Felix Salmon

BofA chart of the day

Felix Salmon
Nov 4, 2010 18:50 UTC

Jonathan Weil has a great column on Bank of America, noting that it’s trading at a price-to-book ratio of just 0.54. That’s not because it’s losing money, but rather because no one believes the bank’s numbers. And it’s easy to see why that might be, when BofA insists that its Countrywide goodwill — all $4.4 billion of it — remains unimpaired, even as the brand name has been dropped.

Bank of America releases a new number for its book value every quarter; here’s a graph that the fabulous Frank Tantillo put together showing how the ratio of BofA’s market cap to its book value each quarter.

Clearly there’s been a rebound from the worst days of the financial crisis, but back then there was no end in sight to BofA’s losses. Today, one would imagine that with a steep yield curve (banks love steep yield curves, since they mean that their core business of maturity transformation becomes very profitable) and too-big-to-fail status, BofA should be insanely profitable.

If a bank is profitable, and if it’s not lying about the value of its assets, then it should trade above book value. But BofA hasn’t come close to that level in over two years. Something is wrong, and Weil puts his finger on exactly what it is:

The only certainty is there is none, aside from the knowledge that Bank of America’s top executives have no idea what goes on inside the bowels of their company.

BofA isn’t just too big to fail, it’s also too big to manage. And the stock market is punishing it for that fact. Unless and until that price-to-book ratio goes back above 1, the market simply doesn’t trust what BofA is saying.


“even if principal reduction is the fastest and most efficient way to solve this crisis.”

A broad based principal reduction program is by definition the LEAST efficent way to solve this crisis. The most efficent way to solve the crisis would be to somehow know exactly which people are willing and able to “stay and pay” and give them no help whatsoever. Call this group the people who get screwed.

Then look at all the people who could be incented to stay in pay if they just had to pay a little less (but still more than anyone else would pay for their house.) Write down their principal just a bit so that they would rather stay and pay than walk and default. Strip these people of any price appreciation up to the value of their principal write down plus interest compounded annually at the rate of their new modified loan. These people wouldn’t get screwed as badly as the first group but also would not totally make out like bandits because any price appreciation in their homes at this point would likely be forfited.

Group #3 are people who’s changed life circumstances preclude them any possiblity of staying in their McMansions bought with fraudently obtained financing. Those people get to walk away and forclosure. Those people get to move from Detroit or Las Vegas where unemployment exceeds 15% to places like Minneapolis where unemployment is half that. These people might get the best deal of the 3 groups assumming their new found freedom from the chains of an underwater home allow them to actually get re-employed. If they are not willing to get re-employed than any program to help this group is a transfer of wealth from the good apples to the bad apples. The people without the willingness and ability to pay can’t keep the homes that other people with the willingness and ability would like to have. This process is slow and ugly in the short term and the greatest generator of wealth and prosperity in the longterm… it’s called capitalizem.

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How QE works

Felix Salmon
Nov 4, 2010 16:56 UTC

Gawker’s John Cook asks me a question about how the Fed’s quantitative easing is supposed to work:

So the Fed is going to by $600 billion in U.S. Treasuries. It will presumably buy these Treasuries from private investors and institutions who had already purchased them–in other words, it won’t be handing $600 billion to the U.S. Treasury in exchange for bonds.

The purchases will be in increments of $1 million. Now, the kind of people who own $1 million and more in U.S. Treasuries tend to be people with a lot of money. And that money was kind of sitting there, and for some reason or another they decided to put it into treasuries, right?

So now along comes the Fed and says to those private investors and institutions, “Hey, I’d be happy to convert those treasuries into cash for you!” And they negotiate over price or there’s an auction or whatever, and the investors get their cash and the Fed gets its treasuries.

And so then these private institutions and investors are sitting there with a pile of cash. So why wouldn’t they just buy treasuries with it, which is what they had previously decided would be the wisest thing to do with that money?

The idea is to get those people to spend that cash in stimulative ways, right? But shouldn’t we assume that people who are sitting on large quantities of treasuries are sitting on them for a reason, and would likely continue to sit on them, even if they suddenly came into some cash?

John has a few of the details wrong, but at heart he’s absolutely right. The way that QE works is that the Fed will publish a schedule of how many Treasury bonds it intends to buy and when. It will then go out and buy those bonds from “the Federal Reserve’s primary dealers through a series of competitive auctions operated through the Desk’s FedTrade system.”

In English, what that means is that the New York Fed has a direct line to the biggest banks in the world (Goldman Sachs, Morgan Stanley, Deutsche Bank, etc — 18 in all). And it gets all those banks to compete with each other, either directly or on behalf of their clients, for who will sell the Fed the Treasury bonds it wants at the lowest price. The winners of the auction get the Fed’s newly-printed cash*, and give up Treasury bonds that they own in return.

The people selling Treasury bonds to the Fed, then, are big banks, who are told in advance exactly how many Treasury bonds the Fed wants to buy. As a result, they’re likely to buy Treasuries ahead of the auction, with the intent of selling them to the Fed at a profit. This is pretty much what John said would be going on, only they buy the bonds before the auction, rather than afterwards. Once the banks have made that profit, it’ll get paid out in bonuses to the people on the bank’s Treasury desk, with the rest going to their shareholders. We’re not exactly helping the unemployed here.

More generally, the Fed isn’t going to be buying any more bonds than the Treasury is issuing — so it’s not going to be lifting a lot of holders of Treasury bonds out of their long-term investments. But insofar as the Fed is forced to offer such high prices that investors simply can’t say no, those investors are probably just going to take the proceeds and invest them in agency debt instead from Fannie Mae and Freddie Mac. That debt is just as safe as Treasuries, and it even yields more than Treasuries, to boot.

What’s emphatically not going to happen is that the people who used to own Treasury bonds will take the Fed’s billions and suddenly turn around and spend them buying croissants at their local family-owned bakery. We’re talking about monetary policy here, not fiscal policy: the aim here is to bid up the price of Treasury bonds, which means that the yield on Treasuries will fall, and that those lower interest rates will somehow feed through into greater economic activity. The aim is not to take $600 billion and spend it on stuff in the real economy. That would be a second stimulus, and the chances of a second stimulus right now are hovering around zero.

Which is why Brad DeLong puts the value of buying $600 billion in Treasury bonds at about $7 billion in total, rather than anything near the headline $600 billion figure. The Fed is playing around with interest rates here — that’s its job. It’s not trying to directly stimulate demand.

*I should also take this opportunity to answer a question from CJR’s Dean Starkman, who asks where the money is coming from. The answer is that in a fiat-money system such as ours, the central bank can simply print as much money as it likes. If it wanted, it could literally go down to the local printing press, print out a bunch of $100 bills, put them in armored trucks, and send them over to JP Morgan or whoever sold them those Treasury bonds.** But that would be silly. So instead it simply increases the amount registered as on deposit at JP Morgan’s bank account at the New York Fed.

If JP Morgan had $100 billion in that bank account before, and then sells the Fed another $50 billion of Treasury bonds, then the Fed will just credit that $50 billion to JP Morgan, and the new balance in JPM’s account is $150 billion. Central banks can do that, which is why they’re so powerful. The amount of money in the system has just increased by $50 billion, and the Fed hopes that somehow that increase will feed through into higher inflation. Whether it will or not, however, depends on the degree to which JP Morgan can take that $50 billion and lend it out into the real economy. So far, banks have been bad at boosting their lending. And there’s not a lot of evidence that they’re getting any better.

**Update: Alea tells me I’m wrong on this: it’s the Mint which prints paper money, not the Fed, and all paper money is backed by Treasury-bond collateral.


Alea is incorrect. The Dept of Treasury’s Bureau of Printing and Engraving prints paper money on behalf the Fed (and netting 4 cents a bill regardless of denomination). The US Mint is a separate Treasury agency that coins money. Coin money is a different kettle of fish, the Fed buys coin from the Mint at face value. The Mint’s costs stay in its Public Enterprise Fund, the Secretary of Treasury sweeps the profits into miscellaneous receipts (31 USC 5136) So every dollar coin that costs 12 cents to mint adds 88 cents to general revenue.

The Secretary is granted authority to mint platinum coins of whatever “specifications, designs, varieties, quantities, denominations, and inscriptions” that he prescribes (31 USC 5112(k)). As we saw with the dollar coin, a coin’s face value bears no relationship to its cost of production. Remember too, coin seigniorage is booked as revenue, not debt. A trillion deficit could be covered tomorrow by the Secretary directing the Mint to coin a $1 trillion piece (or ten $100 billion coins, easier to make change) and then showing up at the drive-in teller to make a deposit (the interest on reserve payments enable the Fed to peg the federal funds rate without having to sell Treasuries to drain excess reserves).

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The dismal economics of paywalls

Felix Salmon
Nov 4, 2010 14:50 UTC

Mark Thoma sends me a very clear explanation of the economics of paywalls from Kellogg’s Shane Greenstein:

Two fundamentally different models have competed in information markets.

In one model, an information provider formats the presentation of information, selling advertising space to another party. These sites want search engines to find them. This model involves little gatekeeping of the user. Much of the open commercial Web operates this way.

In the other model, an information provider sells passwords to users…

Vendors can charge serious subscription fees for password when the information is unique enough that users are not tempted to go to the free advertising-supported alternatives…

The Wall Street Journal has had a bit of success providing unique coverage of financial matters… Similarly, many sports teams have started gatekeeping for deep coverage of team matters…

In most other news markets, in contrast, gatekeeping had a hard time surviving because it was not valuable. This outcome should be blamed on competition between many news outlets with similar material. If one vendor tried to restrict access with gatekeeping activity, another vendor could offer the same information for free, thereby attracting another eyeball for their advertisers. Users tended to go to the latter, undercutting the former.

This outcome arose because the cost of sending files to one more reader is nearly zero, which makes it tempting for competitors to charge nothing and sell advertising. If that attracts large numbers of users from the gatekeeping site, it renders any gatekeeping strategy unprofitable.

There’s a couple of important things to add to this analysis, I think. Firstly, there isn’t some lumpen mass of “users” who are in search of information and go to where they find the most value. Every major newspaper in the world has vastly more readers today than when the only way of reading it was to pick up a physical copy. And the daily readership of an inside-the-beltway publication like Politico dwarfs the print circulation of the largest newspapers in the world — Bild, or The Sun, or USA Today.

When online publications go free, they’re not just competing for users; they’re creating new readers in a way that pay sites have enormous difficulty doing. That’s one of my big problems with paywalls: even if they’re the most effective way of monetizing existing readers, there’s an enormous opportunity cost of implementing them, in terms of the new readers who will in future never read the site because they’re put off by the paywall.

Sites with paywalls understand this, of course, which is why they make selected content free, or allow readers some quota of free articles before they reach the wall. But there is always a downside: such approaches require registration, which many people find too burdensome; and they also mean that the site develops a reputation as somewhere to be avoided unless there’s an article you really want to read. Certainly it becomes very difficult to search such sites for specific information.

More generally, Greenstein sees the economics of content as a competition between providers, where the lowest-cost providers win. But he misses something, I think. It’s not just that readers don’t see the value in paying for content when something “similar” can be found elsewhere. It’s also that there is positive extra value in reading free content, since it becomes much easier to share that content via email or blogs or Facebook or Twitter, you don’t need to worry about following links or running into paywalls, and in general you know that the site will play well with others on the open web.

The point here is that giving away content for free doesn’t have to be a regrettable necessity; it can actually be an exciting way of maximizing the value of your content.

And meanwhile, the richness of the web does not mean that news sites, say, are competing mainly with each other. If Newsday puts up a paywall and it fails, is that because readers can find content similar to Newsday’s elsewhere for free? Yes, in part. But it’s also because the people who would otherwise visit Newsday.com have lots of other things they also like to do. They like to spend time in Farmville, or they want to watch a video of a dog skateboarding, or they want to see their house on Google Earth, or they want to go walk their dog. These aren’t people who need certain information and are going to seek it out at the lowest cost; they’re just people who would visit Newsday’s website if it was free, but won’t if it isn’t.

That’s why gateways and paywalls are such problematic things, online: they’re a bit like that crappy VIP room in the back of the nightclub which is much less pleasant than the big main space. You might wander in there from time to time if it’s free, but if you need to buy an expensive bottle of Champagne to do so, forget it. There’s lots of other stuff to do, both online and off. And so the walled-off areas of the internet simply get ignored.

Bernanke explains QE2

Felix Salmon
Nov 4, 2010 13:10 UTC

Ben Bernanke might not be giving Trichet-style press conferences, but he is at least taking to the op-ed page of the Washington Post to explain yesterday’s decision. Here’s what he’s trying to achieve with his quantitative easing:

Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

I don’t think that lower mortgage rates are going to make housing more affordable: there’s no evidence that I can see that rents fall when interest rates drop. If anything, the opposite is true. And in the wake of being stung by predatory adjustable-rate mortgages in the past, most homeowners now have fixed-rate mortgages, which don’t get any cheaper when rates fall. Or, of course, they have no mortgage at all.

So there really only two groups of people who are affected by the lower mortgage rates. One is homebuyers. Their numbers have shrunk to historic lows. And the other, as Bernanke explicitly says, is people refinancing their mortgages. But this round of QE isn’t going to bring mortgage rates down to levels significantly lower than they’ve been in the recent past: anybody liable to refinance on lower mortgage rates is likely to have done so already. So the rolls of potential refinancers are pretty thin as well.

Bernanke lists two other positive effects of QE, though. The first is that “lower corporate bond rates will encourage investment” — a statement contingent on the idea that there are firms out there who would love to borrow money to invest, but they find the interest rate they would have to pay to issue bonds too damn high. I can’t think of any companies like that, and so this effect, too, is going to be decidedly marginal.

Finally, Bernanke gets into very dangerous territory indeed: he explicitly says that he’s trying to boost stock prices. Surely if we’ve learned anything from Greenspan’s mistakes it’s that the Fed shouldn’t be trying to support stock prices, and that attempts to do so are liable to end in tears.

Meanwhile, although Bernanke says that “the FOMC has been cautious, balancing the costs and benefits before acting”, he only mentions one cost, inflation — and that cost he mentions three times. He doesn’t even hint at other costs, such as increased market uncertainty and volatility, or increased currency-related difficulties as investors pile in to the global carry trade.

It’s also odd that Bernanke is talking down the risk of higher inflation given that, as Brad DeLong says, the only way that QE is going to work is if it results in higher inflation expectations. In a piece of clever math, DeLong calculates the value to the market of the Fed’s interventions at just $7 billion a year, which clearly isn’t enough to move an economy the size of the US. “Unless this moves inflation expectations in a serious way, it is hard to see why they came out here,” he concludes.

So while I welcome Bernanke trying to explain his actions in the form of an op-ed, I’d be much happier if he did so in the form of a press conference, or some other place where people could ask him questions. He’s good at communicating; why doesn’t he use those skills better?


Exactly, DanHess. Debtors could barely repay creditors when times were good. Now that the economy has retrenched a bit, they are in over their heads.

We’re seeing moderate but sustainable levels of default, dragged out over a few years. This is a “fair” way of destroying debt because it directly impacts only the creditor and the debtor, however if the rate of defaults rises too high then it can bring down the whole system. Meanwhile, NOTHING HAPPENS in the economy until the imbalance has cleared (and at this rate it will take a while).

Quick defaults = (a)
Slow defaults over a long period of time = (b)

The Fed is trying for (c), which is the best bet to destroy wealth quickly without bringing down the whole house of cards.

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Felix Salmon
Nov 4, 2010 02:34 UTC

Federal Reserve Rains Money On Corporate America — But Main Street Left High And Dry — HuffPo

The sophisticated understanding that 5-year-olds have of gender — Nerdy Apple Bottom

The Fed’s $600 Billion Statement, Translated Into Plain English — NPR

Annals of unambitious forgery: the case of the fake Rodolphe-Théophile Bosshard — SwissInfo

The Underbelly Project — NYT

Why on earth would Jeff Koons want a 21,500 sqft single-family home? — Curbed

In some ways, this is actually the most depressing news of the day — CNN

Kanye West was the only critic who really got to George W. Bush? — Atlantic

Only 0.1% of Dutch bikers wear helmets — WSJ


Felix… take some comfort in knowing that a demographic sea-change is taking place on the issue of same sex couples.

Something like 75% of 75 year olds do not support same sex marriage. Something like 75% of 25 year olds do. Time is very much on the side of progress and tolerance in this case.

If only that were true for much larger and more imporntant issues like resource depletion…

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BNP Paribas is not the largest bank in the world

Felix Salmon
Nov 4, 2010 01:56 UTC

Bloomberg not only should know better; it does know better. And it says as much, in paragraph 21 of its story. But that doesn’t stop it from leading the story with this:

The world’s biggest bank isn’t in the U.S., where regulators banned lenders from proprietary trading, nor in Switzerland, which is doubling capital requirements. BNP Paribas SA is in France, which is doing neither.

BNP Paribas’s assets rose 34 percent in the three years through June, reaching 2.24 trillion euros ($3.2 trillion), equal to the size of Bank of America Corp., the largest U.S. bank, and Morgan Stanley combined.

At the end of the piece, there’s even a league table of what Bloomberg calls “the world’s 15 biggest banks by assets”, with BNP Paribas in first place and BofA in 5th.

But here’s that 21st paragraph, which pretty much entirely negates the entire premise of the story:

European and U.S. banks use different accounting standards, making a direct comparison of their size difficult. In particular, U.S. generally accepted accounting principles net out the banks’ derivatives positions, unlike the international financial reporting standards used in Europe. This results in higher reported assets under IFRS. The comparison also excludes assets held by banks off their balance sheets.

And here’s a chart, via Alea, showing that Deutsche Bank’s assets, as of end-2008, were more than twice as high under European rules as they were under US rules:


Basically, it all comes down to those derivatives books: in the chart above, Deutsche Bank’s derivatives assets alone, at €1.2 billion trillion, are significantly larger than its total size under US GAAP.

I’m quite sure that if JP Morgan had to report its assets under IFRS, it would be significantly larger than BNP Paribas. And I’m pretty sure that if anybody at Bloomberg stopped to think about it, they would come to exactly the same conclusion. So why on earth are they running headlines saying that “BNP Paribas Grows to World’s No. 1 Bank”? Anybody?


FrancisL, I suspect that it is in some sense a “tax” on all conventional investment transactions. The HFT supporters talk about “low spreads”, but they neglect to mention that they reduce the spreads primarily by splitting every transaction into two (or more) pieces and acting as a (profitable) intermediary.

Q: If Jack is willing to pay $4 for a widget and Jill is willing to sell it for $3, what price should they set for the transaction?

A: Jack should sell it for $4, Jill should receive $3, and Wall Street should get $1.

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Wine market arbitrage of the day

Felix Salmon
Nov 3, 2010 20:45 UTC

Price of 2009 en primeur Chateau Lafite in New York, per case: $17,000

Price of shipping a case of Chateau Lafite from New York to Hong Kong: $40

Price of 2009 en primeur Chateau Lafite in Hong Kong, per case: $70,000


shipping a case of Chateau Lafite from New York to Hong Kong:

This wine is not yet available in bottles. All 2009 Lafitte Rothschild 2009 are still in the cellars of the Chateau.

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Sailing QE2 around Charybdis

Felix Salmon
Nov 3, 2010 19:58 UTC

It’s easy to see the logic behind the Fed’s latest bout of quantitative easing. Indeed, the official Fed statement lays it out quite plainly: the economy is struggling, and needs all the help it can get; meanwhile, inflation is lower than the Fed would like to see. Since rates can’t be lowered below the zero lower bound, all that’s left is QE.

The Fed, on this view, has precious few tools at its disposal, and so its using the tools it has as best it can, in pursuit of its mandate. Right now, unemployment is way too high—and the longer it stays that way, the more structural it will become. The Fed can’t simply hire millions of people, so instead it’s buying up hundreds of billions of dollars in Treasury bonds, and hoping that the proceeds from those purchases will somehow find their way into expanded payrolls. It’s never been tried before, so no one has a clue whether it’ll work. But not trying it is simply defeatist, an admission that there’s nothing the Fed can do to boost employment.

What’s the downside? Well, for one thing, it’s extra fuel for the bond-bubble fire. Treasuries are already highly sought-after securities; this announcement increases the demand for them so much that the Fed has had to “temporarily relax” the limit of 35% of any given bond issue that it’s allowed to buy. With all that money flowing into a constrained asset class, market imbalances are all but certain to result in unintended consequences somewhere down the road.

What’s more, the Fed has historically spent relatively little time worrying about the dollar—that’s Treasury’s purview. And the first-order effects of a looser monetary policy are in fact positive: a weaker dollar means higher export revenues and therefore more money for hiring new employees.

But there are all manner of nasty second-order effects; indeed, my colleague Jennifer Ablan talks about quantitative easing as “exporting currency chaos.” It now costs essentially nothing to borrow dollars, and to then take those borrowed dollars and use them to buy other currencies, like the Brazilian real, which yield vastly more. That’s the carry trade, and it can be very destructive: it means massively overvalued currencies in places like Brazil, and when it unwinds (it always unwinds) it tends to do so in a very messy and destructive manner. (Remember Iceland?)

More generally, the Fed is spending trillions of dollars on an experiment, with no real plan for what to do if the experiment goes wrong. Indeed, it’s far from clear that the Fed has spent much time war-gaming the various different scenarios of how QE could go pear-shaped, and what it might be able to do in response.

Certainly one of those negative outcomes is a sudden bout of untamable inflation if and when the economy gets out of its current slump: after the Fed has printed all that money, the other shoe can drop fast. Too-high inflation at some point down the road isn’t probable, but it’s possible, and its likelihood is surely higher now than it was before the Fed’s balance sheet started expanding faster than the Very Hungry Caterpillar.

But there are other negative outcomes too. And in general, the further that the Fed goes down this path, the less control it has over the economy and the money supply. Which means more of that uncertainty which everybody is blaming, these days, for the very slump the Fed is trying to get us out of. You can see how QE, however logical and well-intentioned, might end up being counterproductive.


Make us more competitive with lower corporate rates, like Singapore. Gives us a multiple year tax credit for each new employee hired. Give tax incentives for foreign corporation to start manufacturing here, instead of going away. Impose a tax, or make it less tax deductible to outsource labor. Impose tariff on finished goods from country that do not have adequate labor laws. The jobs will come back and inflation too, ultimately curing the debts.

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Conspiracy theory of the day, Foundation X edition

Felix Salmon
Nov 3, 2010 17:44 UTC

Don’t believe for a minute that the likes of Rand Paul are bringing a whole new level of nutty to upper-house politics, in contrast to staid and boring countries like the UK. Via Joseph Cotterill and Charlie Stross, here’s an astonishing speech made in the Mother of Parliaments by David James, a/k/a Baron James of Blackheath.

After opening with reminiscences of seeing “Brigadoon” in the West End, James explains that:

  • Britain needs “investment in industry”, to the tune of about £5 billion.
  • He’s going to “raise a subject that I should not raise and which is going to be one which I think is now time to put on a higher awareness”.
  • There is “a strange organisation which wishes to make a great deal of money available to assist the recovery of the economy in this country”, which he refers to as Foundation X.
  • Foundation X has “megabucks”.
  • He, Lord James, has “handled billions of pounds of terrorist money”; his “biggest terrorist client was the IRA”, who weren’t as nasty as the north African terrorists.
  • As a result, he has “an interesting set of phone numbers”, which he used to “get a reference and a clearance on foundation X”.
  • He has “come to the absolute conclusion that foundation X is completely genuine and sincere and that it directly wishes to make the United Kingdom one of the principal points that it will use to disseminate its extraordinarily great wealth into the world at this present moment, as part of an attempt to seek the recovery of the global economy.”
  • The government — in the form of both the Bank of England and the Treasury — thinks that the whole thing is “rubbish”.
  • Foundation X’s people “expect to be contacted only by someone equal to head of state status or someone with an international security rating equal to the top six people in the world”.
  • They claim to have already deposited £5 billion in British banks — a claim Treasury says cannot be true.
  • They claim to have more than $7 trillion in gold bullion — more than the standard figure of 5.3 billion troy ounces of gold which has been mined in human history.
  • They would be happy to put up £5 billion for the UK government to invest in industry, they don’t want to control the funds, and they won’t charge interest.
  • They’d also be happy to transfer £17 billion to the UK government for the Crossrail plan — before Christmas.
  • Oh, and they’ll happily fund the building of hospitals and schools, too.

Lord James always struck me as a perfectly sensible person, but he does seem to have gone completely bonkers here. But hey, at least he’s provided years’ worth of grist for conspiracy theorists around the world. Who could this Foundation X be? Might they be related to the Rosicrucians? The Knights Templar? The Illuminati Elite? The Vatican? And what terrible fate might befall James, now that he has hinted at their shadowy existence?

Update: Jon Hendry reckons — and I’m inclined to agree — that Foundation X is the Office of International Treasury Control. Certainly this sounds very similar:

Though not generally or publicly known, OITC is the largest International Institution of its kind. It is the largest single owner of gold and platinum bullion in the World, in addition to being a major owner of Bank Debenture Securities, International Treasuries, Cash and other forms of securities…

Original assets in the form of gold have been wisely and well utilized to create wealth that creates further wealth…

It should be noted that only a few persons in each country of the world are eligible to be able to verify, or undertake a verification, re: the position of Dr. Ray C. Dam (International Treasury Controller) and the Office of International Treasury Control. Such persons are limited to Kings, Queens, Presidents, Prime Ministers, with Ministers of Finance and Ministers of Foreign Affairs subject to security status and special conditions / dispensation.

Any sensible person would recognize OITC as a scam after spending about two seconds on its website. Which says to me that David James is, sadly, no longer a sensible person. He’s had a long and noble and storied career; someone should let him retire with dignity at this point.

Update 2: Someone should show James the OITC’s extremely comprehensive Wikipedia page, which details, among other things, how the OITC swindled $20,000 out of an Ecuadorean mayor. There’s also this:

Speaking at a press conference in Fiji, OITC representative Masi Kaumaitotoya told the local media: “Don’t you ever, ever, ever again report negatively on OITC or we’ll sue you for defamation.”

Update 3: James tells Tom Espiner that he has not been approached by the UNOITC, and that there were no links between Foundation X and UNOITC.


What if the ‘X’ was a a SWASTIKA… by removing the arms of the swastika you have your ‘X’
www(dot)rantrave(dotcom)/Rant/Foundation -X.aspx

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