Bonus Episode: Mephistopheles in Manhattan

Harry Angel: Louis Cyphre . . . Lucifer. Even your name is a dime store joke.
Louis Cyphre: Mephistopheles is such a mouthful in Manhattan, Johnny...
-From Angel Heart, 1987

Mephistopheles might be a mouthful in Manhattan. Or maybe Mephistopheles is already in Manhattan.

For those of you in the, "We could just neeeevveerrr have another 2008" crowd, the documentary "Money, Power, Impunity: The Bankers Who Stole The World" should be mandatory viewing. If you get a bit of gray in your hair (silver, in my case), you'll realize you've lived long enough to see these "we could just never" events happen multiple times. Funny how that works.

In a shining example of cult-like tactics used in Corporate America, the CEO of Lehman Brothers is shown in an internal (or perhaps infernal) video salivating over the idea of ripping out hearts and eating them in front of the victims. I mean . . . WTF?

Link to the documentary: https://www.youtube.com/watch?v=PsFpFP8o1o8

Other links I discuss in this episode:

https://features.marketplace.org/why-no-ceo-went-jail-after-financial-crisis/#:~:text=The%20number%20of%20executives%20jailed,one%20banker%20went%20to%20jail.

https://www.reuters.com/article/baker-hedgefund-plea/chicago-hedge-fund-manager-pleads-guilty-to-fraud-idUSN1E77N1UI20110824


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Transcript

0:15

Welcome to the Causey Consulting Podcast. You can find us online anytime at CauseyConsultingLLC.com. And now, here's your host, Sara Causey. Hello, Hello, and thanks for tuning in. I wanted to record a bonus episode because I've been back on Java Discover. And I watched a documentary titled Money, Power impunity, the bankers who stole the world, the 2008 bank crisis and recession documentary. Apparently, this was published in 2018. And it's kind of difficult to believe that's already been four years ago. But I want to read the opening slide for you now. 10 years after the global economic crisis of 2008, the world is still reeling, but no one has yet been held responsible. This is a story of the perfect crime. Doesn't that say at all? I have mentioned many times before that whatever it is that's brewing up now reminds me so much of the prelude to 2008 yet anytime that I say that I get swatted down by man explainers, bots, shills, trolls, oh, we could just never and it's like, sure. But yet all of this seems to be cyclical. I was having a conversation just the other day with a mortgage broker. And I told him that same thing, you know, it's get a little bit spooky out there. I'm starting to kind of feel the way I did 2006 2007. Seeing the same kind of things play out. The job market is my Bellwether, because I've been in it for so many years, yada, yada. And he tried to crank it up. Well, I just don't think we would ever have another 2008 Oh, and I'm like, Huh. Don't believe me? Just watch. There's an article on marketplace.org. I'll drop a link to it as well. And it's titled you asked, we answered. Why didn't any Wall Street CEOs go to jail after the financial crisis? The answer to that reads, it's complicated is it doesn't seem to be that complicated to me. I'll read the opening paragraph for you now. Why didn't any Wall Street CEO go to jail after the financial crisis? It's a question we were frequently asked throughout our reporting of the 10 year anniversary of the financial crisis, the financial crisis of 2008 altered so many lives, millions of people lost their homes, their jobs and their savings. It set off a recession that collectively destroyed over$30 trillion of the world's wealth. And though the crisis grew out of the big banks handling of the mortgage backed securities, no Wall Street executive went to jail for it. So what happened? So they have this little diagram underneath that shows these different banks and like colored balls representing how much of their total assets that I guess were responsible? So we have banks like Credit Suisse, Goldman Sachs, Deutsche Bank, Citigroup, Bank of America, JP Morgan Chase. Now, for those of you in the week of Joe's never crowd that want to bury your heads in the sand and live in the state of denial. Let's take a little stroll down memory lane. I'm continuing to read from the marketplace.org article, Crime and Punishment, a look back at Enron and savings and loans. before the financial crisis, there was Enron and the savings and loans collapse. They all hit similar beats, manipulations of the financial system, top executives after hefty profits, American workers depleted of their savings. But there's one key difference. Many of the people involved with those first two scandals were prosecuted for financial fraud and went to jail. The number of executives jailed during the Oh 708 crisis. One, the banks got slapped with large fines for their role in the financial crisis, but only one banker went to jail and quote, so they detail the SNL scandal that happened in the early 80s. Then they detail what happened at Enron, which went bankrupt in 2001. So it's like, Look, if you live long enough, you get a little bit of gray or in my case a little bit of silver in your hair and get a little bit of mileage on your tires, you realize that these things happen repetitively. This is not just you big huge conglomerates and Wall Street raiding the kid at a time or two and getting their hand slapped and people going to jail and it never ever, ever happens again. Of course it happens. It happens and I'm concerned that we're gearing Not for it to happen again. And there's a commentator in this documentary Who says essentially the same thing. You don't have to be a genius to read the tea leaves here. And it's scary to me the number of people that just want to get on their normalcy bias is like the last bonus episode. Well, it's okay. Because the public forgets, they'll forget, they forgotten all these other scandals, when, you know, we raped their pocketbook, they'll forget this one too. And, and it was ever with us. Here we are, again. At the beginning of the documentary, they profile Philip Baker, who was a former managing director of a Chicago based hedge fund called Lake Shore asset management. And the prosecutors said that it totaled up to be an almost $300 million worldwide fraud. Now, I don't pretend to know all the ins and outs of what was going on at Lake Shore asset management. But based on what they say in the documentary, it sounds like it was basically a Ponzi scheme. I'll drop a link to an article from Reuters that you can check out for yourself. But it sounds to me like essentially, they were just getting more and more clients spending the money and then trying to pay back the initial clients by getting more and more clients in which is essentially like a pyramid or Ponzi scheme. About a third of the way in, we get into the housing crisis. And there's a quote about how massive global banks made billions by packaging, toxic mortgage loans, and toxic financial products and selling them all around the globe. And they mentioned that it starts with this political push towards home ownership. Well, everybody deserves a home, everybody needs to get inside a house by God. And they showed up Yeah, December of 2003, standing in front of a backdrop that says, a home of your own. I think that's what I don't have my glasses on. I think it's got a little cartoon of a house and it says something like a home of your own. And he's standing there saying our government is supporting home ownership, because it's good for America. Meanwhile, it's like really why, why why? Why does the government care so much as to whether you rent or you buy? What what business? Is it of? There's how you choose to live your life. I'm not gonna get political. I am politically agnostic on this podcast. I'm just wondering, like, why do they care so much? Why, why? Why is it good for America? For you to own a home, you know, whether or not you can actually afford it and make the payments is a completely separate point, which is good for America. Why? Then he, like creepily leans into the camera, and he's like, it's good for our economy. And I think that's pretty much the answer. Right? And I really do respect that also, in this documentary. They don't get partisan. It's not one of these issues of well, it was just these Republicans. It was just those Democrats. I mean, the commentators are pretty clear and saying this was an agenda that was pushed by both parties. So it really doesn't matter if you're talking about Clinton and Obama or you're talking about Bush like this was, this is the American dream. We need to get you in suburbanite tract housing. It's just good for everybody. And I remember in the years leading up to the 2008 crisis, those suburbanite tract home subdivisions were popping up everywhere. Spoiler alert, I've seen the same thing happening last year people in FOMO I saw the same type of what I'm just going to be okay in my opinion, crappy shoddily built suburbanite housing, just tracks and tracks on tracks of houses that all look exactly the same going up and every square inch of land that you can imagine, you know, I've talked before on the podcast about seeing houses being built up against railroad tracks. Not far from where I live. There's like an easement that belongs to the railroad and there are people, some developer who has been crapping out suburbanite tract housing up against the railroad tracks. And that's an active tract. It's not it's not a railroad track that's been abandoned or something. It is an active railroad track. I mean, can you imagine having an entire subdivision of people that think they're moving out to the country to get peace and quiet and at all hours of the day and night they're up against an active railroad track. But here we go, the more things change, wink wink, the more they stay the same. We also learn that in the run up to the 2008 crisis, interest rates were being kept low. There was that encouragement of you need to get in a suburbanite drag house you deserve it. They also may In it very easy to borrow. I also remember this from firsthand experience there would be banners okay. So, in my part of the Midwest they crop out one of these add water and stir living on a wing and a prayer suburbanite tract subdivisions. All the yards were about the size of a postage stamp, give or take, and they would have a banner outside that said 0% down 125% financing available. And so people were taking the bait. I mean, it sounds fantastic, until it doesn't. And as one of the commentators is saying, here was the beginning of the housing bubble, they show construction workers putting up those cheaply in my opinion cheaply built suburbanite tract house neighborhoods that I mean I swear out here it was just like they went up practically overnight. And unless you think, Oh, she's just being elitist. Listen to her up on her high horse. Oh, no, no, no, no, no, no, no, no. The first house that I was able to actually buy, you know, I got in on a wing and a prayer myself. The house had been foreclosed on, it was in bad shape. Structurally, it was okay. It wasn't like the roof was caving in or, you know, the foundation had collapsed and nothing like that was going on the structure of the house was fine. But that's really about all that can be said for it. It had been rode hard and put up with it was not in great condition. And it was in one of those crappy suburbanite tract house neighborhoods where I could just you know, practically stick my hand out the window and slap the next door neighbor's house. I mean, we were just all crammed jammed in there. But it definitely teaches you that when you are that crammed in, so close together, your neighbors problems pretty rapidly become your problems. So if they're having loud parties, if they're fighting all the time, if they let their kids roll the household, nobody ever disciplines them. If there's crime and vice drugs are being openly used and sold, people are engaged in prostitution, all of those things pretty rapidly become your problems too. Even if you're like, Hey, man, I just want to go to work, live my life. I don't want to do drugs and crime. I just want to come home and be left the EFF alone. You know, after I've put in like a 14 hour work day, too bad. So sad. You know, when you're that close together with other people, their problems become your problems. So don't please don't think that I've never lived that way. And please don't ever think that I haven't ever been working poor. Because I have. One of the commentators they interviewed is William K. Black, who is a white collar criminologist slash former US bank regulator. And as he points out, when the bubble is expanding, everybody's a winner. Everybody looks like a genius, everybody is living off the fat of the land. But then, when the bubble pops, it becomes a really awful scenario. Martin Wolf, the chief economics commentator for the Financial Times talks about how in a boom cycle, people take more risks. The banks and the lenders take more risks. The individual consumers take more risks. Because it's a boom cycle. People are feeling good, there's money flowing around. And really just like we're being told now, people are doing great. And as he says, one of the ways that this risk taking happens is through as he calls it, financial innovations, then they go into what was known affectionately or affectionately as the ninja loans. So that's where we start to get the subprime and the ninja loans, so that the people signing up for for those loans, or those mortgages really couldn't even afford them. As I mentioned before, the banners that said 0% down, get a home loan for 125% Just finance the entire house plus, because you know YOLO you only go live once you're going to need to furnish that house, you're going to want to get top of the line appliances, so just do a 125% loan. Okay, then you had the ninja loans, which stood for no income, no job or assets, loans. And I remember when, okay, don't talk about predation. So when I was working for and I was living paycheck to paycheck, just barely, you know, this was a point in time in my life where I've talked about it before I would have to borrow change from coworkers and essentially Panhandle at work to be able to ride the toll road home. Sometimes I had to count every penny I got super excited. During the Great Recession when the grocery store I shopped at instead of having to for $1 Microwave burritos. They had three for $1 Microwave burritos, that was a big effing deal in my world. Me and one of my co Workers, we've talked about what was on sale at the grocery store. And oh, did you see that? The 99 cent apiece personal pizzas are going to be 75 cents as we did you see the microwave burritos? You know, I definitely was living hand to mouth. And there were times when the the disposable income was nothing. And there were times when the bank account only had, you know, pennies in it. And I remember getting postcards in the mail almost constantly for these freaking companies that did those ninja loans, or be like, hey, you need a payday loan, you're having some trouble making it to the next payday or, Hey, no, no questions asked. And you know, no income, no problem, just come on in here and get you a loan to help yourself through the hard times. I got those constantly. It's like they must have known that what my economic situation was and that I was living hand to mouth. But thank God, I never took out one of those payday loans or Ninja loans. But from what I understand, they're basically just like loan sharking and usury. And as William K Black says, In this documentary, overwhelmingly, the people who were targeted for these predatory loans were people of color, the elderly, and women. So I'm sure that being a woman who was working for at that time just struggling doing the best that I could to keep all the plates spinning in the air. I'm sure that in Wall Street's mind that made me an excellent target for these predatory loans. One of the statistics that they show in the documentary is from 1994 to 2006, subprime mortgages increased from $35 billion to$600 billion per year. At about 20 minutes in we meet Richard Bowen, described as the whistleblower, who was a former vice president at Citi Group. So according to Bowen, it was his job. Like Citigroup was the largest bank at that time. And it was his job to make sure that all of these millions upon millions upon billions of dollars worth of mortgages that they were purchasing from other originators made sense, and were held to a certain standard. Here's some irony for you. So that first house, the little, little tiny shack that I purchased, were you going to slap your neighbor, slap, slap your neighbor's house out the door, I originally took out a mortgage with one company, and it later got sold the city during during this exact time. So Richard Bowen says that in the early part of 2006, he discovered that like 60% of these mortgages don't actually meet the standard that they're supposed to be following. And as he says, They were by definition, defective. So he says that he kept squawking and making noise, and nobody would listen. So the number of defective mortgages goes from being 60% to being over 80%. William D. Cohen, who is a financial journalist and writer talks about seeing mortgage documents with his own eyes, that were falsified. There was just incorrect data put into the loan documents and the buyer sign them anyway. So for example, you might have someone whose real income was 60,000 that they were putting down but they made 120,000. It was like, okay, great, just sign here. And as William D. Cohen explains, as these junk, toxic mortgages, junk, toxic loans would get sold off to someone else, investors or hedge fund or another bank, whoever everything would be packaged up so that it looked legitimate. It looked as though you were investing in something that was real and vetted. When actually, that just wasn't the case. On November 2 2007, Richard, the whistleblower says he sat down, and he wrote an impassioned email and he put the the subject line in all caps for emphasis. He talks about urgent financial issues and the need for outside investigation to deal with this poop storm, and crickets and tumbleweeds. So according to him throughout November and December, nobody says anything to him. There's no apparent action taken on his warnings. Nobody says anything. So he gets paranoid and he starts acting like someone in a spy novel or a movie, checking under his hood, worrying that every time he starts the ignition to his car, it's going to explode. He he's feeling nervous. Fast forward to February and he is stripped of his underwriting duties and then he is put on administrative leave. After Richard says that a slide pops up on the screen which reads, months later, the bailout of Citigroup cost the US government $45 billion Let me just correct that. months later the bailout of Citigroup cost the US taxpayer $45 billion. Robert Rubin, who was the chairman of the board, left the bank with $17 million in compensation and $33 million in stock options. As is pointed out in the documentary, it's not like Citigroup was the only one that was involved in this. And as time was going on, some of these banks were taking on more and more debt to be able to buy more and more of these crappy loans and crappy mortgages and try to turn them into derivatives. So guess who the top underwriter was in 2005 and 2006. When this documentary we learned it was Lehman Brothers. According to William K, black, Lehman Brothers really had the worst of the worst, the most toxic loans, the chunkiest loans in the junk pile. Well, that was Lehman Brothers, according to him. Now, if you're wondering why I opted to call this bonus episode, Mephistopheles and Manhattan, well, I'll get to that now. If you go to 3022 In this documentary, you will see an internal video from Lehman Brothers data 2007. And I'm almost at a loss for words on how to describe it. It touches on so many things, not the least of which is cult like tactics used in corporate America. I mean, it just wow. You know, it gave me some bad flashbacks to times when I would have to go to these rah rah meetings and, you know, one particular company I worked at in the past, sometimes we would have to wear like football jerseys or baseball jerseys. It was almost like there would be a sports theme for camaraderie. Sometimes they wanted us to dress up in costumes like it was Halloween. Except it wasn't. I love Halloween is one of my favorite holidays. As you know, I'm definitely an Intel milling wintertime person. But having to dress up in an offbeat time of the year and dance and do skits for the owners amusement is not really what I personally consider to be a good time. But you know, it's some of these rah rah crush the competition or meetings, it was like really? Isn't this kind of over the top? Doesn't this kind of feel like we're gonna see you lt isn't this the kind of things that like got exposed and the Nxium cult? Hello, but that this, this S h i t here at 3022, this internal video, this is next level. I mean, whoa, just Whoa. So in this video, the head honcho there at Lehman Brothers Richard aka Dick fold. What's an amazing what's it mean? He's on there talking about squeezing, get up in their shorts and squeeze, squeeze. So if using the analogy of reaching inside someone's boxer shorts, and squeezing their testicles, and squeezing them hard wasn't enough, you know, I guess if that just doesn't make your point strongly enough for you. He gets into another analogy that immediately gave me a flashback to the movie Angel Heart. He says and I will try to get this as verbatim as possible. I would encourage you go go and look at this for yourself. It's free of charge on Java discovery, if you watch nothing else in this documentary, but this clip of the internal video, which in my opinion should have been called infernal video, you should you should see this, you should see this. He says what I really want to do is reach in, rip out their heart and eat it before they die. What the f you know, I've had some business deals in my life that went sour. And I've walked away from some situations thinking I hope karma gets that person. If they continue to treat people this way. They're not going to be in business very much longer. I have never I can honestly say I've never had in my life the impulse to reach inside someone's chest and devour they're still beating heart that that literally is a key component. And William yardbirds book, falling Angel and in the subsequent movie that was done masterfully in my opinion by Alan Parker 1987's Angel Heart that is a key component is that Johnny favorite trying to cheat Satan of ducks and man Harry angels spoiler alert, you know, you can fast forward through this if you're planning to watch the movie and you never had it's become kind of a cult classic now, but Johnny favorite of ducks Harry Angel slices him open in an occult ritual and eat is still beating heart to try to assume his identity to devour his soul and cheat Satan. And all I could think of watching this and He the, this individual in this video Deke, Deke fold, he he looks in my opinion he looks demonically possessed, as he is sitting there, like sweating and Frothing saying I want to eat are still beating harbor. It's like, ah, you know all I can think of was Robert De Niro saying well, Mephistopheles is such a mouthful in Manhattan. Well, I don't know if Mephistopheles is a mouthful in Manhattan, but I think Mephistopheles may well be in Manhattan, good God. We learned that in 2007, Lehman Brothers profits reached $4.2 billion. In the documentary, a former attorney who worked inside the company, explains how they shifted money around. And he goes into more of the financial ins and outs of how they did what they did, which I'm not going to get into here. Again, I really recommend that you watch this documentary. But the same attorney says absconding with$550 million creates a lot of temptation. And he says in the documentary, if someone told me, you can have $550 million, and all you have to do in return is hurt 6 billion people, I might think about it, it might give me pause, I might have to think it over. In the last few minutes of the documentary, that same attorney takes the filmmakers to midtown Manhattan, he points out, okay, here's where Lehman Brothers was after 911. And then he points to the building directly across the street and says, yeah, that's where Dick folds new businesses now. So he's literally just moved right across the street, and he's running his business over there. Now. As the attorney says, Nothing has changed. People may think that he was somebody that got banished forever. But no, he's in the same industry. And he's just right across the street from where he was before. At the very end, the contributors are asked if they feel like something in the vein of the 2008, great recession, the financial crisis, all of this insanity from Wall Street. Could it happen again? unanimously, they all say yes. And in fact, the conversation that I talked about in the last bonus episode, where a leader at Deutsche Bank had allegedly said, Well, it's okay, because the public always forgets, that same type of analogy is brought up by these commentators as well. You know, we go through a crisis, and then we get past it, it's in the rearview mirror, and we just keep on driving. And then we sort of forget whatever that last speed bump was, we get to another speed bump. And it's like this novel occurrence, even though it isn't, it's not a novel occurrence at all. William D. Cohen says, I think the seeds of the next financial crisis have already been planted, we may not know exactly when it's going to hit or exactly how it will play out. We don't know all of the answers yet. But we're already seeing the signs. Now, that was back in 2018, when he was interviewed for this documentary, here we are in 2022. And I believe that's what I am seeing, I believe it's what I'm sensing. And I believe it's what I'm seeing out in the marketplace. Now, as I've told you many times, this is not advice of any kind. I am not an economist of billionaire, hedge fund manager for billionaires, a professional financial advisor, planner, yada, yada, blah, blah, blah, I am none of those things. For me, the job market is my Bellwether, because I have been involved in it for so many years, and I've had to ride through the boom and bust cycles of this, that and the other. I feel like I'm pretty good at reading the tea leaves in the job market. And I just I can't imagine that all of this will not come to a head at some point, the fever pitch and FOMO that we saw in the housing market last summer. All of these people say well, not okay, not all of them. Many of these people saying a majority of them saying I have buyer's remorse. I feel like I overpaid and I went too fast. You have that ball of wax then you have we're being told to open jobs for everyone unemployed person. 3.5% unemployment rate, labor shortage, labor shortage. People are doing great now ignore the fact that most of them are trying to shop at dollar stores just to get food people are having to go to pawn shops to make ends meet and upon things. I never thought they would but people are doing great tons of money and savings now ignore the fact that we're approaching some wreck record credit card debt, people are doing fine. How can you not think that these chickens will not come home to roost at some point they have to now I agree with William D. Cohen. How is it going to play out exactly where is it going to manifest first? I don't know. I have no idea but I do think something is brewing up and it's better in my opinion to be prepared than scared to have a little bit of extra money some extra food and water put back so that whatever this thing is you You feel that you're in a better position to be able to survive it. It is just spine tingling, bone chilling to me to watch that infernal internal video of somebody who looks in my opinion to be demonically possessed talking about eating, someone's still beating heart, eating their heart in front of them before they die so that they can see you doing it. What what level of psychopathy in my opinion, do you have to be on to have to have that thought? And to say it while you're being taped. I go back to that documentary I watched about Tony Alonso and how he said, Yeah, if I ever get out of jail, I'll do all of this over again. I'll have multiple wives. I'll have millions of dollars. I'll have all of these acolytes and followers. It's not a problem. I can rebuild my empire like that. I remember seeing an interview with John Wayne Gacy that was very similar. He said there's no cure for what I have. There's no therapeutic intervention, there's nothing that can be done if I ever got out of jail. I would torture and kill all over again. That is that is what I want to be doing. I really put corporate psychopathy in that same kind of bucket Yeah, I'll screw over 6 billion people and get my money on don't give a shit. Sorry, I was trying to keep this JRPG but I just where do we go from here? And and how is it possible that people can forget how quickly people can forget all of these different crises? I don't know. You know, I wish that I had some magical answer for all of you, but I don't just please. In my opinion, the smartest thing to do is to stay aware not scared, not paranoid, but stay aware of what's going on. Have a job loss Survival Plan roughed out. Have some extra things in your pantry just in case and be ready for Come what may stay safe. Stay safe, and I'll see you in the next episode. We hope you enjoyed today's episode. If you haven't already, please take a quick second to subscribe to this podcast and share it with your friends. Thanks for tuning in. We'll see you next time.