The Gathering Financial Storm - Global Financial and Economic Crash Imminent
The last time
"From the Wilderness Publications" issued an
emergency economic bulletin a derivatives investment bubble was
on the verge of implosion, with a 900-point drop in the Dow Jones
average and a pending liquidity crisis signalling a crash in the
order of 1929. Only the attacks of Sept. 11 and massive
intervention from the U.S. Treasury and Federal Reserve prevented
the collapse. Investors blamed the ensuing market losses on the
attacks. The situation now is much, much worse as more factors
combine to suggest that foreign investors and trust in the U.S.
economy might soon be a thing of the past. Pensions are at risk
today and homes may be at risk in six months to a year.
One economic analyst has suggested that a nuclear exchange
between India and Pakistan might be the perfect cover for the
biggest financial wipe out in human history. I think that an
ill-conceived and risky invasion of Iran might serve the same
purpose. From consumer confidence, to corporate accounting, to
the dollar, to gold, to foreign capital flight, to pension fund
wipe outs, to the derivative bubble, to debt, there is not a
single economic indicator that is not flashing red.
The warnings are as clear, explicit and well-documented as
were the warnings received by the U.S. government throughout
summer 2001 that a terrorist attack against the World Trade
Center would take place during the week of Sept. 9 using hijacked
airliners from United and American airlines. Nothing was done to
prevent that and apparently nothing is being done now in spite of
the fact that $4.2 trillion of public money has been stolen right
in front of people’s eyes.
There was no "single" reason for the attacks of 9-11. I have
cited oil, drug cash and geopolitics as three of the primary
motives for the U.S. government’s complicity in allowing
the attacks to happen. But what also cannot be overlooked is the
fact that 9-11 effectively masked a major economic crash that was
certain to occur. That crash has not been averted by the
extraordinary financial maneuverings of the Bush administration
that followed 9-11. It has merely been postponed for a time.
Reuters, of London published a story based upon an interview
with billionaire financier George Soros. The headline read,
"Soros Blames ‘Bush Factor’ for Dollar’s Fall."
George Soros is a man to be reckoned with. Emerging from WWII as
someone who allegedly cooperated with Nazi occupation troops by
identifying assets to be seized, the European financier is one of
the most powerful financiers on the planet. He is credited with
successfully assaulting the currencies of several nations,
including Britain’s pound. He recently participated in the
World Economic Forum in New York where he was seated on the dais
with the likes of Zbigniew Brzezinski, Hillary Clinton, Shimon
Peres and academics from Ivy League colleges. It is more than
just a case that when Soros speaks, people listen. The truth is
that when Soros speaks, markets move.
His comments were brutal. "The international financial system
is coming apart at the seams. There is a lack of confidence what
I call the ‘Bush factor’ in the economy." There is a
liquidity crisis in financial markets, said Soros.
"Everybody’s going home. The Swiss banks are going home.
The strengthening of the yen clearly shows repatriation."
Translated, that means that foreign capital is fleeing the U S in
the wake of as yet not fully realized accounting scandals that
will, according to Fox News, take an estimated $600 billion in
value out of the U.S. stock market. One of the many smoke alarms
triggered by this is the fact that the U.S. economy needs an
estimated $1.5 trillion per year in new foreign investment just
to remain solvent. Reuters quoted Soros as saying that the global
economic downturn had "exposed the weaknesses of corporate
America and how the U.S. administration runs the international
Soros told Reuters, "But the declines in the markets have gone
somewhat further than what would be the natural consequences of
the previous exuberance. The decline in the dollar came as a
surprise to me. I attribute it to lack of confidence in the
management of affairs by the United States, its unilateralism,
the pursuit of national self-interests and not living up to the
responsibility of being the dominant financial power in the
world, not taking care of the system."
What is Soros setting us up for? The pumping of the stock
market occurred while Bill Clinton was president. Yet he’s
blaming Bush. Is another Herbert Hoover being created before the
big crash? The signs are there. Britain’s paper the
Independent ran a story headlined, "WorldCom scandal: Currencies:
Latest Wall Street disaster sends investors all over the world
running for cover." The lead read, "The U.S, dollar yesterday
moved to the brink of free fall, a nightmare scenario for the
world economy, after reverberations from the WorldCom scandal
triggered panic among investors."
For years the price of gold — the ultimate smoke alarm
signaling a failing economy — has been artificially
suppressed by paper traders capable of flooding the commodities
markets with gold future options when the price needs to be kept
low. Why low? Because rising gold prices have always signaled
inflation and/or a lack of faith in financial markets. Years of
efforts by the Gold Anti-Trust Action Committee, or GATA, while
not being successful at halting or fully exposing artificial
manipulation of gold prices by the F R B, major banks, the Bank
of International Settlements and major commodities traders, have
opened the eyes of many to overt manipulations in gold
As one investment banker told me recently, there is five times
more paper gold than there is actual gold out of the ground. If
gold prices ever pop they’ll be out of sight. Gold prices
have often moved in exactly the opposite direction (lower) from
what conditions would dictate. The financial effort required to
do this requires the support of powerful state banking
institutions and cash to service the paper.
There are unmistakable signs of market manipulation now with
regards to both gold and stocks. Who is it that keeps the markets
from correcting, only making the inevitable crash that much
worse? It’s called the Plunge Protection Team, or PPT. And
now it has to have the liquidity to flood both the gold and the
stock markets with enough cash to keep the bubbles from bursting.
This, at the same time that major banks like J.P. Morgan/Chase
and Citigroup sit atop huge derivatives bubbles that have been
estimated at between $150 trillion and $300 trillion.
Most major U.S. banks have heavy exposure as a result of the
mushrooming financial scandals. All of these bubbles require
cash, and this is the liquidity Mr. Soros is rightly worried
about. Rep. Ron Paul, R-Texas, has been challenging the gold
manipulation for years. He has been one of the few fiscally sane
voices anywhere on Capitol Hill. His website has a listing of his
writings and much needed legislation he has or is sponsoring.
Only recently have there been signs that the PPT is also working
in the U.S. equity (stock) markets.
"London’s Observer newspaper reported it had information
the plunge team was preparing to spend ‘billions of
dollars’ to avert a repeat of 1929 and 1987." The problem
is clear: With a strong dollar the PPT has demonstrated that it
has enough cash to suppress gold prices or to save the stock
market. It may not have enough cash to do both — especially
if the dollar were to suddenly lose its value. Then, all of the
chickens that have been locked out will come home to roost with a
vengeance. As The International Forecaster reported, "The
American consumer has run out of credit and buying power. All
bets are off if the housing and credit bubbles break and
that’s a distinct possibility. Debtor’s prison is
drawing nearer. House and Senate conferences are deciding on a
new set of rules for Chapter 7 bankruptcy. If the Plunge
Protection Team weren’t manipulating the market with all
these scandals, the Dow would already be at 4,500."
REALIZING THE EXTENT OF THE DESTRUCTION
Not all of the money looted from American taxpayers is going
to support the PPT market manipulations. A lot of it is just
being stolen. According to Standard and Poor’s website,
"domestic equity allocation" (stock market) of U.S. pension fund
investments was near 50% by the end of 1990s. It has topped 50%
since then. Before the 2000 presidential election, candidate
George W. Bush promised that he would tap the Social Security
Trust Fund only in the event of war, recession or national
emergency. On Sept. 11, he was quoted by his budget director,
Mitch Daniels, as saying, "Lucky me! I hit the trifecta!"
It’s not a question about stealing a little here and a
little there. It’s a question about open, full-scale
looting — but only from the pockets of the American people
who, in my opinion, will soon have almost nothing left.
Let’s look at the hard numbers of what has been taken and
from where. These numbers are by no means exhaustive. It’s
just what we know about.
$34 Billion - Social Security in 2001 (USA Today/Washington
Post) $160 Billion - Social Security in 2002 (est.) (House Budget
Committee) $42 Billion - Federal Employees Retirement System
(Wall Street Journal 6/13/02) (to Meet 2002 budget deficits) $2
Billion - Civil Service Retirement and Disability Fund (ibid)
$1,100 Billion - Stolen from the Dept. of Defense — 1999
(Cong. Record and Insight Magazine) $2.3 Billion - Stolen from
the Dept. of Defense — 2000 (CBS News) $59 Billion - Stolen
from HUD — 1999 (Cong. Record) $600 Billion - Shareholder
Equity Lost to Financial Fraud — 2002 (Fox) $4,297 Billion
Pending Thefts: $845 Billion - Social Security (by 2010)
(Washington Post citing Cong. Budget Office figures) An anecdotal
story reveals the damage to pension funds. If you think that
Social Security will be a safety net, please read the above
section again. Of course we all know about the Enron employees
who were wiped out. But according to the New York Times, New York
City’s pension system has lost $9 billion in the wake of
recent stock scandals. Imagine the impact if local governments
declared bankruptcy or defaulted on their pension obligations. It
has been estimated that the California state employee retirement
system (CALPERS) has more than 90 percent of its money invested
in the stock market.
A WORD ABOUT HOUSING
Most Americans believe that their homes are their last, best
retirement insurance. Yet many Americans have mortgaged their
homes for 120 percent of value. Their loans are backed with the
full faith and credit of the U.S. government through various
agencies such as Ginnie Mae, Fannie Mae, Freddie Mac, and the
Federal Housing Authority. The International Forecaster has
predicted that "40 percent of Fannie and Freddie’s loans
are going to come back and haunt them. We envision an S&L
type bailout of $2.4 trillion down the road. This will be the
biggest financial disaster in history."
The full faith and credit of the U.S. government lie behind
these home loans. If the homeowners go broke in an economic
crash, they default. If the U.S. government goes broke —
before or after that point — it defaults, and the holders
of U.S. debt ultimately have the right (especially under WTO and
globalization) to foreclose on the collateral — your home
loans. In the worst case scenario most of the United States could
legally be owned by all of the countries holding U.S. debt
— better described as T-Bills, or U.S. gold, or U.S.
The Great Depression was not an event that wiped out U.S.
capitalists. It was an event that made the rich even richer by
transferring the wealth of the peo- ple into the hands of the
wealthy. Legendary is Bank of America’s rise to affluence
through real estate foreclosures from 1929-37. Don’t
believe for a minute that the richest of the rich will be hurt by
the coming collapse. The only ones hurt will be you and me.
George Soros is a member of the Bilderberger Group, a collection
of the wealthiest individuals on the planet. It includes, from
the U.S., both Democrats and Republicans, and from Europe and
Asia the richest "old" money that can be found.
U.S. participants in this year’s conference included
David Rockefeller, Henry Kissinger, former Treasury Secretary
Larry Summer, former CIA Director John Deutch and George Soros.
It was just after this year’s meeting which ended in early
June, that all of the revelations about corporate fraud started
to really hit the news. One wonders if it had been on the
I also note sadly a financial report from the Denver area
stating that mortgage foreclosures were going through the roof.
This, at the same time that Reuters reported that corporate
layoff announcements had risen by 12% in one month. In this
context Bush’s tax cuts seem worse than bad judgment. As
former Ass’t Secretary of Housing Catherine Fitts pointed
out to me in a last minute e-mail, "By 2010, when (and if) the
Bush tax reductions are fully in place, an astonishing 52 per
cent of the total tax cuts will go to the richest one per cent.
Put another way, of the estimated $234 billion in tax cuts
scheduled for the year 2010, $121 billion will go to just 1.4
Unless you can convince me that gravity might suddenly reverse
direction, this collapse is inevitable and imminent. It will be
unspeakably brutal. How long do we have? Maybe weeks. Maybe
months. Maybe only days. But the house of cards is already
starting to collapse all around us. Another major terrorist
attack, the folly of an invasion of Iran or a nuclear exchange
between India and Pakistan would only be a momentary diversion
from a much greater tragedy.
by Michael C. Ruppert
Copyright "From the Wilderness Publications"
Reprinted by permission