The Game: The Real Secret Behind The Economic Crisis

Though mind-boggling and intricate, the sequence of events that led to our current economic crisis is simple and tactical.


While the talking heads endlessly discuss the relative culpability of one party or another, make no mistake: beneath the surface such events are driven by an unseen set of dynamics, a kind of parallel reality game.

This ‘game’ is rarely seen for what it is – in fact it thrives on clandestine maneuvers by a collective few. Much to their chagrin, however, the economic crisis of 2008/2009 exposed these dynamics.

Now front-page news, the energy typically expended by the ‘players’ to conceal the game, failed. You can be sure, however, that historians will stop short of exposing its root cause.

I refer to this choreography as The Game, and those who perpetuate it as The Players.

The Game is not confined to the grand scale. It is present in every aspect of our lives. It is with us at work, at the club and around the table at Sunday dinner. Its universality blinds us to its existence. As it has always been with us, albeit in the background, we have no conception of life without it.

A brief glimpse at the sub-prime mortgage bubble that burst last year is a powerful example of how The Game works. Here’s a hypothetical scenario:

The bubble is created by a junior loan officer at a small mortgage company who makes a pitch to a recently married couple with a baby on the way.

The young couple is just starting their life together. They tell the officer they saw an ad on television that claimed they could buy a home with no money down.

The loan officer confirms the claim and assures them that despite their lack of means, they could have their little dream home: not in ten years, not in five years, but today! Not only that, but they can be in their new home for a full six months without paying a single cent!

The wife is a little hesitant, but her husband assures her that lots of their friends have done it, so why be left behind? Let’s go for it, he says to his wife and she finally gives in.

Meanwhile, all the other salesmen at the company are diligently signing up new customers and, in short order, all their funds are fully committed. That’s great but what do they do now?

Bob then approaches his boss, Jim, and says, “Well I just heard of this new product, called a mortgage backed security, which allows investment dealers to use mortgages as collateral for securities. Why don’t we pool our mortgages and sell them as one package to one of these companies? Then we can go back to doing what we do best: sell mortgages.”

Jim thinks it’s a capital idea and soon an investment house buys the mortgage company’s portfolio. They in turn use it to secure shares in the mutual fund they are offering to investors. Shares are sold to investors as well as institutions.

One of these institutions is a much larger investment fund based in New York. They bundle the investment with other similar securities and create a new fund which is once again sold to investors. A fund in Singapore likes the investment house’s balance sheet and purchases their firm along with its entire portfolio. And so it goes.

Eventually, these securities are floating in the system long enough that they are randomly and evenly spread throughout the world’s financial system. At that point the product has been diluted and blended so many times it would be near impossible to determine who is actually holding the paper on our young couple’s mortgage.

Then the bubble is stretched too far.

The housing bubble bursts and the mortgages securing the securities are worth next to nothing. The mortgage company is no longer on the hook as they sold the mortgage to the first investment house. They in turn passed off their securities to their clients, taking commission on the sales.

All the insiders were smart enough to keep passing it on. Each time the debt was passed, it was re-bundled, artfully packaged and profit was taken. Like a huge game of hot potato, they pass the security as fast as they can. Everybody is doing just fine as long as they are not caught holding the potato when the game ends.

The securities are, for the most part, held by mutual funds, banks and insurance companies spread over the globe. The managers of these funds have been well compensated for their returns over the last decade.

So who is caught holding the hot potato?

The investors who are holding shares in these funds will take the hit: pensioners, professionals, teachers; in other words, you and me. To make things worse, when the investment houses, insurance companies and banks are bailed out, it is the taxpayers – you and me – who are on the hook once again.

Our young couple has lost their home and declared personal bankruptcy. The pensioner holding the mutual fund units has lost a good part of his nest egg. The taxpayers are saddled with a debt which might take a generation or two to pay off.

Who is to blame? Who do we hold accountable, the loan officer? He was just doing his job – meeting his quota trying to sell as much product as he can. Do we blame the mortgage company? Their mandate was to place their funds with homeowners and manage the risk and that’s what they did. They signed up the homeowners and then sold the debt. What more could they do in fulfilling their responsibility to their shareholders?

Should we blame the management of the investment houses? They were acting on the professional advice of their qualified experts in the research department. How about the experts they relied upon? They were only following the advice of what all the economists were saying. The only one left to blame is the economist, the man behind it all. He will tell us that based on the model it should have worked; however, certain unanticipated events (such as the extent of human greed) were not fully taken into account.

So in the end, who truly is to blame?

Nobody, they tell us! Instead, they feed us lines: ‘it’s an economic anomaly, the exception that makes the rule;’ or, ‘It is like an ‘Act of God,’ something which simply defies prediction;’ or, ‘One just has to accept that these things will happen from time to time;’ and, ‘It’s part of the self-correcting mechanism that makes capitalism so great.’

The economic crash of 2008 contains the core elements, and is a perfect example of, The Game and how it is played.

Combining the securitization of mortgages with the relaxation of credit standards to the point where virtually anyone could qualify for a loan was like mixing fertilizer with gasoline.

Individually, each is powerful, even useful, but the combination was nothing short of lethal. This unfortunate combination was not a result of oversight, or mere chance, it could only happen by design. The true blame lies not in how it happened but in who pulled it off.

Unwilling to take, or even share blame, the Players pull out their trusty tool: transference. They cry out for greater transparency and stiffer regulations. This then is supposed to be the solution; the very ones who manufactured the crisis are those who expect we entrusted them with its cure.

In actuality, the same group of people is on both sides of the regulatory bodies and investment banks fence. Whatever checks and balances that may have existed were undermined by nepotism. Indeed, for any scam to be sustainable, everyone must be in on it.

Lastly, there is the mantle of respectability. It’s an established fact that a well-dressed man stands a better chance of getting $10.00 from a complete stranger than does a bum begging for change to buy a cup of coffee.

For the scam to work it had to have the noblesse of investment banking, the aura of moral sanctity imparted by the libertarian ethos, the blessing of the most celebrated monetarist economists in the world and, finally, the stamp of government approval.

Then when all goes awry those in the inner circle are equally stupefied! They expect us to believe that this intricate choreography, without which none of this could have ever taken place, was a perfect storm, a confluence of natural forces which no one could have predicted.

The worst part is not that we were played – but that we, the public, swallowed it! We whine and grumble, then return to our lives of begrudging, resentful acquiescence. We do our jobs, pay our taxes and do as we’re told. This too was a part of the Player’s original calculation.

Are you ready to stop being a victim to the Player’s game? Let me share more with you about how The Game is played and how you can reclaim your life.

In my book series on, The Hidden Game, I reveal the tactics and motivations of society’s ‘Players’ and how they operate. My goal is to give you the leverage you need to not only out-smart the Players, but to play – and win.

My passion is a call-to-arms to every thinking man and woman to free themselves from the yoke of The Hidden Game.

By: Janev6

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John Berling Hardy is President of a management consulting company, Eminence Gris, and offers financial services as President of Hardy & Co. After decades of watching the hidden game played out in both corporate and social arenas, John could no longer keep silent. Learn how he has blown the whistle on those who dominate and destroy hard-working, honest men and women through his books and blog: www.playingtheplayers.com/