Additional Titles










"Men in Black" The Cult of The Judges



PART 2 of 2


By Jon Christian Ryter
March 3, 2010

Here's how it works: you apply to a bank for a home mortgage loan. The price of the home is, say, $250 thousand. You have good credit and, because the home is valued at $325 thousand, and this is an FHA mortgage, you qualify for 100% financing. You pay $12,500.00 in closing costs. A year or two, or ten years later, the bank holding your mortgage received a "mark to market" letter. During the preceding decade, the value of homes in your community, and in particular, your subdivision, have escalated. You are now paying taxes on a $550,000 home. But, about 25% of the homes in the subdivision are now in foreclosure because the homeowners, who actually could not afford traditional payments on the homes they bought, received exotic mortgages (adjustable rate mortgages) and for the first few years only paid about half of what their mortgage payment should have been. When their ARM adjusted, their mortgages doubled and they could no longer afford their dream homes. As the problem cascaded across the country, home values dropped. The home seller market suddenly became a home buyer market—only there were no buyers.

The fed rule, "mark-to-market" made mortgage holders reappraise the value of their collateral, basing the net worth of the collateral at the current market value of the foreclosed homes in their market. You bought your home for $250 thousand. After a decade, the balance of your mortgage is, say, $215 thousand. But because of the lessened value of the empty homes in your retail trade area, your mortgage holder was required by the Fed to value your home—which is current—at $150,000. Your bank now has an asset shortfall of $65 thousand...just on your home. Let's say that every home that bank financed was $250 thousand—and, let's suppose they are holding 663 mortgages. And, let's further suppose that every homeowner still owes $215 thousand just to make the math easy. And, of course, let's also assume that all of those mortgages are relatively current. Yet from 9 a.m. when the bank president opened the door to his bank and at 9:05 a.m. when he opened the letter from the Fed, he suddenly has a negative asset ratio of $43,095,000.00. It's like his bank just got held up, only the FDIC is not going to make good on his losses.

Since banks loan money based on a 4-to-1 to 10-to-1 ratio, this bank is now in trouble. It cannot loan anyone a penny until it figures out how to come up with somewhere between $172,380,000.00 to $430,950,000.00. That bank is effectively out-of-business even though had that letter from the Fed not arrived, the bank would have been completely solvent and would conduct business that day just like it did the day before, loaning money, issuing credit cards and helping its community prosper in good times.

If the Fed rescinded the "mark-to-market" rule, the financial crisis would have ceased to exist. Except, of course, the financial crisis at Fannie Mae and Freddie Mac which chose to guarantee some $800 billion in bad ACORN arranged loans, many of them to home buyers who were buying home with generational welfare checks (and you thought that all went away in 1995). Many ACORN-arranged loans went to people without any real earnings and should never have even been considered for a loan, let alone granted one.

On Feb. 24, the Securities & Exchange Commission voted on new rules they claimed would limit short selling. The new rule curbs short selling once the value of the stock of any company under attack by short sellers falls 10%. When the 10% threshold is reached, traders can only execute short sales for the stock at a price above the market's best bid. That ends short selling for the moment, and offers a modem of protection for the stocks that are currently being devastated at will.

Needless to say, the big financial conglomerates like AIG, Citibank, Goldman Sachs, JP Morgan Chase, Morgan Stanley and others who own hedge funds like Goldman Sachs Group, Inc., Citadel Investment Group, LLC, and D.E. Shaw are not happy that SEC Director Mary Schapiro has decided to mess with their favorite pudding jar—short selling, since that's how they generate fast revenue. They rob your 401K. Short selling is the legalized theft of the retirement investment portfolios of the working class by selling the value out from under the stock.


Hedge fund short sellers insist all they are doing is "betting" that a particular stock's price will fall. In point of fact, how the short seller works is to start out the day selling shares of stock they don't own. If you or I did that, we would go to jail. When we do it, it's called stock fraud. When Goldman Sachs or AIG does it, it's called shrewd business. What the short seller does is borrow a large block of stock that primes the pump when he dumps it. He sells as the market opens, triggering a slide that will cause other short sellers to jump in. The value of the affected stocks will plummet from the opening bell. At the end of the day, when the stokc bottoms out, the short sellers will then buy a block of stock two to ten times the amount of the stock he borrowed. The difference between the price he sold the borrowed stock for and the price he gets for the collapsed stock is his profit.

Let's put it into numbers that you can see so you get a better picture of how it works. Let's say Shortseller Sam borrows a million shares of Ajax Widgets from his parent investment banker. Sam dumps the stock when the market opens, for $50 per share. That's $50 million. Ajax Widgets opens down. Throughout the day, because a hundred other short sellers also jump on Ajax, it drops to $20 per share by the end of the day. To protect his "investment," Sam now buys 5 million shares of Ajax Widgets (probably the first time he ever owned a single share of that stock). Sam just earned $100 million, or a profit of $50 million. His risk was zero. The person who lost was the guy who had $100 thousand of Ajax Widgets in his 401K. Since Ajax lost 60% of its value due to activity of the short sellers, his 401K lost 60% of its Ajax value in one day. But, remember: around the world, short sellers work 24-7, and they are robbing every 401K in the world everytime they engineer a short sell. In other words, this was not an isolated incident. Short selling is big business. And, it's big business that goes on 24-7.

The hedge fund short sellers complain that the new rules will restrict their ability to generate needed capital in the financial markets, and it will eliminate the ability of the hedge funds to work to achieve "fair value" for stocks. They said that when the India Stock Exchange restricted short selling in 2008, the Indian stock market almost collapsed. I guess when you take the gun away from the thief he suffers a financial loss.

The rule was implemented because Schapiro, Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernancke came under a ton of pressure from Congress to restore the Uptick Rule that was put into place after the 1929 Stock Market Crash. Most companies who have fallen victim to the ruthlessness of short-selling are demanding that Congress permanently enforce the Uptick Rule. Bush-43 SEC Director and former Congressman Chris Cox [R-CA] repealed the Uptick Rule in 2007, opening the door for what appeared to be a financial crisis that Obama was able to use to create $3.6 trillion of new debt for the taxpayers to pay.

The question no one seems to be asking is this: if we loaned the banks $3.6 trillion to jumpstart the economy, why aren't we hearing the engine turning over? Why? Because the banks didn't use the money to jumpstart the US economy. The same question could have—and should have—been asked by Daniel Hannan of the British government: what did the British banks do with the money they extorted from their people? We know that AIG paid $168 million in bailout bucks to their hedge fund short sellers (who stole the money from the 401Ks of about 25 million Americans and stopped them from retiring). And we know Goldman Sach, Morgan Stanley and JP Morgan Chase did the same thing. But, what did they do with the rest of over $2.2 trillion they got in bailout bucks?

They bailed out the banks in the third world countries where they're building their new factories to accommodate the consumers of the 21st century—the impoverished people in Indonesia, Micronesia, Mexico, Pakistan, India, Russia, Korea and Central and South America. Those banks were spending money they didn't have to create a 21st century infrastructure. Only, the investment thus far has not been $2.2 trillion or even $3.6 trillion. The Federal Reserve, the true "secret society" of America, has surreptitiously sunk $12 trillion of our money into building the infrastructure of the third world, paving the way for a new economy that will enrich the human capital of the third world—and the princes of industry, and the barons of banking and business—as it bankrupts every man, woman and child in the industrialized nations.

Seven of the world's 10 largest bank holding companies: American Express, Citibank, Bank of America, Wells Fargo, Morgan Stanley, JP Morgan Chase, and Goldman Sachs realized that the bank bailout, initially tied to non-voting preferred stock, was a George Soros ruse to gain voting control of them when the White House demanded the preferred stock they received as collateral for their "loan" be traded for common stock. The bankers realized they needed to repay Uncle Obammy before Soros (or ACORN), or SEIU, or worst yet, Fannie Mae, owned their banks.

If the banks were broke and in desperate need of a bailout, where did the nation's seven largest banks get the $68.3 billion in cash to pay off their TARP (Troubled Asset Relief Program) loans? Easy. They turned the short sellers loose once again to ravage what's left in the 401Ks and IRAs of America's seniors who now realize that not only are their pension funds worthless, so is Social Security. When the short sellers were through, the bankers handed the Treasury a check for $68.3 billion and walked away from the socialist nightmare, leaving it behind not only for the American taxpayers, but for the taxpayers of the entire industrialized world which, very shortly, will begin to witness the domino affect of a global economic meltdown that will sweep away both new wealth and old.

Subscribe to the NewsWithViews Daily News Alerts!

Enter Your E-Mail Address:

The Bible says it best as economic Babylon spirals into chaos: "And the kings of the Earth who have committed fornication and lived luxuriously with [economic Babylon] shall bewail her and lament...And the merchants of the Earth shall weep and mourn over her, for no man buyeth their merchandise anymore...for in one hour so great riches are come to nothing." [Rev. 18:9, 10, 11, 17, paraphrased.]

Click here for part -----> 1,

� 2010 Jon C. Ryter - All Rights Reserved

[Order, Jon C. Ryter's book, "Whatever Happened to America?" It's out of print, and supply is limited.]

E-mail This Page

Sign Up For Free E-Mail Alerts
E-Mails are used strictly for NWVs alerts, not for sale

Jon Christian Ryter is the pseudonym of a former newspaper reporter with the Parkersburg, WV Sentinel. He authored a syndicated newspaper column, Answers From The Bible, from the mid-1970s until 1985. Answers From The Bible was read weekly in many suburban markets in the United States.

Today, Jon is an advertising executive with the Washington Times. His website, has helped him establish a network of mid-to senior-level Washington insiders who now provide him with a steady stream of material for use both in his books and in the investigative reports that are found on his website.











I have no idea what limits have legislatively been placed on the British parliament by either statutory or common law, but under the Constitution of the United States, contrary to the view of the legislators and the courts, the explanatory preamble of Constitution is not an implied right of government.