10 Jun 2011

The Elite, the ‘Great Game’ and World War III

The control of the US, and of global politics, by the wealthiest families of the planet is exercised in a powerful, profound and clandestine manner. This control began in Europe and has a continuity that can be traced back to the time when the bankers discovered it was more profitable to give loans to governments than to needy individuals.

These banking families and their subservient beneficiaries have come to own most major businesses over the two centuries during which they have secretly and increasingly organised themselves as controllers of governments worldwide and as arbiters of war and peace.

Unless we understand this we will be unable to understand the real reasons for the two world wars and the impending Third World War, a war that is almost certain to begin as a consequence of the US attempt to seize and control Central Asia. The only way out is for the US to back off – something the people of the US and the world want, but the elite does not.

The US is a country controlled through the privately owned Federal Reserve, which in turn is controlled by the handful of banking families that established it by deception in the first place.

In his interesting book The Secret Team, Col. Fletcher Prouty, briefing officer of the US President from 1955-63, narrates a remarkable incident in which Winston Churchill made a most revealing utterance during World War II: “On this particular night there had been a heavy raid on Rotterdam. He sat there, meditating, and then, as if to himself, he said, ‘Unrestricted submarine warfare, unrestricted air bombing – this is total war.’ He continued sitting there, gazing at a large map, and then said, ‘Time and the Ocean and some guiding star and High Cabal have made us what we are’.”

Prouty further states: “This was a most memorable scene and a revelation of reality that is infrequent, at best. If for the great Winston Churchill, there is a ‘High Cabal’ that has made us what we are, our definition is complete. Who could know better than Churchill himself during the darkest days of World War II, that there exists, beyond doubt, an international High Cabal? This was true then. It is true today, especially in these times of the One World Order. This all-powerful group has remained superior because it had learned the value of anonymity.” This “High Cabal” is the “One World Cabal” of today, also called the elite by various writers.
The High Cabal and What They Control

The elite owns the media, banks, defence and oil industry. In his book Who’s Who of the Elite Robert Gaylon Ross Sr. states: “It is my opinion that they own the US military, NATO, the Secret Service, the CIA, the Supreme Court, and many of the lower courts. They appear to control, either directly or indirectly, most of the state, county, and local law enforcement agencies.”

The elite is intent on conquering the world through the use of the abilities of the people of the United States. It was as far back as 1774 that Amschel Mayer Rothschild stated at a gathering of the twelve richest men of Prussia in Frankfurt: “Wars should be directed so that the nations on both sides should be further in our debt.” He further enunciated at the same meeting: “Panics and financial depressions would ultimately result in World Government, a new order of one world government.”

The elite owns numerous “think tanks” that work for expanding, consolidating and perpetuating its hold on the globe. The Royal Institute of International Affairs (RIIA), the Council on Foreign Relations (CFR), the Bilderberg Group, the Trilateral Commission, and many other similar organisations are all funded by the elite and work for it. These think tanks publish journals, such as Foreign Affairs, in which these imperialist and anti-mankind ideas are edified as publications, and then, if need be, expanded in the form of books that are given wide publicity.

Zbigniew Brzezinski and Henry Kissinger et al, as well as the neo-con “thinkers,” owe their positions and good living standards to the largesse of the elite. This is an important point that must be kept in full view at all times. These thinkers and writers are on the payroll of the elite and work for them. In case someone has any doubts about such a statement, it might help to read the following quotes from Professor Peter Dale Scott’s comprehensively researched book The Road to 9/11 – Wealth, Empire, and the Future of America (University of California Press, 2007):
...Bundy’s Harvard protégé Kissinger was named to be national security adviser after having chaired an important “study group” at the Council on Foreign Relations. As a former assistant to Nelson Rockefeller, Kissinger had been paid by Rockefeller to write a book on limited warfare for the CFR. He had also campaigned hard in Rockefeller’s losing campaign for the Presidential nomination in 1968. Thus Rockefeller and the CFR might have been excluded from control of the Republican Party, but not from the Republican White House. (Page 22)

The following quote from page 38 of the book is also very revealing:
The Kissinger-Rockefeller relationship was complex and certainly intense. As investigative reporter Jim Hougan wrote: “Kissinger, married to a former Rockefeller aide, owner of a Georgetown mansion whose purchase was enabled only by Rockefeller gifts and loans, was always a protégé of his patron Nelson Rockefeller, even when he wasn’t directly employed by him.”
Professor Scott adds:
Nixon’s and Kissinger’s arrival in the White House in 1969 coincided with David Rockefeller’s becoming CEO of Chase Manhattan Bank. The Nixon-Kissinger foreign policy of detente was highly congruous with Rockefeller’s push to internationalise Chase Manhattan banking operations. Thus in 1973 Chase Manhattan became the first American bank to open an office in Moscow. A few months later, thanks to an invitation arranged by Kissinger, Rockefeller became the first US banker to talk with Chinese Communist leaders in Beijing.
How They Manipulate Public Opinion
In addition to these strategic “think tanks” the elite has set up a chain of research institutes devoted to manipulating public opinion in a manner the elite desires. As pointed out by John Coleman in his eye opening book The Tavistock Institute on Human RelationsShaping the Moral, Spiritual, Cultural, Political and Economic Decline of the United States of America, it was in 1913 that an institute was established at Wellington House, London for manipulation of public opinion. According to Coleman:
The modern science of mass manipulation was born at Wellington House London, the lusty infant being midwifed by Lord Northcliffe and Lord Rothmere. The British monarchy, Lord Rothschild, and the Rockefellers were responsible for funding the venture... the purpose of those at Wellington House was to effect a change in the opinions of British people who were adamantly opposed to war with Germany, a formidable task that was accomplished by “opinion making” through polling. The staff consisted of Arnold Toynbee, a future director of studies at the Royal Institute of International Affairs (RIIA), Lord Northcliffe, and the Americans, Walter Lippmann and Edward Bernays. Lord Northcliffe was related to the Rothschilds through marriage.

Bernays was a nephew of Sigmund Freud, a fact never mentioned, and developed the technique of “engineering consent.When Sigmund Freud moved to Britain he also, secretly, became associated with this institute through the Tavistock Institute. According to Coleman, Bernays “pioneered the use of psychology and other social sciences to shape and form public opinion so that the public thought such manufactured opinions were their own.”

The Tavistock Institute has a 6 billion dollar fund and 400 subsidiary organisations are under its control along with 3,000 think tanks, mostly in the USA. The Stanford Research Institute, the Hoover Institute, the Aspen Institute of Colorado, and many others, devoted to manipulation of US as well as global public opinion, are Tavistock offshoots. This helps explain why the US public, by and large, is so mesmerised as to be unable to see things clearly and to react.

Bilderberg researcher Daniel Estulin quotes from Mary Scobey’s book To Nurture Humanness a statement attributed to Professor Raymond Houghton, that the CFR has been clear for a very long time that “absolute behaviour control is imminent… without mankind’s self realisation that a crisis is at hand.”

Also keep in mind that currently 80% of US electronic and print media is owned by only six large corporations. This development has taken place in the past two decades. These corporations are elite owned. It is almost impossible for anyone who is acquainted with what is going on at the global level to watch, even for a few minutes, the distortions, lies and fabrications, incessantly pouring out of this media, a propaganda and brainwashing organ of the elite.

Once your picture is clear it is also easy to notice the criminal silence of the media on crimes being perpetrated against humanity at the behest of the elite. How many people know that the cancer rates in Fallujah, Iraq are higher than those in Hiroshima and Nagasaki because of the use of depleted uranium, and maybe other secret nuclear devices, by US forces? Fallujah was punished for its heroic resistance against the American forces. 
The Importance of Eurasia
Why is the US in Central Asia? In order to understand this, one has to look at the writings of the stooges of the elite – Brzezinski, Kissinger, Samuel P Huntington, and their likes. It is important to note that members of these elite paid think tanks publish books as part of a strategy to give respectability to subsequent illegal, immoral and predatory actions that are to be taken at the behest of the elite. The views are not necessarily their own – they are the views of the think tanks. These stooges formulate and pronounce policies and plans at the behest of their masters, through bodies like the Council on Foreign Relations, Bilderberg Group, etc.

In his infinitely arrogant book The Grand Chessboard, published in 1997, Brzezinski spelled out the philosophy behind the current US military eruption. He starts by quoting the well-known views of the British geographer Sir Halford J Mackinder (1861–1947), another worker for the elite. Mackinder was a member of the ‘Coefficients Dining Club’ established by members of the Fabian Society in 1902. The continuity of the policies of the elite is indicated by the fact Brzezinski starts from Mackinder’s thesis first propounded in 1904: “Who rules East Europe commands the Heartland: Who rules the Heartland commands the World-Island: who commands the World-Island commands the world.”

Brzezinski argues that for the first time in human history a non-Eurasian power has become preeminent and it must hold sway over the Eurasian continent if it is to remain the preeminent global power: “For America the chief geopolitical prize is Eurasia… About 75 percent of the world’s people live in Eurasia… Eurasia accounts for about 60 percent of the world’s GNP and about three fourths of the world’s known energy resources.”

It is not just the geostrategic location of this region – it is also its wealth, “both in its enterprises and beneath its soil,” that holds such attraction for the elite whose greed for money, and lust for power, remain insatiable, as if there was a sickness afflicting it.

Brzezinski writes: “But it is on the globe’s most important playing field – Eurasia – that a potential rival to America might at some point arise. This focusing on the key players and properly assessing the terrain has to be a point of departure for the formulation of American geostrategy for the long-term management of America’s Eurasian geopolitical interests.”

These lines were published in 1997. Millions of people have died in the past two decades and millions have been rendered homeless in this region but it remains a “playing” field for Brzezinski and his likes! In his book Brzezinski has drawn two very interesting maps – one of these has the caption The Global Zone of Percolating Violence (page 53) and the other (page 124) is captioned The Eurasian Balkans. The first of these encircles a region which includes the following countries: Sudan, Egypt, Saudi Arabia, Turkey, Syria, Iraq, Iran, all Central Asian states, Afghanistan, Pakistan and parts of Russia as well as India. The second one has two circles, an inner circle and a wider circle – the outer circle encloses the same countries as in the first map but the inner circle covers Iran, Afghanistan, eastern Turkey and the former Soviet Republics in Central Asia.

“This huge region, torn by volatile hatreds and surrounded by competing powerful neighbours, is likely to be a major battlefield…” writes Brzezinski. He further writes: “A possible challenge to American primacy from Islamic fundamentalism could be part of the problem of this unstable region.” These lines were written at a time when this kind of fundamentalism was not a problem – subsequently the US manipulated things and chose to make it one by its provocative and deceptive tactics. According to its strategic thinkers, the US might face a serious challenge from a coalition of China, Russia and Iran and must do whatever it can to prevent such a coalition from forming.

For Brzezinski, “terrorism” – a Tavistock-type concept – is just a well planned and well thought out strategy, a lie and a deception, to provide cover for a military presence in the Central Eurasian region and elsewhere. It is being used to keep the US public in a state of fear, to keep Russia in a state of insecurity about further breakup (the US has trained and supported Chechen fighters, “terrorists,” throughout) and to justify presence of US troops in and around Central Asia.  
The Concocted War on Terrorism
Terrorism provides justification for transforming the United States into a police state. According to the Washington Post of 20 & 21 December 2010, the US now has 4,058 anti-terrorism organisations! These are certainly not meant for those so-called terrorists who operate in Central Asia – the number far exceeds the number of so-called terrorists in the entire world. Unbridled domestic spying by US agencies is now a fact of life and the US public, as always, has accepted this because of the collusion of media and Tavistock type institutes owned by the elite.

The US historian Howard Zinn puts it very well: “The so-called war on terrorism is not only a war against innocent people in other countries, but also a war on the people of the United States: a war on our liberties, a war on our standard of living. The wealth of the country is being stolen from the people and handed over to the superrich. The lives of our young are being stolen. And the thieves are in the White House.” Actually the thieves control the White House and have been doing so for a very long time.

In his outstanding book Crossing the Rubicon, Michael Ruppert points out that much of the violence in the Central Asian region as well as in Pakistan, which has been encircled in two maps in Brzezinski’s book, was “initiated by the US proxies.” “Given that these maps were published a full four years before the first plane hit the World Trade Centre, they would fall in a category of evidence I learned about at LAPD [Los Angeles Police Department]. We called them ‘clues’.” This means that the eruption of US militarism after 9/11, and the event itself, were part of a pre-planned and coherent strategy of global domination in which the people of the US were also “conquered” through totalitarian legislation carried out in the wake of 9/11.

As Brzezinski puts it:
America is too democratic at home to be autocratic abroad. This limits the use of America’s power, especially its capacity for military intimidation. Never before has a popular democracy attained international supremacy. But the pursuit of power is not a goal that commands popular passion, except in conditions of a sudden threat or challenge to the public’s sense of domestic well-being… The economic self-denial (that is, defence spending) and the human sacrifice (casualties even among professional soldiers) required in the effort are uncongenial to democratic instincts. Democracy is inimical to imperial mobilisation.

Certainly post 9/11 legislation, the extraordinary expansion of agencies and surveillance of the US public is a cause of great satisfaction for the elite – the US can hardly be called a democracy now. As reported by the Washington Post, the National Security Agency intercepts over 1.7 billion emails, phone calls and other communications every day and stores them. No wonder Bush called 9/11 “a great opportunity” and Rumsfeld saw it analogous to World War II to “refashion the world.”

In order to achieve the objectives of the elite, the US destroyed Yugoslavia while Russia stood by mesmerised and impotent, carried out regime changes in Central Asia, set up military bases in East Europe and Central Asia, and staged highly provocative military exercises testing Russia’s and China’s will. It set up a military base in Kyrgyzstan that has a 500 mile or so border with China. When the Chinese protested recent naval exercises with South Korea were too close to Chinese territory, a US spokesman responded: “Those determinations are made by us, and us alone… Where we exercise, when we exercise, with whom and how, with what assets and so forth are determinations that are made by the United States Navy, by the Department of Defence, by the United States government.” As journalist Rick Rozoff notes: “There is no way such confrontational, arrogant and vulgar language was not understood at its proper value in Beijing.”

The US has acquired bases in Romania, Bulgaria, Poland, and the Czech Republic – and set up the largest military base ever built in the region, Camp Bondsteel, in Kosovo. According to a report in the Russian Kommersant newspaper on 3 March 2011, a four-phase plan for deployment of a US missile system in Europe is to be fully implemented by the end of 2020. The US is also busy setting up bilateral military ties in Russia’s backyard with Azerbaijan, Kazakhstan, Uzbekistan, Turkmenistan and is pursuing the goal of a “Greater Central Asia” from Afghanistan right up to the Middle East, a great corridor from where the oil, gas, and great mineral wealth of this region will flow to the coffers of the US elite, at bloody expense to the local people.

As remarked by the Indian career diplomat M.K. Bhadrakumar: “The time is not far off before they begin to sense that ‘the war on terror’ is providing a convenient rubric under which the US is incrementally securing for itself a permanent abode in the highlands of Hindu Kush, the Pamirs, Central Asian steppes and the Caucasus that form the strategic hub overlooking Russia, China, India and Iran.” The scene for a great war involving the great powers of the time – US, Russia and China – is now set, by design of the elite. It is just a matter of time.

Time and again the US elite has taken its good people into great wars through documented and proven deceptions – the sinking of the Lusitania during World War I, Pearl Harbour in World War II, and so on. The elite considers us “human garbage” – a term first used by the French in Indo-China. It is also generating a good deal of “human garbage” in the US. A World Bank report points out that in 2005, 28 million Americans were “insecure” – in 2007 the number had risen to 46 million! One in every five Americans is faced with the possibility of becoming “destitute” – 38 million people receive food coupons!

Michael Ruppert laments:
My country is dead. Its people have surrendered to tyranny and in so doing, they have become tyranny’s primary support group; its base; its defender. Every day they offer their endorsement of tyranny by banking in its banks and spending their borrowed money with the corporations that run it. The great Neocon strategy of George H.W. Bush has triumphed. Convince the America people that they can’t live without the ‘good things’, then sit back and watch as they endorse the progressively more outrageous crimes you commit as you throw them bones with ever less meat on them. All the while lock them into debt. Destroy the middle class, the only political base that need be feared. Make them accept, because of their shared guilt, ever-more repressive police state measures. Do whatever you want.

A global economic system erected on inhuman and predatory values, where a few possess more wealth than the billions of hungry put together, will end, but the end will be painful and bloody. It is a system in which the elite thrives on war and widespread human misery, on death and destruction by design. As Einstein said, “I do not know how the Third World War will be fought, but I can tell you what they will use in the Fourth – sticks and stones!”

9 Jun 2011

China warns U.S. debt-default idea is "playing with fire"

U.S. Republican lawmakers are "playing with fire" by contemplating even a brief debt default as a means to force deeper government spending cuts, an adviser to China's central bank said on Wednesday.
An employee of an money exchange counts U.S. dollar bills in Tokyo November 27, 2009.  REUTERS/Yuriko Nakao/FilesThe idea of a technical default -- essentially delaying interest payments for a few days -- has gained backing from a growing number of mainstream Republicans who see it as a price worth paying if it forces the White House to slash spending, Reuters reported on Tuesday.

But any form of default could destabilize the global economy and sour already tense relations with big U.S. creditors such as China, government officials and investors warn.
Li Daokui, an adviser to the People's Bank of China, said a default could undermine the U.S. dollar, and Beijing needed to dissuade Washington from pursuing this course of action.
"I think there is a risk that the U.S. debt default may happen," Li told reporters on the sidelines of a forum in Beijing. "The result will be very serious and I really hope that they would stop playing with fire."
China is the largest foreign creditor to the United States, holding more than $1 trillion in Treasury debt as of March, U.S. data shows, so its concerns carry considerable weight in Washington.
"I really worry about the risks of a U.S. debt default, which I think may lead to a decline in the dollar's value," Li said.
The U.S. Congress has balked at increasing a statutory limit on government spending as lawmakers argue over how to curb a deficit which is projected to reach $1.4 trillion this fiscal year. The U.S. Treasury Department has said it will run out of borrowing room by Aug. 2.
If the United States cannot make interest payments on its debt, the Obama administration has warned of "catastrophic" consequences that could push the still-fragile economy back into recession.
"It has dire implications for the economy at a time when the macro data is softening," said Ben Westmore, a commodities economist at National Australia Bank.
"It's just a horrible idea," he said.
Financial markets are following the U.S. debate but see little risk of a default.
U.S. Treasury prices were firm in Europe on Wednesday, supported by a flight to their perceived safety on the back of the Greek debt crisis and worries about a slowdown in U.S. economic growth.
Marc Ostwald, a strategist with Monument Securities in London, said markets were working on the assumption that the U.S. debt story "will go away". But nervousness would grow if a resolution was not reached in the next five to six weeks.

The Republicans' theory is that bondholders would accept a brief delay in interest payments if it meant Washington finally addressed its long-term fiscal problems, putting the country in a stronger position to meet its debt obligations later on.
But interviews with government officials and investors show they consider a default such a grim -- and remote -- possibility that it was nearly impossible to imagine.
"How can the U.S. be allowed to default?" said an official at India's central bank. "We don't think this is a possibility because this could then create huge panic globally."
Indian officials say they have little choice but to buy U.S. Treasury debt because it is still among the world's safest and most liquid investments. It held $39.8 billion in U.S. Treasuries as of March, U.S. data shows.
The officials declined to be identified because they are not authorised to speak to the media.
Oman is concerned about the impact of a default on the currency reserves of the sultanate and its Gulf neighbours.
"Our economies are substantially tied up with the U.S. financial developments," said a senior central bank official, who spoke on condition of anonymity.
"It just wouldn't happen," said Barry Evans, who oversees $83 billion in fixed income assets at Manulife Asset Management. "They would pay their Treasury bills first instead of other bills. It's as simple as that."
Monument's Ostwald called the default scenario "frightening" and said bondholders' patience would wear thin if lawmakers persisted in pitching this strategy in the coming weeks.
"This isn't a debate, this is like a Mexican standoff and that is where the problem lies," he said.
Yuan Gangming, a researcher with the Chinese Academy of Social Sciences, a government think tank, smelled some political wrangling behind the U.S. debt debate as the 2012 presidential election draws nearer and said Republicans "want to make things difficult for Obama."
But with time running short before the U.S. Treasury exhausts its borrowing room, Yuan said default was a real risk.
"The possibility is quite high to see a default of the U.S. debt, which would harm many countries in the world, and China in particular," he said.


More Money and More Market Manipulations

The powers behind government obviously believe Americans are very simple people, or just plain dumb. First came the certificate of live birth that a 14 year old could have identified as a total forgery and then came the death of Osama bin Laden, a man who had been dead for ten years. His death was accompanied by the most preposterous tale imaginable. The media mainstream totally controlled by those behind the curtain gave widespread dissemination of these unbelievable lies. We have news for the elitist propaganda machine and that is most Americans do not believe you in either case.

As these created episodes were carried out we again heard the secretary of the Treasury engage in more fantasy by telling us a strong dollar policy was still in place. These three elements then gave the dollar a push upward, as it became obvious that the EU and IMF were not getting the results they wanted in Greece, that is looting the country of just about everything the country had left. As we predicted, the euro had been run up to $1.49 to create a buffer zone for the euro to fall into as Greece went haywire. As we write the euro is $1.41. It is not difficult to catch on to what these one-worlders are up too, as international leaders shake their heads in disbelief and consternation. Mr. Obama’s approval ratings may have climbed 10% and in spite of his trip to Ireland London and France for the G-8 conclave, he is again losing ground fast. He will be back to 35% in the wink of an eye. In the meantime 35% of Americans want an immediate withdrawal from Afghanistan. That is up from 22% a year ago.

CIA asset and poster boy for world terrorism, Osama bin Laden can no longer help the cause of faux terrorism worldwide. His journey from 1984 was a long one. We can remember Ollie North telling us about him in 1986. The goal of the CIA was to bolster the presidency and something else equally important and that is to put an end to the upside performance of gold, silver and commodities. They have been reflecting the failure of the dollar, a victim of unsustainable debt. The events above also have served as a distraction of America’s real problems, which are financial and economic. The lies and temerity are simply unfathomable. Even those with an 80 I.Q. can see through these machinations. We wonder what will happen on August 2nd if the short-term debt is not extended? Is it any wonder that gold and silver have hit new highs in spite of government-manipulated markets? As we have just seen any cuts in entitlement programs such as Social Security and Medicare will result in quick one-way ticket out of the House or Senate. The possibility of small incremental budget cuts over five years and similar tax increases never entered these politician’s minds.

In addition, the financial scam of these scenarios was the deliberate takedown of silver and gold. These brazen, arrogant crooks had the transparent gall to raise margin requirements for silver five times in nine days, while a little bird told the commodities brokerage firms that the CME contract for silver should be doubled from $21,600 to $42,000 to wipe out almost all small and medium sized investors. This shows you the lengths to which government and those who control government will go to crush their antithesis, gold and silver. Again, it worked on the short term, but it cleaned out possible seller overhang and made it very easy for gold and silver to soon test their highs again. The elitists are fighting a losing battle.

As a result of monetary irresponsibility Japan, Europe, England and the US are in serious trouble, that won’t go away anytime soon. That means you do not want to be long the yen, euro, pound or US dollar, or for that matter any other currency. Why waste the effort, just stay long gold and silver coins, bullion and shares. The dollar and many other currencies are failed currencies. All of their debt situations are unsustainable. The US has raised the debt limit 75 times since 3/1962, and number 76 will be reality on 8/2/11. Or will it?

As Treasury auctions come and go the number of foreign buyers dwindles. That means the Fed has to buy exceedingly larger amounts of bills, notes and bonds. It should also be remembered that creating trillions of dollars gives the Fed more power over the system, as well as creating inflation. This kind of policy is explained as being instrumental in saving the system for the good of the people, when in fact it allows the Fed to be able to further control the people. This centralized, nationalized system of total Fed and government control means total government empowerment, something that has been dormant many years, which now comes into full view. The public has little input into government any more due to the fact that 95% of their legislators have been purchased from behind the scenes. They are told, accept this or we will destroy the system. At every turn Americans find they have less and less to say about government. This is how government and those who control it can create any lie and get away with it. This attitude and reality has not been lost to other nations, which express their thought process by buying less Treasuries. Recent data demonstrates that as the Fed had to add $24 billion in treasuries to its balance sheet, as foreign holdings fell the most in four years by $18.7 billion to $2.685 trillion. This fall in purchases is a vote of no confidence. These figures will get larger as each month passes, as other sovereign borrowers bail out. Each day brings the world monetary system closer to the brink. Does anyone really believe the Fed can buy 80% of Treasury sales indefinitely? Ultimately it is impossible, not to mention the horrendous inflation and perhaps hyperinflation created by such a policy.

We expect the Fed will continue its current policy of Treasury purchases. They have already said that they will continue to use funds to purchase that are created by maturing paper instead of reducing their balance sheet. This monetization will continue indefinitely from our viewpoint. As the economy recedes the Fed will declare that more Treasury and Agency purchases are necessary and QE3 will begin, although it will be called sometime else. We expect that to happen in July or August. Remember, the short-term debt extension if not enacted on August 2nd, will give the Fed the perfect excuse to begin QE3, as well. It would also give government the excuse to commandeer your private retirement plans. That would be based on the Treasury having to continue to borrow funds from public pensions to run the government. That wouldn’t be fair, so private pensions would be legislated in as well. Remember, anything is possible with these people.

It also should be noted that there have been no concrete steps to cut spending. Current talks between political parties are carried out in secret. Slowing down the rate of spending increases is not cutting the deficit. We hear of trillions being cut but no real response as yet, besides they only address spending increases. Inflation is here to stay and it will get lots worse. These policies, of course, will continue to destroy the dollar.

All of these events lead nations and corporation as to wonder why they are holding 60% of their foreign exchange in US dollars. Again, the law of diminishing returns comes into play. The more US Treasuries these buyers purchase the higher the bonds go and the lower the yield. They also know there will be no meaningful deficit reductions. As you saw from the figures above nations are dumping dollars and that process is accelerating.

The dollar falls, gold and silver and commodities rise, and the speculation orgy fueled by QE2 and the anticipation of QE3 rambles onward. We see no margin increases for the NYSE, but many of them for commodities, gold and silver. The elitists never will allow a level playing field. Talk about a criminal element a criminal syndicate, if you look at it hard all you can see is another Mafia operation. Silver margins rose five times in nine days or a net 84% and then that was doubled by commodity brokerages, which, of course, discovered the same problem simultaneously and wiped out almost all small and medium sized investors causing a collapse in silver from $50.00 to $32.50. While all this transpired JPM, HSBC and government were delighted and the CFTC was nowhere to be found, again. That is what our government and those who run it are all about.

The Fed and those who control it are trapped and there is no way out. Market manipulations will continue, as will unilateral policy changes. Their only option is to inflate until they cannot inflate anymore. In the meantime they still support the stock and bond markets and try their best to subdue gold, silver and commodities markets. One of the things talked about previously, that has completely faded from view is an exit strategy. The term is never used now. What we hear is low interest rates will be employed until full recovery is underway, which means until the system collapses. They do not care that the cost of money is 10% below the inflation rate. As long as the elitists have to engage in this subsidy, the higher gold, silver and commodity prices will go. One of the things as well that should not go unnoticed is that once interest rates are forced to rise in the real market the derivative market will implode, particularly in interest rate swaps.

8 Jun 2011

Banks may need more cash to clear derivatives

The world's top 14 derivatives dealers may need extra cash to handle a surge in transaction clearing, especially in choppy markets, the Bank for International Settlements (BIS) said.
Clearing is being favoured by regulators because it is backed by a default fund that ensures a trade is completed even if one side goes bust, as with the collapse of Lehman Brothers during the financial crisis.
World leaders have agreed that chunks of the $600 trillion off-exchange derivatives market must be standardised and cleared by the end of 2012 to broaden transparency and curb risk.
Researchers at the BIS, a global forum for central bankers, looked at whether the "Group of 14" dealers (G14) that dominate derivatives trading would have enough capital to handle the anticipated surge in trades that will have to be cleared.
BIS concluded in a paper published on Sunday that "it seems unlikely that G14 dealers would have much difficulty finding sufficient collateral to post as initial margin".
"By contrast, dealers may need to increase the liquidity of their assets as central clearing is extended," BIS said.
Central clearing covers about half of $400 trillion in interest rate swaps, 20-30 percent of the $2.5 trillion commodities derivatives, and about 10 percent of $30 trillion in credit default swaps.
The G14 dealers comprise Bank of America-Merrill Lynch, Barclays Capital, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, RBS, Societe Generale, UBS and Wells Fargo Bank.
BIS said they could face a cash shortfall in very volatile markets when daily margins are increased, triggering demands for several billions of dollars to be paid within a day.
"These margin calls could represent as much as 13 percent of a G14 dealer's current holdings of cash and cash equivalents in the case of interest rate swaps," BIS said.
Clearing operators like ICE, CME, LCH.Clearnet and Eurex are vying to capture the huge increase in clearing volumes expected but policymakers are taking steps to make sure operators remain robust.
Requiring clearing houses to be able to withstand a default by two major clearing members could also help financial stability, BIS said. Current rules require clearers to be able to ride a single member default.
Clearers could also benefit from adjusting initial margins to market volatility levels or set them according to the highest level of volatility, BIS said.
A more streamlined clearing sector would allow for multilateral netting across different types of derivatives to ease the burden of margining, it added. Linking clearers, known as interoperability, would also bring netting benefits.
The European Union is set to effectively bar interoperability among derivatives clearers for at least three years, believing it creates contagion risk.


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7 Jun 2011

Something Really Ugly Is Brewing...

I know the financial stocks have been sucking wind lately but I had not really looked at them until today.  Financials make-up the highest percentage of stocks by sector in the S&P 500 and thus can be considered a good market signal for information, in general, about what is going on systemically.   Currently the SPX is down about 4.4% from its high close this year.  But take a look at some of the huge banking/Wall Street stocks:   Since Jan 18, AIG is down 55%, BAC -33%, GS is down 22%, Citidown 20% and WFC is down 25% (since Feb 14 on WFC).  There's no way of knowing for sure what exactly is going on systemically other than to know that something very ugly is occurring.  

Of course, we can take a stab at it based on what we know about the economy and what the Fed is doing.  I have believed all along that the "QE" aka money printing has been first and foremost a means to keep the big banks from collapsing and, secondarily, to keep the Federal Government - and de facto most States - from having to close down most operations.  After all, the banks are still paying record bonuses and the Government is still happily funding Entitlements and Defense.  The only constituency not benefiting from the money printing - and that constituency which is, prima facie, the target of the QE - is the unemployed (or at least the jobless who want jobs and are not living off of unemployment welfare).

Now, we all know that the poker faces in NYC and DC are expressing that they are going to hold firm with no more QE.  But does that makes sense given what we know about how bad the economy is AND the dismal performance of the too-big-to-fail banks?  Quite frankly, the stock performance of these banks, especially that of AIG and BAC are telling me that there is a massive liquidity problem going on in the banking system.  The two entities that should have been allowed to fail, AIG and BAC, but were saved are reflecting this in the performance of their shares.  We also know that Goldman was one of the heaviest users of emergency borrowing from the Fed during the last crisis, ostensibly because its fate was wrapped around AIG back then.  

And one more point.  Zerohedge.com has been doing a marvelous job at tracking the flow of new Treasury bond issuance as it gets repurchased from the primary dealers by the Fed shortly after the Treasury issues it.  On average and in general, the Fed has been rapidly taking up to 50% or more of recent Treasury issuance off of primary dealer balance sheets.  The PD's have been taking, on average, over 50% of all Treasury issuance.  See what's going on here?  We also know that since December, the Fed has monetized in excess of 100% of all new Treasury issuance.  Here's the latest evidence per Zerohedge:  LINK

I've been saying for quite some time that housing was still going south and that banks are choking on mortgages that  not being paid AND not classified as in default or in foreclosure.  The Fed has enabled this game with its money-printing.  Unless some miracle comes along from some corner of the universe OR the Fed folds on QE, something VERY bad is coming our way....got gold?


Storm clouds gathering? Hyperinflation?

Know Your Money: Gold & Silver

This government film was released in 1947, "Know Your Money"

6 Jun 2011

China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills

Chinese President Hu Jintao and President Barack Obama of the United States
President Barack Obama and President Hu Jintao of China toast during the State Dinner in State Dining Room of the White House, Jan. 19, 2011. (Official White House Photo by Lawrence Jackson)

China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation’s debt.
Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of the Treasury report linked here.
Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.

Since October, however, China has also started to divest from longer-term U.S. Treasury securities. Thus, as reported by the Treasury Department, China’s ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March.
Prior to the fall of 2008, acccording to Treasury Department data, Chinese ownership of short-term Treasury bills was modest, standing at only $19.8 billion in August of that year. But when President George W. Bush signed legislation to authorize a $700-billion bailout of the U.S. financial industry in October 2008 and President Barack Obama signed a $787-billion economic stimulus law in February 2009, Chinese ownership of short-term U.S. Treasury bills skyrocketed.

By December 2008, China owned $165.2 billion in U.S. Treasury bills, according to the Treasury Department. By March 2009, Chinese Treasury bill holdings were at $191.1 billion. By May 2009, Chinese holdings of Treasury bills were peaking at $210.4 billion.
However, China’s overall appetite for U.S. debt increased over a longer span than did its appetite for short-term U.S. Treasury bills.

In August 2008, before the bank bailout and the stimulus law, overall Chinese holdings of U.S. debt stood at $573.7 billion. That number continued to escalate past May 2009-- when China started to reduce its holdings in short-term Treasury bills--and ultimately peaked at $1.1753 trillion last October.
As of March 2011, overall Chinese holdings of U.S. debt had decreased to 1.1449 trillion.
Most of the U.S. national debt is made up of publicly marketable securities sold by the Treasury Department and I.O.U.s called “intragovernmental” bonds that the Treasury has given to so-called government trust funds—such as the Social Security trust funds—when it has spent the trust funds’ money on other government expenses.
The publicly marketable segment of the national debt includes Treasury bills, which (as defined by the Treasury) mature in terms of one-year or less; Treasury notes, which mature in terms of 2 to 10 years; Treasury Inflation-Protected Securities (TIPS), which mature in terms of 5, 10 and 30 years; and Treasury bonds, which mature in terms of 30 years.

At the end of August 2008, before the financial bailout and the stimulus, the publicly marketable segment of the U.S. national debt was 4.88 trillion. Of that, $2.56 trillion was in the intermediate-term Treasury notes, $1.22 trillion was in short-term Treasury bills, $582.8 billion was in long-term Treasury bonds, and $521.3 billion was in TIPS.

At the end of March 2011, by which time the Chinese had dropped their Treasury bill holdings 97 percent from their peak, the publicly marketable segment of the U.S. national debt had almost doubled from August 2008, hitting $9.11 trillion. Of that $9.11 trillion, $5.8 trillion was in intermediate-term Treasury notes, $1.7 trillion was in short-term Treasury bills; $931.5 billion was in long-term Treasury bonds, and $640.7 billion was in TIPS.

Before the end of March 2012, the Treasury must redeem all of the $1.7 trillion in Treasury bills that were extant as of March 2011 and find new or old buyers who will continue to invest in U.S. debt. But, for now, the Chinese at least do not appear to be bullish customers of short-term U.S. debt.
Treasury bills carry lower interest rates than longer-term Treasury notes and bonds, but the longer term notes and bonds are exposed to a greater risk of losing their value to inflation. To the degree that the $1.7 trillion in short-term U.S. Treasury bills extant as of March must be converted into longer-term U.S. Treasury securities, the U.S. government will be forced to pay a higher annual interest rate on the national debt.
As of the close of business on Thursday, the total U.S. debt was $14.34 trillion, according to the Daily Treasury Statement. Of that, approximately $9.74 trillion was debt held by the public and approximately $4.61 trillion was “intragovernmental” debt.


5 Jun 2011

US shredding economy raises concerns on QE 3

Following unexpected weak jobs data in the US, the recovery of the world's biggest economy has become less feasible. Chris Weafer, chief strategist from Uralsib spoke to RT Business about global economic performance and the outcome for Russia.
RT: What is wrong with global investor confidence, if there is such a thing today?
CW:Well, as you say, we’ve had a series of disappointing or weaker-than-expected economic data points in major economies from the US, Europe and China, and that’s undermined expectations that economic growth would accelerate this year. Where we’re at right now and what we see in the markets is just reflecting the fact that optimism for even faster growth coming into 2012 is now giving way to a more sobering reality that we’re still struggling to stay just above the positive line.
RT: Where is the root of the problem, would you say right now?
CW: Well we’ve plateaued, is the best thing you could say, we’ve had a very steep recovery from a very steep crisis, starting in the middle of ’08. We’ve now kind of reached this plateau, or shelf, as it were, and it’s just difficult now to see what’s going to take us up the next leg of recovery. There’s a lot of discussion about the ending of the Quantative Easing in the US this month and whether or not a third bout of easing may even be required to propel the economy forward, but that’s big question that economists and investors are looking at, saying “What is there to drive this market higher?” Nobody’s really worries about a reversal or a double-dip or return to a recession, but there’s a serious question over what’s going to drive us forward from here.
RT: Is there going to be a new round of Quantative Easing in the US?
CW: I think the bottom line is that, with next year being an election year, if it needs it, it’ll get it, even tough economists and agencies have been highly critical of the amount spent, or wasted, so far, but I think if economic indicators start to slow down even more than we’ve had and job creation slows down, then I think there’ll be a lot of pressure on the Fed to go for another round of Quantative Easing. So, I don’t expect it too quick, I think there’ll be a pull-back at the end of this month when QE2 ends to review the situation. I think they’ll make a decision in the autumn based on the strength of the economic indicators at that time.
RT: With the high commodity prices, why isn’t Russia faring better than it is right now?
CW:Because I think the perception of Russia has changed quite a lot. If we go back before the crisis, rising oil would have lifted all Russian asset prices, the rouble, the banks for example would all be a lot higher, but investors had a very sobering reality check in the second half of ’08 when oil collapsed so quickly, and everybody is very focused on the fact that Russia is still highly vulnerable to commodities, highly vulnerable to the oil price, and therefore very highly vulnerable to what happens in Washington and Beijing, more than, say, what happens in Moscow. The bottom line is that Russia has not really made any material progress in transforming its economy from a resource-based economy to a more diversified economy. The domestic case, therefore, is quite weak fiscally, and the budget is improving with oil, but that’s it. Investors, I think, will remain reluctant until they actually see real progress on the promised reforms, and we could be a year at least away from that.

Silver Eagle sales so far in 2011 best in 25 years

With sales of no less than 3.65 million ounces of new American Eagle silver coins in May, silver coin sales by the U.S. Mint are reported to be at their highest ever from U.S. Mint data going back to 1986.  Indeed May sales were even 30% higher than April's 2.819 million ounces, which in itself was the best ever April on record.  This brings the total sale of American Eagle silver coins to 18.9 million ounces so far this year.  Last year's sales over the same period amounted to 15.2 million ounces.
In the light of what it refers to as unprecedented high demand, The U.S. Mint has also announced that effective this week it will be adding production from its San Francisco facility to provide manufacturing flexibility across the bullion and numismatic product lines to meet customer needs.
The Mint further notes that it conducted American Eagle Silver Bullion Coin trial strikes at San Francisco in March and has the capacity to mint up to several hundred thousand coins per week at the facility.  Previously all the American Eagle silver coins had been minted at its West Point plant.
The latest sales figures put the Mint well on track to beat its 2010 sales year output which was a record 34.663 million ounces despite having to impose some rationing die to the high demand.
That's how many 1-ounce American Eagle silver coins were sold last month by the U.S. Mint. Silver prices almost doubled between January and April, spurred by concern about Europe's debt crisis, higher inflation, a weakening dollar, and unrest in North Africa and the Middle East. The mint said last week that its San Francisco facility will start producing American Eagle silver coins to meet "unprecedented high levels" of demand.
For numismatic collectors, June sales could also be boosted by the release of two new silver coins for collectors - the Yosemite National Park 5 ounce silver uncirculated coin from next week and the 2011 American silver eagle proof coin from June 30th.  It is anticipated that both will generate excellent sales with earlier coins in the series selling out in a matter of days.
It now remains to be seen whether the sharp recent fall in the silver price will have been affecting demand - negatively because of nervousness about the white metal's future price direction, or perhaps positively with silver buyers seeing the lower prices as a buying opportunity.  The U.S. Mint's June figures will be awaited with interest.

US economy on verge of ‘Great Great Depression’?

World markets fall after the US economy suffered its worst day of the year on June 1 with all signs pointing to more declines over the summer.
We’re on the verge of a great, great depression,” opined a market strategist Peter Yastrow.
The US market was hit by falls in job growth and manufacturing which in turn abolished quarter of the Dow Jones industrial average's gains for the year thus far. As the markets opened back up on June 2 investors were reluctant to take risks as more bad news regarding the US economy is expected to be released June 3.

The Dow dropped 30 points within the first 15 minutes of open trading as market watchers anxiously await the release of US government job numbers. Thus far reports indicate claims for unemployment benefits did not shrink as much as expected, causing many people to fear a labor market recover simply is not taking place.
We've been through a couple-week period here where basically every piece of economic data has just been awful,” John Canally of LPL Financial in Boston told the Daily Mail.
Yastrow said he has witnessed “near panic” by investors unwilling to take risks in the volatile markets.
Interest rates are amazingly low,” he told CNBC. “We’re on the verge of a great, great depression. The [Federal Reserve] knows it.”
Almost every bit of data about the health of the US economy has disappointed expectations recently,” noted Mike Riddell of M&G Investments.
Home prices are down, foreclosures are up. Commodity prices are rising and many Americans remain unemployed, some have even exasperated their allotted unemployment benefits, leaving them with nearly no options.
A recent report by Capital Economics found drops in first quarter home prices indicated the prices had fallen by more than they did during the Great Depression.
US Treasury Bonds have now fallen to their lowest levels since December 2010. Overall doubts about Americans economic recovery have begun to surface from more analysts as new reports compound one another with dire news.
It looks like this recovery has hit its second ‘soft patch’, which for a recovery that is less than two years old is troubling,” pointed out Paul Ashworth of Capital Economics.
Meanwhile, Moody’s Investors Service said if America’s two political parties fail to make progress on economic growth and a solution to the debt ceiling debate, it would place the US credit rating under review for a possible downgrade.
“If there is no progress on increasing the statutory debt limit in coming weeks, it expects to place the US government’s rating under review for possible downgrade,” Moody’s said.
This threat follows similar threats by Standards and Poor.
Erica Payne, the founder of The Agenda Project explained the threat may not change the debate however. Republicans are dedicated to their Tea Party agenda of not raising the debt ceiling.
It’s hard to negotiate with a crazy person,” she said. “They fundamentally don’t understand this.”
The Tea Party has taken over the Republican agenda, they are calling on the Republicans to do the irresponsible and illogical thing, and that is to default on debt. Defaulting is not good for anyone – America or the rest of the world.
Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely,” Moody’s added.
The responsible thing to do is raise the ceiling, Payne argued, failing to do so will damage the economic recovery.
She said she hoped the Moody’s warning pushed for Congress to act more quickly and reach a compromise to raise the ceiling and tackle US debt concerns. Whether they will or not remains unclear.
The US government hit its $14.3 trillion borrowing limit on May 16 and now has until August 1 to solve the problem or risk defaulting on its debts.