If you don't know derivatives, then you don't know jack. Derivatives are leverage and they are at the heart of the cancer of debt that is killing the economy of the world. Yes, yes, I know. The current administration claims the economy is getting stronger and the recession is in the rear view mirror. They have cured the worst financial crisis in history in a matter of months. Yeah, sure. I won't even address that nonsense other than to say this. Small business makes up the vast majority of the economy. They were polled last week and gave an opposite view. In fact, small business says things are getting worse. Only for the liars in charge are things getting better.
Well, that's not counting Goldman Sachs. Goldman Sachs had a tough week. It seems that every time a cancer in the economy is detected, Goldman Sachs turns out to be the infector. The SEC is suing Goldman for fraud related to their derivatives dealing. The charge as I understand it, is that Goldman conspired with a hedge fund to bundle garbage mortgage paper into CDOs that were sold to investors around the world. The hedge fund bought insurance (credit default swaps) that would pay handsomely if the CDOs failed. Goldman made money on both ends. The CDOs failed and the fellow that helped to bundle the garbage made a billion. The SEC announced the suit on Friday morning and the market crumbled. Sure, Goldman took a beating of 12% or so but markets all over the world buckled along with them. The Dow stuck its toe just below the 11,000 mark and then finished at 11,018 or so. As a spectator, I didn't think the Fed would let the Dow fall below this mark. They still have work to do to tack on another 500 points to get back to the pre-Lehman failure mark. The whole thing is a sham of course but investors are happy to be back from the abyss of Dow 7000 back in March of '09. The banking cartel knows that investors will put up with anything as long as the stock market is gaining. Just look at the clown show in Washington.
As for the 'vipers and thieves' that run the country through their banking institutions (only fools think that the fellow sleeping in the White House has any control), JP Morgan and Bank of America both reported earnings this week. Neither makes money through their lending activities anymore. Their profits now come from 'investment banking'. I have a couple of points.
1) In the great financial debacle of 2008, wasn't it the 'investment banking' group that went extinct?
2) Wasn't it 'investment banking' that nearly extinguished the banking banks?
3) How can it be that the banks were so woefully inept and incompetent in the 'investment banking' practice 2 years ago and now they find that department the only profitable one in their business today?
4) Investment banking is all about derivatives and credit default swaps. How is it better that taxpayers saved all these disgusting vipers of deceit from bankruptcy so that they can continue their scams and Ponzi schemes?
5) Why does no one seem to be alarmed that all of our Treasury Secretaries come from Goldman Sachs?
6) Why does it not bother anyone that the taxpayers bailed out a company like Goldman Sachs who continues to participate in fraudulent activities (according to the SEC charge)?
And now we find out that JP Morgan may be due a $1.4 billion dollar tax refund. Why? They bought WaMu in 2008 for $1.9 billion. If you rule the world, you don't pay for things, right? They managed to get the tax laws changed so they could use WaMu's losses for previous years prior to JP's buyout as tax write-0ffs. I guess they are looking to get the other $500 million from the Treasury. It makes you want to go to JP's headquarters and puke all over it. If there are any bodily functions left, save them for Goldman Sachs. The derivative cancer just continues to grow. And, the big banks are the carrier. If capitalism had been left alone (the Bush administration surrendered capitalism in August 2007), it would have rendered these parasites extinct. If you are a thief and a scammer, you don't like capitalism. Congress is an idiot. They are used by the scammers like Goldman to spread the cancer. Now the market heaves. It will all be over on Monday. Hey, it's like bubblevision always says. This is just another buying opportunity. Of course, on Monday morning, you'll have to get in line behind Bernanke. I suspect he will be up bright and early on Monday morning.
The chart below is the DIA year-to-date. We can easily see the PPT savior day when the Dow fell below 10,000. I suspect the PPT will not give up Dow 11,000 now. Get ready to buy alongside the criminals!
Chart courtesy StockCharts.com