Introduction
On the morning of February 23, 2008, the world looked
for several minutes into an economic abyss with a possible
crash on the New York Stock Exchange. Within minutes of
opening the index went down an unprecedented 464 points.
I watched the event with amazement on CNN, which was broadcasting
live from the trading floor. A steep decline was expected
because Asian and European markets had performed very badly
the days before, futures indexes indicated big losses and
then recent economic indicators were worse than expected.
The Federal Reserve saw it also coming and pre-emptively
cut its benchmark rate by 0.75 percent, making its decision
known just one hour before trading started. The market went
through a roller coaster and ended the day only 128 points
down. What other manipulations might have occurred to stabilize
the market, for example by the Plunge Protection Team, and
how far down the index might have gone without the Fed's
intervention, is anybody's guess, but it will not have been
pretty. Within days gold went over $900 and is now over
the psychological benchmark of $1000, joining two other
important milestones like oil over $100 and the Euro over
$1.50.
A similar situation as described above almost happened
Monday morning March 17. Some Asian markets were steeply
down and the 5th biggest US investment bank was technically
insolvent. The Federal Reserve tried feverishly on Sunday
before the Asian markets opened, to put together a package
of unprecedented measures "hoping to prevent a systemic
meltdown in financial markets" as the New York Times
put it. The Federal Reserve slashed another .25% of its
discount rate; arranged $30 billion for JP Morgan Chase
to take over insolvent Bear Stearns and opened its printing
press to investment banks. Then on Tuesday they slashed
another .75% and the Dow jones went through another roller
coaster. The big correction on Wall Street has not yet occured
because the Federal reserve keeps preventing it with ever
more dramtic measures. Eventually they are expected to run
out of ammunition.
Meanwhile the effects of the sub-prime mortgage fiasco/scandal
is rippling through the global financial system with such
a relentless force that it leaves analysts stunned, traders
frazzled, banks wobbly, credit markets frozen, hedge funds
popping, litigations mushrooming, municipal bonds unsold
and its insurers downgraded, investors facing bankrupting
margin calls, homeowners foreclosed, consumer confidence
dropping, employees losing jobs, retail sales plummeting,
businesses belly-up, municipalities losing their tax-base
and facing increased crime and homelessness, and much, much
more. All kinds of records are broken and comparisons with
the Great Depression more frequent, with even a French
research company coining the coming downturn as the
Very
Great US Depression. To prevent a recession Congress
throws some spending money at the problem, ignorant of what
caused this situation in the first place, and the Fed is
cranking out hundreds of billions of inflationary fiat dollars
to lubricate a banking system that is progressively becoming
more cautious, suspicious, opaque, stuck and (silently)
insolvent. Only two comercial banks so far have gone bankrupt
in 2008, but the Federal Deposit Insurance Company is hiring,
knowing it will have a busy year.
Much more could be reported in fascinating and revealing
detail, like the ticking $500 trillion derivatives time
bomb, but lack of time and expertise prevent me from double-checking
all facts and refining all reasoning for a possible extended
article. I am a dilettante as far as economic maters are
concerned, and I mean that in a positive way as "enthusiastic
amateur." Therefore I invite you to just go straight
to the articles and read for yourself. An introduction might
be appropriate to explain the choices of authors and articles.
In a later article I will report on my investigation into
the nature of money, which is a far from obvious phenomenon,
and on the possible solutions to the economic mess we are
in developed by several citizen thinkers. One interesting
proposal
comes from Stephen Zarlenga of the American
Monetary Institute: nationalize and reform the Federal
Reserve System; re-regulate the financial services sector;
have banks go back to full reserve lending; and have the
US Treasury Department issue debt-free money, spent into
the economy on the crumbling US infrastructure like dams,
levees, roads, bridges, public transportation, schools,
a nationwide fiber-optic network and maybe even education
and healthcare. So, as worse is still to come, get prepared,
sit tight, and let your spirits not get dampened. Mine have
just turned a corner.
Prof. Nouriel Roubini, Ph.D.
The first three articles are by or about New York University
economics professor Nouriel Roubini. He is an academic straight-talker
whose accessible views many economic analysts and journalists
take serious. He even has access to the highest echelons
of world finance like the IMF, the annual World Economic
Forum at Davos, Switzerland, and recently he testified before
Congress. He is the one who lays out the logic or "anatomy"
of a possible "systemic financial meltdown" scenario
in 12 steps in both a shorter column
and a longer study and warns the world that a meltdown "has
a rising and significant probability of occurring."
Martin Wolf of the Financial Times summarized Roubini's
12 steps in his "America's
Economy Risks Mother of all Meltdowns."
F. William Engdahl, Ph.D.
Next in line is the writer on geopolitics and geo-economics,
F. William Engdahl, author of the acclaimed study "A
Century of War: Anglo-American Oil Politics and the New
World Order," and frequent contributor to the high
quality Global
Research web site. He is currently writing on the economy
and released so far 5 installments of what looks like a
book in the making. His chosen metaphor to bring home the
danger of the situation is "The
Financial Tsunami." The 5th part, "The
Predators Had A Ball," nicely captures the basics
of the situation and can therefore be read by itself.
Ambrose Evans-Pritchard
Switching back to the mainstream press with the views
of Ambrose Evans-Pritchard of The Telegraph (United Kingdom).
He has been around a long time as an economic journalist
and commentator and is a good example of a non-US reporter
who has more freedom to be non-ideological, incisive and
factual about American matters than the big US media allow
their own reporters to be. He ended his March 7, 2008 article
with the eerie confession that for "the first time
since this Greek tragedy began, I am now really frightened."
Kurt Richebächer's Shoes
Since the unfortunate death of Kurt Richebächer last
year the question rose about who could step into his shoes.
The issue is important because he was regarded as the pre-eminent
hard-nosed analyst of the American economy in the mold of
the Austrian school of economics and cranked out on a consistent
basis a 12-page monthly report with an Austrian take on
the latest statistics and trends. Never before in my life
I paid so much per page and got so much out of it. Years
ahead he foresaw and laid out the logic of the economic
downturn we are now in. The publishers of the Richebächer
Letter are still looking for someone to take up his
pen. As the names of Jim
Willie, Mike
Whitney and Bob
Chapman were dropped in this context, because of their
analytic acumen, some of their relevant articles are presented
in this installment on the economy.
Miscellaneous Analysts
If the above is all too esoteric or 'European,' the views
of some US commentators are also included. In general, I
like Jim
Jubak and some others at msn.money,
and I'm glad that trend-spotter and economic forecaster
Gerald
Celente has some degree of access to the mainstream
US media. Meanwhile the elitist Washington Post is also
letting the cat out of the bag through one of its columnists,
David
Ignatius. He rejoices that, fortunately, the average
American does not understand what is going on, otherwise
the ignorant public will clamor for bailouts and fixes that
might do more harm than good and interfere with the necessary
market correction: "The public, fortunately, doesn't
understand how bad the situation is. If it did, we might
have a real panic on our hands. And there would be more
pressure for bad policies -- ones that try to freeze the
damage, rather than letting prices fall to levels where
buyers will return and the markets will clear."
Mike Shedlock
Before getting into some stronger stuff as a finale, check
the most recent, March
6, 2008, Mish's Global Economic Trend Analysis by Mike
"Mish" Shedlock for the latest look into the abyss
or jaws of hell (and other stark metaphors) to convey the
plausible, but not necessary, nightmare scenario of the
catastrophic blow up and end of the line, tsunamic meltdown
slow-motion, chain-reaction crash of the broken, utterly
unhinged, global financial casino. In short: economic 9/11-Armageddon.
Warren Buffet
The story
of how Warren Buffet came to look upon derivatives as "financial
weapons of mass destruction" will help to get a sense
of the
magnitude, danger and, even for experts, the incomprehensible
nature of the derivatives market. By definition derivatives
are complex financial contracts that derive their value
from underlying assets like stocks, bonds or mortgages.
Originally designed and used to hedge against the risks
of market volatility, speculators have now taken over the
market and put it on steroids to a system-endangering level,
against which there is no ultimate hedge, insurance or lender
of last resort. Many of these contracts have build-in time
limits and are periodically due on the third Friday of March,
June, September and December. (I'm not calling another crash
for March 21, because the Plunge Protection Team will again
make some open and covert pre-emptive moves like lowering
the Fed benchmark with probably another dramatic .75%. The
PPT is apparently very concerned--they are convening Monday
at the White House--because of last week's developments,
especially the insolvency of 5th largest US investment bank
Bear Stearns and investment fund Carlyle Capital. Rumors
are also flying around that a big commercial bank is in
deep trouble, which I guess is Citibank.)
Dmitry Orlov
Recently a compassionate Russian, Dmitry Orlov, was so
kind to make some very well educated forecasts about American
economic life after a meltdown by comparing it with what
the Russians had to go through in the late 1980s and '90s
when they lost their own empire. He lived through the economic
meltdown of the Soviet Union and Russia and made a study
of how the average Russian coped with that. He confidently
stated that an "economic collapse is amazing to observe,
and very interesting if described accurately and in detail."
He is convinced that the US will loose its own empire, experience
an economic collapse, and its citizens will have to go through
a very painful adjustment to a new lifestyle, for which,
he thinks, they are poorly prepared and therefore offers
some common sense hard-nosed advise.
Al Martin (?)
How the scenario might play out on a federal level, if
you have the stomach to activate your brain about that,
is the subject of Al Martin's hypothetical "Protocols
For Economic Collapse In America," in which he
lays out the legal tools the United States Treasury might
deploy to deal with a major financial collapse of the federal
government when it can not service its debt anymore. He
foresees that either there will have to be very deep spending
cuts, and/or steeply increased taxations, or the United
States Treasury can declare a "force majeure"
and repudiate all its debt, i.e. declaring the US Government
bankrupt, which can trigger other "collapse protocols"
designed and coordinated by the Department of Defense, including
martial law. It is not clear whether the article is by the
prolific conspiricist Al Martin of almartinraw.com
and why the article appeared, or re-appeared on February
23, 2008, while it probably was written more than 4 years
ago, for it refers to a possible coming second Bush-Cheney
administration. Maybe he had withdrawn the article and thought
that the occurrence of the almost-crash last February was
a good reason to release it again. The great importance
of this article though is that it moves into a next level
of parapolitical analysis and views the economic collapse
as an inside job by the "Bushonian Cabal" in order
to impose a dictatorship on the unruly Americans and to
get their hands on citizen's assets to bail themselves out
and pay off foreign creditors.
The Parapolitical Angle
To round off a para-politico-economic analysis, the motives
of the High Cabal to create an economic disaster will have
to be laid bare. Basically I hypothesize that the motives
overlap with the ones operative behind the 9/11 false flag
terrorist inside job as laid out in "War
and Truth V: What happened on 9/11?" Ever since
the esoteric-Masonic network successfully pulled off the
American Revolution there has been a reactionary, systematic,
trans-generational, trans-national, European-based effort
to contain, subvert and undo the political and civilizational
gains made through this event. The primary leverage over
society that the reactionary forces sought was monetary,
which was to be gained by legislating the power of issuing
money into private hands. After more than a century of moving
battle lines between conniving private bankers and perceptive
public servants the former attained, through a series of
well-executed conspiratorial maneuvers, a firm, though reversible,
victory with the establishment of the Federal Reserve System,
about which the accurate quip goes that it is neither federal,
nor has reserves, nor is a bank, but a private, legalized
counterfeiting operation in the hands of the international
banking fraternity. Within 16 years the Fed set the conditions
for the 1929 crash and depression, which gave the High Cabal
a good opportunity to re-structure the economy and banking
sector and re-engineer American society. This they accomplished
also through the well-organized, semi-secret power-base
and recruiting grounds of the Germany-based Skull &
Bones at Yale University and the UK-based Round Table in
New York. In 1919 both hooked up to co-create the immensely
influential Council on Foreign Relations (CFR) together
with J.P. Morgan. After WWII and after having given birth
to the UN, IMF and World Bank, the CFR would mold and provide
the managers for the new global system and do the think
tanking for the Bilderberg conferences and the Trilateral
Commission. The CFR got also interlocked with quite some
communist front organizations and harbored and promoted
some successful Soviet spies like Alger Hiss and 'Boris,'
who is still on the loose influencing policies at the highest
levels of the international power elite. In what way all
these groups are the interconnected offspring from Weishaupt's
Illuminati is still an open question. (For a visual display
of this network see "Secret
and semi-secret long-term policy planning groups on a chronological-geographic
grid.") Through academic studies, journalistic
investigations and their own open confessions it is quite
obvious that this cabal likes to get rid of sovereign nation
states and have all nations merge into a world government
of sorts and beholden to the international banking fraternity.
The biggest obstacles to the implementation of this long-term
plan are the US Constitution and American citizens. Therefore
one of its greatest strategic prizes would be a thoroughly
deconstructed, malleable US in a state of Post Traumatic
Stress Disorder after she had gone through several economic,
political, moral and constitutional breakdowns. So, we end
by asking, is the unfolding economic crisis one in a series
of hits to bring the US into submission to the One World
agenda or are we conspiranoids, projecting monsters where
only benign though ignorant windmills exist? Dare to check?
In either case, radical financial and monetary reforms are
called for and coming, but, please, be very skeptical of
the solutions coming from the people that were responsible
for the mess in the first place.
Previous articles in this series:
The State of the US Economy,
September 2007 (Sept. 2007)
Manipulation, Manipulation, Manipulation
(Oct. 2007)
===========================================
Articles
Article: Anatomy of a Financial Meltdown
Author: Nouriel Roubini
Source: Daily Times (Pakistan), February 17, 2008
URL: http://www.dailytimes.com.pk/default.asp?
page=2008%5C02%5C17%5Cstory_17-2-2008_pg5_41
Excerpt: Indeed, adding up all these losses in financial
markets, the sum will hit a staggering $1 trillion. Tighter
credit rationing will then further hamper the ability of
households and firms to borrow, spend, invest, and sustain
economic growth. The risk that a systemic financial crisis
will drive a more pronounced US and global recession has
quickly gone from being a theoretical possibility to becoming
an increasingly plausible scenario.
=========================================
Article: The Rising Risk of a Systemic Financial Meltdown:
The Twelve Steps to Financial Disaster
Author: Nouriel Roubini
Source: Global EconoMonitor, February 5, 2008
URL: http://www.fxstreet.com/futures/market-review/
outside-the-box/2008-02-12.html
Excerpt: Why did the Fed ease the Fed Funds rate by a whopping
125bps in eight days this past January? It is true that
most macro indicators are heading south and suggesting a
deep and severe recession that has already started. But
the flow of bad macro news in mid-January did not justify,
by itself, such a radical inter-meeting emergency Fed action
followed by another cut at the formal FOMC meeting.
To understand the Fed actions one has to realize that there
is now a rising probability of a "catastrophic"
financial and economic outcome, i.e. a vicious circle where
a deep recession makes the financial losses more severe
and where, in turn, large and growing financial losses and
a financial meltdown make the recession even more severe.
The Fed is seriously worried about this vicious circle and
about the risks of a systemic financial meltdown.
That is the reason the Fed had thrown all caution to the
wind - after a year in which it was behind the curve and
underplaying the economic and financial risks - and has
taken a very aggressive approach to risk management; this
is a much more aggressive approach than the Greenspan one
in spite of the initial views that the Bernanke Fed would
be more cautious than Greenspan in reacting to economic
and financial vulnerabilities.
To understand the risks that the financial system is facing
today I present the "nightmare" or "catastrophic"
scenario that the Fed and financial officials around the
world are now worried about. Such a scenario - however extreme
- has a rising and significant probability of occurring.
Thus, it does not describe a very low probability event
but rather an outcome that is quite possible.
=========================================
Article: America's Economy Risks Mother of all Meltdowns
Author: Martin Wolf
Source: Financial Times, February 19, 2008
URL: http://www.ft.com/cms/s/0/
4d19518c-df0d-11dc-91d4-0000779fd2ac.html?nclick_check=1
Excerpt: Recently, Professor Roubini's scenarios have been
dire enough to make the flesh creep. But his thinking deserves
to be taken seriously. He first predicted a US recession
in July 2006. At that time, his view was extremely controversial.
It is so no longer. Now he states that there is "a
rising probability of a 'catastrophic' financial and economic
outcome". The characteristics of this scenario are,
he argues: "A vicious circle where a deep recession
makes the financial losses more severe and where, in turn,
large and growing financial losses and a financial meltdown
make the recession even more severe."
=========================================
Article: The Financial Tsunami (in 5 parts)
Part I: Sub-Prime Mortgage Debt is but the Tip of the Iceberg
Part II: The Financial Foundations of the American Century
Part III: Greenspan's Grand Design
Part IV: Asset Securitization-- The Last Tango
Part V: The Predators Had A Ball
Author: F William Engdahl
Source: Global Research & Engdahl's web site
URL: http://www.engdahl.oilgeopolitics.net/index.html
Excerpt: Even experienced banker friends tell me that they
think the worst of the US banking troubles are over and
that things are slowly getting back to normal. What is lacking
in their rosy optimism is the realization of the scale of
the ongoing deterioration in credit markets globally, centered
in the American asset-backed securities market, and especially
in the market for CDO's-Collateralized Debt Obligations
and CMO's-Collateralized Mortgage Obligations. By now every
serious reader has heard the term "It's a crisis in
Sub-Prime US home mortgage debt." What almost no one
I know understands is that the Sub-Prime problem is but
the tip of a colossal iceberg that is in a slow meltdown.
=========================================
Article: Bush convenes Plunge Protection Team
Author: Ambrose Evans-Pritchard
Source: The Telegraph (UK), January 11, 2008
URL: http://www.telegraph.co.uk/money/main.jhtml?
view=DETAILS&grid=A1YourView&xml=/
money/2008/01/07/ccview107.xml
Excerpt: On Friday, Mr Bush convened the so-called Plunge
Protection Team for its first known meeting in the Oval
Office. The black arts unit - officially the President's
Working Group on Financial Markets - was created after the
1987 crash. It appears to have powers to support the markets
in a crisis with a host of instruments, mostly by through
buying futures contracts on the stock indexes (DOW, S&P
500, NASDAQ and Russell) and key credit levers. And it has
the means to fry "short" traders in the hottest
of oils. … Judging by a well-briefed report in the
Washington Post, a mood of deep alarm has taken hold in
the upper echelons of the administration.
=========================================
Article: Crisis may make 1929 look a 'walk in the park'
Author: Ambrose Evans-Pritchard
Source: The Telegraph (UK), December 29, 2007
URL: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/
2007/12/23/cccrisis123.xml&page=1
Excerpt: Twenty billion dollars here, $20bn there, and
a lush half-trillion from the European Central Bank at give-away
rates for Christmas. Buckets of liquidity are being splashed
over the North Atlantic banking system, so far with meager
or fleeting effects. As the credit paralysis stretches through
its fifth month, a chorus of economists has begun to warn
that the world's central banks are fighting the wrong war,
and perhaps risk a policy error of epochal proportions.
"Liquidity doesn't do anything in this situation,"
says Anna Schwartz, the doyenne of US monetarism and life-time
student (with Milton Friedman) of the Great Depression.
"It cannot deal with the underlying fear that lots
of firms are going bankrupt. The banks and the hedge funds
have not fully acknowledged who is in trouble. That is the
critical issue," she adds.
Lenders are hoarding the cash, shunning peers as if all
were sub-prime lepers.
===========================================
Article: Enter 2008: The System Breaks
Author: Jim Willie
Source: Golden Jackass website, Jan 3 2008
URL: http://www.gold-eagle.com/editorials_08/willie010308.html
Excerpt: The year 2008 will be the year that THINGS JUST
PLAIN BREAK. It will be a truly deadly year, unavoidably
lethal to the US Economy and especially to the US banking
sector. Nothing has been repaired. Some tangible solutions
will be offered in the next section, all legitimate in a
real world. However, we do NOT live in a real world, but
rather in a Fairy Tale world of US Hegemony and Wall Street
with a chokehold around the US entire system. Managed inflation
is the policy never to be reversed, until total breakdown
occurs. Treason is rampant, called simply Power Games. All
attempts so far are to shore up the existing system, to
enable Wall Street to sell as much of their damaged asset
backed bonds to suckers, and to avoid international lawsuits
against Wall Street firms. In 2008, an alarming sequence
is assured of enormous damage that puts the entire US economic
and financial system in a perilous situation. The powers
survived the end of 2007, with heavy usage of band-aids,
rubber bands, and paper clips, but reality continues to
itemize a relentless sequence of unfixable, tragic, intractable
problems. The pressure points are big banks suffering from
insolvency, prime mortgage bonds destined for massive losses,
consumers without kitties to rob to keep spending, a worsening
housing market from chronic inventory bloat, and deepening
problems in the lending industry frozen from insolvency
and distrust. Pitch in a global resentment of US fraud and
heavy-handed tactics, especially from the last couple decades.
=========================================
Article: The Bonfire of Capital: Less Money, More Pain
Author: Mike Whitney
Source: Counterpunch, February 22, 2008
URL: http://www.counterpunch.org/whitney02222008.html
Excerpt: The country is now headed into a deep and protracted
recession. Low interest credit and financial innovation
have paralyzed the credit markets while inflating a monstrous
equity bubble that is wreaking havoc with the world's financial
system. The new market architecture, "structured finance",
has collapsed under the stress of falling asset-values and
rising defaults. Many of the banks are technically insolvent
already, drowning in their own red ink. Public confidence
in the nations' financial institutions has never been lower.
Monetary policy and deregulation have failed. The system
is self-destructing.
====================================
Article: Iran's Oil Bourse Could Topple The Dollar
Author: Mike Whitney
Source: Rense.com, February 5, 2008
URL: http://www.rense.com/general80/topple.htm
Excerpt: The petrodollar system is no different than the
gold standard. Today's currency is simply underwritten by
the one vital source of energy upon which every industrialized
society depends---oil. If the dollar is de-linked from oil,
it will no longer serve as the de-facto international currency
and the US will be forced to reduce its massive trade deficits,
rebuild its manufacturing capacity, and become an export
nation again. The only alternative is to create a network
of client regimes who repress the collective aspirations
of their people so they can faithfully follow directives
from Washington.
=======================================
Article: Meltdown Looms Larger as Credit Markets Freeze
Author: Mike Whitney
Source: Counterpunch, March 13, 2008
URL: http://counterpunch.org/whitney03132008.html
Excerpt: The stock market was headed for a crash this week,
but Bernanke managed to swerve off the road and avoid a
head-on collision. But nothing has changed. Foreclosures
are still soaring, the credit markets are still frozen,
and capital is being destroyed at a faster pace than any
time in history. The economic situation continues to deteriorate
and even unrelated parts of the markets have now been infected
with subprime contagion. The massive deleveraging of the
banks and hedge funds is beginning to intensify and will
continue to accelerate until a bottom is found. That's a
long way off and the road ahead is full of potholes.
========================================
Article: The Current Credit-Crunch Catastrophe
Author: Bob Chapman
Source: International Forecaster Weekly, February 16 2008
URL: http://theinternationalforecaster.com/
item.php?topicId=2&articleid=227
Excerpt: Bank reserves are being eaten alive by loan defaults
and asset write-downs faster than the Fed can replace them.
That is because the fractional reserve system Ponzi scheme
is now working in reverse and unraveling big-time. This
is why Hanky Panky Paulson is running around trying to figure
out how to stop the defaults that are bleeding the banks
dry. The Fed and Wall Street made a big blunder and grossly
underestimated the percentage of loan defaults from toxic
waste and the impact that this would have in non-subprime
sectors while they grossly overestimated the liquidity of
this kind of maniac paper and falsely boosted its credit
rating. And remember, the Fed cannot control the creation
of credit by non-bank institutions which are also getting
hammered. The bank's that dabbled in toxic waste must either
borrow reserves from the Fed, or call in a total of demand
loans equal to 7 or 8 times the amount of reserves that
have been lost or they will become insolvent and have to
be liquidated by the FDIC which in the end won't even be
able to pay losses at pennies on the dollar as the entire
financial system comes tumbling down unceremoniously.
=========================================
Article: A painful fix for the credit crisis
Author: Jim Jubak
Source: msn money, Jubak's Journal 2/22/2008
URL: http://articles.moneycentral.msn.com/Investing/
JubaksJournal/FinallyAFixForTheCreditCrisis.aspx?page=1
Excerpt: The crisis of confidence that has gripped the
debt markets is like an old-fashioned, Depression-era run
on the banks -- but now with trillions of dollars on the
line.
In a bank run, depositors, fearing their bank might not
have enough capital to cover its obligations, rushed to
pull out their money before it all disappeared. The bank
would try to call in whatever loans it could to provide
cash and, of course, stopped making loans. If the run was
fast and heavy enough, the bank would shut its doors, freezing
the accounts of depositors who hadn't been quick enough
to pull out their money and calling in all outstanding loans
to the borrowers who depended on the bank. … If the
bank was big enough, the run and subsequent closing of its
doors could send ripples out across the banking sector as
customers at other banks began to worry about whether their
banks were safe. That often led to runs on other banks and
a banking crisis like the panics of 1930-33, when 2,489
banks failed. …. In the current credit crisis, as in
the bad old days of bank runs, the key questions are: Whom
can you trust to pay what they owe? How do you restore confidence
to the system?
====================================
Article: Panic of 08 - Politician Won't Prevent It
Author: Gerald Celente
Source: Rense.com, February 25, 2008
URL: http://www.rense.com/general80/p2anic.htm
Excerpt: The same question has been asked throughout history:
"How could it have been that, with all the evidence
staring them in the face, people couldn't see disaster coming?"
History is again repeating itself. Despite the mountains
of evidence and baskets of statistics pointing to "Panic,"
the media, the man on the street and the politicians avoid
the facts and deny the ugly truth or defend their beliefs
with a vengeance attacking those who beg to differ.
Battered equity markets, rising unemployment, a diving
dollar, $100 per barrel oil, soaring commodity prices, plummeting
real estate values, record home foreclosures, slumping retail
sales, crumbling consumer confidence, a credit crunch, the
subprime crisis, write- offs and write-downs the data doesn't
lie. Banks, brokerages, and bond insurers begging for bailouts
and pleading for cash.
SIVs, CDOs, ARSs VRDNs, hedge fund operators, derivative
players, buyout specialists an alphabet soup of exotic scams,
rigged games, Wall Street cons and double dealers.
America's on the rocks and sinking fast and there's no
one there to save it. Not the Federal Reserve, the President
of the United States, nor the presidential wannabes in waiting.
There are no quick fixes or human geniuses that can make
the debt-bloated pig fly, yet a desperate public prays that
its pathetic politicians will lead them to economic salvation.
=========================================
Article: Wall Street Bank Run
Author: David Ignatius (columnist)
Source: Washington Post, February 21, 2008
URL: http://www.washingtonpost.com/wp-
dyn/content/article/2008/02/20/AR2008022002270.html
Excerpt: It doesn't look like an old-fashioned bank run
because it involves the biggest financial institutions trading
paper assets so complicated that even top executives don't
fully understand the transactions. But that's what it is
-- a spreading fear among financial institutions that their
brethren can't be trusted to honor their obligations. ….
The public, fortunately, doesn't understand how bad the
situation is. If it did, we might have a real panic on our
hands. And there would be more pressure for bad policies
-- ones that try to freeze the damage, rather than letting
prices fall to levels where buyers will return and the markets
will clear.
================================
Article: Financial System Broken - Markets 'Utterly Unhinged'
Author: Mike "Mish" Shedlock
Source: Mish's Global Economic Trend Analysis, March 06,
2008
URL: http://globaleconomicanalysis.blogspot.com/2008/03/
financial-system-broken-markets-utterly.html
Excerpt: But let's not be too gloomy here. Other than overleverage,
bad debts, sinking home prices, no jobs, shrinking wages,
cash strapped US consumers, rising oil prices, a sinking
US dollar, $500 trillion in derivatives not marked to market,
rampant overcapacity, underfunded pension plans, looming
boomer retirements, no funding for Medicaid, no funding
for Medicare, and no Social Security trust fund, everything
is just fine. And even though the Fed, central bankers in
general, and governments combined to create this problem,
the irony is nearly everyone is begging for them to fix
the problem by encouraging still more speculation in housing,
commercial real estate, and the markets. Sorry folks, it's
the end of the line and payback time for the world's most
reckless financial experiment in history. The deflation
genie can't be put back in the bottle until leverage everywhere
is unwound.
==============================
Article: Derivatives the new 'ticking bomb' - Buffett and
Gross warn: $516 trillion bubble is a disaster waiting to
happen
Author: Paul B. Farrell
Source: MarketWatch, March 10, 2008
URL: http://www.marketwatch.com/news/story/derivatives-
new-ticking-time-bomb/story.aspx?guid=%7bB9E54A5D-4796-
4D0D-AC9E-D9124B59D436%7d&print=true&dist
=printTop#comments
Excerpt: The fact is, derivatives have become the world's
biggest "black market," exceeding the illicit
traffic in stuff like arms, drugs, alcohol, gambling, cigarettes,
stolen art and pirated movies. Why? Because like all black
markets, derivatives are a perfect way of getting rich while
avoiding taxes and government regulations. And in today's
slowdown, plus a volatile global market, Wall Street knows
derivatives remain a lucrative business.
Recently Pimco's bond fund king Bill Gross said "What
we are witnessing is essentially the breakdown of our modern-day
banking system, a complex of leveraged lending so hard to
understand that Federal Reserve Chairman Ben Bernanke required
a face-to-face refresher course from hedge fund managers
in mid-August." In short, not only Warren Buffett,
but Bond King Bill Gross, our Fed Chairman Ben Bernanke,
the Treasury Secretary Henry Paulson and the rest of America's
leaders can't "figure out" the world's $516 trillion
derivatives.
Why? Gross says we are creating a new "shadow banking
system." Derivatives are now not just risk management
tools. As Gross and others see it, the real problem is that
derivatives are now a new way of creating money outside
the normal central bank liquidity rules. How? Because they're
private contracts between two companies or institutions.
=========================================
Article: The $300 Trillion Time Bomb
Author: Jesse Eisinger
Source: Portfolio, March 29, 2007
URL: http://www.portfolio.com/views/columns/wall-street/
2007/03/29/The-300-Trillion-Time-Bomb
Excerpt: The binding threads are derivatives, and the brightest
minds on Wall Street worry about how they work-especially
as stock markets around the world hit a bump. The term derivatives
describes an array of financial contracts whose value is
determined by, or derived from, an underlying asset such
as a stock or currency. The derivatives market, one of the
fastest-growing areas of finance, is estimated at $300 trillion.
A subset of that-credit default swaps, which are derivatives
based on companies' creditworthiness-last year reached $26
trillion, twice the size of the U.S. economy.
In their most benign form, derivatives are probably the
greatest financial innovation of the past 25 years. They
have helped smooth currency and interest-rate fluctuations
by allowing investors to protect themselves. But when it
comes to the really big stuff-such as global market collapses-derivatives
could turn from vaccine to contagion. Investors use them
as a form of insurance, which may give a false sense of
security. "A financial crisis is likely to be a global
event, not a local event, and derivatives will probably
help make that happen," says Joe Brandon, C.E.O. of
General Re, a reinsurer owned by Berkshire Hathaway.
Brandon has grown intimately familiar with the perils of
derivatives during a grand five-year experiment conducted
on orders from his boss, Warren Buffett, to close Gen Re's
derivatives business.
=========================================
Article: Closing the 'Collapse Gap': the USSR was better
prepared for collapse than the US
Author: Dmitry Orlov
Source: Energy Bulletin, December 4, 2006
URL: http://energybulletin.net/23259.html
Excerpt: An economic collapse is amazing to observe, and
very interesting if described accurately and in detail.
A general description tends to fall short of the mark, but
let me try. An economic arrangement can continue for quite
some time after it becomes untenable, through sheer inertia.
But at some point a tide of broken promises and invalidated
assumptions sweeps it all out to sea. One such untenable
arrangement rests on the notion that it is possible to perpetually
borrow more and more money from abroad, to pay for more
and more energy imports, while the price of these imports
continues to double every few years. Free money with which
to buy energy equals free energy, and free energy does not
occur in nature. This must therefore be a transient condition.
When the flow of energy snaps back toward equilibrium, much
of the US economy will be forced to shut down.
=========================================
Article: Protocols For Economic Collapse In America
Author: Al Martin
Source: Rense.com, February 23, 2008
URL: http://www.rense.com/general80/protc.htm
Excerpt: And this is how the U.S. Treasury would handle
an economic collapse. It's called the 6900 series of protocols.
It would start with declaring a force majeure, which would
immediately be interpreted by the marketplaces as a de facto
repudiation of debt. Then the SEC and the various regulatory
exchanges would anticipate the market's decline, hour by
hour -- when Japan's markets opened the next day, what would
happen when the European markets, and all the inter- linkages
of the global markets. … The origin of these protocols
comes from the Department of Defense. …. In the economic
collapse scenario, the starting point would be the United
States Treasury declaring a force majeure on debt service,
which is de facto repudiation, and that's how it would be
interpreted by the world's capital marketplaces. Then the
scenario goes on from there. …. David Walker, US Comptroller
General and chief of the GAO has said that should the Bush-Cheney
regime be re-ensconced into power and, hence, the scourge
of Bushonomics persist, that the United States could no
longer service its debt beyond 2009. They're not hiding
it from anybody anymore. They are telling you what's happening.
=======================
Article: War and Truth V: What happened on 9/11?
Author: Govert Schuller
Source; Alpheus, March 31, 2006
URL: http://www.alpheus.org/html/source_materials/
parapolitics/warandtruth5.htm
Excerpt: An inter-locked and well-disciplined network of
lone operators and Secret Teams operating within the White
House, Pentagon, FEMA, CIA, FBI, FAA and NORAD, coordinated
by a High Cabal of a very few key insiders planned, executed
and covered-up the 9/11 events and the Anthrax scare even
while framing Osama Bin Laden and Al-Qaeda as the patsies.
The Pentagon was hit by anything but a commercial airliner
and WTC 1, 2 and 7 collapsed by controlled demolition. They
subsequently pushed diverse agendas like the militarily
invasion of oil-rich central Asia, curb civil liberties,
enrich the military-industrial complex, etc. all for the
sake of the main beneficiaries of American Imperialism.
… [A more trans-national version of the above would
posit that not] only US Secret Teams and a US High Cabal
[was] involved, but also other teams lodged deep inside
foreign governments and coordinated by both US and non-US
members of the trans-national Power Elite. The issues for
them go beyond oil, money and power, which for them are
merely tools to advance, by a subtle dialectic process,
the crumbling of the US political and economic system and
the emergence of a fascist New World Order. In this case
the Neo-conservatives and Zionists are the second line of
patsies in case the official version of blaming OBL and
Al-Qaeda fails. … [An esoteric version would be similar
to] the previous one, but with the added perspective that
the main network of the High Cabal of the trans-national
Power Elite is comprised of the surviving remnant of Weishaupt's
Order of Illuminati and other like-minded groups, who are
mostly to be classified on spiritual levels as Fallen Ones,
Adepts of the Left-handed Path, incarnated Fallen Angels,
black magicians, etc. They are the organized counter-force
to the spiritual and civilizational gains made by the world-wide
Masonic and Theosophical Enlightenments and like nothing
better than to enslave mankind in spiritual darkness, material
poverty and intellectual ignorance, while they live of the
fat of the land and try to postpone their own day of judgement.
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