The Biggest Bubble In History: Fraud

George Washington's picture

Bursting Gas Bubble 60 Light Years Across. Courtesy of ESA


The housing bubble which burst in 2007 or so was the biggest bubble of all time.

Many argue that the bubble in U.S. bonds has surpassed the housing bubble as the largest ever.

Of course, given that the derivatives market is more than a thousand trillion dollars, and that is is backed by thousands of times less collateral, a good case can be made for arguing that derivatives are the biggest bubble.

But if you really think about it, the largest bubble in history is fraud, because it includes all of the above and more.

Specifically, the housing crisis was caused by fraud.  The government encouraged fraud, and helped cover it up.

Huge swaths of the derivatives market are manipulated by fraud.  See this, this, this and this. But instead of cracking down on the fraud, the government is backing it.

And the bubble in bonds was caused by super-low interest rates.  See this, this and this.

Low interest rates - in turn - are caused by quantitative easing and the government's general zero interest rate policy.

And how did the government sell these programs? That they were necessary to help the economy and create more jobs.

But in reality, zero interest rate policy is just another stealth bailout for the big banks.  And quantitative easing only helps the super-elite ... and hurt the economy and the little guy (Bernanke knew back in 1988 that QE doesn't work for its advertised purposes.)

In other words, the government's low interest rate policies were based upon a fundamental misrepresentation as to their purpose and probable effect.

Indeed, experts say that all bubbles are enabled by fraud.

But there are signs that the fraud bubble is collapsing.

Trust is falling to all-time lows as to many government and private institutions.  Why?  Because institutional corruption is so rampant that it is becoming obvious to everyone from Joe Sixpack to amateur and sophisticated professional investors.

While liberals tend to distrust big corporations and conservatives tend to distrust the federal government, we all agree that the malignant, symbiotic relationship between the two is the root problem.  Indeed, when government and corporatism merge, it is hard for anyone to trust what is going on.

When government officials are as corrupt as the criminal enterprises they are suppose to regulate, even the mainstream media can't ignore it any longer.

And the people lose all trust in the system.

No matter how hard the boys work to cover up their ongoing misdeeds, the fraud bubble may finally be popping ...

See examples of a popping fraud bubble here, here and here.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
hooligan2009's picture

help her to spend it..unfortunate fact of life, clinging onto unneeded capital is not all that can't buy you time (with you) to do the things that make you happy if you just sit on it.

rodgerleanne's picture

I offer this question for your comments:  Is the reason why the Fed is buying so many Treasuries because there are not enough nations or individuals who are willing to take the risk?  If so, how long can the Fed keep it up until the roof falls in?

Ghordius's picture

Yes. But. Note how Japan does not want China to buy their debt, or how europeans don't want Japan to buy theirs

On the brink of currency war escalations, safe haven movements and reserve currency doubts national banks have more than only the internal monetization on their screens

lasvegaspersona's picture

for fucks sake rodger

my 13 year old knows the Fed is funding the federal deficit....nothing more

every since China quit buying, the Parilment of whores has needed a new sugar daddy...Ben was there waiting when the godless commies left her crying and broke

Ben will contine until  something breaks

MedTechEntrepreneur's picture

It should be illegal for the Fed to buy more than like 20% of the TB market. There is no mechanism for the market to correct government largess other than total currency collapse.

hooligan2009's picture

maybe this is the "new normal" and we are finding that the fungibility of bank notes (1's and 0's) is not the big bogey man we all thought it was.

maybe we never needed to pay tax at all and can just borrow all of government spending and swapping currency notes for long term government debt has been the solution all along.

maybe tax has only ever been a way to make sure everyone works for a living.

The Miser's picture

How about the politicuans who won't come clean on anything:  Bengazzi, the debt, terror, banks, unions, corproations and countless other issues.  It is no wonder Congress has low approval ratings.  Our government only wants to tax more and waste more money.   Politicians only worry about their next election while there are12 million not working in the US.   We didm't hear our President say aword about jobs this week.   

Aussiekiwi's picture

Damn, the muppets are catching on, quick start a war, acuse Iran of nuclear weapons, Syria of chemical weapons, threaten to take their guns away, anything to put the muppets back in a state of fear.

proLiberty's picture

The biggest bubble, to the benefit of government, is fiat money, the ability to issue infinte perpetual debt coupled with a tax on the nominal gains of inflated value of capital assets.  

IamtheREALmario's picture

There is also the "evil" bubble.

CheapBastard's picture
Goldman cleared of all charges in doomed Dragon sale


Why is this news?

slightlyskeptical's picture

It's relevant to Nuance, formerly Scansoft, which I bought at around $4 a share once I learned they got Dragon out of bankruptcy. Grown from $160 million market cap to over $5 billion based mostly on this Dragon purchase.  Founder of Dragon got screwed out of lots of money after being represented by Goldman in the sale of Dragon to L&H.

TideFighter's picture

Just when you thought the "Hello, Kitty" story was over the top,

another girl is theatened with arrest for a PAPER gun.

Intoxicologist's picture

Really, when are these kids gonna learn?


TheFourthStooge-ing's picture


Really, when are these kids gonna learn?

It won't be when they're in school.


blindman's picture

who will reflate the explicit fraud bubble, perhaps the
"hello kitty bubble gun", terrorist threat, criminal
children of tomorrow with council ?
did you see this ...?
Military Prosecutor Battles to Drop Conspiracy Charge in 9/11 Case
P January 18, 2013
so who done it? ... some 5 year old slandering kindergartener
safely tucked away in a Pennsylvanian public school?

thisandthat's picture

Maybe you should read the article before commenting on it - just saying... oh, and url fixed

duo's picture

Finance, er fraud, is just grifing with suits on.

1.  Sell something you don't own or that doesn't exist.

2.  Hide risk so you get a higher price than you should

3.  Sell the same thing to multiple buyers.

4,  Insure something you don't have any financial interest in, then destroy it.

5.  Buy protection from judges and politicians .

Who needs busness school?


Anusocracy's picture

Society has always been built on lies and deceptions.

The reality is that most people don't want to see reality and they will change only when their lives are destroyed.

Buck Johnson's picture

They are starting to run scared that that one day or morning the president will change the rules and all hell will break loose.

11b40's picture

If he does, he will be dead in 30 days, or less.

metastar's picture

The biggest lie is the one we tell ourselves. That is, the average american's naive belief in the system.

Boris Alatovkrap's picture

When is think of Washington inviting for Corporate into Boudoir of Congress where body and fluid so intertwined cannot see which is for which, Boris is want to wretch.

OutLookingIn's picture

"Indeed, when government and corporatism merge..."

You have facism.

my wag's picture

Exactly. We, the 99% end up in debt and just trying to keep our homes.

Debt is a treadmill, like a production line at a factory and the speed is constrantly being turned up.

This is entirely different but please read. Ellen writes about debt, economics and peoples rights.

A trillion-dollar game changer
By Ellen Brown


Please pardon the hijack but I'm new to linking to other people.

Kobe Beef's picture

Why, don't you just love The Corporate State?

Well, there might be just a few problems with it. Unfortunately, the Carlyle Group doesn't really give a fuck if we like their system or not.

Anusocracy's picture

The problem IS the State, the government, nothing else.

Religion is okay, religion and government: bad.

Capitalism is okay, capitalism and government: bad.

Ethnic groups are okay, ethnic groups and government: bad.

People are incapable of understanding that. That's why peace, freedom. and prosperity are not the norm.

Herd Redirection Committee's picture

The biggest bubble currently is actually the US Dollar.


Anusocracy's picture

The most destructive bubble is the Control Bubble.

Boris Alatovkrap's picture

In close proximity, most destructive bubble is rise in Boris bath tub.