Tuesday, April 13, 2010
Back Down The Same Road We Go
What caused the financial crisis that lead to the economic recession? The Congress held hearings last week and the people involved went before the Congressional Commission and lied through their teeth. It is never called lying, but rather the term CYA, known as "cover your ass", is perhaps a better description of what these people were doing.
To believe that no one realized what was happening is pure crap and we all know this. You don't have to be an Einstein to figure out what created the trillions of dollars of toxic assets. I have written over the last two plus years about the mortgage-backed bond market meltdown and how the credit rating agencies played a key role in inflating the housing bubble. The people at the top, such as the Chairman of the Federal Reserve Bank, the President of the New York Fed, the Secretary of the Treasury and a host of advisers, all played a part in the disaster known as the financial crisis of 2008.
I refer to our economy as the political-economy for a reason. No country's economy runs without some influence from the political powers regardless of the kind of government. Lobbyists cleared the way for this financial disaster to occur, and yet despite the severity of the recent economic disaster, these same lobbyists are once again pressuring Congress not to put in place safeguards, regulations, transparency and accountability for the future.
And, you know what? The lobbyists will succeed. Why? Because financial regulation is boring and the vast majority of the people don't know anything about this industry and don't care. Well, you get what you pay for, and in the case of the banking and investment industries, the people that are doing all the paying are going to get their way. And, back down the same road we go.