Analysis by Bob Chapman – Sept. 17 2008
Summary: Losses and bankruptcies of the major banks that we predicted, trouble for the taxpayer who now shoulder a trillion in debt from bank failures, Why do we have to bail out Wall Street fraud? Lehman Brothers left to expire, We are watching our Zombie economy implode, Buy-outs are just throwing good money after bad, Toxic waste eats your equity capital, eats your stocks, your bonds, and eats your retirement funds. 1929 all over again
The business end of Hanky Panky Paulson’s bazooka is glowing red hot as it continues to fire round after round of high explosive moral hazard contains an up to 85 billion dollar, two-year bridge loan from the Fed to the world’s largest insurer, AIG, to be guaranteed by the US taxpayer via the US Treasury.
Warrants convertible to up to 80% of the common stock of AIG will be pledged as collateral to secure the US Treasury’s loan guarantee to the Fed, with proceeds from the sale of AIG’s now virtually worthless assets being supposedly used to pay down the loan. It’s just Bear Stearns mixed with Fannie and Freddie. You have a loan from the Fed guaranteed by the US Treasury being used to bail out AIG directly instead of being used to facilitate the assassination of BS by a predatory lender (i.e. JP Morgan Chase), and you have what will be ultimate taxpayer ownership of AIG’s toxic waste by having common stock pledged as collateral instead of being purchased through equity injections, as with Fannie and Freddie.
The Treasury’s potential 80% ownership greatly dilutes the value of the existing common shareholders, and the Treasury has been given the right to stop dividend payments on both common and preferred stock of AIG shareholders, which means basically that they have both just been vaporized. The Fed’s Fascist Follies continue.
You, the US taxpayer, will now not only end up owning nearly worthless stock in these corporate cesspools, you have assumed all of their liabilities up to the amount of the loans/capital injections. Remember, the bondholders are still ahead of you!!! BS was $29 billion (plus), Fannie and Freddie are $300 billion just for openers, soon to grow into a loss in excess of one trillion, perhaps even as much as two trillion or more, and now we pour another 85 billion into the pot of boiling moral hazard for AIG. As we inhale the radioactive fumes from the detonation of this latest round of DU laced moral hazard, the stock markets and the dollar rally, while gold and silver decline, all thanks to the manipulation of markets that are rigged daily by the same scum who are bailing out the fraudsters. It is nothing short of surreal.
Who do these cretins running our government, the Fed and Wall Street think they are to presume that we, the taxpayers, want to bail out these rampaging corporate fraud machines?! Who are they to saddle us with this debt when they have already overspent us into a nearly 100 trillion dollar national debt nightmare, after future costs of entitlement are factored in using GAPP (generally accepted accounting principals). Haven’t they done enough damage already? Let these morons fail before their malevolent fraud and unprecedented and profligate financial imbecility cause the whole world economy to implode and then collapse as if blasted by a Force 5 tornado. This is a clear case of: ”You can pay me now, or you can pay me (a whole lot more) later.” Let’s take our medicine now before these inane, vapid, Ponzi-scheming fraudsters send us into an even bigger debt-bubble oblivion as they continue to pump out more toxic waste with their Fascist, Freddie, Fannie, Fraud machine only to ask for even more bailouts! We ask, is any of this even legal? Does it pass Constitutional muster? Unfortunately, and not surprisingly, our cowardly Congress and President never say “no” to anything the Illuminati ask for! Could it be because they are all on the same team? We believe our subscribers know the answer to that question. Vote out all incumbents, except for Ron Paul, in November.
As this transpires, Lehman Brothers has, somewhat surprisingly, been left to expire in the financial dessert as the Illuminist vultures circle it, waiting to pick its juiciest bones. Barclays has torn the first shred of flesh and acquired its North American banking operations and investment research and trading businesses, plus its Times Square headquarters and other real estate, for $1.75 billion.
The Illuminists, through the nefarious, dirty dealings arranged by their privately owned Fed, their corrupt Treasury and SEC bootlickers, and their Wall Street cohorts, will now pick and choose who goes under and who stays afloat, and will arrange for who will buy out whom, as they fashion their next incarnation of our corporatist, fascist system. You just saw Bank of America eat Merrill Lynch for 50 billion after turning down the offer to buy out Lehman Brothers. This is the same bank that just bought a toxic waste dump known as Countrywide in what can only be a described as a suicidal move. Now, Bank of America goes bonzai for Merrill Lynch, yet another toxic waste dump, as they tie on their red sun bandanas and get ready to go down in a blaze of glory. What are these people thinking?! Are they that clueless that they can’t see that all the assets in these companies are overvalued and are not marked to market, and that there are likely to be huge mortgage noteholder recourse and derivative counterparty liabilities? They should have waited and bought Merrill Lynch for a song, or not bought it at all. Perhaps their arms were twisted by the Illuminists. It is impossible to know all the nefarious machinations that are happening out there as our zombie economy implodes.
Watch all the options and short-sales frauds that will be running rampant as these greedy Shylocks use all their inside information, fed to them by the Fed and government officials in attendance at these clandestine meetings. The Illuminati will now get to play financial gods, determining who lives and who gets the axe, so why not use that inside information to your advantage? At the upper levels of Wall Street, all trading is done based on inside information about breaking news and about planned market manipulations. The Illuminists control the secret meetings, the fane-stream media and the manipulation of markets through the PPT. They have a monopoly on inside information and market manipulation, and believe us when we tell you, they use both of these monopolies to rape, pillage and burn anyone that is not in their fascist, Marxist club. They especially like to slaughter and devour the morons who use black boxes for investment, who they eat for breakfast every morning as the markets open. Look at what just happened to gold and silver specs on the COMEX over these past two months. We rest our case.
Note how, in all the above bailout situations, the shareholders get vaporized, and the bondholders get saved. This is in keeping with what we told you about the bond markets, namely, that they are the seat of Illuminist power. The small investors, the municipalities, the regional banks and the pension plans who invested heavily in the stocks of these failing companies get vaporized, while the bond-holding Wall Street fraudsters, the transnational Illuminist conglomerates and the thieving, currency-manipulating nations which took undue advantage of the elitists’ free trade, globalist agenda, or which gouged us with monopolistic pricing of oil and other essential commodities, get a bailout, courtesy of their victims. It is like a mugger who steals your money, gambles it away, and then asks you to make good on his losses. Even the mafia doesn’t go that far!
The message is now quite clear. The sucker-dupe, equity-injection scheme, where big players like sovereign wealth funds are lured into rescuing fraudsters by providing capital under circumstances that are deceitfully made to look like tempting bargains, is now at an end. Forget about equity injections. Rescuing these toxic waste sewer holes, which we call “fraudsters”, is the surest way to blow your money out your derriere. Talk about throwing good money after bad! The big players have had their fill of this fraud and will now be content to stand aside, take flight and circle like the vultures they are, waiting to pick the bones of the walking dead, zombie companies who have been poisoned by the toxic waste derivatives that have been spread around the globe by the Illuminist fraudsters in the US.
The problem, which the fraudsters now face, is not a problem with liquidity, but with equity capital. When you borrow money, you have the borrowed money as an asset, but then you have an equal, off-setting liability. You get your equity capital either through accumulated profits, or by the sale of equitable securities like common or preferred stock. Sufficient equity capital must be maintained, or your company becomes non-compliant with stock exchange rules, or with government regulations, and usually this triggers defaults on your debts as well, and the market loses all confidence in your ability to stay in business. So basically, without sufficient equity capital, also known as net worth, your company is toast. Losses, as from toxic waste, eat directly into your equity capital, and you must either sell assets and liquidate debts to meet your mandatory debt to equity ratios or you go under and file for bankruptcy. In the present case, the Fed is flooding the system with liquidity, but the bank’s can’t make any profits by use of fractional reserve banking leverage because they are afraid to lend money, which is what they are supposed to be doing for a living. They are afraid to lend money because everyone is lying about their assets, and they won’t even lend to one another much less to companies outside the banking system. Without profits, there can be no new equity added to your balance sheets unless you get an equity injection from the sale of stock issues. But now, because all the bailouts have vaporized shareholders, no one is in the mood to buy the stocks of companies suffering from toxic waste problems, especially companies like AIG that are heavily into counterparty liability on credit default swaps, which are costing them billions every quarter.
Because of these problems with equity capital, the Illuminati have taken a two-pronged approach. The vipers of fraud, greed and speculation have run amok among many financial institutions around the world, flashing their toxic waste derivative fangs dripping with toxic waste poison, inflicting many bites, and injecting their toxic waste poison into the wounds. The central banks have cut an “X” into the wounds, and are attempting to suck the poison back out. They have two main suction cups.
First, the Fed and other central banks around the world are acting as a clearing house for toxic waste. The Fed, for instance, has just extended their term securities lending facility by allowing their 20 or so primary dealers, flagship Illuminist companies all, to exchange any of their investment grade (BBB or better) securities for treasury paper, where before they were only allowing AAA paper (even if the rating was false), and these auctions are going to weekly instead of bi-weekly intervals, so as to make sure the exchange of treasuries for toxic waste is readily available and that no one important to the system is left hanging. This gives the Fed a lot of power, because anyone who gets out of line does not get his loan of treasury paper renewed. You play their game, or you get taken out. The Fed is acting as a parking lot for toxic waste vehicles so that the fraudsters do not have to show the garbage on their balance sheets, showing treasury paper instead. That way, they are not forced into the fire-sale of derivatives to shore up their tanking equity capital positions as their mortgage related derivatives go into meltdown. Such fire-sales could bring the whole system down by forcing other suffering institutions to mark their toxic waste derivatives to market, instead of marking them to model. The elitists have taken a huge chance by allowing Lehman Brothers to fail. Fire-sale bankruptcy liquidations do not good derivative prices make, and bankruptcy is bound to set off some large holdings of credit default swaps, and who knows where that could lead. We suspect that this may be one of the most protracted bankruptcies in legal history for that very reason – to delay the liquidation of Lehman’s toxic waste. We further suspect that Lehman will be bought up piece by piece in sales approved by the bankruptcy court but not made public (i.e. a gag order will be placed on the terms of sale).
Second, the Fed is transferring liability for losses to the sheople taxpayers, by conspiring with the usual Illuminist players to design bailouts dripping with moral hazard. For instance, trillions in toxic waste have just been transferred to the Treasury by virtue of its authorization and consent to inject equity in exchange for preferred stock. They will just keep creating money out of nothing to keep buying preferred stock in order to provide the funds to make the bondholders whole, whether the bondholders are those who have loaned money to Fannie and Freddie directly, or are those who own mortgages or mortgage derivatives made or guaranteed by Fannie and Freddie. The limits will be raised as high as necessary, and already $1.3 trillion has been authorized by raising the national debt ceiling in anticipation of the problems to come. Since the Fed now holds a bunch of AAA-rated GSE toxic waste that it has exchanged for treasuries, in a very real sense, the Fannie and Freddie bailout is, in an extremely substantial way, a bailout of the privately owned Federal Reserve Bank itself, which we predicted would eventually end up eating the toxic waste to save the system.
Further, because the sheople have just guaranteed all this GSE paper, which previously carried a high risk of default due to the poor financial condition of Fannie and Freddie, the paper no longer carries such a high risk of default and will now retain substantially more of its value, thereby saving large financial institutions throughout the world from having to mark these assets down to account for the former elevated risk, and thus obviating the need for fire-sales of these assets to reduce debt and maintain equity capital levels, which would have led to a mark to market disaster for the big players. This is also why the Fed has now opened itself up to absorb anything BBB or above, because all the GSE paper it holds has been guaranteed by the sheople. And remember, those dollar bills you hold are not backed by gold anymore, but are now backed by the Fed’s general collateral, which was diminishing rapidly as it took in the toxic waste through it term securities lending facility. The GSE bailout thus helped to preserve a large portion of the Fed’s general collateral, and this may in part account for the dollar’s rally when the GSE bailout was announced. This is of course ridiculous, because what they hold is nothing but “worthless paper,” but that is not yet the perception of investors. Otherwise, they would be storming the gold and silver pits. The Fed may now in fact return the GSE paper it holds back to its original owner, because it is no longer perceived to be at great risk, and the Fed’s treasury paper will be returned to the Fed, where it can be used to absorb other, more troublesome, toxic waste. The same reasoning was used to have the taxpayers save AIG, because this prevented the fire-sale of derivatives that would have been forced by a bankruptcy, and prevented a meltdown in the credit default swaps issued by AIG and the bonds these swaps insured, had AIG gone under. It is all about preventing mark-downs and fire-sales.
Many banks, investment banks, mortgage companies and insurance companies like Fannie, Freddie, Bear Stearns, Merrill Lynch, Lehman Brothers and AIG are totally insolvent and nothing can help them stay afloat, save a bailout forced down the throats of the hapless sheople taxpayers either directly or via a buyout planned by the Illuminists and funded most likely with guaranteed financing, courtesy of the sheople. Those companies that are allowed to fail, like Lehman Brothers, will be picked clean by various predatory Illuminist interests for pennies on the dollar just as we have described in previous issues of the IF. Wait until a thousand banks go under. The Illuminati will have a field day. Meanwhile, as tanking stocks, bonds and derivatives take down banks and pension plans, the sheople will get to eat the depositor losses and the losses suffered by participants in under-funded pension plans through the almost broke FDIC and PBGC. These losses will also run in the trillions of dollars.
The Illuminists are setting up a feeding frenzy for the sovereign wealth funds of other nations, who will no longer provide equity injections as discussed above. That is why the FTC has discontinued publishing statistics regarding foreign investment in US assets. Such investments are about to explode and the many treasuries out there are going to come home to roost, stoking inflation to unbelievable levels. Those unlucky institutions that are allowed to fail will be fed to the hungry piranha, so they can dump their dollar surpluses in a more gradual fashion. The Illuminati were threatened with a catastrophic dollar meltdown via a flood of sales of treasury paper, and they had to turn to the OPEC nations, especially Saudi Arabia, to force oil prices down, and to sell euros for dollars, and get the dollar to rally. The dollar rally has taken pressure off exporting nations like Russia, China, Japan and Europe by making their exports more competitive with US consumers, and will enable them to buy more tangible property here in the US before ever-accelerating hyperinflation erodes, and eventually destroys, the purchasing power of their US dollar forex reserves. Such reserves were accumulated through trade surpluses made possible by illegal currency manipulations that gave these nations unfair trade advantages against their US competitors, and this, coupled with free trade and globalization that did away with trade tariffs, has devastated our domestic businesses, especially our manufacturing sector. Obviously, the Dickster had to go to Saudi Arabia to do some arm-twisting to “git ‘er done.” We are certain the Saudis did not relish lower oil prices or the inflation that a stronger dollar would impose through their dollar pegs, but in the end, self-preservation won out. The Saudis undoubtedly also assisted with the gold and silver market manipulations that have taken precious metals to bargain basement levels, thus providing those who missed the previous rallies with a new, and very favorable, entry point.
As you can see, all roads lead to hyperinflation, after which comes the crack-up-boom, followed by the biggest depression in US history. If you do not own gold and silver, you will be vaporized. We can assure you that the Illuminati themselves are now scarping up gold and silver like it was going out of style, adding more bullion to their already gargantuan hoards. This is there failsafe asset, being hard bullion instead of fiat paper, and it may serve to back a new regional currency, and later a world currency, to be issued by private banks free of government regulation and interference, meaning the banks will be able to do as they please. What you may be witnessing here is half of The Big Sting Two. They can’t get the stock, bond and derivative markets to rally substantially because of de-leveraging and dreadful news. So the next best thing is to drive precious metals and other commodities as low as they can take them so they can make the most of the proceeds of their sale of dollar-denominated paper assets behind the backs of the US public using dark pools of liquidity known as Project Turquoise and Baikal. The meltdown has begun. It is 1929 all over again.
Listen to this 10 minute clip of Bob Chapman discussing the economy, gold and a possible depression; from the “Alex Jones” show – Sept. 18, 2008:
Here are the other three segments if you would like to listen to the entire interview: