In honour of this morning's Full Moon penumbral lunar eclipse in Cappie...
Here's an excellent article written by James Lieber for The Village Voice detailing the derivatives scheme that toppled the economy:
What Cooked the World's Economy
(You can also read it at The Village Voice, but tribe.net has it all laid out here...)
Honestly, I've never understood the actual details of derivatives/hedge funds until reading this article. And I'm shaking my head at how obscene it all is. I knew it was rotten (couldn't you feel it in your gut all along?), and here it is all laid out...
Securities were set up in fundamentally flawed ways, destined to fail (ie. groups of high-risk, adjustable rate mortgages, for example)...and then the hedge funds (unregulated investment houses) basically bet on that failure, selling derivatives or "insurance policies" on the securities, which produced huge wins for their investors when they did fail.
Not only that, but investors could buy these derivatives when they didn't own the original securities! So that's like buying an insurance policy on your neighbour's house after it has been slated for demolition.
Multiple policies were taken out on each security, meaning that the value of the derivatives is now twenty times more than the value of the actual stock market! "At almost $600 trillion, over-the-counter (OTC) derivatives dwarf the value of publicly traded equities on world exchanges, which totaled $62.5 trillion in the fall of 2007 and fell to $36.6 trillion a year later."
This is how companies like AIG were taken down. The derivatives they held were worth three times as much as the company itself. And this is where the government bail-out money went. All those taxpayers' dollars, stolen from the people under Obama et. al. and a threat to Congress of martial law. Covering the bets of criminals...
$152 billion (that we know of) went to AIG alone.
Corporate capitalists setting the system up to fail and then betting on that failure, making off like bandits while the rest of the world is kept in the dark about the dirty dealings, trying to keep going in a system that is imploding.
"The bottom line in this scandal is that fantastically wealthy entities positioned themselves to make unfathomable fortunes by betting that average Americans - Joe Six-Packs and hockey moms - would fail," Lieber writes.
And fail they did...because the system was set up for that exact purpose. They were given loans they had no hope of repaying, under unscrupulous terms. The deck was stacked against from the get go.
Now, instead of prosecuting the parties responsible for the derivatives fraud and for the provision of the bad loans in the first place, the U.S. government pays off the gambling debts of the extremely wealthy with taxpayers' money.
Anyone still convinced that Obama is the change we need? As he funnels money to these crooks under threat of martial law?
Sounds like the history of power on this planet, doesn't it? The same scam is played out again and again, with different backdrops, through time and space.
The people got scammed. Big time. And now we have to be wiser going forward. We have to stop leaping at the dangling carrots and playing into these schemes.
Keep digging, Pluto...we've only just begun.