The complete collapse of America has been averted

However, it’s turned into a daylight robbery fest without you knowing….here’s how.

Today, 4th December 2008,  Bloomberg just reported the following:

Dec. 4 (Bloomberg) — New York approved Intercontinental Exchange Inc.’s application to form a state-regulated trust to guarantee trades in the $31 trillion credit-default swap market, boosting the company’s bid to beat rival CME Group Inc. in running a clearinghouse for the trades.

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This means that the massive obligation placed on the federal reserve through its ontake of toxic CDS assets are going to become more liquid, tradeable and transparent, thus, sprading the risk between the counterparties (buyers and sellers).

This is important because as more and more companies ‘are’ going to go bankrupt then federal reserve was standing to lose quite a lot – and their credit is based on the credit worthiness of the American people. If their house of cards failed then America would have failed.

This could go the other way however in that the Federal Reserve will be able to mine all the trades in the system and forcably take more of these things on knowing the exact risk – so if they wanted to take on more risk then this system would facilitate this event very efficiently.

At the moment, these CDS’s are all over the counter trades between investment houses and the total risk is hidden from the total view.

Of course however, there’s a massive conflict of interest here in that if the federal reserve takes on all of this exposure in a recession (moving into a depression)  then the yields (return on investment) will soar (the federal reserve gets a higher return on their investment). Now with the fed in cohorts with the US Treasury(?), they can effectively dangle the bailout carrot to all these big companies that are facing bankrupcy while knowing full well in secret that they will be bailed and the yields get ever more higher and higher. Ultimately they make it look like they’ll go bankrupt when they know that they won’t.

We are seeing this at the moment with GM. GM has stated that it will run out of cash by Christmas and is begging for bail out money. Now, remember that the Federal Reserve now owns AIG, (worlds largest underwiter of credit default swaps) so, if GM goes under then there’s a massive obligation for the federal reserve (american tax payers) to pay out large sums of money. While all of this is happening, No one is telling you how much the federal reserve is getting in huge returns on their investment, so they, along with the treasury(?) are going to drag this out as long as possible so as to get more money on their CDS positions.

So yes, GM & ford will be saved because it makes economic sense for them to be bailed out. However, they are playing the game of trading that creates a massive conflict of interest and opens the gate to virtual corruption, coercion and insider trading.

Moving forward with the CDS exchange in place, I can see this happening more and more as we move into a depression – if the federal reserve is as corrupted as what people make them out to be.

As companies face bankrupcy, the federal reserve or their investment banks, will take on the high yielding CDS positions in selected companies, drag out the process until company in question is just about to go bankrupt, thereby driving up the yields-  then they will be bailed out at the last second with your money.

The CDS contract can then be returned to the market very easily through the new exchange being developed and then another ‘target’ is selected. CDS are the highest yeilding and most risky investments out there at the moment – every bank out there is chasing higher yeilds in a falling Securities and Money Market. However, if you conrol the outcome of a fixed game then you’re a winer – but you’re also playing with insider trading which, last time I checked, is illegal.

Make of this what you will but this is the reality. Mark my words. GM WILL be bailed out and so will other companies facing bankrupcy in the same long drawn out process. The benefactors will be the Federal Reserve & ‘in-the-know’ Investment banks and don’t expect any of these high yielding CDS earnings to be returned to American people let alone the earnings of them be reported.

If anything is to change from this then the Federal Reserve must be abolished and market risk of all instruments must be taken out of the hands of Government and placed in the market.

Peace

p.s. Merry Christmas to all GM and Ford workers too!

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update 5/12/08

Lawmakers and White House agree on auto aid plan

Fri Dec 5, 2008 11:08pm EST

By Thomas Ferraro and John Crawley

WASHINGTON (Reuters) – Congressional Democrats and the White House have reached agreement on emergency aid  for U.S. automakers of between $15 billion and $17 billion, two senior congressional aides said on Friday.

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Now, even though these guys will not be making the water powered car, they will be making a hybrid gas electric car that will be a stepping stone to the future of cleaner energy and les reliance on oil leading to equality. I advse readers to watch out for this circus being repeated on another comany in the near future – this will lead to the collapse of Amarica unless it’s averted and stopped. No one has told you that the federal reserve’s CDS holding in GM yeilding 80% return on investment. So if they have $10b in CDS holdings , they in effect get $8bln for holding them over 5 years. Scam isn’t the word for this.

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