5 December 2013
1121 hrs
OK, all you Crazy Cats . . . and Patient Readers, of course.
I am a pretty tired guy, I have to admit. Between the insomnia and finals week and personal problems in my strange life, I am running ragged. Sheesh . . .
I am waaaay to old and waaaay too tired to run about my life playing games and dealing with those who feel that games are . . . Fun? Necessary? I dunno. And on top of that I've been told that I am not a nice guy. Well, I suppose that I am not.
But I am a nice guy who tries to do good things; I try to make the world around me a better place, though I fail at that more than I succeed. The thing is, I have improved myself a great deal. Y'all should have seen me long before now. Or perhaps not. I was a Dick. Now I am just an Asshole. What's the difference? A Dick doesn't know he's a Dick, even when others point it out. An Asshole is some one who knows he is an Asshole. As I admitted up above, I am an asshole . . . or Asshole . . . or ASSHOLE!
But what ever you want to call me, I am, like we all are, more than just one label. I am many things; some terrible; some okay; and some are rather excellent, if I do say so myself.
I bet there are serial killers out there that would run into a burning bus and save people. Would I want them to babysit my kids? Huh uh. But I know that every one of us has something good in them . . . Somewhere . . .
I came to the realization that I had an innate ability to hurt people. I rarely did so physically (though I have been in some pretty good fist-fights in my day), but there was plenty of emotional and mental pain caused by me.
Anyway, I am not in the mood nor do I have the time to get into my own frailties. Perhaps another time . . .
I do, however, have another essay to post from my writing class. I do hope you find it interesting and perhaps it will provoke thought, whether you agree with me or not.
As always, I invite you all to send your comments, good or bad, as I will definitely consider all y'all have to say.
Have an incredibly interesting Yule, y'all, though you will certainly be hearing from me many times before then . . .
So shall we now proceed to the essay? Splendid!
 |
| The Cunning Fennec Fox |
When Does Capitalism
Become A Felony?
We all read about the Bernie
Madoff’s of the world who use different means to bilk trusting yet naïve
investors out of their life savings through multiple variations of the Ponzi
Scheme. This Scheme involves using new
investors’ capital to pay old investors’ dividends. Finally unmasked, he was tried and convicted
of fraud, and was given one of the harshest sentences ever for a white-collar
crime: 150 years. Is that the point at
which Capitalism becomes a crime?
Investment
banks such as Bear-Stearns, Lehman Brothers Holdings, Inc., and Goldman-Sachs
recently used other means. They bundled mortgages and sold the “risk,” also to
unknowing investors.
The latter example was one of pretty
innovative ingenuity: Say a mortgage
lender like Countrywide Financial for example, approves all mortgage loans no
matter the income of the borrower. Some
of these loan officers would see an application for a new home wherein the
applicant is a person of limited means; e.g. a diner server making just enough
to survive. These loan officers, at
first, would approach the CEO of their firm, in this case Angelo Mozilo,
himself the son of a Bronx, New York butcher.
Mozilo would then tell his employees to “approve it!” no matter what the
borrower’s story was. These loans were
considered “subprime,” meaning interest rates were set below the current Prime-Lending
Rate, giving borrowers the false sense of security that they were buying a good
home at a great price.
Eventually the loan officers were
comparing war stories, “So and so, a butcher at a small deli . . .” or “this
lady, an elementary school teacher . . .” and then laughing loudly
afterwards.
It turns out Countrywide’s loans
were bought by the major lending banks, some of which are listed above
(Bear-Stearns, et al) at a huge
profit to Countrywide. These banks would
then “bundle” the cost of these loans into a relatively new Stock Market
commodity known collectively as “risk.” They would then slice this metaphorical
loaf of risk into easily digestible bites and in turn sell these to other
lenders worldwide, who would then add their own Prime Lending Rate to the
mortgage. Every wealthy person was
making more money.
It became commonplace that the buyer in say,
Sylacauga, Alabama had no idea who held their deed. It could be a lender in South Korea or
Iceland through whom the loan was financed.
So here you have a hard-working
middle-income American, already in over his head with a mortgage for which he
or she was never qualified to begin with, now paying some outrageous interest
to a lender they don’t even know. And
thanks to the loaf being sliced into so many pieces, there were, commonly,
multiple lenders holding the deed. A
percentage of the deed was held in South Korea and Iceland, and perhaps China and Britain, too. This is how Wall Street bankers minimized
their own risk. They never held the
whole deed on a house upon which they, or some other bank, would later
foreclose.
As any economist knows (and now, many
regretful home . . . owners?), a bubble
like this was sure to burst eventually.
In a 2007 issue, the financial magazine The Economist, reported:
“ . . . Over 2m (sic) Americans—many of them poor and black—face sharply higher
mortgage payments over the next year or so, as the low introductory rates on
their loans reset. A lot of these people could lose their homes. If the economy
slows and overall house prices fall by the 15% or more that some Wall Street
seers are now predicting, the problem could spread far beyond the weakest
borrowers.”
It seems the Wall Street lending banks
themselves foresaw the collapse a year before it happened.
The PBS television program, Frontline, reported: “. . . in September
2008, the outlook for the financial system couldn’t have
been worse. Markets were
plunging, layoffs were mounting, and Congress was scrambling. As Federal Reserve Chairman Ben Bernanke
warned lawmakers in an emergency meeting that month, without a $700 billion bank bailout, “We may not
have an economy on Monday.” (Emphasis mine.)
To date, though they knowingly duped
investors out of their life savings, none of the billionaire bankers have been
prosecuted.
This type of grey-to-black area earning
is not new to America. Other self-made
individuals, Capitalists, (a term they use to blatantly excuse their actions),
used immoral if not illegal means to become wealthy beyond their wildest
dreams.
Leland Stanford, a
railroad baron who was instrumental in the building of the Trans-Continental
Railroad, used racial prejudice and indentured servitude, at near slavery
definitions, to become one of the wealthiest men in history. The PBS documentary program, American Experience, reported, “. . .
“.
. . Chinese peasants from the Canton
Province began arriving on California's shores in 1850, pushed by poverty and
overpopulation from their homeland -- and pulled forward by rumors of the Gum
Sham, the Mountain of Gold, that awaited them across the ocean. Initially, they
took five-year stints in the mines, after which they prospected or accepted
jobs as laborers, domestic workers, and fishermen. As their presence increased,
the Chinese immigrants faced growing prejudice and an increasingly restrictive
laws (sic) limiting opportunity. When
Leland Stanford
was elected governor of California in 1862, he promised in his inaugural address
to protect the state from "the dregs of Asia." Stanford, at least,
would change his tune.”
The
episode went further:
“.
. . The Chinese teams were organized
into groups of 20 under one white foreman; as the difficulty of construction
increased, so often did the size of the gangs. Initially, Chinese employees
received wages of $27 and then $30 a month, minus the cost of food and board. In contrast, Irishmen were paid $35 per month,
with board provided . . .”
Stanford was the very definition of a “self-made
man.” Born on a farm in Watervliet, (now
the town of Colonie) New York, Stanford went on to found, with Charles Crocker,
Mark Hopkins, and Collis P. Huntington, The Central Pacific Railroad.
Later he helped form the Pacific Union
Express Company, which was later absorbed by Wells Fargo and Co., where he
served as director.
Stanford went on to become California’s
eighth governor. Eventually he founded
Stanford University in Palo Alto, California.
Some have heard of it.
I happen to believe that Capitalism is a
good thing, but much like Socialism, it is at its best only in principle. When human nature becomes involved, with our
inherent greed and seeming need for ultimate comforts at whatever the cost,
well, some men are more equal than others, if I may paraphrase George Orwell.
In Communist/Socialist countries people
get vouchers and then go stand in lines to get food. In Capitalist societies people get a paycheck
and then go stand in lines to get food.
People use others as stepping stones to
their wealth and prosperity. Some are
even philanthropic once they become rich.
Stanford, Cornelius Vanderbilt, John Jacob Astor, and Phil Knight . .
. these men are all examples of that,
even though Phil Knight was bashed recently for using what amounted to a
sweatshop to make Nike shoes in Vietnam.
Pay workers just enough to get by and maybe save a little money, but not
enough to improve their country’s infrastructure and jump-start their economy
in order to become financially independent in their own right. Essentially, they are not provided the
economic means to become a thriving Capitalist society, which is
counter-intuitive, as America was, in part, built on such a philosophy. Didn’t we go to war there some 50 years ago
to beat back the Red Horde of Communism?
I suppose when you look at the nuts and
bolts of the whole thing, our country’s independence came about because a bunch
of rich White Anglo-Saxon Protestants didn’t like paying taxes. It’s good to see how much we have changed in
the last 200-plus years.
I wonder how much that village in Vietnam
would have benefited had Knight given them as much as he spent on the new
Matthew Knight Arena on the University of Oregon Campus. Or had given even a fraction of that cost.
If the average Joe goes into a 7-11 and
robs them at gunpoint he goes to prison for ten years. Wall Street investment bankers rob millions
of dollars from people all over the globe at pen-point and they get bonuses or,
if a head must roll, golden parachutes worth millions of dollars. Richard S. Fuld, Jr., former Chairman and
Chief Executive Officer of Lehman Brothers walked away with half a billion dollars and three homes. Fuld’s
$529 million “consolation prize” is much less than it would have been had he
been able to cash out all of his stock before the Lehman Brother’s
bankruptcy. He had been paid $889.5 million in salary and stock between
2000 and 2007. When Lehman settled
out of court for $90 million with disgruntled investors the firm had deceived
via a financial maneuver orchestrated by Fuld, it was an insurance company that
paid, not executives like Fuld.
Jimmy Cayne oversaw Bear Stearns’s
participation in the home loans debacle prior to the company’s collapse. He left with $289 million in stock and
received another $87.5 million as a cash bonus from 2000 to 2007.
The list goes on: Charles Prince of Citigroup lost his company $11
billion in the housing market scam. He
got $28 million when he was told to leave.
What about Stan O’neal of
Merrill-Lynch? $161.5 million when he
left the firm. Then there is Ken Lewis
of Bank of America. What was his
punishment? $83 million in compensation
for his crimes.
All three Wall Street firms were bailed
out by taxpayers.
It is true that Madoff was sentenced to
150 years in Federal prison, and that makes one wonder who, among the
Powers-That-Be, was bilked by him? A
Congressional Representative? A District
Attorney? A judge? Somebody thought that Madoff’s actions were
felonies. But for every Bernie Madoff
there are a dozen Angelo Mozilos who grin sheepishly and shrug it off.
A final, sobering fact, and this may come as a
shock: Congress is partially to
blame. Christopher Dodd (D-CT), Chairman of the Senate Banking
Committee, and Kent Conrad
(D-ND), Chairman of the Senate Budget
Committee, both received preferential loans for
their ramshackle hovels through Countrywide Financial, as special “F.O.A.”
clients. F.O.A. stands for, “Friends of
Angelo.”
The Conde Nast Portfolio, a
now-defunct financial magazine, reported that Countrywide Financial formed a Political Action
Committee which had made large donations to Dodd's campaign. But the largest recipient of campaign
contributions from Countrywide was Rep. Ed Royce
(R-CA), House Financial Services Committee, who has received $37,500 since
1989.
To his dubious credit,
however, Dodd has advocated that the federal government, through the Federal Housing Administration,
insure up to $300 billion in refinanced mortgages for distressed homeowners. Our hard-earned
dollars, now in the form of taxes, are to be used to pay off our own defaulted
mortgages. After bailing out the Wall
Street banks with our tax dollars, doesn’t it seem that we bought those houses
twice? And we don’t even own them. The banks do.
Seems we get stuck paying for all of those banker’s yachts and cars and
mansions and vacations, anyway. They’ll
get the American Dream somehow.
That is when Capitalism becomes Felony Robbery.
The Cunning Fennec Fox
Works Cited
Conde Nast Portfolio June 2008: n. pag. Web. 4 Dec. 2013.
"Countrywide Financial Political Loan Scandal." Wikipedia.
Wikimedia Foundation,
n.d. Web.
03 Dec. 2013.
"Leland Stanford." Wikipedia. Wikimedia
Foundation, 12 Mar. 2013. Web. 03 Dec.
2013. PBS American Experience. N.d.
Television.
Smith, Martin. "Frontline PBS." Frontline.
Dir. Martin Smith. Prod. Martin Smith. 21
May 2013. Television. Transcript.
Zwonitzer, Mark. "American Experience, PBS." American Experience. Dir. Mark
Zwonitzer
and Michael Chin. Prod. |. Zwonitzer. Television.
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