There comes a time when the frame of a news story changes. It
happened in Iraq when the “war for Iraqi freedom” became seen as a
bloody occupation, not a beneficent liberation. It is happening as the
war on terror is increasingly perceived as a war of error, and when
voting problems are reframed as electoral fraud.
And it will
happen in the economic arena too, when we see the “subprime” credit
crunch for what it is: a sub-crime ponzi scheme in which millions of
people are losing their homes because of criminal and fraudulent
tactics used by financial institutions that pose as respectable players
in a highly rigged casino-like market system.
Suddenly, after
years of denial and inattention, the press has discovered what they
call “the credit crisis.” Vague words like “woes” are still being used
to mask a financial calamity that some analysts are already calling an
apocalypse, as lenders go under and the Stock Market melts downs.
A
French bank froze BILLIONS Thursday saying, “The complete evaporation
of liquidity in certain market segments of the U.S. securitization
market has made it impossible to value certain assets.” Translation
from the French: We are all in deep shit.
On Thursday morning,
President Bush was asked about this at a press conference. He blamed
borrowers for not understanding the documents they signed. If you have
ever tried to read the documents banks prepare for mortgage closings,
you will know that they are written by risk minimizing lawyers to be
too long and dense to be understood. (Later in the day, the market
reacted to his upbeat assessment with the Dow plunging 387 points.)
The
financial insiders who watched were more than skeptical. Here are some
quotes from a discussion on the Mi-implode website. One of the
discussants calls our fearless leader, “President Pumkinhead:”
“Why’d
president pumpkinhead have a news conference in the morning? Probably
hoping no one would see it and he wouldn’t have to lie to as many
people.”
Another described what he was watching with more than disbelief:
“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
wonders a bit, he quickly goes back on script. It is very odd to watch,
to say the least.”
“Odd?” Not for him, but, of course, there are
more than one man to hold accountable. This is a deeper structural
problem that implicates a whole industry and the process of
“financialization” it promotes. This crisis is an example of what goes
around comes around as the companies that suspended their usual
“standards” and “rules” and self-styled “due diligence” knowingly
sucked money out of people with poor credit records and who now find
their own companies imploding and collapsing worldwide. Many of the
victims are people of color. They were targeted by predators.
Underscore
that this was done deliberately, with forethought and malice, a well
orchestrated plan to create armies of “suckers” and steal—yes, I said
it—their monies to leverage even bigger deals. Their greed had no
limits, until the scheme collapsed.
Behind it all were the
so-called “Masters of the Universe,” the wise men of Wall Street who
worked behind the scenes to turn mortgage brokers and small lenders
into part of what will one day be seen as a criminal network worthy of
prosecution under the RICCO conspiracy laws used against the mob and
drug dealers.
Read this account from the Wall Street Journal:
“Lou
Barnes, co-owner of a small Colorado mortgage bank called Boulder West
Inc., has been in the mortgage business since the late 1970s. For most
of that time, a borrower had to fully document his income. Lenders
offered the first no-documentation loans in the mid-1990s, but for no
more than 70% of the value of the house being purchased. A few years
back, he says, that began to change as Wall Street investment banks and
wholesalers demanded ever more mortgages from even the least
creditworthy — or ’subprime’ — customers.
All of us felt the
suction from Wall Street. One day you would get an email saying, ‘We
will buy no-doc loans at 95% loan-to-value,’ and an old-timer like me
had never seen one,’ says Mr. Barnes. ‘It wasn’t long before the no-doc
emails said 100%.’”
You don’t read many accounts like this of
businessmen bashing Wall Street in the business press. Could it all
have been stopped? Of course, if there were real regulators and rules
protecting consumers and the public interest. And if there was a social
movement that championed exonomic justice.
And also, if there
were investigative journalists like the ones who just wrote a series on
the “debacle” of the “debt bomb” in the Journal – but after the
collapse, not before. And what do they admit now? That this is NOT just
a subprime problem but far more serious and global.
They note
that “credit problems once seen as isolated to a few subprime-mortgage
lenders are beginning to propagate across markets and borders in
unpredicted ways and degrees. A system designed to distribute and
absorb risk might, instead, have bred it, by making it so easy for
investors to buy complex securities they didn’t fully understand. And
the interconnectedness of markets could mean that a sudden change in
sentiment by investors in all sorts of markets could destabilize the
financial system and hurt economic growth.”
Will the rest of the media follow up and explain what is really going on?
This
is very serious folks, but far too many progressives, activists and
politicians alike haven’t spoken out about the crime behind this
rolling scandal. We should be calling for major debt reform in America,
like Bono advocates for Africa. We should demand criminal penalties for
the profiteers who started out to enrich themselves and seem to have
ended up destroying the very system they misused. We should press the
Congress to use its subpoena power to investigate the corporate
criminals and their government enablers.
When they propose a
bailout, we should demand a “jailout.” The Washington Post reports that
the US has started a bail out “pumping more than $150 billion into the
financial system to keep it operating smoothly.” Where is this money
coming from? Not from the military budget you can be sure.
Blogger Carolyn Baker writes that we all must become more engaged with these issues saying she is:
“profoundly
aware of the role of economic issues-perhaps more than militarism,
healthcare, education, politics, or any other institution, in the
dead-ahead demise of empire.
I also notice that few in the
left-liberal end of the political spectrum have a firm grasp on
economic issues which I suspect comes from a fundamental polarization
between activism and financial intelligence.”
She writes about a
book by a conservative named Michael Panzner called “Financial
Armageddon” criticizing his analysis as limited, and by extension, many
of the left’s avoidance of these issues as well.
She writes:
“What is most disturbing to me about the book is what appears to be a
total lack of perception regarding the role of fraud, theft, and
malicious intent in the American and global financial train wreck which
has been exacerbating over recent decades.”
Indeed! What are we going to do about this? How about starting with becoming more aware?
Writings 
Today’s Washington Post: Credit Crunch In U.S. Upends Global Markets:
Subscribe to this comment's feed
