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28 September Updated.

25 September 2008

Comments on the financial mess welcome. Send to: cryptome[at] State if anonymity is wanted.

Cryptome, 20 September 2008

The Financial Crisis as the Second 9/11

The failure to connect the dots, dismissal of warnings as unfounded, declarations of unexpected calamity, calls for urgent action by government to prevent greater disaster, insistence that Congress and the Administration must act immediately, frightening secret briefings by those who claim to know what has led to the emergency and what must be done to handle it, public assurances that while the nation is in jeopardy wise heads have a plan for protection, with continuing risk to be borne by all Americans, those responsible for a solution to be trusted in the future even though they failed in their responsiblities to prevent the crisis, and don't waste time questioning who was responsible for the failure now is the time to plan for the future.

That the problem is due to the US dropping its guard, being complacent about its superiority, not recognizing threats different from those well-known in political and military terms. And failing to see that a national threat has come from a source that no sensible person could have foreseen, sure a few gloom and doomers raised alarms about incomprehensible financial dealings, but who could believe those obsessed with imaginary hazards to the financial market.

Financial power has shifted from the US to Asia and the Middle East, some say, and who knows, maybe that was the plan -- to outfox the US masters of the financial universe who believed that nobody better knew global economics, and no nation could challenge military protection of the US economy.

Since 9/11 the second 9/11 was predicted to happen in a way that could not be anticipated, that its success would depend on bypassing defenses derived from the first 9/11. Not nuclear, biological or chemical, but financial. Why target a few thousands when millions can be harmed using the institutions and technologies invented for global commerce supremacy -- hi-jacked airliners a mere test run.

The confused rush to handle the financial crisis with piecemeal reactions developed over a couple of weeks is likely to have been anticipated by attackers to panic their targets while continuing to withdraw funds from US institutions, picking them off one by one, assured that no military countermeasure is possible so long as targets cannot be identified in time to halt the aggression.

Or is there an armageddon military spasm in the offing of wounded warriors unable to pinpoint targets so goes for all in the database of those who invented, inflicted, condoned and avoided punishment for debt WMD.

[Added 22 September 2008]

[Federal Register: September 22, 2008 (Volume 73, Number 184)]

                        Presidential Documents 

Title 3--
The President

                Notice of September 18, 2008
                Continuation of the National Emergency With 
                Respect to Persons Who Commit, Threaten to Commit, or 
                Support Terrorism

                On September 23, 2001, by Executive Order 13224, I 
                declared a national emergency with respect to persons 
                who commit, threaten to commit, or support terrorism, 
                pursuant to the International Emergency Economic Powers 
                Act (50 U.S.C. 1701-1706). I took this action to deal 
                with the unusual and extraordinary threat to the 
                national security, foreign policy, and economy of the 
                United States constituted by the grave acts of 
                terrorism and threats of terrorism committed by foreign 
                terrorists, including the terrorist attacks in New 
                York, in Pennsylvania, and against the Pentagon 
                committed on September 11, 2001, and the continuing and 
                immediate threat of further attacks against United 
                States nationals or the United States. Because the 
                actions of these persons who commit, threaten to 
                commit, or support terrorism continue to pose an 
                unusual and extraordinary threat to the United States, 
                the national emergency declared on September 23, 2001, 
                and the measures adopted on that date to deal with that 
                emergency, must continue in effect beyond September 23, 
                2008. Therefore, in accordance with section 202(d) of 
                the National Emergencies Act (50 U.S.C. 1622(d)), I am 
                continuing for 1 year the national emergency with 
                respect to persons who commit, threaten to commit, or 
                support terrorism.

                This notice shall be published in the Federal Register 
                and transmitted to the Congress.
                    (Presidential Sig.)

                THE WHITE HOUSE,

                    Washington, September 18, 2008

Betty, 21 September 2008

Well stated... your analysis of the Financial Crisis.

Thank you for your words.  You are right on!

FBI, 22 September 2008

WHEN CRISIS STRIKES: New FBI Technology is Ready to Help

A software system built by our agents and technology experts is helping the FBI and its partners better manage crisis situations. 


Robert 1, 22 September 2008

Nettime, 23 September 2008

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully

Minister of Treasury Paulson

Michael, 23 September 2008

It took me a while to find it, but find it I did.  OFHEO is the regulator for Fannie and Freddie and won't be around much longer:

Charles, 24 September 2008

On September 21 you linked to a blog entry with link name Magic and description "How Banks Create Money Out Of Thin Air".

The opening description, of what economists call velocity, is quite correct, though friction (not all money is deposited) and competition (of the money that is deposited, not all is deposited at the same bank) are of course neglected.  But just after this Econ 201 description, it continues:

"When you cash out your CD, you get your $100,000 deposit back, in addition to the $5,000 interest. Meanwhile, the bank has created $243,900 of new money. After it pays you 5% interest, the bank has made a tidy profit of $238,900. ($243,900 - $5,000 = $238,900.) If the numbers are confusing, go over them again until you see how magical this process is. This is how banks create money."

In fact this is quite wrong.  When the money is withdrawn by cashing out the CD, the reserve requirement for the $243,900 is no longer met so the bank must reduce its liabilities by this amount.  They money that the bank makes on the CD is the interest charged on the $243,900. (Actually the figure will be lower for the reasons mentioned above.)

I thought this might be of interest to you, since you found the entry amusing enough to post.

Anonymous, 24 September 2008

Anonymous has left a new comment on your post "Anonymous Posts Welcome":

Here are some great tips for investing:

Tyler, 24 September 2008

Aside from [Tim] May, who woulda thunk it? One could argue that the investment banks were not self-regulating after all, but perhaps the fault boils down to a plain-and-simple statist approach to the money supply. There is no "economic stimulation" knob after all, or if there is the economy eventually cancels out external stimulation so that the stimulation is temporary.

Actually, the US economy is arguably not a hell of a lot different than a crack whore: The government gives it periodic toots of blow but it has built up a tolerance and the old tricks don't do it no more.

Arguably, a government MIGHT be able to facilitate economic growth through things like education and perhaps some infrastructure. But growth doesn't come in a can and this governmental imposition of ultra-leverage hasn't done much but redistribute wealth into the Hamptons and the upper East side...these are the pimps that have to be paid in order for the defense industry to have a go tryin' a little anal with ole' Lady Liberty.

Robert 2, 24 September 2008

Visual Perspective of the figure 'Trillion':

POC, 25 September 2008

Friends and folks,

Many of you have heard me talk over the last year about getting out of the stock market, diversifying across global currencies, getting some of your savings out of "fiat money" altogether. Some of you thought I was batty to be warning of financial apocalypse, others took me seriously, but few acted. Now we're (supposedly) at zero hour again, and some people are asking me, "What did you say I should do again?" The most general answer I have is to seek good stores of value, besides the US dollar, and to get out of the criminally manipulated US equities markets. (Warning: I am not a financial professional. By law, I must tell you that this is not a recommendation to buy, sell, or hold any financial instrument.)

It's impossible to know what will be a good store of value in the future. However I believe that diversified fiat money and gold bullion are good places to be.

For those with time and curiosity, here's a brief and opinionated run-down of various stores of value: REAL ESTATE is traditionally one of the best, but putting its immense human value aside, its actual price remains artificially inflated by various well-known shenanigans. COLLECTIBLES have been good stores of value historically, but a global decline in discretionary spending could lead to deflation of the value of many such assets, so you need to be very picky (or just lucky). PRECIOUS METALS are historically good stores of value, but a global recession will reduce demand for their consumption, causing them to lose some value. Rather different from other precious metals, GOLD is priced largely for its value as a store, with less consumption-based price influence compared with other collectibles and commodities. It has been hoarded by world powers for millennia, has retained its perceived value through thick and thin, which puts it high on my list of good stores of value. FIAT MONEY (also known as "cash" or "currencies") is less volatile than gold over short periods of time, and is widely recognized as means of payment, despite the fact that it's backed only by the economic and military power of the issuer. The value of today's currencies as symbols of world government gives me some faith in the future of some of the better currencies as stores of value.

The following two mutual funds are focused on holding "hard currencies," meaning stable stores of value in the opinion of the fund advisor. Both are invested mostly in the treasury instruments of various first-world governments, and have some exposure to gold through third parties.

The Prudent Global Income Fund (symbol PSAFX)

The Merk Hard Currency Fund (symbol MERKX)

While I like both of these funds a lot, it's important to remember that they're securities, they don't give you direct ownership of any foreign currency. When you own a mutual fund, you're trusting that it will operate per its stated goals. The SIPC does not insure you against fraud. But if you're not wealthy enough to have private banking relationships, your options for holding foreign cash are very limited.

I sleep pretty well at night having my foreign currency allocations managed by these two funds.

Moving onto the US dollar, some people feel that holding this currency is still a good idea. To me, it looks more like a bad idea with every passing day. However I do recommend keeping a chunk US dollar cash around, somewhere safe, for emergencies. Bank "safe deposit" boxes are no longer safe in the current banking environment.

Finally, there's gold. This is where you get to thumb your nose to the entire banking system and take direct ownership of a historically stable and efficient store of value. Depending on how you acquire it, you might even be thumbing your nose at the US government, which has previously confiscated gold from its citizens en masse.

Right now I own my gold through an intermediary called BullionVault, which operates under British law as a bailor, meaning that they serve merely as a custodian for my gold ownership. This is far superior to the "unallocated gold" offered by banks, which is really just another sketchy debt issuance. My gold lives in a vault in Switzerland, that government offering some of the strongest personal property rights in the world. Another big advantage of BullionVault over keeping gold in your personal posession is that you don't need to get it re-assayed if and when you sell it. The entire operation at BullionVault is very meticulous, and they don't dabble in other business operations.

Please use the following link for BullionVault:

You should also consider having some Krugerrands in your physical posession. These are conveniently small South African gold alloy coins with no face value, widely recognized as a standard form of gold. If you find a reputable dealer who will let you pay cash for Krugerrands, it's a good way to own the metal off-the-books. "Junk" coins (with precious metal value but no collectible value) are a similar strategy, possibly easier to acquire with cash.

Finally, please call, email, and fax your SENATORS and REPRESENTATIVES and tell them who you'll hold responsible for the consequences of this criminal bailout if it passes into law.

Good luck to all.

Robert 3, 25 September 2008

Dear Friends,

In my previous political and economic letters and papers, we have disagreed about the finer points of some issues, but we may now have some common ground, being against the Bush Administration's proposed additional bailout of incompetently managed financial institutions that are also likely corrupt and fraudulent. This proposed 700+ billion dollar bailout comes on the heels of many hundreds of billions of dollars already doled-out to such financial institutions during recent weeks. I place much of the blame for this crisis on the Bush Administration's failure to monitor and regulate the industry, and their tolerance of shameless greed. Although some of you remain free-market purests, I remain a believer in reasonable regulation because I have seen so much shameful greed and dishonesty in my time, it seems regulation is the only leash to restrain the seemingly infinite greed and dishonesty of some people. The current mess with 53,000+ children being poisoned with tainted baby formula is but one current example that continues.

Regarding the current fiscal woes here in the States and spreading overseas, I am very skeptical about this proposed 700+ billion dollar bailout (in addition to several hundreds of billions already flushed down-the-drain in recent weeks by the Bush Administration, to benefit their most wealthy friends and supporters). First, I have doubts that the additional 700+ billion dollar bailout will cure the problem. As a matter of fact, at best it may act as a bandage for one financial sector in trouble, but other financial sectors are skating on thin ice, and these potential financial meltdown's will likely become more apparent by year's end. Obvious examples of such unstable financial sectors that are "skating on thin ice" are the banking institutions with trillions of dollars in loans in the credit card sector, most of these loans being unsecured and unlike those secured loans in the real property sectors. It is only a matter of time before this banking sector winds-up in hopelessly a deep hole. A large set of banking institutions have much of their business in unsecured credit card loans. How long do you think it'll be before millions more people stop paying unsecured loans and focus on paying-off their secured loans, such as car loans and home loans? This may likely happen following the forthcoming Holiday Season charge-up in consumers' credit card accounts? Will the public be held responsible for bailing these banks out to the tune of another trillion or several trillion more dollars? This sort of potential financial collapse will be bigger and more expensive to bailout, and it is not unlikely to happen. Second, we have heard this sort of doom and gloom before, historically, and as recently as the doom a [text missing]

Whenever we have financial messes historically, you can be sure greedy, scheming bank executives are at the root of the problem. Recall during recent memory, not only the Great Depression during the Hoover (R) Administration, but the numerous Savings & Loan failures during the Reagan (R) and Bush I (R) Administrations, which involved fraud and misconduct of Bush family members (e.g., Neil Bush @ the Silverado Savings and Loan fraud and bank failure) and the fraud and misconduct of prominent politicians (e.g., McCain as one of the Keating Five @ the Lincoln Savings and Loan fraud and bank failure). This whole matter regarding the bailout must be well-defined with strict limitations on executive compensation and profits, and scrutinized under a microscope, before the government doles-out what will far exceed a trillion dollars in bailouts. These trillion dollar bailouts may pose more of a threat to us than the failure of some mismanaged and corrupt institutions. The CEO's and the top managers of these grossly mismanaged institutions, and their associates, should also be scrutinized and face the full power of the DOJ's Criminal Division, as well as that of their States' Attorney General. When Sir Issac Newton was honored by being appointed Master of the Mint, counterfeiting was rampant throughout the U.K. Newton's solution to the problem was seemingly simple and quite effective: He ordered the arrest of suspected counterfeiters and their immediate trial and if found guilty, their prompt public execution. Within a matter of months, counterfeiting was reduced to a negligible level. Perhaps doling-out a trillion dollars more is not a logical solution to this problem, and there may be another lesson, a more powerful lesson, to be learned from Newton. nb

The Bush Administration's proposed 700+ billion dollar bailout is just another means for them to enrich their super wealthy friends and supporters, using fear, and smoke and mirrors. The Bush Administration must think the American public is incredibly stupid and gullible to keep believing the smoke and mirrors they use to back their several fear-based lies and fraudulent schemes. Their 700+ billion dollar bailout scheme is clearly more fraudulent and dishonest that anything Wall Street has ever come up with, and I'll bet that its not going to be the last time the Bush Administration uses fear and smoke and mirrors to milk another trillion dollars or more from the public.

I urge you to demand that your Congressional Representatives vote against this proposed 700+ billion dollar bailout, or you'll actively vote them out-of-office in little more than a month's time.

Best regards,


Barack Obama Campaign, 25 September 2008

Friend -- This morning Barack called John McCain to suggest a joint statement of principles that would help Congress resolve the immediate financial crisis. Then John McCain went on television and said he was suspending his campaign and that Friday's presidential debate should be postponed. Barack spoke about the crisis and took questions from reporters a few hours ago. He also made it clear that -- with only 40 days left for the American people to decide who will be responsible for leading our economic future -- it is more important than ever that the scheduled debate takes place. Please take a minute to watch the video of Barack's press conference and share it with your friends:

This is an important time, and we have to keep this campaign focused on the crucial issues. Thank you, David

David Plouffe

Campaign Manager

Obama for America

Graham, 25 September 25, 2008

Just thought that you might like to give the Following, an AIRing on Cryptome. For years now, your work has been providing Valuable Insight and Information to me, for my Work Rest and Play. :-)

A Patent Application for the Prevention of Capitalist Systems Meltdown

By amanfromMars

Posted Thursday 25th September 2008 09:51 GMT

Share widely please. ...... Patents are hereby Gifted to open source and Open Source under CopyLeft Common License

"The net worth of the Forbes 400 richest Americans is now a staggering $1.54 trillion, which is up $290 billion from last year." .....

Mr Paulson's $700 billion dilemma is easily solved for Americans by Americans at no cost to the taxpayer and at no real personal cost to those who bale out the System because all that is needed is for the Forbes 400 richest Americans to donate just half of their enormous, we'll never ever be able to spend it, wealth to him.

And that would also show everyone that they have all the confidence in the world that the American economy and its Capitalist System is Sound rather than a Crooked Rigged Game.

PS That net worth figure by the way is conservative and last year's figures [which were up $290 billion from the previous year, so one can reasonable expect the figure to be considerably higher]. .... "estimates of net worth are deliberately conservative and should be considered 'at least' figures." ...... so the White Knights would be quids in.

Or is there a problem with that solution? It is surely the most Patriotic ACT thing to do, is it not, returning one's Good Fortune in Times that have turned sour to Institutions which the Government and Market leaders are Touting/Pimping as Triple AAA Worthy of National Support to save All from Catastrophic Collapse and Markets Meltdown.

What better Act could one expect of true Americans caring for their Peoples?

However, the note of caution would be that if Paulson and friends are perpetrating a Scam, will their Money be lost into the same black hole as swallowed all of the other wealth ....... but it will not really effect the lifestyle of the Donors, will it .... so no Real Harm done.

28 September 2008

Jeremy Wells  (jeremy[at] writes:

There is no quick fix to the current "financial mess". This "mess" is an intrinsic characteristic of capitalism and yet another crises of U.S. capitalism careening to complete economic and political collapse.

I suggest a daily read of the World Socialist Web Site: for an anti-capitalist, socialist perspective on current affairs.

For further understanding go to the web page of the Socialist Equality Party, founding convention in August 2008, at: