Sunday, June 12, 2011

147. Inside Job: "Its a Wall Street government."

Only recently I heard for the first time about a prize winning documentary about
the 2008 crisis: "Inside job", made by Charles Ferguson in 2010.

The whole documentary is on youtube since march this year, and it is worthwhile to see it.
It takes about 110 minutes in total and gives all the essential information about the crisis.

Ferguson has given us the proof: this crisis was avoidable.
For many reasons. Lets take one aspect:

Many people warned for the dangers of what was going on:
- In 1998 Brooksley Born tried to get derivatives regulated.
- In 2004 the FBI warned for criminal subprime loans.
- In 2005 the chief economist of the IMF, Rajat, warned Greenspan, Summers etc.
- In 2006 Nouriel Roubini wrote about the dangers.
- In 2007 mr Sloan ( Financial Times) and D. Strauss Kahn ( IMF boss) warned.
- In 2008 Charles Morris warned with his book.

Greenspan, Summers and Rubin had only one argument:
"Free markets will automatically do the best for us all: bankers want to survive, so they will never take 'mortal' risk".

Strange reasoning by Greenspan as 'Too big to fail' was a well known fenomenon. And the bankers themselves were getting rich by taking all these risks.

In my view Greenspan, Summers and Rubin KNEW that they were driving the world towards a huge global crisis.
That is what they wanted: a huge crisis.

Either that, or by extreme coïncidence the USA had promoted three very stupid people to the most important posts in government.

How can a sane person believe that selling a house to poor people with no income is a good idea ?  How can a sane person believe that housing-prices can only go up and never go down anymore ?
How can a sane person think that an insurance company does not need her own capital to be able to    pay claims, just because you now call it securitization instead of insurance?
Greenspan and Rubin claim that they believed all these strange things.

A world-wide crisis has one big advantage:
Those who know that it is coming, can make huge profits. Sell  all your stock before the crisis, and buy when stocks have fallen.
Also: It is easier to controle world full of poor hardworking people, than to controle a world of well to do people.

There is misery all over Europe. Greece is the most recent example.  In Holland the Arts loose 25% of
the subsidies.  Health care suffers. Pensions are revised.

But those who played an important role in creating the crisis get good jobs in the Obama administration:  Geithner ( NY Fed).  WC Duddley ( who praised derivatives; Fanny Mae),
Lewis Sachs ( betting against his own clients) , Gansler, Rahm Emmanuel, Larry Summers.
They are or were Obamas helpers.

These politicians and professors made the crisis possible.
Those who were the actors,  like the CEO's of banks,  all got their many millions and bonuses, and kept them.
No investigations were made, nobody went to jail.

"It's a Wall Street government".

And we are their slaves.
The problem is: the slaves are continuously reading how free they are, and how rational.
They are cooked alive, like the frog, and have no idea about it.
They think this crisis was unavoidable.

Yes, but only if you accept that Greenspan and Rubin are much more stupid than you and I.
Not very likely.

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