PUMP AND DUMP 2.0
Remember
the whole derivatives mortgage-fraud pump-and-dump scheme that made the
banksters lots of money, until the housing pricing bubble burst, and
the too-big-to-fail banks were bailed out by the too-cowardly-to-jail
Congress? If you don't, then you haven't been paying attention, and
especially haven't been paying attention to Catherine Austin Fitts, who
has been writing, talking, and warning about this method of deep-state
fraud and theft for years. For us, this has represented one aspect of
the whole financial mechanism for a vast deep state black projects and
covert operations apparatus.
And its
real-world operation has been grounded in housing and mortgage fraud
market manipulation, all accomplished by robo-signing, document fraud,
asset fraud, ledger manipulations, you name it, it's there.
But
I've often wondered, if we're looking at the whole picture... after
all, housing is, for most of us, our biggest life purchase.
But what is the second biggest?
Our automobiles (which, in some cases, a new one costs almost as much as an older house, so there's no much difference).
And
that, of course, raises the question, why not use easy credit,
pump-and-dump and foreclose and resell methods on automobile loans as
well? Granted it won't be nearly as big an income and fee-generator as
mortgages, but, what the heck, if you're a bankster, then just throw
those auto-loans into the derivative bundles along with credit default
swaps on mortages, and voila, you've just expanded your
money-harvesting mechanism tremendously. And if you're a deep state
finance and funding person shuffling money to this or that hidden
project or covert op, you need all you can get, so why not?
Now,
until this week, I kept these high octane speculations to myself,
because I didn't see any evidence that something like this might indeed
be going on...
...until, that is, Mr. D.S.M. sent me this little gem from our friends at Zero Hedge:
Before
we get into this article, please note that UBS is, of course, the Union
Bank of Switzerland, which readers here will recognize as one of those
banks having some alleged dubious associations. So, as they say,
consider the source.
With that in mind, consider the first four paragraphs of the article, and particularly the second one:
For months we've written about the imminently doomed auto bubble in the U.S., spurred in no small part by an unprecedented relaxation of underwriting standards by banks that would put even the shenanigans of the 2008 mortgage crisis to shame. From stretched out lending terms to promotional interest rates, auto lenders have increasingly played every trick necessary to get those incremental new car buyers into the most expensive car their monthly budgets could possibly absorb.That said, in recent weeks there has been growing concern that consumers, auto dealers and/or banks have been going beyond simply relaxing underwriting standards and have instead been forced to commit outright fraud in order to attract that incremental auto volume growth. As UBS Strategist Matthew Mish told Bloomberg, “something is definitely going on under the hood...it’s not just smoke and mirrors anymore.”The evidence is growing. First, the explosion of technology makes gaining access to information to improve credit scores very simple. Internet searches for 'credit score' are at record levels. Second, our survey finds 21% of auto loan borrowers admitted to some form of inaccuracy in their loan applications. Third, there is growing concern reported among auto lenders around fraud, which is the extreme case of this behavior.Overall, the explosion and adoption of technology makes gaining access to "proven" methods for improving credit scores extremely simple. To this point, the popularity of internet searches for "credit score" has been rising consistently and is near peak post-crisis levels (Figure 7). Similarly, our survey finds that 21% of auto loan borrowers admitted to some inaccuracy in their application for non-mortgage related debt (auto, student or credit card loan). More concerning, this trend may be systemic as 29% of other consumer loan (i.e., student loan, credit card) borrowers acknowledged some form of inaccuracy in their applications (Figure 8).
As
I speculated prior to quoting these paragraphs, throw in this auto-loan
fraud into the mix of derivatives bundles and one has the makings of
another financial crisis which, by Zero Hedge's lights, could
be almost as big as the mortgage-housing price collapse of 2007-2008. In
a certain sense, this could be far worse, since auto dealers, RV
dealers, and so on, carry millions of dollars of inventory on their
lots, and, as an overhead expense, insurance and in many cases,
security.
Now imagine sudden falling prices as the bubble bursts, at the same time as a lack of cash and... well, you get the idea.
But
there's something lurking in the middle of all of this that I find
profoundly disturbing, and it's at the center of today's high octane
speculation. Notice how much of the fraud is being enabled, not so much
by the internet, as by internet-derived or -sourced or -manipulated information.
Imagine, now, for a moment, this is combined with hacking activities. A
customer comes into an auto-dealer, asks for financing on a brand shiny
new Mercedes or Cadillac SUV, but has already manipulated his or her
credit score, and even managed (if they're really good) to post a few
extra thousand dollar blips into their bank account for good measure.
The bank or auto-dealer then uses the same internet to verify or
corroborate the application information. In short, the electronic market - from finance to loans - has(as Catherine Fitts has so often said) no integrity, and being thus utterly divorced from human reality,
is subject to potentially massive corruption, while at the same time
distorting price(to the buyer) and risk (to the seller or
loan-originator), the most fundamental information in any economy or
single transaction. (In this regard, ask yourself, why should today's
modern new car cost almost as much as an older house? Answer: you're
paying for all that fraud, and extra overhead it requires the automakers
and dealers to carry.) Now, extend this corruption to
wide-spread scale, and pretend you're an auto-maker, or auto-dealer:
would you rather do business with electronic blips, or with someone who
walks in, and puts actual cash into your hands for a full payment, or
partial down payment?
As the corruption
and fraud spread, so too will the revolt, and this, I suspect, is also
the reason many states in the USA are now passing bullion depository
legislation, and resolutions underlining that the only constitutional
money authorized under the US constitution is that made by Congress whose value is regulated in bullion.
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