We are fortunate to have a front row seat at one of the greatest historical re-writes in ….. well history I guess! In reality (because reality is so rare when reading about financial issues today) we are an integral part of the re write because without a complacent sheep like investing public it could never happen! Puff out that chest folks, you are a part of smoothing over the biggest fraud in history!
First lets review the key players in the fraud; then we can look at the cameo role we all will play!
The fraud of course starts with the three key ingredients of all good cons: a large dose of greed, a little street smarts, and a whole whack of arrogance!
The initial level of greed is a shared role involving real estate agents, appraisers, and bankers on the street level. Their greed combined with a little street smarts allowed then to con a massive number of homeowners into thinking they could have free money on run down shacks. They however, can only be complicit in the scheme if somebody can get them real cheap money to prime the pump on the scam.
That of course required a higher level of greed and arrogance than we generally find on the street. For that we needed a team approach. Thus we have the lobbyists and politicians to manipulate rates to set up the free flow of mortgage money. The politicians, being of a lower intelligence level, are influenced for minor amounts of campaign donations. In fact the key role they will play is as a fallback position for when the scheme eventually and inevitably must explode.
The arrogance that was so key to the overall success was supplied, for the most part, by the international bankers and investment experts who refused to admit they had no clue what they were buying for their clients. Thus the scheme takes on an unprecedented scope and size because arrogance is an international trait and thus common to all high paid, lazy analysts and rating agencies. In fact, one can hardly assume the scam was ever meant to get so large because it is ridiculous to think anybody could have predicted how arrogant and lazy the world’s investment experts were to become.
Thus a national scam gained speed and became a large scale fraud that now threatens the free world as we know it! (sorry, I have been listening to politicians too much lately). Anyhow now comes our part!
With the crap having been flung from the blades of the fan, the politicians swing into the distraction mode blaming everybody in site but themselves. While they do this the smart guys bail out and cash in their profits and start shorting the companies they financially raped and pillaged to make even more money.
And finally the finishing touch on the cover up. Let's try this one on for size ;"In fact this whole thing was caused by a social experiment as the government tried to increase social housing to the lower income folks." In fact some hedge fund folks will tell you this whole thing is really a failed government program and all we really need is “less regulations”. So tell you what, since this is all a government problem, really, the tax payer needs to rightfully make sure all the shareholders are protected from the bad investments their companies made. In fact lets let the government buy up all the poison crap we sold and put it in the treasury.
For those that faithfully read this blog, you should know that this is a combination of the Modern Commission Theory and the “One is Born Every Day” theory with a hefty dose of steroids thrown in for good measure!
Your wise historian,