Currency Balloon Madness

Posted on January 15, 2015 by Thundering Heard

Today’s headline from GoldCore:

Market Chaos as Swiss Franc Surges 30% In 13 Minutes, Gold Rises Sharply

Historians will not look kindly on the financial titans and politicians of this period. They’ll have little trouble understanding the deceptions, but one wonders how they will account for the derangement. As some blame lead in the water for the demise of the Roman Empire, they’ll probably blame it on pharmaceuticals in our water supply, or electromagnetic pollution, or maybe, using the same data set cited here in Your daily dose of poison, they’ll blame it on a pesticide:

MIT Researcher’s New Warning: At Today’s Rate, Half Of All U.S. Children Will Be Autistic By 2025

But let’s get back to a major world currency, the Swiss Franc, rising 30% in 13 minutes. As pointed out in Currency Balloons, it is best for one’s financial health if they don’t say, “The Franc rose 30% in value in 13 minutes,” but instead say, “The Franc rose 30% in price in 13 minutes.” The concept of value has–for anyone who is not thinking clearly and carefully about it–been distorted beyond all recognition in this world where currency units are tethered to nothing real and Trillions of them can be conjured up (or lost!) with a few keystrokes.

So what happened with the Swiss Franc? Lots of Europeans, foreseeing the inevitable bankruptcy of Eurozone governments, were trading their Euros for Swiss Francs, driving up the price of the Swiss Franc relative to Euros. The Swiss central bank didn’t like this because, whenever a currency rises in price these days, the corporations in the country don’t like it because their products appear more expensive when they export them. So the Swiss central bank printed and spent hundreds of billions of Swiss Francs and sold them to buy Euros to artificially peg the price of the Franc to the price of the Euro.

But they ran into a problem. The price of the Euro has been, let’s put it nicely, diminishing, losing 16% versus the US Dollar in the last several months. So all of their Euro positions keep losing money. So despite saying just last week that they would keep pegging the Franc to the Euro, that they would print unlimited amounts of Swiss Francs to keep going, today they announced that they wouldn’t, that they were throwing in the towel. (By the way, with all currency resets, this has always been the case–they lie about their intentions right up to the last minute. You will never get an advance warning from the authorities about anything like this. You must make decisions about such things in advance on your own; or live with their decisions, which benefit them, not you.)

Such is the world of paper/electronic debt currencies these days, intimations of their inevitable demise. Very few people think through what is happening here. Why do people value money? Because they believe that they, or their descendants, can use it to acquire something real. But what does it mean when those in power (governments and banks) can conjure as much of this “money” as they see fit, Trillions at a time? All who end up with that currency believe that they can use it to acquire what is real.

But emergencies show the reality. When an earthquake or a storm hits, within hours or even minutes, store shelves are empty; what is real is gone, there’s none to be had. Then people realize that what is real is what has value: real actions, real goods, real knowledge; and that the concepts of price and currency-denominated wealth are increasingly unreliable in our money-mad world.

Saturday morning cartoons

Posted on October 18, 2014 by Thundering Heard

(But) look at these sexagenarian dogs! Their dog-teeth get sharper at every moment. The hairs drop from the fur of an old dog; (but) see these old (human) dogs clad in satin! See how their passionate desire and greed for women and gold, like the progeny of dogs, is increasing continually! Such a life as this, which is Hell’s stock-in-trade, is a shambles for the butchers (executioners) of (the Divine) Wrath; (Yet) when people say to him, “May your life be long!” he is delighted and opens his mouth in laughter.
He thinks a curse like this is a benediction: he never uncloses his (inward) eye or raises his head once (from the slumber of heedlessness). If he had seen (even as much as) a hair’s tip of the future state, he would have said to him (who wished him long life), “May thy life be like this!”
–Rumi, The Mathnawi, Book VI, circa 1270 A.D.

The cartoons at the link below should be required viewing (and understanding!) in school, especially any history or economics class. These cartoons are all from 100 years ago or more. They clearly describe the cementing into law–pending at the time– of the rigged banking, currency, and stock markets that financially enslave almost everyone on the planet to the endless hunger for humongo-profits of the few. They show that at least a some people understood the game then. Sadly, few understand the game even now. How do we get this understanding to everyone so that we can end this vicious travesty? How do we bring in the logic and compassion that clearly show the primitive and self-defeating nature of systematically-enshrined greed? Continue reading →

Finally, a Fed Whistleblower

Posted on November 12, 2013 by Thundering Heard

The claim has been made repeatedly here and elsewhere–a claim derided as conspiracy theory by the mainstream–that the US Federal Reserve has one purpose: to protect the game of the big banks. Everything else they say and do is cover for that single goal.

Thankfully, a Fed insider has offered excellent confirmation, including apologies to taxpayers for his actions. Everyone with the slightest interest in how the world actually works should read the full article by this fellow.

As background: Talk about an insider, this guy was in charge of the program through which the Fed purchased $1.2 trillion of mortgage backed securities (MBS) from the banks in 2009-2010. The Fed conjured up new electronic currency to pay for this. They call that Quantitative Easing (QE) instead of money printing because such lying does succeed in fooling most of the people most of the time.

In 2009, these MBS “assets” were called toxic assets by anyone with a fondness for truth because they were large packages of mortgages backed by sub-prime and other mortgage loans that were not being re-paid, and by residential real estate collateral that was plummeting in value. In other words, the big banks peddling and holding these assets were insolvent, bankrupt, in part because of the plunging value of their MBS. So, the Fed came to the rescue, of course, buying up toxic MBS from the big banks and paying many times the pennies-on-the-dollar actual street prices of these securities (Don’t you just love the BS terminology that pervades the financial sector?) to make the banks appear less bankrupt.

Here are some choice quotes from Andrew Huszar, a true Wall St and Federal Reserve insider:

We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street.

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time…

My part of the story began a few months later. Having been at the Fed for seven years, until early 2008, I was working on Wall Street in spring 2009 when I got an unexpected phone call. Would I come back to work on the Fed’s trading floor? The job: managing what was at the heart of QE’s bond-buying spree—a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months. Incredibly, the Fed was calling to ask if I wanted to quarterback the largest economic stimulus in U.S. history.

This was a dream job, but I hesitated. And it wasn’t just nervousness about taking on such responsibility. I had left the Fed out of frustration, having witnessed the institution deferring more and more to Wall Street…

In its almost 100-year history, the Fed had never bought one mortgage bond. Now my program was buying so many each day through active, unscripted trading that we constantly risked driving bond prices too high and crashing global confidence in key financial markets. We were working feverishly to preserve the impression that the Fed knew what it was doing.

It wasn’t long before my old doubts resurfaced. Despite the Fed’s rhetoric, my program wasn’t helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.

From the trenches, several other Fed managers also began voicing the concern that QE wasn’t working as planned. Our warnings fell on deaf ears. In the past, Fed leaders—even if they ultimately erred—would have worried obsessively about the costs versus the benefits of any major initiative. Now the only obsession seemed to be with the newest survey of financial-market expectations or the latest in-person feedback from Wall Street’s leading bankers and hedge-fund managers. Sorry, U.S. taxpayer.

Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.

You’d think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later—after a 14% drop in the U.S. stock market and renewed weakening in the banking sector—the Fed announced a new round of bond buying: QE2…

Where are we today? The Fed keeps buying roughly $85 billion in bonds a month, chronically delaying so much as a minor QE taper. Over five years, its bond purchases have come to more than $4 trillion. Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history…

And the impact? Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn’t really working.

Unless you’re Wall Street. Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets…

So the big-bank rich got very much richer. What a surprise. A perfect strategy, still in full implementation in plain site, by a Fed fulfilling its real goal. The full article is here.

The quotes above might as well be directly from those derided for years as Fed conspiracy theorists. The latest survey I saw said that 74% of US citizens favor a full audit of the Fed, which is a private bank masquerading as a quasi-government agency, owned by the big banking families of the world, and which has the concession from the US Congress to print money. (Nice concession, eh?) But those 74% will likely be ignored. 90% of US citizens were against the TARP bank bailout in 2009, but it became law anyway. The people’s wishes are meaningless when it comes to the criminal partnership between Wall St and Washington DC.

Huszar didn’t name names or produce documents, so unlike other US whistleblowers, he likely won’t be jailed or hauled into endless court proceedings. But maybe this will encourage others to speak up about the Fed, perhaps even to reveal the truly nefarious aspects of this organization and its owners. And maybe someday the politicians who take millions from Wall St will become whistleblowers and tell us what marching orders they are given when they pocket those funds. Hey, a person can imagine! There’s no law against that….Is there?

Upcoming Thefts by Big Money

Posted on June 22, 2013 by Thundering Heard

The insatiable banking/corporate/political crony network that has stolen so much from people in the past has some new schemes in store. First on the docket is the bail-in, where reckless banks with huge losses will be kept afloat not by the general base of taxpayers, but by those who have lent them money. And as mentioned in Update on Metals, Deposit Confiscation, and Capital Controls, depositors are definitely grouped into the class of those who have “lent” money to these banks. As in Cyprus, if a bank fails and the regulators decide that depositor money will be confiscated, the depositors receive some stock in the bank in exchange for their money. We’ll see later in this post just how well that is working out for people in Cyprus. But first, let’s establish that bail-ins are definitely the new thing:

It Can Happen Here: The Confiscation Scheme Planned for US and UK Depositors

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds…

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.” The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price?…

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive.

Wealthy bank depositors to suffer losses in EU law

A draft European Union law voted on Monday would shield small depositors from losing their savings in bank rescues, but customers with over 100,000 euros in savings when a bank failed could suffer losses.

Asmussen clarifies EU Parliament: savers must bleed for bank rescue

Japan to adopt ‘bail-ins,’ force bank losses on investors if needed, Nikkei says

Land Of The Rising Bail In: Deposit Confiscation Coming To Japan Next

Other countries have hopped on the bail-in bandwagon, but you get the idea.

To absolutely confirm that bail-ins are coming, the next story is about an organization called ISDA preparing for how to handle bail-ins. Why is this important? Because the following is a list of the voting members of the ISDA Determinations Committee:

Bank of America N.A.
Barclays Bank plc
BNP Paribas
Citibank, N.A.
Credit Suisse International
Deutsche Bank AG
Goldman Sachs International
JPMorgan Chase Bank, N.A.
Morgan Stanley & Co. International plc
UBS AG

That is the rogues gallery of derivatives trading on this planet. And what is this Determinations Committee determining? Who gets what on all of the derivative bets placed with respect to any bank that gets a bail-in. In other words, there will be bets that the bank will fail, bets that the bank will survive, bets on the bank’s bonds, etc. etc., and these guys are now setting the rules for who gets what after a bail-in. If these folks think it’s necessary to protect themselves relating to bail-ins, then gee, I wonder if everyone else ought to do the same?:

New CDS trigger event proposed to tackle bail-in

ISDA is consulting on a proposal to add another credit event for financial credit default swaps in order to adapt to sweeping changes in regulation that will give supervisory authorities the power to bail-in the debt of floundering institutions.

For further proof, those who are well-connected are already working to make sure that they are exempt from the torture of a bail-in:

EACH wants CCP exemption from bail-ins

Rest assured that there will be bank failures because the big ones have gone back to the methods that precipitated the financial crisis on the first place. They are again selling CDOs, one of the primary culprits in 2008:

‘Frankenstein’ CDOs twitch back to life

And they are once again granting what are called “covenant-lite” loans.

And in new depths of scum-sucking bottom-feeding, banks are so desperate for capital and profits and bonuses that they are now pursuing people upon whom they foreclosed to make up the difference between the mortgage loan amount and the price the banks were able to get for the house when they sold that house after foreclosure:

Lenders seek court actions against homeowners years after foreclosure

For Jose Santos Benavides, the ordeal of losing his home was over.

The Salvadoran immigrant had worked for years as a self-employed landscaper to make a $15,000 down payment on a four-bedroom house in Rockville. He had achieved a portion of the American dream, earning nearly six figures.

Then the economy soured, and lean paychecks turned into late mortgage payments. On Aug. 20, 2008, one year after he bought his dream home for $469,000, the bank’s threat to take his house became real via a letter in the mail. Just four days before the bank seized the property, he moved out, along with his wife and their two young children.

That wasn’t the worst of it.

In November, more than three years after the foreclosure, he was stunned to learn he still owed $115,000 — with the interest alone growing at a rate high enough to lease a luxury car.

“I’m scared, you know,” Benavides said. “I can’t pay.”

The 42-year-old is among the many homeowners being taken to court by their lenders long after their houses were taken in foreclosure. Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years.

From that Washington Post article, here is a chart that shows that, in some states of the US, the banks have 40 or more years after the foreclosure to go after former “homeowners” upon whom they foreclosed:

So the banks engaged for years in seriously questionable lending practices, packaged up mortgages they knew would fail into “securities” that they sold all over the world, created fake documents and had them robo-signed to accomplish foreclosures, and now they can hound people for decades for what the banks say are their losses on these mortgages. With interest. And attorneys fees. I wonder who created such a legal system. As Bank of America employees reported:

‘We were told to lie’ – Bank of America employees open up about foreclosure practices

Employees of Bank of America say they were encouraged to lie to customers and were even rewarded for foreclosing on homes, staffers of the financial giant claim in new court documents…

“To justify the denials, employees produced fictitious reasons, for instance saying the homeowner had not sent in the required documents, when in actuality, they had,” William Wilson, Jr., a former underwriter for the bank, wrote in his statement.

As a side note on Europe, rumor has it that the infamous EU Finance Minister Jeroen Dijsellbloem, the one who correctly stated in public that the Cyprus bank action was a template for future bank resolutions, is pressing EU officials to try to preemptively resolve the problem of insolvent EU banks via deposit confiscation. And he wants to do that soon. So far, all attempts to fix EU bank problems have been band-aids that temporarily covered over the real problems; none have come close to a real solution, and we’ll get to the reason for that below. But if you have any notion that EU banks are solvent, then read this comment about Deutsche Bank by a former US Federal Reserve Bank President:

Deutsche Bank “Is Horribly Undercapitalized… It’s Ridiculous” Says Former Fed President Hoenig

A top U.S. banking regulator called Deutsche Bank’s capital levels “horrible” and said it is the worst on a list of global banks based on one measurement of leverage ratios. “It’s horrible, I mean they’re horribly undercapitalized,” said Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig in an interview. “They have no margin of error.” Deutsche’s leverage ratio stood at 1.63 percent, according to Hoenig’s numbers, which are based on European IFRS accounting rules as of the end of 2012.

Deutsche Bank is the biggest player in the world in the risk-laden derivatives market. At last count, they had $73 trillion in derivatives outstanding, which is over twenty times the size of the German GDP, so if Deutsche Bank has a derivatives blow up, it’s unlikely that Germany or anyone else would be able to afford to make good on their losses. After all, $73 trillion is larger than the entire world GDP.

And why is it that, as stated above, there have been no attempts to really solve EU bank problems? It’s very simple: too much debt was issued to buy assets (e.g., real estate), pushing up the price of those assets to unrealistic levels. There are real losses that need to be taken, and no one wants to take the losses. All involved prefer to pretend that there are no such losses, so they use near-zero-interest bridge loans, accounting lies, and round robin I’ll-lend-your-bank-money-to-buy-your-government-debt-and-you-use-the-proceeds-to-bail-out-your-bank games to mask the truth. With non-performing loans at EU banks at record highs and growing by the day, good luck with that.

But here is the problem with bail-ins, the latest and great “fix” for the financial system: so far, they don’t work. Let’s look at the infamous Cyprus case: they stole a lot of deposits and in return, gave people stock in the bank. But few want to keep their money in that bank anymore. Even with strong limits on daily withdrawals from the Cyprus banks, people are persistently removing their money from those banks:

Cyprus Bank Deposits Plunge By Most Ever During “Capital Controls” Month

Here’s what the trend of withdrawals from the Cyprus banks look like:

That’s more than $6 billion being withdrawn in April, after the March bail-in. So that bank stock that people received in return for their “expropriated” deposits? Must be worth a fortune. If people still received stock certificates as a matter of course, at least these could be framed as memorabilia, yet another testament to the financial follies of humanity. But it’s all just electronic entries these days. Switch a few bits and bytes and then who owns what?

And the whole Cyprus action is breaking down anyway:

The Cyprus Bail-In Blows Up: President Urges Complete Bailout Overhaul

Cyprus’ President Nicos Anastasiades has realized (as we warned), too late it seems for the thousands of domestic and foreign depositors who were sacrificed at the alter of monetary union, that the TROIKA’s terms are “too onerous.” Anastasiades has asked EU lenders to unwind the complex restructuring and partial merger of its two largest banks…

Not that the bail-outs actually worked either. Despite the fact that the EU leaders touted each of the first three Greek bailouts as the final fix, Greece now needs a fourth:

Greece Has One Month To Plug A €1.2 Billion Healthcare Budget Hole

Think Cyprus is the only country that will need a repeat bailout (as the FT reported earlier)? Think again. Cause heeeeere’s Greece… again…. where as Kathimerini reports, a brand new, massive budget hole for €1.2 billion has just been “discovered.

And here’s another nice theft tactic. Well, nice if you are the bank. The Bank of Ireland just doubled the interest rate on existing floating rate mortgages where the fine print allowed them to do so:

Bank Of Ireland Doubles Mortgage Rates, Homeowners Fear More To Come

And expect to hear a good deal more about wealth taxes in the coming months:

German ‘Wise Men’ push for wealth seizure

Professors Lars Feld and Peter Bofinger said states in trouble must pay more for their own salvation, arguing that there is enough wealth in homes and private assets across the Mediterranean to cover bail-out costs. “The rich must give up part of their wealth over the next ten years,” said Prof Bofinger.

And last but not least, you know all that money sitting in retirements accounts? Multiple countries have nationalized such accounts in recent years. People like former Republican Administration insider Catherine Austin Fitts have been warning people that US politicians salivate when they contemplate getting their hands on that pool of $18 trillion.

OK, just three final (brief!) comments:

1. You’ve heard the old saying about someone who “wants your money in their pocket.” The problem here is most people’s money is already stored in “their pocket,” that is, it’s already being held by the institutions that want to grab it.

2. That thing about the banks going after people for more money after they have already foreclosed on them? Too bad we don’t have a Charles Dickens around to dramatize this type of behavior, maybe then people would get the depth of depravity in this system.

3. Tread carefully out there, folks, it looks like acceleration spares nothing, so I think you want to be real careful about “wait and see.” You know my view: banks are for transaction accounts, not savings.

Next time we’ll cover another big pile of electronic money, brokerage accounts.

A Forecast for the Next Eleven Years

Posted on June 4, 2013 by Thundering Heard

Today we’ll review one of the single best pieces of economic / political / social analysis I’ve been lucky enough to see. Read this post and you’ll have an extremely important input for how the world will proceed over the next eleven years. How can I make such a statement? Because this analysis landed on my screen in December, 2007, and it covered the time period from 1995 through 2024, and it has been working extremely well. I promised more about cycles. This is from the world of cycles.

Understand this analysis and you will understand what Ben Bernanke of the US Federal Reserve has publicly admitted has been befuddling him and his colleagues.

At the time of publication at the end of 2007, this analysis said that we had reached a major turning point: That while the period from 1995 through 2007 had been characterized by optimism (think of all the “new era” talk), manias (think bubbles in stocks and real estate), high confidence, free enterprise, free trade, globalization, unfettered capitalism, and so forth–all of which had clearly been at the forefront during that period–that the period from 2008 through 2024 would be characterized by caution, fear, contraction, pessimism, restrictions on freedom, economies planned by the state, trade barriers, low confidence, and so forth. Here is part of what was presented:

To put it mildly, an awful lot of people would have benefited if they had known about this huge switch that did occur, just as predicted, in January 2008. It really was as if, at the end of 2007, someone threw a big switch and changed things dramatically. Central bankers and politicians around the world are still scratching their collective balding heads about why all of the things they used to do in the past, things that would work to stimulate economies, are barely working today. At first they used their old tried-and-true methods–lowering interest rates, feigning confidence, stuffing cash into the banks, spending money on stimulus plans–and they got an anemic recovery at best. So they pulled out the really big guns. “Unconventional” methods, as they call them. Also known collectively as printing money. Lots of it. Enough since 2009 that they have basically tried to add the equivalent of one year of the US economy to the global economy.

What has it got them? Well, since the printed money went into buying assets rather than creating jobs, the rich and their vendors–Sotheby’s, Porsche, Armani, et al–have done very well. Everyone else, not so well. The huge divide between rich and poor is widening at an accelerating pace. Historically, that has always been a dangerous setup. You can only push people so far before they push back. Sometimes fiercely. Overall, what it got them was continuing recession and debt crises in Europe, a US economy with paltry growth at best, and China joined the club of getting themselves over-indebted to keep their economy growing, but now that excess of debt is coming back to bite them and their economy is rapidly losing steam. Japan remains in near-continuous recession no matter what they do.

Since the analysis above has been working remarkably well for 18 years, it makes a whole lot of sense to figure that it will keep working for the next eleven years. That was the claim for this cycle, that it would have two phases, one from 1995 through 2007, and the second, radically different in tone, from 2008 through 2024.

What could be the cause, the source, of such an influential cycle, one that seems to have changed the energetic tone for the majority of people, from excessive optimism from 1995–2007, to caution from 2008–2024? Let’s show more about what the top of that table looked like when presented in December 2007, right at the point of the big switch:

The table was astrological in nature. It showed what was about to happen as Pluto moved from Sagittarius into Capricorn.

This outstanding piece of analysis was put forth by Manfred Zimmel through his web site in his Forecast Issue for the year 2008. At the web site, you can sign up for his free newsletter or paid subscription service. The information above was given to his paid subscribers only.

Now I know that some readers here have a low opinion of astrology. I would say two things about that: First, I agree that popular astrology as shown in daily newspapers and glossy magazines is worse than useless. Second, as with most complex fields of endeavor, there is a small group of practitioners doing excellent work and a much larger group of practitioners who do not. But excluding astrology from one’s view of the world precludes access to information like the above, which can be exceptionally useful in guiding real world decisions. Also, it can provide an outstanding “truth filter” for claims about the world. For example, the article at this link contains five predictions Bernanke made in 2008 that, armed with the information above, one could see at the time that these were more than likely to be wrong. They turned out to be, in fact, entirely wrong:

1/10/08 — The Federal Reserve is not currently forecasting a recession. WRONG

2/27/08 — I expect there will be some failures [among smaller regional banks]… Among the largest banks, the capital ratios remain good and I don’t anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system. WRONG

4/2/08 — In separate comments, Mr. Bernanke went further than he had in the past, suggesting that the Fed would remain aggressive and vigilant to prevent a repetition of a collapse like that of Bear Stearns, though he said he saw no such problems on the horizon. WRONG

6/10/08 — The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so. WRONG

7/16/08 — [Fannie Mae and Freddie Mac are] adequately capitalized. They are in no danger of failing… [However,] the weakness in market confidence is having real effects as their stock prices fall, and it’s difficult for them to raise capital. WRONG, they needed bailouts to the tune of $160 billion.

The point here is that automatically excluding information because of its source can put a person at a distinct disadvantage in understanding how the world works and where it is heading. Anyone who has read more than a couple of my posts knows that I regularly give the US Federal Reserve a well-deserved lambasting for its lies, its attempts to get over-indebted people to borrow and spend more, and its only real goal: protecting the stranglehold that the large banks have on our society. But I used one of their reports in 2005 to decide when to sell out of real estate. They published a great research paper in 2005 that analyzed the history of maybe 30 real estate booms and busts from many countries. They said that real estate bubbles popped in the following manner: once sales volume peaked, price peaked, on average, six months later. US sales volume peaked in October 2005, and the US price peak was in June 2006, so their estimate was quite good. I took their research seriously and sold in Feb 2006. They, however, did not take their own research very seriously, at least in their public statements. Here are some quotes from Bernanke in 2007 (I won’t bother putting the WRONG label after each.):

7/1/2005, CNBC interview:

INTERVIEWER: Tell me, what is the worst-case scenario? We have so many economists coming on our air saying ‘Oh, this is a bubble, and it’s going to burst, and this is going to be a real issue for the economy.’ Some say it could even cause a recession at some point. What is the worst-case scenario if in fact we were to see prices come down substantially across the country?

BERNANKE: Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So, what I think is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.

10/20/05: BERNANKE: House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals. (Ha!)

So, acting on the Fed’s research can be very helpful. Acting on their opinions and forecasts is a mistake. They aren’t trying to help you, they are trying to help the banks. Anyone who understands that distinction can put Fed forecasts in the proper perspective.

So the next time you hear rosy predictions about the great recovery that is turning out to be perennially “just around the corner,” whether those predictions are from someone who is mistaken or someone with malevolent intent, now you can understand that what these forecasters are up against is this: for an economy based on debt to grow, they need to get people to borrow more money. And until 2024, people are under the influence of Pluto in Capricorn, and most of them don’t really want to take on more debt. Quite the contrary, a lot of them have replaced the notion of “how much debt can I qualify for” with a wish to have less debt. Many have now seen the slavery of debt and they didn’t like what they saw.

Perhaps after 2024 the economists will be able to stimulate the majority’s “animal spirits” again. The question is: can this financial system, which depends on the constant growth of debt, survive through 2024 with people not wanting more and more debt? I decided quite some time ago that the answer is no and persistently take those pleasant actions that ready a person for financial system collapse. I take the influence of this Pluto “big switch” as a small but important part of the energetic change bringing us the long-awaited Transition.

Thanks to Manfred Zimmel for permission to reprint this excellent piece of research.

Update on Metals, Deposit Confiscation, and Capital Controls

Posted on April 21, 2013 by Thundering Heard

…one goal is to get to the point where all market participants understand with certainty that if a large SIFI (systemically important financial institution) were to fail, the losses would fall on its shareholders and creditors…
–Governor Jeremy C. Stein, US Federal Reserve Board, Regulating Large Financial Institutions, speech at a conference sponsored by the International Monetary Fund, April 17, 2013

* * *

“Bank creditors,” as it happens, is a class of people that includes bank depositors. Everything about the rhetoric of banking is designed to obscure this. You deposit money in your bank account…But what you’ve really done is loaned the money to the bank…
—Slate.com

A big price drop in the precious metals. So let’s see, on Thursday, April 11:

CEOs of biggest U.S. banks to meet with Obama on Thursday

and the big selling in metals took place on Friday, April 12 and Monday, April 15. No chance of any causation in that correlation. Nah. Move along. As Leslie Nielsen said, “Nothing to see here.”

Anyway, with all that selling, there must be lots of inventory of coins around. That’s what they teach in Econ 101, right? That if a price is plunging, it’s because people are dumping large quantities of that item onto the market.

But there isn’t lots of inventory. Inventory is very tight, sold out in many cases. Delivery lead times are out to five or six weeks, and that’s if you can even place an order for what you want. Big-volume dealers like Tulving.com are entirely out of one-ounce silver coins minted by any country, and they have been since April 15. You can scroll down this page at their web site to see how many items they normally sell are currently sold out.

And these people make a living buying and selling lots of coins. They really want to do a lot of business. And they are happy to buy right now, but they can’t sell lots of items because there aren’t any available.

This scramble to buy physical bullion coins is going on worldwide.

In Australia:

Golden times for Perth Mint

The volume of business that we’re putting through is way in excess of double what we did last week,” Treasurer Nigel Moffatt said, without giving precise figures. “There’s been people running through the gate.”

In Japan:

As global price slumps, “Abenomics” risks drive Japan gold bugs

But on Tuesday, buyers outnumbered sellers by a wide margin. At Ginza Tanaka, the headquarters shop of Tanaka Holdings, gold buyers waited for as long as three hours for a chance to complete a transaction.

In India:

India’s Response To The Gold Sell Off: A Massive Buying Frenzy

In China:

Chinese Gold & Silver Exchange Society Runs Out of Gold…Importing from Switzerland and London

Now we discover that the Chinese Gold & Silver Exchange Society has essentially sold out of gold bullion, and must wait until Wednesday for shipments to arrive from Switzerland and London.

Gold Buying Frenzy Continues: China, Japan, And Australia Scramble For Physical

In the US:

US Mint Sells Record 63,500 Ounces Of Gold In One Day

According to today’s data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone.

Bullion Shortages Develop As Retail Demand Skyrockets

…on Monday there was such chaos in the markets that some of the larger wholesale dealers had to shut down at various times because of the massive demand on the buy side… Gold and silver buyers are still outpacing sellers by a stunning 50 to 1. There were premium increases on everything bullion related. The wholesalers are now telling us four to six weeks on silver maple leafs, and wholesalers quit taking orders on one ounce silver rounds.

In Canada and Europe:

Massive Run On Physical Gold & Silver At UBS & Scotiabank

At the Bank of Nova Scotia in Toronto the gold window has been absolutely swamped. I have confirmed there were people lined up in droves recently for multiple-hours at a time to buy gold and silver bars and coins….

“I then confirmed with UBS today in Zurich, Switzerland, that they are experiencing exactly the same thing. They told me people are waiting in long lines for bullion related bars and coins. The physical market is incredibly tight…

In Switzerland:

Refiners Can’t Keep Up With Massive Global Gold Demand

If you look at our company, as just one example, we did not have one single seller in the last few weeks.

So during this takedown in gold and silver there wasn’t one single seller, only buyers….

If we turn to the Swiss refiners, Eric, the premium over spot for physical gold is rocketing. Swiss refiners are unable to keep up with the demand for immediate delivery. They are working flat out, including the weekend, and still can’t keep up.

The Swiss refiners are seeing global demand coming in from everywhere, especially from the Middle-East and the Far-East. So, again, this proves that the artificial manipulation of paper gold has nothing to do with the physical market.
–Egon von Greyerz, Matterhorn Asset Management

So, with all that buying interest in real physical gold and silver, why has the price been falling? Because the two largest trading venues on the planet for metals, the LBMA (London Bullion Market Assoc.) and the COMEX in the US, are the places where the price of gold is currently set. And 99% or more of the trades there that are said to be related to gold are not for the physical metal, they are futures contracts that are traded for cash, not physical gold. In other words, these are very large trading casinos. But like the banks, they are fractional reserve systems. In other words, if everyone who had a futures contract for gold actually wanted physical gold for their contract, there would not be anywhere near enough gold to go around. Even supporters of the LBMA admit there is maybe 1% physical gold backing all these contracts. So that’s even more leverage than is used at most banks. A lot more.

Monday, April 15 was a good example. Andrew Maguire–an LBMA trader and whistleblower who the Powers That Be ran down, but did not kill, with a car in 2011 right after Andrew gave testimony on silver price manipulation to the authorities—reported that on Monday, there was a period during which 155 tons of gold was sold on the LBMA in one hour. I can tell you for sure that no one who owned or was the custodian for 155 tons of physical gold would sell it in a panic into a falling market. This was selling of futures contracts that will be settled in cash. They have little or nothing to do with physical gold. People in charge of 155 tons of real gold do not sell in a panic. If they wanted to sell—and such a thing would be quite unusual these days when even central banks are net buyers of physical gold—they would do so carefully, trying to get the best price. They would sell on days when the price was rising, not falling. This is the way anyone with a strong profit motive sells, they hire good traders to sell over time when they can get the best price. They do not panic dump their holdings regardless of price.

In fact, Maguire reports that central banks picked up 55 tons of physical gold during that one hour period when 155 tons worth of paper gold contracts were sold.

Here are Maguire’s comments about Monday, April 15.

At some point, this charade will fall apart. The price of physical gold will separate from the price quoted in these paper instruments. This is already visible when one needs to buy coins at a premium above the spot price of the metal. During these smashdown selloffs (we’ve seen these before in 2006 and 2008), the premium above the quoted spot price for physical gold and silver rises, sometimes to as much as 50% above the spot price if you want prompt delivery. During those periods, the price for physical coins is not the quoted spot price, it is the spot price plus the premium, and that price can be substantially higher. These are the indications of the separation of the paper and physical gold and silver prices to come.

The press duly reported nearly the same quote from representatives of all of the banks. Yes, reps from those same banks that met with Obama on April 11. “Gold has lost its safe haven status. “ “Gold is no safe haven.” And on and on. They should have dressed them up in silly costumes and they could have danced and sang together, at least that would have been entertaining.

So why do they want to scare you out of, or away from, gold and silver? Two main reasons:

First, so that you cough up your goods so they can buy them on the cheap.

Second, when they go to “Cyprus” your accounts, that is, when they want to confiscate some of your money, they want it easily available with a few keystrokes. Confiscating gold and silver coins would be inconvenient at best, dangerous at worst.

Do you think “they’ll never do that here”? Here is the overall order of events in Cyprus:

1. On Feb 10, the Financial Times published the plan for the confiscation of depositor money in Cyprus called Radical rescue proposed for Cyprus.

2. On Feb 11, the Central Bank of Cyprus posted a letter shown at this link saying that the Financial Times article was incorrect, that confiscating depositor money was against the constitution, etc.

3. In mid-March, the confiscation of depositor money was announced.

4. The Cyprus parliament voted against it.

5. The central bank of the EU overruled the Parliament of Cyprus and went ahead with the confiscation. So democracy and the constitution were thrown out the window along with the promises.

On the day after the confiscation, the new head of the EU finance ministers, Jeroen Dijsellbloem, gave not one, but two interviews in the mainstream press in which he said the Cyprus bank resolution was a new template for such actions. From Reuters:

A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, the head of the region’s finance ministers said.

The rest of the EU and IMF politicians nearly had a baby on the public stage. For the next three weeks, all they would say was that Cyprus was not a template. We should have put them in a chorus line too. Even Dijsellbloem tweeted that he didn’t say what he said.

But then a member of the US Federal Reserve Board, Governor Jeremy C. Stein, said that if a Too Big to Fail bank failed, that private investors and creditors would have to bear the losses. His speech was on April 17, well after the Cyprus event wherein depositors were ruled as “creditors” of the bank. These people choose their words carefully. I hope everyone out there listens to them carefully.

And it’s worth remembering this: In the US, for example, the bank insurance fund held by the FDIC has $25 billion. That’s the amount insuring $9 trillion worth of deposits. So that’s 370 times more deposits than the amount in the insurance fund. And the insured banks have an additional $297 trillion in exposure to derivatives. So that’s almost 12,000 times more than the amount in the insurance fund. Very safe and sound, eh? Now you know why the authorities have just hinted that banks won’t be simply bailed out anymore; people’s deposits will be bailed in. Just remember, they’ve put you on notice now that you need to determine whether or not your bank is safe. People who spend their whole lives trying to do that can’t figure out which banks are truly safe anymore, but so what, you are now supposed to be able to do that. You can see a chart of the FDIC situation here. And you can find out a little about the safety of any US bank at the Safe and Sound section here. I am not aware of what is available publicly available for bank analysis in other countries.

Also part of the Cyprus event were strong restrictions on how much money a person could take out of Cyprus, the dreaded capital controls. This is also part of the template. When that happens, people are stuck in their own currency even if it tumbles mercilessly in value. When people tried to switch their money into the electronic currency Bitcoins because it recognizes no borders, it doubled the price of Bitcoins in a few weeks. TPTB then smashed down the price of Bitcoins as well, to show people that there is “no safe haven.”

Throughout history, currency devaluations, capital controls, and asset confiscations are denied until after they have happened. Governments typically say, “Sorry, we didn’t want to do that, but we had no choice.” You need to either anticipate them or be a connected government crony. Here’s a chart of monthly deposits into and withdrawals from the Cypriot banking system. The large withdrawals in January and February show the strong likelihood that some people were given advance notice:

Most people were not given advance notice; if the time comes, you and I will be in that group.

Lots of people are showing that they understand. As the stories above show, people were waiting in line for metals at these prices across the globe. We have seen this play before. Sometimes the elites smash down the prices of metals. Did I see it coming? Nope. Can they do it again? Yep. But as the rising price of gold over the last 12 years proves, they can’t push it down too far. If they do, the Asians and regular people will end up owning all of the gold. And the banksters won’t like that at all since they know the financial (per)version of the golden rule: he who has the gold makes the rules.

Lots of regular people on the planet take these price smashes as a gift. I think these people are smart.

Here is Jim Sinclair’s latest comment on the topic: The US Will Be Cyprused & We Will See $50,000 Gold.

And the recently-released video The Secret World of Gold, while not perfect, has Andrew Maguire briefly explaining how gold and silver prices are manipulated, and brings up the interesting question of whether there is any real gold (and not just gold-plated tungsten bars) at the US gold depository at Ft Knox. Channeled information agrees that Ft Knox is empty of real gold. It will be a very interesting day when the world finds out about that.

What is the Transition? Part 6

Posted on March 11, 2013 by Thundering Heard

You know that thing about time accelerating? As of today, nearly one-fifth of 2013 is in the past!

The Age of Truth

If truth does set us free, then far greater freedom is on the way due to the accelerating emergence of truth. The controllers of the major systems on our planet react to both, that is, they react to the emerging truth by repeated attempts to squelch free expression on the internet and on the streets, and by well-funded propaganda and disinformation campaigns; and they combat emerging freedom by surveillance cameras (1.6 million in the UK alone!), repudiation of laws that protect individual freedom, complete tracking of people’s electronic activities, drone surveillance, and so forth. All under the rubrics of national security, public safety, copyright protection, and so forth. In the US, it appears that this is likely to get worse:

CIA Head Sworn In On Draft Constitution WITHOUT Bill of Rights

One problem with a discussion of the emergence of truth: On this planet, at this time, when the light of truth shines, it reveals a lot of lies. Many have come to see lies as standard operating procedure, so lies are accelerating in their frequency and boldness. This is a problem for two reasons: lies generally have consequences, victims, that is, they often do damage; and much that goes on in our world is based on trust, for example, when you buy something, you trust that it will work as advertised, and the vendor who sells it to you trusts that your form of payment has value. What is the general consequence of an increasing breakdown in trust resulting from increased lying?

Some lies are easy—once they are exposed. Horsemeat being sold as beef all over Europe comes to mind. Though this fish thing will be tougher to sort out:

New Study Shows 59% of “Tuna” Sold in the U.S. Isn’t Tuna

Other lies are more tricky because either there is a powerful constituency that supports the lie, or most people want it to be true even if it isn’t, or both. That is the category of lie described in the first major post on this site, The financial system is based on twelve promises that are lies, which described the lies at the foundation of what is called our financial system; and how the recognition of just one of those lies—the lie that real estate prices always goes up—came within hours of dissolving the world’s current financial system.

Governments lie so often now that more and more people assume that anything the government bothers to comment about in public is a lie. It would help their case if they weren’t so obvious, though sometimes one has to do at least the amount of digging that would be required on a standard reading comprehension test to uncover them.

There is a great example of a “policy lie,” and likely the often-associated “lying to keep one’s job,” at this link. It’s of interest here because we used the government’s own database to show the truth of this topic in Part 1. The post reports on a US Geological Survey study that says more people will die from earthquakes during this century than the last. But it is known from repeated examples that it is USGS policy to say that earthquakes are not increasing. So the article dutifully states that it isn’t because earthquakes are increasing that more people will die, but rather because of increasing population density in seismically vulnerable buildings. But the article blows its own policy case. They state that there were seven catastrophic earthquakes in the Twentieth Century, so that’s one every fourteen years. And then they state, and I quote: “Four catastrophic earthquakes have already struck since the beginning of the 21st century.” So that’s one every three years! So the “population density in vulnerable buildings” took a threefold leap right around the year 2000?! Nice try. This is science by policy–and keeping one’s salary or grant money flowing–rather than science by data. Such “science” is unfortunately all too common in our world.

So why does the USGS have a policy that can be easily shown to be a lie using their own database? For one, I’m sure they are correct in thinking that most people are not going to actually go look at the data, so they can say what they want about it and most people will believe it: “It’s from the government. It’s from a scientist. It must be true. What’s on TV?” For another, governments seem to think that keeping people calm is a high priority. Perhaps they correctly believe that they get to stay in power longer when the people are calm. But as each of their lies is uncovered, what they derided as “conspiracy theory” becomes conspiracy fact and they have an accelerating loss of credibility.

The same applies to billionaires. If you see or hear about them saying an investment is bad or good, assume that they are talking their book. In other words, if they say in public that some investment is fabulous, it means that they own a boatload of it and now want to get rid of it, selling it to anyone who will listen. And if they deride an investment, they are trying to knock down its price so they can buy more of it cheaper. George Soros was caught doing this with respect to gold twice in just over a year. Twice he made somewhat nebulous but definitely negative public comments about gold. In both cases, in the quarter following his comment, his hedge fund strongly increased their position in gold as its dollar price fell. These purchases are only revealed well after the fact, so they can’t be uncovered in real time. But if a billionaire bothers to hit the airwaves with investment commentary, assume that they are talking their book. One exception to this idea is Jim Rogers, but he is unusual.

Over the last six weeks, we found out more about the world’s Too Big to Jail treatment of banker crime. In the US, first the Assistant Attorney General said right on TV that he didn’t prosecute the big banks because he worried about the economic fallout:

Assistant Attorney General Admits On TV That In The US Justice Does Not Apply To The Banks

And then the Attorney General himself, Eric “Place” Holder, admitted the same in testimony before the US Congress:

Eric Holder: Some Banks Are So Large That It Is Difficult For Us To Prosecute Them

Holder: But I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large.

So, big money gets a free pass from what is supposed to be the Department of Justice.

There are entire industries that live by lies:

The tobacco industry is famous for it.

The nuclear power industry, creators of vast quantities of waste that will be deadly toxic for thousands of years, has in recent years been trying to characterize itself as “green”! And there were people who are supposedly environmentalists who fell for it. It took the catastrophe at Fukushima to take at least some of the wind out of their sails.

And the oil industry is a barrel of laughs along these lines. Let’s take the case of alcohol fuel, aka ethanol. Everyone in the US now “knows”–because it was covered this way by both the liberal and the conservative press, so people think it must be true—that it takes more energy to produce ethanol than one can get from the end product. And it drives up the price of food for everyone. And it wrecks engines. So ethanol is bad.

Would it surprise you to find out that all of that “information” is vigorously and continuously disseminated by the American Petroleum Institute in a well-financed campaign to malign ethanol? That it is based on a series of studies by a single person, Cornell Professor David Pimentel (more “science”!) who is the only investigator who claims that ethanol has a negative return on energy invested and whose faulty calculations are strongly at odds with other investigators? That Brazil’s conversion from gasoline to ethanol turned the country from a struggling importer of expensive energy to a net exporter of same? That the oiligarchy regime of Bush and Cheney implemented the ethanol program in a way that was sure to make ethanol look bad? That Henry Ford wanted all cars and trucks to be powered by ethanol, not gasoline, but that a ruthless campaign by John D. Rockefeller made that impossible? Including the fact that Rockefeller funded groups who created Prohibition of alcohol as a drink in the US not because he was against people drinking alcohol but because he wanted to bankrupt the major alcohol distillers in the US (he succeeded) so he could supply oil as the transport fuel of choice? That there are farmers across the globe who distill their own ethanol on their farm and successfully run all of their machinery with it? That alcohol is clean-burning, creating no particulate pollution? So again now, what is it that we “know” about ethanol and how inferior it is to petroleum fuel? Have the engines in all of the cars in Brazil been destroyed because they are burning ethanol? It turns out that, using permaculture, it is possible to become energy independent without driving up the cost of food for anyone. In the late 1970s, PBS funded a nine-part series by David Blume on precisely how to do that. They broadcast the first two episodes. All of their oil company donors said that if they continued airing the series, those oil companies would pull all funding forever. PBS folded under the pressure, even to the point of destroying all copies of the tapes, none of which exist today.

In real estate, it’s always a good time to buy. (I was planning to do a post with that as the title, but I don’t have to, Jim Quinn of the Burning Platform did that, and he did an outstanding job):

IT’S ALWAYS THE BEST TIME TO BUY

If prices are rising, it is claimed that they will always rise forever. If prices are falling, then they said to be a great bargain. Some blogs refuse to report the exaggerations that are alleged to be statistical reports from the US National Association of Realtors. At the end of every year, the NAR quietly revises the data it reported for the past year. For several years running, they have “adjusted” the number of existing home sales down by around 800,000 per year. So they report big, increasing, “better than expected” numbers all year, only to quietly admit the truth after each year is done. (The use of “better than expected” when reporting dismal statistics in news headlines deserves a post of its own, but let’s agree to pass on that.) You’ve probably all seen the monthly headlines generated by the NAR. But have you ever seen a headline about the NAR annual revisions? Certainly not in the mainstream media.

When you see some headline like “Highest New Home Sales in Three Years,” just remember this next chart. Yes, the highest level in three years. But this is a market trying to lift its face out of the mud:

Here is Jim Quinn’s comment on that chart:

The media, NAHB, and certain bloggers look at this chart and declare that new home sales are up 20% from 2011 levels. Sounds awesome. I look at this chart and note that 2011 was the lowest number of new home sales in U.S. history. I look at this chart and note that new home sales are 75% below the peak in 2005. I look at this chart and note that new home sales are lower today than at the bottom of every recession over the last fifty years. I look at this chart and note that new home sales are lower today than they were in 1963, when the population of the United States was a mere 189 million, 40% less than today’s population. Do you see any signs of a strong housing recovery in this chart?

OK, when one includes existing homes sales, the picture is a little better, here’s the chart of mortgage applications for purchase of a home in the US:

So that’s back to 1997 levels. But Jim Quinn correctly notes this:

JP Morgan, Blackrock, Citi, Bank of America, and dozens of other private equity firms have partnered with Fannie Mae and Freddie Mac, using free money provided by Ben Bernanke, to create investment funds to buy up millions of distressed properties and convert them into rental properties, further reducing the inventory of homes for sale and driving prices higher. Only the connected crony capitalists on Wall Street are getting a piece of this action.

So what just happened? Through a well-orchestrated bubble followed by a continuing foreclosure fest, shown here:

residential real estate ownership in the US is being transferred from Main St to Wall St., facilitated by free money from the US Federal Reserve. Here’s the ownership percentage of regular people in the housing stock in the US:

So that number has dropped from 80% to 43%. How does that trend look to you? Do you think all of this government real estate assistance, said to be for the benefit of regular people, is for regular people or for Wall St? And this is the system that most people hope remains intact.

And speaking of free money from the Federal Reserve, and indeed, all central banks, the next time you see meek and mild Ben Bernanke on TV telling you he’s doing it all for you, remember who gets free money from him and who does not. The big banks get free money. You and I do not. But, if you are a citizen of the US, you might think, well at least he’s giving money to American banks. But that’s less than half true. Much of Ben’s “quantitative easing” (i.e., the fashionable cover term for money printing) has gone directly into the coffers of European banks via their American branches. Why? The US Federal Reserve is a private corporation among whose major shareholders are large European banking families. And the European banks have a lot of bad loans and their depositors are wising up and withdrawing their deposits:

Euro-Land Banks In Trouble

A recent study by Ernst & Young has revealed that euro-land banks in the aggregate now hold € 918 billion (US $1.23 trillion) in non-performing loans…

Of course we’ve all heard from the European politicians that everything has been fixed in Europe, though even a cursory look shows that to be a lie.

So Ben Bernanke is printing up US Dollars to bail out European banks. He testified to Congress in 2011 that he was not and would not bail out European banks. But those who track the Fed’s money printing have demonstrated that what was called QE2 (Quantitative Easing 2) did not show up on the balance sheet of US banks, it showed up on the balance sheets of the American branches of large European banks, and this has continued. The benefit to the European banks is shown here in green, correlated with the amount of money printing the Fed has done shown as the black line:

That chart is from:

Fed Injects Record $100 Billion Cash Into Foreign Banks Operating In The US In Past Week

And speaking of lying, there is a law against what the Federal Reserve is doing. The law says the Fed can’t buy Treasury Bonds directly from the US Treasury. There’s a reason for this: when the Fed prints up new money to buy US Treasury bonds, which is the borrowing of the Government of the US, it’s called “monetizing the debt,” a clear Ponzi scheme where one hand borrows and the other hand prints to enable the borrowing. There’s a law against this because many countries have gone down the tubes once they traveled that road of money printing. Their currency value ultimately went to zero. So what does the Fed do to circumvent the law? They have one of the big NY banks buy the Bonds from the Treasury and then they buy the Bonds from the big NY bank three days later. So the Fed circumvents the law and NY banks get nice commissions and the US Congress gets more free money. And your income and savings are worth less and less.

Fed Buys Back 30 Year Bond Auctioned Off Last Thursday

And the politicians and economists who support money printing claim they are Keynesians, that is, that they follow the principles of economist John Maynard Keynes. But they cherry-pick Keynes work, only using that which supports what they want to do anyway, ignoring the rest. Here is a quote from Keynes:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. … Those to whom the system brings windfalls… become “profiteers” who are the object of the hatred…. the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Does that sound like someone who thought money printing was a good idea? Clearly, politicians think all this underhanded dealing is justified:

Berlusconi: “Bribes Are Necessary – They Are Not Crimes”

This section could go on for days, but let’s stop, though I would like to mention that I think it is advisable that people give consideration to those things derided by powermongers and their minions in the press as “conspiracy theory.” Many things that the mainstream attempted to relegate to this scrap heap have turned out to be true (here’s a link to an account of 33 of them).

Just one example: Many supposed conspiracies are rejected under the heading that too many people would have to know about it and that this large number of people could never keep it secret. This whole rejection methodology was blown out of the water with the LIBOR scandal where at least dozens of traders at several major banks conspired over decades to manipulate the interest rates on which trillions of dollars of contracts are based. Testimony has been given in the US and the UK that people told the central banks of their respective countries about this manipulation as early as 2008 and the central banks did worse than nothing: The Bank of England is said to have encouraged the practice. Clearly the profit motive was enough to keep this conspiracy operating and quiet for decades. So when you hear that price fixing takes place, with or without government collusion, in fossil fuels, pharmaceuticals, stocks markets, precious metals markets, and so forth, it actually appears to be irrational now to think that price fixing is not taking place. When there is big money to be made, there is big price manipulation in play. All this stuff about “free markets” is a thick, giant smokescreen designed by to increase the power of those who already have it but who crave even more.

However, between insider whistleblowers and great investigative researchers (typically outside the mainstream media that is primarily a compliant tool of those in power), using internet communication as a conduit, discovery and dissemination of truth is clearly on a meteoric rise.

This trend is strongly supported, in my view, by the accelerating increase in the number of people who recognize that individual inner work is beneficial and necessary. People who do the work to identify and become independent of lies they once blindly accepted as true, who continue working to understand the ways in which they fall for illusion, become acceleratingly tough to trick! We will take a look at this and other fabulous developments in Part 7.

Slings and Arrows

Posted on July 7, 2012 by Thundering Heard

To be or not to be, that is the question:
Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles
And by opposing, end them.
—Shakespeare, Hamlet

Sometimes slings and arrows feel very difficult indeed. But sometimes, and I guess some would say always, they are our friends, as they help to end pernicious cycles. Our increasingly-being-shown-as-notorious financial system is experiencing its end-of-cycle as its lies and chief liars are exposed, as major world banks have been shutting down public access to their systems for days at a time, as criminal hackers have figured out how to pilfer billions from the accounts of high net worth individuals at banks, etc.

We documented the base-level lies in The financial system is based on twelve promises that are lies. But each and every week now, more of the operational lies of the system are revealed.

Matt Taibbi of Rolling Stone reported on a court case showing that the big banks have for decades criminally deceived participants in the municipal bond market, robbing cities, towns, hospitals, etc. of interest payments due to them: The Scam Wall Street Learned From the Mafia.

Too bad that cities and towns are going broke, the banksters must get their bonuses. And their posh offices. Drive around any city in the industrialized world. Who has the largest and fanciest buildings, whose buildings dominate the skylines? Banks and insurance companies. Check it out. But I digress. Back to the latest slings and arrows.

Everyone has probably heard about the LIBOR scandal where the big banks–and it is looking like most or all of them–colluded in criminal fashion to manipulate interest rates. The LIBOR rate is used to calculate the interest rates on myriad types of loans including mortgages, business loans, credit card rates, etc. It is used as the basis for hundreds of trillions of dollars worth of derivatives. The top executives at Barclay’s were the first to be caught, but now RBS has been fined, and Deutsche Bank is under investigation. Others will follow. And the fired CEO of Barclay’s, Bob Diamond, has publicly stated that he was told to manipulate LIBOR by the guy who is second in command at the Bank of England, Paul Tucker. How long before we find out the US Federal Reserve was giving out the same kinds of orders for illegal acts?

And speaking of investigations, how about Spain investigating the top executives of Bankia, headquarters pictured here, I kid you not:

Photo from Mike Krieger’s site.

A year ago, when they were selling stock in the bank to the public, these executives touted Bankia’s greatness. They stated two months ago that everything was fine, in fact profitable, at Bankia. Within a few weeks, it was determined that the bank needed a $19 billion bailout.

And it looks like JP Morgan has been caught pulling an Enron, manipulating the electric power market in California and the Midwest: JPMorgan’s Role in Power Market Comes Under Scrutiny.

The Vatican can’t resist joining the financial criminality party, assisted, of course, by JP Morgan: Catholic Church Fears Growing Vatican Bank Scandal.

We also have the mystery of large banks shutting their systems to any public access. RBS, one of the biggest UK banks, had a major “system outage” for days that halted the processing of just about everything including credit and debit cards, ATMs, payroll checks, account balance inquiries, i.e., everything! See: As RBS’ ATM “Glitch” Enters Fifth Day, The Bailed Out Bank Issues A Statement.

And yesterday the largest bank in Russia stopped all public access to its systems, so no credit or debit cards swipes would work, no on-line transactions, etc.: RBS ‘Glitch’ Goes Airborne As Biggest Russian Bank Halts All Credit, Debit Card Operations.

RBS gave a potentially plausible explanation of their outage in testimony to the UK Treasury: RBS gives more detail on IT failure train wreck.

However, it seems suspicious that the biggest bank in Russia also had to shut out the public. Perhaps it had something to do with criminal hackers figuring out how to initiate wire transfers from the accounts of high net worth individuals at 60 banks! Haven’t heard of that one? It broke in the news about two weeks ago and was promptly “disappeared” from many websites. As of this minute, the story is still currently available at the Times of India: Cyber criminals may have siphoned off 2 billion euros from 60 banks. From the article:

The study highlighted a highly sophisticated, multi-tiered, global financial fraud ring that is comprised of at least a dozen groups using active and passive automated transfer systems to steal high value amounts from high balance accounts.

“This fraud empire, dubbed Operation High Roller, has impacted every class of financial institution: credit union, large global bank and regional bank, using smaller and less detectable automated transactions,” McAfee said in a statement.

Could it be that these banks recognize that they are being hacked, and their accounts drained, and they have no way to stop it other than preventing all public access to their systems? And why did coverage of this story virtually disappear? That’s an easy one: When criminal hackers hear that a class of juicy targets is hackable, it’s like pouring blood into water near sharks, they all want a piece of the action. And we can’t have depositors getting nervous about their deposits when the whole system is based on confidence.

Perhaps the problem isn’t hacking. But then how could these large bank systems, famous for their redundancies, backups, and all-around bulletproofness, fail in such catastrophic ways? Could it be that the Sun has decided to make a statement or two about who really runs this sector of the universe? Did 18 M-class solar flares over three days cause glitches in these systems? (Eighteen (18) M-Class Flares Within Last 72 Hours) Followed by an X-class solar flare? (Sunspot Region 1515 Fires Off X-Class Flare) Or are their systems based on MS-Windows? (Joke. Sort of.)

Either way, I have to wonder how people with their savings in electronic accounts feel about that. The system is based on lies. The people who run it are pulling continuous criminal capers, and it looks like they have been doing so for decades. Hackers have figured out how to drain accounts electronically. And the Sun may even be contributing to bank computer mayhem, with NASA admitting that the Sun will be ramping up its activity into mid-2013.

We think it best to consider all of these as indications of a system that is in something beyond peril. It is going down. It will fail. It’s only a matter of time. The pace of slings and arrows impacting the system is accelerating.

Let’s recall that people value money because it is a medium of exchange through which a wild variety of good and services can be exchanged in some comparable way; and a store of value providing one way to save the energy expended in work today to meet needs at some future time. Our current paper currencies (Dollar, Euro, Pound, Yen, etc.) are masters of exchange, but are cascading toward failure as stores of value. Some who have studied the history of money say–and I have no way to verify this–that the longest reigning currency regime based on unbacked paper lasted 41 years. Well, the world went fully into unbacked paper currency in 1971. Add 41 years and you get 2012. Can we set a new record? Perhaps. But the system is showing so many signs of being in its death throes, why take the chance?

People keeping their savings in the banking/brokerage system reminds me of the old Eddie Murphy comedy routine where he asks about movies like Poltergeist and Amityville Horror, “When there’s a ghost in the house, why don’t white people just leave the house?” If profanity offends you, don’t go to the link.

We have all been warned. Over and over. And the warnings are increasingly clear and loud. But we can take arms against this sea of troubles, at least for ourselves. And if we do, we’ll be in a position to help when the slings and arrows end this financial system.

Where there are things to be done, the end is not to survey and recognize the various things, but to do them.
—Aristotle, Nicomachean Ethics

How The Powers That Be become The Powers That Were

Posted on May 30, 2012 by Thundering Heard

In a word: TRUTH! Truth in plain sight for all to see.

Here’s an article about the head of the IMF (International Monetary Fund), Christine Lagarde, talking tough to Greeks, telling them to pay their taxes:

It’s payback time: don’t expect sympathy – Lagarde to Greeks

And of course she wants the Greeks to pay their taxes, and everyone else too–because she doesn’t pay any taxes at all on her salary and benefits package, which is worth way more than $500,000 per year:

Christine Lagarde, scourge of tax evaders, pays no tax

And if people didn’t pay exorbitant taxes, there wouldn’t be any IMF at all.

But if there weren’t any IMF, then that would be one less conduit for funneling tax money from hardworking people to banksters. Hmmm, can’t have that.

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Hat tips to the UK Guardian, Zero Hedge, and to Clif High for his repeated use of the phrase “The Powers That Were.”

Thundering Heard

Toward Clarity in this Time of Major Transition

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