Goldman Sachs is doing it again. Goldman is telling the public that
everything is going to be just fine, but meanwhile they are advising their top
clients to bet on a huge financial collapse. On August 16th, a 54 page report
authored by Goldman strategist Alan Brazil was distributed to institutional
clients.
The general public was not intended to see this report. Fortunately,
some folks over at the Wall Street Journal got their hands on a copy and they
have filled us in on some of the details. It turns out that Goldman Sachs
secretly believes that an economic collapse is coming, and they have some very
interesting ideas about how to make money in the turbulent financial environment
that we will soon be entering.
In the report, Brazil says that the U.S. debt problem cannot be
solved with more debt, that the European sovereign debt crisis is going to get
even worse and that there are large numbers of financial institutions in Europe
that are on the verge of collapse. If this is what people at the highest levels
of the financial world are talking about, perhaps we should all start paying
attention.
There is a tremendous amount of fear in the global financial
community right now. As I wrote about the other day, the financial world is
about to hit the panic button. Things could start falling apart at any time.
Most of these big banks will not admit how bad things are publicly, but
privately there is a whole lot of freaking out going on.
According to the Wall Street Journal, Brazil believes that "as much
as $1 trillion in capital may be needed to shore up European banks; that small
businesses in the U.S., a past driver of job production, are still languishing;
and that China's growth
may not be sustainable.”
Perhaps most startling of all is what the report has to say about the
debt problems of the United States and Europe.
For example, this following excerpt from the report sounds like it
could have come straight from The Economic Collapse Blog....
“Solving
a debt problem with more debt has not solved the underlying problem. In the US,
Treasury debt growth financed the US consumer but has not had enough of an
impact on job growth. Can the US continue to depreciate the world's base
currency?”
Remember, this statement was not written by some guy on the Internet.
A top Goldman Sachs analyst put it into a report for institutional
investors.
The report also goes into great detail about the financial crisis in
Europe. Brazil writes about how the euro is headed for trouble and about how
dozens of financial institutions in Europe could potentially be in danger of
collapse.
But in any environment Goldman Sachs thinks that it can make money.
The following is how Business Insider summarized the advice that Brazil gave in
the report regarding how to make money off of the impending collapse in
Europe....
* Buy a six-month put option on the Euro versus the Swiss Franc, thus
betting the Euro will drop against the Franc (the Franc being the currency that
an official Goldman report recently referred to as the most overvalued in the
world).
* Buy a five-year credit default swap on an index of European
corporate debt-the iTraxx 9. This is a bet that some of these companies will
default, and your insurance policy, the CDS, will pay off.
This is so typical of Goldman Sachs. They will say one thing publicly
and then turn around and do the total opposite privately.
For example, prior to the financial crisis of 2008, Goldman Sachs was
putting together mortgage-backed securities that they knew were garbage and
marketing them to investors as AAA-rated investments. On top of that, Goldman
then often privately bet against those exact same securities.
The CEO of Goldman Sachs has even acknowledged that the investment
bank engaged in "improper" behavior during 2006 and 2007.
For much more on the history of all this, please see this article:
"How Goldman Sachs Made Tens Of Billions Of Dollars From The Economic Collapse
Of America In Four Easy Steps".
So will Goldman Sachs ever get into serious trouble for any of
this?
No, of course not.
Yeah, they will get a slap on the wrist from time to time, but the
reality is that the top levels of the federal government are absolutely littered
with ex-employees of Goldman Sachs.
Goldman is one of the "too big to fail" banks and they are going to
continue to do pretty much whatever they feel like doing.
Sadly, the power of the "too big to fail" banks just continues to
grow. At this point, the "big six" U.S. banks (Goldman Sachs, Morgan Stanley,
JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets
equivalent to approximately 60 percent of America's gross national product.
Goldman Sachs was the second biggest donor to Barack Obama's campaign
in 2008, so don't expect Obama to do anything about any of this.
We have a financial system that is deeply, deeply corrupt and all of
that corruption is a big reason why things are falling apart.
Sadly, the 54 page report mentioned above is right - we really are
facing a global debt meltdown and we really are heading for an economic
collapse.
You aren't going to hear the truth from the mainstream media or from
our politicians because "keeping people calm" is much more of a priority to them
than telling the truth is.
The debt crisis in the United States is unsustainable and the debt
crisis in Europe is unsustainable. Right now we are in the calm before the
storm, and nobody knows exactly when the storm is going to strike.
But let there be no doubt - it is coming.
The amazing prosperity that we have enjoyed for the last several
decades has largely been a debt-fueled illusion. It was a great party while it
lasted, but now it is coming to an end and the aftermath of the coming crash is
going to be absolutely horrific.
Keep watch and get prepared. We don't know exactly when the collapse
is going to happen, but it is definitely on the way and now even Goldman Sachs
is admitting that.
ARA/KA/DB
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