September 11 Commission Report - Gnostic Liberation Front

mind is that if Brady type bond payments are defaulted, the maturity value is guaranteed
by US Treasury Bonds, thereby explaining the need for the Federal Reserve intervention
if 2001.
“The initial asset securitisation formula that converted international bank loans into dollar
denominated, high yield, tradable sovereign bonds was named the Brady Programme, after the US
Treasury Secretary Nicholas Brady in 1989. The objective of the Brady Bond programs was to create
liquidity for the giant American banks by enabling them to remove their troubled Third World
sovereign loans off their books, albeit at a haircut to face value. Morever, the Brady Programmes also
provided sovereign borrowers with debt relief because they reduced their interest burden, extended the
payback maturities and Uncle Sam guaranteed the principal via collateralised zero coupon US
Treasury bonds.
The Brady Bond is therefore a blend of zero coupon US Treasury securities and Third World sovereign
risk paper. This has enormous valuation implications for an investor in Brady Bonds because its value
is based not just on a sovereign borrower's credit or willingness to repay but also the movement of long
US Treasury bond interest rates, since zero coupon bonds are an intrinsic component of the Brady
collateral.
The US Treasury maintains the zero coupon collateral at an account with the New York Fed. Rolling
interest rates guarantee "rolling" forward every time a coupon payment is made to bondholders. This is
another quirk of a Brady Bond. If a borrower defaults, say, in year 6 of a 30-year bond, the US
Treasury zero coupon collateral still provides a positive yield to maturity.
Brady Bonds have fixed, step, floating rate or even hybrid coupon that payout semi-annual payments
and are generally amortising. They are issued as both Bearer or Registered instruments. Certain Par
and Discount Brady are even issued with warrants. Brady Programmes now cover a spectrum of
nations worldwide 13 years after the landmark Mexican deal. In Latin America, Brady's exist for
Mexico, Brazil, Argentina, Costa Rica, Venezuela, Panama, Ecuador, Dominican Republic,
Nicaraguan, and Uruguay. Elsewhere, Poland, Bulgaria, Morocco, Jordan, Nigeria and Russia have
Brady Bonds in existence. While most Brady's are dollar instruments, they are also available on
occasion in the Euro, sterling, Swiss francs and the Canadian dollar. [Matein Khalid, Strategist,
Capital Markets and Research, www.pressreleasenetwork.com/newsletter/nlfin_view.phtml?nl_id=40]
That recognized, $240B is not an amount that can be hidden anywhere in the world with
having a major impact on the financial markets – except for Russia in 1991 and 1992,
where there was virtually no financial reporting during the chaos of the collapse.
However incredulous this statement may seem, that is exactly what happened with the
collapse of the Soviet Union and its banking system – money just “disappeared.” Prior to
the collapse, $30 Billion in new German credits just disappeared from the Soviet banks
into Swiss and other offshore banking entities.
“…West Germany had compensated the USSR very handsomely in cash for allowing Germany to be
reunited, and the cash had been embezzled. As the Russian deputy finance minister admitted in 1991,
“A gigantic sum was received...from Germany--64 billion Deutsche marks [about $30 billion]--and it
all slipped through our fingers.” [The IMF Behind the Scenes]
As documented earlier in this report, the entire national treasury of gold was reported (in
August 1991) by the Soviets to have simply disappeared.
“Valued at $35 billion, Russia's gold reserves were estimated to be 100 million troy ounces - just under
3000 tonnes. Then in September 1991, a palpitating Grigory Yavlinski, the economic supremo,
revealed to delegates at the Group-of-Seven industrial countries meeting in Bangkok, that a mere 240
tons were all that was left. Two months later, in November, even that had disappeared. "Not a gram of
THE SEPTEMBER 11 COMMISSION REPORT Page 216