Two economies exist – the real economy, where goods and services that society needs are produced or provided by industries. The other economy is the financial sector – the commercial paper economy – nominally the Wall Street banks and their London and European counterparts – that utilize and depend on the real economy for their existence and paper profits. Without the real economy, the financial giants of Wall Street and their cohorts abroad, could not gain paper wealth, would not have a basis from which their derivatives are derived from, their hedge funds to hedge or their Masters of the Universe hotshot brokers to naked short sell.
It is these private financiers in the financial economy – the paper economy – that are killing the real economy. It started with the sub-prime paper mortgages that the predatory banks loaned to home buyers who they knew or should have known could not afford the loan. Those subprime loans were then packaged together and sold as mortgage backed securities – MBS – around the world. When the loans underlying those MBSs went bust – in the real world – the banks who sold those bad MBS – like Bear Stearns and Lehman Bros – and those who bought those MBSs and held them on their books as assets – starting going bust. Investors in those banks – banks like WaMu, IndyMac, Northern Rock – and their depositors starting losing their funds, all in the real world.
However, it was the financial world that got bailed out – not the real world. Those Wall Street conglomerate banks – those “too big to fail” – received public money at taxpayer expense – in the billions. With those billions they are now able to buy up the companies that their greed, mismanagement, fraud and other nefarious activity in large part caused to go bankrupt. With public money – these financial behemoths are now poised to buy up real assets and infrastructure needed in the real world to produce real goods and services.
Paper wealth – the fictional wealth – of the financial world is being transformed into control and ownership of real world productive wealth – service corporations, natural resources, infrastructure, industry, etc.
These are very intelligent people who are behind this entire financial catastrophe we are all now victims of. When the smoke clears, those who did this – the Rubins, Greenspans, Bernankes, Clintons, Paulsons, Summers, Bushes, and a whole host of others should not be allowed to maintain control of the assets they are now buying – with public money – through their Wall Street buddies.
They should all be held accountable – criminally charged and dealt with. A public hanging would be best.