WallStreet's Near-Meltdown = New Lies About the Economy, Designed to Blame All But those Responsible

[marmar]

via AlterNet:



Wall Street's Near-Meltdown Gave Rise to New Lies About the Economy, All Designed to Blame Anyone But Those Responsible

By Nomi Prins, Wiley Press. Posted September 29, 2009.

To hear it from the big financial companies, the big crash started when poor people bought homes they couldn't afford. But that was at most 1% of the problem.



Editor's note: The following is an excerpt from Nomi Prins' new book, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street.

The Second Great Bank Depression has spawned so many lies, it's hard to keep track of which is the biggest. Possibly the most irksome class of lies, usually spouted by Wall Street hacks and conservative pundits, is that we're all victims to a bunch of poor people who bought McMansions, or at least homes they had no business living in. If that was really what this crisis was all about, we could have solved it much more cheaply in a couple of days in late 2008, by simply providing borrowers with additional capital to reduce their loan principals. It would have cost about 3 percent of what the entire bailout wound up costing, with comparatively similar risk.

Just as great oaks from little acorns grow, so, too, can a Second Great Bank Depression from a tiny loan grow. But so you know, it wasn't the tiny loan's fault. It was everyone and everything that piled on top. That's how a small loan in Stockton, California, can be linked to a worldwide economic collapse all the way to Iceland, through a plethora of shady financial techniques and overzealous sales pitches.

Here are some numbers for you. There were approximately $1.4 trillion worth of subprime loans outstanding in the United States by the end of 2007. By May 2009, there were foreclosure filings against approximately 5.1 million properties. If it was only the subprime market's fault, 1.4 trillion would have covered the entire problem, right?

Yet the Federal Reserve, the Treasury, and the FDIC forked out more than $13 trillion to fix the "housing correction," as Hank Paulson steadfastly referred to the Second Great Bank Depression as late as November 20, 2008, while he was treasury secretary. With that money, the government could have bought up every residential mortgage in the country — there were about $11.9 trillion worth at the end of December 2008 — and still have had a trillion left over to buy homes for every single American who couldn't afford them, and pay their health care to boot. ...........(more)

The complete piece is at: http://www.alternet.org/workplace/142944/wall_street%27s_near-meltdown_gave_rise_to_new_lies_about_the_economy%2C_all_designed_to_blame_anyone_but_those_responsible_

[midnight]

1. When everything was said and done Americans could of been helped out.

the FDIC forked out more than $13 trillion to fix the "housing correction," as Hank Paulson steadfastly referred to the Second Great Bank Depression as late as November 20, 2008, while he was treasury secretary. With that money, the government could have bought up every residential mortgage in the country — there were about $11.9 trillion worth at the end of December 2008 — and still have had a trillion left over to buy homes for every single American who couldn't afford them, and pay their health care to boot. ...........(more)

Good information.

[Demeter]

2. The Lies Won't Serve

The housing crisis can't explain Lehmans, Bear Stearns, Citi, B of A, merrill lynch, General Motors, General Electric, or 15+% unemployment.

[midnight]

3. I think these folks are beholding to explaining anything per their

request.

[Enthusiast]

4. Instead of this accurate information,

the public has been fed a pack of lies that serve the interests of corporate America.

Why haven't we heard this on the M$M? As if we didn't know.

I have heard the Barney Frank + Fanny May and Freddy Mac explanation dozens of times. Every Republican in the country repeats that explanation any time an explanation is required. Simple, easy to remember, and it puts the blame entirely in the Democratic Party camp. Fortunately the public has not bought into this simplistic explanation and most suspect there is far more to it than Barney Frank, lol.

[unc70]

5. I have been posting exactly this info for the past year

If "someone" had magically bought all the trouble loans at full value, that would have been the maximum cost to all of us. All those credit default swaps would instantly have become worthless since the underlying assets were now whole, and the problem with multiple swaps involving a single underlying asset would have become moot.

The reason it was not implemented that way was that a very powerful few would have lost their fortunes and more. That is why AIG was kept in business (with even more of our money).