Gregory Mannarino April 29 2013
Bill Gross, Nouriel Roubini, the Wall Street Journal and many others say that our entire economy is a Ponzi scheme. The world’s economy is built on a system that requires ever more people to consumer ever more products. Building an economy that constantly leverages the prosperity of a society’s future is bad enough: the fact that ours might fail sooner than later is cause for great alarm. As fertility rates continue to fall, we are in danger of losing the sheer numbers of consumers it will require to keep our current Ponzi-like economy going. The Resident (aka Lori Harfenist) investigates.
Boston University Economics Professor Laurence Kotlikoff is worried about America’s dire financial situation. Dr. Kotlikoff says, “The situation is getting worse and worse and worse. We are running a massive six decade Ponzi scheme, and it’s coming to a real threatening point.”
Dr.Kotlikoff calculates the real government deficit is enormous and it’s growing exponentially. “It’s $222 trillion. Last year it was $211 trillion. We grew the deficit by $11 trillion in one year,” charges Dr. Kotlikoff. He also says, “We are actually in worse shape than any developed country. . . We are using accounting that would make Bernie Madoff blush.” Kotlikoff thinks the Federal Reserve could easily lose complete control of inflation and warns, “Ben Bernanke is playing with fire here because we could have a tripling of the price level.”
In 2012, when we think Wall Street we think: MF Global theft, JPM criminality, Goldman naked shorting, DTTC failures to deliver, precious metals manipulation, fractional reserve banking, Comex games, HFT trading and endless derivatives. But don’t forget about MERS and mortgage fraud – because according to Vermont Trotter, the National Director of ‘Protect Americas Dream’ it’s all tied together in one giant Ponzi scheme. The worst part is, the bank you pay for your mortgage probably does not even hold the title to your home. It’s a mess – and we are ALL victims.
Wall Street bankers could have averted the global financial crisis, so why didn’t they? In this exclusive extract from his book Inside Job, Charles Ferguson argues that they should be prosecuted.
OPINION ~ Bernard L Madoff ran the biggest Ponzi scheme in history, operating it for 30 years and causing cash losses of $19.5bn. Shortly after the scheme collapsed and Madoff confessed in 2008, evidence began to surface that for years, major banks had suspected he was a fraud. None of them reported their suspicions to the authorities, and several banks decided to make money from him without, of course, risking any of their own funds. Theories about his fraud varied. Some thought he might have access to insider information. But quite a few thought he was running a Ponzi scheme. Goldman Sachs executives paid a visit to Madoff to see ifthey should recommend him to clients. A partner later recalled: “Madoff refused to let them do any due diligence on the funds and when asked about the firm’s investment strategy they couldn’t understand it. Goldman not only blacklisted Madoff in the asset management division but banned its brokerage from trading with the firm too.”
The Obama government has rationalised its failure to prosecute anyone (literally, anyone at all) for bubble-related crimes by saying that while much of Wall Street’s behaviour was unwise or unethical, it wasn’t illegal. With apologies for my vulgarity, this is complete horseshit.
When the government is really serious about something – preventing another 9/11, or pursuing major organised crime figures – it has many tools at its disposal and often uses them. There are wiretaps and electronic eavesdropping. There are undercover agents who pretend to be criminals in order to entrap their targets. There are National Security Letters, an aggressive form of administrative subpoena that allows US authorities to secretly obtain almost any electronic record – complete with a gag order making it illegal for the target of the subpoena to tell anyone about it. There are special prosecutors, task forces and grand juries. When Patty Hearst was kidnapped in 1974, the FBI assigned hundreds of agents to the case.
In organised crime investigations, the FBI and government prosecutors often start at the bottom in order to get to the top. They use the well-established technique of nailing lower-level people and then offering them a deal if they inform on and/or testify about their superiors – whereupon the FBI nails their superiors, and does the same thing to them, until climbing to the top of the tree. There is also the technique of nailing people for what can be proven against them, even if it’s not the main offence. Al Capone was never convicted of bootlegging, large-scale corruption or murder; he was convicted of tax evasion.
A reasonable list of prosecutable crimes committed during the bubble, the crisis, and the aftermath period by financial services firms includes: securities fraud, accounting fraud, honest services violations, bribery, perjury and making false statements to US government investigators, Sarbanes-Oxley violations (false accounting), Rico (Racketeer Influenced and Criminal Organisations Act) offences, federal aid disclosure regulations offences and personal conduct offences (drug use, tax evasion etc).
Let’s take the example of securities fraud. Where to begin?
Well here’s a shocker…
MBF Clearing Is Sued by CFTC Over Claims Customer Funds Weren’t Segregated
“MBF Clearing Corp. was sued by the Commodity Futures Trading Commission and accused of failing properly to segregate customer accounts from its own and of violating the Commodity Exchange Act”
“MBF employees from September 2008 to March 2010 deposited $30 million to $60 million in customer funds into a U.S. government money market fund at JPMorgan Chase & Co. without properly segregating them, the CFTC alleged today in a complaint in federal court in New York.”
A few comments [from Bix] on this one:
James J Puplava is pleased to welcome Producer/Director Jeff Prosserman to discuss his explosive new documentary “Chasing Madoff,” the story of Harry Markopolos and his ten year struggle to expose Bernie Madoff and save investors’ life savings. Finding himself trapped in a web of epic deceit, the once unassuming Boston securities analyst turned vigilante investigator now feared for his life and the safety of his family, as he discovered no one would listen. “Chasing Madoff” tells the story the regulators hid from the public and which is still widely ignored by the media.
Jeff Prosserman is the Executive Producer and Principal of Gusto Goods. Gusto Goods is a production company based in New York and Toronto specialized in the development, production, and marketing of socially evocative films and documentaries.
With smoke still billowing from the ashes of MF Global another gold/silver related brokerage house is going down via the same problem….using customer funds to make their own bets.
“The Investment Industry Regulatory Organization of Canada warned Monday that Barret clients are at risk due to the firm’s “ongoing misappropriation of their money to fund losing trades and ongoing misinformation about the value and holdings in their accounts.”
The Ponzi Scheme called the Global Financial System is breaking apart. Like all Ponzi Schemes the killer is lack of confidence. It is not only metals related brokerage houses that REQUIRE full confidence but all other leveraged systems such as banks, mutual funds, 401k’s and the “Mother of all Leveraged Ponzi Schemes”…the Depository Trust and Clearing Corporation (DTCC) which controls all your paper and electronic certificates of ownership!