Posted: December 15th, 2009 by Militant Libertarian
The public may have casually become aware of recent news announcements about an agreed upon goal between bankers to reach an 8-percent cash reserve requirement in their institutions. A list was recently published showing few banks currently have reached this reserve requirement. This list was obviously issued to apply public pressure via the public’s ability to direct their deposits to more stable banks, thus nudging other banks to increase their reserves.
Banks deploy depositors’ money into interest-bearing loans in order to generate profits and keep a portion in reserve to meet depositors’ immediate needs. Recall that withdrawal of $16.7 billion in cash from Washington Mutual bank over a 9-day period is what drove that bank into insolvency even though it had $307 billion of (over-valued) assets and deposits of $188 billion at the time. So cash reserves are of greater importance into today’s unstable financial environment.
It all sounds so collegiate – a bunch of the world’s bankers have agreed to stabilize their institutions so as to better withstand current economic challenges and create greater public confidence in banks. News reports make it sound like bankers are cooperative. But in reality, there is a war going on between bankers, in particular central bankers, those bankers who supply money to depository banks where the public banks their money.
First shots fired
The first shots in this war were apparently fired by banks in Japan a number of years ago. This dispute between bankers is what has led to the current worldwide financial crisis.
Bruce Wiseman makes us aware of this war in his report A Look Behind The Wizard’s Curtain: The Financial Crisis: The Hidden Beginning. Wiseman’s upcoming book and movie on this topic are scheduled for release in 2010.
Wiseman reports that the top ten banks in the world in the 1970s were American banks. But in the 1980s six Japanese banks rose into the top-ten ranking. Wiseman explains this sudden rise, which was said to shift the center of world banking from New York to Tokyo, was due to the low reserves (said to be as low as 3%) kept by bankers in Japan.
With lower reserve requirements, Japanese banks had more available funds to loan than competing banks throughout the globe. These Nippon bankers could establish branch banks throughout the world and dominate the world’s financial markets.
The 8-percent reserve requirement agreed upon in the Basel I agreement, named for the location of its signing at the Bank of International Settlements in Basel, Switzerland, is intended to put the world’s banks on a level playing field when it comes to doing business outside their own countries.
Wiseman says this low-reserve requirement practiced by banks in Japan was perceived as drawing a samurai sword against the rest of the world’s bankers and this didn’t rest well with Alan Greenspan, then chairman of the US Federal Reserve Bank and Board Member of the International Bank of Settlements, a bank for the world’s central bankers headquartered in Basel, Switzerland. Something had to be done about unfair competition in the banking arena.
Bankers in Japan were informed via the Bank of International Settlements, the “central bankers’ bank,” that they would not be allowed to continue their operations in major foreign markets unless they agreed to a minimum reserve requirement – the 8% rule. Japanese bankers were coerced to agree to what has become known as the Basel I accord which was signed in 1988.
Foot dragging over reforms
But it’s now 21 years later, and bankers are still dragging their feet to comply with a stability measure that, had it been implemented, may have staved off part of the current economic crisis long before it occurred.
Don’t get a false impression that Japanese banks are solely to blame for bank instability. Five investment banks in the U.S. (Goldman Sachs, Lehman Brothers, Bear Stearns, Merrill-Lynch and Morgan Stanley) appealed to the Securities Exchange Commission (SEC) and won the privilege to carry a 20-to-1 or even 30-to-1 ratio of capital to loans (not the same as cash reserves, as mentioned above).
For example, instead of these investment banks employing a more traditional capital-to-loan ratio of 10-to-1 (let’s say $1 billion of capital to issue $10 billion in loans), they were given the green light to loan at the ratio of 20-to-1 or even 30-to-1 ($1 billion of capital to issue $20 billion or even $30 billion in loans). This was a conscious decision by the SEC that probably was coerced by political influence.
Basel II spawns real estate bubble
This bankers’ war continued over the following decade and a half, culminating in Basel II in 2004, another agreement between banks to standardize reporting requirements for credit worthiness and capital that each depository bank holds. This is when the so-called “mark-to-market” rules were established. The Bank of International Settlements is attempting to get banks to value their real estate assets on real market value and to reveal all of the non-performing loans (foreclosures) they have on their books. Such revelations and transparency would doom many banks, including some of the world’s largest banks.
Basel II also made provision for reduced reserve requirements for mortgage-backed home loans. This made home loans more profitable and is set off the explosive false growth in residential real estate and created the financial bubble that finally popped in 2008. Central bankers are to blame for setting off this wild fire in the real estate market.
How many banks intend to comply?
A recent survey conducted by the Financial Stability Institute attempted to determine how many banks in 115 jurisdictions in less developed nations in Africa, Asia, Latin America and the Middle East intend to comply with Basel II. The survey was not sent to banks in Japan, possibly for good reason. The 2004 survey revealed 95 countries currently plan to comply with Basel II reporting requirements, and even more countries said they intended to comply with Basel II in a 2006 survey.
However, according to a report in Risk Magazine, the banking industry is fighting finalized reforms in the Basel II mandates, claiming the amount of capital required cannot be raised within the allotted time framework. Finance ministers and central bank governors of the 20 leading economies (called the Group of 20) wants full implementation by 2012.
Prudent banking is not beyond the capability of bankers. For example, according to a Wall Street Journal article, while Basel II requires a capital to loan ratio of 9%, banks in India are required to have a 12% standard.
Bankers in China have been even more prudent. Chinese banks adhere to a cap on loan-to-deposit ratios of about 75% (the actual ratio is more like 67%), and leverage ratios (capital-to-loan ratios) in the single digits – considerably below what the big U.S. banks have been allowed to accumulate. Furthermore, in China, home buyers can only borrow up to 70% of the value of their property (60% if it’s a second purchase).
Fang Xinghai, director-general of Shanghai’s financial-services office, recently described the difference between the Chinese and U.S. approaches to bank regulation in the Wall Street Journal: “In the U.S., the regulators don’t believe in regulation to begin with,” he said, and pointed a finger at former Federal Reserve Chairman Alan Greenspan’s belief that the Fed’s job wasn’t to prevent or deflate assets bubbles, but to “deal with the consequences.”
The Wall Street Journal report goes on to say that bankers in Spain certainly incurred exposure to an overbuilt real estate market (an estimated 1.2 million unsold new homes), but they avoided further trouble by consolidating all their assets, even non-performing home loans, onto their balance sheets. For comparison, “Special investment vehicles,” employed by American banks, “cooked the books” and keep risky debt off of bank ledgers.
Resorting to the unthinkable
Unable to create a level competitive field for banking, the bank reform effort has now shifted away from cooperation to a master plan to take down the world’s economies and exercise complete control in the aftermath by introduction of a master plan to control banking and currency.
According to Wiseman, the plan underway now is to intentionally “take down the United States and the U.S. dollar as the stable datum of planetary finance and replace it with something called a Global Monetary Authority” that will issue a single global currency via the world’s central bankers, who in turn distribute money to depository and investment banks.
What Wiseman is talking about here is that a small group of less than a dozen central bankers are likely to rule the world via control of currency.
As confirmation of Wiseman’s claim, the call for a “global monetary authority” was echoed by a Yale professor in theFinancial Times in 2008.
What looms is a single global currency, probably issued by the International Monetary Fund (IMF), which will then exert control over the world’s banks. A more complete picture of what is likely being planned is provided here andhere.
The intentional take-down of the world’s economies and establishment of a world currency will be spawned out of planned chaos which would provoke the planet’s masses to beg for relief. The new currency and its new central bank will be offered up as the quickest solution to the world’s economic turmoil.
But will world control be lost?
However, the bankers and elites risk losing control of the world that they now hold. As investigative journalist Daniel Estulin reports, “One of Bilderberg’s primary concerns accordingly is the danger that their zeal to reshape the world by engineering chaos in order to implement their long term agenda could cause the situation to spiral out of control and eventually lead to a scenario where Bilderberg and the global elite in general are overwhelmed by events and end up losing their control over the planet.” (The Bilderberg Group, comprised of over 100 influential people, meets annually to discuss issues of world concern.)
Yet central bankers and elitists plod ahead, all the while attempting to tighten their grip on the masses. Following the G20 (20 leading countries of the world) meeting at the beginning of April, 2009, it was reported that, “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” A communiqué released by the G20 leaders stated that, “We have agreed to support a general standard drawing rights (SDR) allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity,” and that, “SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.” Essentially, “they are putting a de facto world currency into play. It is outside the control of any sovereign body.”
IMF plants an agent in our midst
The IMF has the right man in place to do the job in the U.S. Timothy Geithner, U.S. Treasury Secretary, was director of the Policy Development and Review Department (2001–2003) at the IMF. Geithner is also well connected in other circles. He was also part of a consulting firm in the 1980s owned by former Secretary of State Henry Kissinger. Furthermore, Geithner was also president of the Federal Reserve Bank of New York and a staffer at the Council on Foreign Relations.
Geithner, as U.S. Secretary of the Treasury, apparently sees no conflict between his duty to uphold the U.S. Constitution and a one-world currency. He goes along with the agenda to abolish the US dollar in favor of a global medium of exchange. Geithner was quoted to say: “Our hope is that we can work with Europe on a global framework, a global infrastructure which has appropriate global oversight.”
What lies ahead
Foot dragging by the world’s bankers to comply with banking standards and the intentional collapse of world economies to force bank reform has dragged the world into a quagmire that could lead to mass starvation, suicide and even war. A former top British bank regulator recently called for the formation of an international bank police agency to bring the bankers into line. But such an idea appears to be too late. Efforts to usher in an IMF-issued currency appear to be steaming forward.
Such plans, to usher in a one-world government and a single currency, were made decades ago by elitists and central bankers, but they were waiting for world events to be engineered in a manner to create the perfect storm that would cause Americans to give up their sovereignty, and their greenbacks, in exchange for a new type of play money and subservience to another rule of law outside the U.S. Constitution. Professor Carroll Quigley described this covert plan in the 1960s in his book entitled Tragedy and Hope: A History Of The World In Our Time. Another broad description of this plan is found here.
Few Americans catch on to the fact that central bankers, not elected representatives, have controlled America for some time now. It was the British banker Mayer Amschel Bauer Rothschild who said in 1791: “Allow me to issue and control a nation’s currency, and I care not who makes its laws.”
The world exists for the central bankers to plunder, and no one else. What is good for the central bankers is good enough for the rest of the world. It’s like the world is a tiger that is being slung around by its tail. If central bankers aren’t paid their dues, the world must suffer. Yet the bankers must not be deprived of their seven, eight and even nine-figure commission checks amidst the turmoil. The world is being slung into economic chaos over a long-standing war between central bankers. If the masses only knew.