20 April 2021

Stocks and Precious Metals Charts - Control Frauds and Cryptic Valuations - A Market of Illusions

 

"Control frauds are seemingly legitimate entities controlled by persons that use them as a fraud weapon. A single control fraud can cause greater losses than all other forms of property crime combined.

Financial control frauds’ primary weapon is accounting.  Fraudulent lenders produce exceptional short-term “profits” through a four-part strategy: extreme growth (Ponzi), lending to uncreditworthy borrowers, extreme leverage, and minimal loss reserves. These exceptional profits defeat regulatory restrictions and turn private market discipline perverse. 

The finance sector is most criminogenic because of the absence of effective regulation and the ability to invest in assets that lack readily verifiable values.  Unless regulators deal effectively with the initial frauds their record profits will produce imitators. 

Mega bubbles produce financial crises." 

William K. Black, Recurrent, Intensifying Bubbles and Crises 

 

"Do not be deceived, God is not mocked; for whatever a man sows, that he will reap.  For whoever sows to the flesh will from the flesh reap corruption, but whoever sows to the Spirit will from the Spirit reap everlasting life.  And let us not grow weary while doing good, for in due time we shall reap if we do not lose heart." 

Galatians 6:7-9

 

When we look back on this time with the perspective of history, we will see markets dominated by control frauds and mispricing of risk that will seem painfully obvious. 

Why do we not see this now? 

Why did so few see it in 2007, and 2000? 

Perhaps because the money is too good, and our societal judgement is too corrupted, often willfully so. 

Still, bubbles have a resiliency, as does evil in a hardened heart. 

Have a pleasant evening. 

 

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