How the financial crisis was engineered and who engineered it

In the year 2000, to counteract the deflationary and recessionary pressures on the economy as a result of the tech bubble bursting, the federal open market committee began lowering the federal funds target rate from 6.5%. Now whether or not you agree with this action, it was performed transparently and in accordance with the dominant economic school of though at the time.


This chart is a screenshot taken from the New York Fed's website and is probably fair use.

As a result of the lower interest rates, home ownership began to rise, and subprime lending as a proportion of other sorts of mortgages gradually began to rise. Was real estate overpriced at the time? Most likely yes, however asset prices can rise and fall in a fashion that is relatively harmless. The gradual decline of real estate prices should have been triggered on June 30th 2004 when the federal open market committee began to raise the federal funds target rate, and expressed that it intended to continue to do so going forward.

That didn't happen, because in 2004 everything changed.


This chart was published by Farcaster under the Creative Commons Attribution-ShareAlike 3.0 License.

The main stream media has pointed fingers every which way at a great number of people, however there are three men who have somehow managed to stay out of the eye of the main stream media, despite undertaking actions that lead directly to the financial crises. These three men in no particular order are:
*Harold McGraw III
*Maurice R. Greenberg
*William H. Donaldson

We have heard a lot about what happened in 2007, 2008 and 2009. This thread will start earlier, in 2004 when the seeds of the economy's destruction were planted.

Harold McGraw III

In 2004, well before the risks embedded in Wall Street’s bets on subprime mortgages became widely known, employees at Standard & Poor’s, the credit rating agency, were feeling pressure to expand the business. One employee warned in internal e-mail that the company would lose business if it failed to give high enough ratings to collateralized debt obligations, the investments that later emerged at the heart of the financial crisis.

Chan, Sewell. "Documents Show Internal Qualms at Rating Agencies." New York Times 22 Apr 2010

So in 2004, rank and file employees at Standard and Poor wanted to honestly rate the credit of collateralized debt obligations. However there was pressure from management to rate them extraordinarily favorably, and the rank and file had no choice but the yield. Who was the management of Standard and Poor in 2004? The answer is Harold McGraw III. Harold served as president, chairman of the board, and CEO of McGraw-Hill companies during the period, a position he continues to hold. In addition to this, he is the chairman of the extremely powerful business roundtable, and chairman of the globalist Emergency Committee for American Trade.

Now the question is, why were employees of Standard and Poor pressured to dishonestly rate collateralized debt obligations? The job of the a rating agency is to gauge the risk of securities, and their reputation is their greatest asset. In the long term, accurately rating securities is better for business than giving ratings which are either misleading or out right fraudulent.

The misrating of collateralized debt obligations directly lead to the financial crisis by both fueling the speculative bubble, and by causing the correction of institutional balance sheets to be sudden and jarring.

Maurice R. Greenberg

Maurice was chairman and CEO of American International Group from 1968 until 2005. However you at AboveTopSecret might know him better as the honorary vice chairman and director of the Council on Foreign Relations, and as a member of the Trilateral Commission. During his tenure AIG got involved creating and selling credit default swaps for collateralized debt obligations. It entered into enough credit default swaps, that in the case of massive wave of delinquencies in the underlying sub prime mortgages of the collateralized debt obligations, they would be unable to make good on their swap agreements. Of course that's exactly what happened, with devastating results for the financial system and economy of the United States and the world.

Now of course everything is connected. In September of 2008, mere weeks away from the bankruptcy of Lehman Brothers and the congress being threatened with martial law, Standard and Poor downgraded AIG's credit rating, wrecking financial havoc. Now of course such a downgrade had to happen eventually, but in this situation their timing couldn't have been worse.

William H. Donaldson

William was the chairman of the Securities and Exchange Commission from 2003 to 2005. Now it is the SEC's job to use its regulatory authority to stop this sort of thing from happening. However William went a step beyond turning a blind eye to the events being orchestrated in the shadows during the time.

In 2004 the SEC relaxed the net capital rule effectively eliminating margin requirements for the following corporations: Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley.
Each of these corporations has a tragic tale of 2008 to tell as a result. Now I don't think Lehman Brothers and the rest conspired to deliberately implode themselves, I just think that these broker dealers dug their own graves through greed and one upmanship. It is the nature of financial companies to try and get as much leverage as possible in an attempt to beat out the competition, and the SEC is the one who is supposed to keep them under control.

William H. Donaldson is also a member of the Skull and Bones fraternity, and served as a special adviser to Nelson Rockafeller.

So in a nutshell what happened? Free from net capital requirements thanks to the SEC, broker dealers created huge amounts of CDOs and sold them to each other and to institutions. CDOs seemed like a great deal at the time, because AIG was selling insurance on their defaults very cheaply, and they were highly rated by S&P. When people eventually caught on that the CDOs were failing to perform, the illusion that had been created fell apart quickly and with disastrous consequences. This was able to happen because of the work of three men, all members of round table groups and secret societies, who crafted this illusion in 2004, at the eventual expense of the reputation of the groups they ran at the time.

However this is only a piece of the puzzle. Several questions remained unresolved, such as who introduced CDOs to the financial community. What ties these men together, and why this crisis was engineered.

The Glass Stegal Act was setup in the 1930's as a response to the cause of the great depression.

In 1999 portions of this act were repealed, setting the stage for investment banks to get involved in the mortgage market.

Repeal of provisions in Glass Steagal 106th congress
Gramm-Leach-Bliley Act passed in the 106th congress
www.govtrack.us...

Many of the clowns...er I mean congress-critters who voted for this also later profited from the bailout in the form of campaign kickbacks.

The housing bubble would not have happened without the repeal of those provisions.

Damn fine thread

Are these people untouchable do you think, or - one day - will we be seeing them testifying infront of a congressional committee about the issue?

My advice to you topic creator is - study economics. Even taking a class on basic economics goes a long way.

Don't try to preach a subject you do not know about. You may throw around economic terms but do not pretend to know the subject.

There is no financial crisis.... It is just the economy's business cycle.

The economy is not controlled by a handful of people, isn't that obvious? What backs the dollar? The American economy.... it used to get backed by gold but not an more. If America's economy fails (which it won't), then that means the dollar fails. Big corporation won't like that and they won't let that happen. The corporations and the banks do not set the rates based on how much business they are making... but by how well the economy is doing.

There is no free lunch ever ...




[edit on 1-5-2010 by fordrew]

reply to post by fordrew


Oh no we must learn to school ourselves in basic economics to post threads, or even reply them these days... I thought, just a tiny little insignificant thought.... That these forums were for non mainstream 'thought processes and not what the newspaper keep spewing at us'.

Guess I must of been wrong, since now we need a few PHD's in simple economics to even start a thread up. Honestly if what the OP is stating offends you deeply... Then why does it? Do you think his thread is going to be front page news on some "huge legitimate, PHD galore newspaper???"

If not then why even bother to whine and cry and attempt to force these forums into some kind of anti-para-NORMAL site.

EDIT: I just had to for this;

There is no financial crisis.... It is just the economy's business cycle.

Ok explain to me how this thing of no financial crisis is causing alot of Americans to have financial crisis's.... If its not bad, then why are these folk experiencing 'bad. Their just load mouths and arn't feeling the sting? Its just all in their heads?

[edit on 1-5-2010 by Aoxoa]

reply to post by fordrew


If you can make a better thread or actually put together a response pointing out whatever flaws you think this thread has then go ahead, but you don't need to go take a class in college to know what you're talking about.

There's subjects I haven't taken in college that I could school (pun intended) people in who've been studying those certain subjects in for 4 years easily. So it doesn't matter about taking classes. There are these things called books, and also much can be learned for free online as well.

I like teaching myself, it's much better since I go at my own pace - fast when I want too - slow when I need a break.

Anyway, well put together thread OP - S&F.

Can you believe it? Forty-four flags, and less than a handful of replies. Shame shame shame, it guess the new exciting topic of today is whatever it is they're doing out in Arizona, while the real issues here are shoved away and forgotten about.

The individuals that you named, OP, particularly Greenberg, are fascinating. Greenberg can be linked to not only AIG, but Henry Kissinger, the build-up to the War on Terror, the CIA, Enron, and Kroll, Inc. It's a tangled web that goes far beyond the economic crisis.

Word of advice, OP, look at the G30 membership rosters, the IMF and the Bank for International Settlements.

Originally posted by zzombie
The Glass Stegal Act was setup in the 1930's as a response to the cause of the great depression.

In 1999 portions of this act were repealed, setting the stage for investment banks to get involved in the mortgage market.

I'm quite aware of this, but I didn't include it in the post, because it was a public action openly taken by congress.

So while I believe that such deregulation is a result of corruption, ignorance and misguided beliefs, it's quite a leap of faith for me to believe that the representatives that we elected are conspiring against us.

However, the sources of lobbying against Glass Stegal are worth looking into. Obviously a lot of lobbying came from the banks lobbying in their own selfish interests, but perhaps there were other less publicized sources. I'll do some more research down the road.

The point is to learn about economy, not try to profess your wrong information. Whether in higher learning or self taught...


and highlyoriginal I HIGHLY doubt that. In fact, I am just smiling right now...

[edit on 1-5-2010 by fordrew]

Originally posted by fordrew
My advice to you topic creator is - study economics. Even taking a class on basic economics goes a long way.

Don't try to preach a subject you do not know about. You may throw around economic terms but do not pretend to know the subject.

There is no financial crisis.... It is just the economy's business cycle.

The economy is not controlled by a handful of people, isn't that obvious? What backs the dollar? The American economy.... it used to get backed by gold but not an more. If America's economy fails (which it won't), then that means the dollar fails. Big corporation won't like that and they won't let that happen. The corporations and the banks do not set the rates based on how much business they are making... but by how well the economy is doing.

There is no free lunch ever ...




[edit on 1-5-2010 by fordrew]

Economy not controlled by a handful of people? And I guess next you'll be telling us that the central banks of almost every country aren't in the hands of one person. Or that all corporate media isn't owned by four corporations.

No financial crisis? Just a "business cycle". You know, even if your almost sentences were a valid response to the OP information and links, you still didn't prove your point in any way. How in the world you can even claim such things is absurd. We've seen demonstrably how this crisis was fabricated and worked towards from multiple angles and organizations who each played a key role in putting us in this situation. This is just more information to pile on top of it all, and damn good info too.

[edit on 1-5-2010 by BladeDraven]

reply to post by BladeDraven


I do not need to prove anything , because it is basic economics.

[edit on 1-5-2010 by fordrew]

Originally posted by fordrew
There is no financial crisis.... It is just the economy's business cycle.

What makes you assume I haven't studied economics?

First of all real business cycle theory, while an important part of the field, isn't the most well researched or popular theory.

Second of all, Keynesians believe very strongly that financial crises are real, and that governmental regulation can help deter them.

I think this thesis is easily demonstrated by how the run on money market accounts stopped once the FDIC issued a guarantee on their balances.

Originally posted by fordrew
reply to post by BladeDraven

 

I do not need to prove anything , because it is basic economics.

[edit on 1-5-2010 by fordrew]

You're the one that needs to take basic economics here. Monetarists believe that central banks have a great deal of power over the economy, and their theories talk about how that power should be used responsibly.

[edit on 1-5-2010 by scwizard]

reply to post by fordrew


Then you provide nothing of value to a debate. What person will read your post and think, "well he said its economics so it must be true."

If you have a valid rebuttle I would love to hear it. That way we all learn something. If you truly know this is wrong then it would be greatly appreciated if you could contribute as I would very much love to have the two sides displayed. Its how discussions get jump started and possibly lead to you illuminating some of us.

As it stands you havn't given any justification or evidence for your belief. I do not say you are wrong. You may very well be right but I have no way of knowing unless you could take some time to explain. Your input would be greatly appreciated.

Cheers

[edit on 1-5-2010 by thebulldog]

Originally posted by neformore
Damn fine thread

Are these people untouchable do you think, or - one day - will we be seeing them testifying infront of a congressional committee about the issue?

Well the first step is to have the main stream media mention these people. If the people tell congress to investigate, then there's a chance that they'll investigate. However that can't happen if the people don't even know who these people are, and instead blame folks like Richard S. Fuld, Jr. ("worst CEO of all time" according to CNBC) or Alan Greenspan (a harmless academic in my opinion).

now lets all attack the person who thinks that the OP is a crackpot.......


The point I am trying to make is that nothing will happen to these men and their plans will just carry on.

I did not know you really wanted to get specific ( Keynesian vs Monetarism, Classic vs Modern).... but anyways nobody can say that a few people control the economy... people and businesses do.... the Fed likes to pump money into the economy currently and that will just raise inflation... government is not good when interfering with Fed. better than having a low money supply (unemployment increases, etc etc)

Hell who am I kidding.. I am not economic expert.

[edit on 1-5-2010 by fordrew]

Originally posted by fordrew
and highlyoriginal I HIGHLY doubt that. In fact, I am just smiling right now...

[edit on 1-5-2010 by fordrew]

You're really ignorant if you think you need to go take college classes to have knowledge. I'm not saying that you shouldn't go to school and learn, but people do have hobbies, and mine include researching certain subjects.

The fact is, it's nice being able to take a class in college and not having to go to class and just show up for tests because I already know the material. Not to mention, how many people out there are geniuses (not saying I'm one of them) that didn't finish college and yet still became a famous inventor or scientist? I don't really think I have to start naming people... not to mention through out history many people were uneducated but inevitably very smart in certain areas...

So you keep smiling

OK. Listen up.

This thread is called "How the financial crisis was engineered and who engineered it". I happen to think its a very good OP, and merits a discussion.

So, lets have the discussion, and not ego fuelled bickering. How does that sound?

Originally posted by fordrew

Hell who am I kidding.. I am not economic expert.

[edit on 1-5-2010 by fordrew]

Indeed. And neither am I, but I know a crisis when I see one.

When the US Treasurer and Chairman of the Federal Reserve claim there'll be martial law and tanks in the streets if we don't immediately give the banks three quarters of a trillion dollars, I'd call that a crisis.

The world is not stupid. You can fool them once but not all the time. What happens when you lose integrity. Even if you hold gold in the hand, the others may think it is fraud. If US wants to restore the integrity, they better do something that the world can trust them again.