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 Have you ever wondered how the big banks make such enormous mountains of money? Well, the truth is that much of it is made by gambling recklessly. If they win on their bets, they become fabulously wealthy. If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are "too big to fail". Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to "recapitalize" themselves by stealing money directly from our bank accounts. So if they win, they win big. If they lose, someone else will come in and clean up the mess. This creates a tremendous incentive for the bankers to "go for it", because there is simply not enough pain in this equation for those that are taking the risks. If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street. But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened. In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse. (Read More....)
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 As stocks have risen in recent years, the big hedge funds and the "too big to fail" banks have used borrowed money to make absolutely enormous profits. But when you use debt to potentially multiply your profits, you also create the possibility that your losses will be multiplied if the markets turn against you. When the next stock market crash happens, and the gigantic pyramid of risk, debt and leverage on Wall Street comes tumbling down, will highly leveraged banks such as Goldman Sachs ask the federal government to bail them out? The use of leverage is one of the greatest threats to our financial system, and yet most Americans do not even really understand what it is. The following is a basic definition of leverage from Investopedia: "The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment." Leverage allows firms to make much larger bets in the financial markets than they otherwise would be able to, and at this point Goldman Sachs and the big hedge funds are pushing leverage to ridiculous extremes. When the financial markets go up and they win on those bets, they can win very big. For example, revenues at Goldman Sachs increased by about 30 percent in 2012 and Goldman stock has soared by more than 40 percent over the past 12 months. Those are eye-popping numbers. But leverage is a double-edged sword. When the markets turn, Goldman Sachs and many of these large hedge funds could be facing astronomical losses. (Read More....)
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 Are we on the verge of societal collapse? Many of the greatest empires throughout world history were not conquered by outside forces. Rather, they crumbled inwardly as extreme social decay set in. There have been many that have compared the last days of the Roman Empire to what America is going through right now. In the decades following World War II, the United States was the most powerful and the most prosperous nation on the entire planet, but now things are rapidly changing. There are literally thousands of signs that our society is collapsing all around us. All you have to do to see this is turn on a television or pick up a newspaper. I spend a lot of time discussing our nightmarish economic and political headaches in this column, but the truth is that our problems go much deeper than that. Even if a major miracle happened and we got the "right person" into the White House, the Federal Reserve was shut down, our 16 trillion dollar national debt was paid off, our trade deficit went to zero, a solution was found for the quadrillion dollar derivatives bubble and the "too big to fail" banks were broken up, we would still be facing a national crisis of unprecedented magnitude. The cold, hard reality of the matter is that America has become an absolute cesspool of filth and corruption, and the thin veneer of civilization that we all take for granted is rapidly disappearing. Until we get our hearts right, there is not much hope for the future of this once great nation. (Read More....)
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 Why is the economy going to collapse? Have you ever been asked that question? If so, what did you say? Sometimes it is difficult to communicate dozens of complicated economic and financial concepts in a package that the average person on the street can easily digest. It can be very frustrating to know that something is true but not be able to explain it clearly to someone else. Hopefully many of you out there will find the list below useful. It is a list of 70 numbers that show why we are headed for a national economic nightmare. So why does the title of the article single out Barack Obama? Well, it is because right now he is the biggest cheerleader for the economy. He is attempting to convince all of us that everything is just fine and that the economy is heading in a positive direction. Well, the truth is that everything is not fine and things are about to get a whole lot worse. Certainly others should share in the blame as well. Congress has been steering the economy in the wrong direction for decades, the "too big to fail" banks have turned Wall Street into a pyramid of risk, leverage and debt, and the Federal Reserve has more power over the financial system than anyone else does. Our economy has been in decline for quite a while now, and soon we are going to smash directly into an economic brick wall. Unfortunately, a lot of Americans are in denial about this. A lot of people out there doubt that an economic collapse is coming. Well, if you know someone that believes that the U.S. economy is going to be "just fine", just show them the list below. (Read More....)
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 Warren Buffett once said that derivatives are "financial weapons of mass destruction", and that statement is more true today than it ever has been before. Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad. Well, it turns out that JP Morgan did not tell us the whole truth. As you will see later in this article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars. But no matter how bad things get for JP Morgan, it will not be allowed to fail. JP Morgan is the largest bank in the United States, so it is essentially the "granddaddy" of the too big to fail banks. If JP Morgan gets to the point where it is about to collapse, the U.S. government and the Federal Reserve will rush in to save it. Because of this "security blanket", banks such as JP Morgan feel free to take outrageous risks. Today, JP Morgan has more exposure to derivatives than anyone else in the world. If they win, they win big. If they lose, U.S. taxpayers will be on the hook. Not only that, but thanks to Dodd-Frank, U.S. taxpayers are on the hook for bailing out the major derivatives clearinghouses if there is ever a major derivatives crisis. So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill. (Read More....)
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 The Democrats, the Republicans and especially Barack Obama promised that something would be done about the too big to fail banks so that they would never again be a threat to destroy our financial system. Well, those promises have not been kept and the too big to fail banks are now much bigger and much more powerful than ever. The assets of the five biggest U.S. banks were equivalent to about 43 percent of U.S. GDP before the financial crisis. Today, the assets of the five biggest U.S. banks are equivalent to about 56 percent of U.S. GDP. So if those banks were "too big to fail" before, then what are they now? They continue to gobble up smaller banks at a brisk pace, and they continue to pile up debt and risky investments as if a day of reckoning will never come. But of course a day of reckoning is coming, and when it arrives they will be expecting more bailouts just like they got the last time. (Read More....)
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The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See
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