We are getting bored of reporting on the impending economic disaster and the imminent disintegration of the society of Man.
But the issue still remains, and so for a moment, we’ll concern ourselves with explaining the real reasons behind the massive economic meltdown that will doom you and your children and your children’s children to poverty, a broken-down society, and perhaps mild cannibalism.
[If you don’t have a head for detail, skip down a few paragraphs to
The Quest for Blood.]
The Quest for TruthSo who is to blame? You’ve heard a lot about people buying houses that they couldn’t afford and predatory mortgage lenders who offered loan terms that were impossible to meet. But that’s not the cause of the problem. There will always be bad loans and people who can’t pay their bills, but they should never lead to the ruin of our economy and create the apocalyptic conditions for cannibalism down the road.
Rewind back to the days of the Great Depression. In 1933, Congress passed the Glass-Steagall Act, which regulated the way banks did business -- essentially separating investment banks (which took great risks with their capital for higher rates of return) and regular deposit banking. This was to ensure that banks did not use the money in regular people’s bank accounts for crazy speculation in, say, the derivatives markets or in the stock market or in high-yield securitized loan portfolios -- all of which could lead to the demise of our species. We hate to bore you with the details, but essentially, the law was designed to prevent the creation of a Citigroup or an AIG, and for 66 years, it prevented the creation of a giant market of the very same toxic assets that will perhaps be damning us all to living underground and, out of necessity, acquiring a taste for human flesh. In other words, this was a good law.
But in 1999, the Glass-Steagall Act was repealed by a bill called the Gramm-Leach-Bliley Act -- named after the three assholes who introduced it: Sen. Phil Gramm (R-Texas), Rep. Jim Leach (R-Iowa), and Rep. Thomas Bliley (R-Virginia) – and it was passed so overwhelmingly by both houses of Congress that it did not even need the signature of then-president Bill Clinton (D-Penisville), though it received that too. This allowed Traveler’s Group -- an insurance company -- to merge with Citicorp -- a bank -- in order to create what they called a ‘financial supermarket.’ We can only assume all the legislators were entertained by hookers and fed mountains of cocaine while they were assured this bill would not lead to cannibalism and the demise of the human race.
Also, around the same time in the late 1990s, credit default swaps came into being. They were conceived as a way to insure lenders, especially banks, against loan losses. In 2000, Congress passed the Commodity Futures Modernization Act, which exempted credit default swaps from regulation. The act was introduced by Sen. Phil “Anybody see a pattern here?” Gramm (R-Texas), and cheerled by Alan Greenspan, Chairman of the Federal Reserve, who argued that the market would regulate itself because he read as much in the writings of Ayn Rand.
What followed can only be described as a financial orgy as banks took more risks in financial markets, falsely comforted by the fact that they could also buy credit default swaps as insurance.
AIG was making large profits by selling credit default swaps well beyond their ability to insure the loans that they covered. Between the years 1999 and 2007 sub-prime loans increased from 5% of all new mortgages to 48%. Holy effing crap! There were a whole lot of other reasons for this, but the main reason is that financial institutions started borrowing more and more money to buy these things, until some of them were borrowing $32 (or more) for every $1 they actually had –- just so they could buy these ridiculous loans. Bear Stearns and Lehman Brothers were two of these. And all the major banks were borrowing at least 25 to 1 to finance the same crap – with the money that regular, hardworking people keep in the bank or in their 401(k)s.
There was another regulation passed during the Great Depression called The Uptick Rule. This was a rule instituted by the SEC to prevent market players from manipulating the value of stocks while selling those same stocks short. It led to the destruction of capital at banks and other financial institutions in 1937, and so the SEC decided to put an end to it. Then, in 2007, the SEC decided capital destruction was cool again, and eliminated the rule. Market manipulators have been destroying bank stocks ever since and bringing the financial system to its knees.
Then came the collapse of Bear Stearns, Lehman Brothers, and the black hole we call AIG. Wachovia and Washington Mutual then contributed with the two biggest bank failures in American history. (Technically, Wachovia didn’t fail because it was bought by Wells Fargo, but the point remains.)
The Quest for BloodIf you’ve read the above paragraphs, congratulations. You are one bored human being.
If you haven’t, let us recap a bit:
It seems that the government had decided sometime in the last 10 years or so that it wanted to bring on another Great Depression, and so repealed every law that had been instituted to prevent exactly that. We admit that 60 or 70 years is a long time and that people forget what exactly the purpose of such laws may have been. So could we suggest maybe a Post-It note be placed on these laws from now on, so that maybe the people in the future will know that they’re really, really important? Or maybe we can put a stamp on certain laws that says, ‘THIS LAW WAS PUT IN PLACE TO PREVENT THE DEMISE OF OUR SPECIES OR POSSIBLE CANNIBALISM. DON’T EFFING REPEAL IT.’
So let us list the people responsible: Senator Phil Gramm (R-Texas), Alan Greenspan, and just about every top executive at AIG, Citigroup, Wachovia, Washington Mutual, Bear Stearns, and Lehman Brothers, every Treasury Secretary from Robert Rubin to Henry Paulson, SEC chairman Christopher Cox, and throw in current Fed Chairman Ben Bernanke, too, who insisted in 2007 and 2008 that the sub-prime crisis would not present much of a problem for the economy.
These people should all be disemboweled and hung by their necks in the middle of every city square in the United States. Their innards should be exposed to the disastrous rays of the sun until they’re baked and cured beyond any semblance of human form and flesh.
You might think that seems a bit harsh. Certainly, they broke no laws. And after all, Alan Greenspan already looks like a rotting corpse, and if the ancient, foul, beaten Earth could walk and talk, it would look and sound like Phil Gramm.
But it is not exaggerating to say that millions of lives have been destroyed -- millions of people have lost their jobs, and millions more have lost their savings in the stock market as a result of what these people have done. That is not even to mention the effect this crisis will have in poor countries, where political instability and famine are sure to be the near-term results. And we cannot yet say that the worst is over. This boulder has been rolling down from the very heights of the highest mountain, and we have no idea where the bottom is, or if the economy and our society can even survive the destruction on the way down. There is no crazed murderer or serial killer languishing in any prison in this country, nor any terrorist hiding in the hills of Afghanistan, who has done damage that even compares to what these people have done.
So we need to pass new laws -– laws that designate these people as Enemies whose existence presents a
systemic risk to our economy, to our civilization, and to the human species as a whole. Then, when cannibalism becomes the order of the day, we will be able to look back and at least know that someone was held responsible for our misery.
Just FYI - this isn't me, in case you were wondering.
