For example, American support of the horrifically brutal regime of the Shah of Iran, because American oil companies operating in the country, got special concessions. It’s almost as if we have imported those concepts and cultures into American companies back home after the fall of Communism. A “blowback” to use a CIA term, (although more conventionally used in terms of national security and secret ops) of white collar criminal culture and activity back into domestic turf.
Nevertheless, twenty years after the “Great Society” ideals of John Kennedy, which promised to further move America forward in terms of both racial and gender socioeconomic equality, the deregulatory, free wheeling, market mantra, which is fundamentally counter to this ideal, using the conventional interpretation of Smith’s work, went back into overdrive. Voodoo Economics – The White Collar Criminal Shell Game as the Trigger of the Tragedy
It entered with the election of Ronald Reagan, accelerated with the fall of America’s Cold War economic nemesis, The Soviet Union and the so-called fall of Communism, was helped along its merry way by Clinton (who was the President after all who destroyed one of the most important anti-trust laws overseeing the banking industry (Glass-Steagall) while allowing for the introduction of what Warren Buffet calls “financial weapons of mass destruction,” (unregulated derivatives) and this trend, along with the accompanying ones of increased and bigger mergers, the increase in mega multinationals, and the relaxation of anti-trust law and regulation, only further went into warp speed under Bush II.
This, in conjunction with economic policies set by the government (such as lending rates) created the housing bubble and the introduction of what was called sub-prime mortgages. This was the point where the criminals swung into action. Because this is where the real X on the carpet and the scene of the crime occurred. Over and over, all over Wall Street. Because it was the subsequent “creative repackaging” of these very risky loans into a different kind of security that looked and was sold as a higher grade asset, creating essentially hocus pocus financial smoke and mirrors, that is what brought down the house of cards and is what is also so illegal.
This is what is what makes what happened fraud. Because the people who created these “vehicles” knew all along that what they were creating was complete fabrication and hot air. The fact that they were so profitable however, made them irresistible to “Big Swinging Dicks” as Michael Lewis once described the denizens of the cut throat, competitive world of Wall Street in his book, “Liar’s Poker,” (Lewis, 1986) created the perfect breeding ground if not storm for a sort of mass production line of white collar crime on a scale never before seen, and with consequences of global implications never before felt by human kind. Into the Eye of The White Collar Crime Perfect Storm
So between the end of the Clinton administration and the beginning of the first term of Bush in the late nineties and early naughts, Wall Street White Crime began to breed like larvae on steroids as a result of little to no regulation of the financial industry, much less corporate America by the political elite, many of whom acted as political white collar criminals themselves, at the same time that corporations had grown ever larger and more powerful in size. At the same time, these same multinationals had access to the new megabanks created in the fall of Glass-Steagall, to finance even more deals, mergers, and what came to be a new and huge unregulated “dark market” of unregulated derivatives trades that were highly profitable, but as it turned out, frequently were fraudulent and often literally financial hocus pocus and worth nothing. As one author wrote recently “There is Fraud In the Heart of Wall Street. ” And it was done deliberately, knowingly, at a widespread and even high level, and for much of the last decade.
Institutional Factors Leading to Industry Predisposition to White Collar Crime The Chattering Classes The traditional media, whether TV or print, or even now, with new media overtaking it, is traditionally financially illiterate. Even supposedly “financially focused” outlets like Reuters and Bloomberg. The destruction of Glass-Steagall, one of the most important banking anti-trust laws in the United States, barely made a blip on the news. There was no extensive analysis or reporting of what it meant. During the housing boom, the media focused on the go-go housing market, rather than an unsustainable boom. Whole Reality series were based on house upgrades.
Real Estate was hot, whether flipping it for a profit, investing in funds for one’s 401K, or just finding a way to get into the game in the first place, was the story of the day. With the exception of the scandal at Fannie Mae, which again barely got media time, but again was an alarm bell that nobody paid attention to, the media “watchdogs” were either asleep, watching their own stock portfolios, marveling at the rise of the market without doing any analysis on what was fueling the boom, not to mention what was behind it, or if it was sustainable, which is inexcusable, considering the amount of information available to financial reporters starting as early as 2004 about the obvious housing bubble, and continued to waive their pom poms in the face of a looming disaster.