Mark Arnold

Mark Arnold

A few weeks back I purchased and started reading the latest book by John Truman Wolfe entitled “The Coming Financial Crisis: A Look Behind the Wizard’s Curtain”. I had earlier read a number of Wolfe’s essays dealing with 2008 sub-prime mortgage debacle and had found them informative. I have always had a keen interest in economics, and back in 2008 and on into early 2009 I had conducted my own research into the cause of the debacle and at that time plumbed the depths of Collateralized Debt Obligations, Credit Default Swaps, Investment Banks [1]and Bailouts. In early 2009 I published my findings in a manuscript entitled “Bailout is the Name of the Game”: my 20,000 word effort to enlighten my friends and associates on what was going on economically and why. “Bailout” was accurate as far as it went, and I was pretty happy with the final product. If you have read “The Big Short” by Michael Lewis, or have seen the movie by the same name, you will discover much the same material; though “Bailout” took things a bit further by enlightening the reader on the actual laws that were passed or repealed by Congress to de-regulate investment banking and which played a major role in facilitating the 2008 crash.

In researching “Bailout” at that time, among the various financial mechanisms I encountered was an accounting principal called “mark to market”. What this term refers to is an accounting method by which corporations and banks are required to value their assets on their balance sheets by “marking them to the market” for that specific asset. This principle played a devastating role in the crisis because in implementing it banks were forced mark their portfolios of mortgage backed securities to the market for those securities, rather than to their face value or any other value; and the market at the time, as we all know, was collapsing. In many instances the underlying mortgages backing the securities were still sound and had not defaulted, yet the bank was still forced to “mark the value to the market.” The result was crashing balance sheets and capital reserves which made it impossible for banks to loan money, which in turn caused the credit crunch we all experienced.

At the time I wrote “Bailout” I considered “mark to market” to be just another factor of the number of factors that coalesced into the perfect financial storm we all went through and to some degree are still experiencing. My research indicated that the accounting principle had come into play in the wake of the Enron [2] accounting scandal in 2002 for the purpose of preventing corporations from fraudulent bookkeeping as Enron had done. Shortly after the Enron collapse a law was passed called the “Sarbanes-Oxley Act”,[3] which included in its provisions the implementation of “mark to market” as a means of inhibiting corporations from over-valuing their assets. “OK,” I thought. “They passed this law in 2003 that ended up having this bad effect in 2008…an honest mistake?” I wondered, but I had no data to indicate otherwise, so I let it go at that.

"The Coming Financial Crisis" by John Truman Wolfe

“The Coming Financial Crisis” by John Truman Wolfe

I should have kept digging.

As good as I felt about “Bailout” when I published it, I couldn’t quiet a nagging suspicion that I had not succeeded in getting to true bottom of the 2008 debacle. I have long been aware of the various theories of conspiracy to the effect that there is an effort afoot to bring about a one world oligarchy, under the thumb of a privileged few. For one thing, it is an old intelligence trick to cause a disaster to happen which is then used to facilitate some other covertly wanted action. [4]There are many examples in history and I have been aware of this for a very long time. The 2008 crash had the earmarks of this, but I did not succeed in establishing any real connection based on confirmable data between the crash and this conspiracy. So, though I speculatively mentioned the possibility in “Bailout”, I took it no further, as it would have violated my own sense of ethics and responsibility regarding the information I publish. I want my published “facts” to be actual facts.

Now, flash forward to several weeks ago. I am reading “The Coming Financial Crisis” and in it Wolfe, who himself had a career as a banker earlier in his life, clearly states that the purpose for this financial crisis, which is actually still on-going, is:

“… to take down the United States and the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority—a planetary financial control organization to ‘ensure this never happens again.’”

"The Tower of Basel" by Adam Lebor

“The Tower of Basel” by Adam Lebor

Wow! If that statement doesn’t smack of conspiracy I don’t know what does. But Wolfe doesn’t leave it at that. In the book’s next chapter, entitled “Hitler’s Bank Goes Global,” he backs it up by describing an organization called “The Bank for International Settlements.” Many of you may have never heard of this group and those who have likely have little understanding of what it actually does. Wolfe does a good job of explaining it in his book, stating that it is located in Basel, Switzerland and is, in effect, above the law. Though located in Switzerland, the Swiss government has no legal jurisdiction over it, no jurisdiction over its premises and no government agency or authority on the planet has oversight over its operations. Neither the BIS, as it is called, nor its personnel are subject to Swiss taxes and Swiss governmental authorities need the permission of the BIS management to even enter the bank’s buildings. BIS communications and personnel are protected exactly as are those of embassies in foreign nations –its “diplomatic pouches” cannot be opened except by those for whom they are intended. The BIS is, in effect, its own sovereign state; and is where all the world’s central banks (55 are members) meet to analyze the global economy and determine what actions they will take, thus pulling the strings of the world’s monetary systems. The stock of the BIS is owned by the member central banks, much the same as the stock of most national central banks is owned by the banks in orbit around them. In other words, just like the U.S. Federal Reserve Bank, the BIS is privately owned. It is controlled by a board of directors comprised of central bankers from 11 different nations; the United States, the United Kingdom, Belgium, Canada, France, Germany, Italy, Japan, Sweden, the Netherlands and Switzerland. Within the BIS the single most powerful and elite group is the Economic Consultative Committee (ECC), current members of which include U.S. Federal Reserve Chairman Ben Bernanke, Bank of England governor Mark Carney, Mario Draghi of the European Central Bank, Zhou Xiaochuan of the Bank of China, plus the central bank governors of Germany, France, Italy, Sweden, Canada, India and Brazil. According to Adam Lebor,[5] whose brilliant book “The Tower of Basel: The Shadowy History of the Secret Bank that Runs the World” is one of the major research sources I used for these articles, the ECC (formerly called the “G-10”—short for “Group of Ten”) “makes recommendations on the membership and organization of the three BIS committees that deal with the global financial system, payments systems, and international markets.” The committee also provides the agenda and makes proposals for another of the major BIS meetings—the bi-monthly Global Economy Meeting.  According to Lebor, “The BIS strictly guards the bankers’ secrecy. The minutes, agenda, and actual attendance list of the Global Economy Meeting or the ECC are not released in any form. This is because no official minutes are taken, although the bankers sometimes scribble their own notes. Sometimes there will be a brief press conference or bland statement afterwards but never anything detailed. This tradition of privileged confidentiality reaches back to the bank’s foundation.”

Adam Lebor

Adam Lebor

Based on all this one can see that the speculative, one world conspiracy theories proposed by some possibly have substance to them. The BIS, as described by Wolfe and Lebor, could possibly be the entity at the apex of the plot. So, I knew that at some point I would have to make a study of this “Bank for International Settlements” to find out what it’s really all about.

But then I read something in Wolfe’s book that really made me sit up and take notice. He described a meeting of BIS members that took place in Basel in 2004 at which an accounting rule was adopted that was to be implemented by all member banks. That accounting rule was “mark to market” accounting, which went into effect as regards US banks in the fall of 2007, a few months before the crash. On reading this I sat there shocked, for here was the evidence I was seeking that clearly demonstrated an unseen hand in the 2008 debacle. “Mark to market” wasn’t just implemented as a result of the Sarbanes-Oxley Act as I had thought; it was enforced specifically on the banks themselves by the agreement of each nation’s central bank at Basel. I began to see that the 2008 crash was a set up. By adopting “mark to market” while being loaded up with sub-prime mortgage securities, when the bubble broke in 2008 the banks were stricken, and everything had been carefully put in place to make it so.

Now, if you are a person who loves freedom and our nation, the scene just described should concern you. Indeed, in the Preface to Wolfe’s book there is a statement that sums up the situation quite nicely:

The Bank for International Settlements building in Basel, Switzerland

The Bank for International Settlements building in Basel, Switzerland

“We are, again, at a crossroads in the history of our nation. The current financial crisis that began in 2007 and in which we are currently digging ourselves ever deeper is causing us to question many of the ideals we hold dear. Our current president is leading us down the path of socialism—a form of government that controls every-thing—not just our healthcare./ More to the point, the ‘leaders’ of our nation have made decisions and signed financial agreements with international financial bodies that may determine the way our very lives are to be handled. They have done this without consulting not only us—the people it most affects—but Congress, the body that is meant to provide oversight in such matters./ These are challenging times for America. We are truly at a watershed moment. Federal budget deficits are beyond being out of control. The government no longer pays attention to the wishes of us, its people, the ones our Founding Fathers fought so hard and so courageously to protect.”[6]

Thus, I stopped reading Wolfe’s book (haven’t even finished it yet—though I will) and for the last two months I have been researching to get all the knowledge I could about the “Bank for International Settlements”; its history, what it does and how it affects us. I have now acquired enough factual material to present you with this series of articles on the BIS, the “Introduction” to which you are now reading. There will be most likely 3 articles to follow under the same title but sub-titled as parts I, II and III; and I will be publishing them as soon as I complete them.

I firmly believe that it is the task of us all to do our utmost to be responsible for, preserve and recover our American Republic. The information presented here and in the upcoming articles is part of my personal effort to do so.

I hope that you find them informative and enlightening.

 

Copyright © 2016

By Mark Arnold

All Rights Reserved

[1] Bailout: The mechanism invented by banks to transfer the liability of bad loans from the bank to the public of a country. Banks, through the practices of fractional reserve create money out of nothing and loan it out thus resulting in inflation. Money becomes worthless as a result of this and confidence in money starts to erode. Other economic pressures develop as a consequence, resulting in loans going bad (witness the current mortgage disaster). The bank must write these bad loans off as losses. The public, observing or sensing this, lose confidence and demand their money from the bank (bank run). The bank, not having the funds to cover the depositor’s demands, must now be bailed out; the justification being that the poor depositors will lose their money or that the national economy will suffer. Because of this the government agrees to subsidize the bank using tax money collected from the people of the country. That is a bailout. The current bailout of the US banking system is costing trillions of dollars.

Collateralized Debt Obligation (CDO): A specific type of security derived from a batch of mortgages. CDOs are created when the owner of the mortgages (such as an investment bank like Goldman Sachs) creates a special corporation to hold the mortgages as an asset. The shares of this corporation then are divided into different classes of investments prior to sale to investors. These classes are usually 3 in number and are called “tranches” (which is French for slice.) The tranches are categorized by risk. The riskiest of the 3 is called the unrated or equity tranche. Investors in this tranche receive the highest rate of return but also assume the highest risk of those investing in that particular CDO issue. The next riskiest tranche is usually called the mezzanine tranche and the least risky is the senior tranche. CDOs had the advantage to the investment bank of opening up a new class of investor who was willing to take more risk for a higher potential return. Should some of the mortgages or loans default the equity tranche would take all of the initial loss followed in turn by the mezzanine and only after these two had failed completely would the senior tranche suffer.

Credit Default Swaps (CDS): Essentially an insurance policy, Credit Default Swaps are often written in as a provision of the loan. They allow a lender, such as a pension fund, which by law must only invest in highly rated bonds and securities, to make investments they could not otherwise make. A CDS taken out on a transaction results in a higher rating, thus qualifying the pension fund/investor to do the investment. Since the de-regulation of the late 1990’s/2000, however, CDSes have been allowed to be taken out by others on transactions they are not personally involved in. In other words, if pension fund A invested in corporation B anyone else could take out a CDS on that transaction with an insurance company or investment bank. The insurance company or investment bank would receive a premium from the CDS purchaser and should corporation B default on the loan from pension fund A these CDSes become redeemable as well as the original CDS insuring pension fund A. Essentially this is a form of gambling, with bets being taken that a certain loan or bond would fail, and it provided the means for astute investors to “short” the CDOs and Mortgage Backed Securities based on subprime mortgage loans, as covered in the movie “The Big Short”. It is the CDS that billionaire Warren Buffet referred to as “financial weapons of mass destruction”. The 2009 US CDS market was estimated at 40 to 50 trillion dollars but the actual amount is unknown.

[2] The Enron Corporation was an American energy company located in Houston, Texas. In late 2001 it was discovered that the company had been hiding billions of dollars of debt from failed deals and projects from its balance sheets, thus creating a false impression of viability and misleading investors, which included many of its own employees. In December of 2001, the company filed for bankruptcy and at the time was the single largest corporate bankruptcy in US history. In the subsequent investigation a number of Enron officers were indicted and several went to prison.

[3] The Sarbanes-Oxley Act, (SOX) was a bill sponsored by  Senator Paul Sarbanes of Maryland and Representative Michael Oxley of Ohio. Passed in July of 2002, largely in response to the Enron scandal, SOX established tighter controls for all U.S. publicly traded companies and was designed to restore confidence in the markets by ensuring financial statements accurately reflected the true position of a given company (rather than what some executives might wish it were – say if their bonuses were dependent on certain figures).

[4] These types of operations are called “False Flag” operations, which simply means covert operations that are designed to deceive in such a way that the operations appear as though they are being carried out by entities, groups, or nations other than those who actually planned and executed them in order to achieve some other hidden purpose. Examples in history include the “Reichstag fire” and “The Gulf of Tonkin” incident.

[5] Adam Lebor is a British author and journalist who grew up in London in the 1970s. He attended Leeds University in England and has a long history as a foreign correspondent in Europe covering the fall of Communism in 1990 and the wars in Bosnia and Croatia in the mid 90s.He is the author of a number of books, both fiction and non-fiction. “The Tower of Basel” was published in 2013.

[6] The Preface to “The Coming Financial Crisis: A Look Behind the Wizard’s Curtain” by John Truman Wolfe was written by Patricia Ross. Ms. Ross holds a Ph.D. but I have no other data about her. The book itself can be ordered through Amazon at the link below.

 

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9 Responses to Hitler’s Bank: The Unknown Story of the Bank for International Settlements—Introduction—by Mark Arnold

  1. Steve Christensen says:

    Good stuff Mark. Thanks

  2. John Donald says:

    Great work Mark.

  3. Chris Poulsen says:

    Mark, this is a great piece! When is part two coming out??

    • Mark Arnold says:

      Hi Chris! Good to hear from you and glad you liked the series so far. I just finished writing the text for Part II and am editing it now. It should be published in a couple of days. I don’t mind telling you I put a great deal of work into these, many late nights. I believe people need to know…stay in comm, OK?
      L, Mark

  4. Mike Lindgren says:

    Thanks Mark, you always deliver the very best

    • Mark Arnold says:

      Thanks Mike! Spread the word, as I know you do…to make the future a good one we have much to do…L M

  5. Richard Douglass says:

    Thanks for the heads up on these guys. Who would have suspected? But then, that was their idea all along.

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