Someone or something really is looting the country, but it's not who you think

[HamdenRice]

OK, I'm going to indulge my tin foil hat inner demons. Lot's of DUers think that the bailout is the last looting of the national coffers by the Bush gang. I've consistently disagreed with that. I think this is a real crisis and the feds are trying, generally ineffectually to contain it. Most of the bailout money is being invested, not given, to the financials.

But there is something very, very strange going on. Someone is looting the country, but it's not who you think it is. I am coming to the conclusion that the bailout is the symptom of the looting, not the cause -- just an epiphenomenon, so the speak.

Right now, Citibank's stock price is getting to penny stock price levels. The bank is in dire shape. But a lot of credible people are saying it's not in as bad shape as its stock price and market capitalization say it is.

In other words, the people looting the financial system are not Paulson and the banks -- it's the people creating the problem that Paulson and the banks are responding to.

In the failure of Bear Stearns, Lehman, AIG, Iceland, and Citibank, in each case the disgruntled CEOs have hinted darkly that someone is driving down the stock price, possibly a cabal of hedge fund managers. Think of it: no one who most DUers accuse of looting are benefiting. The people who have benefited are the ones who profited on, eg, Citibank's stock falling by 70%.

Who are those people?

They are short sellers.

In each case, there has been a sustained assault on the stock price of a financial institution that drove that price below what it should have been -- even for a troubled institution.

But they are not the typical disorganized, individualized short sellers. They are wolf packs with multi billion dollar war chests, driving financials into the ground, selling, and pocketing even more billions.

My guess is they are issuers of credit default swaps who are covering their positions through hedges, selling short on companies whose bonds they insured.

Or maybe not.

Someone is looting hundreds of billions of dollars from the system, but it's not who you think it is.

[ContinentalOp]

1. Uh... what makes you think it's not precisely the same people? -nt-

[HamdenRice]

5. Because the owners of the banks are being wiped out

The decline in stock price, then the dilution caused by the bailouts, are basically taking away all their money.

[ContinentalOp]

11. Sorry, I meant the Bush administration and their backers, not the bankers. -nt-

[grantcart]

2. You are correct

People don't understand that government getting equity in these firms doesn't benefit the shareholders who have been basically wiped out.


they should stop short selling for the interim.

[hlthe2b]

3. Same ones that sold airline stock short on 911?

[HamdenRice]

6. ROFL!

No comment.

[Irish Girl]

4. I agree with you, Hamden

If what we both suspect is true, the dirty wolf pack by design needs to remain as invisible as possible. I've always believed Bushco -- criminal in itself -- were still intended to be used as scapegoats. It's all interconnected, but how does one rout out the true cause?

[HamdenRice]

7. The CEOs are saying this themselves

Some in the financial press are calling it sour grapes, but I assume that the richest guys in the world have pretty good private intelligence services.

This is what happened in 1929, and when FDR was elected, it all came out. Joseph Kennedy (JFK's father) was particularly forthcoming in describing the manipulations he himself even engaged in.

It was an artificial crisis, as this one may well be.

[Leopolds Ghost]

8. Center-right dems have become completely clueless. DU is now the party of Coolidge it seems.

If you want to know what's really going on, see:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4529390

Obama is proving to be a front man for a complete corporate takeover of the Democratic
Party by DLC and Reagan/Rubinomics team that JFK would have actively campaigned against
-- and JFK is the standard for centrism in the Democratic Party which puts Obama and
the Clintonites he surrounds himself thoroughly on the hard right -- with Gramm and
other Republican allies they quietly agree with on actual policy after policy.

As the old saying goes, the objective is to scientifically manage a two-party system
to ensure that the two parties are so close together that they can pull the country
in the direction the economic rulers want, while splitting the vote evenly and precisely
on a year in, year out basis.

It's like Coke / Pepsi marketing.

[pscot]

9. Let's ratchet up the paranoia

and speculate that maybe foreigners, maybe even foreign governments are behind it. And remember, paranoids can have real enemies too.

[HamdenRice]

10. Definitely considered that

By governmental standards or sovereign fund standards, it would take much to put together a fund to roil the markets for fun and profit and to hobble the "superpower."