Author: Alicia

An article in People’s Daily underlines the fact that the world is waiting for China to take the lead in reforming economic governance. The article by Guo Jiping was given an “abstract translation” in the Chinese edition of the paper Thursday.

In the article, Guo says that “eight years have passed since the onset of the global financial crisis, but downward pressure lingers in today’s world economy.” The G20, he writes, has an advantage as a platform in dealing with this crisis. “The world is counting on China at this critical stage of the ongoing global economic governance transformation,” Guo says.  He then goes through the four “I’s” announced by President Xi Jinping as the theme of this year’s summit: “Towards an Innovative, Invigorated, Interconnected, and Inclusive World Economy.”

With regard to innovation, Guo writes: “The world economy can only be revived by innovative technology, pro-development philosophy, new mechanisms, and fresh business modes.”“Invigoration can release development potential,” he continues. “The G20 members should stimulate economic vitality by intensifying global cooperation and accelerating domestic structural reforms, so that they can push for a more equal-footed, reasonable, and highly-efficient form of global economic governance; optimize their endogenous impetus, and thus fully release the potential of world economy.”

“Interconnection” means that “only by synergizing each country’s development with global economic growth, can resources around the world be allocated in the most optimal way.” “Inclusiveness” refers to “the responsibility of the international community to benefit people in every corner of the world with the dividends of global economic growth.”“With innovation as a priority, the Hangzhou summit will work out a G20 Blueprint on Innovative Growth and formulate action plans on innovation, the new industrial revolution and digital economy,” Guo writes. “The summit will also decide on the prioritized areas, guidelines and index system of the structural reform; deepen international financial architecture reform, and optimize the global financial security network, in order to promote the re-balancing of the world economy.”

Guo then concludes by underlining the important paradigm- shift which the summit hopes to accomplish: “Facing rising geopolitical and security challenges, the G20 Hangzhou summit will focus on international economic cooperation and lay the foundation for world stability. By inviting the most developing countries ever to attend the meeting, the meeting also aims to narrow the development gap and call for an inclusive world economy.” 

Speaking a day before the inauguration of the Eastern Economic Forum at Vladivostok, New Development Bank (NDB, also known as the BRICS Bank) Vice President Zhu Xian said: “We established good relations with the AIIB. Also we have already started discussion of possible forms of cooperation. Firstly, we plan to co-finance some projects. Secondly, we have already signed the relevant agreement on cooperation. At the moment, many investment projects are in need of financing. That’s why we should not compete, but complement each other,” Tass reported Thursday.

Both the AIIB and NDB are headquartered in China, and were set up to partner-finance projects that would fill in the huge infrastructure gap that has paralyzed development in Eurasia,  if not around the world. Nominally speaking, the NDB focuses on the five BRICS countries while the AIIB focuses on Asian countries. Tass also reported Zhu saying, “I think we complement each other; also a lot of investment projects lack finance….  We want to be the financial institution of the 21st century, but not to be a copy of the traditional financial institution,” he added, referring to the IMF and World Bank.

While the joint financing projects have not been finalized yet, Zhu Xian said the NDB “experts are studying the possibility of funding road construction projects in Russia.””A number of Russian projects attracted our attention, especially in the transport sector,” Zhu added, according to Tass. In addition, Zhu told Sputnik today:”We have plans in other national bond markets, including Russia. We are already in discussions with the Russian government on the possibilities of issuing ruble-based bonds in Russia as well.” 

The three day conference on Nuclear Power in the Asia-Pacific Region, sponsored by the IAEA in Manila, concluded Thursday with a rousing call from the Duterte government’s Energy Secretary for reopening the mothballed Bataan Nuclear Plant and proceeding onwards with nuclear power.

Energy Secretary Alfonso Cusi said that the conference had provided him and others with a “virtual crash course on the entire chain of launching  a nuclear program and the importance of public information.” He said that he and others had visited the Bataan plant Thursday morning. “The timing of this summit is perfect,” Cusi said. “As a coincidence we had a hearing also in the Senate. We discussed also nuclear power plants and today we inspected the BNPP and there are a lot of discussions,” he said.

It should be noted that Butch Valdes, the head of the Philippines LaRouche Society, had organized a tour of the Bataan plant for politicians and engineers several years ago, which sparked the growing interest in reversing the disaster of shutting the plant after its completion in 1985, without producing a single watt of electricity. He has since been the leading spokesman for restoring the Bataan plant, and was invited to address the conference on Wednesday 

Cusi said that “with intensified electrification programs, increasing population, and strong GDP growth, demand for electricity is expected to grow by an average of 5 percent per year… This is the most pressing concern for the country,” and that “given its known characteristics, nuclear energy can be a viable choice for the country.”

Cusi said one of the things they learned was how other nations launched their own nuclear programs.

The meeting was chaired by the Philippine Ambassador to the UN, Zeneida Angara Collinson, who told the press: “For me the most important thing is the understanding of our people about what nuclear energy, nuclear power is all about. Having understood that, then we can form our own opinion.”  She noted that experts who attended the event claimed that the BNPP was sturdier than the nuclear reactor in Fukushima, which was damaged by an earthquake and a tsunami. She said that while a single nuclear reactor will cost billions of pesos, it is cheaper to run because of the relatively cheap cost of fuel, and noted the dozens of nuclear plants being constructed in Asia. “They can no longer get [energy] from biomass, solar,” she said, adding that they were “fluctuating and we cannot use them as baseload.”  The ambassador said the Philippines is already lagging behind. “Malaysia already has a nuclear science university,” she said, explaining that knowledge in nuclear science can be applied to agriculture and health.

China’s Party newspaper Global Times editorialized on Wednesday that the US and Japanese efforts to draw China into a geopolitical confrontation will not work, and encouraged the government to not be diverted, but to proceed with win-win policies.

The editorial reviews Abe’s cooperation with Russia, Obama’s “Pivot” and his upcoming trip to the ASEAN Summit in Laos, and the Indian Defense Minister’s current visit to Washington, noting that western pundits describe these moves as efforts to pull countries away from their cooperation with China. “China seems to be positioned in the center of the geopolitical maneuvers by the US and Japan,” the editorial says. “But Beijing should not let its attention be led by the two. Geopolitics in the 21st century is not like the traditional game of ‘Go’ where every piece aims to encircle the others. The outside world has miscalculated geopolitics by interpreting China’s diplomacy.”

It notes that China is not “encircling” the US when they establish ties with Cuba and Mexico and other Latin American nations, nor challenging India by working on development projects in Sri Lanka.

On the other hand, they continue: “The US and Japan have the motivations to initiate a geopolitical competition with China, but China will not be made to give in. Myanmar is a neighbor of China that Washington and Tokyo have been particularly keen to court. Nonetheless, after Aung San Suu Kyi’s recent China visit, the relationship between China and Myanmar is steering in the opposite direction to the wishes of the US and Japan. The arbitration case around the South China Sea, a contention point between China and the US, will eventually prove beneficial for China.”

They conclude: “China has just become a real major power. China needs to develop modern national defense, and at the same time keep long-term economic vitality and expand its vision. The Chinese military should become so strong that we can withstand any external military pressure. The Chinese economy should retain its momentum of long-term prosperity that will surpass that of the US. This is the primary task for China, and we should not let our attention be diverted by the clamorous geopolitical rivalry in the Asia-Pacific.”

A new, peaceful world order, dedicated to scientific progress, real economic advancement, and an all-out effort in space exploration, is being woven together at a series of four international summit meetings during September and October.  All four summits complement each other, but the single most important of them is the Group of 20 Summit in China, September 4-5.  If Americans show the intelligence and courage now, in September, to shake off the dying system of Obama and his like, we can begin to revive our nation’s morality, and with it our science and industry.  For those who are old enough to remember it, the effect will resemble what was only promised by the brief administration of the murdered John F. Kennedy, who brought us into space and onto the Moon, where a plaque has lain since 1969 with the words, “We came in peace for all mankind.”

We must return there!  We will return!  The Moon is the irreplaceable gateway to the Solar system and beyond.

The impetus that John Kennedy gave to the U.S. economy during the few short months he was allowed to serve, was not completely exhausted until the beginning of the 1970s.  Now, it is Barack Obama who has finally killed off everything left of the U.S. economy by shutting down our space program.   And the torch that John Kennedy dropped when he was killed, has been picked up by,— Vladimir Putin!  Along with the President of China, Xi Jinping, who is about to open the summit of the Group of 20.

What Russia and China are offering us is, on the one hand, membership in a vast, growing Eurasian system of interdependent infrastructure and growing science-based economy.  This concept was pioneered by Lyndon LaRouche and Helga Zepp-LaRouche beginning in the 1980’s.  Now it has become reality under the name of China’s policy of the New Silk Road adopted in 2013, called, “One Belt, One Road.”

The other, complementary part of their offer is what is called a “New Financial Architecture.”  The present doomed financial system is at the verge of another blowout, which will choke off the means of livelihood throughout the entire trans-Atlantic area.  Economic development based on science, space exploration, and infrastructural “development corridors,” demands a return to the financial system invented by Alexander Hamilton, as Abraham Lincoln and Franklin Roosevelt also returned to that system later.

Most immediately, we must take action now to insure that the estimated 2 quadrillion dollars of world derivatives (gambling) claims, does not implode and crush us immediately, as was threatened already in 2007-08.  This demands an immediate return to Franklin Roosevelt’s Glass-Steagall law, to separate commercial banking from gambling speculation while there is still time to do so. There is legislation to revive Glass-Steagall, with multiple bipartisan sponsors, in both Houses of Congress. What are our Congressmen and Senators doing?  Do they have any idea how many deaths will result among our citizens, if these vital protections are delayed further?

If you wait to act until Nov 8, it will probably be too late.  Inform yourself and act today, and seek out and make contact with everyone else who will act with us.  The governments of the world’s largest nations are appealing to us to do this, and they are right.

I’m ready to act.

LPAC Press Release

Sen. Bob Graham (D-Fla.), the former head of the Senate Select Committee on Intelligence and the co-chair of the Joint Congressional Inquiry into 9/11, addressed a room full of media at the National Press Club in Washington today, and made some explosive statements about the Saudi Royal Family’s role in the Sept. 11, 2001 attacks on the World Trade Center and the Pentagon.  The former Senator has been a driving force behind the recent release of the long-suppressed 28 page chapter from his Dec. 2002 report, and he has now called for the total declassification of all of the government’s investigative files on the 9/11 attacks.

Sen. Graham detailed the fight, now underway in Florida, to declassify 80,000 pages of FBI documents on a prominent Saudi businessman who was tied to three of the 9/11 hijackers, including the alleged ring-leader Mohammed Atta.  The FBI covered up the existence of that investigation for a decade, and it took a Federal Judge to order the Bureau to turn over the investigative file on their probe of the Florida cell, in a Freedom of Information Act lawsuit.
 
Sen. Graham highlighted the role of Prince Bandar bin-Sultanin providing financial and logistical support to the 9/11 hijackers in San Diego, Cal. and reviewed some of the now-declassified details about Bandar’s private security links to a leading Al Qaeda figure Abu Zubaida.  He made a strong case for the House to immediately pass the Justice Against Supporters of Terrorism Act (JASTA), to give the 9/11 survivors and families their long-overdue day in court to actually put the Saudi Royals on trial for their complicity.
 
Graham spelled out three powerful reasons why the full government files on the 9/11 attack had to be made public, even 15 years after the fact.  He made clear that first and foremost, the families of those killed in the 9/11 attacks, and the American people as a whole, deserved the full truth as a matter of justice.  Second, the national security of the United States demands a full airing of the Saudi role.  And third, the cover-up of such a crime breeds cynicism in the American people, and you cannot maintain a Republic if the citizens distrust their government and cease to participate in the political process. Graham cited Benjamin Franklin, who told an inquiring citizen during the Constitutional Convention in Philadelphia that “We have given you a Republic—if you can keep it.”
 

Startling Statements

During the extensive question and answer period, Sen. Graham gave some startling answers.  He blasted both President Bush and President Obama, and particularly President Obama, who had no personal interest in covering up the Saudi role in 9/11, but suppressed the 28 pages for nearly eight years.  He also assailed the FBI for conducting what he called an “aggressive deception” over the Sarasota files, and provided a detailed account of his own Dulles Airport encounter with the Deputy Director of the FBI, who pressured him to “get a life” and drop his inquiries into the Sarasota 9/11 cell.
 
Asked to explain how the Saudi Royal Family, ostensibly close allies of the United States, could have been complicit in the 9/11 attacks, Sen. Graham gave his own hypothesis:  He noted that the Saudis were very insecure about the stability of the Kingdom, after the U.S. had supported Iraq during the long war with Iran in the 1980s.  After the U.S. intervention against Saddam Hussein in 1991, the Kingdom was even more unstable, and Osama Bin Laden was calling for the ouster of the Royal Family. In return for Bin Laden backing off of the threats, the Saudis agreed to provide material support in the United States for the planned Al Qaeda terror attack.  He made clear that he had no “proof” of that theory, but found it very credible.
 
There are undoubtedly hundreds of thousands of pages of FBI and other government investigative files on the 9/11 attacks that remain hidden from the public, and Sen. Graham made clear that all of this had to be made public.  Along with the immediate passage of JASTA, he put priority on opening up the files on places like Paterson, New Jersey and Falls Church, Virginia, where hijacker cells were operating, and where the FBI and other agencies no doubt conducted exhaustive investigations that remain secret.

James Laurenceson, Deputy Director of the Australia-China Relations Institute at the University of Technology, Sydney, welcomed China’s efforts to turn the G20 “from a crisis response to one that drives long-run improvements in living standards,” in an interview with Xinhua published Tuesday. “China is the world’s second largest economy and is responsible for 30 percent of global growth. That makes it an ideal candidate to play a leadership role in ensuring the G20 makes a successful transition and delivers widespread benefits,” Laurenceson told Xinhua.

Xinhua reported on Laurenceson’s view in a story on how China seeks to use its chairmanship of the G20 to transform the grouping, “from a crisis committee to a ‘peace time’ steering committee for international policy coordination.”

That includes turning the world away from short-term stimulus and monetarism, to what Chinese economists call “supply-side structural reforms,” which focus on increasing physical production and technological innovation—a different animal entirely from the austerity and government-reduction which the IMF and Western financiers mean by “structural reforms.”

“Short-term stimulus measures to encourage demand such as rapid credit expansion and zero interest rates have hit their limits. Structural reform is now the most realistic way to achieve sustainable improvements in living standards,” Laurenceson told Xinhua.

An overview of Chinese thinking on this front was made available to U.S. policymakers on August 28 by Washington, D.C.’s National Interest, in a column on “What To Expect from China’s G20 Leadership,” authored by Wang Wen, the executive director of the influential Chongyang Institute for Financial Studies at Renmin University in Beijing. Wang laid out China’s intent to prioritize innovative approaches to growth, and “step up global governance and transform development mechanisms to facilitate production flows on a global scale.” China believes in cooperation on international production-capacity, he wrote, “and [wants to] forge an inclusive global industrial chain to enable all countries to fully realise their comparative advantage.”

Financial governance reforms, and an “open world economy… [to] balance the developmental needs of countries at different stages of economic development,” are likewise priorities. “Urbanisation and industrialisation in developing countries is restricted by inadequate technology, equipment and infrastructure. And, in developed countries, equipment and infrastructure rejuvenation is complicated by a shortage of funds and high costs.” Here, China’s “One Belt, One Road” is put forward as exemplary of approaches for resolving these imbalances.

The Intercept has published an interview with Rep. Ted Lieu (D-Cal.), who is a leader of the fight to block the $1.15 billion latest arms sales to the Saudis, and who has been pressing for months for the Obama Administration to abandon its blatant military backing for the Saudi crimes in Yemen. Lieu is a retired Air Force colonel who still serves in the Air Force Reserve.

“I taught the law of war when I was on active duty,” he told The Intercept. “You can’t kill children, newlyweds, doctors and patients—those are exempt targets under the law of war, and the coalition has been repeatedly striking civilians.” After the Saudis resumed bombing of civilian targets in Yemen in August, after peace talks broke down, Lieu charged that the Obama Administration was “aiding and abetting what appears to be war crimes in Yemen.” Less than 24 hours after Lieu issued that statement, the Saudi coalition bombed the Doctors Without Borders hospital in northern Yemen. It was the fourth Doctors Without Borders hospital that the Saudi coalition had bombed in Yemen in the past 12 months. Since September of last year, Lieu has written to JCS Chairman Gen. Joseph Dunford, President Obama, Secretary of State John Kerry, and Secretary of Defense Ashton Carter, calling for a full investigation into the “indiscriminate nature” of the coalition operations in Yemen. A Pentagon spokesman wrote back, claiming that the Saudis were “trying harder to comply with the Laws of Armed Conflict.”

Lieu warned in his Intercept interview that continuing to back the Saudi war crimes in Yemen is going to backfire against US security: “By aiding a coalition that is killing civilians, the U.S. is going to create another generation of people who hate the U.S. and who are going to want to do very bad things to us… It’s actually creating more terrorists by killing all these civilians.”

In response to efforts by Congress and human rights groups to expose the crimes of the Saudis in Yemen, the Saudis are doubling down on their lobbying efforts in Washington, particularly since the July 15 release of the 28 pages from the Joint Inquiry into 9/11. Al Monitor reported Monday that in the past year, the Saudis have hired five new public relations firms to defend them in the US, doubling their lobbying price tag to $9.5 million a year. In May, the Saudis hired DLA Piper, a major Washington lobbying firm, to save the Saudi reputation. The same month, the Saudis also hired former Republican National Committee chairman Haley Barbour as another lobbyist. Their longstanding chief lobbying firm, Qorvis (now renamed MSLGROUP), has been working for the Saudis for 14 years, hired in the aftermath of 9/11. Qorvis is also the PR firm for the High Negotiations Committee (HNC), the Saudi-backed Syrian rebel coalition, largely made up of hardcore Salafist groups.

In a world where systemic economic crises and proxy warfare have become the new normal, it’s not hyperbole to say that we are—as a planet—at the end of the post WWII paradigm. Now, a handful of world leaders are proposing a change of course and in doing so, are fundamentally challenging the underlying axioms which have shaped the last century of global economic policy.

The global economic renaissance first envisioned by Lyndon and Helga LaRouche two decades ago when they presented their “Eurasian Land-Bridge, the ‘New Silk Road’—locomotive for worldwide economic development” report, is now becoming a reality. In December 2014, Lyndon LaRouche’s intelligence weekly, Executive Intelligence Review, published an updated version of the Land-Bridge proposal, this time presented as “The New Silk Road Becomes the World Land-Bridge.” (to purchase the report visit: worldlandbridge.com)

Constructing the World Land-Bridge would mean an economic and cultural renaissance for the planet, a new paradigm for mankind. The projects and key economic concepts laid out in this report are truly the blueprint from which leading governments around the world are working, the challenge now is bringing the U.S. back to its roots and transforming it into a powerful ally of this new economic order.

In a world where systemic economic crises and proxy warfare have become the new normal, it’s not hyperbole to say that we are—as a planet—at the end of the post WWII paradigm. Now, a handful of world leaders are proposing a change of course and in doing so, are fundamentally challenging the underlying axioms which have shaped the last century of global economic policy.

The global economic renaissance first envisioned by Lyndon and Helga LaRouche two decades ago when they presented their “Eurasian Land-Bridge, the ‘New Silk Road’—locomotive for worldwide economic development” report, is now becoming a reality. In December 2014, Lyndon LaRouche’s intelligence weekly, Executive Intelligence Review, published an updated version of the Land-Bridge proposal, this time presented as “The New Silk Road Becomes the World Land-Bridge.” (to purchase the report visit: worldlandbridge.com)

Constructing the World Land-Bridge would mean an economic and cultural renaissance for the planet, a new paradigm for mankind. The projects and key economic concepts laid out in this report are truly the blueprint from which leading governments around the world are working, the challenge now is bringing the U.S. back to its roots and transforming it into a powerful ally of this new economic order.

An interesting and fairly thorough argument for the necessity of Glass-Steagall was made in American Banker by Marcus Stanley, the head of the Americans for Financial Reform coalition, in answer to constant debating there and in the Wall Street Journal. While also praising Dodd-Frank in his ending, Stanley observes correctly “the powerful hold that the Glass-Steagall principle of separating commercial and investment banking has on the public imagination. Glass-Steagall has become politically popular for good reason. The public understands that reducing the size and (especially) the complexity of our major publicly supported banking institutions is crucial to a healthier financial system. Restoring some version of the Glass-Stegall firewall between commercial and investment banking is a direct and powerful means to that end. There’s also an understanding that the financial system was generally more stable during the 60 years in which Glass-Steagall was in force.”

Stanley takes on the fig-leaves that Wall Street calls “arguments” against Glass-Steagall restoration.

For example, for those who don’t understand, or deny, that Glass-Steagall would have prevented the 2008 bank panic, he informs that FDR’s law also limited insurance companies. “As Eric Dinallo — the regulator of AIG’s insurance unit — made very clear, it was only due to the repeal of Glass-Steagall that AIG was able to engage in the large-scale credit derivatives business that brought the company down.” AIG would not even have been allowed to buy the Texas thrift bank which it then transferred to London and made into the vastly destructive AIG Financial Products, pouring insurance premium income — illegally, under Glass-Steagall — into AIGFP until it blew out and triggered the TARP bailout. Lehman, meanwhile, had been lying to customers and bond buyers that it enjoyed Federal protection because it had bought — illegally, under Glass-Steagall — two small commercial banks. And Lehman leveraged itself 36:1 on money borrowed from commercial banks in one form or another, especially JPM Chase.

“The 2008 crisis was catastrophic for the global economy not simply because non-bank financial institutions failed, but because the problems in non-banks spread throughout the financial system and threatened to bring down giant megabanks that combined commercial and investment banking, such as Citigroup, JPMorgan Chase and Bank of America. Glass-Steagall firewalls between Wall Street trading markets and ordinary commercial banking are directly relevant to stopping this kind of contagion.”

Finally, Stanley refers to the crucial 2012 studies by the New York Federal Reserve, entitled “Shadow Banking” and “Peeling the Onion: the Structure of Large Bank Holding Companies.” He quotes from the former: “The shadow banking system emerged from the transformation of the largest banks from low return-on-equity (RoE) utilities that originate loans and hold and fund them until maturity with deposits, to high RoE entities that originate loans in order to warehouse and later securitize and distribute them, or retain securitized loans through off-balance sheet asset management vehicles. In conjunction with this transformation, the nature of banking has changed from a credit-risk intensive, deposit-funded process, to a less credit-risk intensive, but more market-risk intensive [i.e, ready to be blow up], wholesale funded process.”

This process, after seven years of zero interest rates and massive artificial liquidity from central banks, has become the dying, non-lending, unprofitable parasites of today’s Wall Street and London giant “banks.”

An interesting and fairly thorough argument for the necessity of Glass-Steagall was made in American Banker by Marcus Stanley, the head of the Americans for Financial Reform coalition, in answer to constant debating there and in the Wall Street Journal. While also praising Dodd-Frank in his ending, Stanley observes correctly “the powerful hold that the Glass-Steagall principle of separating commercial and investment banking has on the public imagination. Glass-Steagall has become politically popular for good reason. The public understands that reducing the size and (especially) the complexity of our major publicly supported banking institutions is crucial to a healthier financial system. Restoring some version of the Glass-Stegall firewall between commercial and investment banking is a direct and powerful means to that end. There’s also an understanding that the financial system was generally more stable during the 60 years in which Glass-Steagall was in force.”

Stanley takes on the fig-leaves that Wall Street calls “arguments” against Glass-Steagall restoration.

For example, for those who don’t understand, or deny, that Glass-Steagall would have prevented the 2008 bank panic, he informs that FDR’s law also limited insurance companies. “As Eric Dinallo — the regulator of AIG’s insurance unit — made very clear, it was only due to the repeal of Glass-Steagall that AIG was able to engage in the large-scale credit derivatives business that brought the company down.” AIG would not even have been allowed to buy the Texas thrift bank which it then transferred to London and made into the vastly destructive AIG Financial Products, pouring insurance premium income — illegally, under Glass-Steagall — into AIGFP until it blew out and triggered the TARP bailout. Lehman, meanwhile, had been lying to customers and bond buyers that it enjoyed Federal protection because it had bought — illegally, under Glass-Steagall — two small commercial banks. And Lehman leveraged itself 36:1 on money borrowed from commercial banks in one form or another, especially JPM Chase.

“The 2008 crisis was catastrophic for the global economy not simply because non-bank financial institutions failed, but because the problems in non-banks spread throughout the financial system and threatened to bring down giant megabanks that combined commercial and investment banking, such as Citigroup, JPMorgan Chase and Bank of America. Glass-Steagall firewalls between Wall Street trading markets and ordinary commercial banking are directly relevant to stopping this kind of contagion.”

Finally, Stanley refers to the crucial 2012 studies by the New York Federal Reserve, entitled “Shadow Banking” and “Peeling the Onion: the Structure of Large Bank Holding Companies.” He quotes from the former: “The shadow banking system emerged from the transformation of the largest banks from low return-on-equity (RoE) utilities that originate loans and hold and fund them until maturity with deposits, to high RoE entities that originate loans in order to warehouse and later securitize and distribute them, or retain securitized loans through off-balance sheet asset management vehicles. In conjunction with this transformation, the nature of banking has changed from a credit-risk intensive, deposit-funded process, to a less credit-risk intensive, but more market-risk intensive [i.e, ready to be blow up], wholesale funded process.”

This process, after seven years of zero interest rates and massive artificial liquidity from central banks, has become the dying, non-lending, unprofitable parasites of today’s Wall Street and London giant “banks.”