Friday, 19 December 2008 14:29

“As more loans are repaid, there is less need for dollars …”

I want readers to read the above quote a few times and really ponder on the implications of the statement made by Robert Sinche, the head of global currency strategy at Bank of America in New York, the third-largest U.S. bank.

Does it make sense to you?

I ask this question because it was only a few months ago, that we were told that banks’ capital base have been depleted to bare bones, that they are all bankrupt, totally bankrupt.

The various assets which they have acquired (the toxic wastes of CDOs etc.) are all junk and fetch at the most ten cents on the dollar. A big chunk have been unloaded onto the FED in exchange for quickie loans under the TARP program.

The banks’ problems have been further compounded when hedge funds and other investors who have leveraged up to 30 times and or borrowed to the hilt have all busted and the securities (CDOs, Mortgage-Backed Securities etc.) have been valued as junk! They have therefore defaulted and the securities pledged to the banks cannot even be sold to reduce the exposures of the bank.

Therefore, these defaulting parties are in no position to borrow elsewhere to repay the outstanding loans. They don’t even have assets to pledge to the bank for further loans. They are dead meat!

Now we have also been told that inter-bank lending has also come to almost a complete halt because banks have no confidence that any security offered by banks who need short-term loans (overnight etc.) are of any value. This is because most banks are up to their eyeballs in toxic wastes. They have been selling to each other and to global investors a whole load of shit.

Such desperate banks cannot borrow in the inter-bank market.

Then, the FED stepped in and offered a variety of loans, but the banks having received such bailouts have said that they will not be lending for reasons stated above. They are hoarding the new injected funds.

So we have a situation where borrowers cannot borrow and lenders cannot lend.

So how did Robert Sinche of Bank of America (a bankrupt bank) come to the conclusion that, “as more loans are repaid, there is less need for dollars”, when in fact loans are not being repaid. Hence, we have massive foreclosures, bankruptcies of financial institutions such as Bear Stearns, Lehman Bros, Merrill Lynch, AIG and other insurance companies, and the hedge funds.

Is this not perverse logic?

If loans are being repaid, banks will be flushed with monies, why is there a need to hoard monies and to cease lending?

Is this not perverse logic?

If home values are not inflated and other assets are “clean” (i.e. not toxic or junk), why are banks refusing such assets as security for further loans?

Is this not perverse logic?

If financial institutions are sound and flushed with cash because of loan repayments, why is there a need to artificially stimulate lending by reducing FED rates to almost zero?

Is this not perverse logic?

If loans are repaid, thereby reducing liabilities in the balance sheet, why is there a need for massive injection to recapitalize the banks?

Is this not perverse logic?

When loans are repaid, it follows there will be liquidity within the banking system. So why is there a need for the massive $8.5 trillion injection by the FED thus far into the system?

Is this not perverse logic?

When loans are being repaid, the banks should be in a healthy state and therefore, the currency that supports the Ponzi scheme should strengthen naturally and not artificially strengthened by manipulation in the last few months.

Is this not perverse logic?

THEREFORE THE DOLLAR SHOULD NOT WEAKEN BUT CONTINUE TO STRENGTHEN IF AS ALLEGED MORE AND MORE LOANS ARE BEING REPAID!

The statements by the Bank of America’s analyst and other so-called experts and economists are nothing but a smokescreen to hide the truth from the people.

The entire global banking system is in a mess. Most Western banking institutions are bankrupt. Their exposures are in the trillions and whatever loans that have been repaid (if any) will not reduce the exposures.

The so-called trillions are all mere digits in the banks’ computers. They are fools’ money.

And as for the US dollar, the paper itself has more value than the numerals printed on it, be it the $1 bill or the $100 bill.

The recent strengthening of the dollar was another con-game perpetrated by Bernanke and Paulson on instructions from the masters of the Shadow Money-Lending system.

And the idiotic rationale for the strengthening of the dollar was allegedly the flight to safety by investors as a result of the collapse of the derivative financial products.

Is this not perverse logic?

The house is burning. The dollar is worthless, mere toilet papers! Real estate has dived and continues to descend to lower depths. These are all dollar assets.

If the dollar is toilet paper and assets are denominated in dollars, what you are having is a load of shit.

So why would anyone want to dump or exchange Euros, Yens, Russian Rubles, Chinese Yuan and most importantly GOLD for a load of shit?

This type of reasoning IS to camouflage the manipulation of the dollar and the forced depression of the gold price so as to prevent a flight from the dollar and all other fiat currencies to GOLD.

This so-called flight to safety to the dollar is a conspiracy hatched by all the global central banks (since they all belong to the fiat money club) to prevent the total collapse of the fiat money system, which according to the Bretton Woods I system (1948) and Bretton Woods II system (1971 when dollar went off the Gold Standard), the US dollar is the main pillar.

If the main pillar collapses, all other fiat money would follow suit.

The present gyrations of currencies, sometimes up and sometimes down are controlled manipulations.

The ultimate aim is to prevent the total collapse of the fiat money system and the flight to Gold.

The present weakening of the dollar is a reflection that such schemes are not sustainable because human nature will intervene to disrupt this grand plan. Sooner or later, those billionaires and money launderers (drug kingpins) will realize that with each passing day, their wealth is going up in smoke and that ultimately the only insurance and or security for their ill-gotten wealth is GOLD.

Then, the real fun starts.

As I have said in my previous two articles, this is the final trillion dollar gamble. The Shadow Money-Lenders will fail and their grand design will be but a fantasy.