The Ponzifying of America

Presidents Weekend brings reminders of how history's most productive economy of goods and services was brought to its knees by glorified paper pushers, crafty clerks who make nothing but money.

On CNN, Obama adviser Paul Volcker complains, "We've got to produce something that somebody else wants to buy."

According to the former Fed chairman, "we spent 20 years inducing some of our brightest people, our most energetic people to go to Wall Street. And nobody wants to be a mechanical engineer or a chemical engineer or a civil engineer. They want to be a financial engineer."

Citing failure of government regulation, Volcker recalls that "a whole school of thought said you don't have to worry about a breakdown. These smart mathematicians are taking care of it. And all the risks have been dispersed to the point where they won't upset anything. Well, when the screws became loose, we found out a lot of the risks were pretty concentrated."

Last week, Volcker recommended "euthanasia, not rescue" for financial manipulators who overreach, but members of the Senate Banking Committee who depend on them for campaign contributions are balking.

Meanwhile, a 60 Minutes segment on financial fraud examines the economic meltdown as "a monsoon of gullibility colliding with a tidal wave of greed."

A financial analyst calls it "a massive Ponzi scheme...the biggest crime against the American economy in our lifetimes" arguing that "the bad mortgage loans that fueled the crisis were repackaged by investment banks, sliced into increasingly complex derivatives and resold to other investors, even though the underlying mortgages were often virtually worthless.

"You had various traders buying each others' products to artificially keep the prices up so that the bubble didn't collapse."

Those mortgage derivatives, 60 Minutes concludes, "were so mind-numbingly complicated, nobody understood them fully. Certainly not...the buyers at banks, mutual funds, pension funds and insurance companies who wound up holding a bag full of worthless paper."

Despite rising public rage and such new revelations that Wall St. helped Greece hide debt that fueled Europe’s banking crisis, the Ponzifying of America goes on in a climate of political paralysis.

Insurance paper pushers continue to siphon one out of every three dollars in the $2.5 trillion health care industry from doctors, hospitals and others who treat patients while bank bailout recipients, hedge funds and private equity funds make record profits and pay themselves huge bonuses for manipulating the money of people who do actual work in the society and paying them practically nothing for using it.

If nothing changes soon, it will not be just the Tea Party people and Sarah Palin who tell government guardians of our interests to "get real" in November.