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Rob Kirby's unique brand of illuminating and insightful economic reporting prompted, Ted F., one of his readers to write, "You are the Johnny Rotten of Economics. Keep it up. I'm a big fan."
 
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Dillon Read & Co.
And The Aristocracy
Of Stock Profits
By
Catherine Austin Fitts

Libor Crisis Chronology

• In the spring of 2007, Bear Stearns went bankrupt due to catastrophic losses in their mortgage backed securities portfolio when AAA rated mortgage paper “failed”.
• Up until that time, AAA rated commercial paper had NEVER failed.
• As a result of AAA rated paper “failing” – by Aug. 2007 credit markets seized up because banks refused to extend credit – even to one another.

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Ted Truman Talks Turkey

According to Wikipedia;

Edwin (Ted) M. Truman (born 1941, Albany, NY) is an American economist specializing in international financial institutions, especially the International Monetary Fund and sovereign wealth funds. He has been a Senior Fellow with the Peterson Institute for International Economics since 2001. Truman has worked quietly over the years on international financial crises issues. Nobel laureate Paul Krugman described Truman as the "George Smiley of international economics".

So why should we, or anyone else, care what Ted Truman thinks or has to say?

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The Road to the Euro: Birth Pangs of Globalism

From an historical context – it may be argued that global domination begins and endsFIRST - with control of Europe.  The unification of Europe, or global domination as a concept, is perhaps as old as war itself.  Put simply, you cannot ‘rule the world’ unless you first ‘rule Europe’.  History is littered with many examples of ‘would-be’ aggressors cum oppressors who have set their sights on European conquest.  While not exhaustive – here’s a list of a few:

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Royal Canadian Mint’s Tungsten Twostep?

Back in 2009, the Royal Canadian Mint [RCM] claimed that it had lost $15 million worth of gold bullion. What ensued from the time the loss was made “public” can best be described as a 'fumbling exercise' where – initially - different accounts were put forward as to the reason for the loss. Finally, public catcalls regarding this loss at one of the world's most renowned Mints led to an official investigation by the Royal Canadian Mounted Police [RCMP].

In the end, we were all told that this loss was due to honest miscalculations and blunders, or in other words – LAX CONTROLS.

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The Myth of American Exceptional-ism

Yesterday, Lance Armstrong was stripped of his seven Tour de France titles after the International Cycling Union [UCI] ratified the United States Anti Doping Agency’s [USADA] sanctions against him.  UCI president Pat McQuaid described Armstrong’s actions as,

“the most sophisticated, professionalized and successful doping program that sport has ever seen.”

Ladies and gentlemen, sophisticated and successful doping programs in America do not stop at sport.

There exist other unconscionable, premeditated hoaxes – ONGOING – that are being purported and presented to the world as American exceptional-ism.

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The Genesis of the LIBOR Crisis

The roots of the LIBOR crisis can be found in the broad based sub-prime FRAUD in America circa 2000 - 2007.  The sub-prime fraud involved American investment banks securitizing [bundling] poor mortgage credits into “pools” – then working hand-in-hand with credit rating agencies like S & P and Moodys – having these pooled securities rated AAA.

In Q1/2007 American investment bank - Bear Stearns, a major player in this sub-prime securitization – had a number of these sub-prime pools FAIL to perform.

The failure of AAA credit – up till then – was UNHEARD of in modern finance and precipitated a GLOBAL CREDIT CRISIS where banks became UNWILLING TO LEND – even to one another.  The sanctity of triple “AAA” credit had been violated.

So by August 2007, Global Credit Markets were “locked up” – Commercial Paper markets, which function on “creditworthiness” – are the oil that greases the wheels of world industry.  These critical markets were brought to a standstill.

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Getting Straight Goods:  We Aren’t in Kansas Anymore

No-one from Officialdom Talks Straight on Gold


Back in June 2007 I spent an evening at a ‘private’ mining-finance-related function at the National Club in Toronto – an invited guest of a private merchant-banker associate. The function we attended featured the Rt. Hon. Jean Chrétien [former Prime Minister of Canada – 1993 to 2003] as speaker. Apart from being Canada’s former P.M. Mr. Chretien is also a former Minister of Finance, Minister of Justice, Attorney General, Minister of National Revenue and Minister of Industry Trade and Commerce.   So, let’s say he’s “pretty plugged in”.  After our meal he delivered a keynote address and then took questions from the audience.
Most of the questions were focused on world events.

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Irony of Ironies and the Bifurcation of the Gold Market

Recently, I spent some time speaking with the Chairman of an emerging North American gold producer.  One of the items we discussed was the procedure by which gold made its way to market.  In this instance, the company in question mined ore from a deep shaft – had their own mill in close proximity to their shaft and created their own dory bars [85 – 87 % pure] on site.  The dory bars then get shipped to Johnson & Matthey where they are further refined into good delivery bars with the J & M stamp.  The costs of mining the ores and producing dory bars at this particular company vary between $U.S. 500.00 and $800.00 per ounce – depending on the grade of the specific ores that are being extracted. 

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Horse-Whipping Rates to Zero

Note how we barely see the hand of the ‘mystery’ rider [Geithner].  Note the conduit [crop] through which the force is applied.  Now note the animal that does the heavy lifting….

Description: C:\Users\rob\Pictures\horse-whip1.jpg

Interest Rate Swaps and the Long End of the Interest Rate Curve

The rest of the world has been a net seller of U.S. Treasuries for a number of years now.  It has been the U.S. Treasury – exercising / implementing Imperialist U.S. monetary policy through the trading desks of the magnificent five [J.P. M., BofA, Citi, Goldy and MS] – IN THE LONG END OF THE INTEREST RATE CURVE by selling tens upon tens of Trillions of Interest Rate Swaps [IRS] – deals between the banks [payers of fixed] with the Exchange Stabilization Fund [ESF] brokered by the N.Y. Fed trading desk.  This is what has kept things “appearing somewhat normal” in the long end of the interest rate curve.

Forward Rate Agreements
 [FRA’s] and the Short End of the Curve

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Libor Rigging:  The Tip of the Iceberg

                                              

GATA was born in the late 1990’s - primarily on the back of fundamental research by Frank Veneroso regarding Central Bank Gold Leasing.  Veneroso’s intellectual curiosity was aroused after being fed detailed data re: gold leasing by the Bank of England’s Terry Smeeton.
   
The fact that gold prices and interest rates were so highly “inter-related” was first publicized in the alternative media by Reg Howe in 2001.  Howe alerted the world to academic accounts of the special relationship between gold and interest rates.  He highlighted the body of economic law and observation associated with “Gibson's Paradox” – something Lawrence Summers [later, U.S. Treasury Secretary and current senior economic advisor to Obama] wrote about with Robert Barsky while he was a professor at Harvard in the 1980’s.

The upshot of this Gibson’s Paradox economic theory goes something like this:  real interest rates and the gold price are causal and inter-related with each other.

This is why Professor Lawrence Summers was summoned to Washington as assistant Secretary of Treasury under Robert Rubin [Clinton Admin. / 1993].  It was to implement HIS THEORETICAL WORK under the auspices of Treasury Secretary Robert Rubin’s mythical “Strong Dollar Policy”.

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The Greatest Hoax Ever Perpetrated on Mankind

A few years ago, when J.P. Morgan grew their derivatives book by 12 Trillion in one quarter [Q3/07] – I did some back of the napkin math – and figured out how many 5 and 10 year bonds the Morgue would have necessarily had to transact on their swaps alone – if they are hedged.  The bonds required to hedge the growth in Morgan’s Swap book were 1.4 billion more in one day than what was mathematically available to the entire domestic bond market for a whole quarter?

Put simply, interest rate swaps create more settlement demand for bonds than the U.S. issues.

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The J.P. Morgan Follies:  More Than Meets the Eye
Morgan says they lost 2 billion in the last 6 weeks from the Credit Default Swap side of their derivatives business??

What has happened in the credit markets in the last 6 weeks??

10 year Italian bonds have done little to nothing [roughly 5.00% - 5.50%].

10 year French bonds have done little to nothing [roughly 2.80% - 3.00%]

10 year Greek bonds did have a severe move [drop in yield] but I find it next to impossible to believe that J.P. Morgue would be caught wrong footed by this:



In summary, there have been NO major credit events [defaults] in the past 6 weeks – not even in Europe – which is widely regarded/reported as being an economic basket case.

When you look at the Office of the Comptroller of the Currency’s breakdown of derivatives held by all U.S. banks – you get a good picture as to the aggregate weightings of broad categories of derivatives – namely, that Credit Default Swaps make up only 6% of ALL OUTSTANDING NOTIONALS at Dec. 31/2011.

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Blythe Masters Lays an Egg

On April 5, 2012, JPMorganChase commodity executive Blythe Masters appeared on CNBC, and she was questioned whether the bank is manipulating metals markets?

Watch the interview here.

Masters’ response was,

"There's been a tremendous amount of speculation, particularly in the blogosphere, on this topic," she told CNBC. "I think the challenge is it represents a misunderstanding of the nature of our business. ... Our business is a client-driven business where we execute on behalf of clients to achieve their financial and risk-management objectives. ... We have offsetting positions. We have no stake in whether prices rise or decline."

So Blythe Masters would have us ALL believe that J.P. Morgue’s 76 Trillion derivatives position – illustrated below - is ALL CLIENT DRIVEN:


source:  Office of the Comptroller of the Currency [OCC]

The Undoing of Blythe Masters and J.P. Morgan Chase

Perhaps Ms. Masters is unfamiliar with [or conveniently forgets, perhaps?] the manner in which the OCC gathers and presents data, namely, they gather and publish data submitted by the banks themselves in submissions known as “Call Reports ”. 

Here is what the OCC tells us about “end users” or clients [or clients who want to be identified, perhaps?] for derivatives, namely, THAT THERE ARE VIRUALLY NONE:

source:  Office of the Comptroller of the Currency

You Cannot Have it Both Ways Blythe

This is EXTREMELY INDICTING.  The head of J.P. Morgue’s derivatives nightmare is telling the world that their business is “customer driven” and on the other hand – the OCC – whom J.P. Morgue reports to - is telling us there are NO CUSTOMERS [or none that want to be identified] for these hundreds of TRILLIONS of derivatives products?
The reality is that Blythe Masters is telling a partial truth – in that J.P. Morgue’s trading is customer driven; and partially misdirection in that Masters refuses to acknowledge that J.P. Morgue’s client “IS” THE Treasury [specifically, the Exchange Stabilization Fund, or, ESF] of the United States of America.
It’s appropriate – with this being Easter – that Blythe Masters would lay-such-an-egg in the mainstream press.  Appropriately, it has landed squarely on her own face.

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All Fraud All the Time

Conspiracies be damned!  Today, the criminal leadership at the helm of the United States of America has taken brazen financial bam-boozery to a new level.

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Manifest Destiny Derailed: Treason from Within

Something very unusual recently occurred in financial journalism. If you are from or rely on the mainstream western financial press as your primary means of being informed – you surely wouldn’t have noticed – because this ‘oddity’ involved a real act of investigative journalism by one Lars Schall.

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The $U.S. Dollar Centric Derivatives Complex: Progenitor of Parasitic, Ponzi Price-Fixing

The term “derivative” has become a dirty, if not evil word.  So much of what ails our global financial system has been laid-at-the-feet of this misunderstood, mischaracterized term – derivatives.  The purpose of this paper is to outline the origin, growth and ultimately the corruption of the derivatives market – and explain how something originally designed to provide economic utility has morphed into a tool of abusive, manipulative economic tyranny.

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The Devil is in the Details

Canada’s Prime Minister, Steven Harper met with President Barack Obama today in Washington to announce details of new/updated Canada/U.S. joint security agreement. The spin – so far – in the Canadian mainstream press has characterized the agreement as being ALL ABOUT expediting the free flow of goods and travelers across our borders. What NO ONE is speaking about – except for a few cryptic bullet references – is the broader agenda to “harmonize” the security agendas of both countries. Here are a few of the highlights as reported by the Canadian Press:

The Canadian Press - ONLINE EDITION
Highlights of the Canada-U.S. border action plan announced Wednesday
By: The Canadian Press
Posted: 12/7/2011 2:05 PM Last Modified: 12/7/2011 2:32 PM
OTTAWA - Highlights of the Canada-U.S. border action plan announced Wednesday:
— Joint, integrated assessments about security threats and improved intelligence sharing, including common privacy principles.
— More comprehensive advance screening of travellers from third countries heading to North America.
— Exchange of entry information of all persons at the Canada-U.S. border, to serve as a record of exit from the other country.
— Co-ordinated research, prevention relating to violent extremism.
— Pilot projects for land-based joint security teams, creation of additional marine-based teams.
— Harmonized approach to screening cargo arriving from offshore.
— New explosive detection machines for Canadian airports by March 2015 to make U.S. flight connections easier.
— Joint assessments and audits for plant, animal and food safety systems in third countries.
— Common framework for trusted trader programs.
— Enhancement of Nexus trusted traveller program.
— More pre-inspection and pre-clearance for land, rail, marine traffic.
— Single electronic window for shippers to reduce paperwork.
— Co-ordinated border crossing infrastructure upgrades.
— Jointly published wait time service levels at key crossings.
— Closer co-operation on cybersecurity and health security threats.
— Harmonized names for cuts of meat and poultry.
— Alignment of auto industry manufacturing standards.
— Executive steering committee to oversee implementation of action plan.

What Canadians may or may not know is that the American federal law enforcement regime considers ANYONE who questions the actions of the government, anyone who is critical of the secretive, PRIVATE Federal Reserve or anyone who is critical about American military adventurism as EXTREMISTS / TERRORISTS. America has recently passed “enabling laws” like The National Defense Authorization Act – allowing legal, indefinite detention – or ‘LIQUIDATION’ of any American citizens deemed to be “a threat”.

The National Defense Authorization Act is the Greatest Threat to Civil Liberties Americans Face
If Obama does one thing for the remainder of his presidency let it be a veto of the National Defense Authorization Act – a law recently passed by the Senate currently which would place domestic terror investigations and interrogations into the hands of the military and which would open the door for trial-free, indefinite detention of anyone, including American citizens, so long as the government calls them terrorists.
So much for innocent until proven guilty. So much for limited government. What Americans are now facing is quite literally the end of the line. We will either uphold the freedoms baked into our Constitutional Republic, or we will scrap the entire project in the name of security as we wage, endlessly, this futile, costly, and ultimately self-defeating War on Terror……

The ‘devil is in the details’ so-to-speak – and we in Canada have not been given “details” as to what co-ordination regarding research and prevention of what is dubbed “violent extremism” really entails. The lack of transparency in this regard is worrisome. What EXACTLY has Canada’s Prime Minister really agreed to with his American counterparts on behalf of all Canadians?
Until the Canadian public is given specific details as to how this co-ordination of policy is to be implemented – its buyer beware.

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Tom Foolery at Its Finest:  The Truman Show Redux

The purpose of this paper is to highlight how hegemonic American economic doctrine has infected global economics in creating a surreal plutocratic corporatocracy, or in other words, what’s black is white, what’s up is down, what’s safe is risky, you get the idea!

Do Deficits Really Matter, or, What’s Unaffordable is Cheap


Back in 2002, Treasury Secretary Paul O’Neill warned [then] Vice President Dick Cheney about the folly of deficit finance as the annual U.S. Government deficit approached $500 billion.  Cheney responded by having O’Neill fired; but before that, he uttered these words,

"You know, Paul, Reagan proved deficits don't matter," continuing, "we won the midterms (congressional elections). This is our due."

Judging by what deficits were then versus what they are now – roughly $1.5 Trillion annually – it’s evident that America continues to be “ruled” by the dictum that deficits do not matter.

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Tic, Tac, Toe, Three Clowns in a Row

Treasury International Capital [TIC] data was released Wednesday morning by the U.S. Treasury.



Appended from: U.S. Treasury TIC data

Appended below is a summation of the U.S. Treasury’s take on what happened in Sept., 2011 reporting:

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The Rape and Pillage of Humanity

With a title like, the Rape and Pillage of Humanity, many of you are probably expecting this paper to be a story about greed, power, misplaced trust and abuse in College Football.  So if you thought that – you’d be wrong.

Instead, this is tale about greed, power, misplaced trust and abuse in our global monetary system – and what Central Bankers have done to it.  In short, they’ve taken us to the showers and had their way with us all.

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The Genesis of Financial Contagion

In private correspondence with a colleague earlier today – he made the point that the Wall Street Journal was trying to lay the blame of the failure of MF Global at the feet of the Commodity Futures Clearing Corp. [CFTC].

I agree with much of what my colleague said, namely, trying to lay the blame of MF Global’s blow-up at the feet of the CFTC is a diversion.   Citing “credit default swaps” he pointed out this fact: Ruben, Greenspan and Summers, prevented the CFTC from regulating derivatives in the Commodity Futures Modernization Act of 2000.

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Algorithms, Bullion and Criminals:  The ABC’s of Understanding Precious Metal

At the link to the S.E.C. below – there is an archive of “fails to deliver equity” data whose original source is the DTCC [Depository Trust Clearing Corporation].

http://www.sec.gov/foia/docs/failsdata.htm


What is presented below is an analysis of September 2011 “fails to deliver” equities which are understood to represent physical gold and silver bullion in the market place.  The individual instruments are aggregated on a coloured, daily gross ounce basis to show the serial and systemic nature of the DRAMATIC SHELL-GAME build in [naked] short ounce equivalents – which, when one considers the Jeffrey Christian Constant. It was back in March, 2010 – at CFTC hearings in Washington that expert testimony was given by C.P.M. Group Chairman, Jeffrey Christian where he explained,

Precious metals are financial assets - and like currencies, T-Bills and T-Bonds they trade in paper at a multiple of a hundred times the underlying physical.

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Are Animal Rights Activists Terrorists?

Something which has created a stir in the alternative media [the derelict mainstream have long ceased reporting the news] in the past couple of days is a report concerning new steps being required of investment advisors in Canada relating to their KYC [Know Your Client] procedures. This was first brought to my attention by Jeff Berwick [The Dollar Vigilante] and I’d advise everyone to read his piece on this here. These new steps involve / require investment advisors to complete a questionnaire – prepared by a national regulatory body called FINTRAC – to help investment advisors “identify” suspected terrorists.

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Lottery Odds Events Keeping Gold and Silver Prices Contained

From Bill Murphy’s Lemetropolecafe.com “Midas commentary” on Friday, Sept. 30, 2011:

HSBC has published an interesting study of the recent precious metal volatility:
"Based on almost 40 years of data, the drop in gold prices last week represented a 3 standard deviation move, down 8.54%. According to the data, this has occurred only seven times since gold became freely convertible in 1972. This made the week ended 23 September the seventh-worst week in terms of percentage price performance in almost 40 years of trading, or more than 2,000 weeks.

The last time volatility was this high was in the week ended 21 March 2008, when Bear Stearns collapsed. To find higher weekly volatility levels,we have to go back to the first week of March 1983, when gold prices dropped more than 11%...

Based on 41 years of data, the drop in silver prices last week represented a 5 standard deviation move, falling 23.42% for week ended 23 September. According to the data, declines of this magnitude are rare and have occurred only four times since 1970"

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The Real Cost of the Bailout [So Far]

Back on July 21, 2011 – Senator Bernie Sanders  [VT] published a paper titled, The Fed Audit, where he made the claim that a GAO [Government Accountability Office] report showed the real cost of the Federal Reserve bailout was 16 Trillion.

A snippet from Bernie Sanders’ The Fed Audit:

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.

The entire GAO report can be read here: http://sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf

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Members.... Read my special presentation, entitled "Derivatives Demystified"

The Silver Siren: Reversion To Reality

According to the World Gold Council – the overall level of global mine production is relatively stable. Supply has averaged approximately 2,497 tonnes per year over the last several years. 2500 tonnes is equal to 80.4 million troy ozs. 

World Silver Supply and Demand
(in millions of ounces)

 

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Supply

Mine Production

606.2

593.9

596.6

613.0

637.3

641.7

665.4

681.9

718.3

735.9

Net Government Sales

63.0

59.2

88.7

61.9

65.9

78.5

42.5

28.9

15.5

44.8

Old Silver Scrap

189.0

196.3

194.0

195.2

198.6

203.3

199.0

193.7

188.4

215.0

Producer Hedging

18.9

--

--

9.6

27.6

--

--

--

--

61.1

Implied Net Disinvestment

--

18.9

1.6

--

--

--

--

--

--

--

Total Supply

877.1

868.3

881.0

879.7

929.5

923.5

907.0

904.5

922.2

1,056.8

                                               Source:  Silver Institute

The Silver Institute tells us there were 735 million ozs. of Ag mined from the earth’s crust in 2010.  Simple math [735 / 80.4] tells us that “nature” is implying that the gold / silver ratio should be 9.14: 1.
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Gold and Interest Rates: More than Joined at the Hip

“Interest rates to remain at zero for the next two years.”  Those were the words of Fed Chair - Sir Benjamin of Bernanke last week.  With inflation beginning to pick-up – the notion that rates would remain at zero for a prolonged period of time seems “paradoxical” to conventional economic thought.  There have been other misunderstood ‘paradoxes’ in economics in modern times.   Here’s how Wikipedia explains the relevance of this famous benchmark in economics:

Gibson's paradox

From Wikipedia, the free encyclopedia
Jump to: navigation, search

Gibson's Paradox is the observation that the rate of interest and the general level of prices are observed to be positively correlated. It is named for British economist Alfred Herbert Gibson who noted the correlation in a 1923 article for Banker's Magazine.

The term was first used by John Maynard Keynes, in his 1930 work, A Treatise on Money. It was believed to be a paradox because most economic theorists predicted that the correlation would be negative. Keynes commented that the observed correlation was "one of the most completely established empirical facts in the whole field of quantitative economics."


Boiled down - Gibson’s Paradox, as first described by Keynes - is the acknowledgement that movement in interest rates and the general price level [inflation] were positively correlated. This was viewed as “paradoxical” because classically – economists expected higher interest rates to ‘arrest’ demand which, it was thought, would lead to lower prices.
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Derivatives: A Capital Markets Gong Show For Whom The Bell Tolls

Back in early March, 2011 – PIMCO’s Bill Gross were calling for much higher rates and telling the world that they were selling U.S. Government Bonds. 

PIMCO's Bill Gross Says to Sell U.S. Treasuries Now

03/03/2011

……To wit, he predicts that when the Fed’s QE2 bond-buying binge ends at the end of June, there will be nobody to take the Fed’s place as last-resort buyer of U.S. Treasuries at artificially low rates. Treasury yields will need to ramp up sharply by 1.5 percentage points to attract private buyers. Given that the ten-year U.S. Treasury is currently yielding only 3.5%, a 1.5 percentage point jump would equal a 43% increase in interest rates (1.5/3.5). That’s a big move in interest-rate land and would have a significantly negative effect on bond prices.

As you can see, not only did the anticipated rise in interest rates NOT materialize – rates have actually fallen:



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Elitism, Immunity and Outstaying One’s Welcome

When The Bank of International Settlements was formed back in 1930, two board seats were allocated to the U.S. Federal Reserve but for many years [decades actually] the Fed did not name anyone to these positions.  As reported by Reg Howe at the Golden Sextant years ago, The Federal Reserve finally took up their seats as directors of the BIS back in 1994.  Howe never did articulate the importance or assign a reason as to why the Fed took their seats on the BIS at that time, but he did question the timing:

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Amaranth Kill Shot:  Collateral Damage in a 78 Trillion Dollar Derivatives Book Compliments of J.P. Morgan Chase

The purpose of this paper is to illuminate the real purpose of the obscene size of derivatives books amongst the world’s largest financial institutions.  Derivatives in strategic markets are controlled by governments through proxy banks and agencies using these instruments.  By sheer volume, the trading in paper “tails” wag the physical “dogs”.  When market volatility negatively impacts these large institutions they are given a pass by regulators and accounting protocols in the interest of national security and preservation of the status quo.  Moreover, this ensures the perpetuation of U.S. Dollar hegemonic power.  The following accounts outline how these instruments are used to project this power.

Amaranth Advisors LLC went bankrupt in Oct. 2006.  By mid 2007 the Committee of Homeland Security and Government Affairs released a document containing a detailed investigation of the Amaranth scandal entitled “Excessive Speculation in the Natural Gas Markets.”  Amaranth, hedge fund, was launched in 2000 as a multi-strategy hedge fund, but had by 2005-2006 generated over 80% of their profits from energy trading.

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Fool Me Once, Shame On You - Fool Me Twice…..

Upon first reading of the Reuters article below, anyone “half informed” might take note of the publication date [April 1, 2011] and wonder?

That an article from the mainstream financial press would have such a negative bias toward precious metal would probably come as no surprise to readers of this space. 

So, in the spirit of “laughing right back at them” – the purpose of this paper is to deconstruct just how idiotic these commentators and their drivel really are, and also to serve as a reminder of how ingrained the disdain remains toward precious metal in mainstream financial press:

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Silver Price Suppression:  How, Why and Effect

This paper is written as a response to market observers who opine, “how can the price of precious metals be suppressed when their prices have empirically gone up 4 fold and more over the past 10 years?”

The following graph depicts the price performance of silver over the course of 2010, paying special attention to the change in silver derivatives positions at both J.P. Morgue and HSBC:



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Questioning Canada’s Leadership

Canada’s Parliament was just dissolved in a vote of non-confidence in the leadership of the Conservative party led by Stephen Harper.  A national election is now scheduled for May 2, 2011.  With all parties in Canada currently trying to stake-out the moral / ethical ‘high ground’ – I wonder if any of them would have the guts to dare tackle this disturbingly glaring issue:

From the Telegraph [but first reported by PrisonPlanet.com]:

Libyan rebel commander admits his fighters have al-Qaeda links Abdel-Hakim al-Hasidi, the Libyan rebel leader, has said jihadists who fought against allied troops in Iraq are on the front lines of the battle against Muammar Gaddafi's regime.

By Praveen Swami, Nick Squires and Duncan Gardham 5:00PM GMT 25 Mar 2011
In an interview with the Italian newspaper Il Sole 24 Ore, Mr al-Hasidi admitted that he had recruited "around 25" men from the Derna area in eastern Libya to fight against coalition troops in Iraq. Some of them, he said, are "today are on the front lines in Adjabiya".
Mr al-Hasidi insisted his fighters "are patriots and good Muslims, not terrorists," but added that the "members of al-Qaeda are also good Muslims and are fighting against the invader".
His revelations came even as Idriss Deby Itno, Chad's president, said al-Qaeda had managed to pillage military arsenals in the Libyan rebel zone and acquired arms, "including surface-to-air missiles, which were then smuggled into their sanctuaries"…….

So, in effect, the Canadian military is fighting [and taking casualties] against Al Qaeda in Afghanistan BUT supporting an insurrection by Al Qaeda in Libya. 
Why is this hypocracy not being discussed by the Canadian mainstream press and ALL PARTIES in Canada’s just announced national elections?
Whose decision was it, really - to commit our armed forces to Libya?
Why was there no debate in Canada’s Parliament?
Don’t we owe it to ourselves – as well as our best and brightest, who are putting their lives in harm’s way, to explain our actions?
Our Canadain mainstream press seems to be towing the same line that the American press in this regard – that rebels need to be defended / supported on a humanitarian basis - because they are being mercilessly attacked by Gadaffi in Libya.
Perhaps our mainsteam press should report on why we are engaged in slaughtering Al Qaeda in Afghanistan and flying support missions for them in Libya?
PS - On March 2, 2007, U.S. General Wesley Clark (Ret.), described a memo he was shown, stating that the Bush Administration planned to take out 7 countries in 5 years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan and Iran, between 2007 and 2012.

Video: http://www.forbiddenknowledgetv.com/page/1324.html

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Getting In Touch With Your MACD

The two primary methods of analyzing markets are fundamental analysis and technical analysis:

Technical analysis looks at the price movement of a security and uses this data to predict its future price movements. Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals.

One of the most watched and adhered to methodologies within the discipline of technical analysis is the study of MACD:
MACD or Moving Average Convergence Divergence Indicator is one of the most well known and widely used indicators for a variety of trading instruments and platforms.  MACD is based on moving averages formula that creates a crossover signal pattern.  MACD is a momentum trend indicator. It was written by Gerald Appel in the 1970's.

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Bernanke’s Deceit Discussed

The purpose of this paper is to illustrate / explain the deceit of Federal Reserve Chairman, Ben Bernanke, who gave testimony up on Capital Hill this past week before the Senate and House Banking Committee. 

Mr. Bernanke uttered a bold faced lie when he told us there is not enough gold for a gold standard. 

“…Bernanke said there were a number of practical issues that would prevent the return of gold as the world standard. Namely, there's not enough gold in the world to effectively support the U.S. money supply….”

Gold is infinitely divisible.  This tells us that supply is not the problem – IT’S PRICE. 

Some Background

From roughly 1994 onward, the U.S. Federal Reserve [Greenspan] / Treasury [Rubin, Summers] instituted the “illusory” Strong Dollar Policy – which in actuality was little more than verbal hype or cover for a pre-meditated explosive expansion in money supply:
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Fecks, Lies and Video Tape [or the Cabal Channel]

The purpose of this article – it’s an attempt to bring some transparency to what’s really happening in the precious metals complex by underscoring the words and actions of players in the Central Banking community.  Attention is drawn to the fact that these elitists lie as a matter of policy but are prone to making simple mistakes like all humans do.  Specifically, light is shone on the degree to which these same elitists will go to keep their surreptitious market activities ‘secret’ and their irredeemable fiat currencies viable.

In December, 2010 – I wrote a paper titled, Something’s Wrong in the Silver Pit, and It’s Much Bigger than J.P. Morgan.  This paper highlighted how the Federal Reserve had stonewalled the Gold Anti Trust Action Committee’s [GATA’s] FOIA requests for information on Fed activity in the gold bullion markets – citing, as an excuse, its ‘privileged status’ and reluctance to divulge ‘trade secrets’
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Dirty Rotten Scoundrels



The purpose of this paper is to draw particular attention to the recent disparity in
crude oil prices – namely the difference between two benchmarks - West Texas Intermediate [WTI] and Brent [North Sea] Crude.  Historically the price of WTI trades at a premium to lesser quality Brent North Sea Crude.  This paper lays out the case that the extreme, existing, observable price discrepancies is likely the result of engineered and arbitrary market manipulations – to be discussed below. Such arbitrary price manipulations in the oil markets impact negatively on the oil exporting economies and show favor to oil importing economies.
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Perception Management 101

Gold began 2010 at 1096.50 per oz.  and finished the year at 1421.60 per oz. for a gain of 324.10 per oz year-over-year or 29.6 % increase.  Employment data throughout 2010 DISAPPOINTED consistently.  If we measure the opening and close of the gold price ONE DAY PRIOR to the release of NON FARM PAYROLL DATA we see that – in aggregate – the gold price DECLINED by 56.20 on the day prior to the release of NON FARM PAYROLL DATA. 

How many people believe this happened by accident?  In a RAGING BULL MARKET the gold price – on average – gets ZONKED one day prior to the most scrutinized / widely followed economic data release.

Today’s trade is an oddity or outlier versus the status quo.  Enjoy it.

This is PERCEPTION MANAGEMENT – through price management - being practiced in the EXTREME.
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Why Gold and Silver Have Declined

Kirbyanalytics subscribers received the following fast blast [in blue] appended below late Tuesday night, Jan. 25, 2011:

The Thompson Reuters CRB index weighting has not changed since 2005.  However, virtually all other commodities related indexes do rebalance in early Jan of every year.  For instance the $CCI consists of 17 commodity constituents – with 5.88 % of the index allotted to each commodity.  It rebalances in early Jan. every year.

Silver’s RABID TEAR [out performance] last year ensured that it would be “cut back” to conform to its intended 5.88 % weight.

Other commodities indexes do the SAME THING.

Big Banks know this – they run or manage most of these index funds.

Index funds dominate the trading universe more today than at any time in our financial history.
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Full Spectrum Dominance Q & A:
The Pathology of U.S. and Global Monetary Policy

The purpose of this paper is to demonstrate how the Federal Reserve – through its proxy money centre banks – has taken complete control of the interest rate complex enabling them to arbitrarily price capital at or near zero.  This has only been possible with accommodation of the ruling elite who mutually benefit from these policies.


Author’s Comment

The market caps of financial institutions post 2008 crash while substantially diminished would have been overwhelmingly negative [i.e. bankrupt] had the accounting rules for banks not been “suspended” by edict. 

Question

Would any rational human being accept a $2,500.00 bet from somebody who only had 1 dollar in their pocket to lose?
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Fine Italian Dining: LTCM, Gold and Plan “B”

This essay is critical of “newly hatched” experts on precious metals and uses historical evidence to validate this skepticism.

On December 7, 2010, James Rickards, Senior Managing Director for Market Intelligence at Omnis, delivered a speech at Johns Hopkins Applied Physics Laboratory titled, Rethinking the Future International Security Environment - “Plan B”.

Note that he is calling for a “Plan B” which, if implemented, would serve to re-catapult the imperialist, debased U.S. Dollar back into “THE UNDISPUTED” worlds’ currency [or, as some might refer to it, a one world currency in drag].
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Something’s Wrong in the Silver Pit: But It’s Much Bigger than J.P. Morgan

When researching the precious metals, often times things are seldom as they appear on the surface.  GATA Secretary and Treasurer – Chris Powell – has said that the true picture of a nations’ gold holdings are, “more closely guarded than their nuclear secrets”.

This has been more-or-less proven true based on the Federal Reserve’s reaction to GATA’s 2009 FOIA request for information concerning GOLD SWAPS. The Fed is ON RECORD admitting they’ve done gold swaps – which, by definition, necessarily utilize sovereign American gold stocks.

To date, the Federal Reserve has stonewalled GATA’s FOIA request citing their ‘privileged status’ and reluctance to divulge ‘trade secrets’.
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Driving the News Agenda:  Jones and Keiser

How many of you have noticed the change in news?  The flavor of the news has markedly “changed” in the past 4 or 5 months – have you noticed it?  Who has picked up on the likes of Fox News’ Glen Beck and his ‘about face’ on many key issues.  Over the past number of months personalities like Beck have completely reversed their positions on subjects like the existence of World Government and FEMA CAMPS – going from complete denial to admitting they exist and the fact that they are intended for the American people.

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The Miracle of Compound Interest



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Derivatives Deconstructed

In a sense, the term “derivatives” has become a ‘catch-all’ to broadly define most, if not all, that ails our financial system.

Few people realize that derivatives have their roots in the agri-complex.  From an historical context, it was agricultural commodities futures [mainly grain] that first gained traction as viable financial instruments. The genesis of these products dates back to the founding of the Chicago Board of Trade [CBT] in the mid-eighteen hundreds.
First and foremost, what is a derivative?


Derivatives are financial instruments whose values depend on the value of other underlying financial instruments. The main types of derivatives are futures, forwards, options and swaps.
The main use of derivatives is to reduce risk for one party. The diverse range of potential underlying assets and pay-off alternatives leads to a wide range of derivatives contracts available to be traded in the market. Derivatives can be based on different types of assets such as commodities, equities (stocks), residential mortgages, commercial real estate loans, bonds, interest rates, exchange rates, or indices (such as a stock market index, consumer price index (CPI) — see inflation derivatives — or even an index of weather conditions, or other derivatives). Credit derivatives have become an increasingly large part of the derivative market.

So, derivatives come in many flavors.  [more.....signup] [open pdf....members]

Gold Market Illusion, Confusion and Conclusion

Over the past year, Jim Rickards has been promoted as a high profile personality on both internet and television business media.  In particular he has been portrayed as an expert on a variety of matters and specifically in the gold market.  In case you forget who Jim Rickards is – he was the legal counsel for failed Long Term Capital Management Inc.

Here are a few highlights of the latest Jim Rickards interview at King World News:

Jim Rickards lays out a plan to commandeer Germany’s and all foreign depositors of sovereign gold at the New York Fed as currency wars heat up and the ‘nuclear option’ of hoarding and raising the price of Gold is contemplated by an embattled Fed as a way to force down the exchange value of the US dollar.

At “KingWorldNews.com“, Eric King published today an interview with James G. Rickards regarding present and future developments in the gold market. Mr. Rickards is a writer, lawyer and economist with over 30 years experience in global capital markets. He is Senior Managing Director at Omnis, Inc., a consulting firm in McLean, VA and is the leading practitioner at the intersection of global capital markets and national security.

[In] the interview, Mr. Rickards states “that the U.S. is the Saudi Arabia of gold.”

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The Private Federal Reserve:  Connecting Dots



First reported by Dawn Kopecki back in 2006 when she reported in BusinessWeek Online in a piece titled, Intelligence Czar Can Waive SEC Rules , “President George W. Bush has bestowed on his [then] intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.”
What this means folks, if institutions like J.P. Morgan and others that are deemed to be integral to U.S. National Security could be “legally” excused from reporting their true financial condition.

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THE FEDERAL RESERVE is SELLING PAPER GOLD and BUYING PHYSICAL GOLD
[the good ole ‘American way’ – through proxies]

A couple of weeks ago, I pitched an idea to some associates of mine who are involved in SERIOUS [tonnage] PRECIOUS METALS procurement – physical metal only – let’s just say HUGE money.  I asked them if they would be interested in purchasing an “option” – cash up front - for the exclusive rights [first right of refusal on off-take] of a gold producer [miner] for a set number of ounces for 3 – 5 years “at the market” – using LBMA pricing [a.m. / p.m. fixes] in the future.  The answer I got back from my associates was “show us a terms sheet, we definitely have interest”.

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Important News Re: Physical Bullion

A couple of weeks ago, I pitched an idea to some associates of mine who are involved in SERIOUS [tonnage] PRECIOUS METALS procurement – physical metal only – let’s just say HUGE money.  I asked them if they would be interested in purchasing an “option” – cash up front - for the exclusive rights [first right of refusal on off-take] of a gold producer [miner] for a set number of ounces for 3 – 5 years “at the market” – using LBMA pricing [a.m. / p.m. fixes] in the future.  The answer I got back from my associates was “show us a terms sheet, we definitely have interest”.

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Treating Symptoms, Ignoring the Root Cause

Anyone who reads a newspaper, speaks with their family or associates or has tuned into mainstream financial television over the past 3 years is acutely aware that “things” are not right. 

So, in a financial sense, what is it that really ails us?

The usual suspects folks routinely hear runs the gamut from burgeoning health care costs to profligate government spending/deficits to credit default swaps to high frequency trading to claims that interest rates were left too low for too long.  Then there’s the “China card”.  Who hasn’t heard the rhetoric about trade imbalances being the fault of the Chinese and their reluctance to allow their currency to ‘strengthen’ against its U.S. counterpart?

All these issues are valid and worth of health public debate.  None of them explicitly deal with the root cause of our economic malaise – exactly because they are ALL symptoms of ‘the root of our real economic problem’ – THE MONEY, namely, irredeemable fiat money.

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The Longest Fix [AKA The Rudest Rig]

For anyone who cares, here’s a snippet of the history on how the price of gold gets “fixed” in London each and every day;

LONDON - The financial district known here simply as The City is a hotbed of the loyal Order of the Masons, who have a penchant for strange rituals. But Masonry has nothing to do with an odd little ceremony performed twice every day in an office at N.M. Rothschild & Sons Ltd.

Five men talk on their phones for 10 minutes or so, and then lower tiny Union Jacks sitting on their desks. And that's it. The London gold fixings is complete. It takes place at 10:30 a.m. and 3 p.m., like clockwork. The same ceremony has been performed the same way, in the same place, and with mostly the same firms participating since the first gold fixing was enacted at Rothschild in St. Swithin's Lane on Friday, Sept. 12th, 1919.

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Follow Up to Extinction of the Bond Vigilantes

A couple of weeks ago I was exchanging barbs with Jim Willie, Catherine Fitts and a couple of others in a group with whom I regularly exchange private thoughts.  The topic du jour was interest rates.  Specifically, someone mentioned there was a proposed Federal program to give homeowners broad based interest rate relief on their mortgages.  They felt this might bring some welcome relief.  Jim Willie stated very loudly that, in his opinion, lowering interest rates would have NO EFFECT and that interest rates levels were irrelevant – stating that it’s a solvency thing.  I responded to the group with this [which, by the way, was the inspiration for the last article I wrote]:
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The Extinction of the Bond Vigilantes

With interest rates having been at or near zero for close to three years, a deeper look at what historically drives interest rates is in order.  Specifically, it invites the questions:  Historically how are interest rates determined and what should bond yields [long term interest rates] really be? 

Historically, it is said that the Federal Reserve has the power to “mandate” or set short term interest rates through their influence over the trend setting Fed Funds [sometime referred to as the Over-night or Inter-bank] Rate.  At the same time it is widely accepted that longer term rates are set “in the bond market” by a group of professionals known as bond vigilantes.
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Toronto G20 Summit: Facts and Figures

The latest G20 Summit is scheduled to take place in Toronto, June 26 – 27, 2010.  The event is being held at the Toronto Convention Centre – adjacent the CN Tower and the Rogers Center, home of the Toronto Blue Jays baseball team - in the city’s downtown core.

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Slippery Business

Back in 2008 in an article titled, Oh Yes They Did!, I documented how the U.S. Government [specifically, the Dept. of Energy (DOE)] “released” crude oil from the Strategic Petroleum reserve to help precipitate the collapse in oil prices from close to 150 dollars per barrel:

slippery

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Un-Graceful Exit or Revolving Door?

Back on April 5, 2010 in an article titled, Un-Graceful Exits, we juxtaposed the “vertical” growth of the monetary base against the “collapsing” monetary aggregate known as M3.




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Spinout at Government Motors

Is there anyone who hasn’t noticed the television advertising blitz begun by G.M. over the past week – how they’ve repaid all of their government loans?  That’s right folks – Ed Whitacre – Government Motors’ Chairman turned pitchman has taken to the airwaves in both Canada and the United States boldly announcing that his beleaguered company had repaid ALL OF THEIR LOANS five years ahead of schedule, with interest!
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Admissions and Denial

Last week Robert Shiller appeared on Bloomberg News and made a proclamation that there was a ’50 – 50’ Chance of another slump in the housing market. You can watch the interview here.

It is interesting that Bloomberg would pick this Shiller nugget up and report it as “news” when one stops to consider this April 8, 2010 HousingWire article:

Big Banks Prepare for Major Rise in Foreclosures Ending 2010
by JON PRIOR
Two major banks are expecting major increases in foreclosures, by the end of 2010. According to the Irvine Housing blog, Bank of America (BAC: 19.48 +0.41%), which currently forecloses on 7,500 homes every month will see that number rise to 45,000 by December 2010 as one senior executive pointed out at a recent trade show. However, a spokesman for BofA told HousingWire, he could not confirm the numbers and they do not reflect a public position of the bank…….
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Un-Graceful Exits

On March 25th, 2010 Federal Reserve Chairman Ben Bernanke gave testimony before the House Committee on Financial Services regarding the Fed’s “Exit Strategy”.  Here is a brief summary of Mr. Bernanke’s testimony in his own words:

“Broadly speaking, the Federal Reserve’s response to the crisis and the recession can be divided into two parts. First, our financial system during the past 2-1/2 years experienced periods of intense panic and dysfunction, during which private short-term funding became difficult or impossible to obtain for many borrowers. The pulling back of private liquidity at times threatened the stability of financial institutions and markets and severely disrupted normal channels of credit. In its role as liquidity provider of last resort, the Federal Reserve developed a number of programs to provide well-secured, mostly short-term credit to the financial system. These programs, which imposed no cost on taxpayers, were a critical part of the government’s efforts to stabilize the financial system and restart the flow of credit to American families and businesses. Besides ensuring that a range of financial institutions--including depository institutions, primary dealers, and money market mutual funds--had access to adequate liquidity in an extremely stressed environment, the Federal Reserve’s lending helped to restore normal functioning and support credit extension in a number of key financial markets, including the interbank lending market, the commercial paper market, and the market for asset-backed securities.”
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The Genesis of the Gold-Tungsten:  The Rest of the Story

Abstract:  Back in October, 2009 I penned an article titled, A Blight on Humanity, where I reported that, in an Asian depository there had been found 60 metric tonnes of “Good Delivery” gold bricks that had been gutted and filled with tungsten. That article was followed up with, On Doing God’s Work, where additional information on the fake gold bricks was presented.  This lengthy report has been written to provide the background and genesis of who was involved, why the fake gold was produced and how it was fed into the international gold market.
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Decoding Double-Speak

Yesterday, March 21, 2010 – the New York Times carried a story about the IMF’s first deputy managing director, John P. Lipsky, making a pronouncement from Beijing, China;

I.M.F. Gives Debt Warning for the Wealthiest Nations

BEIJING — The global economic crisis has left “deep scars” in the fiscal balances of the world’s advanced economies, which should begin to rein in spending next year as the recovery continues, the No. 2 official at the International Monetary Fund said on Sunday in Beijing.

In a speech at the China Development Forum in Beijing, the I.M.F. official, John P. Lipsky, who is the first deputy managing director, offered a grim prognosis for the world’s wealthiest countries, which are at a level of indebtedness not recorded since the aftermath of World War II……            
           

Everyone should take note that I.M.F. pronouncement above, chastising Western country’s indebtedness, was made by [arguably] America’s leading print media outlet - from Beijing, China.
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Smoke, Mirrors, SDRs and Gold:  Why Central Banks Cannot Tell the Truth

In the following article the term Special Drawing Right [SDR] is used frequently. A brief explanation of an SDR is provided below together with its current value [which floats] in U.S. Dollars.

According to the IMF:

The currency value of the SDR is determined by summing the values in U.S. dollars, based on market exchange rates, of a basket of major currencies (the U.S. dollar, Euro, Japanese yen, and pound sterling). The SDR currency value is calculated daily and the valuation basket is reviewed and adjusted every five years.

And here’s how SDRs are valued:


Tuesday, March 16, 2010

Currency

Currency amount under Rule O-1

Exchange rate 1

U.S. dollar equivalent

Percent change in exchange rate against U.S. dollar from previous calculation

Euro

0.4100

1.37150

0.562315

-0.029

Japanese yen

18.4000

90.67000

0.202934

0.011

Pound sterling

0.0903

1.51370

0.136687

0.625

U.S. dollar

0.6320

1.00000

0.632000

 

1.533936

 

U.S.$1.00 = SDR

0.651918 2

-0.046 3

SDR1 = US$

1.53394 4

 

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History as Our Guide

Years ago, in his freshman year in the School of Foreign Service at Georgetown, future U.S. President Bill Clinton took Professor Carroll Quigley's course on the development of civilizations, receiving a 'B' as his final grade in both semesters.

Carroll Quiqley was not only a professor, he was also a very influential writer, commentator and economic historian.  Among his most influential works was Tragedy & Hope.  

Tragedy and Hope" is unique among other history books in its exposure of the role of International Banking cabal behind-the-scenes in world affairs.  Combing through “gold bug” forums this past weekend, I came across a quote from this Quigley masterpiece which caught my attention;

“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements, arrived at in frequent private meetings and conferences. The apex of the system was the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the worlds’ central banks which were themselves private corporations. The growth of financial capitalism made possible a centralization of world economic control and use of this power for the direct benefit of financiers and the indirect injury of all other economic groups.”

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CFTC – Purveyors of Fanciful Financial Oversight

Something of significance occurred last week that went unreported in the mainstream financial press.  This important development was the admission of the Commodities Futures Trading Commission [CFTC] that it was suppressing information that would expose precious metals market manipulation.

This issue was first publicly reported by GATA director, Adrian Douglas – in a February 20, 2010 article posted here.

Beginning in December, 2009, the CFTC began suppressing the disclosure of the identity of banks participating in the silver futures market [via the Bank Participation Report or BPR].

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Discount Rate Hike Analysis

The Fed raises the Discount Rate [the rate at which banks can borrow at the discount window] yesterday and the talking heads all claim that “excess liquidity” is now being drained from the market. 

Meanwhile, TODAY – the Fed conducts Permanent Open Market Operations [POMO] to the tune of close to 1 billion in AGENCY BONDS [Fannie / Freddie]:
http://www.newyorkfed.org/markets/pomo/display/index.cfm?opertype=agny

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All Roads Lead to Goldman Sachs

Once upon a time, Goldman Sachs shunned publicity.  During the period from 1930 to 1969, Sydney Weinberg ran Goldman Sachs where he developed a staunch corporate cultural aversion to publicity.  During the 1970s, a tandem of John Weinberg and John Whitehead assumed the reigns of leadership at Goldman Sachs.  Whitehead left the company in 1984 to enter public life.  John Weinberg carried on in the same vein as his father Sydney – shunning publicity – to the point where he hired a man to keep his name and his firm's out of the press.  He kept him off the full-time payroll (though he sat full-time at a desk in head office) so that if, improbably, a comment did slip out, it could be honestly dismissed as not coming from a Goldman Sachs employee.  John Weinberg served as sole senior partner and chairman until 1990.  His mantra was to put the client’s interests first and he wouldn’t allow Goldman to be involved hostile takeovers.
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A Sterling Account of Silver’s January, 2010 Dismal Performance

From Mark Leibovit’s most recent VR Gold Letter:

In the news, we learned that demand for precious metals weakened substantially in January. The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust (GLD), said its holdings fell 21.7 tons or 1.9 percent in January. The largest silver-backed fund, the iShares Silver Trust (SLV), saw a 107.99 ton or 1.1 percent decline in its holdings last month.

The US Mint sold a record $1.7 billion of gold, silver, and platinum bullion in 2009, a 79 percent increase from 2008. The Mint turned a profit of $32.7 million from the bullion sales, an 84 percent increase. [more.....signup] [open pdf....members]

Framing Up the End Game – It’s Coming into Focus

A close confidant of mine contacted me on Wednesday and asked me to read and provide commentary for discussion on the following article, Thoughts on the End Game.  After reading the article, I offered the following thoughts;

The article begins by pondering the notion that American’s must now choose between “bad outcomes”.  I believe this is a misguided foundational assumption because American leadership appears unwilling to make ANY tough choices.
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Interest Rate Roulette

According to the most recent data from the U.S. Office of the Comptroller of the Currency, the notional value of derivatives held by U.S. commercial banks increased $804 billion in the third quarter of 2009, or 0.4%, to $204.3 trillion.

Seven banks hold 99.8% of all derivatives:[more.....signup] [open pdf....members]

More Irregularities in GLD Bar List

Why would the current GLD bar list be missing approximately 700 metric tonnes worth of gold bar inventory? 

GLD bar list:

Back in October, the GLD bar list went short for several weeks.  The most recent [Jan. 15, 2010] GLD pdf bar list [appended above] has 157 pages, two rows of 105 bars per page [except for the first page which has 2 rows of 86] for a total of:  32,932 BARS
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Russian-Roulette

Let’s consider a well publicized recent sale of Russian gold bullion to itself:

Russia sells gold to itself

December 14, 2009 3:47pm by Emma Saunders

The Russian central bank will spend $1bn next week, buying 30 metric tons of gold from Gokhran, the state repository. Gokhran had planned to sell 20-50 MT on the open market, but cancelled after news of the sale leaked. The sale would have helped plug Russia’s budget deficit, and, apparently, purchase some diamonds from state-run miner Alrosa….

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Clear Thought in Confusing Times

How often have you heard a talking-head or pundit from the print media try to “explain” how the U.S. led global economy faltered the way it has?  We’ve been dazzled and fed explanations regarding root-cause, ranging from sub-prime mortgages to credit-default swaps to lack of regulatory oversight to good-ole-fashioned greed.

While countless pages and untold face-time has been devoted to the aforementioned topics in the main stream financial press – precious little has been articulated in the mainstream that irredeemable fiat money is what lies at the heart of our economic woes.
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A Sobering Look at the Year Ahead – 1st Installment

The following is the first article in a “big picture” montage explaining where we are – economically – how we got here – and where we are likely headed throughout the balance of 2010.

Nothing is “As It Appears” 

President Obama campaigned on a platform of ending war[s].  He showcased his ‘deliberations’ on whether to send additional troops to Afghanistan – like the outcome was ever in doubt?  The reality, according to a memo released by Sen. Claire McCaskill’s [Chair - Contract Oversight subcommittee on contracting in Afghanistan] staff,
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Deep In Derivatives or Dumbed-Down Reporting?

On December 29, 2009 The New York Post [josh.kosman@nypost.com] published an article titled, Deep in derivatives, where scribe Josh Kosman ‘took-a-shot’ at explaining the ABSURDITY of the bind boggling derivatives positions amassed by financial behemoths such as J.P. Morgan Chase and Goldman Sachs.  In an attempt to explain how dangerously systemically-interconnected derivatives makes ALL banks, Kosman began;
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Legitimate Price Discovery Vs. Fraudulent Price Determination?

Year’s end is a time when folks customarily take stock of things and analyze or review what has transpired over the past 12 months.  With that in mind, let us stop and consider what has transpired in the global silver market for the ‘front half’ of the preceding 12 months:
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Christmas Gold Round-Up

Before Christmas, we would like to bring a couple of issues to your attention. 

First, we are hearing anecdotal accounts that beneficial owners of “allocated” gold bullion in London and other European centers have showing up at bullion banks and demanding their physical metal be a] viewed and assayed, and then b] withdrawn from the vaults of banks.
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Your Christmas Comics

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Implications Stemming From Copenhagen

The United Nations’ sponsored Climate Change Conference is currently underway in Copenhagen, Denmark [Dec. 7 – 18, 2009].  The expressed purpose of the meeting is to get a new global climate treaty signed by the 192 countries attending – supplanting the UN's 1997 Kyoto Protocol.
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An Examination of the Gold / Silver Ratio

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Cutting Through the Fog

I want to start by acknowledging the savage “take-down” in the gold price which began last Friday, December 4th at 8:30 a.m., immediately following the release of better-than-expected November U.S. Employment data.  First off, I like to point out that there are some perceived discrepancies in exactly what happened last Friday at 8:30 a.m. when the Employment data was released:
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Honey, I Shrunk the Gold

Back in June, the Ottawa Citizen Newspaper reported,

“that external auditors were investigating a discrepancy between the mint's 2008 financial accounting of its precious metals holdings and the physical stockpile at the plant on Sussex Drive in Ottawa.”

Interestingly, initial reports indicated that discrepancies involved silver and other precious metals.
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When Settlement Becomes a Sticky Wicket

How Gold Bullion Transacts At COMEX

Gold futures and options are generally utilized by market participants to hedge or speculate on price movements of the underlying commodity – gold bullion.  However, to ensure the sanctity of these products and the exchanges on which they trade as “honest price discovery mechanisms” – there must always be an option for investors to effect physical delivery of the underlying product – which in this case is gold bullion.
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Predatory Lending and Outsourcing of Jobs:  A Deadly Combination

Catherine Austin Fitts has been sounding the alarm about the pillage of America for more than a decade,
“Overwhelming American communities with mortgage, auto and credit card debt as we shift manufacturing and research capacity, jobs and approximately $10 trillion of capital offshore—much of it by illegal means— has been the US economic strategy since 1996.”
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On Doing God’s Work

“Gold Finger” - A New Take On Operation Grand Slam With A Tungsten Twist

I’ve already reported on irregular physical gold settlements which occurred in London, England back in the first week of October, 2009.  Specifically, these settlements involved the intermediation of at least one Central Bank [The Bank of England] to resolve allocated settlements on behalf of J.P. Morgan and Deutsche Bank – who DID NOT have the gold bullion that they had sold short and were contracted to deliver.  At the same time I reported on two other unusual occurrences:

1] -       irregularities in the publication of the gold ETF - GLD’s bar list from Sept. 25 – Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.

2] -       reports of 400 oz. “good delivery” bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.
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Draining the Pool A Cup At a Time

This is intended as a foundational article to provide all subscribers with a much more “rounded” understanding of today’s gold market and hopefully an appreciation of why the gold price is not likely to act as it has so many times in the past – on a go forward basis.
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Disinformation or Ignorance, Take Your Pick?

Over the past few weeks, anecdotal accounts of shortages of physical gold bullion have been surfacing around the world. Empirical observations supporting this development include [below excerpted from Eric DeCarbonnel – Market Skeptics];Mints are seeing a sharp rise in sales this year due to interest so strong that dealers are reported a shortage of products such as Krugerrands and one-ounce bullion coins.

  • China is now pushing their citizens to buy gold.
  • Anecdotal accounts from “boots-on-the-ground” gold and silver brokers are reporting heavy ‘net with drawl of physical metal’ at COMEX depositories, raising doubts as to whether there is gold in inventory to match existing warehouse receipts.
  • London gold vaults are being emptied. Hong Kong is pulling all its physical gold holdings from depositories in the UK and moving their $63 million worth of gold home to newly built vaults near the city's airport. Dubai is also planning to withdraw its gold from London. Meanwhile, private investors and Swiss ETFs continue to move gold out of London.
  • Many large money managers who were formerly in paper gold are now demanding physical gold bullion instead.
  • Anecdotal accounts I have already reported on, during the week of Oct. 5, some large allocated physical transactions that were settled in London under VERY strange circumstances. Banks like JPMorgan and Deutsche Bank (who sold endless amounts of gold futures at prices of 950 to 1025) and then tried to make “side deals” with the folks they sold the futures to – offering them spot + 25 % (around 1,275 per ounce) to settle in fiat – after their counter parties demanded [allocated settlement] substantial tonnage of physical gold bullion.

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Update to Addendum: Q and A

In my second to last piece, I wrote about physical “allocated” gold trades that were settled in London during the week of Oct. 5 under highly unusual circumstances two weeks ago. Here is the definition of allocated settlement:

Some short definitions: an unallocated account is an account where specific bars are not set aside, and the customer has a general entitlement to the metal. This is the most convenient, cheapest, and most commonly used method of holding metal. The allocated account, on the other hand, is an account opened when a customer requires metal to be physically segregated, and this needs a detailed list of weights and assays….
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The Axis of Monetary Lies

This past weekend, much celebrated Bush-era speech writer David Frum took his best shot at defaming gold in a Financial Post [one of Canada’s major dailies] op-ed titled, Beware the gold bug.

Frum began his uninformed attack [er, article] by immediately trying to infer that the cause of the “gold bugs” as hyperbole fit for nothing more than the satirical publication, The Onion
There are some that might say it’s too bad Mr. Frum’s, Axis of Evil, tall-tale wasn’t relegated to the back pages of The Onion instead of the floors of Congress – but I digress.
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Blight on Humanity Addendum

Earlier this week, I wrote about possible “incongruities” in the gold bar registry of GLD.  Specifically, here is what has happened to the GLD bar list which is published each Friday at approximately 4:30 pm EST.  An alert reader I communicate with [who shall remain anonymous] has been documenting the length of the published GLD bar list:

    • on Friday, Sept. 25 – the list was 1,381 pages long
    • on Friday, Oct. 2 – the list was 208 pages long
    • on Friday, Oct. 9 – the list was 195 pages long
    • then, on Wednesday, Oct. 14 – after questions were being raised about the strange machinations with the bar list in chat rooms on the internet – the list was back up to 855 pages long
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Coincidences Becoming Common Place

An interesting development / admission occurred, virtually unnoticed, last week [Friday, Oct.9]:

LME CEO confirms meeting with high-profile London bullion market members, sees grounds for further talks
By Melanie Burton - Correspondent, press@fastmarkets.com (+44 (0)20 7929 6339)
Email this page to a friend - http://premium.thebulliondesk.com/news/img/website1/print.gifPrinter friendly version
London, 09 October 2009 - The LME has met with several high-profile members of the London bullion market recently and believes there are grounds for further talks, LME CEO Martin Abbott confirmed on Friday.

"I can confirm a recent meeting," Abbott told FastMarkets by phone. "As a result of the meeting, we believe that there are grounds for us to continue discussions with bullion market participants. There is no timeline."

The meeting is believed to have taken place on September 24, with at least five high-profile members of the bullion market meeting members of the exchange.

Representatives of large bullion bank, including HSBC, Goldman Sachs International, JP Morgan, ScotiaMocatta, and Deutsche Bank were in attendance, FastMarkets understands. Of these, all but ScotiaMocatta are LME members.

Although the subject of the meetings has not been disclosed, the London bullion market has, since the start of the year, been considering a new model for their over-the-counter gold forward contracts to cut counterparty risks, credit costs, and prepare for a new era of stricter regulation.

Competitor CME Group introduced on September 20 its OTC forward clearing offering to the London market, while clearing house LCH.Clearnet has vowed to have a service ready by April next year.

Discussions may also have touched on other services the LME could offer such as help with developing data collection and monetisation.

The LME said in July it was holding exploratory talks with members of the freight industry. It called for the development of a London Baltic Freight Exchange, which has so far met with a mixed reception.

(Editing by Mark Shaw)

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Central Banking:  A Blight On Humanity

Impeccably reliable sources have informed me that as recently as Sept. 30, 2009 – the last possible day of trade in the Sept. 09 gold futures – a number of well-heeled market participants “bought” substantial tonnage worth of gold futures on the London Bullion Market [LBMA] and immediately told their counterparties they wanted to take instantaneous delivery of the underlying physical bullion.
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History Rhymes and Old Habits Die Hard

Over the past couple weeks some interesting historical documents relating to the gold market have surfaced.  First up is Zero Hedge’s, Exclusive Smoking Gun: The Fed On Gold Manipulation which features an official document uncovered by researcher / historian Geoffrey Batt - a June 3, 1975 memorandum from Fed Chairman Arthur Burns to [then] President Gerald Ford.
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Anglo-American Central Banking Axis “On Notice”

Is it just me, or has anyone else noticed that the G20 has been meeting with increasing regularity?  So far this year, they’ve met in London twice [April and early Sept.] and again in Pittsburg [later in Sept.].  By my count that’s 3 G20 meetings in 6 months. 

Seems to me that the BIG G’s [G5, G7, G10 or pick your own G flavor] used to meet but once a year?

While these confabs are generally spun in the media as “love-ins” and pictures of “unity” – should 3 of these meetings being convened inside of 6 months be more accurately construed as an indication of deep divisions and quite possibly the imminent break-down of Anglo-American financial hegemony?
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The Game Has Changed – The Achilles Heel Exposed

In a discussion I had earlier this week with Dr. Jim Willie, we discussed how the prices of gold and silver have been arbitrarily managed for years.  In this discussion, I contended that, while the prices of gold and silver have been closely managed, the growing “off-take” of physical bullion is inflicting great damage on price managers.  We can see manifestations of this reality in that price corrections [sell-offs] are much shallower and shorter lived than they were even last year.  Jim asked me if I could provide any “hard data” or minutia showing the amounts of physical metal being taken off the market in recent weeks.

Unfortunately, I cannot.
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Lying to Congress:  Central Banking Personified

Last evening, publication of the Federal Reserve’s Kevin M. Warsh’s response to GATA’s Freedom of Information Request re: gold; was finally posted.  It revealed,

“The Federal Reserve System has disclosed to GATA that it has gold swap arrangements with foreign banks that it does not want the public to know about.”

You can all read about this here:  http://www.gata.org/node/7819

The Federal Reserve’s revelations may pose a legal problem for former Fed. Chairman, Alan Greenspan, who – UNDER OATH before Congress – back in 1999, under questioning from Rep. Ron Paul - transcript,
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The Thin Edge of the Hedge

A couple of weeks ago, Barrick Gold Corp. announced it was raising 3 billion dollars via equity issue and taking a $5.6 billion 3rd quarter charge so they could eliminate their 9.5 million ounce “hedge book” over the next 12 months,

            Barrick Gold to eliminate hedges, plans offer

By ROB GILLIES
ASSOCIATED PRESS WRITER
TORONTO -- Barrick Gold Corp., the world's biggest gold producer, said Tuesday it plans to eliminate all of its gold hedges and raise $3 billion in a share offering to help pay for the move.
The Toronto-based company cited the bullish outlook for gold. Its announcement came on a day the price of the metal rose above $1,000 per ounce to its highest level since March 2008.
Gold hedges are futures contracts that commit a company to selling the metal at set prices. While hedges guarantee certain cash flows, they often commit a metals producer to ship the gold at prices lower than the current spot price. Barrick's decision to pay off its hedges amounts to a bet that gold prices will keep rising.
Barrick said it believes holding the hedges hurt its appeal among investors and weighed on its share price.
The company said it will take a $5.6 billion charge to its earnings in the third quarter as a result of a change in accounting treatment for the contracts.
To raise money for the pay off the hedges, Barrick will issue about 81.2 million shares at $36.95 per share. It will use $1.9 billion to eliminate all of its fixed-priced gold contracts within the next 12 months and another $1 billion to eliminate a portion of its floating spot price gold contracts…..
Since Barrick announced their intentions, much has been written about the effect such an announcement might have, not only on Barrick’s share price going forward, but on the price of gold itself.
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Another Day in the Matrix

I present to you all some very recent price / chart activity in both gold and silver.

Here’s a chart of gold for Sept. 8, 2009:

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Crude Reality – A Closer Look at the Almost Perfect Crime

Some time ago, GATA Secretary / Treasurer Chris Powell gave a speech titled, There are no markets anymore, just interventionsThese sage words have stuck in my head.  While Mr. Powell was specifically referencing manipulations in the precious metals markets, I am revisiting the concept as it relates to the crude oil market.  The ongoing surreptitious “management’ of strategic commodity prices by the U.S. Government and its agents needs to be exposed for what it really is – UNFAIR TRADE and AN ABUSE OF PRIVILEGE.  These practices have resulted in a litany of unsustainable, unfair and damaging outcomes in many markets with results that favor privileged insiders at the expense of the common good.  I continue to be amazed at the lack of uptake by the media to these over-arching issues that impact the well being and daily lives of all citizens and media’s feeble attempts to explain the ‘unexplainable’ based on free market principles when markets are not free.
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Addendum to Interest Rate Cosa Nostra

A number of readers have inquired about the amount of interest rate swaps held in non American jurisdictions.

As the Cosa Nostra article states, there is no country specific derivatives reporting from Britain, France, Switzerland, Germany or Japan but the Bank for International Settlements [BIS] tell us that global [aggregate] derivatives are in the neighborhood of 600 Trillion.
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Interest Rate Cosa Nostra

Recently, Bloomberg News reported that a legal brouhaha has developed in Italy surrounding the municipality of Milan entering into a refinancing package, including retiring older existing debt and associated interest rate swaps, with a combination of new bonds and interest rate swap agreements designed to protect Milan against a rise in long-term interest rates, back in 2005.  This financing was arranged with a quartet of banks including J.P. Morgan Chase, U.B.S. AG, Deutsche Bank AG and Depfa Bank Plc.
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Shell Game Revealed?

Last week, on August 19, 2009, George Milling-Stanley, Managing Director and “mouthpiece” for the World Gold Council appeared on Canada’s Business Network [BNN] and, in response to questioning about the activities of precious metals ETFs by commentator Pat Bolland, Milling-Stanley stated [at 5:50 of the following]:

“ETFs don’t buy gold…people who buy ETFs are buying shares that are in issue and are backed by gold.  If the broker-dealers who make a market in the shares of those exchange traded funds feel there is insufficient liquidity and not enough shares for them to buy on the stock exchanges “THEY” buy gold and deliver it to the trustees of the ETFs who create new shares so you can’t blame the ETF providers for anything which has happened”….

Milling-Stanley, when questioned about the dramatic rise in investment demand for precious metal, then went on to add,

“the advent of exchange traded funds which we [the World Gold Council] pioneered in Australia 6 years ago [that would presumably be 2003] brought a whole new universe of gold investors into the market.”
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Rebutting Martin Armstrong

In an article titled, The Goldman Sachs Conspiracy. The Real Dark Pool, Mr. Armstrong states generally, that he sees NO EVIDENCE of conspiracy – anywhere. 

Yet, he says that “there is not a single economic statistic that is even valid, no less any plausible guide as to what is going on. There [they, perhaps?] are manipulated so much to try to influence the ‘public confidence’ that it becomes a joke.”
Here is a definition of market manipulationMarket manipulation describes a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a security, commodity or currency. Market manipulation is prohibited in the United States under Section 9(a)(2) of the Securities Exchange Act of 1934, and in Australia under Section s 1041A of the Corporations Act 2001. The Act defines market manipulation as transactions which create an artificial price or maintain an artificial price for a tradable security.
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Inflation, Deflation, or, What Have They Done To the Currency?

In recent weeks and months, there’s been much public debate in the financial press whether we’re going to hyper-inflate or suffer a deflationary collapse?  I know this to be the case because I field many questions about this topic from readers around the world on a regular basis.

To better understand which of these two competing forces will ultimately win the day, let’s consider the following observable basics:

    • In a hyper-inflation, the value of currency [in this case, fiat money] is driven toward zero as prices rise.
    • In a deflationary collapse, the value of currency increases as prices collapse.

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The Elephant In the Room:  More Pieces of the Puzzle

This following article was an address by Rob Kirby at the Gold Anti-Trust Action Committee Inc., GATA Goes to Washington -- Anybody Seen Our Gold?, at the
Hyatt Regency Crystal City Hotel, Arlington, Virginia, Saturday, April 19, 2008.  The original address has been updated and added to since new information has come to light. 

My name is Rob Kirby – proprietor of Kirbyanalytics.com, proud GATA supporter and frequent contributor to Bill Murphy’s LeMetropolecafe.com.  I would like to extend a warm welcome to GATA delegates from all over the world to Washington, D.C.

I’d like to delve into the numbers, or math, showing how J.P. Morgan’s derivatives book cannot be ‘hedged’.
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Upside Down and Backwards: Is Central Banking on Death’s Door Step?

In a rare lucid moment, British Prime Minister Gordon Brown recently quipped,

            “Technology means that foreign policy will never be the same again”

Elaborating before a group of leading thinkers at the TED global conference in Oxford, England, Brown further explained,

The power of technology - such as blogs - meant that the world could no longer be run by "elites"

While Mr. Brown didn’t exactly enunciate it, he might as well have said, “the advances in technology [read: the internet] also mean that our system of fractional irredeemable fiat currency [read:  backed by NOTHING] practiced by Central Banks like the Federal Reserve may also soon be passe too.”  This is largely due to the masses becoming informed about the world’s biggest ponzi scheme, namely, irredeemable fiat currency – forget about the warm-up acts like Madeoff and sub-prime.
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Mr. Bernanke’s Report Card: We Should All Be Holding Our Noses

On Sunday, July 26, 2009, Federal Reserve Chairman Benjamin Bernanke participated in a town-hall styled meeting, moderated by public television's Jim Lehrer, in Kansas City, Mo., where he was peppered with several questions about government decisions last year to rescue so-called "too big to fail companies" like insurance giant American International Group. 

Mr. Bernanke responded,

"I had to hold my nose. ... I'm as disgusted as you are….”

“Nothing made me more frustrated, more angry, than having to intervene" when companies were "taking wild bets."

And,

It was a "perfect storm," he said, where housing, credit and financial problems converged into a major crisis the likes of which haven't been seen since the 1930s.
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Deceptions, Deceit and Distrust

With the former Investment Banks being granted Commercial Banking status due to the unfolding financial crisis in late 2008 – it was widely reported in the mainstream financial press that this “change” would mean that these banks would be subject to more oversight and hence, more transparency would result regarding their derivatives activities.

Ladies and gentlemen, nothing could be further from the truth.  View the Q1 / 09 Quarterly derivatives report here.
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Alchemists in Action

On Saturday, July 11, 2009 – GATA board member, Adrian Douglas published a paper titled, The Alchemists.  Disturbingly, what this paper chronicles is how the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs) in a transaction known as an Exchange of Futures for Physicals (EFP).
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Stop The Ponzimonium [and Pawns-a-monium]: Shame On CFTC Commissioner Bart Chilton

On Wednesday, June 24, 2009, CFTC Commissioner Bart Chilton appeared on Canada’s Business Channel [BNN] to discuss market manipulation [or as Mr. Chilton coined it, “ponzimonium”] in the commodities markets.  You can watch the interview here.
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Globalism or Localism:  A Peek at Financial Ecosystems

World Trade, free trade, regional currency blocs, global warming, G-8, G-20, New World Order, carbon taxes, Central Banking and Debt Based Money Systems, expanded roles for the World Bank and I. M. F. – collectively, these are all factors – or components of a financial eco-system - which have contributed to our current deteriorating, global economic circumstances.
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The Bush Doctrine, Economic Warfare and Your Investment Portfolio

Let us be clear, that in the aftermath of 9/11, American policy vis-a-vis its relations with the rest of the world changed forever under the aegis of the Bush Doctrine:


The Bush Doctrine is a phrase used to describe various related foreign policy principles of former United States president George W. Bush. The phrase initially described the policy that the United States had the right to secure itself from countries that harbor or give aid to terrorist groups, which was used to justify the 2001 Invasion of Afghanistan.

Later it came to include additional elements, including the controversial policy of preventive war, which held that the United States should depose foreign regimes that represented a potential or perceived threat to the security of the United States, even if that threat was not immediate; a policy of spreading democracy around the world, especially in the Middle East, as a strategy for combating terrorism; and a willingness to pursue U.S. military interests in a unilateral way.  Some of these policies were codified in a National Security Council text entitled the National Security Strategy of the United States published on September 20, 2002.
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CNBC:  The Spin Cycle

After writing U.S. Gold: Going or Completely Gone? late last week, widely read London based analyst, Paul Mylchreest, expanded on my work in his Thunder Road News – which is widely read in the institutional investor universe.  The British publication, Telegraph.co.uk picked up on Mr. Mylchreest’s report and published the following on Monday, June 1, 2009:
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Auto Companies: Forensic Examination of Their Woes and More

A couple of weeks ago in this space in an article titled, Theater of the Absurd: a view from the inside, a case was made that Interest Rate Derivatives, not credit derivatives, are the ‘root cause’ for the macro economic problems our global financial system is currently facing.
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U.S. Gold, Going or Completely Gone?

This past Tuesday evening I found myself reading a snippet from Enrico Orlandini’s, DTAnalysis [DT stands for “Dow Theory”]  - where Mr. Orlandini opined,

"I believe the [U.S.] trade gap will surprise people and continue to shrink and may even turn positive for the first time in decades. Unfortunately, this will only facilitate the flow out of the US dollar and bond and that’s not a good thing.”
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Theater of the Absurd: A View From the Inside

I read an article that was published by The Institutional Risk Analyst [IRA] titled, Kabuki on the Potomac: Reforming Credit Default Swaps and OTC Derivatives.  According to the Kabuki article;

"Kabuki is classical ancient Japanese folk theater performed broadly and loudly for the general public. I became familiar with it when I lived in Tokyo years ago. Kabuki on the Potomac this week fit Kabuki's theatrical definition with lawmakers wailing loudly, uttering angry threats, and rhythmically pounding podiums in a performance of mangled metaphors and fantasy."
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Forensic Examination of the Gold Carry Trade

Is There A Supply Deficit?

If you ask the World Gold Council or their “official numbers keeper” - GFMS – they’ll say there is no persistent gold supply deficit.  If you ask the folks at GATA – they’ll claim there is an annual 1,000 – 1,500 tonne gold supply deficit.

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Massive Blows to the Foundations of Our Faith Based Capital Markets

Most widely accepted and reported accounts of our current global financial difficulties place its beginnings in the August 2007 timeframe – when sub-prime [mortgage] credit markets “seized up”.
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Can Pigs Really Fly?

The Fed / Treasury first announced that banks would be subject to stress tests back on Feb. 10, 2009.  This WSJ account is the earliest mention we’ve been able to find:

FEBRUARY 10, 2009

Banks to Get Stress Test Before Aid

As Part of Revamped Bailout, Cash Will Go to Those Deemed Healthy Enough to Lend

By DEBORAH SOLOMON and DAMIAN PALETTA

WASHINGTON -- Many U.S. banks will be subjected to rigorous examinations to see if they are healthy enough to lend before receiving additional financial aid, according to people familiar with the matter.
The stress tests will be part of the bailout revamp to be announced Tuesday by Treasury Secretary Timothy Geithner. In addition to fresh capital injections into banks, the new approach will include programs to help struggling homeowners; a significant expansion of a Federal Reserve program designed to jump-start consumer lending; and a private-public partnership to relieve banks of bad assets……

So…. as of the date of the article above – WHEN STRESS TESTS WERE CLEARLY PLANNED and ANTICIPATED – FASB [Financial Accounting Standards Board] rules CLEARLY stipulated that mark-to-market accounting was the measuring stick for prudently gauging the true financial health of any banking institution.
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The Big Lie and A Whole Lot More

Last Wednesday, April 15, 2009, The United States Treasury published their monthly Treasury International Capital [TIC] System report.  What this report captures, broadly, is macro international capital flows in and out of the U.S. capital markets.  Because the United States is a debtor nation – running huge fiscal budget deficits as well as massive, seemingly perpetual, current account [trade] deficits; they require massive amounts of foreign capital injections to finance these shortcomings.  In recent years the amount of foreign capital REQUIRED by the United States has been conservatively running in the neighborhood of +70 billion per month. 
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The Magnificent Seven and the Public Private Partnership

So how big is the credit derivatives market anyway?  According to Reuters, the credit derivatives market is 55 Trillion in size at Oct. 7, 2008:

….AIG sold protection to banks on pools of risky mortgages and other assets in the $55 trillion credit derivatives market…..

Now, let’s take a look at where the bulk of these derivatives are held,
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Humpty-Dumpty Fiat Sat on the Wall….You Know the Rest!

We’ve heard much over the past number of days, weeks and months as to what lays at the root of our economic and financial woes.  We’ve been made painfully aware of sensationalized storylines; like a Made-off-ian styled Ponzi-fraud, a real head-scratcher when you consider that 64 billion in proceeds is alleged to have vanished into the ether without a trace; Bear and Lehman styled collapses where, in the confusion, 50 odd billions were created out of thin air – only to be quickly buried like bones in ‘rover’s clover’; and perhaps the most egregious of all, visibly, to date – the 180 billion and growing “black hole” of Darth Vader Ponzi-finance – AIG.
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More Derivatives Obscenities from Goldman Sachs “the Bank”

The U.S. Office of the Comptroller of the Currency [OCC] posted its latest [Q4/08] quarterly derivatives report today.  Everyone in the civilized world should be shaking their head at this.  In the 4th quarter of 2008, Goldman [Hannibal Lecter] Sachs became a bank and, as such, for the first time was compelled to fill out and submit “call reports” to the Comptroller’s office. 

Ladies and gentlemen, the tide just went out and it appears that the Horrible Hannibal is not wearing a bathing suit:
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Derelicts on the Dole
(pdf version for members)

March 24, 2009, I sat, watched and listened as U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Benjamin Bernanke gave sworn televised testimony to a U.S. Senate Banking Committee.

The gist of the testimony and solutions posed by both Geithner and Bernanke were that the Federal Reserve / Treasury combo be mandated more regulatory power to cure the existing financial crisis and prevent future financial disasters from occurring – because their existing mandate was inadequate.

This theater left me shaking my head.

I’d like everyone to think about what these two men said under oath and, then consider how it pans with the following – excerpted from Stanford University alumni magazine:

After Brooksley Born was named to head the Commodity Futures Trading Commission [CFTC] in 1996, she was invited to lunch by Federal Reserve chairman Alan Greenspan.
The influential Greenspan was an ardent proponent of unfettered markets. Born was a powerful Washington lawyer with a track record for activist causes. Over lunch, in his private dining room at the stately headquarters of the Fed in Washington, Greenspan probed their differences.
“Well, Brooksley, I guess you and I will never agree about fraud,” Born, in a recent interview, remembers Greenspan saying.
“What is there not to agree on?” Born says she replied.
“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” she recalls. Greenspan, Born says, believed the market would take care of itself…..
….As chairperson of the CFTC, Born advocated reining in the huge and growing market for financial derivatives….
….. Back in the 1990s, however, Born’s proposal stirred an almost visceral response from other regulators in the Clinton administration, as well as members of Congress and lobbyists…….
… Robert Rubin, who was treasury secretary when Born headed the CFTC, has said that he supported closer scrutiny of financial derivatives but did not believe it politically feasible at the time…..
….. Ultimately, Greenspan and the other regulators foiled Born’s efforts, and Congress took the extraordinary step of enacting legislation that prohibited her agency from taking any action. Born left government and returned to her private law practice in Washington…..
Contacted for the Stanford Alumni magazine article, Mr. Greenspan reportedly now disagrees with Born’s recollection and characterization of their lunch conversation years ago by responding,
“This alleged conversation is wholly at variance with my decades-long held view,” he said in an e-mail, citing an excerpt from his 2007 book The Age of Turbulence, in which he wrote that more government involvement was needed to root out fraud.”
Born stands by her story.
A Fond Remembrance
This kind of got me wondering, if Sir Alan of Selective Amnesia – the knighted one – might remember whether he was mischaracterized in another one of his dalliances, back in 1966, when he wrote a paper titled Gold and Economic Freedom, wherein he wrote,
“The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.”
Now, I ask how the above girds with this revelation,
Alan Greenspan himself referred to the federal government's power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: "Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
Far be it from me to call the esteemed former Federal Reserve Chairman a bold-faced-liar, I’ll leave that kind of conjecture to you, the reader.  But I digress.
Contemptuous Critiques
Now, I would like to focus on the disdain and utter contempt the establishment showed Ms. Born and her clarion calls – for probity’s sake - that EXISTING REGULATIONS be enforced,
The CFTC was created in the ’70s to regulate agricultural commodities markets. By the ’90s, its main business had become overseeing financial products such as stock index futures and currency options, but some in Washington thought it should stick to pork bellies and soybeans. Born’s push for regulation posed a threat to the authority of more established cops on the beat.
“She certainly was not in their league in terms of prominence and stature,” says a lawyer who has known Born for years and requested anonymity to avoid appearing critical of her. “They probably thought, ‘Here is a little person from one of these agencies trying to assertively expand her jurisdiction.’”
Some of the other regulators have said they had problems with Born’s personal style and found her hard to work with. “I thought it was counterproductive. If you want to move forward . . . you engage with parties in a constructive way,” Rubin told the Washington Post. “My recollection was . . . this was done in a more strident way.” Levitt says Born was “characterized as being abrasive.”
Her supporters, while acknowledging that Born can be uncompromising when she believes she is right, say those are excuses of people who simply did not want to hear what she had to say.
“She was serious, professional, and she held her ground against those who were not sympathetic to her position,” says Michael Greenberger, a Washington lawyer who was a top aide to Born at the CFTC. “I don’t think that the failure to be ‘charming’ should be translated into a depiction of stridency.”
Others find a whiff of sexism in the pushback. “The messenger wore a skirt,” says Marna Tucker, a Washington lawyer and a longtime friend of Born. “Could Alan Greenspan take that?”
One Size Fitts All
You see folks; I bring all of this up for good reason.  The contemptuous, maligning treatment of Ms. Brooksley Born as head of the CFTC concisely parallels the poisonous treatment doled [or Gored, perhaps?] out to Ms. Catherine Austin Fitts, former Assistant Secretary, FHA – Bush I Admin. 
During her time in government, Fitts discovered that Fannie and Freddie were accidents looking for a place to happen.  When she left government and formed Hamilton Securities, in her capacity as government contractor, she learned;
“In 1995, a senior Clinton Administration official shared with me the Administration’s targets for Fannie Mae and Freddie Mac mortgage volumes in low- and moderate-income communities. We had recently reviewed the Administration’s plans to increase government mortgage guarantees — most of these mortgages would also be pooled and sold as securities to investors. Even in 1995, I could see that these plans would create unserviceable debt loads in communities struggling with the falling incomes expected from globalization. Homeowners would default on mortgages while losses on mortgage-backed securities would drain retirement savings from 401(k)s and pension plans. Taxpayers would ultimately be hit with a large bill . . . but insiders would make a bundle. I looked at the official and said that the Administration was planning on issuing more mortgages than there were houses or residents. “Shut up, this is none of your business,” the official snapped back.”
Ladies and gentlemen, there’s a pattern here.  Ms. Fitts attempted to identify rampant systemic financial abuse – in her case, colossal mortgage fraud.  From speaking with Ms. Fitts personally, I am aware that Fitts – in her capacity as President and founder of Hamilton Securities – actually met with the Greenspan Federal Reserve. 
For trying to expose the reality that one of the dirty little secrets behind the housing bubble is the long standing partnership of narcotics trafficking and mortgage fraud and the use of the two in combination to target and destroy minority and poor communities with highly profitable economic warfare back in the 1990s – Fitts found herself the subject of secretive but factually baseless investigations by H.U.D. and the U.S. Dept. of Justice.  Along with the legal proceedings aimed against her, her company [Hamilton Securities] was ruined, she was threatened and harassed to the point where recent revelations by Seymour Hersh that, Vice President Dick Cheney was running an executive assassination ring made her stop and consider,
“I have always wondered if this ring was responsible for a series of poisonings between 2002 and 2005 while I was in litigation with the federal government.”
The Common Thread
It has occurred to me that Ms. Fitts attempts to fix a broken system shares a common thread with Ms. Born’s experience – The U.S. FEDERAL RESERVE – that blocked both their efforts to either prevent or expose systemic, fraudulent financial abuse.
And now there is serious consideration to give the Federal Reserve / Treasury more power????
As the most important members of the President’s Working Group on Financial Markets [aka the Plunge Protection Team], these two bodies would have had direct input [and thus been complicit] into the S.E.C’s 2007 elimination of the “Uptick rule” on legal shorting of equities.
Similarly folks, these are the same two organizations which in 1999 oversaw the repeal of the Glass-Steagall Act, which since 1933 had separated investment and commercial banking activities – allowing unfettered growth in securitization and derivatives trading. 
Additionally, in the same complicit manner, these folks for years sat idle and silent - observing the inaction of the S.E.C regarding the serial Naked Shorting of equities [the illegal practice of short selling shares that do not exist] in contravention of EXISTING SECURITIES LAW
Add to this their complicit derelict behavior of crony capitalism in fashioning schemes of “selective” outright bans on shorting, what-so-ever, of selected financial equities. Now, ask yourself, “Should these miscreants at the privately owned Federal Reserve really be graced with more power?”
While we’re doing our dirty laundry, let us also not forget last Friday night’s [Mar. 20] takeover [or mugging, perhaps?] by the FDIC of U.S. Central Federal Credit Union, a huge wholesale credit union with about $34 billion in assets based in Lenexa, Kansas.  This institution provides settlement services to 100 percent of corporate credit unions and 93 percent of all U.S. credit unions. At minimum, this means that local Credit Unions all over the U.S. [one of the only credible alternatives to money center banks] will now be facing higher costs according to Reuters:
“The immediate costs of the takeover are coming out of a $7 billion industry-maintained insurance fund, but will mean higher premiums levied on retail credit unions.”
The reason offered for regulators taking control of this wholesale credit union [and in turn burdening the ENTIRE credit union system] is alleged to have been that it failed a regulatory mandated “financial stress test”.  If U.S. Central Federal Credit Union failed their financial stress test; the cadavers of Citibank and B of A must already be undergoing autopsies at the county morgue.
Interesting how anything that competes with, threatens, or offers an alternative to the Federal Reserve controlled financial system [like community banking] dies or is threatened but AIG lives!!!
In short, the Fed / Treasury combo should have their oversight curtailed since they have clearly shown a blatant disregard for enforcing existing financial law.
In my own research and writing, as a foot soldier for the Gold Anti Trust Action Committee [GATA] – I have personally chronicled and documented systemic financial abuse – encapsulating ALL that Fitts and Born have warned about - all emanating from the highest levels of the U.S. Fed and Treasury – primarily in the global gold and bond markets; and all aimed at fraudulently perpetuating the global primacy of the U.S. Dollar. 
I’ve been able to determine through independent forensic examination of undeclared, nefarious Fed Reserve activity over the last 5 years that the Federal Reserve has NEVER had a coherent policy – unless one considers the major observable planks of “scorched earth” and/or “gold-price-bashing” to be any semblance of sound economics.
Isn’t it time that the Federal Reserve is publicly recognized for what they are – derelicts on the dole – and what they’ve done?  Isn’t it about time they are ORDERED to put their shovels down and quit digging a deeper-debt-hole for the American public?  Haven’t the American people given enough?
America and the world-at-large might be a better place to live if American monetary and political elites would quit trying to become more omnipotent and – for a change - simply execute their existing mandates.
This article is published publicly [unusually] in its entirety.  Subscribers to Kirbyanalytics.com regularly receive guidance and actionable recommendations to help insulate themselves from the aforementioned systemic financial abuses.  Subscribe here.
* Rob Kirby acknowledges the keen nose of GATA lieutenant Adrian Douglas  and Lemetropolecafe.com for drawing attention to the existence of the Brooksley Born interview in the Stanford University alumni magazine.
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A Date That Shall Live In Infamy

Mark it on your calendar folks – Wednesday, March 18, 2009, the demarcation point - the date that the U.S. Federal Reserve publicly acknowledged that they will monetize the nation’s debt. While we suspect that the Fed has been doing so for quite some time – on the ‘Pirates of the Caribbean sly’ – the public disclosure that the Fed is resorting to quantitative easing [aka the printing press] has signaled a clear shift to the long predicted hyper inflationary end-game gyrations which historically have manifested themselves in virtually ALL irredeemable fiat money systems.
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Setting the Record Straight

I want to share with you all a piece of correspondence I received from reader [I’ve removed his real name] with the hopes that you all benefit from this exchange.  I believe it has value because is demonstrates that even when folks “get it” that something is seriously wrong in the financial system – they are not [in my opinion] making informed decisions to protect themselves.  If any of you are having difficulty grasping the content of what I am writing – ask questions!:
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The Real Ponzi Scheme – “Unreal Interest Rates”

Recently, former chairman of the Federal Reserve – Alan Greenspan – penned an editorial, “The Fed Didn’t Cause the Housing Bubble”. It was published in The Wall Street Journal March 11, 2009. 

In the article Mr. Greenspan attempts to blame today’s global financial crisis on “too-low mortgage rates” between 2002 and 2005 which led to a real estate bubble.
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Underlying Assumptions: A Forensic Review

I’d like to take everyone on a little trip back in time – to May, 2003 – when Allan Yarish penned an article, Mark-to-market accounting undercuts banks' loan hedging, extolling the virtues of Credit Default Swaps.  He did so methodically, by first identifying a problem or need:

“FAS [financial accounting standards] mandates that derivatives be recognized in the statement of financial condition as either assets or liabilities and are to be disclosed at fair value. Changes in fair value of the derivative instrument may be offset by changes in the value of the hedged asset. However, distortions that arise from differences between fair value accounting of derivative instruments and the accrual accounting valuations used in valuing bank loans makes hedge accounting difficult if not impossible to achieve.”
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J.P. Morgan Leaking Oil

Last week’s article, The Statue of the Three Lies, examined the key “lynchpin” roles being played by the institutions Harvard and J.P. Morgan in our current global economic morass. 

This week, we’ve learned that insurer AIG is the recipient of another 30 billion in government [taxpayer] assistance to augment the obscene 150 billion already sent their way.  Lawmakers on Capitol Hill this week began asking tougher questions of Benedict Bernanke about who the ultimate recipient[s] are of bailout funds being extended to AIG.

Benedict Bernanke has thus far refused to divulge who the REAL recipients of these funds are.
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The Statue of the Three Lies

statue3

Canada’s Globe and Mail newspaper reporter, Heather Scoffield, interviewed renowned Harvard Economist Niall Ferguson for an article published Feb. 23, 2009 titled, There Will Be Blood.  In the interview Ferguson states,

The global crisis is far from over, has only just begun, and Canada is no exception.
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Failure or Sabotage?

As our beloved fiat financial system continues its ‘long predicted’ systemic melt-down, it has been most interesting to observe the jockeying of establishment Keynesian acolytes; positioning themselves and their revisionist rhetoric to obfuscate / obscure the nascent havoc that their ideology has cast upon humanity.
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Oh Yes They Did!

I’ve been trying to resolve what’s behind the recent inversion of the historic premium that West Texas Intermediate [WTI] Crude Oil has enjoyed versus Brent Crude?  Historically, West Texas Intermediate Crude Oil trades at a premium price to Brent Crude Oil for quality as well as logistical reasons.  In recent weeks and months – WTI has been trading at a deep discount to Brent Crude:
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Crime Scene Investigation

Last week, on Thursday February 5th, 2009 – The President’s Working Group On Financial Markets held their first official soiree with former New York Federal Reserve Bank President, Timothy Geithner, installed as President Obama’s pick as Treasury Secretary
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We’ve All Been Had

                                             indgov

As world leaders gathered over this past week for their annual wine-and-cheese ski-fest in Davos, Switzerland – perhaps we, the little people, should all take-stock [or a forensic account, perhaps?] of the cards we’ve been dealt.
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A Reminder / Refresher for Physical Gold Investors   

The prices we are all accustomed to “watching” on a daily basis are “mimics” of an exchange traded price.  Exchanges trade uniform futures contracts [each contract or “lot” representing 100 troy oz. of gold] aka the PAPER price of gold pretty much 24 hours per day Monday – Friday:
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Further Forensic Examination

Borrowing from the axiom that, “a picture is worth a thousand words”; today we are going to view the incredulity of recent macro-economic events with the aid of charts and graphs.  First up is a chart of the price of gold [POG] over the past year with a few “milestones” pasted in for good measure:
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Questions Begging Answers

To say that markets have been behaving “strangely” recently is an understatement.  In recent weeks and months we’ve been witness to historic lows in sovereign interest rates in-the-face-of record amounts of debt being issued by governments?  We’ve seen the price of gold behave counter intuitively by “not rising” in-the-face-of unprecedented systemic global economic malaise?  Last, but not least, we’ve witnessed a “complete flip-flop” in the traditional pricing of Brent Crude Oil [IPE-London] versus West Texas Intermediate [NYMEX-N.Y.]?
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When”, Not “If” – Not Even Close

Two weeks ago in this space in an article titled, “When”, Not “If”, I attempted to highlight the disparity between annual global gold production versus amounts of physical ounces of gold transferred on the London Bullion Market Association [LBMA].  At this time I would like to acknowledge the contribution of reader Allan C. who pointed out two oversights in my analysis which led to my dramatically understating my position:
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In Fraud We Trust

Amazing, isn’t it, how times have changed?  Just [Wed.] this morning, President elect Barack Obama stood before microphones and television cameras and told the world that his administration was set to inherit an annual deficit of 1.2 TRILLION dollars.  He went on to add that the fiscal 2009 amount did not even include “his” stimulus plan, rumored to be as much as an additional TRILLION dollars, reportedly geared toward infrastructure spending, would be required to “jump start” the U.S. economy.
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Whether Or Not We Like It

In the past, I’ve written papers where the following quotation was included at the end of the treatise as an “exclamation point”:
“We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent.” – James Paul Warburg, whose family co-founded the Federal Reserve - while speaking before the United States Senate, February 17, 1950

Today, I feel that I’ve finally got it “the right way around” with this important quote – where it should be – at the beginning of, and in fact the subject of, a treatise of its own.
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A Familiar Tune

Funny isn’t it, how modern day economists prattle on about how “sub prime” mortgages are / were at the root of the systemic financial collapse we’re currently experiencing?  They usually follow that bleep up with some hollow hogwash about how deflationary forces are winning the battle over inflation – thus explaining every otherwise inexplicable occurrence observed in our modern day monetary morass.

Updated: Conclusion added
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Government Sanctioned Theft

The Office of the Comptroller of the Currency just released it’s Q3/08 Quarterly Derivatives Fact Sheet today.  Here is one of the highlights:

Take a look at J.P. Morgan’s gold derivatives [futures] position, paying particular attention to how the < 1 yr. position changed from the end of Q2/08 to the end of Q3/08:
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“When” not “If”

The global gold trade – or at least its price discovery – is historically and primarily conducted on major exchanges; primarily at the London Bullion Market Association [LBMA] and to a lesser extent the New York Commodities Exchange [COMEX].

Let’s take a look at the primary sources of global gold supply:

1] - Global gold production: has been running at roughly 2,500 metric tonnes per annum in recent years:
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Backwardation:  Facts from Fiction

An important piece of academic research was published last week [Dec. 5, 2008] by Professor Antal Fekete, titled, Red Alert: Gold Backwardation!!!  In this article, Professor Fekete reasoned that Dec. 2, 2008 was a landmark date in the saga of the collapsing international monetary system;
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Have We Peaked Already?

Last Friday, Dec. 12, 2008, CNNMoney.com published an article chronicling the dismal state of the U.S. employment picture, highlighting December's job cut total – which already stands at 115,416.

The article went on to explain that December job losses could be even worse than November, when the Bureau of Labor Statistics [BLS] reported that 533,000 jobs were lost [most since 1974] – since, according to David Wyss, chief economist at Standard & Poor's;

            "Generally companies like to make their cuts by the end of the year."

If we can dismiss the human suffering associated with job losses for a moment and instead view “employment” as an “energy consuming activity” – it might help one begin to grasp the true nature of exactly what’s confronting the industrializing and industrialized world.
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The Great Flation Debate and More 

Over the past few weeks I’ve been inundated with requests for my opinion on whether the near term future is going to be deflationary or inflationary?  The topic has been the ‘subject de jour’ provoking spirited debate in many precious metals forums and has been the subject of many recent articles in the letter writer’s community.
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Shock and Awe at COMEX 

This past Friday, Nov. 28, 2008, was first notice day for delivery of the December COMEX [a division of NYMEX] gold and silver futures contracts which trade on the New York Mercantile Exchange.  The chart appended below shows that, on Friday, 8,600 gold futures contracts @100 ounces per contract [and 3,040 silver futures contracts @ 5,000 ounces per contract] were delivered.  To try to give some perspective to these numbers; the previous delivery month for gold futures was October, 2008 when there were 11,554 deliveries for the entire month – a “big” number by historical standards.
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The Federal Reserve – Draining the Swamp

Hank Paulson went on national television today, Oct. 12, 2008 and made the claim that the Treasury / Fed is doing everything in their power, utilizing the TARP, to “ease” consumer’s access to credit.

I’m saying that Hank Paulson is LYING SNAKE.  The Treasury / Fed combo has done EVERYTHING IN THEIR POWER to shut the credit spigots.

They injected capital into the balance sheets of their cohorts – the banks and their Wall Street friends – and at the same time, as of Oct. 3rd, 2008, the Fed began PAYING banks interest on reserves held at the Fed.  Formerly, or prior to Oct. 3, 2008, it was mandatory that banks hold reserves at the Fed but they paid no interest on them.  The ONLY purpose of such an action was to stymie the banks from creating more money / credit – by putting those reserves to work.
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An Undisclosed Act of Treason 

For those of you who are unfamiliar with the work of John Williams of Shadow Government Statistics fame; this missive should prove to be quite an eye opener.  For those who are familiar with Williams’ work – this is nothing more than logical extension[s] and conclusions. 

Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. 

So, let’s just say the man knows of what he speaks.
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Clarity: Shrouded In Double-Speak 

Today, we’re going to begin with the cliche, “the more things change – the more things seem to stay the same”.  

It was back on Oct. 3rd, 2008 that Rep. Brad Sherman [D-Ca] reported from the floor of the House [C SPAN] the disingenuous nature of the [then] proposed Bail-Out Bill by revealing that dissenting voices had been “threatened” of imminent, dire consequences if the bill was not passed in its proposed form [see link:  http://www.youtube.com/watch?v=gnbNm6hoBXc]
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J.P. Morgan – Loving Their Handiwork

The following research paper was compiled as the basis for a radio interview with Patrick Timpone at One Radio Network.

Morgan is the quintessential leviathan in the Interest Rate arena through their obscenely sized Medium-Term Interest Rate Swap book which stood at 59 Trillion at June 30, 2008.

The interest rate swap book, due to its sheer size, overwhelms the bond complex by creating artificial demand for government securities.  This interest rate suppressive activity began in earnest back in the 1990’s and has kept market rates of interest at artificially low levels.  The FUNDAMENTAL [and ongoing] MISPRICING of CAPITAL – for many years – has led to a myriad of economic excesses like the Dot Com boom, subsequent housing boom and the financial asset boom itself. [more.....signup] [open pdf....members]

Fudging, Fundamentals and the Electoral Cycle

Anyone who’s paying attention has probably noticed that commodities prices have been, shall we say, volatile?

Most economists worth their salt will generally proffer opinions on the sometimes erratic moves in the prices of commodities based on their views of inflation, deflation or possibly even their perceptions regarding where we are in the business cycle?

If we take a stroll down memory lane and unearth a few comments of gold market impresario, Doug Casey, from a 2002 essay titled, Gold During Inflation, Deflation and Chaos, they tell quite a story:
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Plumbing the Depths:  Conclusions and Action Plan 

Although we’ve experienced a stiff round of short term asset deflation, I remain firmly in the reflationary / hyperinflation camp.  The Congressional Budget Office [CBO] is calling for a fiscal deficit of 438 billion for 2008 – up from 161 billion in 2007.  Non-government types are now suggesting that FY 09 shortfalls will likely top 1 Trillion:
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Plumbing the Depths of Depravity

First, for a bit of historical context, a little bit of fact-finding pertaining to Henry Paulson complements of my friend, Jesse:
“I didn't know he was a member of the Nixon White House as his first 'real job.'

In 1970, fresh from the Masters program of the Harvard Business School, Paulson entered the Nixon administration, working first as staff assistant to the assistant secretary of defense.

In 1972-73, Paulson worked as office assistant to John Erlichman, assistant to the president for domestic affairs. Erlichman was one of the key figures involved in organizing President Richard Nixon’s notorious "plumbers" unit that carried out illegal covert operations against the president’s political opponents, including espionage, blackmail, and revenge. Ehlichman resigned in 1973, and in 1975 he was convicted of obstruction of justice, perjury, and conspiracy, and was imprisoned for 18 months.

Utilizing his connections, Paulson went to work for Goldman Sachs in 1974. In a 2007 feature, the British newspaper the Guardian wrote, "Not only was he well connected enough to get the job [in the Nixon White House], but well connected enough to resign in the thick of the Watergate scandal without ever getting caught up in the fallout. He went straight to Goldman back home in Illinois."
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Dis-Information Specialists Ply Their Trade

 Tim Gardiner, president and CEO, Mitsui & Co. Precious Metals Inc. appeared on Canada’s Business News Network [BNN] and – in a ridiculous attempt to explain the recent demolishing of the gold price - made the claim that demand for gold was down and, “the only reason for physical shortages of gold products at retail was ‘logistical’ and due to a shortage of ‘blanks’ from which the coins are stamped”.
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Derivatives Disclosure

Like it or not we hear the term “derivatives” bandied about in the mainstream financial press these days with increasing regularity.

In recent times it has come to be a term that, when mentioned in conjunction with a particular financial institution, can cause loss of confidence or worse – maybe a herd like run on deposits [or policies] on the offending institution.

To help clear up some of the confusion, today’s market wrap will deal with Derivatives:  where they came from and how they’ve morphed into the reviled bank-killers they are known as today.
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Bear Stearns: Murdered at the Golden Gates

Much has already been written about the untimely demise of investment bank Bear Stearns.  Most, if not all, that has been written to date – deals with issues related to equities / expiring options – or the share price.

Recently, new information has come to light which allows us to forensically examine the demise of Bear Stearns from a completely different angle – GOLD.
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If Pigs Could Fly

Interesting times we live in, eh?  Our global financial markets have metamorphosed more in the past fortnight than they did in the previous 14 years.  Here’s a recap as to why, paying specific attention to the build-up of DERIVATIVES – and their unraveling which is causing so many of the dislocations that are now manifesting themselves:

The great unwinding we are now witnessing had its roots in myth – The Strong Dollar Policy.  This myth was a conceptual concoction of former Treasury Secretary Robert Rubin and his protege Lawrence Summers [with an academic “assist” to Barsky and the Harvard Economics Department]:
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The Invisible Hand and the Pox Known as Usury

First, from Wikipedia, a little background on usury:

Usury (pronounced /?ju???ri/, comes from the Medieval Latin usuria, "interest" or "excessive interest", from the Latin usura "interest") originally meant the charging of interest on loans.  After countries legislated to limit the rate of interest on loans, usury came to mean the interest above the lawful rate. In common usage today, the word means the charging of unreasonable or relatively high rates of interest…..
….But one must always consider that usury, in historical context, has always been inextricably linked to economic abuses, mostly of the masses and of the poor; but sometimes of the financier and royalty, as bankrupt royalty has led to many a demise, thus frowning upon lending at interest or for a euphemistic "just profit". The main moral argument is that usury creates excessive profit and gain without "labor" which is deemed "work" in the Biblical context. Profits from usury do not arise from any substantial labor or work but from mere avarice, greed, trickery and manipulation. In addition, usury creates a divide between people due to obsession for monetary gain. Most importantly, usury commodifies biological time for profit, which is linked to life, considered sacred, God-given and divine, leading to excessive worrying about money instead of God, thus subjugating a God-given sanctity of life to man-made artificial notions of material wealth…..
I began this paper with a broad definition of usury to explicitly point out, in an historical context; it has always been inextricably linked to ECONOMIC ABUSE.

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Monday, Sept. 29th Subscriber Only Commentary

At the time of writing, the Paulson Plan Bail-Out Bill has just been defeated on the floor of the U.S. House of Congress – overwhelmingly defeated [counter-intuitively I would suggest] by Republicans.

Blather emanating from Hank Paulson over the past week has included his disingenuous claims that he “never realized” the extent of the regulatory problems or “over leverage” facing markets.

As former Chairman of Goldman Sachs, no-one in the world was better positioned to have fore-knowledge and fully comprehend the “casino state” of our Capital Markets. [more.....signup] [open pdf....members]

The Backgrounder

This report has been prepared as a more-in-depth follow up to Monday’s public article, Treachery Abounds, to fill in some blanks and provide subscribers with a fuller understanding and honest assessment of what they are confronting.

Regarding Recent Dollar and Interest Rate Rallies

Today, the U.S. Treasury released July TIC data.  Here’s a snippet:
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Rob has been a ongoing contributor to Financial Sense Online for several years now. Browse Rob Kirby's archive of financial analysis articles.


 
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