Financial Terrorism

The financial meltdown of 2008 is blamed on corporate greed, incompetent regulators, and poor government policy...are they smokescreens that distract us from the truth?

The concept of economic warfare or financial terrorism is inconceivable to many who believe only serious investors would play in the world’s stock markets. According to author Kevin D. Freeman in his new book, Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It Can Happen Again, that naïvety needs to change.

Prussian general and military theorist, Karl von Clausewitz, wrote “...war is the continuation of politics by other means.” If that is indeed true, then economic warfare and financial terrorism are simply “war by other means.” Economic warfare is defined as state-sponsored action taken against another state’s economy to coerce its government into certain activity. Financial terrorism is the secret, behind-the-scenes manipulation of a nation’s economy by state or non-state players.

During the 20th century, economic weapons were widely established and used, from the currency and trade wars of the 1930s to the OPEC oil embargoes of the 1970s. The 21st century became perilous with the complexities of modern financial weaponry—derivatives, hidden orders, high-frequency trading, anonymity, and the interconnectedness of the world’s markets via the Internet.

Oddities of 9/11

Hugh McDermott, senior lecturer in law enforcement at the Charles Sturt University Australian Graduate School of Policing, explained how terrorists use their “insider” knowledge to exploit the markets for profit:

When terrorists have “inside information” about an imminent attack, they purchase financial derivatives before the attack and make millions from the subsequent market movements . . . .

Interestingly, the Investment Dealers Association of Canada told its members that the Security and Exchange Commission (SEC) identified thirty-eight companies whose shares were traded at a far higher level than usual in the weeks prior to 9/11. The AP reported that the companies included General Motors, Raytheon, Continental, Delta, Northwest, Southwest, U.S. Airways, Boeing, and Lockheed Martin.

The Wall Street Journal also revealed that the government was investigating the high-volume buying of five-year U.S. Treasury notes, which are usually picked up when people expect a recession, a war, or both.

Addressing the Myths

Unfortunately, many conspiracy advocates used these financial anomalies as support for their belief that the U.S. government was behind the 9/11 attacks. However, the details of independent investigations into these anomalies do not support those claims. That viewpoint also distracts the public from the certainty that financial terrorism is a reality in our time.

A captivating study by economist Alan Krueger sheds light on another misconception. It is naïve to believe all “terrorists” are disenfranchised youth acting out in rebellion. His research of 129 martyrs (shahids) revealed that terrorists are less likely to be poorer than their peers, and are more likely to have at least a high school education. Krueger wrote, “Terrorists tend to be drawn from well-educated, middle-class or high-income families.”

Osama bin Laden was no exception. Educated in economics and business administration at Saudi Arabia’s King Adulaziz University, his net worth was estimated at approximately $50 million in 2004 (after being disinherited by family and stripped of his Saudi citizenship for his radicalism).

In keeping with his Islamic faith, bin Laden often spoke of destroying the economic powerhouse of the U.S. His foundation was in the Qur’an, Sura 8:

The unbelievers shall expend their riches in debarring others from the path of Allah. Thus they dissipate their wealth: but they shall rue it, and in the end be overthrown. The unbelievers shall be driven into hell.

The realities of the economic damage accomplished by the 9/11 attacks are still not fully realized. Original estimates put the cost upwards of $500 billion. However, when you factor in the damage to the airline industry, the cost of new homeland security measures, defense spending in Iraq and Afghanistan, additional veterans’ benefits, and servicing the national debt of the next decade, the actual cost of 9/11 may approach $5 trillion.

George Soros and Chinese Military Strategy

The financial escapades of George Soros have been well documented since the early 1990s. Economic historian Dan Briody wrote about Britain’s “Black Wednesday” when Soros’ efforts crashed the pound, crippled the British economy and embarrassed the prime minister, John Major. Soros made a $950 million profit for his efforts.

Along with other powerful “traders,” Soros proved himself a man to be feared. He even attracted the attention of two colonels in the Chinese Army.

In their decisive study of Chinese military strategy, Unrestricted Warfare, Qiao Liang and Wang Xiangsui recommend economic warfare as a primary means of attacking the United States. Regarding financial terrorism, they write: Precisely in the same way that modern technology is changing weapons and the battlefield, it is also at the same time blurring the concept of who the war participants are. From now on, soldiers no longer have a monopoly on war. Global terrorist activity is one of the by-products of the globalization trend that has been ushered in by technological integration. Non-professional warriors and non-state organizations are posing a greater and greater threat to sovereign nations, making these warriors and organizations more and more serious adversaries.

Liang and Xiangsui wrote regarding characters such as Soros:

During the 1990s...we began to get an inkling of a non-military type of war which is prosecuted by yet another type of non-professional warrior.... Judging by this kind of standard, who can say that George Soros is not a financial terrorist?

The Meltdown of 2008

The financial meltdown of 2008 has been universally blamed on corporate greed, incompetent regulators, and poor government policy. Author Kevin D. Freeman presents a persuasive case that these are indeed smokescreens that distract us from the truth.

As outlined in Unrestricted Warfare, a financial terrorist could cause a stock market crash and then hide himself “in the forests of free economics.” According to economist and investment banker, Jim Rickards:

If terrorists or countries wanted to send U.S. financial markets into a tailspin, they would not need an explosion. Several financial doomsday scenarios have circulated in intelligence and financial circles….

Overcoming a few hurdles, Freeman discovered where the attacks were focused, how they took place, which trading firms were used, and how America’s enemies carried out their plans. The meltdown essentially happened in two phases: 1) the “oil run-up,” and 2) the “bear raids.”

The oil run-up began in January 2007 when oil prices were at a low $50 per barrel. Prices rose steadily, despite a leveling of global economic activity and increased drilling, to a high of $150 per barrel by June 2008. Dr. Walid Phares, teacher of Global Strategies at the National Defense University, saw geopolitical forces behind the skyrocketing oil prices:

Combined Salafist-Wahabi and Muslim Brotherhood circles in the Gulf with consent from the Iranian side on this particular issue, used the escalating pricing of oil over the past year to push the financial crisis in the US over the cliff.... The “oil-push” put the market out of balance, hitting back at Wall Street….

With the U.S. reeling from the oil prices, the bear raids began with the assault on Bear Stearns.

The collapse of Bear Stearns should have served as a wake-up call. On January 12, 2007, its stock traded at $171 per share. By March 16, 2008, J.P Morgan agreed to purchase Bear Stearns for $2 (later raised to $10) per share.

What happened? An unnamed person or entity “made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness.” Madness? That $1.7 million investment turned into $270 million virtually overnight. According to Freeman:

Our enemies picked the right target and the right time. They precipitated an old-fashioned bear raid using naked short selling and credit default swaps—both instruments in which you can make a profit without having to own anything. These are the instruments Warren Buffett called “financial weapons of mass destruction.” State sponsors of Islamic terrorism, jihadists, and their Chinese benefactors learned well, and they used these instruments just as Buffett had feared…. And the entire U.S. economy paid the price.

Current Outlook

Unfortunately, 2012 does not look promising for the lessons gleaned from the first decade of the new century. Oil prices can still be manipulated. Credit default swaps are still a problem. The new regulation of derivatives remains ineffective. In July 2010, U.S. President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. This established 20 different regulatory agencies charged with creating 387 different rules for the financial industry. However, regardless of Dodd-Frank, the powerful ten-member Financial Stability Oversight Council is made up of the same regulators who failed in 2008.

As Jim Rickards detailed, the continuing, over-arching vulnerability is the monetary policy of the U.S. government itself.

The number one vulnerability is the dollar itself. We’re printing them and shoving them out the door, and the Fed is basically out of bullets. So why hasn’t the dollar collapsed? The short answer is, global investors don’t have any other choice. That is, there simply aren’t enough Euro- or Yen-backed securities for investors to shift their money out of dollars and into some other currency. But what if some kind of global coalition—say a trillion-dollar sovereign wealth fund allied with several countries around the world—banded together to create a gold-backed alternative to the dollar?

The results of the manipulated collapse of the dollar perpetrated by financial terrorism would indeed appear apocalyptic. Those efforts are blazing the trail for economic globalism and transferring the world’s wealth into the hands of a relatively few entities, who will one day be able to establish the “rules of engagement” in the ultimate war against God.

The study of financial terrorism and the blatant “blame game” of the financial meltdown of 2008 highlights the enemies’ “truth mingled with a lie” method of communication. As Proverbs 22:3 warns:

A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.

As we walk in these days described in 2 Timothy 3, we have many reasons to keep our focus on our coming King and what He would have us to do!