Looking Back At America - Part V
This is Part V in the Looking Back At America series, which presents the perspective of what today's America might look like to historians 100 years in the future. This series of articles is most easily understood by starting with the first installment.
The stock market topped in October of 2007 and began a downward decline into 2008. The U.S. economy slipped into recession as the construction industry stalled along with the housing market. Unemployment started rising and kept rising. People, ever so subtly, began to restrain themselves from borrowing more money.
It was early in 2008 that the financial system began to get more widespread attention. The sub-prime mortgage market was collapsing, and with it the value of the securities the banks had sold to the pension funds. The collateral that investment banks used to float their transactions had lost value, and this created a solvency problem for the banks. Banks reacted by tightening lending standards, belatedly, and this served to further exacerbate the collapse of the housing market.
By September of 2008, the financial system was in a full blown crisis, the likes of which had never been seen in human history. On September 18, 2008, an electronic run began on the banks, draining over $550 billion dollars from the money market accounts of the large financial institutions in less than two hours. The U.S. Treasury shut down the accounts and announced a $250,000 guarantee on these accounts, stopping the run.
Hank Paulson, Treasury Secretary, told Congress that afternoon that if they had not taken these actions, and did not take further action, that the world as they knew it would come to an end. Paulson, as paraphrased by Rep. Paul Kanjorski, a Democrat from Pennsylvania, told congress:
If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it.
On September 18, 2008, with the financial markets in chaos, Congress, the White House, the Federal Reserve Bank, the Treasury, and leaders of the large financial institutions scrambled to stop the bleeding and prevent an all out collapse. These leaders will be referred to from this point forward as TPTB (The Powers That Be), for it was collusion among these leaders that stayed the collapse in the near term while making it all the more catastrophic when their manipulations inevitably failed.
After temporarily stabilizing the financial markets in September, the next several months offered the last opportunities to minimize the pain that would be necessary to fix the financial system. This is when losses should have been taken and the banks restructured. The bad debt should have been exposed and flushed from the system. This would have caused a short term dislocation in the American and global economies, but it would have been over fairly quickly and would have provided a healthy foundation for recovery. Instead, TPTB instituted policies that would cover up the problem in the short term, but magnify the ultimate devastation that was guaranteed by their actions in the longer term.
When the bailout for the institutional banks was announced, We the People did stand up and shout, but TPTB ignored the strident pleas of the population and bailed out the banks anyway. We the People were told that these banks were integral to the financial system itself. These banks, it was explained, were Too Big To Fail, for their failure posed “systemic risk” and could cause a complete failure of the global banking system; they had to be bailed out. This bailout was funded by We the People, though they did not agree to be pillaged in this manner.
This is when We the People failed to fully recognize that the system in its totality was rigged for the banks, and that their elected political leaders were indeed bought and paid for by the institutional banking cabal.
The American people had been fleeced in a number of ways by the fraudulent behavior of the institutional banks and, to add insult to injury, were then forced to bail them out. The sub-prime mortgage market was shot through with fraud, from appraisals to origination to processing to securitization to the ratings and sale of the securities. The entire business model was fraudulent. Then, when the bubble collapsed, the American taxpayer was forced to bail out the same institutions that had fleeced them. Not only that, but many of these people were invested in the pension funds that bought the worthless securities, and their retirement funds were now in jeopardy. The average middle-class American had been robbed in three different ways by the same institutions.
This was akin to having one’s pocket picked by a meth addict, then, after he has smoked himself nearly to death on what he stole from you, being forced to allow the him to stay in your home while you pay for his rehabilitation. Then he turns around and burglarizes your home while the sheriff holds you at gunpoint.
The financial crisis impacted the psyche of America, and as the U.S. approached the Presidential elections of 2008, Americans wanted change.
Barack Hussein Obama represented change in every way. He couldn’t have appeared more different than George W. Bush, or the any of the Republicans, physically or ideologically. He was the first black nominee for either party, and the first truly serious black contender for the White House. It didn’t seem to matter to the American people that he was inexperienced and untested. He ran on a platform of Hope and Change, a brilliant campaign stroke at a time when America was hungry for hope and desperate for change. He was a charismatic orator, and a tireless campaigner, and the financial crisis couldn’t have come at a better time for Barack Hussein Obama.
It was ironic that the American people, in their desperation for change, would elect not only the first black President, but one whose name sounded like that of a Muslim terrorist. In fact, the Iraqi war had been in part a thinly-veiled effort to remove Saddam Hussein from power in Iraq. And his last name, Obama, rhymed with Osama, as in, bin Laden, the world’s most influential terrorist at the time. That they would elect as President a black, very junior Senator with a terrorist name spoke volumes for the desperation in America.
Obama, who said he would not appoint lobbyists and Wall Street insiders to influential positions, took office and promptly began appointing lobbyists and Wall Street insiders to just such positions. Many of his appointments created public embarrassments that he and the mainstream media substantially and successfully ignored. Many of Obama’s appointees seemed to have trouble paying their taxes. Ironically, Tim Geithner, Obama’s choice for Treasury Secretary, was found to owe the IRS over $35,000 in unpaid taxes. Still, Geithner was appointed to oversee the Treasury. Not only was he a tax cheat, he was also one of Wall Streets most influential advocates. So much for Obama’s promise.
In 2009 Obama approved Ben Bernanke’s nomination to another term as Chairman of the Fed. Ben Bernanke had succeeded Alan Greenspan as Chairman of the Federal Reserve Bank in 2006. Bernanke was a Harvard educated economist and an academic. He had been a professor of economics at Princeton, and was a proclaimed expert on the Great Depression, prior to being appointed to the Board of Governors of the Federal Reserve System in 2002. In 2006, President George W. Bush appointed him to a four year term as Chairman of the Board of the Federal Reserve. It was widely believed (or at least, widely promoted) that Bernanke’s machinations to stem the crisis of 2008 had saved the world from disaster. Bernanke was even named Time magazine’s 2009 Man of the Year. Thus Obama kept him in power.
Incredibly, very few people saw that Bernanke’s machinations were nothing more than a bailout of the banks at the taxpayer’s expense. Americans weren’t paying attention to details; they saw only the mendacious big picture painted by the mainstream media. A small minority opposed Bernanke’s reappointment, but they were a tiny voice in the din.
It would be negligent to overlook the compliance of the mainstream media in the charade. Americans might not have been paying attention to details, but the alleged journalists of the mainstream media did little to provide honest details. The primary news media outlets were owned by corporations with plenty of motive not to rock the boat. If Americans had been exposed to the truth, perhaps they would have woken up sooner.
Part VI continues the construction of the historical perspective.