Wag the Dog: How to Conceal Massive Economic Collapse
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Wag the Dog: How to Conceal Massive Economic Collapse
by Ellen Brown
Global Research, August 14, 2008
webofdebt.com
"I’m in show business, why come to me?"
"War is show business, that’s why we’re here."
– "Wag the Dog" (1997 film)
Last week, Fannie Mae and Freddie Mac had just announced record
losses, and so had most reporting corporations. Unemployment was
mounting, the foreclosure crisis was deepening, state budgets were in
shambles, and massive bailouts were everywhere. Investors had every
reason to expect the dollar and the stock market to plummet, and gold
and oil to shoot up. Strangely, the Dow Jones Industrial Average
gained 300 points, the dollar strengthened, and gold and oil were
crushed. What happened?
It hardly took psychic powers to see that the Plunge Protection Team
had come to the rescue. Formally known as the President’s Working
Group on Financial Markets, the PPT was once concealed and its very
existence denied as if it were a matter of strict national security.
But the PPT has now come out of the closet. What was once a legally
questionable "manipulator" of markets has become a sanctioned
stabilizer and protector of markets. The new tone was set in January
2008, when global markets took their worst tumble since September 11,
2001. Senator Hillary Clinton said in a statement reported by the
State News Service:
"I think it’s imperative that the following step be taken. The
President should have already and should do so very quickly, convene
the President’s Working Group on Financial Markets. That’s something
that he can ask the Secretary of the Treasury to do. . . . This has to
be coordinated across markets with the regulators here and obviously
with regulators and central banks around the world."1
The mystery over what was going on with the dollar the first week in
August was solved by James Turk, founder of GoldMoney, who wrote on
August 7:
"[T]he banking problems in the United States continue to mount, while
the federal government’s deficit continues to soar out of
control. . . . So what happened to cause the dollar to rally over the
past three weeks? In a word, intervention. Central banks have propped
up the dollar, and here’s the proof.
"When central banks intervene in the currency markets, they exchange
their currency for dollars. Central banks then use the dollars they
acquire to buy US government debt instruments so that they can earn
interest on their money. The debt instruments central banks acquire
are held in custody for them at the Federal Reserve, which reports
this amount weekly.
"On July 16, 2008 . . . , the Federal Reserve reported holding $2,349
billion of US government paper in custody for central banks. In its
report released today, this amount had grown over the past three weeks
to $2,401 billion, a 38.4% annual rate of growth. . . . So central
banks were accumulating dollars over the past three weeks at a rate
far above what one would expect as a result of the US trade deficit.
The logical conclusion is that they were intervening in currency
markets. They were buying dollars for the purpose of propping it up,
to keep the dollar from falling off the edge of the cliff and doing so
ignited a short covering rally, which is not too difficult to do given
the leverage employed in the markets these days by hedge funds and
others."2
Just as central banks manipulate currencies in concert, so gold can be
manipulated by massive selling of central bank reserves. Oil and any
other market can be manipulated as well. But markets can be
manipulated by only so much and for only so long without fixing the
underlying problem. There is more bad news coming down the pike, news
of such magnitude that no amount of ordinary manipulation is liable to
conceal it.
For one thing, roughly $400 billion in ARMs (adjustable rate
mortgages) have or will reset between March and October of this year.
Assuming 3 to 6 months for strapped debtors to actually hit the wall
with their payments, a huge wave of defaults is about to strike,
continuing through March 2009 – just in time for the next huge wave of
resets, in option ARMs.3 Option ARMs are loans with the option to pay
even less than just the interest on the loan monthly, increasing the
loan balance until the loan reaches a certain amount (typically 110%
to 125% of the original loan balance), when it resets. The $800
billion credit line recently opened to Fannie Mae and Freddie Mac may
be not only tapped but tapped out, at taxpayer expense. The underlying
problem is little discussed but impossible to repair – a one
quadrillion dollar derivatives scheme that is now imploding. Banks
everywhere are facing massive writeoffs, putting the whole banking
system on the brink of collapse. Only public bailouts will save it,
but they could bankrupt the nation.
What to do? War and threats of war have been used historically to
distract the population and deflect public scrutiny from economic
calamity. As the scheme was summed up in the trailer to the 1997 movie
"Wag the Dog" --
"There’s a crisis in the White House, and to save the election, they’d
have to fake a war."
Perhaps that explains the sudden breakout of war in the Eurasian
country of Georgia on August 8, just 3 months before the November
elections. August 8 was the day the Olympic Games began in Beijing, a
distraction that may have been timed to keep China from intervening on
Russia’s behalf. The mainstream media version of events is that
Russia, the bully on the block, invaded its tiny neighbor Georgia; but
not all commentators agree. Mikhail Gorbachev, writing in The
Washington Post on August 12, observed:
"What happened on the night of Aug. 7 is beyond comprehension. The
Georgian military attacked the South Ossetian capital of Tskhinvali
with multiple rocket launchers designed to devastate large areas.
Russia had to respond. To accuse it of aggression against "small,
defenseless Georgia" is not just hypocritical but shows a lack of
humanity. . . . The Georgian leadership could do this only with the
perceived support and encouragement of a much more powerful force."4
Bruce Gagnon, coordinator of the Global Network against Weapons and
Nuclear Power, commented in OpEdNews on August 11:
"The U.S. has long been involved in supporting ‘freedom movements’
throughout this region that have been attempting to replace Russian
influence with U.S. corporate control. The CIA, National Endowment for
Democracy . . . , and Freedom House (includes Zbigniew Brzezinski,
former CIA director James Woolsey, and Obama foreign policy adviser
Anthony Lake) have been key funders and supporters of placing
politicians in power throughout Central Asia that would play ball with
‘our side’. . . . None of this is about the good guys versus the bad
guys. It is power bloc politics . . . . Big money is at stake . . . .
[B]oth parties (Republican and Democrat) share a bi-partisan history
and agenda of advancing corporate interests in this part of the world.
Obama’s advisers, just like McCain’s (one of his top advisers was
recently a lobbyist for the current government in Georgia) are thick
in this stew."5
Brzezinski, who is now Obama’s adviser, was Jimmy Carter’s foreign
policy adviser in the 1970s. He also served in the 1970s as director
of the Trilateral Commission, which he co-founded with David
Rockefeller Sr., considered by some to be the "master spider" of the
Wall Street banking network.6 Brzezinski later boasted of drawing
Russia into war with Afghanistan in 1979, "giving to the Soviet Union
its Vietnam War."7 Is the Georgia affair an attempted repeat of that
coup? Mike Whitney, a popular Internet commentator, observed on August
11:
"Washington’s bloody fingerprints are all over the invasion of South
Ossetia. Georgia President Mikhail Saakashvili would never dream of
launching a massive military attack unless he got explicit orders from
his bosses at 1600 Pennsylvania Ave. After all, Saakashvili owes his
entire political career to American power-brokers and US intelligence
agencies. If he disobeyed them, he’d be gone in a fortnight. Besides
an operation like this takes months of planning and logistical
support; especially if it’s perfectly timed to coincide with the
beginning of the Olympic games. (another petty neocon touch) That
means Pentagon planners must have been working hand in hand with
Georgian generals for months in advance. Nothing was left to chance."8
Part of that careful planning may have been the unprecedented propping
up of the dollar and bombing of gold and oil the week before the
curtain opened on the scene. Gold and oil had to be pushed down hard
to give them room to rise before anyone shouted "hyperinflation!" As
we watch the curtain rise on war in Eurasia, it is well to remember
that things are not always as they seem. Markets are manipulated and
wars are staged by Grand Chessmen behind the scenes.
NOTES
[1] Remarks from Hillary Clinton on the Global Economic
Crisis,” CNN (January 22, 2008) (video preserved on
allamericanpatriots.com).
[2] James Turk, “Mystery Solved,” GoldMoney.com (August 7,
2008).
[3] Bill Murphy, “Wipeout Nightmare,” LeMetropoleCafe.com
(August 11, 2008); Ruth Simon, “FirstFed Grapples With Payment-Option
Mortgages,” Wall Street Journal (August 6, 2008); Ruth Simon,
“Mortgages Made in 2007 Go Bad at Rapid Clip,” ibid. (August 7, 2008).
[4] Mikhail Gorbachev, “A Path to Peace in the Caucasus,”
Washington Post (August 12, 2008).
[5] Bruce Gagnon, “What Do We Know About Georgia-Russia
Conflict?”, OpEdNews (August 11, 2008).
[6] Hans Schicht, “Financial Spider Webbing,” Gold-eagle.com
(February 27, 2004).
[7] “Soviet War in Afghanistan,” Wikipedia
[8] Mike Whitney, “Bush’s War in Georgia,” Global Research
(August 11, 2008).
Ellen Brown, J.D., developed her research skills as an attorney
practicing civil litigation in Los Angeles. In Web of Debt, her latest
book, she turns those skills to an analysis of the Federal Reserve and
"the money trust." She shows how this private cartel has usurped the
power to create money from the people themselves, and how we the
people can get it back. Her eleven books include the bestselling
Nature’s Pharmacy, co-authored with Dr. Lynne Walker, and Forbidden
Medicine.
Ellen Brown is a frequent contributor to Global Research. Global
Research Articles by Ellen Brown
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