Pentagon Report Reveals Financial Terrorism Suspected in 2008 Economic Crash … Updated
When Paul Kanjorski, the former Pennsylvania U.S. Representative, appeared on CSPAN in January 2009 to discuss the government bailouts after the 2008 economic meltdown, he also disclosed some chilling information about America’s economic vulnerabilities. He revealed that on that fateful September day in the midst of the 2008 Presidential elections “$550 billion was being drawn out [of U.S. money markets] in a matter of an hour or two.” The Congressman said the United States was experiencing an “electronic run on the banks.”
Would an investigation begin to determine who was behind the run on the banks that according to Kanjorski could “have collapsed the entire economy of the United States and within twenty-four hours, the world economy…?” As Kanjorski detailed: “It would have been the end of our economic system and political system as we know it.”
Now, finally over three years later, we may finally be closer to finding out. According to investigative reporter Bill Gertz writing in the Washington Times, Financial terrorism suspected in 2008 economic crash:
Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.
The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy…”
Mr. Freeman wrote the report for the Pentagon’s Irregular Warfare Support Program, part of the Combating Terrorism Technical Support Office, which examines unconventional warfare scenarios.
Read it all here.
Pay close attention to Mr. Freeman’s analysis of what he describes to be the third phase to destroy America’s economy because it is already happening: the devaluation of the U.S. dollar.
Below is Mr. Freeman’s Executive Summary
Serious risks to the global economic system were exposed by the crisis of 2008, raising legitimate questions regarding the cause of the turmoil. An estimated $50trillion of global wealth evaporated in the crisis with more than a quarter of that loss suffered by the United States and her citizens.
A number of potential causative factors exist, including sub-prime real estate loans, a housing bubble, excessive leverage, and a failed regulatory system.
Beyond these, however, the risks of financial terrorism and/or economic warfare also must be considered. The stakes are simply too high for these potential triggers to be ignored.
The Obama administration‘s recent call for greater financial regulation stipulates to the facts that hedge fund activity has been virtually unregulated and that dark-pool trading, Credit Default Swaps, and naked short selling provide tremendous vulnerabilities in the system. This report concurs with these concerns as recently outlined by the heads of the SEC, US Treasury, and Federal Reserve and provides supporting data.
Beyond that, this report exposes the fact that these vulnerabilities are subject to exploitation not only by greedy capitalists seeking profit but also by financial terrorists, intent on destroying the American financial system.
From a historical perspective, there are numerous examples of financial attacks on specific companies and industries both for economic and non-economic reasons. In addition, there are other examples of financial attacks conducted against individual nations both for economic and non-economic reasons. Based on this awareness, the economic collapse of 2008 must be critically examined to determine the possibility that a financial attack took place as well as an assessment of future risks.
The purpose of this report is to consider the implications of financial terrorism and/or economic warfare and to identify and realistically list prospective threats to U.S. economic security from a means, motive, and opportunity perspective.
The preliminary conclusions of the research suggest that, without question, there were actors who had the motive to harm the U.S. economy. These motives can be categorized as both economic and non-economic. In addition, these same actors have clearly demonstrated the means to carry out such an attack. Finally, the opportunity was clearly present given the existing economic condition and regulatory framework in operation. The hypothesis under consideration is that a three-phased attack is underway with two of those phases completed to date.
The first phase was a speculative run-up in oil prices that generated as much as $2 trillion of excess wealth for oil-producing nations, filling the coffers of Sovereign Wealth Funds, especially those that follow Shariah Compliant Finance.
This phase appears to have begun in 2007 and lasted through June 2008.
The rapid run-up in oil prices made the value of OPEC oil in the ground roughly$137 trillion (based on $125/barrel oil) virtually equal to the value of all otherworld financial assets, including every share of stock, every bond, every private company, all government and corporate debt, and the entire world‘s bank deposits. That means that the proven OPEC reserves were valued at almost three times the total market capitalization of every company on the planet traded in all27 global stock markets.
The second phase appears to have begun in 2008 with a series of bear raids targeting U.S. financial services firms that appeared to be systemically significant.
An initial bear raid against Bear Stearns was successful in forcing the firm to near bankruptcy. It was acquired by JP Morgan Chase and the systemic risk was averted briefly. Similar bear raids were conducted against various other firms during the summer, each ending in an acquisition. The attacks continued until the outright failure of Lehman Brothers in mid-September. This created a system-wide crisis, caused the collapse of the credit markets, and nearly collapsed the global financial system. The bear raids were perpetrated by naked short selling and manipulation of credit default swaps, both of which were virtually unregulated. The short selling was actually enhanced by recent regulatory changes including rescission of the uptick rule and loopholes such as ―the Madoff exemption.
While substantial, unusual trading activity can be identified, the source of the bear raids has not been traceable to date due to serious transparency gaps for hedge funds, trading pools, sponsored access, and sovereign wealth funds. What can be demonstrated, however, is that two relatively small broker dealers emerged virtually overnight to trade ―trillions of dollars worth of U.S. blue chip companies. They are the number one traders in all financial companies that collapsed or are now financially supported by the U.S. government. Trading by the firms has grown exponentially while the markets have lost trillions of dollars in value.
The risk of a Phase Three has quickly emerged, suggesting a potential direct economic attack on the U.S. Treasury and U.S. dollar.
Such an event has already been discussed by finance ministers in major emerging market nations such as China and Russia as well as Iran and the Arab states. A focused effort to collapse the dollar by dumping Treasury bonds has grave implications including the possibility of a downgrading of U.S. debt forcing rapidly rising interest rates and a collapse of the American economy. In short, a bear raid against the U.S. financial system remains possible and may even be likely. Phase Two may have concluded with the brief market rebound that was supported by an emerging regulatory response calling for greater transparency across the board. Efforts including regulation of credit default swaps and proposed oversight of previously unmonitored trading activity, as well as Federal support of systemically vital institutions.
But, we remain left with the critical unanswered questions of who and how?
The recent seizure of $134 billion face value in supposedly counterfeit U.S. Federal Reserve bonds underscores the reality of the economic threat. This may be as significant as the Japanese radio intercepts were before December 1941. Immediate consideration of the issues outlined in this report is vital. Further study is essential and prospective responses must be crafted to address future risks. Finally, there are legitimate questions about the performance of the regulatory regime and Wall Street institutions. Implications that these parties have been complicit or otherwise co-opted cannot be ruled out. Therefore, it is strongly recommended that this study and any task-force response be conducted outside of traditional Washington and Wall Street circles.
This report was completed in 2009 but is only seeing daylight now. Read the entire report here.