Subprime or Subcrime? Time To Investigate and Prosecute
Subprime or Subcrime? Time To Investigate and Prosecute
There comes a time when the frame of a news story changes. It happened in
And it will happen in the economic arena too, when we see the "subprime" credit crunch for what it is: a sub-crime ponzi scheme in which millions of people are losing their homes because of criminal and fraudulent tactics used by financial institutions that pose as respectable players in a highly rigged casino-like market system.
Suddenly, after years of denial and inattention, the press has discovered what they call "the credit crisis." Vague words like "woes" are still being used to mask a financial calamity that some analysts are already calling an apocalypse as lenders go under and the Stock Market melts down.
A French bank froze billions Thursday saying, ""The complete evaporation of liquidity in certain market segments of the
On Thursday morning, President Bush was asked about this at a press conference. He blamed borrowers for not understanding the documents they signed. But if you have ever tried to read the documents banks prepare for mortgage closings, you will know that they are written by risk-minimizing lawyers and are too long and dense to be understood. (Later in the day, the market reacted to Bush's upbeat assessment with the Dow plunging 387 points.)
The financial insiders who watched were more than skeptical. Here are some quotes from a discussion on the Mi-implode Web site. One of the discussants calls our fearless leader, "President Pumpkinhead:"
Why'd president pumpkinhead have a news conference in the morning? Probably hoping no one would see it and he wouldn't have to lie to as many people.
Another described what he was watching with more than disbelief:
"He's being hit with a lot of questions on mortgages, credit crisis, and the economy ... and of course the economy is 'in for a soft landing,' he's been assured by the treasury that 'there is plenty of liquidity,' yadda-yadda-yadda.
But he is stumbling over his words more then usual, not making eye contact, not finishing his sentences ... and when he wonders a bit, he quickly goes back on script. It is very odd to watch, to say the least."
"Odd?" Not for him, but, of course, there is more than one man to hold accountable. This is a deeper structural problem that implicates a whole industry and the process of "financialization" it promotes. This crisis is an example of what goes around comes around as the companies that suspended their usual "standards" and "rules" and self-styled "due diligence" knowingly sucked money out of people with poor credit records and who now find their own companies imploding and collapsing worldwide. Many of the victims are people of color. They were targeted by predators.
Underscore that this was done deliberately, with forethought and malice, a well orchestrated plan to create armies of "suckers" and steal -- yes, I said it -- their monies to leverage even bigger deals. Their greed had no limits, until the scheme collapsed.
Behind it all were the so-called "Masters of the Universe," the wise men of Wall Street who worked behind the scenes to turn mortgage brokers and small lenders into part of what will one day be seen as a criminal network worthy of prosecution under the RICO conspiracy laws used against the mob and drug dealers. Read this account from the Wall Street Journal:
Lou Barnes, co-owner of a small
You don't read many accounts like this of businessmen bashing Wall Street in the business press. Could it all have been stopped? Of course, if there were real regulators and rules protecting consumers and the public interest. And if there were a social movement that championed economic justice.
And also, if there were investigative journalists like the ones who just wrote a series on the "debacle" of the "debt bomb" in the Journal -- but after the collapse, not before. And what do they admit now? That this is not just a subprime problem but far more serious and global.
They note that "credit problems once seen as isolated to a few subprime mortgage lenders are beginning to propagate across markets and borders in unpredicted ways and degrees. A system designed to distribute and absorb risk might, instead, have bred it by making it so easy for investors to buy complex securities they didn't fully understand. And the interconnectedness of markets could mean that a sudden change in sentiment by investors in all sorts of markets could destabilize the financial system and hurt economic growth."
Will the rest of the media follow up and explain what is really going on?
This is very serious, but far too many progressives, activists and politicians alike haven't spoken out about the crime behind this rolling scandal. We should be calling for major debt reform in
When they propose a bailout, we should demand a "jailout." The Washington Post reports that the
Blogger Carolyn Baker writes that we all must become more engaged with these issues saying she is "aware of the role of economic issues -- perhaps more than militarism, health care, education, politics, or any other institution, in the dead-ahead demise of empire.
"I also notice that few in the left-liberal end of the political spectrum have a firm grasp on economic issues which I suspect comes from a fundamental polarization between activism and financial intelligence," she writes.
Reviewing conservative author Michael Panzer's book, Financial Armageddon, she criticizes his analysis as limited, and by extension, the left's avoidance of these issues as well.
"What is most disturbing to me," she writes, "about the book is what appears to be a total lack of perception regarding the role of fraud, theft, and malicious intent in the American and global financial train wreck which has been exacerbating over recent decades."
Indeed! What are we going to do about this? How about starting with becoming more aware?
News Dissector Danny Schechter edits Mediachannel.org and directed the new film "In Debt We Trust: America Before The Bubble Bursts." To get involved, visit Stopthesqueeze.org.