Market Crash 2008 Was Caused By Ponzi Schemes Between Banks.
Allan Greenspan, the former Chairman of the Federal Reserve Board has been proven wrong by events: trusting markets and companies to regulate themselves does not work. He was staunchly opposed to any form of regulation of the finance industry and admired for it. The result was that banks started organizing ponzi schemes among themselves.
In April 2008 the New York Times published a book review of “The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash,” by Charles R. Morris that was written by Floyd Norris, their chief financial correspondent.
The author of the reviewed book is a lawyer and an ex-banker. He correctly predicted that the world economy was on course for a crash the likes of which we had never seen before. He was far from being the only one.
He pointed to derivatives, the devilishly complex and opaque investment instruments that bankers used among themselves to set up what can only be named Ponzi schemes, in which banks and brokers sold pieces of paper that no one really understood back and forth among themselves, creating credit out of thin air. These have now hit the wall and caused the 2008 world economy meltdown.
Is it any wonder trust among bankers evaporated so quickly? Mr. Morris warned he was only describing the tip of the iceberg and that the worst was yet to come, if only because it was not possible to measure the scale of the damage caused by bankers’ other ponzi schemes.
The US financial market was deregulated in 1997 in the face of stiff opposition by new legislation and today, 10 years later, the world is facing debts in the order of magninute spoken of in trillions of dollars. If you were to spend 1 million dollars every single day during the nex 80 years, you would barely put a dent of 3% in one trillion.
Plenty of people loudly rang alarm bells; think of Brooksley E. Born, Peter Schiff, Satyajit Das, Ron Paul, Charles R. Morris or Frank Partnoy. Ponzi schemes are still being set up every day and we can read periodically of some individual that was jailed for organizing one.
Now governments are scrambling to organize the bail out with citizen taxes and what happened in the past is repeating itself. Why is it that humanity fails to learn from past mistakes? The question remains open.
Sources: Google Alerts, The New York Times, NYT Book Review
