Back to the BLOG? ..... Back to the HOMEPAGE? March 2009: Lots of people wondering what’s coming next from the Obama adminstration. What’s the next shoe to drop? What if I told you there’s a way to know? In fact it’s already in writing because the US is simply following a global script that’s available for all to see. Would you believe it? You’d probably think I was talking about the Shadow Government. And I probably am, but these documents are in plain sight (as is most of the shadow government work). Listener Kerri is at it again, doing all the research I don’t. God love her. Here’s her latest email with wonderful embedded links. Even if you don’t click on any, read it. It’ll answer a lot more questions than it raises: I'm discovering that waaaaay too many of these recent "actions" by either the Fed, the Treasury, or the new Administration appear to be very similar or outright identical to the IMF's recommendations and preferences from past years, and not necessarily Mr. Obama's (at least from what he said to get elected). I found these "recommendations" presented in the yearly "Article IV Consulations" that we do with the IMF. Most of them, nearly all of them, have been repeated year after year by the IMF to US as "Policy Advice" in "Consultations," and have not been implemented. Now all the sudden, it seems they are frantically falling into place. But there's no secret government. :) The 2008 Article IV Consulation released last July is full of bad news, but totally misses the mark as to the severity of what it was actually reporting. Its very much worth looking at. A lot of good info that no one bothered to add up. Its a very different tune than the 2006 version , for sure.). Check this out from the 2008 report: That's not the funny part yet...here's the punchline: LOL! But the reason I'm bringing these up is because now so many of the recommendations are suddenly being implemented. And the ones that have not yet been implemented-or even talked about--might be just over the horizon. Reading these reports might be like reading our future national/global policy. The 2006 IMF Consultations is almost identical to the Obama/Giethner plan we are currently seeing. It is as if they are literally using it as a playbook. Or just being told what to do. See if you agree: From page 4 of the 2006 Article IV Consultation: IMF: "There would also seem merit in the Fed providing a more explicit statement of its inflation objective to help further anchor inflation expectations." During his reign, Greenspan refused the idea of setting a formal inflation target, but Bernanke has apparently always had a different opinion, and last year there was an "informal" target. Well, this year that has changed, and for the first time ever in our country, the Fed has indeed set a target rate. Announced Feb 19 from the minutes of the FOMC, the official target rate is 1.7-2%. What a coincidence. IMF: "Publishing a regular Financial Stability Report and undertaking a Fund FSAP could provide further insights on these challenges." Now all the sudden, we're undergoing the IMF's FSAP months ahead of schedule. I wouldn't assume that Obama even ever heard of an FSAP before getting elected, but Giethner certainly could explain it to him I'm sure. IMF: "There would seem merit in re-introducing caps on discretionary spending, as well as pay-as-you-go (PAYGO) requirements covering both entitlement spending and tax measures. On the revenue side, the priority should be on reforms that would broaden the revenue base by reducing tax preferences, but consideration could also be given to consumption-based indirect taxes." Barack Obama, after first supporting PAYGO, and then not supporting it, and then supporting it again, and then saying during the campaign that his big ideas would not be "sacrificed" by deficit concerns...Obama has now come back around. PAYGO is the way to go, man. As for consumption based taxes? You'll read about that below. IMF: "Moreover, given the much larger financial shortfall of the Medicare system, fundamental reform of the U.S. health care system seems necessary." Obama has always been on this horse, but recent rhetoric imbues an economic edge. Just today (Mar 2), Obama announced his "Healthcare Team" and said: "Healthcare is one of the fastest growing expenses in the Federal budget, and it is one we simply cannot sustain. That is why we cannot fail to act again....we must realize that no longer is fixing our healthcare system just a moral imperative, it is a fiscal imperative." And an IMF imperative, er, I mean.... IMF: "Care will also be needed to resist domestic protectionist sentiment and to ensure that bilateral trade initiatives complement multilateral approaches." Obama originally was called a protectionist (which of course I would take as a compliment!), but when the whole conflict with the Buy-American clauses in the Recovery Bill resulted in.... their disappearance! "The jury is out on how this administration is going on trade policy," said Steven Schrage, an international business analyst at the Center for Strategic and International Studies. "This will be a key test." (http://www.capitolhillblue.com/node/14650) A test? Guess who won. IMF: "Staff also suggested (to the Federal Reserve) it could be helpful to increase the frequency and forward-looking element of the biannual Monetary Policy Report, to which officials (at the Fed) responded that it would be difficult given the size and diversity of the FOMC." (page 13) Sudden charge of heart: Added to the main page at the Fed's website, and elaborated here, Press Release dated Feb 25 2009: And more stars align when we throw in the 2008 Consultations.... From the 2008 Article IV Consultation: IMF: "Issuing 'negative equity warrants' that allow the creditor to share profits from future sales could expand the scope of the current scheme, which runs the risk of limited take-up by lenders. In addition, bankruptcy reform allowing judges to "cram down" reduced mortgage principal on primary residences—as is already allowed for other houses and all other debt—would provide further incentives for creditors to participate." (page 28) This idea was first kicked around by the OTS, called "negative equity certificates" in Feb 2008 (Bloomberg), but it was basically shelved. Well, its back: Obama included a new hybrid version of it in his big Housing Plan as the "31% rule" where the government will cover the differences on refinancing to make the monthly payments 31% max of the homeowners income (quick, lets apply for McDonalds!). It achieves the same idea as the original certificates, but you don't have to sell you house. And the "cram down"? You should have been laughing when you read that, man, right from the IMF's own document. The Cram Down is our new plan. Or as Obama calls its in the plan, "Allowing Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options." IMF: "In particular, significantly extending the length of existing swaps of mortgage-backed securities for Treasuries using the government’s balance sheet, as in the United Kingdom, could limit disruption from further market illiquidity." (page 29) This has already happened. Who knows how much longer the Fed with offer this. Its totally ridiculous, too: trade MBS for Treasuries? Trade worthless, negative-equity MBS for interest-bearing US Treasuries? Man. Leave it up to the IMF or the Fed to come up with that one. IMF: "With budget deficits projected to rise despite a squeeze in non-defense discretionary spending, revenue increases need to be considered in the medium term. Consumption taxes, energy or carbon taxes, and elimination of unlimited tax deductions for employers' health insurance and mortgage interest would improve efficiency." (page 40) Here the 2008 Consultation is reiterating the 2006 version. Consumption taxes, Energy taxes and Carbon taxes? Consider these comments on Obama's Feb 2009 Plan: Revenue from carbon taxes? He trying to make it part of the 2009 Federal Budget. As for the elimination of unlimited tax deductions for mortgage interest? That's part of the plan, too. "Obama proposed to cap Mortgage interest deduction for higher income taxpayers." I think there are definitely some "coincidences" to say the least when it comes to the similarity between our new policy and IMF policy. Someone might say, "Oh well, great minds think alike," but that would actually be more reason NOT to listen to anything the IMF says or suggests, because according them, "Officials regarded risks as relatively balanced as they were more sanguine about the potential impact of the housing slowdown on spending and placed greater weight on upside potential from business investment, exports, and productivity." (2008, p 6) Oh yeah! But there is one more thing mentioned in the "Policy Advice" from the 2008 IMF Consultation: Under the "Long-Standing Policy Fund Advice," (page 40) "Issue: There are concerns about the impact of Basel II implementation on minimum capital floors and that it may engender procyclical lending. "Basel II implementation?" What the? Now this is where it gets very bizarre... BASEL II You know the Bank of International Settlements is based in Basel, Switzerland, so your mind probably already lit up when you read "Basel II." Yes, Basel as in CH, and yes, Basel as in BIS. I have never heard of this plan until today, when I saw the phrase in the document I cited above, the IMF United States: 2006 Article IV Consultation—Staff Report. Page 13 mentions it: "Basel II. Bank regulators expected some decline in minimum capital requirements after the shift to Basel II norms in 2009. They acknowledged that the impact on bank balance sheets was uncertain, in part because the role of the economic cycle would only become fully evident after the system was implemented. However, capital adequacy standards could be recalibrated, if necessary, as the transition to the new framework was to take place over several years." and again, from the 2008 "Long Standing Policy Advice:" "Issue: There are concerns about the impact of Basel II implementation on minimum capital floors and that it may engender procyclical lending. "Basel II" refers to an agenda established by the BIS (Basel II Accord -- before you click, be warned its 284 pages long!), with original ideation in 1999, some discussion in 2001-2003, the first agreed text in 2004, and final formulation and presentation to member banks through the "Basel Committee" in November 2005. According to the document, "The Basel Committee on Banking Supervision is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1975. It consists of senior representatives of bank supervisory authorities and central banks from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom, and the United States. It usually meets at the Bank for International Settlements in Basel, where its permanent Secretariat islocated." This is the BCBS, remember that. Okay, so we got the BIS chillin' out in Switzerland making rules for the globe....so who owns the BIS? The BIS, as of 2005, is wholly owned (BIS Press Release) by its member central banks, which of course includes the Federal Reserve Bank, primarily the FRBNY. "Established in 1930 in the form of a company limited by shares, the BIS today is wholly owned and controlled by its 55 member central banks." Before 2005, there were actually some individuals who owned shares of this "company." Obviously, seeing as its only stockholders are central banks, its Board of Directors must also be central bankers, right? Oh yeah. Check it out: At this point, it might be appropriate to point of Section 7 of the BIS "Code of Conduct": "Board members should maintain the confidentiality of non-public information about the BIS or its activities or operations to which they have access by virtue of their functions as Board members ("Confidential BIS Information"), although they may disclose this information to other officers or employees of their home central bank on a need-to-know basis, provided such officers or employees are under a similar obligation of confidentiality to their home central bank." Conflict of interest? Maybe, if the Fed was actually responsible to us in the first place. But just in case you felt sorry for poor Bernanke being at those BIS secret meetings all alone, don't worry. He's got company. I understand he knows the Chairman of the BIS' Committee on Payment and Settlement Systems (CPSS)--his name is Timothy Giethner. I guess he also knows one of the members of the BIS' BCBS (remember from above?) Basel Committee on Banking Supervision , his name is also Timothy Giethner. As Giethner is now no longer a representative (at least officially!) of a member central bank since leaving the CEO post at the FRBNY and moving to Treasury Secretary, he may no longer be eligible for his past rolls at the BIS. I don't know, but he's still listed on the BIS's site in that position. I'm sure they'd let him stop by for tea, at least. But back to the Basel II agreement. The Federal Reserve has been reviewing this document since at least 2006. Here's some relevant info from a Press Release dated March 30 2006: "The proposed rule (Basel II agreements) would require the largest internationally active banks to enhance the measurement and management of their risks, including credit risk and operational risk. It also would require these banks to have rigorous processes for assessing overall capital adequacy in relation to their total risk profile and to publicly disclose information regarding their risk profile and capital adequacy...." "Given the increasing complexity of the activities at our largest banks, and the related risks of those activities, I fully support efforts to develop a more appropriately risk-sensitive capital framework for those institutions," said Board Chairman Ben S. Bernanke. "The current Basel I framework has become increasingly inadequate for capturing the risks at large, complex U.S. banking organizations." Recent references to Basel II, as late as a week ago on Feb 22 2009, show things are really coming to a head because of the variance in timetables of countries implementing the Accord. On Feb 22, in Bloomberg, the German Deputy Finance Minister said, "Business policy by banks is part of this crisis. 'We need to agree' means, probably by augmenting Basel II banking rules, to force them (banks) to save for when economies cool." But this is NOT regulation. Regulation is from an outside authority, like a government. Basel II is not backed by any government--its backed by the BIS. And the BIS is a private, "wholly owned" company representing 55 central banks, most of which are also wholly-owned and private. Basel II is self-regulation, banks regulating banks, and replacing all sovereign national regulators and regulations: "In the Basel II agreement, banks were to dictate their own capital requirements, allowing them to set their own level of risk rather than letting it be dictated by regulators. European countries adopted the Basel II rules in 2007, and the U.S. slowly began to implement them in 2008. But the financial meltdown happened first." (http://www.whorunsgov.com/Profiles/Daniel_K._Tarullo) Debate about this Basel II business was and still is hot, and its not settled. Yet. In testimony before the House Financial Services Committee in 2005, then-former Rep John LaFalce gave a scathing admonition of the "premises" of the Basel II Accord, with the title of his statements "BASEL II PLAN IS A CRISIS IN THE MAKING". LaFalce said: "First, it is based on a fanciful premise that sophisticated risk-management models enable banks to allocate capital to each asset that is neither too low, nor too high, but just right. I hope my former colleagues and others do not gamble the stability of our domestic and global financial system on this theory." "With every large bank in the world lining up to play the Basel II capital game, and a financial system that is increasingly interdependent, the consequences of even an inadvertent mistake could be devastating. The odds are too high that Basel II, if adopted, could trigger a systemic financial crisis. " Amplifying the supranational basis of Basel II as superceding domestic/sovereign regulation, LaFalce said: "Banks will implement Basel II only if they know their capital requirements will decline. That will also create powerful incentives, competitive pressures, and irresistible temptations for the nation's largest banks to revise their models over time to achieve the lowest amount of capital reserves possible." "Banks will be able to artificially improve their performance by manipulating capital levels, much as we have seen some companies manipulate earnings." "Although some at the Federal Reserve have provided assurances that the leverage ratio will be maintained under Basel II, some have left that question open. And powerful institutional and lobbying forces have already voiced their preference for capital regulations based exclusively on risk based credit models, and have called for the elimination of the leverage ratio." (You can see this convoluted "Credit Risk Models" in the BIS document itself) LaFalce continued: "I see no consideration of safety and soundness at all in the Basel II debate, and no recognition of the danger of adopting a new capital regulation that goes in the exact opposite direction from the recent reforms concerning corporate governance, regulatory oversight, and internal controls." Wow, tell us how you really feel. Rep LaFalce is not alone in his disgust for the Basel II, and as he indicated with several references to the Federal Reserve's apparently loving of it, the regulatory bodies were not so enthusiatic. The FDIC was/is one: From the FDIC's Critique of Revised Basel II: (http://www.fdic.gov/bank/analytical/cfr/2006/sept/JarrowR.pdf) "The first conclusion is that the revised Basel II required capital rule (standardized or IRB (foundation or advanced), does not generate a good approximation to the ideal regulatory capital. The major problems are that the risk measure (VaR) is not conceptually appropriate, and that the assumptions used to implement VaR are inconsistent with market evidence. The second conclusion, based on the XYZ theory of regulatory capital, is that (due to conclusion one) the revised Basel II capital rule should only be implemented in conjunction with alternative existing rules for determining capital, e.g. the FDICIA leverage based rule, and it should not replace the existing rules." (page 14) I'm beginning to wonder how much of this sentiment was actually caused by Basel II, as all the banksters are trying to use it for a justification for more Basel II, quicker. "We need to agree"? When this discussion was happening in Congress in 2005/2006, there was not much "agree." A lot of people have never even heard of it, either. But I can tell you one person who I'm sure has heard of it, though: Barack Obama, even if he just heard about it. I went through the list of members he selected for his "Economic Recovery Advisory Board" in search of links to the BIS. Volker was obvious, and he is the head. Of course, Volker spent many years at the BIS. But beyond him, I was not surprised to be successful--again. Introducing Roger Ferguson, current CEO of TIAA-CREF, former Vice Chairman of the Board of Governors of the Federal Reserve System, the big link. Besides the Fed ties, while Ferguson was at the Fed, he was also Chairman of the BIS's Financial Stability Forum from 2003-2006, where he came a major architect and advocate for--guess what?--the Basel II. His thoughts on Basel II: "We have concluded, therefore, that US chartered banks (including subsidiaries of foreign banks) that are both large in scale and have significant foreign activities should be required to adopt Basel II. These US banks are significant competitors in foreign markets and must, if we are to honor our commitments to other countries, be subject to the new Accord...There are about ten such banks, and each one has been notified about the requirement." Ferguson, "Basel II--Scope of application in the United States." http://www.bis.org/review/r030613e.pdf I have not read the entire 284 page document, but there are some very specifically interesting and relevant parts that I noted in looking over it. First off, there is a whole section, Section II starting on page 15, "Credit Risk--the Standardised Approach." From what' I've read so far, "standardization" is definitely the goal. Or you can call it globalization. Apparently, while Geithner, Bernanke, and Ferguson and all very gung-ho about the Basel II, the reception of this plan at the Fed is not totally fawning. From an article in International Economy: "Indeed, sources inside the OCC say that the Fed’s own examiners also oppose Basel II, but have been silenced by the globalist tendency that dominates the Board of Governors’ research division." The article continues "Translated into simple language, the New Basel Accord proposes to use precisely those measures of risk and credit quality that caused such fiascos as Enron, WorldCom, and Parmalat, to name the most familiar names. The largest banks will employ risk models that are based on derivative indicators and academic assumptions about the statistical distribution of such events (defaults and restatements, for example) that do not accurately describe the real world. Third and most important, the Fed is pushing the Basel II framework as a panacea for the growing market risk created by the Fed’s profligate monetary policies. Throughout the post-bubble deflation, the Fed has flooded the market with fiat paper dollars, fueling the growth of derivatives activity and market volatility in general. The federal budget deficit and the Fed’s efforts to accommodate it are the two biggest sources of instability in the U.S. economy today." Had enough? But I'm note done! Obama's new pick to fill tone of the two open spots for governor at the Federal Reserve is Daniel Tarullo. You might not know him yet, but would you be surprised if his is somehow linked to the BIS and Basel II? How about this one: in 2008, he wrote a book--title: "Banking on Basel." His suggestions include strengthening the power of the Basel Committee to internationally regulate banks, and adopting an "International Leverage Requirement". Some are saying, he doesn't think Basel II goes far enough. So all this talk about Basel II and being governed by the BIS? What about national laws of the home countries? Oh, that is soooooo 1995. What if a country wanted to do something different? A rhetorical question since no one would want to do that in this global age, would they? You'll be pleased to know that Tarullo is a member of the CFR? He'll fit in at the Obama (or any) Administration! So how is the BIS doing these days? Perhaps it is ironic that the Press Release (http://www.bis.org/press/p080630.htm) from the last BIS meeting, the 78th Annual, is titled "BIS Annual Report: The unsustainable has run its course and policymakers face the difficult task of damage control." So how is the BIS doing these days? "The Bank’s balance sheet grew to SDR 311 billion (USD 511 billion) at end-March 2008. Official foreign currency reserves deposited with the BIS rose from SDR 222 billion to SDR 236 billion (USD 388 billion). This corresponds to a year-on-year increase of around 6%. The BIS’s 55 shareholding central banks will receive a dividend of SDR 265, around 4% higher than that for the previous financial year." (By the way, SDRs (Special Drawing rights) are an official international reserve asset issued by the IMF to its members, who can exchange them for freely useable currency.)" Well, how about that. (And hey, how the hell does a "company" with a $511 balance sheet justify using a .org address?!) As one of them put it "At the BIS, there are no countries. Only banks." But I'm making a full circle here ...Back to IMF Article IV... In case you're curious, "Article IV" as mentioned above with the Consultations and all that, refers to that article in the IMF's "Articles of Agreement". The original 1944 Bretton Woods version of that was changed after BW fell apart, and so we are under the 1976 code. Article IV talks mainly about the Fund mission, but there is one part, Section 4, that is very interesting. Section 4. Par values After Nixon shut the doors on international US dollar-gold reserve exchanges, the IMF ceased gold exchanges in 1971 and in 1976 responded with the "Bretton Woods II" versions of Article IV, which is the one above. The reason I bring up the new Article IV and make bold the "evolution of the monetary system, with particular reference to sources of liquidity" being subject to a "85% percentage majority" that could introduce "a widespread system of exchange arrangements" is because, of late, we have been hearing about not Bretton Woods II or the IMF, but the "new Bretton Woods." UK PM Brown was recently quoted, we "must have a new Bretton Woods - building a new international financial architecture for the years ahead" (Telegraph). Of course, as that article points out, the original Bretton Woods, again, was tied to gold. To what would this "new" currency be tied? Former Fed Chairman Paul Volker has a famous quote, "A global economy requires a global currency." Of course, Volker is now head of Obama's "Economic Recovery Team (this is alarming!)." This is also very discouraging to me--the prospect of our nation's "recovery" being headed by an individual who advocates for a global currency. He is certainly not alone: I just learned about another group, website and all, www.singleglobalcurrency.org who are, obviously, major advocates of the idea and very vociferous about their plan to the IMF. They apparently very much see this current crisis as a valuable oppurtunity. That puts them in line with everyone from Rahm Emanuel to Daniel Tarullo to the BIS. Another piece of interesting info that my recent noising through IMF documents has uncovered is something specific about gold. Of course, I knew and you knew that the Bretton Woods II (1976) did de-peg the other currencies from the dollar, after the dollar was de-pegged from gold, and hence de-pegged the other currencies from gold. BUT, I did not know that the Bretton Woods II actually prohibited member nations from basing their own currencies on gold, outright! Hmm. The IMF says "no gold" as a reserve to your currency--hey, that's the best evidence yet that gold is a reserve currency! I don't imagine globalists like Volker and Brown have any intention of suggesting that, heaven-forbid, we might actually have a "new" currency based on limits, and controls, with a redeemable backing, but apparently, there in Article IV, is the clear reservation of gold as separate thing. Question is, for what? The BIS (oh, that again) is in charge of the IMF's gold, and for prohibiting gold as a reserve, the IMF sure has a damn lot of gold. It is not the property of the IMF, however, but the property of the "contributing" nations, but it is also not "subject to restitution to its members" either (http://www.imf.org/external/np/exr/facts/gold.htm). They hold over 3,200 tons, and I said on Thursday that this was the 5th largest in the world--let me correct that, because it seems they are the 3rd largest holder in the world: From The IMF's Factsheet "Gold in the IMF": - "The IMF has a systemic responsibility to avoid causing disruptions to the functioning of the gold market." Compare that to the Article IV prohibition of gold: Article IV, Section 2 (b)(i) Okay, whatever IMF. Totally schizo like most globalist institutions. So where is all this going? I don't know. But I have decided that watching IMF and BIS documents and press releases may prove to be the first indicator some new plan the Fed, Treasury, or Administration suddenly "thinks" up. There is a serious move toward the total bankster takeover, as Alex Jones might put it, and Basel II is a perfect example. Basel II is not really international--it's supranational. It is, as many critics have put it, banks regulating banks. Uniform and international standards rarely serve to "level the playing field", they usually just prohibit some players from playing. And let me hypothesize this, for which I have NO evidence whatever: Lets just say we do move to fully implement Basel II, and then we do move towards some gold-backed currency. And as part of the "capital requirements", the BIS--which under Basel II is the last authority--decides that banks and countries must have a certain amount of gold...who's got all the gold? The answer: the BANKS. The IMF (read: BIS!) has a "significant amount." And the United States (read: FED) has even more, but even in our own country, US gold is under the domain of the Fed, and the Fed actually leases it out. We don't even know how much of it the Fed has "leased" (do a search on "leasing gold" and you'll see its anything but "leasing" when a central bank does it), or sold, or stolen. I'm not saying we are moving to a global gold-backed single currency, I'm just saying that I don't trust these banks one bit! Money makes the world go 'round? This is the total consolidation of the regulatory authority of the PLANET into the hands of the Banks. |