Wall Street’s Part In the Murder of the World Economy
There you sit, hunched over for a minute or hours from the day to day hectic pace which propels you forward, or so you are told. Like the rest of us, captivated by the Internet in some way shape or form. You might have just come home from your job at Walmart, or you stopped at the PC to check mail before heading out to work at Google. You could be a work at home Mom, a programmer analyst, car salesman, fireman, policeman, butcher, baker or candlestick maker. Your profession or inclination makes little difference, you have three things in common with hundreds of millions of other people (well many more things than that), you use the Internet, and the current financial situation has hurt you, and you probably have little time or intention to read this article. But, you should.
Just to start this off, let me say I have a new hero. An article I read by Rolling Stone’s Matt Taibbi convinced me of two things. First, and perhaps foremost, he gives a damn. Secondly, he knows how to put together a story that can reach people on any number of levels. As for my article here, will not be so long as to take up too much of your time. That valuable commodity is better spent reading one of his latest articles entitled; “Wall Street’s Naked Swindle.” No profundity on my part, however well researched or presented, could say more about your current economic situation I don’t think. So, if you will bear with me for a couple of minutes, I will premise his work and leave you to discover for yourselves the circumstantial proof of where America’s and the World’s livelihood went to. You know, those trillions of dollars I alluded to you losing the several times?
Learn Or Perish
The collapse of Lehman Brothers signaled the current disaster we are all experiencing, but that debacle was not the only whisper of something terrible which was about to happen to us all. In Taibbi’s supremely detailed report on this thing (like the rest of you Wall Street jargon is Greek to me) called “the naked short sell”, among other even more nebulous stock market terms. Like me, I assure you, it is in your best interest to read Taibbi’s article no matter how difficult the terms, how seemingly boring or long it is, or how strapped you are for time. The essence of it quite simply provokes questions and suggests action we should all take. Below are some key points which we all should come to grips with.
- The collapse of Lehman Brothers and other financial institutions plunged us all into the worst recession since the Great Depression
- Even in the midst of such failures, there were a few winners financially who may have had a role in the collapse
- The people in charge of monitoring financial market, namely The Securities and Exchange Commission and in the end the Executive Branch of the U.S. Government, did or have done little to discover exactly what happened.
- Though as of yet no one can be accused of manipulating the crash, it is readily evident who benefited from this disaster.
- Though no one in either the Bush or Obama administrations can be “fingered” as being in collusion with Wall Street’s “robber barons”, circumstances there also point to unusual circumstances of the what can be considered of a highly questionable nature.
Don’t Take Anyone’s Word For It
If you are reading this, you likely are already tired just thinking about all this. Even your weariness is probably something which has been calculated though. Just consider this, and then go read Taibbi’s article, which by the way has prompted the only action however meaningless to find the lost trillions American even now does not know existed. Be advised it is 8 pages long though, but never have 8 pages meant more to your financial future in my view. In the end though, do your own homework, think about what has happened, wonder where your job, or house, or car, or everything went to. Part of the cause is revealed in Taibbi’s conclusion:
“The nation’s largest financial players are able to write the rules for own their businesses and brazenly steal billions under the noses of regulators, and nothing is done about it. A thing so fundamental to civilized society as the integrity of a stock, or a mortgage note, or even a U.S. Treasury bond, can no longer be protected, not even in a crisis, and a crime as vulgar and conspicuous as counterfeiting can take place on a systematic level for years without being stopped, even after it begins to affect the modern-day equivalents of the Rockefellers and the Carnegies.”
So far, economists have calculated that over $14 trillion dollars in household wealth evaporated when this apparent “financial homicide” took place. INn case you need some simple math to put that sum in perspective, it represents about $45,000 from the pocket of every man, woman, and child in America! The Obama bail out money of course offset this fairly well, but that money is almost all already spent, and it went primarily to the same people who may have committed the murder.
Follow the Money
No one can literally blame Goldman Sachs, Barclays, Meryll Lynch, George Soros or any of the rest of the suspects, as there is no incontrovertible proof. Just like Taibbi, we are handcuffed here by the government’s lack of action in investigating these things. The “smoke” from the gun in this case does seem to lead from Wall Street itself. Interestingly, not even the government, nor seemingly anyone, knows who perpetrated the initial “naked short sell” on Bears and Stearns. You have to read that other article to figure out why this is significant.
When you get it. When you are mad as hell and are not going to take it any more. You can go to some of the links below, comment on Twitter, put your anger up on Facebook, and even come back here to express. Make no mistake, this is not about traffic, us, the Rolling Stone, nothing but doing something to get back what was taken. Your’s and your children’s, children’s future.
The White House, The SEC, The House of Representatives, Members of the U.S. Senate, The FBI (maybe check on ongoing investigations). If you need more, please do not hesitate to contact me personally. As for Matt Taibbi, I will be contacting him for an interview shortly.
About the Author
Phil Butler is editor-in-chief of Everything PR and senior partner at Pamil Visions PR. He’s a widely cited authority on beta startups, search engines and public relations issues, and he has covered tech news since 2004. Phil wrote in the past for ReadWriteWeb, Mashable, Profy, SitePoint, Search Engine Journal, AltSearchEngines. Follow Phil on Twitter or send him an email at phil [at] pamil-visions [dot] com.
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Comment by ross on 22 October 2009:
Interesting article. I enjoyed hearing this perspective.
Comment by Judd Bagley on 22 October 2009:
Phil,
Thank you for raising awareness of the dire problem that is illegal naked short selling.
If you or your readers are as angered by Matt Taibbi’s article (as you should be), and are looking for something constructive to do about it, consider asking your US Senator to co-sponsor the bill currently under consideration that will end the problem once and for all.
You can learn more about this legislation, as well as find a out how to contact your senator, here:
http://www.deepcapture.com/congress-prepares-to-bypass-impotent-sec/
Comment by richard keane on 23 October 2009:
Phil,
Can you contact me. I’m the narrator for a movie called Stock Shock that was directed by Sandra Mohr and came out on DVD on June 10th, 2009.
Since the word came out about the movie well before it was finished and then stories started to come out after the movie was completed on June 10th, 2009.
Stock Shock – The Short Selling of the American Dream clearly explains what Naked Short Selling is. Matt Taibbi’s great acticle ” The Naked Swindle ” in the Rolling Stones Oct 2nd 2009 edition was a great read and in story, he interviews Sussanne Trimbath who is an expert on Wall Street and Susanne was also in the movie Stock Shock and gave great explainations about what took place on Wall Street along with Patrick Byrne and others.
I do not understand how Matt could not give any recognition to the movie Stock Shock. I can only hope he does a follow up story in Rolling Stone’s and talks about Susanne Trimbath being in Stock Shock.
I’m hoping you will investigate this and perhaps write about Stock Shock.
Stock Shock back in June was viewed by the SEC and Senator Ted Kaufman and has been the leader behind the scenes on getting changes made on Wall Street, yet the news media refuses to cover the movie because it is told thru the eyes of Sirius XM Radio investors. What better company than Sirius XM Radio, which was the most naked shorted and shorted stock in this country during July 2007 – July 2009. In July 2007, the head of the SEC at the time Christopher Cox made a huge blunder and abolished the Up Tick Rule, which triggered Wall Street gone Wild ! It was the start of Greed and secret software that was used to bring this company into a full blown recession based on their corrupt actions of a few.
It is a must see movie. I hope you will contact me to discuss in more detail. The American people and the World needs to see this movie.
Richard Keane
http://www.twitter.com/stockshockmovie
Comment by forgiste on 24 October 2009:
Wall Street is trying to build a financial empire in the Empire State of New York. Long ago they usurped our government. Now, our elected officials are blind and powerless against them. The corporations and banks decide world policy in Board meetings, and then the government has to sell their ideas to the world. New York, as in The York Rite.
Comment by Paul on 24 October 2009:
Naked shorts are not the only swindle Wall Street is pulling on us, nor it is the biggest one. There is the derivative market which exceeds 1 Quadrillion USD. 1 Quadrillion is 1000 Trillion USD, just for comparison the US GDP is about 14 Trillion. These numbers are simply mind boggling. They also give you an idea how much leverage ordinary people have over those who operate in these markets. For more info on the unregulated derivative markets check the latest Frontline documentary – “The Warning”
Comment by Billy Kang on 24 October 2009:
I agree with most of the basic facts of this article (and the Taibbi article), but I have to disagree with the conclusions and the implications.
First of all, this latest financial crisis was the bursting of a real estate bubble. Bubbles were not invented or engineered by Goldman Sachs – nor could they be – and they are a fact of life in every human activity (think of the bursting of the “Obama is Jesus” bubble, for example).
Second, $14 trillion in wealth did not “evaporate” – most of it was paper profits, on the rising prices of houses or stocks, which were inflated because of the bubble. Did $14 trillion of ACTUAL buildings and companies actually disappear? No, their prices just went down, because their prices were too high in the first place. Do you REALLY believe that Goldman Sachs and other former investment banks are now $14 trillion richer?
Third, of course Goldman Sachs and other companies profited from the bubble, and then profited from the implosion. That’s HOW they make money – by hiring (and then giving big bonuses to) smart traders who figure out what’s happening, and then make money off of it. Put another way, their job is to profit from other people’s stupidity – but isn’t that the job of every company? Marlboro profits from people’s stupidity about smoking, Harrah’s profits from people’s stupidity about gambling, so why can’t Goldman Sachs profit from our stupidity in unemployed people getting $500,000 mortgages? We’re blaming them because they were smart when we were stupid.
Fourth, in a related vein, naked short selling may sometimes by illegal (though throughout most of American history it has not been), and it may SEEM Un-American and even immoral profiting from stock prices going down, but is it? Maybe it is, but isn’t it stupid NOT to profit from knowing that prices are too high? If you had realized that housing prices were too high, wouldn’t you have jumped at the opportunity to profit from that realization? Or look at it another way – if you were a rich investor who knew that retail coffee prices, or Microsoft operating system prices, or Internet broadband prices, were too high, why would it be immoral for you to profit from high prices by opening a competing business?
Naked short selling may not seem to be a “productive” activity, but it is – it helps keep prices in check. As any economist or basic economics textbook will tell you, accurate prices are a necessity for any capitalist (or socialist, or communist) economic system. You should also realize that naked short selling only gets a bad rap after every crisis (look up Jesse Livermore for an example from, of course, the Great Depression) – but traders do it all the time (even today), sometimes making money, sometimes losing it, but always contributing to setting accurate stock prices. We blame them today because we lost money while they made it – which doesn’t make them evil, it just means they were smarter than we were.
I agree that the government should TRY to identify and control bubbles, but there’s no way that regulating (or even eliminating) companies such as Goldman Sachs will do anything to avoid future bubbles, because bubbles, financial or otherwise, will continue to occur, because we always get caught up in the moment of major trends, take them too far – then stand around dazed and ready to blame someone else when they inevitably burst.
Comment by Phil Butler on 24 October 2009:
You are very correct Billy. I was just pointing to one arm of the henchmen stealing our heritage. You have done a good job of pointing out some others. Do you need a writing job?
Always,
Phil
Comment by Andrew Stanton on 24 October 2009:
If you watched the recent PBS Frontline show “The Warning” you would know exactly whom to blame for the crisis and sadly too many are part of the Obama administration.