August 7, 2007:
BNP PARIBAS has frozen three investment funds due to problems with high-risk mortgages, and everyone has been shocked, especially in the North American real estate sector.
The subprime mortgage scandal has broken out… and it’s curious that it’s happening this year when they had already been denounced before the turn of the century.
The whole world is talking about it and it seems like something new, even a huge surprise, as if it were something that had just happened.
Everyone is talking about the same thing: all the debate programs, the major news programs, the entire press, the entire internet… even celebrity gossip is talking about the issue.
The financial world is terrified, as if I had attended the new Hollywood movie with fantastic special effects and there were aliens, in the form of subprimes, threatening the survival of the human race.
Continuing with the same analogy:
Within the financial world, the trailer had already been seen, even some isolated scenes, and more than one person knew the ending before this great movie premiered.
For others it was a remake of other similar moments… but that’s another story we could tell another time… in any case:
It’s nothing new, as they want everyone to believe… and the apocalypse is nowhere near either.
Fear and ignorance are always plot elements that offer plenty of possibilities.
What happens now?
Progress was already made in an article written more than a year agoand received poorly, with accusations of being doomsayers, charlatans, or nonsense, although… it seems that in the end, the yellow brick road led us to the Emerald City.
BUSH President’s team has planned an urgent recovery system motivated by the disaster unleashed by the aforementioned subprime mortgages (more famous now than any Hollywood star) in order to save the financial system and keep the investment banks, mortgage and real estate entities that have gone bankrupt or are about to go bankrupt operating.
Something typical of a film that mixes organized crime and “political fiction”: In this script, instead of penalizing seemingly ineffective managers, they are given a helping hand.
Early 2008:
Distrust has spread globally and markets have plummeted… or at least it seems that way.
Suddenly Absolutely everyone has realized that the economy was doing very badly, and that all the control mechanisms had failed… without supposedly knowing the reason.
EVERYONE? REALLY? DO WE HAVE SO MANY IGNORANT PEOPLE CONTROLLING EVERYTHING?
October 3, 2008:
The United States approves THE EMERGENCY ECONOMIC STABILIZATION ACT (TARP), a $700 billion expenditure to help the banks.
The INTERNATIONAL MONETARY FUND, he G-7 (where the world’s richest countries are represented) and the EUROZONE have decided to take action.
Amazingly, marking a historic milestone, a solution to a problem of planetary significance has been found in record time (a weekend), and all our politicians (from every side and every country) have agreed (despite how difficult it is for even the smallest matter!) to invest in the banks and ensure their refinancing. And all this, continuing the science fiction analogy, even though the aliens haven’t yet set their conditions for not attacking the planet.
It’s great when politicians want to reach an agreement: how easy it is to summon them and get them to sign documents. Or is there more than one infiltrator working for the evil aliens? (WE’LL SEE IT IN A REMAKE IN A FEW YEARS, FOR SURE).
Of course, there’s one piece of information that isn’t being mentioned: Politicians also depend on debt… so it’s better to reach an agreement and keep happy those who give them the money to govern, and their intermediaries (the banks), than to keep them angry, right?
The plan includes:
- The purchase of debt (depending on the case, toxic assets from failed banks or the acquisition of assets from healthy companies).
- The acquisition of bank shares (to provide them with liquidity).
- The increase in deposit guarantees (at all levels).
- Limitations on the remuneration of managers (at least in their official contracts).
- …And a boost to consumption (When everyone says they’re broke and can’t afford to buy anything!!!???… Is this a joke to appease the people or should we ask ourselves where that money is really going?)
The States (regardless of their political affiliation) will be jointly and legally responsible for the debt owed to one ultimate payer: THE CITIZEN. Yes, the CITIZEN.
How is that possible?
Through cuts, tax increases and the loss of social services… regardless of political sign, putting State Budgets at the service of those hungry holders of debt, who after all (we repeat) are also the ones who supply him with funds to be able to continue in the political arena.
Objectively speaking, we could establish that the 2008 financial crisis is being caused by private debt, with private creditors (banks and by extension their shareholders) being bailed out with public money, so that the owner of the debt recovers their loss through the State and the State through the base of the pyramid: the citizens.
Many people, companies, administrations… are wondering why the losses caused by those subprime mortgages have to affect their well-being and their wallets instead of those who sold and resold the junk mortgages knowing that it was a product designed to collapse.
Safeguarding the solvency of a few lenders has led to the insolvency of billions of citizens.
AWESOME!
The question we should be asking is: Can this continue to happen, and what about in the face of any loss?
And the answer is:
YEAH.
In summary:
The phrase “Whoever holds the debt, holds the power” seems to make perfect sense when analyzing the events of recent years and the position of each individual at the present time.
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