Sometimes, we don't see what's in front of our faces. No one who has followed the details of the catastrophe can deny that a financial failure was facilitated by the media failure to follow its trajectory and detail its criminality, causing inattention and denial within a distracted public, including its activist wing.
When most of us think of crime, we think of gangsters, not banksters, wrong-doers who can be shamed, named and if possible prosecuted. Conditioned by years of movie-going and TV watching, we look for bad guys, individuals, not institutions with well elaborated schemes designed to transfer your wealth to their vaults.
In that respect, Bernie Madoff was the perfect villain, a poster child for financiers gone wild. Who doesn't want to kick a "Ponzi King" when he's down? Alas, Madoff's $65 billion dollar fraud was child's play when compared to what the bigger firms pulled off.
There is another frame, which has yet to be adopted by the left or the mainstream media. It was articulated simply by Graydon Carter, the editor of Vanity Fair, a publication more at home with Groucho Marx that Karl. He wrote of the meltdown "[This] may well turn out to be greatest non-violent crime against humanity in history " never before have so few done so much to so many."
This is way I came to see the problem as I followed the money and examined how it was made. We are talking about what's known as a criminal enterprise, a cabal, not simply a few high profile marauders.
It is the kind of crime that needs to be prosecuted under the Rico laws that not only recognize but go after real world, not imaginary, criminal conspiracies.
As I explain in my film Plunder The Crime of Our Time (Disinfo Films) and more detailed companion book, The Crime Of Our Time (Disinfomation) there were three interconnected rings in this circus.
First there was the housing bubble built around what the FBI called an "epidemic" of intentional mortgage fraud.
Then, there was the bundling, securitization and resale of those shady loans worldwide with phony assessments of their "asset" values by ratings agencies on the payroll.
And, finally, there were insurance scams by companies like AIG that guaranteed payments to those that knew there would be massive defaults and foreclosures. The insurance boys and the bankers leveraged their investments into pyramids of trillions with bogus algorithms that even they couldn't understand.
This created a system staffed by tens of thousands of "professionals" who pumped out phony products on an assembly line, legitimating them with the imprimaturs of financial institutions that practiced voodoo accounting. As James Kwak explained on BaselineScenario, for banks, "there is no contradiction between fleecing customers and making lots of profits (which is what makes you safe and sound).
(a) Originate bad loans;
(b) Pocket fees;
(c) Sell bad loans to an investment bank for distribution;
(d) Repeat."
Inside the industry, the term of art was "extraction," another way of saying looting. A risky super-leveraged capital structure was built with no objections from politicians who took their cut and regulators who seem to have been hired to look the other way
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