If you are new to this blog, you are invited to read first “The Largest Heist in History” which was accepted as evidence and published by the British Parliament, House of Commons, Treasury Committee.

"It is typically characterised by strong, compelling, logic. I loosely use the term 'pyramid selling' to describe the activities of the City but you explain in crystal clear terms why this is so." commented Dr Vincent Cable MP to the author.

This blog demonstrates that:

- the financial system was turned into a pyramid scheme in a technical, legal sense (not just proverbial);

- the current crisis was easily predictable (without any benefit of hindsight) by any competent financier, i.e. with rudimentary knowledge of mathematics, hence avoidable.

It is up to readers to draw their own conclusions. Whether this crisis is a result of a conspiracy to defraud taxpayers, or a massive negligence, or it is just a misfortune, or maybe a Swedish count, Axel Oxenstierna, was right when he said to his son in the 17th century: "Do you not know, my son, with how little wisdom the world is governed?".

Thursday, 16 July 2009

Held by the throat

Goldman Sachs announced record quarterly profits: $3 billion. But these are not normal times. Any profits made by financial institutions deserve a careful analysis.

When the current crisis started banks were sitting on a huge pile of toxic instruments, notionally worth quadrillions of dollars. This is a massive pile of toxic waste worth on the market nothing but having a massive face value.

Then the US government, and and other governments too, pumped in billions, trillions of dollars of liquidity into the system. It should be examined then whether Goldman Sachs found a way of converting some of this massive pile of toxic waste that would be normally worthless (that must have been written off as such last autumn), to convert into government injected cash. And whether they will continue doing that posting big profits in months to come whilst ordinary business and consumers market will see very little liquidity that governments (stupidly) expected when they injected liquidity into the system.

If that was the case that would have confirmed a well predicted (last autumn) scenario: effectively banks, with the help of governments, developed a control method of the economy (and hence taxpayers) that work in the same way, as loan sharks control their "customers" (or rather victims). No matter how much the victims pay, their debt keeps on growing and the sharks are able to extract every dime earned by their victims. In essence, the financial "elite" holds the taxpayers by their throats.

It may (or may not) be coincidental that in this scenario that Goldman Sachs is so close to the US government. British government also pumped billions into the banking system. It will not be surprising, or it may be to some, if JP Morgan, that is very close to the British government, posts large profits too.

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