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What about July 9?

Jul 10, 2013

In 2010-2011, the nations agreed to take steps to prevent a bank meltdown in an agreement known as Basel III. On July 2, 2013 Federal Reserve chairman, Ben Bernanke announced the implementation of these new rules, requiring the banks to have an increase in cash reserves. Basel II had required only 2% cash reserves, but under Basel III the reserve requirement was increased to 3%, and the large international banks were required to maintain 6% in reserves.

Previously, on February 26, 2013 Bernanke had testified before Congress that he would implement Basel III sometime in the middle of 2013.

At the hearing, Bernanke indicated the intention of the Federal Reserve to finalize the rules, but did not identify a specific time when this would be done, according to Reuters. 

"I can't give you the exact date, but somewhere in the middle of this year," he told the lawmakers present at the hearing. "We aim to be getting the implementation of Basel [III] during 2013."


On June 7, 2013 Bernanke finally "signed off" on the new Basel III rules. This was reported the next day:

The US Federal Reserve on Thursday signed off on proposed new regulations to bring US banks in line with the Basel III global standards, aimed at giving banks more crisis-resistant footings.

The US rules will give bank holding companies and savings and loans companies with at least $500 million in assets until 2019 to meet the new capital rules, which have met resistance from banks as too hefty.

The rules tighten the definitions of bank capital and set new minimum levels: a seven percent base of common equity, including 4.5 percent of risk-weighted assets and another 2.5 percent "capital conservation buffer'.


 For the smaller banks, this means they will not be able to loan out as much money to small businesses and home mortgages. For the big banks, they won't be able to leverage their derivatives as much as before. No wonder the banks oppose this measure.

On July 2, as Bernanke was announcing the compliance to Basel III, The FDIC was formulating its own plans that were even more stringent than Basel III required. Fox Business News reported:

The Federal Deposit Insurance Corp. said Tuesday it plans to introduce draft  leverage limits for big banks on July 9. It's expected that the restrictions will be much tougher than restrictions included in a global capital agreement.  It is unclear exactly how restrictive the new leverage limit will be, however  they are expected to be tougher than the leverage limit included in the global agreement, known as Basel III, approved by the Federal Reserve Tuesday.


So the FDIC is introducing tougher "leverage limits for big banks on July 9." Someone at the FDIC apparently understands the precarious position that the big banks are in, on account of their monstrous derivatives position. Back in 2003, Warren Buffet called derivatives, "financial weapons of mass destruction."


In 2012 an article commented further:

Since Buffett first referred to derivatives as "financial weapons of mass destruction," the potential derivatives bubble has grown from an estimated $100 trillion to $516 trillion in 2008 [actually, June 2007], according to the most recent survey by the Bank of International Settlements.


It is estimated now that the derivatives market has gone past a quadrillion dollars (a thousand trillion). A recent book entitled Fools Gold, speaks of the dangers of such massively leveraged derivatives trading. A book review from 2009 says,

Perhaps it's noteworthy that Tett's book begins when JPMorgan had the face-value equivalent of $1.7 trillion in derivatives on its books. Today that number has jumped to a mind-boggling $87 trillion. Part of that portfolio includes almost $8.4 trillion in credit derivatives, more than Bank of America's (BAC), Citi's, and Goldman Sachs' (GS) holdings combined. Clearly, the final chapter on Dimon and his team has yet to be written.


As of today, the top four big banks in America hold 94.4% of all the world's derivatives contracts.

The top 4 banksters: JPM with $78.1 trillion in exposure, Citi with $56 trillion, Bank of America with $53 trillion and Goldman with $48 trillion, account for 94.4% of total exposure.


This is the type of Casino Banking that Basel III will restrict to some extent. The big banks will have to hold back 7% of their deposits as reserves, instead of using the cash in the Derivatives Casino.

Lindsey Williams reports that his "elite" friends have told him that the derivatives market was designed thirty years ago to be the means by which the Babylonian rulers would crash the whole system. He says they plan to crash the system in order to gain total power in America and Europe. How? These evil men create the problems and then present their own "solutions" which invariably are "give me more power, and I'll solve this problem."

Hence, it appears that the derivatives market has now brought the Western banking system to the edge of the cliff in preparation for the final power grab. The Eastern hemisphere sees what is happening and has been working to prevent this from happening. Whether their alarm is due to their benevolence or to self-interest makes little difference. The East is in the process of overthrowing the wicked witch of the west. Basel III is one of the steps in this process, though it is unclear whether or not it will succeed. It may be too little, too late. The East is backing the idea of asset-based currencies, whereas the West wants to continue with its idea of fiat currencies (backed by nothing).

To this end, the East is positioning itself by purchasing gold. The West is busy lowering the price of gold to support the US$, thereby giving the Eastern nations an unprecedented bargain price. When the gold has been stripped from the West, then the US$ will lose its standing as a world currency, and the honor will pass to another--or perhaps a "basket of currencies." The US$ will then lose most of its value, and huge changes will take place in America's way of life. What America has done to other countries will suddenly be reversed by an inverse Golden Rule, as people will start buying up America with their high-value money, just as American business has done with them in the past.

The coming of Basel III on specific watch dates suggests that July 15 will be an important date as well. Three years ago we cast barley meal into the Mississippi River headwaters on July 9 and saw the results on July 15. Perhaps that is what will happen in 2013 as well.

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Category: Financial

Dr. Stephen Jones

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