Denninger on a roll again. Has a way with words, he does.
Chris Dodd and Barney Frank.
These two are the "banking regulatory chiefs" in Congress of course; Dodd in the Senate and Frank in the House.
Both have steadfastly stood beside the banks through this crisis, especially the really-big banks that have given millions of dollars in campaign contributions.
The same banks that lobbied hard to "reform" bankruptcy so you cannot file Chapter 7 any more when you go bankrupt and stick lenders with the bad lending decisions they made of their own free will. That is, your credit and financial life is ruined, but theirs (which should also be ruined) is not.
The same banks that connived with Congress and The Federal Reserve to get the last pieces of Glass-Steagall repealed - the law that, had it been present, would have prevented nearly all of this crisis.
The same banks that (Citi-cough-cough) got Alan Greenspan to approve a merger with Travelers that Greenspan knew was illegal at the time it was consummated - a merger that was then retroactively made legal with passage of Gramm-Leach-Bliley.
The same banks that lobbied to get an exemption from bucket-shop laws and insurance regulation (indeed, any regulation) for credit-default swaps.
The same banks that, post-ENRON when we all learned about the outright fraudulent accounting enabled by "off-balance sheet" games, not only kept doing it but increased the size of such ventures.
And more importantly, the same banks that lobbied hard this spring to get an exemption from mark-to-market accounting for the "assets" they hold on their books - an exemption they were in fact using without having it, as I will shortly illustrate.
If you're wondering why I keep harping on the same points over and over it is because I have been warning of this catastrophe and its consequences, along with the willful blindness and complicity of our government in this charade and scam for more than two years.
Those who have paid attention have managed to mostly-avoid the catastrophe, at least for their stock market holdings. They got out in the beginning of 2008 when it became evident that despite months of warning and clear evidence our government was going to conspire with these robber barons to commit fraud right up until the moment when the truth became impossible to hide any more and our entire economic system came crashing down around our ears, all in the name of protecting a handful of companies and their cronies, along with their ill-gotten "gains" and "bonuses."
Folks, this bubble and the consequence thereof for our economy and nation was not an accident. It was not merely a matter of "greed". Greed, all on its own, is not necessarily bad, despite what The Bible says. Greed drives human ambition, and ambition in turn drives true innovation. Absent "greed" we would not have the personal computer, electricity in our homes, air conditioning, microwave ovens, mechanical refrigeration, the Internet or cell phones. All of these things exist because someone got "greedy" and decided to try to make a profit.
It is when greed combines with fraud - that is, the knowing and intentional deceit practiced by one for the purpose of screwing someone else, that we have a problem. It is when honesty is discarded in favor of a "faster and simpler way" to make money - that is, instead of a fair bargain someone decides they would rather steal, either by lying, bribery or "convenient" omission.
We will not exit this economic downturn on a durable, sustainable basis, nor will we normalize our economy - that is, return it to a structure where economic prosperity is based on production instead of the scam of lying about asset values - until the hidden insolvency of institutions is flushed to the surface and recognized in bankruptcy court. In turn we must reverse the disastrous "bankruptcy reform act" so that both creditor and debtor, whether they be corporations or individuals, are afforded both the same harm from going bust and the same protection.
Until Chris Dodd and Barney Frank, along with the rest of the clowns that inhabit The Capitol, 1600 and 1500 Pennsylvania Avenue, come to the realization that the game-playing cannot possibly work and that it is time to tell the truth, we will continue to spiral down into the abyss.
The important point to take from this is not that forcing honesty will make the pain go away. It will not. It will, however, limit the duration of the pain, and stop compounding the errors and thus the necessary economic harm that must come.
We had a good deal of economic pain that had to be taken in the year 2000. The vast majority of it was not.
As a direct consequence of the willful fraud that our government and banking interests engaged in to avoid that economic pain in 2000, we have now more than doubled the economic pain that must be taken in 2008 and 2009.
What must be recognized is that there are only two choices: We can accept that amount of economic pain in full, here and now, or we can continue to add to it and try to put it off until later.
Doing the latter appears to be beyond our ability to succeed, meaning that we are only adding to the harm that must be absorbed at a rapidly-increasing rate.
It has been time to face the music since 2000, and it still is. We are now in the "exponential blow-off top of pain" phase, and instead of garnering years of respite (at the cost of even more trouble) we are only gaining weeks or months.
The clock has, quite simply, run out.
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Yawn! Got to go sleep peacefully now.
