Friday, 24 August 2007

us military and et civilizations


Former U.S. military commander says elites hide from
humanity knowledge and contact with many
Extraterrestrials civilizations

by Paul Chen
Robert Dean

Robert Dean is a former U.S. military commander.
Command Sergeant Major Robert Dean worked at NATO’s Supreme Headquarters from 1963-1967, and during this time was stationed in the Operations Center with a Cosmic Top Secret clearance. « He claims to have viewed a secret NATO study that was commissioned to analyze the threat posed by UFOs to NATO operations in Eastern Europe », reports Dr. Michael Salla, who is a scholarly researcher on Extraterrestrial life and Earthbound human political implications, in the article entitled « Extraterrestrials among Us », Exopolitics Journal, Vol 1:4 (October 2006): 284-300.
The classified report was titled: “An Assessment: An Evaluation of a Possible Military threat to Allied Forces in Europe.” It focused on the dangers of UFOs being mistakenly identified as an incoming ballistic missile attack from the Soviet Union. Dean claimed that the NATO study identified four different extraterrestrial civilizations visiting the Earth.
Dr. Salla elaborates that former U.S. Military commander Dean said that « what really worried the NATO top brass was that some of the visitors looked so much like us that they were virtually indistinguishable. Dean says that NATO generals were paranoid over the possibility that some of the extraterrestrial visitors could be walking in the corridors of NATO or the Pentagon, or even the White House itself. »
Dr. Michael Salla further reports in an interview documented by Bob Hieronimus, “Transcript of Interview with Bob Dean, March 24, 1996 that Major Dean said:
« There was a human group that looked so much like us that that really drove the admirals and the generals crazy because they determined that these people, and they had seen them repeatedly, they had had contact with them…. These people looked so much like us they could sit next to you on a plane or in a restaurant and you’d never know the difference. And being military and being primarily paranoid, that bothered the generals and the admirals a little bit. That the fact that these intelligent entities could be involved with us, walking up and down the corridors of SHAPE [Supreme Headquarters Allied Powers Europe], walking down the corridors of the Pentagon. My God, it even dawned on a couple of them that these guys could even be in the White House! Of course, as I said, being paranoid in those years it really shook things up a little bit. »
« Dean’s testimony is a vital key in unlocking the truth of extraterrestrials living among the human population. His testimony conclusively demonstrates that official military and government agencies are aware of this possibility, and in fact would undoubtedly have been developing strategies for such a contingency », says Dr. Salla.
« While NATO viewed extraterrestrials living among us in the context of a classified Study assessing UFOs as a potential security threat, based on contactee testimonies, it appears that the extraterrestrial visitors are blending in to learn about the human population, » elaborates Dr. Salla.
Dean also reported that government insiders feel that we are dealing with hundreds of ET civilizations, some intergalactic, some interdimensional. He noted that over 10 years ago, NASA set up a scientific committee, which came to the conclusion that there are an estimated 10 billion planets with intelligent life.
« Sgt.-Major Dean has assembled 20 astronauts, former intelligence officers, servicemen who participated in crashed UFO retrieval operations, generals, admirals, and even cosmonauts, who are willing to testify to a Congressional Committee about what they know about UFOs, provided that they are released from their National Security oaths. The videotaped depositions of sworn key witnesses have been taken by a prestigious Washington, D.C. law firm, and stored in its safe, awaiting public hearings, » documents Dr. Richard J. Boylan in « UFO Reality is Breaking Through ».
Former U.S. Military Commander Dean had began working with CSETI’s [Committee for the Study of Extra Terrestrial Intelligence], Dr. Steven Greer, in concert with former astronaut Gordon Cooper, other astronauts, another high-ranking military officer, and a General, to plan the release of UFO information to which they are privy.
« Dr. Greer and Sgt. Major Dean are part of a Coalition of Starlight and Stargate Projects, which have been putting together the best evidence of UFO/ET reality. The evidence includes not only military and intelligence officers who participated in UFO crash retrievals and autopsies on ET corpses, but also fighter pilots, generals, astronauts and cosmonauts who have witnessed UFOs close-up, as well as UFO and ET tissue samples, » further documents Dr. Boylan.
« The Coalition’s plan is to take their Briefing Document and evidence to world leaders, the U.N., scientific academies, and religious leaders for a pre-briefing. Then the Coalition will make a Public Disclosure before mid-1997. Dr. Greer reports that the White House, the Joint Chiefs of Staff at the Pentagon, and the United Nations are being enlisted to assist, and no one has said that this cannot come out. »
On August 17, 1995, Sgt.-Major Robert Dean had announced the beginning of a citizen campaign to compel Congress to grant Congressional immunity to astronauts and military and intelligence witnesses, who are ready to testify at Congressional UFO Hearings. « Washington Post journalist Ruth Montgomery related how she had received multiple reports about UFO reality from various military officers with whom she had spoken », further documents Dr. Boylan.
The producer of Mexico’s « Sixty Minutes » television documentary program, Jaime Maussan, showed extensive videotapes of UFOs over Mexican population centers. These videotapes show structured craft, flotillas of UFOs, and a vertical column of UFOs inside a translucent plasma field. The most arresting footage is a night-time shot of a UFO hovering near the ground, and later, a « Praying Mantis »-type extraterrestrial, illuminated, is seen turning towards the camera from perhaps one block away.

Extraterrestrials also appear to be doing their share to disclose their presence to Earthbound humans by employing various apparent strategies to reveal their presence, suggests Dr. Boylan:
1. To increase the pace, boldness and openness of UFO sightings. Peter Davenport, Director of the National UFO Reporting Center (206-722-3000), stated that the center has been swamped by UFO reports since the first week in July [1995] and escalating. Not only are the reports plentiful, but reports are now common of numerous and multiple kinds of UFO craft during a single sighting, and there are many reports of UFOs landing.
2. The coming forward of an increasing number of close encounter experiencers to acknowledge their contacts to psychotherapists, investigators and the public. Many professional researchers and therapists have recently reported increasing numbers of such accounts of extraterrestrial encounters.
3. The strong sense of mission felt by numerous UFO experiencers and researchers to work to bring the extraterrestrial presence to public awareness. Reports from around the country verify that many people are feeling such a sense of mission.
4. The attitude change in many governmental and other influential leaders to allow release or leaks of UFO information. Numerous instances of the results of such greater openness are evident in the revelations cited earlier in this report.

« On July 9 near Versailles, MO, two Air Force officers and a dozen other witnesses saw five very large UFOs (a triangular craft and four discs, each as long as a football field) hovering over an empty field. On the ground were 20-25 extraterrestrials moving about. Three different races were present: some short, with purplish skin and large ears, another type described as luminous energy beings, and a third group of humanoid ETs in jump suits, » further documents Dr. Boylan.
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Mr. Dean’s spent twenty-seven years of active duty in the U.S. Army where he retired as Command Sergeant Major after serving as a highly decorated infantry combat veteran. His reportedly received a Cosmic Top Secret clearance. Mr. Dean also spent fourteen years as an emergency services manager with the Federal Emergency Management Agency (FEMA) for the Arizona Pima County Sheriff’s Department. He is the former Arizona Assistant Director and Pima County Director for the Mutual UFO Network and is a former member for the UFO studies (CUFOS) and the Ancient Astronauts Society. He also served twelve years as a member of the board of Directors for the Aerial Phenomenon Research Organization (APRO).
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Saturday, 18 August 2007

us: interventionnisme sur les marches actionaires

source: forum revue de presse

Le Temps ch le 18/08/07

La main invisible de l’Oncle Sam

Le «Plunge Protection Team» serait intervenu jeudi soir.


Jeudi, les bourses étaient au bord du gouffre. Les turbulences estivales semblaient avoir atteint leur paroxysme et on évoquait à demi-mot le krach. Et puis le démenti est arrivé, fulgurant, du marché américain. Au cours des 45 dernières minutes d’échanges, le Dow Jones a pris plus de 300 points pour clôturer près de son niveau d’ouverture. Un mouvement surprenant par son ampleur et sa rapidité, même dans le contexte très volatil que connaissent les marchés.

Qui a donc bien pu se jeter, dans des volumes aussi importants, sur les actions américaines?
Vendredi matin, sur les marchés financiers, on n’hésitait pas à évoquer une intervention du très furtif, très officieux mais non moins très gouvernemental «Plunge Prevention Team», en français «groupe de prévention en cas de plongeon». Autrement dit, la main invisible de l’Etat américain.


Ce groupe serait le prolongement informel du «Working Group on Financial Markets» (groupe de travail sur les marchés financiers) institué en 1988 par le président américain Ronald Reagan, en écho au «Black Monday» du 19 octobre 1987.


Au pays du libéralisme, le marché boursier réputé parfaitement transparent et libre ferait donc l’objet d’interventions téléguidées par l’Etat. Depuis la crise de 1987 en tout cas, les actions imputées au «PPT» auraient permis de limiter l’écroulement des marchés après la débâcle du fonds LTCM, les attentats de 2001 et la guerre en Irak.

«Les autorités américaines ne confirmeront jamais
l’existence d’un tel groupe. Cela reviendrait à donner
un blanc-seing aux spéculateurs agressifs, avec
l’assurance d’un filet de sauvetage», déclare un
gérant de fonds genevois. Et d’ajouter: «Il n’y a rien
qui pourrait expliquer des achats aussi massifs jeudi
soir, sauf une intervention pour soutenir le marché.»


Avec l’intercession supposée du gouvernement américain, ce n’est plus le marché qui s’effondre, mais bien son mythe, celui du dernier bastion où se rencontrent l’offre et la demande par la magie de la main invisible.

La Fed laisse beaucoup de questions ouvertes


Pour conduire sa politique, l’institut de Washington dispose de deux instruments: le principal, celui des Fed funds (inchangé à 5,25%) qui détermine le prix auquel les banques se refinancent entre elles. Le taux d’escompte est moins usité: il est celui auquel les banques peuvent obtenir des crédits auprès de la Fed, pour des montants beaucoup plus vastes et moyennant une variété de collatéraux.

La possibilité d’accéder à des liquidités sans limite
à un coût qui s’exprime dans l’écart entre le taux des
Fed funds et le taux d’escompte. En réduisant
nettement ce coût, «la Fed accomplit son devoir de
banque centrale, elle stabilise le système bancaire,
explique un économiste parisien. Elle indique aux
banques qu’elle leur fournira toute la liquidité dont
elles ont besoin, de sorte qu’elles ne soient pas
obligées de vendre tout et n’importe quoi. C’est un
pilotage fin. Et, en ne touchant pas aux Fed funds,
elle s’est abstenue d’envoyer un signal de
complaisance aux marchés


«La revalorisation des actions a été instantanée, les valeurs financières en tête», indique un gérant genevois. Mais, de l’avis général, l’embellie ne devrait pas durer. Dans le communiqué qui accompagne sa décision, la Fed souligne que «les conditions sur les marchés financiers se sont détériorées, le resserrement du crédit et l’incertitude montante ont le potentiel d’affaiblir l’économie». Elle ne fait plus mention de la menace inflationniste pour se concentrer sur «l’augmentation sensible des risques pesant sur la croissance». Cette inquiétude a été corroborée par la chute de l’indice de confiance des consommateurs de l’Université du Michigan à 83,3 points en août, contre 90,4 en juillet.


Ce communiqué est inquiétant. Il est possible qu’une

multitude de fonds soient en péril, que le secteur
financier ressemble à un champ de mines. La preuve de
la contagion est faite», s’alarme Jan Poser,
économiste chez Sarasin (BSAN.S). Patrick Uelfeti, de
Clariden Leu, est sur la même ligne: «En se disant
prête à prendre d’autres mesures, la Fed admet que la
correction financière n’est plus un petit problème. Sa
décision soulève bien des questions.»


Le rebond est sans doute plus le fait d’investisseurs qui couvrent leurs positions vendeuses prises ces trois derniers jours, qu’un vrai retournement de tendance.

Site :

Monday, 13 August 2007

chinese high tech big brother in shenzhen

Big Brother gets high-tech help in Shenzhen

By Keith Bradsher

Sunday, August 12, 2007

SHENZHEN, China: At least 20,000 police surveillance cameras are being installed along streets here in southern China and will soon be guided by sophisticated computer software from a U.S.-financed company to recognize automatically the faces of crime suspects and detect unusual activity.
Starting this month in a port neighborhood and then spreading across Shenzhen, a city of 12.4 million people, residency cards fitted with powerful computer chips programmed by the same company will be issued to most citizens.
Data on the chip will include not just the citizen’s name and address but also work history, educational background, religion, ethnicity, police record, medical insurance status and landlord’s phone number. Even personal reproductive history will be included, for enforcement of China’s « one child » policy. Plans are being studied to add credit histories, subway travel payments and small purchases charged to the card.
Security experts describe China’s plans as the world’s largest effort to meld cutting-edge computer technology with police work to track the activities of a population and fight crime, but they say the technology can be used to violate civil rights.
The Chinese government has ordered all large cities across the country to apply technology to police work and to issue high-tech residency cards to 150 million people who have moved to a city but not yet acquired permanent residency.
Both steps are officially aimed at fighting crime and developing better controls on an increasingly mobile population, including the nearly 10 million peasants who move to big cities each year. But they could also help the Communist Party retain power by maintaining tight controls on an increasingly prosperous population at a time when street protests are becoming more common.
« If they do not get the permanent card, they cannot live here, they cannot get government benefits, and that is a way for the government to control the population in the future, » said Michael Lin, vice president for investor relations at China Public Security Technology, the company providing the technology.
Incorporated in Florida, China Public Security has raised much of the money to develop its technology from two investment funds in Plano, Texas: Pinnacle Fund and Pinnacle China Fund. Three investment banks helped it raise the money: Roth Capital Partners in Newport Beach, California; Oppenheimer & Co. in New York; and First Asia Finance Group of Hong Kong.
Shenzhen, a computer manufacturing center next to Hong Kong, is the first Chinese city to introduce the new residency cards. It is also taking the lead in China in the large-scale use of law enforcement surveillance cameras.
That tactic that would have drawn international criticism in the years after the Tiananmen Square crackdown in 1989, but rising fears of terrorism have lessened public hostility to surveillance cameras in the West, especially in Britain, where the police already install the cameras widely on lampposts and in Underground stations and are developing face recognition software as well.
Shenzhen already has 180,000 indoor and outdoor closed-circuit television cameras owned by businesses and government agencies, and the police here will have the right to link them on request into the same system as the 20,000 police cameras, according to China Public Security.
Some civil rights activists contend that the cameras in China and Britain are a violation of the right of privacy contained in the International Covenant on Civil and Political Rights. Large-scale surveillance in China is more threatening than such surveillance in Britain, they said when told of Shenzhen’s plans.
« I don’t think they are remotely comparable, and even in Britain it’s quite controversial, » said Dinah PoKempner, general counsel of Human Rights Watch in New York. China has fewer limits on police power, fewer restrictions on how government agencies use the information they gather and fewer legal protections for those suspected of crime, she said.
While most countries issue identity cards, and while many countries gather a lot of information about citizens, China also appears poised to go much further in putting personal information on identity cards, PoKempner added.
All police officers in Shenzhen now carry global positioning satellite equipment on their belts. This allows senior police officers to direct their movements on large, high-resolution maps of the city that China Public Security has produced using software that runs on the Microsoft Windows operating system.
« We have a very good relationship with U.S. companies like IBM, Cisco, HP, Dell - these are all very good partners with us, » said Robin Huang, the chief operating officer of China Public Security. « All of these U.S. companies work with us to build our system together. »
The role of U.S. companies in helping Chinese security forces has periodically been controversial in the United States. Executives from Yahoo, Google, Microsoft and Cisco Systems testified in February 2006 at a congressional hearing called to review whether they had deliberately designed their systems to help the Chinese state muzzle dissidents on the Internet; the companies denied having done so.
China Public Security proudly displays in its boardroom a certificate from IBM labeling it as a partner. But Huang said that China Public Security had developed its own computer programs in China and that its suppliers had sent equipment that was not specially tailored for law enforcement purposes.
The company uses servers manufactured by Huawei Technologies of China for its own operations. But China Public Security needs to develop programs that run on IBM, Cisco and Hewlett-Packard servers because some Chinese police agencies have already bought these models, Huang said.
Lin said he had refrained from some transactions with the Chinese government because he is the chief executive of a company incorporated in the United States. « Of course, our projects could be used by the military, but because it’s politically sensitive, I don’t want to do it, » he said.
Western security experts have suspected for several years that Chinese security agencies could track individuals based on the location of their cellphones, and the Shenzhen police tracking system confirms this.
When a police officer goes indoors and cannot receive a global positioning signal from satellites overhead, the system automatically switches to tracking the location of the officer’s cellphone, based on the three nearest cellphone towers. Huang used a real-time connection to local police dispatchers’ computers to show a detailed computer map of a Shenzhen district and the precise location of each of the 92 patrolling officers, represented by caricatures of officers in blue uniforms and the routes they had traveled in the previous hour.

Copyright © 2007 The International Herald Tribune

Sunday, 12 August 2007

us stocks prepare for nightmare

Stock market meltdown . . . it’s a bloodbath

By Mike Whitney

Online Journal Contributing Writer

Aug 6, 2007, 00:40

On Friday the Dow Jones took a 280-point nosedive on fears that that losses in the subprime market will spill over into the broader economy and cut into GDP.

Ever since the two Bear Sterns’ hedge funds folded a couple weeks ago, the stock market has been writhing like a drug-addict in a detox cell. Friday’s sell-off added to last week’s plunge that wiped out $2.1 trillion in value from global equity markets. New York investment guru Jim Rogers said that the real market is “one of the biggest bubbles we’ve ever had in credit” and that the subprime rout “has a long way to go.”
We are now beginning to feel the first tremors from the massive credit expansion which began six years ago at the Federal Reserve. The trillions of dollars which were pumped into the global economy via low interest rates and increased money supply have raised the nominal value of equities, but at great cost. Now stocks will fall sharply and businesses will fail as volatility increases and liquidity dries up. Stagnant wages and a declining dollar have thrust the country into a deflationary cycle which has, up to this point, been concealed by Greenspan’s “cheap money” policy. Those days are over. Economic fundamentals are taking hold. The market swings will get deeper and more violent as the Fed’s massive credit bubble continues to unwind. Trillions of dollars of market value will vanish overnight. The stock market will go into a long-term swoon.
Ludwig von Mises summed it up like this: « There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. » (Thanks to the Daily Reckoning)
It doesn’t matter if the “underlying economy is strong,” as Treasury Secretary Henry Paulson likes to say. That’s nonsense. Trillions of dollars of overleveraged bets are quickly unraveling which has the same effect as taking a wrecking ball down Wall Street.
Last week, a third Bear Stearns fund shuttered its doors and stopped investors from withdrawing their money. Bear’s CFO Sam Molinaro described the chaos in the credit market as the worst he’d seen in 22 years. At the same time, American Home Mortgage Investment Corp. (AHM) -- the 10th-largest mortgage lender in the U.S.—said that “it can’t pay its creditors, potentially becoming the first big lender outside the subprime mortgage business to go bust.” (MarketWatch)
This is big news, mainly because AHM is the first major lender outside the subprime mortgage business to go belly-up. The contagion has now spread through the entire mortgage industry: Alt-A, piggyback, interest only, ARMs, prime, 2-28, jumbo, the whole range of loans are now vulnerable. That means we should expect far more than the estimated 2 million foreclosures by year-end. This is bound to wreak havoc in the secondary market where $1.7 trillion in toxic CDOs (collateralized debt obligations) have already become the scourge of Wall Street.
Some of the country’s biggest banks are going to take a beating when AHM goes under. Bank of America is on the hook for $1.3 billion, Bear Stearns $2 billion and Barclay’s $1 billion. All told, AHM’s mortgage underwriting amounted to a whopping $9.7 billion. (Apparently, AHM could not even come up with a measly $300 million to cover existing deals on mortgages! Where’d all the money go?) This shows the downstream effects of these massive mortgage-lending meltdowns.

Everybody gets hurt.

AHM’s stock plunged 90 percent in one day. Jittery investors are now bailing out at the first sign of a downturn. Wall Street has become a bundle of nerves and the problems in housing have only just begun. Inventory is still building, prices are falling and defaults are steadily rising—all the necessary components for a full-blown catastrophe.

AHM warned investors last Tuesday that it had stopped buying loans from a variety of originators. Two other mortgage lenders announced they were going out of business just hours later. The lending climate has gotten worse by the day. Up to now, the banks have had no trouble bundling mortgages off to Wall Street through CDOs. Now everything has changed. The banks are buried under more than $300 billion worth of loans that no one wants. The mortgage CDO is going the way of the Dodo. Unfortunately, it has attached itself to many of the investment banks on its way to extinction.
And it’s not just the banks that are in for a drubbing. The insurance companies and pension funds are loaded with trillions of dollars in “toxic waste” CDOs. That shoe hasn’t even dropped yet. By the end of 2008, the economy will be on life-support and Wall Street will look like the Baghdad morgue. American biggest financials will be splayed out on a marble slab peering blankly into the ether.

Think I’m kidding?

Already the big investment banks are taking on water. Merrill Lynch has fallen 22 percent since the start of the year. Citigroup is down 16 percent and Lehman Bros Holdings has dropped 22 percent. According to Bloomberg News: “The highest level of defaults in 10 years on subprime mortgages and a $33 billion pileup of unsold bonds and loans for funding acquisitions are driving investors away from debt of the New York-based securities firms. Concerns about credit quality may get worse because banks promised to provide $300 billion in debt for leveraged buyouts announced this year. . . . Bear Stearns Cos., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Goldman Sachs Group Inc., are as good as junk.”

That’s right—“junk.”
We’ve never seen an economic tsunami like this before. The dollar is falling, employment and manufacturing are weakening, new car sales are off for the seventh straight month, consumer spending is down to a paltry 1.3 percent, and oil is hitting new highs every day as it marches inexorably towards $100 per barrel.

So, where’s the silver lining?

Apart from the 2 million-plus foreclosures, and the 80 or so mortgage lenders who have filed for bankruptcy; a growing number of investment firms are feeling the pinch from the turmoil in real estate. Bear Stearns, Basis Capital Funds Management, Absolute Capital, IKB Deutsche Industrial Bank AG, Commerzbank AG, Sowood Capital Management, C-Bass, UBS-AG, Caliber Global Investment and Nomura Holdings Inc., are all either going under or have taken a major hit from the troubles in subprime. The list will only grow as the weeks go by. (Check out these graphs to understand what’s really going on in the housing market.)

The problems in real estate are not limited to residential housing either. The credit crunch is now affecting deals in commercial real estate, too. Low-cost, low-documentation, “covenant lite” loans are a thing of the past. Banks are finally stiffening their lending requirements even though the horse has already left the barn. Commercial mortgage-backed securities are now nearly as tainted as their evil-twin, residential mortgage-backed securities (RMBS). There’s no market for these turkeys. The banks are returning to traditional lending standards and simply don’t want to take the risk anymore.

Bataan Death March?

Leveraged Buy Outs (LBOs) have been a dependable source of market liquidity. But, not any more. In the last quarter, there was $57 billion in LBOs. In the first month of this quarter that amount dropped to less than $2 billion. That’s quite a tumble. The Wall Street Journal’s Dennis Berman summed it up like this:

“the Street is scrambling to finance some $220 billion of leveraged buy out deals” (but) the “mood has gone from Nantucket holiday to Bataan Death March.”
Berman nailed it. The investment banks took great pleasure in their profligate lending; raking in the lavish fees for joining mega-corporations together in conjugal bliss. Then someone took the punch bowl. Now the banking giants are scratching their heads— wondering how they can unload $220 billion of toxic-debt onto wary investors. It won’t be easy.
“The banks and brokers are in the bull’s eye,” said Kevin Murphy. “There’s article after article not only on subprime, but also banks sitting on leveraged buy out loans.” (WSJ) Credit protection on bank debt is soaring just as investor confidence is on the wane. In fact, the Chicago Board Options Exchange (CBOE) Volatility Index (VIX) -- the “fear gauge”—which measures market volatility, has surged 60 percent in the last week alone. The increased volatility means that more and more investors will probably ditch the stock market altogether and head for the safety of US Treasuries.
But that just presents a different set of problems. After all, what good are US Treasuries if the dollar continues to plummet? No one will put up with 5 percent or 6 percent return on their investment if the dollar keeps sliding 10 percent to 15 percent per year. It would be wiser to one’s move money into foreign investments where the currency is stable.
And that is (presumably) why Treasury Secretary Paulson was in China last week to sweet talk our Communist bankers into buying more USTs to prop up the flaccid greenback. (Note: The Chinese are currently holding $103 billion in toxic US-CDOs and are not at all happy about their decline in value.) If the Chinese don’t purchase more US debt, then panicky US investors will start moving their dollars into gold, foreign currencies and German state bonds as a hedge against inflation. This will further accelerate the flight of foreign capital from American markets and trigger a massive blow-off in the stock and bond markets. In fact, this process is already underway, although it has been largely concealed in the business media. In truth, the big money has been fleeing the US for the last three years. What passes as “trading” on Wall Street today is just the endless expansion of credit via newer and more opaque debt-instruments. It’s all a sham. America’s hard assets are being sold off to at an unprecedented pace.

Credit crunch: Whose ox gets gored?

When money gets tight; anyone who is “overextended” is apt to get hurt. That means that the maxed-out hedge fund industry will continue to get clobbered. At current debt-to-investment ratios, the stock market only has to fall about 10 percent for the average hedge fund to take a 50 percent scalping. That’s more than enough to put most funds underwater for good. The carnage in Hedgistan will likely persist into the foreseeable future.
That might not bother the robber baron fund managers who’ve already extracted their 2 percent “pound of flesh” on the front end. But it’s a rotten deal for the working stiff who could lose his entire retirement in a matter of hours. He didn’t realize that his investment portfolio was a crapshoot. He probably thought there were laws to protect him from Wall Street scam artists and flim-flam men.
It’ll be even worse for the banks than the hedge funds. In fact, the banks are more exposed than anytime in history. Consider this: the banks are presently holding a half trillion dollars in debt (LBOs and CDOs) for which there is no market. Most of this debt will be dramatically downgraded since the CDOs have no true “mark to market” value. It’s clear now that the rating agencies were in bed with the investment banks. In fact, Joshua Rosner admitted as much in a recent New York Times op-ed: “The original models used to rate collateralized debt obligations were created in close cooperation with the investment banks that designed the securities.” . . . [The agencies] actively advise issuers of these securities on how to achieve their desired ratings.” (Joshua Rosner, “Stopping the Subprime Crisis,” NY Times)
Pretty cozy deal, eh? Just tell the agency the rating you want and they tell you how to get it.
Now we know why $1.7 trillion in CDOs are headed for the landfill.
The downgrading of CDOs has just begun and Wall Street is already in a frenzy over what the effects will be. Once the ratings fall, the banks will be required to increase their reserves to cover the additional risk. For example, “As a recent issue of Grant’s explains, global commercial banks are only required to set aside 56 cents ($0.56) for every $100 worth of triple-A rated securities they hold. That’s roughly 178 to 1 ratio. Drop that down to double-B minus, and the requirement skyrockets to $52 per $100 worth of securities held—a margin increase of more than 9,000 percent.”
“56 cents ($0.56) for every $100 worth of triple-A rated securities?” Are you kidding me?
As Mugambo Guru says, « That is 1/18th of the 10 percent stock margin equity required in 1929! » (Mugambo Guru;
The high-risk game the banks have been playing of “securitizing” the loans of applicants with shaky credit is falling apart fast. There’s no market for chopped up loans from overextended homeowners with bad credit. The banks don’t have the reserves to cover the loans they have on the books and the CDOs have no fixed market value. End of story. The music has stopped and the banks can’t find a chair.
The public doesn’t know anything about this looming disaster yet. How will people react when they drive up to their local bank and see plywood sheeting covering the windows?
This will happen. There will be bank failures.
The derivatives market is another area of concern. The notional value of these relatively untested
instruments has risen to $286 trillion in 2006 -- up from a meager $63 trillion in 2000. No one has any idea of how these new “swaps and options” will hold up in a slumping market or under the stress of increased volatility. Could they bring down the whole market?
That depends on whether they’re backed up by sufficient collateral to meet their obligations. But that seems unlikely. We’ve seen over and over again that nothing in this new deregulated market is “as it seems.” It’s all stardust mixed with snake oil. What the Wall Street hucksters call the “new financial architecture of investment” is really nothing more than one overleveraged debt-bomb stacked atop another. Ironically, many of these same swindles were used in the run-up to the Great Depression. Now they’ve resurfaced to do even more damage. When the crooks and con men write the laws (deregulation) and run the system; the results are usually the same. The little guy always gets screwed. That much is certain.
At present, the stock market is running on fumes. Another four to six months of wild gyrations and it’ll be over. The NASDAQ plunged 75 percent after the bust. How low will it go this time?
Keep an eye on the yen. The ongoing troubles in subprime and hedge funds are pushing the yen upwards which will unwind trillions of dollars of low interest, short term loans which are fueling the rise in stock prices. If the yen strengthens, traders will be forced to sell their positions and the market will tank. It’s just that simple. The Dow Jones will be a dead duck.
So far, Japan ’s monetary manipulations have been a real boon for Wall Street, enriching the investment bankers, the big-time traders and the hedge fund managers. They’re the one’s who can take advantage of the interest rate spread and then maximize their leverage in the stock market. It works like a charm in an up-market, but things can unravel quickly when the market retreats or starts to zigzag erratically. The recent rumblings suggest that the volatility will continue which will push the yen upwards and cut off the flow of cheap credit to the stock market. When that happens, the end is nigh.

The American people: “We’re not a dumb as you think”

It’s always refreshing to find out that the majority of Americans seem to have a grasp of what is really going on behind the fake headlines. For example, the Wall Street Journal/NBC conducted a poll last week which shows that two-thirds of Americans believe that “the economy is either in a recession now or will be in the next year.” That matches up pretty well with the 71 percent of Americans who now feel the Iraq War “was a mistake.” Americans are clearly downbeat in their outlook on the economy and haven’t been taken in by the daily infusions of happy talk about “low inflation” and “sustained growth” from toothy TV pundits. In fact, the mood of the country regarding the economy is downright gloomy. “Only 19 percent of Americans say things in the nation are headed in the right direction, while 67 percent say the country is off on the wrong track.” Iraq, of course, is the number one reason for the pessimism, but the dissatisfaction runs much deeper than just that.

“Only 16 percent expressed substantial confidence in the financial industry; 18 percent in the energy or pharmaceutical industries;” 17 percent in large corporations and 11 percent in health-insurance companies.” Only 18 percent of the people have confidence in the corporate media and only 16 percent in the federal government.
These are encouraging numbers. They show that the vast majority of people have lost confidence in the system and its institutions. They also illustrate the limits of propaganda. People are not as easily indoctrinated as many believe. Eventually the “bewildered herd” catches on and sees through the lies and deception.
The American people know intuitively that something is fundamentally wrong with the economy. They just don’t know the details or the extent of the damage. Decades of neoliberal policies have inflated the currency, broadened the wealth gap, and destroyed manufacturing. Workers can no longer buy the things they produce because wages have stagnated through a stealth campaign of inflation which originated at the Federal Reserve. When wages shrink, prices eventually fall from overcapacity and the economy slips into a deflationary cycle. This downward spiral ultimately ends in depression. So far, that’s been avoided because of the Fed’s massive expansion of cheap credit. But that won’t last.
Economic policy is not “accidental.” The Fed’s policies were designed to create a crisis, and that crisis was intended to coincide with the activation of a nationwide police state. It is foolish to think that Alan Greenspan or his fellows did not grasp the implications of the system they put in place. These are very smart men and very shrewd economists. They knew exactly what they were doing. They all understand the effects of low interest rates and expanded money supply. And they’re also all familiar with Ludwig von Mises, who said, « There is no means of avoiding the final collapse of a boom brought about by credit expansion.”
A crash is unavoidable because the policies were designed to create a crash. It’s that simple.
The Federal Reserve is a central player in a carefully considered plan to shift the nation’s wealth from one class to another. And they have succeeded. Nearly 4 million American jobs have been sent overseas, the country has increased the national debt by $3 trillion dollars, and foreign investors own $4.5 trillion in US dollar-backed assets. While the Fed has been carrying out its economic strategy; the Bush administration has deployed the military around the world to conduct a global resource war. These are two wheels on the same axel. The goal is to maintain control of the global economic system by seizing the remaining energy resources in Eurasia and the Middle East and by integrating potential rivals into the American-led economic model under the direction of the Fed. All of the leading candidates—Democrat and Republican— belong to secretive organizations which ascribe to the same basic principles of global rule (new world order) and permanent US hegemony. There’s no quantifiable difference between any of them.
The impending economic crisis is part of a much broader scheme to remake the political system from the ground up, so it better meets the needs of ruling elite. After the crash, public assets will be sold at fire sale prices to the highest bidder. Public lands will be auctioned off. Basic services will be privatized. Democracy will be shelved.
The unsupervised expansion of credit through interest rate manipulation is the fast-track to tyranny. Thomas Jefferson fully understood this. He said, “If the American people ever allow private banks to control the issue of our currency, first by inflation, then by deflation, the banks and the corporations that will grow up will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”
We are now in the first phase of Greenspan’s Depression. The stock market is headed for the doldrums and the economy will quickly follow. Many more mortgage lenders, hedge funds and investment banks will be carried out feet first.
As the disaster unfolds, we should try to focus on where the troubles began and keep in mind Jefferson’s injunction: “The issuing of power should be taken from the banks and restored to the people to whom it properly belongs.”

Rep. Ron Paul is the only presidential candidate who supports abolishing the Federal Reserve. Mike Whitney lives in Washington state. He can be reached at

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