Lies, Lies, Lies: The New Foundation of the Financial System By Bill Bonner |
December 14, 2010
Lies, lies, lies…
The days are dwindling down fast now. There are only a
precious few left in 2010. The Dow rose 40 points on Friday.
Gold fell off $7.
But let’s forget the market action for a little while…most
of it is noise anyway.
It is time to relax a little. Time to think.
“Everybody is so busy now,” said a colleague
in Australia. “No one has time to think. Instead,
we’re busy answering our email or checking our Blackberries.
It’s amazing. You get in an elevator and everyone
pulls out a phone. No one talks anymore. Or looks at anyone.
Or has a thought.
“I don’t even think we writers bother to think
anymore. We’re too busy. We have to produce too much
material. We don’t really have anything to say…but
we say a lot.”
Of course, that’s been true at The Daily Reckoning
for years. We were always ahead of the trend. We write every
day, whether we have something to say or not.
Do we have something to say today? To tell you the truth,
we don’t know yet. But let’s begin by thinking
about this…a quote from The Daily Bell we passed along
on Friday:
“The problem with where America is now is that the
country has been built on one lie after another for the
past decade and the lies show no signs of slowing down.”
And then, there’s this from Charles Hugh Smith via
Marc Faber:
“…the status quo would collapse were systemic
fraud and complicity banished. Rather than the acts of evil
conspirators, they have become the foundation of the US
economy and financial system…”
You will recall how Goldman Sachs wowed the whole world
with its dazzling trading. Day in, day out…the traders
at Goldman made money. The firm turned in “perfect”
trading quarters, with not a single day showing a loss.
Surely, one of the junior traders would have miscalculated
at least once? Or a seasoned old pro, after a well-irrigated
lunch, take his fat finger and hit the wrong button? Nope.
Not once did Goldman’s trading machine err. It was
uncanny. Almost unnatural.
Who was on the other side of those trades, we wondered?
Trading is a zero sum game. One side wins. The other loses.
So some poor schmuck must have taken a loss for every gain
earned by Goldman’s geniuses. Imagine him taking his
lumps day after day…and still coming back for more.
How could anyone stand so many losses? What kind of fighter
could take that kind of beating and still be on his feet?
And yet, there were no major new bankruptcies announced
during that period. How was it possible? Who was losing
all that money?
We don’t know. But we know who the schmuck was …the
poor sap was us! Had it not been for Senator Bernie Sanders
from the Green Mountain State, who was curious enough to
insist, we would never have known what had happened to the
Fed’s $1.3 trillion in bailout cash. Now we know.
Goldman helped itself 212 times – roughly every business
day – during the 12-month period beginning in March
’09, all the while telling the world that it needed
no bailout.
Lies, lies, lies…
The first lie was the biggest whopper of all – that
you could get rich by spending money rather than saving
it.
The second was that the stock market would make you rich.
All you had to do was to buy a well-balanced portfolio and
hold for the long run.
When that one ran into a wall, along came the lie that
you couldn’t lose money in real estate.
There was also the lie that the free market would make
people rich…and if it didn’t, the authorities
would force it to do so!
Then there was the lie that an economy saturated in debt
could be stimulated to heights of prosperity by splashing
on more debt.
And then there was the lie that you didn’t need real
money in the system; the authorities could manage a flexible,
paper money system so as to help maintain full employment.
And then, after half a century of adding cash and credit,
when the Wall Street speculators cried and moaned, we were
told that they were “too big to fail.” They
needed to be saved.
Then came the lie that monetary and fiscal stimulus would
lead to “recovery.”
When recovery didn’t come, we were told that QEI
would do the trick – so they pumped hundreds of billions
of dollars into Wall Street’s failed institutions.
When it didn’t work, we got QEII.
And now, the federal government is headed to bankruptcy.
We are told not to worry. No need to change course. Tax.
Spend. Overspend. Stimulate.
The same goofballs, liars and incompetents who have brought
us this far say they’ll take care of us.