How Long Will the Dollar Remain the World’s Reserve Currency?

RON PAUL | THE REAL AGENDA | SEPTEMBER 4, 2012

We frequently hear the financial press refer to the U.S. dollar as the “world’s reserve currency,” implying that our dollar will always retain its value in an ever shifting world economy. But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency. This means the dollar became an article of faith in the continued stability and might of the U.S. government.

In essence, we declared our insolvency in 1971. Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it– not even a pretense of gold convertibility! Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC in the 1970s to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence backed the dollar with oil.

In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite radical Islamic movements among those who resented our influence in the region. The arrangement also gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as the dollar flourished.

In 2003, however, Iran began pricing its oil exports in Euro for Asian and European buyers. The Iranian government also opened an oil bourse in 2008 on the island of Kish in the Persian Gulf for the express purpose of trading oil in Euro and other currencies. In 2009 Iran completely ceased any oil transactions in U.S. dollars. These actions by the second largest OPEC oil producer pose a direct threat to the continued status of our dollar as the world’s reserve currency, a threat which partially explains our ongoing hostility toward Tehran.

While the erosion of our petrodollar agreement with OPEC certainly threatens the dollar’s status in the Middle East, an even larger threat resides in the Far East. Our greatest benefactors for the last twenty years– Asian central banks– have lost their appetite for holding U.S. dollars. China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever. Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency.

If we act now to replace the fiat system with a stable dollar backed by precious metals or commodities, the dollar can regain its status as the safest store of value among all government currencies. If not, the rest of the world will abandon the dollar as the global reserve currency.

Both Congress and American consumers will then find borrowing a dramatically more expensive proposition. Remember, our entire consumption economy is based on the willingness of foreigners to hold U.S. debt. We face a reordering of the entire world economy if the federal government cannot print, borrow, and spend money at a rate that satisfies its endless appetite for deficit spending.

Ex-Israeli Intelligence Officer: “Pearl Harbor” Style Attack Will Be Pretext For War On Iran

Paul J. Watson
Infowars
January 13, 2012

Former Israeli intelligence officer Avi Perry writes that a “surprise” Pearl Harbor-style Iranian attack on an American warship in the Persian Gulf will provide the pretext for the US to launch all-out warfare against Iran

Given the fact that former Vice President Dick Cheney’s office openly considered staging a false flag attack on a US vessel in the Persian Gulf to blame it on Iran as a pretext for war, Perry’s summation of how “2012 will see to a new war,” cannot be taken lightly.

Under the headline ‘The looming war with Iran‘, Perry writes;

Iran, just like Nazi Germany in the 1940s, will take the initiative and “help” the US president and the American public make up their mind by making the first move, by attacking a US aircraft carrier in the Persian Gulf.

The Iranian attack on an American military vessel will serve as a justification and a pretext for a retaliatory move by the US military against the Iranian regime. The target would not be Iran’s nuclear facilities. The US would retaliate by attacking Iran’s navy, their military installations, missile silos, airfields. The US would target Iran’s ability to retaliate, to close down the Strait of Hormuz. The US would then follow by targeting the regime itself.

Elimination of Iran’s nuclear facilities? Yes. This part would turn out to be the final act, the grand finale. It might have been the major target, had the US initiated the attack. However, under this “Pearl Harbor” scenario, in which Iran had launched a “surprise” attack on the US navy, the US would have the perfect rationalization to finish them off, to put an end to this ugly game.

Perry’s use of quotation marks around the word “surprise” comes across as a literary device to imply that the so-called “surprise” attack will not be a surprise at all.

Of course, the Pearl Harbor attack, which provided the pretext for America’s formal entry into World War Two, was not a “surprise” by any means, it was known well ahead of time.

Read Full Article…

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The Geo-Politics of the Strait of Hormuz

Could the U.S. Navy be defeated by Iran in the Persian Gulf?

by Mahdi D. Nazemroaya
Global Research
January 10, 2012

After years of U.S. threats, Iran is taking steps which suggest that is both willing and capable of closing the Strait of Hormuz. On December 24, 2011 Iran started its Velayat-90 naval drills in and around the Strait of Hormuz and extending from the Persian Gulf and Gulf of Oman (Oman Sea) to the Gulf of Aden and the Arabian Sea.

Since the conduct of these drills, there has been a growing war of words between Washington and Tehran. Nothing the Obama Administration or the Pentagon have done or said so far, however, has deterred Tehran from continuing its naval drills.

The Geo-Political Nature of the Strait of Hormuz

Besides the fact that it is a vital transit point for global energy resources and a strategic chokepoint, two additional issues should be addressed in regards to the Strait of Hormuz and its relationship to Iran. The first concerns the geography of the Strait of Hormuz. The second pertains to the role of Iran in co-managing the strategic strait in accordance with international law and its sovereign national rights.

The maritime traffic that goes through the Strait of Hormuz has always been in contact with Iranian naval forces, which are predominantly composed of the Iranian Regular Force Navy and the Iranian Revolutionary Guard Navy. In fact, Iranian naval forces monitor and police the Strait of Hormuz along with the Sultanate of Oman via the Omani enclave of Musandam. More importantly, to transit through the Strait of Hormuz all maritime traffic, including the U.S. Navy, must sail through Iranian territorial waters. Almost all entrances into the Persian Gulf are made through Iranian waters and most exits are through Omani waters.

Iran allows foreign ships to use its territorial waters in good faith and on the basis of Part III of the United Nations Convention of the Law of the Sea’s maritime transit passage provisions that stipulate that vessels are free to sail through the Strait of Hormuz and similar bodies of water on the basis of speedy and continuous navigation between an open port and the high seas. Although Tehran in custom follows the navigation practices of the Law of the Sea, Tehran is not legally bound by them. Like Washington, Tehran signed this international treaty, but never ratified it.

American-Iranian Tensions in the Persian Gulf

In recent developments, the Iranian Majlis (Parliament) is re’evaluating the use of Iranian waters at the Strait of Hormuz by foreign vessels.

Legislation is being proposed to block any foreign warships from being able to use Iranian territorial waters to navigate through the Strait of Hormuz without Iranian permission; the Iranian Parliament’s National Security and Foreign Policy Committee is currently studying legislation which would establish an official Iranian posture. The latter would hinge upon Iranian strategic interests and national security. [1]

On December 30, 2011, the U.S.S. John C. Stennis carrier passed through the area where Iran was conducting its naval drills. The Commander of the Iranian Regular Forces, Major-General Ataollah Salehi, advised the U.S.S. John C. Stennis and other U.S. Navy vessels not to return to the Persian Gulf while Iran was doing its drills, saying that Iran is not in the habit of repeating a warning twice. [2] Shortly after the stern Iranian warning to Washington, the Pentagon’s press secretary responded by making a statement saying: “No one in this government seeks confrontation [with Iran] over the Strait of Hormuz. It’s important to lower the temperature.” [3]

In an actual scenario of military conflict with Iran,  it is very likely that U.S. aircraft carriers would actually operate from outside of the Persian Gulf and from the southern Gulf of Oman and the Arabian Sea. Unless the missile systems that Washington is developing in the petro-sheikhdoms of the southern Persian Gulf are operational, the deployment of large U.S. warships in the Persian Gulf would be unlikely. The reasons for this are tied to geographic realities and the defensive capabilities of Iran.

Geography is against the Pentagon: U.S. Naval Strength has limits in the Persian Gulf

U.S. naval strength, which includes the U.S. Navy and the U.S. Coast Guard, has primacy over all the other navies and maritime forces in the world. Its deep sea or oceanic capabilities are unparalleled and unmatched by any other naval power. Primacy does not mean invincibility. U.S. naval forces in the Strait of Hormuz and the Persian Gulf are nonetheless vulnerable.

Despite its might and shear strength, geography literally works against U.S. naval power in the Strait of Hormuz and the Persian Gulf. The relative narrowness of the Persian Gulf makes it like a channel, at least in a strategic and military context. Figuratively speaking, the aircraft carriers and warships of the U.S. are confined to narrow waters or are closed in within the coastal waters of the Persian Gulf. [See map above]

This is where the Iranian military’s advanced missile capabilities come into play. The Iranian missile and torpedo arsenal would make short work of U.S. naval assets in the waters of the Persian Gulf where U.S. vessels are constricted. This is why the U.S. has been busily erecting a missile shield system in the Persian Gulf amongst the Gulf Cooperation Council (GCC) countries in the last few years.

Even the small Iranian patrol boats in the Persian Gulf, which appear pitiable and insignificant against a U.S. aircraft carrier or destroyer, threaten U.S. warships. Looks can be deceiving; these Iranian patrol boats can easily launch a barrage of missiles that could significantly damage and effectively sink large U.S. warships. Iranian small patrol boats are also hardly detectable and hard to target.

Iranian forces could also attack U.S. naval capabilities merely by launching missile attacks from the Iranian mainland on the northern shores of the Persian Gulf. Even in 2008 the Washington Institute for Near East Policy acknowledged the threat from Iran’s mobile coastal missile batteries, anti-ship missiles, and missile-armed small ships. [4] Other Iranian naval assets like aerial drones, hovercraft, mines, diver teams, and mini-submarines could also be used in asymmetrical naval warfare against the U.S. Fifth Fleet.

Even the Pentagon’s own war simulations have shown that a war in the Persian Gulf with Iran would spell disaster for the United States and its military. One key example is the Millennium Challenge 2002 (MC02) war game in the Persian Gulf, which was conducted from July 24, 2002 to August 15, 2002 and took almost two years to prepare. This mammoth drill was amongst the largest and most expensive war games ever held by the Pentagon.  Millennium Challenge 2002 was held shortly after the Pentagon had decided that it would continue the momentum of the war in Afghanistan by targeting Iraq, Somalia, Sudan, Libya, Lebanon, Syria, and finishing off with the big prize of Iran in a broad military campaign to ensure U.S. primacy in the new millennium.

After Millennium Challenge 2002 was finished, the war game was “officially” presented as a simulation of a war against Iraq under the rule of President Saddam Hussein, but in actuality these war games pertained to Iran.[5] The U.S. had already made assessments for the upcoming Anglo-American invasion of Iraq. Moreover, Iraq had no naval capabilities that would merit such large-scale use of the U.S. Navy.

Millennium Challenge 2002 was conducted to simulate a war with Iran, which was codenamed “Red” and referred to an unknown Middle Eastern rogue enemy state in the Persian Gulf. Other than Iran, no other country could meet the perimeters and characteristics of “Red” and its military forces, from the patrol boats to the motorcycle units. The war simulation took place because Washington was planning on attacking Iran soon after invading Iraq in 2003.

The scenario in the 2002 war game started with the U.S., codenamed “Blue,” giving Iran a one-day ultimatum to surrender in the year 2007. The war game’s date of 2007 would chronologically correspond to U.S. plans to attack Iran after the Israeli attack on Lebanon in 2006, which was to extend, according to military plans, into a broader war against Syria. The war against Lebanon, however, did not go as planned and the U.S. and Israel realized that if Hezbollah could challenge them in Lebanon then an expanded war with Syria and Iran would be a disaster.

In Millennium Challenge 2002’s war scenario, Iran would react to U.S. aggression by launching a massive barrage of missiles that would overwhelm the U.S. and destroy sixteen U.S. naval vessels – an aircraft carrier, ten cruisers, and five amphibious ships. It is estimated that if this had happened in real war theatre context, more than 20,000 U.S. servicemen would have been killed in the first day following the attack. [6]

Next, Iran would send its small patrol boats – the ones that look insignificant in comparison to the U.S.S. John C. Stennis and other large U.S. warships – to overwhelm the remainder of the Pentagon’s naval forces in the Persian Gulf, which would result in the damaging and sinking of most of the U.S. Fifth Fleet and the defeat of the United States. After the U.S. defeat, the war games were started over again, but “Red” (Iran) had to operate under the assumption of handicaps and shortcomings, so that U.S. forces would be allowed to emerge victorious from the drill. [7] This outcome of the war games obviated the fact that the U.S. would have been overwhelmed in the context of a real conventional war with Iran in the Persian Gulf.

Hence, the formidable naval power of Washington is handicapped both by geography as well as Iranian military capabilities when it comes to fighting in the Persian Gulf or even in much of the Gulf of Oman. Without open waters, like in the Indian Ocean or the Pacific Ocean, the U.S. will have to fight under significantly reduced response times and, more importantly, will not be able to fight from a stand-off (militarily safe) distance. Thus, entire tool boxes of U.S. naval defensive systems, which were designed for combat in open waters using stand-off ranges, are rendered unpractical in the Persian Gulf.

Making the Strait of Hormuz Redundant to Weaken Iran?

The entire world knows the importance of the Strait of Hormuz and Washington and its allies are very well aware that the Iranians can militarily close it for a significant period of time. This is why the U.S. has been working with the GCC countries – Saudi Arabia, Qatar, Bahrain, Kuwait, Oman, and the U.A.E. – to re-route their oil through pipelines bypassing the Strait of Hormuz and channelling GCC oil directly to the Indian Ocean, Red Sea, or Mediterranean Sea. Washington has also been pushing Iraq to seek alternative routes in talks with Turkey, Jordan, and Saudi Arabia.

Both Israel and Turkey have also been very interested in this strategic project. Ankara has had discussions with Qatar about setting up an oil terminal that would reach Turkey via Iraq. The Turkish government has attempted to get Iraq to link its southern oil fields, like Iraq’s northern oil fields, to the transit routes running through Turkey. This is all tied to Turkey’s visions of being an energy corridor and important lynchpin of transit.

The aims of re-routing oil away from the Persian Gulf would remove an important element of strategic leverage Iran has against Washington and its allies. It would effectively reduce the importance of the Strait of Hormuz. It could very well be a prerequisite to war preparations and a war led by the United States against Tehran and its allies.

It is within this framework that the Abu Dhabi Crude Oil Pipeline or the Hashan-Fujairah Oil Pipeline is being fostered by the United Arab Emirates to bypass the maritime route in the Persian Gulf going through the Strait of Hormuz. The project design was put together in 2006, the contract was issued in 2007, and construction was started in 2008. [8] This pipeline goes straight from Abdu Dhabi to the port of Fujairah on the shore of the Gulf of Oman in the Arabian Sea.

In other words, it will give oil exports from the U.A.E. direct access to the Indian Ocean. It has openly been presented as a means to ensure energy security by bypassing Hormuz and attempting to avoid the Iranian military. Along with the construction of this pipeline, the erection of a strategic oil reservoir at Fujairah was also envisaged to also maintain the flow of oil to the international market should the Persian Gulf be closed off. [9]

Aside from the Petroline (East-West Saudi Pipeline), Saudi Arabia has also been looking at alternative transit routes and examining the ports of it southern neighbours in the Arabian Peninsula, Oman and Yemen. The Yemenite port of Mukalla on the shores of the Gulf of Aden has been of particular interest to Riyadh. In 2007, Israeli sources reported with some fanfare that a pipeline project was in the works that would connect the Saudi oil fields with Fujairah in the U.A.E., Muscat in Oman, and finally to Mukalla in Yemen. The reopening of the Iraq-Saudi Arabia Pipeline (IPSA), which was ironically built by Saddam Hussein to avoid the Strait of Hormuz and Iran, has also been a subject of discussion for the Saudis with the Iraqi government in Baghdad.

If Syria and Lebanon were converted into Washington’s clients, then the defunct Trans-Arabian Pipeline (Tapline) could also be reactivated, along with other alternative routes going from the Arabian Peninsula to the coast of the Mediterranean Sea via the Levant. Chronologically, this would also fit into Washington’s efforts to overrun Lebanon and Syria in an attempt to isolate Iran before any possible showdown with Tehran.

The Iranian Velayat-90 naval drills, which extended in close proximity to the entrance of the Red Sea in the Gulf of Aden off the territorial waters of Yemen, also took place in the Gulf of Oman facing the coast of Oman and the eastern shores of the United Arab Emirates. Amongst other things, Velayat-90 should be understood as a signal that Tehran is ready to operate outside of the Persian Gulf and can even strike or block the pipelines trying to bypass the Strait of Hormuz.

Geography again is on Iran’s side in this case too. Bypassing the Strait of Hormuz still does not change the fact that most of the oil fields belonging to GCC countries are located in the Persian Gulf or near its shores, which means they are all situated within close proximity to Iran and therefore within Iranian striking distance. Like in the case of the Hashan-Fujairah Pipeline, the Iranians could easily disable the flow of oil from the point of origin. Tehran could launch missile and aerial attacks or deploy its ground, sea, air, and amphibious forces into these areas as well. It does not necessarily need to block the Strait of Hormuz; after all preventing the flow of energy is the main purpose of the Iranian threats.

The American-Iranian Cold War

Washington has been on the offensive against Iran using all means at its disposal. The tensions over the Strait of Hormuz and in the Persian Gulf are just one front in a dangerous multi-front regional cold war between Tehran and Washington in the broader Middle East. Since 2001, the Pentagon has also been restructuring its military to wage unconventional wars with enemies like Iran. [10] Nonetheless, geography has always worked against the Pentagon and the U.S. has not found a solution for its naval dilemma in the Persian Gulf. Instead of a conventional war, Washington has had to resort to waging a covert, economic, and diplomatic war against Iran.

Mahdi Darius Nazemroaya is a Sociologist and award-winning author. He is a Research Associate at the Centre for Research on Globalization (CRG), Montreal. He specializes on the Middle East and Central Asia. He has been a contributor and guest discussing the broader Middle East on numerous programs and international networks such as Al Jazeera, Press TV and Russia Today. Nazemroaya was also a witness to the “Arab Spring” in action in North Africa. While on the ground in Libya during the NATO bombing campaign, he reported out of Tripoli for several media outlets. He sent key field dispatches from Libya for Global Research and was Special Correspondent for Pacifica’s syndicated investigative program Flashpoints, broadcast out of Berkeley, California. His writings have been published in more than ten languages. He also writes for the Strategic Culture Foundation (SCF) in Moscow, Russia.

Notes

[1] Fars News Agency, “Foreign Warships Will Need Irans Permission to Pass through Strait of Hormuz,” January 4, 2011.
[2] Fars News Agency, “
Iran Warns US against Sending Back Aircraft Carrier to Persian Gulf,” January 4, 2011.
[3] Parisa Hafezi, “
Iran threatens U.S Navy as sanctions hit economy,” Reuters, January 4, 2012.
[4] Fariborz Haghshenass, “Iran’s Asymmetric Naval Warfare,” Policy Focus, no.87 (Washington, D.C.: Washington Institute for Near Eastern Policy, September 2010).
[5] Julian Borger, “
Wake-up call,” The Guardian, September 6, 2002.
[6] Neil R. McCown, Developing Intuitive Decision-Making In Modern Military Leadership (Newport, R.I.: Naval War College, October 27, 2010), p.9.
[7] Sean D. Naylor, “War games rigged? General says Millennium Challenge ‘02 ‘was almost entirely scripted,’” Army Times, April 6, 2002.
[8] Himendra Mohan Kumar, “
Fujairah poised to be become oil export hub,” Gulf News, June 12, 2011.
[9] Ibid.
[10] John Arquilla, “The New Rules of War,” Foreign Policy, 178 (March-April, 2010): pp.60-67.

The Secret Wars of the Saudi-Israeli Alliance

By Mahdi Darius Nazemroaya
Global Research
May 29, 2011

As an old Chinese proverb says, crisis can be used as an opportunity by some.

Tel Aviv, Washington and NATO are taking advantage of the upheavals in the Arab World. Not only are they fighting against the legitimate aspirations of the Arab people, they are manipulating  the Arab geo-political landscape as part of their strategy to control Eurasia.

Sectarian Conflicts in Egypt: A Means to Weaken the Egyptian State

Egypt is ruled by a counter-revolutionary military junta. Despite the increasing assertiveness of the Egyptian people, the old regime is still in place. Yet, its foundations are becoming shakier as the Egyptian people become more radical in their demands.

Like in the Mubarak era, the military regime in Cairo is also allowing sectarianism to spread in Egypt in an effort to create divisions within Egyptian society. In early-2011 when Egyptians stormed government buildings they discovered secret papers that showed that the regime was behind the attacks on Egypt’s Christian community.

Recently, so-called  Salafist extremists have attacked Egyptian minorities including Christians but also Shiite Muslims. Egyptian activists and leaders in the Coptic and Shia community are pointing their fingers at the military junta in Cairo, Israel, and Saudi Arabia.

The Egyptian military junta, Tel Aviv, and the Al-Sauds are all part of an ominous alliance. This grouping is the backbone of the U.S. imperial structure in the Arab World. They are dependent on Washington. They prevail inasmuch as the U.S. remains dominant in Southwest Asia and North Africa.

The Al-Sauds are now working with Washington in Egypt to establish a supposedly Islamic government. This is being done through political parties that the Al-Sauds have funded and helped organize. The new so-called Salafist movements are primary examples of this. It also appears that the Muslim Brotherhood or at least branches of it have been co-opted.

The Saudi-Israeli Alliance and the Politics of Division

The ties of the Al-Sauds to Tel Aviv have in recent years become increasingly visible and pervasive. This secret Israeli-Saudi alliance exists within the context of a broader Khaliji-Israeli alliance. The alliance with Israel is formed through strategic cooperation between the ruling families of Saudi Arabia and the Arab sheikhdoms in the Persian Gulf.

Together Israel and the Khaliji ruling families form a frontline for Washington and NATO against Iran and its regional allies. The alliance also acts on behalf of Washington to destabilize the region. The roots of chaos in Southwest Asia and North Africa are this Khaliji-Israeli alliance.

In line with the U.S. and the E.U., it is the alliance formed by Israel and the Khaliji rulers that has worked to create ethnic divisions between Arabs and Iranians, religious divisions between Muslims and Christians, and confessional divisions between Sunnis and Shiites. It is the “politics of division” or “fitna” that has also served to keep the Khaliji ruling families in power and Israel in its place. Israel and the Khaliji ruling families would not survive without the regional fitna.

The Al-Sauds and Tel Aviv are the authors of the Hama-Fatah split and the estrangement of Gaza from the West Bank. They have worked together in the 2006 war against Lebanon with a view to crushing Hezbollah and its political allies. Saudi Arabia and Israel have also cooperated in spreading sectarianism and sectarian violence in Lebanon, Iraq, the Persian Gulf, Iran, and now Egypt.

Israel and the Khaliji monarchies serve Washington in its objective to ultimately neutralize Iran and its allies, as well as any form of resistance against the U.S. in Southwest Asia and North Africa. This is why the Pentagon has been heavily arming Tel Aviv and the Khaliji sheikhdoms. Washington has also been setting up missile shields aimed at Iran and Syria in Israel and the Arab sheikhdoms.

Iranophobia

The alliance between the Khaliji sheikhdoms and Israel has been instrumental in creating a wave of Iranophobia in the Arab World. The ultimate objective of Iranophobia is to transform Iran in the eyes of Arab public opinion, into an enemy of the Arab people, thereby distracting attention from the real enemies of the Arab World, namely the neo-colonial powers which occupy and control Arab lands.

Iranophobia is a PsyOp, an instrument of propaganda. The strategic objective is to isolate Iran and reconfigure the geo-political landscape of Southwest Asia and North Africa. Moreover, Iranophobia has been used by the Khaliji ruling families, from the U.A.E. to Saudi Arabia and Bahrain, as a pretext for the repression of their own people, who are demanding basic freedoms and democratic rights in the sheikhdoms.

The March 14 Alliance in Lebanon, which is a collection of Khaliji-U.S. clients and Israeli allies, has also used Iranophobia and the “politics of division” to try to attack Hezbollah and its political allies in Lebanon The objective is to weaken and undermine Lebanese-Iranian and Lebanese-Syrian ties. The March 14 Alliance, specifically the Hariri-controlled Future Movement, has imported into Lebanon the so-called Salafist fighters of Fatah Al-Islam with the objective of getting them to attack Hezbollah. The Future Movement has also had a role in the Israeli-Saudi-U.S. project to destabilize Syria and remove it from the Resistance Bloc.

Mahdi Darius Nazemroaya specializes in the Middle East and Central Asia. He is a Research Associate of the Centre for Research on Globalization (CRG).

Consolidating US Money Power: The Four Horsemen of Global Banking

By Dean Henderson
Global Research
May 25, 2011

If you want to know where the true power center of the world lies, follow the money – cui bono.  According to Global Finance magazine, as of 2010 the world’s five biggest banks are all based in Rothschild fiefdoms UK and France.

They are the French BNP ($3 trillion in assets), Royal Bank of Scotland ($2.7 trillion), the UK-based HSBC Holdings ($2.4 trillion), the French Credit Agricole ($2.2 trillion) and the British Barclays ($2.2 trillion).

In the US, a combination of deregulation and merger-mania has left four mega-banks ruling the financial roost.  According to Global Finance, as of 2010 they are Bank of America ($2.2 trillion), JP Morgan Chase ($2 trillion), Citigroup ($1.9 trillion) and Wells Fargo ($1.25 trillion).  I have dubbed them the Four Horsemen of US banking Consolidating the Money Power.

The September 2000 marriage which created JP Morgan Chase was the grandest merger in a frenzy of bank consolidation that took place throughout the 1990’s.  Merger mania was fed by a massive deregulation of the banking industry including revocation of the Glass Steagal Act of 1933, which was enacted after the Great Depression to curb the banking monopolies which had caused the 1929 stock market crash and precipitated the Great Depression.

In July 1929 Goldman Sachs launched two investment trusts called Shenandoah and Blue Ridge.  Through August and September they touted these trusts to the public, selling hundreds of millions of dollars worth of shares through the Goldman Sachs Trading Corporation at $104/share.  Goldman Sachs insiders were bailing out of the stock market.  By the fall of 1934 the trust shares were worth $1.75 each.  One director at both Shenandoah and Blue Ridge was Sullivan & Cromwell lawyer John Foster Dulles. [1]

John Merrill, founder of Merrill Lynch, exited the stock market in 1928, as did insiders at Lehman Brothers.  Chase Manhattan Chairman Alfred Wiggin took his “hunch” to the next level, forming Shermar Corporation in 1929 to short the stock of his own company.  Following the Crash of 1929, Citibank President Charles Mitchell was jailed for tax evasion. [2]

In February 1995 President Bill Clinton announced plans to wipe out both Glass Steagal and the Bank Holding Company Act of 1956- which barred banks from owning insurance companies and other financial entities. That day the old opium and slave trader Barings went belly up after one of its Singapore-based traders named Nicholas Gleason got caught on the wrong side of billions of dollars in derivative currency trades. [3]

The warning went unheeded.  In 1991 US taxpayers, already billed over $500 billion dollars for the S&L looting, were charged another $70 billion to bail out the FDIC, then footed the bill for a secret 2 1/2-year rescue of Citibank, which was close to collapse after the Latin American debt crunch hit home.  With their bill’s paid by US taxpayers and bank deregulation a done deal, the stage was set for a slew of bank mergers like none the world had ever seen.

Reagan Undersecretary of Treasury George Gould had stated that concentration of banking into five to ten giant banks was what the US economy needed.  Gould’s nightmare vision was about to come true.

In 1992 Bank of America bought its biggest West Coast rival Security Pacific, then swallowed up the looted Continental Bank of Illinois for cheap.  Bank of America later took a 34% stake in Black Rock (Barclays owns 20% of Black Rock) and an 11% share in China Construction Bank, making it the nation’s second largest bank holding company with assets of $214 billion.  Citibank controlled $249 billion. [4]

Both banks have since increase their assets to around $2 trillion each.

In 1993 Chemical Bank gobbled up Texas Commerce to become the third largest bank holding company with $170 billion in assets.  Chemical Bank had already merged with Manufacturers Hanover Trust in 1990.

North Carolina National Bank and C&S Sovran merged into Nation’s Bank, then the fourth largest US bank holding company, with $169 billion in its war chest.  Fleet Norstar bought Bank of New England, while Norwest bought United Banks of Colorado.

Throughout this period US bank profits were soaring, breaking records with each new quarter.  The year 1995 broke all previous records for bank mergers.  Deals totaling $389 billion occurred that year. [5]

The Big Five investment banks, who had just made boatloads of money steering Latin American debt negotiations, now made a killing steering the bank and industrial merger- mania of the 1980’s and 1990’s.

According to Standard & Poors the top five investment banks were Merrill Lynch, Goldman Sachs, Morgan Stanley Dean Witter, Salomon Smith Barney and Lehman Brothers.  One deal that fell through in 1995 was a proposed merger between London’s biggest investment bank S. G. Warburg and Morgan Stanley Dean Witter.  Warburg chose Union Bank of Switzerland as its suitor instead, creating UBS Warburg as a sixth force in investment banking.

After the 1995 feeding frenzy, the money center banks moved aggressively into the Middle East, establishing operations in Tel Aviv, Beirut and Bahrain- where the US 5th Fleet was setting up shop.  Bank privatizations in Egypt, Morocco, Tunisia and Israel opened the door to the mega-banks in those nations.  Chase and Citibank lent money to Royal Dutch/Shell and Saudi Petrochemical, while JP Morgan advised the Qatargas consortium led by Exxon Mobil. [6]

The global insurance industry had a case of merger mania as well.  By 1995 Traveler’s Group had bought Aetna, Warren Buffet’s Berkshire Hathaway had eaten up Geico, Zurich Insurance had swallowed Kemper Corporation, CNA Financial had purchased Continental Companies and General RE Corporation had sunk its teeth into Colonia Konzern AG.

In late 1998 the Citibank colossus merged with Travelers Group to become Citigroup, creating a behemoth worth $700 billion that boasted 163,000 employees in over 100 countries and included the firms of Salomon Smith Barney (a joint venture with Morgan Stanley), Commercial Credit, Primerica Financial Services, Shearson Lehman, Barclays America, Aetna and Security Pacific Financial. [7]

That same year Bankers Trust and US investment bank Alex Brown were swooped up by Deutsche Bank, which had also purchased Morgan Grenfell of London in 1989.  The purchase made Deutsche Bank the world’s largest bank at the time with assets of $882 billion.  In January 2002, Japanese titans Mitsubishi and Sumitomo combined operations to create Mitsubishi Sumitomo Bank, which surpassed Deutsche Bank with assets of $905 billion. [8]

By 2004 HSBC had become the world’s second largest bank.  Six years later all three behemoths had been eclipsed by both BNP and Royal Bank of Scotland.

In the US, the George Gould nightmare reached its ugly nadir just in time for the new millennium when Chase Manhattan swallowed up Chemical Bank.  Bechtel banker Wells Fargo bought Norwest Bank, while Bank of America absorbed Nations Bank. The coup de grace came when the reunified House of Morgan announced that it would merge with the Rockefeller Chase Manhattan/Chemical Bank/ Manufacturers Hanover machine.

Four giant banks emerged to rule the US financial roost.  JP Morgan Chase and Citigroup were kings of capital on the East Coast.  Together they control 52.86% of the New York Federal Reserve Bank. [9]  Bank of America and Wells Fargo reigned supreme on the West Coast.

During the 2008 banking crisis these firms got much larger, receiving a nearly $1 trillion government bailout compliments of Bush Treasury Secretary and Goldman Sachs alumni Henry Paulsen; while quietly taking over distressed assets for pennies on the dollar.

Barclays took over Lehman Brothers.  JP Morgan Chase got Washington Mutual and Bear Stearns.  Bank of America was handed Merrill Lynch and Countrywide.  Wells Fargo swallowed up the nation’s 5th biggest bank- Wachovia.

The same Eight Families-controlled banks which for decades had galloped their Four Horsemen of oil roughshod through the Persian Gulf oil patch are now more powerful than at any time in history.  They are the Four Horsemen of US banking.

Notes

[1] The Great Crash of 1929. John Kenneth Galbraith. Houghton, Mifflin Company. Boston. 1979. p.148

[2] Ibid

[3] Evening Edition. National Public Radio. 2-27-95

[4] “Bank of America will Purchase Chicago Bank”. The Register-Guard. Eugene, OR. 1-29-94

[5] “Big-time Bankers Profit from M&A Fever”. Knight-Ridder News Service. 12-30-95

[6] “US Banks find New Opportunities in the Middle East”. Amy Dockser Marcus. Wall Street Journal. 10-12-95

[7] “Making a Money Machine”. Daniel Kadlec. Time. 4-20-98. p.44

[8] BBC World News. 1-20-02

[9] Rule by Secrecy: The Hidden History that Connects the Trilateral Commission, the Freemasons and the Great Pyramids”. Jim Marrs. HarperCollins Publishers. New York. 2000. p.74

 Dean Henderson is the author of Big Oil & Their Bankers in the Persian Gulf: Four Horsemen, Eight Families & Their Global Intelligence, Narcotics & Terror Network and The Grateful Unrich: Revolution in 50 Countries.  His Left Hook blog is at  www.deanhenderson.wordpress.com