Tag Archives: bailouts

The Shameless, Blatant Fraud Of Morgan Stanley’s Former CEO, John Mack

This idea that I heard yesterday, the possibility of not making their [Deutsche Bank] interest payments, it’s just absurd. The government will not let that happen…the German central bank should make a statement in support of the lender [DB]…the bank’s name is Deutsche Bank. It’s the German bank. Politically, they will stand up, if they need a safety net, and give it to them. – former Morgan Stanley CEO, John Mack on CNBC (from Zerohedge)

John Mack is the former CEO of Morgan Stanley, after Deutsche Bank and JP Morgan, one of the most Untitledfinancially unsound banks in the world.  The statement above is coming from the CEO of a Wall Street bank that was saved from extinction in 2008 by U.S. Taxpayers.  It was a move forced on the public by a Government that is controlled by Wall Street bankers.  It enabled John Mack and his cronies to continue stealing $10’s of millions from the middle class.

What set me off is the flagrant arrogance coming from a man who’s outright failures as a businessman and banker were bailed out by the U.S. Government.  This is the malicious sense of entitlement from a man who is steering Morgan Stanley back into bankruptcy.

Have we learned anything from what happened in 2008 – or from the Bernie Madoff and Enron lessons of history?  Obviously not.  Not only is the western financial system entering a collapse much bigger than that of 2008, the big banks are already lining up with their hands out and pockets open.

Currently Morgan Stanley’s ratio of assets to “tangible” book value is 13:1.   The problem is that the book value of Morgan Stanley’s “assets” is likely exceedingly overvalued and will eventually be written down at least 30% (and probably more).  This bank will blow-up if the U.S. Government allows the market to do what markets are supposed to do.

John Mack’s comment about Governments bailing out banks is nothing more that the childish appeal of a desperate man who knows the end is in sight for a bank that had failed under his leadership.

The Truth About TARP: Bernanke Lied To The Public And Perpetrated A Crime

U.S. Code § 1001:     a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully – (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years…(18-USC-1001 link)

My colleague and good friend, John Titus has written and produced an absolutely stunning video documenting the fact that Fed Chairman Ben Shalom Bernanke knowingly lied to Congress when he testified to members of Congress in Nancy Pelosi’s office – and then to Congress at-large – that the $700 billion Taxpayer bailout was required to prevent a collapse of the entire economic system and specifically the commercial paper market.

Titus shows with hard evidence directly taken from Fed documents that the “Main Street” commercial paper market or the main street economy was never at risk.  Nancy Pelosi may be a stark-raving lunatic and corrupt to the core (I would suggest that her husband, a commercial real estate magnate benefited from the big bailout of Wall Street), but Bernanke broke the law and he knew he broke the law.    After you watch this 11-minute video, please pass it along to anyone you know who might still care about this country:

Just to be clear here, TARP was a $700 billion transfer of Taxpayer money to the big banks. A large portion of that money was paid out to the Jamie Dimons and Lloyd Blankfeins for their huge bonuses that year. Treasury Secretary Henry Paulson – who should also be in jail – benefited from the TARP bailout because it saved the value of the $200 million in Goldman Sachs stock warrants he still owned.

The economy was never in danger of collapsing. Yes, the Wall Street controlled financial markets might have experienced a brief disruption, but it would have been a useful device to clean up and reform the interminably corrupt Too Big To Fail Banks.

Our country has “crossed the Rubicon.” There’s no turning back. The elitists running what is left ouf our system will take no prisoners. Unfortunately, it looks like my view that we’re headed for war with the world is starting to unfold…U.S. Upset At West’s Lack Of War Prepardness

Hate To Say “I Told You So, But I Told You So”

UPDATE (Feb 21, 2015):  A lot of pundits with poor-analysis-egg-on-their-face are now predicting that the deal struck yesterday to bail out Greece will fall apart.  Well ya, I guess eventually Greece will blow up but it will blow up with the entire EU.  Does this statement from Greek  Tsipras sound make it sound like the deal will blow up?

Greek Prime Minister Alexis Tsipras declared victory on Saturday after agreeing a last-minute conditional financial rescue deal with Europe, despite making big concessions to avert financial collapse within days (LINK)

The real beneficiaries of this deal are the people running the big banks – U.S. and European – because a Grexit would have blown up them up and the upper management of these banks could no longer milk QE by paying themselves huge salaries/bonuses.   Hey Germany:  You just made sure that the CEO’s of Goldman, JP Morgan, Deutsche Bank, Citibank, Morgan Stanley, et al will get to reward themselves handsomely with YOUR tax money.  Now ya know how we feel…

Three weeks ago I wrote that the ECB and the Greeks would reach a “kick the can down the road” agreement – that everything in between would be staged grandstanding for the benefit of Germany’s restless anti-euro population (you know, the ones that want to hold the Bundesbank accountable for the gold that the Bundesbank has claims to have). Well, guess what? They kicked the can down the road: Bloomberg, Zerohedge.

It was simple to figure this:  follow the money.   The real money wasn’t in the exposure to the Greek sovereign debt that everyone was blathering about.  The real money is in the OTC derivatives connected to the Greek sovereign debt, the former to which big Too Big To Fail Banks have a huge exposure.   I can guarantee you that the U.S. Treasury and the Fed had played a huge role in engineering this latest maneuver to put off the day of reckoning.

“You can ignore reality, but you can’t ignore the consequences of ignoring reality.”  Ayn Rand

Derivatives Meltdown Part 2 + Let’s See How Obama/Kerry Respond To This…

[Update on MH17]:  It’s starting to not look so good for the Ladies who doth protest too much (Obama/Kerry/Biden/Feinstein/McCain/etc).  Russia has satellite images showing Ukrainian troops deploying the type of missile involved and wonders why the U.S. won’t release satellite photos from a U.S. satellite that was directly overhead at the time, among other questions raised by Russia:   10 Questions From Russia For Obama

Oops – Obama pisses off China on MH17 now: China Condems Obama’s Response to MH17. That’s not good, given that China is America’s largest lender and enables the hoi polloi here to borrow and spend…

If you’re bored by the that topic already, then maybe Part 2 of our derivatives Armageddon series will interest you.  In this video we discuss some of the insanity that lies behind U.S. derivatives accounting rules and how they favor the banks at our expense:

The coming derivatives collapse is one of the primary reasons the price of gold (and silver) is going to the moon. Gold will start moving well in advance of this event but it will go parabolic once it becomes obvious to everyone.

Assuming the markets remain functional in the aftermath, the junior mining stocks will move even more than gold/silver.

New Derivatives Rules Rescinded To Help Banks Make More Money

The rules originally established to help protect the system from bank greed and fraud connected to derivatives were just rescinded by the same Basel Committee that drafted the original blueprint – article link.  The original rules would have significantly curtailed the ability of banks to underwrite the derivatives they sell to pension funds and hedge funds. It would have required that the banks put up a lot more in reserve capital, which in turn would have forced the banks to charge a much higher premium – or cost to the buyers – for the derivatives it sells. Make no mistake about it, AIG and Goldman would not have blown up if both parties had been forced to properly reserve against their derivatives contracts.

The financial collapse in 2008 was largely triggered because banks systematically under-priced the risk premium built-in to derivatives.  The original rules were designed to help limit the disaster caused by the under-reserved derivatives which blew up Lehman, AIG and Goldman and triggered the massive bailouts.  If the risk premium had been properly priced in a way that reflected the degree of risk embedded in the derivatives deals, it would have made most derivative contracts unaffordable to the end-user – pensions, hedge funds, municipalities, insurance companies etc. In other words, the new rules were established to protect the system from extreme greed and risk.

But if banks were forced to properly put up reserve capital to protect against the risks for which derivatives are used, most end-users would never buy them. This in turn would shut off the spigot to Wall Street’s most profitable business line. The change in the rules now means that the banks can party on as usual and make huge profit spreads on the derivative ticking time bombs they dump into  the financial system.

Again, make no mistake about it, this rule change is going to lead to another financial system collapse.  Only this time everyone will be forced to contribute directly to the bailout of the big Wall Street banks in the form of “bail-ins.”  Now we know why the bail-in rules are being transitioned and we know why big banks are moving their derivatives exposure up to their bank holding company level.

Anyone who understands what is going on here and continues to keep their money inside the financial system is either extremely naive or tragically stupid.  Forewarned is forearmed.