Mortgage Market Musing

Sometimes, it helps to step back and see the big picture.

Let’s say that I serve as the depository for a large government and I also own the central bank. I get my partners appointed to run the government’s treasury and key funds on a regular basis so I can also control financial system policies and regulation that help me finance what I want to do and mess up my competitors. Even that is getting cumbersome so I am arranging to move most of the regulatory control over to my central bank because I can control all of it privately.

Frustrated with having to deal with democratic processes, I decide to move a significant amount of money out of the government between 1997 and 2001 for reinvestment abroad. I and my partners and our syndicates engineer a series of steps to bubble the economy so that when I move the money out the currency is high and because everyone was making money they did not notice that lots of capital was leaving. To ensure no one notices, I suppress the gold price which turns off the financial burglar alarm and shifts gold out of the government into my private control at below market prices.

Normally moving money out of a government in excess of the total taxes that year would be hard to do. However, I could use securities fraud. I could issue a lot more government securities and government agency (like mortgage agencies) securities than I recorded on the government books and sell them abroad. I would have to make sure not to publish audited financial statements as that would increase the liabilities of engaging in this kind of fraud. It would help a lot if I could pool mortgages and sell government agency securities to finance those mortgages in a process where the same mortgage could be sold many times into the same pool. Investors would not notice or care because the securities were government guaranteed.

I also engineer an internet and telecom stock bubble, and move trillions more out through that mechanism.

OK, so as I move the money out of the country at a high price because my currency is high, what do I invest? Well if places like Asia, Latin America and Russia experience economic crashes as a result of credit crunches that result as my cutting off credit, then their currencies will be low and they will welcome investment. Or if they don’t welcome investment, I can make sure that the IMF and World Bank can strong arm. So I can buy in really really cheap. Meantime, these currencies rise as I move manufacturing and jobs into the places where I now have big investment positions. So my investments go up.

Well, back in the U.S. the bubble bursts, and the institutions like Fannie and Freddie that financed the housing bubble experience significant losses. Their stocks drop by a lot. That hits the pension funds, 401ks, IRAs and other savings of the people who have lost money on their homes. It’s a double whammy. A lot of them also lose their jobs. Triple whammy.

The currency drops in value a lot. This means that the dollar I pulled out and put into other currency that has been going up, up, up, is now worth multiple dollars. As asset values drop, each remaining dollar can buy things cheaply.

Indeed, with Fannie and Freddie’s stock dropping like a stone, I could have one or more of my offshore investment vehicles fund a recapitalization plan and buy control of the senior positions directly or indirectly controlling 50% of the residential mortgages in the country with my profits — that is for a small portion of that which I shifted out of the government.

Think of it. The housing bubble has reached it’s logical conclusion. If you can get enough people to buy a home for no money down, you can buy their country for no money down.


Cantor Fitzgerald Finds Permanent NYC HQ, Will Ad 200 Jobs
By Jack Lyne –  (2 Aug 2004)


  1. well explained and I know you have invested heavily in attempts to address the problem but I also think that Lyndon Larouche has provided some valuable assets in EIR to address the problem if you could work together I believe that a break through could be made!!!

  2. Aussie,Pound,Euro are in backwardation for 2008.Proving your point.In your 7/12/08 blog. On a currency basis.High priced in demand backwardation currencies,investing in low priced out of favor contango currencies.It is printed in black and white every day in the mass financial press,currency tables.If only people would learn to read the numbers in those tables.Even financial types do not get it,or maybe they just ignore it?Maybe they are just hoping no notices?Except you,which is why I love reading your work and the articles you post on Solari.

  3. One must have a full knowledge of a subject to give great simplifications such as ‘Mortgage Market Musing’.

    A professor from the Middle East wanted some economic information from me. The best I could do was to link him with Catherine’s ‘Slow Burn’ so I did.

    I keep going back to the map on this site showing the giant world information links going in and out of the East and West Coast of the US. The article it related to showed that control of ‘money information’ was more powerful than money.

    It will backfire, as it does not follow the historical rule that banking always follows general information. We have only been a full blue-water mammal for about 4 centuries. When just a land mammal the information center was easy to see: Babylon. That was where the caravans crossed between continents. As we started on water an important information network built up around the ‘Middle Sea’, (Mediterranean), amongst the fishermen. The information center switched to Jerusalem as it had the caravans on one side of the mountains and the fishermen network on the other. From there it went to Rhodes, Malta (time of Crusades), Rome, Lisbon (Henry the Navigator), Azores, Nantucket, Martha’s Vineyard. The Luce Vineyard network stayed in power until almost the time of the canals. Wall Street would have remained in Boston were in not for the canals and railroads. Exceptions, such as England, more prove the rule. Therefore ‘central information’ trumps ‘money/banking’ information in the long run. Always.

    Consolidating and correctly interpreting information is lagging on Internet, (by about ten years), but will start to catch up. By design Internet cannot be ‘centralized’. South Korea is an example. Entire government had to change overnight just a few weeks ago. Though they had per capita less computers than other areas they were far better at processing the information they did have.

    Catherine asked, “Who is your farmer, who is your banker?” Many vegetable seeds sold out in Maine. I could hardly get spinach and what I did get was planted so late it will bolt. No matter. Next years suppliers will increase. Already in Cuba more than half of food consumed, even in cities such as Havana, are produced within walking distance of where eaten. The trend is worldwide. Food even trumps banking in ‘need sequence’. Banking, worldwide, must follow and also go local.
    Michael Donovan

  4. Great site….like the low key writing. When one considers the movie Loose Change, which postulates that the 9/11 event was an inside job, and all the gold in the towers disappeared, it’s easy to see that all this may well be planned. Yet, they also forget, the money is just money. It’s not food, air or water.
    Maybe they have blown their own game.

  5. I have a lot to contribute, having been a Broker Professional for 48 years!
    Help me to get my blog going and I can parcipate from this wheelchair from body stunned by Stroke. Only left hand works, but I love the history and I have read a few books in 68 years.

  6. This came in by e-mail from a member of our network.

    I am responding to your little story, Mortgage Market Musing, posted at the Le Metropole Cafe about a gang of scoundrels who sold bonds [naked shorts] that did not really exist. If I was a betting man I’d saythat those bonds were phantom sold through Cantor Fitzgerald in the time period 1997 – 2000. Trillions were undoubtedly involved.

    A little trip down memory lane follows. If you read the whole article – it explicitly states that they “couldn’t resuscitate the system for settling transactions” ERGO trade data was categorically LOST.

    > Cantor Fitzgerald
    > Finds Permanent
    > NYC HQ,
    > Will Add 200 Jobs
    > by JACK LYNE, Site Selection Executive Editor of Interactive Publishing

    > ?.Perhaps the most critical steps in the company?s comeback came immediately after the attacks. Somewhat miraculously, Cantor and eSpeed managed to be back up and running when the New York bond market reopened at 8 on the morning of Sept. 13 ? not yet 48 hours after 9/11?s attacks.
    > One key recovery element was the mirror site that Cantor had established at its data center in Rochelle Park, N.J. The New Jersey operation replicated all of the machines, connections and functionality inside the company?s WTC headquarters?..

    > Notice how Cantor Fitzgerald was ?back-up? running within 48 hours – its data center in Rochelle Park, N.J. The New Jersey operation replicated all of the machines, connections and functionality inside the company?s WTC headquarters n ? but take SPECIAL NOTE that there no mention of RECORDS ? presumably because they were all LOST.

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