It's 'Groundhog Day' in America
The 1993 movie Groundhog Day is the perfect metaphor for so much of what happens in the U.S. — including (or maybe especially) anything having to do with finance or corporate crime and corruption. Bill Murray plays a Pittsburgh weatherman who's forced to cover a saccharine annual event in rural Pennsylvania. The assignment is his idea of hell, and he tries desperately to get it over with as quickly as possible so he and his two-person crew can get out of town and back to the "big" city.
But the weather — and fate — intervene, and Murray's character is forced to re-live that same day over and over again until, after exhausting every duplicitous and underhanded strategy for exploiting the situation to his own advantage, he is finally able to restore the normal timeline only by abandoning his cynical and self-serving attempts to "game" a system he knows all too well (by dint of its repetition) and fundamentally altering his entire approach to life and his relationships with the people in it.
Well, anyone who's lived through one of the recent boom-bubble-corruption-crime-bust-bailout cycles that have gradually supplanted the actual economy in the U.S. must be hearing the strains of the 1965 Sonny and Cher hit I've Got You Babe*, because it should be clear to everyone by now that Wall Street is perfectly happy with the lucrative predicament it's in, and has no interest in fundamentally changing anything — and that the government's pathetic pantomime of financial reform doesn't even begin to approach the level of systemic change needed to break us out of yet another econo-temporal loop.
In addition to the return of soaring stock valuations, quarterly profits, and hyper-inflated bonuses on Wall Street; the restoration of corporations, CEOs, and shareholders to their Gilded Age status at the center of economic policy, political influence, and media genuflection; and corporate America's reversion to brazen exploitation of consumers, workers, and the government, there is a less overt but potentially more ominous sign that the "lather, rinse, repeat" school of economics is back in session.
The same privately held, ethically bankrupt bond-rating agencies that served as willing log-rollers in Wall Street's massive pyramid scheme last time — by granting AAA (risk-free, government-grade) ratings to securities they themselves did not understand — are doing it again.
Not only are ratings firms such as Moody's and Standard & Poor's allowing Wall Street to re-package large parts of the same over-leveraged "toxic" bonds that those same agencies over-rated a few years ago (and which are worth less than nothing now, and are still sitting on the investment firms' books), but they are making millions of dollars in fees — again — by giving AAA ratings to $80 billion worth of these re-securitizations (also known as "re-REMICs") again. And at least one firm was forced almost immediately to downgrade the bonds to high-risk "junk" status. AGAIN.
As Reuters columnist Felix Salmon noted in obvious astonishment at the practice, "the whole point of a AAA-rated ... security is that it’s robust [enough] to [avoid] such deterioration. If it isn’t, then it should never have been rated AAA in the first place." Salmon described the entire process as a "farce" and went on to say that "[i]f we needed one more reason to strip all official recognition from credit ratings, this is it. S&P and Moody’s are clearly completely incompetent, and no one should base any investment decisions on the random series of letters they apply to bonds."
Ah, if only it were incompetence. But one of the big lessons of the latest financial crisis is to never attribute to accident, ineptitude, or a "perfect storm" of events that which is most easily explained by simple greed.
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* One of the film's central conceits is Murray's character waking up each morning to the song playing on the radio, and realizing that he's still stuck in the same time-warp hell.
