It's only when the tide goes out that you learn who's been swimming naked - Warren Buffet (2007)
It surely kind of prophetic to hear a market guru, like Buffett, embracing such a philosophical approach two years ago as the Berkshire profits plunged 96% in early March amid the dysfunctional world economy. It is even more baffling to hear him blame the derivatives after admitting that the firm' s equity holdings had lost 44% because of them. One has to wonder exactly which game is he playing. In 2003, he was among the very first experts to warn about CDOs calling derivatives *financial weapons of mass destruction* and *time bombs*. This grabbed the media's attention and put on a red alert a myriad of intrigued journalists who directly began to investigate the opacity surrounding these innovative products, all of which led them to the conclusions that Buffett would eventually be proven right. Yes, this was the ultimate CDOs horror story that circulated for many months on the Net. Talk about complacency! But even more troubling: how does it come to be that he was unable to take action in order to prevent his shareholders from dealing with this nasty surprise? And one might ask too: how does it come that Buffett' shareholders didn't do anything to reduce Berkshire's exposure to those exotic financial deals... Of course everybody reaped highly satisfying returns for a while. But that was then, and this is now. As of October 2008, the Size of Derivatives Monster was coming down to $190K per person on the planet! It is not a matter of 'if' but 'when' and when this derivative bubble explodes, we will see who was swimming naked. What a clever man, Buffett, whose private wealth won't most likely suffer too much from the Greatest Depression.
Although Tens of thousands rally at tax day 'tea parties', it is still kind of challenging to explain to the average Joe and Jane that our economic system is legalized 'grand robbery'. As a matter of fact Westerners are largely silent as their nations are systematically destroyed. When profits are privatized and losses socialized, we definitely deal with an undeniable feudal component. And of course taxpayers wouldn't be victimized if taxation and usury didn't exist in the first place: it really is the power to destroy. David M. Walker, former Comptroller General of the United States, forecasts that taxes could easily double, which would amount to $483,000 per American household.
Optimal indebtedness has made money scarce. According to Evans-Pritchard , unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. The 'human calamity' has been announced by the World Bank! Debt is not money, it’s a charge against future money. And making people believe that it has to be considered as an asset is simply fraudulent. This has nothing to do with the 'right' or the 'left' but morality, yet we can see why political parties use the 'anti-tax' sword when they see it fit. But which one is truly 'right' on? , one would ask. Again please follow the money: the lesser the taxes, the lesser government fraud, it is logic applied.
IMF just predicted that the US economy will be worse than the world economy in 2010. But why the heck wasn't this aired on all TV broadcasts several years ago? The answer to that question is just more than appalling. 'Few Americans realize that over the last 94 years they have been enserfed', Paul Craig Roberts wrote. The scheme is obvious. The real crime lies in the 'Radical Redistribution' of wealth, asserted Chuck Collins in a Buzzflash interview. Alas it is only when this process is taking place that we can forecast a full-fledged systemic crisis. But at the very heart of this worldwide financial Greek tragedy, lies the very root of the current crisis is Money itself... It’s charging interest, stupid!
If you do not know Nomi Prins yet, her book titled 'Other People's Money' deserves to be put on your must read list a.s.a.p. Her work is an appalling indictment and it will irate you beyond anything you can imagine. Indeed - Prins argues that the free market system is in the hands of criminal wizards whose machinations have overrun the government while claiming to be its champions - and that there is no way to stop those scandalous doings with the system now in place. Laws are simply inadequate to the task. She also describes at length a whole industry that feeds on unlimited quantities of easy money to fund expansion. The most astonishing is that all the so-called (de)regulations were drafted under Clinton's tenure. The funny thing is that Bill Clinton asked not to be blamed for the economic debacle. The most damning evidence is when Nomi Prins explains why banks don't care about the failures at all: the word 'losses' is not part of their jargon behind closed doors. The name of the game in town is milking the system, using every trick possible to make *some* incredibly rich and leave everyone else holding the bag. According to her knowledge, investment banks have sold up to 30 times every mortgage in America. This brings us back to Buffett's dire CDOs warnings... with a financial structure like this, everything is built on sand. How ready are you and every member of your family to lose the $190K - which you do not have on your bank account? Although these are notional values, the threat remains very real. Think of AIG, which already had approximately $500BN derivatives exposure and then start imaging what would happen if the same toxic instruments engulfed other multinationals.
IMF sees a long and severe slowdown, as of April 14, and warned of 'worrisome parallels' between the current crisis and the Great Depression, despite the drastic measures already taken by central bankers and global leaders. Astonishingly, the international body advises to spend **more** to soften the deep recession. In other words keeping the bubbles inflated no matter what. World citizens are slowly being siphoned by the mother of all financial vacuums while the system has clearly become predatory. Zombie Banks feed off on bailout money and ultimately whatever stimulus injections. As if that weren't enough, U.S. 2008 household wealth fell $11.2TN from a year ago and 50% of them are two paychecks away from losing everything. What is going to happen once they realize that they fell for a game called ' The equity illusion'? With the system we have, massive liquidations are unavoidable, they are bound to occur since every banknote in circulation is a debt (IOU) that must be paid pack. Real money doesn't exist because if we paid all our debts, there wouldn't be any money left in circulation. Period. So it isn't by mistake that the clock ticks towards a Financial Judgement Day.
The 'Max Keiser' Solution
In the meantime another a massive $410BN spending bill was passed amid the collapse of factories' output tumbling at a rapid pace globally. Even the Chinese begin to question their massive holdings of Treasuries and other U.S. debt - and getting worried as witnessing their exports plunge 25.7% in February and which they plan to address with a $585 billion stimulus. Billions here, trillions there. But how wise is it to pour so much into a scheme that caused to date a $50,000bn wipe out in asset values worldwide? Yet they are still making us believe that 'they are on top of it' while ignoring the Japanese economic lessons of the 1980's Asian meltdown. The end result is a damning evidence: alas February, the Times.uk reported that Japan fell into a spiral of despair and currently is on the brink of implosion according to Roubini's rgemonitor.com. Japan Says Economy Is in ‘Severe’ State, read a Bloomberg headline on April 17. But wait, there is more: on the top of that a major contraction could grip China at any time - unless its economic managers start printing faster their own shadows. To keep the record straight, China experienced double-digit growth between 2003 and 2007 and then recorded 9% growth in 2008... now down to 6.1%!! This horrific news surely explains why China plans to slash new purchases of US debt. Indeed an article ran this month by the American Thinker revealed that in the first quarter of 2008, the Chinese purchased $153.9bn US Treasuries versus a mere $7.7bn in the first quarter 2009. Rest assured, the boomerang effect has been long overdue.
Beyond America, the picture isn't looking better at all. April alone give us a good glimpse of what lies ahead: the G-8 copes with its first bankruptcy, Singapore was foreseeing the worst economic plunge amid a shrinking GDP; that the very survival of the euro will soon be thrown into serious question; that Russia's banking problem is just beginning; that the full blown bust in Dubai is a story that gets uglier by the day, that toxic debts could reach $4tn worldwide; that the Irish's economy is in free fall collapse; that Switzerland is tipping into deflation, that the European bank bailout totals $4 Trillion... etc. But wait, the cherry on the cake is a very disturbing CNBC slideshow about The World's Biggest Debtor Nations. The results will get you to scratch your head for a while, especially if you thought that America would be ranked first... aorry, it is Ireland with an external debt (as % of GDP) amounting to 811%, followed by The UK then Belgium! The Scandinavian countries are also cited as much larger debtors than the U.S. This is freaking unbelievable, isn't it?
Don't listen to the policymakers who obviously have started shooting themselves in the foot - the spin is getting enforced no matter what. We just need to listen to a so-called specialist like Christina Romer, an economic historian at the University of California (and on Obama's payroll), to understand why our fate is sealed. 'We Need Banks to Lend Like Crazy', she interjected on CNN a month or so ago. Talking of madness, the Fed is planning 15-fold increase in US monetary base, contended Eric deCarbonnel. At the end of April, a Federal Reserve press release announced the purchase of up to $1.25Tn of agency mortgage-backed securities. This move clearly is a 'silent bailout', isn't it?. The system is so rigged that insiders can no longer hide their incestuous dealings. What are we to think of the White House selecting the head of mortgage giant - Fannie Mae's president and CEO - as an assistant treasury secretary? The infamous Fannie Mae, which got bailed out last September 2008 (along with Freddie Mac). No, really, we cannot make this stuff up. The combined losses amounted to approximately 80% of the companies' share values and dwarf the savings and loan rescue in the 1980, CBSMarketwatch wrote.