Let’s remember how “making markets more efficient” worked to reform legal title to property in practice.
Real median income had been falling for decades. Households increasingly tapped into equity lines of credit.
Equity lines of credit were offered for sale, and sellers knew there was demand for it, with rising prices against falling income. People hocked their homes because they were told by financial experts that the value of the equity would always go up, which was a big fat fraud!
How were “liar loans” going to be paid with a declining income?
It is unreasonable to argue that the best-and-brightest (Ivy League bankers) did not know the system would collapse. It is equally unreasonable to have them fix it because they are the best and the brightest.
They knew it would collapse because the value of the equity interest was a deliberate fraud. The value was subordinated to debt with declining median income, which yields productivity gains (GDP). While GDP was being supported it was actually being resisted in the futures, which is why TBTF banks securitized the debt and insured it with TBTF, derivative financial products (prohibited by Glass-Steagall).
When it blew up in 08-09, debtors were told they needed to sell their property to pay the debt. They surely wouldn’t be able to pay it with falling income. The property of millions of Americans was (and still is) being actively confiscated!
Relying on Ivy Leaguers to fix it is downright psychopathic.
We are not really that crazy; but we are being played, organized by “the experts.”
The CEO of Goldman Sachs said today that equity values are high and credit is tight, which is a big fat fraud!
Credit is not tight.
Big corporates have been borrowing from the Fed’s discount window. They have been getting money for nothing (due to the Great Recession) and buying back stock (the equity with interest) for eight years!
(The Nasdaq again closed today at a record level; and companies listed on the exchange have been buying back their equity at record rates.)
Now, understand, capitalists like Warren Buffet say they do not use Fed money to finance acquisitions. Hedge funds, private-equity firms, and venture capitalists, however, do. Then they buy Berkshire Hathaway shares, and Warren Buffet’s company has a big equity stake in companies like Bank of America, taking legal title to property confiscated after the big bust in 08-09.
The image of the “friendly capitalist” who does not really “intend” to do anyone harm — but it’s just the system — is a big fat fraud!
Capitalists say that confiscation of property is stealing. It is larceny if acquired by public means, but it factors into a company’s “growth” (gaining economy-of-scale, forming corporate conglomerates) if acquired by private enterprise.
Either way, confiscation occurs by means of consolidated power. Once power is consolidated, despite the stated purpose, there is no guarantee it will be used to your benefit. If history is any indication, it probably won’t! (It is still “us and them.”)
A system that intends to consolidate property on a routine basis, and sell it back to you at a profit just because “that’s the way it works,” is likely to be in a state of constant “reform.”
We can always go back to the good ole days when we had Glass-Steagall. We can then, after some time, argue how bright it will be to repeal it, and consolidate the wealth of the nation, in the name of free enterprise.
Goldman Sachs, for example, says it is now positioned for the return of Glass-Steagall.