from KingWorldNews:
With tremendous volatility in global markets around the world, today
King World News interviewed Ben Davies, CEO of Hinde Capital. Davies
told KWN, “it would have been lovely to have had an extreme event happen
so that we get to the end of this process.” Here is what Davies had to
say about what is taking place: “I think the mini-boom that we
had in the nominal gold price, up to $1,900, we’ve been working off
that mini-excess sideways. The disinflationary pressures from this
concept of credit dying is worrying, and I think it weighs on all assets
prices. But gold is doing what it should be doing.”Ben Davies continues @ KingWorldNews.com
from Gold Money News:
Bestselling author of The Dollar Meltdown and Red and Blue and Broke All Over, Charles Goyette, talks to the GoldMoney Foundation’s Alasdair Macleod.
Goyette states that members of the Fed are increasingly realising that their idea of managing the economy does not work and that they have magnified problems rather than solving them. The Fed created trillions of new dollars by buying up toxic debt and it’s absurd to think that these measures will be without consequences.
They point out that money printing is hurting savings, which form the foundation of sustainable growth. Instead the Fed has encouraged credit-based consumption which has led to the accumulation of massive debts. The question now is in what way these debts will be defaulted on, as there is no way of paying them off. Goyette advocates confronting reality sooner rather than later. In any case the value of the dollar will suffer as a consequence.
Both men agree that financial repression is simply not sufficient to get rid of the $120 trillion of US debt. Goyette says that Americans should look to the crisis in Europe as demonstrating that the problem is always bigger than the conventional wisdom acknowledges, and that the solutions favoured by governments are insufficient.
Bestselling author of The Dollar Meltdown and Red and Blue and Broke All Over, Charles Goyette, talks to the GoldMoney Foundation’s Alasdair Macleod.
Goyette states that members of the Fed are increasingly realising that their idea of managing the economy does not work and that they have magnified problems rather than solving them. The Fed created trillions of new dollars by buying up toxic debt and it’s absurd to think that these measures will be without consequences.
They point out that money printing is hurting savings, which form the foundation of sustainable growth. Instead the Fed has encouraged credit-based consumption which has led to the accumulation of massive debts. The question now is in what way these debts will be defaulted on, as there is no way of paying them off. Goyette advocates confronting reality sooner rather than later. In any case the value of the dollar will suffer as a consequence.
Both men agree that financial repression is simply not sufficient to get rid of the $120 trillion of US debt. Goyette says that Americans should look to the crisis in Europe as demonstrating that the problem is always bigger than the conventional wisdom acknowledges, and that the solutions favoured by governments are insufficient.
This Is What Happens When A Mega Bank Is Caught Red-Handed
Back on May 10, when JPMorgan announced its massive CIO trading loss (which may or may not have been unwound courtesy of a risk offboarding to another hedge fund which may or may not be backstopped by the Fed as the massive IG9 position was not novated but merely transferred) JPM also disclosed something else which may have bigger implications for the broader, and just downgraded, banking sector. As a reminder, in the 10-Q filing, the bank reported a VaR of $170 million for the three months ending March 31, 2012. This compared to a tiny $88 million for the previous year. According to the company, “the increase in average VaR was primarily driven by an increase in CIO VaR and a decrease in diversification benefit across the Firm.” What JPM really meant is that after being exposed in the media for having a monster derivative-based prop bet on its books, it had no choice, as it was no longer possible to use manipulated and meaningless risk "models" according to which the $2 billion loss, roughly 23 sigma based on the old VaR number, was impossible (ignoring that VaR is an absolutely meaningless and irrelevant statistical contraption). Turns out it is very much possible. Which brings us to the latest quarterly Office of the Comptroller of the Currency report, and particularly the chart on page 7. More than anything it shows what happens when a big bank is caught red-handed lying about its risk exposure. We urge readers to spot the odd one out.
from TruthNeverTold :
Deciphering Silver
Trader Dan at Trader Dan's Market Views - 1 hour ago
The internet has been awash with comments recently about the downdraft in
silver and the strong increase in Open Interest on last week's big down
day. As usual, the chatter is about an orchestrated attempt by JP Morgan to
smash the price of silver lower so that they can cover their "losing short
position".
Let me first state that I am a firm believer in the view that the US
government has a vested interest in controlling the price of gold. Being a
good friend of GATA, we both have ridden through the ups and down of this
together for the last decade. However, that being said, not ev... more »
from Zero Hedge:
All 28 NATO Allies will meet Tuesday following Turkey’s request under article 4 of the Washington Treaty
And so the escalation-cum-provocation-cum false flag is complete. There was a time when shooting down a foreign jet over one’s territory was considered self-defense. But not when the one doing the defending is perpetual media bogeyman Syria, which “unnamed sources say” kills hundreds, nay thousands of its own people daily, usually in round, soundbitey numbers. Of course, the other side to the story is irrelevant: the Western-led media is never known to fabricate stories that suit the status quo’s power and military industrial complex interests. All that is relevant is for the west, aka NATO, aka Hillary Clinton to get an angle to push for provocation. She just got it. As we suspected on Friday, there was much more than met the eye with the Syrian take down of a Turkey F-4 jet. Remember what we said on Friday: “The only question remains whether Syria’s act was offensive or defensive. Naturally, its version is one of self-defense. Turkey obviously will claim it was in its right to be wherever the plane may be, and will say this was an act of provocation. Then NATO, read Hillary Clinton, will promptly step in, and make this a case in which Turkey was in its right and that Syria committed an act of aggression. From there, things will just escalate, and can potentially deteriorate to a far more troubling scale, because as we reminded earlier, Syria has recently become a major symbol for NATO vs the Russia-China axis.” And sure enough, just out from CNN: “Turkey declares jet shoot-down a ‘hostile’ act.”
Read More @ Zero Hedge.com
Have you ever heard the phrase, “He/She will do anything to get
elected?” Well, it’s a phrase that now applies to the Obama campaign.
The Imperial Presidency needs to know everything about you and your
parents in order to remain in the White House for another term.
In what’s being hailed in some quarters as the greatest political data-mining operation in history, President Obama’s reelection campaign headquarters in Chicago has employed more than 150 “techies” who are “quietly peeling back the layers of your life,” all in a bid to win your vote.
Instead of “Forward,” the president’s campaign message this time around should be, “We’ll trample your privacy rights for a vote!” But I guess that doesn’t fit on a bumper sticker very well.
Read More @ NaturalNews.com
And
so it will continue; as society evolves and progresses, the free
market — so long as there is a free market — will naturally reallocate
resources and labour based on society’s preferences. Without a free
market — and since 2008 when the banks were bailed out and markets
became junkiefied intervention-loving zombies, it is highly dubious that
there is such a thing as a free market in the West — planners will
just end up guessing at how to allocate resources, labour and capital,
and producing monstrous misallocations of capital. The political nature
of such reallocation is irrelevant; whether the centralists call
themselves communists or socialists or environmentalists, their modus
operandi is always the same: ignore society’s true economic
preferences, and reallocate resources based on their own ideological
imperatives (often for their own enrichment). The command economies of
the 20th Century — particularly Maoist China and Soviet Russia — produced much greater pollution than
the free markets. Under a free market, polluters who damage citizens
or their property can be held to account in the market place, and
through the court system.There is no such mechanism through the kind of
command of economy that the centralists seem to wish to implement.
The answer is not central planning and government control. The answer is the free market.
Jim Sinclair’s Commentary
Central Banks Face Power Limit as Debt Persists, BIS Says By Jennifer Ryan – Jun 24, 2012 12:30 PM GMT-0300
Central banks in developed nations are confronting the limits of their ability to aid economic recovery as government efforts to strengthen their finances fall short, the Bank for International Settlements said.
“Central banks are being cornered into prolonging monetary stimulus as governments drag their feet and adjustment is delayed,” the Basel, Switzerland-based BIS said in its annual report, published today. “Both conventionally and unconventionally accommodative monetary policies are palliatives and have their limits.”
European Central Bank President Mario Draghi has indicated that the ECB is close to exhausting its tools after cutting its benchmark rate to a record low and flooding the banking system with cash. Photographer: Hannelore Foerster/Bloomberg
While central banks’ actions were key to limiting damage from the collapse of Lehman Brothers Holdings Inc., interest rates are now “as low as they can go” and debt purchases have swollen central bank balance sheets, the BIS said. European Central Bank President Mario Draghi has indicated that the ECB is close to exhausting its tools after cutting its benchmark rate to a record low and flooding the banking system with cash.
“In the middle of all this we find the overburdened central banks, pushed to use what power they have to contain the damage,” Stephen Cecchetti, BIS economic adviser, said on a conference call. “There are very clear limits to what central banks can do. It’s critical for the health of the global economy to break the vicious cycles and reduce the pressure on central banks.”
More…
Jim Sinclair’s Commentary
Morsi wins Egypt’s presidential election
Muslim Brotherhood candidate declared the official winner with 13.2 million votes. Last Modified: 24 Jun 2012 15:44
The Muslim Brotherhood’s Mohammed Morsi has officially won Egypt’s presidential election and will be the country’s next president, the electoral commission has announced.
Morsi picked up 13.2 million votes out of just over 26 million, giving him about 51 per cent of the vote. His competitor, Ahmed Shafiq, the final prime minister under Hosni Mubarak, received 12.3 million. More than 800,000 ballots were invalidated.
Farouq Sultan, the head of the election commission, delivered a long speech before announcing the results in which he defended the body’s "independence and integrity" amidst what he called meddling by unnamed political factions.
The two candidates filed 456 complaints about the electoral process, Sultan said, most of them allegations of either forgery or Christian voters being blocked from polling stations in Upper Egypt. The vast majority of those complaints were dismissed.
Tahrir Square erupted into celebration after Morsi’s victory was announced. Tens of thousands of his supporters waved Egyptian flags and chanted "God is great" and "down with military rule."
More…
Jim Sinclair’s Commentary
US to fall off ‘fiscal cliff’, warns Joseph Stiglitz June 23, 2012
The US economy is likely to fall over a "fiscal cliff" at the start of next year because Washington will be too divided to stop it, Joseph Stiglitz, one of the world’s leading economists, has warned
Economics Joseph Stiglitz fears tax increases and spending cuts in January risk plunging the US back into recession.
America faces a combination of tax increases and spending cuts in January which risk plunging the world’s biggest economy back into recession if they are all allowed to happen, he said.
“There are so many political battles ahead that the likelihood we avoid all of these elements that will then avoid the fiscal cliff is very problematic,” Mr Stiglitz told The Sunday Telegraph. “It’s a real danger.”
The warning comes as concerns grow that the US will embark on a fiscal squeeze that economists estimate will be between 3.5pc and 4pc of the country’s gross domestic product. By contrast, the International Monetary Fund has said that Britain’s fiscal contraction amounted to 1.7pc of GDP last year and a further 1.6pc is due this year.
“It’s unambiguously the case that these measures will slow down growth,” said Mr Stiglitz. “If there is European turmoil, there is a significant probability of going into a recession.”
More…
Jim,
The guys just got downgraded on Thursday and the downgrade means more collateral must be issued by Morgan Stanley. So what did they do? They added more derivatives to their books, jumping 49% to 2.57 trillion. A sigma 6 event coming??
Regards,
CIGA Ed
Dear Ed,
Morgan Stanley Added Derivatives In Bank In First Quarter By Michael J. Moore – Jun 22, 2012 5:08 PM ET
Morgan Stanley (MS), which was downgraded two levels to Baa1 yesterday by Moody’s Investors Service, increased the percentage of the derivatives housed in its higher-rated bank subsidiary in the first quarter.
The notional amount of derivatives in Morgan Stanley Bank NA jumped 49 percent to $2.57 trillion, according to a report released today by the Office of the Comptroller of the Currency. That brought the share of Morgan Stanley’s total derivatives in the bank, which has a A3 rating after the cut, to 5.1 percent from 3.3 percent at the end of 2011.
Chief Financial Officer Ruth Porat said in April that the firm has been “slowly” moving derivatives into the bank, starting with new foreign-exchange contracts and following with interest-rate deals. The movement came as the firm faced questions about whether counterparties would halt long-dated business with Morgan Stanley after it was downgraded.
The bank is still waiting for approval from the Federal Reserve in order to transfer existing derivative contracts into the bank subsidiary, according to a person familiar with the matter, who asked not to be identified because the information isn’t public. Bank of America Corp., the second-largest U.S. lender, moved derivatives from its Merrill Lynch unit to its bank last year after its rating was cut, prompting objections from the Federal Deposit Insurance Corp., people familiar with the matter said at the time.
The increase in derivatives held in Morgan Stanley Bank was driven by a jump in over-the-counter forwards and options, which both climbed to more than 10 times the level at the end of last year, according to the OCC report.
More…
Jim,
When George Senior was running for re-election, I remember the Fed lowering interest rates a point at a time over a short period of time to help with his chances. Didn’t help! I have quit predicting election winners. However, how much time does the Fed have left if it is going to help Obama in his re-election bid? I can only imagine how tight Mr. President’s skivvies must feel every time the Fed meets and doesn’t do anything. The markets all crash and he looks impotent.
CIGA Bob the Bee Man
Dear CIGA Bob,
All 28 NATO Allies will meet Tuesday following Turkey’s request under article 4 of the Washington TreatyAnd so the escalation-cum-provocation-cum false flag is complete. There was a time when shooting down a foreign jet over one’s territory was considered self-defense. But not when the one doing the defending is perpetual media bogeyman Syria, which “unnamed sources say” kills hundreds, nay thousands of its own people daily, usually in round, soundbitey numbers. Of course, the other side to the story is irrelevant: the Western-led media is never known to fabricate stories that suit the status quo’s power and military industrial complex interests. All that is relevant is for the west, aka NATO, aka Hillary Clinton to get an angle to push for provocation. She just got it. As we suspected on Friday, there was much more than met the eye with the Syrian take down of a Turkey F-4 jet. Remember what we said on Friday: “The only question remains whether Syria’s act was offensive or defensive. Naturally, its version is one of self-defense. Turkey obviously will claim it was in its right to be wherever the plane may be, and will say this was an act of provocation. Then NATO, read Hillary Clinton, will promptly step in, and make this a case in which Turkey was in its right and that Syria committed an act of aggression. From there, things will just escalate, and can potentially deteriorate to a far more troubling scale, because as we reminded earlier, Syria has recently become a major symbol for NATO vs the Russia-China axis.” And sure enough, just out from CNN: “Turkey declares jet shoot-down a ‘hostile’ act.”
Read More @ Zero Hedge.com
by J. D. Heyes, Natural News:
Have you ever heard the phrase, “He/She will do anything to get
elected?” Well, it’s a phrase that now applies to the Obama campaign.
The Imperial Presidency needs to know everything about you and your
parents in order to remain in the White House for another term.In what’s being hailed in some quarters as the greatest political data-mining operation in history, President Obama’s reelection campaign headquarters in Chicago has employed more than 150 “techies” who are “quietly peeling back the layers of your life,” all in a bid to win your vote.
Instead of “Forward,” the president’s campaign message this time around should be, “We’ll trample your privacy rights for a vote!” But I guess that doesn’t fit on a bumper sticker very well.
Read More @ NaturalNews.com
Free Market Ecology
And
so it will continue; as society evolves and progresses, the free
market — so long as there is a free market — will naturally reallocate
resources and labour based on society’s preferences. Without a free
market — and since 2008 when the banks were bailed out and markets
became junkiefied intervention-loving zombies, it is highly dubious that
there is such a thing as a free market in the West — planners will
just end up guessing at how to allocate resources, labour and capital,
and producing monstrous misallocations of capital. The political nature
of such reallocation is irrelevant; whether the centralists call
themselves communists or socialists or environmentalists, their modus
operandi is always the same: ignore society’s true economic
preferences, and reallocate resources based on their own ideological
imperatives (often for their own enrichment). The command economies of
the 20th Century — particularly Maoist China and Soviet Russia — produced much greater pollution than
the free markets. Under a free market, polluters who damage citizens
or their property can be held to account in the market place, and
through the court system.There is no such mechanism through the kind of
command of economy that the centralists seem to wish to implement.The answer is not central planning and government control. The answer is the free market.
Jim Sinclair’s Commentary
There is only one tool that can be effective in a liquidity crisis
now and that is QE to infinity. For that reason it is coming. The longer
it takes to come the greater it must be.
Central Banks Face Power Limit as Debt Persists, BIS Says By Jennifer Ryan – Jun 24, 2012 12:30 PM GMT-0300
Central banks in developed nations are confronting the limits of their ability to aid economic recovery as government efforts to strengthen their finances fall short, the Bank for International Settlements said.
“Central banks are being cornered into prolonging monetary stimulus as governments drag their feet and adjustment is delayed,” the Basel, Switzerland-based BIS said in its annual report, published today. “Both conventionally and unconventionally accommodative monetary policies are palliatives and have their limits.”
European Central Bank President Mario Draghi has indicated that the ECB is close to exhausting its tools after cutting its benchmark rate to a record low and flooding the banking system with cash. Photographer: Hannelore Foerster/Bloomberg
While central banks’ actions were key to limiting damage from the collapse of Lehman Brothers Holdings Inc., interest rates are now “as low as they can go” and debt purchases have swollen central bank balance sheets, the BIS said. European Central Bank President Mario Draghi has indicated that the ECB is close to exhausting its tools after cutting its benchmark rate to a record low and flooding the banking system with cash.
“In the middle of all this we find the overburdened central banks, pushed to use what power they have to contain the damage,” Stephen Cecchetti, BIS economic adviser, said on a conference call. “There are very clear limits to what central banks can do. It’s critical for the health of the global economy to break the vicious cycles and reduce the pressure on central banks.”
More…
Jim Sinclair’s Commentary
Assuming this report to be accurate, Arab Spring is moving into a cold Arab Winter for the West.
Morsi wins Egypt’s presidential election
Muslim Brotherhood candidate declared the official winner with 13.2 million votes. Last Modified: 24 Jun 2012 15:44
The Muslim Brotherhood’s Mohammed Morsi has officially won Egypt’s presidential election and will be the country’s next president, the electoral commission has announced.
Morsi picked up 13.2 million votes out of just over 26 million, giving him about 51 per cent of the vote. His competitor, Ahmed Shafiq, the final prime minister under Hosni Mubarak, received 12.3 million. More than 800,000 ballots were invalidated.
Farouq Sultan, the head of the election commission, delivered a long speech before announcing the results in which he defended the body’s "independence and integrity" amidst what he called meddling by unnamed political factions.
The two candidates filed 456 complaints about the electoral process, Sultan said, most of them allegations of either forgery or Christian voters being blocked from polling stations in Upper Egypt. The vast majority of those complaints were dismissed.
Tahrir Square erupted into celebration after Morsi’s victory was announced. Tens of thousands of his supporters waved Egyptian flags and chanted "God is great" and "down with military rule."
More…
Jim Sinclair’s Commentary
It is so and there are two ways by which it might be modified for two
years. One is extending Bush tax cuts accompanied by QE now, or the
cliff is real. Regardless, only 2 years can be bought this way.
US to fall off ‘fiscal cliff’, warns Joseph Stiglitz June 23, 2012
The US economy is likely to fall over a "fiscal cliff" at the start of next year because Washington will be too divided to stop it, Joseph Stiglitz, one of the world’s leading economists, has warned
Economics Joseph Stiglitz fears tax increases and spending cuts in January risk plunging the US back into recession.
America faces a combination of tax increases and spending cuts in January which risk plunging the world’s biggest economy back into recession if they are all allowed to happen, he said.
“There are so many political battles ahead that the likelihood we avoid all of these elements that will then avoid the fiscal cliff is very problematic,” Mr Stiglitz told The Sunday Telegraph. “It’s a real danger.”
The warning comes as concerns grow that the US will embark on a fiscal squeeze that economists estimate will be between 3.5pc and 4pc of the country’s gross domestic product. By contrast, the International Monetary Fund has said that Britain’s fiscal contraction amounted to 1.7pc of GDP last year and a further 1.6pc is due this year.
“It’s unambiguously the case that these measures will slow down growth,” said Mr Stiglitz. “If there is European turmoil, there is a significant probability of going into a recession.”
More…
Jim,
The guys just got downgraded on Thursday and the downgrade means more collateral must be issued by Morgan Stanley. So what did they do? They added more derivatives to their books, jumping 49% to 2.57 trillion. A sigma 6 event coming??
Regards,
CIGA Ed
Dear Ed,
That is how you attempt to limit risk when you cannot close what you
have. You add offsetting derivatives which may or may not cover the
risk. This is why OTC derivatives have only one way to go and that is
up. Forget about tearing up contracts. You can only do that by paying
for the privilege, or on duplicated offsetting contracts.
Jim
Morgan Stanley (MS), which was downgraded two levels to Baa1 yesterday by Moody’s Investors Service, increased the percentage of the derivatives housed in its higher-rated bank subsidiary in the first quarter.
The notional amount of derivatives in Morgan Stanley Bank NA jumped 49 percent to $2.57 trillion, according to a report released today by the Office of the Comptroller of the Currency. That brought the share of Morgan Stanley’s total derivatives in the bank, which has a A3 rating after the cut, to 5.1 percent from 3.3 percent at the end of 2011.
Chief Financial Officer Ruth Porat said in April that the firm has been “slowly” moving derivatives into the bank, starting with new foreign-exchange contracts and following with interest-rate deals. The movement came as the firm faced questions about whether counterparties would halt long-dated business with Morgan Stanley after it was downgraded.
The bank is still waiting for approval from the Federal Reserve in order to transfer existing derivative contracts into the bank subsidiary, according to a person familiar with the matter, who asked not to be identified because the information isn’t public. Bank of America Corp., the second-largest U.S. lender, moved derivatives from its Merrill Lynch unit to its bank last year after its rating was cut, prompting objections from the Federal Deposit Insurance Corp., people familiar with the matter said at the time.
The increase in derivatives held in Morgan Stanley Bank was driven by a jump in over-the-counter forwards and options, which both climbed to more than 10 times the level at the end of last year, according to the OCC report.
More…
Jim,
When George Senior was running for re-election, I remember the Fed lowering interest rates a point at a time over a short period of time to help with his chances. Didn’t help! I have quit predicting election winners. However, how much time does the Fed have left if it is going to help Obama in his re-election bid? I can only imagine how tight Mr. President’s skivvies must feel every time the Fed meets and doesn’t do anything. The markets all crash and he looks impotent.
CIGA Bob the Bee Man
Dear CIGA Bob,
The Fed is out of time. The question is if the management of the Fed
is looking to deep six the present administration. No Fed in history has
ever failed to support the incumbent. I doubt this is going to be the
first time because of the cost of inaction, not because I think the Fed
is loyal to the incumbent.
Regards,
Jim
Jim
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