Wag the Dog – How to Conceal enormous Economic Collapse
“I’m in show business, why come to me?”
“War is show business, that’s why we’re here.”
– “Wag the Dog” (1997 film)
The first week of August 2008, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and enormous bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average attained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?
It hardly took psychic powers to see that the drop Protection Team had come to the rescue. Formally known as the President’s Working Group on Financial Markets, the PPT was once hid and its very existence denied as if it were a matter of strict national security. But the PPT has now come out of the closet. What was once a legally questionable “manipulator” of markets has become a sanctioned stabilizer and protector of markets. The new tone was set in January 2008, when global markets took their worst tumble since September 11, 2001. Senator Hillary Clinton said in a statement reported by the State News Service:
“I think it’s imperative that the following step be taken. The President should have already and should do so very quickly, convene the President’s Working Group on Financial Markets. That’s something that he can ask the Secretary of the Treasury to do. This has to be coordinated across markets with the regulators here and clearly with regulators and central edges around the world.”
The mystery over what was going on with the dollar the first week in August was solved by James Turk, founder of GoldMoney, who wrote on August 7:
“[T]he banking problems in the United States continue to mount, while the federal government’s deficit continues to soar out of control. So what happened to cause the dollar to rally over the past three weeks? In a information, intervention. Central edges have propped up the dollar, and here’s the proof.
“When central edges intervene in the money markets, they exchange their money for dollars. Central edges then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central edges acquire are held in custody for them at the Federal save, which reports this amount weekly.
“On July 16, 2008 the Federal save reported holding $2,349 billion of US government paper in custody for central edges. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. So central edges were accumulating dollars over the past three weeks at a rate far above what one would expect as a consequence of the US trade deficit. The logical conclusion is that they were intervening in money markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others.”
Just as central edges manipulate currencies in concert, so gold can be manipulated by enormous selling of central bank reserves. Oil and any other market can be manipulated in addition. But markets can be manipulated by only so much and for only so long without fixing the inner problem. There is more bad news coming down the pike, news of such extent that no amount of ordinary manipulation is liable to conceal it.
For one thing, approximately $400 billion in ARMs (adjustable rate mortgages) have or will reset between March and October of this year. Assuming 3 to 6 months for strapped debtors to truly hit the wall with their payments, a huge wave of defaults is about to strike, continuing by March 2009 – just in time for the next huge wave of resets, in option ARMs. Option ARMs are loans with the option to pay already less than just the interest on the loan monthly, increasing the loan balance until the loan reaches a certain amount (typically 110% to 125% of the original loan balance), when it resets. The $800 billion credit line recently opened to Fannie Mae and Freddie Mac may be not only tapped but tapped out, at taxpayer expense. The inner problem is little discussed but impossible to repair – a one quadrillion dollar derivatives scheme that is now imploding. edges everywhere are facing enormous writeoffs, putting the whole banking system on the brink of collapse. Only public bailouts will save it, but they could bankrupt the nation.
What to do? War and threats of war have been used historically to distract the population and deflect public scrutiny from economic calamity. As the scheme was summed up in the trailer to the 1997 movie “Wag the Dog” –
“There’s a crisis in the White House, and to save the election, they’d have to fake a war.”
Perhaps that explains the sudden breakout of war in the Eurasian country of Georgia on August 8, just 3 months before the November elections. August 8 was the day the Olympic Games began in Beijing, a distraction that may have been timed to keep China from intervening on Russia’s behalf. The mainstream media version of events is that Russia, the bully on the block, invaded its tiny neighbor Georgia; but not all commentators agree. Mikhail Gorbachev, writing in The Washington Post on August 12, observed:
“What happened on the night of Aug. 7 is beyond comprehension. The Georgian military attacked the South Ossetian capital of Tskhinvali with multiple rocket launchers designed to devastate large areas. Russia had to respond. To accuse it of aggression against ‘small, defenseless Georgia’ is not just hypocritical but shows a without of humanity. The Georgian leadership could do this only with the perceived sustain and encouragement of a much more powerful force.”
Bruce Gagnon, coordinator of the Global Network against Weapons and Nuclear strength, commented in OpEdNews on August 11:
“The U.S. has long been involved in supporting ‘freedom movements’ throughout this vicinity that have been attempting to replace Russian influence with U.S. corporate control. The CIA, National Endowment for Democracy and Freedom House (includes Zbigniew Brzezinski, former CIA director James Woolsey, and Obama foreign policy adviser Anthony Lake) have been meaningful funders and supporters of placing politicians in strength throughout Central Asia that would play ball with ‘our side’. None of this is about the good guys versus the bad guys. It is strength bloc politics. Big money is at stake. [B]oth parties (Republican and Democrat) proportion a bi-partisan history and agenda of advancing corporate interests in this part of the world. Obama’s advisers, just like McCain’s (one of his top advisers was recently a lobbyist for the current government in Georgia) are thick in this stew.”
Brzezinski, who is now Obama’s adviser, was Jimmy Carter’s foreign policy adviser in the 1970s. He also served in the 1970s as director of the Trilateral Commission, which he co-established with David Rockefeller Sr., considered by some to be the “master spider” of the Wall Street banking network. Brzezinski, who wrote a book called The Grand Chessboard, later boasted of drawing Russia into war with Afghanistan in 1979, “giving to the Soviet Union its Vietnam War.” Is the Georgia affair an attempted repeat of that coup? Mike Whitney, a popular Internet commentator, observed on August 11:
“Washington’s bloody fingerprints are all over the invasion of South Ossetia. Georgia President Mikhail Saakashvili would never dream of launching a enormous military attack unless he got explicit orders from his bosses at 1600 Pennsylvania Ave. After all, Saakashvili owes his complete political career to American strength-brokers and US intelligence agencies. If he disobeyed them, he’d be gone in a fortnight. Besides an operation like this takes months of planning and logistical sustain; especially if it’s perfectly timed to coincide with the beginning of the Olympic games. (another petty neocon touch) That method Pentagon planners must have been working hand in hand with Georgian generals for months in improvement. Nothing was left to chance.”
Part of that careful planning may have been the unheard of propping up of the dollar and bombing of gold and oil the week before the curtain opened on the scene. Gold and oil had to be pushed down hard to give them room to rise before anyone shouted “hyperinflation!” As we watch the curtain rise on war in Eurasia, it is well to remember that things are not always as they seem. Markets are manipulated and wars are staged by Grand Chessmen behind the scenes.