| MONETARY CRISIS REPORT * Monetary Fragments |  HAT TRICK LETTER Issue #96 “the Golden Jackass” 18 March 2012 |
"Despite the well-known benefits of maintaining
stable prices, there are calls in both Europe
and the
"At present, with the unemployment rate
elevated and the inflation outlook subdued, the
committee judges that sustaining a highly accommodative
stance for monetary policy is
consistent with promoting both objectives of the
Fed for stable prices and maximum employment."
~ Bernanke (misguided professor heading the
USFed who revises history)
"Nazi Germany in its final years taught
Reich Physics, a preposterous brand of science
whose premises defied nature while stressing certain
dominance in a bizarre set of adopted natural
laws contrary to true physics. One can see its
continued vein in modern Economics theory in the
"This modernist view of money [that governments determine the ultimate monetary value] ignores that market forces, which a government can influence but in the end cannot control, inevitably determine the value of any asset. With repeated interventions in the market process, governments disregard this basic principle, causing disruptions to the market process that impede economic activity and even worse, can distort money itself." ~ James Turk (in dispute with Warren Buffet
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" ~ Upton Sinclair
"You cannot solve a problem from the same consciousness that created it. You must learn to see the world anew." ~ Albert Einstein
"We really do not know the true market
price for USTreasurys."
~ Mike McKee (Bloomberg News)
"I believe with 100% certainty that the Chinese are now clearly on a path to accumulate so much Gold that one day soon they will be able to restore the convertibility of their currency into a precious metal, just as they were able to do a century ago when the country was on the Silver Standard." ~ Porter Stansberry
"China wants the Renminbi to be backed with a huge percentage of Gold, thereby making the Renminbi the world's best and most trusted currency." ~ Richard Russell
MONETARY FRAGMENTS
◄$$$ CHANGE IS COMING TO FRENCH LEADERSHIP.
THE DAYS OF SARKOZY ARE FEW AS HIS FATE IS SEALED
IN AN EXIT. EXPECT MORE ISOLATION FOR
If the vote goes to Hollande, a major obstacle
to the linkage between
◄$$$ LLOYDS BANKING GROUP REGISTERED A GBP 3.5 ANNUAL LOSS. THE VENERABLE FIRM HAS TURNED INTO A TOXIC PIT. THE UKGOVT IS NOT SEEING BENEFIT FROM THEIR INVESTMENTS IN THE CITY. EXECUTIVE BONUSES CONTINUE BUT LOWER, A SIGN OF ENTITLEMENT FOR THE ELITE. THE BANK SEES NO NEAR-TERM IMPROVEMENT IN ECONOMIC CONDITIONS. $$$
Lloyds is 41% owned by the UKGovt, a heavy portion
like Royal Bank of
◄$$$ GOLDMAN SACHS HAS BEEN DEALT A BLOW
TO ITS IMAGE IN A BLATANT NAKED SHORTING CASE.
THE DETAILS OF THE OVERSTOCK.COM INCIDENT WILL
BE AIRED IN PUBLIC FOR ALL TO SEE. THE COURT RULED
THAT EVIDENCE WILL NOT REMAIN SEALED. A TRIAL
WILL EXPOSE CORRUPT
The court final ruling on disclosure is significant because the evidence submitted to the court lays out in detail the means by which Goldman Sachs and Merrill Lynch committed numerous securities violations. They used naked short selling of the stock, in collusion with others, to manipulate downward the Overstock.com share price. The court declined to seal the evidence, a refusal in defiance of the syndicate. The court denied mostly all of the defendant motions to seal the evidentiary record on the summary judgment hearing. Patrick Byrne is chairman and CEO of Overstock.com. He said, "We are thrilled. I could not imagine that a post-2008 public would be denied access to this evidence, which displays in living color the flaws in our capital markets and in the regulatory structure that governs them. Now the public will have a window through which to view this evidence and judge for itself the fraudulent and systemically risky behavior at issue in this case." Jonathan Johnson is president of Overstock.com. He said, "On the one hand, defendants have gone overboard to keep this evidence locked away from public view, while on the other they maintained that the conduct is perfectly legal. We believe it is not legal, and that the public has an independent right to make that determination, based on the evidence." Four major media groups intervened in the case to join Overstock in opposing the motion by Goldman and Merrill to seal the evidence. They were The Economist, New York Times, Rolling Stone Magazine, and Bloomberg News. Many expect the court decision will be upheld on appeal. But in today's corrupt age, watch for a higher appellate court to toss the entire decision out on an early Saturday morning several weeks later. At issue in the case was an earlier ruling by the court that was overturned. That court had granted a summary judgment motion in favor of the defendants, ruling that the conduct at issue in the case did not take place in California, therefore not subject to California law. A full trial is scheduled which should attract many reporters and cameras.
Details are scummy but vintage Wall Street. A
large percentage of the stock trades that were
part of the manipulative scheme were effected
on the Pacific Coast Stock Exchange, located in
◄$$$ THEGOLDMAN SACHS POISON VAMPIRE CULTURE IS COMING TO LIVING ROOMS ACROSS THE WESTERN WORLD. MATT TAIBBI NODS TO GREG SMITH, WHO CRITICIZED HIS EX-FIRM ON THE WAY OUT THE DOOR. A TOXIC DESTRUCTIVE CULTURE IS DESCRIBED IN A STORY GONE VIRAL ON THE WEB. $$$
A Goldman Sachs employee has delivered a scathing
criticism of his old firm for exploiting clients.
The image of a crime syndicate comes to mind,
except that Greg Smith did not reveal illegal
activity. That might come next. A Lithuanian-born
native of
The Stanford graduate Smith wrote, "I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It is purely about how we can make the most possible money off of them. It makes me ill how callously people talk about ripping their clients off. Over the last 12 months, I have seen five different managing directors refer to their own clients as muppets, sometimes over internal e-mail. Culture was always a vital part of Goldman Sachs's success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. It was not just about making money. This alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm. Smith describes a vile predator from the inside.
More remarkable is how the press networks are running with the story, albeit with some wry grins and laughter in undermine. The attack adds to criticism from politicians and protesters who blame the company for triggering the financial crisis and profiting at client expense. The august firm is widely accused of engineering the TARP Fund bailout to disguise a 100% redemption for its badly impaired AIG holdings (believed worth 40% to 60% of face value). The criminal organization has endured Congressional hearings probing its role in the financial crisis. It paid $550 million in 2010 to settle a lawsuit related to misleading investors in a Collateralized Debt Obligation (leveraged mortgage bond scam). A recent Harris Interactive study was conducted by the market research firm, in which is found Goldman Sachs to score among the lowest on corporate reputations. Matt Taibbi is squarely on the mark calling the firm the great vampire squid with tentacles spread anywhere that blood resides.
Some query on the Jackass part revealed that
numerous big bank organizations are under active
and vigorous investigation. The forensic work
is being done by a crack international team of
police, attorneys, and judges. Mos of their work
to date has been in
In an echo event, a whistle blower has stepped forward anonymously to cast accusation at JPMorgan Chase. His focus is on illicit activity in the Gold market. He urges the CFTC to take action. But this story involves very little information. If in the next few weeks, no further direct information and evidence is produced, regard it as a distraction ruse. He opened the door, and next we must see if he walks through it carrying boxes. See the CFTC article (CLICK HERE).
◄$$$ GEITHNER SUPPOSEDLY WAS ARRESTED AND
RELEASED OVER COLLUSION REGARDING THE A.I.G. CASE.
A WAVE OF BANKER RESIGNATIONS IS IN FULL SWING,
MOSTLY IN
Rats are jumping from the ship, or else feces
is departing the rodent structures. A fellow with
Harvard credentials combines with the now notorious
hero Judge Napolitano to inform that Treasury
Secretary and former New York Fed head Timothy
Geither was recently arrested over his tawdry
role in the AIG case. But his release came quickly,
maybe in a simple showcase event. Geithner
allegedly ordered AIG to withhold documents during
the entire bailout and investigation period.
To be sure, he is linked to much bigger crimes,
from $trillion thefts to mortgage bond fraud to
money laundering. A much bigger dragnet is at
work. Arrest warrants for US bankers are sitting
on desks all across
Carl Herman has made a private mission of following
the bankers (aka The 1%) and documenting their
profound crimes. He wrote, "Anyone with
intellectual integrity and moral courage can affirm
that the Federal Reserve system is guilty of financial
fraud at its core. The EMPEROR HAS NO CLOTHES
reason is they lie in omission and commission
with a fiduciary responsibility. They create debt
for what we use as money, charge the 99% increasing
aggregate interest, and then tell us this is responsible
leadership for the public good. I teach college
level Economics. The facts of a debt-based monetary
system, unpayable increasing aggregate debt, and
increasing per-capita interest costs is conservative
textbook information. If you want to understand,
I will walk you through here. There is more to
the charge of financial fraud at the top of
Also, the Securities Exchange Commission maintains
a database named EDGAR, open to the public. Corporations
must report by law executive resignations on 8-K
forms. Some research with searches on a specific
range of dates and including the keyword boolean
searches reveals aplenty. A baseline comparison
exposes a big uptick in resignations. In all,
320 resignations have occurred recently from world
banks, investment houses, and money funds. One
must wonder if Dominique Strauss-Kahn of the IMF
is included. Not all these resignations have any
meaty meaning behind them, because bankers routinely
wait for their yearly bonuses to leave office.
The European implosion has taken a large toll,
as has the breakdown in
◄$$$
Edgar Cayce is known for many scientific facts,
like the wobble in the earth's rotation and its
relation to geological instability. He also made
some amazing references to
For confirmation, consider the opinion of an
excellent contact with global consulting experience
that includes
CORRUPT DERIVATIVES SEEP TO SURFACE
◄$$$ A CONGAME IS UNDERWAY, AS THE I.S.D.A. WILL USE AN AUCTION IN PAYOUTS FOR GREEK DEFAULT INSURANCE, IN A GRAND EVENT THAT WILL SHROUD HIDDEN CENTRAL BANK BAILOUTS IN SIMULTANEOUS MANNER. AROUSED SUSPICION POINTS TO SOME DEVIOUS HANDLING IN THE GREEK DERIVATIVES THAT TOTAL UP TO $37 TRILLION. $$$
The bigger story on the micro scene is the congame
managed by the Intl Swaps & Derivatives Association
(ISDA), whose released report was intended to
confuse. The press is using the word default,
but the ISDA is using the word auction. The
amount of CDSwaps outstanding is orders of magnitude
more than the $3.5 billion being quoted. That
low figure is the likely premium posted by the
insurance contracts. The BIS confirms the total
outstanding CDSwaps is approximately $37 trillion.
Sinclair believes that at least 50% or more of
the existing $37 trillion on the books is directly
related to
The beginning has come for revealing the false facade of offsetting derivative exposure. When Bank A and Bank B are counter-parties to each other in large scale destruction, both are almost certainly going to face ruin. The payout liability for a debt default is so great that Bank A could not pay it on the Credit Default Swap insurance contract. So Bank B would be left exposed to a loss without hope of payout on the insured loss, while Bank A is dead. Both lose. One holds a huge bond loss, the other a huge insurance cost. The financial press and bank leaders promote the story that the two sides cancel and offset each other. It is like seeing two buildings side by side, one burned to the ground, the other smashed by a wrecking ball. We are told that the smashed building will prop up the burned building. Both are ruined in the real world.
A rejoinder editorial comment. Notice the key word is auction to resolve the Greek bailout and its complex intertwined after-effects. Sinclair tipped us off with the hint of the auction being the key. The auction will help to put a spotlight on the true value on the Greek Govt Bonds, since the swap from the insurance contract involves the bond owners to hand over (swap) their bonds in return for full original principal value in payout. The auction will put value on a bond kill zone. However, much more to this story. The total Greek debt exposure that must be rolled over this month is $129 billion worth of bonds, ranked of various maturities like 1-year, 5-year, 10-year. The big big big problem is that the Credit Default Swaps are unregulated, corrupted, written in obscure language, and overseen by friends of the banks who suffer exposure. The problem simply stated is that the underwriter banks sold multiples more CDSwap contracts than Greek Govt Bonds in existence. It is like 30 to 50 people bought fire insurance on a house worth $250k. The average policy was for $200k, since the plot of land is not part of the protection policy. The house burns down. All the people (who do not own the house) want their $200k. The underlying asset is dwarfed by the CDSwap contract payout risk held by the underwriter banks. The CDS market involved is grotesquely over-leveraged versus the asset base. For a decade or more, it has been a vast money machine for Wall Street with no hope of paying out insurance awards. What an incredible mess, an unresolvable mess, extending from the fact that the derivative market is shady, secretive, and totally corrupt.
◄$$$ HUGE DERIVATIVE PAYOUTS ARE LIKELY TO BE COVERED IN THE GREEK DEFAULT. BUT THE SOURCE OF FUNDS WILL BE THE HYPER INFLATION PIPELINE IN THE PAPER CURRENCY PRINTING PRESS. WATCH FOR THE PROJECT TO BE CONTAINED WITHIN THE FINANCE SECTOR, AND NOT LEAK OUT INTO THE MAIN STREETS OF VARIOUS WESTERN ECONOMIES. $$$
Common misconceptions continue to spread, even by very astute community members. Jim Sinclair believes the Greek credit default event and declared resolution will result in enormous price inflation. That remains to be seen. The plan executed in the last few years has been to contain the hyper inflation within the financial sector in general, and the bond & derivative markets in particular. Offsetting bond loss is not inflationary to the economy where people work in offices and plants small and large, only to the financial sector. So far containing the inflation within the Black Hole of the finance sector has prevented the required leakage to produce systemic price inflation. An inflationary hell comes, but in the ruin of currencies from lost legitimacy even as used widely. The derivative Black Hole will see the inflation engine output pissed down a bottomless pit, not the economies, certainly not wages. Sinclair expects the full notional value of derivatives in bank restoration to result in massive inflation, from direct infusion of $trillions, leaking into the Main Streets. That remains to be seen.
The Jackass has been in steadfast disagreement
for a year or longer about the imminent extreme
price inflation episode. The principal effect
will come in rising costs, not in wages, which
serves as the main byline message. The result
is economic collapse assured by the Chinese industrial
expansion in the Globalization movement which
has stripped off legitimate income from the Western
economies, and thus limited Western wages.
Debt replaced it. The magnificent monetary inflation
covers runaway government debt, covers ruined
mortgage bonds, and covers derivatives implosion.
But that inflation does not and probably will
not reach the Main Streets of each Western nation.
Find the price inflation in
Sinclair concluded two end results, a fast rising Gold price (with a cautionary note) and a powerful price inflation outbreak. The Jackass agrees on the first result, not the second. He wrote, "This type of event would be the meat by which Alf Fields would be proven right on his $4500 projection for Gold. But strictly for traders, this does not apply to investors. For the intelligent traders, they will flatten out their positions. If my father were still living, I could hear him telling me, GO FLAT! My father Bert Seligman and his business partner Jesse Livermore would flatten out their positions because of the ambiguity that exists here. Again, this is for the traders, which is not to be confused with investors which hold positions in Gold. The bottom line is if these CDSwaps are made to pay, we are looking at an inflationary hell. This is also key, whether or not this is a default, this is a revelation of the outrageous weakness in all fiat currencies." To be honest, the Jackass is not entirely clear about the cautionary note, but it sounds like he warns of extreme volatility that makes for dangerous times. Some smart colleagues tell me that Sinclair advises not playing games with futures or leveraged positions, even to sell out of most stocks (except mining stocks). Going flat means not to have risky bets that would be harmed by the volatility or leverage. The winners will be those who avoid the casino tables, hunker down with physical gold & Silver, and wait for much higher prices. See the King World News interview (CLICK HERE).
Permit a lecture on the distinction of inflationary
hell. It will come as financial sector hyper-inflation,
not to reach
No systemic strong price inflation effect can
happen unless wages go up in a strong manner.
The great obstruction, the economic global hairball,
is
◄$$$ THE DERIVATIVE MESS IS THE CHANNEL FOR RAMPANT FASCISM AND NATIONALIZED BANKS, OR ELSE MASSIVE PRICE INFLATION FROM AN ARTIFICIALLY RECAPITALIZED BANK SYSTEM. THE CHOICES ARE LIMITED, AS PHONY ACCOUNTING PERSISTS INSTEAD OF MUTUALLY LINKED FAILURES ALONG WITH LOST CONFIDENCE IN THE SYSTEM. THE OFFSET LOSSES AND NETTING BENEFITS ARE THE NEW MYTH. $$$
The difference between the notional and real
value of derivatives has been of great interest
in recent months, as the entire shadowy corrupted
field of finance is thrust into the news. The
real value comes to bear on the financial system
only in the event of a default. Uncollateralized
financial instruments, like derivatives, are credits
or potential money. Only when a failure event
triggers them do they become real, with a significant
effect hitting the balance sheet of the payer
and lifting the income statement to the beneficiary.
At that time, they become money. The financial
world has seen the extraordinary growth of derivatives
in notional value, to almost unbelievable proportions
approaching $1 quadrillion (one billion billion
dollars). The entire scummy business has served
the Wall Street and
The hyper-inflation managed by the major central
banks has an abscess filled with a leveraged form
of money in the derivatives. It explains the policy
error blatantly evident for the past several years.
The policy error is not in the setting of interest
rates alone, but in the USFed's failure to regulate
the banking system and manage its risks. The Greenspan
Fed started the process, and was an abysmal failure.
No improvement has been forthcoming at the Bernanke
Fed. The explosion of new derivative contracts
creates a risk of either enormous fortunes restored
or hidden cancelations of unpayable debts. Watch
for more bank nationalizations in order to cover
up the corruption within derivatives themselves.
The constant in the picture is the unsustainable
leverage and the mispricing of risk. The individual
contract risk quickly becomes a cascade of risk
in a financial system where risk has gone amok.
In all too many cases, a single bank might have
a hundred or more $trillions of notional value
in derivatives on their books, against much less
than one $trillion in assets. The situation is
permitted since netting is the norm, and multiples
in contracts to the underlying assets are permitted.
The raft of derivative arrangements never offset
their own risk, much like a hedge. As the amounts
of derivative netting grows larger and more intertwining,
the secondary effects of counter-party risk become
tightly compressed and distorted. Since the
Lehman Brothers meltdown, the entire derivative
arena has gained attention, while its exposure
to risk and accounting flaws have come to the
fore for better autopsy examination. The analogy
is not frivolous, since in late 2008 the
In 2002 Warren Buffett famously referred to derivatives as financial weapons of mass destruction. That was one of the few times the Oracle of Omaha actually spoke the truth. His more recent rubbish emitted vocally pertain to big bank strength, stock market valuation, and the imprudence of investing in Gold. A grand distortion in the real economy still goes largely unmeasured since 2008, by design. The bank leaders prefer phony accounting to a loss of confidence in the system. Buffet is a principal player in the charade. The entire Too Big To Fail mantra is a grand charade. It is soft blackmail in Jesse's keen view, blackmail of mutually assured destruction borrowed from the cold war. In fact, the old Soviet Cold War has morphed into a Financial Cold War. The large insolvent banks are kept standing as zombies in order to cover up the depths of the fraud, insolvency, and mispriced risk in the financial system. The same large dead bank structures have seized enormous power over the political process. The global financial system is like a nuclear bomb. At its center are at most ten banks whose financial posture is over-leveraged and interdependent not only amongst themselves but also with their national economies. They have already failed. They are too big to fail comfortably and in a stable manner. The challenge will be to manage their failures when they become too obvious, like dead vehicles lying in the road.
Jesse summarizes very effectively the bad math of derivative offsets and mythical netting. He wrote, "Rather than execute a disastrously complicated web of transactions, swap dealers and ordinary banks use clearing houses to do exactly what we just did above, but on a gigantic scale. Obviously, this is done by an algorithm, and not by hand. Banks and swap dealers prefer to strip down the number of transactions so that they only part with their cash when absolutely necessary. There are all kinds of things that can go wrong while your money spins around the globe, and banks and swap dealers would prefer, quite reasonably, to minimize those risks. Presumably by assuming them away, as in the case of Black-Scholes Model. Except the assumptions made in netting as compared to the risk handwave in Black-Scholes seem like planet killer class ordnance [bombs] compared to conventional bunker busters. It is an Engine of Misunderstanding. As you can see from the transactions above, the total amount of outstanding debts is completely meaningless. That complex web of relationships between A, B, and C, reduced to 1 transaction worth $1. Yet, the media would have certainly reported a cataclysmic 2 + 3 + 4 + 5 + 2 + 6 = $22 in total debts. But borrowing from Sinclair's description, if a major counter-party in this daisy chain fails, the notional netting can become cataclysmic, and enormous losses can be realized, especially if there are linkages to the commercial credit and banking systems. And this is where Mark-to-Myth and bailouts come in." See the Cafe Americain article (CLICK HERE).
◄$$$ THE I.S.D.A. MAKEUP ON THE BOARD IS AN EASY PRIMITIVE GIVEAWAY, JUST AS BAD AS THE SECURITIES & EXCHANGE COMMISSION, JUST AS BAD AS THE COMMODITY FUTURES TRADING COMMISSION. THE BANKERS REGULATE THEMSELVES AND PERMIT GROSS CRIMINAL ACTIVITY. EXPECT ALL OUTCOMES TO SUSTAIN THE CURRENT SYSTEM WITH A CLEAR BIAS, OR AT LEAST ATTEMPT TO SUSTAIN IT. $$$
Consider the Intl Swaps & Derivatives Association (ISDA) and their entire structural makeup. Their titles will not be cited, since all high ranking and influential. Only their company affiliation will be listd. The Board of Directors consists of Stephen O'Connor of Morgan Stanley, Michele Faissola of Deutsche Bank, and Diane Genova of JPMorgan Chase. The Directors are Guillaume Amblard of BNP Paribas, Brian Archer of Citigroup, Martin Chavez of Goldman Sachs, Bill De Leon of PIMCO, Thibaut de Roux of HSBC Bank, Nitin Gulabani of Standard Chartered Bank, Harry Harrison of Barclays Capital, Alan Haywood of British Petroleum, Peter Healey of Union Bank of Switzerland, Jonathan Hunter of RBC Capital Markets, Jeroen Krens of RBS Global Markets, TJ Lim of Unicredit, Eric Litvack of Societe Generale, Ted MacDonald of the DE Shaw Group, Yutaka Nakajima of Nomura, Gerhard Seebacher of Bank of America Merrill Lynch, Yasuhiro Shibata of Mizuho, Eraj Shirvani of Credit Suisse, Stuart Spodek of BlackRock, and Emmanuel Vercoustre of AXA. With such a cast of insiders, do not expect anything fair and equitable to come from derivative payout decisions and rulings. All outcomes will favor the banking system in a manner to sustain that system. Even their biased efforts might not be sufficient to save the system.
◄$$$ THE DERIVATIVES CLEARING FUNCTION
IS FALLING THROUGH THE FLOOR. THE EMBATTLED C.M.E.
HAS WITHDRAWN FROM ITS EUROPEAN DERIVATIVE RESPONSIBILITIES.
THE GREEK DEFAULT IS CAUSING A TREMENDOUS CRUMBLING
ACT ON THE FOUNDATION OF THE UNREGULATED AND HIGHLY
CORRUPT NICHE INDUSTRY.
Again, not in the news, since the preferred story is that the Greek default is finally behind us. Not true! The CFTC regulatory body released this announcement stating that it has vacated the CME Clearing Europe Limited registration as a derivatives clearing organization. They actually reported that the action was taken at the request of CME, citing Section 7 of the Commodity Exchange Act. Bix Weir summarized by writing, "There is a raging wildfire behind the scenes, as the entire $50 trillion Credit Default Swap market is imploding due to the Greek default. The losses will come fast and furious once the auction is held on March 19th. The ISDA's 2009 Big-Bang Protocol will be put to the test next week."
MFGLOBAL STENCH LINGERS
◄$$$ THE MF-GLOBAL FAILURE AND FRAUD HAS
CREATED A TAX CRUNCH FOR
This story was told a couple months ago. The farmers and their business are put at risk by the criminal theft perpetrated by MFGlobal and by the tax liability that lingers without certain closure. The farmers cannot properly account for their losses. They must declare the lost and forego attempts at recovery in the process of paying taxes. Many do know know exactly the results of last year from legitimate hedging of risk, since a crime scene is permitted to persist. The delay assists the thief in JPMorgan, while harming the victims a second time. The authorities wish for the MFG scene to linger, the trail turned cold, and for victim motivation to fade away. In the process, farm enterprises are at risk from lack of funds, heavy losses, and uncertain tax filings. Those affected include not only farmers, but ranches and honest ancillary investors.
In many cases the criminal organizations that ransacked through their accounts and stole their funds have not yet distributed tax forms that detail their profits and losses, perhaps embarrassed at detailing their own robbery. Such documents could be construed as evidence in court. The collapse of MFGlobal, whose fallout hit farmers more than others, has produced a series of financial frustrations for former customers not yet fully reimbursed for hundreds of $millions that were frozen in their accounts, many still frozen. The reimbursed funds are an order of magnitude lower than the financial press reports. The process of recovering funds from the overseeing Trustee is painfully slow, while the tax deadline approaches. The delayed tax forms often add insult to injury since the lack of data means some people may have to pay taxes on profits they did not really make while being unable to write off money they may never see again. The theft has been followed by malignant neglect.
The Commodity Customer Coalition is a victim advocate group led by a dedicated Koutoulis, pushing the government for more guidance from his lead attorney post. It estimated that not even one MFGlobal customer has filed a 2011 tax return in the aftermath of confusion, due to delays in the Trustee sending out 1099 tax forms on income. The coalition requested Treasury Secy Geithner for guidance from the IRS on how former MFGlobal customers ought to account for assets still frozen in the bankruptcy. The group has not yet received a response, a sign of bereft leadership by the diminutive crime lieutenant. Former clients, so the press informs, have been returned about 72% of their missing money so far. Yet my contact in Chicago, one of the victims, has not received anything, nor any of his cohorts. They cannot declare the remainder as a loss yet because there is still the possibility it will be returned, tax experts state. Any victim who declares a loss might put himself in a weak position at a later date for recovery. See the Reuters article (CLICK HERE).
◄$$$ CHECK OUT BLISTERING COMMENTS ABOUT
THE JPMORGAN ROLE IN THE MF-GLOBAL FIASCO. CREDIT
TO C.N.B.C. FOR THE EXPOSURE AND INTERVIEW, BUT
THE FINANCIAL NETWORK IS PART OF THE SYNDICATE
PROPAGANDA AND COVERUP
Chris Whalen is a superb financial and bank analyst, at Target Capital Partners. He believes that JPMorgan and CEO Dimon are being protected by USGovt agencies and the financial media. He criticizes the official story being told as incorrect and deceptive, whereby the public is told of confusion at MFGlobal in their bank office on the days of the account thefts. In fact, client accounts are segregated and are never to be touched, hardly the basis of confusion, but rather outright raids and thefts. He points a finger of guilt at the SEC for continuing a charade whereby the MFGlobal failure is being treated as a financial firm liquidation, when in fact it is a brokerage dealer breakdown. In the latter brokerage bust, the client accounts are sacred and restored fully. But not in this case, since the big bank, namely JPMorgan, has no interested in justice or due process. The SEC and JPM preferred to deny the Trustee the empowerment to claw back funds taken by JPMorgan. He went on to describe the effects of the horrendous 2005 bankruptcy reform law, which he claims the banker lobby unduly influenced. It does not permit a Receiver to be in the picture, which would be given broad powers to pursue funds held by accused third parties. Instead, the Trustee is left helpless, without the power to claw back funds unless fraud is clearly proven. Proof cannot easily be made. The big bank JPMorgan prefers theft with impunity and USGovt regulatory agency protection.
Whalen openly told CNBC and Carl Quintania that
customers were raped publicly, and legitimate
broker clients will not return to the COMEX futures
arena from lost trust. He warns that the risk
hedge niche industry might be vanishing.
◄$$$ THE SHAM OF AN MF-GLOBAL INVESTIGATION HAS DIED DOWN IN VERY PREDICTABLE FASHION. THE FRONT WAS MADE. THE EFFORT FIZZLED AWAY, MUCH LIKE MADOFF. THE PUBLIC ATTENTION SPAN IS SHORT. THE ARM OF JUSTICE IS SLOWLY REMOVED, AS THE PUBLIC FOCUS HAS MOVED OFF CENTER TO THE ACADEMY AWARDS AND PRESIDENTIAL ELECTION. AS FOR THE MF-GLOBAL CRIME DRAMA, WE HAVE SEEN THIS MOVIE BEFORE. $$$
After a quick start, replete with an army of
marshalled forces, the MFGlobal criminal probe
has slowed to a dribble. USGovt investigators
of bankrupt MFGlobal Holdings still have not determined
after four months of intense comprehensive indefatigable
heroic probes, whether sufficient evidence warrants
pursuit of a criminal case. Federal prosecutors
in
The CME is the world's largest futures exchange.
It received subpoenas in November from the
◄$$$ THE
The watchdog job requires overtime in this day
and age of high crime sponsored by governments
and protected by its armada of agencies. The Wall
Street Journal in
GREEK DEFAULT CURTAIN RISES
◄$$$ THE GREEK DEFAULT IS SET TO TRIGGER $3 BILLION IN CREDIT DEFAULT SWAPS, THE ACTUAL TRUE VALUE IN DISPUTE. GREAT MYSTERY AND INTRIGUE IS LIKELY TO ACCOMPANY THE VAST FRAUD FACADES. THE FORMAL DECISION WAS UNANIMOUS TO DECLARE A GREEK DEFAULT THAT TRIGGERS THE CREDIT DEFAULT SWAPS. $$$
The New York-based Intl Swaps & Derivatives
Assn is set to start the grand event. The ISDA
has stated that the latest
Confusion is the constant. The viability of CDS contracts as a hedge for the $257 billion of Greek Govt debt has been regularly questioned. The recent restructuring during the bailout effectively subordinated private investors to the European Central Bank, an extremely risky maneuver that angered a great many leaders. It was a rules change to maintain elite control and solvency in pecking order. Banks, hedge funds, and institutional investors were directly affected. Investors with 95.7% of privately held Greek Govt Bonds will participate in the swap after the collective action clauses (CAC) are triggered. Such clauses force the hand of holdouts who object to the process, typically hedge funds that seek fair play. The ISDA has been feverishly defending the widely swirling belief that Credit Swap Default contracts are not effective hedges, since they have not been triggered by past bailouts and forced bond writedowns. The ISDA has been working with members to put together a preliminary list of bonds that can be used in the auction, having hinted at expanding the range of obligations that are either currently outstanding or may be outstanding once some of these exchanges occur.
CDSwaps on Western European government debt securities
can pay out on a credit event triggered by failure
to pay, restructuring writedown of debt, or a
moratorium on debt service payments. A restructuring
event can be caused by a reduction in principal
or interest, postponement or deferral of payments,
or a change in the subordinate ranking or currency
of obligations, according to ISDA rules. Curiously,
the ISDA ignored their own rules until this month.
Any of these changes must result from deterioration
in creditworthiness, applied to multiple investors
and be binding on all holders. The determinations
committee which decides whether a credit event
has occurred consists of representatives from
15 dealers and investors. On March 9th, the
ISDA rendered a formal decision in unanimous manner
on a credit default event, relating to The
◄$$$ BRING YOUR PROGRAM GUIDE TO FOLLOW THE GREEK EVENTS. $$$
Tyler Durden of Zero Hedge provides an excellent
summary of where the crisis stands in
1)
2)
As a result of the bond writedowns,
3) CDS buyers will struggle, but should win some insurance payouts, provided their counter-party is solvent. Worse, the counter-party cannot be heavily exposed to an insolvent party or a financial firm permitted to fail since not in the syndicate. In other words, risk is hidden and confusion reigns.
4) Nations with AAA-rated debt will be left in the cold, when they attempt to issue new debt. Usage widely of the CAC clauses on Greek Govt Bonds revealed how contracts can be unilaterally abrogated. Ugly gray storm clouds hover over new debt issuance. Peripheral nations in the EU will suffer most, since their bonds will continue to be subordinated to the EuroCB. If at any point the ECB chooses to exercise its divine right of seniority, the bond investors will face heavy losses at the stroke of a pen without recourse. Bond investors do not cotton to such rules.
5)
One hundred EUR billion worth of
paper wealth evaporated, a major blow to the European
banking system. It had been short of capital,
busily responding to
6)
7) Be on the watch for a massive hidden bank recapitalization, conducted simultaneously, funded by USFed Dollar Swap Facilities. The opportunity is ripe. The need is desperate. The cloak is in place. The credit line has been written.
◄$$$ SOME CONFUSION HAS COME OVER THE GREEK DEFAULT IN PRELIMINARY STAGES. A FALSE PREMISE HAS BEEN EXPOSED, WHEREBY VARIATION MARGIN WAS NOT MAINTAINED AND TRANSFERRED THROUGH THE PROCESS AS IT SHOULD HAVE BEEN. THE BASIS FOR SOME CONFUSION IS THE HOPE THAT GOVERNMENT BACKSTOPS WOULD SAVE THE DAY, AND MORE SENIOR BONDS WOULD ARRIVE ON WHITE HORSES. JUST ONE RUINED LINK IN THE DAISY CHAIN OF PHONY NETTING EXPOSES HOW BOTH SIDES ARE DEAD. THE FALLOUT FROM THE MAYHEM IS ASSUREDLY GOING TO BE SUDDEN CAPITAL FLIGHT OUT OF THE OTHER P.I.G.S. NATIONS IN A FLASH EVENT. $$$
Reports circulate that a snag has occurred, surely to be swept under the rug. The big banks apparently have not regularly been squaring off their margins on the Credit Default Swaps. They act much like an option, but the margin must be maintained much like a futures contract, marked to market. Bloomberg reported that KA Finanz, an Austrian Bad Bank supported by the Austrian Govt, faces as much as a EUR 1 billion funding need to cover its margin exposures to Greek CDSwaps. The bank noted that "activation of the CDS with an assumed loss ratio of about 80% would mean an additional provisioning charge of EUR 423.6 million." A big oops! The bandied impression has been that very little net cash would change hands on the basis of the $3.2 billion net aggregate market exposure, a lie. However, that belief was based on the now known false premise that variation margin was maintained and transferred throughout the process. Recent IMF filings attest to this shortcoming. The dealer to dealer variation margin has been conveniently less rigorous since perhaps all collateral was netted up across all exposures.
The higher order backstops by the individual governments and even the Euro Central Bank surely motivated the sloppy maintenance. One might easily conclude that the big banks have been marking all sovereign debt CDS insurance at par, and not paying off cash to other dealers. The counter-party chain is fragile. Only a single ruined counter-party entity within the chain is required to quickly convert net into gross. In other words, only one failure within the chain can ruin the corrupt practice of netting, enough to expose the entire chain as flawed and defective, both party and counter-party ruined. That is my perception, all sides are dead. The bank leaders have a herculean balancing act to undertake, as they must ensure that not a single entity fails. See the Zero Hedge article (CLICK HERE).
Marc Ostwald from Monument Securities put it
well when he said, "The rule of law has
been treated with contempt. This will lead to
litigation for the next ten years. It has become
a massive impediment for long-term investors,
and people will now be very wary about
◄$$$ ACCELERATING CAPITAL FLIGHT OUT OF ITALY AND SPAIN IS IN FULL SWING, BUT THE EURO CENTRAL BANK IS HIDING THE HOT MONEY EXIT. THE DEPOSITS ARE MOVING OUT. THE LONG-TERM FINANCING OPERATIONS ARE RAMPING UP FAST. A HIGH RISK BOND CARRY TRADE HAS EMERGED. $$$
Hot money is moving out of
As deposits fall (shown above in falling blue
line) within the large Spanish and Italian banks,
the need to reduce assets can only accelerate
problems, especially as they replace liabilities
with their own sovereign bonds in the all too
convenient carry trade. Notice the rise for
deposits in
The cardiac arrest evidence lies in the fast
rising LTRO for
◄$$$ PRIVATE GREEK DEBT REPRESENTS ANOTHER BIG SHOE TO DROP IN THE MACHINERY, YET MORE DEBT GUARANTEED BY THE GOVERNMENT. THIS PLAYER AT THE TABLE HAS BEEN IGNORED FROM FORMAL PROCEEDINGS. THE BONDS IN QUESTION ARE LINKED TO NUMEROUS ITEMS, BOTH TANGIBLE AND INTANGIBLE. $$$
Tyler Durden calls it the 800-pound Greek Gorilla
entering the room gracefully. Other Greek debt
remains outstanding and must be accounted for
as the country defaults. Detailed are disconcerting.
The Other sovereign obligations of the Greek
Govt submitted to the ISDA include Bank bonds,
Hellenic Railway bonds, Urban Transportation bonds,
all guaranteed by
USFED & FABLE OF RECOVERY
◄$$$ THE USECONOMIC RECOVERY IS A FABLE, AS THE USGOVT DEFICIT RECORDED THE LARGEST IN HISTORY FOR FEBRUARY IN THE REAL WORLD. DATA ON THE DEFICIT IS WORSE THAN COMPARABLE PERIOD IN 2011. REVENUES ARE DOWN ALSO FROM 2011. A SLOW MOTION IMPLOSION IS OCCURRING, REPORTED IN ORWELLIAN STYLE. $$$
The USGovt has recorded more miserable aggregate
data on economic performance that makes big liars
of most politicians, bank leaders, investment
barkers, and market barkers. Tax revenues are
far below year 2011 when the recovery supposedly
was still on track. What a grand lie! The USEconomic
recession is on course, powerful, unstoppable,
and will continue as long as the 0% interest rate
is a fixture. The budget deficit for February
rang in at $231.7 billion. That is around one
quarter of a $trillion in a single month, the
largest single monthly deficit in history. In
the first five months of the new fiscal year that
began in October, the USGovt (aka USS Titanic)
has racked up $580 billion in deficits. Curiously,
an even larger sum of $727 billion in new debt
was issued, 25% more than needed to fund the deficits.
Perhaps the endless war or Fannie Mae costs or
AIG black hole expenses account for the additional
sum. Be sure to note that February is traditionally
the worst month for deficits as the USDept Treasury
pays out the usual surge in tax refunds. The other
damning pointed finger is the tax revenues. The
total
What is worse is the hidden off-balance sheet pile of certain future toxic debt gathering at the foot of the USFed locker. The Fannie Mae adopted serial destroyer leads in the toxic spill. Most of the $2.665 trillion in debt will be plowed under in the toxic vat. The smallest two items in agriculture and small business could prove viable. The rest probably not.
◄$$$ SOMETHING BIZARRE AND SUSPICIOUS IS
HAPPENING IN THE LONG-TERM USTREASURY BOND MARKET.
THE USFED, THE USGOVT, AND
The 2012 is an election year, complete with the insanity and distortions and promises of free lunches, an absurd carnival atmosphere during a systemic failure. The political nonsense serves as motive for painting a thoroughly fabricated fable of a USEconomic recovery, one to aid the incumbent President to win. It has no basis. To the contrary, the statistics are uniformly worse in the valid data world that the Jackass prefers to focus on. No end in sight for food prices to come down, especially after the MFGlobal ruin for farmers, unable to risk hedge anymore. Expect agricultural supply to be harmed. No evidence of price inflation abating, with gasoline in the US jumping up to $3.82 per gallon on average for unleaded regular. The Shadow Govt Statistics folks honestly measure the CPI at 10.5% in February. The ECRI recession call contradicts any and all dumkopf pronouncements of recovery. The housing market continues down, with foreclosures to accelerate, and bankers liquidating REO homes more readily. My suspicion is that either something has gone badly wrong with the Quantitative Easing bond purchase initiative, or else the end of Operation Twist deception has come. For sure, less QE purchases of USTBonds is obvious. The USFed might be testing the bond market to see how much turmoil a rising TNX 10-year yield would cause.
The buyer strike by foreign creditors is still
on, nothing changed there. Perhaps a combination
of factors is at work. The month of February was
a whopping record setting deficit month, at $231.7
billion, possibly too large to hide from the price
dynamics of Supply & Demand. The other factor
at work could be diverted atttention to
◄$$$ THE USDOLLAR MONETARY AGGREGATE CONTINUES TO GROW AT A MONSTROUS RATE, TYPICAL OF HYPER-INFLATION EPISODES. THE Q.E. PROGRAMS HAVE BEEN A CONSTANT FIXTURE THAT NEVER HALTED, DESPITE SILLY DEBATE. A RESPITE OCCURRED IN 2009, LONG PAST. BANK CREDIT HAS RETURNED IN FORCE, MOST LIKELY TO COVER TOXIC BONDS HELD ON IMPAIRED BALANCE SHEETS. $$$
Adjusted Monetary Base measures the money supply
but adjusted for statutory (legally required)
reserve requirements enforced on banks. Two major
events increased the monetary base in recent years,
exercises in powerful growth of the monetary aggregate.
The morons talk about deflation without benefit
of knowing its definition or the many contrasting
sides. Let them flap their gums in stupidity.
This is hyper monetary inflation like never seen
since the 1930 decade. Witness
The M2 Money Supply represents the cash plus readily available liquid accounts like savings, certificates of deposit, and money market funds. After the Lehman orchestrated kill job event, the system endured a significant death of money. In response, Quantitative Easing was born, embraced, and continues without interruption. More stupid talk persists about the dawn of QE3. The more accurate description is that QE morphed into Global QE by all major central banks in order to take pressure off the USDollar, while the ruse of Operation Twist was born. Observe the Change in M2 Money Supply in circulation.
Excess Bank Reserves stored at the USFed are
an embarrassment to any economy claiming to be
either free market or in expansion. They are evidence
of a banking system that withdrew in its banking
function. The reserves sequestered at the USFed
represent a concerted effort by the central bank
to avoid systemic hyper price inflation on
Bank Credit of Commercial Banks has struggled
ever since the death of the
Time is running out on the USDollar, the fiat
currency experiment, and the central bank franchise
system. The entire world that operates with
benefit of intelligence and experience realizes
the limited remaining lifespan of the brutally
debased global reserve currency. Sir Alan
Greenspan can be located at the scene of the crime,
blowing money and any other tubes from the bankers.
With the fading USDollar will go the viable sovereignty
of the
◄$$$ THE ENORMOUS NEW USTBOND SUPPLY WAS MET BY EQUALLY LARGE EUROPEAN BOND DEMAND AIDED BY THE USFED SWAP LINES. THE EURO CENTRAL BANK ACTED AS INTERMEDIARY. THE RESULT WAS A NON-EVENT IN BOND YIELD MOVEMENT. THE USTBOND SAFE HAVEN IS A TOXIC PIT. ALSO, PRIMARY DEALERS HAVE BEEN CONSISTENTLY WRONG WITH USTREASURYS. $$$
The USTreasury market until March had been bustling, but the buyer is the sidekick USFed, the central bank, partner in crime. Primary dealer purchases of Treasuries are running at record levels. They are the dedicated intermediaries under contract. The bank purchases are also at record levels, under an implicit coercion. So are bond fund purchases, seeing no alternatives, or at least preferring the lack of risk. Furthermore, foreign central bank purchases have been running at the highest levels in 14 months. In late February, the European Central Bank flooded the European banking system with over EUR 300 billion in hot money straight off the USFed swap machine. The lion's share went to US Primary Dealers and banks who invest in USTreasurys. One might conclude that the ultra-low bond yields would have fallen further, but they did not. Instead, the 10-year yield rose above 2% on a couple of occasions. Notice how the hapless constricted primary dealers have fared poorly. They have been consistently long and wrong or short and stupid, as the harsh but astute Lee Adler of the Wall Street Examiner points out. The bond yield scale is inverted on the right. The dealers went more committed long almost exactly when bond yields rose to cause loss in principal values.
The bond markets display the results of two powerful
forces, monstrous supply but staggering monetary
largesse. An enormous dump of USTreasury supply
hit and settled as the March month arrived. The
torrent of EuroCB buying soaked up the supply
eagerly and effectively, in true monetary hyper
inflation style. The ECB arrived in the form of
Long Term Refinancing Operation (LTRO) to save
the USTBond day. The big European banks were beneficiaries
of hundreds of $billions in nearly free money
from the ECB, almost obligated to invest the tainted
money in the supposedly safe haven of USTreasury
paper. It is the sanctioned toxic paper pit. In
all, a whopping equivalent of $425 billion hit
the market as USTreasurys demand in one swoop.
Not all found its way to USTBonds, the rest tucked
away at the ECB in the form of reserves, exactly
like at the USFed. The US and
FOREIGN CENTRAL BANKS & POOR HARVEST
◄$$$ THE RIFT GROWS BETWEEN BUNDESBANK
AND THE EURO CENTRAL BANK. THE GERMAN CENTRAL
BANK HAS FOR A DECADE BEEN THE DRIVING FORCE AND
A battle royal is underway of extreme significance.
The German bankers, long a fortress of monetary
prudence and well managed wealth, is pitted against
the Goldman Sachs machine that continues in the
Euro Central Bank. The Germans are breaking the
alliance. The new head Mario Draghi might
be Italian, but he is of GSax pedigree first and
foremost. So the Bundesbank stands opposite to
the venerable criminal firm in Goldman Sachs,
as the divorce unfolds.
While Euro Central Bank head Mario Draghi is
privately content with his recent decision to
flood the markets with cheap money, Bundesbank
President Jens Weidmann warns of the dangers.
The policy rift grows wider by the month.
By the time Draghi made his appearance at the
most recent G-20 meeting in
The rift among top ranking officials at the Euro
Central Bank extends to its Governing Council
and the Bundesbank. Note the departures, viewed
as loud votes of dissent. Two leading German
ECB officials, chief economist Jurgen Stark and
Bundesbank President Axel Weber, resigned because
the monetary authority was buying up sovereign
bonds from
Last week, the conflict escalated to a new level.
Weidmann complained in a letter to ECB President
Draghi that the central bank was accepting increasingly
lower-grade collateral in exchange for its cash
injections. This poses a danger, he warned,
in plain specified terms. As the central banks
in the North of the EuroZone are owed ever growing
amounts of money by their counterparts in the
South, a EuroZone breakup would leave the Bundesbank
holding too much of its bad debt from so-called
TARGET2 loans. The fresh toxic paper currently
amounts to some EUR 500 billion (=US$660 bn),
he elaborated publicly. Such open opposition has
no precedent. No longer is the EuroCB a German-led
entity. It has gone rogue. A foundation is being
laid in my opinion for a divorce between German
bankers and Goldman Sachs, later to be consummated
in a new marriage with
Among leading ECB officials the Weidmann letter
was seen as violating a taboo, whose meaning actually
signals a Euro breakup. TARGET2 refers to the
central banks internal payment system, which has
accumulated massive imbalances in the last three
years. These inequalities are not problematic
or demanding or urgent, as long as the monetary
union remains intact. Until recent weeks,
the Bundesbank has always denied such a breakup
risk. However, all is changing, since the Weidmann
opposition sends what is seen as a disastrous
schism signal. In the perspective of monetary
observers, and ECB executives, the Bundesbank
for the first time ever is no longer ruling out
a breakup of the EuroZone. They are in fact
announcing it implicitly. At issue are the entire
spectrum of monetary practices, from loan conditions
to interest rates, but at the core are solutions
that combat a debt overload failure and ongoing
collapse with evermore debt in a grand shuffle
within a queer bond hierarchy.
A dire warning has come from an unlikely source, the Bank for Intl Settlements (BIS), which acts as an umbrella organization for the central banks. The Basel-based institution foresaw the big crisis back in 2003. It warns against the dangers of the commonly administered lax monetary policies. The Swiss fortress, a combination of syndicate stronghold and think tank, believes that such policies remove the incentive for political reforms, increase the risk of price bubbles on stock exchanges and real estate markets, and make it increasingly difficult to return to normal conditions. Obviously! BIS Deputy General Manager Herve Hannoun recently referred to the "illusion of unlimited intervention [and] surprising inflation rate" as a result of the supposed solution. See the Spiegel article (CLICK HERE).
◄$$$ A MASSIVE HIDDEN USFED BAILOUT OF EUROPEAN BANKS IS UNDERWAY, WELL ALONG, HARDLY NEW, BUT VOLUMES GROW. THE STORY IS MORE OF A HEADLINE VARIETY, UNSEEN IN THE PAST. THE DEVICE WAS USED IN 2009 AND 2011, AGAIN IN 2012. FINGERPRINTS ARE EVERYWHERE. EVEN A FED MEMBER HAS OPENLY DISCUSSED THE USAGE. VOLUMES OF THE MONETARY HYPER INFLATION DEFY DESCRIPTION. $$$
During the height of crisis in 2009 following
the Lehman Brother killjob collapse, during the
European sovereign debt crisis middle stage eruption
events in 2011, and again in the last couple months,
the USFed Dollar Swap Facility has been used in
historically unprecedented volume. On Christmas
Day less than three months ago, the USFed handed
over $600 billion to
The USFed is using what is termed a temporary
USDollar liquidity swap arrangement with the European
Central Bank. Permit an explanation of their detailed
inner workings. There are similar arrangements
with the central banks of
The two central banks use the shell game of tainted money in a roundabout procedure, often described as a fig leaf to cover the inflationary genitalia. The USFed is embarrassed by its steady largesse with foreign banks. The funny part of the sham is that in strict accounting the currency swap with the EuroCB is not technically a loan. The USFed is reluctant to load its toxic balance sheet further with more debt. So it is not called debt, but a swap. The central banks are trading under the table their counterfeit paper posing as money, like cheaters at a private poker table. Somehow Economics textbooks do not cover the current practice in their prestigious Money & Banking courses, which the Jackass wisely dropped in college. The course seemed like a spaghetti cookbook of recipes with all ingredients being junk paper. A much more useful Statistics class was picked up.
◄$$$
◄$$$
The Brazilian Govt has declared a new front on
the Competing Currency War, with opposition directed
at the
◄$$$
The Indian central bank cut its reserve ratio
as a broad cash squeeze threatens their economy.
In an unexpectedly move, the central bank slashed
the amount of deposits lenders need to set aside
as reserves. The plan has been to ease a cash
squeeze in the banking system that threatens to
deepen an economic slowdown. The Reserve Bank
of
GLOBAL ECONOMY IN RECESSION
◄$$$ THE BITTER FRUIT OF THE GLOBAL QUANTITATIVE EASING (Q.E.) AND THE ZERO INTEREST RATE POLICY (Z.I.R.P.) IS PERVASIVE SYSTEMIC ECONOMIC DETERIORATION FROM BOTH MISPRICED ASSETS AND CAPITAL DESTRUCTION FROM RISING COSTS. THE EFFECT IS SEEN IN ALL MAJOR ECONOMIES. $$$
The Competing Currency War forces major central
banks to reduce interest rates to the low level
maintained by the US Federal Reserve. Not following
suit puts the export trade at risk, since a higher
currency exchange rate results, lifting prices
of export products. The mispriced money leads
to a total mispricing of assets, as well as rising
cost structure. The hyper monetary inflation from
the Global QE lifts the entire cost structure,
while Chinese industry puts a lid limit on wages
from Asian competition. The capital destruction
has gone global. Evidence is piling up. What is
promoted as stimulus is actually organized destruction,
as equipment and machinery is taken offline from
lost profit margins. The economist and banker
blind spot is complete and total. Witness the
deterioration of the entire global economy. The
moronic policy begins in the
◄$$$ THE JAPANESE TRADE DEFICIT IS GROWING,
A PHENOMENON NOT SEEN IN FOUR DECADES. SUCH IS
THE BITTER FRUIT OF 20 YEARS WITH FIXED ZERO PERCENT
RATES, COMBINED WITH THE USFED JOINING AT A PERMANENT
ZERO PERCENT RATE ALONG WITH EUROPE AND
Recall the Jackass forecast made last April and
May 2011, that the Japanese Economy would suffer
from a rising Yen currency, then post some big
trade deficits. Few paid attention, but both happened.
The Yen has recently surged downward after yet
another gigantic QE, the 527th in twenty years
by the Bank of Japan. The more important data
point is the newly posted January trade deficit
of JPY1.382 trillion (=US$17.0 bn), a new historical
record. The deficit is up 245.9% compared
to the period one year ago. The matching Current
Account deficit totaled JPY 437.3 billion in the
month, much larger than economist forecasts. The
C/A deficit accounts for financial flows in asset
purchase. The forecast of a trade deficit occurred
on schedule.
Some details. By region, exports to Asian countries
declined 13.7% in January 2012 versus January
2011. Exports to
◄$$$ A GERMAN INDUSTRIAL SLOWDOWN HAS ARRIVED.
IT FORETELLS OF A POWERFUL ECONOMIC RECESSION
IN THE EUROZONE. AS
◄$$$
◄$$$
Australia recorded a trade deficit in January,
its first in 11 months, as weaker shipments of
iron ore and coal led to the biggest drop in exports
in almost three years. In all exports fell by
8%, a significant amount. Imports outpaced exports
by A$673 million (=US$715 mn), compared to a revised
A$1.33 billion surplus in December, according
to the Bureau of Statistics. The trade deficit
was the biggest shortfall since March 2010. The
data add to pressure on Reserve Bank of
Gross Domestic Product in the final quarter 4Q2011
grew 0.4% versus the previous quarter, a big surprise
disappointment to hapless economists. They overlook
the impact of chronic 0% rate and its harm to
capital. Business profits unexpectedly dropped
in the three months through December by the most
in 2-1/2 years, as earnings weakened at mining
and financial companies. Gross operating profits
for the two key sectors fell 6.5% in the fourth
quarter to A$66.3 billion from the previous three
months. A new report showed Australian employers
cut payrolls by 15,400 jobs in February as the
unemployment rate rose to 5.2%, for the first
time since August. Reserve Bank of
◄$$$ A CHINESE TRADE DEFICIT HAS HIT THE BOOKS. DECLINES IN THE EXPORT ECONOMY ARE BROAD AND UNIFORM, HITTING EVERY SINGLE MAJOR NATION INVOLVED IN ITS EXPORT TRADE. $$$
The world has experienced a major stall in exports.
Topping off the export economy malaise is
◄$$$ GREEK MANUFACTURING PLUMMETED IN FEBRUARY. THE NATION NEEDS BADLY A LOWER CURRENCY. THE GREEK AUSTERITY PLAN IS WORKING EXACTLY AS THE JACKASS EXPECTED, CAUSING AN IMPLOSION. BLAME WILL BE PLACED ON EXPLOITS OF FOREIGN BANKERS, CAPITAL FLIGHT, EVEN STREET RIOTS. THE RAPID DEGRADATION WILL FEED UPON ITSELF. $$$
Greek manufacturing plummeted at its fastest
rate in at least thirteen years in February, as
production and new orders declined at record rates.
The industrial sector went deeper into recession,
thus forcing companies to cut jobs even more rapidly.
Witness the fruits of austerity budget plans imposed
by the foreign creditors, hellbent on destroying
the rest of the nation of antiquity. The official
Greek unemployment rate hit 20.9% in November,
actually on par with the
The Markit Manufacturing Purchasing Managers
Index for
The vicious cycle will continue, complete with
riots and eventually elements of systemic shutdown
and freeze. The plan is not designed to improve,
but rather to implode, thus enabling foreign credit
seizure of prized assets, and removal of the Greek
central bank gold inventory. Foreign creditors
prefer an implosion on Greek soil rather than
vast bank losses on their own soil. Think gutting!
Installation of syndicate puppets at the prime
minister posts is part of the plan for a united
fascist
Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch.