Posts Tagged ‘blame’

Bankers, Banksters, Bernanke, Black and Beethoven

November 8, 2015

How’s a fellow to make sense of it all? Who you gonna call? Who you gonna believe? What’s the world coming to? What’s it to ya? and Who’s in charge here?

I’ve been trying to figure out a few things about our financial system.

TheFed

About a week ago I loaded Ben Bernanke’s book, Courage to Act, and have been reading what the former Chairman of the Federal Reserve has to say about those events of 2007-8 that brought this country to its money-grubbing knees.

http://www.amazon.com/The-Courage-Act-Memoir-Aftermath-ebook/dp/B00TIZFP0I

Now about a quarter of the way through Bernanke’s explanation of things, I must say I like the guy. He has a personal mission to bring more transparency to that enigmatic institution known to us as the Federal Reserve. I think he really wants regular folks to understand our financial system and the function of the central bank which, having been founded by Congress in 1913, tries to keep a rein on the nation’s banking system so it doesn’t become a runaway horse.

Nevertheless, the System did morph into a kind of bucking bronco back in the fall of 2008. The crash and crisis of that time may have seemed quite sudden to many of us, but in fact the collapse of Wall Street et al during September-October of that year was the culmination of a bunch of misadventures and misdeeds that had begun a year or two or more before it all came crashing down.

I vividly remember, during that time seven years ago, sitting in my car in a parking lot, a few minutes before 8 am when I would enter my day-job, and hearing on the car-radio with dread or fascination about the demise of such formerly venerable institutions as Lehman Brothers, Washington Mutual, Bank of America, Wachovia, Countrywide, Golden West,  AIG, Fannie, Freddie, even General Motors, and then about how Hank Paulson and Wall Street and the Fed, Bernanke and the President and Congress would deal with the degenerating situation by instituting TARP which was rejected by our Representatives and Senators before it was passed and implemented a week later after Hank and Larry and Tim put the fear of god in the legislators’ minds or whatever it was they told them to convince them that they should loan the distressed banks $767 billion so the whole dam bailiwick wouldn’t fall apart and drag us into another Depression, or so they said.

The world was changing. Have you ever watched the world changing? It is an awesome thing, to see history being made.

What a time a time oh what a time it was. . . a time of innocence (lost), a time of confidences (lost forever), as Paul Simon once sang. Oh what a time it was. Eventually the dust settled and the country lapsed back into normalcy or something like it but not really.

Things were different after that. You know what I’m talking about. . . the Great Recession, everybody and their brother deleveraging, budgets tightening, layoffs and downsizing, fading into perpetual “jobless recovery” with wage deflation, rising unemployment, then descending unemployment but with more part-timing and less money. . . stock-crunchers and media fixated on monthly numbers from the Fed, the gov, BLS, etc, a languid economy generating fewer jobs, then a few more jobs, then leveling out and stabilizing and lapsing into destagulation and blah blah blah. . .

And it was about that time, or actually a year of three later by n’ by, that the Occupy Wall Street crowd came along.

My wife and I visited our son in Seattle during fall or early winter of 2011. I woke up one morning and strolled down Pike Street. I stopped at the Westlake Center and entered a Starbucks where I settled in for a while. I was observing through the large glass storefront, the Occupiers who had gathered across the street in Westlake Park.

After a while I noticed among all those protesters, many of whom were carrying signs (mostly say hooray for our side) . .here comes an especially noticeable fellow with a sign. He was tall, scruffy, with a long beard. He looked like the classic cartoon image of the street-corner doomsday prophet, and his sign said:

“Jail for Banksters”

Well that’s interesting.

Now, yesterday, November 7 2015, I recalled having seen that fellow and his sign, and I was thinking about what his sign said.

I had been reading Uncle Ben’s very informative book–his plainly-written, quite “transparent” explanation of what had happened back in ’08, when the low quality of vast numbers of subprime mortgage loans catapulted those same home-loans into default, and subsequently cast a ubiquitous monkey wrench into the vastly complex financial machinery of sliced/diced tranches of mortgage-backed-securities and collateralized debt obligations and credit default swaps, etc etc  and then wall street came crashing down and all the Fed’s horses and all the Treasury’s men couldn’t put humpty dumpty together again (not for a while anyway) and the world changed forever, or so it seemed at the time and for quite a long time after that, even until now.

Yesterday, I had made note of this sentence from Ben Bernanke’s book:

“As the chain from borrower to broker to originator to securitizer to investor grew longer , accountability for the quality of the underlying mortgages became more and more diffused.”

And I was wondering, if the accountability had become more and more diffused, then who was responsible for this mess?

My own personal answer to that question is: Human nature, collectively. Shit happens.

Not everyone sees it that way, though. Some folks feel the need to investigate, litigate, prosecute, execute, and. . . as the protester’s sign said, send the “banksters” to jail.

So here I was yesterday, having taken a break from reading Uncle Ben’s book, and I was fiddling around online when I landed upon an interview that Chris Martenson did with Bill Black.

http://www.peakprosperity.com/podcast/95125/bill-black-why-banksters-winning

Now Bill is well-informed fellow; he’s an academic like Ben Bernanke, but from a totally different perspective than Ben’s. Bill is a regulator, investigator, earth-shaker, litigator who is crowing that Eric Holder,  former Attorney General and head of the U.S. Department of Justice, should have prosecuted the banksters for their corruptive abuse of the system. In his interview with Chris that I listened to yesterday, Bill Black said:

“Every dollar by which you inflate an asset inflates capital by a dollar and creates an additional dollar you can steal. . . they lied and they lied to the extent of trillions of dollars. They lied and made stuff that was really in the trade, right. So the bankers are actually calling these things toxic in their internal memorandum. And they are simultaneously rated Triple A, which is supposed to mean that they are equivalent to United States Treasury and are “risk free” by which they mean credit risk.”

Furthermore, whistle-blowing Bill Black says that culpability for the crash also includes the Fed’s complicity, when Bill says:

“You say Bank of America has got 50 billion of these things. They sell them to Fannie/Freddie.

Next thing we know, Black Rock is in there with the Federal Reserve helping the Federal Reserve decide which tranches of MBS to go out and buy. And the Federal Reserve vacuums up 1.25 trillion or thereabouts of these mortgage backed security pieces of paper. Here is the question. What is the chance that the Fed preferentially or accidentally (but I am going to think preferentially) went out and vacuumed up some of the worst of these things so that they could die quietly on its balance sheet rather than do damage to bank balance sheets?

So Black is implying that Bernanke shares some of the blame for the Crash of ’08.

But in my reading of Uncle Ben’s version, I see a very smart man, an honest man, who was trying to do his job–that job to which he had been appointed by the President and approved by the Congress of the United States. He was striving, as best he could, trying to stop the nation’s calamitous slide into financial oblivion. Ben writes:

 “Just as the bank runs of the panic of 1907 amplified losses suffered by a handful of stock speculators into a national credit crisis and recession, the panic in the short-term funding markets that began in August 2007 would ultimately transform a ‘correction’ in the sublime mortgage market into a much greater crisis in the global financial system and global economy.”

From Chairman Ben Bernanke’s perspective, he was doing his job– using every tool in his Reserve tool-chest  to arrest to the “panic” that would eventually impose a “much greater crisis” in the global financial system and global economy.

You can’t blame a fellow for trying to do his job. And that’s how I make sense of it all. I try to do my job, while I see everyone else doing theirs, and that’s what makes the productive world go around.

Although, every now and then shit does happen. Then, as Schumpeter said. . . it is creative destruction, and somebody’s got to clean up the mess. Jobs for everybody, cleaning up the mess from places high and low. And then reconstructing it all, a vicious (or inevitable) cycle. It’s been going on for 10,000 years. But now with hi-tech, everything goes faster and faster, until it grinds again to a screeching halt and. . . can you hear it? The music of the ages.

https://www.youtube.com/watch?v=TEbyBINYBfo

Glass half-Full

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The Unfinished War

October 4, 2014

In one sense, all war is unfinished, because the political crimes that wage death between people groups inevitably come to the surface again. Like toxic waste, old atrocities bubble up from the depths of human strife to plague subsequent  generations.

Now and then in history, a war will actually settle a divisive question. Our American Civil War established once and for all that American states of north and south would remain as one federation under a common flag, and that resolution has remained intact.

The First War was an unfinished war, because the issues that separated Germany from the rest of Europe resurfaced, zombie-like, about twenty years later as the the Second World War. Then the Second War resolved those divisive issues in a more effective way, and now Europe is reasonably, if not politically, united in peaceful coexistence.

Forty-nine years of my 63-year life have been spent in the twentieth century, which was a time period in which nations were generally at each others’ throats over ideological differences. The basic conflict between freedom and slavery was continually re-inventing itself in various ideological costumes: libertarian vs. totalitarian, democracy vs. communism, communism vs. fascism, etc.

Now it seems the world reverts to religious identities to fortify the battlefields of the 21st century: Muslim vs. Jew, Muslim vs. Christian, etc. It’s not really as simple as that, but you know what I’m talking about. The issue of whether the so-called Islamic State is actually representing Islam should be a serious point of debate among Muslims; but no matter how that identity pans out, the decapitative modus operandi of IS is undeniably a danger which is Islamic in its ethnic origin.

Furthermore, the ongoing contention between Israel and the Islamic states (with or without Caliphate) is, despite modern secularizing influences in both camps, a religious war the origin of which is shrouded in the dust of Levant history.

On a secondary level within nation-states, we see political divisions, which still revolve around ideological poles: left vs. right, progressive vs. conservative, statist vs. libertarian, etc.

Within my country, USA, the time-honored catch-all labels “left” and “right” have lately morphed from “liberal” vs. “conservative” to “progressive” vs. “conservative.” A subset of this ideological polarity is the “Occupy” crowd vs. the “Tea-Party.”

“Tea Party” derives its philosophical roots from an emphasis on individual liberty. Its tactical roots are found in the Boston Tea Party of 240 years ago, which turns upon economic and tax disputes and government get out of the way attitude.

“Occupy Wall Street” and its progeny (Occupy Oakland, Occupy Vancouver, whatever) derives its precedents from the Civil Rights and Anti-war activisms of the 1960s, and before that the socialist ideal as developed through the French Revolution, Marx, the Russian Revolution, Alinsky etc.

David Horowitz, a (rare) seasoned veteran of both left and right activisms, has identified, in his autobiography Radical Son, this truth:

“. . . conservatism was (is) an attitude about the lessons of the actual past. By contrast, the attention of progressives was (is) directed toward an imagined future.”

During the Vietnam war, a time when I was entering draftable age, the “left” was dragging our American sins of racism and napalmic militarism out into the streets for all the world to see. They imagined a more perfect United States that would successfully rid itself of the hegemonic abuses of capitalistic neo-colonialist empire-building.

Eventually the student-led antiwar movement was able to convince us to withdraw from Vietnam. But the more perfect United States they were dreaming of did not emerge. We are now still the same good n’ bad nation we were then, manifesting a tri-part government of checks and balances that can, every generation or two, arrest our reprobate tendencies.

The activist left of the 1960s, of which I was (like many others) a curious, though non-involved part, also imagined an idealized Vietnam. But it did not materialize after we pulled out.

After the beginning of U.S. withdrawal in 1973, the National Liberation Front of South Vietnam (in whom the American anti-war activists had placed their hope) was crushed by the North Vietnamese army. Oppressive reeducation camps were set up and filled with hundred of thousands of prisoners. Tens of thousands were executed without trials. The bloodbath spilled into Cambodia. Millions were killed by the Khmer Rouge.

The consequences of U.S. withdrawal were tragic. More people died in the first two years of communist peace than had been killed during the U.S. war effort.

http://www.ocf.berkeley.edu/~sdenney/Vietnam-Reeducation-Camps-1982

So distressed were many Americans who had formerly worked to get us out of Vietnam, that a group of high-profile war-objectors published an ad in the Washington Post protesting the arrests of “thousands upon thousands of detainees”, who suffered enforced reeducation with starvation, physical abuse and use of prisoners as mine-detectors.

http://keywiki.org/Joan_Baez#Open_Letter_to_the_Socialist_Republic_of_Vietnam

While some leftists were grief-stricken at the widespread abuses in postwar, communist Vietnam, many more activists were not appalled. They blamed the aftermath on us–the United States, who were fighting to protect the Vietnamese people from the oppression that followed when the North Vietnamese took over.

That was a long time ago. There’s been a lot of water under the bridge in our river of time, since then.

Now it’s Iraq.

We have an eerily parallel situation in Iraq, with the IS attacking from Syria to enforce an “Islamic” Caliphate, just as the North Viet Cong descended on the South in 1973-75 with cruel, murderous intent.

And once again, the leftists want to blame us because we sent our troops over there and knocked the dictator Saddam out of power and tried to help them establish a just government.

But history, and prudent policy, does not hinge upon what might have happened or not happened because of the military assistance that came from the people of the United States, provided to the people of Iraq.

To those who want to blame us for the IS insurgency now threatening Iraq, we must say: don’t even think about it.

It’s time to subdue the beast that videos decapitations. No one in their right mind wants that kind of vengeful retribution, masquerading as “justice”, established in the world.

Smoke