[quote=TheBreeze]I think the government does have a plan to ‘resurrect’ the economy, but it does not involve reform, change, or anything that would disrupt the financial oligarchy’s stranglehold on money and power. Instead, I think the government’s plan is to gun the markets, distract the people with sideshows (firing of GM CEO), all the while offloading the tons of bad loans to taxpayers. I agree with Mish that this plan is doomed to fail.
The first part of the plan involved using AIG as a conduit of taxpayer dollars straight to the banks:
Here’s the really amazing/frightening/unbelievable part of the above article:
During Jan/Feb AIG would call up and just ask for complete unwind prices from the credit desk in the relevant jurisdiction. These were not single deal unwinds as are typically more price transparent – these were whole portfolio unwinds. The size of these unwinds were enormous, the quotes I have heard were “we have never done as big or as profitable trades – ever”.
So the government purposely directed AIG to massively overpay the banks on their CDS contracts in January and February. These huge payouts which came straight from taxpayers through AIG to the banks allowed the banks to say they were profitable:
As the news of the banks ‘profits’ started to seep out, the market started going up. This was around early March.
At the end of March (March 29th), Zero Hedge posted the reason for the banks ‘profitability’ (i.e., the massive taxpayer payouts through AIG). The next day, March 30th, Obama asked the GM CEO Wagoner to step down:
Coincidence? I think not. This was to distract the bloggers from the massive taxpayer theft that occurred through AIG. It certainly seemed to work on this blog as so many were captivated by Obama’s actions.
Now we have the next part of the plan: obfuscation of the bank’s asset values through suspension of mark-to-market.
Along with this, you will see the pundits come out and recommend buying the banks. Cramer had an article out this morning saying that Citigroup has to be bought off this news.
By the way, Japan suspended mark-to-market in 1992 when the Nikkei was around 15K. It’s difficult to tell, but it looks like this may have sparked a rally to 20K:
To me, it looks like we are in for a extended decline down (with stock market bumps along the way caused by tricks like those above). The only way to stop it will be to unhinge the oligarchy’s death grip on money and power.
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Excellent post, Breezy. We are now witnessing the most elaborate use of smoke and mirrors in history. The recent market activity is a massive set-up, and most sheeple – those who are unfortunately still captivated by Obama (and I’m SO happy to see that you are no longer one of them!) – will believe that we have hit a bottom and that this “rally” has legs. I got an email from Michael Moore this week, nearly orgasmic in its praise of Obama and the Waggoner pink slip. He ended with this comment: “I can’t wait to see Obama’s next superhero move.” Co-opt the Left, co-opt blacks, and all you have to worry about are old people, yuppies and Bubbas. Shrewd move by TPTB.
You know what this reminds me of? The moment in a tsunami when the ocean is sucked out about half a mile or so. There’s a strange silence, a stillness; a sense that nothing is “wrong”, even though things clearly don’t feel “right”.
And then the wave hits before you can run. I firmly believe that this summer the foundation will start to give in a MAJOR way, and it will be clear to everyone that all the king’s horses and all the king’s men won’t be able to put Humpty Dumpty back together again.
[quote=TheBreeze]The only way to stop it will be to unhinge the oligarchy’s death grip on money and power.
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Bingo. So how are we going to accomplish that? THIS is the real question that needs to be addressed globally, because this is clearly no longer an “American” problem. The oligarchs are making a power grab worldwide, and Obama is one of their 20 or so grinning fools/tools.
