To many Americans one of the most bewildering things about the 'Great Recession' is the inability to know precisely when it actually began.
Americans are a people that like to associate dates, individuals, as well as documents with great events, and few of the key indicators have been available, that is, until now.
The 'Great Recession' began on the 3rd of July 2007 '...
a date which will live in infamy' On that date, the most important document associated with the demise of the American economy - SEC Release No.
34-55970 - went into effect.
The reason why, the Securities and Exchange Commission chose the day before a holiday, the 4th of July, which fell on a Wednesday, in the middle of a week when many Americans would be on vacation and financial institutions closed, was not coincidental.
For several months prior to that date, the SEC, the Federal Reserve, the major banks and investment houses had come to realise that, in spite of a prohibition against short trading the financial system was awash with such positions to an extent that no one knew, even in broad and general terms what the impact would be if a substantial portion of the short positions were to find their way onto the exchange.
In addition, the major financial players knew that not since 1929, had the amount of private debt been equal to the gross national product of the United States.
The combination of debt, derivatives and short trading had sent the financial system out of control.
Those in the know sought to accomplish two things that week, first, to try and sort out the extent of the short positions and an over extended derivative market.
And second, to safeguard their own financial positions, their fortunes.
Someone had to tell the president.
And, the story that they laid out before the president was chilling.
What ensued can be told by paraphrasing Lenin.
Lenin stated that once you have taken control, the first thing that one should do is change the law to make everything that you did to take control legal.
Mr President, the conversation would have gone, we have to reduce our obligations.
To do this we will have to adjust the value of all stocks and bonds to a level where the short traders cannot collect.
But to do that Mr President we will have to do something that has not been done since 1929, that is, we will have to make short trading legal.
Otherwise, it will become obvious that we did not enforce the rules that were ours to enforce, and that revelation could expose us to charges of criminal negligence.
Even if we bring the exchange down from 13000 to a level of about 6500 we will still be trillions of dollars below the required asset support minimums.
We want you to understand, Mr President, that we will have to reduce our obligations to retirement savings, by devaluing them some 20, 30 or 40%.
But that is still not enough money to offset the extent to which our obligations exceed our assets.
How far reaching is this crisis, Mr President, some 1,000 banks and investment houses are affected or infected, if you will, including all the major players.
In short, Mr President, we may be able to forestall another great depression, but a long and enduring recession is now inevitable, with the inevitable unemployment in the millions, millions and millions of foreclosures...
If there is a silver-lining, Mr President, it lies in the fact that we get to decide who wins and who folds, and that is substantially it.
And, the SEC, the Federal Reserve, the major banks and investment houses went to work trying desperately to unravel the economic chaos that they had themselves spearheaded, while the American people enjoyed their 4th of July holiday unaware of the impending demise of economic innocence.
The massive exposure of short positions and the liquidity crisis which accompanied it is blamed for the Wall Street Crash of 1929.
President Hoover condemned short sellers.
FBI Director J Edgar Hoover threatened to investigate short traders not only for triggering the Depression, but for their role in prolonging it to keep control of the banking infrastructure.
Our current Director of the FBI may well have to investigate short traders not only for triggering the Great Recession, but for their role in prolonging it.
Financial regulations governing short selling were implemented in the United States in 1929 and were in effect until the 3rd of July 2007 when they were removed by the SEC Release No.
34-55970.
Eric LaMont Gregory for US Senate - Ohio - In a republic knowledge is the only true safeguard of liberty http://www.
theoxfordscientist.
com
Americans are a people that like to associate dates, individuals, as well as documents with great events, and few of the key indicators have been available, that is, until now.
The 'Great Recession' began on the 3rd of July 2007 '...
a date which will live in infamy' On that date, the most important document associated with the demise of the American economy - SEC Release No.
34-55970 - went into effect.
The reason why, the Securities and Exchange Commission chose the day before a holiday, the 4th of July, which fell on a Wednesday, in the middle of a week when many Americans would be on vacation and financial institutions closed, was not coincidental.
For several months prior to that date, the SEC, the Federal Reserve, the major banks and investment houses had come to realise that, in spite of a prohibition against short trading the financial system was awash with such positions to an extent that no one knew, even in broad and general terms what the impact would be if a substantial portion of the short positions were to find their way onto the exchange.
In addition, the major financial players knew that not since 1929, had the amount of private debt been equal to the gross national product of the United States.
The combination of debt, derivatives and short trading had sent the financial system out of control.
Those in the know sought to accomplish two things that week, first, to try and sort out the extent of the short positions and an over extended derivative market.
And second, to safeguard their own financial positions, their fortunes.
Someone had to tell the president.
And, the story that they laid out before the president was chilling.
What ensued can be told by paraphrasing Lenin.
Lenin stated that once you have taken control, the first thing that one should do is change the law to make everything that you did to take control legal.
Mr President, the conversation would have gone, we have to reduce our obligations.
To do this we will have to adjust the value of all stocks and bonds to a level where the short traders cannot collect.
But to do that Mr President we will have to do something that has not been done since 1929, that is, we will have to make short trading legal.
Otherwise, it will become obvious that we did not enforce the rules that were ours to enforce, and that revelation could expose us to charges of criminal negligence.
Even if we bring the exchange down from 13000 to a level of about 6500 we will still be trillions of dollars below the required asset support minimums.
We want you to understand, Mr President, that we will have to reduce our obligations to retirement savings, by devaluing them some 20, 30 or 40%.
But that is still not enough money to offset the extent to which our obligations exceed our assets.
How far reaching is this crisis, Mr President, some 1,000 banks and investment houses are affected or infected, if you will, including all the major players.
In short, Mr President, we may be able to forestall another great depression, but a long and enduring recession is now inevitable, with the inevitable unemployment in the millions, millions and millions of foreclosures...
If there is a silver-lining, Mr President, it lies in the fact that we get to decide who wins and who folds, and that is substantially it.
And, the SEC, the Federal Reserve, the major banks and investment houses went to work trying desperately to unravel the economic chaos that they had themselves spearheaded, while the American people enjoyed their 4th of July holiday unaware of the impending demise of economic innocence.
The massive exposure of short positions and the liquidity crisis which accompanied it is blamed for the Wall Street Crash of 1929.
President Hoover condemned short sellers.
FBI Director J Edgar Hoover threatened to investigate short traders not only for triggering the Depression, but for their role in prolonging it to keep control of the banking infrastructure.
Our current Director of the FBI may well have to investigate short traders not only for triggering the Great Recession, but for their role in prolonging it.
Financial regulations governing short selling were implemented in the United States in 1929 and were in effect until the 3rd of July 2007 when they were removed by the SEC Release No.
34-55970.
Eric LaMont Gregory for US Senate - Ohio - In a republic knowledge is the only true safeguard of liberty http://www.
theoxfordscientist.
com