Frank Dodd (Tony) Smith, Jr. - 2014
Mike Lofgren in a 21 February 2014 essay at Moyers &
Company described
"... Deep State ... a hybrid association of elements of government
and parts of top-level finance and industry that is effectively able
to govern ... without reference to the consent of the governed as
expressed through the formal political process …".
In some countries their Deep State is clear and open:
the Russian Deep State is what was known in Soviet days as the KGB;
the Chinese Deep State is the CPC/PLA.
The USA/UK Deep State is thought by some to be the Wall Street and
London City
Big Banks whose Quadrillion Dollar Hedge Fund Casino is the largest
concentration of nominal wealth on Earth.
What would a Wall Street / London City
Deep State do if the next financial crisis were
on the scale of Hundreds of Trillions of Dollars, far beyond the
scale of the few Trillion a year of Quantitative Easing for the
2008 financial crisis Banker Bailout ?
Consider these quotes from www.telegraph.co.uk on 14 Feb 2014 and 10
Sep 2013:
"… Concerns over the potential manipulation of foreign exchange
markets …
the allegations over currency manipulation were "ever bit as bad" as
those in the Libor-rigging scandal … If rates have been manipulated
it could mean
hundreds of trillions of dollars of investments could have been
incorrectly priced.
...
the FCA … was investigating the potential manipulation of the
ISDAfix that is used to price much of the $379 trillion (£242
trillion) interest rate swap market …".
and
this quote from www.prisonplanet.com on 18 February 2014:
"... Yet another banker has committed suicide, with a JP Morgan
forex trader leaping to his death from the top of the firm’s Chater
House headquarters in Hong Kong. Over the past few weeks at least
seven bankers have died under mysterious circumstances, including
another JP Morgan senior manager who jumped off the top of a
skyscraper in London last month. Speculation is rife that the series
of deaths are connected to some kind of looming financial crisis
...".
If the USA/UK Deep State is indeed
Wall Street / London City,
then
the Big Banks would get the Fed/Treasury to print up Hundreds of
Trillions of Dollars
as a Banker Bailout to cover losses.
Those Hundreds of Trillions of Dollars would be a Weimar-style
HyperInflation
that destroys the Dollar as a Reserve Currency
China
becomes
the New Global Financial Hegemon.
Alternatively, pseudonymous
Tyler Durden of Zero Hedge sees the
USA/UK
Deep State as a broader "... National Security State which
enables a vast Imperial structure that incorporates hard and soft
power--military, diplomatic, intelligence, finance, commercial,
energy, media, higher education--in a system of global domination
and influence ... read "Foreign Affairs", with an emphasis on
reading between the lines ...".
Tyler Durden wrote "Who Gets Thrown Under The Bus In The Next
Financial Crisis?"
on 3 March 2014, saying "... In the 2008 financial crisis, the Fed
threw savers and the bottom 95% under the bus to funnel hundreds of
billions of dollars ... to the banks to rebuild their broken balance
sheets. The Fed also provided limitless liquidity to bank trading
desks and financiers to skim billions from carry trades, effectively
channeling
the nation's financial resources to enrich its cronies, the top
1/10th of 1% ...
the next (and inevitable) financial crisis ... is simple to
summarize: the paper claims on
wealth so far exceed actual wealth that something's gotta give.
These claims include trillions of dollars in shadow-banking bets
(derivatives and other leveraged claims all teetering on a tiny base
of real collateral) and trillions of dollars in debt-based claims
on future income. Simply put, the vast majority of these claims will
have to be zeroed out, i.e. these phantom-claim "assets" will be
voided and declared worthless.
This leads to the key question:
who will the Deep State throw under the bus to preserve itself and
the nation-state?
...
the speculative excesses and political power of Wall Street pose a
strategic threat to the Deep State, and as a result a showdown
between
the
Deep
State ... high-echelon U.S. military and national-security
assets ...
and
the
surface
machinery of governance that has been captured by Wall Street
is looming
...
Between saving the U.S. dollar and making whole the $100 trillion in
nominal-value bets made by financiers in offshore shadow-banking
accounts--there's no contest.
...
the pre-eminence of both the Deep State and the U.S. nation-state
depend on the U.S. dollar remaining the key reserve currency in the
global economy.
The collapse of the U.S. dollar would destroy the foundation of both
the Deep State and the U.S. nation-state, hence ... the Deep State
will not enable that collapse.
...
the Deep State will do whatever it takes to eliminate strategic
threats to the integrity of the Deep State and the nation it depends
on for its power and survival. In a financial crisis that threatens
the dollar and the Deep State, the phantom claims of Wall Street's
financier skimmers, scammers and swindlers will be tossed under the
bus ...".
If the USA/UK Deep State is indeed
the Broader Alternative,
then
the Remnants/Successors of Wall Street / London City will be in
competition with China
for the role of Global Financial Hegemon.
What
assets
will the Remnants/Successors of Wall Street / London City have
in
their competition with China ?
According to the OCC Quarterly Report on Bank Trading and
Derivatives Activities (Third Quarter 2013) the Assets and Notional
Amount of Derivatives = Phantom Claims
held by the top 5 Bank Holding Companies were (in $ millions):
JPMORGAN CHASE &
CO.
2,463,309 73,255,282
CITIGROUP
INC.
1,899,511
63,245,172
BANK OF AMERICA
CORPORATION
2,128,706 57,929,528
GOLDMAN SACHS GROUP, IN.,
THE
923,359 50,372,894
MORGAN
STANLEY
832,223
50,332,826
Therefore,
the Big Five Banks have $ 303 Trillion of Total Wealth (Real Assets
+ Phantom Claims)
but
$ 295 Trillion of their Total
Wealth is in Phantom Claims that would be Zeroed Out
leaving
the Big Five Banks with only their
Real Asset Wealth of $ 8 Trillion.
The Top 5 Banks of China have assets (according to www.cba.ca) (in $
millions ):
ICBC
2,803,129
China Construction Bank
Corporation
2,232,764
Agricultural Bank of
China
2,116,358
Bank of
China
2,026,278
Bank of
Communications
842,651
Therefore,
the Top 5 Banks of China have Real
Asset Wealth of $ 10 Trillion.
Since Remnant USA/UK Banks and
China Banks have roughly equal Assets
their competition for Global
Financial Hegemon will be decided by other factors:
China + Russia has the Chinese
Manufacturing Machine
which can be fed by Russian Resources
while
the USA/UK has nothing to offer the rest of the world
other than Lawyers, Accountants, and Bankers
which would be irrelevant with China as Global Financial Hegemon.
USA/UK policy in the Middle East
has alienated both Iran and Saudi Arabia
and has driven Egypt to seek arms from Russia
while
China is getting agreements to buy oil from Russia, Saudi Arabia,
Iran and Venezeula
using Chinese currency instead of Dollars.
USA/UK has historically had high
influence in Europe
but
instability of the European Union due to mismatch
of the German and the South European economies
make it a less reliable ally.
USA/UK has military bases in Japan
but
Japanese economic ties to China are strong and
Japan might refuse to risk the Nuclear Destruction of a war with
China.
The USA/UK has military might of
USA + NATO
but
is opposed by the military of China + Russia
so
a military war would result in the Nuclear Destruction of the
USA/UK.
As I write this in early March 2014 the lead news in the USA/UK is
"Pentagon
sending fighter jets
to boost NATO presence amid
Ukraine standoff"
(Fox News 5 March 2014)
"U.S. Bid for Russia-Ukraine
Talks Fails"
(The New York Times 5 March 2014)
"Ukraine crisis: Russia
'spinning' intervention, says US"
(The Telegraph 5 March 2014)
"Blows for west in bid to counter
Moscow
Kremlin shuns Ukraine meeting
as Germany resists US-led
sanctions call"
(Financial Times 5 March 2014)
The loud noisy Ukraine news in USA/UK seems to be
a Deliberate Distraction of the USA/UK general population
from the really serious issue of impending collapse of the USA/UK
Deep State Hedge Fund Casino.
The importance of the Hedge Fund Casino Collapse has been seen in
the first 4 pages.
What is importance of the Ukraine issue?
Ukraine is divided between Ukrainian Majority (yellow) and Russian
Majority (red):
(image from Wikipedia)
presented competing aid packages to Ukraine's elected President
Yanukovych
who rejected the EU / NATO proposal and accepted the Russian
proposal.
EU countries Poland, Slovakia, Hungary, and Romania share
borders
with the Ukrainian Majority (yellow) part of Ukraine, which includes
Kiev.
USA/UK Deep State favors Ukraine's inclusion in EU / NATO and so
instigated in Kiev
a violent coup against President Yanudovych (who fled to Russia for
personal safety)
and installed a Coup Government to accept the EU / NATO proposal.
Russia reacted by securing its leasehold interest in Crimea and, at
the request
of President Yanukovych, prepared for military steps to protect the
status of
President Yanukovych including his decision to accept the Russian
proposal.
USA/UK reaction has been highly publicized Anti-Russian bluster and
threat
but no serious military counter to Russia's steps, so it seems that
USA/UK is using
the Ukraine as a Deliberate Distraction from the far more serious
Hedge Fund Collapse.