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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

The Basle Banking Model Created the Banking Crisis

Stock-Markets / Credit Crisis 2008 Sep 19, 2008 - 06:55 AM GMT

By: Christopher_Quigley

Stock-Markets

Best Financial Markets Analysis Article

“Originate to Distribute” - In an attempt to comprehend the current "credit crisis" I decided to try to investigate its underlying causes. To my dismay I discovered that the situation did not come about by accident but was actually conceived and planned by the International Banking Fraternity in Basel, Switzerland, in 1998.


The tsunami of credit that burst onto the scene after this "Basle Accord" helped save America from a recession, enabled it to fund a war, sleep walked Europeans, politically, into the Euro Zone and attempted to copper fasten the artificial state called the European Union. This crisis is no accident it was premeditated and internationally agreed.

If you don't believe the pre-meditation involved please read the quote below from the Wall Street Journal, Nov. 27 th . 2007:

"In 1998 the Basle Accord created the opportunity for regulatory arbitrage whereby banks could shift loans off their balance sheets. A new capital discipline that was designed to “improve” risk management led to a PARALLEL BANKING SYSTEM whose lack of transparency explains how the market started to seize up.

The " originate-to-distribute" model REDUCED THE INCENTIVE for banks to monitor the CREDIT QUALITY of the loans they pumped into collateralized-

loan-obligations and other structured vehicles, the rules failed to highlight contingent credit risk ......With Basle II, the question is just how the markets will evolve over the next 20 years.... as the new accord will require banks to hold LESS CAPITAL”.

American history has shown that many of its great leaders saw the danger in granting banking institutions too much power over the destiny of a nation. The Basle I Accord and now Basle II indicate just how fundamentally the International Banking Groups have lost their moral compass and altered old standard banking rules. Through sleight of hand i.e. "off balance sheet accounting" they allowed the financial structure of the world to become totally unstable and risk prone. If one was cynical one would actually come to believe that in 1998 future failure was built into the matrix; failure which only the strongest and the most astute could survive.

The end result will be systematic institutional deflation on a worldwide basis. Even though cash is being pumped into the major institutions the multiples of “off balance sheet” credit are now historic, thus the corporate inflation has already occurred. What we will now experience going forward is dept collapse and with it falling mortgage issuance and restrictive commercial funding. Here in Ireland business activity has almost come to a standstill and everybody is holding their breath wondering what the next crisis will be. The only saving grace is that things are not much better in Italy, Germany, France or Spain and is actually much worse in Scotland, (where the bank of Scotland failed) England and Greece. This crisis is truly global.

As institutional deflation (due to collapsing systematic credit) and social inflation (due to the panic demand and circulation of currency) spreads around the globe those who are left holding excess negotiable resources will be in a very powerful position to soak up value assets for pennies on the dollar. Regular folk will not be able to participate in this bonanza because for them the banking credit system will be closed with nothing to offer but foreclosure and frustration. The majority will in a defensive survival mode while the privileged few will be in full scale acquisitive attack. Such was the case in the last depression. How history is repeating itself. Those who instigated the “off balance sheet” travesty knew exactly what they were doing. My advice is if you cannot beat them join them.

Friends go to cash and the physical money metals as soon as you can. Contract your business and life-style expenses. Network and co-operate within a real community for the exchange of goods and services that sustain life. Before things get really bad become educated and aware. Form city based money circles based on the teachings of E.C. Riegel and learn how to issue community based, bearer-negotiable, split-barter, exchange - instruments of agreed value ; otherwise known as money. (Most people do not fully understand that money, in essence, is a social contract based on human trust and mutual benefit).

This “crisis event” is going to get much worse before it gets better folks. There will be short periods of reprieve but the reality of the problem is so serious and fundamental that it will take years, maybe decades (as in Japan), to work through, even with a R.T.C. (B) type solution. But perhaps it is true that “every cloud has a silver lining” and that “every problem bears within it the seeds of a greater opportunity”. Maybe finally after ninety five years the good people of the United States will awake from their media induced trance and realise that too much power was usurped by an elite on the 24 th . December 1913. Peaceful, proactive and constructive community must reassert its primacy over immoral, selfish and destructive institutionalism.

By Christopher M. Quigley
B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley is 46 years of age and holds a Batchelor Degree in Management from Trinity College/College of Commerce, Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the Stock Market in San Francisco, California where he lived for 6 years. Now based in Dublin, Mr. Quigley actively trades utilising the principles set out in the modules above. This Wealthbuilder course has been developed over the last 9 years as a result of research, study, experience and successful application.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

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