The world's biggest Ponzi Scheme is unravelling..

The world's biggest Ponzi Scheme is unravelling..
Nebraskablue
Sep 23, 2008

http://www.dailykos.com/storyonly/2008/9/23/18926/1826/220/607964

And Ben Bernanke and Hank Paulson are just the front men for the wind down of the biggest scam ever run.

They are just jugglers tying to keep all the balls in air so the current game doesn't melt down on their watch.

And like the slow motion train wreck that Enron became... so will the system they are trying to keep going.

There is a global financial adjustment coming and it will rock the economies of many nations, not just ours here in the USA.

Not even... Germany will suffer, so will the UK, and Austrailia, the Swiss and Russia.

The 10,000 lb Gorilla in the room NO ONE is talking about is the Credit Default Swap (or option) market.

Currently the CDS / CDO market is conservatively estimated to be valued at 44 TRILLION dollars.

The value of the ENTIRE US Stock Market is 22 TRILLION dollars.

The value of the ENTIRE US Mortgage market is 7 TRILLION Dollars.

Can you say inverted pyramid?

THE CDO / CDS market is based upon NOTHING but wishfull thinking and bad paper, who is going to unwind it? We shall see....

Of course this started in the US Debt market, sell more stuff to America, more houses, more cars, more electronics and put it all on an equity loan, or your credit card!

America gets attacked on 9-11, hell, come on America, do your part! - Go shopping!!!!!

The name of the game was - how much DEBT can we (Wall Street and the other Global Financiers) push off on the public.

Of COURSE they got scared after a while because they can crunch numbers too, or so it seems. And they figured out while they were getting really huge returns on all of this debt they were pushing and trading, it was getting so very much riskier to keep it all floating around.

So they decided to make up their own insurance plans, in the form of securities they could trade amongst themselves which SUPPOSEDLY spread the risk of failure among many companies and various forms of debt.

(By the way the smartest guys on Wall Street bought and paid for this venue for them to make money by getting even MORE deregulation via their paid for lobbyists and compliant Congressman and Senators).

The invisible hand of the FREE market... ya know!!!

Does Wall Street come apart next week?

Does Wall Street come apart next week?
by Stranded Wind
Sun Jul 27, 2008

http://www.dailykos.com/story/2008/7/27/43457/2825/714/557629

The triggering event for the run on the monoline bond insurers could not come from within the United States; the Federal Reserve, the U.S. Treasury, the Congress, and the White House have all shown a willingness to do whatever was necessary to head off this day of reckoning. It was always obvious the trigger for the meltdown would come from a "mark to market" occurring outside the control of these entities.

National Australia Bank’s decision to value the CDOs it holds at 10% of their face value (this is what got me started on this diary) may very well be the event that will trigger the destruction of the monoline insurers, the revaluing of CDOs from their "mark to model" to "mark to market". If you prefer to be more direct you can call it "mark to meltdown".

These synthetic securities or derivatives (Just call ‘em funny money) were valued via computer models that purported to express the percentage of debtors who’d fail to pay. No one actually sold these things in the open market, they just bought and held them, taking the payments that came and trusting the investment banks that were bundling up and selling these things. Financial innovation, they called it. This was true until two Bear Stearns funds imploded fifty four weeks ago.

Bankers were terrified that this would trigger an overall "mark to market" event.

NAB will shock Wall Street

NAB will shock Wall Street
Business Spectator
Robert Gottliebsen
25 Jul 2008

http://www.businessspectator.com.au/bs.nsf/Article/NAB-will-shock-Wall-Street-GV4M7?OpenDocument&src=sph

The National Australia Bank's decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a "meltdown".

We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans - an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.

Bond insurers are under attack

Bond insurers are under attack
Jul 26th 2007
From The Economist print edition

http://www.economist.com/finance/displaystory.cfm?story_id=9552987

The two largest monolines, MBIA and Ambac, both started out in the 1970s as insurers of municipal bonds. In recent years, much of their growth has come in structured products, such as asset-backed bonds and the now infamous collateralised debt obligations (CDOs). The total outstanding amount of paper insured by monolines reached $3.3 trillion last year.