Doomsday Software and There Is Good Reading on Mars
by Bill Sardi: The
Hunt for a Known Cure
crystal ball, who is the fairest bank of all? Answer: Take your
money out of the bank and buy some gold.
agencies now have software to pre-inform them of the predicted day
of their demise. This software goes beyond predicting the death
of any single bank to calculate the inter-connectedness of the entire
banking system and show when one banks falls if the rest will fall
They call it
You can call it Bankers Doomsday Software, an algorithmic oracle
that tells when a financial crisis is nearing that would crumble
the entire global financial system. What its initial test run is
telling us is that the world banking system is so intertwined with
credit default swaps and derivatives that a relatively small banking
institution can bring down the entire system of world banking. Using
DebtRank software, prognosticators were retrospectively able to
determine that the financial crisis of 2008, started by the collapse
of a relatively small firm, Lehman Brothers, could have wiped out
more than 70% of the wealth of the world’s financial network if
bailout funds had not been provided in a timely manner.
development team says a problem uncovered by its analytic software
is that its ability to avert a future worldwide financial meltdown
is hampered by the fact most global transactions are confidential
and regulation occurs only at the national level. Therefore, there
authority keeping track at the international level to monitor
the global finance system as a whole.
governor of the Bank of England didn’t have DebtRank at hand last
October (2011), but he issued a warning to chief executives of Britain’s
largest banks that there was a serious chance none of their institutions
would survive to the end of the year. His precise wording, posted
online by the UKs Telegraph, said: "Gentlemen,
you could all be out of business by Christmas."
having lost about 70% of their revenue sources with the collapse
of the residential real estate market and the legislative reduction
of billions of dollars of fees to process debit card transactions
seems to have prompted bankers to make up for their desperate situation
by ignoring the rules. Regulators seem be looking the other way
as an array of infractions have been revealed in recent news media
a gander at what the largest American banks have been up to lately:
money laundering, interest rate rigging, defrauding hospitals, schools
and state governments of investment income from municipal bond sales,
misleading investors over the quality of home mortgages, omission
of documents relating to the sale of debt instruments, fake research
on the sale of stocks and bonds, etc.
Barofsky, former TARP bailout watchdog, describes it: "it’s
all part of a pattern of activity, this sort of scandal after scandal….
not only do we have to rescue them (the financial institutions)
but they get to operate above the law. Because they know and we
know, that if we took dramatic action against them we could bring
them down and then bring down the entire economy."
What has become
apparent is that "too big to fail banks" are essentially
working the system to gain a competitive upper hand. They are using
public backing (bailout money) to reduce their borrowing costs.
have become subsidies. Banks that play by the rules and take
no bailout money receive no such advantages. It is financial cannibalism
at its finest.
is predictive software doesn’t make things any better. Corrective
action could possibly be taken but most of this amounts to creating
more electronic money from the U.S. Federal Reserve while fundamental
banking malpractice remains in place.
world financial system is more precarious in some respects, if for
nothing more than all the counterfeit money that was created to
make it appear banks are solvent. If bankers today had to play by
truthful accounting rules and appraise their real estate assets
at their actual market value and declare all their non-performing
home loans as foreclosures, the entire banking system would collapse.
crystal ball may declare an immediate crisis lies ahead, but then
again, what if the crisis is imminent and daily? Now it becomes
business as usual. Just change the rules and then go back to the
DebtRank crystal ball and ask again if the financial system is about
to implode. The DebtRank crystal ball will give a different answer
this time. So it can be manipulated. Some large banks have learned
how to borrow money just prior to their required quarterly financial
reports to make their financial status appear rosier. See if DebtRank
can calculate that.
only tells you whether the first domino has begun to fall, it does
nothing to prevent a crisis and only begs for more money printing
and bailouts that foment irresponsible banking practices.
The same fundamental
flaws of fiat money, fractional banking and debt-based money prevail.
Anything that would reign in these dangerous practices and restore
sanity to banking, such as gold-backed money that puts limits on
inflation and how leveraged banks can be, and full-100% reserves
rather than 8-10% reserves on loans (which banks ignore anyway),
are shunned or ignored.
that a relatively small bank could bring down the world financial
system, even small bankers can extort the Central Bank. Maybe the
smaller banking and financial institutions can’t be cannibalized
directly. Regulators now step in and do the cannibalizing for the
mega-banks by forcing a weaker institution to merge with a stronger
Volcker rule, which requires banks to restrict their investments
in hedge funds and private equity funds, is being put in force,
but banks have delayed implementation till 2014 and who knows when
that date is reached whether bankers will obtain even further delays.
We all hear the rules, but exactly what are the penalties if the
rules are violated beyond a slap on the hands with fines and penalties
that amount to far less than what is gained by breaking the rules.
So bankers ignore the rules and pay the fines. Disregard for law
is everyday business practice. It’s like an auto driver who keeps
getting speeding tickets and just paying the fines with no regard
for the law.
Basel III agreement, which is to be phased in from 2013 through
2019, will require banks to maintain "top-quality capital"
equivalent to 7 percent of their risk-bearing assets (loans), which
is about three times what they are required to hold under existing
rules. But who enforces this rule and when will the banks ever stop
delaying its implementation? Will any violators ever go to jail?
presentation by a 12-year old girl in Canada reveals the banking
system there has loaned
out $1.5 trillion with only $4 billion on reserve. That is less
than 1% on reserve. The banking system is a total farce.
may be able to get banks to agree, but they may not be able get
them to comply. The Basel I agreement, which required banks to hold
8% in reserve, was agreed upon 24 years ago. The
world’s banks have yet to uniformly comply.
In 1999, when
the price of gold was $260/oz. (less than the cost of getting it
out of the ground and refining it), Reginald H. Howe said an "online
poll of U. S. college students showed that twice as many expected
in their lifetime to see aliens land on Earth than to experience
another Great Depression."
How times have
changed. Gold is ~$1640/oz. as I write today and the banking and
finance industry papers over what amounts to an economic calamity
that dwarfs the Great Depression and obfuscates any real reforms.
This means even more difficult times ahead.
To update Reginald
H. Howe’s monitoring of online public opinion polls, in an unexpected
reversal, an interplanetary poll reveals Martians are now fearful
earth will expel its bankers to their planet. I’ve overheard earth’s
bankers say they are looking forward to a Martian landing as that
planet that has no gold, no banking rules and no reserve requirements.
However, a Mars early landing rover which was sent to scout the
opportunity to start a central bank there was stunned to discover
a preserved copy of Ludwig von Mises book The
Theory Of Money And Credit on the red planet. It was like Dracula
finding a ring of garlic.
him mail] is a frequent writer on health and political
topics. His health writings can be found at www.naturalhealthlibrarian.com.
latest book is Downsizing
© 2012 Bill Sardi Word of Knowledge Agency, San Dimas, California.
This article has been written exclusively for www.LewRockwell.com
and other parties who wish to refer to it should link rather than
post at other URLs.
Best of Bill Sardi