I stated in 2003 that the insider elitists would hold up the system with printed money long enough to wipe every last crumb of middle class wealth off the “table” and into their pockets. If you don’t have enough cash laying around to buy your own Federal-level “elected” official, you are middle class.
It’s easy for Wall Street to get their share of the crumbs being
swept off the table because it’s managed to infiltrate and control every
nook and cranny of Capitol Hill. Hillary Clinton is a Democrat?
Really? Then how come she and Bill greedily take millions from Goldman
Sachs alone in “speaking” fees. Quite frankly, ex-Presidents OR
potential Presidential candidates should be barred from accepting paid
appearances from any corporate or corporate-sponsored entity, but
especially from Wall Street.
I want to call your attention to an investigative article by Wall
Street On Parade titled “The U.S. Government [really, The Taxpayer] Is
Quietly Paying Billions To Wall St. Banks.” In the past for years,
2011 – 2015, Freddie Mac alone paid out nearly $12 billion in
derivatives counter-party payouts. These payouts resulted from losses
interest rate swaps, 90% of which are owned by Wall Street banks. That
money from Freddie Mac is actually Taxpayer money because the Government
still owns FRE and FNM. LINK
But it’s even more profound than the WSOP lays out.
Interest rates are held artificially low by the Fed/Treasury, which
enable FNM/FRE to underwrite mortgages for people who otherwise would
not be able to afford the mortgage. The Too Big To Fail banks make money
off of this is several ways. They source the mortgages and take a fee,
they flip the mortgage to FNM/FRE and take a fee, they securitize the
FNM/FRE mortgages and sell the mortgage pools to institutional investors
and take a fee and they sell interest rate swaps to FNM/FRE and take a
fee. When interest rates don’t go up because the Fed is holding them
down, FNM/FRE lose money on the swaps and…Wall Street gets the money
from the loss.
A close friend of mine was curious about how the housing market might
play out, because – after I described what’s happening and why the
mid-price homes in Denver are hot right now (while the over $800k
housing inventory piles up like trash at the local dump) – I explained
that the same mortgage bubble that fueled the big housing bubble has
been reinflated. The only difference is that FNM/FRE are now the
underwriters of sub-prime mortgages that are disguised to look like
conventional mortgages. But they’re far from “conventional.” If
someone puts down 3% – or, more likely borrows the 3% – they are
underwater on the value of their home after all closing costs are
factored in. These de facto LTV mortgages well in excess of 100%.
That’s what Countrywide and Wash Mutual were underwriting, only this
time it’s well-disguised and backed by YOU, the Taxpayer.
The same dynamic has already occurred with auto loans and student
debt. Auto loans are starting to blow up, as are student loans. These
3% (FHA) and 3.5% (FNM/FRE) and 0% (USDA and VHA) down payment mortgages
are next. We’re already seeing this occur in energy-heavy areas like
Houston. What’s going to happen to the Central States Teamster pension
beneficiaries who need their pension payout to make a mortgage payment
after their payout is cut 60%? That’s close to half a million people,
many of whom use that payout to fund monthly mortgage payments.
There’s another gigantic bail-out coming. And
Wall Street will get to keep all the $10’s of billions in Taxpayer
money that was funneled to it while it was underwriting the current
housing, auto sales and student loan bubble.
My friend then asked me what I thought be would be the event that
collapses the U.S. house of cards. The fact is, no one knows but it
will likely be derivatives-related just like in 2008. No one saw the
de facto AIG/Goldman collapse. Note: the Martins reference AIG blowing
up but Goldman Sachs blew up too. The only difference between AIG and
Goldman was that Henry Paulson, ex-Goldman CEO who was Treasury
Secretary, was in a position to direct Taxpayer money toward a bail-out
Goldman, while AIG and Lehman were left for dead. Note also:
AIG was taken over by the Government because it enabled the Government
to “dis-arm” – with the help of the Fed – all of the derivative bombs
that would have completely incinerated Goldman Sachs.
The only way to protect yourself from what’s coming is to get your
money out of the banking system. The Fed’s inexorable suppression of
the price of gold/silver is openly giving everyone a chance to convert
as much paper monopoly money as possible into physical gold and silver
at artificially low prices.
A Mining Stock Journal subscriber told me over the weekend that he
was contemplating a 100% cash-out refi on on his house, which has a lot
of equity in it, and buying gold and silver. He asked me if I thought
it was a good idea. I said that as long as he was okay sending the keys
to the bank and walking away when this thing blows – because I know of a
lot of people who are going to do just that – that he would be an idiot
if he didn’t do it.
This is exactly what Wall Street is doing with the Government’s blessing. If you can’t beat ’em, join ’em…