"What makes you a man isn't the ability to conceive a child; it's having the courage to raise one." - President Obama in his State of the Union Address lowering the bar for valiance by characterizing the act of not abandoning one's child as 'courageous'.
Dear All,
Gretchen Morgenson is one of the more capable mainstream financial journalists. Unfortunately she is employed by the New York Times. An accomplished surface-scratcher, she can be relied on to stop short of laying out the uncomfortable conclusions of her rhetorical narrative, leaving that undertaking to members of the ethically unencumbered blogosphere: NYTimes: Don’t Blink, or You’ll Miss Another Bailout
Writes Morgenson --
"To anyone interested in holding banks accountable for mortgage improprieties, the Fed’s actions are bewildering."
Actually it is the reporter's addled state five years into her own reporting on the financial crisis that is the sole bewilderment. Less perplexing (but not forgivable) given the sycophantic relationship between the Times and the banking establishment, has been Ms. Morgenson's consistent omission of one of journalism's five W's throughout her reporting on the financial crisis; the motives of the U.S. central bank are alluded to but never mentioned. It must be abundantly clear to Ms. Morgenson that the Federal Reserve and the TBTF banks are now functionally a common entity operating under the pretense of individual private companies and one central bank. The perpetuation of that facade fully explain the actions which so befuddle her. It is interesting how the term 'Too big to fail banks" is recited constantly in financial media without the slightest recognition that they have already failed and that the Fed is their highly partial and benevolent receiver.
Bloomberg: Why Should Taxpayers Give Big Banks $83 Billion a Year?
"So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?"
The FDIC's vice-chairman commented on TBTF banks' corrupt off-balance sheet derivative parking, although his remarks drastically understate the reality of the debacle: Warning: Banks in the U.S. are bigger than they appear.
"Applying stricter accounting standards for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are -- or about the size of the U.S. economy -- according to data compiled by Bloomberg...U.S. accounting rules for netting derivatives allow banks to erase about $4 trillion in assets, the data show."
This has been circulating on a number of websites and with good reason. Unbeknownst to most Americans, as of January 1st the FDIC no longer insures accounts for up to $250,000. Rather, depositors are insured for a maximum of $250,000 in account aggregates across multiple institutions. From the FDIC's website:
As scheduled, the unlimited insurance coverage for noninterest-bearing transaction accounts provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act expired on December 31, 2012. Deposits held in noninterest-bearing transaction account are now aggregated with any interest-bearing deposits the owner may hold in the same ownership category, and the combined total insured up to at least $250,000.
The FDIC, it should be pointed out, has approximately $375 in assets backing every $250,000 it insures. For prudence sake, consider yourself to be an unsecured creditor of the "insured" institutions at which you deposit funds and choose those institutions carefully.
The illegal drug trade is the largest source of bank liquidity other than central banks: RollingStone: GANGSTER BANKERS: TOO BIG TO JAIL - How HSBC hooked up with drug traffickers and terrorists. And got away with it
FYI...The $995 billion Sequester Cut Is Actually a $110 Billion Spending Increase - Forbes
The trend...
U.S. gold bars and coins find new home overseas on Asian demand
Putin Turns Black Gold to Bullion as Russia Outbuys World
How gold will benefit from a currency war
Regarding gold...
The Los Angeles Times published the following on February 18th: Gold at N.Y. Fed is intact, some purer than thought, audit finds. It is a formidable work of propaganda, notable for the brazenness with which it misdirects. From the article:
"The U.S. government’s gold in New York is safe in a vault underneath Manhattan, and some of the precious metal there is purer than previously thought. That’s according to a first-ever audit conducted last year by the Treasury Department of U.S. gold on deposit at Federal Reserve banks in New York and elsewhere."
An inventory-taking and analysis by the U.S. Treasury of the contents of a U.S. Federal Reserve vault is not an independent audit -- it is an internal report. Even were it such, the resulting information is meaningless absent an audit of all Fed vaults together with the financial records with respect to the audited inventory in order to establish ownership. Again, from the Times article:
"The audit of the Fed gold came after 2012 presidential contender and former U.S. Rep. Ron Paul (R-Texas) questioned the central bank's gold holdings. While he was in Congress, Paul questioned whether the New York Fed had loaned or otherwise encumbered U.S. gold in financial arrangements, and he advanced a bill that would have required a full assay and audit of the country’s gold reserves."
The Times implies that this is the type of "audit" Ron Paul had in mind. The paper is actually correct in describing Representative Paul's concern (loaned or otherwise encumbered U.S. gold in financial arrangements) as well as what his bill would have required (a full assay and audit of the country’s gold reserves) but this Treasury charade neither addresses the former nor constitutes the latter.
"Auditors drilled tiny holes into the bars to remove samples that were tested for fineness in a process called assaying. In three of the 367 tests, the gold was more pure than Treasury records indicated, according to the Treasury's inspector general. As a result, the government notched up the value of its gold holdings by approximately 27 fine troy ounces – or about $43,500, based on gold’s market value Monday."
How impressive. Unfortunately the tiny holes were drilled into bars that for the most part belong to foreign countries. The vast majority of the gold held in the Fed's Manhattan vault is custodial, a material fact the Times chose to omit. By emphasizing the entirely irrelevant matter of the purity of gold bars the paper facilitates Treasury/Fed misdirection from its central deception; the re-hypothecation of U.S. gold reserves through loans and swaps agreements.
Although I have been unable to locate the information upon which the Times' article is based on the U.S. Treasury website, James Turk seemed to have done so and shed additional light on discrepancies between the actual information the Treasury Department provided and the Times' reporting. Draw your own conclusions as to how and why this agitprop made its way into the Los Angeles Times.
The best commentary on this week's smashdown of the Comex gold and silver prices was provided in Eric King's audio interview of whistleblower Andrew Maguire, who informs that Eastern central banks took a massive 225 tons out of the physical gold market on this takedown and in the face of which an ounce of gold commands a $24 premium in Shanghai: Andrew Maguire: The real deal on the gold and silver markets
As I have previously pointed out gold is a chess game, not checkers. The psychological warfare inflicted in this latest deluge of Comex contracts has likely shaken loose quite a number of stale and fragile longs who either do not understand the implications of the paper/physical bifurcation or are simply frustrated with the price action. As beaten-up gold and silver investors necessarily capitulate the market dynamics move closer to the record high prices that are coming. The significant anecdotal reports of worldwide silver shortages belie the paper price movements, as Andrew Maguire so well describes.
The key to confidence in the face of the Comex shenanigans is to ignore those phony prices (as well as Fed twattle about cessation of QE) while remaining highly attentive to physical demand. The dynamics of the physical market, as influenced by the trends highlighted in each posting here, tell you all you need to know as to the inevitable direction of real prices.
All the best,
Jeff