The Unnanounced Class War

[bush_cheney2004]

...Is your opinion that no crimes were committed, or just that nobody is actually going to be punished for anything? They're not actually the same thing.

Fraud has always existed at some quiescent level long before this, but fraud was not the main cause for the "scheme" or financial system crisis. The principals went in with their eyes wide open, and the risk came back to bite them in the ass, including a legally complicit government.

Regardless, as these lawsuits in progress make their way through the courts, evidence obtained through subpoena will become public knowledge, like the debate between Morgan Stanley brokers about whether to call their CDO "Subprime Meltdown", "Nuclear Holocaust", or "Shitbag". It will become harder for clowns in politics and the media to spin the story that they're trying to sell right now. It will be harder for the banks and their allies to claim that they need less regulations, not more.

All well and good, but perfectly legal given regulatory loopholes.

And ultimately, whether or not they're held responsible in a legal sense, they'll be shown to have been responsible in a moral sense, and that will have political ramifications.

Morals...schmorals. Money talks....morals walk.

Edited February 24, 2013 by bush_cheney2004

[Pliny]

Yes, I recall seeing the CEO of Lehman Bros telling a committee how bad he felt that his company was gone; this guy who'd collected something in the neighborhood of $100 million of performance bonuses in the previous 3 years was now out of work. Tough times, bro. I know those feels.

Too bad some got bailed out and we can now wait for the next bust. What do you think it will be, kimmy? Currency crisis? Stock Market crash?

They hired a fox to guard the hen-house. And so did Obama later on. They can hire somebody who doesn't understand the game, or they can hire somebody who understands the game and has a vested interest in making sure the game doesn't change.

Of course Paulson knew what was up, of course he assured everybody the regulators were doing a bang-up job, and of course he went around trying to raise support for the bailout as soon as the stuff hit the fan. Why would this surprise anybody?Lots of people smoke pot, and traffic is usually moving faster than the posted limits, so there shouldn't be any rules on what the banks can do? I'm not quite sure that follow, Pliny.None of this has any bearing on the subject under discussion. This is just generalized libertarian rambling.The regulators' "preference" for fines and settlements over criminal trial is because they don't have the budget to take these cases to trial, and because they would likely only be able to obtain convictions against the lower tier employees.Fraud, as we discussed earlier.

There it is in a nutshell. Paulson, Secretary of the Treasury, leading on Nancy, Barney and the boys, economic ignoramuses all, with the help of Alan Greenspan at the Fed just building the American dream of social equality for all.

>You can talk all you want about "signals", but there was never a signal sent that banks ought to approve mortgage applications from waitresses claiming to earn $12,000 a month. Saying that banks must treat qualified applicants in urban areas the same as they treat qualified applicants in the suburbs wasn't a signal to disregard their own due diligence process. Saying that banks must treat qualified applicants with swarthy skin-tones the same as they treat qualified applicants who are paler wasn't a signal to disregard their own due diligence process.

Greater powers than they wanted this. Think Acorn, the house and the Senate. Together they ignored economics and plowed through with social justice.

Fractional reserve banking has been around a long time and is used in a lot of countries. It works well as long as the fundamental principle is observed: lend money to people who can repay it.

It's used in every country, except perhaps Iran, North Korea and Somalia. Fractional Reserve Banking became institutionalized when central bankers became the money printers for national economies so the banking system would never fail. We're seeing that unravel now.

Yes, hiding unwisely created credit was the problem. And it was their decision to approve mortgages for "anybody who can fog a mirror", as one exec put it, that unwisely created that credit.

Yep, even regulators couldn't stop it. Did Barney over at Fannie Mae say hey we aren't buying these useless junk mortgages from you guys and as a matter of fact this is outright fraud or did he say umm...ok I'll buy that one.

Wall Street invented a means by which it no longer mattered to them if the loans they issued were repaid, and in fact they could make more money from risky lending than from safe lending. That's why they approved all those junk mortgages:

they didn't lose money if the mortgage defaulted. Such a system should not have been allowed to exist.

Now they have kimmy on their tail. What worse hell could they have created?

The system of creating money out of nothing allowed for the creation of WWI, the Great Depression, WWII, the Korean War, the Viet Nam war, the 70's recession, the S&L bust, the tech boom, and the housing crisis and it's just about over with governments around the globe unable to sustain their levels of spending. They have just about run out everyone else's

money.

-k

[ReeferMadness]

Yep, even regulators couldn't stop it. Did Barney over at Fannie Mae say hey we aren't buying these useless junk mortgages from you guys and as a matter of fact this is outright fraud or did he say umm...ok I'll buy that one.

I'm not sure that the regulators couldn't stop it but they didn't. There wasn't the political will to do anything about it. Greenspan and his successor Bernanke drank the coolaid and couldn't believe in anything other than their misguided notion that the market would police itself.

The system of creating money out of nothing allowed for the creation of WWI, the Great Depression, WWII, the Korean War, the Viet Nam war, the 70's recession, the S&L bust, the tech boom, and the housing crisis and it's just about over with governments around the globe unable to sustain their levels of spending. They have just about run out everyone else's

money.

What nonsense. Fractional banking was responsible for the depression and both world wars? Where do you dig up these tin-hat theories?

[Canuckistani]

Just saw an interview in PBS with an economist who said that banks began to subvert Glass-Steagal as soon as it was passed. They found ways around it, then they found ways to get the politicians to weaken it, and finally they got Clinton to repeal it. http://billmoyers.com/episode/preview-taming-capitalism-run-wild/

“Capitalism has a long-term tendency to polarize wealth and income,” Wolff tells Bill.

He questions what kind of society would have people living in 40 million condos while outside people live in abject poverty. He gives some examples of how this poverty affects children, and makes the idea of equal opportunity for all a blatant lie.

[ReeferMadness]

Just saw an interview in PBS with an economist who said that banks began to subvert Glass-Steagal as soon as it was passed. They found ways around it, then they found ways to get the politicians to weaken it, and finally they got Clinton to repeal it. http://billmoyers.com/episode/preview-taming-capitalism-run-wild/

Yes, Clinton repealed it. This supports the contention that there is really only one political party in the USA, with two wings.

[Canuckistani]

We see that in the people whom Obama got to run finance - the usual suspects. And his actions haven't matched his rhetoric. The party you're talking about is the RPPP, I think.

[Pliny]

I'm not sure that the regulators couldn't stop it but they didn't. There wasn't the political will to do anything about it. Greenspan and his successor Bernanke drank the coolaid and couldn't believe in anything other than their misguided notion that the market would police itself.

There certainly wasn't any "political" will to do anything. Rememeber, it was a boomiung economy - What was there to do?

Nancy, Harry and Barney were ecstatic and as late as July 2008 Barney was allaying any concerns about the housing

market.

Greenspan and Bernanke drank the cool-aid? These were the men in charge!

What nonsense. Fractional banking was responsible for the depression and both world wars? Where do you dig up these tin-hat theories?

It was the whole central banking system and their policies, of which the fractional reserve system is a part. Wars had to be paid for somehow. It wasn't extracted out of the economy immediately - it was borrowed. But you should understand a little more about central banking.

[Pliny]

He questions what kind of society would have people living in 40 million condos while outside people live in abject poverty. He gives some examples of how this poverty affects children, and makes the idea of equal opportunity for all a blatant lie.

What kind of society? How about...ummm...Cuba. Castro even has a private hospital - while all the 57 Chevy's from before the revolution are held together with whatever can be scrounged up. But the people are happy. It's a great place to be stuck.

Capitalism has a longterm tendency to polarize wealth and income? Is there some unfettered capitalism around somewhere

to prove this? The United States being perhaps the closest example, in days of yore, lifted the living standards of the whole nation and in the matter of a century and a bit became the most powerful nation on the planet. If you looked at it you might say, look at all that wealth and income that was polarized while the rest of the world sufferred! Sorry, but they produced all that wealth and income - it didn't exist before. Then of course, certain global dreams came into

existence and there were visions of freedom and democracy that could be brought to the whole planet - all that was necessary was the political will. Experiments in totalitarianism began. The USSR was formed to bring the revolution and

socialism to the world. Nazism and Fascism, different forms of socialist totalitarianism, rose up. And hard economic

times, brought about by a now centralized banking system gave opportunity for these ideologies to gain a foothold even

in western capitalist societies. It was the influence of the bankers, now controlling the money supply, on governments that started centralizing governmental powers. It is true that well-positioned capitalists, now the prominent central bankers, flummoxed the economically illiterate politicians thus more or less taking over the direction of governments, primarily enabling them to ensure their concentrated wealth stayed in their hands. A free market would never have created that scenario alone. Once central banking put them in charge of the money supply they could now direct the whole economy.

It seems people get a politicized version of history these days and, like kimmy, really can't see cause and effect to

events that occur. The banking system was created over a long period. Today those in charge don't seem to realize, even themselves, the power of it and are abusing that power for political and personal purposes.

But that's enough rambling for now. Gotta get on with my day!

Edited February 25, 2013 by Pliny

[Pliny]

We see that in the people whom Obama got to run finance - the usual suspects. And his actions haven't matched his rhetoric. The party you're talking about is the RPPP, I think.

Obama's rhetoric is pretty general, his actions demonstrate his direction and progressivist ideology. Because he isn't

instituting totalitarian socialism, doesn't make him less of a socialist ideologue than he is - who knows where that is - his rhetoric doesn't match his actions which makes it difficult to ascertain.

[GostHacked]

Quote

Yes, that is exactly what happened. Feel better? Everything ok now? At least another housing boom will not occur. What is going to happen to get growth in the economy now? How is prosperity going to be created now? Shouldn't we be a little wary of economic growth?

This was the case, but your post seemed to indicated that this was not the case.

The Glass-Steagall act basically separated commercial banking and investment banking.We have never had that in Canada. Shouldn't we have that regulation here? Or are we less greedy and don't need that kind of regulation? The fact is that in America they have competition and that has to be regulated or else upstarts might think they can take on the big boys. Here we don't have competition we have a cartel everyone agrees what the rules are.

Canada does have banking regulations, possibly better regulations because we have not seen this type of thing in Canada. And to say we don't have competition in the banking sector in Canada is laughable.

Canada's regulations may have gotten tighter, while south of the 49th, some regulations were done away with completely which allowed the crisis to take place. After the housing crash, banksters and others were still calling for LESS regulation.

[ReeferMadness]

There certainly wasn't any "political" will to do anything. Rememeber, it was a boomiung economy - What was there to do?

Nancy, Harry and Barney were ecstatic and as late as July 2008 Barney was allaying any concerns about the housing

market.

It was actually a false economy. And if you think that the reactions of the Democrats is somehow relevant, you'll have to point out how.

Greenspan and Bernanke drank the cool-aid? These were the men in charge!I

They were supposed to be protecting the system from collapse, not accelerating its tailspin into the dirt.

t was the whole central banking system and their policies, of which the fractional reserve system is a part. Wars had to be paid for somehow. It wasn't extracted out of the economy immediately - it was borrowed. But you should understand a little more about central banking.

So, your view is that all borrowing is wrong?

[Pliny]

This was the case, but your post seemed to indicated that this was not the case.

It was the case. kimmy et al, seem interested in punishment and not a resolution to this ever happening again. Earlier

instances of booms and busts were the result of meddling by the central bank and government due to the structure of the banking and monetary system. The answers to this and earlier similarly created crises seem to be to blame, the

capitalist market bail out the privileged, write a few more regulations, collect on a few fines and maybe put someone in jail, and then continue on until the next bust; which seem to be occurring with increasing frequency.

If you want a resolution to these scenarios correct the root causes.

Canada does have banking regulations, possibly better regulations because we have not seen this type of thing in Canada. And to say we don't have competition in the banking sector in Canada is laughable.

Canada's banking system is far less competitive than in the States. It could be said we have an apparency of

competition. How many new banks have you seen crop up lately? We have some international banks that have opened business here and there is a growth in credit unions but the banks are pretty much what we have seen for the last 50 years.

Canada's regulations may have gotten tighter, while south of the 49th, some regulations were done away with completely which allowed the crisis to take place. After the housing crash, banksters and others were still calling for LESS regulation.

The more regulations you get the more the government is directing where the wealth on Wall Street will flow - you can bet it won't be to the needy. The banks and Wall Street may as well just get out of the way. Edited February 26, 2013 by Pliny

[Pliny]

It was actually a false economy. And if you think that the reactions of the Democrats is somehow relevant, you'll have to point out how.

There we are it was a false economy. Describe that for me.

They were supposed to be protecting the system from collapse, not accelerating its tailspin into the dirt.

They are the managers of the system. they direct it. they print and control the creation of money, they set the interest rate, they set the fractional reserve rate, they direct money flows. They take credit for a

strong economy and blame the market for its collapse.

So, your view is that all borrowing is wrong?

Borrowing should be out of savings not the creation of money out of thin air. I should be so lucky to have

the right to lend "money" by simply printing it or debiting your bank account.

Edited February 26, 2013 by Pliny

[GostHacked]

The more regulations you get the more the government is directing where the wealth on Wall Street will flow - you can bet it won't be to the needy. The banks and Wall Street may as well just get out of the way.

Since some regulations were done away with in the USA, we see how well Wall Street and the investment banks took the whole housing market for a ride. Do you think less regulations would allow them to conduct their business in a proper legal and ethical manner? I think you have your answer.

Obviously there was a transfer of wealth as well.

Edited February 26, 2013 by GostHacked

[Pliny]

Since some regulations were done away with in the USA, we see how well Wall Street and the investment banks took the whole housing market for a ride. Do you think less regulations would allow them to conduct their business in a proper legal and ethical manner? I think you have your answer.

Obviously there was a transfer of wealth as well.

Well, if increased regulation is the answer Wall Street may as well just get out of the way then and let the government

run it.

[Argus]

Well, if increased regulation is the answer Wall Street may as well just get out of the way then and let the government

run it.

You mean the way the government was running Wall Street in the 50s, 60s and 70s?

[cybercoma]

You mean the way the government was running Wall Street in the 50s, 60s and 70s?

Didn't you know? The US was Socialist in the 50s-70s.

[kimmy]

Greater powers than they wanted this. Think Acorn, the house and the Senate. Together they ignored economics and plowed through with social justice.

"Greater powers". Yes, when I think of the "Great Powers" that control our world, I think of the Illuminati, the Freemasons, Opus Dei, the Bilderberg group, and of course, ACORN. A group so powerful that it doesn't even exist anymore. A group so influential that its goals of advocating for the poor, that the gap between the rich and poor in America has never been greater. Yes, ACORN is the real puppetmaster pulling the strings.

The idea that the housing bubble was created by "social justice" is wrong, no matter how many times or how many ways you repeat it.

It's used in every country, except perhaps Iran, North Korea and Somalia. Fractional Reserve Banking became institutionalized when central bankers became the money printers for national economies so the banking system would never fail. We're seeing that unravel now.

Fractional reserve banking works fine when lenders are cautious about who they lend to.

Yep, even regulators couldn't stop it. Did Barney over at Fannie Mae say hey we aren't buying these useless junk mortgages from you guys and as a matter of fact this is outright fraud or did he say umm...ok I'll buy that one.

Fannie and Freddie were ordered to start buying "troubled assets" from the banks, in what was essentially a pre-TARP TARP.

Subprime mortgages issued by the GSEs defaulted at a rate equal to the national average. Subprime mortgages issued by the PLSs defaulted at three times the national average. It's not hard to figure out who was doing proper due diligence and who was rubber stamping "anybody who could fog a mirror".

Now they have kimmy on their tail. What worse hell could they have created?

It's not me they have to worry about.

The system of creating money out of nothing allowed for the creation of WWI, the Great Depression, WWII, the Korean War, the Viet Nam war, the 70's recession, the S&L bust, the tech boom, and the housing crisis and it's just about over with governments around the globe unable to sustain their levels of spending. They have just about run out everyone else's

money.

I don't even know where to start with that. Wars existed a long time before anybody came up with fractional reserve banking.

-k

[kimmy]

Bush-Cheney linked to this article earlier to support his view that there wouldn't be much in the way of prosecution to come from the financial crisis.

To some extent, he's right. The article lists many examples of situations where the banks did things that were repulsive but not really illegal.

However, the article goes on to point out that just because prosecution isn't successful or even possible in most cases, that doesn't mean people should just shrug their shoulders:

No personno criminal, that iscaused the Great Depression. Stock manipulation (most of it, at the time, legal) was surely a factor in the Crash of '29. Exhibit A was Charles E. Mitchell, president of National City Bank. "Sunshine Charley" avidly sold securities of dubious character to hapless clients and whipped up speculation with margin loans. His trial, on charges of tax evasion, resulted in acquittal. However, the country drew the right lessons. It enacted rules for securities disclosure and created a cop on the beat (the SEC). It also established deposit insurance, which would avert future bank runs. Bankers, though not incarcerated, were shamed, thanks to electrifying public hearings.

Lessons were learned, public anger led to political action, reforms were made.

Some people here want to skip the part where people get angry and demand reform.

-k

[Pliny]

"Greater powers". Yes, when I think of the "Great Powers" that control our world, I think of the Illuminati, the Freemasons, Opus Dei, the Bilderberg group, and of course, ACORN. A group so powerful that it doesn't even exist anymore. A group so influential that its goals of advocating for the poor, that the gap between the rich and poor in America has never been greater. Yes, ACORN is the real puppetmaster pulling the strings.

Laugh as you may. They were contributors and not about to demand an end to the easy money ride.

The idea that the housing bubble was created by "social justice" is wrong, no matter how many times or how many ways you repeat it.Fractional reserve banking works fine when lenders are cautious about who they lend to.Fannie and Freddie were ordered to start buying "troubled assets" from the banks, in what was essentially a pre-TARP TARP.

Fractional reserve banking works just fine for bankers and the elite. It isn't so good for the rest of us.

Firstly kimmy, can a housing bubble be created by low interest rates? Ask Paul Krugman who in 2002 was calling for another bubble and suggested the fed should start a housing bubble by lowering interest rates. Greenspan gladly did so.

The real cause of the bubble is in fact the Federal Reserve.

Secondly, with lower interest rates many more people with lower incomes can qualify for a mortgage. The "irrational

exuberance" followed that when investments in housing were realizing excess profits. The result was an increase in

already malinvested development. Anyone who could fog a mirror could have made some money.

Subprime mortgages issued by the GSEs defaulted at a rate equal to the national average. Subprime mortgages issued by the PLSs defaulted at three times the national average.

Paint it whatever way you like. Fannie and Freddie are not mortgage issuers they purchase mortgages from mortgage issuers. They buy "conforming mortgages".

http://www.mtgprofessor.com/a%20-%20secondary%20markets/what_do_fannie_and_freddie_do.htm

I don't know who told you they issued sub-prime mortgages but I would cross him off my list of advisors.

I don't even know where to start with that. Wars existed a long time before anybody came up with fractional reserve banking.

-k

Of course wars existed, how do you arrive at the fact that I said they didn't exist? It is a matter of how they are paid for. You will notice with fractional reserve banking in full force and the establishment of central banking that wars

are more common place than they used to be. Pretty much every decade since the federal reserve was created there has

been a war, from WWI to the present War in Afghanistan never mind the Cold War and in between wars there has been recessions and depressions. That might lead one to conclude that war is necessary to our prosperity and some have made that

conclusion but it isn't true.

[Pliny]

Argus, on 26 Feb 2013 - 14:10, said:

You mean the way the government was running Wall Street in the 50s, 60s and 70s?

At that point they were only intervening it could be said for reasons other than protecting the public. But let's face it the economy was being manipulated all for the public good and has been since the twenties. That their interference is

becoming more and more destructive is apparent to anyone taking note. Then again, we could just blame capitalism for our

economic woes. What do we do when it can no longer serve as the whipping boy?

[Argus]

= Then again, we could just blame capitalism for our

economic woes. What do we do when it can no longer serve as the whipping boy?

Or we could just set the rules, including taxation rules, to the way they used to be before Reagan screwed everything up...

[bush_cheney2004]

How did President Reagan change the tax code in Canada ?

"What people forget about Ronald Reagan was that he very much converted
to base broadening as a means of reducing deficits and as a means of tax
reform," said Eugene Steuerle, an Institute Fellow at the Urban
Institute who had helped lay the groundwork for tax reform in 1986 and
served as a deputy assistant Treasury secretary during Reagan's second
term.

http://money.cnn.com/2010/09/08/news/economy/reagan_years_taxes/index.htm

Edited February 28, 2013 by bush_cheney2004

[Pliny]

Or we could just set the rules, including taxation rules, to the way they used to be before Reagan screwed everything up...

Reagan didn't continue the Carter Depression, unlike Obama continuing the Bush recession. But if you like the idea of lineups at gas stations, unemployment offices, etc., that Carter created under his administration, and I know Canadians are

partial to lineups, then by all means Reagan screwed things up for you.

[Argus]

Reagan didn't continue the Carter Depression,

Carter didn't start a recession (depression!?). In fact, it started during Richard Nixon's time, as the oil crisis of 1973 led to skyrocketing energy prices over the following years, and then stagflation.

unlike Obama continuing the Bush recession.

Now here you're closer to the truth in that the latest recession can be laid squarely at George Bush's doorstep. However, it's not easy getting out of a deep recession. There aren't a lot of government policies which will help, and given the Republican wanted and continue to want the recession to continue, and did everything in their power to hinder Obama from doing anything about it, one can't really blame Obama too much.

But if you like the idea of lineups at gas stations, unemployment offices, etc., that Carter created under his administration,

The energy crisis started during Nixon's time, actually. You can look it up. Honest. By the time Carter took power staflation was already well implaced and the country was in a recession.

and I know Canadians are

partial to lineups, then by all means Reagan screwed things up for you.

I wasn't referring to Reagan in the sense the screwed up the economy as that he made the first major attacks on the middle class, in doing away with unions, in cutting taxes for the wealthy, and in helping corporate American and its oligarchs take control of the country back from the people.

Edited February 28, 2013 by Argus