Declining American Dream Undermines Our Currency and Our Society

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Notable Quotes from article: Read NY Times Article

America is no longer in the business of building and making actual physical objects. Instead, all the energy and resources go into the kind of financial engineering that creates quarterly numbers that Wall Street buys into.

By now, the notion that business is a place built on accountability and performance should be as outdated as the one-room schoolhouse. Ask yourself, what would happen if American public schools were offered hundreds of billions in bailout money? One outcome is not in the cards: its leaders would not end up back at the trough so quickly, sucking up tens of millions in bonuses as Wall Street has.


EDITOR’S COMMENT: Arrogance only results from intentional ignorance — the kind that filters out any feedback that says you are wrong. There is no magic or mystery as to what has happened and the eventual outcome is not so difficult to project even as our perceptions are manipulated into thinking or hoping otherwise. The numbers are simple: America was once the source of innovation, growth, consumption and capital. It isn’t anymore. With the financial sector being counted as part of GDP, only 60% or less of our economic activity is actually devoted to doing anything of value; yet we continue to prop up the myth of a mighty economy by pumping metrics into the picture that measure nothing of importance.

Whether we suffer from complacency, resignation or just apathy doesn’t really matter in terms of looking at the snapshot of our economy. It’s dead in the water. The only thing that could revive the fish that is starting to stink is confronting the truth in the marketplace where real people make real decisions doing real things. No policy-maker is going to change the whole picture here. Things have gone too far for that. This is a problem for the people to solve using the best means at their disposal.

What is needed is something that jump-starts what I hope is a vestige of Yankee ingenuity that resets the playing field — at least enough to give people a fighting chance. Surely the current trend in judicial forums tells us that the mortgage bonds are being revealed as worthless pieces of junk sold under obviously false pretenses that grossly misled buyers of the bonds, government regulators, and even rating agencies (who were somewhat complicit in the fraud). AND it tells us that however hard the megabanks try, the facts will be revealed about the origination of mortgages using procedures and documentation far outside the bounds of what the law allows.

The facts are clear that the intermediaries in the whole false securitization scheme were out for themselves ONLY. They stepped out of the role of intermediation of finance and capital and seized the capital meant for liquidity, reduction of risk, and production of products and services that added value to the ordinary guy on Main Street. Now it’s payback time and the question is not whether there will be chaos, but the extent of the consequences of a correction that is completely assured to occur.

Strangely enough I think the answer will come from the good players, the ones who didn’t get into “the game” and who were interested in value instead of illusion. The forces mounting from the homeowners who were defrauded to the investors who were defrauded, are now reaching  critical mass. If you do the numbers you can easily see that this inchoate strength far exceeds the collective power of the megabanks. A new day is arriving on  Wall Street and the people who think they have it all under control just don’t quite understand that a handful of people can have an effect on billions of people but they can’t control them. It seems to be a lesson that those given to arrogance won’t learn because they just don’t want to do it.

To most people this comment will not make much sense — yet. But just as surely as there were many of us predicting the collapse of finance and the markets in 2006-2007, and just as there are those of us who see massive government defaults on government obligations starting next summer, the unthinkable still happens. Yes it will get worse, a lot worse before it gets better. For the few who have the time and inclination to do the analysis, you also know that besides the bad tidings, there will be major upheavals in the markets and who drives the markets. At the end of the day, reality has a nasty way of spoiling the best and grandest of schemes.


A Lesson for Wall St. About Failure


It’s awards season again, and critics and the academy members are deciding on their top film picks of the year. But in many corners of the business community, the issue is already settled: “Waiting for ‘Superman’ ” is the year’s must-see film.

On Wall Street and on Silicon Valley office campuses, in hedge fund boardrooms and at year-end Christmas parties, it seems you can’t have a conversation without someone talking about the movie that finally lays bare America’s public education crisis.

“Waiting for ‘Superman’ ” is one thing that Bill Gates, Steve Jobs and Mark Zuckerberg agree on, Rupert Murdoch talks about to anyone who will listen, David Koch of Koch Industries promotes, and Paul Tudor Jones and many of his hedge fund brethren work to support.

“Waiting for ‘Superman’ ” follows five children and their parents as they run a gantlet to gain access to high-performing charter schools because the alternative — the public system — is a complete disaster. The film has caught the imagination of the business community because it represents a reckoning for public education and its chronic failures, making the very businesslike case that large school systems and the unions that go with them must be replaced by a customized, semi-privatized education in the form of charter schools.

Which is odd when you think about it. If you are looking for an American institution that failed the public, made resources disappear without returning value and lacked accountability for its manifest sins, the Education Department would be in line well behind Wall Street.

By now, the notion that business is a place built on accountability and performance should be as outdated as the one-room schoolhouse. Ask yourself, what would happen if American public schools were offered hundreds of billions in bailout money? One outcome is not in the cards: its leaders would not end up back at the trough so quickly, sucking up tens of millions in bonuses as Wall Street has.

If the captains of American business are looking for a holiday movie, I have another suggestion for them. I’m not talking about “Inside Job,” which is a scabrous take on the well-documented story of how the American economy was nearly tipped over by business greed and incompetence. Nah, I’d buy them a bucket of popcorn and sit them in front of “The Company Men,” a moody and elegiac feature film starring Ben Affleck, Tommy Lee Jones and Chris Cooper as businessmen who have a moment of clarity about how American business lost its soul.

As executives at GTX, a fictitious multinational corporation involved in the transportation business, among other endeavors, they watch as many of their colleagues are laid off to meet inflated earnings targets and as numbers get ginned up to keep the stock price growing and potential acquirers at bay. And then their turn comes.

At that point, “The Company Men” becomes a film about the loss of privilege: Porsches are sold and driven away, access to the private golf club is denied and suburban mansions go on the market. But the movie delivers, over and over, a message that far from being a center of American know-how and ingenuity, much of modern business is now preoccupied with goosing the share price and tricking up the year-end bonus — about getting over by getting by.

The film manages to use the tableau of a bunch of rich guys losing their jobs to reach a fundamental question of this economic age. How can it be that both corporate profits and unemployment are simultaneously high?

“When I made the film, I had hoped it would be a historical document, a portrait of a very bad moment in American economic history,” said John Wells, an executive producer of the television series “ER” and the director of “The Company Men,” who began working on the film in 2007. “Unfortunately, it didn’t turn out that way.”

“The Company Men” reflects that America is no longer in the business of building and making actual physical objects. Instead, all the energy and resources go into the kind of financial engineering that creates quarterly numbers that Wall Street buys into. Mr. Wells said that he spent a great deal of time talking with chief executives who run large concerns like his movie’s fictional GTX and said only so much of the blame can be laid at the corner office.

“They are responding to the needs of the market, to the institutional investors — the large mutual funds, the money market funds,” he said. “And when you think about it, that implicates all of us because we are all investing in the market one way or another.”

The movie resonates in the current moment because each day it becomes more clear that the guy at the bar who mutters into his whisky glass about the game being rigged is probably right.

On Dec. 12, my colleague Louise Story chronicled how nine men from various banks meet in secret every month to oversee, and in some aspects control, trading in derivatives, the arcane and often lucrative financial instruments that are used to hedge risk. As her article makes clear, the opacity and secrecy of the systems give banks the upper hand and leaves at their whim the market’s less pedigreed players.

It is a small slice of a large problem of self-dealing and self-enrichment on Wall Street, often at the expense of the rest of us. Decisions made there land hard in the middle places where most of America lives and works.

“You know that show ‘Undercover Boss?’ ” Mr. Wells asked, referring to the hit television show on CBS. “I’d like to see a show called ‘Undercover Investor’ where investors go undercover and get a good look at the companies that are being decimated by restructuring plays and roll-ups.”

He added: “I think so many people are seeing business and how it is conducted in the abstract that they have no idea about how these decisions play out.”


16 Responses

  1. […] This post was mentioned on Twitter by Eva Miranda, Financial Wellness. Financial Wellness said: COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary Notable Quotes from article: Re… […]



  3. Lawyers, two former Deutsche Bank employees and the former chief executive of accounting firm BDO Seidman LLP. Two people pleaded guilty in that case.

    As part of its agreement Tuesday, Deutsche Bank agreed not to be involved with any type of prepackaged tax products and to adopt an ethics and compliance program. The bank also agreed to cooperate with prosecutors.

    Under the agreement, Deutsche Bank admitted it knew or should have known that the transactions underlying the shelters were “intended to create the appearance of investment activity, but taxpayers were entering into these transactions for the primary purpose of avoiding taxes, as opposed to making profits on the transactions.


    NEW YORK—Deutsche Bank AG agreed Tuesday to pay $553.6 million and admitted criminal wrongdoing in a long-running probe over tax shelters that prosecutors claim generated billions in false tax losses.

    Under a nonprosecution agreement with the U.S. Attorney’s office in Manhattan and the Internal Revenue Service, the German bank won’t be prosecuted for its participation in about 15 tax shelters involving more than 2,100 customers between 1996 and 2002, including shelters marketed by accounting firm KPMG LLP and defunct law firm Jenkens & Gilchrist PC.

    “Customers used the transactions to generate more than $29 billion in bogus tax benefits, mainly losses,” according to the agreement.

  5. Although demonstrating in the streets in support of foreclosure victims and the fraud perped on them is a valid demonstration against the injustice, there’s a much bigger issue that needs to be taken up that would solve the all of the problems.

    And as has been discussed many times on this website, modification, which will for sure be the culmination and “fix” called for by the 50 Ag’s inquiry, after forcing the banks to cough up an insignificant amount of damage dough, this simply “renews” fraudulently based contracts that aren’t worth the price of the paper they’re printed on. This will also have no effect on the underlying rot.

    Austerity measures, which are spreading across the globe like a severe pandemic simply cause pain, without addressing the reasons for austerity in the first place.


    All of society’s ills are the result of theft on the most massive scale ever before seen. The only way to return our society back to a healthy vibrance is to wrestle OUR money, our assetts, our ability to shape our future back from the elite who think they hold all the cards.

    There’s simply no other way. We must take control of our money away from the criminals who have pillaged the planet with their abject greed. Only then can we grow our economies. We would then be able to live in an assett based world, rather than in a debt based world. Usury is the underlying rot that is decaying every one of us, our homes, our jobs.

    There is nothing immoral about refusing to honor fraudulent agreements. Whether it’s a faulty mortgage document, or a state’s loan from Sacs or B of A. You can’t borrow money to pay off a debt! It doesn’t work that way, no matter what Ben Bernanke may tell you.

    Our government is using a credit card that we never co-signed on, but was taken out in our names, with our yet unborn children as co-signers as well. They are borrowing our money from the banks and paying the banks interest in the process. And they aren’t even making the minimum monthly payment, so the debt keeps climbing. The banks are laughing all of the way to…the freakin’ banks!

    The insanity will stop, either through all of us coming to our senses and changing the rules, or through a collapse that will cause such massive damage as to linger on for a century, easy. Now’s the time folks.


  6. b davies,
    Other than the simple fact that all attorneys are scum, Esquires are unconstitutional liars etc.. have you ever been to Laguna Niguel? The district judge who threw my case out lives there, IT’S BEAUTIFUL (I’ve been to the Ritz Carlton there). There’s no way in hell judges are going to let her keep that house (even if whatever bank said “ah forget about what you owe, let’s say we’re even”). Judges, Sheriffs, DAs, AGs, etc… they’re all real parties in interest (and they are well aware of this) because their pension funds are heavily invested in MBS and in case you haven’t noticed (like everyone else) IT’S AFFECTING THE WAY THEY RULE ON CASES, like disregarding the law when on the borrower’s side.

    Just watch, when the time comes all of their pensions will be seized due to criminal forfeiture for their complicit involvement and attempted concealment. This was all a trap, and they fell for it. Part of the plan was to get rid of the current powers that be in all 3 branches so that the [blank] bankers can take their place and obtain even more power. Come on now, why no judicial nominations?

  7. We can see where the uncontrolled and uncontrollable greed has brought us. Most of you don’t believe that there were great civilizations that went to destruction in the past. I can assure you there were. We are on the way. It is not just the United States. It is a worldwide form of dementia that will make the whole planet blow up, and it has happened before. The human race has still a way to go in its evolution. We are not “there” yet. Enough people have not learned that immoral, illegal practices do not work. They work for awhile and then they blow up. The population of the planet is way too big as well. Mother Nature will not stand for that either. Move your American money to precious metals. Metals retain their value. The American dollar is about to crash. The mortgage and fraudclosure meltdown is majorly contributing to the downfall of humanity.

  8. Italy seizes banks assets..

    California lead the way in California

    We need nationals from Spain Italy Britain to start filing criminal and civil lawsuits against the Banksters.

  9. As a former NY’er and a descendent of Wall Street traders, I can tell you that we the people should take control back. Wall Street like everything else is what we make it. It is a reality that seems to be shrouded in mystery and mysterious dealings but we as Americans opt in for the shady games, because we all secretly want a piece of the action. We have made it ok for banks to rape us and investors.

    True change will come when the American people start pulling their money back. When they realize that they can manage thier own money.

    At this point “go to the mattress”, keep your cash on hand for awhile and educate yourself on how to invest your own money.

    No one ever thought that the tobacco industry could be brought down, but it was, and the same can happen to Wall Street and the banks.

    It is our responsibility to ask questions and be diligent when it comes to finances. We should not bury our head in the sand and ignore the situaiton.

    We can take this country back but it will require that we adjust our attitudes and return to a simpler way of life!

    Bravo to the NY Times for thier excellent pieces on the American mess!

  10. There is also Naca

    for whatever they are worth.

    California is behaving like a bankrupt State.

  11. nice post

  12. California also has the highest unemployment in the nation or close to it 12.5% or higher.

    California has such a high debt and nothing to show for it. The Goldman Sachs etc… underwrite the debt for California.

    California will have a new Attorney General who ran on fighting Predatory lending let us see.

    Great article B. Davies. as usual.



    California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time.

    Now they face yet another obstacle: hiring a lawyer.

    Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

    “They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

    Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts……………

  14. […] See the article here: Declining American Dream Undermines Our Currency and Our Society […]

  15. A couple big red flags will be the finale of the current banking absorption to into the global scale puppet masters above it, as in the 1930’s on a national level, the final global “buy”, outside of dead American markets, with the dollar at it’s apogee before it of course plummets into the global abyss of worthlessness, which will of course affect everything, but the core to drive this mess, will be fueling, not only the motors, and cities, but the people themselves.

    Fuel energies, in all forms, will become very inexpensive, and affordable, and soon distributed for free! J/K, the opposite will occur, and all the moss dependant, and “growing” on the American rock, will also plunge to the depths of dark, irreversible history of cosmic justice and reality.

    This is why I say, spend your money while it’s still worth something, and don’t expect money, in itself, to be of much use in the coming days.

    Right? Isn’t this where our math is leading? 0

    No! We got the golden age up ahead, paradise up ahead, the full fruition of the American dream up ahead, and happily ever after up ahead, peachy good times up ahead! We will be just fine when this dern economy comes out of the dip, and all the banksturbators bring back the trillions of dollars they swindled from America’s trove over the last 30 years, in fraud wars, and “secured” schemes, then we can shoot some golf, consume as much as 1000 other global inhabitants per zombified American capita, and be the pinnacle of earths moral and performance oriented inhabitants in our own self right fantasia! Cool! LOL, not…

    Wake up now everyone. We just made the entity which made greed a science and a worshipped institution, Wallstreet, the caretakers of our former wealth and future security. It won’t be there when you need it for real, and even if it was, it won’t buy much.
    Let’s read the writing on the wall…street….Game over

  16. Wall Street, and the Whitehouse, and other visible hands, in the sleight of global scale transparent banking, are just distractions. This does not just happen, it is designed, engineered and deployed.

    America, as so many have written in books I started to notice in the late eighties, is now an illusion of lines defining a nation, but in fact, it has become a state in a global “nation”, and so has China, Russia, Europe, etc.

    This is why the “wealth” being drained from here, to the “new Americas” of India’s and others emerging middle class future profit machines, and other things, are where also another weird symbol turned illusion is buying tangibles, and is repeating the same process that has brought America here, with projections of course, of it not happening over night.

    The next waves which will smash Americas commercial and retial real-estate and finance, is coming. This is not a slump, it’s a structural, non-cyclical evolutionary metamorphosis of industrial extinction through unsustainable spreading and decaying conurbation cancer called our system infrastructure. Going broke, dilapidating, greed demented, delusion.

    Now I know it sounds crazy, but a great plunge awaits, even if the boyancy of these last bubbles to burst keep us bouncing a bit, they still have to pop, and mountains of printed money won’t stop a thing, in fact it will exacerbate the condition – A classic repeating pattern. I think, with a little honest appraisal, the whole world can see where we are heading, down the other side of the bell curve of corrupted power in action, real-time, driven by blind guides, focused where they have been directed to focus, the props of common philosophic stagnation.

    Right? LOL, not…

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