What Are Derivatives? – Demystifying Interest Rate Swaps & Credit Default Swaps – Larry Summers: High-Rolling Fraudster – History’s Largest Bookmaking Operation – A Rigged Casino – Lawless “Markets” – Financial Terrorists Destroying National Economies – Scamsters’ Tag-Team Partners: Corporate Media & Ratings Agencies – Banking Crime Syndicate

The Derivatives Market: Bets, Bookies, and Fraud

Published: 05 October 2015 | Written by Jeff Nielson | Bullion Bulls Canada

No one understands derivatives. How many times have readers heard that thought expressed (please round off to the nearest thousand)? Why does no one understand derivatives? For many, the answer to that question is that they have simply been thinking too hard. For others, the answer is that they don’t think at all.

Derivatives are bets. This is not a metaphor, or analogy, or generalization. Derivatives are bets. Period. That’s all they ever were. That’s all they ever can be. This can be easily illustrated by simply examining and defining some of the more well-known derivatives, meaning those derivatives with which everyone is familiar via their labels.

Let’s start with the two largest and most important forms of this gambling (and fraud): “interest rate swaps” and “credit default swaps”. What is an interest rate swap? This is a bet between a banker (i.e. the people who control interest rates) and a chump, on which direction an interest rate will move.

Can anyone see a problem with this form of gambling/fraud? Correct. If you place bets on the direction of interest rates against the criminals who control those interest rates, you’re probably going to lose on those bets, almost all of the time. Is this what we saw in the interest rate swap “market”?

Not at first. At first, the chumps were allowed to win – on their small bets. That’s how you gets lots and lots more chumps to get suckered into the scam, and how you get the chumps to place larger and larger bets. But after the initial “success” of the chumps, it was lose, lose, lose.

Case in point, self-declared “economic genius” Larry Summers, former Treasury Secretary of the United States, and (at that time) President of Harvard. No one thinks that Larry Summers knows more about economics and finance than Larry Summers. So it should be no surprise that this “genius” decided to bet against (his friends) the bankers in financing Harvard’s debt, via interest rate swaps.

How did he do? Summers managed to lose nearly $1 billion in financing a mere $2 billion of debt. To be more precise, not only did Harvard pay the full rate of interest on their debt, but (thanks to Summers’ gambling) the university paid an additional $900+ million in “penalties” – to avoid losing even more money on Summers’ gambling.

That’s what happens when you bet on interest rates against the people who create those interest rates. It’s obvious fraud, and it has resulted in at least one jurisdiction filing criminal charges against three of the largest fraud-factories in this scam: JPMorgan Chase & Co., Deutsche Bank, and UBS. But that’s all “old news” now.

To really understand “the derivatives market” as a whole requires understanding exactly what it is: history’s largest bookmaking operation (i.e. bookies). This is all that this rigged casino has ever represented: bookies taking bets. Here, readers also need to understand how a bookie’s “market” operates.

Bookies take bets according to odds, the prevailing gambling ratio for that particular bet, or the price it costs to place that bet. But these odds change over time. How do they change? They change based on the amount of money placed on each side of the bet. When more money is placed on one side of the bet, the price to place the bet (on one side) declines, while the price to place the bet on the other side rises.

The gambling itself moves the market. The financial crime syndicate noticed how this gambling operated, and figured out how they could create their own bookmaking operation, where all the bets were rigged, and where these banksters were not only allowed to take bets (i.e. act as bookies), they would also be allowed to place bets, in this same market. All they had to do was to make up a bunch of euphemisms to hide this systemic crime.

Here, we see fraud in its most elementary form. “Legitimate” bookies never bet in their own “market”. Even in the world of quasi-illicit gambling, it is recognized that allowing this would allow bookies to rig their own gambling. But not in the world of “banking” and “derivatives”. Here, the biggest bettors in this fraudulent gambling (by many orders of magnitude) are the bookies themselves.

Goldman Sachs : $47.7 trillion

Bank of America : $53 trillion

Citigroup : $56 trillion

JPMorgan Chase : $78.1 trillion

This is totally illegal, in so many different ways. To begin with, most of these “derivatives” (i.e. bets) were illegal, until the Clinton regime obliterated most U.S. financial regulation, and simply stopped enforcing any laws that still remained on the books. This criminality was then rubber-stamped and extended by the subsequent Bush Jr. and Obama regimes.

Secondly, and as noted, there is only one “legal” limit for the amount of gambling that these bookies should be allowed to place in their own “market”: $0. But, of course, to penalize this illegality, you need to have laws, and the derivatives fraud-market is totally lawless. How lawless? Not only are the bookies allowed to bet (massively) in their own casino, these bookies/gamblers/criminals are allowed to “regulate” their own casino.

When is a crooked casino not a crooked casino? When the crooks are also the cops.

Thirdly, it is massively illegal to see “concentration” to this degree in any market. Yet in the world of “banking”, we see this crime syndicate with similar “concentrations” of its dirty money in virtually every nook and cranny of the financial world.

But we’ve still only barely begun to scratch the surface of this organized crime. This brings us to a second, and even more financially destructive form of illegal gambling: “credit default swaps”. What is a credit default swap? It is a bet placed on the odds that a particular nation (or corporation) will default on its debt.

This particular form of the bankers’ illegal gambling was outlawed for nearly 100 years (in the United States) based on anti-gambling statutes. It is now used by the banking crime syndicate to (literally) destroy the economies of entire nations.

What do we already know about bookmaking operations and “odds”? By massively piling your bets on one side of the ledger or the other, you move the market itself. How does this enable these financial terrorists to destroy the economies of nations? Simple.

What happens any/every time the banksters use their massive betting in the CDS market to “change the odds”, and thus move the market itself? The scam then moves on to the next tag-team partner: the corporate media.

The corporate media reports that the “odds” of a particular nation defaulting have suddenly soared or plunged. Does this mean anything? No, it means nothing at all, other than the bets on one side have suddenly gotten extremely lopsided. But that’s not what the corporate media says.

What these stooges report is that the “risk” of a particular nation defaulting has suddenly soared or plunged. This is not the same thing. The risk that a nation will default is based upon the economic fundamentals of that nation – and not based merely upon the gigantic bets of known criminals.

However, this media lie is then passed along to the next tag-team partner in this fraud/crime: the ratings agencies. These corrupt mouthpieces then “assess” this “news” from the corporate media. And based upon the (supposed) “change in risk” – where nothing has changed at all except the bankers’ gambling – the credit rating agencies then assign higher or lower ratings, based upon the bankers’ original fraud in the derivatives market.

This moves interest rates. When these “official” ratings agencies change their “official” ratings, nations must pay either more interest or less interest on their debts. We saw the most obvious example of the bankers’ economic terrorism directed against Greece.

Using manipulation of the credit default swap market (and the lies of their accomplices), the banking crime syndicate drove the interest rate on Greek debt as high as 30%. To put this into perspective, in the equally bankrupt United States, the equally corrupt Federal Reserve has been too cowardly to raise the U.S. interest rate from 0% to 0.25% (despite seven years of promises) – because it’s afraid this Ponzi-scheme economy would immediately implode.

What would happen to the United States if it had to pay 100 times more interest on its debts, like Greece? Ka-boom! And in less time than it takes to say “ka-boom!”

Having done a little bit to expose the overall fraud and criminality of these bets and the crime syndicate “bookies” themselves, we can now discuss these “derivatives” in a more familiar tone. What is a “gold derivative”? It’s a bet on the direction in which the price of gold will move.

What is a “silver derivative”? It’s a bet on the direction in which the price of silver will move. What is an “oil derivative” or “copper derivative” or “coal derivative”? Same thing. Yes, we can invent “gold derivatives” (or silver derivatives) which are different from this, just as we can devise/imagine different ways to bet on gold or silver.

The precise form of the bet is irrelevant. What is relevant is that merely through this crime syndicate placing its multi-trillion dollar bets in its own rigged casino, these bets influence the corrupt markets of our “real” world. Indeed, where does the word “derivative” come from? These are bets which (like all bets) are “derived” from the real world. Gamblers need something to bet on: a derivative.

Obviously, one could write many books on the bankers’ assorted crimes in this “market”, and the refusal of our corrupt governments to interfere with this blatant criminality and market-rigging. However, space is only available for one further observation.

How corrupt, illegal, and utterly irredeemable is the fraudulent casino which the banksters call “the derivatives market”? When these criminals actually manage to lose on their own gambling (despite rigging these markets themselves), they simply refuse to pay.

In the real world, any casino (legal or otherwise) which refused to pay when the “house” lost would quickly be driven out of business – one way or another. But we don’t live in the real world. Almost all of us live in the Wonderland Matrix: a magical realm where “bookies” are allowed to place bets in their own bookmaking operations, there are no laws, and nothing ever has to make sense.


#1 Dylan 2015-10-05
Not only do they not have to pay when they “lose”, they have the power to force US to pay. In fact, the whole system is based on forcing the masses to “make good” on the banksters’ (fake) debts – which in reality goes into their pockets.
The important thing, though, is that our pockets are empty, rendering us malleable. Their pockets are quite literally bottomless.

#2 Jeff Nielson 2015-10-06
Yes Dylan, these BUBBLES of crime then form the basis of their “too big to fail” extortion. Essentially, we have the criminals telling our (puppet) governments that if they don’t make their extortion payments to this crime syndicate, then they will “blow up” their CRIMES. In the case of the derivatives market, this one COLLECTION of crimes is roughly 20 times larger than the GLOBAL ECONOMY – making this a very substantial threat.

#3 Canadian Eagle 2015-10-06
Read again for those who didn’t get it the first time. If you still don’t get it – as in the first ‘MATRIX’ movie – take the blue pill.


12_17_2014 / Jeff Nielson: Currency Wars, World Wars, and False Flags in 2015?
Gold, China, Trump & The Jewish Crime Syndicate – Jeff Nielson 

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The IMF’s Split Mind – Iceland and Greece – Big Banks’ Extortion Game – Take a Machete and Put Big Banks to Death – “The People Versus the Banks” – Fiscal Decision: Bankster Blackmail or Social Safety Net? – Defy IMF Austerity, Manifest Prosperity – The IMF: Not Merely Incompetent, Not Merely Insane, but Evil

The IMF: Don’t Listen to the IMF (We’re Crazy!)

09 July 2015 Jeff Nielson (Bullion Bulls Canada)

Most readers are familiar with the colloquial definition of insanity: repeating a (failed) policy/plan, but expecting a different outcome. Then we have the International Monetary Fund: it makes a mistake, explains that mistake to the entire world (twice), but still keeps repeating that same mistake, year after year – (supposedly) expecting a different outcome.

The hopeless/incurable/corrupt insanity of the IMF can be illustrated with absolute clarity by simply looking at two nations: Iceland and Greece. Following the Crash of ’08, the International Monetary Fund (and its other partners-in-crime) issued “advice” to all of the governments of the corrupt West – advice which, in the case of Greece, has now turned into demands.

1) “Bail out” all of the Big Banks (i.e. cave in to their pay-me-or-else extortion).

2) Designate these Big Banks as being “too big to fail”, so that they can play their pay-me-or-else extortion game forever.

3) While rewarding the Big Banks for their extortion (and reckless gambling), punish your people with crippling/suicidal Austerity.

One nation – Iceland – didn’t listen to the IMF. Instead of submitting to the extortion of its Big Banks, it ignored their demands. Instead of dubbing them “too big to fail” and permanently protecting the Big Banks, it put them to death. Instead of taking care of the Big Banks (who caused the economic crash/crisis) and punishing their people, it took care of its people – and punished the criminals.

All of the other lackey-governments of Europe and North America did exactly what the IMF (and the rest of the banksters) told them to do. For the criminal Big Banks, it was rewarding them with one carrot after another. And once government treasuries (i.e. our treasuries) had been emptied by the bailouts, these lackey-governments created “bail-ins” – so that this banking crime syndicate could simply steal our private assets directly.

For Western populations, it was hitting them with the stick, again and again and again: Austerity, Austerity, and more Austerity. The banksters commit the crimes; the People do the time. The banksters lose the bets; the People pay the debts. It’s so perverse, it would make Machiavelli puke, if he were alive today.

Halfway between then and now, the IMF issued a progress report on Iceland. It concluded, unequivocally, that Iceland’s refusal to “bail out” the banking crime syndicate, its refusal to punish its own people (for the sins of the bankers) with Austerity, and its refusal to listen to the IMF “holds some key lessons” for us all – presumably including the IMF itself.

The IMF termed this, at the time, “a surprisingly strong recovery” – even though (unlike nearly every other Western government) Iceland had also managed to “preserve the social welfare system” while engineering this strong recovery. Yes. Surprise! Surprise! With the money it saved not paying bankster blackmail, it could continue to fund its social safety net. And by continuing to fund that net (nets exist for a reason), its economy made a robust and continuing recovery. A real recovery.

Halfway between then and now, Greece, which did exactly what the IMF (and Troika) told it to do, was bankrupted – for the first time. Let’s review this scenario, as it existed back in 2012.

Iceland took a machete to its Big Banks, preserved its social welfare system – and its economy thrived. The Rest of the West took a machete to their social welfare system, but preserved the Big Banks (just like Japan did) – and they all turned into (Japan-like) zombie economies. Gee, who could have predicted that?

Perhaps some readers will be surprised by this extreme dichotomy. But did the IMF learn its lesson after Iceland’s economy was a raging success for doing the exact opposite of everything the IMF advised – while Greece, which heeded the IMF’s “wisdom”, was a bankrupted trainwreck?

Not exactly. What was its advice/demands for the (new) lackey-government in Greece, in 2012? More and more Austerity, while (of course) continuing to make its blackmail payments to the financial crime syndicate. More Austerity for Greece than any other European nation, despite the horrific economic carnage which had already been created from following this scorched-earth sadism.

Let’s flash ahead roughly three more years, to the spring of 2015. The IMF issued another “progress report” on Iceland, which had continued to do the exact opposite of everything which the IMF continued to recommend for other Western lackey-governments. What were the IMF’s findings?

Macroeconomic conditions at their best since the crisis

Recovery achieved without compromising welfare model

Things in Iceland were good in 2012 (according to the IMF), but they’re better in 2015 (according to the IMF). Meanwhile, Greece, whose lackey-government continued to follow the dictates of the IMF (more Austerity for the people, more blackmail payments to the bankers) was bankrupt – for the second time in three years.

Through following the advice of the IMF and its Troika partners – the self-proclaimed sages of economic/financial management – Greece was bankrupted once after three years, and then bankrupted a second time, three years later. It is very likely economic failure and incompetence of unparalleled magnitude.

Beside Greece, we have Iceland. Its economy is once again strong; its people are once again prosperous – through six years of doing exactly the opposite of what the IMF was demanding from successive lackey-regimes in Greece. Did the IMF finally learn its own lesson, after six years of destroying Greece’s economy and six years of reporting on Iceland’s success (achieved through ignoring the IMF)?

No. This utterly shameless, absolutely irredeemable institution (along with the rest of the Troika) blamed Greece’s government for the second bankruptcy of that economy. The two lackey-governments that were in power while the IMF (and the Troika) were bankrupting Greece’s economy (twice), and did everything the Troika told them to do, are now gone. Greece’s new government, Syriza, was only elected after the Troika had bankrupted Greece for the second time.

As a proposition of elementary logic, it’s possible to blame the Troika itself for destroying Greece’s economy, twice, over a span of six years. It’s also possible to blame one or both of the lackey-governments formerly in power. The one entity which cannot, in any possible way, be to blame for the total destruction of Greece’s economy (or either bankruptcy) is Greece’s new government.

Syriza assumed power and reported that Greece was bankrupt, again. What has transpired since that time is the most extreme/most insane manifestation of shoot the messenger ever witnessed.

What has been the negotiating position of Alexis Tsipras and Syriza? He wants a reduction in Greece’s debt, and no more Austerity. More generally, he wants to follow the example of Iceland: at least reduce Greece’s blackmail payments to the bankers, and begin to repair Greece’s own social safety net.

Syriza wants to copy success (Iceland), rather than copy failure (the Troika). For this, the equally shameless, equally irredeemable corporate media has labeled Tsipras (and Syriza) “radical”, day after day, month after month.

Yes, what could be more “radical” than wanting to do what works, when you can do even more of what has already failed for the last six years? The only thing more “radical” than that thinking (in the eyes of the Troika) is that when a banker commits a crime, he/she should go to prison. The criminals must be protected – no matter how many of the People must be sacrificed to do so.

If the IMF were merely incompetent (but honest), it would have long ago told Greece’s government to stop doing what it had advised, and to never listen to one word of IMF “advice” ever again. If the IMF were merely insane, presumably it would not have been able to explain, in detail (twice), how Iceland’s economy had succeeded over that same six years – by ignoring the IMF.

Readers can make their own judgments about the IMF’s level of (in)competence, and its degree of (in)sanity. What is unequivocal is that the IMF is evil.

It has six years of (unequivocal) empirical evidence, showing how the morally bankrupt policies of the Troika have economically bankrupted Greece twice, three years apart. It is the economic fascism of Milton Friedman, taken to its most malicious extreme. It also has six years of its own analysis, showing how Iceland has risen from the ashes by doing the exact opposite of what it has ruthlessly imposed on Greece.

When the IMF demands more debt for Greece, it knows that this will cause further harm to this bankrupt economy. Presumably, IMF bankers can operate a calculator. When it demands more Austerity for Greece, it knows this will cause much, much more harm to Greece’s economy and the people of Greece. No hit man could be any more cold-blooded than that.


Greece Resists IMF Swindle
How the IMF Really Works 
How Iceland Defeated the (Jewish-Masonic) Anglo-American Bankster Mafia

Max Keiser and John Perkins, author of Confessions of an Economic Hitman, about “peak bankster” 

Apology of an Economic Hitman – John Perkins Story

ΘΩΜΑΣ ΚΑΤΣΑΡΟΣ ΜΕ Λόρδο Jacob Rothschild

Men At Work – Dr. Heckyll & Mr. Jive
The Police – Demolition Man 
Cake – Nugget
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Financial Con Artist Jim Rickards “Sounds the Alarm” – Scheduled Bubble-and-Crash Cycles Manufactured by Organized Crime (the Western Banking Cartel) – Scripted Financial Theater of Corruption – For Administrative Convenience, U.S. Puppet-Presidents Now Serve Two Terms – Villain Roles, White Knight Roles – Pre-Crash “Warnings” Are Machiavellian Exercises in Pure Cynicism – The One Bank’s Bubble-Blowing Cheerleaders and Contrarian Lackeys – Controlling the Message via Revisionism (Selective Memory) – Shameless Market-Pumpers and Economic Rapists – Don’t Be a Lemming: Look for Logical Slip-Ups

Source: Bullion Bulls Canada

The Pre-Crash Warnings Begin

by Jeff Nielson – June 1, 2015

As regular readers are well aware, the bubble-and-crash cycles manufactured by the Western banking cartel and its central banks are nothing but organized crime. What makes this scripted financial theater so absurd and infuriating is that there are very rigid and obvious patterns as these systemic crimes are perpetrated.

The most obvious and rigid pattern to this organized crime is timing. The bubble-and-crash cycles are almost precisely eight years long, reflecting the U.S. presidential cycle. For administrative convenience, each U.S. puppet-president now serves two terms apiece. The corporate media (another tentacle of the One Bank) blames the outgoing regime as the villain/scapegoat for the crash, and hails the incoming regime as the white knight who will fix everything.

For this banking crime syndicate, which has literally bought and paid for both parties, nothing changes except the color of their servants’ stripes. Neat and tidy. The perfect crime. The scapegoat is conveniently banished – but not punished – for precisely eight years. At that point in time, all is forgotten/forgiven by the braindead electorate, and then the former villain is rebranded as the new white knight.

Meet the new boss;

Same as the old boss.

However, that is only one of the repetitive aspects of this surreal theater of corruption. Another aspect of this pattern which is always present, because of its extreme importance, is the pre-crash warnings. With the banksters (and their most highly-placed servants in the corporate media) fully aware of the scheduled dates for these crashes, such “warnings” are Machiavellian exercises in pure cynicism.

Goldman Sachs sent a note to clients Monday that said the U.S. stock market is the most overvalued in 40 years, excluding the tech bubble.

Then there was this more impromptu theater between Glenn Beck and Jim Rickards, a few weeks ago:

[Beck] … an event unlike anything at least this generation, and I believe anything like the world, has ever seen before.

A catastrophic failure and reset, in a way that we don’t know what we’re doing for a while. We all kind of have to – kind of figure it out on our own. And most likely it, at least for a while, ends in martial law. And ends in some pretty frightening times. The Great Depression would look like a picnic, quite honestly. And James is here to comment on that. Do you agree with that?

[Rickards] I agree, Glenn. I think we can see it coming. One of the things is – let me talk about what it’s not going to be like. I don’t think we’re all gonna be living in caves, canned goods. It’s not the end of the world.

[Beck] Right. We make it through this.

[Rickards] We make it through, but it’s a different world when we come out the other side [i.e. more of “the New Normal”]. You know, Mussolini’s mantra was, everything in the state, nothing outside the state. That was their succinct summary of what fascism was. Well, you get to a world where the government controls all the money. Everything, first of all, is all digital. [emphasis mine]

Note how we have the lackeys here not only “predicting” an economic collapse unlike “anything… the world has ever seen before”. We also have them predicting social engineering and political oppression, unlike anything ever seen before in our (supposedly) democratic societies.

Martial law. Fascism. A ban on cash. But also note how these dutiful lackeys make their predictions about these “frightening times”:

We don’t know what we’re doing for a while.

Not only do they predict that this imminent martial law, fascism, and related shredding of what’s left of our democracies/economies/societies will be an “accident”, but it will be almost an involuntary accident. It’s a pre “mea culpa”: don’t blame the U.S. government for what it is about to do, because it’s about to become temporarily insane “for a while” (sound familiar?). In typical perverse Machiavellian fashion, we’re told by these lackeys that it won’t be our (corrupt) governments who are imposing their fascism upon us, but rather our governments are going to trip and fall into this fascism, by accident (perhaps via another “terrorist attack”?).

One glance at the real world immediately exposes this revisionism for the cynical lie that it is. Since the day after 9/11, the U.S. government (both parties) has been furiously constructing hundreds of “detention centers” all over the country. It has eviscerated the “Constitutional rights” of all Americans. It has instituted (illegal) saturation “Big Brother” surveillance. And, again in violation of its own laws, it has begun deploying military units on U.S. soil.

Does this sound like a regime about to “accidentally” trip and fall into fascism and martial law? It’s already there. Note the inadvertent logical disconnect, produced by the exchange between Rickards and Beck. We have Rickards saying that “we can see it coming”, while we have Beck lamenting that (supposedly) “we don’t know what we’re doing for a while”. And the two of them emphatically agree with each other.

How can the U.S. government descend into a level of shock to the point where it literally doesn’t “know what it is doing” (i.e. temporary insanity) “for a while”, with respect to an obviously foreseeable crisis? It can’t. The “shock” will be feigned, the pretext for overtly embracing the fascism which these regimes already implicitly embrace.

Instead of acknowledging that they are pseudo-whistleblowers, simply reporting a premeditated crime (their Master’s crime), these frauds depict themselves as market/economic savants, the few visionaries who can “see” what remains invisible to the rest of the herd. These phony “warnings” serve several purposes, but to properly understand this propaganda shell game, it is necessary to consider how the corporate media operates, as a whole.

One of the most important traits of this 21st century propaganda machine is selective memory, otherwise known as revisionism. This is how that trait relates to these scripted warnings: Six to twelve months before the full detonation of the crash event, a small number of the One Bank’s lackeys in the big banks and corporate media (and the charlatan discipline of “economics”) are instructed to cease being cheerleaders, as the bubble-blowing of various asset classes reaches its insane peak.

Instead, these lackeys are given the role of contrarians. They “sound the alarm”, warning people that they see cracks in the Goldilocks economy (or in this case, never-ending recovery) which the Fed-heads, and government, and media all claim (on a daily basis) has been achieved in the U.S. Meanwhile, 95% (99%?) of the lackeys in the big banks, government, and mainstream media continue their inane cheerleading. “Woo-hoo! Pedal to the metal. The good times are never going to end!”

Note also that these (pseudo) contrarians are carefully distributed amongst key tentacles of the One Bank. There will be one or two contrarians in the Federal Reserve. One or two contrarians in each of the most important big banks. One or two contrarians amongst the charlatan economists, and one or two contrarians in the corporate media. There are rarely any contrarians placed in the (outgoing) government, since it has already been cast as the scapegoat for the crash.

This is where we get to the revisionism, and the main reason why we see it in such a relentless, endemic form, in virtually every facet of our societies: “controlling the message”. First of all, what is meant by this term/concept?

The meaning and purpose of controlling the message is very simple. With any authoritarian regime which uses propaganda as one of its primary weapons (i.e. all authoritarian regimes), it is necessary that its media propaganda machine, and key institutions attached to the regime, retain credibility, at least with the majority of the oppressed masses. How do serial liars retain credibility? Through the process of controlling the message, via revisionism (i.e. selective memory).

It is here where we see the primary reason/purpose for pre-crash warnings, as part of the process of controlling the message. In real time (meaning the weeks/months immediately prior to the scheduled crash), we will see the vast majority of the big bank lackeys, government lackeys, central bank lackeys, and media lackeys continuing to play their parts as shameless market-pumpers.

This occurs in the context of a general population of lemmings that has been conditioned to always trust the herd. This is why the One Bank doesn’t worry in the slightest when its sends out some of its own servants to “warn” the lemmings about the imminent, scheduled crash of our markets and economies. It already knows, via its own conditioning, that nearly all of the lemmings will ignore those warnings – and instead will trust the herd.

The scheduled crash then takes place, and as part of this surreal theater, it is universally characterized by the corporate media as “a surprise”, to (supposedly) exonerate all of the market-pumpers. Then, immediately after the crash, while the vast majority of the population are still in a literal state of psychological shock, we get the revisionism and selective memory.

“The Federal Reserve was right!” proclaims the entire flock of corporate media parrots, in unison. “Goldman Sachs was right!” “JPMorgan was right!” Forgotten, entirely, are all the thoughts/words of the vast majority of lackeys in these institutions, cheerleading until the very eve of the crash. Instead, the corporate media is instructed to carefully pluck out the scripted “warnings” of the contrarians, and edit out permanently that the vast majority of these lackeys remained shameless market-pumpers, right to the bitter end.

This same process also takes place on an individual basis. “So-and-so was right! [insert name of lackey-economist]” chimes the corporate media. These designated contrarians then get to bask in their new (financially lucrative) role as “economic savants”. They were right when the herd was wrong. With populations brainwashed into believing that the herd represents ultimate wisdom, nothing could possibly impress such lemmings more.

Trust the Federal Reserve. Trust Goldman Sachs. Trust JPMorgan. Trust these economic rapists before, after, and while they are raping you. This is one of the underlying themes/purposes of this relentless revisionism. The term “con game” is short for “confidence game”, because in order for any gang of financial charlatans (i.e. thieves) to be successful in fleecing large numbers of people, they must retain the confidence of the lemmings from whom they are stealing. To do that, they must continue to control the message.

The next crash has already been laid out to readers, in commentaries going back several years. The event itself was never in doubt, merely the timing. Could these Ponzi-scheme economies be held together (through market manipulation, and smoke-and-mirrors “statistics”) all the way from the Crash of ’08 to the end of the current U.S. presidential cycle? Improbably, the answer to that question appears to be affirmative.

All is presently proceeding according to the script, and thus the pre-crash warnings have now begun, in earnest. The big banks (and Bubbles Buffett) are already positioning themselves for the next crash, while their market-pumping lackeys do their best to ensure that the lemmings keep most of their money in the various asset bubbles about to be detonated. Business as usual.

Comments (2)

written by dgierl, June 04, 2015

I didn’t realize that Jim Rickards was one of the lackeys (as I should have) until I read in his “Death of Money” book that he believed the government’s line on 9/11. How anyone with above an 80 intelligence CAN believe the government story is the question. Their intelligence level should be reevaluated.


written by Jeff Nielson, June 04, 2015 

No shame there, dgierl. Rickards is one of the more successful of the Disinformation Artists, and he CONTINUES to fool a lot of sharp people. Indeed, it’s only a couple of years ago that I finally saw through him. And (notably) it was in a similar manner as with yourself.

I was following along one of his analyses, and I suddenly encountered a logical disconnect. In order for him to deliver his (hidden) propaganda message, it required him to CONTRADICT (directly) some of the near-truths he had delivered to win my trust.

This is how we ferret out these lackeys: CLOSE observation. It’s not enough for a commentator to “mostly” make sense. LOOK FOR logical slip-ups, where (as with your own example) you obviously conclude that “no reasonable person” could actually believe what is being said.

The slip-ups almost always occur when they are defending the status quo. But note even here these propagandists can be slippery. They will “condemn” the present system – but then (absurdly) say right after that all we need to do is “fine-tune” the status quo.

Given the hopelessly rancid nature of our present system, ANY commentator who does not advocate dramatic, wholesale changes cannot be trusted.


Ron Paul, Nigel Farage, Peter Schiff, Jim Rogers, Jim Rickards – grinning like gold-plated Freemasons
New Order – Thieves Like Us 

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All “Markets” Are Manipulated: A Totally Rigged Casino – The Pied Piper Trading Algorithm of the One (Rothschild) Bank – High-Frequency Trading (HFT): A Market-Rigging Apparatus – Massive, Manipulated Short Selling – Blind/Deaf/Dumb “Regulators” – Half of Futures Trades in Chicago Are Illegal Wash Trades

Source: Bullion Bulls Canada – Sprott Money News

More Evidence of the Master Trading Algorithm

by Jeff Nielson, March 23, 2015

Why is the assertion that “all markets are manipulated” generally greeted with scorn and derision? Because while manipulating any particular, single market is a relatively straightforward matter – using “tools” for financial crime honed through centuries of practice – rigging markets collectively has always been viewed as an endeavour infinitely more difficult than herding cats.

Markets diverge. It’s what they do. While overall economic fundamentals affect all markets, and all sectors, these fundamentals affect markets/sectors/companies unevenly. Coupled with that, every individual sector/market has its own, unique collection of economic fundamentals – almost entirely independent of the general fundamentals of the economy.

This absolute absence of homogeneity means that, in legitimate markets, we will always see most sectors (and individual companies) moving not only with varying degrees of magnitude, but frequently in opposite directions. This is what must happen in any/all legitimate markets, on most days. It is only at times where the general fundamentals are extreme (i.e. extremely bad or extremely good) where we will ever see markets exhibit herd movement patterns.

What do we see in the Western-dominated markets of the 21st century? We see this herd movement not just occasionally, but virtually every hour of every trading day – something which is absolutely impossible. Suddenly our herd of cats is behaving – every hour of every day – like rats following a Pied Piper. Obviously when we see a herd of cats behaving like rats following a Pied Piper, this directly and necessarily implies the existence of a Pied Piper.

Enter so-called “high-frequency trading” (HFT): the Pied Piper. The disinformation which both the general public and the puppet regulators have been fed is that this market-rigging apparatus is supposedly aimed at nothing other than bringing greater “speed and efficiency” to our markets. The reality is that this was never more than a minor consideration, and the One Bank’s “HFT” innovations were always aimed at totally and completely manipulating markets: its virtual Pied Piper.

This is very similar, in kind, to the lies fed to us by the bankers when they wanted to introduce “short selling” into our markets. It would induce “better price discovery” in markets, and thus “make markets more efficient”, they told us. The reality is that (until the One Bank perfected its Pied Piper trading algorithm) massive, manipulative short selling was the bankers’ most important and most often used weapon for distorting (and thus rigging) markets.

These two campaigns of lies, used to “justify” two of the banksters’ most formidable weapons for market manipulation, have several factors in common:

1) Both can/would only have a benign impact on markets if used in extreme moderation.

2) Both have obvious manipulative potential.

3) Neither has any legal/statutory limits as to the quantity of such trading which infests our markets.

4) Neither is subject to any meaningful degree of oversight by our blind/deaf/dumb “regulators”.

To call this a recipe for disaster is the ultimate of understatements. This is not merely allowing the fox into the henhouse. It’s allowing an unlimited/infinite number of foxes to enter the henhouse – all with unsupervised access. It is recklessness to an extreme which directly and necessarily implies corruption. No one can be this blind.

Yet, to this point, all of the evidence of a Master Trading Algorithm is theoretical – the process of necessary, logical deduction. We see a herd of cats behaving like mesmerized rats, ergo we know there is a Pied Piper. It is “circumstantial evidence”, and circumstantial evidence is the primary basis for the vast majority of all convictions in our criminal justice system. Strangely, however, the Average Person gives this evidence very little heed when encountered outside the courtroom, and then spends all his/her nights soaking up this evidence as they watch their crime dramas.

For those readers, however, we now have far more than (merely conclusive) circumstantial evidence to offer, and can now supplement inevitable logic with overwhelming empirical evidence. First there was the evidence offered in a lawsuit against the Chicago Mercantile Exchange, global focal point of commodities trading.

In that suit, the plaintiffs asserted they had evidence that half of all trades at the CME are “wash trades”, phony and illegal trading activity which has no purpose other than to manipulate markets (in this case, all the world’s commodity markets). Billions of phony/illegal trades every year. Half of all trading at the CME amounts to approximately 100 illegal trades per second – something utterly beyond human capacity. But not beyond the capacity of a computerized trading algorithm.

This is old news now, however. More recently, we have the first real attempt to study the obvious manipulative potential of so-called HFT trading. The findings are stunning (to most), and unequivocal. Researchers found vast quantities of what they euphemistically termed “quote stuffing”, and then they went on to spend 50 pages dissecting the various ways in which this quote stuffing distorted markets – and thus manipulated markets.

More damning was the endemic nature of this quote stuffing. The data indicated that 74% of all U.S. equities (it was a U.S. study) showed significant evidence of quote stuffing (i.e. market-rigging). Obviously when one speaks of “manipulating all markets”, on an individual basis it’s only necessary to manipulate important equities. Now we know what percentage of (U.S.) equities the One Bank considers “important”: 74%.

Note that this study proceeded with the assumption that there was no pattern to this quote stuffing, i.e. no Invisible Hand which was engaging in this quote stuffing on a systematic basis. Yet despite the assumption of a lack of such master control, the researchers also found:

“an abnormal correlation in message flow”

In other words, while the premise of this research was that such market manipulation was “micro” in nature, i.e. taking place separately, on an equity-by-equity basis, what they actually observed was a pattern to this manipulative trading: a Pied Piper. Not only is market manipulation via HFT trading massive, it is also systemic.

At this point, it’s necessary to remind readers of more comprehensive research, which has been referred to in many previous commentaries. Using a data sample of more than 10 million corporate and personal entities, a trio of Swiss researchers concluded that a single “super-entity” (a collection of more than 140 corporate fronts) controlled, by itself, 40% of the entire global economy. Furthermore, the researchers found that “3/4 of the core (i.e. super-entity) are financial intermediaries”. The Mega-Monopoly discovered by Swiss researchers is primarily a banking monopoly – hence the name “the One Bank”.

Putting together the results of these two very detailed studies along with the evidence introduced into the lawsuit against the CME brings us to this. We have empirical evidence of a single financial entity (the One Bank) manipulating all U.S. equity markets, and all U.S. commodity markets. Furthermore, this most recent study is conclusive that the majority of this market-rigging is perpetrated though the massive and systematic use of manipulative HFT trading: the Pied Piper trading algorithm of the One Bank.

Markets cannot move in synch, every hour, every day. Our “markets” do move in synch, every hour of every day; ipso facto we do not have markets. Rather, we have a totally rigged casino, where a single Pied Piper controls all of the bets, and thus all of the bettors.

Theory tells us that nothing other than an endemic, computerized trading algorithm could transform a herd of cats (our markets) into a pack of docile, mesmerized rats, marching day after day in near-perfect synchronicity. Empirical evidence shows us how this is actually taking place. The prosecution rests.


Lawsuit Stunner: Half of Futures Trades in Chicago Are Illegal Wash Trades

by Pam Martens: July 24, 2014 – Wall Street on Parade

Terrence Duffy of the CME Group Testifying Before the Senate on May 13, 2014

Since March 30 of this year, when bestselling author Michael Lewis appeared on 60 Minutes to explain the findings of his latest book, Flash Boys, as “stock market’s rigged,” America has been learning some very uncomfortable truths about the tilted playing field against the public stock investor.

Throughout this time, no one has been more adamant than Terrence (Terry) Duffy, the Executive Chairman and President of the CME Group, which operates the largest futures exchange in the world in Chicago, that the charges made by Lewis about the stock market have nothing to do with his market. The futures markets are pristine, according to testimony Duffy gave before the U.S. Senate Agriculture Committee on May 13.

On Tuesday of this week, Duffy’s credibility and the honesty of the futures exchanges he runs came into serious question when lawyers for three traders filed a Second Amended Complaint in Federal Court against Duffy, the Chicago Mercantile Exchange, the Chicago Board of Trade and other individuals involved in leadership roles at the CME Group.

The conduct alleged in the lawsuit, backed by very specific examples, reads more like an organized crime rap sheet than the conduct of what is thought by the public to be a highly regulated futures exchange in the U.S.

The lawyers for the traders begin, correctly, by informing the court of the “vital public function” that is supposed to be played by these exchanges in “providing price discovery and risk transfer.” They then methodically show how that public purpose has been disfigured beyond recognition through secret deals and “clandestine” side agreements made with the knowledge of Duffy and his management team.

The most stunning allegation in the lawsuit is that an estimated 50 percent of all trading on the Chicago Mercantile Exchange is derived from illegal wash trades.

Wash trades were a practice by the Wall Street pool operators that rigged the late 1920s stock market, leading to the great stock market crash from 1929 through 1932 and the Great Depression. Wash trades occur when the same beneficial owner is both the buyer and the seller. Wash trades are banned under United States law because they can falsely suggest volume and price movement.

The lawsuit says Duffy and his management team are tolerating wash trades “because they comprise by some estimates fifty percent of the Exchange Defendants’ total trading volume and also because HFT transactions account for up to thirty percent of the CME Group’s revenue.”

The complaint indicates that the plaintiffs have a “Confidential Witness A,” a high-frequency trader, who has given them a statement that wash trades are used by high-frequency traders as part of a regular strategy to detect market direction and “to exit adverse trades when the market goes against their positions.”

The strategy works like this, according to the complaint:

“HFTs [high-frequency traders] continuously place small bids and offers (called bait) at the back of order queues to gain directional clues. If the bait orders are hit, the algorithm will place follow-up orders to either accumulate favorable positions or exit ‘toxic’ risks, a process which leverages bait orders to gain valuable directional clues as to which way the market will likely move. The initial bait orders are very small while subsequent orders, once market direction has been identified, are very large. A portion of the large orders that follow the smaller bait orders are wash trades.”

Another very serious charge is that some of the defendants in the lawsuit who are in leadership roles in management at the futures exchanges, have “equity interests” in the very high-frequency trading firms that are benefitting from these wash trades. The complaint states:

“The Exchange Defendants profit from the occurrence of wash trades and have a vested interest in not having more robust safeguards against them because they contribute significantly to the Exchange Defendants’ volume numbers and revenue. Were the volume of wash trades excluded from the Exchange Defendants’ volume and revenue numbers, the radically reduced volume numbers would exert adverse pressure on the CME Group’s stock price, not to mention the revenue to members of CME Group’s governance who have equity interests in participating HFTs in addition to stock ownership in the CME Group, Inc.”

In addition to wash trades, the lawsuit charges that the CME Group has entered into “clandestine” incentive agreements.

“Defendants have entered into clandestine incentive/rebate agreements in established and heavily traded contract markets with favored firms such as DRW Trading Group and Allston Trading, paying up to $750,000.00 per month in one of the most heavily traded futures contracts in the world. At no time during the Class Period have Defendants voluntarily revealed to the trading public that these material agreements exist in established markets. Defendants through their lawyers have repeatedly ridiculed the suggestion that clandestine agreements exist.”

The complaint identifies another “Confidential Witness B” who has provided information on “the existence of a clandestine rebate agreement between the CME and a very large volume HFT firm that trades in the S&P500 E-Mini contract.” That’s a stunning allegation, since the S&P500 E-Mini was thought to be one of the most liquid contracts in the U.S. The complaint correctly notes that “there can be no economically justified reason, such as to develop thinly traded markets, that would justify the CME and CME Group to maintain clandestine incentive agreements in this particular market, other than the improper intent.”

Another trick to get an early peek at trading information is referred to in the complaint as the “Latency Loophole,” which “allows certain market participants to know that orders they entered were executed and at what price, and to enter many subsequent orders, all before the rest of the market participants found out the status of their own initial orders.”

The complaint explains that the ability to continuously enter orders and get trade confirmations “of the price at which these orders are filled, before the rest of the public even knows about the executed trades,” empowers high-frequency traders with “a massive informational and time advantage in discerning actual price, market direction and order flow before anyone else.”

By providing just a select group of market participants and high-frequency traders with this “sneak peek” advantage, says the complaint, the defendants engaged in a “fraud on the marketplace.”

The Justice Department and FBI have opened investigations into high-frequency trading. Let’s hope that includes both stock and futures exchanges.

The traders bringing the lawsuit, which is filed as a class action, are William Charles Braman, Mark Mendelson and John Simms. Lawyers for the plaintiffs are R. Tamara de Silva, who maintains a private practice, and lawyers from O’Rourke & Moody.

The suit was filed in the U.S. District Court for the Northern District of Illinois. The Civil Docket for the case is #: 1:14-cv-02646 and has been assigned to Judge Charles P. Kocoras. The CME Group is represented by the law firm Skadden, Arps, Slate, Meagher & Flom, LLP.

Wash Trades (Max Keiser – E633: July 29, 2014) 
Illegal Wash Trades Dominate US Market 
Terry Duffy Discusses Regulation and High-Frequency Trading

Further information:

Global Corporate “Super-Entity” = Rothschild Monopoly – Organized Crime Syndicate – The One Bank Is a Gigantic Parasite – Corporate Media “World’s Richest” Lists Are Propaganda

RBC Sued by U.S. Regulators Over Wash Trades (Bloomberg)

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How American Corporations and the Super-Rich Steal From the Rest of Us

Main Street is going broke. Wall Street is cashing in.

By Paul Buchheit / AlterNet
December 28, 2014

The Merriam-Webster definition of ‘steal’ is to take the property of another wrongfully and especially as a habitual or regular practice. Much of our country’s new wealth has been regularly taken by individuals or corporations in a wrongful manner, either through nonpayment of taxes or failure to compensate other contributors to their successes.

1. The Corporations

As schools and local governments are going broke around the country, companies who built their businesses with American research and education and technology and infrastructure are paying less in taxes than ever before. Incredibly, over half of U.S. corporate foreign profits are now being held in tax havens, double the share of just twenty years ago. Corporations are stealing from the nation that made them rich.

There are many examples of greed among individual firms. Based largely on 2014 SEC documents submitted by the companies themselves:

Exxon has almost 80% of its productive oil and gas wells in the U.S. but declared only 17% of its income here. The company used a theoretical tax to account for 83% of last year’s income tax bill, and paid less than 2% of its total income in current U.S. taxes.

Chevron has about 75% of its oil and gas wells and almost 90% of its pipeline mileage in the United States, yet the company claimed only 13% of last year’s income in the U.S., and paid almost nothing (less than 1/10 of 1%) in current U.S. taxes.

Pfizer had 40% of last year’s sales in the U.S., but claimed losses in the U.S. and $17 billion in profits overseas.

Bank of America, despite making 84% of its 2011-2013 revenue in the U.S., declared just 31% of its profits in the United States.

Citigroup had 43% of its 2011-2013 revenue in North America but declared less than 3% of its profits in the United States.

Apple still does most of its product and research development in the United States. Yet the company moved $30 billion in profits to an Irish subsidiary with no employees, with loopholes in place to avoid establishing residency in any country. The subsidiary files no returns and pays no taxes. Apple CEO Tim Cook said, “We pay all the taxes we owe.”

Google‘s business is based on the Internet, the Digital Library Initiative, and the geographical database of the U.S. Census Bureau. Yet the company has gained recognition as one of the world’s biggest tax avoiders.

2. The Forbes 40

Defenders of inequality argue that fortunes are deserved because of innovation and hard work. But many of the 40 Americans who own as much as the poorest half of the country have relied on less deserving means of accumulating great fortunes (details here).

– Warren Buffett’s company (Berkshire Hathaway) made a $28 billion profit last year, yet claimed a $395 million refund.

– The Koch brothers have taken clean air and water from us.

– The Walton siblings take our tax money to subsidize their employees.

– Larry Ellison was #1 on Sam Pizzigati’s Greediest of 2014 list.

The rest of the Top 40 List (details here) is speckled with instances of fraud, tax avoidance, and billionaire subsidies. The worst is probably hedge fund manager John Paulson, who has built a $13 billion fortune after conspiring with Goldman Sachs in 2007 to bundle and bet against sure-to-fail subprime mortgages that took the homes from millions of Americans.

Speaking of hedge fund managers, the carried interest loophole allowed just 25 individuals to take almost $5 billion from society last year by claiming that their income is different from the rest of ours.

3. The Deniers

After 35 years of wealth theft there are still inequality deniers – notably the American Enterprise Institute, which claims that income inequality has been shrinking since 1989, and that we should be asking whether or not the bottom 60% are paying their fair share.

Another insult from The Federalist: Income Inequality Is Good for the Poor.

The Reason Foundation tops it off, advising us that the best way to defuse the situation is to teach tolerance for inequality.

All of which suggests that the theft of society’s wealth may be due to ignorance as well as to greed.

Paul Buchheit teaches economic inequality at DePaul University. He is the founder and developer of the websites UsAgainstGreed.org, PayUpNow.org, and RappingHistory.org, and the editor and main author of “American Wars: Illusions and Realities” (Clarity Press). He can be reached at paul@UsAgainstGreed.org.


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The End of Capitalism

by Anthony Migchels

November 13, 2009

In these days of upheaval and transition, it is more important than ever to have a clear understanding of what we are talking about. The opposition is very skilled at playing with language and creating holes in linguistic concepts, blurring our vision of reality.

A good example is “inflation”. Many people nowadays seem to think that inflation means “rising prices”; however, inflation means a growing money supply.

Because of this misunderstanding, you often read things like “inflation dangers because of rising oil prices” – a totally ridiculous statement without any economic relevance, but understandable when one realizes how our language is being willfully corrupted.

It is useful to realize that such “evolutions” of meaning are no accident. John Kenneth Galbraith noticed that: “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” And to evade truth about money and economics, a lot of lies are also purposefully introduced in the public discourse.

“Capitalism” as a concept is another, and far more important, case in point. I don’t think there is a generally accepted definition of Capitalism that we can use as a reference – which is strange in itself.

Most people, however, believe Capitalism is associated with “free markets”. And most people agree that most of the Western world lives in a Capitalist society, although many will say that these economies have been “Socialized” too much to be considered really Capitalist.

I agree that we want to call the current system Capitalism; after all, it is our current system we are talking about and want to reform. I don’t think the defining nature of Capitalism has been exposed for what it is, however, so I’ll give a very clear working definition to get a better picture:

Capitalism is an economic system where owners of capital dominate providers of labor, by causing artificial scarcity of money.”

Money, of course, is a medium of exchange by agreement; capital and labor are the factors of production.

This is surely not a definition that everybody will immediately accept, so I will elaborate a little.

To begin with, we should consider that, as one Capitalist once put it: “Capital, if it is to co-operate untrammeled, must be free to establish a monopoly of industry and trade: this is already being put in execution by an unseen hand in all quarters of the world.”

So, domination of labor by Capital will express itself by Monopolies – and Capital’s natural tendency is toward Monopoly.

Many others have pointed out that Capitalism and Communism share this Monopolistic tendency: Communism, after all, is a Monopoly in the hands of the State (we will forget about the poor proletariat…). The question is then, “Who owns the State?” – and it has been established without a doubt that Capital financed the Communist revolutions and controlled the Communist States. One only has to think of Averell Harriman running the Stalin war effort to get the picture.

Communism is therefore not Capitalism’s antithesis, but merely a subset. Actually, it is a more direct expression of Capitalism than our current system.

The notion that Capitalism is associated with “free markets” strikes me as very odd indeed, because we can easily ascertain that, in this world, there are no free markets. Every major industry in the world – be it Big Pharma, Energy, Food, Telecommunications & IT, Aviation, Weapons, Automotive Industry – is run by a small number of gigantic Transnationals. These Transnationals only compete nominally. They divide the market among themselves, set the rules of the game, control the watchdogs intended to supervise them, and co-operate in keeping the market closed to competitors (or “interlopers”). They operate as Cartels.

The situation is aggravated by the fact that all these Cartels are basically proxies of the Money Power that controls them.

So the real situation is that our so-called “free markets” are basically one gigantic Money-Power-controlled Trust.

The idea that we live in a “free market” economy is simply another Orwellian thought control operation, totally comparable to the “Freedom Is Slavery” and “War Is Peace” slogans.

Big Brother likes his slogans, and he has many of them. And why shouldn’t he? They are very effective.

Means of control

In our system, and throughout modern history, Capital has been controlling labor through control of the money supply. Most historians agree that Capitalism’s first real champion was the Amsterdam Empire. It is no coincidence that de Amsterdamsche Wisselbank was the first major Central Bank in the world. When London rose, the Capital that dominated the Dutch Republic financed Oliver Cromwell and later that not-so-Glorious Revolution. Capital simply migrated to control greater markets through the new British Empire, to eventually end up taking over New York after that city rose to world prominence.

By keeping the medium of exchange scarce, there is always unemployment, forcing labor to accept detrimental conditions. By claiming interest on loans financing production, Capital ends up with a large part of the added value of production. Labor gets its wages, so it can survive and continue to feed Capitalists, but all the profit goes to the providers of capital. You work for 30 years with a big firm and you are to be happy to end up with some pension, if you are lucky.

By controlling the money supply, Capital is insured to be the bottleneck in production, leading to Capital’s supremacy. By controlling money, you end up controlling everything, and this surely is a fitting description of our current situation.

When you know the problem, the solution is usually easy

Our not-so-illuminated masters (after all, how illuminated would you consider someone praying to Mammon?) are real masters are pitting us against one another by controlling the flow of ideas and language. They let us play with concepts we don’t understand, which they invent and define. “Capitalism”, “Communism”, “inflation”, “free markets” – all these concepts have been shown to be misunderstood. These misunderstandings lead to bad analysis and even worse solutions.

Nowadays, we say “free markets” have failed – as if there are any. Because of the language distortion we are discussing, people actually believe that we need to more closely “supervise” these “free markets”; whereas our current system has shown, without a doubt, that regulators are usually doing the bidding of the industries they are supposed to keep in check.

We can also be led to believe that since these “free markets” operate globally, we need global solutions – which of course require the Capitalists’ coveted World Governance.

Now that we can see that Capitalism’s defining nature is simply capital being the bottleneck in production, we know the solution must be to make labor the bottleneck. Labor should be the scarce factor of production.

And since we now also know that scarce money is the means of control, we can establish once more that it is vital to wrest away this control from our current masters – the Powers-That-Shouldn’t-Be – if we are to improve our lot.

Nowadays, many people around me are looking for solutions to the illusory “free market” problem. They want committees to set prices. They want someone to control the factors of production.

They should be looking to actually establish some free markets – a free-market economy, with sufficient money circulating to let labor become the scarce factor of production.

I don’t believe that great Monopolies will survive for long, if many people and organizations gain full access to markets. If you have ever worked for a big company or any other bureaucracy, you will quickly realize that these organizations are so inefficient that they can never survive competition from small, agile firms. The only reason they are successful now is that they are being financed by the Money Trust, while normal people are not.

Capitalism is slavery – because labor is composed of the many, and capital is controlled by the few. Capitalism in its favored form, Communism, has shown us everything we need to know about not allowing the Monopolists to establish their World Government.

To paraphrase Henry Ford: “Solve the monetary question and you solve the question of Capitalism.”

Further reading:

Capitalism Versus Free Enterprise – Dethrone the Bankers of Issue – The “Third Hand” (of the Middleman) – Honest Money Is Simple

Global Corporate “Super-Entity” = Rothschild Monopoly – Organized Crime Syndicate – The One Bank Is a Gigantic Parasite – Corporate Media “World’s Richest” Lists Are Propaganda

The Wailers: “Get Up, Stand Up”

Jimmy Cliff: “The Harder They Come”

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BRICS Bank to Complement/Challenge “Bretton Woods Twins” (World Bank & IMF) – Fortaleza Summit Creates New Development Bank and Contingency Reserve Arrangement – “Energy Association” of Major Developing Countries – BRICS Countries Building a New Internet Backbone via an Undersea Fiber-Optic Cable

Emerging Nations Set Up BRICS Bank to Counter Western Domination

Alonso Soto and Anthony Boadle, Reuters
July 16, 2014, 3:48 AM

Russian President Putin, Indian Prime Minister Modi, Brazilian President Rousseff, Chinese President Xi and South African President Zuma talk at a group photo session during the 6th BRICS summit in Fortaleza (Thomson Reuters)

FORTALEZA Brazil (Reuters) – Leaders of the BRICS emerging market nations launched a $100 billion development bank and a currency reserve pool on Tuesday, in their first concrete step toward reshaping the Western-dominated international financial system.

The bank, aimed at funding infrastructure projects in developing nations, will be based in Shanghai, and India will preside over its operations for the first five years, followed by Brazil and then Russia, leaders of the five-country group announced at a summit.

They also set up a $100 billion currency reserves pool to help countries forestall short-term liquidity pressures.

The long-awaited bank is the first major achievement of the BRICS countries – Brazil, Russia, India, China, and South Africa – since they got together in 2009 to press for a bigger say in the global financial order, created by Western powers after World War Two and centered on the International Monetary Fund and the World Bank.

The BRICS were prompted to seek coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of U.S. monetary stimulus. The new bank reflects the growing influence of the BRICS, which account for almost half the world’s population and about one-fifth of global economic output. The bank will begin with a subscribed capital of $50 billion divided equally among its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees. It is scheduled to start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 percent. The contingency currency pool will be held in the reserves of each BRICS country and can be shifted to another member to cushion balance-of-payments difficulties. This initiative gathered momentum after the reverse in the flows of cheap dollars that fueled a boom in emerging markets for a decade. “It will help contain the volatility faced by diverse economies as a result of the tapering of the United States’ policy of monetary expansion,” Brazilian President Dilma Rousseff said.

“It is a sign of the times, which demand reform of the IMF,” she told reporters at the close of the summit.

China, holder of the world’s largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, or $41 billion. Brazil, India, and Russia will chip in $18 billion each and South Africa $5 billion. If a need arises, China will be eligible to ask for half of its contribution, South Africa for double, and the remaining countries the amount they put in. Negotiations over the headquarters and first presidency were reached at the eleventh hour, due to differences between India and China. The impasse reflected the trouble Brazil, Russia, India, China, and South Africa have had in reconciling stark economic and political differences that made it hard for the group to turn rhetoric into concrete action.

“We pulled it off 10 minutes before the end of the game. We reached a balanced package that is satisfactory to all,” a Brazilian diplomat told Reuters.

Negotiations to create the bank dragged on for more than two years, as Brazil and India fought China’s attempts to get a bigger share in the lender than the others.

In the end, Brazil and India prevailed in keeping equal equity at its launch, but fears linger that China, the world’s No. 2 economy, could try to assert greater influence over the bank to expand its political clout abroad. China, however, will not preside over the bank for two decades.

Facing efforts by leading Western nations to isolate Russia for annexing Crimea and stirring revolt in eastern Ukraine, the BRICS summit provided President Vladimir Putin with a welcome geopolitical platform to show he has friends elsewhere, economic powers seen as shaping the future of the world.

The BRICS abstained from criticizing Russia over the crisis in Ukraine, and called instead for restraint by all actors so the conflict can be resolved peacefully.


BRICS establish $100bn Development Bank to cut out Western dominance (RT)

Escobar: BRICS bank on its way to beat casino financial system (RT)

BRICS Bank to Rival Western Banking Monopoly | Interview
with Vijay Prashad (RT)

BRICS Establish $100 Billion Bank to Rival IMF, Western 
Dominance! (Dahboo7)


BRICS bank to be worth $100 bn; India gets first presidency

Associated Press | Fortaleza (Brazil) | Updated: Jul 16 2014, 08:49 IST


BRICS leaders give final nod to creating their own development bank with headquarters in China.

Vladimir Putin shakes hands with Xi Jinping as Narendra Modi looks on during BRICS Summit in Fortaleza. (Reuters)

The leaders of five emerging market powers said at a summit Tuesday that they gave final agreement to creating their own development bank worth $100 billion that will have its headquarters in China.

The first president of the New Development Bank will be from India and the position will rotate every five years among Brazil, Russia, India, China, and South Africa – the so-called BRICS nations, a joint statement from the leaders said.

BRICS leaders conferred in a closed session earlier in the day at their conference in northeastern Brazil, then announced concrete plans for the bank at an afternoon session open to the press.

The new bank is seen as a strong push by the BRICS against the World Bank and the International Monetary Fund, which the developing world has long complained is far too U.S.- and European-centric.

“Based on sound banking principles, the NDB will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development,” the statement said.

Russian Foreign Minister Sergey Lavrov told the Russian news agency ITAR-TASS that the decision “confirmed that BRICS members, while speaking against unilateral actions in the world economy and politics, are not seeking confrontation but propose working out collective approaches toward the resolution of any problems.”

The New Development Bank will have an African regional branch in South Africa, and eventually other nations would be able to participate.

The statement also alluded to Brazil’s and India’s longstanding quest to overhaul the United Nations Security Council, of which China and Russia are two of five permanent members with veto power. Those nations have in the past proved reluctant to endorse Brazil’s and India’s ambitions, but Tuesday’s statement said the BRICS nations “support their aspiration to play a greater role in the U.N.”

Though exhaustive, the joint statement largely steered clear of potentially divisive issues, like the conflict in Ukraine between pro-government and pro-Russia factions.

It touched only briefly on the matter, saying the five countries expressed their “deep concern” with the situation in Ukraine and urged “comprehensive dialogue, the de-escalation of the conflict, and restraint from all the actors involved, with a view to finding a peaceful political solution, in full compliance with the U.N. Charter and universally recognized human rights and fundamental freedoms.”



Source: The Conversation

World Bank watch out, the BRICS Bank is a game-changer

21 July 2014, 10.47am
Ali Burak Güven

Lecturer in International Relations & International Political Economy at Birkbeck, University of London

Banking on success. Ria Novosti/EPA

The top news from this year’s BRICS summit was the announcement of a New Development Bank. Headquartered in Shanghai, the bank will become operational in 2016 with an initial capital of US$50 billion. Its core mandate is to finance infrastructure projects in the developing world.

The bank, announced at the summit in Fortaleza, Brazil, will also have a monetary twin to provide short-term emergency loans, the Contingency Reserve Arrangement. While the bank will be open to all UN members, the reserve will lend only to the contributing BRICS countries in times of crisis.

This combination of timing, actors, and institutions is noteworthy. It was in July 1944 that the Allied nations gathered at Bretton Woods to form two of the most vital institutions of the post-war era: the International Monetary Fund and what would become the World Bank. Now, 70 years later and only a few years on from the global financial crisis, the leading developing nations of our time have joined forces to forge new institutions of international economic cooperation with mandates identical to the World Bank and the IMF.

This move is born out of a belief that the Bretton Woods twins, despite numerous governance reform initiatives over the past decade, remain set to reflect the policy preferences of their original creators. In creating complementary institutions, the BRICS will be hoping to use these alternative platforms of international economic governance as leverage to accelerate the reform of existing arrangements.

Game-changing potential

The New Development Bank is currently the more interesting of the “Fortaleza twins”, for it is designed as a freestanding organisation that’s open to all. Yet it has not received a warm welcome in business columns. While the political symbolism of the new institution is widely acknowledged, its immediate economic utility has been challenged – why do the BRICS need a development bank of their own when infrastructure projects are already easily financed through private as well as official channels, especially through the World Bank?

This is a narrow criticism. In the long run, the New Development Bank has the potential to become a game-changer in development financing. In fact, if its evolution even remotely parallels that of the World Bank, it might end up having a formative impact on economic policy-making and overall development strategy in the Global South.

To begin, while there is no shortage of national and regional development banks as well as private financiers of infrastructure projects, there is still a massive gap in development finance, estimated to be as high as US$1 trillion per year. Many developing countries encountered significant financing problems during the global crisis of the late 2000s. This shortfall necessitated a surge in World Bank commitments, from an annual US$25 billion in 2007 to about US$60 billion in 2010.

But commitments declined just as swiftly over the past few years, and as of 2013 stood at about $30 billion. Given these figures, the New Development Bank’s readily available $10 billion in paid-up capital and the extra $40 billion available upon request are not exactly pocket money for development financing.

Yet just as the World Bank was never simply a money lender, so too will the new bank represent far more than a mere pool of funds. The existing geostrategic and policy inclinations of its founding stakeholders imply a bigger role to play for the institution. In the process, it is bound to offer a formidable challenge to the World Bank’s financial prominence and so influence policy in the developing world.


The new bank has been long in the making. It is the culmination of nearly two decades of intense South-South cooperation and engagement. In recent years especially, the BRICS and other emerging nations have become donors and investors in both their immediate regions and in less developed areas of the world – with Chinese and Brazilian involvement in sub-Saharan Africa and parts of Latin America representing the prime examples.

They have made an effort to establish more equal relationships with their lower-income developing peers and have emphasised an attractive narrative of partnership, non-intervention, and knowledge transfer, instead of smug, superior Western notions of top-down aid and restrictive conditionality. To the extent that it could keep its rates competitive, the New Development Bank is unlikely to suffer from a dearth of clients from among its fellow developing nations.

Paradoxically, BRICS and other large middle-income countries still remain the most valuable clients of the World Bank. Since the financial crisis, India has been the largest borrower from the World Bank, and has been closely followed by Brazil, China, and a few other near-BRICS such as Indonesia, Turkey, and Mexico. But once the new bank fully kicks off, it is possible the World Bank will lose a lot more business from this traditionally lucrative market of large middle-income borrowers who now have a serious alternative.

Political implications

A reduced loan portfolio will ultimately translate into declining policy influence for the World Bank, which has held a near-monopoly on development wisdom over the past 70 years. Perhaps in recognition of their waning power, there has already been a slight but steady decline in World Bank loans that emphasise policy and institutional reforms.

Also, a larger portion of the Bank’s resources have been allocated to conventional development projects, such as environment and natural resource management, private sector development, human development, and social protection. These are precisely the types of projects in which the Bank will encounter fierce competition from the new BRICS-led bank.

Knowledge and power

Consider also that the World Bank has labelled itself as a “knowledge bank” in recent years. Employing thousands of policy specialists, it doubles as one of the biggest think tanks in the world. Yet if it loses considerable financial ground to initiatives such as the New Development Bank, this threatens a decline in the power it has through knowledge.

Crucially, none of the BRICS adhere to the Bank’s standard policy prescriptions, nor do they advocate a different common strategy either. Brazil’s social democratic neo-developmentalism is quite different from China’s state neoliberalism, which in turn differs from established policy paths among others in the group. The only common denominator is a substantially broader role given to the state. But beyond this, there is much flexibility and experimentation, and little in the way of templates and blueprints like there is with the Western institutions. This policy diversity itself dismisses any idea of superiority of knowledge and expertise.

None of this suggests that the World Bank, as the dominant, Northern-led development agency, is now on an ineluctable path of decline. Cumbersome as they may appear, large organisations often accumulate considerable resilience and adaptive capacity over generations. Yet the World Bank does have a serious contender in the New Development Bank.

While it may not overtake the World Bank in financial prowess and policy influence any time soon, at a minimum it should be able to exert significant pressure over the World Bank to respond more sincerely and effectively to the new balance of power in the global economy.


BRICS summit decisions may change world economic climate (ITAR-TASS)

World Bank Chief Welcomes New BRICS Development Bank (IBTimes UK)

BRICS will launch their long-awaited development bank at a summit next week (PressTV)


Walking the talk: Indian to be first CEO of BRICS Bank, Shanghai will host NDB

By Manish Chand
16 Jul 2014

Don’t write off BRICS; bank on BRICS. The journey that started in Delhi two years ago culminated in the Brazilian seaside resort town of Fortaleza July 15, with the formal launch of a BRICS-patented New Development Bank that seeks to provide an alternative source of infrastructure finance to emerging economies and the larger developing world.

The BRICS Bank, as it was informally called, found crystallisation at the sixth summit of the grouping in Brazil, with the leaders unveiling key facets of the bank that marks a major defining step in remapping the West-dictated global financial architecture. Finally, the developing world has a Development Bank of its own sans asymmetries of the post-war Bretton Woods institutions. The negotiations had gone down to the wire, with the leaders agreeing on the architecture of the New Development Bank, based on the principle of equity.

In a pithy and eloquent speech at the plenary session of the BRICS summit at the Ceara Convention Centre in Fortaleza, India’s Prime Minister Narendra Modi encapsulated the spirit and essence of the BRICS Bank. “The vision of a New Development Bank, at the Delhi Summit two years ago, has been translated into a reality, in Fortaleza. It will benefit BRICS nations, but will also support other developing nations. And, it will be rooted in our own experiences, as developing countries.”

Intense partisan lobbying preceded before the details of the bank were firmed. The location of the headquarters of the Bank was embroiled in last-minute hectic negotiations, with India pushing hard for Delhi to host this prized institution and China pulling out all stops to get other BRICS leaders to endorse Shanghai as the HQ of the new bank of the developing world, managed and driven by emerging powers of the global South.

In the end, China, the largest economy within the BRICS grouping, with over 3 trillion dollars in foreign exchange reserves, prevailed, with Shanghai declared as the seat of the Bank in the July 15 Fortaleza Declaration. It could have been a disappointment for India, but it was somewhat mitigated by the collective decision by BRICS leaders to get an Indian to head the Bank. Reliable sources said that there was a trade-off between Indian and Chinese negotiators, with India willing to concede China’s case to host the bank in return for an Indian to get the rotating presidency of this signature project. The Fortaleza Declaration reflected consensus and a generous spirit of give-and-take on the broad contours of the NDB.

Clearing the thicket of confusion and speculation surrounding the Bank, the Fortaleza Declaration spelt out key features of the Bank: I) The Bank shall have an initial authorized capital of US$ 100 billion. The initial subscribed capital shall be of US$ 50 billion, equally shared among founding members. II) The first President of the Bank shall be from India. III) The first chair of the Board of Governors shall be from Russia. IV) The first chair of the Board of Directors shall be from Brazil. V) The New Development Bank Africa Regional Center shall be established in South Africa concurrently with the headquarters.

The BRICS leaders directed their finance ministers to work out the modalities for its operationalisation. If all goes well, and there are all indications it will, the Bank will start lending by 2016.

Touted as an alternative to the West-dominated IMF and World Bank, the Fortaleza Declaration was more grounded and pragmatic in the mandate and agenda of this first multilateral institution of the South. “The NDB will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to our collective commitments for achieving the goal of strong, sustainable and balanced growth.”

The leaders of BRICS countries also formally announced the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$ 100 billion. “This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements,” said the Fortaleza Declaration.

With the concretisation of these two signature initiatives, the BRICS club of emerging powers has proved beyond a shade of doubt that the BRICS is not a glorified talk shop, but a powerful instrument for recasting the world order. Dial B for BRICS, and dial B for business.


BRICS bank likely to have same problems as World Bank and IMF (News24)

BRICS Development Bank: Is this a way to depoliticise Chinese credit? (CNBC Africa)

Is the New BRICS Bank a Challenge to US Global Financial Power?
(The Real News)

BRICS: Progressive Rhetoric, Neoliberal Practice
(The Real News)

Webster Tarpley (July 19, 2014): Malaysian Airliner Massacre is Wall Street-City of London Riposte to Fortaleza Summit’s Creation of BRICS Bank, The Most Formidable Challenge Yet to International Monetary Fund, World Bank, Federal Reserve and Dollar Domination of World Trade; Putin Should Implement Full Glazyev Dirigism in Response to New US Sanctions [download audio] or [YouTube version]

Jim O’Neill – BRIC Countries and the Global Economy

Putin to Form ‘Energy Association’ of Major Developing Countries

Michael Bastasch
07/22/2014 – The Daily Caller

While the world is distracted by escalating tensions in Ukraine, Russian President Vladimir Putin announced plans to create an “energy association” of developing countries.

World Nuclear News reports that Putin is looking to form an energy coalition, complete with its own “fuel reserve bank and an energy policy institute,” among BRICS nations. BRICS countries include the world’s major developing economies of Brazil, Russia, India, China, and South Africa.

The energy alliance would seek greater cooperation between BRICS, including nuclear power agreements.The announcement comes after BRICS agreed to form a New Development Bank to act as an alternative to the World Bank and International Monetary Fund.

“These steps would allow us to strengthen our nations’ energy security and prepare us for the creation of new instruments and new institutes to trade energy resources,” Putin announced at the 6th annual BRICS meeting in Brazil.

“It would be possible to create a fuel reserve bank and an institute of BRICS energy policy under its auspices. These steps would allow strengthening energy security of our countries,” Putin added.

In the wake of the unrest in Ukraine, Russia has been looking to expand its energy influence outside of Europe as the continent looks for ways to wean itself off of Russian oil and gas. Putin recently sealed a natural gas pipeline deal with China, where the growing economy is hungry for more energy.

Russia has also been increasingly looking to strengthen its energy ties with South America. Prior to the announcement, Russia had already “signed a number of nuclear power cooperation agreements,” reports Nuclear World News.

The Russian state-owned nuclear company Rosatom signed agreements with Argentina and Brazil earlier this month for construction of nuclear power plants, generators, and storage facilities in South America.

Putin himself has already held talks with Indian Prime Minister Narendra Modi on expanding the two countries’ energy and defense partnerships. India is also negotiating with Russia on extending an international natural gas pipeline as well.

Russia’s expansion of natural gas pipelines to Asia has some market analysts and lawmakers worried that the U.S. may miss out on the opportunity to ship its own natural gas to potential east Asian customers.

“Competition in the international gas markets is bound to heat up, and the United States may have already missed its opportunity for an LNG [liquid natural gas] export bonanza,” writes Richard Martin of Navigant Resources for Forbes magazine. “Expanding pipelines, more export terminals, and better technology for liquefying and shipping natural gas will all help globalize the natural market, in the way the crude oil market is already globalized.”

“Already, the relatively low price that China will pay for Russian gas (around $350 per thousand cubic meters, analysts estimate) is putting downward pressure on higher prices for Japan and South Korea,” Martin added.


Russia and China Do Pipelineistan (Zero Hedge)


Source: Voice of Russia

BRICS countries are building a “new Internet” hidden from NSA

28 October 2013
Valentin Mândrăşescu

The NSA spying scandal created a need for a cyberspace hidden from the prying eyes of American spooks. While countries like Germany are trying to create a secure cyberspace built on current infrastructure, a consortium of BRICS companies are working to create a “new Internet”. The Hindu reports that Brazil is building a “BRICS cable” that will create an independent link between Brazil, South Africa, India, China, and Russia.

The length of the fiber-optic cable will be over 21 thousand miles, making it one of the most ambitious underwater telecom projects ever attempted. The cable will run from the Brazilian town of Fortaleza to the Russian town of Vladivostok via Cape Town, Chennai, and Shantou.

The main goal of the project is to create a network inaccessible to the NSA, bypassing all parts of internet infrastructure located outside BRICS countries. While this ambitious project certainly has potential, it also has some inherent weaknesses. So far, it is not clear whether the project company has enough funds to finish it, although the Brazilian president has voiced her support for the cable’s construction. It remains to be seen whether this political support will generate financial support from Brazil or from other countries. Another weakness is that the cable will only protect the data sent through it and won’t help the people who use US-based web services like Google, Facebook, or Yahoo because American IT companies have been willingly helping the NSA spy on their users. The last significant weakness is that the cable will still be vulnerable to eavesdropping by specialized American military units, which learned how to intercept communications on underwater cables during the Cold War. It is possible that constant checking and patrolling of the cable will be required in order to protect it from US intelligence agencies or from the American military. All these weaknesses can be overcome through cooperation of BRICS political leaders, IT companies, and maybe militaries. In today’s world, privacy is an expensive privilege, but BRICS countries are one of the few able to pay for it.


  BRICS Cable video


Source: Infowars

BRICS countries building new internet to avoid NSA spying

Fiber optic undersea cable bypassing U.S. to be completed by 2015

Paul Joseph Watson
October 24, 2013

BRICS countries are close to completing a brand new Internet backbone that would bypass the United States entirely, and thereby protect both governments and citizens from NSA spying.

In light of revelations that the National Security Agency hacked German Chancellor Angela Merkel’s phone, in addition to recording information about 124 billion phone calls during a 30-day period earlier this year, the fallout against the NSA has accelerated.

Brazil is set to finalize a 34,000-kilometre undersea fiber-optic cable by 2015 that will run from Vladivostok, Russia to Fortaleza, Brazil – via Shantou, China; Chennai, India; and Cape Town, South Africa.

According to The Hindu, the project will create “a network free of US eavesdropping,” which via legislative mandates will also force the likes of Google, Facebook, and Yahoo to store all data generated by BRICS nations locally, shielding it from NSA snooping.

“The BRICS countries have the muscle to pull this off,” notes Washington’s Blog. “Each of the BRICS countries are in the top 25 largest economies in the world. China has the world’s second largest economy, India is 3rd, Russia 6th, Brazil 7th, and South Africa 25th.”

However, some privacy experts fear that this will do little to stop the NSA, given that it has tapped undersea cables since the Cold War era. Others are more positive.

“Any alternative would be a positive thing,” writes Michael Dorfman. “The more choice you have, the better. Yet no-one can say for sure whether this new Internet will be safer than its US counterpart and will be able to protect the rights of regular users, including the privacy of personal data and free access to resources, more effectively.”

The BRICS cable was already in development months before the revelations of whistleblower Edward Snowden first became public in June.

In September it emerged that the NSA had been spying on Brazilian government communications as well as Brazilian oil company Petrobras. Spooks hacked into the firm’s computer network to eavesdrop on conversations between CEOs.

The current Internet architecture is dominated by ICANN (the Internet Corporation for Assigned Names and Numbers), which is largely controlled by the United States.

Other entrepreneurs are also fighting back against NSA surveillance. Tech maverick John McAfee recently announced that he was to fund a $100 gadget named Decentral that would sync up with a modem to thwart NSA spying and provide total anonymity.

Asked what he would do if the US government banned the product, McAfee responded, “I’ll sell it in England, Japan, the Third World. This is coming and cannot be stopped.”

Analyst: Germany Secretly Planning to Join BRICS
BRICS Nations Plan New Bank to Bypass World Bank, IMF
The BRICS’ “Independent Internet” Cable, in Defiance of the “US-Centric Internet”


Brazil-Europe Internet cable to cost $185 million

February 13, 2014, 7:38 am

Rousseff has worked with European and South American allies to pressure the US on illegal NSA spying overseas [Xinhua]

Brazil is pushing ahead with plans to boost its Internet security by developing an undersea fibre-optics communications cable that would reroute its online traffic directly to Europe, bypassing the United States.

State-owned telecom provider Telebras recently announced that it was entering into a joint venture with Spain’s IslaLink Submarine Cables to build a link between the northeastern city of Fortaleza and the Iberian Peninsula.

The undersea cable is budgeted at $185 million and construction is scheduled to begin in July.

Brazil, along with most Central and South American countries, traditionally routes its Internet traffic through the Network Access Point, which is hosted in Miami, Florida.

Brazil, Russia, India, China, and South Africa currently use hubs in Europe and the US to connect to one another, which translates into higher costs and leaves open the opportunity for data interception and theft.

Telebras project coordinator Ronald Valladão says the cable will boost Brazil’s Internet security and cut online costs for the consumer.

“This new submarine cable provides a direct connection to the European continent, decreasing latency. It is expected that this will result in cost reductions,” he recently told the media.

Since Edward Snowden, the National Security Agency contractor who leaked vital intelligence to the media on US domestic and overseas surveillance, published information that Washington was aggressively spying on Brazilian officials, including the president, Brasilia has made Internet security and communications a priority.

Brazil and its fellow BRICS partners are also moving ahead with building a massive undersea cable that would connect all members.

By the time it is completed, the BRICS Cable will be the third longest undersea telecommunications cable in the world, covering a distance of 34,000 km.

Brazilian President Dilma Rousseff has also pushed a new Internet bill that would compel Google, Facebook, and other networks to store locally gathered data in the country, and not on overseas servers.

The new legislation would force foreign-based Internet companies to maintain data centres inside Brazil that would then be governed by Brazilian privacy laws, officials said.

Rousseff has repeatedly said that the US spying regimen is unacceptable, and postponed an official visit to the US originally scheduled for October 23 in protest.

“The illegal practices of intercepting the communications and data of citizens, companies, and members of the Brazilian government constitute a serious act against national sovereignty and individual rights, and are incompatible with the democratic coexistence of friendly countries,” a presidential statement said when revelations of espionage in Brazil were made public.

On November 24, Brazil and Argentina urged other South American countries to discuss a bilateral treaty on cyber-security.

On November 27, the UN Rights Committee passed a “right to privacy” resolution, drafted by Brazil and Germany.

The Third Committee of the UN General Assembly, which deals with social, humanitarian, and cultural affairs, unanimously adopted the resolution, saying surveillance and data interception by governments and companies “may violate or abuse human rights.”

In late January, talks between Brazil and the US failed to satisfactorily answer the spying charges or eke out a “permanent solution” to restore bilateral ties damaged by the Snowden revelations.


Prime Minister Narendra Modi poses with leaders of the BRICS and South American nations at the BRICS summit at Itamaraty palace in Brasilia, Brazil on Wednesday

Sixth BRICS Summit – Fortaleza Declaration

Putin Blamed for #MH17 to Launch Attack on BRICS World Bank

The MH17 Disaster. BRICS Banks Will Change the World! (DEMCAD)
REALIST NEWS – BRICS Nations Plan Their Own World Bank, IMF (jsnip4)

  Major C.H. Douglas on “The Causes of War” – part 1

Major C.H. Douglas on “The Causes of War” – part 2

The Dangers of Internationalism (Arthur Kitson)

Abel Danger Monetary Reform Folder

Peter Tosh – The Day the Dollar Die

The Police – Spirits in the Material World

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The Hubris of Trying to Eliminate Cash

People like hard currency and use it every day. It is a check on centralized power. It is private and peer-to-peer. And despite or because of that, some want to get rid of it.

Conor Friedersdorf Jun 6 2014

While investigating Bitcoin, Antonis Polemitis once poked fun by imagining how the media would react to the introduction of cash. He titled his parody, “Bizarre Shadowy Paper-Based Payment System Being Rolled Out Worldwide.” Cash has been dubbed “bills” among “the shadowy community of anti-banking libertarians who have been the primary users of cash to date,” the article explains, and “though hard to imagine, cash operates with no consumer protection at all. If your ‘bills’ are stolen or lost, they are gone forever.”

A later section of the article is titled “Perfect for Criminals”:

The launch of cash has provoked a reaction from law-enforcement agencies worldwide that universally condemned the development. “Cash is a 100% anonymous and untraceable payments technology. It is like a weapon of mass destruction launched against law enforcement,” said Mike Smith, the recently confirmed FBI Director. “It is the perfect payment mechanism for criminals, drug cartels, terrorists, prostitution rings and money launderers. We don’t know how we will be able to combat such a technology and fully expect that a new generation of super-criminals will emerge, working in the shadows of a world where they can conduct their illicit affairs without leaving a trace.”

Polemitis quotes the fictional banking superintendent of New York State: “I can’t think of any reason that a law-abiding individual would want to use cash,” he declared. “At a bare minimum, we believe there should be a licensing procedure for individuals or businesses that plan to use cash, a ‘Cash-License’ as it were. This license will limit ‘cash’ to trust-worthy individuals who keep detailed auditable records of all their cash transactions in order to keep New York safe from criminals.”

At the time, I laughed.

Today I worry that the parody is prescient. Kenneth Rogoff, a professor of public policy and economics at Harvard University, is as good a place to begin as any. Under the headline, “Paper money is unfit for a world of high crime and low inflation,” he declares in the Financial Times that “it is time to consider whether paper currency is vestigial, or worse,” in part because “phasing out currency would address the concern that a significant fraction, particularly of large-denomination notes, appears to be used to facilitate tax evasion and illegal activity.”

He is hardly alone. Late last year, The New York Times posed this question in its Room for Debate feature: “Should the U.S. eliminate cash and stop printing currency?”

“Scrapping cash is simple and elegant,” Matthew Yglesias wrote back in 2011, “which is why it will happen one day soon.” Public-policy intellectuals are often taken by their own perception of simplicity and elegance, the desires of the governed be damned. They imagine that simplicity on paper will lead to real-world utopia.

“Already, a movie character depicted as carrying a large quantity of cash can be reliably assumed to be doing something illegal,” Yglesias wrote. “Meanwhile, the rise of phone-based mobile payments services such as Square and the emergence of a complete mobile banking industry in Africa point to the arrival of the day germ-ridden cash will be as inconvenient for small transactions as it is for large ones. At that point, cash will be left with its rump use as a medium of exchange for drug dealers, tax evaders, and other shady operators and we can expect countries to start banning it altogether. The first country to impose that ban will find there’s an appealing hidden benefit: Without cash, there’s no need to ever have an extended recession.”

So there you have it: Let Yglesias and his technocrat-manager friends bring all money under the control of government and corporate financial institutions (never mind their recent performance record) and hard times will be a thing of the past!

Does that sound too good to be true to anyone else?

I cite these journalistic treatments instead of scholarly arguments not because the latter don’t exist, but to demonstrate that the idea has made its way into mainstream discourse. True, the masses are not clamoring for this change. What concerns me is that the movement grows stronger despite the lack of popular appeal. The rise of electronic-payment systems is wonderful. I use credit cards and debit cards all the time. I also use cash. Like me, most people want the ability to use cash in many circumstances. Revealed preference could not be more clear.

An end to cash would mean that every financial transaction is exposed to a third party.
But elite incentives are different. Federal, state, and local law enforcement, as well as tax authorities, want to bring as much of the economy under their direct supervision as possible. Economists like Rogoff and technocracy-friendly journalists like Yglesias want to design and popularize “elegant” systems of rational central planning, and to eliminate checks on centralized power, messiness, and spontaneous orders. Forget folks who like cash. Never mind worries about forcing us all to run all spending through a corrupt corporate-banking system. Never mind the resilience of having a medium of exchange in the non-digital world that works when the power grid is down, when one’s smart phone is dropped in water, when one’s identity is stolen by hackers, or one’s account frozen by Visa or Bank of America because a purchase on vacation was deemed suspicious.

An enthusiastic Washington Post article about eliminating cash, pegged to ongoing efforts in Sweden, included this passage about hard currency in the United States:

Creating a cashless society is possible once you open up the financial services sector to the technology sector. All of a sudden, you have the most innovative companies in Silicon Valley competing to launch new financial services offerings. While Google sticks to its vision of creating a digital Wallet, competitors are exploring other options, such as creating a payment network within Facebook or sending money via text messages. Even companies that used to cater only to the financial elite, such as American Express, are now exploring new payment alternatives that enable lower-income Americans to participate in the digital economy simply by being part of Facebook. All of this competition has obvious implications — it will help to push down transaction costs and level the playing field for America’s 99 percent.

Think about that for a moment. Confronted with a policy change that would destroy the ability of low-income Americans (many of whom have no bank account or credit card) to conduct various transactions they rely on in daily life, the author suggests one solution could be signing them all up for Facebook, and then, invoking the “obvious implications,” he predicts … equality for the 99 percent! Along the way, he assumes that, for poor people, signing up for Facebook, logging in, and using it for all transactions will have fewer transaction costs than cash. And what would Facebook do with all that data? The question never occurs to him.

To eliminate cash is to say to hell with financial privacy. In 1976, the Supreme Court held the following in U.S. v. Miller:

There is no legitimate “expectation of privacy” in the contents of the original checks and deposit slips, since the checks are not confidential communications, but negotiable instruments to be used in commercial transactions, and all the documents obtained contain only information voluntarily conveyed to the banks and exposed to their employees in the ordinary course of business. The Fourth Amendment does not prohibit the obtaining of information revealed to a third party and conveyed by him to Government authorities …. Issuance of a subpoena to a third party does not violate a defendant’s rights, even if a criminal prosecution is contemplated at the time the subpoena is issued.

An end to cash would mean that every financial transaction is exposed to a third party. Protecting one’s privacy from the prying eyes of the government isn’t the only concern either. Cashlessness has implications for people like Janet Vertesi, who wanted to hide her pregnancy from Big Data. It has implications for people who don’t want their credit score dinged when, say, they make a purchase at Walmart. Beyond a certain threshold I’d alert my wife to a purchase, but do I want her knowing exactly what I spend on my insatiable avocado habit? Thank goodness for cash.

It’s adorably naive that Yglesias thinks a cashless society would be recession-proof, and that some law-enforcement types think it would eliminate black markets, which they haven’t even managed to squash in maximum-security prisons. It is tempting to focus on these flaws in the debate over a cashless future. But there is a more basic point to be made. Cash should remain, always and everywhere, because it allows private, peer-to-peer transactions. In doing so, it decentralizes power in society (as well as adding a layer of resilience to the financial system — a diversification between the physical and virtual). Having stuff in society that elites can’t completely control is a good thing. Keeping a large swath of the economy away from Big Finance and Big Data is a good thing. Finally, people like cash; we shouldn’t let the elites take it away.



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Bermuda: The Domicile of Choice for ILS Entities – Sophisticated Counterparties, Light Regulation – Property Catastrophe Arena – Earthquakes and Hurricanes – Calibrating Models to Predict Outcomes – Impact on Traditional Markets – More Money Coming Into the ILS Space – Moral Hazard

KPMG in Bermuda: Deciphering Insurance Linked Securities


Published on Jan 28, 2013

With Bermuda fast becoming a central player in the ILS market, KPMG in Bermuda has brought together an experienced team of structured finance professionals across our services lines to form the Insurance Linked Securities (“ILS”) Group.

Deciphering Insurance Linked Securities
with Jason Carne
Managing Director | ILS Insurance Practice | KPMG in Bermuda

Hi. I’m Jason Carne. I’m the managing director in charge of our ILS insurance practice here in Bermuda. I’ve been a partner for about 15 years, I’ve been in Bermuda for 20 years, and during that time I’ve worked predominantly in property catastrophe reinsurance business. So I have a unique insight into a number of these ILS types of products. And I think that’s why the firm asked me to take the lead in the ILS market here.

What is an Insurance Linked Security (ILS)?

An insurance linked security is, essentially, it’s an instrument that provides protection for a buyer, in a collateralized form, against an insurance loss. And that insurance loss could be an event such as an earthquake in California, or a hurricane in Florida, or an extreme mortality type of a loss – let’s say it’s a pandemic flu or something like that – and the unique thing about them are that it takes away the counterparty risk, from the buyer’s perspective. So within the traditional market, you had insurance contracts between two companies; and when one insurance company buys protection from another, that buyer assumes the credit risk – the counterparty risk – of the company it does business with.

But in an insurance linked security structure, that counterparty risk is removed, and replaced by funds that are placed in a dedicated trust account that is only available for use by the purchaser, in the event of a loss. So it really takes away the counterparty risk from the buyer’s perspective, and that’s one of the reasons we’ve seen some growth in this area in the last several years.

Why has there been such rapid growth in this area in the last few years?

I think these products have been around for a while; so they’ve been around for 15 years or more – certainly the early catastrophe bonds were done 15 years or more ago. And I think we’ve seen a few things happen over the last several years. Firstly, the costs of doing these have come down substantially. The costs really were somewhat prohibitive in the early days, but now we’ve got a greater volume of these bonds. There’s more parties that have got the necessary knowledge and experience to bring these to market a little bit on a more cost-effective basis than perhaps we’ve seen in the past.

We’ve also seen some larger events: so World Trade Center, we’ve seen Hurricane Katrina – some of those events have really challenged the stability of traditional reinsurers, and we’ve seen some companies go to the wall as a result of that. And I think investors are really looking for the security that a collateralised ILS product brings. So that has certainly helped with growth.

The other thing I would say is that we’ve seen some improvement in modeling over the last 10 to 15 years or so. So where we talked about a 2 percent risk of default, that is really driven by a modelled analysis of, let’s say, the impact of a Category 4 hurricane hitting the Florida coast. And the sophistication of the modelling, and the ability of the modellers to predict the magnitude of an event happening, and the probability of it happening, have really improved substantially. As we’ve had more events, they get better at calibrating their models to predict outcomes. And I think that’s led to some investor confidence – greater investor confidence. And I think that’s led to more money coming into this space.

And then finally I would also add that we are in an environment at the moment where there is very little in the way of yield in the traditional markets. And a lot of institutional money, and other money, is looking for yield and looking for a home to get a good reward without taking undue risk. And I think that has also driven some money into this space, because the yields are very attrative relative to the risk. So if you bundle all those things together, I think we’ve seen some fantastic growth in this area, certainly in the last 5, 6 years. And I personally expect it to continue for the foreseeable future as well.

Why has Bermuda emerged as the domicile of choice for ILS entities?

Bermuda is the natural home for these vehicles. We already have some of the world’s top talent in the property catastrophe market on the island. Some of the world’s top underwriters are here, that are working for the Class 4 commercial property catastrophe reinsurers; we have some of the world’s top modellers here; we have some of the world’s top legal brains in the reinsurance industry, that are here; we have some of the world’s top accounting brains that are in the reinsurance industry, that are here; and we have one of the world’s leading regulatory jurisdictions, that is used to regulating the reinsurance market and the property catastrophe market, is also here. So when you bundle all those things together, Bermuda is an overwhelming leader in this field.

So I think, because of that, we’ve seen a lot of these ILS structures, and a lot of these ILS vehicles, come to the island to be able to tap into the expertise that we have on the island. And certainly, the regulatory environment is sensible and appropriate here. So it’s not overly burdensome, it doesn’t regulate an ILS vehicle the way that it would regulate an insurance company, because an insurance company is dealing with members of the public that are somewhat, let’s say, unsophisticated in insurance, whereas the ILS market is really a… it’s done between grown-ups. And you have sophisticated counterparties that really don’t need the heavy level of regulation that an insurance company would have. And I think we’ve designed a regulatory framework that works extremely well for these vehicles: it’s cost-effective, you can do some of these structures in a special purpose insurer that only needs a dollar of capitalisation to set up, and I think you have a fee structure here that is extremely competitive. When you wrap all those things together, it makes Bermuda a really, really attractive jurisdiction to base these vehicles.

What does the future hold in store for the ILS industry?

I think the future’s bright. I think some of the capital that are come into the ILS space is permanent, and a little bit maybe opportunistic – we may see some institutional investors just taking advantage of the enhanced yields that are available, relative to the corporate bond market. But overall I think the capital that’s here is largely here to stay. I think in terms of growth, I think we’re seeing more and more investors looking to diversify their investment portfolios and get some exposure to this market. As a result of that, I think that will drive growth. I think we’ll see growth through the same perils: so windstorm and earthquake, I think we’ll see those – the buyers of those risks diversify. So at the moment, the buyers tend to be North American, European, Japanese; I think in the future we’ll see a greater geographic spread of some of those types of bonds.

And I also think we’ll see growth in the types of perils that are covered. So we’ve seen some interest around things like satellite, offshore energy; we’ve seen a little bit of these already, but I think we may see some greater growth in these types of products as well. So I think we’ll see diversification geographically and diversification in types of risks that are covered. And when you marry that up with the increased funds that are looking to get into this space, I think we will see continued growth in the ILS market over the foreseeable future; so, I think the future’s bright.

How can KPMG help? 

Well, KPMG’s been working in this space for 15 years or more. And we’ve really been at the centre and the forefront of a lot of what has happened. Our role… people tend to think of us just as auditors, but we do so much more than that. We have an actuarial team here of 5 people – 5 actuaries: they have fantastic experience in property catastrophe arena; they are sophisticated modelers; they have great insight into the types of reserves that need to be held whenever these catastrophe events happen.

And then we also have a lot of experience around the audit of the claims orders. So when an event happens, investors generally would like confidence around the moral hazard of an insurer paying the claim and not making fraudulent claims into the ILS structure. So what a claims reviewer would do – and what KPMG would do in this role – is actually go in, inspect the claims, make sure that the claim is covered under the insurance policy, make sure there’s been appropriate due diligence around the claim itself: that the valuation is acceptable, and that the claim has been appropriately paid and authorised. That can be extremely invaluable in adding a level of credibility and confidence to an investor, when they’re looking to invest in these types of products.

We also do tax work; so certainly to the extent that there is U.S. investors in catastrophe bonds or ILS funds, we could certainly help investors with some of their compliance returns. We also can do tax planning, for individuals and for corporations, around this space as well. So there’s a real wealth of expertise we have in this area. And I would venture that we are the leading firm in this space.

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The Divine Comedy: “Here Comes the Flood”
XTC: “Great Fire”
Peter Tosh: “Igziabeher (Let Jah Be Praised)”

KPMG in Bermuda: ILS and the impact on traditional markets


Published on Feb 4, 2014
In this Podcast, we sit with Jason Carne, Head of ILS, to discuss Insurance Linked Securities and its impact on the traditional market.

Questions include: What are Insurance Linked Securities (ILS)?
What is the traditional market?
What are the benefits for the buyer and the seller?
Why has ILS grown so significantly?
What impact does ILS have on traditional markets?
What services do KPMG provide?
Why KPMG in Bermuda?

ILS and the impact on traditional markets
with Jason Carne

What are Insurance Linked Securities (ILS)? 

Insurance linked securities are instruments where the insurance company – the buyer – is buying a limit of cover that is either fully collateralised or fully funded by the counterparty. Examples of insurance linked securities would be catastrophe bonds, or collateralised reinsurance, and things like ILS funds, where ILS funds are maybe buying catastrophe bonds and/or collateralised reinsurance. And we’re seeing great growth in this area, and it’s brought a lot of new capital and new ideas into the reinsurance market.

What is the traditional market?

So if you go back in time, the traditional market is really an insurance contract of utmost good faith between a buyer and a seller. So the insurance company would buy cover from another insurance company, in the form of a reinsurance agreement; and in the event of a loss, the reinsurance company would pay losses to the insurance company; and in the event of no losses, the reinsurer walks away with the premium.

So the catalyst – or one of the catalysts – for the insurance linked securities market, is the buyers, in some situations, were getting concerned about the counterparty risk of just buying from another company. Because in the event of a very significant, or series of significant catastrophes, the reinsurer could become insolvent. Then the insurance contract that the buyer has purchased becomes worthless, because the reinsurer has no funds to make good on its obligations.

Whereas in a collateralised or ILS structure, those funds are kind of firewalled, and they are readily available for the buyer, in the event of a loss. And that’s all constructed under the legal documents of the transaction.

What are the benefits for the buyer and the seller?

So the buyer, apart from getting the fully collateralised cover, the buyer may also be able to get multi-year pricing. So rather than just buying a contract for a year, in a softer market – and we’re in a softer market at the moment – a buyer can maybe go out several years – typically 3, let’s say – 3 years, and lock in a price over an extended period of time. And that’s attractive to them because, you know, if we have a large event in any given year – in the past, pricing would respond to that; in other words, it will increase. Whereas you bought a multi-year cover and you lock that – we have some agreement around the parameters of pricing early on – then you can benefit from over the 3 years if the market does harden subsequently.

From a seller’s perspective, the sellers as I said are typically, you know, institutional investors or hedge funds and other types of sophisticated investors. They like the idea of owning an asset where their returns and their risk of loss of principal are not linked to the financial markets. So, you know, if they’re buying a corporate bond, their risk of losing money is driven by the creditworthiness of the issuer of that bond; where in an ILS environment, their risk of principal is linked to a natural catastrophe, for example: so an earthquake, or a hurricane, or the like. And that means that, from an investor’s perspective, it gives them greater diversity in a portfolio, in theory; it would mean that, over time, they should get enhanced return with low volatility. And that’s very attractive to investors, and it’s really attracted a lot of money into the space.

And I think the financial crisis – to the extent there are some silver linings coming out of that – that, you know, investors saw that the ILS asset class, even though it did come off a little in the financial crisis, it did not come off anywhere near as much as more traditional asset classes. And the reason for that is the fact that it’s a non-correlated opportunity for them.

Why has ILS grown so significantly?

It’s grown because there are advantages for both the buyer and the seller. And I also think it’s grown because we’re in a low interest rate environment, so sellers are – investors are struggling to get good yield elsewhere, and they’ve been attracted into the ILS space because they could get a very good yield relative to the risk that they’re taking. And I think that’s drawn a lot of money into the area. So that’s been very positive for the ILS industry.

What impact does ILS have on traditional markets?

So we already talked about the softening rates, which is certainly a negative for the traditional market. On the positive side, a lot of the traditional resinsurers have formed sidecars or other vehicles that they will use their underwriting expertise to benefit them. So, for example, they will write business directly onto the balance sheet of their sidecar, and charge a fee and perhaps a proper commission for doing so. So the traditional reinsurer is earning underwriting income and other fees whilst writing against somebody else’s capital. And it’s good for the other capital, because of all the reasons we just talked about – why sellers are benefitting from this. But it’s good for the traditional reinsurer, because they’re actually enhancing their own return on capital by getting fees where they’re not actually having their own capital at risk.

What services do KPMG provide? 

So I’ve been involved in the ILS area for well over 15 years, and over that time we’ve done a number of things: doing audits, through some more advanced work around helping companies structure some vehicles and, you know, general advice to the industry; we’ve done claims review services, where we will go out and inspect claims in the vent of a loss; we do actuarial work around, you know, assessing the amount of reserves an entity has to hold, and/or a settlement price that should be struck between counterparties to close a deal out; and of course we also do tax services. So we’ve done tax services primarily around tax planning, and then tax compliance for investors – people looking to start up these types of vehicles.

Why KPMG in Bermuda?

Well, I think as a jurisdiction, Bermuda has become the domicile of choice for these vehicles. We have a great infrastructure here, incredible depth of talent; we also have the reinsurance market itself. So you have some of the best and brightest intellectual capital that the reinsurance community has to offer, within the 21 square miles of Bermuda. So that’s a massive competitive advantage.

And then, as a service provider that’s been working in this industry for 20 years, you know, we’ve developed a real leadership position in this. We were involved with the very first cat bond in Bermuda; we’re the only firm that’s performed claims review of procedures subsequent to an event; and we have a very senior and talented group of partners and staff in the office. And we really have what it takes to differentiate ourselves from the competition.

So I’d like to thank you for listening to me today. If you’d like more information, please feel free to visit our website – www.kpmg.bm – and you can find my contact details there, and please feel free to give me a call or drop me your number.

Hubert Smith: “Bermuda Is Another World”
Jonathan Richman: “Down In Bermuda”
Jonathan Richman: “Monologue About Bermuda”
Mighty Sparrow (Trinidad): “Bang Bang Lulu” 
Bob Marley (Jamaica): “Stiff Necked Fools” 
Further viewing:

2013 Bermuda Reinsurance Conference: ILS and Alternative Capital 
911 Resolution Trilogy: Pattern of the Crimes 

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The Basel Accords Demystified – Massive Regulatory Failures – Unelected, Unaccountable International Bankers Impose an Immense and Unnecessary Burden – Reform Money and Finance for the Good of All


BASEL I, II & III on an unsuspecting world

Central bankers’ Basel III scheme will worsen worldwide recession

BASEL I. In 1988, a faceless, unelected group of bankers met in Basel, Switzerland at the Bank for International Settlements (“BIS”) – the “central bankers’ bank” which even Swiss authorities may not enter – and in their “Basel I Accord” agreed to a set of minimum capital requirements (8%) for banks. This was a number fine for some banks, but higher than what was in place for French and especially Japanese banks. To raise more capital to reach the 8% level, French and Japanese banks had to reduce loans, causing a recession in France and a depression in Japan, one from which Japan has never fully recovered.

BASEL II. In 2004, the same group met and agreed to Basel II (“The Return of Basel I”) – which required banks to value their capital based on market values, or “mark-to-market”. These rules were approved for the US on November 1, 2007. The declining housing market set off a chain reaction due in part to Basel II, which banks knew was coming and constricted credit in anticipation of. The next month, December 2007, the stock market collapsed and the Great Recession began in earnest. This should have been no surprise to the Japanese, nor to the BIS bankers. Full implementation of Basel II was subsequently delayed in the US until 2009. Basel II has been blamed for actually increasing the effect of the housing crisis, as banks had to reduce lending to increase their capital as the value of mortgages they held declined. This produced a downhill snowball effect on home prices, and then on nearly everything else as lending and the economy contracted.

BASEL III. Not content with two massive regulatory failures, the same bankers have now produced Basel III (“The Revenge of Basel I & II”). Like Basel I & II, Basel III increases capital requirements yet again, in a series of steps beginning in 2013 with the start of the gradual phasing-in of the higher minimum capital requirements, not completed until 2018. The BIS bankers have imposed this and are forcing their home governments to get in line – as have the UK, the US, and most other developed nations. It is truly a global rule by central bankers acting in concert/cabal.

An OECD study estimates that the medium-term harmful impact of Basel III implementation on GDP growth is in the range of –0.05% to –0.15% per year – just what’s needed in a worldwide recession! To meet the capital requirements effective in 2015, banks are estimated to need to increase their lending spreads on average by about .15%. The capital requirements effective as of 2019 could increase bank lending spreads by about .5%. Rising interest rates could significantly hurt small bank capital positions, because a 3% upward swing in interest rates could drop a bank’s capital by 30%, placing the bank in an undercapitalized position, forcing it to dramatically reduce loans – again, the downhill snowball effect.

The proposed Basel III regulatory capital requirements are an immense and unnecessary burden that will actually threaten the existence of banks having under $1 billion in assets. These new regulations will further drive consolidation into a few bigger banks. Some on Wall Street, like mergers and acquisitions expert John Slater, predict that Basel III’s compliance costs will lead to a merger boom, and that in the next 3-5 years, 20-30 percent of all banks will merge, further consolidating wealth in fewer and fewer hands. That is the object: world bank/economic and hence political control by a handful of unelected, unaccountable, international bankers beholden to no one, many of whom have ethics only Machiavelli could admire and world views that most people on earth would consider abhorrent.  source

Dick Eastman writes:

The Basel Accords (I, II, and III) have brought nothing but more deflation and depression, by raising the reserve requirement of banks. Their only purpose in doing that was to add to unelected central bankers’ wealth, at the expense of the world’s debtors.

Banks can lend a high fraction of what people have deposited in the bank. The fraction that they must keep and not lend is their required reserve.

If the reserve requirement is 10 per cent of the loan amount, then if someone deposits $1,000 in the bank, the bank will be able to lend 9/10ths of that ($900), and must keep the rest ($100) in reserve. 

The money that we use to pay employees, to go shopping, to pay rent, taxes, and mortgages, is paid with checks. Checks transfer deposits that were created by banks’ lending.

Money that people use to hire one another and buy from one another is money loaned by banks. How much money that is, depends on how much money is deposited in the banks, and on what the reserve requirement is – whether 1/10th of the loan amount, or some other fraction.

Basel Accords are an agreement among bankers internationally – the big banks get together, the small ones are not invited – to raise the reserve requirement from what it is now (say, holding reserves equal to 1/10th of loans outstanding) to a higher reserve requirement (say, 2/10ths or 1/5th of loans outstanding).

What this means is that banks have to cut their lending and call in loans, because getting away with having reserve money equal to just 1/10th of loans is no longer acceptable. To back the loans that were backed by the 1/10th requirement, now requires twice as much in reserves: so the banks must contract (reduce) their loans to meet the new requirement. If a bank had $10 million in loans outstanding, and one tenth of that amount ($1 million) “backing” the loans, but now $2 million of reserves is required to make the $10 million in loans legal, then the bank must call in another $1 million in loans. 

And that will cause further contraction due to the money multiplier effect. This means that the $1 million in loans called in, was itself acting as reserves in other banks: so loans will fall by even more than $1 million. Fractional reserve banking multiplies deposits by more than just the amount of new deposits. It also contracts the money supply by more than just the amount of the retirement of a loan. This is hard to explain, so let’s just jump to the result.

Starting with a reserve requirement of 1/10 for loans of $10 million, when you increase the reserve requirement from 1/10th to 2/10ths (that is, from a 10% reserve requirement to a 20% reserve requirement), the amount of loans the banking system can have drops from $10 million to $5 million.

The Basel Accords raise reserve requirements – which means a fall in loans outstanding.

And guess what? Only the rich big banks have lots of idle cash to meet the new requirement and keep their loans outstanding.

The little banks will have to cut good loans to good businesses – because of the new Basel law imposed on the US economy.

Guess which banks will get the assets of those borrowers who were forced to liquidate because of the loan call? The big banks will, of course.

The end result is that the small banks fail, the bigger banks grow, there is less lending and more deflation and depression all around. 

Further reading:

Everything the citizen must know to reform money and finance for the good of all (Dick Eastman)

Global Banking: The Bank for International Settlements (Patrick Wood)

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