The judge throws the book at Bernie Madoff. His hausfrau gets to keep only $2.5 million of illicit wealth. I wish I had $2.5 million. I would no longer have to publish these stories. I could go sail the Caribbean. Visit the Cayman Islands during hurricane season. Also, the Bank of England releases a report with graphs and charts which means, lots of fun for us. Oh, and Bernanke is furious about the Ron Paul 1207 bill. HAHAHA. Bernanke should share a cell with Bernie.
Federal prosecutors recommended on Friday that Bernard L. Madoff be sentenced to 150 years in prison for conducting his enormous worldwide Ponzi scheme… Also Friday, prosecutors announced that Judge Chin has entered a preliminary order directing Mr. Madoff to pay just over $170 billion in forfeited assets. The order strips Mr. Madoff of all his property and leaves $2.5 million in assets for his wife, Ruth Madoff.
Madoff doesn’t have any $170 billion. He doesn’t have $17 billion. He doesn’t have $1.7 billion. Much of this money is down the old rat hole…it never really existed. This is what happens when people can make money appear out of thin air. All sorts of characters then do this and we get…INFLATION! During all of Madoff’s crime spree, we had pesky inflation. He was one guy contributing to it.
His ‘money’ was all counterfeit. And the people playing this con game with him flooded the world with at least $50 billion in fake money. Of course, compared to the international central bankers who created well over $14 trillion in counterfeit money…HAHAHA. I want Bernanke and Greenspan to be his cell mates. They can be a ménage à trois. The lesson Madoff teaches us is, if anyone is enterprising enough, controls enough portals for making Wall Street deals and gives enough money to enough influential people, they can create money to their heart’s content. Before destroying everything.
Speaking of criminal operations, Congress, via Ron Paul— :) —has been making noises about peeking into the top secret books of the Federal Reserve bookies who run the US money machine casino. The possibility that Congress might do what it is supposed to do according to the Constitution is causing our real rulers and their attack dog, Bernake, a heart attack. Maybe Bernanke should contact Michael Jackson’s voodoo druggie doctor and get some injections. And then fall to sleep. ZZZZZZZ….
Federal Reserve chairman Ben Bernanke unleashed an alarming veiled threat of financial terrorism when he was questioned by Rep. Duncan on Thursday about his response to the fact that a majority of Congress co-sponsoring Ron Paul’s H.R. 1207 bill to audit the Federal Reserve.
Bernanke clearly regarded the bill’s intent as hostile to the institution he represents:
“My concern about the legislation is that if the GAO is auditing not only the operational aspects of the programs and the details of the programs but making judgments about our policy decisions would effectively be a takeover of policy by the Congress and a repudiation of the Federal Reserve would be highly destructive to the stability of the financial system, the Dollar and our national economic situation.”
HAHAHA. Yes, Congress, you can stuff this guy into Bernie’s cell and throw away the key! Oh yes, the Fed has defended the dollar. As well as Bush and Rumsfeld and Cheney protected us on 9/11. Maybe some buildings can fall on them. As for our national economic situation: if we imported some Zimbabwe officials and let them run our government, perhaps it might be worse than the way it has been run. PERHAPS. In a year, we will decide. Doesn’t look all that good, so far.
Hell’s bells! OBVIOUSLY, the Federal Reserve has failed. Utterly, totally failed. You can’t fail worse except if you compare us to Zimbabwe or North Korea. Not too many other places. Oh! Afghanistan! HAHAHA. They just called off the anti-poppy regime and so let the heroin flow! Too bad, we lost some more druggie rock stars to drugs. Look what happens when they can’t access good horse (in my demented youth, addicts used to call heroin, ‘horse’.)
There is one bank as bad as our own. It is the older bank. It is the model for the Federal Reserve. It leeched off of our central bank which was created less than six months before WWI floated down the River Styx. Both the Bank of England and the Bank of China released reports this week. I will do the Bank of England first because the Chinese report is very long and has lots of information I need to digest. We had many thunderstorms since last night and this is why the report today is late.
Several hours ago, I was in the living room and had the sliding doors open. ‘Look, Chris, that storm is missing us. No lightning,’ I stupidly said. Right where I was pointing a big lightning strike hit the ground. BANG! I jumped backwards. Chris laughed. ‘Thor likes you.’
Changes needed to increase the resilience of the financial system:
• Market discipline should be strengthened significantly (pages 37–40), for example through improved bank disclosures, a credible threat of closure/wind-down for financial institutions and risk-based, pre-funded deposit insurance schemes.
• Financial institutions should self-insure more than in the past (pages 40–46), for example through higher capital and liquidity buffers and contingency plans for capital, liquidity and their own wind-down in periods of stress.
Self-insure? HAHAHA. AIG is now run by our government who also insures nearly everything these days. The entire reason for the OTC and CDS and other three letter games was to deal with that four letter word, ‘RISK’. The hundreds of trillions in swap deals were supposed to insure all losses. Instead, they exaggerated all losses! So, we can’t let these gnomes pass the buck anymore. They have to pay for their own damn (another 4 letter word) losses (a 5 letter word all gnomes despise.)
• Management of risks arising from interactions among financial institutions and with the real economy needs to be improved (pages 46–52), including through higher buffers for firms posing greater systemic risks and countercyclical prudential policy to limit the growth of financial imbalances.
The ‘real economy’ is non-Madoff/non-Bernanke stuff. Like, manufacturing things, building things, growing stuff, digging up physical stuff, etc. I find it hilarious to see more and more central bankers admit there must be higher buffers (fancy talk for CAPITAL) and there has to be ‘limits to growth’! HAHAHA. Yes, anyone attempting to get to infinity via adding zeros to stuff have to be stopped. Arrested. Punished.
Another key financial imbalance is how world monetary systems operate: the US trade deficit has utterly warped how the entire planet operates. It is the worst aspect of this imbalanced system.
• Authorities domestically and internationally should consider whether they need to more actively influence or constrain the size and structure of financial systems to support stability (page 53).
HAHAHA. Tear Goldman Sachs to shreds! Rip up JP Morgan! Smash all the mega international banks! But There is a problem: the biggest banks are… the central banks, themselves! They caused infinite problems.
• Where self-protection fails, a safety net is required that encourages prudent behaviour and contains risks to the public finances (pages 56–57), for example via clear principles guiding authorities’ actions as market maker or capital provider of last resort during financial crises.
ALL safety nets kill prudence! If there is no losses and no punishments, people will do whatever the hell they want. This latest attempt at trying to prevent Libra from balancing the books and getting rid of the immense Derivatives Beast has only made things much, much, much worse. This is the conundrum: banking gnomes will act like irresponsible teenagers if they think mommy and daddy Central Bank will bail them out! Period. This is human nature.
Authorities internationally attempted to break the adverse feedback loop between the financial system and the economy providing support for banking systems which in Europe and North America could be equivalent to over US$14 trillion, or 50% of those countries’ GDP (page 20).
The governments and central bankers have put all of us in hock to over half of our entire economic worth???? WHAT THE HELL???? And in return, have we arrested all the banking gnomes who did this to us? No? Madoff was a piker. A small fish. The real economic whales that crushed the world economy are still hard at work, trying to keep this thing going even as it continues to collapse. Imagine if we put up $14 trillion for socialist programs? How about that? At least, it would do some slight good!
This graph shows how the predictions made nearly a year ago were ridiculous. Even the January estimates were way off. Look at how they hope, from last October to last January and then, April, for this collapse to swiftly rebound. Now, the ‘rebound’ is going to not be above the magic average line but far below it. Right now, we are in negative territory, that is, below zero.
OK: this Bank of England graph really annoys me. It is about unemployment. Note how the US has bigger peaks than anyone else except for the 1980 UK peak which came right when the North Sea oil began to flow. England was totally on the ropes, the former ruler of the planet, a pathetic beggar. Sort of like where we will be very soon. AFter 1990, the US unemployment spikes get higher and higher. Thanks to outsourcing and offshoring of our jobs.
Here is the Bank of England’s graph comparing the various recessions. The Dot Com collapse was pretty bad. We are now near the point in time when that crash ended. It ended by the US giving itself tax cuts while dropping the last trade barriers. Which led to a immense trade deficit. And world trade boomed, of course! The way we ended that mess made this mess. And it took only 5 years to jump from one collapse to the next one. This is very bad. It should take 20 years, not 5.
Isn’t this graph a work of art? :) Each constriction of this timeline is a major recession. This goes only to 2006. The graph, if it were updated, would show a total constriction from those immensely wide spreads. These ‘global account imbalances’ are mostly the US trade deficit, the US, England and Japanese budget deficits and everyone else, adding their own two bits. But about 50% of this is the top G7 nation’s fault.
The immense Swedish bail out whereby they bailed themselves out is still the biggest bail out…but in dollar amounts, it was far, far less than what the US and UK are doing today. Note that the bail outs by the two renegade central banks are nearly 100% of our GDP. This is monstrous considering, virtually no one who created this mess is being punished. For example, the politicians who pushed for tax cuts but refused to balance their budgets should be punished. As it is, in England, the finance scandals hammering Parliament is reaching a fever pitch. I suspect many politicians will find themselves looking for new ways to fund designer duck houses.
This graph compares various collapses and seeks to see how many YEARS it took for a variety of countries to get out of depressions. The fall from grace period is around 3.5 years! This means, we are in only year 2 of the present cycle. Yikes. And the rise back to above 0% growth takes another 3.5 years! This is the dreaded 7 year cycle of ancient Egyptian fame. This is one of the funnier cycles. Due to it being one of the oldest, of course. It fascinates me. Why this is so? Perhaps it is magical. Note that Japan’s depression is now a decade and expanding in length. A serious problem for the world’s second or third biggest economy.
Switzerland is the land of gnomes, nonparallel. The UK decided to become the land of Garden Banking Gnomes and be a dim imitation of Switzerland. One problem: both countries decided gold was stupid. Both are probably kicking themselves for dumping gold. Sorry, chaps. That’s the way the cookie is munched. The US has the lowest bank assets relative to GDP. Why is this?
Well…one reason is, a huge amount of our assets are sold…to Switzerland, the UK, the pirate islands, lots and lots of it, epic amounts go to Japan, etc. We don’t own our own assets. We can barely cover our own asses, as it is. Well, the storms are gone and I can publish my story without all systems going haywire. I hope everyone has a delightful weekend.