The following timeline shows how government officials, members of the Federal Reserve (which in the US is a private company and thus wide open to conflicts of interest) and business conspired together to bring down the American economy. Notice how mortgages are bundled together, then chopped up and resold... while Goldman Sacks bet against their clients, banks push bad mortgages on to their clients, Sachs (again) got Greece to hide their debt, how businesses LITERALLY took money from the government and lent it back to to the government for interest (Yes, the Federal Reserve was involved and even gave trillions - clear contradiction of interest i.e. they are required to look after the public good not their buddies).
Alan Greespan (former head of the FED under Clinton AND Bush) pushed to move jobs abroad, destroying the manufacturing base of the US = Senator Bernie Sanders thinks Alan Greenspan shouldn't be sending jobs abroad.
State today: Manufacturing jobs have become more specialized requiring less labor and more technical expertise - i.e. small companies making big ticket items such as fighter jets; this means less people are employed, smaller number of people make huge profits and these huge profits make the economy look like its growing when actually its just a few companies making huge profits benefiting a small group of people.
So. No jobs. No Manufacturing sector. The housing bubble was fueled by Alan Greenspan's bad policies combined with the worst housing development plan known to man (passed by George Bush)... and that's how you bring down the economy folks! Notice that if the Federal Government didn't have so much power over mortgages and how these mortgages are given out then this housing bubble financial disaster would never have happened. And if Alan Greenspan, with his private bank controlling public interests, hadn't pushed to create policies to move businesses abroad then this job crisis would never have been created.
All of the housing bubble/crises, originating with Freddie May/Mac, was all overseen by the United States Department of Housing and Urban Development (HUD). Too much power in too few hands while being totally compromised, is a recipe for disaster.
On top of all that, top controllers allowed the biggest Wall Street scam in history to occur... then bailed them out... then turned on the government for having too much debt!
On the one hand, the debts of private banks and those who own that debt, the bond holders, are being protected from any losses by the publicly funded bailouts. Public debt, on the other hand, at the insistence of the same banks and bond holders we have bailed out, is being paid down at breakneck speed, no matter what the cost in unemployment and the destruction of social services.
This double standard is creating two different groups with very different financial prospects: one group made of the bankers and their bond holders (the financial class), is doing rather well because, by not having to pay off its debts, its wealth – the money to make more money – is being maintained. The other group, the rest of us, find our wealth is disappearing because we are paying off not only our debts but theirs as well. Our welfare, pensions and pay are all being cut in order to appease the bond holders, while the banks and the money they owe us, seems to have almost disappeared from the story altogether. (read more)
Best part is that the 700 billion, no questions asked, TARP bailout was just the tip of the iceberg as the Federal Reserve (again playing God with the US economy) gave out an additional 16 trillion to their close buddies. Notice that the Federal Reserve is a private bank and thus has no oversight. They can do whatever they want to the economy and NEVER have to face elections for this actions, i.e. no consequences! If you have access to a money printing machine and couldn't get in trouble no matter what you did, would you print yourself up some cash? If you could give this money away with no consequences would you give some to your friends? It's just paper, after all.
Overview
"Long before the meltdown, one woman tried to warn about a threat to the financial system..."
Watch the full episode. See more FRONTLINE.
Above video is from "The Warning, FRONTLINE, PBS Video" Notes:
1. 29 minutes 10 seconds- "this deregulated market is part of the reason we are having this boom" - Alan Greenspan supports the boom bust cycle.
2. 38 mins - Math geniuses thought they had a full proof money making system and this group included people who had won the Nobel Prize. - The foundations of math are based on assumptions or in other words, just because a mathematical model has results that could mean there are other worlds existing right next to us, doesn't make it so (such as multiverse model or the many worlds theory). [ Math has a practical function and a purely theoretical function as every field of knowledge. ] .
It was the holy grail of investors. The Black-Scholes equation, brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run. It was like buying or selling a bet on a horse, halfway through the race. It opened up a new world of ever more complex investments, blossoming into a gigantic global industry. But when the sub-prime mortgage market turned sour, the darling of the financial markets became the Black Hole equation, sucking money out of the universe in an unending stream. (read more)
3. 39 - 40 mins - 'Many banks had invested in the derivatives believing they were the only ones' i.e. This is like having 15 owners for the same house - basic fraud or scamming being done by a gambling model based on statistical averages of historical financial market fluctuations.
4. 45 mins 20 seconds - 'you keep seeing these regulators saying the market knows best how to regulate' thereby leaving banks free to take on riskier assets (while ignoring the warnings of watchdogs)= Results 45 mins and 36 seconds - 'by 2007 the OTC market was at over 500 trillion dollars and consisted of most, if not all, of a 'boom' - In other words, a recession had begun and was being propped up by over leveraging assets/derivatives (selling one house to 15 people, in full) - followed by a TARP bailout with huge bonuses... wow! More about how the Bail out money was used: The big banks make money by taking the bailout money we gave them and lending it back to the government with interest.
1987 The new Fed chairman, Alan Greenspan, is a believer in Ayn Rand's philosophy -- free-market capitalism means no regulations, no government intervention. Read more
Jan 1993 The country's best-known financier, Robert Rubin, joins forces with Greenspan. Both men believe the less regulation on the market, the better.Read more.
So far, only regulation (or laws) allows market transparency(according to our economic structure), therefore...
1.
Feb 1994 A Major Derivatives Scandal Surfaces Procter & Gamble sues Bankers Trust claiming the bank's derivatives deals has cost P&G millions. The lawsuit reveals what's really going on in the completely dark and unregulated derivatives market. Read more
May 1998 One Regulator Is Closely Eyeing Derivatives The new chairperson of the CFTC, Brooksley Born, sees systemic risk in the virtually unregulated, high-stakes derivatives market. She starts a campaign to regulate the secretive, multitrillion-dollar market. Read more.
Another Watchdog Ignored:
Sep 1998 A Meltdown Begins at Long-Term Capital Management This hedge fund invented complex mathematical formulas and placed bets using derivatives -- all of it done in secret. LTCM's crisis also reveals how the world has become financially interconnected.Read more.
Dec 1998 No to Born; No to Regulation Despite LTCM's near-collapse, Congress and top regulators resoundingly reject Brooksley Born's push to regulate derivatives. Read more.
"Because of our inability to regulate financial markets, we have no idea who has the credit default swaps"...
1999 The Banking Laws Are Changed For decades big banks pressed Congress to repeal the 1933 Glass-Steagall Act and allow investment banks and commercial banks to merge. It finally happens. The new superbanks are free to make riskier investments. Read more.
March 2000 Tech Bubble Bursts in Late '90s It had been fueled by the notion that old rules no longer applied (such as, businesses needed to make a profit). Investors and the SEC smell a rat in the way investment banks handled those IPO deals.Read more.
May 2000 Two Boston financial analysts figure out Bernard Madoff probably is running a Ponzi scheme.Read more
2001-2006 Housing Prices Can Only Go Up! After the Internet bust, and then 9/11, Alan Greenspan lowers interest rates. It fuels a massive housing boom. But by 2007, the party's over. Read more The lower interest rates, over long periods of time, combined with the above policies hit the housing market together
AND...
3 mins and 30 secs - Says 'we didn't realize housing doesn't go up forever' yet the excuse for the derivatives housing nonsense (triple AAA rated toxic assets) is 'this is the normal financial crises that occurs every 5-7 years'.
Feb 2006 Alan Greenspan retires, replaced by Ben Bernanke. Before leaving office, Greenspan receives the Presidential Medal of Freedom, the country's highest honor. Read more.
March 2008 Bears Stearn Freefall Rumors fly about Bear's huge exposure in subprime mortgages -- soon to be dubbed "toxic assets." Investors rush to pull their money out of the investment bank. Read more.
Sept. 7, 2008 The U.S. Nationalizes Fannie and Freddie The crisis is spreading. And the two mortgage giants with $5 trillion in assets, are the definition of "systemic risk." Read more.
1. 2 institutions owned 50% of the mortgage market.
2. Not backed by capital
3. Double dealing with wall street and congress - Mentality: Boom and Bust - Trying to score big off a gamble, very casino movie kinda game play.
4. "Profits get privatized and losses get socialized"
5. Over-subsidy on housing also presented people to own half an 'American Dream' (the other half being hard work to deserve what you get) - Combined with a shrinking public sector job market and consolidation of private firms into conglomerates (reducing private sector job market)- squeezed the job market on two sides.
6. Useful to prevent companies from becoming 'too big to fail' in the first place.
Sept. 12-14, 2008 Lehman Brothers Nears Collapse But Treasury Secretary Paulson, a free marketer, refuses to have the government bail out Lehman. For him, moral hazard trumps systemic risk.Read more.
Sept. 13, 2008 A Secret Deal As Lehman melts down, it appears Merrill Lynch, the second-largest investment bank, could be next. Paulson, Ken Lewis, John Thain secretly cut a deal: Bank of America will buy Merrill. Read more.
Sept. 15-16, 2008 Markets Crash, Credit Freezes The Merrill deal can't stop the meltdown; Lehman was more interconnected than anyone realized. Read more. AIG had sold credit default swaps -- a type of insurance -- against the collapse of Lehman, assuming it could never happen. Read more.
Sept. 18, 2008 Government Asks for $700 Billion The Paulson Three-Pager Requesting $700 Billion Economist Simon Johnson's opinion on the document Paulson sent Congress Sept. 18, 2008 asking for the money. Read more.
"As close to a blank check as you can get without asking for a blank check"...
(see 1 minute 30 seconds into video: Paulson requires no oversight or accountability)...
Then Congress did some grandstanding while they didn't even attach requirements to the money they gave in the bail outs...
Oct. 13, 2008 Top Bankers Summoned to Washington To boost the nation's confidence in the banks and get them lending again, Paulson tells nine CEOs each of their banks will get tens of billions; the government will become a major stakeholder. Read more.
Oct. 23, 2008 Testifying before Congress on the financial crisis, Greenspan admits that his premise that markets could be trusted to regulate themselves was wrong.Read more.
Dec. 2008 Bernard Madoff, head of a prominent Wall Street trading firm -- and an unlicensed investment adviser -- confesses to a Ponzi scheme that's cost investors $65 billion. Read more.
Dec 2008 Government's Message to Bank of America Bernanke and Paulson tell Ken Lewis: "You cannot pull out of the Merrill deal" -- even though BofA is facing $15 billion in losses on Merrill's balance sheets. Read more.
Jan 2009 The New President's Challenges Credit markets are frozen, there's rising unemployment and housing foreclosures, two wars -- plus a growing national debt. Read more.
Present Will OTC Derivatives Be Regulated? New rules have been proposed, but the financial lobby is fighting back. And Brooksley Born is offering another warning.Read more
More reporting on the history and corruption of the financial crisis...
(Notice how the corporations see their clients i.e. us... clear contradiction of interest!)
Above Interview is of the authors of the book: All The Devils Are Here
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