Monday, November 29, 2010

Quadrillion=10^15. Derivatives?



Remove "millions" from your immediate vocabulary. It’s outdated and no longer has use in political language. “Billions" can also be kept at arm-reach as "trillions" has become the new appropriate, politically-correct and common terminology. And, is there a new 800 lb gorilla about to enter the room - his name is "Quadrillion!" Surprised? Here's how it looks: 1,000,000,000,000,000. And, I don't even want to think of how many times that sum would stretch to the moon and back - let's just say many times and save that brain energy for pouring more coffee.

The current see-saw debate Congress is having over Obama's spending plan pales in comparison and is simply "political cover" for what is forthcoming. They are merely "throwing us a bone" to make it appear that they are "doing something" to help with American job losses. However, in reality it's just part of a larger scheme to soften our palpability to another gargantuan bank-bailout and a cushion for the gorilla about to plop his big, ugly self down. Recently, it was noted that US banks are still dramatically under-capitalized, facing more than $3.6 trillion in additional credit losses as the financial crisis broadens. You may have already heard sound bites indicating that there will be another "bailout bill" coming soon - this time likely trillions in another attempt to re-capitalize the failing banks. Think that's bad news? Well, it gets worse, far worse - the 800 lb gorilla still lies ahead.

There are over $600 trillion (careful, that's trillion, not billion) in credit derivatives steadily tanking as we speak, effectively draining world liquidity. Stumped yet? Derivatives (though I've never seen one) are basically "insurance policies" that cover large loans in case of default. But, it wasn't just the homeowner as we’ve been led to believe that was hedged to fail, it was the paper itself - bundled repeatedly, replicated and sold that became gargantuan. The heavier and deeper these derivatives grew the more volatile they became. Ultimately, they all default because no one, no one fund is solvent enough to cover these large losses. And, now we know why the Fed's money-printing presses have been working 24/7 - they can't print enough money fast enough to fill these default holes.

Consider for a moment that the "combined" world stock exchanges represented only a mere $62.5 trillion in the fall of 2007 (though it fell to $36.6 trillion in the fall 2008); we're talking small potatoes compared to the dark derivatives market that is sucking the US and the world dry. Federal Reserve Chairman Ben Bernanke knows this – he sits on the board of the Bank for International Settlements, a consortium of the world's central banks. $600 trillion in derivatives is what the consortium has estimated and claim is now maturing, emptying depositories and keeping credit markets clogged. Amidst the secrecy shroud, it’s my guess that it’s much bigger and we'll soon hear the term “quadrillion.”

We've been hoodwinked by every conceivable excuse for the financial crisis - from poor folks that should never have been given mortgages, to corrupt politicians like Barney Frank who couldn't balance his own checkbook much less comprehend the scale and scope of what's happening or do anything about it, to shady Wall St traders who were just trying to pay for their yachts and beach homes. Sure, it's all complicit, but none hold a candle to the dark dealings in derivatives, unregulated and obscure with a life and death of their own making.

What can be done? Clearly, it's going to take larger minds than out-of-work lawyers in Congress, or Presidential soothsayers and Chairman Bernanke’s team. Personally, I give them two chances of resolving this mess: slim and none. Certainly, nothing will be done quickly to stave off children’s hunger pains caused by laid-off parents. The stimulus plans have been noble, but they miss the mark. Now, with a job lost every 13 seconds, it seems unlikely that more obtuse spending will dissuade the crisis. The financial elite are fighting a beast they can't beat - their gorilla has slipped and busted it on a banana peel of epic proportions in a quintessential, wrecking slide of greed and corruption. Unfortunately, he has bruised more than his pride, leaving millions jobless, perhaps homeless and certainly hungry for answers.

Sunday, May 2, 2010

Paul sees possible troubling trend with Global Financial System and gold


Ron Paul: I see a development in the Gold market. For years, Gold has acted like commodity and roughly tracked the stock market. Last week, I believe due to major instability in the Eurozone (Greece and Spain), Gold went up and the markets went down, evidence that Gold is acting like a safe haven currency. I'll pay close attention this week, this could spell troubling things for the global financial system.

Monday, April 12, 2010

BOMBSHELL – Whistle Blower Comes Forward With Solid Proof The Price Of Gold And Silver Is Being Manipulated By Major Financial Institutions


Once the American people learn how incredibly corrupt the world financial system is, it is going to change everything.  The government that we are all trusting to guard the integrity of the financial system is failing to do that job.  It turns out that the Commodities Futures Trading Commission has been sitting on solid evidence that the elite banking powers have been openly and blatantly manipulating the price of gold and silver.  Even though they were basically handed a "smoking gun", they have done absolutely nothing with it.  But now the information has gone public and the CFTC is red-faced. 
Back in November 2009, Andrew Maguire, a former Goldman Sachs silver trader in Goldman's London office, contacted the CFTC's Enforcement Division and reported the illegal manipulation of the silver market by traders at JPMorgan Chase.
Maguire told the CFTC how silver traders at JPMorgan Chase openly bragged about their exploits - including how they sent a signal to the market in advance so that other traders could make a profit during price suppression episodes.
Traders would recognize these signals and would make money shorting precious metals alongside JPMorgan Chase.  Maguire explained to the CFTC how there would routinely be market manipulations at the time of option expiries, during non-farm payroll data releases, during commodities exchange contract rollovers, as well as at other times if it was deemed necessary.
On February 3rd, Maguire gave the CFTC a two day warning of a market manipulation event by email to Eliud Ramirez, who is a senior investigator for the CFTC’s Enforcement Division.
Maguire warned Ramirez that the price of precious metals would be suppressed upon the release of non-farm payroll data on February 5th.  As the manipulation of the precious metals markets was unfolding on February 5th, Maguire sent additional emails to Ramirez explaining exactly what was going on.
And it wasn't just that Maguire predicted that the price would be forced down.  It was the level of precision that he was able to communicate to the CFTC that was the most stunning.  He warned the CFTC that the price of silver was to be taken down regardless of what happened to the employment numbers and that the price of silver would end up below $15 per ounce. Over the next couple of days, the price of silver was indeed taken down from $16.17 per ounce down to a low of $14.62 per ounce.
Because of Maguire’s warning, the CFTC was able to watch a crime unfold, right in front of their eyes, in real time.
So what did the CFTC do about it?
Nothing.
Absolutely nothing.
Which is extremely alarming, because the size of this fraud absolutely dwarfs the Madoff or Enron scandals.  In fact, this fraud is so gigantic that it is not even worth comparing to any of the other major financial scandals of recent times.
But Maguire did not give up.  He sent several more emails to the CFTC detailing the open manipulation of the gold and silver markets.
The CFTC did not reply.
Finally he sent them a final email: "I have honored my commitment to assist you and keep any information we discuss private, however if you are going to ignore my information I will deem that commitment to have expired."
The reply by the CFTC?
"I have received and reviewed your email communications. Thank you so very much for your observations."
No action.
No acknowledgement that anything was wrong.
No recognition that a massive crime had been committed.
Fortunately, that was not the end of it.
On March 25th, the CFTC held a hearing on alleged manipulation in the gold market by the major banking powers.
Maguire wanted to testify during that hearing but he was not invited.
But William Murphy, chairman of Gold Anti-Trust Action (GATA), was invited to testify.  GATA has been compiling data on the manipulation of the gold and silver markets for quite a long time now.
Murphy was only given five minutes to deliver his testimony.  He raced through his presentation so that he could get as much information on the record as possible.
Very curiously, the live television broadcast of the CFTC hearing suffered a technical failure the minute before Murphy began his testimony. The technical failure was corrected the minute after Murphy was finished.
Coincidence?
Well, it turns out that there were are lot of coincidences surrounding this hearing.
But we'll get to that in a minute.
When Murphy finished his statement, the panel asked him for some hard proof of market manipulation.  Murphy shocked the panel by revealing the name of Maguire and explaining how Maguire had informed the CFTC Enforcement Division of the market manipulation that was taking place by JPMorgan Chase.  The CFTC panel seemed stunned by the revelation and seemed reluctant to learn any further and asked nothing else about it.
Video of Murphy's revelation to the panel is posted below....



In another "coincidence", Maguire and his wife were subsequently injured and hospitalized when their car was struck by a hit-and-run driver in the London suburbs.

When a bystander who saw the "accident" tried to block the other driver from getting away, the other driver accelerated directly towards the witness, forcing him to leap out of the way to avoid being hit. The hit-and-run driver’s car then hit two additional cars as he left the area.

But Maguire and his wife were fortunate.

In the past, other would-be whistle blowers that had evidence regarding the manipulation in the gold and silver markets died in "unusual accidents" before they were able to bring their evidence to light.

But there were even more "coincidences" surrounding this hearing.

A week before the hearing, the CFTC announced that they had had a fire in the room where its gold and silver records are held.

Isn't that convenient?

In addition, after the hearing was over, Murphy was contacted by a number of major media outlets for interviews.

Within 24 hours, every single interview was cancelled.

Every single one.

Is that a coincidence too?

It appears that some very powerful people do not want this information to get out.

It also shows how corrupt the mainstream media has become.

This is a story that is so much bigger than the Madoff scandal or the Enron scandal that it is not even funny.

And yet the mainstream media is avoiding it like the plague.

But there were additional bombshells that came out during the hearing as well.

During the hearing it was revealed that the gold manipulators have accumulated a huge short position in gold and that these huge short positions are "naked", which means that these positions are not hedged.

These massive short positions have put some of the largest financial institutions in the world in an extremely vulnerable position.

In addition, it has now come out that most "gold" that is traded is not backed by the actual metal itself. For years, most people have assumed that the London Bullion Market Association (LBMA), the world's largest gold market, had actual gold to back up the massive "gold deposits" at the major LBMA banks.

But that is not the case.

People are now realizing that there is very little actual gold in the LBMA system.

When people think they are buying "gold", they are actually just buying pieces of paper that say they own gold.

In fact, during the CFTC hearings, Jeffrey Christian of CPM Group confirmed that the LBMA banks actually have approximately a hundred times more gold deposits than actual gold bullion.

Uh oh.

So what happens if everyone decides that they want actual physical delivery of their gold?

It would be such a mess that it is painful even to think about it.

The truth is that right now most of the trading activities on the London exchange are just paper for paper.

But people get into gold because they want to be in a real commodity.

In fact, there are thousands of clients around the globe who think they own huge deposits of gold bullion, and are being charged large storage fees on that imaginary bullion, but what they really own are a bunch of pieces of paper.

If there comes a time when everyone starts asking for their gold it is going to create a squeeze of unimaginable proportions.

Maguire explains this situation this way: "for 100 customers who show up there is only one guy who is going to get his gold or silver and there’s 99 who will be disappointed, so without any new money coming into the market, just asking for that gold and silver will create a default."

The truth is that it is absolutely impossible for the LBMA to ever deliver all the gold and silver owed to the owners of contracts.

Yes, it is a gigantic mess.

But this type of things is not entirely unprecedented. For example, Morgan Stanley paid out several million dollars back in 2007 to settle claims that it had charged 22,000 clients storage fees on silver bullion that did not exist.

But the scale of the fraud going on now is absolutely mind blowing. The following video contains footage from the hearing related to these issues....


So what is the bottom line?

The bottom line is that the precious metals markets are cesspools of fraud and manipulation.

The markets have been suppressed by the major financial institutions for years, and this has created the potential for a "squeeze" in the precious metals markets that could send the prices of gold and silver into the stratosphere.

You see, the reality is that there would be no gold left in the entire world if all the Gold ETFs (Exchange Traded Funds) asked for physical delivery.

Are you starting to get the picture?

In fact, Maguire claims that the naked short selling scam by the major financial institutions is well into the trillions of dollars, making it by far the biggest financial fraud in history.

Maguire calls what has been going on "financial terrorism", and he accuses the financial institutions involved in this fraud of "treason" for putting national security at risk.

And national security is at risk.

Because if the true extent of this fraud comes out, it could collapse the entire financial system.

If you have never heard an interview with Andrew Maguire, we encourage you to listen to the audio interview posted below. It will really open your eyes to what is going on in the precious metals markets....


This is one of the biggest financial stories of the decade. Because it is complex, most Americans will not understand it. But the fraud and manipulation in the gold and silver markets has the potential to cause a massive economic collapse even without all of the other factors talked about on this blog.

Some very powerful people have been doing some really, really bad things. Once people understand the truth, they will never look at the financial markets the same way again. Already, faith in the major financial institutions of this country has been shaken by revelations about what has been going on over at Goldman Sachs. The American people have no more appetite for any more financial scandals or for any more Wall Street bailouts. But if the fraud and manipulation taking place in the precious metal markets ever gets totally exposed it will change the U.S. financial system forever.

Please get this information out to as many people as you can. There are a number of very powerful people who are not going to be pleased that sites like this are attempting to get the truth about this massive scandal out.


(NOTE: Is any of THIS true? Who knows these days, right? But, I  have long-since stopped waiting on the MSM to keep me adequately informed).

Saturday, April 10, 2010

New Debt: Day after Day, Month after Month

"FISCALLY, WE ARE IN UNCHARTED TERRITORY.” 
— WARREN BUFFETT, BILLIONAIRE, 
AUGUST 19, 2009

We usually speak of budget deficit in terms of year: In 2009, our country ran a $1.4 trillion deficit, and in 2010, the Congressional Budget Office (CBO) projects that we’ll run a $1.5 trillion deficit. But these budget deficits don’t materialize all at once; rather, they accrue as the federal government spends more money than it takes in, month after month after month.

The CBO keeps track of the federal budget deficit in its 
“Monthly Budget Review”. There we can watch the debt as it accumulates throughout the year. Our federal budget is going in the wrong direction – quickly – and it’s crucial to understand that by spending more money than we have each month, we’re making the problem much, much worse.

Friday, April 9, 2010

California leads the way on the US's unsustainability







The first evidence usually comes from CA or NY. This time it's CA. It's about to get the big one, but not an earthquake, though the earth will quake. The state is about to be in bankruptcy - Los Angelos, followed by many others. Detroit is in the same fix. And, it usually takes about six months for the rest of the nation to feel the shakeout from those places (perhaps sooner) and/or with similar events occuring elsewhere around the country. One thing you can be sure of is that they will pull every tool (and more) out of the box to keep the lid from exploding until after the November election. Bank on that. But, it's inevitable. It's all coming much faster than we think.

Remember that word - "exponential" that I've mentioned repeatedly previously. SS was supposed to be somewhat solvent thru 2016, but its insolvency came six years sooner than generally expected. That 2012 benchmark will also come much sooner. Remember, as real contraction deepens, so do revenues and the need to borrow exponentially more just to keep "existing" services running. That doesn't count new healthcare, more state and local bailouts, etc, etc. Hence why Treasury Geithner has been in Mumbai and headed to Bejing, not to discuss currency valuations like is being reported, but to drum up Treasury bonds whose sells are waning. The debt tsunami and our pinnacle, realization moment of unsustainability is about to become very visibly clear. It is practically at the doorstep now.

Personally, I am expecting intervention - something like another terrorist attack here or missiles going off elsewhere. And, IMO, likely in the biggest troublespot, the one place where implosion is about to take place - North Korea. But, who knows, it could be elsewhere. We're also about to get several trade salvos fired at us, starting with Brazil, China and others to follow shortly.

There is no stopping the trainwreck. It's just a matter of the speed in which it derails.