Libor and Lies

There is a thing called Libor in the news, I don't have a lot of time to discuss this tonight but I want to make sure I have made you aware of it. Libor is the interest rate that banks in London lend to each other. It is an average of the rate charged by 16 banks, the big ones. Now, why is this important. Well, that rate is often used to determine what you will pay in interest when you get a loan.

There is a problem, the rate was rigged by the banks. The banks lied about what the rate was that they were lending to each other at. How is this important? Well, if you are playing blackjack in Vegas, the house advantage is 51% to your 49%. If you card count, you can put the advantage to you. If you do the same thing with trillions of dollars, you can effect every financial transaction and they did.

One of the banks investigated what had occurred and has just removed it's head; but, for this to have worked, all the banks (or at least many) had to participate. The financial industry in the City of London is one of England's biggest industries. If people stop trusting it, England will be severely damaged.

The western worlds financial system is corrupt, pretty simple. Wall Street was corrupt, our banking system is corrupt and Europe's is. Heck, even the Vatican bank has been found to be corrupt. The west controls the financial world because of dollars, the reserve currency of the world; but, China, Russia and others are looking to go off of the dollar standard. If they do, why should they let us control the financial system too?

I can see a time when the world creates a new financial system and a new financial capital. I like Dubai for the role; but, Singapore, Hong Kong and many others would do. China is the dominant economy in the world right now and they will have a say in it. Dubai works for me as it is home to so many companies worldwide including Halliburton.

I have said before that I see the elimination or greatly minimized use of paper currency. I think China, Germany, Japan and others are going to insist upon an electronic currency that is backed by actual commodities and other things. When the great transition occurs, I believe a lot of debt is going to be excused and there will be a reboot. That won't make things better for long for the west.

You might wonder why I don't see it as a good thing. The problem is simple, we don't produce anything to sell. Eliminate all the debt and we have no way to make money. The cost for Chinese goods is only going to go up and they produce everything. The west will simply transition into a second world country.

Both George W. Bush and President Obama have used Warren Buffet as a financial adviser and your can't get any better than him. If you read his stuff, you can know what he told them both, it is what he has written about for years. Our businesses are mismanaged, short term thinking and reward bad business practices. He will also say that we have destroyed our manufacturing base and will be in a long slow decline if we are lucky. He would have told them that this was all exposed after 911 when we had to beg people to go to restaurants for the sake of the economy.

I am firmly convinced that the housing bubble was intentional because it was. It also took place in other western countries at the same time, something that has never happened in history. The government allowed and encouraged loans with no income verification, when has that happened before, not in my lifetime. The bubble was the only way we could pump start our economy, employ people and build housing that we would need later because we cannot afford to build it again. Let me explain, it is cheaper to buy a new house then build one and a lot cheaper. We built these houses and sold the bad loans to the Chinese and Japanese. We are scoundrels.

As we continue our decline, we will lose our influence on other countries. Our military cannot help us, we cannot just steal what we need. The question is who we are and what we will become and it is our choice. We can cut our salaries and work together while not taking what we don't deserve or cheating on our taxes. We could be competitive again; but, the truth is, I do not see that happening. In the book "Gone With the Wind" somebody says that there are two times when you can make lots of money, when a society dies and when a new one is created. You can make a lot more while a society is dying, desperation pays more.

What we are witnessing is people who know that the game is rigged and the game is up. We are seeing people gamble with our future because they feel they have nothing to lose. The question that we really should be addressing is what next? We could repent that we have lost our morality and only care about ourselves; but, I don't think we will see that.