An excellent top level analysis!
Behind the Panic: Financial Warfare and the Future of Global Bank Power
by F. William Engdahl
What’s clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub- prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout. Meanwhile Treasury Secretary Henry Paulson pursues his Crony Capitalism to the detriment of the nation and benefit of his cronies in the financial world. It’s an explosive cocktail that need not have been.
What has emerged are the outlines of two opposite approaches to the
unfolding crisis. The Paulson plan is now clearly part of a project
to create three colossal global financial giants—Citigroup, JP
MorganChase and, of course, Paulson’s own Goldman Sachs, now
conveniently enough a bank. Having successfully used fear and panic
to wrestle a $700 billion bailout from the US taxpayers, now the big
three will try to use their unprecedented muscle to ravage European
banks in the years ahead. So long as the world’s largest financial
credit rating agencies—Moody’s and Standard & Poors—are untouched by
the scandals and Congressional hearings, the reorganized US financial
power of Goldman Sachs, Citigroup and JP Morgan Chase could
potentially regroup and advance their global agenda over the coming
several years, walking over the ashes of a bankrupt American economy
made bankrupt by their follies.
By agreeing on a strategy of nationalizing what EU finance ministers
deem are ‘EU banks too systemically strategic to fail,’ while
guaranteeing bank deposits, the largest EU governments, Germany and
the UK, in contrast to the US, have opted for what will in the longer
run allow European banking giants to withstand the anticipated
financial attacks from the likes of Goldman or Citigroup.
The dramatic selloff of stocks across European bourses and across
Asia is in reality a secondary and far less critical issue. According
to market reports, the selloff is being driven mainly by US hedge
funds desperate to raise cash as they realize the US economy is going
into economic depression, that they are exposed and that the Paulson
Plan does nothing to address that.
A functioning solvent banking and interbank system is far the more
strategic issue. The ABS debacle was ‘Made in New York.’ Nonetheless,
its effects have to be isolated and viable EU banks defended in the
public interest, not just the interest of Paulson’s banking cronies
as in the US. Unregulated offshore vehicles such as hedge funds,
unregulated banking, unregulated insurance all went into building the
$80 trillion ABS Tsunami as I have called it. Certain more
conservative EU hands are not about to buy the remedy being offered
The coordinated interest rate cut by the ECB and other European
central banks while grabbing headlines, in effect do little to
address the real problem: banks fear to lend to each other until
their solvency is assured.
By initiating state partial nationalizations across the EU, and
rejecting the Berlusconi/Sarkozy bailout scheme, the governments of
the EU, interestingly enough this time led by the German, are laying
a more sound foundation to emerge from the crisis.
Stay tuned, it’s far from over. This is a fight for the survival of
the American Century which has been bvuilt since 1939 on the twin
pillars of American financial dominance and American military
dominance—Full Spectrum, Dominance.
Asian banks, badly burned by Wall Street’s manipulated 1997-98 Asia
Crisis, are apparently very little exposed to the US problem.
European banks are exposed in different ways, but none so serious as
in the US banking world.
The product of knowledge is knowledge;
The fruit of understanding is wisdom.