Standing Armies in Modern Finance – A Global Credit Crisis
“I accept as true with… That banking establishments are greater dangers than status armies, and that the precept of spending money to be paid with the aid of posterity underneath the name of investment is, however, swindling futurity on a big scale.” – Thomas Jefferson, 1816 Jefferson’s warnings almost centuries in the past approximately the pernicious banking establishments had been indeed prescient.
The seismic events of 2008 sparked off by using the dishonesty of the high priests in present-day finance have borne out his suspicions as residents grapple with the sheer scale of the worldwide credit disaster. In March 2003, as America’s army began collecting at the borders of Iraq to find Saddam Hussein’s phantom cache of weapons of mass destruction, America’s army of investment bankers on Wall Street was quietly producing its arsenal, diabolically concocting an alphabet soup of economic sludge that masqueraded shaky mortgages and risky loans as AAA-rated investment-grade bonds. At the clicking of a mouse, these poisonous securities would transmit electronically over the buying and selling terminals of the sector and land on the doomed stability sheets of the unsuspecting buyers, in which they would lie in wait to wreak maximum devastation. With copious quantities of liquidity from the Federal Reserve, collaboration from the score organizations, an insatiable investor appetite for yield, and true old-style American ingenuity, enablers at every level inside the financial meals chain have been approximate to be richly rewarded for their components in the glorious American revolution known as “Securitization”. In low hobby fee surroundings, debt or profits-generating assets, including mortgages, purchaser loans, automobile loans, credit card loans, and student loans, could be securitized and offered as excessive grade investments, boasting yields advanced to those on treasury bonds.