You may have had your suspicions, but yes, the world has gone completely mad – it’s official. Bond traders in New York are at this very moment plotting to stuff your life and the lives of millions across the world – and to seriously enrich their own. Nothing new in that you may think, but this time it’s big, very big. So big they’ve called it ‘The Big Short’. They’re making massive bets against the Euro and trying to manipulate the markets to make their apocalyptic dreams come true. If it comes off they stand to make 800 – 1000% profit!
The beauty of this gigantic scam from the bond traders’ point of view is that they’re not using their own money. They’re using bank money, which in a round about way, you could say is your money. How are they doing it? Through Credit Default Swaps (CDS). Essentially what they’ve done is to take out an insurance policy against the demise of the Euro, they’re now trying to manipulate the market to ensure that the Euro collapses, when it does they’ll sell the policy, and head off into the sunset clutching their obscene profits.
Is it legal? It most certainly is. Hard to believe, isn’t it? But it illustrates just how complicated, powerful and corrupt the Western financial model has become. So complicated that few politicians (and regulators) understand what is going on. So powerful that bond traders could be said to have more power over our lives than elected politicians.
Why don’t our politicians do something about this ‘financial terrorism’? Because too many of them (particularly in the US) are themselves corrupt and have become players in the game by accepting ‘political donations’ – and other more subtle inducements. Their connivance has meant that change has been sidelined and that the status quo has been allowed to endure.
This time though, bond traders may have over-stepped the mark. The Big Short may be a game too far. The scale of this financial terrorism is a threat to Western democracy: as great, or even greater, than the threat posed by the type of terrorism practiced by followers of the late Mr Bin Laden. Do our politicians realise this? Maybe as they contemplate the scale of their ineffectiveness and their inability to do anything about the Big Short, they’re starting to understand the folly of their ways. Let’s hope so. And let’s hope that they have the good sense to address the reform of the financial system without delay before we are all stuffed by the activities of financial terrorists.
In the meantime a ban Credit Default Swaps and the outlawing short selling would be a useful way of curtailing their excesses.