The elites have struck again. If there is anybody out there who thinks that big government and big financial institutions are good for the country, the pillaging of America's farmers and ranchers by the financial elite needs to be understood.
On October 31, 2011, MF Global filed for bankruptcy protection after losing a huge bet on crappy European debt. Jon Corzine, a well connected former U.S. Senator and former Governor of New Jersey, was in charge of this commodity trading company when it commingled customer and company funds in an effort to service a margin call, allegedly by JP Morgan. The margin call was precipitated by a decline in the value of European bonds held by MF Global after the poltical wizards in Europe announced a plan requiring a 50 percent reduction in the face value of Greek debt. Corzine had bet the farm on Europe standing behind the value of its issued debt, when in fact the effect of the plan was to convince investors that European debt had become garbage.
In this business, it is illegal to commingle customer and company funds. But Corzine must have felt that he was above the law as the ends justified the means. In other words, putting America's working people at financial risk was worth the benefit of saving his company and, presumably, staying in good graces with JP Morgan. The loss has been estimated by the bankruptcy trustee at $1.2 billion, not an insignificant piece of change. Corzine has been called to testify in front of Congress mid December, but do not expect much other than grandstanding. Congress is more interested in preserving the status quo than busting up the financial industry and reducing the risk that large inter-continental banks pose to Americans.
Meanwhile, back in Europe, the drama continues. We now have financial technocrats ruling the roosts in Greece and Italy. These are credentialled financial people right from the Goldman Sachs mold. Essentially, the citizens of Greece and Italy are being run by non-elected people. But it could be worse. Some elites are talking about redoing the European Union treaties so that sovereign countries' budgets can be controlled by the folks in Brussels. We are witnessing the death of countries, with the cause of death being excessive debt, and the disease being excessively liberal social welfare policies. Austerity has been delayed so long that forced austerity is now required. And note that citizen dissatisfaction leads to nationalism, charismatic leaders and wars. Just look at the history of Europe.
Europe has reached the end-game. Citizens need to decide whether to repudiate their respective sovereign debts and start over with rational tax and social welfare policies that are sustainable long-term in an environment of very low growth. European debt is being repriced with interest rates increasing to levels that better reflect the investment realities in Europe. The days of near zero interest rates are gone, and, as a result, the carrying costs of sovereign debt are not managable. Citizens need to repudiate the debt - or resign themselves to debt serfdom - with interst payments to the banking elite forever, to the detriment of core government functions.
This movie is soon coming to a theater near you. The U.S. is not going to avoid this issue. We are lagging Europe by a year or two. Short-term, the U.S. has been a beneficary of Europe's troubles as money has moved into U.S. Treasuries. But this is simply a reactionary event. As investors come to the realization that the U.S. is accumulating debt in almost exponential fashion, the end-game will arrive. It will not be pretty.
We do not have the horsepower we need in Washington D.C. We need more conservatives.
November 2012 is coming soon. Get involved now.
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