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Economic “Terrorism” Contributed to/or Caused Crash of ’08?

COMMENT: A Pentagon report on the economic crash of ’08 cites the possibility of economic terrorism as a contributing cause to the meltdown of ’08. (The report does come from the Unification Church-owned Washington Times, so spin must be factored into the analysis in this particular article.)

Citing possible culprits, the report (or the article’s reportage on it) does not mention the Underground Reich. In this regard, one should examine FTR #’s 671 and 690, both of which examine the possible role of the Bormann capital network in the financial meltdown.

FTR #327 highlights the probable role of that network in the market manipulation attendant on the assassination of President Kennedy and the 9/11 attacks.

Might the analysis presented in the article have been basically accurate, but attributed to the wrong conspiratorial entity?

“Financial Terrorism Suspected in 2008 Financial Crash” by Bill Gertz; The Washington Times; 2/28/2011.

EXCERPT: Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.

The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy.”

While economic analysts and a final report from the federal government’s Financial Crisis Inquiry Commission blame the crash on such economic factors as high-risk mortgage lending practices and poor federal regulation and supervision, the Pentagon contractor adds a new element: “outside forces,” a factor the commission did not examine.

“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place. . . .

Discussion

One comment for “Economic “Terrorism” Contributed to/or Caused Crash of ’08?”

  1. This isn’t a recipe for disaster or anything…nope:

    One big order, thousands of small ones, seen behind oil tumble

    By Jeanine Prezioso and David Sheppard

    NEW YORK, Sept 18 | Wed Sep 19, 2012 4:59am IST

    (Reuters) – A single large sell order in the benchmark European Brent oil market, followed by an abrupt U-turn among high-frequency traders, may have caused one of the most abrupt price routs ever, brokers and analysts said on Tuesday.

    As the dust settled on Monday’s four-minute, nearly $4 plunge, other possible causes such as an erroneous “fat finger” trade, a computer program run amok or a broad, rumor-driven sell-off were set aside in favor of a combination of one big trade – potentially as much as 12 million barrels worth some $1.4 billion – and tens of thousands of computerized orders.

    “There was most likely a large fundamental seller in the market yesterday,” said Eric Scott Hunsader, Chief Executive of Nanex, a trading consultancy that regularly conducts detailed forensic analysis of erratic market activity.

    But assuming a single seller got the ball rolling lower, it was algorithmic traders that almost certainly extended and intensified the decline, causing a 20-fold spike in volume as risk limits or automated price triggers fueled selling.

    Prices fell moderately at first, with Brent crude dropping by just 98 cents over the first three minutes. But the sell-off intensified over 46 seconds after 13:53:56 p.m., at which point market-makers may have been forced to liquidate.

    “We can see from looking at the tick data that initially the High Frequency market makers were willing to absorb their position around $98 a barrel in U.S. crude,” said Hunsader, who examined detailed trading data in the NYMEX market.

    Separately, several broker sources said the sell-off originated in the Brent market.

    “This created what the CFTC has described in the past as a ‘hot potato’ event, where the position was rapidly passed on in a way that looks very similar to the equity market ‘flash crash’ in May 2010.”

    Talk of more nefarious causes was deemed highly unlikely. High-frequency firms rarely initiate big one-off trades. A mistaken trade execution would likely have provoked an immediate rebound as the seller scrambled to buy back positions.

    “Based upon our initial review, it does not appear that a fat finger is the likely cause of the oil price dive yesterday,” CFTC commissioner Bart Chilton said in an interview. “We have been poring over the data.”

    BUT WHY?

    What remains unclear, and may not be known for weeks if ever, was who placed the first order that might have set the rout in motion – and why.

    Was it a hedge fund in distress, or one that had simply changed its view on prices? An oil trade that spilled over into other commodities, which also fell, or a cross-asset macro-trade? Why would anyone choose one of the most subdued periods of the trading day to execute such a mammoth deal?

    Finding the root cause is harder now than before.

    Unlike five years ago, when the constant human chatter of the New York oil trading pit would likely have pinpointed a culprit in short order, oil markets are now traded almost wholly electronically, further disguising the participants of a notoriously secretive and opaque marketplace.

    Regardless of the cause, some fear that the growing role of computer-driven traders – now estimated to account for half or more of oil market liquidity – might make these events more common.

    “This raises a larger questions about whether these markets continue to fulfill the fundamental purpose – hedge risk and price discovery,” said the CFTC’s Chilton.

    Posted by Pterrafractyl | September 19, 2012, 12:52 pm

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