Collateral Damage (Part 2): The Subprime Crisis and the Terrorist Attacks on September 11, 2001By E.P. HeidnerDecember 25, 2008 All Right s Reserved
Two independent ‘insiders’ to the fund have provided with testimony and documentationcontending that George H.W. Bush and Alan Greenspan funded a covert operation in1991 in the range of $240 billion dollars. One of those insiders was the wife of a minorcovert fund manager (CIA operative Russell Hermann, of the Durham Trust) and theother was the long-term program manager of the covert fund (General Earle Cocke).
Subsequent investigation into the funding and the history of that period suggests theyused the gold to fund a covert economic war that caused the collapse of the SovietUnion.
However implausible the claim may sound, “…it helps to realize that the entirecost of World War II, in current dollars and including service-connected veterans'benefits, is about $460 billion…. The cost of the Vietnam War, including benefits, was$172 billion; Korea was $70 billion; World War I was $63 billion. The Civil War was $7billion.”
For George H.W. Bush and his colleagues, the covert war was probably abargain that was too hard to turn down regardless of the legality!The corroborating evidence for these claims is extensive, and moreover suggests thatsecurities from the $240 Billion covert war were ‘settled’ in the aftermath of September11
, 2001 tragedy. This meant that $240 billion jumped from the off-balancesheet accounts to the balance sheets of their respective holding banks, and had a majorimpact on the money supply. Since that event, a chain reaction has contributed to aneconomic crisis that has stripped corporations and investment funds (read as retirementand saving plans) of trillions of dollars, and brought global economic growth to astandstill. Starting with a significant failure in the subprime equity market, a majorcontraction of the finance industry created a crisis with the following characteristics.
A significant percentage of defaults on ‘subprime’ mortgages had reduced the cashflow and net value of the securities they were bundled into. In 2006 one report had17% of the subprime loans 60 days in arrears
predicting defaults in mortgages of $100 Billion. Mixing the risky mortgages with the good mortgages in thesecuritization process extended the risk to between $500 billion and $1 trillion of financial assets.
The businesses, investment funds and banks holding those securities, having eithera reduced cash flow or net asset value, were unable to ‘invest’ earnings to buystocks and bonds, and reduced the value of their portfolios. The banks holding thosesecurities as capital became unable to meet capital requirements as defined underthe Basel II, Agreement and made them targets for takeover.
Without an active demand for stock and bonds, companies requiring new fundingfor growth and expansion found themselves at a standstill. As inflated PE values of corporate stocks were driven to realistic levels, corporate ability to raise cash usingstock as collateral was reduced even more. Large corporations holding securitiesrelated to the debacle were seeing their capital base drain away. Companies usingsecurities, or their own stock or property value as collateral for loans would befacing bankruptcy as happened in Japan when real estate values plunged in the1980s.
Demand for goods and services was being curtailed by the reduced value anddividends of retirement and savings portfolios, forcing many senior citizens to cutback on day-to-day expenditures, forcing overall contraction in employment,providing few and smaller paychecks, and the standstill in the housing market -