First off, I am not an economist. I am not an investment advisor. I am not politically active. I am also not stupid. I saw what was coming back in the summer of 07. I took my few sheckels out
of the stock market in October of 07. Just naively thought that I had caught a market cycle accurately for the first time in my life. I never for a moment imagined what was coming next.
The first revelation came at the time of the demise of Lehman Brothers. Why them? Why not Bear? Heck, they were all suddenly in trouble. The AIG situation was frightening. It looked as though complete collapse was imminent. Paulson & crew told congressmen that martial law might be needed if our financial pillars collapsed. I could tell that we were going to witness dramatic changes in our economic system. But the notion of threatening to impose martial law bothered me. It weighed on my mind. I could easily understand that Bush had no clue. It was equally easy to envision that congressmen would be confused and essentially impotent to deal
with what was presented as an unprecedented situation since the late 20s. But martial law? When had the US become a banana republic? Who were these "wise" men pushing these buttons?
It seemed as though they had one thing in common:Goldman Sachs. This was the elite firm on Wall Street. Still is. Or at least the most solvent thanks to all the political connections derived from their alum in the Bush administration as well as previous administrations.. The oddity in the allowed collapse of Lehman was difficult to explain. Was the government drawing a line in the sand? Not a chance. Lehman was Goldman's biggest competitor. Former Goldman czars in the Bush administration were the least likely to assist Lehman. Lehman's CEO had never worked for Goldman. This wasn't family. It was decided to let Lehman fail.
Could Goldman alum really behave so callously? Why not? We came to discover that these were the same investment pros that were selling the bad bundled mortgage paper to one set of clients while shorting the same paper. We came to learn that the bailout of AIG engineered by Goldman alum working in the government paid Goldman 100% on the dollar to the tune of 13 billion. When you get in trouble, you always find out who your friends are. But this was about stacking the deck in the guise of saving AIG. This "friendship" is incestuous and disengenuous. Also unethical and likely illegal.
Alot of odd things were happening in the fall of 08, and George W hadn't the capacity to know or understand. This was essentially a bloodless coup, with the largest financial institutions in the country taking over because their brethren in the government had deemed them too big to fail hence the Treasury coffers were opened to save them. Nice place to be when your business is backstopped by the government.
I cease my ranting today with the latest update to the ongoing scandals (never to be prosecuted if I am correct). Tim Geithner is revealed to have told the AIG folks to not disclose where the bailout money was going back in 08. In a comical twist, the AIG folks wanted to disclose where it was going. When the corporate guys want to regulate themselves more than the regulators do,
then head for the hills.
Herein, I will be looking at the present but I submit to you: what is past is prologue.
