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Bankster Rap

Written by Wanda Pasz Tuesday, 23 December 2008

I had a creepy feeling last year when I first started to hear about the The Great Wall Street Swindle a.k.a. the subprime lending crisis. The whole thing seemed like a scam from top to bottom. How could any of the financial wizards who were passing around the toxic bags of asset-backed commercial paper not know that sooner or later the bottom was going to fall out? Of course they knew. They knew damn well but they didn't care. As the festering ABCP's passed from money-grubbing hand to money-grubbing hand, a lot of rich guys got richer. When the bottom fell out, they didn't feel any pain. It was the little guys - small investors and working people - who took the hit as their savings and retirement nest eggs disappeared virtually over night. I felt sick about the deliberateness of it all.

When news of this extraordinary fleecing of the middle class finally made it onto the front pages and nightly broadcasts, I felt even sicker listening to the excuses and rationalizations of the thieves and their enablers, the various tentacles of government whose role it is supposedly to protect us from thieves and scam artists. The whole thing looked like legalized loan sharking on a grand scale. There was something really disingenuous about all the victim-blaming. Yes, no doubt, people bought houses they couldn't afford after the thieves jacked up their interest rates - and borrowed money they couldn't pay back after they lost their jobs in the financial meltdown that the thieves precipitated. And then there was the small matter of the sales pitch by none other than the President of the United States, urging one and all to become homeowners because that was going to cure the economy and make everyone a more responsible citizen.

Maybe loan sharking is too simple a description. From a certain vantage point, its more like a big Ponzi scheme where a few guys get a big payoff and everybody else takes a bath. But instead of this being a scam hatched by some slippery bad guys, it involved the biggest bigs of the banking and securities trading with the helping hands of the business-crazy Bush administration.

But the news only got worse. Within a few months, we would see the Lehman bailout which would be followed by a humungous $700 billion bailout of other failing banks, initially with no strings attached. Then with a few.

Then the captains of the auto industry weighed in, breezing in on private jets to beg - well, it was more like demand a few billion taxpayers' dollars to shore up their own sinking empires. After much backing and forthing it seems they got what they asked for, at least $17 billion of it with a few not-too-enforceable strings attached.

But The Worst is Yet to Come. The meltdown will last another few months, maybe even a year, maybe longer no one seems to know.

I believe that the worst is yet to come and that it will come when we realize that there is no bottom to this barrel - that no amount of bailout moolah is going to fix the economic crisis because at its root is not frozen credit or impractical cars. Those are just symptoms of the disease. The root cause is that the corporatist model was doomed to this kind of flame out from the beginning. Come on, when GWB pleads with us to give capitalism another chance, you know there has to be something wrong with it.

The notion of unfettered markets and the goal of profit maximization leads over the edge of a cliff. Unfettered greed, over production of junk and a philosophy that makes stealing from the people and wrecking their communities a kind of moral imperative is doomed to implode and thats what were seeing all around us.

I'm amazed as I take in the reactions of people around me, how nave we are. So many seem to be holding their noses and crossing their fingers that the billions of our hard-earned dollars that are being poured into the corporatist black hole will somehow bring back the measure of prosperity that we've been promised for the last two centuries but somehow never really achieved - not for any length of time anyway.

It's hard to fathom that we can believe that the guys who knowingly perpetrated this colossal scam and paid themselves over a billion dollars in bonuses while doing it and are even now taking their loot offshore can be trusted to straighten up and fly right.

If the events of the past few months make anything clear it's that it isn't just a handful of financial felons that are stealing from us - our entire economic system is rife with larceny and nothing is going to change until the system itself is radically redesigned.

Although it still remains kind of a heresy to question the viability of corporatism (that's what capitalism became many decades ago), the writing is surely on the wall. There are no bailout- fixes that will work. The money that the corporatist scammers pumped out of our treasury is gone forever. Any new money will also disappear. These bailout funds are a frightening example of throwing good money after bad. The economists and analysts will scratch their heads and opine that it must not have been enough and that the credit markets are still frozen and that more tax dollars must be pumped into the auto industry which can't be allowed to fail even though its already done that and other similar nonsense. More jobs will be lost, more people will be homeless and hungry. More will turn to suicide as a way out. Some will take others with them. The lenders will continue to turn the screws.

It's time that we stop believing in centuries' old myths about the mysterious hidden hands of the marketplace. The only hidden hands that exist in the current economic paradigm are the ones helping themselves to our resources. It has always been this way. We have about 200 years of proof to look back on and there's no reason to believe that anything is going to change for the better if we continue to delude ourselves.

The only bailout that will work is the one where we bail ourselves out of the corporatist model and into a new people-centric approach to managing the economy. This must include a rethinking of the core values on which our economic order is founded. We must come to terms with and accept that -

1. The market must serve the people and their communities and not greedy cabals.

2. Markets dont exist without regulation. They never have and it's foolish to believe that they ever will. So far the greedy cabals have controlled the market through their selfish manipulations. It's time control was given to the people who must decide how markets will operate and for whose ultimate benefit.

3. The idea that profit should be the only goal of enterprise must be relegated to the scrap heap of history in much the same way as deeply-held beliefs about a flat earth were discarded centuries ago. The values and objectives of enterprise must be in line with those of the communities that it affects. Again, the people must decide what these will be.

4. Unlimited production of consumer goods must end. This is one of the aspects of our current system that makes it inherently unsustainable. How much is enough? Communities must decide - including workplace communities.

5. And speaking of workplace community - management practices within all enterprises must change. The top-down autocracies that we have come to know as the only way to run a business, encourage (even demand) corruption, bad decisions, inefficiency and waste. Horizontally networked associations of human beings working towards shared goals must replace traditional hierarchical methods of human resources management. The concept of master/servant as the model for workplace relations must be replaced with workplace community.

6. The current financial system which is reliant mostly on imaginary money (yes people, the loans, lines of credit, credit cards and other "financial products" that you pay real money to pay off, were never real money to begin with) must be scrapped. The financial institutions that have perpetrated this fraud on the people have created an enslaved society that is subject to the most egregious exploitation and lives in perpetual fear of destitution. We must eliminate the debt system and the imaginary money that it dispenses.

I'm sure that this all sounds very radical and that most of us would prefer to hang on in quiet desperation in the hope that the thieves will bring back our money. But this is no longer an option. We are in Stage 1 of what Russian engineer and writer Dmitry Orlov calls the Five Stages of Collapse.

I am quite convinced that nothing short of a profound cultural transformation will allow any significant number of us to keep roofs over our heads, and food on our tables. I also believe that the sooner we start letting go of our maladaptive cultural baggage, the more of a chance we will stand. A few years ago, my attitude was to just keep watching events unfold, and keep this collapse thing as some sort of macabre hobby. But the course of events is certainly speeding up, and now my feeling is that the worst we can do is pretend that everything will be fine and simply run out the clock on our current living arrangement, with nothing to replace it once it all starts shutting down.

Closer to home, it's heartening to see that numerous thinkers and doers are envisaging something different on the post-bailout horizon. I was pleasantly surprised to learn that my five-points for a new economic paradigm line up very neatly with those proposed by writer David Korten in a recent piece entitled Beyond the Bailout, Design for a New Economy.

Equally encouraging is the proliferation of information that is becoming available about the true nature of our financial system. Ellen Hodgson Brown's Web of Debt doesn't pull any punches.

President Andrew Jackson called the banking cartel a "hydra-headed monster eating the flesh of the common man." New York Mayor John Hylan, writing in the 1920s, called it a "giant octopus" that "seizes in its long and powerful tentacles our executive officers, our legislative bodies, our schools, our courts, our newspapers, and every agency created for the public protection." The debt spider has devoured farms, homes and whole countries that have become trapped in its web.

Professor Henry C. K. Liu is an economist who graduated from Harvard and chaired a graduate department at UCLA before becoming an investment adviser for developing countries. He calls the current monetary scheme a "cruel hoax." When we wake up to that fact, he says, our entire economic world view will need to be reordered, "just as physics was subject to reordering when man's world view changed with the realization that the earth is not stationary nor is it the center of the universe." The hoax is that there is virtually no "real" money in the system, only debts. Except for coins, which are issued by the government and make up only about one one-thousandth of the money supply, the entire U.S. money supply now consists of debt to private banks, for money they created with accounting entries on their books. It is all done by sleight of hand; and like a magician's trick, we have to see it many times before we realize what is going on. But when we do, it changes everything. All of history has to be rewritten.

Is Professor Liu out of his mind? Here are a few little-known facts:

Tangible currency (coins and dollar bills) together make up less than 3 percent of the U.S. money supply. The other 97 percent exists only as data entries on computer screens, and all of this money was created by banks in the form of loans.

The money that banks lend is not recycled from pre-existing deposits. It is new money, which did not exist until it was lent.

Thirty percent of the money created by banks with accounting entries is invested for their own accounts.

The American banking system, which at one time extended productive loans to agriculture and industry, has today become a giant betting machine. An estimated $370 trillion are now riding on complex high-risk bets known as derivatives (28 times the $13 trillion annual output of the entire U.S. economy). These bets are funded by big U.S. banks and are made largely with borrowed money created on a computer screen. Derivatives can be and have been used to manipulate markets, loot businesses, and destroy competitor economies.

It's tempting to believe that it's all an intriguing conspiracy theory but it really does work this way. They lend us imaginary money and we pay them back with real money hard-earned money. Are we really such a bunch of easy marks? Seemingly yes. We continue to worship these financial high flyers when the reality is that they're taking us for the ride of our lives. There's even a word for them in the urban dictionary:

Bankster, noun | A portmanteau or blend word derived from combining "banker" and "gangster". Usually referred to in the plural form "banksters" to refer to a predatory element within the financial services industry, such as those offering "too good to be true" adjustable mortgage rates for home buyers.

So, how much longer are we going to allow ourselves to be hung out to dry while the wealthy gangsters continue to rule our lives with their fake dollars and flimsy myths?

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