World Lurches Towards A One World Order Banking System
Wednesday, 24. September 2008, 05:04:29
News Reports Indicate A One World Banking System Is Emerging
1) ... The Economic Times is reporting on September 23, 2008, that the G7 Vows to Do What It Takes to Support the 'International Financial System'
2) ... It appears that unified regulation of global banking is coming as James Politi and Gillian Tett of FT.com relate that at the onset of the June 10, 2008, EU-US 2008 Summit, held in Krajn, Slovenia, Timothy Geithner, President of the New York Branch of the Federal Reserve and Bilderberg 2008 attendee, wrote a commentary in The Financial Times, in which he called for a global financial system operating under a unified regulatory framework.
3) ... Barry Grey writing in September 23, 2008 WSWS.org article Banks Race To Profit From US Bailout relates that "the announcement of a virtually open-ended government bailout of Wall Street has set off a frenzied competition among the biggest banks and financial firms to grab the lion’s share of the super profits to be reaped from the program.
The New York Times on Monday carried an unusually frank article, which began, “Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.
“Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.
“At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.
“Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.”
The article quoted Bert Ely, a financial services industry consultant in Alexandria, Virginia, as saying, “Of course there will be fierce lobbying. The real question is, Who wouldn’t want to be included in the package?” The plan was so open-ended, Ely said, it could be interpreted to mean that the US government was open to buying “any asset, anywhere in the world.”
To put it bluntly, the American financial industry is preparing to deliver to the US Treasury every bad debt it accumulated over the years of reckless speculation and financial manipulation that generated super-profits and multimillion-dollar compensation packages for its top executives. And it is insuring that the American people pay super-inflated prices for their financial junk, so that they can launch a new and even bigger orgy of speculation".
4) ... The AAP, September 22, 2008 Wabusinessnews.com article Quick Action Urged On $700bn Bailout reports "a later version expands the definition of the financial firms that would qualify to sell their bad debt to the government to include not just US firms but also foreign firms doing business in the United States if the government decides debt purchases from those firms are needed to stabilise the financial system".
The article in full: "The Bush administration insisted on Sunday that Congress must move quickly to approve what one lawmaker called the "mother of all bailouts" - a $US700 billion ($A871.19 billion) proposal to buy a mountain of bad mortgage debt in an effort to unfreeze US credit markets.
However, Democrats said that the administration's spare three-page plan must be expanded to include help for struggling ordinary Americans as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.
Treasury Secretary Henry Paulson stressed that time was critical to get the proposal passed and that changes to the administration's measure, which was sent to congressmen on Saturday, could delay that approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression of the 1930s.
In the past two weeks, the government has taken over the country's two biggest mortgage companies, Fannie Mae and Freddie Mac, and its biggest insurance company, American International Group Inc, and stood by while the nation's fourth-largest investment bank, Lehman Brothers, was forced to declare bankruptcy and another investment giant, Merrill Lynch, was forced to sell itself to Bank of America.
Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies.
This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up last week despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.
The plan the administration has developed with support from the Fed would have the government buy up to $700 billion of the bad loans, taking them off the books of financial firms with the hope that this will allow those companies to resume normal lending operations.
Sen Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said the government's efforts would be the "mother of all bailouts" that could well cost $US1 trillion ($A1.24 trillion) when the cost of the government takeovers of Fannie, Freddie and AIG were included.
(Seeking Alpah Breaking News Item on Monday, September 22 2008 posts at 10:07 AM Sen. Chris Dodd: "When the chairman of the [Fed] described the situation to us ... there was a pause for about 10 or 15 seconds when nothing was said. The air came out of the room." Sen. Richard Shelby adds, "this is the mother of all bailouts.")
Paulson, appearing on four of the five Sunday morning television talk shows to sell the plan, insisted that the administration had no choice.
The cost of doing nothing would have been far more severe because the clogged credit markets would make it harder for businesses to get the loans they need to keep operating, he said. Doing nothing also would make it harder for consumers to get the credit they need for car loans and other purchases, the Treasury secretary said. Consumer spending accounts for two-thirds of total economic activity.
"The credit markets are still very fragile right now and frozen," Paulson said in an interview on NBC's Meet the Press. "We need to deal with this and deal with it quickly."
"We need to look at what is going on in the credit markets and they are still very fragile right now and frozen," Paulson said on NBC's "Meet the Press."
In addition to what is happening in the United States, Paulson said he was confident that other major countries would take similar actions to support their financial systems, helping to avert a global meltdown.
"We have a global financial system and we are talking very aggressively with other countries around the world and encouraging them to do similar things and I believe a number of them will," Paulson said on ABC's "This Week." He refused to name the countries that he expected would act.
Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes.
One possible approach, they said, would be changes in bankruptcy laws to allow for mortgages to be modified, something financial companies have strongly opposed, and by capping benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government.
"It would be a grave mistake to say that we're going to buy up a bad debt that resulted from bad decisions of these people and then allow them to get millions of dollars on the way out," said House Financial Services Chairman Barney Frank, a Massachusetts Democrat. "The American people don't want that to happen and it shouldn't happen."
Senate Banking Committee Chairman Christopher Dodd of Connecticut told reporters at a Capitol Hill news conference on Sunday that while he hoped Congress could pass the legislation this week "if it takes a little longer, then so be it."
He said financial markets should be reassured that Congress was moving toward a significant response and a few more days to "get it right" should not trigger a renewed nosedive on Wall Street.
While Paulson gave no indication during the interview shows of what changes the administration would be willing to accept, the administration did modify an early draft obtained by The Associated Press in a significant way.
A later version expands the definition of the financial firms that would qualify to sell their bad debt to the government to include not just US firms but also foreign firms doing business in the United States if the government decides debt purchases from those firms are needed to stabilise the financial system.
Sen Charles Schumer, a New York Democrat, said that he believed there would be changes to Paulson's plan and that agreement could still be reached quickly.
Schumer said that he was pushing to get a provision where the government would receive stock warrants in return for the bailout relief and for creation of a government oversight board to supervise the huge operation, which under Paulson's plan would be run out of the Treasury Department. He said Paulson seemed receptive to changes when he had discussed his ideas with him.
"We need changes in it relating to housing ... we need to put the taxpayer first ahead of bondholders, shareholders, executives" Schumer said on "Fox News Sunday."
However, Republican congressmen said that the Democratic efforts risks slowing down a measure that was urgently needed.
"This would be the most serious financial crisis that the world has ever dealt with. It is not a time to be playing games," said House Republican Leader John Boehner.
Paulson said in his round of interviews that the outdated US regulatory system for financial markets must be overhauled but the first job is to get the rescue package through Congress and then deal with a comprehensive regulatory overhaul next year.
The administration's proposal seeks an increase in the limit on the national debt from $US10.6 trillion ($A13.19 trillion) to $US11.3 trillion ($A14.06 trillion) to make room for the massive rescue. But Paulson said that the government would recoup a part of the $700 billion when the housing market recovers and the mortgage assets rebound in value."
5) ... The September 17, 2008 Resourceful Bear Blog article Gold Soars As A Liquidity Meltdown Occurs relates: "Liquidity was sucked out of the world's financial system again today. The Ted Spread is a metric of liquidity. The fact it blew sky high to 3.02 relates that money and cash is quickly going out of the financial system. The TED Spread has only been above 3% twice in its history: immediately prior to the 1987 stock market crash and again last Thursday when the credit markets froze up. Jesse reports that the TED Spread Rises To New High For The Credit Crisis."
6) ... The September 15, 2008 Google News AFP article Lehman Bankruptcy Shakes World Financial System reports that banks world wide have provided 70 Billion to settle counterparty exposure to derivatives, most likely credit default swaps, arising from the bankruptcy of Lehman Brothers, LEH: "A consortium of 10 global commercial and investment banks announced plans to provide 70 billion dollars to help offset a credit squeeze". In a joint statement the banks relate they have 'initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.' "They also said they would work together 'to help facilitate an orderly resolution' of the derivatives exposures between Lehman Brothers and its counterparties."
The article in full: "Lehman Brothers declared bankruptcy Monday and Wall Street rival Merrill Lynch was taken over in a new financial earthquake driving a global stocks plunge and central bank intervention.
The US Federal Reserve, European Central Bank and Bank of England injected tens of billions of dollars into money markets after the fall of the finance titans under the weight of massive bad loans.
Lehman Brothers file for bankruptcy on Monday after a frantic weekend of negotiations failed to arrange a rescue.
In the fallout, Bank of America took over Merrill Lynch in a 50-billion-dollar deal, insurance giant AIG was reported to have sought a massive emergency loan to head off its own crisis and a group of banks set up a 70 billion dollars global emergency fund.
"You've probably seen more in one day of financial history than we've seen since the great crash of 1929," Macquarie Private Wealth associate director Marcus Droga said.
"I'm not suggesting the US market will crash tonight, but in terms of landmark events, it's an historic day," Droga told Dow Jones Newswires.
Despite reassurance from central banks, major European and Asian stock markets plunged by five percent, the dollar fell and oil went below 93 dollars a barrel over fears for the international economy.
The Federal Reserve eased conditions for collateral in return for the provision of funds to banks and said it was working "to identify potential market vulnerabilities."
The European Central Bank said it injected 30 billion euros (43 billion dollars) into money markets to keep them going after the Lehman collapse.
The Bank of England injected 5.0 billion pounds (6.3 billion euros/9.0 billion dollars) into short-term money markets. Switzerland's central bank also reportedly offered a money injection.
The European Commission expressed confidence in central banks and other agencies to contain contagion from the crisis.
"It seems clear that a category five storm is making landfall in the US financial system and a lot of very messy stuff is hitting the fan," Michael Panzer, author of the book "Financial Armageddon," said on his blog.
Lehman filed for bankruptcy protection in New York. The bank said in a statement it was acting "in order to protect its assets and maximize value."
"Customers of Lehman Brothers, including customers of its wholly-owned subsidiary, Neuberger Berman Holdings LLC, may continue to trade or take other actions with respect to their accounts," the statement said.
The bank lost an estimated 3.9 billion dollars (2.7 billion euros) in its fiscal third quarter amid fresh writedowns on mortgage assets.
Last-ditch efforts to find a buyer collapsed Sunday. A London source at British bank Barclays said it walked away from negotiations because of concerns it would have to guarantee the 158-year-old US firm's trading commitments.
Bank of America said it was buying Merrill Lynch for 50 billion dollars in a transaction that creates the world's largest financial services company.
The acquisition gives Bank of America the largest brokerage in the world with more than 20,000 advisers and 2.5 trillion dollars in client assets.
Analysts expected Lehman's bankruptcy to hit a range of companies dealing with the Wall Street giant and could worsen the global credit crunch.
Unicredit economist Marco Annunziata in Frankfurt said: "The coming days and weeks will be truly crucial to the global economic outlook.
"The US Treasury has decided it was time for shock therapy, and taken an extremely gutsy gamble by letting Lehman fail."
US Treasury Secretary Henry Paulson vowed steps to maintain market stability however.
"I am committed to working with regulators and policymakers - including Congress - to take necessary and appropriate steps to maintain the stability and orderliness of our financial markets," Paulson said in a statement.
"And I will engage with regulators and policymakers around the world to that end," he said. "I am confident in the resilience of our capital markets, and in the commitment of US regulators and market participants to work together through this difficult period."
The German finance ministry said links between German banks and Lehman Brothers were "manageable".
Japan's financial watchdog ordered Lehman Brothers' Japan unit to retain certain assets within Japan, it said in a statement.
A consortium of 10 global commercial and investment banks announced plans to provide 70 billion dollars to help offset a credit squeeze.
Bank of America, Barclays , Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, and UBS, said in a joint statement they "initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."
They also said they would work together "to help facilitate an orderly resolution" of the derivatives exposures between Lehman Brothers and its counterparties.
"These actions reflect the extraordinary market environment," the statement said.
Meanwhile, The New York Times reported that AIG was seeking a 40 billion-dollar bridge loan from the Federal Reserve in the face of a possible downgrade from credit ratings agencies that could spell its doom".
Summary And Analysis
A one world banking system is emerging.
The Federal Reserve gave AIG an $85 Billion loan; the reality is that for all practical purposes AIG was nationalized by the Federal Reserve, as its disorderly failure would intensify the current financial storm and greatly complicate the government's efforts to manage it. The company is such a big player in insuring risk for institutions around the world that its failure would have shaken the global financial system to the ground.
Oil Drum reports: "In all, AIG wrote some $79 billion in insurance on CDOs backed mainly by subprime mortgages—selling insurance to financial firms like Merrill, UBS and Calyon. But AIG did much more than just issue credit default swaps on the worst of the CDOs. The total value of AIG’s credit default swap portfolio is $527 billion, according to a regulatory filing. In downgrading AIG on September 15, Standard & Poor’s said: “The primary source of the strain comes from credit default swaps covering multi-sector collateralized debt obligations, with mortgage exposure as well as insurance company holdings of residential mortgage-backed securities."
Oil Drum also relates Merrill Lynch's AIG problem: "Even after selling off some $30.6 billion in ailing CDOs to private equity firm Lone Star Funds in August at a steep discount, Merrill still has $19.9 billion in mortgage-backed CDOs in its portfolio. Merrill has marked down the value of those CDOs to $8.8 billion—a more than 50% haircut. In a recent regulatory filing, Merrill said it was adequately protected against suffering any sizeable losses on those remaining CDOs because it had purchased $6 billion worth of insurance, or credit default swaps, from “highly-rated non-monoline counterparties.’’ It’s widely believed that the bulk of that insurance was purchased from AIG, which was a prime seller of credit default swaps on CDOs up until the beginning of 2006."
As presented above unified action is currently being taken by banks to settle counter party exposure to Lehman Brothers credit default swaps and other derivatives; this was a large part of the cause of the Liquidity Meltdown of September 17, 2008.
It is reasonable to conclude that unified global banking will be the outcome of President Bush's bank bail out plan.
The immediate objective of the bailout is to inject liquidity in to the banking system, as Schrödinger in article What Do You Call Banks With No Money? provides charts of non-borrowed reserves of depository institutions showing that the numbers are rapidly become more and more negative.
A primary part of the emerging world banking system will be to manage exposure to and cost of settlement of credit default swaps and other derivatives associated with mortgage backed securities and CDOs, held by banks, investment bankers, and central banks worldwide.
Elaine Meinel Supkis writing in Financial Black Holes relates that "modern capitalist banking systems create increasing DEBT and not increasing wealth!"
And, I add that the purpose of the modern day banking system is to subject Americans and the world unto debt. The legislation being developed by Congress adds debt unto debt; it creates debt out of debt; it is securitization of existing CDOs by the United States government; that is the Federal Reserve will likely provide re-securitization of CDOS.
And the Federal Reserve will likely become a "bank of banks", clearinghouse and settlement agency for derivatives, with the aim of providing financial stability worldwide.
The outcome of this week's news was foretold in the Bible prophecy of Revelation 13:16,17, that as economic conditions worsen, a unified global banking system will emerge, where the False Prophet, who also acts as Seignior, meaning investment banker who takes a cut, will introduce a seigniorage system, which is based upon the charagma which is the Greek word meaning "etching in", or "tattoo upon", or "stamp", or "badge of servitude", or "mark", which enables one to conduct economic activity, and which authorizes one to receive economic benefits; the mark will be required in order to buy or sell.
Related Reading
System, Sovereign, And Seignior To Rule Mankind Bible Reveals
The Mother Of All Frauds
Banks Race To Profit From US Bailout
It's The Derivatives Stupid: Why Fannie, Freddie, AIG Had To Be Bailed Out
Derivatives Beast Devours All Major Investment Banks
Bailout Is Financial Equivalent Of The Patriot Act
Keywords
oneworldbankingsystem, oneworldfinancialorder
1) ... The Economic Times is reporting on September 23, 2008, that the G7 Vows to Do What It Takes to Support the 'International Financial System'
2) ... It appears that unified regulation of global banking is coming as James Politi and Gillian Tett of FT.com relate that at the onset of the June 10, 2008, EU-US 2008 Summit, held in Krajn, Slovenia, Timothy Geithner, President of the New York Branch of the Federal Reserve and Bilderberg 2008 attendee, wrote a commentary in The Financial Times, in which he called for a global financial system operating under a unified regulatory framework.
3) ... Barry Grey writing in September 23, 2008 WSWS.org article Banks Race To Profit From US Bailout relates that "the announcement of a virtually open-ended government bailout of Wall Street has set off a frenzied competition among the biggest banks and financial firms to grab the lion’s share of the super profits to be reaped from the program.
The New York Times on Monday carried an unusually frank article, which began, “Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.
“Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.
“At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.
“Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.”
The article quoted Bert Ely, a financial services industry consultant in Alexandria, Virginia, as saying, “Of course there will be fierce lobbying. The real question is, Who wouldn’t want to be included in the package?” The plan was so open-ended, Ely said, it could be interpreted to mean that the US government was open to buying “any asset, anywhere in the world.”
To put it bluntly, the American financial industry is preparing to deliver to the US Treasury every bad debt it accumulated over the years of reckless speculation and financial manipulation that generated super-profits and multimillion-dollar compensation packages for its top executives. And it is insuring that the American people pay super-inflated prices for their financial junk, so that they can launch a new and even bigger orgy of speculation".
4) ... The AAP, September 22, 2008 Wabusinessnews.com article Quick Action Urged On $700bn Bailout reports "a later version expands the definition of the financial firms that would qualify to sell their bad debt to the government to include not just US firms but also foreign firms doing business in the United States if the government decides debt purchases from those firms are needed to stabilise the financial system".
The article in full: "The Bush administration insisted on Sunday that Congress must move quickly to approve what one lawmaker called the "mother of all bailouts" - a $US700 billion ($A871.19 billion) proposal to buy a mountain of bad mortgage debt in an effort to unfreeze US credit markets.
However, Democrats said that the administration's spare three-page plan must be expanded to include help for struggling ordinary Americans as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.
Treasury Secretary Henry Paulson stressed that time was critical to get the proposal passed and that changes to the administration's measure, which was sent to congressmen on Saturday, could delay that approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression of the 1930s.
In the past two weeks, the government has taken over the country's two biggest mortgage companies, Fannie Mae and Freddie Mac, and its biggest insurance company, American International Group Inc, and stood by while the nation's fourth-largest investment bank, Lehman Brothers, was forced to declare bankruptcy and another investment giant, Merrill Lynch, was forced to sell itself to Bank of America.
Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies.
This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up last week despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.
The plan the administration has developed with support from the Fed would have the government buy up to $700 billion of the bad loans, taking them off the books of financial firms with the hope that this will allow those companies to resume normal lending operations.
Sen Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said the government's efforts would be the "mother of all bailouts" that could well cost $US1 trillion ($A1.24 trillion) when the cost of the government takeovers of Fannie, Freddie and AIG were included.
(Seeking Alpah Breaking News Item on Monday, September 22 2008 posts at 10:07 AM Sen. Chris Dodd: "When the chairman of the [Fed] described the situation to us ... there was a pause for about 10 or 15 seconds when nothing was said. The air came out of the room." Sen. Richard Shelby adds, "this is the mother of all bailouts.")
Paulson, appearing on four of the five Sunday morning television talk shows to sell the plan, insisted that the administration had no choice.
The cost of doing nothing would have been far more severe because the clogged credit markets would make it harder for businesses to get the loans they need to keep operating, he said. Doing nothing also would make it harder for consumers to get the credit they need for car loans and other purchases, the Treasury secretary said. Consumer spending accounts for two-thirds of total economic activity.
"The credit markets are still very fragile right now and frozen," Paulson said in an interview on NBC's Meet the Press. "We need to deal with this and deal with it quickly."
"We need to look at what is going on in the credit markets and they are still very fragile right now and frozen," Paulson said on NBC's "Meet the Press."
In addition to what is happening in the United States, Paulson said he was confident that other major countries would take similar actions to support their financial systems, helping to avert a global meltdown.
"We have a global financial system and we are talking very aggressively with other countries around the world and encouraging them to do similar things and I believe a number of them will," Paulson said on ABC's "This Week." He refused to name the countries that he expected would act.
Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes.
One possible approach, they said, would be changes in bankruptcy laws to allow for mortgages to be modified, something financial companies have strongly opposed, and by capping benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government.
"It would be a grave mistake to say that we're going to buy up a bad debt that resulted from bad decisions of these people and then allow them to get millions of dollars on the way out," said House Financial Services Chairman Barney Frank, a Massachusetts Democrat. "The American people don't want that to happen and it shouldn't happen."
Senate Banking Committee Chairman Christopher Dodd of Connecticut told reporters at a Capitol Hill news conference on Sunday that while he hoped Congress could pass the legislation this week "if it takes a little longer, then so be it."
He said financial markets should be reassured that Congress was moving toward a significant response and a few more days to "get it right" should not trigger a renewed nosedive on Wall Street.
While Paulson gave no indication during the interview shows of what changes the administration would be willing to accept, the administration did modify an early draft obtained by The Associated Press in a significant way.
A later version expands the definition of the financial firms that would qualify to sell their bad debt to the government to include not just US firms but also foreign firms doing business in the United States if the government decides debt purchases from those firms are needed to stabilise the financial system.
Sen Charles Schumer, a New York Democrat, said that he believed there would be changes to Paulson's plan and that agreement could still be reached quickly.
Schumer said that he was pushing to get a provision where the government would receive stock warrants in return for the bailout relief and for creation of a government oversight board to supervise the huge operation, which under Paulson's plan would be run out of the Treasury Department. He said Paulson seemed receptive to changes when he had discussed his ideas with him.
"We need changes in it relating to housing ... we need to put the taxpayer first ahead of bondholders, shareholders, executives" Schumer said on "Fox News Sunday."
However, Republican congressmen said that the Democratic efforts risks slowing down a measure that was urgently needed.
"This would be the most serious financial crisis that the world has ever dealt with. It is not a time to be playing games," said House Republican Leader John Boehner.
Paulson said in his round of interviews that the outdated US regulatory system for financial markets must be overhauled but the first job is to get the rescue package through Congress and then deal with a comprehensive regulatory overhaul next year.
The administration's proposal seeks an increase in the limit on the national debt from $US10.6 trillion ($A13.19 trillion) to $US11.3 trillion ($A14.06 trillion) to make room for the massive rescue. But Paulson said that the government would recoup a part of the $700 billion when the housing market recovers and the mortgage assets rebound in value."
5) ... The September 17, 2008 Resourceful Bear Blog article Gold Soars As A Liquidity Meltdown Occurs relates: "Liquidity was sucked out of the world's financial system again today. The Ted Spread is a metric of liquidity. The fact it blew sky high to 3.02 relates that money and cash is quickly going out of the financial system. The TED Spread has only been above 3% twice in its history: immediately prior to the 1987 stock market crash and again last Thursday when the credit markets froze up. Jesse reports that the TED Spread Rises To New High For The Credit Crisis."
6) ... The September 15, 2008 Google News AFP article Lehman Bankruptcy Shakes World Financial System reports that banks world wide have provided 70 Billion to settle counterparty exposure to derivatives, most likely credit default swaps, arising from the bankruptcy of Lehman Brothers, LEH: "A consortium of 10 global commercial and investment banks announced plans to provide 70 billion dollars to help offset a credit squeeze". In a joint statement the banks relate they have 'initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.' "They also said they would work together 'to help facilitate an orderly resolution' of the derivatives exposures between Lehman Brothers and its counterparties."
The article in full: "Lehman Brothers declared bankruptcy Monday and Wall Street rival Merrill Lynch was taken over in a new financial earthquake driving a global stocks plunge and central bank intervention.
The US Federal Reserve, European Central Bank and Bank of England injected tens of billions of dollars into money markets after the fall of the finance titans under the weight of massive bad loans.
Lehman Brothers file for bankruptcy on Monday after a frantic weekend of negotiations failed to arrange a rescue.
In the fallout, Bank of America took over Merrill Lynch in a 50-billion-dollar deal, insurance giant AIG was reported to have sought a massive emergency loan to head off its own crisis and a group of banks set up a 70 billion dollars global emergency fund.
"You've probably seen more in one day of financial history than we've seen since the great crash of 1929," Macquarie Private Wealth associate director Marcus Droga said.
"I'm not suggesting the US market will crash tonight, but in terms of landmark events, it's an historic day," Droga told Dow Jones Newswires.
Despite reassurance from central banks, major European and Asian stock markets plunged by five percent, the dollar fell and oil went below 93 dollars a barrel over fears for the international economy.
The Federal Reserve eased conditions for collateral in return for the provision of funds to banks and said it was working "to identify potential market vulnerabilities."
The European Central Bank said it injected 30 billion euros (43 billion dollars) into money markets to keep them going after the Lehman collapse.
The Bank of England injected 5.0 billion pounds (6.3 billion euros/9.0 billion dollars) into short-term money markets. Switzerland's central bank also reportedly offered a money injection.
The European Commission expressed confidence in central banks and other agencies to contain contagion from the crisis.
"It seems clear that a category five storm is making landfall in the US financial system and a lot of very messy stuff is hitting the fan," Michael Panzer, author of the book "Financial Armageddon," said on his blog.
Lehman filed for bankruptcy protection in New York. The bank said in a statement it was acting "in order to protect its assets and maximize value."
"Customers of Lehman Brothers, including customers of its wholly-owned subsidiary, Neuberger Berman Holdings LLC, may continue to trade or take other actions with respect to their accounts," the statement said.
The bank lost an estimated 3.9 billion dollars (2.7 billion euros) in its fiscal third quarter amid fresh writedowns on mortgage assets.
Last-ditch efforts to find a buyer collapsed Sunday. A London source at British bank Barclays said it walked away from negotiations because of concerns it would have to guarantee the 158-year-old US firm's trading commitments.
Bank of America said it was buying Merrill Lynch for 50 billion dollars in a transaction that creates the world's largest financial services company.
The acquisition gives Bank of America the largest brokerage in the world with more than 20,000 advisers and 2.5 trillion dollars in client assets.
Analysts expected Lehman's bankruptcy to hit a range of companies dealing with the Wall Street giant and could worsen the global credit crunch.
Unicredit economist Marco Annunziata in Frankfurt said: "The coming days and weeks will be truly crucial to the global economic outlook.
"The US Treasury has decided it was time for shock therapy, and taken an extremely gutsy gamble by letting Lehman fail."
US Treasury Secretary Henry Paulson vowed steps to maintain market stability however.
"I am committed to working with regulators and policymakers - including Congress - to take necessary and appropriate steps to maintain the stability and orderliness of our financial markets," Paulson said in a statement.
"And I will engage with regulators and policymakers around the world to that end," he said. "I am confident in the resilience of our capital markets, and in the commitment of US regulators and market participants to work together through this difficult period."
The German finance ministry said links between German banks and Lehman Brothers were "manageable".
Japan's financial watchdog ordered Lehman Brothers' Japan unit to retain certain assets within Japan, it said in a statement.
A consortium of 10 global commercial and investment banks announced plans to provide 70 billion dollars to help offset a credit squeeze.
Bank of America, Barclays , Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, and UBS, said in a joint statement they "initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."
They also said they would work together "to help facilitate an orderly resolution" of the derivatives exposures between Lehman Brothers and its counterparties.
"These actions reflect the extraordinary market environment," the statement said.
Meanwhile, The New York Times reported that AIG was seeking a 40 billion-dollar bridge loan from the Federal Reserve in the face of a possible downgrade from credit ratings agencies that could spell its doom".
Summary And Analysis
A one world banking system is emerging.
The Federal Reserve gave AIG an $85 Billion loan; the reality is that for all practical purposes AIG was nationalized by the Federal Reserve, as its disorderly failure would intensify the current financial storm and greatly complicate the government's efforts to manage it. The company is such a big player in insuring risk for institutions around the world that its failure would have shaken the global financial system to the ground.
Oil Drum reports: "In all, AIG wrote some $79 billion in insurance on CDOs backed mainly by subprime mortgages—selling insurance to financial firms like Merrill, UBS and Calyon. But AIG did much more than just issue credit default swaps on the worst of the CDOs. The total value of AIG’s credit default swap portfolio is $527 billion, according to a regulatory filing. In downgrading AIG on September 15, Standard & Poor’s said: “The primary source of the strain comes from credit default swaps covering multi-sector collateralized debt obligations, with mortgage exposure as well as insurance company holdings of residential mortgage-backed securities."
Oil Drum also relates Merrill Lynch's AIG problem: "Even after selling off some $30.6 billion in ailing CDOs to private equity firm Lone Star Funds in August at a steep discount, Merrill still has $19.9 billion in mortgage-backed CDOs in its portfolio. Merrill has marked down the value of those CDOs to $8.8 billion—a more than 50% haircut. In a recent regulatory filing, Merrill said it was adequately protected against suffering any sizeable losses on those remaining CDOs because it had purchased $6 billion worth of insurance, or credit default swaps, from “highly-rated non-monoline counterparties.’’ It’s widely believed that the bulk of that insurance was purchased from AIG, which was a prime seller of credit default swaps on CDOs up until the beginning of 2006."
As presented above unified action is currently being taken by banks to settle counter party exposure to Lehman Brothers credit default swaps and other derivatives; this was a large part of the cause of the Liquidity Meltdown of September 17, 2008.
It is reasonable to conclude that unified global banking will be the outcome of President Bush's bank bail out plan.
The immediate objective of the bailout is to inject liquidity in to the banking system, as Schrödinger in article What Do You Call Banks With No Money? provides charts of non-borrowed reserves of depository institutions showing that the numbers are rapidly become more and more negative.
A primary part of the emerging world banking system will be to manage exposure to and cost of settlement of credit default swaps and other derivatives associated with mortgage backed securities and CDOs, held by banks, investment bankers, and central banks worldwide.
Elaine Meinel Supkis writing in Financial Black Holes relates that "modern capitalist banking systems create increasing DEBT and not increasing wealth!"
And, I add that the purpose of the modern day banking system is to subject Americans and the world unto debt. The legislation being developed by Congress adds debt unto debt; it creates debt out of debt; it is securitization of existing CDOs by the United States government; that is the Federal Reserve will likely provide re-securitization of CDOS.
And the Federal Reserve will likely become a "bank of banks", clearinghouse and settlement agency for derivatives, with the aim of providing financial stability worldwide.
The outcome of this week's news was foretold in the Bible prophecy of Revelation 13:16,17, that as economic conditions worsen, a unified global banking system will emerge, where the False Prophet, who also acts as Seignior, meaning investment banker who takes a cut, will introduce a seigniorage system, which is based upon the charagma which is the Greek word meaning "etching in", or "tattoo upon", or "stamp", or "badge of servitude", or "mark", which enables one to conduct economic activity, and which authorizes one to receive economic benefits; the mark will be required in order to buy or sell.
Related Reading
System, Sovereign, And Seignior To Rule Mankind Bible Reveals
The Mother Of All Frauds
Banks Race To Profit From US Bailout
It's The Derivatives Stupid: Why Fannie, Freddie, AIG Had To Be Bailed Out
Derivatives Beast Devours All Major Investment Banks
Bailout Is Financial Equivalent Of The Patriot Act
Keywords
oneworldbankingsystem, oneworldfinancialorder
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