In Sept, 2008, I penned the post, the US Economy: A Perfect Storm of Housing and Lending Events. This overview of how we managed to bring ourselves to the precarious cliff of a failed economy revealed it was not a single issue, but a combination of many events – including political pressure on lenders for homeownership, relaxing of GSE lending criteria, regulation/deregulation, and profit motivation by financial institutions – leading to an out of whack supply vs demand, driving up housing values to unsustainable and dangerous levels.
It never crossed my mind that financial terrorism could be another element to be factored in. So when the WA Times wrote of an unclassified Pentagon report by Kevin D. Freeman, my head perked up. (Read the Scribd version here.)
Since that time, I’ve tried to dissect what many here, and elsewhere, have dismissed as a report they consider simply a distraction from ill thought US fiscal policies and irresponsibility by both Congress and Wall Street alike, and fueled to a frenzy by irresponsible homeowners.
Be assured that the Freeman report does not dismiss irresponsibility for US fiscal policies and events. Rather, he frames his three Phrase hypothesis upon the premise that our self-induced fragile and unsustainable fiscal trajectory, combined with opaque global trading practices, was easily exploited for purposes of financial terrorism. And several out of the norm trading activities – such as an oil spike that wouldn’t traditionally happen, the bear runs at US financial institutions, and the disappearance of a hefty amount of money in the markets in a short time – were enough to raise suspicion.
It can be said that most conspiracy theories contain variations and glimmers of truth. So, to be as analytical as I can, without slinging political arrows, I offer you my thoughts on the first two of three Phases of the Freeman theory of Financial Terrorism as an element in the global 2008 economic crash.
Under normal conditions, an economic actor would seek to maximize returns and would therefore slow any price rise to reduce suspicion and minimize negative impacts on demand. A desire to spike prices may imply other intentions more in line with the oil as a weapon theory.
To summarize, the end goal of Phase 1 was simple… to generate enough excess wealth to launch Phase 2; bear raids on the markets. This starts with the assumption that the spike in oil prices in late 2007 and 2008 were not as a result of the usual supply/demand reasoning, but of speculation. Growth seemed to be leveling, and drilling activity had increased. So in hindsight, without disruption of crude, speculation was a likely explanation for a tripling of prices in a very short time.
Instead of using the more traditional hedge funds to drive up prices, a newer mechanism was flourishing… the Sovereign Wealth Funds (SWFs).
“A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets. These assets can include: balance of payments surpluses, official foreign currency operations, the proceeds of privatizations, fiscal surpluses, and/or receipts resulting from commodity exports.‖
“Since 2005, at least 17 sovereign wealth funds have been created. As other countries grow their currency reserves they will seek greater returns. Their growth has also been skyrocketed by rising commodity prices especially oil & gas, especially between the years of 2003 – 2008.
44% of all SWFs are in the Middle East, and 61% of the funding sources for these SWF’s are oil and gas related. These new power brokers have not only the motive to drive up oil prices, they have the means. According to Dr. Gal Luft, Executive Director of the Institute for the Analysis of Global Security – when testifying before House Committee on Foreign Affairs – they have been pouring billions into Western economies’ hedge funds, private equity funds, real estate and other natural western resources. They were estimated to hold approx $3.5 trillion in western assets at that hearing, and predicted to balloon to $10 to $15 trillion within a decade.
This is an amount equivalent to the entire US GDP.
Contrary to popular political beliefs, oil prices are out of our regulatory control. Instead, they are determined on a global basis, effected through non-transparent trading, and regulated outside the United States borders.
But one US corporation, Intercontinental Exchange (ICE), founded by young entrepreneuer, Jeffrey Sprecher in 2000, has been taking the brunt of Congressional Dems blame, with accusations of oil speculation. Sen. Maria Cantwell, along with Maine’s Olympia Snow, had introduced legislation meant to give the CFTC more authority over the juggernaut that ICE has become since it’s creation. Before that, it was a Feinstein/Levin/Snow bill.
ICE was founded as an energy clearing house and online trading market for energy commodies, including partnering with Chicago Climate Exchange (and it’s links to Al Gore, Obama and Goldman Sachs) in 2006. In a letter to Sen. Feinstein, Sprecher protests Congressional charges about transparency, saying “Not only does ICE provide an audit trail but it provides one that cannot be replicated by other parts of the OTC marketplace (voice brokers, bilateral trading parties, etc.).”
But how much transparency is enough, when it comes to financial terrorist attacks? And is it energy clearing houses, such as ICE, that become unwitting (or witting) accomplices for SWFs putting excess revenues into hedge funds that positively speculate on increased oil prices?
Whalid Phares (pg 22 of the Freeman report), like Freeman, attributed much of the economic crisis to political pressure on Wall Street for risky loans, and Wall’s Streets willing participation in the risk. But Phares also sees a potential 3rd player in crisis – radical elements in OPEC nations…. Crumbling the US economic defense in a matter of months.
The thesis argue that combined Salafist-Wahabi and Muslim Brotherhood circles in the Gulf -with consent from the Iranian side on this particular issue, used the escalating pricing of Oil over the past year to push the financial crisis in the US over the cliff. The ‗high point‘ in this analysis is the timing between the skyrocketing of the prices at the pumps and the widening of the real estate crisis. In short the ―Oil-push‖ put the market out of balance hitting back at Wall Street.
~~~Let‘s not underestimate the power of the Jihadi-oil lobby in America: it has decades of influence and it has long arms into the system, and it has powerful political allies. It knows when Americans are messing up their own system, and it knows very well how to push them over the cliff, into the abyss of economic calamity.
Jihad doesn’t care about economic destabilization in their backyard. And in fact, would welcome such an opportunity, as we witness with the current uprising in the ME countries. A political and economic vacuum translates to a jihad opportunity. How important is oil as a financial weapon to jihad? (excerpts from pgs 23 and 24 of the Freeman report)
―Sheikh Yussuf al Qardawi, Muslim Brotherhood ideologue and mentor of the Qatari-funded channel, spoke openly of Silah al Naft, i.e, ‗the weapon of oil.‘ Indeed, it was called a weapon – as in a warfare situation — and most likely it was used as such.
~~~For years now, Salafist web sites and al Qaeda spokespersons have loudly called for an ‗oil Jihad against infidel America and its lackeys.‘ Online material is still circulating. But more revealing are the official speeches by Osama Bin Laden and his deputy on the ‗absolute necessity to use that weapon.‘
The second phase appears to have begun in 2008 with a series of bear raids targeting U.S. financial services firms that appeared to be systemically significant.
Motive of the market, for the most part, is profit. And to accomplish that, sometimes it behooves certain market participants to see a decline in stock values. Bear raids short a target stock… i.e. “borrow” shares in the hopes to cover/replace them with a cheaper price than the current rate. So bad news or rumors are spread to get the stock to drop.
Short selling, a similar process, is legit. But a bear raid is a rapid “short selling” process, involving violations of markets rules by using rumors or manipulation of perceived stock value. It is believed that it was such bear raids, conducted by Jesse “The Boy Plunger” Livermore, that lead to the 1929 US crash, and ushered in the creation of the SEC and the “uptick rule”. – the latter which would limit a short seller‘s ability to drive down a stock price simply from continual selling. Ironically, the uptick rule was eliminated by a Dem held Congress back in July 2007 – a year before the crash, and just months before the oil price run up began. Since 2009, debate and a reintroduction of it’s implementation began, but has not resulted in it’s reinstatement.
Not unlike politicians, campaigns and media rumors to negate their appeal, even a healthy business can fail when rumors abound. Such a case was Bear Sterms who failed not from lack of capital, but lack of confidence.
But the bear raid assault has been enhanced in sophistication with other more recent, tools. The success of a raid, using Credit Default Swaps, naked shorting*, Exchange Traded Funds (ETFs), and option strategies increases considerably, plus affords appeal with the near impossibility in tracing their origins. Lehman Brothers was also the victim of a bear raid using a combination of these financial tools. (pg 27 of the Freeman study). Dr. Susan Trimbath estimated that failed trades from naked short sales could account for 30-70% of the decline in share values for both Bear Stearns and Lehman. Had the uptick rule, or more transparency for short selling been in place, it’s entirely possible that even the troubled accounting of LB may have been revivable within bankruptcy reorganizing.
Naked short selling occurs when shares are sold without first owning them or borrowing them. This practice is basically illegal with a few exceptions created to promote short-term liquidity. Unfortunately, provisions against naked short selling have had lax enforcement by regulatory authorities in recent years, creating a serious vulnerability in our financial markets.
Just as with Phase 1, where it’s obvious that the conditions did not warrant a run up of oil prices, finding out the How’s, Who’s and Why’s of those at the heart of the bear raids is important… however extremely difficult.
Per the Freeman theory, the “how’s” were obvious. Multiple bear raids were successfully conducted against major US financial institutions. After the collapse of LB, the credit market froze, and stocks collapsed. Amazing when you consider that LB’s collapse may have been averted if there were a restraint on the naked short selling. Thus the economic dominoes began to fall, with the chaos surrounding AIG, GS, Morgan Stanley, losses in Norway’s government pension funds and the Reserve Primary Fund falling below $1 a share for the 1st time in 14 years.
“Who” demands examining who benefited from this chaos? According to Freeman, only net short financial stocks, or the entire market in general. Considering what it would take to organize such chaos across such wide spans and participants, one might discount conspiracy from the overall stock market community, working in concert.
Not withstanding the lack of transparency in these type of illegal trades, most of this trading originated from behind the fronts of brokerage firms, hedge funds and client investor pools.
Regardless of the motive, the actors behind the bear raids not only prefer anonymity but most likely planned for it from the beginning. This suggests layer upon layer of secrecy through foreign shell corporations, feeder funds, and numerous other pass-through entities. Historically, hedge funds have disclosed nothing to the government and very little to the public. Even from a tax standpoint, there has been virtually no ability for governments to track investment results back to most clients.
With the increase of “dark pools” and hedge funds comes anonymity in trading…, which is ideal for the laundering and the use of terror funds as an economic weapon.
One scenario could be that a terror group could direct investments to a feeder hedge fund. That feeder fund would locate a Cayman Islands-based hedge fund on their behalf that was predisposed to sell short financial shares. With sufficient new money, the hedge fund would expand their short selling activity (naked and traditional) and trade through dark pools or with sponsored access.
At the same time, the same terror group might invest heavily in credit default swaps of the targeted short sales either directly, through foreign contacts, or hedge funds. This activity, focused initially on Bear Stearns would prove greatly profitable. The same activity refocused on Lehman Brothers could account for a significant portion of the 33 million failed-to-deliver (naked short) shares, providing the trigger for the market and economy to collapse. And, nearly all of it would occur without notice. In fact, the original investor could close out positions basically undetected.
What this means is that terrorists no longer need to fly buildings into heart of the US financial district. With substantial financial backing, and Internet connection from their caves, they need only set up several overseas hedge funds and, acting as a coordinated unit, dump U.S. stocks…all under the financial radar of virtually all countries.
But for those seeking the quintessential smoking gun, it will be impossible to prove jihad groups were behind the financial crash. As Freeman notes, the only reason to suspect financial terrorism at all is the existence of such unusual trading activity in the scope of the historical norm. Therefore, in order to speculate on the “who’s”, it becomes necessary to review the available trading in the stocks of the financial services firms that appeared subjects of bear raids.
Starting on pg 43 of the Freeman study is the mention of a 65 pg report to Congress, various law enforcement agencies and regulators, titled “Red Flags of Market Manipulation Causing a Collapse of the U.S. Economy”. The report was submitted by an anonymous author.
In this anonymous report, is the key point that there were two companies at the heart of this style of trading, and they consistently work in concert. Freeman deliberately withholds the names of these two companies from his study because “…trading data alone is insufficient to consider any accusations against them.”
Likely for this reason, I have not found this document on the Internet… nor do I suspect any of us will. But it would be an interesting FOIA request to put in. In case any of you find that some enterprising investigative journalist has successfully done so, please provide the links in the comments for the rest of us.
But with the breadcrumbs of clues Freeman left, we can deduce who these companies are *not*, based on the data provided for the anonymous author.
These firms became, virtually overnight, the largest traders in the U.S. financial markets. These companies provide a one-stop-shop for trade execution, back office clearing and bookkeeping that cater to hedge funds and small broker dealers. To give perspective, the amount of trading executed by these two firms in October 2008 exceeded the trading of securities firms Goldman Sachs, JP Morgan and Merrill Lynch combined in the NASDAQ market participant reports.
This obviously leaves out the favored political target of Goldman Sachs, who enjoys the current POTUS on the end of their marionette strings. Whoever these firms are, they dwarf these immense US financial institutions.
But for those who may have a better grasp of the players in the global trading world, here are the other clues from “deep keyboard”, as I’ll call this author:
(From the anonymous report directly)
1) The firms have traded trillions of dollars worth of U.S. blue chip companies. They are the number one traders in all financial companies that collapsed or are now financially supported by the U.S. government. Trading by the firms has grown exponentially while the markets have lost trillions of dollars in value.
2) These firms appear to own few or no shares of blue chip companies they are number one traders in. There is no doubt that the magnitude of their trading impacted the marketplace. Since the direction of the market place has been in a severe downward trend, the impact from the firms has been and remains, negative to the marketplace.
~~~(From Freeman’s summarized addition key findings)
The two previously small broker dealers mentioned in the report are market makers for every major financial services firm under attack.
These firms have a combined 76 different symbols under which they act as market maker (by contrast a major firm such as Citigroup has just 6).
Both firms offer sponsored access.
Both firms offer access to dark pools.
From June through September 2008, the two firms appeared to concentrate on Lehman Brothers, trading 1.04 billion shares while the stock price collapsed from $33.83 to $0.21 on 15 September. This pattern seemed to repeat in every other major financial stock.
The report estimates that the two firms completed as many as 641,000 trades per hour in October 2008 (based on market participation statistics and average trade size from the last available data).
Total trading volume by month in the financial sector listed for these two firms grew from approximately 350,000 shares (less than 1% of all market participant trading) in September 2006 to approximately 600,000 shares in the sector (about 6% of all market participant trading) in September 2007, to over 8 billion shares in the sector (about 19% of all market participant trading) by September 2008. That‘s an increase of 2.4 million percent in two years.
While both firms have been around for several decades, their rapid growth began in 2006 for one and 2007 for the other.
Both firms seem to specialize in the same stocks at the same time, appearing to work in concert.
Combined, the two firms traded 203 billion shares, mostly concentrated in major financial services companies. This compares to a total of 427 billion shares outstanding of all issues on the New York Stock Exchange.
The report estimates trading of at least $5 trillion over the 25-month period ending in November 2008.
The trading appears to represent new money to the marketplace by new participants.
From July 2008 through September 2008, the two firms ―traded more shares of Fannie and Freddie than were issued‖ even as the share prices were collapsing.
The firms were also the largest traders of the UltraShort funds as well as the ―financial spider‖ (symbol ―XLF‖) during the reporting period.
The firms also became the largest traders of energy stocks.
The two firms did not and do not hold major equity positions on their books
Whoever they are, they had to have sufficient capital to effect $5 trillion in trades in a very short period… whether domestic or foreign. And they used minor league brokers to focus on failed or failing US financial institutions.
This bring us to the “Why’s”…
Their motive comes down to two base choices… financial for profit, or subversive non-economic motives.
Another favorite target would be George Soros. Certainly the Soros Quantum Fund profited by $1.1 billion during this period. But then Soros was also an outspoken voice, warning of the danger of this bear raid activity. Therefore it’s also entirely possible that Soros, an astute businessman if not a likeable character, merely piggybacked wealth on the events out of his control.
Certainly hedge funds profited as well. Add to that, the naked short selling is a favorite of organized crime and the Russian Mafia. In this case, it will have to be a very greased palm for any of the potential mafias involved.
But then, when you consider greed, coupled with the chaos of the markets, you have to wonder if the quick fast profit, and potential destruction of the largest free market economy, is such a wise strategy. Would a manufacturer make a killing on a new invention right out of the gate, then burn down his factory and the potential to make even more?
Which brings me to those with non-economic motives. Barry Ritholtz, the head of research firm FusionIQ, made an interesting observation on his blog, The Big Picture, on Sept 19th, 2008. Ritholtz was discussing the absurdity of banning all short sales.
I have been trying to contextualize this, and I keep coming back to what seemed like a wild theory yesterday that seems a whole lot less wild today. During the day, I had an interesting phone conversation with Joe Besecker of Emerald Asset Management. (We used to do schtick together on Power Lunch, and made for an amusing financial comedy team).
But Joe is a good money manager, a great stock picker, and a thoughtful guy. He raised an intriguing issue: None of the many hedgies he knew were pressing their bets recently. The bear raids on the banks and brokers were NOT a case of piling on by US based hedge funds. And from what he was seeing and hearing about in terms of order flow, the vast majority of the financial short selling the past week or so were being done overseas. It appears that the lion’s share of shorting was coming out of overseas bourses such as London and Dubai.It may not be a coincidence that the financial short selling ban is both here and in London.
Then there is another coincidence: The huge increase in shorting of the financials occurred on the anniversary of 9/11. And on top of that, the same institutions attacked on 9/11/01 were the ones suffering in recent days.
This same financial terrorism theory, plus the date of the economic assault, was noted by Jim Cramer. But in the chaos of the moment, no follow up was done. To pile on to what may not be such a wild theory afterall, add Charles Duelfer and James Rickards in their co-authored NYTs op-ed on Dec 21, 2008, titled Financial Time Bombs.
In their examination of possible suspects, they note that China behaved appropriately during the fiscal crisis, being large holders of US debt. Russia was considered in the bailout of the GSE’s because they are also some of the largest holders of government agency debt. This seems to indicate these two are unlikely perps.
Al Qaeda, on the other hand, has declared that damage to the US economy is it’s 2nd priority, following only mass deaths. To emphasize the jihad focus on the US economy, we need only remember OBL’s words on Dec 21st, 2001.
…hitting the economic structure…is basic for the military power. If their economy is destroyed, they will be busy with their own affairs rather than enslaving the weak peoples. It is very important to concentrate on hitting the US economy through all possible means.”
AQ, acting alone, doesn’t have the financial resources for such an attack. However with their tentacles extending to the cash rich Taliban, Russia, Iran, Venezuela, China and the Arab states, their combined effort may be enough to do the trick. All sects of radical Islam share a common goal – that of replacing “..the ‘slavery’ of the Western international monetary system” with Shariah Compliant Financing (SCF) because it is then subject to Shariah Law.
According to Saudi and Muslim Brotherhood (MB) spiritual leader Hamud bin Uqla al-Shuaibi, “The importance of Financial Jihad [is]…more important…than self-sacrificing.”
There are documented ties between the Shariah Finance Compliance and the widely increased appearance of Sovereign Wealth Funds that have appeared on the scene in the past decade. Which again ties into Phase 1’s driving up the price of oil.
Altho there is no evidence that these SWFs have participated in bear raids, the Shariah-compliant SWF now has the ability to sell short either through SCF-compliant hedge funds or directly via the arboon short sale…. and all without transparency.
Yet none of the above bonding between jihad groups eliminates other likely suspects, such as Venezuela, Iran, Russia and China, as they are also abundant in wealthy SWFs. But, as mentioned above, Russia and China have more financial ties economically that would be negatively affected by a damaged US economy.
But renegade Chinese elements may indeed have their motives, and some of the involvement can be traced back to a Chinese individual, helping to launder money thru multiple global banks, aiding in Iran’s WMD program, presumably obtained from Russian sources. Some of Iran’s largest banks are believed to have played roles in illegal money movement.
Another axis of evil, engaging in illegal money movement has been North Korea, who was ID’d as creating and laundry’ing huge sums of counterfeit money.
The report says North Korea uses front companies and shell companies overseas to facilitate the illicit trafficking in supernotes. The use of fake companies increased after the Treasury Department barred U.S. companies from working with Banco Delta Asia.
To further hide the transactions from international financial authorities, the North Korean party office used a financial front company, set up in China in 2006, to make payments as part of the purchases, the report says. North Korea also set up a front company in the British Virgin Islands in the mid-2000s to take advantage of lax banking regulations and tax laws there, it says, and other branches of the front company were established for financial support activities in China, Russia and Southeast Asia.
However what may possibly be the largest indication that financial terrorism is at work is a 2009 story that was virtually swept under the rug by the MSM. The arrest of two Japanese nationals (or Asian men, as reported elsewhere) in Italy, trying to smuggle $134.5 billion in US Treasury bearer bonds into Switzerland. If they were real, it would constitute the largest financial smuggling operation in history. If fake, the quality of the counterfeiting was such high quality to be almost undistinguishable from the original.
At the time, Seeking Alpha pointed out the many strange inconsistencies in the story. Obvious points were their choice of transportation, where two affluent business men would have stood out like sore thumbs on a train filled with Italian common workers, and why the bearer bonds would have been hidden in a secret cache of an attaché case. If they were real, they could have been transported in a diplomatic pouch, exempt from customs scrutiny.
Another eyebrow raiser was the amount of the bearer bonds. The arrest of the Asian men took place early June of 2009. In March, 2009, US Treasury Department announced that USD $134.5 billion remained in TARP funds…, coincidently the same amount of the counterfeit bearer bonds.
The head scratching moments don’t end there. While doing an article about just how this attempt to smuggle bearer bonds could bring down the US economic, Contrarian Profits also points out who broke the story of this historic smuggling attempt… AsiaNews.it…, an obscure Vatican-sponsored news website.
This story has more holes than a Swiss cheese. We know from experience here at Notes (your co-editor spent two years working as an investigative reporter in his native Ireland) that there is rarely smoke without fire when it comes to news stories. But one aspect of this story still puzzles us… and it’s a part of the story nobody to date has questioned: What was an obscure Vatican-sponsored news outfit doing breaking the largest financial crime story all time?
As far as we can tell, AsiaNews.it broke the story on June 8. Major news services followed on with their own reports much later. Bloomberg, for instance, only got to it yesterday. So how did AsiaNews.it, a website linked to the Ponticial Institute for Foreign Missions and funded by the Vatican scoop the major news agencies on the bond story?
AsiaNews.it’s About Us page freely admits that it is an anti-Communist organ of the Roman Catholic Church, “nobly dedicated to China and her people.” The organization’s missionary zeal is not difficult to detect.
A smuggling operation of this magnitude demands a level of sophistication that is absent in this attempt in every fashion… from the strategic action to the media outlet who exposed it. It was almost as if they wanted to be caught.
Why? As Seeking Alpha notes, there’s no faster way to sabotage and usher in the death of a currency than to raise legitimate questions about its ability to withstand counterfeiting efforts. (as was done by the Nazis in WWII with Operation Bernhard)
Ironically, the Asian business men, arrested, were released. According to the Italian authorities, they were not caught using the fake bonds in the commission of fraud. Status of the bonds as real or counterfeit did not seem to enter the picture for prosecution.
As for the US Treasury, they declared them counterfeit. (linked from Cryptogon’s various updates on the story…)
“The whole thing is a total fraud,” Stephen Meyerhardt, a spokesman for the Treasury Department, said Thursday. “They don’t look anything like real securities, which in any case were never issued in any of those denominations.”
The highest denomination ever issued by the Treasury Department was $10,000, he said. The Italian financial police claimed some of the paper was “Kennedy bonds” from the 1930s, but no such bonds ever existed. And the total of Treasury bearer bonds still outstanding is a mere $105 million; the Treasury has been issuing bonds in electronic form since 1986.
Here’s the rub… the Treasury dept declared their counterfeit status not by in person inspection, but
by photos on the Internet. WTF? They appear to be so real as to fool Italian customs, yet can be so easily dismissed by shooting a photo or two thru cyberspace??
On the contrary, again the Vatican’ news arm, AsiaNew.it, linked above, gives reason to doubt the quick dismissal of authenticity.
One more element in favour of the bond’s authenticity is found in the securities, which in the June 4 statement, the GdF termed “Kennedy Bonds” with photos provided. These photos reveal that the securities under discussion are not bonds but Treasury Notes, because they are securities that can be immediately exchanged for their worth in goods or services and because they are devoid of interest coupons. One side carries a reproduction of the image of the American president, the reverse side that of a spaceship. From confidential, usually well-informed sources, AsiaNews has learned that this type of paper money was issued less than ten years ago (in 1998), although it is difficult to know whether those seized in Chiasso are authentic. But the fact that the release of this particular State Treasury was not completely in the public domain tends to exclude the possibility of counterfeiting. It highly unreasonable to suppose that a forger would reproduce a State Treasury not commonly in circulation and of which there is no public knowledge.
As Freeman notes in his report:
The sheer amount of the bonds takes the activity out of the role of the criminal and into the realm of financial terrorism and/or economic warfare.
Again, more questions than answers INRE motive, and players. But it’s obvious that financial terrorism is not a conspiracy theory to be lightly dismissed.
Coming next…. Phase 3, assault on the US dollar.
Vietnam era Navy wife, indy/conservative, and an official California escapee now residing as a red speck in the sea of Oregon blue.
As to the bearer bonds.
Experts do not study fakes, they study real ones.
When a fake is a denomination that never existed, that’s a BIG clue.
It’s like a $3 bill.
It doesn’t take a genius and it doesn’t take a lot of digging to know it is a fake.
When we first got into printing we were astonished how easy making money could be.
And, indeed, many countries, like North Korea and Saddam’s Iraq messed with us by flooding the market with near-perfect $100 bills.
Why do you think we change our currency so often?
Nan G, read the 2nd to last blockquote paragraph…. excerpt:
The report from the Pentagon came out at the end of “09” I believe? So we must first question with the way things are going right now, why has it been hidden from the public until now?!!! It is my understanding it was even kept from ranking members of both parties and the 2 houses. WHY!
In turn, why is it, in my view BTW, that it seems like this administration is actually in effect enabling the very scenarios as described in the report?
So why hasn’t the SEC revealed who bought the massive amount of puts on the airline stocks in the days leading up to 9-11? (Snopes discounts this, FWIW)
Edit: I forgot to mention: Great piece of research, Mata.
Regarding short selling and the uptick rule: Short selling is selling a stock (or commodity) that you don’t own. In theory, you’re supposed to borrow it from a broker. In the last few years, there has been a rise in “naked short selling” where the short-seller never borrows the stock or commodity. The SEC is supposed to prosecute those who engage in that illegal behavior, but they never do.
It’s interesting — your choice of #1
Blame it on middle class people and their supporters. No, they weren’t the ones who caused the meltdown. They held less than 1% of the toxic mortgages, by dollar value (most of which was for re-fis, jumbos, vacation houses, flipping investments, etc.). But they (the relatively poor folks) do make for a convenient scapegoat.
And now you introduce an Asian conspiracy theory.
The true answer is right here; at home.
http://www.marketwatch.com/story/four-time-bombs-that-will-blow-up-wall-street-2011-03-01?pagenumber=2
– Larry Weisenthal/Huntington Beach CA
Didn’t read very far, did you Larry? The entire post is from excerpts of the 111 pg report, not created by me. I am giving the run down on the theory proposed by Mr. Freeman.
And there is no “asian conspiracy theory” anywhere in here. The suspects are varied, including jihad elements. The only “asian” conspiracy is the undeniable fact that two asian men attempted to smuggle bearer bonds out of Italy. Neither Freeman, nor myself, tied that to a particular country. Indeed, we don’t know if they were actually Japanese, Chinese, NK or what. That story seems to have been quashed without fanfare. Odd considering it’s historic status in size.
Secondly, political pressure on lenders for homeownership is indeed part of the problem, and not the sole culprit. That it’s first is because Congress did indeed put pressure on lenders, and the GSEs, for lower standards and more loans. This is not “blaming it on the middle class people and their supporters” This is blaming the ill thought fiscal policy on Congress, where it belongs.
So thank you for hurling your personal and snide remarks at me, one more time. You’re really a piece of work, lately. Whatever your problem, I suggest you level it elsewhere. I’m in no mood. And I suggest you try reading past the first paragraph before hitting the keyboard with your personal bias and preconceived notions.
#1, I was being “snarky” and not “snide.” #2, it wasn’t personal; it was simply an expression of disgust/despair over the scapegoating of the middle class and teachers and unions (people who’ve run in place or lost ground over the last 30 years; while the wealthy have prospered as never before — oblivious and impervious to the meltdowns and the real life problems they’ve caused real people living in the real world).
The true villains get off scott free, as nicely explained in the WSJ blogpost I linked.
“Asian,” by the way, is a generic term which I have consistently applied (as in “land war in Asia”) to every place from Lebanon to North Korea). The term applies to West Asian Jihadis, as well as East Asian despots.
I loved David Stockman’s quote, in the WSJ blogpost:
“If there were such a thing as Chapter 11 for politicians” the “tax cuts would amount to a bankruptcy filing.”
We are dealing with a debt crisis not by returning tax rates to where they were, pre-debt crisis, but by cutting Pell Grants, NIH medical research, and infant formula for poor mothers.
I get nauseated hearing GOP polls drone on about a debt burden created by their courageous cut-taxes-and-raise-borrowing policies. No politician ever took a hit by supporting a tax cut. But our country has taken an enormous hit, over the past 30 years, over our refusal to pay for our own government.
Asian conspiracy theories are just another distraction from the real problems — Wall Street bankers and Capitol Hill tax cutters.
– Larry Weisenthal/Huntington Beach, CA
Larry, if you had even read the first five paragraphs, you’d know I was dissecting this report, trying to assess if there was anything to the investigation. Instead you, like most people simply leap to call it a “conspiracy theory”. Therefore you can’t tell me that I, personally, am offering up “an asian conspiracy theory” since I didn’t create the report I was wading thru.
There is no “asian conspiracy theory”, save your own accusations. But one would actually have to read to figure that out.
Other than the mention of China as a likely suspect, along with NK, and the very real smugglers of bearer bonds who were undeniably asian, that’s it for the links. Perhaps I’m more familiar with an Atlas, but asian I hold to SE Asian countries. I don’t consider the Mediterranean countries to be asian, but Middle East. I doubt anyone else does either.
Nor did I blame the “middle class” as you claim. It was Congress who was in control of regulations, of GSEs being over leveraged and avoiding oversight. It was their combo of regulation and deregulation that enabled Wall Stree to become extremely prolific on toxic assets. And, in the end, it was also irresponsible homeowners who sucked out 100-125% of their home’s equity, and spent it on anything but their home and asset. Don’t tell me differently, since I run into them daily.
Lastly, your WSJ link to the madman, Paul Farrell.. .always good for a grin here and there when you want hyperbole and to hear a socialist bashing capitalism… is not a WSJ link at all, but to MarketWatch. I laughed when I had read what the more sane SeekingAlpha had to say about Farrell. Rich Karlgaard at Forbes hasn’t been as kind as Seeking Alpha in the past. He pretty much calls out Farrell as he is. A “frothing” madman.
Which comes right back to my original point in the 5th paragraph. That most conspiracies – and in Farrelll’s case, frothing madmen who long for socialist revolution – often operate from premises with various glimmers of truth.
In the case of Freeman, he’s got a lot going on his side from the report. In the case of Farrell? The man’s in serious need of Prozac.
Now, perhaps you’ll stop taking this off topic, and actually address debunking what theory – thus far – of Freeman’s you believe is so impossible.
The country is going down the drain, and we look under carpets for scapegoats, while ignoring the elephants in the room (pun and irony unintended), and pretend that we are solving problems by cutting Pell Grants, NIH medical research, and baby formula, after ratifying and continuing the tax cut policies which created the lion’s share of the debt.
I don’t pay all that much attention to the writers, themselves, of blogpost churnings (those would be 95% of blogposters, such as, in this case, Farrell) as I pay attention to the actual issues raised in their churnings. Farrell is not offering new information; he’s commenting on the work of others (like Matt Taibbi and David Stockman). And all three of them are seeing what’s right out there, in plain sight, and not buried under Asian rugs.
– Larry Weisenthal/Huntington Beach, CA
Again with the “asian conspiracy” horse manure, Larry? You have a history of commenting without reading. And I can guarantee you have not read Freeman’s Pentaton contracted report, and equally sure you didn’t even read this post. I suggest that you wouldn’t know what may be buried in your back yard if you don’t bother to look. And it’s apparent that you have no curiousity, or an open mind, when it comes to the political/intelligence arena. You have yet to debunk one specific point made by the Freeman report. But then, that would entail reading it, wouldn’t it?
You’re right, Mata.
There is no one here standing behind any theory.
So, what’s the point of eliminating the obvious.
Or of tracking down evidence of who most likely did it.
Who’s proffered theory are you discussing, Nan G?
Interesting idea that might have some merit but I disagree with the very first assumption of flat oil consumption patterns. At the time China and India were on a steep growth curve. In fact I wrote about the incompetence of Democrats with their insistence on the drilling ban in 2008.
Don’t forget the reneged promises (lower the price of gas) by Democrats in their 2006 election campaign that gained them the Congress.
Now if you were to expand this to include gross incompetence of government energy policy then I might buy into it. But given the fanatical devotion of Democrats to outsourcing of US energy supplies in the name of the environment, no this economic mess falls squarely in the laps of incompetent Democrats.
dscott, the assumption (for the Freeman report’s purpose) was not that oil consumption was flat. Rather that there was no reason, based on supply and demand, for oil prices to triple between Jan 2007 (when oil was about $50 bbl) and June of 2008, when it was around $150 bbl.
@Nan G, what I am most curious about is that rapid rise to prosperity by two firms, mentioned in the anonymous report that was sent to Congress and law enforcement agencies. That’s a report I’d love to get my hands on. Hang, I’ll just take the names! The pro economic bloggers would have a field day researching that… to the extent they could.
When I began reading, I had two criteria to give the report some serious thought:
1: Was any of the market action out of the norm for the events, and
2: Was any single entity capable of such a crash.
I believe, from reading the report, and from my ensuing travels thru the archives of the financial gurus I haunt, there was certainly trading activity that should have rolled the Feds eyes back in their heads. So I do believe there is enough suspicious activity to lend credibility that there were outside forces at work.
Was money their motive? I’m grappling with that one. The long term harm to the markets, which are slow to react to individual nations’ fiscal plights now (in other words, it isn’t likely a stable high it’s on), doesn’t strike me as a wise way to get rich. Again, I consider that burning down the factory after your first run of a successful product. So I’m inclined to say no.
As to who… again, I’d love to know who those two firms are that “deep keyboard” mentioned. I don’t necessarily believe that jihad is the only element capable, or with motive. The SWFs of Russia, Iran and NK are nothing to be sneezed at. Russia has most certainly been racking in cash hand over fist. If you read the report… of which I could only scratch the surface here in over 5000 words… you’ll find there are indeed potential motives for them, and for China, that you may never have thought of.
Then there’s Iran, teamed up with radical jihad. Not a small sum of cash between them all as well.
Seems there’s no lack of villains for another piece in the Perfect Storm puzzle. All I can say is that, at this point, I am convinced that the trading activity was anything but normal, given the circumstances. We may never find out who was engaging in the unusual trading activity. But we sure need to figure out ways that this manipulation cannot take place under everyone’s security radar.
Very good post Mata. During my time with the Intel section in Iraq, we would get periodic intel that would cause one to support this theory. If anyone reading FA fails to believe that there are forces out there that would not use a system like this to destroy the US, you are very naive.
Thank you, Randy. This kind of piece is generally better received by military who’ve had some exposure to intel. For others, they need to empty their minds to preconceived notions and just read the report with an open mind. It’s a barrage of info which I’ve only scratched the surface here. Oh to be able to instantly abbreviate it. t’ain’t gonna happen. That would come out like only giving the punchline to a joke, and leaving out the build up.
Mata, are you also aware of the manipulation/speculation in the cotton market that happened during one week in March of either ’08 or ’09..I can’t remember. The big cotton firms had to cover their shorts which leveraged them to the hilt. Most of the big cotton firms in the US, some over 100 years old folded or have been sold. As I understand it, the heads of the cotton firms went to DC and met with the SEC to figure out what had happened during that one week in March. They still don’t know.
It raised my suspicions as did the strange “correction” of a market segment (real estate) in ’08. In July of that year, the fourth to be exact, I was sitting around with friends, one of whom was in the investment business (I was a broker prior to that time). I was telling him how odd things were to me. 93% of people were paying their mortgages. How could this be a meltdown, I was saying. He said stocks were being touted by his firm ( a large and reputable one) one week then going under a week later. Nothing was normal as you have pointed out so well in this article. To me, it has been financial terrorism from the getgo.
@MataHarley: If anyone can remember when Tom Clancy was writing his own books, he wrote this “fictional” story about a 747 full of fuel flying into the capital building during the state of the union address making Jack Ryan the president.
That was fiction, but within the relm of possibility as we found out 10 years later. Clancy had also been investigated because his “fiction” closely resembled real situations and technology. Does anyone remember the gas crisis in the 1970s? OPEC learned to minipulate the west by controlling the flow of oil into World markets. Attacs on the currency of the west is nothing new. We even did it to the Germans during WWII with counterfeit bills.
Someone at FA posted the Hunt Brother’s cornering the World silver market driving up the price back in the 1980s. Why does it not make sense that our enemies in the middle-east could not attack our financial markets during vulnerable times? There were many people who recognized that the liberal mortgage criteria would adversely affect the financial markets since they were bundled into “assets” and sold as investments. It would take little to envision a strategy whereby a country or organizations that could wield trillions of dollars could minipulate a whole economy for financial gain as well as to weaken an enemy.
Keep up the good work Mata!
@ Mata,
Great effort produced an excellent piece.
The MSM and even Republicans in Congress ignore things like this: “Ironically, the uptick rule was eliminated by a Dem held Congress back in July 2007 “ . . . just for starters.
. . . I can just see the headline Jan. 1, 2012: “Democrats Conspired To Destroy Stock Markets” Their fingerprints are all over the housing bubble and the meltdown, yet they do the most screaming and carry the day in the MSM.
Now for the good news. I should preface this by saying that I don’t “believe” in debt and everyone including governments, should be encouraged to live within their means. The good news rests just beyond your note above: “They were estimated to hold approx $3.5 trillion in western assets at that hearing, and predicted to balloon to $10 to $15 trillion within a decade. . . . . . This is an amount equivalent to the entire US GDP.” I say, beyond, because the amounts you note, while significant, are a glimpse into the vast sea of trillions of U.S. Dollars that trade across the world each day through endless vehicles, from currency plays, to pork futures.
The capital looking for a home, vastly dwarfs the U.S. deficit, and particularly its annual deficit. . . . . Doesn’t mean these aren’t a problem, but when you stand back objectively, they can be dealt with. It will just take sweeping, unpopular decisions, which will take many more new faces in Congress to enact with fortitude.
Excellent review, Mata. I bow to your knowledge in all things financial.
I have a question for you – when the price of oil goes up as it has as of late, would releasing a large portion of our strategic reserves flood the market with oil and lower the price? I know it would screw with the speculators, but I am curious as to what the effects would be.
Mata: here is more info about the essay you described.
March 05, 2011
Was the Economic Crisis Manufactured?
By Nancy Morgan http://www.americanthinker.com/2011/03/was_the_economic_crisis_manufa.html
Mata–
First, I apologize for my previous stupid comment on short selling which duplicated what you had already written in your original post. In my haste to read your article the first time, I must have skipped over that part.
Regarding the two mystery companies, I suspect the names are in this 80 page article published one year ago on the manipulation of Dendreon. Have you read Deep Capture – The Story of Dendreon? If not, it fits right in with your article.
Milken…Boesky…Madoff…Genovese Mafia family…Marc Rich…Marty Peretz…lots of familiar names in the article.
I’m going to let some of my libertarian leanings show here in a minute, but first….Larry.
We’ve had the conversation before about the Community Reinvestment Act and your droning about the poor not being the problem. Let’s say for a minute you’re right, there really weren’t people out there putting no money down on houses they’d never be able to pay for. That never happened, even though half the houses in my neighborhood went into foreclosure for that very reason. The community reinvestment act led to the factors that caused the housing bubble. Banks are going to find a way to make a profit when government forces them to do things that prevent them from making a profit. The question is what authority does the government have to force banks to be non-profit?
The blog you linked references the pentagon war machine. I agree, we need to cut spending and somewhere along the line defense spending has to come into play. But why are we in the middle east? Why is it such a matter of national security. Besides kicking a mudhole in Al Qaeda, we get a lot of our oil from the middle east. Even the oil we get from England comes from the ME. Why do we do that? Because environmental whack jobs won’t let us drill for oil in our own country. And when they do, we can’t build new refineries to process it. We need to drill anywhere and everywhere and build state of the art refineries. And don’t talk to me about alternative energy, I’m still waiting on Teh One to issue the first Nuke Plant permit. I won’t be holding my breath. Maybe if we didn’t rely so much on the ME, we could reduce some of our defense spending. I’m sure our military is tired of eating desert sand while listening to libs whine about oil for blood and then denying American companies from finding our own oil.
Finally, you’re tired of the GOP droning about tax cuts? I’m tired of the Dems refusing to cut spending. You think no conservative takes a hit talking up tax cuts? No liberal takes a hit talking up entitlements either. It works both ways Larry and we’ve tried the entitlement way for 50 years. IT HAS NOT WORKED! Liberals complain about the amount of money spent on war; well the amount of money spent on the “war on poverty” is a pretty good chunk of change. The war is lost.
Isn’t it Indy Mac that is discussed in the YouTube video about banks making money off foreclosures, selling properties quickly to anyone and getting money from the government to make up for any losses, actually making a profit?
And Schumer is the one who read the letter about Indy Mac…
More and more I say, Follow the money. Who is getting paid to do what to whom…within our government and without.
Pray.
@anticsrocks, thank you for your compliment, but you are giving me far too much credit for “all things financial”. I’m like everyone else. I read, and when I get stumped on something, I search for additional resources to provide more clarity.
INRE the SPRs, I’d have to speculate like everyone else. During the 2008 oil spike (graph below to place emphasis on exactly how big a spike that was…), candidate Obama was screaming for using some ofo the SPR for budgetary purposes.
But that’s not it’s original function… it’s an emergency reserve that is usually called into action when we have disrupted oil supply. It wasn’t meant to control pricing. Here’s a 2008 study from the Congressional Research Service on the SPR.
Considering it’s purpose, and factoring in that we do not have a disruption in supply… merely the threat of it from ME unrest… I wouldn’t think this is the time to uncork that emergency supply just to control pricing.
But hey, what do I know. It may force prices downward, but then what happens if we do have a disruption following that? Aren’t we making ourselves quite vunerable for something more heinous down the road?
@Catherine, no maam I was not aware of the run on cotton. Certainly textiles, along with industrial manufacturing, steel, agriculture, are staples of any nation that seeks a modicum of self sustainability. George Washington was quite adamant that this nation not give away too many of our base needs to foreign powers. In a global market, we have trotted far away from that principle.
@John Cooper, no apology necessary for the repeated definition of a short selling. But not all short selling is illegal. It only becomes so when there is deliberate manipulation and rumors spread to affect the targeted stock.
I don’t know much about Dendreon. Certainly there are many recognizable names. But one thing keeps at the forefront of my mind. The two companies commanded more share trading than three or four of the US financial giants combined. Or, as one of the breadcrumbs left by both Freeman and “deep keyboard” notes:
Somehow I think this is beyond the bonding of a few billionaires, and really demands closer scrutiny of the larger and more powerful SWFs working in concert, effecting their trades with no transparency.
@Randy, thanks for the link. But I can’t say there’s much I agree with in Ms. Morgan’s piece. It’s unfortunate that many wish to play into the hands of Obama’s ego, and place him at the center of the global universe. Frankly, I doubt this has much to do with Obama’s rise to power. The US will be “the Great Satan”, despite this term’s figurehead. This isn’t based on the personality occupying the WH, but the structure of our Republic from it’s founding. According to radical jihad, any form of democracy is unIslamic.
Key flaws in Ms. Morgan’s “Obama did it” type post is that she starts her count for the tumbling “house of cards” in June of 2008. This totally ignores the theoretical “Phase 1” run up in oil prices that start over a year before, as well as the beginnings of the effects of financial woes with HSBC, New Century Financial and Bear Stearns problems in 2007. It’s also to be noted that JP Morgan’s take over of Bear Stearns predates her timeline start, in March 2008.
In fact, in Jan of 2008, the mixed economic factors were so evident that Citigroup was already reporting their over $9 bil in losses, and the Feds were busy cutting rates by the widest margin in 25 years to avoid credit crunches… not that it helped. Needless to say, this was all on the march well before June 2008.
Any attempt to tie this to an Obama campaign is but a political pipedream. If one reads the report in full, and considers the sheer cash and trading volume behind all the unusual market activity in question, they’d realize this is far beyond even the inflated, omnipotent Obama community organizing capabilities. Frankly, this guy ain’t that smart economically or in trade practices, and certainly doesn’t possess the financial resources to pull this off. Too bad some want to give him that credit.
He’s a bit player who’s managed to make an already bad situation, considerably worse. That is, in my opinion, more out of incompetence than it is nefarious intent. This nation, because of our structure, would not become a Venezuela overnight. Instead, as would be Obama’s intent, it would be a steady march first to Euro-socialism.
@Catherine, IndyMac hasn’t been around since it was auctioned off in March 2009, and purchased by One West Group out of Pasadena. It had been closed/seized by the FDIC back in summer of 2008.
But if you want to know who’s making the cash…
I don’t think that One West would be the only bank to enjoy a double dipping on foreclosure sales and writing off losses. With the new Congressional demand (by some) that banks reduce the principles because most homes are toxic… even if current… there’s apt to be quite a bit of back door payoffs to subsidize the loss coming our way yet.
Psst..The War on Poverty continues. Ever April 15th We lose the battle. Every time You buy Automobile Fuel, You lose a battle. Every time You pay any Utility Bill, You lose a Battle. Every time You get taxed for anything, the War on Poverty is personal. You are at War with a Government that seeks to Impoverish You.
@Old Trooper 2:
If they were forced to admit to the truth, they would have to call it “The War for Impoverishment”.
Mata, this is where I disagree with Freeman since at the time the amount of oil available to be pumped was constrained and in 2007 we were fighting with the Democrats over their no drilling ban. Looking over my notes, back in July 2007 I addressed their stubborn belief that ethanol would substitute for not allowing drilling. This was on top of refusing to allow new refinery construction which they aided and abetted the econuts for 30 years. http://www.americanthinker.com/2007/07/magical_thinking_on_energy_pol.html
The oil market at that time was very in-elastic since this was BEFORE fraking came into full swing. Fraking by the oil and gas industry was the response to the Democrats refusal to meaningfully lift the drilling bans in 2007 thereby allowing them to rejuvenate OLD fields where they did not need NEW drilling permits. As a person who follows the energy industry as a hobby generally a well in production starts to loose its volume with in a year or two of coming on line. Hence the need to continually punch new wells. Fraking allowed the reuse of tired wells by increasing their output to economically sustainable levels.
dscott, I understand where you would disagree with Freeman. Personally, I’ll come down on his side of the debate because I think you place too much emphasis on the US continued refusal to tap into our domestic reserves, and it’s impact on the large scale of pricing. The below graph, again from Oil Prices website, has a graph of world events that have effected oil prices since 1947. Again, it comes down to disruption of existing supply and the demand at that time, and not additional oil production by the US being a thumbs up or thumbs down.
For reference, the last global event was the PDVSA (Venezuelan strike) in 2002. The best that can be argued for post that time is uncooperate ME nations, perhaps not being happy about OIF.
So I would place the US debate over domestic drilling – which has been the same pretty much for decades – as a tiny blip on a very large radar screen.
In effect, what you are arguing, is that a long running Congressional debate over to drill or not was responsible for a tripling of oil per barrel in a year and a half’s time. That, historically, is quite a stretch.
@ johngalt, Roger that. On the same vein, if the Truth were known, there is NO shortage of Revenue.
There are too many Folks that get their hands in the cookie jar before the Nation’s Bill are paid. Running on a CR tells me that no one is accountable for counting the cookies but someone is going to the jar too often.
In effect, what you are arguing, is that a long running Congressional debate over to drill or not was responsible for a tripling of oil per barrel in a year and a half�s time. That, historically, is quite a stretch.
Yup, that’s my position and I’m sticking with it. 😉
My reasoning being that there comes a “tipping point” where incompetent government policies if carried on long enough brings on the crisis ala Fred and Fan induced Mortgage Meltdown, or in this case global oil supplies. Remember that in economics the supply- demand equation is NOT always proportional. When a contraint in supply occurs the response of price becomes exponential NOT proportional. That is why I disagree with Freeman. Exponential responses are the driving forces of either new technology, a massive increase in investment to increase supply or a substantial drop in demand – Recession. The trap Freeman has fallen into is what I call the Extrapolation Fallacy, everything being equal, cause “A” will predictably result in effect “B”. The bugaboo is nothing is equal when it comes to human psychology in a perceived shortage.
Example, in 2006 when I was living in Florida, when the first jump in gasoline prices occured, people would line up at the pumps to top off their tanks when they weren’t even half empty in order 1) beat the continuing price increases and 2) respond to their fear of spot shortages that occured because too many people were topping off their tanks and thus everyone and their brother topped off their tanks creating more spot shortages. And just to underline the panic, one moron actually brought a 42 gallon trash can and filled with it gasoline in the back of his pickup truck. (why the gas attendent didn’t stop him I have no idea). One lady topped off her tank with 2 gallons of gas! Insane… This is just a recent experience of how people respond initially to a price hike that causes a shortage which creates a price spike, in a self reinforcing manner. Having experienced the 73 oil embargos people behaved pretty much the same way back then with a run on the gas stations.
Now if you would agrue that Democrats planned the whole thing, I’ll buy into it. But I personally don’t think Democrats are that smart, just as Obama isn’t really that smart either. IMO – Hanlon’s Razor… Stupidity is an adequate explanation.
LOL! Well, dscott, I admire your fortitude, and certainly agree to disagree. But then, I might ask you to square potential reserve supply that the US drilling would add to the world’s reserve, and ask you why the discovery of Brazil’s 40 billion barrels in Sugar Loaf in 2007, and a second equally sized field in 2010 didn’t have any effect on the oil prices. Just like any lesser amount some US drilling permits would add, it was a future reserve.. not to mention guaranteed to be exploited.
Yet Sugar Loaf had no effect on speculative prices, despite the plans for production. Sorta puts a crimp in your theory, don’t you think? When you speak of oil reserves, you can’t just look at what’s going on in the US.
BTW, there was something I wanted to add to your comment:
Note that in the anonymous report mentioned in the post above, Fannie and Freddie were also a bear run target by these two firms, according to “deep keyboard”.
The crude oil reserves IMO have little to do with spot prices which are dependent on 1) current demand, 2) current supply, 3) fear of disruption and 4) the amount of money moving into or out of oil futures contracts. IMHO – if there was a boogyman in 2007/8 and now, it would be George Soros using his billions to enrich himself by attempting to corner the foreign markets where transparency of trades is at a minimum. This is not to say that there wasn’t some collusion by person(s) who had malicious intent be it political or greed. With Soros, it’s both. It was Soros who almost broke the Bank of England with a run on the Pound Sterling. The exact same arbitrage techniques are involved in currency trading and oil trading. Yes, you can create the impression of a short term shortage using these techniques which becomes a self fulfilling prophesy in higher prices. But having said that, pointing the finger of blame solely on the Speculators would be wrong since they are a necessary part of the commodities business providing liquidity. Democrats attempted to solely blame Speculators for the entire run up in prices as an obfuscation of their incompetent policies that led to the price spike.
Example: SouthWest Airlines used oil futures contracts sold by speculators during that time period and successfully dodged the price spikes which hurt the other airlines to the point of checked baggage charges (no charges to this day on SouthWest) and other annoying fees.
btw – the response of US distillate (diesel) supply during this period dropped dramatically at the end of 2007: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WDIUPUS2&f=W This usage reflects the transportation industry as a whole (trains, planes, trucks) moving product to factories, stores, etc. Note how that corresponds to your 60 month crude oil price chart which has a finer time resolution. As the price runs up the demand cratered. Once the expectation of demand disappeared, all those suckers (speculators) who bought oil futures contracts for 2008 deliveries got burned big time. They also fell for the Extrapolation Fallacy thinking that demand could not, would not drop so much, i.e. proportionally versus exponentially.
Maybe, dscott, instead of reading my post, you should just click on Freeman’s link and read what he has to say about his Phase 1 theory. I assure you, what I covered in 5000 words here for Phases One and Two wasn’t even scanning the surface of all the data there. Your casual reference to blaming speculators indicates to me that you haven’t read the report. My post is to “summarize” this as much as possible, however there is no substitute for reading the original document. Granted, it’s 111 pages, but his Phase One is covered in the first 24 pages of the document.
However I will say, if your belief that spot prices are dependent on the four items you mentioned, again Freeman is correct in his assumption that it did not warrant a tripling of oil prices in that short of a time. The current demand/supply wasn’t out of hand… especially with the new fields discovered. There was no fear of disruption as Iraq was well on it’s way since 2003, and Afghanistan isn’t an oil nation. The amount of money moving in and out of futures is where you are missing exactly what Freeman is saying.
Also, you keep confusing refined products with the price per barrel, which is the subject at hand when it comes to the oil prices. The only relationship they have to each other is that the US companies do not produce enough domestic supply to cover our refined needs, so they must purchase on the open market for the additional needed. And they take a bath at the pump on that. Where oil giants make their cash is in E&P, apparently for other nations and not the US since we don’t allow any E&P. That makes up for the loss for refinery supply.
Here’s an interesting snipit via instapundit: http://pajamasmedia.com/tatler/2011/03/05/gas-way-past-5-a-gallon-in-florida/ $5 /gallon gas in Orlando.
Is this collusion, fear, greed or all of them? And who would pay the price they are demanding? The wonders of Capitalism, charge what the market will bear. There is always one fool who will pay and there is always one fool who has the audacity to charge it. It takes two to tango as they say.
@ dscott,
I’m not a fortune teller nor can I read the future, but I can occasionally smell bulls*@t when it oozes out of some manipulators.
You might recall that when Oil was on its way to kissing $150.00 per barrel, an early morning announcement was made with some certainty by Goldman Sachs that Oil Was Heading For $200.00. Given its past predictions, that had been totally self serving and purposeful AND seemingly accurate, they were going to catch plenty of fish.
After counselling a few friends I knew were in that play with urgent implorations of “get out now, it’s going to crash”, I sat back and witnessed an immediate annihilation of billions of dollars as the price of oil came right off the high.
When the heavy handed manipulators are running a side game, you have to read diligently between the lines as they make their moves. As I’ve commented before, they are a ruthless bunch.
The prices were not dictated by supply or demand as they moved through their gyrations.
@mata
I am still digesting overall this thesis you have laid out. I would say however, it is too easy to just make this statement against Obama or even John McCain/Sarah Palin (had they been elected) after this crisis. The problem about proving a negative (which Obama has to do) is that no one really knows how much worse things could have got if not for the influence of some policy or perceived policy as well. Everything on either side of the argument would be total conjecture. The bottom line is our economy was severely damaged in 2008 and we are still living through the aftermath.
I can remember having my comments deleted and being chastised here complaining about the massive debt when the economy was on a firm footing (or the illusionary one). We were paying for the wars and you and I debated if the cost of Iraq was in the hundreds of Billions of dollars, or in the Trillions. My concern then as it is now is we don’t pay for things as we go. WHY DID WE NOT PASS A WAR TAX?
Cut budgets to the bone, raise taxes… balance the budget. I was cut down every time. Now those chickens are home to roost. We have an enormous budget deficit, we are cutting taxes to grow the deficit and we are looking at cutting very little bullshit from the budget. Recently I saw a pie chart (here of FA) which showed the income of the government and its expenditures. It actually showed that social security was bringing in more in taxes then it was paying out in benefits. Kinda wild when all we hear about is “GOTTA FIX SS” out of so many politicians. Yes, SS needs to be fixed, but maybe if everyone was truly honest about the deficit we could fix it. Income for the government is not growing because of the recession. Government spending for some programs went up to meet the needs of citizens during the crisis. Too bad we did not start this emergency with a balanced budget and no national debt, but we did start this crisis with a HUGE debt and a skyrocketing budget imbalance due to unfunded programs, wars and of course the fiscal problems… and YES additional “stimulus program and tax cuts from Obama”.
Now fast forward two years and jobs were the #1 priority of the day, everyone was running on jobs jobs jobs. How can one run on jobs and then not do anything to produce them? It is just trading one theory “Dems” with another theory “Reps” and still no movement. I have no confidence in the Democrats or the Republicans to solve anything.
Finally, .. All the new highway construction near me in Texas are toll ways. It is a nice legacy we leave the next generation. We leave them with a huge debt, but we even build infrastructure projects in a way that are never paid for (and for sure totally enriching these thieving wall street bankers). We are a gift that just keeps giving.
blast, quite disappointing you wandered in to play ping pong at a tennis match. None of this Freeman theory has to do with giving the precarious financial situation the US put themselves into a pass. Instead, it presented an open door for exploitation by outside forces.
This is not the the place to rehash yet another version of the Iraq war debate. Nor was the Iraq war instrumental to the economic decline since the *entire* defense budget is slightly more than a quarter of all US spending. Don’t care about your Texas highways. Not germane to the subject.
Oh yes.. I never “deleted” you, nor do I suspect you were deleted because you were “complaining about the massive debt when the economy was on firm footing”. Hyperbole and pipedreams. I’m sure that Curt could attest to that.
Alright, I read the phase one section and this it what the issue of OPEC participating in such an attack on the US and the West:
A counterpoint to this thesis would vigorously argue that the alleged OPEC destabilization over the US economy is illogical, as many countries in the Gulf are experiencing a recession as a result of Wall Street’s crunch. In other words,they wouldn’t do it to themselves. Yet the ideological forces manning the oil weapon aren’t particularly concerned about economicstability. Their drivingfactor is Jihadism. We’ve heard their ideologues stating that even if they were toincur losses among their own societies in order to defeat the infidel powers, thenlet it be. 27
And this is where the argument Freeman is advancing has a problem. OPEC, i.e. non Shiite members are not NUTS nor are they so committed to Jihad that they would fall upon their own swords. Iran yes, the Sunnis NO.
He interestingly agrees with many of my points I already made and even mentions Soros. But the real issue is NOT if they are able to do it, which I agree they could do it via the SWFs, the real issue is WHY would a Sunni Government screw themselves over, especially Saudi Arabia. The Wahabist thing is NOT a policy that the Saudis are going to pursue to their own deteriment given they learned their lesson with the funding of the Madras’s since it backfired on them causing them even more problems maintaining control of their country. Their past funding of the Madras has burned them, they have no reason to burn themselves again. Also during that 2007 time frame Saudi itself had reached their limits in pumping oil.
If this SWF thing was done it would have been solely Iran.
Sorry, dscott… are you saying that AQ, OBL and Zawahiri, the Taliban, because they are Sunni and not Shia, are “not NUTS”?? This then will beg the question, are you unaware that Sunni and Shia have, indeed, collaborated in past events mounted against a common enemy?
I will also remind you that the person you are quoting is not Freeman, but Walid Phares and his “but maybe” to his thesis that radical jihad is a 3rd party to the Phase One drive up of oil.
From Freeman, and pertinent to your claim this is a result of American drilling policies:
No sir… as I point out in Freeman’s quotes (not your selected passing Phares quotes)… he does not agree with you because, if you read the last pages of the report, he’d tell you they are based on assumptions that nothing about the oil spike was in the normal realm of trading activity.
As for Soros… his (Freeman) comments were:
What you fail to recognize is that Soros recognized the illegal bear raids, and pointed out their existence. As I pointed out in my original post above, Soros was an outspoken voice, warning about the bear runs. Which is why I said he, being an astute businessman, may not have been a party, but certainly piggybacked on the opportunity. But not without giving a shout out.
I suggest you read again, and read more.
@dscott: You need to reappraise your views on Shia and Sunni. Your comments are way out there on this one!
@MataHarley:
Just a guess, but could it be because :
1) It would take time to tap
2) China keeps setting new comsumption records
3) More nations have seen an increase in oil usage
Speculation on my part…
Thus why it’s called “futures”, HR. It would “take time to tap” even the US reserves that dscott believes is the reason for the tripling of oil prices in 18 months. However Brazil’s drilling and production would go at the speed of light compared to the US, because they don’t have the red tape.
Neither does China have the red tape. They are not only doing their own drilling (off our back yard, I might add), but also have the Russian resources.
No one is discounting the increase in growing industrial nations needing more oil. However, without a disruption on the horizon, and considering the discoveries at the time, I agree with Freeman that the conditions were not such to warrant a tripling of the prices in that period.
You have looked at the graphs I have provided above. Surely you can’t be placing the US, once more diddling about on drilling domestically, in the same category as the other events that drove up prices… wars, embargos, etc. And look at the price hike compared to those other events…. all because Congress diddled?
Don’t think so….
Our own government and the banksters @ the fed reserve pulled off this scam. We are paying for it because we are to weak to roll into D.C and Wall st. and arrest these crooks and crony capitalist fakers. FOLLOW THE MONEY.
http://www.watchglennbeck.com/video/2011/march/glenn-beck-show-march-2-2011-financial-terrorism/
FYI… added Kevin Freeman March 2nd interview on CNBC’s Closing Bell, March 2nd to the bottom of the original post. H/T to Curt!
I much appreciate the time, effort and brilliance we are often treated to and your keeping us informed in matters we would never have a clue of…also the stimulation, good thing I read this in the a.m.. Just wish you could put much of your effort into book form and profit from what you freely give. Thank you Mata, outstanding as usual!
@MataHarley:
Many things worry me about our current situation. It was a good dissection Mata.
The thing that really did push us over the edge was the oil pricing. Many things have costs that either derive directly from oil (gas, plastics, etc.), or have a component associated with oil due to transport, or use of oil based products within their production and go-to-market process.
When oil pushed higher, companies and individuals had to spend a higher fraction of their income and savings on these products, or reduce consumption to keep pricing down.
In the case of individuals, they began to cut discretionary spending. Enough people were in the “barely solvent” class, highly leveraged on mortgages, and could not withstand a serious financial shock.
So in that first wave, people who could stand the change cut back their spending. People who were too highly leveraged, fell off the cliff. Forclosures accelerated beyond the baseline.
But they didn’t start to really accelerate until the recession hit in full force. Then consumers decrease their spending dramatically. Companies that depend upon consumers spending, had to cut their cost basis to whether the storm. So people were laid off.
This is normally a perturbation. A so called first order effect. Think way back to your math days, if you ever took calculus, you learned of this thing called a Taylor series. A first order effect is something small compared to the baseline (zero-th order), but measurable. A perturbation is a change in that first order from where you expect it to be, to where it is.
Most corrections are perturbations. They aren’t real zero-th order effects.
But add up enough of them, and, well, you get a zero-th order effect.
A vicious cycle was launched. Consumer centric companies had to slash costs or die. So they laid people off. And people whom are laid off, seeing a bad job market are going to reign in their spending. Some of them may be able to whether some time off before they lose their houses. Some may not. Which then fed the foreclosure beast. Which reduced consumer spending more as people hunkered down for the hurricane blowing thru the economy.
This perturbation was growing rapidly, and becoming less of a perturbation, and now becoming a zeroth order effect. Wealth was being destroyed with abandon. The government intervened (incorrectly) and “saved” two of the three US large auto manufacturers, in the process, effectively economically devastating south east Michigan, with all these nice companies who will no longer collect the bills they are owed. What choice did they have? Bankruptcy went into high gear here. Housing prices plummeted. Unofficial unemployment stats were closer to 25%. We had people knocking on our door, who lived in our neighborhood, begging for food.
While I find it tremendously distasteful, I understand that we had to intervene temporarily, into the economy to staunch the mad dash towards the cliff. This was largely done at the tail end of GWBs term as president, with momentum carrying it into BHO’s term. TARP this wasn’t, Spendulous this wasn’t. This was the trillion dollar liquidity injections done by the Fed. Without that, as distasteful as it was, we would be in far far worse condition. What happened after that was idiotic, but this one was needed.
Yeah, there were significant problems with mortgages. Yeah, people got them who shouldn’t have. Yeah, there was a massive housing bubble in the US that took advantage of all that cheap and easy money. And yeah, that bubble imploded.
But it would have been a far softer landing had someone not blown up the rest of the pillars of the economy.
[this is metaphorical, so don’t get all crazy over the next bit]
If you want to bring a dam down, you don’t bring enough explosive to turn the dam to rubble. You bring enough to sever support for critical pillars. You then get out of the way, and let gravity do the heavy lifting for you.
Gravity, in this case, was doing the heavy lifting by means of the oil price shock. Start leaning harder and harder, and eventually, you’ll start pushing enough people/companies into failure, that this failure starts a positive feedback.
This is, exactly, what we saw.
Now here’s what troubles me.
Look closely at that oil price plot.
Whats happening to the price of oil? Again?
SPR won’t help here. Only thing that will is a combination of “drill baby drill” with new refineries, with new nuke plants, with conservation and better electrical and other efficiencies. Renewable resources which can cost effectively employed without subsidies … that is … actual, not ideological, solutions, may apply. Resources which, by consuming them, raise other prices (e.g. ethanol), and require huge subsidies, should be stopped/killed outright
BREAKING: It’s being reported that Obama is “considering” opening the SPR. http://www.reuters.com/article/2011/03/06/usa-energy-reserves-idUSN0626640920110306
@John Cooper:
Only this Administration, led by an individual who doesn’t seem to grasp much of realities outside the wonderfulness of his own image, would think of using strategic reserves.
Strategic reserves are not a stop gap measure against price increases. They are a last resort in the event of major calamities that would impede oil flow – disasters that would stop the Nation from functioning effectively.
Effective leadership would quell the fears, even fears related to foreign revolutions. This President has no such capacity. He has no clue what to say or what to do. Mr. “Present” watches his country suffer from the golf course. Good plan. Good for him.
Surely all independents are rethinking their votes of 2 years ago.
@James Raider
Several years ago, as fuel prices were increasing at the pump, liberals everywhere were crying out for Bush to open up the SPR for domestic use, simply as a way to drop the cost of a gallon of fuel. That kind of myopic thinking concerning economics is what has put us in the mess we are in.
The SPR is not for use by anyone but the Government but opening it up for General Use is foolish beyond comprehension. Libya is still shipping Crude at this time so the point is moot. The Saudis promised to increase production so lets knock off on discussion on the SPR for now, Please.
A question.
The economic collapse at the end of ’08 was not restricted to the USA, though it may have started here.
Is it possible this was not directed at us specifically but merely as a particularly effective tool?
The piece mentions that though Soros warned of the collapse ahead of time that he still profited by it to the tune of 1.1 Billion during the turmoil.
Could he or other perpetrators have done this with the intent on taking advantage of other companies or countries while weakened similar to what he did in crushing the British Pound in 1992, Thailand and Maylasia in 1997?
I couldn’t find a reference to it but thought there was something similar in Eastern Europe at some point.
This is not to point a finger at Soros but to ask whether the profit could have come in the aftermath rather than as a direct result of an attack?
If one decides to extend their knowledge on the issues our government is not really telling us,- here is the top expert from the previous generation of researchers, many times a witness in USA Congress and Senate: Joseph D Douglass Jr.
https://docs.google.com/document/d/18X2O0sFoX86KTjqor3a3ZDToA9NBqaGcrOHRNrB135c/edit?hl=uk
To compare:
The world’s financial assets (-equities, -private and government debt and -deposits) rose to $196 trillion in 2007, slightly below the pace of 2006 but still faster than the historical trend-likely marking the recent peak for equity and private debt markets.
World financial assets fell by $16 trillion to $178 trillion in 2008, marking the largest setback on record and a break in the three-decade-long expansion of global capital markets.
The world GDP 60 tril
at the the link above
1999 :
…Three years ago the gross size of international organized crime was estimated by World Bank specialists to be in the neighborhood of $1.2 trillion per year, of which at least $500 billion was profit. This year, a study sponsored by the UN estimated the gross size at $1.6 trillion.
Both of these figures are believed to be low – politically conservative estimates. More realistic estimates run from $2 trillion to $3 trillion. Over 50 percent of that is profit, which means $1 trillion to $1.5 trillion profit each year that is transferred into the coffers of international organized crime. All of this is, of course “laundered” and the bank laundering fee runs from 15 percent to 20 percent, which helps explain their obvious witting involvement. Since the drug trade exploded in the late 1960s in the United States, it is not unreasonable to estimate the total accumulated proceeds in the $30 trillion to $50 trillion range, mind boggling though it may be. Moreover, since this is the profit, it is easy to see how the amount spent on political and police corruption, propaganda, and other influence in important nations can easily have been many billions of dollars each year.
….a U.S. government interagency group conducted a study of international organized crime. Its conclusions were more frightening than the 9-11 attacks.
Just the money-laundering part of international organized crime revenues was estimated to be at least $900 billion, possibly exceeding $2 trillion, a year. Other studies place their gross annual revenues at $2+ trillion.
Drug trafficking, with annual revenues at $500+ billion, is one of the major components of organized crime.
Another component is the sale of illegal goods and arms, most of which go to terrorists and terrorist regimes.
A third component is organized crime’s role as an intermediary in helping terrorist groups and rogue nations acquire weapons of mass destruction.
The money dimension of organized crime, its use for buying favors, corruption and compromise, is probably of greatest concern. Only a few statements from the interagency report, “International Crime Threat Assessment” (December 2000), are needed to tell the story.
Consider:
“Most organized crime groups have successfully corrupted those persons charged with investigating and prosecuting them.”
“Criminal groups are most successful in corrupting high-level politicians and government officials in countries that are their home base of operations.”
“International criminals are attracted to global finance and trade. They are able to avoid scrutiny because of the importance to businesses and governments of facilitating commercial and financial transactions.”
“Criminal groups cultivate and rely on corrupt political elites, government officials, and law enforcement and security personnel to protect their operations and to provide cover.”
“They use illicit proceeds to: finance political campaigns, buy votes, protect their operations, influence legislation, gain insider access, and pre-empt prosecutions.”
One more. “One of the more significant developments since the end of the Cold War has been the growing involvement of insurgent, paramilitary, and extremist groups.”
In other words, terrorists.
One Big Happy Family
It is not just that terrorism feeds off drug trafficking. Rather, terrorism, drug trafficking and organized crime are one big happy family.
Originally, these were independent operations that emerged in different regions and grew in an evolutionary manner. This is not the nature of these operations today.
This is because in the latter half of the last century, various states (mainly Communist states that were inherently criminal and terrorist in nature) recognized the potential of these operations as revolutionary weapons.
Thus they proceeded to build narcotics trafficking, organized crime and terrorism into major state intelligence operations.
The three operations trafficking, terrorism and crime are different but complementary. They work together while striving to appear independent of each other.
They do not compete with each other, but cooperate synergistically. The three have become so intertwined that war on any one of the three means war on all.
In reality, this is what needs to be done to wage war on all three. They are all unacceptable, they are all covert state intelligence attack operations, each can have dire consequences, and all need to be eradicated.
The most damaging are drug trafficking and organized crime, not terrorism.
Terrorism is the least damaging of the three because its main product is physical damage, in contrast to organized crime and drugs, which attack the moral basis of society and corrupt its leadership and institutions.
However, because of the built-in publicity that goes along with terrorism, it is terrorism that gets the lion’s share of the attention. Witness the U.S. government’s response to the 9-11 attacks.
Actually, far greater damage is done each year by organized crime and drug trafficking in terms of deaths, casualties, corruption and economic costs.
I can’t remember how I got here but I’m glad I did. I’m still going over everything you have written but I must say that so far you’ve done an excellent job. This was no easy task assembling what you have so far and I thank you for that.
Any idea when your analysis of Phase 3 will be out? Any thoughts on PIMCO dumping all government debt?
Thank you, catfish. Hoping to have Phase Three out by the weekend. Since Phases One and Two are, theoretically, accomplished and/or complete, Phase Three is supposed to be “in progress”… based on The Treasury getting overloaded with debt (check), elimination of the US dollar as the world’s currency (already suggested, but the dollar looks good because the other currencies are also in the tank), and thereby destroying the US economy. Here is where the theory get’s dicey, because the haps around the world change so much on a daily basis. Take, for example, today’s stock market plummet…. China’s surprise trade deficit, Spain’s credit rating decline, US employment figures, Saudi Arabia unrest. And yet, despite the later, oil went down slightly. The gold sell off, however, was big. Caterpillar and Exxon were among the big losers.
Lots to consider when it comes to speculating effect on the US dollar, yes? But yes, I did archive PIMCO’s dumping of US bonds… and thought that was rather prescient when others are starting to run toward US treasuries, hoping for some security. Either way, I think the bull run has pretty much run it’s course. History shows it’s usually about a two year cycle, and ironically, they just celebrated their 2 year anniversay.
PIMCO has been encouraging dumping of US treasury bonds for a while.
Today they put out this graphic:
http://static2.businessinsider.com/image/4d6e7e054bd7c80e790e0000/chart-of-the-day-buying-treasuries-pimco-march-2011.jpg
Who will buy US Treasury Bonds when the Fed quits buying them?
http://www.pimco.com/Pages/Two-Bits-Four-Bits-Six-Bits-a-Dollar.aspx
It is a good question.
Another bubble?
We saw Obama create a car bubble with his C4C program, a housing bubble with his mortgage rewrite program and so on.
This is a great thread –chock full of excellence!
Mr. Soros often discusses his activities, in an elliptical way if the circumstance demands. He’s got his wizard’s reputation to uphold, because that reputation carefully employed can be entered into trading as a new fundamental –as he himself has said. And he will speak on matters from which he needs the shield of being able to say “But I warned about that very thing” or “I got hurt on that very market move”. He understands that at a certain point in time, warning about bear raids can have no effect on stopping a new round –and that his warning itself will help start some fear-selling. For some reason, the company that drove over the cliff and froze the credit markets, LEH, was attracting a lot of Soros buying in the month or two before its collapse. Heavy buying, he accumulated a significant chunk of the company in August 2008 –take a search, you’ll see. Months after the bankruptcy, Soros published a ”silly me” article (iirc, Financial Times) saying more or less, to the community of crash-stunned financial industry professionals, “Me, too, you guys, I got hurt too!” Pardon me, but, ‘Ha!’.
Anyhoo, that other company besides Dendrion may be Penson Financial. The Deep Capture website has a good article on the Penson connection to the naked shorting –circumstantial, of course –but that’s what makes most cases. A connection to the Genovese crime family (for which Nancy Pelosi’s father is well-known to’ve controlled the Port of Baltimore for Lucky Luciano’s contraband network) is not circumstantial, however.
Take a look
If I were to hazard a guess as to who is trading massively: GETCO.
They run their own book and it’s staggering…
—–
Great work Mata.
Thank you buddy and blert for the late visits. Actually, I’ve been working off and on on the Phase II part of the theory. However it seemed useless to post it amid a world, fixated on Japan, nuke power plants, and Libya. Indeed, all of these events actually affect the Phase 3 theory, which resolves around high US debt, devaluation of the dollar, and ultimate replacement of the dollar as the world reserve currency.
In some ways, these are events that are hard for a financial terrorist entity to control since there are mitigating factors that can influence that effect. i.e. Japan’s expensive and tragic tsunami damage. That’s not an event that could be planned, but if Japan decided to liquidate their considerable US assets on the market to finance their way into recovery, it could put a world of hurt on the US dollar and economy. Dumping US Treasury notes and assets is not something we could survive easily.