The latest in the attempt to deflect attention from the people responsible for the collapse in 2007-2009 is now out, claiming that there's an "international" and "unknown actor" component:
Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.
Uh huh.
I suppose if you want to be pedantic, should Bernanke walk out into the middle of Constitution Avenue and douse himself with gasoline, one could claim that the passer-by who happened to be smoking was "responsible" for his self-immolation.
In today's Goebbels media world, we'd probably even prosecute him for murder, never mind Bernanke's intentional act of pouring gasoline all over himself.
“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place.
Really?
Let me see. We have on the record, under oath testimony that Citibank wrote 60% of their loan volume in 2006, and 80% in 2007, that did not meet the quality guidelines of the buyer of that paper. That is, it was mispriced, Citibank got paid for something that wasn't as represented, and the risk of loss was materially higher (and ultimately recognized) than represented.
How much is this? Well, if Citibank was not alone, we're talking about several hundred billion dollars worth of loans. And that's just in one year's time.
Losses? We now know that there has been a loss of value in homes of about $9 trillion. Of course the problem is that the previous gain in $9 trillion was not real, and yet it collateralized about that much lending.
Anyone who thinks that $9 trillion (in a $14 trillion economy) is not enough to cause a Depression all on its own is nuts.
Anyone who asserts that someone (no matter who) that detects this intentional scam in the financial system does not have the right to exploit it to make a profit is certifiably insane.
“The new battle space is the economy,” he said. “We spend hundreds of billions of dollars on weapons systems each year. But a relatively small amount of money focused against our financial markets through leveraged derivatives or cyber efforts can result in trillions of dollars in losses. And, the perpetrators can remain undiscovered.
How about this? Stop being a crook. Lock up the crooks. Then you can't have your economy collapsed by people who detect that you're a crook and decide to exploit that fact.
“The preponderance of evidence that cannot be easily dismissed demands a thorough and immediate study be commenced,” the report says. “Ignoring the likelihood of this very real threat ensures a catastrophic event.”
Again, it's not very difficult to stop this. Lock up the banksters who have admitted that they were intentionally selling bad loans into the market and then go look for the others who haven't admitted to it yet and prosecute them as well.
The first phase of the economic attack, the report said, was the escalation of oil prices by speculators from 2007 to mid-2008 that coincided with the housing finance crisis.
In the second phase, the stock market collapsed by what the report called a “bear raid” from unidentified sources on Bear Stearns, Lehman Brothers and other Wall Street firms.
Oh this is rich.
Let me remind everyone that according to the Lehman Bankruptcy Trustee Report, a published document that detailed the forensic examination of Lehman's collapse, it was disclosed that Citibank, and presumably others, knew for a fact that the firm had no good collateral to pledge for overnight repos weeks - or months - before it failed.
That is, Citibank knew as a factual matter that the firm was functionally insolvent.
Would you short a company that you knew was functionally insolvent? I would. So would you. And there's not a damn thing wrong with doing so.
The solution to such a problem, of course, is to not become functionally insolvent. You avoid that problem by not lying about what you're doing in your lending operations and making good loans instead of trashy ones. Regulators can also avoid this outcome by prosecuting people for filing false financial statements or standing up on CNBS and claiming they're going to "burn the shorts" when in fact their trading counterparties are refusing repo credit and similar acts of fancy.
The third phase is what Mr. Freeman states in the report was the main source of the economic system’s vulnerability. “We have taken on massive public debt as the government was the only party who could access capital markets in late 2008 and early 2009,” he said, placing the U.S. dollar’s global reserve currency status at grave risk.
“This is the ‘end game’ if the goal is to destroy America,” Mr. Freeman said, noting that in his view China’s military “has been advocating the potential for an economic attack on the U.S. for 12 years or longer as evidenced by the publication of the book Unrestricted Warfare in 1999.”
So what? If the Chinese do it the responsibility remains ours.
It is a fact that you cannot spend more than you make forever. All such acts have a "use by" date, and as they approach the ability of others to exploit your stupidity increases.
Guess what? We're still doing it. 42% of Federal Spending last year was borrowed, not taxed and "earned." We will fail at this. It is simply a matter of time. And when we do, and the walls come crashing down upon us after the roof caves in, it will be our government, not some mystical "foreign interloper", that causes it.
Just like the example above, where BeerNapke walks into Constitution Avenue and douses himself with gasoline, the problem isn't the nearby smoker - even if he hates the Fed Chair. Without the gasoline, willfully and intentionally poured over oneself, that passerby would simply enjoy a smoke.
Among the financial instruments that may have been used in the economic warfare scenario are credit default swaps, unregulated and untraceable contracts by which a buyer pays the seller a fee and in exchange is paid off in a bond or a loan. The report said credit default swaps are “ideal bear-raid tools” and “have the power to determine the financial viability of companies.”
Uh huh. And what did I call for in 2007? Forcing all these contracts onto exchanges, double-blinding them and guaranteeing margin supervision. Why? Because it was obvious to anyone with more than two firing neurons that these instruments were inherently bogus in that there was never any supervision sufficient to guarantee that the person writing such an obligation could actually pay.
Oh, I'm not alone in this. Brooksly Born was run out of town on a rail by Alan Greenspan along with a passel of Congresscritters for demanding that the CFMA not be passed. She in fact stated that exactly what did happen would happen - people would use these things to effectively emit infinite credit against nothing, and when the inevitable defaults happened we'd all take it in the bum.
She was right and Greedscam along with Phil Gramm and others of Gramm-Leach-Bliley, the CFMA and President Clinton were dead flat wrong. Where's her apology for the political and character assassination that was served up by all those jackasses, one of which I might add was an economic adviser to John McCain's failed Presidential bid in 2008 and further compounded his douchebaggery by claiming we were in a "mental recession"?
Are we ready to go round up all these bastards and try them for terrorism yet? Why not? I think there's a prima-facie case, to be honest, and have so-maintained for the last four years.
It's not Osama-Bin-CDS-Trader who's responsible for this, it's our own damn government and regulators who are responsible. They are the ones who repealed Glass-Steagall in order to retroactively make legal a bank merger that was black-letter-unlawful at the time it was undertaken.
They're also the ones who not only intentionally removed credit default swaps from insurance regulation by the States (without which there would have been no housing bubble, no tricky securities games and no collapse in 2008) but in addition went to court to block State Laws that barred predatory lending practices.
Yes, I believe that the collapse had a strong element of financial terrorism involved in it.
But I believe the people responsible are found right here, in America, and include (but are not limited to) politicians of both parties along with the present and previous Chairs of The Federal Reserve.
Put that in your conspiracy pipe and smoke it.
