Archive for July, 2012
An easy guide to keeping political news in perspective…
1. The Wall Street Journal is read by the people who run the country.
4. USA Today is read by people who think they ought to run the country but don’t really understand The New York Times. They do, however, like their statistics shown in pie charts.
5. The Los Angeles Times is read by people who wouldn’t mind running the country, if they could find the time – and if they didn’t have to leave Southern California to do it.
6. The Boston Globe is read by people whose parents used to run the country.
7. The New York Daily News is read by people who aren’t too sure who’s running the country and don’t really care as long as they can get a seat on the train.
8. The New York Post is read by people who don’t care who is running the country as long as they do something really scandalous, preferably while intoxicated.
9. The Miami Herald is read by people who are running another country but need the baseball scores.
10. The San Francisco Chronicle is read by people who aren’t sure if there is a country or that anyone is running it; but if so, they oppose all that they stand for. There are occasional exceptions if the leaders are handicapped, minority, feminist, atheist dwarfs who also happen to be illegal aliens from any other country or galaxy, provided, of course, that they are not Republicans.
11. The National Enquirer is read by people trapped in line at the grocery store.
12. The Key West Citizen is read by people who have recently caught a fish and need something to wrap it in.
My own search for a possible cancer cure began in late 2004 when I found out that my cousin, lifelong friend and running buddy, Jeff Johnson, had been diagnosed as having stage-three melanoma. The cancer had appeared out of nowhere and so it was quite a shock to my cousin and everyone close to him. As luck would have it, I had spent a lot of time the previous four years or so working on my dream of someday posting a website aimed at helping aging baby boomers and others live longer, healthier and happier lives. Naturally, a lot of my research involved searching for ways to ward off and treat diseases and ills such as cancer, Alzheimer’s, heart disease, high blood pressure, kidney and liver disease, and so forth.
When I found out about my cousin, I already had a head start on knowing where and how to look, and so I began to redouble my efforts and focus my research more on cancer. As a result of my research, I found a lot of very good information about fighting cancer and other diseases, boosting our immune systems and improving health in general – much of which you may find in my articles and upcoming book “How to Live a Long and Healthy Life”. However, it was not my research that led me to finding out about the magical, miraculous oleander plant – it was a card game!
The rest of this story, which is part 1 of the 13 part oleander series of articles:http://www.tbyil.com/oleander1.htm
Note: While I’m not a participating member of The Resistance2010.c0m, the website contains a wealth of information on personal and planetary evolution. This message in particular caught my attention because it mirrors my perspective on how media is being used as a tool to keep the ego in a state of fascination with the battle, totally distracted from focusing on their own spiritual growth and from aligning with the cosmic energies literally pouring on to the planet right now. Lately I’ve even had to pull my energy back from ‘online activities’ because I became aware of how much it drains my “spiritual battery” when too much time is spent focused on the “outer” vs “inner” world, especially if the focus is on negative future outcomes or material that doesn’t focus on Higher knowledge, spiritual energy or ancient teachings.
So I applaud James Bomer’s campaign against disinformation and new age false prophecy, there are some extraordinary manifestations unfolding and outcomes beginning to appear on the horizon indicating that dark forces are losing their grip on the energetic hold they’ve had over Gaia and her children for tens of thousands of years….possibly millions of years. The black magic spell cast over the 3D realm by the Fallen Ones is breaking, collapsing under gravity in the downward spiraling clockwise spin of the third dimension as it begins to pull away from the 5D New Earth energies that are ascending in an upward spiraling, counter clockwise motion. Middle ground is vanishing as the two worlds pull literally apart, it’s also the reason reality’s becoming so polarized with zombie attacks, doomsday scenarios and mass murder scenes.
If you grasp the concept that we live in a holographic universe and the “as above so below” paradigm, that should help in understanding that 3D reality is descending to the Dark side of the matrix; while 5D Earth ascends up toward the Divine. Those who continue in 3D will most likely stay on the incarnational wheel of karma, while the souls on 5D will evolve to a Higher state of spiritual evolution.
Another reason to stay away from “dark news” is we also create our reality by magnetizing outcomes through the thoughts and emotions we project out on to life’s canvas, our “reality”. With the law of attraction we draw to us exactly what we previously projected out onto life’s canvas, thereby mirroring destructive doomsday scenario’s back on to the canvas called our reality if those are images we’re impressing upon our thought patterns. As the ocean we live in changes with the introduction of incredibly transformational cosmic energies it’s important to be aware, stay in the now and begin pulling your focus away from the ego’s need to feel informed and “in the know”. In many respects, the internet has become just as dangerous as your television set as a tool for mind control.
Many people feel immune to mind control from mass media since they quit turning to TV for news and entertainment, yet they expose themselves to the same disinformation “programming” on the internet. Unfortunately the archonic powers behind the scenes programming broadcast media, are also in control of many alternative news sites. Then there are tens of thousands of trolls, agent provocateurs and disinformation sites, all are making money at keeping people distracted from their own spiritual evolution. ir
The Resistance Protocol Update
It has come to the attention of many, especially those in tune, that the so-called controllers are after our Energy. However, many have not come to the full realization that how they do this is by causing us to predict doom and gloom and then torment ourselves through fear until the day goes by and we figure out once more that we have been hung out to dry while looking like the boy who cried wolf again.
This has happened with 1999, Nibiru, Elenin, The Superbowl, and now the Olympics. False flag after false flag event predicted by the new age prophets who are rapidly becoming false prophets. The definition of a false prophet is one who predicts things to happen in the future and it never occurs. In most cases the individuals who do this move on to the next big event that they can spread their portents of destruction and conspiracy about. It is time this come to an end on the internet and we will perpetuate that with this campaign, however, it will most certainly come to an end on the Resistance Website.
DREAMING ABOUT DESTRUCTION IS JUST AS DESTRUCTIVE
As I explained on last Sunday’s Show. You have to realize that immersing yourself in to negativity, especially negativity that has nothing to do with your education, which is generally brought in a fear based fashion, for any prolonged period is going to waste your Energy. Further, many people experience the situation that is being predicted within their dream and thus for that night they have lived the dooms day scenario and even been drained of the energy. Just about everyone reading this post has had deluge, and comet impacts destroy their dreamworld. Its time we realize the obvious play of the so-called controllers and their system which is no different than the bible.
NEW AGE PROPHECY IS REALLY FOR PROFIT
Remember Prophecy is for Profit. In Revelations a great deal of death dealing and doom is delivered and it has created a immense group of deluded individuals who just want to see the world destroyed so they can say their God was right. They do not take in to account that according to the scriptures they will also be amongst those that perish with their hypocritical half hearted attempt to obey all of Hammurabi’s Code or The Ten Commandments. Such things are for children, I mean how obvious is it that you should not steal and kill.
New Age people should see themselves as no different since they at times want the confirmation of the activation of their prophetic ability so bad they predict in every major world event total desolation. You will also notice that these people never use their abilities to predict good news. When was the last time you heard a good prediction like, by the end of next month thousands will be aware and positive energy will sweep the Earth. You never hear stuff like that, even though that is the key to perpetuating such things.
So from here on we will no longer be hosting the fear based prophecies which are turning rapidly in to major disinformation. Humanity is grown enough to deal with its problems when they occur. Most people did not start predicting dooms day scenarios until after 9/11 when they all of a sudden became spiritual. Still keeping in mind just about all of the big names such as David Icke in the mainstream then failed to predict despite the alarming amount of information that proved something would take place.
IMAGINING THE ILLUMINATI HAS CONTROL IS A FALSE FLAG EVENT
Now it has become a game by the illuminati to make you think something will take place and then play your emotions like a piano until you are drained with a bad case of bleed over in to your dreamworld. To prevent this further atrocity of self destructive soothsaying we will no longer accept posts, blogs, or internal mail structured in such a way. To be clear this should not be confused with dissecting and breaking down symbolism or the inner workings of the hidden hand. It does not mean that one cannot thoroughly lay out the true meaning behind symbolism and activities that take place.What it does mean however is predicting the end of the world and then even getting upset when it does not happen will get you banned from the site.
Lastly I would like to say, what do people truly expect will happen on a positive level when they predict something bad will occur? If I say “a comet will hit the Earth” does that really put people in a position to avoid the impact? Of course not if anything it only troubles them more especially if they do not have the resources, which most don’t, to up root their family to a fall out shelter in the middle of the desert. So the fact remains all of the warnings, if true, will still not prevent the occurrence if it is going to take place. In fact it may cause an event that would otherwise not have the energy to manifest actually occur.
PERFECTION = PROTECTION
Most importantly you should realize the defense you have in regards to such things on a personal level is located within your Aura and you personal Sphere. If you are in Balance and Wholeness even if you are right in the middle of the disaster you would come out unscathed and untouched. In the face of the hurricane you will notice a grin on the face of the Adept.It is imposible to destroy the Immortal, lets start acting like it. You are the Universe anyway, its not something that has to be understood to be true, did you not notice your Chakras? Expand and help us end Disinformation and False Prophecy which is vampiric not Symbiotic. Wholeness
James Evans Bomar III
The Planetary Resistance
Visit THE OFFICIAL RESISTANCE at: http://www.resistance2010.com/?xg_source=msg_mes_network
Blessed are those servants whom the Lord when He comes shall find watching.”
~ Luke 12:37
Nepsis, or nipsis, is a Greek word which means to be watchful, alert, and vigilant, and to keep on your guard for illusions and fear, with a clear, sober mind. Parallels could likely be made between Nepsis and the concepts of mindfulness in Buddhism, dhikr in Islam, and devekut in Judism. In spiritual literature, Nepsis is the natural state of an awaken soul: one that is both connected with the Divine and is self-aware of this connection.
Nepsis is an interesting and important sacred concept, because it is a major requirement for those that practice the teachings of any spiritual path. Nepsis is also an early Christian precept as it was considered as a requirement or virtue that was avidly expected for the seeker to develop during their lifetime. The Essenians and the Fathers of the Desert, thought that evil thoughts were thoughts brought in by demons. These thoughts darken the mind; they bring in doubt, and fear. Nepsis was a way to intentionally “close the gate” to other non Godly thoughts.
Nepsis, the art of being watchful, can be taught and learned as a means to overcome various spiritual sicknesses. Specific to this process is the watchfulness of the human heart. The ancient traditions thought that Nepsis was the proper way to address and resolve the conflicts of the human nous: the conflicts between the heart and mind.
Stillness within one individual can affect society beyond measure.
To be involved in Nepsis is to be exercising watchfulness and alertness. It does not mean to be simply guarding our thoughts against the evils of illusions and fears, but also means to guard our thoughts closely: once we have aligned ourselves with Christ-consciousness, we enter a new level of manifestation, and with this gift comes much responsibility.
“Words can be worth silver, but silence is worth gold.”
The cultivation of this “virtue” through the practice of stilling or silencing chatty thoughts, peacefulness of movements and speech ,and internal quietness can turn the mind, the eyes of the soul, and the heart, the source of all our power, into fertile grounds for further spiritual practices, such as deep meditation, contemplation even the applications of Theurgy. With the development of Nepsis, and our attention, comes a charismatic spiritual gift: discernment.
By Angela Peregoff
July 30, 2012
“The world is not to be put in order; the world is order incarnate. It is for us to harmonize with this order.”
– Henry Miller
What amazing fireworks energy we have been experiencing this month!
Many more of us are stepping into the rocky, unpredictable territory of evolutionary ascension and the lessons that will lead to a higher realm of existence.
For the past few weeks I have witnessed individuals being called out by their own Soul essence in an effort to get the personality and the spirit aligned in current time. It seems no one is exempt from donning their Lightbody codes and so quite a few are dealing with scary, confusing, uncomfortable, stressful, and at times unpredictable situations. If you are witnessing or participating in a life experience that is less-than-calm, rest assured that you are not alone.
When consulting the guides on this matter I am told that everyone will be handling their “personal best” with spiritual/personal growth issues for the second half of this year. Whatever needs to separate from your old existence is going to be falling apart so that you are ready for the reconnection energies that take hold from now to Dec. 21, 2012. Any last aspects of identity that would hold you in resistance or fear in relation to the Light that is attempting to activate from within your internal core of expression is being whirled around in a “healing vortex” so that more of your Soul can be present and function day to day.
In this way your journey becomes one in which you can actively choose whether or not to embrace a new and different consciousness, even when chaos and duality are an integral part of your existence. You are teaching yourself that you do indeed create your own reality, and that you must endeavor to discover and integrate your own highest truths, and then live your personal philosophy to the best of your ability.
Be okay with digging into the situations that come up to destroy old conditions and rebuild new ones during this time. Remember, life never takes one thing away without giving something new. This is about learning to love the law of change and as you do, you will release your creative abilities for the New reality that is forming.
As you trust and begin to follow the nudgings of your Higher Self through your latest obstacle course of empowerment notice that you’ll actually be supported by the strength of the old and the vibrancy of the new. That’s the balance that you want to keep in mind. If you consciously strive to stay centered within your own wisdom and Light you should be able to maintain a nice blend of what has been with the new.
All is in Divine and Perfect order even when it doesn’t feel like it.
As you constructively link energies of old and new you will find yourself arriving in a harmonious material/physical world. Please be mindful too that as a master builder of worlds without end, you need to create time for you. Take time for yourself; make a couple of days this week all about you and the things that are going to nurture, relax and re-charge you. Staying uplifted in these cycles of intense, unavoidable cosmic vibrations requires a buoyancy of Spirit and no one except you can make certain that happens. Figure out now what commitments and obligations you are passionate about and be firm about saying no to the favors, appointments, and gatherings that drain or pull on you.
August is going to be a month flooded with the “outer” and the “inner” switching places in your focus. You are going to be living and acting more and more from the emerging truth that is rising from within you and experiencing more instantaneous manifestations of what you value. Don’t allow present adversities to define your humanity! At every level and station of Beingness you are healing and refining the many facets of Self at the fastest pace humanly possible. Sometimes it’s hard to remember the Truth – that you are a precious expression of the Creator striving to return to the Oneness of your Divine Self.
The universe is shape-shifting dramatically and when that happens our future can seem uncertain. The highs and lows are happening more often so at times it can feel as if you are on a fast-moving roller coaster. This requires that you remain vigilant and focused on the now moment as you strive to stay centered within your Soul. There is no place on Earth that is not being affected by the powerful energies of change. And just as Gaia (Earth) experiences cycles of cleansing, rest and growth, so it is with humanity.
Ride the energies of change like an infinite wind my friends. Allow them to carry you into unknown territory. You are setting the pace for the “leading-edge” Spiritual beings, and a world of peace, harmony, joy and abundance. It is a great responsibility, but also a great gift.
Here’s to healing as we go forward on the spiral of the future –
©2003 – 2012 Angela Peregoff | All rights reserved.
Please feel free to copy and share these copyrighted Blessings with your friends, letting them know the source and inviting them to visit my website.
According to the doctrine of Proclus, the uppermost regions from the Zenith of the Universe to the Moon belonged to the Gods or Planetary Spirits, according to their hierarchies and classes. The highest among them were the twelve Huperouranioi, or Supercelestial Gods, with whole legions of subordinate Daimons at their command. They are followed next in rank and power by the Egkosmioi, the Inter-cosmic Gods, each of these presiding over a great number of Daimons, to whom they impart their power and change it from one to another at, will. These are evidently the personified forces of nature in their mutual correlation, the latter being represented by the third class, or the Elementals.
~H. P. Blavatsky
It is clear that our manifested universe is ruled by cosmic laws. Essentially, these laws are the connection between the Microcosms-Man and the Macrocosms-Galaxy. In this universe, every created element resonates with the multiple vibrations of the planets, suns, constellations, galaxies and correlated multiverses.
In accordance with esoteric practices brought down through Gnostic traditions, it is possible to connect and amalgamate with the vibration of the celestial bodies to facilitate the amplification of our internal planes, spiritual growth, and assistance in our field of manifestation, through improvement in health, security, marriage and professional fields.
In every aspect of life, human beings are intimately and immediately engaged with these ordered ranks and legions of daimons or elementals. The elementals are neither immortal spirits nor tangible bodies; they are merely astral forms of the celestial and supercelestial ideas that move them. They are a combination of sublimated matter and rudimentary mind, centers of force with instinctive desires but no consciousness in the human sense. Acting collectively, they are the nature-spirits – the gnomes and sylphs, salamanders and undines of alchemical tradition. (Copyright©2011 Theosophy Trust)
For those familiar with cosmic energies, it will be no surprise to know that the mediator vehicles between the Higher Cosmic forces and the Earthly Man is the chakra system. The chakras are amplified receivers and translators of the diverse frequencies and vibrations. Each one of these centers was wired to receive these frequencies as they are absorbed by the energy vortexes and passed through the meridian system, activating the holographic connections between the Microcosms and Macrocosms. Once this connection is triggered, the natural flow of the cosmic currents starts interacting with our refined will and the intentional trine flames of our heart. A Human being, once activated, transforms itself in a Divine column of life, anchoring the Divine infinite energy of Christ-consciousness in any earthly grid of manifestation.
In the antaskarana, in the channel of aspiration, the force of Buddhi in Manas will actually become manifest in the fingers, nostrils and lungs. Buddhi will be aroused in all the centers of the brain and the heart. It will then be possible to invite or invoke the chief controllers of the many classes of daimons. When this takes place, the teaching that man is a living link between heaven and earth takes on a concrete meaning in benevolent magic based upon arcane science. (Copyright©2011 Theosophy Trust)
The framework of influx of energy inside of the meridian system of our physical and other bodies can be stimulated through the use of Mantras. In Theurgy, mantras are the keys that allow us to work with the sacred energies of the Infinite Cosmic Mind. In this universe, every flower, mountain, rivers, human, suns, planets, constellations holds peculiar vibrational energy signatures; with their own patterns, expressed by colors, aroma, power and energy. All the vibrations generated on a planetary globe are a reflection of a synthesis note inserted in the infinite choir of the universe. The grouping of all these key notes is the composite of the cosmic orchestra of the starry skies. This is the real music of the spheres discussed by Pythagoras.
 The words daemon and daimon are Latinized spellings of the Greek daimôn, a reference to the daemons of Ancient Greek religion and mythology, Hellenistic religion and philosophy. Daemons are good or benevolent “supernatural beings between mortals and gods, such as inferior divinities and ghosts of dead heroes” and differ from the Judeo-Christian usage of demon, a malignant spirit that can seduce, afflict, or possess humans.
All major religious traditions carry basically the same message, that is love, compassion and forgiveness the important thing is they should be part of our daily lives.
~H.H. the Dalai Lama
The word Theurgy has its origins in the Greek words “Theoi”, “God”, and “Ergein”, “work”, which leads the meaning towards the concept of God’s work or Work from God. Initially, it was a concept used in opposition to Theology, which emphasized solely the energy of God as a pure philosophical contemplation as suggested by Plotinus. Theurgy does not focus on the religious context, nor in the historical and social background of the Idea of God. Instead, it apprehends the true nature of the Divine that comes from the diverse schools of wisdom and knowledge and from the various mystic traditions of all eras.
In Greece, this initiatory practice existed during all its historic times, from Apollonius of Tyana through Pythagoras, Plato, and Plotinus and through the mystery of Eleusis and Samothrace.
Literally, Theurgy was created by the school of Neo-Platonism to characterize the higher type of ceremonial rituals that can create phenomena related to the expansion of one’s consciousness. This is an extremely subtle notion and it was passed through the generations of time as the most simplistic version of being a ritualistic ceremony that evolves and thrives through the communication with Angelic Hosts and Stellar Logos. Theurgy is based on the idea of a natural coexistence between Human beings and Higher Vibrational and Divine Beings.
While the initiation in this art may be contextualized as a historical reference; nevertheless, it has always existed throughout the history of ancient civilizations in many different time lines. Its purpose was to create a ceremony where the objective was to connect with the Divine Mind and evoking its power in perfect resonance and communion with All That Is, or Christ-Consciousness.
This perfected state of communion is achieved through the exercise of ceremonial ritual, prayers, invocations and regular Spiritual exercises. These practices are very much used inside of the Esoteric Christianity School.
The Human comprehension about the nature of the Divine has been developed only in a partial form, through successive approximations and insight. The objective and finite mind cannot possible fully understand the concept of the infinite Mind of God. Only through expansion of one’s consciousness and proper training of Spiritual and transcendent intuition can bring one closer to what Theurgy really means.
The biggest obstacle to the understanding of transcendental truths is the anthropomorphic conditioning we have received in relation to giving and attributing to God, Human reactions and feelings, and, in one way, limiting the One Divine Creator in His ways to manifest His works and Consciousness.
Adopting a simplistic way of understanding, Theurgy is a the internal manifestation of the Divine Essence through words of power (mantras), prayers, guided meditations and an intense desire (manifested Intention) to be permanently connected with the Divine Mind (Logos). For those who practice it, Theurgy can reach diverse levels of Human existence; from the psychological plane to the perfect harmony with Creation and its beings. The most interesting effect of these practices, however, is of the possibility to transcend the Human nature and commune with Higher Vibrational Beings in different levels of reality.
The modern way to celebrate the Holy Mass is nothing more than a shadow in how to partake through ritualistic procedures of the Body of Christ and of the Spirit of God in all His might. The basic motivation of these rituals cannot be anything other than the purity of desire in practicing the spiritual union with God in his diverse ways of manifestations. It requires a necessary attitude of internal reverence, prayer, faith and pure unconditional love. One must cultivate the state of Nepsis, a powerful and almost unknown virtue of the spirit that allows one to keep a level of control of his own consciousness, an inner state of alert vigilance and self-awareness. This is an essential element because it prevents the individual from suffering from self-pity and negative energy attachments.
In becoming a Master of the Stellar Codes, one should thrive to develop this skill: to receive and transmit its Divine Light symbols and syllables with a purity of mind and heart. It is necessary to develop an internal posture of Integrity and Righteousness to receive and become a vessel for Divine Grace. Elements such as Respect, Reverence, Gratitude and Forgiveness are essential to conduct and preside over these types of ceremonies.
In the specific case of the Attunements and Initiations of the Stellar Codes, the alchemy of the Codes operate mainly based on the Cosmic Calendar, perfect aligned with the Time of Kairos, not necessarily of our usual concept of Chronos time. Kairos is the time of the Universe and the internal planes. It can be understood as our internal psychological time. Kairos time is always NOW and manifests externality as the concept of Zero Point.
In reality, the vastness of Divine Mind covers not only this harmonic Universe but many Multi-verses, and throughout Creation, as we expand our perception of reality, we perceive the harmony in the Divine Order which is so absolute that is capable of synchronizing all the elements that are not necessarily in harmony; transforming into symmetry all that is asymmetric. Like turbulent waves that may seem to represent conflict and dissonance; they are mere contingencies of situational movements of Karmic adjustments, apparently dissociated from the Unity, but in the reality of things, this is just an illusion: in the deepest part of the ocean, the calmness and steadiness of God’s eternal love and grace is permanent and unchangeable. It is this center that one should reach in order to practice Theurgy.
The essence of Theurgy as a method of reverence of the Divine is to open the possibilities of the future, to help assist others in this crucial moment of transition; through the activation of the Christic Principal: the resonance and harmonics with Christ-consciousness and Light, which is our birthright, existing inside of every Human being and is already an element of our Divine Nature.
Go into meditation, allow yourselves to be open to receiving the vibration of a sacred site which will resonate with you. With this resonation, you will also feel the vibrations and resonation of the ascended masters associated with this sacred site. Add your light to the whole, dear ones; add your light to the fullness of the vibrations of the diamond light to assist the sacred sites into full consciousness. They too, are conscious, make no mistake. Just as your mother earth has consciousness, so do the sacred sites and nodes of power, through the added influence and continuity of the formation of particular grids and leylines which are most significant to each sacred site. Flow your light to the sacred site which resonates with you, dear ones. Flow your light and assist the coming into full consciousness and power of the diamond light, for this sacred site.
We have received many questions on what shadow banking really is. Here is one of the easiest explanations, courtesy Azizonomics.
Meet James. James bought a house. It cost him $150,000, of which $30,000 had come from his own savings, leaving him with a $120,000 30-year fixed-rate mortgage from the WTF Bank, with a final cost (after 30 years of interest) of $200,000. Now, up until the ’80s, a mortgage was just a mortgage. Banks would lend the funds and profit from interest as the mortgage is paid back.
Not so today. James’s $200,000 mortgage was packaged up with 1,000 other mortgages into a £180 million MBS, (mortgage backed security), and sold for an immediate gain by WTF Bank to Privet Asset Management, a hedge fund. Privet then placed this MBS with Sacks of Gold, an investment bank, in return for a $18 billion short-term collateralised (“hypothecated”) loan. Two days later Sacks of Gold faced a margin call, and so re-hypothecated this collateral for another short-term collateralised $18 billion loan with J.P. Morecocaine, another investment bank. Three weeks later, a huge stock market crash resulted in a liquidity panic, resulting in more margin calls, more forced selling, which left Privet Asset Management — who had already lost a lot of money betting stocks would go up — completely insolvent.
You should be. This is of course a fictitious story. But the really freaky thing is that this kind of scenario — the packaging up of fairly ordinary debt into exotic financial products, which are then traded by hundreds or even thousands of different parties, has occurred millions and millions of times. And it is extremely dangerous. When everybody is in debt to everybody else through a complex web of debt one small shock could break the entire system. The $18 billion debt that Privet owed to Sacks of Gold could be the difference between Sacks of Gold having enough money to survive, or not survive. And if they didn’t survive, then all the money that they owed to other parties, like J.P. Morecocaine, would go unpaid, thus threatening those parties with insolvency, and so on. This is called systemic risk, and shadow banking has done for systemic risk what did the Beatles did for rock & roll: blow it up, and spread it everywhere.
The banking system has blown up multiple times in history, when depositors have panicked and withdrawn funds en masse in what is known as a bank run. So traditional banks have become party to a lot of regulations. For example, banks must keep on hand 10% of deposits as a reserve. This reserve is a buffer, so that if depositors choose to withdraw their money they can do so without the bank having to call in loans. Of course, banks can still suffer from a liquidity panic if a large proportion of their depositors choose to withdraw their money. Under those circumstances, traditional banks have access to central bank liquidity — short term loans from the central bank to guarantee that they can pay depositors.
Shadow banking arose out of bankers’ desire to not be bound by these restrictions, and so to create more and more and more financial products, and debt, without the interference or oversight of regulators. Of course, this meant that they did not have access to central bank liquidity, either.
Essentially, shadow banking is still banking. It is a funnel through which money travels, from those who have an excess of it and wish to deposit it and receive interest payments, to those who want to borrow money.
Shadow banking institutions are intermediaries between investors and borrowers. They can have many names: hedge funds, special investment vehicles, money market funds, pension funds. Sometimes investment banks, retail banks and even central banks. The difference is that in the new galaxy of shadow banking, these chains of intermediation are often extremely complex, the shadow bank does not have to keep reserves on hand, and shadow banking institutions raise money through securitisation, rather than through accepting deposits.
With securitisation, the financial industry creates the products which populate the shadow banking ecosystem, and act as collateral. Rather than accepting deposits (and thus accepting regulation as traditional banks) shadow banking gets access to money through borrowing against assets. These assets could be anything — mortgages, credit card debt, commodities, car loans. These kinds of products are packaged up into shares, sold and traded. There are various forms: collateralised debt obligations, collateralised fund obligations, asset-backed securities, mortgage-backed securities, asset back commercial paper, tender option bonds, variable rate demand obligations, re-hypothecation, and hundreds more exotic variants. (Hypothecation is where the borrower pledges collateral to secure a debt – i.e. a mortgage, and re-hypothecation is where that collateral is passed on and someone else borrows against it, even though it remains in the original debtors hands). The function of these assets are essentially the same; securitisation is a way of creating products with an exchange value, and bringing money into the shadow banking system; so much money that the shadow banking system in 2008 was much larger than the traditional banking system:
Read more: Shadow Banking 101 |