shadow banking

Cartel Economics III

“They made a wasteland and called it peace.”

– Tacitus, Roman historian

So, where are we today?

As financial commentator Hans Schicht has described from his experiences of working with power-brokers in international commerce, he believes that the banking systems have become so centralised and concentrated that it is now under the control of “an inner circle of men.” He calls their financial warfare “spider webbing” where the concentration of wealth is made invisible; control is consolidated through “take-overs, mergers and chain share holdings where no companies hold shares of other companies” and where “conditions annexed to loans.” They also exercise: “tight personal management and control with a minimum of insiders of front men who themselves have only a partial knowledge of the game.” [1]

All this amounts to a vast system of unregulated and corrupt “shadow banking” which has no relationship to the kind of monetary system that is reported on mainstream news or the everyday lives of ordinary people. Its only relationship is to accrue maximum amounts of money at great qualitative cost – in all senses of the word – to societies.  A CNBC / Reuters report stated that such shadow banking “… grew to a new high of $67 trillion globally ” in 2011 and that it is “set to thrive” according to a study by a top regulatory group the Financial Stability Board (FSB). The study’s outlook was bleak and called for tighter regulatory measures on global banking.

It further observed:

“… shadow banking around the world more than doubled to $62 trillion in the five years to 2007 before the crisis struck. But the size of the total system had grown to $67 trillion in 2011 — more than the total economic output of all the countries in the study. The multitrillion-dollar activities of hedge funds and private equity companies are often cited as examples of shadow banking. But the term also covers investment funds, money market funds and even cash-rich firms that lend government bonds to banks, which in turn use them as security when taking credit from the European Central Bank. The United States had the largest shadow banking system, said the FSB, with assets of $23 trillion in 2011, followed by the euro area — with $22 trillion — and the United Kingdom — at $9 trillion.” [2]

That’s about $10,000 for every man, woman, and child on the planet.

The apex of those designs can be seen today in the disaster of deregulation and financial warfare that has characterised the last two decades culminating in the financial crash of 2008 the continuance of the same dynamic has been manipulated to achieve a greater global centralisation and concentration of power. The perceptions of the few remain the same today as they did in 1900. Innate pathology doesn’t change.

After the onset of the 2008 financial crisis European countries hit hardest saw an unprecedented upsurge in suicide rates and anti-depressant prescriptions. Greece’s health ministry recorded a 40 per cent rise in suicides in early 2010. By 2011, figures reached 25 per cent in Athens and 18 per cent nationwide. The New York Times reported that suicides caused by economic difficulties have increased by 52 per cent at 187 in 2010 up from 123 in 2005. Parallel to the misery of ordinary people, the Guardian reported that “… salaries of executives in FTSE 100 companies have risen by 4,000 % compared to 300 % for their employees” which means that: “An average pay rise of 50% in 2010 took the annual earnings of the directors of Britain’s FTSE 100 companies to £2.7 million each: over 100 times the national average.” [3]

If we are to address the Official Culture view of economics in the world and the cessation of endless cycles of boom and bust and all the social and psychological fallout from such financial terrorism mandated as “normal” we must begin to de-fang the institutions for whom debt slavery of the masses is vital to their continuing hold on a wide variety of power bases. Change the very concept of money and how it is channelled and you change the core of corruption.

As the aforementioned HSBC bank becomes the latest in a long line of international banks to be fined a record $1.9 billion dollars by regulators, this time for money laundering, a fine which amounted to 1 percent of its profits over ten years. [4] But again, there is something deeply unsettling for us all to realise that our present global banking system is entirely compromised and enmeshed with an overworld of institutional corruption that is ubiquitous as it is endemic. This was clearly illustrated when Senator Elizabeth Warren during Senate testimony in 2012 grilled the so-called “experts” in money laundering which included David Cohen, Sec. for Terrorism and Financial Intelligence, U.S. Treasury; Thomas Curry, Comptroller, Office of the Comptroller of the Currency and Jerome H. Powell, Governor, Federal Reserve System. Their responses were less than edifying. In fact, they were so slippery that it does make one wonder if they didn’t have their hands in the HSBC cookie jar themselves.

Here’s what Ms. Warren asked them:

“… in December, HSBC admitted to money laundering. To laundering $881 million that we know of for Mexican and Colombian drug cartels. And also admitted to violating our sanctions for Iran, Libya, Cuba, Burma, the Sudan. And they didn’t do it just one time. It wasn’t like a mistake. They did it over and over and over again across a period of years. And they were caught doing it. Warned not to do it. And kept right on doing it. And evidently making profits doing it.

Now HSBC paid a fine, but no one individual went to trial. No individual was banned from banking. And there was no hearing to consider shutting down HSBC’s activities here in the United States. So what I’d like is, you’re the experts on money laundering. I’d like your opinion. What does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”

A very reasonable question which remained unanswered amid obvious uncomfortable squirming from the panel. They gave no view and were clearly intent of covering their behinds which frustrated the Senator who was at loss to understand why.

Before her time was up she delivered this statement to the men and an analogy which all but the most dim-witted could understand:

So what you’re saying to me is you are responsible for these banks, and again, I read your testimony and you talk about the importance of vigorous enforcement here. But you’re telling me you have no view when it’s appropriate to consider even a hearing to raise the question of whether or not these banks should have to close their operations when they engage in money laundering for drug cartels?  I understand that I’m over my time.  And I’ll just say here, if you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail.  If it happens repeatedly you may go to jail for the rest of your life.  But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night.  Every single individual associated with this.  I just, I think that’s fundamentally wrong.

And so do most people capable of thinking critically who value even the most basic idea of a moral code. That being so, with such “experts” overseeing corruption in plain sight and being incapable of taking the action needed, it seems unlikely that the financial architecture will change unless it is drastically dismantled by forces outside of the system.

The overworld of defence and weapons manufacturing is fully entwined with truly huge amounts of missing cash funnelled to deep black operations along a legion of outsourced agencies. The public record is bad enough. Author and peace activist David Swanson offered some research on US Dept. of Defence spending and found a total of $32 trillion since 1948; another $780 billion on war expenditure from 1946-7 along with extra funding for Nuclear weapons (DOE) reaching $1.7 – 3 trillion; V.A.: $1.3 to 2.5 trillion and other departments at $1 to 2 trillion…Let’s add the total amount of bailout money that has actually been spent, invested, or loaned to corporations, banks and bank-related companies in the United States. As of October 2013, the online watchdog journal lists the “State of the Bailout” at the princely sum of $608 billion.[5]

You get some idea that truly gargantuan sums of cash have been devoted to the business of war and banking cartels that thrive on the continuance of death and suffering.

The rise of technocracy and financial computation is as experimentally challenging as the military technophilia that seeks new and ingenious ways to exploit the distorted panoply of human desire. Within the complex bed of global price-fixing HFT (high-frequency trading) systems are operating and evolving at faster speeds and according to one former HF trader writing for the Association for Computing Machinery: “… a big Wall Street trader is more likely to have a Ph.D from Caltech or MIT than an MBA from Harvard or Yale.” Automated trading is set to take the cartel capitalism into new levels of hyper-speculation as it continues to mine the gold out of the teeth of the poor. UK transactions have reached 77 percent while it is slightly lower at 73 percent in the U.S. market. Automation of the traders parallels the dissociation and disconnection from human values and responsibility as one finds with drone operators sitting behind their assigned lap top console.

Just as they click their way through the blurred line between civilian and insurgent deaths thousands of miles away, so too the speculator punches a key in his custom built software and executes a buy and sell in 740 nanoseconds (0.00074 milliseconds). This action contributes to the ebb and flow of poverty and corporate profit which has an equal dividend in the profit to poverty ratios.


See also: Why Real Reform Is Now Impossible By Charles Hugh-Smith



[1] Quoted from the introduction to Ellen Hodgson Brown’s The Web of Debt: The Shocking Truth about our Money and How We Can Break Free. Published by Third millennium Press 2007 updated 2008. | ISBN 978-0-19139795608-2-8.
[2] ‘’Shadow Banking’ Still Thrives, System Hits $67 Trillion’ November 18, 2012, CNBC/Reuters,
[3] ‘One-per-cent-wealth-destroyers’ By George Monbiot, The Guardian November 7, 2011.| ‘Britains fat cats get the cream as salaries surge by 4000 for top execs’
[4] ‘HSBC to pay record $1.9 billion U.S. fine in money laundering case’ By Carrick Mollenkamp and Brett Wolf, Reuters Dec 11, 2012.