RETURN TO CAPITALISM: Don’t Abandon It —The Problem is Fear

Most people have become so fearful that things can only get worse that they are clinging to any vestige of normalcy in their lives, hoping it will last just a little while longer. Here is the truth: the banks have undermined capitalism. Those symbols of free market capitalism have been steadily eroding our capitalist economy for decades. Capitalism depends upon free market forces. Those forces have been corrupted by theft and deceit and have continued because the banks have literally bought political leaders at every level of government. Theft and deceit are not capitalism and they do not excuse illegal acts.

Here is what I wrote to a reader who was lamenting about the unwillingness of judges to venture into the realm of fact and who refuse to reject fiction for fear that it will topple our economy and our society.

Nobody wants to decide these cases. while judges do not understand the complexity of the financial manipulations that were accomplished under the umbrella of “securitization” they do know one thing, to wit: any acknowledgement by the court that the debt was converted to revenue and no longer exists will cause mayhem. the government has told them that, Wall Street is telling them that and it is probably true.

FACT: only a change in the law will enable a party to legally foreclose. Right now before closing party must have paid value for the debt and must own it. In nearly all cases that party does not exist. Thus a foreclosure cannot be legally processed. But in order to change the law, they must also give recognition to the illegal practices of the banks in the past. And that means disclosing to investors what is really happening and disclosing to borrowers what is really happening so that both can bargain based upon real information about real events. and that is something that the banks don’t want. They want to keep all the money for themselves. As a result the winds of free market forces are blocked and gross inequalities emerge.
A glance at litigation dockets shows with certainty that neither investors nor borrowers would have made a deal if they really knew the terms of the deal. The investors had no idea that only a portion of their investment would be used for loans and the borrowers had no idea that the named lender was not the lender and that millions of dollars in revenue were being generated off of that one loan.
The fact that the burden and financial losses fall upon the only two parties who were actually involved in a financial transaction — the investors and the Borrowers —- and that the financial gains flow mainly to the investment Banks is known by people who make policy but they really don’t know what to do about it. Their fear is that if they do something about it the entire Financial system will collapse. if the entire Financial system collapses then it is thought that Society will collapse.

What they don’t realize is that the collapse will mainly fall on the major players in securitization and that when the dust settles, if the government simply enforces its existing laws and regulations, the major players may fail but everyone else will be in better shape. It will take great courage to go down that path. The banks have bought off virtually everyone in government at federal, state and local levels. It can be done and frankly it must be done. There will be pain because we have let this fester for 20 years. But in the end we will have healed a major disease in our economic and social system.
There are many economists who take a different view about the apocalyptic vision That Wall Street projects in the event that they are challenged for their illegal practices and the government claws back ill-gotten gains. The simple truth is that we already have over 7000 alternatives to the commercial banking services provided by the Mega Banks. And we have hundreds of alternatives for investment banking ranging from small boutique Investment Banking companies too much larger and more influential Investment Banking companies that we’re not involved in the securitization scheme. The electronic backbone of our payment system is already serving all 7000 Banks and credit unions and savings associations. The actual change will be in control of that system so that no one Bank or small group of banks can dictate the terms of commerce in the marketplace. In other words, it is a change back to capitalism and free market forces.
By ending the dominance of the major Banks, we will be correcting inequalities in the marketplace that have corrupted free market forces. In plain language, it is only when we can stop a dominant Bank from looking at investors and borrowers as food that we will have a free market. Capitalism depends on a free market. Banks have been undermining capitalism. They have weakened the fundamental elements of most Financial transactions. we must end that. And the only way that we the people can do that is by electing those people who have the courage and the support to actually change the dynamics of the marketplace so that everyone is trading on an even playing field — or something close to it.

One Response

  1. Ha! LOL…
    “Or something close to it”
    Interesting end to a good presentation for a possible solution. I would have to add to your desire for free market capitalism… “Regulated”. I have repeatedly seen the results when it has not been regulated… Money chasing the next big win… Every bubble, speculation, the next promise of winning the lotto. (And how many “win”?)
    How could it be a level playing field if those that write the laws, nearly always write them to favor themselves and enablers. Or special interest lobbyists that write the rules being the determining factor, yes?
    Public banking comes to my mind as a viable alternative to the “status” quot. Take the privatized gains for corporations/wall street, off the table. Put the socialized liability of their actions back in the corner of the perpetrators where it belongs. The “real costs” of their contributions (profits) far offset the gains privately made….Anyone ever crunch those numbers? Socialized Superfund sites come to mind. How many? Who is footing the bill?
    Nearly all of this planets problems were business decisions. Let the results of those problems be squarely placed, attributed and paid for by those responsible. What happened to corporate responsibility to all of U.S., instead of corporate/legal mandates of profits above all else? Is there not a gauge of sorts that can identify the real costs to the environment, people and the planet from wanton pollution, habitat damages, human suffering, BEFORE legislation is passed? (Oh, I forgot. We do have those protections in place, (FDA, EPA ) except they also have fallen/been thrown under the bus) and have been co-opted by corporations/wall street, and banks. The best government money can buy.
    Any ideas, solutions? Let’s put them on the table so we can vote on them. Isn’t that how Democracy is supposed to work? I think we all have much more in common with each other than not. Let’s Make caring for each other and the planet more important than profits.

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