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 VoxPop on 03/02/11 11:53 AM
With friends like Wall St who needs to invent enemies.
Oh, and why no mention of Israel " the most self-serving 'friend' of the USA? Until the stock market returns to raising cash for start-ups it will only behave like a casino; as such it is parasitic & deserves to be taxed out of existence.
Posted by Laura K on 03/02/11 11:52 AM
Thanks for pointing out the relevance of The "City" of London in the articles of today. Hurray! The Crown and its influences all along history brought me finally to believe in your theory of the PE's conspiracy. Crazy enough, the story of King and Freeman seems to have a deep inspiration on Chavez playbook. Soft tyrannies around the world in one or another form. Chase the enemy, it is out there. Where? Uh... it is out there: the "Evil Hedge funds",Russia, China, Kadaffi, Islam in the ME and North Africa you pick one. The enemies are everywhere, but we can still are not able to identify them. Maybe, if they read the DB, will be able to save our money by building military infrastructures and increasing the overreach of the central banking through more regulations. Unbelievable, ah!
Posted by Adrian W. on 03/02/11 11:48 AM
Perhaps, they should have opted for contingency plan II:
The moon was discovered during the vast moon landings to be a secret alien death star equipped with a large "death laser" pointed at the center of the Earth. Without Earth's cooperation in payment of ransom these alien fiends would render the Earth a smoldering cinder. Perhaps touching off a few well placed nukes to show them as serious! At least it beats the Bin Laden's bin hidin' theme.
Posted by LocalHero on 03/02/11 11:45 AM
This is as ridiculous as that latest Pentagon propaganda ad for the Navy that obscenely rapes the English language by calling it a "Force for Good." If there's "force" there can be no "good" involved and if there is "good" being done there can be no "force" involved but that's only obvious to everyone except the knuckle-dragging military.
Posted by Abby on 03/02/11 11:45 AM
Anything coming out of the Pentagon should be deeply suspect, however Mr Freeman seems adept as an author of fairy tales.
Posted by Gretchen on 03/02/11 11:44 AM
@ David Robertson
exactly. Human nature is at the bottom of all of it; our faith in banking/institutions, and in each other, to do the right thing is all connected; and the crash itself depicts all of it coming to an incredible peak that is yet to see the end. but thank you for that extra dose of enlightenment with my cup of coffee this morning...and if you knew me, that is totally sincere.
Posted by John Williams on 03/02/11 11:26 AM
There is a name for this Financial Terrorist organization. It's called the Federal Reserve!
Posted by Robert Phenicie on 03/02/11 11:08 AM
It just doesn't seem viable that terrorists (as they were known in 2008) could mount an attack on the Western economies. Case in point ' terrorists used "planes" as "bombs". Terrorists simply were not that sophisticated; however, isolated incidents of financial terrorism did exist.
What no one seems to correlate are the events and conditions that led up to the collapse. Consider these scenarios:
1. The Nixon administration led the US withdrawal from the World gold standard.
2. Britain's top economic product is financial services.
3. Canada is still some type of Providence or Commonwealth of Britain.
4. Much of the precious metals mining in the US and World is done by Canadian firms.
5. The US Government "gave away" our in-the-ground precious metals reserves to Canadian firms.
6. A British female V.P. in JP Morgan (and she's still there) invented the CDO/CDS instruments.
7. In 2006, Allan Greenspan (economic dictator) opined concerns about the spreads on certain investment instruments (toxic assets). Greenspan's main responsibility as an economist for the USG was managing the mortgage industry. Perhaps Freddie and Fannie were Greenspan's brainchild.
8. In 2008, while in a pub in Britain, a British investor called large investment banks on Wall Street to convince them to buy his positions on toxic assets. Eventually his investment rocketed from $60,000 to over $600,000 in one day. His name can be found in a book titled "The Long Short".
9. Government tie-in's ruined the World economy and killed capitalism, which is why it feels obligated to bail out large corporations.
10. The USG has and still is robbing the personal wealth of its citizens.
11. A book titled "Financial Reckoning Day" blames "all" of the economic problems in the US on troubles in Europe; and, it traces these troubles all the way back to the Napoleon Era.
12. Remember, power is money and money is power and money is greed.
13. Peak oil and peak gold are real and can never be reversed.
Posted by RF on 03/02/11 11:07 AM
That the elite bank system has severe weaknesses , that can easily be exploited by the enemies we create, should be as no surprise-- We have educated out enemies, in our system and obviously since the first oil "crisis", when the Saudi's decided to put a stopper on the bottle, raise the price and let it out in drips .
Our entire economic well being depends on petroleum products,the central banking system provides the means to manipulate the works, here and around the world.. The Middle East will survive without us,as well as the Chinese,but the need for ther Internet, the cell phones, the techno-cratic manipulation, that has the entire population glued to the gadgets in thier hands, the screen in front of them, may not, for without an economy to pay for them,they are useless, along with the banking system that promotes them......
Posted by Vudutu on 03/02/11 11:05 AM
And I am suppose to believe "US financial analyst Kevin Freeman, at the Pentagon's request, has penned a report" Have you SEEN "Inside Job"?
Posted by Rascally Rabbit on 03/02/11 11:03 AM
America has created many of it's own vulnerabilities by not practicing good, solid business practices in government and private enterprise large and small.
Posted by Bionic Mosquito on 03/02/11 10:59 AM
"So the answer to the question (title) is 'yes' ‒ it's only the 'who is behind financial terrorism' Freeman failed to identify properly."
My thoughts exactly.
"Apparently the USMC has Bernanke's back."
The dollar stays the reserve currency as long as the US military has significant relative superiority over other militaries of the world which it will have as long as the dollar stays the reserve currency. The two will live and eventually die together. Eventually, all those patriotic moms and dads will have to come out of pocket to buy junior a coach-class ticket home....
Jim Rickard's has apparently made presentations at various Pentagon-sponsored conferences on exactly this subject ‒ the risks to US security brought on by the financial crisis and subsequent risks to the dollar's status.
Posted by Leonardo Pisano on 03/02/11 10:49 AM
@Kaara -- post of 3/2/2011 9:57:39 AM
"Instead of pointing fingers, we need to put some strong regulations into place that will prevent this kind of thing from happening again, because without regulation, it surely will."
Regulations to "protect"? People seek to maximise their output and minimise their input. Call that greed (in its extreme form)- whatever. That will not change by regulations – it's human nature. Regulations, however, will distort the free market, and benefit big players with information channels linked to government.
The whole point is that markets are manipulated and orchestrated for the very purpose as Painted~Corner said: to create chaos and induce "necessary regulations to protect" that are then (because of fear) swallowed by the masses. What is needed is to destroy these centralized powers/institutes, not more control.
Posted by Freelance on 03/02/11 10:48 AM
The Community Reinvestment Act which required banks to make dubious loans was the direct cause of the financial collapse. Sen. Chuck Schumer (D Ny) instigated the collapse by pointing out, as part of his civic duty, that IndyMac bank in LosAngles was about to collapse. And it did. What a guy. It is hard to escape the obvious conclusion that this disaster was mediated both internally and externally by ultra left wing elements abroad and in this country.
Reply from The Daily Bell
Regulation does not usually cause financial collapses. Monetary policy does.
Posted by M J Anderson on 03/02/11 10:44 AM
Absolute BULLS--T !! If the Pentagon says Click to view link means Obama wants this said....& going further up the line to Obama's puppet Click to view link means SOROS & BRZEZINSKI & Kissinger-Rockefeller & of course, the Rothschild banking family *ALL* want to divert our attention from from the real Click to view linksten to the Michael Savage radio program....He's virtually HATED by the "elite" because he names names !! FOX News will NOT even interview him after writing his best selling book: "Trickle up Poverty"........MA
Posted by Ol' Grey Ghost on 03/02/11 10:43 AM
I learned a long time ago to look for the profit-motive of the author of anything I read. This author attempts to please his employer so he is well compensated for putting his employer in a good light. His employer, of course, is compensated by a duped public who gives them more power to prevent this from ever happening again.
The other day at a party for my youngest son's kindergarten class I did some quick magic to amuse the children by making a bottlecap disappear from my left hand and reappear in one of the youngster's ear or nose. The biggest thing the kids wanted to know was how was I doing that.
I showed them how, though it appeared I was taking the cap from my right hand with my left, I was actually secreting it into the palm where they couldn't see it and I was distracting them to watch my left hand that was empty. Once they learned how the trick was done, I couldn't make a move without them watching both hands, my feet, my eyes, etc., etc.
People, even young children, can learn to watch for the illusions and distractions once they learn how the trick is done...
Posted by Painted Out Of A Corner on 03/02/11 10:37 AM
@ Kaara ..Hi
'more regulations' is what they want :( They will then cause another boom to bust & then new regulations 'til we are completely controlled Serfs to their every whim.
Posted by John Williams. on 03/02/11 10:30 AM
The only financial terrorists, are the banks and idiotic governments that fuelled a wild boom on the back of the housing market. It was obvious it could not continue once the bottom tier of buyers could not afford to get on the ladder. The consequenses will be with us for years as the trillions that have been blown can not be recovered. Especially by printing more and more money which will eventually cause a bigger crash than we have seen before, they are just delaying the inevitable. Happy days, John.
Posted by Kevin on 03/02/11 10:29 AM
Unfortunately, it takes an educated populace to understand how central banks literally steal purchasing power from savers via inflation and related devaluation of fiat currency. Well, it seems both educated citizens and savers are both in the minority in this country. I was watching a Fed official the other day claim that inflation was running too low because their idea of "stable prices" is 3-4% inflation which halves your purchasing power every 18-24 years. Not my idea of stability, even if you are silly enough to take as fact government supplied numbers.
Posted by Mal Scott on 03/02/11 10:21 AM
Love it. Someone suggested this the other day and I told them the only financial terrorism that has gone on were with the rating agencies, regulators, banks and the cronies in washington along with their affiliated lobbies."Liars Poker" the book, gives one some insight as to the development over the years. Nothing has changed...