Bernard Madoff was exposed because declining prices crippled the mechanism of his fraud, as they always do. To his detriment he was not an integral segment of the banking system. If he had been, he might have merely been declared insolvent, retained his honor and his bonuses, been backstopped by the NY Fed, and put into an arranged merger.
Bernie Madoff's mistake was in not incorporating his fraud on a broader scale. He operated on a relatively specialized area of turf in Palm Beach and New York, with collateral damage to the usual suspects on the international stage who are always willing to buy mislabeled American risk.
We believe that there are much greater deceptions being covered up now as we speak, not involving individuals so much as entire companies who have engaged in wanton accounting and securities fraud for the past twenty years.
The losses will eventually top 15 trillion dollars worldwide, and threaten to plunge the world economy into a serious economic dislocation.
Where will the losses come from that will break down the rest of the Ponzi schemes?
History informs us that most of the perpetrators will never be prosecuted, and even though exposed will eventually once again become respected members of society. This is how it was after the Crash of 1929.
The reason for this is that the frauds cut so deeply into the establishment and so far and wide beyond the financial system into the government that they are literally too big to jail.
Indeed, we are already see many of the characters who helped to set this credit bubble rolling in the 1990's coming back into government service with the new 'reform' administration.
The last bubble to fail that will expose these remaining Ponzi schemese is the US dollar and the Treasury bonds. They are the products of a nation that has been overtaken by a rogue culture of sociopaths and swindlers.
Bernie Madoff was no rogue trader. He was successful for as long as he was because he blended in, he was one of the crowd, he was an independent player within the greatest financial swindle in history, the US financial markets and ultimately the US dollar.
Experience suggests that you will ignore this warning, wishing to think of yourself as an insider. After all, it is the weak, the naive, the unsuspecting, the under-developed, the unsophisticated others that are the victims, and indeed they are. After all, what can stop this? The returns are so good, and have been paid steadily for so many years. And you are among the smart ones, the elect.
The endgame will come and strike the astonished like lightning.
You will not realize what has happened until you wake up one day and the accounts are empty, the returns cannot be paid, the promises are proven false, and the principal is gone.
And you will be facing the teeth of the storm with pockets full of empty promises and worthless paper, and no one will be able or willing to help.
And those responsible will say that you were lazy and foolish, and need to be smarter and work harder like them. Those who you imagined were shepherds will be revealed as ravening wolves.
How do we know this? It is already happening again.
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