i havent been doing much independent writing of my own at this time of year, but there is a story developing with California thats similar to what happened to Chrysler (see sidebar)...the story was probably told better than i could on the urbansurvival blog, but this blog adds new stories daily, & i havent been able to find a way to link to only that one, so im just gonna copy & paste it here, with minor modifications for clarity…
California At the Wall
There is a story in the Christian Science Monitor "Clock's ticking for California budget talks" that is worth reading. Especially if you understand the larger game in play by the PowersThatBe. In case you've forgotten, here's how it works:
· Out of state rich people buy a small handful of California bonds. $50-million maybe, or even $100-million.
· Then through offshore funds, they effectively short California debt hundreds of times over. About 100-offshore funds, or so, is all that need to play. They buy billions in insurance hedge bets.
· Then since the out of state slimeballs control the offshore hedge funds that stand to reap huge payoffs when California defaults, they pour some of their out of state money through various fronts into California to block any meaningful solutions.
· (Which is why there's a groundswell in the PowersThatBe to press for 'super-majority' legislation nationally because who needs a new housing type bubble to burst when there's a whole government with unlimited deep pockets to go after? This is like the crack-addicts wet dream.)
· Then the hedging slime sit back and profit as their bond insurance bets pay off when California defaults and they make billions, which they then dribble back into their US checking accounts as small to medium-sized wire transfers claiming near zero-percent taxable rates from offshore - long term gains, ostensibly, not the high crimes against the people that it really is....
· And then they bitch & moan about maximum income tax rates on long term capital gains they'll tell you should be lowered and "Woe be to us poor bond holders". Ask them to open their books to see how they had hedged that risk, they'll scream bloody frigging murder about 'rights to privacy".
Gotta love it. The Land of the Brave and Home of the Free has become the ultimate financial teat of the uber klassen. What a deal (for them), huh?
ive covered naked credit default swaps in the sidebar, and here’s an article which explains naked shorting; although it talks about shorting corporate stock, the same tactic applies to shorting debt instruments (bonds)
for further clarification, this is a readable introduction to the derivatives market