The Armageddon Looting Machine

The Looming Mass Destruction From Derivatives

by Ellen Brown

financial-crisisIncreased regulation and low interest rates are driving lending from the regulated commercial banking system into the unregulated shadow banking system. The shadow banks, although free of government regulation, are propped up by a hidden government guarantee in the form of safe harbor status under the 2005 Bankruptcy Reform Act pushed through by Wall Street. The result is to create perverse incentives for the financial system to self-destruct.

Five years after the financial collapse precipitated by the Lehman Brothers bankruptcy on September 15, 2008, the risk of another full-blown financial panic is still looming large, despite the Dodd Frank legislation designed to contain it. As noted in a recent Reuters article, the risk has just moved into the shadows:

“[B]anks are pulling back their balance sheets from the fringes of the credit markets, with more and more risk being driven to unregulated lenders that comprise the $60 trillion “shadow-banking” sector.”

Increased regulation and low interest rates have made lending to homeowners and small businesses less attractive than before 2008. The easy subprime scams of yesteryear are no more. The void is being filled by the shadow banking system. Shadow banking comes in many forms, but the big money today is in repos and derivatives. The notional (or hypothetical) value of the derivatives market has been estimated to be as high as $1.2 quadrillion, or twenty times the GDP of all the countries of the world combined.

According to Hervà Hannoun, Deputy General Manager of the Bank for International Settlements, investment banks as well as commercial banks may conduct much of their business in the shadow banking system (SBS), although most are not generally classed as SBS institutions themselves. At least one financial regulatory expert has said that regulated banking organizations are the largest shadow banks.

The Hidden Government Guarantee that Props Up the Shadow Banking System

According to Dutch economist Enrico Perotti, banks are able to fund their loans much more cheaply than any other industry because they offer “liquidity on demand.” The promise that the depositor can get his money out at any time is made credible by government-backed deposit insurance and access to central bank funding. But what guarantee underwrites the shadow banks? Why would financial institutions feel confident lending cheaply in the shadow market, when it is not protected by deposit insurance or government bailouts?

Perotti says that liquidity-on-demand is guaranteed in the SBS through another, lesser-known form of government guarantee: “safe harbor” status in bankruptcy. Repos and derivatives, the stock in trade of shadow banks, have “super-priority” over all other claims. Perotti writes:

“Security pledging grants access to cheap funding thanks to the steady expansion in the EU and US of “safe harbor status”. Also called bankruptcy privileges, this ensures lenders secured on financial collateral immediate access to their pledged securities. . . .

“Safe harbor status grants the privilege of being excluded from mandatory stay, and basically all other restrictions. Safe harbor lenders, which at present include repos and derivative margins, can immediately repossess and resell pledged collateral.

“This gives repos and derivatives extraordinary super-priority over all other claims, including tax and wage claims, deposits, real secured credit and insurance claims. Critically, it ensures immediacy (liquidity) for their holders. Unfortunately, it does so by undermining orderly liquidation.”

When orderly liquidation is undermined, there is a rush to get the collateral, which can actually propel the debtor into bankruptcy. The amendment to the Bankruptcy Reform Act of 2005 that created this favored status for repos and derivatives was pushed through by the banking lobby with few questions asked. In a December 2011 article titled ” Plan B — How to Loot Nations and Their Banks Legally,” documentary film-maker David Malone wrote:

“This amendment which was touted as necessary to reduce systemic risk in financial bankruptcies . . . allowed a whole range of far riskier assets to be used . . . . The size of the repo market hugely increased and riskier assets were gladly accepted as collateral because traders saw that if the person they had lent to went down they could get [their] money back before anyone else and no one could stop them.

Burning Down the Barn to Get the Insurance

Safe harbor status creates the sort of perverse incentives that make derivatives “financial weapons of mass destruction,” as Warren Buffett famously branded them. It is the equivalent of burning down the barn to collect the insurance. Says Malone:

RuleOfBanks“All other creditors — bond holders — risk losing some of their money in a bankruptcy. So they have a reason to want to avoid bankruptcy of a trading partner. Not so the repo and derivatives partners. They would now be best served by looting the company — perfectly legally — as soon as trouble seemed likely. In fact the repo and derivatives traders could push a bank that owed them money over into bankruptcy when it most suited them as creditors. When, for example, they might be in need of a bit of cash themselves to meet a few pressing creditors of their own.

“The collapse of . . . Bear Stearns, Lehman Brothers and AIG were all directly because repo and derivatives partners of those institutions suddenly stopped trading and “looted’ them instead.”

The global credit collapse was triggered, it seems, not by wild subprime lending but by the rush to grab collateral by players with Congressional-approved safe harbor status for their repos and derivatives.

Bear Stearns and Lehman Brothers were strictly investment banks, but now we have giant depository banks gambling in derivatives as well; and with the repeal of the Glass-Steagall Act that separated depository and investment banking, they are allowed to commingle their deposits and investments. The risk to the depositors was made glaringly obvious when MF Global went bankrupt in October 2011. Malone wrote:

“When MF Global went down it did so because its repo, derivative and hypothecation partners essentially foreclosed on it. And when they did so they then “looted’ the company. And because of the co-mingling of clients money in the hypothecation deals the “looters’ also seized clients money as well. . . JPMorgan allegedly has MF Global money while other people’s lawyers can only argue about it.”

Troika Buys NationsMF Global was followed by the Cyprus “bail-in” — the confiscation of depositor funds to recapitalize the country’s failed banks. This was followed by the coordinated appearance of bail-in templates worldwide, mandated by the Financial Stability Board, the global banking regulator in Switzerland.

The Auto-Destruct Trip Wire on the Banking System

Bail-in policies are being necessitated by the fact that governments are balking at further bank bailouts. In the US, the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivative activities. That means the next time we have a Lehman-style event, the banking system could simply collapse into a black hole of derivative looting. Malone writes:

“. . . The bankruptcy laws allow a mechanism for banks to disembowel each other. The strongest lend to the weaker and loot them when the moment of crisis approaches. The plan allows the biggest banks, those who happen to be burdened with massive holdings of dodgy euro area bonds, to leap out of the bond crisis and instead profit from a bankruptcy which might otherwise have killed them. All that is required is to know the import of the bankruptcy law and do as much repo, hypothecation and derivative trading with the weaker banks as you can.

“. . . I think this means that some of the biggest banks, themselves, have already constructed and greatly enlarged a now truly massive trip wired auto-destruct on the banking system.”

The weaker banks may be the victims, but it is we the people who will wind up holding the bag. Malone observes:

“For the last four years who has been putting money in to the banks? And who has become a massive bond holder in all the banks? We have. First via our national banks and now via the Fed, ECB and various tax payer funded bail out funds. We are the bond holders who would be shafted by the Plan B looting. We would be the people waiting in line for the money the banks would have already made off with. . . .

“. . . [T]he banks have created a financial Armageddon looting machine. Their Plan B is a mechanism to loot not just the more vulnerable banks in weaker nations, but those nations themselves. And the looting will not take months, not even days. It could happen in hours if not minutes.”

Crisis and Opportunity: Building a Better Mousetrap

There is no way to regulate away this sort of risk. If both the conventional banking system and the shadow banking system are being maintained by government guarantees, then we the people are bearing the risk. We should be directing where the credit goes and collecting the interest. Banking and the creation of money-as-credit need to be made public utilities, owned by the public and having a mandate to serve the public. Public banks do not engage in derivatives.

Today, virtually the entire circulating money supply (M1, M2 and M3) consists of privately-created “bank credit” — money created on the books of banks in the form of loans. If this private credit system implodes, we will be without a money supply. One option would be to return to the system of government-issued money that was devised by the American colonists, revived by Abraham Lincoln during the Civil War, and used by other countries at various times and places around the world. Another option would be a system of publicly-owned state banks on the model of the Bank of North Dakota, leveraging the capital of the state backed by the revenues of the state into public bank credit for the use of the local economy.

Change happens historically in times of crisis, and we may be there again today.

Ellen Brown is an attorney, president of the Public Banking Institute, and author of 12 books, including WEB OF DEBT and its newly-released sequel, THE PUBLIC BANK SOLUTION. Her websites are,, and

Observations From a Gypsy Cool Brother

Some Observations on Reality in the World Today

by Skip Rorshach Freedman

 The old saying that you “can’t see the forest for the trees” is the perfect analogy of our world today. The planet has become so fast-paced and complex that the daily activities necessary to survive seem to take up most of our waking time. Additionally, we are all bombarded by some major crisis almost every month; be it some horrendous man-made or (allegedly) natural disaster, a shooting at some business or school, another celebrity in rehab, or something else you never imagined when you were growing up. These incidents are intended to distract us away from other things happening to undermine our health, wealth and liberty. All that is needed to recognize these amateur diversions is the ability to look at the world with a realistic and objective mind.

What you’ll see is that modern corruption in the USA has sunken to new lows, so we might as well start at the top and work down. The office of president hasn’t been the same since JFK was murdered on live television 50 years ago. With voting we have the illusion of choice, but only select persons of certain genealogies will ever occupy the Oval Office. For the last several decades, presidents have been issuing so-called “executive orders” that supposedly supersede both Congress and the Constitution. Your civil rights and liberties have been progressively diminishing, with surveillance and government intrusion in your privacy being vastly broadened and spreading like cancer. Congress enacts laws to benefit business at the expense of the people (that’s called Fascism), and alphabet agencies can run amok in this kind of atmosphere. The NSA spies on every electronic facet of our lives, particularly cellphones and email. There is abundant evidence that the FBI has directed and aided many terrorist incidents within this country. The CIA has been intimately involved with the military in importing narcotics into the USA since the Vietnam war (why else would we be in Afghanistan?), plus it performs rouge operations of murder throughout the entire world and even within the USA (prime example: Michael Hastings). The FDA allows conglomerates like Monsanto to poison our food and water, lets dentists use the toxic substance mercury in fillings for teeth, plus approves hundreds of brands of harmful psychiatric pills from Big Pharma to be prescribed to children and depressed adults to put them in a haze. And, topping it off, Homeland Security acts like the new Gestapo. The banking industry pays almost nothing in interest on a savings account; but takes in billions yearly from loan and credit card interest, plus repossessing people’s homes at a record rate. And don’t forget that your money paid for their phony “bailouts”. The Federal Reserve System is a collection of private banks that has hijacked and manipulated our money system for a century now, deliberately causing monetary panics and stealing your hard-earned money through inflation to make people into wage slaves. Big Business has been gradually moving to mega-corporation monopolies that squeeze out small business competition and keep the prices of goods at maximum. The petroleum industry has maintained an artificial scarcity of oil to justify high gasoline prices, as well as suppressing viable alternative energy sources for over a century. All media is owned by a handful of companies that control the content of television, radio, and magazines. The medical industry, in collusion with the FDA, has suppressed alternative therapies for cancer that could have saved hundreds of thousands of lives in the last century. There is a prison industry (with the highest incarceration rate in the world) designed to ensnare and exploit as many people as possible within its grasp. And, at the bottom of the heap, the police have been receiving military training and equipment, plus acting like surly belligerant bullies while writing tickets to generate capital for decaying bankrupt cities. Unfortunately, the average person is manipulated into paying for all this through ever increasing taxes, while the services and benefits supposedly provided by those taxes dwindle away. And they keep trying to brainwash you into thinking that this is somehow normal. Unfortunately, most people actually fall for this outright fraud.

The bottom line is: do you feel it’s appropriate to help this growing insane police state by assisting it, either morally or financially? Why support a system that is trying to exploit and destroy you? That really doesn’t make any rational sense. Non-compliance with a corrupt system will rob them of their ill-gotten gain, so just gradually ease out of their system. Additionally, you can use their tactics against them for your advantage, convenience, or pure amusement. There are many ways of doing this: by materials diversion and procurement, surreptitious utilization of equipment and supplies, or just good old-fashioned harassment. Don’t make life easy for them – after all, they’re the problem. You don’t always have to be a victim, the tables can occasionally be turned. So if you find the concept of Full Spectrum Dominance to be both pretentious and offensive, consider doing something about it. Just be carefully creative, and always resist tyranny that’s disguised as freedom.

Dissolving the Make-Believe Matrix

Please read…

Dissolving the Make-Believe Matrix

Zen Gardner

These power crazed would be rulers don’t own the earth. They don’t own you and me. They don’t own all their stupid secret symbols. They don’t own the present, they don’t own the future. They don’t even own themselves.

They’re usurpers, in every sense of the word. And absolutely nothing to fear. Continue reading Dissolving the Make-Believe Matrix


 !!! JUST SAY NO – TO THE N.W.O. !!!



There are many thousands of books and websites and videos on the subject of the New World Order, Global Enslavement and other various issues much of which has been termed the ‘Dark Cabal’ or ‘Criminal Cabal’ that cover just about every bit of this subject matter in great detail.

It seems incredibly surprising, that there are rarely any discussions of POSSIBLE SOLUTIONS to this issue.

Here is, quite simply, possibly one of most absolute simplest and most powerful solutions of all:

!!! JUST SAY NO – TO THE N.W.O. !!!

Is it possible that altering humanity’s future can be literally this simple?

Well, there is a Mass Awakening happening now. People all around the globe are waking up to the fact that they have been controlled by the opressive ‘Criminal Cabal’. And they have had enough and realize that it is time for the ‘Dark Cabal’ to end.

The reason that the cabal has been able to rise to power is due to this very one simple reality: We, the people of Earth, HAVE ALLOWED IT!

Think of the most simplest equation:

Over 7 billion people are currently ruled by a few thousand!

Question: So, how could just a few thousand people rule over 7 billion? Answer: Because the 7 billion people are willing subjects and playing along with the ‘Dark Cabal’ game. In the past much of the control has been from instilling and threatening fear, now it seems that that is mainly due to what seems like hollow threats. The cabal has no power of it’s own, but rather from controlling the masses. If the masses stop supporting the criminals – Then all their power simply vanishes!

Now that the Mass Awakening is happening, people everywhere are becoming intolerant of the oppressive rulers and their methods.


Of course the actual implementation of the ‘change over’ will be highly complex, and this writing is oversimplified to say the least, however here are some initial steps to get going …


Many people are still asleep and in the dark when it comes to the ‘Dark Cabal’ and it’s oppressive government, so here are some excellent websites to get caught up on exactly what is happening outside of the mainstream news (Which is controlled by the Cabal)…

Visit these websites and links:


After you have woken up to what is wrong with the dark cabal, then you can start looking into the bright and positive aspects of change that is possible as outlined by current new science and teachers of all kinds.

Please visit these websites and links – 5D Earth

and many more….



1st, you can use various heart and mind techniques outlined in the 2nd step to work with your own inner change. Then, as you feel more comfortable with these issues of change, you can share your ideas and feelings with your family, friends and neighbors.

So here is a powerful, positive visualization to consider: Imagine for one moment, that you woke up tomorrow morning, and all the oppressive forces of the dark cabal simply vanished and all positions were filled with good, honest, compassionate caring citizens. How would that make you feel? As we have learned from modern science and therapy techniques, change starts from within and that keeping your focus on a goal will get you to the finish line! So therefore, if you can stay focused on the concept of the vanishing ‘Criminal Cabal’ being replaced by a good, compassionate government, then you are starting to do your part in bringing this about.

Let’s also imagine that billions of other people are doing the same thing and focusing on the same mindset.

Wouldn’t it be a natural assumption, that if billions of people were focusing on this every day, that at some point, great positive action would start manifesting towards this goal?

Do you really think that 7 billion people would continue to let themselves be controlled by just a few thousand of the ‘Dark Cabal’ at this point?

Eventually, as the people bring forth the new vision into real actions of change , with no support and backing, the criminals would no longer be able to sustain control.

So, simply put, people will ‘start in the heart and mind’ and create an image of change to a positive, nurturing government, and as things progress they will start to affect real change and actions in the world as we have already seen in recent current events.


There are those who believe that there are various entities such as ET’s – Spirits – Angels and regular citizens (Some called white hats) and the like that are here to aid us in this transition that some call ascension at this time. It may start soon with Mass Arrests of the criminal cabal. Here are a few links:

And here’s some info about the recent World Liberation Day on May 5 & 6 2012.

If this change does manifest itself in the coming days, then that would be fantastic. However it is not necessary, since people are already waking up and just saying no is all that is needed to begin the transition.

So please, if this resonates with you, PLEASE SHARE with others.


Thanks for Reading,

An Awakening Citizen