According to Moody's assessment, "weak macroeconomic conditions will continue to weigh on Europe's banking sector in 2015 and banks' low overall profitability implies that Europe's banking sector remains structurally vulnerable".
Given the whole of the banking system is so globalized and interdependent, does the forecast also apply to the rest of the world? Are we headed for another wave of the financial crisis?
Radio Sputnik is discussing it with F. William Engdahl, American geopolitical consultant and author of ‘Gods of Money: Wall Street and the Death of the American Century’.
Dr. Engdahl, would you agree with this assessment?
F. William Engdahl: Very much so, because the crisis which became global, it began in the US in 2007, in March, approximately, with the subprime real estate collapse. And it became global in September of 2008 when the US Treasury secretary pulled the plug on the Lehman Brothers deliberately to scare the Congress into giving them a carte blanche rescue fund that he could use to help his friends on the Wall Street. I'm talking about Henry Paulson. But the steps that the Federal Reserve has made, the steps that the Obama administration has made in the past 6 years have in no way addressed the fundamental disconnect or disorder in the US economy. And the same holds for the EU and the ECB. They are simply aping the rescue of the banks that are supposed to be too big to fail, and in the process ruining the real economies of all these countries.
So, the notorious austerity measures have not worked, have they?
F. William Engdahl: They never work; austerity never works. But the IMF is a fraudulent organization that says you need to get your house in order, you need to have austerity to balance your budget – this is nonsense. The US has not had a balanced budget in decades. In most countries of the world it is a point about what the state does with the credit it creates, and how it invests that credit or uses its taxing power to encourage investment in the infrastructural long term economic efficiency for the overall economy, such as high-speed rail lines for free transport across Eurasia and things like that.
So, none of that is going on in the EU, virtually none. And in the US there is more than a $2 trillion deficit in urgently needed infrastructure – for rebuilding bridges, the highways are full of potholes and patchwork and so forth, the electrical grids, one after the other, the water supplies. So, we are not taking care of the fundamentals of the economy. What we are taking care of is the criminal banks that are stealing us blind and I think there is something a little bit in disorder in that picture.
But how does the global banking landscape look now? What are the trends? In which direction things are moving?
F. William Engdahl: The catastrophe. We are now talking about 8-12 global banks in Europe and the US that are so big, that they dwarf the GDP of most nations on Earth. When a private bank with such a power exists largely unregulated… these banks are barely regulated. Look at some of the leading banks. The HSBC in London, they have been again and again caught laundering criminal money in the billions of dollars. JPMorgan Chase – one of the most respected banks in the world – how many billions of dollars of fine have they paid for manipulating the markets with their derivatives and the size, and their insider knowledge. And they pay billions of dollars just to keep doing the same thing. So, all the banks that did the fraud, that created the crisis in 2008, are still doing the same thing. But this time they are doing it with the Central Banks’ support. So, they virtually have an open checkbook.
You authored a book entitled “Gods of Money: Wall Street and the Death of the American Century”, right? Who are the gods of money?
F. William Engdahl: Well, it is the JPMorgan Chase, it is Citigroup, it is Goldman Sachs, it is Morgan Stanley, the Bank of America…
The big five.
F. William Engdahl: Yes, the big five, the big six. I’d say there are six or seven banks that dominate the world derivative trade, not just the US derivative trade. And you have two or three in the city of London that do the same. You have Deutsche Bank in Frankfurt which has been admitted into the club. You have UBS in Switzerland. And this handful of banks is at the heart of this cancerous growth that is destroying the world economy.
There are analysts who maintain that there are certain financial groups who are vying for power. And this is what defines the geopolitical processes we are witnessing now. Is this a correct assessment?
F. William Engdahl: I don’t believe so. I think the major thing that we are viewing now is that the 10 or 12 giant banks in the US, the Wall Street and in the City of London, and the few European banks I've mentioned, they are losing their grip on power, the very rich families behind them – Rockefeller and what will you. They are losing their global grip on power. And what they are losing, too, is something that they don’t yet fully control, and that makes them very upset, because they are used to controlling everything. The American century is the story of that control over the last 70 years. So, what are they doing? They are creating disorder everywhere, in order to regroup and to reorganize their power.
They are creating disorder in the ME. They call it the Arab Spring, but it is really the Arab nightmare. They are causing color revolutions in Egypt and they are trying to create a regime change in Syria (so far that hasn’t happened, fortunately). With the ISIS or the Islamic State, as they call themselves, they are trying to create disorder all across from Syria to Iraq and beyond. None of that is working. They are trying to create disorder in Ukraine to seduce Russia into making stupid mistakes, and, fortunately, Russia has not made the stupid mistakes on Ukraine. The Crimea question was an urgent question that, I think, had to be resolved in the way it was given the US provocation in Kiev with the regime coup d'état that they pulled in February.
I think that is the primary battle going on in the world. There are banks connected with the financial groups, but this is a new kind of warfare or a new kind of competition for the future of the planet, really, and the future of mankind. So, the stakes are enormous. There is no resolution of this in the friendly peaceful way of shaking hands over the table with Secretary John Kerry or President Obama and Vladimir Putin. It is a dying system and this may sound dramatic, but the American century is a dying system. It’s been rotting dramatically since the early 1970s when the dollar decoupled from gold unilaterally.
And everything that has happened since then, the banks and financial powers have rotted out and hollowed out the productive economy in the US. I've seen that in my own lifetime as an American. It is a tragedy. And then they outsourced to Mexico. That became too expensive, so they outsourced to places in Asia. And then, China began to come into the WTO. So, they made a massive outsourcing to China, which became the workshop of the world. And now China wants to decide its own fate, and these globalists suddenly realized that they don’t control China in the way they thought they did. The same with Russia.
So, as Russia and China are forced to work more closely together to simply defend their own national interests, it is creating the very thing these American oligarchs, I call them…you know, the American media loves to talk about the Russian oligarchs or the Ukrainian oligarchs, but America has its own oligarchs. And these are the people like David Rockefeller, or Bill Gates, or Warren Buffett, George Soros. And they think that their money makes them almighty. But they are not gods.
So, who do you think is going to succeed? I mean, the system is dying, which is going to be the new system?
F. William Engdahl: I think we are seeing that emerging in a rough form in the BRICS. I think we’ll have several groupings of nations, which I think is much healthier than one superpower dictating to everybody. And I think Eurasia is a natural economic space. In geopolitical and economic terms it is a very natural space which encompasses, of course, Russia and China as the two key elements in that space. But once that begins integrating with the high-speed rail lines, with the Eurasian economic union and the like, then it will be a magnet that will pull in closer cooperation with the countries like Turkey, which right now is not sure which wind to put its sails to. They are kind of aimlessly trying to find their bearings and doing it rather foolishly, for the most part, in Syria and elsewhere.
So, I think as this grouping of the Eurasian states, the Shanghai cooperation countries, if you will, the SCO, as their cooperation on the economic basis deepens, as they make themselves independent from the dollar, because it is a suicide to link the Russian economy or the Chinese economy to the dollar of the declining American power anymore. So, the dollar is the weapon that they use, the dollar is the reserve currency, to control other nations and to do this financial warfare, like it is being done against Russia right now. The US Treasury has a special office of financial warfare. They call it Combating Terrorism Department.
And in cooperation with the Wall Street banks, with the Wall Street hedge funds and so forth, and the Federal Reserve they have developed the techniques that they think can destroy any nation at will, whether it’d be Iran or Russia. So, the way out of that, of course, is to make yourself independent of the dollar and independent of those banks, those 12 or so banks, of the gods of money in the Wall Street and in London. And then, their weapon is shooting empty bullets.
When we are talking about a new system coming over, if we take this system and if we just supply it with the new resources, but leave the old methods and the old ways, that is going to be just a matter of years before it collapses. What is the new essence of this system? What should it be?
F. William Engdahl: Of course! I think the essence of the system is that nations and governments have to retake control of their central banks, the issuance of their own money. That is an essence of national sovereignty and that has to be reclaimed. When then IMF was dictating to Russia, for example, in the early 1990s how to “reform” their economy with shock therapy and all these criminal methods that Harvard whiz kids introduced in Russia under the Yeltsin years. When they did that, they had one goal. And that was to take the Central Bank of Russia out of the hands of the state and to put it into private hands that could be corrupted, like the Federal Reserve which is owned not by the Government in the US, but owned by private banks. That in 1913 was a violation of the US Constitution which gives the Congress of the US the power to print and coin money. They turned that over to a private entity and ever since the history of the US has been more and more dictated by these private bankers.
So, I think that is the first thing – that the nations have to retake control, the governments have to retake control of the issuance of credit and there has to be a planning process that incorporates the population in a dialog. Much as you had under De Gaulle in the Planification years in the 1970-1980s in France, especially the 1970s, where each region expresses its feelings of what it needs in that region and there is a dialog, and there is a credit created without interests by governments. Why do we need banks? We don’t need these banks to give the government a credit if government has the power to print and coin money. It should take that power back from the private banks – simple as that – and begin a fair economic system without the burden of debt. The key to the destruction of economies, the key to all wars that we’ve known in the modern history is the creation of debt and debt slavery of nations. And once they are enslaved by a debt, the debt collectors come in the form of a war.
And are they going to come in the form of war? I mean, real war.
F. William Engdahl: The war is really here. It is being done at this level by the financial war, but it is a war. And that is the US Treasury’s new weapon, that Victoria Nuland so proudly boasted about in one of her silly comments a few months ago. They’ve refined this thing. They think they have the ultimate financial hydrogen bomb or the beam weapon in Washington. They don’t. Once the BRICS countries begin to decouple from the dollar, that weapon becomes just ineffective. So, it is a war. It is a real-real war. It is not being fought with bombs in the same way, although of course it is in Syria and in Ukraine. If the US were to ball out Ukraine entirely, that war would stop in 48 hours, I'm sure.