Hedge Fund Hackers Expose Another Vulnerability

Six years ago, during that fateful summer of 2008 when everything began to unravel, we first raised issues of financial terrorism as a risk to the stock markets, our economy, and indeed our way of life. In hindsight, it should be obvious that an attack on our markets does indeed have the potential to attack the very heart of America. Our initial research, later confirmed in a formal Pentagon report, served as the basis for the 2012 bestseller, Secret Weapon; How Economic Terrorism Brought Down the U.S. Stock Market and Why It Could Happen Again.  Overall, we documented a variety of vulnerabilities that could be exploited through hidden market activity, cyber-manipulations, and other subversive efforts. As with any new concept, there was a considerable amount of skepticism. Since then, however, virtually every concept we described has been documented or validated.

Standard Chartered Takes Sides with $250 billion against America?

An excellent and well-sourced article by Kevin D. Freeman. Click the link for the full story.

There is a story out today about how Standard Chartered allegedly hid $250 billion in 60,000 transactions with Iran that could have been used to fund nuclear development or even terror activities. This story, if true, blows away the arguments that no one would work against U.S. interests in the financial realm. The size and volume of the transactions is extraordinary. And, the investigation uncovered an attitude that is clearly against American interests. If all of this is true, we hope that it will wake up regulators to even more serious vulnerabilities in our system. Remember, we documented how a single one billion transaction roiled our Treasury markets a little over a year ago. These transactions total a quarter-trillion dollars!

We have pointed out the extraordinary arrogance contained in the idea that the world’s financial system is U.S. centric. In fact, in our previous post on this subject, Our Paper or Their Oil, we said the following:

A high-stakes drama is playing out now between the United States and Iran. On this blog, in our book Secret Weapon, in speeches and media interviews, we  have been warning about the reality of global economic warfare. For several years, our government has ignored this reality. The good news is that just recently the government has begun to recognize economic weaponry. The bad news is that the government has approached the subject with typical American arrogance. The worse news is that we may all be hurt as a result.

…

The news from Standard Chartered, a British-based multinational bank operating in 70 countries, provides a decent proxy of world opinion. The primary reason that the world continues to deal with Iran is that they have Oil. We are fighting with paper. Here is a telling quote from the CNBC story:

Regulators, quoting a New York bank branch officer, said the group director replied: “You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”

Here are important quotes from the New York Times story:

The bank “left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes,” the agency said in an order sent to the bank Monday …

The department accused the bank of undermining the safety of New York’s financial system through a range of violations including “falsifying business records” and “obstructing governmental administration,” according to the order.

Suspecting that Iranian banks were using their financial institutions to finance its nuclear weapons program, the United States Treasury Department banned certain transactions between Iranian banks and United States financial institutions in 2008.

Make no mistake, this is a global economic war. The international financial system is not serving American interests and as we have proven can be used as a weapon in the global economic war (seewww.SecretWeapon.org). Sadly, this is a shock to most Americans.

Full article: Standard Chartered Takes Sides with $250 billion against America? (Kevin D. Freeman)

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)

Is Shariah Compliant Finance a Secret Weapon?

Shariah Compliant Funds are among the fastest growing pools of wealth on the planet representing about $1 trillion, not including major Sovereign Wealth Funds that loosely conform to Shariah principles. Even Goldman Sachs has joined the party, offering a $2.2 billion Shariah Compliant bond issue announced last September. The problem is that Iran is the world’s leader in Shariah Compliant investing, representing more than one-third of all Shariah assets. This is a concern in light of the economic war underway between Iran and the West. The second concern is that Shariah funds require mandatory payments that can be problematic.

Full article: Is Shariah Compliant Finance a Secret Weapon? (Global Economic Warfare)