Trent Tucker

Fear and Loathing in 2009

We may be in a recession but we are still in possession of our faculties. So why so many sane people in a recession? We know that while a rising tide floats all boats a tsunami is a different story. The tsunami formed when Ginnie Mae and Freddie Mac altered real estate and mortgage structure to allow 100% financing with no down payment, basically the same structure Wall Street uses when it speculates with other peoples money. So housing was turned into real estate gambling for anyone with a credit score above 700 and what is a true gamblers only discipline? No more money, a recession. The intent of Ginnie Mae and Freddie Mac was to allow access to housing for people who previously could not qualify and really they didn’t cause this. The speculators who figured out quickly how to gin the mortgage apps. and gambled on rising housing prices with multiple acquisitions caused this and Wall Street joined the fray because they were searching for a new investment frontier. You see, since the cold call cowboys fell off their horses they have been steadily losing their client base. The larger firms have been losing 15% of their client base annually for years. Previously marketing was able to replace them. The internet changed all that. Enter collateralized mortgages(The Glass Steagall Act had to be repealed to allow Wall Street access to mortgages. That happened in 1999). Surfs up, it is a tsunami mommy. A meltdown, fiscal fission, but where did it begin? It began when the rules were changed. (Actually it began when the brokerage firms began exploiting their clients to such extent they could no longer replace their dwindling client base and they had to search for happier hunting grounds) Now who really makes the rules? Our elected representative do. I have never been able to locate a recession or depression that was not caused by government intervention of some kind, or in the failure of governmental judgment. But was it a failure of judgment or bias? Of course bias is… monetary influence, lobbyist, powerbrokers, whatever you care to call them, I prefer money laundering. Tsunami’s occur because of an earthquake far away and this is no different. Change the rules, the earth shakes, the wave forms and the law of unintended consequences comes into play. So, again, where did it begin? Basically in in the backrooms of your, excuse me our, congressman’s office as the paid lobbyist of the largest financial firms exerted their influence over our elected representatives. It never changes, . when the eastern block was abandoned to Stalin the Polish summed up the situation the best, “Under capitalism man exploits man. Under socialism the reverse is true.”-Polish proverb author unknown. Of course in America many years later it depends on what your definition of is, is. This meltdown resulted because the brokerage firms were exploiting their clients to such an extent their client base began to diminish and marketing was bested by the internet and on line brokers. What to do? Finance a Senator and repeal Glass Steagall so Wall Street could collateralize with Main Street, and we have just recreated the same circumstances of 1929, which Glass Steagall was written to prevent. It took a few years but the tsunami has hit and the giants of finance in 2008 are being consumed by the wave they set in motion in 1999. It is the definition of unintended consequences and really, it is what the definition of is, is.
Trent Tucker Author Wall Street Dancers
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