Message from the editor: “Before I officially begin, this is my best attempt at breaking down a very complex financial meltdown with a bi-partisan approach. In other words, the facts are facts and are presented accordingly. It has taken me hours and hours to piece it all together. Conflicting opinions and views are everywhere. I poured through books, videos, articles and contacted individuals first hand. I wanted to learn the truth and share it with my readers, but I had no idea just how complex and surprising my search would eventually reveal. I wanted this to be short enough to read in one sitting but long enough to explain the full story. Thus, I believe all the elements of the big picture of what happened to the American financial system is here. This piece was created and dedicated to those out their who are still unsure what happened and distrust Wall Street. In many ways, I wrote this because there many good individuals working in the financial industry right now. Lastly, I have the highest hopes for America and believe, without a doubt, that this country has a fantastic future ahead. Please enjoy, and comment accordingly.”
Intro:
Sometimes we find ourselves caught in a full blown paradox of beliefs, questions and ultimately change brought on by some need. This is America right now, going through painful change brought by fear. Change is heading into the unknown, the dark abyss. No ones enjoys the painful process of real change. What feels familiar feels good.
Societies since Rome have thrived on the concepts brought by rules. However, like Rome and countless empires the world has known, all have failed. But why? A solid question would be what separates where we are now from where they were then?
The American Dream?
Fact or Opinion- The average middle class American loves the idea of the free market, of pure Capitalism, of the ability to have the America dream? This “dream” has been drilled into our psyche. Many believe it is our right to own land, a home, to raise a family, own a business and give our children a better life than we had. And, if fact, it is.
Is this the real definition of Capitalism? Better yet, could you please point out in the United States Constitution where it states, “America shall have a pure-free-market Capitalistic economy?” Please find where it states capitalism once, because it ain’t there. But, are we finding out the American dream is unattainable, or even worse, unsustainable?
The 1 %
This is also a piece inspired by the wealthiest 1% in America, for whom control the other 95% of America’s wealth combined, and ultimately, the ability to control power on Capitol Hill. This a post that was inspired by greed and the powerful inside individuals in banks, top government regulation committees and law.
However, the fundamental fact here, my main point, is that because we the people can vote, thus we the people have the ultimate power to change who runs our democratic society. Please let me try to explain.
Knowledge, Capitalism and Democracy
Knowledge has forever changed how humans perceive their world and themselves. Knowledge truly is power. Knowledge is the fact or state of knowing; the perception of fact or truth; clear and certain mental apprehension. When one travels down the road of knowledge, especially specific knowledge in specific areas, one can eventually become an expert. Now I am no expert, but I have laid the foundation for sound financial knowledge apprehension.
It is with this foundation I get to my point, our current democracy vs. capitalism.
Like any lawyer, one could argue two sides of this story. For example, most everyone loves the concepts of socialism, of social programs like welfare, social security, medicare, public schools, law enforcement, military protection, etc.
Then there is the other side, with pure capitalism’s free-market financial industry, privatized health care and social services, health insurance and pharmaceuticals, private banking, etc. I can go on.
Greed and Mankind
Gordon Gekko states in “Wall Street” words that practically sum up my two points of this debate. This quote is from Oliver Stone’s 1987 “Wall Street”, “The richest one percent of this country owns half (today more than 95%) our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you’re not naive enough to think we’re living in a democracy, are you buddy? It’s the free market. And you’re a part of it. You’ve got that killer instinct. Stick around pal, I’ve still got a lot to teach you.”
Gekko is also famous for saying greed is good. “greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA.”
I illustrate that quote because in too many ways greed has caused the markets to implode. Yes, it is true that greed in the financial markets has always existed. The market always runs in a sicklicle cycle, bull markets (up) give to bear markets (down), good years turn to poor years. To truly understand how we got to where we are, one really has to go back years and years.
The American Financial Story Begins- years and years ago.
In all honestly, having spoken to a number of people and reading a number of books, I am even hard pressed to say what was the defining element. Truth is, there are several large factors. One could say things like going off the gold standard, complex technology entering into the trading system, quantitative financial theory’s, sub-prime CDO mortgages backed by insurance, Fed Reserve policies, derivatives, deregulation of the banking industry, etc. That about covers it.
Continue reading An Account of the Worst American Financial Collapse in History