AUT: Fw: The Gathering Storm (readable version)

["cwright" <cwright@xxxxxxxxxxxxxxx>]

"From The Wilderness" newsletter is read by 20 members of congress, 12
University professors and the Intelligence Committee of both Houses.. He

uses only government documents, official statements or verifiable press
reports as evidence to support his claims.



The Gathering Storm

·       Global Financial and Economic Crash Imminent
·       Stock Market, Pension Funds, U.S. Dollar on Brink of Collapse and
Implosion
·       Theft and Fraud Losses to U.S. Taxpayers Exceed $4.2 Trillion


by Michael C. Ruppert

[Copyright 2002, From The Wilderness Publications, http://www.copvcia.com.
All Rights Reserved. May be copied or distributed for non-profit Purposes
only. May not be posted on any internet web site in its entirety without
express written consent. Contact mruppert@xxxxxxxxxxxx]


[Ed. Note: The last time FTW issued an emergency economic bulletin to its
subscribers was Sept. 9. At that time a derivatives investment bubble on the
verge of implosion, a 900-point drop in the Dow Jones average and a pending
liquidity crisis signaled a crash on the order of 1929. Only the attacks of
Sept. 11 and massive intervention from the U.S. Treasury and Federal Reserve
prevented the collapse. Investors blamed the ensuing market losses on the
attacks.

The situation now is much, much worse as more factors combine to suggest
that foreign investors and trust in the U.S. economy might soon be a thing
of the past. Your pension is at risk today and your home may be at risk in
six months to a year.

One economic analyst has suggested that a nuclear exchange between India and
Pakistan might be the perfect cover for the biggest financial wipe out in
human history. I think that an ill-conceived and risky invasion of Iraq
might serve the same purpose. From consumer  confidence, to corporate
accounting, to the dollar, to gold, to foreign capital flight, to pension
fund wipe outs, to the derivative bubble, to debt, there is not a single
economic indicator that is not flashing red.

The warnings are as clear, explicit and well-documented as were the Warnings
received by the U.S. government throughout summer 2001 that a terrorist
attack against the World Trade Center would take place during the week of
Sept. 9 using hijacked airliners from United and American airlines.

Nothing was done to prevent that and apparently nothing is being done now in
spite of the fact that $4.2 trillion of your money has been stolen right in
front of your eyes.

There was no "single" reason for the attacks of 9-11. I have cited oil, drug
cash and geopolitics as three of the primary motives for the U.S.
Government 's complicity in allowing the attacks to happen. But what also
cannot be overlooked is the fact that 9-11 effectively masked a major
economic crash that was certain to occur. That crash has not been averted by
the extraordinary financial maneuverings of the Bush administration that
followed 9-11. It was merely postponed for a very short time.--MCR ]

July 8, 2002, 4 PM PDT (FTW) -- Reuters, London published a story June 27
based upon an interview with billionaire financier George Soros. The
headline read, "Soros Blames 'Bush Factor' for Dollar's Fall." George Soros
is a man to be reckoned with. Emerging from WWII as someone who Allegedly
cooperated with Nazi occupation troops by identifying assets to be seized,
the European financier is one of the most powerful financiers on the planet.
He is credited with successfully assaulting the currencies of several
nations, including Britain's pound. He recently participated in the World
Economic Forum in New York where he was seated on the dais with the likes of
Zbigniew Brzezinski, Hillary Clinton, Shimon Peres and academics from Ivy
League colleges. It is more than just a case that when Soros speaks, people
listen. The truth is that when Soros speaks, markets move.

His comments were brutal.

"The international financial system is coming apart at the seams.There is a
lack of confidence. That's what I call the 'Bush factor' in the
economy."  There is a liquidity crisis in financial markets, said Soros.
"Everybody's going home. The Swiss banks are going home. The strengthening
of the yen clearly shows repatriation." Translated, that means that foreign
capital is fleeing the United States in the wake of as yet not fully
realized accounting scandals that will, according to Fox News on July 6,
take an estimated $600 billion in value out of the U.S. stock market this
year.

One of the many smoke alarms triggered by this is the fact that the U.S.
economy needs an estimated $1.5 trillion per year in new foreign investment
just to remain solvent.

Reuters quoted Soros as saying that the global economic downturn had
"exposed the weaknesses of corporate America and how the U.S.
administration runs the international economic system."

Soros is aware of what FTW and noted economic thinkers like Catherine Austin
Fitts, former assistant secretary of housing, and British economist Chris
Sanders of Sanders Research have been saying for years: as much as half of
the value of the U.S. financial markets is derived from criminal endeavors,
whether it is the laundering of drug money or the fraudulent "cooking" of
financial statements to boost profits.

PUMP AND DUMP

It's a simple scheme really. The mafia knows it quite well. By whatever
means necessary, drive a stock's price higher and higher. Make it look
like a mover, even if it's a dog. Cook the books and get suckers to buy in,
helping to drive the price even higher. When you think the balloon will pop,
call all your buddies and sell your shares. That effectively steals all the
money that the suckers put in. When the stock crashes, the suckers who
weren't part of the scheme will take the loss, whether they be individual
investors or the New York City police and fire pension fund.

The U.S. stock markets have been pumped to the breaking point, and they are
trying very hard to dump right now. Most sober analysts have agreed for a
long time that the prices are over-inflated by as much as 50 percent or
more; that price/earnings ratios, now averaging more than 30-1, should
properly be corrected to about 15-1. That means the Dow should be at 5,000
or lower. We'll talk about how the meltdown is being temporarily prevented
later. It is first necessary to examine the severity of the crisis.

If I mention the "bookkeeping problem" that's threatening Wall Street right
now and asked you how many companies were being investigated for or had
announced "overstated earnings," how many would you say? Six? Eight? Try
17.* Seven of them are energy companies, and this adds another degree of
imperative for Congress to force the White House to compel full disclosure
from Vice President Cheney's 2001 energy task force. But he has a problem
there too. One of the companies under investigation for fraudulent
bookkeeping is Halliburton. Cheney was its CEO until taking office, and the
fraudulent accounting occurred while he was the boss.

Did you think that WorldCom was a big one, having illegally claimed $3.8
billion in earnings to boost its share price? On July 5, according to
Newsday, the energy giant Reliant Resources "restated" its 1999-2001
earnings by chopping off $7.8 billion in revenue. Just today it was
disclosed on CNN that the pharmaceutical giant Merck has overstated its
revenues by $14 billion.

At the core of all these accounting problems is a non-transparent form of
corporate bookkeeping called "pro forma." As opposed to the more transparent
and rigid practice called GAAP (Generally Accepted Accounting Practices),
pro forma bookkeeping allows for all kinds of manipulations like hiding debt
as income, double booking revenues and sneaking drug money onto the bottom
line. What has yet to be fully explored by any of the major media is which
other major corporations use pro forma bookkeeping. The reason is that all
of the major media companies use it too. Also on the pro forma system are GE
(NBC), AOL/Time Warner (CNN), Microsoft (MS-NBC), Viacom (CBS), Disney
(ABC), IBM, Intel, Cisco Systems, Sun Micro, Tribune (the Chicago Tribune
and the L.A. Times), The Washington Post (Newsweek) and the New York Times.

The accounting scandals are starting to nip at the heels of these and other
cornerstones of American capital markets. Trading of GM shares was halted
June 27 after "unconfirmed market rumors of accounting irregularities." And
New York Times reporter Gretchen Morgenson offered the suggestion in an
April 14 story that GE might be cooking its books. Thanks to PBS's Lowell
Bergman in a 2000 report, we already know that GE has been called on the
carpet for accepting drug cash, lots of drug cash, as payment for the good
things it brings to life. So has Philip-Morris.

How much foreign capital can Wall Street expect to attract, let alone
retain, if foreign investors expected to be wiped out for leaving their
money here? American investors, especially pension funds are still putting
money in or leaving it in place in the stock market. Are there other alarm
bells that mom and pop investors should be hearing? What will happen to the
value of the American brand name as a trustworthy place to invest money if
GM is ultimately revealed to have cooked its books?

A look at the real health of the stock market is revealing. On April 26, The
International Forecaster made two chilling observations:

"At the time of the AOL Warner merger the combined companies were worth $290
billion. They are presently worth $85 billion. Their quarterly loss is
estimated to be $50 billion. This could be the business mistake of the new
century.

"The downgrade of Bristol Myers Squibb to Aaa by Moody's leaves only 8
AAA-rated companies left. They are GE, UPS, AIG, ExxonMobil, Johnson &
Johnson Berkshire Hathaway, and Pfizer & Merck. In 1990 there were 27 AAA
companies and in 1979 there were 58."

THE DOLLAR

Soros was extremely upset about what was happening to the U.S. dollar, which
has been falling against various currencies for about a month. The key to
understanding this lies in the lesson I learned at an economic conference in
Moscow in the spring of 2001. Almost all countries in the world use the U.S.
dollar as their reserve currency. They have bought trillions and are holding
them. If another currency becomes more valuable or is viewed as more stable,
then the world will switch currencies, and trillions of dollars will come
back into the country -- inflation would be inevitable and the dollar would
lose its value.

In the week ending July 5, the dollar closed consistently at or near parity
with the Euro. As of this posting it sits at (US) 99 cents and has been
hovering there for more than a week. Since various economic "reforms" from
the 1950s to the 1970s removed the dollar from the gold standard it has been
a fiat currency, unconnected to any measure of intrinsic value. The full
faith and credit of the United States -- along with its military - have
given the dollar its value. The Euro is partially backed by gold and there
have been lingerring but credible rumors for years that the U.S.'s gold
reserves have been moved to Europe.

Soros told Reuters, "But the declines in the markets have gone somewhat
further than what would be the natural consequences of the previous
exuberance.  The decline in the dollar came as a surprise to me. I attribute
it to lack of confidence in the management of affairs by the United States,
its unilateralism, the pursuit of national self-interests and not living up
to the responsibility of being the dominant financial power in the world,
not taking care of the system."

What is Soros setting us up for? The pumping of the stock market Occurred
while Bill Clinton was president. Yet he's blaming Bush. Is another Herbert
Hoover being created before the big crash? The signs are there. Britain's
paper the Independent ran a June 28 story headlined, "WorldCom scandal:
Currencies: Latest Wall Street disaster sends investors all over the world
running for cover." The lead read, "The U.S, dollar yesterday moved to the
brink of free fall, a nightmare scenario for the world economy, after
reverberations from the WorldCom scandal triggered panic among investors."

That was before the announcements about Reliant and Merck.

The story painted a glum picture. "'This is threatening to become a
disorderly market,' David Bloom, global economist at HSBC said. There's
no better way to show loss of confidence in a country than through its
currency.'"

Quoting another financial expert, the Independent reported, "'If the dollar'
s decline turns explosive, this could compound the problems of the U.S.
asset markets as currency losses raise fears of massive capital flight out
of the U.S.'"

GOLD

For years the price of gold -- the ultimate smoke alarm signaling a failing
economy -- has been artificially suppressed by paper traders who are capable
of flooding the commodities markets with gold future options when the price
needs to be kept low. Why low? Because rising gold prices have always
signaled inflation and/or a lack of faith in the financial markets.  Years
of efforts by the Gold Anti-Trust Action Committee, or GATA, while not being
successful at halting or fully exposing the artificial manipulation of gold
prices by the Federal Reserve, major banks, the Bank of International
Settlements and major commodities traders, have opened the eyes of many to
overt manipulations in gold pricing.

As one investment banker told me recently, there is five times more paper
gold than there is actual gold out of the ground. If gold prices ever pop
they'll be out of sight.

Over the past year, certainly since 9-11, gold prices have often moved in
exactly the opposite direction (lower) from what conditions would
dictate. The financial effort required to do this requires the support of
powerful state banking institutions and cash to service the paper. Gold has
risen in price from around $280 an ounce nine months ago to a high of around
$327 in recent weeks. That's a return on investment of 16 percent -- far
better than the Dow has done this year.

In our last economic bulletin FTW noted that the Dow had lost close to 900
points. Since March of this year it had lost, before the profit-seeking
300-point rally of July 5, almost 1,600 points. Yet even as the economic
news worsened last week, the price of gold peaked and then started to fall.
As of this writing it sits at $312 an ounce. The gold price dropped as the
worst economic news was hitting the streets. Why?

As one astute gold watcher, Jay Taylor, summed it up in an October 2000
newsletter, "Every single time there is concern about a stock market
debacle, gold is bombed. Always."

On June 5 GATA described one of the recent moves to "fiddle" with gold
prices. "MiningWeb.com has just reported an explanation for the plunge in
the gold price today. The plunge, MiningWeb says, 'came in the wake of a
large after-market trade in New York last night, with an unnamed fund
liquidating 5,000 futures contracts, a move which knocked the price first to
$326/oz, then to $324/oz, and finally to $321/oz,.The sale was executed
using the 'Access' system on Comex, which allows for anonymous trading by
large funds.'"

There are unmistakable signs of market manipulation now with regards to Both
gold and stocks. Who is it that keeps the markets from correcting, only
making the inevitable crash that much worse? It's called the Plunge
Protection Team, or PPT. And now it has to have the liquidity to flood both
the gold and the stock markets with enough cash to keep the bubbles from
bursting. This, at the same time that major banks like J.P. Morgan/Chase and
Citigroup sit atop huge derivatives bubbles that have been estimated at
between $150 trillion and $300 trillion. Most major U.S. banks have heavy
exposure as a result of the mushrooming financial scandals. All of these
bubbles require cash, and this is the liquidity Mr. Soros is rightly worried
about.

Rep. Ron Paul, R-Texas, has been challenging the gold manipulation for
years. He has been one of the few fiscally sane voices anywhere on
Capitol Hill. His website has a listing of his writings and much needed
Legislation he has or is sponsoring.

Only recently have there been signs that the PPT is also working in the U.S.
equity (stock) markets.

THE PLUNGE PROTECTION TEAM

The Washington Post acknowledged the existence of a select group of four who
could and would intervene in markets to prevent massive capital flight and a
run on shares that would cause an economic collapse if there weren't enough
cash to pay out during a massive sell off. In his Feb. 23, 1997 story headed
"Plunge Protection Team," Post reporter Brett Fromson identified the Federal
Reserve chairman, the Securities and Exchange Commission chairman, the
chairman of the Commodities Futures Trading Commission, and the secretary of
the Treasury as the team's key players. The intervention of the team in The
1998 crash of Long Term Capital Management, after it became wildly
overexposed in the gold market, revealed that private institutions such as
Goldman Sachs, J.P. Morgan, Merrill Lynch and other major banks could be
involved as well.

Fromson quoted a former team member as saying, "In a crisis, a lot of
deference is paid to the Fed. They are the only ones with any money."
Or, I might add, the ability to print it.

Pointing to the 1987 stock market crash, the single largest crash in
history, Fromson observed, "The Fed kept the markets going by flooding
the banking system with reserves and stating publicly that it was ready to
extend loans to important financial institutions, if needed."

On April 5, 2000 New York Post reporter John Crudele reported that the Stock
market had turned back from the abyss. After a 500-point drop that looked
like it was leading to a meltdown, ".someone started buying large amounts of
stock index futures contracts through two major brokerage firms - Goldman
Sachs and Merrill Lynch.Unless the brokers tell, there is no way of knowing
which of their clients were making the  purchases.Then the market
rebounded."

Calling it the PPT, Crudele both referred to the 1997 Washington Post Story
and suggested that private banks were acting as team captains.

Gold activist David Guyatt, relying on information obtained from GATA
Chairman Bill Murphy, pointed to the PPT in October 2000. "The hand of The
Plunge Protection Team (PPT) is clearly visible for the first time. The
entire short gold play over the last few years is a technique that has been
used to 'prop up key stocks' and 'fund futures' operations. In the simplest
form it works like this. Borrow (at negligible interest rates) someone's
[America's, Germany's, Britain's, Goldman Sachs'] gold and sell it in the
market. This gives a handsome pool of near-interest-free dollar cash.
Whenever the stock market looks shaky, or key stocks come under pressure,
dive in and buy, buy, buy.

"But it is not only necessary to manipulate the stock market to succeed. It
is also necessary to manipulate the gold price and keep the price of gold
below the price PPT sold the leased gold for.This is a game of double
jeopardy. The problem the PPT now have is that there is virtually no more
official gold left to borrow."

The causes of this intervention were a pending NASDAQ crash and the Imminent
downgrading of IBM and Intel stocks.

And the PPT's hand has been noted recently from as far away as Australia.
Progressive Review Editor Sam Smith recently quoted a story by Richard
Bromby of the Australian Financial Review:
"At 2:32 Wednesday [June 26, 2002], New York time, something extraordinary
happened at the corner of Wall and Broad streets. The New York Stock
Exchange's Dow Jones industrial index -- struggling since the opening bell
after the WorldCom fraud revelations -- threw off its problems. From an
intraday low of 8,926.6, the Dow shot skywards to its high of 9,160 at 3:29
PM.Could it be the work of the much talked about, but never seen, Plunge
Protection Team? There is a belief that this team represents a powerful and
secretive hand that is ready to act at any time the Dow looks ready to tank
big-time.

".London's Observer newspaper last October reported it had information the
plunge team was preparing to spend 'billions of dollars' to avert a
repeat of 1929 and 1987."

The problem is clear: With a strong dollar the PPT has demonstrated that it
has enough cash to suppress gold prices or to save the stock market. It may
not have enough cash to do both -- especially if the dollar were to suddenly
lose its value. Then, all of the chickens that have been locked out will
come home to roost with a vengeance.

As The International Forecaster reported on April 26, "The American Consumer
has run out of credit and buying power.All bets are off if the housing and
credit bubbles break and that's a distinct possibility. Debtor's prison is
drawing nearer. House and Senate conferences are deciding on a new set of
rules for Chapter 7 bankruptcy.If the Plunge Protection Team weren't
manipulating the market with all these scandals, the Dow would already be at
4,500."

REALIZING THE EXTENT OF THE DESTRUCTION

Not all of the money looted from American taxpayers is going to support The
PPT market manipulations. A lot of it is just being stolen.

According to the Standard and Poor's website, "domestic equity allocation"
(stock market) of U.S. pension fund investments was near 50 percent by the
end of the 1990s. It has topped 50 percent since then.

Before the 2000 presidential election, candidate George W. Bush promised
that he would tap the Social Security Trust Fund only in the event of war,
recession or national emergency. On Sept. 11, he was quoted by his budget
director, Mitch Daniels, as saying, "Lucky me! I hit the trifecta!"

It's not a question about stealing a little here and a little there. It's a
question about open, full-scale looting -- but only from the pockets of the
American people who, in my opinion, will soon have almost nothing left.
Let's look at the  hard numbers of what has been taken and from where. These
numbers are by no means exhaustive. It's just what we know about.

- Social Security in 2001 (USA Today/Washington Post)
$34 Billion

- Social Security in 2002 (est.) (House Budget Committee)
$160 Billion

- Federal Employees Retirement System (Wall Street Journal 6/13/02)
(to Meet 2002 budget deficits)
$42 Billion

- Civil Service Retirement and Disability Fund (ibid)
$2 Billion

- Stolen from the Dept. of Defense -- 1999

(Cong. Record and Insight Magazine)  $1,100 Billion

- Stolen from the Dept. of Defense -- 2000 (CBS News) $2.300 Billion

- Stolen from HUD -- 1999 (Cong. Record)
$59 Billion

- Shareholder Equity Lost to Financial Fraud -- 2002 (Fox)
$600 Billion

TOTAL
$4,297
Billion

Pending Thefts

Social Security (by 2010) (Washington Post citing Cong. Budget Office
figures)
$845 Billion

An anecdotal story reveals the damage to pension funds. If you think that
Social Security will be a safety net, please read the above section again.
Of course we all know about the Enron employees who were wiped out. But
according to the New York Times on April 3, New York City's pension system
has lost $9 billion in the wake of recent stock scandals. Imagine the impact
if local governments declared bankruptcy or defaulted on their pension
obligations. It has been estimated that the California state employee
retirement system (CALPERS) has more than 90 percent of its money invested
in the stock market.

A WORD ABOUT HOUSING

Most Americans believe that their homes are their last, best retirement
insurance. Yet many Americans have mortgaged their homes for 120  percent of
value. Their loans are backed with the full faith and credit of the U.S.
government through various agencies such as Ginnie Mae, Fannie Mae, Freddie
Mac, and the Federal Housing Authority.

The International Forecaster has predicted that "40 percent of Fannie and
Freddie's loans are going to come back and haunt them. We envision an S&L
type bailout of $2.4 trillion down the road. This will be the biggest
financial disaster in history."

The full faith and credit of the U.S. government lie behind these home
loans. If the homeowners go broke in an economic crash, they default. If the
U.S. government goes broke -- before or after that point -- it defaults, and
the holders of U.S. debt ultimately have the right (especially under WTO and
globalization) to foreclose on the collateral -- your home loans.

In the worst case scenario most of the United States could legally be owned
by all of the countries holding U.S. debt -- better described as T-Bills, or
U.S. gold, or U.S. stocks.

CONCLUSION

The Great Depression was not an event that wiped out U.S. capitalists. It
was an event that made the rich even richer by transferring the wealth of
the people into the hands of the already wealthy. Legendary is Bank of
America's rise to affluence through real estate foreclosures from 1929-37.
Don't believe for a minute that the richest of the rich will be hurt by the
coming collapse. The only ones hurt will be you and me.

George Soros is a member of the Bilderberger Group, a collection of the
wealthiest individuals on the planet. It includes, from the U.S., both
Democrats and Republicans, and from Europe and Asia the richest "old" money
that can be found. U.S. participants in this year's conference included
David Rockefeller, Henry Kissinger, former Treasury Secretary Larry Summers,
former CIA Director John Deutch and George Soros. It was just after this
year's meeting which ended in early June, that all of the revelations about
corporate fraud started to really hit the news. One wonders if it had been
on the agenda.

I also note sadly a recent financial report from the Denver area stating
that mortgage foreclosures were going through the roof. This, at the same
time that Reuters (July 2, 2002) reported that corporate layoff
announcements had risen by 12% in one month. In this context Bush's tax cuts
seem worse than bad judgment. As former Ass't Secretary of Housing Catherine
Fitts pointed out to me in a last minute e-mail, "By 2010, when (and if) the
Bush tax reductions are fully in place, an astonishing 52 per cent of the
total tax cuts will go to the richest one per cent. Put another way, of the
estimated $234 billion in tax cuts scheduled for the year 2010, $121 billion
will go to just 1.4 million taxpayers."

Unless you can convince me that gravity might suddenly reverse direction,
this collapse is inevitable and imminent. It will be unspeakably brutal. How
long do we have? Maybe weeks. Maybe months. Maybe only days. But the house
of cards is already starting to collapse all around us. A major terrorist
attack, the folly of an invasion of Iraq or a nuclear exchange between India
and Pakistan would only be a momentary diversion from a much greater
tragedy.



Suggested Resources:

http://www.sandersresearch.com

http://www.solari.com

http://www.gata.org

http://www.house.gov/paul/

* -- Enron, WorldCom, QWest, Tyco, ImClone, Martha Stewart (the
company),
Global Crossing, Dynegy, CMS Energy, El Paso, Halliburrton, The Williams

Co., Clear Channel (which owns approximately 1,200 radio stations),
Adelphia, Reliant, Motorola and Merck. [Source: CNN and various news
services]

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