To solve global problems we need global solutions, and we must work together even when there are differences in our political systems. - Jose Manuel Barroso, European Commission President speaking to the Chinese Communist Party Central School in Beijing on November 27, 2007
by Stefan Fobes
October 3, 2008
As the climb towards a world government continues, several things need to be done first, and one of them is centralization of all regulatory bodies, governments, and anything that affects our daily lives to even the smallest degree, the signs of which are too great to be ignored when reading on world events is done. 2008 seems to be the start of a turning point of this race for control, and those running things behind the scenes aren’t pacing themselves to conserve energy anymore. So, I will concentrate here on what appears to me at the moment to be the three main things that that are in the beginning stages of or will soon be quickly centralized right now around the planet.
So here it is. Everything I said three weeks ago before the crap really really started to hit the fan that about the banking and housing situation proved to be correct, unfortunately. I’ll do a recap of the overall steps that have led the financial world to this point.
Banks and investment houses were lending out loans to people who clearly didn’t have the income to pay. They could legally treat the cash flow from the loan itself as an asset and it seems the risk to them was so great since they were issuing so many of them, they combined them into packages called asset backed securities and collaterilized debt obligations, and then sold those to investors, who then traded them on the open market for profit.
This is basically what was being done all over the world, as is now public. The New York Times lends a hand here.
According to JPMorgan, there are about $1.5 trillion in global collateralized debt obligations, and about $500 billion to $600 billion in structured-finance C.D.O.’s, referring to those made up of bonds backed by subprime mortgages, slightly safer mortgages and commercial mortgage backed securities.
Many of the products have proved to be highly problematic as the underlying assets — the subprime mortgages — have gone bust, revealing dangerous amounts of leverage in the securities that few people could value. As a result, they have become like a potent computer virus, leaving many people fearful that they too will be affected.
“A lot of risk in the subprime asset-backed market is embedded in, and amplified by, C.D.O.’s,” said Rod Dubitsky, head of asset-backed research at Credit Suisse.
Weaknesses in the system were laid bare, including ratings that did not accurately reflect risk and faulty assumptions on how diversified pools with multiple layers of leverage would react.
Still, momentum was turning against the firm. That morning Goldman Sachs’s credit derivatives group sent its hedge fund clients an e-mail announcing another blow. In previous weeks, banks such as Goldman had done a brisk business (for a handsome fee, of course) agreeing to stand in for institutions nervous, say, that Bear wouldn’t be able to cough up its obligations on an interest rate swap. But on March 11, Goldman told clients it would no longer step in for them on Bear derivatives deals. (A Goldman spokesman asserts that the e-mail was not a categorical refusal.)
“I was astounded when I got the [Goldman] e-mail,” says Kyle Bass of Hayman Capital. He had a colleague call Goldman to see if it was a mistake. “It wasn’t,” says Bass, who is a former Bear salesman. “Goldman told Wall Street that they were done with Bear, that there was [effectively] too much risk. That was the end for them.”
It was ominous, but it wasn’t yet the end. Bear continued absorbing blows. The cost of insuring $10 million in Bear debt via credit default swaps, which had hovered near $350,000 in the month before, shot past $1 million. By the end of March 11, the rate was irrelevant: Banks refused to issue any further credit protection on Bear’s debt.
All it took was just this one crash to scare investors and their lack of confidence in all these different banks drove down their stock prices and credit ratings and then they were done. Banks all over the world were buying up these debt backed securities like hungry hyenas and they have got and are getting burned along with US banks. At the end they all held a bunch of bootleg assets which were the cash flows from all the home, student, car, credit card loans from people who could never have paid them in the first place, and were totally vulnerable to all their investors and depositors pulling out their money on the event of public exposure of this. All it took was just one bank, Bear Stearns, to cause a chain reaction which brought the financial markets to their knees. Bear Stearns was clearly a corporate hit, as the Fortune Magazine timeline shows. Goldman Sachs just came out of nowhere, and did that, and didn’t even make a buy bid? Come on.
When you really look at it, the banks killed themselves. Literally. In 2004, representatives of Goldman Sachs, Morgan Stanley, Lehman Brothers, Merill Lynch and Bear Stearns met with the SEC and asked for a whole string of things, including that their rainy day money which was supposed to be used to be a cushion against losses on their investments be loosed so they could start doing deals with the asset backed securities and that whole mess. The SEC commissioners gave em everything they wanted in a unanimous vote of approval. Some more of what they got was…
In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms’ own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.
Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly.
Unbelievable. And it got even wilder.
Annette L. Nazareth, the head of market regulation, reassured the commission that under the new rules, the companies for the first time could be restricted by the commission from excessively risky activity. She was later appointed a commissioner and served until January 2008.
Their rainy day money being burned out? Their debt ceiling erased? She was tied in. No one’s that dumb. Also, in 2004, Paulson was CEO of Goldman Sachs before he became Treasury Secretary. Him being in that position is an insult a minute to America.
I’ve said in my last article about the financial storm that the banks that this was all a case of problem-reaction-solution. Create a problem, or let an existing one exacerbate, wait for the people to cry out “This is enough! Something must be done!”, and then changes in society and power structures are introduced to clean up problems by the very same people who created those problems in the first place. Alan Greenspan set interest rates after 9/11 to the absolute minimum they could be, which was what gave the banks the encouragement to go wild. He held them there for years after, right up to the peak of the subprime mortgage lending scenario, and was called out on this by Leslie Stahl on 60 Minutes.
One of his former Fed governors, Ed Gramlich, said that he proposed that the Fed examine these lending practices and look into them to see if something could be done. Greenspan rejected that idea.
Why did he reject it?
“I thought that…we would not be capable of doing what he was suggesting,” Greenspan says.
“But if sitting on them, taking some regula-what…” Stahl asks.
“Well, I think not,” Greenspan replies.
“Even looking into it?” Stahl asks.
“It’s nothing to look in to particularly because we knew there was a number of such practices going on, but it’s very difficult for banking regulators to deal with that,” Greenspan says.
He insists there’s nothing he could’ve done to prevent today’s plummeting home prices and the fact that a million families have lost their homes, and many more could. But some economists now say Greenspan actually created the housing bubble and the credit crunch by keeping interest rates too low for too long.
Oh no, nothing wrong here. Don’t look at the man behind the curtain! People talk about Bush’s smirk, but you look at Greenspan’s, he makes Bush look like a store mannequin, he has it on so much.
More from the 60 Minutes exchange.
“Just remember we raised interest rates at every meeting from June of 2004 till I got out of office,” he says.
“You raised rates in 2004. But only after you held interest rates at historically low level for three years, while the bubble, the housing bubble was forming,” Stahl points out. “And that you had 13 rate cuts in that period of time.”
“It was our job to unfreeze the American banking system if we wanted the economy to function. This required that we keep rates modestly low,” Greenspan explains.
This casual, carefree attitude about his position as Federal Reserve Chairman makes no sense if you come from the point of view that he is put there to stabilize the economy and to help save the world. But if you understand the little known fact that every year, world heads of state, European royalty, politicians, military, Fortune 500 business and banking CEOs, military bigs, and key journalists and academics, collectively known as the Bilderberg Group, meet at a luxurious hotel every year to talk, and it’s so secret that not even the journalists or newspaper owners that do attend are allowed to report on what goes on. This is even from the Asia Times reporting on one of the more infamous guys who goes there.
“It would have been quite impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries …”
- David Rockefeller, Bilderberg club permanent member, 1991
This conversation never happened. Well, it actually did. Date: March 5 to 8, 2005. Location: the isolated, fully-booked Dorint Sofitel Seehotel Ueberfahrt in Rottach-Egern, 60 kilometers east of Munich, Germany. Essential amenities: luxury rooms, a lake, a golf course, no suits - and no wives. Participants: 120-odd Western movers and shakers - politicians, tycoons, bankers, captains of industry, so-called strategic thinkers - invited for the 2005 meeting of the ultra-secretive Bilderberg club. Security: absolutely draconian. Global media coverage: non-existent.
Can’t get much more solid than that. A person holding the above knowledge can easily understand why Bear Stearns suddenly turned upon Goldman Sachs, why Greenspan did what he did, and why the institutions which hold sway over populations are merging and combining like some lab experiment. Deputy White House Press Secretary Tony Frattohas admittedthat the bank bailout bill was actually planned and written months before this reached even close to the point it is now.
Fratto said it would be “unthinkable” for Congress not to pass legislation this week, asserting the result would be a “very, very serious situation” for the U.S. economy.
“It shouldn’t take much analysis to remember what happened last week, which was a very serious freeze-up in our credit markets,” Fratto said. “Our financial markets right now do not need uncertainty, they need increased certainty as to how this rescue plan is going to go forward - and that they can be sure that there is a plan to go forward - and that will begin the correction in our financial markets.”
Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.
The gigantic Patriot Act bill coming out within two months of 9/11, when the planning, research, teamwork and coordination, and typing work would have taken ages to stamp out. Take a look at the Patriot Act sometime. Even if the bailout bill was written with the best of goals in mind, it won’t work because it offers no solutions, just gives more money to the problem. And it wasn’t. Speaking of throwing money, the revised bailout bill allows the FDIC to borrow unlimited amounts of money from the Treasury. The inclusion of a provision raising the amount that the FDIC can give out is just the steak thrown to the people that’s been riddled with poison. That money gets out there, inflation will surge yet again because an upped money supply = less worth for the dollar. Too long has this machine run on other people’s energy, other people’s money. It’s time these business hacks used their own steam to keep the train moving. Nouriel Roubini of Global Economonitor fleshes my thoughts out better.
Indeed, the plan also does not address the need to recapitalize those financial institutions that are badly undercapitalized: this could have been achieved by using some of the $700 billion to inject public funds in ways other and more effective than a purchase of toxic assets: via public injections of preferred shares into these firms; via required matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; via suspension of dividends payments; via a conversion of some of the unsecured debt into equity (a debt for equity swap). All these actions would have implied a much lower fiscal costs for the government as they would have forced the shareholders and creditors of the banks to contribute to the recapitalization of the banks. So less than $700 billion of public money could have been spent if the private shareholders and creditors had been forced to contribute to the recapitalization; and whatever the size of the public contribution were to be its distribution between purchases of bad assets and more efficient and fair forms of recapitalization (preferred shares, common shares, sub debt) should have been different. For example if the private sector had done its fair matching share only $350 billion of public money could have been used; and of this $350 billion half could have taken the form of purchase of bad assets and the other half should have taken the form of injection of public capital in these financial institutions. So instead of purchasing – most likely at an excessive price - $700 billion of toxic assets the government could have achieved the same result – or a better result of recapitalizing the banks – by spending only $175 billion in the direct purchase of toxic assets. And even after the government will waste $700 billion buying toxic assets many banks that have not yet provisioned for such losses/writedowns will be even more undercapitalized than before. So this plan does not even achieve the basic objective of recapitalizing undercapitalized banks.
Americans were furious over this bill, and Congress is saying they are recieving record amounts, in the millions of emails and calls on this one alone. Oh, if only the anger could have been about the ramifications of the proviso that gives Henry Paulson, the US Treasury Secretary some pretty badass powers under the plan: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” America, like all other countries to some degree or another, is already headed towards a total 1984 style dictatorship in so many areas it’d make the average Joe or Jane’s head spin if they knew the full extent of it. Paulson said that there was no room or time to get some money to bail out the screwed over homeowners when he was pitching the first version of the bill. It was only three pages long. I’m not going to spare the space for the obvious response to that. Oh and those golden mega payouts to exiting bank CEOs? Payoffs for a job well done. Why did the government officials who were at the helm before 9/11 get promoted instead of at the very least, fired? Same deal. Rewarded for a job, in their masters eyes, well done. Who stands to gain the most? Are there, to the naked eye, unreasonable rewards and promotions being passed around when the situation screams for the opposite to be happening? This is the simple formula that will let anyone know an attack was carried out, who did it and why in any major catastrophe that strikes anywhere on the globe. And indeed, Bush called Henry Paulson his wartime general. The reason for that remark is plain and clear now.
When I said in From Trap to Crunch to Assimilation - The Great American Power Lunch three weeks ago that the solution to the created problem would be more power given to government or a new regulatory agency created to control financial institutions, it wasn’t that hard to see when the history is looked at. FEMA cut off water, aid and food and wouldn’t let any of the French, Dutch, or anyone else come in with water filters or food or water or anything. But they took away the guns of the people and let the Mexican troops in. And then wanted MORE authority afterwards. FBI and CIA after 9/11? Wanted more power. It is now harvest time for these string pullers and they aren’t being nice and easy about it. Timothy Geithner, New York Federal Reserve president, just right after Bilderberg ended on the 8th of June, proposed a global banking regulatory framework in the Financial Times of London. After that, what Greenspan did, and the meetings at Bilderberg, not too hard really. Here are all the people who have called for a centralized control over banks.
Mark Zandi, co-founder of Moody’s Economy was the second one out the gates on the morning of September 18 on CSPAN calling for a new banking regulatory framework that gives the Federal Reserve greater power over institutions.
John McCain came out the next day saying he would create a new regulatory body specifically to deal with weakened financial institutions. Barack Obama said he is all for giving the Treasury as broad unilateral authority as possible. It’s change, baby.
Council on Foriegn Relations member, former policy planner for Henry Kissinger when he was Secretary of State, and now Yale professor Jeffrey Garten has called for a global monetary authority which would: “It would act as “bankruptcy court” for financial reorganisations of global companies above a certain size. The biggest global financial companies would have to register with the GMA and be subject to its monitoring, or be blacklisted. That includes commercial companies and banks, but also sovereign wealth funds, gigantic hedge funds and private equity firms. The GMA’s board would have to include central bankers not just from the US, UK, the eurozone and Japan, but also China, Saudi Arabia and Brazil. It would be financed by mandatory contributions from every capable country and from insurance-type premiums from global financial companies – publicly listed, government owned, and privately held alike.”
At the UN General Assembly, French president Nicolas Sarkozy said capitalism must be rebuilt in order to control financial markets when necessary. Guess that’s the Chinese brand of capitalism. Gotcha. Brazilian president Luis Ignacio de Silva and UN Secretary General Ban ki-moon both called for international action on the financial storm.
And European Central Bank president Jean-Claude Trichet says to preserve the unity of Europeans, the bailout bill must pass. Do it for the global community. And it has, today. And a European Central Bank Executive Board member Lorenzo Bini says governments must buy up stakes in banks to save economies. He says it is not right to use taxpayer money to save banks, but the question must be asked, where would governments be getting the money from to buy these stakes? Could it be from the very same banking kingpins such as the Rothschilds which started every single financial disaster from the London market tumble, to the Great Depression, to beyond? They don’t have nearly the amount of charge to get the consent needed for a world central bank, but one more big bank, say a Citigroup, falls, they’ll get it for sure.
I found it strange and not a little funny when Mahmoud Ahmadinejad and Robert Mugabe got up at a summit in Rome a few months ago and blamed the West for the food crisis. I also found it boldly hypocritical in the worst way. Mugabe actually blamed the West for starving his people. Anyone who knows the basic story of Zimbabwe knows that it is he who keeps the food under strict control, but what I really found chilling, is that Ahmadinejad both called for a global food regulatory organization. This guy is a total New World Order shill, deeper cover than most, but on the world stage you truly can be judged by the friends you keep, and below can be seen where his true loyalties lie.
Every month it seems, there’s a new Chinese contaminated product scandal coming out. Tainted milk here, bad pet food there, sick children due to lead paint in toys just hitting the public’s heads constantly. Here are all the Chinese scandals there over the past two years that have been publicized. The aspartame which fries people’s brains, the genetically modified food which can change the DNA of gut bacteria, and the MSG which turns kids into little Tasmanian Devils. These should be front page news items without stop every day until these products are taken off the shelves. Even the thousands of deaths in China are nothing compared to the effects of aspartame in Diet drinks, MSG, and the deaths from the mercury in vaccines combined.
So why China? As far as I can see, there are two main reasons for shoving this in the public’s face, and it’s not for any altruistic purposes. I continue to write about there being a plan for a manufactured war involving China, Russia, Iran, and several other countries vs the West. It won’t start out the way most are expecting it to straight into Iran though. The public isn’t giving them the consent and already the false flag terror attack tactic has been made wise to too many for it to work again. That will be tried from a totally unexpected angle. The way this is being broadcasted, it looks to me to be an economic war against China as part of an ongoing sort of WW2.5 before the actual hard war starts. The EU has banned products containing Chinese milk. China seems to have told its banks to stop lending to US financial institutions as retaliation, because it seems so out of character for them, who are the biggest foriegn holders of US debt. A little known story by TIME has revealed that Iranian and US troops had gotten into a firefight at the Iraqi-Iranian border. Which has been blacked out by the corporate media outlets at large. The world got their first brush with WW3 during the Georgia breakaway province conflict, and other outbreaks of the same will happen. China has been in Africa for several years gathering up all the natural resources it can and is bossing the African people around just like the British did them during colonial times. But actually colonial times have never ended for China since the British Windsors own it now as much as they have ever during colonial times, just in an economic way and through the subordinate to them Chinese secret societies, the slightly more public face of them known today as the Triads and Tongs. In Africa, the US has started up a new command called Africom, whose head had some curious things to say.
However General Wardsaid Africom did not intend to help the US get control of more of Africa’s oil and other resources.
“There is no hidden agenda. It is about working with the African nations to help them build their capacity,” the general told the BBC’s World Today programme.
He said it was a “myth” and “absolutely not the case” that the command was going to build big bases in Africa.
“We will do those things in partnership with our African friends,” he said.
“Where we bring in, for instance, trainers or other forms of military support and assistance there, they are only so long as is required to conduct the specific training that we’ve been asked to do or to conduct the specific activities.”
It’s the special reversespeak which tells you what they really plan to do. There are fantastic amounts of gold, silver, bauxite, all that stuff, and watch for African events that will provide justification for the US to come in, whether it be a resurgence of Al-Qaeda, new African rebel groups that threaten the African democratic process, or whatever other excuse will be needed to come in and get the territory away from China before WW3 starts up. This is subtle, this is real, and it is ongoing even as I write this. But this plan can be stopped through exposure of it. Feel this info is valid? Pass it around. This agenda is gaining ground like a Pacman and if people think that just sitting on their asses and being afraid of mysterious government agencies who in reality don’t have the manpower (other than their supercomputers) to spy to even a fraction of a degree to what the public believes they can will save them from Big Brother, they are dead wrong.
The other reason, is to gain control of world food trade, growing, and distribution. It is no coincidence that there are stories also in the US rolled out every other month as well about contaminated food. It is my gut feeling that there is in the works, planned a giant food related incident headlined in the world press, then the world leaders will get up on the podiums and say international regulatory action has to be carried out, we need more genetically modified food, and the same old script will play out again.
Rising fuel prices have contributed to price increases in so many areas of our daily lives. Every week, prices are going up for something when previously it took three years for those same things to go up in cost. Even the airlines are getting hit by it, and that’s why you see it coming in form of reduce quality of service, such as being charged to carry extra luggage on planes. But more to the point, there are the all day takeoff waits for flights, the stranding in airports in the bitter cold winter, Northwest, Transworld, and Delta going bankrupt, and the others that have gone bust, it’s a problem waiting to happen. Here’s the list of airplanes crashing mysteriously. The one in Madrid, they wouldn’t even let the reporters in the Spanish media report on it. Total ban. There have also been a string of medical helicopter accidents reported almost every other day it seems now. These pilots can’t all be incompetent, and there are many unanswered questions regarding all these incidents. Whenever there’s a string of incidents rapid fire reported over a short period of time, it always ends up culminating in some call for more centralized control. And control over movement is a much desired feather in any dictator’s cap.
Iberia and British Airlines, two of the biggest ones, are set to merge in March of ‘09. When they first came out with the announcement that they were holding merger talks, or should it be called cartelism talks?
BA’s close rival Virgin Atlantic said the merger could lead to less choice for consumers and push up ticket prices.
Virgin also expressed concern that the combined entity would control nearly half of all take off and landing slots at Heathrow airport.
Laurie Price, head of aviation strategy at Mott MacDonald, said that travellers may see fewer flights to certain destinations or larger aircraft used on certain routes.
“They will agree spheres of interest,” Mr Price said.
“Iberia will likely concentrate on South America and Africa while BA will focus on the Middle and Far East,” he added.
They are both part of an alliance called Oneworld, funnily enough. If a world government with a small group of regulatory bodies having centralized control over everything is to be put in place, the corporations have to be merged along with the governments and other units. This is the reason why everything is so lax regarding mergers, and becoming more so by the day.
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