Myths permeate our news. Who can explain with logic and reason why if tax brackets return to the Clinton years and why if “defense” spending is reduced we are then at the edge of a precarious precipitous cliff? And who can explain with logic and reason the need for markets for liquidity for $600 to $700 trillion derivatives that have no foundational value and are “too complex to explain?
These are both economic myths which may seem unrelated; however, if the basis for an economic myth is a lie or a ruse to elicit a Pavlovian response to avoid the lack of material substance behind the myth, and when the myth is a decoy, i.e., a Trojan Horse – these economic myths are related. Especially because they are both a product of the return to Social Darwinism which Obama discussed on April 3, 2012:
Slamming ‘social Darwinism,’ Obama reignites debt clash with GOP …
Apr 3, 2012 – Barack Obama delivers remarks at the American Society of News Editors Convention … The president referred to the GOP budget proposal as ‘thinly veiled social Darwinism.’ ….
Obama Sparks Debate On His Meaning Of ‘Social Darwinism‘ www.huffingtonpost.com/…/obama–social darwinism_ n_ 1405610.ht… Cached
Apr 5, 2012 – Obama argued that the plan was “thinly veiled social Darwinism.” But what …. John Boehner Fiscal Cliff Comments Show Tough…
First to debunk the cliff:
Boehner’s cliff is Grover Norquist and the Republican pledge of allegiance to Grover well ahead of the best interests of America. The pledge of allegiance, even for Republicans in Congress, is supposed to be – to the (American) Flag and the United States of America… So this cliff is for Republicans to jump off of in their lockstep support for Norquist and their refusal to raise taxes for individuals earning in excess of $500,000 or $1,000,000. And their cold war mentality support of the military industrial complex – because to reduce ‘Defense Spending’ is to stop significant the waste to support the military industrial complex Eisenhower warned JFK about, and to cease and desist paying for huge military installations in Europe and Japan dating back to post WWII needs, (or neo-con paranoia).
If having higher tax brackets for the 47% is viewed as injurious to our economy because there will be a decrease in consumer spending, then the Republicans have the choice to retain all the lower tax brackets created by Bush, excepting the top bracket which can remain where it was during the Clinton years. But Republicans will need to vote to lower all the brackets below the top bracket. And Obama should not negotiate retaining the top bracket, but ask for increased percentages above $500,000 and again at $1,000,000 of net income.
And where do the fraudulent rating agencies get off by being allowed to lower ratings when they were instrumental in the 2008 crisis, because they furnished fraudulent triple A ratings for fraudulent CMOs and CDOs.
From my new book: How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War Against the American Dream:
chapter 7: Appraisers and Raters Drove the Getaway Cars
Raters became involved with Banks and Wall Street’s innovative “too complex to explain” debt, which was securitized, packaged and sold as bonds. And they were paid significant fees to rate the risk which was deemed to have been mitigated by the fallacious assurances provided by Credit Default Swaps. So raters enabled Wall Street and Banks by providing ratings too good to be true. A rating is like the depth meter on a sailboat in that you always think you know where you are until you hit rocks. I know I have hit rocks…
Investments with phony ratings catered to the Investor Risk Avoidance Syndrome – (which has a well documented history.) Raters, who must have known better, relied on financial engineered, risk measurement tools. And these esteemed “professional” tools were intentionally designed to mask risk in order to sell blind pools of unmitigated, fallaciously appraised real-estate sub-prime, over leveraged, mortgage debt. It is obvious that raters were paid to bless all the lousy lack of substance with alphabetical grades like AAA or AAb….
So we live in fear of ratings going down, when the world economy still depends on us and our dollar. The individuals who ran the raters during the lead up to 2008 should be indicted, (maybe for treason).
Next, the Military Industrial Complex which Dwight D. Eisenhower understood as well as anyone in the world, and who was right 50 years ago:
Eisenhower warns of military–industrial complex — History.com This … www.history.com/…/eisenhower–warns-of-military–industrial–comple…Cached – Similar
On this day in 1961, Dwight D. Eisenhower ends his presidential term by warning the nation about the increasing power of the military–industrial complex.
Certainly I have nothing to add. Except that, the new Republicans have regressed to the cold war mentality prior of the pre Iron Curtain Era in the aftermath of WWII. And this is characterized by the term “neo-con;” which means a group of people who see a communist under every rock along with an enemy of the United States, and believe that if we have enough nukes to blow up the globe 30 times it is not enough.
This leads to the real threat to the future of the United States and the Globe which is the risk of leverage explosion – which means a Hydrogen Bomb sized financial plague of $600 to $700 trillion derivatives. And the myth that markets to provide liquidity for “investors” to play fantasy investing by trading in derivatives (without any foundational value that cannot be explained) are essential is a ludicrous dangerous distortion of reality.
To make derivative markets transparent for protection is like saying – I understand the complexities and inner workings of a human body best on a nude beach.
Alan Greenspan, the great mathematician and prominent Wall Street consultant summed up the importance of derivatives, from Swindled:
chapter 10: Too Complex to Explain” Financial Instruments: Derivatives, CDOs, CMOs, Swaps, and Rancid Tranches – Pools of Worse than Junk Bond Debt
By far the most significant event in finance during the past decade had been the extraordinary development and expansion of financial derivatives. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it – a process that has undoubtedly improved national productivity growth and standards of living.” — Alan Greenspan, Chairman, Board of Governors of the US Federal Reserve System, April 2005, and Genius. Who was the recipient of lots of outside income as a consultant to Investment Banks and Mega Banks, and leader in the fight against regulations! Greenspan’s 2005 inscription in granite, like a commandment from God…
How We Got Swindled is about the return to Social Darwinism that has metastasized into Financial Darwinism and how we found ourselves in the 2nd worst economy since 1776. Financial Darwinism is behind all the newest myths and is the root cause of our current depression, where 20% of kids in America do not have enough to eat, and the vast chasm of financial inequality continues while Republicans have voted in lockstep for Grover, and our media parses how to get the (our) Congress to become “non-partisan,” because too many members of the 4th Estate have become non-partisan about the truth.
The real cliff is the lack of concern for empirical evidence that we are living in a world that is ruled by fantasy investing so Wall Street Trojan Mega Banks and some Mega Multinational Corps can continue to generate huge profits at the expense of the capital formation necessary to create jobs in America.
Social Darwinism created the need for unions, and its return has morphed into Financial Darwinism which has renewed the need for unions. It is critical to have a complete discussion of the return to Social Darwinism. Watch for my next article, and get a copy of Swindled to learn what Congress and Wall Street do not want you to know and what the 4th Estate cannot completely understand from the outside looking in.