My most likely scenario: A major bank like Morgan Stanley or Bank of America is deliberately bankrupted. The banks have already been told to make Living Wills which means they are preparing for bankruptcy by separating their good assets from their bad ones. The banks and the Insiders will then get free money from Bernanke to naked short Morgan Stanley stock to zero. They could also buy Credit Default Swaps. CDS are a special type of derivative that in this case could insure someone against a decline in Morgans stock price. But there are too many liabilities in the CDS market with no ability to pay claims, CDS night be avoided altogether as the plan is to take the markets down a little and not to flatten them all in one day. The Congress and the Federal Reserve would step in to bailout Morgan. The banks and the Insiders will buy all of Morgan’s remaining good assets for pennies on the dollar with subsidies from you. The Congress lets the taxpayers buy Morgan’s bad assets funded by even more Treasury bonds to finance this deal of the century while paying for it with money the banks created out of nothing. Since Morgan is to become a regulated public utility anyway, it does not matter if it goes bankrupt as long as the assets are stripped and the taxpayers are stuck with the liabilities. This process can be repeated with Bank of America and Citibank after the elections before it all goes south.
It has been noted by just about everyone that Ben Bernanke cannot raise interest rates. He says because he is worried about those poor homeowners. Nonsense. He is buying mortgages up so he can sell them at a discount to the bankers who will foreclose on you demanding 100 cents on the dollar for MBS they bought for pennies. The real reason Ben cannot raise interest rates is that the New York and London banks have hundreds of trillions of dollars in one sided bets that interest rates will not go up. That is why I keep saying that those 10% inflation numbers from Shadow Stats are worrisome. The other indicator of a sharp rise in inflation is the decline of the Petrodollar. China has announced it will buy oil in yuan and avoid dollars. The Chinese are negotiating to buy oil from Mexico in yuan. If foreigners have no use for dollars, they will dump them by buying commodities like food and oil. This will drive up oil and food prices so Americans and any nation that does not export food and oil will suffer. Higher prices will collapse the US economy. As I said before, once inflation hits 20%, there will be an international conference like Bretton Woods at which the dollar will be devalued by at least 40%. That will cut American wages in half between now and the end of 2013 or sooner. That is the long term risk.
In the short term we might have some economic shocks designed to squeeze that last few dollars out of the suckers before the bankers reduce us to Permanent Debt Slavery. That is their plan for you. I assume you have a plan for them.
SourceBank Living Wills
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