The Crash of 1929 Was Just a Prelude: Truthout Interviews Whistleblower-Novelist Nomi Prins
Thursday 17 November 2011
by: Mark Karlin, Truthout | Interview
Nomi Prins, author of “Black Tuesday.” (Photo: Official Nomi Prins Page)
Mark Karlin: Given your expertise in understanding the corruption of Wall Street, what did you find in the practices of the financial world leading up to the 1929 crash that presaged the 2007 crisis?
Nomi Prins: Into the crash of 1929, there were six big banks. Their leaders controlled most of the market activity, sat on each others’ boards and owned large chunks of stock in each others’ firms. They inflated the values of stocks through “trusts” (financial mechanisms by which many investors could “pool” together their money, and borrowed money, to purchase or sell various stocks in bulk).
These were further puffed up by a co-opted media and enabling political leaders (as depicted in “Black Tuesday.”) Even as the crash happened, the biggest bankers thought they could contain it and could buoy stocks until the market settled, so they threw in their own (read: customers’) money. That didn’t work, of course. The financial markets and lending systems collapsed.
Today, we have six banks (mostly incarnations of the 1929 banks) that control the stock market, most mortgage lending, the bulk of deposits and nearly all derivatives activity. They inflated the housing market, in particular subprime loans, so they could stuff those loans into more complicated assets, borrowing hundreds of trillion of dollars against them, increased their risk through derivatives and spread them throughout the globe. When it became apparent these assets didn’t have the value that banks said they did, the market, they got federally bailed out, while the Main Street economy sank.