News & Analysis
2008 Crash Caused by Financial Terrorism?
Financial terrorism suspected in 2008 economic crash ... Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system. The unclassified 2009 report "Economic Warfare: Risks and Responses" by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that "a three-phased attack was planned and is in the process against the United States economy." ... The report concluded that the evidence of an attack is strong enough that "financial terrorism may have cost the global economy as much as $50 trillion." – Washington Times
Dominant Social Theme: Terrorists caused the crisis. Economic difficulties are military ones.
Free-Market Analysis: In the other article in today's issue, we focused on ways that the power elite memes were designed to avoid casting blame on central banks. The idea is to create diversionary blame that can then be parlayed into further government action, usually via regulation. In the case of this report, excerpted above, we see a new twist however.
While Britain's central banker Mervyn King blames the private sector, US financial analyst Kevin Freeman, at the Pentagon's request, has penned a report (excerpt above) that blames foreign enemies for the 2008 financial crisis. This is a fairly brilliant fear-based promotion in our view because like King's positioning, it doesn't merely push blame away from central banks it also opens up another entire venue for state expansion – military growth to combat economic terrorism.
Not only does this meme logically support military expansion, it has ominous free-market implications as well. By treating the current, fallacious system as a kind of "gold standard" that cannot be taken down without an attack, one enshrines what is injurious. The conversation moves beyond remedies from reconfiguration to strategic necessities intended to defend what is evidently and obviously the Western economic system.
Only it is not. The central bank economic system that has been put in place by the Anglo-American elite is far from a free-market system. It begins by printing money-from-nothing and as this fiat-currency circulates, it begins to inflate various markets, certainly the stock market. It also fools entrepreneurs into thinking times are better than they really are – and thus firms begin to over expand while other companies create trivial or non-essential products that would not have been successful in a less simulative environment.
Eventually, the economy, stuffed with paper money, reaches a breaking point, usually because price inflation has begun to be a problem and the central bank has started to raise rates. This in turn weakens the economy, slows the circulation of money and eventually has an impact on the stock market, which usually crashes.
People begin to wake from their Dreamtime at this point, rubbing their eyes and realizing that much of the wealth they had accumulated yesterday is considerably devalued today. In some cases the companies they work for are seen as inessential in the new, sober light of day. Housing markets crash. Whole industries shrink radically. This is the business cycle at work; this is the economic system that is in place currently. And the Western elites certainly understand its functioning.
None of this finds it way into the Pentagon's report. "Outside forces," are apparently responsible. "There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008," the report says, according to the Washington Times, explaining that those domestic economic factors would have caused a "normal downturn" but not the "near collapse" of the global economic system that took place.
There are suspects of course. The article recites them: "enemies" of the West (and particularly the US) including Middle Eastern states, Islamic terrorists, hostile members of the Chinese military, or government and organized crime groups in Russia, Venezuela or Iran. "Because of secrecy surrounding global banking and finance, finding the exact identities of the attackers will be difficult."
What are the most likely enemies? "Unfortunately, the two major strategic threats, radical jihadists and the Chinese, are among the best positioned in the economic battle space." (No surprise there.) Also, the report lists as suspects advocates of Islamic law, who have publicly called for opposition to capitalism as a way to promote what they regard as the superiority of Islam. Here's some more from the article:
The report states that federal authorities must further investigate two significant events in the months leading up to the financial crisis. The first phase of the economic attack, the report said, was the escalation of oil prices by speculators from 2007 to mid-2008 that coincided with the housing finance crisis. In the second phase, the stock market collapsed by what the report called a "bear raid" from unidentified sources on Bear Stearns, Lehman Brothers and other Wall Street firms. "This produced a complete collapse in credit availability and almost started a global depression," Mr. Freeman said.
The third phase is what Mr. Freeman states in the report was the main source of the economic system's vulnerability. "We have taken on massive public debt as the government was the only party who could access capital markets in late 2008 and early 2009," he said, placing the U.S. dollar's global reserve currency status at grave risk. "This is the ‘end game' if the goal is to destroy America," Mr. Freeman said, noting that in his view China's military "has been advocating the potential for an economic attack on the U.S. for 12 years or longer as evidenced by the publication of the book Unrestricted Warfare in 1999."
Additional evidence provided by Mr. Freeman includes the statement in 2008 by Treasury Secretary Henry M. Paulson Jr. that the Russians had approached the Chinese with a plan to dump its holdings of bonds by the federally backed mortgage companies Fannie Mae and Freddie Mac. Among the financial instruments that may have been used in the economic warfare scenario are credit default swaps, unregulated and untraceable contracts by which a buyer pays the seller a fee and in exchange is paid off in a bond or a loan. The report said credit default swaps are "ideal bear-raid tools" and "have the power to determine the financial viability of companies."
Another economic warfare tool that was linked in the report to the 2008 crash is what is called "naked short-selling" of stock, defined as short-selling financial shares without borrowing them ... In a section of who was behind the collapse, the report says determining the actors is difficult because of banking and financial trading secrecy. "The reality of the situation today is that foreign-based hedge funds perpetrating bear raid strategies could do so virtually unmonitored and unregulated on behalf of enemies of the United States," the report says.
The last paragraph is most interesting, providing as it does, an argument for investigating unregulated hedge funds. Regulating hedge funds has been on the "agenda" for a while now and this report will provide more ammunition for those who want hedge funds (and black pools, etc.) pried open. "Transparency" is the new normal for everyone but the Bank for International Settlements (see other article, today).
Conclusion: This is a most cynical presentation, in our view. Modern crashes are a result of central bank monetary stimulation. Variants of the 2008 crash occurred on a lesser scale in 2000, in 1987, in the 1970s, in 1969, in 1963 and, of course, in 1929. Are we to believe that financial terrorism is responsible for each of these slumps? Or only in 2008? It is obvious nonsense, and yet few if any have bothered to point out the repetitive occurrence of modern-day crashes – which would put the presentation into question. Instead, we have no doubt the report will be used for yet more Draconian regulation and to haul the Pentagon directly into economic matters, creating a kind economic-industrial complex to go along with the military-industrial complex and all the rest. Or perhaps the system, struggling as it is, will merely collapse before this takes place. Doubtless, it will still be blamed on an "enemy." Desperation?
Posted by Intellicept3 on 03/02/11 05:42 PM
A link to the full report is available here
Click to view link
Posted by Apberusdisvet on 03/02/11 04:49 PM
An Alinsky deflection worthy of the best psyops or Goebbels propaganda. Anything to keep the spotlight off the real criminals; the FED and its TBTF henchmen.
Posted by Siegfried on 03/02/11 04:47 PM
Of all the points you mentioned I think the second one is probably the most misunderstood one. Language is the first victim in this power game, when suddenly words end up meaning their opposite. One could make a compilation: sure "deregulatio"n and also "freedom", "fact", "democracy", "terrorism", "credit", "history", "bias", "danger", "good", "evil", "security", "adulthood", "capitalism", and a few hundred more, ending in "I".
Posted by Cathy on 03/02/11 04:40 PM
I like your analysis!! :)
Posted by Cor on 03/02/11 04:38 PM
Who do these people think they are fooling? My only guess is the average citizen that does not follow the economic news and does not have an in depth understanding of the Central Banking System (transnational in scope).
What this suggests (this is just a hunch) is they need to get the 'lil guy/gal behind them (like they did after 9/11). They have to know that most wall streeters will not be fooled by this bologne. It is an insult to anyone that understands what is going on. so it is designed to infuriate the masses....to prepare them for supporting the next massive world assault.
I feel this is a very threatening article. An omen of sorts
Posted by Ginny on 03/02/11 03:05 PM
Implausible, but, nonetheless, very effective at producing nightmares and cold sweats. Good grief.
Posted by Glen2Gs on 03/02/11 02:52 PM
Yea,Click to view link was Bin Laden running the Derivatives Market from a Cave.
Posted by Daily Cynic on 03/02/11 02:27 PM
How 'bout we take a long, hard look at anyone/any organization involved with the issue of derivatives, securitization of junk-debt, etc., to add to the list of primary suspects.
Organizations that "made out like bandits" as the global economy pumped up & then crashed.
There's as much money – maybe more – to be made in a collapsing market as there is in a rising one when you use options, futures & shorts.
Posted by Martin on 03/02/11 02:17 PM
Seemingly forgotten was the government policy that permitted and encouraged home ownership by those that couldn't afford it. To the point that down payments became unnecessary. And in some cases buyers were able to get cash back at closing. Central bank policies that kept interest rates low contributed directly. But as stated, all of the past and current members of government refuse to accept responsibility for their actions. Finding it much more convenient to point the finger at others.
Banks operate in a regulated environment. They are able to engage in certain types of commerce. So when the government and central bank create virtually risk free, profitable opportunities for them, and encourage them to engage in them, why is there so much surprise about the fact that they do? They are doing just what people do.
Click to view link
Posted by Tolling For Thee on 03/02/11 02:02 PM
Posted by Leonardo Pisano on 03/02/11 01:21 PM
[Apparently they were not 'in the club' The Federal Reserve Bank created an environment in which the other banks could over-extend and the resetting of foolishly 'arranged' Mortgages took the ground from under these banks fool-hardy games.]
Now we are talking. The commercial banks as such just tried to leverage the most as they could get. The culprit is the system that made this possible, and as Bionic Mosquito so cleverly put, the government that provided the safety net. But the puppet masters, the PE, they are really the cause of all this evil.
I don't want to sound paternalistic, but the morale is: peel off the layers until there is nothing anymore to peel.
Posted by Alexsemen on 03/02/11 01:17 PM
If it was so simple long ago USA was back in Stone Age.
But to me is very clear that all those people from Pentagon &co USA guvernement they are looking at to many Hollywood crap movies!
Of course after such gradiouse educations their intelectual can not reach the leavel of those imbecile soap-series.
With such specialists from Pentagon aswell of CIA, NSA ..... nobody needs other and more enemies to make one country kapoot !
Somewhere there are a lot of Psychiatric clinics where such people could received the best treatment ever.
Orwell is nothing comparing with such guys!
Posted by Graysailor on 03/02/11 01:09 PM
Zenbillionaire – your comment: "I must read publications like this one and fret over making the correct investments in order to preserve the fruits of my labor against relentless attack. Gold? Silver? Real Estate? Oil? Strange and complicated option strategies? Ammunition? Beans? Durable Goods? Razor Blades?"
This is a good starting list – but I would add that you will need a safe location and weapons and manpower. So start chatting up friends. I am a professional in the computer business. I am amazed by how many people I have talked to in the last few months that are stockpiling food, ammo, weapons and medical goods. All of them are young to middle aged (mostly 40 to 55 aged) and all are engineers, accountants, and other types. The common thread is that all of them are stable, careful people that built their own homes (often), stay out of debt, and have lived successful lives (up to this point). Does our government realize how many of it's citizens have ZERO faith in their ablity to change course?
Posted by Angela Eisenberg on 03/02/11 01:04 PM
I wholeheartedly concur. This is to quiet the "noise" that most of us are feeling in that not one exec. from these bailed-out banks has gone to jail. They committed fraud- and are being protected by Congress. Both parties are corrupt and bought and paid for. This generation never acknowledges 'fault' – it's always the other guy's fault-never their own. Yes, it is pure nonsense!
Posted by Bionic Mosquito on 03/02/11 01:03 PM
"Anybody with half an ounce of common sense can recognize that it was the Greedy and deceptive actions and creations of the five major American Banks that caused it."
If you are going to put it out there, expect that it will get stepped on....
You, like many others, are the perfect example of someone looking for the pea under the wrong walnut shell. I will suggest the following "reasons" usually blamed for the financial calamity. These are in reverse order of the truth, and I am sure I am missing many " even higher and lower than my list:
- Greed: you are ice cold. This human trait has existed throughout the history of mankind. What is different this time?
- Lack of regulation: still cold, at least in the way it is defined for public consumption. Properly defined, it is correct ' a lack of allowing the free market to regulate the banks to their own death.
- Wall Street Banks: you are getting warmer
- Central Banks: your clothes are now getting singed
- Federal government: So warm, you are on fire. These write legislation "legalizing" what is in fact fraudulent activity. The free market would kill such a cartel in its crib.
- Puppet Masters: Bingo. You have gone up in a puff on smoke.
Read the article about Mervyn King. Internalize it. Perhaps then you can progress from your half-ounce of common sense to a more substantial portion. It only takes half an ounce to swallow the story that you have swallowed.
Posted by Graysailor on 03/02/11 01:00 PM
"while other companies create trivial or non-essential products that would not have been successful in a less simulative environment..." a truer statement couldn't be crafted. For proof walk into any 'Dollar Store'. Tons of crap made in China using power, oil, and cheap labor and sent across the ocean in huge amounts of waste packaging. 90% of the stuff in the store is absolutely useless crap. And what is it's true cost? In wasted resources? And blaming China for being smart enough to try to dump their worthless Fannie and Freddie stuff – like that's criminal activity? Bizarre.
Posted by Always Wondering on 03/02/11 12:48 PM
One can only wonder if this analysis is correct as to the cause, but if the intended effect was two pronged: first, to help elect Obama, coming as it did while the election was still contested; and two, to help speed the downfall of the US dollar to the benefit of parties as yet unknown, the two events being closely linked and complementary.....
Posted by George on 03/02/11 12:38 PM
No! Leonardo, I think you misunderstood me, however, it was Goldman Sachs, City Group, J.P.Morgan, Bank of America and Bear Sterns who created all of the SWAPS, derivatives and were ridiculously over-leveraged. This caused the crash. Lehman Bros were also involved but they were taken down by the 'establishment'. Apparently they were not 'in the club' The Federal Reserve Bank created an environment in which the other banks could over-extend and the resetting of foolishly 'arranged' Mortgages took the ground from under these banks fool-hardy games.
I hope that helps.
Posted by Leonardo Pisano on 03/02/11 12:19 PM
Frankly, I don't understand what you are saying. King represents a major CENTRAL Bank, and he tries to put the joker into the hands of the commercial banks. Now you seem to do the same. DB is trying to explain that it's a trick, a smoke screen by King to let people believe the commercial banks are to blame (while in fact the central banks with their manipulating mechanisms are the real culprits). So, logically, you agree to King c.s. and disagree with DB (and most of us feedbackers). Or am I mistaken?
Posted by George on 03/02/11 11:59 AM
What a preposterous and ridiculous suggestion that "un-known" terrorists caused the financial meltdown of 2008 !!
Anybody with half an ounce of common sense can recognize that it was the Greedy and deceptive actions and creations of the five major American Banks that caused it. It was they who created all of the Derivatives, it was they who were leveraged from 40 to 80 -1, it was they who had made huge fortunes pushing falsely rated stocks and companies.
Come on !!! give me a break. Do the people in our government really think we are so stupid as to believe this garbage?
The 'establishment' are simply trying to divert culpablility away from themselves. Remember , not one soul amongst all of these Wall Street crooks has been called to task over this issue.