Wednesday, February 25, 2015

Ex-Plunge Protection Team Whistleblower: "Governments Control Markets; There Is No Price Discovery Anymore"

One year after the great stock market crash in 1987, US President Ronald Reagan launched the "Working Group on Financial Markets." Conspiracy theorists believe, however, that the real task of this committee is to protect against a renewed slump in the stock market. In the jargon of Wall Street, the working group is known as the "Plunge Protection Team."
One glimpse at a few days suring 2007/8 and it is clear that 'someone' with infinitely deep pockets was able to support markets on several critical days - though, of course, anyone proclaiming intervention was propagandized away as a conspiracy theory wonk. However, as Dr. Pippa Malmgren - a former member of the U.S. President’s Working Group on Financial Markets - it is not conspiracy theory, it is conspiracy fact: "there's no price discovery anymore by the market... governments impose prices on the market."
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In this 38 minute interview Lars Schall, for Matterhorn Asset Management, [4]speaks with Dr Pippa Malmgren, a US financial advisor and policy expert based in London. Dr Malmgren has been a member of the U.S. President’s Working Group on Financial Markets (a.k.a. the “Plunge Protection Team”). They address, inter alia:
Full interview:

Source: [4]

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Still don't believe?
Here is Scott Nations in 2008 getting "Schiff'd" by the CNBC anchors (Liesman) and some other guest muppet when he dares to suggest the Fed is intervening and that the President's Working Group (i.e. Plunge Protection Team) is hard at work...

"look at the market action on the 10th and 28th and tell me what else might have generated a 100 point rally in the S&P under that situation?" Liesman fobs him off as some conspiracy wonk...
Yep looks normal to us... 10/10/2008

and 10/28/2008

Those are 100 point moves on a 700/800 S&P!! Nothing to see here eh Liesman, Kiernan, Quick?
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And of course there's last October's Bullared bounce... the longest most consistent trend higher in stocks ever. [8]

Thursday, February 19, 2015

Central Banks Have Lost Control Of The World

With the world's oldest central bank - Sweden's Riksbank - taking the plunge into negative rates, there have been 19 'eases' by central banks this yearMorgan Stanley warns of "ghosts of the 1930s." With competitive 'easing' stoking fears of international currency wars, The Telegraph noteshowever that looser monetary policy is not the order of the day everywhere in the world, and herein lies potential danger for the world economy.

The world's interest-rate policies...
Click image for interactive version
Looser monetary policy is not the order of the day everywhere in the world (see map above), and herein lies potential danger for the world economy.

The expectation of a normalisation of monetary policy by the Federal Reserve has resulted a sustained rally in the US dollar. Such strength in the world's reserve currency has simultaneously applied pressure on economies pegged to the greenback.

Meanwhile rate hikes from the Fed - which are expected to begin later this year - will naturally leader to tighter monetary conditions in economies everywhere from Mexico to Hong Kong.

It is this divergence in the actions of the world's major central banks which could lead to a new global liquidity crisis,according to the governor of the Bank of England.

Despite robust job creation and economic output in the domestic economy of the US, the trend towards lower global interest rates will probably slow the extent of the Fed's rate hikes once it finally gets off zero, according to Kit Juckes at Société Générale.

"The best we can hope now is that the dollar’s advance is orderly and the impact on global capital flows is limited" said Mr Juckes.
The 19 Policy 'eases' so far... (or 24 if Romania's 2 and Denmark's 4 are counted)
Uzbekistan's central bank cuts its refinancing rate to 9 percent from 10 percent.
Jan. 7/Feb. 4 ROMANIA
Romania's central bank cuts its key interest rate by a total of 50 basis points, taking it to a new record low of 2.25 percent. Most analysts polled by Reuters had expected the latest cut.
The Swiss National Bank stuns markets by scrapping the franc's three-year-old exchange rate cap to the euro, leading to an unprecedented surge in the currency. This de facto tightening, however, is in part offset by a cut in the interest rate on certain sight deposit account balances by 0.5 percentage points to -0.75 percent.
Jan. 15 INDIA
The Reserve Bank of India surprises markets with a 25 basis point cut in rates to 7.75 percent and signals it could lower them further, amid signs of cooling inflation and growth struggling to recover from its weakest levels since the 1980s.
Jan. 15 EGYPT
Egypt's central bank makes a surprise 50 basis point cut in its main interest rates, reducing the overnight deposit and lending rates to 8.75 and 9.75 percent, respectively.
Jan. 16 PERU
Peru's central bank surprises the market with a cut in its benchmark interest rate to 3.25 percent from 3.5 percent after the country posts its worst monthly economic expansion since 2009.
Jan. 20 TURKEY
Turkey's central bank lowers its main interest rate, but draws heavy criticism from government ministers who say the 50 basis point cut, five months before a parliamentary election, is not enough to support growth.
Jan. 21 CANADA
The Bank of Canada shocks markets by cutting interest rates to 0.75 percent from 1 percent, where it had been since September 2010, ending the longest period of unchanged rates in Canada since 1950.
The ECB launches a government bond-buying programme which will pump over a trillion euros into a sagging economy starting in March and running through to September next year, and perhaps beyond.
Pakistan's central bank cuts its key discount rate to 8.5 percent from 9.5 percent, citing lower inflationary pressure due to falling global oil prices. Central Bank Governor Ashraf Wathra says the new rate will be in place for two months, until the next central bank meeting to discuss further policy.
The Monetary Authority of Singapore unexpectedly eases policy, saying in an unscheduled policy statement that it will reduce the slope of its policy band for the Singapore dollar because the inflation outlook has "shifted significantly" since its last review in October 2014.
Albania's central bank cuts its benchmark interest rate to a record low 2 percent. This follows three rate cuts last year, the most recent in November.
Jan. 30 RUSSIA
Russia's central bank unexpectedly cuts its one-week minimum auction repo rate by two percentage points to 15 percent, a little over a month after raising it by 6.5 points to 17 percent, as fears of recession mount following the fall in global oil prices and Western sanctions over the Ukraine crisis.
The Reserve Bank of Australia cuts its cash rate to an all-time low of 2.25 percent, seeking to spur a sluggish economy while keeping downward pressure on the local dollar.
Feb. 4 CHINA
China's central bank makes a system-wide cut to bank reserve requirements -- its first in more than two years -- to unleash a flood of liquidity to fight off economic slowdown and looming deflation.
Jan. 19/22/29/Feb. 5 DENMARK
The Danish central bank cuts interest rates a remarkable four times in less than three weeks, and intervenes regularly in the currency market to keep the crown within the narrow range of its peg to the euro.
Feb. 13 SWEDEN
Sweden's central bank cut its key repo rate to -0.1 percent from zero where it had been since October, and said it would buy 10 billion Swedish crowns worth of bonds
February 17, INDONESIA
Indonesia’s central bank unexpectedly cut its main interest rate for the first time in three years
February 18, BOTSWANA
The Bank of Botswana reduced its benchmark interest rate for the first time in more than a year to help support the economy as inflation pressures ease.
The rate was cut by 1 percentage point to 6.5 percent, the first adjustment since Oct. 2013, the central bank said in an e-mailed statement on Wednesday.
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Not exactly the actions of a world on the verge of escape velocity growth...

It doesn't seem to be working... have central banks lost control?

Wednesday, February 18, 2015

Operation Choke-Point Is Worse Than We Thought

Operation Choke Point is an initiative of the DoJ that was announced in 2013 which investigates bank interactions with certain businesses believed to be at higher risk for fraud and money laundering. When first disclosed it was heavily criticised for bypassing due process with critics warning that "it's a thinly veiled ideological attack on industries the Obama administration doesn't like, such as gun sellers," and precious metals dealers. However, as Mike Maloney explains, it is far worse than that... "it violates the most fundamental principles of the rule of law and accountable, transparent government."
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From: Staff Report, 113th Congress, December 8, 2014
"At a minimum, Operation Choke Point is little more than government-mandated de-risking.

FDIC, in cooperation with the Justice Department, made sure banks understood – or in their own language, “got the message” – thatmaintaining relationships with certain disfavored business lines would incur enormous regulatory risk.

The effect of this policy has been to deny countless legal and legitimate merchants access to the financial system and deprive them of their very ability to exist.

Accordingly, Operation Choke Point violates the most fundamental principles of the rule of law and accountable, transparent government."
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We strongly suggest you are not holding anything sharp while you watch these clips....
Mike Maloney digs into the details... (Introduction)

And the follow-up "it's far worse than we thought" - Must Watch!!

Hawkins Guns Targeted By Operation Chokepoint:
Wikipeida entry for Operation Chokepoint:
Operation Choke Point is an initiative of the DoJ that was announced in 2013, which is investigating banks in the United States and the business they do with payment processors, payday lenders, and other companies believed to be at higher risk for fraud and money laundering.

This operation, first disclosed in August 2013 Wall Street Journal story has been criticized for bypassing due process; the government is pressuring the financial industry to cut off the companies' access to banking services, without first having shown that the targeted companies are violating the law. As reported by the St. Louis Post-Dispatch, critics believe "it's a thinly veiled ideological attack on industries the Obama administration doesn't like, such as gun sellers and coal producers."

The operation itself is now under investigation by two federal agencies.
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Tuesday, February 17, 2015

Moscow-Based Security Firm Reveals What May Be The Biggest NSA "Backdoor Exploit" Ever

Since 2001, a group of hackers - dubbed the "Equation Group" by researchers from Moscow-based Kaspersky Lab - have infected computers in at least 42 countries (with Iran, Russia, Pakistan, Afghanistan, India, and Syria most infected) with what Ars Technica calls "superhuman technical feats" indicating "extraordinary skill and unlimited resources."
The exploits - including the 'prized technique' of the creation of a secret storage vault that survives military-grade disk wiping and reformatting - cover every hard-drive manufacturer and have many similar characteristics to the infamous NSA-led Stuxnet virus.
According to Kaspersky, the spies made a technological breakthrough by figuring out how to lodge malicious software in the obscure code called firmware that launches every time a computer is turned on.

Disk drive firmware is viewed by spies and cybersecurity experts as the second-most valuable real estate on a PC for a hacker, second only to the BIOS code invoked automatically as a computer boots up.

"The hardware will be able to infect the computer over and over," lead Kaspersky researcher Costin Raiu said in an interview.


Kaspersky's reconstructions of the spying programs show that they could work in disk drives sold by more than a dozen companies, comprising essentially the entire market. They include Western Digital Corp, Seagate Technology Plc, Toshiba Corp, IBM, Micron Technology Inc and Samsung Electronics Co Ltd.
The group used a variety of means to spread other spying programs, such as by compromising jihadist websites, infecting USB sticks and CDs, anddeveloping a self-spreading computer worm called Fanny, Kasperky said.
Fanny was like Stuxnet in that it exploited two of the same undisclosed software flaws, known as "zero days," which strongly suggested collaboration by the authors, Raiu said. He added that it was "quite possible" that the Equation group used Fanny to scout out targets for Stuxnet in Iran and spread the virus.
Which, as Reuters reports, strongly suggests the "extraordinary skills and unlimited resources" were funded by the NSA...
The U.S. National Security Agency has figured out how to hide spying software deep within hard drives made by Western Digital, Seagate, Toshiba and other top manufacturers, giving the agency the means to eavesdrop on the majority of the world's computers, according to cyber researchers and former operatives.

That long-sought and closely guarded ability was part of a cluster of spying programs discovered by Kaspersky Lab, the Moscow-based security software maker that has exposed a series of Western cyberespionage operations.

Kaspersky said it found personal computers in 30 countries infected with one or more of the spying programs, with the most infections seen in Iran, followed by Russia, Pakistan, Afghanistan, China, Mali, Syria, Yemen and Algeria. The targets included government and military institutions, telecommunication companies, banks, energy companies, nuclear researchers, media, and Islamic activists, Kaspersky said.

The firm declined to publicly name the country behind the spying campaign, but said it was closely linked to Stuxnet, the NSA-led cyberweapon that was used to attack Iran's uranium enrichment facility. The NSA is the agency responsible for gathering electronic intelligence on behalf of the United States.

A former NSA employee told Reuters that Kaspersky's analysis was correct, and that people still in the intelligence agency valued these spying programs as highly as Stuxnet. Another former intelligence operative confirmed that the NSA had developed the prized technique of concealing spyware in hard drives, but said he did not know which spy efforts relied on it.
The global coverage is clearly focused in a particular region (and not in the US)...
As Kasperskey exposes, victims generally fall into the following categories:
•     Governments and diplomatic institutions
•     Telecommunication
•     Aerospace
•     Energy
•     Nuclear research
•     Oil and gas
•     Military
•     Nanotechnology
•     Islamic activists and scholars
•     Mass media
•     Transportation
•     Financial institutions
•     Companies developing cryptographic technologies
As an interesting note, some of the “patients zero” of Stuxnet seem to have been infected by the EQUATION group. It is quite possible that the EQUATION group malware was used to deliver the STUXNET payload.
So far, Kaspersky have identi?ed several malware platforms used exclusively by the Equation group. They are:
EQUATIONDRUG  – A very complex attack platform used by the group on its victims. It supports a module plugin system, which can be dynamically uploaded and unloaded by the attackers.
DOUBLEFANTASY  – A validator-style Trojan, designed to con?rm the target is the intended one. If the target is con?rmed, they get upgraded to a more sophisticated platform such as EQUATIONDRUG or GRAYFISH.


TRIPLEFANTASY – Full-featured backdoor sometimes used in tandem with GRAYFISH. Looks like an upgrade of DOUBLEFANTASY, and is possibly a more recent validator-style plugin.

GRAYFISH  – The most sophisticated attack platform from the EQUATION group. It resides completely in the registry, relying on a bootkit to gain execution at OS startup.
FANNY  – A computer worm created in 2008 and used to gather information about targets in the Middle East and Asia. Some victims appear to have been upgraded ?rst to DoubleFantasy, and then to the EQUATIONDRUG system. Fanny used exploits for two zero-day vulnerabilities which were later discovered with Stuxnet.
EQUATIONLASER  – An early implant from the EQUATION group, used around 2001-2004. Compatible with Windows 95/98, and created sometime between DOUBLEFANTASY and EQUATIONDRUG.
Although the implementation of their malware systems is incredibly complex, surpassing even Regin in sophistication, there is one aspect of the EQUATION group’s attack technologies that exceeds anything Kaspersky has ever seen before.
This is the ability to infect the hard drive ?rmware.
The plugin version 4 is more complex and can reprogram 12 drive “categories”

*  *  *
So to summarize:
1) US sanctions Russia

2) a Russian-based research group (Kaspersky Lab is an international group operating in almost 200 countries and territories worldwide. The company is headquartered in Moscow, Russia, with its holding company registered in the United Kingdom. Kaspersky Lab currently employs over 2,850 qualified specialists) reveals that through Equation group's code, there is NSA presence across the supply chain of the highest margin US products .

3) As Reuters notes, the exposure of these new spying tools could lead to greater backlash against Western technology,particularly in countries such as China, which is already drafting regulations that would require most bank technology suppliers to proffer copies of their software code for inspection.

4) And Peter Swire, one of five members of U.S. President Barack Obama's Review Group on Intelligence and Communications Technology, said the Kaspersky report showed that it is essential for the country to consider the possible impact on trade and diplomatic relations before deciding to use its knowledge of software flaws for intelligence gathering. "There can be serious negative effects on other U.S. interests," Swire said.
It appears the 'boomerang' is boomerang-ing...
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Monday, February 16, 2015

HSBC Bank: Secret Origins To Laundering The World's Drug Money

Submitted by the Drug Trafficking & Narco-Terrorism Department of GreatGameIndia 
HSBC Bank : Secret Origins To 26/11 Mumbai Attacks
#SwissLeaks what the media has termed it is a trove of secret documents from HSBC’s Swiss private banking arm that reveals names of account holders and their balances for the year 2006-07. They come from over 200 countries, the total balance over $100 billion. But nowhere has the HSBC Swiss list touched off a more raging political debate than in India.
That’s why to obtain and investigate the Indian names, The Indian Express partnered in a three-month-long global project with the Washington-based International Consortium of Investigative Journalists (ICIJ) and the Paris-based Le Monde newspaper. The investigation revealed 1,195 Indian HSBC clients, roughly double the 628 names that French authorities gave to the Government in 2011. The new revelation— published as part of a global agreement — is expected to significantly widen the scale and scope of the ongoing probe by the Special Investigation Team (SIT) appointed by the Supreme Court.
For years, when banks have been caught laundering drug money, they have claimed that they did not know, that they were but victims of sneaky drug dealers and a few corrupt employees. Nothing could be further from the truth. The truth is that a considerable portion of the global banking system is explicitly dedicated to handling the enormous volume of cash produced daily by dope traffickers.
Contrary to popular opinion, it is not “demand” from the world’s population which creates the mind destroying drug trade. Rather, it is the world financial oligarchy, looking for massive profits and the destruction of the minds of the population it is determined to dominate, which organized the drug trade. The case of HSBC underscores that point. Serving as the central bank of this global apparatus, is HSBC.
2009 CIA Map of Drug Trade Routes
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East India Company Origins
The opium trade began in the early 1700s as an official monopoly of the British East India Company, which conquered India, and ran it on behalf of the British Crown and the financiers operating through the City of London. Indian-grown opium became a key component in the trade for tea and silk in China.  The East India Company had a thriving business selling British textiles and other manufactured products in India, and selling Chinese silk and tea in Britain. But the Company ran into problems with the opium end of the trade. The influx of opium caused major problems for China, and led the Emperor to issue an edict in 1729 prohibiting opium consumption. Then, in 1757, the Emperor restricted all foreigners and foreign vessels to a trading area in the port city of Canton. A stronger edict in 1799 prohibited the importation and use of opium under penalty of death.
None of this stopped the British from continuing to flood China with opium, creating millions of addicts, but it did cause the East India Company to protect its tea and silk trade by shifting its Chinese opium operations to nominally independent drug runners who bought opium legally from the East India Company in Calcutta, and smuggled it into China. The most prominent of these drug-running firms was Jardine Matheson & Co. It was founded in 1832 by two Scotsmen, William Jardine and James Matheson.  Jardine had been a ship’s surgeon with the East India Company, while Matheson was the son of a Scottish baronet. The firm today is controlled by the Keswick family. In 1839, the Chinese Emperor launched an anti-opium offensive, which included the confiscation of all opium stocks in the hands of Chinese and foreign merchants. The merchants put up a fight, but were ultimately forced to concede, turning in their opium stocks after being indemnified against losses by British officials.
In response, however, the British launched a propaganda campaign against China, accusing it of violating Britain’s right to “free trade.” Britain sent its fleet to China, to force the Chinese to capitulate to the opium trade. The action, known as the First Opium War, resulted in the Treaty of Nanking in 1842, under which China not only capitulated to the opium trade, but also agreed to pay reparations to the opium runners and gave the British control of the island of Hong Kong. However, the treaty did not specifically legalize opium, so the British launched a second Opium War, which resulted in the 1856 Treaty of Tientsin, which legitimized the opium trade and opened China up to foreigners even more.
As the opium and other trade with China expanded, Britain’s new territory of Hong Kong became a major imperial commercial center. The opium dealers gathered together to form a bank, the Hongkong and Shanghai Bank, as the financial flagship of the British opium trade. Over time, the bank—now known as HSBC—would extend its reach into the drug fields of the Middle East and Ibero-America, as befitting its role as the financial kingpin of Dope, Inc.
Role of Secret Societies
In 1783 Lord Shelbourne launched the Chinese opium trade with Scottish merchants from the East India Company and members of the House of Windsor-allied Knights of St. John Jerusalem.
Shelbourne’s chief propagandist was Adam Smith who worked for East India Company, which emerged from the slave-trading Levant Company and later became known as Chatham House, home to the powerful Royal Institute for International Affairs (RIIA). In 1776 the high seas pirate Adam Smith wrote Wealth of Nations, which became the bible of international capitalism.
In the Far East the British organized the Chinese Triad Society, also known as the Society of Heaven and Earth, to smuggle their opium.  Beginning in 1788 the Freemason Grand Lodge of England established lodges in China, one of which was the Triad Society.  Another was known as the Order of the Swastika.
In 1839 William Jardine- a Canton-based opium trafficker- steered Britain into the first Opium War after Chinese officials confiscated his stash. The second Opium War lasted from 1858-1860.  Lord Palmerston commanded both expeditions for the Brits.  He was also the High Priest of Scottish Rite Freemasonry in the British Empire.
Throughout the 19th century the British families of Matheson, Keswick, Swire, Dent, Inchcape, Baring and Rothschild controlled the Chinese heroin traffic.  The Inchcape’s and Baring’s Peninsular & Orient Steam Navigation Company (PONC) transported the dope around the world.
To the US West Coast, the families brought Chinese coolies to build JP Morgan’s railroads, slave laborers who were kidnapped (shanghaied) by the Triads.  The Triads came along too, setting up opium dens in San Francisco and Vancouver and using a network of Chinatowns as a channel for heroin.  This network exists today.  To the US East Coast the families brought African slaves and cotton.  These same families built plantations and became kings of southern cotton on the backs of shanghaied Africans.
The American families Perkins, Astor and Forbes made millions off the opium trade.  The Perkins’ founded Bank of Boston, which is today known as Credit Suisse First Boston.  The Perkins and Morgan families endowed Harvard University.  William Hathaway Forbes was a director at Hong Kong Shanghai Bank shortly after it was founded in 1866.  John Murray Forbes was the US agent for the Barings banking family, which financed most of the early drug trade.  The Forbes family heirs later launched Forbes magazine. Steve Forbes ran for President in 1996.  John Jacob Astor invested his opium proceeds in Manhattan real estate and worked for British intelligence.  The Astor family home in London sits opposite Chatham House.
These families launched the Hong Kong Shanghai Bank Corporation (HSBC) after the second Opium War as a repository for their opium proceeds.  HSBC, a subsidiary of the London-based HSBC Holdings, today prints 75% of Hong Kong’s currency, while the British Cecil Rhodes-founded Standard Chartered Bank prints the rest.  HSBC’s Hong Kong headquarters sits next to a massive Masonic Temple.
Freemasonry is a highly secretive society, making it an ideal vehicle for global drugs and arms trafficking.  According to 33rd Degree Mason Manly Hall, “Freemasonry is a fraternity within a fraternity – an outer organization concealing an inner brotherhood of the elect…the one visible and the other invisible.  The visible society is a splendid camaraderie of ‘free and accepted’ men enjoined to devote themselves to ethical, educational, fraternal, patriotic and humanitarian concerns.  The invisible society is a secret and most august fraternity whose members are dedicated to the service of an arcanum arcandrum (sacred secret).”
Wealth derived from selling this Chinese opium during British colonial rule, helped build many landmarks on India’s west coast. The Mahim Causeway, The Sir JJ School of Art, David Sassoon Library and Flora Fountain, landmarks in modern Mumbai, were built by prominent Parsi and Jewish traders from profits made by a flourishing opium and later cotton trade with China.
Prominent families from Mumbai’s past, names that adorn today’s famous institutions such as the Wadia’s, Tata’s, Jejeebhoy’s, Readymoney’s, Cama’s and Sassoon’s sold opium to China through the British. By the end of the nineteenth century, when the opium trade went bust, cotton from India’s western state of Gujarat, which had already developed strong trade links with Canton profited. The Paris’s ploughed profits from the trade with the Chinese back into India, setting up several schools, hospitals and banks. Historical records prove that some of India’s prominent Parsi traders at the time, were founders of the Hong Kong and Shanghai Banking Corporation (HSBC) founded in 1865. For a detailed report readRothschild colonization of India.
It is this deadly opium empire that Gandhiji was very much conscious about and spoke out against for which he was jailed in 1921 by India’s British rulers for “undermining the revenue”. Having seen generations of Chinese youths rendered docile and passive Gandhijis was concerned over opium and its deadly effects on India which is clear from his letters. These opium production activities ran until 1924 in India and were stopped with the heroic efforts of Mahatma Gandhi who first agitated to remove opium production from India and destruction of China using Indian soil. Finally the British transferred the entire production to Afghanistan in 1924 handing the production to southern Afghani tribals which after 90 years became the golden crescent of opium production. Though the production is in the hands of Afghan tribals the distribution finance market control is still exercised by the same old British business houses or their proxies.
Afghan Opium for Bankers and Terrorists
There is a general impression that Afghanistan has always been the center of opium production. In fact, it has not. Prior to the Soviet invasion in 1979, opium production in Afghanistan was less than 1,000 tons; that grew to 8,200 tons (based on conservative UN Office on Drugs and Crime/UNODC figures) in 2008. Throughout this period, Afghanistan was in a state of war. Following the Soviet invasion, the anti-Soviet powers, particularly, the US, UK, and Saudi Arabia, began generating larger amounts of drug money to finance much of the war to defeat the Soviets. Since 1989, after the Soviet withdrawal, there has been an all-out civil war in Afghanistan, as the US-UK-Saudi-created mujahideen dipped further into the opium/heroin money.
What was happening in Afghanistan during this period that caused opium production to soar to those levels? History shows that the US invasion in 2001 came close to wiping out the Taliban forces; the Afghan people, at least at that point in time, because of the Pakistani-Saudi links to the Taliban and the oppressive nature of the Wahhabi-indoctrinated regime, supported the invading American and NATO forces. That began to change in 2005.
The year 2005 is important in this context, since one of the most damning parts of the US Senate report details HSBC’s relationship with the Saudi-based Al Rajhi Bank, a member of Osama bin Laden’s “Golden Chain” of important al-Qaeda financiers. The HSBC-Al Rajhi relationship has spanned decades; perhaps that is why, even when HSBC’s own internal compliance offices asked that it be terminated in 2005, and even when the US government discovered hard evidence of Al Rajhi’s relationship with terrorism, HSBC continued to do business with the bank until 2010.
In fact, the report said, Al Rajhi’s links to terrorism were confirmed in 2002, when US agents searched the offices of a Saudi non-profit US-designated terrorist organization, Benevolence International Foundation. In that raid, agents uncovered a CD-ROM listing the names of financiers in bin Laden’s Golden Chain. One of those names was Sulaiman bin Abdul Aziz Al Rajhi, a founder of Al Rajhi bank.
Recently an operation by German Customs official revealed that the British Queen financed Osama Bin Laden. German officials in an operation raided two containers passing through Hamburg Port and seized 14,000 documents establishing that Osama bin Laden was funded by UK Queen’s bank Coutts, which is part of the Royal Bank of Scotland.
HSBC & 26/11 Mumbai Attacks
Why did HSBC not terminate its links with the Al Rajhi in 2005? The answer lies in what was then put in place in Afghanistan to generate large amounts of cash. When it comes to opium/ heroin and offshore banks, Britain rules supreme. In 2005, poppy fields in southern Afghanistan began to bloom, and it became evident to the bankers and the geo-politicians of Britain and the US that cash to support the financial centers and the terrorists could be made right there.
It was announced on Jan. 27, 2006 in the British Parliament that a NATO International Security Assistance Force (ISAF) would be replacing the US troops in Helmand province as part of Operation Herrick. The British 16 Air Assault Brigade would make up the core of the force. British bases were then located in the districts of Sangin, Lashkar Gah, and Gereshk.
As of Summer 2006, Helmand was one of the provinces involved in Operation Mountain Thrust, a combined NATO/Afghan mission targeted at Taliban fighters in the south of the country. In July 2006, the offensive essentially stalled in Helmand, as NATO (primarily British) and Afghan troops were forced to take increasingly defensive positions under heavy insurgent pressure. In response, British troop levels in the province were increased, and new encampments were established in Sangin and Gereshk. In Autumn 2006, some 8,000 British troops began to reach “cessation of hostilities” agreements with local Taliban forces around the district centers where they had been stationed earlier in the Summer, and it is then that drug-money laundering began in earnest.
This drug money, at least a good part of it, is generated in this area with the help of Dawood Ibrahim, who also played a role in helping the Mumbai attackers by giving them the use of his existing network in Mumbai. At the time, Ibrahim worked on behalf of the British, and ran his operation through the British-controlled emirate of Dubai. Drugs came into Dubai through Dawood’s “mules,” protected by the Pakistani ISI and British MI6; the dope was shipped in containers which carried equipment sent there for “repair” from Kandahar and elsewhere in southern Afghanistan. British troops controlled Helmand province, where 53% of Afghanistan’s gargantuan 8,200 tons of opium was produced in 2007.
The drugs were converted, and still are today, to cash in Dubai, where Dawood maintains a palatial mansion, similar to the one he maintains in Karachi. Dubai is a tax-free island-city, and a major offshore banking center. The most common reason for opening an offshore bank account is the flexibility that comes with it.
With the development of the Dubai International Financial Centre (DIFC), which is the latest free-trade zone to be set up there, flexible and unrestricted offshore banking has become big business. Many of the world’s largest banks already have significant presence in Dubai – big names such as Abbey National Offshore, HSBC Offshore, ABN Amro, ANZ Grindlays, Banque Paribas, Banque de Caire, Barclays, Dresdner, and Merrill Lynch, all have offices in the Emirate already.
In addition to Dubai, most of the offshore banks are located in former British colonies, and all of them are involved in money laundering. In other words, the legitimization of cash generated from drug sales and other smuggled illegitimate goods into the “respectable banks” is the modus operandi of these offshore banks. The drugs that Dawood’s mules carry are providing a necessary service for the global financial system, as well as for the terrorists who are killing innocents all over the world.
In December of 2007, this Britain-run drug-money-laundering and terrorist-networking operation was about to be exposed when Afghan President Hamid Karzai learned that two British MI6 agents were working under the cover of the United Nations and the European Union behind his back, to finance and negotiate with the Taliban. He expelled them from Afghanistan. One of them, a Briton, Michael Semple, was the acting head of the EU mission in Afghanistan and is widely known as a close confidant of Britain’s Ambassador, Sir Sherard Cowper-Coles. Semple now masquerades as an academic analyst of Afghanistan, and was associated with the Harvard Kennedy School’s Carr Center. The second man, an Irishman, Mervin Patterson, was the third-ranking UN official in Afghanistan at the time that he was summarily expelled.
These MI6 agents were entrusted by London with the task of using Britain’s 7,700 troops in the opium-infested, Pushtun-dominated, southern province of Helmand to train 2,000 Afghan militants, ostensibly to “infiltrate” the enemy and “seek intelligence” about the lethal arms of the real Taliban. Karzai rightly saw it as Britain’s efforts to develop a lethal group within Afghanistan, a new crop of terrorists.
The drug money thus generated to fund the financial centers and terrorists through HSBC was also responsible for ongoing terrorist attacks that have destabilized most of South Asia. The most important of these was the massive attack on Mumbai.
The mode used to launder such drug money is through diamonds. A 2003 Report assessed various alternative financing mechanisms that could be used to facilitate money laundering and or terrorist financing. Trading in commodities, remittance systems, and currency were assessed on each of their abilities to earn, be moved, and store value. Diamonds were the only alternative financial device that fit into all of these assessment criteria.
Diamonds can be vulnerable for misuse for money laundering and terrorist financing purposes because they can transfer value and ownership quickly, often, with a minimal audit trail. They provide flexibility and an easy transportation of value.
Top diamond traders of the country, several of whom are now settled abroad, figure on what the media calls as the #SwissList, with mostly Mumbai addresses given. Many persons on the list are Gujarati diamond merchants with offices all over world having roots in Palanpur.
However their involvement in not just limited to money laundering. Almost 6 months before 26/11 2008 Mumbai Attacks the Financial Intelligence Unit of India (FIU-IND) (the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions) was already tracking the diamond industry for suspicious activities by terrorists.
“A year ago, some people from Mumbai began purchasing diamonds worth crores of rupees. When the industry tried to trace the traders, they turned out to be non-existent,” said Vanani.
The FIU traced all foreign transactions of Surat’s diamond industry, especially those emanating from Belgium. It found that a great deal of money was being invested by terrorist groups.
However in May 2014 eight of these Belgium based diamond dealers were given a clean chit by the Income Tax department in the black money case. The I-T department said a probe was initiated against the eight individuals, but there was no proof of tax evasion by them. Why is the Government reluctant in disclosing Black Money related data; be it NDA and even UPA before it ? For a detailed report on the issue read 26/11 – The Black Money Trail.
From the Far East to the Middle East to Ibero-America to India, everywhere the drug trade is flourishing, you will find HSBC. It may not handle the dope, but it does handle the money, making sure that the “citizens above suspicion” who run the empire get their cut of the proceeds.  Now HSBC has been caught red-handed laundering money in the U.S., India, China, Argentina almost everywhere the sun shined through the colonies. This is a bank which has abused us, assaulted our people, and violated the law with abandon. Isn’t it time we set an example and revoke its charter to do business here in India ?

David Stockman: The Global Economy Has Entered The Crack-Up Phase

Few people understand the global economy and its (mis)management better than David Stockman -- former director of the OMB under President Reagan, former US Representative, best-selling author of The Great Deformation, and veteran financier.
David is now loudly warning that events have entered the crack-up phase, which he predicts will be defined by the following 4 developments:
  • Increasingly desperate moves by the world's central banks
  • Increased market volatility and losses
  • Deflation in industrial and commodity prices
  • Decreasing demand due to Peak Debt
As the crack-up phase gains momentum, he predicts an increasing number of "financial breaks" that will add to the unpredictability and instability of the environment for investors. Even 'dancing close to the door' sounds excessively risky at this point.
We’re in the crack-up phase. I think there are four big characteristics of that which are going to shape the way the economy and the markets unfold as we go forward.

You’re going to see increasing desperation and extreme central bank financial repression because they have gotten themselves painted so deep into the corner that they're lost and desperate. Almost week by week, we have another central bank – this week, it was Sweden – lowering their money market rates into negative territory. The Swiss Bank is already there, the Denmark Bank is there, the ECB is there on the deposit rate, the Bank of Japan’s there. All of the central banks of the world now are desperately driving interest rates into negative territory. I believe that they’re lost; they're in a race to the bottom whether they acknowledge it or not. The central bank of China can’t sit still much longer when the reminbi has appreciated something like 30% against the Japanese yet because of the massive bubble of monetary expansion that’s being created there. So that’s the first thing going on. Central banks out of control in a race to the bottom, sliding by the seat of their pants, making up really incoherent theories as they go.

The second thing is increasing market disorder and volatility. In the last three months, the stock market has behaved like a drunken sailor. But it’s really just a bunch of robots and day traders that have traded chart points until somebody can figure out what is happening directionally in the world. It has nothing to do with information or incoming data about the real world. We have today the 10-year German bond trading at 29.5 basis points. Well, the German economy’s been reasonably strong, fueling the Chinese boom. That export boom is over. The Chinese economy is faltering. Germany is going to have its own problems. But clearly, 29 basis points on a 10-year is irrational, even in the case of Germany, to say nothing of the 160 available today on the 10-year for Spain and Italy.

Both of those countries are in deep, deep fiscal decline. There is no obvious way for them to dig out of the debt trap that they’re in. It’s going to get worse over time. There’s huge risk in those bonds, especially because there’s no guarantee that the EU will remain intact or the euro will survive. Why in the world would anybody in their right mind be owning Italian debt at 160 other than the fact that they’re front-running the massive purchases that Draghi has promised and the Germans have acquiesced to over the next year or two. But that only kicks the can down the road. One of these days, the central banks are going to falter and the market is going to reset violently to prices that reflect the true risk on all this sovereign debt and the pretty cloudy outlook that’s ahead for the world market.

We now have something like four trillion worth of sovereign debt spread over Japanese issues, the major European countries that are trading at negative yields. Obviously, that is one, irrational and second, completely unsustainable. And yet, it’s another characteristic of what I call these disorderly markets. Investment is now coming home to roost. It will be driving a huge deflation of commodity and industrial prices worldwide. You can see that in iron ore, now barely holding $60 from a peak of $200. Obviously, it’s seen in the whole oil patch. Look at the Baltic Dry Index. That is a measure, one, of faltering demand for shipments and, two, massive overbuilding of bulk carrier capacity as a result of this central bank driven boom that we’ve had in the last 10 to 20 years. So that is going to be ripping through the financial system, the global economy, in ways that we’ve never before experienced. And so therefore, in ways that are hard to predict what all, you know, the ramifications and cascading effects will be. But clearly, it’s something that we haven’t seen in modern times or ever before – the degree of over investment, excess capacity, and everything from iron ore mines to dry vault carriers, aluminum plants, steel mills, and on down the line.

And then, finally, clearly, demand has run smack up against peak debt -- I think that’s the right word for it. We had a tremendous study come out in the last week or so from McKinsey, who do a pretty good job of trying to calculate, track and total up the amount of credit outstanding, public and private, in the world. We’re now at the $200 Trillion threshold. That’s up from only about $140 Trillion at the time of the crisis. So we’ve had a $60 Trillion expansion worldwide of debt just since 2008. During that same period, though, the GDP of the world saw a little more than $15 trillion from $55 or mid-$50s, roughly, to $70 Trillion. So we’ve generated, because of central bank money printing and all of this unprecedented monetary stimulus, we’ve generated something like $60 Trillion of new debt in the world and have barely gotten $15-17 billion of new GDP for all of that effort. And I think that is a measure of why the fundamental era is changing. That the boom is over and the crackup is under way when you see that kind of minimal yield from the vast amount of new debt that has been generated.

Now I’d only wrap this up by calling attention to the fact that within that global total of $200 billion, the numbers from China are even more startling. At the time of the crisis, let’s go back to 2000, China had $2 Trillion of credit outstanding. It’s now $28 Trillion. So we’ve had just massive 14X growth in 14 years. There’s nothing like that in recorded history, nor is there any plausible reason to believe that an economy, which is basically under a command-and-control system that is run from the top down to the party cadres, could possibly create $26 Trillion in new debt in that period of time without massive inefficiencies in waste and mistakes everywhere within the systems, especially since they have no markets. They have no feedback mechanisms. It all comes cascading down from the top and everybody lies to the next party above them. And I think the system is irrationally out of control.

In any event, my point was that at the time of the 2008 crisis, China had allegedly – if you believe their numbers, which no one really should – but as reported, they had $5 Trillion worth of GDP. It’s now $10. So they’ve gained $5 Trillion of GDP. Their debt at the time of the crisis was $7 Trillion, now it’s $28. So the debt is up more than $20 Trillion while the GDP is up just $5 Trillion. These are extreme unsustainable deformations, if I can use that word, that just scream out, “Danger ahead. Mayhem has happened.” And the unwinding of this and the resolution of this is not going to be pretty.
Click the play button below to listen to Chris' interview with David Stockman (54m:29s)