This Bloomberg article tells us all we need to know about how corrupt Wall Street bankers, the Federal Reserve and our federal government have become. Wall Street ultimately sucked $1.2 trillion out of the American economy.
Why? And what were the consequences?
Prior to individual retirement accounts, the stock market game had been played between big banks, insurance companies (annuities) and brokerage houses, so the playing field was pretty well leveled; the players at least were all in the same league.
From the days of the 401k, IRAs and other self-directed retirement accounts, tens of millions of financially ignorant savers have poured their retirement savings into the stock market, along with employer matching funds, in the hope of a decent retirement future.
This opportunity for profit did not escape the notice of the parasitic East Coast financial establishment. There were fees and commissions, of course; but that required actual work and soon fell out of favor. What was necessary was an automated method of inserting themselves between the investment’s buyer and seller, one that would enable a reliable source of profit by skimming it off the top of retirement accounts without any acknowledgement it was being done.
So trading desks and eventually automated trading computer programs were set up by brokerages and big banks to fleece the vast new herd of “investors” – most of whom thought buying a bank certificate of deposit was “investing.”
It was easy money, and nobody noticed they were taking it. It was only a few cents here and a couple of dollars there. But when you had hundreds of millions under management, then hundreds of billions, and then trillions – it added up to an immense and eventually predictable financial windfall, on which the parasitic establishment came to depend.
As the brokerages and big banks grew more brazen in their thefts, leverage became popular. Why not double your holdings – and then double them again? Thus derivatives were born. Maximize the profit – because the software is never wrong, and the computer never sleeps.
Think of it as a tax on Main Street, collected by Wall Street and pocketed by America’s East Coast aristocracy. The tax was increased by selling junk securities to Main Street as investment-grade “opportunities.” Those were the mortgages never to be repaid (mandated by a corrupt Congress).
Then the economy belched. The trading software panicked. The traders froze at their screens. And the stock market headed below sewer level.
Individual traders who had recognized the impending economic slowdown watched their profits grow handsomely. But there was a problem: The big bank’s trading desks were now running the banks. And the banks didn’t have the money to pay for their losses, because of the greed and subsequent leverage.
Their theft was a tax, you see. And taxes only flow in one direction: from the little guy’s pockets into the big guy’s pockets. Doesn’t really matter if it’s the Chicago mob or the East Coast aristocracy.
So the banks had to be rescued from their greed and folly. And the only entity that could perform the rescue was the Federal Reserve – because they could “make up” the money the banks were set to lose. Poof! “Here’s 1.2 trillion dollars. Call us if you need any more.”
The small people and firms who had seen the slowing economy coming were wiped out when the injection of Fed funny money was inserted back into the stock market. The banks made their profits – and the bankers and traders got their bonuses.
The East Coast politburo establishment breathed a huge sigh of relief. Their purchase of the federal government and the last election had been worth it, after all! Laws and the Constitution had been ignored, and the bailout funds flowed from the taxpayers into the pockets of the uber-wealthy. Never to be seen again.
Which is why no jobs have been created. Or ever will be. And why history is about to repeat itself again, with the next bailout. And the next presidential election. And the next Congress. Wash, rinse and repeat. And here’s who does it for them (“Quick! Help media pick ‘right’ GOP candidate”).