by Ellen Brown
August 18, 2011
Ellen Brown is president of the
Public Banking Institute and the author of eleven books. She
developed her research skills as an attorney practicing civil
litigation in Los Angeles. In Web of Debt, she turns those skills to
an analysis of the Federal Reserve and “the money trust.” Her
websites are http://WebofDebt.com and http://PublicBankingInstitute.org.
What just happened in the
Last week, the Dow Jones Industrial Average rose or fell by at least 400
points for four straight days, a stock market first.
The worst drop was on Monday, 8-8-11, when the Dow plunged 624 points.
Monday was the first day of trading after US Treasury bonds were downgraded
from AAA to AA+ by Standard and Poor’s.
But the roller coaster actually began on Tuesday, 8-2-11, the day after the
last-minute deal to raise the U.S. debt ceiling - a deal that was supposed
to avoid the downgrade that happened anyway five days later.
The Dow changed
directions for eight consecutive trading sessions after that, another first.
The volatility was unprecedented, leaving
analysts at a loss to explain it.
High frequency program trading no doubt added to the wild swings, but why
the daily reversals? Why didn’t the market head down and just keep going, as
it did in September 2008?
The plunge on 8-8-11 was the worst since 2008 and the sixth largest stock
market crash ever.
Der Spiegel, one of the most widely read
periodicals in Europe:
Many economists have been pointing out that last week's panic resembled the
fear that swept financial markets after the collapse of US investment bank
Lehman Brothers in September 2008.
Then as now, banks stopped lending each other money. Then as now, banks'
cash deposits at the central bank doubled within days.
But on Tuesday, August 9, the market gained more points from its low than it
lost on Monday. Why? A tug of war seemed to be going on between two titanic
forces, one bent on crashing the market, the other on propping it up.
The Dubious S&P Downgrade
Many commentators questioned the validity of the downgrade that threatened
to be another Lehman Brothers.
Dean Baker, co-director of the Center for
Economic and Policy Research, said
in a statement:
"The Treasury Department revealed that S&P’s
decision was initially based on a $2 trillion error in accounting.
However, even after this enormous error was corrected, S&P went ahead
with the downgrade. This suggests that S&P had made the decision to
downgrade independent of the evidence."
Paul Krugman, writing in the New York Times, was also skeptical,
[E]verything I’ve heard about S&P’s demands suggests that it’s talking
nonsense about the US fiscal situation. The agency has suggested that the
downgrade depended on the size of agreed deficit reduction over the next
decade, with $4 trillion apparently the magic number.
Yet US solvency depends hardly at all on
what happens in the near or even medium term: an extra trillion in debt
adds only a fraction of a percent of GDP to future interest costs...
In short, S&P is just making stuff up - and after the mortgage debacle, they
really don’t have that right.
In an illuminating expose posted on Firedoglake on August 5, Jane Hamsher
It’s becoming more and more obvious that
Standard and Poor’s has a political agenda riding on the notion that the
US is at risk of default on its debt based on some arbitrary limit to
the debt-to-GDP ratio.
There is no sound basis for that limit, or
for S&P’s insistence on at least a $4 trillion down payment on debt
reduction, any more than there is for the crackpot notion that a
non-crazy US can be forced to default on its debt...
It’s time the media and Congress started asking Standard and Poors what
their political agenda is and whom it serves.
Who Drove the S&P Agenda?
Jason Schwarz shed light on this question in an article on Seeking Alpha
titled “The Rise of Financial Terrorism”.
[A]fter the market close on Friday August 5th, we received word that S&P CEO
had taken control of the ratings agency and personally led the
push for a U.S. downgrade. There is a lot of evidence that he has
tried to trash the U.S. economy.
Even after discovering that
the S&P debt calculations were off by $2 trillion, Sharma made the decision
to go ahead with the unethical downgrade. This is a guy who was a
contributor at the 2009 Bilderberg Summit that organized 120 of the world's
richest men and women to push for an end to the dollar as the global reserve
[T]hrough his writings on “competitive strategy” S&P CEO
Sharma considers the United States the PROBLEM in today’s world,
operating with what he implies is an unfair and reckless advantage.
The brutal reality is that for
"globalization" to succeed the United States must be torn asunder...
Also named by Schwarz as a suspect in the market manipulations was Michel Barnier, head of European Regulation.
Barnier triggered an alarming
513-point drop in the Dow on August 4, when he blocked the plan of Hans Hoogervorst, newly appointed Chairman of the International Accounting
Standards Board, to save Europe by adopting a new rule called IFRS 9.
rule would have eliminated mark-to-market accounting of sovereign debt from
European bank balance sheets.
We all should be experts on the dangers of mark-to-market accounting after
observing the U.S.
banking crisis of 2008/2009 and the Great Depression in
the 1930s. Mark-to-market was repealed at 8:45 am on April 2, 2009, which
finally put a stop to the short term liquidity crisis and at the same time
ushered in a stock market recovery.
Banks no longer had to raise capital as
long term stability was brought back to the system.
The exact same scenario
would have happened in 2011 Europe under Hoogervorst's plan. Without the
threat of failure by those banks who hold high amounts of euro sovereign
debt, investors would be free to move on from the European crisis and the
stock market could resume its fundamental course.
Schwarz notes that Barnier, like Sharma, was a confirmed attendee at past
What, then, is the agenda of
The One World Company
noted expert on the Bilderbergers, describes that secretive
globalist group as,
“a medium of bringing together financial institutions
which are the world’s most powerful and most predatory financial interests.”
Writing in June 2011,
Bilderberg isn’t a secret society... It’s a meeting of people who
represent a certain ideology... Not
OWG [One World Government] or NWO
[New World Order] as too many people mistakenly believe. Rather, the
ideology is of a ONE WORLD COMPANY LIMITED.
It seems the Bilderbergers are less interested in governing the world than
in owning the world.
The “world company” was a term first used at a Bilderberger meeting in Canada in 1968 by George Ball, U.S. Undersecretary
of State for Economic Affairs and a managing director of banking giants
Lehman Brothers and Kuhn Loeb.
The world company was to be a new form of
colonialism, in which global assets would be acquired by economic rather
than military coercion.
The company would extend across national boundaries,
aggressively engaging in mergers and acquisitions until the assets of the
world were subsumed under one privately-owned corporation, with
nation-states subservient to a private international central banking system.
The idea behind each and every Bilderberg meeting is to create what they
themselves call THE ARISTOCRACY OF PURPOSE between European and North
American elites on the best way to manage the planet.
In other words, the
creation of a global network of giant cartels, more powerful than any nation
on Earth, destined to control the necessities of life of the rest of
...This explains what George Ball... said back in 1968, at a Bilderberg meeting in Canada:
“Where does one find a legitimate base for the
power of corporate management to make decisions that can profoundly affect
the economic life of nations to whose governments they have only limited
That base of power was found in the private
global banking system.
The problem with today’s system is that the world is run by monetary
systems, not by national credit systems... [Y]ou don’t want a monetary
system to run the world. You want sovereign nation-states to have their own
credit systems, which is the system of their currency...
possibility of productive, non-inflationary credit creation by the state,
which is firmly stated in the US Constitution, was excluded by Maastricht
[the Treaty of the European Union] as a method of determining economic and
The world company acquires assets by preventing governments from issuing
their own currencies and credit.
Money is created instead by banks as loans
at interest. The debts inexorably grow, since more is always owed back than
was created in the original loans. (For more on this, see
currencies are not allowed to expand to meet increased costs and growth, the
inevitable result is a wave of bankruptcies, foreclosures, and sales of
assets at fire-sale prices.
Sales to whom? To the “world company.”
Battle of the Titans
If that was the plan behind the market assaults on August 4 and August 8,
however, it evidently failed.
What turned the market around, according to Der Spiegel, was the European Central Bank, which saved the day by embarking
on a program of
buying Spanish and Italian bonds. Sidestepping the
Maastricht Treaty, the ECB said it would engage in the equivalent of
“quantitative easing,” purchasing bonds with money created with accounting
entries on its books.
It had done this earlier with Greek and Irish
sovereign debt but had resisted doing it with Spanish and Italian bonds,
which were much larger obligations.
On Tuesday, August 16, the ECB announced
that it was engaging in a record
$32 billion bond-buying spree in an attempt
to appease the markets and save the Eurozone from collapse.
Federal Reserve Chairman
Ben Bernanke was also expected to come through with
another round of quantitative easing, but his speech on August 9 made no
mention of QE3.
As blogger Jesse Livermore summarized the
...[T]he markets sold off rather rapidly as no announcement was made about
QE3... It wasn’t until... the last 75 min of market activity [that]
the DJIA gained 639 pts to close at a day high of 11,242.
That begs the
question, where did that injection of capital come from? The President’s
Working Group on Financial Markets? Or did the “policy tools” to promote
price stability by any chance include the next round of Quantitative Easing
Was that QE3 Incognito, Ben?
Titanic Battle or Insider Trading?
That leaves the question, why the suspicious downgrade on August 5, AFTER
the government had made major concessions just to avoid default, and despite
the embarrassing revelation that S&P’s figures were off by $2 trillion?
Suspicious bloggers have pointed out that Lehman Brothers was brought down
by a massive
bear raid on 9-11-2008, echoing the
disaster of 9-11-2001; that the
S&P downgrade hit the market on 8-8-2011; and that the S&P
fell exactly 6.66%
and the Dow fell exactly 5.55% on that date.
In Illuminati lore, these are
power numbers, of the sort chosen for power moves.
But we don’t need to turn to numerology to find a motive for proceeding with
On August 12, MSN.Money
reported that it “wasn't much of a
Wall Street had heard a rumor early on that the downgrade was coming. News
sites reported the rumor all day.
Unless it was all a huge coincidence, it's likely that someone in the know
leaked the information. The questions are who and whether the leak led to
early insider trading.
The Daily Mail had
the story of someone placing an $850 million bet in the
futures market on the prospects of a U.S. debt downgrade:
The latest bet was made on July 21 on trades of 5,370 ten-year Treasury
futures and 3,100 Treasury bond futures, reported ETF Daily News.
Now the investor’s gamble seems to have paid off after Standard and Poor’s
issued a credit rating downgrade from AAA to AA+ last Friday.
Whoever it is stands to earn a 1,000 per cent return on their money, with
the expectation that interest rates will be going up after the downgrade.
The Securities Exchange Commission (SEC) announced on August 8 that it is
investigating the downgrade. According to the Financial Times, the move is
part of a preliminary examination into potential insider trading.
Whatever can be said about the first two weeks of August, their market
action was unprecedented, unnatural, and bears close observation.