China Is Preparing for Conflict – and Why We Must Do the Same

Always remember, as explained by Mr. Chi Haotian, Minster of Defense and vice-chairman of China’s Central Military Commission, extermination of America is the goal of China.

In February of 2010, hand-to-hand combat with America within 10 years was promised by Colonel Meng Xianging.

Anyone who doesn’t see the danger from these credible warnings straight from the Chinese regime itself is definitely not awake. Sadly, such is the current state of America where shopping until you drop is the number one priority.

Note: Due to the the article being highly recommended for anyone to read so that it raises awareness, it will remained archived here in full.

 

 

Ever since Richard Nixon opened relations with Communist China in 1972, Chinese intentions have been a matter of incessant and often fevered speculation in this country.

In particular, national security and regional experts, non-governmental organizations and office-holders alike, have endlessly debated whether the People’s Republic of China could be brought into a U.S.-dominated international order and world economy in a manner consistent with American interests and, better yet, as a partner in opposition to mutual adversaries (e.g., the Soviet Union, North Korea, and the global jihad movement).

Credit Default Swaps Remain a Secret Weapon of Economic Warfare

Kevin Freeman points out exactly what is flying over most people’s heads, and what has most likely happened to JP Morgan Chase:

The strategy involved credit default swaps , a kind of derivative that was at the center of the 2008 financial crisis. The swaps were originally used to hedge the bank’s exposure to other investments it owns and included contracts tied to North American investment grade and junk corporate bonds, as well as bonds in Europe and Asia. JPMorgan helped invent the market for such swaps, known as “synthetic” positions because they trade risk without trading the actual bonds. But two things made these particular positions untenable and costly for JPMorgan, according to traders in the market and derivatives experts.

First, as bond markets shifted and forced JPMorgan to realign its hedges, the bank layered swap on top of swap, complicating the structure and increasing the risk that its hedges would fail to offset losses from one swap with gains from another. Second, the sheer size of JP Morgan’s swap position became more than the thinly traded market could easily manage. The lack of liquidity meant the exit door was too small for JPMorgan to fit through quickly once the trades started to deteriorate. Making matters worse, because JPMorgan was so dominant in this market it became clear to hedge funds and other trading entities that it was isolated and at risk—providing opportunities for those who could successfully trade against the bank’s position. The complexity of the trades made it difficult for the bank to stay on top of the risks as its position worsened.

Stop and contemplate this for a moment. No one knows Credit Default Swaps better than JP Morgan Chase. They invented the instruments after all. And, they have long been considered “best in breed” on Wall Street in this regard. Nobody does it better. Yet, this quote is so very significant: “it became clear to hedge funds and other trading entities that it was isolated and at risk—providing opportunities for those who could successfully trade against the bank’s position.” The article went on to say: “But hedge funds and other institutions in the market smelled weakness and dozens took advantage of the bank, according to traders. Reports by the Wall Street Journal and Bloomberg in early April about the bank’s giant positions only made awareness of JP Morgan’s problem and its isolation greater.”

Now, we know that there are players in the world who desired to see JP Morgan Chase brought down. That is motive. Remember a year ago? We wrote a post titled The Invisible Gorilla that had quotes from Stephen Lerner of SEIU and George Soros regarding the need to tear down and remake the financial system. Quotes attributed to Lerner:

“S. Lerner: It seems to me that we’re in a moment where we need to figure out in a much more, through direct action, much more concrete way how we really are trying to disrupt and create uncertainty for capital, for how corporations operate. . . .

And I think the only way we can do that is to think much more creatively, and the key thing I …is we have to say what does the other side fear most? They fear disruption, they fear uncertainty. Every article about Europe says a riot in Greece, the markets went down. The folks that control this country care about one thing: how the stock market does; how the bond market does; and what their bonus is. So I think we weed out a very simple strategy: how do we bring down the stock market, how do we bring down their bonuses, how do we interfere with their ability to, to be rich. And if we don’t do, and that means you have to politically isolate them, economically isolate them and disrupt them. So, it’s not all theory, I’ll do a pitch.

 So, a bunch of us around the country are thinking about who would be a really good company to hate? We decided that would be JP Morgan Chase. …. And so we’re going to roll out over the next couple of months what will hopefully be an exciting campaign about JP Morgan Chase that is really about challenge the power of Wall Street. And so what we’re looking at is in the first week of May, we get enough people together – we’re starting now – to really have a week of action in New York with the goal of … I don’t want to go into any details because I don’t know which police agents are in the room, but the goal would be that we would roll out in New York the first week in May…”

Regarding George Soros:

“Two years ago, George Soros said he wanted to reorganize the entire global economic system. In two short weeks, he is going to start – and no one seems to have noticed. On April 8, a group he’s funded with $50 million is holding a major economic conference and Soros’s goal for such an event is to “establish new international rules” and “reform the currency system.” It’s all according to a plan laid out in a Nov. 4, 2009, Soros op-ed calling for “a grand bargain that rearranges the entire financial order.”

Soros wrote an Op-Ed in March 2009 that explained how Credit Default Swaps were used as Bear Raid instruments to bring down the big banks in 2008.

Full article: Credit Default Swaps Remain a Secret Weapon of Economic Warfare (Global Economic Warfare)

Motive, Means, and Opportunity for the Next Attack In Place

For those that are still lulled into the belief that this is a typical economic cycle of boom and bust we’re facing in this country, it couldn’t be farther from the truth. While the United States is in fact facing an economic crisis, the roots causes of the country’s ills are much deeper than the symptoms suggest on the outside. We are under a full scale economic attack in the last phase which will push us off the cliff. The following article underscores this point:

Three news items landed on my desk today from three different sources all pointing to a Phase Three attack designed to destroy the American way of life or even Western civilization as we know it. This isn’t alarmist. Rather it is the studied conclusion of current events with a solid understanding of the fragility demonstrated in 2008. Make no mistake. Our system nearly imploded less than four years ago and we have done very little to address the risks of a systemic attack on our financial system. Since the publication of my report nearly three years ago for DoD (Economic Warfare; Risks and Responses), I have gone to great lengths to educate and awaken our national security apparatus, Congress, and anyone in a leadership position who would listen. In the past year or so, I have taken the case to the American people to get them to wake up to the very real threats we face. This effort has included hundreds of interviews in national and local media, Op-Eds, articles in major publications, a national speaking tour, and finally the publication of the NY Times best-selling book Secret Weapon (www.secretweapon.org).

Despite our best efforts, we have not received the attention necessary to address this fast-developing crisis. Many fine people have listened and understood our message. Far too many, however, have ignored the warnings due to arrogance. They wrongly assume that the events of 2008 were “one-offs” that won’t repeat. They can’t believe that we have enemies who would do harm to our economy. In short, they doubt that anyone has the motive, means, and opportunity to bring harm to our economy. Quite simply, they are wrong and their excessive arrogance is endangering all of us.

[If you haven’t been following us over the past year, first go to www.secretweapon.org. From this website, you can access our Reviews tab and see responses from some of the people we have briefed. These are serious people representing experience from every Presidential administration dating back to Jimmy Carter. And, that’s just a portion of those who have been in senior leadership positions over the past 30 years who now know of and acknowledge the serious problem we are describing. You can also check out the Newsroom tab. Scroll through and view, listen to, or read a small portion of interviews, Op_eds, and articles. Be sure to dive into the Previous Entries at the bottom of the page because there are some really good media pieces in earlier entries. Then, be sure to really dive through this Blog. Start at January 2011 and read the many posts on all subjects that back up what we are saying. And, you can even find the report I prepared for DoD. Here is a web link (although I have not verified it page by page):  SCRIBD.com Economic Warfare by Kevin Freeman. There have been almost 52,000 downloads of that report.]

Full article: Motive, Means, and Opportunity for the Next Attack In Place (Kevin Freeman / Global Economic Warfare)

But Aren’t We Joined at the Hip with China?

Another very common objection raised to the Economic Warfare reality is based on the misperception that China is so connected to our economy that “they” would never harm us. [Of course, these are the same people who said that America would never lose our Triple-A Credit Rating.] The idea that “the Chinese” would never harm us is ridiculous on its face, given the proven reality that there are Chinese who continually hack our systems, manipulate and undermine our markets. There is ample evidence of that. The whole concept is rather naive, assuming that all Chinese are the same. Certainly the average businessperson in China might not want harm to our economy. But, how about the PLA (People’s Liberation Army)? We addressed this in our posts titled “Which Chinese?” and “Which Chinese Part 2.”

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“Here in the U.S. you may hear many people worry that the Chinese government might stop buying American T-Bills. I think those fears are vastly overblown. The economic situation between China and the U.S. is the financial version of mutually assured destruction…”

Basically, this theory is based on the idea that the Chinese hold so much in dollar debt that they couldn’t afford to see the dollar go down. Here’s the problem. The military doesn’t care. They have a much longer view of things than the next quarter’s export sales. The smug response of those who believe China needs us so much that they must always stay friends is just another example of American arrogance. Now, there is further evidence of what we have been saying all along. We have no idea about what China really holds in dollar debt. They have so many ways to obscure their holdings that we can’t ever be certain. This from the March 2, 2012 Wall Street Journal cover story (Beijing Diversifies Away From U.S. Dollar):

Full article: But Aren’t We Joined at the Hip with China? (Kevin Freeman / Global Economic Warfare)

Which Chinese? (Part 2)

When considering the possibility of economic warfare, the most frequently asked question is:

“Why would the Chinese hurt our economy when they are so dependent upon it and have trillions of dollars in U.S. debt?”

Our standard answer is a return question: “Which Chinese?”

It is clearly naive to believe that China is monolithic. Certainly the business community and many in the government would not want anything to hurt the American economy if it in turn hurt China. Having said that, however, there are no doubt members of the People’s Liberation Army (PLA) who have every intention of harming America. We proved this point once before in our post “Which Chinese?” In that post, we documented how the PLA leadership had gone around the civilian leadership, making a dramatic and aggressive statement. Now, it has happened again. Rumors have begun to surface that some military officers may have attempted a coup. Why? Because they believe that the civilian leadership has not been aggressive enough. Should anyone doubt that given the opportunity, some PLA elements would strike hard against us? The collateral damage to Chinese business would not be their primary concern.

Continue reading article: Which Chinese? (Part 2) (Global Economic Warfare)

Additional article: Which Chinese? (Part 1) (Global Economic Warfare)