Mark Karlin: Given your expertise in understanding the corruption of Wall Street, what did you find in the practices of the financial world leading up to the 1929 crash that presaged the 2007 crisis?
Nomi Prins: Into the crash of 1929, there were six big banks. Their leaders controlled most of the market activity, sat on each others' boards and owned large chunks of stock in each others' firms. They inflated the values of stocks through "trusts" (financial mechanisms by which many investors could "pool" together their money, and borrowed money, to purchase or sell various stocks in bulk).
These were further puffed up by a co-opted media and enabling political leaders (as depicted in "Black Tuesday.") Even as the crash happened, the biggest bankers thought they could contain it and could buoy stocks until the market settled, so they threw in their own (read: customers') money. That didn't work, of course.
Today, we have six banks (mostly incarnations of the 1929 banks) that control the stock market, most mortgage lending, the bulk of deposits and nearly all derivatives activity. They inflated the housing market, in particular subprime loans, so they could stuff those loans into more complicated assets, borrowing hundreds of trillion of dollars against them, increased their risk through derivatives and spread them throughout the globe.
Read more about The Glass-Steagall Act, how Geithner is a tool, and why, with the way the system is set up today that
what happened with the collapse of finance that lead to the Great Depression, absent complex derivatives, is nothing compared to what could happen today.
"Now, more than ever, the illusions of division threaten our very existence. We all know the truth: more connects us than separates us. But in times of crisis the wise build bridges, while the foolish build barriers. We must find a way to look after one another as if we were one single tribe.” -King T'Challa, Black Panther
The truth is incontrovertible. Malice may attack it. ignorance may deride it, but in the end, there it is. ~Winston Churchill
And if this scenario comes to pass, America is much more intertwined with the world economy that it was in 1929. The old saying, if America catches a cold, the world catches the flu, if America catches the flu, the world dies.
Thomas Sowell: There are no solutions, just trade-offs.
