That “Last Tango…” blog of mine (December 27th) could do with a little explanation: It was a bit of fantasy, folks – stirred up by a few Christmas Day conversations over the Bernie Madoffs of the world and the lack of ethics and regulation that have dogged our country’s financial dealings and securities markets for the past ten years or so.
‘Uncle Sammy’ was meant as a fictional character, as was his snowy country home. And his Christmas Day visitor, my first person stream of consciousness narrator, wasn’t me but a somewhat self-indulgent and naive relative of Sammy’s, who was undoubtedly part of the Uncle’s investment team.
It’s also easy to see that in creating Uncle Sammy I was also thinking of Karl Stohner, the villain in my novel “3 ACES,” who Thomas Livingston – to whom I am indebted for a positive and thoroughgoing Amazon review – referenced as “the most vicious villain in modern American fiction.” The difference with Uncle Sammy is that he appears to be a rather jolly and jovial fellow, but such an un-villainous flaw might simply be ascribed to the mood of the holiday.
Somewhere, possibly out on Long Island, maybe up in N.Y.’s Westchester County, or perhaps out in far, far rural New Jersey, over the Christmas Holidays dozens of Uncle Sammys were enjoying the fruits of the greatest financial ripoff in history. The damage done to our banking system and major banks throughout the world by such Uncle Sammys is nearly incalculable. Billions of dollars of bad mortgage bonds and trillions of dollars in notional value of derivatives thereof, have been sold to hedge funds and large commercial banks by Wall Street Investment bankers, and those securities were rated highly by rating agencies who most certainly should have known better. Then collateralized loans were made by those large commercial banks, facilitated by a so-called ‘Shadow Banking System’ which lodged many of those loans and securities offshore – off the books – inflating the debt structure (often as much as 30:1) and making it untouchable by whatever or whomever was left of our shattered regulatory system. Leaving in the lurch any oversight from Federal Reserve governors, the U.S. Treasury Department, Congress, or the Executive Branch of our Federal government.
And where were they?.. as Bear Stearns, Merrill Lynch, Wachovia, AIG, Fannie Mae & Freddie Mac, and finally Lehman collapsed. Incredible! More interesting is the fact that no one yet has been prosecuted, and that three of the investment banks who bundled, sliced, diced, and sold those billions and billions of bonds have suddenly disappeared – the surviving investment banks quickly reincarnated as commercial banks under the banner of the Federal banking system.
Where does that leave us as taxpayers? We are being asked to foot an overall bill that, so far, and by several reliable estimates, is reaching in the neighborhood of 7 trillion dollars (that’s $7,000,000,000,000). A smaller chunk of that sum ($350,000,000,000) has been printed up and sent to the injured banks to stiffen up their books and free up their frozen will to lend. But, as of this date, there has been little or no interest from them in making any such loans. How much more will it take for them to gain “trust” in their fellow bankers and their customers ability to repay so that things will get moving again? If you were such a banker, where would YOU lend it? – to the U.S. automakers?
A few days before Christmas someone handed me a copy of Elie Wiesel’s “Night.” Maybe this tightly written horror story of a child’s brutal voyage to Auschwitz and terrifying incarceration in Birkenau concentration camp is what got me thinking… Do I grow my own food? Can I pump my own petrol from a backyard well? What if my source of income ceases to exist? Do I trust my local, state and federal elected officials to assist me and my family should I fall seriously ill, fail to meet my house payments, or find myself without the ability to place food on the family table? Are my elected officials on their way to me with a personal tax refund, a bailout check for several billion dollars – or might it be the other way around?
Next week – an idea or two on where we might be headed and how to cope.
