As most of us understand by now, the stark increase in US income inequality in the 21st century coincides with the off-shoring of US jobs, which has enriched executives with "performance bonuses" and the rapid rise of unregulated over-the-counter (OTC) derivatives, which enriched Wall Street and the financial sector at the expense of everyone else.
Frontline's October 21 broadcast, "The Warning," documents how Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry Summers, and Securities and Exchange Commission Chairman Arthur Levitt blocked Brooksley Born, head of the Commodity Futures Trading Commission, from performing her statutory duties and regulating OTC derivatives.
Greenspan may have bet our country on his free market ideology, but does anyone believe that Rubin and Summers were doing anything other than protecting the enormous fraud-based profits that derivatives were bringing Wall Street? As Brooksley Born stressed, OTC derivatives are a "dark market," which means there is no transparency -- regulators have perilously inadequate information on them just as do their buyers."
(In actual fact, no one has any idea of the true value of all the derivatives that have been sold over the past decade or so. Some say $500 trillion, others $50 trillion, while many claim that the price at which most of them could be sold or redeemed may well be much much less than is consistent with even the lowest of those two figures.)
Roberts continues:
"The financial insiders running the Treasury, White House, and Federal Reserve shifted onto taxpayers the cost of the catastrophe they created. When the crisis hit, Henry Paulson, appointed by President Bush as Rubin's replacement as the Goldman Sachs representative running the US Treasury, hyped fear to obtain from "our" representatives in Congress, with no questions asked, hundreds of billions of taxpayers' dollars (TARP money) to bail out Goldman Sachs and the other malefactors of unregulated derivatives.
Yet despite the total insanity of unregulated derivatives, the high level of public anger, and Greenspan's confession to Congress, nothing has been done to regulate derivatives. One of Rubin's Assistant Treasury Secretaries, Gary Gensler, has replaced Brooksley Born as head of the CFTC. Larry Summers is the head of President Obama's National Economic Council. Former Federal Reserve official Timothy Geithner, a Paulson protege, runs the Obama Treasury. A Goldman Sachs vice president, Adam Storch, has been appointed the chief operating officer of the Securities and Exchange Commission, which means that the Banksters are still in charge.
Is there another country in which, in full public view, so few so blatantly use government for the enrichment of private interests, with a coterie of "free market" economists available to justify plunder on the grounds that "the market knows best"? A narco-state is bad enough. But the US surpasses this horror with what can most accurately be called a financo-state." http://www.counterpunch.com/roberts10262009.html
What did we get over the last year?
1. Taxpayer Bailout. Taxpayers have committed $4.7 trillion to the financial sector over the last year, only $700 billion of which was through TARP. Even banks like Goldman Sachs that returned their TARP funds earlier this year continue to benefit from other bailout programs, such as the $12.9 billion that Goldman received as an AIG counter-party that it will never have to pay back. Once all crisis-related programs are factored in, taxpayers could be on the hook for a grand total of up to $18 trillion for this economic rescue.
2. Trillions of Dollars in Lost Wealth for Ordinary Americans. The bank-induced economic crisis has cost Americans trillions of dollars already, on top of the trillions more we have committed through the bailouts.
American families lost $11 trillion in wealth in 2008, nearly 18% of their net worth.
Americans have lost $6.1 trillion in homeowner wealth since June 2006.
Banks have generally refused to modify mortgages to help prevent foreclosures because it is more profitable for them to collect fees as a family loses its home than it is to save the home.
Over 5.3 million Americans have lost their jobs since last September, and the national unemployment rate is at its highest in 26 years.
Personal bankruptcies are soaring, and are expected to reach levels not seen since a 2005 law made it more difficult to file bankruptcy.
