Five Things We Need to Know About This Economic Disaster; The Ways the Media Missed It

Five Things We Need to Know About This Economic Disaster; The Ways the Media Missed It by Danny Schechter

1. IT WAS NOT A MISTAKE: IT WAS A SCHEME
Many people thing the economy is in free fall because some businesses made mistakes or because "everyone's to blame." Irresponsible borrowers are being equated with irresponsible lenders. Republicans are blaming Democrats, and vice versa. What the blame game misses is that this was at the heart of the collapse of the housing market that started the financial avalanche was a scheme and scam called Predatory Lending, often racially discriminatory and unscrupulous practices.

How do we know? The FBI tells us so as they open 2400 cases, say that crime is pervasive, open 1400 cases, indicted 400 people in the mortgage industry and announce a criminal investigation of 26 top companies. This is just the beginning. Even Alan Greenspan, the former head of the Federal Reserve blames fraud and corruption. Remember Franklin D Roosevelt's word for the folks behind the depression? He called them "banksters"

That's why I say we need a "jailout," not a bailout.

2. WALL STREET "SUCTION" COMPOUNDED THE CRIME

It was Wall Street firms that figured out how make real money on the peddling of subprime mortgages. The idea: get as many as people on the hook for cheap mortgages with no documentation so we can securitize them, by slicing them into investment pools and selling them worldwide as "asset backed securities." They pushed the brokers at the bottom to cut corners and get them more paper so they could turn straw into gold/ The problem: often there were no assets backing up asset-backed securities. The result, investors in other countries were defrauded and banks were forced to write down BILLIONS. This led to a lack of confidence and the credit crisis. Business writer Dean Starkman summed it up with one word: CORRUPTON. The same institutions were hiring lobbyists and making political donations to make sure they got their way. Corrupt themselves, they corrupted the political system further.

3. THE REGULATORS WERE NOT REGULATING

The head of the Securities and Exchange Commission admits that his agency did not do its job and regulate. Why? Because this administration didn't believe in regulation and supported all sorts of measures to let the "free market" do its thing. In addition, slick operators created a "shadow banking system" which was totally unregulated. The result, no one was watching the store or worrying about risk. Soon the law of karma went into effect -- what went around came around. The Banks got what they wanted and now they don't want it. Now they say, please bail us out.

4. THE MEDIA MISSED THE STORY

Where was the media exposing the this problem before it became a crisis, before three and half million families were forced into foreclosure, before the Congress passed a 700 BILLION dollar bailout that everyone in the know expects will go higher. The subprime lending book started after the http://dot.com boom went bust back in 2002. The market for these securities melted down in 2007. In that period, five years there were very few investigations perhaps because at this time, lenders and credit card companies spent $3 Billion advertising in the media. We need to investigate the Investigators.

5. WHERE WAS THE PUBLIC?

We can blame the kleptocrats on Wall Street and the compromised politicians, some of whom were sent to jail. We can even express our frustration with a media that barely covered the story when it might have done some good, and when they did cover tended to glorify high paying CEOs while not reporting on mounting economic inequality... But what about us, the people? Why were we in denial and not pressing our politicians to act in our interest?

One reason may be that we live in a charge-it society where we are constantly being told to shop until we drop. Many of us don't really understand high interest, especially about how it compounds. So many of us are in debt and obsessed with personal economic problems that make it hard to have the time to relate to a larger economic debate. Yet, it seems clear that we all need to understand these issues more clearly, and base our opinions on real information.

I am not an economic "expert" but I pushed myself to investigate our economic calamity. My findings appear in the book PLUNDER (Cosimo) My hope is that readers will find it of value and get into the conversation. If I can learn about these problems and the need for change, so can you.


About the Author
Danny Schechter edits Mediachannel. He was an Emmy Award winning producer for ABC News, director of the film In Debt We Trust and author of the new book: PLUNDER: Investigating Our Economic Calamity.

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