Sunday, July 29, 2012

The Disintegration of the Old Economic Order

The house of cards created at Bretton Woods by the plutocratic elite is starting  to disintegrate. Many astute observers are noticing that more than an errant dog will cause the collapse of the rickety structure.

Although we don’t normally delve into economic matters directly, we believe that the urgency of these crises warrant an exception to policy, particularly when the background reporter is Jim Willie. His latest public newsletter presents a series of acute troubles facing the financial world.

We find further justification in our excurses since it underlines one of our major theses – namely that world events are not governed through the sham institutions over which Americans wax patriotic, but rather that sinister selfish people manipulating those institutions are the real movers and shakers of political events.

In particular, it was the plutocratic elite, led by the Bush Crime Syndicate, which murdered a president in Dealy Plaza, forced an elected president to resign in 1974, and attempted the murder of another sitting president in March 1981.

This same cabal of economic hyenas is facing a significant crisis – or engineering one – which is attacking all major pillars of Western economic life.

For those who have been oblivious to the financial storm, several issues are coming to a head.  We briefly enumerate them here.

LIBOR Scandal

The revelations of the enormous fraud perpetrated by major banks such as Barclays, Deutsche Bank, Lloyds and others have forced resignations of senior executives of these and other firms. However, that is nothing compared to the extent of their criminalities. These banks, plus major American banks, the US Federal Reserve Board, the Bank of England, and a cast of many thousands have engaged over the course of years – if not decades – in manipulation of this key rate.

Interest rates, like any other traded good, are two sided. When their prices are subverted through manipulation, someone loses, particularly those depending upon interest income or financial derivatives adversely affected by a certain direction in rates.

Over 350 trillion dollars in financial transactions depend upon this rate, meaning that the plunder is measured in hundreds of billions of dollars, if not more, even with the small basis point clipping of rates.

Although pure animal greed was at the core of this crime, one of the major movers behind it were governments who were hopelessly in debt and running annual deficits of 1.5 trillion USD.

Money Laundering

If you thought that BCCI and its money laundering schemes were things of the past, we would nominate you for fool. Where there is large money and power, there is large corruption. All of the leading financial institutions in the US have a large dependency on money laundering, particularly of the narcotic variety. Willie has mentioned Wachovia’s major involvement in narcotic money laundering prior to its demise. He also notes that money center banks’ survivals depend upon it.

JPMorgan and Interest Rate Swaps

We have previously reported on JPM’s exposure to Interest Rate Swaps as the real background story to its London Whale trades gone bad, but it is worth reminding our readers that the only way that interest rates can remain at 0% in the face of chronic deficits of the current magnitude is through these financial instruments which artificially create demand for bonds. As Willie notes, there is no rush to safety toward US Treasury debt – rather it is a gusher of Fed purchasing of debt through the banks of the Federal Reserve, in this case, Morgan Stanley. After the gold story, this is the story to watch.

FASB Accounting Scandal

In 2009, in the pell-mell of the Lehman crash and stock market sell-off, Congress compelled FASB – the Financial Accounting and Standards Board which specifies accounting rules and standards for public and corporate accounting – to suspend the mark to market standard which required that companies book assets at the lower of acquisition or market price. This suspension of centuries of accounting practice permitted companies to valuate assets at their whims - always through complex inscruitable models - , covering up massive losses in so doing.

If banks were required to adhere to mark to market,  they would have to recognize their bankruptcies and be forced into receivership. Nearly all of the major banks, including the Federal Reserve, are thusly insolvent. The Federal Reserve’s purchases of massively bad debt render it bankrupt. These insolvencies are the real reasons why banks are not lending, plus the fact that the Fed is paying banks to park 1.6 trillions dollars in funds by paying .25% interest.

Stolen Gold

Perhaps the biggest story yet to be widely reported is the massive theft of gold by the major banks as part of their gold shorting schemes to suppress the price of gold. Central banksters fear the price of gold because it, above all assets, signals bankster malfeasance and currency debasement. Hence, they are allowed to sell gold with naked shorts, something which would land an ordinary person in prison.

Having plundered their account holders’ gold, and in conjunction with massive flows of gold to the East, the gold cartel banks are finding themselves in a huge bind. At least 60,000 tons of gold have been stolen by the banks through lease programs in a bid to suppress its price. When the true owners discover the theft, an enormous upward thrust in gold will materialize.

Now that the price is rising, the pressure on these criminals to replace the gold will be volcanic. We believe that this is the main reason Ben Bernanke, once dubbed as the Chair Satan of the Federal Reserve Board, is refusing to engage in raw Quantitative Easing, a fancy term for currency debasement. Doing so would put enormous upward pressure on the price of gold which would in turn demolish the short positions of the gold cartel. Such a result would force them into bankruptcy just as they would face enormous civil litigation. Fortunately for the banksters, they are not subject to criminal prosecution because they own the government lock, stock, barrel and could always invoke national security as a covering pretense.

As a side note, Fort Knox is depleted of all gold. The only thing in its storage bays besides gold plated tungsten bars is nerve gas to be used on US citizens "for their own safety."

We again thank Jim Willie for providing the background summary for our interpretation of these events, and hope that readers can see the abject corruption of its esteemed leaders. Banksters and politicians have a very tight symbiotic relationship which could not flourish without each other.
We are at a loss to explain what the repressive regime which follows will look like, but Nazi Germany is a good place to start. The destruction of the economic order, to paraphrase North American Mossad Director Rahm Emmanuel, is not a crisis to be wasted.

US Treasury Bonds False Safe Haven, GOLD is the True Sanctuary , Jim Willie, July 26, 2012
Copyright 2010-12 Tony Bonn. All rights reserved.

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