Wednesday, November 18, 2009

Laissez-faire Fraud

Lots of people nowadays are looking at our troubled economy and are understandably confused as to what is the ultimate cause of the recession. Many reasons for the "economic collapse" have been put forward - mortgage lenders freely passing out low interest loans to folks who were never going to be able to repay, bankers and investment brokers repackaging collections of worthless loans and selling bits and pieces of them for commissions without any added value, worldwide growth expanding demand for a dwindling supply of oil, consumers financing their endless materialism on lines of credit they wouldn't be able to repay if they lived to be a hundred, etc. etc.

I'm sure that all of these are contributing factors. But what really concerns me is that the reasons listed above may add up to only a small portion of the real factors causing our current woes. Check out this article:

The writer points fingers at Goldman Sachs (and others) for manipulating the price of oil, and in doing so committing fraud at a never before imagined scale. I don't really know how accurate his accusations are, but he does quote the Congressional Research Service, reports from the U.S. Commodity Futures Trading Commission, and others. If he's only partly correct, then outright fraud would appear to be a major contributing factor to the current recession.

We already knew that fraud played the major role in bringing Enron and Worldcom down. Computer Associates (CA) and Qwest Telecommunications were involved in multi-billion dollar fraud scandals, and then of course there's Bernie Madoff's multi-billion dollar scam.

So, now here in the early years of the twenty-first century, we are seeing thievery at a scale that not only was never possible before, but literally unimaginable.

And, making it all worse, the government is basically paying the criminals off with YOUR money! Just about every thinking financial analyst out there understands that by sinking multi-trillions of dollars into the TARP funds, the value of a dollar will be reduced commensurately. The biggest accomplishment of  TARP is that the criminals no longer will lose any of their ill gotten gains!

Currently, congress is contemplating new legislation intended to address these schemes by the Financial Sector community. However, legislation has often had exactly the opposite effect of it's intention (ref: "The Communications Decency Act of 1996" gave pornography on the Internet its biggest boost. "No Child Left Behind" explicitly spells out how public education will leave some children behind. "Defense of Marriage Act" - Ha! Don't get me started on that one!). I have very little confidence that any laws we could possibly pass would stem the flow of wealth from the middle-class to the very rich.

I am not sure what can be done to solve the problem. I'm tempted to take everything I have in savings and purchase what little gold I can. I know that my dollars will not be worth much of anything in the near future.

What's your thoughts on the current state of affairs? Do you have any hope of ever being able to retire with any quality of life?

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