Are you naked and short?

Are you naked and short? Well, let me first clarify that I’m not talking about whether you are clothes- or height-challenged.  Rather, I’m talking about one of the current hot topics on the world financial scene that will be on the agenda at the upcoming G20 Summit in Toronto.

Most Canadians, if they know anything at all about the coming Toronto G20 meeting,  have only heard that we, the taxpayers, are going to have to pay a $1Billion event tab to safely throw this political/financial workshop and photo-op for the media and the leader’s of the world’s top 20 economies.

The main thing to focus your attention on is not the outrageous cost or the colourful, noisy antics of the anarchist protestors, but on the serious global issues that these leaders are trying to tackle. The real question is, “Will they develop a new effective, collaborative strategy to prevent our slide back into another round of financial recession, or perhaps even global financial meltdown?” The world’s financial system is on the ropes these days, to use a boxing analogy, due to unprecedented high levels of national debt and the  instability this creates in financial markets. We are on the verge of drastic and dramatic actions that will profoundly alter the world’s status quo.

On one side of the ring are the world’s leaders, their central bankers and financial ministers. On the other side are the world’s financial market speculators/gamblers. The speculator/gamblers have really been hitting some of these leaders hard.

The speculator’s blows are really hurting. In fact they’ve been making headlines in the financial world’s media: weakening values of currencies like the Euro and reducing confidence in the sovereign debt bond values of countries like Greece, Spain, Italy, Belgium and more. All this results in escalating borrowing costs and emergency bailouts, forcing the leaders to slash away at their national budgets in order to reduce the surge of red ink that is cutting deep and enraging many of their citizens. There is, literally, blood on the floor as a result of this bare-knuckle financial fight!

To fight back, leaders like Germany’s, Angela Merkel, and France’s, Nicolas Sarkozy, are seeking to neutralize the favourite punch of the speculator/gamblers: the naked short selling of certain stocks and bonds and the naked credit default swaps on sovereign bonds.

Naked what? Naked short selling of stocks and bonds is when investors sell securities they never owned nor even arranged formally to borrow! Naked shorting of credit default swaps is when traders buy swaps linked to bonds they don’t own!

In the old days market traders had to actually deliver the literal paper stock/bond certificates of the financial instruments they were trading.  These certificates were kept in enormous vaults located at the major stock/bond trading cities and were counted and shuffled around. But with the rise of high-resolution copiers, counterfeiting became a major problem so the system shifted to digital record keeping.

But the problem is the digital record keeping has been very sloppy and lax. Some of these securities being traded don’t even exist. And naked short-selling is simply selling what you don’t own and haven’t borrowed. This is fraud pure and simple.

In the old days the cautionary limerick for financial brokers and traders went something like this: HE WHO SELLS WHAT IZN’T HIZEN, PAYZ THE PRICE OR GOES TO PRIZON.

But rather than sending them to prison, we’ve been highly esteeming the financial market’s wealthy speculators/gamblers who naked short sell because they’ve been giving their clients high returns.  And these clients, of course, are the rich and powerful of this world, whether individuals, or corporations, or institutions like pension funds.

While the speculator/gamblers have been profitably playing this Alice in Wonderland game for some time now, it would appear that at the G20 meeting the European Union’s heavyweights, Germany and France, will push the United States, Britain, and Canada – the champions of unfettered markets – to move from their current positions in order to control what and how investors can buy and sell. They may also be pushing for a single world currency in order to take away from the speculators their ability to play the present world currencies against each other.

The world is entering uncharted waters of change due to this financial crisis that is not being resolved with the traditional solutions open to an individual nation or a small group of individual nations. Is it time to pay attention to the mysterious, and perhaps, controversial Book of Revelation to ponder where this might lead us? Consider the implications of Revelation 13:16-17:

16Also he compels all [alike], both small and great, both the rich and the poor, both free and slave, to be marked with an inscription [stamped] on their right hands or on their foreheads,

17So that no one will have power to buy or sell unless he bears the stamp (mark, inscription), [that is] the name of the beast or the number of his name (Amplified version).

Any attempt to regulate human greed on a global scale, which is how our financial markets work these days, necessitates the creation of a compulsory global system that all will require all players to participate in and obey.  Now, if God were in charge of such a system, then I could know that it would not be oppressive; it would be just and fair:

17Now the Lord is the Spirit, and where the Spirit of the Lord is, there is liberty–emancipation from bondage, freedom (2 Corinthians 3 Amplified).

Unfortunately, I doubt the decisions made to deal with the problems in our financial system that will be made during this coming G20 and  subsequent meetings will exemplify liberty and freedom. The decisions will undoubtedly mean more regulation and more control over us rather than less. So, here is a reminder for all of us to exercise endurance and faith in the days to come whatever the news that issues from the G20 meeting in Toronto.


2 thoughts on “Are you naked and short?

  1. Peter

    Question: Will the current EU currency insecurity help facilitate or be used asa leaver to bring in this global system?

  2. Jeff Post author

    The instability in the current paper money system, which is presently divided into the various national/regional currencies, requires “fixing” if the central bankers are to avoid regular costly “attacks” by the currency speculators and to insure continued global prosperity. I would say that the Euro insecurity is going to motivate Germany and the other EU countries to think seriously about solutions. When the problem becomes sufficiently acute, then the push will really be on to create a new global reserve currency. When that happens, a large measure of an individual nation’s sovereignty will be transferred to an international authority. What starts like lamb in a field with spring flowers will end like a ravening wolf at our doors.

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