Think Like a Pirate, Pt. 4: Their Tomorrow Wasn’t Like Their Yesterday

When it becomes serious, you have to lie.”  -Jean-Claude Juncker
 At the height of the Crisis in 2008, the system as we know it, both financial and political, came hours within ending, for good.
If you believe that the problems of the Great Financial Crisis are in the rear-view mirror, then my friend, you don’t yet understand what really happened back then.
Just one bank’s total derivative exposure is roughly 20 times the size of the German economy, and more than 5 times the size of all of Europe’s economy combined! One bank!
What do you think will happen when the ISDA announces that another “credit event” has occurred?  When even one losing party has to eventually pay out to another holder of derivative products, to make good on their obligations, do you think that the eventual loser won’t set off another daisy chain, as happened in 2008?  The Fed itself  has had to backstop Bank of America’s oversized $53 trillion dollar derivative position
Who do you think is really on the hook for the coming daisy chain of failures?  
That’s right, you are.

Submitted by The Wealth Watchman

There is a tragic story concerning Saint-Pierre, Martinique, in the Caribbean islands.  The year was 1902, and Saint Pierre was in full bloom, as travelers and tourists from all over the world were coming to experience its charms. Known as the “Paris of the Caribbean”, and part of the French territories, this picturesque city certainly was the pride of Martinique.

Something was terribly wrong though, for nearby, Mount Pelee had been building up tremendous pressure inside, and conditions had reached the point, where a volcanic eruption was inevitable.

Sadly, for several weeks there had been many warnings that something very big was imminent. There were rumblings within the volcano, as the ground shook and groaned beneath the feet of residents. Boiling water was bringing up trees and boulders near the top, as the pressures within continued to build, sending the unpleasant odor of sulfur into the city.  There was even a faint rain of cinders that came down upon the extremities of the island.

During this time though, a general calm was kept, and a great evacuation was forestalled, due to the city’s mayor, and the island’s governor.   Their administration assured everyone that there was no reason to be alarmed, and that everything was safe due to several large valleys that lay between Saint-Pierre, and Mount Pelee.  The general belief was that any lava flows which did eventually come, would be directed into these valleys, and would harmlessly flow down to the sea.  At last, when panic began to be a problem, the Governor “pulled out the big guns”, the end-all tactic of all bureaucracies to tackle a serious problem: he established a scientific Volcano Commission, to study Mt. Pelee, and measure the dangers!

Just days later however, in early May, something happened which both the local government and townsfolk didn’t anticipate.  Rather than traditional lava flows which typified many of the region’s volcanoes, Mt. Pelee’s initial eruption was in sudden waves of pyroclastic flows.

What is documented is that the top of the mountain literally blew off, and sent two large plumes of rock and gas into the air, with temperatures reaching up to 1,800 degrees Fahrenheit. The first plume went horizontally outward, over the city.  The second plume went straight into the air, and slowly rained white ash and gases over much of the top half of the island.

The first pyroclastic plume, which traveled out over the town at a speed of roughly 420 miles per hour, killed all 30,000 residents of St. Pierre literally within seconds.  As far as we know, there were roughly 2(and possibly 3) survivors.  Sadly, what had made it worse, was that St. Pierre’s officials had convinced many locals from other(safer) towns, to ride out the coming eruption within St. Pierre instead.

If only the governing bodies there had put the townspeople first(instead of their own egos), they could’ve saved every last person there.  For the towns further south, were almost untouched by the deadly flows, save only for the white ash which clouded and rained down for several days afterward.  Instead, 30,000 people lost their lives, and the jewel of Martinique is, to this day, a mere shadow of its former self.

It’s What We Do

I was just a boy when I first heard this story, and it made a powerful impression upon me.  I remember having an extremely difficult time believing it, but it wasn’t merely the great many unfortunates who lost their lives, that I found so difficult.

Call it the innocence of youth, naivety, whatever you like, but I really struggled with the thought that a few people could be so selfish, that they’d actually put their own egos and positions of privilege, above the safety of 30,000 human beings.  This thought was foreign to me, I suppose, because I’d been raised by real leaders who were utterly selfless.

I no longer have trouble believing such stories, at all.  At this point, sadly, few of us probably do, right?




After all, each of us watch day after day, as the central banks and governments of the world do exactly what St. Pierre’s government did.  In our government’s case however, it is much worse than the actions of Martinique’s government.

Why do I say that?  Well, because both the St. Pierre governor, his wife, and the mayor all died in the eruption.  They may have been foolish in what they advised their constituents, but they also took their own advice, and died because of it.  It appears they actually believed what they had been saying.

Whereas modern central banks and governments, who talk of a renewed housing boom, of economic recovery, of “Green Shoots!”, of banking stability, of “responsible debt levels”, or of the strength of the financial system, all know that what they’re saying is untrue.

They know none of this “recovery” is, in fact, real or sustainable.

They know it’s all a desperate ploy to buy time.

They know they’re telling you lies.

A Common Creed

In the summer of 2011, things were getting tenuous in the E.U.  Greece, it seemed, couldn’t go more than a few months, without needing another bailout.  Each of which was being unfairly funded by hard-working Germans, and by other insolvent southern E.U. countries.  The blind were leading the blind, as everyone was trying to buy the Euro currency a little more time, with each new patchwork solution.

Then came a great moment of truth: there was to be “a meeting”. Not just any meeting, but a gathering of many of the European continent’s most influential bankers and heads of state.  The agenda was simple: what was to be done about the Greek problem, in light of “the greater Euro” community?  Confidence in the Euro currency itself was waning, many bond markets were taking a beating, and many commentators even speculated about the possibility of Greece being expelled from the European Union. 

In the end, Greece wasn’t expelled, yet.  A “Troika” solution, a committee of technocratic bankers, was installed over the Greek country, and the Greek people were literally dictated to, regarding their debt problem.  Yes, the “birthplace of democracy” had just been forced to lay democracy to rest.

As bad as that was, however, the really infamous part of the whole affair was the repeated denials by E.U. officials, that such a meeting was taking place at all!  Why would they lie about a mere meeting to the press?

One official at the time, Mr. Schuller, can help us with that:

“I was told to say there was no meeting,” he told the press, “We had certain necessities to consider. Evening in Europe is midday in the United States…We had Wall Street open at that point in time…There was a very good reason to deny that the meeting was taking place…”  It was, as he put it, “self preservation”.

The ultimate political credo however, that came around this time, and which has come to encapsulate the cynicism of the modern system was uttered by another.  The head of the Eurogroup council of Eurozone finance ministers, Mr. Jean-Claude Juncker, was caught on tape, speaking of these meetings and other delicate economic topics, saying:

“When it becomes serious, you have to lie.”

Repeat that statement in your mind, seer it on your soul, for you now have a summary statement of belief from these people. 

That is all you need to know to understand why anything transpires in our political and financial system.  The part that adds insult to injury, however, is that liars aren’t simply not punished, but the best and most gifted liars are promoted for skill in this department: as Mr. Juncker has only recently been elected as the current President of the European Commission!

Could it Possibly be that Bad?

Now, I know what you may be asking yourself:

“These officials felt compelled to lie about a meeting simply because of what they thought it would do to the stock and currency markets?  I can’t believe it.  How could a few really turbulent days of market action possibly be a danger to the system itself?  They told us everything was fixed! Could things really be that bad?”

Yes, things really are that bad, and if you believe that the problems of the Great Financial Crisis are in the rear-view mirror, then my friend, you don’t yet understand what really happened back then.

At the height of the Crisis in 2008, the system as we know it, both financial and political, came days(perhaps hours) within ending, for good.  If you think that the previous statement I just wrote is mere hyperbole, or that I’m simply being sensationalist about what took place, I urge you to watch this clip below.

This is a snippet of Representative Paul Kanjorski, explaining to a furious caller, why he had dared to vote for TARP.  TARP(what came to be known as the “bank bailout”), if you’ll recall, was the acronym, for the universally unpopular Troubled Asset Relief Program.  This bill authorized the Treasury to purchase ‘troubled’(read worthless) assets from key banking institutions, and attempt to make the financial system reasonably more solvent for the near term.

If you don’t do anything else today, please watch this clip until the very end.

That footage is chilling, and the last 6 years of my research has reinforced to me, that everything he was saying is true.

The Problems Persist

Let me ask you one question: can you name me just one problem that we were facing in 2008, which you’d consider “fixed” today?

The Housing Bubble? It has been re-blown, thanks in large part to the Federal Reserve and the Treasury.  Through Fannie Mae and Freddie Mac bailouts, through perpetual ZIRP(zero percent interest rates) in inter-bank lending, and through a constant barrage of carefully-constructed employment and GDP reports, the Housing Bubble is back with a vengeance.

Question: how long do you think housing prices would stay at these levels, if you couldn’t lock in a 30 year mortgage at sub 4%?  Furthermore, what do you think will occur to your home’s market value when interest rates inevitably rise?  The only thing holding housing together, is the Fed’s program to buy enough debt to hold interest rates at these historic lows.

The Credit Bubble? It has also been re-blown, as the world, especially the Fed’s primary dealer banks, have used the cheap credit money-spigot of the Federal Reserve, to double down on sovereign bond purchases, on “creative” and complex securities products, and on investment speculation.

Question: how long do you think the governments of the world will be able to finance their debts, when each insolvent Western government can no longer line up to purchase the other’s bonds? How long do you think it would take for each government to reach the end of the line, and default on those debts, as Argentina has recently announced it is going to do?

The Stock Market Bubble: Not only has it been re-blown, but it is bigger than it was in 2008 by multiples.  The P/E ratios are even higher, and more out of whack than in 2008.  Fortune 500 valuations have reached historic disconnects. The Dow has reached a full 3000 points higher than the peak of 2008, and done so in record time.

Question: how long do you think all these corporate stock buy-backs will continue when central banks(who’ve admittedly injected $29 trillion of capital into world equity and financial markets), are no longer able to do so?  What do you think will happen to the last 6 years’ worth of your IRA’s gains(or any general equity account’s gains), when these multi-trillion dollar injections have ceased?

The OTC Derivative Bubble: the great threat, which Warren Buffett called “weapons of mass financial destruction”, are a more dire concern than they’ve ever been before.  In fact, recently, the NY Fed actually came out castigating Deutsche Bank for their over-sized participation in the OTC derivative market.  Just click on this one chart below, it will show you what I mean:

570x400_Hawksbill Turtle

In that chart, just one bank’s total derivative exposure is roughly 20 times the size of the German economy, and more than 5 times the size of all of Europe’s economy combined! One bank!

Question: what do you think will happen when the ISDA announces that another “credit event” has occurred?  When even one losing party has to eventually pay out to another holder of derivative products, to make good on their obligations, do you think that the eventual loser won’t set off another daisy chain, as happened in 2008?  Did you know that the Federal Reserve itself, has had to backstop Bank of America’s oversized $53 trillion dollar derivative position?  Who do you think is really on the hook for the coming daisy chain of failures?  That’s right, you are.

There are multiple other serious problems which still persist, but at this point, you can see the situation for it is.

They Think They Wear White Hats

The very worst part about all of this, is not simply that the politicians and bankers are responsible for this crisis(they are), or even that they’re fully aware that what they’re saying to us is untrue(they are). No, the worst part of all is that in their twisted minds, they’re the good guys for telling you the lies!

Just as the government in St. Pierre faced an epic, natural disaster, our politicians and banking CEO’s face a seismic financial disaster, a financial volcano, if you will.  One which is capable of leveling currency, bond, equity, and housing markets with a force equal to the pyroclastic flows on that fateful day in 1902, which destroyed so many lives.

The difference between Mt. Pelee, and our current financial volcano though, is that the latter’s eruption can and will be triggered when the fragile confidence of its market participants is gone.

Each one of these men know the forces building underneath it all, they’re all too aware of the rumblings, and furthermore,they know that the ground you’re standing on isn’t safe for you. Yet, they all feel compelled to lie to you though, because the moment they come clean is the moment the uneasy calm would end and the magma flows would be in full swing.  In their psyche, many of them believe in the “Noble Lie” of Plato’s Republic, and that they’re actually acting in your best interests, in forestalling this disaster as long as possible.

None of them are willing to be the one responsible for setting off this new “Mt. Pelee of finance”.  None of these power brokers are your friends.

Conclusion: Think for Yourself, and Seek Safer Ground

Which brings us to the title I chose for this series to begin with.  To be clear, when I say, “Think Like a Pirate”, I’m certainly not telling you to go and do something illegal. No, the Watchman would never give that counsel to anyone.

Rather, the opposite is true: I’m simply urging everyone to do whatever it takes, in your situation, in order to keep something illegal from happening to you.  Everything from TARP, to market rigging, to bail-ins, has been truly and patently illegal.  None of that matters though, because the same people who are breaking the laws, are the ones writing them. The banking/merchant sector of society has become so fused with the political sector, that there’s no longer any use in trying to find where one ends and the other begins. The Jamie Dimons, and Blythe Masters of the world are “the Untouchables”, but you, shield brother, are most certainly not. Many of these people behave as carnivores in a “eat or be eaten” world, and to them you’re simply the newest fresh meat on the menu.

Time is growing short, the rumblings are growing louder by the day, if you have but ears to hear, and the courage to act, you can shield yourselves from the worst of the fallout. There is a new beginning on the other side of this system’s end, but you must take action to seize that New Day, in order to participate in it.  Remove yourselves and your wealth(as our hero likely did in the story of the Saddle Ridge Hoard) from the radius of the blast that’s coming, in order to ensure that you and the ones you love, are not collateral damage in this modern war on truth.

Think for yourselves, seek safer ground, and I promise: I’ll be there alongside you, striving to be your sentinel of truth, calling out in a wilderness of fraud.

-Wealth Watchman

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