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Fraud Is The Biggest Bubble In History

Posted By Washingtons Blog On January 28, 2013 @ 1:30 am In Think Tank | Comments Disabled

Wolf Rayet bubble large The Biggest Bubble In History: Fraud [1]Bursting Gas Bubble 60 Light Years Across. Courtesy of ESA [2]

Forget the Housing, Bond or Derivatives Bubbles … Fraud Is the Biggest Bubble of All Time

The housing bubble which burst in 2007 or so was the biggest bubble of all time [3].

Many argue that the bubble in U.S. bonds has surpassed the housing bubble as the largest ever [4].

Of course, given that the derivatives market is more than a thousand trillion dollars [5], and that is is backed by thousands of times less [6] collateral, a good case can be made for arguing that derivatives are the biggest bubble.

But if you really think about it, the largest bubble in history is fraud, because it includes all of the above and more.

Specifically, the housing crisis was caused by fraud [7].  The government encouraged fraud, and helped cover it up [8].

Huge swaths of the derivatives market are manipulated by fraud.  See this [9], this [10], this [11] and this [12]. But instead of cracking down on the fraud, the government is backing it [13].

And the bubble in bonds was caused by super-low interest rates.  See this [14], this [15] and this [16].

Low interest rates – in turn – are caused by the government’s zero interest rate policy and quantitative easing [17].

And how did the government sell these programs? By saying that they were necessary to help the economy and create more jobs.

But in reality, zero interest rate policy is just another stealth bailout for the big banks [18].  And quantitative easing only helps the super-elite … and hurt the economy and the little guy [19] (Bernanke knew back in 1988 [20] that QE doesn’t work for its advertised purposes.)

In other words, the government’s low interest rate policies were based upon a fundamental misrepresentation as to their purpose and probable effect [21].

Indeed, experts say that all bubbles [22] are enabled by fraud.

But there are signs that the fraud bubble is collapsing.

Trust is falling to all-time lows as to many government and private institutions.  Why?  Because institutional corruption is so rampant that it is becoming obvious to everyone from Joe Sixpack [23] to amateur and sophisticated professional investors [24].

While liberals tend to distrust big corporations and conservatives tend to distrust the federal government, we all agree that the malignant, symbiotic relationship between the two is the root problem [25].  Indeed, when government and corporatism merge [26], it is hard for anyone to trust what is going on.

When government officials are as corrupt [27] as the criminal enterprises [28] they are suppose to regulate, even the mainstream media can’t ignore it any longer [29].

And the people lose all trust in the system [30].

No matter how hard [31] the boys work [32] to cover up their ongoing misdeeds [33], the fraud bubble may finally be popping …

See examples of a popping fraud bubble here [34], here [35] and here [36].


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2013/01/fraud-is-the-biggest-bubble-in-history/

URLs in this post:

[1] Image: http://www.esa.int/ESA_Multimedia/Images/2012/10/Wolf-Rayet_bubble

[2] ESA: http://www.esa.int/Our_Activities/Space_Science/Fire_burn_and_cauldron_bubble

[3] biggest bubble of all time: http://www.washingtonsblog.com/2012/11/grantham-worst-housing-bubble-since-807-a-d.html

[4] the largest ever: https://www.google.com/search?q=bonds+largest+bubble&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a#hl=en&client=firefox-a&hs=Fmo&tbo=d&rls=org.mozilla:en-US%3Aofficial&sclient=psy-ab&q=bonds+largest+bubble+history+-casey&oq=bonds+largest+bubble+history+-casey&gs_l=serp.3...28873.29949.1.30132.7.7.0.0.0.0.206.853.3j3j1.7.0.les%3B..0.0...1c.1.P96JTnmNBw8&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.&bvm=bv.41248874,d.cGE&fp=f57bf628413e002&biw=785&bih=484

[5] a thousand trillion dollars: http://www.washingtonsblog.com/2012/05/top-derivatives-expert-finally-gives-a-credible-estimate-of-the-size-of-the-global-derivatives-market.html

[6] thousands of times less: http://www.zerohedge.com/news/2012-12-24/1000x-systemic-leverage-600-trillion-derivatives-backed-600-billion-collateral

[7] caused by fraud: http://www.washingtonsblog.com/2010/10/at-the-root-of-the-crisis-we-find-the-largest-financial-swindle-in-world-history-where-counterfeit-mortgages-were-laundered-by-the-banks.html

[8] encouraged fraud, and helped cover it up: http://www.washingtonsblog.com/2011/08/real-reason-sec-has-been-shredding.html

[9] this: http://www.washingtonsblog.com/2012/08/a-cartel-of-big-banks-is-harming-the-world-economy-by-manipulating-derivatives.html

[10] this: http://www.washingtonsblog.com/2009/12/princeton-economist-and-computer-scientists-show-that-derivatives-are-inherently-vulnerable-to-fraud.html

[11] this: http://www.washingtonsblog.com/2012/07/libor-is-not-the-only-manipulated-economic-indicator.html

[12] this: http://www.washingtonsblog.com/2012/07/big-banks-criminally-conspire-to-rig-800-trillion-dollar-market.html

[13] backing it: http://www.washingtonsblog.com/2012/05/as-an-encore-to-bailing-out-the-big-banks-government-to-backstop-derivativees-clearinghouses-in-the-u-s-and-abroad.html

[14] this: https://personal.vanguard.com/us/insights/article/bond-bubble-09282012

[15] this: http://www.post-gazette.com/stories/business/news/bond-bubble-stemming-from-low-interest-rates-could-endanger-seniors-retirement-650909/

[16] this: http://www.zerohedge.com/news/2013-01-18/guest-post-bloated-bond-bubble

[17] quantitative easing: http://topics.nytimes.com/top/reference/timestopics/subjects/q/quantitative_easing/index.html

[18] another stealth bailout for the big banks: http://www.washingtonsblog.com/2013/01/www.washingtonsblog.com/2012/03/big-banks-continue-to-suck-at-the-government-teat-with-never-ending-stealth-bailouts.html

[19] only helps the super-elite … and hurt the economy and the little guy: http://www.washingtonsblog.com/2012/12/quantitative-easing-benefits-the-super-elite-and-hurts-the-little-guy-and-the-american-economy.html

[20] knew back in 1988: http://www.washingtonsblog.com/2010/10/bernanke-knew-back-in-1988-that-quantitative-easing-doesnt-work.html

[21] fundamental misrepresentation as to their purpose and probable effect: http://www.washingtonsblog.com/2011/06/bernanke-is-either-not-very-bright-or-not-very-honest-he-admits-he-doesnt-know-why-we-have-a-weak-economy-but-hes-the-one-who-weakened-it.html

[22] all bubbles: http://www.washingtonsblog.com/2011/11/real-free-market-capitalists-demand-that-financial-fraud-be-prosecuted.html

[23] Joe Sixpack: http://www.washingtonsblog.com/2012/05/trust.html

[24] sophisticated professional investors: http://www.washingtonsblog.com/2012/12/amateur-and-professional-investors-lose-faith-in-the-economy.html

[25] malignant, symbiotic relationship between the two is the root problem: http://www.washingtonsblog.com/2011/10/conservatives-and-liberals-agree-end-the-malignant-symbiotic-relationship-between-big-government-and-big-corporations.html

[26] government and corporatism merge: http://www.washingtonsblog.com/2012/12/government-and-big-banks-joined-forces-to-violently-crush-peaceful-protests.html

[27] as corrupt: http://www.washingtonsblog.com/2012/07/corrupt-government-officials-should-be-in-jail-alongside-corrupt-banksters.html

[28] criminal enterprises: http://www.washingtonsblog.com/2012/08/big-banks-worse-than-you-think.html

[29] can’t ignore it any longer: http://www.washingtonsblog.com/2012/12/even-the-mainstream-media-finally-awakens-to-the-fact-that-big-banks-are-criminal-enterprises.html

[30] lose all trust in the system: http://www.washingtonsblog.com/2013/01/16140.html

[31] how hard: http://www.washingtonsblog.com/2012/11/massive-accounting-fraud-using-shadow-banking-system.html

[32] work: http://www.washingtonsblog.com/2013/01/12-of-the-13-big-banks-went-bust-and-the-government-lied-when-it-said-it-only-bailed-out-healthy-banks.html

[33] cover up their ongoing misdeeds: http://www.washingtonsblog.com/2012/12/the-pretense-that-prosecuting-bank-fraud-will-destablize-the-economy-is-itself-what-is-actually-destablizing-the-economy.html

[34] here: http://www.zerohedge.com/news/2013-01-23/assistant-attorney-general-breuer-leave-doj-untouchables-aftermath

[35] here: http://www.businessweek.com/articles/2013-01-23/missing-114-billion-from-u-dot-s-dot-banks

[36] here: http://www.washingtonsblog.com/2013/01/the-real-reasons-that-germany-is-demanding-that-the-u-s-return-its-gold.html

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