Thursday, September 25, 2008

The financial and credit crisis. Who's behind it?

Over on Noteworthy Blog, Bubba had this question and presented this evidence for thinking folks to take a look at.
"Let's take another look at the 'credit crisis.' Why is bank lending UP?

"As Robert Higgs points out, consumer loans are up, commercial and industrial loans are up, even real estate loans are up. Overall, total bank credit is up with just a slight sign of leveling off in recent weeks. So where is the credit crunch?

"First, one reason that bank lending is up may be that firms with good projects have already turned to the substitute bridge of ordinary bank loans. Second, I wonder how much real lending was actually being generated by asset backed securities. Could it not be that most of the funds generated were used to buy more asset backed securities? (The growth in these securities is certainly suggestive of that possibility). If that is the case then it explains why the real economy has been remarkably resilient to the 'credit crunch."

Now I would ask just how we got here in the first place. I have been saying for a number of years now that George Soros was behind the slowdown of the U.S. Economy, and folks have laughed and said that one man could not have that much influence. Well, bully, he has dang well pulled this one off and in time for the elections, so he can almost guarantee that his new sock puppet Obama is elected.

In August 2007, Soros had farmed out most of his business dealings but "suddenly" decided to get back in. Can anyone guess when? About the time Obama announced his run for the WH in February of 2008. Next, he put this out in his book called The New Paradigm released in March 2008. Obama announced his candidacy in February of 2008. Coincidence? I think not.

Soros said a major casualty from the U.S. subprime crisis will be the 60-year reign of the dollar-based credit boom, which he says will come to an end. This has been his plan for years. He goes on to say: “Now the rest of the world is increasingly unwilling to accumulate dollars.''

In January 2008, Soros' investment plan was to "short U.S. and European stocks, U.S. 10-year government bonds, and the U.S. dollar; long Chinese, Indian and Gulf States stocks and non-U.S. currencies." He succeeded in most as one can see from the decline of the dollar.

I have previously said that oil shares and supply was one way he would do it. The speculators went wild, and the Hedge Fund folks were behind it. Guess who is one of the largest Hedge Funds in the world? Yep, George Soros controlled Soros Fund Management LLC and Quantum Group of Funds. Soros' companies have been accused of applying pressure on currencies and markets to directly benefit their speculative strategies. Of course, he claims he only takes advantage of poor management.

Soros has bet on declines in the dollar, 10-year Treasuries and U.S. and European stocks. He correctly anticipated that foreign currencies would rise, as well as Chinese and Indian equities.

The latter bet helped Quantum return 32 percent in 2007. Quantum's returns this year have ranged from up 3 per cent to down 3 percent.

The euro has climbed 7.5 percent against the dollar this year and the Japanese yen has gained 9.1 percent. These and other currencies may continue to strengthen, Soros said. And he should know since he is shorting the U.S. Dollar and stocks as well.

Federal Reserve officials dropped their benchmark interest rate 2 percentage points this year to 2.25 percent, and Soros does not expect the interest rate to go much lower, given the weak dollar.

If you are not getting the picture by now, keep reading and the light bulb will eventually flicker.

On March 10, he noted that commodities were stronger than he thought they'd be, that the Federal Reserve acted more aggressively than he'd anticipated, and that the Indian and Chinese stock markets, not quite decoupled from the U.S. economy , took major hits even with all his manipulations. On March 16, he observed that, "The panic is palpable," and bought into ailing Bear Stearns (nyse: BSC - news - people ), expecting some return on a Federal Reserve brokered auction of the company. He got burned admitting that, "We forgot to take into account that Bear is disliked by the establishment, and the Fed would use the occasion to deal with a moral hazard by punishing shareholders." And, of course, his willingness to lose money is explained by his willingness to bring the U.S. economy to its knees and put a Democrat puppet into the WH.

For those who might be confused by Soros' analysis there, Bill Miller, manager of the Legg Mason Value Trust explains: "Bear had been very aggressive in seizing the capital of Askin Capital in 1994 and precipitating its failure. In 1998 it opted out of rescuing Long Term Capital Management. That's the kind of thing where, if you're Merrill, Citigroup or the Fed, you remember." Miller also bought shares in Bear, for the same reasons Soros did.

The trading diary ends with Soros losing money. While he wishes he could have reached a more triumphant ending, he notes that the result "may be more appropriate for the purposes of the book." Hang on, he didn't actually loose a thing but just set it up to actually make more and to hopefully gain control of the U.S. through his sock puppet Obama.

While Soros is investing actively again, he's really using the market as a laboratory where he can test his philosophical ideas, especially the notion of reflexivity--that no market participant can ever have perfect knowledge because their beliefs, and the beliefs of others, effect and distort the markets. Because investors tend to herd--they buy things that are going up and sell things that are going down--markets are constantly beset by bubbles. Irrationality reigns supreme. (He hopes!)

Soros was once a student of the philosopher Karl Popper, who spent most of his time studying science. Popper came to the conclusion that all scientific statements must be falsifiable and that no scientific theory is ever absolutely true. They are just able to withstand people's attempts to prove them wrong. So long as a theory isn't falsified, it's as good as true. But we're 100% certain about nothing.

One thing that is 100% certain is that Soros was and is behind this mess today. He has been planning it since his losses in the 2000 and 2004 elections when he failed to buy the WH for Gore or Kerry. Soros said that removing President Bush from office was the "central focus of my life" and "a matter of life and death." He said he would sacrifice his entire fortune to defeat President Bush "if someone guaranteed it." According to the Center for Responsive Politics, during the 2003-2004 election cycle, Soros donated $23,581,000 to various 527 Groups. His hate for this country grew to the point that he cared not how he had to do it, even losing a bit of money, but he was going to destroy the economy of the U.S. and gain control of the WH.

After Bush's reelection in 2004, Soros and other wealthy liberal political donors backed a new political fundraising group called Democracy Alliance, which aims to support the goals of the U.S. Democratic Party. Directly and through his organization, Open Society Institute (OSI), he has funded various gun control organizations, such as the Tides Foundation, the HELP Network, and SAFE Colorado (all of which support Obama). He and seven friends founded their own political committee — Campaign for a Progressive Future — and spent $2 million on political activities in 2000, including providing the prime financial backing for the Million Mom March. OSI has supported UN efforts to create international gun control regulations and has singled out the United States for failing to go along with other countries on international gun control measures. Obama’s Global Poverty Bill ties right into this as was shown in an earlier post tying Obama and Soros to the Tobin Tax.

The LSM, the Democrats, and a handful of supposed Republicans are licking their chops at the economy tanks hoping that it will assure a victory in November. They will continue to build the crisis to an even greater size than it actually is. The bail out was a buy out, and the left is betting that it will buy more votes. The right is trying to buy what they can as well. In a non-election year, the market would have adjusted as it did earlier. Unfortunately, too many people actually believe all that they hear, see, and read in the LSM. So I suggest that you hang on because we are in for a heck of a ride. Hopefully, the American people will wake up before they find themselves being controlled by a World Committee headed by George Soros and his few cohorts who have the money to hold the world hostage.

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