In mob parlance, as per Scorcese, “busting out” a restaurant or other business means buying supplies on credit, then stealing those supplies and leaving the business holding the bag. When the credit ceiling of the business is reached, the business is declared bankrupt and the creditors are stiffed. The mobsters, of course, walk away with all the supplies that were bought on credit and sell them off for a 100% profit. The beauty of the scam is that the business (and the business’ owners) are the ones stuck with the legal responsibility, while the creditors are stuck with the tab.

Beu-di-ful!, as the mobsters would call this racket. Not so “beudiful” for the business owners or the creditors—which is why of course there are laws against this sort of thing: Racketeering laws. Laws against fraud. This kind of planned bankruptcy is explicitly illegal, as per 18 U.S.C. §152, as well as 18 U.S.C. §157, both of which cover bankruptcy fraud, which is the use of bankruptcy in order to aid in or conceal the commission of a fraud or theft.

I would argue that that is exactly what has happened to the U.S. economy, at virtually all levels. Read more about busting out the economy…

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As Henry Kissinger once said ~ ” It’s not a matter of what is true that counts but a matter of what is perceived to be true “  and, believe me, the recent rally of the Dow Jones to 10,000 is a manipulated Wall Street Ponzi scheme to draw Main Street into the market to reinflate the same credit bubble that just burst ~ while bailing out the financial elite, who are mainly sellers, in the process.

When Robert Reich says ” Watch Your Wallet even with the Dow at 10,000 ” ~ you had better listen because the real truth of our present financial disaster is just beginning to emerge from the darkness. Read more about the Wall Street Ponzi scheme…

Do you own a law firm? Would you like to utilize our mortgage auditing services for foreclosure defense cases? Contact MFI-Miami now!

Janet Tavakoli is one of the foremost experts on structured finance and derivatives. Tavakoli made an outstanding presentation to the IMF last week on the fraud which led to the financial crisis.

Making many of the same points that William K. Black (senior S&L regulator and professor of law and economics) has made about fraud and the big picture of what has occurred in the current as well as the S&L crisis – see this and this – Tavakoli told the IMF:

Wall Street gave mortgage lenders large credit lines (similar to credit card debt) and packaged the loans into private-label residential mortgage backed securities (RMBS). Most of the RMBS was rated “AAA” … But many RMBSs were backed by portfolios comprising risky fraud-riddled loans. Most of the “AAA” investment was imperiled, and subordinated “investment grade” components were worthless. Wall Street disguised these toxic “investments” with new value-destroying securitizations and derivatives.

Read more about the Ponzi scheme…