from
(snip)"Bill Bonner of the Daily Reckoning.com says, "The world's credit system is no longer controlled by banks, and thus, no longer under the control of bank regulators. Instead, there is a huge pool of liquidity outside of the banking system. A news item last week spoke of giant 'dark pools' of liquidity that 'do not publish quotes on the open market.' But how much bilge is sloshing around in these dark puddles? How do they work? Where does the money come from? We don't know."
Instantly, I am on my feet with joy! "I know!" I gleefully shout. "Over here! Ask me! I know where all those 'dark pools of liquidity' come from! They come from the lying mouths of greedy scumbags! Hahaha!"
Before anyone could interfere with my sudden outburst of Inflammatory Mogambo Gibberish (IMG), I hurriedly continued, "The only legal way to create money is to borrow it from a damned bank! Nobody else can create money! If anybody could, they would do it! Hell, I'd do it! But nobody does it, and I don't do it, because it can't be done!"
Out of the corner of my eye I see serious men in somber suits and sunglasses excitedly talking into their walkie-talkies and looking at me with venom in their sour expressions, but I recklessly continue, "Therefore, there cannot be any real, 'legal' money sitting around in 'pools of liquidity' because these 'dark pools of liquidity' probably exceed the total money supply of the world, just like the total value of the global issuance of derivatives is, I dunno, something like 10 times global GDP!"
Waiting until the last second, I quickly bolt towards my planned escape route, mere steps ahead of some security goons, and as I run away like the scared little rat that I am, I hear Doug Casey, of the International Speculator newsletter, delivering his essay, "It's the End of the World As We Know It". He says, "The collective result is that our financial system has been wired up to $370 trillion dollars of privately negotiated investment contracts. They're usually written to shift risk from one bank, pension fund, insurance company or brokerage firm to another. And many are linked together in long chains, with each contract providing collateral for the next."
Okay, about six or seven times global GDP! But it's still an unbelievable lot!
But the point is that this whole "dark pools of liquidity" thing can be explained as, "Somebody is selling something that ain't his'n to sell, and it being bought by somebody with money that ain't his'n to spend!" This is, as rustic and charmingly homespun as it is, an actual quote from actual SEC transcripts of landmark legal case, "The United States v. The Mogambo Idiot (TMI)", and where the presiding judge said this very thing to me as a prologue to declaring that I was a "lowlife, lying, deceptive little creep."
This is relevant because the whole brouhaha came about because I tried this exact same "dark pool of liquidity" thing, but was immediately exposed as the crook I was, and only later exposed as the "lowlife, lying, deceptive little creep" that I am.
You are probably wondering, "What was this Terrific Mogambo Scheme (TMS)?" Well, the nub of it is that I got Sluggo to buy 100 Mogambo Interstellar Enterprises Gilt-Edged Bonds (MISEGEB), at a million bucks a pop. "These fabulous bonds are guaranteed to pay a princely coupon yield of 10% of par value!", I told him with a big ol' smile.
Naturally, I take his IOU for $100 million in full payment to me, and I give him the bonds, which really are legally binding after all, despite being amateurish and so cheap that I literally made them with a crayon. This is according to recent court rulings, which surprised the hell out of both of us, and which (parenthetically) ruined our planned "fall back" defense strategy at a stroke. Damn! This "legal niceties" thing is harder than it looks!
Anyway, to continue with outlining the TMS, I bought back the rights to all of the coupon payments of the bonds from Sluggo, and left him with the stripped bonds. Then I "paid" him $50 million for them, using an IOU that I created on the spot and that I signed with a magnificent flourish to give it that air of authenticity and to indulge my own outlandish, arrogant vanity.
At the end of the day, Sluggo had a stack of bonds "worth" $100 million and an IOU for another $50 million. I, on the other hand, have an IOU for $100 million, and a book entry of $50 million in ownership of all the coupon interest payments from the Mogambo Interstellar Enterprises bonds (which, sporting a par of $0.10, comes to, in total, one cent per year per bond).
But the banks didn't know this, and investors didn't know this, and depositors didn't know this, and regulators didn't know this; and that kind of pervasive ignorance is all you need to turn a lie into a "dark pool of liquidity", as these clueless people loan money against these millions, and billions, and trillions of dollars in "assets"! Hahaha!
So, our legal defense switched to the "greater good" variety, in that Sluggo and I would get rich, which we admit, but we would also pay a lot in taxes, and increase the incomes of a lot of bartenders, barmaids, pole-dancing cuties, creditors, creditors' lawyers, various blackmailers, and any business that will deliver ready-to-eat food and drink of the yummy variety.
Our summation was succinct: "And therefore, your Honor, with all the multiplier effects, the world would be a wonderful, richer place all around, because of us! We're heroes! Like Robin Hood! Only better, because even the Sheriff of Nottingham's tax collectors make more money! One must surely be compelled to proclaim the brave Sluggo and the valiant Mogambo 'Not guilty!'"
But alas, according to a stupid kangaroo court with a biased "Out To Get The Mogambo" judge (who was a complete idiot and corrupt down to the bone, and who was so stupid he couldn't even seem to understand that, no matter how many times I told him what a jerk he was), the whole deal was adjudicated to be a scam.
Mr. Bonner, I am sorry to say, also disagrees with Sluggo and me, but agrees with the stupid presiding judge, but thankfully without the power to lock me away until science can figure out what in the hell is wrong with me, and says "But we know that pools of liquidity do not really make the world a richer place. They just increase the odds that you will step into something…like Enron or New Century…and sink."(snip)



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