Mortgage Meltdown Hurts Small Norwegian Towns: What’s Next?

And this is still the tip of the iceberg. It is happening all over the world. 

Public officials are hiding it in the hope that a bailout might save the investments. They can’t stop the disclosure. The party is over. This time the intended and known consequences are being dwarfed by unintended and unknown consequences. Too many people know or are getting to know what really happened. And too many people know how to ask the right questions. 

Besides avoiding U.S. source investment products, people will be throwing out the babies with the bath water. All derivative products will be suspect, which while a good thing, will slow down capital infusions even where the investment should be made. All U.S. investment products will have to be disguised, which is probably a good thing because it will require approval of private and government people in other countries, where the lock on fraudulent behavior is not so calmly accepted. Very bad news here though for U.S. equity markets. 

The Fed can only print money so long before the value of the dollar even in this country is seen as suspect or even zero. It has happened before right here, in this republic of ours also during wartime in the revolutionary war and the civil war. We are teetering here in inflation unknown to most AMerican citizens because it hasn’t happened in their lifetimes and the history they learned in school didn’t include this vital piece of information. Paper currency is based on faith. It is faith based money. And we have lost faith with the holders of our currency here and abroad. 

But the most disturbing outcome is backlash. All Americans might be considered targets for retribution. Unless our housing market DOES completely tank and stay in the doghouse, foreign investors and governments will see the fraud as being shared by everyone in the United States — a perception of vast conspiracy that will undermine faith in the stability and integrity of our government and our society. Reports of catastrophic consequences to homeowners and renters will be dismissed as PR to distract the world from seeing America as a whole and not a few bankers as the cause of this unspeakable economic horror. It is unlikely that the housing market will slump to that degree, and some of the reason will be foreign purchases of our real estate, cheap now because of a near worthless dollar. In the end, the perception of our culpability will be felt down to the citizen level.

And so, prosecution of the people in each country will lead to prosecution and indictments of people in other countries and eventually all lead back to the U.S. All roads will lead back to us. The legal mess created by a legal war against the U.S. will spill-over into all our foreign relations. And like the rock that starts falling down the hill, it gathers up and disturbs other rocks and debris that were better left undisturbed. The value of the dollar, supported in fact (as opposed to economic theory) by world view of the power of America will be replaced with suspicion and unwillingness to accept the dollar as the common denominator in commerce.

We don’t have time for this. Action must be taken now. Candidates must realize that this debacle is actually more important and significant in foreign relations and world peace than Iraq or even oil dependence. If we want to save ourselves we will demonstrate convincingly to the world that we are a nation of laws and principle. Our leaders and/or candidates must recognize the significance of this. We must make heads role, prosecutions happen, strengthen and enforce regulation on derivatives in particular, and put people, big people in jail. 

This was a natural outgrowth of the excesses that arose with Enron, WorldCom and many other companies that got caught up in “creative” accounting and plausible deniability. while we did raise our statute somewhat, everyone remembers that we let it happen, and that people all over the world, their families, their friends, their vendors, their governments and everyone else who depended upon them and upon whom they depended were either destroyed or hurt badly by the corporate corruption scandal. The culprit of course is greed and those incredibly high CEO salaries and the lack of culture or accountability for real results. Appearances do matter, but when they become everything, then at some point the mirror cracks, the lights go out and all that’s left is vapor.

And if you want to see all this predicted and described 35 years ago in a book, and 40 years ago in articles, find a copy Unaccountable Accounting: Games Accountants Play (Hardcover) Publisher: Harper Collins; [1st ed.] edition (January 1972) Language: English ISBN-10: 0060104716 by Abraham J. Briloff .

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