The Derivatives Beast Versus Sovereign Nations

ΩΩThe rot at the top is now destroying the body politic.  I must congratulate Ron Paul’s son, Rand Paul, a doctor like his dad, for winning his primary election in Kentucky.  There is so stirring of life in our political system which suffers from hardening of the arteries.  The liberal left isn’t nearly as organized as the libertarians so it isn’t hammering away at the base of the Democratic Party.  But that may be next, disillusionment is extremely high on the left.  The right has been thoroughly pissed off for quite a while after Bush betrayed them.

ΩΩSecondly, I want to talk about the Derivatives Beast: it takes ever new forms as soon as one part of it is outlawed or controlled, it oozes into another arena to continue the same con game.  This is easy to do since there is an overall conspiracy going on here and this conspiracy is a typical ‘Mafioso’ type of operation which uses old tribal/religious connections which enforces ‘omerta’—silence and acquiescence on the part of the bigger tribal/religious community.  Example: in a very Italian Catholic neighborhood in Brooklyn, many years ago, the Mafia killed one of its ‘turncoats’ in the middle of the street.

ΩΩHe was shot several times literally in the middle of the street and his car was left running and a fish tossed into his lap.  No one, not one person, called the police!  When the police came, everyone swore they saw nothing at all which is totally hilarious, how could they miss this?  But this is how gangs operate inside of their home bases.  The rightwing in the US is as divided as the left wing.  And often, it is along religious/tribal lines.  That is, the battle over ethnic identity politics being abused by various groups so they can commit many crimes is a pressing problem for our country.

ΩΩRand Paul’s election is a shot across AIPAC’s prow.  They will probably pour immense seas of funds into Kentucky to stop him.  His dad’s base was very diffuse and rather small before the endless wars against the Muslims coupled with Wall Street crimes.  Now it is much bigger and much noisier.  And on the left, anti-Zionist actions are also rising slowly.  But in general, a basic anti-sovereign bias planted in the left and the libertarian community hobbles any ability to organize because of a basic hostility towards the entire concept of ‘citizenship’.

ΩΩI hammer on this issue for a good reason: we are not individuals, we are all a collective known as a nation.  And being a citizen was a very hard-won civil right requiring revolutions, wars and great sacrifices and anyone who wants to really build a real movement has to base it firmly on ‘citizens of a nation’ not ‘international collectives’.  Palin, a woman who betrays the concept of sovereignty at every turn, is hijacking this movement by appealing to citizenship while at the same time, selling herself to Zionists who cynically use this hated Shiska (dirty Christian female) to further AIPAC Zionist goals.

ΩΩHere is an article from a pro-Paulist web site:  The strange love affair of the U.S. and AIPAC | Ron Paul 2012 | Campaign for Liberty at the Daily Paul

The Dwight Eisenhower and Jack Kennedy administrations and the 1964 Fulbright Investigation Committee tried to declare groups representing Israel’s interests to be foreign agents. Deceptive maneuvers, ambiguous and modified election laws dragged charges through the courts and temporarily resolved the issue in favor of AIPAC. Nevertheless, government officials should realize there is meaning and significance to the charges and any support for an accused agency undermines reputable administrations. .

Then we have the perception of an organization using its resources to engineer defeats of popular congressional leaders based upon an issue that usually doesn’t concern the American electorate: foreign policy. Four of the Senate’s more popular leaders, Charles Percy from Illinois, James Abourek from South Dakota, Adlai Stevenson III from Illinois and J. William Fulbright from Arkansas were defeated when PAC funds poured in to assist their opponents, simply because AIPAC categorized the incumbent senators’ supports for Israel as insufficient. Add Representatives Paul McCloskey (1982), Paul Findley (1983), Earl Hilliard (2002), and Cynthia McKinney (2006) to those who ran afoul of AIPAC, and by coincidence, suffered defeat. .

Is AIPAC a strong factor in determining elections? This is more likely true when the candidate is already in a weak position. Nevertheless, why do the national political parties approve their candidates’ attachments to the Israel friendly PACs? Isn’t the electorate more concerned with domestic issues than with foreign nations, and doesn’t it abhor PACs? Nevertheless, the political parties reinforce an organization which skews voter intentions and masks the principal issues. Something is wrong with the voters’ inability to recognize and react to candidates who benefit from accepting funds from a PAC whose only mission is to assist a foreign nation. And why does the State Department bother with AIPAC? Its officials are not elected and AIPAC is a hindrance to its mission. Strange!

ΩΩI was banned from more than one ‘liberal’ (sic) website long ago when people were running around, wailing about losing elections and I said, ‘Blame AIPAC’.  Well!  Verboten!  Sheesh.  The Holocaust was a very real event and a total horror and was driven by xenophobia and racism but using this awful expression of religious/tribalist behaviors as a cloak to hide equally odious tribal/religious behaviors is a catastrophe.

ΩΩThe issue of adding yet another Jewish person to the already top-heavy Jewish/Catholic Supreme Court, a court that just wiped out all restraints on flooding our politics with bribes from groups like AIPAC, has been brushed off by our media but it is beginning to gain some traction underground.  Jewish politicians and media mouths are perfectly fine with adding yet another Jew to the court just as the Catholic community thinks it is a wonderful thing to be grossly overrepresented in our top courts.  But just as Italian Catholics brazenly overlook Mafia hits in the middle of the street, Jewish  people brazenly refuse to stop Jewish Mafia crimes.  This is because these ethnic gangs enrich the ethnic enclaves and religious powers.

ΩΩRaw politics can suddenly turn very ethnic in a flash: when the Protestant Europeans suddenly get outraged and turn on fellow citizens who belong to other religious/ethnic groups, we will see a Yugoslavian-style blood bath at home.  If highly educated/highly industrialized Germany could do this after going bankrupt, so will the US when we go bankrupt.  There are some very toxic currents under the surface here.  Rand Paul’s victory is one last gasp for real change.  Obama’s betrayal of liberal desires for change has temporarily shocked the left but it will soon be in up in arms, too.

ΩΩLooking at the rest of the news, I can see the outlines of what will roar over us next.  Thailand’s military is suppressing the uprising there in a most bloody way, Mexico continues to dissolve into anarchy as Gus linked in the comments here, an entire town’s police disbanded due to fears of the Mafioso-type drug gangs.  Howls for Arizona to basically disarm itself in the battle to stop a flood of illegal immigrants has been fading as the majority of US citizens supporting Arizona in this matter.

ΩΩThe minority can shove the majority around to a limited extent but when push comes to shove, ramming down people’s throats something they hate will fail.  And expose the minorities doing this to gravest dangers.  Attempts by Congress to control anything connected to the Zionist tribal interests fails miserably due to the campaign finance money mentioned above.  Here is the latest example:

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Senate’s Dodd Proposes Delaying Swaps Measure in Rules Bill – Bloomberg.com

A plan to shelve one of the most contentious issues in the U.S. Senate’s debate over new rules for Wall Street may clear the way for a final vote on the bill. .

The American people aren’t contending this.  Wall Street hot shots are fighting this!  Of course, most Congress creatures bend to the will of the rich and connected and we shall look at these connections in a minute.  But the main point here is, there is an ethnic lobby in Congress that is extremely strong and it is called ‘AIPAC’ and is a Zionist/Jewish operation which also affects many other issues besides our trillion dollar wars against Muslims and pouring public funds into Israel.  That is, it also gives cover to Wall Street so Mafia-style ethnic operations can run unimpeded there.

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The Senate legislation includes a rule that would force banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. to move swaps trading to subsidiaries. Senate Banking Committee Chairman Christopher Dodd yesterday introduced an amendment that would delay the measure pending a one-year study of its effects by a new council of regulators. The panel could eliminate the rule two years after enactment if it was found to “have a material adverse effect on the financial markets and economy.” .

It is painfully obvious that ‘financial instruments’ are more like instruments used to torture people.  These may have unleashed a flood of easy credit but this is the entire problem: this flood of easy credit is exactly what is causing the present financial collapse of nearly all economic systems.  The easy credit given to the US through various tricks and schemes simply dumped immense amounts of debt on top of an economy that is being rapidly decapitalized and decapitated.

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Senator Blanche Lincoln, an Arkansas Democrat who faced a primary election yesterday, had crafted the proposal to deny swaps traders access to the Federal Reserve’s discount lending window or Federal Deposit Insurance Corp. guarantees. The rule is part of her larger plan to strengthen derivatives oversight after unregulated bets by companies including American International Group Inc. were blamed for spurring the 2008 credit crisis.

ΩΩBlanche is in a lot of political trouble and can’t even win a primary against her Democratic opponent.  Blanche Lincoln | Run-Off Election | Bill Halter | Mediaite

With 41% of precincts in, MSNBC and CNN are reporting that Arkansas Democratic Senator Blanche Lincoln is still leading her opponent, Arkansas Lieutenant Governor Bill Halter, but not by enough to win decisively. As per Arkansas electoral law, it appears Lincoln will be forced into a run-off election against Halter for the nomination.

ΩΩBeing a ‘dead Congress person walking’, she can’t really influence the course of this bill which is hitting immense headwinds which will blow like a hurricane to stop this amendment from appearing in print.  The mixed up politics in our country which ranges over many side issues can derail important reforms such as stopping the raiding of our Treasury by a bunch of Wall Street crooks, for example.  A weak and divided public fighting over healthcare, abortions and other social issues works great for Wall Street money men who need to keep laws from being passed.

ΩΩTheir main efforts always are for reducing supervision, removing controls and preventing interference with their endless schemes to use the entire nation and all that we are collectively to bankroll and capitalize their own private investment/banking games.  The many useless and stupid battles over social issues has worked like magic for these guys: as we struggle over how we want to live at home, they have made their share of the GDP grow from 8% to over 38%!

ΩΩThis is totally insane!  As well as utterly reckless and dangerous.  As we fight over the healthcare pie, the GDP share we must use to fund any sort of healthcare shrinks rapidly!  We can’t have bankers eating up nearly half of our GDP. Any more than we can let healthcare costs eat up another 15% and war mongering eating up another 20% of our GDP.

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Conspiracy of Banks Rigging States Came With Crash (Update1) – Bloomberg.com

A telephone call between a financial adviser in Beverly Hills and a trader in New York was all it took to fleece taxpayers on a water-and-sewer financing deal in West Virginia. The secret conversation was part of a conspiracy stretching across the U.S. by Wall Street banks in the $2.8 trillion municipal bond market. .

The call came less than two hours before bids were due for contracts to manage $90 million raised with the sale of West Virginia bonds. On one end of the line was Steven Goldberg, a trader with Financial Security Assurance Holdings Ltd. On the other was Zevi Wolmark, of advisory firm CDR Financial Products Inc. Goldberg arranged to pay a kickback to CDR to land the deal, according to government records filed in connection with a U.S. Justice Department indictment of CDR and Wolmark. .

This article is all about how the Jewish Mafia on Wall Street operates: they are ‘family’.  Just as Madoff cheerfully ripped off fellow Jews with his magic money perpetual profit machine, all Mafia operations destroy their own ethnic base which has to join in or be the victim of a lot of the crimes.

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In the ‘Godfather’, several gangsters are debating about going into drug dealing.  The lawyer for the gang explains how this is too dirty for him to launder very well.  But another one says, the drugs will go to Negro communities and kill and destroy them, not the Italian communities.

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Well, I know for a fact, having lived in NYC communities of various ethnic groups, the drugs filtered into these, too, and the crime syndicates didn’t prevent this.  The Jewish community has a very, very powerful central community in the financial district and they use this all the time for making deals….as well as conspiring to commit vast crimes.  The less they are supervised by DC, the more tempted they are to lie, cheat and steal.

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A basic contempt for the ‘goyim’ encourages this.  It is a cultural artifact that is as old as the Old Testament.  The god of this particular tribe has no problems with cheating, looting or lying to outsiders.  Even when leaving Egypt after the Pharaoh tells them to go, they steal as much wealth as possible which is why the Pharaoh (according to the Jewish writers) chased them down, only to be drowned by this god who wanted the people to make a getaway with the loot.

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Then, the Jews melt this stolen gold and make an idol and thus, angered this god which then turns on them and a civil brawl broke out leading to the 40 years wandering in the desert.

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West Virginia was just one stop in a nationwide conspiracy in which financial advisers to municipalities colluded with Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Lehman Brothers Holdings Inc., Wachovia Corp. and 11 other banks…The swaps are derivatives designed to keep monthly interest payments low as lending rates change. Municipal- derivative units of the largest U.S. banks also sold the contracts, public records across the nation show….

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The Jewish guys peddling this FAKE ‘insurance’ were playing a confidence game!  And it worked like a charm!  This is a vast, huge problem: all of the systems set up to stabilize and secure our financial banking/bond systems were turned into literal con games which enriched a very few people running these schemes.

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…“The whole investment process was rigged across the board,” said Charlie Anderson, who retired in 2007 as head of field operations for the Internal Revenue Service’s tax-exempt bond division. “It was so commonplace that people talked about it on the phones of their employers and ignored the fact that they were being recorded.”

. Anderson said he referred scores of cases to the Justice Department when he was with the IRS. He estimates that bid rigging cost taxpayers billions of dollars. Anderson said prosecutors are lining up conspirators to plead guilty and name names. .

“This will go on for a long time and a lot of people will be indicted,” he said in a telephone interview….Former CDR employees Douglas Goldberg, Daniel Naeh and Matthew Rothman, pleaded guilty in federal court in Manhattan in February and March to wire fraud and conspiracy to rig bids.

.Madoff sailed under many radars due to family connections, sexual alliances and omerta-type deals whereby everyone looked the other way so long as things looked OK.  The meta-problem here is obvious: we can’t have financial gushers running all the time.  Just like the gusher in the Gulf of Mexico, these have to be closely inspected, controlled or even prevented (no drilling!) rather than let a bunch of lunatics do as they please!

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The scandal with the oil rig that blew up and then collapsed is identical in nature to the blow up and collapse of the world’s financial systems.  People who thought governments were controlling or inspecting things were shocked to learn that the systems failed due to corruption of the inspectors.

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The trials have barely begun but the political trials are very much in their infancy here!  That is, the financial bribery game in DC has been blown wide open by our lopsided Supreme Court and now we have a totally unrestrained system that will lead to the collapse of our entire nation as we go bankrupt thanks to looters like the Mafia-tribal group in today’s latest chapter of ‘Steal Everything You Can So You Can Have Sex With A Shiska’.

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In October, CDR was charged with criminal conspiracy and fraud, along with Chief Executive Officer David Rubin, 48, vice president Evan Zarefsky and Wolmark. They pleaded not guilty. Rubin, who was also charged with making fraudulent bank transactions, faces as much as $3 million in fines and more than 30 years in jail if convicted….

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The Jewish community worries about anti-semitism a great deal.  But at the same time, won’t go after its own Shylocks!  Just as the guys busting up the Italiano Mafia had to be Italian G-men and prosecutors, so it is with the Jewish community: these con men should be denounced and removed and punished by Jewish prosecutors and politicians, not coddled by them!

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…CDR helped arrange deals in which financial firms took millions of dollars in profits from GICs, Bloomberg News reported in October 2006. Almost all of the deals were shams: As much as $7 billion in bond-issue proceeds were invested in GICs but never spent for the intended purpose of providing services to taxpayers.

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Just as Jews can loot our taxes and ship these to their home base with total impunity, they can also evade strict regulations on their favorite industries using their powerful political muscle in DC.  So everyone goes ‘stupid’ at our capital and lets things slide unless there is a total collapse and thanks to this political tribal corruption, things are now collapsing all over the place and as the Jewish Mafia guys on Wall Street skate over the mess they created, they saved themselves by…using our national Treasury.

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The Blanche Lincoln amendment for example, stopping this looting, will die because the Jewish Mafia wants it dead.  And she will vanish along with it or be bought off and turned into another lobbyist working to wreck our economy and turn it towards the military/industrial complex and Wall Street crooks.

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CDR signed off on interest-rate swaps to municipalities, as banks took hidden fees sometimes 10 times as much as they charged on fixed-rate bond deals, according to data compiled by Bloomberg. For the public, the swaps were fraught with risks. .

This 10X scam is a classic!  While pretending these deals would save money, they really lost money in the form of HIDDEN fees and then, to add to the insult, the protection racket didn’t protect at all!  This is VERY Mafioso: indeed, the real profits for the bosses were always in ‘protection’ schemes.  ‘Nice store you got there, buddy.  It would be too bad if someone were to come by and firebomb it,’ is the usual line.  That is, the Mafia itself was the menace and to keep them at bay, you had to pay them bribes!

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So it is here only much more elaborate and tricky.  The entire problem with interest rates is due to the Federal Reserve slamming on the brakes and then putting the pedal to the metal with interest rate hikes or drops as I explained the other day.

. Dozens of municipalities have paid banks billions to get out of swap contracts. The agency that oversees the San Francisco-Oakland Bay Bridge said it spent $105 million to escape its deal in July 2009.

.“They were gouging the municipalities,” said retired IRS investigator Anderson, 59. “Beside the excessive fees, some of the swap deals just didn’t work. It was just awful. The same people were involved in the GIC end of the market.”

. Bid rigging not only cheated cities and towns, it also illegally denied the IRS required taxes from GIC income, Anderson said. The evidence is clear in telephone recordings made on GIC desks, he said. “We could hear people talking about how everyone knew who was going to win the bid. You could tell it was just everyday business.”

ΩΩProbably the most dangerous game played by the Wall Street Mafia has been the con game of encouraging tax cutting mania in the public arena and then insuring that most of the tax cuts benefit only the very rich.  As our government is starved of tax revenues by these rich Wall Street Mafioso bosses, they get richer selling not only debts to us to keep our underfunded government rolling, but also rigged the bond sales so they could exploit this with hidden fees and shorting games!  Then, to keep the ball rolling, would evade taxes on these games so the government would fall even deeper into debt!

ΩΩThis is causing planetary problems!  And sovereign nations trying to fix this, can’t.  Countries that try to be fiscally sober are being destroyed and any attempts at fixing this seems to hit a brick wall that is quite political and extremely dangerous:

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Germany Fails to Get Other Nations to Join Short Ban (Update1) – Bloomberg.com

Germany has failed to persuade other nations to follow its prohibition on naked short-selling and speculation on European government bonds, limiting the effect of the rules….In an effort to calm the region’s financial markets German regulator BaFin issued a ban that took effect at midnight and lasts until March 31, 2011. The move caused stocks around the world to drop and the euro traded near a four-year low against the dollar. . …The failure to get other countries on board will make the ban ineffective, the Bank of China Ltd. said. .

“Germany is not one of the major financial centers,” Steve Wang, a credit strategist for Bank of China International, said in a telephone interview from Hong Kong today. “You need to get the U.S., U.K. and in some sense Tokyo involved to be very effective.”

ΩΩAnd here it is: the troika of trouble is the US/UK/Japan trio.  These super-heavy deep in debt nations are the PRIMARY cause of ALL the world’s bubbles.  And Germany is not.  Germany wants to stop this madness but the trio of troublemakers wish very much to not only not stop this insanity but to expand on it.  The games being played are destroying the US/UK/Japanese people who are seeing their future prospects vanish in a sea of red ink.

ΩΩBut this is making the top 1% very, very rich and very, very happy.  They want this odious business to continue to its wretched end.  That is, there is no thing as infinite red ink so the end will come.  But the game players hope it won’t end because getting very rich by conning people into the derivatives game is so very easy.  Lying and stealing is always easier than hard work so long as the Mafias doing this pay off the cops and own the politicians.

ΩΩGermany has zero chance of stopping this freight train to ruin.  What will happen is, Germany might form an alliance with China to kill these bubbly machines.  We shall see.  The wholesale looting of the former USSR showed us that it is very hard to stop looting expeditions once a country loses its sense of sovereignty and citizenship.

ΩΩHere is an editorial written by one of the guys in Europe that I correspond with via emails:  The EU Ministers Announcement Of The Eurostabilization Plan And Fund Is A Historic Turning Point, France’s Christine Lagarde Says | EconomicReview Journal

Is Germany ready for the euro area that changes its nature by being more integrated politically and economically?… “Germany has agreed to change its traditional position with focus on bilateral loans as we have seen in Greece, to defend us, with the creation of a stabilization fund for Europe, whose dimension is collective, is the key element.” .

Is this one ounce of federalism? … “It’s more than an ounce of European federalism, as the fund’s programs will purchase securities or offer loans.” .

My commentary is that at the May 2010 European Summit, the EU Finance Ministers announced a region of global governance, specifically a federal economic, political, and monetary government, with a EU Treasury which has the authority to buy ailing sovereign debt and to exercise seigniorage. Mr. Trichet is tasked as the EU’s Treasurer and Chief Banker. .

It is significant to note the optimism and sense of mission in the Les Echos interview, as Finance Minister Lagarde stated that “This is a historic turning point is extremely clear. This is not just a device concocted for emergency requirements. We wanted to build a system for the long term. Basically, there is a realization that we’re all in this together and we suffer the same blows. There is a determination to build a new building, to reinvent the European model. We must find the rules that we preserve such crises in the future. When you put 500 billion euros on the table, it still believes that will be satisfaction. This also means that there will be fiscal adjustment for everyone. “ .

She went on to highlight the pivotal role of incoming EU chairman: “The work cannot be done in one day. The work will begin soon after May 21, with the appointment of the new chairman of the European Union, Herman Van Rompuy.”

Herman Van Rompuy – Wikipedia, the free encyclopedia

Herman Van Rompuy (Dutch pronunciation: [ˈɦɛɾmɑn vɑn ˈɾɔmpœy̆] (help·info); born 31 October 1947) is the first long term and full time President of the European Council (until the Treaty of Lisbon, the position had rotated among the Prime Ministers of the Member States for six months each, since then they choose a President of their meetings for a 2 1/2 year period, renewable once). A Belgian politician of the Christian Democratic and Flemish party, he served as the 49th Prime Minister of Belgium from 30 December 2008 until his predecessor (Yves Leterme) succeeded him on 25 November 2009.

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Born in Etterbeek, Brussels to Germaine Geens and Vic Van Rompuy,[8] he attended Sint-Jan Berchmanscollege in Brussels (until 1965) where Ancient Greek and Latin were his main subjects. Later he studied at the Katholieke Universiteit Leuven and received a bachelor’s degree in philosophy (1968) and a master’s degree in applied economics (1971).[9] He worked at the Belgian central bank from 1972 to 1975.[10]

ΩΩSo basically, a central banker/economist is running Europe.  Will this mean he will fix this mess?  Unfortunately, he won’t.  The reason is obvious: the declining condition of all workers in all countries due to free trade and the floating fiat currency catastrophe can’t be fixed by people who think this is all a wonderful thing and should continue!  Just as the communist dictators in China, Russia and other countries were totally delusional until total economic failure finally rang down the curtain on them, so it is here: once the Derivatives Beast is done destroying everything, once all the major sovereign powers go bankrupt, we will see changes in the systems.  Of course, these will be rather violent changes.

ΩΩThe computerized con games of Wall Street and the international pirates is totally out of control now.  The recent sudden near-total collapse on the DOW is a symptom of this disease.  Now, all the world stock markets are beating a retreat due to the fundamental instability of all our financial systems and the huge overload of debts sitting on top of it, smothering real economic activities to death.

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CounterPunch: Tells the Facts, Names the Names

SEC Chair Mary Schapiro made a stunning admission during House subcommittee hearings last week seeking answers to the May 6 hit and run in the stock market which briefly trimmed 998 points off the Dow and caused massive losses to small investors who had placed stop loss orders on individual stocks.

. According to Ms. Schapiro, the SEC has no consolidated audit trail that captures time and sales in a chronological order among the 40 or more electronic trading platforms and exchanges that constitute today’s deeply fragmented U.S. stock market.

ΩΩThe mystery of this collapse deepens.  It seems increasingly obvious that the complex con games being played on Wall Street are not stepping on each other’s toes and are happening so fast, the operators of these con schemes can’t keep up with events they, themselves, created, using faster and faster computers.  We might call this the Financial Singularity Crisis: the robots and machines used to do business are programmed to CHEAT every investor as much as possible while HIDING things from any regulations or controls.  Being wildly successful, they now evade ALL controls!  Including the controls of the operators who want to have the ILLUSION of ‘all is well’.

ΩΩNow, everyone is in a panic and running to safety.  And these ‘safe’ systems such as the gold markets are just as infested with this out of control computerized double dealing as these ‘risky’ systems!  The slosh of funny money borrowed from central banks and huge government overspending bonds are washing back and forth over all investment systems, seeking high returns.  There is too much ‘money’ and this is typical of all fiat money systems: people always create too much money because it is all too easy.

ΩΩHere is yet another theory of why our markets went down so fast in just a few minutes:  ETFs Bearing Brunt of May 6 Drop Shows Hedging Worsened Losses – Bloomberg.com

When $1 trillion briefly evaporated from the U.S. stock market on May 6, no group of securities got hurt more than exchange-traded funds, as attempts to protect against snowballing losses may have made the decline worse, a report by federal regulators shows. .

ETFs made up 70 percent of securities with trades that were later canceled because of excessive declines, the joint study by the Securities and Exchange Commission and Commodity Futures Trading Commission found. Traders selling the funds to offset falling stocks may have created “unusual liquidity demands,” causing buyers to pull out of the market, the report said. .

“No question there’s a direct correlation because ETFs are the new derivatives,” said Richard Weiss, who helps oversee $50 billion for City National Bank in Beverly Hills, California. “The ability to arbitrage to ensure prices are fair is theoretically a very good thing, but when you get perturbations or exogenous variables acting on prices, it can be bad.”

ΩΩAt the bottom of all these scum ponds lies the gigantic Derivatives Beast.  Chop off one limb, it grows another, it is a MYTHOLOGICAL CREATION.  All myths are human creations.  And express important human brain and emotional functions. The Hydra, for example, grew new heads every time one chopped off an old head!  This is the nature of the Derivatives Beast: since the people who created and protect this monster want it to continue growing, chopping off one part or another will fail since the heart of the beast continues to beat.

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How ETFs work? – ETF Center – Yahoo! Finance

ETFs are securities certificates that state legal right of ownership over part of a basket of individual stock certificates. Several different kinds of financial firms are needed for ETFs to come into being, trade at prices that closely match their underlying assets, and unwind when investors no longer want them. Laying all the groundwork is the fund manager. This is the main backer behind any ETF, and they must submit a detailed plan for how the ETF will operate to be given permission by the SEC to proceed.

. In theory all that a fund manager needs to do is establish clear procedures and describe precisely the composition of the ETF (which changes infrequently) to the other firms involved in ETF creation and redemption. In practice, however, only the very biggest institutional money management firms with experience in indexing tend to play this role, such as The Vanguard Group and Barclays Global Investors. They direct pension funds with enormous baskets of stocks in markets all over the world to loan stocks necessary for the creation process. They also create demand by lining up customers, either institutional or retail, to buy a newly introduced ETF. .

The creation of an ETF officially begins with an authorized participant, also referred to as a market maker or specialist. Highly scrutinized for their integrity and operational competence, these middlemen assemble the appropriate basket of stocks and send them to a specially designated custodial bank for safekeeping. These baskets are normally quite large, sufficient to purchase 10,000 to 50,000 shares of the ETF in question. The custodial bank doublechecks that the basket represents the requested ETF and forwards the ETF shares on to the authorized participant. This is a so-called in-kind trade of essentially equivalent items that does not trigger capital gains for investors. .

The custodial bank holds the basket of stocks in the fund’s account for the fund manager to monitor. There isn’t too much activity in these accounts, but some cash comes into them for dividends and there are a variety of oversight tasks to perform. Some managers have leeway to use derivatives to track an index.

ΩΩETFs are supposedly supervised.  But Mafias operate on the notion, ‘Don’t look too closely’ which is why the Italiano Mafioso guys loved to infiltrate, say, cement making operations.  Putting in too much sand is easy if the inspectors are paid off!  And the politicians protect the cement guys putting in the sand and bribing the regulators!  And this was done to huge things like…the World Trade Center.  You don’t need bombs to pulverize poor cement!  That building was very badly made thanks to the cement corruption scandals, for example.

ΩΩThe Mediterranean countries are in deep trouble due to a Mafia-style ethos: cheat the state, rip off the government, do bad work on civil projects, etc.  This plagues China, too.  The failure of the cement in Chinese schools was a political scandal.  No system is free of this sort of ‘Mafia’ style corruption!  Catholics do this, Chinese atheists do this, anyone can be part of a ‘Mafia’ if they wish but this is extremely dangerous, too.  The Italians in the US, for example, still struggle to get away from the ‘bad Italian’ reputation.    Just as Mexicans must deal with the ‘Mexican Drug King’ problem that is weakening their own reputations.  And Jews have to be very alert about their own reputation as Shysters.

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U.S. Stocks Drop on Record Mortgage Foreclosures, Germany’s Trading Limits: And the economic mess continues its downwards track.  We are now in 1931 in this Great Depression.  All the government fixes will now fail due to a moral failure at the very top.  The rescue of the richest people on earth has greatly endangered the sovereign citizens of many countries and cleaning up political and moral corruption must be the next thing on our collective agendas.  Or we get violent wars and revolutions as well as ethnic cleansing hysterias.  This is the next leg of a long, long bear market.sunset borger

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17 Comments

Filed under .money matters, Free Trade, gold, Politics

17 responses to “The Derivatives Beast Versus Sovereign Nations

  1. JT

    Forget Bilderberg,
    Institut International d’Etudes Bancaires (founded 1951) meeting in Stockholm 2010.
    Today in Dagens Industri:
    http://di.se/Default.aspx?tr=272296&rlt=0&pid=207132__ArticlePageProvider

    Who takes part:
    Josef Ackermann, Deutsche Bank
    Klaus-Peter Müller, Commerzbank
    Frédéric Oudéa, Société Générale
    Baron David de Rothschild, Rothschild & Cie Banque
    Peter Straarup, Danske Bank
    Pier Francesco Saviotti, Banco Popolare
    Marcus Agius, Barclays Bank
    Swedish Royal family
    Norwegian Royal family

    That is the heads of almost all European banks. Bilderberg let´s poor people take part. This is only for banksters and royalty.

    Organizers of the meeting the Swedish Wallenberg clan (SEB bank).

    Some people will have better parachutes than the rest of us when our monetary system collapses.
    SDR´s are the new currency in my opinion.

    ΩΩΩΩΩΩΩΩΩΩ

    ELAINE; I keep harping on about the true elites, namely, the royals. Glad you gave us this link.

  2. charlottemom

    As I listen to one after another hedge fund and private equity mouthpiece howl and trash German’s move to ban naked shorts and reign in the CDS market, I wonder what Germany is up to. The financial community seems to have been caught flat footed on this.

    I see France has publicly stated it will NOT follow German’s lead. They are joining US, UK and Japan in this denouncement. What of the rest of the EU nations? Will each pick sides, will Germany stand alone alone, be coerced back to EU or as you write seek alliance with China? If Germany is truly serious about this, then China may be its only hope.

    Is this a last stand for sovereigns? Is this a headfake by Germany. I hear the financial press say this is only a political move by Merkel. They say this as the markets clearly look paniced. Whistling past the graveyard…or something else. Whatever…we will be the last to know.

    ΩΩΩΩΩΩΩΩ

    ELAINE: Nein, the Germans are extremely pissed as hell about all of this and if the elites in France and England want to continue as is, we have serious future trouble on our hands.

  3. Your write: “All the government fixes will now fail due to a moral failure at the very top.

    Yes how true: “A fish rots from its head”.

  4. EconCurious

    The German ban is interesting. But I am not sure how they can really enforce it. I’m guessing 90%+ of sovereign CDS trading takes place in NY and London. Obviously, they can ban short sales of shares on their own exchanges. Why now? It seemed like things were calming down a little before the announcement.

  5. mike

    as long as you mention hardening of the arteries, think not that ACE inhibitors or angiotensin converting enzyme may convert the tension enough to cause aneurysms or more bigger paydays for the drug companys and doctors………and the large widespread usages of these…………

  6. DeVaul

    For those who would like a laugh and also find out what government officials think of us according to a recent poll, here it is:

    http://www.theonion.com/articles/report-majority-of-government-doesnt-trust-citizen,17459/

  7. if

    Greek Central Bank Accused Of Encouraging Naked Short Selling Of Its Own Bonds
    http://tinyurl.com/34hejtz

  8. Duski

    JT, that meeting you talk about, it might be bad or it might be good.

    Maybe I am just optimistic, but seeing the latest developments, just *maybe* these bankers realized they are on the edge of cliff where people might just chop their heads off when next provocation comes.

    Then again, maybe they will provide that next provocation, since so far they have not seemed to be worried at all.

  9. Duski

    And for the Germany to finally push for right things… Market howling and threatening? That means the proposals of Germany WILL HURT the fraudsters and manipulators, why else would they care at all? Of course, if Germany is indeed left alone in this, it could not lead to anywhere.

    Maybe this is why the financial terrorists howl, they try to terrorize all others to NOT ban them from looting all wealth. Oh, how much that would hurt the economy, indeed.

  10. Duski

    Germany alone is too small player to seriously change things. I just hate to see other EU-countries backing off from opportunity like this, NOW would be excellent time to strike to the heart of the problem.

    If the world turns really, really wretched, and some countries in the heart of the system refuses to correct it, what can one country do? Disconnect totally from these fraudsters? Try to find real and honest dealers? Well, lets be real, someone who has same interest as you do… and together make you stronger? Damn, even my own thought betray me, I am a pacifist at heart but I can clearly see how alliances form… and how they often must attack or defend themselves, since other side just won’t let it slide…

  11. DeVaul

    Sounds like the real battle of wills is between France and Germany, as these two countries were the main backers of the new union. I don’t think Germany gives a hoot what Estonia thinks, but it must pay attention to France or decide to go it alone — which is tantamount to a divorce.

    Divorces are ugly, and when they involve armies and common borders, they can be even uglier. Germany probably wants out after learning of all of France’s “affairs”, but must reckon with the consequences.

    The way Sarkozy and Merkel are talking, they sound like a couple on the verge of divorce. One more hit to Germany’s treasury might be all it takes for someone to leave the marital home (and maybe take some of the children with them).

    Frankly, I don’t care what they do. I always thought it was a dumb idea, especially the never-ending drama concerning Turkey (I bet they’re glad now their adoption papers were turned down).

    You cannot stabilize a currency unless you stabilize the government that spends it.

  12. Duski

    Euro rules were good in themselves. But economies taken in were not nearly equal enough, not philosophically, not fiscally, not by any means.

    Finland and Germany would have done fine together, both countries are decently tight in finances. Sweden too, maybe. Norway is too rich by oil to even want to join.

    But others? Uh, they should have first fixed their economies before even considered to join. Well, excluding France would have been impossible already so there we go, impossible from the start.

  13. PLovering

    The Jazi oil spill figures to reach the Florida Keys this weekend.

    Cleanup volunteers sign in at KeysSpill.com.

  14. JT

    @Duski

    Now why would the banks worry about anything. It is the exact copy of what US did with investment banks. The bailout will happen no matter what.
    Merkel is talking about the future. We northeners are funny that way. Maybe it´s because we have to worry about the next winter too. Nature has weeded out the ones pinning on just hope and luck here 😉 .

    Now why would the banks worry look below:
    http://online.wsj.com/article/BT-CO-20100518-710888.html?mod=WSJ_latestheadlines#articleTabs%3Darticle

    “The Bank of Italy Tuesday said Italian lenders holding European government bonds in their available-for-sale portfolio don’t have to take into account possible capital gains or losses on them, in a move to safeguard …”

  15. Duski

    Oh, why should bankers be scared? If everything falls apart, they will have few countries to run and hide, and little time too maybe.

    Even more so if they get all the loot all the way to the end, they will get all the hate as well.

  16. JT

    @duski

    Sweden and Switzerland are great places to hide. Neither took part in WWI or WWII.

  17. Pingback: US And EU Hurtles Off Cliff As World Power Shifts…Towards Russia! | Culture of Life News

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