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Monkey Business

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Monkey Business!

Dr. A. H. Krieg                                                                        October 2015

 

Beginning in 1981 business and finance entered the new era,

Monkey Business became the hallmark of the end of the 20th

century and continuing well into the 21st.

 

In every business demeanor, ethical, and moral operation, are sidelined by greed, usury, and personal profit. No large business is exempt. Small business became the orphan, lost with the closing of over 57,000 small manufacturing businesses and the loss of over 11.7 million manufacturing jobs in just the last ten years. “Free Trade”, the “Trojan Horse” of the “New World Order” saw to the elimination of small and family business, what they did not quash was ruined by government loan policies and the Export Import Bank, which only provides funds to Boeing, GE and other globalist operations. The Export Import Bank should have been closed down eons ago; it only loans out tax money to huge corporations, which have ability to cover their loans through normal banking channels.

We have in the past written on the manipulated gold and silver markets whose value base has been eroded through the issuance of fiat. We have written on oil, coal, and energy and its mismanagement by Dr. Chu of the Department of Energy. We have often written about our federalized education system by
Arne Duncan that is now decrepit. Of all these matters all of us are apprised, but the usury and criminality of the banksters we have only touched upon. The situation within our banking and financial systems has in the last 10 years attained a corruption so great that it is destroying our economy. On Sept 23 actual silver delivery price was 25% above fiat silver certificates. Monkey Business!

Lucent Technologies, the name being apropos, tells us a lot. Carly Fiorina (Cara Carleton Sneed) was the CEO of Lucent when the company began a systematically fraudulent management sales practice. In all honesty she cannot be held totally responsible because her primary competitors began the practice first and she followed suite to protect Lucent. The Telecommunications industry was at the time undersold and produced much more equipment that the market demands required. The resulting telecom bubble resulted in one of the largest bankruptcies of history, MCI WorldCom. The industry as I said was producing much more equipment than there was demand for, to solve that problem Lucent and all the rest, loaned customers and potential buyers money to purchase their produced product. Most of these were with very lax credit certification. Let’s be clear, loaning your customers money to buy your product, and then on your balance sheet counting that sale as profit, in not exactly kosher. Everyone in the telecommunications business did it. Who told them that market demand would be ten times what it turned out to be, we will probably never learn, possibly they asked someone in the government. Monkey business!

This all however is small potatoes when we look at the finance, banking and trading business. There developed a new form of financing of large amounts of money. It began with the European Bank of Reconstruction and Development (EBRD) a hangover of the Fabian, Keynesian meeting in NH in 1944. Credit lines previously guaranteed by individual banks (credit risks), were transferred to EBRD, we’re not talking about million, but billions, and companies like EXXON. This let companies like J.P. Morgan reduce their exposure while still guaranteeing the credit and loan out more money, because they did not require the reserves for their large clients. Just to clarify, all large banks are international; credit exposure is therefore universal upon all banks. The banks of 64 nations the European Union and the European Investment Bank and FRS own the EBRD. So bluntly, the very people who provide the credit in the first place underwrite the debt guarantee. “You have money in your left pocket move it to your right pocket, guarantee the principle without additional assets and loan out the money in your right pocket”. Monkey Business!

The leverage ratio in normal banking is about 10 to 1. In the late 90’s a change was instituted, allowing banks to change that ration from 10 to 1 to 50 to 1, in other words they expanded their loans by 400% without any additional assets, or backing. The institutions set up what are called SIV’s. An SIV is a shell company owned by the loan agent (bank) to which the credit risk is transferred.  The SIV has no basic assets it’s just a shell corporation acting as the holder of transferred bank debt. The sale of the debt, which in most cases had dubious value due to poor credit ratings of the borrower, was then listed as an asset at full loan value, showing up on the banks books as an asset. The SIV was then capitalized with their phooey assets and sold to a Hedge fund for resale to foolish investors. This boosted the banks book asset value, allowing them to loan out even more, none of which was backed by any held value. Monkey Business!

Not foolish, the banks were anxious to sell off the debt held by their SIV’s that were mortgage debt, loan debt, and what have you debt all somewhat shaky. They bundled this debt and offered it on the capital markets as a valuable asset, which it was not. Many people bought this debt, unaware that they were buying a pig in a poke. Monkey Business!

Looking for more profit, the banks began exploring the auto market and car loans. This has always been a lucrative business so long as the borrower was able to repay the loan. Beginning in 2011 the subprime auto loan business began to take off. Loans were made just as had been in the housing fiasco; to people whose ability to repay was questionable. Car sales still today are booming in an economy that is stagnant at best. Most of these loans are for 5 years so that more expensive cars can be sold. (The margin on higher priced cars is much better than economy vehicles) Beginning in 2014 the risk of the subprime instruments shot up from $120 to $ 168 in just 90 days. CDS (Credit Default Swap) were used to transfer the debt from companies like GM Financial, as well as bank held instruments, to SIV’s freeing up more money for even more dubious car loans. The first large CDS deal was in 1997 by JP Morgan for $9.7 billion. Monkey Business!

Traders of the SIV’s are hedge funds, another crooked deal. Understanding that a hedge fund is a limited partnership of investors who use borrowed money in hope’s of huge profits taxed as capital gains, a rate lower then normal income tax. Understand that because they deal in large amounts of money, they are able to get loans a 0.05% (Bank Prime) so if you get a car loan at 2.99% (excellent credit rating) the SIV still makes 2.94% profit. On personal loans that run up to 29.12% for 48 months their profit is 29.07%. Hedge funds are not regulated; investors (partners) must be “Qualified”, i.e. must have a large asset base. In other words you and me are not allowed in! Many hedge funds invest in the assumed interest profit percentage of SIV’s in other words, the assumed possible profit if the borrower in the bundled debt instrument pays the loans. Hedge funds making a $30 billion profit is not an anomaly. This can only be designated as USURY all in capital letters. Monkey Business!

All this leads to what I think will be a huge credit default coming to America and the world before 2016. For the last three decades corporate credit defaults have spiked. Defaults are as follows; (normal about 2.5%) pre 1990- 4%, after 1990 -8%, 1991- 11%, 1992- 6%, in 1993 it normalized at 2.5% 1999 -5.5% and then continually climbing to over 10% by 2001. Reasonable assumption is that total outstanding corporate default will peak at $1.4 trillion, by 2020 assumed debt has grown from 1980 at one trillion to 2015 at 8 trillion. (FRED). Personal debt is $ 11.85 trillion now, and may be anticipated to grow to $25.8 trillion by 2020. (NY FED report) CBO reports that personal debt will rise by 90% by 2020. Personal credit card debt per capita is today at $15,677 and may be anticipated to top $25,000 by 2020. At the same time conservative estimates place the national debt (Reported) at $ 21 trillion by 2016 (unreported) at $39 trillion. (Missing in reported national debt is $4.6 trillion quantative easing, and $16.4 trillion large bank loans)

All you have to do is add it up:

*The total US economy is $14.7 trillion (2015)     2020 $16.2 trillion

*Corporate debt is $8 trillion                                  2020 $10 trillion

*Personal debt is $11.85 Trillion                            2020 $25.8 trillion

*Adjusted national debt is $39 trillion                    2020 $ 71trillion

2016 total debt                      $58.85 trillion                        $106.8 trillion

Anyone who believes that an economy whose total annual GDP is $14.7 trillion ($16.7 trillion in 2020) can repay a debt of $58.85 trillion or a projected 2020 of $106.8 trillion belongs in a nut house.

Monkey Business!

 

All monitory assumptions are made on fixed dollar value of 2015.

 

 

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