Who Is Behind the Economic Collapse?
By Dr. Joseph Mercola
The PBS Frontline documentary The Untouchables, which originally aired in 2013, investigates the cause of the 2007-2009 financial crisis, and why Wall Street crooks escaped fraud charges related to the sale of bad mortgages.
Not one Wall Street executive was held accountable for this massive crisis, yet evidence suggests Wall Street executives with the willingness to defraud customers to pad their own bottom line were the cause of it all.
The case against Bear Stearns and JPMorgan, basically summed up the core of the entire 2008 credit crisis: Banking institutions intentionally sold securities they knew were bad.
The same criminal bankers are now intentionally destroying the global financial system in order to replace it with something even worse — social credit scores, digital identity and Central Banking Digital Coupons (CBDCs), which will give them the ability to control not only your individual finances but also everything else in your life.
The financial crisis of 2008 showed us how incompetent they are. So why would we accept the “new and improved” financial system they intend to roll out as soon as the current financial system is in shambles?
The PBS Frontline documentary above, The Untouchables, which originally aired in 2013, investigates the cause of the 2007-2009 financial crisis,1 and why Wall Street crooks escaped fraud charges related to the sale of bad mortgages. As explained by PBS:2
“Are Wall Street executives ‘too big to jail’? In … ‘The Untouchables,’ producer and correspondent Martin Smith … investigates why the U.S. Department of Justice failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse.
Through interviews with top prosecutors, government officials and industry whistleblowers, FRONTLINE reports allegations that Wall Street bankers ignored pervasive fraud when buying pools of mortgage loans.”
Historical Review
You might wonder why I would post a nearly 10-year-old documentary. It is because we can learn powerful lessons from our history. It is clear that all the bankers that were responsible for the financial trauma were never prosecuted. Well, you can bet your bottom dollar that we will have the same result when it comes to prosecuting those responsible for killing millions in the COVID pandemic.
So let’s dive into the history so you can learn. Below, I’ve also included a documentary called All the Plenary’s Men, which goes deeper into the question of why the Justice department didn’t hold anyone accountable or prosecute any of the big banks.
The financial crisis that began in 2007 and came to a head in 2008 wasn’t the result of short-term fraud. No, the scene was set years earlier with rock-bottom interest rates and lax mortgage lending standards and grew worse from there, as fraudsters started cashing in on what appeared to be free and easy money.3
Originally, the lowered interest rate was intended to boost the economy after the dot.com bubble. The end result, however, was the complete opposite. A housing bubble formed, and as all bubbles do, it eventually burst, leaving financial institutions holding trillions of dollars of worthless subprime mortgage investments — investments that had fraudulently been sold as top-notch low-risk instruments.
Deepening the disaster was the fact that the Securities and Exchange Commission in 2004 relaxed the net capital requirements for investment banks such as Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley, which allowed them to leverage their investments by as much as 40 times. As explained by Investopedia:4
“The Fed started raising rates in June 2004, and two years later the Federal funds rate had reached 5.25%, where it remained until August 2007. There were early signs of distress. By 2004, U.S. homeownership had peaked at 69.2%. Then, during early 2006, home prices started to fall.
This caused real hardship to many Americans. Their homes were worth less than they paid for them. They couldn’t sell their houses without owing money to their lenders. If they had adjustable-rate mortgages, their costs were going up as their homes’ values were going down.
The most vulnerable subprime borrowers were stuck with mortgages they couldn’t afford in the first place. As 2007 got underway, one subprime lender after another filed for bankruptcy.
During February and March, more than 25 subprime lenders went under. In April, New Century Financial, which specialized in sub-prime lending, filed for bankruptcy and laid off half of its workforce.
By June, Bear Stearns stopped redemptions in two of its hedge funds, prompting Merrill Lynch to seize $800 million in assets from the funds. Even these were small matters compared to what was to happen in the months ahead.
It became apparent by August 2007 that the financial markets could not solve the subprime crisis and that the problems were reverberating well beyond the U.S. borders.”
The interbank market froze as banks around the world started reporting liquidity problems and major losses from bad subprime investments, central banks started pumping out billions of dollars in loans to prop up the credit markets, recession hit, stock markets crumbled, investment banks collapsed and were sold for pennies on the dollar, and home lenders like Fannie Mae and Freddie Mac were seized by the U.S. government.
The “remedy” to this epic failure was the Wall Street bailout, where many banks were given billions of dollars to stay afloat. Government basically bought the toxic assets (with taxpayer dollars, of course) to save banks deemed “too big to fail,” while an estimated 3.8 million Americans were forced into foreclosure5 and lost their life savings to boot.
Who’s to Blame?
There’s plenty of blame to go around for the 2008 financial collapse.6 Economists like to blame lax mortgage lending policies that permitted people to borrow more than they could afford.