.

What is not acknowledged is that such a crisis is a precondition for today’s economy to recover from the rising debt/income and debt/GDP ratios that are burdening the United States, Europe and other regions. At least the United States has been able to monetize its budget deficits and subsidize banks to carry its rising debt overhead with yet new debt. The Eurozone has banned budget deficits of over 3 percent of GDP, imposing austerity that leaves the only response to over-indebtedness to be Greek-style austerity: depopulation, shrinking living standards, wipeouts of retirement income and pensions, mortgage defaults, shortening lifespans, and mass selloffs of public infrastructure to foreign financial appropriators.

None of this was spelled out in the September 15 weekend marking the tenth anniversary of Lehman Brothers’ failure and subsequent rescue of Wall Street. President Obama, Treasury Secretary Tim Geithner and their fellow financial lobbyists at the Federal Reserve and Justice Department are credited with saving “the economy,” as if their donor class on Wall Street was a good proxy for the economy at large. “Saving the economy from a meltdown” has become the euphemism for saving bondholders and other members of the One Percent from taking losses on their bad loans. The “rescue” is Orwellian doublespeak for expropriating over nine million indebted Americans from their homes, while leaving surviving homeowners saddled with enormous bubble-mortgage payments to the FIRE sector’s owners.

What has been put in place is not a restoration of traditional status quo, but a reversal of over a century of central bank policy. Failed banks have not been taken into the public domain. They have been enriched far beyond their former levels. The perpetrators of the collapse have been rewarded, not penalized for lending more than could possibly be paid by NINJA borrowers and speculators whose mortgage applications were doctored by systemic fraud at Countrywide, Washington Mutual, Bank of America, Citigroup and their cohorts.

ORDER IT NOW

The $4.3 trillion that could have been used to save debtors was given to the banks and Wall Street firms whose recklessness and outright fraud caused the crisis. The Federal Reserve “cash for trash” swaps with insolvent banks did not restore normalcy or the status quo ante. What occurred was a financial revolution by stealth, reversing the traditional responsibility of creditors to make prudent loans.

Quantitative Easing saved creditors and the largest stockholders and bondholders by lowering the interest rates by enough to make it profitable for new loans to inflate asset prices on credit. This revived the value of collateral backing bank loans and bondholdings. “Saving” the economy in this way actually sacrificed it. That is why our “recovery” is only “on paper,” a result of calculating GDP to include bank earnings and hypothetical homeowner windfalls as rents are soaring.

Among Democrats, the most extreme tunnel vision denying that debt is a problem comes from Paul Krugman: Writing that “The purely financial aspect of the crisis was basically over by the summer of 2009,”[1]Paul Krugman, “Days of Fear, Years of Obstruction,” The New York Times, September 14, 2018. he criticized what he called the “bizarre Beltway consensus that despite high unemployment and record low interest rates, debt, not jobs, was the real problem.”

This misses the point that 2009 was the real beginning for most of the nine million homeowners being foreclosed on and evicted from their homes. Consumers found themselves with less income “freely disposable” after paying their monthly FIRE sector nut off the top of their paycheck – housing charges, credit card charges, medical insurance, student debt, FICA withholding and tax withholding. Krugman says that he would have solved the problem by more deficit spending to pump enough money into the economy to enable debtors to keep paying the banks their exponential growth of interest claims.

We are still living in the destabilized, debt-ridden aftermath of such pro-bank advocacy. In the New Yorker, John Cassidy celebrates a book by Columbia professor Adam Tooze promoting the idea that “the economy” cannot exist without the credit (that is, debt) provided by the financial sector.[2]John Cassidy, A World of Woes: A global take on a decade of financial crisis,” The New Yorker, September 17, 2018. True enough, but does it follow that rescuing the economy must involve rescuing Wall Street and enriching the banks at the expense of the rest of the economy. That conflation is an Orwellian rhetoric of deception that has been introduced to the discussion of how the economy was “rescued” by locking in today’s Great Debt Deflation.

At the neoliberal/neocon Brookings Institution, Treasury secretaries Hank Paulson and Tim Geithner joined with the Federal Reserve’s Ben Bernanke to explain that the public simply didn’t understand how successful they all were in saving not only the banks, but non-bank financial institutions. Unlike Sheila Bair, they did not point out that behind these institutions were the bondholders, the One Percent of savers who held the rest of the economy in debt. Bernanke wrote a Financial Times piece producing junk statistics purporting to show that there was no underlying debt or financial problem at all, merely a “panic.”[3]“Ben Bernanke pins blame for Great Recession on bank panic,” Financial Times, September 13, 2018. To paraphrase, he said: “The crisis was all in the mind folks. Nothing to see here. Keep moving on.” It is as if, as Margaret Thatcher liked to insist, There Is No Alternative.

Can this bailout without debt writedowns really bring prosperity? Can economies achieve growth by “borrowing their way out of debt,” by creating enough new credit to cover the interest charges out of capital gains from the asset-price inflation fueled by new bank credit. That is the logic that has guided the Federal Reserve’s net $4.3 trillion in Quantitative Easing, and the parallel credit creation by the European Central Bank under Mario “Whatever it takes” Draghi. Ellen Brown recently published a review, “Central Banks Have Gone Rogue, Putting Us All at Risk, noting that the ECB has become a major stock buyer.[4]Ellen Brown recently published a review, Central Banks Have Gone Rogue, Putting Us All at Risk.” Public Banking Institute and Truthdig, September 13, 2018. The beneficiaries are the stockholders who are concentrated in the wealthiest percentiles of the population. Governments are not underwriting homeownership or the solvency of labor’s pension plans, but are underwriting the value of collateral backing the savings of the narrow financial class.

The GDP accounts report the widening gap between low government bond rates and the cost of credit to banks compared to the higher rates paid by mortgage borrowers, credit-card holders and student loan customers as “financial services.” What is extracted from the economy is added to the GDP statistic instead of being treated as a subtrahend. This absurd practice reflects the degree to which Wall Street lobbyists have captured economic statistics. The National Income and Product Accounts (NIPA) have been turned into a vehicle for deception. What is celebrated as growth of the GDP since 2008 has been mainly the growth in financial extraction, along with the health-insurance sector profiting from Obamacare.

Glenn Hubbard, chairman of the Council of Economic Advisors under George W. Bush, uses Orwellian doublethink to pretend that “Debt is Wealth.” He concludes a Wall Street Journal op-ed: “An ability to recapitalize banks remains crucial and must be explained to a skeptical Congress and public,”[5]Glenn Hubbard, “Bailouts Shouldn’t Be Only for Banks” Wall Street Journal, September 14, 2018. To be sure, Hubbard acknowledges that Republicans had agreed to but incoming President Obama nixed: “The government should have directed a mass refinancing of mortgages for primary homes in which the borrower was current in payments.” so that wealthy bondholders and speculators will not suffer losses.

On a brighter side, Adair Turner pokes fun at the “Authoritative experts such as the IMF [who] explained how increased securitisation and trading activity made the financial system more efficient and less risky.”[6]Adair Turner, “Banks are safer but debt remains a danger,” Financial Times, September 12, 2018. It was as if “options” and hedges can get rid of risk entirely, not shift them onto Wall Street victims such as the naïve German Landesbanks.

ORDER IT NOW

The aim of this week’s disinformation campaign is to prevent popular anger advocating what was done in classical antiquity. The ancients fought civil wars for land redistribution and debt cancellation. Today the demand should be for mortgage writedowns to bring their carrying charges in line with reasonable rent charges, limited to the former normal 25 percent of homeowner income – while rolling back the FICA wage withholding and allied taxes levied to bail out the creditor class.

 

An Athenian antecedent to today’s financial takeover

It is an old story, with a striking parallel in classical Athens. After losing the Peloponnesian war to oligarchic Sparta in 404, a Pinochet-style military junta – the Thirty Tyrants – was installed. During its eight months of terror its members killed a reported 1,500 democratic advocates whose land and other property they grabbed. Advocates of democracy took refuge in Thrace and other neighboring regions.

After the exiled democratic leaders reconquered Athens, they sought to restore harmony, going so far as to pay off all the debts that the oligarchic junta had run up to Sparta. To top matters, the subsequent 4th century obliged Athenian jurors and indeed, mayors in some Greek cities to swear an oath: “I will not allow private debts (chreon idiom) to be cancelled, nor lands nor houses of Athenian citizens to be redistributed.”[7]Demosthenes Against Timocrates (xxiv.149).

If no such pledge is needed today by public officials, it is because the financial administrators at the Treasury, Federal Reserve and other regulatory agencies already have shown themselves to be so tunnel-visioned from graduate school through their employment history that they can be trusted to find debt writedowns as unthinkable as enforcing laws against criminal financial fraud to punish individuals rather than their institutions. Academia joins in the deception that financial engineering can sustain a geometric growth in debt ad infinitum without imposing austerity. The bailout aftermath has demonstrated that corporations are not really “persons” if they cannot be given jail time.

The key financial principle is that this self-expansion of interest-bearing debt grows to absorb more and more of the economic surplus. The solution therefore must involve wiping out the excess debt – and savings that have been badly lent. That is what crashes are supposed to do. It was not done in 2008. That is why the status quo was not restored. A vast giveaway to the financial elites occurred, setting the rest of the economy on a road to debt peonage.

It would have been nice to have read an article by Sheila Bair explaining the procedures that the FDIC had in place, ready to take over insolvent Citigroup and other banks in similar straits, saving all the insured depositors by taking over these institutions. No doubt as public institutions they would not have indulged in junk mortgages or, for that matter, takeover loans.

It would have been nice to hear from Hank Paulson and perhaps Barney Frank on how they tried to get incoming President Obama to write down bad mortgages whose carrying charges were as far above the debtor’s ability to pay as they were above the going rental value for similar properties. It would have been nice to hear a mea culpa from Mr. Obama apologizing for representing the interest of his campaign donors by standing between them and his voters with pitchforks. Even an article by Tim Geithner or Eric Holder on how lucky they felt at getting such high-paying jobs after they left office from the financial sector they had overseen and “regulated.”

What is needed now is to follow up the primary policy perception that today’s financially dysfunctional economy cannot be saved without a bank crash. That means rolling back the enormous gains that the FIRE sector has made since 1980 at the expense of the “real” economy. Banks have ceased to be an “engine of growth.” They are not making loans to create new means of production. They are lending to asset strippers, not asset creators. It is not hard to show this statistically. (I drafted an attempt in Killing the Host, and am now working with Democracy Collaborative to prepare a larger study.)

At stake is whether the U.S. and Western European economies are going to end up looking like those of Greece, Latvia and Argentina – or imperial Rome for that matter. Neoliberals applaud today’s victorious finance capitalism as the “end of history.” One such end has already occurred once, at the close of Roman antiquity. It is remembered as the Dark Age. Progress stopped as the creditor and landowning class lorded it over the rest of society. Trade survived only among the lords at the top of the economic pyramid. Today’s “End of History” dream threatens to unfold along similar lines. It is all about relative power of the One Percent.

Notes

[1] Paul Krugman, “Days of Fear, Years of Obstruction,” The New York Times, September 14, 2018.

[2] John Cassidy, A World of Woes: A global take on a decade of financial crisis,” The New Yorker, September 17, 2018.

[3] “Ben Bernanke pins blame for Great Recession on bank panic,” Financial Times, September 13, 2018.

[4] Ellen Brown recently published a review, Central Banks Have Gone Rogue, Putting Us All at Risk.” Public Banking Institute and Truthdig, September 13, 2018.

[5] Glenn Hubbard, “Bailouts Shouldn’t Be Only for Banks” Wall Street Journal, September 14, 2018. To be sure, Hubbard acknowledges that Republicans had agreed to but incoming President Obama nixed: “The government should have directed a mass refinancing of mortgages for primary homes in which the borrower was current in payments.”

[6] Adair Turner, “Banks are safer but debt remains a danger,” Financial Times, September 12, 2018.

[7] Demosthenes Against Timocrates (xxiv.149).

 
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  1. The problem of a financial crisis is that assets lose their value, but debts remain.
    Bernard Baruch, anticipating the 1929 crash, sold all his shares etc, and bought first class mortgages.
    But, if even this always functions, is questionable.
    Stones may seem a good investment, but in a crash even stones may lose their value.
    During the around 1924 German hyperinflation shares kept their value.
    Of course, not all of them.
    One of my four great parents, who had been rich farmers, went bust in 1890.
    My grandfather was told by his mother ‘people always must eat, become a baker’.
    He followed the advice.
    Quantitative Easing, a great expression for creating money, in the hope that this would improve the economy.
    My professor monetary economy long ago explained to us that the small suitcase with monetary instruments contained few tools.

  2. Thank you for this, Michael Hudson! You seem to be just about the only person in the USA right now who [1] fully undestands the depth of the fraudulence of the financial sector and the extent of its looting of the actual economy and who [2] is being fully honest in describing it!

  3. Anonymous[298] • Disclaimer says:

    It’s a wonder that Athens could even function 400 BCE without worshiping a Kike on a stick. The Jew-worshipers posit that it’s impossible. European history shows otherwise.

    • Replies: @jacques sheete
  4. Here is an article that looks at the big favour that the Trump Administration has granted to the American banking sector:

    https://viableopposition.blogspot.com/2018/05/the-economic-growth-regulatory-relief.html

    Washington failed to learn the lessons taught by the 2008 – 2009 recession and has set the economy up for another banking sector crisis that the Fed will be forced to resolve, an issue that will compromise its ability to “correct” the economy.

  5. Please don’t use the term “doublespeak.” When George Orwell wrote 1984, he coined the terms “newspeak” and “doublethink.” If you look up “doublespeak” in Wikipedia, it says that the term is often erroneously attributed to Orwell.

    • Replies: @Si1ver1ock
  6. “At the neoliberal/neocon Brookings Institution, Treasury secretaries Hank Paulson and Tim Geithner joined with the Federal Reserve’s Ben Bernanke to explain that the public simply didn’t understand how successful they all were in saving not only the banks, but non-bank financial institutions.”

    The charlatan’s game being played with economic realities as you have taken on here is key to nearly all other issues as the foundation of our society. The bail outs and what created the situation for which they were applied remain a tragic hidden reality for much of how the financial architects shield themselves from responsibility for bad dealings. And that includes members of Congress. The double standards of the supposed best and the brightest

    As long as you don’t start advocating that the solution is communism, this article is important.

  7. Economies of all countries are walking in no exit street, but we do not know when we will see the last house. Venezuela is already there, but we do not know when US will be there.

  8. @Anonymous

    It’s a wonder that Athens could even function 400 BCE without worshiping a Kike on a stick. The Jew-worshipers posit that it’s impossible. European history shows otherwise.

    So does Egyptian and more than a few other histories and Hudson points them out in other articles.

    Here’s another good one by him, and the concept applies to a lot of our so called understanding of “history.”

    We decided we have to re-write the history to free it from the modern ideological preconceptions that have distorted much popular understanding.

    https://michael-hudson.com/2017/01/the-land-belongs-to-god/

  9. I liked this article. I’ll probably read Ellen Brown’s article as well.

    https://www.commondreams.org/views/2018/09/15/central-banks-have-gone-rogue-putting-us-all-risk

    • Agree: Iris
  10. I read down to “allows the creditor one per cent to gain” and now pause to ask whether there is a reason to read on.

    Who constitute this “creditor 1 per cent”? Who can prosper from lending their own money even now when real interest rates are again (just) positive? The rich *borrow* cheap money to buy assets.

  11. Anon[376] • Disclaimer says:

    The “rescue” is Orwellian doublespeak for expropriating over nine million indebted Americans from their homes, while leaving surviving homeowners saddled with enormous bubble-mortgage payments to the FIRE sector’s owners.

    ”We all know the story by now: the repeal of Glass-Steagall in 1999 led to the housing bubble, the subprime meltdown and the global financial crisis…right? ”

    The Truth About Glass-Steagall

    https://www.corbettreport.com/the-truth-about-glass-steagall/

    • Agree: Agent76
  12. Agent76 says:

    The Fed Audit GAO (Government Accountability Office) report Of the Federal Reserve.

    http://www.gao.gov/new.items/d11696.pdf

    How The Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo Barack Obama

    Although He Created it 2005

    Barney Frank Does Not Believe a Housing Bubble Exists

    • Replies: @jacques sheete
    , @Iris
  13. Agent76 says:

    Everyone should at minimum listen to this truth about banking. May 21, 2013 Why the whole banking system is a scam – Godfrey Bloom

    MEP • European Parliament, Strasbourg, 21 May 2013 • Speaker: Godfrey Bloom MEP, UKIP (Yorkshire & Lincolnshire)

    Which Corporations Control the World?

    A surprisingly small number of corporations control massive global market shares. How many of the brands below do you use? It’s a Small World at the Top.

    http://www.internationalbusinessguide.org/corporations/

  14. Anon[376] • Disclaimer says:

    After the failed coup attempt in South Ossetia by the NATO bankers and their Georgian kamarad Mikaiil Sakashviili in the Caucasus (= more than 2000 victims) on 888, i.e., August 8, 2008 (when Americans and Canadians were busy watching the Olympic Games in China on their beloved television set), the NATO bankers ”transferred” their funds (the NatoNarcoPetrodollars) to foreign banks in order to continue the expansion of the ”Roman” empire in Europe.

    Thus, the ”crash” of the Lehman bros (QUÉBÉCOR World’s Richard Holbrooke the dog of war and Afghanistan-Pakistan specialist) was the first of a series of intentional ”crashes” designed by the NATO bankers to hide the transfer or their dirty currency to foreign banks.

    ON TARGET: WHO’S IN WHO’S FACE

    “… Russian forces quickly destroyed the Georgian forces and restored the previous territorial … 2008, following a large-scale joint military exercise with U.S. troops, the Georgian military mounted a … Georgia in the south. A more apt name for NATO’s ongoing Operation Reassurance deployments might in fact be Operation Provocation. … Republic of Georgia in the Caucasus. Not only does Georgia border Russia, it also has two frozen … Georgia and Ukraine into NATO. Had Canada been successful in that effort, the third world war would have …”

    ON TARGET: Canada Bears A Share Of Responsibility For Ukraine’s Comic-Opera Hijinks

    ” territory of South Ossetia in 2008 resulted in Russian intervention and a huge setback for the Georgian … a no-brainer choice for Saakashvili, as any return to Georgia will see him arrested on the … renouncing his Georgian citizenship as his home country does not allow dual citizenship. It was a bit of … the U.S., Saakashvili was America’s strongest ally in the Caucasus when he ruled Georgia from 2003 … former president of neighbouring Georgia, and a former close friend and ally of Poroshenko. The …”

    http://espritdecorps.ca/search?q=georgia

    ON TARGET: Canada Bears A Share Of Responsibility For Ukraine’s Comic-Opera Hijinks

    territory of South Ossetia in 2008 resulted in Russian intervention and a huge setback for the Georgian … a no-brainer choice for Saakashvili, as any return to Georgia will see him arrested on the … renouncing his Georgian citizenship as his home country does not allow dual citizenship. It was a bit of … the U.S., Saakashvili was America’s strongest ally in the Caucasus when he ruled Georgia from 2003 … former president of neighbouring Georgia, and a former close friend and ally of Poroshenko. The …

  15. @Agent76

    How The Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo Barack Obama

    Give it up. The whole system of governent is a bipartisan rip off and always will be.

    I said, “No, there is a great difference. Taft is amiable imbecility. Wilson is willful and malicious imbecility and I prefer Taft.”

    “[Teddy]Roosevelt then said : “Pettigrew, you know the two old parties are just alike. They are both controlled by the same influences…”

    - R. F. Pettigrew, “Imperial Washington,” The story of American Public life from 1870 to 1920 (1922), p 234

    https://babel.hathitrust.org/cgi/pt/search?q1=amiable;id=yale.39002002948025;view=1up;seq=7;start=1;sz=10;page=search;orient=0

  16. I am about to coin a new economic law based on Hudson’s fine insights.

    Whereas the Krugmanites, including Sammy “the Divine” Maven, and other simple minded shylock sympathizers hold that debt is good, Jacques’ Law states that debt cancellation on a periodic basis can be better and that lender bailouts are typically rotten to the core especially if the lenders are loaning money created out of a vacuum and it gets spent on terrorizing the world in hopes of controlling nearly everything.

    No more welfare for the TBTF classes!

    • Replies: @Anon
    , @james charles
  17. Agent76 says:

    Mar 20, 2017 US Debt of $20 Trillion Visualized in Stacks of Physical Cash

    The faith and value of the US Dollar rests on the Government’s ability to repay its debt. “The money in the video has already been spent”

  18. Agent76 says:
    @jacques sheete

    As you can read and view you should realise I am accutely aware of the fraud and lie. Thanks for your time and comment.

    • Replies: @jacques sheete
    , @anon
  19. Like the savings and loan mess, the consequences of the relaxing the rules demonstrated that the system must be regulated. The financial and banking services have repeatedly demonstrated that fear of going out of business is not a deterrent for misbehavior in the economy. That if we continue to redirect the consequences for financial misbehavior or carelessness, then capitalism is no longer capitalism – but shameless mercantilism. The president’s comments about the rich understanding and the economy were disappointing. One because I simply don’t believe that is the case – at all. And history is replete with the wealthy engaging in practices as the the economy was their own personal playground as opposed to an economic system societies sustain public access and use of money. Two, repeatedly members of congress and the executive have violated the self disciplining parameters of capitalism’s maxim of bad behavior reaps negative consequences and therefore serves as a deterrent to the same. That fundamental aspect of capitalism’s tenet has been exacerbated because while congress and the executive have interfered to save business,m they have done little to nothing to ameliorate or protect the consumers who are at the brunt end of the consequences.

    In fact, millions of home owners should not have been forced to sell. They should have been permitted as should have required or left to choose — the financial institutions involved in the processes that caused the problem — should have been forced to do — restructure their loans via the various programs designed to do just that including the bankruptcy programs.

    Note: I think Lehman Brother’s was scapegoated for the dealings of the group as a whole. And that situation was used to remove a competitor in a rather seedy bid for consolidating wealth and control. It is an error to assume that what business dealings happen in boardrooms and among corporate entities is about the economy in their view. Said relations are ab out their businesses, the economy is the result. So I have to reject anyone’s view that being rich is by definition a vote for the economy. What the rich do have is an inside track in how to manipulate economic entities and forces to their advantage. That is not the same thing as understanding the economy — and no self respecting capitalist makes that claim. In fact, a capitalist would not engage in dealings that take advantage of another – soley to power. The beauty and responsibility of capitalism demands a high degree of personal responsibility and integrity not disadvantage another, while still making a profit.

    The scandal of the MBS system was not merely the manipulation to advantage at its collapse by those responsible, but the MBS system itself, that was in fact a skimming operation as well as a false profit generating schema that deliberate over and undervalues properties at the same time it speculation using astro-physic speculative formulas to an economy nationally and globally that was utterly unpredictable under the numbers — save but to fail. In fact, it is unknown based on those formulas just how much negative subtractions could be accounted to the economy, based on formulas that did not reflect tangibles. In an economy in which a near infinite of interrelated variables may be in the equation, but unaccounted to the same — we simply have no real understanding of the losses.

    What we do know is that the fear tactics were used to bail out not the economy, but individuals and financial entities. Well, all accept, home owners, pensions, and small entities dependent on larger forces. And that members of congress and the executive so engaged to benefit themselves and their relations with corporate world — a tragic turn of events. No less culpable, the ratings and regulatory agencies, the financial press and regular press corps that touted the same tune minus doing their homework or having done their homework, hadn’t the integrity to lay the issues out cold, as opposed to the blame game of that firm or this firm or worse p- home owners – who had absolutely nothing to do with packaging stock packages of MBS’s.

    Telling that two government agencies Freddie and Mac were knee deep in the mess — and now revealed their deep pocket political gifts to members of congress. Are we still in the wake of those events — absolutely and i think this article among the following:

    Bailout — Neil Barofsky

    All the Devils Are Here — Bethany McLean, Joe Nocera

    Bull by the Horns — Sheila Bair –

    For all of the twenty four news cycles, especially the financial networks, we now know that their reporting of the finances regarding the economy are but the foam of waves depth. And as Mrs Bair relates — Basel I and now Basel II with another round of of Basel like proposals coming — unless we place a halt and reassessment — things are bound to get cloudier for an unsuspecting public. And as with Mrs. Bair, insiders enlightening the rest of us — are hardly greeted with the respect they are due.

    https://www.theamericanconservative.com/articles/no-good-deed-goes-unpunished/

    • Replies: @jacques sheete
    , @MarkinLA
  20. Anon[156] • Disclaimer says:
    @jacques sheete

    Jacques,
    You might be wronging Sam [assuming you mean Sam Shama] on this matter. He had written about this a while ago. I remembered that discussion and searched and found it in the archives:

    http://www.unz.com/pgiraldi/team-hillary-to-end-evil-worldwide/#comment-1535474

    Well, I approach the subject of political organisation as arising from a corollary of economic contracts between various groups. It is possible to be more leisurely and philosophical, but I subscribe to the belief, lest we otherwise make a frightful muddle of things, that at the core of most human struggles there is an essential economic contract. All else follows. So it is between any “nobility” or “elite” and “commoners”; call it noblesse oblige, fair progressive taxation, periodic debt jubilees, whatever; it is in the interest of the upper echelons of society to care for the welfare of the rest. All of us have a part to play, and serious deviations from the script tend to cause operatic chaos. This contractual obligation is far more vulnerable to manipulation in a liberal democracy, where responsibility is far more dispersed.

    It is important to be consistent and to that end a body of laws, written and enforced by a supra-national entity at the international level, a sovereign at the nation-state level and local administrations at local levels etc. ought be the model via which expanding polities are established. The mutual obligations between the elite and commoners whether explicitly encoded or ineluctably observed as tradition are but a special case of the general proposition.
    [btw a slight digression on this theme, I daresay judaism is quite legalistic and prescriptive at the level at which is impacts most adherents; the philosophical stuff comes much, much later; so I suppose this need for an organising body of laws was evident to the old rebbes]

    • Replies: @jacques sheete
  21. @Agent76

    Yes, but I wanted to emphasize that the so called “Republicans” are essentially the same goons as the so called Democrats and that goes for the false capitalist-commie dichotomy and several other institutional frauds as well.

    • Replies: @Agent76
  22. @EliteCommInc.

    Like the savings and loan mess, the consequences of the relaxing the rules demonstrated that the system must be regulated.

    Most would agree with you, but I ask, who regulates the regulators in the world you’re describing ?

    • Replies: @EliteCommInc.
    , @Da Wei
  23. Agent76 says:
    @jacques sheete

    The fraud lies in the mythology of the two separate party propaganda Edward Bernays created. They are all on the same ‘BIG’ government Banksters team!

    • Agree: jacques sheete
  24. @Ralph A. Brandt

    Sometimes it gets conflated with doublethink. However, you can have Orwellian doublespeak or double talk, a lie of Orwellian proportions. One that turns the whole thing upside down.

    In this case Orwellian refers to the scale of the deception, not its origin.

    Mr. Hudson is an accomplished scholar with a new book coming out on the history of debt, from ancient Sumer to the present.

    And Forgive Them Their Debts.

    He discusses Debt with Max Keiser here:

  25. @Anon

    lest we otherwise make a frightful muddle of things

    Oh, my, St Sam apparently fails to recognize that “we’ve always made a “frightful muddle of things.”

    Oh! How frightful!

    PS: He’s also the one that also claims to want to work for the benefit of humanity but probably half his comments give lie to the idea. He can take his Zionist go-gooderism and take a long walk off a short dock.

  26. @jacques sheete

    That is of course the question:

    World Bank, IMF, G-7 (G-8), Basel and similarly structured proposals implemented by various national and international monetary organizations . . . in reality, no one organization controls the economy. I tend to agree that it is too large and too complex for any organization to control.

    Now that lends itself to arguments that such an agency should be created or that such organizations already exist in clandestine form, i.e. Bilderberg, Rothchild’s and related such entities all battling for supremacy and we are in its wake.

    Here I tread carefully, because there are global organizations tasked with similar said purposes — how effective in controlling the planet remains in question.

    And the dilemma is agreed as my observation concerning the complicity of supposed regulating agencies. The cornerstone of all financial dealings as with most everything else — integrity — would that I could guarantee it amongst everyone -

    i cannot.

  27. This funny money boom bust debt/depression phenomenon has been explained ad nauseam by the Austrian School, Lew Rockwell, Murray Rothbard, Friedrich Hayek and David Stockman. All other explanations are either superficial and wrong or are put forth purposefully to avoid the obvious truths. In other words, the alternative explanations, by not engaging Austrian School analysis, amount to journalistic and academic fraud.

  28. Rich get richer and the poor get poorer. Nothing new here. But everything has its limit. There is a limit how rich the rich can get, and how poor the poor can get. Economic activities are declining for decades. Shopping centers used to be full decades ago. Not anymore. Investment capital supply greatly overgrown the demand. Money does not make money like it used to. It is making less and less.
    These are economic trends and they will not change until collapse. If you look at advertising, you will rarely see advertising for products. Most of the advertising is for insurance and various financial products. Investors are buying the safe bet government certification. But when the collapse will come investors will be getting cent for the dollar.

    • Replies: @Anonymous
  29. Anonymous[350] • Disclaimer says:
    @Ilyana_Rozumova

    Everything one needs to know about economics can be learned from playing a game of Monopoly.

  30. anon[228] • Disclaimer says:
    @Agent76

    no you don’t . Your blame game is misplaced and dangerous Democrats like Republicans are junior partners in this criminal enterprise of saving the banks.

  31. MarkinLA says:
    @EliteCommInc.

    The financial and banking services have repeatedly demonstrated that fear of going out of business is not a deterrent for misbehavior in the economy. That if we continue to redirect the consequences for financial misbehavior or carelessness, then capitalism is no longer capitalism – but shameless mercantilism.

    Of course it is capitalism. When will we get off this stupid idea that there is such a thing as a pure unadulterated capitalism that always produces wonderful results for everybody at all times. The fact of the matter is the PEOPLE running those companies made a lot of money in a short amount to time so the system worked just fine for them. They also know that if the nag they are ridding on dies, they will just use their “expertise” to find another one to jump on. Just stick to the story that “nobody could see this coming” and you get to keep all the money.

    In fact, millions of home owners should not have been forced to sell. They should have been permitted as should have required or left to choose — the financial institutions involved in the processes that caused the problem — should have been forced to do — restructure their loans via the various programs designed to do just that including the bankruptcy programs.

    This is the stupidity of the author as well. What about the poor slob who didn’t lie about his income and held off on buying one of these overpriced houses. Now, you want to take his ability to buy the house at a bargain price and give it to the person who originally lied which kept the bubble going. How is that fair? They should have been foreclosed on and put into some kind of program (unlike the one we had where investors bought tens of millions of dollars of loans in one fell swoop) that only allowed a single person living in the area to buy the house at normal interest rates under normal lending conditions.

    If you don’t penalize the buyers, what is to stop the next bubble when people think that by buying any house and stopping payments, they will trigger another collapse that will allow them to reduce their mortgage by 75%?

    Yes, the banks and brokerages should have ALL been taken over if they were insolvent. There is already a mechanism for that in the FDIC and SIPC. There were plenty of small banks and brokerages who were solvent and would have loved to move or expand into one of Citibank’s or Merrill Lynch’s old offices.

    I don’t buy the idea that TARP paid for itself because of the FED’s cash for trash program where the FED bought that garbage and that money was used to pay off the TARP loans. The FED put money into the bank through the side door when nobody was watching and the Treasury was paid off with that money through the front door with a megaphone turned on.

    • Replies: @EliteCommInc.
    , @c matt
  32. anon[347] • Disclaimer says:

    Was Quantitative Easing a Tax?

    In the last of his four lectures to students at George Washington University, Ben Bernanke explained how the Fed’s quantitative easing programs worked. As it turns out, they were akin to a tax hike.

    This aspect of government asset purchase-and-resale-for-profit programs is not well understood. I explained it in terms of a Treasury program last week.

    A tax takes dollars out of the private sector, leaving households and businesses with fewer dollars and the government with more dollars. When the government buys something for $10 and sells it back to the private sector for $12, the net effect is the same as if the government had taxed away those $2.

    Bernanke doesn’t come out and call quantitative easing a tax. But he comes close.

    “The Fed’s asset purchases are not government spending, because the assets the Fed acquired will ultimately be sold back into the market. Indeed, the Fed has made money on its purchases so far, transferring about $200 billion to the Treasury from 2009 through 2011, money that benefited taxpayers by reducing the federal deficit,” he explains in one of the prepared slides.

    Here’s a good rule of thumb. If something reduces the federal deficit, it is either the equivalent of a spending cut or a tax hike.https://www.cnbc.com/id/46898830

    This sort of article is meant to suggest that Fed is squeezing banks and the their financial institutions and enriching the treasury

  33. We should have followed Iceland’s example and arrested the banksters.

  34. H. S. says:

    Ohio congressman Dennis Kucinich suggested the $700 billion bailout package was sending America towards ‘casino socialism, where the only real product is debt’. (Sept. 28)

    ”Is this the United States’ Congress or the board of directors of Goldman Sachs?”

  35. Anon[381] • Disclaimer says:

    ”It’s highly unlikely that Georgia’s current president Mikheil Saakashvili will be queuing up for Kremlin aid following his country’s disastrous five-day conflict with Russia last year. Saakashvili is facing growing discontent in his country where his government is considering to be sliding to towards authoritarianism. A successor to Saakashvili could in theory turn his back on NATO and EU in favour of a return to old fold in Moscow.

    Meanwhile, Russia’s Prime Minister Putin is still riding high in the polls having protected his country from the worst ravages of the global financial crisis. The rebound in oil prices and the recent stability of the rouble point to a rosier outlook than in many Western markets.

    Russia’s territory now includes Abkhazia and South Ossetia – the two breakaway regions of Georgia effectively absorbed by Moscow this summer. Further integration of former USSR states is not thought to be imminent but closer trade and fiscal cooperation is probably inevitable.

    Putin famously said in 2005 that the collapse of the Soviet empire “was the greatest geopolitical catastrophe of the century.” Economic upheaval and political chaos may be his chance to right that calamity.”

    Blog: The Revolution is dead, long live the USSR

    http://emergingmarkets.me/blog-the-revolution-is-dead-long-live-the-ussr/

  36. @MarkinLA

    laughing.

    You apparently don’t understands what happened. I suggest you do some reading. The news media made a good deal of hay about such buyers, no income false incomes . . . and certainly they made a portion of the problem, but a very small portion. More importantly, due diligence on the part of lenders, mortgage companies, realtors would have forestalled such loans. But that is the issue, they sold properties under a dubious agreements. The gaming of ballooning payments and hiding said m methodologies in complex structures. Sure, I agree, every home owner should examine their long term payment schedules and in so doing , should have noticed that double payment due in seven months or six months, however it was implemented into the schedule.

    But the truth is that most people expect their lenders and realtors be straight shooters on something as large as a home loan. But given the packaging, this enabled the providers, many of them to get their money upfront. I am going to walk with caution here because I cannot speak for how everyone in the system was compensated. And while I think honesty is of mighty value — those homeowners who did not misrepresent should be fine with their existing mortgages, unless they missed one of those peculiar balloon mechanisms embedded in the paperwork. But for those people who engaged in the standard practices as exercised by their due diligence and that of the providers — I have no idea how that would make “stupid” holding off on closing mortgages based on the environment.
    —-

    to all of your comments about capitalism — excuse my frank response — you don’t know what capitalism is. The practices we are talking about are not engendered in capitalist philosophy — any and everything but that. Your own accounting makes it very clear that it was not capitalism at play here. Merely making money is not capitalism, nor is getting ahead of the other guy a requirement in capitalist practice — but your presentation explains a lot.

    You are misrepresenting my comments — I did not say that buyers should be exempt from penalty or consequence — i suggest you reread my comments. A hold on foreclosures and the restructuring of debt amongst all parties involved — is not a call to allow anyone off the hook.

    ———————–

    Since I opposed the bail outs as implemented and have made no comments about TARP — I have no response to your comments regarding TARP.

    A deeper and lingering issue — if in fact, trillions were missing from the economic pool — several hundred billion seems might shrift to resolve the outstanding debt.

    ______________________________________

    I don’t much find myself agreeing with Rep Kucinic on much by way of hos liberal polity — but he is spot on perfect on how this was used and why. The US has been fueled on propositions of fear for more than twenty years. There’s a difference in urgency and fear mongering — and if anyone was getting off the hook, it was those engaged in most of the fear mongering.

    • Replies: @MarkinLA
  37. joe webb says:

    to broaden the net…..world tendencies. Not just the US banks.

    w: NYTimes.com: How the Next Downturn Will Surprise Us ( but will surprise the economists even more )
    >
    : Wednesday, September 19, 2018, 10:49:25 AM PDT
    Subject: Fw: NYTimes.com: How the Next Downturn Will Surprise Us ( but will surprise the economists even more )

    “But economists are more often wrong than right. Professional forecasters have missed every recession since such records were first kept in 1968, and one of the many reasons for this is “recency bias”: using economic forecasting models that tend to give too much weight to recent events. They see, for example, that big banks are in much better shape than in 2008, and households are less encumbered by mortgage debt, and so play down the likelihood of another recession. But they are, in effect, preparing to fight the last war.”

    However, per this article , it is not the banks now, but other sources of cheap credit, like corporations that have lots of cash and want to lend it.

    “By the eve of the 2008 crisis, global financial markets dwarfed the global economy. Those markets had tripled over the previous three decades to 347 percent of the world’s gross economic output, driven up by easy money pouring out of central banks. That is one major reason that the ripple effects of Lehman’s fall were large enough to cause the worst downturn since the Great Depression.

    Today the markets are even larger, having grown to 360 percent of global G.D.P., a record high. And financial authorities — trained to focus more on how markets respond to economic risk than on the risks that markets pose to the economy — have been inadvertently fueling this new threat.”

    Why is this a threat? Because cheaply borrowed money leads to reckless lending, by whoever is lending other people’s money, Corporations are no different than banks, except that banks are regulated and corporations are largely not regulated…in their lending.

    “One of the big corporate risks is developing largely beyond regulatory oversight. Some United States companies that were publicly traded in 2008 have since gone private, often precisely in order to avoid intensified scrutiny from regulators. Many of those companies were purchased by private equity firms, in deals that leave the companies saddled with huge debts. Right now the typical American company owned by a private equity firm has debt six times higher than its annual earnings — or twice the level that a public ratings agency would consider high-risk or “junk.””

    The writer also remarks that The Fed’s tightening of interest rates is already “rattling” the markets. He also states that every tightening of interest rates over the last 50 years has led to market turmoil.

    “Now, the markets are so large it is hard to see how policymakers can lower the risks they pose without precipitating a sharp decline that is bound to damage the economy. It’s a familiar problem: Like the big banks in 2008, the global markets have grown “too big to fail.”

    This story implicitly addresses the limits of Keynesian tools to influence or control the economy. Personally, I am more or less Keynesian inasmuch as the logic, abstract as it is, makes sense: cool off an overheated economy by raising interest rates, and warm up a contracting economy by lowering interest rates as well as having the government spend money on public projects to help employment, etc..

    Overlooked by Keynesians is the psychological factor, like Trump’s jawboning/cheerleading of MAGA focused mostly on the economy.

    This is all very well, but the “Fundamentals” are still the central factors, not psychology.

    Keynesianism has limits. Interest rates can only be lowered so much, like to zero. Spending by the state can be enormous, but it drives up the national debt, which has its own destabilizing tendencies.

    Raising interest rates even a tiny bit, like what is going on now, if it spooks the markets, means that this Keynesian tool is also of limited use.

    Greed apparently is not just a marginal factor in the economics equation. If the money-changers who run international economics today threaten the stability of the Whole by their particular fear based behaviors, and/or their greed -base behaviors…that is, ‘rattling’ markets on the one hand , or risky loans on the other, expecting somehow to be shored-up by central banks when things go bad, but permitted to strike gold when things go well…that is not only a heads-I-win, but a tails-you (the taxpayer) lose situation, but it is bad economics.

    China is in deep trouble with its loans now….. pay attention, and consider hedging your bets on the stock market…as in selling your stock, before it goes up to money heaven.

    Joe Webb

  38. @jacques sheete

    Some debt is ‘good’?

    “Importantly for our disaggregated quantity equation, credit creation can be disaggregated, as we can obtain and analyse information about who obtains loans and what use they are put to. Sectoral loan data provide us with information about the direction of purchasing power – something deposit aggregates cannot tell us. By institutional analysis and the use of such disaggregated credit data it can be determined, at least approximately, what share of purchasing power is primarily spent on ‘real’ transactions that are part of GDP and which part is primarily used for financial transactions. Further, transactions contributing to GDP can be divided into ‘productive’ ones that have a lower risk, as they generate income streams to service them (they can thus be referred to as sustainable or productive), and those that do not increase productivity or the stock of goods and services. Data availability is dependant on central bank publication of such data. The identification of transactions that are part of GDP and those that are not is more straight-forward, simply following the NIA rules.”
    P20

    http://eprints.soton.ac.uk/339271/1/Werner_IRFA_QTC_2012.pdf

  39. MarkinLA says:
    @EliteCommInc.

    I did not say that buyers should be exempt from penalty or consequence — i suggest you reread my comments. A hold on foreclosures and the restructuring of debt amongst all parties involved — is not a call to allow anyone off the hook.

    Sure you did but you weren’t smart enough to see it. There is NO way to restructure those loans such that those people can ever repay them unless the debt is written down. Somebody making 20 dollars an hour can never pay the mortgage on a 500,000 dollar house. They don’t even make enough to pay the interest.

    But the truth is that most people expect their lenders and realtors be straight shooters on something as large as a home loan.

    Who is the naïve idiot here. It is ALL the lenders fault, right? The poor borrower who put on his application that he made 50,000 dollars a year on a side job in order to qualify is blameless. The big problem was people lying on their application to get first mortgages on houses they knew they couldn’t afford. Those were the loans bought and sold by Wall Street.

    The shady subprime practices where people were fooled into taking out small loans so somebody could immediately foreclose on a house that was previously owned free and clear was not part of the problem.

    to all of your comments about capitalism — excuse my frank response — you don’t know what capitalism is.

    I know what capitalism is but you don’t seem to know what bullshit is. There is no more a pure capitalism than there is a pure communism. Everything that was done in this scam was well within normal capitalistic policies.

    • Replies: @EliteCommInc.
  40. @MarkinLA

    From the bottom up

    If you think that everything has been done according to “capitalistim” based on the issues, then you don’t know what capitalism is, even though it is well known that humans involved in any enterprise indicates practicum will not align with theory. However, basic accounting, hiding details of agreements, and willfully engaging misleading tactics, etc. are all behaviors that exist outside of capitalism basic tenets, being able to add what’s in front of you, accurate assessment of valuations — violates the espoused principles of best practices standards — again, you don’t know what capitalism is – even when engaged by imperfect human beings. But your comments due reinforce the need for regulation and that is sad – as government leadership is currently complicit.

    I don’t think you grasp the subprime issues tentacles, the selling of homes was but one aspect, though the most advertised. The deep core issue was how they were bundled as investment properties to millions of investors: include state pension funds, etc. As someone who deeply pro home ownership, this deregulation of investing was not merely national, but international and in a world where banks are owned by international entities instead of local communities — the bills coming due were catastrophic. The use of basel II and I to increase debt to liquidity lending — catastrophic — but those principles were industry wide.

    I have already responded to the buyer behavior — though, I find it strange you seem to think that due diligence to affirm applications is something unique — it’s a basic standard practice — in place since banks and finance companies began loans. And did not represent the deep core issues. To answer the obvious question, the buyers is the naive one as most home buyers haven’t clue of the contract system. What they know is they x dollars and they are going to x dollars to own a home until it is paid off. And they tend to believe their realtors and mortgage advisors and lenders. Because of the nature of the process to desire, and practice — is why there were strict rules against using these entities as investments in the manner deregulation unleashed them. And that was not based on wiley home buyers —

    If you think that merely restructuring debt means there are no accountability consequences, then you simply have a shallow view of what restructuring means. Restructuring eases the pain, it doesn’t remove it. It aides in smoothing out a process as jolting as crashes. You have a very shallow understanding — thus far exhibited of the processes in play here. You seem to think that it is home buying that was the primary cause — you are just flat out incorrect. You are welcome to do an accounting of how many properties were bundled so as to hide their actual value passed from brokerage to brokerage.

    I am not an economist, nor a financial specialist, but there is enough information out there that makes it quite clear where the major fault lies. And that fault that b y the fear mongering exposed the not just the US but the international communities as well — to grave needless, careless risk. And it remains so — Greece, Italy, Spain, France — Europe a whole was tackling the consequences of Basel I and i have no idea why they doubled down with Basel II as schema out Latin American banking —

    I am going to be very frank — Mrs Baird — is a hero of sorts for questioning the protocols. If there is a conspiracy it is this, that many of our allies and trading partners want to share their woes with us by handing them to us on a silver covered platter.

    • Replies: @MarkinLA
  41. MarkinLA says:
    @EliteCommInc.

    More ignorance on your part.

    willfully engaging misleading tactics, etc.

    Sure take the borrowers word on that. How many bridges do you own? Send me your bank account so I can deposit part of the millions I got as part of my settlement.

    Restructuring eases the pain, it doesn’t remove it.

    You must not have much of a math background. They can’t pay back the loan under ANY circumstances unless the loan is reduced substantially.

    The deep core issue was how they were bundled as investment properties to millions of investors: include state pension funds,

    There is nothing wrong with this practice as it has been done successfully since the Depression by Fannie Mae and Freddie Mac. This is what you don’t get. The “free market” took a policy that was sound and ramped it up to the point that it no longer became sound. There is nobody ringing a bell and saying the party is over. You cite “regulation” as though you could actually do this. Wall Street was buying them and the supposed lack of government protection for losses was supposed to be the governor on their activities. Yet, what did we get? We got cries that without bailing them out we would all be up shits creek. Regulation only happens after the crash because before the crash nobody sees anything wrong.

  42. MarkinLA says:

    Actually there is one regulation that would do more to prevent this than all other regulation. It won’t pass Constitutional muster however.

    Make ALL brokerages and investment banks privately owned. No publicly traded stock companies. This was normal until about 20 years ago. Then the partners only got paid if the business was successful and only from the profits of the business. People at the lower levels stayed in line with the hopes of eventually making partner. The companies did not generally undertake large risks because the partners had to eat the losses – not the stockholders. There was no way for the insiders to get rich except for a long history with the company making money in a sound way. Temporarily goosing the stock up to cash out was not available to high level company officers.

  43. Da Wei says:
    @jacques sheete

    jacques sheete, help me understand this mess.

    You ask, “who regulates the regulators in the world?” and it causes me to think of Ezra Pound’s redundant question to the American public: “Who rules your rulers?”

    Who’s behind the whole scam? Ezra Pound asked and was tried for treason and imprisoned in a mental asylum. (Ironic that he was brilliant beyond his captors.) The right questions can land you in jail, as we well know. I digress. How can we shut down these bastards and take our lives back? We are serfs serving computer synapses posing as real money, orchestrated by sociopaths. Nothing in it is real in it, but our sweat. And our elected leaders are bought and paid for whores of the money system. To quote Chester A. Riley: “What a revoltin’ development this is.”

    We need to get our brains together and kick this system over.

    • Replies: @peterAUS
  44. @MarkinLA

    I will simply have to side with the record and on that score MBS had nothing to with the borrowers, save tangentially. The behavior on WS, in Finance, Banks, mortgage brokers and realtors is well documented. I provided several references. The article makes references. Here are some more:

    https://www.investopedia.com/terms/m/mbs.asp

    Note who still owns the trillion dollar debt — it’s not the home buyers who created this mess and that is why I contend for restructure those properties most, in my view — I have not done the numbers , would have have a home, even if not the home they originally attempted to purchase, but even if that was the case that debt would begetting some income as opposed to the zero it now receives.

    https://www.theguardian.com/commentisfree/2018/sep/15/gordon-brown-british-banking-crimes-2008

    https://www.theguardian.com/commentisfree/2018/sep/14/the-panel-lehman-brothers-ten-year-anniversary-financial-crash

    I have not even mentioned hedge funds.

    To you rather obvious rhetorical circle about people doing x and k in violation of the rules and have and will — Laugh. Sure, there will be people who violate the rules, hence in the market system a government neutral in which the market itself sorts out the damage and the lessons get learned by the failures — bailouts, government assuming debt circumvented that process. And it circumvented that process to the benefit of the primary abusers, and designers of the systems. When I say restructure, that means the whole kit and kaboodle — because based on the fear mongering — the whole kit and kaboodle was at stake. If intervention was to take place it need to be a 360 intervention, not merely one for investment firms, banks, financial institutions etc. Homeowners, and sellers, market designers, fund corps,Fannie And Freddie all in the fire — that pain is how lessons get learned.

    And you are incorrect about what those entities were entitled to do. But suppose I agreed — the evidence is pretty clear when their accounts came do — they were partner to fraudulent behavior —

    There is but one group of people, for which immediate foreclosure and everything else would be just — those in the country illegally, who should not have been able to make said purchase attempts in the first place.

    • Replies: @MarkinLA
  45. peterAUS says:
    @Da Wei

    We need to get our brains together and kick this system over.

    And there lies The Problem.

    Articles/threads/chats like this pop up often on the Internet. Plenty of books too. Presentations, forums etc. A lot of ….stuff…..explaining the system a bit, but much more pointing what’s wrong with it. All good……..venting.

    The real fun comes when a solution to the problem gets presented.
    I’ve never, ever, seen a consensus, by those complaining, on how to fix all this.

    True, somebody comes up with apparently solid idea. Solid for non-expert like me. And then another expert comes in with strong disagreement which fast spirals out into incomprehensible financial mumbo jumbo.

    Yes…yes….we commoners aren’t smart enough I do get it. But….hehehe….those smart experts are also idiots re social intelligence and really lack common sense. Until they present a strong case easy to understand by an average person nothing will change. Or, at least, nothing they want.Things will, actually, get worse.

    Bottom line, it’s easy to complain and point to “wrongs”. Feels good too.
    The real work is different though. A solid critique with proper solution, that is.

    My take after (amateurishly) reading plenty of that, among them Ellen Brown, “Mefo bills” etc. is: the real problem is much deeper than money/finance.
    It’s human nature.

    Good luck fixing that.

    • Replies: @Da Wei
  46. @MarkinLA

    No. and false. Regulation is rejected. It’s not being adopted does not in any way indicate that there are those who see the dangers and attempt to pre-empt them.

    https://www.investopedia.com/articles/investing/011916/brief-history-us-banking-regulation.asp

    I am not even going to decipher your free market gymnastics, it speaks for itself. Safe to say, you admit the misbehavior when you reference “rev’d up”. I won’t get into it. The history on what can happen when entities break the rules of math, fair play, fair practices and the law, etc are clear.

    You have a very strange understanding of success. The issues of 2007 did not start in 2007, they are the culmination of years more than 20 years of careless behavior. Note: Not all banks failed, many who had held to basic tangible sound practices, avoided even taking advantage of the deregulation — – smart they were.

    I am going to end on the below with a painful laugh.

    https://www.heritage.org/markets-and-finance/report/basel-iii-capital-standards-do-not-reduce-the-too-big-fail-problem

  47. To think that there hundreds of thousands of people who think the financial warble was the result of people buying homes they could not afford alone in places of power, influence and decision making, is a frightening concept.

    But then I guess I voted for at least one of them.

  48. MarkinLA says:
    @EliteCommInc.

    There is but one group of people, for which immediate foreclosure and everything else would be just — those in the country illegally, who should not have been able to make said purchase attempts in the first place.

    The only thing “fair” is for the all the people who took those loans out and cannot pay them off to be foreclosed on. The value of those loans was in the annual percentage rate which is a weighted sum of the various interest rates earned and the duration of the loan. When the people got 5 year 2% interest and a reset loans the amoun of the reset has to make up for the annual percentage rate being higher than the annual percentage rate of a fixed rate loan (which at the time was around 7%). So the reset rate had to be well above 8%.

    You want to “restructure” the loan so the borrower can make payments and stay in the house. The only way for that to happen is the interest rate on the loan has to stay at 2% which is even lower than that of a new loan. You are also effectively gifting him the 6% difference on the loan. For a 500,000 dollar mortgage that would be around 30K a year. You are also destroying the value of the loan to whoever owns it. The owner of the loan is better off if the place is foreclosed on and he can clean up the mess and move on.

    Why should the borrower get that windfall when he helped create the bubble?

  49. The argument that people behave badly by nature and therefore, no regulation need by applied — because people will break the law, is in short wrong and that of a child. It’s the argument used to justify all manner of excuses for behavior. It’s akin to why have any laws at all — people will break them anyway as is their nature.

    The truth that people actually abide by the law and rules most of the time. They serve as guide, reminder, deterrent. They are not a fix all guarantee that some number won’t violate them. The fact that some number of women were able to find people willing to murder their children in the womb is hardly an argument for making it legal, nor were the few tragic instances of the same that damaged women. The fact that people break the law is hardly sound analysis for making the law being broken legal.

    The regulations concerning our financial system cannot guarantee that there will be no financial crisis. There are instances in which the system can fail by way of circumstance with or without human behavior. But the rules are designed to challenge the what we might call the easiest abuses an entity might succumb to in making money. There are designed to promote, encourage if not guarantee fair play — to promote and encourage it.

    Only God and people can fix an ill nature. But history, and experience reveal that having none provides more instances for volatile conditions than systems without regulations.

    During the period in which alcohol was illegal — most people did not drink. Even advocates for restoring alcohol as beverage obeyed the law. And that pertained to a behavior widespread and deeply rooted across the multiple cultures.

    And while that law was changed — it’s important to note that human nature for most people was buffered by self control.

    If the rules don’t matter, one has to explain why WS held Lehman to such exacting standards so as to end their business.

  50. It is simple as this!!!!Balance between investment capital and purchasing power is out of vac.
    Investment capital is overflowing while purchasing power is at state of exhaustion.
    ……………………………………………….
    Nothing can prevent the incoming disaster.

  51. c matt says:
    @MarkinLA

    Under pure capitalism, the banks would have been forced to foreclose, sell the properties for pennies on the dollar, and write off the difference. The original homeowners would have lost their homes, and the bankers and their investors would have lost the value of their assets/investments. Pain all around teaching valuable lessons. Government would have stayed out of it, other than conducting foreclosure proceedings.

    • Replies: @MarkinLA
  52. MarkinLA says:
    @c matt

    Yes, and pure capitalism created the bubble, just like it created the S&L fiasco and the dot com bubble. So the idea that pure capitalism is infallible is ridiculous.

    And EliteComm wanted to reward the people complicit by either intentionaly or not lying on their loan applications, yet he was crying about “real capitalism”.

    • Replies: @EliteComminc.
  53. @jacques sheete

    Might well have said
    “No, there is a great difference. Trump is amiable imbecility. Clinton is willful and malicious imbecility and I prefer Trump.” You don’t even have to change all the letters.

  54. @MarkinLA

    Entirely false as my comments explain –

    Certainly you are not engaging deliberately misconstruing my comments.

  55. Iris says:
    @Agent76

    Thanks for sharing.

    You may like this short video from economist Prof Steve Keen, an academic who really predicted the 2008 Great Financial Crisis, unlike the other conmen a la Paul Krugman. All the best.

  56. Da Wei says:
    @peterAUS

    peterAUS,

    “…the real problem (is) human nature.” You know, I think you’re right.

    You’re talking common sense. But, then, I think common sense is what somebody has if he agrees with you.

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