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Only about a month ago, most of us ordinary folks were shocked to learn that the greatest economic empire the World has ever known was basically rotten to it's core.
Ancient and venerated financial giants on Wall Street began toppling like hollow images of themselves. And hollow they were, we came to learn, as we watched in awe as they collapsed, one by one, like the World Trade Center towers did at the other end of GwB's rule.
These were not attacked by foreign terrorists. They were carved away from the inside with a razor sharp scalpel of greed, lethally removing muscle and bone, right down to their foundations, until the slightest breeze could bring them down.
GwB was warned of a possible terrorist attack on the US when he stole into office. He ignored it.
For years, he's been warned about the impending collapse of Wall Street. He ignored it.
How could the Street be in trouble when it was soaring into the stratosphere? Yet those inside knew, as they stuffed their bags with bonus cash on the way out, when what they were entrusted to protect began folding. Why should they leave empty handed? StealAllUcan, whileUcan.
We should have guessed something was up when banks started stripping the word 'trust' out of their names.
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But why hasn't anyone been arrested? Hometown bankers made bad mortgage loans, on houses worth 2, 3, 4 times what the borrower could afford. Even when homes by hundreds of thousands across our land went into foreclosure, they kept making impossible loans, betting they could take houses back and sell them again. Dare we call them home wreckers?
When that didn't work, they bundled bad mortgages together and discounted them to Wall Street Bankers, sight unseen. After all, this was the full thrust of GwB's much touted Ownership Society.
Then, whiz kids with Harvard MBAs and Uncle Miltie Friedman's urging, started inventing financial instruments out of nothing at all. Using stacks of contractual papers that only an advanced calculus major could understand, they invented "derivatives".
Worthless sub prime mortgages were repackaged in sparkling tinsel, tied up with fancy bows they called Credit Default Swaps, an insidious form of derivative.
Senator Phil Graham had tacked a Rider onto an Appropriations bill in the last hours of a session, saying that derivatives, whatever they were, would not be regulated like stocks and bonds. They were to be sold 'over the counter' by unregulated private agreements.
Derivatives are NOT investments. They are bets against both sides losing. Hedge Funds hedged these bets. Derivatives are nothing but gambling, pure and simple.
It's a giant shell game that Wall Street played expertly, always one step ahead of discovery. Until, someone figured out, there never was a pea under any shell, not from day one.
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So why does this affect the price of tea in China? If the banker boys are just jerking each other off over in a dark corner, who cares?
Because, like the silent killer Aids, a similar virus was traveling incognito into financial markets around the World. Based on 'trust' (remember that word?) of the American Financial Empire, Global Banks bought instruments stuffed with derivatives, and were happy to do so, trusting the indecipherable sales contracts.
Banks bought them, investment funds bought them, nations bought them, worldwide. For years.
Then somebody peeked. It was like the Emperor's new clothes. When someone said, "Hey! there's nothing there!" it all started collapsing like a house of cards. Worse than a house of cards. With that, at least you have the cards to pick up.
It was so pervasive, into every nook and cranny of the World's economy, that no financial institution was spared. Falling dominoes is too mild a description.
Crash. Meltdown. Collapse. Ruin. Those are the words we hear, but are just beginning to understand. Another generation is about to learn what the word Depression means.
Why hasn't anyone been arrested?
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US Treasury Secretary Hank Paulson, formerly of Goldman Sachs, knew it was coming, and tried to cover by inoculating some, but not all, financial institutions with injections of cash. The ones he didn't, collapsed, toppling Wall Street giants, which in turn plunged Global Stock Markets into panic. Those "too big to fail", were falling.
American financial giants had peddled junk to everyone. Junk. And the World's banks became junkies. None of them knew how much of Wall Street's viral infection was inside their investment portfolios. What's worse, they didn't know how much was in someone else's portfolio. If they made uncollectible loans to others, they might also topple. So they froze, afraid to take a
step in any direction. And things only got worse.
Hank Paulson, with help of Federal Reserve's Ben Bernanke, are flipping through the blank pages of their Economics Book, trying to write the next Chapter before anyone catches on that they don't know what they're doing.
Former FED Chair Alan Greenspan testified before Congress that he had no idea this could happen, even after he was warned time and time again. It was a complete surprise to Alan that Free Markets DO NOT operate in their own self-interest.
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Self-regulation is dead. Reaganomics is dead. Trickle down is dead. Derivatives are dead. Good riddance.
When I came into this World, seven months before Pearl Harbor, America provided a moral imperative for all to look up to. Here at the ending of my life, America is providing a moral degeneracy for all to curse.
Tens of Trillions of dollars have been stolen in a Global Confidence Game. Wall Street polluted our Planet with their Junk.
Why hasn't someone been arrested?
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