Criminal Banks and Brokers Continue To Ply Their Trade...

By: Richard Greene | Fri, Feb 27, 2009
Print Email

Stealing From You and Me As the Public Carries On Its Belief in Fantasies

What ever would possess intelligent professionals such as those running the finances of major financial institutions to leverage their equity 88 to one in the case of Citigroup and 134 to one in the case of Bank of America? JP Morgan's credit exposure to financial derivatives, (financial weapons of mass destruction) at last glance exceeded 400 to 1! An undergraduate student with average intelligence would clearly see that such outrageous levels of leverage would guarantee a bad ending. So what was it that compelled supposedly best of breed financial officers to act like total nincompoops? Well, if you had tomorrow's sports pages you might be willing to bet a little more heavily on the horse races today if you believed you already knew the outcome. When you view the landscape and try to make sense of how these financial institutions could possibly have allowed themselves to get to such extreme levels of leverage, common sense leads one to believe that the only thing that could compel such reckless behavior was that the parties involved believed they already knew the outcome of such bets. This goes beyond arrogance; it involves cheating, rigged markets, and total disregard of unintended consequences. So, if it follows that no one in their right mind would get this leveraged without knowing the outcome beforehand, then you should be able to deduce that these bankers and brokers have been purposely stealing from the rest of us who enter trades under the assumption of free markets. Their use of off market derivatives have reached as high as over $1 quadrillion in financial bets that have made a mockery of price discovery in the traditional markets. Here is a question I haven't seen asked: Where are all the tax revenues from all of this unfathomable black market trading? Just 1% of $1 quadrillion is $10 trillion. Shouldn't at least that much have resulted in someone's tax liability? More corruption. Bernie Madoff has admittedly participated in a $50 billion Ponzi scheme while he still sits in the comfort of his home, where is the outrage? What possible explanation can there be for Madoff to not yet be in jail other than that he can implicate some very powerful people that have arranged for him to remain in his home? It is obvious that since our citizens do not seem to care, our Government can do whatever it pleases.

The secretive TARP plan and the rest of the bailouts are more of the same. Can anyone say what good any of the trillions being thrown around have done? The Administrators refuse to tell us where the money has gone. The best case scenario is that they don't want us to know where the money went because they feel it would create a panic. I don't believe that line of thought, I believe rather the top dogs are siphoning the money off the best they can into their own coiffeurs and will continue to do so as long as the public and our representatives leave it to the same criminals and "leaders" that got us into this mess to get us out. Why does anyone believe that the same people doing more of the same that got us into this highly levered and bankrupt state will now magically get us out? Treasury Secretary Timmy Geithner had such a worthless response on his big day to explain his plan to our politicians that even the politicians responded with. "So basically, you have no plan." It is certainly time for increased scrutiny of these incompetents (or criminals) and everyone that reads this should do their part to make sure that happens.

"All tyranny needs to gain a foothold is for people of good conscience to remain silent." ~ Thomas Jefferson

Write your representative here President Obama may have good intentions but when you look at his team with many of the same characters from the Bush and Clinton years, all you should expect is more of the same because the Rubin's and the Geithner's are just the guys that turned up the greed meter accelerating our economy toward bankruptcy. Wouldn't it be wiser to give power to some of the individuals that were screaming from the rooftops that our borrow and spend fake economy was headed toward this path long ago? Who are these people? Here is a list for starters: Peter Schiff, Jim Willie, Bob Chapman, Rob Kirby, Bill Fleckenstein, Doug Noland, Jim Puplava, Jason Hommel, and Puru Saxena.

Former Fed Chairman Paul Volcker who is credited with bringing inflation to its knees in the early 1980's still claims his biggest error was not capping the gold price. So here again is more of the same; instead of letting gold, one of the natural alarms of inflation or an unsound financial system, do its job; the plan should have been to send false signals to the marketplace that everything was okay. This is what the Government is doing today except on an even grander scale. They lie to their citizens and misrepresent facts to achieve their own end purposes. Nowhere is this more clear than regarding the current state of Government economic statistics. It is absolutely imperative that Americans educate themselves on what has caused our current economic problems. There are many, many writers such as the ones above that have predicted in detail the current dislocations in our economy. Our third United States President Thomas Jefferson had many famous quotes that should be considered because time is short and the damage being inflicted to our economy is accelerating NOT being reversed. Jefferson said.

"If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and what never will be.

Hank Paulson and Ben Bernanke went around the country last July to talk to big institutional investors and asked them to sell their commodity related investments to create the illusion that inflation would no longer be a problem. This action severely damaged the ability of an industry to produce what is badly needed and wanted worldwide, gold and silver. Everything our Government does is about creating an illusion rather than dealing with reality. These are real problems and real debts; this isn't a matter of restoring confidence through lies. Our major problems are we have too much debt, not enough savings, and we perpetually consume more than we produce which is why we are at the mercy of foreigners to borrow over $2 billion a day that they are no longer willing to lend us. Now that foreign lenders are no longer willing to play this game, the response is to simply print the money which will just put us in a deeper hole. The time to end this madness has come and it is time to bring our house in order and stop making things even worse. Our debts are unpayable and will not benefit from any further stimulating. It will be painful for sure, but not more painful, because the sooner we put ourselves on the track to recovery the less overall damage will occur. Our Government statistics have been so doctored they are virtually meaningless to the point that our unemployment rate today is less than half of what the same actual unemployment would have read 30 years ago. Does that make it less bad because we simply don't count the same actual unemployed to make the reading better? Of course not! A better question is why they have to change such statistics unless they are simply trying to lie to the public at large. Since that is clearly what is going on here, what is it going to take to bring these issues up and throw out these criminals that are wrecking our nation?

Section 19 of the Coinage Act of 1792 specifically states that any officer debasing the money shall suffer death. Alan Greenspan wrote the following back in 1967,

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold......The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirade against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as the protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

Obviously, with this eloquent explanation on how gold protects the property of the common man it is certain that Greenspan clearly understood BEFORE he took his job at the Fed that there was no longer anything that kept the privately owned Fed from confiscating the wealth of the American people. So he knowingly took a job that he understood beforehand was confiscating the wealth of the American people and for 20 years this man moved rates for the privately owned Fed to the advantage of the many banks worldwide that own a stake in the Fed that subcontracts monetary policy for our country. It would not be hard to convict this man as he has provided his own evidence. The only thing lacking is enough intelligent individuals to cause a big enough ruckus to bring this man to justice, and of course, the bigger task of overcoming his grateful friends in high places. It is imperative if you are against many of the things this article mentions to let your representatives know. There is a constant shift of attitude more and more toward the Government feeling that it is in charge of us rather than them serving us. Most people either don't know or don't care so if you see what has been going on speak up loud and clear. As Thomas Jefferson said,

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Boy did he call that one! Here is another which is most appropriate to consider in view of our "bailout plans."

"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."

It is truly amazing how readily the American people are willing to embrace the socialist solutions being offered about. Apparently no one believes in the free market allocating scarce capital any more despite the total failures that are due to moving away from capitalism and free markets. Those that thought Government through the likes of inept economists such as Alan Greenspan and Ben Bernanke could determine precisely what the best interest rate and debt expansion should be can now see that the entire exercise was a complete failure and fraud. If not for $60 trillion in interest rate swaps on the books of JP Morgan, interest rates would have soared long ago imploding the system. JP Morgan also has $100 billion in gold derivatives it has used to keep gold under wraps from alerting the masses of the wrecked financial system. Massive shorting in the Comex gold futures over the past few weeks even while the gold price breaks out to new highs is one of the operations of the money powers. They attack the gold futures in conjunction with the gold stocks but lose much of the effect due to the strong results that the companies deliver. During the latest raid two stocks, in particular, Northgate (NXG) and Golden Star (GSS) were driven down 17% on Tuesday alone while they recently delivered impressive results far exceeding expectations.

The quickest way to get back on a recovery path is to end sending billions, and eventually trillions if this is not stopped, to failed organizations. Guess what, the world will not come to an end if Citigroup, Bank of America, and JP Morgan are allowed to fail. It will only end the gravy train for the top officers that feel they are in a privileged class. Hank Paulson diverted billions to his Goldman cronies before he stepped down and John Thain made sure $4 billion! in bonuses were paid early to Merrill henchman in a year when they not only blew themselves up but brought down the entire US economy in the process. Great job guys, what would we have done without you? There is nothing but endless talk in the media over fear of our financial system coming down. The people should embrace it coming down, the sooner the better, and get rid of these huge banks that are rotten to the core especially at the top. Bailout money should go to making sure depositors get all their savings back and the highly leveraged speculating banks should eat their own losses and disappear. The people should educate themselves, demand investigations and throw all of these people in jail that abused the confidence we put in them and impoverished our entire country. There are plenty of good banks to pick up the slack once these failures are swept aside. Why not fund banks that were diligent and allow them to pick up the slack rather than reward those that brought down the financial system? There is nothing smart about any of these bailout plans and if this continues it will drag out this hangover for decades rather than years. What happened to the cleansing process of Capitalism? The current bailout plans are attempting to fund activities and companies that the private sector has already refused to extend capital to. Are we going to allow the heavy hands of Government to move America toward the Communism that brought down Russia? Don't be surprised if the same banks are left in charge when you wake up one morning and find out they are trying to stuff a new fiat currency down your throat and try to give you one of the new ones for three of your old ones that you have on deposit. The rest of the world already will not stand for this. Let's just hope Americans won't either.

I will leave you with some more quotes from Jefferson that should not be ignored.

Ignoring them removes any chance that the United States will remain a civilized place to live.

"It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world."

Another that the US Government should learn quickly:

"Never spend your money before you have earned it."


"To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical."


"The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government."


"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."

Perhaps if someone close to President Obama can get him to look at the virtue in some of these quotes he will model his behavior after Thomas Jefferson rather than Franklin Roosevelt. After all it was Roosevelt that sped us in the direction of the welfare state. After he stole from us our most important tool; honest money, he handed us over to the bankers that have stolen from us and left our nation in a bankrupt shambles. Better yet someone please put this in the hands of Rick Santelli. At least he was able to get his message across to President Obama. Send this article to as many people you care about as you can, you may well save them a big portion of the money they have in these corrupt banks. Let's just hope that President Obama can educate himself and not sell us down the same road. In the end it is the people that must demand it, for if President Obama were to attempt such a massive feat on his own he would end up like John F. Kennedy.



Richard Greene

Author: Richard Greene

Richard J. Greene CFA
Thunder Capital Management

More articles by the author can be accessed by the "Research Articles" choice at:

Copyright © 2004-2009 Richard J. Greene

All Images, XHTML Renderings, and Source Code Copyright ©