Goldman Sachs Eats Tax Money While Giving No Service At All

The greatest economic heist on earth was the imposition of the floating fiat currency/free trade/no taxes on the rich regime.  This trio of trouble is at the heart of the present Great Depression.  True, some numbers are looking up somewhat. But the fundamental problems, especially the Derivatives Beast, are not fixed at all.  Indeed, these problems are now getting much worse and will cause future havoc.  The entire system was papered over by immense capitalization efforts costing trillions of dollars. And one party that is having a good time now that we gave them all of this is Goldman Sachs, of course.

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Goldman Sachs Still Paid for Swaps on Redeemed Bonds (Update2) – Bloomberg.com

New Jersey taxpayers are sending almost $1 million a month to a partnership run by Goldman Sachs Group Inc. for protection against rising interest costs on bonds that the state redeemed more than a year ago. .

The most-densely populated U.S. state is making the payments under an agreement made during the administration of former Governor James E. McGreevey in 2003, when New Jersey’s Transportation Trust Fund Authority sold $345 million in auction-rate bonds whose yields fluctuated with short-term interest costs. The agency finances road and rail projects. .

“This vividly shows the risk of entering into interest- rate swap agreements,” said Christopher Taylor, former executive director of the Municipal Securities Rulemaking Board in Alexandria, Virginia. “The world’s got to see what stupidity even the sophisticated investors like the transportation fund can get into.”

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Interest rate swaps are a catastrophe in ZIRP systems.  If the US and UK ape Japan totally, we will be  mired in a ZIRP trap for decades to come.  Japan dealt with inflation by pretending there was none while inflation ran at more than 3% in 2008.  So will the US and UK: the need to run at zero is immense and in direct proportion to government need to create debt.  This is connected with not taxing the rich properly.  Japan has the most millionaires next to the US (in raw numbers) but the government runs deep in the red.

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This refusal to tax the very wealthy is a social problem in a number of nations.  In particular, the US and UK.  It is no accident that the philosophy of free trade and the fiat dollar coincide with the philosophy that the rich are not responsible for taxes for maintaining governments.  I would suggest that this economic thinking fashion lies at the heart of the international financial and trade collapse.  That is, something that can’t be sustained can’t be sustained.

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The seeming return to ‘normalcy’ is fraught with many dangers.  We shouldn’t look at the past collapse as an anomaly but rather as the inevitable outcome of the fiat floating currency/free trade/cut taxes on the rich economic philosophy.  This toxic combination has been totally wrecking the bottom lines of all systems in key economic sectors, in particular, the US and UK.  As taxes were cut on the rich, the chasm between the top 0.1% of the population and the bottom 50%  has widened very rapidly and now we have the disgusting sight of the international derivatives banking giants reaping immense personal profits exactly one year after the bottom 99.9% of the population bailed them out of messes these same guys created in the first place.

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The above Bloomberg story illustrates perfectly how this has happened.  The state was scared of the possibilities that interest rates might shoot up a la during the Volcker years when it had to rise faster than the inflation rate.  The inflation rate back then was due to two things: government overspending in social and war areas and two major oil price hikes coupled with wars in the Middle East.  Which hammered the US due to the US hitting its own Hubbert Oil Peak in 1973.

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To protect themselves from this phantom, NJ bought ‘insurance’ from the Mafia group, Goldman Sachs.  Instead of rising interest rate overhead costs, the opposite happened as the US slid into the same dark hole as Japan.  Derivatives are a very queer form of insurance since it is NOT insurance AT ALL.  It is a BETTING OPERATION more akin with three card Monty as played in Manhattan in Times Square.  That is, you can’t win.  If the ‘insurers’ who are Mafioso, must pay up, they simply refuse and run for the hills.

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Then, in order to keep their side of the deals from going bust, Uncle Sam steps in and capitalizes them.  Which means that if GS had to pay for any rate hikes to NJ, they would simply refuse and the Feds would pay which is why the entire thing is a fraud.  And this should be taken to court.  Since the chances of ANY major investment banker being able to pay up on $600 trillion in derivatives is as likely as Santa Claus coming in July, it should be shut down as a fraud, right?  Of course.

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Just as ‘free trade’ is a fraud and after 40 years of the US running in the red no matter what, we should kick that business to the curb, too.  The support for these frauds comes from a simple desire to get rich quick and not pay taxes on this fraudulent wealth.  So the people at the top support the floating fiat dollar/free trade/no taxes on the rich formula.  They will fight to the death to keep this ridiculous and dangerous system imposed on the rest of us.  The US public bought into this scheme due to these same Mafioso bosses offering to dump immense amounts of debt on top of our homes.  So the average US homeowner was tempted into going very deep into debt to finance purchases of foreign goods which gave immense profits to the very rich who used it to corrupt our governments with bribes.

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BOE More Likely to Expand Bond Purchases After GDP Slump – Bloomberg.com

Britain’s failure to escape the worst recession since World War II may force the Bank of England to increase its bond-purchase plan next month, economists said. .

Seven months after Governor Mervyn King’s central bank started a 175 billion-pound ($286 billion) program to rescue the economy, the Office for National Statistics said yesterday gross domestic product unexpectedly shrank 0.4 percent in the third quarter. None of the 33 economists surveyed by Bloomberg predicted a contraction.

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England is Japan without Toyota.  That is, England has lost it own industrial base and is now an empty shell.  The British subjects of the House of Hanover were told that if all of England were only an international hub for international piracy, the loot gotten this way would filter down through the economy and sustain the welfare state as well as other things.  Well, the only thing that has been filtered to the masses are these two items: immense seas of debt and the obligation to capitalize the pirates no matter what including paying off the IOUs the pirates ring up in playing footsie with the Derivatives Beast.

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England’s taxes are still higher than the US or Japan so the rich are very discontented and like many rock groups, are relocating in cheaper tax venues since the very rich have no national desires.  That is, they don’t give a rat’s ass if their former home bases go into economic or even political collapse.  For example, U2’s Bono loves to go to Bilderberg meetings and talk about saving the world’s poor.  But he doesn’t want to pay taxes in Ireland or England, for that matter.  So he left. He is beloved by the internationalists who think he is very hot but this is due to him becoming one of them.  That is, he doesn’t care about anything, in the end, but himself.  And of course, he is splashed all over the place and praised and coddled by his fellow gnomes and pirates.

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LBOs Cutting $527 Billion of Debt Gain Concessions (Update1) – Bloomberg.com

The biggest leveraged buyouts from the takeover boom this decade are making a comeback in the debt market seven months after investors concluded they were almost certain to default, thanks to concessions from lenders. .

KKR & Co. and TPG Inc. asked investors this month to swap $6 billion of debt for $4 billion in new secured notes in Energy Future Holdings Corp., taken private in 2007 in the biggest buyout. Casino operator Harrah’s Entertainment Inc., acquired in a $30.7 billion takeover in January 2008 by Apollo Management LP and TPG, cut its long-term debt by more than 16 percent to $19.3 billion during the six months ended June 30 by offering new notes with later maturities and less principal.

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As recently as March, credit-default swaps showed Energy Future, Harrah’s and four of the other biggest buyouts since 2005 were poised to collapse, trading as if there were a 95 percent chance of default, as the high-yield, high-risk debt markets struggled with $1.74 trillion in new borrowings. Now, the average price of contracts to insure against failures has dropped by more than half as the economy recovers from the worst recession in 70 years.

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“Private-equity holders feel there is a lot more upside to play for,” said William Cunningham, global head of credit strategies and fixed-income research at the investment unit of Boston-based State Street Corp., the world’s largest money manager for institutions. “It appears as if the private-equity holders and some of the management teams are more emboldened to try and get more out of the bondholders now. That is going to create greater tension going forward.”

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After devouring trillions of taxpayer bail money and now, fully recapitalized, the Derivatives Beast opens its maw and resumes eating and growing bigger and bigger.  We had a wonderful opportunity back last Fall to slay this monster, once and forever, when AIG collapsed.  This would have forced all derivative gamers to pay up.  They all slipped away but carefully kept the Beast alive until the central bankers and the US and UK governments could restore this obvious scam and off it goes, doing what it did in the past.

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So long as the gnomes know they can suck down ALL excess capital and pay NO taxes on this, they will resume their garbage and we can expect an even worse collapse to come: the total default of both the US and UK and maybe, even Japan as nearly all of Europe outside of say, Germany, also goes bankrupt.  The world banking system should be conservative, not radical.

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U2’s Bono is very popular with the criminal class because he endorses this system and gives it a friendly face.  He is the Pied Piper of the International Gnomes.  He sings and dances and talks about sharing while he and his fellow gnomes sit on top of immense mounds of wealth.  Which he and they refuse to share with the rest of us via taxes.  The private equity holders usually do not hold any private capital. They hold carry trade debts. This is why they need the floating fiat currency system: this is an immense, gigantic milk cow for gnomes.

It is a major part of how the Derivatives Beast was created.  Before the floating fiat currency regime, gold balanced trade values.  After Nixon slew the gold system, we got stuck with this miserable and useless system (it obviously does NOT balance anyone’s trade at all!).

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Dollar’s Doom Puts a Face on New $1 Million Bill: David Reilly – Bloomberg.com

The dollar has fallen almost 3 percent over the past two weeks against a basket of six major currencies. The greenback has dropped 20 percent against the euro since early March. .

Reflecting investor angst, BofA Merrill Lynch Global Research analysts recently held a conference call titled, “How Damaged is the Dollar?” Google searches for the phrase “dollar collapse” have doubled since the start of 2008, according to financial Web site Clusterstock.

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The dollar may not easily snap back. U.S. policy makers and economists “actually argue for depreciation of the dollar to bail out America and make it more competitive,” Marc Faber, publisher of the Gloom, Boom & Doom report, said during a recent Bloomberg News interview. “Nobody in the world has ever become rich by devaluing the currency, but that’s what they’re advocating in America.”

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HAHAHA.  Marc Faber is one of many goofy guys who claims he understands what is really going on.  Yet he is quoted saying one of the stupidest things ever.  Right now, the US has been screaming for nearly a decade at China to raise the value of the yuan because of the immense trade imbalance between the US and China.  Right?  And China has gotten immensely richer running a trade imbalance thanks to keeping the yuan cheap, right?  HAHAHA.  So, by devaluing the currency, they got richer?  Right?  I hope Faber reads this somewhere but I doubt this.

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Very, very few people want to understand the nexus that connects all these things and it isn’t international bankers.  It is people wanting to exploit international free trade for their own ends.  Each player has his or her own game plans.  And China’s is to drive the US deep into debt and then force us to default on our international loans and then collapse like all previous empires while China takes over the helm and imposes a Pax Chinoise on the world.

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The dollar can’t be ‘damaged’.  It is a TOOL.  And supposedly, according to 99% of all US economics professors, it is supposed to balance our trade with the world.  So it should go up or down according to how much red ink we produce.  But we just produced nearly half a century of trillions of dollars of red ink and the dollar has NOT functioned in any way, shape or form as a ballast to balance trade values.  Not even slightly.  We can’t fix any of our problems unless we first force all the professors to finally admit that their beloved philosophical system is utter rot and is toxic as hell and can’t be fixed by tweeking the corners.

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The fundamental basis has to be fixed.  And even people with very modest incomes are so scared of paying up for things instead of charging them on our collective bills, the political will to fix what is broken is not there.  We can’t tax cut our way to prosperity.  We can’t run trade deficits to prosperity.  We can’t offshore our way to prosperity.  We can’t borrow our way to prosperity.  We have to regain a full understanding of the nature of capital and its very close relationship to labor to regain power over our own economic systems again.

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Or we can ape Japan and die a very slow ZIRP death.

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