SARKOZY’S RIFT WITH CHANCELLOR MERKEL WIDENS
And indeed, The Times of London reported on 24th October that Frau Merkel was scheduled to hold ‘a frosty meeting’ with President Sarkozy on the 24th, during a summit meeting between the European Union and Asian leaders in the Chinese capital. So, ‘if it’s Friday 18th October, it must be Camp David. If it’s Friday 24th October, it must be Peking (Beijing)‘.
Flying around the world like bees in a bottle, these jet-lagged, frazzled leaders are increasingly at each other’s throats, as their corrupt world collapses beneath them and they thrash around ever more frenetically to try to ‘do something‘. For public consumption, the ‘frosty meeting’ between Sarkozy and Merkel in the Chinese capital was supposed to have concerned Sarkozy‘s intention to launch a French sovereign investment fund with a capital of 100 billion Euros which the French and EU President says that other European Union Collective countries should copy.
• Sarkozy openly proclaimed that his proposed fund is part of a programme to strengthen public sector control over private business, on the Chinese and Russian models. He's 'through', he says, with capitalism, a convenient way of trying to 'bury' his own complicity in the criminality.
This French lurch back to heavy state control (dirigisme) hardly befits a country with budgetary debt in the background of around 1,200 billion Euros. A spokesman for the German Government claimed that the French initiative might fall foul of European law.
However the meeting on 24th October will have been frosty because President Sarkozy had earlier threatened Frau Merkel with arrest for blocking the Settlements releases in accordance with her arrangements with George Bush Sr. who, as indicated above, bribes her in exchange for which she guards the integrity of his illicit funds held with Germany’s biggest bank.
Since the German Chancellor had reacted to Sarkozy’s threat that he would have her arrested, by continuing to block the Settlements, and had been confronted with the extensive arrests of Bush-linked ‘Never-Pay Syndrome’ ‘sleepers’ at the German banks, as reported above, we suspect that the ’frosty meeting‘ will in reality have been more akin to a shouting match – which, of course, will have been taped by Chinese intelligence. They are very happy to have these conferences in the Chinese capital: it's so convenient for eavesdropping purposes.
Sarkozy has also widened divisions inside the European Union Collective that he says the financial crisis has 'drawn closer together', by demanding to be allowed to continue in a presidential rôle as chairman of ‘economic Europe’ until the end of 2009 – a proposal that has gone down like a lead balloon in Berlin and other capitals, especially Prague, which takes over the six-month rotating EU Presidency slot in January 2009 and acquires the power being wielded by Sarkozy.
The Deputy Prime Minister there says that Sarkozy has no right or power to do this, that the Czech Republic is entitled to its six-month stint at the EU Presidency, and that the EU Collective's rules cannot be changed unless all 27 ’Member States‘ of the Political Collective agree.
What Sarkozy really has in mind here is that not only is the Czech Republic lukewarm about its own EU membership, but it is not even a participant in the Eurozone, so that it will be liable (President Sarkozy assumes) to give a low priority to issues surrounding the collective currency, the Euro.
More generally, the Czechs have pointed out that Mr Sarkozy’s erratic and impulsive behaviour is driving Europe apart rather than the reverse, i.e. that the French and EU President is behaving in a wild and uncoordinated manner, and that power has gone to his head.
The immediate answer to this is that if Sarkozy does not deliver the Settlements payouts within the 20 days laid down by the other EU ’Member States‘ with the probable exception of Angela Merkel's Germany, he will be relieved of his duties and position by the rest of the European Union.
ROW BETWEEN BRITAIN AND ICELAND INTENSIFIES
The International Monetary Fund is reportedly insisting that Iceland’s dispute with London over British savings held in Icesave, the UK offshoot of Iceland’s Landsbanki, must be resolved before it will take any decision on the scale of emergency IMF support for Reykjavik. The Fund’s governing Executive Board was meeting on 23rd October to consider a prospective rescue package, which could be supported by several Scandinavian central banks and the Bank of Japan.
On 24th October, Iceland announced that it had in fact reached a tentative agreement with the IMF for a $2.0 billion emergency loan. However it appeared that the Scandinavian central banks were now less interested in coming to Iceland's assistance. Reykjavik has turned to Russia for help.
The Times of London stated on 25th October that 'Iceland is poised to receive a bailout from the International Monetary Fund (IMF) without giving the UK Government assurances about how it will reimburse thousands of British savers with money in Icelandic banks'.
The Icelandic Prime Minister, Mr Geir Haarde, said: 'Our dealings with Britain over Icesave are not included in the talks. Those will be resolved on another level and we are at present not prepared to commit to British demands apart from those to which we are legally bound'.
Talks in the Icelandic capital between the country’s Government and representatives from the British Treasury broke up on 23rd October with no agreement. The talks are believed to revolve around Britain lending Iceland some £3 billion, although the Treasury has not named a figure.
Some 300,000 British savers held accounts worth about £4.0 billion with Icesave, which suspended operations on 7th October, and stopped customers from depositing and withdrawing funds.
While spokesmen for both Governments said that talks would in fact continue, 8,000 depositors who held more than £800 million in their offshore accounts on the Isle of Man with Kaupthing Singer & Friedlander, have threatened legal proceedings against the UK Government.
The Isle of Man Government sent a delegation on 24th October to see officials from the Treasury and the UK Financial Services Authority, to demand the release of about £550 million of Isle of Man deposits held by Kaupthing Singer & Friedlander in London that were frozen on 8th October. The British authorities ordered clearing banks not to process transactions involving Icelandic-owned institutions under the Anti-Terrorism Act, prompting a wave of imminent legal proceedings.
The UK Treasury will almost certainly call for a list of the depositors involved, to winkle out any British residents holding undeclared accounts. It may also claim that it is not responsible for protecting accounts in the Isle of Man, which is a separate financial jurisdiction for tax purposes.
FEARS THAT CDO LIABILITIES WILL IMMEDIATELY DESTROY SOME BANKS
Suggestions that one or more huge bank failures were likely to occur on Tuesday 21st October were associated with the fact that outstanding Lehman Brothers' Credit Default Swaps (CDOs) had to be settled on that date. This episode will serve to illustrate that such instruments are worthless.
These insurance-type guarantees were provided by banks and hedge funds to generate income streams for themselves. Under these arrangements, banks and hedge funds agreed to cover any default by a large investment entity such as Lehman Brothers, the underlying assumption being that the big houses would always remain ‘Too Big To Fail’ (TBTF).
• This kind of assumption ran in parallel with the careless belief that the financial corruption would and could never be exposed, a miscalculation for which the world is paying a heavy price.
Providers of the CDOs charged hefty premia to offer such ‘protection’, which they were confident would never have to be provided. Given that Lehman Brothers’ assets were deemed during the week ending 17th October to be worth just 8 cents on the dollar, the credit default liability would equate to about 92 cents on the dollar, multiplied by about $400 billion.
Theoretically, parties that had agreed to cover credit defaults by Lehman Brothers would need to pay out the cash. If these arrangements were legal, that would be a serious problem that might indeed trigger bank collapses.
But in reality, these private arrangements cannot be enforced. They all represent private, non-regulated undertakings that are in sharp violation of the US securities regulations. Since the only means of enforcement would be through the US Courts, a process that would probably take years, and the Courts would follow the securities regulations (they would have no choice), this ‘deadline’ amounted to nothing substantive. The same will apply to similar deadlines in the future.
What does count is the fact that up to $400 billion of credit has been permanently destroyed through this particular linkage alone. Credit and monetary destruction are proceeding apace.
U.S. DOMESTIC CREDIT EXPANSION FROM 1996 TO 2007 INCLUSIVE
Total US domestic credit outstanding expanded from $13.9 trillion in 1996, to $33.1 trillion in 2007, an increase of some $19.2 trillion, or more than $1.7 trillion, on average, annually.
Within this total, domestic credit outstanding created by the banking system rose from $6.0+ trillion in 1996 to $14.2 trillion in 2007, representing an increase of $8.2 trillion, or $745 billion annually.
In 1996, the difference between domestic credit created by the banking sector and total domestic credit outstanding was $7.9 trillion, which was the aggregate credit that had been created OUTSIDE the banks as of December 1996.
In 2007, this differential had expanded to $18.9 trillion, so that the volume of outstanding domestic credit generated OUTSIDE the banks equated to 133% of that created BY the banks.
Therefore, for many years now, the banks have created less credit outstanding than non-banks (as reported). Thus the banks have declined progressively in importance as sources of credit, while all talk of monetarism, an artificial means of trying to control the expansion of the money supply, has long since died a death. The reason for this is that notions about curbing monetary expansion at the banks through various techniques became redundant with the hegemony of geocriminal ‘funny money’ and fraudulent finance techniques – almost all of which, as we shall be showing in a future study, currently in preparation, are irregular, illegal and unenforceable at law in the United States.
IMPLICATIONS OF THE ’INTERNATIONAL COLLEGES OF SUPERVISORS’
In the preceding report we noted that one of the most embarrassing and painful new realities for the big geocriminal financial enterprises has been the insistence, first publicised via the Group of Seven’s formal statement at the IMF/World Bank Spring Meetings in April 2008, that ‘international supervisory colleges’ must be attached to these institutions, as a means of ensuring that they do not revert to their old corrupt financial bad habits.
As we also pointed out, the report that the Editor wrote overnight on 10th/11th October in the IMF Press Room was subsequently terminated by the NSA/NSC/CIA ‘mental defectives’ just at the point where the Editor noted that this demand for supervision stemmed from Michael C. Cottrell’s call for an ‘oversight panel’ to govern transactions under what was still then (in the first quarter of 2007) referred to here by this Editor’s term ‘The Wanta Plan’.
As will be seen in International Currency Review, Michael Cottrell made it plain that as Treasurer of Wanta’s corporation (prior to Mr Cottrell‘s welcome but irregular dismissal by Wanta), he wouldn’t be prepared to handle a single cent of the funds unless such an oversight panel were installed.
He needed this panel not least for his own protection, given Wanta’s approach to finance.
At this suggestion, Wanta flew into a rage and expostulated on the Editor’s voicemail that ‘if I need an ‘oversight panel, I shall appoint an oversight panel’ and that since it would be ‘his’ money, he would do what he liked with the funds without guidance from anyone else.
After Wanta ‘fired’ Michael Cottrell irregularly (Wanta was later informed that firing Cottrell was ‘the stupidest thing you ever did’), the Editor in turn realised (admittedly very late on the uptake) that if Wanta couldn’t be bothered to repay the Editor’s $35,000 loan which fell due on 11th June 2007 plus interest, how could he possibly be trusted with the vast sums of money that he was claiming?
This past painful episode aside, the decisive fact of the matter is that the international community’s insistent demand for oversight grew specifically out of Mr Michael C. Cottrell’s parallel demand for an ‘oversight panel’ in the above context. This is a development greatly loathed by all the criminal financial enterprises that will be subjected to this new form of discipline.
But there is much more to this significant demand, on which the international financial community is adamant. For the ‘international colleges’ to be attached to the 60-odd criminal enterprises (banks and huge bank-like institutions) will re-establish the derivatives ratios.
DERIVATIVES CONTRACTS AND GROSS MARKET VALUES OUTSTANDING
The most recently available official aggregate for the volume of derivatives ‘assets’ outstanding, is $667 trillion. According to the International Monetary Fund’s 'Global Financial Stability Report' for October 2008, subtitled ‘Financial Stress and Deleveraging: Macrofinancial Implications and Policy’, the notional total value of global over-the-counter derivatives contracts outstanding was $297,666 billion at the end of December 2005, ballooning to $596,004 billion just two years later (at the end of December 2007), a figure consistent with the latest official number of $667 trillion.
But the Gross Market Values of the outstanding contracts were estimated by the Fund to have risen from $9,748 trillion to $14,522 trillion over the period.
These IMF data were adjusted for double-counting. Specifically, the notional amounts outstanding have been adjusted by halving positions vis-à-vis other reporting dealers, while the gross market values were calculated as the sum of the total gross positive market value of the contracts and the absolute value of the gross negative market value of contracts with nonreporting counterparties. The elimination of double-counting explains why our earlier figure of $1,200++ trillion surfaced: it appears to have included double-counting.
The ‘international colleges’ to be attached to the big institutions are likely, we suspect, to confirm that the derivatives outstanding are all worth zero.
Which brings us, finally, to the talk about ‘rolling’ financial and economic summit meetings of world leaders ostensibly 'to discuss the global response to the financial crisis', according to a senior White House official, cited by The New York Times on 19th October.
The official added that the (initial?) meeting would be intended to 'explore ideas to 'prevent any recurrence' of the cascading financial failures that have forced the major economic powers to take costly, coordinated actions in the past several weeks'.
WHAT ’PREVENTING ANY RECURRENCE‘ WILL MEAN IN PRACTICE
'Preventing a recurrence' presupposes closing down all off-balance sheet, untaxed, high-yield investment program offshore parasitical financing operations over which zero supervision, checks or balances, are exercised, or ever apply.
It also presupposes banning hedge funds, or subjecting them, contrary to the wrongheaded and permissive decision on this score taken by the G-7 meeting in northern Germany in June 2007, to severe disciplines to which they are far from accustomed.
Most clearly of all, to preclude any recurrence of this financial corruption nightmare, 'preventing a recurrence' implies valuing the outstanding derivatives contracts at zero.
We understand, on authoritative input, that the independent regional US Federal Reserve Banks believe that the outstanding derivatives contracts are worthless, which has obvious implications for SOME of the so-called ‘packages’, as well.
In a final swipe at maintaining his ’free market‘ ideology intact, the subdued financial crook Dr Alan Greenspan told the House Committee on 23rd October:
'Whatever regulatory changes are made, they will pale in comparison to the change already evident in today's markets. Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory régime'.
By which Greenspan probably meant that with the market implosion in full swing, there will be no need for improved regulation, after all. However, as the worldwide interest in The Cottrell Plan has revealed, no-one is listening. It's 'curtains' for Greenspan, the crooked pied piper of banking. |
