Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Big Boys and Their Synthetic Political and Financial Toys

Politics / Credit Crisis 2009 Oct 09, 2009 - 01:32 PM GMT

By: Marilyn_M_Barnewall

Politics

Best Financial Markets Analysis ArticleIt was a story about a man who plunged from an escalator at The Pier Shops at Caesars in Atlantic City that raised my curiosity. He was the second man to die on that same escalator.


As I read about his background, two words caught my eye: “Synthetic securitization.” Only a banker seeks out words like “synthetic securitization.” It is a process that provides an extremely complex structure so derivatives can be produced.
For readers who have written and asked me what "derivatives" are, synthetic securities – derivatives – are created by combining one group of securities so they mimic the properties of other securities. Sound confusing? That's why no one likes to explain what they are… including me.

Derivatives are synthetic. "Synthetic" means artificial. It means unreal, non-genuine. "Synthetic" means a thing made in imitation of something that is natural. Breast implants are a good example of “synthetic.”

In addition to being an imitation rather than an original, derivative investments also allow product developers to create securities that do not actually exist. What did I just say? You read it correctly. Derivatives are imitations of a real investment… they mimic real securities but do not have to be real, and the security being mimicked doesn't have to exist. If that doesn't confuse you, nothing will.

What can be turned into derivatives? Life insurance, credit card debt -- any kind of debt can be turned into a derivative… home mortgages were used in the last go around.

Carbon credit derivatives could combine energy from windmills with that of electric cars to mimic the properties of – what? Clean air? Orange juice? Anything can be created to mimic anything so let your imagination run wild! Obviously, Wall Street does. And, the windmills in which you are investing don't even need to be built to be mimicked, packaged, and sold as derivatives. Such a deal! That’s why they are sometimes called “weapons of mass destruction.”

A sane person might ask why anyone would want to invest money in a financial product that is not real or genuine… something artificial, an investment that imitates something else. It's a very good question. It's the best question you could ask, in fact. The answer should be quite clear: No one.

Equally clear, however, is that a lot of people who consider themselves sane do invest in derivatives – or, synthetic securitized products. Why? In a synthetic world, synthetic products look and feel real. But the real world has a way of forcing truth upon us. We are living through an economic crisis brought on by reality – and synthetic derivatives.

America was founded as a Republic with a capitalist system of economics. Capitalism requires risk management. Someone is removing risk – creating a phony derivative that imitates capitalism. People who are afraid of or unable to manage risk want socialism. It eliminates the need for risk management at the cost of personal freedom. What we have in America today is synthetic – a derivative form of capitalism. It’s true. Synthetic capitalism is dying. Real capitalism, once re-discovered, will still build strong nations.

In thinking over the past couple of years since the crisis started, I asked myself why so many successful hedge fund managers and wealthy financiers are dying prematurely – so young. We must mourn their passing and pray for their eternal souls. But some very significant questions arise when we realize sandbox toys the big boys play with offer no more solutions to life's problems than your sandbox toys or mine. At some point, we must all come to grips with reality. We must put away our toys.

Think about how the term “synthetic securitization” can be applied to life in America, today… the synthetic security we have allowed – even encouraged – our society to accept.

Synthetic Political Toys

The Patriot Act encourages us to exchange our freedoms for the promise of personal safety. It is a synthetic promise. Homeland Security tells us we are protected yet leaves our borders open to any illegal who wants entry into our great nation. The people who accept promises of security under such circumstances are living in a synthetic world. It is an unreal world. Logic tells me my freedom is priceless and cannot be exchanged for safety – or anything else. It tells me foreigners who wish to enter America illegally are dangerous and that Homeland Security isn’t doing its job if it doesn’t know that.

All three branches of government, Legislative, Executive, Judiciary, are synthetic. Justice Ginsburg speaks of making legal decisions more in line with international law than Constitutional law. She lives in a synthetic world of make believe, thinking herself and her personal opinions above the very Constitution she has sworn to uphold – a Constitution that gives her no such powers. Her Constitution is synthetic… imaginary. Others on the bench have joined her to bring an undesired result: There is no Rule of Law regulating how our banks are run, how investment firms can do business, or how taxpayer money can be used to bailout ailing businesses that should be allowed to fail so successful ones can replace them.

Congress thinks it can continue spending synthetic money that appears from a make believe world… just turn on the printing presses.

There are no consequences. Because they like an idea, they think they can create money from thin air and there will be no shake out, no negatives, no inflation… and no bankruptcy. “I wouldn’t intend for that to happen. I’m a good American who loves my country!” A legislator who lives in a synthetic world actually believes that intent, not reality, determines the outcome of actions taken.

An American intelligence agent’s oath is designed to protect Our America from foreign interests. Agents swear to “…learn to subvert, sabotage, and destroy our enemies by more sophisticated and more effective methods than those used against us.”

Last year “waterboarding” was sophisticated and effective. Today, it is not. Those who did what was okay last year may be punished for it this year. That is likely to generate a lot of employment applications at the CIA - not! When something is synthetic, it can be morphed into anything chosen by those who hold power. What kind of career intelligence officers will that attract?

We fight synthetic wars. The truth is, we have not fought a real "war" since Congress declared World War II in 1941. Congress has not declared a Constitutional war since that “day of infamy” so easily forgotten by so many. Yet we have spilled American blood in Korea, Vietnam, and in various places in the Middle East. Does that negate the cause for which American lives were lost? No. Nothing negates a life or an injury given in sacrifice.

Synthetic Social Toys
Life for many, it seems, may be very like a derivative. Having bucket loads of money doesn't solve problems if your life is synthetic – an imitation of the real thing. Finding and dealing with truth from which reality is born is the most basic of life's many processes.

Of what value is the establishment of a standard of behavior anyplace in the world if it is based on the unreal? If it is fictional or pseudo – made of synthetic securitization – what good is it? If a standard can be changed like a light bulb, it is not a standard. It is a device to get from point A to Point B.

Our public school system has fallen victim to synthetic securitization. We play like we are educating our children when we know they are being indoctrinated. It is pseudo education. False. Phony. Imitation. Yes, synthetic.
We have synthetic faith. New "religions" emerge based on the principle that man is God. Perhaps the ultimate example of pseudo synthetic behavior is man creating God rather than the other way around.

We allow legislators to talk about giving seniors counseling on how to end their lives as part of nationalized health care. We kill the unborn. We allow our government to steal from the Social Security system and ignore the dangerous results as if they were not real. Our society has created synthetic principles of what is good and what is evil.

Most people agree that the world has turned upside down and they don't know how to right it.
The truth is we cannot right the world for others. Each of us must start with our own world and make it right. When we do, we stand like a candle on a hill for others to see and follow. We do it as individuals and as our individual numbers multiply we do it as a nation. We do it by finding truth. To do otherwise is to accept a synthetic society as a way of life. Too many Americans do.

There is no substitute for truth. There never has been. There never will be. Yet, we have a synthetic business community… the bigger the business, the greater the Let's Pretend atmosphere of outward symbols of success. One old saying tells us that "Success is not a destination. It is a journey.” What the saying doesn’t say is that it is a journey of truth based on reality.

Do you see where synthetic securitization leads? It leads to a world where bankers believe they can leverage mortgages contained in a derivative 40 times without causing a world economic crisis. It results in a three month prison sentence for raping a child. The undisciplined world of the unreal leads to greed which results in lies which bring deadly results.

Maybe that's why there are so many lies today. In the end, life doesn't imitate anything… and it cannot be imitated by anything. Synthetic people are about to learn that lesson.

Marilyn Barnewall received her graduate degree in Banking from the University of Colorado Graduate School of Business in 1978. She has authored seven non-fiction books about banking, two are listed at Oxford and Cambridge University libraries in Great Britain. Her current book, When the Swan’s Neck Breaks, details the banking problems she foresaw in 2006. Of the 24 predictions made in the book, 22 have happened. It is fiction but readers refer to it as docu-fiction.

Barnewall was named one of America's top 100 businesswomen in the book, What It Takes (Dolphin/Doubleday; Gardenswartz and Roe) and was one of the founders of the Committee of 200, the official organization of America's top 200 businesswomen. She can be found in Who's:Who in America (2005-08), Who's Who of American Women (2006-08), Who's Who in Finance and Business (2006-08), and Who's Who in the World (2008).

E-Mail: marilynmacg@juno.com

© 2009 Copyright Marilyn M. Barnewall- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules