INCEIF the Global University in Islamic Finance,

Kuala Lumpur, Malaysia

MIF Program

Term Paper

The current Global Economic Meltdown Causes and impacts

By: Mughees Shaukat

Student ID # 0801014
THE GRAND DESIGN
HOW ECONOMIC MELT DOWNS ARE FABRCATED

INTRODUCTION

Crisis that affects the entire financial system and beyond is said to appear whenever the
expectations of continuously higher returns to financial assets fail to materialize (Eichengreen
and Mitchener, 2003).there is now a consensus that the global financial crisis began in the
mortgage finance sector of the financial system of U.S. and spread so rapidly to the global
financial system. Because the U.S financial system is the epicenter of the crisis. But the
situation is not as straight forward as it ogres here. There are always two sides of the picture
and to me it is that other side of the picture that is actually its only side and which we will
explore in this paper.

To begin our quest of this expedition which is a pragma and not a dogma of the philosophical
and the very analytical conclusions profounded, it is imperative for us to first understand what
this so called SUB PRIME crisis is and then extend our voyage to the real depths of fabricated
despair to satisfy greed and the never ending lust for power and hence the abuse of it as the
epitome.

This paper will argue and hence will try to prove that how the global financial crisis has been
manufactured. It’s even been planned, in advance. And make no mistake about it - it’s hardly
started yet. It's not a cyclical downturn or a 'recession’. Furthermore it will also reveal its trunk
from the invasions of Iraq and Afghanistan and finally will conclude at the predictable effects
and some more questions left unanswered.

The National Debt Clock in Times Square had to be taken down in September. The clock,
which has been informing the public about the United States' soaring debt for nearly two
decades, needed to be reconfigured to add space for new numbers. According to the Treasury,
the national debt has grown more than $500 billion each fiscal year since 2003. And then,
beginning on September 30, 2008, it grew another $500 billion in a single month. Never before
in U.S. history has the national debt increased so rapidly. The $700 billion government bailout
recently passed by congress could send the total debt to more than $11trillion and the current
global cost of the financial crisis is $2.8 Trillion and counting. As the nation speeds toward what
could be the next great depression we are left to wonder, “what happened?” To find the
answer, it helps to understand Wall Street jargon—mortgage backed securities, collateralized
debt obligations, credit default swaps. It also requires us to revisit former economic sage Alan
Greenspan, deregulation, and the role of U.S. homebuyers. The answer to the question,
however, can be summed up two words Greed, and Power. The financial sector is one of the
commanding heights of a modern economy, a key node in the flow of power.
BACK GROUND

THE GRAND DESIGN AND THE JEWISH-CHRISTIAN ALLIANCE

There is a grand design that links international politics, international monetary economics and
religion with today’s fraudulent monetary system Let us explain. We live in precisely such a
world in which a Judeo-Christian alliance has emerged for the very first time in history. It is that
alliance which has created modern western civilization, and which now rules the world through
the United Nations Organization, etc. It has created a monetary and economic system through
which it has already succeeded in unjustly enriching itself at the expense of the rest of the
world. It is that Jewish-Christian alliance which established the International Monetary Fund.
A rich elite now rules over the poor masses of mankind, and the rich nations now rule over the
rest of the world. In addition, the wealthy ruling elite around the world now constitute one
Jama’ah, and the stage is now set for a shift of power. The reader can easily recognize the
very heart of the process of legalized theft in the international monetary system that the Judeo-
Christian alliance has created by focusing attention on an event that occurred in April 1933.
The US Government enacted legislation at that time prohibiting American residents from
keeping gold coins, bullion or gold certificates in their possession. Gold coins were
demonetized, and were no longer permitted as legal tender. They could not be used as money.
If anyone was caught with such gold after a certain date, he could be fined $10,000 and/or be
imprisoned for six months. In exchange for the gold coins and bullion, the Federal Reserve
Bank, which is a private bank, offered paper currency (i.e., US dollars) with an assigned
numerical value of $20 for every one ounce of gold.

Most Americans rushed to exchange their gold for paper currency, but those who were aware
of the rip off that was about to take place bought gold with their paper currency and then
shipped the gold away to Swiss banks. It is significant that the British government also
demonetized gold coins in the same year as the US. They did so through the simple expedient
of suspending the redeem ability of the sterling paper pound into gold.

After all the gold in USA had been exchanged for paper currency, the US Government then
proceeded in January 1934 to arbitrarily devalue the US paper dollar by 41% and to then
rescind the law of prohibition concerning gold that was previously enacted. The American
people rushed back to exchange their paper currency for gold at the new exchange value of
$35 per ounce of gold. In the process, they were robbed of 41% of their wealth. The reader
can now easily recognize the legalized theft that takes place when paper currency is devalued.
Domestically the new monetary system through which a massive and unjust transfer of wealth
throughout the unsuspecting world could be achieved.

Less than two years earlier, in September 1931, the British pound was devalued by 30% and
this gradually increased to 40% by 1934. France then followed with a devaluation of the
French Franc by 30%, the Italian Lira was devalued by 41%, and the Swiss Franc by 30%. The
same thing subsequently happened in most European countries. Only Greece went beyond
the rest of Europe to devalue its currency by a whopping 59%. What appeared to be "beggar
thy neighbor" policies of 1930s — using currency devaluations to increase the competitiveness
of a country's export products in order to reduce balance of payments deficits — resulted in
plummeting national incomes, shrinking demand, mass unemployment, and an overall decline
in world trade that came to be known as the Great Depression. However, it prepared the way
for the imposition of an international monetary system that ostensibly sought to bring order and
prevent chaos in the world of money and trade. In other words, the Great Depression was
artificially contrived in order to justify the imposition of an international monetary system that
would bring order to a chaotic world of money.
Similarities can be drawn from this so called great depression and applied to the present
situation keeping in mind the statement which I already have lingulised that the global financial
crisis has been manufactured. Its even been planned, in advance. And make no mistake about
it - its hardly started yet. It's not a cyclical downturn or a 'recession'. Prevalent from the very
roots of this articulate parlance, let us scrutinize what SUB PRIME crisis is how it uprooted and
the predictable effects it carries with it ringing the bell with this huge conspiracy.

Securitization and the subprime crisis

The subprime crisis came about in large part because of financial instruments such as
securitization where banks would pool their various loans into sellable assets, thus off-loading
risky loans onto others. (For banks, millions can be made in money-earning loans, but they are
tied up for decades. So they were turned into securities. The security buyer gets regular
payments from all those mortgages; the banker off loads the risk. Securitization was seen as
perhaps the greatest financial innovation in the 20th century.)

As BBC’s former economic editor and presenter, Evan Davies noted in a documentary called
The City Uncovered with Evan Davis: Banks and How to Break Them (January 14, 2008),
rating agencies were paid to rate these products (risking a conflict of interest) and invariably
got good ratings, encouraging people to take them up.

Starting in Wall Street, others followed quickly. With soaring profits, all wanted in, even if it
went beyond their area of expertise. For example,

•Banks borrowed even more money to lend out so they could create more securitization.
Some banks didn’t need to rely on savers as much then, as long as they could borrow from
other banks and sell those loans on as securities; bad loans would be the problem of
whoever bought the securities.

•Some investment banks like Lehman Brothers got into mortgages, buying them in order to
securitize them and then sell them on.

•Some banks loaned even more to have an excuse to securitize those loans.
 •Running out of who to loan to, banks turned to the poor; the subprime, the riskier loans.
Rising house prices led lenders to think it wasn’t too risky; bad loans meant repossessing
high-valued property. Subprime and “self-certified” loans (sometimes dubbed “liar’s loans”)
became popular, especially in the US.

•Some banks evens started to buy securities from others.

•Collateralized Debt Obligations, or CDOs, (even more complex forms of securitization)

spread the risk but were very complicated and often hid the bad loans. While things were
good, no-one wanted bad news. Side Not When asked what if someone raised concerns,
Peter Harn, one of the innovators of CDOs, an even more complex version of
securitization, told the BBC such people would likely lose their job; anyone trying to slow
down would have seen a decline in their market share compared to others, for example.

High street banks got into a form of investment banking, buying, selling and trading risk.
Investment banks, not content with buying, selling and trading risk, got into home loans,
mortgages, etc without the right controls and management.

Many banks were taking on huge risks increasing their exposure to problems. Perhaps it was
ironic, as Evan Davies observed that a financial instrument to reduce risk and help lend more
securities would backfire so much.

When people did eventually start to see problems, confidence fell quickly. Lending slowed, in
some cases ceased for a while and even now, there is a crisis of confidence. Some investment
banks were sitting on the riskiest loans that other investors did not want. Assets were
plummeting in value so lenders wanted to take their money back. But some investment banks
had little in deposits; no secure retail funding, so some collapsed quickly and dramatically.

The problem was so large; banks even with large capital reserves ran out, so they had to turn
to governments for bail out. New capital was injected into banks to, in effect, allow them to
lose more money without going bust. That still wasn’t enough and confidence was not
restored. (Some think it may take years for confidence to return.)

Shrinking banks suck money out of the economy as they try to build their capital and are
nervous about loaning. Meanwhile businesses and individuals that rely on credit find it harder
to get. A spiral of problems result, as Evan Davies described it, banks had somehow taken
what seemed to be a magic bullet of securitization and fired it on themselves.

According to all the analysts, the global financial crisis is set to get much worse. Not even the
corporate news channels can conceal this fact.

It was only a few short months ago that we were assured there was no financial crisis, right?
Global leaders said so. Presidents,Prime Ministers, the Presidents of Banks etc. They went out
of their way to say nations were in a good position to weather the storm of any 'credit crunch’.
But today (a few short months later) the same people are saying they don't even know how
bad things will get!!! And we, the public, WILL 'bail out' these financial organizations, over and
over again without ever knowing the depth of the problem or even whether these 'bailouts'
solve the problem. (Whether we tell the political classes to vote differently or not). Have you
ever felt ‘conned’?

All the evidence is that the global financial crisis has been manufactured. It’s even been
planned, in advance. And make no mistake about it - it’s hardly started yet. It's not a cyclical
downturn or a 'recession'. So let's forget that. It's definitely not a 'credit crunch'. These bailouts
of banks haven't fixed anything. This will become more and more clearer. So what we are
really witnessing /experiencing is the terminal evacuation of all credit from the global financial
system. Except for those in the 'system', The current Globalist Financial Crisis is a Financial
False Flag operation. It is a controlled collapse of the globalist economic system, engineered
by an international war crime. The globalist financial system is being intentionally destabilized
with the same technologies that the government of Salvador Allende was destabilized in Chile
by Henry Kissinger and Richard Nixon on behalf of David Rockefeller and the Rothschilds,
resulting in Allende's assassination on September 11, 1973.

The Financial False Flag designed to accelerate the deterioration of First World economies,
democracies, and prosperity, in aid of a larger program of global depopulation. The same
powers who control the Federal Reserve Bank are intent on depopulating between 1/3 and 2/3
of the current human population, in service to a grotesque covert elite plan.
This seems to fall inline too well with statements made by Rahm Emanuel and Gov. Jon
Corzine of New Jersey. To quote Emanuel "You never want a serious crisis to go to waste...
what I mean by that is opportunities to do things you think you could not do before". Henry
Paulson, Con. Barney Frank, Sen. Chris Dodd, Sec. Andrew Cuomo Jr., are no exceptions to
this either they knew full well that mandating low-income families that didn't have the ability to
pay back the loans be given mortgages, and then the mortgage companies unloaded this toxic
debt to investors... passing around the hot potato while playing musical chairs hoping they
won't get it back when the music stops.

Then on top... Henry Paulson paints the picture far blacker than it is to the point of what the
article and Rush paraphrases as "Fraud".

Now we have a government who is going to PRINT and spend money to the tune of Trillions
which will devalue the dollar further and reduce the average American's buying power... let’s
not forget the fact that now American Government debt will be just as toxic as the bad
mortgages. Even now China is balking at buying more of this debt.... Canned food and
shotguns, folks... buy long on canned food and shotguns...

Iraq and Afghanistan War Culture another sham for Financial Crisis

The corporate mass-media is playing a key role in seeking to shape the broad public perception
of the current financial crisis. The corporate mass media, in its public relations capacity, has
sought to specifically create a public perception that prevailing economic problems are a
separate issue from on-going military adventurism in the Middle East.
However, it is apparent that on at least two levels, the Iraq War was in fact, a direct precursor to
the prevailing financial crisis. The first level is the actual cost of the war to the American
taxpayer, and the second level, is an apparent culture of parasitism against the American
taxpayers.

The same group of dissemblers who unethically fabricated the Iraq War, also sought to engage
in similar unscrupulous practices on Wall Street, and that in turn, produced the financial crisis.
Indeed, the financial crisis is the result of an ego driven agenda by elites, who pursue insatiable
commercial profit and power, with total disregard to civil society. the financial crisis and the Iraq
War as one of precursors to it, illuminates capitalism as technique of governance that
fundamentally subverts the democratic potential of a society. Through the Afghanistan War, the
American aristocracy and its confederates in the European Union, seek to perpetuate
adversarial military retributions, designed to prod contrived enemies into counter-attacks. In
turn, that can be used to legitimate demands for more money, away from a peaceful civilian
economy, and into the apparent criminal orchestrators of military adventurism.
Naomi Klein’s book Disaster Capitalism, indeed explores the mutation of capitalism into preying
on human fear and dislocations, in the pursuit of insatiable commercial profit, power, and
eugenic control over the 'masses’. Henceforth, it is the perpetuation of American military
adventurism, that is throwing the Middle East into a worsening culture of deprivation and
violence that well connected elites have sought to exploit and parasitize.

Future falsified scenarios for the perpetuation and for the contriving of wars, toward worsening
spiraling financial crises, cannot be prevented by bailing out the masterminds of generally
unethical and specifically criminal conspiracies against taxpayers.

EXTENSION OF ADVERSITIES

Odious third world debt has remained for decades; Banks and military get money easily

Crippling third world debt has been hampering development of the developing countries for
decades. Many of these debts were incurred not just by irresponsible government borrowers
but irresponsible lending (also a moral hazard) from Western banks and institutions they
heavily influenced, such as the IMF and World Bank.

Despite enormous protest and public pressure for odious debt relief or write-off, hardly any has
occurred; one recently described “historic breakthrough” debt relief was announced as a $40
billion debt write-off but turned out to be closer to $17 billion in real terms. To achieve even this
amount required much campaigning and pressuring of the mainstream media to cover these
issues.

By contrast, the $700 billion bailout as well as bailouts by rich other country governments were
very quick to put in place. The money then seemed easy to find. INFACT THIS BAIL OUT IS
NOTHING BUT TO COVER THE LOSSES OF THE WEALTHY.

And, a common view in many countries seems to be how financial sector leaders “get away”
with it. For example, a hungry person stealing bread is likely to get thrown into jail. A financial
sector leader, or an ideologue pushing for policies that are going to lead to corruption or
weaknesses like this, face almost no such consequence for their action other than resigning
from their jobs and perhaps public humiliation for a while.

A crisis of poverty for much of humanity

Almost daily, some half of humanity or more, suffer a daily financial, social and emotional,
crisis of poverty. In poorer countries, poverty is not always the fault of the individual alone, but
a combination of personal, regional, national, and importantly international influences. There is
little in the way of bail out for these people, many of whom are not to blame for their own
predicament, unlike with the financial crisis. There are some grand strategies to try and
address global poverty, such as the UN Millennium Development Goals, but these are not only
lofty ideals and under threat from the effects of the financial crisis (which would reduce funds
available for the goals), but they only aim to halve poverty and other problems..

A global food crisis affecting the poorest the most

While the media’s attention is on the global financial crisis (which predominantly affects the
wealthy and middle classes), the effects of the global food crisis (which predominantly affects
the poorer and working classes) seems to have fallen off the radar. The two are in fact inter-
related issues; both have their causes rooted in the fundamental problems associated with a
neoliberal, one-size-fits-all, economic agenda imposed on virtually the entire world.
CONCLUSION

I believe two things are clear.

1. We — everybody — have more questions than answers.

2. The American people are fools. These events should spark thought about their
fitness for self-government.

This post discusses the questions, the details about the crisis. As usual for this site, let us take
this by the numbers. First, what do we know?

• This down cycle has much more to go, still in its earliest stages.

• The de-leveraging of US households has just began. Purging of excess mortgage debt
is the first step; credit card and auto loans are next to go.

• Most important, the global rebalancing process has barely started...

• How far will the U.S. government go in socializing the excess debt, moving it from
private balance sheets onto the national credit card?

• Will our markets recover from the extensive manipulation by the US government?
Midnight rule changes, authorizing falsification of financial statements, it is a long list of
efforts to prop up prices.

• How long will U.S. government retain ownership? A short-term fix followed by a quick
return to private ownership. Or long-term ownership?

How much wealth will be transferred from the taxpayers to insiders by this process? The
Resolution Trust Company and the Iraq War proved that vast sums can be looted by insiders
without public protest. Those sums might be pocket lint compared to what happens in the next
few years.

“There will be blood, in the sense that a crisis of this magnitude is bound to increase political
as well as economic conflict. It is bound to destabilize some countries. It will cause civil wars to
break out, that have been dormant. It will topple governments that were moderate and bring in
governments that are extreme. These things are pretty predictable.
REFERENCES
Federal Trade Commission: the Gramm-Leach-Bliley Act,
http://www.ftc.gov/privacy/privacyiitiatives/financial_rules.html
Naomi Klein’s Disaster Capitalism
T. Curry and L. Shibut, “The Cost of the Savings and Loan Crisis: truth and Consequences” in FDIC
Banking Review, December 2000, pp. 26-35, available at:
http://www.fdic.gov/bank/analytical/banking/2000dec/brv
J. Sapir, Quelle économie pour le XXIè siècle, Odile Jacob, Paris, 2005. See chapter 2, 3
IMF, Containing Systemic Risks and Restoring Financial Soundness, Global Financial Stability Report,
April 2008, Washington DC., p. 54.
CNN.COM
The financial dimension has been described in J.Sapir, “Global finance in crisis” in real-world
economics review, issue no. 46, 18 May 2008, http://www.paecon.net/PAEReview/issue46/Sapir46.pdf
Greenspan, « The Roots of the Mortgage Crisis », The Wall Street Journal, December 12th, 2007.
H.P. Minsky, “Uncertainty and the Institutional Structure of Capitalist Economies” in Journal of
Economic Issues, op.cit., p. 361.
J. Sapir, “Global Finance in Crisis and Implications for Russia”, CEMI-EHESS Working Paper, March
2008.
Moody’s Economy.com.
This is to some extent the view of F. Renversez, who links the trend to financial opening-up to
constraints arising from a liberalised global economy and the development of institutions like the
Economic and Monetary Union inside the EU.
IMRAN HOSEIN.ORG
Abbas Mukhtar and Noureddine Krichne: RECENT CRISIS AND LESSONS FOR ISLAMIC FINANCE