Call It Treason

Enough water has flowed under the bridge in the present financial crisis that a few historical questions might be asked. It is now clear how we got here. Politicians were persuaded to throw away the governors that managed credit since the thirties. They mistook constructive deregulation of the real economy for ill thought out deregulation in the financial sector which a little reading of history warned you against. And this is not ancient history. There is the savings and loan fiasco of the Reagan administration. There was the first mutual fund bubble in the late sixties. Then there is the rest of the sorry historic record. And after all, Fannie and Freddie paid well.

This bubble was willfully created and sustained by the central bank and the compromised political sector. They have inflicted massive damage to the global financial system that has chastened US trading partners world wide who all bought into the same train wreck.

It is time to talk of crime and punishment. This was an act of treason. It should be punished as such. Not because the multitude of participants is necessarily equally culpable but because none of them had the courage to stand up and say no.

Yes it was treason, in the same way that Nazis followed orders and participated in obvious crimes. And yes the crimes were obvious. AAA bonds do not fail unless collusion existed to subvert the credit system. Everyone who signed off on these pieces of script was guilty of treason. They need to be so charged and ordered to disgorge their illegal gains for an ounce of mercy. Those proceeds were proceeds of crime. If they are lucky, they will still have a good life afterwards. A lot better than their victims, the American people, will have with upside down mortgages.

You may ask why we do not just walk away and forget about it all. Getting your hands on the levers of banking is a sacred trust that must never be compromised. Without governors, this trust must turn into a bubble. The first financial credit bubble was John Law and the Mississippi bubble that bankrupted the richest nation on Earth at the time and created the preconditions of the French revolution and ultimately the Louisiana Purchase.

The first and foremost governor is the absolute certainty that you will pay if you willfully run with it. Stripping these masters of the universe of their spoils and placing them in jail loses society nothing since none own and operate tangible job creating businesses anymore anyway. They were never entrepreneurs. In fact, they distained entrepreneurs while they preyed on their capital and ideas.

The next generation of bankers needs to see these folks off to jail, or they will also succumb to temptation. Also recall that no one in a position of leadership can ever claim ignorance of the history of this style of folly or the inevitable consequences. Why do you think that they grabbed as much personally and ran for the hills as quick as possible?

Yes it truly matters that this generation of fools go to prison for this, because the damage wrought is as devastating as the loss of several aircraft carriers.