Thursday, June 25, 2009

$134Billion Suitcase Bomb


For two decades, U.S. security forces worried endlessly about the surfacing of the infamous ‘suitcase nuclear weapons’ built by the Soviet Union. In June 2009, a suitcase carrying a weapon of mass destruction - $134 billion of bearer bonds – was confiscated as it was being smuggled into Switzerland. Without any additional reported facts – which seems to be where this story will end-up - the source and destination of the $134 billion in bearer bonds will probably remain a mystery. There are however, adequate clues in the initial reports to provide insight for speculation:

  1. An extremely powerful organization is making a major commitment to a financial strategy with global implications. Given the value of the bonds in question, this strategy is certainly being backed with a nod and wink by a central bank or treasury somewhere. The bonds are designated as intergovernmental, and somewhere in the process, a U.S. central bank or Treasury official would have been required to support the scam, if it indeed it was a scam. Any one organizing a scam of this magnitude would have considered and planned for verification of the bonds – meaning someone in the U.S. Treasury is involved in this. Otherwise, one has to question why anyone would create such perfect and expensive forgeries with such a fatal flaw in execution of the plan.
  2. The Italian police were "trailing" the holders of the bonds, suggesting a long term investigation was behind the arrests. Discovering these bonds was not an accident, and there is a lot more information to be had but is not being released.
  3. The Italian police or press referenced a ‘bond scam’ being run by the ‘Mafia’ with the Venezuelan Central bank, accusations for which the bank has denied any involvement. The Venezuelan Central bank would not be the bank validating the legitimacy of the bonds, but as explained below, would be the initial target.
  4. The two carriers with Japanese passports displayed the behavior of typical low level, dispensable resources who were allowed to be released from incarceration, and subsequently disappeared. (Odd, since a $134 billion of bonds illegally deployed can do more damage than a small nuclear weapon, and even a phony nuclear device will keep you in prison for a long time.) Whoever is behind the trafficking has a lot of ‘influence’ with multiple government agencies
  5. Significant press coverage has been totally stifled, considering the potential risk for global devastation this ‘suitcase bomb’ had. The five corporations that control most of the western media are all tightly linked in a network that supports U.S. covert operations. (1)The Mafia does not have that level of influence. – the U.S. and Israeli governments do.


Can the bonds be real?


There is a lot of speculation on the internet that these bonds are not forgeries, given that neither the Italians nor German officials thought they were forgeries, but there are those nagging facts that say it is impossible for them to be real, unless they were issued covertly. The U.S. Treasury has denied the bonds are real. There are a lot of bloggers that want to discount the possibility that these bonds are real, simply on the basis of "there is no official record of these existing." So what pieces of data do we have that suggest that the U.S. government has covertly issued bonds in that order of magnitude in the past? At this point of course, it all depends on who you chose to believe, the officials of the U.S. government, or independent historians and researchers.

  1. Start with the impeccably documented research of Sterling and Peggy Seagrave, Gold Warriors, who have documented how the Imperial Treasury of Japan was confiscated by U.S. bankers and President Truman in the aftermath of World War II, and subsequently the balance was taken from Ferdinand Marcos in 1985 by Reagan, Bush and Kissinger. Estimates vary, but at one point, we have estimates that can put the value of that treasury easily over $200 billion. Under international law, confiscation was illegal, so there are not a lot of U.S. officials stepping up to admit this.(2)
  2. Then move the story line to Mrs. V.K. Durham, wife of widely reported CIA covert fund manager Russell Hermann, who claims in sworn testimony, and provides actual documents of the transfers, that Greenspan and Bush with the assistance of Goldman Sachs, generated around $240 billion in covert bonds in 1991. Documents show the bonds were sent to Israel, where they were converted to yen and deutschemarks. (3)Following on Mrs. Durham’s claims, the reader must research the status of the deutschemark in 1991. From 1990 to 1991, the Bundesbank increased it’s currency printing costs from DM190 million to DM331 million while increasing the interest rates to reduce money supply. (4) The German monetary policy failed inexplicably in this timeframe, unless one considers $120 billion in deutschemarks created covertly by Greenspan, Bush, Rubin and Friedman.
  3. Move the story line to Andrei Kozlov, First Deputy Head of Russia’s Central Bank, who was heading an investigation into the loss and reported the theft at 400 billion rubles from the Central Bank in 1991. (Not to be confused with a similar scam run out of Chechnya in 1992 on a much smaller order of magnitude.) These rubles were stolen by someone putting hard currency securities in remote Chechen banks as collateral for Russian loans and then making the collateral notes disappear from the remote banks at the same time the funds were being withdrawn. At official exchange rates at the time, 400 billion rubles was about $240 billion.(5)
  4. Turn then to the highly respected consultant to the CIA, Claire Sterling who unabashedly points out that the collapse of Russia in 1991 was directly managed by intelligence agencies.
    "The fact that scarcely anyone outside Russia has heard of the Great Ruble Scam may be explained partly by its seemingly unbelievable details, but partly, too, by Western reluctance to touch exquisitely sensitive political nerves. Western governments rejoicing in the collapse of the evil empire wanted to assume, and to all appearances did assume, that all the evils in an emerging democracy emanated from politicians identified with the fallen communist state. Not one was prepared to acknowledge indelicate evidence to the contrary. The ability of three or four characters to mount such a planet wide operation, their extraordinary impact on what was still a world superpower, and their singular immunity from beginning to end suggest the guiding hand of not just one, but several intelligence agencies." (6)
  5. Look at the widely unreported claims that in the 1990s, the US covertly introduced hundreds of tonnes of gold into the market on at least four occasions, representing somewhere between $120-140 billion in bonds.(7) The two lawsuits that could have opened this story were shut down prematurely – the FBI records related to the Reginald Howe lawsuit were destroyed on 9/11, and a similar suit by Donald W. Doyle of Blanchard in which Barrick Gold was a primary defendant was settled out-of-court in 2006 and sealed under agreement.
  6. General Earl Cock’s ‘deathbed’ deposition in April 2000 describes Citibank’s and John Reed’s central involvement in Project Hammer in the last quarter of 1991 as being funded with $223 billion dollars, of mostly CIA moneys. Cocke also references the use of baby bonds to collaterize these funds, which are 10 year bonds. Cocke describes the source of these funds as "accounts, participants or players" with the accounts converting to bank ownership upon the death of the controlling party, and then to the government. This matches exactly what Sterling and Peggy Seagrave claim happens to the gold accounts
    opened by agents of the US.(8)

These historical facts have been summarized here to illustrate that the U.S. Government does indeed have and move massive, massive amounts of currency around covertly because the objectives of these financial manipulations run counter to U.S. law, and the origins of these funds are illegal. No nation will admit criminality until the statute of limitations runs out. The next question requiring an answer then is: Why would covert pro-U.S. forces be running these bonds? While the hypothesis of the bonds being used to claim TARP funds is interesting, the strategy of substituting one form of worthless U.S. debt for another does not seem plausible. On the other hand, there is a rich history of that links the plot to Venezuela, as the original press reports did.

Bonds and Venezuelan Oil


The international movement of major blocks of capital has at least twice before been associated with the takeover of large oil interests. The great success of the 1991 covert bond issuance was the transfer of ownership of Russian oil and gas interests to western investors cloaked behind holding companies and offshore banks.(9) In 1998, the collapse of the Russian market (which drove the LTCM financial crisis) was again engineered in an effort to force the Russians into a debt for equity swap for the Baltic Oil pipeline. The 1998 gambit failed, and the Russians simply defaulted on their debt rather than turn over control of the pipeline, and shortly thereafter, U.S.-Russian relations began an ongoing deterioration. One can look at additional covert financial programs where governments were unhinged by engineered financial crises: Chile in the 1980s and Mexico in the 1990s - where previously ‘nationalized companies’ were returned to private investors in debt for equity swaps.(10) The beneficiaries of this were privileged western investors who took over restructured operations that were rebuilt with taxpayer dollars from Russia, Chile and Mexico – and did so for pennies on the dollars. This history is relevant because a similar scenario is unfolding in Venezuela today, where an array of unknown western based investors are converting U.S. debt into Venezuelan debt in an illegal market with the expectation that a crushing debt load will drive Hugo Chavez out of office, and force Venezuela to swap equity in its primary valuable asset – state-oil company Petroleos de Venezuela SA, or PdVSA - to satisfy its growing debt.


Key to understanding this strategy is that the exchange market where this is occurring is ambiguously legal for some purposes, and more often than not illegal for most purposes. Currency exchange for Venezuelan ‘bolivars’ is tightly regulated by the Chavez government to prevent capital flight and tax avoidance, and for Venezuelans to get dollars through the official channels for purposes that do not align with Chavez’s vision of social investment is very expensive. As a result, dollars are in high demand, and are procured through an officially sanctioned back-door. The Venezuelan government has created a safety valve process (permuta) in which Venezuelan denominated bonds can be swapped for dollar denominated bonds at an uncontrolled rate in a market, and that exchange consist of hundreds of small ‘cambios’ that collect demand and funnel them through large money aggregators. A lot of this demand – but not all -is illegal under Venezuelan law. Hence, the bonds brought to the exchange for Venezuelan debt are being laundered under less than stringent governance, making bonds like those confiscated in Italy more likely to be accepted in these swaps. Chavez is gambling that the US dollar will be devalued, and western investors are betting Chavez’s hold on political power will be disrupted before the dollars collapses.


The largest permuta laundry appears to have been headed up by a former regulatory officer of the U.S. Federal Reserve (Atlanta), in charge of several Latin American countries, through Florida-based Rosemont P. Corporation, also known as Rosemont Money Services. He has recently been indicted for money-laundering, but the ‘parallel market’ (the newest euphemism for ‘black market’) continues, albeit at a more constrained pace.
Rosemont was indicted for accepting $900,000 of drug money to move through the permuta process, but there are preliminary indicators that the DEA indictment will not stick, and the indictment was meant more to disable a major player in the exchange mechanism than to cripple any particular drug cartel. Disrupting the exchange mechanism impedes the flow of capital to the Chavez government. This impediment creates inabilities for the Chavez regime to compensate foreign contractors, forcing them to turn off support for the state oil industry, which in turn reduces oil production and thus state revenues. Seven of nine off-shore oil rigs have been shut down in this manner, and the remaining two will probably be shut down in the near future. As the economy is destabilized with less oil revenue, there is increased likelihood of another coup attempt. Investors have seen this scenario before, in Chile in the 1980s and Mexico in the 1990s, where government takeovers by the upper classes ousted democracies inclined to support the interests of broader constituencies, by causing mass unrest through economic destabilization. In the wake of those upper class takeovers, the nationalized assets were exchanged for nation’s foreign debt, usually at prices that significantly enriched foreign investors at indigenous taxpayer expense.


The appearance of massively large blocks of U.S. bonds in the permuta - whether counterfeit or not – suggests a single player is attempting to dominate this market.
"No one truly understands what the source of the dollars is in these transactions. Most of the money is coming from offshore accounts," said Brian Stoeckert, who runs an anti-money laundering consulting firm." (11)
By shutting down the big players in the permuta exchange, and bringing in new, controlled exchange players, covert operatives can start aggregating Venezuelan debt with virtually no risk by using bonds whose authenticity can be denied if necessary, or argued as real if necessary. International debt settlement happens behind locked doors, and no one ever gets to find out what the settlement terms are.(12) Most of the funds and individuals who were behind the 1991 takeover of Russian oil are still around, and represent the most likely candidates for running this scenario again.(13) This scenario is classic U.S. covert policy: disrupt the economy and force the democratic government into debt; drive the debt to unmanageable proportions, and then cut off funding and call in the loans. The ensuing economic disruptions result in a takeover and force the government into bankruptcy proceedings. Western investors take over the key national assets for pennies on the dollar. This strategy is tried, tested and trusted.


Who then, might one ask, replaces the Rosemont P Corporation. Fortunately, J Aron, the subsidiary of Goldman Sachs that deals with its foreign exchange business is in an enviable position. Because of its oil and coffee trading business, J Aron has numerous contacts in Venezuela. Because of Rule 35 of the Commodity Futures Trading Act, these bond swap trades fall into the category of unregulated business.(14) Goldman Sachs clearly has the connections to the U.S. Treasury. It was Rubin and Friedman of Goldman Sachs in 1991 who facilitated the Bush/Greenspan issuance of covert bonds.(15) While plausible, this is –of course –only speculation.


Notes

  1. See Who Controls the Media? Professor John Lye, October 8, 2004, also National Organization of Women, also see Chapter 13, THE SEPTEMBER 11 COMMISSION REPORT Final Report of the Investigation Into the Murders of Nicholas Berg, Eugene Armstrong and Jack Hensley, EP Heidner, 2008
  2. see Gold Warriors: America’s Secret Recovery of Yamashita’s Gold, Sterling and Peggy Seagrave, Verso, 2005, p. 358. Most cursory reviews of this amount forget that 280,000 tonnes is less than 140 years of annual production. When one considers that treasuries and personal fortunes of South East Asia and China were plundered over 50 years by the Japanese army, this number should not be inconceivable.
  3. V.K. Durham presents substantial photographic evidence of these crimes on her website, and it can also be located at Tom Flocco’s website as well. see http://www.theantechamber.net/; also conduct a search engine query on "VK Durham"
  4. David Marsh, The Bundesbank: The Bank the Rules Europe, 1992, Mandarin Paperbacks, pp 24 and 85.
  5. "The West is not very highly concerned with the threat of cyber terrorism," Regnum News Agency, December 15, 2006, http://www.regnum.ru/english/749825.html.
  6. Thieves World, Claire Sterling, Simon and Schuster, 1994, p.202
  7. see footnote 25 in Collateral Damage (Part 2): The Subprime Crisis and the Terrorist Attacks on September 11, 2001, E.P. Heidner, 2008.
  8. Brigadier General Erle Cocke’s deposition in US District Court, Southern District of New York, April 13, 2000, April 13, 2000, (as provided in photostat version in Guyatt’s Project Hammer Files)
  9. Collateral Damage: U.S. Covert Operations and the Terrorist Attacks on September 11, 2001, E.P Heidner, 2008
  10. see The Blood Bankers, James S Henry, 2003, Chapter 7; Banking on Dictatorship
  11. US Money Laundering Case Halts Venezuela Forex Trading , Darcy Crowe, Dow Jones Newswires, MARCH 27, 2009; http://online.wsj.com/article/BT-CO-20090327-714177.html
  12. The writer challenges the reader to try to find a summary of how the international debt crisis was resolved in 1990.
  13. The names of the investors are found in Collateral Damage: U.S. Covert Operations and the Terrorist Attacks on September 11, 2001
  14. Title 17--Commodity and Securities Exchanges , CHAPTER I--COMMODITY FUTURES TRADING COMMISSION, PART 35--EXEMPTION OF SWAP AGREEMENTS http://edocket.access.gpo.gov/cfr_2006/aprqtr/pdf/17cfr35.2.pdf
  15. Collateral Damage (Part 2): The Subprime Crisis and the Terrorist Attacks on September 11, 2001, E.P. Heidner, 2008.

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