We’ve all heard the top names in Investment Banking tossed around lately… trusted names like Bear Stearns, Morgan Stanley and Lehman Brothers. Even Bank of America, CitiCorp and Wachovia, to name a few, have gotten in on the act. For years they have been raking in boatloads of cash from this sub-prime shell game they’ve been running.
Well, here’s an eye opener. Goldman Sachs, the oldest and largest of the investment banking firms on Wall Street is the only firm involved in the mortgage meltdown that’s still making money… lots of it.
Goldman reported their quarterly earnings recently and lo and behold, they reported a net profit of roughly $3 Billion Dollars (for the quarter). How’d they do it you ask? Well they not only took in billions selling these CDO’s and SIV’s (nuclear waste) to their investors, but when they were done they intuitively knew it was garbage and began “shorting” the same bonds they had just sold. You can call them brilliant, or deceptive and manipulative… either way it’s just cold.
In the early 80′s we were saddled with runaway inflation. You may remember, Certificates of Deposit were paying 18% and mortgage rates were at 20%, the dollar was losing value as quickly as it passed from one hand to the next. It took nearly 14 years for the economy to fully recover and then came the “Savings & Loan Disaster.” From ’90 to ’91, due to their affinity for making a buck, these banks made high risk loans (the Fed prints it, the Bankers spend it… same old shit) that almost caused the collapse of our entire banking system. As a result nearly 50% of the nation’s banks closed their doors.
In both cases the Federal Reserve came to the rescue very similar to what is happening today. With their easy credit and lending practices, a free wheeling printing press and drastic reductions in interest rates they managed to avert catastrophe, save us from recession and orchestrate a “soft landing” (more like a crash landing).
All this at the expense of the treasured “Greenback.” It looks like young Skywalker (Bernanke) has learned his lessons well from Master Yoda (Greenspan). There seems to be no limit to which these guys will go to debase our currency. With the Fed expected to cut rates again in November by another 50 basis points, it appears history is inevitably setting the stage to repeat itself once again.
Just like Goldman Sach’s, the “Smart Money” on Wall Street is already “Shorting” the Financials, the Housing Market and the Dollar.
Add A Comment