Confidence Games at High Levels

Confidence games are based on creating an image of respectable or dependable repute that inveigle the victim to give you what you want, usually a matter of theft by deception. This last six+ years has been the ultimate con. While knowing their words were hollow the cretin in chief and his accomplices have lied inconscionably in order to gain their ends, which have been without exception injurious to the safety and wellbeing of the American public.

Listening to the injunctions of the financial 'authorities' being trotted out on one weekend talk show after another, I did hear one voice that I found believable, former Secretary of the Treasury Lawrence Summers, who recommended that no bailout occur of the investing entities, but that regulation of lending to individuals be tightened, and that Fannie Mae and Freddie Mac be given much greater leeway to offer loans with much more clarity of language (now known as transparency).

For the most part, the administration sent out defenders of the financial institutions who refused to restrain lending on beyond flimsy bases, and to insist that "injecting liquidity" (newspeak for giving massive amounts of public funds to the offending lenders) would keep the market up. This next week, Secretary Summers warned, any still existing weaknesses will turn up - involving financial institutions unable to make payments on their own loans because their portfolios are worthless.

In the runup to the Great Depression, this kind of confidence game was used to manipulate prices for gain. One example was the Fisk/Gould ruse which is described below.

In August 1869, Gould and Fisk began to buy gold in an attempt to corner the market, hoping that the increase in the price of gold would increase the price of wheat such that western farmers would sell, causing a great amount of shipping of bread stuffs eastward, increasing freight business for the Erie railroad. During this time, Gould used contacts with President Ulysses S. Grant's brother-in-law, Abel Corbin, to try to influence the president and his Secretary General Horace Porter. These speculations in gold culminated in the panic of Black Friday, on September 24, 1869, when the premium over face value on a gold Double Eagle fell from 62% to 35%. Gould made a nominal profit from this operation, but lost it in the subsequent lawsuits. The affair also cost him his reputation.

Though I couldn't find them in the limited amount of time I had for research, there have been rumors of the leading investors in the country colluding to keep bidding up stocks in those wild days, and by pre-arrangement bailing out at its height. Of course, buying up the instantly depreciated stocks was the intention, not the total disaster that was caused. Or so the story goes. I see something of this nature in the collusion of this dishonest executive branch with corporations, and their insistence on false information intended to keep individuals buying up questionably valued stocks.

We are the victims, this is a confidence game. We don't have any reason to believe any lines we are being fed. I suspect there will be a large number of investors who are not fooled, and will not bite.