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From: illyia2/9/2012 3:55:25 PM
1 Recommendation   of 7567
 


A Very Different Take On The "Iran Barters Gold For Food" Story
By Tyler Durden
Published on ZeroHedge ( http://www.zerohedge.com)

Created 02/09/2012 - 15:24


[1]
Submitted by Tyler Durden [1] on 02/09/2012 15:24 -0500

Brazil [2] BRICs [3] China [4] Copper [5] Crude [6] Crude Oil [7] Dominique Strauss-Kahn [8] European Union [9] Fail [10] Federal Reserve [11] France [12] Greece [13] India [14] International Monetary Fund [15] Iran [16] Iraq [17] Israel [18] Japan [19] national security [20] Natural Gas [21] None [22] North Korea [23] OPEC [24] Real estate [25] Renminbi [26] Reserve Currency [27] Reuters [28] Saudi Arabia [29] Unemployment [30] Yen [31] Yuan [32]


Much has been made of today's Reuters story [33] how "Iran turns to barter for food as sanctions cripple imports" in which we learn that "Iran is turning to barter - offering gold bullion in overseas vaults or tankerloads of oil - in return for food", and whose purpose no doubt is to demonstrate just how crippled the Iranian economy is as a result of the ongoing US embargo. Incidentally this story is 100% the opposite of the Debka-spun groundless disinformation from a few weeks ago that India was preparing to pay for Iran's oil in gold (they got the asset right, but the flow of funds direction hopelessly wrong). While there is certainly truth to the fact that the US is actively seeking to destabilize the local government, we wonder why? After all as the opportunity cost for the existing regime to do something drastic gets ever lower as the popular resentment rises, leaving the local administration with few options but to engage either the US or Israel. Unless of course, this is the ultimate goal. Yet going back to the Reuters story, it would be quite dramatic, if only it was not the case that Iran has been laying the groundwork for a barter economy for many months now, something which various other analysts perceive as the basis for the destruction of the petrodollar system. Perhaps regular readers will recall that back in July, we wrote an article titled " China And Iran To Bypass Dollar, Plan Oil Barter System [34]." Specifically, we wrote that "according to the FT [35], China has decided to commence a barter system in which Iranian oil is exchanged directly for Chinese exports. The net result: not only a slap for the US Dollar, but implicitly for all fiat intermediaries, as Iran and China are about to prove that when it comes to exchanging hard resources for critical Chinese goods and services, the world's so called reserve currency is completely irrelevant." Seen in this light the fact that Iran is actually proceeding with a barter system, something that had been in the works for quite a while, actually puts the Reuters story in a totally different light: instead of one predicting the imminent demise of the Iranian economy, the conclusion is inverted, and underscores the culmination of what may have been an extended barter preparation period, has finally gone from beta to (pardon the pun) gold, and Iran is now successfully engaging in global trade without the use of the historical reserve currency.

Here is how Reuters presents its findings [33]:

Difficulty paying for urgent import needs has contributed to sharp rises in the prices of basic foodstuffs, causing hardship for Iranians with just weeks to go before an election seen as a referendum on President Mahmoud Ahmadinejad's economic policies.

New sanctions imposed by the United States and European Union to punish Iran for its nuclear program do not bar firms from selling Iran food but they make it difficult to carry out the international financial transactions needed to pay for it.

Reuters surveys of commodities traders around the globe show that since the start of the year, Iran has had trouble securing imports of basic staples like rice, cooking oil, animal feed and tea. Grain ships have been held at its ports, refusing to unload until payment can be received for cargo.

With Iran's rial currency tumbling, the prices of rice, bread and meat in Iranian bazaars have doubled or more in dollar terms in recent months.

Iranian grain importers have in the past side-stepped sanctions by booking business through the United Arab Emirates, traders said, but this option was cut off by the UAE government in response to sanctions.

Iran has been trading oil in currencies like Japanese yen, South Korean won and Indian rupees, but such deals make it difficult to repatriate profits.

Deals revealed Thursday appear to be among the first in which Iran has had to result to offering cashless barter to avoid sanctions, a sign of new urgency as it seeks to buy food and get around the financial restrictions.

The article's punchline:

Another trader said: "As the shipments of grain are so large, barter or gold payments are the quickest option."

Details of how the barter deals work are still unclear as the payments problem is so new, and traders did not disclose the exact size of such deals.

Perhaps a different spin on the news is that gold is "suddenly" just as equially accepted as a pseudo-reserve currency virtually everywhere in the world, as the dollar: a blasphemous concept to many legacy economists for sure. But the truth is that gold and barter appear to be working. Especially when one considers what the FT had to say on this topic back in July 2011:

Tehran and Beijing are in talks about using a barter system to exchange Iranian oil for Chinese goods and services, as US financial sanctions have blocked China from paying at least $20bn for oil imports.

The US sanctions against Iran, which make it extremely difficult to conduct dollar-denominated business, mean that China could owe the oil-rich nation as much as $30bn, according to people familiar with the problem.

They said the unpaid oil bills had built up over the past two years and the governments, which are in early-stage talks, were looking at how to “offset” the debt.

Some Iranian officials are growing increasingly angry about the inability of the country’s largest oil customers to pay cash, a problem that has contributed to a shortage of hard currency and has hindered the central bank from defending the Iranian rial, which has been sharply devalued over the past month.

China and India together buy about one-third of Iran’s oil, the country’s economic lifeblood. China’s oil imports from Iran have risen 49 per cent this year, according to Reuters.

And what prevents China, whose secretive gold stockpiling is the stuff of legends to migrate from a barter system to one of gold, whereby the two countries exchange goods not in the form of barter but using the yellow metal currency equivalent. Furthermore, how would the world react if the entireAsian continent was found to be transacting in gold, coupled with the discovery that China's gold holdings have soared, very much the same way it disclosed its shocking gold expansion back in April 2009 when overnight its gold holdings went from 600 tonnes to 1054 tonnes [36]:

Shanghai/Beijing: China disclosed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying.

Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.

The confirmation of its surreptitious stockpiling is likely to fuel market talk about Beijing’s ability to buy secretly and its ambitions for spending its nearly $2 trillion (around Rs100 trillion) pile of savings. And not just in gold: copper and other metals markets are booming thanks to China’s barely visible hand.

Speculation has gathered speed over the last year, since the tumbling dollar has threatened to weaken China’s buying power—and give it yet more reason to diversify into gold, oil and metals.

Not only that, but consider our post from September 2011: " Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree [37]"

Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best, and illogical at worst. We have a suspicion that the following cable from the US embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24 karat pool. The only thing that matters from China's perspective is that "suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB." Now, what would happen if mutual and pension funds finally comprehend they are massively underinvested in the one asset which China is without a trace of doubt massively accumulating behind the scenes is nothing short of a worldwide scramble, not so much for paper, but every last ounce of physical gold...

In other words, we humbly submit that instead of taking the Reuters article at face value, and one may certainly do that, what may instead be happening as Iran migrates to a non-dollar based international trade system is the testing of the waters of a non-USD regime, more impotantly, one quietly encourage by China, who is a very complicit participant in the transition to a world in which the US Dollar suddenly finds itself irrelvant. Whether replaced by gold, or a currency backed by a basket of hard assets (the CNY?) we don't know. However, we know one thing: China needs Iran's crude, which at last check was among the world's top 5 oil producers [38], and had the world's third largest proven oil reserves [39]after Saudi Arabia and Canada, and despite media reports that it is actively looking for crude import alternatives, we would allege that this is nothing but purposeful disinformation. After all why would China comply with US demands for an enhanced Iranian embargo? The whole point of China's foreign policy to date has been to counteract US pushes and provocations abroad without fail. Why should it make an exception now. Frankly, we don't buy it, especially when one considers last summer's FT piece.

Finally, we leave readers with this interesting take from Casey Research's Marin Katusa [40], who looks at recent development in a rather comparable light.

Will Iran Kill the Petrodollar? ( source [40])

The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran's oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.

But that line doesn't make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends – like India – will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.

The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.

We know where that situation led – to a US government suffocating in debt while its citizens face stubbornly high unemployment (due in part to the high value of the dollar); a failed real estate market; record personal-debt burdens; a bloated banking system; and a teetering economy. That is not the picture of a world superpower worthy of the privileges gained from having its currency back global trade. Other countries are starting to see that and are slowly but surely moving away from US dollars in their transactions, starting with oil.

If the US dollar loses its position as the global reserve currency, the consequences for America are dire. A major portion of the dollar's valuation stems from its lock on the oil industry – if that monopoly fades, so too will the value of the dollar. Such a major transition in global fiat currency relationships will bode well for some currencies and not so well for others, and the outcomes will be challenging to predict. But there is one outcome that we foresee with certainty: Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.

The Petrodollar System

To explain this situation properly, we have to start in 1973. That's when President Nixon asked King Faisal of Saudi Arabia to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi Arabian oil fields from the Soviet Union and other interested nations, such as Iran and Iraq. It was the start of something great for the US, even if the outcome was as artificial as the US real-estate bubble and yet constitutes the foundation for the valuation of the US dollar.

By 1975, all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving its surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending.

The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.

The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount – the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.

There is another downside, a potential threat now lurking in the shadows. The value of the US dollar is determined in large part by the fact that oil is sold in US dollars. If that trade shifts to a different currency, countries around the world won't need all their US money. The resulting sell-off of US dollars would weaken the currency dramatically.

So here's an interesting thought experiment. Everybody says the US goes to war to protect its oil supplies, but doesn't it really go to war to ensure the continuation of the petrodollar system?

The Iraq war provides a good example. Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars. In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela. In April 2002, Iranian OPEC representative Javad Yarjani was invited to Spain by the EU to deliver a detailed analysis of how OPEC might at some point sell its oil to the EU for euros, not dollars.

This movement, founded in Iraq, was starting to threaten the dominance of the US dollar as the global reserve currency and petro currency. In March 2003, the US invaded Iraq, ending the oil-for-food program and its euro payment program.

There are many other historic examples of the US stepping in to halt a movement away from the petrodollar system, often in covert ways. In February 2011, Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), called for a new world currency to challenge the dominance of the US dollar. Three months later a maid at the Sofitel New York Hotel alleged that Strauss-Kahn sexually assaulted her. Strauss-Kahn was forced out of his role at the IMF within weeks; he has since been cleared of any wrongdoing.

War and insidious interventions of this sort may be costly, but the costs of not protecting the petrodollar system would be far higher. If euros, yen, renminbi, rubles, or for that matter straight gold, were generally accepted for oil, the US dollar would quickly become irrelevant, rendering the currency almost worthless. As the rest of the world realizes that there are other options besides the US dollar for global transactions, the US is facing a very significant – and very messy – transition in the global oil machine.

The Iranian Dilemma

Iran may be isolated from the United States and Western Europe, but Tehran still has some pretty staunch allies. Iran and Venezuela are advancing $4 billion worth of joint projects, including a bank. India has pledged to continue buying Iranian oil because Tehran has been a great business partner for New Delhi, which struggles to make its payments. Greece opposed the EU sanctions because Iran was one of very few suppliers that had been letting the bankrupt Greeks buy oil on credit. South Korea and Japan are pleading for exemptions from the coming embargoes because they rely on Iranian oil. Economic ties between Russia and Iran are getting stronger every year.

Then there's China. Iran's energy resources are a matter of national security for China, as Iran already supplies no less than 15% of China's oil and natural gas. That makes Iran more important to China than Saudi Arabia is to the United States. Don't expect China to heed the US and EU sanctions much – China will find a way around the sanctions in order to protect two-way trade between the nations, which currently stands at $30 billion and is expected to hit $50 billion in 2015. In fact, China will probably gain from the US and EU sanctions on Iran, as it will be able to buy oil and gas from Iran at depressed prices.

So Iran will continue to have friends, and those friends will continue to buy its oil. More importantly, you can bet they won't be paying for that oil with US dollars. Rumors are swirling that India and Iran are at the negotiating table right now, hammering out a deal to trade oil for gold, supported by a few rupees and some yen. Iran is already dumping the dollar in its trade with Russia in favor of rials and rubles. India is already using the yuan with China; China and Russia have been trading in rubles and yuan for more than a year; Japan and China are moving towards transactions in yen and yuan.

And all those energy trades between Iran and China? That will be settled in gold, yuan, and rial. With the Europeans out of the mix, in short order none of Iran's 2.4 million barrels of oil a day will be traded in petrodollars.

With all this knowledge in hand, it starts to seem pretty reasonable that the real reason tensions are mounting in the Persian Gulf is because the United States is desperate to torpedo this movement away from petrodollars. The shift is being spearheaded by Iran and backed by India, China, and Russia. That is undoubtedly enough to make Washington anxious enough to seek out an excuse to topple the regime in Iran.

Speaking of that search for an excuse, this is interesting. A team of International Atomic Energy Agency (IAEA) inspectors just visited Iran. The IAEA is supervising all things nuclear in Iran, and it was an IAEA report in November warning that the country was progressing in its ability to make weapons that sparked this latest round of international condemnation against the supposedly near-nuclear state. But after their latest visit, the IAEA's inspectors reported no signs of bomb making. Oh, and if keeping the world safe from rogue states with nuclear capabilities were the sole motive, why have North Korea and Pakistan been given a pass?

There is another consideration to keep in mind, one that is very important when it comes to making some investment decisions based on this situation: Russia, India, and China – three members of the rising economic powerhouse group known as the BRICs (which also includes Brazil) – are allied with Iran and are major gold producers. If petrodollars go out of vogue and trading in other currencies gets too complicated, they will tap their gold storehouses to keep the crude flowing. Gold always has and always will be the fallback currency and, as mentioned before, when currency relationships start to change and valuations become hard to predict, trading in gold is a tried and true failsafe.

2012 might end up being most famous as the year in which the world defected from the US dollar as the global currency of choice. Imagine the rest of the world doing the math and, little by little, beginning to do business in their own currencies and investing ever less of their surpluses in US Treasuries. It constitutes nothing less than a slow but sure decimation of the dollar.

That may not be a bad thing for the United States. The country's gargantuan debts can never be repaid as long as the dollar maintains anything close to its current valuation. Given the state of the country, all that's really left supporting the value in the dollar is its global reserve currency status. If that goes and the dollar slides, maybe the US will be able to repay its debts and start fresh. That new start would come without the privileges and ingrained subsidies to which Americans are so accustomed, but it's amazing that the petrodollar system has lasted this long. It was only a matter of time before something would break it down.

Finally, the big question: How can one profit from this evolving situation? Playing with currencies is always very risky and, with the global game set to shift to significantly, it would require a lot of analysis and a fair bit of luck. The much more reliable way to play the game is through gold. Gold is the only currency backed by a physical commodity; and it is always where investors hide from a currency storm. The basic conclusion is that a slow demise of the petrodollar system is bullish for gold and very bearish for the US dollar.










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From: Plott_Hound_Dawg2/16/2012 5:15:45 AM
1 Recommendation   of 7567
 
FUKUSHIMA FALLING APART-GET READY 2.14.2012

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From: illyia2/16/2012 10:31:52 AM
   of 7567
 


MF Global: Where's the Cash -- Part II
By rcwhalen
Published on ZeroHedge ( http://www.zerohedge.com)

Created 02/15/2012 - 23:53


[1]
Submitted by rcwhalen [1] on 02/15/2012 23:53 -0500

Bankruptcy Code [2] Bloomberg News [3] Counterparties [4] MF Global [5] President Obama [6] WorldCom [7]


This week in The Institutional Risk Analyst we published a comment on the ongoing financial genocide at MF Global, “MF Global: Where's the Cash?” http://us1.irabankratings.com/pub/IRAstory.asp?tag=515 [8]

The comment correctly identifies the location of the “missing” $1.6 billion as JP Morgan Chase and other bank custodians of MF Global. The trouble is that even though we now know where the missing customer money has gone, namely JPMorgan, there is little chance that the defrauded customers of Jon Corzine will ever recover a dime.

Here’s the link to a video by William Rochelle of Bloomberg News explaining how the safe harbor in Section 546(e) of the Bankruptcy Code likely will prevent MF Global customers from ever getting their $1.6 billion back -- even when it’s located, as it has been evidently.

http://www.youtube.com/watch?v=3zVEZ-knlcA&feature=youtu.be [9]

When Bill recorded the video, the bankruptcy trustee hadn’t yet raised the loss estimate from $1.2 billion. In case you’re wondering why Bill is so knowledgeable about bankruptcy law, he was head of bankruptcy litigation at Fulbright & Jaworski in New York before he decided to take up journalism.

What people need to understand is that like the case of WorldCom, the MF Global bankruptcy illustrates the way in which the large Wall Street banks have used their Washington lobbyists to encroach upon the rights of investors. Even if it were proved that John Corzine and his colleagues committed criminal violations of the Uniform Securities Act and state law, there is little chance that the investors in MF Global will ever receive equity and justice. Again, read the WorldCom case.

The problem here is that the existing laws against pillaging customer accounts and other acts of fraud are in conflict with the bankruptcy statute designed to make the world safe for large banks and over-the-counter derivatives. Specifically, the post 2005 bankruptcy laws prohibit trustees from clawing back the $1.6 billion in stolen customer funds. Indeed, the Bankruptcy Court and trustee are precluded from pursuing the banks just as the trustee in the Madoff fraud has likewise been stymied.

In addition to the clients of MF Global who were apparently defrauded, the big losers in this mess are the smaller independent broker dealers who have acted as custodian of client funds. Once institutional customers understand that they have no rights in the event that management of a small broker-dealer absconds with client funds to pay bank margin calls and a broker-dealer fails, the ability of independent dealers to hold customer funds is going to evaporate.

Purely as a matter of due diligence, no fiduciary will ever again be able to use a US-based broker dealer as a custodian. To do so would be reckless and would expose the fiduciary to claims of negligence in the event a loss similar to MF Global occurred.

Until the Congress rectifies the current bankruptcy laws and allows trustees to claw back payments made to secured lenders and other counterparties, there is no reason for any rational personal to allow a broker dealer to hold securities in custody. All of this business will go to the big banks, who will be just as happy to see the smaller dealers thrown into the meat grinder.

Now why, you may be wondering, did the lobbyists from the big banks push Congress to expand the safe harbor for secured parties in the bankruptcy code? As one former Bush II Treasury official told me last night: “The canard the banks used to get 546 amended was that overriding the trustee's normal avoidance powers was said to be necessary to limit systemic risk and ensure access to credit. God forbid the banks be required to do some due diligence. As the bailouts showed, the systemic risk was in fact enhanced by the changes to the bankruptcy code and the illusion of superior claims to collateral, thus increasing leverage.”

The MF Global bankruptcy provides yet more evidence that the 2005 bankruptcy reform legislation passed by Congress is an abomination, but the cancer goes even deeper than the years of Bush II. The big banks who earn the lion's share of their profits in the quantum world of derivatives are literally looting the real economy and real investors, all with the full approval and complicity of the Fed.

Fred Feldkamp, learned securities counsel and expert on RMBS, put the problem in perspective:
"Greenspan proved his total ignorance of the current state of the law when he stupidly eliminated regulatory restraints on fraud saying there was no need for regulation because "fraud is self-regulating." The "Supremes" don't "get it" as of now and Congress precluded just about every other means for controlling fraud between the last 2 years of Clinton and the 8 years of Bush II. It took a decade (1929-1938) before the Supreme Court woke up to the Great Depression's root cause (fraud of the 1910s to 1929). Blaming Obama for this is understandable in one sense, but overly simplistic."

It may be overly simplistic to blame President Obama for the financial mess, but don't think that this president won't throw Jon Corzine to the wolves to make political points. "Jon Corzine is not well-liked in Washington," one veteran republican operative told me over dinner tonight. "Don't be surprised if we see a high profile prosecution of Corzine by the US Attorney to prove Obama is distancing himself from the big banks."


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From: illyia2/16/2012 9:52:55 PM
   of 7567
 
GREEK DEFAULT PLAN: JP Morgan also possesses it.

The Slog
John Ward**
2-16-12

And Dr Strangelove goes into overdrive

Just to update folks, my first source for today’s earlier posting is now happy for me to name another US bank working to the March 23rd Greek default schedule as JP Morgan. This is based on the reality that dozens of people have now come forward to confirm Morgan the Pirate as one of the recipients.

I have not as yet received any confirmation that eurobanks are in this loop. I must therefore conclude that the ‘default schema’ is US Fed-led, with Mr Timothy Geithner perhaps in a leading role

During the day, emails have dribbled in here supporting the story from a professional standpoint. (For those who don’t already know it, the email address for Slog editorial contact is jawslog@gmail.com). One such is particularly interesting, I think:

‘Congratulations on getting this out there. You need to look more closely at Deutsche [Bank] and Commerzbank. Key people in Bankfurt are fully aware of this.’

This in turn would suggest joint Washington-Berlin cooperation. At the moment, I’m unable to reach The Slog’s Bankfurt Maulwurf for confirmation or denial of that.

The likelihood, of course, is that these revelations will act as a self-denying prophecy. That is to say, if the story continues to hold up, the Troika-Berlin axis will now have to look for another schedule – purely for the purposes of denial.

Meanwhile, Wolfgang ‘Strangelove’ Schauble (top right) continues to supply the World with hard evidence that he has gone more than slightly off his trolley. The German finance minister is now pressing for Greece’s April elections to be put off for a year – and the replacement of elected politicians with more Montis and Papademoses. I can do no better than commend to you Ambrose Evans-Pritchard’s piece in the Daily Telegraph this afternoon…with this extract in particular:

‘His [Schauble's] apparent demand that Greece postpone elections scheduled for April, and impose a technocrat junta (a l’Italiana) for another year without PASOK and New Democracy, takes your breath away. Is this really the position of the German government? Greek democracy be damned?’

But while we wait to see what bonkers idea Berlin will come up with next, it is worth noting once again that the Teutonic drive for control over events does fit disturbingly well with Americo-German plans being given to senior investment bank currency traders…perhaps under the assumption (back in mid-January) that a German/EU Gauleiter/Commissioner would be in power by then.

The times may well be interesting, but they are not entirely reassuring.

hat4uk.wordpress.com





The Slog was founded just over three years ago. The name is an abbreviation of ‘bollocks log’. It is primarily concerned with the deconstruction of bollocks in contemporary life. During late 2011 going into 2012 – depending on the volume of bollocks around at any given time – The Slog was getting 7-9000 hits a day.

In the Total Politics awards 2011, John Ward was voted 5th most popular unaligned blog author in the UK.

I became a retired adman in 2000, and then consulted for three years. The conclusion I took from not being a protected corporate Master of the Universe any more was that every bank, insurance company, multiple retailer, investment house, car dealer, local government official, politician and minority group was trying to screw the system. This was a shock, as until then I’d thought the practice was restricted to marketing clients and Whitehall Sir Humphreys.


I decided there were acres and acres of bollocks being employed in order to disguise the pong of bullshit. Not a pleasant thought.


Being anyway part of the problem, politicians are mostly too self-obsessed, dense or corrupt to do anything about the situation. But also – as the years passed and I engaged in more research – it became clear that, the way the world is constructed now, the political Establishment is powerless in the face of far more significant – and ruthless – interest groups.

Far too many of those in positions of power are strangers to the moral compass, and commercial ethics have virtually disappeared. But the problem for anyone opposing this state of affairs is that the raw material available is not that good….and far too many of them are too recently arrived to realise that it used to be much better.


There are far too many of us on this island: far too many of us are educated to a low standard that fails to teach people to think for themselves; and our economy is woefully unbalanced. These are big problems, but there is no need for anything unpleasant to occur between the various ages, cultures and ethnicities present in the British Isles. The only need is for everyone to sign up to a single Rule of Law – and accept genuine equality before that law. Multiculturalism and forced pc equality are the insane ideas of folks who don’t get out enough, don’t read any history, and know nothing of social anthropology.


Independence of thought, self respect, and respect for others is at the core of what I write about most of the time. I believe in personal liberty, but I am not a libertarian, and I am not a liberal. I am not a Socialist and I am not a Conservative. I am a radical realist. This means I am convinced that those working the current political and constitutional forms will continue to deny reality. Only by doing so can they stay in power. They must be removed from power – but legally, and without violence.


I believe above all that what Britain needs is accountable leadership. I want leaders we can look up to, not creatively empty suits who look down on us. I want to get out of the EU (although the way things are going, it may well implode anyway) and restore our manufacturing/marketing skills with a focus on exports. I want us to grow more of our own food. I would like us to replace globalist mercantilism with a judicious mixture of self-sufficiency and logical trade.


I believe passionately in the revival of mutual concerns and organisations as a far better complement to the ‘profit economy’ than the public sector….something which, at last, has begun to gain ground as an idea. We need an economy of mixed motives, not mixed ownership. Much of the justification for my use of the word ‘radical’ is a desire to slim down State-controlled activities of all kinds, and to spin off most of its work into mutualised organisations – free from takeover, but made to compete in the real world. I include in ‘activities’ almost everything that the Civil Service does. Most people don’t get this, but this is my cross to bear, not yours.

Over time, The Slog has been a melange of investigative journalism, philosophy, use of hard data, and humour as a means of chipping away at the current Establishment. While I do not see it as a ‘news’ medium, I do see it as adding value in order to interpret the news. 24/7 TV and online news has become a hiding place for yet more bollocks: I try to point it out when I see it.

The track record isn’t that bad for such a small site. The Slog broke the Gordon Brown on anti-depressants/going blind story in 2008. Three months later it revealed the identity of Tommy McAvoy as the Labour whip encouraging MPs to fiddle expenses. It began tracking Nicolas Sarkozy before most of the media. It was the first to show that Gordon Brown lied to Chilcot, and the first to develop a credible theory about how Brown deposed Blair. I identified Christine Lagarde as an idiot before most people, and predicted Barack Obama would make a disastrous President.I spotted Recep Erdogan as a bad guy, said Cameron would regret his Ankara speech, predicted the Arab Spring would turn sour, and revealed that Libya’s Moussa Koussa is an MI6 double agent. Last but not least, The Slog said on Day One that Dominique Strauss-Kahn’s arrest was a farce, and the charges wouldn’t stick. I had a world exclusive on the DA Cyrus Vance’s decision to move for dismissal of all charges against the former IMF boss. More recently, I have been ahead of the curve on most bondholder/debtor EU State situations and negotiations, and predicted more or less to the letter why Andrew Lansley’s NHS reforms would turn into a morass of bitterness, confusion and indecision.


The Slog’s most satisfying success has been in attacking Newscorp villainy, and predicting at the outset that the Hackgate scandal would turn into a true British Watergate. I have said, and still believe, that in the end David Cameron will be forced to resign as a result of it. I was also early into the case against hackers on other papers, and broke two damaging stories about Piers Morgan’s obvious personal use of hacking in the past.I continue to be convinced that he and others will pay a much higher price for this than they have to date.


The site’s other main focus has been the dysfunctionality of global investment banking, the inevitability of sovereign debt forgiveness, the impossibility of a proper UK recovery without drastic rebalancing of the economy, and the dire need for root and branch banking reform both here and elsewhere.We are witnessing a transfer of power not just from West to East, but also from democratically elected politicians to controlling, bullying, monopolistic money.


The Slog has been ahead of the pack on EU meltdown from the start, and its analyses of the push and pull between the banks, Greece, the Bundestag, the ECB, Merkel, Brussels, Italy, Sarkozy and Drgahi have been proved consistently correct. Recent Berlin rigidity in the face of bad ClubMed behaviour and infinite market greed can only lead to disaster. More and more financial, business and political leaders now accept this.


The Slog doesn’t ban any comment that is reasonably put without abuse. It will allow one use of obscenity in the comment threads, after which any recurrence will attract a permanent ban. I believe in free thinking, but I find it hard to deal with superior Charlies who turn up foul-mouthed with the sole objective of belittling everyone. That sort of arrogance based on ignorance is a big part of what I’d like to stop.

I hope you’ll enjoy what’s here, and come back regularly for more.

John Ward, January 2012

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From: illyia2/17/2012 3:46:38 PM
   of 7567
 
Why Were The Trillions In Fake Bonds Held In Chicago Fed Crates?
By Tyler Durden
Published on ZeroHedge ( http://www.zerohedge.com)

Created 02/17/2012 - 11:06


[1]
Submitted by Tyler Durden [1] on 02/17/2012 11:06 -0500

Bearer Bonds [2] Bond [3] Federal Reserve [4] Google [5]



    While there is precious little in terms of detail coming out of the latest and literally greatest "fake" bond story in history, the BBC [6]has been kind enough to release the pictures of the boxes that the supposedly fake bonds were contained in. While we reserve judgment on the authenticity of the bonds, what we wonder is whether the boxes were also fake. Because while we can understand why someone would counterfeit the Treasury paper itself, what we don't getis why someone would go the extra effort to also create a "fake" compartment in which to store it. In this case a compartment that is property of the "CHICAGO FEDERAL RESERVE SYSTEM." Perhaps Fed uberdove and Chicago Fed President Charles Evans will be kind enough to explain why Versailles Treaty Chicago Fed crates are floating around in Europe (and filled with $6 trillion in supposedly fake bearer bonds)?

    [7]

    What is also interesting is that a simple google search for Mother Box Treaty of Versailles yields the following [8]:

    Transferring rights over Mother Box Treaty of Versailles 1934-Illinois Bank



    We transfer rights over Mother Box Treaty of Versailles 1934-Illinois Bank having the next status:
    1. Has been verified by the authorities, being legal, certain and real existence.-
    2. With SKR in an Reputable Security House in an European Country .-
    3. History of mother box and baby boxes (13 ) certified by a public notary.-
    4. Print amount in the front of Mother Box includes:
    M.B. Control...G7777xxxxxxxxxxxx
    Serial
    Sec Code
    Public Debt Nº
    Total Face Value: Three Trillions
    5. Inside 13 baby boxes closed, with certificates, numbers, size and height.-
    6. 13 JPG Images (In High Definition) Front, Up, Down, Right, Left, Inside, each with notary seal and sign.-



    Transfer rights under conditions as follows:
    1. Deal only with direct interested with Bank POF (Proof of Funds) in hands (Non negotiable point).
    2. No broker chains or pretenders in the middle.
    3. Verification when buyer wants and wish face to face.
    4. Meeting with the owner without problem, ever in the European Country.
    5. We are able and open mind about any reasonable offer.
    6. We not send images, numbers of information in advance.
    7. First step for any interested person: LOI and Passport.
    8. Second step: We reply with the same.
    9. Third Step: Both parties disclose addresses, phone numbers, mails and skype (Owners don´t speak english)
    10. Operation is clear: after all previous steps is Box against Money.

    If interest please write to secretisimo@mail.com [9]



    And some other examples of Chicago Fed Mother Boxes courtesy of divinecosmos [10]:

    [11]

    [12]

    [13]

    [14]

    [15]

    [16]

    [17]



    And below is a fascinating, if entirely uncorroborated account on the provenance of these boxes, once again courtesy of Divine Cosmos. Unwittingly, the counterfeiters may have stumbled upon something they had no idea about:


    scribd.com


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    Bearer Bonds Bond Federal Reserve Google



      Source URL: http://www.zerohedge.com/news/why-were-trillions-fake-bonds-held-chicago-fed-crates
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      [7] zerohedge.com
      [8] t.co
      [9] mailto:secretisimo@mail.com
      [10] divinecosmos.com
      [11] zerohedge.com
      [12] zerohedge.com
      [13] zerohedge.com
      [14] zerohedge.com
      [15] zerohedge.com
      [16] zerohedge.com
      [17] zerohedge.com
      [18] twitter.com

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      From: illyia2/20/2012 11:06:17 AM
         of 7567
       


      Bob Janjuah: "Markets Are So Rigged By Policy Makers That I Have No Meaningful Insights To Offer"
      By Tyler Durden
      Published on ZeroHedge ( http://www.zerohedge.com)

      Created 02/20/2012 - 08:38


      [1]
      Submitted by Tyler Durden [1] on 02/20/2012 08:38 -0500

      Ben Bernanke [2] Bob Janjuah [3] Bond [4] Central Banks [5] default [6] Eurozone [7] Germany [8] Greece [9] Price Action [10] Random Walk [11] Reality [12] Totalitarianism [13]


      Bob Janjuah is back.

      Bob's World: Monetary Anarchy

      Since my last note from early January [14]I have spent the last few weeks assessing data and price action, as well as spending a lot of time talking to clients and trying to analyse the words and deeds of policymakers. In no particular order, my takeaways are as follows:

      1 – Greece (and the whole eurozone story) continues to lurch about, seemingly perpetually, from Farce to Tragedy. Policy seems to be focused on protecting and preserving vested interests, with little consideration given to the dreadful conditions the people of Greece and other "peripherals" are being forced to live with. However, it seems that eurozone leaders may be about to pour even more taxpayer money down into the black hole that is Greece, primarily to help the banks in Europe, at the expense of perhaps a decade of suffering by the Greek populace. For my part, I am now consigning the Greece/Peripherals/Eurozone story to the box marked "self-serving political debacle" and from here on in I will simplify Europe as follows: Until, and unless, Germany signs up to full fiscal union, a eurozone breakup is likely. And depending on how long we can continue to "kick the can" down the road in order to protect the eurozone banks, the eurozone will be consigned to an extended period of weak growth, which in turn means ever decreasing debt sustainability. Ultimately this means that the end game will simply be more devastating for us all the longer we are forced to wait. Investors should be fully aware that "home" bias amongst real money investors is now "off the charts". This is not a good development for the eurozone, unless of course our leaders are preparing for break up, or at least considering it as a viable option.

      2 – I am staggered at how easily the concepts of Democracy and the Rule of Law – two of the pillars of the modern world – have been brushed aside in the interests of political expediency. This is not just a eurozone phenomenon but of course the removal of elected governments and the instalment of "insider" technocrats who simply serve the interests of the elite has become a specialisation in Europe. Many will think this kind of development is not a big deal and is instead may be what is needed. Personally I am absolutely certain that the kind of totalitarianism being pushed on us by our leaders will – if allowed to persist and fester – end with consequences which are way beyond anything the printing presses of our central banks could ever hope to contain. Communism failed badly. Why then are we arguably trying to resurrect a version of it, particularly in Europe? Are the banks so powerful that we are all beholden to them and the biggest nonsense of all – that defaults should never happen (unless said defaults are trivial or largely meaningless)?

      3 – More broadly, with Mr Draghi now in situ, it is clear that I misread and misunderstood two things. First, I am simply stunned that our policymakers seem so one-dimensional, so short-termist, and so utterly bereft of courage or ideas.It now seems obvious that in response to the financial crisis that has been with us for five years and counting, we are being "told" to double up on these same policy decisions. The crisis was caused by central bankers mispricing the cost of capital, which forced a misallocation of capital, driven by debt/leverage, which was ultimately exposed as a hideous asset bubble which then collapsed, destroying the lives and livelihoods of tens of millions of relatively innocent people. Well now, if you listen to the latest from Bernanke and Draghi, it seems that the only solution they can offer up is to yet again misprice the cost of capital, in the hope that, yet again, through increased leverage/debt, we are yet again "greedy" enough to misallocate capital, which in turn will lead to yet another round of asset bubbles. Such asset bubbles are meant to delude us into believing that we are now "richer". When – as they do by definition – these bubbles burst, those who have been suckered in will realise that their "wealth" is instead an illusion, which in turn will be replaced by default risk.

      Secondly, I have clearly underestimated the ‘market’s’ willingness, nay desperation, to go along with this ultimately ruinous policy path. Personally, I think this is extremely worrying – the number of clients who tell me that they know they are being forced into playing a game that will end in disaster, but who feel they have to play along and who hope they will get out before it turns, is a depressingly familiar old tale. Some such folks hang onto the idea that Draghi/LTRO changed the asymmetry of risk from deeply negative to positive. Yet even these folks know that printing more money/more liquidity/more debt/more leverage is not a viable solution to our ills, and in fact will mean true supply side reform and the search for true competiveness and sustainable growth will be further cast aside, as the focus will be on the "easy gains" to be made in markets.

      4 - Assuming that we are in yet another liquidity fuelled rally courtesy of Bernanke and Draghi, then there are some key things to remember. First, such rallies can last days, weeks, months, perhaps we could even extend into 2013.And – to give a proxy guide – the S&P could end up in the high 1500s again if this current binge lasts into 2013. The problem with such liquidity fuelled set-ups is that they can last longer and get bigger than any reasonable logic would dictate. The issue here is not what central bankers say – it now seems clear that Bernanke and Draghi will say whatever it takes to keep the market supplied with ample liquidity – but what they can do. In this respect one either believes that central bankers can do whatever they like whenever they like, or one believes there are limits. I think there are limits to what Bernanke and Draghi can do, and once we hit those limits these bubbles will burst, with increasingly greater consequences the longer we are forced to wait. Do I know when we may hit these limits? I hope that it is sooner rather than later, but I have no real conviction.

      Secondly, when looking for where the bubbles may be, realise this: in this current cycle, where central bank balance sheets are at the core, the bubble is everywhere– in stocks, in bonds, in growth expectation, in credit spreads, in currencies, in commodity prices, in most real asset prices – you name it! This is why I think that this current bubble, if it is allowed to fester and develop into 2013, will have such widespread consequences when it bursts that it will make 2008 feel, relatively speaking, like a bull market.

      Third, when this bubble bursts, I don’t think there is an easy way out. Who will be the bail-out provider? We already have extraordinarily weak and fragile government balance sheets, ditto banking balance sheets and consumer balance sheets.The big cap corporate balance sheet is sound, but it already worries about how bad the real economy hit will be when the next bubble bursts. As such, the corporate sector – which has a huge degree of "control" over the political classes – will keeps its powder dry until asset prices fall to clearing levels. When this happens they will be the biggest buyer of truly cheap assets in town, but not before then. The really dangerous thing about this next bubble is that it will likely ruin current central bank credibility, as their balance sheet expansion, accumulating ever more "toxic" assets, is at the centre of the current cycle. As a result, the central bank decision-making function is now (increasingly) deeply compromised, if not utterly at odds with its own raison d'être. This of course means that if/when the current cycle implodes, central banks which have seen explosive balance sheet growth will add to the problems, rather than being able to act as credible lenders of last resort. A resulting consequence is that we will, at that point, usher in a new era of central banking and policy settings, where the key will be to regain a semblance of credibility and independence. This will be good news. But we will likely have to go through the "bust" first.

      5 – I am not well equipped to navigate bubbles where tactical views and secular views are all thrown into the melting pot together, where there is no visibility, where – as one client put it to me recently – we have Monetary Anarchy running riot, where the elastic band between the ‘real’ economy and the current liquidity-fuelled markets is stretched further and further beyond credulity, and where history tells us that policymakers will happily stand by whilst bubbles are being pumped up, and hope that they are onto their next job before it all comes tumbling down.It seems that the 07/08/09 part of this crisis has resulted in zero lessons learned. In fact it is much worse than that as we are instead being asked to double up on a strategy which I fear will end in failure. As such, clearly my outlook in my last note needs to be re-assessed in terms of the latest developments. Whilst equity market levels are still within the tolerance limits set out in this previous note, my timing is clearly being "stretched". Unfortunately for me, and as warned in the prior note, if my outlook set out therein is proven to be wrong, it is because I am overly cautious. I say "unfortunately" because the longer we have to wait for the "final" resolution to the global financial crisis, the bigger and more devastating the final leg lower will be. I have an extremely high level of conviction on this point.

      6 – So, in terms of markets, be warned. My personal recommendation is to sit in Gold and non-financial high quality corporate credit and blue-chip big cap non-financial global equities. Bond and Currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears. Real assets are relatively attractive. But I am going to wait for this current central bank bubble to burst before going all in. I may be waiting 5 days, 5 weeks, 5 months, perhaps 5 quarters. It all depends on when and how our central bank leaders are exposed as lacking credibility and/or lacking the mandates to keep pumping liquidity into the system. The end of the bubble will be sign posted by either monetary anarchy creating major real economy inflation or by a deflationary credit collapse (if they run out of pumping "mandates"). The end game is incredibly binary in my view, but in between it is pretty much a random walk. Either way, "bonds are toast" in any secular timeframe (due either to huge inflationary pressures, or due to a deflationary credit collapse), which in turn means that asset bubbles in risky assets will get crushed on a secular basis.

      My colleague Kevin Gaynor has a more nuanced view and he feels that we may well avoid the bubble outcome, as political hurdles, political changes, growth and earnings data will all very quickly undermine central bankers and their bubble vision. For all our (long term) sakes, I hope I am wrong when it comes to fearing another round of liquidity-fuelled bubbles, and that he is right that "good sense? will prevail soon.

      I will continue to use the Dow/Gold charts to continue to guide me going forward. The USD price of an ounce of gold and the Dow will, I believe, converge at/around 1, at some point over the next 2 years or so. I have extremely high conviction on this. What I am not sure on is whether we converge at 7000+/-, or at 14000+/-. Because I do believe that even Bernanke and Draghi cannot do as they wish and that there are some limits to the recklessness of policymakers, I still lean towards a deflationary resolution at/about 7000 in the next year or two. Pretty vague, I know, buts it's the best I can do right now, and what is clear is that, in the world I fear ahead, gold is a winner either way – remember, gold is a great (monetary) inflation hedge, and in a deflationary credit collapse gold works as a store of value/wealth as it carries zero credit risk.

      As a "credit" guy at heart I see more likelihood in a deflationary credit (i.e., a "real") collapse rather than a real economy inflationary (nominal) collapse. Either way however, what is clear is that if Bernanke and Draghi are allowed to continue on their current policy path for much longer, then whatever the final outcome will be, it will likely leave a deep scar on us for decades. Which on a ten-year timeframe may not be such a bad thing as it should kill off monetarism and usher in a new era of monetary and fiscal prudence? In the near term, LTRO2 at month-end is the next clear focus for markets, more so than Greece. If LTRO2 is USD1trn or more, the market will take that as a signal to load on more leverage, more risk and more ‘carry’. If LTRO2 is in the order of USD250bn to USD500bn, Risk Off will be the order of the day as markets will start to fear that central bankers are having to reign back-in their current policies, and that as a result we face another period where central bankers and policymakers fall back behind the curve. LTRO1 clearly took policymakers from behind to ahead of the curve, but this is an extremely fluid situation, where doing nothing is, in reality, the same as going backwards. As the skew of expectations is to a large LTRO2, a LTRO2 take-up in between these ranges is likely to be viewed with neutrality/mild disappointment.

      Similar Articles You Might Enjoy:





      Ben Bernanke Bob Janjuah Bond Central Banks default Eurozone Germany Greece Price Action Random Walk Reality Totalitarianism


      Source URL: http://www.zerohedge.com/news/bob-janjuah-markets-are-so-rigged-policy-makers-i-have-no-meaningful-insights-offer
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      From: illyia2/20/2012 10:48:46 PM
         of 7567
       


      Contract Requires Prisons 90% Filled
      The Big Picture - ritholtz.com
      Posted By Barry Ritholtz
      On February 20, 2012 @ 7:30 pm
      In Legal,Really, really bad calls,Taxes and Policy | 11 Comments


      Property laws? Civil Liberties? Not when they stand in the way of profits:

      “Corrections Corporation of America (CCA) has reached out to 48 states as part of a $250 million plan to own existing prisons and manage their operations. But in return CCA wants a 20-year contract and assurances that the state will keep the prisons at least 90% full.”
      - AllGov [1]

      90% occupancy? I guess the marijuana laws cannot be overturned then or it would violate this 20 year contract.

      Here is my compromise: Let’s fill the prisons with CCA Executives!


      Article printed from The Big Picture: http://www.ritholtz.com/blog

      URL to article: http://www.ritholtz.com/blog/2012/02/contract-requires-prisons-90-filled/

      URLs in this post: [1] AllGov: http://www.allgov.com/Top_Stories/ViewNews/Private_Prison_Company_to_Demand_90_Percent_Occupancy_120216





      Copyright © 2008 The Big Picture. All rights reserved.

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      To: illyia who wrote (7377)2/21/2012 1:05:22 PM
      From: illyia
         of 7567
       


      Here Is Why The Dow Just Passed 13,000
      By Tyler Durden
      Published on ZeroHedge ( http://www.zerohedge.com)

      Created 02/21/2012 - 11:37


      [1]
      Submitted by Tyler Durden [1] on 02/21/2012 11:37 -0500

      Central Banks [2]


      Wondering why the DJIA just passed 13K again? Wonder no more: as the chart below shows it is entirely due to the nearly $7 trillion pumped by global central banks into the world stock markets just in the past 4 years. As Sean Corrigan from Diapason notes, the aggregate global central bank balance sheet has doubled in four years, after doubling in the 5 years before that. We would add that with the entire centrally planned ponzi scheme hell bent on preserving the illusion of nominal gains, global liquidity is now fungibly sloshing from one market to another with absolutely zero resistance whatsoever. At this rate, it should double again in 3 years, then 2, and so on. Will the Dow hit 52K in 5 years in that case? Why most certainly. Just ask any remaining citizens of the Weimar Republic. They know all too well about exponential stock market rises. They also know absolutely everything about the self-delusion that comes with chasing NOMINALnumbers. Oh, and before we forget, expressed in spot gold price, the central bank aggregate tally has moved from being the equivalent of 10 billion oz of gold, to just 8 billion. Guess what is 20% underpriced.

      [3]





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      Central Banks


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      From: illyia2/22/2012 12:43:12 PM
         of 7567
       
      Scandal: Greece To Receive "Negative" Cash From "Second Bailout" As It Funds Insolvent European Banks
      By Tyler Durden
      Published on ZeroHedge ( http://www.zerohedge.com)

      Created 02/22/2012 - 12:15


      [1]
      Submitted by Tyler Durden [1] on 02/22/2012 12:15 -0500

      Creditors [2] European Central Bank [3] Eurozone [4] Greece [5]



        Earlier today, we learned the first stunner of the Greek bailout package, which courtesy of some convoluted transmission mechanisms would result in some, potentially quite many, Greek workers actually paying to retain [6]their jobs: i.e., negative salaries. Now, having looked at the Eurogroup's statement [7]on the Greek bailout, we find another very creative use of "negative" numbers. And by creative we mean absolutely shocking and scandalous.First, as a reminder, even before the current bailout mechanism was in place, Greece barely saw 20% of any actual funding, [8]with the bulk of the money going to European and Greek banks (of which the former ultimately also ended up funding the ECB and thus European banks). Furthermore, we already know that as part of the latest set of conditions of the second Greek bailout, an ' Escrow Account [9]" would be established: this is simply a means for Greek creditors to have a senior claims over any "bailout" cash that is actually disbursed for things such as, you know, a Greek bailout, where the money actually trickles down where it is most needed - the Greek citizens. Here is where it just got surreal. It turns out that not only will Greece not see a single penny from the Second Greek bailout, whose entire Use of Proceeds will be limited to funding debt interest and maturity payments, but the country will actually have to fund said escrow! You read that right: the Greek bailout #2 [10] is nothing but a Greek-funded bailout of Europe's insolvent banks... and the Greek constitution is about to be changed to reflect this!

        The smoking gun quote:

        The Eurogroup also welcomes Greece's intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece's debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter's debt service directly to a segregated account of Greece's paying agent.

        As for the priority of payments - it is more than clear:

        Finally, the Eurogroup in this context welcomes the intention of the Greek authorities to introduce over the next two months in the Greek legal framework a provision ensuring that priority is granted to debt servicing payments. This provision will be introduced in the Greek constitutionas soon as possible.


        So there you have it: the Second Greek bailout is nothing but the first Greek bailout of Europe's banks! And the Greek constitution is about to be changed to reflect that.

        Congratulations Greece - you just got royally raped by your own unelected rulers and you didn't even know it.

        Full Eurozone document ( source [7]).

        [Scribd Doc]

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        Creditors European Central Bank Eurozone Greece
          Source URL: http://www.zerohedge.com/news/scandal-greece-receive-negative-cash-second-bailout-it-funds-insolvent-european-banks
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          [7] consilium.europa.eu
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          From: illyia2/22/2012 3:36:20 PM
             of 7567
           
          John O’Brien: Mortgage Settlement Fails to Address Banking Criminal Enterprise
          Yves Smith
          Naked Capitalism
          2-22-12

          Yves here. The release by San Francisco county assessor-recorder Phil Ting of a study of document irregularities in foreclosures has put a spotlight on the failure of Federal banking regulators and state officials to do anything beyond cursory examinations of servicers’ bad practices. If a country official with limited resources can show that there are widespread abuses, what is the excuse of state and Federal officials for their failure to understand the depth and severity of these problems?

          As Dave Dayen has pointed out, it was two county registers of deeds, Jeff Thigpen in Guiford County, North Carolina, and John O’Brien of South Essex County, Massachusettes, who were the first to look at their own records to see how extensive the frauds were. O’Brien has called his office a “crime scene” and refused to register any more fraudulent deeds. He also performed a study of his own, and the results were released in June 2011. As Dayen reported, the study found widespread failures and apparent fraud, just like the later San Francisco exam:

          Register John O’Brien revealed the results of an independent audit of his registry. The audit, which is released as a legal affidavit was performed by McDonnell Property Analytics, examined assignments of mortgage recorded in the Essex Southern District Registry of Deeds issued to and from JPMorgan Chase Bank, Wells Fargo Bank, and Bank of America during 2010. In total, 565 assignments related to 473 unique mortgages were analyzed.

          McDonnell’s Report includes the following key findings:
          • Only 16% of assignments of mortgage are valid
          • 75% of assignments of mortgage are invalid.
          • 9% of assignments of mortgage are questionable
          • 27% of the invalid assignments are fraudulent, 35% are “robo-signed” and 10% violate the Massachusetts Mortgage Fraud Statute.
          • The identity of financial institutions that are current owners of the mortgages could only be determined for 287 out of 473 (60%)
          • There are 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership can be traced.


          Below, John O’Brien gives us his views on the mortgage settlement.

          *****



          By John L. O’Brien of the Southern Essex District Registry of Deeds – Salem, MA

          When you enter my registry you see a sign that reads “The deeds tell the story.” Before the big banks took it upon themselves to corrupt the land recordation system, the deeds used to tell a happy story, one in which people purchased a home and lived “the American Dream.” Today, however they tell a different story one of greed, fraud, and forgery. By now everyone in Massachusetts knows what I have been doing over the past two years to expose and stop the schemes by the Mortgage Electronic Recording Systems, Inc. and their shareholder banks. The accuracy and integrity of the land records in my registry are of the upmost importance to me.

          Just this past week the Attorney Generals of this country said they will enter into a deal with the 5 largest banks who have agreed to stop robo-signing, provide principal reductions of between 20 to 25 thousand dollars to a million underwater homeowners. This amount will in no way solve the housing crisis that we are faced with nor even begin to turn our economy around. In addition, the settlement suggests that approximately 750,000 people who have had their homes taken by foreclosure using fraudulent documents will receive a check for $2,000. As Yves Smith has said, “that amount is the new penalty for forgery.” This is merely a slap on the wrists to these lenders. It is my opinion that this deal has been crafted for the banks and by the banks. It is not in the best interest of the consumer, the homeowner, or the taxpayer. Simply put, I do not trust these lenders who have flooded my registry with over 32,000 fraudulent documents to do the right thing. Those homeowners who now have a corrupted title are looking for answers. This deal gives them none. The illegal activity by the banks is nothing shy of a criminal enterprise, where they crossed state lines using the United States Postal Service to deliver the instruments that were fraudulent and contained forgeries.

          I will continue to pursue my request for Federal and State grand juries to be impaneled to hold the CEO’s of these banks liable for the crimes that have been committed under their watch. The only thing missing in this illegal scheme that MERS and the big banks came up with was a gun and a mask. I will continue to expose this fraud and work everyday to make sure that the taxpayers are fully reimbursed for the over $44 million dollars in lost recording fees in my district alone by institutions who still believe fees are “for thee but not for me.” A message needs to be sent to these banks that they may think that you are too big to fail but they are not too big to go to jail.

          We need a common sense approach in order to get this economy running again. I strongly believe that the hardworking homeowners who have struggled to stay current on their mortgages should be able to refinance there homes, quickly at a fixed rate of 3%. A true national program with these terms would lower payments and infuse millions into our economy immediately.

          Let’s not forget that foreclosures benefit no one. When a bank auctions off a home for less than is owed, that becomes the “comp” for the neighborhood. Simply put, your home and those of your neighbors are worth less. It makes far better sense to work with struggling homeowners and to take whatever action is needed to keep people in their homes.

          Unless we face the facts and approach this with common sense we will be talking about the same issues a year from now and I am not sure we can wait that long.


          nakedcapitalism.com

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