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Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers

March 20, 2013 by Michael

Why is the global economy in so much trouble? How can so many people be so absolutely certain that the world financial system is going to crash? Well, the truth is that when you take a look at the cold, hard numbers it is not difficult to see why the global financial pyramid scheme is destined to fail. In the United States today, there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts. So you could take every single penny out of the banks, multiply it by six, and you still would not have enough money to pay off all of our debts. Overall, there is about 190 trillion dollars of total debt on the planet. But global GDP is only about 70 trillion dollars. And the total notional value of all derivatives around the globe is somewhere between 600 trillion and 1500 trillion dollars. So we have a gigantic problem on our hands. The global financial system is a very shaky house of cards that has been constructed on a foundation of debt, leverage and incredibly risky derivatives. We are living in the greatest financial bubble in world history, and it isn’t going to take much to topple the entire thing. And when it falls, it is going to be the largest financial disaster in the history of the planet.

The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed. As I wrote about yesterday, the entire European banking system is leveraged 26 to 1 at this point. A decline in asset values of just 4 percent would totally wipe out the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes.

We got a small taste of what that is like back in 2008, and it is inevitable that it will happen again.

Anyone that would tell you that the current global financial system is sustainable does not know what they are talking about. Just look at the numbers that I have posted below.

The following is the global financial pyramid scheme by the numbers…

–$9,283,000,000,000 – The total amount of all bank deposits in the United States. The FDIC has just 25 billion dollars in the deposit insurance fund that is supposed to “guarantee” those deposits. In other words, the ratio of total bank deposits to insurance fund money is more than 371 to 1.

–$10,012,800,000,000 – The total amount of mortgage debt in the United States. As you can see, you could take every penny out of every bank account in America and it still would not cover it.

–$10,409,500,000,000 – The M2 money supply in the United States. This is probably the most commonly used measure of the total amount of money in the U.S. economy.

–$15,094,000,000,000 – U.S. GDP. It is a measure of all economic activity in the United States for a single year.

–$16,749,269,587,407.53 – The size of the U.S. national debt. It has grown by more than 10 trillion dollars over the past ten years.

–$32,000,000,000,000 – The total amount of money that the global elite have stashed in offshore banks (that we know about).

–$50,230,844,000,000 – The total amount of government debt in the world.

–$56,280,790,000,000 – The total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.

–$61,000,000,000,000 – The combined total assets of the 50 largest banks in the world.

–$70,000,000,000,000 – The approximate size of total world GDP.

–$190,000,000,000,000 – The approximate size of the total amount of debt in the entire world. It has nearly doubled in size over the past decade.

–$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.

–$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.

Are you starting to get the picture?

Every single day, the total amount of debt will continue to grow faster than the total amount of money until the day that this bubble bursts.

What we witnessed back in 2008 was just a little “hiccup” in the system. It caused the worst economic downturn since the Great Depression, but global financial authorities were able to get things stabilized.

Next time it won’t be so easy.

The next wave of the economic collapse is quickly approaching. A full-blown economic depression has already started in southern Europe. Unemployment is at record highs and economic activity is contracting rapidly.

The major offshore banking centers in Cyprus are on the verge of collapsing. It was just announced that they will now be closed until Tuesday, but nobody really knows for sure when they will be allowed to reopen. And there is already talk that when they do reopen that there will be strict limits on how much money people can take out.

And now the IMF is warning that the three biggest banks in Slovenia are failing and that a billion euros will be needed to bail them out.

The dominoes are starting to tumble, and the United States won’t be immune. In fact, the greatest financial problems that the United States has ever seen are on the horizon.

But you can just have faith that Ben Bernanke, Barack Obama and the U.S. Congress know exactly what they are doing and will be able to save us from the coming financial collapse if you want.

The mainstream media will provide you with all of the positive economic news that you could possibly want. They are giddy about the fact that the Dow keeps hitting all-time highs and they would have us all believe that we are in the midst of a robust economic recovery. You can listen to them if you want to.

But when you are tempted to believe that everything is going to be “okay” somehow, just go back and look at the numbers there were posted above one more time.

There is no way that the global financial pyramid scheme is going to be able to hold up for too much longer. At some point it is going to totally collapse. When that happens, will you be ready?

The Great Cyprus Bank Robbery Shows That No Bank Account, No Retirement Fund And No Stock Portfolio Is Safe

March 18, 2013 by Michael

The global elite have now proven that when the chips are down they are going to go after any big pile of money that they think they can get their hands on. That means that no bank account, no retirement fund and no stock portfolio on earth is safe. Up until now, most people assumed that private bank accounts were untouchable and that deposit insurance actually meant something. Now we see that there is no pile of money that is considered “off limits” by the global elite and deposit insurance means absolutely nothing. The number one thing that any financial system depends on is faith. If people do not have faith in the safety and stability of a financial system, it will not work. Well, the people that rule the world have just taken a sledgehammer to the trust that we all had in the global financial system. They have broken the unwritten social contract that global banking depends on. So now we will see a run on the banks, and this will not just be limited to a few countries in southern Europe. Rather, this will be worldwide in scope. Yoda may have put it this way: “Begun, the global bank run has.” All over the world, frightened people are going to start pulling money out of the banks. A lot of that money will go into gold, silver and other hard assets. And as money starts coming out of the banks, this could cause many of the large banks that have been teetering on the edge of disaster to finally collapse.

Many of you may not believe that they would ever come after bank accounts, retirement funds or stock portfolios in the United States.

Many of you may be entirely convinced that the Great Cyprus Bank Robbery could never happen in America.

Well, where do you think this whole plan was dreamed up?

It was the IMF that reportedly pushed the hardest for the wealth tax in Cyprus, and the IMF is headquartered right in the heart of Washington D.C.

Almost every nation on the planet has to deal with the IMF. It is an organization that is dominated by the United States and that is always involved when there is an international debt crisis.

If the IMF thinks that it is a great idea to steal from bank accounts to solve a financial crisis in Cyprus, why wouldn’t they impose a similar solution in other countries in the future?

And if bank accounts are no longer safe, are there any truly safe places to put your money?

You can trust the politicians when they tell you that an unannounced “wealth tax” will never happen where you live if you want, but that is the exact same lie that the politicians in Cyprus were telling their people until the day that it happened. The following is from an article in the Cyprus Mail…

And after all, President Anastasiades had emphatically declared in his inauguration speech that “absolutely no reference to a haircut on public debt or deposits will be tolerated,” adding that “such an issue isn’t even up for discussion.” Finance Minister Michalis Sarris made similarly reassuring statements, arguing that it would be lunacy for the EU to impose such a measure because it would threaten the euro system.

At this point, politicians in Cyprus have been given two very unappealing options. Either they vote yes on the wealth tax and destroy all faith in the banking system of Cyprus, or they vote no and they are forced out of the eurozone. In either case, we will probably see the financial system of Cyprus collapse and their economy plunge deep into depression.

At this point, the vote has been delayed until Tuesday. Apparently some additional “arm twisting” was required to get the needed votes.

And there have been proposals to change the terms of the wealth tax. Reportedly, some politicians want to impose a maximum rate of up to 15 percent on bank accounts of over 500,000 euros so that the rate on smaller accounts can be decreased.

It has also been announced that the earliest that banks in Cyprus will reopen will be Thursday.

But what is happening in Cyprus is small potatoes compared to how this will affect the rest of the world. The entire planet is watching this unfold, and as a recent article by Lucas Jackson described, faith in the global financial system is being greatly shaken…

It would be hard to over-emphasize how significant the Cyprus situation is. The EU demonstrated under no uncertain circumstances that they will destroy the rule of law to maintain their own power. It was a recognition of tyranny that many of us have always assumed was the case but yesterday became reality.

The damage done here is not related to the size of the haircut – currently discussed between 3 and 13% – but rather that the legal language which each and every investor on the planet must rely on in order to maintain confidence in the system has been subordinated to the needs of the powerful elite. To the power elite making the major decisions in DC, London, Berlin, France, Brussels, et. al., laws are like ice cream, easily melted.

Which begs the question, who is next? Will it be Portugal? Greece? Spain? Italy? France???

Will they impose a “one-time” tax on your bank account? Your house? Your stocks and bonds? Retirement accounts?

The global elite have declared open season on all large piles of money, and now many people all over the world will consider taking money out of the bank to be the rational thing to do. This will especially be true in countries in southern Europe since they would probably be the next to have wealth confiscated.

This is so abundantly clear that even Paul Krugman of the New York Times understands this…

It’s as if the Europeans are holding up a neon sign, written in Greek and Italian, saying “time to stage a run on your banks!”

Tomorrow and the days immediately following should be very interesting.

The global elite have truly “crossed the Rubicon” by going after private bank accounts. It is almost as if they purposely chose the most damaging solution possible to the financial crisis in Cyprus.

Many in the financial world are absolutely stunned by all of this. For example, David Zervos is describing this move as a “nuclear war on savings and wealth“…

All of us should really take a moment to consider what the governments of Europe have done. To be clear, they initiated a surprise assault on the precautionary savings of their own people. Such a move should send shock waves across the entire population of the developed world. This was not a Bernanke style slow moving financial repression against risk free savings that is meant to stir up animal spirits and force risk taking. This is a nuclear war on savings and wealth – something that will likely crush animal spirits. This is a policy move you expect from a dictatorial regime in sub-Saharan Africa, not in an EMU member state. If the European governments can clandestinely expropriate 7 to 10 percent of their hard working citizen’s precautionary savings after the close of business on a Friday night, what else are they capable of doing? Why even hold money in a bank account? Are they trying to start a bank run?

So what motivated the global elite to do this?

According to CNBC, one of the motivations was to go after the Russians that had been using the banking system of Cyprus to launder money…

Indeed, the IMF is reported to have been keen on the levy as a way to stem the flood of Russian money into the island over the last few years which has prompted concerns over money laundering.

Russian money accounts for about 25 percent of all money in the banking system of Cyprus, and obviously the Russians are quite upset by what the IMF and the EU have decided to do. Even Vladimir Putin is loudly denouncing this move…

Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s.

And you haven’t heard a lot about this in the western media, but the Russians have actually stepped forward and have offered to help Cyprus out of this jam. For example, there are reports that Russian investors are interested in buying the two banks that were the primary cause of this bailout…

Officials have also said Russian investors are interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus – the two biggest banks on the Mediterranean island.

And according to Sky News, Gazprom has offered Cyprus a very large sum of money for the right to explore their offshore gas reserves that have not been developed yet…

The uncertainty comes as Russia’s finance minister said his country would consider restructuring its loans to Cyprus.

Russian energy giant Gazprom has also reportedly offered financial assistance to Cyprus in exchange for access to the island’s gas reserves.

So far the government of Cyprus has rejected the help of the Russians, but could they change their mind at some point? Apparently the Russians are offering enough money to completely fund the bank bailout…

According Greek Reporter, Gazprom made an offer over the weekend to the Cypriot government to fund the bank restructuring planned under the Cypriot bailout (which is set to cost up to €10bn) in exchange for exclusive exploration rights for Cypriot territorial waters. How reliable this story is remains to be seen, but it does hint at the geopolitical tension which we have been warning about.

Gazprom is known to be very close to the Russian government and despite Russian President Vladimir Putin overtly slamming the deposit tax – calling it “unfair, unprofessional and dangerous” – it is unlikely that they would let this opportunity pass untouched. Fortunately, the Cypriot government is said to have rejected the deal off the bat, but if displeasure towards the eurozone and the EU grows, the Russian option may become increasingly appealing.

It will be very interesting to see what happens.

Meanwhile, some European officials are already suggesting that other nations in southern Europe should have a “wealth tax” imposed upon them. The following comes from an article by Paul Joseph Watson…

Joerg Kraemer, chief economist of the German Commerzbank, has called for private savings accounts in Italy to be similarly plundered. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product,” he told Handelsblatt.

A “tax” of 15 percent on all financial assets?

Could you imagine if you woke up one morning and the government had decided to suddenly steal 15 percent of all the money that you had in bank accounts, retirement funds and stock portfolios?

If I had a bank account in Italy I would be very nervous right about now.

Under normal circumstances these kinds of things don’t happen, but governments will use an “emergency” to justify all kinds of things. I recently came across an article that included a great quote by Herbert Hoover that put this beautifully…

“Every collectivist revolution rides in on a Trojan horse of ‘emergency’. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And ‘emergency’ became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains.”

This is what the elite love to do.

They love to create order out of chaos.

And this is just the beginning. The Great Cyprus Bank Robbery was just a beta test for what is coming next.

As the global financial system crumbles, the global elite are going to target our bank accounts, our retirement funds and our stock portfolios. You might want to start thinking about how you will protect yourself.

So what are your thoughts on all of this? Please feel free to post a comment with your thoughts below…

Watch The Financial Markets In Europe

February 7, 2013 by Michael

Is the financial system of Europe on the verge of a meltdown? I have always maintained that the next wave of the economic crisis would begin in Europe, and right now the situation in Europe is unraveling at a frightening pace. On Monday, European stocks had their worst day in over six months, and over the past four days we have seen the EUR/USD decline by the most that it has in nearly seven months. Meanwhile, scandals are erupting all over the continent. A political scandal in Spain, a derivatives scandal in Italy and banking scandals all over the eurozone are seriously shaking confidence in the system. If things move much farther in a negative direction, we could be facing a full-blown financial crisis in Europe very rapidly. So watch the financial markets in Europe very carefully. Yes, most Americans tend to ignore Europe because they are convinced that the U.S. is “the center of the universe”, but the truth is that Europe actually has a bigger population than we do, they have a bigger economy then we do, and they have a much larger banking system than we do. The global financial system is more integrated today than it ever has been before, and if there is a major stock market crash in Europe it is going to deeply affect the United States and the rest of the globe as well. So pay close attention to what is going on in Europe, because events over there could spark a chain reaction that would have very serious implications for every man, woman and child on the planet.

As I noted above, European markets started off the week very badly and things have certainly not improved since then. The following is how Zero Hedge summarized what happened on Thursday…

EuroStoxx (Europe’s Dow) closed today -1% for 2013. France, Germany, and Spain are all lower on the year now. Italy, following ENI’s CEO fraud, collapsed almost 3% from the US day-session open, leaving it up less than 1% for the year. Just as we argued, credit markets have been warning that all is not well and today’s afternoon free-fall begins the catch-down.

In addition, the euro has been dropping like a rock all of a sudden. Just check out this chart which shows what happened to the euro on Thursday. It is very rare to see the euro move that dramatically.

So what is causing all of this?

Well, we already know that the economic fundamentals in Europe are absolutely horrible. Unemployment in the eurozone is at a record high, and the unemployment rates in both Greece and Spain are over 26 percent. Those are depression-level numbers.

But up until now there had still been a tremendous amount of confidence in the European financial system. But now that confidence is being shaken by a whole host of scandals.

In recent days, a number of major banking scandals have begun to emerge all over Europe. Just check out this article which summarizes many of them.

One of the worst banking scandals is in Italy. A horrible derivatives scandal has pushed the third largest bank in Italy to the verge of collapse…

Monte dei Paschi di Siena (BMPS.MI), Italy’s third biggest lender, said on Wednesday losses linked to three problematic derivative trades totaled 730 million euros ($988.3 million) as it sought to draw a line under a scandal over risky financial transactions.

There is that word “derivative” that I keep telling people to watch for. Of course this is not the big “derivatives panic” that I have been talking about, but it is an example of how these toxic financial instruments can bring down even the biggest banks. Monte dei Paschi is the oldest bank in the world, and now the only way it is able to survive is with government bailouts.

Another big scandal that is shaking up Europe right now is happening over in Spain. It is being alleged that Spanish Prime Minister Mariano Rajoy and other members of his party have been receiving illegal cash payments. The following summary of the scandal comes from a recent Bloomberg article…

On Jan. 31, the Spanish newspaper El Pais published copies of what it said were ledgers from secret accounts held by Luis Barcenas, the former treasurer of the ruling People’s Party, which revealed the existence of a party slush fund. The newspaper said 7.5 million euros in corporate donations were channeled into the fund and allegedly doled out from 1997 to 2009 to senior party members, including Rajoy.

That doesn’t sound good at all.

So what is the truth?

Could Rajoy actually be innocent?

Well, at this point most of the population of Spain does not believe that is the case. Just check out the following poll numbers from the Bloomberg article quoted above…

According to the Metroscopia poll, 76 percent of Spaniards don’t believe the People’s Party’s denials of the slush-fund allegations. Even more damning, 58 percent of the party’s supporters think it’s lying. All of the Spanish businessmen with whom I discussed the latest scandal expect it to get worse before it gets better. Their assumption that there are more skeletons in the government’s closet indicates what little trust they have in their leaders.

Meanwhile, the underlying economic fundamentals in Europe just continue to get worse. One of the biggest concerns right now is France. Just check out this excerpt from a recent report by Phoenix Capital Research…

The house of cards that is Europe is close to collapsing as those widely held responsible for solving the Crisis (Prime Ministers, Treasurers and ECB head Mario Draghi) have all been recently implicated in corruption scandals.

Those EU leaders who have yet to be implicated in scandals are not faring much better than their more corrupt counterparts. In France, socialist Prime Minister Francois Hollande, has proven yet again that socialism doesn’t work by chasing after the wealthy and trying to grow France’s public sector… when the public sector already accounts for 56% of French employment.

France was already suffering from a lack of competitiveness. Now that wealthy businesspeople are fleeing the country (meaning investment will dry up), the economy has begun to positively implode.

As the report goes on to mention, over the past few months the economic numbers coming out of France have been absolutely frightful…

Auto sales for 2012 fell 13% from those of 2011. Sales of existing homes outside of Paris fell 20% year over year for the third quarter of 2012. New home sales fell 25%. Even the high-end real estate markets are collapsing with sales for apartments in Paris that cost over €2 million collapsing an incredible 42% in 2012.

Today, the jobless rate in France is at a 15-year high, and industrial production is headed into the toilet. The wealthy are fleeing France in droves because of the recent tax increases, and the nation is absolutely drowning in debt. Even the French jobs minister recently admitted that France is essentially “bankrupt” at this point…

France’s government was plunged into an embarrassing row yesterday after a minister said the country was ‘totally bankrupt’.

Employment secretary Michel Sapin said cuts were needed to put the damaged economy back on track.

‘There is a state but it is a totally bankrupt state,’ he said.

So what does all of this mean?

It means that the crisis in Europe is just beginning. Things are going to be getting a lot worse.

Perhaps that is one reason why corporate insiders are dumping so much stock right now as I noted in my article yesterday entitled “Do Wall Street Insiders Expect Something Really BIG To Happen Very Soon?” There are a whole host of signs that both the United States and Europe are heading for recession, and a lot of financial experts are warning that stocks are way overdue for a “correction”.

For example, Blackstone’s Byron Wien told CNBC the other day that he expects the S&P 500 to drop by 200 points during the first half of 2013.

Seabreeze Partners portfolio manager Doug Kass recently told CNBC that what is happening right now in the financial markets very much reminds him of the stock market crash of 1987…

“I’m getting the ‘summer of 1987 feeling’ in the U.S. equity market,” Kass told CNBC, “which means we’re headed for a sharp fall.”

Toward the end of 2012 and at the very beginning of 2013 we saw markets both in the U.S. and in Europe move up steadily even though the underlying economic fundamentals did not justify such a move.

In many ways, that move up reminded me of the “head fakes” that we have seen prior to many of the largest “market corrections” of the past. Often financial markets are at their most “euphoric” just before a crash hits.

So get ready.

Even if you don’t have a penny in the financial markets, now is the time to prepare for what is ahead.

We all need to learn from what Europe is going through right now. In Greece, formerly middle class citizens are now trampling one another for food. We all need to prepare financially, mentally, emotionally, spiritually and physically so that we can weather the economic storm that is coming.

Most Americans are accustomed to living paycheck to paycheck and being constantly up to their eyeballs in debt, but that is incredibly foolish. Even in the animal kingdom, animals work hard during the warm months to prepare for the winter months. Even so, we should all be working very hard to prepare during prosperous times so that we will have something stored up for the lean years that are coming.

Unfortunately, if events in Europe are any indication, we may be rapidly running out of time.

Who Controls The Money? An Unelected, Unaccountable Central Bank Of The World Secretly Does

February 5, 2013 by Michael

An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe. It is called the Bank for International Settlements, and it is the central bank of central banks. It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City. It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws. Even Wikipedia admits that “it is not accountable to any single national government.” The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system. Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does. Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”. During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on. The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system. It is imperative that we get people educated about what this organization is and where it plans to take the global economy.

Sadly, only a very small percentage of people actually know what the Bank for International Settlements is, and even fewer people are aware of the Global Economy Meetings that take place in Basel on a bi-monthly basis.

These Global Economy Meetings were discussed in a recent article in the Wall Street Journal…

Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine.

The dinner discussions on money and economics are more than academic. At the table are the chiefs of the world’s biggest central banks, representing countries that annually produce more than $51 trillion of gross domestic product, three-quarters of the world’s economic output.

The article goes on to describe the room that these Global Economy Meetings are held in. It sounds like something out of a novel…

The Bank of England’s Mr. King leads the dinner discussions in a room decorated by the Swiss architectural firm Herzog & de Meuron, which designed the “Bird’s Nest” stadium for the Beijing Olympics. The men have designated seats at a round table in a dining area scented by white orchids and framed by white walls, a black ceiling and panoramic views.

The central bankers that gather for these meetings are not there just to socialize. No staff members are allowed into these meetings, and they are conducted in an atmosphere of absolute secrecy…

Serious matters follow appetizers, wine and small talk, according to people familiar with the dinners. Mr. King typically asks his colleagues to talk about the outlook in their respective countries. Others ask follow-up questions. The gatherings yield no transcripts or minutes. No staff is allowed.

So the fate of the world economy is determined by unelected central bankers in secret meetings that nobody ever hears about?

That certainly does not sound very “democratic”.

But this is the direction that “global governance” is taking us. The elite believe that the “big decisions” are far too important to be left “to the people”, and so most of the “international institutions” that have been established by the elite operate independently of the democratic process.

Sadly, the truth is that all of this has been planned for a very long time.

In a recent article entitled “Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings“, I included a quote from Georgetown University history professor Carroll Quigley from a book that he wrote all the way back in 1966 in which he discussed the big plans that the elite had for the Bank for International Settlements…

[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.

Back then, the Bank for International Settlements was only just starting to play a major role in global affairs. But over the years the BIS began to become increasingly important. The following is an excerpt from an article by Ellen Brown…

For many years the BIS kept a very low profile, operating behind the scenes in an abandoned hotel. It was here that decisions were reached to devalue or defend currencies, fix the price of gold, regulate offshore banking, and raise or lower short-term interest rates. In 1977, however, the BIS gave up its anonymity in exchange for more efficient headquarters. The new building has been described as “an eighteen story-high circular skyscraper that rises above the medieval city like some misplaced nuclear reactor.” It quickly became known as the “Tower of Basel.” Today the BIS has governmental immunity, pays no taxes, and has its own private police force. It is, as Mayer Rothschild envisioned, above the law.

Yes, it most definitely does bear a striking resemblance to the Tower of Babel as you can see from the photo in this article. Once again the global elite are trying to unite humanity under a single system, and that is most definitely not a good thing.

But many of these elitists are entirely convinced that “global governance” is what humanity desperately needs. They even publicly tell us what they plan to do, but most people are not listening.

For example, the following is an excerpt from a speech that former president of the European Central Bank Jean-Claude Trichet delivered to the Council On Foreign Relations in New York…

In the area of central bank cooperation, the main forum is the Global Economy Meeting (GEM), which gathers at the BIS headquarters in Basel. Over the past few years, this forum has included 31 governors as permanent members plus a number of other governors attending on a rotating basis. The GEM, in which all systemic emerging economies’ Central Bank governors are fully participating, has become the prime group for global governance among central banks.

The speech was entitled “Global Governance Today”, and you can find the full transcript right here. But most people have never even heard that such a thing as a “Global Economy Meeting” even exists because the mainstream media rarely discusses these sorts of things. They are too busy focusing on the latest celebrity scandal or the latest cat fights between the Republicans and the Democrats.

If you go to the official BIS website, the purposes of the organization sound fairly innocent and quite boring…

The mission of the Bank for International Settlements (BIS) is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.

In broad outline, the BIS pursues its mission by:

promoting discussion and facilitating collaboration among central banks;

supporting dialogue with other authorities that are responsible for promoting financial stability;

conducting research on policy issues confronting central banks and financial supervisory authorities;

acting as a prime counterparty for central banks in their financial transactions; and

serving as an agent or trustee in connection with international financial operations.

The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People’s Republic of China and in Mexico City.

But when you start looking into the details, things get much more interesting.

So exactly how does the BIS achieve “monetary and financial stability”? An article posted on investorsinsight.com described how this is accomplished…

It accomplishes this through control of currencies. It currently holds 7% of the world’s available foreign exchange funds, whose unit of account was switched in March of 2003 from the Swiss gold franc to Special Drawing Rights (SDR), an artificial fiat “money” with a value based on a basket of currencies (44% U.S. dollar, 34% euro, 11% Japanese yen, 11% pound sterling).

The bank also controls a huge amount of gold, which it both stores and lends out, giving it great leverage over the metal’s price and the marketplace power that brings, since gold is still the only universal currency. BIS gold reserves were listed on its 2005 annual report (the most recent) as 712 tons. How that breaks down into member banks’ deposits and the BIS personal stash is unknown.

By controlling foreign exchange currency, plus gold, the BIS can go a long way toward determining the economic conditions in any given country. Remember that the next time Ben Bernanke or European Central Bank President Jean-Claude Trichet announces an interest rate hike. You can bet it didn’t happen without the concurrence of the BIS Board.

In recent years, it has become increasingly obvious who really has power over our economy.

When Barack Obama speaks, the markets usually move very little.

When Ben Bernanke speaks, the markets often respond with wild gyrations.

A recent CNBC article entitled “Central Banks: How They Are Ruling the Financial World” detailed the enormous impact that central banks had on the global financial system during 2012…

In all, 13 other central banks in the world have followed the Fed’s lead and set interest rates at or near zero in an effort to keep the liquidity spigots open and prop up their ailing economies. Those 14 economies represent a staggering $65 trillion in combined equity and bond market capitalizations, according to Bank of America Merrill Lynch.

Later on in that same article, the author discussed the enormous amounts of money that global central banks were creating out of thin air…

“When you add up all the central banks in the world, it’s going to be over $9 trillion,” said Marc Doss, regional chief investment officer for Wells Fargo Private Bank. “That’s like creating the second-largest economy in the world out of thin air.”

Indeed, central banking has become an economy unto itself, a multi-trillion-dollar empire that massages and manipulates markets, which respond to the slightest news out of the respective entities’ policy making committees.

So who controls the money?

The central banks of the world do.

And who controls those central banks?

The Bank for International Settlements does.

If we don’t like what the Bank for International Settlements is doing, can we do anything about it?

Nope. The Bank for International Settlements is above the law…

Maybe we’d feel better about the BIS if it were more transparent, but most everything about it, including its bi-monthly member and board meetings, is shrouded in secrecy. And perhaps more worrisome is that the BIS is free from oversight. By rights granted under its agreement with the Swiss Federal Council, all of the bank’s archives, documents and “any data media” are “inviolable at all times and in all places.” Furthermore, officers and employees of BIS “enjoy immunity from criminal and administrative jurisdiction, save to the extent that such immunity is formally waived . . . even after such persons have ceased to be Officials of the Bank.” Finally, no claims against BIS or its deposits may be enforced “without the prior agreement of the Bank.”

In other words they can do whatever they want, without consequences. How’s that for a leak-proof legal umbrella?

If the BIS wants to “intervene” in the financial markets, they simply just do it.

If the BIS wants to bail out big banks or even entire nations, they simply just do it.

The BIS reminds me of this old joke…

Q: Where does an 800 pound gorilla sit?

A: Anywhere it wants to.

So what is next for the Bank for International Settlements?

Well, many have speculated that eventually the goal is to have just a single global currency which will be administered by a single global central bank. The BIS is already using Special Drawing Rights (SDRs), which are considered to be a precursor to the coming global currency. The BIS played a big role in the adoption of the euro, and more currency integration is almost certainly on the way in future years…

But in the end, how you feel about the BIS may come down to how you feel about a one-world currency. The bank was a major player promoting the adoption of the euro as Europe’s common currency. There are rumors that its next project is persuading the U.S., Canada and Mexico to switch to a similar regional money, perhaps to be called the “amero,” and it’s logical to assume the bank’s ultimate goal is a single world currency. That would simplify transactions and really solidify the bank’s control of the planetary economy.

But if the United States ever did give up the U.S. dollar, it would be a massive blow to our national sovereignty.

When someone else controls your money, it doesn’t really matter that much who makes the laws.

Unfortunately, the global elite seem absolutely obsessed with the idea of a global currency, a one world economic system and a global government.

None of those things will happen this year, but that is where we are moving. With each new crisis that arises, the solutions that we will be given will always involve more centralization and more globalization.

So what do you think about all of this?

Please feel free to share your thoughts by leaving a comment below…

11 Signs That Time Is Quickly Running Out For The Global Financial System

July 30, 2012 by Michael

Are we rapidly approaching a moment of reckoning for the global financial system? August is likely to be a relatively slow month as most of Europe is on vacation, but after that we will be moving into a “danger zone” where just about anything could happen. Historically, a financial crisis has been more likely to happen in the fall than during any other time, and this fall is shaping up to be a doozy. Much of the focus of the financial world is on whether or not the euro is going to break up, but even if the authorities in Europe are able to keep the euro together we are still facing massive problems. Countries such as Greece and Spain are already experiencing depression-like conditions, and much of the rest of the globe is sliding into recession. Unemployment has already risen to record levels in some parts of Europe, major banks all over Europe are teetering on the brink of insolvency, and the flow of credit is freezing up all over the planet. If things take a really bad turn, this crisis could become much worse than the financial crisis of 2008 very quickly.

All over the world people are starting to write about the possibility of a major economic crisis starting this fall.

For example, a recent article in the International Business Times discussed how some economists around the globe are fearing the worst for the coming months….

The consensus? The world economy has entered a final countdown with three months left, and investors should pencil in a collapse in either August or September.

Citing a theory he has been espousing since 2010 that predicts “a future lack of policy flexibility from the monetary and fiscal side,” Jim Reid, a strategist at Deutsche Bank, wrote a note Tuesday that gloated “it feels like Europe has proved us right.”

“The U.S. has the ability to disprove the universal nature of our theory,” Reid wrote, but “if this U.S. cycle is of completely average length as seen using the last 158 years of history (33 cycles), then the next recession should start by the end of August.”

The global financial system is so complex and there are so many thousands of moving parts that it is always difficult to put an exact date on anything. In fact, history is littered with economists that have ended up looking rather foolish by putting a particular date on a prediction.

But without a doubt we are starting to see storm clouds gather for this fall.

The following are 11 more signs that time is quickly running out for the global financial system….

#1 A number of very important events regarding the financial future of Europe are going to happen in the month of September. The following is from a recent Reuters article that detailed many of the key things that are currently slated to occur during that month….

In that month a German court makes a ruling that could neuter the new euro zone rescue fund, the anti-bailout Dutch vote in elections just as Greece tries to renegotiate its financial lifeline, and decisions need to be made on whether taxpayers suffer huge losses on state loans to Athens.

On top of that, the euro zone has to figure out how to help its next wobbling dominoes, Spain and Italy – or what do if one or both were to topple.

#2 Reuters is reporting that Spanish Economy Minister Luis de Guindos has suggested that Spain may need a 300 billion euro bailout.

#3 Spain continues to slide deeper into recession. The Spanish economy contracted 0.4 percent during the second quarter of 2012 after contracting 0.3 percent during the first quarter.

#4 The unemployment rate in Spain is now up to 24.6 percent.

#5 According to the Wall Street Journal, a new 30 billion euro hole has been discovered in the financial rescue plan for Greece.

#6 Morgan Stanley is projecting that the unemployment rate in Greece will exceed 25 percent in 2013.

#7 It is now being projected that the Greek economy will shrink by a total of 7 percent during 2012.

#8 German Finance Minister Wolfgang Schäuble says that the rest of Europe will not be making any more concessions for Greece.

#9 The UK economy has now plunged into a deep recession. During the second quarter of 2012 alone, the UK economy contracted by 0.7 percent.

#10 The Dallas Fed index of general business activity fell dramatically to -13.2 in July. This was a huge surprise and it is yet another indication that the U.S. economy is rapidly heading into a recession.

#11 As I have written about previously, a banking crisis is more likely to happen in the fall than at any other time during the year. The global financial system will enter a “danger zone” starting in September, and none of us need to be reminded that the crashes of 1929, 1987 and 2008 all happened during the second half of the year.

So is there any hope on the horizon?

European leaders have tried short-term solution after short-term solution and none of them have worked.

Now countries all over Europe are sliding into depression and the authorities in Europe seem to be all out of answers. The following is what one eurozone diplomat said recently….

“For two years we’ve been pumping up the life raft, taking decisions that fill it with just enough air to keep it afloat even though it has a leak,” the diplomat said. “But now the leak has got so big that we can’t pump air into the raft quickly enough to keep it afloat.”

The boat is filling up with water faster than they can bail it out.

So what is the solution?

Well, some of the top names in economics on both sides of the Atlantic are urging authorities to keep the debt bubble pumped up by printing lots and lots more money.

For example, even though the U.S. government is already running trillion dollar deficits New York Times “economist” Paul Krugman is boldly proclaiming that now is the time to print and borrow even more money. He is proud to be a Keynesian, and he says that “you should be a Keynesian, too.”

Across the pond, the International Business Editor of the Telegraph, Ambrose Evans-Pritchard, is strongly urging the ECB to print more money….

Needless to say, I will be advocating 1933 monetary stimulus à l’outrance, or trillions of asset purchases through old fashioned open-market operations through the quantity of money effect (NOT INTEREST RATE ‘CREDITISM’) to avert deflation – and continue doing so until nominal GDP is restored to its trend line, at which point the stimulus can be withdrawn again.

But is more money and more debt really the solution to anything?

In the United States, M2 recent surpassed the 10 trillion dollar mark for the first time ever. It has increased in size by more than 5 times over the past 30 years.

Unfortunately, our debt has been growing much faster than GDP has over that time period.

For example, during the second quarter of 2012 U.S. government debt grew by 274.3 billion dollars but U.S. GDP only grew by 117.6 billion dollars.

Our problem is not that there is not enough money floating around.

Our problem is that there is way, way too much debt.

But this is how things always go with fiat currencies.

There is always the temptation to print more.

That is one of the big reasons why every single fiat currency in history has eventually collapsed.

Printing more money will not solve our problems. It will just cause our problems to take a different form.

In the end, nothing that the authorities can do will be able to avert the crisis that is coming.

A lot of people are starting to realize this, and that is one reason why we are seeing so much economic pessimism right now.

For example, according to a new Rasmussen poll only 14 percent of all Americans believe that children in America today will be “better off” than their parents.

That is an absolutely stunning figure, but it just shows us where we are at.

Our economy has been in decline for a long time, and now we are rapidly approaching another major downturn.

You better buckle up, because this downturn is not going to be pleasant at all.

The Price Of Corn Hits A Record High As A Global Food Crisis Looms

July 19, 2012 by Michael

Are you ready for the next major global food crisis? The price of corn hit an all-time record high on Thursday. So did the price of soybeans. The price of corn is up about 50 percent since the middle of last month, and the price of wheat has risen by about 50 percent over the past five weeks. On Thursday, corn for September delivery reached $8.166 per bushel, and many analysts believe that it could hit $10 a bushel before this crisis is over. The worst drought in the United States in more than 50 years is projected to continue well into August, and more than 1,300 counties in the United States have been declared to be official natural disaster areas. So how is this crisis going to affect the average person on the street? Well, most Americans and most Europeans are going to notice their grocery bills go up significantly over the coming months. That will not be pleasant. But in other areas of the world this crisis could mean the difference between life and death for some people. You see, half of all global corn exports come from the United States. So what happens if the U.S. does not have any corn to export? About a billion people around the world live on the edge of starvation, and today the Financial Times ran a front page story with the following headline: “World braced for new food crisis“. Millions upon millions of families in poor countries are barely able to feed themselves right now. So what happens if the price of the food that they buy goes up dramatically?

You may not think that you eat much corn, but the truth is that it is in most of the things that we buy at the grocery store. In fact, corn is found in about 74 percent of the products we buy in the supermarket and it is used in more than 3,500 ways.

Americans consume approximately one-third of all the corn grown in the world each year, and we export massive amounts of corn to the rest of the world. Unfortunately, thanks to the drought of 2012 farmers are watching their corn die right in front of their eyes all over the United States.

The following is from a Washington Post article that was posted on Thursday….

Nearly 40 percent of the corn crop was in poor-to-very-poor condition as of Sunday, according to the U.S. Agriculture Department. That compared with just 11 percent a year ago.

“The crop, if you look going south from Illinois and Indiana, is damaged and a lot of it is damaged hopelessly and beyond repair now,” said Sterling Smith, a Citibank Institutional Client Group vice president who specializes in commodities.

About 30 percent of the soybean crop was in poor-to-very-poor condition, which compared with 10 percent a year ago.

Conditions for both crops are expected to worsen in Monday’s agriculture agency report.

More than half of the country is experiencing drought conditions right now, and this is devastating both ranchers and farmers. Right now, ranchers all over the western United States are slaughtering their herds early as feed prices rise. It is being projected that the price of meat will rise substantially later this year.

The following is from a recent MSNBC article….

For example, you may want to make room in your freezer for meat because prices for beef and pork are expected to drop in the next few months as farmers slaughter herds to deal with the high cost of grains that are used as livestock feed, said Shawn Hackett of the agricultural commodities firm Hackett Financial Advisors in Boynton Beach, Fla. But, he added, everything from milk to salad dressing is going to cost more in the near term, and eventually the meat deals will evaporate as demand outstrips supply.

So there may be some deals on meat in the short-term as all of these animals are slaughtered, but in the long-term we can expect prices to go up quite a bit.

But it isn’t as if food is not already expensive enough. The price of food rose much faster than the overall rate of inflation last year.

As I wrote about yesterday, American families found their grocery budgets stretched very thin during 2011. Just check out these food inflation rates from last year….

Beef: +10.2%
Pork: +8.5%
Fish: +7.1%
Eggs: +9.2%
Dairy: +6.8%
Oils and Fats: +9.3%

If prices rose that fast last year, what will those statistics look like at the end of this year if this drought continues?

Sadly, America is not alone. According to Bloomberg, the U.S. is not the only place that is having problems with crops right now….

Dry weather in the U.S., as well as the Black Sea region; a poor start to the Indian monsoon and the possibility of emerging El Nino conditions suggest agricultural products may rally, Barclays said in a report e-mailed yesterday.

And all of this is very bad news for a world that is really struggling to feed itself.

In many countries around the globe, the poor spend up to 75 percent of their incomes on food. Just a 10 percent increase in the price of basic food staples can be absolutely devastating for impoverished families that are living right on the edge.

You may not have ever known what it is like to wonder where your next meal is going to come from, but in many areas around the world that is a daily reality for many families.

Just check out what is happening in Yemen….

Crying and staring at his distended belly, 6-year-old Warood cannot walk on his spindly legs.

“We become so familiar with sickness,” said his mother, who according to social norms here does not give her name to outsiders.

She says she has watched two of her children die. “I have to decide: Do I buy rice or medicine?”

The United Nations estimates that 267,000 Yemeni children are facing life-threatening levels of malnutrition. In the Middle East’s poorest country hunger has doubled since 2009. More than 10 million people — 44% of the population — do not have enough food to eat, according to the United Nation’s World Food Program.

In the United States, we aren’t going to see starvation even if nearly the entire corn crop fails. Our grocery bills might be more painful, but there is still going to be plenty of food for everyone.

In other areas of the world, a bad year for global crops can mean the difference between life and death.

Sadly, it is being projected that the current drought in the United States will last well into August at least.

But even when this current drought ends, our problems will not be over. The truth is that we are facing a very severe long-term water crisis in the western United States.

Just check out the following facts from foodandwaterwatch.org….

-California has a 20-year supply of freshwater left

-New Mexico has only a ten-year supply of freshwater left

-The U.S. interior west is probably the driest it has been in 500 years, according to the National Academy of Sciences and the U.S. Geological Survey

-Lake Mead, the vast reservoir of the Colorado River, has a 50 percent chance of running dry by 2021

The 1,450 mile long Colorado River is probably the most important body of water in the southwestern United States.

Unfortunately, the Colorado River is rapidly dying.

The following is from a recent article by Jonathan Waterman about how the once might Colorado River is running dry…

Fifty miles from the sea, 1.5 miles south of the Mexican border, I saw a river evaporate into a scum of phosphates and discarded water bottles. This dirty water sent me home with feet so badly infected that I couldn’t walk for a week. And a delta once renowned for its wildlife and wetlands is now all but part of the surrounding and parched Sonoran Desert. According to Mexican scientists whom I met with, the river has not flowed to the sea since 1998. If the Endangered Species Act had any teeth in Mexico, we might have a chance to save the giant sea bass (totoaba), clams, the Sea of Cortez shrimp fishery that depends upon freshwater returns, and dozens of bird species.

So let this stand as an open invitation to the former Secretary of the Interior and all water buffalos who insist upon telling us that there is no scarcity of water here or in the Mexican Delta. Leave the sprinklered green lawns outside the Aspen conferences, come with me, and I’ll show you a Colorado River running dry from its headwaters to the sea. It is polluted and compromised by industry and agriculture. It is overallocated, drought stricken, and soon to suffer greatly from population growth. If other leaders in our administration continue the whitewash, the scarcity of knowledge and lack of conservation measures will cripple a western civilization built upon water. “You can either do it in crisis mode,” Pat Mulroy said at this conference, “or you can start educating now.”

People need to wake up because we have some very serious water issues in this country.

In the heartland of America, farmers pump water from a massive underground lake known as the Ogallala Aquifer to irrigate their fields.

The problem is that the Ogallala Aquifer is rapidly being pumped dry.

According to the U.S. Geological Survey, “a volume equivalent to two-thirds of the water in Lake Erie” has been permanently drained from the Ogallala Aquifer since 1940.

Once upon a time, the Ogallala Aquifer had an average depth of about 240 feet.

Today, the average depth of the Ogallala Aquifer is just 80 feet, and in some parts of Texas the water is totally gone.

Right now, the Ogallala Aquifer is being drained at a rate of approximately 800 gallons per minute.

Once that water is gone it will not be replaced.

So what will the “breadbasket of America” do then?

Most Americans do not realize this, but we are facing some major, major water problems.

Let us pray that this current drought ends and let us pray that everyone around the world will have enough to eat.

But even if we get through this year okay by some miracle, that doesn’t mean that our problems are over.

Four Reasons To Be Even Less Optimistic About The Global Financial System Than You Were Last Month

July 11, 2012 by Michael

The cracks in the ice are getting bigger. At this point it is really hard to have much confidence in the global financial system at all. They told us that MF Global was an isolated incident. Well, the horrific financial scandal over at PFGBest is essentially MF Global all over again. They told us that we would not see a huge wave of municipal bankruptcies in the United States. Well, three California cities have declared bankruptcy in less than a month. They told us that we could have faith in the integrity of the global financial system. Well, now we are finding out that global interest rates have been fixed by insiders for years. They told us that Greece was an isolated problem and that none of the larger European nations would experience anything remotely similar. Well, what is happening in Spain right now looks like an instant replay of exactly what happened in Greece. So who are we supposed to believe? Why does it seem like nearly everything that “the authorities” tell us turns out to be a lie? What else haven’t they been telling us?

The following are four reasons to be even less optimistic about the global financial system than you were last month….

#1 PFGBest Is MF Global All Over Again

Do you remember that whole MF Global thing?

Do you remember how hundreds of millions of dollars of customer funds were “missing” due to “accounting irregularities”?

Well, it is happening again.

PFGBest is a brokerage firm in Cedar Falls, Iowa that mostly handles agricultural futures.

All hell broke loose when the National Futures Association discovered that a bank account that was supposed to be holding 225 million dollars of customer funds was only holding about 5 million dollars instead.

So where is the other 220 million dollars?

That is a very good question.

Of course it is not a promising sign that the head of PFGBest tried to commit suicide when this news came out.

A lot of PFGBest clients are going to be absolutely devastated by this scandal. The following is from a recent Reuters article….

Farmers on Tuesday fumed at the prospect of financial losses, or at a minimum a lengthy wait for the return of frozen funds, due to alleged mismanagement at brokerage PFGBest, and some said they had been burned for the last time.

The U.S. futures industry reeled as regulators accused Iowa-based PFGBest of misappropriating more than $200 million in customer funds for more than two years, a new blow to trader trust just months after MF Global’s collapse.

Centered in the heart of farm belt, the firm handled agricultural futures accounts for a number of clients who grow corn, soybeans and cotton.

But it is not just PFGBest clients that are going to feel the pain of this scandal.

The truth is that this is going to deeply shake confidence in the entire global financial system.

Many dismissed what happened at MF Global as an “isolated incident”.

But now it is happening again.

Fool me once, shame on you.

Fool me twice, shame on me.

#2 A Third California City Goes Bankrupt In Less Than A Month

First it was Stockton.

Then it was Mammoth Lakes.

Now it is San Bernardino’s turn.

On Tuesday, the city council of San Bernardino, California voted to file for bankruptcy.

An article in the Los Angeles Times detailed the issues at the heart of San Bernardino’s financial problems….

The city’s fiscal crisis has been years in the making, compounded by the nation’s crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento’s raid on redevelopment funds and a city reserve that is tapped out, officials said.

While it would be easy to dump on the state of California (and that is something I have done quite often), the truth is that we are seeing municipal debt problems erupting all over the United States.

For example, the city of Scranton, Pennsylvania has such severe financial problems that the mayor of Scranton has ordered that all city employees be paid minimum wage until a solution to the crisis is found.

If this was television, Dwight Schrute would find a way to save the day for Scranton.

Unfortunately, this is real life and Dwight Schrute does not exist in real life.

#3 The Liborgate Scandal Keeps Getting Worse

We have been taught that we should all have faith in the integrity of the global financial system.

What a bunch of baloney that turned out to be.

It turns out that banksters have been colluding to fix global interest rates for years.

“Liborgate” is being called the biggest financial scandal in history. Libor is important because it is one of the key benchmarks used to set prices for hundreds of trillions of dollars of loans, securities and derivatives.

British banking giant Barclays has already admitted that they were involved in manipulating Libor.

Barclays has already agreed to pay $453 million in fines to British and U.S. authorities.

But the truth is that it would have been totally impossible for Barclays to have manipulated Libor by themselves.

So who else was involved?

That was a question that was discussed in a recent article in The Economist….

Over the past week damning evidence has emerged, in documents detailing a settlement between Barclays and regulators in America and Britain, that employees at the bank and at several other unnamed banks tried to rig the number time and again over a period of at least five years. And worse is likely to emerge. Investigations by regulators in several countries, including Canada, America, Japan, the EU, Switzerland and Britain, are looking into allegations that LIBOR and similar rates were rigged by large numbers of banks. Corporations and lawyers, too, are examining whether they can sue Barclays or other banks for harm they have suffered. That could cost the banking industry tens of billions of dollars. “This is the banking industry’s tobacco moment,” says the chief executive of a multinational bank, referring to the lawsuits and settlements that cost America’s tobacco industry more than $200 billion in 1998. “It’s that big,” he says.

As many as 20 big banks have been named in various investigations or lawsuits alleging that LIBOR was rigged. The scandal also corrodes further what little remains of public trust in banks and those who run them.

So what does all of this mean?

The Wall Street Journal says that the credibility of the entire global financial system is at stake….

At stake is both the integrity of the world’s financial system and the credibility of the U.K. authorities to police it. Long before the current scandal, many European policy makers had concluded that London during the boom was the Wild West, whose loose standards are a threat to European financial stability. The Libor scandal suggests U.S. regulators have reached similar conclusions. The Commodities Futures Trading Commission, the U.S. regulatory body that first started investigating rate-fixing, left little doubt how seriously it regards the abuses it uncovered.

Once faith is shattered, it is incredibly difficult to rebuild.

And right now it is really hard to come up with a decent argument why anyone should trust their money to such a corrupt system.

#4 Spain Is Turning Into Greece

A central government drowning in debt?

Check.

A banking system on the verge of collapse?

Check.

Politicians pushing a forced austerity program that includes much higher taxes, much lower government spending and greatly reduced pay for government workers?

Check.

Wild rioting in the streets by protesters?

Check.

Let’s see….where have we seen this before?

Can anyone still possibly deny that Spain is going down the exact same road that Greece has gone?

Spanish Prime Minister Mariano Rajoy is proposing a huge slate of tough austerity measures including a 3 point increase in the Value Added Tax on goods and services. If that 3 point hike is implemented, the Value Added Tax will rise to 21 percent.

Could you imagine going to the store and paying a 21 percent sales tax?

Ouch.

Rajoy is promising that these measures will get Spain back on the right track.

Of course we have already seen how well such austerity measures have worked in Greece.

The unemployment rate in Spain is already up to 24.4 percent, and now these austerity measures will slow the economy down even more.

No wonder there is rioting in the streets. You can see high quality footage of the rioting that has been going on in Spain this week right here. At one point police were seen firing rubber bullets at the protesters.

But of course the citizens of Spain could not live way above their means forever. At some point every debt bubble ends, and when that happens the results are often incredibly painful.

This is a lesson that the United States has not learned either. When we stop racking up more than a trillion dollars of additional government debt every year our “adjustment” will be exceedingly painful as well.

A little over a week ago, I wrote an article entitled “17 Reasons To Be EXTREMELY Concerned About The Second Half Of 2012“. I never imagined that things would get so much worse in just a week.

Everything seems to be accelerating these days.

That includes the decay that is happening in society. A few days ago I made a list of 25 signs that society is falling apart, but then another story came along after I had finished my article that topped all of the examples in my list. The following is how one man in West Virginia has been treating his wife….

During the conversation, according to the criminal complaint, Lizon’s wife told the woman that her husband had kept her chained up with metal padlocks and chains for about 10 years. The woman noticed scar tissue on the victim’s hands and ankles. Lizon’s wife told the woman that the scars were from the chains tearing into her skin.

Lizon’s wife told the woman that she and her husband were originally from Czechoslovakia, and that they live in Leroy, W.Va.

According to the complaint, the woman told investigators that the feet of Lizon’s wife were “mutilated and swollen,” one of which was missing a considerable amount of skin. Lizon’s wife told the woman that her husband smashed her foot with a bucket or scoop attachment of a farm tractor.

Lizon’s wife also told the woman Lizon called her his “slave,” and that whenever her husband entered the room she had to kneel down before him, according to the complaint.

Can you imagine anyone doing that?

Can you imagine any husband chaining his wife up for 10 years?

That is so sick that it is beyond words to describe it.

Unfortunately, that is not just one isolated incident of depravity in a world filled with goodness.

The truth is that the entire world system is saturated with depravity and corruption.

If anyone is willing to stand up for “the integrity of the global financial system”, I challenge you to leave a comment below explaining to the rest of us why we should still have blind faith in the system after everything that has happened.

I don’t imagine that too many people will even attempt to take me up on that challenge.

20 Signs That Dust Bowl Conditions Will Soon Return To The Heartland Of America

February 27, 2012February 27, 2012 by Michael

For decades, the heartland of America has been the breadbasket of the world. Unfortunately, those days will shortly come to an end. The central United States is rapidly drying up and dust bowl conditions will soon return. There are a couple of major reasons for this. Number one, the Ogallala Aquifer is being depleted at an astounding pace. The Ogallala Aquifer is one of the largest bodies of fresh water in the entire world, and water from it currently irrigates more than 15 million acres of crops. When that water is gone we will be in a world of hurt. Secondly, drought conditions have become the “new normal” in many areas of Texas, Oklahoma, Kansas and other states in the middle part of the country. Scientists tell us that the wet conditions that we enjoyed for several decades after World War II were actually the exception to the rule and that most of time time the interior west is incredibly dry. They also tell us that when dust bowl conditions return to the area, they might stay with us a lot longer than a decade like they did during the 1930s. Unfortunately, without water you cannot grow food, and with global food supplies as tight as they are right now we cannot afford to have a significant decrease in agricultural production. But it is not just the central United States that is experiencing the early stages of a major water crisis. Already many other areas around the nation are rapidly developing their own water problems. As supplies of fresh water get tighter and tighter, some really tough decisions are going to have to be made. Fresh water is absolutely essential to life, and it is going to become increasingly precious in the years ahead.

Most Americans have never even heard of the Ogallala Aquifer, but the truth is that it is one of the most important bodies of water on the globe. It covers well over 100,000 square miles and it sits underneath the states of Texas, New Mexico, Oklahoma, Colorado, Kansas, Nebraska, Wyoming and South Dakota.

Water drawn from the Ogallala Aquifer is used to water more than 15 million acres of crops. Without this source of water, the United States would not be the breadbasket of the world.

That is why what is happening right now is so alarming.

The following are 20 signs that dust bowl conditions will soon return to the heartland of America….

#1 The Ogallala Aquifer is being drained at a rate of approximately 800 gallons per minute.

#2 According to the U.S. Geological Survey, since 1940 “a volume equivalent to two-thirds of the water in Lake Erie” has been permanently lost from the Ogallala Aquifer.

#3 Decades ago, the Ogallala Aquifer had an average depth of approximately 240 feet, but today the average depth is just 80 feet. In some areas of Texas, the water is gone completely.

#4 Scientists are warning that nothing can be done to stop the depletion of the Ogallala Aquifer. The ominous words of David Brauer of the Ogallala Research Service should alarm us all….

“Our goal now is to engineer a soft landing. That’s all we can do.”

#5 According to a recent National Geographic article, the average depletion rate of the Ogallala Aquifer is picking up speed….

Even more worrisome, the draining of the High Plains water account has picked up speed. The average annual depletion rate between 2000 and 2007 was more than twice that during the previous fifty years. The depletion is most severe in the southern portion of the aquifer, especially in Texas, where the water table beneath sizeable areas has dropped 100-150 feet; in smaller pockets, it has dropped more than 150 feet.

#6 According to the U.S. National Academy of Sciences, the U.S. interior west is now the driest that it has been in 500 years.

#7 It seems like the middle part of the United States experiences a major drought almost every single year now. Last year, “the drought of 2011” virtually brought Texas agriculture to a standstill. More than 80 percent of the state of Texas experienced “exceptional drought” conditions at some point, and it was estimated that about 30 percent of the wheat fields in Texas were lost. Agricultural losses from the drought were estimated to be $3 billion in the state of Texas alone.

#8 Wildfires have burned millions of acres of vegetation in the central part of the United States in recent years. For example, wildfires burned an astounding 3.6 million acres in the state of Texas alone during 2011. This helps set the stage for huge dust storms in the future.

#9 Texas is not the only state that has been experiencing extremely dry conditions. Oklahoma only got about 30 percent of the rainfall that it normally gets last summer.

#10 In some areas of the southwest United States we are already seeing huge dust storms come rolling through major cities. You can view video of a giant dust storm rolling through Phoenix, Arizona right here.

#11 Unfortunately, scientists tell us that it would be normal for dust bowl conditions to persist in parts of North America for decades. The following is from an article in the Vancouver Sun….

But University of Regina paleoclimatologist Jeannine-Marie St. Jacques says that decade-long drought is nowhere near as bad as it can get.

St. Jacques and her colleagues have been studying tree ring data and, at the American Association for the Advancement of Science conference in Vancouver over the weekend, she explained the reality of droughts.

“What we’re seeing in the climate records is these megadroughts, and they don’t last a decade—they last 20 years, 30 years, maybe 60 years, and they’ll be semi-continental in expanse,” she told the Regina Leader-Post by phone from Vancouver.

“So it’s like what we saw in the Dirty Thirties, but imagine the Dirty Thirties going on for 30 years. That’s what scares those of us who are in the community studying this data pool.”

#12 Experts tell us that U.S. water bills are likely to soar in the coming years. It is being projected that repairing and expanding our decaying drinking water infrastructure will cost more than one trillion dollars over the next 25 years, and as a result our water bills will likely approximately triple over that time period.

#13 Right now, the United States uses approximately 148 trillion gallons of fresh water a year, and there is no way that is sustainable in the long run.

#14 According to a U.S. government report, 36 states are already facing water shortages or will be facing water shortages within the next few years.

#15 Lake Mead supplies about 85 percent of the water to Las Vegas, and since 1998 the level of water in Lake Mead has dropped by about 5.6 trillion gallons.

#16 A federal judge has ruled that the state of Georgia has very few legal rights to Lake Lanier, and since Lake Lanier is the main water source for the city of Atlanta that presents quite a problem.

#17 It has been estimated that the state of California only has a 20 year supply of fresh water left.

#18 It has been estimated that the state of New Mexico only has a 10 year supply of fresh water left.

#19 Approximately 40 percent of all rivers in the United States and approximately 46 percent of all lakes in the United States have become so polluted that they are are no longer fit for human use.

#20 Eight states in the Great Lakes region have signed a pact banning the export of water from the Great Lakes to outsiders – even to other U.S. states.

Unfortunately, it is not just the United States that is facing a shortage of fresh water in the near future. The reality is that most of the rest of the world is in far worse shape than we are. Just consider the following stats….

-According to the United Nations, the world is going to need at least 30 percent more fresh water by the year 2030.

-Global demand for fresh water tripled during the last century, and is now increasing faster than ever before.

-According to USAID, one-third of the people on earth will be facing severe or chronic water shortages by the year 2025.

-Of the 60 million people added to the cities of the world each year, the vast majority of them live in deeply impoverished areas that have no sanitation facilities whatsoever.

-It has been estimated that 75 percent of all surface water in India has been heavily contaminated by human or agricultural waste.

-Sadly, according to one UN study on sanitation, far more people in India have access to a cell phone than to a toilet.

-Every 8 seconds, somewhere in the world a child dies from drinking dirty water.

–Due to a lack of water, Saudi Arabia has given up on trying to grow wheat and will be 100 percent dependent on wheat imports by the year 2016.

-Each year in northern China, the water table drops by an average of about one meter due to severe drought and overpumping, and the size of the desert increases by an area equivalent to the state of Rhode Island.

-In China, 80 percent of the major rivers have become so horribly polluted that they do not support any aquatic life at all at this point.

-In sub-Saharan Africa, drought has become a way of life. Collectively, the women of South Africa walk the equivalent of the distance to the moon and back 16 times a day just to get water.

It has been said that “water is the new gold”, and unfortunately we are getting close to a time when that may actually be true.

Without water, none of us could survive for long. Just try not using water for anything for 12 hours some time. It is a lot harder than you may think.

We can’t grow our food in a pile of dust. Unfortunately, many areas of the heartland of America are slowly but surely heading in that direction.

History tells us that it is only a matter of time before dust bowl conditions return to the central United States. We have used irrigation and other technologies to delay the inevitable, but in the end it cannot be stopped.

Let us hope that the return of dust bowl conditions can be put off for as long as possible, but let us also prepare diligently for the worst.

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