Saturday, January 30, 2010

Why no prosecution, but instead bailouts?

Hopefully I won't get thrown off this page for this, but every valid conspiracy theory I have ever seen involved the Wall Street banker class. Why is it that the biggest fraud scheme in the history of the world has not only not been investigated or prosecuted, but the perpeptrators of the fraud bailed out and massively rewarded? This is like going to Federal prison, finding the convicted bank robbers, throwing the judge and jury in prison and giving the convicts the key to the bank and releasing them. This is only about a $5 trillion fraud when you sum it all up and it touches all corners of the world. Guys like Blanfein should be charged and tried. If they are innocent, they have a huge pile of money for a defense, but someone should act. As Karl and others write over and over again (William Black cites the same study), the FBI warned that massive mortgage fraud was going on as early as 2004. What is it that has put the power structure in the US in position that simple shoplifting can get you prison time while massive financial fraud gets you another huge bonus?

I have recently been trying to trade the oil markets short. Once the volume dries up, the robots take over. If there was only one form, trading these markets would make you rich, but the form changes. In order to sell into a market, you need bids and the machines line the bids up to where there is always 1 contract in the front and never over a few behind it. The large bids are phonies and they disappear when the line comes to them. I suspect the bids and the asks are put there quite often by the same entities. You see market orders go right through bids to the bid behind it over and over again, meaning the computers are getting the signals and moving the pawns before the orders hit them. Not only are our securitization markets rife with fraud, our other markets are being manipulated for the profit of the very operations that owe the public fidiciary duty. It is no wonder that Goldman and the other banks are reaping massive trade profits out of the markets. Bull the oil market up $1 or so with minimal cost so you can play the other side after squeezing the ones that are on the right side. You have to watch this a few days to realize what is going on. These guys are more than making the markets. You might as well be playing the roulette wheel and giving the house the vig. The copper market is the same and I am sure the SPX overnight is also manipulated. I doubt there is much left in NYC that isn't some kind of organized crime. Organized crime starts within the government.

There isn't much Karl wrote that I either haven't written myself or that I disagree with. The smokescreen nonsense that heads up every major election always covers up what is really going on. There are also myths about who is who. Bernanke either hasn't a clue what caused the Great Depression (over extention of credit) or he is doing the opposite of what he knows would cure it. Bernanke didn't cause this mess. What caused this mess was the idea that the supply of credit was infinite and it was only a matter of debt service itself that determined how much debt one could take on. This would only be true if it wasn't necessary for some to act as creditors. Thus only a minority few could ever pose at any given time as major debtors. It is clear that one more time we are being forced to bail out our own creditors. FDR bailed out the banks in 1933 along with the Fed. Wall Street created the mess that time as well, but we had one problem then we don't have now, gold. FDR had to devalue gold to balance world financial flows. But, he confiscated gold from the American public in order to relieve the Fed of its duty to redeem all its paper in gold. The Fed was broke then. We will find it broke again.

Why is it that everything seems to be on the table but banking? The compound interest equation always eventually collapses and causes a depression and most likely has for 3000 years or more. It is clear that in order to produce a real return that the yield on loaned funds has to exceed the inflation created by such lending. Once lending becomes speculative, the bubbles arise and then burst. Every form of protection ever created has collapsed into a pile of economic ruin. For some reason, this is a mistake made over and over again by man. Any other form of business that caused such problems would be outlawed immediately, but this one is always deemed essential to the continued operation of the world. The idea that one group gets to draw an income out of the very existance of money while the others pay a penalty and provide the property to create the money/debt is beyond me. It is clear that this seemingly benign operation could be the very synagog of Satan spoken of in the bible. It is also clear that bondage in Egypt was a lien against the entire population for 20% of its income. Moses prohibited usury for the very reason that it would eventually enslave and destroy the society in which it was practiced.

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