Dear friends, I wrote Democracy, Debacles and the American Dream when I realized we had all been subjected to lies in order to cover up one of the worst assaults on the American economy that occurred in 2008 as a result of actions taken by big business and the fast buck artists who thought the answer to Americas problem was too much control....but in reality, what we experienced was a smokescreen to cover up the lies, the fraud, and the punishment of the middle class that exists today with our current president unwilling to do what needs to be done to clear the air once and for all.... This is from the prelude which precedes Democracy, Debacles and the American Dream... The Needed Discussion We Never Had…. This investigation begins where everyone leaves off, the Melt Down and discusses the fundamentals of how it happened but also focuses on what led up to the unsurprising melt-down from a broader perspective. To say that America’s progress those years was motivated by selfishness and corrosive greed may be obvious, an understatement and tautologically correct, but it doesn’t begin to put things in the perspective needed to wrap our mind around. And for clarity and purpose and our ability to understand systemically what happened—or did not happen—I proffer this perspective that tends to view the causative factors from a different perspective, much as if were the final threads in a tapestry that spun out of control, where there were few constraints and capitalism was allowed to run free to its ultimate ruin. Ultimately, what this book hopes to accomplish is to provide the backdrop to what led to an environment that created the meltdown, our experiments with technology, the preoccupation with money-making and profit, the desire to become richer than Midas, and what made those conditions possible, the penultimate greed that began in the late 70s—including the rush to mergers and acquisitions by foreign businessmen, not entrepreneurs, who were more interested in making money than creating products, and how the focus of an education becoming a short cut to a career in finance, or banking or investment that made possible success on a scale seldom imagined before, the readiness to jettison ventures that would extend America’s hegemony because they engendered risk and thereby avoiding opportunity and a mind set that saw cutting costs as the guiding principle of investment strategy, a pernicious risk adversion, the ease with which most of us were willing to forego the needs of the helpless, the needy and others who were unable to help themselves, a growing “they” and “us” mentality that simply eschewed the idea that man has an obligation to his fellow man that persists to this day and so much more. Addendum to debacles and the American Dream…. Up til now, everyone has belabored the short term, obvious causes that led up to the devastation that has emerged from what is referred to as the 2008 meltdown that led to the changes that are still operative today and have not been changed through promised reforms; these so-called reforms never seemed to have materialized indicating that the rich and powerful prefer the status quo that even further enriches this segment of society. The fact is that even today, even though the middle class has not climbed back to its pre-2008 status, or that the housing market has recovered, or the economy returned to a pre-Recession mode that fulfills the needs of the people and maintains growth, the middle class is still in stasis. This is predicated on the use of other people’s money, greed only, and profits no matter how they are earned and it has closed off any and all possible connections with the 1% that controls and empowers government and big business. This short-fall in mentality has crippled the American ideal badly and has led us down the wrong path to salvation, and revealing to all not only how vulnerable this system of greed can be, but the natural pitfalls of a society that worships capitalism with all its flaws uber alles. To gain a perspective, we need to examine those conditions set in motion beginning as near as we can tell with the administrations of Ronald Reagan, but may actually, in fact, predate him, and—in the process--we hope to uncover certain influences and predispositions and leanings that allow us to paint on a broader canvass in order to enhance understanding. To put this into perspective, president Roosevelt saw a need to put into a law the Banking Act, oftentimes referred to as Glass Steagall. What it did in 23 pages was to establish a firewall, so to speak, between banking and investments so that investors money did not find their way into investments by the banks, obviously, at that time a serious concern. In Reagan’s appointment of Donald Regan, the money men of New York’s Wall Street strengthened their influence with President Reagan and deliberately set about to relax controls and monitoring of Wall Street and banking practices so that opportunities for bigger profits were set into motion. For what is the purpose of “money men” if not to make money and if that can be brought to the extreme—at the expense of everything else—why not? The impact of such decisions only exacerbated controls on banking and finance with Bill Clinton’s appointment of Robert Rubin as Treasury Secretary after George Bush left us increasingly in debt with outsized spending by the government. Robert Rubin had been president of a major Wall Street firm at the time and helped to extend the relaxation of controls over the investment community which led to a surplus by the time Clinton left Washington. But the real precursor of our eventual downward slide, was a man called Sandy Wiel, who’s vision of greed was to change the way the world did business. Until that time, bank loans were one thing and investment another; that was what the Banking Act protected us against. It is instructive to realize that Sandy Wiel’s vision was shared by many but only he had the boldness to take it to the next phase and the contacts to see his vision realized. As president Citibank, he had been deep into negotiations with the president of Travelers Insurance Company, John Reid, an investment company, about the prospects of a merger that would combine the way a bank made money with the way an investment company made profits. There was, however, one fly in the ointment. Such a merger would run counter to the Banking Act. If they went ahead, they could stand to make significant increases in profits for the combined organization and themselves, but they also recognized that under the law, they only had a year to effectuate their union--which required fundamental changes to the Banking Act--and the approval of then president, Clinton. In moving forward with their decision, they had to influence change at the highest levels. But they also had many friends and contacts who could lend their influence to clearing the path towards realization of their dream, the accumulation of vast amounts of wealth at a level never heretofore realized. At that time, Robert Rubin, a former principle at Goldman Sachs, who’s name consistently appears in this litany of profit-seeking power brokers, sided with them and approached key influences to the president to consider abandoning the Banking Act to free up capital and to make big gains possible for the investment community. Many in Congress, including New York senator, Chuck Schumer, worked to facilitate the decision, knowing full well that it would punish the poor and the middle class in fundamental ways, but the attraction of great wealth seem to blur whatever reservations may have remained. Within one year, the president was convinced that the banking act restricted the flow of capitol and was in the best interests of the economy and signed off on putting an end to the Banking Act and allowing Citibank to merge with Travelers Insurance, thereby, once and for all shattering the firewall that kept investor funds separate from investment capitol. This ultimately made possible the melt-down to come because it put in place all of the essential pieces while creating the “wink-wink, nod-nod” climate that emerged from the negotiations and passage of the bill empowering a system that could navigate around former restrictions that prohibited risk taking with other people’s money, the investors, who were to be subsequently cheated and de-frauded in a host of schemes and “deals” ostensibly for the purpose of making money, but in reality served a simpler purpose: To separate people from their resources in order to enhance the wealth of the institutions, later to be deemed “too big to fail!” Subsequent to this decision, the banks began investing in mortgages in record numbers, giving mortgages in many cases to those who were not credit worthy in the interests of re-packaging these mortgages in various ways and selling them as investments to large institutions at the same time they thought they covered themselves with additional investment in something called credit default swaps, that ostensibly should have protected the banks and investment companies, but ultimately failed in that regard. At the same time, they also indulged in investing against their own investments to further protect themselves and potentially earn even bigger profits for themselves and the institutions they headed up. While the ideas all sounded doable, many who participated in these instruments did not take heed of the risk or the fact that they were violating the letter of the law through their actions but being blind-sided to anything other than the potential for profits, they forged ahead without seeming regrets. Later, much later, the ducks would all come home to roost when the packages created by the investment companies, led by Citibank, were deemed to be worthless pieces of paper. Many of the packages were so chopped up as to be unrecognizable and value-less in the extreme causing consternation among those making the investments; still the practice proceeded, causing many other of the major banks to participate, recognizing the huge earning potential of these investments, despite their worthless character, that the primary decision makers threw caution to the wind; that is, until the days of reckoning in 2008 and the entire artificial edifice of credit default swaps and investments collapsed, dragging down the banks and their cohorts and revealing the depths of the scheme in place and the transference of shock that had to register at least a 9 on the Richter scale. It became clear very quickly that these banks, victims of their own infallibility-- thought themselves not only immune from such troubles, but also believed that they were beyond threat and that they could get away with literally anything, were to painfully discover that they had to go hat in hand to the Fed and the then new Treasury Secretary, Ron Paulson, also from the same investment company as the former Treasury Secretary, Goldman Sachs, Robert Rubin in order to arrange their own survival through a proposed system of bail-outs inasmuch as they were now out of available options. The rich and powerful had been brought low by their own greed! In a matter of days, the new Treasury Security contrived a package that constituted not only a bail-out but repayment in full amounting to a trillion dollars of loans from taxpayer funds to not only repay the banks for the losses, but to provide full repayment without penalty for all of the major banks illegal investments, so that they didn’t even have to pay for the risk involved in their investments under the challenge of being “too big to fail.” It is too bad that the middle class who paid for this bail-out did not have an equivalent bail-out mechanism to keep them from paying such a severe price that goes on even today and we see reflected in “under water mortgages,” diminished savings, and lost opportunity! This is a condition not adequately considered by either government or big business and will be with us as long as there is memory. The circle has not been closed since and the levels of anguish and frustration fill the air even as we speak from those who “lost everything” in an atmosphere as corrupt as ancient Rome. And, as a result, there is little ensuing confidence in either our government or business, recognizing the collusion that took place and the atmosphere for it resurface again in order to complete the rush to perdition and chaos that seems all but self-evident. At the time, the new president who had inherited the problems of his predecessor went along with the actions and assured the big banks not only of their survival, but the continuation of their practices inasmuch as today there has been no legislation that has made its way into the law that today enforces an end to bad practices that may affect the best interests of the investor or to prevent such a recurrence. Today, in a harsh contempt for what is logical, the president appointed another Goldman Sach’s executive officer to preside over the recovery, such as it is, but not before finalizing the recovery of the banks with no preconditions to make them more sensitive to the needs of the people. Moreover, in an act of contempt for the people, not one of the participants in the illegal behavior of the banks has been sent to jail for his/her actions and while there are still cases pending against the offenders, while millions sit atop mortgages that are underwater. Such actions essential to bringing closure to a continuing case of abuse against homeowners and others taken advantage of by the banks, the ensuing violation of the laws and the banks’ high risk behavior that has effectively jeopardized the economy of this country and has left us still roiling in deep Recession, not yet capable of restoring the economy to sound health. Until now, we have refrained from comments on the new administration; but as the gloves come off, all parties are now viewed as derelict, and some may suggest that there is insufficient differences among the parties who seem so locked into finance and big business and the powers of Wall Street that they are incapable of seeing the bigger picture or to fully comprehend the plight of the middle class. As such, we recognize that this is a continuing story that has resulted in the Dodd-Franks Act that today is being held back by those who’s interests support the private banks and investment companies. These companies are represented by batteries of lawyers who argue that to effectuate Dodd-Franks would require batteries of accountants and lawyers to adjudicate decisions that would impact the backs and bear a heavy cost. The reasoning of big business and the banks described as “too big to fail” suggests that we, the public, believe that Dodd-Franks is too complicated and unfair to banking practices. Also, it may be noted, that the interests of the banks have been served by the failure of Congress to approve the appointment of a Director to husband Dodds-Franks through the Congressional pitfalls that hamper its principal objective of bringing reform to the banking system, and , thusly, to serve the people and assure that the people’s interests are being met. Overall, It remains to be seen whether Dodd-Franks will ever be approved by Congress in the current climate that despairs of reform and made part of the law; nevertheless, it is clear that the banks do need further regulation if the people’s interests are to be served and many of the people are suggesting that Dodds Frank in its current form may be too weak to come to grips with the real problems that banking reforms requires and are calling for restoration of some form of the original banking act as a principal vehicle for protecting the people against continuing abuses by the banks. One suspects however that that proposal, too, suffers from being laced with opportunism and self-interest. Even Sandy Wiel, as of today, stands for reform of current banking regulations and a break up of the banks, re-inserting the fire wall that had pre-existed before the Banking Act was deemed incapable of keeping up with the needs of bankers in the later part of the 20th century, in order to keep investors apart from those seeking banking assistance…a notion that has been mostly shunted aside in the momentum for the status quo.
Posted on: Tue, 02 Dec 2014 21:25:22 +0000
Trending Topics
Recently Viewed Topics
© 2015