WHY FX CURRENCY SPREADS WIDER THAN THE SEVEN SEAS

CLICK HERE LARGE PRINT EDITION: WHY FX CURRENCY SPREADS WIDER THAN THE SEVEN SEAS « Culture of Life News 2

chinese-take-out-troy-ny

As Israel bombs the Gaza Ghetto, we teeter yet again, on the edge of a dark precipice. As the US loses its grip on controlling history, we can take a moment to look backwards in time at the economic workings of this global financial collapse. Even now, many economics professors seek, like hounds on a false trail, the causes. The obvious event was the collapse of the US and then global housing bubbles. But they were symptoms, not causes of the collapse.

As I keep trying to prove beyond contention, the true nature of this collapse is due to the very system we have today: the free trade/floating currency regime. This replaced the free trade/gold standard of the British Empire which collapsed in 1914. There was an interlude where the US had a controlled trade/gold standard system from 1920-1971. That collapsed due to the Vietnam and Cold War overspending in the US.

 

Since 1971, we have been in the present system which did NOT start all at once at all but was slowly imposed upon the planet. Step by relentless step, treaty by treaty, starting with Bretton Woods II, US and European negotiators worked hard to create this obviously extremely flawed and even downright dangerous system.

 

Since all economists are propagandized into thinking, this is a GOOD system and not a totally screwed up system, they cannot understand how all the permutations are actually DESTABILIZATION POINTS which appear each time the EU/US/Japanese G7 nations fiddle with it to keep it rolling.

 

Periodically, I visit the Bank for International Settlements to see what sort of garbage they discharge via their think tanks. Remember: the BIS was founded to keep the three manic empires of Germany, Britain and France afloat after WWI and to uphold a collapsing system when Germany began to give up paying reparations for WWI. Hitler used the BIS to process Nazi loot in Switzerland before and even during WWII. So it is a bank with a very nasty history. And still exists and sits there, in the center of Europe, still playing global power games.


BIS Working Papers 

 Interpreting deviations from covered interest parity during the financial market turmoil of 2007–08

The functioning of money markets was severely impaired in the summer of 2007. What began as a deterioration in a relatively limited segment of the US subprime mortgage sector quickly spread to other markets, especially those of credit and securitised products .

Uncertainty about losses increased the liquidity needs of financial institutions as well as their reluctance to lend to each other in money markets, particularly at maturities longer than one month. Reflecting these and possibly other factors, spreads of interbank short-term interest rates over overnight index swap (OIS) and treasury bill rates widened substantially in August 2007, and then, despite some degree of fluctuation, persisted at high levels.

A much less well documented aspect of the turmoil is how the turbulence in money markets spilled over to foreign exchange (FX) swap markets. One of the few works to address the question is Baba, Packer, and Nagano (2008), which documents heightened volatility in the FX swap markets across several G10 currency pairs soon after the financial market turmoil erupted.

As noted in that paper, the three-month FX swap-implied dollar rate using euro as a funding currency moved together quite closely with dollar Libor (London interbank offered rate) prior to the summer turmoil in money markets. From mid-August 2007, however, the spread between the FX swap-implied dollar rate and dollar Libor widened considerably, reaching 40 basis points in September 2007, pointing towards a large and persistent deviation from the short-term covered interest parity (CIP) condition.

Though the spread narrowed substantially after the beginning of 2008, it widened again from early March.3 Baba, Packer, and Nagano (2008) argue that dollar funding shortages of non-US financial institutions were largely responsible for these developments.

More specifically, soon after the turmoil began, European financial institutions increased activity to secure dollar funding to support US conduits for which they had committed backup liquidity facilities.

At the same time, US financial institutions appeared to become much more cautious about lending dollars to other institutions because of heightened counterparty risk and their own need to preserve funds on hand. Facing unfavourable demand and supply conditions and the associated impairment of liquidity in interbank markets, many European institutions moved to actively convert euros into dollars through FX swaps.

Deteriorating liquidity in the FX swap market likely contributed to further deviations of the FX swap market from the short-term CIP condition, despite coordinated efforts by central banks to make dollar funding more readily available to non-US financial institutions.

More specifically, as part of a series of coordinated measures to provide term dollar funding, on December 12, 2007, the establishment of swap lines between the Federal Reserve and both the European Central Bank (ECB) and the Swiss National Bank (SNB) was announced.

These swap lines allowed the ECB and SNB to conduct US dollar term funding auctions during European trading hours for depository institutions in continental Europe in a fashion that complemented the Federal Reserve’s own term auction facility (TAF) for US institutions.

No where in this paper, do the authors talk about the entire floating currency regime and how utterly ridiculous it is.  Nor do they examine why we have to have this goofy, utterly screwy system.  Nor do they talk about why the US, which instigated this system and sits dead center in it, is the victim of this system.  As well as a fundamental cause of it collapsing today.  

 

As per usual, the blame is popped into the laps of the lowliest players on the economic stage: home buyers.  They gave up the game in 2007 because they could no longer play the international ‘pass the hot currency potato’ game.  By focusing only on Europe, the BIS brainiacs here could leave out all the noise from Asia nor do they talk about the Asian Currency Crisis which was a harbinger of the storm that has enveloped the entire planet.

 

Nor do they mention FOREX reserves held by sovereign powers!  Europe has nearly as much FOREX reserves as Japan but it is held by many countries and not by one.  Since no one controls the $700 billion European government banks hold, it has much less power than the Chinese or Japanese central bank’s multi-trillion dollar reserves.

 

The narrow view of this paper is to turn what was a mega-banking collapse event into magic formulas.  This way, they feel that they can ‘explain’ and even ‘predict’ what is going on.  But of course, the formulas below are more like thermometers: they can express the temperature of the dying patient but do not diagnose the disease killing the patient.  Below is a graph they referred to in the above excerpt:

fx-swaps1

Starting on 7/17/7, the chart, which is in harmony, suddenly has this spike.  This is when China declared open banking warfare on the G7 after they jointly attacked China at the G7 meeting that week.  People, as I recall from back then, were shocked when this big jolt hit.  I said, ‘This is the end of the Japanese carry trade.’  As usual, I was right.  The instant the Japanese carry trade collapsed and, despite ZIRP, the value of the yen which was 120 to the dollar, suddenly began its relentless rise to where it is today, 90 yen to the dollar [it hit 84 to the dollar this last month!].  

 

When this event happened, the entire machinery based on the Japanese carry trade/weak yen began its vast collapse.  Housing was screwed up in the US since 2006 so there was NO EVENT in the US to trigger both that sudden blip upwards and then the resulting complete collapse in the FX swap markets.  Since that dark day in July, things have re-stabilized….at a very disjointed level with a wide spread that seems a permanent fixture.  The creepy thing is, why has this become the NEW status quo?

picture-51

This cool graph is cute!  HAHAHA.  Talk about a SIMPLE SYSTEM.  How could such a childish system fail?  Of course, it looks simple because is is only two parties.  But the global FX market is very complex.  The inherent problem with the stupid floating currency system is simple: if the currency that is the basis for all others and which is used to resolve all international trade goes off the cliff, the whole system collapses.

 

All the elaborate scaffolding, all the previous treaties creating this system, all the warty, ugly, nasty little processes, games, goofy systems set into motion by an army of speculating and banking gnomes eager to exploit weaknesses and drain wealth from the system into their pockets, all this collapses!

 

On top of this, all the trading powers that use this FX market to screw up the true value of their currencies so they can all export to the US as well as screw up each other’s trade: all of this has stability only so long as the dollar has stability.  The US has destabilized the dollar at several key times in history: in 1914, in 1933, in 1964, in 1971 and from there, nearly continuously with increasing desperation.

 

We keep announcing, we will have a floating currency.  Then, our trade rivals destroy us so we negotiate a sudden drop in the dollar.  This, in turn, triggers tsunamis of money flows that cause humungous problems like the epic Japanese bubble that followed directly in the wake of the Plaza and Louver Accords.  Germany dodged that bubble potential by purchasing East Germany from a collapsing Soviet Union which needed money very badly.

 

http://www.bis.org/publ/work267.pdf?noframes=1

An FX swap is a contract in which one party borrows a currency from, and simultaneously  lends a second currency to, another party. Although FX swaps can be viewed as effectively collateralised transactions, the collateral does not cover the entire counterparty risk. For example, if one party to the swap defaults during the contract period, the counterparty needs to reconstruct the position at the current market price, which entails replacement cost.

Furthermore, Duffie and Huang (1996) show that FX swaps are subject to greater
counterparty risk than are interest rate swaps
because, unlike interest rate swaps, FX swaps entail the exchange of notional amounts at the start of the contract.

  1. A financial institution or other entity needing foreign currency funding can either borrow directly in that currency’s uncollateralised cash market or
  2.  borrow in another (typically the domestic) currency’s uncollateralised cash market and convert the proceeds into an obligation in the desired currency through an FX swap.

This whole FX market is part of the Derivatives Beast.  Note how the collateral is not equal to the risk!  This means, when something goes bad, the party insuring the risks is HAMMERED TO DEATH!  How dare anyone devise such an idiotic and unstable system!  I am just aghast. 

 

The Fascinating History of the Forex Market

Foreign Currency Exchange (Forex) Trading allows an investor to participate in profitable fluctuations of world currencies. Forex trading works by selecting pairs of currencies and then measuring profit or loss by the fluctuations of one one currency’s market activity compared to the other. For example, fluctuations in the value of the $ U.S. Dollar are measured against another world currency such as the £ British Pound, € Eurodollar, ¥ Japanese Yen etc. Being able to discern price trends in market activity is the essence of all profitable trading and this is what makes foreign currencies so exciting, currencies are the world’s ‘best trending’ market. This gives Forex investors a profit making edge that is unavailable in most other markets.

Forex Trading is being called ‘today’s exciting new investment opportunity for the savvy investor’. The reason is that the Forex Trading Market only began to emerge in 1978, when worldwide currencies were allowed to ‘float’ according to supply and demand, 7 years after the Gold Standard was abandoned. Up until 1995 Forex Trading was only available to banks and large multinational corporations but today, thanks to the proliferation of the computer and a new era of internet-based communication technologies, this highly profitable market is open to everyone. The Forex Trading Market’s growth has been unprecedented, explosive, and continues to be unequaled by any other trading market.

Unlike traditional trading which brings buyers and sellers together in a central location (trading floors) in Forex Trading there is no need for a centralized location. Forex is a market where worldwide traders conduct business by high-speed Internet connections with the Interbank Foreign Currency Exchange via Forex Clearinghouses (also called Forex Brokerage Firms). Forex has not only become the fastest growing trading market, but also the most profitable trading marketplace in the world.

 

What the hell is this???  The mere trading of currencies, one of the most USELESS activities on earth, became, under the idiotic floating currency system, the most PROFITABLE betting game in town!  This is due to increasing instability since day one.  Here is a sober fact from the above article praising the insane and destructive FX markets:

 Of the $1.2 trillion day trading in Foreign Currency Exchange, 83% of spot foreign exchange activity and 95% of swap activity involves US Dollars. The Euro is the second most active currency at 37%. The Japanese Yen (24%) and the British Pound Sterling (10%) are ranked third and fourth. The Swiss Franc is 7%, and the Canadian and Australian Dollars account for 3%.

Nearly the entire FX market is dollars!  So when the dollar has difficulties, the entire FX market goes totally insane.  And the graph at the top is the result of this.  Is world trade between the US and all other nations 95% of all trade?  

 

Of course not!  Not even slightly!  But the US has a dual role here: it is the destination of more trade than any nation and its output doesn’t come even slightly close to the input from abroad. Yet almost all of trade is negotiated in dollars.  This puts the dollar at an disadvantage. This has forced all Presidents from Nixon to Bush Sr to resort to negotiations and treaties to artificially position the dollar vis a vis all other currencies.

 

Since the Japanese ZIRP and the Japanese plan to build up their FX funds to a trillion dollars, no US President has negotiated weakening the dollar.  And US trade imbalances went from less than $50 billion a year to nearly a trillion dollars a year.  This destabilizes the entire FX system, of course!  Both Europe and Japan’s trade surpluses, before 7/17/7, dwarfed the rest of the world with the exception of China.  So, the main currency for trade should have been the yen, yuan and euro.  Not the dollar. 

 

Here is a formula the BIS eggheads cooked up to explain what is going on, at least, at the most infantile level:

 
picture-63
 

The LIBOR mess was a warning bell sounding, not a system that can be worked out.  It simply noted that the US is going bankrupt, the ability of trade partners to suck down US debts and dollars has collapsed and the system must be reset.  Instead of doing this, everyone is trying to get back to the 1994-2007 system whereby the US runs gigantic trade deficits with impunity.  Below is the conclusion of the BIS report:

 

http://www.bis.org/publ/work267.pdf?noframes=1

Our empirical results show a striking change in the relationship between perceptions of counterparty risk and FX swap prices after the onset of financial turmoil. That is, CDS spread differences between European and US financial institutions have a positive and statistically significant relationship with the deviations from CIP observed in the FX swap market.

The result holds when we consider the CDS spreads of a range of financial institutions wider than that of the Libor panel. Our findings suggest that concern over the counterparty risk of European financial institutions was one of the important drivers of the deviation from covered interest parity in the FX swap market.

The results hark back to the Japan premium episode in the late 1990s, when the creditworthiness of Japanese banks had substantially deteriorated. Faced with the extreme difficulty of raising dollars in global interbank markets, Japanese banks turned to FX swap markets, which resulted in substantial deviations from CIP.

While not significantly reducing the level of FX swap deviations over the period, the ECB’s US dollar liquidity-providing operations to Eurosystem counterparties do appear to have lowered the volatility (and thus the associated uncertainty) of the FX swap deviations.

Our estimation results thus support the view that the dollar term funding auctions conducted by the ECB, supported by dollar swap lines with the Federal Reserve, played a positive role in stabilizing the euro/dollar FX swap market. This study covers a period that ends in September 2008 shortly before the bankruptcy of Lehman Brothers. After the Lehman failure, the turmoil in many markets become much more pronounced.

In currency and money markets, what had principally been a dollar liquidity
problem for European banks deepened into a phenomenon of global dollar shortage. The provision of dollar funds by central banks, supported in some cases by unlimited dollar swap lines with the Federal Reserve, expanded greatly. One promising line of research would focus on the effectiveness of the diverse array of policy measures taken in this recent, more severe stage of the financial crisis.

Japan began ZIRP and with this, began the Japanese carry trade and solved their difficulties in collecting and holding FX dollars.  This way, starting in 1994, the Japanese FX reserves began their climb. At first, slowly, for few people understood exactly how wonderful the ZIRP system would work. The trick being, to translate JAPANESE loans and monetary games into US dollars.  Via other nations getting these loans in Japan.  This was a successful offshoring of FX business trades that benefitted Japanese exporters on every possible level.

 

Which is why, once Japan and an army of newly -hatched offshore hedge funds began to play this game in ernest.  So the Japanese FX reserves shot upwards from 1999-2006 as the hedge funds turned the Japanese carry trade into hostile buy-outs which dumped all that debt onto corporations across the entire planet, an epic amount that is directly responsible for the dual banking/manufacturing collapse we are seeing today.

 

The BIS claims, like everyone at the top, that we have a DOLLAR SHORTAGE.  How can that be?  There are already far too many dollars being held in a host of FX reserves across the entire planet!  Poor nations even hold more than the US in foreign reserves!  Dollar debts are the majority of debt holdings of nearly every nation on earth.  They are ALL buying US debts, buying and holding US Treasuries. The last thing the floating currency regime needs is more dollars.  This should be obvious even to children.

 

With Fed’s Help, AIG Unloads $16 Billion in Credit Default Swaps – washingtonpost.com

American International Group retired $16 billion in credit default swaps, the contracts that almost caused the company’s collapse, after buying the underlying securities with help from the Federal Reserve.
The fund created by the Fed and AIG to protect the insurer’s customers from losses has now purchased collateralized debt obligations with a face value of about $62.1 billion, the firm said in a statement.   The purchases bring AIG closer to winding down the financial products unit that triggered the worst of AIG’s losses. The business guaranteed more than $70 billion in securities created by pools of different kinds of debt, including subprime mortgages, that plunged in value. The federal government committed $150 billion to bail out AIG and prevent losses at investment banks that bought protection on fixed-income securities from the insurer.

The fund, called Maiden Lane III, paid about $6.7 billion to the investors for the securities in the latest purchases. The counterparties were also able to keep more than $9 billion that AIG had posted in collateral, reimbursing them at face value for the assets. AIG “continues to analyze” ways to retire another $12.3 billion in contracts it sold, the company said.

AIG retired their stupid deals via transferring it to the US public.  We, not they, get to eat all the losses.  Isn’t that just charming?  And did it fix the problem created by AIG and the other banking, insurance and market gnomes?  

 

Nope.  It fixes absolutely nothing at all.  If this sort of idiotic stuff was at least outlawed, I would accept the nasty necessity of eating this organization’s losses but only after all the top brass there are arrested and put in prison.  Madoff, for example, is not in jail.  He is relaxing in his NYC penthouse while the FBI and SEC pound on his door, demanding he figure out where all that loot went. The pace of arrests here is at a snail’s pace!  The Maiden Lane bail outs are actually deflowering the female.  The Maiden is now a whore.  The ‘counter parties’ in this stupid CDO headbanger’s bash get to keep their loot, we are paying it for AIG.  

 

And there is another $12+ billion to go!  The numbers are huge.  We are talking well over $150 billion here.  They knew, from day one, this would be over $200 billion but didn’t dare bring that into the public eye, all at once.  Thus, the dribbles and drabbles of amounts due.  And why are we paying this?

 

Ah!  Because Japan and China hold a lot of this counter party paper!  And there is the clue we need: this is all about the damn FX games, global trade and the trap the US fell into when we ceased negotiating drops in the dollar’s value vis a vis Europe and Asia.

 

The Market Ticker

 

Its time to put a stake through this vampire’s heart and pronounce it dead, then go find the vampire that bit what was a human and turned it. Let’s first talk about what “Quantitative Easing” IS.

That phrase applies to a central bank (in this case our Fed) lowering interest rates to zero.  You can’t lower rates below zero, so what comes next is to “quantitatively” ease money – that is, “in quantity” print up reserves and buy “assets”, thereby throwing yet more money into the economy.

In theory, anyway.

See, the economic theory is that when you lower interest rates people want to borrow more money, because it’s cheaper to do so.  Therefore, when you want the economy to expand (faster) you lower interest rates, which makes it more likely that people will borrow.

When people borrow they either spend or invest those funds, and both produce more GDP.  If I buy a new flatscreen TV on credit that counts in the GDP of the economy, as does the farmer who borrows to buy seed and grows a crop of corn.

The problem is that the flatscreen TV purchase isn’t really an increase in GDP; its a TIME SHIFT….

In short continuing demand becomes irrelevant because debt service chokes off available free cash flow.

Quantitative Easing” into such an environment, which we are now in, is a complete and utter waste of time because it in fact requires that additional debt be taken on in the economy in order to do anything.

That is, buying assets from banks and pumping reserves back into them so they can loan them out only boosts aggregate demand if there are in fact qualified borrowers who wish to take out a loan to buy something. 

Throughout this mess, debts has always been counted as wealth.  This includes the business of the Treasuries.  This is not wealth.  It is IOUs owed by you, others and I.  The US public, the ones bailing out AIG and all the other clowns.  The Quantitative Easing’ is ‘MORE IOUs FOR THE USA’.  That is it!  That is all of it!  The US government is running up huge debts against all of us so some of us can get super-cheap loans.  Instead of simply seizing and handing over empty houses, the government is subsidizing house buying. 

 

While not making a profit.  Taking losses! And the worst losses are still in the trade arena.  Only an epic collapse in US consumer markets can slow down our trade deficits.

 

China: China Allows Yuan Trade With Asean, Hong Kong And Macao 

China will allow two provinces sharing land borders with Asean member countries to trade in yuan currency to boost its exports which have been hit by the global financial crisis.

The move is part of a pilot project to allow the yuan to be used for trade with its immediate neighbours including Hong Kong and Macao, both special administrative regions belonging to the mainland, state media reported Thursday.

Yuan trade will be permitted between southwestern Yunnan province and the southern Guangxi Zhuang autonomous region and Asean, the China Daily said citing a State Council statement….

The mainland’s trade with Hong Kong, Macao and ASEAN nations has been rising rapidly to reach US$402.7 billion last year, accounting for a fifth of the mainland’s total trade.

As I predicted long ago, China would eventually move to make the yuan the world’s trade currency.  Since both Europe and Japan, the other parts of G7, refused to take up this role, China will.  And I am also predicting that China might even reestablish the gold standard.  Watch out, when that happens.  All governments on earth will confiscate their citizen’s gold hoards.  Trust me on this.  

 

And these changes happen very suddenly with virtually no warning.  Sometimes, only two or three people decide to yank the rug out from under all the traders and hoarders.  They do this all the time!  So plan for it to happen.  Will it be next year?

 

I don’t know.  If China gets Saudi Arabia or other oil pumping nations to demand payment in gold, watch out!  That will be the shot heard around the world.

 

FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net

CLICK HERE TO DONATE TO THIS WEBSITE

54 Comments

Filed under .money matters, Free Trade

54 responses to “WHY FX CURRENCY SPREADS WIDER THAN THE SEVEN SEAS

  1. DrKrbyLuv

    Great article – it’s interesting to get your international perspective.
    .
    One thing that I think may prohibit china from talking up gold is that the IMF holds over 50% of the worlds reserves (I’ve read as much as 75% but am unable to confirm).
    .
    I think this alone will make it foolish for any nation to go back to a gold standard – the bigger reason being that no one else has much gold.
    .
    The IMF more than any nation, has the power to issue a gold backed currency.

  2. PLovering

    BIS: Suckers The World
    .
    The Bank for International Settlements designed the present borderless flow of monies between countries when it pushed for the de- regulation of monetary laws of the major North American, European, and Asian countries. By tearing down national financial borders, they created the ability for $1.2 trillion daily to flow around the world (uncontrolled stateless money) looking for the highest interest or fastest currency play. In the process of solving the problem, the BIS will then extend its tentacles down to the local level (which are not controlled or supervised by this supranational organization) for a complete takeover of the world’s banking system through the Basle Core Principles– without even one bullet being fired—a fait accompli. By the time the average citizen has figured this out–much less those who are elected to Congress–it will be too late.
    .
    http://www.womensgroup.org/2000bis_20010217.html

  3. sharkbabe

    It’s amazing to live in such a maelstrom of suicidal greed and insanity.

    I guess it’s ever thus.

    Why wouldn’t Israel go Nazi?

    Why wouldn’t we think it’s just a matter of more troops and more bombs, then Afghanistan will be our bitch like everyone is and like God intended?

  4. emsnews

    Quite true, Plovering.
    .
    The IMF has different countries ‘swapping’ with the IMF but the gold isn’t held directly with the IMF, I think. But then, many things are so darn murky, aren’t they?

  5. OC

    Elaine,

    Perhaps the question is whether IMF actually has real gold to sell??

    Might be double counting or an illusion like Madoff for all we know…

    There are lots of speculation that Benny’s Quantitative Easing is going to fail in a few months time..question is what’s next once that happens?? Regional reserve currencies?? Euros, Yen or Yuan?? Will there still be a place for USD?

  6. nah

    economic PAJAMA JAMMY JAM! who wants to go to an ingenious replication of the greatest imperial whit.
    .
    http://video.google.com/videoplay?docid=-53565441845289277&q=nuclear+fision&total=185&start=10&num=10&so=0&type=search&plindex=0
    .
    vote your paycheck

  7. PLovering

    Elaine, the IMF sold part of its gold holdings earlier this year.
    .
    The $2 Trillions that Paulson won’t account for almost certainly ending up in banks that were shorting/suppressing the price of gold.
    .
    Come to Jesus Day for the December Gold Contract is December 31st.

  8. PLovering

    Bitter taste of the Shadow Banking System:
    .
    “The FED has been an effective tool of the Illuminati and the Rothschilds, creating crisis such as the Great Depression (which J.P. Morgan, Jr was very involved in creating). Apparently (according to Congressman Louis McFadden), the Depression helped consolidate financial power over the U.S., putting it in the hands of the Rothschild banking alliance between J.P. Morgan’s First National Bank group and Schiff’s Kuhn, Loeb-run National City Bank.” -77:195

    “…Concerning the four-part World Bank/IMF plan…about a year ago, I received a good thousand pages of documents from inside the World Bank and the IMF, the International Monetary Fund, based out of Washington. These are the two organizations which work in coordination with the WTO, World Trade Organization, and they are in control of the world movement of capital. They are, in effect, the central bank and the, kind of a Treasury Dept. for the planet. And, of course, they work very closely with banks out of New York… And it has for each nation an economic program…and they have specific demands on each country. … And one nation after another is required to sell-off their water systems, electric systems to foreign operators. It requires the sale of the banks to foreign operators, allowing, changing rules to allow the banks to remove the capital from nations.

    “…[The IMF 4-part plan] admits though that they want to destabilize countries so they can’t pay back the debt.

    “…what they say is well if there’s a little instability, which is masked by what they call resolve, meaning troops in the street. Then they’ll be no visible dissent to our program to what they would call rationalize the economy, which is to turn them over. But like in the case of Argentina, the water systems were turned over to Enron Corporation and Vivendi Corporation of France. And Enron took the Buenos Aires water system and the assets disappeared… Then Enron implodes and the United States taxpayer is now on the hook for the cost in Argentina. Did you know that our government treasury is now going to have to pay for the costs of repairing the Argentine system that Enron wrecked. ….you know they took off with millions, if not billions of dollars…”
    .
    http://watch.pair.com/new-business.html

  9. emsnews

    A lot of the G7 central bankers sold gold this last 8 years.

  10. nah

    gold needs to be cheeper or the GMOS will be everywhere. Contact your representative and demand more CHEEP GOLD to supress the GMOz
    .
    http://www.dailymotion.com/video/x7gqts_immortal-tyrants-graspop-2008_music
    .
    vote your paycheck

  11. Karmaisking

    To whom?

  12. DrKrbyLuv

    PLovering – thanks for your link and usual fine editorial.
    .
    I think we may safely say that the “solution” to our international dilemma has been carefully prepared by the NWO banking bastards and that they will not unveil the plan until we are looking for a life preserver.
    .
    Then, it will be “hurry-up” grab it, martial law and worse will be waiting if you don’t tote our chains. They are over-reaching!

  13. ”All governments on earth will confiscate their citizen’s gold hoards. Trust me on this. ”

    Does that include jewelry?, hmmm, some grabing peoples wedding rings etc. might prove unworkable.

  14. OC

    Elaine,

    The Chinese love these so called 5 year plan; perhaps their plan is to be the next reserve currency within 5 years and ASEAN is the testing ground.

    Does this mean USD has 5 more years as reserve currency??

  15. PLovering

    DrKrbyLuv, the NWO has reveal future plans:
    .
    “The FED has been an effective tool of the Illuminati and the Rothschilds, creating crisis such as the Great Depression (which J.P. Morgan, Jr was very involved in creating). Apparently (according to Congressman Louis McFadden), the Depression helped consolidate financial power over the U.S., putting it in the hands of the Rothschild banking alliance between J.P. Morgan’s First National Bank group and Schiff’s Kuhn, Loeb-run National City Bank.” -77:195

    “…Concerning the four-part World Bank/IMF plan…about a year ago, I received a good thousand pages of documents from inside the World Bank and the IMF, the International Monetary Fund, based out of Washington. These are the two organizations which work in coordination with the WTO, World Trade Organization, and they are in control of the world movement of capital. They are, in effect, the central bank and the, kind of a Treasury Dept. for the planet. And, of course, they work very closely with banks out of New York… And it has for each nation an economic program…and they have specific demands on each country. … And one nation after another is required to sell-off their water systems, electric systems to foreign operators. It requires the sale of the banks to foreign operators, allowing, changing rules to allow the banks to remove the capital from nations.

    “…[The IMF 4-part plan] admits though that they want to destabilize countries so they can’t pay back the debt.

    “…what they say is well if there’s a little instability, which is masked by what they call resolve, meaning troops in the street. Then they’ll be no visible dissent to our program to what they would call rationalize the economy, which is to turn them over. But like in the case of Argentina, the water systems were turned over to Enron Corporation and Vivendi Corporation of France. And Enron took the Buenos Aires water system and the assets disappeared… Then Enron implodes and the United States taxpayer is now on the hook for the cost in Argentina. Did you know that our government treasury is now going to have to pay for the costs of repairing the Argentine system that Enron wrecked. ….you know they took off with millions, if not billions of dollars…”
    .
    http://watch.pair.com/new-business.html

  16. PLovering

    Elaine, lizards confiscated my last posting, again.

  17. ralph

    Gold is going to soar. Buy all you can. If you can find it. The FED wants Gold to explode!!! Their balance sheet has no balance. Their liabilities are ENORMOUS and their assets are weak. They list Gold on their balance sheet @ $42.22 per troy oz. If they revalue that Gold to $5,000 per oz. and bid it in the mkt. They will restore some confidence to the battered FED. China CANNOT go on a Gold standard. They dont have any Gold. PBC has 600 tonnes of Gold. USA has 8,200 tonnes.

  18. Zorro

    Madoff connection to Pirate Islands.
    This will be very interesting to watch as the
    investigation pans out. I wonder where the
    trail ends up lol.

    http://www.guardian.co.uk/business/2008/dec/28/bernard-madoff-fraud-investigation-offshore

  19. Zorro

    China is the biggest producer of Gold now.

    http://www.chinadaily.com.cn/bizchina/2008-12/24/content_7336981.htm

    “If you have to choose between trusting the natural stability of gold, and the honesty and intelligence of members of the government, with due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for Gold,” – George Bernard Shaw, 1928.

  20. Zorro

    Cayman Links discovered in Made-Off Scandal

    http://tinyurl.com/79utmv

  21. Like the link zorro. Contemplating the CIMA (Caymen Islands Monetary Authority) gave me a chuckle. I picture a couple of guys in a tin shack, a 1980’s ibm computer, and most importantly a safe for the cash.
    The Caymen’s are a strange place, incredibly flat, lot’s of tourism of course, but filled with branch offices of most of the major banks (all the major canadian ones). I originally thought it was for drug money, now it seems the banks launder hedge fund money. It’s probably all the same funny money anyway!

  22. emsnews

    It is the same funny money, Scarletfire. I found the missing posts eaten by the spam filter and restored them. Sorry about the stupid thing.
    .
    About China and gold: if they become the reserve currency, they will be easily able to buy gold from the US.
    .
    About jewelry: it isn’t money. The value of jewels is dropping, not rising. It can, like sex or food, be BARTERED. Many things can be bartered. But it doesn’t make it ‘money’. After WWII, cigarettes, sex, chocolates and silk or nylon stockings had tremendous barter value. Do not mix this up with ‘money’.

  23. Tell

    “Hypo Real Estate and insider trading scandal about to blow in Berlin tomorrw”…

    “The ordure is due to enter the air conditioning in Berlin , Monday am. Der Spiegel have the goods on an investigation into insider trading in multiple rescue, German property lender Hypo Real Estate. (211 Mn. shares in issue closed at Euro 2.86)”…

    http://tinyurl.com/8gux9y

  24. ralph

    “We must use terror, assassination, intimidation, land confiscation, and the cutting of all social services to rid Palestine of its Arab population.” David Ben Gurion, 1948. These Zionists are the enemy of mankind. They are DECIMATING the Palestinians in slow,surgical fashion, and zionist Amerika says NOTHING, and does NOTHING to stop this butchering. Imagine Chinese troops invading California, saying “we own this land, the ancient Chinese texts we read, say this is our land, given to us by GOD.” Than they issue this statement ““We must use terror, assassination, intimidation, land confiscation, and the cutting of all social services to rid California of its American population.” Would we not lob rockets into their camps? Would we not stand up and fight this atrocity? How can anyone support Zionist Israel?

  25. Yeah – how and who. More names please.
    :
    Names, indictments, law, maybe liberty. Let the chips fall.
    :
    Otherwise, we are nothing but a killer species on our way out and/or our way down.
    :
    Israel can shove it up its ass.

  26. How bout this for a twist on the game of bridge.
    :
    (add in 4 jokers with their own locally-defined impact, then on each deal, leave out 4 “random” cards). This might add some fun for a game of contract bridge.
    :
    It might even work in duplicate tournaments.
    :
    Just another free idea although if I checked I suspect someone has already come up with it.
    :
    Why are we all focussing on the “bad” ideas…
    :
    This one was for you kenogami bu-bami who-shoe!

  27. and for good measure here’s another…
    :
    Lets just rein in Isreal and Madoff and all their ilk. Enough is enough. Who is in charge here?
    :
    Peace

  28. CK

    It will be a fait accompli and after it is over the usual people will wring their hands and sputter loudly. A little bit of ethnic cleansing; another Rwanda only with fewer made for TV movies.

  29. doesn’t have to be that way CK and I think you know it

  30. and lastly for this day, I say all the dual Israeli-American “citizens” in positions with the United States of America government need to say the god-damn pledge of allegiance out loud and publically for all to see.
    :
    Otherwise, dump their asses. They have split loyalities and some of them have already committed TREASON.

  31. Grok1

    Elaine, a fairly decent read (with no doubt some contention), but more importantly some graphs you might find useful,can be found at:
    *
    http://www.monthlyreview.org/081201foster-magdoff.php#fn18b
    *
    Hope it is of some help.

  32. CK

    @BK
    http://www.jewishexponent.com/article/11295/
    There is no other way it can be Ken. One cannot become a member of the congress of the USA without supplicating to AIPAC. Every Repbulcian and Democratic party presidential candidate ( except 1 ) made a hajj to AIPAC to be vetted. Sarah Palin’s first speech and interview after she was nominated was to AIPAC.
    And in other news, as soon as the shelling of Gaza started the artricles about Darfur started appearing.

  33. Tell

    “China ready to exand Yuan trade area to ASEAN countries , Myanmar, Laos and Vietnam”…

    http://tinyurl.com/a7mkzj

    Buffalo Ken

    “Herding Humans For Profit”…

    http://tinyurl.com/a72zj8

  34. Tsk Tsk , jewelry = gold jewelry = gold

  35. GK

    The true value of fiat currency is the ability of global banks to create it via loans, then call in the loans to seize property and assets.

    The true value of the FX markets is partially the never-ending fun of a global casino, but mainly it is the ability to do sequential devaluations, kind of like milking a cow, around the world.

    Look at the history of European and African hyperinflation, Asian and South American currency collapses, and now the Russian currency devaluation.

    These are surgical strikes designed to drain the life savings of a whole population in one fell swoop.

    If gold is re-monetized (converted into money by government decree) that act would instantly devalue all global currencies by 90 to 99%. Simply calculate the total value of all global fiat currencies and then divided by the well known total volume of gold in the world.

    It would also make personal ownership of gold most likely subject to seizure.
    But if you believe that gold will finally put and end to the reign of government black operations you are SERIOUSLY DELUSIONAL.

    Gold has primarily been used over history for global trading and making war.

    Here is realistic thinking on this subject.
    ================================================
    http://www.scoop.co.nz/stories/HL0408/S00277.htm

    Keep the people frightened
    Of things they cannot know
    Is the secret of the Tomb
    If they knew what you and I know
    They would know it is just men
    Who rob them, cheat them, kill them
    Then start it all again
    – Orville X

    *********

    Introduction

    The United States government has operated a secret budgeting and spending program for decades outside the framework of the American Constitution. The institutional and political roots of this system of clandestine finance reach back to at least a century. The turn of the 19th and 20th centuries saw the consolidation of American industry and banking under the control of a restrictive cartel that for all practical purposes assumed control of the economy. The great magnates of American industry and finance in the late nineteenth century were superb practitioners of covert operations. Witness to this fact are the institutions set up during the twentieth century through which their descendants maintain control.

  36. Pingback: WHY FX CURRENCY SPREADS WIDER THAN THE SEVEN SEAS | Creative-i

  37. David

    Elaine:

    As you noted in an earlier post, it is very difficult to see an overall picture of this thing from a global perspective, especially since there are half a dozen intelligence agencies murking up any sort of view with propaganda and psychological manipulation and disinformation.

    Add to this several corporate media agendas and and many local and national political agendas, and the view is very obscured for someone like myself.

    Still, as I read, and reread PLovering’s comments, I do get a very vague outline of what might be going on, and the temptation is great to speculate a little about all of this, and where it is going.

    I am a total novice, but I sometimes imagine that I’m learning to see through the smoke just a little. So, I’ll just throw out a few things. Anyone can correct me on anything, and I welcome it because I’m just rambling around, trying to get a better view of this.

    First, the thing about the IMF, Enron and Argentina water facilities might indicate that globalist bankers, wherever they are headquartered, are doing this to force eventual consolidation of the world economy under a single structure, and corporations are a majoy party in this planning…otherwise they would not be involved in buying up foreign public works like Enron did.

    If each nation eventually owns parts of other nations, then world commerce, even at local levels, is global, and eventually, everything else, including, military enforcement of rules, will eventually become transnational, and under the control of some sort of international world order (for now, the UN, but what the future holds is yet to be seen).

    Also, having billions dollars not attached to any national entity, floating around looking for a place to land, might indicate that these guys want continual global growth at the best, most opportune places this money might land…creates a huge economic leveling effect on the entire world, but is not too good for developed nations.

    If these guys are astute enough to plan all of this, they might have known about the huge US “house of cards” in regard to our financial dealings. And if they did, they certainly knew that the US banking-financial system would crumble as it is now doing….or am I giving them too much credit?

    Now, where is all of this going? Where will it end up after all of the dust settles?

    Are the Chinese an integral part of this plan or or they just being used in this consolidation effort? Or are they competing for the overall control of what exists after the dust settles?

    What about the Russians?

    Where are the Israeli’s in this since a lot of middle eastern trouble that is closely related to oil production revolves around them?

    Japan is probably involved in this also, It’s involved in everything else. Is it eventually going to be somewhat deindustrialized like the US has been? I think about their population problem.

    Is there any hope of nations like the US preserving their national sovereignty in a NWO?

    I wrote in a thesis many years ago that “as government becomes more distant from the people [as in global government] it becomes less responsive to local citizens…and they soon see little benefit in supporting it.” It will have to eventually be imposed by force. Rome discovered that control could not be sustained over the long run.

    Just some thoughts.

  38. The pictire made me hungry

  39. DeVaul

    GK is right.
    :
    The whole purpose of banking since it reared its ugly head is to create loans (which have no value) and hope that the debtor defaults, in which case the lender will then seize something of real value.
    :
    The mechanism that causes the default in most cases is the inability to pay back the interest, which was not created when the principal supporting the loan was created. This was deliberate. The interest must then be taken from the principal, thus making it impossible to pay back the principal in full.
    :
    It is possible to loot or rob or cheat others out of their principal so that you can pay back the principal AND interest on your loan, but this is irrelevant to the banker, who knows that someone will have to default and he will then seize the real goods. It matters not from which person, just so long as no one notices his scam.
    :
    Early medieval peasants and Arabs recognized banking with compound interest as a scam since it was new and not cloaked in “monetary science” like it is today. That is why they outlawed it.
    :
    Bankers continued to push the scam (often using Jews because they were not allowed to engage in any kind of normal trade) until it finally became known as monetary science and the basis of all national economies, which they controlled through centralized banking cartels.
    :
    For most of human existence, barter was the only form of fair and honest trade, and after Peak Oil brings the printing presses to a grinding halt, I suspect it will return as the basis of all commerce for the rest of human existence.

  40. GK

    David, here is a good place to start. Read this story and note Elaine’s earlier stories about being almost killed by lightening and then seeing a bird (she calls Pegasus). Straight out of the book.

    http://educate-yourself.org/mc/mcsvaliinterviewpt7.shtml

    “3. Illuminati trademarks: these are the most cautionary people on earth. They try to leave absolutely NO tracks. Most of the symbology can be seen on T.V. or movies, and include: the concept of a military government ruling. These people are very, very militaristic.

    The Phoenix: this is one of their highest military and spiritual symbols. If you see a German eagle, too, this is a huge sign. Certain companies will use a phoenix as their logo, especially red on black, or the reverse, this is a huge sign, since the Illuminati use many resuscitation rituals in their training, where the person is brought into a death, or near death state, then “resuscitated” and told that Baal, or some other entity, “gave them life” and they owe their new life to him and the group. Thus, the phoenix is a huge trigger and symbol. “

  41. Joseppi

    A common belief amongst those interrupting current events, statistical graphs and the entrails of derivative beasts is that the current financial system is imploding. This unfolding process will take abrupt and devious plot twists that we all can only speculate about the multi-layered conspiracies of the confederacy of dunces.

    Therefore, in our trying to assemble some semblance of cognitive order out of this maze of mutating mayhem, I do think that by using history as a template we can postulate that having some gold and silver in physical form will hopefully modulate the expected future indecencies or at least the precious metals will be psychologically reassuring.

    I would like to take this moment to also thank our super woman, Elaine, blogster extraordinaire and master puzzle solver, who deserves much praise for her fine work – OK, everyone let’s give her a big round of applause. Thanks again Elaine.

  42. emsnews

    The Phoenix is a very ancient Chinese symbol which shows how things that die come to life again in a new form, over and over again. I often say, History is a Bitch who writes down follies and then photocopies it over and over since humans seem to seldom learn very much.
    .
    The eagle as a symbol goes back to the very, very first city/states. It was a common symbol for power from heaven since the dawn of civilization. There are many such symbols which are all parts of our culture and we use them nearly unconsciously. Some tales told around fires 100,000 years ago continue to be told, often, with only the smallest variations.
    .
    Confusing culture with conspiracy is due to a shallow reading of the human collective. Language, itself, is a form of human collective hive-mind and anyone familiar with the Dream World knows that language becomes image and these are often connected with ancient stories,beliefs and systems.

  43. emsnews

    As for ‘rebirth’ symbolic actions: I can’t think of any religion that doesn’t have that as part of their systems. This is ‘Ur-magik’ and goes back to the Ice Ages. No religion seems able to exist without doing this, at least, metaphorically.

  44. Paul S

    “and lastly for this day, I say all the dual Israeli-American “citizens” in positions with the United States of America government need to say the god-damn pledge of allegiance out loud and publically for all to see.” HAHA. As if a pledge from people who are morally and ethically bankrupt would mean anything.

  45. Since what I posted was stated again, I’ll reply. 🙂
    :
    After its said publically then it is A-OK with me when Bubba deals with the hypocrites!
    :
    If they can’t say it publically, then that tells you something also.
    :
    Peace,
    Ken

  46. Oh, and “publically” means for all to see right?
    :
    It ought be done individually. Perhaps on U-Tube. Maybe even on big-screen TV. One at a time with an image of the flag in the background. We just need to make sure which country they are actually representing.
    :
    The investigation and such need to go on regardless, don’t you think?

  47. I’m glad I don’t live in Chicago. Fingers get cut off there often.

  48. Israel is half-way round the world as far as I’m concerned. I care about the home town.
    :
    Hey today is “perfect number” 28 in the 12 month in the year “08”.
    :
    Peace, Shalom, and Salam.
    Ken

  49. OC

    Elaine,

    Isn’t it ironic that neo-Jews are returning to Israel to kill real Jews in homeland that was taken from original Palestinians!!

    Talk about retribution aka the tale of Esau!! I think God has a sadistic sense of humor and payback is a bitch even if this is centuries late!!

  50. The pictire made me hungry =))

  51. Hello there! I simply want to give you a huge thumbs up for your excellent information you’ve got here on this post. I will be returning to your website for more soon.

  52. Aw, this was an exceptionally good post. Finding the time and actual effort to generate a good article… but what can I say… I put things off a lot and don’t manage to get anything done.

  53. A speedy black wolf jumped over the lazy cat

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s