Socialism washes over America
tor>Marian Miszalski‘To get to the bottom’… – and the mechanism of the financial crisis in America was revealed surprisingly quickly. This mechanism is not a result of the free market chaos but the decision that was taken years ago by the Democrats who controlled the Congress; so it was a political decision of the American left wing. In order to win cheap popularity in the society they introduced the bill that forced banks to assign 30% of their loan capacity for the so-called subprime loans, i.e. loan without escrow accounts. Moreover, to get a good start (sing before breakfast, cry before night) the Democrats chose two quasi-banks (having money from the taxpayers!) that began this dangerous practice. The zeal to buy this political support for someone’s money was so big that the bank ‘touts’ catching borrowers without insurance received even 2.5 % of commission on the amount of the mortgage … There always were people who wanted to take easy home loans. But these ‘social banks’ that the Democrats had created acted according to virtual, i.e. deceptive bookkeeping, entered the loans, which they had given, not as expenses on account of future possible profits (their profits would begin only when the borrowers began regularly pay back their loans and their interests, which constitute the profits of the bank) but as ‘profits.’ This deceptive practice of virtual accountancy was shown in the famous affair of ‘Enron’, the big finances-insurance company a few years ago. In spite of that the American organ of financial control did not draw any conclusions. It shows how far the economic thought of socialism has penetrated the American financial system. It is worth noticing that within only 2-3 years the leadership of this financial group – one of these ‘managers’ was sentenced, the second one ‘committed suicide’, the third one ran away from America, the fourth avoided court verdict, being defended by skilful lawyers (he was not aware of what had happened…) earned on the Enron affair several hundred million dollars for each of them. Entering expenses as ‘profits’ and revealing them as profits in the reports caused that the evaluation of these fraudulent banks on the stock exchange was profitable, their value was growing… The other banks, not wanting to be worse on the stock exchange, followed this deceptive practice, and the spiral of big fraud, started by the American socialists and social democrats from the Democratic Party, began fuelling. The one who has deceived or lied once generally got bogged down in deception and lies… Giving mortgages without proper insurance means improved ‘the virtual position’ of the loan givers on the market but could no last for ever and the losses of these banks must have been unveiled sooner or later. In order to delay this sad moment (and at the same time to rescue their own remuneration, exploited to the maximum on the basis of false accountancy, showing allegedly excellent conditions of these banks) their management staff began selling secondary market securities, something like bonds (based on these numerous loans), ensuring the buyers shares in alleged extra-profits which the bonds would bring in the future. In the basic scheme it resembled the mechanism of the most primitive financial fraud, called ‘pyramid scheme’, which has been known well in Poland, too. It was an attempt of the cheaters, ‘to run ahead’ in order to cover the first deception: complete unprofitability of the loans. Yet, throughout years of this deceptive practice, which was socialist in its content and free market in its form, the real estate market in America collapsed because it had to collapse: the already started easy availability of mortgages without insurance caused an increase in prices of real estates on the same basis as issuing bad money must evoke increasingly high prices. In order to stop this deceptive practice, initiated by the Democratic Party, one had to give bigger and bigger ‘loans without insurance’, which no accountancy, even the virtual one, could hide the size of this economic absurdity and fraud. All things were revealed (fraud and lies will out although within these years several dozen cheaters belonging to the bank management made big fortunes). Now the Republicans must face the music of the Democrats. Although at first the Republicans strongly opposed the so-called Paulson’s plan (robbing the American tax-payers of 700 billion dollars to rescue the main participants of this big fraud!) but finally accepted the plan to lose some of their popularity before the presidential election.
The interesting thing is that in Europe Germany opposed a similar ‘rescue plan’ but the Benelux countries, France, Italy and Great Britain, strongly connected with the American capital, accepted the plan at once and in the end Germany yielded. Unfortunately, our financial sector is also connected with Holland and France as far as our capital and organisational aspects are concerned, which will influence us in somewhat delayed time. It is known that the Polish governments borrow from Western usurers and profiteers (by issuing bonds) instead of cutting radically the bureaucracy, its emoluments, and prepare honest privatisation of the still powerful socialist ‘remains’ in Poland. They do not possess the knowledge to which extent these bonds are in the hands of foreign financial institutions that face the threat of the big fraud of the American Democrats but it is not difficult to image the situation in which they will prolong these obligations to rescue their own interests or demand retiring these bonds on time… Thus we may face the threat of giving over the national wealth to foreign hands on an increasingly large scale. In the meantime, the creation of the European guarantee fund for banks (the socialist idea of the French President, ‘liberal’ Sarkozy), similar to the American Paulson’s plan, is an attempt to rescue the financial institutions, their political promoters and sponsors, that take part in this deceptive practice at the cost of the ordinary tax payers, honest citizens who would never take bank loans knowing that they will not be able to pay them… In my opinion the second consequence of not only the big fraud in America but the adopted ‘preventive means’ will be a radical increase in high prices in Poland. Above all it will be the poorest that will pay for the visible ignorance and opportunism of the government of the Citizen’s Platform, especially in our hybrid system.
"Niedziela" 42/2008