"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland. Financiers are without patriotism and without decency. Their sole object is gain." ~ Napoleon Bonaparte
"For a national currency to also be a reserve currency requires a country to experience a current account deficit, which over the long run undermines confidence in the currency. Ignoring the dilemma does not solve it." ~ Robert Triffin (economist)
"The crisis not seen by Fed observers is the true balance sheet condition of the losses on the trillions of dollar of worthless paper fraudulent paper because numbers are given but no independent mark to market audit has been or is likely performed. As QE3 to Infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of USA Inc (the US dollar) continues to expand exponentially. The end game problem is an extended recessionary business conditions going into 2015 to 2017, wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow, and the quality of the Federal Reserve balance sheet proceeds to deteriorate further." ~ Jim Sinclair
"Without further reform of Money Market Funds, our financial system will remain vulnerable to runs and instability, which are harmful for retail and institutional investors, businesses that need a reliable source of funding, the MMF industry, and the financial system as a whole. We will seek broad input from the full range of stakeholders on how best to design further reforms." ~ Timothy Geithner (who will not return in 2013, regardless)
"The 1901 [Bull market] was a speculative demonstration based on the assumption that we were living in a new era; that the old rules and principles and precedent of finance were obsolete; that things could safely be done today which had been dangerous or impossible in the past. The illusion seized on the public mind in 1901 quite as firmly as it did in 1929. It differed only in the fact that there were no college professors in 1901 who preached the popular illusion as their new political economy." ~ Alexander Dana Noyes (1930, history repeats)
"It is not just the fiscal cliff; it is the fiscal abyss." ~ David Walker (former Comptroller General of USGovt and current CEO of the Comeback America Initiative)
"We now live in a world where doctors destroy wealth, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the press destroys information, religion destroys morals, and the banks destroy the economy." ~ Chris Hedges
## INTRO MONETARY FRAGMENTS
THE UNITED STATES PRESENCE IS GRADUALLY BEING
anti-US progression is happening quite rapidly,
as the blow-back effect begins to work. The
reality is that $trillions were wasted, the
final chapter being ultimately thrown out
in response is considering a decision to replace
Exxon with Russian Lukoil
and Gazprom Neft,
both of which are already involved in the
country. A spokesman for Lukoil denies
the expansion plans, reiterating the official
line that it is satisfied with its portfolio
Iraqi stage has a military component, which
should be equally shocking for a
Mexican President Felipe Calderon has signed
into law a ban on large cash transactions.
The ban will take effect in about 90 days
and it is part of a broader effort to control
monetary flows. Under the law, a specialized
task force within the nation's top legal prosecution
office will investigate financial operations
related to resources of unknown origin. For
real estate transactions, cash payments of
more than a half million Pesos (=US$38,750)
will be forbidden. For automobiles or items
like jewelry, art, and lottery tickets, cash
payments of more than 200,000 Pesos (=US$15,500)
will be forbidden. The law carries a minimum
penalty of five years in prison. The new law
extends the laws put into enforcement in 2010.
At that time,
USDollars in flow
are a huge portion of the actual paper cash
that this effort is aimed at. The Mexican
Peso is the 12th most traded currency in the
world, but has a clear lead as the most traded
years in the making, the new law in
YET ANOTHER EXECUTIVE ORDER PERMITS THE CONFISCATION
OF PERSONAL BANK ACCOUNTS. THE CURRENT PRESIDENT
OBAMA HAS ISSUED 923 SUCH ORDERS, FOUR TIMES
AS MANY EXECUTIVE ORDERS AS THE YOUNG BUSH,
WHO ISSUED HIS FASCIST ORDERS OVER EIGHT YEARS.
THE GROUNDWORK FOR THE
Recent imperial pronouncements by Obama give the USGovt the right to kill citizens on order, to arrest citizens without charges or due process, to confiscate citizen assets without cause, and to force citizens into no wage (slave) labor camps. In early October, President Obama signed yet another executive order that specifies private bank accounts as targets for seizure. The big banks require capital to survive. They will use yours. The MFGlobal and Peregrine Financial cases where private accounts were stolen did not awaken the nation. One must wonder if the nation can be awakened to the fascist police state that is taking shape. Perhaps so, but when too late. See the New American article (CLICK HERE) and the White House press release (CLICK HERE).
◄$$$ CRONY CAPITALISM CORRUPTS FREE MARKETS. A NICE NAME GIVEN TO THEFASCIST BUSINESS MODEL THAT PERMITS AND ENCOURAGES FINANCIAL FRAUD IN THE $TRILLIONS (WITH 12 ZEROS). THE INEFFICIENCY AND CRIMINALITY WORK TO DESTROY THE NATION. $$$
Reagan Admin budget director David Stockman
is living in the fast but dangerous lane.
He regularly provides information on the broken
USGovt finances. But Stockman has taken
a new tack to criticize USFed
Chairman Bernanke for lunatic monetary policy.
He criticizes the chairman for believing that
hyper-active usage of the printing press to
create new money can be done without destructive
consequences. He calls Bernanke the most
dangerous man in the nation, saying "The
Fed is being run by the singlemost dangerous man ever to hold high office in the history
ATTACKS DIRECTED AGAINST VARIOUS GROUPS ARE
ON THE RISE, IN DEFENSE OF THE
law enforcement apparatus for the
REVOLT OF THE SPOOKS HAS BEGUN, EMANATING
FROM THE SUPPRESSED FLOW OF INFORMATION ABOUT
RISING ISLAMIC COUNTER-INSURGENCY ACTIVITY.
FOCUS IS ON
officials angered by Obama Admin have covered
up the available information held on insurgent
intelligence officials pointed to the statement
issued in late September by the Office of
the Director of National Intelligence (ODNI)
that raised additional concern about the administration's
mishandling of intelligence. The attack began
spontaneously following protests at the
◄$$$ BEWARE OF A POTENTIAL SUPER PLAN TO FORECLOSE ON AMERICAN PEOPLE, IN AN IMPOSITION OF MARXIST PRINCIPLES. THE HOUSING BUBBLE AND BUST PERMITS A FORECLOSURE THAT REMOVES PRIVATE PROPERTY RIGHTS, PUTS PROPERTY TITLE IN USGOVT HANDS, WHILE CIVIL LIBERTIES VANISH. $$$
Lindsey Williams is a former religious pastor for the big oil firms, given the privilege of hearing the Syndicate's important long-range plans from remote locations where the dons often met and shared thoughts openly. The information is permitted leaks by the arrogant. According to a story reported by Adrian Salbuchi, it appears Williams was given an opportunity to speak to a former CEO at Atlantic Richfield. The plan is to conduct the marxist confiscation of private property, using the USFed as the operator and bonds reeling off the press as the purchase weapon. The hypothesized plan makes sense. The many parts are in motion toward such an objective. Keep in mind that the following plan in steps is from Williams, taken from a conversation with an oil executive.
Here is what Lindsey Williams was told as for the blueprint plan in steps.
1) Bernanke was sent out by the banker syndicate to ramp up the bond monetization without limit (QE to Infinity) with a focus on mortgage bond purchases. The goal is to dispossess Americans of their homes, a process well along with the spate of home foreclosures. Then the USGovt tool in Fannie Mae will rent the homes back to the public. Private property is to be killed off, in keeping with the marxist principles. The source of funds to purchase the homes, either directly from bank portfolios or via mortgage bonds, is obviously thin air. Wealth is to come from illusory sources, the banker arrogance, and their printing press under full control.
2) The USFed will use the mortgage bonds to enter the derivatives market, geared at least to the fractional 10-fold, maybe more. Chairman Bernanke so forewarned in his speech explaining the details of QE3. Few however contemplate what the plan is though when hearing his Politburo words.
3) Banks will use the proceeds from mortgage bond sales to buy USTreasurys. The QE3 really is USTBond monetization, but with a handoff from banks to assure the home titles are in the proper hands. This is a paper game in movement.
USDollar from the
three steps will be placed in an accelerated
death spiral. A precise timetable for the
collapse was not revealed, if it exists. The
ex-CEO did not say. In order to prepare
5) Upon the crippling fatal final chapter of the USDollar, a new world currency is unveiled, to be backed by Gold. However, in order to succeed from a banking perspective, from a solvency foundation, the Gold price must be at least $3000 per ounce and the Silver price must be at least $75 per ounce.
Syndicate expects the
postulated plan offers details on the indirect
of USTreasurys with some added twists
to secure property titles. One must permit suspicions to be aroused
for a large picture orchestration, as in multi-lateral
participation. The Chinese leased the Mao
era gold to Wall Street. The USGovt granted
Most Favored Nation status to
view is shaped by observing the anti-USDollar
movement going on. It is the fly in the milk,
which dictates the end game in removing it
from global reserve status and in shutting
down the USDollar
itself. Rather than disrupt the American foreclosure
plan the foreigners led by
◄$$$ CANTOR FITZGERALD (THE SIGNIFICANT BOND FIRM) WAS DOWNGRADED BY MOODYS. BIG-TIME TROUBLE COMES FOR THE OFFICIAL BOND DEALERS, WHO FACE A TOUGH SQUEEZE FROM LOW YIELDS AND USFED BUYING. CANTOR PLAYED A KEY ROLE IN THE 911 ATTACKS WITH DEEP COMPLICITY TO DESTROY JPMORGAN BOND COUNTERFEIT RECORDS AND OTHER RUSSIAN BONDS DUE TO MATURE IN THE FOLLOWING DAYS. CANTOR IS A DEATH MERCHANT, NOT BOND MERCHANT. $$$
Cantor debt was cut to junk by Moodys on capital markets pressure. Their hiring expansion plan for 800 people has not halted the profit slide. The firm was downgraded from Ba2 to Ba1, the highest level of speculative grade. Moodys expects the capital markets operating environment to be challenging for all participants for the medium term, in their words. With struggles to diversify revenues and stubbornly high compensation expenses, the profit squeeze is harsh. Brad Hintz of Sanford Bernstein concluded, "It certainly makes it difficult to expand a company in the face of a significant downgrade. A non-investment grade rating for a broker is not a death sentence, but the lower rating will limit financing alternatives and reduce the willingness of counter-parties to deal with a firm." May the firm die!
Fitz sill holds investment grade rankings
of BBB from Standard & Poors and Fitch Ratings. However, S&P lowered its outlook
on Cantor to negative on January 27th, with
no updates since then. The firm's brokerage
arm plans to boost its staff from the current
1600 in the future, probably adding another
500 sales traders in the next two years with
plans to build its investment banking and
asset management units. Cantor Fitz lost 658
employees in the September 11th
Fitz was prepared for the mass murder and
data destruction, having moved its backup
The Jackass would like to see the firm fail and be plowed under, but not before exposure of their vast crimes in aiding the fascist takeover. The Cantor downgrade indicates something bubbling to the surface, deep distress for bond dealers. The intermediaries for USTreasury Bond sales are all suffering. The margins to the bond middlemen are tiny and their end buyers are gone. The ultra-low bond yields means skimpy profits for the dealers at a time when the main bond buyer is the USFed. Their purchases from QE1, QE2, Operation Twist, and QE3 severely limit the dealer profits. Witness more extreme bond structural damage from ZIRP and QE in bubble finance.
## USFED SURRENDERS TO QE3
◄$$$ THE QE3 BOND MONETIZATION PROGRAM WAS RAMPED UP RADICALLY AND ALMOST SECRETLY RIGHT AWAY. THE USFED ANNOUNCED RIGHT AWAY THE VOLUME OF BOND PURCHASES WOULD BE DOUBLED. THE USFED SOFT PEDDLED THE VOLUME OF THE PROGRAM WHEN INTRODUCED. LIKE USGOVT PROGRAMS, ONCE BEGUN THEY CAN BE VASTLY EXPANDED. THE STERILIZATION DEVICE WILL BE ABANDONED OUT OF SHEER URGENCY. LOOK FOR PURE INFLATION TO WARD OFF COLLAPSE. MY BELIEF IS THAT THE USFED IS IN PANIC MODE. THEY WILL CONTINUE NAKED SHORTING OF COMMODITIES AND GOLD, WHILE THEY SLOWLY ENGAGE IN ECONOMIC DESTRUCTION TO REDUCE FINAL DEMAND. $$$
The USFed is talking to the public with one voice, and taking more extreme action when behind closed doors. Perhaps the central bank reacted to the worst back-to-school retail sales chapter in decades. The data tells the story. On October 1st, the USFed doubled their bond purchase program, compared to what they announced at its inception, a significant even not mentioned in the financial rag press. Best to deceive on stage, and do what is urgently required when busy at the window. Any commentary about protecting the bond monetization with sterilized action is verifiable noise. Witness pure hyper monetary inflation of the worst kind. Michael Pento told King World News on October 1st, "The Fed doubled down on QE3 this morning and unofficially announced QE4. Charles Evans did not indicate that these new and additional purchases, which will start in January, would be sterilized."
The volume and missing sterilization indicates panic in bold terms. Pento believes the mainstream media does not comprehend the nature and extent of the next QE program. He expects it will have massive implications for the markets, including Gold and Silver. Pento has been highly accurate regarding his predictions of central bank moves. Pento has a good ear to the ground, noting that the propaganda behind the supposed ISM (rigged) number pushed many financial markets. Once more, the lift was due to the USFed and the monopoly money it will shoot into the markets from central bank fire hoses. It lifts all markets, but not in value, only in perceived nominal price. Money is rapidly being debased. Pento did not mince words. Pento interprets the actions as the USFed having doubled down on QE3 and unofficially announced QE4. They did this even when the echoes of QE3 are still reverberating around the room from the bond purchase plans being announced just days earlier.
Chicago Fed President Charles Evans is the right hand man to Bernanke, and the Chief Architect of QE3. The basis of the QE3 plan, as announced, is to purchase $40 billion of mortgage backed securities each month, until the unemployment rate shows a notable decline. Evans has stated his desire that the USFed should continue buying at least $45 billion more of long-term USTreasurys, even after Operation Twist ends in January. He will be a full voting member in the FOMC next year. Note the extreme importance in his most salient point. Evans did not indicate that these new additional purchases would be sterilized when they start in January. A key distinction, since the monthly $40 billion of QE3 is not to be sterilized, but the $45 billion in Operation Twist has steadily been sterilized. A footnote. By sterilized is meant that the central bank is buying long-date USTreasurys, but using cash from sold USTBills of shorter maturity. The cash from the sale is used to fund the new purchases, no new money infused. Evans avoided the sterilized topic entirely, since the new purchases will apparently use fresh money infused into the system. That is the most dangerous kind of action a central bank can take. They have run out of USTBills to sell, an inventory dry of short-term instruments with brisk liquidity.
The ugly factor is the USFed does not have many short-term Treasuries left to sell. Evans said the $45 billion a month should last at least a year. That's $540 billion worth of what he indicated would be a combination of mortgage backed securities and USTreasurys. The harried desperate central bank cannot sterilize $540 billion of new purchases, in addition to the $480 billion dollars already slated for action on the tail end of Operation Twist. The USFed balance sheet shows that they are almost empty of short-term USTBills. Their next heavy volume action will be an unsterilized, open-ended, double-down version of QE3. The pressure is on for rise in the precious metals market. The news is huge, not an official announcement, yet easily interpreted. Bernanke has not sanctioned this move in any official capacity. However, as architect behind QE3, regard Evans as fully indicating the decisions to become policy. In September, the USFed did precisely what Evans outlined earlier. He has credibility for its direction. Now he is laying out what QE4 (or QE3+) will become. See the Investors Hub article (CLICK HERE).
Keep in mind that we are being exposed to QE to Infinity, as defined by continuing without end. Watch as the total QE bond monetization volume will eventually surpass $3 trillion and work its way toward $4 trillion. The USFed is over halfway on the total potential. The criterion until a favorable economic response registers is prescription for ruin since a rising cost structure is assured, just like QE1 and QE2. The entire bond purchase initiative will harm business profitability, cause job cuts, and result in lower incomes. The monetary policy has turned global, in a queer attempt to undercut the Competing Currency War by adopting the monetary policy uniformly. The price paid will be uniformly rising cost structure imposed on global economy, from food to energy to materials. The only defense by the central banks is naked shorting of the commodity markets, and destruction of economic fabric so as to dampen final demand. They will do both, as they always have done. They are merchants of market corruption and economic destruction. See the recent effects of the QE programs on food and energy. Notice that food prices marched upward even after QE1 had come to an end.
◄$$$ THE USFED QE3 WITH $40 BILLION ON MORTGAGE BONDS IS DESIGNED TO COVER THE WORST BOND FRAUD AND MOST EGREGIOUS BOND CRIMES, IN ORDER TO ENABLE A CLEARING OF THE LOGJAM. THEY WANT TO ENGINEER A FLUSH OF FRAUD SO THAT THE HOUSING MARKET CAN REBOUND, AUGMENTED BY FOREIGN DEMAND. QUESTIONS REMAIN ON WHO OWNS HOME LOANS FOR PEOPLE STILL IN THEIR HOMES, AND CURRENT ON PAYMENTS. AT THE SAME TIME, THE PLAN IS TO CEMENT FEDERAL OWNERSHIP AND CENTRAL BANK OWNERSHIP OF HALF OF AMERICAN HOME TITLES. WITNESS A HIDDEN MARXISM MANEUVER THAT SHOULD BE EASIER TO NOTICE, EXCEPT THE NATIONAL INTELLECT IS LACKING. FITTS MAKES A POWERFUL INDICTMENT, AS A TRUE EXPERT WITNESS. $$$
Catherine Austin Fitts is the foremost expert on Fannie Mae, the mortgage fraud, and the full proper accounting of the agency, including the pilferage by past presidents Papa Bush and Bill Clinton of $1.5 trillion, stolen from its accounts with full protection. She has survived three murder attempts and a stripping of professional license. When she speaks on mortgage matters at a national level, people should pay attention. She is expert. The following are some of her thoughts. The housing market cannot recover, in part because of multi-$trillion fraud, a point the Jackass has made for over four years. Foreigners own a lot of fraudulent mortgage bonds. So do domestic pension funds. The QE3 plan focuses on mortgage bonds in order to clear the market of fraud-ridden mortgages, their toxic appendages, and related channels. She states her opinion that fraud was the original plan, hatched a decade ago by Wall Street, although she did not identify them. See the Solari article (CLICK HERE).
"The challenge for Ben Bernanke and the Fed governors since the 2008 bailouts has been how to deal with the backlog of fraud, not just fraudulent mortgages and fraudulent mortgage securities, but the derivatives piled on top and the politics of who owns them, such as sovereign nations with nuclear arsenals, and how they feel about taking massive losses on AAA paper purchased in good faith. On one hand, you could let them all default. The problem is the criminal liabilities would drive the global and national leadership into factionalism that could turn violent, not to mention what such defaults would do to liquidity in the financial system. Then there is the fact that a great deal of the fraudulent paper has been purchased by pension funds. So the mark down would hit the retirement savings of the people who have now also lost their homes or equity in their homes. The politics of this in an election year are terrifying for the Administration to contemplate.
Various court squabbles over the MERS [title registration] system for registering mortgages are also nipping at the Fed and Treasury heels. It is hard to win a presidential election in 3100 counties when multiple federal agencies are in the local courts trying to foreclose on half the county while supporting arguments that a national registration system is free to violate local property laws with impunity.
So, it looks like the Fed decision last week to buy $40 billion a month in mortgage paper is the ultimate plan to clear the market once and for all of fraudulent mortgages, mortgage backed securities, and related derivatives. This means Fannie and Freddie will be bailed out and winding down through the back door. This means the big banks may be paid in full for your mortgage. It also means your pension fund assets will not be marked to market, at the price of debasing the purchasing power of your assets and benefits.
Fed is now where mortgages go to die. Thousands
of mortgages on homes that do not exist or
on homes that have more than one first mortgage
are now going to the Fed to disappear.
Thousands of multi-family and commercial mortgages
will be bought up as well. As this happens,
trillions of dollars that have been amassed
offshore will be free to come back into the
QE3 proves beyond any shadow of a doubt that the extent of the fraud was as bad as I said it was. You can count up the bailouts. The QE1, QE2, QE3 the numbers speak for themselves. The fraud was indeed in the many trillions of dollars. It was intentional. It was a plan.
The $64,000 question for those whose house is underwater or whose mortgage is in default is whether or not you still owe on your mortgage. Certainly, you still do as a legal matter. If the bank has been paid off, arguably in some cases several times, why not you? Let's see if Fannie Mae, Freddie Mac, and the big banks are under orders to quietly pass through a portion of their largesse to troubled homeowners in amounts sufficient to unfreeze the market. If you are in a workout situation, you need to take notice." Expect very little, a trifling amount, to filter down to the people, who are not a priority.
◄$$$ KAMINSKY CALLS BERNANKE A KAMAKAZI PILOT. MONETIZATION WILL NOT END WELL, BEGINNING WITH THE EXTENT THE PRIVATE FEDERAL RESERVE BANK CARTEL WILL FUND THE USGOVT DEFICIT. MY BELIEF IS CLOSE TO 100%. $$$
Kaminsky is former
managing director of Neuberger Berman. He
offered a voice of reason on the latest insanity
by the USFed that repeats on a much larger scale the reckless hyper
monetary inflation that was conducted 70 years
ago in war-torn
Kaminsky said, "We know this will end ugly! Bernanke is a kamikaze pilot, experimenting [in monetary policy] and is destined to fail." He went on to cover the many sides of the reckless lunacy that has become engrained USFed policy, not mincing words. From the lack of credibility of any USFed exit, despite the openly stated desire back in 2009 (which the Jackass dismissed immediately as impossible), to the explosion of the monetary base, which few analysts seem overly concerned about, Kaminsky compared the United States to Japan as an obvious template for our path to continue past the Keynesian endpoint, as in ruin. See the Zero Hedge article (CLICK HERE).
view is that the final destination for the
a quick analysis of winners and losers from
the QE3 upcoming debacle, see the Zero Hedge
article (CLICK HERE).
For a summary on how the USFed
strives to achieve a better cleaner inflation
in their always destructive inflation management
theme, see the Yahoo Finance article (CLICK
Observe the travesty that is the USFed
monetary policy. Welcome to Bernankville,
the city of
◄$$$ SYSTEMIC DE-LEVERAGING IS INDEED A MYTH, AS DOUG NOLAND STATES. BUT THE SYSTEM IS FAR MORE UNSTABLE THAN HE PERCEIVES IT. BUBBLE DYNAMICS TO BE SURE, THE DERIVATIVE MACHINERY HAS MADE THE ENTIRE USTREASURY BOND COMPLEX A GIGANTIC LEVITATED MONSTER. THE DESCRIPTION OF PONZI DOES NOT GO FAR ENOUGH IN THE CRITICISM. HE CITES ABSENT INTERMEDIATION FOR THE USTBOND COMPLEX, WITHOUT ACKNOWLEDGMENT OF THE INDIRECT EXTENSIVE DERIVATIVE ROLE WITH INTEREST RATE SWAPS. HE HAS SOME BLIND SPOTS, BUT THEY ARE OF MACHINERY WELL HIDDEN. $$$
Noland of the Prudent Bear is a solid analyst.
He offers a summary description of the bubble
foundation for the
wrote, "A 100% increase in Federal
debt and 200% growth in the Federal Reserve's
balance sheet are surely not indicative of
system de-leveraging. Such extraordinary credit
developments do, however, have profound effects
throughout the markets and real economy. The
ongoing credit expansion has inflated incomes,
spending, corporate earnings, and securities
prices, in the process sustaining for now
The situation is much worse than the dire description offered by Noland. It is utterly amazing to the Jackass that not 5% of the bond analysts even remark, not even passing comments, about the enormous Interest Rate Swap structures that maintain the near 0% short-term USTBills, the sub-2% yield in 10-year USTNotes, and the sub-3% yield in 30-year USTBonds. The bond analysts are either not aware (incompetent) or paid off to exhibit blindness. Much for the Jackass and Noland are in agreement. He paints an ugly face on the situation, when it deserves a nightmarish horror facade in description. The QE bluster has lifted bank sector earnings from their USTreasury carry trade, while their toxic bonds remain on the books at lunatic high values, and their derivative book losses are ruinous even as they strain to keep bond yields low. The strain is greater with each new month of added debt financed. The rest of the economy has suffered the consequences of rising costs and shrinking profits. Noland seems off his game, with a huge blind spot on the Interest Rate Swap strain that supports the USTBond complex. It is not stable. He does not see much of anything that is behind the scenes. Smart guy, but second level insights. Maybe in his favor, he is paid never to comment on the supporting derivatives.
the immediate effect, by the way, on hourly
wages when QE is put on. The damage is to
profit margins, resulting in shorter worker
hours and outright job cuts due to rising
costs. Also, and much more importantly, notice
how the Money Velocity slows down despite
the extreme central bank activity with heavy
Quantitative Easing programs. The bond purchase
initiatives do not address any fundamental
problems, except to provide a buyer of USTBonds,
and the redemption of toxic bonds held by
◄$$$ BILL GROSS REGARDS GOLD AS THE SURVIVING ASSET DURING THE TEST OF FIRE. THE FISCAL SITUATION FOR THE USGOVT TRANSCENDS BONDS AND AFFECTS THE USDOLLAR. GROSS EXPECTS THE DEEP DEPENDENCE UPON THE USFED TO FINANCE THE DEBT TO BE A PRESCRIPTION FOR HYPER-INFLATION, FOR USDOLLAR DECLINE, AND FOR A RISE IN THE GOLD PRICE. $$$
Bill Gross of PIMCO has credibility. As preface, recall that he missed the big USTBond rally in 2010 and 2011. But he missed it because he failed to anticipate massive derivative abuse in Interest Rate Swaps to push down the long-term bond yields and thus create a false flight to safety. He overlooked the potential of a rigged corrupted USTBond market. My firm opinion is that he is forbidden to discuss this oversight. In fact, most big bond experts are forbidden. Gross wrote, "Unless we begin to close this [USGovt budget] gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow, and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed. Only Gold and real assets would thrive within the Ring of Fire. If the fiscal gap is not closed even ever so gradually over the next few years, then rating services, dollar reserve holding nations, and bond managers embarrassed into being reborn as vigilantes may together force a resolution that ends in tears. The damage would likely be beyond repair."
Gross does not expect the USGovt to step away from debt abuse. The federal deficit will continue to be outsized and dangerous, since the political apparatus is totally broken and the war is a new constant theater. The chronic abuse will be next to impossible to halt. However, expect the derivative levers to work overtime to support the USTBonds until they break in full view, from over-use, obscene volume, and reckless leverage. See the Zero Hedge article (CLICK HERE).
◄$$$ JAPANESE BANKING OFFICIALS ADMIT THAT MONETARY EASING DOES NOT WORK, WHEN THE MOTIVE IS TO PUSH DOWN THE YEN EXCHANGE RATE. THE COMPETING CURRENCY WAR DEBASES ALL CURRENCIES SIMULTANEOUSLY. THE ENTIRE SET OF MAJOR CENTRAL BANKS IS WORKING IN UNISON TO PUSH THE COST STRUCTURE HIGHER FOR THE GLOBAL ECONOMY IN A DESTRUCTIVE SEQUENCE. $$$
Japanese should be listened to by the American
monetary witch doctors.
## THREAT OF COLLAPSE NEARS
◄$$$ INTEREST RATE SWAPS ARE BADLY AFFECTED BY MOVEMENT IN THE USTBOND YIELDS. ANY MEASURABLE MOVEMENT UP OR DOWN IS DESTABILIZING. THE T.N.X. YIELD INDEX HAS NOT BEEN STABLE SINCE EARLY THIS YEAR. GREAT STRESS FROM SWINGS IS RACKING THE INTEREST RATE DERIVATIVES IN THE MACHINERY ROOM. LOSSES ARE BEING HIDDEN. $$$
The hidden Interest Rate Swaps do not receive much of any attention, even by the experts. They are responsible for keeping long-term bond yields down when foreign creditors have left the market, when chronic $1.3 trillion debts are the mainstay, and when AAA-rated sovereign debt is globally sold off. The IRSwaps suffer damage when rates move much, either up or down. Since early in 2012, the 10-year yield (TNX) has not been stable. It has thus caused great strains and losses to the derivatives that support the USTBond complex. In March the TNX was at 2.4%, then in July 1.4% (to register a correct Jackass forecast), then in August 1.85% in a rebound, then in early Sept 1.57% for another rally, then in late September 1.9% even though the USEconomy showed no strength. In the last couple weeks, it has hovered around the 1.7% to 1.8% level.
movement swings this year is playing havoc
with Interest Rate Swaps, the controlling
machinery largely funded by Morgan Stanley,
but operated by JPMorgan. Some deep damage
is occurring in the JPM basement. The losses
so far are well hidden, with grand deceptions
on quarterly earnings statements. My guess
is the losses are hidden with the USFed
help, or else tossed around from
TNX chart looks like it is preparing for a
move up. Pressure is building from a rising
channel trend evident since June after the
big corrected forecasted drop. The 50-day
moving average has shown some upward bias,
with momentum. The unresolved USGovt deficits
are providing constant pressure on the long-term
bond yield. The swings could be causing major
damage in the Interest Rate Swap basement,
where the bonds are defended by leveraged
over-used machinery. The many-sided assaults
on the big
◄$$$ CENTRAL BANKS ARE BUYING STOCKS, AS THE FINANCIAL PLATFORMS ARE COLLAPSING. THE BIG US-BANKS CANNOT EARN A HEALTHY BOND YIELD, JUST LIKE AMERICAN PENSION FUNDS. THE EXCHANGE STABILIZATION FUND IS ON HYPER-DRIVE, WITH NO DISCLOSURE IN OVER FIVE YEARS. A FULL DISCLOSURE WOULD CAUSE GREAT DISRUPTIONS AND CONTROVERSY, WITH DEBATE ON THE TOXIC UNDERPINNING TO THE UNITED STATES FINANCIAL STRUCTURE. $$$
who criticize the conspiracy nuts for their
steady claims of printed money being used
to purchase stocks should really shut up.
Reuters reports that foreign central banks
are buying more stock shares because of the
paltry returns from top-rated sovereign bonds.
The USGovt openly admits reliance upon the
Working Group for Financial Markets (aka Plunge
Protection Team) to support the
Missing in action is any formal disclosure or public statement that reports on the giant fund that manages the USTBonds and USDollar, keeping them stable and strong. The Exchange Stabilization Fund balance sheet has had no update in disclosure since March 2007, and for good reason. It would obviously show some dubious and embarrassing details for the props to the major US$-based vehicles. For guttural laughter, recall that the NYFed is their execution trader. From their last statement as of end March 2007, the Exchange Stabilization Fund total assets were $45.9 billion which included $20.8 billion in foreign currencies, $9 billion in SDRs (unit of Intl Monetary Fund major currency basket), and $16.1 billion in USGovt securities. See the New York Fed document (CLICK HERE).
$15 TRILLION DOLLARS MUST BE PUT INTO PROPER
PERSPECTIVE, IN STACKS OF $100 BILLS. THE
USDOLLAR IS FAST BECOMING A
Observe $100 million on a palette of $100 bills, the height of a man. See the Daily Cognition pictorial rendition of stacked paper money (CLICK HERE).
Observe $1 trillion, otherwise stated as $1000 billion. Its size is over four football fields of stacked $100 bills on an array of palettes, the height of a man.
Observe $15 trillion, the former USGovt debt limit. The size resembles the volume of a few city blocks, including the height from some skyscraper buildings. The unit is still the stacks of $100 bills.
a $100 trillion
## EUROPEAN BANKS LEAD TOWARD RUIN
◄$$$ DRAGHI'S NEXT STILLBORN BABY IS THE ERRANT OUTRIGHT MONEY TRANSACTIONS PROJECT, WHICH HAVE BEEN DECLARED ILLEGAL ALREADY IN SOME CIRCLES. THE DRAGHI BETTER BOND DREAM SEQUENCE IS FAST FIZZLING FROM LACK OF CREDIBILITY AND SIGNIFICANT WORTH. TO SEE HIM REVERED SHOWS THE LOWEST LEVEL OF AWARENESS OR INTELLECT. $$$
Call it the Draghi power play, but the Outright Money Transactions violate the EU charter directly. Designed as a program of conditional bond buying targeted at specific countries to restore their sovereign bond stability, and to repair a broken monetary policy transmission mechanism, the OMT has no limits, complies with the ECB price stability mandate, and contains the required flexibility to interrupt funding for certain countries for non-compliance with imposed conditions or failure to meet performance guidelines. However, the OMT is much more than stated. On its face it is illegal, in clear violation of the Treaty on the Functioning of the European Union. For the last two years, the frequency of basic violations has turned common in expedience, like for the EuroCB to enter into primary market sovereign debt purchases. See the Zero Hedge article by Blankfiend of Fibs & Waves (CLICK HERE). The following arguments attack the OMT for its deficient integrity.
OMT is a Eurobond equivalent, which target specific countries, but which shares the potential losses on bond purchases among the member central banks according to their capital key. The scheme revisits the rejected red versus blue concept, for participants versus the others. The OMT life support could quickly kill the bonds outside the corral with wrong color label.
OMT is a banking license for the European Stability Mechanism. Behind the official window, the Euro Central Bank would be free to purchase potentially unlimited bonds on the secondary market, which extends greatly the resources of the ESM without a formal banking license or leverage scheme. It also by-passes any safeguards countries would put in place to limit their bailout losses. A legal clause forbids the EuroCB from creating a credit facility. An official banking license for the ESM has been declared in violation of Article 123(1) of the TFEU by no less than the ECB itself.
OMT is a sham, since the system players would not have the resolve to halt or reverse bond purchases if a target country reneges or falls short on its commitments. Enforcement of compliance is an empty threat. Consider it an OMT methadone program as no discharging of patients for abuse would be possible or viable.
is fiscal policy by Central Bank fiat. Bear in mind that Eurobonds, ESM banking licenses, and
ESM leverage schemes have all been previously
rejected by various European political leaders,
◄$$$ THE DRAGHI BOND DREAM HAS BEGUN TO FIZZLE BEFORE IT IS FULLY HATCHED. THE BOND BUYING PLAN HAS CIRCLED THE DRAIN AS ECB/BUNDESBANK BRINGS IN THE LAWYER TEAM. $$$
first project was the Long-Term Financial
Operation that provided ample funding to redeem
impaired sovereign bonds from
a stunning development, the Outright Money
Transactions were challenged for legality.
If not a still-born baby like the LTFO just
a few months ago, perhaps the OMT is best
described as a bastard child brought to enforce
a power grab. The lawyers at the EuroCB and Bundesbank lawyers hastily
gathered to examine the legality of the new
bond purchase program. Obviously, they are
illegal. So the challenge was how best to
present them, to exert pressure on the system,
and to sidestep the law. The entire Draghi
EuroCB has conducted
an illegal operation for almost a year's time.
Make expedient the rules, not the law. Unlike
the US Federal Reserve, the EuroCB
is constrained. It cannot print money, cannot
buy bonds, cannot
legally do much of anything. The EuroCB
can process the tainted money printed by the
USFed and channeled
The German Bild newspaper reported that in-house lawyers were reviewing the features of the OMT project to determine what volumes were necessary and the extent of time in order for it to break EU treaties. The ECB is specifically banned from financing state deficits. The heretic high priests will find a way to declare that bond purchases do not finance deficits, as long as an intermediary works as middleman and as long as days pass on the calendar. Mario Draghi is insufferably arrogant, a typical Goldman Sachs elite stained rectal pore. He went public with a statement to the effect that inversion in the Spanish yield curve was urgently in need of reversal. Nothing like market interference to halt the message of recession or the low value of cash. The Bild noted the entire case could be referred to the European Court of Justice. Both the ECB and Bundesbank were preparing for such the event. Much consternation has come over leaked disinformation of false nature, in order to further the German anti-Europe agenda. The floating continental consensus is misplaced and ugly, that central banks can solve every problem with a wave of the magic money printing.
President Mario Draghi announced earlier in September that the central bank
stood ready to purchase unlimited amounts
of bonds issued by EuroZone member nations. However, the nations had to submit a formal request for
aid and fulfill strict domestic policy conditions.
As head of the Bundesbank, Jens Weidmann was the
sole dissenting voice in the ECB decision.
The plan is designed to lower the borrowing
costs of EuroZone
nations such as
THE SWISS NATIONAL BANK IS IN A BIG PICKLE.
CAPITAL FLIGHT FROM THE ENTIRE EUROZONE CONTINUES
TO HEAD TO
tireless but foolhardy defense of the Euro
currency by the Swiss National Bank is resulting
in a bloat of reserves. The SNB is holding
a growing mountain of dodgy and toxic bonds
from throughout the EuroZone.
Some suspect it is largely German Bunds. Much
of it will be written down in losses. The
Swiss Franc exchange rate stands at 107.70
versus the USDollar,
but the Euro stands at 120.92 versus the Swissy.
This all important Swiss currency represents
the lever or trigger for breaking the Euro
SPANISH GOVT DEBT WAS CUT TO BBB- IN RATING.
NEXT ON THE DOCKET IN
& Poors downgraded
the Spanish Govt debt to BBB- and gave it a negative outlook. The cut
moves Moodys and
S&P to the same level. The cut came as
a surprise, piling on the woes. Another cut
would cause major problems. If both agencies
ripples from the rating cut have come with
further downgrades by Standard & Poors
of covered bonds for banks, like for Banco Santander and Banco Bilbao
Vizcaya Argentaria (BBVA), the largest
big financial firms have gone bust. More will
follow. See the Spiegel article (CLICK HERE).
A big fat long powerful fuse has been lit
the backdrop of deterioration and liquidity
shocking 2500 demonstrations occurred in
THE FRENCH ECONOMY IS ACCELERATING IN COLLAPSE.
CAR AND TRUCK SALES ARE PLUMMETING. THE NATIONAL
MANUFACTURING INDEX FELL HARD. CONFIDENCE
IS DYING. MUCH FOCUS IS ON NEIGHBORING
French Economic indicators are flashing loud
sirens and glaring red lights. Few appear
to be paying heed. A reliable barometer of
their tangible economy crashed in September.
New car sales via registrations
collapsed by 18.3% from September last year
over the twelve months. Year
to date for the nine months, car sales were
down a whopping 13.9%, signaling an acceleration downward. The year 2012 is on track to
be the worst year for the car industry since
long before the financial crisis. Of the French
brands, market leader Peugeot Citroen declined
only 5% in sales, buffeted by the introduction
of its new sub-compact Peugeot 208. But year
to date, French brand car sales were down
a hefty 18.4%. Renault was wrecked, no other
words fit, as their sales plummeted by a stunning
33.4% for the month and 19.8% year to date.
The German brand cars also were also hit hard
in French sales. The parent Volkswagen (VW,
Audi, SEAT, Skoda)
fell 17.4%. BMW and Mercedes saw declines.
GM (Opel, Chevrolet) tumbled 20.8%, but Ford
crashed by 31.5%. Fiat was crucified, with
sales careening down by 38.4% in a wreck.
The pattern is confirmed by light utility
vehicles, an ominous sign for the private
sector and its investment environment. As
defined by under
5 tons in weight, their sales in
Manufacturing Purchasing Manager Index (PMI)
French Govt has proceeded to impose a harsh tax increase on all dividends,
incomes, and capital gains.
No wealth is safe, as it is needed to finance
the welfare state and the failure that surrounds
it. The nation combines brain-dead socialist
policy with the background bank insolvency
to create a nightmare. The misery will surely
be spread far and wide,
and evenly across the society, which is what
socialism is best at doing. The jobless rate
is at 10.6%, but youth unemployment is at
25.2% and rising fast. Over three million
people are out of work for the first time
since 1999. The confidence barometer of
small and medium businesses, which create
most new jobs, crashed in September to 84,
the lowest level ever recorded for the series,
going back to 1992. It has plummeted quickly,
once at 129 in April. The national economy
actually has massive untapped reserves of
gold, oil, and natural gas, few people realize.
The nation of
the depression began in
gold deposits lie in
ONE THIRD OF
absolute economic collapse in
◄$$$ EXITS FROM EURO MONETARY UNION COULD COST $17 TRILLION IN FULL RIPPLE EFFECT TO THE EUROPEAN ECONOMY EN MASSE OVER THE REMAINDER OF THE CURRENT DECADE. THE RIPPLE EFFECTS WOULD BE POWERFUL AND PREDICTABLE. ADD TO THE LETHAL BREW THE AVALANCHE OF CREDIT LOSSES FROM BOND DEFAULTS AND WRITEDOWNS. BOTH CREDITOR NATIONS AND PRODUCER NATIONS WOULD BE HARMED BADLY IN IMPACT. HOWEVER, THE REAL WORLD OPERATES IN A DYNAMIC MANNER. THE EXITING NATIONS WOULD REVERT TO THEIR FORMER CURRENCIES, DEVALUATE THEM, AND ENJOY THE GREAT STIMULUS, TO BE SURE AMIDST SOME CHARRED RUINS AND TRAMPLED FIELDS. $$$
is no solution except to exit the Euro currency,
a true albatross that prevents any semblance
of recovery and restart. However, the cost
is being more accurately assessed in view
of its inevitability. The German think tank
Prognos, an economic research group, was commissioned by Bertelsmann
Stiftung to conduct
a study on the impact of a string of exits
from the Euro Monetary Union. The conclusion
was stark ugly and devastating, but one-sided.
The study estimated that a Euro exit by
researchers arrived at the bleak assessment
after calculated losses of bank creditors
were included which are deeply exposed to
the nations mired in crisis. They included
in the analysis the potential impact of a
Euro collapse on economic growth in the 42
most important industrial and emerging economies,
which comprise over 90% of the world economy.
The chain reaction would reach all Southern
European nations, and numerous global players
in trade. The extent of the eventual damage
ironically grows with each month, since defense
of the Euro and propping the big bank increases
the commitments into a losing situation.
This is the classic toss of good money after
bad. Aart De Geus, Chairman of the Bertelsmann
board, warned "In the current situation
we have to make sure that the crisis in
A Greek exit from the common Euro system would lead to a loss of gross domestic product (GDP) totaling EUR 164 billion, equal to EUR 14,300 per capita by year 2020. They calculated the impact through devaluation of the new currency, unemployment, and a sharp fall in domestic demand. It would cost Germany EUR 64 billion in credit writedowns and EUR 73 billion in lost economic growth between 2013 and 2020, the study said. But that only amounts to 2.9% of German GDP. One must question as forecast analyst if they included any added boost to the Greek Economy from a currency devaluation of the Drachma once reverted. My guess is that is ignored.
impact of other countries leaving the currency
union would be more dramatic. If
Again as critical footnote, the research appears to ignore the stimulus effect from the reversion to the devaluated Greek Drachma, Spanish Peseta, Portuguese Escudo, Italian Lira, and French Franc. The principal is basic in econometric analysis, called dynamic scoring. The Western economists are mostly hired harlots. They do not wish to promote the benefit of dynamic reaction to reverted currency devaluations. Consider the Prognos research to be a worst case analysis with no positive reaction to currency devaluation, whose arrival would be obvious and basic. They would enjoy new export business growth from the lower currency rates, obvious amidst charred ruins in the Southern European nations, matched by damage in the producer nations who might purchase much cheaper Greek wine (plus tambourines), much cheaper Italian clothes (plus Lambourghinis), much cheaper Spanish farm output (plus castinets), and much cheaper French pharmaceuticals (plus arrogance).
## BIG BANKS CAUGHT IN VISE
Chris Whalen is a solid brave analyst who makes statements that reflect the reality of the banking sector crush. In a recent Bloomberg interview, he spoke on stark terms of survival pressures for the big Wall Street investment banks. Whalen believes no Wall Street firm is earning money on its bond inventory, since bond yields are so puny. Ironically, Wall Street is an important victim of the USFed monetary policy, the destructive Zero Interest Rate Policy. They must ordinarily rely upon fees from investment banking, which have dried up. Even trading profits are down, as high frequency trading schemes dominate, and private investors are not so available to fleece in controlled swings. The large banks will be forced to break up from internal stress and absent income. The driver to the process is cost, as the missing piece is income. They will reduce the wages paid to executives, fund managers, and trading desks, or else they will suffer from the usual process of dried vines. They will shut down entire business segments. Half of Wall Street profit used to be derived from the USTBond carry trade in the past, which has been severely reduced now that the 10-year yield is steadily under 2% and the 30-year yield is steady under 3%.
My choice is to point to the irony, how Citigroup suffers from direct impact of ZIRP. They dismissed Victor Pandit as CEO. A great consolidation is coming to Wall Street that must be disguised. So do the other big banks suffer, one after the other report strained on earnings. They must hide their derivative losses and wrecked mortgage assets. The JPMorgan profit was engineered with more skill, more deceit, like showing positive positions but not losing positions. No details will be offered here since only my deep instinctive reaction from their past pattern.
The bigger question is whether the new top executives will preside as caretakers until Citigroup is dissolved, with major parts taken by Goldman Sachs and JPMorgue. The biggest banks might soon start to act like undertakers. My suspicion is that Citigroup is being set up to undergo a metamorphosis that is exploited, like with a black hole created on some derivative losses, like some vanished private accounts. It might merge portions of its vast sprawling unmanageable business segments with other big banks. The firms are shifting their risk and hiding their losses in a grand shell game. Wall Street urgently needs a garbage can to fill with toxic paper and vast derivative acid. The opportunity is there to steal private accounts. It is not just Morgan Stanley that is likely to steal private accounts, but Citi and even Merrill Lynch. To wit, notice that the Morgan Stanley quarterly statement did an ugly swing to a $1 billion dollar loss from a respectable $2 billion profit a year ago (3Q2012 versus 3Q2011). Net revenue was cut almost in half, from $5.3 billion down from $9.89 billion in the third quarter last year.
MORGAN STANLEY CONTEMPLATES PAY CUTS FOR ITS
BLOATED OVERPAID STAFF. THE INVESTMENT BANKING
BUSINESS IS DRYING UP LIKE A LAKEBED IN AN
investment bank will examine a further round
of retrenchment next year. In a surprising
bout of frank honesty, CEO James Gorman admitted,
"There is way too much capacity and
compensation is way too high. As a shareholder,
I am sort of sympathetic to the shareholder
view that the industry is still overpaid.
The current Wall Street management is a little
tougher minded about [keeping compensation
strong to retain good workers] and shareholders
are certainly tougher minded." The
investment banking business has largely dried
up. The stock brokerage business is dormant,
although a few million private accounts lie
around waiting to be stolen, whose owners
are fully asleep to the aggravated risks made
known by the MFGlobal
thefts. The extreme drag is painful and obvious
from the entrenched USEconomic
recession and the European debt collapse.
Hard hit is the trading volumes in bonds and
stocks. The industry is also grappling with
new regulations passed in the
A CLIENT REPORTED STRANGE ASPECTS FROM A GREATER
SAN FRANCISCO BRANCH OFFICE FOR BANK OF
Hat Trick Letter went recently to a Bank of
America branch with a friend who wanted to
refinance his mortgage. He left with more
than a few observations. Armed guards are
now posted outside the branch, the first time
ever seen. The company providing the security
is G4S, a foreign company. The
The business side was equally alarming. Bank of America (BAC) is still offering adjustable rate mortgages (ARM) tied to LIBOR, subjecting clients to the same nasty risk as a few years ago. This begs the question whether the offering is even legal. Here is the juicy part. The bank is making money via refinance, not by dumping the mortgages to the USFed or on the Fannie Mae doorstep, but rather via upfront points. Most fixed or ARMortgages require a 1% origination point paid upfront. However, the twist is that the point is not paid in cash at closing like in ordinary times, adding to the closing cost of lawyer fee and title tax, etc. The point is added to the principal, and surely booked as profit. BAC for a $500k loan would record the loan as $505k, and book the $5000 as present income, even though it is amortized. If the home loan does not perform, then BAC must back out the recorded present profit later.
This is accounting fraud. Bank of America is recording forward amortized cash flow as income which carries with it extreme risk. The home loan underwriting it not lunatic like before. The loan to value is set at least 80% and thus not subprime lending. At other big banks, such might not be the case throughout the country. Hence, BAC is putting people back into ARMs. If the housing market prices drop or mortgage rates rise, a lot of people will land themselves in trouble again. If the homeowner loses the job with income, again the loan will enter the foreclosure track and the 1% point must be backed out. The bank will return to a sudden acid reflux event, all over again.
IN ITS FINANCIAL FILING, FANNIE MAE SHOWED
IT IS TAKING FEWER LOSSES ON R.E.O. SALES
ON ITS BOOKS. BUT THE SHORT SALES CONTINUE
TO RACK UP MULTIPLE $BILLIONS IN LOSSES. LESS
THAN HALF THEIR INVENTORY IS EVEN ON THE MARKET
Fannie Mae snapshot is evidence of continued
distress, but portrayed as a minor success.
Any financial firm that recovers only 65
cents per dollar on loans is in desperate
shape. And it on a widespread basis, the firm
will surely go bankrupt. The Govt
Sponsored Enterprise announced an improvement
from disastrous to horrendous in its recovery
of home loan balances. Fannie Mae & Freddie
et al (includes the gaggle of ruptured FHA
agencies) recovered an average 65% of the
unpaid principal balance from REO sales in
2Q2012. That is an improvement from the low
of 59% at the beginning of 2011. But even
this metric varies widely across the country.
It was able to recover an average 78% of the
unpaid principal through REO sales in
Only half of the previously foreclosed homes held under the Fannie Mae warehouse are on the market for sale or prepared for sale. The remaining properties are currently stuck in some step of the foreclosure system. Some are surely in such bad shape as not to be sellable. Fannie officials said 23% of its more than 109,000 repossessed homes are currently available for sale. Their inventory is actually down by 28% from the end of last year. Some homes are pending in sale. An offer has been accepted on another 19% of homes in FNM inventory, and 11% have an appraisal in progress. But 47% of its inventory is unable to be marketed (think nasty sabotage, disrepair, neglect).
Consider that a large slice cannot be sold due to improper titles, absent titles, duplicate titles tied to mortgage bonds, and more corruption. In the Fannie back yard they will be buried, but not without the opportunity to gather rental income later on. Fannie officials said another 13% of its properties remain occupied by the borrower, the holder of the home loan. The eviction process just had not been completed. The rental phenomenon has not expanded much, not yet. Only 8% of its inventory, fewer than 9000 homes, are being rented as part of its piloted Tenant in Place Program or the Deed for Lease Program. These programs enable the homeowners to rent their own homes, not leave, after handing over title to Fannie Mae, but probably a broken heart. See the Housing Wire article (CLICK HERE).
◄$$$ BARCLAYS HAS MADE AN ASSET GRAB. THE NEW PATTERN IS BECOMING CLEAR, TO SEIZE THROUGH ACQUISITIONS THE AVAILABLE DEPOSIT BASE IN ORDER TO STAVE OFF GROSS INSOLVENCY. THE BOLSTER TO THE EQUITY BASE IS NOT ATTRACTING ANY ATTENTION. THEIR INSOLVENCY IS AN UNNOTICE UNADDRESSED CANCER. $$$
has set the stage to acquire ING Direct with
GBP 10.8 billion (=US$17.4bn) in assets and
GBP 5.6 billion in mortgage assets. They pursue
deposits while risking more mortgage losses
in a gamble. The ING online segment is a losing
business. The added 1.5 million clients will
shore up the Barclays client base, while also
improving funding for its consumer operations.
Andrew Lim is a London-based analyst at Espirito Santo Investment Bank. He said, "The deal
is more about the acquisition of a deposit
base which reinforces the funding of the
has fortified its conglomerate segments by
acquiring assets from rivals at a discount,
since the onset of the financial crisis. It
acquired the banking arm of insurer Standard
Life out of
The ING Direct business lost GBP 89 million pounds before tax in 2011. It will be folded into the Barclays retail and business banking division. Some 750 employees will transfer from the Dutch firm as part of the deal. ING said the transaction frees up 330 million Euros in capital on their end. The lender has been selling assets as it seeks to repay the Dutch state aid received during the financial crisis. The Dutch company claims the sale will not affect its core Tier-1 capital ratio, a measure of financial strength. Barclays expects that in order to make ING Direct profitable, substantial investments must be made in transforming it into an internet bank with a full product range. Usually that means cash spent, unsure where from. Research from JPMorgan Chase indicate that a clash could come with the firm's current priorities of strengthening its capital buffers ahead of stricter regulatory demands and repaying state aid.
asset sale took place early in 2012. In February,
the Dutch financial services company sold
ALLEGATIONS OF SYSTEMIC FRAUD HAVE COME TO
ROYAL BANK OF
is being accused of swindling large scale
property borrowers in rather obvious glaring
attempts to haul in properties in not so complex
paper shuffling games. The tactics are more
successful in Central America, but not in
Another high profile case involves a hotel redevelopment project using an RBS credit line of GBP 5 million. The project was abruptly halted when suddenly RBS used the opinion of an independent property agent (plain collusion) to massively undervalue the property. RBS used the bogus assessment to designate the hotel a distressed asset, thus declaring the project insolvent. Administrators then colluded to sell the property to the RBS distressed assets division at West Register for the dubious sum of one British Pound. The biggest odor emitted came from the procedure that approved the assessment, reclassification, and move to then seize in sale.
November last year, entrepreneur developers
Innes Berntsen and
Chris Richardson initiated High Court proceedings
against the NatWest subsidiary of the Royal
two months ago, financial blogger Ian Fraser
reported that Royal Bank of
Slog has posted endlessly about the devious
activities in bank accounting by the big
◄$$$ MONEY MARKET FUNDS POSE AN IMMINENT RISK. APPARENTLY THE DRAIN CONTINUES ON BANK SECTOR EQUITY. EXPECT THE STRICTURES ON MONEY MARKET REMOVAL OF FUNDS TO TIGHTEN. DEPOSITS AND MONEY MARKET FUNDS ARE THE LAST REMAINING SLAB OF EQUITY SITTING IN THE WRECKED BANKS. THE RISK IS FOR THEM TO BE STUCK, THEN STOLEN, OR CONVENIENTLY VANISHING. QUICK REMOVAL OF M.M.FUNDS BY CUSTOMERS WOULD EXPOSE BOTH THE INSOLVENCY AND CORRUPTION OF THE BIG US-BANKS. THUS THE URGENT NEED TO STOP WITHDRAWALS. $$$
Again, the mass of over $3 trillion in customer money markets has an awkward classification, not bank equity, not invested funds, but important asset for the firm. Some level of desperation is apparent by the Secy Treasury Geithner. Before the meeting of the Financial Stability Oversight Council of regulators, Geithner told members to prepare for harsher money market fund (MMF) reforms even if the SEC remains inactive on the issue. The USDept Treasury and the SEC are at odds. He indicated the likelihood that the largest of the funds could fall under closer USFed supervision if necessary. By that he meant if the bank runs occur from rapid MMF withdrawals. Geithner issued a formal letter to the council member agencies, comprised of the Securities & Exchange Commission, the Commodity Futures Trading Commission, the US Federal Reserve, and other firms involved in financial or markets supervision. In it he asked council staff to begin drafting a formal recommendation immediately, which would be voted on in November. An inner battle is being waged, as SEC Chair Mary Schapiro is moving somewhat aggressively to publish reform proposals. The full SEC commission is not supporting her every wish, thus denying her a majority.
SEC spokesman John Nester revealed the conflict and desperation building. He said, "The Chairman [Shapiro] has long believed that addressing the susceptibility of money market funds to destabilizing runs is a critical piece of unfinished business from the financial crisis. That is why she has advocated for reforms to bolster the structure of these funds. She is very pleased that this important reform initiative is moving forward." The money market funds are situated in big investment banks and mutual funds, subject to SEC directives since not in commercial banks. They are not ordinary bank accounts or certificates of deposit. The SEC will repeat their initiatives. The Investment Company Institute is the trade group that speaks for the mutual fund industry. In late August, Schapiro was forced to back down and concede defeat, but expect it to be temporary. The ICI commented at the time, "We have strongly opposed the structural changes to money market funds under consideration at the SEC, because of the adverse consequences of these proposals for investors, issuers, and the economy."
However, Geithner will press onward since the Syndicate prefers power games not in the public interest. He believes that further reforms to the MMF industry are essential for financial stability. My view is that fast removal of MMFunds would expose the banks for insolvency and corruption. The keyword indicates the desperation to avert a bank run, since the big banks are hollow insolvent dry timber laced with fraudulent vines. He is urging the full council to take action. He wrote, "The Council has both the responsibility and the authority to take action to address risks to financial stability, [even if the SEC] fails to do so." Geithner has often reminded the financial markets generally that the USTreasury guarantee of more than $3 trillion of MMF shares, along with a series of liquidity programs by the USFed, and support from many mutual fund companies, prevented a panic marred by a raft of withdrawals during the ongoing financial crisis. He is full of feces, since narco money laundering saved the big banks during the climax of the crisis. The Financial Stability Oversight Council must decide on the measures directed at non-bank financial institution risk, and whether any large insurance funds should be designated as systemically significant. The firms are not eager to be classified as part of institutional risk, since they had little if any role in the crash of the banking system. Also, such designated firms would require expensive additional safeguards such as additional precautionary reserves and frequent reports, even on-site examinations, by regulatory authorities.
Geithner is relentless, which reveals the urgency
in desperation. He regards the MMF industry
can potentially pose a threat to
◄$$$ THE NEW F.D.I.C. RULE REVERTS TO $250K IN DEPOSITOR INSURANCE, FROM UNLIMITED CURRENTLY. THE BURDEN WILL FALL ON THE USFED AND ITS VAST BOND MONETIZATION TO FILL THE GAP, OR ELSE NEGATIVE USTBILL RATES COULD ARRIVE. THE NEW RULE WILL PUT MORE PRESSURE ON THE LAST SLAB OF MONEY MARKETS. THE US-BANKING SYSTEM IS STUCK IN A VISE ABOVE A PRESSURE COOKER. $$$
The new banking rules present a small glitch. On December 31, 2012 the unlimited FDIC insurance expires on non-interest bearing transaction accounts. It will then revert back to $250k per account. Currently there is about $1.6 trillion in deposits that fall under this category. The irrepressible Tyler Durden expects virtually the entire amount in new deposit liabilities will have to be created from the QE box, the fountain of bond creation to infinity. The challenge is to foresee how those account holders will react, and whether they will the exit the deposits, once they realize the assets are unsecured bank credit risk. For sure, great pressure will sudden be placed on the money market funds. Durden wonders aloud if a possible consequence might be negative USTBill rates as far as the eye can see. That would cause quite the commotion and controversy, as the massive bank warts would be impossible to conceal. The chart below shows that notional of deposits backed by FDIC unlimited insurance, which would be affected. See the Zero Hedge article (CLICK HERE).
## USDOLLAR DEFENSE
◄$$$ THE UNITED STATES NATION, THE USGOVT, AND THE USECONOMY ARE STUCK WITH THE USDOLLAR THROUGH THE COMPLETE IMPLOSION. ADVANTAGE AND PRIVILEGE HAVE BEEN REPLACED BY BURDEN, BALL & CHAIN. $$$
virtue of its global reserve status, the USDollar
is engrained in international contracts, foreign
accounts, medium for savings, and more across
the world. The
DEVOTION TO WAR AND CONSISTENT WAR COSTS KILLED
costly theme is not popular, nor is it even
recognized by supposed financial experts.
Too many have been co-opted, with purchased
brain stems, compromised thought, and accepted
dogma. The problem that led to the demise
of the American Empire began with the Vietnam
War. It was started by the CIA, when the Boyz assassinated Diem and then set up the false flag
most recent egregious event was the bomb incident
an economic slant, the inflation problem started
with the Vietnam War impact from USTreasury
Bond finance, in monetizing the war costs. The Jackass remembers full well the first $1 trillion
in debt after numerous annual deficits were
racked up, during my college days. The nation
was rocked by the sudden conversion from creditor
nation to debtor nation in the 1970 decade.
The trickle down from destructive enterprise
within the supply chain halts quickly, unlike
for constructive enterprise. The job growth
and economic development from war (defense)
spending is a fleeting illusion. War is often
the great infrastructure agent of change.
consequences on the economic front were profound
and irreversibly damaging. The inflation
led to the offshore outsource of US industry, starting with Intel in 1984.
Then came important
labor union victories, for cost of living
raises. Then came
the lunatic notion of clean industry directed
by the mature advanced sophisticated financial
sector. Its only true ingenuity was shown
in the ATM machine, certainly not in leveraged
exotic contracts. During this time, the environmental
movement imposed new costs to maintain clean
air. Industry left for
Wall Street frauds are in the $trillions,
but are sustained with no significant prosecution.
The wars continue to assure crude oil supply
and narcotics production and control in a
magnificent display of vertically integrated
business in global monopoly. The big
summary, the pervasive actions by the
40 years turns the tables. Let the Jackass
state that THE USDOLLAR IS THE GLOBAL RESERVE
CURRENCY, BUT IT IS THE NOOSE AROUND THE AMERICAN
NECK ON THE GLOBAL GALLOWS. In 1971, then
Treasury Secy John
Connally famously said "It is our currency and your
problem." The quote went down in
history, and spawned huge resentment. The
comment marked recognition that the
with what it sees as the USGovt malign neglect
of the USDollar,
a researcher at the Shanghai Institutes for
International Studies, said
The enduring global financial crisis, the existential threat to the Euro currency, the USGovt facing the fiscal cliff, all against the backdrop of the Chinese ascendancy and continued development of other emerging markets, is prompting policymakers in the West to question the current monetary order. Change is in the air for relations with the USDollar. The supposed analytic experts claim no obvious alternative to the USDollar exists for now, but a new trade settlement system is evolving outside the sphere of American and British influence. These experts have their eyes closed to developments.
Chinese leadership finds itself in a grappling
bind. Opportunities clearly exist in using
the Yuan currency beyond its borders. The
powerful industrial advent of
USMilitary working with the USDept
Treasury is attempting to economically strangle
the nation of
seemingly endless stream of unchallenged statements
made by politicians and financial leaders
contains many media reports awash in misleading
narratives, incomplete histories, and outright
self-defense is the way to go, a call to informational
arms. The only way to rebuff and dismantle
propaganda is to be aware of the truth on
which it claims to comment. Jeff Wright of
the Christian Stork offers eight postulates
to counter the propaganda by the fascist
and media stenographers have been claiming
American and Israeli security establishments
are against any new military front. The US
Secy State Hillary
prefers to watch
American and Israeli people are against any
new military front. In the
Iranian nuclear weapon would be assured if
the US or
SANCTIONS ARE TAKING THEIR TOLL ON
new data from
THE SWISS FIRM VITOL HAS CONTINUED TO TRADE
IRANIAN FUEL OIL, SKIRTING SANCTIONS IN
is not a household name, but it is the world's
largest oil trader. Vitol continues to
buy and sell Iranian fuel oil, undermining
elusive measures taken by Vitol occur under
the guidance of CEO Ian Taylor, a Briton.
He has close ties with the British Prime Minister,
who is a stern critic of
FINGER POINTED CONTINUES AT
seems to challenge wild accusations and charges
More bank hacking has taken place on US shores. The client account websites of Wells Fargo, PNC Bank, and US Bancorp were hit by long drawn out slowdowns in late September of the same type cyber attacks that hit JPMorgan Chase and Bank of America in the previous week. The symptom was unusual and coordinated high traffic volume designed to slow down the system. So the event was more like a mudslide than a robbery. Perhaps it was a test of system defenses. The lightest volume of delay reports came for PNC. The result was widespread denial of service. The origin of the attacks is not clear, a symptom of their sophistication. The attacks are part of a larger game that has turned into a global security arms race. A group called Izz ad-din Al qassam Brigades supposedly claimed responsibility for the attacks on Bank of America and Chase last week on PasteBin, a forum commonly used to boast or threaten. See the Fox Business article (CLICK HERE). My personal guess is that with likelihood under 5% an Islamic outfit did the deed. Naming an Arab brigade is incredibly easy. They might have blamed the Easter Bunny or the Grinch just as easily. It is an insult to one's intelligence.
far the leader in this arena is the US Intelligence
agencies, along with the security agency for
the small ally nation on the
## SAUDI TURMOIL & INSTABILITY
AN ISLAMIC REVOLUTION IN
oil world would be shaken to its core by a
The succession to the throne is fraught with problems and challenges. The geriatric successor would be both weak and soon ready to pass on. Although Crown Prince Salman is next in line to the throne, at 76 years of age he lacks experience. No doubt he would be challenged by regime opponents. He is next in line, not because of ability or experience, but because his older brothers all died. Hardly a prescription to stabilize the nation under new assaults. The remaining runt of the litter is least trained, least educated, least groomed, least prepared to lead. Saudi holds the key to the Petro-Dollar, which is the key to the USDollar. Salman would lack the energy or savvy to enact significant reforms necessary to keep the regime in power.
Some tough endemic problems challenge the world's biggest oil producer, namely high unemployment, a corrupt bureaucracy, a crippled economy, a weak education system, and a society full of frustrated youth. The Saudi royals kept the money mostly for themselves in foreign bank accounts, rather than to lift their society with education and wide opportunity. The nastiest theme in the last decade has been young royals appropriating business property under threat of imposed illegal taxes or outright threats, offering 10% of property value to buy in blatant extortion. The three primary pillars that have long supported the royal family are also weakening. 1) Significant oil revenues, which have long been used to foster public support, are being depleted by increased domestic demand. 2) The Wahhabi Islamic establishment that supported the House of Saud is increasingly fractious and is losing credibility. 3) And the royal family struggles to maintain its sturdy facade after losing two crown princes to old age in recent years.
quick update, as the Saudi Army has suddenly
done a quick reform to avert an internal revolt.
The USGovt calls it a soft revolution. Things
are moving quickly in
◄$$$ THE CHARADE OF THE SAUDI COVER-UP FOR THE BANDAR ASSASSINATION CONTINUES. PRINCE BANDAR WAS ASSASSINATED BY HEZBOLLAH. THE HOUSE OF SAUD MUST BE VERY TENSE INSIDE, WITH NOBODY SAFE. THE HOUSE SHAKES BEFORE IT FALLS. WITH IT WILL GO THE PRIZED PETRO-DOLLAR STANDARD. THE SAUDI REGIME IS CONCOCTING A NICE STORY ABOUT A SMOOTH TRANSITION FROM THE DEAD MAN. A DECEPTIVE TRANSITION APPEARS IN THE WORKS. $$$
a charade is taking place inside
Ghost of Prince Bandar is replaced in Saudi
theater. The official statement by the rattled
House of Saud is as follows, "Saudi
King Abdullah issued on October 5, 2012 a
royal decree whereby he relieved Prince Bandar
Bin Abdulaziz of
his position as Deputy Chief of General Intelligence
for Intelligence Affairs and appointed General
Yusef Bin Ali Al-Idrisi as Deputy
Chief of General Intelligence in his place.
The following 501-word report sheds light
on the subject and tells what about the position
of Chief of General Intelligence Prince Bandar
Bin Sultan Bin Abdul-Aziz." A key
error since Bandar was not deputy chief, but
rather chief. Amateur hour
official Saudi press release read, "Chief
of the Saudi General Intelligence Prince Bandar
Bin Sultan Bin Abdul-Aziz, who also acts as
Secretary General of the Saudi National Security
Council (NSC), is said to be working to reinforce
the role of his half-brother Prince Salman, who acts as his Assistant for Security and Intelligence
Affairs at the NSC." They are preparing
the stage to announce the passage of security
power to the surviving half brother. Neither
Bandar nor his half brother
are of the geriatric Saudi type. The
top leadership in the House of Saud is aging,
frail, and losing their grip. Since Prince
Bandar was assassinated in August,
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