To my fellow mormons. If proposition 8 doesn’t pass this election in California, homosexuality won’t ruin the country and lead to the downfall of the nation of the USA. Don’t get me wrong. I am not saying that is is not a worthy thing to seek to keep marriage in the condition that God has ordained that it should be. On the contrary, your efforts are noble and faithful. However, there is so much in this country, in California, in the world, that is not the way God has ordained that it should be right now.
My Elder’s Quorum instructor last week stated that homosexuality has brought down every nation that ever embraced it and he mentioned Sodom and Gommorah as an example. This is false doctrine my friends. Sodom was brought down by its greed and covetousness and meanness of spirit and pride. This is what Ezekiel 16:49-50 means. This is what the Book of Mormon teaches us. We are told it is a book for our day right? Well, what brought down those great ancient civilizations? Was it not greed, covetousness and pride? Failing to repent, seeking after the glory of the world and it’s riches? The Book of Mormon is full of references that speak thusly. 3 Nephi 6 for example:
I am more afraid of covetousness in our Elders than I am of the hordes of hell. Have we men out now of that class? I believe so. I am afraid of such spirits; for they are more powerful and injurious to this people than all hell outside our borders. All our enemies in the United States or in the world, and all hell with them marshaled against us, could not do us the injury that covetousness in the hearts of the people could do us; for it is idolatry.
22 And whatsoever nation shall uphold such secret combinations, to get power and gain, until they shall spread over the nation, behold, they shall be destroyed; for the Lord will not suffer that the blood of his saints, which shall be shed by them, shall always cry unto him from the ground for vengeance upon them and yet he avenge them not.23 Wherefore, O ye Gentiles, it is wisdom in God that these things should be shown unto you, that thereby ye may repent of your sins, and suffer not that these murderous combinations shall get above you, which are built up to get power and gain—and the work, yea, even the work of destruction come upon you, yea, even the sword of the justice of the Eternal God shall fall upon you, to your overthrow and destruction if ye shall suffer these things to be.24 Wherefore, the Lord commandeth you, when ye shall see these things come among you that ye shall awake to a sense of your awful situation, because of this secret combination which shall be among you; or wo be unto it, because of the blood of them who have been slain; for they cry from the dust for vengeance upon it, and also upon those who built it up.25 For it cometh to pass that whoso buildeth it up seeketh to overthrow the freedom of all lands, nations, and countries; and it bringeth to pass the destruction of all people, for it is built up by the devil, who is the father of all lies; even that same liar who beguiled our first parents, yea, even that same liar who hath caused man to commit murder from the beginning; who hath hardened the hearts of men that they have murdered the prophets, and stoned them, and cast them out from the beginning.26 Wherefore, I, Moroni, am commanded to write these things that evil may be done away, and that the time may come that Satan may have no power upon the hearts of the children of men, but that they may be persuaded to do good continually, that they may come unto the fountain of all righteousness and be saved.
I believe that banking institutions are more dangerous to our liberties than standing armies. (Thomas Jefferson, US President; 1743 – 1826)
America is dying. It is self-destructing and bringing the rest of the world down with it.
During the 1990s, advertisers went into overdrive, marketing an ever more luxurious lifestyle, all made available with cheap easy credit. Second mortgages became commonplace, and home equity loans were used to pay credit card bills. The more Americans bought, the more they fell into debt. But as long as they had a house their false sense of security remained: their home was their equity, it would always go up in value, and they could always remortgage at lower rates if needed. The financial industry also believed that housing prices would forever climb, but should they ever fall the central bank would cut interest rates so that prices would jump back up. It was, everyone believed, a win-win situation.
Greenspan’s rock-bottom interest rates let anyone afford a home. Minimum wage service workers with aspirations to buy a half million-dollar house were able to secure 100% loans, the mortgage lenders fully aware that they would not be able to keep up the payments.
So many people received these sub-prime loans that the investment houses and lenders came up with a new scheme: bundle these virtually worthless home loans and sell them as solid US investments to unsuspecting countries who would not know the difference. American lives of excess and consumer spending never suffered, and were being propped up by foreign nations none the wiser.
It has always been the case that a bank would lend out more than it actually had, because interest payments generated its income. The more the bank loaned, the more interest it collected even with no money in the vault. It was a lucrative industry of giving away money it never had in the first place. Mortgage banks and investment houses even borrowed money on international money markets to fund these 100% plus sub-prime mortgages, and began lending more than ten times their underlying assets.
After 9/11, George Bush told the nation to spend, and during a time of war, that’s what the nation did. It borrowed at unprecedented levels so as to not only pay for its war on terror in the Middle East (calculated to cost $4 trillion) but also pay for tax cuts at the very time it should have increased taxes. Bush removed the reserve requirements in Fannie Mae and Freddie Mac, from 10% to 2.5%. They were free to not only lend even more at bargain basement interest rates, they only needed a fraction of reserves. Soon banks lent thirty times asset value. It was, as one economist put it, an ‘orgy of excess’.
It was flagrant overspending during a time of war. At no time in history has a nation gone into conflict without sacrifice, cutbacks, tax increases, and economic conservation.
And there was a growing chance that, just like in 1929, investors would rush to claim their money all at once.
To guarantee, therefore, these high risk mortgages, the same financial houses that sold them then created ‘insurance policies’ against the sub-prime investments they were selling, marketed as Credit Default Swaps (CDS). But the government must regulate insurance policies, so by calling them CDS they remained totally unregulated. Financial institutions were ‘hedging their bets’ and selling premiums to protect the junk assets. In other words, the asset that should go up in value could also have a side-bet, just in case, that it might go down. By October 2008, CDS were trading at $62 trillion, more than the stock markets of the whole world combined.
These bets had absolutely no value whatsoever and were not investments. They were just financial instruments called derivatives – high stakes gambling, ‘nothing from nothing’ – or as Warren Buffet referred to them, ‘Weapons of Financial Mass Destruction’. The derivatives trade was ‘worth’ more than one quadrillion dollars, or larger than the economy of the entire world. (In September 2008 the global Gross Domestic Product was $60 trillion).
Challenged as being illegal in the 1990s, Greenspan legalised the derivatives practise. Soon hedge funds became an entire industry, betting on the derivatives market and gambling as much as they wanted. It was easy because it was money they did not have in the first place. The industry had all the appearances of banks, but the hedge funds, equity funds, and derivatives brokers had no access to government loans in the event of a default. If the owners defaulted, the hedge funds had no money to pay ‘from nothing’. Those who had hedged on an asset going up or down would not be able to collect on the winnings or losses.
The market had become the largest industry in the world, and all the financial giants were cashing in: Bear Stearns, Lehman Brothers, Citigroup, and AIG. But homeowners, long maxed out on their credit, were now beginning to default on their mortgages. Not only were they paying for their house but also all the debt amassed over the years for car, credit card and student loans, medical payments and home equity loans. They had borrowed to pay for groceries and skyrocketing health insurance premiums to keep up with their bigger houses and cars; they refinanced the debt they had for lower rates that soon ballooned. The average American owed 25% of their annual income to credit card debts alone.
In 2008, housing prices began to slide precipitously downwards and mortgages were suddenly losing value. Manufacturing orders were down 4.5% by September, inventories began to pile up, unemployment was soaring and average house foreclosures had increased by 121% and up to 200% in California.
The financial giants had to stop trading these mortgage-backed securities, as now their losses would have to be visibly accounted for. Investors began withdrawing their funds. Bear Stearns, heavily specialised in home loan portfolios, was the first to go in March.
Just as they had done in the 20th century, JP Morgan swooped in and picked up Bear Stearns for a pittance. One year prior Bear Stearns shares traded at $159 but JP Morgan was able to buy in and take over at $2 a share. In September, Washington Mutual collapsed, the largest bank failure in history. JP Morgan again came in and paid $1.9 billion for assets valued at $176 billion. It was a fire sale.
Relatively quietly over the summer Freddie Mac and Fannie Mae, the publicly traded companies responsible for 80% of the home mortgage loans, lost almost 90% of their value for the year. Together they were responsible for half the outstanding loan amounts but were now in debt $80 to every $1 in capital reserves.
To guarantee they would stay alive, the Federal Reserve stepped in and took over Freddie Mac and Fannie Mae. On September 7th 2008 they were put into “conservatorship”: known as nationalisation to the rest of the world, but Americans have difficulty with the idea of any government run industry that required taxpayer increases.
What the government was really doing was handing out an unlimited line of credit. Done by the Federal Reserve and not US Treasury, it was able to bypass Congressional approval. The Treasury Department then auctioned off Treasury bills to raise money for the Federal Reserve’s own use, but nonetheless the taxpayer would be funding the rescue. The bankers had bled tens of billions from the system by hedging and derivative gambling, and triggered the portfolio inter-bank lending freeze, which then seized up and crashed.
The takeover was presented as a government funded bailout of an arbitrary $700 billion, which does nothing to solve the problem. No economists were asked to present their views to Congress, and the loan only perpetuates the myth that the banking system is not really dead.
In reality, the damage will not be $700 billion but closer to $5 trillion, the value of Freddie Mac and Fannie Mae’s mortgages. It was nothing less than a bailout of the quadrillion dollar derivatives industry which otherwise faced payouts of over a trillion dollars on CDS mortgage-backed securities they had sold. It was necessary, said Treasury Secretary Henry Paulson, to save the country from a “housing correction”. But, he added, the $700 billion taxpayer funded takeover would not prevent other banks from collapsing, in turn causing a stock market crash.
In other words Paulson was blackmailing Congress in order to lead a coup by the banking elite under the false guise of necessary legislation to stop the dyke from flooding. It merely shifted wealth from one class to another, as it had done almost a century prior. No sooner were the words were out of Paulson’s mouth before other financial institutions began imploding, and with them the disintegration of the global financial system – much modelled after the lauded system of American banking.