TROY OUNCE

Don't Be Fooled, Folks: It Is ALL About Gold.

2012-01-21T06:15:00.010+02:00

Oops! Turns Out the Financial System Is A Scam After All!

Our thinking has been shaped by 40 years relentless propaganda of the financial media. Time to step back and pull back the curtains.
It is a confidence game.."trust" is the word. The less you know..the better for them.
A strong Dollar policy can't only come from the Dollar! A weak gold price is also more than welcome. So why not help gold weakness a bit by leasing, swapping or selling gold over a hundred times in the market...on paper of course....in the meantime claiming that the US Dollar is "as good as gold". Read the explanation of the thinking of the monetary underbelly below. What will follow is "hot fury" as finally the people will realise that The Emperor has no clothes...that it is all a BS story...that pensions and savings just do not exists. This is exactly the reason why big companies and financial institutions are not allowed to go bankrupt. To keep the music going....just for a little while. I bet Obama goes on his knees every night and asks The Good Lord to please let the economy grow with 10% soon as only with positive growth figures they can re-start the economy - borrow from our grand children...and cover-up a criminal financial system with the words: -you see, you can trust us, we have nothing to hide-.

Auditing The Fed's Gold

(Goldseek) I have posted a video of something I thought I would never see: all five of the Republican candidates for the U.S. Senate verbally demanding an audit of the Federal Reserve System. You can see it here.

Bernanke is facing what no Federal Reserve chairman has ever faced: public awareness of the Federal Reserve System. From late December 1913, when an almost deserted Senate voted for the Federal Reserve Act, until 2008, when the recession confirmed Ron Paul's warning in late 2007, there was almost no public awareness or even a vague understanding of the Federal Reserve System. The genie is now out of the bottle, where it had been corked since 1913. Ron Paul has uncorked it.

From the November 1910 secret meeting at Georgia's Jekyll Island until Ron Paul's 2007 candidacy for the Republican nomination for President, The Federal Reserve had received a free ride from Congress. There had never been much oversight. That's because FED regulation was an oversight. (The same word is used to convey opposite meanings.)

The Texas Leftist-populist Democrat Wright Patman had been a critic. He had been the chairman of the House Banking Committee until 1975, a year before Paul arrived in Congress. He was a Greenbacker: a believer in a zero-interest economy that achieves this Utopian goal through the use of fiat paper money. Patman was not able to generate much interest in the FED.

Patman did inflict one major wound on the FED. He and California Congressman Jerry Voorhis, another Greenbacker, in the early 1940s persuaded Congress to pass a bill, which Roosevelt signed, that forbids the Federal Reserve from keeping the interest payments from the government bonds it has counterfeited fiat money to purchase. Today, the FED must return to the Treasury all of this money beyond its operating expenses. For 2011, the FED will pay back $77 billion.

A full-scale audit of the FED, if it ever comes, must include an audit of the gold every year. The auditors must see if the gold is in the two vaults. The first vault, at Ft. Knox, is more famous. The more important vault is located at 33 Liberty Street, New York City: the privately owned Federal Reserve Bank of New York. This is the "Die Hard III" vault.

The auditors must do two things. First, they must determine whether there is the same amount of gold as is listed on the FED's books at the fake price of $42.22 per ounce. Second, the auditors must follow the paper trail of ownership. They must make sure that the gold in the vaults is still legally in the possession of the FED.

There is a possibility that the FED has transferred ownership of this gold, through swaps, to European central banks, which have in turn leased – sold – their gold to private buyers. It is not enough to determine that the physical gold is in the two vaults. It is also mandatory to determine whether the FED has indirectly sold the government's gold, which it has held in trust for the government since 1933.

[Note to auditors: pursue this phrase in the FED's statements: "deep storage gold." As to why, read this.]

BERNANKE VS. A FULL-SCALE GOVERNMENT AUDIT

Every FED chairman has resisted any attempt by the Congress to mandate an independent audit of the FED by the General Accountability Office of the U.S. government. Bernanke was adamantly opposed in 2009. He of course did not mention what I regard as the main reason for his opposition to an audit: the missing gold. For all FED chairman, gold is a four-letter word. He mentioned only monetary policy, as if Congress has no authority over monetary policy, despite that ancient "barbarous relic," the U.S. Constitution.

The Congress has recently discussed proposals to expand the audit authority of the Government Accountability Office (GAO) over the Federal Reserve. As you know, the Federal Reserve is already subject to frequent reviews by the GAO. The GAO has broad authority to audit our operations and functions.

This of course was deceptive. First, the FED is audited by a rotating group of private auditing firms, which are appointed by the Office of Inspector General. This rotation system makes long-term accounting continuity far more difficult to achieve. The FED forbids the auditing firm to inspect all of the FED's operations. According to the Federal Reserve Bank of New York,

Operations at each Federal Reserve Bank also are subject to review by the Government Accountability Office (GAO), the audit arm of the U.S. Congress. However, GAO auditors are restricted by law from reviewing monetary policy operations and transactions carried out by the Federal Reserve on behalf of foreign central banks. This restriction was imposed by Congress to assure the independence of the Federal Reserve from political influence.

"Political influence." There is another term for "political influence." That term is "the United States government."

The FED defends this principle: "Monetary policy is far too important to be audited by the government." After all, what claim to such authority does the government have, other than the fact that it created the Federal Reserve System?

Second, a full-scale audit would require Congress to abandon the limitation on its own authority which the banking industry persuaded Congress to impose on itself. This is why Bernanke opposes an audit. He added this in 2009.

The Congress recently granted the GAO new authority to conduct audits of the credit facilities extended by the Federal Reserve to "single and specific" companies under the authority provided by section 13(3) of the Federal Reserve Act, including the loan facilities provided to, or created for, American International Group and Bear Stearns. The GAO and the Special Inspector General have the right to audit our TALF program, which uses funds from the Troubled Assets Relief Program.

As he was giving this testimony, the FED was involved in a court dispute involving a Freedom of Information Act request by Bloomberg News to find out who got the TALF money. Bloomberg News had initiated this lawsuit in November 2008, after the FED had stonewalled on Bloomberg's its May FOIA request. It took a U.S. Supreme Court decision in 2011 to pry this information out of the FED.

Bernanke continued.

The Congress, however, purposefully – and for good reason – excluded from the scope of potential GAO reviews some highly sensitive areas, notably monetary policy deliberations and operations, including open market and discount window operations. In doing so, the Congress carefully balanced the need for public accountability with the strong public policy benefits that flow from maintaining an appropriate degree of independence for the central bank in the making and execution of monetary policy.

The phrase "balanced the need" is a code phrase for "abdicated Congressional authority."

Financial markets, in particular, likely would see a grant of review authority in these areas to the GAO as a serious weakening of monetary policy independence. Because GAO reviews may be initiated at the request of members of Congress, reviews or the threat of reviews in these areas could be seen as efforts to try to influence monetary policy decisions. A perceived loss of monetary policy independence could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability. We will continue to work with the Congress to provide the information it needs to oversee our activities effectively, yet in a way that does not compromise monetary policy independence.

Or, as he might have said, "Butt out, you twits." Guess what? The twits butted out. I wrote about this at the time.

But now the twits are facing signs of a political rebellion. Millions of voters have figured out that the FED is a scam that is run for the benefit of the largest commercial banks, including foreign central banks. Ron Paul represents this view. A new generation of candidates for Congress is finding that there is no broad constituency in the electorate that comes to the defense of the FED. Most voters still don't have any opinion, but among those who do, the opinion is negative.

The FED has relied on secrecy and obscurity to protect it from criticism for almost a century. That strategy worked until 2008. But Ron Paul was like the little boy at the emperor's parade. "The emperor has no clothes!"

The emperor is Bernanke, a bland academic who surely could use a charisma implant.

This attack is a major break from the past. William McChesney Martin lasted for over 18 years, from Truman to Nixon. He was unassailable. Arthur Burns followed. He smoked a pipe at Congress, and seemed so wise. G. William Miller was a monetary neophyte, but he only lasted 18 months. Carter somehow persuaded him to resign to become Secretary of the Treasury, where he could do no more damage. Then came Paul Volcker, 6 feet 8 and a cigar smoker. He overpowered any critics. Then came Greenspan, the seeming wizard, whose FedSpeak befuddled Congress, and whose policy of inflate and inflate, obfuscate and obfuscate, and warn about inflation worked just fine for 18 years. He departed just in time.

Then came the hapless Bernanke, George W. Bush's gift to the world in 2006. Obama re-appointed him in 2009.He will serve until February 1, 2014. This is good for FED-bashers. He will go down in history as the footnoting scholar who was in charge when the tide of public opinion went from "What's the FED?" to "audit the FED!"

DOUBLE-COUNTING THE GOLD

If the FED is fully audited, it is likely that the audit will reveal that the gold is encumbered. Foreign central banks have leased their gold. This is a phrase for "sold the gold," since the people who borrowed it at 1% per annum then sold it for money and bought government bonds paying 5% or more. They cannot sell these bonds at face value; the bonds have fallen in value. They cannot afford to buy gold in the open market to return the gold to the central banks. The price is already far above what they sold it for.

The central banks dare not demand a return of this gold. The gold is still on their books. The IOUs they received from the borrowers are counted as being as good as gold. The voters do not know that the gold is missing.

In December 2004, an obscure committee with the International Monetary Fund submitted a report on swaps and gold leasing. With respect to accounting for gold leasing, the report admitted that there are no standards. "The statistical implications of gold swaps and gold loans/ deposits are complex and have not been fully worked through. Work is still being undertaken by the Committee to address the implications." What implications? One of them is the issue of double counting.

In particular, gold may be double counted with either a gold swap or gold loan/deposit if the party acquiring the gold were to on-sell it outright, because both the original owner and the outright purchaser would report ownership of the gold. In addition, there is the difficulty of having monetary gold being used in these transactions for purposes other than for reserve assets, and how (de)monetization would apply if the gold is sold for industrial purposes. Moreover, there is a proposal to treat (some) nonmonetary gold as a financial asset, rather than a commodity, and the outcome of that discussion may have further implications on the treatment of gold swaps and gold loans/deposits. Finally, how the "fee" for gold swaps and gold loans/deposits should be treated has yet to be resolved. All these matters are being considered by the Committee and a report will be taken to the AEG in due course.

Nothing has changed.

The Federal Reserve has always denied that it has leased the gold, meaning the government's gold. But the FED is involved in all kinds of swaps with foreign central banks. And remember, quoting the Federal Reserve Bank of New York,

. . . GAO auditors are restricted by law from reviewing monetary policy operations and transactions carried out by the Federal Reserve on behalf of foreign central banks.

Consider the political fallout if it should be revealed that the physical gold in the vault of the Federal Reserve Bank of New York has claims against it. What if it should turn out that the Federal Reserve Bank of New York, which is a privately owned organization, has in some way compromised the government's ownership of its gold?

What kind of pressure would be brought on the assembly of twits by the voters to "get our gold back"? What kind of response from the twits would be likely?

Bernanke would dutifully go to Congress to present his footnotes showing that this was good for the world economy. He would find a warm reception: hot fury.

He really does think that providing footnotes will protect him. This is what he learned in academia. But politicians pay no attention to footnotes.

Bernanke's credibility is nothing like the credibility possessed by all FED chairman except Miller, who is long forgotten. He has been able to fend off calls to audit the FED for four years. But Ron Paul is now a serious contender for the Republican nomination. He keeps returning to one theme above all others: the incompetence of the Federal Reserve. No serious Presidential candidate in history so much as mentioned the Federal Reserve in his campaign speeches.

The media keep brushing off Paul because of this. They keep saying that this issue has no traction with normal voters. But the issue has traction with at least 20% of the voters in the Republican primaries so far. That is more voters than the bureaucrats at the Federal Reserve have ever encountered. They have no idea what to do about this.

CONCLUSION

Paul's candidacy will continue for months. He will continue to hammer on this theme: the Federal Reserve is incompetent. This message will stick, whether or not he gets the nomination. His supporters are like Bruce Willis: die hards.

The Federal Reserve will never again be able to hide from the voters behind a curtain of secrecy. Bernanke is the Wizard of Oz, and Ron Paul is Toto. He has pulled back the curtain. From this time on, whenever you read a report on his testimony before Congress, think of this scene.

The main difference between this scene and a Bernanke speech is footnotes.

MUST SEE VIDEO: Why Rising Debt Will Lead to $10,000 Gold

2012-01-11T17:29:00.002+02:00

Bullion Management Group Inc. (BMG) President and CEO Nick Barisheff presents the case for $10,000 gold and how the world’s developing currency crises will affect the gold price in 2012 and beyond at the Empire Club of Canada's Investment Outlook for 2012 on January 5th,

His speech has gained significant amounts of global media coverage and has been very favourably received by the investment community, so please make sure you take this chance to view the 13 minute speech in its entirety.

Barisheff also takes the opportunity to announce the exciting launch of his much anticipated book, ‘$10,000 Gold: The inevitable rise and investors’ safe haven'. Ahead of the book's release later this year, The Author’s Preface is available for download now at www.10000goldthebook.com .

BMG is confident financial advisors, institutional investors, pension funds and individuals alike, on a global basis, will benefit from Nick Barisheff’s expert insight and will find both the speech and the book extremely valuable tools for preserving wealth in these difficult times.

You can also read the speech online at: www.bmgbullion.com/outlook2012.

Open Secret: Panetta admits Iran not developing nukes

2012-01-10T09:14:00.000+02:00

Iran is not trying to develop nuclear weapons

With war ships on their way and war drums beating in Washington we learn that:

The American government is lying about the fact that Iran is developing nuclear weapons
Reading the blood thirst of the American population in the comment secion of the MSM, the conclusion is that the government propaganda still works.
Internet will spread the truth and increasingly frustrate the old propaganda machine

That admission by Defense Secretary Panetta proves just how preposterous the US position is. Hopefully Europe has second thoughts over the absurd embargo it is considering later this month.

From Face the Nation:

Chinese Troops In Texas!

2011-12-11T03:57:00.000+02:00

A Powerful Message From Ron Paul.

Gold: Five reasons why 2012 will be golden year for investors .

2011-12-09T13:52:00.001+02:00

"The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard."
-Ludwig von Mises

Commodity Online - The outlook for Gold is bullish for 2012. The European debt crisis, which dominated 2011, will continue to hang over markets in 2012. I’m extremely bearish on Europe. The political and financial systems are inadequate to deal with the serious fiscal and sovereign-debt problems the old continent faces.

Europe and Gold
The risk of contagion is large and the safety mechanism is convoluted (too many countries with too many conflicting interests). Europeans don’t have a handle on the situation; some banks and countries are already insolvent. The situation is extremely precarious.

Europeans will keep kicking the can down the road until it can’t be kicked any longer. When that happens, it’s going to get very ugly very quickly.

In this environment, gold should retain its safe-haven status. Investors will seek to protect their assets by using gold, one of the only currencies that’s a store of value that central banks can’t print at will. The volatility caused by the European markets will push gold prices as high as $2,500 in 2012.

Five reasons why 2012 will be golden for investors:

Gold is an institutionally underowned asset. While investment demand for gold has been increasing year-over-year, the yellow metal is still drastically underowned by many institutional investors. In fact, gold represents only 1.5 percent of all total global assets including equities, fixed income, private equity and real estate.

Increased market volatility boosts gold’s safe-haven status. Following the global turmoil that has been with us since September 2008, volatility has become a permanent staple in the markets. As measured by the VIX index, volatility is at historic highs. This increased volatility is pushing investors toward the safety of gold, which will continue in 2012 and for years to come.

Central banks starting to load up on gold. One of the biggest shifts we’ve seen in the Gold markets is central bank purchases of gold. Up until 2010, global central banks were net sellers of gold assets. Beginning in 2011, many of the world’s leading central banks began aggressive and active purchasing programs to buy gold. Gold purchases in 2011 are up more than 160 percent from the previous year. Indeed, the central banks of Kazakhstan, Mexico, Russia and South Korea all went to the open market to buy gold to diversify away from their dollar holdings.

Emerging market jewelry demand remains very strong. More than 50 percent of gold goes toward the manufacturing of high-end jewelry, and the majority of these purchases are made in emerging markets; particularly in India, China and the Middle East. While these economies could slow down as a result of a European crisis, the amount of wealth creation over the last decade has been staggering, and the high-end consumers who purchase gold should continue their purchases into 2012 and beyond.

Supply extremely tight, accompanied by rising production costs. In addition to all the bullish demand factors, the actual physical supply of gold is draconically tight. Yes, high prices incentivize miners to produce more, but that’s not enough: Ore-grade levels are at historic lows; it takes several years (5-7 years) for a new mine to start producing at commercial levels; and extraction costs are increasing dramatically (labor, energy and environmental costs are all higher). All this means that there’s only 1.5 percent of new gold coming online each year.

When you add up the tight supply scenario with all the bullish demand factors, gold prices have only one place to go, and that is higher.

If you keep your money at Bank of America, you are an idiot

2011-10-19T10:27:00.001+02:00

OK, you take the handgranate, I take the pin. Bye!

Bank Of America Takes Sleaze to A New Level

The Golden Truth

If you keep your money at Bank of America, you are an idiot. BAC quietly moved $53 trillion in derivatives from its holding company to its subsidiary that holds $1 trillion in customer deposits and is insured by the FDIC. If any part of these derivatives blow up, the Taxpayer will then be on hook for the $1 trillion in deposits.

I said 8 years ago that we would eventually see things go on in this country that blow your mind. This is one of them. Although this kind of move is permitted to a very limited degree by the Federal Reserve Act, there is no way in hell that the loophole was intended to permit $53 trillion of shit to affect FDIC-insured deposits. Of course, the watchdogs who are supposed to prevent this kind of abuse are the same people who benefit from allowing it to occur.

That the BAC upper managment would be so completely devoid of ethics and do something like this is a tragedy. That Bernanke, Geithner and Obama would allow BAC to do this is a testament to the fact that our system is collapsing.

You can read the details HERE

Why the State Demands Control of Money

2011-10-13T17:01:00.000+02:00

Hans Hermann Hoppe - Ludwig von Mises Institute

Imagine you are in command of the state, defined as an institution that possesses a territorial monopoly of ultimate decision making in every case of conflict, including conflicts involving the state and its agents itself, and, by implication, the right to tax, i.e., to unilaterally determine the price that your subjects must pay you to perform the task of ultimate decision making.
To act under these constraints — or rather, lack of constraints — is what constitutes politics and political action, and it should be clear from the outset that politics, then, by its very nature, always means mischief. Not from your point of view, of course, but mischief from the point of view of those subject to your rule as ultimate judge. Predictably, you will use your position to enrich yourself at other people's expense.
More specifically, we can predict in particular what your attitude and policy vis-à-vis money and banking will be.
Assume that you rule over a territory that has developed beyond the stage of a primitive barter economy and where a common medium of exchange, i.e., a money, is in use. First off, it is easy to see why you would be particularly interested in money and monetary affairs. As state ruler, you can in principle confiscate whatever you want and provide yourself with an unearned income. But rather than confiscating various producer or consumer goods, you will naturally prefer to confiscate money. Because money, as the most easily and widely saleable and acceptable good of all, allows you the greatest freedom to spend your income as you like, on the greatest variety of goods. First and foremost, then, the taxes you impose on society will be money taxes, whether on property or income. You will want to maximize your money-tax revenues.
In this attempt, however, you will quickly encounter some rather intractable difficulties. Eventually, your attempts to further increase your tax income will encounter resistance in that higher tax rates will not lead to higher but to lower tax revenue. Your income — your spending money — declines, because producers, burdened with increasingly higher tax rates, simply produce less.
In this situation, you only have one other option to further increase or at least maintain your current level of spending: by borrowing such funds. And for that you must go to banks — and hence your special interest also in banks and the banking industry. If you borrow money from banks, these banks will automatically take an active interest in your future well-being. They will want you to stay in business, i.e., they want the state to go on in its exploitation business. And since banks tend to be major players in society, such support is certainly beneficial to you. On the other hand, as a negative, if you borrow money from banks you are not only expected to pay your loan back, but to pay interest on top.
The question, then, that arises for you as the ruler is, How can I free myself of these two constraints, i.e., of tax-resistance in the form of falling tax revenue and of the need to borrow from and pay interest to banks?
It is not too difficult to see what the ultimate solution to your problem is.
You can reach the desired independence of taxpayers and tax payments and of banks, if only you establish yourself first as a territorial monopolist of the production of money. On your territory, only you are permitted to produce money. But that is not sufficient. Because as long as money is a regular good that must be expensively produced, there is nothing in it for you except expenses. More importantly, then, you must use your monopoly position in order to lower the production cost and the quality of money as close as possible to zero. Instead of costly quality money such as gold or silver, you must see to it that worthless pieces of paper that can be produced at practically zero cost will become money. (Normally, no one would accept worthless pieces of paper as payment for anything. Pieces of paper are acceptable as payment only insofar as they are titles to something else, i.e., property titles. In other words then, you must replace pieces of paper that were titles to money with pieces of paper that are titles to nothing.)
Under competitive conditions, i.e., if everyone were free to produce money, a money that can be produced at almost zero cost would be produced up to a quantity where marginal revenue equals marginal cost, and because marginal cost is zero the marginal revenue, i.e., the purchasing power of this money, would be zero as well. Hence, the necessity to monopolize the production of paper money, so as to restrict its supply, in order to avoid hyperinflationary conditions and the disappearance of money from the market altogether (and a flight into "real values") — and the more so the cheaper the money commodity.
In a way, you have thus accomplished what all alchemists and their sponsors wanted to achieve: you have produced something valuable (money with purchasing power) out of something practically worthless. What an achievement. It costs you practically nothing and you can turn around and buy yourself something really valuable, such as a house or a Mercedes; and you can achieve these wonders not just for yourself but also for your friends and acquaintances, of which you discover that you have all of a sudden far more than you used to have (including many economists, who explain why your monopoly is really good for everyone).
What are the effects? First and foremost, more paper money does not in the slightest affect the quantity or quality of all other, nonmonetary goods. There exist just as many other goods around as before. This immediately refutes the notion — apparently held by most if not all mainstream economists — that "more" money can somehow increase "social wealth." To believe this, as everyone proposing a so-called easy-money policy as an efficient and "socially responsible" way out of economic troubles apparently does, is to believe in magic: that stones — or rather paper — can be turned into bread.
Rather, what the additional money you printed will affect is twofold. On the one hand, money prices will be higher than they would otherwise be, and the purchasing power per unit of money will be lower. In a word, the result will be inflation. More importantly, however, all the while the greater amount of money does not increase (or decrease) the total amount of presently existing social wealth (the total quantity of all goods in society), it redistributes the existing wealth in favor of you and your friends and acquaintances, i.e., those who get your money first. You and your friends are relatively enriched (own a larger part of the total social wealth) at the expense of impoverishing others (who as a result own less).
The problem, for you and your friends, with this institutional setup is not that it doesn't work. It works perfectly, always to your own (and your friends') advantage and always at the expense of others. All you have to do is to avoid hyperinflation. For in that case people would avoid using money and flee into real values, thus robbing you of your magic wand. The problem with your paper-money monopoly, if there is one at all, is only that this fact will be immediately noticed also by others and recognized as the big, criminal rip-off that it indeed is.
But this problem can be overcome, too, if, in addition to monopolizing the production of money, you also set yourself up as a banker and enter the banking business with the establishment of a central bank.
Because you can create paper money out of thin air, you can also create credit out of thin air. In fact, because you can create credit out of nothing (without any savings on your part), you can offer loans at cheaper rates than anyone else, even at an interest rate as low as zero (or even at a negative rate). With this ability, not only is your former dependency on banks and the banking industry eliminated; you can, moreover, make banks dependent on you, and you can forge a permanent alliance and complicity between banks and state. You don't even have to become involved in the business of investing the credit yourself. That task, and the risk involved in it, you can safely leave to commercial banks. What you, your central bank, need to do is only this: You create credit out of thin air and then loan this money, at below-market interest rates, to commercial banks. Instead of you paying interest to banks, banks now pay interest to you. And the banks in turn loan out your newly created easy credit to their business friends at somewhat higher but still submarket interest rates (to earn from the interest differential). In addition, to make the banks especially keen on working with you, you may permit the banks to create a certain amount of their own new credit (of checkbook money) in addition and on top of the credit that you have created (fractional-reserve banking).
What are the consequences of this monetary policy? To a large extent they are the same as with an easy money policy: First, an easy credit policy is also inflationary. More money is brought into circulation and prices will be higher, and the purchasing power of money lower, than would have been the case otherwise. Second, the credit expansion too has no effect on the quantity or quality of all goods currently in existence. It neither increases nor decreases their amount. More money is just this: more paper. It does not and cannot increase social wealth by one iota. Third, easy credit also engenders a systematic redistribution of social wealth in favor of you, the central bank, and the commercial banks within your cartel. You receive an interest return on money that you have created at practically zero cost out of thin air (instead of on money costly saved out of an existing income), and so do the banks, who earn additional interest on your costless money loans. Both you and your banker friends thereby appropriate an "unearned income." You and the banks are enriched at the expense of all "real" money savers (who receive a lower interest return than they otherwise would, i.e., without the injection of your and the banks' cheap credit into the credit market).
On the other hand, there also exists a fundamental difference between an easy, print-and-spend money policy and an easy, print-and-loan credit policy.
First off, an easy credit policy alters the production structure — what is produced and by whom — in a highly significant way.
You, the chief of the central bank, can create credit out of thin air. You do not have to first save money out of your money income, i.e., cut your own expenses, and thus abstain from buying certain nonmoney goods (as every normal person must, if he extends credit to someone). You only have to turn on the printing press and can thus undercut any interest rate demanded of borrowers by savers elsewhere in the market. Granting credit does not involve any sacrifice on your part (which is why this institution is so "nice"). If things then go well, you will be paid a positive-interest return on your paper investment, and if they don't go well — well, as the monopoly producer of money, you can always make up losses more easily than anyone else: by covering your losses with even more printed paper.
Without costs and no genuine, personal risk of losses, then, you can grant credit essentially indiscriminately, to everyone and for any purpose, without concern for the creditworthiness of the debtor or the soundness of his business plan. Because of your "easy" credit, certain people (in particular investment bankers) who otherwise would not be deemed sufficiently creditworthy, and certain projects (in particular of banks and their main clients) that would not be considered profitable but wasteful or too risky instead do get credit and do get funded.
Essentially, the same applies to the commercial banks within your banking cartel. Because of their special relationship to you, as the first recipients of your costless low-interest paper-money credit, the banks, too, can offer loans to prospective lenders at interest rates below market interest rates — and if things go well for them they go well; and if they don't, they can rely on you, as the monopolistic producer of money, to bail them out in the same way as you bail yourself out of any financial trouble: by more paper money. Accordingly, the banks too will be less discriminating in the selection of their clients and their business plans and more prone to funding the "wrong" people and the "wrong" projects.
And there is a second significant difference between a print-and-spend and a print-and-loan policy and this difference explains why the income and wealth redistribution in your and your banker friends' favor that is set in motion by easy credit takes the specific form of a temporal — boom-bust — cycle, i.e., of an initial phase of seeming general prosperity (of expected increases in future incomes and wealth) followed by a phase of widespread impoverishment (when the prosperity of the boom period is revealed as a widespread illusion).
This boom-bust feature is the logical — and physically necessary — consequence of credit created out of thin air, of credit unbacked by savings, of fiduciary credit (or however else you may call it) and of the fact that every investment takes time and only shows later on, at some time in the future, whether it is successful or not.
The reason for the business cycle is as elementary as it is fundamental. Robinson Crusoe can give a loan of fish (which he has not consumed) to Friday. Friday can convert these savings into a fishing net (he can eat the fish while constructing the net), and with the help of the net, then, Friday, in principle, is capable of repaying his loan to Robinson, plus interest, and still earn a profit of additional fish for himself. But this is physically impossible if Robinson's loan is only a paper note, denominated in fish, but unbacked by real-fish savings, i.e., if Robinson has no fish because he has consumed them all.
Then, and necessarily so, Friday must fail in his investment endeavor. In a simple barter economy, of course, this becomes immediately apparent. Friday will not accept Robinson's paper credit in the first place (but only real, commodity credit), and because of this, the boom-bust cycle will not get started. But in a complex monetary economy, the fact that credit was created out of thin air is not noticeable: every credit note looks like any other, and because of this the notes are accepted by the takers of credit.
This does not change the fundamental fact of reality that nothing can be produced out of nothing and that investment projects undertaken without any real funding whatsoever (by savings) must fail, but it explains why a boom — an increased level of investment accompanied by the expectation of higher future income and wealth — can get started (Friday does accept the note instead of immediately refusing it). And it explains why it then takes a while until the physical reality reasserts itself and reveals such expectations as illusory.

But what's a little crisis to you? Even if your path to riches is through repeated crises, brought about by your paper-money regime and central-bank policies, from your point of view — from the viewpoint as the head of state and chief of the central bank — this form of print-and-loan wealth redistribution in your own and your banker friends' favor, while less immediate than that achieved with a simple print-and-spend policy, is still much preferable, because it is far more difficult to see through and recognize for what it is. Rather than coming across as a plain fraud and parasite, in pursuing an easy-credit policy you can even pretend that you are engaged in the selfless task of "investing in the future" (rather than spending on present frivolities) and "healing" economic crises (rather than causing them).
What a world we live in!

Financial Advisors: Keep Calm...Stay With Us...It Is Cyclical (We Hope).

2011-09-20T13:24:00.000+02:00

Advisers Emphasize Calm as Global Depression Gathers

I know a few. Super rich and convinced that the wheel will turn in a few months. Their financial advisors/friends have been instructed to convince their clients "to stay with them" as "it is only cyclical". I must say that it is very, very difficult to get them to change their opinion. But I am 100% convinced that they are wrong this time and that the super rich do have the wrong friends. The party is over as exlained in the article below and the glow you see is not the eternal light but a meterorite coming towards you...too late now..

Daily Bell

Advisor's Top Job: Helping Clients Stay Cool, Survey Says ... In hot markets, it's crucial for advisors to do plenty of hand-holding and other work, say most financial advisors polled by Russell Investments ... The latest quarterly survey of advisors by Russell Investments found that helping clients keep their cool when markets heat up was the most important role for FAs, the company said Thursday. – Advisor One

Dominant Social Theme: The euro is collapsing, the dollar reserve system is failing, China is deflating and NATO military actions continue to expand. Investors should simply ignore the "noise" and concentrate on the soundness of their portfolio allocations, which have been made with the help of true investment professionals.

Free-Market Analysis: It used to be that stock drummers were more than happy to share a hot tip with their clients. Today, more than half (55%) of advisors say the most valuable service they provide to clients in or near retirement "is helping the client maintain perspective and think clearly about events and trends," according to a survey by Russell Investments.

These are not happy times for investment advisers. While it is true that stock markets have not entirely collapsed following the financial crisis of 2008, the headier estimates of equity advancements have been discarded. With the US in a permanent slump and Europe headed into an ever greater depression, only Asia (and China in particular) are holding up the world's economy.

When China has what will likely be some sort of hard landing, it is hard to see how the world can avoid a generalized depression of the sort that afflicted it in the 1930s. Advisers and their clients are spectacularly unprepared for this sort of occurrence as neither group unfortunately seems to have the psychological fortitude or the mental capacity to accept the increasingly grim reality of the 21st Century.

The projections of "Dow 20,000," so popular in the late 1990s and early 2000s, have shrunken to a whisper, replaced by campaigns that promote the effectiveness of financial advice regardless of the markets. Charles Schwab, which makes hefty fees as a custodian of assets, is rolling out one such campaign starting this week, a multimedia marketing campaign for advisers, according to Advisor One.

"The campaign will include sharable, digital banners with the tagline 'RIA-Stands for You. Discover the difference with a registered investment advisor,' and an affiliated website, RIAStandsForYou.org."
It is easy to see why advisers may be in need of promotional support. While the advent of the personal computer and putative advancements in Modern Portfolio Theory contributed to the theoretical arsenal of financial advisers, the fundamental weakness of the financial industry continues to be its refusal to recognize that modern money itself is flawed. This has led to all sorts of conclusions that have simply not held up in the 21st Century from an investment standpoint.

The fundamental one has to do with the creation of currency. Almost no modern advisers will admit that central banks fix the price of "money" – or that money itself in the 21st Century, delinked from an underlying asset, is suspect. This gives rise to terrible misjudgments in the industry, mostly having to do with not comprehending the business cycle, which is controlled by the inflationary afflatus of the central banking mechanism.

Central banks inevitably print too much money in good times and bad. They are virtual inflation manufacturers, though the rhetoric that surrounds them has to do with "controlling" inflation. Inevitably, there are said to be central banking "hawks" and "doves" – with the hawks wanting a severely restrictive monetary policy and the doves wanting a looser one. This obscures the real issue, of course, which is that there would not be modern monetary inflation without central banking.

The business cycle itself is generated by this overprinting of money. First central bankers print money to inflate staggering economies and then, when economies inevitably "overheat," central bankers print even more money to cushion the inevitable bust.

Over time this distorts the free-market price mechanism so grievously that people cannot tell a healthy business from one propped up by government subsidies and central banking favoritism. When this happens, economies basically freeze up. No one hires or sets aside funds for expansion because the free market itself is being held captive by an elaborate contraption of regulations, tax distortions and monetary favoritism that makes capital formation impossible
.
Most Western financial advisers doubtless missed much of the runup of gold and silver, advising their clients to hold paper assets while precious metals valuations grew tenfold during the fiat-money collapse of the early 2000s.

Financial advisers, even independent ones, serve as distribution arms for financial product companies. These financial product companies, some of them massive indeed, are the logical outcome of a central banking economy that has reorganized the investment industry around paper-based securities (and now electronic digits).

Central banking blows up economies regularly, and during economic contractions the middle class becomes increasingly unprosperous while more and more wealth is centralized in the hands of great Anglosphere banking families. These families then use their wealth to create dominant social themes – fear-based promotions featuring scarcity memes – that are intended to push Western middle classes into surrendering wealth and power to the globalist solutions (UN, IMF, WHO, etc.) that the familial elites have already prepared.

One of the dominant social themes that was remarkable successful in America during the late 20th Century was the idea that various forces were conspiring to erode middle class wealth. The only way to address this potential ruination was through "investing" in a menu of pre-prepared investment solutions featuring rigid, fragile and highly controlled "public" money pools.

Of course, the available solutions such as mutual funds and limited partnerships never work very well because the central banking business cycle itself precludes their ongoing viability. Every few years, what passes for money itself becomes unstable, stock markets deflate and public investment structures themselves lose altitude and in some cases crash. Regulation only makes the structures more rigid.

Over time, the constant inflations and deflations caused by central banking give rise to entirely dysfunctional economies. Stock markets are decimated; credit freezes; economies seize up. This happened in 2008, when central banks around the world rushed in to inject something between US$20 and US$50 trillion to prevent an entire liquidation of the global fiat-money financial system.

People still don't understand that the dollar-reserve system of the 20th Century likely ended in 2008. And today the ruination has continued and even expanded. Central banks are again, in a concerted effort, printing yet more money to liquefy a system that basically doesn't exist anymore. It is impossible to maintain a monetary system for a lengthy period of time that is divorced from an underlying asset such as gold and silver.
Most financial advisers, unfortunately, are not much more sophisticated when it comes to money than their clients. Financial advisers may manage lots of money, but this does not mean they understand the underlying history of money or what money actually is today. Additionally, their clients may have made a great deal of "money" but this doesn't mean they understand it any better.

Financial advisers, even the best of them, are caught up in the modern investment meme. It is one that mandates "allocation" across a personal portfolio, with distribution in numerous types of paper assets – and a determined refusal to consider an overweighting in physical assets even during an appropriate time in the business cycle.

Advisers, in fact, do not realize that they are ultimately in the employ of the great banking families that want to create one-world government and are doing so through the boom/bust mechanism of central banking. They would consider such a statement to be "conspiratorial" and reject it outright.

Thus it is that Western financial advisers remain in the grip of this merciless system, trying futilely to protect their clients from the worst of its depredations by advising aggressive allocation of assets using the somewhat flawed applications of Modern Portfolio Theory. Unfortunately, this doesn't protect their clients from the overall deflation that central banking causes on a regular basis.

The collapse of the dollar-reserve system has made the advisers' job that much harder. Most advisers believe that the cyclical nature of the fiat-money system – which they have experienced historically – will eventually lift asset valuations once again. They seemingly do not understand that there has probably been a terminal dollar-reserve blow-off and that the cyclicality they count on may not occur in ways they and their clients expect.
This is why there is so much emphasis on "keeping clients cool and clam" in the industry today. Both advisers and their clients (having failed to understand the underlying malevolence of the system) are like children holding hands and looking up at the night sky with awe and wonder as a large meteor bears down upon them.
Conclusion: They mistake the distant glow for the promise of better times tomorrow.

Denial, ANGER, Bargaining, Depression, Acceptance.

2011-09-10T12:21:00.000+02:00

Fear Sets In, Panic Begins, Ruin Perceived, Prepare for Gold $2100

2011-08-27T09:24:00.000+02:00

You have no idea how much of our economic confidence is based on "trust". Trust that you wll get your money back after a bank deposit; trust that your monthly payments into the pension account will guarantee you a good retirement; trust in our leaders that what they say is not a lie, trust, trust, trust.
We have to believe, where would be without it? Our society would fall apart!

But when the rot sets in, trust evaporates quickly. First with a question mark, then denial, then anger. Exponentially, the fury will burn the soothing words of the msm, the main stream media. We are there now, people demand answers as they are getting uncertain.
How can this be? Teflon USA, we are the biggest nation in the world? What did we do? What happened? Who is responsible for this mess?

Read the always entertaining (and angry) explanation of Jim Willie:

Something big is going on in the United States in a sentiment change, an altered state of psychology, a growing sense of panic. My opinion is that the nation has entered the early stage of comprehension among the population of systemic failure. The most immediate measures are the rash of heavy selling down days in the US Stock market, the strong purchases in Gold, as well as the reactions to constant news of sovereign debt in trouble, and the big banks teetering. Several other softer measures have been noted, made overwhelming by their sheer numbers. A perception wave has taken hold of a toxic USEconomy, a toxic US financial sector, a toxic US housing sector, a toxic economic brain trust in the US towers. A sense of doom is creeping into the nation's living rooms and board rooms, that the nation is in deterioration. Worse, they are realizing how US Federal Reserve is toothless, unable to address or treat the problems.

The citizenry is not adept or gifted enough to conclude that the problem is national insolvency, whose errant prescription has been a flood of liquidity. But they sense something is horribly wrong, and worse, that no current treatment will fix anything. They detect the backfire of the blunt banker solution and the misfired futility of the federal government solution. Witness the rooted perception and horrifying awareness that the United States is moving gradually and unavoidably into a systemic failure. The perception is that neither governments nor bankers have any solutions to help the people, who must impose their own gold standard. The Gold price registered a new high over $1900 per ounce, this after mental midget clowns and propaganda wags in May pronounced the bull market as finished. Their opinions are worthless. Watch them vanish behind the tall shrubbery when Gold surpasses $2000 this autumn.

ROOT OF NATIONAL ILLNESS
In my view, the national illness is a toxic USEconomy dominated by pervasive profound grotesque insolvency. In the early part of the 2000 decade, a strong hint of near-term future failure was obvious. The USEconomy shed its industry to Asia since the 1980 decade. In the early years of last decade, the migration of factories was to China. In its place, the US consumers relied upon home equity withdrawal, blessed as good by the American economists and high priest of heretical ideology Alan Greenspasm. The hint to sound money economists such as the Jackass from the dependence shift was a clear signal of ruin in a few years, as in now. It came on time. In my view, the national illness is a toxic US financial sector dominated by pervasive insolvency and massive fraud. The FASB accounting rule change permitted grotesque falsification of the bank balance sheets, reflected in market capitalizations above zero. The value zero has been and still is more accurate, still is the price target. The big US banks continue to fight off the powerful forces of a housing market in resumed chronic decline, sovereign bonds overseas beset by heavy losses, and a spate of bond investor lawsuits that rack up. All attempts to limit lawsuit exposure have failed. Litigants line up in court like Wal-Mart shoppers on a big sale. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.
The Achilles Heel, the broken leg, the ruined road, and the toxic field is HOUSING & MORTGAGES. The contaminated blood, the leaking gangrene into the circulation system, the sewer line in the water supply is BANKING & FINANCE. The USEconomy grew dependent upon the two-sided asset bubble. No resolution or remedy or liquidation means rotting flesh and gangrene on the body economic. Americans have noticed. The US banking system remains insolvent, worse each quarter from toxic assets. Home prices have resumed their decline, despite all incorrect announcements by banking, political, and economic leaders over public address propaganda loudspeakers. The crowd control devices are not working, as the people are deeply worried. The banks are plagued by an REO inventory bloat extended from home foreclosures, where they do not dare release all the homes onto the already bloated market for sale. The banks are peppered in attacks by bond investor lawsuits, which work to resolve the bond fraud from misrepresentation of mortgages packaged in AAA toxic bundles. They lost 30% to 60% in a matter of months and a few years. The banks have a dirty secret of hundreds of thousands of home loans operating in strategic default, whether the homeowners refuse to pay anything more on their mortgages, often demanding to see the proper title on the property. The news media will not cover this story. In every court challenge, the banks have lost the cases, resulting in the homeowners taking clear title with the loan fully forgiven. The newest threat to the banks is the next Option ARM wave, the second round of adjustable rate mortgage that will continue in a storm until 2013 ends. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.
No meaningful home loan balance scheme conducted by the USGovt means the housing mass & mortgage connective tissue circle the toilet in a flush. The reason is simple. Home loan balance reductions would expose gigantic bond fraud in tracing the mortgage bonds to home loans with title registrations. It would result in exposure of Fannie Mae counterfeit bonds having circulated widely. It would result in forced bank asset writedowns amidst the pervasive accounting fiction at work on the balance sheets, blessed as good by the FASB. It would expose MERS as a fraudulent device to hold titles without legal standing. It would embolden half the nation into civil disobedience, as in outright refusal to pay banks on home loans. It would expose the nation as insolvent generally. It might interfere with some perverse national plan to use Fannie Mae as some devious device to become landlord to one third of the nation's homes, a plan of collectivism that Karl Marx might approve. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.
PANHANDLE DOCTRINE & PARASITE DOCTRINE
The tragedy that struck the US nation has a great connection to toxic economic thought from its economic brain trust. It is thoroughly toxic, corrupted, and destructive ideology woven in an acidic blanket with rampant impairment to working capital. It earns a D grade on economics effectiveness, and in fairness is not what Keynes prescribed. It is toxic thinking. It seems to have elevated the Voodoo Economics of the 1980 decade to the Fascist Business Model in the 2000 decade. The license to engage in fraudulent activity is engrained in the pact between big business (led by big banks) and the USGovt policy making groups which are dominated by Wall Street firms (led by Goldman Sachs). The summary line is vividly clear to astute adept students of economics: the United States no longer has any concept of capitalism, and has undergone three decades of capital destruction. The crescendo of the capital destruction has taken place in the last three or four years, whose climax tune is the shrill Quantitative Easing. The cast of American economists is wedded deeply to the notion of credit dispensation and monetary growth under the illusion of control. They do not comprehend capital formation anymore, relying instead upon what the Jackass calls with bitter intended mockery the Panhandle Doctrine applied to consumers, matched by a Parasite Doctrine applied to banks. If you give a street bum money, he will buy coffee and maybe a sandwich. The USEconomy is based upon coffee and sandwiches, not much more, as the consumer is given money in pockets and purses to spend. The depravity of economic thought is shocking. The stock market & housing sector (FIRE) replaced industry & factories with tragic outcome. FIRE means finance, insurance, and real estate, a great ironic moniker since the fires burned capital at a rapid rate.
A prevailing belief exists among American economists that if the consumer picks up, then industry will expand with big capital spending and job hires. The belief is entirely backwards, a symptom of American economist ignorance and stupidity. The consumer (street bum) relies upon tax breaks, reduced Social Security & Medicare contributions, extended jobless benefits, clunker car gifts, first time home buyer tax credits, and more. They are all examples of the Panhandle Doctrine from which the USEconomy have grown dependent upon. Observe the toxic American economist ideology. For banks, a parallel Parasite Doctrine hard at work has gutted the financial sector. The regular fare offered as examples as strategic crutches to a broken sector are sponsored USTreasury carry trade (aided steered by Interest Rate Swaps), betting on their own stocks lifted by phony FASB accounting rules, participation in USFed frequent flyer programs like the Money Market giveaways, flash stock trading (High Frequency Games) done with impunity, short stock sale bans (Goldman Sachs given an exemption), and naked selling of USTBonds (grandaddy fraud). See failures to deliver, buttressed by Interest Rate Swap artificial end demand that serves to cover the other end and qualify as a bonafide bucket shop.
Thanks to Aaron Krowne and his Mortgage Implode website, for the intrepid work on the mortgage market and recently on the USTreasury market. He provided the graph on Failures to Deliver on USTBonds. See the ML Implode article (CLICK HERE). The total is roughly $1 trillion in bond fraud, an ongoing figure. The story broke in mid-2009, only to disappear with organized suppression. The Wall Street firms lost their investment banking business, but found a fertile source of liquidity from naked short sales of USTBonds, whose buyers were the artificial factory of Interest Rate Swaps. Without this naked shorting line of liquidity, the Wall Street job cuts would have been much worse, equal to the London and European bank sector job cuts. The Parasite Doctrine has a poster boy project with these fraudulent sales given cover by the Securities & Exchange Commission, whose official ranks are filled by Wall Street henchmen.

THE CONFIDENCE GAME RUSE
The American public is told that confidence is the root cause of the absent woefully low business spending. The confidence took on damage after the vacant USGovt & USCongress budget deal and debt extension to be sure. But the true source of absent business capital investment is broad deep insolvency, the poor business risk, extending from the broken housing market, the wrecked banking sector, and the inadequate industrial base. The government finance requirements serve to crowd out the bond market, which in a normal system would rely upon the financial sector for capital formation, business development, and construction of platforms that offer job growth. In the US financial sector, the innovation is with carry trade speculation, exploitation of easy money facilities, and profound bond fraud, hardly the stuff of growth mechanisms. Big banks do not lend when they can reliably make money on the USTreasury Bond carry trade. The American corporate sector has responded to the liquidity flood, aka monetary hyper-inflation, and the corresponding acidic undermine to capital, by moving investment overseas. See Cisco, General Electric, and Hewlett Packard, which is instead raising a white flag to Asian PC makers. The most glaring consequence to the monetary policy, marred (not aided) by QE and QE-Lite and QE2 and Secret Global QE, has been the entire cost structure has risen, without benefit of rising incomes.
Furthermore check Economics 201, Chairman Bernanke. Low interest rates suppress the USEconomy, not stimulate it. Almost twice as much interest income is earned versus interest costs paid. The pensioners and retirees are struggling with inadequate income, spending less. The bond investors sought out higher yields in mortgage bonds, only to be burned by 25% to 40% losses in principal. Pension fund income is way down. Of course the motive has been to support and stimulate speculation in Wall Street, where the USFed primary loyalty lies, surely not with Main Street and business interests.

FEAR SETS IN, PANIC BEGINS, RUIN PERCEIVED
A confluence of major perceptual factors is flowing in the national mindset. Fear is setting in. The early stage of panic is evident. A growing perception of ruin can be spotted. People are responding to numerous high profile stories, each of which is important in painting a mosaic of extremes, none of which would have occurred in the 1990 decade. The chorus of crisis is loud and shrill. Here are some important events that the American public must examine.

The broken USGovt budget and upcoming huger deficits. With tax receipts trending down, and the need for economic stimulus programs clear, the USGovt deficit next year will be larger, not smaller, despite what the errant Govt Accountability Office statement reads.
The blatantly obvious USeconomic recession, whose billboard signs litter the highway, the latest being the Richmond Fed down 10% (called good), and the Philly Fed down 37 (could not be called anything but horrible). The Philly Fed forecast was minus 2 by the intrepid marketing prop carnival barker American economists.
The EUR 850 billion bailout by the Euro Central Bank, intended to cover the mountain of Italian and Spanish Govt bonds. But the bailout will accomplish nothing, just like Greece, where numerous bank bond bandaids have been applied. And besides, the Germans have refused to offer any more bailout funds, calling Italy and Spain too big to bail out, quite properly.
The creepy feeling of a global monetary system breakdown. The major currencies are being debased to such a grand extent that even the less gifted American public can notice. They see the onslaught of sovereign bonds overseas, and might harbor more distrust for USTreasury Bonds that the media reports. They might be buying gold & silver coins from the USMint, which cannot keep up with demand.
The anticipated QE3 heresy is certain to continue. It has already come in Global QE form, as the Jackass expected. My forecast is that the USFed will formally support the US Stock market and violate its charter. But the move will be applauded and serve as the next heroin injection to the body economic, with certain additional capital destruction and rising cost structure.
The Swiss and Japanese central bank futile actions, designed to halt their rising Franc and Yen currencies. The lesson learned is that all major central banks have turned toothless, their policies ineffective, wasteful, and destructive. The Competing Currency War is making all of them big losers. Their economies suffer.
The pitiful paltry puny USTreasury long-term yield of 2.0% to 2.2% does not offer the American saver the proper incentive to save, nor the proper return on investment, certainly not an adequate yield to reflect the risk taken. The yield now stands at 7% to 8% below the true CPI rate.

SINKING INTO THE AMERICAN PEOPLE MINDSET IS THAT THIS IS 2008 ALL OVER AGAIN, BUT TWICE AS BAD, SINCE THE SOLUTION HAS FAILED AND TRUE REMEDY IS SEEN AS IMPOSSIBLE!! The USGovt and USFed and Wall Street policy makers and league of Rasputins have thrown $3 trillion at the problem, have bailed out the big US banks, have conducted numerous liquidity programs, have made Swap Lines to Europe, have completed a few mickey mouse stimulus initiatives (clunker cars, first time home buyers), have extended but terminated aid to states, have extended jobless benefits, have given SS/Medicare relief, have operated gigantic debt monetization programs (QE's), but the USEconomy is rolling over into a recession anyway. The confirmation of the recession is the many denials with shorter frequency between denials
THE SHAPE OF QE3
As the Jackson Hole Conference is set to begin in the spectacular picturesque mountains of Wyoming, anticipation and anxiety rise. The Grand Tetons serve as a fitting location to announce the renewed dependence from the USFed teats, the monetary spigot. Where the spigot is directed remains the main question in debate. Given the robust supposed USTreasury Bond rally, it hardly seems suitable to direct QE3 toward more USTBond buying, unless they wish to avoid USTreasury auction failures. The ultra-low yield combined with ultra-high supply makes for extremely high risk. Bond investors might not show up at all. A failed auction would be highly embarrassing as a event after the highly publicized bond rally, an irony worthy of Rolling Stone exposure or a Saturday Night Live comedy segment. The USGovt minions and Wall Street made men had crowed that the bond rally contradicted the Standard & Poors downgrade for the USGovt debt. My forecast is that the QE3, when it comes, will be designed and intended openly to support the Stock market. It will not arrive this week. It will arrive with full bore announcement in response to the next round of deep US stock market declines. History will be made. The spin on the USTBond rally to 2% on the 10-yr is deafening and deceptive. We are told the bond market anticipates QE3 but that is patently false. The bond market smells with great dread the next USEconomic recession, or more accurately, recognition of the ongoing chronic powerful recession that began in 2008 and never ended. The bond market smells unfixable recession, all current tools having failed. The bond market detects correctly that the US Stock market from mid-2010 has been propped by QE initiatives, now absent.
The irony, intrigue, and corruption is both bizarre and macabre. The Standard & Poors President Deven Sharma has decided to step down only three weeks after the agency downgraded the US credit rating. What a predictable move. The post will be occupied by Douglas Peterson, chief operating officer of Citibank, to take effect on September 12th. Business as usual on Wall Street. The S&P lead role will be in capable hands. One might wonder if the outgoing officer will be charged with child pornography or a rape in a hotel. That event might not be needed.
GOLD MAKES RECORD HIGHS
This week has been tumultuous. The best summary in my view is to conclude that the Gold price set a record high, and fully revealed what direction it will take this autumn. In the low volume vacation dominated days of summer, an opportunity to engineer a selloff has begun in earnest. Gold has gone down to $1765 and Silver to $40 flat, still way up on the year. Hats off to Ben Davies, who has been impressively accurate in his precious metals forecasts. He nailed the silver forecast in April, expecting a steep pullback to $35. We saw it!! In June, when Gold was trading in the low $1500 level, Davies boldly forecasted that Gold would break above $2000 by yearend 2011. The strong upward moves seen so far in August have captured global attention. After action last week, Davies fine tuned his 2011 gold call, stating he expects Gold to reach $2100 by the end of December after first a correction to $1675. Today we saw it!! The hefty pullback will lose some faithful followers, but offer savvy investors a great chance to add to their positions. The cartel is busy making countless grateful Chinese, Indians, and Asians who have not stopped buying precious metals in defense of rapid inflation. They see the American bankers as the inflation villains. The sudden pullback has assured the last fire sale before the autumn gold bull romp, a great trampling event to come. It is written, it will happen. See the King World News interview (CLICK HERE).

The compromised clowns have been busy citing how the Gold price is $150 to $200 too high based upon price inflation, or even 50% over-valued based on some cockeyed Fed Business Model. They overlook the broken distorted market is the USTBonds, supported by powerful usage of Interest Rate Swaps, aided by USFed monetization still and the migration from stocks to bonds. The volatile moves in the Gold market can be interpreted with high predictability. The big down move today signals even bigger upward moves in the next few months. The money is moving quickly today on Wednesday. The 10-yr USTreasury has rallied on the TNX from 2.14% to 2.21% as a decent move. The crude oil price is up from $85.40 to $86.1 as a modest move. Nobody can deny that panic has hit the stock market, as the recession can be seen without rose colored glasses. Expect much more debasement of the USDollar, as tax revenues fall and stimulus costs rise. The bigger USGovt deficits must be financed, during a truly hostile climate. The complete ruin of major global currencies is in progress, not stoppable. Money is being ruined to such an extent that people are bewildered, wondering what constitutes money if sovereign bonds are being attacked and losing value. The tainted USTreasury Bond market has become almost a source of great amusement. The entire major currency market is in turmoil. See the Swiss Franc, the Japanese Yen, and their rapid rise several standard deviations above their norms or trendlines. Havoc has taken root.
The Libyan chapter will be properly told in a year or two. Tyrant Qaddafi wanted to install a Gold Dinar for North African usage, a similar sin committed by Saddam Hussein. These guys never learn that a challenge to the USDollar is met with armed resistance. The US & UK forces entered the fray. The secondary goal might have been to take oil producing capacity offline, thus lifting the crude oil price. Big Oil interests do not want the global recession to rock the crude oil price too much. The other benefits have been the $50 billion in funds frozen solid in US & London banks. Another $50 billion is frozen in European banks. Expect it to remain out of reach by Libya's new leaders, despite talk. It is too badly needed within the Anglo banking system. See Oslo. The search is on not only for Qaddafi, who is surely comfortable somewhere in a desert bunker, but also well fed, and well medicated with his usual fare of psycho-tropic drugs. The hunt is also on for Libyan gold bullion. The Anglo bankers need it, since the COMEX and LBMA are just about bone dry, and the big US & UK banks are insolvent on the edge of failure. See their Credit Default Swap rates on debt insurance. For the greater good of the Anglo Empire, gold must be found and secured and locked up in the banking system, regardless of the propaganda messages put forth.
Prepare for $2100 gold by January, and $60 silver by January. The last open door is being made possible in the final days of August. Like last year, the months of September through January will be ones for the history books. The start of big bank failures in the United States, London, and Europe should add to the gold run. Contagion has hit Italy, Spain, and France (the newest PIGS lookalike). The breakdown will be broad, deep, and frightening in the next few months. The twisted thinking is probably that gold must be brought down as much as possible, to make a lower base before the next gigantic upward moves beyond the $2000 level and probably past $2100. The gold breakout will capture global attention and make major headline news. This is 2008 all over again, but much worse!! The story line will be that nothing was fixed, but that nothing can be fixed, and much more debasement of money will come. The Gold Meter will rise in direct reflection.

Rupert Murdoch hearings show generational split

2011-07-20T10:54:00.002+02:00

If does not happen often, but as it happens it is a delight to read: a blogpost with an intelligent view point which makes the inner workings of the system a bit clearer. Wonderful, to make a comparison between the banking system and the media and that both are suffering from a generational conflict.

But...is the older generation so much wiser? Are our rulers young Jack Russells without any decency? If so, where is the older generation? Why do they keep their mouth shut?

The media industry is not much different from the banking industry

Generational Dynamics

Surely the most spectacular moment in the hearings on Tuesday occurred when Robert Murdoch's young 42 year old wife, Wendi Deng, got up and slugged an intruder throwing a paper plate full of shaving foam at her husband, according to the Daily Mail.

I have no way of knowing whether either Rupert Murdoch or his son James lied during the dramatic hearing on Tuesday, but I do know that Murdoch's testimony is completely consistent with the the culture of fraud and extortion that I've been describing for many years on my web site, among politicians, and in the financial and computer industries. (For the latter, see "Boomers and Gen-Xers: Dumbing down IT.")

The statement by Murdoch that most struck home, in my opinion, occurred when he was asked if he planned to resign, quoted by AP.

Now, you can that his answer is self-serving, but whether he had any other motives, I felt he was genuinely at what had happened, and his response describes a lot of what's been going on in the last decade:

"I feel that people I trusted, I'm not saying who, I don't know at what level, have let me down. And I think they behaved disgracefully, betrayed the company and me, and it's for them to pay. I think that frankly, I'm the best person to clean this up."

This is exactly what happened in the financial industries, where those tens of trillions of dollars of toxic assets still in banks' portfolios didn't just come from nowhere. They were created by Gen-Xers who poured out of colleges in the 1990s with masters degrees in financial engineering. Those people knowingly created these fraudulent securities, and sold them to investors knowing that they were defrauding the investors.

Their greedy, incompetent Boomer bosses went along with this, because they were making so much money by defrauding investors. The extortion came in when the bosses started asking too many questions; then the perpetrators threatened to go to another firm or create other problems. (See "BlogWatch: Yves Smith at 'Naked Capitalism' adopts generational model of financial crisis.")

These tens of trillions of dollars of fraudulent securities did not just come from the tooth fairy. Almost every major financial institution in the world was involved as perpetrator, and that could only happen generationally. That doesn't mean that every Boomer and Gen-Xer is a crook; quite the contrary, most people are decent, honest people.

But it's amazing how much the culture has changed since the 1990s, when the Silent generation was still in charge. In today's culture, unlike earlier decades, people who are willing to commit fraud and extortion are able to get away with it, and have a big advantage over people who are decent, honest, competent and professional.

The Rupert Murdoch scan exploded into world headlines only in the last couple of weeks, after it was revealed by the Guardian that reporters from Murdoch's News of the World newspaper had hacked into the cell phone account of a missing 13 year old schoolgirl, Milly Dowler, after she had been abducted in 2002.

The reporters actually listened to Milly's phone messages and deleted some of them, to keep other reporters from getting the scoop. Milly's distraught parents, not knowing whether she was alive or dead, discovered that the messages had been deleted, and assumed that Milly must have deleted them herself, meaning that she was still alive. Her decomposed body was found in the woods several months later.

At Tuesday's hearing, Rebekah Brooks, the editor of the paper at that time, described her reaction when she read the Guardian article two weeks ago, as quoted by BBC:

"The idea that Milly Dowler's phone was accessed by someone being paid by the News of the World, or even worse authorised by someone at the News of the World, is as abhorrent to me as it is to everyone in this room. ... I don't know anyone in their right mind who would authorise, know, sanction, approval, anyone listening to the voicemails of Milly Dowler in those circumstances. I just don't know anyone who would think it was the right and proper thing to do at this time or at any time."

Once again, I don't know what additional motives Brooks might have had in making this statement, but her anger and disgust is very credible to me, because there are two kinds of people in the world. There are people who think that there's nothing particularly wrong with hacking into the cell phone messages of an abducted 13 year old girl, and there are people who think that no one in his right mind would do so, or who would go ballistic at learning about someone else doing it. I'm firmly in the second of these two categories, and I can easily believe that Brooks was also in the second category.

What's different about our culture now that's different from the 1970s, 80s and 90s is that today there are a lot more people in the first category. For these people, decency, honesty, competence and professionalism count for nothing.

We know that the culture of fraud and extortion permeates the entire financial industry, as well as the politicians in Washington and Brussels. We know that it also exists in the computer industry, and now we also know that it media.

This is not surprising. What WOULD be surprising is if anyone could name an industry which was not permeated by fraud and extortion in the last few years.

Exec. Order 13575: Janet Now Interested In Promoting Flowers Or Controlling Your Life. You Choose

2011-07-05T09:19:00.002+02:00

Liberty

US Department of Defense & Homeland Security are going to promote rural development and economic growth in rural USA....huh?... Executive order 13575 is designed to begin taking control over almost all aspects of the lives of 16% of the American people. In the middle of the Anthony Weiner scandal, as the press and most of the American people were distracted, President Obama created something called “The White House Rural Council” (WHRC).
What has Homeland Security & Defense to do with fishing & hunting? No explanation given, just an "Executive Order" order by stealth while you were looking the other way. Janet Napolitano and her brainless thugs are now interested in promoting flowers or controlling your life. Read and judge for yourself.

Executive Order 13575 of June 9, 2011
Establishment of the White House Rural Council

By the authority vested in me as President by the Constitution and the laws of the United States of America and in order to enhance Federal engagement with rural communities, it is hereby ordered as follows:

Section 1. Policy.: Sixteen percent of the American population lives in rural counties. Strong, sustainable rural communities are essential to winning the future and ensuring American competitiveness in the years ahead. These communities supply our food, fiber, and energy, safeguard our natural resources, and are essential in the development of science and innovation. Though rural communities face numerous challenges, they also present enormous economic potential. The Federal Government has an important role to play in order to expand access to the capital necessary for economic growth, promote innovation, improve access to health care and education, and expand outdoor recreational activities on public lands.
To enhance the Federal Government's efforts to address the needs of rural America, this order establishes a council to better coordinate Federal programs and maximize the impact of Federal investment to promote economic prosperity and quality of life in our rural communities.

Sec. 2. Establishment.: There is established a White House Rural Council (Council).

Sec. 3. Membership.

(a)

The Secretary of Agriculture shall serve as the Chair of the Council, which shall also include the heads of the following executive branch departments, agencies, and offices:

(1)		the Department of the Treasury;
(2)		the Department of Defense;
(3)		the Department of Justice;
(4)		the Department of the Interior;
(5)		the Department of Commerce;
(6)		the Department of Labor;
(7)		the Department of Health and Human Services;
(8)		the Department of Housing and Urban Development;
(9)		the Department of Transportation;
(10)		the Department of Energy;
(11)		the Department of Education;
(12)		the Department of Veterans Affairs;
(13)		the Department of Homeland Security;
(14)		the Environmental Protection Agency;
(15)		the Federal Communications Commission;
(16)		the Office of Management and Budget;
(17)		the Office of Science and Technology Policy;
(18)		the Office of National Drug Control Policy;
(19)		the Council of Economic Advisers;
(20)		the Domestic Policy Council;
(21)		the National Economic Council;
(22)		the Small Business Administration;
(23)		the Council on Environmental Quality;
(24)		the White House Office of Public Engagement and Intergovernmental Affairs;
(25)		the White House Office of Cabinet Affairs; and such other executive branch departments, agencies, and offices as the President or the Secretary of Agriculture may, from time to time, designate.

(b)

A member of the Council may designate, to perform the Council functions of the member, a senior-level official who is part of the member's department, agency, or office, and who is a full-time officer or employee of the Federal Government.

(c)

The Department of Agriculture shall provide funding and administrative support for the Council to the extent permitted by law and within existing appropriations.

(d)

The Council shall coordinate its policy development through the Domestic Policy Council and the National Economic Council.

Sec. 4. Mission and Function of the Council: The Council shall work across executive departments, agencies, and offices to coordinate development of policy recommendations to promote economic prosperity and quality of life in rural America, and shall coordinate my Administration's engagement with rural communities. The Council shall:

(a)		make recommendations to the President, through the Director of the Domestic Policy Council and the Director of the National Economic Council, on streamlining and leveraging Federal investments in rural areas, where appropriate, to increase the impact of Federal dollars and create economic opportunities to improve the quality of life in rural America;
(b)		coordinate and increase the effectiveness of Federal engagement with rural stakeholders, including agricultural organizations, small businesses, education and training institutions, health-care providers, telecommunications services providers, research and land grant institutions, law enforcement, State, local, and tribal governments, and nongovernmental organizations regarding the needs of rural America;
(c)		coordinate Federal efforts directed toward the growth and development of geographic regions that encompass both urban and rural areas; and
(d)		identify and facilitate rural economic opportunities associated with energy development, outdoor recreation, and other conservation related activities.

Sec. 5. General Provisions.

(a)

The heads of executive departments and agencies shall assist and provide information to the Council, consistent with applicable law, as may be necessary to carry out the functions of the Council. Each executive department and agency shall bear its own expense for participating in the Council.

(b)

Nothing in this order shall be construed to impair or otherwise affect:

(i)		authority granted by law to an executive department, agency, or the head thereof; or
(ii)		functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(c)

This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(d)

This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

Barack Obama

The White House,

June 9, 2011.

Who Really Owns America? Its' a Big Club And You Aint In It.

2011-06-17T08:49:00.000+02:00

George Carlin at his best.

Greek Financial Problems Due To Organised Criminal Racket Of International Banks

2011-06-05T03:13:00.010+02:00

"....and while the banks were raising money for the Greek government, the same banks were silently betting and speculating against the same loans. Sounds familiar? The same people, same plan, same action, same rating agencies and same result in the US, Ireland, Belgium, Portugal, (wait for Spain, Italy, etc). Also called "racketeering & collusion".... These banks knew damn well Greece would never be able to pay back their loans, so for this they should be punished. Not only with jail but also with a so called "haircut". Capice?...Καταλαβαίνετε?"

The Greek people are angry and nobody is helping them. The courts are the last refuge. After that it is civil war.
---------------------------------------------

On April 09, 2010, in Athens, together with the Greek Lawyer Mr. George Noulas, we filled a Criminal Fraud Charge file submitted to the Attorney General of the Supreme Court.
The file is claiming against fraudulent Speculators who, by running an organized criminal plan, they manipulated the Greek Government Bonds Market, with the intent to perform multiple financial profits, deceiving and damaging Greek National Economy and Greek Citizens and Taxpayers wealth.
The Greek sovereign debt crisis analysis could help the world to realize the extreme vulnerability of all our national economies.
To understand how sovereign countries can be easily destroyed and brought to financial slavery by some few fraudsters, through the combination of both naked CDS trading and naked short selling on Government bonds, issued by the Governments in order to finance our Govt debts and the economic development of our countries.
The most important lesson we learned from the Greek case study, is the definition of the limit between market speculation and financial crime.
This explains how financial speculation could turn into a fraud crime, transforming fraudulent market profits in pure money laundering and changing economic sovereignty of a country in a financial slavery scam.

The crime
The crime is a typical financial fraud against the State, consisting in the manipulation of the Greek Government debt by a group of fraudulent Speculators and their Accomplices, Greek and foreign citizens and Government Officers.
Those persons, by running an organized criminal plan, represented falsities on the existing Greek sovereign debt and national economy facts and figures, with the intent to manipulate the Greek Government Bonds Market, in order to perform multiple and consecutive financial profits, with the knowledge and the purpose to deceive and damage Greek National Economy and Sovereign Debt, Greek GDP and, consequently, Greek Citizens and Taxpayers wealth.
The direct and consequent damage, only for the year 2010, was calculated at 13 billion euro, stretching Greek National Economy, Next Generations Wealth and Economic Sovereignty of the country.
The Greek Government debt financial scam fits with all fraud elements, as required by the most EU criminal laws.
Speculators and accomplices made representations of existing facts with the knowledge of their falsity and with the intent that it shall be acted upon by the plaintiffs ignoring the falsity, their reliance on the truth of those false representations, their right to rely upon it and the consequent damage suffered by the Greek citizens and taxpayers.
Each of the above mentioned elements has been pled with particularity and proved with clear, cogent and convincing evidence, in order to establish the case.
Some of the persons, corporations and institutions involved in the Greek case, have been recently charged with similar fraud crimes in the USA and EU, following to investigations of Justice and other State and International Authorities.

The Fraudulent Actions & the Omissions to Act
The crime consists in a double financial scam, committed under consecutive actions by the persons identified as fraudulent speculators.
First, with Naked CDS multiple trading actions (transactions) against Greek Govt bonds, in order to manipulate CDS and spreads rates.
This fraudulent trading pushed the lending cost of the Greek sovereign debt to unacceptable interest rate levels, higher than 15%.
Second, with multiple Naked Short Selling actions (transactions) on Greek Govt Bonds, in order to manipulate the bonds market itself.
This fraudulent short selling created a fake and artificial bonds offer in the international markets, with the intent to depreciate Greek Govt Bonds values by up to 30%-40%.
In both those circumstances, some of the physical persons directly or indirectly identified as responsible persons of the crimes committed, were at the same time representing as principals, managers, officers, delegates and brokers the Prime Dealers of the Greek Govt Debt, that means the international Banks who, under agreements with the Greek Government, are placing the Greek Govt debt to the international markets.
This is the most important of the accusations, as the same persons responsible for the placement of the Greek Govt debt in the international markets, were double dealing with CDS and Govt Bonds Short Selling, covered or naked transactions, acting against the interest of their customer, that means Greek Republic, omitting intentionally to inform any of the local Supervision and Regulation Authorities regarding their double dealing position.

This represents the most clear and direct case of both conflict of interest, insider trading and financial scam, as the same persons and corporations were first dealing with their customer’s Govt bonds and, at the same time, were double dealing against their customer’s interest, selling the bankruptcy of that customer (Greek Republic) to other customers they had, taking advantage of the inside information and the knowledge they had on the particular circumstances and the expires of the Greek Govt debt, as a result of their first position as Prime Dealers of the Greek Govt bonds.
This is the main reason we accused them to act under a precise and organized criminal plan.
The persons we charged are the same fraudsters involved in the USA scandal during the years 2007-2008, speculating on the CDOs and the CDS issued on the USA subprime mortgages that brought to the Lehman and AIG collapse and to the world financial crisis.

Same persons, same actions, same plan, same money, same scam, same damage.

That means there were knowledge, manipulation experience, inside information and organization.

(How were there crimes executed in Ireland, Spain and Portugal? Are there similarities with Greece? Troy Ounce)

The one and unique difference consists in the fact that the Greek case was the first financial scam where market manipulation was organized in order to destroy a sovereign country, instead of a bank or a private corporation.
And instead of the CDOs, the crime was committed with the Greek Govt Bonds.
All those fraudulent actions were realized by a series of multiple and consecutive transactions, consisting in buy and sell orders, covered or naked and then recycled, which were left to happen thanks to the omissions to act by the Greek supervision and regulation authorities for the domestic financial market, such as Bank of Greece, Ministry of Finance and Public Debt Management Agency in first.
Those combined fraudulent actions, consisting mainly in both Naked CDS and Naked Short Selling transactions on Greek Govt Bonds by the Prime Dealers of the Greek Govt Debt, created a sovereign debt financial bomb exploded on Greek national economy, destroying the country.
This is the reason we identify the scam as a financial terrorism crime.

The persons we charged
All physical persons identified as fraudulent speculators on the Greek Govt debt manipulation.
That means all responsible principals, officers, managers, delegates, brokers, etc., of the major commercial and investment banks involved in the scam, hedge funds, rating agencies and, together with them, all Greek partners, representatives, brokers and other physical persons identified as accomplices, such as Greek Banks and Funds principals, officers, managers, traders and, more than them, blue chip business owners, experts and financial analysts, politicians, Govt officers, Media Owners, etc.

The direct damage
Following to the direct and consequent damage of 13 billion euro suffered by the Greek citizens and Taxpayers, on May 2010, Greece entered under an IMF, EU and ECB bailout scheme called «MNIMONIO».

This is nothing the less than a tailor made Government lending program ruled by a Memorandum of Understanding (MOU) with the lenders, similar to those imposed in Argentina and other Latin America countries.

This MOU was imposed in Greece after a real parliamentary coup organized by the Greek government, violating the primary and most essential principles of the Greek Constitution map.
There was not any referendum, Greek citizens were never asked in any way on that and decision was made in Parliament without to respect the quorum majorities required by the Greek Constitution for the international contracts and agreements signed by any Greek Government in charge.

And the most terrible thing was that persons, institutions and corporations identified as responsible for the speculation and the financial crimes committed against the country, through years of government debt manipulation and falsities, they have been self appointed as the ultimate country rescuers.

That means Greek Government itself, Banks, Bank of Greece, ECB and EU Commission.

The indirect damage – Debt Restructuring
Through the IMF, EU and ECB M.O.U. bailout, Greek government debt real restructuring procedure started on May 2010.
This is a very important step, we need to understand.

MOU bailout modified both the nature and jurisdiction of the Greek sovereign debt.

This was the first, real restructuring procedure started on the Government debt of the country.
Greek sovereign debt issued until 2010, was under a form of a regular uncover debt, simply issued through government bonds, without any understanding securities or any other kind of collateral assets.
That means, existing Greek sovereign debt was not collateralized.
Going under the MOU bailout scheme, the 110 billion euro loan approved on May 2010, was the first Greek government debt issued as a collateralized debt obligation, similar to a CDO contract, and was approved only with the purpose of the down payment of the previous government bonds expires.
That means, Greece signed a new loan agreement, in order to pay older debts expires.
This is a typical and pure refinance operation.
But the real truth beside is that previous debts were not collateralized and new MOU debts they are.

Through this refinance procedure, Greece will gradually transform all the existing non collateralized sovereign debt, in a new, collateralized sovereign debt, offering as collateral securities all public properties, future revenues and all tangible and intangible assets of the country.

This is how sovereign debt nature was modified through MOU bailout agreement.

How that will happen ?
After the first 110 billion MOU loan agreement, signed on May 2010, a second one will follow.

This will happen as Greece will not be allowed to return to the markets on 2012 and 2013.

This is the reason why speculation against the country is continuing, even after the approval and the realization of the first MOU agreement.

Government’s financial policy agreed with the lenders of the MOU agreement, encourage international speculators to continue with manipulation against country’s national economy and sovereign debt.

Internal market experiences a day after day continues downturn, private business are constantly closing or bankrupting, inflation and unemployment are blowing, recession is running on an average 4% year rate, poverty and criminality are growing up, and all this explosive, hard recession economic mix, introduces Greece in the vicious circle of a new and continue deficit generation that will keep creating additional, new sovereign debt, as deficits could never be financed by the future economic revenues of the country, as GDP is constantly dropping down.
After all that, there will not be any market in the world intended to finance a country in such a financial situation, and that means on the year 2012 a second MOU bailout will follow the first one.
And again, this one will be also issued as a collateralized debt.
And again this will also be approved limited with the purpose to pay older government debt expires,continuing through this refinance procedure to transform the whole Greek sovereign debt into a new, collateralized debt obligation.

When over a 50% quote of the existing sovereign debt of the country will be transformed in a collateralized debt obligation, only then default will be leaved to happen in Greece.

In this way, all Greek national assets and resources will become ownership of the country lenders, as the new Government loans under the various MOU bailout agreements, not only will be 100% collateralized but they will also be regulated by the English Law.

And this is how jurisdiction of Greek government debt is gradually changing, as existing debt is regulated by the Greek law.

That means execution procedures on public properties and any kind of tangible and intangible assets will be admitted and Government debt transfer to any third parties, partially or totally, will also be free to happen.

After all that, Greece will never allowed in the future to be a sovereign country, as Government debt could be easily transferred under a regular factoring agreement to any physical person, institution, corporation or country, such as Turkey for example.

What is the actual status of the case
The criminal charge case is now at the most important point.
Preliminary investigations are recently concluded, after a very detailed exam from both Prosecutor General Office and Greek Financial Police Authorities (SDOE).
On February 2011, we were invited by the Financial Police Dept in Athens to give additional information regarding Greek Govt bonds short selling transactions, between January – April 2010.
On this purpose we submitted an additional file with all that information.
On May 2011, Mr. Panos Kammenos, a deputy of the Greek Parliament, following to the Greek justice authorities investigation on the criminal fraud charge file, submitted a parliamentary interrogation to the Minister of Economy and Finance, asking from the Government to inform Greek Parliament on all the specific details regarding Govt debt Prime Dealers, CDS and Naked CDS Traders, Govt Bonds Short Sellers, Banks, Funds and physical persons indentified as buyers, sellers or short sellers and, additionally, to inform Greek Parliament on the official results of the recent EU and USA state and justice authorities investigations on Greek Govt debt speculation, CDS cartel frauds, etc.
After that, the complete charge file is now transmitted to the Prosecutor for the Financial Crimes at the Athens Court, who is starting with the main investigation procedure and, during this phase, he will investigate on all specific physical persons and corporations, both Greek and foreign citizens.
This is a criminal charge case and only physical persons can be indicted, that means all responsible persons indicted with the charge file, such as banks and funds principals, managers, officers, representatives, brokers, dealers, CDS traders, Short Sellers, etc., Govt Ministers and Officers, Bank of Greece principals, officers and directors, together with the others who will be indicted during the preliminary investigation process.
All those indicted persons will be called to the Prosecutor’s Office to explain their actions or omissions to act, that means they have to explain what exactly they did, how they did it, why they did it, on behalf of whom they acted, etc., etc.
Having a good experience on previous similar cases, I’m sure that this moment is very critical as a lot of them will start to talk.
Some of them because they’ll get afraid, others because they didn’t share any of the profits, some others because they didn’t got the profits promised by the speculators who organized the scam, etc., etc.
We trust in God, Justice and Common Sense, hoping that the Greek charge file will push other European citizens and taxpayers to do the same, as happened recently in Spain, where a similar criminal file was submitted to the local Justice Authorities.
For more information: Dr. Kiriakos Tobras * www.stopspeculators.gr

(Google translation) h/t www.maxkeiser.com

Keynes vs. Hayek: Undecided?

2011-06-04T12:56:00.003+02:00

Part 1

Part 2

The Kicking And Screaming Of A Loser Who Is Taking Stock Of His Policies

2011-06-03T11:47:00.000+02:00

(Desperation)

POWER:
Trichet: "Europe needs a Finance Ministry":

CONSOLIDATION
Trichet: "This Finance Ministry would carry direct responsibilities for countries in distress"

INTERFERENCE
Trichet: We WILL interfere into a Souvereign State

Nobel Peace Prize Winner Assassinates His Unarmed Enemy By Shooting Him in the Head And Then Throws His Body Out Of A Helicopter Into the Sea.

2011-05-04T19:45:00.002+02:00

Never mind the cruelty of Osama Bin Laden, the moral high ground of the Americans is laughable. This tit-for-tat debt empire which spends trillion of US$ on warfare equipment but just cannot win wars even if the country consists of rocks or sand only now has to resort to sending kidnap and assassination teams to foreign countries to take out their symbolic enemies.

Constitution, schmnontitution, you are only protected by the rule of law and the constitution if you're not condemned by the media. Constitution? Only if you're not a prisoner at Guantanomo bay. Constutution? Not if you're being waterboarded. Constitution? Only if youre not a victim of rendition procedures. Constitution? Not if you're a victim of fraudulent regulators like the SEC and FDIC. Constitution? Not if it does not suit the blood thirsty tugs in charge.

A massive war apparatus to protect the US pissed on by a few guys with box cutters. Something I am missing here?

The same Americans who shout for more blood at Times square can be found on Sunday in church asking for forgiveness for all their sins. Violence! they shout. Violence is the only language they understand. Fools, they are.

Typically the last day of an empire.

Now What's All This Fuzz About Gold and Silver?

2011-04-21T13:49:00.000+02:00

Honey, I am just going to the shop to get some milk, OK?

Now what's all this fuzz about gold and silver?

I always wondered why the money I earned when I was young with washing cars could buy you a lot of things but not even a lollypop today. In those days I saved big money, well...to me that was.. by knocking on doors in the neighbourhood and I considered myself wealthy. Those were the days.....

Now why is it that this feeling of wealth disappears over time and where did it go to?

Welcome to the world of money where nothing is straight forward.

You believe you are wealthy with your $50,000 in your bank account? Tell you what: the money is yours but not the value of your money. The value of your money is dictated by our financial and political powers. And am I right that every year you have the feeling that you are getting a little bit poorer? Not much, but enough to raise an eyebrow but not enough to make you really, really angry?

The scheme is to print every year more money than is necessary to keep up with the growth of the economy. That is called inflation and is exactly the reason your feeling of wealth disappears year after year.

You see, more of something decreases the price. The price of a collectable Ferrari could well be US$ US$ 200,000; but if there would be 50 similar Ferrari’s for sale the price would be less, perhaps 25%, makes sense, no?. The same logic applies to money. More money in circulation; the less it is worth.

But what is the motivation of our political leaders to debase our money? I mean, a strong currency should be in their interest also? The answer is that their only objective is that they want to get re-elected and the only way to do this is to keep their voters happy...by spending more...a small price to pay for a comfortable job.

Note also the financial people with excess saliva in the background as more expenditure means more loans, means more bonuses.

Before 1971 politicians were not allowed to spend more than the economic growth as this expenditure was linked to a gold standard. Expenditure was fixed, to the fury of the politicians. Nixon at that time needed the money to expand the war in Vietnam, but was not allowed to because of the gold standard. So he changed the rules, abolished the gold standard and off they went to....spend....spend...spend....as if there was no tomorrow.

Intrinsically, politicians cannot be trusted with money

Of course all this money created a feeling of wealth and invincibility. Fighting 3 wars, 50 x up and down to space, health care for everybody, and a defence budget to protect all this, a lack of money will not stop the politician. But nothing is for free and the cost was, and is, the debasement of the US$.

Currency debasement is a worldwide disease

That is why the world must return to a sort of a gold or silver standard. Intrinsically, politicians all over the world cannot be trusted with money. He/she needs to be kept in check and only the voter can make sure of this.

Any other solution politicians come up with to rein in spending will be a dud. We must take away the financial powers we gave them and go back to creating wealth with real money.

The world will soon wake up to the reality that everyone is broke.. *

2011-03-26T21:24:00.001+02:00

"THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED. ” Ludwig von Mises – Austrian Economist (1881- 1973)

" * ...and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title."

Hedge - & Pension Funds in Joint Suicide Pact

2011-03-13T21:41:00.001+02:00

The Alchemist Believe They Have It All Sorted Out.........

Smart people have been buying precious metals for 3000 years to protect themselves against the follies of politicians and bankers. They know, precious metals are a great store of value.

There is however one "but": you have to buy the real thing, the actual metal and take possession of it. Our banker friends know this and are coming up with all kind of ways to sell "paper gold", claiming it is "as good as gold".

A precious metal investor can put money in the financial system such as banks and financial institutions and buy exchange traded funds (ETF's) of which 99% of the funds does not have exposure to the real metal at all. Also, it is claimed that the financial industry sold approximately 100 times more paper claims of precious metals than that there is physical precious metal available. Of course, this is an accident waiting to happen. It is all about "trust" and hope the financial system is not a Ponzi scheme.

What is worse is that when an exchange traded fund (or paper gold fund) blows up for whatever reason (could be our financial system is a Ponzi scheme), the precious metal investor will be a normal creditor and stand in line with other creditors for a partial pay-out in a worthless currecny of his/her choice. Forget you will get the real stuff. Firstly the metals are not there, secondly the metals are not on your name (segregated) so they will be sold in case of a bankruptcy and the investor will hold the bag.

Paper gold such as ETF's are a scam, price trackers only. The banks dupe the investor into thinking they have the real stuff, but they don't. Financial advisors are complicit is this fraud and playing the shell game of "trust", the criminal racket to convince people to buy a piece of paper which is "as good as gold".

One would think that some, perhaps 2-3 hedge - or pension funds would be aware of the dangers, but apparently not. They only know "financial instruments": paper promises based on the good name of governments and financial institution and approved by the Alchemists, the Central Banks and big banks of this world. I spoke recently to a hedge fund manager about the value of possession of physical gold and she only shouted: "where is the liquidity?" completely unaware of the fundamentals of precious metals and proof that hedge - and pension funds are walking around in their own tunnel.

Granted, many funds just are not allowed ("not mandated", as it is called) to invest in physical precious metals, but only in "financial instruments" or...paper promises. The Alchemists in the banking industry restricted these pension and hegde funds to buy anything real, something you can touch, with the result that only investments from the financial industry can profit..

Linked to the above is that hedge & pension funds are not allowed to put investments, which they made outside the financial industry like an investment in physical precious metals, on their balance sheet.

The implication of the above is that pension and hedge funds are in a joint suicide pact. The thinking is that if the shit hits the fan we go together. Note also that the precious metal investor, who believes he has the real stuff, will be worst off. In case of a financial meltdown an ETF is junk paper and people will try to claim the real stuff. Forget it. It is not there and financial ruin is next.

Part of the criminal financial game is also that the Alchemists have been suppressing actively the price of gold for the last 20 years. The reason for this scheme is to maintain the strong US$ policy. Trust in the US$ is of major importance so a high gold price is out of the question. Also the silver price is being manipulated downwards.

The Alchemist Believe They Have It All Sorted Out........they closed the circle.....nothing can happen....but...oops.... they forgot something....silver....:

THE SILVER DOOR IS CLOSING

Dont thread on me

I have a little theory that I’ve been kicking around for a couple of years. The theory is that there will come a time that you will not be able to buy silver at any price. It will not be because there is not any silver around to be purchased or that silver will not have any value. I think that we won’t be able to buy silver at any price because there will be a very sudden and a very dramatic shift in the perception of silver’s value. A time will come when the value of silver is so strong and the value of the dollar so weak, that only a fool would ever trade silver for the dollar.
I have stated in many previous articles that silver is the Achilles Heal of the Global Power structure. This honest money will not only bring down the fraudulent banking system, but it will bring down all of the forces that are a scourge to humanity. You see, without a corrupt monetary system, trillions of dollars will not be available to fight needless wars, fund Wall St schemes and a myriad of other horrible events.

Right now, we have two separate forces fighting over a precious, limited and diminishing resource called silver. In one corner, we have the Elite that know that they have Quadrillions in paper assets riding on the perceived value of the dollar. They use that wealth to control politicians, armies, natural resources, medias, corporations, capital markets and ultimately you. They can sustain unlimited paper losses to keep the game going. The problem for them is that their infinite money is running into a very finite world, especially in silver.
In the other corner is an increasingly Aware group of people, that know that the end game is near for the dollar. Fathers are worrying about how to secure their family’s future and mothers are concerned about rising food and fuel costs. Business owners are starting to see that they need to protect their assets. Investors are worried about rigged markets and inflation destroying their returns. Corporations are becoming increasingly aware that their market capitalization might be at risk if they do not have the materials to make their products. Even nations like China are seeing the value of this strategic resource. This Aware group sees that owning tangible assets is the best strategy to not only defeat this enslaving system, but also to protect their wealth. No other tangible asset in the world is as attractive as real, physical silver. (Read the Silver Bullet and the Silver Shield.)
The Elite use a multiple pronged attack on silver to hold it down. All of their weapons are paper tigers. The Aware have found that by taking physical delivery of silver, the Elite’s powerful weapons are rendered useless. Actually even worse than useless, these paper weapons actually help the Aware to buy more physical silver at discounted and subsidized prices, hastening the Elite’s ultimate demise. Keep those shorts coming and we will keep stacking!
As a result of this battle, the CRIMEX now has less than half of what it had in registered inventory than it did at the bottom of the Bear Trap of 2008. In July of 2008 there were 87 million ounces in the registered CRIMEX vaults. Today, there is just over 40 million ounces left. The trend line is pretty dramatically down even as the price of silver spikes up. Less than $1.5 billion would empty the CRIMEX of the last bit of silver at current prices. With no silver to deliver, the jig is up for the Elite.

The Silver Door is closing on this game and I feel it could happen by the end of this month. I made the prediction that silver would be $50 by the end of March but I also said that it might not be available at any price. Both of these predictions center around a physical silver default at the CRIMEX. This would be the equivalent to a bank run where people turn in their receipts/contracts to get their money/silver only to find out that there are much more receipts/contracts than money/silver. We all know that banks run on a fractional reserve banking system. According to whistle blower Andrew Maguire, the CRIMEX/LBMA are trading 45 to 1 paper versus real metal. Got physical?

The first part of my prediction may have already come true with $50 silver according to this article. It was reported that Blythe Masters offered a deal that no trader could refuse. She offered an 80% premium NOT to take physical delivery of silver in March. The trader was told that JP Morgan could not deliver 20 million ounces (4,000 contracts) and that if the trader did not take this pay off, they would be left holding the bag as an unsecured creditor. Vito Corleone would have been proud of Blythe.
Another interesting twist in this silver saga is noted in this article form Along the Watchtower. There are claims that JP Morgue, through silver derivative bets, could have exponential loses when silver goes above $36. They estimate that if silver goes to $50 they might be out $40 billion. And that is IF they don’t cover their shorts! The article claims JPM has a $170 billion market cap with $40 billion in cash. That means if silver goes to $50, JPM will be insolvent. (That is IF the Fed doesn’t give them their own QE3 or if JP Morgue does not set up Enron like banks to dump these bad positions into in the Caribbean.)
We can see the inventory of silver they are able to deliver is depleting, which is one side of the closing door. The other side of the closing door is as the price rises, the more silver is in Aware hands. The further the price raises, the larger the floor is for the silver market. Buying silver is not like buying a stock, bond or any other asset. It almost has a cult like following that is growing stronger every day. Some buy for the financial opportunities. Some buy as a way to “stick it to the man.” Some buy for the honesty of the money. For me, it is a shot in the next American Revolution for freedom. There are hundreds of reasons to buy silver but very few reasons to ever sell for dirty green pieces of paper with “all seeing eyes.”

The total amount of silver production sold short between the 8 largest banks equals 150 days of world silver production. If silver starts marching up and these banks are forced to not only cover their paper shorts, but also deliver the real physical silver, this will cause the largest short squeeze the world has ever seen. This will cause severe dislocations in the world’s economy to say the least. I believe will coincide with a crash in the world’s fiat currencies. The Silver Door will then be closed.
Sooner or later the silver door will be shut, as all of the physical silver sits in the hands of the Aware. The Aware will not sell until a new paradigm comes into existence. They will not care about a world wide military empire. They will not care about public pensions. They will not care about vampire squid banks on Wall St. They will not care about sock puppet politicians and their budgets. They will not care about propaganda from controlled media. They will hold, because they will then have the power.
“He who has the silver, makes the rules.” -Chris Duane
When the Silver Door is closed, you will hear a deafening quite around the world. When there is a silver default on the CRIMEX and the Elite will be forced to admit that they have been playing a huge game of illusion. Everyone will then know the world has changed, forever. Those who do have silver will be awe struck at your new found wealth they now have. They will have hit the lottery because the real purchasing power of their silver will rise astronomically. They might be able to trade 1 ounce of silver for 1 ounce of gold. They might be able to pay off their mortgage with a few ounces of silver. They may be able to buy the entire Dow Jones share for a handful of silver.
“It is better to be 6 years too early than 1 day too late on this silver rocket.” -Chris Duane
I believe that we are in the beginning of a Mania Phase in this silver bull market in my article the Silver Rocket. If we are in the Mania Phase, the game has changed already. Things that worked in the past will no longer work in the future. Traders that don’t see the sea change will either be left off of the rocket or burned. Those that short silver with leverage in the Mania Phase will be wiped out as the market stays irrational longer than they can stay solvent. Ultimately these silver shorts are the ones that will send silver to the moon because they HAVE to buy or risk bankruptcy.
Silver traders may sell silver at a “top” and when they see silver keep going higher. They will eventually get back into the market buying less silver for more money. They will learn this hard lesson once. They will get back into the silver market and stay in.

I have had my run ins with more than one trader who has said that it is frothy and it time to short silver. The very well respected David Morgan thinks we are going to have a pull back in silver. Even one of my favorite analysts of the silver market, Adam Hamilton of Zealllc., is saying we are in unprecedented territory as silver is 50% over its 200dma. The very fact that I am spending so much time talking about silver this delivery month of March, would seem very bubble like. For the reasons stated above and many more, I think we could be seeing the Silver Door closing. If that is the case, then these traders could be in a very dangerous space.
I would caution traders that silver has or will decouple from the control of the Elite into the hands of the Aware. If you are taking “FRN profits” that is one thing. If you are shorting silver, like some guys I know, be prepared to be swept up in the largest short squeeze of all time. (Remember, you don’t have the luxury of the Fed’s printing press to back you up.) If we are truly in the Mania Phase of the Silver Rocket there might not be a way back into the market, IF you think like a trader.
I would also caution silver buyers, do not ever use leverage in this most volatile of commodities. Stick to physical silver in your possession only. I watched my holdings take a 60% hit in 2008. Thankfully I was in physical and knew enough to buy more when silver was on sale. If I were buying today and did not have a single ounce, I would be buying a good first shot right now to have something. I recommend averaging in on a weekly or monthly basis. Think of just trading your fake digital and paper money for the real stuff and it becomes less scary. Find your own comfort level and do your own due diligence. And for Pete’s sake, don’t panic if a hit does come. (It looks like they tried last Thursday and Friday. All of that work shorting silver got reversed in a few hours to finish 1.7% higher.)

If silver does what it did in 2008 and dumped 60%, would you have enough confidence in buying more or would you be selling into that trap? If you said you would be selling then don’t buy now or ever, because you are weak handed. You will have your money taken from you and be left with no metal. How sad.

If that if that happened again would you actually be a little excited to buy more at a discounted price? Then get going and buy now. Be sure leave some powder dry for the smack downs. 10 am EST seems to be a good time to buy just about everyday thanks to Blythe…

I will sleep soundly regardless if silver dumps or moon shots in the near term. I have seen this movie before and I know the ending. All of the dramatic plot twists mean nothing to me. In the end, the good guys ride off into the sunset with their girls, guns, and sacks of silver.

Wake Some People Up!

FAKE US WEST COAST RADIOACTIVE FALL OUT AREA.....

2011-03-12T20:36:00.005+02:00

From: http://www.solarstorms.org/Sradiation.html:

0-50 rads - No obvious short-term effects

80-120 rads - You have a 10% chance of vomiting and experiencing nausia for a few days

130 -170 rads - You have a 25% chance of vomiting and contracting other symptoms

180-220 rads - You have a 50% chance of vomiting and having other severe physical effects

270-330 rads - 20% chance of death in 6 weeks, or you will recover in a few months.

400-500 rads - 50% chance of death

550-750 rads - Nausia within a few hours ; no survivors

> 1000 rads - immediate incapacitation and death within a week or less.

Not sure if I believe this one, looks like a hoax:

UPDATE: Fake map and numbers! http://yournewreality.blogspot.com/

All About Sir Fred Goodwin, former RBS chief or Fred "The Shred".

2011-03-10T16:57:00.009+02:00

Q: Now spot the difference between the guy on the left and the guy on the right?

You see! Not difference. They could even be family!

<<------------------------------------------->>

Q: And what is the difference between the guy on the left and the guy on the right?

A: the guy on the left has a friend.

<<------------------------------------>>

Sir Fred Goodwin, former RBS chief, obtains super-injunction

Telegraph

Sir Fred Goodwin, the former chief executive of the Royal Bank of Scotland, has obtained a super-injunction banning the publication of information about him, it has been disclosed on the floor of the House of Commons.

The existence of the draconian injunction - so strict it prevents Sir Fred being identified as a banker - was disclosed by John Hemming, a back-bench Liberal Democrat MP, in a question during a business debate at the House on Thursday morning. His comments are protected by parliamentary privilege.

He said: "In a secret hearing this week Fred Goodwin has obtained a super-injunction preventing him being identified as a banker.

"Will the government have a debate or a statement on freedom of speech and whether there's one rule for the rich like Fred Goodwin and one rule for the poor?"

Leader of the House Sir George Young said a forthcoming Westminster Hall debate would explore freedom of speech, adding: "I will raise with the appropriate minister the issue he has just raised."

The terms of the injunction are so strict that the Daily Telegraph cannot reveal the nature of the information that Sir Fred Goodwin is attempting to protect.

Sir Fred, nicknamed Fred "the shred" for his management style, presided over the near collapse of the Royal Bank of Scotland, which had to be bailed out by the taxpayer.
He left with a pension of £700,000 a year and a lump sum of nearly nearly £3 million. Following a public outcry he later agreed to reduce his payout by £200,000 a year.
Super-injunctions - under which even reporting the existence of the injunction is banned - are increasingly being used by powerful corporations and wealthy individuals to stop the media from publishing information.
Last month a sportsman known to have cheated on his partner with two women won an appeal to remain anonymous. The judge said his identity had to be protected because the fact he had conducted a previous affair would make it easier for people to work out the nature of the allegations.
Three days later Mr Justice Eady granted anonymity to a married TV personality identified only by the random initials OPQ. The judge asked the media to leave the court, saying that "to proceed in public would defeat the object of the application".

The Government's lies; grassroot protest in the UK

2011-03-07T21:20:00.001+02:00

The Government's Line lies

“The cuts are necessary, there is no alternative.”

We are told that it is vital to reduce the deficit, and that the only way of doing this is to cut public spending. This is certainly not the case. There are alternatives, but the government chooses to ignore them, highlighting the fact that the cuts are based on ideology, not necessity.

One alternative is to clamp down on tax dodging by corporations and the rich, estimated to cost the state £95bn a year
Another is to make the banks pay for a crisis they created: last year they paid out over £7bn in bonuses and just four banks made £24bn in profit

The tax avoided and evaded in a single year could pay for the £81bn, four-year cuts programme.

“The cuts are fair, we are all in this together.”

Since the banking crisis:

average pay of FTSE 100 directors has risen 55%,
corporation tax has been cut,
the government have not delivered on a manifesto pledge to clamp down on tax avoidance, instead cutting staff at HMRC,
bank profits and bonuses are back in the many billions,
there has been no reform of the banks.

David Cameron himself has said that the cuts will change Britain's "whole way of life". Every aspect of what was fought for by generations seems under threat – from selling off the forests, privatising health provision, closing the libraries and swimming pools, to scrapping rural bus routes. What Cameron doesn't say is that the cuts will also disproportionately hit the poor and vulnerable, with cuts to housing benefit, disability living allowance, the childcare element of working tax credits, EMA, the Every Child a Reader programme, Sure Start and the Future Jobs Fund to name a few. The facts speak for themselves; we are not all in this together, we are paying for the folly of reckless bankers whilst the rich profit.

The government are forced to claim that the cuts are necessary as they know that people would never accept them otherwise. By repeating the same lies over and over again, they hope to brainwash people into inaction.
There are alternatives to the cuts, and we are not all in this together. But unless we take action, and take the facts to our friends, our families and those around us, they will get away with it.

About UKUncut

On October 27th 2010, just one week after George Osborne announced the deepest cuts to public services since the 1920s, around 70 people ran along Oxford Street, entered Vodafone’s flagship store and sat down. We had shut down tax-dodging Vodafone’s flagship store.

At that point, UK Uncut only existed as #ukuncut, a hashtag someone had dreamed up the night before the protest. As we sat in the doorway, chanting and handing leaflets to passersby, the hashtag began to trend around the UK and people began to talk about replicating our action. The idea was going viral. The seething anger about the cuts had found an outlet. Just three days later and close to thirty Vodafone stores had been closed around the country.
We start with some simple points of agreement. The brutal cuts to services about to be inflicted by the current Government are unnecessary, unfair and ideologically motivated. The coalition are particularly fond of two obscene catchphrases: ‘There is no alternative’ and ‘We’re all in this together.’ Both slogans are empty and untrue. The cuts will dismantle the welfare state, send inequality sky-rocketing and hit the poorest and most vulnerable hardest. A cabinet of millionaires have decided that libraries, healthcare, education funding, voluntary services, sports, the environment, the disabled, the poor and the elderly must pay the price for the recklessness of the rich.
Austerity-economics is the policy of the powerful. It cannot be stopped by asking nicely. We cannot wait until the next election. If we want to win the fight against these cuts (and we can win) then we must make it impossible to ignore our arguments and impossible to resist our demands. This means building a powerful grassroots mass movement, able to resist the Government cuts at every turn.
UK Uncut hopes to play a small part in this movement. In only a few months, from a single action in London, UK Uncut has spread to up to fifty-five towns and cities. Everyone from pensioners to teenagers, veterans to newbies have already joined our actions in towns from Aberdeen to Aberystwyth. We have proved that there is anger at these cuts, that the idea of mass apathy is a myth and that people are willing to do more than just join a Facebook group to stand up and defend what they believe in.
Even if you have never been on a protest before, please join us. UK Uncut makes it easy to either join or organise an inspiring, effective protest wherever you are. Vodafone’s own slogan is ‘Power to You.’ It couldn’t be more appropriate.
Now is the time to get angry, to get organised and to build a resistance to austerity.
See you on the high streets.

How To Prepare The Dutch Population For Austerity & Serfdom 101

2011-03-06T11:41:00.001+02:00

Profits privatised; gambling debts of the banks socialised. That's bad news for any bankrupt country! But how do you package the news that the ones who have to pay for these debt is the guy in the street? Which institutions do you use to break the news? How do you write the message?

How To prepare the Dutch Population For Austerity & Serfdom 101:

Lesson 1: Use an "independent" trustworthy institution as the source to break the bad news. Smart, intelligent people thought about this problem, so that's cool.

Lesson 2: The message must be:

"Despite some minor bad news, it is all under control, there are no problems. In fact, it is only good news. Trust us!"

Lesson 3: Throw figures and economic slogans around. (Not too important, this part will only be read by a minority of the readers)

Lesson 4: Use a Financial Newspaper and their brain dead journalists to make the story public. They are paid for in any case.

Lesson 5: Warn the reader that cutting red tape would be the worst idea. So...job saved of the bureaucrat...that's out of the way! Forget about this, the rest is only good news!

Lesson 6 : Remind the reader of the gas reserves in the Dutch town of Slochteren. That's still a nice honey pot for a rainy day, so what's the problem? Nobody knows in any case that "Slochteren" has been used and calculated many times over by politicians to spend money and keep the voters happy. They call it gas, I call it "Hopium".

Read the good news Dutch austerity plan, calculated by politicans, aided by an " independent " institutions (CBP) and made public in a paid-for newspaper (Financieel Dagblad) here (Google translated).

By the way, the magic word the writer forgot is the word "temporary".

Got Stocks, Pension or Another Paper Claim? You're A Goner As You Listened To The Wrong People.

2011-03-02T16:52:00.002+02:00

Finally, columnists are getting angy. From the article:

"Time for action. Time for revolution on Wall Street"

Four time bombs that will blow up Wall Street

Commentary: Too late to jail bank CEOs; only revolution will succeed

Market Watch, Paul Farrell

SAN LUIS OBISPO, Calif. (MarketWatch) — Put Goldman Sachs CEO Lloyd Blankfein in jail for six months, and all this will stop, all over Wall Street and America, a former congressional aide tells Matt Taibbi in his latest Rolling Stone attack, “Why Isn’t Wall Street in Jail? Financial crooks brought down the world’s economy — but the feds are doing are doing more to protect them than to prosecute them.”

Taibbi’s right, everyone knows Wall Street’s run by a bunch of dictators who are doing more damage to democracy and capitalism than North Africa’s dictators. But jail the CEOs of Goldman, Citi, B. of A. or my old firm Morgan Stanley? Too late.

Berkshire contemplates acquisitions

Jamie Heller and Erik Holm discuss the implications of the newly released letter to Berkshire Hathaway shareholders from billionaire investor Warren Buffett.

Only a revolution will stop Wall Street’s self-destructive capitalism. And watching the people revolt against dictators like Mubarak and Gadhafi reminds us of the spirit that sparked America’s revolution in 1776. But today we need a 1930s-style revolution.

During the S&L crisis two decades ago America had a backbone, indicted 3,800 executives and bankers. Today’s leaders have no backbone. Besides jail time won’t reform the darkness consuming Wall Street’s soul. We’re all asleep, in denial about the moral crisis facing America. Yes, we need a new revolution.

Jail time? We’ve heard that many times before. Journalists have been beating that dead horse for three years. Jailing CEOs made sense in early 2009. But our naïve president missed that opportunity, instead surrounded himself with Wall Street insiders as Bush did with Blankfein’s predecessor. Trojan Horses manipulating a Congress filled with clueless Dems mismanaging tired Keynesian theories.

Taibbi got it right: Washington’s error was in protecting Wall Street’s billion-dollar crooks when they should have been prosecuting CEOs for criminal behavior in getting us into the 2008 mess. So today, the political statute-of-limitations has run. Jail solution is wishful thinking, like praying to the tooth fairy for a miracle. Time for action. Time for a revolution on Wall Street.

Jail Wall Street? Old news. They got away with it. We chickened out

“Jail Bank CEOs” makes a great sound bite in the cable pundits’ echo chamber. Remember Taibbi’s earlier indictment of Goldman Sachs: the “world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

But so what? Just three years after Wall Street’s crooks “brought down the world’s economy” Goldman’s Blankfein and his buddies are paying record bonuses, and laughing at us.

Seriously, think about it folks: Since the 2008 meltdown magazines and newspapers have analyzed the 2008 crash to death. It really is old news, history. Journalists churned out book after book: “Greenspan’s Bubbles,” “House of Cards,” “Trillion Dollar Meltdown,” “13 Bankers,” “Dumb Money,” “Bailout Nation,” “All the Devils Are Here,” “The Big Short,” “Too Big to Fail,” “The Failure of Capitalism,” “This Time is Different,” “And Then the Roof Caved In,” on and on, ad nauseum. All talk, no action, and no effect.

Get it? With every book, every editorial, every expose the past three years, Wall Street bankers actually grew stronger, got richer, more arrogant, bolder on bonuses, impervious to attacks, even taunting us, like the dictators Mubarak, Ben Ali and Gadhafi, confident they could do no wrong, confident no one would rebel. Jail? Our moment to act is long past. We blinked.

Yes folks, Wall Street is the “Comeback Kid” story of the 21st century. Like a terrorist in a horror film, Wall Street thrives on threats. Three short years ago, Wall Street was virtually bankrupt, a ward of the state. We could have jailed “just one” of them back then, when they were down for the count. Instead, we bailed them out! Made them richer. Gave them $13.7 trillion, loans, credits, cash, asset buyouts. Gave them keys to the Treasury. They didn’t just recover, they “ran the tables,” to use a blackjack/pool metaphor. Now Wall Street dictators have absolute power, ruling Washington, America, you and me.

Yes, America’s bankrupt, but the rich just do not care

Admit it, we lost the opportunity. Jail a bank CEO and Wall Street will miraculously reform? You’re joking, right? Wall Street got away with a “legal” bank heist. Today the should-be/would-be inmates are running the prison.

Wall Street’s corrupt banks have lost their moral compass … their insatiable greed has become a deadly virus destroying its host nation … their campaign billions buy senate votes, stop regulators’ actions, manipulate presidential decisions. Wall Street money controls voters, runs America, both parties. Yes, Wall Street is bankrupting America.

Wake up America, listen:

“Our country is bankrupt. It’s not bankrupt in 30 years or five years,” warns economist Larry Kotlikoff, “it’s bankrupt today"
Economist Peter Morici: “Capitalism is broken, America’s government is two bankrupt political parties bankrupting the country.”
David Stockman, Reagan’s budget director: “If there were such a thing as Chapter 11 for politicians” the “tax cuts would amount to a bankruptcy filing.”
BusinessWeek recently asked analyst Mary Meeker to run the numbers. How bad is it? America really is bankrupt, with a “net worth of a negative $44 trillion.” Bankrupt.

And it will get worse. Unfortunately, nothing can stop America’s self-destructive Wall Street bankers.

“America’s worst 10 years start now.”

A Theory On Dead Fish & Birds, Disappearing Vessels and Airplanes.

2011-02-26T19:02:00.009+02:00

Study finds massive flux of gas, in addition to liquid oil, at BP well blowout in Gulf

A new University of Georgia study that is the first to examine comprehensively the magnitude of hydrocarbon gases released during the Deepwater Horizon Gulf of Mexico oil discharge has found that up to 500,000 tons of gaseous hydrocarbons were emitted into the deep ocean, where it is trapped in a deep layer (1000 – 1300 m) of the water column.

The authors conclude that such a large gas discharge (methane and pentane, known to have significant health implications for human and marine life)—which generated concentrations 75,000 times the norm—could result in small-scale zones of "extensive and persistent depletion of oxygen" as microbial processes degrade the gaseous hydrocarbons.

Now what if the gas is not trapped, as the study maintains, but bodies of gas of unknown sizes are being formed and escape to the surface at irregular intervals, floating in the air as highly toxic, invisible, odourless, super explosive, “drop-dead” bubbles?

Would this not explain the “dead fish in the ocean and birds falling from the sky” phenomenon?

And suppose this phenomenon is just a natural occurrence (except for in the Gulf, courtesy BP) in other part of the world, would it not explain midair exploding airplanes and disappearing vessels?

Agree, 99,9% of these bubbles would disappear in the air and dissolve. But 0,1% of them might not, floating in the air horizontally and, depending on size, chemical composition and weather patterns, be destructive or not.

Who would ever know?

From the study:

"It's like searching for a needle in the haystack. We may never know what happened to all of that gas."

Joye said the methane and other gases likely will remain deep in the water column....

Likely? Likely is 80%? 90%. Much more than 99.9% as previously stated. Great!!

Now what if such a “drop-dead” bubble descends on a densely populated metropolitan area...........

Update: My 2nd eldest son Jeroen (12) questioned my theory. He says all the gas dissipates in the air. Great comment! But then, what if the gas comes out streaming out of the ocean and keeps on streaming for an X number of hours. Like a geyser. Again: who would ever know, see or smell, unless you cross he path with an open fire, like an airplane with jet engines or a vessel with gas ovens or people smoking?

Update2: The more I look around, the more stories about climate change, the unknown of the ocean floor but also the potential as an alternative energy source.

A Worried Dutch Government Is Going To "Rescue" The Pension Funds

2011-02-20T14:44:00.007+02:00

I read in below article: "Don't worry, your Government will rescue your savings"

Tut-tut-tut, what a mess! Nobody could have seen this coming. To protect the savings we will have a hearing on pension funds who made stupid and risky decisions. If necessary, we will take them over, thereby guaranteeing the entitlement of the poor pensioners.

What the article actually says is: "We're broke, we need the money!"

The government is preparing a hearing to legitimise the stealing of the savings of pensioners as they need money! They are broke. Previously private savings, these vast amounts will eventually belong to fiscally irresponsible politicians who will distribute it depending on the popular sentiment (Das Gesundes Volksempfinden).

The problem is that they really do not know how broke they are. Pension funds admitted they had a big problem with the stock exchange going down in 2008 but, they say, recovered 35% since then, so, you know, it is going much better now. Do not worry.

Fools, puppets and economists: the stock exchange has been going up thanks to the POMO (Permanent Open Market Operation) organisation, invented by the Federal reserve and part of the PPT (Plunge Protection Team) to buy anything that moves on the exchange. There is no demand, there is no economy or stock exchange anymore, only the POMO. It is all rigged, manipulated bull shit to fool everybody, especially brain dead financial journalists and with that the population at large. Nobody gives a damn anyway as longs as they keep on repeating "The Bold and The Beautiful".
And as the POMO gets their money from QE2 (printing press), we all know these debt will eventually be socialised. Why do they do this: to mask a depression bigger than 1929-1946. "Time" is what they want and need, in the hope Jezus comes back to earth with approximately 100 Trillion US$.

Don't you believe the sudden "increased life expectancy" story. They saw this coming 30 years ago. Furthermore, low interest rates have been set by Keynesian economists of the Fed and ECB. This has nothing to do with market forces but with "manipulation", market rigging and interventions. Therefore, setting interest rates so low is a political decision to intervene in and "to kick start" the market but (alas) with the "unintended" consequence that the saver will the punished in order to save the spender/speculator. Did the low interest rates help to kickstart the economy? No! Will they? No! But in the meantime, due to a wrong economic religion, savers are being brought to the slaughter house.

Moral of the story:

Prepare for violence in Entitlement Country. Pensioners are going to be eaten alive by the politicans. The Government is broke and desperate and pensioners are weak, vulnerable and their savings plenty. Inflation will eat away the good life. "Nobody Saw This Coming". Hah! Soon, the stock exchange will crash for a 2nd time, but now more severe, as the Keynesian lie cannot continue. "Trust", which holds everything together, will be severly tested. See the politicans and bankers running for the hills.

Hey, Got Gold?

Update: Bomb under pension scheme: The government to the rescue! Telegraaf (Google translation)
Update: How to break the bad news to the population.
Update: Do you have an additional pension scheme? No guarantees anymore..

Parliament calls for pension hearing

Telegraaf (Google translation)

THE HAGUE - In a hearing on the investment of pension funds, the House calls on citizens to maximize their questions and comments about the management of their retirement provision known. People will do so also through the website of the Chamber are invited.

According to the initiator of the emergence of CDA politician Pieter Omtzigt hearing his "individual opinions" such as employees and retirees important for MPs to managers, supervisors and experts in the pension world to hear.On March 31, the Court scheduled a hearing after including auditors and criticism of the show 'The Vanishing pension funds' TV program Zembla.

Many pension funds are working on a recovery plan for buffers in order to get declined since the credit crisis. Low coverage rates are often attributed to the low discount rate and increased life expectancy, so funds have to raise money.But there are also problems through poor management and risky investment.

Hi! I Am Your Banker And You Can Trust Me...Until You Are Down.

2011-02-16T15:39:00.009+02:00

"Hi, I am your BANKER. When all goes well and you are of interest to us, I will give you money, a lot of money....and an umbrella. But, you know, we take away your umbrella when it starts raining."

Here you have a perfect example of how vulnerable you are when banking: trust, promises, wealth protection, family offices, assest management and great stories about their legacies.

But! When you are down, they not only spit on you but kick you also in the nuts. No legal process or document needed. No rule of law or due process. A news report, a story on television will do as they will commit themselves to Das Gesundes Volksempfinden. (Eng: "popular sentiment")

Rrrrausss!

Update: Gadaffi is the next media victim - imagine it was you! International Business Times - Swiss freeze assets of Gadaffi
Update: Also the Brits follow the cry of the populus - hang'em high. Telegraph - Gadaffi billions to be seized by Britain

Swiss start to disclose Mubarak assets

The National

Banks in Switzerland are disclosing the assets of the former Egyptian president Hosni Mubarak and his "associates", says the Swiss foreign ministry.
Last week, the government said it had frozen "any potential assets" belonging to Mr Mubarak, as well as 10 members of his family and other people. The move followed Switzerland's decision to freeze the assets of Tunisia's ex-president Zine al Abidine Ben Ali and his entourage after he was forced out of power last month.
A spokesman for the Swiss foreign ministry said yesterday Swiss banks were beginning to reveal the extent of Mr Mubarak's holdings and his entourage for the first time, although he would not give a figure.
"That's all I can say about the subject," the spokesman told Bloomberg.

Billions of dollars are believed to have been amassed by the Mubarak family and businessmen connected to them during the 30 years that Mr Mubarak ruled Egypt, although no official accounts of their wealth exist. Mr Mubarak reportedly earned just over US$800 (Dh2,938) a month as president.
EFG-Hermes, Egypt's largest investment bank, said on Monday Mr Mubarak's son, Gamal, has owned 18 per cent of EFG-Hermes Private Equity since 1997. The fund has $919 million under management. Few other assets have been publicly identified.
The aggressive measures from the Swiss government are part of a broader attempt to improve the image of the country's famously secretive banking system.
Micheline Calmy-Rey, the Swiss president, told the Swiss newspaper NZZ am Sonntag Switzerland had to ensure it was not a haven for "dirty money".

"It cannot be that right at our door some people embezzle state funds and put them into their own pocket," she said.
European powers are also weighing decisions to freeze the assets of Mr Mubarak and his family, but are waiting for an official request to be made from Egypt, the EU said.
"We are in contact with the Egyptian authorities. We will take appropriate measures if this issue comes up, when necessary," said Catherine Ashton, the vice president of the European Commission, according to reports.
Egypt had also requested the US, France, Germany and the UK to freeze the assets of several former Egyptian politicians, whose identities have not yet been revealed.
EU finance ministers were expected to discuss the requests from Egypt to freeze assets yesterday, but gave signs they were willing to co-operate.
A spokesman for David Cameron, the British prime minister, said any action should come as part of an international arrangement, according to reports.

"As I understand the situation on asset freezing, there has to be some international effort … and a request has to be made" by the Egyptian authorities, a spokesman for Mr Cameron said.
Meanwhile, Egypt's stock exchange plans to open on Sunday and may cancel the January 27 trading session, the day the benchmark index slumped 11 per cent, said Hisham Turk, a spokesman for the bourse.
* with agencies

The Financial Advisors Of The Children Of the Super Rich, Systemic Risks, Conflicts Of Interest And Precious Metals

2011-02-11T09:50:00.003+02:00

<--- John Exter's Inverted Golden Pyramid: visualise the organization of asset classes in terms of risk and size. In Exter's scheme, gold forms the small base of most reliable value, and asset classes on progressively higher levels are more risky. The larger size of asset classes at higher levels is representative of the higher total worldwide notional value of those assets. While Exter's original pyramid placed Third World debt at the top, today derivatives hold this dubious honor. Read about it here and here.

What the Financial advisor will tell the children of the super rich is to understand where the power is: the politicians, bankers as they will protect you no matter what.

They will also advise the children to invest in the system rather than outside of the system with a preference for "risk free" (!) stocks, bonds, etc.

Financial Advisors cannot and will not see the systemic risk, the moral hazard and the boom & bust theories of their Masters, after all, we're experiencing a "return to normal"?

Unfortunately also, what the financial advisor will not tell these children that there is one asset class which will preserve their wealth, in fact, has been used for at least 3000 years by smart people to avoid the follies of out-of-control politicians and bankers, but also:

§ Doesn’t engage in accounting fraud.

§ Doesn’t miss quarterly earnings.

§ Isn’t affected by Obama’s health care.

§ Doesn’t lie about its real balance sheet problems.

§ Doesn’t lose market share due to stupid management practices.

§ Doesn’t perform stupid mergers or acquisitions.

§ Doesn’t waste money on buybacks.

§ Doesn’t lose profit margins to rising commodity costs.

§ Doesn’t go out of business.

§ Doesn’t have custodial risk (if you keep your bullion yourself).

§ Doesn’t pay itself ridiculous salaries and bonuses rather than increasing shareholder returns.

§ Doesn’t require a bailout or stimulus to stay in business.

§ Doesn’t commit insider trading or use Government policies to keep itself a billionaire.

§ Isn’t impacted by a slow down in the economy or consumer spending.

The regular reader knows the answer: physical gold and silver. Look at these words carefully and note that ETF's are paper promises and therefore not gold.

Makes one wonder about the competence of financial advisors!

The Rich Want Children Schooled In Crisis

Private Wealth Magazine

February 10, 2011 (Dow Jones) Advisors to the very wealthy are adding a new chapter to the primer they use to teach the next generation how to handle the family's fortune. Its title: Avoiding the mistakes of 2008.

Stung by the downturn's impact on their fortunes, ultra-wealthy families—think $50 million and up—want their future leaders to have a firm grasp of governance and to fully understand investment risk.

"For the first time in my experience, prospects are coming to us and asking, unsolicited, about family governance," says asset manager Glenmede's wealth-service chief Susan Mucciarone. A family wealth manager for 30 years, she says that was a concern "we used to have bring to our clients over time."

Mucciarone sees education as core to family governance, along with other aspects of family management like mission statements, councils and regular, business-oriented get-togethers.

U.S. millionaires shed 30% of their financial wealth in 2008, according to an early-2009 study by Spectrem Group. Though the S&P 500 has nearly doubled since those dark days, advisors say families remain eager to equip younger members to withstand future downturns.

Lessons from the downturn now underpin next-generation education on wealth, and give senior family members "an easier way to talk about the future" with those younger family members, says Daisy Medici, head of family governance for GenSpring Family Offices.

Before the recession, family elders often avoided talking money to their children—even grown-up offspring—for fear of dulling their ambition. "But now they're able to say, 'We're worried the wealth may not be there,'" says Medici. This approach can draw next-generation family members into governance structures and promote thinking aimed at preserving wealth.

One important element of education for scions of the wealthy is something Medici calls "the impact of generational mathematics"—that is, the erosion of wealth as a family grows larger but no more productive over the years. "Given time, there is no amount of wealth that can't be spent through," says Medici.

Some families are looking to mold entrepreneurs--even if it calls for instilling skills quite different from those that make for good investors. "Building a business is about taking control, being in charge; investing in financial markets is really about letting others take control," says Jennifer Pendergast, a senior consultant with the Family Business Consulting Group.

Still, Medici says family members should be encouraged to follow, and educated to make the most of, their go-it-alone instincts, both for the sake of their personal fulfillment and because it can help keep the family coffers filled.

The financial crisis was a shock not just to family's portfolios but also to the psyches of both adults and children.

Jill Shipley, head of next-generation education at GenSpring, tells of the teenage son of super-rich parents who, unnerved by media coverage of the crisis, had a full-on anxiety attack over the expense of a vacation the family had planned for late 2008.

So some of GenSpring's next-generation education focuses on market cycles—including basics like the fact that battered markets can engender bargains—and the danger of letting emotions sway investment decisions.
Copyright (c) 2011, Dow Jones. For more information about Dow Jones' services for advisors, please click here.

H/T Phoenix

The Economists Are The Real Sheeple.

2011-02-02T16:57:00.000+02:00

Afraid to dissent, brain dead economists (yes, 99%, which means ALL of them) are being paid for to stay within the boundaries of what Wall street is thinking and saying. Now Wall street & the Fed created a Financial Wunderland of paper & promises which will disintergrate because nature dictates manipulative systems to crash. No doubt about it.
You can just hear the economists saying on TV, after the crash: "Nobody Saw This Coming".

Priceless: How The Federal Reserve Bought The Economics Profession

Huffington Post

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.
"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."
One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.
The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."
The Fed also failed to sufficiently regulate major financial institutions, with Greenspan -- and the dominant economists -- believing that the banks would regulate themselves in their own self-interest.
Despite all this, Bernanke has been nominated for a second term by President Obama.

In the field of economics, the chairman remains a much-heralded figure, lauded for reaction to a crisis generated, in the first place, by the Fed itself. Congress is even considering legislation to greatly expand the powers of the Fed to systemically regulate the financial industry.
Paul Krugman, in Sunday's New York Times magazine, did his own autopsy of economics, asking "How Did Economists Get It So Wrong?" Krugman concludes that "[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system."
So who seduced them?
The Fed did it.
Three Decades of Domination
The Fed has been dominating the profession for about three decades. "For the economics profession that came out of the [second world] war, the Federal Reserve was not a very important place as far as they were concerned, and their views on monetary policy were not framed by a working relationship with the Federal Reserve. So I would date it to maybe the mid-1970s," says University of Texas economics professor -- and Fed critic -- James Galbraith. "The generation that I grew up under, which included both Milton Friedman on the right and Jim Tobin on the left, were independent of the Fed. They sent students to the Fed and they influenced the Fed, but there wasn't a culture of consulting, and it wasn't the same vast network of professional economists working there."
But by 1993, when former Fed Chairman Greenspan provided the House banking committee with a breakdown of the number of economists on contract or employed by the Fed, he reported that 189 worked for the board itself and another 171 for the various regional banks. Adding in statisticians, support staff and "officers" -- who are generally also economists -- the total number came to 730. And then there were the contracts. Over a three-year period ending in October 1994, the Fed awarded 305 contracts to 209 professors worth a total of $3 million.
Just how dominant is the Fed today?
The Federal Reserve's Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a "visiting scholarship." A Fed spokeswoman says that exact figures for the number of economists contracted with weren't available. But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.
That's a lot of money for a relatively small number of economists. According to the American Economic Association, a total of only 487 economists list "monetary policy, central banking, and the supply of money and credit," as either their primary or secondary specialty; 310 list "money and interest rates"; and 244 list "macroeconomic policy formation [and] aspects of public finance and general policy." The National Association of Business Economists tells HuffPost that 611 of its roughly 2,400 members are part of their "Financial Roundtable," the closest way they can approximate a focus on monetary policy and central banking.
Robert Auerbach, a former investigator with the House banking committee, spent years looking into the workings of the Fed and published much of what he found in the 2008 book, "Deception
and Abuse at the Fed". A chapter in that book, excerpted here, provided the impetus for this investigation.
Auerbach found that in 1992, roughly 968 members of the AEA designated "domestic monetary and financial theory and institutions" as their primary field, and 717 designated it as their secondary field. Combining his numbers with the current ones from the AEA and NABE, it's fair to conclude that there are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed -- or who hope to one day soon -- and you've accounted for a very significant majority of the field.
Auerbach concludes that the "problems associated with the Fed's employing or contracting with large numbers of economists" arise "when these economists testify as witnesses at legislative hearings or as experts at judicial proceedings, and when they publish their research and views on Fed policies, including in Fed publications."
Gatekeepers On The Payroll
The Fed keeps many of the influential editors of prominent academic journals on its payroll. It is common for a journal editor to review submissions dealing with Fed policy while also taking the bank's money. A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another.
"Try to publish an article critical of the Fed with an editor who works for the Fed," says Galbraith. And the journals, in turn, determine which economists get tenure and what ideas are considered respectable.
The pharmaceutical industry has similarly worked to control key medical journals, but that involves several companies. In the field of economics, it's just the Fed.
Being on the Fed payroll isn't just about the money, either. A relationship with the Fed carries prestige; invitations to Fed conferences and offers of visiting scholarships with the bank signal a rising star or an economist who has arrived.
Affiliations with the Fed have become the oxygen of academic life for monetary economists. "It's very important, if you are tenure track and don't have tenure, to show that you are valued by the Federal Reserve," says Jane D'Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts, Amherst.
Robert King, editor in chief of the Journal of Monetary Economics and a visiting scholar at the Richmond Federal Reserve Bank, dismisses the notion that his journal was influenced by its Fed connections. "I think that the suggestion is a silly one, based on my own experience at least," he wrote in an e-mail. (His full response is at the bottom.)
Galbraith, a Fed critic, has seen the Fed's influence on academia first hand. He and co-authors Olivier Giovannoni and Ann Russo found that in the year before a presidential election, there is a significantly tighter monetary policy coming from the Fed if a Democrat is in office and a significantly looser policy if a Republican is in office. The effects are both statistically significant, allowing for controls, and economically important.
They submitted a paper with their findings to the Review of Economics and Statistics in 2008, but the paper was rejected. "The editor assigned to it turned out to be a fellow at the Fed and that was after I requested that it not be assigned to someone affiliated with the Fed," Galbraith says.
Publishing in top journals is, like in any discipline, the key to getting tenure. Indeed, pursuing tenure ironically requires a kind of fealty to the dominant economic ideology that is the precise opposite of the purpose of tenure, which is to protect academics who present oppositional perspectives.
And while most academic disciplines and top-tier journals are controlled by some defining paradigm, in an academic field like poetry, that situation can do no harm other than to, perhaps, a forest of trees. Economics, unfortunately, collides with reality -- as it did with the Fed's incorrect reading of the housing bubble and failure to regulate financial institutions. Neither was a matter of incompetence, but both resulted from the Fed's unchallenged assumptions about the way the market worked.
Even the late Milton Friedman, whose monetary economic theories heavily influenced Greenspan, was concerned about the stifled nature of the debate. Friedman, in a 1993 letter to Auerbach that the author quotes in his book, argued that the Fed practice was harming objectivity: "I cannot disagree with you that having something like 500 economists is extremely unhealthy. As you say, it is not conducive to independent, objective research. You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results," Friedman wrote.
Greenspan told Congress in October 2008 that he was in a state of "shocked disbelief" and that the "whole intellectual edifice" had "collapsed." House Committee on Oversight and Government Reform Chairman Henry Waxman (D-Calif.) followed up: "In other words, you found that your view of the world, your ideology, was not right, it was not working."
"Absolutely, precisely," Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."
But, if the intellectual edifice has collapsed, the intellectual infrastructure remains in place. The same economists who provided Greenspan his "very considerable evidence" are still running the journals and still analyzing the world using the same models that were incapable of seeing the credit boom and the coming collapse.
Rosner, the Wall Street analyst who foresaw the crash, says that the Fed's ideological dominance of the journals hampered his attempt to warn his colleagues about what was to come. Rosner wrote a strikingly prescient paper in 2001 arguing that relaxed lending standards and other factors would lead to a boom in housing prices over the next several years, but that the growth would be highly susceptible to an economic disruption because it was fundamentally unsound.
He expanded on those ideas over the next few years, connecting the dots and concluding that the coming housing collapse would wreak havoc on the collateralized debt obligation (CDO) and mortgage backed securities (MBS) markets, which would have a ripple effect on the rest of the economy. That, of course, is exactly what happened and it took the Fed and the economics field completely by surprise.
"What you're doing is, actually, in order to get published, having to whittle down or narrow what might otherwise be oppositional or expansionary views," says Rosner. "The only way you can actually get in a journal is by subscribing to the views of one of the journals."
When Rosner was casting his paper on CDOs and MBSs about, he knew he needed an academic economist to co-author the paper for a journal to consider it. Seven economists turned him down.
"You don't believe that markets are efficient?" he says they asked, telling him the paper was "outside the bounds" of what could be published. "I would say 'Markets are efficient when there's equal access to information, but that doesn't exist,'" he recalls.
The CDO and MBS markets froze because, as the housing market crashed, buyers didn't trust that they had reliable information about them -- precisely the case Rosner had been making.
He eventually found a co-author, Joseph Mason, an associate Professor of Finance at Drexel University LeBow College of Business, a senior fellow at the Wharton School, and a visiting scholar at the Federal Deposit Insurance Corporation. But the pair could only land their papers with the conservative Hudson Institute. In February 2007, they published a paper called "How Resilient Are Mortgage Backed Securities to Collateralized Debt Obligation Market Disruptions?" and in May posted another, "How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions."
Together, the two papers offer a better analysis of what led to the crash than the economic journals have managed to put together - and they were published by a non-PhD before the crisis.
Not As Simple As A Pay-Off
Economist Rob Johnson serves on the UN Commission of Experts on Finance and International Monetary Reform and was a top economist on the Senate banking committee under both a Democratic and Republican chairman. He says that the consulting gigs shouldn't be looked at "like it's a payoff, like money. I think it's more being one of, part of, a club -- being respected, invited to the conferences, have a hearing with the chairman, having all the prestige dimensions, as much as a paycheck."
The Fed's hiring of so many economists can be looked at in several ways, Johnson says, because the institution does, of course, need talented analysts. "You can look at it from a telescope, either direction. One, you can say well they're reaching out, they've got a big budget and what they're doing, I'd say, is canvassing as broad a range of talent," he says. "You might call that the 'healthy hypothesis.'"
The other hypothesis, he says, "is that they're essentially using taxpayer money to wrap their arms around everybody that's a critic and therefore muffle or silence the debate. And I would say that probably both dimensions are operative, in reality."
To get a mainstream take, HuffPost called monetary economists at random from the list as members of the AEA. "I think there is a pretty good number of professors of economics who want a very limited use of monetary policy and I don't think that that necessarily has a negative impact on their careers," said Ahmed Ehsan, reached at the economics department at James Madison University. "It's quite possible that if they have some new ideas, that might be attractive to the Federal Reserve."
Ehsan, reflecting on his own career and those of his students, allowed that there is, in fact, something to what the Fed critics are saying. "I don't think [the Fed has too much influence], but then my area is monetary economics and I know my own professors, who were really well known when I was at Michigan State, my adviser, he ended up at the St. Louis Fed," he recalls. "He did lots of work. He was a product of the time...so there is some evidence, but it's not an overwhelming thing."
There's definitely prestige in spending a few years at the Fed that can give a boost to an academic career, he added. "It's one of the better career moves for lots of undergraduate students. It's very competitive."
Press officers for the Federal Reserve's board of governors provided some background information for this article, but declined to make anyone available to comment on its substance.
The Fed's Intolerance For Dissent
When dissent has arisen, the Fed has dealt with it like any other institution that cherishes homogeneity.
Take the case of Alan Blinder. Though he's squarely within the mainstream and considered one of the great economic minds of his generation, he lasted a mere year and a half as vice chairman of the Fed, leaving in January 1996.
Rob Johnson, who watched the Blinder ordeal, says Blinder made the mistake of behaving as if the Fed was a place where competing ideas and assumptions were debated. "Sociologically, what was happening was the Fed staff was really afraid of Blinder. At some level, as an applied empirical economist, Alan Blinder is really brilliant," says Johnson.
In closed-door meetings, Blinder did what so few do: challenged assumptions. "The Fed staff would come out and their ritual is: Greenspan has kind of told them what to conclude and they produce studies in which they conclude this. And Blinder treated it more like an open academic debate when he first got there and he'd come out and say, 'Well, that's not true. If you change this assumption and change this assumption and use this kind of assumption you get a completely different result.' And it just created a stir inside--it was sort of like the whole pipeline of Greenspan-arriving-at-decisions was
disrupted."
It didn't sit well with Greenspan or his staff. "A lot of senior staff...were pissed off about Blinder -- how should we say? -- not playing by the customs that they were accustomed to," Johnson says.
And celebrity is no shield against Fed excommunication. Paul Krugman, in fact, has gotten rough treatment. "I've been blackballed from the Fed summer conference at Jackson Hole, which I used to be a regular at, ever since I criticized him," Krugman said of Greenspan in a 2007 interview with Pacifica Radio's Democracy Now! "Nobody really wants to cross him."
An invitation to the annual conference, or some other blessing from the Fed, is a signal to the economic profession that you're a certified member of the club. Even Krugman seems a bit burned by the slight. "And two years ago," he said in 2007, "the conference was devoted to a field, new economic geography, that I invented, and I wasn't invited."
Three years after the conference, Krugman won a Nobel Prize in 2008 for his work in economic geography.
One Journal, In Detail
The Huffington Post reviewed the mastheads of the American Journal of Economics, the Journal of Economic Perspectives, Journal of Economic Literature, the American Economic Journal: Applied Economics, American Economic Journal: Economic Policy, the Journal of Political Economy and the Journal of Monetary Economics.
HuffPost interns Googled around looking for resumes and otherwise searched for Fed connections for the 190 people on those mastheads. Of the 84 that were affiliated with the Federal Reserve at one point in their careers, 21 were on the Fed payroll even as they served as gatekeepers at prominent journals.
At the Journal of Monetary Economics, every single member of the editorial board is or has been affiliated with the Fed and 14 of the 26 board members are presently on the Fed payroll.
After the top editor, King, comes senior associate editor Marianne Baxter, who has written papers for the Chicago and Minneapolis banks and was a visiting scholar at the Minneapolis bank in '84, '85, at the Richmond bank in '97, and at the board itself in '87. She was an advisor to the president of the New York bank from '02-'05. Tim Geithner, now the Treasury Secretary, became president of the New York bank in '03.
The senior associate editors: Janice C Eberly was a Fed visiting-scholar at Philadelphia ('94), Minneapolis ('97) and the board ('97). Martin Eichenbaum has written several papers for the Fed and is a consultant to the Chicago and Atlanta banks. Sergio Rebelo has written for and was previously a consultant to the board. Stephen Williamson has written for the Cleveland, Minneapolis and Richmond banks, he worked in the Minneapolis bank's research department from '85-'87, he's on the editorial board of the Federal Reserve Bank of St. Louis Review, is the co-organizer of the '09 St. Louis Federal Reserve Bank annual economic policy conference and the co-organizer of the same bank's '08 conference on Money, Credit, and Policy, and has been a visiting scholar at the Richmond bank ever since '98.
And then there are the associate editors. Klaus Adam is a visiting scholar at the San Francisco bank. Yongsung Chang is a research associate at the Cleveland bank and has been working with the Fed in one position or another since '01. Mario Crucini was a visiting scholar at the Federal Reserve Bank of New York in '08 and has been a senior fellow at the Dallas bank since that year. Huberto Ennis is a senior economist at the Federal Reserve Bank of Richmond, a position he's held since '00. Jonathan Heathcote is a senior economist at the Minneapolis bank and has been a visiting scholar three times dating back to '01.
Ricardo Lagos is a visiting scholar at the New York bank, a former senior economist for the Minneapolis bank and a visiting scholar at that bank and Cleveland's. In fact, he was a visiting scholar at both the Cleveland and New York banks in '07 and '08. Edward Nelson was the assistant vice president of the St Louis bank from '03-'09.
Esteban Rossi-Hansberg was a visiting scholar at the Philadelphia bank from '05-'09 and similarly served at the Richmond, Minneapolis and New York banks.
Pierre-Daniel Sarte is a senior economist at the Richmond bank, a position he's held since '96. Frank Schorfheide has been a visiting scholar at the Philadelphia bank since '03 and at the New York bank since '07. He's done four such stints at the Atlanta bank and scholared for the board in '03. Alexander Wolman has been a senior economist at the Richmond bank since 1989.
Here is the complete response from King, the journal's editor in chief: "I think that the suggestion is a silly one, based on my own experience at least. In a 1988 article for AEI later republished in the Federal Reserve Bank of Richmond Review, Marvin Goodfriend (then at FRB Richmond and now at Carnegie Mellon) and I argued that it was very important for the Fed to separate monetary policy decisions (setting of interest rates) and banking policy decisions (loans to banks, via the discount window and otherwise). We argued further that there was little positive case for the Fed to be involved in the latter: broadbased liquidity could always be provided by the former. We also argued that moral hazard was a cost of banking intervention.

"Ben Bernanke understands this distinction well: he and other members of the FOMC have read my perspective and sometimes use exactly this distinction between monetary and banking policies. In difficult times, Bernanke and his fellow FOMC members have chosen to involve the Fed in major financial market interventions, well beyond the traditional banking area, a position that attracts plenty of criticism and support. JME and other economics major journals would certainly publish exciting articles that fell between these two distinct perspectives: no intervention and extensive intervention. An upcoming Carnegie-Rochester conference, with its proceeding published in JME, will host a debate on 'The Future of Central Banking'.

"You may use only the entire quotation above or no quotation at all."
Auerbach, shown King's e-mail, says it's just this simple: "If you're on the Fed payroll there's a conflict of interest."
UPDATE: Economists have written in weighing in on both sides of the debate. Here are two of them.
Stephen Williamson, the Robert S. Brookings Distinguished Professor in Arts and Sciences at Washington University in St. Louis:

Since you mentioned me in your piece on the Federal Reserve System, I thought I would drop you a note, as you clearly don't understand the relationship between the Fed and some of the economists on its payroll. I have had a long relationship with the Fed, and with other central banks in the world, including the Bank of Canada. Currently I have an academic position at Washington University in St. Louis, but I am also paid as a consultant to the Federal Reserve Banks of Richmond and St. Louis. In the past, I was a full-time economist at the Bank of Canada and at the Federal Reserve Bank of Minneapolis. As has perhaps become clearer in the last year, economics and the science of monetary policy is a complicated business, and the Fed needs all the help it can get. The Fed is perhaps surprisingly open to new ideas, and ideas that are sometimes in conflict with the views of its top people. One of the strengths of the Federal Reserve System is that the regional Federal Reserve Banks have a good deal of independence from the Board of Governors in Washington, and this creates a healthy competition in economic ideas within the system. Indeed, some very revolutionary ideas in macroeconomics came out of the intellectual environment at the Federal
Reserve Bank of Minneapolis in the 1970s and 1980s. That intellectual environment included economists who worked full-time for the Fed, and others who were paid consultants to the Fed, but with full-time academic positions. Those economists were often sharply critical of accepted Fed policy, and they certainly never seemed to suffer for it; indeed they were
rewarded.
I have never felt constrained in my interactions with Fed economists (including some Presidents of Federal Reserve Banks). They are curious, and willing to think about new ideas. I am quite willing to bite the hand that feeds me, and have often chewed away quite happily. They keep paying me, so they must be happy about the interaction too.

A former Fed economist disagreed. "I was an economist at the Fed for more than ten years and kept getting in trouble for things I'm proud of. I hear you, loud and clear," he said, asking not to be quoted by name for, well, the reasons laid out above.
Elyse Siegel, Julian Hattem, Jeff Muskus and Jenna Staul contributed to this report

Ryan Grim is the author of This Is Your Country On Drugs: The Secret History of Getting High in America

Until the Music Stops - Awaiting Reality to Kick In.

2011-02-02T10:11:00.002+02:00

Fed's Hoenig says QE3 "may get discussed"

Reuters - The Federal Reserve could debate extending its bond-buying program beyond June if U.S. economic data prove weaker than policymakers expect, Kansas City Fed President Thomas Hoenig said.
Another round of bond buying "may get discussed" if the numbers look "disappointing," Hoenig told Market News International in an interview published on Tuesday.

Update: Hoenig know what is happening and covering his ass. Bloomberg - Hoenig says US should break up TBTF banks

Misallocation of capital, unintended consequences, gold suppression scheme and brain dead financial journalists.

2011-01-30T14:51:00.002+02:00

A wonderful "must-read" speech by Chris Powell of Gata (www.gata.org) explaining that our financial markets are actually a joke, benefitting the insider. What is worse is that the one "above-all" undemocratic institutions of the Western world, Central Banks and the private company called Federal Reserve Bank (...as "Federal" as "Federal Express"...) as HQ, manipulates almost everything, inclusive gold as the Alpha and Omega of monetary policies, thereby making sure that vast amounts of capital and labour are being misallocated. As a consequence, can you believe the price of anything? Unintended consequences, alchemy with ETF's and why financial journalists appear to be brain dead when it comes to gold and the gold suppression schemes.

Chris Powell: And was Jerusalem builded here?

The Cheviot Asset Management Sound Money Conference
The Guildhall, London
Thursday, January 27, 2011

Most Americans will believe almost anything if it's said with a British accent. I'm not here to ask you to return the favor, but rather to consider some evidence, to be receptive to questions, and to start asking some questions of your own.
In September 2009 Jim Rickards, director of market intelligence for the Omnis consulting firm in Virginia, was interviewed about the currency markets on the cable television network CNBC. Rickards remarked: "When you own gold you're fighting every central bank in the world."
That's because gold is a currency that competes with government currencies and has a powerful influence on interest rates and the value of government bonds. This was documented in an academic study published in 1988 in the Journal of Political Economy by Lawrence Summers, then professor of economics at Harvard, future U.S. treasury secretary, and Robert Barsky, professor of economics at the University of Michigan -- a study titled "Gibson's Paradox and the Gold Standard":
http://www.gata.org/files/gibson.pdf
This close correlation among gold, interest rates, and government bond values is why central banks long have tried to control -- usually suppress -- the price of gold. Gold is the ticket out of the central banking system, the escape from coercive central bank and government power.
As an independent currency, a currency to which investors can resort when they are dissatisfied with government currencies, gold carries the enormous power to discipline governments, to call them to account for their inflation of the money supply and to warn the world against it. Because gold is the vehicle of escape from the central bank system, the manipulation of the gold market is the manipulation that makes possible all other market manipulation by government.
Of course what Jim Rickards said about gold was no surprise to my organization, the Gold Anti-Trust Action Committee. To the contrary, what Rickards said has been our premise for most of our 12 years, and we have documented it extensively. But while the gold price suppression scheme is a hard fact of history, it is seldom mentioned in polite company in the financial world. So it is a thrill for me that everyone here today is being so polite.
How have central banks tried to suppress the price of gold?
The gold price suppression scheme was undertaken openly by governments for a long time prior to 1971.
That's what the gold standard was about -- governments fixing the price of gold to a precise value in their currencies, a price at which governments would exchange their currencies for gold, currencies backed by gold.
Though the gold standard was abandoned during World War I, restored briefly in the 1920s, and then abandoned again during the Great Depression, that was not the end of government efforts to control the gold price. Throughout the 1960s the United States, Great Britain, and some of their allies attempted to hold the price at $35 per ounce in a public arrangement of the dishoarding of U.S. gold reserves. This arrangement was known as the London Gold Pool.
As monetary inflation rose sharply, the London Gold Pool was overwhelmed by gold demand and was shut down abruptly in April 1968. Three years later, in 1971, the United States repudiated the remaining convertibility of the dollar into gold -- convertibility for government treasuries that wanted to exchange dollars for gold. At that moment currencies began to float against each other and against gold -- or so the world was told.
In fact since 1971 the gold price suppression scheme has been undertaken largely surreptitiously, seldom acknowledged officially. But sometimes it has been acknowledged officially, and with a little detective work, still more about the price suppression can be discovered.
You may have heard GATA derided as a "conspiracy theory" organization. We are not that at all. To the contrary, we examine the public record, produce documentation, question public officials, publicize their most interesting answers, or their most interesting refusals to answer, and sometimes litigate to get information. I'd like to review some of the public record with you.

The official records
The gold price suppression scheme was a matter of public record in January 1995, when the general counsel of the U.S. Federal Reserve Board, J. Virgil Mattingly, told the Federal Open Market Committee, according to the committee's minutes, that the U.S. Treasury Department's Exchange Stabilization Fund had undertaken gold swaps. Gold swaps are exchanges of gold allowing one central bank to intervene in the gold market on behalf of another central bank, potentially giving anonymity to the central bank that wants to undertake the intervention. The 1995 Federal Open Market Committee minutes in which Mattingly acknowledges gold swaps are still posted at the Fed's Internet site:
http://www.federalreserve.gov/monetarypolicy/files/FOMC19950201meeting.p...
The gold price suppression scheme was again a matter of public record in July 1998, six months before GATA was formed, when Federal Reserve Chairman Alan Greenspan told Congress: "Central banks stand ready to lease gold in increasing quantities should the price rise." That is, Greenspan contradicted the usual central bank explanation for leasing gold -- supposedly to earn a little interest on a dead asset -- and admitted that gold leasing is all about suppressing the price. Greenspan's admission is still posted at the Fed's Internet site:
http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm
Incidentally, while gold advocates love to cite Greenspan's testimony from 1998 because of its reference to gold leasing, that testimony was mainly about something else, for which it is far more important. For with that testimony Greenspan persuaded Congress not to regulate the sort of financial derivatives that lately have devastated the world financial system.
The Washington Agreement on Gold, made by the European central banks in 1999, was another admission -- no, a proclamation -- that central banks were working together to control the gold price. The central banks in the Washington Agreement claimed that, by restricting their gold sales and leasing, they meant to prevent the gold price from falling too hard. But even if you believed that explanation, it was still collusive intervention in the gold market. You can find the Washington Agreement and its successor agreements at the World Gold Council's Internet site:
http://www.reserveasset.gold.org/central_bank_agreements/cbga1/
Barrick Gold, then the largest gold-mining company in the world, confessed to the gold price suppression scheme in U.S. District Court in New Orleans on February 28, 2003. That is when Barrick filed a motion to dismiss Blanchard & Co.'s anti-trust lawsuit against Barrick and its bullion banker, JPMorganChase, for rigging the gold market.
Barrick's motion claimed that in borrowing gold from central banks and selling it, the mining company had become the agent of the central banks in the gold market, and, as the agent of the central banks, Barrick should share their sovereign immunity and be exempt from suit. Barrick's confession to the gold price suppression scheme is posted at GATA's Internet site:
http://www.gata.org/files/BarrickConfessionMotionToDismiss.pdf
The Reserve Bank of Australia confessed to the gold price suppression scheme in its annual report for 2003. "Foreign currency reserve assets and gold," the Reserve Bank's report said, "are held primarily to support intervention in the foreign exchange market." The Reserve Bank's report is still posted at its Internet site:
http://www.rba.gov.au/publications/annual-reports/rba/2003/pdf/2003-repo...
Maybe the most brazen admission of the Western central bank scheme to suppress the gold price was made by the head of the monetary and economic department of the Bank for International Settlements, William S. White, in a speech to a BIS conference in Basel, Switzerland, in June 2005.
There are five main purposes of central bank cooperation, White announced, and one of them is "the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful." White's speech is posted at GATA's Internet site:
http://www.gata.org/node/4279
Two years ago a remarkable 16-page memorandum was found in the archive of the late Federal Reserve Chairman William McChesney Martin. The memorandum is dated April 5, 1961, and is titled "U.S. Foreign Exchange Operations: Needs and Methods." It is a detailed plan of surreptitious intervention to rig the currency and gold markets to support the dollar and to conceal, obscure, or falsify U.S. government records and reports so that the rigging might not be discovered. Amazingly, this plan for rigging the currency and gold markets remains on the Internet site of the Federal Reserve Bank of St. Louis:
http://fraser.stlouisfed.org/docs/historical/martin/23_06_19610405.pdf
In August 2009 the international journalist and provocateur Max Keiser reported an interview he had with the Bundesbank, Germany's central bank, in which he was told that all of Germany's gold reserves were held in New York. That interview is posted at the YouTube Internet site:
http://www.youtube.com/watch?v=EzVhzoAqMhU
Some people saw the Bundesbank's admission as a suggestion that Germany's gold had become the tool of the U.S. government. GATA consultant Rob Kirby of Kirby Analytics in Toronto then pressed the Bundesbank for clarification. The Bundesbank quickly replied to Kirby by e-mail with a denial of Keiser's report, but the denial was actually pretty much a confirmation:
http://www.gata.org/node/7713
"The Deutsche Bundesbank," the reply said, "keeps a large part of its gold holdings in its own vaults in Germany, while some of its gold is also stored with the central banks located at major gold trading centers. This," the Bundesbank continued, "has historical and market-related reasons, the gold having been transferred to the Bundesbank at these trading centers. Moreover, the Bundesbank needs to hold gold at the various trading centers in order to conduct its gold activities."
The Bundesbank did not specify those "gold activities" and those "trading centers." But those "activities" can mean only that the Bundesbank is or recently has been surreptitiously active in the gold market, perhaps at the behest of others -- like the United States, the custodian of German gold.
A few weeks ago the German journalist Lars Schall, at GATA's urging, pressed the Bundesbank for clarification about the German gold reserves, and particularly about whether the Bundesbank had undertaken gold swaps with any U.S. government agency. Schall sent the Bundesbank 13 questions. But the Bundesbank brushed him off, even as it seemed to acknowledge meddling surreptitiously in the gold market:
http://www.gata.org/node/9363
The Bundesbank replied:
"In managing foreign reserves, the Bundesbank fulfils one of its mandated tasks as an integral part of the European System of Central Banks. We trust you will understand that we are not able to divulge any further information regarding this activity. Particularly with respect to the confidential nature of information about where gold holdings are kept, we are unable to go into any greater detail concerning exact locations and the quantities stored at each of these. Likewise, owing to the strategic nature of the activity, we are not at liberty to provide you with more detailed information about gold transactions."
In 2009 a New York financial market professional and student of history, Geoffrey Batt, posted at the Zero Hedge Internet site three declassified U.S. government documents involving the gold market.
The first was a long cable dated March 6, 1968, sent by someone named Deming at the U.S. Embassy in Paris to the State Department in Washington. It has been posted at the Zero Hedge Internet site:
http://www.zerohedge.com/article/declassified-state-dept-data-highlights...
The cable described the strains on the London Gold Pool, the gold-dishoarding mechanism established by the U.S. Treasury and the Bank of England to hold the gold price to the official price of $35 per ounce. The London Gold Pool was to last only six months longer.
The cable is a detailed speculation on what would have to be done to control the gold price and particularly to convince investors "that there is no point anymore in speculating on an increase in the price of gold" and "to establish beyond doubt" that the world financial system "is immune to gold losses" by central banks.
The cable recommended creation of a "new reserve asset" with "gold-like qualities" to replace gold and prevent gold from gaining value. To accomplish this, the cable proposed "monthly or quarterly reshuffles" of gold reserves among central banks -- what the cable called a "reshuffle club" that would apply gold where market intervention seemed most necessary.
Of course these "reshuffles" sound very much like the central bank gold swaps and leases of recent years.
The idea, the cable says, is for the central banks "to remain the masters of gold."
Also disclosed in 2009 by Zero Hedge's Geoffrey Batt was a memorandum from the Central Intelligence Agency dated December 4, 1968, several months after the collapse of the London Gold Pool. This too has been posted at the Zero Hedge Internet site:
http://www.zerohedge.com/article/cia-chimes-gold-control-highlights-hist...
The CIA memo said that to keep the dollar strong and prevent "a major outflow of gold," U.S. strategy would be:
"-- To isolate official from private gold markets by obtaining a pledge from central banks that they will neither buy nor sell gold except to each other."
And:
"-- To bring South Africa to sell its current production of gold in the private market, and thus keep the private price down."
The third declassified U.S. government document published by Geoffrey Batt at Zero Hedge in 2009 may be the most interesting, because it was written on June 3, 1975, four years after the last bit of official fixed convertibility of the dollar and gold had been eliminated and the world had been told that currencies henceforth would float against each other and against gold and that gold would be free-trading.
The document is a seven-page memorandum from Federal Reserve Board Chairman Arthur Burns to President Gerald Ford. It is all about controlling the gold price through foreign policy and defeating any free market for gold. It has been posted at GATA's Internet site:
http://www.gata.org/files/FedArthurBurnsOnGold-6-03-1975.pdf
Burns tells the president: "I have a secret understanding in writing with the Bundesbank, concurred in by Mr. Schmidt" -- that's Helmut Schmidt, West Germany's chancellor at the time -- "that Germany will not buy gold, either from the market or from another government, at a price above the official price of $42.22 per ounce."
Burns adds, "I am convinced that by far the best position for us to take at this time is to resist arrangements that provide wide latitude for central banks and governments to purchase gold at a market-related price."
While the Burns memo is consistent with the long-established interest of central banks in controlling the gold price, it was written 36 years ago.
But there is a contemporaneous admission of U.S. government intervention in the gold market. It has come out of GATA's long Freedom of Information Act struggle with the U.S. Treasury Department and Federal Reserve for information about the U.S. gold reserves and gold swaps, information that has been denied to GATA on the grounds that it would compromise certain private proprietary interests. (Of course such a denial, a denial based on private proprietary interests, is in itself a suggestion that the U.S. gold reserve has been placed, at least partly, in private hands.)
Responding to President Obama's declaration, soon after his inauguration, that the federal government would be more open, GATA renewed its informational requests to the Fed and the Treasury. These requests concentrated on gold swaps.
Of course both requests were denied again. But through its Washington lawyer, William J. Olson (http://www.lawandfreedom.com), GATA brought an appeal of the Fed's denial, and this appeal was directed to a full member of the Fed's Board of Governors, Kevin M. Warsh, formerly a member of the President's Working Group on Financial Markets, nicknamed the Plunge Protection Team. Warsh denied GATA's appeal but in his letter to our lawyer he let slip some stunning information:
http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf
Warsh wrote: "In connection with your appeal, I have confirmed that the information withheld under Exemption 4" -- that's Exemption 4 of the Freedom of Information Act -- "consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."
So there it is: The Federal Reserve today -- right now -- has gold swap arrangements with "foreign banks," and the public and the markets must not be permitted to know about them.
Eight years ago Fed Chairman Alan Greenspan and the general counsel of the Federal Open Market Committee, Virgil Mattingly, vigorously denied to GATA, through two U.S. senators who had inquired of the Fed on our behalf, that the Fed had gold swap arrangements, even though FOMC minutes from 1995 quote Mattingly as saying the U.S. has engaged in gold swaps:
http://www.gata.org/node/1181
But now the Fed has admitted such arrangements, if only inadvertently.
GATA subsequently sued the Fed in U.S. District Court for the District of Columbia to gain access to the documents involved. That suit is pending.

Central banks are out of control
There is a reason for the Fed's insistence that the public and the markets must not know what the Fed is doing in the gold market.
It is because, as the documents compiled and publicized by GATA suggest, suppressing or controlling the gold price is part of the general surreptitious rigging of the currency, bond, and commodity markets by the U.S. and allied governments; because this market rigging is the foremost objective of U.S. foreign and economic policy; and because this rigging cannot work if it is exposed and the markets realize that they are not really markets at all.
This should not be so surprising. For intervening in markets is what central banks do.. They have no other purpose. They've just gotten out of control.
Central banks often admit intervening in the currency markets, buying and selling their own currencies and those of other governments to maintain exchange rates at what they consider politically desirable levels. Central banks admit doing the same in the government bond markets. There is even evidence that the Federal Reserve and Treasury Department, through intermediaries, have been intervening frequently in the U.S. stock markets since the crash of 1987.
You do not have to settle for rumors about the "Plunge Protection Team," the President's Working Group on Financial Markets. Again you can just look at the public record.
The Federal Reserve injects billions of dollars into the stock and bond markets every week, on the public record, through the major New York financial houses, its so-called primary dealers in federal government bonds, using what are called repurchase agreements and the Fed's Primary Dealer Credit Facility. The financial houses thus have become the Fed's agents in directing that money into the markets. As GoldMoney's James Turk notes, the recent rise in the U.S. stock market matches almost exactly the money funneled by the Fed to the New York financial houses through repurchase agreements and the Primary Dealer Credit Facility -- devices of "quantitative easing."
Meanwhile, for years the International Monetary Fund, the central bank of the central banks, has been openly intervening in the gold market by threatening to sell gold and then finally selling some, or at least claiming to have sold some. The IMF said its intent in selling gold was to raise money to lend to poor nations. This explanation was ridiculous on its face, though the IMF has never been challenged about it in the financial press. No, the financial press has been happy to tell the world that central banks that lately have effortlessly conjured into existence, out of nothing, fantastic amounts of money in many currencies could find a little money to help poor countries only by selling gold.
Of course the intent of the IMF and its member central banks was not to help poor countries but to intimidate the gold market and control the gold price.
Just as Lars Schall recently tried to get some useful information out of the Bundesbank about its gold reserves, in April 2008 I wrote to the managing director of the IMF, Dominque Strauss-Kahn, with five questions about the IMF's gold. I copied the letter to the IMF’s press office by e-mail, and quickly began to get some replies from one of its press officers, Conny Lotze. But they were all evasive or refusals to answer. Exactly where is the IMF's gold and who controls it? The IMF wouldn't say:
http://www.gata.org/node/6242
Lately central bankers often have complained about what they call "imbalances" in the world financial system. That is, certain countries, particularly in Asia, run big trade surpluses, while other countries, especially the United States, run big trade deficits and consume far more than they produce, living off the rest of the world. These complaints by the central bankers about "imbalances" are brazenly hypocritical, since these imbalances have been caused by the central banks themselves, caused by their constant interventions in the markets to prevent the markets from coming into balance through ordinary market action lest certain political interests be disturbed.
Yes, when markets balance themselves they sometimes do it brutally, causing great damage to many of their participants. The United States enacted a central banking system in 1913 because for the almost 150 years before 1913 the country went through a catastrophic deflation every decade or so. Central banking was created in the name of preventing those catastrophic deflations.
The problem with central banking has been mainly the old problem of power -- it corrupts.
Central bankers are supposed to be more capable of restraint than ordinary politicians, and maybe some are, but they are not always or even often capable of the necessary restraint. One market intervention encourages another and another and increases the political pressure to keep intervening to benefit special interests rather than the general interest -- to benefit especially the financial interests, the banking and investment banking industries. These interventions, subsidies to special interests, increasingly are needed to prevent the previous imbalances from imploding.
And so we have come to an era of daily market interventions by central banks -- so much so that the main purpose of central banking now is to prevent ordinary markets from happening at all.
By manipulating the value of money, central banking controls the value of all labor, services, and real goods, and yet it is conducted almost entirely in secret -- because, in choosing winners and losers in the economy, advancing infinite amounts of money to some participants in the markets but not to others, administering the ultimate patronage, central banking cannot survive scrutiny. As has been noted by U.S. Rep. Ron Paul, the Federal Reserve, an unelected agency of the government, has come to appropriate and spend far more money than Congress itself does.
Yet the secrecy of central banking now is taken for granted even in nominally democratic countries.
Now that Paul, an immensely informed critic of the Fed, has become chairman of the House subcommittee on monetary affairs, there may be some devastating public inquiries into central banking. But what a hundred years ago in the United States was called the Money Power is still so ascendant that it sometimes even boasts of its privilege. What other agency of a democratic government could get away with the principle that was articulated on national television in the United States in 1994 by the vice chairman of the Federal Reserve, Alan Blinder? Blinder declared: "The last duty of a central banker is to tell the public the truth."

Official gold data is disinformation
Government's largely surreptitious agenda in the gold market is greatly assisted by the widespread falsification of gold reserve and market data. Gold is the worst understood financial market in part because most official data about gold is actually disinformation.
Years ago GATA disclosed that the International Monetary Fund, the leading compiler of official gold reserve data, allowed its member nations to count gold they had leased, gold that had left their vaults, as if it was still in their vaults. The effect of this accounting fraud was to deceive the market into thinking that central banks had much more gold left to bomb the market with than they really did.
But that's only the start of the false data.
In April 2009 China caused a sensation by announcing that its gold reserves had increased by 76 percent, from 600 tonnes to 1,054 tonnes. For the previous six years China had been reporting to the IMF only 600 tonnes. Had China acquired those 454 new tonnes only in the last year? Very unlikely. Most experts believe that China acquired those 454 new tonnes over at least several years, largely by purchasing the production of China's own fast-growing gold mining industry. So for as many as six years the official gold reserve data about China was way off.
Last June the World Gold Council reported that Saudi Arabia's gold reserves had increased by 126 percent, from 143 to 323 tonnes, just since 2008. That the world's oil-exporting superpower had made such a new commitment to gold in its foreign exchange reserves also caused a sensation.
But a few weeks later the governor of the Saudi Arabia Monetary Authority, Muhammad al Jasser, insisted to news reporters that Saudi Arabia had not purchased the gold cited in the June reports but rather had possessed that extra gold all along, holding it in what he called "other accounts":
http://www.gata.org/node/9094
That is, the seemingly new Saudi gold had been held in accounts not reported officially, just as the true status of China's gold accounts was not reported officially for six years, if the true status is being reported even now.
Some analysts think that China and Saudi Arabia have accumulated far more gold than they’re reporting and are accumulating still more gold surreptitiously -- China to hedge its dollar foreign exchange surplus, Saudi Arabia to hedge both its dollar surplus and the depletion of its oil reserves -- but that China and Saudi Arabia can't acknowledge this accumulation lest they spook the currency markets, explode the gold market, and devalue their dollar surpluses before those surpluses are fully hedged.
The United States claims to hold almost 8,200 tonnes of gold. But has any of that gold been swapped with other central banks through the gold swap arrangements Fed Governor Warsh disclosed in his letter denying GATA's request for access to the Fed's gold documents? The Fed won't be answering that question voluntarily. It will be answered only at the order of the federal court in which GATA is suing the Fed, or at the direction of Representative Paul's subcommittee.

Conflicts of interest at ETFs
Then there are the major gold and silver exchange-traded funds, which were established in the last few years supposedly to help ordinary investors invest conveniently in gold and silver. How much metal do the ETFs have?
While the major gold and silver ETFs frequently report their metal holdings, studies by GoldMoney founder James Turk and former GATA board member Catherine Austin Fitts and her lawyer, Carolyn Betts, suggest that this data is unreliable too:
http://www.gata.org/node/8600
For the major ETFs won't disclose exactly where their metal is, and indeed their prospectuses say it's OK for the ETFs not even to know where their metal is kept among custodians and sub-custodians.
Further, the custodians for the major gold and silver ETFs are, perhaps not so coincidentally, also the two major international banks -- J.P. Morgan Chase and HSBC -- that report having the biggest short positions in gold and silver, short positions that give these banks and metal custodians a powerful interest in suppressing the price of the assets they supposedly are holding for investors who want those assets to rise in price.
How much gold do the major gold and silver ETFs really have in their vaults? How much of it is encumbered in some way? ETF investors themselves may never be permitted to know.
The biggest so-called "physical" gold market in the world is run by the London Bullion Market Association. The LBMA publishes statistics on how much gold and silver are traded by its members. But these statistics show spectacular volumes, more metal than could exist. Of course much of this metal could be sold and resold back and forth many times every day. But an expert in that market, Jeffrey Christian of the CPM Group, acknowledged at a hearing of the U.S. Commodity Futures Trading Commission last March, as he had acknowledged in an explanatory report published in 2000, that the London bullion market is actually a fractional-reserve gold banking system built on the assumption that most gold buyers will never take delivery of their metal but rather leave it on deposit with the LBMA member banks from which they bought it.
GATA board member Adrian Douglas has studied the LBMA statistics and Christian's work and estimates that the great majority of gold sold by LBMA members doesn't exist -- that most gold sales by LBMA members are highly leveraged. How leveraged? How much gold is due from LBMA members that doesn't really exist? Of course the LBMA doesn't report that. Like the Fed's gold swap arrangements, the world must not be permitted to know that much of the gold the world thinks it owns is imaginary. The consequences might be catastrophic for the banks that have sold that imaginary gold.
For then the world might understand why even at its recent price above $1,300 per ounce gold has not come close to keeping up with the inflation, the currency debasement, of the last few decades, why gold has not completely fulfilled its function of hedging against inflation.
That is, gold's enemies figured out how to increase gold's supply by vast amounts without going through the trouble of digging it out of the ground. They invented "paper gold" -- imaginary gold that many buyers accepted, never suspecting that major financial institutions might deceive or defraud them.

Negligent journalism about gold
The misunderstanding of the gold market is worsened with the awful journalism about it.
The falsity of the data about the gold market practically screams at financial journalists:
-- There is the omission by official gold reserve reports of leased and swapped gold.
-- There are the sudden huge changes in official gold reserve totals.
-- And there are the deception and conflicts of interest built into ETF prospectuses.
The valid documentation about the gold market also practically screams at financial journalists as well:
-- There are the huge and disproportionate gold, silver, and interest rate derivative positions built up at just two or three international banks, positions that never could be undertaken without the express or implicit underwriting of government, particularly the U.S. government.
-- And there are the many official records, records collected and publicized by GATA over the years, demonstrating the plans and desire of the U.S. government to suppress and control the price of gold.
But somehow financial journalists just don't ask about these things. After all, who are the major advertisers in the financial news media? The market manipulators and governments themselves.
Here are a couple of examples of this gross failure of journalism in the last year.
Last June the Bank for International Settlements, the central bank of the central banks, disclosed, via a footnote in its annual report, that it had undertaken a gold swap of unprecedented size, 346 tonnes. But the BIS provided no explanation for this. A newsletter writer was the first to come upon the information; only then did it leach into the major financial news media. What was going on here?
The reporters for the major financial news media didn't bother going to the source, didn't bother asking the BIS itself. It was simply assumed that central banks never give serious answers about what they do, particularly in regard to gold. Instead the reporters called various gold market analysts for what they hoped would be informed speculation.
A few days after GATA ridiculed the Reuters news agency for not demanding answers from the source of the swaps, the BIS, Reuters did try putting some questions to the bank, and on July 16 last year Reuters reported: "The BIS said the gold in question was used for 'pure swap operations with commercial banks' but declined to respond to further questions from Reuters on the transaction":
http://www.gata.org/node/8834
Ever since Federal Reserve Governor Warsh admitted to GATA that the Fed has secret gold swap arrangements with foreign banks, I have been urging financial journalists to call the Fed to ask about those arrangements. As far as I know, no news organization has put such questions to the Fed officially. But, a bit intrigued, a reporter for a major news agency, having failed to get her editor's authorization to pursue a story about gold, called the Fed on her own and did ask about the gold swap arrangements. She told me that a Fed spokesman had told her: "Oh, we never talk about those things."
GATA has been gaining publicity, if with difficulty. Last year the Financial Times did a big story about gold that was half about GATA’s complaints about gold price manipulation by central banks and their agents, the bullion banks. But amazingly the FT reporter failed to put any questions to any central bank or government official:
http://www.gata.org/node/8966
How can you report complaints of central bank gold price manipulation without questioning central banks themselves? Again, it is just taken for granted that central banks operate in secret, particularly in regard to gold, and there's no point in questioning them.

Why gold and silver are mysteries
Why is gold such a mystery? Why is it, along with silver, kept such a mystery?
It's because the two precious metals are not only money but, from the point of view of free people, the best sort of money, less susceptible to what governments see as the most desirable quality of money -- the susceptibility to control by government and particularly susceptibility to devaluation. You can print or otherwise issue gold and silver derivatives to infinity, but not the metals themselves.
Gold particularly is kept such a mystery because it is the key to unlocking the currency markets, which long have been the most efficient mechanisms of imperialism.
Many of you have heard about the looting of Europe undertaken by the Nazi German occupation during World War II. But most of that looting did not take place as it is imagined, at the point of a gun. No, it took place through the currency markets.
This looting through the currency markets was spelled out by the November 1943 edition of a military intelligence letter published by the U.S. War Department, a letter called Tactical and Technical Trends. Of course the Nazi occupation seized whatever central bank gold reserves had not been sent out of the occupied countries in time. But then the Nazi occupation either issued special occupation currency that could not be used in Germany itself or, in countries that had fairly sophisticated banking systems, took over the domestic central bank and enforced an exchange rate much more favorable to the reichsmark. Or else the Nazi occupation simply printed for itself and spent huge new amounts of the regular currency of the occupied country.
This control of the currency markets drafted everyone in the occupied countries into the service of the occupation and achieved a one-way flow of production -- a flow out of the occupied countries and into Nazi Germany.
For a few years Nazi Germany had one hell of a trade deficit -- and couldn't have cared less about it. For being in the position to print the currencies for occupied Europe, Nazi Germany never had to cover that deficit, at least not as long as the military occupation continued.
Since the United States now issues the reserve currency for the world, the dollar, the United States now more or less occupies most countries economically, even those countries that have their own currencies, since even those countries hold most of their foreign exchange reserves in dollars.
Free-trading and widely accessible gold always has been and always will be doom to the rigging of the currency markets, always will be the escape from overbearing government generally and from any overbearing government in particular. That is why those U.S. government records compiled by GATA over the years candidly discuss or advocate or describe controlling and suppressing the gold market -- and suppressing the truth itself.

The secret knowledge
The truth as GATA sees it is this:
First, gold is the secret knowledge of the financial universe and its true value relative to currencies is vastly greater than its nominal price today, since much of the gold that investors think they own doesn't exist. The actual disposition of Western central bank gold reserves is a secret more closely guarded than the blueprints for the manufacture of nuclear weapons. For gold is a deadly weapon against unlimited government.
Second, all technical analysis of all markets now is faulty if it fails to account for pervasive and surreptitious government intervention.
And third, the intervention against gold is failing because of overuse, exposure, exhaustion of Western central bank gold reserves from gold sales and leasing, and the resentment of the developing world, which is starting to figure out how it has been expropriated by the dollar system, a system in which people do real work and create real goods and send them to the United States in exchange for nothing but colored paper and electrons.
For years now the Western central banks have been attempting a controlled retreat with gold, bleeding out their reserves with sales, leases, and especially derivatives so that gold's ascent and the dollar's inevitable decline may be less shocking. Central bankers often convey part of this strategy in code; they warn against what they call a "disorderly decline" in the dollar, as if an "orderly" decline is all right.
The rise in the gold price over the last decade is just the other side of that coin -- an "orderly" rise, 15-20 percent or so per year, a rise carefully modulated by surreptitious central bank intervention.
But GATA believes that the central banks may have to retreat farther with gold than anyone dreams, and far more abruptly than they have retreated so far. We believe that when the central banks are overrun in the gold market, as they were overrun in 1968, and the market begins to reflect the ratio between, on one hand, the supply of real gold, actual metal, not the voluminous paper promises of metal, and, on the other hand, the explosion of the world money supply of the last few decades -- as the market begins to perceive the difference between the real and the unreal -- there may not be enough zeroes to put behind the gold price.
Market analysts talk about what they call "reversion to the mean." But maybe we should talk about reversion to the real.
A century ago Rudyard Kipling anticipated this when he wrote a poem that foresaw the decline of the empire of his country, Great Britain. Kipling's poem attributed this decline to the loss of the old virtues, the virtues that were listed at the top of the pages in the special notebooks, called "copybooks," that were given to British schoolchildren at that time -- virtues like basic honesty, fair dealing, Ten Commandments-type stuff. Kipling titled his poem "The Gods of the Copybook Headings," and its conclusion is a warning to the empire that succeeded the one he was living in:
Then the gods of the market tumbled,
And their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled
And began to believe it was true
That all is not gold that glitters,
And two and two make four,
And the gods of the copybook headings
Limped up to explain it once more.
As it will be in the future,
It was at the birth of man.
There are only four things certain
Since social progress began:
That the dog returns to his vomit
And the sow returns to her mire,
And the burnt fool's bandaged finger
Goes wabbling back to the fire;
And that after this is accomplished,
And the brave new world begins,
When all men are paid for existing
And no man must pay for his sins,
As surely as water will wet us,
As surely as fire will burn,
The gods of the copybook headings
With terror and slaughter return.
The problem goes far beyond gold price suppression. Indeed, since central bank intervention in the currency, bond, equities, and commodity markets has exploded over the last few years, we don’t really know what the market price of anything is anymore. Thus the gold price suppression story is a story about the valuation of all capital and labor in the world -- and whether those values will be set openly in free markets, the democratic way, or secretly by governments, the totalitarian way.
The specifics of the gold price suppression operation are complicated, but you don't have to remember them all if you know what they mean.
They mean that there is a currency war going on between countries and their central banks, and a war being waged by central banks against the people of their own countries. There has been such a war for many years, only the victims were not really fighting back. Now some of them are, countries and individuals alike, by buying and taking delivery of the monetary metals. (Now all we need to do is find a safe planet to keep them on.)

The focus on London
London may seem like the belly of the beast of Anglo-American imperialism, being home to both the LBMA and the Bank of England, whose surrender of the better part of Britain's gold reserves a decade ago, at the bottom of the market and at the onset of a short squeeze, makes sense only as part of the gold price suppression scheme and the rescue of influential bullion banks that were caught short at the market's turn.
But let us instead see this scheme as an aberration and London as the city where the rescue of all decent civilization was arranged even as the bombs of the most horrifying evil fell on it. The St. Paul's that was so famously surrounded by the fire and smoke of those bombs is just around the corner from this grand old building; please forgive a rube tourist for being a bit in awe of it all. GATA actually has a few friends in this city and hereabouts. So this may be as good a place as any to clamor for the most cosmic justice. After all, isn't it practically in your anthem?
And did the Countenance Divine
Shine forth upon our clouded hills?
And was Jerusalem builded here
Among these dark, Satanic ... central banking systems?
I don't think Blake would mind too much about that rewriting if he was still around and knew the facts of the situation. He might even make it rhyme.
We in GATA have our bow of burning gold; we have our arrows of desire. But we can always use more, and with your help we will do more to restore our dear countries, Britain and America together, to their principles and ideals of democratic, transparent, limited government, and, really, the brotherhood of man, which, in the end, are what the monetary metals are about.

Recovery Through Trickle Down Effect

2011-01-27T22:39:00.004+02:00

<-----The US Middle Class Is Grateful and Says It Can Feel the Trickle Down Effect

Rich Shoppers On Spending Spree

(Bloomberg News) Rich shoppers are driving an increase in consumer spending, bolstering a recovery that masks reluctance among less affluent Americans to join in.

Sales are up at Tiffany & Co. and Coach Inc., buoyed by demand for $6,000 diamond pendants and $1,200 leather handbags as a stock-market surge pads the wallets of the wealthy. At the other end of the economic spectrum, Wal-Mart Stores Inc., the world’s largest discount retailer, reports “everyday Americans” are living paycheck to paycheck as they await an improvement in job prospects.

“The heavy lifting is being done by the upper-income households,” said Michael Feroli, a former Federal Reserve economist who is now chief U.S. economist at JPMorgan Chase & Co. in New York. “They’re the ones benefiting the most from the stock market rally, and they’re spending.”

The uneven progress in household expenditures, which account for about 70% of the economy, helps explain why Fed policy makers likely will keep interest rates near zero and complete a second round of Treasury purchases. Unemployment averaged 9.6% last year, the highest rate since 1983, even as the expansion gathered speed.

Consumer purchases reflect bigger gains among high-income households and “financial pressures on those of more-modest means,” according to minutes of the Fed’s Dec. 14 meeting. Feroli estimates the top 20% of wage earners account for about 40% of spending, while Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, puts their contribution at closer to 50%.

Biggest Annual Gain

High-end retailers led the increase in December sales at stores open at least a year, company data showed Jan. 6. The Bloomberg Retail Sales Luxury Index jumped 8.1% from the same month a year earlier, while the Bloomberg Retail Sales Discount Index eked out a 0.9% rise. Nationwide, retail sales climbed 0.6% last month, capping the biggest annual gain in more than a decade, according to the Commerce Department.

The U.S. lost about 8 million jobs during the worst recession since the 1930s, and Fed Chairman Ben S. Bernanke said in Senate testimony on Jan. 7 that employers remain reluctant to hire. Payrolls expanded by 103,000 workers in December, less than the median forecast of economists surveyed by Bloomberg News. A healthier labor market would put more money in the hands of shoppers across the board, further lifting consumption.

Wealthy Customers

Purchases made in the third quarter with American Express Co. credit cards, carried by relatively wealthy and corporate customers, were back to the most recent peak for a third quarter, reached in 2008, while the combined total for Visa Inc. and MasterCard Inc. didn’t experience a similar rebound, according to company data.

“The labor-market recovery will become more widespread as we go through 2011, which should take away some of the imbalance” in purchases, said Maki, who specialized in researching household finances at the Fed from 1995 to 2000. “We definitely expect to see some catch-up in spending by middle and lower-income households. It’s one of the ways the recovery will become more entrenched.”

Investors placed their bets early on, favoring companies that cater to consumers shopping beyond basics such as groceries and fuel. The Consumer Discretionary Select Sector SPDR Fund, which includes Tiffany, Coach, Best Buy Co. and Nike Inc., outperformed the SPDR Standard & Poor’s 500 ETF Trust from November 2008 through October 2010 by more than 50%.

Easy Gains Over

The easy gains may be over: The S&P trust has risen 8.8% since November 26, 2010, while the consumer- discretionary ETF produced a 4.4% gain.

Doug Cliggott, a U.S. equity strategist at Credit Suisse, said he recommends an “underweight” position in these stocks for 2011.

“Three years into the market cycle, it’s very uncommon for consumer discretionaries to be the leadership in the market,” Cliggott said.

In the meantime, rising share prices signal rich shoppers will retain an edge in driving spending. The top 20% of income earners own about 80% of equity wealth and half of housing wealth, Maki estimates.

The S&P 500 Index has soared 91% from its March 2009 low. On top of that, President Barack Obama on Dec. 17 signed into law an $858 billion bill extending Bush-era tax cuts for two years for all income groups, instead of letting them expire for family earnings that exceed $250,000 a year, the cutoff the administration uses for the middle class.

Poverty Threshold

The Census Bureau estimates the poverty threshold for 2010 was $22,314 for a family of four.

“It’s striking,” said Dean Baker, co-director of the Washington-based Center for Economic and Policy Research. “Most of the rest of the country is still suffering while the wealthy seem to be largely insulated. You would think they wouldn’t have all that much to complain about. Instead they’ve had unending criticism for the Obama administration.”

Sentiment data reflect the stock-market gains. The Conference Board’s consumer-confidence index for households making more than $50,000 a year climbed in December to a seven- month high, while the gauge fell for income groups in the $35,000-$50,000 and $25,000-$35,000 ranges.

Rising foreclosures and declining real-estate values indicate middle- and lower-income households will remain cash- strapped. The asset value of property held by Americans fell by $649 billion in the third quarter to $16.6 trillion, the Fed said Dec. 9. Home prices may drop as much as 11% through the first quarter of 2012, which would be 36% below their 2006 peak, according to a Dec. 8 Morgan Stanley report.

‘Uneven Recovery’

“It’s an uneven recovery at this point,” Maki said. “We’re seeing more of a rebound at retailers serving upper- income households.”

Coach, the largest U.S. maker of luxury leather goods, in October raised its North America sales forecast for the rest of the year. In anticipation of holiday-season sales, the New York- based company increased inventory by 36%, including its line of Sophia satchels that range from $298 to $1,000. The company will report second-quarter results on Jan. 25.

Tiffany will accelerate store openings for 2011, Chief Financial Officer James Fernandez said on a Nov. 24 conference call. The New York-based jeweler on Jan. 11 forecast profit from continuing operations of as much as $2.88 a share in the year ending Jan. 31, up 11 cents from a November projection and exceeding the $2.79 average estimate of analysts surveyed by Bloomberg.

Rising Wine Sales

Total U.S. wine sales rose 4.1% to $9.32 billion for the 52 weeks ended Dec. 11, according to the most recent data from Nielsen Co. The fastest-growing segment was wine priced at $20 a bottle and higher, with sales gaining 11%. Wines under $3 declined 0.6%.

There’s been “a greater bounce back in the more-affluent customer,” said Clarence Otis, chief executive officer of Darden Restaurants Inc. He should know: His Orlando, Florida- based company owns both casual-dining chains such as Red Lobster and Olive Garden as well as the upscale Capital Grille steakhouse.

The industry is witnessing a “changing guest mix,” Andrew Madsen, Darden’s chief operating officer, said on a Dec. 21 conference call with investors. “Less-affluent guests who tend to have a lower check are reducing their restaurant visits.”

Want, Not Need

Family Dollar Stores Inc., the second-biggest dollar-store chain in the U.S., fell 8.8% to $44.99 on Jan. 5, the most in more than two years, after its second-quarter forecast fell short of analysts’ projections. Purchasing decisions are “primarily based on want rather than need,” Howard Levine, chief executive officer of the Matthews, North Carolina-based company, said on a conference call that day.

The jobless rate among Americans who haven’t graduated from high school -- likely those in low-paid positions -- exceeded unemployment among people with at least a Bachelor’s degree by 10.5 percentage points in December, near the record 10.9 point gap set in September.

“The paycheck cycle is still pronounced” for Wal-Mart’s typical customer, Mike Duke, the Bentonville, Arkansas-based company’s chief executive officer, said on a Nov. 16 conference call with investors. “Financial uncertainty still weighs heavily on everyday Americans.”

The Betrayal And Moral Bankruptcy Of Our Leaders

2011-01-26T14:02:00.011+02:00

Max Keiser says it best: " Bank of England declares war on workers and savers; sides with borrowers and speculators in pogrom of the middle class".

My comment: "Lending money is not difficult. Banks should operate low-key in the back ground, f.i. assisting entrepreneurs with great ideas to get on their feet in order for them to make loads of money. At the moment, the financial industry, has a 16% share on the NYSE, the biggest after the technology sector with 17%. It is contributing nothing to society but paper shuffling and gambling and has become a major systemic risk factor. What is worse: the entrepreneur is now the second fiddler, the guy who ("risk free" remember, TBTF) creates and decides who gets the money is the big money maker. The financial system has become a parasite sucking the life out of our society as the host. It should be stopped, but nobody knows how. Politicians side with the bankers as they all have been bought. If not stopped or broken up, the crisis will continue until all gambling debts of the banks have been paid off, the bonus system set firmly in place and the middle class brought to its knees as financial serfs of the elite. Then we will start again, but now 100% on their terms.............

Mervyn King: standard of living to plunge at fastest rate since 1920s

Families will see their disposable income eaten up as they “pay the inevitable ( can you believe this? Troy Ounce) price” for the financial crisis, the Bank of England governor warns.

Telegraph

Families will see their disposable income eaten up as they “pay the inevitable price” for the financial crisis, Mervyn King warned.

With wages failing to keep pace with rising inflation, workers’ take- home pay will end the year worth the same as in 2005 — the most prolonged fall in living standards for more than 80 years, he claimed.

Mr King issued the warning in a speech in Newcastle upon Tyne after official figures showed that gross domestic product fell by 0.5 per cent during the final three months last year. The Government blamed the unexpected reduction — the first since the third quarter of 2009 — on the freezing weather that paralysed much of the country last month.

But there were fears that the country was poised to slip back into recession, defined as two successive quarters of negative growth. Economists said the situation was “an absolute disaster”.

The economic gloom deepened this morning as figures showed that mortgage lending by the major banks dived to an 11-and-a-half-year low during December.

Net lending, which strips out redemptions and repayments, fell to £880 million during the month, the lowest level since June 1999, according to the British Bankers' Association.

Labour has accused ministers of jeopardising recovery by pushing ahead with public spending cuts too quickly.

Mr King said he was unable to offer any imminent hope of a rise in interest rates in coming months because of the poor economic outlook. Savers and “those who behaved prudently” would be among the biggest losers in the squeeze, he admitted.

Disposable household income has been hit by sharp increases in the cost of food, fuel and tax, coupled with restricted wage rises for most workers. Last year, take-home pay fell by about 12 per cent, official figures showed, and the trend was expected to continue in 2011.

The governor warned that the Bank “neither can, nor should try to, prevent the squeeze in living standards”.

He said that the economic figures were a reminder that the recovery will be “choppy”. However, he said the biggest threat facing the Bank’s Monetary Policy Committee, which sets interest rates, was rising inflation.

The Bank is expected to use interest rates to keep inflation below two per cent, but the governor said inflation could rise “to somewhere between four per cent and five per cent over the next few months”.

He claimed that rising inflation had been caused largely by increases in global oil and commodity prices, and tax rises such as the increase in VAT introduced at the beginning of the year, which the Bank was powerless to control.

“In 2011, real wages are likely to be no higher than they were in 2005,” he said. “One has to go back to the 1920s to find a time when real wages fell over a period of six years.

“The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.”

Mr King insisted that the Monetary Policy Committee could not have increased interest rates from their current record low level to tackle the rise in inflation.

“If the MPC had raised the Bank Rate significantly, inflation might well have started to fall back this year, but only because the recovery would have been slower, unemployment higher and average earnings rising even more slowly than now,” he said.

“The erosion of living standards would have been even greater. The idea that the MPC could have preserved living standards, by preventing the rise in inflation without also pushing down earnings growth further, is wishful thinking.”

He added: “Monetary policy cannot be based on wishful thinking. So, unpleasant though it is, the Monetary Policy Committee neither can, nor should try to, prevent the squeeze in living standards, half of which is coming in the form of higher prices and half in earnings rising at a rate lower than normal.”

“The Bank of England cannot prevent the squeeze on real take-home pay that so many families are now beginning to realise is the legacy of the banking crisis and the need to rebalance our economy.”

The comments represented one of the governor’s starkest warnings yet. His claim that the banking crisis was behind the ongoing squeeze on living standards comes at a sensitive time, as banks prepare to announce multi-million pound bonuses for their executives.

Mr King expressed sympathy for savers and highlighted the failure of lenders to pass on cuts in interest rates. “I sympathise completely with savers and those who behaved prudently now find themselves among the biggest losers from this crisis,” he said. “But a return to economic stability from our fragile condition will require careful and well-judged steps looking beyond the next few months.”

Addressing the problems of borrowers, he added: “Households and small businesses with little housing equity may be unable to borrow at all or are able to borrow only in the unsecured market – where rates are much higher than before the crisis.”

CRASH JP MORGAN, BUY SILVER

2011-01-24T22:26:00.005+02:00

<------- an ETF is a price tracker, nothing more, nothing less. Further to that, the custodians of these ETF's are almost all exposed to the 1,2 Quadrillion US$ Derivatives market and the undeclared losses of the banking system. Did your wealth manager not inform you about that?

Bravo to Max Keiser for his "Crash JP Morgan, Buy Silver" campaign. We need more campaigns like that, slowly dissolving the credibility of the banking system. Why? Just read on:

China vs. JPMorgan: the battle over gold and silver

Commodity Online

Gold is down 6% and silver 12% since the start of 2011. This is the sharpest decline in precious metals since June of last year and with technical support broken at the 50-day moving averages, many are concerned of a deeper correction ahead.

While there are a myriad of factors driving the prices, two of the major opposing forces are Chinese demand for physical gold on the long side and JPMorgan paper schemes on the short side. Which force prevails in the short term remains to be seen, but in the long run the paper shorts will eventually be squeezed, pushing the price for both gold and silver much higher.

Corrections are a healthy and normal part of any secular bull market, allowing the bull to rest its legs, shake out weak hands and prepare for the next phase up. Every correction in precious metals over the past decade has brought so-called “experts” out of the woodwork to proclaim an end to the gold bull market. They were wrong when gold hit $500, $800, $1,000 and will be wrong many times again before gold finally does peak somewhere above $5,000 per ounce.

But the recent slide in gold and silver prices seems like more than the usual correction and profit taking. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act during July of 2010 and many metals analysts believed it would lead to the CFTC implementing sensible position limits. In addition, the passing of the Volker rule and closing of prop trading desks seemed to jump start precious metals into an impressive and steady advance.

Many gold bugs believed they were witnessing the end of the fraudulent gold and silver manipulation that has been occurring so blatantly over the past several years. This manipulation has been painstakingly exposed by GATA over the years, was detailed in an earlier article that I published and has led to a series of lawsuits against JPMorgan and others.

Gold and silver posted impressive gains in 2010, with gold up 30%, while silver rocketed more than 80% higher! But these advances came to an abrupt halt at the start of 2011 and the decline worsened a few weeks later when the CFTC announced the details of it proposed position limits. First off, the proposed limits were way too high to curb manipulation and more importantly, JPMorgan, HSBC and other large investment banks were granted an exemption to the new position limit rules by being “grandfathered.” The CFTC absolutely caved to the interests of JPMorgan and the price of gold and silver both proceeded to tank and drop through key levels of support.

To what degree the CFTC decision is driving the decline in precious metals is unclear. Gene Arensberg recently pointed out that the large commercial banks have actually been covering their short positions lately and that the swap dealers are the ones that have been uncharacteristically piling on the paper shorts. Regardless, big money has certainly been helping to push prices lower, even as the dollar has weakened significantly in the past few weeks.

While the paper market has been driving the spot price lower, the physical market appears to be as robust as ever. Sales of silver eagle coins for the month of January have already set a new all-time record, with ten days still left in the month. Furthermore, silver demand in China has quadrupled versus last year, as the emerging Chinese middle class looks for a hedge against inflation and the Chinese government encourages its citizens to buy gold and silver.

This is a relatively new phenomenon in Chinese culture, as ownership of precious metals was illegal just a few short years back. But this has all changed as China has become the largest producer of gold in the world and is expected to surpass India as the largest consumer of gold as well.

Demand from China is not only coming from the citizens though, as the Chinese government has been accumulating massive amounts of gold and silver for their reserves. After not reporting gold reserves for six years, the Chinese government in 2009 made a surprise announcement that they had nearly doubled their gold reserves to over 1,000 tons. They have been doing this quietly via buying up the production from Chinese mining companies, as well as making purchases in the open market via intermediaries.

China announced annual gold production of 314 tons in 2010 and this number is expected to be around 320 tons in 2011. If the suspicion that China is buying up most of the country’s gold production is true, there could well be another 600 tons or more moved into ‘unofficial’ reserves before the next announcement. Add in purchases in the international market, and it is conceivable that China’s reserves could effectively be doubled again by the end of 2011 to some 2,000 tons.

In December, central bank adviser Xia Bin publicly commented that China should consider adding to its gold reserves and diversifying away from dollars as a long-term strategy to pave the way for the yuan’s internationalization. With $2.7 Trillion in foreign-exchange reserves, even a small portion of this going into gold could send prices skyward. All of this is extremely supportive to the gold price and could explain why the dips in the past year have been so shallow. Furthermore, the World Gold Council has stated that China could exhaust its gold reserves in the next six years, as demand is expected to double while production slows. If China has to go into the open market for a greater percentage of their gold needs, the robust gains we have seen in the past few years could suddenly look insignificant.

But China is not alone in their moves to aggressively increase gold reserves. Russia, India, Saudi Arabia, Dubai and central banks around the world are buying up as much gold as they can. Russia increased reserves by 169 tons and Saudi Arabia casually announced in 2010 that it had made ‘an accounting adjustment’ that upwardly revised their gold reserves from 143 tons to 343 tons, more than doubling the previous estimate!

So with robust physical demand from both citizens and governments around the world, the current correction should be short-lived, absent increased meddling from Wall Street banks. And even with increased meddling, there will come a time when the real buyers overwhelm the paper game and force a massive short squeeze and/or default on the rigged exchanges. The disconnect between the paper and physical market in precious metals appears to be deepening as premiums are increasing and silver is now in both short-term and long-term backwardation.

If you still aren’t convinced about the shortages and illiquidity in the silver market, consider that BullionVault.com announced last week that it has run out of silver due to high demand. Furthermore, it took Sprott Asset Management over two months to take delivery of the 22 million ounces of silver they ordered for the Sprott Physical Silver Trust (NYSE: PSLV).

“Frankly, we are concerned about the illiquidity in the physical silver market,” said Eric Sprott, Chief Investment Officer of Sprott Asset Management. “We believe the delays involved in the delivery of physical silver to the Trust highlight the disconnect that exists between the paper and physical markets for silver.”

On a more local level, one of my premium subscribers in Hawaii reported that the only coin shop in his area had committed to selling all of the silver it could procure to one wealthy customer. The shop had officially stopped selling to anyone else, as 100% of its ongoing supply has already been claimed! This further demonstrates the degree of demand in the market and potential for more extreme shortages in the near future. Wise investors are stocking up on physical gold and silver while it is still accessible and relatively inexpensive to acquire.

The snake oil salesman at the corrupt investment banks were not punished for misleading investors and selling mortgage-backed paper derivative instruments they knew were doomed to fail. This has created incredible moral hazard that persists today in the offices of JPMorgan, HSBC and others.

These scam artists are making more money than any industry today by finding ways to rip off smaller and less-savvy investors, all while providing absolutely zero contribution to society. They aren’t making anything of value and in this zero-sum gain, they are only helping to destroy the middle class and further concentrate the world’s wealth in the hands of a select few. They control the government and regulatory industries that are supposed to be policing their fraud and are to this day continuing to use the same paper schemes and tactics that precipitated the last financial crash and will likely lead to the next.

As honest investors lose faith in these institutions and grow weary of a default on the COMEX, price discovery may need to occur in the free market, between private buyers and sellers that aren’t using massive leverage and concentrated short positions to move the price to their advantage. I wonder if we might be more likely to use Ebay than Kitco to track the true price of gold and silver in the near future.

In the meantime, the financial shenanigans taking place in the precious metals sector are offering investors a temporary gift of artificially suppressed prices. As some point, the gig will be up and there will be a massive upward revision to the prices for gold and silver. So by all means, we should be using this current correction as another buying opportunity handed to us by Jamie Dimon and company.

They may be able to buy off the CFTC and change the rules of the game to their advantage in the short term, but you can avoid this trap by simply rejecting all paper forms of gold and silver in favor of buying the actual physical metal and keeping it in your possession. I’m not sure if this approach will “Crash JPMorgan,” but it will certainly make their manipulation more difficult, while providing true protection for your wealth.

The Fork In the Road For Europe

2011-01-24T12:56:00.003+02:00

The Spectre Haunting Europe

Debt Defaults, Austerity, and Death of the “Social Europe” Model

Michael Hudson

..............The problem is the austerity imposed by existing debt levels........ Aside from the misery and human tragedies that will multiply in its wake, fiscal and wage austerity is economically self-destructive. It will create a downward demand spiral pulling the EU as a whole into recession.

The basic problem is whether it is desirable for economies to sacrifice their growth and impose depression – and lower living standards – to benefit creditors. Rarely in history has this been the case – except in a context of intensifying class warfare. ......

What is needed is a reset button on the EU’s economic and fiscal philosophy. How Europe handles this crisis may determine whether its history follows the peaceful path of mutual gain and prosperity that economics textbooks envision, or the downward spiral of austerity that has made IMF planners so unpopular in debtor economies.

Is this the path that Europe will embark on? Is it the fate of the Jacques Delors’ project of a Social Europe? Was it what Europe’s citizens expected when they adopted the euro?

There is an alternative, of course. It is for creditors at the top of the economic pyramid to take a loss. That would restore the intensifying GINI income and wealth coefficients back to their lower levels of a decade or two ago. Failure to do this would lock in a new kind of international financial class extracting tribute much like Europe’s Viking invaders did a thousand years ago in seizing its land and imposing tribute in the form of land. Today, they impose financial charges as a post-modern neoserfdom that threatens to return Europe to its pre-modern state.

Read the whole story here

Growth For Growth's Sake Is The Sole Purpose Of A Cancer Cell, Not An Economy.

2011-01-23T06:44:00.015+02:00

"Transparency", "sustainability", "success" are easy and soothing words we all like to hear. Like "credit", but credit is actually "Debt" and the article below should actually read: Over US$ Trillion Additional Debt Needed To Support Global Growth. As this is what it is: Debt. Oops, ugly word, but easy to get, difficult to get rid off. In the meantime, Mankind will become the slave of the banking system as US$ 100 Trillion will surely be not enough. This "easy" money drive has to stop as it is the road to serfdom. But who will have the vision and guts to stand-up and say: "Enough is Enough? Surely not politicans as they have all been paid for. Therefore, it is perhaps easier to compare our financial system with the cancer cell: it will eat itself from the inside and die off.

Over US$ 100 Trillion Additional Credit Needed to Support Global Growth

World Economic Forum

New York, USA, 18 January 2011 – Credit levels will need to double over the next 10 years, growing by US$ 103 trillion, to support consensus-projected economic growth. This doubling of credit could be achieved without increasing the risk of major crisis, finds More Credit with Fewer Crises: Responsibly Meeting the World’s Growing Demand for Credit, a report released by the World Economic Forum in collaboration with McKinsey & Company. The study develops a detailed global credit model using historical credit volumes and forecasting potential credit demand to 2020 across 79 countries, representing 99% of world credit volume. The study applies a sustainability methodology to the projected credit demand, using newly developed metrics to answer the following two questions: Will credit growth be sufficient to meet demand? Is there a risk of future credit crises and, if so, where?

The report finds that meeting credit demand will be challenging. Globally, financial protectionism may constrain cross-border financing, a key to the provision of sufficient credit in the next decade, as global imbalances persist. In addition, the regions will experience varying issues: Asia will face the challenge of meeting the high credit demand growth of US$ 40 trillion with less developed financial systems and capital markets. In the European Union, a further US$ 13 trillion of credit in the form of bank lending will be needed. To supply this, banks will require additional capital that, after retained earnings, could lead to a capital shortfall of US$ 2 trillion. Analysis shows that the US would continue to need to draw on global savings, potentially by up to US$ 3.8 trillion in 2020, in order to fund its credit needs, unless there is a marked increase in US domestic savings rates.

“Leaders in the private and public sectors must take decisive actions to avoid contributing to credit hotspots and coldspots, while still meeting the US$ 100 trillion of credit demanded to sustain economic growth over the next 10 years,” said GianCarlo Bruno, Director, Financial Services Industries, World Economic Forum.

Despite widespread deleveraging, a number of “hotspots” – i.e. segments where credit levels grow in excess of sustainable levels – will persist, while new ones emerge. By 2020, these will include retail credit segments in countries representing almost half of the global GDP. By contrast, government credit hotspots are projected for a much smaller set of countries, between them representing 13-14% of world GDP. In wholesale credit, Asia and Western Europe will be the main drivers of hotspots in 2020.

The report finds that the large projection in credit demand can be safely met, but financial institutions, regulators and policy-makers need more robust indicators of unsustainable lending, contagion risk and credit shortages – and better mechanisms to ensure credit promotes development.

“This report is a timely contribution to the discussion of what’s needed to secure stable and sustainable credit for the world economy in the years ahead. Given the huge financing needs of both developed and developing markets, it’s a crucial issue for policy-makers and the financial industry to tackle globally,” said Deven Sharma, President, Standard & Poor’s.

“The banking system has a critical role in supporting future economic growth and this report highlights ways in which it can do so with reduced risk of crises. In particular, there is a pressing need for continued development of capital markets in developing economies to support their continued economic success,” said Charles Roxburgh, Director of McKinsey Global Institute.

The report concludes with eight recommendations that financial institutions, regulators and policy-makers can follow today to ensure sustainable credit levels for the future:

1. Integrate the concepts of sustainable credit into the regulatory agenda
2. Create standardized government accounting practices to increase transparency and accurately assess sovereign finances
3. Encourage responsible borrowing through financial education
4. Encourage financing of local “coldspots” through targeted mechanisms
5. Task a single agency with monitoring global credit levels and system-wide credit sustainability
6. Align banks’ risk appetite with sustainable credit criteria
7. Drive innovation by financial institutions, developing new mechanisms that can safely meet future global credit needs
8. Establish goals for efficient and deep capital markets by 2020 in developing economies

The findings and recommendations of the report will be discussed by experts from the industry, policy-makers, regulators and academics at the World Economic Forum Annual Meeting 2011 in Davos-Klosters, Switzerland.

This report was developed by the World Economic Forum in collaboration with McKinsey & Company.

H/T: King World News

The Blind Panic of US Banks & Politicians

2011-01-12T20:49:00.012+02:00

Moral hazard neglected as phony profits are being made thanks to corrupt accountants supported by mafia regulators and cheered on by fraudulent politicians and scary bankers.

Apparently only a few people "scratch their heads". The rest lives the lie.

Our society, as we know it, is "toast".

"Why would this be a problem", one could argue. "They rescued the world from a financial collapse?" Yes, but consider this:

the collapse will happen anyway; they are postponing the inevitable.
the "repair" is not transparent, no consultation at all but in the highest echelons of government & Wall street
the "repair" favours a few insiders; the well-connected, to become billionaires and future rulers
fraud is rife, rules and laws are being ignored: where are the law suits?
regulators, the watch dogs have been neutered; consider the SEC and accountancy profession which have been ordered to "cook the books".
Without consultation, the middleclass will foot the bill for the repair, 20-30 trillion US$ till now and empoverish them;
After the "repair", total costs will be 80-90 US$ Trillion and Wall street will continue their paper game
they are creating a fascist state in which physical and mind control will rule;
there is no way back to "democracy".

That's why we are TOAST. And do not think this post is not directed to you as you are not living in the US. Our financial & poltical world is too interconnected.

UPDATE: Threats from everywhere, not only for the middle class, now also for the "elite": the OMERTA has been broken! Code RED. If you talk, you're dead. Politicians, bankers and wealthy of this world are corrupt to the core: Swiss operation Officer of Julius Baer decides to talk, leak documents on internal policies to Wikileaks.

UPDATE1: Sorry, not 80-90 Trillion, but US$ 100 Trillion to clean up the mess. I was close, but not "on the spot". Sorry, but what's US$ 10-20 Trillion between friends?

UPDATE2: Damn! Wrong again. According to the World Economic Forum (WEF) we need US$ 210 Trillion for the coming 10 years just to retain GDP growth.

US Banks Report Phantom Income on $1.4 Trillion Delinquent Mortgages

Huffington Post

The giant US banks have been bailed out again from huge potential write-offs by loosey-goosey accounting accepted by the accounting profession and the regulators.

They are allowed to accrue interest on non-performing mortgages until the actual foreclosure takes place, which on average takes about 16 months.

All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.

This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due to them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.

Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.

The potential write-offs could be even larger should home prices continue to weaken, placing more homes in the nonperforming category on bank balance sheets.

About 6 million homes are still at risk, according to Schnapp, and at least 10% of them are 25% underwater, meaning their market value is 25% less than the mortgage -- but the owners are still paying interest to their banks.

2011: Year of the bank run?

2011-01-05T12:05:00.004+02:00

From the article below:

Bank runs "will seriously undermine the prosperity of this country (Ireland, troy ounce) for a generation," Pimco's Mohammed El-Erian said in November. He said the first steps to stemming the run would include "a big external aid package and steps by the Irish government."

Assistance must come from "Big External Aid Package" and "The State" say mr El-Erian. From whom? He knows, and now you know, that every single intergovernemental financial organisation, bank and state is bankrupt: the IMF, Worldbank, USA, Europe, ECB, sovereign countries, everybody!!

Another example of "kicking the can down the road". There is no money anymore, only debt and more debt. So the policy is "Extend and Pretend" and "Kicking the can down the road". As long as they can. In the meantime the rich and famous are hoarding physical gold and silver and stashing it away in vaults on island with names nobody can pronounce.

2011: Year of the bank run?

Is a bank run about to bring Europe to its knees?

Fortune

Some market watchers say yes, pointing ominously to the torrents of money pouring out of Ireland.

Irish bank deposits declined in November for the fourth straight month, the central bank said last week. Overseas deposits fled the country at their fastest pace in more than a year.

The deposit flight compounds the stress on a financial system whose massive property-lending losses already have driven the government to accept an unpopular bailout from the European Union and the International Monetary Fund.

Worse yet, it shows that the solutions policymakers slapped together in the fall of 2008 helped in some cases to create even bigger problems -- ones that are now coming due.

Unconditionally guaranteeing bank deposits is just such a policy, in a country where loan losses made the banks insolvent, job loss left many taxpayers peniless and deposits now at least double annual economic output.

And this time, given the unpopularity of bailouts and dysfunctional European politics, there is ample reason to fear the banking mess won't so easily be swept aside.

"Facing facts like these, each morning when I wake up I have to wonder, 'Why is today not a good day for a wholesale run on the Irish banking system?'" asks Scott Minerd, chief investment officer at Guggenheim Partners. "And if there is a wholesale run on the Irish banking system, then what stops the same scenario from cascading into Portugal, Greece, Italy, and most importantly, Spain?"

That is very much the question being asked in bond markets, where the cost of borrowing surged in all the so-called peripheral European countries in the second half of 2010. The yield on Irish 10-year government bonds, for instance, surged to 9% at year-end from around 5% in August.

The high cost of market borrowing ties the hands of government officials who have promised to ride to the rescue of the bubble-ridden banks. Ireland has already ponied up outlandish sums to keep the banks afloat. Officials have said at every turn they believed they had the ability to stabilize the system, but stability has remained beyond their reach.

Now, with the state locked out of the bond market and the banks losing depositors, who is going to lend in an economy that already has shrunk drastically from its bubbly size of just a few years ago?

Bank runs "will seriously undermine the prosperity of this country for a generation," Pimco's Mohammed El-Erian said in November. He said the first steps to stemming the run would include "a big external aid package and steps by the Irish government."

The IMF, the EU and the Irish government committed to those steps this fall. But there is still no sign people in Ireland or elsewhere believe the $113 billion bailout package will keep their money safe. Among many other things, there has been a rush out of the euro for the Swiss franc, not to mention the ever-present embrace of gold.

On Minerd's mind

The flight from Irish banks has been most pronounced among foreigners, who presumably are less attached to their bailed-out bankers and can easily find other banks that, at least for the moment, appear less apt to go out of business.

Some 20 billion euros ($27 billion) of overseas deposits fled the country in November alone, according to the Central Bank of Ireland. The level of foreign deposits has plunged 28% in the past year and is down 42% from its bubbly peak.

But don't blame just the foreigners. Domestic deposits tumbled by 6.3 billion euros in November, in their steepest decline since August 2009.

All told, the Irish banking system's deposit base has contracted by 15% over the past year -- which isn't making it any easier for taxpayers to keep the deeply troubled banking sector afloat.

Meanwhile, the aid the Irish banks took from the eurosystem more than doubled over the past year, to 97 billion euros from 45 billion in November 2009.

The flight of deposits from troubled Irish banks is an unhappy irony because Ireland was lauded in some quarters in 2008 when it became the first state to guarantee bank deposits. That decision led to a short-lived surge of funds into the Irish banks -- not that the money stuck around for long. Since the late 2008 peak, more than 100 billion euros of overseas deposits have left the Irish banking system.

When you consider that similar trends could easily play out in the other euro countries, you have the recipe for a hangover-inducing New Year that is likely, in the view of Minerd, to see the euro plunge anew against the dollar. He expects the euro to test its decadelong low against the dollar of 85 cents before all is said and done, compared with a recent $1.33.

"As sovereign credit downgrades continue to flow in and deposits in Europe's weakened banking system flow out, a broader crisis in Europe appears to be imminent in 2011," says Minerd.

Information is Beautiful.

2011-01-03T15:39:00.003+02:00

Information is beautiful. How about putting some things in perspective (h/t: Clive).

The Most Dangerous Man In America.

2010-12-30T17:43:00.007+02:00

The Most Dangerous Man In America.

Viz a viz Wikileaks, Julian Assange, Bradley Manning, lying and corrupt governments, unjust wars, debasement of their currencies, a population impregnated by the sound bites of a cowardly media and journalists like Jon Hilsenrath, paid for by big money and the promise of power. Will history repeat itself? A great documentary on heroes and peak-empire. Visit www.ellsberg.net to read about Daniel Ellsberg and what an incredible struggle he must have gone through between career & patriotism (read: keeping your mouth shut despite knowing your government is lying) and ethics & conscience. There is presently another Daniel Ellsberg out there and his name is Bradley Manning. He is now our hero. Read about and support Bradley Manning here: http://www.bradleymanning.org/
(Hat tip: Clive)

The Most Dangerous Man in America from Aritz Bermudez on Vimeo.

Dutch Politicians Plundered ABP State Pension Fund To Pay For Their Promises.

2010-12-25T12:45:00.012+02:00

<-- a well deserved pension after 20 years of hard work........?

Dutch Politicians Plundered ABP State Pension Fund To Pay For Their Promises.

2 former executives of the Dutch Pension Fund ABP (now APG), Jan Frijns, former Investment Director 1993-2005 and Jan van der Poel, financial executive 1997-2002, seem to be desperate in trying to get the attention of msm to highlight government looting which occurred from 1997 and 2002 in order to pay for the implementation of an early retirement scheme, called VUT.

Well, I've explained before how the market works, money is never a problem, ask the politician, when he cannot steal he will print. After all, the only thing the politican wants is to get re-elected. And nothing will stop him there.

In a november 2010 interview Frijns said in the Parool, a Dutch daily newspaper:

"The government, the largest employer in the country, withdrew in the nineties around 25 billion euros from the financial reserves of the Pension Fund ABP, according to Jean Frijns, former director of ABP Investments, in the television section KRO Reporter Saturday.

For years the authorities paid too little premium to the ABP, said Frijns. In the privatization of the pension fund in 1996 the backlog had risen to around 15 billion euros, Frijns said, who from 1993 to 2005 was director of investments. He says the government is therefore partly responsible for the current financial problems of the ABP.

Frijns, now professor of investment management at the Free University in Amsterdam, says that ''a large part of the early retirement scheme''by the government was funded with money that ABP had reserved for regular pensions. That would be a sum of 10 million euro's."

Big schandal, but no outrage from msm at all? Why should there be? The entitement thinking in Holland is arguably second to only the USA. So Frijns' old time colleague Jan van der Poel got on his horse and tried again with a subsequent interview in the same Parool newspaper, now in stronger wording:

"Without any problems, the Dutch government could plunder dozens of billion of guilders from the ABP Pension Funds, despite the outrage of the Dutch Court of Audits"

This newspaper interviewed Jan van der Poel, who was from 1997 up to 2002 a financial executive of ABP. ''I received a report of the Court of Audits and read in this report that the government had stolen 30 billion guilder (app. Euro 13,6 Billion) from our Fund. The Court of Audits was furious. But nobody read that report and no journalist wrote about it".

Also private companies looted the fund, said van der Pond, but not on such a large scale as the government.

Van der Poel has no good word for the politicians who were for many years in charge of the ABP. According to him politicans are egoists who always blame others
and they regarded the ABP as a haven for early and safe retirement

Low point

The ABP has suffered greatly because of he credit crisis of the last 2 years. Investments were less profitable than originally calculated. Also, these investments were regarded as too risky. Over 2008 the pension cover degree which is the proportion between the capital of a pension fund and the amount to be paid out to pensioners, decreased with almost sixty percent points to the lowest point of 83 per cent at the beginning of last year. Afterwards the pension contribution was raised. Meanwhile the pension cover degree increased to 105 per cent.

According to van der Poel there is presently too much attention for investment results. '' The pension problem is extremely simple. With the rising life expectancy and our current life style it cannot be that you start to work on your 27st, stop working on your 60th and go on holiday for forty years for free. That is possible only in a state which works on slavery. Therefore, if people are healthy, they must work. This demographic time bomb has been ticking for a long time, it is a pyramid scheme. But the Dutch labor Unions never wanted to talk about these problems. Today, they still act as if there are no problems."

Frijns world view collapsed and now knows better. He says. Oops, I almost forgot to mention that today, Frijns is a boardmember of several banks inclusive of.....JP Morgan Fund in Luxemburg. Now this increases your credibility! NOT. Van der Poel, now as professor Risk Management at Maastricht University, seems to chose his masters more careful.

But let's get real, the fact that the Dutch would not be able to afford their pension pyramid scheme must have been known for at least 30 years. 1 + 1 = 2, still is and always will be, unless you are a politician in a comfortable chair, with a wood paneled board room, a great salary and pension and an ulterior motive not to make decisions. After all, the decision of today could very well be your personal problems of tomorrow. Only now I understand the slogan of the APG which is "tomorrow is today".

Frijns and van der Poel have the attention of this little blogger; as fas as msm is concerned only Het Financieele Dagblad wrote a few lines.

Will there be an "independent" (politicians investigating politicians) investigation into this rot? My guess, yes. But this depends on the severity of this crisis (read: outrage, anger) which is not over by a long shot. Wait till pensioner lose 50-60% of their entitlement. Will not happen? Think again: the stock market is rigged, interest rates have been set by politicians to assist the speculator and not the savers such as the pension funds, banks have not yet declared all their losses, financials of companies cannot be trusted and property evaluations are a thumb suck based on pricing of the of the good old days. "Trust", the Central Theme, is gone.

The waiting is now for "The Big Reset", which will come with or without the market riggers, politicans and bankers. A return to reality is imminent.

English translations: google translation

UPDATE: Europe starts confiscating private pension funds. Washington Examiner
UPDATE 1: European Nation begin seizing private pensions. Christian Science Monitor
UPDATE 2: License to Steal?: ZeroHedge
UPDATE 3: All OK! Worried Dutch Government will "rescue" pension funds

Richard Blackden Officially on Paylist of Banks: Makes £75.32.

2010-12-22T20:21:00.012+02:00

"I also have a family and need to put food on the table!", he says, "everybody does it!"
Without criticism or additional questions, he just copied and pasted the nonsense he must have received from FoxNews. Just leave the important parts out, a screaming headline and the money is in the bank. Sell your intelligence for £ 75.23, VAT inclusive and please come back next time. After all, what is journalism about?

US shows stronger growth as investors look to 2011 tax cuts

Telegraph

Existing homes sales across the country climbed 5.6pc last month, which though weaker than economists had pencilled in, caps a consistent improvement from the summer. Meanwhile, the government's final estimate for GDP growth in the third quarter came in at a 2.6pc annual pace, a slight upward revision on the 2.5pc seen in the second estimate.

The question Wall Street economists are now asking is whether the $858bn (£558bn) in tax cuts agreed by Congress last week, including a surprise reduction in a payroll tax companies have to pay when taking on staff, will prompt consumers to spend their extra income and encourage businesses to hire. Their answer, for now at least, appears to be yes. JP Morgan, for example, has increased its forecast for growth in the first quarter to 3.5pc from 2.5pc.

With most countries in the eurozone – Germany apart – struggling to stage sustainable recoveries, investors are looking anxiously to the US to improve on growth that has proved underwhelming this year.

"The more recent data suggest we're seeing reasonably healthy (? troy ounce) retail sales growth, pretty healthy investment spending, some growth in employment," said Zach Pandl, an economist at Nomura.

The world's biggest economy will enter the new year backed by an unprecedented wave of stimulus. Alongside the tax cuts, the Federal Reserve is working its way though a second, $600bn round of quantitative easing designed to lower long-term interest rates. Each policy has proved controversial abroad and at home.