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Back in the early 1950′s Banks were our friends. We can remember vividly that our 4th Grade teacher wanted us to go get a Christmas Club Account. We lived in Norwalk, California in those days. Our whole class was required, for extra credit, to take part of their weekly allowance (for those that got one) and put in a quarter, a 50 cent piece or dollar into that account a minimum of every two weeks. There was even a contest our Teacher created that rewarded those with the most savings by the end of the semester. Not being so successful saving much….when we moved from Norwalk to Fullerton, that Christmas Club account had $3.24 cents in it. For years we wondered how much was in that account after 20 years. Then we found out…..if there is not any activity in the account after a year….the Bank can close the account and take fees up to the amount deposited, for any Administration fees they may want to charge. Guess that Bank wasn’t quite as kind as we had thought.
Iceland, Greece, Portugal, Spain, Italy and the UK are finding out that the same thing. Those same smiley guys who offered great investment opportunities and “Complicated Investment Vehicles” with exorbitant high rewards are now letting these people know “the rest of the story”! How can a country just go Bankrupt?
Is it possible that just by screaming ”Derivatives”, “Structured Investment Vehicles”, “Credit Default Swaps”, ”Hedge Funds” or any of the other 100′s of variants in a crowded room should probably be against the law of the land! Perhaps someone can also explain how these Institutions, Municipalities and Individual Companies can keep huge earnings enough to pay for their bloated Employee Pension and Retirement Programs…. even Bureaucratic Lifetime Health Insurance and Government Yearly Bonus Programs without risk….yet, available for all those “that want to play in the big game!” This is the tough job of the World Investment Bankers - that continue to get their millions and billions in bonus payments.
There seems to be a problem however, in the bad old days…if a country made a bad bet, they could simply Devalue their Currency! One day you might be getting 4 Swiss Francs for a dollar….the next day 2 Swiss Francs for a dollar. Countries tied their Exchange Rates to the American Dollar – because it was dependable. It was the proscribed way because any country knew that the United States currency was backed by Gold at Fort Knox…remember that stuff?
Richard Nixon changed all that in 1968 when they moved everything then backed with a so-called ”Basket of Currencies”. Remember that? The good news was that Currency Traders were making out by buying low value to dollar currencies and trading up with dollars. Buy a Thai Bot…trade that into US Dollars then trade that into French Francs or German Marks! The Europeans finally invented the EURO to keep these activities under some control. Actually, so they could do the same thing! Now all the EURO countries and the countries that trade with them are in the soup! No more Individual DeValuation Implementation. Greece would have to pull out of EU and re-institute the Drachma if they want to DeValue their currency! Greece could then soon return to the days of “Zorba the Greek”..the economists say!
Then came the demise of Glass-Steagall (Regulation Developed after the Great Depression in the 30′s) and the rise of Enron in 1998, mixed into a typical Farm Bill! We should probably go back and see who voted for it and how much money they got from Investment Banks for doing so. There were a few folks who took serious note of this Legislative Banking Regulation stepdown: Ken Lay, Jeff Skillings, Bernie Madoff, Bernie Ebbers at WorldCom and so many more! The day after passage Ken Lay cornered the market on the entrie capacity of Natural Gas in the United States – with no money down! Talk about leveraged! How about the dear old Fed Chair at the time: Alan Greenspan? Great guys all! Wonder how much they put into their Christmas Glub accounts when they were in the 4th Grade? Today, the wisdom is: ”Just Hedge everything!” Just ask Bernanke, Geithner, Paulson and company. They are all – still on the Juice! They all need to go Cold Turkey! Our alternate solution: Glass-steagall on Steroids!
In between the Professional Bankers, Investment Bankers, Mutaul Fund Investment Groups, and Treasury Secretaries - along with the Union Bosses, Pension Fund Managers, Mutual Fund Dealers, Insurance Companies, State and County Treasurers and of course the entire Real Estate Industry – were willing co-conspirators!. Everyone threw their hats into the ”Great Ponzi Scheme”. This “House of Cards”, this ”Grand Pyramid Charade”! Hey, it was easier than working – it was taking the money out of the other guys pocket (retirees, working moms, the working young and the greedy) and putting it into the hands of Stock Brokers and Investment Bankers that could drive a new BMW or Mercedes AMG - with style! The same guys that could make not millions of dollars a year – but billions. People sometimes forget: Capitalism creates Winners and Losers! Governments job – Keep the rules as fair as possible!
Investment Bankers and such have been able to single-handedly create a world of Debtor Nations and Institutions. It was purely ”investment lottery: time. Now our Goose has really been cooked and it is time for payback! When the Banker’s investors balked, or asked questions….those same guys were right there to invite them to a fancy lunch, take them on a lovely get-a-way or cruise and put it all on their tab….because they were such nice guys! When some investors asked how or if these “Investment Inventions” were “Sustainable”…the answer was always the same: “Growth! Are more people going to be on this planet tomorrow than they are today? Never Ending Growth” It is the same philosophy that has encouraged “unabated illegal imigration in the United States”. Hey, rents and Real Estate will go up, we can start Toll Roads and have the illegals pay for them, they can do jobs we don’t want to do, they can live in the slums and get us our recreational drugs, if they cause problems we can put them into NEW Jails which will create – New Jobs! How can you beat that logic? Think about how much more gasoline we can sell and how much more energy we can consume and tax!
Well, the Golden Goose is on its way to finally being cooked and devored by the remnants of Investors that have seen those ”Paper Tigers of Investment Banking” pull the rip-cord and go running to the very people they paid off initially – our Legislators! “Help, Help, Help!” they cry…as they continue to take their “Millions in Bonuses”…..as they take more and more from people and governments to cover up their lies, pay-offs and deceits. ” Hey, it doesn’t matter what a person may do for a living!” said the Godfather! Just don’t do it with our money! From now on United States please ask: “How many jobs will be saved if the government bails you out?”
Any hope for American and the World? Just one: “We regulate those bastards back to the stone age!” Maybe then they will truly know what “Unsustainable” really means!