How did I know the crash was coming four years ago, and for the very reasons that it happened? Anyone can understand how bubbles work. All you need is half a brain and no stake in believing the get-rich hype. It's been 290 years since John Law's France and the near simultaneous South Sea crash of 1719-20, some 380 since the tulip mania of 1637. It's been 80 since the Wall Street crash of 1929, so newness is an excuse. The dot-com bubble burst and Enron went down just eight years ago, so you can't say the history is too remote to remember.
Little about the basic scheme of overvalue and oversell -- with a wink -- was different in this latest and greatest round. Many investors knew they were in a bubble market in the hope of cashing out before it crashed.
One of the tricks this time was that the perpetrators deployed hired mathematicians with sophisticated but ultimately fictional algorithms to conceal the predatory, largely criminal practices that became the financial sector's norm. They knew exactly what the inevitable results would be, years before 2008.
Come on, Madoff and Thain aren't "black swans" - they were the
chairmen of the equities markets! Madoff hired the ratings agencies for a blessing and was cleared by the blind men at the SEC. He was not an abberration or a bad-apple surprise: he was the
paradigm of the modern financial sector. This is a Ponzi economy.
From the Gramm-Rubin deregulation offensive on behalf of Citigroup and Enron, from yesterday's "Kenny Boy" Lay to today's John Thain, all of the executives at the biggest financials, not to mention the ratings agencies, the central bank, the Goldman Sachs cabal who recently commandeered the Treasury with the blessings of the corporate parties, the supposed government overseers of the SEC, and the outgoing Halliburton Administration are neck-deep in breathtaking financial criminality, and even more astonishing self-enrichment. Sadly, the Yes-on-TARP voter Obama is a step away from fully cementing his own complicity in the intentional, long-running and systematic plunder of the American people and the world on behalf of the billionaire-banker class.
Before the crash, any banking poobah who didn't go along with derivatives scammery would have been eaten alive for not pulling down the highest return in accordance with the Money-God's commandments. Even their apologists know this; it's their excuse, for pete's sake!
For those who really want to read about the crisis, and not the justifying mumbo-jumbo advanced by the players, Michael Lewis laid it out in a brilliant treatment published in Portfolio:
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?print=true# The End
by Michael Lewis December 2008 Issue
The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.![](http://www.portfolio.com/images/site/editorial/magazine/2008/12/end-wall-st-bull-collapsed-slide.jpg)