Posts Tagged ‘fraud’

Tic-toc… tic-toc… to global war

November 28, 2011

I have been trying to find an analogy that would adequately illustrate what it feels like to watch the development of an event all the while being helpless to do anything about it.

Try as I may, the only image that comes to mind is that of the 1937 newscaster that witnessed the destruction of the Hindenburg. The only difference being that I could see this happening before hand.

Today, via Zerohedge, we have bonafide, third party, main stream confirmation of what was already clear was happening a decade ago:

“Multi Trillion Bank Bailout Leads To Multi Billion Bank Profits Bloomberg Finds

What remains to be seen is whether this “finding” by a serous main stream publication can open the eyes of the general public.

In the meantime, the UK Foreign Office is warning of the imminent break down of social order in Europe. Read the article. There is rare use of conditionals in any of the phrases. The Foreign Office is warning that there will be strife. Admittedly, the FO only warns of strife in Europe. But the reality on the ground says that the USA will not be immune either.

This is, by the way, the reason behind the gradual militarization of formerly civic institutions such as the police. Any of you remember the repatriation of a combat brigade from the Iraq war theater for deployment at home in the USA… in urban settings… in civilian urban settings? If not, do a search on the internet or on this blog.

As the arithmetic underpinning out monetary system assures us, unless our current monetary system can assimilate a new currency and a new market of import, then this is it. The debt load now weighing on the global monetary system is such that no degree of productivity that may be found henceforth can service the debt.

[…] the Bank of International Settlements reported a number that quietly slipped through the cracks of the broader media. Which is paradoxical because it is the biggest ever reported in the financial world: the number in question is $707,568,901,000,000 and represents the latest total amount of all notional Over The Counter (read unregulated) outstanding derivatives reported by the world’s financial institutions to the BIS for its semi-annual OTC derivatives report titled “OTC derivatives market activity in the first half of 2011.”

And here is the problem.

When the benefits of open society are gradually and glaringly eroded; when civil liberties are progressively withdrawn; when social promises are rolled back; when public infrastructure and services can no longer be maintained;  when the time between what a politician promises in order to be elected and when they renege on their promises is counted in weeks; … and when a restricted gang of politicians and bankers are caught defrauding the public and making away with Billions over and over again throughout Western countries….

… why would anyone think that revolution would be unthinkable?

But today, no Western politician can in good conscience do what needs to be done. Not if doing what needs to be done means recognizing that despite our self proclaimed standing on the moral high ground, they (our politicians) are no better than your garden variety Mugabe.

So, when you are financially and socially cornered and you are not willing to admit that you have fucked up, what do you do?

Traditionally, you precipitate a war.

2013/2015 and we’ll have us our global war. Stand by for the next foreign evil to be foisted upon the unemployed, homless, hungry masses.






JP Morgan’s net soars 67% on economic recovery

April 14, 2011

As I never tire to reiterate in these pages  (i.e. “As to why changing the monetary system should be a priority in altering the political landscape” ), you must not forget whom the system is broken for. The Primary Dealers and, generally speaking, the global banks are making out like bandits.

It is indisputable today that the presumed recovery is but a figment of the imagination of a political elite hell bent on attempting to assuage an increasingly restive electorate. Restive due to a creeping realization that the presumed development of the past forty years may well have been a mirage brought about by irresponsible and expedient inflationary policies.

At a time when variously housing data is still deteriorating, when city, region, state and nations’ budgets are bleeding red ink profusely, when food stamp usage is at an all time high and shows no sign of abating, when the labor participation rate is plumbing new depths despite an increasing population, when pension promises are being curtailed and revoked, when food prices are spiraling relentlessly upwards, when fiscal income is declining and when sales data is poor, calling a recovery is a matter of opinion.

When at the same time what is by now glaring and officially determined criminal behavior on the part of the political and financial elites is not prosecuted, it takes a special kind of gall to term the current juncture as a “recovery”. On the other hand, nobody has ever accused the main stream press of being objective or fair so; par for the course I guess.

Now what?

April 11, 2011

When valued in terms of gold, the price of the US Long Bond has now fully retraced the presumed gain it achieved between 1980 and 2001. In other words, in ten years, what is widely considered as the single safest investment in the world has lost 100% of the presumed value it had accumulated in 21 years.

Considering interest rates have been at their lowest in living memory and for a few generations beyond that, what are the chances the Long Bond can regain some composure?

By the way, in case you had missed it, this same picture illustrates by and large the performance of your presumed pension fund or, if you like, it measures your purchasing power parity between then and now.

O tempora…

Let the major banks fail! Iceland should be our model. Ireland is our hope. Let the major banks take their lumps.

Charlie Rose interviews Charles Ferguson (Inside Job the movie)

April 3, 2011

Zero Hedge reports the full interview here.

Inside Job is a good movie to the extent that it may make people realize this debacle is entirely man made if not down right intentional.

But… there is a “but”!

Despite Charles Ferguson’s courage, he too fails to make the connection as to the why what happened happened. When asked what it would take to fix the broken system we find ourselves in Mr. Ferguson suggests: “(i) change the role of money in elections, (ii) to pay regulators well, and (iii) have law enforcement that is necessary to enforce the laws we have.”

Readers of this blog will by now know that the reasons mentioned by Mr. Ferguson are but the proximate causes of socioeconomic failure. But Mr. Ferguson fails to identify the ultimate cause and the prime driver of scioeconomic failure.

Allow me here to be absolutely clear about something that seems to be missed by the wider public. As everything else in life, one man’s crisis is another man’s bonanza. As has been been made abundantly clear already, this quick succession of failures of social and economic constructs we are witnessing today is in fact a God send for a handful of global banks. This you must not forget.

As to the ultimate cause of this phase we are living in today, we must go straight up to the one dynamic that frames all other dynamics: the monetary system.

When asked what it would take to fix the broken system, Charles Ferguson should first and foremost clarify whom the system is broken for because it sure as heck ain’t broken for the global banks and for the US Primary Dealers in particular. In fact, this is the single best possible universe the Primary Dealers can evolve in. That done, Mr. Ferguson could simply point the finger at the monetary system. And guess what! It is exactly what today are the Primary Dealers that have sold this particular variety of monetary system to the politicians whom, in turn, impose it on society.

We can argue today whether politicians are truly witting accomplices of the banks or whether they are mere useful idiots. But we can certainly not overlook the primary and central role the monetary system plays in our lives. This particular variety of monetary system in use today in the West is predicated on inflation. Thus our monetary system is predicated on discouraging savings and encouraging rampant expenditure. Rampant expenditure can be encouraged via aberrant fiscal and monetary policies of which low interest rates is the first and most basic. Debt based fiat money is predicated on hollowing out the productive capacity of society transferring said productive substance to the entity that has the privilege to create the currency…. this may appear too abstract to wrap your head around so picture the following…

Draw two separate circles on a piece of paper. One circle is much larger than the second. Now imagine that the larger circle represents society as a whole – all men, women and children, all governments, all factories, all schools… everything. The second circle stands apart from the first circle and it represents the entity tasked with the authority to create money.

Now think about this.

The small circle is arbitrarily bestowed three privileges. 1) It can create a substance that has zero cost of production 2) It is allowed to inject said substance into the larger circle. 3) It can demand said substance must be returned in its entirety PLUS more of it.

The large circle is forced to make use of said substance but at cost.

In the above construct, simple arithmetic says that if the large circle is forced to make use of the substance that is the exclusive privilege of the small circle to create, because the small circle has no cost of production and because the same amount of substance PLUS more must be returned to the small circle, eventually the large circle will transfer all productive capacity to the small circle.

In the construct above, it is clear that the politicians and, indeed, the banks have a vested interest in concealing the true nature of the monetary system and in avoiding as well as discouraging any discussi0n of same. But what is also painfully clear from the above construct is that the politicians and the banks have an interest in not pursuing regulation too vehemently particularly with regards to selected entities of which the banks are the most prominent example.

Thus, identifying “the role of money in election” is not a useful observation not only beacuse as long as there is politics, money will always play a role and this is particularly so in the context of electoral politics. But because Debt Based Fiat Money is predicated on spending money far and wide regardless of how or why. We cannot alter the reality of politics but we can change the nature of money.

Similarly, “paying regulators well” is not a solution. This is a concept that harkens back to 18th century political theory that says that civil servants should be well paid in order to discourage them from succumbing to corruption. Obviously that hasn’t really panned out well particularly in Europe where for example civil servants in France and Italy are by far the best paid in the world and yet corruption is rife in both countries. And, anyway, in a Debt Based Fiat Monetary System, regulation must be loose so as to allow the expenditure of great sums far and wide. Once again, we cannot alter the nature of man but we can change the nature of money.

And of course, “have law enforcement that is necessary to enforce the laws we have” isn’t going to be much more helpful because in a system predicated on spending money far and wide, law enforcement must by necessity be fairly lax particularly with regards to laws that may regulate the spending of money.

The corollary to all of the above is that this system lends itself to aberrant policy. Take the issue of “money in elections”. Debt Based Fiat Money allows politicians to promise outlandish expenditure to various interest groups. In turn, this dynamic fosters the creation of more interest groups thus always requiring more extravagant projects to be proposed as political platforms. Rinse repeat.

Take the issue of “paying regulators well”. In a debt based fiat monetary system, the inflationary dynamic dictates that government must progressively but necessarily become the largest actor in the economy thus the largest employer and the most munificent. This dynamic along with the dynamic of “money in elections” ensures that civil servants and regulators are fully aware which side their toast is buttered on. So that as the recipient of special interest money regulators are hired by the politicians that have been put in place by the interest groups because they agree to pursue a certain regulatory policy.

The same goes for law enforcement.

What is afflicting society today is the monetary system. But it is afflicting society. It is most certainly not afflicting the Primary Dealers. Quite the contrary.

So, “Inside Job” is a good movie and a worthy subject to explore. But we must not lose sight of the fact that our problems stem far upstream than mere regulators or law enforcement officials.

We must take the monetary system to task along with the sponsors of the system

Time for an “I told you so” re-post

March 25, 2011

What is going on – My opinion and not-so-improbable scenario

By guidoamm

You’ve read my rants and ravings and you are probably inclined to think I am a crank. After all, how can Guido be sitting there seeing things that the great and the good cannot see particularly considering that he avails himself of published data and news articles available to all. Entertaining though he may be occasionally, Guido mostly dramatizes for effect.

Bear with me. We know for a fact that the USA, Europe and England have officially borrowed in excess of US$3Trillion to ostensibly counter the crisis. This sum does not take into account the guarantees each government has put up. This is just the physical amount of money that has been requested, approved and is being transferred.

From a recent Bloomberg article we read: “If atonement is difficult, retribution may prove “brutally difficult,” Starwood Capital Group CEO Barry Sternlicht said in an interview in Davos. As Sternlicht sees it, “everyone wants a head, and that’s not reasonable. To do that, you’d need to take out the top 20 executives at the 300 biggest financial firms.”

Sternlicht gives us an estimate of 6000 people that are directly involved in this scandal – because it is a scandal.

Let’s take the 6000 people Sternlicht is talking about (300 biggest financial firms x 20 executives per firm) i.e. Thain, Trichet, Paulson, Bernanke, Cameron, Goodwin, Greenspan and so forth and lets assume they were the only and ultimate puppet masters. As puppet masters, they operated through a gaggle of minor figures a good number of whom were politicians. To be generous, let’s assume that Sternlicht’s 6000 top executives influenced and enacted policy through a gaggle of 10000 minions. So we now have an estimated gang of 16000 people involved in the scandal. Let’s round that number to 20000 to be generous.

So, we have a band of 20000 around the world that somehow genuinely did not, could not or did not want to see what was clearly suspect, undesirable if not criminal behavior in the past 15 years. Things like companies selling debt and using the proceeds to buy back their own company stock so as to artificially inflate the stock price. Things like Fannie Mae unable to publish its accounting books for a period of 18 months not 2 years after the Enron event. Things like GM no longer making money in its core business (vehicles) and making up the shortfall with suspiciously juicy profits from its finance arm GMAC. Things like banks making use of off-balance-sheet instruments called SIVs. Things like negative ammortization mortgages in the face of what was clearly a bubble… you get the drift… there was no shortage of red flags in the recent past and yet, apparently, nothing appeared to be out of whack for the world elite economists and politicians. Fine.

Of course, we can argue that professional economists also somehow completely failed to notice the long term decline in the velocity of money despite the fact that the rate of expansion of financial debt was outpacing GDP expansion at an accelerating rate for the past 20 years. But, let’s not get technical here.

So, we have a band of 20000 (twenty thousand) that thought nothing was amiss in the past ten, or even, the past five years.

Our leaders have now borrowed US$3Trillion (that’s twelve zeros) and it is likely that Obama this week will request another whopping amount as will the EU and England in the coming weeks. I estimate that before the year is out, we’ll be talking of amounts in excess of US$7Trillion… a large sum in and of itself but nothing compared to the sum it is supposed to off-set estimated by the BIS at well over US$500Trillion in various debt instruments world wide.

What is the use of pitting 7 Trillions against a potential default of 500 or even only 50 Trillions?

The answer is two fold. Our leaders are not attempting to counter the deleveraging of the debt mountain. If that were the case, they should be talking of sums that are ten, twenty or thirty times larger than US$7Trillion.

What our leaders are doing is to make whole the gang of 20000 that got us into this mess.

The 20000 are making out like bandits. They will plunge us in a world war which will presumably bring about the much talked about New World Order that Gordon Brown is so proud to discuss in public fora these days.

7 Trillion Dollars divvied up amongst the 20000 is a cool average of 350 Million each. In a deflationary environment, that’s a whole lotta moola.

These calculations are based only on the official numbers common mortals like you and me have access to. Undoubtedly, there are huge sums changing hands behind closed doors that we will never hear about.

Still think I am a crank?

Is it fraud?

February 23, 2011

David Malone has a good post on his blog today on which I was trying to comment. However, I was logged out of his blog on four occasions… since I commented on his posts before, I suppose I should take the hint… so I’ll post on my blog instead?

David’s post:


In the last quarter of 2010, while Wall Street said enough of crocodile tears and mock humility and returned to crowing and oiling itself with bonuses, housing for ordinary people in 11 of America’s biggest cities declined to new lows, nearly 4% down in just three months. The rate of foreclosures is up and so are the number of them flooding the market.

David goes on to point out a host of larcenous and criminal practices and calls it fraud, which, of course, it is.

What I would like there to happen instead is for people to realize this is not fraud as such. Not in the sense that one entity turned out to be a bad apple in a cart of otherwise good apples. These practices are pervasive within a very restricted but very prominent circle of financial institutions globally.  The extent and depth of these practices are sanctioned by the highest offices in government in an attempt at keeping alive our debt based monetary system in order to effect the greatest transfer of wealth possible.

The only question that remains to be answered therefore, is whether our politicians are aware of the mechanics of our monetary system and are thus willing accomplices or whether they are merely unwitting useful idiots.


November 23, 2010

Do not give up your sovereignty. More to the point DO NOT GIVE UP YOUR PRODUCTIVE ASSETS!!

At this particular junction, the choice is limited and very well defined.

Either you accept the bailout and ensure that a bunch of bankers are made whole whilst the rest of the population alone shoulders the costs of this debacle.

Or you default and ensure that banks’ bond holders too shoulder the cost of this debacle.

There is pain and hardship in store whatever we do. The least we can do is ensure that bank bondholders share with everyone.

… in an investor note this weekend, Société Générale in Paris, which helps sell Irish sovereign bonds for the government, said there were calls from around Europe for Ireland to stump up “collateral” in return for its bailout loans.

Follow Iceland’s example. Let the banks fail.

You, the Irish people, were our only and last hope against the Lisbon Treaty. Make your stand now against the banks. Let the banks fail.

For those of you that fear that failing banks will result in lost savings and pensions, here is the skinny.

Whatever happens next, social expenditure will be curtailed if not, in some cases, discontinued entirely. Your pension is already compromised.

With regards to savings, whatever savings there may be, bondholders’ capital is largely sufficient to make those up. That is how the dynamic should evolve as contemplated by law. Savers are first in line to be paid back in bankruptcy. Follow bond holders, followed by second lien bond holders and so on and so forth till the shareholders. Shareholders are the first to be wiped out. Bondholders ans savers are last. As was the case for Lehman Brothers, Western banks today have largely sufficient bondholder capital to cover most bankruptcies. Thus savers are covered.

Let the banks fail. Stop fascism in its tracks. We are hurtling towards a global war and you and me will pay the price whilst a select bunch of bank bondholders will sit back and reap the profits.

Let the banks fail.

Is it not enough that during this crisis that has variously been described as the deepest and the most severe since the Great Depression of the 30s, banks have been distributing the richest and most eye popping bonuses in history??

Let the banks fail.

And by the way. We’re only talking here about a handful of banks. It is always the usual suspects. Banks have failed before in history and the world kept turning. Let them fail and force banks to share in the hardship.

NATO must prepare to launch military operations outside its border after Afghanistan!??…

November 19, 2010


Full article with interspersed comments below:

Anders Fogh Rasmussen said alliance members must be willing and able to exercise military power “beyond our borders” to combat threats such as terrorism and missile attacks.

Mr Rasmussen spoke to The Daily Telegraph as Nato members prepared to gather today in Lisbon to plan the future role of the alliance.

Guido here: “to plan the future role of the alliance” – meaning, we’ve gotta find ourselves some wars boys.

After almost a decade of military operations in Afghanistan, some European Nato members have suggested that the alliance should focus on defending its home territory.

By contrast, Britain and the US believe that to remain relevant, Nato must be prepared to tackle potential security threats beyond its members’ borders.

Guido here: If you have a flourishing and expanding armament industry, at some point little backwater inventory wars no longer suffice to absorb your production. So whatchagonna do. Furthermore, since we are at the point where monetary policy is pushing its own mathematical limits, a war is just what the doctor ordered.

Durable Goods Shipments

Mr Rasmussen supported that view, urging alliance members to accept that new security threats may have to be met.

“Our core function will remain territorial defence of our populations,” he said. “But we must realise that in the modern world we have to go beyond our borders to actually protect and defend our borders.”

Guido here: There it is! We must go beyond our borders to protect ourselves. This assertion of course omits to point out that in the particular case of the USA, the UK and France we already are beyond our borders in Africa, the Middle East and throughout Asia and South America.

Afghanistan could serve a template for future threats and Nato’s response to them.

Guido here: Let’s hope not. If Afghanistan is a template of effectiveness, we’re plain fucked! The math says that on a Dolllar per result basis, these presumed troglodites on donky’s back are kicking the shit out of our modern military machine that costs hundreds of Billions to maintain without mentioning the long term medical costs and without mentioning the demoralizing effect on the troops these cave dwellers are having. Some template!

“After the Cold War, we have seen a number of new threats emerge,” he said. “Terrorism is one of them.”

The Lisbon summit will adopt a “strategic concept” or mission statement in a post-Afghanistan world.

“The purpose of the new strategic concept is to prepare the alliance to address the new security challenges – missile attacks, cyber attacks, terrorist attacks,” Mr Rasmussen said.

Guido here: the purpose of the new strategic concept is to find ways to deflect responsibility from our own failed economic and social policies that have brought us to economic gridlock with little chance to come out of it unscathed. A foreign sacrificial lamb will be found and excuses will be built-up to look good.

He also promised that a reform of Nato’s command structures will make alliance forces “more flexible”.

As well as the mission statement, the summit will also consider a European missile defence shield. The shield, based on US interceptor missiles, will rely on British radar stations to detect attacks.

The missile shield is being developed primarily because of fears of Iranian missile programmes, but Mr Rasmussen said other countries could also pose a threat.

“More than 30 countries have missile technology or are aspiring to get missile technology,” he said.

“Some of them can also hit the Euro-Atlantic area.”

Alliance leaders will later confirm a timetable for starting the “transition” of security responsibility from Nato forces to the Afghan government, starting next year and concluding at the end of 2014.

Mr Rasmussen said he was confident that Afghan forces will be ready for that responsibility in time, but accepted that the timetable could slip.

He said: “If conditions are not met fully by the end of 2014, then we will have to continue the combat mission.”

Who do the IMF or the ECB really want to bailout?

November 17, 2010

As the mainstream press appears to steadily if hesitantly move towards a more objective role, the Wall Steet Journal today reports who the real beneficiaries of the bailouts really are.

Not news to us of course.

All told, European banks were sitting on more than $650 billion of exposure to Ireland as of March 31, according to the Bank for International Settlements.”

And there you have it.
Banks are once again trying to skirt their primary legal and fiduciary responsibilities. Banks are businesses. Businesses make strategic decisions in an attempt to earn a profit. When decisions turn out to have been wrong, a business takes the loss or goes bankrupt. It is how it is supposed to work in open free economies.
But in our bank imposed, debt based, fiat monetary system, not only are banks perceived as indispensable to the normal functioning of the system but they have also placed themselves above the law. This would not be such a bad thing if it weren’t for the fact that banks have successfully maneuvered into this position with the ongoing connivance of the political, legislative, judicial and executive framework of presumably sovereign democratic countries.
Hence the reason banks can disregard entire swathes of accounting rules that apply to everyone else. Hence the reason banks enjoy selective legal treatment. Hence the reason banks get fined token amounts in cases where they have clearly and deliberately committed fraud, if not been criminally negligent, as is the case with the ongoing foreclosure debacle that incidentally is in the process of getting “settled” for yet more token amounts and where nobody will go to jail… yet again.
Mathematically, we’ve reached the limits of this monetary system. The upshot of this situation is that debt based fiat money conforms to the law of diminishing marginal utility so that as you reach the mathematical limits of the system, the progression accelerates till it implodes. We are literally 3 to 5 years away from total implosion.
You know my position. This implosion will bring global conflict just because neither our politicians nor, indeed, our electoral political systems are geared towards doing what needs to be done or taking responsibility for a crisis years in the making. Politicians and electoral politics are inherently expedient and short-termist in inspiration and in deed thus guaranteeing immunity from responsibility. A fall-guy will be found, a sacrificial lamb will be slaughtered and a war precipitated.
Ireland like Iceland before it, should tell the banks to go pack fudge. Bank bondholders should be forced to assume their roles as prescribed by law and take the loss. Public funds must no longer be used to safeguard bank’s deliberately reckless behavior. Bondholders must no longer be saved from the scheming ways of their own creation.
Someone has suggested recently that each citizen should buy a silver coin or a silver ingot. You needn’t spend much; less than US$50 will do. But each and every person in the world should buy a small quantity of physical silver either in coin form or in ingot form. Buy it and put it in your pocket; i.e. do not buy a certificate. Buy the real physical item. Whilst you are at it, you can do the same with gold. If every sentient and reasonable person in the world did so, the monetary authorities would be quickly brought under control. Help reason and decency prevail. Buy a little bullion.


October 15, 2010

Talk of fraud is now going main stream. Even previously willfully blind media companies like CNBS are now at the very least mentioning the word. Spitzer, Ratigan, the NYT, and a handful of other media companies appear, at least momentarily, to be joining the chorus too.

The trigger this time is what is now known as Foreclosure Gate. But it could have easily been any of a plethora of other things that triggered the sudden realization that fraud is a deliberate tool of the authorities.

But Foreclosure Gate, or the deliberate choice to allow banks to disregard accounting compliance, or government giving public funds to select private companies or any of a list of other actions that are blatantly and factually illegal are only symptoms of a dynamic that is well known and that leads to a logical conclusion that, too, is known. We know why this is happening and we know how it ends.

How do we know?

Because it has happened before; several times in fact. And every time it ended the same way.

So, absolutely, let’s make a big deal of Foreclosure Gate. It is right we should and hopefully someone will get indicted.

But Foreclosure Gate is only a symptom. What we need is for someone with clout to take up the matter of the monetary system. The monetary system is THE ultimate cause of this all too predictable and politically mandated debacle.