Posts Tagged ‘Synthetic Derivatives’

How Big Bankers Became Outlaws.

April 28, 2010

[A much larger post will develop the full picture in a civilizational perspective].


1) We are living in a state of law. Supposedly.

2) That state is democracy, the rule of the demos, the people. It is not the rule of the bankers. Supposedly.

3) Political leaders have recently given PRIVATE unelected individuals, the bankers, the means, and the right to create money, the money everybody uses, through debt, ex nihilo, starting from PUBLIC funds. (This is called, somewhat misleadingly, the fractional reserve banking system.)


3) Contradicts the union of 1) and 2). Because money is power, and power is supposed to be exerted by the people. But big bankers create money at will, with the complicity of the political leadership. So they create power at will.

Thus, the present system incite, big, MONEY CREATING BANKERS TO BECOME GANGSTERS, and OUTLAWS. Indeed the huge  power bankers are allowed to gather overwhelms the power of the people.

It is as simple as that. Thus one needs to get rid of the private fractional reserve PUBLICLY funded money creating system.

The situation has been rendered worse in the last decade by the blossoming of synthetic derivatives which are out of this world bets which could not possibly be paid back.

Synthetic derivatives transformed a 300 billion dollars loss in real mortgages into a potential exposure of 24,000 billion dollars, thanks to the leverage of the derivatives squared.

Then political leaders, accomplices with the bankers, offered to pay the 24,000 billion dollars, on behalf of taxpayers, leaving the economy in tatters.

Not all is lost: Goldman Sachs got its entire 2008 profit, 13 billion dollars, from taxpayers, through AIG, thanks to US politicians, and the USA loves a winner. Love and dove, there are still many a feather to  pluck.




Technical P/S:

1) The numbers above pertain to the USA, alone. European banks use the same derivatives, and some had losses so great that they survived only from the injection of public funds. But, differently from the USA, this was not a complete gift: some of the biggest banks became property of the public (starting with the British “Northern Rock”).

2) Synthetic derivatives are, mathematically and philosophically, a generalization of the licentious money creation, at will and from thin air, or no air at all, of the privately managed, publicly funded, fractional reserve system, thus proving further, if need be, how erroneous the latter can be.

3) The fractional reserve system ought to be kept, to provide the capital needed, simply it ought not to be anymore the province of a small private oligarchy gaming it.

4) The huge  power bankers are allowed to gather overwhelms the power of the people. Proof? Look where the job of the people are (overseas) and where capital and investments have gone (overseas, from Grand Caiman to China). This empowering of a small elite, while weakening the rest of us, violates the spirit of our law, all the more since it is due to a mechanism, not to any sort of merit. Moreover, it is a financial mechanism, and thus that oligarchy is actually a plutocracy. Plutocracy is to civilization what cancer is to animals. Terminal.