Global Crisis Creates Capital Gains For The Big Guys

By Author: Alice Brooks
Total Articles: 90
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Did the global crisis in the world financial markets come as a shock? Some believe it was something Wall Street and the White House could see coming. There is plenty of evidence out there to indicate it was all a perfect money making scheme for the guys at the top of the economy, leaving you and me to get the short end of the stick.
In 1993, the Federal Housing Enterprises Financial Safety and Housing Act entered into effect in the United States. This Act mandates that two government sponsored enterprises (known as GSE's in Washington-speak), would increase housing mortgage loans to poor people in under-served areas. Freddie Mac and Fannie Mae, the two mortgage monsters at the eye of the sub-prime firestorm in 2009, are the GSE's in question.

Well, in 2003, the U.S. Department of Housing and Urban Development (HUD) commissioned a report. The report was entitled An Analysis of the Effects of the GSE Affordable Goals on Low- and Moderate-Income Families. The report found these sub-prime loans were effective in making housing affordable for minorities and the poor. (If you're interested, this report can be found ...
... at http://www.huduser.org/Publications/pdf/gsegoals.pdf.)

In other words, in 1993, the federal government began encouraging these private but federally sponsored firms to give out these loans. They were issued, at low interest rates, to the poor.

Ten years later, in 2003, despite problems and concerns, a HUD study found everything to be hunky dory. It's worth mentioning that the same Freddie Mac and Fannie Mae making the mortgages helped fund this study.

Growing mortgages and construction looked like a big boom in housing. To make the risk less to Fannie Mae and Freddie Mac, who actually lent money from the big banks, insured the loans. This insurance on these loans, through AIG, were turned into securities.

These financial products, known as derivatives, (which are basically unregulated by any government entity), were sold far and wide around the world. That's where the set up for the global crisis comes in.

Once interest rates were raised on these loans, people that had the mortgages just couldn't afford them. When default kicked in the insurer couldn't come up with all the money and that's when it all started to hit the proverbial fan.

The big executives at these companies didn't care. Why would they? They already had millions in their own bank accounts. Furthermore, they were so intertwined with the global banking system the government wouldn't let them sink. You have to keep in mind that it's the big banksters that own U.S. currency, control monetary policy and pick politicians for powerful posts. We the voters are only served the choices from a limited menu, from which no substitutions are accepted on Election Day.

Lo and behold -- the latest bank bailout was born. While Bush Jr. made the first installment, President Obama was quick to follow up with continued no-strings-attached payments. Why wouldn't he? Banks and securities are his biggest corporate campaign contributors!. If you don't believe me just take a look at the Federal Elections Commission data. It's neatly organized by the Center for Responsive Politics at opensecrets.org.

So if the politicians are paid for by the big banksters and other corporate goons of greed, why not bet on a losing horse if the odds are tipped in your favor always? Paid for politicians were in on the scam from the start.

Any way you cut it, it's working people paying the price. Be it through foreclosures or increased debt to pay the banks for the global crisis they provoked, it's all part of the American trickle up economics system. Too bad we're in the basement at the bottom.

If you want to see the government corruption exposed, then do not hesitate to pay a visit to this website and see for yourself. You can promote your cause here, suggesting solutions for the government corruption network and not only!