Too Big to Fail Global Banks will collapse between Now and First Quarter 2011

Home

Search By

Back to Article List

by Matthias Chang

on 08 Sep 2010

Readers of my articles will recall that I have warned as far back as December 2006, that the global banks will collapse when the Financial Tsunami hits the global economy in 2007. And as they say, the rest is history.

Quantitative Easing (QE I) spearheaded by the Chairman of Federal Reserve, Ben Bernanke delayed the inevitable demise of the fiat shadow money banking system slightly over 18 months.

That is why in November of 2009, I was so confident to warn my readers that by the end of the first quarter of 2010 at the earliest or by the second quarter of 2010 at the latest, the global economy will go into a tailspin. The recent alarm that the US economy has slowed down and in the words of Bernanke “the recent pace of growth is less vigorous than we expected” has all but vindicated my analysis. He warned that the outlook is uncertain and the economy “remains vulnerable to unexpected developments”.

Obviously, Bernanke’s words do not reveal the full extent of the fear that has gripped central bankers and the financial elites that assembled at the annual gathering at Jackson Hole, Wyoming. But, you can take it from me that they are very afraid.

Why?

Let me be plain and blunt. The “unexpected developments” Bernanke referred to is the collapse of the global banks. This is FED speak and to those in the loop, this is the dire warning.

So many renowned economists have misdiagnosed the objective and consequences of quantitative easing. Central bankers’ scribes and the global mass media hoodwinked the people by saying that QE will enable the banks to lend monies to cash-starved companies and jump-start the economy. The low interest rate regime would encourage all and sundry to borrow, consume and invest.

This was the fairy tale.

Then, there were some economists who were worried that as a result of the FED’s printing press (electronic or otherwise) working overtime, hyper-inflation would set in soon after.

But nothing happened. The multiplier effect of fractional reserve banking did not take off. Bank lending in fact stalled.

Why?

What happened? Let me explain in simple terms step by step.

1) All the global banks were up to their eye-balls in toxic assets. All the AAA mortgage-backed securities etc. were in fact JUNK. But in the balance sheets of the banks and their special purpose vehicles (SPVs), they were stated to be worth US$ TRILLIONS.

2) The collapse of Lehman Bros and AIG exposed this ugly truth. All the global banks had liabilities in the US$ Trillions. They were all INSOLVENT. The central banks the world over conspired and agreed not to reveal the total liabilities of the global banks as that would cause a run on these banks, as happened in the case of Northern Rock in the U.K.

3) A devious scheme was devised by the FED, led by Bernanke to assist the global banks to unload systematically and in tranches the toxic assets so as to allow the banks to comply with RESERVE REQUIREMENTS under the fractional reserve banking system, and to continue their banking business. This is the essence of the bailout of the global banks by central bankers.

4) This devious scheme was effected by the FED’s quantitative easing (QE) – the purchase of toxic assets from the banks. The FED created “money out of thin air” and used that “money” to buy the toxic assets at face or book value from the banks, notwithstanding they were all junks and at the most, worth maybe ten cents to the dollar. Now, the FED is “loaded” with toxic assets once owned by the global banks. But these banks cannot declare and or admit to this state of affairs. Hence, this financial charade.

5) If we are to follow simple logic, the exercise would result in the global banks flushed with cash to enable them to lend to desperate consumers and cash-starved businesses. But the money did not go out as loans. Where did the money go?

6) It went back to the FED as reserves, and since the FED bought US$ trillions worth of toxic wastes, the “money” (it was merely book entries in the Fed’s books) that these global banks had were treated as “Excess Reserves”. This is a misnomer because it gave the ILLUSION that the banks are cash-rich and under the fractional reserve system would be able to lend out trillions worth of loans. But they did not. Why?

7) Because the global banks still have US$ trillions worth of toxic wastes in their balance sheets. They are still insolvent under the fractional reserve banking laws. The public must not be told of this as otherwise, it would trigger a massive run on all the global banks!

8) Bernanke, the US Treasury and the global central bankers were all praying and hoping that given time (their estimation was 12 to 18 months) the housing market would recover and asset prices would resume to the levels before the crisis.

Let me explain: A House was sold for say US $500,000. Borrower has a mortgage of US $450,000 or more. The house is now worth US$200,000 or less. Multiply this by the millions of houses sold between 2000 and 2008 and you will appreciate the extent of the financial black-hole. There is no way that any of the global banks can get out of this gigantic mess. And there is also no way that the FED and the global central bankers through QE can continue to buy such toxic wastes without showing their hands and exposing the lie that these banks are solvent.

It is my estimation that they have to QE up to US $20 trillion at the minimum. The FED and no central banker would dare “create such an amount of money out of thin air” without arousing the suspicions and or panic of sovereign creditors, investors and depositors. It is as good as declaring officially that all the banks are BANKRUPT.

9) But there is no other solution in the short and middle term except another bout of quantitative easing, QE II. Given the above caveat, QE II cannot exceed the amount of the previous QE without opening the proverbial Pandora Box.

10) But it is also a given that the FED will embark on QE II, as under the fractional reserve banking system, if the FED does not purchase additional toxic wastes, the global banks (faced with mounting foreclosures, etc.) will fall short of their reserve requirements.

11) You will also recall that the FED at the height of the crisis announced that interest will be paid on the so-called “excess reserves” of the global banks, thus enabling these banks to “earn” interest. So what we have is a merry-go-round of monies moving from the right pocket to the left pocket at the click of the computer mouse. The FED creates money, uses it to buy toxic assets, and the same money is then returned to the FED by the global banks to earn interest. By this fiction of QE, banks are flushed with cash which enable them to earn interest. Is it any wonder that these banks have declared record profits?

12) The global banks get rid of some of their toxic wastes at full value and at no costs, and get paid for unloading the toxic wastes via interest payments. Additionally, some of the “monies” are used by these banks to purchase US Treasuries (which also pay interests) which in turn allows the US Treasury to continue its deficit spending. THIS IS THE BAILOUT RIP OFF of the century.

Now that you fully understand this SCAM, it is left to be seen how the FED will get away with the next round of quantitative easing – QE II.

Obviously, the FED and the other central banks are hoping that in time, asset prices will recover and resume their previous values before the crisis. This is a fantasy. QE II will fail just as QE I failed to save the banks.

The patient is in intensive care and is for all intent and purposes brain dead, although the heart is still pumping albeit faintly. The Too Big To Fail Banks cannot be rescued and must be allowed to be liquidated. It will be painful, but it is necessary before there is recovery. This is a given.

Warning

When the shit hits the ceiling fan, sometime early 2011 at the earliest, there will be massive bank runs.

I expect that the FED and other central banks will pre-empt such a run and will do the following:

1) Disallow cash withdrawals from banks beyond a certain amount, say US $1,000 per day;

2) Disallow cash transactions up to a certain amount, say US $10,000 for certain transactions;

3) Transactions (investments) for metals (gold and silver) will be restricted;

4) Worst-case scenario – the confiscation of gold AS HAPPENED IN WORLD WAR II.

5) Imposition of capital controls etc.;

6) Legislations that will compel most daily commercial transactions to be conducted through Debit and or Credit Cards;

7) Legislations to make it a criminal offence for any contraventions of the above.

Solution

- Maintain a bank balance sufficient to enable you to comply with the above potential impositions.

- Start diversifying your assets away from dollar assets. Have foreign currencies in sufficient quantities in those jurisdictions where the above anticipated impositions are least likely to be implemented.

CONCLUSION

There will be a financial tsunami (round two) the likes of which the world has never seen.

Global banks will collapse!

Be ready.

[Courtesy Matthias Chang]

http://futurefastforward.com/feature-articles/4104

User Comments Post a Comment

Apparently, B S Harishankar is confused.

Firstly, few Israelis or other Ashkenazim have any genetic link to the ancient Israelites. Their origins are the Khazar Empire; whose Emperor made his people Jews by royal decree in the 8th century. That is their only link to the Semite people.

When Kublai Khan drove the Khazars westwards in the 13th century, they fled to Russia or Germany, eventually creating a hybrid language of Khazar and German... Yiddish.

If Christians were not so ignorant, they would not believe the myth of return to the homeland.Most certainly, the Mahatmar Mohandas Gandhi did not. As he said about the proposed state of Israel, nobody has the right to invade another nation for religious reasons.

What Hindus should be doing is joining the global boycott against Israel until it returns the West Bank and Golan Heights to the Palestinians, ceases the genocide of civilians, ceases to attack aid flotillas, and establishes a genuine democratic state with Palestinians.

Modi will go down in Indian History as the leader who supported Israeli apartheid and genocide of Palestinians, an action which brought shame on all Indians

Tony Ryan
July 14, 2018

Report Abuse

Although increasing cultural contacts between Indians and Jews of all nations is a legitimate and positive initiative, care should be taken not to make this a politically partisan move which risks creating further divisions between Indians of various persuasions and religions on top of the already divisive 'Muslim question'.

Keep in mind that there is a rift within the Jewish community itself, between Israel Supremacists who broadly follow Netanyahu and far-right Zionist parties and the cosmopolitans Jews all over the world who are often much less favourable to Israel-first policies and often more supportive of the legitimate claims of Palestinians to their own land and property.

The last thing India needs is to be dragged like the USA and other western powers into the Israeli-Arab-Iranian conflict which is forcing the USA for one to make its foreign policy hostage to the interests of the hardline faction of the Israeli political system to the point of threatening a war with Iran simply to make israel 'feel secure'.

The same factor was behind the catastrophic wars in Iraq and Syria, which could have been avoided if the Jewish state had not put heavy pressure to overthrow those governments that it saw as inimical to its interests.

The Jewish religion and culture should not be conflated with Israeli power politics and financial interests but unfortunately it is now hard to distinguish between them.

Anon
July 14, 2018

Report Abuse

Very refreshing to read here an article sympathetic to Jews and Israel!

Bharati
July 14, 2018

Report Abuse

Many Indians are attracted sentimentally to Israel but I find that most Israelis are much more focused on the business opportunities and are especially interested in selling highly priced military hardware. The problem begins when they use their influence to drive a wedge between India and Iran which is, strategically and in terms of resources and geographical position and clout, more important than Israel for India.

Anon
July 14, 2018

Report Abuse

Kudos and thumbs up to Dr B.S.Harisankar's article "neccesity of indo - judaic studies in Indian universities". He has beautifully brought out the healthy Hindhu - Jewish relationship history of 1200 years as well as exposed the sinister designs of Christian - Marxist nexus, who are trying to erase the memorable hindhu Jewish history in kerala. He has also exposed the Congress govt of not only neglecting the study of Israeli history in India but also the hostile attitude towards Israel and the Jews, who have not harmed anyone in the world. In fact the Jews were the victims of persecutions by Christians, Muslims and Hitler of Germany. Bharat is the only country in the world to give refuge to the persecuted Jews who had to flee from their original homeland Israel and from Germany and Poland. The Jews reciprocated to the Indian generosity and merged their identity with Indian culture and contributed to the devt of India. It was the Jews of Israel that helped India during the 1971 indo - Pakistan war and kargil war in July 1999. Late Lt Gen. J.F.R.JACOB, was a jew who brought victory to India in the 1971 indo pak war. Although he was called to settle in Israel, he refused saying that India is my mother land and wished to die in India. While the indo Jewish relationship was very cordial for centuries, this is not the case with Christianity and Islam which spread terror and blood wherever they went. In India too, the Jews along with hindhus were tortured by Christian fanatics in kerala and Goa by the Portuguese. Hence Tony Ryan's comment that Modiji supports Israeli apartheid is downright baseless nonsense. Neither PM Modi nor Israel practices apartheid. In fact apartheid exists among Muslims and Christians all over the world like protestant don't go to Catholic churches and sunni and Shia Muslims having separate mosques,and all of them fighting against one another in various countries. The contention of Tony Ryan that India must join the global boycott against Israel in absurd and untenable. There is no cogent reason for any country to boycott Israel that is fighting for their homeland. PM Modi has been visiting many Christian and Muslim countries to build healthy diplomatic ties and has won accolades from many countries of the world. He stands tall as the third most popular political figure in the world scenario. By visiting Israel, he does not become anti Muslim or anti Christian. It is a false propaganda let loose by leftists that he is anti Muslim and so on. Only Pakistan and China are afraid of growing indo Israel ties and only God knows why. It may do well for all and particularly Tony Ryan to remember, that Congress govt was forced to ask help from Israel army during the 1971 indo pak war. Indira gandhi who was having more sympathy to the Muslim world and was anti Israel had no option but to listen to the wisdom of the Indian army General and Lt gen Jacob (an Indian jew), who said that Israeli army can help India in many ways. Despite Israel's help to India, the Congress govt never ever thought of thanking Israel and continued to show a hostile, ungrateful attitude towards Israel. It was PM Modi who made a historic visit to Israel to set right diplomatic ties. Thus it is Modiji who put an end to the long period of hostility between India and Israel, a hostility created by the Congress govt of the past. To sum up, in the light of Dr Harishankar's exposing left - Christian conspiracy in attempting to destroy the long cordial indo - Jewish relationship and Modiji efforts to build good relationships with Israel and others countries, the necessity of "global boycott" of Israel stands redundant and meaningless. Once again let me thank Dr Harishankar for his remarkable insight into indo - judaic bonds of friendship since ancient times. Unni pune.

Panikkath Krishnan Unni
July 14, 2018

Report Abuse

About 2000 years ago, a ship with 14 Jewish oil traders headed towards Gujrat. However, their ship wrecked at the Konkan coast. Those 14 families then settled in the Konkan region of Maharashtra. They were called Shanivarche teli (Marathi: ???????? ????), i.e. Saturday-oil merchants by the locals because they did not work on Saturdays on the account of Shabbat. Those Jews called themselves Bene-Israel (sons of Israel)

They almost completely adopted the Maharashtrian culture. Even today, old Jewish women in the Konkan wear saris even at home. Almost all of them speak Marathi as their mother-tongue. Many Jewish kids still learn in Marathi-medium schools. Some Jews are also said to have converted to Hinduism and live as brahmins in Maharashtra.

Before the second world war, the Jewish population in Konkan was about 500,000. However, after WW II, most of them migrated to Israel, to help build a strong Jewish nation. Today, Maharashtra has only 5,000 Bene-Israel Jews left.

The Bene-Israels in Israel still speak Marathi. There are 2 towns in Israel, Dimona and Beersheba, where those Bene-Israel Jews are a majority. Marathi is commonly spoken there.

Krishna Hari C
July 15, 2018

Report Abuse

Why are the jews hated through out the world? What made the christians and muslims persecute jews?

srinivasan
July 15, 2018

Report Abuse

There are strong and multifaceted ties between India and Israel as recorded in the Hebrew Bible that is at least 1200 BCE (i.e over 3000 years old).

King Solomon (first millennium BCE) is reported to have gone to India and to have married Indian women who were allowed to keep practicing Hinduism. That created a scandal back in Israel and was blamed in some quarters for the Assyrian destruction of the First Temple (built by Solomon).

The evolution of Yahveh from the war god of Moses ("you shall have no other gods before me") to the One God of the Pentateuch occurred when Ptolemy II (mid-3rd century BCE) convened a council of 70 or 72 Jewish scholars (6 from each of the 12 tribes of Israel to translate the Torah into Greek. The change was made on the basis of a declaration by the Council that it had found a writing of Solomon about the One God. Most probably, that reflected a teaching of the Upanishads about Brahman (the universal abstraction from which Creation springs).

Links continued throughout history, with the Essene settlement near Jerusalem reflecting strong Hindu influences during the First Temple period, and two great Jewish diasporas to India after the destruction of both the First and Second Temples.
.
As to the question why Jews came to be the object of Christian discrimination and oppression, we can lay the blame squarely on the Roman plot to hijack the Church of the Disciples to Rome and thus deprive the Jewish resistance in Palestine of a messianic leader, all the more powerful after being martyred.

Bhaskar Menon
July 16, 2018

Report Abuse

There is no reference in the Hebrew Bible to Solomon marrying women from India, only non-Hebrew 'idolatrous' women from neighbouring regions. There may be folk traditions about his Hindu wives but nothing in recorded history.
The struggle between monotheists and henotheists (who regard one God- Sabaoth, Elohim or Yahveh - as ranking above all others) is old and and was quite bitter among Israelites. The split between Israel and Judah during the reign of Solomon's son was partly political and partly reflected the divergence between strict Judaic monotheists and more diverse citizens of Israel (the ten other tribes).
The trial and execution of Jesus was motivated by the conservative Pharisaic Roman-friendly faction of the Jewish religious leadership in alliance with the power of Rome. The Jewish resistance to Rome did not involve Christians or Nazarenes as they were called then, because the latter were quietist or mystical and did not seek political power, according to Jesus who said that that belonged to Caesar should be given to Caesar and who shunned the idea of a violent revolt. The opposition between Christians and Jews developed as a rivalry for power and was not directly connected to Roman repression of the Zealot rebellious Jews. Paul of Tarsus advocated converting non-Jews to Christianity on an equal footing which Jews resented as a threat to their community's survival and privileges.
Finally current news indicate that Israel is moving in a direction similar to South Africa under the Apartheid regime. https://www.theguardian.com/world/2018/jul/15/israel-turmoil-bill-allowing-jews-arabs-segregated

anon
July 16, 2018

Report Abuse

Excellent article. Do ignore the bigoted comments of 'Anon' and 'Tony Ryan' which are not in keeping with Hindu civilizational values of pluralism, diversity, compassion and harmony between faiths and ethnicities! The two are evidently not Hindu by religious persuasion.

Bhaskar Menon exemplifies Hindu values and fundamentals. Congratulations to a super Op Ed.

Reader
July 17, 2018

Report Abuse

Oops, I meant Harishanker, not Bhaskar Menon (who is ok - nothing personal against him)

Reader
July 17, 2018

Report Abuse

@ Mr. Tony Ryan: says/quotes “nobody has the right to invade another nation for religious reasons.”

Is any other reason, reason enough then? Political, strategic, economic, social, etc. etc.? Mr. Ryan, if you are sincere you would first take a look at the white, Christian west, and deliver your first lecture to these folk who eradicated ancient civilizations and peoples of 5 continents of the world, and ridiculous as they are, eradicated THEIR OWN MEMORY OF WHAT THEY WERE, WHERE THEY CAME FROM, WHO THEIR OWN ANCESTORS WERE.

As an Indian, I feel only pride and relief at setting things right at long last, when Sri Modi recognized and supported Israel. If we went along with what you say that only those who have an ancient and historical ties of blood to a land can call it home, then every christian, Muslim, and others of India, must either revert to Sanaathana Dharma or must migrate to the Holy Land.

Judaism has returned to its place of origin. Even if it is right that modern Jews are not descendants of the original Jews, still they ARE Jews. Forget the people. That place around Jerusalem is the home of Judaism. Then came Christianity and then Islam, each one of them
claiming for itself a home that already belonged to another. At least they should have had the grace of requesting and accepting the hospitality of the original home owner. But they had to be churlish, greedy and dishonest and appropriate to themselves the homes they were allowed to share! But then, this has always been the story of Christianity and Islam. To maul and chew off the fingers that feed them! Do not we “Hindus” know that 2000 years old trick?

So why should we Indians, Hindus, have friendly feelings with the Jews? But why not? The Jews did not get our children to convert and ideologically send our ancestors to “hell"! They did not torture, murder, harass my ancestors, so that they had to leave their ancient homes in the north and wander in poverty and destitution for centuries before they found another home in the Deep South!

To the Hindu it does not matter whether the “Other” thinks that the creator is an independent all powerful being separate from “His” Creation. It does not matter even if the “Other” was to think that the creator is a purple goat with twisted horns. What matters is that my people and my children are not inveigled by lies, threats, bribes, etc. to convert! What matters is that we are not forced to trash our antiquity and heritage. What matters is that we are not forced to be them. And very important that every person on earth has the same right as the Christian and Muslim, to be himself/herself.

Chandra Ravikumar
July 19, 2018

Report Abuse

Excellent article by B.S. Harishankar. I have suggested that Indus Script is used on three pure tingots found in a shipwreck in Haifa, israel. My monograph on this conclusion has been published in Journal of Indo-Judaic Studies, Vol. 1, Number 11 (2010), pp.47-74 — The Bronze Age Writing System of Sarasvati Hieroglyphics as Evidenced by Two “Rosetta Stones” By S. Kalyanaraman (Editor of JIJS: Prof. Nathan Katz) http://www.indojudaic.com/index.php?option=com_contact&view=contact&id=1&Itemid=8

The author Michal Artzy showed these four signs on the four tin ingots to E. Masson who is the author of Cypro-Minoan Syllabary. Masson’s views are recorded: “E. Masson, who was shown all four ingots for the first time by the author, has suggested privately that the sign ‘d’ looks Cypro-Minoan, but not the other three signs.”

If all the signs are NOT Cypro-Minoan Syllabary, what did these four signs, together, incised on the tin ingots signify? If the tin ingots contained Indus Script signifying the nature of the cargo with specific expressions: ranku dhatu muha 'tin mineral ingot' using hieroglyphs of similar sounding Ancient Indian words: ranku 'liquid measure/antelope', X daatu, 'cross' and human face (mukha).

Every serious student of civilization studies has to keep an open mind and study the contacts of ancient times between India and Israel.

S. Kalyanaraman
July 20, 2018

Report Abuse

Comments are free. However, comments that include profanity or personal attacks or other inappropriate material will be removed from the site. Readers may report abuse at editorvijayvaani@gmail.com