The key effect that set the 2008 collapse in motion was when the
Repeal of Glass-Steagall, which allowed banks to own stock
exchanges where securities could be publicly traded. Before that
The NYSE, the AMEX, and the NASDAQ all refused to allow banks
to trade mortgage-backed securities because they are not investment-
grade securities. Once the banks could own an exchange, they purchased
the Philadelphia Exchange, began trading mortgage-backed securities
that allowed them to essentially sell to the public the mortgages
they wrote, relieving them of having to carry mortgages to term before
They could re-loan the money. Now they had an "endless" supply of
funds and were not burdened by the prospects of mortgages
failing since the public now relieved them of that risk. That meant, in
turn, that banks could write mortgages that were ever less worthy.
As one bank wrote more mortgages, they became wealthier, and so
competing banks wrote even shakier mortgages to keep up, and that
set off a "race to the bottom" as ever more risky mortgages were
written. Eventually, scamsters were given mortgages that would never
perform, and when the public learned of this fraud, banks (whose
Sloppy bookkeeping would not allow them to report how much and which
paper was bad. The public stopped buying the CDO, and banks had no
more money to lend, the economy went into a nose-dive and would have
collapsed, but the gov't stepped in and bailed the biggest banks out, giving
rise to the term "Too Big To Fail". Thank you, Mr. Bush for TARP.
However, Hitler dressed Nazi's as Czechoslovakian soldiers and
had them attack a radio station so he could use that as a provocation
to invade. It doesn't matter whether or not anyone believes what
The government says it's just a cover for the action they intend to
take. Public opinion only matters if and when the public joins
hands and absolutely refuses to go along, like what happened
in So. Korea, Brazil and France.
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