Posted on 12/25/2008 2:24:43 AM PST by dennisw
Derivatives consultant Janet Tavakoli is onto something. In a note to her clients, she says the biggest Ponzi scheme of all may be the one that brought the world financial markets to its knees. That’s the scheme that united Wall Street bankers with mortgage lenders in a bid to funnel more and more money into the market for supbrime homes loans. She says packaging of iffy home loans into securitized bonds that could be sold to insitutional investors—many of them relying on borrowed money—was a system born to fail.
“The largest Ponzi scheme in the history of capital markets is the relationship between failed mortgage lenders and investment banks that securitized the risky overpriced loans and sold these packages to other investors—a Ponzi scheme by every definition applied to Madoff,” says Tavakoli. “These and other related deeds led to the largest global credit meltdown in the history of the world.”
About a year ago, BusinessWeek made a similar point in an article about the two Bear Stearns hedge funds that collapsed in June 2007 and helped spark the credit crisis. The story focused on a novel type of collateralized debt obligation that the managers of the Bear funds used to tap funding from money-market funds. The CDOs which were widely copied on Wall Street helped fuel the market for these esoteric securities, along with the underlying housing boom.
In that article, BusinessWeek likened the new market that the Bear funds helped inspire a pyramid scheme. Or, as Tavakoli says, a Ponzi scheme.
Hallmark of Ponzi scheme is an investment vehicle that generates consistent, steady returns. This discourages investors from pulling too much money out of the fund—the event that ulimately causes a Ponzi scheme to collapse. Wealthy people showered money on Madoff because his fund generated predictable returns—rain or shine.
(Excerpt) Read more at businessweek.com ...
By all means, broadcast that baby!
I have been posting links to it over the past few days. Denninger seems to see the big picture very clearly, doesn’t he?
If you really want to understand the motivations of these central banks, study Andrew Jackson’s dealings with them: http://www.dollardaze.org/blog/?post_id=00255
If you wish to regulate that away, then you’d have an economy a fraction of the size.
I think the size of the economy would be an honest result of legitimate growth. A constant money supply would not indicate a necessarily limit on the scale of the economy, but an absence of an artificially expanded BS economy veneered over the top of legitimate trade.
You also do away with the theft of private citizens' wealth by the banking cartel.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. ” - Alan Greenspan
It was all “based on interest” or “based on earnings” or “based on growth”.
Wholescale and reckless “counting your chickens before they were hatched...”
Ha!!!been by a Lowes or Home Depot lately? Studs are 1.65/wallboard 5.00/plywood 16.75......that home can be replaced at a very low price with contractors looking for work.
Yes, it’s called “The New World Order” or “One World” and it can only be created after the economic might of the U.S. is brought low while, at the same time, the U.S. tax slaves are harnessed with redistributionist payments, fees, grants and “loans” to third world despotisms.
Once that leveling is achieved, the elite planners of this new UTOPIA, where we are all equals (but SOME will be more equal than others), will declare themselves and the by then UNARMED masses will be helpless to resist them.
I solicit those who believe the above to be Bravo Sierra to bring forth their evidence that it is in error.
My favorite bumper sticker as the plan comes to fulfillment is “LOOKS LIKE THE BIRCHERS WERE RIGHT!”
Of course, as any who lived through the era during which those crazy old Birchers were largely discredited by the willing handmaidens of the One Worlders — the so-called MAIN STEAM MEDIA — will recall, even the mention of the Birch Society in “polite company” elicited derisive chuckles.
“The urge to save humanity is often a false front for the urge to rule.” H.L. Mencken
My only quibble with Mencken is that he SHOULD have said “NEARLY ALWAYS” in lieu of “OFTEN.”
Yes, it’s called “The New World Order” or “One World” and it can only be created after the economic might of the U.S. is brought low while, at the same time, the U.S. tax slaves are harnessed with redistributionist payments, fees, grants and “loans” to third world despotisms.
Once that leveling is achieved, the elite planners of this new UTOPIA, where we are all equals (but SOME will be more equal than others), will declare themselves and the by then UNARMED masses will be helpless to resist them.
I solicit those who believe the above to be Bravo Sierra to bring forth their evidence that it is in error.
My favorite bumper sticker as the plan comes to fulfillment is “LOOKS LIKE THE BIRCHERS WERE RIGHT!”
Of course, as any who lived through the era during which those crazy old Birchers were largely discredited by the willing handmaidens of the One Worlders — the so-called MAIN STEAM MEDIA — will recall, even the mention of the Birch Society in “polite company” elicited derisive chuckles.
“The urge to save humanity is often a false front for the urge to rule.” H.L. Mencken
My only quibble with Mencken is that he SHOULD have said “NEARLY ALWAYS” in lieu of “OFTEN.”
Wholescale and reckless “counting your chickens before they were hatched...”
No one works for a pittance on Wall St
Billions in bonuses were doled out to create these derivatives and CDS and the people that made them and traded them knew they might well turn to junk....and they did. And the taxpayers are the last man left holding the bag in this Ponzi scheme
So billions in bonuses were handed out to make investment vehicles that failed with months or a few years
Tying the money supply to the amount of any particular mined metal, doesn’t make much sense either though. There’s no reason an economy should be the size of some arbitrarily picked resource.
I agree with you in general on some of the issues of derivatives, but I believe your solution would be even more disastrous to the economy.
Perhaps somewhere in between...
But the gold standard doesn’t limit the size of the economy- only the relative value of gold in the economy.
For instance, I read an article suggesting that if the existing global gold reserves were equated to the economy as it exists, it would be something like $55,000 an ounce.
If anything, this is an indication of how badly our savings have been depleted by inflation.
There was a time, Dick, when I would have thought you crazy. Not anymore.
Our would-be masters are now bold enough to TELL us what they’re up to. They know that — after multiple generations of GOVERNMENT SCHOOLING (INDOCTRINATION) and control of the national media — there has been sufficient dumbing down that any resistance would be furtive and short-lived. We have become a different people than the strong-willed and dedicated folk who put this thing we call “America” together.
And there’s another problem with trying to “wake the town and tell the people:” To borrow a phrase from a popular film of a dozen years or so ago they “...can’t HANDLE the truth.”
An anecdote to that point:
One beautiful Fall night in 1980, I took an old friend to a lovely Stone Mountain home to hear Larry McDonald deliver his close to 2 hour program on what many have come to believe is an ongoing “conspiracy” to alter life in America and the “Free World” to something other than that intended by many of our Founding Fathers.
There were about 50 of us in the spacious and comfortable basement recreation room. Larry began his customary comprehensive and concise recap of a very complicated and convoluted topic shortly before 7:30. He wrapped up for Q&A around 9:15. Although I had wanted to remain and chat with Larry and the others, Al, who sat virtually motionless next to me for the entire presentation, insisted we leave immediately. Since he was my guest and I drove, we left.
We’d been in the car for 3 or 4 minutes and Al had still not spoken but stared straight ahead. I glanced over each time we passed a street light and THOUGHT I saw him begin to physically shake and clutch the door handle. Sensing that there might be something wrong, I asked him “Al, are you alright?”
After a slight hesitation, a low, quivering voice I’d never before heard issued from this normally jolly friend of over a decade:
“Dick, don’t EVER invite me to anything like that again!” His response to my “Why?” was “I CAN’T DEAL WITH IT.”
Al and I remained friends. He resumed his uncomplicated life of running his printing business, spending week ends at his lake house on his pontoon boat and enjoying increased quantities of adult libations, for which increase I earnestly hoped Larry and I weren’t responsible.
I continued to slug it out with the beast.
You see, I had CHILDREN – and now grandchildren — who will almost certainly NOT live in the America I knew growing up.
(That America is now upon us!)
A rifle behind every tree.
Not so sure we are all ready to give up, though. The Left has serious internal problems that make it doomed to fail. The useful idiots have gone ahead and elected a true Marxist but, we've done this before to a lesser extent and survived. If "we" (whatever the heck that means)can regain control of Congress (it can't be the GOP this time because they blew it last time) then we may have a fighting chance at turning the country around. If not, we need to separate into a free state and a socialist state before the fighting really starts.
bttt
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