Naked Capitalism is Wrong About Who Caused the Financial Crisis: Yet Another Anecdotal Example

Stone Street Advisors's picture

This post is from Stone Street Advisors.

Tom Adams - a former Monoline exec - and Yves Smith, proprietor of
the Naked Capitalism blog and authors of Econned, have spent the better
part of the past few months (if not longer) driving up my blood
pressure by consistantly laying the blame for the (structured) credit
bubble squarely at the feet of those people who saw the impending crash
and went short as a result.  This, sense does not make.

claim "the shorts" drove the demand for creating all of the "toxic"
CDO's that almost brought down the Financial System down because after
all, the Investment Banks couldn't sell a CDO to lazy/ignorant
institutional investors and CDO managers if there was no one to take
the short side of each trade.  This logic is so painfully flawed that
I've actually lost sleep over it, especially because they just won't
stop shouting it as if it were infallible, iron-clad truth, which it
most certainly is not.

Sure, you cannot have such a trade without a buyer and seller, but
when history shows the sellers to be the ones who were right, and who
acted on it, I'm not sure how you can not only avoid blaming those who
were wrong - those who were long such deals - but go out of you're way
to blame the people who saw the signs and acted accordingly.  That, to
me, is crazy talk, at best, like blaming the United States for the actions of the Third Reich during WWII.

Despite what Tom, Yves, or whomever else wants to blame the shorts
may try to tell you, "the shorts" were the ones who saw
(broadly-speaking) impending collapse and traded accordingly.  The
longs were the ones who kept buying things that others - and sometimes
they, themselves - knew were crap, or were likely to become crap. 
Hell, the monolines - whose business Ackman, Einhorn, and others had
identified as unsustainable as early as 2002 only dug further into the
structured finance business.  As they say, the band played on, so to

If one really wants to point fingers (which isn't really very
productive), they should be pointed at the Investment Banks, the
Ratings Agencies, lazy/poorly-incentivized money managers, and
Regulators, in that order.  Arguing that the shorts who allowed the
banks to create and sell (or retain) long CDO exposure to investors are
making a similar argument to those who blame gun/bullet makers Glock
and Remmington for shooting deaths, or Stanley Hand Tools
for making the hammer that was used in an assault.  CDO's, CDS, etc are
like tools, and, when used properly, can be quite effective.  But, when
used improperly, or without proper care, they can be deadly,
financially speaking.

Absent fraud (another story for another time) on behalf of the
Investment Banks, originators, and/or servicers, institutional
investors like IKB - who, despite having a dozen or two member
diligence team - still went long CDO's like ABACUS, akin to a child
getting his hands on a loaded machine gun.  It was only a matter of
time until they shot themselves in the foot (or worse)...

They did this because as I've said time and time again, portfolio
managers don't get paid to sit on cash (generally); they have to invest
their money, and in many if not most cases there were (and still are)
perverse incentives for PM's to buy the highest-yielding security he
could find as long as had the blessing of the Ratings Agencies.  (Naked
Bond Bear can elaborate on this, and has, if you want more nuance). 
The same holds true for many other participants, collateral managers
like ACA (infamous for apparently blessing the ABACUS transaction even
though they "knew" the collateral), CDO managers like Chau, etc.

John Paulson, Michael Burry, Steve Eisman, none of these guys forced
their counterparties to take the long side of their winning short
trades.  Their counterparties were (mostly) financial institutions with
the resources to do the same research and put on similar trades (or at
the very-least least reduce their risk exposure) as "the shorts." 
Others, due to arcane financial regulations (etc), were able to gain
exposure to these securities without having anywhere near the financial
sophistication to understand them, yet they did so, anyway, because
they did not know what they were getting themselves into.

Michael Hyde,
general manager of an Australian council responsible for investing
millions was one of these latter, ignorant types.  Mr. Hyde has since
admitted that he did not know what a CDO was, and "admitted to
confusion on his part about the terms "call date" and "maturity date",
which he had believed to be interchangeable. 'I guess (it was)
ignorance. I did not know there was a difference,' he said."

Mr Hyde said he believed that Grange would buy an
investment back from Wingecarribee at three days' notice, or return the
value of the whole portfolio at 30 days' notice.

Barrister John Sheahan, SC, for the liquidator of Lehman Brothers Australia, put to Mr Hyde that the contract Wingecarribee signed with Grange provided for the buy-back to be at market value, not face value.

"What you were told was that you could redeem your security at three days' notice, at market price?" Mr Sheahan asked.

"I did not understand that," Mr Hyde replied.

When, in September of 2007, Mr Hyde asked Grange to buy the
investment back from Wingecarribee at face value, the response was

Mr Hyde said he was told by a Grange employee, "you need to understand Mike, there is no such thing as a capital guarantee".

By then, the Federation note, originally worth $3 million, was valued at $1.02 million.

While it may have been (quite) unethical for Lehman/Grange to have
gotten the council into investments its representatives verbally said
they were not interested in, they did not force the council members to
sign any contracts.  At the end of the day, a not-insignificant part of
the blame has to lay at the feet of those who voluntarily gained
exposure to these securities despite having no idea what they were
talking about, let alone what they were signing-up for.

As James Montier of GMO Investments said in his recent letter "The Seven Immutable Laws of Investing,"

1. Always insist on a margin of safety
2. This time is never different
3. Be patient and wait for the fat pitch
4. Be contrarian
5. Risk is the permanent loss of capital, never a number
6. Be leery of leverage
7. Never invest in something you don’t understand

#'s 1-6 are surely important (especially #'s 1, 2, 5, and 6), but
I've highlighted #7 because it is the single best piece of investment
advice anyone can every give you.  I would add, after "Never invest in
something you don't understand..." that if you do invest in something
you don't understand, absent fraud, you must accept that you have no
one else to blame but yourself if the investment does not work out as
you'd hoped.  Caveat emptor.

People who don't even understand the difference between a call date
and a maturity date (let alone know what a CDO is/how it works) should
NEVER be able to come anywhere close to anything more complicated than
a mutual fund or vanilla bond, and that they were able to do so in this
(and other) case(s) is the fault of the regulatory apparatus, the
"Overseers" tasked with protecting investors.

But as Montier's law #7 says, you should never buy something you
don't understand.  And, unless someone made you sign a contract at
gunpoint, it's you're responsibility to make sure you've read the
contract and understand the terms before signing on the dotted line. 
If you don't understand, but sign anyway, then you're just begging-for,
if not deserving of losses.

I do feel a bit of sympathy for people like Mr. Hyde who were
pressured by those more sophisticated (I'm not going to say savy, since
that whole Lehman thing worked out so well...) than they, but my
sympathy is limited by the apparent indifference with which Mr. Hyde
and others of his ilk exercized when making their investment
decisions.  It's one thing if you want to bet all of your personal
money on something you don't understand and end up screwing only
yourself.  It's another thing when you're investing other peoples'
money and/or public monies.

That's analagous to me going into a surgical procedure without
knowing which organ is which, or a crazed alchemist tossing various
liquids and powders haphazardly into a cauldron with little if any
regard for possible - if not downright likely - violent and dangerous

The sad part is that it wasn't just financially unsophisticated
people like Mr. Hyde who failed to exercize the proper level of
diligence and caution.  I'd be curious - although I doubt we'll ever
know such things - what % or how many of the parties that had long RMBS
(synthetic or otherwise) exposure pre-crisis conducted thorough
analysis at the loan level, on originators' underwriting standards, etc
and turned-down or shorted deals they found to be garbage.

As far as I can tell, the answer is 'not many,' although in fairness
Tom claims they did, in fact, turn down several deals for such reasons,
but I doubt in the grand scheme of things, the ones they didn't do were
anywhere close in number and size to the ones they did.


The Analyst

Stone Street Advisors

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neutrinoman's picture

Some guy tries to jump the Grand Canyon in a souped-up motorcycle.  Bettors on the sidelines make bets for and against.  When the attempted jump fails, as it must, are the "con" bettors to blame for the failure?

Of course not -- the idea is idiotic.

Here's the interesting question: why have American financial markets become such a grand casino?  Granted, they always involve risk-taking.  But why so much capital wasted on so much non-productive activity?  The housing bubble was largely the result of two forces: bad government policy, and bad central bank policy.  Add to that the rapid evolution of high-speed electronic trading and information systems, and we have the ingredients.  The first thing to get rid of are the bad policies, the distorting rules and raw cheap credit that fueled and guided the bubble.

glenlloyd's picture

the market is the market, for every buyer there has to be a seller, to suggest that shorts were the culprit is foolish and really beyond idiocy. Even I know that and I'm not at all smart about investing.

The profligacy of our past failings must be laid at the doorstep of the creator of all money, the fed. In this case the excess money creation unleashed a rash of worthless business endeavors that should have been proven worthless via collapse, but which we have elected to prop up now via more money creation and low rates (same thing).

When the money creation (and credit) stops the non-productive biz ventures will be revealed for what they are and they will collapse.

There is no way around it, either you buck-up and stop the music or you wait for the end game.

loub215's picture


Blaming the shorts for this is very "short-sited". It's like weather forecaster for the tornado. All the shorts did was point out the flaw in the system. If they were wrong or full of beans, they would have lost in the market. The fact that they were righter than imagined only meant that the dimwitted Wall Street types and their customers had NO CLUE about their own markets. If you want to regulate something, regulate the mental giants that cooked up the sub-prime no doc no money down interest only once a year $1MM loan to a minimum wage worker. They can regulateeducation level. Start with the basics, 1+1=2. that should thin the herd 60%...


dirtbagger's picture

Stoneage Street should read Yves book before posting such crap.   She believes the root of the financial crisis was a undeserved reverence for Milton Friedman and University of Chicago economics.  Much of the subsequent Wall Street shenanigans was a result of financial elites promoting those implausable economic theories.

Perhaps Stoned Head Advisors will read E-Conned when it becomes available as a condensed Comics Classic.

malek's picture

I didn't buy her book for the same reason I stopped reading her blog, see my post above.

If you have read it, can you give a 3 sentence summary what she proposes how to get out of this mess? (if anything)

JR's picture

“That, to me, is crazy talk, at best, like blaming the United States for the actions of the Third Reich during WWII.” – Stone Street Advisors

Actually, if you ask Lord John Maynard Keynes if the U.S. could be blamed for the Third Reich, he would say, “Yes.” Keynes warned that the heavy reparations Germany was forced to pay until 1988 by the Allied Powers in the Treaty of Versailles after WWI, were excessive and counterproductive and would force Germany, out of starvation and desperation, to war. 

Excessive greed by Allied Powers or market insiders is destructive. You can’t have a Buyer Beware Market in the fine print, where certain insider entities of the market make up the rules, then engage in protected fraud and profit from the rules.  And, then, when proof shows rules are broken, nobody gets punished.  Example, can you call a package quality when it is garbage, and then in the fine print, say Buyer Beware? Not and be viable, certainly.

As commenter Walt Wriston wrote on The Curious Capitalist in 2010: “It goes beyond simple ‘fiduciary duty’ and far, far beyond a simple tort: it's criminal conduct!  GS had all the advantages and the buyer the disadvantage, GS had triggers... probably in tight with the Good Ol' Boys of the ‘great rating’ agencies. Trying to explain away everything as an options bet - one side has a put the other a call - to justify what GS has done is highly immoral, but that is the way the ‘game’ is played. Does that mean they should be off-the-hook? Of course not!

“I stated almost the same thing in the blog Why Capitalism Is Bad at Giving Advice, and I quote: ‘And if they (investors) knew how much muscle is against their investments to the banks and brokerage firms propriety trading they'd be aghast !  Goldman Sachs states this explicitly in their fine print, something along the lines of “your investment objectives may run contrary to Goldman's investment objectives’: now that takes a lot of chutzpah to state!”

A reshaping of the markets by a few controlling insider entities is deadly to individual investors and a free enterprise market.  As London Banker observed in Britain in the early 1990s, and pointed out to Americans in 2008, it is “well to be aware…that the new insider dealing powers in a single authority can be applied selectively to erode markets and undermine market participants who threaten those who wield the real power.”

Goldman routinely created CDOs with the worst mortgage bonds it could find, and then bet against them. Goldman and a few hedge funds pocketed billions when the CDOs failed, while Goldman's clients who bought the CDOs endured huge losses. Goldman, of course, has denied all of this.

Here’s an excerpt from “The Long and Short of It at Goldman Sachs” by Ben Stein from the New York Times on December 2, 2007 that  mentions a former Goldman Sachs scandal from the Great Depression:

“But what leaps out at me…is that Goldman Sachs was injecting dangerous financial products into the world's commercial bloodstream for years.

“My pal, colleague and alter ego, the financial manager Phil DeMuth, culled data from a financial Web site, (for "asset-backed alert"), that Goldman Sachs was one of the top 10 sellers of C.M.O.'s  [essentially CMOs are about mortgages, CDOs are about debt in general] for the last two and a half years. From the evidence I see, Goldman was doing this for years. It might have sold very roughly $100 billion of the stuff in that period, according to ABAlert. Goldman was doing it on a scale of billions even when Henry M. Paulson Jr., the current Treasury secretary, led the firm. …

“The point to bear in mind, as Mr. Sloan brilliantly makes clear, is that as Goldman was peddling C.M.O.'s, it was also shorting the junk on a titanic scale through index sales -- showing, at least to me, how horrible a product it believed it was selling. …

“From what I have observed over the years, Goldman has a fascinating culture. It is sort of like what I imagine the culture of the K.G.B. to be. You always put the firm first. The long-ago scandal of the Goldman Sachs Trading Corp., which raised hundreds of millions just before the crash of 1929 to create a mutual fund, then used the fund's money to prop up the stocks it owned and underwrote, was a particularly sad example. The fund, of course, went bust…

Here is a query, as we used to say in law school: Should Henry M. Paulson Jr., who formerly ran a firm that engaged in this kind of conduct, be serving as Treasury secretary? Should there not be some inquiry into what the invisible government of Goldman (and the rest of Wall Street) did to create this disaster, which has caught up with some Wall Street firms but not the nimble Goldman…?


cdskiller's picture

Okay, this post was so beneath the quality standards of Zero Hedge, I couldn't let it slide. It left me wondering if the name "Stone Street Advisors" is a typo. Perhaps they meant to call themselves "Stoned Street Advisors".

First, I would advise these stoners to take a class in grammer. Double negatives and redundancies won't win you any respect. Neither will nonsense. The sentence beginning with "Arguing that the shorts who allowed..." is laughably nonsensical. So is the entire paragraph starting with "Absent fraud...". There, honestly, are so many mistakes I got tired while reading this drivel. It is impossible to take seriously someone who talks about financial sophistication who also seems to have a 5th grade understanding of the English language and is, on top of that, so lazy, or stoned, or both.

Spelling class would help, as well. Consistent is not spelled with an a, for example. I know it must be hard, when you are high, to re-read what you've scribbled before posting it.

This inability to think clearly and the lack of attention to detail (perhaps the munchies set it) explains why the author has so misunderstood the arguments of Naked Capitalism, as well as the reason for the emergence of the CDS market, its function in the credit markets, its role in the collapse, and the overall history of the credit bubble and burst phenomenon.

While it is not my job to educate reactionary drug abusers who weren't paying attention in grade school, I will point out that the purchasers of CDS contracts were not proven "right" by history. They were, in fact, proven wrong. In a just, legitimate and free market they would have lost their shirts, but  governments, complicit in that error of judgement, bailed out the shorts to cover up their own crimes.

steelhead23's picture

Dear Stoned,  I freely admit that I stopped reading your post at around para. 3.  You are either an imbecile, disinginuous, or misinformed.  It is wholly possible that some shorts were of the form you suggest - merely taking the other side of a deal they saw as riskier than the long side.  However, Smith has detailed cases where that kind of innocence simply cannot be claimed.  I direct you to the Magnetar hedge fund.  Seated as an equity investor, Magnetar was actually substantially short the very deals they were party to, in effect, a Judas sheep for those being shorn.  Being short is one thing, but luring parties into the alley so you can mug them is quite another.  I hope you continue to lose sleep.

Ned Zeppelin's picture

Agree. These Stoned Advisors need to find a new playground. 

- Longtime reader of NC who does not recall Yves laying blame solely on the shorts.

ArmchairRevolutionary's picture

Exactly. This did not even rise to the level of meriting a response from Naked Cap.  Stoned, better luck next time.

jomama's picture

Yves worships Krugman.  She also tried like crazy to make the Giffords shooting a into a partisan issue.

nuff said.

Northeaster's picture

"Yves worships Krugman." -


No, she really doesn't, and you would know this if you read her work. Like my above statement, I don't agree with everything she writes, but it is foolish to claim only one site as gospel in all areas, Naked Capitalism and ZH included. 

malek's picture

Well, worshipping is a bit rich, but she has rarely ever called BS on Krugman's NYT pieces.

And I stopped reading her blog after I got the feeling that no matter how big the mess is, she is of firm belief that "we just cannot let the big banks fail." It's just unthinkable, to her. I mean we can really stop dissecting the financial crash and the mess we are in if there are neither a) prosecutions nor b) bankruptcies in relation to big banks, as then everything will just continue almost as before.

spooz's picture

Huh?  Yves takes on the banksters on a regular basis.  Just one of her more recent posts:





malek's picture

Where did I say she is not taking on banksters, by word?

She is however shying away from the ultimate consequence: the fact that the banks must be allowed to fail! She somehow got herself into a mindblock of "this is unthinkable". This is exactly what TPTB try to scare everybody into: the consequences are unimaginable, so we must do everything and anything to not allow that to happen (including the most ridiculous distortions of so-called free markets).

jomama's picture

i used to read her work for years.  i don't anymore - and not just because of her infatuation with that failure who got a nobel for someone else's work.

NorthenSoul's picture

Yo Stone Street,


Would it kill you to provide a link or at the very goddamn least a quote to naked Capitalism postings you guys found so deleterious to your blood pressure?

spooz's picture

I don't mind the players taking risks with derivatives sold by AIG.  Its the taxpayer funded bailout of AIG, the casino with inadequate bank, that I object to.  All the players should have been left scrambling to pick up the pieces of AIG and not relying on systemic risk to bail them out.

Hedgetard55's picture

I dropped Naked Capitalism a long time ago, when I realized Yves was a dumbshit red diaper doper baby moron, not too unlike Barry Ritholtz.

Ted K's picture

The main problem with Yves Smith is, she puts up with vulgarity and drive-by attacks.  But if you point out mistakes, hypocrisies, or bold faced lies she tells on the site, she blocks your comments.  And she constantly takes LARGE segments/blocks of New York Times while making pithy attacks at the writers.  If she wants to attack them fine, but quit using NYT as half the content of your site while simultaneously taking cheap shots.

She also gets paid handsomely by some firms, and I can't help but wonder if there is some conflict of interest in her "reporting" (I use that term extremely loosely in her case) and her obvious agenda against short-sellers.


Northeaster's picture

While I don't agree with everything Yves writes, her coverage of the mortgage industry has been excellent. To qualify her as a "dumbshit" is obviously your opinion, but doesn't quantify her knowledge and arguments in other areas. Just like ZH, no site, and/or person is perfect.

jomama's picture

are you that dude spamming her comments page complimenting how great she looked on her latest hit piece?

razorthin's picture

The FED, fukkers!  Can't do this without fractional reserve bullshit.

Big Mac's picture

 bruiserND - I think you are on to something, but he may not even be getting paid!

 Below  is the "bio" for the "Analyst".

 Perhaps he is graduating and wants to score some points with a heavy hitter during an  job. His resume probably has all the creditability of the CDO marketing process he is  defending! 

 The Analyst

The Analyst started trading and following markets before his Bar Mitzvah over decade and a half ago.  Subsequently, he earned a BS in Finance, worked in a number of areas from Wealth Management to Investment Banking, and is currently in Business School.  (He almost worked in the Financial Institutions Group at one of the Ratings Agencies in mid-2007 but luckily they couldn’t afford him, whew!)  He writes about business/market/financial analysis, economics, policy, financial regulatory reform, the persistent & unfortunate failings of the mainstream financial media, business failures in general, social media, and yachts.  His interests include sports, music, food, and happy hours on Stone Street.  New York, NY

bruiserND's picture

Ask this little rag picking suck hole " Stone Street Advisor" to define "yield to commission" a term whispered between CDS & CDO salesmen before they hosed their clients.

I still fault Tyler for this garbage ever seeing the light of day on ZH.

Proofreading is a dying art but this is shameful.

lincolnsteffens's picture

Please permit me as a relatively new fan of ZH to say...

Several years ago I asked my broker if there were some way of making a little more interest on my cash and as safely as a money market. Well sez he, "there are weekly money market auctions that are essentially the same as the regular money markets but you can only take cash from the fund once each week.  Because you have your cash committed for a weak instead of being able to withdraw it at your pleasure you get a slightly higher return. It is just as safe as your regular money market account."

As many ZH readers know my broker was wrong on the safety of the auction rate funds as they were based on the value of real estate bundles. I relied on him as my source of information rather than reading lengthy information that I might not have understood. Someone or several people in his firm knew precisely what the nature of these weekly auction money funds were made up of but I know my broker, a senior VP  in his gigantic investment firm, was not told the nature of the fund.

After  the market imploded it took a few months, but I was finally made whole. I'm sure his firm did everything they could to round up the cash to satisfy their customers. I don't think they made good because they were nice guys. I think they made good to avoid severe legal consequences and hopefully only be dope slapped a bit.

At the time this scenario played out, I was one of my broker's few customers that had any understanding of what they were buying. Most of his clients only looked at their statements once a month, never asked questions unless their investments went down and I'm sure didn't even understand what the ticker symbols ment on their statements. I've learned so much since then (I know that I know very little compared to most of the participants on ZH) and continue to understand as much as possible for several hours a day. I warn people all the time if they don't understand what they own they could be in severe danger. Some take my advice, most don't.


bruiserND's picture

Stone Street Advisors

R. Christopher Whalen & Janet Tavakoli are calling bullshit on this article and stand with Yves Smith. Me too.

Who at GSA and the ISDA paid you for this psyops piece? WTF Tyler for not calling bullshit too.

How bout a forensic audit on all the AIG / Citi Bank CDS written and against which toxic securitizations and the hedge to cash market instruments ratio.

If the taxpayer became the guarantor of the failed clearing hous why wasn't all this garbage reverse engineered to see which Wall Street player needed to be executed?

WaterWings's picture

why wasn't all this garbage reverse engineered to see which Wall Street player needed to be executed?

Wut? You are seriously asking? Hey, Max, what do you think?

bruiserND's picture

Love Max and have for years.

GSA - JPM are perps that walked

prophet_banker's picture

In the world of off balance sheet transactions, players are allowed to place bets that are bigger than the underlying asset's; this fact was curiously missing from this analysis!



Piranhanoia's picture

didn't they back the narzi?  same WS Bundesbanks working for Schicky? Sorta loses its perspective when the author starts out with a turd.

MrBoompi's picture

The not-so-simple act of creating "securities" out of horrible mortgages is fraud, let alone buying CDS on the crap you're selling.

You can yell Buyer Beware all you want. But it should matter when the crap you're selling really is a pile of shit and you've bribed the ratings agencies to keep this fact from everyone but a few insiders.

Thurifer's picture

"That's like blaming the
U.S. for the acts of Nazi Germany during WWII: It's just
doesn't make any sense."

Don't worry, George Washington will address this in his next post. (Hint: It's all Bush's fault)

cunningtrader's picture

Let's be  real here, the big carrot that was waved around to sell the CDO shit, was "100% MONEY BACK GUARANTEE FROM AIG IF THINGS FUCK UP".   When things inevitably fucked up, along with the sellers openly short selling the very instruments they were flogging,and the AIG insurance ponzi scam failed to pay, investors quite rightly saw red, and are now, quite rightly so, suing.

Tom and Yves,  Get your fingers out of each other's ass, and go and find another job.

apberusdisvet's picture

It has always been the Creature from Jekyl Island; everything or anyone else is just a derivative.

centerline's picture

The failure was caused in 1913.  Everything else is an effect.  Asset backed paper to full fiat to derivitives.  Just leverage - which is a cute way to say "life-support" for a ponzi scheme.

Blaming this on anything else is just silly.

tamboo's picture

you can most certainly blame usa for actions of nazis.

The Financing of German Industry
Since 1924, the Dawes Plan flooded Germany with a tremendous amount of American capital which enabled Germany to build its war machine. The three largest loans went into the development of industries, such as I.G. Farben A.G., the German company which became the largest corporation in Europe and the largest chemical company in the world after a $30 million loan from the Rockefeller's National City Bank after World War I, and who created a process of making high grade fuel from low quality coals; and Vereinigte Stahlwerke, which produced about 95% of Germany's [steel and] explosives.

AnAnonymous's picture

Since 1924, the Dawes Plan flooded Germany with a tremendous amount of American capital which enabled Germany to build its war machine.


Pretty bad, pretty bad. On this site, people support the idea that the debt, the war reparations are what caused WW2.

The rationale supported by people here is that a nation crushed by  debt repayments is abler to build up a war machine than a nation that is given special funding facilities to grow into a war machine.

Dont go against the meme propagated on this debt. War reparations are all, the US funding is nothing in the scheme leading to WW2. 

WaterWings's picture

The rationale supported by people here is that a nation crushed by  debt repayments is abler to build up a war machine than a nation that is given special funding facilities to grow into a war machine.

Sounds a little counterintuitive, if you ask me. You'll have to explain further if you think you can voice for the crowd. You're not off to a good start.

AnAnonymous's picture

Of course it is a total nonsense.


People pushed into misery as they are crushed by huge installments on debt are far less able to build a military than people who are afforded money dedicated to build their military.

What do you want? People here have chosen their way of thinking. They want to believe that the war reparations put on Germany is the cause of WW2, not the special money sent by the US to build the german nazi army.

The reality is of course that Germany was relieved of their debt in many ways and received money from the US to invest on their military. It is not the debt that caused the war but the fact Germany did not pay it and got special treatment.

Check it, many here think that way: war reparations are what caused the war.

So funny.

By the way, a poster reported the idiocy I reported down the page. A good sample of the way of thinking that prevails on this site.

prophet_banker's picture

great website link, but calling these traitors "usa" and assigning collective guilt to them is flawed logic; that would be like collectively blaming jews for the holocaust just because hitler had 100's of jews in his SS, and many more in his army.

max2205's picture

or we wake up and none of the last 2 years happened and the tape reads 666.66

JW n FL's picture

1. Reagan... up National / Government Useage of Structured Debt

2. Cranston Gonzalas? (whatever) was a Daddy Bush Program

3. Baby Bush did pour in a 1,000% more new monies into Daddy's free home give away

4. Cleveland and Detroit did not bankrupt the world.. nor where they big enough domino's to toppel the others over.

all facts can be sourced from .gov sites if need be.


falak pema's picture

Cleveland Browns and Detroit Lions...?

UpShotKnotHoleGrable's picture

Indians and Tigers, no football for 2 years.


frenchie's picture

there is that story about Standard Oil furnishing gas for German war planes also...

prophet_banker's picture

While this was happening, the British royal family owned some of the stock, and were receiving dividend checks from the company that profited from the fuel used by the planes that were bombing them!!!!!!

cahadjis's picture

Actually, US *was* slightly to blame for the Nazi actions, in so far as the Fed actions during the Crash led to severe depression worldwide which brought people like the Nazis in power. Just saying.

falak pema's picture

How about smog and fog?