I have struggled for almost a year to find a scenario which would link the regulatory actions of a corrupt and/or complacent Congress with the Administrations of Bill Clinton, George Bush and Barack Obama. Putting the pieces of a three-dimensional puzzle without straight lines may have actually been easier.
But I think that I have found the key – the bankers!
No, it is not a conspiracy in the normal sense, just a relatively small number of large, loosely-coupled financial institutions which are held together more by mutual interests than by actual trust. All self-protective with purchased influence in both government and banking circles.
Consider for a moment what the banking community has done ...
Aided and abetted by the lawyers, consultants and public relations counselors, their lobbyists have induced a willing and corrupt political structure, on both sides of the aisle, to relax regulatory standards. In essence to create a large, multi-faceted casino with no fear of being charged with illegal gambling.
With the regulators sidelined, the central bankers have allowed the financial institutions to make bets using borrowed cash from investors and when that ran out, synthetic securities – casino debt markets if you will – to continue the game. All hidden in plain sight with the assistance of the accounting profession which created “off balance sheet accounting” and other niceties to ensure their existence in a post-Enron world.
The financial institutions, recognizing that there was no way out of their extremely leveraged and technically insolvent positions and holding debts far greater than their assets, has little choice but to continue the game – pursuing further debt until such time the game was called.
Because the ratings agencies had little to sell except their so-called expert counsel, they entered the game by pronouncing relatively valueless paper as being of “investment grade” in return for large fees – justified by computer models which no one apparently understood.
When investors no longer believed the story of unending riches and refused to invest further – or heaven forbid – asked for their money to be returned, people finally realized that their investments could no longer be valued.
In the process, no one trusted each other’s markers. After all, the “investments” were paper and their valuations depended on having a willing buyer who could assign a value to their existence.
With no buyers to be found, the world entered a global liquidity crunch and the central bankers were forced by pre-planed circumstances to intervene.
So what is the end game …
It seems the objective of the game is to control as much of the debt as you can possibly manage. For with the control of debt, you can control the institutions which owe you an amount of money which is seemingly impossible to pay. Thus you are able to place people in positions of control and insure an unimpeded cash flow as the tangible assets are stripped from the institution and replaced with more paper.
Thus someone with funds; be they the oil-rich kingdoms, the Chinese or mega-wealthy individuals acting alone or in concert, could actually purchase control of our nation’s largest financial institutions without invading our country. Taking control over a large segment of our population who, in turn, is indebted to those who themselves are in debt to others.
If you were a corrupt leader?
Might I suggest that if you were able to elect a controllable, corrupt or incompetent political leadership, and each case works equally well, you could hasten the process of a bloodless coup by forcing (or allowing) the nation’s government and institutions to create so much debt as to imperil the existence of the United States.
That is, if you played the game according to the gentlemanly rules in existence. However, if you were a game changer, one could simply create a war or devalue the currency to restore the balance of power. Creating domestic turmoil for your citizens, to be sure, but insuring your survival as a nation.
However, if you were a really corrupt leader – you might attempt to disarm your citizens and weaken your military, putting your nation further at risk from a disgruntled trading partner or sovereign lender.
The nuclear option …
But there is another scenario, one that is sure to be fought by all of the corrupt politicians and others who would oppose any solution which will restore the balance of power to its rightful owners and secure the sovereignty of the nation.
No, I am not talking about nuclear weapons; but the use of nuclear energy power generation to provide low-cost, clean energy to an industry which could then prosper, to power desalination plants which could enlarge growing areas – and most of all, reduce our dependence on foreign oil, using that money to repay the devalued debt owed to those who previously controlled the energy and reaped windfall profits as they raped American citizens and others who needed their energy.
As a measure of closure, you are probably wondering if anyone could be prosecuted for the financial crisis contemplated in this scenario? The short answer is NO! With the exception of some egregious operators like Bernard Madoff, the great majority of the people involved will be protected by the system – simply because they were all involved in the process to one degree or another. So everybody but the most corrupt and politically unconnected are placed at risk. Sorry, but that’s how life seems to work in these instances.
Yes, this would make a great movie – especially if it was fiction.
-- steve
P.S. There are things people want to believe, things they want to hear, things they wish were true – and then there is reality. Your political perceptions will control our future – choose wisely this time! -- steve
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