Dear Editor,
For many years, I’ve had nothing but admiration for the United States’ financial system. I went around, like so many others, proclaiming it to be the gold standard of capitalism. Was and is it all a façade? Are the Americans the greatest illusionists in the world? One can certainly make a convincing case that they are. How could an entire financial sector collapse to the extent that it has in the US? How could private sector companies be billions of dollars in the red and still pay CEO’s fantastic salaries and/or dole out ridiculous sums on other remuneration and pensions schemes? How did all those Harvard, Princeton, Stanford and other Ivy League graduates get it so wrong? Is the business education system in the US also pulling wool over our eyes?
The irony of this entire debacle is that the chief capitalist and democratic crusader has had to turn to a semi-socialist and authoritarian regime in China to finance and save it from impending humiliation. This fact has not stopped the US from pretending that it has unlimited funds to subsidize massive “bailouts” of its private sector. Oh well, the more things change, the more they remain the same.
Yours faithfully,
Clinton Urling
Well Mr. Urling, The Americans are not illusionists, all of the American people were duped by this pyramid scheme also.
Today they are losing their homes, 401k’s and pension funds, while being saddled with the cost of bailing out the banking cartel.
There were Americans that knew of this scheme, but no one listened. If you read the book Web of Debt, you will realise that the American author, accurately predictated, exactly what has happened, in uncanny detail, and she wrote this book about 3 years ago.
What these bankers did, was set up their business in lateral sections, so that the right hand was never allowed to know what the left hand was doing and vice versa.
It eventually degenerated into a business culture of not what you as the trader can do for the investor, but what can you do to make me the banker richer and richer.
So they continued to leaverage the investors money into more and more riskier investments, while pocketing the actual wealth for themselves.
Make no mistake about it, these guys are not suddenly poor, money did not suddenly disappear,wealth was simply tranferred, they have all of it hidden away in their offshore accounts, and they are not giving it back or paying taxes on it either. Taxes are only for the little people.
It is the collateral that they are now obligated to payout on these massive leaveraged bets that they do not have.
This great big risky gamble was beginning to burst at the seams when a young investor in Singapore caused ING bank to fold with his leaveraged bets, then there was another guy, in France who lost 7 billion of his banks money, at that time they said they have no clue how one individual was ever allowed to bet the whole farm and that was all they said.
Now we know that was the entire purpose of all their business, and that these guys were not rogue traders, acting on their own as they said to us at the time.
Ken lay was Procsecuted for the Enron failure and Bernie Ebbers of Worldcom, was sent to the Slammer for his role in the failure of his company. But these incidents were just the early signs of the unravelling of their massive scam.
The banks along with their major accounting firms were all complicit in cooking the books, to show massive profits where there was none.
They even had their trade experts tout certain stocks, fully aware that the stocks were worthless.
As with every pyramid scheme, eventually you run out of more victims that need to be pulled in to keep it going,the subprime borrowers were the last ones left then it collapsed.
But now that they need to inject new life into this broken system, they found themselves a new set of suckers, to offer up as cannon fodder. The taxpayer.
Joe.
Hi Joe, don’t agree with the whole cabal theory (smacks too much of the “Jews are running the world” thing for my taste), but I must admit that it is really odd how every single time an international economic powerhouse seems to be rising and threatening US hegemony (because economic power always impacts hard power) — such as the Arabs with oil in ’70s, Japan in the ’80s, the EU in the ’90s and India/China in this decade — a very convenient crash shakes up the whole world order and US primacy is reasserted.
I am not making a strong case for this — because it sure could all be tulip-mania, South-Sea shares or simple greed — but it does make me think on occasion.
PANTHA. That’s what makes great thinkers. Sees a pattern go ahead and write a brief. Hope it is not like the “Pelican brief”. Remember that movie?
GOLD. Clinton is a businessman in GT. Took over ownership of his father GERMAN restaurant.
Clinton…it’s called Greed. Remember Gasolene was $140 a litre….now it’s 71cents a litre. The price for a barrel of oil is still the same.
The problem with your mentality is that you think anything white is alright. It’s a “native mentality” thought pattern that anything white cannot go wrong and if it does, you feel sorry for them. Eh!
CONCERNED, I am concerned about how you get your facts. The price for a barrel of oil this year reached into the 140’s and has now dropped into the 40’s. I am further concerned, CONCERNED. What did Clinton say that cause you to blame him of “native mentality”?
Lighten up Concerned! He merely asked a rhetorical question.
This is the underbelly of capitalism! Plain and simple! That said, it is still better than the socialist system promoted by the former Soviet Union, because this system allows for transparency, investigations and accountability. The government can step in and save it if and when the need arises.
The socialist system is run by the governmentr, so if the system collapses, the government has no one to turn to for help. Besides, the socialist system is not transparent, does not encourage public probes and accountability.
Tat said, this crisis could trigger attempts by some to experiment with an alternative economic system that may yet prove just as disastrous. Going back to socialism is only going to temporarily ease concerns and apprehensions, but people have to find ways and means to live. This cannot be left entirely to government or else it will be socialism by another mask!
Re: “This is the underbelly of capitalism!…” What in the world are you talking about? The U. S. economy will (bounce back) very soon; and the “State Of The Union will Be Strong – Very Strong!
Every civilization, in its time, likes to think of itself as the pinnacle of civilizations. All have, however, succumbed to the erosive processes of time. Some last longer than others. But they all have an expiry date. They delude themselves to think they will last forever. America, like any of the other great civilizations of the past, will one day fade away. Not today. Not tomorrow. Not in any of of lifetimes. But one day. All civilizations are great illustionists.
Wow,
This is beautiful, nicely written.
WOW, great discussion on the topic, but must agree with you, nothing last forever.
i saw a report by a british historian and an economist, and both said, with reference to the GREAT ROMAN EMPIRE. american way of thinking is and will be a fail system.
the experiment is still on going.
It may all seem like doom and gloom and yes sir, the American empire will crumble and fall one day but not today my friends I say not today.
This bust is actually a good thing, how longer could house prices keep rising in ill-porpotion to rising salaries? had it kept rising, America would have become a wasteland.
This bust will allow things to go back to where they should be and for people to become more innovative, especially those who lost their jobs.
I agree with Joe: Make no mistake about it, these guys are not suddenly poor, money did not suddenly disappear,wealth was simply tranferred, they have all of it hidden away in their offshore accounts, and they are not giving it back or paying taxes on it either.” Somebody is smiling all the way to the bank..next time I hope I can cash in on some of that :)
Yeah, so let’s enjoy it while it lasts…
I hope I can cash in the next time too.
Yes Clinton, I have been wondering myself – capatalism vs socialism. I have been steeped in both ideologies and I come out picking capitalism. What the recent atrocities in the US financial system has shown is that the human nature is prone to greed regardless of the ideology. The difference is that in the US there are checks and balances. Very soon there will be investigations and many will be lost in jail.
In the socialist system, try putting govt. and their officials is jail. Note only today criminal cases are made out against five blackwater workers who used their weapons in-discriminately is Iraq. No one can ever believe or feel comfortable that they can hide from justice. Even George Bush stand a chance of facing justice for the Iraq war when he leaves office. For some political reason he was not impeached although the evidence is there. Big differences my friend, big differences.
Re: “Yes Clinton, I have been wondering myself – capitalism vs socialism. I have been steeped in both ideologies and I come out picking capitalism. What the recent atrocities in the US financial system has shown is that the human nature is prone to greed regardless of the ideology. The difference is that in the US there are checks and balances….” I think a lot of you folks talking away here have gotten it all wrong; and, it is all about the mis-education of people. Have you asked yourselves why is it that Guyana’s President Jagdeo may fare not so badly like GWB mistakingly has – thanks to the far reaching economic policies of the late L. F. S. Burnham; and, (authoritatively speaking) this is the same foundation that will now be laid for President-elect Barack Obama.
yep and now the auto makers need a bail out also. Everyone is capatilizing on this situation. when will the tax payers get a bail-out plan for all of their investments which are melting away rapidly in front of their eyes. when will they change policies so one is not penalize for withdrawing their own pension seeing that corporations and business will not provide pensions for their workers. as usual the system is designed to keep everyone in their place the wealthy gets wealtier, the rich even richer and the poor and middle class left to bail out the ones who made bad business practices, prompted by greed; and the one under the povety mark left to be tramppled on by everyone. Welfare will never go away. Some are making it a career, from generation to generation.
The American economy like any other economy appeal to homosapians in three forms; [1] the lust of the eye, [2] the lust of the flesh; [3] the pride of life. The valence of the effect on each society and the country economy is a function of society’s morass. Any society operating through a confluence of the above three, will obviously be presented with an illusion of the abstract view of life, liberty, and the pursuit of happiness.
THE CHICKENS HAVE COME HOME TO ROOST!
Interesting analyses here, but like the Fortune 1000 CEOs, the politicians, most capitalist, academia and those who aspire, there appear to be a misunderstanding of what really caused the meltdown. Let’s put this thing in context; the Glass-Siegel law repealed by the US congress triggered the breakdown in this financial system. The stock market culture of positive quarterly results for CEOs or face the wrath of the shareholders played a role in this. Putting these two phenomenon together one can reason why we are in a crisis mode today.
It’s simple; the bigger a company gets it loses more of its agility suffers i.e. it cannot respond fast enough to changes whether or not it is correcting bad policy decisions or changes in market forces .The more consolidated an industry becomes the less diversified it is i.e. risk are not widely spread but are now concentrated. With that combination any small shifts can doom an industry.
Through-out my MBA education, I always asked my professors “what is OPTIMAL size for an industry/company?”. From the answers I got I can tell you the best minds in academia don’t know.
Mr. Urling et al, business/economics education is a “lagging education” as oppose to, say an engineering (I am also an engineer).By that I mean what it learned in the business world is taken to the class room, whereas what is learned in an engineering class/lab is taken to the engineering world. What I can also tell you, is that as this situation unfolds, text books are being written and updated. We all learning as the USA adds to its GNP. There will be many more failures ahead. Don’t forget the USA is a $14T experiment in capitalism and no one knows how much farther I can go.
“[...Through-out my MBA education, I always asked my professors “what is OPTIMAL size for an industry/company?”. From the answers I got I can tell you the best minds in academia don’t know.
Mr. Urling et al, business/economics education is a “lagging education” as oppose to, say an engineering (I am also an engineer).By that I mean what it learned in the business world is taken to the class room, whereas what is learned in an engineering class/lab is taken to the engineering world. What I can also tell you, is that as this situation unfolds, text books are being written and updated. We all learning as the USA adds to its GNP. There will be many more failures ahead. Don’t forget the USA is a $14T experiment in capitalism and no one knows how much farther I can go...]”
Did your professors teach/explain to you a lot about Project Ranking, Economic Rate of Return (ERR) and how these are related the a country’s engineering economy – duh! and, we get some of the missing links in the U. S. economy.
Very interesting blogs on this article, just on to pay compliments today. One question I would like to ask why don’t the CEO’S sell their private jets ? They were asked that question and who ever was willing to seel their jet please raise your hands, well as you know no hands were raised.
LIVE IN LOVE
PEACE OUT.