60 Minutes’ December 11, 2011 interview of President Obama included a claim by Obama that, unfortunately, did not lead the interviewer to ask the obvious, essential follow-up questions.
“I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal.”
Obama did not explain what Wall Street behavior he found least ethical or what unethical Wall Street actions he believed was not illegal. It would have done the world (and Obama) a great service had he been asked these questions. He would not have given a coherent answer because his thinking on these issues has never been coherent. If he had to explain his position he, and the public, would recognize it was indefensible.
Bill is a very bright guy who I’ve interviewed on Blogtalk before.
His blind spot is in his failure to recognize the deadly embrace between Congress, the Executive and the Banks. Without the bubbles that the banks inflate Congress and The Executive cannot overspend, and without that offshoring of jobs cannot happen, the looting cannot happen, none of it can happen.
In short you have Bill’s criminogenic environment but in point of fact it is mutually profitable for everyone except the ordinary person. He gets serially raped by these practices. The truth of not only the underlying practice but its duration is found in my now-many-times-reproduced chart:
There is no resolution to this problem that does not put a stop to the behavior that causes that chart to come into existence and be maintained.
There is also no financial stability possible until this practice ends.
Government cannot spend more than it takes in via taxes. It’s that simple. Nobody wishes to deal with this but it is the intentional refusal to deal with this fundamental truth head-on and live within it’s confines that leads to all of these frauds.
In 2007 and 2008 I started publishing The Market Ticker focusing on this exact point and the abuse of leverage in the financial system. Nobody wanted to hear it. Then the 2008 collapse happened. You’d think that the pain of that collapse would have forced the government to act, to force financial institutions to pull that leverage out of the system and reverse their perversities, to put a stop to the stupidity. Perhaps support for a short period of time while that was done would have been reasonable, perhaps not.
But none of that happened. Instead, what happened is that the support was provided and the government did it level damned best to prevent the removal of the leverage that was endemic in the system. Specifically, everything possible was done to prevent the clearing of home prices and deflation of those “values” (which were utter and complete crap – and still are.)
Now we’re doing the same crap: This morning it is reported on CNBC that European banks are buying sovereign debt at 5% coupons and borrowing the money from the ECB at near zero for three years. This is a scam as BASEL allows them to buy these bonds with zero capital!
This is a doomsday trade: If the trade “works” and there is no blowup they’ll make more money than they’ve ever made before. If it blows up the guys on the other side of the trade will get zero because they can’t pay. Instead of leverage coming out it’s being added!
This crap has to stop.
Bill closes his column (and you should read the whole thing) with:
To date, Bush and Obama have prosecuted none of the mortgage frauds in the top nine levels. I urge reporters to ask him to explain three things about his statements to 60 Minutes. • Why are there no prosecutions of the felons that drove the crisis and occupy the nine worst rungs of unethical and destructive acts? • Explain the five unethical acts by elite financial institutions that you consider the most destructive and least ethical – but which you believe to be legal. How do you rank the degree of unethical conduct and destruction in those acts? • What specific statutory provisions did you propose to make those five unethical acts illegal? As enacted, which provisions of the Dodd-Frank Act made those five unethical acts illegal? Who has been prosecuted for those formerly legal but seriously unethical and destructive acts that were made illegal by the Dodd-Frank Act?
Reporters will have to be persistent in coordinating their follow-up questions to get Obama to provide direct answers to these questions. I request that private citizens write President Obama to ask him to provide specific, written answers to these three questions. I will be proposing a series of questions that I will urge citizens to demand answers to because it is clear that the regular media will rarely ask demanding questions of elite politicians or bankers. It is up to us to hold them accountable and end the doctrine of Presidential Amnesty for Contributors.
The important factor here Bill is that it’s not just PACs, although certainly “money in politics” hasn’t helped. It’s the fact that no matter where you look Congress and The Executive have not only bought into the scam of ever-increasing leverage in the system they have been some of the worst abusers of this by making political promises that cannot be fulfilled any other way.
We will never address the true cause of the problem until we come to understand and accept that the promises made by the political class to Americans in the form of forward entitlement promises and similar games in the federal budget process are part and parcel of the scam and they are entirely reliant on the banking system running a serial bubble machine and never being forced to reconcile their books lest all of those promises disappear in a puff of smoke!
Neither left or right sides of the aisle will tell the truth about this — but in fact we must if we are to ever find economic stability.