Sovereign Debt Crisis, Washington Complicit in Massive Financial Wall Street Fraud

[G_j]

http://www.marketoracle.co.uk/Article19352.html


Sovereign Debt Crisis, Washington Complicit in Massive Financial Wall Street Fraud
Politics / Credit Crisis 2010 May 10, 2010 - 06:15 AM
By: Bob_Chapman



It was 7 years ago we said Fannie Mae and Freddie Mac were bankrupt. Most everyone within the beltway knew it, but no one would say anything about it. This as it now turns out they were the poster companies, which led to sovereign debt problems, but also showed that they were involved in massive fraud over several years and many in Washington knew it. Earnings were fabricated in order to create conditions, so that the officers could collect millions of dollars in bonuses. Part of this scam was engineered by Goldman Sachs, which pushed more than $100 million in earnings into future years. Earnings were structured so that they justified larger payouts for executives.

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Outrageous monetary policy by the FOMC and Alan Greenspan led to ever more profits in the banking system and on Wall Street. In the end the lifeline was the GSE’s and still is. Banking and Wall Street, as we all well know, expedited the distribution of these toxic assets. The problems created by this cabal in their quest for extraordinary profits are still with us.

As we look to the future we see more bubbles from that era still to be dealt with and that is sovereign debt. For 19 nations that problem is acute. They are on the edge of insolvency. Iceland has led the pack and today the visible are Greece, Portugal, Ireland, Spain and Italy, all in different stages of collapse. More will soon follow reaching a crescendo next year. The contagion will be complete as bad debt stretches around the world affecting debt and credit everywhere. No one will escape it – it will be just a matter of degrees. We are embarking into a crisis of confidence in governments. Even though Americans do not understand what is wrong with monetary and fiscal policies, they believe their own government is untrustworthy. Some 82% and 79% in two polls just said so. The public obviously sees something is wrong that it quite doesn’t understand. The professionals who should understand are looking the other way hoping it will just go away.

Compounding these debt problems we have banking and Wall Street running Washington in an ongoing criminal enterprise, which is being splashed all over the media. Something that few have talked about is the failure of Goldman Sachs and the event that could cause the collapse of the derivative markets. The system is fragile, especially since it has been kept alive for seven years by massive amounts of money and credit being injected into the system by the Fed. This is nothing new – it has been going on for a long time. It is just now being exposed. How can you hope the system will function when you have unregulated derivatives, hedge funds that are unregulated, black box front running and naked shorting? That is massive rules violations and the SEC and CFTC do absolutely nothing about it of real import. As time passes the Fed will have to again increase liquidity, not just to banks that keep it on deposit at the Fed, in a sweetheart deal, but to small businesses and individuals. If that doesn’t happen the system will be sucked under by the undertow of deflation.

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What is going on concerning sovereign debt is eventually going to bring the world financial system down. It did not just happen that way; it was planned that way.

[G_j]

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