I just read this…
Good admission, but wait, what? Nah – don’t buy it.
As a lay person, very interested in but a non economist, one could see the start of the bubble in the early mid 1990s. The UK commentariat called it a recovery. They observed the return upwards of crazy flat (apartment) and house prices around 1995 and jumped for joy. Homes regained some value post crash, a wonderful thing. Again, loose credit offered to kick start the ‘economy.’ Again house prices for sale, at sums not multiples of 3.5 times salaries / income – but requiring huge mortgages offered with low or no deposits based on salary multiples like 5x, 6x, 8x, 10x – utter insanity.
You don’t need to be a graduate or a psychic to know that there would be a problem. I knew that it would end in tears, it was just a question of when.
No one knew about the massive, frankly fraudulent, ethically and morally bankrupt numbers game that was going on. Bank chiefs, specifically all the unimprisoned even now, department heads ran what is really a con by any other name. They facilitated, gave life to the monster computer models justifying, to the banks’ and other casino financial institutions’ top management board rooms, that the risk was managed and safe. All this was perpetuated by the whizz kid ‘quants,’ quantitative analysts, in financial jargon. They were the wunderkinde responsible for the creation of clever financial modelling, fabricating documents that represented financial intruments, re-packaging high risk, soon to be bad debt bets, with less bad bets and even gold plated AAA good debt, specifically to hide the riskier parts.
Bankers who had decades long careers, led the naive young graduates, pointing the way for none the wiser kids, doing as they were told. Geeks were kids with massive IQs and Advanced Math degrees, but still kids, led by bankers at boardroom level who chose to forget to balance the equations. You know the one – where zero i.e. 0 = complex, super multi-levelled, computer aided, alegbraic calculus = 0 ergo zero.
People like the lady above, Ms Yellen, along with UK and US politicians, dismantled the scaffolding of the USA Glass Stegal Act and UK legislation that held banks in check and other tough, somewhat inflexible, stabalising financial regulations. They were urged to do so by lobby groups on behalf of bankers wanting to rely on extreme ‘laissez faire’ political non interference. The ideas of the politically neo conservative Chicago school of economists, focused around that Prof. Milton Friedman idiot ran riot with Reagan. In the UK those ideas were used to justify, by the handbag wielding, utterly vile British PM, Mrs Thatcher, no doubt egged on by the World Bank and IMF.
They destroyed the sensible, economically stabalising, world wide influencing, financial regulations and even the first presidential Clinton administration in the USA saw President Clinton consigning the Glass Stegal Act to the dustbin. They burned the safety wall around the financial workings of the world economy, erected post the 1929 crash that had held good certainly until the 1970s oil crisis.
We non graduate dummies were not supposed to know about that. We were supposed to be drinking beer, sweating our labour in exchange for a few pennies, while you lot all lived high on the hog. We great unwashed masses, the victims, the low and average pay millions of ordinary tax payers, who got smacked hard 30 years later.
We all have been forced (not asked) to bail out the financial system.
We the mass of ordinary people have even been blamed for the debt pile creation activities of the banks and governments that enacted bail outs of those same banks.
While all of those, with their snouts deeply in that huge bankers’ party trough, all sucked out what they could get from the free for all. All grabbed a piece, in political donations, fancy advisory jobs and a whole plethora of ‘kick backs,’ to keep voting the ‘regulation lite’ environment and the party going, as the ship sank, even if legal and legit, but based on a lie.
We dummies down here at ground level know there’s leveraging. We comprehend borrow a little to invest and pay later. Buy or build a house, knowing it’s a necessary liability, unless a buy to let if you can. Borrow to invest in a business, build or buy an income generator, that’s normal use of credit. Then there’s the rampant disgusting party had by those who could access the elevated upper middle class, super educated or fortunately born, accidents of birth elevated to higher plains of existence, well mansions and champers soirees and we all watched you all from down here.
Damn, there was no party like that started in the 1980s, with big bang, a hiccup of Black Fridays, don’t like Mondays, in passing, the rest of the 100 odd mini crashes along the way eg. a big IT crash in 2000, precient odd little warning, nothing ever lasts. No party goes on without time being called and the piper needing to be paid.
You say you and yours didn’t know? I say bullshit.
You chose to immerse and not look, but you knew in the deep recess of your highly educated peanut brains, grandma told you, Mr Micawber (Dickens) told you, you all knew.
The bankers who ‘coined it,’ raking in all that A&M (Acquisitions and Mergers) loot and fees for squeezing Greece or Mexico and all their other mercantile scams. They took their commissions, took what they could get, put their loot in bricks and around the world, for when the shit hit the fan. Almost none are in prison nor had those 30 years of A&M extracted from their personal wealth piles, funny that.
It is dishonest to deny the basics of that 30 years profligacy, and debauchery, gorging on the stupidity of the weak politicians who let it happen.
Experts you call yourselves, all that time under your noses daylight robbery. The bankers were busy, ramping up the numbers, hyper inflating prices of goods and services, funded by cheap credit to the middle classes whose real terms income stagnated for 30 to 40 years.
But you wanted them, us little people, to keep spending, focused on the factory gate and amount of trade volume, buying cars, houses, furniture, holidays etc., to keep pace with the Jones, whilst real wealth gravitated to the few 1% or 0.1%.
You all let it happen. You were all deeply involved in the endeavour to create the emperor’s new clothes, in monetary units, fiscal instruments, that ultimately blew up. This was inevitable. Do not say you didn’t and couldn’t know.