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Behind the Panic: Financial Warfare over Future of Global Bank Power
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F. William Engdahl
Infowars
October 9, 2008
What is clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub-prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout.
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| The process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay. | |
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Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis ‘Made in USA.’
As I suggested in my previous piece here, Spezi-Kapitalismus in den USA: Paulsons Panikmache sieht immer mehr nach Berechnung aus, there is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid and is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’
In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkosy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.
Using panic to centralize power
As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929 the House of JP Morgan—have deliberately triggered bank panics in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power. Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.
That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.
It is becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. They, as did Fed Chairman Greenspan, had a strategy. Knowing that at a certain juncture the pyramid of trillions of dollars of dubious sub-prime and other high risk home mortgage-based securities would come falling down, they apparently determined to spread the so-called ‘toxic waste’ ABS securities as globally as possible in order to seduce the big global banks of the world, most especially of the EU into their honey trap.
It worked…up to a point. That point came over the weekend of October 3, coincidentally the national unification holiday of Germany.
Germany breaks with US model
In closed door talks well into the evening of Sunday October 5, Alex Weber the hard-nosed head of the Bundesbank, BaFin head Jochen Sanio and representatives of the Berlin coalition Government of Chancellor Merkel came up with a rescue package for Hypo Real Estate of a nominal €50 billion. However, behind the dramatic headline number, as Weber pointed out in a September 29 letter to Finance Minister Peer Steinbrück that has been made public, not only did the private German banks have to come up with 60% of that figure, the state with 40%. But also, given the careful manner in which the Government in cooperation with the Bundesbank and BaFin, structured the rescue credit agreement, the maximum possible loss, in a worst case scenario, to the state would be limited to €5.7 billion, not €30 billion as many believed. It’s still real money but not the blank check for $700 billion that a US Congress under duress and a few days of falling stock market prices agreed to give Paulson.
- A d v e r t i s e m e n t
The swift action by Finance Minister Steinbrück to fire the head of HRE, in stark contrast to Wall Street where the same criminal fraudsters remain at their desks reaping huge bonuses, indicates as well a different approach. But that does not cut to the heart of the issue. The situation of HRE arose as noted previously, from excesses in a wholly-owned daughter bank of HRE subsidiary DEPFA in Ireland, an EU country known for its liberal loose regulation and low tax regime.
A British policy shift
In the UK, after the costly and foolish bailout of Northern Rock earlier in the year, the Government of Prime Minister Gordon Brown has just announced a dramatic change in policy in the direction of Germany’s position. Britain’s banks will get an unprecedented 50 billion-pound (€64 billion) government lifeline and emergency loans from the Bank of England.
The government will buy preference shares from Royal Bank of Scotland Group Plc, Barclays Plc and at least six other banks, and provide about 250 billion pounds of loan guarantees to refinance debt, the Treasury said. The Bank of England will make at least 200 billion pounds available. The plan doesn’t specify how much each bank will get.
That means the UK Government will at least partially nationalize its most important international banks, rather than buy their bad loans as under the unworkable Paulson plan. Under such an approach, costs to UK taxpayers once the crisis abates and business returns to more normal conditions, the Government can sell the state shares back to a healthy bank at perhaps a nice profit to the Treasury. The Brown Government has apparently realized that the blanket guarantees it gave to Northern Rock and Bradford & Bingley merely opened the floodgates of government costs without changing the problem.
The new nationalization policy is a dramatic contrast to the Paulson ideological ‘free market’ approach of buying the worthless bonds held by the select banks Paulson chooses to save, rather than recapitalize those banks to allow them to continue to function.
The battle lines drawn
What has emerged are the outlines of two opposite approaches to the unfolding crisis. The Paulson plan, as we noted in our previous article, is part of a project to create three colossal global financial giants—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs. Having successfully used fear and panic to wrestle a $700 billion bailout from the US taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead.
By agreeing on a strategy of nationalizing what EU finance ministers deem are ‘EU banks too systemically strategic to fail,’ while guaranteeing bank deposits, the EU governments have opted for what will in the longer run allow European banking giants to withstand the anticipated financial attacks from the likes of Goldman or Citigroup.
The dramatic selloff of stocks across European bourses and across Asia is in reality a secondary and far less critical issue. According to market reports, the selloff is being driven by mainly US hedge funds desperate to raise cash as they realize the US economy is going into economic depression and that the Paulson Plan does nothing to address that.
A functioning solvent banking and interbank system is far the more strategic issue. The ABS debacle was ‘Made in New York.’ Nonetheless, its effects have to be isolated and viable EU banks defended in the public interest, not just the interest of Paulson’s banking pals as in the US. The coordinated interest rate cut by the ECB and other European central banks while grabbing headlines, in effect do little to address the real problem: banks fear to lend to each other until their solvency is assured.
By initiating state partial nationalizations across the EU, and rejecting the Berlusconi/Sarkozy bailout scheme, the governments of the EU, interestingly led by the German, are laying a far more sound foundation to emerge from the crisis. Stay tuned, it’s far from over. Asian banks, badly burned by Wall Street’s manipulated 1997-98 Asia Crisis, are very little exposed to the US problem. European banks are exposed in different ways, but none so serious as in the US banking world.
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October 9th, 2008 at 11:10 am
We are all taught, early on, not to ‘expose’ yourself. You will get in trouble.
October 9th, 2008 at 11:14 am
Adam Smith pointed out in the Wealth of Nations that the textile industry in Manchester and Birmingham was 100 years old before any banks appeared in those cities. Financing of the work was done via the ‘real bills doctrine’ without any bank loans.
Banks are parasitic and unnecessary entities.
October 9th, 2008 at 11:20 am
For people new to the site, do not trust the EU and globalism. Everywhere the EU was put to a real vote, it was voted down. So all the parliaments decided to toss out all the votes and only let parliaments decide, except for Ireland where the constitution required a referendum. Every parliament was in favor of giving the EU constitutional power over member states, but unanimous consent by all member states was needed. Ireland’s people voted NO, but the globalism fight is far from over. If and when it comes into the US and gets full power over the US, the Constitution is completely dead.
October 9th, 2008 at 11:36 am
I was wondering when it would come around to this , now lets follow this a little further to it’s conclusion , first the feds gain control of mortgage compaines , then home insurance companies , now the banks , that’s all they need , total control without a shot fired and America is on it;s knees.
October 9th, 2008 at 11:48 am
According to http://www.moneyandmarkets.com.....na-3-26557 China’s banks only have a 3.7% exposure to all this “financial crisis”. Don’t know how much “exposure” the other banks have.
October 9th, 2008 at 11:55 am
STOP BEING CONSUMERS.GET AWAY FROM SOCIETY.THEY CANNOT BE STOPPED. NO LOANS.NOBANKS.DROP OUT.
October 9th, 2008 at 1:27 pm
Face it guys!! Even now the central banks of the whole world are consolidating their wealth to help each other out!! But soon; they will be consolidating their lost wealth in bailing out each other again and again and again!! Until – THE WORLD WIDE ECONOMIC COLLASPE HAPPENS AND WORLD WIDE MARTIAL LAW IS TOTALLY INSTALLED STARTING WITH EUROPE AND THE UNITED STATES!! And this is what the new world antichrist order wants!! As I watched Bush stroll across the grass a few days ago at a press conference in front of the White House and on television at the White House thinking “”We will soon own all of your base!! We will soon rule all of you suckers who thought that I was so dumb!! But you will be the dumb ones!! You and your dumb economist have no idea what my masters are really about!! ahahahah!!”" But he didn’t say what he was thinking though. When he spoke he drove the stock market down along with the globalist devil Paulson who scared the living daylights out of the lemming stock marketeers!! As the stock market reacted in sheer terror and plunged 200 points in minutes after their threatening speeches!! So even when the stock market is doing good; they say things to bring it down and terrorize the market with their threats and deceptions!!
October 9th, 2008 at 1:48 pm
http://www.youtube.com/watch?v=Bw32XCw_AvM
October 9th, 2008 at 4:19 pm
Sounds like he’s saying the FULFORD WAR has started. Bereft of Ninja’s, but the Fulford war just the same.
October 9th, 2008 at 7:34 pm
The party is over indeed!
By – Bob Chapman edited.
- Credit default swaps are at the root of all big losses and recession which slows trade worldwide. Confidence will not return to the credit markets until the counterparty risk for credit default swaps and interest rate swaps is completely sorted out, which could take years, assuming it is even possible in such an opaque, unregulated environment.
- They had no intention of protecting the sheople taxpayers. This was just a stopgap measure to keep the credit default swaps from imploding so they could dump the problem on the sheople. Hanky Panky will use the bailout money to buy all their toxic waste for far more than it is worth, and the proceeds will be used to pay off the Fed loan. Due to its various lending facilities, and especially its Term Securities Lending Facility for Primary Dealers where toxic waste is swapped for treasury paper, its balance sheet was either composed almost exclusively of toxic waste, it was a convoluted bailout of the Federal Reserve. The debt ceiling had to be raised by Congress to accommodate all the new programs the Fed had in mind, and $700 billion, a figure supposedly pulled out of the air, apparently is serving that purpose.
- The use of leasing as a method of precious metals suppression is now history, lease rates for both gold and silver have soared to multi-year highs. Gold lease rates are in the 2.42% to 2.88% range, while silver lease rates are somewhere between 1.35% and 1.68%. These new higher rates speak volumes for what the elitists anticipate for gold and silver prices in the future and soon the elitists will be joining us in our quest to acquire more gold, silver and their related shares.
- We are inches from having the Fed nationalized and considering the god-like powers being given to the Fed this will be jump-start in our transition to a corporatist, fascist police state. Remember, this is a private bank, totally unregulated by our government, which has been given this power via taxpayer funds.
- JOB ONE of the Illuminati Plunge Protection Team (PPT):
Hide damages until it no longer matters wether such damages remain hidden or not.
- The Fed is monetizing bank assets by increasing its Monetary Base by $150 billion over the past two weeks while the Reserve Balances with Federal Reserve Banks also increased by a like amount over the same period of time re-capitaling the banks, putting them in a position to start speculating all over again.
This is the true helicopter drop which produces hyperinflation, because it is loaned out to other banks and multiplied to $1.5 trillion of credit extended through the fractional reserve (levering) banking system. These increases in the Monetary Base and Reserve Balances were apparently made possible by use of the new Supplementary Financing Program, a program similar to what the Weimar Republic used, which allows the Fed to create cash assets out of thin air by auctioning off treasuries to fund its various facilities, which now include the purchase of unsecured commercial paper for non-banks and banks alike.
That’s why ther is no other financial manipulation tool to accomplish all three objectives simultaneously available to the Illuminati as:
Hammering oil prices:
1- suppressing precious metals
2- supporting the value of the dollar
3- boosting the economy.
This special case for oil is due to the euro effect of petrodollars and the extensive use of oil in the production of goods and services. Because OPEC nations tend to spend their money in Europe, as opposed to spending it in the US, they take their gargantuan sums of petrodollars and convert them to euros, thus weakening the dollar. When oil prices decline, the flow of petrodollars is slowed and there are less petrodollars to convert. This process supports the dollar by lessening the number of dollars that are being sold to purchase euros. The resulting stronger dollar then has the effect of suppressing precious metals. Any decline in the price of oil also decreases the cost of goods and services, thus supporting the economy and giving the appearance of less inflation.
If the Fed hikes rates precious metals are suppressed and the dollar is boosted, but the economy suffers.
If the Fed cuts, the economy gets some relief, but the dollar gets hit and precious metals rally.
As planned rate cuts are implemented by the Fed. The commercials have reduced their short positions in precious metals drastically in anticipation of these rate cuts and soaring safe-haven/inflation-hedge investment demand, coupled with physical shortages, decreased or sluggish production, a cessation of central bank selling, hyperinflation from bailouts, monetizations of treasuries and further increases to the money supply by the Fed.
Cover margins generated by the allowed crashing stock values and the oil and commodity markets as the sacrificial lambs for the bond market (includes treasuries) and derivative market and as support for the dollar. The Fed is falsely suppressing precious metals by lower interest rates forcing the precious metals to rally from a much lower vantage point than would have been set by free and fair markets. This boosts the perceived quality of the treasury market and improving balance sheets of financial institutions which own such bonds which is all-important in order to maintain the successful auction of treasuries to foreigners.
The Illuminati allow the US stock markets to crash. The US stock markets then usually cause a sympathetic explosion in the Japanese markets, and everyone in the Japanese and Asian stock markets start to sell their stock and run for the cover of Japanese bonds in much the same way as we run (stupidly) for US treasury paper in the event of a crisis. The non-yen currencies, which are obtained via these stock liquidations are then converted to yen and used to purchase Japanese bonds and treasuries. This process strengthens the yen, thus starting the cascade of losses as carry traders run to cover their margins. As the carry traders bail out of foreign stock holdings, they convert the proceeds, which are in foreign currencies, into dollars, so that they can purchase US treasuries, where the money is then temporarily and (they think) safely parked. So what happens as a result of all this financial carnage is that many traders located abroad, or even here in the US, liquidate their foreign stock holdings into whatever currencies they are denominated in, and then use that currency to purchase dollars which are then parked in US treasuries for perceived safety. That process bids up the value of the dollar, thus suppressing precious metals and increasing the attractiveness of US treasuries.
The increased demand for US treasuries also boosts their value, thus strengthening the balance sheets of Wall Street fraudsters, who now own a considerable number of treasuries, which they have received in exchange for their toxic waste.
Meanwhile, institutional carry traders are also in a mad dash to cover their margins as well, and precious metals and commodities get liquidated to raise the cash needed to cover. This is why we have recommended for over a year now that those dealing in precious metals and commodities maintain un-leveraged, long-term, stock index puts and yen calls, to counteract these PPT maneuvers by maintaining liquidity via these puts and calls without selling off their metals and commodities.
The perceived diminution of inflation also suppresses precious metals, which are often bought as a hedge against soaring oil costs. Due to the special case for oil described above, we see oil going much lower unless some new military conflict to keep the phony “War on Terror” going is in the cards, such as an October surprise. If you are long oil, we strongly suggest hedging your positions. The coming decline in oil will help to boost resource stocks substantially by reducing the cost of production.
AIG could potentially take down the entire European banking sector due to swaps it had insured on European banks.
Do you remember the AIG bailout, where the Fed made an $85 billion loan to AIG guaranteed by the Treasury where the taxpayers were to receive an 80% interest in AIG as security for the loan in the event that AIG could not repay it?
Well, now with the PPPP, you may get to bail out AIG, and you can forget about having an 80% interest in return. AIG shareholders could get a break if the PPPP is used to buy their toxic waste and get them out of their debt to the Fed, but then the credit default swaps are still an issue and losses from these derivative insurance policies may be too big to buy out through the PPPP.
Also note that a dramatic decline in commodities in general would have an impact similar to a decline in the price of oil, but with less power due to the smaller size of the non-oil commodity markets compared to the oil market and due to the lack of a pronounced euro effect. That is why the commodities sector has taken such a pounding recently, in furtherance of these elitist objectives.
http://www.theinternationalfor.....ing_Warned
October 9th, 2008 at 7:38 pm
http://ca.youtube.com/watch?v=Vv3yuRdD2oE
October 9th, 2008 at 8:03 pm
With Japan down 10 % already, looks like a wild day again coming up, no one will want to be in stocks tomorrow. TERMINAL VELOCITY SPEEDS AHEAD.
October 9th, 2008 at 10:13 pm
Audio report for a CBRNE attack:
http://www.defenselink.mil/dod....._audio.mp3
October 9th, 2008 at 10:16 pm
10 Kilo ton detonation radius could be a model for a city like Los Angeles:
http://www.globalsecurity.org/.....scen-1.htm
October 9th, 2008 at 11:47 pm
If the European Central Bank and the Federal Reserve have been sitting on billions of dollars that they can inject into the system for bailouts why did they not provide money for:
1. Feeding the hungry
2 .Curing cancer
3. Housing the homeless
4 .Health care for all Children
Enough is enough! Rise up and let your voice be heard!
Usury:
1.the lending or practice of lending money at an exorbitant interest.
2.an exorbitant amount or rate of interest, esp. in excess of the legal rate.
It is like the ruby slippers in the Wizard of Oz. We the people have had the power over the bankers and global elite all along. We just did not know we had the power.
Starting right now we all need to:
Take all of your money that you can out of the bank
Make a token credit card payment of $1
Make a token mortgage payment of $1
We the people will no longer make mortgage, credit card payments or keep our money in a bank until:
Every mortgage interest rate world wide is set to 3%.
Every credit card interest rate world wide is set to 3%.
Interest paid on all bank savings will be 6%.
We the people have spoken!
NO MORE USURY!!
October 10th, 2008 at 2:10 am
People of nantions control the financial outcome of their Nation.
The sooner the people realise that and take control and stop making excuses the better for them.
ANY PROBLEM can be solved only if there is a will to do so.
Take your life in your own hands and what happens? A terrible thing: no one is to blame. -Erica Jong
” What is the hardest task in the world? To think.” Ralph Waldo Emerson
October 10th, 2008 at 4:05 am
OPERATION MONKEYWRENCH
this whole “self created” problem, does not stem from a few houseowners that could not pay, due to excessive gasoline bills. That is a fallacy.
This is a MONKEYWRENCH thrown into the shameless bank gears, by someone with a terminal, sitting on some yacht.
What he did, is put a stop to one single bank, to “create cash out of thin air”. The bank managers wanted to do it, and the computer system told them, NOPE.
that’s all it takes to create a world of zombies.
you just wait until the food companies cannot put any more carrots on your supermarket shelves, which will happen in a few weeks. People will first revolt, and a few years later they’ll be zombies and mutants and rodents.
FIN
October 10th, 2008 at 4:54 am
Let me see!! how many cans of peas do I have in my pantry!!?? Its all over!! The party is all over!! We had 232 years of freedom but now it is all over!! OH WELL; ONE THING FOR SURE; WHEN THIS luciferic age eventually ends; MY LORDS REIGN AND KINGDOM WILL COME!! ON EARTH AS IT IS IN HEAVEN!! For there is no crime and violence and murdering monsters in heaven!! AND THE KINGDOM THAT JESUS IS SETTING UP OVER THE EARTH (after the antichrist system is totally defeated and in the great lake of fire and brimstone) WILL BE ONE OF PEACE AND EQUITY AND WITHOUT DEATH AND MURDERS AND WARS ALSO!! SO THOSE OF US WHO KNOW AND SERVE GOD WILL BE ETERNAL WINNERS!! But those of you who serve yourselves and thinking that this country will stand are totally deceived!!!
October 10th, 2008 at 5:41 am
Article Quote:
“—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs. Having successfully used fear and panic to wrestle a $700 billion bailout from the US taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead.”
History being rewritten before your eyes. There was no wrestling of $700bn from the public, there was outright theft of over $850bn against the will of the people.It won’t be far in the future, and the papers will print that we begged them for the bailout.
And the fear and panic remain.
October 10th, 2008 at 8:27 am
Infowars you need to post an article about the cook county illinois sheriff Tom Dart who may face contempt charges for defying orders to evict people. This hero said he refuses to follow unlawful orders that destroy innocent peoples lives.