$1.2 Quadrillion Derivatives Market Dwarfs World GDP

AOL Finance

One of the biggest risks to the world’s financial health is the $1.2 quadrillion derivatives market. It’s complex, it’s unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost — and as much as risk managers and regulators might want to limit that risk, they lack the power or knowledge to do so.

A quadrillion is a big number: 1,000 times a trillion. Yet according to one of the world’s leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University (and whose speaking voice sounds eerily like John Lennon’s), $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world’s annual gross domestic product is between $50 trillion and $60 trillion.

To understand the concept of “notional value,” it’s useful to have an example. Let’s say you borrow $1 million to buy an apartment and the interest rate on that loan gets reset every six months. Meanwhile, you turn around and rent that apartment out at a monthly fixed rate. If all your expenses including interest are less than the rent, you make money. But if the interest and expenses get bigger than the rent, you lose.

You might be able to hedge this risk of a spike in interest rates by swapping that variable rate of interest for a fixed one. To do that you’d need to find a counter party who has an asset with a fixed rate of return who believed that interest rates were going to fall and was willing to swap his fixed rate for your variable one.

The actual cash amount of the interest rates swaps might be 1% of the $1 million debt, while that $1 million is the “notional” amount. Applying that same 1% to the $1.2 quadrillion derivatives market would leave a cash amount of the derivatives market of $12 trillion — far smaller, but still 20% of the world economy.

Getting a Handle on Derivatives Risk

How big is the risk to the world economy from these derivatives? According to Wilmott, it’s impossible to know unless you understand the details of the derivatives contracts. But since they’re unregulated and likely to remain so, it is hard to gauge the risk.

But Wilmott gives an example of an over-the-counter “customized” derivative that could be very risky indeed, and could also put its practitioners in a position of what he called “moral hazard.” Suppose Bank 1 (B1) and Bank 2 (B2) decide to hedge against the risk that Bank 3 (B3) and Bank 4 (B4) might fail to repay their debt to B1 and B2. To guard against that, B1 and B2 might hedge the risk through derivatives.

In so doing, B1 and B2 might buy a credit default swap (CDS) on B3 and B4 debt. The CDS would pay B1 and B2 if B3 and B4 failed to repay their loan. B1 and B2 might also bet on the decline in shares of B3 and B4 through a short sale.

At that point, any action that B1 and B2 might take to boost the odds that B3 and B4 might default would increase the value of their derivatives. That possibility might tempt B1 and B2 to take actions that would boost the odds of failure for B3 and B4. As I wrote back in September 2008 on DailyFinance’s sister site, BloggingStocks, this kind of behavior — in which hedge funds pulled their money out of banks whose stock they were shorting — may have contributed to the failures of Bear Stearns and Lehman Brothers.

It’s also the sort of conduct that makes it extremely difficult to estimate the risk of the derivatives market.

How Positive Feedback Loops Crash Markets

Another kind of market conduct that makes markets volatile is what Wilmott calls positive and negative feedback loops. These relatively bland-sounding terms mask some really scary behavior for investors who are not clued into it. Wilmott argues that a positive feedback loop contributed to the 22.6% crash in the Dow back in October 1987.

In the 1980s, a firm run by some former academics came up with the idea of portfolio insurance.

Their idea was that if investors are worried about their assets losing value, they can buy puts — the option to sell their investments at pre-determined prices. They can sell everything — which would be embarrassing if the market then started to rise — or they could sell a fixed proportion of their portfolio depending on the percentage decline in a particular stock market index.

This latter idea is portfolio insurance. If the Dow, for example, fell 3%; it might suggest that investors should sell 20% of their portfolio. And if the Dow fell 20%, it would indicate that investors should sell 100% of their portfolio.

That positive feedback loop — in which a stock price decline leads to more selling — boosts market volatility. Portfolio insurance causes more investors to sell as the market declines by, say 3%, which causes an even deeper plunge in the value of investors’ holdings. And that deeper decline leads to more selling. Before you know it, many investors are selling everything.

The portfolio insurance firm started off with $5 billion, but as its reputation spread, it ended up managing $50 billion. In 1987, that was a lot of money. So when that positive feedback loop got going, it took the Dow down 22.6% in a day.

The big problem back then was the absence of a sufficient number of traders using a negative feedback loop strategy. With a negative feedback loop, a trader would sell stocks as they rose and buy them as they declined. With a negative feedback loop strategy, volatility would be far lower.

Unfortunately, data on how much money has been going into negative and positive feedback loop strategies is not available. Therefore, it’s hard to know how the positive feedback loops have gained such a hold on the market.

But it is not hard to imagine that if a particular investor made huge amounts of money following a positive feedback loop strategy, other investors would hear about it and copy it. Moreover, the way traders get compensated suggests that it’s better for them to take more and more risk to replicate what their peers are doing.

Traders Make More Money By Following the Pack

There is a clear economic incentive for traders to follow what their peers are doing. According to Wilmott, to understand why, it helps to imagine a simplified example of a trading floor. Picture yourself as a new college graduate joining a bank’s trading floor with 100 traders. Those 100 traders each trade $10 million: They “win” if a coin toss lands on heads and “lose” if it lands on tails. But now imagine you’ve come up with a magic coin that has a 75% chance of landing on heads — you can make a better bet than the other 100 traders with their 50-50 coin.

You might think that the best strategy for you would be to bet your $10 million on that magic coin. But you’d be wrong. According to Wilmott, if the magic coin lands on a head but the other 100 traders flip tails, the bank loses $1 billion while you get a relatively paltry $10 million.

The best possible outcome for you is a 37.5% chance that everyone makes money (the 75% chance of you tossing heads multiplied by the 50% chance of the other traders getting a head). If instead, you use the same coin as everyone else on the floor, the probability of everyone getting a bonus rises to 50%.

When Traders Say ‘Jump,’ Risk Managers Ask ‘How High?’

Traders are a huge source of profit on Wall Street these days and they have an incentive to bet together and to bet big. According to Wilmott, traders get a bonus based on the one-year profits of those on their trading floor. If the trading floor makes big money, all the traders get a big bonus. And if it loses money, they get no bonus — but at least they don’t have to repay their capital providers for the losses.

Given that bonus structure, a trader is always better off risking $1 billion than $1 million. So if the trader, who is the king of the hill at the bank, asks a lowly risk manager to analyze how much risk the trader is taking, that risk manager is on the spot. If the risk manager comes back with a risk level that limits how big a bet the trader can take, the trader will demand that the risk manager recalculate the risk level lower so the trader can take the bigger bet.

Traders also manipulate their bonuses by assuming the existence of trading profits before they are actually realized. This happens when traders get involved with derivatives that will not unwind for 20 years.

Although the profits or losses on that trade have not been realized at the end of the first year, the bank will make an assumption about whether that trade made or lost money each year. Given the power traders wield, they can make the number come out positive so they can receive a hefty bonus — even though it is too early to tell what the real outcome of the trade will be.

How Trader Incentives Caused the CDO Bubble

Wilmott imagines that this greater incentive to follow the pack is what happened when many traders were piling into collateralized debt obligations. In Wilmott’s view, CDO risk managers who had analyzed a future scenario in which housing prices fell and interest rates rose would have concluded that the CDOs would become worthless under that scenario. He imagines that when notified of that possible outcome, CDO traders would have demanded that the risk managers shred that nasty scenario so they could keep trading more CDOs.

Incidentally, the traders who profited by going against the CDO crowd were lone wolves whose compensation did not depend on following the trading floor pack. This reinforces the idea that big bank compensation policies drive dangerous behavior that boosts market volatility.

What You Don’t Understand, You Can’t Properly Regulate

Wilmott believes that derivatives represent a risk of unknown proportions. But unless there is a change to trader compensation policies — one which would force traders to put their compensation at risk for the life of the derivative — then this risk could remain difficult to manage.

Unfortunately, he thinks that regulators aren’t in a good position to assess the risks of derivatives because they don’t understand them. Wilmott offers training in risk management. While traders and risk managers at banks and hedge funds have taken his course, regulators so far have not.

And if regulators don’t understand the risks in derivatives, chances are great that Congress does not understand them either.

They Want You DEAD Before You Get Your Pension

By Neil Foster

As people struggle day to day, even if they’ve got a job at present, the government that cares about you wants to make you work longer whilst paying more towards you pension and promising you that you’re going to get less back for it then you expected.

The fact is, you weren’t ‘expecting’ anything. You were ‘told’ by the pension fund managers what you would get when you retired at 65 years old. But of course that’s now gone up to 68 years old which also means you’ll be paying for your pension for another 3 years on top yet you’re still getting less back?

I for one, for whatever reason, have always known that pension schemes were a scam. I’ve never had one and don’t expect there to be any such thing by the time I’m 68.

The question is, why is anyone paying into a pension when the sharks that run them regularly make these funds which you’ve paid for go bust thus losing all YOUR money which you’ve saved for years in the faint hope of getting some of it back when you retire?

Don’t you get it folks? It’s just another way of screwing you out of more money, in the same way that you pay your union fees just in case you might need the union one day who are the same people, on massive wages that YOU pay for who are busy making cushy deals up with government to cut YOUR wages while they still live like parasites from YOU with their friends and criminal cohorts in government. Yep folks, these crooks are laughing all the way to the bank and a fantastic retirement, well before 68 years old, that YOU have paid for.

Doesn’t that give you a great sense of satisfaction and a nice warm feeling knowing that you’ve helped these idiots who control you to have a nice, long, happy and wealthy retirement at YOUR expense?

Do you really think they’ve raised the retirement age because they’re short of funds to pay you at 65?

Why can’t you see that they simply hope you DIE before you claim a cent of your pension? That’s how they make their money folks. It’s cynical but it’s a fantastic business isn’t it especially when a lot of YOUR pension money can just disappear into a black hole called a ‘bad investment’. Face the facts folks, they steal your money, bad investments are just a smokescreen for fraud at your expense.

A Mickey Mouse politician can get himself elected in a tiny rural constituency, do nothing for 5 years and claim a full, index linked pension immediately, which means in effect they could ‘retire’ at 26 years old, yet these crooks want the ordinary person to pay more, get less and hopefully die before getting anything!

When are people going to WAKE UP to what’s being done to them? How bad do things have to get before they cry ‘ENOUGH’!

We the people around the world are being FLEECED by the criminals running our government and other governments across the world under the guise of looking after us. Well, quite frankly, the wolves looking after the sheep seems like a bad deal to me.

We are led by the nose, told lies every day by these pitiful creatures and what’s more, most of you believe them and truly think they are there to look after you when in reality the only people they’re looking after are themselves, PERIOD!

You and I are nothing to these people until it comes to voting them back onto the well funded, by us, gravy train known as politics. It doesn’t matter who you vote in, nothing ever changes.

There is a perception amongst the public that if they vote in this or that party every few years then things will get better. Let me tell you, I’ve seen nothing get better since I left school in the late ‘70s. There are still very poor people and there are still very wealthy people. The politicians still get massive wages, expenses, junkets and pension arrangements the rest of us could only dream about.

Voting for a ‘change’ of government is simply keeping the same circus with different clowns. We need a new political mindset where the people come first, not the politicians. There should be no massive salaries and pension arrangements. If these people are really in politics to ‘help’ society, then why don’t they get paid the average industrial wage? Why don’t they have to wait for their pension the same way the rest of us do? Why are we paying for them to go to work for us?

We are supposed to be the ‘masters’ and they are supposed to be our ‘servants’. Is that how it appears to you?

It’s time we let them know that the game is up for them and that we won’t put up with this criminal system any longer. We must stop voting for all the establishment parties and form our own system with honest people, with genuine intentions and ideas, who truly do want the best for the people.

The charade of mainstream party politics has to stop. The circus tent needs to come down and the clowns put out to retirement for good. If not, then we are going to continue being fleeced by these criminals who care nothing for us.

So, what are YOU going to do about it? Are you going to sit in front of your TV watching them as they lie to you, on one side of their faces telling you the recession is over but on the other telling you that you’re going to be a lot poorer?

Which is it?; better or worse? ; truth or lies? The choice is YOURS!

OPERATION GULF GREASE: Problem, Reaction, Solution to implement Agenda 21?

newswithviews.com

In the days prior to the Gulf drilling operation and ensuing environmental catastrophe, I remember thinking just how odd and out of

What is the United Nations' Law of the Sea Treaty? Click image and read the details.

character it was that Barack Obama had announced his approval for more offshore drilling. On April 1st, The Washington Post quoted Interior Secretary Ken Salazar as saying the administration had broached “a new direction” in energy policy. [1]

Had Obama lost his mind? Had he had some sort of religious experience? This was a president who campaigned against traditional energy sources in favor of so-called “sustainable” alternatives such as wind, solar, etc. This was a president who banned offshore drilling as one of his first acts in executive office.[2] This was a president who admitted in a meeting with the San Francisco Chronicle in January of 2008 that it was his plan to use a Cap and Trade system to cause energy prices to “necessarily skyrocket” in order to force people to transition to “green” technologies. “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket,” Obama stated as documented in a YouTube video. [3]

Hence, the shock at the sudden “turnabout” in energy policy. True, the vast majority of Americans do support drilling for oil as a counterweight against increasing dependence upon the perpetually troubled Middle East and its OPEC cartel. But since when has any president in recent history paid attention to the opines of their electorate?

Now, as the days turn into weeks, and weeks into months — and the oil continues to gush in the Gulf with no sign of ever letting up — Obama has used the crisis as an excuse to not only ban offshore drilling,[4] but also to clamor for passage of his “cap and trade” energy bill.[5] Politico has cited opinion polls that suggest public support for drilling may be eroding.[6]

Was this the Hegelian plan all along? To foment a crisis in the Gulf to condition the masses that the world must adopt Agenda 21 “sustainable development” as its model for energy or pay the environmental consequences? Before you dismiss this notion as insanity, there are many troubling questions that demand answers. Questions that imply foreknowledge and planning. Questions of “coincidence.”

For example, is it “coincidental” the numerous incredible financial and business transactions that took place in the days, weeks, and months prior to the rig explosion?

We know the ties between British Petroleum and Goldman Sachs run deep. Peter Sutherland, the chairman of Goldman Sachs International also served as chairman of BP right up until last year, according to a 2009 bio on the site of the Trilateral Commission. It says,

“Peter Sutherland is chairman of BP plc (1997 – current). He is also chairman of Goldman Sachs International (1995 – current). He was appointed chairman of the London School of Economics in 2008. He is currently UN special representative for migration and development. Before these appointments, he was the founding director-general of the World Trade Organization. He had previously served as director general of GATT since July 1993 and was instrumental in concluding the Uruguay GATT Round Negotiations.”[7]

On April 30th, The Huffington Post published a satire piece about Goldman Sachs, who was embroiled in a Congressional probe over the present and pending financial meltdown just days before the Gulf disaster stole the headlines. The spoof article titled, Goldman Sachs Reveals It Shorted Gulf of Mexico, was actually mistaken by some as a legitimate news story. Written by a comedian, the satirical article said,

“In what is looming as another public relations predicament for Goldman Sachs, the banking giant admitted today that it made ‘a substantial financial bet against the Gulf of Mexico’ one day before the sinking of an oil rig in that body of water.”[8]

After this gag piece was published, various independent researchers began checking into the financial transactions of Goldman. What they found turned out to be a case of art imitating life.

Sterling Allan reported in The Examiner on May 5th,

“It turns out that Goldman Sachs really did place shorts on TransOcean stock days before the explosions rocked the rig in the Gulf of Mexico sending stocks plunging while GS profits soared — benefitting [sic] once again from a huge disaster, having done the same with airline stocks prior to 911 then again with the housing bubble.”[9]

It’s important to note the cozy relationship between Goldman Sachs and the Obama administration. According to McClatchy, while Goldman Sachs was under fire from the Securities and Exchange Commission, and their lawyers were in negotiations with the regulatory agency, Goldman CEO Lloyd Blankfein was a repeated visitor to the White House. He attended events with Obama and met with Larry Summers, Obama’s top economic advisor. Obama’s 2008 campaign benefited from $994,795 worth of campaign donations from Goldman employees and their relatives.[10] The Gulf disaster, coming on the heels of the Congressional hearing and SEC “investigation,” served to distract attention from the ongoing financial fraud and economic meltdown caused by Goldman and others.

We now know from John Byrne at Raw Story that prior to the Gulf oil mess, not only did Goldman Sachs short shares of TransOcean, the owner of the failed Deepwater Horizon rig, they also ditched 4,680,822 shares of BP stock, worth $250 million and representing 44% of their holdings. “Goldman’s sales were the largest of any firm during that time,” writes Byrne. “Goldman would have pocketed slightly more than $266 million if their holdings were sold at the average price of BP’s stock during the quarter.”[11]

Byrne also noted other financial institutions that also dumped BP holdings.

“Other asset management firms also sold huge blocks of BP stock in the first quarter — but their sales were a fraction of Goldman’s. Wachovia, which is owned by Wells Fargo, sold 2,667,419 shares; UBS, the Swiss bank, sold 2,125,566 shares.”[12]

If that weren’t enough of a “coincidence,” we also had The Telegraph out of London reporting that the chief executive of BP, Tony Hayward, also sold 223,288 shares, worth £1.4 million of stock in his own company (over $2 million) on March 17th — only weeks before the BP Gulf mess. The paper noted that by doing so he “avoided losing more than £423,000 ($614,449) when BP’s share price plunged after the oil spill began six weeks ago.”[13] He took the money and paid off the mortgage on his family mansion in Kent.

At this point, a question should be coming to mind: What did these people know that the rest of us didn’t? How is it that stock in BP and Transocean suddenly seemed so unattractive to those closest to the disaster? Ah, the coincidences! But it gets even better.

On April 10th, The Houston Chronicle reported that Halliburton — the company of which former Vice-President Dick Cheney was CEO — was in the process of acquiring Boots & Coots. Reuters reported that the deal was announced on Friday, April 9th — just eleven days prior to the explosion.[14] The Chronicle noted that “Boots & Coots has become well known for putting out some of the world’s largest oil and gas fires.”[15] The company’s website lists services they provide, including “deepwater application and well inspections, as well as blowout prevention and control counsel or assistance…”[16] According to the Orlando Sentinel, their expertise is already being put to use in the Gulf, as they are “one of two primary companies designing relief-well strategies for the BP blowout.”[17]

So when the acquisition deal is formerly approved by the government, Halliburton — the company famous for profiting from no-bid government contracts in war zones — will have collected for themselves yet another “slick” profit.

This is especially intriguing in light of the fact that, according to NPR, Halliburton’s cementing work — completed only hours prior to the explosion — has become a “central focus” of the Congressional investigation.[18] The Wall Street Journal quotes unnamed “experts” as saying the timing of the cementing in relation to the blast “points to it as a possible culprit.”[19]

But Halliburton isn’t the only company that stands to make a killing off the crisis. The Times Online out of the UK reported that TransOcean itself took out a $560 million insurance policy on the Deepwater Horizon rig. The dollar amount was well above the rig’s value. According to the paper, insurance payouts amounted to a $270 million profit from the disaster.

“The windfall, revealed in a conference call with analysts, will more than cover the $200m that Transocean expects to pay to survivors and their families and for higher insurance costs.”[20]

A number of people have questioned why Corexit — a chemical banned in the UK[21] and is much more toxic than the oil itself — was used as a dispersant in the Gulf. Assuming for the moment that chemical dispersants had to be used, the New York Times reported on May 13th:

“Of 18 dispersants whose use EPA has approved, 12 were found to be more effective on southern Louisiana crude than Corexit, EPA data show. Two of the 12 were found to be 100 percent effective on Gulf of Mexico crude, while the two Corexit products rated 56 percent and 63 percent effective, respectively. The toxicity of the 12 was shown to be either comparable to the Corexit line or, in some cases, 10 or 20 times less, according to EPA.”[22]

Yet, despite the EPA data ranking it “far above dispersants made by competitors” for toxicity, BP chose to dump more than 400,000 gallons of Corexit into the Gulf, order 805,000 more gallons with plans of hundreds of thousands of additional gallons should the spewing continue. Why?

The answer may lie in the fact that not only has Corexit production benefited BP and Exxon Chemical Company, it also has ties to the very same banking company that somehow knew to sell nearly half its holdings in BP stock just prior to the disaster — Goldman Sachs. Cassandra Anderson of Morph City connects the dots to the economic ties between the oil industry and the bankers.

“Corexit is produced by NALCO, originally named the National Aluminate Corporation, which formed a limited partnership with Exxon Chemical Company in 1994. Ondeo Nalco was purchased by Goldman Sachs, Apollo and Blackstone in 2003 and is currently a publicly traded company. Given NALCO’s business ties, it seems that safe and natural cleanup methods were avoided in the Gulf to pursue an economic agenda. The use of Corexit in Alaska, after the Exxon Valdez disaster, resulted in toxicity to humans that included respiratory, nervous system, liver, kidney and blood disorders.”[23]

They say that history repeats itself. We know from wire reports that all 125 fishing boats had to be recalled from Gulf cleanup efforts after workers aboard began “experiencing nausea, dizziness, headaches and chest pains.”[24]

What’s going on here? Is the Gulf being poisoned on purpose to enhance corporate profits? Or has this crisis been orchestrated by the illuminists in order to force the United States to ratify the Law of the Sea Treaty (LOST) which would cede control of the oceans — over 70 percent of the planet’s surface — to the United Nations?

One must always keep in mind that Agenda 21 is the game plan for all that happens in the world today. The Hegelian dialectic is the means by which that game plan is implemented — creation of a crisis to condition the minds of the people that an undesired change is necessary, creation of their own controlled opposition to the crisis, finally the introduction of their pre-determined solution.

Chapter 17 of Agenda 21 deals with “Protection of the Oceans, all Kinds of Seas, Including Enclosed & Semi-enclosed Seas, & Coastal Areas & the Protection, Rational Use & Development of their Living Resources.” Who will determine what constitutes “rational use” of the oceans and their resources? If the LOST is ratified, it will be the United Nations.

In July 2009, State Department official Margaret Hayes told the New York Times that the Obama administration was in the process of working to “craft a plan to ratify the U.N. Convention on the Law of the Sea.”

“President Obama is strongly in favor of the United States becoming a party to the Law of the Sea Convention,” Hayes was quoted as saying. “There is discussion going on as to the exact timing of when they might have a hearing and when they might proceed to have the full Senate consider accession.”[25]

The Times goes on to report that the administration is continuing a multi-year mapping of the sea floor in the Arctic in preparation to stake a claim under the LOST.[26]

Furthermore, the World Ocean Council, an alliance of multi-national businesses that are dedicated to ocean “sustainability,” is having its “Corporate Ocean Responsibility” meeting this month — conveniently on the heels of a major maritime disaster. The Sustainable Ocean Summit is described as “the first international, cross-sectoral ocean sustainability conference for the private sector – [that] will catalyze the growing interest among ocean businesses for more effective leadership and collaboration in addressing ocean environmental challenges.”[27] It just so happens that two of the founding members of the World Ocean Council are ExxonMobil and TransOcean.[28]

That the crisis in the Gulf may have been planned and executed with the intention of profiting from it while pushing an environmental control agenda, might explain the pathetic federal response after the disaster. [NWV POLL: Was the Gulf oil spill deliberately created?]

Three days after learning of the Gulf gusher, the Interior Department Chief of Staff Tom Strickland left for the Grand Canyon with his wife and went white water rafting.[29] The Department of the Interior is charged with the task of coordinating federal response to a major oil spill. Yet, Strickland’s priorities were elsewhere.

The “In-Situ Burn” plan was developed by the federal government in 1994 to deal with oil spill disasters in the Gulf, and calls for the immediate use of fire booms. Had the plan been followed, it might have prevented oil from reaching the shoreline. A single fire boom can burn up to 1,800 barrels or 75,000 gallons an hour. Yet, despite the plan, not one fire boom was available anywhere in the Gulf at the time of the incident.[30] [31]

On May 11th, ABC News reported that the U.S. Coast Guard conducted operations in the Gulf, simulating a major oil spill and practicing federal response to it a mere three weeks prior to the real disaster.[32] What was the purpose of the simulation? Obviously, it wasn’t to improve federal response.

In 2002, there was a similar practice operation which ABC describes as “eerily similar” to the current disaster. Lack of experience, poor communications, conflicting roles, and a need for new technology were cited. None of the recommendations were ever put into place.[33]

Wire reports from the Associated Press have said that workers aboard the rig were forced to sign statements that they hadn’t witnessed the explosion. They were told they couldn’t go home, nor could they make phone calls and talk to their friends and family until they signed the statements indicating they had no “first hand or personal knowledge” of the incident.[34]

We now have private military contractors deployed from Wackenhut — the military contractor infamous for its employees’ drunken brawls and vodka shots taken out of each other’s backside — guarding the perimeter of the Deepwater Horizon Unified Command.

Respected attorney Ellen Brown has written about empty Wackenhut buses with prison bars on the windows being driven around for no apparent reason in Arizona. Your writer has personally talked to other people who have seen these buses. Ellen wrote last year:

“The new Wackenhut operation is shrouded in mystery. It has been running its fleet of empty prison buses night and day, apparently logging miles on a Department of Homeland Security (DHS) contract. Multiple buses can be seen driving all over town and even on remote desert back roads. Oddly, except for the driver and one escort guard seated in front, these buses appear to be empty.”[35]

Network news media have been complaining of being harassed and threatened by the security contractors for shooting video of the coast,[36] [37] which we’re told may soon become uninhabitable. Will Wackenhut buses be utilized to relocate mass numbers of people out of the coastal states?

It’s shaping up to be an interesting summer.

Russian President: New World Order with new Global Currency

By Luis R. Miranda
The Real Agenda
June 19, 2010

As many other puppet presidents have done it before, Russia’s Dmitri Medvedev is taking his opportunity to call for a new world

Russian President, Dmitri Medvedev

order and to push the Russian currency up, as the new reserve paper.  “What had seemed untouchable has collapsed. The bubbles that created the illusion of flourishing economies have burst,” said the Russian president in St Petersburg.  As he opened Russia’s annual economic forum, Medvedev said the times when western corporations dominated the economy had ended and the new interest in Russia was a sign that the world was changing.

“For Russia this situation is a challenge and an opportunity.  And we should use it to build a modern, flourishing and strong Russia … which will be a co-founder of the new world economic order.” he added.  Talking in front of many businessmen from around the world, the Russia leader followed the steps of other governments and presidents as well as of non-governmental institutions.  In the past, George H.W. Bush, Tony Blair, Gordon Brown, Mahmoud Ahmadinejad and Barack Obama, among others, have called for the formation of a new world order.  In fact, all those leaders have cited the creation of a centralized global entity as the only way to cure the many illnesses the world suffers from today.

Together with governments, there are supranational institutions such as the World Bank, the International Monetary Fund, the European Central Bank and their respective leaders, who have echoed the same calls for the creation of a new global order.  This order would have the power, will amass the resources of the planet and will decide how to use them.  The plan also includes the creation of a single monetary policy to which all countries will have to submit to.  The adherence to such policy will enable the countries to receive loans and aid packages that will make them more dependent on the foreign centralized organization, and less dependent on their own Constitutions and laws.  In fact, in the world seen through the eyes of people like Medvedev and the other power men, there is no need for nationality, sovereignty or identity.

Russia has already taken significant steps to aid the lifeline of the new world order -which has existed for many years now-.  The country will introduce a policy of zero taxation on capital gains which will indeed allow the free flow of monies in and out of, much like it happens in corrupt countries where this policy aides and enables money laundering through the banking system.  This would transform Russia into the new United States when it comes to moving large amounts of money coming from all places -drug trade, arms trade, slave trade- to circulate and make its way across the world.  Of course Medvedev did not present it like that.  Instead, he said his policy would allow companies working on long-term investments.  Russia, he said, “was improving the legal system to offer better protection for businesses against the long arm of bureaucracy.”  In other words, crime, of the kind recently experienced through Wall Street banks around the world will have a safe heaven in Russia.  What Mr. Medvedev’s words mean is that all the policies that allowed the bankers to suck countries dry of their resources will also exist in the world order he dreams about, where Russia is the new leader and he’s the new Al Capone.  Limits to bureaucracy means zero regulation or a perfect environment for the corporations to run their shady Ponzi schemes.

The Russian president also talked about something that would make any corporate businessman smile, even in the rainiest day.  Russia has completed the process of simplifying migration procedures, so that workers can go in the country; or better, Russia just like China will allow corporations to pay some of the lowest wages to its citizens in exchange for long working days with no benefits and no rights.  Again, it’s clear he did not present it this way.  He said Russia had changed to attract “highly-qualified specialists” from the financial and technology sectors.  “The state should not tear down the apples from the tree of economics,” he said.

Medvedev complemented his speech on a new world order by forcefully attacking the dollar and claiming that it was time for a new reserve currency.  “Only three, five years ago it seemed like a fantasy” to create a new reserve currency. Now we are seriously discussing it.”  He does not seem to be alone in that ride.  It seems China is up to the challenge as well.  In the meantime, Bank of Israel Governor Stanley Fischer added his voice to the Russian’s, but from a very different point of view, one that is rarely heard.  He said: “New reserve currencies don’t emerge by fiat. They emerge as countries change.”  A fiat currency is paper or electronic  money that is not backed up by a nation’s industry or production, but by an inflated system of blind trust on what a piece of paper says it is worth.

Apparently, both Russia and China think it is time for the East to drive the world and its markets.  “We really live at a unique time, and we should use it to build a modern, prosperous and strong Russia, a Russia that will be a co-founder of the new world economic order,” he said.  The problem with Medvedev’s vision is that his plan will not work, at least not for as long as he wants.  Although he intends to build something new, better and different, he plans on using the same old policies that brought us to the disaster he so clearly criticizes.  He wants prosperity, a modern economy and a strong Russia, but he wants zero regulation, a centralized dictatorial government and no sovereignty.  Maybe he forgets that Capitalism, the real Capitalism, was born from free independent nations that based their development on the use of their resources to produce quality goods that benefited the world.  Instead, he wants a global economy filled with cheap, slave-made products that need to be changed every few months.  He wants the best workers, but will follow the same old low-paying policies that maintains Asia’s and Latin America’s people in a continuous feudal model of development.

“If the world depended completely on the dollar, the situation would have been more difficult,” Medvedev reminded the audience.  So why does he want a single global currency, then?

As Predicted, Spain on the Brink of Collapse

The tentacles of the international banking cartel are about to envelop the fifth most important economy of the old continent

The Independent

European leaders meet in Brussels today amid growing fears that Spain, Europe’s fifth-largest economy, is preparing to ask for a

The horns of the depression are in Spain's rearview mirror. An aid package is in the works to rescue one more failed State.

bailout which would dwarf the €110bn (£90bn) rescue plan for Greece.

The Spanish government yesterday dismissed reports that it was already in discussions with the European Commission, International Monetary Fund and the US Treasury for a rescue package worth up to €250bn.

Officials in Madrid, Brussels and Paris were forced to deny that a Spanish bailout – which would take the European debt and euro crisis into a potentially dangerous new phase – was on the Brussels summit agenda.

“Spain is a country that is solvent, solid and strong, with international credibility,” said its Prime Minister, Jose Luis Rodriguez Zapatero. The European Commission spokesman said: “I can firmly deny [that a Spanish rescue is under discussion]. I can say that that story is rubbish.”

Brussels diplomats have been at pains to send out feel-good signals ahead of a summit in which Europe’s leaders are supposed to take the first steps towards more disciplined and co-ordinated, control of national finances. Those reforms are meant to restore confidence in the euro and underpin the €750m EU and IMF safety-net, created last month for euroland countries that lose the confidence of the financial markets.

However, it is proving hard to shake off persistent market fears about Spain, which, if it needed a lifeline, would swallow up a large part of the emergency fund. Worryingly for the EU, the doubts about Spain – whether real or driven by speculation – are eerily similar to the gradual seeping away of confidence that sent Greece into a financial death spiral in March and April. The Spanish government’s cost of borrowing hit a new record yesterday. The interest rate gap, or spread, between 10-year Spanish bonds and their German equivalents, rose by more than 0.10 of a point to 2.23 percentage points.

A senior Spanish banker, Francisco Gonzalez, chairman of the BBVA financial services group, confirmed that foreign private banks were now refusing to provide liquidity to their Spanish counterparts. “Financial markets have withdrawn their confidence in our country,” he said. “For most Spanish companies and entities, international capital markets are closed.”

As a result, the European Central Bank is said to have provided record amounts of liquidity to Spanish banks in recent days. The closure of bank-to-bank credit to Spanish institutions recalls to some market commentators the ripple of crisis through the global financial system after the fall of Lehman Brothers in the Autumn of 2008.

The IMF chief Dominique Strauss-Kahn is expected in Madrid tomorrow to see Mr Zapatero – but brushed off speculation of a crisis. “It’s a working visit,” he told reporters in Paris. “I am in France [today] – are there such rumours about France?”

Fears over Spain’s finances checked the recovery of the euro on money markets yesterday. The single currency lost much of the gains it had made in the past seven days.

One of the proposals on the table at the Brussels summit is public “stress tests” to force banks to reveal the state of their books. The Spanish government offered yesterday to open the books of its own private banks unilaterally to prove that they were sound.

Today’s summit in Brussels was intended to be a time for the EU leaders to catch their breath and discuss ways of restoring the euro’s long-term credibility. The threatened Spanish crisis may blow all that out of the water.

Despite an apparent rapprochement between Paris and Berlin this week, President Nicolas Sarkozy and Chancellor Angela Merkel remain deeply divided on how to prevent the currency and debt crisis from dumping Europe back into recession. Mr Sarkozy has agreed to drop his proposals for new institutional machinery for a political “government” of the euro by its 16 member states. Ms Merkel prefers to talk of a vague “governance” of the euro, and European state spending, by all 27 EU governments.

More fundamentally, Paris is deeply concerned that the austerity plans announced by Berlin last week could – on top of budget cuts in other countries – plunge Europe into crisis.

The French fears were echoed yesterday by the billionaire investor, George Soros, who warned that Europe would almost certainly face a recession next year which might generate “social unrest” and the kind of populist nationalism seen in the 1930s. “That’s the real danger of the present situation – that by imposing fiscal discipline at a time of insufficient demand and a weak banking system… you are actually… setting in motion a downward spiral,” he said.

The collapse of Spain’s housing boom has helped fuel a deep downturn which has sent unemployment spiralling to 20 per cent, the second worst in the EU. Mr Zapatero introduced a range of measures last month, including spending cuts of €15bn over two years and reductions in public sector wages and spending. Unions have called a general strike over labour reforms.