Wednesday, March 14, 2012

"I Am Just Following Orders"

So here we have a system where you can 1) make up your own rules, 2) establish any value for any asset you choose, 3) inflate that value a hundred fold based on ostensible future value and returns, 4) leverage that inflated value another thousand or a million fold simply on your say-so, enough to buy up multi-billion dollar firms if you choose, 5) lean on taxpayer bailouts when you get into trouble, and 6) do this without any disclosure or accountability, all based upon a self-interested formula you concoct to enrich yourself.  (from must-read commentary posted on zerohedge:  LINK)
The biggest farce of the week/month is the Fed's declaring that JP Morgan passed the stress tests and is allowed to buy back stock and pay dividends.  How could the Fed have possibly even bothered to test JPM's enormous OTC derivatives book?  Seriously.  JPM has the biggest OTC derivatives exposure of any bank on the planet.  There is no f-ing way in hell that the Fed can go on the assumption that JPM's OTC book is immune because of "netting." 

The biggest and most efficient stress test possible is reality.  Let's look at the evidence:  Long Term Capital, Enron, Refco, Amaranth, AIG.  Need I say more?  AIG's "netting" ended up costing the U.S. Taxpayers $100's of billions in taxes to keep the system from collapsing.  I don't know of anyone who disputes that fact.  Reality stress test?  Ben Bernanke never held a job in his entire life outside of academia and the Fed.  His knowledge of reality stops at the back cover of the textbooks he studies and the ridiculous theory-based papers he has written. 

The blow-ups from derivatives keep getting bigger and more expensive for the Taxpayers.  And yet Congress, and therefore the public, continues to enable the this grand scale theft.  And now it's continuing with JP Morgan.  I know, it's all okay as long we know that Snooki is losing weight and the bank gave some additional availability on our credit card.

So now we're left with the fact that JP Morgan can continue operating on the assumption that its balance sheet is ultimately immune from some kind of financial/economic catastrophe, can continue pretending its derivatives exposure is hedged, and can therefore go ahead and start draining cash from it's operations and pay it out to the shareholders.  Who benefits from this?  Not the little odd lot shareholders or the people who have de minimus exposure to JPM's stock by virtue of having a 401k fund that owns some JPM stock.  It's the large individual shareholders and the upper management, who get paid in big chunks of stock that they unload as soon as it vests. 

This is nothing more than a grand scale maneuver to pull cash out of a de facto insolvent entity by the elitists and leave behind a worthless corporate corpse that the Taxpayers will have the pleasure of bailing out again.  What is Obama's take on this - the man who rode into the Oval Office on definitively stated promises to clean up this blatant fraud and corruption?  "I am just following orders."


  1. Barry's take? oh yeah the guy who has played more golf than Bush II (he had played more golf his first year than Bush did his entire 8) and who has prosecuted less "white collar crime" than any President.

    I hear you Dave!

  2. What's the accounting standards in 3rd World countries?..LOL

    ..remember the cooking oil scandal in the sixties?..they had to keep moving and fictitiously marking the valuations up on fictitious collateralized inventory....well the bankers got smart(er)...they went virtual(derivatives) and it all resides inside or off their book.

    Self regulation works after MF Global, says CME's Donohue

    The disappearance of customer money has shaken confidence in futures markets around the world, said Charles Li, CEO of Hong Kong Exchange and Clearing. He said it was "amazing" that customer money went missing.

    "Betting customers money is something that we only thought happened in the third world," he said.

    Read more:
    Stay on top of Chicago business with our free daily e-newsletters

  3. Calm down, Dave. Keep speaking the truth and you'll get NDAA disappeared or have a heart attack, or both. Me? I'm just turning FRNs into real money as fast as I can before heading to the arroyo, you might call it a gulch.

  4. Well the farce is working. Alf Fields has to go back to the drawing board and everyone blown out the water. The bears are the big ones - governments and commercials.

    At the top no one wants to recognize that the top as formed.

    Embry and his 30% for gold, so the Dec low wasn't a low at all for miners. They will never go - they are lower now than when gold was 1525.

    Have you seen Hecla and Kinross and many others - the graphs just look to go one way. They are going down in a straight line. So we can't expect gold to just go sideways for a while.

    Everyone is fooled.

    1. I guess your not French?

      JKB: As the provider of the world's primary reserve currency, the United States continues to enjoy a degree of the 'exorbitant privilege' that it has always enjoyed ever since the Bretton Woods agreements were negotiated and signed in 1944. As such, one could argue that the United States would have the most to lose from an international power perspective were silver or derivatives thereof to take on a growing role as reserve assets. How do you think the US would respond to this? Would it see the growth of silver-based trade and reserve growth as a fait accompli and go along at some point? Or would it try to shut it down and maintain the dollar's current, dominant role instead?
      HSP: A wounded beast is very dangerous, so is a cornered rat, for that matter. The rulers of the US are blindly trying to maintain the present state of affairs,HSP: A wounded beast is very dangerous, so is a cornered rat, for that matter. The rulers of the US are blindly trying to maintain the present state of affairs but will fail in that attempt. Just because it is big and has nuclear weapons, does not mean the US can avoid financial cataclysm. It will, with no doubt whatsoever, go the way of Greece; and the dollar will go the way of the French assignat of 1790 and the way of the German reichsmark in 1923. That is written in stone. We still have to endure the period of persecution of owners of gold and silver, which is likely to take place. (Ed. note: Frenchmen refusing to part with their gold, silver or other nationalised property in return for fiat assignats were frequently sent to the guillotine.)

  5. I forgot to mention the HUI is about to breakdown - today is the day the HUI will set a 52week low. So much for a gold bull and all little gold bugs saying miners, miners are undervalued.

  6. LOL. Go to where the puck is going, not where it is at this moment. Ask yourself, is the Govt doing anything to reduce spending deficits? Is it doing anything to reduce new debt issuance? Is it doing anything to reduce fraud and corruption in the banking system? Are the banks REALLY better off now than 2008? Seriously?

  7. So - eventually the HUI has broken down - how far will it go from here, new 52 week low. And that happened at a higher Gold price from a 1525 previous. Magnificent - not so. The bulls are really just the fringe. What a lovely religious experience.

    And you think the gold bugs can keep the juniors up when the majors are breaking down. Its because the gold bugs are all in the juniors and are selling the majors, and no replacement of buyers for the majors.

    This time the gold bloggers are completely wrong.

    so much for the physical buying at 1680. Nobody is concerned about it. Just look at the miserable Silver March delivery.

  8. And to help you all out a little - perhaps you can use this guy as trader. He has been the most accurate and not totally a Gold fanatic - although he trades it. He doesn't own any physical at all but that hasn't kept him from doing very well. All these other people like Embry, Turk and the like have become useless and only use very colorful adjectives.

    I didn't take his advice on the basis of the Embry's etc. Should have.

  9. Marvy the GDX is back to Jan 2008 level.

    That's why I offered my suggestion as to the help you can use above.

    And another thing - he doesn't use the most over used word in the gold bugs vocabulary and that is "MANIPULATION" - everything is a manipulation. Embry is out once again with one of his worthless comments and guess what - the word manipulation features often.

    Don't you need some sheeple now!!!

    1. check your 401, lately?

      Broker bankrupted in kangaroo court
      Commentary: Industry group loses evidence in whistleblower case

      DENVER (MarketWatch) — Mark Mensack joined Morgan Stanley in 2008, landing an $873,000 signing bonus, but now he’s in personal bankruptcy and just moments away from losing his home in Cherry Hill, N.J.

      He’s turning 50. He’s got a wife and three kids. And this is where he’s landed after losing an arbitration with his former employer before his industry’s self-regulating body, the Financial Industry Regulatory Authority.

      Mensack claimed he was forced to leave Morgan Stanley MS -0.66% after he accused the firm of taking hidden fees from its retirement-account customers. In July, a Finra panel ruled against this would-be whistleblower and ordered him to pay Morgan Stanley $1.2 million, essentially demanding most of his bonus back after quitting, plus interest and legal fees.

      To me, this is the very definition of a kangaroo court: An alleged hall of justice that loses — and even tampers with — key records in its leaps of judgment. What kind of organization shuts down a whistleblower’s claims, bankrupts him with a $1.2 million order and then can’t find the testimony behind its damning decision?
      Mensack has a long list of accusations against Morgan Stanley and Finra, from perjury and fabricating evidence to ethics violations and incompetence. He says the missing arbitration recordings would help prove these claims.

      Instead, he will go down in history is an example of what happens in the financial industry if you spot something you think is wrong and try to drag it out in the open.
      Mensack claims that when he went to work at Morgan Stanley, he discovered the firm, and the companies it partners with on retirement accounts, were double-dipping into a $4 billion pool of 401(k) assets. He says he first thought it was an innocent gaffe by people who didn’t understand their fiduciary responsibilities. But when he ran his concerns up the ranks, he says he was retaliated against and ultimately forced to leave.

      “For me to work at Morgan Stanley, and sell 401(k) products, I would have had to lie to people,” he said. “That would have put me in a fiduciary breach. I can’t do that. ...There is no amount of money that is going to make me knowingly lie to people. ...And Morgan Stanley never gave me a way out.”

  10. Hey Dave moving up in the world! Looks like you have earned your very own TROLL. LOL. Must be making the sweat in the world of never ending fraud.


    1. LOL. Ya I guess it is quite an honor of recognition in a perverse way.

    2. Is this a joke or for real...this fed tweet thing...?

      Fed's Twitter Arrival uZIRPed By Hecklers, And Real Time Fed Twitter Tracker
      If the Fed thought it could boldly go where hundreds of millions have gone before (in a vain attempt to be cool, hip and relevant - Twitter of course - with the @FederalReserve handle naturally), all in a quest for faux transparency and openness, which nobody who is even remotely familiar with the Fed's actions is buying, without getting a few heckles in the process, it was wrong. Unfortunately, as the currency debasement race has simply taken a short breather ahead of a presidential election and a possible regional war with wide-ranging commodity price implications, before it resumes into the frantic final lap, the below sample is merely a modest appetizer of what is yet to come.

  11. So what are the physical holders of silver waiting for- both the private sector as well as the large commercial entities like Sprott and silver mines.

    They have what it takes to get this party started. All that has to be recognized is that physical ONLY will command a certain price ~ then let's see where it finds it's true level.

    What's the confusion all about !!??!

    No physical - no recognition.

  12. You have it all wrong trollup ..the lower they go the more we can buy..come back and educate us on the next rally lol.."Die mense hier is nie bang vir die donker "

    Nice post Dave

  13. thanks.. good point on lower prices! they're a gift!!

  14. Dave, 1 Kg Lunar Dragon here... I believe that Harvey has attracted the same Bankshill troll.... you can read through his comment section to see what I mean. I love the (anti)logic of this guy... on a day (today) where Harvey ascertains that the bullion bankers settled nine contracts yesterday with real Silver metal, and 25 with cash... the troll tries to convince us that the paper market price action is telling us there is no shortage of physical Silver... while of course the bullion banker tactics, and the bankshill's very presence here, is telling us (those of us astute enough to hear) quite the opposite.

  15. well the gifts will keep on coming - until there is no money in the till.

    have u seen the hecla graph lately straight line 45 degrees down, and at 2002 levels. is that the sort of investment to keep buying.

    the treasuries are breaking down - this is what all gold bugs were waiting for for that money to go to precious metal - all scenarious aren't working out. with europ as it is and gold can't reach its previous high and pathetic silver not even its 1980 high - then keep on dreaming.

    you all being played - its great calling everyone else sheeple when those calling the kettle black are in fact them.

    and be sure to checkout smartmoneytrackerpremium you may learn to trade.

    turks latest on kingwilliamnews - its getting a little lame.

  16. Even with all the central banks buying......this is what it is.... central banks are known to sell at the wrong time - how about buying at the wrong time?

  17. Yes Dave - they are a gift , but what Meiserho is failing to address is the longer that this squashing of the true price of silver goes on for the more the problems grow out the other end with regards to hyperinflationary results.

  18. Meiserho ~Why don't you put this in your pipe and smoke it lol >>>