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Orwellian possibilities were suggested by Alex Wallenstein in an April
2004 article:
People would never give up their property rights voluntarily,
directly. But if we can be sucked by Fed interest rate policy into
no longer saving money (because stock market gains are so much
higher than returns on CDs and savings bonds), and instead
into throwing all of our retirement hopes and dreams at the
stock market (that can be engineered into a catastrophic collapse
in the blink of an eye), then we can all become “good little sheep.”
Then we can be made to march right up to be fleeced and then
slaughtered and meat-packed for later consumption by our
handlers.16
Even if an economic collapse is not being engineered intentionally,
many experts are convinced that one is coming, and soon. In a 2005
book titled The Demise of the Dollar, Addison Wiggin observes:
How can the government promise to pay its debts when the
total of that debt keeps getting higher and higher? It™s already
out of control. . . . In fact, a collapse is inevitable and it™s only a
question of how quickly it is going to occur. The consequences
will be huge declines in the stock market, savings becoming
worthless, and the bond market completely falling apart. . . . It
will be a rude awakening for everyone who has become
complacent about America™s invulnerability.17

Is the Spider Losing Its Grip?

Hans Schicht has another slant on the approaching day of finan-
cial reckoning. He noted in 2003 that David Rockefeller, the “master
spider,” was then 88 years old:
[W]herever we look, his central command is seen to be fading.
Neither is there a capable successor in sight to take over the

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reigns. Hyenas have begun picking up the pieces. Corruption is
rife. Rivalry is breaking up the Empire.
What has been good for Rockefeller, has been a curse for the
United States. Its citizens, government and country indebted to
the hilt, enslaved to his banks. . . . The country™s industrial force
lost to overseas in consequence of strong dollar policies. . . . A
strong dollar pursued purely in the interest of the banking em-
pire and not for the best of the country. The USA, now de-
graded to a service and consumer nation. . . .
With Rockefeller leaving the scene, sixty years of dollar
imperialism are drawing to a close . . . . As one of the first signs
of change, the mighty dollar has come under attack, directly on
the currency markets and indirectly through the bond markets.
The day of financial reckoning is not far off any longer. . . . With
Rockefeller™s strong hand losing its grip and the old established
order fading, the world has entered a most dangerous transition
period, where anything could happen.18

Or Has the Spider Just Moved Its Nest?

With Rockefeller losing his grip and no replacement in sight, there
is evidence that the master spider may have moved its nest back across
the Atlantic to London, armed with a navy of pirate hedge funds that
rule the world out of the Cayman Islands. In a March 2007 article,
Richard Freeman observed that the Cayman Islands are a British
Overseas Protectorate. The Caymans function as “an epicenter for
globalization and financial warfare,” with officials who have been
hand-selected by what Freeman calls the “Anglo-Dutch oligarchy”:
For the Anglo-Dutch oligarchy, closely intertwined banks
and hedge funds are its foremost instruments of power, to control
the financial system, and loot and devastate companies and
nations. . . . The three island specks in the Caribbean Sea, 480
miles south from Florida™s southern tip”which came to be
known as the Caymans, after the native word for crocodile
(caymana)”had for centuries been a basing area for pirates who
attacked trading vessels. . . .
In 1993, the decision was made to turn this tourist trap into
a major financial power, through the adoption of a Mutual
Funds Law, to enable the easy incorporation and/or registration
of hedge funds in a deregulated system. . . .The 1993 Mutual

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Web of Debt

Fund Law had its effect: with direction from the City of London,
the number of hedge funds operating in the Cayman Islands
exploded: from 1,685 hedge funds in 1997, to 8,282 at the end of
the third quarter 2006, a fivefold increase. Cayman Island hedge
funds are four-fifths of the world total. Globally, hedge funds
command up to $30 trillion of deployable funds. . . . According
to reports, during 2005, the hedge funds were responsible for up to
50% of the transactions on the London and New York stock exchanges.
. . . The hedge funds are leading a frenzied wave of mergers and
acquisitions, which reached nearly $4 trillion last year, and they
are buying up and stripping down companies from auto parts
producer Delphi and Texas power utility TXU, to Office Equities
Properties, to hundreds of thousands of apartments in Berlin
and Dresden, Germany. This has led to hundreds of thousands
of workers being laid off.
They are assisted by their Wall Street allies. Taken altogether,
the hedge funds, with money borrowed from the world™s biggest
commercial and investment banks, have pushed the world™s
derivatives bubble well past $600 trillion in nominal value, and
put the world on the path of the biggest financial disintegration
in modern history.19

The Cracking Economic Egg

The magnitude of the banking crisis and the desperate attempts
to cover it up became apparent in June 2007, when two hedge funds
belonging to Bear Stearns Company went bankrupt over derivatives
bets involving subprime mortgages gone wrong. The parties were
being leaned on to settle quietly, to avoid revealing that their derivatives
were worth far less than claimed. But as Adrian Douglas observed
in a June 30 article called “Derivatives” in LeMetropoleCafe.com:
This is not just an ugly, non-malignant tumor that can be
conveniently cut off. This massive financial activity that bets on
the outcome of the pricing of the underlying assets has corrupted
the system such that those who would be responsible for paying
out orders of magnitude more money than they have if the bets
go against them are sucked into a black hole of moral and ethical
destitution as they have no other choice but to manipulate the
price of the underlying assets to prevent financial ruin.


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Chapter 33 - Maintaining the Illusion

While derivatives may appear to be complex instruments, Douglas
says the concept is actually simple: they are insurance contracts against
something happening, such as interest rates going up or the stock
market going down. Unlike with ordinary insurance policies, however,
these are not catastrophic risks that happen infrequently. They will
happen eventually. And if a payout event is triggered, “unlike when
a house burns down, there will not be just a handful of claims on any
one day, payouts will be due in the trillions of dollars on the same
day. It is the financial equivalent of a hurricane Katrina hitting every
US city on the same day!” Douglas observes:
Instead of stopping this idiotic sham business from growing
to galactic proportions, all the authorities, and all the banks,
and all the major financial institutions around the world have
heralded it as the best thing since sliced bread. But now all
these players are complicit in the crime. They are all on the hook.
The stakes are now too high. They must manipulate the
underlying assets on a daily basis to prevent triggering the payout
of a major derivative event.
Derivatives are a bet against volatility. Guess what has
happened? Surprise, surprise! Volatility has vanished. The
VIX [the Chicago Board Options Exchange Volatility Index] looks
like an ECG when the patient has died! Gold has an unofficial
$6 rule. The DOW is not allowed to drop more than 200 points
and it must rally the following day. Interest rates must not rise,
if they do the FED must issue more of their now secret M3, ship it
offshore to the Caribbean and pretend that an unknown foreign bank
is buying US Treasuries like crazy.
But the sham is coming unglued because the huge excess
liquidity that has been injected into the system to prevent it from
imploding is showing up as asset bubbles all over the place and
shortages of raw materials are everywhere. There is massive
inflation going on. There is no major economy in the world not
inflating their money supply by less than 10% annually.
When the derivative buyers realize what is going on and quit
paying premiums for insurance that doesn™t exist, says Douglas, “there
will be a whole new definition of volatility!” And that brings us back
to the parasite™s challenge. When the bubble collapses, the banking
empire that has been built on it must collapse as well . . . .



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Web of Debt



Chapter 34
MELTDOWN:
THE SECRET BANKRUPTCY
OF THE BANKS


“See what you have done!” the Witch screamed. “In a minute I
shall melt away.”. . . With these words the Witch fell down in a brown,
melted, shapeless mass and began to spread over the clean boards of the
kitchen floor.
“ The Wonderful Wizard of Oz,
“The Search for the Wicked Witch”




T he debt bubble is showing clear signs of imploding, and
when it does it is likely to liquidate the private banking empire
that has been built on it. To prevent that financial meltdown, the
Witches of Wall Street and their European affiliates have resorted to
desperate measures, including a giant derivatives bubble that is jeop-
ardizing the whole shaky system. In a February 2004 article called
“The Coming Storm,” the London Economist warned that top banks
around the world were massively exposed to high-risk derivatives,
and that there was a very real risk of an industry-wide meltdown.
The situation was compared to that before the 1998 collapse of Long
Term Capital Management, when “[b]ets went spectacularly wrong
after Russia defaulted; financial markets went berserk, and LTCM, a
very large hedge fund, had to be rescued by its bankers at the behest
of the Federal Reserve.”1
John Hoefle wrote in 2002 that the Fed had been quietly rescuing
banks ever since. He contended that the banking system actually went
bankrupt in the late 1980s, with the collapse of the junk bond market
and the real estate bubble of that decade. The savings and loan sector
collapsed, along with nearly every large Texas bank; and that was
just the tip of the iceberg:

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Chapter 34 - Meltdown

Citicorp was secretly taken over by the Federal Reserve in 1989,
shotgun mergers were arranged for other giant banks, backdoor
bailouts were given through the Fed™s lending mechanisms, and
bank examiners were ordered to ignore bad loans. These
measures, coupled with a headlong rush into derivatives and other
forms of speculation, gave the banks a veneer of solvency while actually
destroying what was left of the U.S. banking system.
The big banks were in trouble because of big gambles that had not
paid off “ Third World loans that had gone into default, giant corpo-
rations that had gone bankrupt, massive derivative bets gone wrong.
Like with the bankrupt giant Enron, profound economic weakness
was masked by phony accounting that created a “veneer of solvency.”
Hoefle wrote:
The U.S. banks “ especially the derivatives giants “ are masters
at this game, counting trillions of dollars of worthless IOUs “
derivatives, overblown assets, and unpayable debts “ on their
books at face value, in order to appear solvent. In the late 1980s,
the term “zombie” was used to refer to banks which manifested
some mechanical signs of life but were in fact dead.
Between 1984 and 2002, bank failures were accompanied by a
wave of consolidations and takeovers that reduced the number of banks
by 45 percent. The top seven banks were consolidated into three “
Citigroup, JP Morgan Chase, and Bank of America. Hoefle wrote:
The result of all these mergers is a group of much larger, and far
more bankrupt, giant banks. . . . [A] similar process has played
out worldwide. . . . The global list also includes two institutions
which specialize in pumping up the U.S. real estate bubble. Both
Fannie Mae and Freddie Mac specialize in converting mortgages
into mortgage-backed securities, and will vaporize when the U.S.
housing bubble pops.
The zombies, said Hoefle, had now taken over the asylum. In
2002, Bank One was rumored to be a buyer for the zombie giant JP
Morgan Chase. (This merger actually occurred in 2004.) “It was ludi-
crous,” Hoefle wrote, since on paper JP Morgan Chase had twice the
assets of Bank One. “Still, letting Morgan fail, which it seems deter-
mined to do, is clearly unacceptable from the standpoint of the White
House/Federal Reserve Plunge Protection Team.”2
In a February 2004 article titled “Cooking the Books: U.S. Banks Are
Giant Casinos,” Michael Edward concurred. He wrote that U.S. banks

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Web of Debt

were engaging in “smoke and mirror accounting,” in which they were
merging with each other in order to hide their derivative losses with
“paper asset” bookkeeping:
. . . [T]he public is being conned into thinking that U.S. banks
are still solvent because they show “gains” in their stock “paper”
value. If the U.S. markets were not manipulated, U.S. banks would
collapse overnight along with the entire U.S. economy.
. . . Astronomical losses for U.S. banks (as well as most world
banks) have been concealed with mispriced derivatives. The
problem with this is that these losses don™t have to be reported
to shareholders, so in all truth and reality, many U.S. banks are
already insolvent. What that means is that U.S. banks have become
nothing less than a Ponzi Scheme paying account holders with other
account holder assets or deposits.
. . . Robbing Peter to pay Paul has never worked, and every
Ponzi Scheme (illegal pyramid scam) has always ended abruptly
with great losses for every person who invested in them. U.S.
bank account holders are about to find this out.3

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