Finally...?

The CRAs are FINALLY going to be scrutinized beyond the dog and pony show that was put on over a year ago. BUT, just as Andy Cuomo was limp-wristed then, if you read this article you get a sense that they STILL don't know what to go after them for - or an even scarier scenario, won't. Even after having incriminating circumstantial evidence about that jerkoff Shin Yukawa - god, why does he have to be Japanese??? - they didn't take care of the basic problem of fraud as a result of the conflict of interest arrangement that is the way the CRAs are paid - by the banks themselves - that is at the heart of this entire disaster that is EM08.

And it's even money - at best - that they will nail them or the banks.

Any pretense to hope is long gone with this administration and for that matter, all of these politicians, who, day by day, are killing us, and not so softly anymore. My, if Enron, Andersen, Worldcom, Global Crossing... are ancient history, it's no wonder that no one remembers "Deep Throat"'s dictum of follow the money.

I'm also a bit surprised that Gretchen Morgenson, who contributed to this article and is one of the journalists/analysts I advocate reading, isn't harping on this, one of the most fundamental contributors of the escalation of the dark derivatives market.

Last, words are important; notice the title and the portion, "Prosecutors ask..." Excuse me??? Since what snowy day in hell did lawyers ask in opening a case, particularly prosecutors? They accuse and allege, yes, but... ask? What is this, Miss Manners?

"Excuse me, Mr. Blankfein, but did you pay for your ratings, and could you please pass the pate'?"

http://www.nytimes.com/2010/05/13/business/13street.html?hp

May 12, 2010
Prosecutors Ask if 8 Banks Duped Rating Agencies
By LOUISE STORY
The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.

The investigation parallels federal inquiries into the business practices of a broad range of financial companies in the years before the collapse of the housing market.

Where those investigations have focused on interactions between the banks and their clients who bought mortgage securities, this one expands the scope of scrutiny to the interplay between banks and the agencies that rate their securities.

The agencies themselves have been widely criticized for overstating the quality of many mortgage securities that ended up losing money once the housing market collapsed. The inquiry by the attorney general of New York, Andrew M. Cuomo, suggests that he thinks the agencies may have been duped by one or more of the targets of his investigation.

Those targets are Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch, which is now owned by Bank of America.

The companies that rated the mortgage deals are Standard & Poor’s, Fitch Ratings and Moody’s Investors Service. Investors used their ratings to decide whether to buy mortgage securities.

Mr. Cuomo’s investigation follows an article in The New York Times that described some of the techniques bankers used to get more positive evaluations from the rating agencies.

Mr. Cuomo is also interested in the revolving door of employees of the rating agencies who were hired by bank mortgage desks to help create mortgage deals that got better ratings than they deserved, said the people with knowledge of the investigation, who were not authorized to discuss it publicly.

Contacted after subpoenas were issued by Mr. Cuomo’s office late Wednesday night notifying the banks of his investigation, spokespeople for Morgan Stanley, Credit Suisse and Deutsche Bank declined to comment. Other banks did not immediately respond to requests for comment.

In response to questions for the Times article in April, a Goldman Sachs spokesman, Samuel Robinson, said: “Any suggestion that Goldman Sachs improperly influenced rating agencies is without foundation. We relied on the independence of the ratings agencies’ processes and the ratings they assigned.”

Goldman, which is already under investigation by federal prosecutors, has been defending itself against civil fraud accusations made in a complaint last month by the Securities and Exchange Commission. The deal at the heart of that complaint — called Abacus 2007-AC1 — was devised in part by a former Fitch Ratings employee named Shin Yukawa, whom Goldman recruited in 2005.

At the height of the mortgage boom, companies like Goldman offered million-dollar pay packages to workers like Mr. Yukawa who had been working at much lower pay at the rating agencies, according to several former workers at the agencies.

Around the same time that Mr. Yukawa left Fitch, three other analysts in his unit also joined financial companies like Deutsche Bank.

In some cases, once these workers were at the banks, they had dealings with their former colleagues at the agencies. In the fall of 2007, when banks were hard-pressed to get mortgage deals done, the Fitch analyst on a Goldman deal was a friend of Mr. Yukawa, according to two people with knowledge of the situation.

Mr. Yukawa did not respond to requests for comment.

Wall Street played a crucial role in the mortgage market’s path to collapse. Investment banks bundled mortgage loans into securities and then often rebundled those securities one or two more times. Those securities were given high ratings and sold to investors, who have since lost billions of dollars on them.

Banks were put on notice last summer that investigators of all sorts were looking into their mortgage operations, when requests for information were sent out to all of the big Wall Street firms. The topics of interest included the way mortgage securities were created, marketed and rated and some banks’ own trading against the mortgage market.

The S.E.C.’s civil case against Goldman is the most prominent action so far. But other actions could be taken by the Justice Department, the F.B.I. or the Financial Crisis Inquiry Commission — all of which are looking into the financial crisis. Criminal cases carry a higher burden of proof than civil cases. Under a New York state law, Mr. Cuomo can bring a criminal or civil case.

His office scrutinized the rating agencies back in 2008, just as the financial crisis was beginning. In a settlement, the agencies agreed to demand more information on mortgage bonds from banks.

Mr. Cuomo was also concerned about the agencies’ fee arrangements, which allowed banks to shop their deals among the agencies for the best rating. To end that inquiry, the agencies agreed to change their models so they would be paid for any work they did for banks, even if those banks did not select them to rate a given deal.

Mr. Cuomo’s current focus is on information the investment banks provided to the rating agencies and whether the bankers knew the ratings were overly positive, the people who know of the investigation said.

A Senate subcommittee found last month that Wall Street workers had been intimately involved in the rating process. In one series of e-mail messages the committee released, for instance, a Goldman worker tried to persuade Standard & Poor’s to allow Goldman to handle a deal in a way that the analyst found questionable.

The S.& P. employee, Chris Meyer, expressed his frustration in an e-mail message to a colleague in which he wrote, “I can’t tell you how upset I have been in reviewing these trades.”

“They’ve done something like 15 of these trades, all without a hitch. You can understand why they’d be upset,” Mr. Meyer added, “to have me come along and say they will need to make fundamental adjustments to the program.”

At Goldman, there was even a phrase for the way bankers put together mortgage securities. The practice was known as “ratings arbitrage,” according to former workers. The idea was to find ways to put the very worst bonds into a deal for a given rating. The cheaper the bonds, the greater the profit to the bank.

The rating agencies may have facilitated the banks’ actions by publishing their rating models on their corporate Web sites. The agencies argued that being open about their models offered transparency to investors.

But several former agency workers said the practice put too much power in the bankers’ hands. “The models were posted for bankers who develop C.D.O.’s to be able to reverse engineer C.D.O.’s to a certain rating,” one former rating agency employee said in an interview, referring to collateralized debt obligations.

A central concern of investors in these securities was the diversification of the deals’ loans. If a C.D.O. was based on mostly similar bonds — like those holding mortgages from one region — investors would view it as riskier than an instrument made up of more diversified assets. Mr. Cuomo’s office plans to investigate whether the bankers accurately portrayed the diversification of the mortgage loans to the rating agencies.

Gretchen Morgenson contributed reporting.

They've Trashed Everything

I'm all for outting so let's name some more names and show faces, shall we? Here they are folks, some of the key EM08 ho-bags whose heads I for one have been calling for; the credit ratings agencies. From left to right, Fitch Ratings' Stephen Joynt, Moody's Raymond McDaniel and S&P's Deven Sharma:


TAKEAWAYS

1. The CRAs provided the AAA investment grade ratings to the "financial products" - read: the cards in the investment banks' version of 3 card monte - based upon the crapass subprime mortgages.

2. That the CRAs gave their approval is one thing. That their payouts came from the investment banks -- the ones who concocted the 3 card monte financial packages! -- is quite another. This is called conflict of interest where I come from. I come from the United States. Unfortunately, we now live in Bizarro world, where things like "conflict of interest" don't exist.

3. The CRAs ho'd for money by committing fraud, and the banks were their pimps. While it's perfectly legal to give one's opinion about something, it's quite another when the government is certifying you as a ratings agency to do so on behalf of the public good.

4. Why is no one in the mainstream press/mass media talking - long and hard - about this?

If you go here you can see their statements given to yet another fancy shmancy committee: The Committee on Oversight and Government Reform, chaired by Edolphus Towns. This happened October 22, 2008.

From Henry Waxman's (my rep) statement:

The leading credit rating agencies grew rich rating mortgage-backed securities and CDOs. ...total revenues for the three firms doubled from $3 billion in 2002 to over $6 billion in 2007. At Moody’s, profits quadrupled between 2000 and 2007. In fact, Moody’s had the highest profit margin of any company in the S&P 500 for five years in row.

Says a lot, doesn't it?

You'll Never Reach Ixtlan This Way

It's strange writing my first post that's not related to Ma. I feel lame doing it, but at the same time the world continues to spin. So, Ma, I know you understand; you want your boy to keep going. I am.

==========================================

CLICK TO ENLARGE & HOPEFULLY LAUGH
Anyone remember this clusterfuck of shitheads?


THE FALL GUY, OR FIRST OF MANY?

Yesterday former BoA head Ken Lewis was brought up on fraud charges, along with former BoA CFO Joe Price:

According to the lawsuit, former CEO Ken Lewis and former CFO Joe Price hid more than $16 billion worth of losses at Merrill from shareholders in order to ensure their approval of the merger. But after shareholders voted to buy the ailing firm, the bank approached the government to demand an infusion of taxpayer cash. Without bailout funds, they told regulators, BoA would be unable to complete the merger. The government capitulated and funneled $20 billion of TARP money into the bank. excerpt @ HuffPo.

My prediction; more pr, more showboating - by both sides, Cuomo and Lewis - and then a slap on the wrist. Lewis will sail off into the sunset courtesy of his golden parachute, aka, truckloads of Benjamins, courtesy of you and I. He won't be as rich as Mikey Milken, but he won't be eating Taco Bell. Ever.


THE QUESTION
While I think Lewis - and plenty of others - deserves to be strung up and looted, my bet is this is just more of Uncle Scam's grandstanding. After all, it's kind of hard to take anything "he" does now seriously and without wondering about trickery. As the saying goes, once bitten, and we're bitten all over.

The ONE burning question I have about Lewis is; what really went down when BoA and Merrill were in m&a talks? Related, what were Bernanke's, Paulson's and Geithner's (let alone Summers' and Dodd's and Frank's) opinions and roles?


A BIGGER POINT
My point is that if you really want to get at the heart of fraud and corruption, then you must address the CRAs.

In regards to the mortgage debacle, one thing stands out: the credit rating agencies, such as Standard & Poor's and Moody's. In other words, the analysts, or referees, this time in the form of credit raters. Because while there are barely six AAA rated companies in America such as Microsoft, ADP and GE, many of these way over-leveraged mortgages (some of these "products" leveraged over TWENTY times!) that eventually blew up and caused the house of cards to collapse were being rated AAA.

I've been saying this for quite a while now, and a few, like Michael Lewis, get it. The truth of the matter is that there is too much money passed around; the banks, whose relationship with the CRAs is a clear conflict of interest, are simply way flush with our cash and buying Uncle Scam's silence. What else could it be if a putz like me sees through this obvious trickery...?


THE RECOVERY WILL BE TELEVISED
The following is a blog/post that I completely agree with. No more happy talk, as evidenced in October of last year.


A GOOD VOICE
So, from a blog that tells it like it is, The Economic Collapse Blog, with my "call and response" below.

Economic Black Hole: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover

Even though the U.S. financial system nearly experienced a total meltdown in late 2008, the truth is that most Americans simply have no idea what is happening to the U.S. economy. Most people seem to think that the nasty little recession that we have just been through is almost over and that we will be experiencing another time of economic growth and prosperity very shortly. But this time around that is not the case. The reality is that we are being sucked into an economic black hole from which the U.S. economy will never fully recover.

The problem is debt. [jp: see point #1, here] Collectively, the U.S. government, the state governments, corporate America and American consumers have accumulated the biggest mountain of debt in the history of the world. Our massive debt binge has financed our tremendous growth and prosperity over the last couple of decades, but now the day of reckoning is here.

And it is going to be painful.

The following are 20 reasons why the U.S. economy is dying and is simply not going to recover....

#1) Do you remember that massive wave of subprime mortgages that defaulted in 2007 and 2008 and caused the biggest financial crisis since the Great Depression? Well, the "second wave" of mortgage defaults in on the way and there is simply no way that we are going to be able to avoid it. A huge mountain of mortgages is going to reset starting in 2010, and once those mortgage payments go up there are once again going to be millons of people who simply cannot pay their mortgages. The chart below reveals just how bad the second wave of adjustable rate mortgages is likely to be over the next several years....
[jp: See point #12 here.]

#2) The Federal Housing Administration has announced plans to increase the amount of up-front cash paid by new borrowers
and to require higher down payments from those with the poorest credit. The Federal Housing Administration currently backs about 30 percent of all new home loans and about 20 percent of all new home refinancing loans. Tighter standards are going to mean that less people will qualify for loans. Less qualifiers means that there will be less buyers for homes. Less buyers means that home prices are going to drop even more.

[jp: Here we go - instead of punishing those who are responsible for pillaging and inflicting this misery on the world, the innocent and defenseless will be punished. Welcome to Bizarro World.]

#3) It is getting really hard to find a job in the United States. A total of 6,130,000 U.S. workers had been unemployed
for 27 weeks or more in December 2009. That was the most ever since the U.S. government started keeping track of this statistic in 1948. In fact, it is more than double the 2,612,000 U.S. workers who were unemployed for a similar length of time in December 2008. The reality is that once Americans lose their jobs they are increasingly finding it difficult to find new ones. Just check out the chart below....


#4) In December, there were also 929,000 "discouraged" workers who are not counted as part of the labor force because they have "given up" looking for work. That is the most since the U.S. government first started keeping track of discouraged workers in 1949. Many Americans have simply given up and are now chronically unemployed.

[jp: As a kid I worked my way through school. With teen unemployment now above 25%, the highest in history, yet another avenue of social climbing has been made more difficult for working class and poor people. Again, the innocent and poor will be punished...]

#5) Some areas of the U.S. are already virtually in a state of depression. The mayor of Detroit estimates that the real unemployment rate in his city is now somewhere around 50 percent.

[jp: Let's be frank; if it's a recession in general then it's a near or actual depression for poor folks, and disproportionately for poor people of color. Like the Katrina disaster, let's at least be honest about how EM08 is playing out along the demographics of race and gender. Then again, as the recently deceased, late great Howard Zinn showed in his seminal A People's History of the United States, when have we ever been honest in this country?]

#6) For decades, our leaders in Washington pushed us towards "a global economy" and told us it would be so good for us. But there is a flip side. Now workers in the U.S. must compete with workers all over the world, and our greedy corporations are free to pursue the cheapest labor available anywhere on the globe. Millions of jobs have already been shipped out of the United States, and Princeton University economist Alan S. Blinder estimates that 22% to 29% of all current U.S. jobs will be offshorable within two decades. The days when blue collar workers could live the American Dream are gone and they are not going to come back.

[jp: Localism is one of the weapons to fight the neo-colonization of the world. Michael Shuman makes a ton of sense to me, along with his org, BALLE.]

#7) During the 2001 recession, the U.S. economy lost 2% of its jobs and it took four years to get them back. This time around the U.S. economy has lost more than 5% of its jobs and there is no sign that the bleeding of jobs is going to stop any time soon.

#8) All of this unemployment is putting severe stress on state unemployment funds. At this point, 25 state unemployment insurance funds have gone broke and the Department of Labor estimates that 15 more state unemployment funds will likely go broke within two years and will need massive loans from the federal government just to keep going.

#9) 37 million Americans now receive food stamps, and the program is expanding at a pace of about 20,000 people a day. The United States of America is very quickly becoming a socialist welfare state.

#10) The number of Americans who are going broke is staggering. 1.41 million Americans filed for personal bankruptcy in 2009 - a 32 percent increase over 2008.

[jp: REMEMBER - The Bush 2 administration's call for re-structuring personal bankruptcy - a very important distinction - that went into effect in 2007 or thereabouts? Notice, corporations can still escape into bankruptcy and leave others holding the bag; look at what the auto companies did to thousands of suppliers recently when they filed. But when it comes down to YOU as an individual, forget it, you're jacked. There were real reasons that was done, most of it lobbying money, and in gambler's parlance, it's called hedging your bet, also insurance. EM08 is proof of the instance where this change in the personal bankruptcy laws are going to have repercussions on the working class.]

#11) For decades, the fact that the U.S. dollar was the reserve currency of the world gave the U.S. financial system an unusual degree of stability. But all of that is changing. Foreign countries are increasingly turning away from the dollar to other currencies. For example, Russia’s central bank announced on Wednesday that it had started buying Canadian dollars in a bid to diversify its foreign exchange reserves.

[jp: Uncle Scam's dollar devaluing isn't helping. The bigger questions though are; 1) What happens when no one wants to buy our bad paper, and 2) when we default on said bad paper? I agree with Peter Schiff; THAT is the Sergeant Pepper's of economic shitstorms that'll make this time look like A Hard Day's Night. And yes, I'm crowbarring in Beatles references. Ya gotta have a lil' bit o' fun when talking doom 'n gloom.]

#12) The recent economic downturn has left some localities totally bankrupt. For instance, Jefferson County, Alabama is on the brink of what would be the largest government bankruptcy in the history of the United States - surpassing the 1994 filing by Southern California's Orange County.

[jp: Shit flows downhill. LA's mayor Antonio Villaraigosa is facing massive record deficits that are engorging historic debt. There are over 30 states now on the brink, led by the world's #6 economy, California. No, that's not a typo. This is one of the elephants in the room that NO ONE - least of all the Governator, is talking about. Our press - what's left of responsible investigative journalism - is a sham and complicit in this regard, only adding to the bad probabilities. See points #7 & 8.]

#13) The U.S. is facing a pension crisis of unprecedented magnitude. Virtually all pension funds in the United States, both private and public, are massively underfunded. With millions of Baby Boomers getting ready to retire, there is simply no way on earth that all of these obligations can be met. Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern's Kellogg School of Management recently calculated the collective unfunded pension liability for all 50 U.S. states for Forbes magazine. So what was the total? 3.2 trillion dollars.

[jp: The Boomers, of which I am one, are going to have THE major role in EM08. Between retirement pensions and medical care, I believe this will have the largest economic impact, even beyond the trillions given and made available to the banks. The social costs, of course, will be historic.]

#14) Social Security and Medicare expenses are wildly out of control. Once again, with millions of Baby Boomers now at retirement age there is simply going to be no way to pay all of these retirees what they are owed.

#15) So will the U.S. government come to the rescue? The U.S. has allowed the total federal debt to balloon by 50% since 2006 to $12.3 trillion. The chart below is a bit outdated, but it does show the reckless expansion of U.S. government debt over the past several decades. To get an idea of where we are now, just add at least 3 trillion dollars on to the top of the chart....


#16) So has the U.S. government learned anything from these mistakes? No. In fact, Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $2 trillion to pay its bills, a record increase that would allow the U.S. national debt to reach approximately $14.3 trillion.

#17) It is going to become even harder for the U.S. government to pay the bills now that tax receipts are falling through the floor. U.S. corporate income tax receipts were down 55% in the year that ended on September 30th, 2009.

[jp: When it gets to the point where the interest on the debt cannot even be serviced, the party's over. Guess where we're at...?]

#18) So where will the U.S. government get the money? From the Federal Reserve of course. The Federal Reserve bought approximately 80 percent of all U.S. Treasury securities issued in 2009. In other words, the U.S. government is now being financed by a massive Ponzi scheme.

[jp: This is a MAJOR point that ALL Americans need to understand. Kudos.]

#19) The reckless expansion of the money supply by the U.S. government and the Federal Reserve is going to end up destroying the U.S. dollar and the value of the remaining collective net worth of all Americans. The more dollars there are, the less each individual dollar is worth. In essence, inflation is like a hidden tax on each dollar that you own. When they flood the economy with money, the value of the money you have in your bank accounts goes down. The chart below shows the growth of the U.S. money supply. Pay particular attention to the very end of the chart which shows what has been happening lately. What do you think this is going to do to the value of the U.S. dollar?....


#20) When a nation practices evil, there is no way that it is going to be blessed in the long run. The truth is that we have become a nation that is dripping with corruption and wickedness from the top to the bottom. Unless this fundamentally changes, not even the most perfect economic policies in the world are going to do us any good. In the end, you always reap what you sow. The day of reckoning for the U.S. economy is here and it is not going to be pleasant.

[jp: Agreed, one hundred percent. But in gambling terms, the probability of those responsible and with the power to turn out all the "wickedness" is a long shot at best. There's simply too much money being thrown around to buy out people. Therefore, one must hedge one's bets in other areas. If you listen to Gerald Celente, about as good a forecaster there is, you better get ready. Or pay the price.]

The Fix

When it rains it pours. By now everyone knows about Madoff's ponzi scheme gone bust, but calling it the biggest theft in history ignores the $700B just handed over on a platter to the banks with no strings attached. In fact, what's tragic is that I heard Chris Dodd himself say that provisions were stipulated for the banks to use the money (in part) for credit. As we all know, that hasn't happened, and the banks instead used and are using the money to go shopping for themselves.

Yup - my bugaboo; further conglomeration.

You think it's bad now that oil, auto, media, and cell phone oligarchs have consolidated, just watch what happens with just a few super banks dominating everything. It's a gambling law: NEVER put all your chips on one bet unless you have "the nuts," the best hand.

Does anyone out there honestly think and can you rationally argue as to how a few super banks is "the nuts," the best possible bet for America...? On the other side of the ledger, that club ("And YOU and me ain't in it," -George Carlin) where the elites sit, they absolutely know what to do: conglomerate!

What's going on is stupefying on a level that would make Marx's and Ayn Rand's heads explode. Well, maybe not Rand's, but you get what I mean.

Long ago, in a financial disaster far, far away, there was a company named Enron who played a game, the game of "now monetize this." And there was a referee, Andersen, to make sure that Enron dotted it's "i's" and crossed its "t's." And there was trickery afoot in Ken Lay's house, and it burned down.

And when the smoke cleared all was revealed - the refs had been in on the fix.

August 31, 2002
Arthur Andersen surrenders its license to practice accounting in the United States. 85,000 people lose their jobs. Nine billion dollars in annual earnings disappears.(1)

Just like the NBA ref who got caught fixing games, the biggest sports story in the past decade in my opinion. Know how much money transacts on Vegas sports books? Some estimate it dwarfs all other forms of gambling.

Yep, Andersen was the REAL story of the fall of Enron. So what does this have to do with Bernie-Boy Madoff? Well, where in the hell were the refs, that is, the SEC???

Michael Ocrant wrote a story in 2001 for MARHedge, which covers the hedge fund industry, about how some traders, money managers and financial consultants questioned Madoff's record of 72 winning months in a row. "When I spoke to them about something not being right … they were adamant — there's no way this could be real," says Ocrant, now at Institutional Investor. "There's no one in history with that kind of results." [sic] He says Madoff smoothly dismissed the questions when he interviewed him at the time. "You could see why people would trust him, particularly since he'd been running a successful business for years."(2)

That's seven years ago that people in the industry knew. Now, if you're a watchdog, shouldn't you at the very least be reading and keeping up with industry trades? And if nothing else, a winning streak of 72 months long is statistically highly improbable. Realistically speaking, it's impossible.

But here's where American capitalism has taken a cue from show biz, of all things. The glitz, the glamour (think Trump, "Lifestyles of the Rich and Famous") and the talking heads, both high and low. Shit, it even has its own channels such as CNBC and Bloomberg thanks to cable's wild west channel fest. In movies it was Hedda Hopper on through to Rona Barrett to Pauline Kael and Noel Burch. The corollary body in finance are the analysts (and journalists, too). Now consider this:

In 1975, deregulation of brokerage commissions opened up a Pandora’s box of competition for securities analysts. Suddenly discount brokerages abounded and took business from investment banks. As trade commissions declined, brokerage firms had diminished resources to fund analyst services. As a result, stock analysts relied less on brokerage fees for income and more on investment banking fees. They began to be judged more for their investment banking skills than their insights or analysis, and this is how what many regard as a systemic conflict of interest was born.(3)

In regards to the mortgage debacle, one thing stands out: the credit rating agencies, such as Standard & Poor's and Moody's. In other words, the analysts, or referees, this time in the form of credit raters. Because while there are barely six AAA rated companies in America such as Microsoft, ADP and GE, the way over-leveraged financial products containing toxic mortgages (some of these "products" leveraged over TWENTY times!) that eventually blew up and caused the house of cards to collapse were being rated AAA, the top blue chip rating.(4)

Bottom line? The present-day game of American capitalism's rigged and, surprise, it's not in your favor. How do we know? Easy; the refs are in on the fix.

NOTES
1. From the PBS series Independent Lens and their page on Enron: The Smartest Guys in the Room. This is from the sub-section, "Enron Timeline: 2002." Despite Andersen's shredding a ton of Enron related documents when under the gun, the fix appears in yet another incarnation, this time as judges. On May 31, 2005, the U.S. Supreme Court overturns the conviction of the Arthur Andersen accounting firm for obstructing justice by shredding thousands of Enron documents. Andersen’s top Enron accountant withdraws his guilty plea when prosecutors drop their case.

2. Financial world still amazed over Madoff's downfall
By David Lieberman, Pallavi Gogoi, Theresa Howard, Kevin McCoy and Matt Krantz, USA TODAY 12/15/08

3. From the PBS series Independent Lens and their page on Enron: The Smartest Guys in the Room. This is from the sub-section, "How the Stock Market Works."

4. 60 Minutes this past Sunday ran a frightening story on the next wave of mortgages set to default, the ones just above the absolute shit sub-primes that we are now experiencing.

The trouble now is that the insanity didn't end with sub-primes. There were two other kinds of exotic mortgages that became popular, called "Alt-A" and "option ARM." The option ARMs, in particular, lured borrowers in with low initial interest rates - so-called teaser rates - sometimes as low as one percent. But after two, three or five years those rates "reset." They went up. And so did the monthly payment. A mortgage of $800 dollars a month could easily jump to $1,500.

Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.

A Second Mortgage Disaster On The Horizon?
60 Minutes: New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default
December 14, 2008 broadcast