Tuesday, February 18, 2014

The United States of Decline

By Deroy Murdock

Coming Economic Collapse

18 Critical Items You Need To Prepare, Tomorrow May Be Too Late
On Feb. 16, a Bank of America analyst announced that the global economy is giving out clear warning signs that the dollar is entering into serious trouble, which adds more credence to John Williams recent assertion that 2014 will be the year of a dollar panic.
Global financial and commodity markets are warning that the US Dollar is in for a bout of trouble, warns BofAML’s Macneil Curry. Across asset classes, Curry points out that Gold was the first to make its low against the US Dollar, doing so back on Dec-15. The second market to turn against the US Dollar was US Treasuries, with Ten year note futures turning bullish back on Dec-26. Currently, the FX market – most specifically GBP - is breaking out and pressuring the US Dollar. Finally, the Japanese stock market continues to suffer, putting downward pressure on USDJPY and thus US Dollar weakness. – Zerohedge
Over the past month, the dollar has fallen over 120 basis points (bps), from 81.30 to hovering just above 80 as economic weakness continues to place the currency at the forefront of financial backlash.  In that same time, gold has climbed more than $100 from $1220 on Jan. 9, to now over $1324 on Feb. 16, validating the increasing cracks showing up in the dollars ability to hold global value.
Additionally, the dollar is dealing with a deteriorating economy in Japan, as well as a backlash from the emerging markets as hedge funds pull out their investments due to the Fed tapering their cheap money programs.
Nearly every alternative economist has put 2014 as the primary year for a crucial change in both the dollar, and its reserve currency status.  And as the recession that never ended begins to pick up steam after so many years of cheap money infusion, chances continue to increase for the dollar to either collapse, or become persona non grata, to the rest of the world each passing day.

Expert Warns of Hyperinflation: “The American Way Of Life Will Be Destroyed”

If there’s one thing that’s certain about what’s happening in the world right now  it’s that uncertainty is pervading every aspect of the global economy. From fabricated employment statistics and consumer spending reports to obscene levels of debt and a failing domestic monetary policy, the writing is on the wall.
According to top Casey Research analyst Marin Katusa, who has met with energy ministers and business leaders in over 100 countries, it’s only a matter of time before the world’s reserve currency goes the way of the German Reichsmark and Zimbabwe Dollar.
What we’re talking about here is nothing short of an outright collapse of our banking system, hyperinflation of the US dollar, and a complete destruction of the world as we have come to know it.
This is a must-watch for those trying to understand what’s happening with the economic landscape, how to position yourself for an unprecedented paradigm shift in how Americans live their lives, what to expect as this crisis unfolds, and how to find opportunities when everyone else is in panic mode.
If the petro-dollar ends, the American way of life will be something that will be destroyed.
The inflation will be over 100% because Americans are getting their lifestyle subsidized by the rest of the world.
This is a very complicated issue… but to be summed up quickly, the world has already started trading commodities and oil, not in the petro-dollar.
And if the petro-dollar finally does die, the American way of life is gone.

(Full interview and transcript via Future Money Trends)
When that happens – when the rest of the world finally turns its back on the United States – you’d better be positioned in the right assets… tangible assets.
Failure to do so will leave you exposed to a financial collapse unlike anything we’ve ever seen in America.
You want to invest in gold… and that’s why you really want to invest in tangible assets… because the bank system will crash.
And I’m not trying to be a doom and gloom guy, this is just factual.
You want to invest in silver, and gold, and companies that produce what the rest of the world wants, which is gold and silver.
It should be clear that China, Russia, oil-producing nations and emerging markets are positioning themselves for exactly what Marin Katusa describes. They have already established unilateral agreements to replace their petro-dollar transactions with either their own currencies or gold. When the timing is right, they’ll pull the plug, at which point all hell will break loose.
The only assets that will survive the destruction will be physical goods such as those commodities essential to survival – food, energy, water, etc.
On the monetary front, when the dollar becomes worthless, confidence in the system itself will be lost on a global scale. We saw similar effects in 2008, when banks refused to lend to businesses, individuals and even themselves for fear of counter party risk. This will leave only one viable mechanism of exchange that will be trusted by trading partners. If you happen to own some, then while everyone else is trying to figure out how to acquire food or pay for other needs, you’ll be thriving.
Insiders and the well informed like Doug Casey, Rick Rule, and Eric Sprott who want to protect and preserve their wealth are already diversifying out dollar-denominated assets. Foreign governments are doing the same, to the tune of billions of dollars being used to buy up assets in the gold production and mining sector (something sovereign wealth funds also did back in late 2008 at the height of the crisis):
The money now is showing up. For example, Rick [Rule] went and got Korean money, and then also Chinese Money. That’s a billion and a half dollars that is coming in to this sector. K.K.R, a major fund, has now put up a billion and a half dollars to set up shop in Calgary for the junior resource sector. You see a lot of funds now, starting to say, “hey, we are getting back in to the junior resource sector because it is so cheap.”

If you go to the BRI website, they talk about all of the big shareholders. You have Tocqueville, Sprott, Sun Valley, KCR…
There’s a reason that well known investment firms run by contrarians like Sprott and Casey are buying gold. Because they know what is coming down the pike.
Yellen is going to continue where Bernanke left off, with the troubles. And the reality is, this is going to make a stronger bull market for gold and silver, and it’s going to be even a better market for the junior resource sector.
If gold and silver are heading to new highs it’s because something has gone terribly wrong in our economy and financial markets.
That being said, if gold is rising and the dollar is collapsing then in all likelihood we’ll see stratospheric price increases in everything from food to fuel, so preparing a contingency plan for this scenario is absolutely critical.
The scenario described here, as noted by Marin Katusa, is not just doom and gloom. It’s fact. The system as we know it is under pressure from all sides. When it implodes you’d better be ready.

A Military Strike In Syria Will Spark World War III

Spain’s public debt is the highest in 100 years and will be impossible to pay back. Unemployment is high in Spain and more layoffs are coming. To deposit money in Chase you will need a photo id so they can track cash deposits. The supreme leader of Iran does not believe the nuclear peace deal will succeed. Libya is close to a collapse. The war drums are beating and the central bankers/US government are pushing to remove Assad from power. The entire goal has always been to put a puppet government in Syria and to put all natural resources on the US dollar. The central bankers/US government will try many different tactics to have Assad removed but in the end they will most likely resort to a false flag event.

Billionaire George Soros doubles his bet that the market is heading for a CRASH

Soros Fund Management has doubled up a bet that the S&P 500 SPX is headed for a fall.
Within Friday’s 13F filings news was the revelation that the firm, founded by legendary investor George Soros, increased a put position on the S&P 500 ETF SPY -0.04% by a whopping 154% in the fourth quarter, compared with the third. (A put or short position basically gives the owner the right to sell a security at a set price for a limited time, and in making such a bet, an investor generally believes the security is going to decline.)
Soros highlighted risks coming out of China and drew a comparison with the lead-up to the crash of 2008.
It was Soros himself who famously once said: “I rely a great deal on animal instincts.” And as we all know, George’s made some big, crazy, winning bets in the past.
Full article:
“Soros Put” Hits Record As Billionaire’s Downside Hedge Rises By 154% in Q4 To $1.3 Billion
What are the two words that signify the loss of America to the tyrants? Answer: George Soros.
This ultimate insider is now dismantling the US Constitution as his mastermind political operative, John Podesta, takes the initiative for this planned tyranny, via the executive order.
Make no mistake, Podesta was brought into the White House to execute the executive order, i.e., the manipulation and use of the executive branch of the government without the benefit of the Constitution, i.e., the separation of powers. This is despotism.
Podesta, just like Obama, works for the central bankers. And George Soros (aka György Schwartz), the symbol of greed, is a facilitator of this gathering of power into a central location.
Soros uses his money to manipulate the politicians and the masses.
Therefore, a fully purchased Congress has no interest in stopping this takeover.
Soros,  the leading moneyman behind the left wing edge of the Democrat Party (MoveOn.org, ACORN and Podesta’s CAPS, etc.), is the international bad boy who engaged in dirty tricks to elect Obama. The way he operates, it’s surprising his passport allows him to travel abroad.
In his book “The Age of Fallibility,”  Soros wrote, “The main obstacle to a stable and just world order is the United States.”  He announced in 2003 that it is necessary to “puncture the bubble of American supremacy.” In the Atlantic Monthly of February 1997, he wrote, “The main enemy of the open society, I believe, is no longer the communist but the capitalist threat.”
Pushing for a world currency, the SDR, and never letting up on the destabilization of the US, USA Today’s immigration beat writer, Alan Gomez, recently outlined how the Soros-funded group, the National Immigration Forum (NIF), has been pushing House Republicans into passage of an Obama amnesty bill, working with the U.S. Chamber of Commerce, Facebook’s Mark Zuckerberg’s FWD.us, and New York City Mayor Michael Bloomberg’s Partnership for a New American Economy.
Amnesty could bring the number of Mexicans in the U.S. to anywhere from 64 to 83 million.
Nationwide, already the number of documented Hispanics in the U.S. has grown to 53 million, or nearly one-half the current population of Mexico — 115 million as of 2012
In addition, the Center for American Progress (CAP) which is funded heavily by megabillionaire George Soros, in a recent report had 180 staffers and a $27 million budget devoting most of its time promoting the Soros Democrat agenda through blogs, events, publications and the media.  It was CAP that ran Obama’s transition team under its president and founder, John Podesta, former chief of staff to President Bill Clinton.
KeyWiki shows Soros’ connections with the KGB while in Hungary, then his connections with Communism through the years, his felony conviction in France, his work as a former director of CFR, his proclaimed atheism, how he made his money and where he’s putting it, the scandals with his ex-wives and girlfriends… and progresses to his current activities.
KeyWiki, a site that profiles Leftist activists, includes this in its Soros profile:
The Seven Steps of Collapse
Soros is known as the man who broke the Bank of England. The prime minister of Malaysia called Soros an “unscrupulous profiteer.” In Thailand, he was branded an “economic war criminal.” They also said that he sucks the blood from people.
In 1994, George Soros stated: “Just right, that the former Soviet Empire is now called the Soros Empire.”
The following are George Soros’ seven steps for bringing down a regime and causing a currency collapse:
  • Step One: Form a shadow government using humanitarian aid as cover.
  • Step Two: Control the airwaves. Fund existing radio and TV outlets and take control over them or start your own outlets.
  • Step Three: Destabilize the state, weaken the government and build an anti-government kind of feeling in the country. You exploit an economic crisis or take advantage of an existing crisis — pressure from the top and the bottom. This will allow you to weaken the government and build anti-government public sentiment.
  • Step Four: Sow unrest.
  • Step Five: Provoke an election crisis. You wait for an election and during the election, you cry voter fraud.
  • Step Six: Take power. You stage massive demonstrations, civil disobedience, sit-ins, general strikes and you encourage activism. You promote voter fraud and tell followers what to do through your radio and television stations. Incitement and violence are conducted at this stage.
  • Step Seven: Outlast your opponent.[15]
George Soros
George Soros – Affiliations
Interesting stuff….. WOW
George Soros exposed!

The Death Of 8 World Bankers Is Mysteriously Sinister

Chase Imposes New Capital Controls on Cash Deposits

Customers have to show ID, can no longer deposit cash into another person’s account
Paul Joseph Watson
Prison Planet.com
February 17, 2014
JPMorgan Chase has irked its customers by imposing new capital controls that mandate identification for cash deposits and ban cash being deposited into another person’s account.
Air Force veteran Kristen Meghan received a letter from Chase informing her of “changes in how we accept cash deposits.”
“When making a cash deposit please; be ready to show a valid ID – deposit only into accounts that list your name,” states the letter.
The move is another example of how banks are becoming increasingly invasive and restrictive with how they treat their customers, while crypto-currency alternatives like Bitcoin offer total anonymity.
According to Meghan, when she asked a Chase bank teller why cash deposits couldn’t be made into another person’s account, she was told that the new regulation was imposed by government request.
According to Fox Business, Chase is “the first big bank to enact such a change.” Customers are already being asked for ID as of February 1, while cash deposits into accounts bearing someone else’s name will be banned from March 3 onwards.
Chase claims it is imposing the changes to prevent money laundering, although the policy is likely to cause massive inconvenience for families, such as parents who wish to deposit cash in accounts belonging to children who are away at college.
Representatives from Bank of America, Citigroup and Wells Fargo did not respond to questions on whether they would also be looking to impose the same rules.
Some analysts have speculated that such measures are a sign that banks are preparing for economic turmoil and potential bank runs. Last year it was reported that two of the biggest banks in America were stuffing their ATMs with 20-30 per cent more cash than usual in order to head off a potential bank run if the U.S. defaults on its debt.
This is by no means the first example of Chase imposing capital controls on their customers’ accounts.
In October last year, we reported on how Chase instituted policy changes which banned international wire transfers while restricting cash activity for business customers (both deposits and withdrawals) to a $50,000 limit per statement cycle.
The bank’s reputation was already under scrutiny after an incident last year when Chase Bank customers across the country attempted to withdraw cash from ATMs only to see that their account balance had been reduced to zero. The problem, which Chase attributed to a technical glitch, lasted for hours before it was fixed, prompting panic from some customers.
Other banks have also imposed capital controls in recent months, including HSBC, which is preventing customers from withdrawing larger amounts of money without written documentation proving how it is to be used.
Russian lender ‘My Bank’ also temporarily banned all cash withdrawals last month.

As Bank Deaths Continue to Shock, Documents Reveal JPMorgan Has Been Patenting Death Derivatives

By Pam Martens and Russ Martens: February 17, 2014
The probability of two vibrant young men in their 30s who are employed by the same global bank but separated by an ocean dying within six days of each other is remote. And few companies are in as good a position to understand just how remote as is JPMorgan: since 2010, it has received four patents on quantifying longevity risks and structuring wagers via death derivatives.
The two deaths at JPMorgan remain unexplained. Gabriel Magee, a 39-year old technology Vice President was found dead on the 9th level rooftop of JPMorgan’s European headquarters at 25 Bank Street in the Canary Wharf section of London on January 28 of this year. A London coroner’s inquest is scheduled for May 15 to determine the cause of death. Six days later, Ryan Crane, a 37-year old Executive Director involved in trading at JPMorgan’s New York office was found dead at his Stamford, Connecticut home. Wall Street On Parade spoke with the Chief Medical Examiner’s office in Connecticut and was told the cause of death is “pending,” with final results expected in a few weeks.
Magee’s death was originally reported by London newspapers as a jump from the 33rd level rooftop of JPMorgan’s building with the strong implication that eyewitnesses had observed the jump. The London Evening Standard tweeted: “Bankers watch JP Morgan IT exec fall to his death from roof of London HQ,” which then linked to their article which said in its opening sentence that “A man plunged to his death from a Canary Wharf tower in front of thousands of horrified commuters today.”
When Wall Street On Parade contacted the Metropolitan Police in London a few days later, there was no assurance that even one eyewitness was on record as having seen Magee jump from the building.
Crane’s death is equally problematic. The death occurred on February 3 but the first major media to report it was Bloomberg News on February 13, ten days after the fact, and making no mention of Magee’s unexplained death just six days prior.
According to information available at the U.S. Patent and Trademark Office, JPMorgan created the LifeMetrics Index in March 2007 as an “international index designed to benchmark and trade longevity risk.” The index was said to enable pension plans to hedge the risk of payments to retirees and incorporated “historical and current statistics on mortality rates and life expectancy, across genders, ages, and nationalities.” From 2010 through 2013, JPMorgan has received patent approval on four longevity related patents.
Reuters reported on August 26, 2013 that the long-term longevity bets taken on by the big banks have now started to cause pain as international capital rules known as Basel III require more capital to be set aside for longer-dated positions. The article noted that “JPMorgan likely has the biggest holdings of long-dated swaps because it is the biggest swaps trader on Wall Street, responsible for about 30 percent of the market by some measures, traders at rival firms said.”
One extremely long longevity bet taken on by JPMorgan was reported by Insurance Risk on October 1, 2008. According to the publication, JPMorgan entered into a 40-year £500 million notional longevity swap with Canada Life whereby Canada Life would make a fixed annual payment in return for a floating liability-matching payment that would increase if the annuitants lived longer than expected. JPMorgan was believed to have passed on some of the risk to hedge fund investors but retained the counterparty risk. Because many of these deals are private, the full extent of JPMorgan’s exposure in this area is not known.
Wall Street veterans have also commented on the fact that JPMorgan may actually stand to profit from the early deaths of the two young men in their 30s. As we reported in March of last year, when the U.S. Senate’s Permanent Subcommittee on Investigations released its report on JPMorgan’s high risk bets known as the London Whale debacle, its Exhibit 81 showed that JPMorgan’s Chief Investment Office was also overseeing Bank Owned Life Insurance (BOLI) and Corporate Owned Life Insurance (COLI) plans which allow the corporation to reap huge tax benefits by taking out life insurance policies on workers – even low wage workers – and naming the corporation the beneficiary of the death benefit. Both the buildup in the policy and the benefit at death are received tax free to the corporation.
According to the exhibit, the Chief Investment Office was tasked with “Maximization of tax-advantaged investments of life insurance premiums” for the BOLI/COLI plans. According to a report in the Wall Street Journal in 2009, JPMorgan had $12 billion in BOLI, noting that a JPMorgan spokesperson had confirmed the figure. Other insurance industry experts put the total for both BOLI and COLI at JPMorgan significantly higher.
In September of last year, Risk Magazine reported that the Basel Committee on Banking Supervision, the International Organization of Securities Commissions and the International Association of Insurance Supervisors had published a report in August warning regulators that longevity swaps may expose banks to longevity tail risk – meaning, for example, that actual death rates in a given portfolio may vary dramatically from a large population index.
One advisor is quoted as follows in the article: “You can see from the position paper that this market has a lot of characteristics that regulators don’t like in terms of banks getting involved in it. It’s based on long-dated risks, upfront payments and a serious element of hubris in assuming that the banks can model these risks better than the people who originated them. It’s potentially a market big enough to cause serious problems if it caught on and went wrong.”
That things are starting to go seriously wrong was evident in a Bloomberg News report that emerged last Friday. AIG reported that it was taking a $971 million impairment charge before taxes for 2013 on its holdings of life settlement contracts because people were living longer than expected. AIG is the company that was bailed out by the U.S. taxpayer to the tune of $182 billion during the financial crisis because of bets gone wrong.
Related Article:
A Rash of Deaths and a Missing Reporter — With Ties to Wall Street Investigations

Euro Debt Spells Danger for Dollar

• Mexico latest country to join BRICs to replace dollar as world currency
By Bill White
Since the Bretton Woods system was established after World War II, the American dollar has been the backbone of international finance. But with American power on the wane and the United States economy in peril, even America’s closest neighbors are looking for dollar alternatives, evidenced by a recent sharp upsurge in euro-denominated debt from developing countries, particularly Mexico.
As of mid-December, $55.3B worth of euro-denominated debt had been issued in 2013, up 34% from 2012, including major issues from Mexican companies like Petróleos Mexicanos, better known as Pemex, which sold more than $2B in bonds for the Europeans in November.
Pemex, the state-owned Mexican oil and gas company, said that investor interest in euro-denominated bonds was three times that of dollar-denominated bonds, reflecting fears of the long-term stability of the dollar versus the euro.
While the Fed has begun to ease back its policy of quantitative easing (QE), which was designed to use inflation to help the banking sector, the policy has generally failed.
There are concerns now that QE tapering could cause deflation, as the velocity of money continues to stay low. On the other hand, rising interest rates and budget problems could cause a demand for more money printing—now a mainstream belief in much of Congress—which would hurt returns on the bonds, making them less attractive to investors. So, rather than gamble on the U.S. dollar, Pemex issued in euros, followed by a number of the other Mexican companies like América Móvil, one of world’s largest corporations, and the Mexican government itself.
“The euro ‘has emerged as a more full-fledged alternative to issuing in dollars,’ said Dmitri Gladkov, head of Russian debt capital markets at J.P. Morgan Chase & Co., whose team helps Russian companies decide whether to issue bonds in euros, dollars or rubles.” ‘The capacity of the euro market has clearly proved to be exceptionally high,’” Gladkov told The Wall Street Journal, in a December 16, 2013 article entitled “Emerging-Markets Borrowers Tilt Toward Euro.”
Lower European interest rates make euro bonds more attractive to issuers, and German sovereign debt rate, which is the basis of many euro bonds, is part of a more stable, manufacturing and export-based economy.
“‘There’s both pent-up supply and pent-up demand for euro’ bonds, David Hinman, chief investment officer at SW Asset Management, LLC, said in an email” for the Journal article. “Investors are looking to diversify away from the dollar.”
This move against the dollar on global debt transactions is part of a larger move against the dollar internationally, as the BRICS nations—Brazil, Russia, India, China and South Africa—and others have begun signing bilateral and multilateral trade agreements in national currencies, and Russia has begun proposing an alternative, Eurasian-oriented, clone of Bretton Woods.

Bill White is a freelance journalist and publisher based in Virginia. He has also written articles for THE BARNES REVIEW (TBR) magazine.

Food Prices Soar As U.S. Government Says There’s No Inflation

Portland protesters bring pitchforks and torches to City Hall over anti-homeless proposal

Protesters in Portland, Ore., showed up at the doors of city hall carrying actual pitchforks and torches, to express their anger about proposals to change laws related to homelessness in the progressive city.
Portland’s leaders have begun debating a bill that would allow police to target homeless people sitting on sidewalks, according to The Oregonian.
The new laws would make it easier for police to clear out homeless encampments, which opponents say would merely exacerbate the problem as police discard homeless people’s only warm clothing and blankets during a purge.
Mayor Charlie Hales “told reporters at Oregon Live “This is not about homelessness. It’s about lawlessness.”
But a self-described “angry mob” of protestors took to City Hall on Tuesday waving pitchforks and torches. “We demand that our city council stop making homelessness a crime,” one protester identified only as “Justin” says to the camera.
Watch the protest unfold below.

Greek Farmers Block Athens with Tractors

farmers-taxationAfter unsuccessful negotiations between representatives of Greek farmers unions and the ministers Yannis Stournaras and Athanasios Tsaftaris, the farmers announced that they will be escalating their protests.

Greek farmers decided to continue their struggle in order to push the government to satisfy their demands which they claim are vital for their survival. They have announced a panhellenic rally on Wednesday, February 19 in the center of Athens, Greece. Farmers called all Greek citizens to participate, expressing their opposition to the government’s policy, which afflicts all workers and vulnerable social groups.
Farmers in Thessaly blocked the roadsFarmers in Thessaly, central Greece carried out a rally on Sunday as a response “to the intransigence of the Greek government,” blocking circulation in main highways of the region.
Moreover, farmers from Serres, northern Greece blocked the Egnatia highway on Sunday noon, for about half an hour, forming a human cordon.

Predator Banks Enter Brave New World of Epic Scams and Public Hasn’t Got a Clue

Wall Street is using loopholes in financial legislation to seize control of entire industrial chains.

Wall Street watchers have been concerned for some time about the monopolizing trend among big banks. One of the most alarming developments in recent years is a buying spree in which megabanks have been gobbling up physical assets.
Matt Taibbi of Rolling Stone has delved into this story in his characteristically colorful way, shining a light on how this particular activity took off, namely through an overlooked provision in the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999. This arcane-sounding piece of Clinton-era legislation ranks high on the list of Very Bad Ideas coming out of Washington since the 1980s. It essentially overturned Depression-era regulations that had kept the banking sector under control and opened the door for commercial banks, investment banks and insurance companies to merge their businesses.
The fine print of the bill also allowed commercial banks to dive into any activity that is “complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally.”
So what exactly classifies as “complementary” to financial activity? When the idea came up in Congress in 1999, JPMorgan’s Michael Patterson said it was something like American Express owning a lifestyle magazine that complemented its business. No biggie.
But in reality, it has meant pretty much everything. Like, for example, oil tankers and raw materials. The result is something the public never signed off on — banks getting their mitts on entire supply chains and industrial processes. Taibbi explains how this is going down:
“Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals. They likewise can now be found exerting direct control over the supply of a whole galaxy of raw materials crucial to world industry and to society in general, including everything from food products to metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum.”
Recently, something rotten occurred in Denmark, as Goldman Sachs launched its bid to buy a 19 percent stake in the national electricity provider, a deal that would give it control of key management decisions. The streets erupted in protest as Danes (some carrying images of vampire squids) raged at the idea that government ministers could have invited an American investment bank to exert so much control over the state energy grid. The deal actually set off acrisis in the Danish government.
In California, citizens found out recently that big banks have been rigging prices in the physical business interests they own. JPMorgan Chase and Barclays are accused of manipulating the delivery of electricity in California and elsewhere. Last year, JPMorgan paid $410 million to settle allegations of power market manipulation in California to the Federal Energy Regulatory Commission. Goldman Sachs, for its part, has come under scrutiny for allegedly delaying the delivery of metals from warehouses it owned so that it could manipulate prices (it has sinceoffered to speed delivery).
Banks not only own the supply chains, they also place bets on their activity in financial markets, such as buying commodities futures. The whole thing is a recipe for corruption and conflicts of interest. Regulators, who have doing precious little about the money laundering, bribery and other scams we already know about, have been slow to address these new problems, the scope of which may be very frightening indeed.
The financial crisis taught us that big banks have turned into dangerous companies that are not only too big to fail, but, as Attorney General Eric Holder openly admitted, too big to police. Their reach continues to extend into more areas of the economy, with little public debate. President Obama has surrounded himself with economic advisors who are not inclined to rein in the banks; some of the banks even participated in the dismantling of the laws that once protected American citizens from their predation.
A lot will depend on the ability of the regulators to adapt to the changes occurring in the banking industry. Wall Street is under pressure to get rid of some commodities assets amid growing awareness of their ability to muck around with the availability of supplies and prices. The Federal Reserve is moving toward tighter restrictions on bank roles in physical commodity markets, and has issued a request for public input on the matter.
Wall Street’s push into the physical commodities markets is a brave new world of financial risk, which will be assumed, as always, by you and me. Now we can add the fear of a catastrophic pipeline explosion to the list of events that might trigger another meltdown the taxpayers will end up paying for.
Meanwhile, you can bet Wall Street is looking for the next loophole.
Lynn Parramore is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of “Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.” She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet’s New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

New Bankster Same as the Old Bankster

At the Fed, The More Things Change, the More They Stay the Same

Last week, Federal Reserve Chairman Janet Yellen testified before Congress for the first time since replacing Ben Bernanke at the beginning of the month. Her testimony confirmed what many of us suspected, that interventionist Keynesian policies at the Federal Reserve are well-entrenched and far from over. Mrs. Yellen practically bent over backwards to reassure Wall Street that the Fed would continue its accommodative monetary policy well into any new economic recovery. The same monetary policy that got us into this mess will remain in place until the next crisis hits.
Isn’t it amazing that the same people who failed to see the real estate bubble developing, the same people who were so confident about economic recovery that they were talking about “green shoots” five years ago, the same people who have presided over the continued destruction of the dollar’s purchasing power never suffer any repercussions for the failures they have caused? They treat the people of the United States as though we were pawns in a giant chess game, one in which they always win and we the people always lose. No matter how badly they fail, they always get a blank check to do more of the same.
It is about time that the power brokers in Washington paid attention to what the Austrian economists have been saying for decades. Our economic crises are caused by central bank infusions of easy money into the banking system. This easy money distorts the structure of production and results in malinvested resources, an allocation of resources into economic bubbles and away from sectors that actually serve consumers’ needs. The only true solution to these burst bubbles is to allow the malinvested resources to be liquidated and put to use in other areas. Yet the Federal Reserve’s solution has always been to pump more money and credit into the financial system in order to keep the boom period going, and Mrs. Yellen’s proposals are no exception. Every time the Fed engages in this loose monetary policy, it just sows the seeds for the next crisis, making the next crash even worse. Look at charts of the federal funds rate to see how the Fed has had to lower interest rates further and longer with each successive crisis. From six percent, to three percent, to one percent, and now the Fed is at zero. Some Keynesian economists have even urged central banks to drop interest rates below zero, which would mean charging people to keep money in bank accounts.
Chairman Yellen understands how ludicrous negative interest rates are, and she said as much in her question and answer period last week. But that zero lower rate means the Fed has had to resort to unusual and extraordinary measures: quantitative easing. As a result, the Fed now sits on a balance sheet equivalent to nearly 25 percent of US GDP, and is committing to continuing to purchase tens of billions more dollars of assets each month.
When will this madness stop? Sound economic growth is based on savings and investment, deferring consumption today in order to consume more in the future. Everything the Fed is doing is exactly the opposite, engaging in short-sighted policies in an attempt to spur consumption today, which will lead to a depletion of capital, a crippling of the economy, and the impoverishment of future generations. We owe it not only to ourselves, but to our children and our grandchildren, to rein in the Federal Reserve and end once and for all its misguided and destructive monetary policy.
Copyright © 2014 Ron Paul

Actual Worth of Money – Dr. David E. Martin

Money, and the nature of a standard currency, is looked at as a recent hegemonic development for humanity with Dr. David E. Martin. The current of the US Dollar is demystified, and the larger context of how wealth is measured and exchanged is weighed in this Buzzsaw interview clip from the full length discussion hosted by Sean Stone.

EU legt Zwitserland sancties op

  Pranavian - Flickr / Creative Commons by/2.0
De Europese Unie heeft het overleg over de Zwitserse deelname aan een aantal Europese miljardenprojecten stilgelegd. Brussel wil voorlopig niet meer praten met Bern vanwege de uitkomst van een Zwitsers referendum.
Vorige week stemde een kleine meerderheid van de Zwitsers voor het beperken van de toestroom van migranten uit EU-landen naar Zwitserland. Als gevolg daarvan tekende de regering een geplande deal met Kroatië niet. Die overeenkomst ging over het toelaten van Kroatische werknemers in Zwitserland.


Brussel eist dat de Zwitserse regering die overeenkomst alsnog tekent omdat vrij arbeidsverkeer een van de fundamentele principes is van de EU. Als Zwitserland gebruikmaakt van allerlei voordelen van de EU, dan moet daar ook wat voor tegenover staan, stelde de president van de Europese Commissie Barroso.
De onderhandelingen die nu zijn gestaakt gaan over het onderzoeksproject Horizon 2020, waar vele miljarden mee gemoeid zijn, en het Erasmus-onderwijsproject.
De Zwitserse regering zoekt naar een manier om de Kroatische deal toch te tekenen en tegelijkertijd de uitkomst van het referendum in acht te nemen.

The World Bank: Rejecting “The Rule of Law”

“The proverb, ‘What you don’t know can’t hurt you”, originated in 1576 as, ‘So long as I know it not, it hurteth mee not.’ But the opposite is true.  Unpleasant hidden truths do the most harm.  The best way to fight corruption is to expose it.  Think of the World Bank as ENRON.” … Karen Hudes

by Karen Hudes (with Jim Fetzer)

Karen Hudes
When, thanks to Mark Novitsky, a federal whistleblower, I learned that Karen Hudes, who earned her J.D. at Yale, our most distinguished School of Law, and an M.Phil. in economics at the University of Amsterdam, which is also a formidable institution, had been removed from her position as Senior Counsel for the World Bank because of her efforts to expose corruption and reaffirm the rule of law in the form of appropriate standards of accounting, I was dumbfounded.  
What initially appear to be obscure issues of international finance, moreover, have the potential to sever ties between us and our NATO allies and weaken the national security of the United States.  The stakes involved are therefore extremely high for every American citizen.
During the World Bank and IMF Annual Meetings last October, with her encouragement, the Development Committee informed President Jim Yong Kim of the need for “a more open, transparent and accountable World Bank Group.”  The reasons that motivated that request included the following series of disturbing developments:

The Crisis in Cyprus as a Mini-Model

The threat by EU bankers to loot savings accounts held in Cyprus has raised red flags all over the world. As The New York Times (25 March 2013) has reported,
LIMASSOL, CYPRUS — It is not just about rich Russians and Cypriot retirees. Also vitally at stake in this island country’s banking crisis is Cyprus’s credibility as a place for international companies to continue doing business.
Take Avid Life Media, the Canadian-owned operator of some of the world’s biggest online dating sites. Only a few weeks ago it set up an office here as a base for its international operations, attracted to Cyprus — as hundreds of other foreign businesses have been — because of its reputation for financial stability, a low corporate tax rate, a friendly banking environment and most of all, a strong rule of law.
Now imagine that was the case for the most important bank of all, which affects the world’s economy.  Imagine that bank accounts were being looted world-wide and you will begin to appreciate the dimensions of the problem.

When I discovered that Karen Hudes’ reinstatement, which was being supported by the finance ministers of the nations of the world, was being blocked by its recently appointed president, Jim Yong Kim, who was formerly President of Dartmouth, I was further astonished, because I had encountered Kim before.  He had supported the publication for an article by a member of the computer science faculty, Hany Farid, who claimed that the backyard photographs used to convict Lee Harvey Oswald in the public mind were authentic, which was profoundly disturbing.

Hany Farid and “the backyard photographs”

That is a claim that others had long since proven false.  Jack White, the legendary JFK photo analyst, had testified to the House Select Committee on Assassinations (HSCA) when it had reinvestigated the deaths of JFK and of MLK in 1976-77 and had pointed out a dozen features that disqualify them.  Oswald himself had told Capt. Will Fritz, the Dallas Homicide detective who interrogated him, that the photo he was shown had his face pasted on someone else’s body.  Like other claims Oswald made at the time, subsequent research has proven that he was right.
The chin is not Lee Oswald’s chin, which was somewhat pointed, but a block chin; there is an insert line between the chin and his lower lip; and the  finger tips of his right hand are cut off, for example.  Even more interestingly, he realized that the two communist newspapers that Oswald was holding–The Militant and The Worker–had known dimensions and could serve as an internal rule to determine the height of the person who was holding them.  Using that method, he was able to establish that he was about 5’6″ tall, when Oswald was about 5’10″–which meant that either someone who was too short to be Oswald had posed for the photos or that they had been introduced too large when they were faked.  Either way, they could not possibly be authentic.
When I discovered that Hany Farid, who has a lab funded by the FBI, had published the claim that he had proven them to be authentic by showing that it was possible to replicate the shadow cast by the nose in one of them, I knew he was perpetrating a fraud on the public, because (1) there are four poses taken in different positions at different times, where it would have been virtually impossible for the nose shadow to remain constant from one to another; and (2) there are many other indications of fakery besides the shadow cast by the nose that prove fakery, where even if he had been right about the nose shadow, his conclusion of authenticity would have been wrong. He was violating a basic precept of science by not basing his reasoning upon all the available relevant evidence
So I wrote to President Kim to explain why Darmouth was committing a blunder in supporting Hany Farid’s claim, which I substantiated with multiple lines of proof.  Dartmouth stood pat, however, and never took steps to correct the record, even though it was a matter of immense public interest and concern.  I published an article about my experience with Kim in an article co-authored with Jim Marrs in OpEdNews, “The Dartmouth JFK-Photo Fiasco” (20 November 2009) and followed up by publishing my correspondence in “Blowing the Whistle on Dartmouth: Hany Farid in the nation’s service” (26 January 2010), which I regarded as a professional obligation.
It now appears to me that Kim may have been rewarded for his contribution to the public deception about the death of JFK by being appointed to the World Bank, just as Paul Wolfowitz appears to have been appointed by George W. Bush for his contributions to 9/11 and the “war on terror”.  I have long believed that, in Washington, D.C., the bigger the liar, the further you go.  I now believe that, when it comes to acting contrary to the public interest, the presidency of the World Bank may be another sign of compliance with corruption, as the experiences of Karen Hudes reflects.  I regard us as kindred spirits insofar as “whistle blowing” seems to be coursing through our veins.

Credit Ratings, NATO and Democracy: Too Big for Transparency?

by Karen Hudes

The World Bank and its next door neighbor, the International Monetary Fund (IMF), stand at the crossroads of the international financial system.  Both organizations are referred to as the “Bretton Woods” institutions, named for the site in New Hampshire where the founding conference of 44 countries was held in 1944.  The Bretton Woods institutions were created to prevent the “beggar thy neighbor” policies responsible for World Wars I and II.
The World Bank’s membership has now grown to 188 countries.  The World Bank and IMF share a Board of Governors comprising the Ministers of Finance of member countries.  They each have resident Boards of 24 Directors; seven Directors are appointed by 7 countries with the largest economies and 17 Directors are appointed by groups or “constituencies” of the remaining member countries.
Because of its crucial role at the heart of the world’s financial system, problems at the World Bank are going to have consequences for the world’s financial system.  I know “up close and personal” because I served as Senior Counsel for the World Bank for 21 years.  My qualifications included a J.D. from Yale Law School and M.Phil. in economics from the University of Amsterdam.  I know the institution inside and out.  And I have been blowing the whistle on improper practices at the World Bank that threaten the world’s fiscal integrity.

Reporting Corruption up the Chain of Command

I worked in the Legal Department of the World Bank from 1986-2007.  But in 2007, I was fired in retaliation for reporting corruption at the Bretton Woods institutions up the chain of command at the World Bank, through the US Treasury Department, and to the US Congress.  My report was quite specific, namely:  that the World Bank is out of compliance with the law, because its financial statements to the holders of its $135 billion in bonds, which are denominated in 52 currencies, are not in accord with Generally Acceptable Accounting Principles and Auditing Standards.
I never imagined how intractable the corruption at the World Bank was. A reliable stakeholder analysis, based on game theory modeling, shows that failure to adhere to the rule of law by the World Bank will bring about a world-wide currency war that will make what we lived through in 2008 pale by comparison.  The stakeholder analysis began predicting success in bringing the World Bank into compliance after the European Parliament invited me to testify on May 25, 2011. My testimony included a chronology of the cover-up. President Kim has already prompted Germany to repatriate the equivalent of $36 billion in gold.  As I told Sen. Harry Reid in 2008, “the greatest security risk to the US is in alienating its partners by acting as a hegemon”.

The Failure of Press Coverage

One reason it is so difficult to end the corrupt regime at the World Bank is because there has been virtually no press coverage.  It is possible to conclude from this that democracy in the United States has been weakened by the reduction in the number of corporations who own the bulk of US media outlets (from 50 to 5 in less than twenty years.)  Barclays Bank, JPMorgan Chase & Co, The Goldman Sachs Group along with a few others use interlocking corporate ownership to control 40 percent of total wealth and 60 percent of global revenues.
This concentration of power rests on disproportionate corporate investments of one percent of all corporations.  Theorists at the Swiss Federal Institute of Technology in Zurich, using natural systems mathematical modeling and comprehensive data on the actual corporate ownership of 43,000 transnational corporations, discovered this concentration of power.  When questions are raised about “who controls the world”, this one percent looks like a very promising candidate. The crux of the matter is that the corporations control the mass media and, through the mass media, control the politicians.
Although there have been occasional articles about these issues, where some of my commentaries about them have appeared in print, for the most part, interest in these questions from the public has been few and far between, where recent interviews with Deanna Spingola and with Jim Fetzer, who are alternative media radio hosts, have been the exception. Here are some links to our recent interviews:
  1. “Spingola Speaks” with Karen Hudes, 22 January 2013, HOUR 1
  2. “Spingola Speaks” with Karen Hudes, 22 January 2013, HOUR 2,
  3. “The Real Deal” with Karen Hudes, 6 March 2013,  1800-1930,
  4. “The Real Deal” with Karen Hudes, 20 March 2013, 1800-1830,
  5. “The Real Deal” with Karen Hudes, 21 March 2013, UPDATE,
  6. “The Real Deal” with Karen Hudes, 22 March 2013, 1800-1830,
[NOTE: Both interviews are followed by discussion with Mark Novitsky.]

The Early Years of the World Bank

The longest-serving General Counsel of the World Bank, Aaron Broches, helped to write the charters of the World Bank and IMF at the Bretton Woods conference in 1944. According to Broches, corruption intensified during former Secretary of Defense Robert McNamara’s presidency of the World Bank from 1968-81.  In 2007, the Board fired another president from the Pentagon, Paul Wolfowitz, after Wolfowitz gave a 35% salary increase to his girlfriend at the World Bank, Shaha Riza.
The Europeans asked for an inquiry. The investigation headed by Paul Volcker, unfortunately, did not address the corruption. The Europeans reacted by calling for an end to the 66 years’ “Gentlemen’s Agreement” that the US appoints the President of the World Bank and the Europeans appoint the Managing Director of the IMF.  Had the press reported my warnings to the authorities about the corruption, the US could have avoided substantial tarnish to its reputation and the loss of the Gentlemen’s Agreement.
My efforts to expose and correct the failure of the World Bank to adhere to standard accounting procedures has been enduring.  In 2005, for example, the Dutch Government asked the Audit Committee to end a campaign of retaliation against me for reporting to the Executive Board about an inaccurate evaluation on a failed Banking Sector project in the Philippines.  Then Senator Richard Lugar (R-IN) and the Senate Committee on Foreign Relations have written three letters to the World Bank on my behalf, asking for an end to the ongoing cover-up.

My Efforts to Expose Corruption

In 2007, I also met with Chris Armstrong in Senate Finance, Jayme Roth in Senator Bayh’s office, and Nicole Willet in Senator Clinton’s office.  Senators Lugar, Leahy and Bayh began asking GAO to investigate the World Bank in 2008, and the Audit Committee is requiring an independent audit of the World Bank’s internal controls. The Audit Committee also referred my case to the Bank’s Institutional Integrity Department (INT).  INT, which reports to the President of the World Bank, is used to intimidate staff.  Paul Volcker ignored INT’s sinister role and simply recommended that whistleblower retaliation cases should be removed from INT’s mandate.
I met with the Ministry of Foreign Affairs of the Dutch Government on 24 September 2007. The Dutch are not happy with the Volcker Report and the ongoing cover-up.  Moreover, previous Dutch Executive Directors, Herman Wijffels and Ad Melkert, disclosed that ‘third parties’ attempted to intimidate them and other members of the World Bank’s Board through shocking invasions of their private lives. The US violation of the safe-conduct normally accorded to diplomats is an egregious breach of honor.  Article VII, Section 8 of the World Bank’s Articles provides immunities to Executive Directors, officers and staff.
Ben Heineman (who was a member of the Volcker Panel) spoke at the Yale Law School on October 5, 2007.  On October 8, 2007, at the suggestion of minority staff on the Senate Foreign Relations Committee, I contacted Kenneth Peel at Treasury, to encourage the Bush Administration to end the cover-up on the Philippines Banking Sector Reform Loan and restore the rule of law to the Bank.  But the upshot of my efforts to correct improper procedures was to have me removed from my position as Senior Counsel, which has had an intimidating effect.

The Crucial Year 2007

I wrote to the Dean of the School of Law at Yale, Robert Post, on 14 October 2007 to express my appreciation for his offer of assistance in exposing the scandal.  I included an email that I had sent to The Wall Street Journal in an effort to correct the false impression it had conveyed about the Volcker Panel report, but it was to no avail. Here is what I wrote him:
Dear Bret,
I am a regular reader of your column, and wanted to set you straight about my next-door neighbor, Suzanne Folsom, and her role as Director of the World Bank’s Institutional Integrity Department. INT’s function under Ms. Folsom is not as you described in your column today.  Ms. Folsom has continued to direct INT along the same lines as her predecessor Maarten de Jong: as a “goon squad” that intimidates any staff member who steps out of line and informs the Board of Directors about what is actually happening at the World Bank.
Until August 1, 2007 I was in-house counsel at the World Bank, and fulfilled my ethical obligations to report to the Audit Committee about a cover-up on a failed Banking project in the Philippines which resulted in the corrupt take-over of the second largest Bank in the Philippines, a $493 million bail-out from Philippines Deposit Insurance Corporation when depositors lost confidence in Philippines National Bank, the cancellation of $200 million from the World Bank’s associated loan to the Government of the Philippines, and the cancellation of $200 million in financing from Japan.
Instead of defending me, INT attacked me in a flawed report to the Audit Committee.  I am not the only whistleblower whom INT has attacked.  The Senate is fully aware of this scandal at the World Bank, which served as a poignant backdrop to Mr. Wolfowitz’ forced departure.  The Europeans are withdrawing their funding from the World Bank in favor of the European Investment Bank as a result of these severe governance issues.  Relevant documentation is attached to this email.
Because of AOL’s limitation on the size of files that may be attached to emails, I will forward other supporting documentation to you separately.
I sent The Wall Street Journal a set of the following, extremely important, documents, expecting that the cover-up would end.  I did not anticipate that a small elite group who owned the press was stealing democracy from US citizens by censoring what could be published by the media.

Here is another letter concerning the misrepresentation of the effects of the Volcker panel, which I sent on August 30, 2007:
Dear Mr. Heineman,
I have informed the Senate about the World Bank’s failure to prevent the corrupt take-over of Philippines National Bank during supervision of the Philippines Banking Sector Reform Loan and the flawed report of the Institutional Integrity Department (“INT”) to the Board’s Audit Committee on this serious matter.  The Senate Foreign Relations Committee, concerned about the US reputation for probity, wrote to the World Bank three times requesting an end to the cover-up.
Ignoring recent legislation mandating whistleblower protections, the World Bank retaliated against me after I continued to report internal control lapses up the management chain.  Both Messrs. Zoellick and Debevoise refused to provide the whistleblower protections that the Senate, in fulfilling its oversight responsibilities, had specifically requested on my behalf.  Ana Palacio, the General Counsel, terminated my employment in the World Bank’s Legal Department on July 31, 2007 after sabotaging my transfer to the External Affairs Department, where I was to establish a global partnership involving the American Bar Association, the International Legal Assistance Consortium, the UNDP, the State Department, and the Center for International Legal Cooperation.
I have devoted my career to the World Bank, designed as a cornerstone of the global public commons when it was created at the end of World War II.  Paul Volcker’s interim report failed to address INT ‘s sinister role in attacking whistleblowers, widely understood by staff and members of the Board alike.   The documentation on my case leaves no doubt about INT’s lack of integrity, but there are other cases that provide serious indictments of INT as well.  The Europeans have been withdrawing their support from the World Bank in favor of the European Investment Bank as a consequence of the failure of the US to play by the rules within the Bank.
A highly accurate stakeholder analysis has predicted that the Gentleman’s Agreement, whereby the US appoints the president of the World Bank and Europeans appoint the managing director of the IMF, will not continue if the US continues to circumvent the rule of law at the World Bank.  I am forwarding a copy of this stakeholder analysis (see page 17 of attached Correspondence), which I have also provided to the Senate and State Department.
On July 23, at an open meeting of the Legal Department, Mr. Zoellick asked me whether the World Bank has a Sarbanes Oxley problem, and then asked me to help him solve it when I answered his question in the affirmative. I am requesting the Volcker Panel to carry out its mandate by ending the cover-up on the Philippines Banking Sector Reform Loan and resolving the associated internal control lapses and governance crisis within the World Bank.

Congressional Oversight

Republicans and Democrats in Congress tried to expose the corruption to the American public by calling for an inquiry by the Government Accountability Office. When the very rich group that owns the media in the United States refused to cooperate with the GAO, both political parties remained divided. On May 19, 2008, Sen. Grassley’s aide in the Senate Finance Committee advised me to request Joe Biden, Barack Obama, and Hillary Clinton to end the cover-up, which I did in a letter to them of May 19, 2008:
Subject: Re: Multilateralism at the World Bank
Dear Senators Clinton, Obama and Mikulski and Congressman Van Hollen,
In response to lapses in internal controls at the World Bank, Senators Lugar, Leahy and Bayh have called for an audit by the Government Accountability Office. On May 14th Chris Armstrong [Senator Grassley's Aide on the Senate Finance Committee] asked me to inform you about a cover-up of the World Bank’s supervision mistakes and corruption in the Philippines Banking Sector Reform Loan.
I will be stopping by later today with additional documentation showing the US’ behavior as a hegemon at the World Bank:
* the US violated diplomatic immunities by investigating Executive Director’s bank accounts to intimidate them and prevent them from holding Paul Wolfowitz accountable for giving his girlfried Shaha Riza exhorbitant salary increases. (Eliot Spitzer was victim of a similar investigation.)
* the US gave narrow terms of reference to the Volcker Panel to exclude the Panel from investigating the goon squad behavior of the Institutional Integrity Department. INT attempted to intimidate me in order to perpetuate an incorrect evaluation of the Bank’s performance on the Philippines Banking Sector Reform Loan and cover-up the Bank’s supervision mistakes on that project. As a result, the Volcker Panel’s recommendations do not address internal control problems raised by INT’s lack of independence.
* the US has ignored appropriations legislation and letters from the Committee on Foreign Relations requiring whistleblower protections at the World Bank.
The US failure to respect the multilateral governance structure and its obligations under the Articles of Agreement creating the World Bank raise Constitutional law issues. In April 2010, the European Community renounced the Gentleman’s Agreement which had been in effect since 1945 whereby the US appoints the President of the World Bank.
During hearings on a capital increase for the World Bank, Senator Lugar had this to say about the World Bank’s continuing to stonewall the GAO inquiry:
“A few years ago, I joined then-Senator Biden, Senator Leahy, Senator Bayh, and others in asking the Government Accountability Office to conduct a review of the World Bank regarding its ability to fight corruption and to conduct environmental assessments. But, at that time, the GAO did not receive clearance from the World Bank to commence its work. What is delaying that review and what could be done to ensure that the GAO has the ability to carry out its work in this endeavor?” GAO is now facing $50 million in budget cuts.

Because they remain divided, both parties have continued to conceal the corruption from the American people, which I appealed to Sen. Harry Reid to end in this letter of 24 September 2008:

SEC and Federal Reserve

The World Bank’s Audit Committee appointed KPMG to audit the World Bank’s internal control over financial reporting. When KPMG did not follow Generally Accepted Audit Principles and Standards, the UK’s Serious Fraud Office called the US Securities and Exchange Commission.
The World Bank’s access to the capital markets is regulated by the Chairman of the SEC and the National Advisory Council on International Monetary and Financial Policies. I asked the Chairman of the Federal Reserve, Secretary of State, and other members of the NAC, “May the World Bank retaliate against persons who inform US Congress and the Board of Governors of the World Bank’s compliance issues?” and whether “KPMG [was] entitled to give false and misleading audit opinions to IBRD’s bondholders?”
The Ombudsman of the Federal Reserve acknowledged that “I further understand that you are concerned that these issues threaten the World Bank’s credit rating and the stability of the international financial system,” but claimed that my complaint did not fall within the Federal Reserve Board’s authority.  I responded that, since Chairman Bernanke had not recused himself when I first wrote to him, “any belated attempts now are ineffectual.”

UK Fires Secretary of International Development

A UK whistleblower has also reported World Bank securities laws violations to the House of Lords, which has recommended that the UK reduce its contribution to the World Bank pending further study.  On October 3, 2011, I informed Secretary Geithner of this fact during his testimony to the House Committee on Financial Services. The UK’s Financial Reporting Council is investigating KPMG’s failure to follow auditing standards. The UK replaced Andrew Mitchell as Secretary of International Development on September 4, 2012.
Another positive development is that the individual states also regulate the World Bank under blue sky laws.  I have been informing the attorneys general, governors, and chief justices of the World Bank’s compliance issues. Congress is requiring the World Bank to make significant progress in protecting its whistleblowers before funds for the World Bank’s capital increase are disbursed under Section 7082 of the Consolidated Appropriations Act of 2012, signed into law on December 23, 2011.
The National Taxpayer’s Union has a petition about this corruption and initiated a blog about my efforts as a whistle blower about the World Bank. As I informed Congressional appropriations committees, “The Treasury Department should be sanctioned for its report to the Appropriations Committees dated November 21, 2012 on World Bank Reform pursuant to Section 7082 of the Consolidated Appropriations Act, 2012.  The uncertified report is inaccurate in all material respects.”

Corruption in the Federal Courts

As the cover-up continued, I bought a World Bank bond and sued the World Bank and KPMG under the securities laws.  I also sued the World Bank’s medical insurance administrator for disclosing the names of my doctors so that the World Bank could question my mental health and defame me.   The Judge in the District Court dismissed my case, ignoring that the World Bank was not immune in lawsuits brought by bondholders.
My case in the Court of Appeals was assigned to the same panel that refused rights under the Constitution to prisoners in Guantanamo Bay.  My computer was hacked to destroy my brief at midnight the day before a filing deadline in the Court of Appeals.  I retrieved an earlier draft from the clouds and stayed up all night to file on time.  On the way to the court I was disoriented by directed energy weaponry.
The Court of Appeals invalidated the filing on a minor technicality, but I managed to refile later in the day electronically. The Panel issued a hasty non-published opinion the day after I blogged that the Board of the World Bank would take over supervision of the litigation because the World Bank General Counsel was conflicted out.
  • Mitt Romney appointed Robert Zoellick, the former President of the World Bank, as his national security transition planning chief.  In the final debate for the US presidency, Bob Schieffer did not ask Mitt Romney or Barack Obama what they intend to do to fight international corruption.

Where things stand

Dr. Jim Yong Kim, President of the World Bank, has refused to tackle the corruption.  He has even had me locked out of the World Bank’s headquarters.  On March 19, 2013, I reported to the World Bank, informing Allied Barton’s security personnel that I was duly reinstated by the shareholders of the World Bank.  Allied Barton illegally denied me a security badge.  An Allied Barton officer raised his voice to me.

The World Bank, under Dr. Kim’s presidency, called the DC police on a legal officer of the World Bank whose reinstatement was necessary in order to qualify for the US contribution to the World Bank’s capital increase. Notwithstanding that the World Bank refused to confirm any request to the police in writing in an attempt to evade accountability, I left the premises at the request of the DC police.  However, I did report to the 2nd District Precinct that the DC police had been derelict in their duties.
Republicans and Democrats in Congress have tried to expose the corruption to the American public by calling for an inquiry by the Government Accountability Office.  Congress has attempted to fight the corruption by refusing to disburse the World Bank capital increase until there is substantial progress in eliminating the effects of retaliation against whistleblowers who disclosed illegality and corruption.  The UK and EU Parliaments have also published testimony and held hearings on the corruption.
The World Bank has attempted to intimidate the World Bank’s Board members, which violates federal, state, and international securities laws.  Fortunately, a team of whistleblowers disclosed this corruption and lawlessness to state governors, attorneys general, and chief justices of state supreme courts.  State authorities, together with NATO and other allies, are attempting to prevent this corruption from lowering the US credit rating and causing a currency war between nations.
The situation in Cyprus appears to be growing increasingly more serious. The prospects for the World Bank itself are also increasingly in jeopardy, where Brazil, Russia, India, China and South Africa (the BRICS nations) are planning to create their own alternative World Bank. These consequences might well have been avoided had President Kim adhered to the principles of the rule of law, reinstated me and implemented appropriate accounting procedures.  That he has done none of these, alas, remains a cause of grave concern, where his past performance in relation to JFK is anything but reassuring.

Karen Hudes, J.D., maintains the Law Offices of Karen Hudes in Washington, D.C.  She served as Senior Counsel for the World Bank for 21 years and maintains a web site at  www.kahudes.net