You know how that little story making the rounds of our elite media which the Republican racists supporters of John McCain have been promoting? The one where the current global financial crisis was caused entirely by Obama’s illicit connection to Fannie Mae and Freddy Mac and their nefarious plan to give bad mortgage loans to shiftless, lazy unqualified black people? It’s been a standard line at any Palin/McCain rally, and I’ve heard it belched out countless Republican pundits on television every chance they get. But folks, it just ain’t true no matter how many thousands of times they repeat this lie, as this story helps to demonstrate:
NEW YORK (Reuters) – Federal and New York state prosecutors have launched a broad investigation of the credit default swap market, asking whether CDS data was manipulated by investors to squeeze financial stocks amid a global credit crisis.
The prosecutors said they are looking at whether investors drove up prices of CDS transactions reported to data providers but never actually completed. Rising CDS prices, indicating a higher risk of debt default, drove down prices of bank stocks during the past year.
Now, unless those “investors” (short for white collar criminals) can be proven to be Obama supporters and/or black people with bad mortgages who ruined our economy just so McCain would lose the election, I don’t think we can blame the Democrats or Obama for their actions manipulating the markets. Effectively, what these insiders are accused of doing is kicking over the tottering tower of lies and deceits which investment banks and mortgage lenders had created in order to fuel the housing bubble. And why did they do it? Apparently for that most ancient of motives: pure greed.
Cuomo’s office said it has issued subpoenas seeking data from a range of financial market players, including stock exchanges, hedge funds and three companies that process swap trades: clearing agent Depository Trust Clearing Corp, CDS data provider Markit, and market data and news company Bloomberg LP.
CDS are a form of insurance that bond buyers can purchase to protect themselves against a default. As more investors rely on CDS data to judge a company’s financial health, rising CDS prices sent bank stocks plunging and disrupted trading and prime brokerage businesses.
The CDS inquiry began several weeks ago but is still in its preliminary stages, the prosecutors said. As in any market-manipulation probe, it is difficult for government authorities to prove a trader intended to break the rules.
You see, when you can rig the game, or to use a more familiar metaphor, guide Adam Smith’s invisible hand to go where you want it to go and do what you want it to do, you can make a nice little profit off your manipulation of the markets. And leave all the “idiots” crying over their losses while you laugh yourself all the way to your anonymous offshore bank accounts.
“I was in this game for the money,” he continued. “The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.
“All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”
Ain’t unregulated unfettered capitalism wunnerful!
