Robyn E. Blumner
By Robyn E. Blumner
St. Petersburg Times Columnist
Our economy has driven off a cliff and most Americans have to be wondering how it happened. How did we go from a nation of growing 401(k)s to the financial abyss so fast?
We all know the story by now. How the people running Wall Street investment banks, commercial banks and hedge funds made gobs of money by leveraging their firms to the hilt in order to gamble on exotic securities backed by bad loans. Then their house of cards collapsed and brought our economy down with it.
But why wasn’t there regulation and oversight to restrain all the irresponsible bets?
Here’s a news bulletin for you: It was methodically bought off.
Over the last decade the financial sector spent more than $5 billion on influence peddling, $1.7 billion on political contributions and $3.4 billion on lobbying. And the industry got its money’s worth.
The details are contained in a blockbuster report by Essential Information and the Consumer Education Foundation, nonprofit groups that advocate MORE
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This column was first published in the St. Petersburg Times on March 8, 2009
March 12th, 2009 at 3:32 pm
There used to be regulation, and we need to retuen to the regulations that we had in the past.
Wall Street should not have gotten a bailout. A financial failure and loss of investment would be an incentive for these and other future investors to become more cautious of what they buy in the way of mortgages. A financial failure would cause the investors to become more skeptical concerning anything that the financial experts have to say (usually lies). We need for this financial penalty to happen. A financial failure would cause investors to be wary of and question anything that any stockbroker or any other financial genius has to say. They are spending the bailout money on bonuses for themselves and new larger private jet airplanes.
The federal government TARP economic bailout money is currently gone to pay for the golden parachutes, private parties, expensive vacations, new jet airplanes and bonuses to these same highly paid incompetent and maybe criminal executives that caused these problems. These incompetent, arrogant, stupid, and selfish executives took so much money from the financial markets that they caused the systems to fail. The lowly paid US citizens is paying his hard earned taxes to them to continue their bad business policies that caused this crisis? Should taxpayer money pay off the bank loans that occurred when these financial geniuses borrowed money to pay stock dividends, in order to artificially drive up the stock prices, which personally enriched themselves through their stock option plans? How can we get rid of these financial geniuses that caused these problems without costing the taxpayer any more of his/her hard-earned tax money? They are still on the job when they should be unemployed and living under a bridge.
The financially successful Arthur Anderson/Enron group here in Houston, with Jeff Skilling, Ken Lay, and Fastow as their leaders swore to false financial statements, perjured themselves when testifying about facts, and generally lied about almost everything that they filed with the SEC, and suffered very little penalty when they finally did get caught and subsequently convicted. They all need to rot in prison until they die as a deterrent to other prospective Financial Geniuses. Their prison sentences should be somehow proportionate to the amount of money stolen and the number of lives wrecked. I am sure that these Enron and Arthur Anderson type Master Criminals are studied and emulated by the current crop of Wall Street Financial Geniuses who studied their successes, how they got caught and how to aviod themselves getting caught. We need legislation to make the CEOs become criminally responsible for any false company financial statements filed with the SEC. Many more crooked CEOs need to be in prison for long periods of time. I am a CEO of a small (international engineering) corporation.
The Stock Markets are just gambling Venues for the public to make gambling wagers (investments) in ownership of publicly traded companies, securities, loans, and other investment vehicles. Investors just lost some of value of their investments, and there is nothing wrong with this loss since the value was speculation over and above the Balance sheet value of the companies. The investors should not have believed anything that their brokers told them about those or any other investments. If you review almost any of the SEC filings (on the EDGAR database) you will find almost all of the sworn information filed with the SEC is extremely false, most especially when you get away from the “Blue Chip” stocks.
Wait until the balance of payment deficit catches up with the USA, and it will take a whole days wages to buy a loaf of bread.
The buying power or value of the US dollar is partly about psychology when it is now backed by the “full faith and credit of the US government” rather than gold. This is almost the same as my definition of “Junk Bonds”. The US government does not go to banks to borrow money. The US government just buys a lot of paper and cranks up the presses to create more dollar bills, T-Bills, Government Bonds, etc. and deposits these items into banks (or the federal reserve) to pay for the checks that they give out to pay for their government payrolls, pork barrel projects, negative balance of trade balances, bailouts, entitlements, operations, social schemes, wars, new infrastructure, wealth re-distribution, mental health, imported consumer goods and etc. Since the US government stopped redeeming freshly printed US dollars for gold (1972), foreign governments and foreign individuals are allowed to redeem these freshly printed dollars (and other freshly printed US securities that they earned in exchange for their products that they exported to the USA) to purchase title to real estate, forests, industries, breweries, hotels, factories, casinos, financial institutions and everything else of value that is located in the USA. We paid these foreigners with our freshly printed currencies to manufacture or supply the things that we imported and consumed (rather than have US citizens working to make these products ourselves in this country). Some government sources estimate that the title to 25% of our property and businesses are now foreign owned (http://www.economyincrisis.org/content/ownership).
The buying power of any paper currency determines its value or exchange rate. The USA government stopped exchanging gold for our currency in 1972. US government does not go to banks to borrow money. The US government just buys a lots of paper and prints up a bunch of new paper money, T-Bills, Bonds, and other similar paper securities then deposit these financial instruments into banks (actually the Federal Reserve) to cover checks issued to pay for government payrolls, wars, pork barrel projects, negative balance of trade, failed business bailouts, entitlements, government grants, social schemes, new infrastructure, wealth re-distribution, mental health, imported consumer goods, police, education, make-work schemes, and etc. This accelerated printing will cause massive inflation to the point that it will take a whole day’s wages to buy one loaf of bread.
Our gold reserves were the basis of the value or buying power of our currency. This was (is) true of all of the currencies in the world. The only thing that will save, preserve or restore the buying power of the dollar is reversing the trade deficit and then re-building our gold reserves. Only a positive balance of trade will restore the value of the dollar, and we must accomplish this by any means possible, or accept third world poverty on a large-scale basis. The only way to do this is to produce export more (dollar value of) things than we import. The only way that we can accomplish exporting is to re-industrialize and make these products with US materials & Labor. The only way that our products will be sold abroad is if these products are technologically superior, or cheaper. We need to increase the percentage of USA citizen college students studying science and engineering from 5% to more than 60%, in order to emulate the Asian countries. In the last few decades we have purposefully destroyed the industrial base that won WWII and gave us today’s bountiful way of life. Paying people to pave roads, build infrastructure, plant trees, dig holes then refill the same holes, rake leaves, write poems, paint pictures, environmental cleanup, etc. will not be useful or contribute anything to correcting the US economic problem. Riots and insurrection are predictable, ala the French Revolution, when the people find their situations economically hopeless.
I really do believe that we must preserve the economic miracle that has given our US citizens one of the highest living standards in the world. This standard of living was created by the Agricultural and Industrial Base that produced the food, goods, services and other items that we consumed, plus an excess of these goods & services that were produced and then sold to other foreign countries in order to accumulate the US gold reserves through a positive balance of trade surplus payments.
I have been the engineer of record for construction projects in Asia, Europe, Middle East, Caribbean, and South America. US citizens are unaware of the lifestyle that we are accustomed to and take for granted. If our economy collapses, we can become a third world country overnight. There is nothing more saddening or devastating than mass unemployment such as exists in countries such as Mexico or India. I have visited India many times on Business. Crime, family abandonment, divorce, selling your 12 year old daughters as (legally) indentured servants to brothels, selling your 12 year old sons to rug weavers, and other bad things increase during these periods of unemployment.
Our political and economic leaders seem to believe that we can continue our economic miracle by becoming a service oriented society cooking hamburgers for each other using imported beef, imported vegetables, etc., selling insurance & junk bonds to each other, and suing each other, but definitely not manufacturing or creating anything that we consume. The only way that we can reverse this trend is to re-start making the things that we consume. Both major political parties apparently listen to economic experts who believe that is possible for us to remain de-industrialized.
I remember a guy named Ross Perot that looked like Alfred E Newman from Mad Magazine who ran as a third party canadate against President Bush 41 and president Bill Clinton, I think in 1992. He had the right message but he was the wrong messanger. He was not attractive, and I believe that the American people vote partially based upon looks rather than intellegence or policy. He had a lots of graphs and charts to indicate his point. I remember him saying that “NAFTA will suck the jobs out of the USA”. That might have been the last chance to preserve the USA economy.
I remember presidential canidate McCain stating something to the effect that he was not interested in the economy during the first part of the campaign after he was nominated, so I voted for Obama.
Maybe there is something missing in the overall gene pool of the USA that makes us believe and select the unqualified people that we elect to govern ourselves, rather listening to their policies.
Why should Americans have to work when we can just print more paper dollars to pay other people to manufacture the things that we import and consume??????
We have met the enemy and it is us. There is nothing more saddening or devastating than mass unemployment such as exists in countries such as Mexico or India. I have visited Asia many times on Business. Crime, family abandonment, divorce, selling your 12 year old daughters to brothels, selling your 12 year old sons to rug weavers, and other bad things increase during these periods of unemployment. Our basic industries such as steel, computer chip manufacturing, petrochemical refining, appliance manufacturing, tire manufacturing, automobile parts manufacturing, aircraft manufacturing, textiles, and etc. have been decimated and/or totally eliminated from this country by government edict. The North American Free Trade Agreement has almost eliminated the remainder of the basic industrial manufacturing jobs from the USA. The USA must re-industrialize. Even if we started to re-industrialize today, it would take many years to re-create the manufacturing and industrial production bases that they destroyed. New jobs created by the EPA are nice, but they are about as economically useful to our balance of payments and our industrial base as paying people for raking leaves, digging holes and re-filling the same holes, since they do not produce anything economically useful that we can consume or export.
The USA population will probably become employees, possibility indentured servants, or maybe even beg to become slaves owned by the foreign countries and foreign individuals that will own everything of value in the USA in the near future if US citizens want to feed their families. The foreigners know that the US dollars that they earn will buy less and less each day that they do not spend them. Our children and grandchildren might also have to change to the religion of the business owner if they want a job, or beg to become a slave in order not to starve. Future nationalization of foreign owned assets (ala Mexico) is another discussion topic for another day.