Wednesday, March 31, 2010

Precious Metal Prices Are Being Rigged Downwards with Full Knowledge of Regulators, Banks and Governments.

(US Government: I know nothing!)

Jesse, a top financial blogger with great academic knowledge and hands-on experience, does not understand why rigging the precious metals market is a matter of "national security issue".

He should know, as it is all part of the US "strong dollar policy". Rig everything to the US$ advantage, make it a sport and pretend you know nothing. The media plays along because they have been made dependent through advertising revenues long ago. As a result a complete country goes into overdrive until greed, like a tumor, gets control of everything, including Congress, regulatory institutions and government ministers. So here you have the "national security issue".

Exposing the rigging of precious metal prices by governments, banks, regulators means the US$ and therefore the USA has been built on quick sand.

So now what?

Of course thousands of people will be nervous, their livelihood depends on the system. System gone, income gone.

But it is too late now. This will be the story on the century. Educate yourself; protect yourself.

King World Interview with Andrew Maguire 'the Silver Market Whistleblower'


"The Biggest Fraud in the World"

I do not know what to think about this, except to just offer it up to you for your own information.

I am disappointed, however, that only the blogs, and almost no one in the mainstream media, have bothered to cover this story and to speak to the principals, and to either debunk them, support them, or even consider what they have to say.

This really is like the Harry Markopolos story, trying to get a hearing on the Madoff ponzi scheme, and being repeatedly ignored, intimidated, and discouraged in every way possible by the establishment, and even fearing for his life.

Even if this is a mistake, a hoax, some conspiracy, it deserves a proper hearing and an airing in the public. Ignoring it raises even more questions, and serious concerns about the integrity of the US markets. If instead of a proper airing there are only the smears, and disinformation, and the usual sly ad hominem attacks, or even worse, I will begin to believe that it is true.

King World News Interview with Andrew Maguire and Adrian Douglas

I cannot believe that testimony is being completely ignored. I do not understand why this is a 'national security' issue. It seems just too bizarre to me.

Do people inside the trade know something that we don't know? Are these fellows frauds or just mistaken? Is this a hoax? Part of some conspiracy?

Or is this something coming right at us, that will end up hurting the public once again, as the rampant fraud in the financial markets has done so thoroughly.

Is there is something going on then it is time to bring it out into the open. If it is national security concern, or more properly the national interest, because it involves the US banking industry, how long do they think they can keep this sort of thing quiet?

If this is something else, why is it not aired, investigated, and nipped in the bud?

I am trying to keep an open mind on this, but it is not being made any easier by what looks like a curtain of silence while the stories and counter-moves are prepared.

I was disappointed that in the interview they never seemed to discuss the hit and run car incident.

I don't want to speculate or get paranoid on this but its not easy. We deserve to know the truth.

Note at night: I have now listened to this tape five times, carefully. It is a bombshell. This has to be dealt with, one way or the other. Bring it out into the light of day, and let the facts be known. This is either the equivalent of the fictionalized testimony on the order of the Salem Witch trials, or one of the most damning accusations of malfeasance in office against quasi-governmental agencies, and probably US officials, since Teapot Dome.

Giving the mainstream media the benefit of the doubt, they are afraid to touch it because it is radioactive. They will wait on the sidelines until something happens. And the strategy seems to be to stonewall, and hope it goes away. The American public is nortoriously fickle and if not reminded of it will move on to the next shiny thing, the next controversy of any type.

But the coverup is always the first mistake of a government in approaching a breaking scandal. But they never seem to learn. You deal with it up front and early. It was not the actual burglary at the Watergate that brought down the government, and took American into its 'long national agony.' It was, and always is, the coverup.

Saturday, March 27, 2010

Dodd's bill strips out a complete Fed audit and allows the Fed to decline to disclose specific information

2nd Serious Attack on "Audit The Fed Bill - HR 1207"

Not difficult to understand: the Congress, Fed and power players in Washington DC know very well that the Fed is a criminal organisation, running a fraudulent Ponzi scheme, supporting the happy few (which is NOT you!) for future enrichment of themselves.

Openness and transparency of financial markets in the USA would result in a civil war.

Ron Paul Sees Dollar Disappearing

Daily Bell

On Monday, Senator Chris Dodd rammed his "financial reform" legislation through his Senate Banking Committee on a strictly party-line vote. It's no surprise that Chris Dodd's answer to the economic crisis is the same as his answer to seemingly everything else: give the government more power ... Dodd's bill, which should be called the "Fed Empowerment Act," will add more layers of bureaucracy to government. One of its provisions includes creating a new Consumer Financial Protection Bureau to be housed at the Fed and funded by it. Apparently, the Connecticut senator expects us to believe that an agency inside the Fed and financed by it will be "independent." The legislation also includes a new Financial Stability Oversight Council to "monitor" companies that supposedly could become "too big to fail." The Council will have the ability to require nonbank financial companies to be under the Federal Reserve's supervision if the government deems they pose a "risk" to financial stability. Certain large companies will be expected to submit plans to the government "for their rapid and orderly shutdown" if the company goes under ... Who knows how many businesses could be targeted and broken up, under the guise of "reform," solely for standing up to the federal government! In yet another expected move, Dodd's bill strips out a complete Fed audit and allows the Fed to decline to disclose specific information.– Ron Paul (left), Campaign for Liberty

Dominant Social Theme: More regulation is necessary ...

Free Market Analysis: We were lucky enough recently to snag an exclusive, short interview (below) with libertarian congressman Ron Paul (R-Tex). And when we received the above missive via email from his Liberty organization, we found to some extent it paralleled the interview. In both this exclusive interview, and the call to action above, Ron Paul bemoans the power of the Federal Reserve and Congress' lack of ability to create meaningful oversight over what can in many ways be considered a rogue monetary entity. Hopefully, the Fed does not end up with even more power after its latest series of economic disasters. See for yourself:

Daily Bell: Will the Fed be audited in your lifetime?

Ron Paul: To the extent that I want to see it audited, probably not. There may be some half-hearted attempts at auditing the now-ended liquidity programs, but the substantive things like open market operations, the discount window, and deals with foreign central banks will remain in the shadows. We've had great success with the language from HR 1207, managing to get the language through the House as part of HR 4173, but I fully expect the audit language to be watered down when the House and Senate bills go to conference.

Daily Bell: What's in store for the dollar and fiat currency in general?

Ron Paul: Well, in the long run the value of all fiat currencies falls to zero. So, it's just a matter of time before the fiat dollar disappears. The dollar has lost 96% of its value over the past century, and the Federal Reserve and federal government have been doing their best in the past two years to accelerate that.

Daily Bell: Where do you see gold and silver going from here?

Ron Paul: Long-term I think they will be much higher than they are right now. We live in a world of government-monopoly fiat currencies and they all inflate and destroy their value in unison. It wouldn't surprise me at all to see gold much higher in the next couple of years.

Daily Bell: Can the fiat dollar recover in your opinion?

Ron Paul: That's hard to predict, but I don't think it's likely. The dollar has lost 96% of its value since 1913, and there's just no way we can get back to that level under a fiat system. In order to recover, the same Federal Reserve that caused that 96% drop would have to suddenly get wise, stop the inflation and debt monetization, and get serious about sound money. That just won't happen.

Daily Bell: Will we have a China-centric or Asia-centric world in the 21st century?

Ron Paul: This is a difficult forecast, but it's certainly possible. When you have Russian leaders chiding American leaders for embracing socialism and Chinese students laughing at the Treasury Secretary's assertion that US assets remain a safe investment, people begin to wonder when the world flipped upside down. For over a century, whether rightly or wrongly, the US has been seen as the epitome of free-market capitalism, where anyone could pull themselves up by their bootstraps and make it big. Over the past several decades that ability for entrepreneurial success has been suffocated by excessive regulation, taxation, and government intervention. Forcing American businesses and workers to get government permission for everything they want to do is not the recipe for economic success.

Conclusion: Ron Paul's prediction about the end of the dollar is noteworthy in that he has been correct literally for decades about its accelerating worthlessness. And here's another point to note: Currencies tend to trade in a band with ratios between currencies. This means that other currencies have been reduced in value proportionately to the dollar - an insight into the overall worthlessness of paper money, especially as compared to gold and silver. The Federal Reserve - rather than being the guarantor of the dollar's soundness - has acted in a way that continually dissipates the dollar's value. This reality, as much as anything else the Fed has done, should ensure a continued national debate over its suitability as the dollar's keeper.

Friday, March 26, 2010

Wine Cheaper Than Water And Coke.

WINE is now cheaper than water and Coke, courtesy of a grape glut, a surging dollar and changing tastes.

Woolworths' large-format liquor chain Dan Murphy's is selling 82,000 750ml cleanskins at $1.99 apiece.

By comparison Woolies charges $2.25 for Pump 750ml water bottles and $3.07 for 600ml of Coca-Cola - equal to $3.84 for 750ml.

"In my 15 years in the wine industry I can't remember a time when drinkers enjoyed better value for money," Dan Murphy's merchandise head Steve Donohue said.

So how do you sell wine for $1.99?

By buying it for as little as 45c/litre.

That's the rumour in the Riverina district, where Dan Murphy's is known to have bought the product.

Australia's wine industry has been facing a grape glut since 2007. And it is getting worse, with a new winery opening every two days.

In previous years much of the oversupply has been exported.

But the rising Australian dollar has made this harder - wine from Chile, Argentina and South Africa has become more attractive to both UK supermarkets and their customers.

The volume of wine exported fell 11 per cent last year, the first fall since 1995, meaning more has to be sold locally, depressing the price.

An extra 1.8 million litres of bottled white wine was sold in Australia in the three months to the end of September from a year earlier, Bureau of Statistics data show. For red wine the figure was 250,000 litres.

In the Riverina, the new pressure is the need to empty storage tanks before the new crop next month.

Producers' pain is drinkers' gain.

"You are paying less and getting as good quality," Mr Donohue said.

The $1.99 cleanskins are chardonnays and cabernet merlots, which lost market share to New Zealand cabernet sauvignon and Australian shiraz respectively.

Saturday, March 20, 2010

The South African Financial Media: Too Old, Tired or Scared.

Herewith an example of the thinking of main stream financial media in South Africa on how they perceive the financial crisis:
"a little accident, but oops, just invest in the trusted financial products
we recommend (and from which we get commissions) and everything will be all right. You see, the financial crisis is THERE, and you are HERE, so not to worry".

Not a word and no opinion at all on the risk pension funds are running as they invested HEAVILY in (commercial) real estate and complicated financial products which nobody understands.

The problem with the South African financial media is that they are co-owned or at least heavily dependent on advertising streams from banks and other financial institutions.

Not a word about the world wide housing - and the upcoming Commercial Real Estate bubble, silence on the fact that the financial world is still busy scamming the last pennies out of the pocket of the middle class through paper promises from which they bloody well know they will only work in good times and not in good times.
"You see, the article you will be reading just now are the words of "boffins", and you know how stupid boffins can be, that's why they are called boffins."
The writer knows, but cannot utter the words that the ultimate product in protecting yourself is physical gold.

After all, gold has been used as protection by smart people against financial meltdowns for hundreds of years. It should not be different now. Our financial system is based on quicksand, boffins know and a few hundred critical economists and bloggers know.

But the media cheerleaders of the Financial Criminals, the people who ought to know and should critically follow and report and inform on the financial meltdown, are too old, tired or scared to be honest.

The outcome though, should be the same: they are going to punish the savers and save the spenders.

Unless you have physical gold. In your pocket.

With the meltdown, the bankers, politicians and financial media call girls will be running for the hills. But I wonder if they will be make it to the hills this time.
"But hey, until such time, not to worry: the financial crisis is THERE and you are HERE."

Boffins advise you to plan ahead for next crunch

Things went horribly wrong to cause the credit crisis, delegates at this week's actuarial congress reminded us, and they'll go wrong again. All you can do is be prepared.

If you want to survive the next financial crisis, start preparing now. Another crisis and yet another will come. The only problem is no one can predict when it will happen, what will cause it and how extensive it will be.

This was the message from a meeting of 1 500 of the brainiest people in the world from 100 countries, who were in Cape Town this week for the International Congress of Actuaries.

The global financial crisis and what can be done to prevent or reduce the destructive force of future financial crises was a major focus of the congress.

One thing that was clear from the presentations is that crises such as the "perfect storm" of 2008 are caused by small groups of people working in major institutions.

But there is virtually nothing the larger population as individual victims can do to prevent a repeat of the biggest credit crunch the world has ever witnessed, which resulted in worldwide recessions and the loss of millions of jobs.

All you can do is be proactive in safeguarding yourself against the consequences.

Garth Griffin, the immediate past president of the Actuarial Society of South Africa and a participant in one of the debates at the conference, says that you must build up financial buffers.

They include things such as keeping debt to a minimum, building up your savings, having emergency funds, being careful about the institutions to which you entrust your savings, and not chasing unrealistic investment returns through high-risk investments.

Griffin warns that you need to start today. The longer you postpone getting your personal finances in order, the greater the risk at which you will place yourself.

The biggest risk is losing your job and having no resources to keep you going. As millions of people around the world have found, they lost their jobs and then their assets, including their homes, when they could not keep up debt repayments.

While South African financial institutions escaped the worst of the financial meltdown, ordinary citizens were not so lucky, with almost one million people losing their jobs. As a consequence, many South Africans have lost assets and are still seeing their assets, including their homes, being repossessed.

In the debate, Griffin warned that financial institutions should stay away from investment structures where they do not fully understand the risk.

Banking, he says, is boring and should remain boring. The actuarial profession must also get back to basics and build a capacity to react to future crises.

"The reality is we are custodians of other people's money. We must meet reasonable expectations of investors," Griffin says.

Faulty risk models
The conference opened with Finance Minister Pravin Gordhan saying millions are out of work, the poor are suffering more, the achievement of the Millennium Development Goals (to end extreme poverty by 2015) has been placed in doubt and recent economic gains have been lost.

"Economic models have been fundamentally destabilised, risk management is in crisis, and the world is searching for new frameworks and conceptual models for a more equitable and sustainable economic model," Gordhan says.

One of the world's most eminent mathematicians, Paul Embrechts, professor of mathematics at the renowned Swiss Federal Institute of Technology, says one of the causes of the meltdown was the faulty risk models of financial institutions.

He says, with the crisis still far from over, the music is starting to play and people, driven by greed, are starting to dance again.

Embrechts and other speakers expressed particular concern about a financial instrument called a credit default swap (CDS).

Simply put, these instruments allow the trading of debt often between un- or under-regulated parties without an actual security changing hands.

Embrechts says the CDS market has grown from zero in 1995 to a massive $50 trillion. This is three times the United States economy and bigger than all the US credit markets put together. The world gross domestic product is $66 trillion.

CDSs have been "a huge source of financial engineering profits, both for Wall Street and the hedge fund community over the last few years", he says.

The growth in CDS trading has come from the banks selling off risk through securitisations.

Speakers also warned about the dangers of large, complex financial institutions that operate across financial markets and national boundaries, escaping the attention of regulators.

In doing so, these institutions take risks - often unknown or not properly assessed - because they consider themselves to be too big to be allowed to fail.

Yoshihiro Kawai, the secretary general of the International Association of Insurance Supervisors and a member of a special G20 committee appointed to properly assess and reduce the potential for another global meltdown, says that the international regulatory system must be revised.

This includes the need for co-ordinated regulation across international boundaries, as well as across financial sectors such as banking, securities and insurance, to reduce systemic risk.

Embrechts says the warning signs of another crisis are:

When people start talking about "new" paradigms. He says: "Always leave when the word 'new' appears." He says "new" usually means that the tried and trusted measures of the past are being ignored, increasing risk.

When leverage goes too high. In simple terms, leverage means borrowing to invest to multiply returns, but it can also multiply losses. Embrechts says leveraging should be strictly regulated. Part of the cause of the meltdown was the removal of the capping of leveraging by banks in the US.

When institutions become too big to be allowed to fail.

When valuations on assets become exceptionally high.

A failure to control complex, opaque and high-risk over-the-counter deals involving trillions of dollars.

The 900 000 South Africans who lost their jobs in the financial market meltdown and consequent global recession can blame David X Li's Gaussian copula function published in 2000. It was this formula for disaster that, initially, made Li the most influential actuary in history and now the villain of the piece.

Online encyclopaedia Wikipedia starts its definition of a copula: "In statistics, a copula is used as a general way of formulating a multivariate distribution in such a way that various general types of dependence can be represented ..."

Confused? Well you have just entered the world of extreme mathematics used to measure, among other things, the risk of investments, in particular the riskiness of things such as securitisations of mortgage loans.

Li and his copula came under the spotlight this week in a presentation by mathematician Paul Embrechts, at the International Congress of Actuaries.

Embrechts asked the question: "Why did no one notice the formula's Achilles heel?" He answered it saying: "We did, but nobody listened."

In fact, he and two colleagues warned about the dangers of Gaussian copulas two years before Li arrived in Canada from China with his copula. In their modelling they found that extreme events occurred a lot more often than predicted by Li and others.

And the warning was repeated in 2001 in response to the Basel II document that provides for the reduction of banking risk. What they did not predict was the scale of the disaster and how soon it would happen.

What made it worse was that no one was listening anywhere in those heady days of over-heated markets and big bank profits. Embrechts says no one listened when Harry Markopolos repeatedly warned, with plenty of analytical evidence, that convicted fraudster Bernard Madoff, with his hedge funds, was running the biggest Ponzi scam in history.

In 2001 a billionaire Texan banker walked into the Bellagio casino in Las Vegas to take on the world's top poker players, who saw people like him as "patsies" (tourist gamblers) from whom they could make money.

Andy Beal had lots of money and the pros thought they could not lose. As Beal lost he continued to raise the stakes until they reached about $200 000 a game. Then Beal started to win. By December 2001 all the top professionals had lost their liquid assets and had to sell investments and property. Then they were forced to borrow $1.5 million to make one last effort to beat Beal. Fortunately for them, they won.

If they had not won, they would have been forced to go back and start with low-stake games. Beal tried again and over a few years was the net loser of more than $30 million.

This story was related by Andrew Fleming of Lloyds Banking Group at the International Congress of Actuaries in Cape Town this week in comparing high-stakes poker with what has and is happening in the global financial community and what was behind the 2008 meltdown.

Fleming says the first mistake made by both the top poker players and the banks was that they did not diversify their risk and, worse, they got together as a group and effectively invested in one asset. And then to cap it off they borrowed from everyone else until, in the case of the banks, "the whole of the economy was invested in one asset".

Mistake two was that both the banks and gamblers thought they held AAA-rated investments. The gamblers did not realise that Beal was a genius and was determined. The mid-level professionals who lent money to the superstars also believed they were buying AAA-rated investments. In the real world, investors bought very risky stocks, compounded by rating agencies not rating them correctly.

Mistake three was that neither the gamblers nor the bankers held sufficient capital to cover the losses they never expected to suffer.

Fleming says the poker players have learned their lesson. They stopped playing with Beal on his terms, they imposed a reduction in the maximum stakes and they diversified their income to include television and internet sponsorship, and internet poker room ownership.

The banks face more stringent capital and liquidity requirements, and there is an attempt to combat the excessive bonus culture driving the excessive risk-taking at banks.

Will a credit crunch occur again? Fleming answers his question, saying "possibly, but not in poker!"

Published on the web by Personal Finance on March 14, 2010.
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