‘A very cruel and destructive god.’ ibid.
On September 18th 2008 the Secretary of the Treasury Henry Paulson and the Chairman of the Federal Reserve Ben Bernanke arrived for an emergency meeting of the Cabinet. In the past seven months they have bailed out one bank and let another one fail, nationalised three of the nation’s largest companies and watched in horror as the credit markets froze. Frontline: Inside the Meltdown, PBS 2012
The road to riches for Bear [Stearns] was simple: buy hundreds of mortgages, then bundle them into securities and sell them to investors. ibid.
Bear had borrowed heavily to invest in toxic assets and other high risk securities. ibid.
They found billions in sub-prime default loans. ibid.
Bear had made credit-default-swap deals worth hundreds of billions of dollars all over Wall Street and around the world. ibid.
A shotgun marriage between Bear and J P Morgan. ibid.
30% of Bear stock was held by its own employees. At the end of the week that stock was selling for $30 a share; J P Morgan was offering $4. ibid.
This time it was the investment bank Lehman Brothers. ibid.
Moral Hazard trumped systemic risk. ibid.
The world’s largest insurance company AIG had invested tens of billions of their insurance profits in risky investments tied to the housing market. ibid.
With the market crashing, Congress felt intense pressure to reconsider Paulson’s plan to buy the toxic assets. ibid.
Paulson said the entire banking system was in trouble. ibid.
Moral Hazard was a thing of the past. ibid.
They created the largest bank in America. But it was troubled from the beginning. Government took over. Frontline: Breaking the Bank, PBS 2009
2008: The markets were teetering. Nobody knew how bad it was going to get. On one weekend in September the entire American financial system would be changed. ibid.
[Henry] Paulson would push the bankers to handle the Lehman crisis on their own. ibid.
[John] Thain realised he had no choice: he agreed to sell Merrill Lynch to Bank of America for $50 billion. ibid.
Lehman Brothers was headed for bankruptcy. ibid.
Paulson had bet the markets would take care of themselves; he would soon discover he was wrong. ibid.
Paulson received the money – $700 billion known as TARP – Troubled Asset Relief Program. ibid.
Paulson gave each man a single piece of paper spelling out the conditions. ibid.
In one day everything had changed. ibid.
The marriage between Bank of America and Merrill Lynch was already showing signs of strain. ibid.
Merrill’s toxic assets were eating a hole in the balance sheet. ibid.
Long before the economic meltdown the story of one woman who tried to warn about the threat to the financial system. Before the toxic assets poisoned the economy, she warned of their danger ... Alan Greenspan v Brooksley Born and the Warning. Frontline: The Warning, PBS 2009
Reagan made Greenspan the most powerful banker in the world – the chairman of the Federal Reserve. ibid.
In 1993 Bankers’ Trust, one of the largest banks in the country at the time, had sold derivatives to Proctor & Gamble. The lawsuit set the stage for a stunning revelation: Bankers’ Trust employees took advantage of the fact that derivatives were too difficult to understand. ibid.
Trillions of dollars and the biggest banks in the country operating in secret. ibid.
Born’s warning became a prophecy. ibid.
The Wall Street banks were pressured to bail out LTCM themselves. ibid.
Some in Congress began to clamour for regulation. ibid.
Alan Greenspan had no intention of yielding. ibid.
Congress did decide to do something about Brooksley Born – they stopped her entirely. ibid.
Wall Street was largely left to regulate itself. ibid.
A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all, and to this statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men. Woodrow Wilson
Have you taken a large home loan? Or did you put your savings in stocks, mutual funds or bonds? If not, you can relax. But all of us who did are living on borrowed time. This is the story of the greatest financial crisis of our time: the one that is on its way. Overdose: The Next Financial Crisis; viz also Johan Norberg, Financial Fiasco, 2010
In 2003 it [interest rates] was cut all the way to 1%. ibid.
Greenspan argued that the Fed should never remove the punch bowl. But rather start refilling it when the party started to peter out. And if things went bad, the Fed would clean up the mess and tend to the hangover. ibid.
The big banks dared to make riskier loans because they had started repackaging loans and selling them to others as securities. ibid.
The rating agencies that rate securities gave the mortgage-backed bonds their highest rating ... The rating agencies were being paid by the sellers of securities. ibid.
The difference is that this bubble is much bigger. ibid.
Even banks who don’t want the money will be forced to take it, so that the public won’t know which banks are on the brink of collapse. ibid.
Congress approves the biggest financial bailout in history: $700 billion. ibid.
President Bush gives billions of dollars to General Motors and Chrysler. ibid.
On February 7th 2009 Obama approves a stimulus package worth $787 billion; with the Bush stimulus package from the year before, US politicians have now spent close to $1 trillion to stimulate the US economy. ibid.
We have been saved from the consequences of one burst bubble by inflating a hundred new ones all around the world. ibid.
Bush almost racked up more US debt that all presidents before him combined. ibid.
Each time and every time a bank makes a loan, new bank credit is created – new deposits – brand new money. Graham F Towers, governor Bank of Canada 1934-1954
Very soon, every American will be required to register their biological property in a national system designed to keep track of the people and that will operate under the ancient system of pledging. By such methodology, we can compel people to submit to our agenda, which will effect our security as a charge-back for our fiat paper currency. Every American will be forced to register or suffer being unable to work and earn a living. They will be our chattel, and we will hold the security interest over them forever, by operation of the law merchant under the scheme of secured transactions. Americans, by unknowingly or unwittingly delivering the bills of lading to us will be rendered bankrupt and insolvent, forever to remain economic slaves through taxation, secured by their pledges. They will be stripped of their rights and given a commercial value designed to make us a profit and they will be none the wiser, for not one man in a million could ever figure our plans and, if by accident one or two should figure it out, we have in our arsenal plausible deniability. After all, this is the only logical way to fund government, by floating liens and debt to the registrants in the form of benefits and privileges. This will inevitably reap to us huge profits beyond our wildest expectations and leave every American a contributor to this fraud which we will call ‘Social Insurance’. Without realizing it, every American will insure us for any loss we may incur and in this manner, every American will unknowingly be our servant, however begrudgingly. The people will become helpless and without any hope for their redemption and, we will employ the high office of the President of our dummy corporation to foment this plot against America. Edward Mandell House, founder Council on Foreign Relations and promoter League of Nations, to Woodrow Wilson 1913
What Wall Street and credit card companies are doing is really not much different from what gangsters and loan sharks do who make predatory loans. While the bankers wear three-piece suits and don’t break the kneecaps of those who can’t pay back, they still are destroying people’s lives. Bernie Sanders
When the boom started to slow down the government looked around for a new golden goose and it turned to the property industry. That would prove a fateful dependency. Property became Ireland’s gold rush ... The sky was the limit for banks dolling out money for investors. Fergal Keane, Panorama: How to Blow a Fortune, BBC 2011
What made the property spree possible was easy credit ... The mortgage market descended into a feeding frenzy. Subsidiaries of British banks like HBOS & RBS had entered the market sensing lucrative returns. Property fever gripped Ireland. ibid.
From a debt of millions to billions. ibid.