When the tide goes out, it reveals a lot of ugliness that was hidden underwater. In times of prosperity (or apparent prosperity), weakness, duplicity and corruption is hidden from view or deliberately overlooked. Few want to point out the fallacies — after all, everyone is doing so well and having such a good time. Why argue with success, even if it comes with a bit of corruption? Surely the success is worth a bit of corruption.
The apparent prosperity is gone and increasingly viewed as a fraud that would do Charles Ponzi proud. It was (and still is) centered in our financial system and encouraged by the political class. Nests were feathered while the public was looted.
Each ebbing of the tide brings more corruption to the surface. Covering up the fraud becomes more difficult as government’s ability to throw money at the problems decreases. Our banking system still pretends to be solvent, although that too will be shown to be hollow at a later stage in this crisis.
The most recent debacle is the scandal involving our government sponsored enterprises known as Fannie and Freddie. Add another $6 Trillion of liabilities to the taxpayer tab courtesy of this fraud. It is not yet officially recognized as part of the $16 Trillion debt of our government, but that is merely government obfuscation. Taxpayers, you have been raped again!
Here is Doug Ross’s take, with the help of Tyler Durden:
While one may wonder about the implications of the just announced “accelerated of the GSEs, predicated in no small part by the surge in animosity between Tim Geithner and the FHFA’s Ed DeMarco, there is one aspect of the announcement that is completely and utterly unambigious: as part of its justification to demand faster liquidation of Fannie and Freddie’s “investment portfolio” Tim Geithner gave the following argument:
This will help achieve several important objectives, including… Ending the circular practice of the Treasury advancing funds to the GSEs simply to pay dividends back to Treasury
In other words not some fringe blog, not some “partisan” media outlet, not some morally conflicted whistleblowing former employee seeking immunity, but the US Trasury itself just admitted it had been engaged in circular check kiting scheme, which essentially has all the components of a Ponzi scheme in it, ever since the nationalization(about which there is no now doubt and which means the GSE’s $6 trillion in debt is now fully on the Treasury’s balance sheet) of Fannie and Freddie in 2008.Transfer one more conspiracy theory into the conspiracy fact bin.
The ludicrous hacks Jim Johnson, Jamie Gorelick and Franklin Raines — all Democrats, all Clinton sycophants, and all of whom raped Fannie Mae like a Doberman let loose in a Toy Poodle pet shop — should be serving time in federal lockup. Between them and a couple of other execs, were somehow able to pull $200 million in compensation out of FNM just before the entire system imploded.
The history books, if they are written with a modicum of the truth, will remember these Democrat henchmen as the linchpins of the housing meltdown.