Monday, October 31, 2011

Your Obligatory Occupy Wall Street-Oriented Article

Just a couple of the things from around the Internet on the economy. Both mention the Occupy movements, so there's a theme, I suppose.

The first is a video of Bill Black, a former bank regulator comparing the Savings and Loan Scandal, which he investigated, and the current financial mess:

Some of the more interesting points he makes:
  • During the Savings And Loans mess, they prosecuted a thousand or so "elite bankers", as Black calls them.
  • Most of the people who went to jail were in the positions most responsible for causing the crisis, the people who ran those banks that kept misleading or fraudulent records.
  • All those prosecutions happened between 1989 and 1993, which means they were largely conducted by the George H.W. Bush Administration. Republicans, in other words.
  • The S&L crisis was about 1/70th the size of the current financial mess. I don't know if that's an accurate number, and can think of no quick way to verify it, but this crisis is far bigger than the S&L crisis. That was a few hundreds of billions of dollars in losses. Losses from the current crisis will almost certainly be in the trillions, maybe tens of trillions. (see NOTE 1)
  • This financial crisis was caused by an "even bigger wave" of fraud than the S&L crisis. He has made the point before that what has happened is control fraud, and there has been a lot of it.
  • By 2006, "liars loans" represented one out of three of all loans made. That amounts to two million fraudulent loans.
I've made this point before, and I'll make it again - there has not been a single prosecution for fraud by the Obama Administration in this area. The only cases they have prosecuted that are related to finance are in the area of insider trading, and con artistry like Bernie Madoff's. The scale of fraud is mind-boggling, and the current Administration has completely ignored it. They've left it to state attorneys general like New York's Eric Schneidermen and Delaware's Beau Biden to prosecute these things. The level of malfeasance on the part of the Justice Department for this is breathtaking.

But I suppose I'm a racist for pointing that out. Oh, and I'm not a realist, either, because I noted that a relatively recent Republican Administration did far better at prosecuting the sort of fraud that has gotten us into this mess at a rate that would put the Obama Administration to shame if, indeed, it had any sense of shame.

Meanwhile, down near the bottom of an article discussing the Occupy movements, Robert Reich dropped this little bombshell:
The jobs depression shows no sign of ending. Personal disposable income, adjusted for inflation, was down 1.7 percent in the third quarter of this year – the biggest drop since the third quarter of 2009. Housing prices have stalled, home sales are down.

The only reason consumer spending rose in September is because we drew from our meager savings – mostly in order to pay medical bills, health insurance, and utilities. That’s the third month of savings declines, according to the Commerce Department’s report last Friday.

This can’t and won’t continue. Savings are now down to 3.6 percent of personal disposable income, their lowest level since the recession began.

The Occupiers’ Responsive Chord
If Reich is correct about that, it means that the "recovery", that period when people who still have jobs can at least pretend to themselves that things aren't screwed up like a drunk walking through a china shop, are about over. They will start getting worse in a few months, or maybe a year. They will not start to get better again for a long time, because neither party wants to do what needs to be done to make them better, and no one is inclined to make them.

If there were somewhere in the world that wouldn't be affected by the resulting collapse, I'd recommend anyone who can should move there. Unfortunately, given the craziness of what's been going on in Europe, I don't think there's any place that's safe.

Afterword: I don't do obligatory posts, just in case you're wondering. I just couldn't think of a good title, and so that one wrote itself. Really. It just wrote itself right into the Title: field, and there was nothing I could do to stop it. I'm the Barack Obama of bloggers, I guess.

NOTE 1: As that FDIC link notes, the write offs in the S&L crisis amounted to about $101 billion.

UPDATE: Forgot a h/t to lambert at Corrente for the Bill Black video.

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