Blitzkrieg on the stock exchange !
© IRAN-RESIST.ORG - OCT 11 2008 | The financial crisis doesn’t end up surprising economists; it is challenging the accounting rules. There’s a good reason to that: this is not a crisis due to a bad bank management, mistakes or a liberalism malfunctioning, the end of a system, but a war lead by Washington against all of its adversaries and competitors. And as all wars, the victory belongs to the one who gains ground.
The crisis started with the notification of a deficit or even a failure of Freddie Mac and Fannie Mae, two American organism of mortgage financing working thanks to the State borrowings or bonds that are very secure financial investments. China was among the first potential victims after such announcement because it owns USD 397 billion bonds in those both institutions. Further to the announcement, on the 7 September, the American government engaged itself to inject USD 200 billion into both organisms in order to make up their deficit and it put them under its tutelage. Such interventionism, first cousin of the Paulson plan, is very generous.
Chinese congratulated Washington for having saved their investments but in the meantime, the bounds they own don’t have their initial value anymore and they cannot resell them. The banks that used to detain those bounds lost as well their value: their shares dropped down. In this operation, America didn’t get richer (although the value of its debt got diminished), but its creditors became notably less rich because they own shares whose value is falling quickly and they have to scoop out from their treasury (their currencies stock) in order to fill up their losses and also to secure the assets of the customers of the affected financial institutions.
Chinese were not the only ones: every country and also all private banks were affected in various scales according to the importance of their investments regarding the American credence asset that worth nothing in present. However Chinese or Japanese banks as well as British ones are not very affected by the fall of the American bounds that showed some failures and losses, contrary to three other major American financial institutions that are Lehman Brothers, Merill Lynch and AIG. Their failure public proclamation, followed by several instigations to cool down or successive announcements of salvation plans appeared as a shutter release. Panic reached every country and stock markets felt down.
Before such tensing notifications, undeniable bombs, the greatest discretion was predominant and is still prevailing into all concerned countries. The main implicated ones don’t let known their loss on the basis of the shock wave in Europe where the democratic rules impose a greater transparency.
The indicative country could be Germany that is with its USD 41 billion investments in 14th position on the honor list of the States owning American bounds. In order to raise Hypo Real Estate, the 4th bank of the country, Merkel had to spend EUR 50 billion, i.e. USD 68 billion, which represent a sum that is much more important than the German investments on American debt.
We dare to imagine the damages that harmed the champions of American credence investment. If we make exception of some of them, all of them increased their investments the past summer due to an abnormal fall of the American share prices since April 2008. At that date began also the American stock exchange speculations that blew up the barrel price.
Both manipulations are probably linked: since April 2008 and the fall of the shares price, each one wished to catch as much as possible shares as they were becoming more and more profitable. The artificial increase of the barrel acted as a locomotive to re-launch the purchase of the cheap bounds: the artificial increase of the barrel boosted the income of the Arabs from the OPEC and their investments increased at an incredible pace of 15% each month from April 2008.
On the last checking in July 2008, Japan owned (G$) USD 593 billion bounds that are currently valueless, China owned G$ 519, United-Kingdom: G$ 291, Gulf Arabs: G$ 174, Brazil: G$ 148, off-shore banks in which mullahs’ and mafia people’s laundered money is resting: G$ 133.5, Luxemburg: G$ 75, Russia: G$ 74, Hong Kong: G$ 61, Switzerland: G$ 45…
Off-shore banks are facing a serious situation. The private stock and shares dabblers are smashed. And each State has to inject colossal quantity of currencies taken into their reserves in order to save the affected banks and secure the assets of their citizens and industrials. Those last ones are affected: their shares are collapsing.
Each State intervenes in order to save its financial and industrial sectors so they won’t be bought back by foreign investors. Among them, some American banks closed profitable deals in the first days of the crisis and Americans can count on new investors’ provision for American bounds. Such investments are necessary to raise Freddie Mac, Fannie Mae and other fellows if everyone wishes to gain his money back at last.
Among the concerned States, China is particularly affected because during this year of huge expenses due to the Olympic Games organization (the most expensive in the history), it had to scoop out from its reserves in order to pay an expensive barrel and it may run out of currency in order to finance all of its losses.
All in all, through a very notified strategy, Americans managed to finance their debts and credits with the resources of their Chinese, Arabic and European competitors, right before they find a subtle way to grow panic through the stimulation of successive deficits of 5 (2+3) of the most important. Thus Americans didn’t become richer but their competitors turned less rich. During a war, when the losses of an enemy are superior to yours, this means victory. But this is a beginning only !
Every States that are currently forced to intervene in order to save their industries scooping out from their reserves is just starting to suffer. They must restructure their affected industries and banks: their unemployment rate is increasing as well as their charges. They injected capitals: their inflation will increase and the value of their currency will go down.
The euro is already pulling down compared to the US dollar: this is an additional consequence of such economic war. Finally, in order to compensate those abrupt increases and losses, they have to decree an essential plan and increase their taxes that will have an influence on their industries profitability. This is a KO victory for Americans who won’t face such problems because, we have to remind it, they didn’t become richer and we are the ones who became less rich.
Geopolitical stakes | This war that re-launches the US dollar (and pulls down oil price) was actually a geopolitical war against the euro on one hand and China on the other hand and also Asian economies (the OPEC faced significant losses, Dubai is ruined).
For long time, America tried to take the control of the entire oil market through war, particularly the Afghan one that should have granted it an access hall to Central Asia. This region is presently enclosed and this is the reason why it became a hydrocarbons reservoir that is exclusively controlled by China and Russia. This last one purchases gas in Central Asia invoiced USD 170 for each thousand metric vat and it resells it USD 400 to the Europeans. In the meantime China purchases a part of its gas needs at the price of USD 170 directly to the national suppliers of Central Asia that makes it more competitive compared to Americans and Europeans.
If the access to this region is restored (through secured gas pipelines), the American oil major companies (that finance the American presidency candidates) will be able to control the prices and therefore the Chinese growth and in the meantime to deprive Russia of the half of its gas income!
The war in Afghanistan couldn’t make this major objective come true in order to let the United States ensure the world hegemony on its direct competitors. Then America turned toward the mullahs leading a small economic war (sanctions) to force them to compromise with it in order to grant it an access to Central Asia. The objective of this other war was to deprive Iran of its foreign investments and it was targeting only the non-American trade partners of Iran. This is the same kind of analysis: the impoverishment of the American companies’ competitors. This also failed (until today). The Republican Party in power had to opt for a plan that is more radical in order to deprive the adversaries of America of their assets (bounds that are impossible to sell) and as well to throw them into inevitable expenses in order to save their own industries but also to save their American bounds from a failure (collective efforts required by Paulson).
October Surprise | Everybody was expecting a war against Iran. America surprises the world with this incredible war of a new type, with no bombs neither bullet victims, a crisis that crashes down everybody and provokes a leveling.
Such leveling as well as the forced enlistment (collective efforts) into the financing of the American debts (past and present ones) makes it able to maintain and even to reinforce the sanction process against Iran (which will exhaust the mullahs as well as Europeans).
In fine, the Americans may reach their target of an agreement with the mullahs, thanks to and on the detriment of the present partners of Iran! Such agreement (or its variant with the Taliban) will make America capable to access to Central Asia in order to control many reservoirs and the prices with a US dollar that would have gained back its strength in the meantime. This will be a permanent jackpot !
Meanwhile we will pay the invoice.