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Ever since I published a recent commentary on this subject (“U.S. Economic Terrorism the New Winning Trade”), there has been a rapid growth of condemnation from various European leaders of the “speculators” in the credit-default swap (“CDS”) market. France, Germany, and Greece have been the most vocal critics of these financial predators.

As I discussed in that previous piece, while CDS contracts are a form of “insurance” (insuring against the default on a particular debt instrument), unlike fire-insurance, the predators using these “financial weapons of mass destruction” can cause a default (and a pay-out on this insurance speculation), or simply push “credit spreads” to such dangerous levels that they can cash-out huge profits “trading” this insurance. This can (and has) been done by the U.S.'s economic terrorists – through massively piling into the trade (which, by itself has caused credit-spreads to widen dramatically) and then exacerbating the “crisis” with months of around-the-clock propaganda, intended to frighten the market, and exaggerate the severity of (in this case) Greece's financial problems.

I have already revealed in a previous commentary (see “Fiscal Follies: Greece versus the U.S.”) that while Greece has fiscal problems which are very similar to those of the United States, the fiscal problems of the U.S. are worse in every respect. Claims by some brain-dead commentators that the U.S.'s printing press gives them an “out” which is unavailable to Greece ignore the fact that hyperinflation (from “monetizing” trillions of dollars of debt) is a worse fate than even a default on government debt.

The only people who fare better in a hyperinflation scenario than a debt-default scenario are the banker Oligarchs. This is why I and many other commentators conclude that the U.S. government has already chosen to deal with U.S. insolvency through hyperinflation. The fact that American commentators (inside and outside government) continue to refer to the U.S. printing press as some “magical” device, which can print-up infinite amounts of money with no consequences reinforces that conclusion.

Returning to the current, U.S.-induced crisis in Greece, the war-of-words between European governments and the economic terrorists has heated-up, with the current President of the EU openly talking about a “complete ban” on all “speculation” in the CDS market. Specifically, the ban is intended to prohibit “naked” CDS contracts, where traders purchase CDS contracts despite having no “insurable interest” (i.e. these traders are not parties to the original debt transaction).

Not surprisingly, there has been a rapid response from the U.S. propaganda-machine – and the U.S. government. The reply, or threat from the banksters was that if such CDS trading was banned in Europe, that this “trading” would shift to “other markets” (i.e. New York). Essentially, the propaganda-machine claims that the economic terrorists would simply continue their “games”, since there is nothing the Europeans can do to stop such terrorism from across an ocean.

Treasury Secretary Tim Geithner, who serves as Wall Street's chief errand-boy, chimed-in that “regulating” CDS contracts was too difficult, saying “it's too hard to distinguish what is a legitimate hedge that has some economic value from what some people might just feel is a speculative bet...”

As previously mentioned, the “legitimate” use of CDS contracts has already been defined: insuring one's own debt instruments – while “naked” CDS contracts are speculative and would be illegitimate. Even a Tim Geithner is not so stupid as to be incapable of making such a simple distinction, thus his remarks can only be interpreted as an intention on the part of the U.S. government to provide a “safe haven” for these economic terrorists. At this point, we can fall back on the infamous “Bush doctrine”: those who provide a “safe haven” for terrorists, are themselves “terrorists”.

The last “line of defense” of these increasingly desperate predators is that “no one can prove” that these CDS contracts are being used as financial weapons of mass destruction. The only reason why such proof cannot be obtained is because this unregulated market is so utterly lacking in “transparency” that it's impossible to identify the actions of any individual traders.

The banksters had better be careful about over-reliance on this argument – since it is guaranteed to cause increased demands for thoroughly regulating the entire derivatives market, every time they attempt to use this argument. However, the best criticism of the abuses of this market comes from the Wall Street bankers, themselves. It was these banksters who “sold” these financial products all over the world on the basis of a promise that they would “reduce borrowing costs”.

Thus, the fact that today we are seeing borrowing costs rapidly increase for the users of this insurance means that either the banksters were lying all along about CDS contracts being a means of reducing long-term costs of borrowing or those contracts are now being abused by the banksters who created them. There are no other possible scenarios.

If the first premise is true: that CDS contracts would never/could never reduce long-term borrowing costs, this can naturally only result in the elimination of this entire market – since it would serve absolutely no legitimate purpose. If the second scenario is correct, then it requires the thorough regulation of this market, and identification of all the individual parties to these transactions.

The only course of action which cannot possibly be defended through any logical/rational argument is that the market should simply be left as is (i.e. Geithner's position). If, indeed, the U.S. (and perhaps the UK, as well) choose to officially become “safe havens” for these economic terrorists, then the “Bush doctrine” decrees that the U.S. and UK would become “state sponsors of [economic] terrorism”.

While the bankster-traders may laugh and sneer at the “impotence” of European governments in preventing their acts of terrorism, the United States, itself, is clearly much more vulnerable to retaliation. Such “retaliation” would initially be “passive”: the refusal to assist or cooperate with the U.S. in any international endeavours, such as the made-in-the-USA “War on Terror” (from which was spawned the “Bush doctrine”).

This would also end any European cooperation in the U.S.'s diplomatic crusade against Iran. Should the U.S. and/or Israel take military action against Iran, while the EU would never get militarily involved, it would certainly negate any “diplomatic cover” for such an act of war – and it would be simply branded as an illegitimate act of naked aggression.

Should the U.S. and UK choose to continue to embrace the role of “state sponsors” of economic terrorism, their transition to pariah-states would be complete. While the U.S. may not have any fears of direct action against it by Europe, what the U.S. should fear is a scenario where China is free to act against the U.S. (economically) without the slightest worry of any condemnation or opposition from Europe.

In that respect, whatever hardship/damage the U.S.'s economic terrorists are able to cause to European nations, China (by itself) is capable of inflicting ten times that amount of damage on the U.S. Quite simply, through its vast holdings of U.S. debt (and currency) China can take the U.S. bond market and/or the U.S. dollar down to zero, by flooding global markets with trillions in dumped-dollars and bonds, overnight.

U.S. talking-heads spout the ridiculous rhetoric that such a scenario would “hurt China” as much as it would hurt the U.S. Such an argument does not stand up to simple arithmetic. The $2 trillion held by China represents a decade of lost profits from China's trade-surpluses. While such a loss would certainly cause some belt-tightening in China, this is a rather trivial problem (for a nation with a huge stockpile of savings) when compared to the complete destruction of the U.S. economy.

Recent events are yet another example of how Wall Street Oligarchs are true “psychopaths”. The original scams of these criminals with respect to the U.S. housing-bubble (and their concurrent Ponzi-scheme) have already permanently destroyed several, financial sub-sectors. Since the obsessive greed of these predators makes them seemingly incapable of voluntary ending (or even restricting) their terrorist acts in the CDS market, it is likely this will be the next aspect of the Oligarchs' “business” which they have destroyed, themselves.

This separates the Oligarchs from mere parasites – who instinctively know enough not to destroy their own “hosts”. The lack of this basic “survival instinct” on the part of Wall Street is compelling evidence of psychopathic behavior.

Meanwhile, the compelling evidence that the U.S. government is a willing partner of Wall Street in this campaign of financial terrorism also continues to mount. As I pointed out in my previous commentary on this subject, the indifference of Americans to any/all events outside their own borders (with the exception of wars) is legendary. Thus, the months of around-the-clock coverage of Greece's “financial crisis” by the entire U.S. propaganda-machine can only be seen as “an act of aggression” against Greece – since there is absolutely no legitimate basis for months of such saturation-reporting. The willingness of Tim Geithner to sacrifice whatever minimal amount of prestige he possesses with his lame and absurd “defense” of the CDS market is another example.

More generally, the supposed “financial reforms” which were supposed to prevent the Wall Street Oligarchs from engaging in another global crime-wave have been thoroughly gutted – to the point where nothing remains. Simply: there are no longer any notable reforms “on the table”. The much-hyped “Volcker rule” is the most visible example. The thoroughly corrupt members of the U.S. “Financial Services Committee” have already telegraphed their intention that any restriction of “proprietary trading” (which manages to survive the U.S. political process) would contain “exceptions” large enough to drive a truck through them.

The behavior of the Oligarchs can be understood (through simply observing their psychopathic tendencies), however, it is the words and actions of the U.S. government which are more difficult to define in any rational terms. The status quo: where corrupt politicians serve the interests of Wall Street in return for a large, uninterrupted flow of campaign-bribes is obviously unsustainable – even through this decade. Hyperinflation or a debt-implosion inside the U.S. are certain to occur long before that time.

One way or another, such an economic catastrophe will permanently destroy the U.S.'s current, hopelessly-gerrymandered political system – where over 80% of the politicians of this so-called “democracy” are “elected for life”. Thus, the blind servitude of the U.S. government toward the Oligarchs is a certain recipe for their own demise, as well.

The only external factor which could possibly serve to unite the American people in continued support of their two-party dictatorship (and the Wall Street Oligarchs) would be a new “war” - or a dramatic escalation of the current “War on Terror”. In that respect, I certainly hope that the actions of the U.S. government reflect only mindless obedience toward their “masters” - rather than being part of a long-term “plan”.

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