But I don’t buy the part about everyone “knowing” it, or even many of them knowing what they were doing. The hetero white male of the West has been under the delusions of free market magic for over a generation. The typical wingnut listening to Rush is not a dumb plumber or contractor (although there are plenty of those). The typical dittohead/freemarket-true-believer is a small time CPA or lawyer who genuinely believes that they and their kind (white, college edumacated, xtian, middle to upper class) are smarter, more productive and – most of all- more deserving than anyone else in the workforce. They see their relative prosperity as their natural right. Stupid self important men with peabrain, enabling “little ladies” wives who let their men think for them (Michelle Malkin, PamAtlas Slug, I’m looking at you), whom the genuine fraudsters co-opted to enact their legislative and executive branch malfeasance (not that the fraudsters, politicians, and overpaid CEOs lacked the same selfimportant delusions).

My mother and a couple of my sisters fall into that peabrain category, and I learned over the holidays from these dumbasses (who couldn’t pass Econ 101 if it was on a microscopic chip encased in a gelcap laxative) that our current problems are “not that simple” (when they heard me blame the Republictards’ deregulation and lack of oversight for this mess). Apparently they have learned from their husbands that this mess is due to minorities buying houses they should have known they couldn’t afford (which sounds like the fault of bleeding heart liberals). See? It’s THAT simple.

I foresee a very, very rude awakening for these people. Even ruder than their liberal son/brother/brother-in-law. Actually, I don’t ever foresee them waking up. But this society will definitely get very ugly in the next few years when reality tries to insert itself into their delusions.

The worst thing about this is that an honest business can’t compete with a crooked one. You can’t make the same profits as a corporation whose business model is based on fraud. So bad business forces out good business.

I felt like I practically lost my voice saying this between 1997 and 2003, after which point I pitched in the towel.

It’s hard, given that experience, to have very much patience or sorrow for much of what we see happening now. Clearly, there were people who didn’t have enough information, background, or perspective to think things through.

Particularly in the housing market, I can honestly say that I saw several really decent developers get totally shafted by ambitious, greed-driven McMansion builders who couldn’t buy enough property fast enough to undercut the few guys who were trying to do a good, environmentally responsible job in the early days of ‘green building’ and basically either threw in the towel, or found another line of work. And now we really need their skills.

Bad business represents huge ‘lost opportunity’ costs.
The economics of allowing bad businesses to run things — and they always do, because they cut corners — is hugely expensive over time.

And the guys who tried to be good, responsible business people?
Now screwed, cynical, and probably not really excited about getting back into construction.

It is apparent that today’s auditors and the firms they work for have no pencils, only a rubber stamp and some public relations boilerplate.

It is equally absurd to imply that that all of the predatory lenders, and people like Sen Phil Gramm and House Speaker Tom Delay — who loosened the US banking regulations — are somehow members of a specific religious faith is, as I hope that you recognize, ludicrous.

Right. Consider that Madoff and his smarmy smile after released on bail, he’s really running a double con. Ponzi scheme? Or money laundering until something went wrong.

I’m still amazed that the finanical industry makes four times the “salary” as all other industries. For what value added?

I am sure that the professionals will claim they are not in the business of policing their peers, but they also know what is most likely a fraud, etc., which places them in the best position of knowing who and/or what is the fraud in question.

Also we need to support those who are willing to be a whistle blower.

Food for thought.

what happened to “trust everybody but cut the cards”?

Auditors and risk managers are overhead. These are people who cut overhead and lay workers off in order to improve profits.

It’s easier for an ignorant so-called businessman to improve profits by cutting expenses than to act to increase revenues. Expenses show up in the financial statements. Revenue enhancements do not, so there is a great deal more uncertainty about what will increase revenues. That has traditionally been a banker’s blind spot, since they read financial statements but generally do not understand the businesses they lend money to.

Usury? At that rate, yes.

But again, that is too good to be true, so their overall competence has been trumped by their greed – or their addiction, like the addicted gambler who thinks that if he gets just one more big win, he’ll come out ahead or at least break even and then quit.

It just suddenly occurred to me that the behavior of the big money bankers resembles that of addicted gamblers. An obsession with the game, a blindness to the risks, and loudly attacking anyone who challenges them. I wouldn’t be too surprised to learn that most of the big money bankers are addicts to their banking.

That would explain their emphatic defense of the free market as it has been run for the last thirty years. They are like addicted smokers who argue so emphatically that they have a “Right” to smoke and that no one else can take that “Right” away.