Hi All,
Greetings and Salutation!
I watched the movie version of “Chicago” the other night. Today, I think about this AIG fiasco and remember Richard Gere’s well done rendition of “Razzle Dazzle ’em” in that movie. The sly lawyer as he diverts attention from what is fact to what is emotion. In the instance of this AIG fiasco, diverting attention to bonuses paid executives and away from the truth. Any really, really, good swindle or scam uses that “Razzle Dazzle ‘em” rule. One must have a focus of attention somewhere other than upon the fraud itself. The shenanigans at AIG bring to mind a movie called “Paper Moon”. Destiny teams a little girl and a middle-aged man up as con artists. The man pays for some items in a story with a large bill. Behind him in line, the little girl pays for something with a small bill. When the girl sees her change, she balks, claiming that she had given the clerk the larger bill. Her distressed cry that the larger bill is a birthday gift with a birthday inscription on it, inciting emotions. Found in the cash drawer is a larger bill with the inscription the girl claims. The girl “earns” the larger bill via her deception. AIG is much the same con, right down to the little girl taking the fraud into a simpler swindle. A couple of more obvious short-changing maneuvers to increase her take or maybe just to show off her flair for the con game. In the AIG situation, these would be bonuses unnecessary yet still, bonuses useful in diverting attention toward facts to attention toward emotions. It can be a bit more complicated but the primary things that occurred up to and including the bailouts is the same. There are many faucets to this fraud. However, the base fraud is a matter of giving a small bill and pretending it is the large bill. The deregulation of laws, which had created borders betwixt Wall Street, the Banks, and the Insurance companies, that allowed great fraud to be committed. Long ago and far away, something called “buying on margin” came to be. This entailed a situation whereby a person could post X dollars of collateral and the stock market company would give an equal amount of credit. Thereby, one could have $100.00 in collateral and buy $200.00 in stock. This is termed “leveraging” and was fine when regulations were in place. The advent of such things as “options” for “hedging” will greatly increase this leveraging situation to create a “win-win” situation for the smart investor (or better said, “Sly” investor). The stock market always somewhat of a gamble, one could now “bet” that a stock would fall in value and make the big bucks. Even if one did not actually own the actual shares of that stock, one could control hundreds of thousands of dollars in stock with only a few hundreds of marginal dollars. Marginal dollars are the big bill that the little girl did not really give the store clerk; it never existed. However, the real big bill, which the store clerk gave back to the little girl, did exist. In effect, it was money used to “bail out” the clerk and the store due to emotional circumstances. One day it hit the news that a company called “Lehman Brothers” had taken the big dive and the world would collapse unless the government did not step in to help. The sky was falling, as it were. The big cats including the FED knew that Lehman would collapse if someone did not purchase it (and revise the books) or the FED did not step in with help. The stack of cards to build the house was going to come down. The FED knew long before Lehman Brothers failed that it would happen. Instead of bracing (or bailing out) Lehman Brothers, the Fed let Lehman Brothers fail. The auspice incongruously put out that Lehman would fall by itself and create only a pothole on Wall Street. This is incongruent because anyone familiar with the system would know that Lehman would take others with it. Lehman failed and AIG became responsible for the billions in insurance it sold against such a failure. The government fooled to step in with billions and no oversight. The insurance that AIG had sold and could not cover, billions in insurance to protect investors that they not lose their investment AND not lose the monies that did not exist; stocks and options bought on MARGIN. What a quandary, what a great fraud is the scam perpetrated on an unsuspecting people. AIG had insured billions of dollars that did not exist. Until the FED marched in and turned those dollars into real cash, the clerk handing the poor little child her take and her bonus for her short change game. The executives earned those bonuses because they pulled the biggest heist in history. In addition, they are taking the people’s eye off the proverbial ball and probably giving AIG plenty of time for a probable shredding enterprise. Find the insured and one will find the trail of fraud or one can play with the millions in bonuses and ignore the billions in fraud.
Loveya,
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