Did Goldman Crash the Markets with Sub Prime Precision? Yes.
The sub prime market is the greatest "scape goat" of all times. Wall Street was quick to put the blame of the market crashing on the sub prime market. But most of us with an average size brain have known for years that sub prime would tank. It had been a topic for several years in the media. So why was Wall Street continuing to collateralize these types of loans, put them in a box and resell them to other less sophisticated banks and around the world.
The quick answer is certain Wall Street banks had be colluding together to crash the real estate market, using sub prime credit-default-swaps(CDS), just to get the avalanche started. These culprits knew that the fire would spread to credit markets and quickly into the stock market. They also knew, their trojan horse, Hank Paulson was at the White House under Bush acting as a Treasury, with a premeditated, massive bailout plan for certain key players.
Later we will find out that it was really about embezzling money to the big players through a "front" better known as AIG. The bailout is just icing on the cake so to speak. Imagine a number of banks each getting 10-20 billion dollars apiece to do with what ever they want, like buying up some of the victims for pennies on the dollar. But the real illicit profits were made when these conspiring banks, or Club of Rome, short sold sub prime, short sold their own bank stocks as well as other bank stocks, and short selling stocks indices during the 2 week crash, as well as short selling oil futures.
So much money was make in these activities that it was difficult to hide all the profits. The profits would be plowed back into their own stocks one to two quarters later, by bidding up their own stock to ridiculous levels just months after the greatest crash of history. You think they would of waited a few quarters so it wasn't so obvious. Why would Goldman Sachs and other players purposely short sell their own stock and other bank stocks? Because they were trying to create this picture of gloom and doom, much greater than it actually was at the time.
They also knew that their, stock would double or triple soon after the crash based on them plowing all these illicit profits back into their stock price through a number of different means. An example of this logic is for example, take Exxon for example. Do you think they care if the price of oil plummets from $147 to $40 in a few months. Not if they sold forward all of their oil contracts. Exxon will be there buying at the bottom. Goldman Sachs was able to sell forward their stock, lock in a high price, then watch the "bank raids" by the short sellers that they themselves were apart of but it will never been known.
That is why anytime Hank Paulson opened his mouth about "spooking the market" or spooking the banks, that is EXACTLY what happened. From the timing of the "short ban" to just the announcement of the "short ban" on bank stocks, it seems Paulsons actions had the opposite effect of what he was portraying himself as he wanted. But really he wanted, to see the markets crash, as it was part of the master plan, and Goldman had trades already lined up.
Also explains why Hank is spreading fear about amongst Congress members, saying things like Great Depression and Martial law. In fact their was never a threat of Depression. The recession started only because the stock market crashed, and so people reacting in fear and stopped spending, thus causing a recession just as Paulson wanted.
But the original crisis that AIG was the center off; would of NEVER spilled into the real economy. It was just 4-6 banks that were conspiring to create a crisis, and then get paid for that crisis (TARP). Had we let AIG fail, along with Goldman and the others, we would have been so much better off. It was a zero-sum game between those players, that's why it would not have spilled over into the real economy.
The worlds 3rd largest investment bank, Bear Stearns sold for pennies on the dollar to the worlds largest bank, JP Morgan. How could one bank have it so wrong while another bank had it so right? Unless…..One bank walked the other bank into a series of diasterous investments and then took out a insurance policy on their demise. Back in 2008, that was as easy as buying an insurance policy from AIG. Seems like many of these polices were bought, AIG selling $120 billion alone. But yet on main street, it is illegal for a man to buy fire insurance on his neighbor’s home! Gee, I wonder why? So, AIG’s counter-parties are simply banks that bought insurance that other banks would burn down. Is it possible that they helped burn them down? In order to get paid on their insurance?
The reason I believe that Goldman Sachs crashed the markets last year, working with the “Club of Rome,” is that there were plenty of motives (profits) and the tools (CDS contracts, corrupt exchanges and gov. officials) and the people (overly paid professionals) to accomplish such a task were in place. It was long ago discovered that a derivative can be used to manipulate the actual market it is trying to minic.
More importantly, the Black Swan arguement is BULLSHIT. Maybe if you looked at it as a flock of Black Swans, that I could buy, but not just one measley sBlack Swan in the subprime market and here is why. When you have, concurrent epic failures across many sectors, such as rating agencies, (Moody's , S&P) regulatory agencies, (CFTC, SEC) mortgage standards, Freddie Mac & Fannie Mae, (the current scape goat) and AIG, not to mention the Black Swan in Subprime ; all at the same time?
That my friends is conspiracy. Yes, everyone's hand might of been in the toxic cookie jar at the end, but there definitely was an overhead, overreaching organized voice , that told people to put their hand in that cookie jar. Encouraged them, bribed them, and even told them "Don't worry about it-- AIG's gottcha covered. That organized force was Goldman Sachs with it's 30 independent slimy business units not reporting to each other, other than to talk Trade Ideas.
But the first one out of that cookie jar, was Goldman Sachs, and apparently with the biggest bag of cookies. So many cookies in fact that the bags split and left cookie trail crumbs all leading back to the Cayman Islands, where it is rumored that mountains of cookies all belonging to Goldman Sachs and clients and partners, many of which are washing away with the tide.
Additionally the Black Swan arguement was already used 10 years ago with the LTCM (Long Term Capital Management) fiasco. The same derivatives problem, and the same players/bankers, but the pot was only 100 million dollars back then. The players decided to bail themselves out and save the idea of a government bailout for another time with the stakes would be much higher. Do any of you Bloombergers remember this incident? That fact it happened again shows double epic failure of the system and the bankers.
The motivation was simple. Elimination of most of the non “Club of Rome” banks on Wall Street. Also the corrupt FDIC would be happy to break up the smaller banks for a small fee, and maybe a fee for being forced to take their tiny slice of TARP. (tiny compared to the Wall St banks, who aren't really banks at all) Next, very profitable trades existed if the market was crashing, or was extremely volatile. The "insiders" are profiting on the up as well as the way down.
It was figured out many years ago that the derivative of a market could be used to manipulate that underlying market. That's why they have limits on the number of contracts that an individual can own at one time.
But the Wall Street banks figured out to work together, spread the trades out over many clients, exchanges, countries and all of sudden, it would be impossible to show that the markets are fixed and manipulated. With one bubble (real estate) infecting another bubble (stock market) and another bubble (oil market) .
More importantly, the Black Swan arguement is BULLSHIT. Maybe if you looked at it as a flock of Black Swans, that I could buy, but not just one measley sBlack Swan in the subprime market and here is why. When you have, concurrent epic failures across many sectors, such as rating agencies, (Moody's , S&P) regulatory agencies, (CFTC, SEC) mortgage standards, Freddie Mac & Fannie Mae, (the current scape goat) and AIG, not to mention the Black Swan in Subprime ; all at the same time?
That my friends is conspiracy. Yes, everyone's hand might of been in the toxic cookie jar at the end, but there definitely was an overhead, overreaching organized voice , that told people to put their hand in that cookie jar. Encouraged them, bribed them, and even told them "Don't worry about it-- AIG's gottcha covered. That organized force was Goldman Sachs with it's 30 independent slimy business units not reporting to each other, other than to talk Trade Ideas.
But the first one out of that cookie jar, was Goldman Sachs, and apparently with the biggest bag of cookies. So many cookies in fact that the bags split and left cookie trail crumbs all leading back to the Cayman Islands, where it is rumored that mountains of cookies all belonging to Goldman Sachs and clients and partners, many of which are washing away with the tide.
Additionally the Black Swan arguement was already used 10 years ago with the LTCM (Long Term Capital Management) fiasco. The same derivatives problem, and the same players/bankers, but the pot was only 100 million dollars back then. The players decided to bail themselves out and save the idea of a government bailout for another time with the stakes would be much higher. Do any of you Bloombergers remember this incident? That fact it happened again shows double epic failure of the system and the bankers.
The motivation was simple. Elimination of most of the non “Club of Rome” banks on Wall Street. Also the corrupt FDIC would be happy to break up the smaller banks for a small fee, and maybe a fee for being forced to take their tiny slice of TARP. (tiny compared to the Wall St banks, who aren't really banks at all) Next, very profitable trades existed if the market was crashing, or was extremely volatile. The "insiders" are profiting on the up as well as the way down.
It was figured out many years ago that the derivative of a market could be used to manipulate that underlying market. That's why they have limits on the number of contracts that an individual can own at one time.
But the Wall Street banks figured out to work together, spread the trades out over many clients, exchanges, countries and all of sudden, it would be impossible to show that the markets are fixed and manipulated. With one bubble (real estate) infecting another bubble (stock market) and another bubble (oil market) .
Some conspiracists believe that entire real estate bubble was creating to rob the middle class of everything they had. I false sence of wealth was created by this bubble, where by home owners were encouraged to buy a 2nd and 3rd home to participate in the bubble. Some would diversify into stocks and the oil market with this "new wealth" that was created from the apprication of their homes. But when the music stopped, all the markets would come crashing down, and 8 trillion dollars of the middle class wealth had vanished.
Wall Street investments are a zero-sum-game. Meaning the money just got pushed across the table to some other players. As was the case with AIG, the money was just moved to the counter-parties. Had those contracts been negated, it would of never spilled into the real economy. And yet other conspiricists believe that the reason that "collalerization" and "securitization" were invented in the first place, for the sole purpose(s) of "commoditizing" peoples homes, so the market could now be victimized by boom/bust cycyles. Where real estate used to be conservative long term investments, now it had become like any other market in which derivatives were used and thus subject to boom/bust cycles.
Goldman Sachs would short sell the sub prime through the use of Credit Default Swaps in 2007 and profit 4 billion dollar profit. Was this trade big enough to pop the sub prime market that would quickly spread into the credit and stock markets? Goldman Sachs behavior from 2006-08 would indicate that Goldman crashed the stock market in 2008. Besides the billions of dollars to be made from the downside volatility, and then back up (w-shaped recovery) Goldman would eliminate most of their competition of investment banks (Lehman Bros, Bear Stearns, Merrill Lynch -Conspiracy 101..LINK to portfolio.com)and consolidate the smaller non-merchant banks into tiny bite-size pieces to be digested later, with the help of the corrupted FDIC stress-test.
Lastly, by crashing the market, and forcing a bailout, they would get $700 billion dollars to be split between a handful of banks, (that were either "long" or "short" real estate) and to buy up some smaller banks. They were just buying "balance sheets" with the money. TARP was purposely large, to add confusion to the over all scene. But once the smoke cleared, it was obvious. It was really about embezzling 15- 20 billion dollar "slices," to about 5 - 8 banks.
Also, TARP would bring sweeping new powers for the FED and Treasury under the guise of new regulation. The existing regulatory bodies, the SEC and CFTC would get zero, while the new massive powers to police capitalism (Video of Hank), shut-down entire industries, and replace CEO's would go to none other than the FED. Today the fun word is "systemic" risk. But we already went through all this with LTCM 10 years ago! Same players. Same problems. Same "systemic" risk and even a Black Swan. Read my blog Deja Vu -- Revisiting LTCM for a refresher.
Goldman Sachs drops the bomb.
In 2007, Goldman short sells the ABX (sub prime) index and makes 3 Billion dollars doing so. Hank Paulson, who is then US Sectary of Treasury, (Visits BilderBerg group, in 2008) tells President Bush and Congress, multiply times through the year, along with Bernake, that "he didn't see it coming" (the sub prime thing) even though he was just CEO of Goldman one year prior, when they bet against the sub prime real estate market. Hank Paulson, a 20 year veteran at Goldman and CEO for 8, was a visionary for the industry.
He also worked under Nixon and reformed the NYSE to Goldman's specs. He simply didn't forget his vision nor put Goldman's long-term strategy on hold because he became a public servant. Hank Paulson most certainty knew that sub prime would tank way before he went to the Treasury. I'm sorry, but you don't go from the world's brightest most inventive merchant banker to a stupefied ignorant public servant just because you became Treasury.
This is very important because if Hank Paulson knew that sub prime would tank, he could infer that the other markets would follow suit, and a great crash would be under way. He already had the "bailout plan" deceptively known as TARP in his back pocket before inducted as Treasury. Goldman Sachs knew, that a heavy short position on the ABX sub prime index would be enough to get the avalanche started. Here is a video of Peter Defazio Rep. of Oregon attacking Hank Paulson about the ludicrous nature of the bailout.
Goldman's People raise margin requirements
Flash forward to July of 08, and we have a massive sell off in the commodities markets with the media blaming it on a slowing economy. The slowdown, in the economy really came mostly after the stock market crashed in October causing consumers to retrench in fear. In reality, it was Goldman's people at the Exchanges, raising margin requirements in the summer, forcing hedge funds out of the market. This really helped the credit crisis to blaze along full-steam ahead. Commodities/Futures would lose 50%-75% over the ensuring months, leading up to the stock market crash.
Working in the back ground, (or not working at all) is Goldman's former employee Cristopher Cox, heading the SEC operation for many years. It was his role to make sure that regulations were very lax, and employees did not to follow up on cases. Cox would also raise margin requirements on equity products when the time was right. With Wall Street inventing an "investment-in-box" they needed a SEC insider to make sure no one looked inside the boxes. The boxes were stamped AAA investment grade by Moody's and that's all that mattered. The demand for these "investment-in-a-box" was so massive, that the banks who originated new mortgages, couldn't keep up the process of filling these boxes that Wall St provided them. The process is better known as collateralizing. Click here to see the bogus math behind these "investments-in-a-box" as reported by Wired Magazine.
Also known as "Geithner's Dirty Little Secret." The fact is that 95% of derivatives are held by just 5 merchant banks. It is these banks that are the weakest. If the banks were solvent, why would they need another 2 trillion dollars as pointed out in the recent Bill Moyers interview with Bill Black on PBS. Bill Black knows all about the massive cover up going on in DC and Wall Street.
Cox would also tip off Goldman as what other firms were "holding" and Goldman was known to gun down these positions. The most notorious case of this is when Goldman traded up oil to force a billion dollar margin call for Semgroup in July 08. First they offered them a loan, but then after seeing their book, they reneged on the loan, and oil would trade mysterious 10 - 15 dollars higher over the next couple of days forcing Semgroup into bankruptcy.
Hank Paulson kills Lehman Bros. Execution Style. Flash forward to the September, and we see Hank Paulson take Mr.Lehman Bros into a private room in the White House, where he was executed with the President as the only witness. I'm pretty sure Hank Paulson knew that this would rattle the markets. Just as he wanted! And the the perfect alibi, "I didn't have the legal authority."
Conveniently for Goldman, that would change a week later, with the AIG bailout. With Goldman Sachs arch rival out of the picture, it was now time to talk BAIL OUT money! All Lehman Brothers needed was 6 billion. To bad they couldn't hang on for a week, for the law to change. Speaking of laws changing, did you notice how fast Goldman Sachs and Morgan Stanley were converted from "merchant banks" to regular banks or holding companies status, once news broke of the bailout package. One day was all it took! To bad the car companies didn't act to become bank holding companies! Anyway, JP and Goldman, need your hard cold cash to keep up the house of cards. The fastest way to achieve this is buying other banks. That was ultimately the purpose of TARP.
Hank knew that there would be a tug-a-war between the markets and DC while he pitched his plan. After the market had crashed for 11 days in a row and Goldman profiting during this 2 week crash, it was time for Hank to really press urgently and threaten Congress to pass it. He would use words like marital law and great depression and scared the hell out of them. They pass the $700 bailout (TARP) which was original 3 pages, now grows to 200 pages. And suprise. The stock market not only stops crashing, but rallies 900 points in a day! What a no-brainer.
Here is Alan Greenspan blaming the credit crisis on the Rating Agencies. (I am curious to who put the hit on AIG. All it took was one phone call, to lower AIG's rating and forced it to find billions over night.)
Hank Paulson was really quick to blame it on "imbalances between the saving and debting nations." The same worthless econo-speak that Alan Green Span uses.
What he really meant to say was American/British bankers had pushed a bunch of bogus investments at the world, which consumed the worlds savings. America doesn't save so, they are on the debting side on the balnce beam, making it a double whammy.
Paulson recently stated
"Something like this, only happens once or twice a century." My response to that would be "Hank, that's because that's the average time (one life) it takes, to forget what just happened. Give it 60 years, and my daugther is retiring, the same bankers will be crashing the market again. You certainly couldn't do it every 20 years, because I would remember."
Jim Crammer on Goldman's Speed dail for dis-info purposes.
Jim Crammer from Mad Money, after watching the market crash for 11 days in a row, tells the American Public to "sell everything." That goes against every Wall Street tradition. Why is demanding every one sell? Oh because, Goldman decided, he was the "pivot man." One day later, the TARP plan passes, and the market is up a record 900 points. If the market rebounds this year, then you know Jim Crammer is "in" on the conspiracy.
Investigative Reporter,
Patrick the PAINTER
Predicted Price of GOLD the day President Obama leaves office!
$
per oz
per ozpatrickthepainter@gmail.com
Denver, CO The Mile High City
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