Forum Post: How the Banksters Do Fraud.

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Final Nail in Credit Default Swap Scam: Opinion 03/05/12 - 03:26 PM ESTAdd Comment

inShare 1 The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

More on Opinion Does Dodd-Frank Have Real Teeth?They Just Don't Get Citigroup!Federal Reserve Stokes the 'One Percent' Stock Portfolio NEW YORK (Bullion Bulls Canada) --One of the most poorly kept secrets in Wall Street's empire of fraud was that credit default swaps were never anything but pretend-insurance.

The credit default swap market is a $60 trillion-plus paper Ponzi-scheme. The Wall Street syndicate claiming to "back" this insurance have nothing more than a few billions of dollars of liquidity apiece.

Given the magnitude of this fraud and the audacity of the perpetrators, this alone is reason enough to abolish the Wall Street fraud-factories, abolish the credit default swaps market, and indeed to abolish the entire derivatives market -- so that the banksters cannot perpetrate a similar crime again in the future.

Credit default swaps were banned in th U.S. for many decades, based upon anti-gambling statutes.

However the CDS fraud itself only scratches the surface on the monstrous evil behind this scheme. As I have written about frequently in the past, the CDS fraud is a tool which the banksters have used to perpetrate an even greater crime: the sabotage and destruction of most of Europe's debt markets.

Here is how this particular Wall Street scam operates. First of all, the banksters pile on massive shorting with respect to the credit default swaps of a particular European debt-market. This drives the prices of credit default swaps sky-high.

Meanwhile, the banksters' accomplices in the mainstream media then perform their best impersonation of Chicken Little: "the sky is falling on Greece's economy." At this point the third partner of this illegitimate tag-team chimes in: the ratings agencies. Based on nothing more than changes in credit default swap prices and media rhetoric, the ratings agencies downgrade the debt of these Euro markets -- immediately driving interest rates higher.

This significantly raises the interest payments on these debtor economies, instantly making those economies less solvent. This is then followed by another shorting operation in the credit default swap market, more media rhetoric, and more bogus "downgrades.". And thus the perfect vicious-circle of crime is established.

Through the fraudulent manipulation of Europe's debt markets, Wall Street's economic terrorists have been able to drive Greek interest rates as much as 50 times higher than U.S. interest rates, despite the fact that the U.S. economy is more fundamentally insolvent than that of Greece.

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