Nearly a year ago, on October 30th, 2007, I first began petitioning Congress with the following message (among others):
"Congress MUST NOT bail out – under any circumstances – mortgage companies and investors who voluntarily entered into risky mortgage and derivative contracts during these last several years due to lax lending standards, poor due diligence or as a matter of business policy. Failure must be allowed irrespective of the damage done to these firms, because only financial failure serves as an effective check and balance against excessively risky behavior and greed. The practice of intentionally making problems “really big” in the smug knowledge that you can take ill-gotten profits and lay off the risk on society has led to a series of economic disasters that have been “charged off” on the American Taxpayer, going back to the S&L Crisis.
Congress must act to ban all off-balance-sheet “conduits”, SIVs and similar schemes, and require that any and all liabilities be properly and completely reported both to regulators and shareholders. These vehicles create an intentionally-false view of firms’ financial condition. In effect, these vehicles serve to fraudulently manipulate a bank’s balance sheet by hiding debt. These are the same accounting tricks that were instrumental in Enron’s bankruptcy. Now, on the front page of the Wall Street Journal (October 13th) we learn that Secretary Paulson is actively involved in attempting to expand this deception! "
Since then we have seen multiple petitions, all of which are chronicled at SupportedTheBailout.Org, and all of which have been largely ignored.
It is willful ignorance of these petitions that leads us to being where we are in this economic crisis.
It is willful ignorance of the facts that has caused your 401k and IRA balances to decline by nearly forty percent, lending to constrict the point that we are threatened with another Depression, and unemployment to skyrocket.
Ben Bernanke claims to be a student of The Depression and has written a thesis paper on it - one that I have read, and, in my opinion, have found to be indefensible. Of course when your defense is heard by a bunch of monetarists who believe that "the answer to all crunches in liquidity is more liquidity", you pass. Such is the ivory tower world, which unfortunately is rather disconnected from the world that those who must "do" in order to survive (instead of "teach") live in.
But Anna Schwartz is no ordinary economist. Nor is she an ordinary student of The Depression.
She, at 92, is one of the few people who actually lived through it and remembers what it was like, never mind quite possibly knowing more about monetary history, theory and the actual practice of banking than anyone alive.
She is co-author (along with Milton Friedman) of the 888-page time "Monetary History", a book that Ben Bernanke himself has said is "the leading and most persuasive explanation of the worst economic disaster in American History."
And today, in The Wall Street Journal, she calls a spade..... a spade.
Let's use her words, of course, attributed:
"We now hear almost every day that banks will not lend to each other, or will do so only at punitive interest rates.
