Into The Valley of Debt

I would like to tie together three subjects that are in the forefront at the moment with three separate essays and argue how they are parts of a whole. Three areas of capitalism are involved; the banking/investment/insurance or financial industry; the oil and resources industry; and the armaments and military services industry. These industries are, of course, controlled by the same group of people and so are readily co-ordinated and this should not surprise us. Indeed, we should expect it. The three subjects or issues breathlessly and inaccurately reported to us are the financial meltdown/bailout fiasco, the moves for a One World Currency and the ever building number and intensity of wars in the the Middle East and Central Asia for the control of oil. The “whole” I speak of is the domination or rulership of the whole world or more succinctly, One World Government.

This first part concerns the financial industry and the derivatives meltdown and the attendant bailout scandal. This essay is in large part a rewrite of part of James Lieber's excellent article, “What Cooked The World's Economy”. I have attempted to expand on some of his points with some logical deductions and also some opinions together with a few added bits of information from the public domain.
All quotes in this essay come from the above article and the first quote will start at the “bottom line”-

“The bottom line in this scandal is that fantastically wealthy entities positioned themselves to make unfathomable fortunes by betting that average Americans - Joe Six-Packs and hockey moms - would fail.“
Bearing this in mind will help makes sense of what I write below, I hope!
So after that introduction, let us deconstruct the scam.


It struck me, at first, as very odd that the derivative scam artists are walking around very much alive. They have caused some major financial institutions that were very much a part of the establishment to go belly up apparently because of their reckless yet deliberate actions. Personally, I would rather scam the Gambino family than mess with the likes of the Rockefellers or the Rothschilds. These people are seriously attached to money. Bankers have a habit of washing up on the ebb tide and or dying from heart attacks in the peak of health or leaving suicide notes that don't sound like them and swinging from bridges. We've had a rash of them over the last few years though they didn't get much play in the MSM, surprisingly . . . not. So how come the likes of Joseph Cassano of AIG Financial Products are not only alive and still in employment but also receiving huge bonuses. Something is seriously wrong with this picture, is it not?

From this evidence, one must immediately conclude that the Rockefellers and Rothschilds have not been burnt which means that they were not involved in any way. But given the interconnectedness of everything financial and their attraction to huge profits, this would seem highly unlikely, indeed. The other option is that they were involved but on the winning side. This would account for Cassano et. al. remaining alive after (or even before) the collapse became public knowledge.

Not only are they still alive, but they are still in employment at the scene of the various disasters and still at the helm. For this situation to continue, the apparently incompetent fraudsters must be under the control and protection of whomever is benefitting from this situation, past and present. So all this would indicate there is still evidence to conceal and James Lieber quotes William Black, a former financial regulator, suggesting that very thing, ' "Don't count on them keeping records for long," Black warns. "It's time to get out the subpoenas."'
/This would also account for the obscene and PR risky bonuses these snake oil salesmen have received. But I will be suggesting that there is more to it and that is that the derivative scam is still in process and the “backsheesh” is to ensure that the salesmen stay in place for the time being, at least, as they still have work to do. After the party's over, though, they may have to avoid taking rides on boats; or flights in small planes; or bending over bridges . . . or bending over anything, really.

I found James Lieber's article very illuminating. Crucial to my understanding from his article is this,
'“Derivatives weren't initially evil. They began as insurance policies on large loans. A bank that wished to lend money to a big, but shaky, venture, like what Ford or GM have become, could hedge its bet by buying a credit derivative (insurance policy) to cover losses if the debtor defaulted.”

A market or trading forum was needed to facilitate the selling of these loan insurance policies (a.k.a. Credit Derivatives or CDs or just “derivatives”) on a large scale and thereby create a new financial services industry (and new profit centre) and was duly supplied in the form of a computer network. From Leiber again,

“the company that put the basic hardware and software together for pricing and clearing derivatives was Bloomberg. It was quite expensive for a financial institution - say, a bank - to get a Bloomberg machine and receive the specialized training required to certify analysts who would figure out the terms of the insurance. These Bloomberg terminals, originally called Market Masters, were first installed at Merrill Lynch in the late 1980s.
Subsequently, thousands of units have been placed in trading and financial institutions; they became the cornerstone of Michael Bloomberg's wealth, marrying his skills as a securities trader and an electrical engineer.

It's an open question when or if he or his company knew how they would be misused over time to devastate the world's economy.”

The scale of this operation, even granting that it was builtup over years, together with the fact that Bloomberg's company is privately owned, suggests to me that Bloomberg needed lots of finance to not only develop and provide the hardware and software but also for promotion and, critical in this industry, he would have needed influential sponsorship to put this system in place and the most likely place that would come from is within this same industry. If I were investigating this meltdown, one of the first questions I would want answered is, “who financed this time bomb?” I suspect the answer would be very revealing and would be at least one of the major anonymous “counterparties”.

So how was it a time bomb? How did legitimate insurance on a loan mutate so badly? Well, it soon became apparent (if it wasn't the purpose from the begining) that with the insurance (derivative) in place, there was more money to be made from a loan going bad and collecting on the insurance than if the loan was secure and paid off in due course. Particularly if the loan could be insured for more than it was worth or was purchased for. Coupled with the fact that the loan could be insured multiple times and the fact that you didn't even need to own the loan yourself. So if you insure a loan a hundred times over so that when it falls over, you are paid its full book value one hundred times. This is more than a “goldmine”; this is an exponential formula to unlimited wealth if the fabulous profits are parlayed a few times. Imagine betting on the winning number on a roulette table and letting the winnings ride and having the number come up again . . . and then keep on repeating this process with no pit-boss (or regulator) to shut the table down!
Now think in trillions!

But this jackpot payoff is dependent on the insured loan going bad. So now there is a market for bad or high risk loans and it is an exponentially ever-growing market because once a derivative buyer or “counterparty” (as he is known in the business) has collected big time on his “investment” he naturally wants to plough it all back into the same glorious, no risk, bonanza. But our counterparty's capital has grown like Topsy and he needs a hundred bad loans this time. How many bad loans will he need after a few circuits on this magic merry-go-round? Clearly the “Bad Loan” business needs to go “bigtime” and to do that the financial regulations and supervision need to be eradicated. Bye-bye Glass-Steagall Act. Hello Commodity Futures Modernization Act (CFMA). And thank you, Bill Clinton.

This need for loans to be defaulted on is one of the reasons why Obama and his backers on Wall Street will not help rescue ordinary, but over committed, people struggling to stay in their homes or pay off their credit cards. There are still derivatives in play to be collected on.
Lieber again, “By plunking down millions of dollars, a hedge fund could reap billions once these fatally constructed securities plunged. Again, the funds did not need to own the securities; they just needed to pay for the derivatives - the insurance policies for the securities. And they could pay for them again and again. This was known as replicating. It became an addiction. “

It's not over, either. To repeat, its still in play and there are still loans to fall over and there are still payoffs to collect for the mysterious counterparties whom the Fed and everyone else involved refuse to identify.
“What about the $600 trillion in credit derivatives that are still out there, sucking vital liquidity and credit out of the system? It's the tyrannosaurus in the mall, the one that made Henry Paulson, the former Treasury Secretary who looks like Daddy Warbucks, get down on his knees and beg Nancy Pelosi for a bailout.
Even with the bailout, no one can get their arms around this monster. Obviously, the $600 trillion includes not only many unseemly replicated death bets, but also some benign derivatives that creditors bought to hedge risky loans. Instead of sorting them out, the Bush administration tried to protect them all, while keeping the counterparties happy and anonymous.”

Note well that last clause, “while keeping the counterparties happy and anonymous.” And Obama is in the continuity business here as well, it seems.

But let me backtrack a little to how the first half of the scam operated before the government intervention and the second half began.
The challenge was how to do it on a mass scale. It needed to pull most of the financial industry in because the object was to firstly, loot whole economies and secondly, set the stage for a one world currency which would give the issuers of this currency a de facto world government. If you control the issue of money then you control the economy. You can run it up and you can run it down through the simple expedient of how much money you put into circulaton or withdraw from circulation via bank lending policy. With the control of the economy, you control the government and more besides because you can buy and sell anything and anybody you please.

So they needed a respectable and respected front to lead the way for others to follow; to assure the nervous Nellies that success lay in joining “The Charge of the Blight Brigade into the Valley of Debt”.
What better vehicle than AIG, the biggest insurance company in the world. You are probably protesting that this company is “one of their own”. Yes, but many a fortune has been made from bankrupting a company, particularly, one's own. Greenburg, the head of AIG, established the demolition team in London, AIG Financial Products by name. I suggest this was not only to escape the rather non-existent regulatory control but also to escape internal detection and intervention from senior executives at the parent company who might not be too exicted about the prospect of their careers, status and livelihoods going up in smoke and so "out" the operation before its time is due. Lieber points out,

“ . . . William Black, an effective federal litigator and regulator during the 1980s savings-and-loan scandal . . . . . has testified to Congress about the current crisis and paints it as "control fraud" at every level. Such fraud flows from the top tiers of corporations - typically CEOs and CFOs, who control perverse compensation systems that reward cheating and volume rather than quality, and circumvent standard due diligence such as underwriting and accounting. For instance, AIGFP's Cassano reportedly rebuffed AIG's internal auditor.”

And also, “In 2000, AIG asked the New York State Insurance Department to decide if it wanted to regulate them, but the department's superintendent, Neil Levin, said no. The question was not posed by AIGFP, but by the company's main office through its general counsel”.
Perhaps head office was trying to get the regulator to do what it ironically couldn't i.e. audit its own subsiduary.

With the solid looking facade of AIG in place all that's needed now is an outside “seal of good housekeeping” for the bait which was provided by Standard & Poors and the other rating agencies. The bait made up of mortgages, credit card debt and sundry other things and otherwise known as CDOs (Collateralised Debt Obligations) was sold to,
“Banks like Wachovia, National City, Washington Mutual, and Lehman Brothers (who) loaded up on this financial trash, which soon proved to be practically worthless. Today, those banks are extinct” (unlike the ratings agencies)

Presumably these banks did not take out CDs (Credit Derivatives) on their new assets, the CDOs. Why not? If they had have, they would be in clover now and not in bankrupcy.
Either these institutions were kept in ignorance and were set up by their fellow bankers to fail with the view to taking out the competition.
Or, they were gutted and offered up as sacrificial lambs; that the derivatives were, indeed, taken out on the bad loans (CDOs) by the principals of these firms but held in other companies away from the creditors and eventual liquidators. All sorts of other obligations would be conveniently voided, too, and the victims (shareholders and creditors) wouldn't realise that it was deliberate and thinking that Lehman Brothers, for instance, wouldn't deliberately bring down the house on top of their heads like Samson did; and the wholesale looting put down to incompetence instead of larceny.

I think it likely that both these scenarios were in play with different individual companies and for both the reasons outlined above.

But this bomb is a time bomb and these institutions (and also private investors) are loaded up with these explosive bad loans, we need a trigger to set the chain reaction off. This was supplied by the banks tightening up consumer credit causing the CDOs to start popping off and then . . .
“the raters rushed to downgrade them to junk status. This occurred suddenly with more than 4,000 CDOs in the first quarter of 2008 - the financial community now regards them as "toxic waste."
To top it all off, JP MorganChase and others delivered the “coup de grace” by freezing interbank lending with instantaneous catastrophic results.

Part one of the scam was complete by this stage. The fiasco had now entered the public arena through the media coverage. And Part Two was about to start.

The Fed went to Congress to appeal for funds to ease the “credit crisis” which had been deliberately created, of course. After initially baulking, Congress handed over the funds and the Fed promptly gave it to the insurers such as AIG who almost certainly turned this money over to the derivative holders, the anonymous “counterparties” i.e. the scammers and builders of this massive operation. This has to be be part of the original plot because AIG and other insurers simply had nowhere near the capital to pay out on the derivatives and the whole operation only makes sense if the scammers can collect which means the government was meant to pay and pay big right from the beginning. This was the prize, the goal of the whole exercise And the government did pay up and is continuing to pay up, what's more. The scam is still in operation.

In the tight monetary conditions i.e. tight lending practices of the banks to the hoi poloi, loans are continuing to fall over and derivatives are continuing to be triggered and are continuing to be payed out and Congress, via the Fed, is continuing to fund it all. The strugglers out there in mortgageland will not be helped in any meaningful way because that would stop this process that provides the continuing shower of funds down on the pigs at the trough.

But it gets even better because the scammers now have enormous funds to buy up all those cheap assets that are up for fire sales by their victims amongst whom are their once upon a time competitors. And they are, no doubt, hoping to convert the bulk of this ill gotten plunder into assets before inflation caused by all this extra money has its effect on prices. The coming inevitable inflation is the cost that everyone will bear. Any savings will effectively be halved in value as prices double or triple or . . . .

I think it is worth taking a side trip to explain the mechanism of inflation. Initiates of this mysterious knowledge can take a break here and rejoin us further down-
The value of one dollar (in theory and also roughly in practice) is calculated by the wealth of a country (which is conveniently measured by the GDP of the country) divided by the number of dollars in existence. The GDP is the amount of wealth collectively created in any given year within the nation. Given that the GDP will only vary by a few percent (if that) year to year, the amount of dollars on issue is crucial to the value of each dollar. i.e. whether there is inflation or not. If the amount of dollars on issue is doubled then the value of each one is halved. There is a simple symmetry involved. To say it another way, if the amount of money on issue is doubled then the prices of everything must double too. You will need twice as many dollars to buy the same thing so each dollar is worth half of what it was before. Or from yet another perspective, the extra money will compete for the goods on sale and thus push the prices up until an equilibrium between the amount of dollars in circulation matches the collective or sum price of everything that it can buy.

There is yet another variation on how to see this relationship and that is through the the realisation that in a stable economy, the money supply not only matches the value of the GDP or wealth of the country but that this GDP is what gives the currency or money supply its value. This is what backs the face value of the currency. This value belongs the citizens of the country as a whole as they largely own it. Yet it is “borrowed” by the bankers to give their issued money value. But that's another scam for another essay which will look at the One World Currency. But bearing this relationship in mind between GDP and Money Supply/Currency will be very helpful in understanding the scams involved with the proposed, and perhaps immanent, One World Currency.

Anyway, back to the topic of this essay (and to the initiates amongst us), all this is to say that the bailouts give massive dollar amounts to the already wealthy and every one pays for it because, for one, the value of the dollars everyone else is holding goes down to accommodate and facilitate this shift of wealth.

In summary, with AIG and JP Morgan in the lead, insurers, investment houses and banks created subprime loan assets and had the rating agencies give them prime rating. These subprime assets had higher subprime returns with apparent prime safety. This was irresistable bait for the greedy. The anonymous “counterparties” behind the AIG/JP Morgan push insured these subprime loans (CDOs) with derivatives (CDs or Credit Derivatives) betting that the loans would fall over and thus collecting handsomely. And in the process, bleeding the above companies and others dry and then bleeding the whole nation dry through the government and its bailouts which was the real and ultimate "mark" all along.

The concept was simple. However, the implementation took some doing over many years including dismantling the regulatory provisions and hobbling the oversight bodies.

With this information, looking back over those years makes it plain that it was all deliberately engineered. The same cast of characters are present at every step; building, priming, selling and setting off the charges and then lobbying excitedly and making threats for the compensation or more correctly, the payoff.

Many privately wealthy people have lost much of their capital by buying CDOs directly without attendant derivatives or by investing in companies that got caught with them.

Many people of more modest means have lost investments, too, and seen the value of their superannuation plummet, as well. Their Mutual Funds have been caught with CDOs and also hold shares that have lost value through the same process.

And lastly, everyone, again, will suffer from the coming inflation and from future increased taxes to pay off the government debts incurred to make the filthy rich obscenely rich.

And all this through a simple scam. To repeat James Lieber's bottom line -
““The bottom line in this scandal is that fantastically wealthy entities (aided and abetted by both political parties ed.) positioned themselves to make unfathomable fortunes by betting that average Americans - Joe Six-Packs and hockey moms - would fail.“

I believe this is called “anti-social behaviour”.

With the economy and population financially bloodied, beaten and fearful (and it ain't over yet by any means) we are all open to being lead over the cliff of a One World Currency and then it's a freefall down into the abyss of a One World Government.

That's the bad news. The good news is that we aren't over the cliff, yet. And we know what's happening and who's doing it and who not to turn to for help. And that's a good start.


Moon of Alabama post

There's an excellent post and discussion over at Moon of Alabama on the differing types of CD holders and the dangers to the economy that each hold.

"b" of MoA also wrote a prescient explanation of the debacle and solution for it and why back in Sept ''08. It can be found here

Thanks James

good job
I'm going to read that again later.
The good news is that we aren't over the cliff, yet. And we know what's happening and who's doing it and who not to turn to for help. And that's a good start.

I feel less manic now but theres still no time to waste.

Like Brad Freidman Says (although hes not saying much about this and neither are GoleftTV)

Copy Paste Email still a very good idea

Blue Thank You


Thanks Sally. “Be of good cheer”! There is an opportunity in this crisis which wouldn't be there otherwise and that is to take away the power of the financial elite and their industry and to put an end to much of the misery that they either create or exacerbate. It takes something like this to expose the criminals and their crime. Most of the financial sector is quite useless and counterproductive for a properly and simply functioning society.
On my travels around the net I'm surprised at how much info is out there already and it's growing exponentially, it seems. Ten years ago, I didn't know anyone who understood how banking really worked, for instance. Even five years ago, there wasn't much on the web that I could see. At least, not on the blogs and message boards. Now, knowledge of the private banking scam is everywhere on the web and soon must spread to the non-web users too. And spreading the word further, as you suggest, is the first essential step to our release from this monster. With real knowledge out there, the psychopaths are robbed of a lot of their advantage. They do need our co-operation, afterall, to do anything. Cheers!

Oh, James.

But this jackpot payoff is dependent on the insured loan going bad.

I had to print off this post and hold it in my hands to read it.

What is the ultimate anger? Is there a word? Who has a right to be angry? Or the word, thereafter? Is it white-hot rage? Why, yes. I think it is.

Would I suicide/homicide bomb, or otherwise BOMB anything? Or kill someone? No I would not. My God needs no bombs.

I'm extremely angry. Thanks, James, for enlightening me. Now I have to go finish reading it. I'm not sure I'm up for it. Perhaps later.

Right now,

I'm thinking about the Indian Nations.

McJ's picture

Really excellent James, this

Really excellent James, this helped to clarify a few things for me! And thanks for the links to Moon of Alabama those were enlightening as well.

I think this is exactly the kind of writing we need, which is an explanation of what's going on here that everyone can understand. So much of what is written, is in industry jargon and difficult to follow for the average person who knows nothing about complicated financial instruments or insurance scams.

What the poster over at Moon of Alabama suggests makes sense to me.
"There is only one possible way to avert this event:
International legislative action that immediately declares all Credit Default Swaps null and void. "

The problem that I see is how do we spread the information that this needs to be done in a way the masses will be able to understand it and thus get behind it. I was thinking that a simple graphic demonstration in a short flash video may be helpful to explain what these CDS are and why they are so lethal. I don't know how to do that but maybe some enterprising readers of this blog do. wink
For example, my friends and family are all losing tons of money in their retirement plans/investments and they know something is very wrong but they really don't understand what it is. Sally talked about her frustration with this in her comments on the Leiber thread and she has been handing out copies of Lieber's article for people to read so they can gain some understanding. She notes "not many" as it is 8 pages long which I think hits the nail on the head because, regardless of their reasons why, most people are not going to take the time to read an eight page document unless they are motivated to understand it's vital to their interest they make the effort to understand this. In fact, I'm certain the perpetrators of this crime are counting on our continued ignorance.

"The most unpleasant truth in the long run is a far safer traveling companion than the most agreeable falsehood." Emerson

The Wisdom of Oscar Wilde

I think I'm a frustrated Headline writer!
"Sally talked about her frustration with this in her comments on the Leiber thread and she has been handing out copies of Lieber's article for people to read so they can gain some understanding. She notes "not many" as it is 8 pages long which I think hits the nail on the head"

The trouble is that my essay is no shorter than James Lieber's. I am reminded of a quip of Oscar Wilde's who at the end of a long letter to a friend apologised saying, “Sorry for the long letter, but I didn't have time to write a shorter one”! (or something close to that!) And it's true. There was a certain haste in what I wrote.

It's a bit of a pickle. I don't think I could have left much out and not hindered my case that it was all deliberately engineered and that the bailouts are an integral part of the original scheme. But having made the case (or at least made it credible), perhaps now I could try a condensed version which includes the solution of rescinding the legality of the Credit Default Swap (derivative) contracts together with the end to “bailouts” for bankers et. al. Something that would be suitable for printing as a pamphlet or flyer and handed out, left in bus stops, waiting rooms, that kind of thing.

Would there be any interest in that?
And if there is, how short would it need to be?

It would need to be pretty

It would need to be pretty damn short, in my opinion.

Thanks James. How is it

Thanks James.
How is it possible that the cds's can be insured over and over? I think the thing that would resonate with most people, of all political persuasions, is the bottom line you noted. Makes me absolutely sick, no better than the internet scams known here as Ugandan Scams.

"How is it possible that the

"How is it possible that the cds's can be insured over and over?"
I don't know, Debbieanne. But the fact that they could defies common sense. Doing so could only benefit crooks so whoever enabled this policy (or lack of policy) is almost certainly an accessory, at least, to this massive crime.
Would you (or anyone else) like to chase that question of multiple insurance/derivatives over the net? I need a mental health day today!

"I think the thing that would resonate with most people, of all political persuasions, is the bottom line you noted."
This is top information should I attempt "The Readers Digest Version". See my comment above.

McJ's picture

Whispering Campaign

I think what you are writing for this blog is great and we wouldn't want it watered done because we are all motivated to inform ourselves. A condensed 'Reader's Digest Version" for handing out or sending as an email to others would be a great idea. Have you ever checked out Winter's Whispering Campaign - ?

"Would you (or anyone else) like to chase that question of multiple insurance/derivatives over the net? I need a mental health day today!"

I can give that a whirl. Any suggestions on where to start, keeping in mind my knowledge here is limited smiling ?
Do take care of yourself - rest is good!

"The most unpleasant truth in the long run is a far safer traveling companion than the most agreeable falsehood." Emerson

Fox hunt!

Thanks, McJ. No I haven't seen Winter's Whispering Campaign - but I will.

I'd start with the smiling lizard, Maurice Greenburg, AIG, AIGFP, Joseph Cassano, and the Commodity Futures Modernization Act (CFMA) and "replicating". Do search combinations. If somebody else's name keeps popping up, do a search on him (or her!)

From the other side, I'd suggest William Black, the CFMA, and other articles from James Lieber. You might also email him direct about it. The Village Voice article may have his email address. Or email the VV and ask them to forward your email to him.

I'd also take note of any major insurers that didn't issue CDS. Why?!
That little lot should through up a lead or two, I would think.

Secondary but interesting would be Bloomberg's network. It is a vital part of all this. I'd be very interested in who had shares in his company though you are unlikely to find that info, but you never know. If he is involved in other ventures the question will be "with whom?" Who are his friends.
George Soros is up to his armpits in this as well. He's a front. As are the Hedge Funds. He doesn't look quite the genius after you know how the scam works, does he?

Good luck. It's hell out there smiling

I believe

that it's called fraud, and that we are the marks.

McJ's picture

Ya got me working

Ya got me working James!!
I'll see what I can do.

I wanted to add this info I learned the other day somewhere - so I guess this is as good a place as any. I do some work for a fellow that owns a very successful financial investment company. This information came from an article in a subscription service they get which advises firms like his. I neglected to write the title of this bulletin down and I can't remember what it is called now. It was about 30 or 40 pages long so I only had to time to scan thru it but a bit on China caught my eye so I scribbled a few notes on it.

They said that China was trying to end the worldwide reserve status by agreeing to a 10.2 billion dollar swap with Argentina which would allow it to receive Renminbi instead of dollars for it's export. They also talked about China proposing using Special Drawing Rights (SDR's) (and Geithner saying he would be open to it) in its efforts to create a new global reserve currency.
China is buying up minerals to unload US dollars and is in negotiations to buy the Australian/UK company Rio Tinto. I googled Rio Tinto and found this:
"2 February 2009
Joint ventures and convertible bonds to deliver US$19.5 billion in cash to Rio Tinto
The Boards of Rio Tinto plc and Rio Tinto Limited (together "Rio Tinto") announce today that they are unanimously recommending to shareholders a transaction with Aluminium Corporation of China ("Chinalco"), a leading Chinese diversified resources company. The transaction will forge a pioneering strategic partnership through the creation of joint ventures in aluminium, copper, and iron ore as well as the issue of convertible bonds to Chinalco, which would, if converted, allow Chinalco to increase its existing shareholding in Rio Tinto.
The transaction is intended to position Rio Tinto to lead the resources industry into the next decade and beyond by ensuring the continuity of its strategy with the benefit of Chinalco's relationships, resources and capabilities. lots more at link -

The last and most interesting note I made is that they suspect the US in selling off gold bullion. They said there is reason to believe the US may have made secret agreements with China and Japan guaranteeing access to American gold buillion in case of a default or hyperinflation so they would postpone selling their 2+ trillion US dollars. (And this very dry investment report actually quipped that they really couldn't say more lest the black helicopters show up. I thought that was rather bizarre.) There is apparently a mention of negotiations on a treaty to protect "their respective investments" in the Dec. 6 -7, 2008 issue of the Wall Street Journal. (I tried to find it but it is a subscription service so if any one reading has access to this publication could you check it out for us please and thanks smiling )

"The most unpleasant truth in the long run is a far safer traveling companion than the most agreeable falsehood." Emerson

I must admit to being very

I must admit to being very surprised at both Russia and China making noises for an international currency. They are rightly pissed off because the US$ is the default currency but going for an international version of it is not going to cure the problems (lack of control on their part) and will only make it worse.

Gold is a whole 'nutha story. I seriously doubt that the US government has ANY gold at all in Fort Knox! They are supposed to do (and publish) an audit every year on their gold stocks but haven't done so for decades in spite of many calls for it. Least, that's the last I read.

The old USSR used to do a lot of intranational and international barter. Sounds pretty good to me. An Australian, John Iggulden (sp?) came up with a brilliant and simple system of international exchange years ago called Impex. I don't know if there is anything on it on the net but I will be talking about it in the next essay.

RioTinto is Rothschilds and the UK establishment BTW (as is BP and Royal Dutch Shell). Rothschilds are setting up a joint bank with the Chinese as well . . . Step Into My Parl . . ! Evil

I see you described RioTinto as Australian/UK. Yes there is an Australian element. Our local comprador class has a slice but I would think it small. There have been various spin-offs such as Hammersley Iron and mergers such as Conzinc RioTInto over the decades but they have all merged again.
RioTinto has just fought off an unfriendly takeover bid from BHP/Billiton (which also has an Australian component whom I imagine are the same comradors involved with RioTinto). So I imagine Rio would be grateful for a cash injection and the Chinese are grateful to be able to convert the cash into assets. But I think the Chinese will regret it. Perhaps this is the influence that is causing them to propose using SDRs (that nobody seems to understand fully which tells me they are yet another scam). If they think these banking families have changed since the Opium Wars, they are going to find themselves sadly mistaken. But then they're all sharks.
It's been said that the easiest mark for a con man is another con man. They can't resist the game and the intrigue.

McJ's picture

Well you are just chock full

Well you are just chock full of interesting info James! smiling The Opium wars sounds like more reading to me! (I did read Taipan and Noble House -do think that will help laughing out loud )

RE: Rio Tinto

I didn't know anything about it so I described it as a Australian/UK company based on the web site I linked to. I just skimmed what the article was saying but I know they were specifically talking about it as Australian and their take was that they would be crazy to sell at this point. So perhaps they were talking about the Australian element.

I would also say I got the sense that they do not know what is going on and they are worried.

As for Fort Knox, I'm pretty sure they won't be letting us in to have a look-see if there is any gold left. wink

"The most unpleasant truth in the long run is a far safer traveling companion than the most agreeable falsehood." Emerson

McJ's picture

Iran, Venezuela seal 10-year strategic alliance

Iran, Venezuela seal 10-year strategic alliance
April 6th, 2009 - 8:33 am ICT by IANS Tell a Friend -

Tehran, April 6 (EFE) Iran and Venezuela endorsed a new “roadmap” for their close bilateral relations by which they intend to increase economic exchanges and strengthen their political activities over the next decade.
The signing of the new “10-year strategic accord” Saturday capped the official three-day visit of Venezuelan President Hugo Chavez to Iran during the course of an international tour that will also take him to Japan and China.

Among the most noteworthy of his activities was the signing of a commitment for the Muslim country to exploit a petroleum deposit in Ayacucho, deep in the Venezuelan jungle.

In addition, studies were begun for the construction of two mixed-capital refineries, one in South America - presumably in Venezuela - and the other in Iran.

However, the main item on the agenda was the inauguration of the first binational bank, which will begin operating with a fund of $1.6 billion and will finance joint projects.

Japan and Venezuela Initiate Joint Orinoco Oil Projects and Expand Economic Ties
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April 6th 2009, by James Suggett –

During the visit, Venezuela's state oil company PDVSA initiated joint projects with Japan's national oil, gas, and metals corporation JOGMEC and several private Japanese firms to extract and refine oil in Venezuela's Orinoco Oil Belt, which is estimated to have the world's second largest crude oil reserves.
Chávez's visit to Japan is the final leg of a week-long diplomatic tour during which Venezuela created a bi-national bank with Iran and proposed a new international currency backed by oil reserves during a summit of Arab and South American countries in Qatar.

"The most unpleasant truth in the long run is a far safer traveling companion than the most agreeable falsehood." Emerson

Oily Money

You've anticipated me, McJ! I was saving this for my next article on One World Currency! smiling Ironically, Iran and Venezuela have anticipated what our wouldbe world masters are going to propose, I believe, for the rest of us; a one world currency based on oil. Maybe someone is blowing in their respective ears like the Rothschilds seem to be doing with the Chinese. It'd be just like them.

I saw this article a couple of days ago and it brought a wry smile to my face and thinking back, a rueful groan from my lips. (I'm Irish. What can I say?!) Iran's and Venezuela's currencies are already backed by their oil production as it is already a part of their measured GDP (or national wealth creation for any given year). I dunno. Maybe I should go talk to these people. Stick me up in the Hilton with room service and I'll do it for free smiling

The bank with the I.6 billion they talk of seems to be more of a Fund which is a repository and distribution point for money rather than a Bank that issues (creates) money.

A useful analogy for the applicability of an international currency in our globalised world is to say, that because we as a group of people are all together dancing with each other on a dance floor that it would make sense to tie everybody together with a short piece of rope attached to each of our left ankles and declaring that we will all be able to dance better together if we accept a measure of restriction in our individual freedom. We would all be together all right; on the floor with broken bones and elbows in eyes, together with the sound of someone laughing in the background.

To extend the analogy, the rope idea is proposed to stop the falling over of some individuals from time to time but that is caused by someone moving unnoticed around the dance floor deliberately knocking people over. It is not caused by the dancers themselves or anything that they are doing.

McJ's picture

Ah- you sent me looking and

Ah- you sent me looking and I just can't resist a story where Hugo's involved. smiling

"I dunno. Maybe I should go talk to these people. Stick me up in the Hilton with room service and I'll do it for free"

Hey I think we should all go! A Winter Patriot outing cause I'd like to be there to hear that conversation.

I like your analogy - you really are a visual thinker.

"The most unpleasant truth in the long run is a far safer traveling companion than the most agreeable falsehood." Emerson

After Armageddon News has

After Armageddon News has picked up this essay. They provide a very good round up of what's on the Net. Always interesting and saves a lot of driving around.
You will find it here

And also here at Twelth Bough where it is linked to much else besides

McJ's picture



"The most unpleasant truth in the long run is a far safer traveling companion than the most agreeable falsehood." Emerson

The Tower of Basel

There's a new article in the forum section put up by McJ called the "Tower of Basel". It is essential history for understanding what is afoot today with teh One World Currency push. Ellen Brown knows her stuff. There are two highlighted paragraphs which contain all you need to know to understand how poverty of tragic proportions has been achieved worldwide. And I say achieved because it has been deliberately engineered; it is not the default position; it is not because of "scarcity".
Those two paras are worth pondering at length. There's a wealth of knowledge behind them. I reckon it took me at least six months, when researching this stuff years ago, to understand all the ramifications and "I ain't stoopid!" smiling
More later.

More Pdf's


Here's my small contribution to your excellent articles and others. I think these pdf's are OK to print.

Into The Valley of Debt...........................

One World Currency................................

The Tower Of Basel...................................

What Cooked The Worlds Economy.........

There are index pages here ................

or here ..................

I will be adding more shortly. If anyone wants me to pdf an article on Winter Patriot dot com please ask and I'll put it on at one or both of these index's

Sally, I've edited "Into The

Sally, I've edited "Into The Valley of Debt" and placed it in the Economics Forum. It's considerably shorter but still longer than ideal. However, the summary, analogy and solution are at the beginning of the essay which should help.
If you have any problems at all with it, let me know and I'll edit or adjust it further. The management aims to please. wink

You know, it wasn't that

You know, it wasn't that long ago at all when the idea that there are patterns in share prices over time was widely, vigorously and at the time reasonably rejected, even though they were as clear daylight to some. Pioneers like Shiller (2000), who showed that the return from long-term investing was consistently greater from stocks bought with low price to earnings per share ratios (bargains), 'grounded' the share price pattern argument, establishing it's credibility and transforming it from lore to knowledge. Presentation makes a big a difference (anyone knows that) and I can't see how someone with your insight could overlook this, which leaves me lost as to why you use a teleological (that everything can be explained with reference to the purpose it serves : flawed because something which explains everything provides no explanatory insight) template for your discussion when it clearly damages everything you're saying.

Hi Marcus

You're not trying to muddy the waters here, are you?

"Pioneers like Shiller (2000), who showed that the return from long-term investing was consistently greater from stocks bought with low price to earnings per share ratios (bargains), 'grounded' the share price pattern argument, establishing it's credibility and transforming it from lore to knowledge."

The great investor, Benjamin Graham, established this approach nearly one hundred years ago. This is known as "Value Investing". He took a company by company approach. John Bogle of the Vanguard Group extended its use in the seventies till now and has made a lot of money for a lot of people. In the eighties, David Dreman, took a more market wide statistical approach and also established the effectiveness of low P/E ratio investing. He also factored in the psychological aspect of the herd mentality and deliberately invested against it. He called this "Contrarian Investing". He backed this up with a thorough statistical analysis going back to before the Great Depression. All this is way before your Mr. Shiller (2000) whom you cite. Where have you been?smiling

But what's all this got to do with the current crash and scam?

The above mentioned market "gurus" (though I can't speak for Mr Shiller) all take the view that the periodic crashes are an inbuilt function of the market. But we know different, don't we. We know that the psychological factor that Dreman takes into account is exacerbated (if not entirely caused), wittingly and unwittingly, for profit by industry insiders and leaders. Hence, the obvious wisdom of going against it.

It is a truism that in a manipulated environment, you always go against the advice or the orders of "the herd" or of the system controllers (same thing) unless you have very specific reasons for not doing so.

"Presentation makes a big a difference (anyone knows that) and I can't see how someone with your insight could overlook this, which leaves me lost as to why you use a teleological (that everything can be explained with reference to the purpose it serves : flawed because something which explains everything provides no explanatory insight) template for your discussion when it clearly damages everything you're saying."

A close cousin to the teleological argument is the, "By their fruits ye shall know them", argument annunciated by no less a personage than Jesus. If you can show the results of an action, detail the mechanism employed and show probable motivation, what's to argue with? I think it is much more useful than simply saying, "something which explains everything provides no explanatory insight".

James and Marcus

"By their fruits ye shall know them"

I think this truth is also described as or is closely related to the "garbage in / garbage out" equation, but you can add more consious intent or propaganda during the garbage in phase then misery, poverty etc, etc and victims in the garbage out phase. boohoo I thought I would add some notes, off key or whatever to this debate just for the sake of it really.
Oh dear deep questions being floated in such shallow and imperfect waters "my current mindset".

Shiller's tests and

Shiller's tests and subsequent illustration of the hypothesis that there are patterns in share prices over time, seen by people like Graham a long time ago but widely rejected because of no well documented evidence, have placed Shiller (amongst others) at the forefront in the development of knowledge and he's a pioneer in this sense. Theoretical work underpinning Shillers findings and essential to it's credibility, from psychologists Kahnemann (Nobel Prize) and Tversky, remained buried for decades, only receiving widespread recognition as the work of others has been accepted. Their experience is like a road map you can draw from, showing the effectiveness of 'grounding' your assertions empirically, although I agree with you that intuitive verification's better than nothing.

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