Crash
The Gathering Storm
· Global Financial and Economic Crash
Imminent
· Stock Market, Pension Funds, U.S. Dollar
on Brink of Collapse and Implosion
· Theft and Fraud Losses to U.S. Taxpayers
Exceed $4.2 Trillion
By Michael C. Ruppert
Note: The full version of the following economic alert
was issued to subscribers of "From The Wilderness"
(www.fromthewilderness.com) on July 8, just days before the recent collapse of
the DOW - a collapse which is just beginning.
The last time FTW issued an emergency economic bulletin
to its subscribers was Sept. 9. At that time a derivatives investment bubble on
the verge of implosion, a 900-point drop in the Dow Jones average and a pending
liquidity crisis signaled a crash on the order of 1929. Only the attacks of
Sept. 11 and massive intervention from the U.S. Treasury and Federal Reserve
prevented the collapse. Investors blamed the ensuing market losses on the
attacks.
Your
pension is at risk today and your home may be at risk in six months to a year.
The warnings of a total economic collapse are as clear,
explicit and well-documented as were the warnings received by the U.S.
government throughout summer 2001 that a terrorist attack against the World
Trade Center would take place during the week of Sept. 9 using hijacked
airliners from United and American airlines. Nothing was done to prevent that
and apparently nothing is being done now in spite of the fact that $4.2
trillion of your money has been stolen right in front of your eyes. -MCR ]
July 8, 2002, 16:00 PDT (FTW) - Reuters, London published
a story June 27 based upon an interview with billionaire financier George
Soros. The headline read, "Soros Blames 'Bush Factor' for Dollar's
Fall." George Soros is a man to be reckoned with. He is credited with
successfully assaulting the currencies of several nations, including Britain's
pound. He recently participated in the World Economic Forum in New York with
the likes of Zbigniew Brzezinski, Hillary Clinton, Shimon Peres and academics
from Ivy League colleges. It is more than just a case that when Soros speaks,
people listen. The truth is that when Soros speaks, markets move.
His comments were brutal.
"The international
financial system is coming apart at the seams.There is a lack of confidence.
That's what I call the 'Bush factor' in the economy." There is a liquidity
crisis in financial markets, said Soros. "Everybody's going home. The
Swiss banks are going home. The strengthening of the yen clearly shows
repatriation." Translated, that means that foreign capital is fleeing the
United States in the wake of as yet not fully realized accounting scandals that
will, according to Fox News on July 6, take an estimated $600 billion in value
out of the U.S. stock market this year. One of the many smoke alarms triggered
by this is the fact that the U.S. economy needs an estimated $1.5 trillion per
year in new foreign investment just to remain solvent.
Reuters quoted Soros as saying that the global economic
downturn had "exposed the weaknesses of corporate America and how the U.S.
administration runs the international economic system."
Soros is aware of what FTW and noted economic thinkers
like Catherine Austin Fitts, former assistant secretary of housing, and British
economist Chris Sanders of Sanders Research have been saying for years: as much
as half of the value of the U.S. financial markets is derived from criminal
endeavors, whether it is the laundering of drug money or the fraudulent
"cooking" of financial statements to boost profits.
PUMP AND DUMP
It's a simple scheme
really. The mafia knows it quite well. By whatever means necessary, drive a
stock's price higher and higher. Make it look like a mover, even if it's a dog.
Cook the books and get suckers to buy in, helping to drive the price even
higher. When you think the balloon will pop, call all your buddies and sell
your shares. That effectively steals all the money that the suckers put in.
When the stock crashes, the suckers who weren't part of the scheme will take
the loss, whether they be individual investors or the New York City police and
fire pension fund.
The U.S. stock markets have been pumped to the breaking
point. Most sober analysts have agreed for a long time that the prices are
over-inflated by as much as 50 percent or more; that price/earnings ratios, now
averaging more than 30 to 1, should properly be corrected to about 15 to 1.
That means the Dow should be at 5,000 or lower.
If I mention the "bookkeeping problem" that's
threatening Wall Street right now and asked you how many companies were being
investigated for or had announced "overstated earnings," how many
would you say? Six? Eight? Try 18.* Seven of them are energy companies,
including Halliburton, once headed by Dick Cheney who still refuses to make
public the records of his 2001 energy task force.
Did you think that WorldCom was big, having illegally
claimed $3.8 billion in earnings to boost its share price? On July 5, according
to Newsday, the energy giant Reliant Resources "restated" its 1999-2001
earnings by chopping off $7.8 billion in revenue. Merck has overstated its
revenues by $14 billion.
At the core of all these accounting problems is a
non-transparent form of corporate bookkeeping called "pro forma." As
opposed to the more transparent and rigid practice called GAAP (Generally
Accepted Accounting Practices), pro forma bookkeeping allows for all kinds of
manipulations. What has yet to be fully explored by any of the major media is
which other major corporations use pro forma bookkeeping. The reason is that
all of the major media companies use it too. They include GE (NBC), AOL/Time
Warner (CNN), Microsoft (MS-NBC), Viacom (CBS), Disney (ABC), IBM, Intel, Cisco
Systems, Sun Micro, Tribune (the Chicago Tribune and the L.A. Times), the Washington
Post (Newsweek) and the New York Times.
A look at the real health of the stock market is
revealing. On April 26, The International Forecaster made two chilling
observations:
"At the time of the
AOL Warner merger the combined companies were worth $290 billion. They are
presently worth $85 billion. Their quarterly loss is estimated to be $50
billion. This could be the business mistake of the new century.
"The downgrade of Bristol Myers Squibb to Aaa by
Moody's leaves only 8 AAA-rated companies left. They are GE, UPS, AIG,
ExxonMobil, Johnson & Johnson Berkshire Hathaway, and Pfizer & Merck.
In 1990 there were 27 AAA companies and in 1979 there were 58."
None of the press accounts look at the role of drug cash
in the markets; something FTW has been talking about for years. Thanks to PBS's
Lowell Bergman in a 2000 report, we already know that GE, SONY, GM, Philip
Morris Citibank, Chase and many others have been called on the carpet for
accepting drug cash, lots of drug cash. The Taliban's destruction of
Afghanistan's opium crop in 2001 - an act which took an estimated $200 billion
out of the world's banking system - can now be seen as an act of economic
warfare. I said so eighteen months ago.
THE DOLLAR
Almost all countries in the world use the U.S. dollar as
their reserve currency. They have bought trillions and are holding them. If
another currency becomes more valuable or is viewed as more stable, then the
world will switch currencies, and trillions of dollars will come back into the
country - inflation would be inevitable and the dollar would lose its value.
For almost a week the dollar has closed at parity with
the dollar and traded above the dollar in the week ending July19th.
Soros told Reuters, "The decline in the dollar came
as a surprise to me.I attribute it to lack of confidence in the management of
affairs by the United States, its unilateralism, the pursuit of national
self-interests and not living up to the responsibility of being the dominant
financial power in the world, not taking care of the system."
That was before the announcements about Reliant and
Merck.
Quoting a financial
expert, the British paper, The Independent reported recently, "'If the
dollar's decline turns explosive, this could compound the problems of the U.S.
asset markets as currency losses raise fears of massive capital flight out of
the U.S.'"
GOLD
For years the price of gold - the ultimate smoke alarm
signaling a failing economy - has been artificially suppressed by paper traders
who are capable of flooding the commodities markets with gold future options
when the price needs to be kept low. Why low? Because rising gold prices have
always signaled inflation and/or a lack of faith in the financial markets.
Years of efforts by the Gold Anti-Trust Action Committee, or GATA, while not
being successful at halting or fully exposing the artificial manipulation of
gold prices by the Federal Reserve, major banks, the Bank of International
Settlements and major commodities traders, have opened the eyes of many to
overt manipulations in gold pricing.
As
one investment banker told FTW recently, there is five times more paper gold
than there is actual gold out of the ground. If gold prices ever pop, they'll
be out of sight. There are signs that the ability of paper traders to suppress
gold prices is failing. Gold is well above $320 an ounce and rising.
Over the past year, certainly since 9-11, gold prices
have often moved in exactly the opposite direction (lower) from what conditions
would dictate. The financial effort required to do this requires the support of
powerful state banking institutions and cash to service the paper. Gold has
risen in price from around $280 an ounce nine months ago to a high of around
$327 in recent weeks. That's a return on investment of 16 percent - far better
than the Dow has done this year.
There are unmistakable signs of market manipulation now
with regards to both gold and stocks. Remember July 15th when a Dow, down 430
points, recouped 390 points in the space of two hours? Who is it that keeps the markets from
correcting, only making the inevitable crash that much worse? It's called the
Plunge Protection Team, or PPT. It no longer has the cash to flood the gold and
stock markets or to service a derivatives bubble estimated at between $150 and
$300 trillion. The chickens are headed home with a vengeance.
Rep. Ron Paul, R-Texas, has been challenging the gold
manipulation for years. He has been one of the few fiscally sane voices
anywhere on Capitol Hill. His website has a listing of his writings and much
needed legislation he has or is sponsoring.
THE PLUNGE PROTECTION
TEAM
The Washington Post acknowledged the existence of a
select group of four who could and would intervene in markets to prevent
massive capital flight and a run on shares that would cause an economic
collapse if there weren't enough cash to pay out during a massive sell off. In
his Feb. 23, 1997 story headed "Plunge Protection Team," Post
reporter Brett Fromson identified the Federal Reserve chairman, the Securities
and Exchange Commission chairman, the chairman of the Commodities Futures
Trading Commission, and the secretary of the Treasury as the team's key
players. The intervention of the team in the 1998 crash of Long Term Capital
Management, after it became wildly overexposed in the gold market, revealed
that private institutions such as Goldman Sachs, J.P. Morgan, Merrill Lynch and
other major banks could be involved as well.
Pointing to the 1987 stock market crash, the single
largest crash in history, Fromson observed, "The Fed kept the markets
going by flooding the banking system with reserves and stating publicly that it
was ready to extend loans to important financial institutions, if needed."
On April 5, 2000 New York Post reporter John Crudele reported
that the stock market had turned back from the abyss. After a 500-point drop
that looked like it was leading to a meltdown, ".someone started buying
large amounts of stock index futures contracts through two major brokerage
firms - Goldman Sachs and Merrill Lynch.Unless the brokers tell, there is no
way of knowing which of their clients were making the purchases.Then the market
rebounded."
Calling it the PPT, Crudele both referred to the 1997
Washington Post story and suggested that private banks were acting as team
captains.
And the PPT's hand has been noted recently from as far
away as Australia. Progressive Review Editor Sam Smith recently quoted a story
by Richard Bromby of the Australian Financial Review:
"At 2:32 Wednesday [June 26], New York time,
something extraordinary happened at the corner of Wall and Broad streets. The
New York Stock Exchange's Dow Jones industrial index - struggling since the
opening bell after the WorldCom fraud revelations - threw off its problems.
From an intraday low of 8,926.6, the Dow shot skywards to its high of 9,160 at
3:29 p.m.Could it be the work of the much talked about, but never seen, Plunge
Protection Team? There is a belief that this team represents a powerful and
secretive hand that is ready to act at any time the Dow looks ready to tank
big-time.
As The International Forecaster reported on April 26,
"The American consumer has run out of credit and buying power.All bets are
off if the housing and credit bubbles break and that's a distinct possibility.Debtor's
prison is drawing nearer. House and Senate conferences are deciding on a new
set of rules for Chapter 7 bankruptcy.If the Plunge Protection Team weren't
manipulating the market with all these scandals, the Dow would already be at
4,500."
REALIZING THE EXTENT OF
THE DESTRUCTION
Are your tax dollars supporting the markets in a double
theft?
According to the
Standard and Poor's website, "domestic equity allocation" (stock
market) of U.S. pension fund investments was near 50 percent by the end of the
1990s. It has topped 50 percent since then.
Before the 2000 presidential election, candidate George
W. Bush promised that he would tap Social Security only in the event of war,
recession or national emergency. On Sept. 11, he was quoted by his budget
director, Mitch Daniels, as saying, "Lucky me! I hit the trifecta!"
It's not a question about stealing a little here and a
little there. It's a question about open, full-scale looting - but only from
the pockets of the American people who, in my opinion, will soon have almost
nothing left. Let's look at the hard numbers of what has been taken and from
where. These numbers are by no means exhaustive. It's just what we know about.
- Social Security in
2001 (USA Today/Washington Post) $ 34 Billion
- Social Security in
2002 (est.) (House Budget Committee) $ 160 Billion
- Federal Employees
Retirement System
(Wall Street Journal
6/13/02) (to Meet 2002 budget deficits) $ 42 Billion
- Civil Service
Retirement and Disability Fund (ibid) $ 2 Billion
- Stolen from the Dept.
of Defense - 1999
(Cong. Record and Insight Magazine) $1,100 Billion
- Stolen from the Dept.
of Defense - 2000 (CBS News) $2,300
Billion
- Stolen from HUD - 1999
(Cong. Record) $ 59
Billion
- Shareholder Equity
Lost to Financial Fraud - 2002 (Fox) $ 600 Billion
TOTAL $4,297 Billion
PENDING THEFTS
Social Security (by
2010)
(Washington Post citing
Cong. Budget Office figures) $ 845 Billion
It has been estimated that the California state employee
retirement system (CALPERS) has more than 90 percent of its money invested in
the stock market. Where is your pension money?
A WORD ABOUT HOUSING
Most Americans believe that their homes are their last,
best retirement insurance. Yet many Americans have mortgaged their homes for
120 percent of value. The International Forecaster has predicted that "40
percent of Fannie and Freddie's loans are going to come back and haunt them. We
envision an S&L type bailout of $2.4 trillion down the road. This will be
the biggest financial disaster in history."
CONCLUSION
The Great Depression was not an event that wiped out U.S.
capitalists. It was an event that made the rich even richer by transferring the
wealth of the people into the hands of the already wealthy. Legendary is Bank
of America's rise to affluence through real estate foreclosures from 1929-37.
Don't believe for a minute that the richest of the rich will be hurt by the
coming collapse. The only ones hurt will be you and me.
George Soros is a member of the Bilderberger Group, a
collection of the wealthiest individuals on the planet. It includes, from the
U.S., both Democrats and Republicans, and from Europe and Asia, the richest
"old" money that can be found. U.S. participants in this year's
conference included David Rockefeller, Henry Kissinger, former Treasury
Secretary Larry Summers, former CIA Director John Deutch and George Soros. It
was just after this year's meeting which ended in early-June, that all of the
revelations about corporate fraud started to really hit the news. One wonders
if it had been on the agenda.
Unless you can convince me that gravity might suddenly
reverse direction, this collapse has just begun. It will be unspeakably brutal.
A major terrorist attack, the folly of an invasion of Iraq or a nuclear
exchange between India and Pakistan would only be a momentary diversion from a
much greater tragedy.
Recent revelations of alleged wrongdoing by Citibank in
helping Enron to cook its books hint at underlying weaknesses which have not
been corrected and threaten any kind of real recovery. In May of 2001, FTW
wrote at length on Citigroup s acquisition of Banamex, Mexico s second largest
bank, well-documented as being a major launderer of drug money. We were shocked
when Citigroup put the bank s owner, Roberto Hernandez, on the board of
directors alongside former Treasury Secretary, Robert Rubin and former CIA
Director, John Deutch. And it was Rubin who made telephone calls, right before
Enron s collapse trying to keep Enron from being downgraded as a credit risk.
If deep structural flaws like this remain unaddressed,
investors need to be very wary of so-called Bear Market Bounces. The things
that are wrong with this economy are preparing to come out of the closet like
the offensive line of the New England Patriots.
Suggested Resources:
www.sandersresearch.com
www.solari.com
www.gata.org
www.house.gov/paul/
* - Enron, WorldCom,
QWest, Tyco, ImClone, Martha Stewart (the company), Global Crossing, Dynegy,
CMS Energy, El Paso, Halliburton, The Williams Co., Clear Channel (which owns
approximately 1,200 radio stations), Adelphia, Reliant, Motorola, Merck and
Johnson & Johnson. [Source: CNN and various news services]
[Copyright 2002, From The Wilderness Publications,
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