It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
Many people now believe that the financial crisis was not an accident. They think that the Bush administration and the Fed knew what Wall Street was up to and provided their support. This isn't as far fetched as it sounds. As we will show, it's clear that Bush, Greenspan and many other high-ranking officials understood the problem with subprime mortgages and knew that a huge asset bubble was emerging that threatened the economy. But while the housing bubble was more than just an innocent mistake, it doesn't rise to the level of "conspiracy" which Webster defines as "a secret agreement between two or more people to perform an unlawful act." It's actually worse than that, because bubblemaking is the dominant policy, and it's used to overcome structural problems in capitalism itself, mainly stagnation.
The whole idea of a conspiracy diverts attention from what really happened. It conjures up a comical vision of top-hat business tycoons gathered in a smoke-filled room stealthily mapping out the country's future. It ignores the fact, that the main stakeholders don't need to convene a meeting to know what they want. They already know what they want; they want a process that helps them to maintain profitability even while the "real" economy remains stuck in the mud. Historian Robert Brenner has written extensively on this topic and dispels the mistaken view that the economy is "fundamentally strong". (in the words of former Treasury secretary Henry Paulson) Here's Brenner :
Originally posted by JacKatMtn
What's the answer, if any, to this continuing manipulation of the economy?
Is there an answer at all?
Google Video Link
The substantial run-up in house prices, which we have followed in Florida and also see in the populous Northeast and West Coast of the United States, may be at least partially attributable to unusually low mortgage rates influenced by our very accommodative policy, which has been in place for some time. Those developments and the risks associated with the run-up in house prices probably deserve further study and thought as we decide how to posture policy.
I continue to be comfortable with the policy path we’re on. And barring some surprise, I judge that we still have a considerable way to go to get back to a more neutral stance. My concern is that, with a real fed funds rate that continues to be near zero, we could unintentionally be encouraging further imbalances in both the inflation environment and in the international sector. I hope we will not try to signal that we may soon pause in our removal of policy accommodation. Thank you, Mr. Chairman.
In 2001, the administration of George W. Bush raised caution flags about lending by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, noting in its '02 budget request that "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."
Remember Nietzsche? "God is dead." Let's translate that 19th century Germanic philosophy into modern economics. In Adam Smith's 1776 capitalism, God was the Invisible Hand, a mysterious force running the economy from the shadows.
Flash forward to 2010: Capitalism is dead. The economy has a new Invisible Hand, the Goldman Conspiracy of Wall Street bankers.
This transfer of power happened suddenly. As recently as late 2008 the Invisible Hand was on life support, near death. Suddenly, miraculously the Treasury secretary, Goldman's former CEO, transferred the power into a new Invisible Hand of God, the free-market ideology of Reaganomics ... a power absolutely essential to the survival of Wall Street's mega-bonus culture.
Yes, that's why the Goldman Conspiracy must kill financial reforms ... why they will kill effective reform with the backroom support of Obama and Dodd. This was predicted back in late 2008, even before the bailouts, back when we thought Reaganomics dead. "Shock Doctrine" author Naomi Klein warned:
"Free market ideology has always been a servant to the interests of capital ... During boom times it's profitable to preach laissez faire, because an absentee government allows speculative bubbles ... When those bubbles burst, the ideology becomes a hindrance and goes dormant while big government rides to the rescue," then a neo-Reaganomics "ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis," setting up a new bubble, bigger meltdown, and the Great Depression 2 the world narrowly avoided in 2008.
The 6 reasons Obama/Dodd helping Wall Street kill financial reforms
In this context, the Goldman Conspiracy's goals are very simple as they manipulate Congress and the president to protect their warped culture:
No Fed audits, no transparency, no matter how much money the Fed prints for the banks
A toothless Consumer Protection Agency
Wall Street must continue controlling rating agencies
Unregulated proprietary trading of derivatives with loopholes for corporate derivatives
No new Glass-Steagall laws to prevent Wall Street from trading with customers' deposits
And taxpayers must remain liable for future bailouts over $50 billion up to unlimited sums even greater that the recent $23.7 trillion the Fed and Treasury handed out.
Bottom line: The Goldman Conspiracy must kill any real financial reform. Why? The Goldman Conspiracy cannot generate huge bonuses without their new Invisible Hand; the resurrection of unregulated neo-Reaganomics allowing traders to keep gambling in the lucrative $670 trillion global derivatives shadow banking casino.
While Wall Street financial firms have been lobbying furiously against regulatory reform, other big businesses have been working behind the scenes to water down the bill or insert loopholes that would exempt their industries.
Credit card companies, auto dealers, community banks, investment firms, hedge funds and student loan firms all have a stake in the game. And all have descended on Capitol Hill in an effort to shape what is set to be the most sweeping financial reform since the Great Depression.
Democrats demonized lobbyists for the last two years on the presidential campaign trail, and won the 2006 midterms by criticizing the “culture of corruption” in the GOP-run Congress. My, how times have changed. Look who just got a cushy job as the top lobbyist at the most politically-connected firm on Wall Street:
Goldman Sachs’ new top lobbyist was recently the top staffer to Rep. Barney Frank, D-Mass., on the House Financial Services Committee chaired by Frank. Michael Paese, a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank’s committee in September, will join Goldman as director of government affairs, a role held last year by former Tom Daschle intimate, Mark Patterson, now the chief of staff at the Treasury Department. This is not Paese’s first swing through the Wall Street-Congress revolving door: he previously worked at JP Morgan and Mercantile Bankshares, and in between served as senior minority counsel at the Financial Services Committee.