Friday, March 8, 2013

Top Bankers: Too Much Central Bank Easing Is Becoming Dangerous

And the Stock Rally Is Due to Money-Printing

Everyone knows that “too big to fail” banks are bad for the economy. Indeed, even top bankers themselves say the big banks need to be broken up.
Now, top bankers are saying that the amount of liquidity which the central banks are flooding into the economy is becoming dangerous.
Agence France-Presse reports:
An influential group of leading world banks warned Thursday that central banks are pumping out too much easy money and markets risk becoming dangerously addicted to ultra-low interest rates.
The Institute of International Finance, which groups 450 banks, said that if central banks continue to flood money into the global economy, then any future bid to get it under control could itself destabilize the financial system.
***
“These conditions — quantitative easing, very low interest rates — cannot last forever, but the risk is that financial markets have become addicted to them,” it warned.
“The longer central bank liquidity is relied on to hold things together, the more excesses and distortions are being accumulated in the financial system. An eventual unwinding of these excesses will become a destabilizing risk event.”
***
IIF deputy managing director Hung Tran said that central bankers should be aware of “the unintended consequences of their actions” and make clear how they expect to adjust monetary policy over the long term.
“This would help lessen the risk of large swings in financial markets,” he said.
***
US Federal Reserve chief Ben Bernanke last week downplayed worries that liquidity was fueling fresh bubbles in financial markets. But he added that the Fed — which has held its key rate near zero since the end of 2008 — was monitoring the situation.
The IIF is not some renegade group. Its board members include the top brass from many of the world’s biggest banks, including Goldman Sachs, Citigroup, Barclays, HSBC, Deutsche Bank, Société Générale, BNP Paribas, UBS, Credit Suisse, Morgan Stanley, Agricultural Bank of China, Industrial and Commercial Bank of China, Sumitomo Mitsui Financial Group, BNY Mellon, Bank of Tokyo-Mitsubishi UFJ, Commerzbank and Scotiabank,
As we noted in 2008, the problem was never liquidity. The problem is that the big banks became insolvent because of stupid gambling.
In other words, the government’s whole approach to the 2008 financial crisis was entirely wrong. And the easy money policy (quantitative easing) of central banks doesn’t help, but instead hurts the economy and the little guy.
Interestingly:
“Much of the recovery so far has… been heavily reliant on ‘easy money’ conditions fostered by central banks,” the IIF said in a statement,
***
The IIF said the US Dow Jones Industrial Average’s had hit an all-time high this week more because of relaxed international monetary conditions than thanks to any recovery in the real economy.
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SelectedWorks of Brian M McCall

After 9 years in private practice with the international law firm Dechert LLP,
Professor McCall joined the faculty of the University of Oklahoma College of Law in 2006.
As a practicing lawyer, he represnted a variety of companies and banks in international
merger and acquisition and corporate finance transactions. Seven years were spent in the
firm's London office as an Associate and Partner. Professor McCall teaches classes
in Contracts, Payment Systems, Secured Transactions and Corporate Finance. He publishes
in the field of Commerical and Business law with an emphasis on the jurisprudence and
philosophy of economic legal regulation. His scholarly research is rooted in a natural
law jurisprudence. 

Commercial Law

The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
It's Just Secured Credit: The Natural Law Case in Defense of Some Forms of Secured Credit, Indiana Law Review (2009)
For decades scholars have been debating whether of not the institution of security can be...
 
Learning from Our History: Evaluating the Modern Housing Finance Market in Light of Ancient Principles of Justice, South Carolina Law Review (2009)
Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has...
 
Quas Primas and the Economic Ordering of Society for the Social Reign of Christ the King; A Third Perspective on the Bainbridge/Sargent Law and Economics Debate, Journal of Catholic Legal Studies (2008)
How can it be that respected Catholic legal scholars can reach seemingly opposite conclusions about...
 

Banking and Finance

Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
It's Just Secured Credit: The Natural Law Case in Defense of Some Forms of Secured Credit, Indiana Law Review (2009)
For decades scholars have been debating whether of not the institution of security can be...
 
Learning from Our History: Evaluating the Modern Housing Finance Market in Light of Ancient Principles of Justice, South Carolina Law Review (2009)
Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has...
 
Unprofitable Lending: Modern Credit Regulation and the Lost Theory of Usury, Cardozo Law Review (2008)
With almost daily news stories about the crisis in our credit markets, it seems inevitable...
 

Secured Transactions

Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
It's Just Secured Credit: The Natural Law Case in Defense of Some Forms of Secured Credit, Indiana Law Review (2009)
For decades scholars have been debating whether of not the institution of security can be...
 
Learning from Our History: Evaluating the Modern Housing Finance Market in Light of Ancient Principles of Justice, South Carolina Law Review (2009)
Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has...
 

Catholic Social Teaching

Consulting the Architect when Problems Arise – The Divine Law, Georgetown Journal of Law & Public Policy (2011)
In The Architecture of Law: Building Law on a Solid Foundation- The Eternal and Natural...
 
The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
It's Just Secured Credit: The Natural Law Case in Defense of Some Forms of Secured Credit, Indiana Law Review (2009)
For decades scholars have been debating whether of not the institution of security can be...
 
Learning from Our History: Evaluating the Modern Housing Finance Market in Light of Ancient Principles of Justice, South Carolina Law Review (2009)
Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has...
 

Law and Economics

Quas Primas and the Economic Ordering of Society for the Social Reign of Christ the King; A Third Perspective on the Bainbridge/Sargent Law and Economics Debate, Journal of Catholic Legal Studies (2008)
How can it be that respected Catholic legal scholars can reach seemingly opposite conclusions about...
 

Contracts

Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 

Religion

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published...
 
Consulting the Architect when Problems Arise – The Divine Law, Georgetown Journal of Law & Public Policy (2011)
In The Architecture of Law: Building Law on a Solid Foundation- The Eternal and Natural...
 
The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
It's Just Secured Credit: The Natural Law Case in Defense of Some Forms of Secured Credit, Indiana Law Review (2009)
For decades scholars have been debating whether of not the institution of security can be...
 

Legal History

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published...
 
The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
It's Just Secured Credit: The Natural Law Case in Defense of Some Forms of Secured Credit, Indiana Law Review (2009)
For decades scholars have been debating whether of not the institution of security can be...
 
Learning from Our History: Evaluating the Modern Housing Finance Market in Light of Ancient Principles of Justice, South Carolina Law Review (2009)
Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has...
 

Law and Society

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published...
 
Can a Pluralistic Commonwealth Endure?, Georgetown Journal of Law and Public Policy (2013)
This article considers whether the American pluralist system can satisfy Cicero's definition of a commonwealth...
 
Consulting the Architect when Problems Arise – The Divine Law, Georgetown Journal of Law & Public Policy (2011)
In The Architecture of Law: Building Law on a Solid Foundation- The Eternal and Natural...
 
The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 

Consumer Protection Law

Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
Learning from Our History: Evaluating the Modern Housing Finance Market in Light of Ancient Principles of Justice, South Carolina Law Review (2009)
Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has...
 
Unprofitable Lending: Modern Credit Regulation and the Lost Theory of Usury, Cardozo Law Review (2008)
With almost daily news stories about the crisis in our credit markets, it seems inevitable...
 

Secured Transactions, Banking and Finance, Uniform Commercial Code

Learning from Our History: Symposium Presentation, South Carolina Law Review (2009)
This is the audio recording of the presentaiton given at the South Carolina Law REview...
 
It's Just Secured Credit: The Natural Law Case in Defense of Some Forms of Secured Credit, Indiana Law Review (2009)
For decades scholars have been debating whether of not the institution of security can be...
 
Learning from Our History: Evaluating the Modern Housing Finance Market in Light of Ancient Principles of Justice, South Carolina Law Review (2009)
Since I first accepted an invitation to join this symposium, the subprime mortgage crisis has...
 
Money, Money Everywhere but not a Drop to Secure: A Proposal for Amending the Perfection Rules for Security Interests in Money and Deposit Accounts, Tennessee Law Review (2007)
It is time that the billions of dollars of money and bank account balances held...
 

Public Law and Legal Theory

Can a Pluralistic Commonwealth Endure?, Georgetown Journal of Law and Public Policy (2013)
This article considers whether the American pluralist system can satisfy Cicero's definition of a commonwealth...
 
Consulting the Architect when Problems Arise – The Divine Law, Georgetown Journal of Law & Public Policy (2011)
In The Architecture of Law: Building Law on a Solid Foundation- The Eternal and Natural...
 
The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Exploring the Foundations of Dworkin's Empire: The Discovery of an Underground Positivist, Journal of Law, Philosophy and Culture (2009)
This review essay examines the jurisprudence of Ronald Dworkin as presented in the anthology: Exploring...
 
The Architecture of Law: Building Law on a Solid Foundation The Eternal and Natural Laws, Vera Lex (2009)
Employing the architectural themes used by Aquinas in his discussion of Eternal Law, this article...
 

Jurisprudence

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published...
 
Can a Pluralistic Commonwealth Endure?, Georgetown Journal of Law and Public Policy (2013)
This article considers whether the American pluralist system can satisfy Cicero's definition of a commonwealth...
 
Consulting the Architect when Problems Arise – The Divine Law, Georgetown Journal of Law & Public Policy (2011)
In The Architecture of Law: Building Law on a Solid Foundation- The Eternal and Natural...
 
The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Exploring the Foundations of Dworkin's Empire: The Discovery of an Underground Positivist, Journal of Law, Philosophy and Culture (2009)
This review essay examines the jurisprudence of Ronald Dworkin as presented in the anthology: Exploring...
 

Corporate Law

The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 

Politics

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published...
 
Can a Pluralistic Commonwealth Endure?, Georgetown Journal of Law and Public Policy (2013)
This article considers whether the American pluralist system can satisfy Cicero's definition of a commonwealth...
 
The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 
Exploring the Foundations of Dworkin's Empire: The Discovery of an Underground Positivist, Journal of Law, Philosophy and Culture (2009)
This review essay examines the jurisprudence of Ronald Dworkin as presented in the anthology: Exploring...
 

Corporations

The Corporation as Imperfect Society, Delaware Journal of Corporate Law (2011)
Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional,...
 

Legislation

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published...
 

Judges

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published...
 

General Law

Decorating the Structure: The Art of Making Human Law, ExpressO (2013)
This article continues to develop the theme of law as architecture begun in two published..

Marc Faber 'Market Will End Badly This Year'

via

WARNING: WORLD ECONOMY IN DANGER AND MARKET WILL END BADLY THIS YEAR

CHART OF THE DAY: Investors Are Getting Really Pessimistic

Despite the rally.
In the wake of the Italian elections, bullish sentiment measured by the American Association of Individual Investors (AAII) plummeted from a high of 41.8 percent down to as low as 28.4 percent last week.
Meanwhile, the Dow Jones Industrial Average continued its bullish march to an all-time high.
This week, AAII bullish sentiment ticked up to just 31.1.  This is well below the historical average of 39 percent.
“The Dow’s new record high gave some AAII members reason to believe the current rally will continue,” wrote Charles Rotblutt in a post on Pragmatic Capitalism. “It also heightened concerns other AAII members have about the markets being overbought and due for a pullback in prices.”

Dow Record ‘Eerily Similar’ to 2007: SocGen

The Dow’s record high feels “eerily similar” to the market’s peak in mid-2007 before the global financial crisis, Albert Edwards, the London-based global strategist at Societe Generale, known for his famously bearish stance on equities, said on Thursday.
“Exactly the same jitters abound of a bond bear market and true to form (Federal Reserve Chairman) Ben Bernanke is making the same complacent comments,”, Edwards wrote in a note to clients on Thursday.
Banking Blues: Job Cuts Rise in February
Worst three-year span for wage earners since ’93-95
U.S. productivity slips less than originally believed, but news on wage-growth front is bleak.
Fourth-Quarter Productivity Weakest in Four Years
Banking Job Cuts Rise for Second Month in Row

Marc Faber: Market Will End Badly This Year

The stock market’s run will result in either a 20 percent correction or a more nasty sell off at some point this year, Marc Faber, publisher of the Gloom Boom and Doom report, told CNBC’s ”Closing Bell” on Thursday.
Faber pointed out that it’s been almost exactly four years since the stock market bottomed out. “We’re up very substantially, I think investors who today rush into stocks should be reminded of that,” he said.
 











Buy-Or-Sell – The Only Chart You Need



Each time more than 45% of stocks have reached these valuation levels in the past 13 years, the market has decided enough is enough and shaken loose. But as we keep being told, it is different this time.



Chart: Morgan Stanley

RICH BERNSTEIN: This Looks Like The Raging Bull Market Of The 1980s!

Dow Hits An All-Time High! Translation: A Bubble Is Always Biggest Right Before It Bursts

Reckless money printing by Federal Reserve Chairman Ben Bernanke has pumped up the Dow to a brand new all-time high.  So what comes next?  Will the Dow go even higher?  Hopefully it will.  In fact, it would be great if the Dow was able to hit 15,000 before it finally came crashing down.  That would give all of us some more time to prepare for the nightmarish economic crisis that is rapidly approaching.  As you will see below, the U.S. economy is in far, far worse shape than it was the last time the Dow reached a record high back in 2007.  In addition, all of the long-term trends that are ripping our economy to shreds just continue to get even worse and our debt just continues to explode.  Unfortunately, the Dow has become completely divorced from economic reality in recent years because of Fed manipulation.  All of this funny money that the Federal Reserve has been cranking out has made the wealthy even wealthier, but this bubble will not last for too much longer.  What goes up must come down.  And remember, a bubble is always biggest right before it bursts.

Top Bankers: Too Much Central Bank Easing Is Becoming Dangerous

And the Stock Rally Is Due to Money-Printing
Everyone knows that “too big to fail” banks are bad for the economy.  Indeed, even top bankers themselves say the big banks need to be broken up.
Now, the heads of many of the world’s biggest banks are saying that the amount of liquidity which the central banks are flooding into the economy is becoming dangerous.
Agence France-Presse reports:
An influential group of leading world banks warned Thursday that central banks are pumping out too much easy money and markets risk becoming dangerously addicted to ultra-low interest rates.
The Institute of International Finance, which groups 450 banks, said that if central banks continue to flood money into the global economy, then any future bid to get it under control could itself destabilize the financial system.
***
“These conditions — quantitative easing, very low interest rates — cannot last forever, but the risk is that financial markets have become addicted to them,” it warned.
“The longer central bank liquidity is relied on to hold things together, the more excesses and distortions are being accumulated in the financial system. An eventual unwinding of these excesses will become a destabilizing risk event.”
….

MARKET CRASH & DEBT BUBBLE BURST IMMINENT – Greg Mannarino & Jason Burack – PT 2


Eric Holder And Senator Grassley On Too Big To Jail


Longer clip from yesterday's hearing.
[Note: Transcript, details and discussion of this clip are here.]
Senator Chuck Grassley asks Eric Holder the names of outside consultants DOJ uses to decide whether to prosecute Wall Street banks.  Matt Taibbi wrote about the issue on Monday at Rolling Stone.
Background:

Banks Pass Fed’s Tests; Critics Say It Was Easy

Ben Bernanke, chairman of the Federal Reserve, at a House panel last month. 
Carolyn Kaster/Associated PressBen Bernanke, chairman of the Federal Reserve, at a House panel last month.

Four years after the financial crisis, federal regulators said that many of the nation’s largest banks were better prepared to sustain future market shocks, paving the way for the healthiest institutions to increase their dividends and buy back shares.
The results of so-called stress tests, released on Thursday by the Federal Reserve, indicate that most large banks would survive a severe recession and a crash in the markets. The tests, which measured a bank’s capital levels during adverse conditions, help validate the government’s efforts to shore up the financial systems.
But some analysts contend that the Fed was still too lenient with the banks. The stress tests, they argue, underestimate potential losses and the effects of several major financial firms collapsing, which can paralyze the entire system.

“The stress tests were just not very stressful,” said Rebel A. Cole, a professor of finance at DePaul University.
With the industry’s health improving, analysts predict that most big banks will now secure the Fed’s blessing to return money to shareholders, including some unexpected candidates. Citigroup, for example, outperformed its rivals in the test just one year after a poor performance embarrassed the bank and thwarted its plans to distribute capital to shareholders.
This year, Citigroup did not wait long to celebrate. Minutes after the results were released, the bank announced that it asked the Fed’s permission to carry out $1.2 billion in stock buybacks through the first quarter of 2014.
Other banks did not fare as well. Ally Financial, which is majority-owned by the taxpayers since the crisis, burned through nearly all its buffer under the test, which assessed how much capital would remain at the end of 2014 once banks were subjected to hefty losses.
Morgan Stanley and JPMorgan Chase also produced some of the lowest capital results among large Wall Street firms. Goldman Sachs would suffer $25 billion in trading losses under the test. The results were not unexpected; all three firms have significant trading operations that can rack up big losses in turbulent times.
The test results provided an important snapshot of the financial system more than four years after the banking industry was on the brink of collapse. Regulators hailed the industrywide improvements, underscoring what they portend for consumers and the economy.
“The stress tests are a tool to gauge the resiliency of the financial sector,” a Federal Reserve governor, Daniel K. Tarullo, said in a statement. “Significant increases in both the quality and quantity of bank capital,” he said, helps “ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty.”
Investors will pore over the results, scanning for hints about how much money banks can return to shareholders. After the crisis, regulators prevented lenders like Citigroup and Bank of America from increasing their dividends or repurchasing shares, forcing them instead to hoard capital to absorb losses.
Behind the scenes, the Fed will now signal to each bank whether it can proceed with new payout plans, potentially creating a tense face-off with regulators. If the Fed objects, a bank will have an opportunity to temper its proposals for dividend payments and share buybacks before the plans are released publicly next Thursday.
The stress tests have already caused tension between regulators and banks. The results, which reveal in some detail the losses that banks will suffer under times of stress, prompted wrangling with the Fed over how to conduct the tests and how much data to release.
In another sign of friction, the banks had to run the same test as the Fed — and in some cases produced rosier results. Wells Fargo reported a projected 9.2 percent Tier 1 common ratio, the primary measure of financial strength tracked by regulators, by the end of 2014. That was far higher than the 7 percent calculated by the Fed.
Bank of America’s outlook also trumped regulators’ findings, while Citigroup’s forecast hewed closely to the Fed. Those sorts of discrepancies may feed suspicions that financial firms are overly optimistic about their businesses.
In its overhaul of the regulatory system after the crisis, Congress mandated stress tests to provide an annual health check for the same banks that brought the economy to its knees. The Fed’s tests take banks through a series of adverse conditions, not unlike the last crisis. The tests estimated that 18 banks sustain combined losses of $462 billion, in a period of considerable financial and economic stress in which unemployment soars, stock prices halve and house prices plummet more than 20 percent.
But, to some banking analysts, the tests did not fully capture some forces and events that occur during economic and market shocks. For instance, Wall Street firms may lose access to short-term loans critical to their survival. It is almost impossible to project the impact of the rapid collapse of one or two large financial firms, as in 2008, when Lehman Brothers and American International Group imploded.
Mr. Cole of DePaul said the projected losses on loans appeared too low for the severity of the imagined cases. “If we really had an economic crisis of this magnitude, the loss rates would be at least double on the real estate loans,” he said.
The numbers also show that, over the last year, the Fed has cut its loss projections for certain types of loans. Last year, it projected a 9.5 percent loss rate on Wells Fargo’s mortgages, but this year that dropped to 7.1 percent. The Fed declined to comment on specific banks, but a senior official said lower loss rates were the result of an improvement in the overall quality of the banks’ loan portfolios.
Still, some analysts cheered the results, saying they confirmed the increasing optimism among investors. Bank stocks have risen sharply in recent months, gains that could continue on the heels of the stress tests.
“It’s a very good exercise to do, showing everyone that the U.S. banking system is well capitalized,” said Gerard Cassidy, a banking analyst at RBC Capital Markets.
In a surprise, Citigroup had a projected capital equivalent to 8.9 percent of its assets at the end of 2014, well above last year’s showing. Bank of America’s so-called Tier 1 common capital ratio registered at 6.9 percent, also an improvement.
But Morgan Stanley’s ratio came in at 6.4 percent, temporarily restrained by its purchase of the remaining stake in the Smith Barney retail brokerage joint venture. JPMorgan’s capital levels stood at 6.8 percent. While those banks’ stress test results are lower than rivals, they are still strong capital numbers amid a crisis.
On one important alternative measure of capital, Goldman Sachs had a poor showing compared with its peers. Under the stressed case, the bank’s Tier 1 leverage ratio — another measure of capital strength that treats assets more conservatively — would fall to a low of 3.9 percent.
This could become an issue in any discussions between Goldman and the Fed about the bank’s capital plan. When regulators assess whether a bank can proceed with its capital plan, the Tier 1 leverage ratio cannot fall below 3 percent. Goldman’s own test showed the ratio falling to only 5.1 percent.

Rick Santelli On Gold ETFs: 'If World Collapses, You're Stuck With Paper'

CNBC's Rick Santelli talks with Frank Lesh, FuturePath Trading, about how ETFs have changed the way investors trade gold.  Feb. 27, 2013.

Santelli on owning 'paper gold.'
Solid clip.  Santelli discusses trading gold back in the late 1970s.
---
This isn't good news:
World's Biggest Gold Storage Company Bans All Accounts From U.S. Citizens...


Explanation:
'How Central Banks Lease Out Their Gold'...



'Charles Ponzi audits the Fed's gold' by William Banzai7.
Ponzi can surely attest
The gold in the vault is the best
But then he checked leases
For 10 times the pieces
And said: "Now I'm really impressed!!!"
The Limerick King

We Are Going To Kill The Dollar - Investor Kyle Bass Discloses Discussion With Senior Obama Admin

via

Should You Move To Another Country To Escape The Collapse Of America? 10 Questions To Ask Yourself First

By Michael
Should You Move To Another Country To Escape The Collapse Of America?
Why are so many people leaving the United States right now?  Over the past couple of years, an increasing number of Americans have decided that moving to another country is the best way to prepare for the collapse of America.  According to the U.S. State Department, an all-time record of more than 6 million Americans are now working or studying overseas.  Of course many of those that have left the country do not believe that the U.S. economy is going to collapse, but without a doubt there are an increasing number of preppers that believe that now is the time to “escape from America” while they still can.  And certainly there are a lot of reasons why the U.S. is becoming less appealing with each passing day.  In addition to our economic problems, crime is on the rise in our cities, our liberties and freedoms are being eroded at a frightening pace, political correctness is wildly out of control, and our corrupt politicians continue to make things even worse.  But is life really that much better in the rest of the world?  The sad truth is that life in most other nations is more difficult than it is in the United States.  Yes, there are some nations that are relatively stable and that look promising at first glance, but the truth is that moving to another country is never easy.  If you plan to do it, there are some hard questions that you need to ask yourself first.
If you plan to move permanently to another nation, it would be wise to visit first.  The way that things work in a foreign country is often very, very different from how things work in the United States.  If you are not accustomed to being in a foreign culture, it can feel like your whole world is being turned upside down.
But of course it is definitely possible to make a successful transition to another culture.  Millions of Americans have done it.  The following is from a recent RT article
Ever dream of leaving it all behind and heading out of America? You’re not the only one. A new study shows that more US citizens than ever before are living outside of the country.
According to statistics from the US State Department, around 6.4 million Americans are either working or studying overseas, which Gallup says is the largest number ever for such statistic.
The polling organization came across the number after conducting surveys in 135 outside nations and the information behind the numbers reveal that this isn’t exactly a longtime coming either — numbers have skyrocketed only in recent years. In the 24 months before polling began, the number of Americans between the ages of 25 and 34 living abroad managed to surge from barely 1 percent to over 5.1 percent. For those under the age span wishing to move overseas, the percentage has jumped in the same amount of time from 15 percent to 40.
But picking up and moving to a foreign nation is not something to be done lightly.
The following are 10 questions to ask yourself before you decide to move to another country…
Do You Speak The Language?  If Not, How Will You Function?
If you do not speak the language of the country that you are moving to, that can create a huge problem.  Just going to the store and buying some food will become a challenge.  Every interaction that you have with anyone in that society will be strained, and your ability to integrate into the culture around you will be greatly limited.
How Will You Make A Living?
Unless you are independently wealthy, you will need to make money.  In a foreign nation, it may be very difficult for you to find a job – especially one that pays as much as you are accustomed to making in the United States.
Will You Be Okay Without Your Family And Friends?
Being thousands of miles away from all of your family and friends can be extremely difficult.  Will you be okay without them?  And it can be difficult to survive in a foreign culture without any kind of a support system.  Sometimes the people that most successfully move out of the country are those that do it as part of a larger group.
Have You Factored In Weather Patterns And Geological Instability?
As the globe becomes increasingly unstable, weather patterns and natural disasters are going to become a bigger factor in deciding where to live.  For example, right now India is suffering through the worst drought that it has experienced in nearly 50 years.  It would be very difficult to thrive in the middle of such an environment.
Many of those that are encouraging people to “escape from America” are pointing to Chile as an ideal place to relocate to.  But there are thousands of significant earthquakes in Chile each year, and the entire nation lies directly along the “Ring of Fire” which is becoming increasingly unstable.  That is something to keep in mind.

What Will You Do For Medical Care?
If you or someone in your family had a serious medical problem in the United States, you would know what to do.  Yes, our health care system is incredibly messed up, but at least you would know that you could get the care that you needed if an emergency arose.  Would the same be true in a foreign nation?
Are You Moving Into A High Crime Area?
Yes, crime is definitely on the rise in the United States.  But in other areas where many preppers are moving to, crime is even worse.  Mexico and certain areas of Central America are two examples of this.  And in many foreign nations, the police are far more corrupt than they generally are in the United States.
In addition, many other nations have far stricter gun laws than the United States does, so your ability to defend your family may be greatly restricted.
So will your family truly be safe in the nation that you plan to take them to?
Are You Prepared For “Culture Shock”?
Moving to another country can be like moving to a different planet.  After all, they don’t call it “culture shock” for nothing.
If you do move to another country, you may quickly find that thousands of little things that you once took for granted in the U.S. are now very different.
And there is a very good chance that many of the “amenities” that you are accustomed to in the U.S. will not be available in a foreign nation and that your standard of living will go down.
So if you are thinking of moving somewhere else, you may want to visit first just to get an idea of what life would be like if you made the move.
What Freedoms and Liberties Will You Lose By Moving?
Yes, our liberties and our freedoms are being rapidly eroded in the United States.  But in many other nations around the world things are much worse.  You may find that there is no such thing as “freedom of speech” or “freedom of religion” in the country that you have decided to move to.
Is There A Possibility That The Country You Plan To Escape To Could Be Involved In A War At Some Point?
We are moving into a time of great geopolitical instability.  If you move right into the middle of a future war zone, you might really regret it.  If you do plan to move, try to find a country that is likely to avoid war for the foreseeable future.
When The Global Economy Collapses, Will You And Your Family Be Okay For Food?
What good will it be to leave the United States if you and your family run out of food?
Today, we are on the verge of a major global food crisis.  Global food reserves are at their lowest level in nearly 40 years, and shifting global weather patterns are certainly not helping things.
And the global elite are rapidly getting more control over the global food supply.  Today, between 75 and 90 percent of all international trade in grain is controlled by just four gigantic multinational food corporations.
But grain is not the only thing that the food giants control.  Just check out the following statistics from a recent Natural News article
The paper said three mega-multinationals now control better than 40 percent of global coffee sales, for example. Eight companies control the supply of cocoa and chocolate. Seven control the lion’s share – 85 percent – of tea production. Five multinationals control three-quarters of the world banana trade. And the largest half-dozen sugar traders account for about 66 percent of world trade, the new report by theFairtrade Foundation said.
The elite are also buying up food producing real estate all over the globe.  That is why farmland prices in the United States have been absolutely skyrocketing lately.
The people that run the world are rapidly getting a stranglehold over the global food supply.
So wherever you end up – whether it is in the United States or in another country – you will need to make sure that you can provide enough food for you and your family to live on independently of the system.
These are all things to think about when considering whether or not to move out of the United States.
But there are many, including some of those that regularly read my website, that have made the transition successfully.
If you have some advice that you would like to share with those that are considering moving away from America, please feel free to share it below…
The Planet Earth From Space

BREAKING: Russia and China to do BIGGEST EVER military drills off Japan and South Korea!

(translated from a Chinese news source)
The Russian Defense Ministry sources said Saturday, the Russian military is discussed in June this year, the Russian Pacific Fleet and Beihai fleet at sea the Chinese naval real live-fire exercises, exercise locations in Japan Haidabide Bay; in addition, the Russian ” peace mission in -2013 ” air army joint military exercises are high-level multiple round.
Russia said the Russian Navy League play, this will be the largest ” “. In fact, precisely, is ” Russia navy in recent years the largest “, may have more than 20 ships, tugs are included. The predicted joint exercises out ship number equivalence, estimation of Russia will each 10 ships, but in last year’s joint exercises in the Yellow Sea is the result of 16 Chinese naval ship, the Russian Pacific fleet includes tug, a total of 7 vessels.
Russian military experts believe that, this will be held military exercises at sea bright spot is ” crossing ” and ” cooperative “,followed by the exercise scenario that joint maritime defense and meet operational, seize the theater air, sea, electromagnetic power cooperative.
Russian experts said, China Sea fleet will pass through the Tsushima Strait or the Korea Strait, China Sea fleet if can pass through the soya strait between Russia and Japan, after a series of chain between Russian controlled, directly into the North Pacific, it can be called on the U.S. – Japan is a ” shake “.
http://www.cjdby.net/junbeidongtai/2013-03-02/military-2957.html

Biderman’s Daily Edge: Why Stocks are Rising Even as Economy Slumps


 Play by play explanation of how the market is being artificailly juiced by the printing press !

Cisco to set up tech training centers in Myanmar


Miami Herald – by ERIKA KINETZ, AP
YANGON, Myanmar – Cisco Systems plans to establish two network training centers in Myanmar, as global technology companies begin to move into one of the least-connected places on Earth.
The announcement Thursday came on the heels of a USAID-sponsored delegation of executives from Cisco, Google, HP, Intel and Microsoft to the fast-opening country.
Levels of cellphone use are lower in Myanmar than in North Korea. The government has made reform of its telecommunications sector, which was long dominated by crony businesses, a priority. Bids from 91 companies from around the world for two nationwide telecom licenses are now under consideration. Increased competition is expected to dramatically reduce the cost of SIM cards, which now run $300 to $500, in time for national elections in 2015.
The USAID technology delegation was geared toward technology education, but is also a step toward commercial engagement.
“Google has a range of potential partnerships, one of which is designed to improve access to online learning … in addition to a broader range of business opportunities that I think you’ll see Google expand into relatively quickly. The same is true of really all the firms,” said USAID head Rajiv Shah, who was making his first trip to Myanmar.
USAID resumed work in Myanmar in November, after Washington suspended most sanctions against the country. Since then, USAID has committed $171 million to health, food security, democracy, human rights and rule of law programs. The agency plans to give more money to Myanmar as the country deepens reforms.

A Simple Example That Should Make It Crystal Clear That ALL Fiat Currency Today is COUNTERFEIT Money

If you had kept $20,000 in a bank savings account since 1913, you would still only have $20,000 dollars in your bank account. But remember that in 1913, one would have been able to buy a very large house with $20,000 whereas today, one can not even buy a decent new car with $20,000. Obviously, the nominal amount of dollars has no meaning and accumulating significantly more dollars does not make one richer as many American foolishly believe today. To buy the same $20,000 house one could buy in 1913, since bankers have destroyed 98% of the purchasing power of the 1913 dollar with their counterfeiting efforts over the last 100 years, one would now need 50X the amount of 1913 $20,000 dollars today, or a whopping $1,000,000 2013 dollars just to buy the same house that $20,000 could have afforded you in 1913.
Another way of stating that is even if you had $999,999 2013 dollars versus only $20,000 1913 dollars, you would still be poorer today than you were in 1913, an astounding fact.
Now imagine you had converted your $20,000 into gold in 1913. In 1913, gold was priced at $18.92 an ounce. Therefore $20,000 would have bought 1,057 ounces of gold. Instead of holding $20,000 in the bank since 1913, had you converted this COUNTERFEIT money in the form of US dollars into the REAL money of gold and simply held 1,057 ounces of gold in a vault (granted one outside of the US) since 1913, your 1,057 ounces of vaulted gold would now be worth 1,057 ounces * 1,580 an ounce = $1,670,060 2013 dollars. And when gold reaches $5,000 an ounce, these 1,057 ounces will increase from $1,670,060 2013 dollars to $5,285,000 future-year dollars. I’ve actually told a class full of 10-year old children that hadn’t yet been exposed to the re-education process this very example and asked them what would they want today given the following choice: $20,000 of USD or $20,000 of gold? 100% of them answered $20,000 of gold because this example makes the decision so clear and so simple.
http://www.zerohedge.com/contributed/2013-03-07/governments-worldwide-are-implementing-orwellian-gold-confiscation-today-yo-0

Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.
I imagine this wealth distribution pattern to be just as obscene in many EU nations as well. In addition, I believe that the top 1% of the wealthiest in America currently also own the lion’s share of all physical gold and physical silver in the United States. Because this top 1% benefits the most from rigged financial markets and truly understand the rigging games as opposed to the masses, they are the most likely to have been converting their COUNTERFEIT fiat paper money into REAL money like physical gold and physical silver. Now I want to make it crystal clear that my intent is not to demonize the top 1% of the wealthiest people in any country as surely there are some entrepreneurs among this group that earned their wealth honestly. However, those that earned their immense wealth through immorally rigging markets, like the LIBOR market, the gold and silver market, and so forth, are the ones for whom I have much disdain.
http://www.zerohedge.com/contributed/2013-03-07/governments-worldwide-are-implementing-orwellian-gold-confiscation-today-yo-0










In reflecting on this two-year smash of precious metals, and in particular, mining shares, let’s take a look at some currency history of the last decade to provide us with some much needed mental capital.
With the help of Nick Laird over at Sharelynx.com, I was able to track down a few charts documenting the staggering percentage growth increases of gold and silver when compared to the world’s major currencies. What I found was shocking:
Despite recent setbacks, gold and silver have been the strongest currencies on the planet for the last 13 years.
Charts at link:
http://bullmarketthinking.com/key-charts-the-two-strongest-forms-of-money-on-the-planet-over-the-last-13-years/

Central banks are among the shrewd investors who buy gold bullion on dips. When gold was weak during May to July of 2012, central banks actively bought nearly 71 tonnes.
http://www.silverdoctors.com/russia-korea-and-central-banks-accumulate-gold-on-dip-below-1600oz/
One clear symbol of our new Gilded Age is that of the peaking DOW while food stamp usage is at a peak as well.
Fed spending far outstripping revenues, balance of trade, and business inventories decline.
from MyBudget360.com:
One clear symbol of our new Gilded Age is that of the peaking DOW while food stamp usage is at a peak as well.  Even though the DOW is only a reflection of a handful of companies, the media focuses on this as if it were a barometer of the real economy.  It isn’t.  Household net worth has fallen by 30 to 40 percent since the recession hit.  But isn’t the DOW at a peak?  Yes.  But the stock market is only a minor part of the portfolio of most Americans.  Also, most Americans derive their wealth from real estate which ironically is now being inflated not by families with growing incomes, but by big banks that are accessing cheap money/debt from the Fed and buying up available properties and crowding out average Americans.  The net impact is higher rents and low supply.  In other words we are inflating another financial bubble that is going to harm your typical American.  Over half of Americans don’t even have a retirement plan in place.  The government is blowing through money it doesn’t even have.  Let us examine the current state of affairs.
http://www.mybudget360.com/the-sequestered-gilded-age-top-20-percent-of-households-control-over-90-percent-of-all-stocks/

No Dhimmi

'Aftershock' Author Robert Wiedemer to Moneynews: Investors Buy Into Fed's '100% Fake' Recovery

The stock market’s roar to record highs Tuesday reflected the Federal Reserve’s massive easing campaign, not the strength of the U.S. economy, says financial commentator Robert Wiedemer, best-selling author of "Aftershock."

The Dow Jones Industrial Average rallied 125.95 points, or 0.9 percent, to 14253.77, surpassing its previous record closing high of 14,164 set in October 2007.
 
“Fed money-printing is important” for the stock market, Wiedemer tells Newsmax TV. “The economy isn’t doing particularly well. This isn’t the economy of 2007; we all remember the boomy times then.”

Watch our exclusive video. Story continues below.


Indeed, the economic recovery is “100 percent fake,” he says. “It’s built on Fed money-printing and government borrowing. Both are at record levels. That’s absolutely crucial to this market rally.”

The Fed has added more than $2 trillion to its balance sheet over the past five years through quantitative easing and has pushed short-term interest rates down to near-record lows.

Still, the economy expanded only 0.1 percent in the fourth quarter. “And more important for companies reporting earnings, much of the world is in recession, and that’s affecting a lot of S&P 500 earnings,” says Wiedemer, a regular contributor to Financial Intelligence Report, the flagship investment newsletter of Newsmax Media.

Discover more about  Robert Wiedemer's latest book, "Aftershock," by Clicking Here Now.

To be sure, that doesn’t mean the rally won’t continue, he says.

“It would be a little silly to say we’ve topped today; it certainly can go higher,” Wiedemer explains. But “some sort of correction is likely,” he maintains.

“We have gone quite a ways in a short period of time. Whenever the market has a large run-up it’s likely to have some kind of pullback. So a correction is certainly plausible. Whether it’s in the next few days or a week or two, I don’t know.”

So is this a good time for individual investors to dive into the market?

Editor’s Note: Put the World’s Top Financial Minds To Work For You

“There are some values, some high dividend stocks that are good to hold, [though] I’m not sure they’re great values,” says Wiedemer, a managing director of Absolute Investment Management, an investment-advisory firm for individuals with more than $300 million under management.

“Keep in mind that this isn’t being driven by economic fundamentals. Always be careful in playing in markets like this. It may be acting like 2007, but this isn’t the economy of 2007.”

Also realize that even at record highs, the stock market is up only about 10 percent from its 2000 zenith, and the Nasdaq is still down almost 30 percent, Wiedemer says.

“And let’s not assume all stock gains are permanent either. They can go back.”

As for the Fed’s quantitative easing (QE), Wiedemer doesn’t think it will end any time soon.

Editor’s Note: Put the World’s Top Financial Minds To Work For You

“The only exit strategy for [Fed Chairman] Ben Bernanke is to retire, which I think he will do in January. We have been through four [rounds of QE]. It will continue through this year, and quite possibly longer.”

When it comes to the automatic spending cuts (sequester), Wiedemer doesn’t see them having much effect this quarter. But economists say that overall, they’ll take 0.5 to 1 percentage point off GDP, he notes.

[Robert Wiedemer is a managing director of Absolute Investment Management, an investment-advisory firm for individuals with more than $300 million under management. He is a regular contributor to the Financial Intelligence Report, the flagship investment newsletter of Newsmax Media. Click Here to read more of his articles.]
© 2013 Moneynews. All rights reserved.

Are Attorney General Holder’s Statements on Banks and Drones Connected?


HO-LAND SECURITY
Image by William Banzai

How Far Will the Government Go to Defend the Too Big to Fail Banks?

Update: After a 13-hour filibuster by Senator Paul asking for a yes-or-no answer, the Attorney General finally said that drones would not be used to kill U.S. citizens who were not engaged in combat. Or did he?

The Attorney General of the United States made the following 2 statements within 48 hours:
These statements may – at first glance – seem unconnected.  And the mainstream media is treating them as separate.
True, the government is hell-bent on keeping the giant banks afloat, even though virtually all independent economists, financial experts and bankers are calling for them to be broken up, and Americans overwhelmingly want the government to get tougher on prosecuting Wall Street fraud.
But there might be more to it then than that … and Holder’s statements may be intimately connected.
For example, the Department of Homeland Security, FBI, and other government agencies worked hand-in-hand with the big banks to violently crack down on the Occupy protests.
And what was Occupy protesting?  One of the core complaints of the Occupy protesters was that there are two systems of justice: the little guy gets thrown in jail for the smallest infraction, while banksters escape prosecution for their criminal fraud.  (Occupy also protested the fact that that the big banks got bailed out, while the rest of us got sold out.  And see this.)
In other words, it is exactly the Department of Justice’s policy of not prosecuting big bank crimes which was one of Occupy’s core complaints … and – in response – the federal government sent in the goons to crack heads and trash the free speech rights of the protesters.
This is not an isolated incident.
The big banks literally own the politicians.
For many years, the government has used anti-terror laws mainly to crush political dissent and to help the too big to fail businesses.
Asking questions about Wall Street shenanigans, speaking out against government policies, and protesting anything are all considered grounds for being labeled a “potential terrorist” by the government. (Whistleblowers and journalists are also being treated as terrorists.)
Indeed, the government agency with the power to determine who gets assassinated is the same agency that is at the center of the “ubiquitous, unaccountable surveillance state aimed at American citizens.”
If this sounds like breathless fearmongering, please remember that the U.S. military now considers the American homeland to be a “battle zone” (and see this).
And the banking system is considered “critical infrastructure” by the Department of Homeland security.

Another Connection Between Big Banks and Drones

There is another connection between big banks and drones.
The big banks have a direct role in encouraging and financing war. And see this.
And Ron Paul noted in 2007:
Congress and the Federal Reserve Bank have a cozy, unspoken arrangement that makes war easier to finance. Congress has an insatiable appetite for new spending, but raising taxes is politically unpopular. The Federal Reserve, however, is happy to accommodate deficit spending by creating new money through the Treasury Department. In exchange, Congress leaves the Fed alone to operate free of pesky oversight and free of political scrutiny.
The big banks own the Federal Reserve.
Indeed, some say that all wars are really bankster wars.
Postscript:  A reader adds another potential link between Holder’s statements.  He argues:
Yes, they are intimately connected. Because from now on, if you refuse to use the Federal Reserve Notes that are being devalued in order to prop up the failed banks, you are engaging in “a unique form of domestic terrorism” according to the Department of Justice.
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