Global systemic crisis: In pursuit of the impossible recovery

Before this summer, LEAP/E2020's team announced that there would be no recovery in sight in September 2009, and not until summer 2010 in any event. Well indeed, contrary to the claims of the media, and financial and political circles, we confirm our anticipation.

The slowdown in the speed of collapse of the global economy, at the origin of all the « good news » (1), is only due to the world's enormous public financial effort of the last twelve months (2). But the « time saved » using taxpayers' money around the world should have been dedicated to redesigning the international monetary system at the heart of the current systemic crisis (3). Yet, besides a few cosmetic considerations (4) and huge gifts to US and European banks, nothing serious has been undertaken, and, when it comes to the future, the « every man for himself » rule prevails (5).

Now, as summer 2009 comes to a close, and as the three rogue waves start impacting the global economy hard (unemployment (6), bankruptcies (7) and monetary shocks (8)), the time to mend the system, or to prepare for a soft transition towards a new global system, is over (9). The first signs of a major decoupling (10) are beginning to appear: the rest of the world is rapidly moving away from the Dollar zone. As shown by the chart below, there is a 95 percent chance that 1,000 billion new USDs will be printed in a very near future... not very attractive for the Dollar zone.

Inconsistent statistics reflect a chaotic world economy

We are heading straight to the phase of geopolitical dislocation expected to begin in the fourth quarter of 2009 (11). In this issue of the GEAB, our team analyses the trends at work (real estate market, srategic issues…) within the current chaos resulting from a flood of unchecked public expenditure and a persistently uncontrolled financial system in a context of growingly inconsistent statistics. Paradoxically, dislocation has become, according to our researchers, the only way to economic recovery (a recovery that will take place around a global architecture and interaction between economic, social and financial spheres profoundly different from anything we knew in past decades. Our team believes that the first features of the “post-crisis world” should begin to appear by summer 2010 and, in the coming months, they will dedicate themselves to their identification.

Meanwhile, as anticipated in the previous editions of the GEAB, no one can now construct a true picture of today’s global economic situation as macroeconomic figures are more and more contradictory or simply absurd (12). Measurement data and instruments have been so manipulated (13) and limited to a volatile US Dollar as sole benchmark (14), that no government, international organisation or bank (15) can now tell in which direction the global system is heading. The media reflect this chaos and contribute to their readers’/auditors’/viewers’ bewilderment: depending on the day, or even the hour, that they give contradictory news on finance, economy or currency. Policy makers, entrepreneurs, employees,… economists or analysts… are reduced to Pascal’s wager (16) to assess what will happen in future months.

Global output, trade and consumer prices (2000 – 2009) – Source: BRI, 2009

According to LEAP/E2020, the chart above tells about facts that cannot be ignored: the global economic, financial and monetary system is drifting at an increasing rate, its weakness is reaching unequalled lows in modern history, and the slightest shock (financial, geopolitical or even natural) can now break it apart (17). The States’ breathtaking plunge into bottomless public debt (18) (governments feel that, without the support of public money, world economies would soon resume their collapse) is creating a literally explosive situation, conveying massive tax increase in Japan, Europe, the US… If there is any recovery in sight, it is that of tax. As a matter of fact, confronted to historic unemployment rates and a free-falling economy, Japanese voters decided to dismiss their decade-old leaders: they have probably inaugurated the great political upheaval of the next phase of the crisis (19). This summer, the Obama administration was also surprised to discover the importance of the popular anger which focused on his health system reform programme (though a much needed one).

Charter rates for container ships (in USD/day) – Showing the decline between the two first quarters of 2008 and 2009 - Source: Spiegel / ISL Port Monitor

Here is a very illustrative analogy of the crisis today that imposed itself on our researchers: a rubber ball in a staircase. It seems to rebound on every step (then giving the impression that the fall has stopped) but it falls even lower on the next step, “resuming” its collapse.

“Disoriented” economic players and policy-makers

Of course, all this doesn’t create a favourable investment climate for business. Production capacity is under-used everywhere in historic proportions. Stocks are only renewed at a drip-feed rate (eliminating any hope of a recovery based on their replacement). Consumers have become realistic economically: no money, no purchase. Their salaries fall when they haven’t simply been lost through job losses, the banks don’t lend any more because they know that they themselves are still insolvent (despite the “golden” powder thrown in the eyes of public opinion these last months) (21). The state itself, on its own, cannot substitute itself for the frenetic consumerism of the past. In the US, a return to the previous state would require about USD 2,500 billion pumped into the economy each year. Barak Obama’s stimulus package, less than USD 400 billion a year over two years is far from the amount needed if he has to replace the non-spending of households and businesses. The problem is that this is exactly the present situation of the US economy.

US retail sales during recent recessions (Rebased to 100 at recession inception, duration in months) - Source: Financial Sense, 2009

But the US are not alone in this regard. Asia and Europe are also confronted with a drastic unemployment surge that statistical manipulation (22) cannot hide beyond this summer: jobless no longer entitled to unemployment benefits, youngsters placed in waiting internships or jobless recruited for short-term public construction projects, lay-offs postponed by means of short-time allowance measures, plants artificially maintained in activity thanks to public funds,… from Beijing to Paris, in Washington, Berlin, London or Tokyo, every trick is being used to hide the situation as long as possible… until the recovery arrives. Unfortunately, the recovery will not arrive in time. It’s Blücher instead of Grouchy (23). Instead of a recovery in September, the world is suffering the impact of this summer’s three rogue waves:

. massive unemployment, for people soon to be excluded from further benefits in particular, and its disastrous consequences for nations’ political and social stability, are beginning to appear

. the number of bankruptcies (companies, municipalities,…) and deficits of all sorts, are exploding

. and, of course, the impact of all this on the US Dollar, Treasuries (and the UK, suffering collateral damage) .

The first wave already reached the shore at the end of summer 2009. The second one is coming up. And the third is beginning to appear on the horizon.

In any event, if the Eurozone and Asia are in a better situation to face up to the impact of these waves (as already analyzed in GEAB N°28 of last October), their situation is not so good that they can expect a recovery yet. It is however on the US, the Dollar and US Treasuries on the one hand, and on the UK and the Pound on the other , that the consequences of the three waves will be harder. Mid-summer night dreams also have an end!

But for those who still have enough money to travel, the holidays can go on as hotels, airline companies, holiday resorts… are giving discounts at prices never seen before. Another sign that the recovery is here!

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Notes:

(1) For example, the fact of talking in percentage points is part of this summer's « euphoria » operation. Indeed, many banks, whose stock price was close to zero could claim « rebounds » of +200 percent, +300 percent or +500 percent. Taking a look at Natixis, Citi or Royal Bank of Scotland stock prices helps to understand the trap: regaining 500 percent when the stock fell down to 1, that makes 5... which would leave you holding a loss of 40 if you bought 2 years ago (or if you borrowed money in exchange of this security).

(2) This is illustrated by France's recent announcement that the state wishes to continue to support the banking system until the end of 2010. Source: Reuters, 09/13/2009

(3) See LEAP open letter to the G20 published last April in the Financial Times on the eve of London's G20 summit.

(4) The great « traders' bonus hunt » is morally praiseworthy. However it should not make us forget that traders are nothing but the « privateers » of the banks hiring them and of the financial centres hosting the latter. These employers and their hosts give them their « letters of marque » (or should we say « of bonus »?) authorizing them to buccaneer the seas of global finance. Limiting their bonuses to their total salary would compel banks to hire them as master mariners instead of filibusters.

(5) Source: Times, 09/02/2009

(6) In the United States, the real rate of unemployment growth remains between 600,000 and 1 million new jobless every month, if we include those who decide to stop searching for a job (source: CNBC/New York Times, 09/07/2009). To get an idea of the socially explosive wave currently hitting the US economy, in California, since September 1st, 143,000 new jobless are no longer entitled to insurance benefits (including their families, that makes an extra 1 million people in distress... just for this month) – source : MyBudget360, 09/02/2009. In Europe, Asia, … everywhere, unemployment rates are almost the highest in modern history (at 5.7 percent, Japan already reached its historic high in July – source : Japan Times, 09/08/2009) ... despite all sorts of manipulation to reduce the figures.

(7) As an anecdote, there have been more bankruptcies in the US between GEAB N°36 (June 16, 2009) and GEAB N°37 (September 16, 2009) than during the whole of 2008, including two of the most important bankruptcies of the year. But, of course, the media cannot make their headlines on both swine fever and bankruptcies. The same goes for the rate of US corporate bankruptcies which has reached a 12.2 percent all-time high (source: Yahoo, 09/09/2009). In Spain, the number of bankruptcies in the first semester of 2009 is three times the number in 2008 (source: Spanish News, 08/06/2009). In France, employers expect 70,000 corporate bankruptcies by the end of this year (source: Capital, 09/02/2009).

(8) The accelerating pace of the weakening of the US Dollar is creating new monetary stress worldwide and the upcoming request, by the Obama administration, to increase the authorized US federal debt ceiling by USD 1,500-billion is not likely to slow down the selling of the US currency. Indeed the USD 12,000-billion debt ceiling is about to be reached. Sources: Wall Street Journal, 09/12/09; Bloomberg, 09/08/2009; Wall Street Journal, 09/12/09

(9) As we said, such a « window of opportunity » existed between spring and summer 2009. This window is now closed.

(10) See GEAB N°22, 02/2008

(11) See GEAB N°32, 02/2009.

(12) For example, US and French unemployment rate reductions at the beginning of this summer, or the growth in Chinese output. Sources: New York Times, 08/10/2009; Expansion, 07/27/2009; Wall Street Journal, 05/25/2009

(13) It is worth reading Marion Selz’s paper entitled « Statistics, a public service twisted » introducing a recently published book written anonymously by a group of French statisticians with the evocative title « The great fiddle: How the government manipulates statistics». Obviously, in these times of global crisis, the information revealed in this book applies to almost all governments. Source: La vie des idées, 09/02/2009

(14) When, in February 2008 in GEAB N°22, we anticipated that the world was heading to a « Dollar carry-trade », not many people believed us. However this is now exactly what is happening on currency markets. Source: Le Monde, 09/12/2009

(15) Banks which, in April 2009, were eager to get the right to return to the « fair value » system (I estimate my asset is worth 100) (source: Bloomberg, 04/02/2009) instead of valuing their assets at “market value” (on the market, your asset is worth 10). Thus they persist in keeping assets in their balance sheets which they cannot realistically value; precisely because they suspect these assets to be worth 10 or 20 percent of their ‘fair value. The countryside and cities of the US, UK, Spain, Latvia, Japan, China, and other countries are full of houses, flats and buildings that no one buys because their prices are artificially maintained high above the market price so that banks’ balances sheets do not show that they are in fact insolvent because almost all their assets are “rotten”. Bankers too are trying to save time, in the hope of a return to yesterday’s world. Are they old children nostalgic of their golden age or big offenders endangering society? The future will soon tell us as the next phase of global geopolitical dislocation will develop.

(16) Refering to Blaise Pascal’s argument to convince miscreants to believe in God: wager as though God exists because if it is so, paradise is the reward, and otherwise, it simply doesn’t matter; while the contrary wager might take you to hell.

(17) In the next GEAB, the October issue N°38, we shall update our country- and big region-based anticipations, including of course an assessment of the situation regarding US and UK defaults.

(18) With a record-high debt issuance in Europe (EUR 1,100-billion in 2009, and more than EUR 250-billion for the UK only), and with USD 9,000-billion federal deficit over the next ten years, there is no doubt on the fact that the situation is uncontrollable. Source: Yahoo/Reuters, 09/04/2009; CBS, 08/25/2009

(19) In the US, in Europe and in China too. Sources: Reuters, 09/08/2009; Financial Times, 09/06/2009; BBC, 07/26/2009.

(20) On the subject of banks, our team strongly recommends reading the excellent article by Matt Taibbi, “Inside the great American bubble machine” which appeared in Rollingstones on 07/02/2009. It sets out the history of Goldman Sachs and throws essential light on its financial practices and central role in the current financial crisis. In the way of deceased India companies, or the knights templars, it is likely that in five to a maximum of ten years from now, American political power, in the face of a socio-economic collapse and under public pressure, will be obliged to tear apart this institution which interferes in all levels of government activity.

(21) In the end, all these indicators depend on the US Dollar as a measure of value. But if Dollar volatility were to be transferred to a compass, we would see the needle swing between North, South, East and West every month. No wonder then that political, economic and financial leaders are so « disoriented »!

(22) Napoleon too, during the battle of Waterloo, firmly believed th at luck was still on his side and that reinforcements (Grouchy) would materialize at the decisive moment of the battle. Alas, the long awaited troops, whose dust showed their rapid progress, happened to be the enemy’s reinforcements (Blücher). We know what happened next… and we cannot bet that the G20 leaders are strategists as experienced as Napoleon was.

(23) The crisis has somewhat « British humour » and proves that we are far from having seen all its consequences. Indeed, London is now expecting to have to pay a heavy bill in order to rescue its little network of tax havens. The Cayman Islands, for instance, can no longer pay their civil servants. No doubt British taxpayers will be very happy with this perspective! Otherwise, these islands could also resort to a simple idea: create taxes. Source: Guardian, 09/13/2009

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Fifty questions on 9/11

It's September 11 all over again - eight years on. The George W Bush administration is out. The "global war on terror" is still on, renamed "overseas contingency operations" by the Barack Obama administration. Obama's "new strategy" - a war escalation - is in play in AfPak. Osama bin Laden may be dead or not. "Al-Qaeda" remains a catch-all ghost entity. September 11 - the neo-cons' "new Pearl Harbor" - remains the darkest jigsaw puzzle of the young 21st century.

It's useless to expect US corporate media and the ruling elites' political operatives to call for a true, in-depth investigation into the attacks on the US on September 11, 2001. Whitewash has been the norm. But even establishment highlight Dr Zbig "Grand Chessboard" Brzezinski, a former national security advisor, has admitted to the US Senate that the post-9/11 "war on terror" is a "mythical historical narrative".

The following questions, some multi-part - and most totally ignored by the 9/11 Commission - are just the tip of the immense 9/11 iceberg. A hat tip goes to the indefatigable work of 911truth.org; whatreallyhappened.com; architects and engineers for 9/11 truth; the Italian documentary Zero: an investigation into 9/11; and Asia Times Online readers' e-mails.

None of these questions has been convincingly answered - according to the official narrative. It's up to US civil society to keep up the pressure. Eight years after the fact, one fundamental conclusion is imperative. The official narrative edifice of 9/11 is simply not acceptable.

Fifty questions

1) How come dead or not dead Osama bin Laden has not been formally indicted by the Federal Bureau of Investigation (FBI) as responsible for 9/11? Is it because the US government - as acknowledged by the FBI itself - has not produced a single conclusive piece of evidence?

2) How could all the alleged 19 razor-blade box cutter-equipped Muslim perpetrators have been identified in less than 72 hours - without even a crime scene investigation?

3) How come none of the 19's names appeared on the passenger lists released the same day by both United Airlines and American Airlines?

4) How come eight names on the "original" FBI list happened to be found alive and living in different countries?

5) Why would pious jihadi Mohammed Atta leave a how-to-fly video manual, a uniform and his last will inside his bag knowing he was on a suicide mission?

6) Why did Mohammed Atta study flight simulation at Opa Locka, a hub of no less than six US Navy training bases?

7) How could Mohammed Atta's passport have been magically found buried among the Word Trade Center (WTC)'s debris when not a single flight recorder was found?

8) Who is in the possession of the "disappeared" eight indestructible black boxes on those four flights?

9) Considering multiple international red alerts about a possible terrorist attack inside the US - including former Secretary of state Condoleezza Rice's infamous August 6, 2001, memo - how come four hijacked planes deviating from their computerized flight paths and disappearing from radar are allowed to fly around US airspace for more than an hour and a half - not to mention disabling all the elaborate Pentagon's defense systems in the process?

10) Why the secretary of the US Air Force James Roche did not try to intercept both planes hitting the WTC (only seven minutes away from McGuire Air Force Base in New Jersey) as well as the Pentagon (only 10 minutes away from McGuire)? Roche had no less than 75 minutes to respond to the plane hitting the Pentagon.
11) Why did George W Bush continue to recite "My Pet Goat" in his Florida school and was not instantly absconded by the secret service?

12) How could Bush have seen the first plane crashing on WTC live - as he admitted? Did he have previous knowledge - or is he psychic?

13) Bush said that he and Andrew Card initially thought the first hit on the WTC was an accident with a small plane. How is that possible when the FAA as well as NORAD already knew this was about a hijacked plane?

14) What are the odds of transponders in four different planes be turned off almost simultaneously, in the same geographical area, very close to the nation's seat of power in Washington, and no one scrambles to contact the Pentagon or the media?

15) Could defense secretary Donald Rumsfeld explain why initial media reports said that there were no fighter jets available at Andrews Air Force Base and then change the reports that there were, but not on high alert?

16) Why was the DC Air National Guard in Washington AWOL on 9/11?

17) Why did combat jet fighters of the 305th Air Wing, McGuireAir Force Base in New Jersey not intercept the second hijacked plane hitting the WTC, when they could have done it within seven minutes?

18) Why did none of the combat jet fighters of the 459th Aircraft Squadron at Andrews Air Force Base intercept the plane that hitthe Pentagon, only 16 kilometers away? And since we're at it, why the Pentagon did not release the full video of the hit?

19) A number of very experienced airline pilots - including US ally Egyptian President Hosni Mubarak, a former fighter jet pilot - revealed that, well, only crack pilots could have performed such complex maneuvers on the hijacked jets, while others insisted they could only have been accomplished by remote control. Is it remotely believable that the hijackers were up to the task?

20) How come a substantial number of witnesses did swear seeing and hearing multiple explosions in both towers of the WTC?

21) How come a substantial number of reputed architects and engineers are adamant that the official narrative simply does not explain the largest structural collapse in recorded history (the Twin Towers) as well as the collapse of WTC building 7, which was not even hit by a jet?

22) According to Frank de Martini, WTC's construction manager, "We designed the building to resist the impact of one or more jetliners." The second plane nearly missed tower 1; most of the fuel burned in an explosion outside the tower. Yet this tower collapsed first, long before tower 2 that was "perforated" by the first hit. Jet fuel burned up fast - and by far did not reach the 2000-degree heat necessary to hurt the six tubular steel columns in the center of the tower - designed specifically to keep the towers from collapsing even if hit by a Boeing 707. A Boeing 707 used to carry more fuel than the Boeing 757 and Boeing 767 that actually hit the towers.

23) Why did Mayor Rudolph Giuliani instantly authorized the shipment of WTC rubble to China and India for recycling?

24) Why was metallic debris found no less than 13 kilometers from the crash site of the plane that went down in Pennsylvania? Was the plane in fact shot down - under vice president Dick Cheney's orders?

25) The Pipelineistan question. What did US ambassador Wendy Chamberlain talk about over the phone on October 10, 2001, with the oil minister of Pakistan? Was it to tell him that the 1990s-planned Unocal gas pipeline project, TAP (Turkmenistan/Afghanistan/ Pakistan), abandoned because of Taliban demands on transit fees, was now back in business? (Two months later, an agreement to build the pipeline was signed between the leaders of the three countries).

26) What is former Unocal lobbyist and former Bush pet Afghan Zalmay Khalilzad up to in Afghanistan?

27) How come former Pakistani foreign minister Niaz Niak said in mid-July 2001 that the US had already decided to strike against Osama bin Laden and the Taliban by October? The topic was discussed secretly at the July Group of Eight summit in Genoa, Italy, according to Pakistani diplomats.

28) How come US ambassador to Yemen Barbara Bodine told FBI agent John O'Neill in July 2001 to stop investigating al-Qaeda's financial operations - with O'Neill instantly moved to a security job at the WTC, where he died on 9/11?

29) Considering the very intimate relationship between the Taliban and Pakistan's Inter-Services Intelligence (ISI), and the ISI and the Central Intelligence Agency (CIA), is Bin Laden alive, dead or still a valuable asset of the ISI, the CIA or both?

30) Was Bin Laden admitted at the American hospital in Dubai in the United Arab Emirates on July 4, 2001, after flying from Quetta, Pakistan, and staying for treatment until July 11?

31) Did the Bin Laden group build the caves of Tora Bora in close cooperation with the CIA during the 1980s' anti-Soviet jihad?

32) How come General Tommy Franks knew for sure that Bin Laden was hiding in Tora Bora in late November 2001?

33) Why did president Bill Clinton abort a hit on Bin Laden in October 1999? Why did then-Pakistani president Pervez Musharraf abort a covert ops in the same date? And why did Musharraf do the same thing again in August 2001?

34) Why did George W Bush dissolve the Bin Laden Task Force nine months before 9/11?

35) How come the (fake) Bin Laden home video - in which he "confesses" to being the perpetrator of 9/11 - released by the US on December 13, 2001, was found only two weeks after it was produced (on November 9); was it really found in Jalalabad (considering Northern Alliance and US troops had not even arrived there at the time); by whom; and how come the Pentagon was forced to release a new translation after the first (botched) one?

36) Why was ISI chief Lieutenant General Mahmud Ahmad abruptly "retired" on October 8, 2001, the day the US started bombing Afghanistan?

37) What was Ahmad up to in Washington exactly on the week of 9/11 (he arrived on September 4)? On the morning of 9/11, Ahmad was having breakfast on Capitol Hill with Bob Graham and Porter Goss, both later part of the 9/11 Commission, which simply refused to investigate two of its members. Ahmad had breakfast with Richard Armitage of the State Department on September 12 and 13 (when Pakistan negotiated its "cooperation" with the "war on terror") and met all the CIA and Pentagon top brass. On September 13, Musharraf announced he would send Ahmad to Afghanistan to demand to the Taliban the extradition of Bin Laden.

38) Who inside the ISI transferred US$100,000 to Mohammed Atta in the summer of 2001 - under orders of Ahmad himself, as Indian intelligence insists? Was it really ISI asset Omar Sheikh, Bin Laden's information technology specialist who later organized the slaying of American journalist Daniel Pearl in Karachi? So was the ISI directly linked to 9/11?

39) Did the FBI investigate the two shady characters who met Mohammed Atta and Marwan al-Shehhi in Harry's Bar at the Helmsley Hotel in New York City on September 8, 2001?

40) What did director of Asian affairs at the State Department Christina Rocca and the Taliban ambassador to Pakistan Abdul Salam Zaeef discuss in their meeting in Islamabad in August 2001?

41) Did Washington know in advance that an "al-Qaeda" connection would kill Afghan nationalist commander Ahmad Shah Massoud, aka "The Lion of the Panjshir", only two days before 9/11? Massoud was fighting the Taliban and al-Qaeda - helped by Russia and Iran. According to the Northern Alliance, Massoud was killed by an ISI-Taliban-al Qaeda axis. If still alive, he would never have allowed the US to rig a loya jirga (grand council) in Afghanistan and install a puppet, former CIA asset Hamid Karzai, as leader of the country.

42) Why did it take no less than four months before the name of Ramzi Binalshibh surfaced in the 9/11 context, considering the Yemeni was a roommate of Mohammed Atta in his apartment cell in Hamburg?

43) Is pathetic shoe-bomber Richard Reid an ISI asset?

44) Did then-Russian president Vladimir Putin and Russian intelligence tell the CIA in 2001 that 25 terrorist pilots had been training for suicide missions?

45) When did the head of German intelligence, August Hanning, tell the CIA that terrorists were "planning to hijack commercial aircraft?"

46) When did Egyptian President Mubarak tell the CIA about an attack on the US with an "airplane stuffed with explosives?"

47) When did Israel's Mossad director Efraim Halevy tell the CIA about a possible attack on the US by "200 terrorists?"

48) Were the Taliban aware of the warning by a Bush administration official as early as February 2001 - "Either you accept our offer of a carpet of gold, or we bury you under a carpet of bombs?"

49) Has Northrop-Grumman used Global Hawk technology - which allows to remotely control unmanned planes - in the war in Afghanistan since October 2001? Did it install Global Hawk in a commercial plane? Is Global Hawk available at all for commercial planes?

50) Would Cheney stand up and volunteer the detailed timeline of what he was really up to during the whole day on 9/11?

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

The Coming Consequences of Banking Fraud

The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud. The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks. If the mission of this current manufactured leg-up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until this point, the mission has been a resounding success. For those unfamiliar with the term “blowback”, it's a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.

Though this term has primarily been used to describe the consequences of covert military operations, “blowback” is an appropriate term to use to describe the coming consequences of banking fraud because the US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future. In fact, I predict that the blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people.

In an article I wrote three months ago, on June 10, 2009, titled, “Can Rising Stock Markets Serve as a Confirmation of a Crashing Economy?”, I stated, “Whether I am right or wrong about US markets tanking by summer’s end/fall’s beginning, if [we] position [our] investment assets based upon an understanding of the fraudulent monetary system, [we] can still continue to create wealth.” While true, I was a bit early in raising the proposition of a stock market correction the month before; I amended my prediction in June upon realizing the breadth of the manipulation schemes occurring in Western stock markets. In today’s markets, only a complete investment novice would try to predict market behavior without accounting for the massive government intervention schemes and forays into stock markets as well as the computerized manipulation of daily trading volume. One of the main reasons, but not the only one, that I amended my target for the end of this rally this past June to the fall season is the fact that fall normally marks the return of much higher daily trading volume from the traditional summer lulls.

Thus, it is a much more difficult proposition for Central Banks and computerized trading programs to manipulate a continued rise in stock markets in the face of higher daily trading volumes.

However, should daily trading volume remain surprisingly low or muted this fall, as is also a possibility, I have no doubt that this market rise can persist for an extended period longer before these false gains are eventually flushed away (but, of course, not before all US financial executives have had ample time to exit their positions quietly). In fact, the development of this false rally was the main topic of my article. The other scenario, one that includes a significant rise in daily trading volumes that trigger the start of a second massive decline in Western stock markets, would not surprise me either. It’s just a matter of observing the signs that forecast the waning efficacy of the fraudulent stimulus of Western markets (or for this matter, the fraudulent stimulus of Chinese stock markets too).

Remember that it is only the timing of this decline that I am uncertain of, but I am very certain that a significant decline of a shocking nature is coming. The last time I issued an adamant warning of a similar nature was on April 23, 2008, when again, the only issue about a market crash was timing, though the US S&P 500 index peaked just 18 business days after I wrote that article and proceeded to fall by more than 50%.

To truly gain more clarity regarding this recent Western stock market rally, consider a hypothetical scenario in which a person was kept ignorant of any action in the US stock markets for the entire previous six months. Instead, imagine that he or she was given the task of predicting US market behavior over the past six month period solely based upon cold, hard US financial and economic data stripped bare of any of the media-slanted headlines that perpetually spin bad economic data as positive or “less bad” than it truly is. Based upon the economic data produced from the last six months, what do you think this person would conclude? That stock markets have soared during this time or that they had crashed?

Of course, factor in the plethora of evidence about numerous PPT interventions to “save” markets during this time, and the strong US stock market rally no longer seems so illogical. But strip away any evidence of free-market manipulation and interference and in the face of true, undistorted economic data, our current market rally would be enormously puzzling. And this point alone should be sufficient to tell you how this rally will end. The inevitable conclusion of this rally isn’t just about the unsustainability of the massive bailout programs implemented by global Central Banks that have engineered this current market rally out of thin air, but its manifestation should trigger an investigation into the outright fraud committed by Wall Street, banking institutions, and Central Banks that has been aided and abetted by financial journalists.

For example, consider the following stories:

Demographers recently reported that Florida, the state known as the “mecca” for wealthy retirees in America, suffered its first population decline last year in more than 60 years, an event that delineates the collapse in wealth of American retirees and an event that is likely to repeat this year.

At the end of this past July, one of the largest ports in America, Long Beach, reported that the 20% year-over-year cargo business decline is among the sharpest since the Great Depression. This is not a trend specific to Long Beach. “It’s phenomenal how much things fell away even since December,” said Paul Bingham, managing director of global trade and transportation for IHS Global Insight, the business research firm that monitors North America’s biggest ports for the National Retail Federation.

As of September 4, 2009, shadowstats.com reported that unemployment in the US is now near 21% and is showing no signs of improving any time soon (when factoring in discouraged workers, part-time workers that can’t find full-time work, unemployed workers that have fallen off the unemployment roll, etc.). In fact, yesterday, Manpower’s Employment Outlook Survey reported that US employers’ hiring plans for the upcoming fourth quarter dropped to the lowest level in the history of its survey which dates back to 1962.

On August 15th, when BB&T (BBT) purchased failed US bank Colonial Bank, it wrote down Colonial Bank’s loans and real estate collateral by 37% and Colonial Bank’s construction loans by 67%. Yes, 67%! The severe markdowns of Colonial Bank’s assets should have set off warnings akin to a five-alarm fire among the financial media, but it did not, for the media increasingly caters to the interests of the elite bankers of this world at the cost of truth and freedom. If there are several things we can deduce from Colonial Bank’s failure, it is the following.

Though the Federal Deposit Insurance Corporation (FDIC) refuses to disclose the names of the banks on its “watch list”, it can be safe to assume that a bank just does not go bankrupt overnight and that the process of going bankrupt can be predicted many months in advance by personnel with access to a bank's financial statements and knowledge of its true financial condition. In fact, various newspaper articles reported that Colonial Bank was in negotiations with the FDIC as early as March, 2009, yet not one time, did the FDIC force Colonial Bank to come clean regarding its true financial health before it finally shuttered the bank five months later.

The fact that the FDIC is spotting massive trouble in the American banking system and covering it up should be massively worrisome to Americans. Because revelations regarding the truth about a US bank’s health only seem to occur after it fails, the favored handling of American banks with kid gloves by the FDIC should immediately beg the question, “How many more US banks are legitimately bankrupt today and just operating on fumes?”

Personally, I would not be surprised if sometime within the next six months, a considerably larger US bank failure causes a massive ripple effect of much greater consequence. Banks that are currently struggling with unreported and covered-up deepening problems of loan delinquencies such as Wells Fargo (WFC), may be among the large banks that are candidates for future bankruptcy despite the public categorization of such institutions in the “too-big-to-fail” category. Unfortunately, Wells Fargo, from a political standpoint, does not have the “most favored bank” status of a Citigroup (C) or JP Morgan (JPM), two institutions deserving of bankruptcy but clearly favored by the US Federal Reserve and the US government.

When one considers the fact that all government or state produced economic statistics have been massively distorted towards the side of optimism and away from reality throughout this global financial crisis, one should be even more worried when the occasional sparse negative statistic is reported, for it is likely that these statistics too are misrepresenting the truth.

Thus, in the face of all negative news that points to zero foundation and zero economic structural improvements, how has a multi-month stock market rally been able to spread across Asia, Europe and the US? Again, the answer is fraud, and thus should be analyzed through the prism of fraud and not the false prism of “economics”. There is no “economics” behind this latest global stock market rally, only fraud.

For many weeks in August, just four stocks accounted for as much as 40% of composite volume on the NYSE: Citigroup, Bank of America (BAC), Freddie Mac (FRE) and Fannie Mae (FNM). In early 2007, Citigroup, Fannie Mae and Freddie Mac accounted for roughly 1% -3% of NYSE volume, a far cry from its recent 35%+ collective weight of the composite NYSE volume. Remember that this huge volume anomaly persisted not just for one day but for weeks on end during August. If Citigroup, Bank of America, Fannie Mae and Freddie Mac were a pharmaceutical collective that just discovered a cure for cancer and AIDS, then such volume anomalies would make sense. However, such massive trading volumes, as a percent of composite volume for the entire NYSE index, makes zero sense for companies, that for all intents and purposes, are on government bailout lifelines. It makes no sense, that is, unless massive free-market intervention is occurring in an attempt to save these firms.

Again, when viewed through the “fraud prism”, such activity makes complete sense. It is obvious that the “Rise of the Machines” has created markets that are now dominated by computerized high frequency trading programs that can execute trades as quickly as 0.5 milliseconds and have as their sole purpose the creation of short-term market distortions driven by statistical arbitrage that can be used to game the system and cheat their clients. Though this link describes how this scheme works in commodity markets for those that have been following the New York Stock Exchange, the use of high frequency trading programs to game the system at the expense of the retail investor has been glaringly obvious especially in the trading behavior exhibited this past summer.

The ironic part of this huge scam that has merely just re-inflated another massive stock market bubble is that the segment of the public that is so easily angered by government bailouts, billion dollar bonus plans for Wall Street executives and the chicanery of JP Morgan and Goldman Sachs (GS) (and justifiably so), are the very same people that so passively accept the mountain of lies that passes for financial reporting today (inexplicably so). It is ironic that this same collective of people, instead of rejecting this mountain of lies, continues to listen to their financial advisers at global commercial investment firms, even though these advisers are the same group of people that miserably failed to see the crash that started in the spring of 2008, when the factors behind the pullback back then was just as clear as the factors behind the future pullback that will occur in the near future. It is ironic that this same group of people continues to support, participate and fund a system that cares only about using their clients' money to lie, cheat and steal from them when a simple withdrawal of funds from the system is the antidote to ignorance-induced paralysis that will once again create massive crisis-induced losses in the future. Pulling one’s money from one’s current firm and switching to another firm that participates in this web of lies and deceit is not a solution either.

It is ironic that it is the same group of people that so readily accepts the Western media’s correct analysis of China’s stock market as a huge bubble through the lens of Austrian economic principles that simultaneously rejects any similar notion as applicable to US or UK stock markets, and instead, readily embraces heavily flawed and unsound Keynesian economic principles when evaluating Western stock markets. It is ironic that the same group of people that foolishly equates being “American” with blind support of the US stock market (i.e. “being bearish on the US market is un-American!”) is also completely ignorant of both the massive fraud that is perpetrated in US stock markets as well as the tenets of the US Constitution that sound great objections and warnings to the ruinous and foolish monetary policies that are implemented by bankers as their “solution” to our current economic crisis. And finally, the greatest irony of all is that the anger that brews inside those that have been tragically hurt by this crisis can coexist with the failure to recognize that it matters not in America if the President has the last name Clinton, Bush or Obama – that monetary and fiscal agenda inside the US for the last 17 years has not wavered nor changed one iota during this period of time because it was not these men that have been in charge of the economy but the men that manufactured these men’s rise to power and that control the US Federal Reserve and the world’s Central Banks, and thus the global monetary policy.

If one can not see the connection between Presidents, Prime Ministers and the banking families that rule Central Banks, one merely needs to open up a newspaper and follow their lives after they leave government office. It is not just a coincidence that ex-British Prime Minister Tony Blair, after leaving office, took a part-time consulting job with JP Morgan’s Jamie Dimon that reportedly pays him $5 million per year as well as another well-paid consulting position with Zurich Financial Services. In office, Mr. Blair was a consultant to the banking oligarchs in secret; out of office, he is free to be a consultant publicly. And one can be certain that current UK Prime Minister Gordon Brown and US President Barack Obama will be offered very considerable salaries and fees by the world’s top financial oligarchs as thanks for their current and past service to them once they leave office as well (especially Gordon Brown, for selling out his countrymen and selling more than half of England’s bank reserves to ensure that the financial oligarchs could maintain the US dollar as the de-facto international currency for 10 additional more years than it deserved to hold this status).

In the end, what is the most frustrating facet of these huge con games executed by the financial oligarchs is that the group of people that this article is most intended to help is often the group of people that will take most offense to this article and most steadfastly refuse to see the truth. Instead, they will only realize the truth when the economic future unfolds to the blueprint of those of us the media labels as “gloom and doomers” because we base our predictions on reality instead of fantasy and lies. Instead of labeling us as “gloom and doomers”, if the media at large ever conducted an unbiased analysis of the predictions of the “gloom and doomers” for the past 3 years, they would discover that the “gloom and doomers” have been spectacularly accurate in the majority of their calls while the financial demagogues they continually fawn over (that only serve the interests of the bankers) have been spectacularly wrong in the vast majority of their predictions. Yet, those that serve the international banking cartel with glowing and rosy predictions of economic recovery never suffer the negative consequences of being wrong all the time as the mass media all too happily continues to provide the largest public platform and the loudest voices to these people. Perhaps, if it is accurate to label “gloom and doomers” as realists, then one should label the optimists that make their calls based upon perpetrated fraud as banking shills and cogs in the investing machine, for their societal contribution of greatest significance is an opiate cocktail for the masses that is a mixture of deceit and lies mixed with unbridled optimism.

As they often say that life imitates art, I close my article today with a speech from the film “V for Vendetta” that is frighteningly relevant if you listen to this speech with a critical ear and replace the references to the war on terror in this speech with the current war the bankster fraudsters are committing against the people. A sound money backed by precious metals, can be the people’s liberation from this war. Anything that falls short of such a solution will be just another scam in an already long line of scams, of a solution sold to the masses, that in reality, is no solution at all.

Two months left to read the book on US collapse

Professor Igor Panarin, whose book "The Crash of America" is just out, claims that by November the book will be yesterday’s news. Panarin believes President Obama will lead his country to a breakup. Panarin compares Obama to former Soviet president Mikhail Gorbachev.

"Obama is "the president of hope", but in a year there won’t be any hope. He’s practically another Gorbachev – he likes to talk but hasn’t really managed to do anything. Gorbachev at least had been a secretary of a regional communist party administration, whereas Obama was just a social worker. His mentality is totally different. He’s a nice person and talks nicely – but he’s not a leader and will take America to a crash. When Americans understand that – it will be like a bomb explosion," Panarin said, speaking to journalists during the unveiling of his book

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Panarin made his controversial forecast back in 1998, saying 2010 would be the starting point of the collapse. He spent the following eleven years monitoring the events around the US and says they largely confirm his theory.

"Today I received another confirmation that the collapse of the dollar and the US is inevitable. Japan’s Democratic Party won the election, and I’d like to remind you that its leader [Yukio Hatoyama] has the snubbing of the dollar among his economic plans. In plainer words, he plans to transfer Japan’s monetary reserves from US dollars into another currency. The move will seriously accelerate the dollar’s exchange slump as early as this November. Disintegration will follow shortly," he added.

Amid all these pessimistic statements, Panarin – once labeled by a WSJ journalist as "a polite and cheerful man with a buzz cut" – insists he is by no means a US-hater but, rather, just a scientist.

"I’m not anti-American, the US population has nothing to do with the part of its political elite that implements an absurd and aggressive policy that aims to create conflicts around the planet…….I hope to see the reasonable part of the American elite – I know there is one – benefiting in these two months left till the collapse. I can name two people that belong to this reasonable part – US Secretary of Defense Robert Gates and Under Secretary of State for Political Affairs William Burns. If they triumph in the political strife, the consequences of the collapse will be minimized."

"The 2009 US budget deficit is 4.5 times the 2008 deficit, while firearms sales are up 40%. On October 1, the coupons that were given to state workers are to be cashed out. When the workers realize that they are getting nothing for those coupons, they will take out their firearms and chaos will unfold. Meanwhile, in a separate issue, as the financial year draws to a close on September 30, its results will be published. They are destined to shock investors worldwide.

After that, and the snubbing of the dollar by Japan and, especially, China, which will transfer 50% of its international operations to Yuan starting in 2010, the currency will then flow like a landslide out of style. Argentina and Brazil are excluding the dollar from mutual financial operations starting January 2010, while Brazil offers to move toward alternative currencies throughout the whole of South America," Panarin noted.

He also suggested Russia follow suit and begin selling oil and gas for roubles. Panarin still leaves room for miscalculation, which would actually make him happy. And should the collapse not start in November, he is ready to explain why it didn’t happen by December. But at the moment, the collapse looks quite likely.

"In my opinion, the probability of the US ceasing to exist by June, 2010 exceeds 50%. At this point, the mission of all major international powers is to prevent chaos in the US," Panarin concluded.