This could be the most important article we ever published. Period.
A post on market-ticker.org refers to quite possibly the greatest Ponzi scheme ever pulled on humanity. To quote:
The game was to move money under a scheme of deceit and fraud. First sell the bonds and collect the money into a pool. Second take your fees, third take what’s left and get it committed into “loans” (which were in actuality securities) sold to homeowners under the same false pretenses as the bonds were sold to investors. By controlling the flow of funds and documentation, the middlemen were able to sell, pledge and otherwise trade off the flow of receivables several times over — a necessary complexity not only for the profit it generated, but to make it far more difficult for anyone to track the footprints in the sand.
If the loans had actually been securitized, the issue would not arise. They were not securitized. This was a mass illusion or hallucination induced by Wall Street spiking the punch bowl. The gap (second tier yield spread premium) created between the amount of money funded by investors and the amount of money actually deployed into “loans” was so large that it could not be justified as fees. It was profit on sale from the aggregator to the “trust” (special purpose vehicle). It was undisclosed, deceitful and fraudulent.
What does all this garbage mean? First you’ll have to inform yourselves on the concept of derivatives and securitization. In a super-basic nutshell, a derivative or security is an investment in the value of an asset (or in the case of the security, a transfer in the risk of your asset). You don’t actually invest in the asset that is being valued. If you read further into derivatives you will be confused, and amazed, at how such an insidious financial instrument made it into modern finance. But, they’re there, and we have to deal with them. So back to the housing fraud. How the scheme works is described very basically in the first paragraph of the quote up above.
The second paragraph describes precisely why this was a scam. Financial instruments are there to do what they were designed to do (duh…). Securities are designed to help banks avoid risk when financing home loans (feel free to correct me in the comments if I got this one wrong, this entire thing is a rather complex issue). Instead of the loss hitting the bank, the loss is incurred instead by a group of investors who bought the security from the bank, and the companies they invest for. I’ll go into why this is so important later, but for foreshadowing; re-read the bold portion of the first paragraph in the quote. The issue is; they didn’t do what they were designed to do. There was a rather large pool of money from the security issuers; and a small amount lent out as loans. The money gap was so large it could not be justified as fee collection. It was profit upon sale from the investors to the trust. Can you see what makes this so maddening? Security issuers made off with a rather large chunk-o-change. They took our money. It was a scheme. However, in speculative defense; I have written this as it were fact. If you clicked the first link you will have read this is pure speculation; just nestled in nicely by a few facts.
The fact is, if you do some heavy research into the process of securitization you will find out that it is wealth redistribution; just done privately. That’s what it literally is. Securitization was designed to transfer investment risk from those that issue loans to a group of investors. This keeps currency “liquid” while transferring potential debt or away from banks. In other words, when you make a payment on your loan; the bank doesn’t keep it, that money goes back to those that invested in the risk. What made me a little concerned was the fact that anyone could get a loan back in the mid-2000s. Anyone, their dog, and their dead great-great-grandparents could get loans. You see where this is leading? Financial securitization allowed this massive transfer of risk from those who issued those loans to those who invested in them. This is what almost broke AIG. They invested in all kinds of other things; things that were proven to blow up. And the loan issuers were asking for their money from the investors while foreclosing on homes. Don’t forget, securitization protects loan issuers against financial risk; the bank still considers your home new property if you default.
Are you mad yet?
Fellow readers; please, please, please, share this article. We could be facing the end of our economy here. -Bran
It wasn’t a mere coincidence that those ‘Too Big to Fail’ Wall Street banks, aided and abetted by their fellow gangsters in the Fed, went on a wholesale looting of American wealth right around the time of the inside job of 9/11.
Like any intelligent gang of crooks knows, having a BIG diversion when robbing a bank is a good idea.
Besides being used to declare war against the Muslim world and shred the Bill of Rights, 9/11 was also used as a cover to help with the looting of the USA.
I’m happy to see a “We are Change” outfit in Branson, I didn’t think that those seeking truth would be so close.
I retired as a career FF from the Columbia FD in 2004, after fighting fires for over 20 years and I’m here to tell you, that what happened on 9/11, especially the ‘pancaking’ of those buildings into their own footprint, doesn’t happen often.
And for three buildings, to ‘pancake’ the same way, on the same day, within hours of each other, well the odds against that happening must be astronomical.
I’d like to join or help out in some way.
greg
Thanks for the offer to assist Greg. I have read through your website and I must say, you have a knack for writing; and linking. We can create you a blog account if you wish.
Also, if you can somehow get your thoughts on audio; another podcast submitter would be awesome!
[...] given any money) and groups of investors (where mortgages and loans that were bought were sold as Mortgage-Backed Securities or other forms of derivatives) to back them up in case they were out of money. The Clinton [...]