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OpEdNews Op Eds    H3'ed 8/3/10

Wall Street's Collapse, 3 Years Later

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I asked: "So, what happened to due diligence?" one of the "market disciplines" that these bankers are always preaching?

He shrugged, indicating that there was so much to be made that normal safeguards and standards were pushed to the side or forgotten. He said there were many internal investigations underway then. I thought, how can we allow them to investigate themselves?

And then it happened, in August, the dog days of summer, when, as if in accord with the law of gravity, what had gone up started coming down.

AP reported: "NEW YORK (AP) -- Wall Street suffered one of its worst losses of 2007 Thursday, leading a global stock market plunge as investors succumbed to months of worry about the mortgage and corporate lending markets."

On Aug. 9, President Bush met the press to reassure us that all was well on the Wall Street front. He was asked about market "volatility" which is how the meltdown was then described.

He prattled on, arguing, "the fundamentals of our economy are strong. I mentioned some of them before. Job creation is strong. Real after-tax wages are on the rise. Inflation is low. Interestingly enough, the global economy is strong, which has enabled us to gain more exports, which helped the second quarter growth numbers to be robust, at 3.4 percent.

"Another factor one has got to look at is the amount of liquidity in the system. In other words, is there enough liquidity to enable markets to be able to correct? And I am told there is enough liquidity in the system to enable markets to correct."

Note, he repeated what he "was told." And then he told us.

Few believed it.

While these message points rolled off the "decider's" teleprompter, a trader was commenting on his meandering press conference on the financial Web site Ml-Implode in real time:

"He's being hit with a lot of questions on mortgages, credit crisis, and the economy ... and of course the economy is "in for a soft landing," he's been assured by the treasury that "there is plenty of liquidity," yadda-yadda-yadda.

"But he is stumbling over his words more then usual, not making eye contact, not finishing his sentences ... and when he wanders a bit, he quickly goes back on script. It is very odd to watch, to say the least."

Historian Carolyn Baker was one of the few bloggers I read arguing that such double talk was all too common and that we all must become more engaged with these issues.

She also noticed that few in the left-liberal end of the political spectrum had a firm grasp on economic issues "which I suspect comes from a fundamental polarization between activism and financial intelligence."

Baker began stressing "the role of fraud, theft, and malicious intent in the American and global financial train wreck which has been exacerbating."
We would see that word "train wreck" more in the weeks to come.

This account is from my book PLUNDER: Investigating Our Economic Catastrophe (Cosimo Books). It couldn't have been more timely, but it was largely ignored. It came out a week before Lehman Brothers collapsed at a time when some media outlets were forecasting an upswing.

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News Dissector Danny Schechter is blogger in chief at Mediachannel.Org He is the author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) available at Amazon.com. See Newsdisssector.org/store.htm.
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