Friday, December 25, 2015

The Big Short - How Wall Street Destoyed the World Economy in 2008 - And May Be Doing It Again

If you are a citizen of America and worried about our economy and your job, then you MUST see the just released movie “The Big Short.”  It is about how Wall Street crashed the American (and global) economy in 2008, which led to massive job losses that Obama had to face his first days in office. Ok, it isn’t “Star Wars” but it matters because your wallet is at risk again.

The movie is fast paced and lays out how corruption took over to the point where even the referees were rigging the game – Standard & Poor’s and Moody’s were giving AAA ratings to JUNK Bonds, consisting of Grade D mortgages, bought by investors worldwide.  They are supposed to be independent referees on ratings, but weren’t.  “If we don’t give a AAA, they will take their business to the other guy” was their excuse!

Moral: It could happen again! 

The Chinese have a saying that “To scare the monkeys you have to kill a chicken.”  Since no chicken was killed—no big bankers went to jail--no monkeys were scared. In fact, they may be encouraged to act out again because, as the movie portrays, the same flawed system remains in place as rich lobbyists dumped money bombs on Congress to get the laws watered down.

The Chinese have been around 5,000 years know a lot about human behavior.  No one went to jail for massive, systemic FRAUD in our financial system during the Bush years that the “experts” didn’t see--but a couple clever entrepreneurs did.  This movie shows how two of them turned $110,000 in $80 million (and they were the little players who saw through the hype and greed on Wall Street.)

What Wall Street was doing was beyond gambling with other people’s money. It turns out that if you and I make a bet, Wall Street was then selling bets on those bets! That “bet-on-a-bet-on-a-bet” system turned a $10 million bet (on mortgages) into a multi-Billion loss! It brought the world’s economic system to its knees in the dark days of late 2008 and early 2009 as Wall Street giants like Lehman Brothers started going bust fast and furiously. The Bush administration ran out of office just as the ceiling and walls were collapsing in the market.

There is another saying in China that, "Once you open the window, ALL the flies can come in."

The flies are the lobbyists that now control our Congress to benefit the 1% (Wall Street) while the 99% will be left to pick up the tab-- like in 2008.

Obama was left with a smoking wrecked ship on a reef by the Bush administration and two hot wars and chaos, so maybe that’s why he passed on prosecuting the offenders. Big mistake. Since then, banking as grown more powerful and concentrated –now only 6 big banks control the vast majority of assets (2/3’s), and can still play Russian Roulette with your money.

But Obama can’t be blamed when the GOP Congress has the big banks best friend, watering down Dodd Frank (weak as it is) and by fighting the restoration of Glass Steagall, the law that resulted from the Great Depression which forbid banks to also be stock traders with other people’s money.  

Go watch “The Big Short” because the howler monkeys on Wall Street are brewing up another bust and are trying to buy this presidential election and Congress.

We don’t want to be hit by another Financial Tsunami when the pain of millions of jobs lost and lives ruined could be avoided by proper Congressional action.

Michael Fjetland

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