Published on 25 May 2016
Published on 25 May 2016
Published on 14 Sep 2018
Ten years ago, on Saturday, September 13th, 2008, the world was about to end.
The New York Federal Reserve was a zoo. Imagine NASA headquarters on the day a giant asteroid careens into the atmosphere. That was the New York Fed: all hands on deck, peak human panic.
The crowd included future Treasury Secretary Timothy Geithner, then-Treasury Secretary (and former Goldman Sachs CEO) Hank Paulson, the representatives of multiple regulatory offices, and the CEOs of virtually every major bank in New York, each toting armies of bean counters and bankers.
The asteroid metaphor fit. In the twin collapses of top-five investment bank Lehman Brothers and insurance giant AIG, Wall Street saw a civilization-imperiling ball of debt hurtling its way.
The legend of that meeting, as immortalized in hagiographic reconstructions like Andrew Ross Sorkin’s Too Big to Fail, is that the tough-minded bank honchos found a way to scrape up just enough cash to steer the debt-comet off course.
In Too Big To Fail, the “superstar” chief of Goldman, Lloyd Blankfein, along with “smart” Jamie Dimon of Chase, “fighter” John Mack of Morgan Stanley, and other titans brokered the deal of deals, just in time to stave off a Mad Max scenario for us all.
The plan included a federal bailout of incompetent AIG, along with key mergers – Bank of America buying Merrill, Barclays swallowing the sinking hull of Lehman, etc.
With respect to the fine actors in the film, the legend is bull.
There are more accurate chronicles of the crisis period, including the just-released Financial Exposure by Elise Bean of the Senate Permanent Subcommittee on Investigations, probably the most aggressive crew of financial detectives who sifted through the rubble over the past 10 years. Bean’s account of what went on at banks like Goldman, HSBC, UBS and Washington Mutual is terrifying to read even now.
But history is written by the victors, and the banks that blew up the economy are somehow still winning the narrative. Persistent propaganda about what happened 10 years ago not only continues to warp news coverage, but contributed to a wide array of political consequences, including the election of Donald Trump.
The most persistent myths about 2008:
Myth#1: The crash was an accident
In the early days of the crash, reporters were told the crisis particulars were probably too complex for news audiences. But metaphors would do. And the operating metaphor for 2008 was a “thousand-year flood,” a rare and inexplicable accident – something that just sort of happened.
It was even implied that the meltdown was due in part to irrational panic, “hysteria,” a fear of fear itself. When Lehman Brothers failed, the theory held, investors overreacted by freezing all lending, causing more disruptions and more losses. The economy was basically healthy, but fear had caused it to founder on a lack of confidence.
In Too Big to Fail, William Hurt plays Treasury Secretary Paulson as a saddened, wearied Atlas. He quips, early in the mess: “This is a confidence game,” and if Lehman Brothers failed, “all the other banks are gonna drop like dominoes.”
Poor Cynthia Nixon, who plays Treasury spokesperson Michele Davis, is heard responding, “Congress won’t move until we’ve already hit the iceberg.”
The film flashes to Lehman’s Dick “The Gorilla“ Fuld (played by James Woods in kinetic perma-jerk mode), who contrasts their fears with his overconfident weather report:
“Real estate always comes back,” he snorts, smugly fixing his tux. “I’ve seen this before. CEOs panic and they sell out cheap… The street’s running around with its hair on fire, but the storm always passes.”
This colorful language – dominoes, a confidence game, an “iceberg,” a “storm” – artfully disguised reality. This wasn’t weather coming at them, but the consequences of years of untrammeled criminal fraud.
Banks like Lehman had lent billions to fly-by-night mortgage mills like Countrywide and New Century. Those firms in turn sent hordes of loan hustlers into lower-income neighborhoods offering magical deals to anyone who could “fog a mirror,” as former Countrywide executive Michael Winston once put it to me. The targets were frequently minorities and the elderly.
Tales of mortgage swindlers guzzling Red Bulls and handing out easy loans in all directions began showing up in news reports as early as 2005. “It was like a boiler room,” one agent told the Los Angeles Times. “You produce, you make a lot of money… There’s no real compassion or understanding of the position they’re putting their customers in.”
These mortgage mills dispensed with due diligence, rarely bothering to verify incomes, identification, even citizenship. The loans were designed to have short, fragile lives, like fruit flies. They had to stay viable just long enough to be sent back to Wall Street and resold to secondary buyers, who took the losses.
It was a classic Ponzi scheme. So long as new loans were created and sold faster than the old ones failed, the subprime market made everyone rich. But the minute the market started to swing back the other way, everyone knew they would all crash to earth, Wile E. Coyote-style.
Paulson knew as well as anyone. Treasury and the other regulators received ample warning. Take the Office of Thrift Supervision (OTS), a regulatory arm of Treasury that happened to oversee two of the worst basket-cases, Washington Mutual and AIG. According to Bean, the OTS observed and ignored more than 500 deficiencies in mortgage practices just at WaMu in the years before the crash.
Even the FBI – not exactly an on-the-ball financial regulator, certainly not to the degree that Treasury or the Fed is expected to be – had warned as far back as 2004 that so-called “liar’s loans” were “epidemic” and would cause a “financial crisis” if not addressed.
CNN told the public of the FBI warning of a “next S&L crisis,” going so far as to identify the top 10 “hot spots’ for mortgage fraud” in: Georgia, South Carolina, Florida, Michigan, Illinois, Missouri, California, Nevada, Utah and Colorado.
All places that would later be rocked by mass foreclosures.
It took longer to get a car wash than a home loan in those days. I had one mortgage broker in Florida tell me he used to look for customers on the way home from work at night, at the beer cooler at his neighborhood 7-Eleven. His pitch was, “Hey, buddy, you like where you’re living?”
The end of this party was no confidence game. This was gravity: what went way up, coming way down.
The captain of the Titanic ignored one day’s worth of iceberg warnings and went down in history as an all-time schmuck for it. History commends him only for the honorable act of going down with his ship.
The titans of Wall Street ignored at least four years of warnings, escaped richer than ever, and in the end were lauded as heroes by the likes of Sorkin.
Myth #2: The crash was caused by greedy homeowners
Too Big To Fail shows Fuld on a rant:
“People act like we’re crack dealers,” Fuld (James Woods) gripes. “Nobody put a gun to anybody’s head and said, ‘Hey, nimrod, buy a house you can’t afford. And you know what? While you’re at it, put a line of credit on that baby and buy yourself a boat.”
This argument is the Wall Street equivalent of Reagan’s famous Cadillac-driving “welfare queen” spiel, which today is universally recognized as asinine race rhetoric.
Were there masses of people pre-2008 buying houses they couldn’t afford? Hell yes. Were some of them speculators or “flippers” who were trying to game the bubble for profit? Sure.
People pointing the finger at homeowners are asking the wrong questions. The right question is, why didn’t the Fulds of the world care if those “nimrods” couldn’t afford their loans?
The answer is, the game had nothing to do with whether or not the homeowner could pay. The homeowner was not the real mark. The real suckers were institutional customers like pensions, hedge funds and insurance companies, who invested in these mortgages.
If you had a retirement fund and woke up one day in 2009 to see you’d lost 30 percent of your life savings, you were the mark. Ordinary Americans had their remaining cash in houses and retirement plans, and the subprime scheme was designed to suck the value out of both places, into the coffers of a few giant banks.
When opioids first hit the market in 1911, and up until the 1990s, these were reserved for post-surgical (acute) pain and patients with cancer. Since then, opioid use for treatment of chronic pain has escalated. It is now one of the most over-prescribed medications in North America. Unfortunately, one of the most common side effects of long-term opioid use is sensitization to pain, or a decrease in pain tolerance. In other words, instead of acting as an analgesic and decreasing pain, overused opioids make individuals more sensitive to pain.
Patients on high doses of opioid pharmacotherapy may suffer escalating acute pain, which can lead to a vicious cycle of increasing the dose, but never again finding that pain relief. Currently, there are no strategies that would prevent, reverse or manage this state of increased pain sensitivity.
To put this sensitization issue into perspective, one study pointed out that patients with lower back pain, on long-lasting morphine, developed pain tolerance within one month of therapy. Further studies suggested that one of the culprits for this process involved a metabolite of morphine, called morphine-3-glucoronide.
Cannabis is an alternative analgesic and anti-inflammatory medicine, as demonstrated by a several pre-clinical studies. However, when it comes to human trials, the data is very scarce and the available studies are inconclusive due to inherent design flaws. Most of the studies conducted, thus far, measured pain tolerance and pain threshold immediately after consumption of THC, CBD, or both (via smoking or oral formulations). Collectively, these studies suggest that cannabis has some analgesic effect but only in males, and not in females, and can increase the pain sensitivity and decrease pain threshold. Not exactly reliable results when you consider methodologies.
Is something extremely unusual happening to our planet? At this moment, Hurricane Florence is just one of seven named storms that are currently circling the globe. That matches the all-time record, and it looks like that record will be broken very shortly as a couple more storms continue to develop. Back in 2004, a Hollywood blockbuster entitled “The Day After Tomorrow” depicted a world in which weather patterns had gone mad. One of the most impressive scenes showed nearly the entire planet covered by hurricane-type storms all at once. Of course things are not nearly as bad as in that film, but during this hurricane season we have definitely seen a very unusual number of hurricanes and typhoons develop. As our planet continues to change, could this become “the new normal”?
As I mentioned above there are currently seven named storms that are active, but an eighth is about to join them, and that would break the all-time record…
The Hurricane season is causing devastation from the Pacific to the Atlantic as seven active storms are currently swirling across the globe – with high chances an eighth powerful storm will soon develop to break an all-time record.
And actually there is an additional storm that is also developing in the Pacific which could bring the grand total to nine.
Overall, there have been 9 named storms in the Atlantic and 15 names storms in the Pacific since the official start of the hurricane season.
That is not normal.
In fact, one veteran meteorologist has said that he has “NEVER seen so much activity in the tropics”…
Far from being the biggest threat facing the US coastline this hurricane season, Florence will be followed by several other storms that rapidly strengthening in the Atlantic. As one veteran meteorologist remarked, “in my 35 years forecasting the weather on TV, I have NEVER seen so much activity in the tropics all at the same time.”
Meanwhile, the biggest storm on the planet is actually in the Pacific Ocean.
Super Typhoon Mangku is a Category 5 hurricane, and it absolutely dwarfs Hurricane Florence…
The devastating force of Hurricane Florence is nothing when compared to the category 5 hurricane sweeping over the Pacific Ocean, Super Typhoon Mangkhu.
With winds close to 180mph, the fierce hurricane is feared to land over a mountainous terrain in the northern Philippines on Friday night, before moving over the South China Sea and potentially impacting Hong Kong and Vietnam.
But let’s not minimize the seriousness of Hurricane Florence. It is currently approximately the size of the state of Michigan, and even though it has been downgraded forecasters are still predicting that it will bring up to 40 inches of rain in some areas.
One meteorologist ran the numbers, and he determined that if the current forecasts are accurate the state of North Carolina could end up getting ten trillion gallons of rain…
Weather.us meteorologist Ryan Maue crunched some numbers and tweeted that North Carolina’s 7-day rainfall forecast by the National Weather Service’s Weather Prediction Center would be like getting “a total of over 10 trillion gallons” of rain from Florence. The math was based on the projected state average of 10.1 inches of rainfall for that time span.
Yes, you read that correctly.
Ten trillion gallons of rain.
Needless to say, all of that water is going to cause an immense amount of damage.
Over in Virginia, a top official is warning that “there could be a number of dams that will fail”…
In neighboring Virginia, officials with the state’s Department of Conservation and Recreation have identified some 100 dams they are concerned could be at risk, either because of “spotty inspection records” or because they are still being built.
“If we get 20 inches of rain in a relatively short period of time,” Russ Baxter, the department’s deputy director told the WSJ, “there could be a number of dams that will fail.”
As I write this article, some areas along the coast are already getting hammered. Atlantic Beach has received more than 12 inches of rain, and other towns are already inundated with water.
It is going to be a long couple of days for those living along the Mid-Atlantic coast, and there were reports of panic among those making last-minute preparations…
A rowdy crowd was shown in a Facebook video shared by an employee from the supermarket off Glenn School Road in Durham Tuesday pushing one another and shouting as they hurried around the store to gather their supplies.
Police officers were even spotted making their rounds around the Walmart to ensure the safety of shoppers.
One officer is seen restraining a young boy as another shopper drops several bottles of water.
This is yet another example that shows that you never wait until the last minute to get what you need.
In the end, the damage to property will be in the tens of billions of dollars, but only a handful of people will probably lose their lives.
Now that the storm has been downgraded, some are even booking rooms along the coast so that they can say that they rode the storm out.
For instance, 53-year-old Barry Freed says that he is sticking around so that he can cross this off his “bucket list”…
For Barry Freed, 53, riding out a hurricane was a chance to cross something off his “bucket list.”
Armed with a few sodas, some M&Ms, Doritos and a copy of Moby Dick, the Greensboro resident booked an AirBnB at a condo here.
As skies darkened Thursday and winds whipped up at Waterway Lodge, just off the marina near Wrightsville Beach, Freed admitted he wasn’t really prepared.
“I kind of thought of this impulsively,” he said. “It’s kind of a stupid idea.”
Yes, it probably is a stupid idea, but I admire his courage.
This storm will come and go, and the recovery will take an extended period of time.
But the much bigger story is what is happening to our planet on a larger scale. These storms are increasing in number and intensity, and that should definitely alarm all of us.
About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.
PANAMA CITY, Panama—One of the things that shocked me the first time I talked with an active cartel member in Mexico was hearing how much he loved his work. But as time went on, and I interviewed others like him, I came to see that my initial surprise derived from my own naiveté.
The homicide rate in Mexico has risen by almost 30 percent over the last five years, a national epidemic. There were at least 25,316 murders in 2017, making it the most violent period since the Drug War began. So far 2018 is on pace to eclipse those numbers.
And the tactics employed in all that killing have become more and more gruesome over time. Maybe the rush felt by some murderers is like a drug itself, and they are junkies needing ever greater doses to get the same high. But how is it that ordinary people get hooked on activities like beheading, acid baths, and cannibalism?
A new study by Dr. Arcelia Ruíz Vásquez, a research psychologist at the University of Guanajuato, provides important answers and insights to many questions about the origins, motivations, and behavioral patterns of cartel operatives.
The report is titled “X-Ray of a Mexican Sicario.” In compiling it, Ruíz interviewed dozens of inmates from the Penitentiary Center in Acapulco, Guerrero, which just happens to be the most violent state in Mexico. (The Acapulco Cartel is actually headquartered inside the penitentiary, with the capos giving orders from their cell blocks.)
By recording her subjects’ personal histories in great detail, Ruíz was able to identify four main personality types among cartel foot soldiers, with a special emphasis on how they became sicarios in the first place:
Marginal: These sicarios are typically from rural areas that have been largely abandoned by the Mexican state. Marginals grow up with little or no infrastructure or opportunities awaiting them, and so they turn to organized crime to escape a life of poverty. They typically start out cultivating drugs in the sierra, or working as collection agents for the cartels. As they move up the ladder, they’re promoted to guarding safehouses and accompanying higher-ranking members on shakedown and execution runs. Such activities serve to “desensitize and train them enough for their first murder,” Ruíz writes in the report.
In an exclusive interview with The Daily Beast, Ruíz elaborated on this character type. Like many people raised in farming country, “the value system of the Marginal hit man [is] based on tradition, respect for authority and obedience to their customs.” As their immersion in the underworld deepens they frequently “retain respect and obedience, but now turned to their criminal leaders.”
Antisocial: This character type usually comes of age in an environment where criminal behavior is commonplace. Antisocials often hail from crowded urban barrios, which also are deeply impoverished with few economic opportunities. A life of crime thus becomes deeply attractive to many young people.
As they grow older, Ruíz says, “they are usually encouraged by relatives or friends already immersed in organized crime to participate.” Gateway activities include working as informants, small-scale robberies, and selling drugs, all of which can pay two or three times what they might earn from lawful income.
Often affiliated with street gangs from as young as 10 years of age, Antisocials gradually escalate their illicit activity by joining larger, better connected, and more lucrative cartels. Along the way they manifest an increased “intolerance for frustration” along with “impulsivity, hedonism, recklessness, and the search for immediate satisfaction,” according to the report.
The more violent they are, the more sway they hold over their peers. “This would explain in part the increase in the escalation of violence in many of their executions,” Ruíz says.
Above all they crave social status, and like to show off their new-found wealth in ostentatious displays via social media. Because of their lack of impulse control, Antisocials often put their own cartels’ business in jeopardy. That makes them the most likely variety to be betrayed and murdered by their cohorts, or to wind up in prison.
Antisocials, like Marginals, can feel remorse for their actions, but they often cushion their feelings of guilt by turning to drugs and alcohol to numb their conscience.