(observation from a friend)...Best explanation I've read! BT
Today's banking crisis is the THIRD trillion dollar plus US-caused financial meltdown in the last twenty years.
Each one of these crises came into being through the same basic mechanism...the fraudulent over-valuing of financial assets by Wall Street - with a "wink and a nod" (and sometimes a lot more) from the White House and Congress.
The fraudulently valued assets stimulate the economy, impart the illusion of health and then, inevitably, the fraud goes too far and the whole house of card comes painfully crashing back to earth.
The three trillion dollar plus frauds were:
Fraud #1: The so-called "Savings and Loan Crisis" of the late 80s
Fraud #2: The so-called "Tech Bubble" of the late 90s
Fraud #3: The so-called "Credit Crisis" of today
*** How the scam works
The mechanism of these frauds is simplicity itself...
...Take a shaky financial asset and blow up its value and then sell as much of it as you can.
In the "Savings and Loan Crisis," the instrument was junk bonds.
In the "Tech Bubble" it was Internet stocks.
In the "Credit Crisis" it was individual mortgages collected into pools and then re-sold to investors.
In each case, normal, well established "bread and butter" financial principles were consciously thrown away by Wall Street with no hint of protest from federal regulators.
***The "Savings and Loan Crisis" dissected
Junk bonds caused the Saving and Loan crisis which resulted in the US taking over the assets of hundreds of banks and selling them back over time to the marketplace at fire sale prices.
Junk bonds, which caused the "Savings and Loan Crisis" were shaky bonds that were pumped up by deliberate misrepresentation and what I call "staged dealing."
Bonds get their value from two things: the amount of interest they pay and how safe they are.
"Junk" bonds have to pay higher interest because they are less safe. Therefore, until the "Savings and Loan Crisis," savings and loan banks banks were not allowed by law to buy them and call them assets.
Reagan/Bush changed all this and then a group of Wall Street fraudsters used the new loophole to kick off an orgy of junk bond creation and junk bond selling to banks and insurance companies.
The crooks would deal the junk bonds back and forth amongst themselves thereby establishing their "value" and then they'd sell them to outsiders. The bonds then became "assets" which could be borrowed against and leveraged to buy even more bonds.
When the bonds failed, the banks failed and in stepped the US government to "fix" the problem that it created at the cost of at least one trillion dollars to US tax payers.
Deja vu, eh?
***The "Tech Bubble" dissected
The instrument of fraud in the "Tech Bubble" was Internet stocks, start ups in particular.
A stock gets its value from the underlying company's sales, its growth and its overall prospects for the future.
Pre-tech bubble, companies used to have to prove themselves by being in existence for several years before they could be sold on major exchanges. That standard was thrown away during the tech bubble.
To pump of their values, the companies engaged in"staged dealing" just like the junk bond crooks.
Company #1 would "sell" 20 million dollars in banner ads to Company #2 which would in turn "sell" 20 million in banner ads to Company #1.
In fact, nobody sold anybody anything. Company #2 ran ads for Company #1 and billed it for them. Company #1 ran ads for Company #2 and billed for an equal amount.
These should have been called media trades not sales, but Wall Street was happy to claim them as legitimate cash sales and then use the sales numbers to fraudulently value these companies - many of them totally worthless - in the hundreds of millions and sometimes even the billions.
***The "Credit Crisis" dissected
By now, you see how the scheme works.
It's not complicated at all.
You take near worthless pieces of paper (junk bonds, stock of start up Internet companies, etc.) and declare them to be good as gold.
Then you create as many junk bonds and Internet start up stocks as you get and sell them as fast as you can.
In the case of our current crisis, the instrument of fraud was so-called sub-prime mortgages.
Previously, sub-prime mortgages had very little trading value. Only people in the sub-prime industry itself dealt in them and for good reason. They're tricky to value and packed with financial peril.
But Wall Street changed all that.
Wall Street said: "If we take LOTS of these mortgages and assemble them into large pools and then slice and dice the pools in various ways, we can sell the slices to banks and other investors as AAA paper."
It sounds crazy, doesn't it?
If the underlying pieces of paper are garbage, how does assembling a whole bunch of garbage into one place make it "better?"
It doesn't, of course, and this is a principle even a three year old child can understand.
But greed and the need to pump up a shaky economy for propaganda purposes are two very strong motivators.
Banks created these mortgage pools, sold them to each other, and they by virtue of these "staged sales" declared them valuable.
Do you recognize the pattern now?
If you do, then you are now smarter than all the assembled j@ck@sses who do financial reporting because they apparently can't - or won't.
This is the THIRD trillion-dollar plus fraud driven financial meltdown in twenty years and apparently no one in the financial news media can see how it happened.
It was e-mailed to me... thought I'd share
Worthy of your time and attention regardless of your Party Affiliation
545 PEOPLE
By Charlie Reese
Politicians are the only people in the world who create problems and then campaign against them.
Have you ever wondered why, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?
Have you ever wondered why, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?
You and I don't propose a federal budget. The president does.
You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.
You and I don't write the tax code, Congress does.
You and I don't set fiscal policy, Congress does.
You and I don't control monetary policy, the Federal Reserve Bank does.
One hundred senators, 435 congressmen, one president, and nine Supreme Court justices 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.
I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.
I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No Matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.
What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits. The president can only propose a budget. He cannot force the Congress to accept it.
The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker o f the House? She is the leader of the majority party. She and fellow House members, not the president, can approve any budget they want. If the president vetoes it, they can pass it over his veto if they agree to.
It seems inconceivable to me that a nation of 300 million can not replace 545 people who stand convicted -- by present facts -- of incompetence and irresponsibility. I can't think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.
If the tax code is unfair, it's because they want it unfair.
< BR>If the budget is in the red, it's because they want it in the red.
If the Army & Marines are in IRAQ , it's because they want them in IRAQ .
If they do not receive social security but are on an elite retirement plan not available to the people, it's because they want it that way.
There are no insoluble government problems.
Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like 'the economy,' 'inflation,' or 'politics' that prevent them from doing what they take an oath to do.
Those 545 people, and they alone, are responsible.
They, and they alone, have the power.
They, and they alone, should be held accountable by the people who are their bosses provided the voters have the gumption to manage their own employees.
We should vote all of them out of office and clean up their mess!
Charlie Reese is a former columnist of the Orlando Sentinel Newspaper.
What you do with this article now that you have read it is up to you, though you appear to have several choices.
1. You can send this to everyone in your address book, and hope they do something about it.
2. You can agree to vote against everyone that is currently in office, knowing that the process will take several years.
3. You can decide to run for office yourself and agree to do the job properly.
4. Lastly, you can sit back and do nothing, or re-elect the current bunch.
YOU DECIDE, BUT AT LEAST SEND IT TO EVERYONE IN YOUR ADDRESS BOOK, MAYBE SOMEONE IN THERE WILL DO
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