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Posted by: "Teresa Binstock" binstock@peakpeak.com aspergerian
Thu May 7, 2009 6:39 am (PDT)
The Quiet Coup -- How Bankers Seized America
The economic crash has made many unpleasant truths about the United
States apparent. One of the most alarming, according to a former chief
economist of the International Monetary Fund, is that the financial
industry has effectively captured the U.S. government.
If the IMF's staff could speak freely to the U.S. government, it would
say what it says to every country in such a situation: Recovery will
fail unless the financial oligarchy blocking essential reform is broken.
And if the U.S. is to avoid a true depression, time is running out.
The article from The Atlantic linked below details how the U.S.
financial crisis is shockingly similar to problems more commonly
associated with the third world -- and the harsh and necessary steps
needed to get out of it.
Dr. Mercola's Comments:
This well-written article featured in The Atlantic pinpoints many of
the unscrupulous banking practices, and the politics that go with them,
that have brought the U.S. to its proverbial knees.
A serious financial crisis is inevitable when you live too far above
your means for too long. This applies whether you're talking about a
single-family household or an entire country. As this article points
out, countries in crisis need to learn to live within their means --
just like you and I. This may mean increasing exports and cutting imports.
But simple as that may sound, one of the biggest obstacles to a
nation's recovery is nearly always its politics, and the politics here
in the U.S. are no exception.
As Jim Bourg states in his article,
"... */Typically, countries are in a desperate economic
situation for one simple reason---the powerful elites within them
overreached in good times and took too many risks. Emerging-market
governments and their private-sector allies commonly form a
tight-knit-- -and, most of the time, genteel---oligarchy , running the
country rather like a profit-seeking company in which they are the
controlling shareholders/ *."
U.S. Bankers Guilty of Fraud?
In the video above, Bill Moyers interviews William K. Black, a
professor of economics and law, who alleges American banks and credit
agencies conspired to create a system in which risky loans could receive
AAA ratings and zero oversight -- exactly the kind of gluttonous
overreaching and hair-raising kinds of risk-taking that Bourg talks
about in his article.
This video, by the way, is one of the most enlightening videos on
what the banks have done that I have ever seen. It's an extraordinary
interview and absolutely worth watching.
In it, Black calls it like it is -- Fraud. Some people got very rich
over a period of time, and now the entire country is paying the price.
What's worse is that Timothy Geithner, President Barack Obama's
Secretary of the Treasury, is currently facilitating the cover-up to
keep you in the dark about America's financial insolvency. A recent New
York Times and CBS News Poll shows a surprising increase in the belief
that the economy is rosy and turning around. Obviously most of them have
not seen this Bill Moyer's interview.
What Went Wrong?
A single bank, IndyMac, lost more money than the entire Savings and
Loan Crisis. The difference between now and then, says Black, is a
drastic reduction in regulation and oversight.
This financial calamity was brought about not by mishap or accident,
but following a concerted effort to undermine and remove all
regulations, allowing a creditor free-for-all that hinged on fraudulent
risk ratings for bad loans.
This kind of situation is rather typical, according to Bourg.
Oligarchs get carried away; they waste money and build massive business
empires on a mountain of debt.
And, just like in an emerging market, global investors became afraid
that the U.S. financial sector would not be able to pay off its enormous
debt, and stopped lending. Once that happens and the bank can't roll
over their debt, they're standing on the doorstep of bankruptcy -- which
is exactly what happened to Lehman Brothers last September.
Says Bourg,
"*/Just as in emerging-market crises, the weakness in the banking system
has quickly rippled out into the rest of the economy, causing a severe
economic contraction and hardship for millions of people/*."
But, says Bourg, there's a deeper and more disturbing similarity
between the U.S. crisis and that of emerging markets in other
countries in the past. And that is that elite business
interests--- financiers, in the case of the U.S.---played a central
role in creating the crisis, by making ever-larger gambles, with the
implicit backing of the government, until the inevitable collapse
<http://articles. mercola.com/ sites/articles/ archive/2008/05/15/why-the-u-s-has-gone-broke. aspx>.
This is exactly Black's point as well.
And, both Bourg and Black agree that one of the most alarming
problems now is that the same people who created this mess are able
to use their political influence to prevent the reforms required to
pull the economy out of its nosedive.
/"The government seems helpless, or unwilling, to act against
them,"/ says Bourg.
*What's the Solution?*
According to Bourg, the proven solution to get a nation out of this kind
of calamity is to nationalize troubled banks and break them up as
necessary.
It would be a complex task, and it would be costly to the American
taxpayers -- cleaning up the banking system would cost an estimated $1.5
trillion in the long term. But both Black and Bourg agree that only by
exposing the full extent of the financial situation, and restoring some
banks to publicly verifiable solvency can the financial sector be cured
as a whole, and start bringing economic sanity back.
Additionally, we have to break the bankers' political stronghold and
influence, which is currently blocking every reasonable attempt to right
the wrongs committed.
Last but not least, to prevent a reemergence of these dangerous banks
that are "too large to fail," the U.S. must also overhaul its antitrust
legislation, says Bourg.
/"Laws put in place more than 100 years ago to combat industrial
monopolies were not designed to address the problem we now face,"/ he
says. /"The problem in the financial sector today is not that a given
firm might have enough market share to influence prices; it is that one
firm or a small set of interconnected firms, by failing, can bring down
the economy."
/