Thursday, August 18, 2011
Standard & Poor's investigated by the Justice Department
* Mortgage-backed securities played a major role in the financial meltdown that led to the 2008 financial crisis.
* Standard & Poor's is a ratings agency that, like all the others, consistently overrated these financial instruments due to greed. This resulted in the illusion of profit, sort of like a pyramid scheme, so that the stock market rose, but every bit of profit was fake.
* A lack of government regulation permitted them to do it.
* The US suffered a serious economic recession as a result. The stock market lost half its value.
* Only a massive spending spree by the federal government could prevent a major depression (in times of economic turmoil, when individuals and corporations do not have money to spend, the only entity that can stimulate the economy is the government).
* President Obama signed into law a federal stimulus bill in the hundreds of billions of dollars, preventing a major depression but also increasing the federal debt.
* Billionaire Republicans invented a "Tea Party" movement to start blaming President Obama for the country's economic woes, ignoring the primary sources of the debt (which included the Bush era tax cuts and the unfunded wars in Iraq and Afghanistan, something he had little to do with).
* The mainstream media gave this "Tea Party" movement significant coverage, characterizing it as a real social movement with roots on the ground in common America (Fox News even encouraged people to go to the events on live, national TV, becoming cheerleaders rather than reporters)
* Subsequently, the nation's attention turned to reducing the national debt rather than fixing the economy or creating jobs for Americans.
* President Obama's ability to get anything done was significantly weakened by radical elements of the Republican Party affiliated with this new "Tea Party" and concerned only with reducing the national debt.
* President Obama gets blamed, and "Tea Party" Republicans start screaming that the problem is the big federal government needs to get off of our backs and stop hurting the "job creators" (i.e., corporations and rich people). The problem is NOT financial greed or a lack of government regulation. The problem is the US spends too much money and thus needs to stop helping poor and elderly people, needs to cut education and health care and anything that sounds like "socialism."
* The wrangling over the debt limit issue caused Standard & Poor's to downgrade the US credit rating from TRIPLE A to DOUBLE A PLUS, for the first time in US history.
* President Obama gets blamed for this, too, even though the debt deal gives Speaker John Boehner "98% of what I want" (his words).
* Shortly thereafter, the US Justice Department announces it is investigating Standard & Poor's for allegedly overrating mortgage-backed securities
In other words, the problems that caused our economic woes have not only NOT been fixed, they've not even been addressed. And we have a lame President who cannot or will not do anything about it, plus a field of Republican party candidates who consistently pledge to, if elected, erode governmental regulation and get the government off the backs of the people that are responsible for our economic crisis.
Anyone in the media care to tell this story?