Goldman Sachs’ sick con: How they made money off your misery
Last edited Sun Apr 6, 2014, 06:50 PM - Edit history (1)
In the financial crisis of 2007-08, Computer Business Systems (CBS) performed on a much bigger stage than any we have encountered so far. The scope and impact of the systems extended beyond the corporate and the national to the global, and the damage inflicted was correspondingly great. In the financial crisis, CBSs and their constituent technologies came together with an unprecedented malignancy. The operations of Wall Street’s mortgage machine before and during the crash, and the role of CBSs within the machine, closely fits what Joseph Schumpeter called the “mechanization of progress,” whereby innovation becomes “depersonalized and automated” and “bureau and committee work” replaces individual actions and judgments.
The Wall Street machine relied on information technologies to create a virtual assembly line on which something as simple as a single subprime mortgage at the start of the line could become by the time it reached the end a molecule within a financial derivative so complex that it was beyond the powers of the IT systems themselves to manage or keep track of. Amid these highly complex IT systems, it was easy to forget that this vast, inverted pyramid of financial manipulation pivoted on the creditworthiness of countless middle- and lower-income families obtaining mortgages for the first time for homes they could ill afford.
As with the making of Ford’s Model T, the making of a financial derivative moved through multiple stages, with each stage responsible for adding an essential component to the product. On the Wall Street line, in contrast to Ford’s, these way stations were also independent financial agencies, each exacting hefty fees and markups as the product passed through its segment of the line. The U.S. government—J. K. Galbraith’s “countervailing power”—which might have set limits on the machine’s operations, was in fact actively working on the machine’s behalf. In their book “Thirteen Bankers,” Simon Johnson and James Kwak show in detail how the regulatory regime that allowed the machine to run amok was as much the work of Wall Street Democrats such as Robert Rubin and Larry Summers as it was of Reagan Republicans such as Donald Regan and Senator Phil Gramm of Texas.
http://www.salon.com/2014/04/06/goldman_sachs_sick_con_how_they_made_money_off_your_misery/?utm_source=twitter&utm_medium=socialflow
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Once again, the serfs get the rope and the lords and ladies are still sippin there champagne ... I hope for not too much longer ...
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