Monday, August 15, 2011

Wall Street Wilding

Illustration by Ian Michael Rousey & Chris Nosenzo

Read it and Seethe
What will it take for Americans to finally get the message that much of Wall Street, in its current form, is a corrupt enterprise in need of a top-to-bottom overhaul, a task that the year-old Dodd-Frank law, for all its verbosity, barely attempts? (Cohan - Ending the Moral Rot on Wall Street)
There have been numerous lawsuits and investigations following the Panic of '08... 
Each examination revealed layer upon layer of behavior that should make us seethe with anger. These include the decision to manufacture and sell mortgage-backed securities that were stuffed with loans of questionable value, plus the worthless AAA ratings placed on them by ratings services paid by Wall Street to do so.  (Cohan - Ending the Moral Rot on Wall Street)
He goes on to list the multi-million dollar fines happily paid by these immoral disciples of Moloch.  Get it? A $500 million fine is chump change, merely a cost of doing business.  The Titans of Wall Street destroyed the world economy with their toxic debt bombs, governments brought low, people left destitute, yet the instigators of this financial destruction are happily earning record profits and getting reelected instead of rotting in jail or hanging from a lamppost.

Three Crises:  Financial, Political, Legitimacy of the Elites

Stratfor founder George Friedman has written an excellent analysis entitled, Global Economic Downturn: A Crisis of Political Economy.  In it he explains how the financial elites' unabashed immorality and naked greed caused the financial crisis, which in turn sparked a political crisis that is now becoming a legitimacy crisis.  The aura of invincibility and omniscience has evaporated; the masses realize that the venal elites don't know what the hell they are doing.
A sense emerged that the financial elite was either stupid or dishonest or both. (Stratfor)
In this excellent article he lays out how this international crisis started (the US carpet bombed the world with toxic debt), how it hastened the decline of the already teetering welfare states, and where he sees it all going.
It is vital to understand that this is not an ideological challenge. Left-wingers opposing globalization and right-wingers opposing immigration are engaged in the same process — challenging the legitimacy of the elites.

This, then, is the third crisis that can emerge: that the elites become delegitimized and all that there is to replace them is a deeply divided and hostile force, united in hostility to the elites but without any coherent ideology of its own. In the United States this would lead to paralysis. In Europe it would lead to a devolution to the nation-state. In China it would lead to regional fragmentation and conflict. (Stratfor)
He concludes, Like Victor Davis Hanson, that this is a crisis of legitimacy. The elites have blown it; we don’t trust them anymore.

When There is no Downside...

In the past, all of this would culminate in the masses hanging the bankers and the elites from lampposts and looting and burning their property.

Civilized society instituted the state, creating a nation of laws not of men. The state would hold everyone to the rule of law and punish the guilty in order to short circuit such violence. Well, the state has failed, the masses are in angry misery and the elites who robbed us and crashed the world economy pay no price whatsoever.

This leads me to rethink the limited liability concept of financial institutions.  It is obvious that the financial titans have no fear of consequences, since it is we the people who suffer their burdens, and that is the root of the problem.

53 comments:

Always On Watch said...

What should be the rule of thumb for investing in the stock market: Never invest more than you can afford to lose.

However, with banks and other like institutions paying nearly zero interest on savings, more and more people have jumped into the stock market. A recipe for personal disaster! I personally know of several people who watched their children's market accounts for college drop to the point that their children's education is no longer funded.

Jack Camwell said...

Well Silver it's like one comment you left on my blog:

Why don't the Wall Street guys commit suicide today like they did in the crash of '29?

Because we have to bail them out, and none of them run the risk of losing everything anymore.

Silverfiddle said...

Jack: So true. Remove the negative consequences of bad behavior and what do you get???

AOW: Yes, no interest on savings coupled with an ever eroding dollar thanks to government-corporate manipulation punishes savers with a silent tax on their savings, eating away the fruits of a lifetime's worth of work. It is immoral.

A more conspiratorial minded person would conclude that the DC-NY Axis of Evil has conspired to do this in order to drive ordinary people's money into the stock market so they have more monopoly money to play with.

conservativesonfire said...

Excelleent! Thanks for the Bloomberg and Statfor links. Two very well done articles. This quote from the Strafor report is tellig:

"Fair or not, this perception created a massive political crisis. This was the true systemic crisis, compared to which the crisis of the financial institutions was trivial. The question was whether the political system was capable not merely of fixing the crisis but also of holding the perpetrators responsible. Alternatively, if the financial crisis did not involve criminality, how could the political system not have created laws to render such actions criminal? Was the political elite in collusion with the financial elite?

Ducky's here said...

In the past, all of this would culminate in the masses hanging the bankers and the elites from lampposts and looting and burning their property.

-------------
Now that's class warfare. You're getting there, Silverfiddle.

Anyone on the campaign trail looking good for delivering the message?
Most of the Republicans are insane and Romney is Mr. Wall Street ... bleak times.

-FJ said...

I think that the whole mess can be summarized in two words. Moral Hazard. And any "human" system that seeks to minimize and/or transfer "risk" from one symbolic financial instrument to another... from a "tranched mortgage security", to a "financial derivative", to a credit default swap should be viewed as an overt attempt to defraud investors, create bubbles, and abnormally accelerate the velocity of money/ capital.

-FJ said...

...and those supposed "expert regulators" like Barney Frank and Chris Dodd who both allowed and PROTECTED the issuers of these obscene financial instruments SHOULD BE HUNG FROM THE TREES BY THEIR NECKS after being pilloried and places in stocks in the public squares of America for a few years.

-FJ said...

“Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” - John Adams

Does anyone believe that a system of law and/or finance that enables an immoral few to transfer the financial risk of their immoral behaviour onto others isn't corrupt and corrupting of the moral decencies of those whom it takes advantage of.

Wall Street CANNOT be corrupt w/o it's Washington Regulators ENDORSING and APPROVING that corruption. The fish is rotten in the head. And Frank-Dodd "reform" is a rott implanted in the system that will ensure its' future collapse. Closing a few "loopholes" does NOT a "MORAL HAZARD" eliminate.

Bunkerville said...

One of the most evil changes of the SEC was to get rid up the uptick rule, whereby one could only short a stock if the stock had gone up at the last sale.This has led to the ability to run a stock into the ground. Better yet, do what several European countries are working on, stop short selling. The market is no more nor less than a casino.

Thersites said...

Elites? No wonder no one takes the Obama Administration seriously anymore...

Mustang said...

It is difficult to trust the political and financial elites when they are in bed with one another. This is a legitimate criticism of our system. No one having worked for Goldman Sachs should ever serve as Treasury Secretary, just as no one who has ever worked for a union should receive an appointment to the NLRB. Common sense must prevail, but sadly, it never does. Not in politics. I feel politicians are not doing better because we have for far too long lowered the bar of expectation. They are giving us exactly what we demand of them: not much.

Jersey McJones said...

FJ, you loon, neither Frank not Dodd were in the majority during the bubble years of the ""tranched mortgage security", to a "financial derivative", to a credit default swap."

Genius.

Yet you, you idiot would have them hanged for doing what REPUBLICANS, you friggin' idiot, did.

JMJ

Silverfiddle said...

Another kool-aid induced rant from Jersey...

Of course, this is all the fault of the GOP, right?

Dodd and Franks's fat asses are stuffed with Wall Street cash, Jersey.

Wake up and smell the statist pork.

Joe Conservative said...

Dodd and Franks's fat asses are stuffed with Wall Street cash, Jersey

Barney Frank's is stuffed with more than that...

-FJ said...

Sure, Jersey, Barney Frank knows EXACTLY what he's doing... and so do the other Democrats...

*rolls eyes*

-FJ said...

FJ, you loon, neither Frank not Dodd were in the majority during the bubble years of the ""tranched mortgage security", to a "financial derivative", to a credit default swap."

Barney Frank - He was elected to the U.S. House of Representatives in 1980

Chris Dodd won election in 1974 to the United States House of Representatives from Connecticut's 2nd congressional district and was reelected in 1976 and 1978. He was THEN elected United States Senator in the elections of 1980, and was the longest-serving senator in Connecticut's history.

They were both "in the majority" or "in the minority" for the invention of ALL the listed nefarious financial instruments.

Speedy G said...

from Wiki:

Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion, falling to $38.6 trillion by the end of 2008...

In 1981 Fannie Mae issued its first mortgage passthrough, called a mortgage-backed security. In 1983 Freddie Mac issued the first collateralized mortgage obligation.


Say again, Snookie?

Ducky's here said...

Silverfiddle, you were doing so well.

As long as you fools think the Baggers aren't completely owned you will continue to sing the blues.

It really gets tedious when we have to continually listen to the fools who think the problem was Dodd/Frank when, as is continually pointed out to you, they weren't even majority members of the committee. Barney Frank ran the Tom Delay House? Where the bleep were you sleeping.

Yeah, between Barney Frank and lending money to the blacks the world economy cratered. Bore me later.

Speedy G said...

they weren't even majority members of the committee.

lol! Frank was in the MAJORITY from his election in 1980 until 1995... and again from 2007-10.

Dodd was in the MAJORITY for 21 of his 38 combined years in the House/Senate.

...but mr. ducky and jersey claim that they were sitting in the back of the bus and didn't know what was going on the WHOLE time.

*shakes head*

Speedy G said...

You don't CHAIR committes in Congress w/o SENIORITY. Both Frank and Dodd CHAIRED their respective Banking/Financial Regulation Committees.

You can't plead them "not knowing" on this one, duckmesiter.

Country Thinker said...

As Gretchen Morgensen points out in her book "Reckless Endangerment," Democrats are even more in bed with Wall Street than Republicans. Just because a Congressman isn't in the majority doesn't mean they don't influence events. Both dodd and Frank's finergprints are all over the financial crisis.

Speedy G said...

When is Congress going to deal with FANNIE & FREDDIE?

Dodd-Frank did NOTHING to ensure their solvency... and the bill to the taxpeayers is now $170 billion AND COUNTING

Speedy G said...

Idiots...

Obama fiddles as FREDDIE and FANNIE burn taxpayers dollars...

Joe Conservative said...

...and yet Obama's on a bus tour today wondering what he needs to do to improve the economy...

*puts fingers in ears*

LA-la-la-la-la-la-la

I see nothing...

I hear nothing...

Always On Watch said...

Thersites,
Elites? No wonder no one takes the Obama Administration seriously anymore...

The video that you embedded in the above comment is a jaw dropper. He's actually looking to The Twilight Zone as a source for economic policy!

Silverfiddle said...

The Romney campaign actually did something good today. They dubbed Obama's campaign tour through the liberal-destroyed midwest as the...

Magical Misery Tour

Always On Watch said...

FJ,
Wall Street CANNOT be corrupt w/o it's Washington Regulators ENDORSING and APPROVING that corruption.

We hear more and more cries of "More government regulation! Reagan's deregulation is the root cause of the present economic crisis!"

Well, we see where government regulation is getting us. Down the sewer!

Apparently, these jackasses who are milking the economy are greedy bastards with no moral code except for he who dies with the most toys wins. Nearly gone are the days that the very rich ask themselves, "What can I give back to a society and an economy who gave me the opportunity to be successful."

Z said...

"Dodd and Franks's fat asses are stuffed with Wall Street cash, Jersey."

Boy, and I get teased for the wrong choice of words :-)

Joe Conservative..exactly!

This video always comes to mind when Freddie and Fannie come up...

http://www.youtube.com/watch?v=usvG-s_Ssb0

There are videos showing how many times BUsh warned about their solvency, too...but, the left somehow can't find them. Go figure :-)

Anonymous said...

”Civilized society instituted the state, creating a nation of laws not of men. The state would hold everyone to the rule of law and punish the guilty ... “

An illusory concept at best. States -- and all other kinds of social structures from corporations, schools, churches down to social and service clubs -- have always been set up to promote and protect the advantages of those who set them up. In every form of social organization we find a hierarchy ruled at the top by elites of one kind or another.

Laws are made to prevent the great mass of people from going wild and spoiling life for those at the top. Only the titles change. Kings and Emperors gave way to Prime Ministers and Presidents, then to Chief Executive Officers.

It’s only natural that those in positions of advantage would seek to maintain and enhance their position while those who serve the Powerful ad Privileged dream and scheme to find ways to exchange places with whatever form of Ruling Class holds sway.

It’s the way of the world, and there ain’t nothin’ ever gonna change it. As far as whoever is in charge is concerned, we’re all nothing but Grist for the Mill.

~ FreeThinke

Anonymous said...

”... the elites become delegitimized and all there is to replace them is a deeply divided and hostile force, united in hostility to the elites but without any coherent ideology of its own. In the United States this would lead to paralysis ...”

It looks as though we’ve reached the stage where we cannot trust A) our representatives in either political party, B) the justices they appoint to the courts, C) corporations, D) Bankers or the E) Firms that Trade on Wall Street.

That means there is NO ONE in positions of power and influence we can rely on.

How could we possibly sustain this or any other society in such a situation? To whom could we turn? What could we possibly do to change things for the better?

FJ quoted:

“Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

~ John Adams

And then went on to say:



”Does anyone believe that a system of law and/or finance that enables an immoral few to transfer the financial risk of their immoral behavior onto others isn't corrupt and corrupting of the moral decencies of those whom it takes advantage of?

 Wall Street CANNOT be corrupt w/o it's Washington Regulators ENDORSING and APPROVING that corruption.”

Absolutely true, which brings us to the crux of the matter:

Who is going to watch the watchdogs and police the policemen? Who can be trusted not to be corrupted and consumed by Entrenched Power?

Marxism couldn’t do it. Unionism couldn’t do it. “Progressivism” has only made it worse (I believe deliberately so).

The virtual abandonment of Christian Doctrine as our Supreme Guide in all matters is doubtless leading to our downfall.

"All we like sheep have gone astray. We have turned everyone to his own way."

Have we reached the End of the Line? I’m only sure that some trendy new form of despotism is NOT what we need, but I imagine it’s all we’re likely to get.

~ FreeThinke

Thersites said...

This is what "financial conservatives" don't get.

It's ALL moral/social conservatism. Just because you CAN create moral hazards for other folk that may allow you to make you a few extra bucks, doesn't mean you should.

Thersites said...

...and if you DO, ultimately you're going to have to pay the ferryman.

A few thousand illegal abortions become hundreds of thousands if not millions of legal ones.

A few "morning after pill" Plan B "pregnancy aborts" become hundreds of thousands of "I won't bother to buy/take the Plan B pills"... become tens of thousands of second trimester abortions.

-FJ said...

We hear more and more cries of "More government regulation! Reagan's deregulation is the root cause of the present economic crisis!"

Republicans never controlled the House of Representatives during the Reagan years. If there was any de-regulation of banks going on, it was done with the FULL cooperation of the Democrats, who OWNED the House for all eight years AND the Senate for the last two years of Reagan's presidency.

That dog just don't hunt.

-FJ said...

ps - Remember the Keating Five? Four Democrats and John McCain...

Jersey McJones said...

Silver and FJ, when the particular bad acts that you guys were referring occured, neither Frank nor Dodd was in the majority on the Hill.

Secondly, the Congress did not create the financial instruments that caused so many of our recent troubles. Wall Street did that for themselves. The GOP, who was in control on the Hill at the time, simply did nothing about it.

The rise of the modern banks/insurance/investors corporatocracy was certainly assisted by both the Democrats and the Republicans over the years.

But in particular, over the past thirty years, the GOP has been far, far more the enabler than the Dems.

I don't know about the rest of you guys, but Silver, I know you're around my age and so you certaintly remember this fact.

The GOP skillfully coopted the rhetoric of the rightwing libertarians and social conservatives and parlayed that into a campaign to shift a huge portion of the wealth of country to the very few.

So misdirected are you guys often are, many of you beleive the government created the crashes and busts with the very tools that were supposed to have prevented it, when it is obvious to any honest observer that the crises were created by private interests that the government could and should have restrained.

It's like that old Black Sabbath song, Heaven and Hell (a song about exactly what I'm talking about right now) goes... "Fools! Fools! Fools!"

JMJ

Always On Watch said...

FJ,
Republicans never controlled the House of Representatives during the Reagan years. If there was any de-regulation of banks going on, it was done with the FULL cooperation of the Democrats...

I should have pointed that out in my comment. I got interrupted, clicked publish, and left my computer for a while.

Both Reagan and Thatcher are being blamed in some quarters for the present banking mess. Funny, that -- people don't remember that Reagan and Thatcher didn't govern by fiat.

Thersites said...

Silver and FJ, when the particular bad acts that you guys were referring occured, neither Frank nor Dodd was in the majority on the Hill.

The "bad acts" as you call them didn't happen the day the system collapsed. They happened every day leading up to it and DEMOCRATS HAVE BEEN THE MAJORITY in BOTH houses of Congress for GREATER than 50% of the time. And during THAT time, Mr's Dodd and Frank were in the MAJORITY up to their EYEBALLS.

Secondly, the Congress did not create the financial instruments that caused so many of our recent troubles. Wall Street did that for themselves.

Wall Street? FANNIE and FREDDIE were Wall Street, NOT Pennsylvania Ave??? What part of "Government SPONSORED Enterprise" (GSE) do you not understand? And does anyone here not understand the role of the "government created" and "independent WITHIN government created FED? Where do you think BANKS get their money from, a Milton Bradley Monopoly game???

Thersites said...

So misdirected are you guys often are, many of you beleive the government created the crashes and busts with the very tools that were supposed to have prevented it, when it is obvious to any honest observer that the crises were created by private interests that the government could and should have restrained.

You haven't seen very many magic acts, have you? Talk about NOT being able to follow misdirection.

-FJ said...

people don't remember that Reagan and Thatcher didn't govern by fiat.

Then what's all that whining Obama's doing about the Tea Party Congress?? That was only this afternoon. Just how bad are their memories? I think Reagan w/Alzheimers was more durable. ;)

Stanley Kowalski said...

Meanwhile, back within the beltway...

Trestin said...

Not afraid of consequences? You mean like Soros deliberately crashing most of the currencies of South-East Asia; and then having the nerve to lecture them on not transitioning fast enough to a green economy?

Anonymous said...

Get this -- it's IMPORTANT:

From Mona Charen's most recent column:

"Henry Miller at Forbes notes that the FDA now "specifies that a corporate officer can be convicted of a misdemeanor for corporate violations if he was in a position to detect, prevent or correct an action that caused a violation of law -- even if the person had no knowledge of the action. That is, intent is not required. Penalties for a convicted executive can include forfeit of profits, fines and a prison sentence."

"Multiply that across the hundreds of agencies and departments that regulate U.S. business and you have a substantial chilling effect on risk-taking and entrepreneurial activity.

"The private sector has been bullied and burdened into quiescence. The public sector, which depends upon a vibrant private economy, has gone on a bender without the slightest nod toward reality."


Submitted by FreeThinke

Jersey McJones said...

"FreeThinke",

Please provide a real world example of that. I'd love to see it.

JMJ

Anonymous said...

An example of WHAT, Jersey?

I quoted Mona Charen, who was reporting on a Draconian government policy bound to have a stifling effect on entrepreneurship.

Surely you can see that if an executive can be held criminally liable for decisions made of which he had no knowledge and in which he did not participate even indirectly, it would tend to paralyze him?

Other than that I don't know what you could be talking about.

~ FreeThinke

Anonymous said...

Here's the link to Mina Charen's column:

http://townhall.com/columnists/monacharen/2011/08/09/broken_system_or_broken_policies

~ FreeThinke

Kid said...

Yea, a lot of people don't know (I believe) but the bailout wasn't 787 billion. That was misdirection.

The Fed, according to folks at www.minyanville.com, more than a year ago, printed up 30+ Trillion to give to banks foreign and domestic in the form of buying up their mortgage derivative monopoly paper so that They could all have a Do Over.
The Fed will never get OUR money back because these derivatives are not tied to actual physical real estate. They are bets on bets placed on other bets.

Probably by now that's 40 trillion that is going to come out of the pockets of US, our kids, and their kids, and so on through inflation/devaluation of the dollar and eventually taxes and/or a Severe deflation of standard of living.

The 1900 dollar is worth about 10 cents these days. The dollar is down 40% or so just since 2003. We're all being robbed and raped with telephone poles.
But obama is hip right. plays basketball and shit so it's all good.

Thersites said...

"specifies that a corporate officer can be convicted of a misdemeanor for corporate violations if he was in a position to detect, prevent or correct an action that caused a violation of law -- even if the person had no knowledge of the action.

----

“The more corrupt the state, the more laws.” Publius Cornelius Tacitus

Ducky's here said...

40 trillion? Are you on dope?

Kid said...

yea 40 trillion. Check out the fed's balance sheet. You know what that is right?

There's 600-700 trillion of derivative paper out there.

Or would you rather I read you a bedtime story?

Anonymous said...

If we lived by Principle, instead of blindly rapacious feral Instinct, we would not be drowning in trillions of tedious, stifling specifics.

~ FreeThinke


"When you break the big laws, you do not get freedom; you do not even get anarchy. You get the small laws."

~ G.K. Chesterton - in the London Daily News, 7/29/1905

98ZJUSMC said...

Jack: So true. Remove the negative consequences of bad behavior and what do you get???


Progressive Pedophillia Utopia!

98ZJUSMC said...

Other than that I don't know what you could be talking about.

~ FreeThinke



I've been trying to for the last year, at least.

98ZJUSMC said...

Frank and Dodd have/had been playing "hide the Fannie Mae weenie" for years. Doesn't take a congressional majority to do that.