Economic Warfare: Risks and Responses
Serious risks to the global economic system were exposed by the crisis of 2008,raising legitimate questions regarding the cause of the turmoil. An estimated $50trillion of global wealth evaporated in the crisis with more than a quarter of thatloss suffered by the United States and her citizens.
A number of potential causative factors exist, including sub-prime real estate loans, ahousing bubble, excessive leverage, and a failed regulatory system.
Beyond these,however, the risks of financial terrorism and/or economic warfare also must beconsidered. The stakes are simply too high for these potential triggers to be ignored.
The Obama administration‘s recent call for greater financial regulation stipulates to the
facts that hedge fund activity has been virtually unregulated and that dark-pool trading,Credit Default Swaps, and naked short selling provide tremendous vulnerabilities in thesystem. This report concurs with these concerns as recently outlined by the heads of theSEC, US Treasury, and Federal Reserve and provides supporting data.
Beyond that, thisreport exposes the fact that these vulnerabilities are subject to exploitation not onlyby greedy capitalists seeking profit but also by financial terrorists, intent ondestroying the American financial system.
From a historical perspective, there are numerous examples of financial attacks onspecific companies and industries both for economic and non-economic reasons. Inaddition, there are other examples of financial attacks conducted against individualnations both for economic and non-economic reasons. Based on this awareness, theeconomic collapse of 2008 must be critically examined to determine the possibility that afinancial attack took place as well as an assessment of future risks.
The purpose of this report is to consider the implications of financial terrorismand/or economic warfare and to identify and realistically list prospective threats toU.S. economic security from a means, motive, and opportunity perspective.
The preliminary conclusions of the research suggest that, without question, there wereactors who had the motive to harm the U.S. economy. These motives can be categorizedas both economic and non-economic. In addition, these same actors have clearlydemonstrated the means to carry out such an attack. Finally, the opportunity was clearly present given the existing economic condition and regulatory framework in operation.The hypothesis under consideration is that a three-phased attack is underway with two of those phases completed to date.
The first phase was a speculative run-up in oil prices that generated as muchas $2 trillion of excess wealth for oil-producing nations, filling the coffers of Sovereign Wealth Funds, especially those that follow Shariah CompliantFinance.
This phase appears to have begun in 2007 and lasted through June 2008.