In 2008, the global financial system was hit by a tsunami of excess speculation and mass deception on the part of the world’s major financial companies — as Bob Livingston likes to say, the banksters.
They colluded in everything from building securities from junk and calling it “investment grade” to re-insuring bad debts to relieve the liability and further leverage their portfolios. They even doled out high-risk loans and then shorted them, knowing they would fail.
All this goes back to then-President Bill Clinton who, in 1999, signed the law that killed the Glass-Steagall Act of 1933. That was the prime force that allowed the financial meltdown that we’re currently in, to happen.
And the problem is, conditions are getting worse, not better.
Past As prologue
The story goes that after the stock market crashed in 1929, President Roosevelt noticed that Joe Kennedy somehow sold all his positions right before the crash.
It was an unusually large move and Kennedy not only saved his fortune but made a fortune by going short when the market plummeted. Many were suspicious of his timing.
Roosevelt invited Kennedy to the White House for a meeting. And there he told Kennedy that he had choice: either prepare for a massive investigation about his knowledge and efforts in the crash or, since he was the consummate market manipulator, write the securities laws so that something of that magnitude will never happen again.
Kennedy chose the latter and was the mind behind the Securities Act of 1933, which also established the SEC to enforce those laws. The thing is, when they were in place, they worked very well.
But when Glass-Steagall was abolished, it meant commercial banks could now own and operate securities firms. It was the mixing of the people who made their money off of fractions of pennies from each dollar with the people who made and lost fortunes daily. The conservative banker meets the high-flying player.
Now the investment side could access and leverage all the assets on the banking side (like mortgages, insurance policies, etc.) and use that capital to play. And it spelled the beginning of the end for the global financial system.
Bankers — and now central bankers — have learned that if they screw things up, taxpayers will foot the bill since they’re the ones that are desperate for the banking system. They’re the ones that owe the banks and need money to spend.
The fact is, the banksters get rich because they make money on volume and movement, not on sitting in blue chip stocks.
You could say that today, the banksters don’t need the banks, the banks need them.
Here we go again
Have a look at what’s happening right now in Europe.
European banks had plenty of their own bad loans on the books that they were kicking down the road. That is why Italy, the European Union’s (EU) third largest economy, is on the brink of economic collapse.
Are they fixing the problem?
As of right now, the European Central Bank (ECB) is repackaging the debt of Italy’s top banks. They are taking the non-performing loans (NPLs) and slicing and dicing them and then calling them “investment grade” products.
Then they’re selling these back to EU banks. All to prop up Italy in particular and the EU in general.
This is simply the central bank version of what the commercial banks did up until 2008. And the commercial banks are still complicit, since they’re more leveraged now than they were in the midst of the crisis. It’s also one reason European countries are aggressively exploring banning cash altogether (more on that coming soon).
These banksters are out of ideas, and a global banking system that is more vulnerable than it ever has been leaves us with a very good chance that things are going to get worse before they get better.
The one thing you want to do is decouple as much as you can from the banks. Watch your investments to make sure they are not somehow connected to these institutions. I would also avoid home equity lines of credit. Pay off your credit cards. Buy gold and silver non-collectible coins and bullion.
And when this storm comes, you won’t have to panic. Build for security now and you don’t have to worry about bad weather.
– GS Early
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