We know they’re not evil, because they’re simply not smart enough to be evil.


In Hollywood movies, we’ve been introduced to villains that have real game.  In the Harry Potter films, for example, there’s “Voldermort… The Dark Lord… He Who Shoud Not Be Named.”  In the movie, “Star Wars,” we were introduced to the infamous and intergalactic, “Darth Vader.”  And few will ever forget “Dr. Hannibal Lecture,” telling Clarice that he was “having an old friend over for dinner,” in “The Silence of the Lambs.”


Most everyone, I would think, has at one time or another, seen a “James Bond” movie, maybe it was “Goldfinger,” a story with a villain whose elaborate plan to use nerve gas to rob Fort Knox and ultimately steal the world’s gold, was first released in 1964.  Or perhaps it was, “Live and Let Die,” in which a villain attempts to hatch an ingenious scheme to addict the world’s population to heroin, after seizing control of the drug’s world-wide production and distribution.


In real life, we’ve never had to worry about such evil actually destroying our world, because throughout our collective history, we’ve never seen a villain show up with that kind of game.


Adolf Hitler was looking somewhat promising for a few years during the 1930s, but after the Battle of Stalingrad ended in a disaster for the German troops in the early part of 1943, he was little more than a screaming lunatic with bad hair and genocidal tendencies.  We’ve had our share of “empires” that for a time, appeared capable of dominating our planet, but regardless of whether we’re talking Roman, Ottoman or British… they all ultimately fell like flan.


And, although I realize that at the moment, we’re very concerned about our TBTF financial institutions having the power to destroy our nation forever, it occurs to me that it’s probably not the case, even if it does seem like it at certain moments.  As far as our corporate dynasties go, if history is any sort of guide, they’ve proven to have shorter lifespans that some MLB player careers.


Don’t get me wrong, I’m not at all happy about how our government seems set on providing us with tangible evidence of its ineffectiveness on at least a monthly basis.  But, it does remind me that it’s at least reasonably likely that the TBTF problem will be overwhelmed by the general incompetence of man, long before it destroys our world or way of life.


Like, it’s not at all inconceivable that five years from now we could be laughing at how we were so worried about Goldman Sachs… before the investment-bank-turned-bank-holding-company in 2008, quietly filed for bankruptcy in 2015.  Remember Lloyd Blankfein, someone would say? And someone else would reply, “Was he the bald one?”


I can remember when the Vietnam War was never going to end… and then it did.  I can recall a time when drugs were sure to be on the verge of destroying our country’s youth, and then they didn’t.  Without an Equal Rights Amendment we would never survive as a great nation, or maybe we would.  Our hostages would all die in Iran, unless they wouldn’t.  And the crash of ’87, which soon morphed into the S&L crisis, was reported so severely at the time, that I never even questioned but that it would be my grandchildren that would be worrying about paying its astronomical bill… until that wasn’t the case anymore.



After that, the Internet was going to change absolutely everything… even replacing our old economy with a “new one,” or not.   AOL bought Time Warner… for a year.  And Enron was the corporate Titanic, that along with Tyco, HealthSouth, Adelphia, WorldCom, Arthur Andersen and a myriad of others, had led us to Sarbanes Oxley, a bill that was sure to signal the end of American business… until it didn’t.


Years ago, the Sears Catalog was a permanent institution in this country, and so was the airline, TWA… and bicycle maker, Schwinn… or camera-maker, Polaroid… and we bought albums, 8-tracks and CDs, but always at Tower Records.  And yet they’re all gone today.


Remember when we might not survive Y2K, and when the president said he didn’t have sexual relations with that woman, and when Larry Craig said he had a wide stance, and when we knew there were weapons of mass destruction… even though we didn’t know for sure, but it didn’t matter because that’s not why we went into Iraq anyway, and besides al-Qaeda had cells around the world that would end our lives soon enough anyway?


Remember when Wall Street had investment banks on it, and Fannie Mae and Freddie Mac stood for fairness?  When membership had its privileges, when the Catholic Church and Penn State were both safe places for boys to be, when you could press five to increase your credit limit and there were things called usury laws that made charging more than a certain amount of interest illegal?


I still remember when there was an impenetrable Iron curtain across Europe, and on its other side lived the people who wanted to kill us with their collective thinking.  They’re gone now, replaced by a smaller, nuttier guy in a Members Only jacket that makes him much harder to fear.


I can remember when none of those things were thought of as fleeting… like the blips on an ever-changing landscape that time would flip, shake and erase like an Etch-a-Sketch whenever we turned our backs to enjoy a moment.



The Worst Economic Crisis Since the Great Depression…


We are now six years since the end of a real estate boom that was only around for some four years anyway, and we’re going on four years since Hank Paulson said that he needed $700 billion in unmarked small bills by morning or our gig would be up.


Since then, we’ve all watched as Secretary Geithner… his trusted ward, Lawrence of Summers, and the Professor sans MaryAnn, all ran about shoveling trillions around Wall Street, while engaging in crazy tea party inspired chatter about how, as far as U.S. homeowners were concerned, there was too much “moral hazard” involved to consider offering them any real help.


Obviously, their thinking was that by bailing out the deadbeats who borrowed the money for houses that they had now lost trillions on, collectively speaking, they would rush out and do the same thing again thinking they’d be bailed out again.  And don’t laugh… that’s pretty much what they thought… and still think for that matter.
So, the announcement went out across the land in so many words.  For America’s homeowners… the beatings would continue.   And so they have.


The Rich Getting Richer…


About a week ago, a study showed that 93 percent of the gains since President Obama took office went to the top one percent.


By anyone’s standards, that statistic is alarming… no one can be in favor of that continuing, not even the top one percent.  It’s not like it’s debatable to say that enormous income disparity between rich and poor is a problem in any society.


The question, I suppose, is whether all that’s occurred since 2007 has been part of some nefarious plot perpetrated by evil villains that might have starred in a James Bond movie, or whether the guys in charge have simply been wrong… you know, handled things badly.


Well, I think the picture is becoming ever clearer that what we have are over-confident leaders who think certain things based on what they’ve been taught and learned in the past… but they’re wrong.  What they view as precedent isn’t applicable to the economic situation we’re facing today.


It’s not like the administration wouldn’t have preferred to have created more jobs and stopped more foreclosures, right?



To those in charge it’s a duck because it looks like a duck, walks like a duck and talks like a duck… but it isn’t a duck…  it’s a goose, and a flightless one at that.  In the parlance of business books, it’s a “black swan.”


The Geithner/Summers/Bernanke clan believed (and continue to delude themselves into believing) that by pumping trillions into the financial system and into the TBTF banks, two things would result:


  1. The banking system would stabilize.
  2. The economy would start to grow again, as measured by GDP.


The funny thing is… and by funny I mean inconceivably sad… that you could argue that neither outcome materialized, or you could say that the first objective was achieved, in an accounting-rules-don’t-matter sort of way.  But, no one could argue that the second goal was reached in the least.


Basically, Geithner and Bernanke thought that lowering rates pumping liquidity into the financial system would stimulate growth because it has in the past.  They sacrificed homeowners thinking that once the financial system was stable again, the rest of the economy would be pulled out by the health of the financial system.


So, here we are… the growth they counted on failed to materialize, as I’m sure they would phrase it, but of course what truly failed to materialize were their critical thinking skills because there was no chance that their plan was going to work in terms of creating real growth.


It’s simple really.


There are fewer of us working, so we’re producing less and therefore we’re earning less… and so we’re spending less.  And that means we’re paying less in taxes to both state and federal coffers, which means the states are spending less, and lower state spending means reduced GDP… do you see the dynamic at work here?


Take a quick peek at what’s happening in Spain today and you’ll see clearly the fallacious nature of banker-think.


Unemployment in Spain is now 25 percent… among the country’s youth, it’s 50 percent, but the European banks to which Spain owes money are demanding that Spain reduce its deficit spending by 5.5 percent over the next two years.  Now guess why.


They want Spain to do that so that the country will have enough money to make its payments to the bankers of course.


But, you might ask… if Spain reduces its GDP by 5.5 percent over the next two years, which is the same as reducing its spending by 5.5 percent, won’t that cause unemployment to rise even higher?


Well, of course it will… and very well done there indeed.


And if the country’s unemployment goes even higher, won’t that reduce the country’s GDP, as fewer people will be working, and won’t that also reduce the revenues that go into the country’s coffers?


Yes, that’s right again!


But, won’t fewer people working result in property values falling even further causing  more people to go underwater and into foreclosure driven by fewer able or ready to buy homes?


Very good, right yet again.  This is so exciting…


And if property values fall, and more people default, won’t that cause further harm to the Spanish banks that made the loans that are increasingly defaulting?


Yes, yes, yes… keep going…


Well, the more the Spanish banks lose as a result of property values falling, and while unemployment rises, the less credit the banks will provide, and won’t that also reduce GDP even further?


I think you’ve got it… now bring it all home for me…


… and won’t all of that combined actually reduce the amounts that Spain will have to make payments to the central and EU bankers who are the ones demanding the 5.5 percent reduction in government spending in the first place?


Thank you, Lord!  Why yes, I would have to say that would be the case. 

Do you see ANY OTHER OUTCOME  that was POSSIBLE?


Please… take your time… the answer is NO, NO, NO.


So, why are the EU bankers doing this?  Isn’t it stupid?


Yep.  It’s stupid.


So, why are they doing it?  Are they evil?  Do they have a nefarious plan?


No, it’s just stupid.  But the EU bankers are just like Geithner, Summers and Bernanke, they are forecasting Spain to have GDP growth this coming year because they are being bailed out.


But the bailout funds are only to repay the EU bankers that are lending them in the first place.


That’s correct.


So, how can Spain grow its GDP as bankers are forecasting they will?


We already covered this point… THEY CAN’T… and wont.


And we’re doing the same thing here at home, the only difference being we can print money… or rather the Federal Reserve can… and then it can lend it to us and charge us interest, albeit a small amount of interest… it’s still interest.


That printing and lending to the U.S. government machine is what gets called “quantitative easing,” or a “twist,” or whatever new not-in-the-Scrabble-dictionary type word they come up with next.  It has a tendency to prop up the stock market, which is why the rich are getting richer as the rest of us die on the proverbial vine.


And just like the EU bankers, Geithner and Bernanke are forecasting GDP growth once again for the U.S. but once again none of us will feel it because we’re not rich and making trillions as the stock market remains artificially propped up by the Fed’s money creation and lending scheme.


The best part is that, all the while, foreclosures will accelerate and continue unabated… actually much faster than before, now that the banks have their settlement and to large degree can’t be prosecuted for their foreclosure related improprieties… not that such prosecutions were going on anyway.


The European bankers are no different than is the FHFA, which is led by Ed DeMarco, the guy stopping Fannie and Freddie from reducing principal balances of mortgages.  He says he won’t do it because his job is to return Fannie and Freddie to profitability, and all that means is that in his forecasts… even if principal is not reduced… we’ll all still pay off the debts, or at least enough of us will that it’s not worth writing down the amounts owed.


Translation: He’s forecasting growth in future years, just as the European bankers are for Spain and elsewhere.  He’s wrong, and so are they.  He won’t share his assumptions used in his forecasts, but if he was forecasting that more and more will default if principals aren’t reduced, then he’d be concluding that they should be.


So, you might ask… what should we do? 


Well, for one thing, I’d suggest yelling out: “Look out below!  We’re coming down… and coming down fast,” in order to avoid hurting those below us on the economic ladder… you know, the poorer people.


It’s not that they can actually do anything to get out of the way, so they’ll still get crushed by our fall, but I still think it’s rude not to yell. “Look out below!”


But, that wasn’t my point…


What I wanted to say is that we shouldn’t despair.  We should keep up and even intensify the fight because if you understood what’s going on, then one thing should be clear…


They’re not evil… they’re wrong.  And we can know they’re not evil, because they’re simply not smart enough to be evil.


Mandelman out.







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