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The U.S. mortgage market was looted systematically by a cabal of highly connected speculators, according to an explosive new book, "Killing Wealth, Freeing Wealth."
The looting caused a crash in the U.S. stock market and the loss of trillions of dollars in wealth for millions of investors.
Billed "Killionaires" for their predatory actions, they are described in the new book by authors Floyd Brown and Lee Troxler that reads like a espionage novel as the entire enterprise is exposed.
Now the "Killionaires" are at it again, the book reports. They once again are orchestrating a sovereign debt crisis and pocketing billions. Greek pensioners and welfare recipients are the losers this time, not to mention the European banks, insurance firms such as AFLAC and others invested in European bonds.
The simple technique is the same deployed against the mortgage bond market, the Floyd and Troxler investigation reveals.
"Killing Wealth, Freeing Wealth" strips bare the mechanics of a stunning scheme: Killionaires manipulate the prices of bonds after taking huge derivative positions. The favorite tool is the credit default swap (CDS) or the derivative that allows the speculator to profit from a decline in bond prices.
Credit default swaps are derivatives that pay a bond buyer face value if a borrower – a country or a company – defaults. In exchange, the swap seller gets the underlying securities or the cash equivalent. But the "Killionaires" do this without owning the bonds. These traders in naked credit default swaps buy insurance on bonds they don't own, the book documents.
Much remains obscure even to the savvy investor. That's because the markets for these derivatives isn't open.
This is why Warren Buffet has called them financial "Weapons of Mass Destruction." Others have compared it to buying insurance on a neighbor's house.
In this case, the "Killionaires" buy the insurance and then burn the house down, "Killing Wealth, Freeing Wealth" reports. They burn it down by shorting the insured bonds. Sometimes these bond markets are small and relatively illiquid. This allows for massive profits to be reaped with no value created for the economy.
According to a report by Bloomberg, European Central Bank President Jean-Claude Trichet explained it this way on May 6, saying he was concerned about speculation in bond markets using credit default swaps.
"By first buying the CDS and then trying to affect market sentiment by going short on the underlying bond, investors can make large profits," Trichet said.
CNN is reporting that now the offended party, Greece, is seriously considering legal action against U.S. investment banks that might have contributed to the country's debt crisis, Prime Minister George Papandreou said.
"I wouldn't rule out that this may be a recourse," Papandreou said in response to questions about the role of U.S. banks in the crisis in an interview on CNN's "Fareed Zakaria GPS." Papandreou said the decision on legal action will be made after a Greek investigation into the cause of the crisis.
"Greece will look into the past and see how things went," Papandreou added. "There are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here."
When these "Killionaires" finish with Greece, they likely will move on to the next vulnerable country – perhaps Spain, Portugal, even Britain. Then they will return to the U.S. where even now, "Killing Wealth, Freeing Wealth" reveals, they have begun buying credit default swaps on a U.S. bankruptcy and are again moving to burn the house down.
Brown studied economics at the University of Washington under famed economist Paul Heyne and forged his political experience working for President Reagan and Sen. Bob Dole. Now president of the Western Center for Journalism, he has authored "Obama Unmasked: Did Slick Hollywood Handlers Create the Perfect Candidate?" "Say the Right Thing," "Prince Albert: The Life and Lies of Al Gore," and "Slick Willie: Why America Cannot Trust Bill Clinton."
Troxler has written not just speeches for Reagan but also books, "Obama Unmasked," "Hillary the Movie," "On Native Soil: The Documentary of the 9/11 Commission Report," "FahrenHYPE 9/11: Unraveling the Truth About Fahrenheit 9/11 and Michael Moore," and "Along Wit's Trail: The Humor & Wisdom of Ronald Reagan."
To interview Floyd Brown or Lee Troxler, please e-mail.
Check out the warnings in "Killing Wealth, Freeing Wealth," available now at the WND Superstore.
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