This post from James Kwak at the “Baseline Scenario” blog…
For a snapshot of what’s wrong with our banking policy, look at the front page of the business section of today’s New York Times. On the left side: “U.S. in Standoff with Banks over Chrysler.” On the right side: “Banks Show Clout on Legislation to Help Consumers.”
…got me to thinking that the seemingly complex events leading to our current economic debacle weren’t really just a simple con.
Okay James Kwak, let me see if I’ve got this right.
- We, the people, got taken by greedy Wall Street cons who seduced us with a dreamy story-line in which greed is good and markets always go up. They got us playing high-stakes for quick riches using highly leveraged purchases funded by tricky loans and credit card teasers rates.
- As demand by we, the people, turned into gold-rush like madness, equity markets and housing prices bubbled-up in a scam fueled by “buy-now-pay-later” leveraging shilled by realtors, loan brokers, financial advisors, and media pundits.
- After pocketing the lending transactions fees we, the people, shelled out, Wall Street repackaged our shaky loans, sold them off in bundles labeled AAA by smarmy rating agencies, and pocketed more transaction fees.
- Then Wall Street repackaged the repackages, sold them again, then burned the candle from both ends by selling insurance on repackaged-repackages, and pocketed more transactions fees.
- As with all Ponzi scams, the gig was up when the ability of we, the people, to keep playing the game came to an abrupt and inevitable end.
- Wall Street’s loans went south with tumbling real estate prices and they couldn’t cover the insurance payouts for the bad loans they sold, so they cried alligator tears to we, the people, and announced that should they fail, they would take we, the people, down with them into a Great Depression II.
- With a some gentle nudging from insiders, we, the people, choked on their story and bailed out Wall Street to the tune of trillions of our dollars, thus driving ourselves into unimaginable debt and undercutting our children’s’ future, our standing in the world, and our nation’s security.
- Wall Street, still rich but on the hook for lots of bad paper, started hiding their money so credit dried up, businesses bellied up, and millions of we, the people, lost our jobs.
- Scared, confused, and addled as to the reason for the financial crisis (namely Wall Street’s con artistry), we, the people, lowered our Fed interest rates and printed more money in order to “free up credit” and “stimulate” lending by the hoarding financiers on Wall Street.
- Now Wall Street is beginning to reap renewed profits based on transaction fees from we, the people, who are buying bargain-basement real estate whose value has collapsed and “We the People” who are re-mortgaging our lives to take advantage of the lower rates on loans that “We the People”are guaranteeing..
- Flush with bailout money and renewed transaction fees, Wall Street is now claiming that they are once again solvent and “We the People” need take no further action to prevent the Great Depression II. The storm has passed, says Wall Street, and they’re ready to get back to business as usual.
- We, the people, are finally figuring out what happened and we are trying to re-regulate Wall Street in order to prevent being taken hostage by Wall Street yet again in another future but Wall Street is having none of it. In an orgy of “free market” rhetoric, cooking the books, market manipulation, and political arm twisting, Wall Street is gearing up to forestall any attempts to change their usual business practices.
- The net outcome of Wall Street’s gaming is that they grow richer still while we, the people, become yet poorer and face a future of crushing indebtedness
- BUT, says Wall Street, don’t worry, because we, the people, are invited to join their game again with whatever money we have left. And if we, the people, are out of money, for a small transaction fee we can always borrow some more at remarkably low interest rates guaranteed by…you guessed it…we, the people,.
Just remember that since we, the people, were unable to change the game, the rule remains “caveat emptor”, which is Latin for “Heads they win, tails you lose. That’s a “catch 22″.
