How Wall Street Scams Counties Into Bankruptcy

[marmar]

(Bloomberg) Lord knows we’ve had more than enough scandals ginned up by Wall Street over the years, and the message that banking executives proclaim after each is: “Don’t worry, we’ve learned that lesson, and it will never happen again.”

Which is how we got to the recent spectacle of Jamie Dimon, the chief executive officer of JPMorgan Chase & Co. (JPM), testifying twice before Congress that although the bank’s chief investment office was taking huge proprietary risks with some $350 billion of its depositors money -- and lost $3 billion (and counting) by making a bunch of risky bets on an obscure, thinly traded derivatives contract -- everything is now fine and dandy because the unjustifiable gambling has been stopped dead in its tracks.

We were, of course, told pretty much the same thing after the collapse of the junk-bond market in the 1980s, the collapse of the Internet initial-public-offering market in the 1990s, the collapse of the telecom debt market in the early 2000s, not to mention the scandals over IPO spinning and laddering and the ones involving the trading of favorable corporate research for investment-banking fees.

We are told repeatedly that when Wall Street’s deeply flawed incentive system leads to one bad outcome after another, year after year, it will never happen again. Yet it does. And you can add this vital business to the list: The way state and local government officials hire Wall Street firms to raise the billions of dollars their municipalities need to build schools, hospitals, airports and sewers, and provide other essential services. ....................(more)

The complete piece is at: http://www.bloomberg.com/news/2012-07-01/how-wall-street-scams-counties-into-bankruptcy.html

[OnyxCollie]

1. K&R. nt

[bemildred]

2. Wall Street view government as a piggy bank. nt

[dixiegrrrrl]

3. Very important to know, it affects all of us at the county level.

[unc70]

4. Wall Street $$, ctrl via bonds, government debt, inadequate tax revenue. Reason for Bush Tax Cut!!

Last edited Sun Jul 8, 2012, 01:42 AM - Edit history (2)

Wall Street's power, wealth, and control is from government bonds, from how they really work, the large hidden costs to the governments involved, the growing risk of another financial collapse, how untaxed wealth invested in bonds realizes as capital gains all excess cost to government from using bonds for borrowing, and far more.

When stripped bare of all efforts to hide the truth, of all the false outrage, then what is left exposed should outrage us all, anger everyone among us, whatever their political party, religious belief, economic status, age, race, or anything else.

Finally, I will explain why I believe that the threat to Wall Street from paying down the National Debt, drastic decline in new bonds, in safe havens, etc. -- why this threat was so great that creating a deficit was paramount, and reason behind Bush Tax Cut. Unfortunately, we also got huge unfunded Medicare Drug program, 9/11, wars, deregulations, derivatives, swaps, program trading, and such complexity and rate of change that evaluating risk is not possible, not even theoretically

Will post more later EXPLAINING BONDS and their traps

Here is a general discussion (rant) about Wall Street in general from my DU2 journal:

[link:http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=8097220&mesg_id=8102129|