Wednesday, January 30, 2008

Swindlers with MBAs and pinstripe suits


By PAT MURPHY

When the United States lurches into an economic trauma requiring bailouts and handouts, Wall Street and Washington wise guys rush into the disaster to assure Americans who're suffering the most that their pain and privation is the result of some mysterious global financial virus that defies explanation and blame.

Welcome, suckers, to the greatest con of all.

These periodic economic crises are not accidental. They're consciously engineered policies that lead to vast fortunes for insiders before the schemes are milked dry and another bailout comes to the rescue.

Think not?

The U.S. sub-prime mortgage catastrophe now being blamed for collapsing housing and financial markets around the world is virtually chapter and verse the same as the savings-and-loan scandal of the 1980s with the same cast of characters—government regulators who winked and went to lunch while MBAs skimmed their tens of millions in personal profits, politicians indifferent to the consequences and Washington media obsessed with less-complicated issues such as political food fights and Britney Spears.

Sen. John McCain should've been the first to shout that grand theft was afoot. He, after all, was one of the Keating Five, members of Congress so named in the 1980s because they got caught doing favors for the master savings-and-loan swindler Charlie Keating. McCain's Arizona was a hot bed of S&L bankruptcies and swindles.

In that debacle, Congress had succumbed to the schmoozing of savings and loans and changed the rules, allowing S&Ls to become virtual banks. Drunk with new financial power, the S&Ls made wild and reckless investments and loans. Eventually, more than 1,000 of them went bankrupt, costing upwards of $160 billion in bailouts (mostly from Washington), while everyone handling S&L deals made fat commissions. The Resolution Trust Corporation laconically blamed "unsound real estate lending." Some S&L executives went to jail.

Does this all sound familiar against today's $140 billion congressional bailout of the mortgage calamity, wherein crazed lending on risky mortgages cost lenders more than $100 billion in losses, but provided a bonanza in pieces of the pie for everyone touching sliced-and-diced mortgage deals?

But why should anyone object to policies that inevitably become disastrous?

Bailouts that follow are just more free lunches with Washington money borrowed from the Chinese, the Saudis and others. Selling off the country's future with IOUs to foreign governments won't cost any of us anything today. Washington's politicians, who wrap themselves in Old Glory and talk romantically about protecting American sovereignty, leave the problem of an America in hock to their grandchildren.




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