Obama: the [financial regulation bill] would make sure that “Main Street is never again held responsible for Wall Street’s mistakes.”
REF: "Say What?" by James Howard Kunstler 6/28/2010
"Whoosh….
That was the sound of something going over America’s head. Something about the size of Rodan the Flying Reptile. And frankly I don’t think the president even meant to be coy or deceptive. It just means he doesn’t get it either. . . .
Why even this time? Why isn’t there an army of federal attorneys out there, their teeth bristling with subpoenas, beating the bushes in every lane and skyscraper floor of lower Manhattan (and Fairfield County, Connecticut, not to mention a thousand office parks around the USA) to roust out the grifters and swindlers who took Main Street to the cleaners this time.
The audacity of cluelessness! And the hilarity of “next time.”
Earth to President Obama: there isn’t going to be a next time. This time was enough to git ‘er done. Wall Street – in particular the biggest “banks” – packaged up and sold enough swindles to unwind 2500 years of western civilization. You simply cannot imagine the amount of bad financial paper out there right now in every vault and portfolio on the planet. Enough, really, to sink any company even pretending to trade in things more abstract than a mud brick or an hour of labor. What’s more, the cross-collateralized obligations between them are so vast and intricate that all the standing timber in North America could not be fashioned into enough pick-up sticks to represent the hideous death-dealing tangle of frauds waiting for the wing-beat of a single black swan to come crashing down.
Go out and get a copy of Michael Lewis’s recent book The Big Short for a close-up view on one micro-corner of the investment world. You will discover that the people fabricating things like synthetic collateralized debt obligations (CDOs) had no idea what the [deleted] they were doing – besides deliberately creating documents that nobody would ever understand, that would never be unraveled by teams of law clerks or secret words or magic incantations or prayers to some dark hirsute deity, and were guaranteed to place in jeopardy every operation of the world economy above the barter level. Sorry to invoke the hoary old metaphor about the horse being out of the barn – but the larger problem is what the horse left behind in a great steaming mound clear up to the rafters. There was nothing to understand in all this [deleted], except that betting against it was a good idea, and then only for those who placed the earliest bets – because everybody else is going to get just as screwed as those who stuffed their vaults and portfolios with Triple-A rated [deleted]."
REF: "The Perfect Con" (The Con of the Decade) by Charles Hugh Smith, www.TheBurningPlatform.com July 8, 2010(Part 1)
"I've laid out the Con of the Decade (Part I) in outline form:
1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.
2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.
3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.
4. Leverage each $1 of actual capital into $100 of high-risk bets.
5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).
6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.
7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.
8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.
9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.
10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.
11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.
12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.
Since the Federal government could potentially inflate away these trillions in Treasuries, buy enough elected officials to force austerity so inflation remains tame. In essence, these private banks and corporations now own the revenue stream of the Federal government and its taxpayers. Neat con, and the marks will never understand how "saving our financial system" led to their servitude to the very interests they bailed out.
The circle is now complete: in "saving our financial system," the public borrowed trillions and transferred the money to private Power Elites, who then buy the public debt with the money swindled out of the taxpayer. Then the taxpayers transfer more wealth every year to the Power Elites/Plutocracy in the form of interest on the Treasury debt. The Power Elites will own the debt that was taken on to bail them out of bad private bets: this is the culmination of privatized gains, socialized risk.
In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better."
Mr Kunstler went on to say: "What banks and governments have been doing for the past eighteen months is a dumbshow meant to distract the public from the fact that the world financial system has been effectively destroyed. There isn’t enough money left in the known reaches of the universe to pay off the outstanding claims. In fact, not even close. Everything that proceeds from this fiasco will be in service of impoverishing most of the population and, incidentally, probably bringing down governments and, with them, convenient social usufructs such as due process of law and civil order. What remains – what you’re watching right now on CNN or Fox – is just a representation of the former structures of civilized life, what Joe Bageant refers to as “the hologram,” a kind of 3-D picture you can see around, that looks like reality, but is actually immaterial, a collective hallucination. It’s comfortable living in a hologram – until you discover that you’re in one."
We will see who survives this 'Empire of Debt' apocalypse. Bet on the bankers.They like other pestilence of the world seem to be immune to the evil they bring to others. A huge outcry against the Wall Street tycoons followed the panic and depression of 1897. As an answer, the money changers got together secretly on Jeckyll Island to scheme the Federal Reserve system, which is not Federal, it is a privately owned bank cartel.
When the credit markets got sticky in 1945, The bankers came up with Breton Woods Agreement where U.S. dollars, soon to become Federal Reserve notes were as good as gold. When we lost most of our gold, the "gold window" was closed and the golden dream of the bankers: a world system of fantasy wealth known as fiat money, based upon 'faith and good will' was realized.
The world may soon wallow in misery, but count on the Wall Street elite to suffer the least.
With Love and Kindness,
THE HATMAN
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