Friday, March 29, 2013

It Can Happen Here: The Bank Confiscation Scheme for US and UK Depositors

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.  
New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March 19th:
The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . .
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
Can They Do That?
Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.
The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:
An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.
No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only  mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.
An Imminent Risk
If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.  That this dire scenario could actually materialize was underscored by Yves Smith in a March 19th post titled When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives.  She writes:
In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.
One might wonder why the posting of collateral by a derivative counterparty, at some percentage of full exposure, makes the creditor “secured,” while the depositor who puts up 100 cents on the dollar is “unsecured.” But moving on – Smith writes:
Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation [to] its depositary in late 2011.
Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? Smith quotes Bloomberg:
. . . Bank of America’s holding company . . . held almost $75 trillion of derivatives at the end of June . . . .
That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
$75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in notional derivatives each than the entire global GDP (at $70 trillion). The “notional value” of derivatives is not the same as cash at risk, but according to a cross-post on Smith’s site:
By at least one estimate, in 2010 there was a total of $12 trillion in cash tied up (at risk) in derivatives . . . .
$12 trillion is close to the US GDP.  Smith goes on:
. . . Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. . . . Lehman failed over a weekend after JP Morgan grabbed collateral.
But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors.
Perhaps, but Congress has already been burned and is liable to balk a second time. Section 716 of the Dodd-Frank Act specifically prohibits public support for speculative derivatives activities. And in the Eurozone, while the European Stability Mechanism committed Eurozone countries to bail out failed banks, they are apparently having second thoughts there as well. On March 25th, Dutch Finance Minister Jeroen Dijsselbloem, who played a leading role in imposing the deposit confiscation plan on Cyprus, told reporters that it would be the template for any future bank bailouts, and that “the aim is for the ESM never to have to be used.”
That explains the need for the FDIC-BOE resolution. If the anticipated enabling legislation is passed, the FDIC will no longer need to protect depositor funds; it can just confiscate them.
Worse Than a Tax
An FDIC confiscation of deposits to recapitalize the banks is far different from a simple tax on taxpayers to pay government expenses. The government’s debt is at least arguably the people’s debt, since the government is there to provide services for the people. But when the banks get into trouble with their derivative schemes, they are not serving depositors, who are not getting a cut of the profits. Taking depositor funds is simply theft.
What should be done is to raise FDIC insurance premiums and make the banks pay to keep their depositors whole, but premiums are already high; and the FDIC, like other government regulatory agencies, is subject to regulatory capture.  Deposit insurance has failed, and so has the private banking system that has depended on it for the trust that makes banking work.
The Cyprus haircut on depositors was called a “wealth tax” and was written off by commentators as “deserved,” because much of the money in Cypriot accounts belongs to foreign oligarchs, tax dodgers and money launderers. But if that template is applied in the US, it will be a tax on the poor and middle class. Wealthy Americans don’t keep most of their money in bank accounts.  They keep it in the stock market, in real estate, in over-the-counter derivatives, in gold and silver, and so forth.
Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank.  Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which a major bank crisis no doubt will be.
The Swedish Alternative: Nationalize the Banks
Another alternative was considered but rejected by President Obama in 2009: nationalize mega-banks that fail. In a February 2009 article titled “Are Uninsured Bank Depositors in Danger?“, Felix Salmon discussed a newsletter by Asia-based investment strategist Christopher Wood, in which Wood wrote:
It is . . . amazing that Obama does not understand the political appeal of the nationalization option. . . . [D]espite this latest setback nationalization of the banks is coming sooner or later because the realities of the situation will demand it. The result will be shareholders wiped out and bondholders forced to take debt-for-equity swaps, if not hopefully depositors.
On whether depositors could indeed be forced to become equity holders, Salmon commented:
It’s worth remembering that depositors are unsecured creditors of any bank; usually, indeed, they’re by far the largest class of unsecured creditors.
President Obama acknowledged that bank nationalization had worked in Sweden, and that the course pursued by the US Fed had not worked in Japan, which wound up instead in a “lost decade.”  But Obama opted for the Japanese approach because, according to Ed Harrison, “Americans will not tolerate nationalization.”
But that was four years ago. When Americans realize that the alternative is to have their ready cash transformed into “bank stock” of questionable marketability, moving failed mega-banks into the public sector may start to have more appeal.
Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are and For details of the June 2013 Public Banking Institute conference in San Rafael, California, see here.

Anatomy of the Bank Run

Lew Rockwell – by Murray N. Rothbard
It was a scene familiar to any nostalgia buff: all-night lines waiting for the banks (first in Ohio, then in Maryland) to open; pompous but mendacious assurances by the bankers that all is well and that the people should go home; a stubborn insistence by depositors to get their money out; and the consequent closing of the banks by government, while at the same time the banks were permitted to stay in existence and collect the debts due them by their borrowers.  
In other words, instead of government protecting private property and enforcing voluntary contracts, it deliberately violated the property of the depositors by barring them from retrieving their own money from the banks.
All this was, of course, a replay of the early 1930s: the last era of massive runs on banks. On the surface the weakness was the fact that the failed banks were insured by private or state deposit insurance agencies, whereas the banks that easily withstood the storm were insured by the federal government (FDIC for commercial banks; FSLIC for savings and loan banks).
But why? What is the magic elixir possessed by the federal government that neither private firms nor states can muster? The defenders of the private insurance agencies noted that they were technically in better financial shape than FSLIC or FDIC, since they had greater reserves per deposit dollar insured. How is it that private firms, so far superior to government in all other operations, should be so defective in this one area? Is there something unique about money that requires federal control?
The answer to this puzzle lies in the anguished statements of the savings and loan banks in Ohio and in Maryland, after the first of their number went under because of spectacularly unsound loans. “What a pity,” they in effect complained, “that the failure of this one unsound bank should drag the sound banks down with them!”
But in what sense is a bank “sound” when one whisper of doom, one faltering of public confidence, should quickly bring the bank down? In what other industry does a mere rumor or hint of doubt swiftly bring down a mighty and seemingly solid firm? What is there about banking that public confidence should play such a decisive and overwhelmingly important role?
The answer lies in the nature of our banking system, in the fact that both commercial banks and thrift banks (mutual-savings and savings-and-loan) have been systematically engaging in fractional-reserve banking: that is, they have far less cash on hand than there are demand claims to cash outstanding. For commercial banks, the reserve fraction is now about 10 percent; for the thrifts it is far less.
This means that the depositor who thinks he has $10,000 in a bank is misled; in a proportionate sense, there is only, say, $1,000 or less there. And yet, both the checking depositor and the savings depositor think that they can withdraw their money at any time on demand. Obviously, such a system, which is considered fraud when practiced by other businesses, rests on a confidence trick: that is, it can only work so long as the bulk of depositors do not catch on to the scare and try to get their money out. The confidence is essential, and also misguided. That is why once the public catches on, and bank runs begin, they are irresistible and cannot be stopped.

We now see why private enterprise works so badly in the deposit insurance business. For private enterprise only works in a business that is legitimate and useful, where needs are being fulfilled. It is impossible to “insure” a firm, even less so an industry, that is inherently insolvent. Fractional reserve banks, being inherently insolvent, are uninsurable.
What, then, is the magic potion of the federal government? Why does everyone trust the FDIC and FSLIC even though their reserve ratios are lower than private agencies, and though they too have only a very small fraction of total insured deposits in cash to stem any bank run? The answer is really quite simple: because everyone realizes, and realizes correctly, that only the federal government – and not the states or private firms – can print legal tender dollars. Everyone knows that, in case of a bank run, the U.S. Treasury would simply order the Fed to print enough cash to bail out any depositors who want it. The Fed has the unlimited power to print dollars, and it is this unlimited power to inflate that stands behind the current fractional reserve banking system.
Yes, the FDIC and FSLIC “work,” but only because the unlimited monopoly power to print money can “work” to bail out any firm or person on earth. For it was precisely bank runs, as severe as they were that, before 1933, kept the banking system under check, and prevented any substantial amount of inflation.
But now bank runs – at least for the overwhelming majority of banks under federal deposit insurance – are over, and we have been paying and will continue to pay the horrendous price of saving the banks: chronic and unlimited inflation.
Putting an end to inflation requires not only the abolition of the Fed but also the abolition of the FDIC and FSLIC. At long last, banks would be treated like any firm in any other industry. In short, if they can’t meet their contractual obligations they will be required to go under and liquidate. It would be instructive to see how many banks would survive if the massive governmental props were finally taken away.
Murray N. Rothbard (1926–1995) was dean of the Austrian School, founder of modern libertarianism, and chief academic officer of the Mises Institute. He was also editor – with Lew Rockwell – of The Rothbard-Rockwell Report, and appointed Lew as his executor. See Murray’s books.

"The Most Lucrative Insider Trading Scheme In U.S. History"

"Mathew Martoma and his hedge fund benefitted from what might be the most lucrative insider tip of all time."
Martoma worked for SAC's Stevie Cohen.
Manhattan U.S. Attorney Preet Bharara, Robert Khuzami, director of the Securities and Exchange Commission's Division of Enforcement and other officials speak at a news conference in New York to review charges against Mathew Martoma, a former portfolio manager for Steven A. Cohen’s SAC Capital Advisors LP, for an insider-trading scheme that netted as much as $276 million for the hedge fund. Prosecutors charged Martoma with trading on insider tips about clinical trials of bapineuzumab, a drug to treat Alzheimer’s diesease. Martoma, 38, is accused of advising Cohen to sell shares of Wyeth LLC and Elan Corp. before bad news about the drug’s prospects was announced.

Full details:

GASPARINO: How To Nail Stevie Cohen

The home of Mathew Martoma stands in the Royal Palm development in Boca Raton.

The recent collapse of Cyprus banks will broker World War across Europe and the United States

No Significant Capital Flows Into Gold From So Called ‘PIIGS’ Yet

by GoldCore

Today’s AM fix was USD 1,602.50, EUR 1,253.13 and GBP 1,057.41 per ounce.
Yesterday’s AM fix was USD 1,591.00, EUR 1,243.75 and GBP 1,052.39 per ounce.
Spot gold and silver closed at $1,606.40/oz and $28.79/oz.

Precious Metals and Currencies Table – (Bloomberg)

Gold continues to consolidate above $1,600 an ounce today supported by widespread concerns that the expropriation of Cyprus deposits could become a blueprint for solving banking crises in the Eurozone.
This is increasing gold’s safe haven appeal and will continue to do so in the coming months. As will the real risk of deepening financial instability in the euro zone stoked by the crisis in Cyprus where hundreds of anxious depositors are withdrawing as much of their savings as they can after their banks reopened.
Depositors in Luxembourg, Slovenia, Spain, Italy, Portugal and Ireland will be made more nervous by the scenes of queues outside banks in Cyprus today.
Gold is on track for a 1.6% gain in March, its first monthly rise in six.
For the quarter, gold is 4.3% lower in dollar terms and 1.4% lower in euros. However, signalling that the demise of gold is greatly exaggerated, gold is 3.7% higher in Japanese yen and 2.6% higher in sterling.

Gold in USD, YTD – (Bloomberg)

The quarter or year to date charts suggest that gold is consolidating and given that the major fiscal, financial and monetary challenges that continue to face the EU and all major economies, we continue to be believe gold remains in a secular bull market.
Currency debasement is set to continue and this allied to the risk of wealth confiscation makes physical bullion a vital asset to own.

Gold in Sterling, YTD – (Bloomberg)
GoldCore have been very busy on the sell side in recent weeks which suggests we are close to a bottom. This week was the first week in three where there were more buyers than sellers.
There were a lot of new account openings after the Cyprus crisis began and in recent days, particularly from Spain and Italy, but there have been no huge flows into gold and nothing on the scale of the Lehman panic.
There are real and growing concerns out there among the European public but as of yet the mass of retail and savers and investors are not concerned enough or more likely not aware enough to diversify into gold.

Gold in Euros, YTD – (Bloomberg)

Whoever thought we’d see the issue of safety of deposits come into question?
We did. Since the Lehman Brothers debacle and near collapse of the world’s financial system, we said that there was a possibility that what happened in Argentina and Russia – capital controls including deposit withdrawal restrictions  and other draconian measures-  would likely be seen in massively indebted periphery nations.
However, we thought such regressive moves would come from misguided and desperate national governments – not from supranational organisations such as the EU and the IMF and from the ECB.
We believe that growing awareness of the risk for individuals and businesses of keeping all their savings and capital in deposit accounts and a gradual realisation of the importance of diversification will lead to significant capital flows into gold.
As one astute financial journalist said to me “ ‘cash in the bank’ doesn’t have quite the same ring to it anymore.”
In most European countries, except for Germany, Austria and Switzerland, cash has been ‘king’ for some time, but that has now changed. This is especially the case as the expropriation was not the doings of the Cypriot government rather it was that of the Troika – the EU, the ECB and the IMF.
Gold is financial insurance which protects against inflation and expropriation of financial assets – such as pensions and now deposits.
Recent events show the wisdom of the old Wall Street adage to always keep 10% of one’s wealth in gold and hope it does not work.


Gold holds above $1,600 as Cyprus fallout supports - Reuters
Cyprus Banks to Reopen: container trucks loaded with cash arrive - Reuters
Russia to ban cash transactions over $10,000 - Forbes
Central Banks Bought Just $3 Billion Of Gold In 2013: UBS - Forbes
How Safe Are Your Savings? – The Tuam Herald
Russia, South Africa plan OPEC-type cartel for platinum and palladium – Market Watch
Faber: Deposits At Risk Everywhere Including US As Seen With MF Global - Bloomberg
Cyprus Shows Your Savings Will be Stolen! UK Theft is by Means of High Inflation– Market Oracle
Keiser Report: ‘Yes, No, Maybe’ World Order – Max Keiser
US National Debt – Nearly $17 Trillion – U.S. Debt Clock
Gold Price Isn’t Irrelevant But Financial Journalism Is - GATA
For breaking news and commentary on financial markets and gold, follow us onTwitter.

Marc Faber: “We are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide.”

Marc Faber, publisher of the Gloom, Boom & Doom report, appeared on “Bloomberg Surveillance” with Tom Keene and Alix Steel today, saying that he sees “considerable downside risk” for U.S. stocks and
Faber went on to say, “We are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide.”

Faber on whether he’s participated in the equity rise in the U.S.:

“I think that I was relatively positive about U.S. stocks since March 2009. I haven’t been shorting any stocks since 2009. The U.S. march is up and consumer confidence is down. Emerging markets are performing badly relative to the U.S.. the dollar is strong, indicating a tightening of international liquidity. I do not think the U.S. market will go up a lot from here. I rather think there is now considerable downside risk.”

On whether Europe can repair its house:

“They can repair it and actually Europe now has a current account surplus, which is positive. But obviously the economy is contracting. We are in recession in Europe. This will have an impact on the corporate profits of U.S. corporations as well because 40% of S&P earnings come from overseas, but the bulk actually comes from Europe and not emerging countries. I think that corporate profits in the U.S. will continue to contract as they have actually — according to S&P — contracted in the first quarter of 2012.”

On why gold hasn’t held up as a safe haven:

“When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. I just mentioned that it doesn’t flow evenly into the system. Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S. So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.”

On whether the raiding of bank accounts in Cyprus set a precedent for Europe:

“MF Global, the depositors were also raided. It is nothing unusual. Philosophically I believe that we shouldn’t have deposit insurances, blanketed insurances by governments because it would force savers to be very careful with which bank they would deposit the money. The good banks would pay very low interest and take low risks and the banks that take high risks would have high interest. By the way, in Cyrus, banks were paying very high interest like in Lebanon at the present time I can get 6% on my deposits. So the depositors should have known that something is dangerous, but I would say that the principal now is very important to understand. Until now, the bailouts in Europe and the U.S. were at the expense of the taxpayer. And onwards, in my view, the bailouts will also be at the expense of the asset holders, the well-to-do people. So if you have money — like I am concerned — I am sure the governments will one day take away 20-30% of my wealth.”

BAILOUT: A Song For Bernanke, Geithner And Paulson

Note from DB: To most of you this will seem crass, crude, generally in poor taste, and I understand that.  But put yourself in my shoes.  I've been running this site alone for more than 4 years.  It's been 12 hours per day 6 days per week for 52 months.  Think about that for a minute, and instead of wondering why I posted this clip, ask yourself why signs of my insanity don't show up more often on the front page.  That's the much better question my friends.  Consider yourselves lucky..

Profanity warning.  Start watching at 2:00.
For reasons known only to Cheyenne and director Sean Fahey, this is NOT a clip in the award-winning documentary Bailout.  The mood changes at 2:10.  Adult content and profanity warning, but nothing you will hear differs markedly from how Ben, Timmaaay, and Hank have treated you.
Bailout's Sergio Mayora sings to a few friends.

Trailer for Bailout:

Bailout features Dylan Ratigan, Chris Whalen, Yves Smith, Chris Hedges and Karl Denninger.
Order a DVD Here

Check out the review:
Bailout wins Best Documentary at Derby City Film Festival...

In case you missed it, the sequel was announced yesterday:

Max Keiser To Star In BAILOUT 2 - War On Banksters

PressTV: Look out! The ‘BRIIICS’ are coming!

Look out! The ‘BRIIICS’ are coming!
Thu Mar 28, 2013 3:40AM GMT
By Prof. Rodney Shakespeare
The importance of the BRICS summit cannot be overestimated partly because it represents new countries beginning to take power and partly because it heralds a new world coming into being.”
Yes, BRIIICS, with three “I”s. That’s because to the countries of Brazil, Russia, India, China and South Africa (which have just held a summit in Durban, South Africa) will soon be added Iran and Indonesia.
Iran is a stalwart moral and political leader. It stands up against Zionism. It has huge natural resources. It is making extraordinary technological progress. It will soon be a BRIIICS member.
And so will Indonesia, which has the world’s fourth largest population, a fast developing economy (around 7% per year) and, again, huge natural resources.
Already, the present BRICS have 40% of the world’s population, 30% of its land mass, and 25% of its GDP with the latter being a sharply rising figure. Other countries, like Venezuela, Turkey, Egypt, Pakistan and Malaysia, are certain to join in.
Much more important, however, is the BRICS decision to set up a new development bank for long-term infrastructure. This is intended to rival, indeed, outclass, the Western-backed institutions. The underlying rationale is simple: the BRICS are determined to challenge Western political and economic dominance and, in particular, to break the dominance of the International Monetary Fund and the World Bank, which have not served the development needs of poor countries and have generally served only to put them into ever-increasing, un-repayable debt.
All of which is excellent news. The West has exploited emerging and poor countries and everywhere has been financially and militarily aggressive. Put simply, other countries are fed-up with the West: they have had enough.
The new bank, however, has more purposes than just being a development bank. American aggression, for example, is ultimately dependent upon the US dollar being the world’s reserve and main trading currency. The BRICS are going to end that by establishing a new reserve and trading currency.
Indeed, the situation can be put even more clearly. The West has long exploited and oppressed everybody that it could but now the boot, in the traditional metaphor, is on the other foot. Political power is shifting away from the West; economic power is shifting away from the West and its moral authority has almost completely disappeared (torture, assassinations, the creeping genocide of the Palestinians and the deliberate furtherance of a vicious sectarianism have seen to that).
Significantly, the BRICS are objecting to sanctions and war threats against Iran and are strongly opposed to Zionist Israel. It will not be long they declare that Israel is a pariah state.
Perhaps the most significant outcome of the BRICS summit is the proposed creation of an optic fibre cable linking all five states (with relatively easy extensions to Iran and Indonesia). Indeed, it could be that the BRICS are constructing an independent global optic fibre internet system or at least an extensive one over which they will have complete control. The BRICS are intensely aware that the USA, denying the evidence of its own sixteen intelligence agencies, is pursuing a Zionist agenda against Iran which includes excluding Iran from the SWIFT international banking system and other banking transactions. The new cable should put an end to that.
The BRICS are raising the flag of independence and are telling the West that its abuse of others has gone so far that the others are going to make their own way in life. And that will really matter because more and more Non-Aligned Movement nations will be joining the BRICS in various ways which will particularly include regional, economic, financial, military and technological agreements. An example is that China and Brazil have signed a currency swap deal under which they will be using their own currencies for half of their mutual trade i.e., the US dollar will not be involved. For a while the US dollar can be expected to remain the main trading currency – until suddenly it isn’t.
Furthermore, Africa, for example, long exploited solely for its minerals and resources with no concern for the lives of the inhabitants, is simply going to turn to those who can provide the one big thing that Africa needs – industrialisation.
The importance of the BRICS summit cannot be overestimated partly because it represents new countries beginning to take power and partly because it heralds a new world coming into being.
However, a new world is not necessarily a better world and the BRICS, becoming the BRIIICS and much more, must be careful not to incorporate, without realising, assumptions and practices stemming from corrupt old Western institutions, thinking and practices. Chief of these is thinking that it does not matter if there is huge rich-poor division. This is at the heart of corrupt Western ‘trickle-down’ economics and is a complete breach of fundamental market principle, which says that producers and consumers must be the same people i.e., real productive (and therefore consuming) power must be spread to everyone in society.
Another corrupt assumption is that interest is necessary for the spreading of real productive capacity. Interest is not necessary: it is an unnecessary tax imposed by the global financial elite merely for its own benefit. The BRIIICS must ensure that the commercial banks are controlled so that they can only lend their own money (which they can then waste, if they want to, or charge interest on it). But the main money supply, for the spreading of the real economy, must stem, interest-free, from the national bank (although it may be administered by the commercial banks making only a fair administration charge).
Jalal (making a comment on the Press TV website) writes: “This is the best thing that could happen to the world. A new power that will not let the ex-colonials have the big cake to themselves as usual. This could also be the right path to finally new world order that will contribute to free human being and lead mankind towards a more balanced and harmonious world.”
Quite right, Jalal.

Ron Paul With Lew Rockwell: Empire, Blood, and Banking

Obama’s ‘change’: 1% get 81% income gains then tax-shelter $21-$32 trillion

Pulitzer Prize-winning tax journalist David Kay Johnston reports IRS tax data since Mr. Obama’s 2009 inauguration shows “change” for 90% of Americans: they lost income. The 1% increased income; taking 81% of gains (the top 1% of the 1% took 39% of this total).
This follows a pattern that between 1980 and 2005, the 1% also took over 80% of all income gains.
Since 1966, inflation-adjusted annual income for the bottom 90% of Americans increased just $59, while the 1% increased income average by $625,000, and the 1% of the 1% increased average incomes by $18,700,000 per year.
This occurs in the context of McKinsey Chief Economist James Henry documenting the 1% hide $21 to $32 trillion in tax havens, the US top seven banks hide over $10 trillion, many top US corporations claim income losses, while the bottom 90%’s tax burden increases - in part to pay top corporations’ tax refunds.
It also occurs in context of accelerating technological capacity that should allow all Earth’s inhabitants to live higher quality lives.
Mr. Johnston reports the excellent work of economists Emmanuel Saez and Thomas Piketty.
Mr. Obama’s Democratic leadership’s escalation of Mr. Bush’s Republican leadership shows us that US politics is one criminal body with puppets at the end of Left and Right arms.
One obvious solution is to arrest US political leadership for crimes in unlawful wars and criminal economic fraud.
If you’re ready for solutions rather than death to millions, harm to billions, and looting of trillions: now’s the time to take all the lawful action previous generations have given you under the US Constitution.
Make us all proud, make your family proud. Be proud of yourself.

Keiser Report: Plunderball – New Euro Banking Game

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the PLUNDERBALL games in Europe and how the United Kingdom turned from Aspiration Nation to Asphyxiation Nation. They also talk about the ‘mega-caust’ of the financial markets in which those who worried about their gold being confiscated have now lost their bank deposits instead! In the second half of the show, Max Keiser talks to Mitch Feierstein about the implications to all bank depositors of the confiscation of some funds in Cyprus

What Exactly Is Inside The Bank Of Cyprus?

Bank of Cyprus vs. Spanish and Italian banks.
Tom Keene earlier today with Bloomberg's single best chart examining assets and balance sheets at several European banks in relation to the Bank of Cyprus.  The conclusion -- unlike Cyprus, for Spain and Italy, there's enough debt to spare depositors in a future bank bail-in.

Father Of The Euro: "Italy Is Next After Cyprus"

Russia And China Plan New Bank To Replace The IMF

Morning links.  Scroll down for new video collection.

Russia And China Give $100 Billion To Create New Bank to Replace World Bank, IMF
The biggest emerging markets are uniting to tackle under-development and currency volatility with plans to set up institutions that encroach on the roles of the World Bank and International Monetary Fund.
The leaders of the so-called BRICS nations -- Brazil, Russia, India, China and South Africa -- are set to approve the establishment of a new development bank during an annual summit that began today in the eastern South African city of Durban, officials from all five nations say. They will also discuss pooling foreign-currency reserves to ward off balance of payments or currency crises.
“If they announce a BRICS bank it will be quite something,” O’Neill said in an e-mailed reply to questions on March 15. “At a minimum it symbolizes they can achieve something as political group and means lots of other things could follow in the future. It also means that they will have their own kind of special World Bank, which may aid infrastructure and trade projects.”
Finance ministers and central bank governors from the BRICS nations, who met in Durban today, agreed to set up currency crisis fund of about $100 billion, Brazilian Finance Minister Guido Mantega told reporters today. He didn’t give details of proposed funding for the new bank, which Brazil wants established by 2014. The nation’s leaders are due to sign a final accord tomorrow.

Cypus Banks to Open for First Time in 2 Weeks With Harsh Cash Curbs

Wells Fargo Paid Director’s Son $1.4 Million Last Year

Federal employees who don’t pay taxes would be fired if bill passes

Mini flash crashes: A dozen a day

Barclays announces £39 million in bonuses for execs on budget day

Icelandic bank's top executives indicted over fraud

Dylan Ratigan is running an organic hydroponic farm

Michele Bachmann faces congressional ethics probe

Is the student loan bubble about to pop? - Write-offs Hit Record High

How To Kill A Drone (Awesone...)

Ex-President Expenses Total $3.7 Million In 2012 - Bush Most Expensive

Biden Flying To Delaware On Weekends On Taxpayer Dime

IRS Star Trek Training Video - Latest Taxpayer Waste

Members of Congress Demand Investigation of Obama’s Ammo Stockpile

New York State Sets Up Gun Snitch Line With $500 Award

CIA Makes $600 million deal with Amazon to build cloud computing system for spies

White House moves to let Pentagon take over CIA drones

Mercedes unveils Tesla-powered electric car

Bulgarian man becomes 6th man in past month to set himself on fire

Stealing Frozen Bag Of Meatballs At West Point Brings Federal Charges

Man Gets 3 Years In Prison For Auburn Tree Poisoning - But Corzine Is Still Free - ESPN

Ecuador auctions off pristine Amazon jungle to Chinese oil firms

Why I'm leaving China

Mexico Horror: Men Executed And Bodies Arranged With Messages Nailed To Chests

A father's hoops dream: Minting an NBA millionaire includes lying about son's age


Ferrari FF: The World’s Only 200 Mph ‘Family’ Car


Consumers struggle with Cyprus banks closed.


Why Has Copper Dropped Out of the Mining Rally?


Global Outlook: Is Gold Losing Its Shine?


Will consumers wear Apple Smartwatches, Google Glasses?


Chinese market may have peaked.


Dick Bove on Cyprus, Europe and U.S. banks.
No surprise.  Bove says all Euro banks must be bailed out. 


Steve Chen: No Regrets About Selling Youtube
Start watching at 45 second mark.


iFixit: The App for the Fix-It-Yourself Revolution


Report Number Of Americans On Food Assistance Program Hits Record High

Report Number Of Americans On Food Assistance Program Hits Record High

Latest Non-Lethal Weapons Arsenal ... That Can Kill

Dees Illustration
Nicholas West
Activist Post

A lot of attention has been paid recently to the massive buildup of lethal weapons purchased by DHS and the ongoing government secrecy about the stockpile. When combined with the increasing rhetoric against anyone professing a love of independence, there is rightful concern that this weapons hoard will be turned inward upon the American "Patriot."

Many argue that, in the end, most military and police will not wage war on their own, even despite overwhelming evidence that they are training for such a scenario, i.e. using "no more hesitation" pictures of elderly men, pregnant women and even children as target practice. Add to that the recent letter issued from a retired U.S. Army Captain that, yes, DHS is prepping for war on Americans, and only cognitive dissonance remains for not answering the wake-up call.

The transfer of weapons of war such as drones from foreign to domestic use should be seen as a natural expansion of any imperial government that is actively taking steps to desensitize military, police, and the domestic public to crossing paths in a very hostile manner. Combine this with a battle over gun rights and we see a public being disarmed, while the central government is hoarding ammunition at the highest levels. Now it is being reported that local police are actually experiencing a shortage of ammunition as a consequence of gun owners and DHS rushing to prepare for something neither can define, but both can feel is imminent.

So-called "non-lethal" weapons have almost been forgotten about in the wake of the far worse possibilities presented by weaponized drones and civil war. These non-lethal weapons have a history dating back to 1930s Germany, which has now extended into nearly all democratic countries as a means of intimidating protesters, culminating with the widespread acceptance of pepper spray - a chemical weapon that is stated as such by the founder of the product. (Source)

 The Taser - or stun gun - is another item in the non-lethal arsenal that is all but ubiquitous, but has come under intense scrutiny by researchers for its lethal results. Electrophysiologist, Dr. Douglas Zipes, published an article for the The American Heart Association which covered 8 cases where a 50,000 volt Electronic Control Device (TASER X26) was used and victims lost consciousness. His conclusion is that this non-lethal weapon can induce cardiac arrest.

But the above seem tame by comparison to new developments such as the microwave cannon crowd dispersal weapon which is euphemistically called an "Active Denial System."
The vehicle-mounted cannon combined with the power of electromagnetic radiation blasts a beam of heat that makes the target feel an intense waft of heat comparable to quickly opening an extremely hot oven, except reportedly with more pain. Unable to withstand the intensity and quickness of the heat, the beam makes people automatically run or jump out of the way. (Source)
Pesky protesters insurgents have much more that they can look forward to when they exit their homes to make their voices heard among the din of LRAD weapons "effective long range communications system used to clearly broadcast critical information, instructions and warning." Though it would seem difficult to hear subsequent "critical information" with permanent hearing loss.

Could it be that the local police, inadequately armed with conventional weapons, will be offered a solution with non-lethal tech . . . especially as they are increasingly outmatched by a gun-toting public?

A new Extraordinary Technology report of the latest non-lethal less lethal, but potential kill tech shows the following trends in the growing sector of "crowd control" amid nearly global civil unrest. Of particular note is the flexibility to apply these devices to either disperse the unruly, or offensively use them in a full-out war setting. It is the type of flexibility that has made the drone market so lucrative; everything from surveillance, to terrain mapping . . . and remote-controlled death if need be. As the report states quite correctly:
First, when looking into NLWs, it might seem logical to divide them into civilian and military, but for all practical purposes there is so much overlap that the distinction barely exists. In fact, some weapons that have been banned from the battlefield are approved for law enforcement, as we shall see. And in modern-day, nonconventional warfare, soldiers are increasingly called upon to perform police duties. So there’s little point in separating the two.
And I would add that police are increasingly called upon to perform soldier duties. The militarization of police is undeniable and all but guaranteed to usher in what is highlighted in this trends report of next-gen non-lethal tech:
  • Shock Wave Generators -- Originally devised by the Israelis, it can knock people down from 100 meters but if you wind up to close to the blast source ... you're dead.
  • Vortex Ring Gun -- Creates a high-energy gas vortex that can be directed toward a specific target. If pepper spray is a potentially lethal chemical weapon, then this just magnifies its potential by combining the effect with nausea-inducing chemicals ... all meant to linger on the target. This is also a favorite of Israeli Defense Forces, as noted in the report. 
  • Mobility Denial System -- Another euphemism building off of the microwave cannon concept of Active Denial System. The report cites this as the “instant banana peel.” This is a class of weapons that were invented at Southwest Research Institute, which can disperse a slippery gel onto asphalt, concrete, wood, and even grass, making movement impossible without falling down. It can also disable vehicles in a similar manner. Self-defense would seem improbable under such circumstances, leaving your fate to be determined.
  • Pulsed Energy Projectile --  Supposedly "under development" by the military. From the report: "It involves a weapon emitting an invisible laser pulse that, upon contact with the target, ablates the surface material and creates a bit of exploding plasma on the skin. This produces a pressure wave that stuns the target, knocking him down, as well as electromagnetic radiation that irritates nerve cells, causing pain." This is a more directed,  enhanced version of the Active Denial System noted above. 
  • Sticky Foam -- Used in Somalia, possibility of suffocation if hit in the face.
  • The Stingball Grenade -- Propels a cache of 100 tiny rubber balls in a circular pattern. The Modular Crowd Control Munition (MCCM) is the Stingball’s tightly directed big brother. It’s constructed like a Claymore mine but with 600 rubber balls inside that are sprayed out in a 45-degree arc. Even standard rubber bullets and "firearm rounds" have caused death
  • Underwater Pulsed Sound Wave -- Under development by the Navy to deter SCUBA attacks within 150 meters.
  • Next-Gen Microwave Ray Gun -- Called MEDUSA (Mob Excess Deterrent Using Silent Audio). The device being built by Sierra Nevada Corp. fires short microwave pulses that penetrate the head and rapidly heat tissue, resulting in a shockwave inside the skull.
Naturally, much more is probably in development that we won't know about until it is fully operational or "just around the corner." For the full report on what is projected CLICK HERE.

One of the most dangerous aspects of non-lethal weapons is that they are far more indiscriminate than conventional weapons; many can be fired at a distance (think drones) creating a far greater risk of abuse. Additionally, these are high-tech (expensive) weapons that have no parallel among what is available to the public subjected to them.

Non-lethal weapons used against peaceful civilians is a natural extension of a war culture. Protesters are now viewed by the militarized police as terrorists, and totalitarianism has been embraced as the new normal. Protesters/terrorists will be fair game for the whole catalog of weaponry. This catalog will not (cannot) diminish when the profits to made by kill tech far outweigh the business model for peace. Unless we the people are willing to make the commitment to stop funding this machine, it will continue to steamroll with increasing ease and lethality.

.1% Return for the Risk of a 40% Haircut?

Submitted by Bill Holter:
What is now in play is that if you have money in the bank and are getting a whopping .1% interest…it compensates you for what?  It compensates you for NOTHING that’s what!  It doesn’t compensate you for the real world inflation that we are told everyday by the statisticians that doesn’t exist…nor does it compensate you for the other risk.  The “other risk” (that did not exist but now apparently does) being that your bank might go under and balances over the insured limits are not covered.  It’s simple “risk versus return”.  If risk goes up (which it now has) so must return.  And this is the problem.
The world cannot have a zero interest rate policy AND a banking system where very real risk exists.
Gold IS money.  It is not an investment, it is not currently used as a currency (but can and surely will be used as one).  “Gold pays no interest” has always been the knock, but…neither do bank accounts nor does currencyWhat has now been introduced publicly is (and has) always been present…namely that Gold can neither be debased, NOR can it default!

Interest rates that banks pay will absolutely have to rise to compensate for this “newly discovered” risk.  But how can a bank pay you 3, 4, 5% on balances if the best that they can get on “risk free” parking money is .25%?  They cannot.  What I think is being missed in the market place is that the “risk” of bank runs has greatly increased because our Pinnochio banking system has finally decided to follow the rule of law.  Why now?  That’s a matter of debate for another day but the decision to follow the law has opened the Pandora box that was shoved in the corner and forgotten about.
This “new” risk of potential deposit loss is now added to the “old” risk of the currencies themselves where purchasing power is lost.  In other words, investors now have another reason to run!  But where to run?  Another or multiple banks?  Stocks?  Bonds (really dumb with interest rates where they are now)?   Real estate?  Precious metals???  You obviously know what my thoughts are already but let me briefly sum up.
Gold IS money.  It is not an investment, it is not currently used as a currency (but can and surely will be used as one).  “Gold pays no interest” has always been the knock, but…neither do bank accounts nor does currencyWhat has now been introduced publicly is (and has) always been present…namely that Gold can neither be debased (except by COMEX and ETF’s) NOR can it default. 
This new “default risk” that depositors have to “adjust” for will be in my opinion the catalyst that sends Gold (and Silver) into orbit.  Once the “runs” begin (and they surely will) in earnest, Gold will be priced far above where the average person can even afford to purchase in any significant “weight”.  Then it will be Silver’s turn because it’s “cheaper”…because when it’s all said and done it will all be about “weight” as opposed to the “wait” to see whether or not your bank still has money left by the time you get to the front of the line! Regards,  Bill H.

THIS IS NOT A JOKE: Lanny Breuer Named Vice-Chairman Of Covington & Burling, Will Head White Collar Criminal Defense Division

Story just hit the wires.  Breuer writes his own comedy.
The revolving door is wide open and Mr. No Punishment For Wall Street just walked in wearing diamonds and a fur coat.  He'll be well prepared for the job, which he himself highlights below in one of the most ridiculous quotes you will ever read.
We couldn't make this shite up if we tried.

Not an Onion headline.
Breuer Returning To Covington & Burling After Four Years Of NOT Prosecuting Wall Street
After four years leading U.S. government efforts to prosecute financial crime, Lanny Breuer is returning to private practice where he’ll help expand his old law firm’s white-collar criminal defense practice.
Breuer, who this month left his job as head of the Justice Department’s criminal division, will become the vice chairman of Covington & Burling LLP, the firm he’s spent parts of 19 years with over the course of his career.
His return to private practice ends a term in which the division secured some of the largest criminal settlements in the department’s history, even as it faced criticism for not bringing cases against Wall Street executives over the 2008 financial crisis.
The 54-year-old Breuer rejoins Covington’s Washington office in a newly created role. As vice chairman, he said he plans to spearhead the development of a large practice covering white-collar defense, civil-litigation and crisis-management.
“I now have such an intuitive and nuanced sense of how the Justice Department, how the government, makes important decisions,” Breuer said in an interview yesterday at the firm’s Washington office. “I believe I can help companies and individuals act appropriately.”
Breuer has a two-year “cooling off” period where he isn’t allowed to set foot in the Justice Department or work on issues he oversaw while leading the criminal division. He said he’s allowed to advise clients on new matters and will have “an ethics officer on speed-dial” while navigating his return to Covington, the only place he’s worked in private practice.
Former Major League Baseball star Roger Clemens and former Citigroup Inc. Chief Executive Office Charles Prince are also among his previous clients, according to the disclosures.
Lawmakers also faulted him for failing to notify superiors of problems during a bungled federal gun operation known as Fast and Furious. Breuer was admonished by Holder after he acknowledged in 2011 that he knew discredited “gun walking” tactics were used in an operation prior to Fast and Furious and didn’t alert his superiors or take steps to prevent them from being used again.
Continue reading at Bloomberg...

This short clip is why Lanny resigned from DOJ:

Most important scene from The Untouchables.
Check this:  Eric Holder, Lanny Breuer Linked To Banks Accused Of Foreclosure Fraud


SATIRE: Lanny Breuer On Wall Street Fraud

Full story on Breuer's resignation:

Wall Street Shill Lanny Breuer Done At DOJ

Will Obama Seize Americans' Savings?

Will Obama Seize Americans' Savings?

China holds landing exercises in disputed seas

BEIJING (AP) -- China's increasingly powerful navy paid a symbolic visit to the country's southernmost territorial claim deep in the South China Sea this week as part of military drills in the disputed Spratly Islands involving amphibious landings and aircraft.
The visit to James Shoal, reported by state media, followed several days of drills starting Saturday and marked a high-profile show of China's determination to stake its claim to territory disputed by Vietnam, the Philippines, Taiwan, Malaysia and Brunei amid rising tensions in the region.
Sailors joined in the ceremony Tuesday aboard the amphibious ship Jinggangshan just off the collection of submerged rocks, located 80 kilometers (50 miles) off the coast of Malaysia and about 1,800 kilometers (1,120 miles) from the Chinese mainland, the official Xinhua News Agency reported Wednesday. China planted a monument on the shoal in 2010 declaring it Chinese territory.
Sailors gathered on the ship's helicopter deck declared their loyalty to the ruling Communist Party and vowed to "struggle arduously to realize the dream of a powerful nation," Xinhua said.
The four-ship task force is headed next to the Pacific Ocean for deep-sea exercises via the Bashi Channel separating Taiwan and the Philippines, Xinhua said.
The exercises and visit to James Shoal did not encroach on any islands where neighboring countries have any substantial presence and drew no immediate response from them, but took place in an area with a complicated patchwork of overlapping claims.
The maneuvers were an important, symbolic declaration of Chinese sovereignty intended to show that Beijing will not waver over its territorial claims despite pushback in the region, said Peking University international relations expert Zhu Feng. Militarily, it means little since the navy has visited a number of times before and has no intention of basing troops near the remote shoal, he said.
"These recent naval operations can be seen as a strong indication of Chinese resolve, but they're also a continuation of the existing Chinese stance," Zhu said.
The Spratlys and other South China Sea island groups are surrounded by rich fishing grounds and some of the world's busiest shipping lanes. China and Vietnam have also begun experimental drilling in the area in hopes of tapping a suspected wealth of oil and gas, further exacerbating frictions that date back decades and have from time to time flared into military action.
China battled Vietnam for control of territory in the region as recently as 1988, and clashes between its naval forces and fishermen from Vietnam and elsewhere are frequently reported.
In the latest incident, Vietnam accused the Chinese navy of setting fire to the cabin aboard a Vietnamese fishing boat last week off the disputed Paracel Islands north of the Spratlys. Hanoi said it filed a formal complaint with the Chinese embassy and is demanding compensation and punishment of the sailors involved.
Beijing responded indignantly on Tuesday, saying its sailors had merely fired flares to drive Vietnamese boats from an area where it said they were fishing illegally. The navy denied causing any damage to the Vietnamese boats.
China's increasingly assertive defense of its claims in the area has sparked a backlash from Vietnam, the Philippines and others. Those countries have turned to the region's traditional dominant power, the U.S., as a counterweight, adding momentum to Washington's renewed focus on security ties in the Asia-Pacific, a strategic pivot viewed by Beijing as part of an effort to encircle it and stymie its development.
Along with maintaining garrisons on territory it claims, China has stepped up patrols by both its navy and ships from civilian maritime agencies that were recently consolidated into a single department along the lines of the U.S. Coast Guard.
The naval task force taking part in the latest drills consists of the Jinggangshan, the destroyer Lanzhou, and the missile frigates Yulin and Hengshui, among China's most modern and capable naval ship, according to an online report by the official People's Daily newspaper.
The drills on and around Johnson Reef and other Chinese-garrisoned islands and outcroppings involved hovercraft, ship-born helicopters, amphibious tanks, and land-based fighters, bombers and early warning aircraft, it said. Photos accompanying the report showed hovercraft setting off from the Jinggangshan and troops in lifejackets storming a beach.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

Egan-Jones downgrades UK to A+ from AA- (San Francisco) - Egan-Jones, the independent agency, has decided to cut down its United Kingdom sovereign debt rating from AA- to A+. According to a official press release, "unfortunately, we expect that the UK's debt/GDP will rise and the country will remain pressed (we are waiting for addl 2012 data)."

UK's deficit to GDP "is still substantial" says the agency. Despite the fact they says "the deficit to GDP has declined over the past three years from 11.5% to 8.3%, which is a respectable decline."

"The over-riding concern is whether the country will be able to continue to cut its deficit in the face of weaker economic conditions and a possible deterioration in the country's financial sector. " Egan-Jones concludes its synopsis with a laconic: "We are downgrading."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing, Forex and Currencies

Referenced Stocks:

Read more:

James Grant, Fed Opponent: "Your money is not really yours if the government needs it."

James Grant, Fed Opponent: "Your money is not really yours if the government needs it."

Cypriots wait anxiously for banks to reopen – video

What Will Follow the Death of the Petrodollar?

Dees Illustration
Dave Hodges
Activist Post

When the present gun control dance concludes, America could soon be doing a waltz with a different partner, and that partner’s name is World War III.

The winds of change are blowing across our once great land of opportunity. America is merely a shell of what it once was. We do not need economic prognosticators or fortune tellers to predict what lies ahead. Ray Charles could see what lies ahead. The globalists are making their move.

At the present moment, the bankers are gobbling up as many hard assets inside the United States as possible. There is a race against the clock, because the economic bomb planted by Wall Street in 2008 is set to go off and the currency is on the verge of collapsing. Consequently, a desperate America will be forced into wars of conquest to preserve what little bit is left of its economic destiny.

The Petrodollar Replaced the Gold Standard

The United States has debt, crushing debt, which makes the former Weimar Republic look solvent by comparison. Unfortunately, the United States abandoned the gold standard a long time ago. What then keeps our economy from degenerating into a trading and bartering society resulting from a collapsed dollar?

 The United States’ good economic fortune is due solely to the fact that world must use the dollar, the Petrodollar if you will, in order to make their nation’s individual oil purchases; this provides the only source of backing for the U.S. dollar that the Federal Reserve requires in order to somewhat sustain our back-breaking debt that the banker-occupied United States government has passed along to the American taxpayer in the form of bailouts.

Despite the economic pain associated with the enormous debt caused by the Wall Street contrived Ponzi schemes associated with the now infamous derivatives, America’s economy has proven to be very resilient. However, if the artificial global dollar demand, made possible by the Petrodollar system, were ever to crumble, our days of economic dominance would abruptly end and the resulting economic chaos would be followed by the need to impose martial law on a starving public. Again, tens of millions of Americans will die in this scenario. Further desperate and out of money, WWIII looms in the future.

The following clip explains why we attacked Iraq and Libya and how this fits into to today’s Petrodollar crisis. The invasion of Syria is underway. Iran is next.

Challenging the Petrodollar and the Roots For WWIII

Unfortunately for every man, woman and child in America, that day of economic reckoning is quickly approaching. China has commenced buying Iranian oil in gold. India has followed suit, as have the Russians. The days of the Petrodollar are numbered and, therefore, so is the only source of backing of our dollar. Have you and your family prepared for the collapse of the dollar and ultimately the collapse of society?

Like most Americans who have awakened from their slumber, I came to realize that the Federal Reserve Board is responsible for most of the evil perpetrated in the world and I personally loathe the organization. It is hard not to cheer the fact that the days of Federal Reserve Board dominance may be coming to an abrupt end. Yet, I would advise against popping the corks on the champagne bottles because, like it or not, America’s economic fortunes are tied to the health of the dollar and our precious dollar has come down with a terminal economic case of the Asian flu. If the Federal Reserve crashes and burns, so will everything that you have ever worked for. If the Federal Reserve collapses over this impending crisis, the resulting economic holocaust will make the United States unrecognizable within a very short time and your personal fortunes will sink right along with these notorious robber barons who are feverishly involved in stealing as many home mortgages as possible through schemes like the robosigners of MERS.

The Federal Reserve, the same people who perpetrated the MERS fraud, is also involved in buying up mortgage backed securities to the tune of $40 billion per month, each and every month, in an attempt to garner the lion’s share of the housing industry. The Federal Reserve is preparing to install feudalism following the currency collapse. How would you like to rent your own house from the bankers that are preparing to steal it from you? This is exactly what has been set into motion.

If you didn’t hear, the Seventh Circuit Court of Appeals made it legal for the banks to steal your deposits. The banks and government of Cyprus (is there a difference?) are preparing to steal depositors' money which is a beta test for the big prize: personal United States banking accounts. Don’t think for a moment that these events are not contrived by the bankers to get as much as they can, of the public’s assets, in as short of time as possible in this time of crisis. The banksters clearly know what is coming and they are in the process of stealing your assets in order to soften the blow of a collapsing dollar, and their “Golden Parachute” will be awarded to them courtesy of your hard-earned assets.

Surely, there must be something that can be done to avert this coming train wreck? Can’t the United States simply employ economic sanctions and force Iran to its knees? Without the cooperation of Russia, China and India, economic sanctions and an oil embargo will not be effective and, subsequently, the United States cannot force Iranians back to the negotiating table over the oil issue. The situation is somewhat reminiscent with happened in the lead-up to the 2003 Gulf War when Iraq tried its hand at circumventing the Petrodollar system with under-the-table deals with France and Germany in which the Euro would be used to purchase oil. Saddam Hussein underestimated the Federal Reserve Board’s reach and paid for this miscalculation with his life because he did not have the support of powerful military allies. Iran is quite a different matter as they have friends, very dangerous friends who mean America harm.

If the United States seeks to reverse the trend which seeks the abandonment of the Petrodollar system, war seems to be the only option left to the bankers. Logic would seem to dictate that the military option will be employed and, therefore, it should be a simple matter to ratchet up the rhetoric and seize the Iranian oil fields and force capitulation. Subsequently, shouldn't the United States dust off an old familiar game plan and create a false flag event, similar to the Gulf of Tonkin?

Undoubtedly, this is what the Federal Reserve desires in a last ditch effort to save the Petrodollar system. However, an act of war needs a pretext. Therefore, we can count on the fact that a series of false flag attacks will be utilized by Federal Reserve friends at the CIA in order to justify the coming war with Iran. I predict that we will see previously unimaginable false flag attacks which will be falsely pinned on Iranian-based terrorism. This is when the National Defense Resources Preparedness Executive Order comes into play and Obama will conscript people and resources in a last ditch effort to save the Petrodollar in World War III

The Globalist Plan Unveiled

Interestingly, the globalists have left clues which clearly signal their intentions, as well as a fair amount of their game plan. In order to inflict maximum casualties for the desired emotional reaction from the American people, namely fear and submission, malls and sports stadiums are conspicuously effective targets for imaginary terrorists, especially when one considers that the Simon Property Group, the largest owner of malls in North America, as well as all of the professional sports leagues have just entered into a “See Something, Say Something” partnership with the Department of Homeland Security. When one considers the massive purchase made by DHS of 7.5 million pounds of ammonium nitrate, which was used to blow up the Oklahoma City Federal Building, it does not take much foresight or skill in dot-connecting to see where this scenario is heading.

For the unaware, the false flag strategy has already become operational as Libyan Ambassador Stevens' death was merely the first of these false flag attacks which will be used to chart a course for war against Iran and its neighbor, Syria. And why is Syria being destabilized? Because it is the doorway which is needed to attack Russia with medium- and long-range weapons.

Creating the pretext for fighting a war, and then successfully selling the American public on the need to fight the war, is one thing. However, winning the war, is quite another. How serious are the Chinese and Russians at standing up to the imperialistic United States? Considering that both Chinese President Hu and Major General Zhang Zhaozhong have threatened the United States with nuclear war if they invade either Iran or Syria. The prudent opinion says that this is the newest version of the “Axis of Evil’s” line in the sand.

China, India and Russia have pinned their economic futures on the fact that they are divorcing themselves from the debt-ridden dollar and are charting a new economic course with gold as the baseline. They are not going to back down.

Legitimate Threats of War

To put muscle behind the collective defiance to the Petrodollar system, China brags that it can place 100 million men on the battlefield. Russia maintains over 1300 nuclear missiles and India joined the nuclear weapons fraternity a long time ago. As you read these words, you may be wondering if the conflict would escalate into a nuclear confrontation. I have a hard time imagining a situation in which the losing side would not resort to the use of tactical nuclear weapons as a best-case scenario. Ask yourself, if your country was faced with economic and military obliteration at the prospect of losing World War III, what would the losing side gain by keeping their nuclear missiles sitting quietly in their respective bunkers?

The Federal Reserve Is Positioning to Weather the Coming Storm

Is the Federal Reserve-controlled United States government really insane enough to launch such a dangerous and potentially catastrophic war? The better question is, what do they have to lose? In the past, the Fed has created fortunes through OPM, other people’s money. They will employ the same strategy in WWW III, as the Federal Reserve will prosecute this war with your money and risk your adult children to carry out their last-ditch fanatical mission designed to save the Federal Reserve.

Formerly, India was purchasing 12 billion dollars per year for the privilege to purchase oil and we loved India all the way to the bank. Unfortunately, India has joined the revolt against the Petrodollar by starting to buy Iran’s oil with gold. And the situation has even worsened as it appears that China has begun to monetize gold which could spell the end of the fiat currencies in the United States and the EU. The Petrodollar is doomed and so is our way of life unless America can make the Iranians capitulate and stick to the antiquated Petrodollar system.

Must We Sleep With the Federal Reserve?

I never thought I would be on the same side of an issue as I am with the Federal Reserve because the alternatives are not pleasant. On one hand, we can enter a dangerous war which threatens our very existence. On the other hand, we face an economic holocaust of epic proportions. And even if we are lucky enough to survive the coming war with our economy intact, the American people face the prospects of runaway inflationary effects of QE3 which has no monetary or time limits.

Of course, we could have developed alternative energy sources for which the world would have been beating a path to our door, but that would not have suited the oil-dominated Federal Reserve. There is one other possibility, debt repudiation. Over 90% of the debt of modern sovereign nations is derived from the failed banking scams in which the globalists have coerced national governments to assume their debts inside of their national budgets. Therefore, short of capitulation to the globalists, the simple answer seems to be to repudiate the debt owed to these gangsters consisting of all mortgages, all credit card debts and all student loans.

All debts must be written off and let the Wall Street cards fall where they may.

However, since most of this debt is owed to the Federal Reserve-dominated Wall Street bankers, debt repudiation will not occur without a full-scale civil war, because the bankers are not going to willingly sacrifice their main cash cow. If the bankers are willing to start a world war, don’t think for a second that they will not initiate a civil war to preserve their bottom line. Therefore, I can only see one answer if we are to avoid this impending disaster, and it is the only sane answer for the quandary in which we find ourselves. Do you know what that one answer consists of? I will get to that one thing in Part Two.


Meanwhile, the chess pieces are being placed on the game board in preparation for WWIII. If we, as a country submit to the will of the bankers, tens of millions of us will die. Many think we can change course by changing our elected officials. I wish that were true and I continue to pay lip service to this end. However, I believe, as do many of you do, that this is a fool’s errand. The American people need to draw a line in the sand because the stakes have never been higher. More on our options in Part Two.

Dave is an award winning psychology, statistics and research professor, a college basketball coach, a mental health counselor, a political activist and writer who has published dozens of editorials and articles in several publications such as Freedoms Phoenix, News With Views and The Arizona Republic.