'The greatest crime of the century'

This radio interview with Bill Burrell drained my face of colour. It's about 50 mins long. I promise you, you will not regret listening to it - explosive stuff about the money markets and essential listening for anyone who wants to understand exactly how the US has been destroyed. Welcome to the world of the 'naked short seller' (selling something that doesn't exist), boiler room set ups, watered stock, de-materialisation, counterfeit long positions, grandfathering, revenue recognition events and tax events - etc etc.

http://www.financialsense.com/Experts/2008/Burrell.html

Deep Capture - the movie

Another excellent presentation about the role of the media in protecting FTDs/naked short selling in the US:

http://www.deepcapturethemovie.com/

you know, i'm a free marketeer. but there is a time and place for lining some people, who have bankrupt the world and its citizens, up against the wall and shooting them.

zakalwe wrote:

you know, i'm a free marketeer. but there is a time and place for lining some people, who have bankrupt the world and its citizens, up against the wall and shooting them.

I agree - first for the firing squad should be the politicians who promoted, aided and abetted them. Here's one US citizen's take on what lies in store:

Quote :

The Nausea Express

The G-7 world, the club of "developed" western nations plus Japan, has commenced an ordeal of suddenly waking up much poorer. All the desperate work-arounds being engineered by governments and central banks on an al fresco basis are intended to overcome this stunning basic fact, and none of them will. The benchmarks of everything are in flux -- stocks, bond values and yields, commodity prices, most especially currencies -- but these tend to disguise the basic fact of growing and spreading impoverishment. Is oil priced at $80 a barrel this morning? That's nice. Except if the company that employs you is about to fold up and you face a holiday season of driving frantically around Atlanta in search of another job, which the odds are against you find finding. Or if you're living on a retirement fund that's just lost 37 percent of its value and it's time to fill the heating oil tank.

Iceland is the poster-child du jour for this. The little island nation of about 320,000 souls (roughly half of Vermont's population) lately grew a banking sector that thrived on something-for-nothing finance. In little more than a month, its banks have imploded like mini death stars, leaving Iceland with a pariah currency. Since it has to import just about everything, and it suddenly finds itself unable to pay for imports, the people are stripping the grocery markets of whatever remains there now. You wonder what they will do in two weeks. Ten years from now there may be 32,000 of them left, subsisting on blubber sandwiches.

I exaggerate perhaps a little, but who really knows where all this leads? Here in the USA, the Treasury, enjoying new and seemingly limitless powers of discretionary spending, has begun shoveling dollars into every truck that backs up to the loading dock. The numbers are staggering. In ten days it's reached into the trillions in loans and handouts. Most of this money is getting sucked directly into the black hole of debt and margin calls of one kind or another. This is previously-presumed wealth that is now un-presumed. It's leaving the system, never to be seen again. One useful way of thinking about it is to regard it as our society's previous borrowings against our own future. Thus, we are seeing our future vanish into a black hole -- our future comfort, health, and basic nourishment.

This is the kind of fiasco that brings down governments, propels societies into revolutions, and starts wars. In a few months, America will be full of angry economic losers. We're not the same nation that crowded around the old radio consoles for Franklin Roosevelt's fireside chats. Back then, we were mostly a highly-disciplined, regimented, industrial society full of citizens who mostly did what they were told to do, and mostly trusted in authority. Today we're a nation of tattooed barbarian "consumers" with no impulse control, a swollen sense of entitlement, ruled by a set of authorities ranging from one G.W. Bush to the grifter-billionaire pantheon of Wall Street CEOs -- now heading into secret bunkers with their stashes of krugerrands, freeze-dried veal Milanese, and private security squads armed with XM-8 carbines.

I go along with Nassim Nicholas Taleb's idea -- read "The Black Swan" -- that nobody really knows anything. We construct our narratives to try and explain circumstances that are unraveling non-linearly before us, and some narratives are more plausible than others, depending on your vantage point. There are infinite narratives. This is nothing more than my narrative. The circumstances we're entering appear, for the moment, to take the shape of a compressive deflationary depression with the cherry-on-top add-on of a hyper-inflation further down the road -- meaning initially that jobs, incomes, and pensions are lost, but that later on even the little money that people manage to get -- perhaps mostly from government hand-outs of one kind or another -- steadily loses its value. Every way you jigger things, it just ends up meaning the same thing: a much poorer society. It certainly won't be a society of recreational shoppers plying the Target store aisles for scented candles and home accents. Hyper-inflation could make old debts meaningless, but it would also make credit meaningless and spending absurd.

Given the way our society has evolved to operate -- as an endless upward spiral of borrowings -- you can see an awful lot of things not working anymore, and an awful lot of people not working in them or at them. Maybe the governments of the G-7 will get lending unstuck at the upper levels, but who, exactly, is able to borrow now besides companies on the verge of bankruptcy -- and why continue to lend to them? (Except to maintain the pretense that "something is being done.") Besides, there's much too much previously borrowed money that won't ever paid back, and the "work-out" of all that debt only implies the continued distress sale of any-and-all assets -- so that the USA in effect becomes yard-sale nation.

Personally, I think all the rejiggering in the world of numbers and indexes will not solve anything, and really only represents a kind obsessive-compulsive neurosis related to numerology that will do nothing to readjust our daily activities toward the production of things that have real and enduring value. In my narrative, the fate of industrial nations really depends on energy resources. The price of oil may be going down for the moment -- perhaps due to the deleveraging of hedge funds, banks, and invested individuals, perhaps combined with a perception of "demand destruction" -- but the geology and geopolitics of oil have not changed since June of this year when oil was at $147. Let's say US oil consumption is down one million barrels of oil a day. Within the next two years, we're liable to lose more than that in import declines from Mexico and Venezuela alone. The International Energy Agency's latest estimate is for only slightly less of an increase in worldwide oil demand than was previously posted. It's still a net demand increase. World oil consumption still exceeds world production now, perhaps permanently so. Finally, the current plunge of oil prices has suddenly halted the very capital ventures in exploration and development that were hoped to increase the worldwide supply of oil. All this portends an aggravation of oil supply and allocation problems in the five years ahead, and ultimately much more expensive, harder-to-get oil.
What we can't face is the prospect that we might become something other than an industrial "consumer" society. My narrative includes the conviction that we will have trouble producing food for ourselves as petro-agriculture fails, and since society can't go on without food production, I see this activity coming back much closer to the center of our daily lives. We're not ready to think about that. The downside of our unreadiness may be that a lot of Americans will go hungry in the decade ahead.

None of this is an argument for despair, by the way, but it certainly invokes the need for steeply revised expectations and serious attention to a national "to-do" list. We're on our way to becoming another nation, whether we like it or not. No amount of numerological augury or even hand-wringing will change that. The big question for, say, the 24 months ahead is: how disorderly will we allow this transition to be?

(Source: The Nausea Express (c) Jim Kunstler. http://jameshowardkunstler.typepad.com/)

At one level this is the systemic failure of a system and at another level it is theft by the few from the many.

US author David Rothkopf, a former member of the Clinton administration, last March published his controversial book Superclass - The Global Power Elite and the World They Are Making. The book argues that the world's six billion people are governed by an elite superclass of 6,000 individuals. This superclass, he argued, has helped create complex financial instruments that replaced currency as the primary repositories of "value". These are not issued by governments, most are not regulated, and the risks associated with them are hidden. Research among big US institutional investors reveals that over 80 per cent of staff felt their boards did not understand the risks inherent in the portfolios they were responsible for.
The argument that corporate bonds and share certificates had replaced currency as the repositories of value made for interesting debate last March. Today, just eight months later, events have rubbished it. Currencies, particularly the US dollar and the euro, and government bonds in those currencies are where liquid wealth now finds refuge. Banks refuse to lend to other banks, but are relieved to lend to governments and central banks even when the return on such loans is close to, or below, zero.

Once civilisation moved from barter to currency, monies tended to blend inherent wealth with symbolic guarantees. Babylonian and Egyptian coins were struck in precious metals. The coin was literally worth its weight in gold - a value confirmed by the monarch appearing on the coin.

In the next incarnation, money became a token backed by gold. The coins and notes could, theoretically, be redeemed for their equivalent in gold. This gold standard was amended at the end of the second World War to a system where currencies were convertible into US dollars, while the dollar remained convertible into gold.

The late president Nixon, under pressure to finance the Vietnam war, ended this dollar convertibility in 1971, ushering in floating exchange rates based on perceptions of a country's economic performance and stability. This confidence-based system of value was, briefly, challenged by stock market instruments, but that challenge is now buried in the rubble of Wall Street. State issued currencies, bonds and guarantees are now the only acceptable repository of value. And what stands behind those notes? We, the people. You and me. Now there's a sobering and decidedly non-capitalist thought.
(Tony Kinsella Irish Times today)

It is interesting that when it comes to lending to states and the whole question of Third World debt, it is the norm to put all the blame, and the risk, on the borrowers and turn a blind eye to the reckless lenders. But with this situation it's the other way round. There were dodgy borrowers surely, don't they get any blame?

Brilliant interview. Listened to it twice. It's good to hear someone branding this activity as crime.

Confessions of an economic hitman:-

http://www.informationclearinghouse.info/article21000.htm