"You've got insolvent banks supporting insolvent sovereigns and insolvent sovereigns supporting insolvent banks." - Robert Prince, co-chief investment officer at Bridgewater Associates in a January 3rd Wall Street Journal interview.
Dear All,
On October 22, 2010 the Commodity Futures Trading Commission held a 'Roundtable Discussion' on "Individual Customer Collateral Protection." The purpose was to assist the CFTC in determining how to apply the Dodd-Frank Act in protecting customer funds. Participating were various industry experts including Edith O'Brien, treasurer at MF Global. As you will note, Ms. O'brien was quite assertive in her view of the adequacy of "the current safeguard system" in protecting customer assets.
"I think that a number of individuals from this table don't have the benefit of the extensive experience of the FCM structure, and I've heard two hours of dialogue about seg customer movements between the clearinghouses and the exchanges, and as the conversations continued, it appears that this is extraordinarily myopic view of the current safeguard structure that operates in America and has effectively worked to the best of my knowledge for years."
Ms. O'brien is now a "person of interest" in the FBI led investigation into the missing MF Global customer funds and is reportedly refusing to speak with investigators unless she is granted prosecution immunity: NYTimes: U.S. Inquiry of MF Global Gains Speed
It well deserves its market share...The press may demonize the Mafia for exploiting a shortage of capital and charging free-market interest rates but frankly it has assumed its dominance by more capably managing its capital than the nation's banks. OTB: Mafia Now The Biggest Lender In Italy On a somewhat related note, a class-action lawsuit has been filed in the U.S. under the RICO [Racketeer-Influenced Corrupt Organizations] Act against the various players in the MF Global theft. Predatory lending, extortion and other varients of organized crime -- franchises dominated in recent decades by banks, have given way to the Mafia, which conducts itself in a more straitforward and honorable manner than the sociopaths running the country's banks and governments.
The Bureau of Labor Statistics reported that 200,000 new jobs were created in December, exceeding consensus expectation of 155,000 and lifting investor optimism (at least until the release of the subsequent lousy Claims Report). John Williams of Shadowstats, apparently one of the few economists who actually reads the footnotes as well as the headlines informs: "The reported seasonally-adjusted 200,000 jobs surge in December 2011 payrolls included a false, seasonally-adjusted gain of roughly 42,000 in the "Couriers and Messengers" category."
The widely touted better-than-expected December labor report was anything but and as Williams also points out -- had the BLS used the same methadology in calculating the unemployment rate that it used prior to 1995, the bureau would have reported the December unemployment rate as 22.4%. Economists, Wall Street and the media continue to rely on bogus economic statistics.
How many Keynesians does it take to screw up an economy?...NYTimes: Inside the Fed in 2006: A Coming Crisis, and Banter Here the Fedeal Open Market Committee, the most important monetary body in the United States is revealed as a fraternity of inept and self-congratulatory sycophants. Imagine a few carloads of sauced teenagers out on a Friday night with the keys to mom and dad's vehicles. The difference is that under a worst-case scenario for the kids, they would inflict far less damage than the 12 men and women comprising the FOMC.
On December 13th CNBC's resident "commodities expert," Dennis Gartman pronounced the 11 year gold bull market over and "the beginnings of a real bear market." Exactly three weeks later on the first business day of the new year a contrite Gartman appeared on CNBC saying just the opposite and expressing a desire to re-enter the market: "It's still a long term bull market."
How's that for conviction? The reason these charlatans provide their opinions is not because their views are of any particular value but rather, because they are asked to. Mark Fisher, a genuinly savvy trader who happened to be on the program when Gartman pontificated, gently took the guru to task: “If gold’s good, it’s not going to give Dennis a chance to get back in...If the market's good it's going to force people to get in at higher and higher prices. It’s sort of like, if everyone can get in, then why bother?..Markets that are really good, stocks that are really good, positions that are really good, you get one chance.”
Groupon vs. Obamacare... Nothing undermines the goal of reducing rising health-care costs than the expansion of insurance coverage and third-party providers. Medical costs have risen broadly and rapidly in all medical specialties except two. It is not a coincidence that when the medical market is forced to price its services based strictly on the ability of its customers/patients to pay for them (as opposed to the willingness of insurance companies to do so) prices decline. In the face of escalating medical costs in virtually every specialty the prices of veterinary medicine and cosmetic surgery -- which insurance companies do not cover -- have declined. If the number of Americans lacking healthcare coverage were to increase, medical costs would drop. MailOnline: Uninsured bargain hunting Groupon for health care ...with some savings better than insurance!
Highly reccomended...
From the world's largest hedge fund: WSJ: Bridgewater Takes Grim View of 2012
Besides being the largest insider trading operation in financial history, Goldman Sachs is the most prolific pump-and-dump machine on Wall Street. Matt Taibbi's latest -- RollingStone: Goldman's Latest Boiler-Room Stock: America
The trend...
FARS: Iran, Russia Replace Dollar with National Currencies in Trade Exchanges
Central banks have accelerated their net purchasers of gold:
China's Gold Imports From Hong Kong Surge to Highest Ever
Regarding gold and silver...
Every report I read and all the anecdotal information I am able to access confirms that physical demand for gold and silver is rock solid. Complacency abounds, particularly among retail investors. MF Global is surely not an isolated case and the duration of the "investigtion" without result should be causing far more alarm than it apparently is. Retail investors are not properly assesing counterparty risk at the most basic level.
Greece is going to default one way or another. The question is what the International Swaps Dealers Association's position will be; its voting members are appointed by the very banks that are on the hook if the swaps are triggered. Europe's troubles are serving as a great temporary diversion from the U.S.' own problems. The theater however is coming here. Only gold and silver will protect you from the destruction of paper asset prices and the rampant fraud and rot in the financial system.
This is no time for complacency. Opt out of the financial system and avoid counterparty risk with physical precious metals. Load the boat on mining stocks for fabulous profits.
My best,
Jeff
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