Monday, June 06, 2011
We've all been there, standing in line at the grocery store behind someone using their EBT card or food stamps or whatever you call it. We wonder if her mother before her relied on the government to feed the family and if her daughter, busily playing with the button that moves the conveyor belt, will follow in her footsteps. We look at the kind of food on the conveyor and think, these people eat better than I do and not a dime is coming out of their pocket. We lay seven meager items on the belt and get charged $51.67. It just seems unfair.
On the heals of reading Michael Lewis' "The Big Short" (see review from and earlier post) I have been reading more about the financial crisis of 2008 and becoming more and more sick about it. The waste, fraud and abuse we suspect of welfare Mom's is spittle in the wind compared to fraud practiced on Wall Street and Washington DC. Our anger, our disgust is completely misplaced. The fact is the relationship between Washington DC and Wall Street is criminal. It does not matter who the President is, the revolving door that spins between executive positions in the Treasury and the White House into all the big Wall Street firms is one massive conflict of interest. The corruption is almost unfathomable. That's really all you can call it, corruption.
Whether or not TARP or any of the other government rescue "loans" saved the financial system from total collapse is irrelevant, what's transpired since the fall of 2008 is the biggest financial crime in all of history.
The roots of the problems go back to 80's and especially the 90's, but now that it has come to a head you'd think something would be done about it to prevent such a disaster from happening again. If you thought that you'd be wrong.
Wall Street traditionally made it's money on commissions being brokers, traders and advisers. In the new century the Internet changed the way many investors did their business and Wall Street needed new sources of revenue. Amazingly in the late 90's deregulation fell into their lap paving the way for complex, potentially dangerous financial instruments called derivatives. Many pushed strenuously for their regulation, but some members of Congress and White House appointees (Democrats and Republicans alike) were so entirely opposed that in 2000 a bill was passed specifically prohibiting any such regulation.
These derivatives made it possible for banks and mortgage lenders to minimize their risk if (when) there was a default. This is what fueled the boom in subprime mortgages. Fannie Mae and Freddie Mac, quasi-governmental lending agencies, were front and center of this scheme. Financial institutions on from Wall Street to Berlin combined these risky loans and made them seem as reliable as government securities. All of this is detailed in "The Big Short". Employing the notorious credit default swaps, Wall Street firms blatantly, knowingly, sold fraudulent securities to gullible clients while betting at the same time that they were going to fail.
This ponzi scheme like all ponzi schemes crashed. This time no one went to jail, no one was shamed, no, this time there was a government bail out as a reward. Sickeningly the executives at Fannie and Freddie as well nearly all the big Wall Street firms walked away with millions - millions in government money. The numbers are so staggering and the fraud so complex that most Americans can't or won't even let themselves be upset by it. Worse, many people just smile slyly and say "boys will be boys" as if we should expect no less. But it's the overweight welfare Mom shopping with abandon that should be cut off!
Barack Obama thinks we should pay more taxes, that the government needs more revenue... While it's clear that most of the lefty criticisms of "the rich" are true they fail to see that it's their "guy" who is and has perpetuated this fraud for decades to keep the money flowing into the party and the campaigns. Barack Obama was the #1 recipient of campaign contributions out of Fannie, Freddie and Goldman Sachs. Boys will be boys. Meanwhile he'll try to convince us that a husband wife team that owns a little business generating $250,000 a year are the filthy rich.
The Republicans may be saying no to higher taxes, but they are no pillars of virtue in this whole affair. The incestuous relationship among the Wall Street elites and the executive branch (of any Preisdent) should be severed. The notion that the finances of the nation are just too complicated for someone without a Goldman Sachs background is preposterous. Isn't clear by now that the qualifications for high government posts are how well you can game the system for the benefit of Wall Street. Most of the filthy rich up and down Wall Street were Republicans at one time. No, the Republicans are no better at all.
Americans need to start getting educated about this and learn to direct their anger at the real welfare queens in NY and DC and not the welfare Moms at their local grocery store.