By Ellis Baxter
It was the best of times and it was the worst of times....so penned Charles Dickens. I say it was the worst day on Wall Street in decades, but the sorriest day is yet to come. Why? For the first time in history, the US credit rating has been downgraded. The once giant of the world in all things financial now lags behind Switzerland in its credit score. How this happened and who is to blame is a complex tale of greed, avarice and arrogance.
The hallowed halls of the banking houses on Wall Street are populated with men who gave themselves salaries in the hundreds of millions of dollars. These same individuals concocted a game of high stakes poker using the mortgage market as their betting chips. Changing the language of Las Vegas to pleasing sounding terms such as "triple A rated derivative swaps" allowed them to bet a stratospheric amount....$70 trillion on a mere $7 trillion of underlying mortgages. To do this required a few changes in the law. So outcome the checkbooks and in comes a stable of compliant representatives in Congress. This group of bought-and-paid-for puppets repealed the Glass-Stegal Act which had created a wall of separation between banks and investors. With nothing holding them back now, they were free to plunder the assets of the American people. In other words they were looking for a rube and the just met YOU!
If you want to talk about the financial mess we're in, Warren and I will be hashing this out on the Mason Dixon Line on Blogtalk Radio Sunday night at 9:30 p.m. Arizona Time and we'd love to have you join the conversation. You can call in at 949-266-6727.