I've yet to finish my thesis, but there has been something on my mind that I wanted to get out. To get an idea of what my life is like right now as I finish up my degree, please reference this video.
Let me be upfront with my biases: I hate money. I hate it in the typical ways people loath money: not having enough, always needing more, I like to buy things, I dislike having to earn it, and on and on. However, my personal distaste for money is only compounded by the recent economic crisis.
The fact this economic crisis is damn near impossible for anyone to wrap their mind around is, I think, the most troubling aspect of this crisis that is largely ignored.
Simon Johnson, a professor at MIT's Sloan School of Management, kind of addressed my concerns when discussing the crisis on Bill Moyer's Journal. He mentioned the banking system has become far more complex than it was during the 1930's, and the Wall St. elite who caused this WTF crisis didn't even get understand their actions. It's not just the greed and massive size of these banks, Johnson says this is an interesting defense of the Wall St. guys: "What if [Wall Street has] become too complex for the Wall Street titans themselves to control, even within their own organizations? Maybe these banks, seriously, became too big to manage and that's why they failed."
Johnson told Moyers, it's not just that these financial institutions are "too big to fail," it's that these institutions are trying to do things that they don't even understand. I want to call this argument the "Frankenstein defense." The scientist, Victor, not only had the power to create the monster, he didn't fully understand that what he created would be a monster in the first place. It's not like Victor was trying to create an army of minions to do his bidding. Rather, Victor was trying to play God, and he was punished for over-reaching his bounds. Wikipedia explains that this story is derived from the Latin myth of Prometheus: "In this [Latin] version Prometheus makes man from clay and water, again a very relevant theme to Frankenstein as Victor rebels against the laws of nature (how life is naturally made) and as a result is punished by his creation."
Greed is definitely a motivation of Victor, he is trying to play God and feel powerful, but there is a dimension of ignorance to the myth. Of course, this ignorance does not absolve Victor from responsibility for his creation. Just like Victor, The Wall St. elites did not understand the consequences of their creation, but they should still be responsible for their ignorance.
However, I don't think there are enough people that are questioning this Prometheus motif… People seem to unquestioningly support the actions of banks, which I think must be the direct result of the history of banking. Banks have been around FOREVER, like The Sandlot "forrrrr-evvvvvverrrrrr." Wikipedia says there are loans that date back to 18th century BC. Around the world, and especially in Western nations, banking is seen as a very respectable and fundamentally necessary system. This respect is not necessarily unreasonable considering banks have been around for over two millennium, but should we extend this same level of respect to the recent "innovations" in finance? When we look at these financial products that have emerged since the 1930's in the context of the history of banking, 70 years is not even a drop in the bucket. Can these recent "innovations" really be considered "banking" in the traditional sense? Do banks have the right to produce such products? Do these products deserve the same ethos as the fundamental functions of a bank, like loans and credit?
Perhaps what America really needs is a reflection upon the role of banks in a society. Johnson described two important roles of banks: the boring role and the risk-taking role. Banks provide certain public utilities, like loans for houses, a place to put your money, etc. From an investment perspective, this is very boring. The risk-taking role of banks is to facilitate entrepreneurs. There needs to be a way for new ideas and businesses to get access to capital, but this can be risky. Johnson proposes these two roles need to be separated. There are actually options available to Main St. that distinguish between the risk and the boring, such as credit unions. Credit unions are owned and controlled by its members, who value security and stability, and decisions by members of the credit union will be focused on those ends. However, the owners of banks are interested in profits and increasing those profits. Yet, the risks only in their own best interests, not Main St.
Companies like AIG were driven by individuals searching for personal gain and profits, and the individuals have largely been able to get away with little to no retribution. It's like if Victor created the monster, but instead of punishing Victor, the monster gives Victor a blow job and then rapes the local villagers. But this time the villagers are not coming out with pitch forks and torches, the mayor is giving the monster a slap on the wrist and an allowance of young virgins so that they can isolate the raping.
I think the reasonable question to ask is: Just who the fuck does Victor think he is creating a monster that runs around raping people?!!!!111 Just because Victor was ignorant to the potential raping, and just because there were no laws explicitly prohibiting the monster does not mean Victor is not libel. Why in the world would the village have a law on the books that says something to the effect "If a scientist creates a monster that rapes people, the doctor is libel for felony sexual assault charges" ??? No reasonable person would expect a doctor to create a monster, let alone one that runs around raping villagers!
Yes, the things these banks have done to cause this crisis are technically legal. But I think they are only legal in the sense we couldn't have predicted banks would use these specific means to be greedy. But it's not like we ain't seen greed before!!! I truly believe there is a case that can be made for criminally charging these people for a more fundamental crime. It is common sense that says if you loan money to people you know can't pay it back, it is risky. But if the company just turns around and takes all these smaller risks and packages them as a new "innovation" that they claim is somehow AAA+++, that is FRAUD!!! No shit Wall St. has gotten complex, they're packaging and marketing rape as dinner and a movie, maybe a kiss good night!
I call bullshit: This economic crisis is not too complex for Main St. to understand, it is simply fraud made so opaque no one can tell it is fraud!
When a criminal "launders" money, they are just covering up the source of illegal funds. According to trusty old Wikipedia: "In US law it is the practice of engaging in financial transactions to conceal the identity, source, or destination of illegally gained money." These banks were able to pawn off their risk by legitimizing it with credit ratings that in no way reflected the actual risk of the financial product. Instead of laundering money, they are laundering debt. I remember hearing an interview with a guy who was working for the credit rating people, and he repeatedly told his bosses it was impossible to accurately estimate the risk of these financial products. In turn, his bosses essentially told him to just make it AAA by making up complex algorithms and other bullshit math that can justify the rating. The person interviewed ended up quitting because of his unwillingness to lie, while his willing colleagues were promoted and given bonuses. This reminds me of the saying "fake it till you make it." Well Wall St. did just that, they faked it with math till they made off like a fucking bandit with all our money!
Wall St.'s manipulation of math adds an interesting dimension to the typical lament of the high school math student: When am I ever going to use Calculus in the real world? Well, in addition to using it to put a man on the moon, you can use it to commit global fraud!
I take offense to the assumption the average person is not capable of grasping the financial crisis. To the contrary, we are all familiar with fraud, greed, and deception. This whole mess is only justified by those on Wall St. who are brainwashed by the whole culture of profits over people, and they have convinced us that we're just too dumb to understand their business. You have people on Wall St. going on tirades against those on Main St. who are the victims of their crimes, like the foreclosures. However, the average person goes to a bank assuming the bank will calculate a reasonable amount of money the person can actually afford. Most people have a hard time picturing the reality of 30 years of payments, not to mention the interest that they will pay. Main St. DEPENDS on bankers to do the MATH! I mean, isn't it the job of the bank to like count shit? The people who bitch about math class are not the ones that become bankers… We pay a lot of money for these people to do the math, and we are vulnerable to their calculations.
Just like companies hide bad things in the fine print, these risks were hidden in calculus that can only be understood as outright fraud. Fraud is already illegal, just like sexual assault. We don't need laws that specify rape is wrong if done by a man-made monster! We also don't need laws that specify the tools these pricks used to commit fraud. There needs to be a lawyer that can argue this calculus is illegal. If nothing else, this calculus is money laundering. People are repelled by higher level math because of its lack of transparency. I agree with this sentiment, because calculus doesn't seem much different than the fucking Wingding font in Word. Can you see much of a difference below?
I sure as fuck can't make meaning out of those pictures, and I'm confident I am not alone. Essentially, the American public needs to be able to stand up to Wall St., and just because we didn't take calc in college doesn't mean we are any less qualified to condemn the assholes messing up our lives. It is going to take a Wall St. outsider, perhaps someone with little to no education in economics or banking, to truly see this crisis for what it is. Yet, if we allow Wall St. to just call this person stupid, we're all fucked.
The banks know we're not too stupid, it's the opposite: Main St. is smart enough to know bullshit when they see it, which is why these banks had to use math to lie to us. One of their many tools of deception is this whole credit rating system. It has been clearly shown the credit rating agencies that offered the AAA labels to these risks were profiting from lying, and were working in the interest of the banks they rated, not the consumers of the toxic assets. Main St. are not even allowed to see the score without using a company like freecreditreport.com. Average people are being screwed everyday by the same system that allowed AIG to magically turn risk into gold. Credit scores allow Wall St. to clutch Main St. by the balls with one hand, and is using the other hand to participate in a giant Wall St. circle jerk. The only thing that could be more offensive is what these guys probably spend on Cristal brand lube...
I want to empower all of us to call this Wall St. crisis like we see it: BULLSHIT! America needs to question some fundamental aspects of our society, and we need to not let the ethos of banking, derived from thousands of years of humanity, to be abused the way it has by Wall St. Think about the trust it takes to just put every penny you earn into the hands of a business! The ethos of a bank is nothing to be taken lightly.
If nothing you read about the economic crisis outrages you, just picture the heaving chests of the Wall St. elites as they inappropriately fondle Main St. and mutually pleasure their buddies. Doesn't the graphic metaphor of a giant Wall St. circle jerk just inspire a little throw up in your mouth... Yummy! Well keep that mental image of a bunch of harry, fat, greedy, swines on Wall St. grunting in mutual satisfaction the next time you hear someone attack a policy as socialist... Today, the American Dream is haunted by the raspy pleasure moans of the elites: "Oh yeah, give it up Main St., who's your daddy?" (Those types always love their "business partners" to be in the submissive role...) It is time we question those who giant inferential leaps of reason that are only enabling the grotesque, not even slightly romantic, circle jerk we witness everyday on CNBC. If only they would market CNBC for what it is: porn.
On that note, I'll end with my favorite Mark Twain quote:
“History doesn't repeat itself - at best it sometimes rhymes”
