If you look with your understanding, the crimes against humanity are written across the rotting visages of Henry Kissinger and Zbigniew Brzezinski.

Like a couple of aging prostitutes, these leading architects of twentieth-century evil still sell their wares to those with an insatiable lust for the power of the crown.

THE CLUB OF ROME

Birth Mother of the Environmental Movement

The moldy twosome have something else in common. Both have been active members of an international think tank from the dark side of the force called the Club of Rome. Founded at the Rockefeller’s estate in Bellagio, Italy, in 1968, some of the other fraternity brothers and sisters include Al Gore, David Rockefeller, Queen Beatrix of the Netherlands, and Mikhail Gorbachev.

And there is no one better to give you the short version of the Club’s agenda than Gorby himself:

“The threat of environmental crisis will be the ‘internal disaster key’ that will unlock the New World Order.”

Who let this guy out of Lubyanka?

Their more precisely stated goal is population control. The solution? Create an environmental catastrophe like, oh, say, “global warming” and blame it on the planet’s most heinous villain—man himself.

But I should let them tell it:

“In searching for the new enemy to unite us, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill. . . . But in designating them as the enemy, we fall into the trap about which we have already warned, namely mistaking symptoms for cause. All these dangers are caused by human intervention and it is only through changing attitudes and behaviors that they can be overcome. The real enemy, then, is humanity itself.”

Sounds like a good plan . . . if you’re Darth Vader.

In 1972, the Club took the world stage with the publication of a book they had commissioned to be written by a group of MIT scientists. It was called The Limits to Growth. Examining the planet’s population growth in relation to available resources, the report concluded that the planet would run out of resources sometime in the next 100 years, resulting in a catastrophic decline in population and industrial production.

As one reviewer put it, the authors examine

“. . . the impact of humanity on the world ecology and of steps taken toward remediating the accelerating approach to a train wreck that is mankind’s ill-managed and uncontrolled ‘footprint’ on this planet’s environment.”

Still, these trends and their consequences could be altered, it argued; we had to be less, do less and have less. The brand for this Orwellian path to planetary salvation was sustainable development.

Heavily promoted, the book reached opinion leaders in political, scientific and economic circles as it exploded around the planet like the Harry Potter of environmentalism. It sold 12 million copies in thirty languages despite the fact that the research had all the scientific rigor of a plagiarized term paper for a freshman biology class.

“An error does not become truth by reason of multiplied propagation, nor does truth become error because nobody sees it.” —Mohandas Gandhi

Assailed by top scientists, the research was shoddy in the extreme. Population expert and author Professor Julian Simon said, “The Limits to Growth has been blasted as foolishness or fraud by almost every economist who has read it closely or reviewed it in print.”

Yale economist Henry Wallich reviewed the book saying, “. . . the quantitative content of the model comes from the authors’ imagination, although they never reveal the equations that they used.”

But it is a PR world and with the publication of this book, the modern environmental movement was born. Midwifed to life in a blanket of deceit, it was yet hailed as the savior, not of mankind, but of the planet it claimed was being fried to a crisp by humanity’s toxic binge of carbon dioxide.

The scientific fraud is its own malice, but few were able to see the underlying strategy—that the book would serve as the foundation of a global public relations campaign that would mesmerize legislators, educators, and countless organizations of goodwill and would eventually set the stage for the biggest rip-off in human history. But I am getting ahead of myself.

This then was Con #1: The scientific basis of the book that launched the environmental movement calling for “sustainable development” and a reduction of man’s leper-like carbon footprint on the planet was, and is, a scam, a hoax, a falsehood—environmental snake oil.

“Every violation of truth is not only a sort of suicide in the liar, but is a stab at the health of human society.” —Ralph Waldo Emerson

Which leads us to the second piece of the puzzle, Con #2. Who’d have thought that . . .

OIL

Is Not a Fossil Fuel

The immigration officer at Sheremetyevo took my passport and studied it for some time. He didn’t say anything; he just thumbed through the passport and then looked at a computer screen for a couple of lifetimes before stamping it and grunting me on to customs.

The KGB was still manning the borders the first time I went to Moscow shortly after the fall of Communism. Letting Americans walk freely into Mother Russia without official surveillance was driving the man crazy but he had to keep a lid on it.

In fact, Communism had been officially dead for only a few months when the shock troops of capitalism started storming the gates of opportunity in the former Soviet Union. The ghosts of Marx, Lenin and Stalin stalked the halls of the Politburo in horror as entrepreneurs from the United States, Japan and Western Europe tried to cut deals for every asset in Mother Russia that wasn’t nailed down. Banking, hospitality, timber and precious metals came under assault by peculiar partnerships of western capitalists and thugs from the once mighty KGB. During those early years, when Yeltsin (God love him) and his vodka were in office, it was a free-for-all.

The Oklahoma land rush of the 1890s had nothing on Moscow in 1992.

But even then, the oil industry stayed under control of the state—directly or indirectly. In fact, as recently as 2003, the bare-chested former KGB colonel and current premier—soon to be president of Russia . . . again—Vladimir Putin squashed a buyout deal between Russia’s Yukos and Exxon, the largest company in the world.

To understand the reason for this, we return momentarily to the early days of the Cold War when an isolated Soviet Union tasked their top scientists to identify the actual source of oil. Not a weekend homework assignment. After considerable research, in 1956, Russian scientist Professor Vladimir Porfir’yev announced that “crude oil and natural petroleum gas have no intrinsic connection with biological matter originating near the surface of the earth. They are primordial [originating with the earth’s formation] materials which have been erupted from great depths.”

If your eyeballs didn’t fall out when you read that, you might want to read it again.

He said oil doesn’t come from anything biologic, not, as conventional wisdom dictates, from the fossilized remains of dinosaurs and/or ancient plant matter. It comes from very deep in the earth and is created by a biochemical reaction that subjected hydrocarbons (elements having carbon and hydrogen) to extreme heat and intense pressure during the earth’s formation.

Russians referred to this oil (any oil, really) as “abiotic oil” because it is not created from the decomposition of biological life forms, but rather from the chemical process continually occurring inside the earth.

I know, easy for Porfir’yev to say. But it turns out it was more than just a theory.

Because shortly after the Russians discovered this, they started drilling ultra-deep wells and finding oil at 30,000 and 40,000 feet below the earth’s surface. These are staggering depths, and far below the depth at which organic matter can be found, which is 18,000 feet.

Interesting, eh?

The Russians applied their theory of abiotic deep-drilling technology to the Dnieper-Donets Basin, an area understood for the previous half a century to be barren of oil. Of sixty wells drilled there using abiotic technology, thirty-seven became commercially productive—a 62 percent success rate compared with the roughly 10 percent success rate of a U.S. wildcat driller. The oil found in the basin rivaled Alaska’s North Slope.

Let’s say they had a good hair day.

But it doesn’t stop there, not by a long shot. Since their earlier discoveries, the major Russian oil companies have quietly drilled more than 310 ultra-deep wells and put them into production.

Result? Russia recently overtook Saudi Arabia as the planet’s largest oil producer.

Maybe they are onto something.

Though there were papers written on this early on, almost all were in Russian and few made it to the West. And those that did were laughed at.

No more. With Russia’s rejection of the Exxon-Yukos deal (Putin did not want this technology and their abiotic oil experts exported to the West) and the access to information now available on the Internet, the word has begun to spread rapidly to the West. Still, it hasn’t taken hold yet.

Why not? This is huge. Oil is not a fossil fuel! And it’s renewable! Wow!

There are a couple of factors at play here.

Big oil has a vested interest in pushing the idea that oil is scarce, hard to find, and thus costly to produce—all of which, of course, means increased revenues and profits. This is a story in itself, but not the primary focus here.

More relevant to our story is the fact that a cornerstone of the environmental movement is this: oil is a fossil fuel, a fossil fuel that is scarce, and is in limited and ever decreasing supply. Moreover, its production creates carbon dioxide. Therefore its use, for virtually all productive purposes—agricultural production, real estate construction, auto, truck, train and air transportation, utilities, heating, cooling, communication, ad infinitum (all of them)—must be curtailed.

According to the thirty-year update of the book The Limits to Growth,

“A prime example of a nonrenewable resource is fossil fuels, whose limits should be obvious, although many people, including distinguished economists, are in denial over the elementary fact. More than 80 percent of year 2000 commercial energy use comes from nonrenewable fossil fuels—oil, natural gas, and coal. The underground stocks of fossil fuels are going continuously and inexorably down. . . .

“Peak gas production will certainly occur in the next 50 years, the peak for oil production will occur much sooner, probably within the decade.”

Scary stuff. Frightening. But as false as a hooker’s smile.

Oil is not a fossil fuel.

And it is “renewable.”

While I have never been a fan of Putin the Macho, the Russians have demonstrated the accuracy of their theory in the only place it counts—the oil field. Oil is not only abiotic, it continues to populate fields that were understood to be as dry of petroleum as a desert wind. In fact, some scientists believe it is the centrifugal force of the planet’s rotation that forces abiotic oil toward the planet’s surface on a continuous basis.

“There are some things the general public does not need to know, and shouldn’t. I believe democracy flourishes when the government can take legitimate steps to keep its secrets and when the press can decide whether to print what it knows.” —the late Katherine Graham, owner of the Washington Post

So Con #2 is that oil is a fossil fuel (which it isn’t), that it is scarce and being depleted (which it isn’t), that it is nonrenewable (which it isn’t), and that, as a result, catastrophe looms (which it doesn’t) unless we drastically curtail our use of petroleum.

Lies one and all, which lead us to the granddaddy of con—Con #3:

GLOBAL WARMING—CLIMATE CHANGE

The heart-wrenching icon of a lone polar bear hovering in solitude somewhere in the rapidly disappearing Arctic has become the environmental movement’s most poignant pitchman.

The pitch, however, is bogus. The bears are booming.

According to the Wall Street Journal, “Nearly everyone agrees that there are more polar bears now than when scientists first started counting: Estimates put the population between 20,000 and 25,000, up from several thousand 50 years ago. In Canada, where two-thirds of the world’s bears live, most populations have grown during the past two or three decades. Arctic residents say they are now bumping into bears wherever they turn.”

The polar bear “debate” cuts to the heart of the foundation on which the environmental movement rests: global warming.

While the Club of Rome’s clarion call for “sustainable development” in The Limits to Growth turned out to be more than a little thin on scientific credibility, and the theory that oil is a scarce and rapidly depleting fossil fuel is untrue, the holy grail of the environmental movement is Global Warming or, as they have renamed it due to the last eleven years of embarrassingly cooler temperatures, Climate Change.

It is the creed upon which the movement is built.

The scripture is as follows: The burning of fossil fuels produces carbon dioxide. This and other “greenhouse” gases create global warming, which will destroy the planet.

To wit, the production of these gases must be “capped.”

Legislation to suppress their use is a first step. Population control, a reduction of the planet’s population, is the real answer because man makes these gases. Fewer people mean less greenhouse gas. Less greenhouse gas means less global warming. Less warming means the earth is saved.

Amen.

Greenhouse gases, by the way, are any of the atmospheric gases, such as water vapor and carbon dioxide, that are said to contribute to the greenhouse effect.

The greenhouse effect is a name for the phenomenon outlined above whereby the earth’s atmosphere traps solar radiation and thereby overheats the planet. According to the theory, these gases in the atmosphere allow sunlight to pass through to the earth, but then absorb the heat radiated back from the planet’s surface.

Shazam! Global warming.

Sounds good. Cut CO₂ and you save the world.

A clearly identified evil with an action plan to handle it.

Kind of like the Inquisition—fry the heretics, purify the faith.

Today, global warming heretics are burned in the media not at the stake, but the dogma is no less strident, no less authoritarian, and no less despotic.

SCIENCE SETTLED

Al Gore is the Moses of global warming. He, along with the high priests of the movement, the United Nations’ Intergovernmental Panel on Climate Change (IPCC), has pronounced that the science regarding man-made global warming is “settled.” There’s nothing further to discuss: global warming is real; man-made CO₂ is the cause; carbon production must be capped. Done deal.

Al and the IPCC are simpatico on this—which is cool. Harmony in the ranks.

THE OREGON PETITION

But here’s the deal: 31,486 scientists have signed a document called the Oregon Petition lambasting the shoddy research behind global warming, stating quite simply that “. . . any human contribution to climate change has not been demonstrated.”

This is not a gang of political hacks, or George Soros–funded “activists.” No, the signatories include 3,667 atmospheric, environmental and Earth scientists; 4,796 chemists; 2,924 biologists and agricultural scientists; 903 math and computer scientists; and 9,992 in engineering and general science.

Of these, 9,029 have PhDs.

The petition states that there is no convincing scientific evidence that the human release of carbon dioxide or other greenhouse gases is causing or will cause global warming.

It goes on to say that there is substantial scientific evidence demonstrating that atmospheric carbon dioxide produces countless beneficial effects on the plant and animal populations of Earth. (In one of Mother Nature’s most spectacular touches of environmental magic, plants convert carbon dioxide and sunlight into oxygen—you know, the stuff we breathe.)

SENATE COMMITTEE ON THE ENVIRONMENT

In March of 2009 the Senate Committee on Environment and Public Works posted a report of more than 700 international scientists dissenting on the theory of man-made global warming. Several of those joining in on this report were current or former IPCC members.

Several other groups of scientists have issued statements blasting the lack of credible science behind the theory that man-made carbon dioxide and other greenhouse gases in the atmosphere contribute to global warming. Examples include the Statement by Atmospheric Scientists on Greenhouse Warming, the Leipzig Declaration on Global Climate Change, and the Heidelberg Appeal.

THE IPCC COOKS THE BOOKS

You will notice, if you read articles about the environment, that “facts” regarding global warming invariably cite the IPCC as their source

In short, the UN’s Intergovernmental Panel on Climate Change is the planet’s opinion leader on the subject of man-made climate change.

Or at least they were.

On November 19, 2009, one of the largest scientific scandals in history exploded across the international media when thousands of internal e-mails were leaked exposing the organization’s blatant manipulation of climate data. The e-mails revealed that the IPCC had skewed bucketloads of climate information to promote the idea that global warming was a result of an increase in man-made carbon dioxide and other greenhouse gases.

This wasn’t a bunch of stoners in a frat house passing the filched answers to the Geology 101 midterm around. These guys were recognized as the world’s leading “authorities” on climate change, caught red-handed in an intentional plot to mislead environmental groups, governments and the public at large about the current and future state of the planet’s temperature.

This brief excerpt from Canada’s National Post rather tells the story.

“The Climategate Emails describe how a small band of climatologists cooked the books to make the last century seem dangerously warm.

“The emails also describe how the band plotted to rewrite history as well as science, particularly by eliminating the Medieval Warm Period, a 400 year period that began around 1000 AD.

“The Climategate Emails reveal something else, too: the enlistment of the most widely read source of information in the world—Wikipedia—in the wholesale rewriting of this history.”

THE MEDIEVAL WARM PERIOD

Like a cheap Las Vegas lounge act, the pernicious cult of climate change ideologues at the IPCC desperately tried to hide the Medieval Warm Period (MWP)—ditch it, make it disappear. This was the warmest period in modern recorded history and is very well known by climatologists.

Trying a page from Houdini’s playbook, the IPCC created a phony graph of historical temperatures that made the MWP—presto!—vanish.

Cute.

You see, during the MWP temperatures were much warmer than they are today. Agriculture flourished and the Norsemen, taking advantage of the ice-free seas, settled Greenland. There is no evidence of a rise in sea level at that time. None. And ice sheets around Greenland were largely absent. Greenland, get it?

Temperatures soared, but where was the man-made carbon dioxide? Oil had yet to be discovered, factories had not been constructed, and the first Model T was centuries into the future.

There followed a mini ice age, and by 1500 the settlements in Greenland were gone and the Thames froze all the way to London.

There was no “man-made” factor in any of this. These ebbs and flows of the earth’s temperatures were all a product of naturally occurring phenomena, which is discussed in detail below.

But as to the IPCC,

“Research data on climate change do not show that human use of hydrocarbons is harmful. To the contrary, there is good evidence that increased atmospheric carbon dioxide is environmentally helpful.” —The Oregon Petition

FEARMONGERS

In fact, the same mindset that is now promoting the catastrophic consequences of global warming were using the same arguments, almost word for word, to promote the dire consequences of global cooling just a few decades ago.

In 1975, Reid Bryson wrote in Global Ecology:

“The continued rapid cooling of the earth since WWII is in accord with the increase in global air pollution associated with industrialization, mechanization, urbanization and exploding population.”

Yeah, baby! CO₂ is causing global cooling.

Or consider Kenneth Watt, writing on Earth Day in 1970:

“If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder by the year 2000. . . . This is about twice what it would take to put us into an ice age.”

Good call, Ken.

There are more, but you get the idea.

These people, then and now, are fearmongers. They get some kind of perverse joy out of frightening people—in this case, frightening them into acceptance of the greatest con job of all time.

Listen to the climate chaos merchants reviewing a book by a global warming jihadist named James Hansen, who subtitles his book “The truth about the coming climate catastrophe and our last chance to save humanity.”

“Dr. James Hansen is Paul Revere to the foreboding tyranny of climate chaos.” —Robert F. Kennedy, Jr.

“With urgency and authority, Hansen urges readers to speak out—taking to the streets if necessary—to protect the Earth from calamity for the sake of their children and grandchildren.” —Kirkus Reviews

Calamity, chaos and catastrophe: the cocaine of the global warming media extremists.

STATS

The crisis and catastrophe crowd don’t like to talk about the fact that water vapor (not carbon dioxide) accounts for 95% of all greenhouse gases. This is naturally occurring water vapor—99.99% of “greenhouse gas” water vapor is natural. Only .01% (one-hundredth of one percent) of greenhouse water vapor is man-made.

But carbon dioxide is the anointed villain of the piece. It must really pack a punch, because CO₂ only makes up 3.6% of greenhouse gases. And here’s the kicker, only 3% of the carbon dioxide—3% of the 3.6%—is man-made. This means .1% (one-tenth of one percent) is man-made CO₂.

This, according to the harbingers of climate doom, is what is driving “climate catastrophe.” International conferences are called, governments allocate billions, and corporate PR departments gush over environmental agendas in a universal tsunami of green.

It’s as if someone had turned a programmed cult of global warming druids lose on the planet to shriek the horrors of carbon dioxide to a populace that doesn’t know or can’t confront the blatant lunacy of what they are saying.

In turn, the lapdog media regurgitates the chaos and calamity to millions. Their sole aspiration is to shovel as much death, destruction, filth and depravity into the public’s mind in the shortest possible time. Except somewhere in their collective soul they know . . . and they are sick with shame.

“We allow the most atrocious lies uttered by political and moral prostitutes to go unchallenged. These lies are endlessly recycled in the commercial media until they become ingrained in the public conscience as truth.” —Charles Sullivan, author and philosopher

Can I get an “Amen”?

THE SOLAR CONNECTION

I’m a California boy. I love the sun. During spring break in college, some friends of mine and I would body surf our way down the west coast of Mexico, turning coffee brown in the process, and return to campus as sun-baked bronze gods. The co-eds would swoon. . . . Okay, maybe not swoon, but getting dates was definitely easier.

It never occurred to me in those halcyon days that the sun might play a leading role in an article I would later write about global warming. But it does.

The fact is that Earth has experienced natural warming and cooling cycles all throughout recorded history—cycles that have driven temperatures much higher than anything we are experiencing today.

And what is the source of these fluctuations in the earth’s temperature? Water vapor? No. Carbon dioxide? Eh . . . sorry. Hair spray? You’re joking.

What causes temperature changes on the earth is . . . the sun.

Scientists have discovered that the sun has regular cycles of sunspot activity. Sunspots are regions on the sun’s surface of intense magnetic activity; the more sunspots, the more “active” the sun is.

Sunspots and solar radiation activity virtually parallel temperature changes on Earth. That’s right; it is the sun that is the source of global warming and cooling cycles—not mankind’s “carbon footprint.”

If greenhouse gases were the cause of global warming, how is it that from 1940 to 1975, when there was a dramatic increase in the production and release of CO₂, the earth experienced a significant cooling period?

Warming periods on Earth are a direct result of an increase in solar radiation, which prevents cloud formation. Cloud formation has a cooling effect on the planet. This is further borne out by the fact that other planets in our solar system all appear to heat up at the same time. But they’re not driving Chevys on Pluto or burning coal on Mars.

This, then, is Con #3: Global warming is a vast, strategic PR campaign, nothing more. It is not a planetary temperature phenomenon. Sorry, Al.

“Most of the greatest evils that man has inflicted upon man have come through people feeling quite certain about something which, in fact, was false.” —Bertrand Russell

So, what gives? Why all the misleading information and climate change hysteria?

Let me introduce you to Con #4. . . .

BIOFUELS

A friend of mine drives around to restaurants late at night and collects used vegetable oil. He uses it in his diesel Mercedes that will qualify for Medicare next year. He has converted the Mercedes to burn vegetable oil as fuel.

One of the solutions to the “carbon crisis” is biofuels.

Biofuels are essentially fuels produced from plants.

There are two basic types of biofuels. Ethanol, which can be used as petrol and is made from corn, sugar cane, beets, wheat and other grains, and biodiesel which is made from oil seeds, tree nuts or waste oil (à la the Medicare Mercedes above).

Biofuels are supposed to be clean, convenient and carbon neutral. But don’t look too closely because the environmental consequences of their use are something out of a Stephen King novel.

DEFORESTATION

The planet’s tropical rain forests are being obliterated as if some frenzied Jolly Green Giant were running an immense weed wacker through the Amazon.

Biofuels are broadly promoted as a solution to the production of carbon dioxide. But a closer examination reveals that they damage the environment on two fronts: the first is massive planetary deforestation.

Tropical forests are the most powerful carbon reservoirs on the planet. In other words, they sequester and store carbon dioxide more effectively than any other resource.

Cutting forests down not only releases massive amounts of carbon dioxide into the atmosphere, it eliminates them as both a carbon reservoir and a generator of oxygen. (Again, for those of you that slept through high school biology, or, like me, never had the guts to take it, plants use carbon dioxide and sunlight to make oxygen.)

But government mandates and corporate greed are pushing the cultivation of biofuels so intently that tropical forests are vanishing from the planet at an appalling rate.

The European Union, for instance, has mandated a 20 percent reduction in carbon emissions by 2020. This is to be partly achieved by mandating that 10 percent of vehicles be powered by biofuel. Financial incentives, which we examine in detail below, have driven global investment in biofuels from $5 billion in 1995 to an estimated $100 billion in 2010. Everyone from George Soros to British Petroleum and Shell Oil are players in this market.

As a result, vast amounts of the Amazon rain forest in Brazil have been destroyed for soybean and sugar cane cultivation. Brazil proudly announced last year that deforestation was on track to double that year.

A report by Friends of the Earth revealed that between 1985 and 2000, the development of palm oil plantations in Malaysia was responsible for the deforestation of 87 percent of the country’s forests. Eighty-seven percent! In fact, palm oil is now referred to as “deforestation diesel.”

In Sumatra and Borneo, 4 million hectares of forest were lost to palm oil farms (9.8 million acres—almost twice the size of the state of New Hampshire).

As an added sucker punch to Mother Nature, biofuel-driven deforestation has also led to Holocaust-like species extinction. The forests in Malaysia and Indonesia are home to the orangutan, Sumatran rhinos, tigers, gibbons, tapirs, proboscis monkeys and thousands of other species, many of which are under serious threat of extinction from habitat loss.

And then there is this troubling little fact: while biofuels generate less carbon emissions than oil, they are doing so by replacing vegetation and soil that suck up even more carbon. In other words, the carbon absorption lost by razing the wilderness to cultivate biofuels is dramatically more than the gains achieved by using the cleaner- burning fuels.

The “inconvenient truth” is that the biofuel craze is destroying nature, and, incidentally, adding to the carbon dioxide on the planet, not decreasing it.

OCEAN POLLUTION AND DEAD ZONES

If you have ever walked by a body of water and noticed an acrid smell, felt your eyes burning or saw that it was blanketed by a thick red, blue or green plant covering, you’ve probably had an unfortunate run-in with an HAB, Harmful Algal Bloom.

In almost all cases, the production of biofuels is accompanied by the use of nitrogen, phosphorous, herbicides, pesticides, insecticides, etc.

Nitrogen, along with other toxic materials, filters downward to the water table and finds its way to rivers, streams and eventually the ocean. There, the nitrogen and, to a lesser degree, the pesticides generate massive, abnormal and very toxic “algal blooms,” which rapidly decay into huge areas of oxygen-sucking dead algae. This is highly destructive of marine life.

Corn cultivation utilizes the greatest application of fertilizers and pesticides. No surprise, then, that the heaviest concentration of these toxins occurs in the U.S. corn belt. The result? Nitrogen and other toxins in the Mississippi River system have mercilessly poured into the Gulf of Mexico creating a dead zone of 22,000 square kilometers (8,492 square miles, an area about the size of New Jersey). It’s not just the Gulf of Mexico. The number of oceanic dead zones has spread around the planet like an environmental cancer.

Since the onset of the biofuel craze in the 1980s, the number of dead zones has increased 450 percent.

But that’s not all.

Species Extinction

There are currently about 405 dead zones on the planet, the largest, 70,000 square kilometers (27,020 square miles—larger than the state of West Virginia), in the Baltic Sea. Species extinction is a direct effect of these zones. In the last ten years, 14,000 dead seals and dolphins have washed up on California’s coast and 650 gray whales have been found beached. In Florida, hundreds of manatees have been killed and 80 percent of the coral reef in the Caribbean has been smothered. Seventy-five percent of California’s fish-rich kelp forest has been ruined and the problem is beginning to affect the availability of seafood for human consumption.

About 1.7 million plant and animal species have been identified on the planet. According to some reports, species extinction is now occurring at the rate of about 20,000 to 30,000 annually. Whatever the number, the endangered species list increased 150 percent last year alone. The single largest reason for this is habitat destruction and pollution, most of which is a result of biofuel production.

Makes you feel warm all over, doesn’t it?

Oxygen Depletion

I don’t know about you, but I’ve grown rather partial to breathing. It brings a certain awareness to life.

So the fact that biofuel production is depleting the planet’s oxygen is more than a little troubling.

Sounds alarmist, doesn’t it? Perhaps even a bit conspiratorial. How could one of the most prolific solutions to global warming be destroying the planet’s supply of oxygen?

The oceans are the planet’s largest carbon sink. (The rain forests are the most effective carbon sinks; oceans are the largest.) It is the algae in the oceans that absorb the bulk of the earth’s CO₂. That’s right; the earth’s primary CO₂ sponge is the algae in the oceans.

The algae then convert sunlight and the CO₂ in the ocean into oxygen.

Seventy to eighty percent (70%–80%) of this planet’s oxygen is produced by the algae in the oceans. Yet the nitrogen, phosphates and other chemicals pouring into the oceans around the world as a result of biofuel production are destroying the very element that produces the bulk of that oxygen—the algae in the oceans.

This is Con #4: Biofuels don’t reduce carbon; they destroy the rain forests and are depleting the very air we breathe. Which begs the question, have these people forgotten to pay their brain bills, are they just plain evil or . . . is there something else at play here?

And that brings us to the last piece of the puzzle and the final con.

CARBON CREDITS

I know you are going to be shocked when I tell you that the banksters have their teeth in the climate change agenda like a pit bull on crystal meth.

You have heard the mantra “the planet is a space-borne oven that is melting the polar ice caps, destroying the polar bears and turning Des Moines into beachfront property.”

The solution? Pass laws that “disincentivize” the production of carbon dioxide by taxing its use. Oh, and turn the tax into derivatives so Goldman Sachs and friends can pig out. (See the chapter “The Goldman Connection” in my e-book Crisis by Design at behindthewizardscurtain.com.)

The marketing folks have branded this scheme “carbon credits.”

Kyoto Protocol

The skyline of Kyoto, Japan, is dotted with many of the country’s oldest Buddhist temples. One of these ancient shrines is built on a lake. The water in the lake is so pristine that the best way to tell the real temple from the reflection is to throw a rock in the water and see which of the images ripples.

This, an introductory allegory, is to make the point that things are not always as they seem, even in the land of many Buddhas.

In 1997, an international agreement was signed in Kyoto seeking to limit greenhouse gas emissions. It was named after the host city and carries a handle better suited for a Robert Ludlum novel: The Kyoto Protocol.

The Kyoto Protocol and a subsequent agreement called the Marrakech Accords set “caps” or quotas on the maximum amount of greenhouse gas a country could emit. In turn, each country was to then assign carbon emission “caps” or quotas to its own businesses and other organizations, which are referred to as operators.

Thus, every business in every country that signed the Kyoto Protocol is supposed to have an allowance of “carbon credits.” Businesses that exceed their allowance must buy some carbon credits. These can be purchased from “green” companies that have not used their allocation of carbon, or they can be bought on a “carbon exchange.”

Let’s take, for example, a furniture factory. The factory is emitting 125 tons of carbon dioxide per year, but its allowance is 100 tons. The factory must now cut its production to bring it into alignment with its 100-ton quota, or buy 25 credits from, say, a biofuel company that is producing “carbon neutral” fuel—an entirely different view of the biofuel craze.

As the population grows, as new companies are created and existing ones expand their productivity, the use of energy (and thus carbon-based fuels and emissions) will increase. The quotas for a country, however, will actually be lowered.

Of course, as carbon quotas (or caps) are lowered, the value of carbon credits increases.

You get the picture: the rules of supply and demand will prevail and the cost of carbon credits has a built-in price increase.

Cap-and-Trade Legislation

Moreover, while the U.S. did not sign the Kyoto Protocol, and Copenhagen turned out to be little more than a cacophonous blizzard of press releases, President Obama has committed to a goal of reducing carbon dioxide emissions to 17 percent below the 2005 levels this year and reducing emissions by 80 percent by 2050.

This is exactly what the “cap-and-trade” legislation that passed the U.S. House of Representatives in June of last year mandates. That’s right, the same circus act that brought you last year’s $1.5 trillion budget deficit has passed a bill to force you to use less energy—because CO₂ is creating global warming.

Except, there is no global warming, temperatures have continued to cool over the last decade, and even if they hadn’t, man-made carbon dioxide has nothing to do with any kind of harmful climate change—nada, zero, zip.

Can you imagine what this kind of legislation would do to American industry and commerce?

To get the full magnitude of where this insanity is going, consider the British. The UK Secretary of State for the Environment has promised legislation there that will set legally binding lower carbon emissions of 60 percent by 2050. He has also conducted a feasibility study to issue carbon “credit cards” to every citizen under a nationwide carbon rationing system.

Under this plan everybody would get an annual allowance of carbon they could spend on products such as food, energy and travel. Individuals would have to swipe their carbon card every time they bought gas, paid a utility bill or booked an airline flight.

Go ahead, read that again. The words won’t change.

The British Parliament, which appears to be a collective mental disorder, has gone so far as to give local bureaucrats the power to enter a person’s home without a warrant to, among other things, check for refrigerators that do not carry eco-friendly energy ratings.

We have here a system literally going mad before our eyes.

Carbon emission limits, and the buying and selling of “credits” to deal with them (called Cap and Trade), are a solution created to deal with a catastrophic—though nonexistent—problem created by what is arguably the most well-orchestrated PR campaign in history.

The solution not only establishes a system of planetary economic control by setting carbon emission limits down to every business (and in the UK down to every citizen) but will make its creators and their allies rich beyond all imaginings.

On a tactical level, Cap and Trade does three things: it suppresses productivity and thus increases unemployment; it drives a biofuel agenda (for carbon credits) that is destroying the earth’s ecosystem, and, if continued, will destroy the very air we breathe; and it creates a massive new international Ponzi scheme that has the international banks orgasmic with delight.

Five “climate exchanges” have already been set up that deal in the buying and selling of carbon credits. The two larger exchanges are the Chicago Climate Exchange (CCX), which is the only U.S. firm that claims to trade carbon credits, and Europe’s European Climate Exchange (ECX), which is half owned by CCX.

There is the stock market, where stocks and bonds are traded, and a commodities market where things like gold and silver and corn, wheat and soybeans are traded. Now cometh the carbon exchanges where carbon credits in the form of derivatives will be bought and sold.

And derivatives sure did a nice job for us last year, didn’t they?

In short, derivatives are essentially contracts that package up some kind of product into a financial instrument that can be traded—bought and sold. A contract for 100 ounces of gold is a derivative, because the contract isn’t the gold itself.

Banks and other entities will be buying carbon credits, packaging them up, and selling them by the trillions. This is already well in motion in Europe, where carbon offsets have been being traded since 2005.

The carbon market is projected to be in the trillions, and will be turned lose in the U.S. the moment the Senate passes a cap-and-trade bill. That bill will have to be reconciled with the House bill and sent to President Obama, who has made this legislation a key policy initiative second only to health care.

Everyone is set up and ready to go. The big banks have been investing in carbon friendly enterprises—Goldman Sachs, J.P. Morgan, Bank of America and Citigroup are some of the players. Not to be outdone, the World Bank has joined the CCX and now operates a Carbon Fund for Europe that helps countries meet their Kyoto Protocol requirements.

Isn’t that special?

Major corporations, including the large oil companies, are strong supporters of cap-and-trade legislation and are members of these carbon exchanges as well. Why would an oil company be interested in this game?

As generators of lots of CO₂, oil companies will have to buy a lot of carbon credits. If the price of oil skyrockets, they make handsome profits from the oil business. However, as the price of oil rises, so, too, will the price of carbon credits. You see, as oil gets expensive, people turn to less costly coal-fired energy. Coal generates roughly twice the CO₂ of oil—which means the demand for carbon credits will increase to offset the coal emissions.

So the oil company scores both ways. Profit on their oil and profit from the increase in value of their carbon credit portfolio.

You see, this is a market that is created only if governments (or international bodies with the authority to do so) mandate emissions standards. By doing so, they instantly create a carbon market because many businesses will have to buy carbon offsets.

If governments impose a limit on carbon emissions, the market will come. If not, it won’t.

The carbon markets in Europe crashed after the Copenhagen conference failed to establish legally binding emission caps for the major industrialized nations.

You see how this works?

And remember, the emission standards do not increase with population growth or increases in the number of plants or factories or their output. They are capped and are then lowered. Therefore carbon credits will continue to rise in price, as the supply will steadily decrease, driving higher demand. Escalating profits are built in if governments mandate the standards.

And standing on deck to become the first carbon billionaire is none other than . . .

Albert Arnold Gore, Jr.

It is not hard to imagine Al Gore in a minister’s collar.

After all, he went to Vanderbilt Divinity School when he was a young man—an act of “purification,” his wife would later say.

And he has called greenhouse gases “a moral issue . . . deeply unethical,” which must be why he warns of environmental Armageddon with such a religious zeal:

“. . . unless we act boldly and quickly to deal with the underlying causes of global warming, our world will undergo a string of terrible catastrophes, including more and stronger storms like Hurricane Katrina. . . .

“Today, we are hearing and seeing dire warnings of the worst potential catastrophe in the history of human civilization: a global climate crisis that is deepening and rapidly becoming more dangerous than anything we have ever faced.”

What do we do, Brother Al? How do we solve “the worst potential catastrophe in the history of human civilization”?

“Cap and trade, my son, cap and trade.”

There’s just one little point that should be known about Brother Al’s sermon: if governments mandate the cap-and-trade legislation he is advocating, Al the Righteous, Al the Moral, Al the Ethical, stands to make billions.

You see, while he is pushing governments around the world to cap carbon emissions, which will force companies to buy carbon offset credits, he is also the chairman and founder of a private equity firm called Generation Investment Management (GIM), which invests in . . . you guessed it . . . carbon dioxide offsets.

Matt Taibbi’s article in Rolling Stone lays out the structure beautifully.

“The feature of this plan that has special appeal to speculators is that the `cap’ on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison’s sake, the annual combined revenues of all electricity suppliers in the U.S. total $320 billion.”

A World Bank Private Sector blog regularly gushes about Brother Al, whose partners in GIM are those priests of Wall Street propriety, the suspender-wearing bankers from Goldman Sachs. Co-founder of the company is David Blood, former CEO of Goldman Sachs Asset Management; other former Goldmanite big shots include Mark Ferguson and Peter Harris. Assisting with the creation of Al’s ethical investment house was none other than the godfather of the Wall Street derivatives that fueled the global financial crisis and the star of the trillion-dollar bank bailout of 2008, former U.S. Treasury Secretary Hammering Hank Paulson.

Goldman has long sought cap-and-trade legislation, having spent $3.5 million lobbying climate issues in 2008. And the bank owns a 10 percent interest in the Chicago Climate Exchange (CCX), mentioned above. The CCX is the only U.S. firm that claims to trade carbon credits, and, as noted above, also has a 50 percent interest in its sister carbon exchange in Europe, the European Climate Exchange (ECX).

Members of the Chicago Climate Exchange, besides GIM, include Ford Motor Company, Amtrak, DuPont, Dow Corning, International Paper, Motorola and other tier-one carbon emitters. This gives them a “home” from which to buy their offset credits, but also the ability to invest in credits for the purpose of speculation.

If cap-and-trade legislation passes, the CCX’s business and income will soar. Its members will profit gluttonously.

And the biggest shareholder of the Chicago Climate Exchange? That’s right, Brother Al’s Generation Investment Management.

Amen, Brother Al. Amen.

People know that it is greed that runs through the veins of Goldman Sachs. They are in a class by themselves, plundering the financial markets like pirates of old. But what about Al the Ethical?

Do you think there’s a conflict of interest in his incessant warnings of the greatest catastrophe in human history if Congress does not legalize carbon restrictions, when his investment company is the largest shareholder in the only U.S. carbon exchange and that same company invests only in carbon offset opportunities?

You think perhaps that Al has taken on the color of his predatory partners?

Another one of Gore’s partners in GIM (this one, silent) is Maurice Strong, a man many credit with being the godfather of the environmental movement. Strong is on the board of directors of the Chicago Climate Exchange and is known to have—what shall we call them?—extreme environmental views.

Strong once told a reporter the plot to a novel in which the rich countries of the world refused to sign an agreement that reduced their impact on the environment. In order to save the planet, a small group of world leaders decide that the only hope for mankind is for the industrialized civilizations to collapse.

Strong’s allegedly fictional plot is echoed in real life by extremists of the environmental movement. Paul Ehrlich, Professor of Population Studies at Stanford, said, “A massive campaign must be launched to de-develop the United States. De-development means bringing our economic system into line with the realities of ecology and the world resource situation.”

And Michael Oppenheimer, Environmental Defense Fund, said, “The only hope for the world is to make sure there is not another United States. We can’t let other countries have the same number of cars, the amount of industrialization, we have in the US. We have to stop these Third World countries right where they are.”

Fortunately, these are not the views of most environmentalists. Most environmentalists are caring people who see our waterways turning toxic with chemical poisons, our rain forests being annihilated, species going extinct by the thousands, and are concerned enough to want to do something about it.

The problem is that they have been fed deceitful and highly misleading information and are seeking to implement solutions to a problem that does not exist, solutions that are making things infinitely worse.

There ARE critical environmental problems on this planet which, if not reversed, can cause devastating consequences. But global warming is not one of them and the solutions being pushed by vested interests are not only bogus, they are causing the very problems real environmentalists are concerned about.

This, then, is a brief summary of the key elements of the con job:

The Club of Rome’s theory of global warming and their deceptive call for “sustainable development” is based on junk science.

The global anxiety over depletion of the planet’s fossil fuels is based on a lie. Oil scarcity is a myth. Oil is not a fossil fuel and it is a renewable resource.

Global warming is an invention. The planet has been cooling for more than a decade, has experienced much warmer temperatures long before industrialization and man-made carbon existed—and carbon dioxide is what plants use to create oxygen.

Biofuels are not a solution to the planet’s environmental problems, but rather are highly destructive of life on Earth.

Carbon credits are a vicious scam. Financial products made possible only by political mandates, they are based on a nonexistent problem and will destroy the economies of the world while making international bankers and the global elite rich beyond imagining.

While real environmentalists do not hold the draconian views of Michael Oppenheimer or Paul Ehrlich, if cap-and-trade laws are allowed to pass, their visions of an industrial apocalypse are all too possible.

SOLUTIONS

1. All effort should be made to nullify carbon credits on an immediate basis. This holds true whether on a local, national or international basis. For example, there is a cap-and-trade bill in the U.S. Senate that is high on the administration’s agenda.

Misinformed environmentalists or “environmentalists” that benefit from the carbon credit agenda are pushing this legislation with a passion born of ignorance or a blatant thirst for power and wealth.

“This system, which may sound market-friendly, is something only a bureaucrat could dream up. The twist is that the carbon market exists only because the government’s imposition of a cap creates an artificial scarcity in the right to produce energy.” —Deborah Corey Barnes, the PoliReport, Washington, D.C.

The damaging effect of such a law on the U.S. economy or the economy of any nation that adopts similar legislation is blatantly obvious and it should be derailed, or, if already passed, repealed. California, for example, has already passed legislation that mandates a 25 percent cut in emissions by 2020. No one has been corny enough to brand the legislation the state’s “economic terminator,” so I’ll do it here.

2. Countries should opt out of the Kyoto Protocol and nullify it, along with any actual agreements that were made in Copenhagen.

This similarly applies to all underdeveloped countries, though from a different perspective. The simplicity is that carbon credits destroy—economies, environments, and life. But third-world countries hold considerable leverage: if they opt out of the Kyoto Protocol and forbid carbon credits, it does not matter what laws are passed in the U.S. or EU, the carbon credits system will fall flat. It requires developing and underdeveloped countries’ cooperation, as they have the carbon offset resources (rain forests, etc).

It is important for them to understand that if they join the system and go for the quick buck now, they will make some short-term money selling credits; but as they gradually industrialize, they will have to buy them back—and what will the cost be then? The African Union has the capability to enforce this.

3. Biofuel production should be legislated against, as it is meaningless as a viable energy resource and because it creates more environmental destruction than all prior conventional causes.

4. Effective action is needed to actually protect the environment: Reduce the use of harmful fertilizers and gradually replace them with nonharmful products. (Eliminating the production of biofuel would cause the most dramatic and immediate improvement.) This would rapidly improve the condition of our rivers and oceans.

5. Deescalate deforestation by prohibiting biofuel production, which would also bring about the most immediate environmental improvement and species preservation.

It doesn’t take a great deal of insight to see the amount of control any governmental body could exert over a planet, a national economy, a business or a household by enforcing a system of carbon emission standards. This is, as one observer noted above, nothing less than complete control of the production of energy.

When Gorbachev, speaking for the Club of Rome, said, “The threat of environmental crisis will be the ‘internal disaster key’ that will unlock the New World Order,” carbon credits are exactly the kind of NWO he meant.

Because, in the final analysis, global warming is nothing more than a PR campaign for global government.

We must act quickly and decisively. The Club of Rome has a massive head start and control of much of the media. But neglect of our responsibilities here is not an option. Not if we value the power of choice, the freedom to produce, and economic self-determinism.

Let’s put this joker back in the box and keep it there. Civilization doesn’t need him.

© 2010 by John Truman Wolfe. All rights reserved.

There will be a war. I’m certain of it.

No, not with Iran, though I’d like to introduce Mahmoud I-refuse-to-wear-a-necktie-under-any-circumstances Ahmadinejad to a woman I met several years ago. She and her twin sister had been experimental subjects of Nazi madman Dr. Josef Mengele. Mengele had tried to change the color of their eyes with dye. The woman was blind. Her sister died at Auschwitz.

Mahmoud, who thinks the Holocaust was a hoax, forgot to pay his brain bill.

And they are a few clowns short of a circus in Pyongyang. Still, I don’t think the Chinese will let Kim Jong-il and his newly appointed secret-police-chief son, Kim Jong-un, drag the West into a military confrontation on the Korean peninsula. It’s a little too close to home and a Korean War II is not part of Beijing’s master plan. At least not yet.

No, this is a war brewing between two iconic American institutions that couldn’t be more different: the voice of America’s rock culture, Rolling Stone magazine, and the country’s premier Armani-clad investment bank, Goldman Sachs.

Rolling Stone recently published an article called “The Great American Bubble Machine,” a masterful exposé by Matt Taibbi revealing Goldman’s greed and corruption in the creation of several investment “bubbles” that have made the firm and its partners—the term filthy rich comes to mind—but which have been devastating to Americans and to the U.S. economy.

I rarely use those two words together. I have no problem with people making money—barrels of the stuff. Boatloads. But this needs to be done with some sense of ethics, some sense of morals, some sense of responsibility toward one’s fellow man.

I was informed that Goldman is preparing a response. One wonders if the Wall Street veneer will crack: if they’ll come out with their pinstripes pressed or PR guns blazing, trying to marginalize Taibbi.

As those of you who have followed my recent articles on the financial crisis know, I have pointed out the all too coincidental participation of Goldman executives in the creation of the financial crisis. Machiavelli himself would be proud of what has been nothing less than a coup d’état of the planet’s financial systems. The Guys from Goldman have played their part.

While I have previously drawn attention to a few of the key figures, Taibbi has peeled the onion on several of the investment bank’s schemes and has also laid bare the army of Goldman alumni that have turned up at critical decision points in the universe of credit, investment and finance.

His orientation was such that he omitted a few that I will cover below. But the article is exhaustively researched and ties Goldman to everything from the Great Depression to speculation in oil futures before last year’s election that sent gas prices to $5.00 a gallon here in the land of many freeways. My focus, on the other hand, has been exposing the actual cause of the worldwide financial crisis. And our paths have crossed at a few key junctures.

Junctures that bring to mind the great Gordon Gekko—Michael Douglas’s character in Oliver Stone’s Wall Street. Preening in front of the board of directors and up and down the aisle among the shareholders of Teldar Paper, Douglas shares the philosophy of the successful investment banker as if handing down commandments from Mount Wall Street: “Greed is good. Greed is right. Greed works. Greed clarifies and cuts through and captures the essence of the evolutionary spirit.”

Yeah, baby.

But is it more than greed? Are Goldman Sachs’ alumni part of a broader agenda that has not only lined their pockets with the spoils of corruption that Taibbi has exposed, but has also helped facilitate an international financial coup—a coup that has put the control of the planet’s financial affairs into the hands of a small group of central bankers that hold secret meetings at what is nothing less than the Vatican of international finance: the Bank for International Settlements located in Basel, Switzerland?

If you’ve had a suspicion that bankers are running Washington, then hang on to your Calvins because, while it starts in DC, this story is global in reach and is rolling out before your eyes—if you are willing to look.

ROBERT RUBIN

I could start this part of the story with Henry Fowler, who, after serving as the 35^th Secretary of the Treasury, in 1969 became a partner at Goldman after leaving office. But that’s not how things worked in the nineties and beyond. Oh no. The current sequence is very different.

Pictures of Robert Rubin always remind me of the cartoon character Droopy. He seems to be in a perpetual state of sad worry. Hard to know what he’s worried about, having received $50 million in compensation from his last employer (Citigroup). Perhaps it’s because the financial website MarketWatch recently named him as one of the “10 most unethical people in business.”

More to the point of our story, having served 26 years with Goldman Sachs, ascending to the position of co-chairman, Rubin came to Washington with the Clinton administration as the Assistant to the President for Economic Policy. Bill must have dug the Wall Street touch, because in January of 1995, he appointed Rubin the 70^th United States Secretary of the Treasury.

This could be called the start of what the New York Times has referred to as the modern era of “Government Sachs.”

The hallmark of Rubin’s years in Washington was deregulation—specifically, deregulation of the financial industry. Turn the financial industry loose. Let the big dogs eat. Let them earn. They have Porsche payments to make. Working with Greenspan, he kept interest rates implausibly low and ensured that regulatory safeguards were gunned down like victims in an L.A. drive-by shooting. The Glass-Steagall Act is a prime example. A piece of Depression-era legislation that kept investment banks and commercial banks from committing fiscal incest, it was repealed—charged with being out of touch with the global financial structure.

What it was out of touch with was an agenda to open the floodgates to unbridled speculation by banks that set the industry up for a financial Hiroshima.

It takes a great deal of power and influence to get a federal law repealed in this country—especially one that has served the country well for 70 years. But Rubin, with a little help from his friends—Larry Summers and Alan Greenspan—got it done.

These and other similar actions helped pave the way for an economic crisis that would soon engulf the entire planet.

The housing bubble has burst. The financial services industry is a ward of the state. Insurance companies and automakers are tottering on the brink of bankruptcy. Consumer credit is drying up along with consumer confidence. Banks have stopped lending money, and big corporations have started laying workers off. The stock market is at a five-year low. But amid the greatest financial panic since the Great Depression, the market for one asset stubbornly resists correction: the immaculate reputation of Robert Rubin, former Treasury secretary and pre-eminent economic wise man of the Democratic Party.

. . . But the financial deregulation that allowed markets to boil over began well before President George W. Bush took office. Three decisions relevant to the market meltdown . . . can be attributed to Rubin.”

—Timothy Noah, “Robert Rubin’s Free Ride,” www.Slate.com

MEXICO

Let’s set aside for the moment that when Rubin was co-chairman of Goldman, the firm underwrote billions of dollars in bonds for the Mexican government. When the Mexican peso tanked a few years later, Rubin, as Secretary of the Treasury, arranged a multibillion-dollar taxpayer bailout, which, according to reports, saved Goldman a cool $4 billion. Kind of a dress rehearsal for Hank Paulson’s trillion-dollar raid on the U.S. Treasury, which channeled tens of billions into the womb from which he came—Mother Goldman. But we’ll get to that.

Rubin did more than pave the road to a financial Armageddon with Maestro Greenspan. His spawn have helped ensure that the crisis came off as planned and that it was solved with the creation of a global financial dictator, who—prepare to be shocked—is also a Goldman alum. But, again, I’m getting ahead of myself.

THE ACOLYTES

SUMMERS

At Treasury, Rubin groomed two protégés that helped craft the multitrillion-dollar financial bailout and that are today in charge of U.S. financial policy: Larry Summers and Timothy Geithner.

Summers, though not a formal Goldman alum, is a fully certified Rubin deregulation clone. He was chief economist for the World Bank in the early ’90s and later served as Rubin’s Deputy Secretary of the Treasury. When Rubin left, Summers took full control of Treasury for the last year and a half of the Clinton administration. Today Summers is the director of the National Economic Council, which means he is in the commanding position of being the senior advisor to President Obama on domestic and international economic policy.

GEITHNER

Geithner, like Summers, worked for Rubin at Treasury during the Clinton administration and was a Rubin favorite. He stayed on during Summers’ tenure and then snagged the powerful presidency of the New York Federal Reserve Bank. It was Rubin who got Geithner the gig at the New York Fed and it was Rubin who hooked him up with Obama, who appointed him as his Secretary of the Treasury.

In case there is any doubt about Geithner’s loyalties, it is widely known on Wall Street and inside the Beltway, that Goldman filed adoption papers on him years ago.

In an interview on July 3, 2009, the former US Assistant Secretary of the Treasury, Paul Craig Roberts, was asked “Does the US Secretary of the Treasury work for the people or does he work for the banking system on Wall Street?” to which he replied, “Geithner works for Goldman Sachs.”

http://en.wikipedia.org/wiki/Goldman_Sachs#Former_U.S._Assistant_Secretary_of_Treasury_claims_Treasury_works_for_Goldman_Sachs

So, for those who thought that Rubin had left the stage of U.S. economic policy, think again. Because not only has Rubin himself been named as an advisor to President Obama, but another of his groupies, Christina Romer, has been named as the chair of the White House Council of Economic Advisors.

Even today, then, Goldman’s former co-chairman is advising Obama behind the scenes and his acolytes are in charge of the U.S. Treasury (Geithner), the White House Council of Economic Advisors and the National Economic Council. (The White House Council of Economic Advisors is made up of academicians who provide the President with economic statistics and other information on domestic and international financial matters [Romer]. The National Economic Council brings together key administration players and agency heads to coordinate and see to the implementation of the administration’s economic policy. The director [Summers] is the President’s senior economic advisor.)

You’d think with this crew in place, Goldman would have had the White House covered. But Obama apparently went for their two-for-one sale. In addition to Rubin, another former Goldman chairman, the controversial Jon Corzine, has been a top Obama economic advisor. In fact he was on the short list to become Secretary of the Treasury. But Rubin ruled and Geithner got the gig.

Given that Goldman employees gave more money to Obama ($994,000) than any other commercial enterprise in the United States, and that the White House is awash in Goldmanites, it is no surprise that 1600 Pennsylvania Avenue is viewed as one of the bank’s more important operating divisions.

PATTERSON

Even with the White House under control, Geithner beefed up his G-man staff at Treasury. He named yet another Goldmanite as his chief of staff. Mark Patterson was selected to help him run the government’s financial circus. Patterson gave up his plum position as the vice president for Government Relations at Goldman—meaning he was the investment bank’s chief lobbyist—to become the number two man at Treasury.

I know, I know. Obama said no lobbyists in his administration; but, well, Mark is family. Sort of a fiscal fraternity brother—Alpha Delta Goldman.

PAULSON

But before Obama was Bush. And with oh-so-propitious timing, before the news of the financial crisis began to go mainline in 2007, a new Goldman CEO descended from his throne on Wall Street to come to Washington and help his government manage the nation’s financial affairs.

We love you, Hank.

Viewed from the board rooms of Wall Street, Henry Paulson’s blitzkrieg of the nation’s capital was nothing short of stunning: a George Patton in pinstripes—except Patton was fighting a real enemy, not one that he himself had created.

LIAR, LIAR, PANTS ON FIRE

At first, he used PR spin to calm the multitudes. As the crisis began to unravel, in August 2007 Paulson assured the American people that the subprime mortgage problems were nothing to be concerned about, that they would remain contained due to the strong global economy.

Reuters: U.S. Treasury Secretary Henry Paulson said on Wednesday that the market impact of the U.S. subprime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades.

Not.

The stock market peaked two months later followed by a crash that wiped out trillions.

In July of 2008, after the fall of IndyMac Bank, Paulson told the public that the banking system was safe and sound and that the situation was very “manageable.” Twenty-five banks failed in 2008. Sixty-four have gone under in the first six and a half months of 2009. Another 309 are now listed as “problem banks.”

In fact, according to FDIC chairman, Sheila Bair, in March 2009, unless the FDIC gets more revenue, they themselves are going to be broke.

“Without additional revenue beyond the regular assessments, current projections indicate that the fund balance will approach zero.”

In a television interview on Meet the Press on August 10, 2008, Paulson stated that he would not be putting any capital into Fannie Mae or Freddie Mac. Three weeks later, he took them over and committed $200 billion in bailout funds; $60 billion has already been spent.

When I was growing up, we’d call this kind of guy a “bullshit artist.” But that didn’t stop him from staging a raid on the U.S. Treasury in broad daylight that would have made Dillinger weep with envy. This, while Congress—a Democratic Congress at that—stood around with their thumbs up their butts.

LIDDY

AIG

Perhaps nothing so demonstrated this scam as the government bailout of American International Group (AIG), the country’s largest insurance company. On September 16, Paulson coughed up $85 billion of your tax dollars to take control of AIG. The $85 billion loan got the government 80 percent ownership of the insurance giant. Just what I always wanted from my government, a bankrupt insurance company.

It turns out the $85 billion wasn’t enough. AIG has continued to hemorrhage losses and Uncle has now poured a total of $182 billion into the insurance company.

Jefferson and Adams weep.

Sticky constitutional issues aside, many have found it more than curious that when the government granted the loan, AIG turned right around and paid it out to the investment banks to which it owed money. The bank that got the largest payout was . . . of course, Goldman Sachs—a cool $13 billion. The money simply passed from your paycheck to the U.S. Treasury, from the Treasury to AIG and from AIG to Goldman (and other banks).

Naturally, Paulson didn’t provide the loan without ensuring that Goldman and fellow banksters would be repaid in full. No, no. He made sure the transfers would occur without any objection from AIG or unseemly negotiations with the banks. To do this, he tapped Goldman Sachs board member Ed Liddy to be the new CEO of AIG.

The good-hearted Mr. Liddy took the gig for a dollar a year in salary from AIG. But he held on to his $3 million in Goldman stock.

Cute, eh?

Goldman made billions from AIG earlier as well. AIG didn’t know this. Neither did Goldman’s clients. You see, despite the fact that they had collected enormous fees selling financial products that were “insured” by AIG, Goldman simultaneously sold AIG short. You get this? On the one hand, they sold financial instruments to their clients, which carried high investment ratings because AIG insured the buyer against loss. At the same time, they made investment “bets” for their own account against AIG. Estimates are that they made $4.7 billion betting against AIG while selling the AIG-guaranteed products to their clients.

“Greed clarifies and cuts through and captures the essence of the evolutionary spirit.” —Gordon Gekko

AIG behind him, Hammering Hank marched on.

LEHMAN BROTHERS

He had worked out strategies to have Bear Stearns purchased by J.P. Morgan in March of ’08 and had committed $200 billion to rescue Freddie and Fannie in early September, but when Goldman’s chief rival, Lehman Brothers, began to waver in midsummer, he turned a blind eye. Lehman went bankrupt and sent the already declining stock market into a colossal rout. The next day, he helped arrange an $85 billion bailout for AIG.

Following Lehman’s collapse, Goldman and Morgan Stanley were the only remaining pure investment banks left on Wall Street.

THE BAILOUT

Congress was next.

The Four Horsemen of the Apocalypse have nothing on Paulson and his lap dog Bernanke’s assault on Congress, with threats of riots and martial law as they fear-mongered the Troubled Asset Relief Program (TARP) through the House and Senate—winding up with a cool trillion dollars to “save” the banks.

Congress’s actions remind me of a bad Godzilla movie, with masses of panicked Japanese citizens fleeing the fire-breathing monster, which is lumbering through the city toppling buildings and devouring cars.

The legislation drafted by our elected officials sounds like something issued to Stalin by the Politburo. They granted Paulson complete dictatorial powers over the bailout money. The TARP read in part:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Calling the multibillion-dollar bailout a “stimulus” program is but a cruel joke. This was nothing more complicated than a coup—a transfer of hundreds of billions of dollars from American taxpayers into the Armani-clad arms of major Wall Street banks.

You won’t be surprised to learn, I’m sure, that Goldman Sachs got a cool $10 billion of TARP funds. And if you followed the billions pouring from your paychecks to Wall Street, you might remember that Bank of America at first received $25 billion. Then, in the midst of the chaos, they agreed to purchase Merrill Lynch. As it turned out, however, Merrill’s losses were $15 billion more than B of A had expected. This was due in part to $4 billion in bonuses paid out by Merrill’s CEO, John Thain, who pushed the bonuses through his books just before the Bank of America deal closed.

Bank of America was taken by surprise by the losses and the purchase of Merrill Lynch started to go shaky, to which Comrade Paulson coughed up another $20 billion of your tax dollars.

You guys are so cool bailing out these banks. I mean it. It brings tears to my eyes.

Oh, I should mention that John Thain, the guy who pushed through the last-minute billions in bonuses, had been the president and co-chief operating officer at Goldman Sachs before becoming the president of Merrill Lynch.

ROBERT K. STEEL

TREASURY TO WACHOVIA

Another Goldman alum to drive his bank headlong into the merger- mania chaos of the financial crisis was Robert Steel. Steel had worked with Paulson at Goldman for 30 years and eventually rose to the position of vice chairman of the firm.

He followed Paulson to the U.S. Treasury in 2006 and became his top financial policy advisor. In July of 2008, he left the government and became the CEO of Wachovia bank, the sixth largest bank in the country.

How did he wind up at Wachovia? Three weeks earlier, Wachovia—who had paid Goldman Sachs $77 million in fees for financial advice—also sought their assistance in finding a new CEO.

Steel was the man. Three short months later, Steel struck a deal with Citibank to buy Wachovia—a deal that required hundreds of billions in loan guarantees from the government. Then he changed his mind and sold Wachovia to Wells Fargo without the government involved and became a member of the Wells Fargo board of directors.

According to Taibbi’s article:

. . . Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing.

Other articles claim that Steel himself did not take a bonus.

Regardless, you have Goldman getting millions in fees to advise Wachovia on, among other things, the selection of a new CEO, who, it turns out, is a former Goldman vice chairman. Nothing illegal about it, but the financial incest begins to smell pornographic.

NEEL KASHKARI

TARP FRONT MAN

Paulson is nothing if not thorough. While he ultimately called the shots, he brought in someone else to oversee the allocation of the TARP funds and take the congressional heat. This was 35-year-old Goldman vice president Neel Kashkari, who, as the head of the Office of Financial Stability at Treasury, was in control of the $700 billion in bailout funds. It was Kashkari who had to testify about the TARP to Congress—a hot seat whose temperature started to soar shortly after Paulson’s scam began to dawn on the legislators.

THE TAKEOVER

There were others. In fact, Paulson brought so many former Goldman executives to Treasury the New York Times noted the “appearance that the Treasury Department has become a de facto Goldman division.”

These included:

Reuben Jeffrey, a former managing partner of Goldman’s European Financial Institutions Group in London;

Dan Jester, a former Goldman vice president;

Steve Shafran, a long-time Paulson associate at Goldman;

Kendrick Wilson III, a managing partner at Goldman in the Financial Institutions Group; and

Edward Forst, a former executive vice president and chief administrative officer at Goldman.

Current or veteran Goldman executives all, they worked on everything from the bailout of Fannie and Freddie to the capital restructuring of the nation’s banks.

All of which makes Andy Borowitz’s article in the Huffington Post this month that much more understandable. The lead reads:

In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the U.S. Department of the Treasury.

No surprise that the first two people I showed the article to thought it was real.

JOSHUA BOLTEN

THE WHITE HOUSE

Paulson and his Goldman gladiators also had air cover from the White House. George Bush’s Chief of Staff during the bailout blizzard was none other than Josh Bolten. Bolten had become Chief of Staff in April of 2006 and is credited with persuading the President to recruit Paulson as the Treasury Secretary.

No surprise, since Bolten had been the executive director, Legal & Government Affairs for Goldman Sachs International before joining the Bush 2000 presidential campaign.

Powerful friends. Powerful places.

But the Goldman virus has not been confined to the White House and the Treasury, not by a long shot.

NEIL LEVIN

THE DERIVATIVES BOOM

The acknowledged boogeymen of the world’s financial crisis were mortgages, many of which were subprime, packaged up into investment products called mortgage-backed securities—also called derivatives because the package, the security, derived its value from the underlying mortgages. There is much more to this story (see The Financial Crisis: A Look Behind the Wizard’s Curtain), but the point here is that these mortgages were a critical component to the crisis.

For reasons we detail in a follow-up article, The Financial Crisis: The Hidden Beginning, the explosive growth of these products was due in large part to the fact that the securities carried a AAA investment-grade rating. That rating was granted because Goldman Sachs and other banks were able to purchase what was essentially credit insurance for the investment. In other words, if the investment went bad, it was “insured” against loss.

This kind of protection was called a credit default swap. Though “swaps” looked like insurance and acted like insurance, they were remarkably adjudicated not to be so, thus eliminating the need for the “insurer” to hold reserves against possible losses. This opened the door to a torrent of speculation in the derivatives.

Let Matt Taibbi tell it.

AIG, a major purveyor of default swaps, approached the New York State Insurance Department in 2000 and asked whether default swaps would be regulated as insurance. At the time, the office was run by one Neil Levin, a former Goldman vice president, who decided against regulating the swaps. Now freed to underwrite as many housing-based securities and buy as much credit-default protection as it wanted, Goldman went berserk with lending lust. By the peak of the housing boom in 2006, Goldman was underwriting $76.5 billion worth of mortgage-backed securities—a third of which were subprime—much of it to institutional investors like pensions and insurance companies.

GARY GENSLER

THE COMMODITIES EXCHANGE

But not to worry. We’re protected now. The regulation of many derivatives and other exotic financial instruments—the $5 trillion commodity futures industry (gold, silver, oil, treasury bills, corn, cotton, sugar, etc.)—has recently been delegated by President Obama to Gary Gensler.

Gensler was confirmed as the head of the Commodity Futures Trading Commission (CFTC) in May, but it took a little arm twisting. Some members of Congress had misgivings.

You see, back in 2000, when he was at Treasury, Gensler advocated legislation, which eventually passed, exempting credit default swaps and some other derivatives from regulation.

Still, it’s hard to argue with his understanding of derivatives. He spent 18 years at Goldman Sachs, the most aggressive derivative trader on Wall Street, where he became a partner. He subsequently went to the Treasury Department where he pushed for the deregulation of the industry. Now President Obama has put him in charge of it.

Change we can believe in . . .

DUNCAN NIEDERAUER

THE NEW YORK STOCK EXCHANGE

Goldman alumni control not only the commodities markets but the major stock markets of the world as well. In May of 2007, the granddaddy of stock markets, the New York Stock Exchange (NYSE), bought Euronext (a pan-European stock exchange with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom), which, now branded as NYSE Euronext, operates the largest securities exchange on the planet.

To run the show, the newly combined entity brought in Duncan Niederauer and appointed him chief executive officer. Niederauer had been a partner and managing director at Goldman Sachs before joining NYSE Euronext.

STEPHEN FRIEDMAN

THE NEW YORK FED

The Federal Reserve System controls the country’s money supply. Nice gig if you can get it. It is made up of a Board of Governors (7), appointed by the President for 14-year terms, and 12 Federal Reserve Banks around the country. The New York Fed is a first among equals. An institution of awesome power, it supervises and controls the major money center banks in New York, the capital of the U.S. financial industry.

The New York Fed worked closely with Treasury Secretary Paulson on numerous aspects of the bailout during the chaos of the financial meltdown in the fall and winter of ’08.

Much of this work was carried out by Timothy Geithner, then president of the New York Fed, until Rubin helped get him the job as the Secretary of the Treasury. The chairman of the New York Fed at this time was Stephen Friedman. He picked up the reins when Geithner left while looking for a replacement.

Friedman was a former CEO of Goldman Sachs and later chairman at Goldman. He’d left Goldman in 2002 to oversee economic policy in the Bush White House as the chairman of the National Economic Council. Later, Bush appointed him to the chairmanship of the President’s Foreign Intelligence Advisory Board.

In 2004, he returned to New York and the chairmanship of the Fed. In addition, he returned to Goldman to become its chairman while he was also the chairman of the Federal Reserve Bank of New York.

WILLIAM DUDLEY

To replace Geithner as president of the NY Fed, Friedman selected William Dudley. Dudley had been a partner and managing director at Goldman Sachs for ten years prior to the Fed appointment.

Incest doesn’t begin to say it.

From the White House to Treasury, from the New York Fed to AIG, from the Commodity Futures Trading Commission to the New York Stock Exchange, Goldman is there.

ROBERT ZOELLICK

THE WORLD BANK AND INTERNATIONAL MONETARY FUND

But it doesn’t stop at our shores. It’s a global economy today, which requires global control.

The World Bank was founded in 1945 to help with the reconstruction of Europe after the Second World War. Over the years, their mission changed.

Today they claim that their purpose is to eliminate world poverty—kind of a pinstriped Mother Theresa for the planet. Unfortunately, this is at odds with what they actually do. If they were achieving their aims, the countries that they worked with would be prospering. But the reverse is true. In fact, an objective view of the results of the bank’s activities leads one to the inescapable conclusion that what the World Bank produces is indebted nations.

In their beneficence, the World Bank makes loans to third-world countries, countries that can’t borrow elsewhere. The loans carry conditions that dictate domestic policy “adjustments” in health, education, tax policy, judicial matters, agriculture, manufacturing . . .

You get the picture. The bank and its sister organization, the International Monetary Fund, have about three-quarters of the planet in debt like this.

Medieval doctors always prescribed the same “cure”; no matter what the ailment, they applied leeches to patients and bled them. For the past decade and a half, critics have likened the World Bank and the International Monetary Fund (IMF) to these doctors. The two institutions have thrown millions of people deeper into poverty by promoting the same harsh economic reforms . . . regardless of local culture, resources or economic context. Strapped with heavy debts, most developing countries have reluctantly accepted these reforms, known as structural adjustment programs (SAPS), as a condition for receiving IMF or World Bank loans.

In recent years, the doctors’ harsh medicine has been exposed in dozens of studies and in increasingly vocal street protests. In response, the World Bank and the IMF have been attempting to revamp their public image into that of anti-poverty crusaders.

http://www.thirdworldtraveler.com/IMF_WB/IMF_CosmeticMakeover.html

The president of the World Bank is Robert Zoellick. In this position, Zoellick walks in the shoes of great humanitarians like über-neocon Paul Wolfowitz, “architect of the Iraq War,” and Robert McNamara, the Johnny Appleseed of Agent Orange.

Zoellick is in charge of spreading loans around the world to eliminate poverty, not unlike McNamara’s blanketing of Southeast Asia with Agent Orange to stop Communism. Both agendas produce the same results—toxicity and, in some cases, death—of the corporal body or the body politic.

Prior to joining the World Bank, Zoellick served as vice chairman, international, of the Goldman Sachs Group.

You gotta love these guys.

The World Bank and the International Monetary Fund (whose most powerful board member is our very own Timothy Geithner) are the key tacticians in ensuring that the planet’s smaller economies remain deeply in debt. But they are no longer at the apex of international finance today.

As I have made clear in our earlier articles, the purpose of this financial crisis was to take down the United States and the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority—a planetary financial control organization to “ensure this never happens again.”

This purpose has now been accomplished.

To explain how, I quote from an article I wrote on this subject a few weeks ago.

THE FINANCIAL STABILITY BOARD

On April 2, 2009, the members of the G-20 (a loose-knit organization of the central bankers and finance ministers of the 20 major industrialized nations) issued a communiqué that gave birth to what is no less than Big Brother in a three-piece suit.

The communiqué announced the creation of the all too Soviet sounding Financial Stability Board (FSB). The Financial Stability Board. Remember that name well, because they now have control of the planet’s finances . . . and, when one peels the onion of the communiqué, control of much, much more.

THE 12 INTERNATIONAL STANDARDS AND CODES

While several press releases from the G-20’s London conclave reference these codes as though they were handed down from a fiscal Mount Sinai, finding the specifics takes some digging.

But then the Bank for International Settlements (BIS)—out of which the FSB operates—has never seen transparency as one of its core values. In fact, given its fascist pedigree, transparency hasn’t been a value at all. Known as Hitler’s bank, the Bank for International Settlements worked arm in arm with the Nazis, facilitating the transfer of gold from Nazi-occupied countries to the Reichsbank, and kept their lines open to the international financial community during the Second World War.

The BIS is completely above the law.

It is like a sovereign state. Its personnel have diplomatic immunity for their persons and papers. No taxes are levied on the bank or the personnel’s salaries. The grounds are sovereign, as are the buildings and offices. The Swiss government has no legal jurisdiction over the bank and no government agency or authority has oversight over its operations.

In a 2003 article titled “Controlling the World’s Monetary System: The Bank for International Settlements,” Joan Veon wrote:

The BIS is where all of the world’s central banks meet to analyze the global economy and determine what course of action they will take next to put more money in their pockets, since they control the amount of money in circulation and how much interest they are going to charge governments and banks for borrowing from them. . . .

When you understand that the BIS pulls the strings of the world’s monetary system, you then understand that they have the ability to create a financial boom or bust in a country. If that country is not doing what the money lenders want, then all they have to do is sell its currency.

And if you don’t find that troubling, the Key International Standards and Codes just adopted by the Financial Stability Board cover such things as

• specification of the structure and functions of government;(!)
• data gathering from ministries of education, health, finance and other agencies;
• matters dealing with personal savings accounts and retirement incomes.

Here’s an example of the FSB in action, from an article written by former Clinton advisor and political strategist Dick Morris for The Bulletin on April 6, 2009.

The FSB is also charged with “implementing . . . tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms.”

That means that the FSB will regulate how much executives are to be paid and will enforce its idea of corporate social responsibility at “all firms.”

Almost no one on the planet has grasped what has occurred here.

Most central banks are answerable to no one. The U.S. Federal Reserve, for instance, is a private bank. It is owned by shareholders. Yes, the President appoints the chairman, and the chairman must testify before Congress, but no one gives them orders or tells them what to do. Again, they are a private, not government, institution (a very good reason to support Ron Paul’s bill [H.R. 1207] calling for congressional authority to audit the Fed—something they currently have no right to do).

And it is the newly created Financial Stability Board, operating as an arm of the Bank for International Settlements, that now structures and dictates the rules and regulations to be carried out by the central banks of the world.

And given the fact that central banks essentially operate independently of their national congresses or parliaments, the FSB now controls the monetary policy of the planet.

It is now, for all practical purposes, the Politburo of international finance. And who is the chairman of this little known entity based in Basel, Switzerland? Mario Draghi. Draghi was a partner at Goldman Sachs until, like Henry Paulson, he left Goldman in 2006. Paulson took over the U.S. Treasury and Draghi became the governor of the Bank of Italy (Italy’s central bank) and in April of this year, chairman of the Financial Stability Board.

Draghi is also a member of the board of directors of the Bank for International Settlements. In fact, the BIS board reads like a Goldman reunion committee. Mark Carney had a 13-year career with Goldman Sachs, where he became the managing director of Investment Banking before becoming the governor of the Bank of Canada and a member of the BIS board.

William Dudley, president of the New York Fed and former partner at Goldman Sachs, is also a member of the board, along with Draghi.

And there you have it. Complete financial control of U.S. financial policy and markets, from the White House and Treasury to the New York Fed, the New York Stock Exchange and the Commodity Futures Trading Commission. Control of the World Bank along with the most powerful member of the International Monetary Fund, and at the top of the fiscal food chain, the Bank for International Settlements and its Financial Stability Board.

This is my fourth article in a series about the financial crisis. Despite our exposure of what some commentators have called Goldman’s economic terrorism, it is important to understand that they are but a part—soldiers in pinstripes—of a more basic agenda, which is nearly complete at this point.

This agenda is set forth in my previous articles—A Look Behind the Wizard’s Curtain, Hitler’s Bank Goes Global and The Hidden Beginning.

But “nearly complete” is not a fait accompli. And so I refer you again to  chapter two, Hitler’s Bank Goes Global, the closing paragraphs of which set out specific actions to take to help bring this situation under control.

Goldman is like a Rottweiler on a leash. The key is bringing the handler, the Bank for International Settlements, under control.

© 2009 John Truman Wolfe. All rights reserved.

Banking wasn’t always that way. . . .

My secretary would come into my office every morning at 9:00 a.m. with a room-service smile and an armload of computer printouts.

She would place the reports on my desk as if she were serving a fine meal and arrange them just so, with the overdraft report on top, and then slip out of the office as if she were trying not to wake anyone.

The customer’s name was on the left side of the page followed by the date the account was opened, the six-month average balance, and a listing of the offending checks that had sentenced the account to the OD report. The amount of the checks and the total overdraft were featured prominently on the right-hand side of the page like perps in a police lineup.

The decisions were twofold: do I pay the checks and, whether paid or not, do I assess overdraft charges? Overdraft charges have gotten rapacious in recent years, but they were $4.00 an item back then, and believe it or not, it takes time, money and effort for bank personnel to track down the impostor and send it home branded with banking’s scarlet letter—insufficient funds.

I would usually let the charges stand, but I was not a tough close if someone called in with a plausible story on why the check beat the deposit to their account. This was usually good for one round of reversed OD charges, but rarely repeated despite screenplay-quality presentations.

A friend of mine had a leather shop down the street where he handcrafted sandals, belts and wallets adorned with peace symbols, which, in those days, were found on everything from condoms to dog collars. He was of the genus Hippy, drove a ratty VW van covered in flowery orange and yellows, and wore iconic bell-bottomed Levi’s. There was great profit in leather goods, but Jimmy paid no attention to his bank balance and overdrew the account with such regularity I sometimes wondered if he was trying to ensure the branch remained profitable.

Banking was more personal then:

“Jimmy, you’re OD again.”

“That’s bullshit, man.”

“No, Jimmy. It’s not bullshit. You’re overdrawn $312.”

“I can’t be overdrawn. I just gave you guys a bunch of bread. You probably held it so some checks would come in first and you could hit me with a bunch of overdraft charges.”

“Lay off the weed, Jimmy. When did you make the deposit?”

“Yesterday. Seven hundred bones. Gave it to that foxy black chick with the Afro.”

“Yes. I see it. But you’re still OD.”

“You’re bummin’ me out, man, really bummin’ me out.”

“When was the last time you reconciled your account, Jimmy?”

“Don’t put that on me, man. That form is a bad trip. Gives me a migraine.”

“Bring your last three statements down to the branch and I’ll have bookkeeping reconcile the account for you.”

“Groovy. You gonna reverse the OD charges?”

“Not a prayer. Bring $312 with you.”

“Fascist.”

Your local bank was also where you went to get a loan to buy your new home. And there it stayed until it was paid off.

A customer would come into the branch, fill out an application and, if approved, we would finance 75–80 percent of the purchase. The borrower would come up with the balance. When the loan was approved, we would issue the funds to escrow at the appropriate time and put the loan on our books, where it would stay, earning the bank the going rate of interest for home loans.

I’m sure there are still some community banks that offer personal service instead of having you talk to someone in the Philippines about your credit card, but I wrote this to make the point that banking—and mortgage banking in particular—had changed.

Banks started selling loans to investors while keeping the servicing. In other words, the borrower would keep making his mortgage payments to the bank that made the loan but the payment would be sent on to the investor who had purchased the loan from the bank. The investors were usually pension plans or large investment funds.

But this change in mortgage lending was just beginning.

A group of leading bankers would soon turn mortgage banking into a cancer that would eat the industry alive. What follows is the earlier beginning to our story “The Financial Crisis: A Look Behind the Wizard’s Curtain”—a chronicle of the men and institutions who designed the current crisis: a crisis by design.

The purpose of this financial crisis is to take down the United States and the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority—a planetary financial control organization to “ensure this never happens again.”

But I am getting ahead of myself.

THE JAPANESE

It is 1985 and the Land of the Rising Sun has become the planet’s largest creditor nation. Words like Toyota, Panasonic and Yamaha have become part of the lexicon in places such as Omaha, Cleveland and Des Moines. In 1970, the ten largest banks in the world were American. By the end of the eighties, six of the ten largest banks in the world are Japanese.

What happened?

The Japanese banks were pampered and protected by their government like corporate rock stars. They were permitted to operate with small amounts of reserve capital, which gave them an advantage over other banks and enabled them to expand their market share at the expense of their competition—the major money-center banks in New York and London represented by the dual-headed Darth Vaders of international finance, the U.S. Federal Reserve Bank and the Bank of England.

The Gunfight at the O.K. Corral had nothing on what was about to occur to the banking samurai of Tokyo.

In the eighties, governments had varying regulations about how much capital their banks had to maintain. These standards were supposed to ensure that banks had enough in reserves to protect themselves and their depositors against bad loans.

These “capital adequacy standards” were set as a percentage of the bank’s assets. In other words, if the capital requirements were 8% and a bank had $8,000,000 in capital, they could expand their balance sheet to $100,000,000 in assets (loans and other investments).

But let’s say the capital requirements were 4%. Taking the same bank with the same $8,000,000 in capital, they could carry $200,000,000 in loans and other assets, generating a great deal more income and profit for the bank.

If the capital requirements were 10%, that same bank could have assets of $80,000,000—fewer loans, less income.

You get the picture: the capital requirements dictated what amount of assets the bank could carry. And the amount of assets determined how much income the bank could generate.

The Japanese banks had low capital requirements—one central banker reported them to be as low as 3%. Others claimed 6%. But in either case, they were low. The low capital requirements enabled them to hold more assets, which in turn spun off more income. The elevated income enabled them to offer lower interest rates on loans than the competition could. Their market share grew.

In time, Japanese banking became the Godzilla of international finance—a condition that did not sit well with Alan Greenspan, the recently appointed chairman of the Federal Reserve Bank, who dealt with the matter like a Mafia chieftain whose turf had been violated by the yakuza.

As soon as he assumed the throne at the Fed, Greenspan, complaining about advantage enjoyed by the Japanese banks, went to his comrades in coin at the Bank of England and executed a two-party agreement establishing capital adequacy standards for U.S. and UK banks. The two of them then turned on their pinstriped Nipponese brothers and told them that they were going to be excluded from Western markets unless they agreed to an international standard of capital adequacy.

The Japanese, dragged to the agreement like a dog to a bath, signed the agreement on July 15, 1988, along with the central bankers of nine other industrialized nations, setting forth “international . . . regulations governing the capital adequacy of international banks.”

The agreement was signed at the secretive Bank for International Settlements in Basel, Switzerland, and is referred to as the Basel Accord. However, since a second accord was signed in 2004 (which we deal with in “Behind the Wizard’s Curtain”), this agreement is now referred to as Basel I and the 2004 agreement as Basel II.

THE BANK FOR INTERNATIONAL SETTLEMENTS

I have dealt with the Bank for International Settlements in the two previous articles on the financial crisis and am going to take the liberty of quoting from them here. First, “A Look Behind the Wizard’s Curtain”:

Central banks . . . govern a country’s monetary policy and create the country’s money.

The Bank for International Settlements (BIS), located in Basel, Switzerland, is the central bankers’ bank. There are 55 central banks around the planet that are members, but the BIS is controlled by a board of directors, which is comprised of the elite central bankers of 11 different countries (U.S., UK, Belgium, Canada, France, Germany, Italy, Japan, Switzerland, the Netherlands and Sweden).

Created in 1930, the BIS is owned by its member central banks, which, again, are private entities. The buildings and surroundings that are used for the purpose of the bank are inviolable. No agent of the Swiss public authorities may enter the premises without the express consent of the bank. The bank exercises supervision and police power over its premises. The bank enjoys immunity from criminal and administrative jurisdiction.

In short, they are above the law.

And from the second article, “Hitler’s Bank Goes Global”:

But then the Bank for International Settlements (BIS) . . . has never seen transparency as one of its core values. In fact, given its fascist pedigree, transparency hasn’t been a value at all. Known as Hitler’s bank, the Bank for International Settlements worked arm in arm with the Nazis, facilitating the transfer of gold from Nazi-occupied countries to the Reichsbank, and kept their lines open to the international financial community during the Second World War. . . .

It is like a sovereign state. Its personnel have diplomatic immunity for their persons and papers. No taxes are levied on the bank or the personnel’s salaries. The grounds are sovereign, as are the buildings and offices. The Swiss government has no legal jurisdiction over the bank and no government agency or authority has oversight over its operations.  

BASEL I

Basel I established the terms for the minimum capital requirements for the ten central banks that signed the accord: Belgium, Canada, France, Italy, Japan, the Netherlands, the UK, the U.S., Germany and Sweden (Switzerland signed later).

A standard had been set: banks had to maintain capital of 8% of their assets. But according to the agreement, all assets were not the same. Basel I introduced a special system of weighing the risk of different kinds of assets and loans—they referred to it as risk-weighted assets. For example, corporate loans to businesses called for a higher percentage capital than mortgage loans. As a consequence, banks started cutting back on corporate loans and seeking ways to expand their mortgage portfolios.

As for the Japanese banks, they had to adjust. But the Nikkei Index (the Japanese stock market) was booming at the time, so they didn’t consider it a big problem. Between 1984 and 1989 the Nikkei had risen from 11,500 to 38,900. As stocks increased in value, the capital base of the Japanese banks (made up largely of stock) increased as well.

Things were cool. Sake flowed, geishas danced and banker-san was happy. But the good times were short lived. Less than a year later, in May of 1989, the Nikkei began a decline that eventually brought the index down to below 8,000.

As went the Nikkei, so went the capital structure of the banks. Down they went, slashing their ability to lend and sending the entire Japanese economy into a recession that has been called the “Lost Decade.”

You don’t cross the Fed and the Bank of England and get away with it. Not on this planet.

It was a different story for the U.S. banks. The new capital adequacy standards laid down as Basel I had loopholes through which the American bankers were able to drive their Porsches to bonuses larger than the budgets of several third-world countries.

THE INTENTIONS OF BASEL I

Writers have referred to the consequences of Basel I as unintended.

Were they really?

Greenspan not only sat on the board of directors of the Bank for International Settlements, he was also of course the chairman of the Federal Reserve Bank. From this position he kept interest rates suppressed at abnormally low levels, ushering in a lethal binge of credit excess in America; advanced the Community Reinvestment Act, which mandated mortgage lending to anyone who drew breath (and some who didn’t); and, along with Robert Rubin and Larry Summers, actively fought efforts to regulate the exploding market in toxic financial instruments called derivatives.

This included using his influence to help eliminate laws that had been on the books for decades protecting people from speculative excess and abuse in financial markets (see “The Financial Crisis: A Look Behind the Wizard’s Curtain”).

DERIVATIVES

Derivatives are what Warren Buffet has called “financial weapons of mass destruction”—financial products that seem to have been imported from a galaxy far, far away.

Derivatives are financial instruments that derive their value from some underlying asset. An example of a derivative is one you have heard a lot of lately: mortgage-backed securities.

Here’s how this works. Mortgage loans are packaged up and legally pooled into a financial document called a security. This simply means that there is a formal certificate that represents a group of loans. The investor buys the security. The security pays interest to the investor, which is based on the interest rates of the underlying mortgages.

You can see where the name comes from: the financial instrument, the mortgaged-backed security, is backed by the mortgages.

It is a derivative because the financial instrument, the security, derives its value from the underlying assets (the mortgage loans).

So what were the intentions of the central bankers when they crafted Basel I? One was to take out the Japanese banks. Mission accomplished.

The other was obvious: to curtail lending to corporations while focusing the attention and appetites of those same lenders on the increased income and bonuses available by investing in mortgage-backed securities.

Under Basel I, banks only had to have half as much capital to invest in mortgages as was required for corporate loans. Or put another way, they could invest twice as much in mortgages as they could in corporate loans with the same amount of capital. The more loans, the more income.

What else did the bankers of Basel think was going to happen other than an explosion in mortgage lending? Nothing of course. And later, when the lenders bought credit insurance for the securities, the capital requirements were reduced even further, pouring gas on what had by then become a raging inferno of credit speculation.

CREDIT DEFAULT SWAPS

It wasn’t actually called credit insurance, though. It had another one of those off-planet names: credit default swaps, but in essence that’s what it was. Here’s how this piece of the puzzle fit.

The bank would buy a contract from an insurer that covered the credit risk of the derivative. In other words, the bank would pay a fee to the insurance company—just like an insurance premium—and if the security turned bad, if the loans failed to pay, the insurance company was obligated to cover the bank’s loss.

When banks bought credit default swaps for their derivatives from an AAA-rated insurance company, the derivative itself took on an AAA rating.

When the derivative received an AAA rating, the bank’s capital requirements—already reduced because the derivatives were made up of mortgages—were reduced even more, freeing up more capital, which enabled them to buy more derivatives, which . . .

There were just a couple of small problems. The credit default swaps—not technically being insurance—were entirely unregulated. This meant that the insurance companies that issued these—think American Insurance Group (AIG), which was the world’s largest insurance company and rated AAA, but which is now owned by thee and me—did not have to carry reserves to cover the loss if the trillions of dollars of derivatives they insured went bad.

The other was the fact that with the passage of the Community Reinvestment Act, the mortgage market was awash in subprime loans (borrowers with poor credit, low income, and no or low down payments). And it was these loans that were packaged into mortgage-backed securities by the trillions and sold to virtually every major bank on the planet, making the international financial structure pregnant with disaster.

It was at this point, having originally set the stage, that the world’s central bankers returned to the Bank for International Settlements in Basel, Switzerland, and issued a second set of rules referred to as Basel II. Included in the Basel II Accord was an accounting rule called mark to market, which brought the planet’s entire financial system to its knees. Mark to market was like pulling the pin on an enormous hand grenade made up of trillions of dollars of toxic derivatives.

On April 2, 2009, at a meeting of world leaders in London, the final card was played: terrified about the potential consequences of a planetary meltdown, they agreed to a plan that established a global financial dictatorship at the Bank for International Settlements called the Financial Stability Board. And this, dear friends, was the goal from the beginning.

If we are going to be realists, we must acknowledge that Greenspan—along with a few fellow monetary jihadists like Paulson, Rubin, Summers and Geithner—planted the bomb in Basel I, lit the fuse by ensuring any meaningful protection against it was removed, and then detonated it with Basel II. What followed the explosion was a global financial coup, which was executed in April.

It took a while for the fuse to burn and the bomb to detonate, but when viewed as a well-constructed plan, the intentions seem inescapable: this financial crisis was and is a crisis by design.

The story of how Basel II created the worldwide financial crisis and how the Financial Stability Board was created is covered in detail in my earlier articles on this subject: “The Financial Crisis: A Look Behind the Wizard’s Curtain” and “Hitler’s Bank Goes Global.”

It is the second article that spells out what action to take, and what can and should be done.

© Copyright John Truman Wolfe. All rights reserved.

A towering citadel housing what is essentially a sovereign state known as the Bank for International Settlements is located in Basel, Switzerland. The bank now controls the financial affairs of planet Earth.

If you think this is an exaggeration or the conspiratorial ramblings of the author . . . or not, I invite you to read on.

I wrote the first installment of this article—“The Financial Crisis: A Look Behind the Wizard’s Curtain”—in mid-March of this year.

The article included the following statement:

The purpose of this financial crisis is to take down the United States and the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority—a planetary financial control organization “to ensure this never happens again.”

This purpose has now been accomplished.

The dollar, the former king of currencies, now goes begging in the pant-suited persona of Hillary Clinton to our creditors at the Chinese Communist Party.

Almost unthinkable a few short years ago, the U.S. dollar is fast losing its status as the world reserve currency, and any thought of saving it is being nuked by the Bernanke, Geithner and Summers commitment to their Alice in Wonderland trillion-dollar budget deficits.

I would not be surprised to see central banks start using the renminbi (the currency of the newly awakened People’s Republic of China—also called the yuan) for international trade and reserves in the not too distant future. This prediction will likely be scoffed at by global economists, but then they have about as much credibility as Larry, Moe and Curly these days.

A more generally discussed alternative is the International Monetary Fund’s SDR (which stands for Special Drawing Rights). There is no production or property behind the SDR. It is one of those clown currencies that are made up out of thin air—a magic trick central bankers like to do. Intoxicated by the power of the purse, they think of themselves as fiscal alchemists.

But the dollar has seen its glory. It can return one day, if Washington ever finds its financial backbone. But let’s be real, with the exception of a very few, like Ron Paul in the House and Tom Coburn in the Senate, these folks are addicted to spending like junkies on horse.

More importantly, the other shoe has dropped. Like some ghoulish predator from another Alien sequel, a Global Monetary Authority has been born. It lives.

THE FINANCIAL STABILITY BOARD

On April 2, 2009, the members of the G-20 (a loose-knit organization of the central bankers and finance ministers of the 20 major industrialized nations) issued a communiqué that gave birth to what is no less than Big Brother in a three-piece suit.

Which means? . . .

The communiqué announced the creation of the all too Soviet sounding Financial Stability Board (FSB)—and no, I’m not going to make a crack about the fact that this acronym is the same as that of the Russian intelligence service that replaced the KGB.

The Financial Stability Board. Remember that name well, because they now have control of the planet’s finances . . . and, when one peels the onion of the communiqué, control of much, much more.

The FSB morphed into existence from an earlier incarnation called the Financial Stability Forum. The Financial Stability Forum (FSF) was established in 1999 to promote international financial stability through co-operation in financial supervision and surveillance. Since it had done such a wonderful job, the central bankers decided to expand its powers and give it a new name.

A board sounds like it has more authority than a forum. But the name change isn’t the problem. The FSB’s broadened mandate includes under point 5, “As obligations of membership, member countries and territories commit to pursue the maintenance of financial stability, maintain the openness and transparency of the financial sector, implement international financial standards (including the 12 key International Standards and Codes), and agree to undergo periodic peer reviews, using among other evidence IMF/World Bank public Financial Sector Assessment Program reports.”

Rather a mouthful of elitist banker-speak. But, as a friend of mine is fond of saying, “The Devil is in the details.”

THE 12 INTERNATIONAL STANDARDS AND CODES

While several press releases from the G-20’s London conclave reference these codes as though they were handed down from a fiscal Mount Sinai, finding the specifics takes some digging.

But then the Bank for International Settlements (BIS), out of which the FSB operates, has never seen transparency as one of its core values. In fact, given its fascist pedigree, transparency hasn’t been a value at all. Known as Hitler’s bank, the Bank for International Settlements worked arm in arm with the Nazis, facilitating the transfer of gold from Nazi-occupied countries to the Reichsbank, and kept their lines open to the international financial community during the Second World War.

As noted in the first article, the BIS is completely above the law.

It is like a sovereign state. Its personnel have diplomatic immunity for their persons and papers. No taxes are levied on the bank or the personnel’s salaries. The grounds are sovereign, as are the buildings and offices. The Swiss government has no legal jurisdiction over the bank and no government agency or authority has oversight over its operations.

In a 2003 article titled “Controlling the World’s Monetary System: The Bank for International Settlements,” Joan Veon wrote:

The BIS is where all of the world’s central banks meet to analyze the global economy and determine what course of action they will take next to put more money in their pockets, since they control the amount of money in circulation and how much interest they are going to charge governments and banks for borrowing from them. . . .

When you understand that the BIS pulls the strings of the world’s monetary system, you then understand that they have the ability to create a financial boom or bust in a country. If that country is not doing what the money lenders want, then all they have to do is sell its currency.

And if you don’t find that troubling, a close reading of the new powers of the FSB are chilling.

The 12 key International Standards and Codes, which are minimum requirements, contain such things as

• clear specification of the structure and functions of government;
• statistical and data gathering from ministries of education, health, finance and other agencies;
• corporate governance principles;
• shareholder rights;
• personal savings;
• secure retirement incomes;
• international accounting standards to be observed in the preparation of financial statements;
• international standards of auditing;
• securities settlement;
• foreign exchange settlement;
• minimal capital adequacy for banks;
• risk management;
• ratification and implementation of UN instruments; and
• criminalizing the financing of terrorism.

“Sounds oppressive,” you say. “But I don’t really care what a bunch of bankers do in Basel, Switzerland. It’s got nothing to do with me.” However, I am writing this to tell you that it has everything to do with you, your family, your business, your country, and—if you’re up to it—your planet.

Because as currently structured, the dictates of the Financial Stability Board will impact your life without any say-so on your part whatsoever. Here’s one example from an article written by former Clinton advisor and political strategist Dick Morris in an article for The Bulletin on April 6, 2009.

The FSB is also charged with “implementing . . . tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms.”

That means that the FSB will regulate how much executives are to be paid and will enforce its idea of corporate social responsibility at “all firms.”

You begin to see what’s involved here.

You see, these standards and codes are commitments, obligations and requirements, not merely advice. The strategy, policies and regulations of the FSB are worked out at the senior levels of the bank. They are approved by the plenary and implemented through the national representatives.

THE STRUCTURE

The plenary, in this sense, is the complete membership body of the FSB. And the membership, my friends—the national representatives who implement these policies—just happen to be the heads of the planet’s more powerful central banks. And in case it slipped your mind, most central banks are private institutions and answerable to no one.

Take our central bank, the Federal Reserve Bank. Yes, the chairman is appointed by the President and often testifies before Congress, but there is virtually no public control over the institution. It can’t be audited nor can Congress tell it what to do. It is not really accountable to anyone. The idea that the Fed is a government agency subject to the control of Congress is a PR line. It is simply not true.

Among other things, central banks govern a country’s monetary policy and create (print) the country’s money.

They make income by charging interest on the money they loan to the government.

Watch this, because if you blink, you’ll miss it.

Governments are perpetually in debt. They are always borrowing money. They have a mental disorder that prevents them from spending less than they collect in taxes—BDD, Budget Deficit Disorder. And if it looks like they might balance the books some year, why, someone can always start a war.

Here’s an example:

Let’s say the annual budget calls for the U.S. government to spend $2.5 trillion. But the income will only be $2 trillion. They’re going to be a little short. But no worries, they have the ultimate credit card—a debt limit that they themselves control. If they borrow up to the established limit, they can just vote it higher—which they have done to the tune of a cool $11.2 trillion dollars.

The Fed loves this.

Listen as the Secretary of the Treasury calls the chairman of the Fed:

“Ben. It’s Tim.”

“Dude. What’s happening?”

“I need a little bread. Friggin’ Taliban again.”

“No problem, Timbo. How much you looking for?”

“Five hundred big ones.”

Ben licks his lips. “Anything for you, big guy. Send me the notes and I’m down with the five hundred. Five percent work for you?”

“Whatever.”

So the Treasury prints up $500 billion dollars’ worth of IOUs—they are called Treasury bills (short term), notes (medium term) or bonds (long term)—and sends them over to the Fed with a fifth of Chivas.

In the old days, the Fed would print the cash. These days, they click a mouse.

Now here’s the part where you aren’t allowed to blink…

When the Fed prints the money or clicks the mouse, they have no money themselves. They are just creating it out of thin air. They just print it, or send it digitally. And then they charge interest on the money they lent to the Treasury. A hundred-dollar bill costs $0.04 to print. But the interest is charged on the $100. Go ahead: read it again; the words won’t change.

The interest on the national debt last year was $451,154,049,950.63. That’s $1.23 billion a day. These are the same people that are now running our banks, insurance companies and automobile manufacturers.

But I digress.

Sure, I oversimplified it. The Fed doesn’t own all the debt and they do some other things. But these are the basics. That is how a central bank works.

It is the heads of the planet’s central banks and some finance ministers that make up the membership of the FSB.

In brief, here’s how it works: the Board’s leadership provides strategies, policies and regulations to the membership. The members vote on the matters and then see to their implementation in their respective countries.

FSB leadership is in the hands of the chairman, Mario Draghi. Mr. Draghi is also the governor of Italy’s central bank. He is a former executive director of the World Bank and like his comrade in international finance Henry Paulson—the former U.S. Secretary of the Treasury who bludgeoned Congress out of the first $700 billion bailout package—Draghi was a managing director of Goldman Sachs until 2006. Like Paulson, he left Goldman in 2006, a year before the financial crisis exploded: Paulson went to Washington to run the U.S. Treasury; Draghi went to Rome to run Italy’s financial system as well as the Financial Stability Forum (forerunner to the Financial Stability Board).

Let’s call it government by Goldman, shall we?

THE REAL SITUATION

More to the point, you may have noticed that you weren’t consulted on this setup. Neither was Congress. In other words, the command channel for implementing global financial strategies goes from the FSB leadership to its central banker members and from them to the world’s financial institutions. You don’t get a peek, neither does Congress, nor, for that matter, does the White House.

And while there may be some accountability in some of the member countries, by and large these central bankers have the authority to implement these regulations and strategies. And they are held responsible by the FSB to do so.

In short, on April 2, 2009, the President signed a communiqué that essentially turns over financial control of the country, and the planet, to a handful of central bankers, who, besides dictating policy covering everything from your retirement income to shareholder rights, will additionally have access to your health and education records.

There is also this troubling little line about “clear specification of the structure and functions of government.”

There is no oversight here. Not by you, not by Congress, not by anybody. No oversight over a handful of central bankers who operate out of a clandestine organization that is above the law and is responsible for having implemented and enforced the “standards” that froze world credit markets and precipitated the worst financial crisis in the planet’s history (see “The Financial Crisis: A Look Behind the Wizard’s Curtain”).

I haven’t heard word one out of Congress about this, but I’m afraid they are a few clowns short of a circus up there.

Which begs the question, what the hell do we do about this?

THE SOLUTION

There are two critical things that need to be done.

The first lies in the fact that the communiqué signed by the President is an agreement that is binding on the United States and, as such, requires approval by Congress. If classed as a treaty, it requires approval by two-thirds of the Senate. At the very least, approval should be by congressional-executive agreement, which requires a majority of both houses of Congress.

The agreement signed in London on April 2 has been called a New Bretton Woods (Bretton Woods being the location of a meeting of world leaders toward the end of the Second World War, which gave birth to the international financial organizations the World Bank and the International Monetary Fund). The original Bretton Woods agreement was put in place as a congressional-executive agreement. So this “new Bretton Woods” should at least do the same.

This step is just to get Congress to recognize their responsibility here. The Federal Reserve Act, the bill that established the Federal Reserve System, was passed in 1913 two nights before Christmas by a sparsely attended Congress.

People have been complaining about this ever since.

What do you say we don’t let this happen again? Not on our watch. Congress needs to understand that it has a responsibility to approve any agreement signed by the President that is binding on this nation.

But the point is not to just get Congress to approve what has been done. It is to first get them to recognize that agreements have been made that affect our entire financial system and that it is their responsibility to shape these agreements in a way that is beneficial to our Republic AND to provide a mechanism for real oversight of this international body.

Central bankers should not be making decisions about international finance without oversight and a system of checks and balances that are reflective of those provided by a republican form of government.

I am, of course, not talking about a political party here. No, no. I’m talking about the American form of government where citizens elect others to represent them.

A republican form of government is one that is operated by representatives chosen by the people.

Congress must step up to the plate. They must insist that the Financial Stability Board be ratified either by treaty or congressional-executive agreement. And that ratification must include the creation of a body with oversight and corrective powers that is comprised of representatives of all the nations involved who are chosen from each country’s elected officials.

There is nothing inherently evil about an international financial organization. As much as we might protest it, it is a global world today, and a body that oversees the smooth flow and interchange of currencies and other financial instruments is needed in today’s world.

But the organization cannot be controlled by international bankers who are not answerable to the citizens of the countries in which they operate. It should be overseen by a senior level group which itself is organized as a liberal republic, following the original model of the United States.

Why? Because the system of government originally created by the United States has been the most successful form of government in man’s history. Any problems with the system have come about as a result of deviations from the original structure—a representative form of government with adequate checks and balances.

Such a body could help create an international economic system in which those that want to be successful can be so. It would also allow them to take an active role in controlling their futures by effectively participating in the legislative process.

ACT!

Let your representatives and senators know: the Financial Stability Board must be approved by Congress and must be subject to oversight by elected officials of the countries involved.

Personal visits, followed by calls and faxes to both Washington and local offices, are the most effective. Don’t be surprised if they don’t know what you’re talking about. Politely insist they find out and take action. And understand this when dealing with legislators or their staffs: they are focused almost exclusively on legislation that has already been introduced—a bill with a number on it.

That is not the case here. You want them to take action on this matter by introducing legislation that brings the approval and structure of the Financial Stability Board under congressional control.

This can be accomplished.

“All tyranny needs to gain a foothold is for people of good conscience to remain silent.” —Thomas Jefferson

Find your elected officials here:

http://www.visi.com/juan/congress/

And let them know what they need to do. After all, they work for you.

© Copyright John Truman Wolfe. All rights reserved.

It’s as if these things were living entities that had spawned an epidemic of economic pornography.

Subprime mortgages are as much a cause of the current financial chaos as bullets were for the death of JFK.

Someone planned the assassination and someone pulled the trigger.

The media, J. Edgar Hoover and the Warren Commission tried to push Lee Harvey Oswald off on the American public. They didn’t buy it.

They shouldn’t buy subprime mortgages either.

Someone planned the assassination and someone pulled the trigger.

Only this time the target is the international financial structure and the bullets are still being fired.

Oh yes, people took out adjustable-rate mortgages they could ill afford, that were then sold to Wall Street bankers. The bankers bundled them up like gift wrappers at Nordstrom’s during the holidays and sold them to other banks after raking off billions in fees. The fees? They were for . . . well . . . they were for wrapping the mortgages in the haute couture of Wall Street.

But it didn’t start there. No, no, not by a long shot.

And as the late, great Paul Harvey would say, “And now you’re going to hear the Rest of the Story.“

Are subprime mortgages part of some larger agenda?

And if so, what is it?

Stay with me here, because Alice is about to slide down the rabbit hole into the looking-glass world of international finance.

EASY MONEY ALAN

There are various places we could start this story, but we will begin with the 1987 ascendancy of Rockefeller/Rothschild homeboy Alan Greenspan from the board of directors of J.P. Morgan to the throne of chairman of the Federal Reserve Bank (a position he was to hold for twenty years).

From the beginning of his term, Greenspan was a strong advocate for deregulating the financial services industry: letting the cowboys of Wall Street sow their wild financial oats, so to speak.

He also kept interest rates artificially low, as if he had sprayed the boardroom of the Federal Reserve Bank with some kind of fiscal aspartame.

While aspartame (an artificial sweetener branded as Equal and NutraSweet) keeps the calories down, it has this itty-bitty side effect of converting to formaldehyde in the human body and creating brain lesions.

As we are dealing here with a gruesomely tortured metaphor, let me explain: I am not suggesting that Chairman Greenspan put Equal in his morning coffee, but rather that by his direct influence, interest rates were forced artificially low resulting in an orgy of borrowing and toxic side effects for the entire economy.

THE COMMUNITY REINVESTMENT ACT

Greenspan had been the Fed chairman for seven years when, in 1994, a bill called the Community Reinvestment Act (CRA) was rewritten by Congress. The new version had the purpose of providing loans to help deserving minorities afford homes. Nice thought, but the new legislation opened the door to loans that set aside certain lending criteria: little things like a down payment, enough income to service the mortgage, and a good credit record.

With CRA’s facelift, we have in place two of the five elements of the perfect financial storm: Alan (Easy Money) Greenspan at the helm of the Fed and a piece of legislation that turned mortgage lenders into a division of the Salvation Army.

Perhaps you can see the pot beginning to boil here. But the real fuel to the fire was yet to come.

GLASS-STEAGALL

To understand the third element of the storm, we travel back in time to the Great Depression and the 1933 passage of a federal law called the Glass-Steagall Act. As excess speculation by banks was one of the key factors of the banking collapse of 1929, this law forbade commercial banks from underwriting (promoting and selling) stocks and bonds.

That activity was left to the purview of “investment banks” (names of major investment banks you might recognize include Goldman Sachs, Morgan Stanley and the recently deceased Lehman Brothers).

Commercial banks could take deposits and make loans to people.

Investment banks underwrote (facilitated the issuing of) stocks and bonds.

To repeat, this law was put in place to prevent the banking speculation that caused the Great Depression. Among other regulations, Glass-Steagall kept commercial banks out of the securities.

Greenspan’s role in our not-so-little drama is made clear in one of his first speeches before Congress in 1987 in which he calls for the repeal of the Glass-Steagall Act. In other words, he’s trying to get rid of the legislation that kept a lid on banks speculating in financial markets with securities.

He continued to push for the repeal until 1999 when New York banks successfully lobbied Congress to repeal the Glass-Steagall Act. Easy-Money Alan hailed the repeal as a revolution in finance.

Yeah, baby!

A revolution was coming.

With Glass-Steagall gone, and the permissible mergers of commercial banks with investment banks, there was nothing to prevent these combined financial institutions from packaging up the subprime CRA mortgages with normal prime loans and selling them off as mortgage-backed securities through a different arm of the same financial institution. No external due diligence required.

You now have three of the five Horsemen of the Fiscal Apocalypse: Greenspan, CRA mortgages and repeal of Glass-Steagall.

WAIVER OF CAPITAL REQUIREMENTS

Enter Hammering Hank Paulson.

In April of 2004, a group of five investment banks met with the regulators at the Securities and Exchange Commission (SEC) and convinced them to waive a rule that required the banks to maintain a certain level of reserves.

This freed up an enormous reservoir of capital, which the investment banks were able to use to purchase oceans of mortgage-backed securities (cleverly spiked with the subprime CRA loans like a martini in a Bond movie). The banks kept some of these packages for their own portfolios but also sold them by the bucketload to willing buyers from every corner of the globe.

The investment bank that took the lead in getting the SEC to waive the regulation was Goldman Sachs. The person responsible for securing the waiver was Goldman’s chairman, a man named Henry Paulson.

With the reserve rule now removed, Paulson became Wall Street’s most aggressive player, leveraging the relaxed regulatory environment into a sales and marketing jihad of mortgage-backed securities and similar instruments.

Goldman made billions. And Hammering Hank? According to Forbes magazine, his partnership interest in Goldman in 2006 was worth $632 million. This on top of his $15 million per year in annual compensation. Despite his glistening dome, let’s say Hank was having a good hair day.

In case this isn’t clear, it was Paulson who, more than anyone else on Wall Street, was responsible for the boom in selling the toxic mortgage-backed securities to anyone who could write a check.

Many of you may recognize the name Hank Paulson. It was Paulson who left the Goldman Sachs’ chairmanship and came to Washington in mid-2006 as George Bush’s Secretary of the Treasury.

And it was Paulson who bludgeoned Congress out of $700 billion of so-called stimulus money with threats of public riots and financial Armageddon if they did not cough up the dough. He then used $300 billion to “bail out” his Wall Street homeboys to whom he had sold the toxic paper in the first place. All at taxpayer expense.

Makes you feel warm all over, doesn’t it?

Congress has its own responsibility for this fiscal madness, but that’s another story.

This one still has one more piece—the pièce de résistance.

BASEL II

Greenspan, the Community Reinvestment Act, the repeal of Glass- Steagall, and Paulson getting the SEC to waive the capital rule for investment banks have all set the stage: the economy is screaming along, real estate is in a decade-long boom and the stock market is reaching new highs. Paychecks are fat.

But by the first quarter of 2007, the first nigglings that all was not well in the land of the mortgage-backed securities began to filter into the press. And like a chill whisper rustling through the forest, mentions of rising delinquencies and foreclosures began to be heard.

Still, the stock market continued to rise, with the Dow Jones reaching a high of 14,164 on October 9, 2007. It stayed in the 13,000 range through the month, but in November, a major stock market crash commenced from which we have yet to recover.

It’s not just the U.S. stock market that has crashed, however. Stock exchanges around the world have fallen like a rock off a tall building. Most have lost half their value, wiping out countless trillions.

If it were just stock markets, that would be bad enough; but, let’s be frank, the entire financial structure of the planet has gone into a tailspin and it has yet to hit ground zero.

While there surely would have been losses, truth be told, the U.S. banking system would likely have gotten through this, as would have the rest of the world, had it not been for an accounting rule called Basel II promulgated by the Bank for International Settlements.

Who? What?

That’s right, I said an accounting rule.

The final nail in the coffin—and this was really the wooden spike through the heart of the financial markets—was delivered in Basel, Switzerland, at the Bank for International Settlements (BIS).

Never heard of it? Neither have most people; so, let me pull back the wizard’s curtain.

Central banks are privately owned financial institutions that govern a country’s monetary policy and create the country’s money.

The Bank for International Settlements (BIS), located in Basel, Switzerland, is the central banker’s bank. There are 55 central banks around the planet that are members, but the bank is controlled by a board of directors, which is comprised of the elite central bankers of 11 different countries (U.S., UK, Belgium, Canada, France, Germany, Italy, Japan, Switzerland, the Netherlands and Sweden).

Created in 1930, the BIS is owned by its member central banks, which, again, are private entities. The buildings and surroundings that are used for the purpose of the bank are inviolable. No agent of the Swiss public authorities may enter the premises without the express consent of the bank. The bank exercises supervision and police power over its premises. The bank enjoys immunity from criminal and administrative jurisdiction.

In short, they are above the law.

This is the ultra-secret world of the planet’s central bankers and the top of the food chain in international finance. The board members fly into Switzerland for once-a-month meetings, which they hold in secret.

In 1988 the BIS issued a set of recommendations on how much capital commercial banks should have. This standard, referred to as Basel I, was adopted worldwide.

In January of 2004 our boys got together again and issued new rules about the capitalization of banks (for those that are not fluent in bank-speak, this is essentially what the bank has in reserves to protect itself and its depositors).

This was called Basel II.

Within Basel II was an accounting rule that required banks to adjust the value of their marketable securities (such as mortgage-backed securities) to the “market price” of the security. This is called mark to the market. There can be some rationality to this in certain circumstances, but here’s what happened.

THE MEDIA AND MARK TO THE MARKET

As news and rumors began to circulate about some of the subprime CRA loans in the packages of mortgage-backed securities, the press, always at the ready to forward the most salacious and destructive information available, started promoting these problems.

As a result, the value of these securities fell. And when one particular bank did seek to sell some of these securities, they got bargain-basement prices.

Instantly, per Basel II, that meant that the hundreds of billions of dollars of these securities being held by banks around the world had to be marked down—marked to the market.

It didn’t matter that the vast majority of the loans (90% +) in these portfolios were paying on time. If, say, Lehman Brothers had gotten fire-sale prices for their mortgage-backed securities, the other banks, which held these assets on their books, now had to mark to the market, driving their financial statements into the toilet.

Again, it didn’t matter that the banks were receiving payments (cash flow) from their loan portfolios; the value of the package of loans had to be written down.

A rough example would be if the houses on your street were all worth about $400,000. You owe $300,000 on your place and so have $100,000 in equity. Your neighbor, Bill, in selling his house, uncovered a massive invasion of termites. He had to sell the house in a hurry and wound up with $200,000, half the real value.

Shortly thereafter, you get a demand letter from your bank for $100,000 because your house is only worth $200,000 according to “the market.” Your house doesn’t have termites, or perhaps just a few. Doesn’t matter.

Of course, if the value of your home goes below the loan value, banks can’t make you cough up the difference.

But if you are a bank, Basel II says you must adjust the value of your mortgage-backed securities if another bank sold for less—termites or no.

When the value of their assets was marked down, it dramatically reduced their capital (reserves), and this—their capital—determined the amount of loans they could make.

The result? Banks couldn’t lend. The credit markets froze.

Someone recently said that credit was the life blood of the economy.

This happens to be a lie. Hard work, production, and the creation of products that are needed and wanted by others—these are the true life blood of an economy.

But, let’s be honest, credit does drive much of the current U.S. economy: home mortgages, auto loans and Visas in more flavors than a Baskin-Robbins store.

That is, until the banks had to mark to the market and turn the IV off.

THE CRISIS

Mortgage lending slammed to a halt as if it had run headlong into a cement wall, credit lines were canceled, and credit card limits were reduced and in some cases eliminated altogether. In short, with their balance sheets butchered by Basel II, banks were themselves going under and those that weren’t simply stopped lending. The results were like something from a financial horror film—if there were such a thing.

Prof. Peter Spencer, one of Britain’s leading economists, makes it very clear that the Basel II regulations “. . . are at the root cause of the crunch . . .” and that “. . . if the authorities retain the strict Basel regulations, the full scale of the eventual credit crunch and economic slump could be disastrous.”

“The consequences for the macro-economy,” he says “of not relaxing [the Basel regulations] are unthinkable.”

Spencer isn’t the only one who sees this. There have been calls in both the U.S. and abroad to, at least, relax Basel II until the crisis is over. But the Boys from Basel haven’t budged an inch. The U.S. did modify these rules somewhat a year after the devastation had taken place here, but the rules are still fully in place in the rest of the world and the results are appalling.

The credit crisis that started in the U.S. has spread around the globe with the speed that only the digital universe could make possible. You’d think Mr. Freeze from the 1997 Batman & Robin movie was doing his thing.

We have already noted that stock markets around the world have lost half of their value, erasing trillions. Some selected planet-wide stats make it clear that it is not just stock values that have crashed.

China’s industrial production fell 12% last year, while Japan’s exports to China fell 45% and Taiwan’s were off 55%. South Korea’s overseas shipments decreased 17%, while their economy shrank 5.6%.

Singapore’s exports were off the most in 33 years and Hong Kong’s exports plunged the most in 50 years.

Germany had a 7.3% decline in exports in the fourth quarter of last year, while Great Britain’s real estate market declined 18% in the last quarter compared to a year earlier.

Australia’s manufacturing contracted at a record pace last month, bringing the index to the lowest level on record.

There’s much more, but I think it is obvious that credit pipe can no longer be smoked.

Welcome to planetary cold turkey.

ODDITIES

It is fascinating to look at the date coincidence of the crash in the U.S. Earlier I noted that the stock market continued to rise throughout 2007, peaking in October of 2007. The dip in October turned to a route in November.

The Basel II standards were implemented here by the U.S. Financial Accounting Standards on November 15, 2007.

There are more oddities.

Despite the fact that Hammering Hank dished out hundreds of billions to his banker buddies to “stimulate” the economy and defrost the credit markets, the recipients of these taxpayer bailout billions have made it clear that they will be reducing the amount of money they will be lending over the next 18 months by as much as $2 trillion to conform to Basel II.

What do you think—Hank, with his Harvard MBA, didn’t know? The former chairman of the most successful investment bank in the world didn’t know that the Basel II regulations would inhibit his homies from turning the lending back on?

Maybe it slipped his mind.

Like the provision he put into his magnum opus, the $700 billion bailout called TARP. It carried a provision for the Federal Reserve to start paying interest on money banks deposited with it.

Think this through for a minute. The apparent problem is that the credit markets are frozen. Banks aren’t lending. They can’t use the money from TARP to lend because Basel II says they can’t. On top of this, Paulson’s bailout lets the Fed pay interest on funds they deposit there.

If I am the president of a bank, and let’s say that I’m not Basel II impaired, why in the world am I going to lend to customers in the midst of the worst financial crisis in human history when I can click a mouse and deposit my funds with the Fed and sit back and earn interest from them until the chaos subsides?

But, hey, maybe Hank’s been putting aspartame in his coffee.

No, this stuff is as obvious as the neon signs on Broadway to the folks who play this game. This is banking 101.

So, given the provisions of Basel II and the refusal of the BIS to lift or suspend the regulations when they are clearly the driving force behind the planet-wide credit crisis, and considering the lack of provisions in Paulson’s bailout bill to mandate that taxpayer funds given to banks must actually be lent, and given the added incentive in the bill for banks to deposit their bread with the Fed, one gets the idea that maybe, just maybe, these programs weren’t designed to cure this crisis; maybe they were designed to create it.

Indeed, my friends, this is crisis by design.

Someone planned the assassination and someone pulled the trigger.

THE RUBBER MEETS THE ROAD

All of which begs the question, how come?

Why drive the planet into the throws of fiscal withdraw—of job losses, vaporized home equity, and pillaged 401ks and IRAs?

Because when the pain is bad enough, when the stock markets are in shambles, when the cities are teaming with the unemployed, when the streets are awash with riots, when governments are drenched in the sweat of eviction and overthrow, then the doctor will come with the needle of International Financial Control.

This string of ineffective solutions put forth by people who know better are convincing bankers, investors, corporations and governments of one thing: the system failed and even the U.S. government—the anchor of international finance (which is blamed for causing the disaster)—has lost its credibility.

The purpose of this financial crisis is to take down the United States and the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority—a planetary financial control organization to “ensure this never happens again.”

Sound Orwellian? Sound conspiratorial? Sound too evil or too vast to be real?

This entity is being moved forward by world leaders “as we speak.” It is coming and the pace is quickening.

A year ago, I saw an article in which the president of the New York Federal Reserve Bank was calling for a “Global Monetary Authority,” or GMA, to deal with the world’s financial crisis. While I have been following international banking institutions for some time, this was the clue that they were making their move. I wrote an article on it at the time.

By the way, as some may recall, the president of the New York Fed last year was a man named Timothy Geithner. Geithner was very involved in structuring the booby-trapped TARP bailout with Paulson and Bernanke.

Of course, now, he is the Secretary of the Treasury of the United States.

Change we can believe in.

Once Geithner started to push a global financial authority as the solution to the world’s financial troubles, other world leaders and opinion-leading voices in international finance began to forward this message. It has been a PR campaign of growing intensity. Meanwhile, behind the scenes, the international bankers are keeping their hands on the throat of the credit markets, choking off lending while the planet’s financial markets asphyxiate and become more and more desperate for a solution.

British Prime Minister Gordon Brown, who has taken the point on this, has said that the world needs a “new Bretton Woods.” This is the positioning. (Bretton Woods, New Hampshire, was the location where world leaders met after the Second World War and established the international financial organizations called the International Monetary Fund [IMF] and the World Bank to help provide lending to countries in need after the war.)

Sir Evelyn de Rothschild called for improved (international) regulations, while the managing director of the IMF suggested a “high level of ministers capable of reaching agreements and implementing them.”

The former director of the IMF, Michael Camdessus, called on “the global village” to “urgently and radically” implement international regulations.

As the crisis has intensified, so too have calls for a global financial policeman; and, of late, the PR has been directed in favor of—surprise—the Bank for International Settlements.

The person at the BIS who was primarily responsible for the creation of Basle II is Jaime Caruana. The BIS board has now appointed him as the general manager, the bank’s chief executive position, where he will be in charge of dealing with the current financial crisis, which he had no small part in creating.

A few well-chosen sound bites tell the story.

Following a recent IMF function, discussion centered on the fact that the BIS could provide effective market regulation, while the Global Investor magazine opined that “perhaps the Bank of International Settlements in Basel” could undertake the task of best dealing with the crisis in the financial markets.

The UK Telegraph is right out front with it:

A new global solution is needed because the machinery of global economic governance barely exists . . . it’s time for a Bretton Woods for this century.

The big question is whether it is time to establish a global economic “policeman” to ensure the crash of 2008 can never be repeated. . . .

The answer might be staring us in the face in the form of the Bank for International Settlements (BIS). The BIS has been spot on throughout this.

And so you see, this was a drill. This was a strategy: Bring in Easy Money Alan to loosen the credit screws; open the floodgates to mortgage loans to the seriously unqualified with the CRA; bundle these as securities; repeal Glass-Steagall and waive capital requirements for investment banks so the mortgage-backed securities could be sold far and wide; wait until the loans matured a bit and some became delinquent, and ensure the media spread this news as if Heidi Fleiss had had a sex-change operation; then slam in an international accounting rule that was guaranteed to choke off all credit and crash the leading economies of the world.

Ensure the right people were in the key places at the right time—Greenspan, Paulson, Geithner and Caruana.

When the economic pain was bad enough, promote the theory that the existing financial structures did not work and that a Global Monetary Authority—a Bretton Woods for the twenty-first century—was needed to solve the crisis and ensure this does not happen again.

Which is exactly where we are right now.

WHAT DO YOU DO?

Let me preface this section by saying that this is advice designed to help you orient your assets—i.e., your reserves, your retirement plans, etc.—to the Brave New World of international finance. It is not meant as advice about what you do with your business or your job, or your personal life.

Those things are all senior to this subject, which has a very narrow focus. There is an embarrassment of riches of materials that you can use to stay ahead of and on top of this crisis. Use them to flourish and prosper. This article is not a call to cut back or contract. It is to provide you information so you know what is going on and can plan.

Enough said.

First of all, while not likely, but just in case Timothy Geithner is shocked into some New Age epiphany and Ben Bernanke grows some real wisdom in his polished dome, this is what the government should do:

1. Cancel any aspects of Basel II that are causing banks to misevaluate their assets.

2. Remove the provision of TARP that permits the Fed to pay interest on deposits.

3. Mandate that any funds given under the TARP bailout or that are to be given to banks in the future must be used to lend to deserving borrowers.

4. Repeal the Community Reinvestment Act.

5. Reinstate Glass-Steagall.

6. Restore mandated capital requirements to investment banks.

7. And in case Congress decides to cease being a flock of frightened sheep and take responsibility for the country’s monetary policy, they should get rid of the privately owned Federal Reserve Bank and establish a monetary system based on production and property.

8. But if a global monetary authority is put in place, it should not be controlled by central bankers. It should be fully controlled directly by governments with real oversight over it and with a system of checks and balances. This you can communicate when this matter hits Congress or the White House or both (which it almost certainly will).

And what do you do with your reserves in this Brave New World of international finance?

Modesty aside, please do what I have been recommending for a few years now: get liquid (out of the stock and bond markets) and put some of your assets into precious metals, gold and silver, but more heavily into silver.

Keep the rest in cash (CDs and T-bills) and perhaps a small bit in some stronger foreign currencies like the Swiss franc or Chinese yuan (also referred to as the RMB, which is short for renminbi).

And remember that my recommendations are based on my 30 years of experience in banking, finance and investments, but I have no crystal ball and make no guarantees regarding my recommendations.

We are living in the most challenging economic times this planet has ever seen. I hope this article has helped shed some light on what is currently happening on the international financial scene. I didn’t cover everything or everyone involved, but these are the broad strokes.

If you want to follow these shenanigans, log on to The Road to London Summit (http://www.londonsummit.gov.uk/en/). It will all look and sound very reasonable—all about saving jobs and homes—but you have seen behind the wizard’s curtain and the above is what is really going on.

Keep your powder dry.

© 2009 John Truman Wolfe. All rights reserved.