The Ignorance Is Willful
By Greg Hunter’s USAWatchdog.com You might remember Dr. Michael Burry as the hedge fund manager who made hundreds of millions of dollars betting on the collapse of the housing market. You, also, might remember everyone from the mainstream media (MSM) to the Federal Reserve claimed nobody could have seen the 2008 financial collapse coming. How did Dr. Burry know a financial catastrophe was on the way while most financial experts and media were totally in the dark? This year’s commencement address at UCLA’s Department of Economics was given by Dr. Burry, and he says, “The ignorance is willful.” (Click here to see Dr. Burry’s June 20, 2012,UCLA address.) “The ignorance is willful.” I think you can say the same thing about the ongoing banking crisis. Last Thursday, credit rating giant Moody’s downgraded the long-term credit ratings of 15 of the biggest North American and European banks. All but four were cut at least two notches, and these are some of the biggest banks in the world. RBC, JP Morgan, BNP Paribas, RBS and UBS are household names in Canada, U.S., France, UK and Switzerland. (Japan’s Numara and Australia’s Macquarie were downgraded earlier by Moody’s.) (Click here for a complete list of downgraded banks from Business Insider.) I can’t find a time when a major credit ratings company like Moody’s has downgraded this many major banks in so many parts of the world at the same time. Sure, critics of Moody’s will say they are way behind the curve, but the fact is the company has come out with bold and devastating bank downgrades when the world is being told it is in “recovery.” Please keep in mind, dozens of Italian and Spanish banks were, also, downgraded in the last few months by Moody’s. The MSM greeted this enormously negative bank news with a yawn. USA Today, which touts itself as “The Nations Newspaper,” covered the story, last Friday, in the newspaper with less than 75 words! What kind of reporting is this? Both Goldman Sachs and JP Morgan were downgraded two notches by Moody’s, and both own more than 15 million shares (combined) of Gannett stock, which is the parent company of the newspaper. I am sure that had nothing to do with the very light coverage and analysis of this story. Bloomberg did a story that underplayed Moody’s downgrades titled “Bank Investors Dismiss Moody’s Cuts as Years Too Late.” The story ended by saying, “The reductions by Moody’s are “a mea culpa from 2007 and 2008,” said James Leonard, a credit analyst in Chicago at Morningstar Inc. (MORN) “The banks have gotten so much better in the last few years in terms of capital, yet their ratings keep going down. What does that tell you? That the ratings were so wrong before.” (Click here for the complete story.) As for the rest of the MSM, not a peep about this on any of the Sunday talk shows. It appears to me it is being played as no big deal. This is the same treatment the financial press gives to what I call “government sanctioned accounting fraud” that the banks use to value underwater assets on their books such as real estate and mortgage-backed securities. The Financial Accounting Standards Board (FASB) changed the rules in 2009, and the banks can value these assets at whatever they think they will be worth at some fictional date in the future. Instead of “mark to market” accounting where assets are valued at what they will sell for today (this is how the IRS does it), you have “mark to fantasy” accounting where you value the assets at what you hope to get for them in the future. This is an insolvency problem so big that FASB had to change the accounting rules to make people think some banks are still solvent. The same kind of accounting rule changes have taken place in Europe, where banks can “mark to fantasy” sovereign debt. It is not only the countries going broke, but the banks that hold sour debt that are insolvent. It appears things there are a bit more desperate and dire because, last week, The Guardian UK reported, “Mario Monti: we have a week to save the Eurozone . . . Italy’s prime minister . . . has warned of the apocalyptic consequences of failure at next week’s summit of EU leaders, outlining a potential death spiral that could threaten the political and economic future of Europe.” (Click here for the complete story.) What kind of financial management is this where you are down to a single week to fill an enormous financial black hole? Mr. Monti is an unelected banker, and I am sure his main concern is the survival of key European banks and not the well-being of the people. This is all about preserving the status quo and the power of the banks. I have repeatedly said the global financial crisis is, in reality, a bank solvency crisis. The bank credit downgrades by Moody’s are another signpost on the road to perdition. Things are clearly not getting better, no matter how much the MSM underplays the crisis. The “nobody saw this coming” excuse will not work the next time there is a financial implosion, and there will be a next time. “The ignorance is willful.”
I just did some mark to market of my own personal assets, and was quite surprised to find out that I’m now the wealthiest person in the world!
But seriously, the bank downgrades have implications that I think most will only recognize in retrospect. I truly believe that when the global financial meltdown occurs, the bank downgrades will be one the moments many will look back on and say, “that was the moment when we should have known that everything was going to fall apart.”. As for me, I’m not going to wait until its too late – I’m preparing NOW.
Since the topic is banks, it may be worth mentioning that NatWest, a subsidiary of RBS (one of the downgraded banks) has not been unable to provide cash to many of their customers for nearly a week. They’re attributing it to a computer glitch, but who knows what’s happening. Aren’t banks supposed to have backups and built in redundancies to prevent these kinds of things from happening? When NatWest is finally 100% operational, one can only guess how many scared and angry customers will become ex-customers. I know if I had any money in that bank, I’d pull it all out at the earliest opportunity.
And like the bank downgrades, this story is receiving very little coverage by the MSM. Typical.
Like the black knight in Monty Pythons “Holy Grail”, banks and governments insist that they are perfectly fine (“it’s just a flesh wound”) even while they are having their (financial) limbs hacked off.
“The ignorance is willful.” Amen, Brother. And I recall seeing a UTube video on a report by some CNN reporter. I think his name was Greg Hunter who said that the economy was headed for a significant fall. Nobody saw it coming. BS. People saw it coming but were marginalized.
One also has to wonder just how much hedging Moody’s did in its downgrade, I suggest it was a whitewash in itself – meaning, Moody’s knows crap is about to hit the fan and was forced to downgrade to stay somewhat relevant. Frankly, probably should have been much deeper downgrades to reflect the reality on the ground. Do you remember when our generals were telling the country we were winning the war in Vietnam? Just more of the same ‘O’ same ‘O’. My last thought is that someone ought to downgrade Moody’s for their late, short, & inept downgrades!
I guarantee you that millions upon millions of Americans will say that no one saw it coming. When it does rear it’s ugly head, I don’t want to hear a peep out of any of my Facebook friends. I have been posting a few articles every week for them to read and if they chose not to, then it’s their own fault. They cannot say that they weren’t exposed to the real news.
Even I saw the housing crash coming and without the benefit of blogs to tell me it was coming. It didn’t take a degree in economics to see what was happening. Double digit price increases year after year. And incomes that weren’t moving up with the prices. ARMs and all kinds of wacky financing was appearing out of no where and everybody was either upgrading to bigger houses or taking money out of their cash cows.
In my market I saw the RE prices start to nose over in December 2005. I saw inventory starting to build. My wife and I had already agreed that the time to sell was when we saw this happen. By May 2006, we had sold and bought another home in a place that never saw anywhere near the bubble prices.
We done good!
The banks have gotten so much better in the last few years in terms of capital, yet their ratings keep going down. What does that tell you?
Tells me theives have no problem lieing.
Im shocked at this video iv just watched on Infowars.com
CNBC has let the cat out of the bag. Admitting we all work for the bankers.
Heres the link
Such an endorsement for thinking far outside the box. In fact, do not get anywhere NEAR the box.
Build your own box and then think outside of IT.
The cartel knows sovereign debt like housing debt brings the debtor under bondage to the lender. Nothing has changed for thousands of years.
This time though and end game is about to unfold once the covenant is made this fall requiring 7 years of exponential trouble followed by one year of world wide destruction before the King sets up His kingdom.
This covenant will look a lot like this:
In CHRIST! Rob
I have a 1968 Firebird that has been restored. You think I could put down in my assets at what I think it will be worth in 100 years because I think it would be worth pretty much.
Who is ignorant enough to allow this kind of accounting and who is ignorant to build your business on it. Talk about a house of cards. When money is worth nothing and the electronic numbers all come crashing down, what will any of this be worth. Gold. Silver, food, and property. these are the investments to be making today. If you are of the mindset to move in this direction then you don’t have to be told about the weapons. Now is the time for every person to take personal responsibility for their future. The banks and the Government (two of the three stooges) will not be there to help you through the mess that is coming. Great job reporting Greg. Boy, they sure have given you the material to report on. I just wish the MSM would wake up to it.
Your cartoon sums it up perfectly. What the average – America’s got talent– can dance — ad infinauseum Joe doesn’t waste one media washed gray cell on – is — where does all this money being printed come from.
WE THE PEOPLE will get the bill for this profligacy. J. Sinclair ( the lone cry of truth from the media wasteland ) has called it 100 % correct for years –QE to infinity –. Besides not listening — Joe Q. Public is low on drugs and unable to see the loss of his freedom – rights – and of this once beacon of strength for the world — drowning in debt — BAILING OUT BANKS that have no risk and all reward as they control the Politician’s who control the purse strings.
Nothing new under the sun.
God blesses man,man forgets God and goes animal perverse.
God’s blessings disappear and man falls down the pain and suffering filled sewer hole and wonders what happened.
So I commended enjoyment, because a man has nothing better under the sun than to eat, drink, and be merry; for this will remain with him in his labor all the days of his life which God gives him under the sun.
hi, Greg, where you been???,
you are missed on sinclair’s tome of the day,
anyway yours today on banks shows a reverse of baloney of banks as to reality, i.e. they are defunct by FRS sucking up to obama and thus has to help make believe member banks are viable
— but, we the listening public already know FRS has made itself obsolete by having shot its load by financing the euro freefall into oblivion,
and euro is there (kaput), FRS (kaput-2) on its tail, obama licking his lips, drooling,
meanwhile back at the ranch the poor working men, you and i, are eating dog food, our brethren eating cat food,
and all is well in wash d.c. esp supr court who today shot self in foot by destroying Arizona law thus putting Arizona folks into higher explosive over-taxing and thus since alreadyt over taxed are now dead ducks, decoys,
— here comes poverty nationwide thus worldwide
no, i am not worried i have a few shekels hidden so when no one else can buy anything i can buy some more dog food….
As an accountant, former auditor, there is no doubt that policy makers “saw this coming”.
Well-run corporations set up TIGHT INTERNAL ACCOUNTING CONTROL SYSTEMS that are designed to SIGNAL and / or PREVENT systemic accounting / financial problems.
When government abolishes, deletes, disengages “regulation” that is originally designed to do the above, then, the “Ignorance Is Willful” motif becomes obvious to those paying attention.
It is all about control of the mindless drug downed people in the US and abroad. Create havoc in one country after another with the excuse of bringing down a ficticious group of people that the US and Israel call Al Queda, coined after 9/11.
The game is out of control, and soon it will be game over for the entire system.This holographic system is imploding, and the only way that the human race is going to survive is now to look within.
The source of all creation will be taking care of business soon. The Earth changes coming about will make this economic implosion seen triveal! The human race has forgotten that without a healthy planet, there will be no life at all. Mother Earth has the most powerful energy in all the universe, and she is about to give birth to a new reality for herself and those awakened and ready to join her.
It is time to believe in the one source of Light that connects everything out there, and that my friend is called LOVE! Belief in ones self, follow your heart. It is Love and Compassion that will lead you to the promised land, not the mind.
Great story Greg!
In my humble opinion, Intelligence decides everything in America. They have something on everyone and have for some time. They use it when they need it.
Case in point. Note the tiny blurp about Goldman Sachs later in the article.
Instead of thinking that the present economic crises is the result of ineptness, try thinking of it as a strategy that is being deployed intentionally for the purpose of destroying the victim nations. When you have given this idea a chance, you will discover that it fits the nature of the phenomenon remarkably well.
Your observation “this is all about preserving the status quo” is brilliant. All sectors of the current status quo – the monetary system, the political class, union bosses, religious dogma etc. – are locked in a battle with the forces of change. This struggle will take the next ten years to resolve.
Average Joe’s however wants only stability in their present day lifes, and that’s why their “ignorance is willful” in disregading the cataclysmic events that surround them today.
“Things are clearly not getting better, no matter how much the MSM underplays the crisis. The “nobody saw this coming” excuse will not work the next time there is a financial implosion, and there will be a next time. “The ignorance is willful.”
No they are not. You are spot on with this comment as usual Greg.
There is a very nice piece on excactly that issue covered in John Hussman’s (Hussman Funds) latest weekly comment which is always an excellent read. I recommend people read this.
Then, in the June 22 Washingtom Post business article on the Moody’s downgrade there was this little absolute gem from another financial wiz kid:
“Moody’s downgrade could present a “buying opportunity” for stocks, said Paul Miller, an analyst at FBR Capital Markets. The downgrades should have happened earlier, Miller, a former examiner for the Federal Reserve Bank of Philadelphia, said today in an interview on Bloomberg Television.”
A buying opportunity??? It’s just too hilarious for words and they really expect thinking people to buy this trash.
All the best Greg.
A few points to flesh out.
i) Notwithstanding what took place in 2009 (FASB) …every chance that the “books were cooked” long before and that Lehman (& Bear) merely forced the issue. Inability to come clean…so best to stay dirty. AND DIRTY THEY REMAIN.
ii)Bank Solvency Crisis….quickly festering into a crisis of confidence. What/Who can be trusted…the charade continues while hope is fading. Hope will dissipate as confidence becomes fear.
We see the forced retreat of masses of liquidity into bank deposits and bonds/treasuries. The very last place one goes for protection knowing of the “hidden gems” that lie beneath the covers.
iii) Its not a matter of seeing it coming any more…its already unfolding as we live and breathe each day. It will be a slow painful
ride where the seat of your pants will at times feel as though they are on fire.
Fraudsters, Banksters, Counterfeiters & Thieves..they are all of the same ilk. Guiltless….They wash their filthy hands from the same bowl….totally unwilling to accept care,responsibility or blame and are undeniably complicit.
Ignorance is indeed Wilful….and Justice is a crime, but is not enforceable, for it is not part of the vernacular of the system.
Yes, the ignorance is willful… And therefore, the action is non-existent OR worse, enabling evil.
I don’t know how you do it, but your writing style improves with each article. The clarity you brought to this subject was remarkable.
Linked from your own web site Greg.
Not everbody is ignorant.
Greg, When the wheels come off, how much cash should we have under the mattress
I am enthralled by your uncensored and unbiased analysis of the financial crisis…i am one of your new followers…keep it up sir.