The End of Laissez Faire

In the 50 years, since America went from the largest creditor nation to the largest debtor, over leveraging debt, shrinking The American Middle-class; the 2008 financial crisis according to the President of Better Markets, Dennis Kehelleran was a $12Trillion toxic-asset-price-bubble-tsunami. For instance, after World War Two’s ‘Broad-Based Shared Prosperity 1946-1971’ the establishment of The Bretton Woods Fixed Exchange Rate Accords, ‘International Haircuts’, The Trilateral/Marshall Plan and government fiscal investment; defeated worldwide economic depression, reduced fascism, contained communism, plus shrank income inequality, while growing the American Middle Class and avoided big bank bailouts. ‘Bretton Woods’ created a system for reconstruction relief and equilibrium in the international balance of payments. However, according to Daniel Ellsberg, “postponing failure while remaining in office”, The Secret Chennault Affair Plan’, exacerbated the detrimental economic effects of wars of choice, further straining global finance and decolonization. To begin with, the ‘Bombshell August 15, 1971’ abandonment of Bretton Woods, separated capital from productivity gains, choosing finance over manufacturing, encouraging inefficient mediocre ‘Laissez Faire’ austerity of exotic finance for deindustrialization, further weakening inadequate, old, antiqued, antediluvian 19th century business practices; increasing risk, speculation and volatility. For example, the 1970’s saw disinvestment, high-inflation, the end of local usury laws, high-interest rates, stagnant wages and the introduction of suitability over fiduciary responsibility, i.e.. mortgage back security derivatives. For example, as the head of President Gerald R. Ford’s Council of Economic Advisors, Alan Greenspan explained the suitability of mortgage backed security derivatives moving risk from banks to capital markets. President Ford asked, “Is this good for the average American?” Likewise, the 1980’s rise of  ‘mass murderer/investment banker American Psycho types like  Gordon Gecko’ with leveraged junk bond hostile takeovers, executive compensation stock price manipulation moving entry level ratios from 1:40 to 1:300 and ‘The Laissez Faire Black Swan of Wall Street Bank Casino Gambling’ turning the Savings and Loan Industry into The Resolution Trust Corporation’. As the head of The United States Federal Reserve, Alan Greenspan watched, as the RTC was formed.                                                                                                                                                                                                                                                      Moreover, the 1990’s “Irrational Exuberance” of 2nd, 3rd + 4th mortgages, saw ‘The Laissez Faire Black Swan Collapse of Long Term Capital Management, over leveraging $5Billion into $1 Trillion, based on 60,000 simultaneous long and short trading positions.’ Again as the head of The Federal Reserve Alan Greenspan declared ‘this time is different’ and oversaw the private liquidation of LTCM. Furthermore, the beginning of the second millennium saw the official end of the ‘Glass-Steagall; separation of insurance-commercial-investment-banking’, ‘Y2K dot.bomb, and unprecedented tax cuts, Enron, WorldCom financial engineering collapses; questionable Triple AAA tranches of mortgage-back-securities-derivatives. In like manner, The Great Recession 2008 financial crisis was the $12Trillion ‘collapse of Shadow Banking’s toxic-asset-price-bubble-tsunami’ uncovering a debt-super-cycle placing mortgage debt, student loan debt, credit card debt and auto loan debt underwater, creating headwinds for fragile economic growth and recovery. October 22, 2008 as a five-decade advocate of rational self-regulated markets,  as a former Federal Reserve Chairman, Alan Greenspan finally admitted to ‘finding a flaw in his ideology’. Nine years after the financial crisis, along with the revelations of opaque tax havens from BCCI to ‘The Panama Papers;Breaking The Story Of How The Rich And Powerful Hide Their Money”, the end of the super-commodity/oil cycle submerged ‘The BRICS, PIGS, MINT and Fragile Five’, [Brazil, Russia, India, China, South Africa, Portugal, Ireland, Greece, Spain, Mexico, Indonesia, Nigeria, Thailand, Turkey, Brazil, India, South Africa, Indonesia, Algeria, Iraq, Libya, Nigeria, Venezuela], therefore the next convergence exacerbates the negative effects of globalization, emphasizing the slower technological advances of ‘Moore’s Law’, plus the effects of non-performing loans on zombie banks; negative interest rates yielding an anemic slow uneven economic recovery increasing risk, speculation and volatility; challenging the sustainability of the social responsibility of 21st century business. Simply put, using mathematics as a cover story, overemphasizing capital at the expense of productivity gains in an unstructured hyper-competitive global economic environment has consequences, because ‘Laissez Faire Black Swans’ cannot price everything. Therefore, there has got to be a better way.