This a very tough article to write because I really don’t want to offend any reporters or broadcast personalities, but the media, like any other business, cannot bad mouth or question it’s customer base, or financial banking interests, and stay in business very long – that’s just axiomatic in the business world, and perfectly legal. The customer base I’m talking about here is politicians and their continuing BILLION dollar campaign advertising – for each and every campaign cycle, and that’s just at the Federal level.
What do candidates and office holders spend most of their alleged campaign contributions on? Commercials and print ads. This is a BILLION DOLLAR market for the media. This market, politicians of all parties, is united in protecting their jobs, their institutions, and especially their money trains. In short, it’s kind of like the proverbial “blue line” in the law enforcement community. No Democrat will fundamentally challenge any Republican where the interest, of the special interests, is at stake – and vice-versa. The welfare of Americans and of the United States is irrelevant to both politicians and the media alike.
It seems logical that special interests can buy off Congress from investigating any transgressions, like falsifying the reason for the credit crunch, by virtue of their campaign contributions, and it follows that Congress can silence the media from investigating it under the threat of withholding media buys. There’s a BILLION DOLLARS, or more, of advertising at stake here. But the media is also silenced by another heavier hand.
This alleged informational based RICO activity succeeds because of the “24-hour” news cycle that constantly throws new problems in the face of the American public. Having to deal with the latest and most time critical issue is distracting to Americans and allows the media to cover-up prior controversial issues or corruption. There’s no time to rehash old issues, no time to fully investigate misinformation or lies from any elected or appointed official – that is assuming our constitutionally protected press even wants to. The never ending BILLION DOLLAR political advertising market transcends the political, moral and ethical responsibilities of the media, after all even an oligarchy still has to get it’s message out and the hell with the truth.
If this sounds “over the top”, I can give you one very dynamic example about which I wrote extensively on in Common Sense – Part Two.
NOTE: It is NOT my intent to argue the cause of the credit crunch in this forum even though there are a lot of points made. I am merely trying to point out what the collective media covered-up or refused to investigate. Consider this: Where do the giant media corporations go for financing? Who controls the value of their stock?
What really caused the credit markets to freeze up?
Repeatedly during January and February 2008, former Treasury Secretary Henry Paulson stated many times that the housing market; “… needs to correct. It's we've had unsustainable growth for some period of time.” He essentially blamed the housing bubble on everything from sub-prime lending, to easy credit, to predatory lending, to deregulation, to over-leveraging and to consumer stupidity and eventually the collapse in the sub-prime mortgages led directly to the crisis. Everyone in the media accepted his story and nobody questioned the conclusions. Why? Ultimately, sub-prime borrowers became the sole reason for the Nation’s economic perils.
Were the public pronouncements of former Treasury Secretary Henry Paulson designed to place the blame for the credit crunch and resulting economic crisis on Main Street instead of Wall Street? After all, he effectively divided Americans along social, economic and political lines by making ordinary Americans responsible for the economic and financial collapse of other American’s wealth and property. Nobody in the media questioned this conclusion on his part.
But what if sub-prime delinquencies, defaults and foreclosures were not the underlying and immediate cause of the credit crunch, what if the reason was in the credit risks associated with the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps(CDS). What if the credit rating agencies misread the risk, or, deliberately rated securities AAA when if fact they were junk? The anti-competitive practices of credit rating agencies and issues including conflicts of interest were known to the media, Paulson and Congress well before 2008, in fact this problem reared its ugly head as far back as 2003. Problems with risk associated with those above-mentioned financial products would mean that the incorrect pricing of risk backing Wall Street’s creative financial innovations were the cause of the credit crunch, not sub-prime mortgages.
Selling the story that sub-prime mortgage defaults caused the credit crunch is critically important because it portrayed corrupt, greedy Wall Street investment banks as victims, and not the perpetrators of this enormous world-wide fraud which they were.
According to Wikipedia, The value of U.S. subprime mortgages was estimated at $1.3 trillion as of March 2007, with over 7.5 million first-lien subprime mortgages outstanding. This was only 20% of all mortgage originations, of which only approximately 25% were delinquent in 2008.
Any and all risk associated with sub-prime was fully discounted and could not have caused a credit crunch or collapse because the rating agencies saw this potential problem right from the beginning. But, blaming Main Street was necessary and since the vast majority of Americans were clueless about these “creative financial products” based on MBSs was easy – as long as the media kept silent. Think the reporters, correspondents and on-air personalities at CNBC, for example, were unaware of this b.s. No way, they’re just too intelligent and knowledgeable about how this stuff works. But, when the top dogs tell you to leave it alone, you leave it alone, or else you’re looking for work – in an industry that has a history of employing “black lists” to control independent thinkers.
Ever here of “AAA” rated “Alt-A” mortgages. Evidently these were non-conforming, low documentation mortgages. Within the U.S. mortgage industry, different mortgage products were generally defined by how they differ from the types of "conforming" or "agency" mortgages, ones guaranteed by the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.
Alt-A loans were not primarily purchased by the GSEs and the amount of outstanding Alt-A loans was approaching $1 trillion in 2007. And then you had the option adjustable rate mortgages (ARMs) on top of the Alt-A loans. They were probably another $500 billion to $600 billion. Most all of them secured by MBSs CDOs.
On or about Valentine's Day 2008, UBS revealed $26.6 billion in exposure to securities backed by Alt-A mortgages. Delinquencies and foreclosures on Alt-A mortgages hadn't climbed as high as subprime loans, but they have deteriorated faster than many expected. Securities backed by Alt-A loans also built in less protection for investors than similar structures holding subprime mortgages. That's what made the deterioration in Alt-A securities almost as agonizing as the subprime meltdown UBS AG's disclosure that it's high exposure to the deteriorating so-called Alt-A home loans caused margin calls and forced selling among other big players in the mortgage market.
IT WAS THE MARGIN CALLS ON THESE SECURITIES (!?) CARRYING AN INCORRECT PRICING OF RISK, COUPLED WITH THE FACT THAT THE INSURER, AIG, DID NOT HAVE THE MONEY NEEDED TO BACK UP ITS CDS COMMITMENTS THAT CAUSED THE CREDIT CRUNCH – NOT MORTGAGE DELINQUENCIES, DEFAULTS OR FORECLOSURES.
That situation was squarely on the shoulders of greedy Wall Street investment banks, and not Main Street.
But, if that scenario was ever even discussed by the media and questions asked, TARP would never have happened. The bogus concept of “too big to fail” would have become the public war cry of “too big to not jail”.
Politicians who control taxpayer money get their “contributions” primarily from Wall Street. Politicians have to protect their benefactors. The media controls information. Where do the giant media corporations go for financing? Who controls the value of their stock?
My next article will lay out the reasons for forming the “American Federalist Party”. I will argue who should join, why the Internet, some basic issues and what being a “middle of the road”, financially and ideologically independent party can do to end this corruption. How and why the new party won’t need, or want, Wall Street money and support from the media, which I refer to as the “newsertainment” industry.
Tpaine2009© http://www.commonsenseparttwo.com
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