4 banker truths you must know
This weekend I finally got the chance to watch the four-time Academy Award-winning (along with two Golden Globes and three BAFTAs – the British Academy Awards) movie “.”
Michael Lewis used to be a bond trader at Salomon Brothers back in the heyday of bond trading in the 1980s and wrote about it in his first excellent book “
And his most recent book, “
“The Big Short” is the story of the financial collapse told through the lens of classic Lewis characters; outsiders who realized that the entire mortgage bond market was built on and perpetuated by the collusion and greed of bankers. I mention this in case you are not aware of Lewis: This is a mainstream movie and popular book, not a fringe exposé by a relative unknown.
Some background into the collusion
What the movie doesn’t go into is how the marriage of institutional investment banks (high-flying traders that soared or crashed on an hourly basis) and traditional commercial banks (banks that made pennies on every dollar) was allowed to occur when then-President Bill Clinton struck down the Glass-Steagall Act that had served the U.S. and global banking system since 1933.
It’s important to understand that after the market crash in 1929 and ensuing Great Depression, President Franklin Roosevelt summoned famed market manipulator and master Joseph Kennedy to the White House.
He made a deal with Kennedy. He offered him either a government investigation of his market manipulation (Kennedy pulled out all his positions and went short just days before the crash and made a literal fortune) or he could write the rules so that people like him could never rig the markets again.
The Securities Act of 1934 and Glass-Steagall were part of what Kennedy helped build. And they remained effective for 60 years. That’s not to say there weren’t some scandals now and again, but none that would tear down the entire U.S. economy.
That disappeared with a stroke of Clinton’s pen and let Wall Street and the bankers run riot on the system, as we now know. It’s not crazy to think the system will not be spared the same pain under a President Hillary.
I heartily suggest that everyone watch “The Big Short,” which is now out on DVD, Amazon and Netflix, so you have no excuse. In two hours it gives a better picture of how the global financial system works, especially in the U.S.
The key moment for me was one scene where a trader who figured out what a pile of crap the mortgage backed bonds had become — and the impending economic doom once (not if) it collapsed — is talking to a contrarian hedge fund team that thinks he’s lying to them. He looks at them all and says, in essence, to a group of cynical insiders, I’m shocked by your child-like faith that underneath it all, the system is honest.
He tells them the system is corrupt and it’s being corrupted by the banks and brokerage firms knowingly and purposefully.
Now, having spent time with plenty of Wall Street insiders, I am fairly certain that there was no artistic license with that scene. It likely went down exactly like it was portrayed. It would have been a memory seared into the minds of everyone in that room.
But the point is, even after all this, Lewis wrote another book about yet another scandal being perpetrated in the same time frame; and thanks to big money lobbying from Wall Street, continues even today – HFT and dark pool investing.
And after all this subterfuge and malevolent behavior there are four truths about bankers and the banking system of which you need to be aware:
- Only one Wall Street player was jailed for the fraud that was revealed in 2008.
- The “too big to fail” banks have gotten even bigger.
- ALL the players who erased trillions in stock market value and people’s personal wealth are still in power.
- The banks, after all the QE and manipulation, are still not healthy.
What you can do
For you, it is time to decide how you are going to protect your assets. My advice is, keep it out of Wall Street’s hands as much as you can.
Debt, aka “credit,” is now more important than true wealth for many Americans. No one has savings, they have credit cards and mortgages and car loans. And that suits the banks just fine. Because they can wheel and deal your debt, just like they did mortgages.
So avoid taking on any debt at this point. This is the time for hard assets. Precious metals aren’t incredibly expensive now, even as they continue a long-term rally. Real estate is a good idea. And if you’ve been flirting with the idea of buying property in another country, the strong dollar is a good friend.
In times like these, collectibles are also a good idea; cars, guns, art. Stick with collectibles that have fairly big markets so they remain liquid investments.
There are some investments in the certain strategic sectors — utilities, energy, healthcare — that are worth stepping into the market to own. Just don’t rely too heavily on this part of your portfolio, and make sure you’re either ahead of the crowd or buying into an undervalued trend.
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Michael Garrison March 25th, 2016 at 10:19 am
The banking system is one of the four hidden dynasties found in Daniel (called “the four carpenters”). Basically, if you own and control these four dynasties, you control the people. Here are the four, in no specific order:
#1) Financial (banking, “owned by Rothschild’s)
#2) Religious (The Church is controlled by Rothschild’s)
#3) Educational (think Common Core, again, Rothschild’s)
#4) Political (guess who….??)
The Zionists control all four of these, and all of the smaller ones (Hollywood, etc), which means that they control America.