Man, you gotta hand it to these guys. The Real Big Money Boys. As Michele Bachmann said—they got the shootzpah.
The con they’ve been running for the last twenty, thirty years on us little people—consumers, laborers, middle class marks, taxpayers, and a whole spectrum of unfortunates? They just doubled down on it. Betting we won’t notice.
They’re taking it international.
Big drop in markets last few days, have you heard?
S & P downgrade? Yeah, that had something to do with it. Because it reminded markets that criminally incompetent morons (the ones who downgraded residential mortgage-backed securities in 2007, neglected to downgrade the CDOs--made up of those very same RMBSs--until six months later) still occupy an exalted and responsibility-immune place at the financial decision-makers table.
The debt deal? Yeah, that also had something to do with it. It demonstrated that the country’s government is run by idiots who cannot distinguish between “we can’t pay our debts” and “we won’t pay our debts.”
But something bigger is going on.
This flameout of markets is merely prologue to another chapter of the Big Con, in which we transfer the remaining nickels in our pockets to the Real Big Moneyed Boys.
This is just the next play in the Big Con.
You still remember how cons work, right? You set up a big store, hire a believable mob to run it as though it was legit, and start trolling for marks. Looking out for greedy people, or scared ones, or both. Convince them of some bullshit line, the incentive for them to suspend disbelief.
The hustle is the same, whether the ripoff is finance, government, or drugs. In the background you see Sonny and Tubbs, and you seem to hear the song: It’s the lure of easy money, it’s got a very strong appeal.
So there’s this con, called the rag, in which a phony brokerage office is set up, ostensibly for investing, actually to relieve the mark of his or her money. Like the racing book in the Sting, but with stocks instead of horse racing.
You may also recognize it from, say, the recent history of Goldman Sachs, from when they urged their marks, er, customers, to buy crap Goldman had sliced and diced, folded and refolded like crap origami, so the crap looked like AAA securities. Alas, those mortgage backed securities were the investment equivalent of the tissue paper bankroll the hood ends up with in the take-off that starts the action in the Sting.
Goldman insisted they were just victims, too, and thus deserved the massive bailouts and free money the feds (that means you and me, fellow non-corporate taxpayers) extended.
You may recognize it from the entirely phony run-up of stocks over the last two years. You see a robust economy anywhere? Any companies over that period thriving, in the long-term, building-a-future, hiring-people sort of ways?
This is the great double-switch con. Where you make money on the front end, fleecing schmucks and charging them vig on every transaction. And you make money on the back end, getting other schmucks to reimburse you for the loan repayments you knew would never be made in the first place.
The international extension of the con is now underway.
So we learn Greece is in trouble. It turns out that the EU, European Central Bank (ECB) and the bailout organizations, the IMF and EFSF (European Financial Stability Fund), have spent the past three years trying to figure out how to let the big investors and banks not take any losses on the shitty loans. Greece can’t possibly repay them, but just as in our mortgage mess, the banksters would rather foreclose (and eventually get pennies on the dollar) than renegotiate the principal to an amount the poor laid-off borrowers can pay (leaving the banksters with quarters on the dollar).
Why? Because the foreclosures leave them with the asset, and there is always the possibility that if the losses are big enough, government will step in to rescue the banks.
A classic (and familiar) case of banks socializing their losses. As risk consultant Satayajit Das notes,
The central premise of the EU plan is not to reduce debt. It replaces private lenders with official lenders, who are increasingly being subordinated to - that is, ranking behind - private lenders, as they get paid out after banks and other investors….allowing them to minimise losses by transferring the major proportion to European taxpayers.
The Real Big Money Boys also insist the people of Greece undertake austerity measures. These are sold to the audience as punishment for Greece letting their debt get so big. (This kind of thing plays big in the puritan heartland: Hear the echoes of the republicans blaming the housing mess on Fannie and Freddie, because they insisted on giving home loans to deadbeats, i.e., people of color?
Of course, there’s a problem with austerity measures. They haven’t magically made Greece’s problems go away. And they won’t. Fact is, they’ll make the problems worse. See, when you go all austere on a country, it throws people out of work, and there are fewer people paying less taxes, which makes the debt even bigger.
But the Real Big Money Boys persist in saying what’s needed is even more austerity. Because, um, don’t you know, the Greeks are lazy, spendthrift, and irresponsibly ignorant of how self-government works. Plus, they have unions. Maybe the Greeks should even think about auctioning off, say, the Acropolis to help rescue the poor rich sonsabitches who had the grievous misfortune to loan out money to the deadbeat Greek government, aka the Greek people.
And therein lies the Real Big Money Boys’ Big Plan: to own everything. Ever damn thing. So you would have to pay fees to use anything, rent to live in it, vig to participate.
This is what they are after.
Not to grow a company, and have it thrive. Not to create innovation, to be an entrepreneur, a “job creator.”
But to be the owner—what economists call the “rentier class.” The folks who get money every time you or me need or use something. It relieves them of all that messy and exhausting hard work. And that risk stuff.
This con is so great it can be run over and over again. Create emergency. Check. Crisis. Check. Bailout. Check. Sale of assets. Worked in Ohio, and Chicago, and Michigan, and it can work worldwide.
It finishes the transferring of wealth, in its fourth decade, to the Real Big Money Boys.
And don’t worry—won’t nobody call the cops. The judges and cops are getting their cut.
The fix is in. Hunker down.