Saturday, April 24, 2010

Sorceries and megabanks

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Peninsula readers' letters: March 24

From Daily News Group readers
Posted: 04/23/2010 11:31:33 PM PDT
Updated: 04/23/2010 11:31:34 PM PDT

Sorceries and megabanks

Dear Editor: This oligarchy consists of six megabanks — Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo. They have assets equivalent to 60 percent of our gross national product.

And to put this in perspective, in the mid-1990s these six banks or their predecessors, since there have been a lot of mergers, had less than 20 percent. Their assets were less than 20 percent of the gross national product.

They did sorceries to take a lot of these loans and package them up into very complex "collateralized debt obligations" and other risky "financial derivatives" and then sell them to others as investments in the hopes the loans would one day be repaid. Banks and other investors all over the world bought and sold these things that they knew probably had no real value. Does this sound mad to you? It did to many at first, but somehow — like the old tale of the emperor's new clothes — enough investors and financiers thought they were exquisite, and eventually nearly everyone began to think it was economic wisdom.

"For thy merchants were the great men of the Earth, and by thy sorceries (the deceitfulness of riches and the witchcraft of wealth) were all nations deceived," says the Book of Revelation, 18,23b. American affluence is the dream of every country the world over, and her luxuries, sins and violence, from her music to her crimes, are imitated by nations around the world.

Ted Rudow III,MA

Palo Alto

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