Saturday, January 22, 2011

Reflections on the State

In the course of aggregating various forms of content for this site and others, I've been struck by just how badly the State fails individuals.  We're all proud on some level of our affiliation with some form of organization higher than the individual level, be it a race or a nation or some form of both.  My own background is a source of immense pride to me: being Irish is something I've always held close, and something I've always been proud to say.  On the same level, I'm a proud American, but I don't think many other Americans get what I mean when I say that: I'm proud of the ideals that America represents, be it achievement based on merit, equality before the law, or a republic founded on individual liberties that trump majoritarian rule. I love it here, be it the land or the people, but I despise our government.  

Our government is an insult to the ideals that make our nation great and unique.  It flouts the limits placed upon by the Constitution, generally tramples and disregards our individual liberties as a matter of convenience and simple preference, and is comprised of some of the worst people we have to offer the world. There are moments when I listen to individual representatives talk and I am absolutely flummoxed at how unintelligent they obviously are.  Moreover, the ones advertised as intelligent by the media are simply asinine.  Their gift, if you can call it that, is speaking the language of the intelligentsia and parroting certain key phrases and jargon.  The media is of the firm conviction that if a person talks a certain way, the way the majority of the media talks, then that person is of a keen mind.  My own conviction on the matter is that very few individuals in the United States government, even those who were advertised as the best and the brightest, actually were bright and good. 

Recent revelations would seem to bear this out, especially the recent release of John F. Kennedy's Harvard application.  The marks therein are abysmal, and the application letter itself is underwhelming: 

 

The reasons that I have for wishing to go to Harvard are several. I feel that Harvard can give me a better background and a better liberal education than any other university. I have always wanted to go there, as I have felt that it is not just another college, but is a university with something definite to offer. Then too, I would like to go to the same college as my father. To be a "Harvard man" is an enviable distinction, and one that I sincerely hope I shall attain.

April 23, 1935

John F. Kennedy

 

 

Five sentences. That's what it took for John F. Kennedy to get into Harvard.  Through his career at The Choate School, John F. Kennedy managed a 68 average. The reality is that historians and journalists alike have never treated John F. Kennedy like a 68 student, nor have they questioned the myth of JFK versus the reality. People from certain families get by with less achievement, less aptitude, and less competence simply by virtue of the fact that their family name carries with it a certain cachet.  

Where George W. Bush was concerned, he got a bad rap because he didn't understand that speaking the language of the intelligentsia mattered where coverage was concerned.  In truth, his grades and those of his opponent in the 2000 Presidential elections, Al Gore, were quite similar.  In point of fact, Gore's sophomore year saw him making worse grades than George W. Bush made throughout his career at Yale.  

These are not the best and the brightest.  Moreover, their advisors, if the track record of the past 40 years is any indicator, are not the best and the brightest either.  We've had forty consecutive years of deficits, and our entire economy is built on inflation.  There hasn't been one quarter of economic growth since the mid-Nineties that wasn't accompanied by Federal Reserve stimulus in the form of monetary expansion.  Quite simply, our economy has little to do with any policy emanating out of Washington.  It runs on the fiat monetary policy of the Federal Reserve and its Board of Governors, and they tighten and relax the monetary supply on the whim of the private financial sector which owns the Federal Reserve.  If the regulatory policies coming out of Washington are judged to be too strident, the monetary supply is manipulated in such a way as to drive the economy downwards.  If the regulatory policies are adjudged as favorable, then the monetary supply makes the compliant politicos in Washington appear competent, even brilliant.  

It is little more than an illusion.  If there are things that our government, our State, is good at, they are as follows: intellectual obfuscation and sleight of hand. The State is responsible for nearly every major economic event of the past forty years.  Enron?  Who do you think approved mark-to-market accounting which enabled Enron to book projected future profits as current revenue?  That would be the SEC.  Enron's stock price went through the roof on the basis of State-sanctioned fraudulent accounting.  The more recent economic crisis was the direct result of State-sanctioned deregulation which allowed banks to securitize anything and everything, thereby multiplying our mortgage market from $21 trillion to $165 trillion in securities.  Additionally, that $165 trillion in securities represents a booked asset that owners of the securities can then borrow against.  The end result is more debt based on paper assets rather than anything physical or concrete.  

The recent news that banks are making a recovery is little more than an absolute lie.  Banks are booking profits because they have been allowed to suspend regular accounting rules, thereby enabling them to book liabilities as assets, or shuffle liabilities off of their balance sheets altogether.  In the name of preserving the mirage, the State has given banks permission to cook their books.  Banks are being allowed to book expected earnings as though those earnings are already in hand, but the truth is that even those banks advertised as healthy have lost hundreds of billions of dollars at the same time they were reporting record profits.  

And that's just the financial end of the State's malfeasance.  The reality of the matter is that the State exists solely to serve the interests of a select few who own most of the capital.  State expenditures are little more than welfare for the wealthy, which is why the State continues to metastasize.  The State is not comprised of bleeding-heart altruists who genuinely care about the poor or the working class. Have you ever noticed that welfare never delivers a single recipient to middle class status?  Not once is a welfare recipient emancipated from dependence on government aid into a self-sustaining lifestyle.  The point of welfare is not to get people back on their feet; instead, the point of welfare is to ensure that recipients wear a yoke around their neck for as long as possible.  

Whatever the recipient receives goes right back into an economy where the owners of the corporations who receive that money are shareholders generally made up of the wealthiest 10% of the population.  Those same individuals receive government tax credits for hiring welfare recipients.  They provide the goods and services that the government relies upon.  There's Lockheed Martin, a defense contractor, administering welfare reform programs and offering up instruction to recipients on how to improve their self-esteem, and you and I are paying for it!  There's a shell corporation, built by ex-Senator Ted Stevens, whereby the Eskimos of Tatitlik run the Chugach Alaska Corporation, or at least sit back and collect dividends while Bechtel and others actually run the $700 million of annual federal contracts to run military bases around the world!  

And then there are the scandals, ranging from torture to pedophilia and child pornography, all of which goes largely unpunished because the violations in question are committed by State employees and officials.  There's the Defense Department child pornography scandal, which shows hundreds of purchases of child pornography by dozens of Pentagon employees, many of whom had sensitive security clearances.  That follows on the heels of revelations that SEC employees were too busy watching porn on work computers to actually pay attention to the rampant mortgage fraud that dominated half a decade of 21st century.  Also, a NASA executive was also busted for the same sort of malfeasance.  We can also count in the Minerals Management Service and their employees, who received Peach Bowl tickets, private jet travel, and watched porn at work to boot.  The end result was the Deepwater Horizon disaster, whereby the negligence of a State bureaucracy enabled the negligence of British Petroleum.  And you can also look at the State as the largest drug distributor, given the history of CIA involvement in heroin trafficking and cocaine smuggling.  

Then there's the genocide, from Darfur to Bosnia to Rwanda to Iraq and elsewhere, all at the behest of State's bureaucrats and the elites who drive State policy by fomenting racial and religious hatred in order to create constituencies out of resentments.  The great question I have after considering all of these various abuses is this: why do we think the State is a viable or beneficial mode of organization for us?  Why, after all of the war, the corruption, the rampant abuses...why do we think States work?  States underwrite the genocidal demagogues and tyrants and the regimes thereof, and they do so with impunity.  The State has little if any problem with a demagogue who enables their policy ends, but the minute he turns against the State which created him, then he is reclassified as a tyrant and a genocidal maniac, albeit a maniac armed and supplied by external States who created his power base.  

Nations work, because people bound by common interests and mutually shared values possess great empathy for each other.  That's why private donationsreached the victims of Katrina with far more efficiency on a far quicker scale than State aid.  States lack empathy, run as they are by individuals who mistake bankrupt moral outlooks with intellectual sophistication.  

States work very well for the worst within a society and culture, people who mistake capital for merit.  The fact that one gains capital in any State regulated economy says more about that individual's ability to network and trade on nepotism and connections than it does about the merit of the individual's ideas or the execution of those ideas.  These individuals love the State even as they denigrate the nation, because they bear no identity along national lines.  Merchants, Thomas Jefferson noted, have no country.  The State enables merchants at the expense of everyone else, and if you don't believe this, you have to look no further than the size of bailouts relative to welfare programs.  Moreover, you can also consider that every dime spent on national defense, infrastructure, and welfare goes into the coffers of companies owned by Statists. 

At the end of the day, the State as it currently exists and the interests it represents, are fundamentally incompatible with the values and norms of ordinary people, because ordinary people have extraordinary compassion and decency.  We've become jaded over time, and many of us have been susceptible to appeals to our fears and bigotries, but the reality of the matter is that in times of crisis, our true character is revealed and that character is good.  It's time for us to finally come to a realization that has been long overdue: the State is not the answer to the problem, the State is the problem.  It has never delivered on its promises, and its existence is the chief problem confronting freedom-loving individuals who believe in human rights and human dignity.  We've arrived at a place in human history where we must reject the State and move towards a gradual Stateless existence.  

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Van Jones's STORM Manual

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Portugese Elites Caught in Sex Scandal with State Orphanages!

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Sri Lankan Military Confirms Genocide

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Capital Analysts' Report on Financial Deregulation

Italian Scientists Claim to Have Demonstrated Cold Fusion

<p>Italian scientists claim to have demonstrated cold fusion (w/ Video)</p>

<p>(PhysOrg.com) -- Few areas of science are more controversial than cold fusion, the hypothetical near-room-temperature reaction in which two smaller nuclei join together to form a single larger nucleus while releasing large amounts of energy. In the 1980s, Stanley Pons and Martin Fleishmann claimed to have demonstrated cold fusion - which could potentially provide the world with a cheap, clean energy source - but their experiment could not be reproduced. Since then, all other claims of cold fusion have been illegitimate, and studies have shown that cold fusion is theoretically implausible, causing mainstream science to become highly speculative of the field in general.</p>

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The Biggest Lie in Finance Today

So it’s all about stocks?

 

Our esteemed Fed Chairman, now claims that QE has helped by raising stock prices. That was never a reason he listed for launching QE before. In fact, this is the first time he’s even mentioned this as a benefit (though everyone with a thinking brain knows that the Fed doesn’t give a hoot for anyone other than Wall Street which is why ALL of its moves were intended to help them juice the markets).

 

Why is he suddenly saying this?

 

It’s simple, because the market has proved he’s either incompetent or a liar (likely both) when it comes to QE. After all, he repeatedly said the reason we needed it was to boost employment and lower interest rates.

 

Well, 7.3 million people have lost their jobs since the Bear Stearns collapse. The Fed claims that this number would have been a lot worse without QE. It’s a pretty brilliant argument considering that there is no alternate universe where the Fed didn’t employ QE to compare to, so there is literally no evidence that refutes the Fed’s claim.

 

However, the fact remains that we spent over $2 trillion and still lost 7.3 million jobs. Hard to see the success rate of that policy. And given that the only folks hiring and raising salaries and bonuses right now are Wall Street firms, it’s pretty clear which demographic QE has TRUTHFULLY benefitted from an economic perspective.

 

As for QE keeping interest rates low, like I said, Bernanke is either incompetent or a liar. Given the abysmal performance QE has had in containing interest rates, I’d say it’s both:

 

 

As you can see, interest rates have soared BOTH times the Fed implemented a new QE program. On top of this, we now have direct evidence that the Fed’s policies are

actually killing people... literally.

 

In case you’ve missed it, food riots are spreading throughout the developing world Already Tunisia, Algeria, Oman, and even Laos are experiencing riots and protests due to soaring food prices. 

 

As Abdolreza Abbassian, chief economist at the UN’s Food and Agriculture Organization (FAO), put it, “We are entering a danger territory.”

 

Indeed, these situations left people literally starving… AND dead from the riots.

 

And why is this happening?

 

A perfect storm of increased demand, bad harvests from key exporters (Argentina, Russia, Australia and Canada, but most of all, the Fed’s money pumping. If you don’t believe me, have a look at the below chart:

 

 

As you can see, it wasn’t until the Fed announced its QE lite program that agricultural commodities exploded above long-term resistance. And in case there was any doubt, QE 2 sent them absolutely stratospheric.

 

In light of all of this, it’s no surprise that Bernanke is now fishing for any justification for his insane policies. However, even his claim that QE has pushed stocks higher is a big fat lie as MOST of stocks’ gains have been a direct result of inflation or decreased purchasing power.

 

Indeed, in nominal terms, stocks have rallied 91% since their March 2009 low. However, when you account for Dollar devaluation by pricing stocks in Gold, you  find that nearly two thirds of stocks’ gains have come as a result of the US Dollar lowing purchasing power. Put another way, stocks have only rallied 31% since their March 2009 in REAL terms.

 

 

And it looks as though stocks are about to drop even MORE in real terms.

 

 

As you can see, stocks have outperformed Gold since December. However, priced in Gold they’ve recently been rejected at long-term resistance. to 0.925 if not 0.90 (meaning Gold would greatly outperform stocks on a relative basis).

 

Indeed, while I think stocks are more than overdue for a correction, I view the latest pullbacks in Gold (and Silver) as MAJOR buying opportunities for both inflation hedges.

 

Let’s be blunt, the Fed is going to do one thing and one thing only: print money. And while stocks might benefit somewhat from this, inflation hedges like Gold and Silver will positively EXPLODE higher.

 

After all, while stocks are up only 31% in REAL terms, Gold has soared 58% while Silver has more than DOUBLED. One can only imagine the returns investors will see in the coming years as the world’s central banks (lead by the Fed) print us into oblivion.

 

Good Investing!

 

Graham Summers

 

PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.

 

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

 

Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.

 

PPS. We ALSO publish a FREE Special Report on Inflation detailing three investments that have all already SOARED as a result of the Fed’s monetary policy.

You can access this Report at the link above.

 

 

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Quantitative Easing Predicted to Create Food Inflation: A Prophecy Fulfilled

Accounting Tweak Changes Liability from Fed to Treasury!

US News
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Accounting Tweak Could Save Fed From Losses
Reuters | January 21, 2011 | 04:58 PM EST

Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.

The significant shift was tucked quietly into the Fed's weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on Jan. 6.

But the new rules have slowly begun to catch the attention of market analysts. Many are at once surprised that the Fed can set its own guidelines, and also relieved that the remote but dangerous possibility that the world's most powerful central bank might need to ask the U.S. Treasury or its member banks for money is now more likely to be averted.

"Could the Fed go broke? The answer to this question was 'Yes,' but is now 'No,'" said Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey. "An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital."

The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.

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Jeffrey Epstein, Billionaire Pedophile!

Boys for Sale

Sibel Edmonds Videotaped Deposition

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Friday, January 21, 2011

Citigroup and the Plutonomy Part II

Citigroup and the Plutonomy

War and Other Human Absurdities

Untitled

Extraordinary Financial Assistance Provided to Citigroup....Homeowners, Not So Much.

Emergency Response to Terrorism Manual with Bonus Original Cover Artwork!

Government on the Brink

Large Israeli Spy Site Uncovered

Lord James of Blackheath and the Story of Foundation X

Below is a transcript of the House of Lords from November 1, 2010, during which Lord James of Blackheath rose to speak and while doing so made several extraordinary claims on the floor of the House of Lords: 

1. He had been engaged in money laundering for the IRA and North African terrorists at the behest of the Bank of England. However, there is some confusion as to what he meant: he could have been referring to unwinding banks and accounts which were used to launder terrorist funds.  

2. He had been approached by a private group claiming to be in possession of funds which could be used to seed the economic recovery of England, and these funds were backed by bullion. The total claimed assets of the group were said to be in excess of the known reserves of gold bullion mined throughout human history, and Lord James then pointed to the Vatican Bank at the close of his speech.  He came to knowledge of this firm through an eminent City firm, but he does not specify which institution put him in touch with the group, which he refers to as Foundation X. 

3.  The group was offering a £17 billion bailout, with £5 billion forthcoming if only a senior member of the U.K.'s government would confirm with the group.  Someone with a credit rating equal to the "top six people in the world" would have to come forward.  

Oddly enough, none of the other speakers before or after Lord James's extraordinary speech addressed any of the claims contained therein, including the other Lord who was present, Lord Sassoon.  Either Lord James of Blackheath has lost his mind and has conjured up an entire scheme ex-nihilo, or he is recounting a rather extraordinary true story.  Below is the transcript of his remarks, with the pertinent remarks highlighted for your attention. Beneath the transcript is a video of Lord James's remarks.  

The entire episode was a rather surreal event, and I think it begs further investigation into either the veracity of Lord James or his sanity.  

 

10.42 pm

Lord James of Blackheath: My Lords, I do not know what you have done to deserve me this late in the evening but I am afraid that is where it is. It has been a fascinating day. I particularly enjoyed the comments of the noble Baroness, Lady Browning, on the subject of "Brigadoon", which was the first play I ever saw in the West End. I do not think she delivered the punchline. The whole point about "Brigadoon" was that it came out of the mist for only one day in every 100 years. That is a lovely idea for the Opposition.

We have heard today a great many tales of woe and dismay about the future, and some of optimism from this side. I am concerned about where the common ground is in that. One of the lessons of what is now quite a long life is that nothing is ever quite as bad or quite as good as you expect. It is probable that there will be a little more common ground between us than we might foresee at the moment. We might assist that process because growth will be what brings the two sides together. The more growth we can achieve, the more scope there will be to deal with some of the greater calamities that might occur unforeseen-since everything is unforeseen in politics.

I will talk a little about some of the growth opportunities that we might be able to harness and what we can do. As I have mentioned before, one of my great messages is a lesson from Sir Kenneth Cork, who taught me most of what I know about corporate rescue. It is that you cannot rescue a business that does not have a successful past. Anything that does not have a successful past is a failed start-up. Get rid of it and concentrate on the businesses that have a successful past. Where, today, are the businesses with a successful past? They are languishing in the intensive care units of the banks. They cannot get out because most of them have been the victims of expanding their capacity beyond the demands of the marketplace. That is a very expensive situation to get out of once you are in it. It was done with some dexterity and considerable success in the early 1970s through the initiatives that were forthcoming from three Is: investment in industry. One of the great tragedies of our economy at present is that we do not have three Is functioning in that form today. Boy, do we need them.

I am very much a believer in the principle of the collective collapse of generic groups of businesses as entities. Let me give some examples. At the present moment this year, we have probably lost half a million cars in our British export market. They would have been a very big additional factor to the economy, both in production-the wages that would have gone to the people who built them-and in the export value they would have had. Why? It is because the banks played their usual dirty trick a year or two ago: they saw that there were big markets outside-big back-orders-so they let the businesses have the money that they needed to fund the delivery of the order books that they had. The orders came in; they took the cash, reduced the facilities and the automotive component industry did 

1 Nov 2010 : Column 1537

not have the working capital to gear up for the massive turn to the diesel engines, which were demanded, and the British export market could not maintain the export requirement necessary to maintain its position on the international scene.

That has largely been corrected now but a similar problem may well happen. The next big crisis is going to come in the second week of February next year when the huge crisis that comes cyclically every year afflicts the retail sector worse than ever. It is already bereft on the high street-with shuttered shops and redundant staff, and a very dismal sight it is. What happens in the banking industry is that it knows that in the first two weeks of February every year, all the credit cards that have been used to buy goods going into Christmas pay, and the retail industry has the lowest borrowings of the year. The banks lie in wait and they grab them. Remember Woolworths? Who is coming next?

So we need someone who can take a grip on a general strategy to save the retail industry from another calamity. One of the great regrets I have at the moment is that the person who would best be able to do that is Sir Philip Green, and he is doing something else. I hope that the Government will hold on to him, and once he has actually finished his present task, he will be told to go and cherry pick the entire retail industry languishing in the hands of the banks, and put together the next version of British Home Stores as a government subsidiary which needs funding and which can be imposed on the banking industry by grabbing each bit, despite the fact that there will be minority bank interests that will not want to sell out for the benefit of the major bank interest, which will get the cream of the equity conversion. That is what three Is should exist to do, and what it did so brilliantly before, and that is why we need it back now.

Another element of the world out there at the moment which is potentially waiting for the pratfall of a massive collective bankruptcy is the food processing industry. The more the accent is moved from the small corner shop to the big grocers, the more production has been stepped up by the food producers to satisfy the ever-increasing demands of cheap food coming through the grocery chains. Of course, they have fallen into the trap again of funding themselves to too high a capacity for the market demand with the result that the grocers can rub their hands with glee and say, "We can screw the margins down so tight you won't be able to breathe" and the suppliers are going to go collectively "pop" at some point in the next few months, because they will not be able to keep up and there is a big social factor coming. We will have the present dependence on cheap food to keep some sort of society structure fed, but we will actually end up being forced up on prices as the industry goes out of business in terms of its ability to keep supply going and prices are forced up in the grocery chains. This is going to be another calamity coming, and we need to have a top-down view as to what to do with it.

I have given your Lordships three examples of why I think we need something, but the creation of the three Is along the lines that I have been talking about would be of the order of a £5 billion cheque required 

1 Nov 2010 : Column 1538

to do it. However, we do not have £5 billion; we do not have half of £5 billion to put in to the creation of this at the moment, so what do we do about it? At this point, I am going to have to make a very big apology to my noble friend Lord Sassoon, because I am about to raise a subject that I should not raise and which is going to be one which I think is now time to put on a higher awareness, and to explain to the House as a whole, as I do not think your Lordships have any knowledge of it. I am sorry my noble friend Lord Strathclyde is not with us at the moment, because this deeply concerns him also.

For the past 20 weeks I have been engaged in a very strange dialogue with the two noble Lords, in the course of which I have been trying to bring to their attention the willing availability of a strange organisation which wishes to make a great deal of money available to assist the recovery of the economy in this country. For want of a better name, I shall call it foundation X. That is not its real name, but it will do for the moment. Foundation X was introduced to me 20 weeks ago last week by an eminent City firm, which is FSA controlled. Its chairman came to me and said, "We have this extraordinary request to assist in a major financial reconstruction. It is megabucks, but we need your help to assist us in understanding whether this business is legitimate". I had the biggest put down of my life from my noble friend Lord Strathclyde when I told him this story. He said, "Why you? You're not important enough to have the answer to a question like that". He is quite right, I am not important enough, but the answer to the next question was, "You haven't got the experience for it". Yes I do. I have had one of the biggest experiences in the laundering of terrorist money and funny money that anyone has had in the City. I have handled billions of pounds of terrorist money.

Baroness Hollis of Heigham: Where did it go to?

Lord James of Blackheath: Not into my pocket. My biggest terrorist client was the IRA and I am pleased to say that I managed to write off more than £1 billion of its money. I have also had extensive connections with north African terrorists, but that was of a far nastier nature, and I do not want to talk about that because it is still a security issue. I hasten to add that it is no good getting the police in, because I shall immediately call the Bank of England as my defence witness, given that it put me in to deal with these problems.

The point is that when I was in the course of doing this strange activity, I had an interesting set of phone numbers and references that I could go to for help when I needed it. So people in the City have known that if they want to check out anything that looks at all odd, they can come to me and I can press a few phone numbers to obtain a reference. The City firm came to me and asked whether I could get a reference and a clearance on foundation X. For 20 weeks, I have been endeavouring to do that. I have come to the absolute conclusion that foundation X is completely genuine and sincere and that it directly wishes to make the United Kingdom one of the principal points that it will use to disseminate its extraordinarily great wealth into the world at this present moment, as part of an attempt to seek the recovery of the global economy.

1 Nov 2010 : Column 1539

I made the phone call to my noble friend Lord Strathclyde on a Sunday afternoon-I think he was sitting on his lawn, poor man-and he did the quickest ball pass that I have ever witnessed. If England can do anything like it at Twickenham on Saturday, we will have a chance against the All Blacks. The next think I knew, I had my noble friend Lord Sassoon on the phone. From the outset, he took the proper defensive attitude of total scepticism, and said, "This cannot possibly be right". During the following weeks, my noble friend said, "Go and talk to the Bank of England". So I phoned the governor and asked whether he could check this out for me. After about three days, he came back and said, "You can get lost. I'm not touching this with a bargepole; it is far too difficult. Take it back to the Treasury". So I did. Within another day, my noble friend Lord Sassoon had come back and said, "This is rubbish. It can't possibly be right". I said, "I am going to work more on it". Then I brought one of the senior executives from foundation X to meet my noble friend Lord Strathclyde. I have to say that, as first dates go, it was not a great success. Neither of them ended up by inviting the other out for a coffee or drink at the end of the evening, and they did not exchange telephone numbers in order to follow up the meeting.

I found myself between a rock and a hard place that were totally paranoid about each other, because the foundation X people have an amazing obsession with their own security. They expect to be contacted only by someone equal to head of state status or someone with an international security rating equal to the top six people in the world. This is a strange situation. My noble friends Lord Sassoon and Lord Strathclyde both came up with what should have been an absolute killer argument as to why this could not be true and that we should forget it. My noble friend Lord Sassoon's argument was that these people claimed to have evidence that last year they had lodged £5 billion with British banks. They gave transfer dates and the details of these transfers. As my noble friend Lord Sassoon, said, if that were true it would stick out like a sore thumb. You could not have £5 billion popping out of a bank account without it disrupting the balance sheet completely. But I remember that at about the same time as those transfers were being made the noble Lord, Lord Myners, was indulging in his game of rearranging the deckchairs on the Titanic of the British banking community. If he had three banks at that time, which had had, say, a deficiency of £1.5 million each, then you would pretty well have absorbed the entire £5 billion, and you would not have had the sore thumb stick out at that time; you would have taken £1.5 billion into each of three banks and you would have absorbed the lot. That would be a logical explanation-I do not know.

My noble friend Lord Strathclyde came up with a very different argument. He said that this cannot be right because these people said at the meeting with him that they were still effectively on the gold standard from back in the 1920s and that their entire currency holdings throughout the world, which were very large, were backed by bullion. My noble friend Lord Strathclyde came back and said to me that he had an analyst working on it and that this had to be stuff and nonsense. He said that they had come up with a figure 

1 Nov 2010 : Column 1540

for the amount of bullion that would be needed to cover their currency reserves, as claimed, which would be more than the entire value of bullion that had ever been mined in the history of the world. I am sorry but my noble friend Lord Strathclyde is wrong; his analysts are wrong. He had tapped into the sources that are available and there is only one definitive source for the amount of bullion that has ever been taken from the earth's crust. That was a National Geographic magazine article 12 years ago. Whatever figure it was that was quoted was then quoted again on six other sites on the internet-on Google. Everyone is quoting one original source; there is no other confirming authority. But if you tap into the Vatican accounts-of the Vatican bank-you come up with a claim of total bullion-

Lord De Mauley: The noble Lord is into his fifteenth minute. I wonder whether he can draw his remarks to a conclusion.

Lord James of Blackheath: The total value of the Vatican bank reserves would claim to be more than the entire value of gold ever mined in the history of the world. My point on all of this is that we have not proven any of this. Foundation X is saying at this moment that it is prepared to put up the entire £5 billion for the funding of the three Is recreation; the British Government can have the entire independent management and control of it-foundation X does not want anything to do with it; there will be no interest charged; and, by the way, if the British Government would like it as well, if it will help, it will be prepared to put up money for funding hospitals, schools, the building of Crossrail immediately with £17 billion transfer by Christmas, if requested, and all these other things. These things can be done, if wished, but a senior member of the Government has to accept the invitation to a phone call to the chairman of foundation X-and then we can get into business. This is too big an issue. I am just an ageing, obsessive old Peer and I am easily dispensable, but getting to the truth is not. We need to know what really is happening here. We must find out the truth of this situation.

 


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