Introduction

Collateral Damage (Part 2): The Subprime Crisis and the Terrorist Attacks on September 11, 2001

By E.P. Heidner

Abstract: The U.S. Subprime and global financial crises of 2008 was the direct result of a covert monetary policy implemented by the U.S. financial institutional caretakers of the World War II Black Eagle Gold Fund. Major growth in this fund occurred in 1986 when the Reagan/Bush administration ousted Ferdinand Marcos and confiscated the Philippines holdings of Japanese pre-WWII treasury, buried in the Philippines due to the U.S. Naval blockade of Japanese ports. Not being able to publicly acknowledge the illegal confiscation of multiple national treasuries, U.S. officials and their banker-agents have released major portions of this fund to the money market in excess of monetary demand, expanding the money supply by $3.5 to $7 trillion. The individuals responsible for releasing this gold were also responsible for deliberately opening the subprime mortgage market to national banks, thus creating inflationary demand in the high risk, subprime housing market. In addition to the ‘coincidence’ that virtually all of the troubled mortgages which are at the source of the 2008 economic crisis seem to come from a timeframe and monetary growth spurt linked to the ‘9/11 bond dump’ this report will document that the primary source of funds for the liar’s loans and troubled subprime loans comes from banks that are in lock-step with the covert funding operations. Given that these same individuals covertly financed the collapse of the ruble in 1991 using these same funds, and then orchestrated the buy-out of key Russian industries for pennies on the dollar, this analysis provides evidence that a similar gambit is being made for the takeover of key U.S. industries.

In the aftermath of World War II, President Truman, acting on the advice of bankers working in the War Department and OSS, created the undisclosed ‘Black Eagle Fund’ using gold confiscated from the defeated Nazis and Japanese. This fund was augmented in 1986 by confiscating subsequent findings of Japanese treasury gold from Ferdinand Marcos, whose gold holdings at the time were estimated to be 73,000 tonnes.1 The total amount of treasure unearthed was in a magnitude estimated to be as much as 280,000 tonnes.2 Under international law, the gold should have been returned to the citizenry from which it had been confiscated – but for reasons of expediency, greed or both, the gold was secreted away under the watchful eye of the OSS/CIA and used over the next half century to finance CIA covert operations. The gold accounts were set up to be managed by the Exchange Stabilization Fund (ESF), a Department of the U.S. Treasury over which there is no congressional oversight. ESF funds are released under the authority of the President and Secretary of the Treasury through the open market operations of the New York Federal Reserve Bank. Over time, these covert funds have been found to be involved with a number of major international banking scandals such as the BCCI, Nugan Hand, Castle Bank, and the International Bank of Washington scandals. The largest covert operation to-date has yet to be discussed by the mainstream media.

Two independent ‘insiders’ to the fund have provided with testimony and documentation contending that George H.W. Bush and Alan Greenspan funded a covert operation in 1991 in the range of $240 billion dollars. One of those insiders was the wife of a minor covert fund manager (CIA operative Russell Hermann, of the Durham Trust) and the other was the long-term program manager of the covert fund (General Earle Cocke).3,4 Subsequent investigation into the funding and the history of that period suggests they used the gold to fund a covert economic war that caused the collapse of the Soviet Union.5 However implausible the claim may sound, “…it helps to realize that the entire cost of World War II, in current dollars and including service-connected veterans' benefits, is about $460 billion…. The cost of the Vietnam War, including benefits, was $172 billion; Korea was $70 billion; World War I was $63 billion. The Civil War was $7 billion.” 6 For George H.W. Bush and his colleagues, the covert war was probably a bargain that was too hard to turn down regardless of the legality!

The corroborating evidence for these claims is extensive, and moreover suggests that securities from the $240 Billion covert war were ‘settled’ in the aftermath of September11th, 2001 tragedy. This meant that $240 billion jumped from the off-balance sheet accounts to the balance sheets of their respective holding banks, and had a major impact on the money supply. Since that event, a chain reaction has contributed to an economic crisis that has stripped corporations and investment funds (read as retirement and saving plans) of trillions of dollars, and brought global economic growth to a standstill. Starting with a significant failure in the subprime equity market, a major contraction of the finance industry created a crisis with the following characteristics:

 A significant percentage of defaults on ‘subprime’ mortgages had reduced the cash flow and net value of the securities they were bundled into. In 2006 one report had 17% of the subprime loans 60 days in arrears7 predicting defaults in mortgages of $100 Billion. Mixing the risky mortgages with the good mortgages in the securitization process extended the risk to between $500 billion and $1 trillion of financial assets.

 The businesses, investment funds and banks holding those securities, having either a reduced cash flow or net asset value, were unable to ‘invest’ earnings to buy stocks and bonds, and reduced the value of their portfolios. The banks holding those securities as capital became unable to meet capital requirements as defined under the Basel II, Agreement and made them targets for takeover.

 Without an active demand for stock and bonds, companies requiring new funding for growth and expansion found themselves at a standstill. As inflated PE values of corporate stocks were driven to realistic levels, corporate ability to raise cash using stock as collateral was reduced even more. Large corporations holding securities related to the debacle were seeing their capital base drain away. Companies using securities, or their own stock or property value as collateral for loans would be facing bankruptcy as happened in Japan when real estate values plunged in the 1980s.

 Demand for goods and services was being curtailed by the reduced value and dividends of retirement and savings portfolios, forcing many senior citizens to cut back on day-to-day expenditures, forcing overall contraction in employment, providing few and smaller paychecks, and the standstill in the housing market - which was the economic engine for growth in the U.S. by spurring on building, home furnishings, appliances etc.