We are being duped, the unthinkable is happening:
While the Outstanding Public Debt of the U.S Government stands at a whopping $ 9, 733, 146, 494, 947, .69 as of September 22, 2008 and growing at an average $2.02 billion dollars per day, President Bush and his Secretary of the Treasury, Henry Paulson, are adding another trillion dollars to the national debt in a desperate effort to bail out failed commercial and investment banks and the jobs (and extraordinary perks) of the “smart boys of Wall Street”.
Should we care?
Considering that the estimated population of the United States is 304,776,541, thus each citizen's share of this debt is currently $31,935.35 and about to increase by $ 2,000 with Bush’s rescue plan, we definitely should care. Big time!
Although we shouldn’t ignore the complexities of the financial and credit markets, it is difficult not to attribute the current financial crisis to anything or anyone other than the uncontrollable greed of the “best and the brightest of Wall Street”, those highly skilled smart guys of the investment baking world that, refusing to make money the old fashion way, invented fancy derivative securities, collateralized mortgage obligations and a bunch of other highly risky financial schemes designed to take leverage (the art of making tons of money with small amounts of money) to new highs.
Less than six months ago commercial and investment banks were falling, the state of the U.S economy was already worse than it looked, and the IRA accounts, the 401K Plans and investment accounts of millions of American were quickly sinking into meager piggy banks. Yet President Bush, Henry Paulson and John McCain were asserting, firmly and without hesitation, that the fundamentals of the U.S economy were strong, that the American workers were resilient, and that the U.S would overcome anything.
Yet, when Bush and Paulson finally admitted that the fundamentals weren’t as strong as they claimed, they quickly turned to interventionism and nationalization (the economic tools typical of socialist countries) to contain a financial crisis that was already in the making four or five years ago. They rescued Bear Stearns, they nationalized Fannie Mae and Freddie Mac and now, in an ultimate state of panic, they are intervening to purchase from the “best and the brightest of Wall Street” $ 700 billions of dollars in assets that no one in the private sector wants.
The credit markets and the financial markets are totally disrupted because of the sheer greed and avarice of the “brightest and the best of Wall Street”, those smart whiz kids that regardless of their enormous disregard for prudence are still collecting millions of dollars in bonuses and other perks while the companies they managed are rapidly sinking.
While the American Dream is fading for millions of young Americans, the U.S Government is doing absolutely nothing to identify, prosecute and punish those bastards responsible for the greatest financial crisis the U.S has experienced since the Great Depression. And, rather than providing honest and comforting answers to the hundred of thousands of people that are being left without savings and jobs, the U.S government continues to fool the American people with financial bail out plans designed to save the rich at the expense of the taxpayers
While the majority of Americans are pissed because the boundless greed and selfishness (perhaps even dishonesty in some) of the top officers and directors of the falling firms, no one in the Government describe, even partially, the real causes for the enormous failure of the U.S financial system. None of the “smart guys of Wall Street” have been held accountable, some criminally accountable, for their role in the creation of this huge and world wide financial turmoil. The auditing firms that surely should have suspected that the high yield, sexy mortgage-backed securities were poorly structured and collateralized, hasn’t been questioned either.
What does it take to figure out that a household with a medium annual income of $46,000 can’t afford the purchase of a $ 241,000 home? Those were the medium household income and medium home price, respectively, in the year 2005 when banks were financing such purchases at record pace and the investment banks were buying the mortgages as fast as they could. Worse yet, where were the regulatory agencies that are entrusted with the task of making certain that the capital structure of the fallen investment banks (and companies such as AIG and Country Wide), weren’t built like pyramids upside-down?. Is it possible that the FED didn’t notice that the capital leverage of some of these firms were 40 to 1?
Let’s face it, the great menace to capitalism is not socialism but the corruption and greed of those bastards that believe that capitalism and free enterprise means that everything and anything goes, that accumulating wealth supersedes all business models and any other moral or ethical consideration. Greed is the root of the problem, of a system of executive compensation that unfairly favors the “smart guys” to the detriment of employees and workers - even shareholders. Is not well enough that the salaries of CEOs and other top corporate officers and directors of the largest corporations are already irrationally and disgustingly high, but in top they get stock options at bargain prices and bonuses based on real and fake profits. And herein rest the imperfection of the compensation system, because corrupt CEOs will stop at nothing to fabricate fake profits, profits that in turn drive up the prices of their company’s shares. Ultimately, it all translates into huge bonuses and stock trading profits for the CEO, officers and directors. And if things go wrong, they still have the U.S Government to protect their Golden Parachutes.
I believe that there can’t be true and lasting success for capitalism and stability for the U.S economy in general, and the financial markets in particular, without adequate, well thought out and strong government regulations.
Corporate wrong doings have occurred much too often as evidenced by the following partial list of screw-ups (or bankruptcies), and we ought to learn from them:
1. Lehman Brothers Holdings Inc, Sept 15, 2008, $ 639 billion
While the Outstanding Public Debt of the U.S Government stands at a whopping $ 9, 733, 146, 494, 947, .69 as of September 22, 2008 and growing at an average $2.02 billion dollars per day, President Bush and his Secretary of the Treasury, Henry Paulson, are adding another trillion dollars to the national debt in a desperate effort to bail out failed commercial and investment banks and the jobs (and extraordinary perks) of the “smart boys of Wall Street”.
Should we care?
Considering that the estimated population of the United States is 304,776,541, thus each citizen's share of this debt is currently $31,935.35 and about to increase by $ 2,000 with Bush’s rescue plan, we definitely should care. Big time!
Although we shouldn’t ignore the complexities of the financial and credit markets, it is difficult not to attribute the current financial crisis to anything or anyone other than the uncontrollable greed of the “best and the brightest of Wall Street”, those highly skilled smart guys of the investment baking world that, refusing to make money the old fashion way, invented fancy derivative securities, collateralized mortgage obligations and a bunch of other highly risky financial schemes designed to take leverage (the art of making tons of money with small amounts of money) to new highs.
Less than six months ago commercial and investment banks were falling, the state of the U.S economy was already worse than it looked, and the IRA accounts, the 401K Plans and investment accounts of millions of American were quickly sinking into meager piggy banks. Yet President Bush, Henry Paulson and John McCain were asserting, firmly and without hesitation, that the fundamentals of the U.S economy were strong, that the American workers were resilient, and that the U.S would overcome anything.
Yet, when Bush and Paulson finally admitted that the fundamentals weren’t as strong as they claimed, they quickly turned to interventionism and nationalization (the economic tools typical of socialist countries) to contain a financial crisis that was already in the making four or five years ago. They rescued Bear Stearns, they nationalized Fannie Mae and Freddie Mac and now, in an ultimate state of panic, they are intervening to purchase from the “best and the brightest of Wall Street” $ 700 billions of dollars in assets that no one in the private sector wants.
The credit markets and the financial markets are totally disrupted because of the sheer greed and avarice of the “brightest and the best of Wall Street”, those smart whiz kids that regardless of their enormous disregard for prudence are still collecting millions of dollars in bonuses and other perks while the companies they managed are rapidly sinking.
While the American Dream is fading for millions of young Americans, the U.S Government is doing absolutely nothing to identify, prosecute and punish those bastards responsible for the greatest financial crisis the U.S has experienced since the Great Depression. And, rather than providing honest and comforting answers to the hundred of thousands of people that are being left without savings and jobs, the U.S government continues to fool the American people with financial bail out plans designed to save the rich at the expense of the taxpayers
While the majority of Americans are pissed because the boundless greed and selfishness (perhaps even dishonesty in some) of the top officers and directors of the falling firms, no one in the Government describe, even partially, the real causes for the enormous failure of the U.S financial system. None of the “smart guys of Wall Street” have been held accountable, some criminally accountable, for their role in the creation of this huge and world wide financial turmoil. The auditing firms that surely should have suspected that the high yield, sexy mortgage-backed securities were poorly structured and collateralized, hasn’t been questioned either.
What does it take to figure out that a household with a medium annual income of $46,000 can’t afford the purchase of a $ 241,000 home? Those were the medium household income and medium home price, respectively, in the year 2005 when banks were financing such purchases at record pace and the investment banks were buying the mortgages as fast as they could. Worse yet, where were the regulatory agencies that are entrusted with the task of making certain that the capital structure of the fallen investment banks (and companies such as AIG and Country Wide), weren’t built like pyramids upside-down?. Is it possible that the FED didn’t notice that the capital leverage of some of these firms were 40 to 1?
Let’s face it, the great menace to capitalism is not socialism but the corruption and greed of those bastards that believe that capitalism and free enterprise means that everything and anything goes, that accumulating wealth supersedes all business models and any other moral or ethical consideration. Greed is the root of the problem, of a system of executive compensation that unfairly favors the “smart guys” to the detriment of employees and workers - even shareholders. Is not well enough that the salaries of CEOs and other top corporate officers and directors of the largest corporations are already irrationally and disgustingly high, but in top they get stock options at bargain prices and bonuses based on real and fake profits. And herein rest the imperfection of the compensation system, because corrupt CEOs will stop at nothing to fabricate fake profits, profits that in turn drive up the prices of their company’s shares. Ultimately, it all translates into huge bonuses and stock trading profits for the CEO, officers and directors. And if things go wrong, they still have the U.S Government to protect their Golden Parachutes.
I believe that there can’t be true and lasting success for capitalism and stability for the U.S economy in general, and the financial markets in particular, without adequate, well thought out and strong government regulations.
Corporate wrong doings have occurred much too often as evidenced by the following partial list of screw-ups (or bankruptcies), and we ought to learn from them:
1. Lehman Brothers Holdings Inc, Sept 15, 2008, $ 639 billion
2. Worldcom Inc, July 21, 2002, $ 103.91 billion
3. Enron Corp, Dec 2, 2001, $ 63.39 billion
4. Conseco Inc, Dec 18, 2002, $ 61.39 billion
5. Texaco Inc, April 12, 1987, $ 35.89 billion
6. Financial Corp of America, Sept 9, 1988, $ 33.86 billion
7. Refco Inc., Oct 17, 2005, $ 33.33 billion
8. Global Crossing Ltd, Jan 28, 2002, $ 30.19 billion
9. Pacific Gas and Electric Co, April 6, 2001, $29.77 billion
10. UAL Corp., Dec 9, 2002, $ 25.2 billion
11. Delta Air Lines Inc, Sept 14, 2005, $ 21.8 billion
12. Adelphia Communications, June 25, 2002, $21.5 billion
13. Mcorp, March 31, 1989, $20.23 billion
14. Mirant Corp, July 14, 2003, $19.42 billion
14. Mirant Corp, July 14, 2003, $19.42 billion
15. Delphi Corp, Oct 8, 2005, $16.59 billion
16. AIG , next?
Unquestionably we been duped by the “best and the brightest of Wall Street”, we are the victims of the well thought out propaganda and misinformation that have led us to believe that these “smart guys” are more intellectually capable to manage our money than we can ourselves. Yet, we are living at a time when we also learn that the “smart guys” are really not smarter than we are and thus we have been double duped.
HZ
16. AIG , next?
Unquestionably we been duped by the “best and the brightest of Wall Street”, we are the victims of the well thought out propaganda and misinformation that have led us to believe that these “smart guys” are more intellectually capable to manage our money than we can ourselves. Yet, we are living at a time when we also learn that the “smart guys” are really not smarter than we are and thus we have been double duped.
HZ
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