Saturday, March 22, 2008

To Diffuse American Bubbles, Americans Must Not Be At The Mercy Of The Ruling Class-By Harsha Sankar

Dear Citizen, December 2007


The developing credit crisis is beginning to reveal extreme accounting manipulations. As subprime mortgages defaults make headlines, attorney-concocted schemes of off-balance-sheets entities have to be reviewed. Crafted accounting rules implemented at $350.00-$700.00 an hour has kept many financial institutions from acknowledging losses previously kept off the books. Citigroup alone has exposure of $41 billion.

Due to economic downturn, many homeowners are needlessly facing foreclosure when huge sums forked out for closing costs and bankruptcy could instead be used to satisfy debt.

Making a loan and keeping it on the balance sheet until it was repaid was so old-fashioned. The ethics of the sale and buyback of Collateralized Debt Obligations and Special Investment Vehicles is highly dubious, since the intention appears to mislead investors regarding a company's financial health.Yet the legal system (driven by money, megalomania, and playboy mentalities) selectively permits the lack of reporting to investors.

As these investments market is collapsing, the real extent of the losses is beginning to reveal itself. The revelations of accounting manipulations and fraudulent activities are a small indication that the economy is pervaded by speculation and out-n-out criminality due to legal profession's increasingly dominant role. The fault lies not with the borrower or lender.

Ayn Rand once stated that the hallmark of authoritarian systems is the creation of innumerable and incomprehensible laws. Such systems make everyone an un-indicted felon and a debtor and it allows for the exercise of arbitrary government power via selective enforcement. Many Americans will lose their homes because they failed to abide by the fine print that was never meant to be understood. It was only meant to be "interpreted".

Nearly all loans have been sold to the corporate sector, both public and private. Vast sums of wealth ,through both intricate mechanisms and brute means, have been transferred to fund managers, attorneys, high finance executives and others. It must always be remember that wealth evaporation always begins with its illicit transfer.

Corporate law firms have had a banner year in deal-making and private equity. As corporate law school graduates expect to receive a total package worth close to a quarter million dollars a year for their "magical knowledge" and "imaginary skills", where does that leave the people that they master, manipulate, regulate and control? The more resources and power that is commanded by the law and the people tied to it, the more the American people fund their own destruction.

Goldman Sachs reports that housing-related losses could force banks and other players to cut lending by as much as $2 trillion, which would be enough to trigger a very nasty recession. An all-out assault against the productive sector has seen manufacturing jobs disappear in smoke. This obviously has a multiplier effect as the shock waves continue to rock the nation.

Something needs to be done to curtail the excesses of special interest control of governance. The preceding can and will invite disagreements and criticisms and that is perfectly fine. There is, after all, more than one way to skin the cat.

However, Americans cannot procrastinate on focusing on the one fundamental issue. That is dismantling the ruling class so that they are no longer at its mercy.

Very Truly Yours,

Harsha Sankar
908 Valley Ridge
Covington,Virginia 24426

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