Many economists and commentators are focussed on the ongoing debt crises affecting the USA, UK, Europe, Japan, and indeed, virtually the entire globe.
But David Bloom of HSBC Foreign Exchange suggests that there is “a bigger Armageddon out there”.
And the latest RBA data shows that our banks are racing headlong into it.
From CNBC:
Investors are afraid of “Armageddon” in foreign exchange markets due to concerns beyond the Greek debt crisis and sluggish US growth, David Bloom global head of foreign exchange at HSBC told CNBC Thursday.
Bloom described the Greek sovereign debt crisis as “yesterday’s news” for foreign exchange markets, adding fresh worries were spooking investors following Federal Reserve chairman Ben Bernanke’s downgrade of US economic growth prospects for the year and his silence over further fiscal stimulus measures.
“Today’s news is will (the US) do (Quantitative Easing) and then is the UK falling apart? This is the problem that we’ve got… this is the problem that I’ve got with currencies, there’s no doubt about it that (the euro zone) is trying to cause a delay and people honestly believe in their hearts that at some stage they’re going to have to take a haircut on Greece, but is there a bigger Armageddon out there?” Bloom asked.
“We’ve got the possibility of QE in the UK, there’s massive change in growth numbers in the US and now people are starting to worry about China,” he explained.
“You saw PMI numbers showing some weakness and actually Chinese interbank interest rates are going up quite substantially, so people are starting to get quite worried,” he added.
An “Armageddon” in foreign exchange markets – indeed, even just a serious bout of volatility – would spell doom for Australia’s banking system. And in turn, for our economy, given that our Government has guaranteed our banks using taxpayers future earnings as collateral.
There are a number of reasons why a forex “Armageddon” poses a critical threat to our banks. Perhaps the primary one, is their staggeringly large exposure to Foreign Exchange and Interest Rate derivatives.
Derivatives are the exotic financial instruments at the very heart of the GFC.
Back in 2003, the world’s most well-known investor, Warren Buffet, famously called derivatives “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”.
In essence, the type of derivatives held Off-Balance Sheet by our banks, are financial instruments used for “hedging” and betting on the direction of Interest rates, and Foreign Exchange rates. A large or unanticipated change in those rates, and our banks stand to lose.
The latest RBA figures are out, current to March 2011.
In just 3 months from December to March, our banks’ exposure to Off-Balance Sheet derivatives “Business” has blown out by a whopping $1.99 Trillion, to a new all-time record total of $16.83 Trillion. That’s the biggest 3-month increase in our banks’ history.
By comparison, at March 2011 the banks have “only” $2.68 Trillion in On-Balance Sheet Assets. That’s an increase of “only” $19.9 Billion. In the same 3 months, their Off-Balance Sheet derivatives exposure blew out by 100 times that much ($1.99 Trillion):
Click to enlarge
You may be wondering how the banks could possibly manage to increase their “Assets” by $19.9 Billion in just 3 months. The answer? 96.4% of that increase ($19.19 Billion) is in new Residential loans. That’s right – your loan is considered the bank’s “Asset”. Which really means, you are their asset. Your signature on that loan document means they literally “own” you, your daily sweat and toil, for the next 30 years.
Now, does this suggest to you that our banks are becoming even more reckless? That near-parabolic rise in the chart of their derivatives exposure is approaching what looks just like the classic “blow off” phase of every trading bubble.
This is a classic sign of the near-end of a Ponzi scheme, a sign that was also seen near the end of the real estate bubbles that blew up in the USA, UK, Ireland, and Europe. The last mad rush by greedy banksters to rake in profits, before the bubble bursts.
And their losses are “socialised” by the government, on to the backs of the next X generations of taxpayers.
Now that we have learned that “Our Banking System Operates With Zero Reserves”, that Fitch Ratings considers “Australian Banks Most Vulnerable To Europe’s Debt Crisis”, and that our banks have just taken on an all-time record $1.99 Trillion in additional derivatives exposure in just 3 months, this new warning about “a bigger Armageddon” in foreign exchange markets should be considered another clear harbinger of an epic disaster to come Down Under.
While the direct exposure is low, if the Greek debt crisis implodes and spurs a major dislocation in global credit markets, Australia and South Korea’s banks and economies would suffer the most, said Andrew Colquhoun, head of Asia-Pacific sovereign ratings.
“Among the countries in Asia I would regard as relatively more exposed are both Korea and Australia, who have an issue of short-term and long-term external debt of the banking system,” he told Dow Jones Newswires on the sidelines of a conference in Sydney.
“If the banks found it more difficult to refinance that debt, then there could be repercussions for the economies,” he said, adding “quite a lot” of risk still remains in the process to firm up a second bailout package for Greece.
Australia’s four biggest banks have in recent years leaned heavily on foreign currency borrowing and were among the biggest issuers of debt in the world using their respective governments’ funding guarantees during the financial crisis.
Learn all about just how vulnerable our banking system really is, in these recent posts –
Here is Climate Change Minister Greg Combet’s oh-so-obviously fallacious attempt at sledging Barnaby’s economic nous on June 2, 2011 (or, see it here on the ALP’s own website):
“Barnaby blunders as economicsts (sic) back carbon price”
Ok, ok, maybe I’m just a spelling nazi. I still think it’s hilarious … and somewhat of a Freudian slip.
Notice too, that the apparently illiterate Combet loudly and proudly bangs on about “13 of Australia’s most prominent economists” who had written an Open Letter in support of a carbon (dioxide) price.
Funny how he neglected to mention that at least 7 of those 13 “economicsts” (sic) are employed by banks. And, that at least another 3 were previously employed by banks.
Yes, that’s right. At least 77% of those Open Letter “economicsts” (sic) were and/or still are employed by the very same parasites who are pressing the hardest for carbon dioxide “pricing” as the basis for their new global casino.
Do you think that little nugget of truth might just have some influence on their “support” for it?
Oh yes. One other thing.
Did you know that one of those “13 most prominent” “economicsts” – Mr Saul Eslake – had himself a little dummy spit right here on this lowly blog, because he didn’t like his little group of rent-seeking parasites being referred to as “The Banksters’ Glee Club”?
Yes indeed. Mr Eslake threw his rattle right out of the cot. See for yourself.
And a good thing it is too.
Because thanks to his little tantrums – yes, more than one – we have now seen a further glimpse of both the heights of vanity, and the depths of deception, that these “economicsts”, banksters, and their dyslexic political lackeys like Combet et al will go to, in order to get the legislation needed to implement their megalithic new derivatives trading casino scam passed through our Parliament.
Seriously – would you trust an ocean-front dwelling former union hack who can’t even spell the word “economist” to successfully implement a multi-billion dollar, economy-altering energy taxation scheme?
From the Liberal Party’s website, Latest News, 3 June 2011:
The Coalition will relieve the red tape burden from Australia’s small businesses by giving them the option to remit the compulsory superannuation payments made on behalf of workers, directly to the ATO.
Small business will be given the option to remit superannuation payments to the ATO at the same time as they remit their PAYG payments.
Senator Barnaby Joyce writing for The Punch, 13 May 2011:
On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.
Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.
The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.
Labor has already introduced legislation in the 2011-12 Budget that aims to grab your super too.
In fact, Labor’s Minister for Financial Services and Superannuation, Bill Shorten, published an op-ed a month ago stating that he views your super as “our sovereign wealth fund”.
There is a wave of government confiscations of private retirement savings rolling around the Western world right now. The first ripples have quietly rolled onto our shores already.
Treasury Secretary Timothy F. Geithner has warned for months that the government would soon hit the $14.3 trillion debt ceiling — a legal limit on how much it can borrow. With that limit reached Monday, Geithner is undertaking special measures in an effort to postpone the day when he will no longer have enough funds to pay all of the government’s bills.
Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers.
The USA is taking public servants’ pension funds, to pay government bills.
Note that well.
Because just over 3 weeks ago – and 4 days before that Washington Post story hit the wires – our own Senator Barnaby Joyce made a very disturbing revelation (below).
Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.
“This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”
But Argentina and Hungary are not like us, right? That couldn’t ever happen in a Western economy like ours, could it?
Oh, but that’s France. They’ve got hangover problems from the Global Financial Crisis, right? That couldn’t happen in a really strong economy like ours, one that sailed through the GFC without even having a recession … right?
… another recent reversal we’ve seen has come from Latin America. In the 1990s, Bolivia’s decision to move its pension assets from the state to private managers placed it among the most advanced pension systems in the region. However, the current government has decided to nationalise the assets once more claiming it is creating a pension system that is equal for all.
Oh yes, but Poland is really just a Central European economy, not long removed from communism. Something like that couldn’t ever happen in a mid-level, “advanced Western economy” like ours … right?
From Business Insider, 10 May 2011:
Irish Bombshell: Government Raids PRIVATE Pensions To Pay For Spending
Capital city dwelling values fell by a seasonally adjusted 2.1 per cent in the first quarter of the year, according to the latest RP Data-Rismark Home Value Index.
The quarterly change was the steepest since the index series began in June 1999, RP Data research director Tim Lawless said.
And from the Sydney Morning Herald, 17 May 2011:
Real estate slump will leave banks in pain too
Australian real estate, long the subject of global concern, bears all the symptoms of a market that simply has run out of puff.
About that $20 billion in RMBS that Wayne Swan purchased. With borrowed money. Just how safe is that $20 billion “investment” looking?
From the Sydney Morning Herald, 26 May 2011:
Arrears on mortgage repayments spiked to a record high in the first three months of 2011, as more Australians struggle with rising costs, Fitch ratings agency says.
Arrears on prime residential mortgage-backed securities (RMBS) of 30 days or more hit a record high of 1.79 per cent in the first quarter, from 1.37 in the final quarter of 2010, the group said, as Christmas spending and the Queensland floods forced more Australians to struggle in repaying their mortgages.
The increase in arrears for the most fragile band of mortgage borrowers, low-doc loans, with payment delays of 30 days or more hit 6.74 per cent in the first quarter, up from 5.7 per cent in the final quarter of 2010, a higher level than December 2008 quarter, when the financial crisis hit and the Reserve Bank began rapidly lowering rates.
Low-doc mortgages are written for riskier borrowers than prime mortgages, which are written for customers who have a reasonably safe ability to borrow.
Delinquencies of three months or more on conforming low-doc mortgages, which are used by people who are self-employed for example, soared past 5 per cent in the March quarter, from about 3 per cent the December 2010 quarter.
Would our Wayne have “invested” any of that borrowed $20 billion in low-doc RMBS? Or, did he stick with prime RMBS?
From the Australian Office Of Financial Management website:
$20 billion worth of RMBS. With low-doc loans included. A brilliant government “investment” in keeping our property bubble inflated. And now that investment too, is failing, with record-high arrears on the mortgages backing those “securities”.
But there’s nothing really to worry about, because we’ve got the “strongest banking system in the world”, right? Even if the property bubble does pop, our government would never need to go looking for even more money, to bail out our banks … right?
Moody’s Investors Service has downgraded the long-term debt ratings of Australia’s big four banks to Aa2 from Aa1, citing their relatively high reliance on overseas funds rather than local deposits.
Moody’s explanatory paper effectively stated that our banks are Too Big Too Fail. That the Big Four’s liabilities must continue to be supported by the Australian Government Guarantee For Large Deposits And Wholesale Funding that Labor “decisively” introduced (like Ireland) in response to the GFC. And if the guarantee is removed, Moody’s indicated that the Big Four’s long-term debt ratings will be downgraded by at least two further ‘notches’.
Meaning?
Moody’s has just placed our government on notice. Australian taxpayers are now effectively on the hook – permanently – to bail out our banks when our housing bubble bursts.
Exactly the same thing that happened in the USA, UK, Ireland, Spain et al.
Don’t believe that we have a housing bubble? Think the nightmare housing-driven bank collapse scenario that is throttling the rest of the Western world won’t ever happen here?
Fine.
If the housing-collapse trigger event is not enough to bother you, then take a moment to think about derivatives.
Those “exotic” financial instruments that were at the heart of the Global Financial Crisis. The ones that famously prudent investor Warren Buffet referred to as “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”, way back in 2003.
The same kind of exotic instruments that lauded economist Saul Eslake also referred to just a few days ago, in an argument with me on my blog over my criticism of his public lobbying for a carbon dioxide “pricing” scheme (emphasis added):
And exactly what kind of “business” makes up 92.3% of that “Off-Balance Sheet” $15 Trillion – more than 10 times our nation’s annual GDP?
You guessed it. Derivatives. Those “financial weapons of mass destruction” which so nearly blew up the whole world in 2008-09.
Finding it a bit difficult to get your head around these huge numbers? Pictures often help.
Take a look at this simple chart comparing our “safe as houses” banks’ On-Balance Sheet “Assets” (blue line) – which are 66% loans – versus their Off-Balance Sheet “Business”, 92.3% of which is derivatives (click to enlarge):
$2.66 Trillion in "Assets" versus $15 Trillion in Off-Balance Sheet "Business"
Still feeling confident about our banking system?
There’s more.
Australia’s banking system only just dodged a bullet in 2008-09, thanks almost entirely to the government (taxpayer) guarantee which is still in place today.
“Almost” entirely thanks to the government guarantee, you say?
That’s right. Something else helped save our banking system too.
The Australian public remains blissfully unaware that during the GFC, two of our Big Four banks, and our very own central bank, the RBA, all obtained secret emergency loans from the US Federal Reserve – which is simply printing new money, Zimbabwe-style.
Data released by the Fed shows the RBA borrowed $US53 billion in 10 separate transactions during the financial crisis… according to a report in The Australian Financial Review.
NAB borrowed $US4.5 billion, and a New York-based entity owned by Westpac borrowed $US1 billion, according to The Age.
If you think “it could never happen here”, if you think that our government would never take away your super to pay for its massively wasteful spending, its crappy “investments”, or to bail out our Too Big Too Fail, very recently downgraded, multi-Trillion derivatives-laden banking system, then it’s time for you to think again.
Were you one of the many who ridiculed Barnaby Joyce’s warnings in late 2009, about the possibility of a US debt default (“Barnaby Warns Of Bigger GFC“)?
That’s coming to pass right now. Trying desperately to avoid a default is the reason why the US Treasury has now resorted to stealing federal workers’ retirement savings, to pay government bills.
On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.
Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.
The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.
That is exactly what is happening in America. Right now.
And Barnaby is warning that it could happen here too.
The first steps in that direction have already begun.
From Global Custodian (Australia edition), 11 May 2011:
The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.
In light of the botched “school halls” program, and the stalled white elephant NBN – which so far has only achieved a 12% takeup rate, versus their predicted 58% – would you really trust this government to wisely and prudently invest your super in Government infrastructure projects?
Others have their doubts.
From The Australian, 12 May 2011:
The government’s plan to use tax incentives to encourage superannuation funds to invest in new infrastructure could be thwarted by inadequate returns on projects and a reluctance by the states to take on project risk, experts say.
First, a little “encouragement” for super funds to invest in government spending programs.
Then, when the costs blow out, or when the government debt becomes unmanageable … or when the banks need bailing?
And, he is the only politician in Australia with the honesty, decency, and courage, to (once again) try to forewarn the public about the risks of debt, and where this debt train is taking us.
Still not convinced there’s anything to worry about?
Then consider the words of Labor’s PM-in-waiting, the Minister for Financial Services and Superannuation, Bill Shorten. He already thinks of your super as a “significant national asset” … a kind of “sovereign wealth fund”.
From Shorten’s op-ed published in The Australian, 4 May 2011:
This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.
… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.
Superannuation “strengthens our financial sector”? Can you see where this is going?
Shorten and his cohorts already have their eyes on our $1.3 Trillion in super savings. In Labor’s view, your retirement savings are “our sovereign wealth fund”.
When our Too Big Too Fail, derivative-laden banks inevitably run into trouble again – as indeed they are right now with a falling housing market – you should have no doubt that our government will follow the lead of the USA, France, Ireland, Poland, and all the rest, and simply take your super to prop up our “financial sector”.
After all, they have “guaranteed” our banks. Your future taxes … and if necessary, your super … are the collateral for those guarantees.
But if the Coalition wins government everything will be fine, right? They’re far better economic managers, right? We can all trust the Liberal Party not to put their hands on our super, to pay down Labor-incurred debts … right?
Wrong.
Just this past Friday 3 June 2011, the Liberal Party announced a new policy that they will take to the next election. Loaded with weasel words, it is yet another harbinger of the super theft to come, sneakily disguised as a helpful “reform”.
From the Liberal Party website:
Further relief for small business
The Coalition will relieve the red tape burden from Australia’s small businesses by giving them the option to remit the compulsory superannuation payments made on behalf of workers, directly to the ATO.
Small business will be given the option to remit superannuation payments to the ATO at the same time as they remit their PAYG payments.
Billions and billions of dollars in compulsory superannuation payments, going directly from our employers’ bank accounts to the government’s tax department , every 3 months. And we have to simply trust the government of the day, that every cent of it will immediately be passed on to our private super funds. Not siphoned off into special “investments”, or government accounts. Or simply “sat on” for a month or so, in order to prop up the government’s weekly cashflow needs.
Oh, but not to worry … it will just be an “option” for “small” businesses to do this, of course.
Right. If you believe that, then I’ve got an air-backed derivative called a “carbon permit” to sell you. Ever heard the old saying, “It’s the thin end of the wedge”?
A final thought.
Our government is presently considering the Garnaut proposal for introduction of a carbon dioxide “pricing mechanism”. A key part of this proposal that has (surprise surprise) drawn strong public support from economists employed by the banking sector, is the suggestion that the billions of dollars raised should be administered by an “independent” Carbon Bank. One that …
In other words, a Carbon Bank run by unelected, unaccountable parasites – chosen from the banking sector, no doubt – with the government … meaning taxpayers … acting as the final guarantor for any losses made on their “green” “investments”.
Does that prospect concern you?
Can you see where this is all heading?
We have a government that has already racked up nearly $200 billion in gross debt.
Is running a “forecast” $50 billion annual budget deficit.
And – like an America’s “Mini-me” – has now moved to raise our debt ceiling by another $50 billion (ie, a 25% increase), to a new record quarter of a Trillion dollars.
This is the same government of completely unqualified economic incompetents behind a string of costly disasters – killer ceiling insulation, overpriced school halls, “green scheme” rorts, subsidised Toyota hybrids (that noone except government is buying), the problem-plagued Nation Bankrupting Network … and their latest rort-ridden debacle, “free” set-top boxes.
Do you honestly believe that this government would not end up burying taxpayers with even bigger losses from their carbon dioxide “air tax” scheme too?
Do you honestly believe that this government would never follow the lead of Argentina, Hungary, Bolivia, France, Poland, Ireland, and now the superpower USA … and steal your super to pay for massive debts that they have racked up?
These are just some of the many sound reasons why Senator Joyce has persistently tried to raise public awareness of the real and grave peril of ever-increasing government debt and deficit, in a (supposedly) post-GFC world.
Your retirement savings depend upon your taking notice of his warnings.
Barnaby is right.
If like me you are under 50 years old – indeed, if you are under 60 years old – then I’m willing to bet you all of my super that you will never see all of yours.
And unlike our bank(st)ers and government … I never bet.
The Labor/Green/Independent government’s hand-picked, unelected, unaccountable, Solomon Islands strip-clearing, water polluting, gold mining, $5 Million taxpayer-salaried, Grand Poobah #JAFA, Mr Ross Garnaut, has decreed called for a trinity of unelected, unaccountable, unnamed “independent” persons to oversee the totalitarians wet dream Eco-dictatorship.
No, this country must not let its future be decided by an unelected committee.
It’s already bad enough that we’ll get a foolish tax the Government promised before the election not to impose.
But sneaking around the people’s will seems the mission of today’s warmist.
Garnaut, the Government’s global warming guru, yesterday recommended an “independent” committee decide how much we cut our emissions – which, in turn, influences the level of any carbon dioxide tax.
This essentially means unelected people will decide how much to jack up your bills for power and petrol, and everything made with them.
Yes, their call can be overruled by the Government, but the aim is to make a political decision “non-political”.
The Government seems keen on Garnaut’s plan because of the very reason it should never be adopted.
Labor and the Greens are squabbling right now over how much to cut our emissions in their negotiations over next year’s carbon dioxide tax.
Labor wants our emissions cut by much less than the Greens demand, because it fears what voters might do to it once they realise what this useless sacrifice will cost.
But if an “independent” committee made that decision, the Government could claim its own hands were clean. Blame the committee, instead.
This is frankly sold as an anti-democratic move that warmists need.
As one media report approvingly noted: “Garnaut has concluded the only safe way to manage a carbon price going forward is to keep politicians as far away from the process as possible.”
You can punish politicians. Bureaucrats, you can’t. So Garnaut’s plan will leave the policies to people beyond your influence.
That may please Garnaut, but the rest of us should fight.
Already we will get a tax we didn’t vote for. Now we are told the tax will be overseen by people we’ll never vote for.
It is nothing more than a ruse to allow banksters – the same people who gave us the GFC – to get their hands on billions of taxpayer’s money right from the start. Even before the move from an initial fixed price “tax”, to a legislated-to-rise “market” priced Emissions Trading Scheme in “3 to 5 years”.
And it is this particular unholy god that will bankrupt the country.
How?
One of the “powers” that the eco-fascists like Garnaut and the peak “clean energy” lobby group want an “independent” carbon bank to be granted, is the power to BORROW against future CO2 tax revenues, and “invest” those borrowings:
An independent carbon bank, similar to the Reserve Bank, should be set up to oversee a carbon price and investment in clean technology, the peak renewable energy lobby says.
The Clean Energy Council will today release a discussion paper proposing the carbon bank, which it says could be allowed to borrow money to invest in renewable energy projects against the future revenue of Labor’s proposed carbon tax and emissions trading scheme.
Note that well.
Borrowing … and “investing” … against the future government tax revenue.
In other words, the government … meaning taxpayers … would be the guarantor for any losses on those “investments”.
We have all seen just how well things work out for the little people, when governments pass laws that effectively give unelected, unaccountable banksters free reign over markets (and thus, our economy).
It’s time to stand up and be counted.
To take our country back, before the eco-fascist banksters bankrupt us all. Once and for all.
The gross value of derivatives contracts that pay out in the event of a US default has doubled from year ago levels, according to the Depository Trust and Clearing Corporation, which collects data on global trading of credit default swaps (CDS).
Here’s the most basic analogy of guilt: Picture Goldman [Sachs] as a used car salesman. When it learned it had an inventory of lemons, rather than return those lemons to the manufacturers (lemon law in most states), it put those cars on promotion with very aggressive sales tactics.
Because Goldman Sachs is about to fingercuff humanity all over again.
The new “lemon” is carbon derivatives. And the “protection” – which Goldman has also invented – is ‘Death Derivatives’:
Goldman Sachs Group Inc. (GS), Deutsche Bank AG (DBK) and JPMorgan Chase & Co. (JPM), which bundled and sold billions of dollars of mortgage loans, now want to help investors bet on people’s deaths.
Pension funds sitting on more than $23 trillion of assets are buying insurance against the risk their members live longer than expected. Banks are looking to earn fees from packaging that risk into bonds and other securities to sell to investors.
Like any successful serial killer, Goldman has found a successful MO (method of operation). And simply refines and repeats it, over and over again.
Goldman Sachs crashed the global markets in 2008’s Global Financial Crisis, and made out like a bandit through the entire process. How? By creating toxic mortgage-backed securities (derivatives) and on-selling them to the world. That’s the front end of the ‘cuff.
On the rear end, Goldman knew its “lemon” mortgage-backed derivatives would explode, and set itself up to profit massively when it did. That’s ‘cuff #2:
Goldman should be tarred and feathered over the 2008 meltdown. Like others on Wall Street, Goldman had an active mortgage department designing, packaging, securitizing, promoting, and selling mortgage-backed securities and related synthetic derivatives. Goldman’s trading desk conceived, promoted, and sold various protection strategies as market maker, agent, and principal.
As the housing bubble got close to bursting, Goldman became enlightened sooner than other banks, partially from witnessing the “big short” strategies of its infamous hedge-fund client John Paulson.
The entire firm came around to believing the great mortgage bubble was a house of cards ready to collapse, based on delinquencies, no-doc loans, fraud, and more...
Goldman had two choices: discontinue the sale of junk-mortgage securities and alerting the government, media, public, their clients, and investors; or, keep it a secret, sell off junk-mortgage securities to investors, profit from the inevitable bursting of the bubble, and steal and even front-run part of Paulson’s trade.
Clearly, Goldman’s short (protection) trade was connected to clearing out their long trades (selling the lemons)…
Once Goldman had its “big short” trades on, it couldn’t wait for the payday, risking the market might recover. It knew marking down its own long portfolio of lemons could trigger the crisis and the huge short-trade payouts. Marking down the lemons lowered them for sale to investors and forced all other banks to do almost the same. Based on fair-value accounting rules, Goldman forced lower fire-sale marks on the industry which put some financial institutions out of business almost overnight. Which turned into another win, as Goldman had pre-purchased credit-default swaps to pay off on their competitors’ demise.
Having raped the USA (and much of the Western world) with their mortgage-backed derivatives bubble, Goldman has refined its MO, and now it has its sights set on the next target. The entire human race.
Fingercuff #1 is carbon trading. That’s the “lemon” being aggressively sold to the world, by Goldman’s handpicked used car salesmen like Malcolm Turnbull.
You know the sales pitch. “Pricing carbon” through carbon taxes / trading is “necessary”, to “save the planet”.
But carbon taxes/derivatives trading is a “lemon”, and it’s designed to do one thing. Kill you … slowly. Through ever-rising costs for everything. To warm your house. To buy food. Goldman gets richer, while you get poorer.
Fingercuff #2 is ‘death derivatives’. That’s the “protection” end.
But it’s no protection for you.
“Death derivatives” is a new form of “protection” sold by Goldman’s to superannuation funds, life insurance companies, “investors”, and speculators. Anyone who stands to gain, or lose, depending on when you die.
What most won’t notice – again – is that there’s a big hole in their “protection”.
And the hole is the serial killer who’s selling it:
What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain…
The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.
They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They’ve been pulling this same stunt over and over since the 1920s — and now they’re preparing to do it again, creating what may be the biggest and most audacious bubble yet.
Did you lose money – in your super fund, say – thanks to the Goldman-inspired GFC?
With the Carbon Tax, we’re about to get raped again.
But this time, it’s not just a question of money.
It really is a question of life and (premature) death.
If not, then what you’re about to learn may cause you to wish that you had never read this post.
Or the linked mainstream business news stories.
On April 6 last year, the leading advocate for CO2 emissions trading in Australia, Goldman Sachs’ Malcolm Turnbull, announced his retirement from politics, having lost the leadership of the Liberal Party over his dogged stance on an ETS.
At the time, Mr Turnbull indicated his desire to pursue business interests.
From SmartCompany.com.au:
Will Malcolm Turnbull Become Australia’s Most Prominent Angel Investor?
We all know just how keenly Malcolm Turnbull wants to see Australia with a carbon (dioxide) derivatives trading scheme.
So one wonders if he is also looking to become an “angel” of Goldman’s newest invention – “death derivatives”.
From Bloomberg one week ago, 17 May 2011:
Death Derivatives Emerge From Pension Risks of Living Too Long
Goldman Sachs Group Inc. (GS), Deutsche Bank AG (DBK) and JPMorgan Chase & Co. (JPM), which bundled and sold billions of dollars of mortgage loans, now want to help investors bet on people’s deaths.
Pension funds sitting on more than $23 trillion of assets are buying insurance against the risk their members live longer than expected. Banks are looking to earn fees from packaging that risk into bonds and other securities to sell to investors.
There you have it.
To banksters, insurance companies, and superannuation fund managers, the possibility of your living “longer than expected” is considered a “risk“.
Nice.
And now, thanks to the sick, evil genius of global banksters like Goldman Sachs, this “risk” factor of you and your loved ones living longer than expected can be packaged up into a tradeable commodity.
A ‘death derivative’.
A new artificial “commodity” – exactly like “carbon permits” – that can be used to attract “investors” who want to place bets with despicable scumbag banksters like Goldman Sachs, on how long each securitised “pool” of human beings will live for.
“And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore: merchandise of gold and silver … and bodies and souls of men.”
Shocked?
Maybe you should not be.
This latest bankster monstrosity comes from the very same people who, according to CEO Lloyd Blankfein, claim they are “doing god’s work”.
We have seen in “Compassion For Malcolm: He Just Wants His Balls Back”, that there is a little-known and very uncomfortable truth about the connection between Mr Turnbull and international investment bank Goldman Sachs.
We know too, that Mr Turnbull loves to get in early on new profit-making opportunities, as an “angel investor”.
Will he use some of it to become an angel of (Goldman’s) death derivatives?
Seems like a sound investment to me … if you’re a morally bankrupt prophet (profit) of global warming catastrophe, (ie), a merchant of death.
Think about it.
A carbon tax – the banksters’ foot-in-the-door on the way to an emissions trading scheme “in 3 to 5 years” – will drive up the cost of living. That is one of the key goals that global warming advocates will – only if pressured – sheepishly admit is the whole point of “putting a price on carbon”. To force citizens to alter their way of living, due directly to rising costs for everything.
What will be the ultimate effect?
Barnaby Joyce has said it well. More and more older Australians already stay in bed all day in winter, because they can’t afford the extra electricity to warm the house:
That’s right here in Australia, where we enjoy a naturally warm climate.
Can you imagine just how many elderly (and not so elderly) people will suffer physically in the future, when current record-high electricity prices double?
The effect of our allowing CO2 taxes / emissions trading to be enacted, is now very clear.
The cost of electricity will rise.
The cost of gas will rise.
The cost of food will rise.
The cost of water will rise.
The cost of clothing will rise.
The cost of transport will rise.
The cost of housing will rise.
Yes. The cost of everything will rise.
In due time.
But is all this just about ever-rising prices?
No.
It’s about the effect of ever-rising prices.
And what will be the effect?
The multi-decade trend of rising longevity in the Western world, will begin to reverse.
Older people – like your parents, and grandparents – will stop living longer.
They will start dying earlier than the insurance and superannuation industries’ models have been expecting.
Thanks to carbon dioxide derivatives trading, more and more human beings will die earlier and earlier than “investors” in death derivatives have estimated.
Superannuation fund managers, insurance companies, “investors” and speculators will find that they have made the wrong bet on average life expectancies.
Meaning – the banksters will first make a killing on the trade in carbon dioxide derivatives.
And then make another killing on the trade in their new ‘death derivatives’ too.
This is the ugly reality. There are people in this world who do not give a shit about you, or your little life.
They just want to profit from it.
In every way they can.
They don’t even “see” you … a wonderful, unique, and priceless individual human being.
They only see a vast herd of human cattle.
To be milked dry.
A huge herd of debt-laden cattle whose lives – and times of death – can be packaged together into different ‘risk’ ‘pools’ and ‘tranches’. Sliced and diced. Securitised. And traded on new “commodity” markets, for vast profits.
What you must also understand is this. These evil scum play The Long Game.
They’re patient bastards.
Don’t be fooled by politicians talk of “household compensation”. It is only for a limited time.
Don’t be fooled by politicians talk of a “low starting price” on carbon dioxide. That is only for a limited time too.
Don’t be fooled by politicians and “experts” pro/con arguments over the “merit” of a carbon tax, versus an emissions trading scheme. Both are intended to have the same effect.
Don’t be fooled by the “carbon tax”.
The banksters would prefer an emissions trading scheme from Day 1. But they are prepared to wait a few years to get what they really want, if opposition from the public means that the safer-sounding option of a “fixed price” carbon tax is needed as a wedge, to get things started.
Mind you, while they’re waiting for an ETS they are still keen to get their hands on those billions in carbon tax money from Day 1 too (see “Our ‘Squeeze Pop’ Carbon Bank“).
A “carbon tax” is the banksters’ foot in our front door.
Don’t be fooled by the merchants of death.
Stop the CO2 Tax.
Stop the banksters.
Please share this information with everyone you know, today.
Julia says today that she is playing “the long game” on carbon trading –
Julia Gillard has assured Labor MPs her government will run its full term, telling them she is playing “the long game” and predicting Tony Abbott’s popularity will fade as Labor programs begin to deliver on-the-ground benefits for voters.
Malcolm Turnbull has again managed to anger his colleagues, thanks to his comments on the Coalition’s Direct Action climate policy on Lateline this week.
I for one think that we could all show a little more compassion for Malcolm’s eunuchly uncomfortable position.
You see, there is plenty of evidence to strongly suggest the – somewhat embarrassing – true reason why Malcolm Turnbull so fervently believes that an emissions trading scheme is the best way to address global warming.
Simply take the time to review the history of the HIH collapse in March 2001.
Consider the highly questionable role that Goldman Sachs Australia – of whom Malcolm Turnbull was chairman at the time – had to play in this, the biggest corporate failure in Australian history:
Consider only a few years after the collapse of HIH, even as those legal proceedings were being prepared, Malcolm Turnbull’s (again, questionable) takeover from Peter King as the Liberal candidate for the seat of Wentworth gave him a ready-made entrance into Parliament in 2004.
Consider his rapid elevation to the key role of … Environment Minister. Followed by the big push for the Howard Government to adopt an ETS.
Consider the revelation only a short time later that then Opposition Leader Malcolm Turnbull was to be spared from appearing in court as a defendant in that $450+ million lawsuit. Why?
Because his former employer Goldman Sachs had made a “confidential” settlement on his behalf:
Most importantly, consider which massive international banking power has been behind all the great market bubbles in modern history – and is again behind the global drive for a new derivatives-based trading bubble, the likes of which the world has never seen:
Goldman Sachs is based in New York, with “tentacles” all over the world.
It hardly takes a rocket scientist to put two + two together.
Malcolm Turnbull, the former Goldman Sachs Australia chairman, named co-defendant in a $450+ million lawsuit, and beneficiary of a “confidential” settlement made on his behalf by his former employer, believes so strongly in Australia having an emissions trading scheme for a very good reason indeed.
But I personally harbour the gravest of doubts that “saving the planet” has anything whatsoever to do with it…
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Barnaby Is Right 
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