How to conceal massive economic collapse


Richard Moore

Ellen Brown, August 14th, 2008
“I’m in show business, why come to me?”
“War is show business, that’s why we’re here.”
                            – “Wag the Dog” (1997 film)
Last week, Fannie Mae and Freddie Mac had just announced record losses, and
so had most reporting corporations. Unemployment was mounting, the
foreclosure crisis was deepening, state budgets were in shambles, and
massive bailouts were everywhere. Investors had every reason to expect the
dollar and the stock market to plummet, and gold and oil to shoot up.
Strangely, the Dow Jones Industrial Average gained 300 points, the dollar
strengthened, and gold and oil were crushed. What happened?
It hardly took psychic powers to see that the Plunge Protection Team had
come to the rescue. Formally known as the President’s Working Group on
Financial Markets, the PPT was once concealed and its very existence denied
as if it were a matter of strict national security. But the PPT has now come
out of the closet. What was once a legally questionable “manipulator” of
markets has become a sanctioned stabilizer and protector of markets. The new
tone was set in January 2008, when global markets took their worst tumble
since September 11, 2001. Senator Hillary Clinton said in a statement
reported by the State News Service:
“I think it’s imperative that the following step be taken. The President
should have already and should do so very quickly, convene the President’s
Working Group on Financial Markets. That’s something that he can ask the
Secretary of the Treasury to do. . . . This has to be coordinated across
markets with the regulators here and obviously with regulators and central
banks around the world.” 1
The mystery over what was going on with the dollar the first week in August
was solved by James Turk, founder of GoldMoney, who wrote on August 7:
“[T]he banking problems in the United States continue to mount, while the
federal government’s deficit continues to soar out of control. . . . So what
happened to cause the dollar to rally over the past three weeks? In a word,
intervention. Central banks have propped up the dollar, and here’s the
“When central banks intervene in the currency markets, they exchange their
currency for dollars. Central banks then use the dollars they acquire to buy
US government debt instruments so that they can earn interest on their
money. The debt instruments central banks acquire are held in custody for
them at the Federal Reserve, which reports this amount weekly.
“On July 16, 2008 . . . , the Federal Reserve reported holding $2,349
billion of US government paper in custody for central banks. In its report
released today, this amount had grown over the past three weeks to $2,401
billion, a 38.4% annual rate of growth. . . . So central banks were
accumulating dollars over the past three weeks at a rate far above what one
would expect as a result of the US trade deficit. The logical conclusion is
that they were intervening in currency markets. They were buying dollars for
the purpose of propping it up, to keep the dollar from falling off the edge
of the cliff and doing so ignited a short covering rally, which is not too
difficult to do given the leverage employed in the markets these days by
hedge funds and others.”2
Just as central banks manipulate currencies in concert, so gold can be
manipulated by massive selling of central bank reserves. Oil and any other
market can be manipulated as well. But markets can be manipulated by only so
much and for only so long without fixing the underlying problem. There is
more bad news coming down the pike, news of such magnitude that no amount of
ordinary manipulation is liable to conceal it.
For one thing, roughly $400 billion in ARMs (adjustable rate mortgages) have
or will reset between March and October of this year. Assuming 3 to 6 months
for strapped debtors to actually hit the wall with their payments, a huge
wave of defaults is about to strike, continuing through March 2009 – just in
time for the next huge wave of resets, in option ARMs.3 Option ARMs are
loans with the option to pay even less than just the interest on the loan
monthly, increasing the loan balance until the loan reaches a certain amount
(typically 110% to 125% of the original loan balance), when it resets. The
$800 billion credit line recently opened to Fannie Mae and Freddie Mac may
be not only tapped but tapped out, at taxpayer expense. The underlying
problem is little discussed but impossible to repair – a one quadrillion
dollar derivatives scheme that is now imploding. Banks everywhere are facing
massive writeoffs, putting the whole banking system on the brink of
collapse. Only public bailouts will save it, but they could bankrupt the
What to do? War and threats of war have been used historically to distract
the population and deflect public scrutiny from economic calamity. As the
scheme was summed up in the trailer to the 1997 movie “Wag the Dog” — 
“There’s a crisis in the White House, and to save the election, they’d have
to fake a war.”
Perhaps that explains the sudden breakout of war in the Eurasian country of
Georgia on August 8, just 3 months before the November elections. August 8
was the day the Olympic Games began in Beijing, a distraction that may have
been timed to keep China from intervening on Russia’s behalf. The mainstream
media version of events is that Russia, the bully on the block, invaded its
tiny neighbor Georgia; but not all commentators agree. Mikhail Gorbachev,
writing in The Washington Post on August 12, observed:
“What happened on the night of Aug. 7 is beyond comprehension. The Georgian
military attacked the South Ossetian capital of Tskhinvali with multiple
rocket launchers designed to devastate large areas. Russia had to respond.
To accuse it of aggression against ‘small, defenseless Georgia’ is not just
hypocritical but shows a lack of humanity. . . . The Georgian leadership
could do this only with the perceived support and encouragement of a much
more powerful force.” 4
Bruce Gagnon, coordinator of the Global Network against Weapons and Nuclear
Power, commented in OpEdNews on August 11:
“The U.S. has long been involved in supporting ‘freedom movements’
throughout this region that have been attempting to replace Russian
influence with U.S. corporate control. The CIA, National Endowment for
Democracy . . . , and Freedom House (includes Zbigniew Brzezinski, former
CIA director James Woolsey, and Obama foreign policy adviser Anthony Lake)
have been key funders and supporters of placing politicians in power
throughout Central Asia that would play ball with ‘our side’. . . . None of
this is about the good guys versus the bad guys. It is power bloc politics .
 . . Big money is at stake . . . . [B]oth parties (Republican and Democrat)
share a bi-partisan history and agenda of advancing corporate interests in
this part of the world. Obama’s advisers, just like McCain’s (one of his top
advisers was recently a lobbyist for the current government in Georgia) are
thick in this stew.”5
Brzezinski, who is now Obama’s adviser, was Jimmy Carter’s foreign policy
adviser in the 1970s. He also served in the 1970s as director of the
Trilateral Commission, which he co-founded with David Rockefeller Sr.,
considered by some to be the “master spider” of the Wall Street banking
network.6 Brzezinski, who wrote a book called The Grand Chessboard, later
boasted of drawing Russia into war with Afghanistan in 1979, “giving to the
Soviet Union its Vietnam War.”7 Is the Georgia affair an attempted repeat of
that coup? Mike Whitney, a popular Internet commentator, observed on August
“Washington’s bloody fingerprints are all over the invasion of South
Ossetia. Georgia President Mikhail Saakashvili would never dream of
launching a massive military attack unless he got explicit orders from his
bosses at 1600 Pennsylvania Ave. After all, Saakashvili owes his entire
political career to American power-brokers and US intelligence agencies. If
he disobeyed them, he’d be gone in a fortnight. Besides an operation like
this takes months of planning and logistical support; especially if it’s
perfectly timed to coincide with the beginning of the Olympic games.
(another petty neocon touch) That means Pentagon planners must have been
working hand in hand with Georgian generals for months in advance. Nothing
was left to chance.”8
Part of that careful planning may have been the unprecedented propping up of
the dollar and bombing of gold and oil the week before the curtain opened on
the scene. Gold and oil had to be pushed down hard to give them room to rise
before anyone shouted “hyperinflation!” As we watch the curtain rise on war
in Eurasia, it is well to remember that things are not always as they seem.
Markets are manipulated and wars are staged by Grand Chessmen behind the
Ellen Brown, J.D., developed her research skills as an attorney practicing
civil litigation in Los Angeles.  In Web of Debt, her latest book, she turns
those skills to an analysis of the Federal Reserve and “the money trust.”
She shows how this private cartel has usurped the power to create money from
the people themselves and how we the people can get it back.  Her websites
are and
1 Remarks from Hillary Clinton on the Global Economic Crisis,” CNN (January
22, 2008) (video preserved on
2 James Turk, “Mystery Solved,” (August 7, 2008).
3 Bill Murphy, “Wipeout Nightmare,” (August 11, 2008);
Ruth Simon, “FirstFed Grapples With Payment-Option Mortgages,” Wall Street
Journal (August 6, 2008); Ruth Simon, “Mortgages Made in 2007 Go Bad at
Rapid Clip,” ibid. (August 7, 2008).
4 Mikhail Gorbachev, “A Path to Peace in the Caucasus,” Washington Post
(August 12, 2008).
5 Bruce Gagnon, “What Do We Know About Georgia-Russia Conflict?”, OpEdNews
(August 11, 2008).
6 Hans Schicht, “Financial Spider Webbing,” (February 27,
7 “Soviet War in Afghanistan,” Wikipedia.
8 Mike Whitney, “Bush’s War in Georgia,” Global Research (August 11, 2008).