The Madoff Effect

Now that disgraced fund manager Bernard Madoff has been sentenced to 150-years in federal prison, and must return 171-billion dollars for running the largest ponzi scheme in history by bilking thousands of investors worldwide of their retirement accounts, its high time to shine the spotlight on the hundreds if not thousands of fellow rats within the walls of Wall street. This would be the perfect time to bailout the taxpayers in our country by disclosing the means and funds in which an elite group of mainly hedge fund managers worldwide manipulated the stock market, destroying our banking system and sending the U.S. economy into a tailspin. The CREDIT DEFAULT SWAP market and other mechanisms have enabled these fund managers access to TRILLIONS of dollars at our country's expense. By establishing a National Economic Security Council, and labeling all trades made within the last fourteen months as subversive activity, in which it can be PROVED that institutions or corporate entities were brought down by these individuals. Transparency and an audit of these stock trades would put several trillion dollars back into a depleted economy and revitalize a scenario desperate for solutions. All offenders could still keep their jobs and assets made outside the fourteen month time frame. The National Economic Security Council would of course RE-REGULATE the process that caused the damage to these entities, as to prevent any future occurrences.

Prime Time

As we move towards one hundred percent burn through in the sub-prime mortgage market, another wave is mounting as it approaches the shores of banks balance sheets in the form of prime loans, these loans were eerily similar to those loans made to individuals with bad credit in there qualification and adjustment structure, but these clients had good credit scores. The mortgage industry labeled them as JUMBO loans, or PAY OPTION loans referring to the typically sizable loan amounts usually exceeding the six hundred thousand plus range. Who wouldn't be attracted to the NO MONEY DOWN, NO INCOME VERIFICATION pitch on a million dollar mansion in the unprecedented appreciation wave of just two years ago. The fact is that just as many people fell victim to the predatory practices of these unscrupulous individuals within the mortgage industry, all the while the enabler, the U.S. GOVERNMENT turned a blind eye in the form of mortgage deregulation instituted in the late 1990s. The majority of these loans adjust upward in the next twenty four months A trend of defaults occur due to income parameters and unemployment figures leading to foreclosure, the loans land as toxic elements on bank balance sheets. This drives down the price of financial stocks instigating a sell off and market volatility. The government throws massive capitol into the banking system in an attempt to absorb these bad loans, and the cycle repeats itself. why not just implement the strategy of the 1980s savings and loan fiasco where a bad bank is established to harbour or de-leverage this bad debt, it worked well in the past and could work again in the future.

A Future Of Bubble Creation

As we speak the Government is quite possibly working on implementing new and aggressive strategies that will create new artificial bubbles within the stock, credit, and real estate markets, in a desperate attempt to drive us out of this relentless recession. The problem is that we have been there done that, and will undoubtedly return at some point to the negative feedback loop and systemic economic problems we are experiencing presently. It is now clear that the stimulus programs have made little positive impact in their intention of freeing up capitol for loans within the banking industry, in addition job creation, and loan modifications have all but failed and the stock market continues its highly volatile path. This administration will have to artificially re-inflate real estate values, deleverage massive debt loads, and somehow inflate the credit scores of those with bad credit in order to right this economy. Even stable consumers are now hording capitol and savings are the highest in decades. The net result of all this activity will cause one of two effects deflation or hyperinflation neither of which is a desirable scenario. It is now time for the fed to look at common sense indicators such as GDP, EARNINGS, UNEMPLOYMENT, and other core economic data before it throws more liquidity in the form of TARP money at the all consuming toxic mortgage market. Recent stock prices in steel, aluminum, durable goods, and diesel supplies show continued contraction not expansion, even an individual without any formal education as myself can figure that out.

State Of Emergency

The actions of California's highest elected official Arnold Schwarzenegger are not only irresponsible, they lack common sense and display several other unenviable traits all at the expense of California's weakest and most vulnerable citizens. To think that children's services, the disabled, homeless, and education will feel the brunt of this economic tsunami that Arnold is leveling against them is inconceivable. Those that elected this individual will also suffer from the lack of essential services such as fire protection and law enforcement. The Sacramento sheriffs department alone plans to cut patrol officers by over fifty percent, and is now endorsing the concept of concealed weapons permits so that citizens can protect themselves. The Governor also believes that the legalization of marijuana is a viable solution in solving the states deficit problems. This guy makes Grey Davis look like a genius and a saint to boot. But the fact that a bad motion picture actor from Hollywood has HOODWINKED Californians into believing that he was capable of performing the tasks of his office is no reason to except his incompetence.