Republicans “Jump the Shark” in Wisconsin

Jumping the shark is an expression used to denote when a particular production effort has surpassed its relevance and reached a point of decline in quality that it is incapable of recovering from. (From Wikipedia)

That pretty much describes the Republicans in Wisconsin

Lucky for the Democrats that after winning the election the Republicans approached their opportunity for governing Wisconsin with the finesse of a T Rex on crack. Now we have thousands of unhappy employees and a national confrontation with the unions that is escalating to the complete middle class. And then there are the pending recalls from the voters who feel they were deceived.

Advice to Wisconsin voters -Be more careful when you vote next time!

But the protest was bound to happen sometime. Lies and half truths by ideologues during campaigns have reached outrageous size. People vote not on the issues but based on the TV channel they watch. When the actual implementation is much different than expected you have serious buyer’s remorse.

Truth, transparency, and honest intent could have gone a long way to solving the Wisconsin dispute fairly without conflict. Some truths I would appreciate to see to resolve the truth of negatives put forth against the unions are:

What is the total amount spent by the unions in influencing the federal government compared to that of corporations? Publish it each year.

Why is the education system criticized and cut while the financial sector who brought us the multi-trillion dollar financial meltdown are receiving bailouts?

After cutting the fat couldn’t the states remaining shortfall for critical areas like safety and education be amortized and paid back over time in an improved economy with less shock.to the citizens?

Why not publish teachers and government employees compensation compared with financial sectors compensation each year?

For some reason we have had a relatively smooth transition here in Virginia, and with a Republican Governor

Union Busting-Another Slice and Dice of the Middle Class

The financial sector screws up and throws the whole world into a recession. The middle class loses millions of job and picks up a multi-trillion dollar tab to save our incompetent economic infrastructure. What should we do next? Let’s use our financial screw-ups as an excuse to bust the unions. We can call them communists or socialists- that always seems to work. Let’s blame the teachers and government workers for the financial shortfall the states are experiencing. And let’s do it now while they are really down and out and desperate for jobs.


I have often wondered just how much abuse the middle class is capable of absorbing from the governing elite. With unjustified wars, an active special interest auction in congress, and the unpunished stealing of trillions from our economy we should have already reached the limit. Because of our numbers and the fact that we do the real productive work of society you would think there would be some caution about overreaching against us. But they seem to have such confidence in their mind control infrastructure they continue to push. Good leadership would be pulling the nation together to resolve our problems. Vilifying teachers and, government workers while attacking unions has the exact opposite effect.

It should be clear by now that the current financial problems are due to national financial sector mismanagement and fraud, not unions. In fact, unions and government worker pension plans suffer the same way that we all have. In hard times they can be expected to make the same sacrifices as all workers.

The union is an important element in our economy. They were strongly pro-America as administrations shipped millions of jobs overseas. Without their influence the individual workers would be on their own against the many billions of corporate dollars dedicated to short term profits. Union workers have the detailed knowledge of facility operations that can be turned into process improvements. When management and the union work cooperatively in trust and professional pride there is potential for many economic benefits. Many facilities miss this opportunity because of an ingrained attitude of confrontation between management and the union.

You have to wonder about the management capabilities of the new Wisconsin government. By picking now as the time for union busting they have transformed a straightforward budget balancing event into a national confrontation. You would expect that they would first try to gain the trust and support of the employees. Instead they now have a demoralized work force of thousands in a trying financial environment.

No matter who wins the battle the nation will be weakened and further divided. In a time when we need to pull the disillusioned middle class back into a national consensus another sector is being split off. There were many ways to cut costs that did not attack collective bargaining.

Is Washington Serious About Financial Reform?

On December 31, 2010 we reviewed an article in BusinessWeek that discussed the progress on the financial reform bill (aka Dodd Frank) As you remember, the bill passed in July 2010 and was our country’s effort to bring our financial sector under control. The bill as passed had very little clout. Developing the actual standards was passed on to the government regulatory agencies such as the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission ( CFTC). The report confirmed that in the face of the banks and lobbyists very little were happening. The bill was very weak leaving many loopholes still in place.


BusinessWeek seems to be one major media that is following up on this very serious issue. They have just released another update "Starving the Regulators". This article reports the astonishing fact that cost cutting is going to reduce the staffs of the regulatory agencies charged with finalizing the rules. Progress will be further slowed and actually stop in several critical areas. The governing elite create an 11 trillion problem, and then reduce the resources charged with preventing another. The situation is summarized in this quote from BusinessWeek.

The reform of financial regulations has slowed down because of the underfunding of the SEC and CFTC. The Dodd-Frank reform requires 243 new rules, 67 one-time studies, and 22 recurring studies. Yet in the face of these requirements, the CFTC is considering laying off staff. The SEC has had to delay establishing an office to oversee the credit-rating agencies. On the other hand, the Consumer Financial Protection Bureau has hired staff and is focused on making credit cards more consumer-friendly and eliminating 80 percent of the mortgage paperwork needed to purchase a home.

It should be noted that the one agency meeting its schedule is the new consumer protection agency whose establishment was bitterly fought by the financial sector.

The encouraging experience is that BusinessWeek is devoting resources to following this issue. In doing so they are performing a great service to the productive sections of the economy, who are their primary customers. Unlike the financial sector the rest of the economy would greatly benefit from a reformed financial system.

We must remember that the financial sector is different from the general business community. The primary products are basically funded and guaranteed by the government. It was meant to be a service to the productive business areas. Once they began to focus on their individual profits they have become a real liability for the rest of the economy. The current lobbying blitz against reform is aimed at protecting their own profits.

Tea Party, this is really important. Why isn’t the rest of the media active about this situation?

Egyptian Events Should Give US Governing Elite Great Pause

Just one if the three TV‘s above the bar was showing the Egyptian protests in Cairo. About half of the customers were casually watching. One person finally asked the obvious question.Could this happen in the US?

The answer certainly depends on where you are when you ask the question. The immediate consensus at that time was that our Constitution will act to prevent it. But let’s look a little deeper.

The First Amendment gives “the right of the people to peaceful assembly and to petition the Government for a redress of grievances.” This happens all the time in the US. No problem! But there are more complex questions to be answered.

What happens when the assembly isn’t peaceful?
What happens when the Government won’t address the grievances?

 There is general agreement that those who disturb the peace are subject to all the local and national laws they break. But it is difficult to arrest thousands of people out of millions of protestors. A non- peaceful assembly must be avoided.

A Government that will not address a just grievance is a special and very dangerous case. If non-peaceful assembly becomes a practice in the US, this will be the reason. When the suffering is by the many and the benefits are reserved for the few we are outside the intent of the Constitution. The preamble to the Constitution bears repeating:

We, the people of the United States, in order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the blessing of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America

The events in the Mid-East should give the ruling elite spending millions to fight common sense reform in the US government great pause. It is much better to reform early before the protestors are in the streets. This warning is especially appropriate for those active in the financial sector. You definitely fall in the category of “few”. And the “many “are not inclined to defend you. You should be honestly helping us to establish an efficient and reliable system that will return fair profits to the entire productive environment. If we have another financial induced failure you will not skate as easily as you did the first time. By overreaching you are setting both us and your system up for another disaster.

We must show that we can reform now through peaceful constitutional procedures. We don’t want to see citizens forced into the non-peaceful assembly route.

Report of the Financial Crisis Inquiry Commission (FCIC) is Very Critical of Financial Sector

In Nov 6 of 2009 we made a post reporting what we felt was the action needed for the citizen to begin to restore the trust in our financial system. They basically needed proof that the cozy financial sector/ government relationship was over.

They wanted a strong reform action that will guarantee that the psychology and ethics that led to the current betrayal is completely disgraced and placed outside the American system forever. It is critical that those in the sector who were responsible for the meltdown are publically identified and punished. There must be significant retribution with large sums recovered for the people who innocently suffered. The public consequences to those that caused the situation must be adequate to prevent any thoughts of ever returning to similar behavior.

An important first step to this goal was the formation of a non-government investigative commission, the Financial Crisis Inquiry Commission (FCIC) .

The task, as described in the preface of the report was:

Our task was first to determine what happened and how it happened so that we could understand why it happened. Here we present our conclusions. We encourage the American people to join us in making their own assessments based on the evidence gathered in our inquiry.

In addition they were directed to identify any violations of Federal or State laws and turn them over for the appropriate legal action. Although no names are given in the report the commission head Phil Angelides said in a TV interview that they had turned several instance over for investigation of illegal actions.

In my opinion it is a through report, well written, and easy to understand. We now have an extensive document that can serve as a check on the Dodd-Frank Bill (aka Financial Reform Bill). The report. is extremely damaging to the entire financial system that allowed the failure and shows the inadequacy of the Dodd-Frank bill.

Three important points we should never forget:

This mismanagement has been very expensive to the country. Nearly 11 trillion dollars in household wealth has vanished, with retirement accounts and life savings swept away.

The additional power we have foolishly given the financial sector caused a shift from productive investments to non-productive financial activities. On the eve of the crisis in 2006, financial sector profits constituted 27% of all corporate profits in the United States; In 1980 it was 15%. Understanding this transformation has been critical to the Commission’s analysis.

Industry testimony has claimed the event was unpredictable. These reports, as well as many other analyses completely disagree.

You can obtain a full copy from the FCIC.  I recommend you download it for a full understanding of what needs to be done. I will list the leading conclusions and two interesting quotes. The report has a full discussion of each conclusion.. They are very damaging to the entire sector and call for a serious review of the companies and institutions which we have given power over our financial system

Here are the conclusions:

This financial crisis was avoidable.

The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble

Dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.

A combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.

The government was ill prepared for the crisis, and it’s inconsistent
response added to the uncertainty and panic in the financial markets.

We do place special responsibility with the public leaders charged with protecting our financial system, those entrusted to run our regulatory agencies, and the chief executives of companies whose failures drove us to crisis. These individuals sought and accepted positions of significant responsibility and obligation. Tone at the top does matter and, in this instance, we were let down

There was a systemic breakdown in accountability and ethics

Collapsing mortgage-lending standards and the mortgage securitization
pipeline lit and spread the flame of contagion and crisis

Over-the-counter derivatives contributed significantly to this crisis.


The failures of credit rating agencies were essential cogs in the wheel of financial destruction.

The current Dodd-Frank bill does not come close to providing the required fixes. The FCIC has identified the causes. Our political leaders now have ample information to be sure that the heavily lobbied Dodd-Frank bill is corrected and rigorously implemented.

The regulators are being heavily lobbied. The citizens need to see a comprehensive checklist of the causes identified in this report versus the response in the Dodd-Frank bill.

For this to really happen will require extreme citizen pressure.

Americans Are Not Getting the Information They Need to Vote Intelligently

So far this year the media has covered the following accomplishments of the new Congress

Reading the constitution aloud in session
Holding a symbolic vote in the House to completely repeal the health care bill
Discussing mixed party seating during the state of union address
Arguing about lifting the debt ceiling in March

News at this low level of complexity and usefulness is adequately handled by the sound byte practice used by the modern media. However it breaks down quickly when applied to the more complex issues. This is where it is important that the citizens have the information required to make the right decisions. Bad national decisions are almost always based upon faulty information.

For complex issues we need a much higher quality of information than we are receiving. This is exactly the way many special interests want it. Here are just a few examples of issues where the information supplied to the public needs a major upgrade.

Jobs for Americans
Reducing the trade deficit to zero
Specific fixes to the health care plan
Developing an investment plan for the future of America
A reasonable immigration policy
Real ethic standards in Congress

These subjects have been given the same media treatment that is applied to lighter information content news. We have statements from both the right and the left that are so ideologically slanted that the information is essentially useless. We really don’t know where progress stands. In fact, we aren’t sure many of these projects are even being seriously worked on This should not be a public relations contest. If we are to act wisely toward supporting important national policies and projects we need to generate more information with high truth content.

Wise decision making by the citizens is fundamental for the long term survival of a constitutional democracy. It is worth a large investment. The forces that have in the past obtained power from a democracy have achieved it by directing the citizens into poor decisions that lead to horrific results. As reflected in our Constitution the Founding Fathers were dedicated to preventing this from happening to the United States.

Good decision making is especially critical when joined with the rights to free speech and freedom of the press guaranteed by our First Amendment. These rights are critical tools for the pursuit of truth but can also be used to present sham information.

Considering the importance of good national decision making, why are our national issues so embedded with issues and controversies that pay such little attention to truth? Our casual acceptance of lies and misrepresentation is mind boggling. We are drowning in so many self serving lies and half truths that you would think the citizens would rebel. Speculation and damaging accusations are given with no concern for backup and logic. We waste billions of hours addressing and readdressing useless and false issues that unbiased facts and truth seeking should have resolved.

What can we do? .

The media must acknowledge that simply presenting two biased sides of an issue does not lead to truth. They just create two incompatible and probably erroneous conclusions There must be more media attention to the factual content the citizens need for decision making.

The citizens have to take responsibility for applying analytical thinking to the facts. Watch closely the reasoning of those special interests that will be happy to do this for you.

We must withdraw support for candidates who lie or resort to misrepresentations. Integrity should be a prime characteristic of our leaders. Don’t vote for anyone without it.

A factual media, analytical citizens, and leaders with integrity will take this democracy a long way.

An American Loss to China in Global Economics Could Deprive Billions of the Opportunity to Live Under Democracy

For over 250 years America has been the proof that a free people can successfully govern themselves. A critical contributor to this success has been our choice of democratic capitalism as our economic system. Democratic capitalism works well with the freedoms that have characterized America.

Our constitution gives us the power to choose the representatives that are to set and guard the economic rules. Although there have been missteps the government generally guided capitalization toward activities that benefited the nation. The system steadfastly outperformed all other competing systems in the ability to deliver economic benefits to its citizens. We were without serious challenge as the leading economic force in the world.

This ended during the later years of the 20th century. We allowed our government to make terrible mistakes that have completely changed the game. We now face the results-financial, trade and investment deficits. excessive special interests influence, loss of manufacturing jobs, too much control by the financial sector-and the list goes on.

These self-inflicted wounds have allowed another form of capitalism to emerge. One that gives little freedom to its citizens but shows great skill in supporting the state. It is best described as state capitalism. China is currently its most successful user.

State capitalism uses the aggressive tools of capitalism but does not grant its citizens the participation and freedom they would enjoy under a democracy The goal is not the general welfare of the citizens but to increase the power of the state. It is a tenacious competitor in the global economy and is currently outperforming our damaged system. It definitely threatens the dominant position of democratic capitalism.

If it prevails and our system continue its current degradation the American vision will eventually collapse and the dream of free people governing themselves will fade. We must not let this happen.

The seriousness of the situation requires strong and immediate action. We must admit mistakes on past policies that have had bad results for the country and make the fixes. We must stop giving away economic opportunities that we need to other countries.

An encouraging example of what must become our standard practice is covered in a recent article in the Washington Post. It reports on an event where the US Export-Import Bank discarded past policy and helped the US vendor fight back. The result was the sale of 150 locomotives by GE. This was against aggressive bidding tactics of China that would normally get them the business.

As the article reports

“The political resistance to brash tactics which would imperil the delicate management of the China relationship has collapsed," said Rosen.

Way to go-US EX-IN Bank and GE!!. We need more of these “brash tactics.” Now let’s fix those other problems. The billions of people may still get the chance to live under a US style democracy.

Remember Wall Street Reform?

Ever wonder what happened to the Dodd-Frank Wall Street Reform Bill? Remember when It became effective on July 21? The Democrats hailed it as landmark legislation that was really tough on the big banks and would prevent a repeat of an economic meltdown. The Republicans said it was anti- business and the meltdown was the governments fault anyway. The banks were against it as it would keep them from “providing their creative services to the public and employers.”

In short, all parties put out pure BS. The issues were apparently too complicated for the daily media to be helpful. So it has remained a mystery to most of the public.

Finally on Dec 28, 2010 Business Week has released an article that attempts to put in understandable format what has happened in the bill. It also discusses the politics and lobbying behind the results. A total of 9 journalists from New York and Washington are listed as contributing to the report. We have to be grateful to Business Week for this difficult but very useful task.

The phase “Wall Street Gets Pretty Much What It Wants” is included in the article headline and portends the sinking feeling citizens will feel as they read the article. The Wall Street victory is confirmed by looking at the record profits at the major banks only two years after their mismanagement led to the economic meltdown and to a comment by an ex-Citibank executive.

“We continue to listen to the same people whose errors in judgment were central to the problem,” said John Reed, 71, a former co-chief executive officer of Citigroup Inc., who estimated only 25 percent of needed changes have been enacted.

The article covers almost all the issues that congress talked about but sadly did little when it came time to write the laws. Like the boy that murdered his parents and then asked for mercy because he was an orphan the banks destroyed the economy with bad management and now fight any regulation on the grounds that it would hurt the recovery.

The biggest laugh of all (if it weren’t so pitiful) is that the banks seem to have convinced many congressmen that they are adding value to the economy with their “innovative” instruments.

Read the article and learn what happened to all that big talk after the lobbyists worked over congress. Remember too big to fail, the revolving door, bringing bonuses into line, banning certain derivatives, and walling off risky ventures from government guaranteed funds? The article discusses the politics and final inaction on all of these.

The only pro-citizen event was the establishment of the Consumer Protection Agency as designed by Elizabeth Warren. The banks fought that desperately but seem to have lost.(as of now). I remember a talk show where the banking representative, fresh from helping the industry set a world record for dumb management, said he was worried about her because she didn’t have enough bank management experience.

Please, surely we aren’t so dumb we will let them do it to us again.

The report is certainly discouraging and confirms that we need a complete rethink on the nature of the organizations that this nation uses to manage its financial infra-structure,

Once again, thank you Business Week.

Our Ideology Regardless of the Problem

Recent polls show that approval of congress has hit a new low of only 13%. I had hoped that this would cause the political party elites to show some humility and give us at least a few ideas on how they were going to correct the situation. Not so.

Last week a group of senators, congressmen, and citizens (about 1000) met in New York to launch an organization dedicated to reducing the party ideologue-based bickering and drive both parties to cooperatively focus on the nations’ problems. It is named "No Labels”. Although they apparently didn’t have time to spend on the low 13% ratings both the Republican and Democratic media attacked the No Labels concept, giving various reasons to reject it.

There were scores of negative posts from both the right and left, They went from insistence that the two party system was critical for debate, to noting that there already were 63 parties in the US, that working together was useless because our current leadership is incompetent, and that No Labels is just plain left wing.

The scariest of all were several writers who contended that No Labels was being set up to be a platform for Bloomberg to run for president. Thankfully No Labels says that they had taken no money from Bloomberg and that he spoke at the launching in New York because he was the mayor. Bloomberg himself has said that in no way would he run for president. Some evidence please.

It is pathetic when citizens feel they must form another party to try to force the two major parties to act reasonably. It is even worse that the self serving ideological media focuses its guns on them before they can even begin. Very typical of the way they are addressing problems. Fred Brown of the Denver Post sums this situation up very nicely.

Regardless of its final accomplishments No Labels is an encouraging example of American citizens starting to recognize and rebel against the bad decisions our leadership has put us through. If No Labels could cause a fracture in the “my ideology for everything” attitude that is smothering individual analytical thought it would be very valuable. The Tea Party, No Labels, and many other small organizations that are being formed are coming from different directions but pointing to the same objective. We all want a constitutional government that is focused on passing opportunity and freedom to the American people rather than power to itself.

That is what the Founding Fathers intended and is what we are honor bound to support.

The More You Know the Worse it Gets…

While finance has never been my favorite area I became determined to gain a much better understanding of exactly what happened to cause the subprime waterfall of economic disaster that has fallen on our country.

Of the multitude of post meltdown books on the market I chose three: The Big Short by Michael Lewis, Gristopia by Matt Taibbi, and All the Devils are Here by Bethany Mclean and Joe Nocera. All authors have extensive experience as financial journalists during the 20 years of life in the subprime era. They tell their stories from different perspectives. The Big Short is from the viewpoint of a few low level hedge fund managers who discovered (to their surprise) glaring weaknesses in the execution of the sub primes business model. No one would listen to them but they initiated very successful hedge funds that played the subprime system short. Gristopia addresses in anger the outright foolishness behind the 20 years of government and private decisions that allowed the subprime business model to develop. He discusses the events, people and the bad decisions that allowed it to grow to the final catastrophic breakdown. All the Devils are Here presents a thoroughly documented historical approach of the last 20 years of bad management that lead to the meltdown. All three books cover the meltdown and the emergency effort by the government to save the financial sector.

This post only touches on a few of the items and at the thousand foot level. Read one of the books to get really incensed.

The subprime business developed during the Clinton administration, and was protected and grew under Bush. Then it fell completely apart. The naïve belief was that the industry would regulate itself. Greenspan was a powerful figure in furthering this philosophy.

The elements of the business plan are easy to understand. The goal was to drastically increase profits by tapping the revenue from the citizen’s multi trillion dollar housing market. This required transforming the normal low risk one lender to one borrower relationship into multi-mortgage securities which could be sold in the financial market with much greater profits. Thousand of mortgages were combined to create derivative securities, the most popular being called a collateralized debt obligation, or CDO. These were then sold on the open market at high yields.

A notable characteristic of the business model is the interconnected nature of the risks between the business units. A failure of due diligence or risk analysis in one business area could spread bankruptcy throughout the entire system. This is exactly what happened at the meltdown and explains the desperate and extremely expensive effort by the government to save the entire financial system.

Here are a few highlights of the role of the key participants and their contribution to the meltdown.

1.0 The mortgage originators that received revenue for finding the borrower

This is where the extraction of wealth from the American citizens began.

The demand for mortgages to bundle into securities was so great that several billion dollar plus public companies were created in this sector. To pay for the high fees the mortgage originators added closing costs that in some instances increased the mortgage cost by as much as 20%. Qualifications for a mortgage were lowered drastically to ensure a steady flow of applicants. Financial positions of borrowers were falsified and teaser rates with 2 year automatic resets to high rates were used to lure unsophisticated buyers into loans that they would never be able to repay.

Because the originators sold the mortgages to others they had little interest in their likelihood for later default. The mortgages they passed into the system were loaded with default potential.

2.0 The large banks and other institutions that assembled the thousands of mortgages into complex high yield securities.

These were the key drivers behind the business. They took the thousands of mortgages from the originators and chopped and structured them into levels of risk that determined the yields and levels of payback priority bundled into the securities. They were then sold to investors who received revenue from the mortgage payments. This was done to the tune of hundreds of billions of dollars. Because of the high yields the sub prime securities were very popular with investors and became the greatest source of profits for many of the banks

The banks did very little due diligence on mortgages being bundled into this essentially unregulated business. They packaged many bad loans into the securities. They placed pressure on the ratings companies for the necessary triple A rating for each security.

The amount of reserves held against failure of the loans of their own securities was left to the banks and proved to be ridiculously low.

3.0 The investors--consisting of institutions, retirement funds, insurance companies, hedge funds, and banks.

The investors received high yield revenue proportional to their ownership in the mortgage security. They also gained profits by trading their securities into the financial market. Obsessed by the high yields being offered they did little due diligence before investing billions of dollars-relying solely on the erroneous triple A ratings.

4.0 The rating companies

Default of a significant number of the mortgages in a CDO could drive its value to zero with complete loss to the investors. The probability of this happening was supposed to be indicated by the rating given by independent rating companies such as Moody’s A triple A rating means that the probability of default is small.

The rating companies did not accurately evaluate the risks of default of the mortgages making up the securities. Each security was complex with a very large number of embedded high risk mortgages. The rating companies could not adequately evaluate the securities and apparently yielded to the pressure to give undeserved triple A ratings. A few hedge funds did the necessary due diligence of the securities and discovered the rating companies error. They made large profits by short selling.

5.0 The companies that sold default insurance on the securities

Investors could buy insurance against the failure of the securities. These were called credit default swaps because they moved the credit risk from the investor to the insuring company. A leading company providing this insurance (AIG) took the insurance premiums but did not reserve capital to meet the amounts that became due on failure. This spread throughout the system and left many of the investors facing bankruptcy. The government eventually took over AIG and made the payments out of public funds.

General

When the mortgages in the securities began failing in very large numbers the whole system disintegrated. This left almost all of the investors with worthless (toxic) securities and mortgages on their books for which they had paid hundreds of billions. The failure of one business would cause failure in others as the securities became further devalued. None of the players had the reserves to meet their obligations and most were facing bankruptcy until the government and the Federal Reserve intervened with over a 3 trillion dollar injection of funds- announced so far. This does not include the toxic assets of Fannie Mae that are not yet publically announced.

The magnitude of the greed and sloppy business practices described by these three books certainly gives the lie to the fallacy that this industry is made up of the brightest of people who deserve the ridiculous bonuses paid.

There were many warnings of future problems by government regulatory agencies and other experts. Proposals of regulatory control were met by angry rejections of the concept from banks lobbyists, trade organizations and congress. This included threats of firings and loss of appropriations to government officials. While self regulation results were clearly becoming catastrophic the concept of self regulation was slow to die. In fact it still lives with many diehards.

The short term focus on immediate profits, sloppy business practices and the lack of executive foresight illustrates how poorly the financial sector is managed. There is really no concern for the American citizens who have paid a very high price for the incompetent practices. It also illustrates how ineffective the elected government is in protecting the citizen. The elected government and the financial sector mutually thrive on the basis of political power bought with our tax money.

Millions of Americans lives have been very badly affected because of the false values and incompetency of this sector. The sector has forgotten that its basic mission is to organize financial support for the productive enterprises of the country. They are now focused only on their own profits. This last gambit for their specific profits has caused terrible problems to the nation. Do we want to continue with them in their current position of power? This seems to be happening by default.

We need a complete review of the nation’s financial model with the goal of a new citizen oriented structure.