On Our Fraudulent Economy - by Karl Denninger

Full Article Here - with imbeded links

This morning Rick Santelli went nuclear on the entire "fraudulent mortgage" game - the culmination of a series of rants that he has (correctly) launched over the last year.

***snip***

Here's the point folks, when you get down to it:

* The entire last two decades of so-called "Economic Growth" has been fueled by one fraud after another, starting with the Internet Bubble.
* This fraud has been systematic and the mainstream media has been both an implicit and explicit enabler of these frauds, instead of doing its job, which is to root them out. The looks on the faces of the other CNBC "anchors" was one of abject fear - perhaps parts of "The Fourth Estate" is coming to realize that when the pitchforks and torches come out - and they certainly will if we hold the course we're on - they might have some trouble explaining why they shouldn't be near the head of the list of those being "sought"?
* The conflicts of interest in the media, where their advertising dollars come from those who are promulgating and profiting from these frauds means that they must choose between their job of protecting the public (their essential purpose under The First Amendment) and being a willing accomplice in the theft being performed by the prime actors in these frauds.
* With the exception of a few months around 1995 (which roughly coincided with Microsoft's release of Win/95, the first "consumer" system of wide acceptance that had a dialer built in along with a web browser) the Internet NEVER doubled in size every three months. Yet this was paraded as the statistic to justify all the bubble companies up until the bubble burst in the spring of 2000. I was one of hundreds if not thousands of people with access to the core of the network and KNEW this was a lie. Nobody would report the truth.

***snip***

#

When the Internet bubble collapsed it was decided to intentionally pump liquidity into the system and ignore both banking regulations and the law, making possible the housing bubble.
# When the leverage ran out Henry Paulson, who was then with Goldman Sachs, came to Congress and the SEC and asked for the ability to run what would turn into effective infinite leverage. The request was granted.
# The very same Henry Paulson, having done this, then bailed off and became The Secretary of the Treasury. He was fully aware of what was going on when the bubble started to come apart in 2007 because he personally lobbied for the changes in law that made the terminal blow off possible!
# Every single one of the firms that has blown up has had leverage far higher than the former 14:1 legal limit. Fannie Mae, Freddie Mac, AIG, Bear Stearns and Lehman - all had leverage at least twice the former legal limit when they blew up. After the first blowup Treasury and the SEC could have slammed the door on this and forced leverage to be taken back down - in August of 2007. Government intentionally refused to take that action despite myself and others screaming about it.
# Hundreds of billions of dollars were siphoned off by the banksters and common Americans as a consequence of willfully-blind and even fraudulent "lending."

***snip***

If you measure "prosperity" by stock prices we're somewhere back in 1997 or 1998. But if the entirety of these two bubbles were fraud-driven (and they were) then a realistic expectation is that we will not only return to 1995 stock prices (about ~450 on the S&P 500) but we will over-correct significantly because the debt that this fraud created still remains in the economy!

That could easily cut the S&P in half again, which puts my 210 "oh God" print on the table, no?

Let's be clear here: There is no way out of this box, and the corruption and fraud have permeated every corner of our financial, media and governmental systems.

We give "free" education and health care to illegal aliens, paid for out of citizen tax dollars. Our government supports this.

We propose to give "foreclosure relief" to people who lied on their mortgage applications; how many of the so-called "rescue" programs would have ANY uptake among the public if as part of the refinance or assistance process the original paperwork was re-underwritten to discover if you lied, and if you did, you were prosecuted instead of being helped?

We have done exactly nothing to indict and prosecute the banking executives, the housing industry executives and others in the business world who contributed to these lies and frauds, in some cases explicitly.

The Congresspeople who got "special deals" from Countrywide Financial (and others) on their mortgages remain in office and are not being charged and tried for what, in my opinion, amounts to public corruption. The amounts involved here are not small - the "savings" in many cases ran into the tens of thousands of dollars.

It has been disclosed that several sitting Congressmen received tens of thousands of dollars in campaign contributions from Stanford Financial (now under investigation on suspicion of not only bilking investors but also money laundering!); the firm also allegedly gave eight hundred thousand dollars to the Democratic Senatorial Campaign Committee during a year that Congress was debating a bill that would have tightened anti-fraud provisions against the securities industry. The bill was killed in a Senate committee.

We learned that government employees are also profligate tax cheats! Not only the high-profile ones like Geithner and Daschle either - this is an across-the-board problem:

The Internal Revenue Service is trying to collect billions of dollars in unpaid taxes from nearly half a million federal employees. According to IRS records, 171,549 current federal workers did not voluntarily pay their federal income taxes in 2007. The same is true for 37,752 active duty military and nearly 200,000 retired civilian and military personnel.

Documents obtained by WTOP through the Freedom of Information Act show 449,531 federal employees and retirees did not pay their taxes for a total of $3,586,784,725 in taxes owed last year.

What?! Oh, and with the exception of the IRS, you can't be fired as a government employee for not paying your taxes either. You can't make stuff like this up folks - nobody would believe you.

I'm tired of people demanding that I cover the bad bets they made as a consequence of fraud throughout the system, while the people responsible, including those in industry and Washington DC go unpunished.

The fruit of a poison tree is also poisonous and if you were a victim of that fraud (that is, you didn't knowingly buy a house you can't afford, you didn't overstate your income and you didn't intentionally speculate on home price appreciation - you instead bought responsibly, you didn't exceed 36% DTI on the back end, you put significant money down and you took a conventional mortgage - not one of those fancy "Option ARM" rent-a-house products that you'd NEVER be able to pay off on the original terms) then you should be looking to those who DID commit fraud for recourse, not the government and everyone else's tax dollars.

If on the other hand you did overstate your income, you did take out an OptionARM, you did lever yourself up to your neck, you did play the "House is an ATM" game or you did speculate with your house then you deserve exactly nothing for help because you participated in an intentional attempt to game economic and financial reality and lost.

Now for those who merely speculated and lost (and there are a lot of them) I believe we should reverse the Bankruptcy "reform" act so you can access the courts and find relief, both spreading the pain to the lender who imprudently granted you credit and accepting a lot of that pain yourself in the form of a destroyed credit rating for the next seven years.

But for those who overstated their income or otherwise committed some form of fraud - and let's be clear here folks, mortgage fraud is a federal offense - what those people deserve is a long stay in prison.

Since we seem to have a shortage of prison space I recommend that we immediately decriminalize all non-violent drug possession and consensual sales between adults, expunging their sentences and releasing those prisoners. We can then tax drug sales (and sell them in DRUG STORES, which are conveniently named), use the money to pay for treatment programs, but more importantly we will have plenty of room to jail all the fraudsters, including the banking executives and Congresspeople that got us into this mess.

Our economy must contract to a sustainable level - period. This is not a matter of what we want, it is a matter of what is possible.

A bubble economy built on fraud cannot be reflated once it pops and the fraud is exposed at the level to which it occurred in this case. It is simply not possible.

We must deal with the underlying rot in our financial and political systems, and until we do in a forceful and forthright fashion we will continue to see economic malaise and destruction.

Wake up America.

There's more I snipped out due to space limits - please go to the FULL ARTICLE and read it all, as well as following the links!!

Sad thing is, buisness is NOT honest, it nver was. It was a way for an individual or a few to sell you snake oil, then run off with your money. Sounds like today, dosnt it? And whats even worse, it has for quite some time, infiltrated our governemnt.
All these corporate takeovers that have happened(aka monopolys) are obviously NO different, from the days of some top hatted tuxedo dressed man selling you sugar water, and advertising it as cough suppresant. Just like todays corporations...they come in, take all they can, then leave the city a ghosttown.

reply to post by redhatty


I heard a clip of this on the radio today and all I can say is "GO Rick!". I would add more but I'd only be parroting what he said.

I hope Obama was listening or will be briefed on it. He needs to know that people are FIGHTING mad.



I can't wait to see what else comes out of the Stanford debacle.

reply to post by redhatty


It's hard for me to believe that there are some people still under the impression,that our Government works for us. Main stream Media,the Federal Reserve Bank,and our beloved Government,have led us all down the primrose path.

I would never pretend to be in the same league with all the economic leaders in this country. Yet i saw most of this collapse comming.Big business,banks and even our government have been surviving on debt interest. This country has little productive product.We export a fraction of what we import.

reply to post by soldiermom


Rick's clip has gone COMPLETELY VIRAL!!!!!

It was even a HUGE headline on Drudge!!

Tonight on CNBC there are more talking heads expressing discontent, but no where near the way Rick pulled it off this morning

Have you seen the clip? Did you look at the faces on the OTHER talking heads?? There was FEAR in their eyes!!!

I LOVED IT!

Typo fix

[edit on 2/19/09 by redhatty]

I totally knew this ! hahahaha,I these charlatans are shaking in their shoes ,they should be it has to obvious even to the most uneducated and unaware among us that we've been had

Heads need to roll over this crowns and all

I haven't been able to see the clip yet but I will. I heard that the looks on their faces were priceless. I'll bet it's a real hoot.

I wish more people would take the gloves off and let it rip.

This is so true. The root cause of much of what our financial system is experiencing right now! Fraud, plain and simple. Fruad = Giant Ponzi Scheme! Madoff & Stanford Financial to name the last three. In fact...coming to a financial institution near you! Fraud!

Nice Post! I give it a flag and a star!!

those who have read the OP's link, must read the page link
HERE

If Taxcheating Timmy is unable or unwilling to discharge his duty as Secretary of the Treasury, I'll do the job. You probably wouldn't like how I'd do it, but I'd do it. Here's my prescription:

toward the bottom is Denningers plan should he take over as Sec. of Treas.

Or, the market crashes?

[edit on 20-2-2009 by imd12c4funn]

As much as I've written on the Economy and the state of our government, I could not have put it better myself.

Rick Santelli, down there on the floor of the exchange
always has a cutting comment to make
and sometimes a scathing observation which he tones down for the sake of the CNBC audience.

the man, is probably more comfortable on the exchange floor
rather than up in the talking-heads tower...
he's been my favorite for awhile now, (the groups black-sheep)

whats really gagging is the apologetic talking heads that weaseled for a
saner approach to the wide spectrum crisis

What makes me laugh is that I have watched countless films about the NWO and their top people, the top end of the Masons, the Rothschilds this and that, and basically these films almost make it as though these people are untouchable, which in essence they are. But then again most premier league footballers in this country are untouchable, as you simply cant get passed the security etc to actually touch them.

What this Santelli has shown, and being from Wales in the UK I have never heared of him before, is that one person speaking out on TV can cause some major damage to the powers of all those above.

The common person is a complete unknown beast, there is no way everybody on this earth can be shut off, closed down and cornered.

It shows that one person, speaking about the right topic at the right time, can really get the agenda forward to stop all this # thats happening in the world, and put a real dent in the deal thats being arranged around the world for the NWO as we speak on here.

They may go ahead and have their own way, as they pull the bank strings, all the technological issues, that we cant manipulate, but when it comes to day to day dealings, they will never win against the majority.

I love these singular people, who pick their moments, and deliver what we need as a normal person, to become more aware of what is going on.

The comment about the S&P falling to 210 reminded me of something I saw on CNBC way back in early 2000. A professor of economics at a US University was interviewed and he said that the major indexes were at that point more than 3 standard deviations above their long term trend lines. He went on to say that over the previous 150 of stock market data that he had looked at, every single time stock prices got more than 3 standard deviations above the long term trend line, prices ALWAYS eventually fell back below the trendline before making new highs. When the anchor person asked him where the trendline would be in 2000, this professor said that the Dow Jones INdustrial Average would be around 4000. This was at the time when the Dow had just hit 11,700. So the idea that we still have a long way to fall is valid.

But if you really want to get scared, then listen to this. Robert Prechter Jr., who is the acknowledged worldwide expert in Elliott Wave Theory, and who is also the one who successfully predicted; the bull market of the 80's and 90's (back in 1978); the Crash of '87: and the imploding financial system years before it was obvious to everyone, has had a long term forecast for the Dow Jones Industrial Average. He says that the worst of this Depression won't be over until the Dow drops to AT LEAST FOUR HUNDRED. In other words, almost a 95% drop from where it is right now. I hope he's wrong but with his track record, I wouldn't bet against him.

Like a lot of people who speak out, if there is an " accident "and rick is involved... herein lies all the proof needed.

Originally posted by multichild
What makes me laugh is that I have watched countless films about the NWO and their top people, the top end of the Masons, the Rothschilds this and that, and basically these films almost make it as though these people are untouchable, which in essence they are.

hmm untouchable? I doubt it. Everyone is vulnerable to gunshot, or an old fashions MGS neck break.

there are like what 300 people in Builderberg group? 300* 6 athletic 20-230 yr old men, trained in shooting and sneaking (not even swat style or what have you, but I'd even venture to say average) could use G maps and the yellowpages to locate most of the scum on the planet and make a sweep of this filth IN ONE NIGHT. or less people in a wee if they were properly funded. although IDk how much it would be pulled off (like 100% success rate) that would sure strike the fear of God into those remaining.

They are human, remember that. Humans with lots of money. Security guards can be bought, humans can be KILLED, life is the most precious and powerful thing, not money. Lets get that through our heads. These guys are NOT, I repeat, NOT untouchable. Never have been. But they have sure struck the fear of 'eternal damnation" (life in prison) into our guys hearts!

Not saying do it but a brick through their windows would not be a bad thing.....

Thats probably what the FEMA camps are for, all the fraudulent business men, politicians, bankers, and secret society toads. Sweet Justice...

Whats happenning over the streets after these media events?

On the economy issue, I'd like to throw in my two cents worth. If you throw out all the political stuff, all of it, and look at the situation from the side, it's not a pretty picture. I don't care if you love Obama, or hate him, whether you're a Rep or a Dem , or an independant--we are in for a major downfall.
if you step back and do your own thinking, and just look at the situation we are in, I personally don't see how we are going to get out of this without some major hurt.
I'm 56 years old, and I've never seen anything so screwed up, so corrupted, so out of control as these economic times are. The really scary thing is, as has been mentioned before, is that there's no plan B.
Listen to your own common sense talking to you. It will tell you , we are in for a world of hurt. There is a bottom to all this, and it will come sooner or later. the only trouble is how much damage we as a nation can take getting there.
I personally can see some things happening that I thought I'd never see. Bad things that are worst case scenario type of things. I'm not a doom and gloom person, but I try to be a realist, and there arer some bad times coming.
People, do your own critical thinking, don't always believe the government spokesman, just because he's giving you your monthly stimulus check. Watch what they do, and not what they say.

Originally posted by daddyroo45
reply to post by redhatty

 

It's hard for me to believe that there are some people still under the impression,that our Government works for us. Main stream Media,the Federal Reserve Bank,and our beloved Government,have led us all down the primrose path.

I would never pretend to be in the same league with all the economic leaders in this country. Yet i saw most of this collapse comming.Big business,banks and even our government have been surviving on debt interest. This country has little productive product.We export a fraction of what we import.

You are absolutely right. This is not my government, they do not represent me, and they are not looking out for me or any that are not in their club. It is actually no surprise that we would now have an Illegal Alien in the Black House. Nothing white about it.
You need to be aware that after WWII, the US was producing most of the goods in the world. That changed, and now we simply invent, create, manage, market, and otherwise use our noggins. The US WAS, I don't know about currently, bringing in MUCH more than it was spending. We didn't assemble the products, we simply created them. The trade deficit was a remarkable pc lie.

reply to post by soldiermom


Completely agreed. I would further elaborate the things such as our warehouse schooling system stacked with the complete educational system. There is a lot to it but he has the idea. I love your sig by the way. I think that was in a Dean Koontz book I recently read!!!!

I have this bumper sticker that gets the point across and it says:

"If you aren't completely appalled then you haven't been paying attention!"


[edit on 20-2-2009 by N3krostatic]