Creative-i

In his recent press conference, after which President Obama would be called to task for lambasting the police in Cambridge Mass for acting ”stupidly”—a comment he later withdrew—he also charged that Wall Street knew what they were doing when they made predatory loans. No one called him on that, not even Wall Street. Here’s what he said. “We were on the verge of a complete financial meltdown. And the reason was because Wall Street took extraordinary risks with other people’s money. They were peddling loans that they knew could never be paid back.”

How long will it be before foreign banks and investors realize that the Fed’s innocuous-sounding “lending facilities” have released a wave of low interest speculative liquidity into the capital markets? How else does one explain soaring stocks when industrial capacity, manufacturing, exports, corporate profits, retail and every other sector have been pounded into rubble?

Millions played at this casino using home equity. Pension funds risked your retirement benefits gambling at this casino and lost. Leveraging, 10, 20 or even 30 times was the norm. There is no money left in the kitty!

First the policy makers pretend that they can be paid, then they denounce the pessimists as spreading panic, and then they say that of course students have been taught for four thousand years now how the ‘magic of compound interest’ keeps on doubling and redoubling debts faster than the economy can squeeze out an economic surplus to pay.