ProPublica: The Fallacy Of Wall Street's View Of The Greater Fool Theory. Wall Street Is Still Holding The Bag. Is This Racketeering?
As I have commented on here over the years, since ProPublica's formation, I have been a big supporter. I give them as much press as possible. And this article is an incredibly damning blow to Wall Street and an example of excellent journalism. (By the way, PBS Frontline just aired a TV special with ProPublica on the post-Katrina lawlessness of some law enforcement. It's available to watch online at the Frontline web site.)
It has been a while since we have remarked of this dynamic, but we have commented numerous times that Wall Street has become the economy - something you can easily understand after reading our last post as well. A few people realize this but the vast majority clearly don't. Wall Street most definitely doesn't and neither does Washington. ProPublica points out that when the economy started imploding back in 2006, Wall Street started buying its own toxic trash when no buyers would step forward. This was done to keep the Ponzi scheme going. In other words, Wall Street's embrace of the Greater Fool Theory collapsed and they were left holding the bag. (2006 mid-year was the peak in American economic activity even though financial markets pushed higher for another year. At that time we guesstimated the economy had peaked but it has since been validated by economic data. Now, courtesy of ProPublica, we have some indication why financial markets kept rising into a collapsing economy. Wall Street was engaged in self-dealing.)
This is a very important dynamic to understand. Because it is in some ways the very foundation of quantitative finance, including Wall Street's activity in equity and commodity markets. This self-dealing is the exact same dynamic we have been writing about for nearly 18 months regarding equities. In other words, our posts remarking that as fundamentals continue to develop, Wall Street will eventually be left batting shares back and forth as more and more counterparties are forced to leave equity markets. And that Wall Street will eventually be left holding the bag with overvalued equities. This is another example of an outcome associated with the failure of the Greater Fool Theory. This dynamic developed because Wall Street has become the economy. Today there is no one left to buy their inventory of equities (or commodities) and Wall Street will eventually be buried by these markets. It's the exact same dynamic which led to the implosion of the housing derivatives and financial products that Wall Street created. No one was left to buy.
What Wall Street really needs is for the Federal Reserve to step in and become its counterparty as happened with the mortgaged-backed securities. In other words, if the Federal Reserve announces it is going to start buying equities and-or commodities, we know the Federal Reserve has truly become the most corrupt enabler of crimes of treason that this country has ever seen. Because it will be doing so to once again bail out a fraudulent Wall Street.
I believe the ProPublica story exposes much concern that Wall Street could be viewed as a criminal racket as defined by the RICO Act. Personally, I believe there is ample evidence for the government to go after Wall Street using RICO. The question is why aren't they? I think you know why. ProPublica's article provides validation of possible criminal racketeering. Only the Justice Department can actually make that determination. But.... Now that ProPublica has exposed this dynamic to the main stream population, let's see how long it takes for someone in the legal or investigative journalism community to bring the question of racketeering to light. I can almost assure you, someone will. All in due time.
Title link also here.
It has been a while since we have remarked of this dynamic, but we have commented numerous times that Wall Street has become the economy - something you can easily understand after reading our last post as well. A few people realize this but the vast majority clearly don't. Wall Street most definitely doesn't and neither does Washington. ProPublica points out that when the economy started imploding back in 2006, Wall Street started buying its own toxic trash when no buyers would step forward. This was done to keep the Ponzi scheme going. In other words, Wall Street's embrace of the Greater Fool Theory collapsed and they were left holding the bag. (2006 mid-year was the peak in American economic activity even though financial markets pushed higher for another year. At that time we guesstimated the economy had peaked but it has since been validated by economic data. Now, courtesy of ProPublica, we have some indication why financial markets kept rising into a collapsing economy. Wall Street was engaged in self-dealing.)
This is a very important dynamic to understand. Because it is in some ways the very foundation of quantitative finance, including Wall Street's activity in equity and commodity markets. This self-dealing is the exact same dynamic we have been writing about for nearly 18 months regarding equities. In other words, our posts remarking that as fundamentals continue to develop, Wall Street will eventually be left batting shares back and forth as more and more counterparties are forced to leave equity markets. And that Wall Street will eventually be left holding the bag with overvalued equities. This is another example of an outcome associated with the failure of the Greater Fool Theory. This dynamic developed because Wall Street has become the economy. Today there is no one left to buy their inventory of equities (or commodities) and Wall Street will eventually be buried by these markets. It's the exact same dynamic which led to the implosion of the housing derivatives and financial products that Wall Street created. No one was left to buy.
What Wall Street really needs is for the Federal Reserve to step in and become its counterparty as happened with the mortgaged-backed securities. In other words, if the Federal Reserve announces it is going to start buying equities and-or commodities, we know the Federal Reserve has truly become the most corrupt enabler of crimes of treason that this country has ever seen. Because it will be doing so to once again bail out a fraudulent Wall Street.
I believe the ProPublica story exposes much concern that Wall Street could be viewed as a criminal racket as defined by the RICO Act. Personally, I believe there is ample evidence for the government to go after Wall Street using RICO. The question is why aren't they? I think you know why. ProPublica's article provides validation of possible criminal racketeering. Only the Justice Department can actually make that determination. But.... Now that ProPublica has exposed this dynamic to the main stream population, let's see how long it takes for someone in the legal or investigative journalism community to bring the question of racketeering to light. I can almost assure you, someone will. All in due time.
Title link also here.
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