Thursday, January 07, 2010

What are the chances that we, the people will benefit in the long run?

After the English South Sea Bubble of 1720, a financial meltdown very similar to the current Wall Street meltdown, Parliament punished prominent politicians implicated in the financial calamity, by stripping them of all of their worldly assets and wealth. However, even though, in the short term, the South Sea bubble proved to be a disaster, according to John Brewer, author of The Sinews of Power: War, Money and the English State, 1688-1783, "its consequences were more beneficial… changing the structure of the national debt” making for a stronger state in the long run.

Fast forward almost 300 years. What are the chances that we, the people will benefit in the long run? Well, considering that the short-term mania that drove Wall Street compensation practices continues to reward the banksters for collapsing our financial system to this very day, the outlook doesn't look so good.

After transforming banking from a service industry into a zombie manufacturing industry that designed, produced and marketed worthless, exotic "securities" that eventually blew up in their faces, tossing trillions of dollars into a black hole, and as Galbraith once said about the 1929 bubble, made "a mass escape into make-believe" the banksters, nevertheless, produced enormous bonuses and rewards for everyone involved. In contrast, the American taxpayer's reward for rescuing the banksters is a costly $3.43 trillion bill and counting, high unemployment, with no end in site, and a totally corrupt political system, considering the depth of the ties between the banking industry and our political leadership in Washington.

So how can we benefit in the long run when, if anything, the conditions that caused our economy to crash are even more exaggerated than their previous forms. And no one, from Ben Bernanke to any of the banksters to the politicians at the helm, are willing to take responsibility.

“For Bernanke to blame weak regulation for the pyramid of bank-concocted, over-leveraged, high fee-producing assets—real loans mixed with a lot of price-inflating hype—is like a Super Bowl coach blaming coaching in general for the failure of his team to win the Lombardi Trophy.” -- Nomi Prins


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