March, 2009

 I¹m tired of hearing about sub-prime mortgages.

 It¹s as if these things were living entities that had spawned an epidemic of

 economic pornography.

 Sub-prime mortgages are as much a cause of the current financial chaos as

 bullets were for the death of JFK.

 Someone planned the assassination and someone pulled the trigger.

 The media, J. Edgar Hoover and the Warren Commission tried to push Lee

 Harvey Oswald off on the American public. They didn¹t buy it.

 They shouldnt buy sub-prime mortgages either.

 Someone planned the assassination and someone pulled the trigger.

 Only this time the target is the international financial structure and the

 bullets are still being fired.

 Oh yes, people took out adjustable rate mortgages they could ill afford,

 that were then sold to Wall Street bankers. The bankers bundled them up

 like gift wrappers at Nordstroms during the Holidays and sold them to other

 banks after raking off billions in fees. The fees? They were for –well they

 were for wrapping the mortgages in the haute couture of Wall Street.

 But it didnt start there. No, no, not by a long shot.

 And as the late, great Paul Harvey would say, And now you¹re going to hear

 the Rest of the Story.

 Are sub-prime mortgages part of some larger agenda?

 And if so, what is it?

 Stay with me here, because Alice is about to slide down the rabbit hole into

 the looking glass world of international finance.

 EASY MONEY ALAN

 There are various places we could start this story, but we will begin with

 the 1987 ascendency of Rockefeller / Rothschild home-boy, Alan Greenspan,

 from the Board of Directors of J.P. Morgan to the throne of Chairman of the

 Federal Reserve Bank (a position he was to hold for twenty years).

 From the beginning of his term, Greenspan was a strong advocate for

 deregulating the financial services industry: letting the cowboys of Wall

 Street sow their wild financial oats, so to speak.

 He also kept interest rates artificially low as if he had sprayed the

 boardroom of the Federal Reserve Bank with some kind of fiscal aspartame.

 While aspartame (an artificial sweetener branded as Equal and

 NutraSweet) keeps the calories down, it has this itty bitty side effect of

 converting to formaldehyde in the human body and creating brain lesions.

 As we are dealing here with a gruesomely tortured metaphor, let me explain:

 I am not suggesting that Chairman Greenspan put Equal in his morning coffee,

 but rather that by his direct influence, interest rates were forced

 artificially low resulting in an orgy of borrowing and toxic side effects

 for the entire economy.

 THE COMMUNITY REINVESTMENT ACT

 Greenspan had been the Fed Chairman for seven years when, in 1994, a bill

 called the Community Reinvestment Act (CRA) was rewritten by Congress. The

 new version had the purpose of providing loans to help deserving minorities

 afford homes. Nice thought, but the new legislation opened the door to loans

 that set aside certain lending criteria: little things like, a down payment,

 enough income to service the mortgage and a good credit record.

 With CRAs facelift, we have in place two of the five elements of the

 perfect financial storm: Alan (Easy Money) Greenspan at the helm of the Fed

 and a piece of legislation that turned mortgage lenders into a division of

 the Salvation Army.

 Perhaps you can see the pot beginning to boil here. But the real fuel to the

 fire was yet to come.

 GLASS STEGALL

 To understand the third element of the storm, we travel back in time to the

 Great Depression and the 1933 passage of a federal law called the Glass

 Stegall Act. As excess speculation by banks was one of the key factors of

 the banking collapse of 1929, this law forbade commercial banks from

 underwriting (promoting and selling) stocks and bonds.

 That activity was left to the purview of “Investment Banks” (names of major

 investment banks you might recognize include Goldman Saks, Morgan Stanley

 and the recently diseased Lehman Brothers).

 Commercial banks could take deposits and make loans to people.

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

 To repeat, this law was put in place to prevent the banking speculation that

 caused the Great Depression. Among other regulations, Glass Stegall kept

 commercial banks out of the securities.

 Greenspans role in our not-so-little drama, is made clear in one of his

 first speeches before Congress in 1987 in which he calls for the repeal of

 the Glass Stegall Act. In other words, he’s trying to get rid of the

 legislation that kept a lid on banks speculating in financial markets with

 securities.

 He continued to push for the repeal until 1999 when New York banks

 successfully lobbied Congress to repeal the Glass Stegall Act. Easy-Money

 Alan hailed the repeal as a revolution in finance.

 Yeah Baby!

 A revolution was coming.

 With Glass Stegall gone, and the permissible mergers of commercial banks

 with investment banks, there was nothing to prevent these combined financial

 institutions from packaging up the sub-prime CRA mortgages with normal prime

 loans and selling them off as mortgage-backed securities through a different

 arm of the same financial institution. No external due diligence required.

 You now have three of the five Horsemen of the Fiscal Apocalypse: Greenspan,

 CRA mortgages and repeal of Glass Stegall.

 WAIVER OF CAPITAL REQUIREMENTS

 Enter Hammering Hank Paulson.

 In April of 2004, a group of five investment banks met with the regulators

 at the Securities and Exchange Commission (SEC) and convinced them to waive

 a rule that required the banks to maintain a certain level of reserves.

 This freed up an enormous reservoir of capital, which the investment banks

 were able to use to purchase oceans of Mortgage Backed Securities (cleverly

 spiked with the sub-prime CRA loans like a martini in a Bond movie). The

 banks kept some of these packages for their own portfolios but also sold

 them by the bucket load to willing buyers from every corner of the globe.

 The investment bank that took the lead in getting the SEC to waive the

 regulation was Goldman Sachs. The person responsible for securing the waiver

 was Goldman¹s Chairman, a man named Henry Paulson.

 With the reserve rule now removed, Paulson became Wall Street¹s most

 aggressive player, leveraging the relaxed regulatory environment into a

 sales and marketing jihad of mortgage backed securities and similar

 instruments.

 Goldman made billions. And Hammering Hank? According to Forbes Magazine, his

 partnership interest in Goldman in 2006 was worth $632 million. This on top

 of his $15 million per year in annual compensation. Despite his glistening

 dome, let¹s say Hank was having a good hair day.

 In case this isn¹t clear, it was Paulson who, more than anyone else on Wall

 Street, was responsible for the boom in selling the toxic mortgage backed

 securities to anyone who could write a check.

 Many of you may recognize the name Hank Paulson. It was Paulson who left the

 Goldman Sachs¹ chairmanship and came to Washington in mid 2006 as George

 Bush¹s Secretary of the Treasury.

 And it was Paulson who bludgeoned Congress out of $700 billion of so called

 stimulus money with threats of public riots and financial Armageddon if they

 did not cough up the dough. He then used $300 billion to ³bailout² his Wall

 Street home boys to whom he had sold the toxic paper in the first place. All

 at taxpayer expense.

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

 Congress has their own responsibility for this fiscal madness, but that¹s

 another story.

 This one still has one more piece ­ the Pièce de résistance.

 BASEL II

 Greenspan, the Community Reinvestment Act, the repeal of Glass Stegall and

 Paulson getting the SEC to waive the capital rule for investment banks have

 all set the stage: the economy is screaming along, real estate is in a

 decade long boom and the stock market is reaching new highs. Paychecks are

 fat.

 But by the first quarter of 2007, the first nigglings that all was not well

 in the land of the mortgage back securities began to filter into the press.

 And like a chilled whisper rustling through the forest, mentions of rising

 delinquencies and foreclosures began to be heard.

 Still, the stock market continued to rise with the Dow Jones reaching a high

 of 14,164 on October 9th 2007. It stayed in the 13,000 range through the

 month, but in November, a major stock market crash commenced from which we

 have yet to recover.

 It¹s not just the U.S. stock market that has crashed, however. Stock

 exchanges around the world have fallen like a rock off a tall building. Most

 have lost have half their value, wiping out countless trillions.

 If it was just stock markets, that would be bad enough, but, let¹s be

 frank, the entire financial structure of the planet has gone into a tail

 spin and it has yet to hit ground zero.

 While there surely would have been losses, truth be told, the U.S. banking

 system would likely have gotten through this, as would have the rest of the

 world, had it not been for an accounting rule called Basel II promulgated by

 the Bank of International Settlements.

 Who? What?

 That¹s right, I said an accounting rule.

 The final nail in the coffin, and this was really the wooden spike through

 the heart of the financial markets, was delivered in Basel, Switzerland at

 the Bank of International Settlements (BIS).

 Never heard of it? Neither of have most people so, let me pull back the

 wizard¹s curtain.

 Central banks are privately owned financial institutions that govern a

 country¹s monetary policy and create the country¹s money.

 The Bank of International Settlements (BIS), located in Basel, Switzerland

 is the central banker¹s bank. There are 55 central banks around the planet

 which are members, but the bank is controlled by a Board of Directors, which

 is comprised of the elite central bankers of 11 different countries (U.S.,

 UK, Belgium, Canada, France, Germany, Italy, Japan, Switzerland, the

 Netherlands, and Sweden).

 Created in 1930, the BIS is owned by its member central banks, which, again,

 are private entities. The buildings and surroundings which are used for the

 purpose of the bank are inviolable. No agent of the Swiss public authorities

 may enter the premises without the express consent of the Bank. The Bank

 exercises supervision and police power over its premises. The Bank enjoys

 immunity from criminal and administrative jurisdiction.

 In short, they are above the law.

 This is the ultra secret world of the planet¹s central bankers and the top

 of the food chain in international finance. The Board members fly into

 Switzerland for once-a-month meetings, which they hold in secret.

 In 1988 the BIS issued a set of recommendations on how much capital

 commercial banks should have. This standard, referred to as Basel I, was

 adopted worldwide.

 In January of 2004 our boys got together again and issued new rules about

 the capitalization of banks (for those that are not fluent in bank-speak,

 this is essentially what the bank has in reserves to protect itself and its

 depositors).

 This was called Basel II.

 Within Basel II was an accounting rule that required banks to adjust the

 value of their marketable securities (such as mortgage backed securities) to

 the ³market price² of the security. This is called Mark to the Market. There

 can be some rationality to this in certain circumstances, but here¹s what

 happened.

 THE MEDIA AND MARK TO THE MARKET

 As news and rumors began to circulate about some of the sub-prime, CRA loans

 in the packages of mortgage backed securities, the press, always at the

 ready to forward the most salacious and destructive information available,

 started promoting these problems.

 As a result, the value of these securities fell. And when one particular

 bank did seek to sell some of these securities, they got bargain basement

 prices.

 Instantly, per Basel II, that meant that the hundreds of billions of dollars

 of these securities being held by banks around the world had to be marked

 down ­ Marked to the Market.

 It didn¹t matter that the vast majority of the loans (90% +) in these

 portfolios were paying on time. If, say Lehman Brothers had gotten fire sale

 prices for their mortgage backed securities, the other banks, which held

 these assets on their books, now had to mark to the market, driving their

 financial statements into the toilet.

 Again, it didn¹t matter that the banks were receiving payments (cash flow)

 from their loan portfolios, the value of the package of loans had to be

 written down.

 A rough example would be if the houses on your street were all worth about

 $400,000. You owe $300,000 on your place and so have $100,000 in equity.

 Your neighbor, Bill, in selling his house, uncovered a massive invasion of

 termites. He had to sell the house in a hurry and wound up with $200,000,

 half the real value.

 Shortly thereafter, you get a demand letter from your bank for $100,000

 because your house is only worth $200,000 according to ³the market.² Your

 house doesn¹t have termites, or perhaps just a few. Doesn¹t matter.

 Of course, if the value of your home goes below the loan value, banks can¹t

 make you cough up the difference.

 But if you are a bank, Basel II says, you must adjust the value of your

 mortgage backed securities if another bank sold for less -- termites or no.

 When the value of their assets were marked down, it dramatically reduced

 their capital (reserves) and this ­ their capital - determined the amount of

 loans they could make.

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

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

 This happens to be a lie. Hard work, production, and the creation of

 products that are needed and wanted by others; this is the true life blood

 of an economy.

 But, let’s be honest, credit does drive much of the current U.S. economy:

 home mortgages, auto loans and Visas in more flavors than a Baskin Robbins

 store.

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

 THE CRISIS

 Mortgage lending slammed to a halt as if it had run head long into a cement

 wall, credit lines were cancelled and credit card limits were reduced and in

 some cases eliminated all together. In short, with their balance sheets

 butchered by Basel II, banks were themselves going under and those that

 weren¹t simply stopped lending. The results were like something from a

 financial horror film ­ if there were such a thing.

 Prof. Peter Spencer, one of Britain’s leading economists, makes it very

 clear that the Basel II regulations are at the root cause of the crunch

 and that if the authorities retain the strict Basel regulations, the full

 scale of the eventual credit crunch and economic slump could be disastrous.

 The consequences for the macro-economy, he says of not relaxing (the

 Basel regulations) are unthinkable.

 Spencer isn’t the only one who sees this. There have been calls in both the

 U.S. and abroad to, at least, relax Basel II until the crisis is over. But

 the Boys from Basel haven’t budged an inch. The U.S did modify these rules

 somewhat a year after the devastation had taken place here, but the rules

 are still fully in place in the rest of the world and the results are

 appalling.

 The credit crisis that started in the U.S. has spread around the globe with

 the speed that only the digital universe could make possible. You¹d think

 Mr. Freeze from the 2004 Batman movie was at work.

 We have already noted that stock markets around the world have lost half of

 their value erasing trillions. Some selected planet-wide stats make it clear

 that it is not just stock values that have crashed.

 China¹s industrial production fell 12% last year, while Japan¹s exports to

 China fell 45% and Taiwan¹s were off 55%. South Korea¹s overseas shipments

 decreased 17%, while their economy shrank 5.6%.

 Singapore¹s exports were off the most in 33 years and Hong Kong¹s exports

 plunged the most in 50 years.

 Germany had a 7.3% decline in exports in the 4th quarter of last year while

 Great Britain¹s real estate market declined 18% in the last quarter compared

 to a year earlier.

 Australia¹s manufacturing contracted at a record pace last month bringing

 the index to the lowest level on record.

 There¹s much more, but I think it is obvious that credit pipe can no longer

 be smoked.

 Welcome to planetary cold turkey.

 ODDITIES

 It is fascinating to look at the date coincidence of the crash in the U.S.

 Earlier I noted that the stock market continued to rise throughout 2007,

 peaking in October of 2007. The dip in October turned to a route in

 November.

 The Basel II standards were implemented here by the U.S Financial Accounting

 Standards on November 15th 2007.

 There are more oddities.

 Despite the fact that Hammering Hank dished out hundreds of billions to his

 banker buddies to stimulate the economy and defrost the credit markets,

 the recipients of these taxpayer bailout billions have made it clear that

 they will be reducing the amount of money they will be lending over the next

 18 months by as much as $2 trillion to conform to Basel II.

 What do you think Hank, with his Harvard MBA, didn’t know? The former

 Chairman of the most successful investment bank in the world didn’t know

 that the Basel II regulations would inhibit his homies from turning the

 lending back on?

 Maybe it slipped his mind.

 Like the provision he put into his magnum opus, the $700 billion bailout

 called TARP. It carried a provision for the Federal Reserve to start paying

 interest on money banks deposited with it.

 Think this through for a minute. The apparent problem is that the credit

 markets are frozen. Banks aren’t lending. They can’t use the money from TARP

 to lend because Basel II says they can¹t. On top of this, Paulson’s bailout

 lets the Fed pay interest on funds it deposits there.

 If I am the president of a bank, and let’s say that I’m not Basel II

 impaired, why in the world am I going to lend to customers in the midst of

 the worst financial crisis in human history when I can click a mouse and

 deposit my funds with the Fed and sit back and earn interest from them until

 the chaos subsides?

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

 No, this stuff is as obvious as the neon signs on Broadway to the folks who

 play this game. This is banking 101.

 So, given, the provisions of Basel II and the refusal of the BIS to lift or

 suspend the regulations when they are clearly the driving force behind the

 planet wide credit crisis, and considering the lack of provisions in

 Paulson¹s bailout bill to mandate that taxpayer funds given to banks must

 actually be lent, and given the added incentive in the bill for banks to

 deposit their bread with the Fed, one gets the idea that maybe, just maybe,

 these programs weren¹t designed to cure this crisis; maybe they were

 designed to create it.

 Indeed, my friends, this is crisis by design.

 Someone planned the assassination and someone pulled the trigger.

 THE RUBBER MEETS THE ROAD

 All of which begs the question How Come?

 Why drive the planet into the throws of fiscal withdraw ­ of job losses,

 vaporized home equity, and pillaged 401ks and IRAs?

Because when the pain is bad enough, when the stock markets are in shambles,

 when the cities are teaming with the unemployed, when the streets are awash

 with riots, when governments are drenched in the sweat of eviction and

 overthrow, then the doctor will come with the needle of International

 Financial Control.

 This string of ineffective solutions put forth by people who know better are

 convincing bankers, investors, corporations and governments of one thing:

 the system failed and even the U.S. government ­ the anchor of international

 finance (which is blamed for causing the disaster) ­ has lost its

 credibility.

 The purpose of this financial crisis is to take down the United States and

 the U.S. dollar as the stable datum of planetary finance and in the midst of

 the resulting confusion, put in its place a Global Monetary Authority - A

 planetary financial control organization “to ensure this never happens

 again.”

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

 real?

 This entity is being moved forward by world leaders as we speak. It is

 coming and the pace is quickening.

 A year ago, I saw an article in which the President of the New York Federal

 Reserve bank was calling for a Global Monetary Authority or GMA to deal

 with the world’s financial crisis. While I have been following international

 banking institutions for some time, this was the clue that they were making

 their move. I wrote an article on it at the time.

 By the way, as some may recall, the President of the New York Fed last year

 was a man named Timothy Geithner. Geithner was very involved in structuring

 the booby-trapped TARP bailout with Paulson and Bernanke.

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

 Change we can believe in.

 Once Geithner started to push a global financial authority as the solution

 to the world¹s financial troubles, other world leaders and opinion leading

 voices in international finance began to forward this message. It has been a

 PR campaign of growing intensity. Meanwhile, behind the scenes, the

 international bankers are keeping their hands on the throat of the credit

 markets choking off lending while the planet¹s financial markets asphyxiate

 and become more and more desperate for a solution.

 British Prime Minister, Gordon Brown, who has taken the point on this, has

 said that the world needs a new “Bretton Woods”. This is the positioning.

 (Bretton Woods, New Hampshire was the location where world leaders met after

 the second World War and established the international financial

 organizations called the International Monetary Fund (IMF) and the World

 Bank to help provide lending to countries in need after the war).

 Sir Evelyn de Rothschild called for improved (international) regulations

 while the Managing Director of the IMF suggested a high level of ministers

 capable of reaching agreements and implementing them.

 The former director of the IMF, Michael Camdessus, called on the global

 village to “urgently and radically” implement international regulations.

 As the crisis has intensified, so too have calls for a global financial

 policeman, and of late, the PR has been directed in favor of surprise, the

 Bank of International Settlements.

 The person at the BIS who was primarily responsible for the creation of

 Basle II is Jaime Caruana. The BIS Board has now appointed him as the

 General Manager, the bank’s chief executive position, where he will be in

 charge of dealing with the current financial crisis which he had no small

 part in creating.

 A few well chosen sound bites tell the story.

 Following a recent IMF function, discussion centered on the fact that the

 BIS could provide effective market regulation while the Global Investor

 Magazine opined that perhaps the Bank of International Settlements in

 Basel... could undertake the task of best dealing with the crisis in the

 financial markets.

 The UK Telegraph is right out front with it.

 A new global solution is needed because the machinery of global economic

 governance barely exists it’s time for a Bretton Woods for this century.

 The big question is whether it is time to establish a global economic

 policeman “to ensure the crash of 2008 can never be repeated.”

 The answer might be staring us in the face in the form of the Bank of

 International Settlements (BIS). The BIS has been spot on throughout this.

 And so you see, this was a drill. This was a strategy: bring in Easy Money

 Alan to loosen the credit screws; open the flood gates to mortgage loans to

 the seriously unqualified with the CRA, bundle these as securities, repeal

 Glass Stegall and waive capital requirements for investment banks so the

 mortgage backed securities could be sold far and wide, wait until the loans

 matured a bit and some became delinquent and ensure the media spread this

 news as if Heidi Fleiss had a sex change operation, then slam in an

 international accounting rule that was guaranteed choke off all credit and

 crash the leading economies of the world.

 Ensure the right people were in the key places at the right time ­

 Greenberg, Paulson, Geithner, and Caruna.

 When the economic pain was bad enough promote the theory that the existing

 financial structures did not work and that a Global Monetary Authority ­ a

 Bretton Woods for the 21st Century - was needed to solve the crisis and

 ensure this does not happen again.

 Which is exactly where we are right now.

 WHAT DO YOU DO?

 Let me preface this section by saying that this is advice designed to help

 you orient your assets, i.e. your reserves, your retirement plans, etc. to

 the Brave New World of international finance. It is not meant as advice

 about what you do with your business or your job, your personal life.

 Those things are all senior to this subject, which has a very narrow focus.

 There is an embarrassment of riches of materials that you can use to stay

 ahead of and on top of this crisis. Use them to flourish and prosper. This

 article is not an call to cut back or contract. It is to provide you

 information so you know what is going on and can plan.

 Enough said.

 First of all, while not likely, but just in case Timothy Geithner is shocked

 into some New Age epiphany and Ben Bernanke grows some real wisdom in his

 polished dome, what the government should do is:

 1- Cancel any aspects of Basel II that are causing banks to mis-evaluate

 their assets.

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

 deposits.

 3- Mandate that any funds given under the TARP bailout or that are to be

 given to banks in the future must be used to lend to deserving borrowers.

 4- Repeal The Community Reinvestment Act.

 5- Reinstate Glass Stegall.

 6- Restore mandated capital requirements to investment banks.

 7- And in case Congress decides to cease being a flock of frightened sheep

 and take responsibility for the country’s monetary policy, they should get

 rid of the privately owned Federal Reserve Bank and establish a monetary

 system based on production and property.

 8- But if a global monetary authority is put in place, it should not be

 controlled by central bankers. It should be fully controlled directly by

 governments with real oversight over it and with a system of checks and

 balances. This you can communicate when this matter hits Congress or the

 White House or both (which it almost certainly will).

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

 finance?

 Modesty aside, please do what I have been recommending for a few years now:

 get liquid (out of the stock and bond markets) and put some of your assets

 into precious metals, gold and silver, but more heavily to silver.

 Keep the rest in cash (CDs and T-bills) and perhaps a small bit in some

 stronger foreign currencies like the Swiss Francs or Chinese Yuan (also

 referred to as the RMB, which is short for Reminbi)

 If you want more personal or specific advice on your investments ­ for

 example, what form of gold and silver and where to buy and what to pay, etc.

 - you can call or email me for an appointment, which we can probably do by

 phone. I charge $200 for the first half hour, which is the minimum and $325

 for a full hour, which is usually sufficient for most folks.

 And remember that my recommendations are based on my 30 years of experience

 in banking, finance and investments but I have no crystal ball and make no

 guarantees regarding my recommendations.

 We are living in the most challenging economic times this planet has ever

 seen. I hope this article has helped shed some light on what currently

 happening on the international financial scene. I didn¹t cover everything as

 I don¹t have time to write another book right now. Nor did I cover everyone

 involved but these are the broad strokes.

 If you want to follow these shenanigans, log on to The Road to London Summit

 (http://www.londonsummit.gov.uk/en/ <http://www.londonsummit.gov.uk/en/> ).

 It will all look and sound very reasonable ­ all about saving jobs and homes

 ­ but you have seen behind the wizard’s curtain and the above is what is

 really going on.

 Keep your powder dry.

 Bruce

 Bruce Wiseman

 Wiseman Management Services

 4312 Talofa Ave

 Toluca Lake, Ca 91602

 bdwiseman@earthlink.net

 818-406-9950