Gobble de la Gobble

An American Thanksgiving - 2011 Tangible Primary Market & Intangible Secondary Market

Years ago, the decision was made to publish, without restriction, the modern financial methods and means used by many Aristocrat and Elite where such methods eliminated slavery but enslaved all but the Aristocrat and the Elite to servitude. Centuries of planning and execution resulted in the removal of compassion for humanity from the financial equation. Over time, people became dependent upon a tangible monetary system. Caesars currency system is extinct; today, Caesars monetary systems value is similar to that of Confederate money, worthless. However, both currencies do have value as being part of history, same for the United States Gold and Silver Certificates. Whereas the Federal Reserve Note has a fixed notational value imprinted upon the face of the instrument and such value has collateral, the guarantee of the American people. Bartering has existed for nearly as long as man has existed. With centuries passing, governments passed various laws that would govern exotic barters. Where a countrys Gross Domestic Product economy is based upon the efforts of the people, the claimed value of many exotic intangible barter exists above the peoples economy. Credit Default Swaps and Credit Default Obligations are just a couple of modern exotic barters. Where a tangible barter exists, its value is based upon compliance with acceptable laws. Unlike the tangible, the value of many intangible barters is based upon an agreed form of value. Many are still under the impression that all monetary systems are based on printed money, not true. Many a mainstream media has noted in publication the Secondary Market (Intangible) claims to have a value in excess of $600 Trillion dollars where as government statistics note the worlds Gross Domestic Value (Tangible) is under $100 Trillion dollars. There is no logical reason why a guarantee should not be allowed to hedge his position in producing a unit. For this example, we will assume a guarantee can produce 100 units in a year. Whereas the guarantee sells 100 units to a futures buyer, the guarantee has thus achieved an advance profit for a harvest of units that bear to fruit. When all goes accordingly, the guarantee would be able to assure the public the guarantee would have sufficient resources to provide products into the future. Were a loss of the 100 units is covered by insurance, a guarantees loss claim payable by an insurer to the guarantee might entice the guarantee to continue to provide

j.mcguire@trilliondollarfubar.comPOBox1352,Bedford,Texas,USA760951352

Page1

products, if such units were destroyed by a covered event. The guarantees futures hedging costs are included within the unit price upon realization of the selling of the units to the manufacturer. Where a guarantee has elected to be an Insured, there would be an Insurance policy, where the same policy would make a loss payment to the insured guarantee in the event the insured guarantee realized a covered loss. We shall say 10 dollars is the premium price paid to cover the 100 units. For success sake, lest assume the guarantee was able to sell his units to a manufacturing plant, the guarantees status quo has been maintained. Neither the futures buyer, nor the Insuree status has been compromised and a status quo is again maintained. The guarantee can calculate the 10 dollar insurance premium into the selling cost of the units to a futures buyer, where such total selling price of unit value could be represented as CV. Where CV equals the guarantees raw material and production cost of 80 plus the guarantees required profit of 10 plus the 10 dollar insurance premium. Where the futures buyer has paid a 100 value for the 100 units a 1 unit price cost would equal CV/100 (100). It is simple to calculate a single unit cost is equal to 1 where the guarantee elects to insure his unit. Where the guarantee does not elect to protect his interest, the single unit cost would be 0.90, but such risk may not be in warrant. The manufacturing plant has similar profit and loss concerns as the guarantee. The plant may elect to protect their profitability interests by the purchase of insurance and in a similar fashion hedge their profit to a futures buyer. With this scenario, the plant did not purchase the units from the guarantee but purchased the units via a futures buyer. Possible, the guarantee could have made delivery of the units directly to the plant, or the futures buyer could have taken possession of the units from the guarantee and delivered same to the plant. As the plant will receive units from 100 different guarantees, the plant could have a potential loss of 10,000 units. For the plant to obtain a status quo, the plant, as insured might pay 1,000 value to an Insurance Carrier for insuring the 10,000 units resulting in providing loss coverage for a 10,000 product count. Here the single unit price will increase due to added costs of manufacturing and the plants insurance costs. We shall allow a 1,000 value required for a profitable manufacturing process. Thus we can calculate the single unit cost at this stage with assuming insurance premiums, where such single unit cost would equal 1.2. Shipper has similar concerns as the guarantee and the plant. The shipper also elects to protect their interests by insuring itself against potential loss. The shipper is only acting as a transport agent and would not sustain the same loss as the plant. However, the shippers does have risks which are significantly junior to the manufacturer and thus maybe only required paying 100 points for coverage of the shippers own interests. As the shipper has no ownership rights in the

j.mcguire@trilliondollarfubar.comPOBox1352,Bedford,Texas,USA760951352

Page2

units, but is that as only a product carrier hired by the owner of the product, the shippers profit is limited to payment of services rendered. The shipper may have taken possession of the product from the plant or an agent for a futures buyer who purchased the 10,000 units. Here, the shipper maybe required to generate a 100 value profit to remain in business and assuming there is no crash and burn, the current single unit value can be easily calculated by adding the shippers cost, raising the single unit value cost to being 1.22. We shall assume Store has elected to purchase products outright from ten different plants or a futures buyer to meet the publics demand for products. Where the store elects to purchase loss coverage for 100,000 units from an Insurance Carrier might result in a charge of 10,000 in value to protect its interest. As the store is ten times the size of the plant we shall apply a profit cost required to be 10,000 in value, as such, the consumers unit cost price can be established as being 1.42. In this example, the guarantees sells the units at a profitable cost of 1, the intervening buyers, sellers, processors could realize a 10% profit as the units moved from the guarantee to that of a marketable product at the store with a final consumer unit price being that of 1.42. One can see from the above simple scenario, if one guarantee fails and the other ninety nine are successful, price increase due to a restricted loss would be minimal. (1/10th of ten guarantees cost / Ten Store source cost = 1% Consumer Cost increase in this example). Where there is a 10 guarantee failure, consumer cost would increase accordingly. Where there is a 50% guarantee failure to produce, supply dwindles; demand increases and product price inflate. This writing will not dwell deeply into details surrounding a brokers profit earned in the buying and selling of a manufacturers hedge, as combined brokers profits should never exceed the value of the base tangibles minus real tangible material costs. Tangible Inflation versus Intangible Inflation One needs not to be an economist, analyst, CEO or a VP to identify the intangible fraud being committed against the worlds population, lessnus those who depend upon the intangible profit. Lest use the example above as being representative of a tangible economy, below, an attempt to explain the faults of an intangible world. As noted in the example above, there is no issue with a futures buyer operating in the worlds tangible economy; such futures buyers do add a degree of price stability to product pricing. Where a futures buyer elects to purchase protection from

j.mcguire@trilliondollarfubar.comPOBox1352,Bedford,Texas,USA760951352

Page3

loss, such protection cost as noted in the example should have already been included in the units pricing. It is time to enter the world of intangible profit and loss. To decrease a primary carriers loss if a guarantee failed, such primary carrier may have elected to purchase a Loss Protection Policy from a secondary carrier. Many policy names are possible where Credit Default Swap and Credit Default Obligation are two of the most commonly known. Where the primary carrier has elected to write a futures buyer policy that covers 100,000 guarantees, a loss money payable for failure of a single guarantees failure would be negligible as such loss would be a percentage of the premium price paid. As the primary carrier has evaluated the guarantee and the futures buyer and a rating applied, premium price paid for coverage for each guarantee can then be calculated as to potential loss risk. The secondary intangible loss policy does not provide loss coverage for the loss of a unit; the secondary intangible loss policy provides payment of an equal amount of loss to the payment stream where such payment stream is the collectable premiums. If, a secondary carrier has elected to offer up the insurance payment stream as collateral for sale to investors, such offering might also include a loss policy made payable to the investors who purchased the Investment Vehicle. Whereas, the primary carrier may now provide loss coverage for a million guarantees, failure of small percentage of guarantees would subtract money from the payment stream, but in an insufficient amount to reduce the payment stream to a negative cash flow. However, failure of higher percentage would result in a negative cash flow and as such may be the trigger required for the primary carrier to claim a loss payable claim with the secondary carrier. Additionally, as the investors may be at risk to a negative cash flow, the secondary carrier would be forced to pull the trigger on their own obtained loss payable policy. From this very short example we can see that if defaults of the guarantees are of significant amount, the primary carrier, the secondary carrier and the investors to protect their income payment stream would be required to execute loss payable policies for compensating the payment stream amount that the contract provided for as noted in todays current state of events. In example, the total payment stream payable for loss coverage to the primary carrier for providing coverage to one million guarantees might equal 1,000,000. The primary carrier requires 10% (100,000) of the payment stream for operating and overhead expense. By logic, the

j.mcguire@trilliondollarfubar.comPOBox1352,Bedford,Texas,USA760951352

Page4

secondary carrier would be providing loss coverage on 900,000 and similarly requires 10% for operating and overhead expenses. Investors, hypothetically, may have purchased a payment stream with a value of 810,000 less reasonable fees for a predetermined value minus allowable losses. Where there is failure of guarantees which causes a loss in excess of allowable loss which is the reduction in the payment stream value results in triggering the default clause contained within the loss payable policy to maintain a positive cash flow. It can simply be seen, when the tangible market fails to tender a minimum required positive cash flow, the intangible market must recoup the loss of value from an alternate source such as from loss payable policies. As the example is based on a commodity product that will not be produced, the loss within the intangible market could be considered a dollar for dollar loss at the tangible market value. In applying some of the same above principles in the real estate secondary intangible mortgage backed securities (MBS) market, and assuming a 100,000 fold unit value increase, the payment stream intangible losses would mount into the hundreds of billions if not trillions. As the intangible market appears to be constructed, the loss payable intangibles value is greater in value than the tangible value. So long as the tangible market remained in a positive cash flow the tendering of a small premium value would have allowed the intangible market to thrive with small payments going to pay for many intangible loss payable policies. The tangible mortgage market has a value around $12Trillion where payments receivables are extended over the course of many years and is in paradox to the intangible loss payables value which would exceed any tangible recovery amount for any given year. This author has written other writings that address the facts that investors did not purchase a secured indebtedness, where such security is lost, recovery of a tangible value not of the indebtedness is a virtual impossibility, as result, the intangible loss payable will greatly exceed and tangible value ever paid or received. Further research is required to determine if and how much value was granted in intangible loss policies that exceeded the tangible payment stream either by collection of obligor payments or the enforcement upon a security. Whereas ESIGN and UETA allows for Intangible (MBSs, loss payables, security certificates), ESIGN and UETA exempt a Tangible Instrument (Negotiable or Non-Negotiable Instrument, Note or Mortgage Note as defined by UCC Article 3.)

j.mcguire@trilliondollarfubar.comPOBox1352,Bedford,Texas,USA760951352

Page5