A psychologist wrote an essay published by the Wharton School of Business arguing that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable: According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust.

"Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG." The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. "Normal expectations of what is safe and dependable were abruptly shattered," Sachs noted. "As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred."

http://georgewashington2.blogspot.com/...

Repeat: Normal expectations of what is safe and dependable were abruptly shattered. And what is more, is that they continue to remain shattered, so Americans are like one of those old worn out boxers/fighters in the ring, that has been suckered punched so many times, that their brains have been fried and they are ready to go down for the count because their so called leaders, in both parties, simply continue to sucker punch them when they are already on their knees.

As I've said so many times: The Shock Doctrine Never Sleeps.

I've used the analogy in the past that America is like a runaway train with no brakes, but I would like to extend that analogy to include that now, the middle class and poor are also like a train that has already crashed and burned and gone off of the rails. We sit helplessly, cowering in fear and revulsion as we sit among the wreckage of our train wreck, while watching the Oligarchy pass us by on the luxurious Orient Express Train on its way to Switzerland, where they can 'hide' their money, laughing at us from the windows of the Club Car, while drinking Dom Pérignon singing God Bless America.

Virtually all independent economists and financial experts say that rampant fraud was largely responsible for the financial crisis. See this and this. But many on Wall Street and in D.C. - and many investors - believe that we should just "go with the flow". They hope that we can restart our economy and make some more money if we just let things continue the way they are. But the assumption that a system built on fraud can continue without crashing is false. In fact, top economists and financial experts agree that - unless fraud is prosecuted - the economy cannot recover.

Nobel prize-winning economist Joseph Stiglitz says about the failure to prosecute Wall Street fraud: The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that's really the problem that's going on. I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That's the point. There were victims all over the world. Economists focus on the whole notion of incentives. People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties. Economics professor James Galbraith says: There will have to be full-scale investigation and cleaning up of the residue of that, before you can have, I think, a return of confidence in the financial sector. And that's a process which needs to get underway. Growing inequality is very harmful to our economy. Indeed, if wealth is concentrated in too few hands, the "poker game" ends, as one or two fat cats are left with all of the chips. See this, this, this and this. Fraud benefits the wealthy more than the poor, because the big banks and big companies have the inside knowledge and the resources to leverage fraud into profits. Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market. The giants (especially Goldman Sachs) have also used high-frequency program trading (representing up to 70% of all stock trades) and high proportions of other trades as well). This not only distorts the markets, but which also lets the program trading giants take a sneak peak at what the real traders are buying and selling, and then trade on the insider information. See this, this, this, this and this. Similarly, JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country's derivatives risk, and 96% of the exposure to credit derivatives. They use their dominance to manipulate the market.

Fraud disproportionally benefits the big players (and helps them to become big in the first place), increasing inequality and warping the market.



http://georgewashington2.blogspot.com/...

For a full understanding as to why our nation will not recover unless trust and confidence are restored with prosecutions of those responsible for our nation's downfall, please read the entire article at the link I have provided.

Our nation is now in a state of deep gridlock, held by a Oligarchy in an ever squeezing vice that keeps getting tighter and tighter around those Americans (the middle class and poor) who held absolutely no responsibility for the Economic terrorism that has destroyed our nation and our way of life. And sorry to say, there are no 'plans' on the horizon from President Obama (or other Democrats), let alone the disgusting Republicans (who are simply taking advantage of the economic catastrophe by destroying the Unions in our nation). And all of this is connected: The Housing market connects to Small businesses, and as credit has been virtually frozen by the Banks (while Bernanke seems to toss a coin everyday to figure out how to pay off the toxic debts) the middle class and poor are being stripped to the bone.

How did this happen? How did we get to the point where governors all over the place are blaming the economic crisis on working people? We're here because we didn't take the fight to Wall Street. The White House, Congress, and even trade unions let Wall Street off the hook. And now working people and the middle class all over the country are paying a heavy price. Remember a couple years back, when Wall Street was on its knees, begging for our support? That was the perfect moment to reverse the 30-year trend and create a new kind of financial system that wouldn't gamble away our nation's wealth. Instead we resurrected too-big-to fail institutions and bailed out virtually every Wall Street investor. And now, the right wing, which has been banging its drum against unions, government, and taxes for years, is having a field day using our recession-induced budget problems as a cover for slicing their enemies -- the unions -- to smithereens. Obama squandered the progressive moment. Because had had refused to make Wall Street pay for the damage it had caused, we had no way to fund serious job creation. As a consequence, the "nationalization" we saw was of deep, persistent unemployment in every corner of the country. And the people getting the hair cut were the Democrats. They were pummeled in the mid-terms not because of health care reform, but because the traditional "Party of Jobs" failed to create them. In my opinion, they were punished for being the Party of Wall Street.

http://www.huffingtonpost.com/...

There are no plans underway to stop the continual crash of the housing market. There are no plans underway to stop outsourcing our jobs overseas and rebuild the manufacturing base. There are no plans underway, to stop the endless wars, as we learn to try our best to not think of 22 year old Bradley Manning sitting naked in a chair for hours on end, meanwhile we can continue to pretend that President Obama doesn't know about this latest episode of torture of an American citizen on American soil, who is being denied due process of law. As I stated in another diary:

So you see, 'that's the plan,' people. To let it all 'crash and burn,' just like the rest our nation is cashing and burning, while the Oligarchy scrapes the carcass clean and manages to blame people like Bradley Manning the Middle Class and poor, for their own insidious reasons.

The housing market has always been the bedrock of our nation's economy, and as I stated, there are no plans to address this problem, nor are there any plans to prosecute those that are still preying on Americans who are being illegally foreclosed on. The latest is the absolute bullshit plan by the cowardly 50 US State Attorney's that are playing 'let's make a deal,' with the Banks, all in an effort to ensure that a slap on the wrist is the answer instead of holding those Lenders criminally liable for their actions:

Here's the outline of the administration's proposed deal, according to most reports: Banks would have to write down the principal on underwater mortgages with $20 billion of their own money (investors in mortgage-backed securities and other financial instruments would not be held responsible). The banks would administer their own mortgage modification programs with these funds; no government money would be used. (Note: Any administration proposal would have to be accepted by the states.) Yves Smith called it a "Mortgage Fraud Whitewash: $20 Billion "Get Out of Jail Free" Settlement," agreeing with Marcy Wheeler that this program would amount to "HAMP 2.0" -- that is, a replay of the so-called "extend and pretend" program which gave many struggling homeowners a year or more of baseless hope -- bleeding more house payments out of them -- only to have the banks foreclose in the end anyway.



Is $20 billion enough to right the wrong that's been done? The U.S. housing market has lost nearly ten trillion dollars of value since the housing bubble collapsed, according to reliable data. The homes were never really "worth" all that money, but banks helped convince people that they were. And the Wall Street casino helped artificially pump up real estate values, setting homeowners up for a fall. Even if we lay 80 percent of the "moral hazard" for excess borrowing at the feet of homeowners -- which I would strongly argue is unjust -- that leaves banks with roughly $2 trillion in moral culpability. The proposed settlement amount of $20 billion is 0.01 percent of that figure. It's also less than Wall Street reportedly paid out in bonuses last year, even as the U.S. taxpayer was rescuing them.



Extend and pretend...that is exactly what is going on here. Let's all 'pretend,' that the US State Attorney's are not working hand in hand with the double dictatorship of our Treasurer and Chairman of the Federal Reserve to protect the criminals who continue to destroy our housing market. And as long as this is allowed to continue our nation will stagnate and there will be now recovery or growth:

It isn't as if there isn't progress in writing down loans by banks. Loan writedowns are finding their way onto the markets as foreclosed properties, thus continuing to depress CRE markets across the country. According to Costar, "Distress sales as a percent of the total has been increasing in each of the four quarters in 2010 with just over 20% in the 4th quarter with 18.5% for all of 2010." We have a long way to go until our economy recovers. Until the malinvested real estate from the boom phase has been liquidated, the economy will continue to stagnate and unemployment will remain high.

http://www.zerohedge.com/...

I marvel at the various excuses and reasons that some on this site are coming up with in regards to what is occurring in Wisconsin and Ohio, as to why its such a bad idea for President Obama (who recently applauded the decision to fire all the teachers in Providence, RI), to put on his damn comfortable shoes and show up in solidarity for the Unions, and I keep wondering where the hell the national Democrats are during this time of great upheaval for our Unions who have loyally supported our party for what seems like forever. Here's a clue people: This isn't just a war on the Unions, its a war on the Democratic party, and its the ultimate war on what is left of the Middle Class and poor.

We have seen the overwhelming response in Madison to Walker's actions: two weeks of protests with massive turnouts (even in the snow and freezing temperatures, as I witnessed first-hand) and well-behaved protesters (the Madison Police Department attested to that fact), sleep-ins at the Capitol, and Democratic state senators moving out of the state to prevent passage of a bill that is clearly bad for most of the citizens of Wisconsin, while four Democratic members of the Assembly moved their desks outside in the freezing cold to make themselves available to their constituents after Walker shut down the Capitol to the public. But if this is a war on the Democratic party, and Wisconsinites have mobilized to an impressive extent, I can't help ask: Where are the national Democrats? Where is President Obama? Where is Vice President Biden? Where is the secretary of labor? Where is Harry Reid? Where is Nancy Pelosi? (A fund-raising e-mail went out in her name today, but that is the closest she's gotten to Madison.) Where are the Democratic U.S. senators who represent the states that border Wisconsin? Why has Wisconsin's Democratic U.S. senator, Herb Kohl, made only one appearance at the Capitol? When the Republicans got pasted in the 2008 elections, they didn't run scared. They doubled down and stuck to their values. And with the help of lies about President Obama and health care reform, they were able to score a victory in 2010. And how have the Democrats reacted? By going into the fetal position and tripping over each other to move to the center (really to the right, as President Obama caved on extending the Bush tax cuts for the wealthy, which most Americans oppose, and Democratic senators formed a group to suggest more spending cuts). The cower and cave strategy has never worked in the past, and it won't work now. It's time the Democrats recognize that the GOP has declared war on them and their core constituencies. Waffling, capitulation and cowering in fear are not acceptable responses. Fighting back and defending themselves and the vast majority of Americans should be the plan.

http://www.huffingtonpost.com/...

So feel free, to give me 101 excuses as to why our President and other national Democrats should not be on the front lines fighting and making a concerted and direct show of support for our Unions, but remember this: When the Unions fall, we all fall, and that includes our own party. Stop making excuses for them, and stop making excuses for the same Wall St./Bankers who are the direct responsible parties as to why we have found our entire nation in the black shit hole of chaos we find ourselves in, and why our States and Cities are going down in flames. The denial and hypocritical meme, that we are here to elect new and better Democrats, but we must not hold them accountable is simply another way to cower and cave, which has become a pattern of behavior in our party. More's the pity.

It is disingenuous at best to not at least admit and recognize that over and over again the American people are being ignored by our President and the Senate and House. Our public servants, oh excuse me, wrong term: our paid off whores and power brokers could care less what the American people want. It doesn't matter if its a Public Option for Health Care, a sane return to Glass-Steagall and ''real" strict Financial Reform, a proven statement to cut the damn defense budget, or recently the figure of 82% of Americans support surcharge on the rich, let alone criminal prosecutions for those on Wall St./the Banks that destroyed out nation and has spread internationally to cause World Wide Revolution and mayhem, that could very well snowball and have us paying 10 bucks a gallon for gas, let alone the implications to soaring food prices. Fact is, no one in Washington DC gives a flying fuck in a rolling donut what the American people want, and that's a fact Jack.

http://www.huffingtonpost.com/...

I'm always looking our for new economic writers who I feel have their finger on the pulse of our nation, and recently I've found one in Mr. Paul Farrell who's website Market Watch has predicted, many times, what has come to actually happen over the past few years.

Mr. Farrell was kind enough to give be full permission to include his entire article on Four time bombs that will blow up Wall Street, but since the article is so long, I've chosen to cut it way down to size, so that you get the gist of what he is talking about.

Wall Street’s corrupt banks have lost their moral compass … their insatiable greed has become a deadly virus destroying its host nation … their campaign billions buy senate votes, stop regulators’ actions, manipulate presidential decisions. Wall Street money controls voters, runs America, both parties. Yes, Wall Street is bankrupting America. Put Goldman Sachs CEO Lloyd Blankfein in jail for six months, and all this will stop, all over Wall Street and America, a former congressional aide tells Matt Taibbi in his latest Rolling Stone attack, “Why Isn’t Wall Street in Jail? Financial crooks brought down the world’s economy — but the feds are doing more to protect them than to prosecute them.” Taibbi’s right, everyone knows Wall Street’s run by a bunch of dictators who are doing more damage to democracy and capitalism than North Africa’s dictators. But jail the CEOs of Goldman, Citi, B. of A. or my old firm Morgan Stanley? Too late. Only a revolution will stop Wall Street’s self-destructive capitalism. And watching the people revolt against dictators like Mubarak and Gadhafi reminds us of the spirit that sparked America’s revolution in 1776. But today we need a 1930s-style revolution. During the S&L crisis two decades ago America had a backbone, indicted 3,800 executives and bankers. Today’s leaders have no backbone. Besides jail time won’t reform the darkness consuming Wall Street’s soul. We’re all asleep, in denial about the moral crisis facing America. Yes, we need a new revolution. Seriously, think about it folks: Since the 2008 meltdown magazines and newspapers have analyzed the 2008 crash to death. It really is old news, history. Journalists churned out book after book: “Greenspan’s Bubbles,” “House of Cards,” “Trillion Dollar Meltdown,” “13 Bankers,” “Dumb Money,” “Bailout Nation,” “All the Devils Are Here,” “The Big Short,” “Too Big to Fail,” “The Failure of Capitalism,” “This Time is Different,” “And Then the Roof Caved In,” on and on, ad nauseum. All talk, no action, and no effect. Get it? With every book, every editorial, every expose the past three years, Wall Street bankers actually grew stronger, got richer, more arrogant, bolder on bonuses, impervious to attacks, even taunting us, like the dictators Mubarak, Ben Ali and Gadhafi, confident they could do no wrong, confident no one would rebel. Jail? Our moment to act is long past. We blinked. Yes folks, Wall Street is the “Comeback Kid” story of the 21st century. Like a terrorist in a horror film, Wall Street thrives on threats. Three short years ago, Wall Street was virtually bankrupt, a ward of the state. We could have jailed “just one” of them back then, when they were down for the count. Instead, we bailed them out! Made them richer. Gave them $13.7 trillion, loans, credits, cash, asset buyouts. Gave them keys to the Treasury. They didn’t just recover, they “ran the tables,” to use a blackjack/pool metaphor. Now Wall Street dictators have absolute power, ruling Washington, America, you and me. And it will get worse. Unfortunately, nothing can stop America’s self-destructive Wall Street bankers. They simply do not care that their “doomsday capitalism” is destroying themselves from within, and is bankrupting America too. One mega-millionaire sent me an email after reading my Jan. 4 column, “America’s worst 10 years start now.” “Paul, you may well be right about the coming decade, but the rich exist in a different world from the one you write about. They live privileged lives in gated communities. Meet for holidays at the world’s elite resorts. The richest just aren’t worried about today’s economy like your readers. Their issues revolve around who’s the best masseuse, best Pilates teacher, best concierge medical doctor, which private school to choose, what investments they are making at this time, etc. Folks at the top are not concerned with the underlying deterioration of America, except in the abstract, because they aren’t directly affected. That’s why no amount of information from you will ever change things. To them, it’s irrelevant. Best wishes, always enjoy your stuff.” 4 ticking time bombs that will ignite the Wall Street revolution Yes, the rich live in a different world. And no, information won’t change them. But a revolution will. Revolutions build slowly over a long time. Then, suddenly, a critical mass, a flash point, something totally unexpected ignites the ticking bomb. It happened recently in a remote Tunisian village. Mohamed Bouazizi, a 26-year-old college graduate, unable to pay bribes, set himself on fire to protest police confiscation of his unlicensed vegetable cart. That triggered a revolution. And his death rapidly led to the collapse of a 24-year dictatorship. Today we have four hot time bombs, tick-ticking, soon to make history; any one can easily accelerate the revolution that’s already killing Wall Street from within. 1. Wealth gap: Super-Rich vs class wars, death of democracy The gap: In one generation, America’s wealthiest 1% has exploded from 9% to 23% of America’s income, while middle-class income has stagnated. Even Buffett admits: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and winning.” But my rich friend tells the real story, of their social disconnect. The rich just don’t care. They live in a different world, live by a self-centered code lacking a moral compass. The public welfare is honored only if supported by tax benefits. The wealth gap is widening and soon something unpredictable will ignite a Wall Street revolution. 2. Wall Street’s doomsday capitalism vs rule by anarchy A key Supreme Court decision accelerated and codified Wall Street’s ability to use billions stolen from taxpayers to lobby Washington and solidify its power, all for its own self-interest, through campaign payola, senators’ votes, presidential access, manipulation of regulators, grabbing tax benefits, etc. And it’s every man and woman for themselves. Don’t believe it? Know this, democracy is dead and you’re in denial. Wall Street CEOs and Forbes 400 billionaires are either engaged in a secret conspiracy, or a classic anarchy picking apart America, oblivious of the fact they are setting up the next big revolution. 3. Pentagon’s perpetual war machine vs America’s budget time bomb The mathematics of our $75 trillion Social Security and Medicare deficits often seem insurmountable, but can be recalibrated. However, the war-loving mindset of America’s neocons — fueled by China’s military actions, the insatiable expansion of our military spending and a Pentagon prediction that global population growth — is putting more and more pressure on the world’s scarce resources, and will, in turn, increase global wars and the demand for more war spending, increasing the risk of sudden revolutions everywhere. 4. Global population explosion vs resources, jobs, better lifestyles As the world population explodes from 7 billion to 10 billion in the next generation, the demand for more jobs and the pressure on scarce resources will increase, while expectations will fall as the ratio of haves to have-nots increases, making the world all around Wall Street a burning powder keg setting up a revolution. Bottom line: Forget jailing Wall Street’s dictators. It’s naïve and too late. We missed that opportunity. But a revolution will do the trick, give us a second chance to jail the crooks. Until then, remember, these four factors are building to a head, merging into a critical mass that will accelerate into a revolution and destroy Wall Street from within: The widening wealth gap, capitalism’s new rule-by-anarchy, the high cost of feeding the Pentagon’s costly war machine, and the huge global population explosion.

http://www.marketwatch.com/...

Thank you Mr. Farrell, as promised I will send you a copy of this diary, and the comments by the community at Daily Kos.

I wish that I could disagree with Mr. Farrell regarding his belief that 'we should just forget about prosecutions for Wall St./the Bankers,' and accept the fact that the only thing that will change America is revolution. Perhaps I am still too naive to believe that my country will once again, somehow find it's moral compass again, but then again, we do not seem to be headed in that direction. Case in point, as one Kossack recently stated: the Rich are not like you and I. Take a look, and I mean a good hard look at this Oligarch, because this 'insane person,' Larry Fink, (Blackrock's Chairman and CEO) actually believes and said so right on television, that:

Markets like totalitarian governments.





BlackRock isn’t just the largest money manager … it is also the larges asset manager in the world. So it is stunning that Blackrock’s Chairman and CEO – Larry Fink – said on Bloomberg TV: Markets like totalitarian governments. Investors can determine whether a nation prospers or starves. Investors can determine the course of nations, including who gets elected and who gets the boot.

No wonder there are so many totalitarian governments in the Middle East, North Africa and around the world. No wonder totalitarianism has been creeping into America’s politics and economics. See this and this. Because big investors (or at least big asset managers) like totalitarian governments. If they instead preferred democracy, democracy would flourish.



I'm beginning to think that Mr. Farrell is right, and that is pretty damn scary to me. I know in my heart, and refuse to remain in desperate deep denial that it is highly unlikely that President Obama is going to hold Wall St./the Banks accountable, and that there will be no sane answer to addressing the continual downward spiral of our economy. I also believe that until this issue is addressed, our nation will continue to fall into chaos and mayhem, as the insane religious right and Republican party continues to double down building a bridge to the 19th Century, in earnest. There is a deep oppressive miasma that has settled on the American people, that haunts them everyday in our nation. They know in their hearts, that both parties are stripping them down to the bone, and making them pay for an economic catastrophe that they had nothing to do with, and in fact are being held accountable with their lost jobs, their lost homes, their retirement accounts, and now as they watch their cities and towns being gutted due to Wall St./the Banks hideous out of control risky gambling casino from hell, I believe that one day it will come to pass, that they will no longer stand by and allow this level of criminality and corruption to continue in our lost Republic. Wish it were not so, I honestly do, and I will always believe in my heart, that it did not have to be this way. I leave you with a reality check and a quote from Mr. Farrell's article:

Wall Street’s corrupt banks have lost their moral compass … their insatiable greed has become a deadly virus destroying its host nation … their campaign billions buy senate votes, stop regulators’ actions, manipulate presidential decisions. Wall Street money controls voters, runs America, both parties. Yes, Wall Street is bankrupting America.

Thanks as always,

Ms. B.