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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

U.S. Financial System, The Audacity of CHANGE (Part 1)

Stock-Markets / Market Manipulation Jun 25, 2009 - 02:40 AM GMT

By: Mike_Stathis

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleEver since (finally) acknowledging the problems within the real estate and banking industries, several historic actions have been taken by Washington, Wall Street, the Federal Reserve and the U.S. Treasury – all in desperation.


We’ve witnessed ridiculous bailouts and stimulus packages totaling over $14 trillion, restricted naked short-selling, revised mark-to-market accounting, quasi-relief to homeowners facing foreclosure, a platoon of industry czar appointments, and so on.

Finally, President Obama has come up with an eye-popping $3.6 trillion budget for 2009. Meanwhile, he has only managed to cut a few million dollars from government operations as a way to portray himself as the agent of budgetary “change.” 

If Washington could somehow locate the $3.3 trillion reported missing by the Department of Defense since 1999, the economy might not be in such bad shape. But there’s really no need to find out where this money is because our politicians have no real accountability.

Similar to others before him, Obama will designate additional expenditures to the “special items” category, to be treated as off-balance accounting, so as to hide the real deficit.

But you cannot spend your way out of the implosion of the Ponzi scheme orchestrated by Wall Street and the Federal Reserve. And you certainly cannot easily escape the meltdown of a Ponzi scheme economy that’s become America’s mainstay for over two decades.

Without a miracle, I estimate the federal debt will soar to $30 trillion by 2020. Alone this will threaten to dethrone the dollar as the universal currency. 

But this is one of the best-case scenarios. It’s likely that the dollar will be threatened further as the universal currency over the next few years. Its status as the universal currency might only be preserved by war. 

The actions taken by Washington and Wall Street have fallen short of providing any real solutions. Rather, they’ve served as direct evidence that those in Washington have absolutely no idea what they are doing, while providing the banking cartel with a blank check.

The irresponsible allocation of taxpayer funds for this band-aid approach will most certainly create an unprecedented problem down the road. Massive inflation is one of the less insidious consequences. I just hope I am not around when things really heat up.

Rather than real solutions, these irresponsible actions represent the continued abuse of power by Washington, the Federal Reserve and Wall Street executives.

How can the same individuals who failed to detect the early stages of this financial apocalypse presume they’re in any position to correct it? They’re clearly causing more harm than good.

The fact is that Washington and the Federal Reserve are committed to bailing out Wall Street at the expense of taxpayers. They’re complete bums. Many of them belong in prison. How can Americans sit back and allow the dismantling of their nation day after day? 

Washington, Wall Street and the Federal Reserve have a very influential friend they’ve been using to help carry out this heist; the media. Whether it’s the neo-con talking heads who sound off for the benefit of your sanity, or the tax day tea parties, America’s very dangerous media machine is serving the interests of Wall Street, the Federal Reserve and Washington by pacifying your rage and disgust.

Meanwhile, the opposing side of the media distracts, lies, and denies the problems, serving to keep the masses dummed down. Together, both sides of the media are working together to help carry out the mission set forth by those in charge.

Let me be crystal clear. The economic devastation will be worse than what we see today. And it will be worse than need be due to the irresponsible decisions made by Washington and the Federal Reserve.

There’s absolutely no way to avoid payback. Only a large-scale war might provide some relief. But there would be a different price to pay. I hate to think that any nation would go to war for economic reasons. But this is planet earth. 

I regret to say, the Ponzi scheme orchestrated by U.S. banking executives and the response to it by Washington will most likely lead to war by or before 2020. I can only hope it will not be confined to U.S. borders.

War or no war, the socioeconomic effects from this economic disaster will persist for decades; perhaps indefinitely. Many other nations will unwillingly follow Obama’s inflationary policies leading to a gargantuous global bubble. When the cumulative effects begin to materialize, there could be mass riots, if not war across the globe.

Already the UK and Eastern Europe are essentially bankrupt. They will require financial assistance from U.S. taxpayers disguised as aid by the IMF and World Bank. Still, the Fed’s printing presses will not prevent mass crime waves, riots, and suicides.

Even the United States is likely to witness unprecedented crime waves, including kidnappings for ransom and mass murdering sprees.

But there will also be false arrests with allegations of “domestic terrorism” in attempt to silence those who choose to protest using free speech, against the tyranny of America’s Fascist dictatorship.

Is there no way out of this mess without further damage? No, there’s not. That’s the way things work. You can’t cheat the system. At best you can only buy some time. But buying time will cause a larger strain so that when the ball drops, it’s going to hit much harder.

At best, America needs to take its licks while repositioning itself for a real recovery. Any attempts to avert further pain will only hinder these efforts.

My solution to this economic crisis is the same as I first proposed in 2006 prior to this mess. It’s really quite simple and involves addressing four main issues: restoring confidence, policy change, investment and prevention.

Those of you who read the original (2006) edition of “America’s Financial Apocalypse” might recall that I actually predicted there would be another New Deal. Of course, I also predicted Fannie and Freddie would collapse, and thereafter bailed out by taxpayers. I made hundreds of other predictions, many which have already surfaced.

Yet, the media continues its campaign to shut me out. You need to start asking yourself why America’s media machine continues to black-ball the leading expert in this crisis. Once you look at your 401(k), you’ll understand part of the reason; to preserve the agendas of Wall Street. The other reason has to do with the preservation of Washington’s agendas.  

The media has fooled most of you to think that the clowns they hype up are experts, when that couldn’t be further from the truth. Documented track records are the best way to decipher who the experts are and who the idiots are. My track record has been published – primarily in my books, and to a smaller extent online.

I challenge any of the media’s so-called experts to claim they can match my track record. They won’t say a word because they know the reality of the situation.

You know who they are. They’re part of the “media club;” the same guys you see on TV everyday; the same guys interviewed in the financial press. There’s a very good reason why they’ve been inducted into this club. You won’t make any money if you listen to them. http://www.avaresearch.com/article_details-234.html

With the help of the financial media, they’ve fooled you. Most of these “experts” have been on TV or in print every other day, so they’ve had plenty of opportunities to revise their previous forecasts; but they rarely did so in a timely manner, if at all.

As a result, they were largely wrong when it came down to the fine details – the details that determine whether you made or lost money. Most of my forecasts have remained unchanged since three years ago and they’ve proven to be nearly 100% accurate. 

Moving along…

Throughout my book, I identified numerous elements needed if America was to recover from this depressive period. Below I’ve highlighted a few of these changes and have updated them to reflect recent events.

(1) Restoring Confidence. The best bang for the buck here is to hold those responsible for this mess accountable. Who might they be? Alan Greenspan, Robert Rubin, Larry Summers, Franklin Raines, hundreds of banking and mortgage executives and mortgage brokers. The list is too long to mention here.

In addition, those involved in the theft of taxpayer dollars, as well as those acting with complete disregard for upholding the law (as set forth by the United State Constitution) should also be held accountable – President Bush, Vice President Cheney, Henry Paulson, Christopher Cox and several other politicians.

Some might include President Obama in this group. And I understand why this might be. But if you say this publicly, you could be charged as a “domestic terrorist” due to the draconian laws established by President Bush, which effectively eliminate our freedom of speech. What has happened to America? 

Moving along…

What do I mean by being held accountable? It certainly has nothing to do with Obama’s definition. These individuals should be indicted on criminal charges.

What would be considered adequate accountability?

Sending Madoff, Stanford and a few other minor players to prison does not even begin to address the accountability issue. Remember that Madoff and Stanford were not involved in this economic apocalypse. In fact, their Ponzi schemes were actually victims of it.

The real criminals of the real estate and banking Ponzi scheme were hundreds if not thousands of mortgage and banking executives, elected and appointed officials.

Let’s face the facts. Bush, Cheney, Rubin, Summers, Paulson, Cox, Raines and others won’t face criminal charges. They’re puppets. As such, they’ve been granted blanket immunity by those who really run America.

And Greenspan won’t go to prison because he was the official spokesperson for the Federal Reserve; one of the principal organizations that truly runs this nation. How is it possible that a private bank has complete control of our currency, and now our entire financial system? It’s unbelievable.

Today, Greenspan collects a nice 7-figure salary for probably doing little more than attending lunches as a consultant for one of the main recipients for his sub-prime fiasco; Paulson & Company – the hedge fund that cleared some $13 billion due to Greenspan’s real estate bubble; such a small payout for Alan given how much money he made for Paulson’s fund.

This is how things work in America. As a politician, you’re rewarded by private industry at the end of your tenure, with sweet deals for your previous deeds. Other times, politicians receive equally lucrative lobbyist positions, or other high-paying jobs in private industry for the purpose of securing government contracts for their new employer.

This kind of activity has been going on for decades, but it has never reached such an epidemic level. It must stop now.

At minimum, Greenspan should be publicly denounced by the media and the current administration. As the facts reveal, he was the person most responsible for this mess. Thus, he should be forced to live out his remaining time faced with shame, and barred from working in any capacity for any firm connected with the financial industry. 

At minimum, I would like to see some fifty executives of large financial firms have all of their compensation received since 2002 (a very conservative year to list as the inception of the real estate Ponzi scheme) seized by the government due to fraud, indicted, and convicted with very long prison terms.

Meanwhile, thousands of mortgage brokers who approved no documentation and other fraudulent mortgages should be provided with a choice; either face a penalty of $50,000-$200,000 (for brokers) and $20,000,000 - $50,000,000 (for companies), or be subject to criminal charges.

Homeowners who lied about their income should not go unpunished either.

They lied.

They committed fraud.

Their lies have ultimately resulted in massive taxpayer bailouts. Therefore, one could argue they facilitated taxpayer fraud.

Who am I kidding? Let’s face it; this all sounds like a big dream; maybe a wild fantasy. What the heck; let’s just call it pure sarcasm.

Part 2 continues here http://www.avaresearch.com/article_details-271.html

I want to encourage all who seek the truth and valuable guidance to follow me to my new site www.avaresearch.com . You won't see me pitching gold or investments to you like others. You will continue to receive nothing but unbiased top-tier insight, education and commentaries.

2

By Mike Stathis
www.avaresearch.com

Copyright © 2009. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.

Restrictions Against Reproduction: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the copyright owner and the Publisher. These articles and commentaries cannot be reposted or used in any publications for which there is any revenue generated directly or indirectly. These articles cannot be used to enhance the viewer appeal of any website, including any ad revenue on the website, other than those sites for which specific written permission has been granted. Any such violations are unlawful and violators will be prosecuted in accordance with these laws.

Requests to the Publisher for permission or further information should be sent to info@apexva.com

Books Published
"America's Financial Apocalypse" (Condensed Version)  http://www.amazon.com/...

"Cashing in on the Real Estate Bubble"  http://www.amazon.com/...

"The Startup Company Bible for Entrepreneurs"   http://www.amazon.com...

Disclaimer: All investment commentaries and recommendations herein have been presented for educational purposes, are generic and not meant to serve as individual investment advice, and should not be taken as such. Readers should consult their registered financial representative to determine the suitability of all investment strategies discussed. Without a consideration of each investor's financial profile. The investment strategies herein do not apply to 401(k), IRA or any other tax-deferred retirement accounts due to the limitations of these investment vehicles.

Mike Stathis Archive

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Comments

lydiaphilpot
09 Jul 09, 05:29
Do you qualify for the Mortgage Modification Bailout?

This whole stimulus package is just part of the governments long term plan to take away the power of the people. Are we going to do something about it or be lazy and think someone else is going to do it for us? It is time for a revolution. We need to overthrow the government and take our power back. Before there is nothing we can do about it. you should check http://obamamortgage2009.blogspot.com/2009/03/obamas-ortgage-modification-do-you.html#comments


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