Saturday, May 3, 2014

Another One Bites The Dust: Banker Washes Up In Hoboken Harbour

via From The Trenches World Report
The body of a man that was pulled from the Hudson River Monday has been identified as that of a 27-year-old jogger from New Jersey who went missing March 30.
The New Jersey Regional Medical Examiner’s Office identified the remains Tuesday night as Andrew Jarzyk, of Hoboken, thanks to the forensic analysts of the victim’s teeth and personal identifiers like tattoos.
The exact cause and manner of death have yet to be determined, but officials say Jarzyk’s body showed no signs of trauma to suggest foul play.
Considering the guy went missing for a month, I’d say there is still a decent chance there was foul play.  The guy was a bank manager at The PNC Financial Services Group in Woodland Park and was only 27 years old.  Suicide is possibly but doesn’t make alot of sense when you take into account he disappeared for weeks.

H.R. 2847: This New Bill Will Go Into Effective On July 1st, 2014. It Will Usher In The True Collapse Of The U.S. Dollar, And Will Make Millions Of Americans Poorer, Overnight. April 30th, 2014

What is FATCA?

The Foreign Account Tax Compliance Act became U.S. law in March 2010 but will take effect around the world on July 1, 2014. The goal of the law is to find offshore accounts held by U.S. taxpayers seeking to avoid paying taxes on them.
Under the law, banks from around the world will be asked to sift through their accounts to look for clients with U.S. connections, then share that information with the U.S. Internal Revenue Service.
The U.S. is looking for tax cheats, but critics say innocent people are getting caught up in the hunt.

Quick Facts

  • Under the agreement, financial institutions in Canada will not report any information directly to the IRS. Rather, relevant information on accounts held by U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) will be reported to the Canada Revenue Agency (CRA). The CRA will then exchange the information with the IRS through the existing provisions and safeguards of the Canada-U.S. Tax Convention. This is consistent with Canada’s privacy laws.
  • The IRS will provide the CRA with enhanced and increased information on certain accounts of Canadian residents held at U.S. financial institutions.
  • Significant exemptions and relief have been obtained. For instance, certain accounts are exempt from FATCA and will not be reportable. These include Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Disability Savings Plans, Tax-Free Savings Accounts, and others. In addition, smaller deposit-taking institutions, such as credit unions, with assets of less than $175 million will be exempt.
  • The 30 percent FATCA withholding tax will not apply to clients of Canadian financial institutions, and can apply to a Canadian financial institution only if the financial institution is in significant and long-term non-compliance with its obligations under the agreement.
  • The agreement is consistent with Canada’s support for recent G-8 and G-20 commitments intended to fight tax evasion globally and to improve tax fairness. In September 2013, G-20 Leaders committed to automatic exchange of tax information as the new global standard and endorsed a proposal by the Organisation for Economic Co-operation and Development to develop a global model for the automatic exchange of tax information. They also signaled an intention to begin exchanging information automatically on tax matters among G-20 members by the end of 2015.
  • Draft legislation to implement the agreement will be released for comment shortly on the Department of Finance website.
July 1st 2014 FACTA Bill .Is America About To Stumble Into A Credit Default?
Markets everywhere breathed a sigh of relief in February when the GOP-controlled House of Representatives allowed the debt ceiling to be suspended without another tussle with the White House over spending.  Whatever the political or budgetary merits, the world of finance and business cheered that the “full faith and credit” of the United States government would not be compromised by failure to meet all of its obligations on time.
The relief may have been premature.
In less than three months the Department of the Treasury will start trimming payments on portions of the $17.3 trillion-plus national debt, with unpredictable – and unstudied – consequences.  Acting in violation of legal commitments to purchasers, the Department will chop 30% from interest payments due some foreign holders of hundreds of billions, perhaps trillions, of dollars’ worth of Treasury securities.  Possible results of this consciously inflicted partial federal default could include mass dumping of bonds by jittery holders, a rise in the rate the government pays for debt service, and undermining the dollar’s status as the world’s reserve currency.  The impact on the U.S. and global economy is, literally, incalculable.
Why would Treasury Secretary Jack Lew do this?  Because he’s required to under a law of which few Americans have ever heard.
Enacted in 2010 by an all-Democratic Congress with almost no legislative review, the “Foreign Account Tax Compliance Act” (FATCA) was slipped into an unrelated jobs bill as a budgetary pay-for provision.  Set to go into effect on July 1, 2014, FATCA supposedly is aimed at American tax cheats with money stashed abroad.  But instead of singling out suspected tax evaders, FATCA creates an NSA-style information dragnetrequiring all non-U.S. financial institutions (banks, credit unions, insurance companies, investment and pension funds, etc.) in every country in the world to report data on all specified U.S. accounts to the IRS.
Read more:
Obama’s new July 1st 2014 law will shock most Americans
Obama’s new July 1st 2014 law will shock most Americans
Dear Reader,
We’ve been critical of several Obama Administration policies over the past few years…
But a new law set to go into effect on July 1st, 2014 (less than six months from now), might be the Administration’s worst decision yet.
On this date, Title V of House of Representative Bill #2847, known as “FATCA,” goes into effect.
We believe this could precipitate a huge collapse in the U.S. dollar… and a rapid decrease in our standard of living.
Of course, we’re not the only ones who believe this new U.S. law is going to be a disaster for our country and American citizens.
Write Down This Date:
July 1st, 2014
On this date, U.S. House of Representatives Bill “H.R. 2847” goes into effect. It will usher in the true collapse of the U.S. dollar, and will make millions of Americans poorer, overnight. You now have just several months to prepare…

It’s An Illusion: Here Are the REAL Unemployment

Mainstream financial pundits are falling over themselves today following a report from the Labor Department indicating that the national unemployment rate has fallen yet again, this time to just 6.3%.
The Associated Press, whose report on the new rate is being distributed to news services around the country, says this is “the strongest evidence to date that the economy is picking up.” They cite numerous economic experts, claiming that the U.S. economy is now experiencing vigorous job growth, which they say is confirmation that the economic health of our nation is bouncing back from a rough winter. In fact, they mention bad “weather” and “winter” eight times in a single article just to make sure we understand that the problems we’ve seen over the last few months were seasonal.
But, as is generally the case with mainstream assessments and government statistics as of late, the devil’s in the details.
The drop in the unemployment rate from March’s 6.7 percent came as the agency’s survey of households showed the labor force shrank by more the 800,000 in April.
The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.8 percent, matching the lowest level since March 1978, from 63.2 percent a month earlier.
Thus, while U.S. companies added some 288,000 jobs last month, three times as many people were dropped from the official unemployment statistics and are no longer counted in the labor pool.
At this rate we’re well on our way to achieving the Communist dream of 0% unemployment before the end of the President’s term.
Karl Denninger looks even deeper into the report at Market Ticker and points out that, while jobs were created last month, the claims of vigorous job growth are not even close.
Uh oh.  Yes, that headline number looks good.  But April is usually good, and that’s where the rubber meets the road; on an annualized basis we actually saw deceleration.  Funny how that works, isn’t it?
That’s right. That little down-hook in the above chart says it all. We’re creating jobs at a slower pace now than at the same time last year.
Contrarian economist John Williams suggests the the government’s numbers are not even close. At his web site Williams calculates the rate of employment using the same methods that were used prior to 1994 when they were officially defined out of existence by bureaucrats looking to pad the numbers.
According to those numbers, we’re looking at an unemployment rate of over 23%.
As the above chart shows, nearly one in four Americans are without work. That’s quite a disconnect considering the government’s numbers are off by about 265%!
Moreover, how is it possible that our economy is officially growing, while everyone in 20% of all American family households is unemployed?
According to shocking new numbers that were just released by the Bureau of Labor Statistics, 20 percent of American families do not have a single person that is working.
So when someone tries to tell you that the unemployment rate in the United States is about 7 percent, you should just laugh.  One-fifth of the families in the entire country do not have a single member with a job. 
On top of that, nearly 50 million people are actively receiving food assistance – fully one in six Americans.
Yet, the stock market hit all time highs just this week.
Something isn’t right, especially if you take a look at the following chart which shows that America’s leading companies showed nearly zero earnings growth in the first quarter of 2014:
EPS Growth
So, while the experts from the government and private business bloviate over the rigorous health of our economy and the success of President Obama’s policies, it’s important to keep in mind that they are doing their damnedest to bury the real story.
That’s because reality isn’t a fairy tale and as we have noted on numerous occasions it will end with the total detonation of the U.S. economy and financial markets, likely leading to a variety of serious issues that include a collapse of our currency and widespread impoverishment of the majority of people in this country.
What will follow will be nothing short of a total collapse of our way of life, so much so that Richard Duncan, author of The New Great Depression, suggests our entire civilization is in serious trouble:
If this credit bubble pops the depression is going to be so severe that I honestly don’t think our civilization can survive it.
When it does finally buckle, as noted by well known investor Doug Casey, it will be unstoppable and the speed of it will leave most people waking up to the danger after it has already happened.
How long the illusions will continue is anybody’s guess, but it should be clear that what we’re seeing from our government and their propaganda arm in the media is nothing but conjecture.
When the trick is finally revealed a whole lot of people are going to feel quite foolish.

Envisioning the End of Employer-Provided Health Plans

The days of Americans getting health insurance through their employers may be numbered — and the change could be just as profound as the shift of employers forcing employees to manage their own retirement savings.
As the Affordable Care Act goes from thousands of pages of legalese to actual, real-life public policy, the future of employer-provided health insurance is one of the most fascinating questions. Will employers call for — and their workers accept — the practice of buying health insurance through government exchanges? How much will companies save, and will they pass those savings on to employees? Will it make workers more mobile and ready to shift jobs, or will employer-paid health insurance become a sought-after perk?
The answers go to the heart of how things work in a sector that is one-eighth of the American economy. A new report gives some hints of how large the impact might be.
By 2020, about 90 percent of American workers who now receive health insurance through their employers will be shifted to government exchanges created by the health law, according to a projection by S&P Capital IQ, a research firm serving the financial industry.
It’s not an outlandish notion. Ezekiel Emanuel, an architect of the Affordable Care Act, has long predicted a similar shift.
Volunteers answered questions about the Affordable Care Act at an event in Miami days before the March 31 deadline to enroll for health care insurance. Credit John Van Beekum for The New York Times
But the scope and speed of the shift is surprising. So is the amount of money that companies could save. The S&P researchers tried to estimate what it would save the biggest American companies. Their answer: $700 billion between 2016 and 2025, or about 4 percent of the total value of those companies. The total could reach $3.25 trillion for all companies with more than 50 employees.
They assume those savings will accrue to companies’ bottom lines, though there are also compelling reasons to think that some of those savings would end up in the pockets of American workers in the form of higher wages or other benefits.
The idea is this: Now that federal and state exchanges exist where anyone, even those with pre-existing illnesses, can gain coverage, employers might decide to give their workers a stipend to pay for health insurance on the exchanges rather than sponsor a plan themselves.
In truth, the American system of health care — in which most people get their private health insurance through their employer — has always been rather odd. Why should quitting a job also mean you have to get a new health insurance plan? Why should your boss get to decide what options you have and negotiate the cost of them? Employers don’t get to select our auto insurance or mortgage company, so why should health insurance be any different?
If there is uncertainty around how the employer-provided health insurance system will evolve, there is even more around who will ultimately pay the bill. It could be the federal government, via insurance subsidies, or individuals who must pay for more of their health care. In a perfect world, lower costs would come from a more efficient system that provides better care at lower costs. But no one knows what the actual system of, say, 2025 will look like, any more than people could have foreseen the decline of pensions when the
 401(k) option was added to the tax code.
 Michael G. Thompson, managing director at S&P Capital IQ, argues that the parallel with defined-benefit pension plans is an apt one. For decades, those plans were a major benefit offered by large employers. But as other options became available that allowed employers to more cheaply provide retirement benefits with fewer administrative headaches, which 401(k)s provided, employers shifted to 401(k)s en masse.

“We still expect some companies to hold on to their health care plans, just as some private companies still have pensions,” Mr. Thompson said. “But we think that the tax incentives for employer-driven insurance are not enough to offset the incentives for companies to transition people over to exchanges and have them be more autonomous around management of their own health care.”

 The advantages are particularly clear for companies with lower-paid workers, who may be eligible for federal subsidies under the Affordable Care Act aimed at those employees making up to 400 percent of the poverty line.

Not everyone is so sure. Employers may not love the administrative challenges of administering a health plan, but they have been offering these plans voluntarily for decades, because employees value the perk. An employer who backs away from offering a health insurance plan directly, instead sending workers to the exchanges, may lose a competitive advantage in hiring. (Yet companies’ experience with substituting 401(k)s for pensions may have taught them that employees had little choice in the transition, and just accepted it.)
There is another strong reason that employers might not rush for the exits. When an employer subsidizes a worker’s health insurance plan directly, the subsidy is tax free to the employee. So the employer is effectively getting more bang for the buck in its total compensation. If an employer gives its workers extra pay to help them buy health insurance on an exchange, that money is taxable income.
Add to that a $2,000 per-worker annual penalty that the Affordable Care Act charges large employers that do not provide insurance, and the pathway toward employers dropping coverage may not be as short and direct as the S&P researchers suggest.
“For most firms, there isn’t a net gain to dropping coverage for active workers,” said David Cutler, a health economist at Harvard who advised the Obama administration in writing the law. “The subsidies are more than offset by the higher taxes workers will pay.”
The story may be different, Mr. Cutler added, for retirees. Where now many employers pay for health insurance for retirees not yet eligible for Medicare, that may change.
Even if the billions of dollars in savings don’t materialize, it could get them out of the messy business of deciding what type of health care their employees might have.
“We think that this process can ultimately yield some big savings for companies and take the responsibility and burden for health care out of their hands,” Mr. Thompson said. Not what business lobbyists were pushing for in 2010, perhaps, but one more step away from work as a social service agency.

Enron 2.0: Wall Street Manipulates Energy Prices … and Every Other Market

Energy Prices Manipulated

The U.S. Federal Energy Regulatory Commission says that JP Morgan has massively manipulated energy markets in  California and the Midwest, obtaining tens of millions of dollars in overpayments from grid operators between September 2010 and June 2011.
Pulitzer prize-winning reporter David Cay Johnston notes today that Wall Street is trying to launch Enron 2.0:
The price of electricity would soar under the latest scheme by Wall Street financial engineers to game the electricity markets.
If regulators side with Wall Street — and indications are that they will — expect the cost of electricity to rise from Maine to California as others duplicate this scheme to manipulate the markets, as Enron did on the West Coast 14 years ago, before the electricity-trading company collapsed under allegations of accounting fraud and corruption.
The test case is playing out in New England. Energy Capital Partners, an investment group that uses tax-avoiding offshore investing techniques and has deep ties to Goldman Sachs, paid $650 million last year to acquire three generating plant complexes, including the second largest electric power plant in New England, Brayton Point in Massachusetts.
Five weeks after the deal closed, Energy partners moved to shutter Brayton Point. Why would anyone spend hundreds of millions of dollars to buy the second largest electric power plant in New England and then quickly take steps to shut it down?
Energy partners says in regulatory filings that the plant is so old and prone to breakdowns that it is not worth operating, raising the question of why such sophisticated energy-industry investors bought it.
The real answer is simple: Under the rules of the electricity markets, the best way to earn huge profits is by reducing the supply of power. That creates a shortage during peak demand periods, such as hot summer evenings and cold winter days, causing prices to rise. Under the rules of the electricity markets, even a tiny shortfall between the available supply of electricity and the demand from customers results in enormous price spikes.
With Brayton Point closed, New England consumers and businesses will spend as much as $2.6 billion more per year for electricity, critics of the deal suggest in documents filed with the Federal Energy Regulatory Commission.
That estimate will turn out to be conservative, I expect, based on what Enron traders did to California, Oregon and Washington electricity customers starting in 2000. In California alone the short-term market manipulations cost each resident more than $1,300, a total burden of about $45 billion.
Public Citizen characterized the Energy partners explanation for the shutdown as absurd:
In the world of business, a firm announcing that an asset purchased just 5 weeks ago is actually uneconomical to operate would be called incompetent, and such a firm would have difficulty attracting capital and staying in business. But the managing partners of Energy Capital Partners are a highly sophisticated all-star crew of former Wall Street financiers: four of the five managing partners are Goldman Sachs veterans, and the firm’s vice-presidents and principals are alumni of JP Morgan, Morgan Stanley, Bank of America, Credit Suisse and other financial powerhouses. These are not your run-of-the-mill owners and operators of power plants. They are Wall Streeters highly motivated to exploit the intricacies of power markets to make as much money as possible for their Cayman Islands-based affiliates.
The record is clear that artificially reducing supply to jack up prices was the plan of Energy partners from the get-go. The strategy is obvious from auction records, as explained by Robert Clark of the Utility Workers Union of America Local 464.
“Almost immediately after acquiring ownership of the Brayton Point Power Station late last year,” Clark said, “[Energy partners] intentionally withheld all of Brayton Point’s capacity from [auction] for the purpose of reducing capacity supply and intentionally raising the market prices” that Energy partners and its competitors could charge for other New England generating capacity they already owned.
As shown below, Wall Street has manipulated virtually every other market as well – both in the financial sector and the real economy – and broken virtually every law on the books.

Interest Rates Are Manipulated

Bloomberg reported in January:
Royal Bank of Scotland Group Plc was ordered to pay $50 million by a federal judge in Connecticut over claims that it rigged the London interbank offered rate.
RBS Securities Japan Ltd. in April pleaded guilty to wire frauda s part of a settlement of more than $600 million with U.S and U.K. regulators over Libor manipulation, according to court filings. U.S. District Judge Michael P. Shea in New Haventoday sentenced the Tokyo-based unit of RBS, Britain’s biggest publicly owned lender, to pay the agreed-upon fine, according to a Justice Department Justice Department.
Global investigations into banks’ attempts to manipulate the benchmarks for profit have led to fines and settlements for lenders including RBS, Barclays Plc, UBS AG and Rabobank Groep.
RBS was among six companies fined a record 1.7 billion euros ($2.3 billion) by the European Union last month for rigging interest rates linked to Libor. The combined fines for manipulating yen Libor and Euribor, the benchmark money-market rate for the euro, are the largest-ever EU cartel penalties.
Global fines for rate-rigging have reached $6 billion since June 2012 as authorities around the world probe whether traders worked together to fix Libor, meant to reflect the interest rate at which banks lend to each other, to benefit their own trading positions.
To put the Libor interest rate scandal in perspective:
  • Even though RBS and a handful of other banks have been fined for interest rate manipulation, Libor is still being manipulated. No wonder … the fines are pocket change – the cost of doing business – for the big banks
Indeed, the experts say that big banks will keep manipulating markets unless and until their executives are thrown in jail for fraud.
Why? Because the system is rigged to allow the big banks to commit continuous and massive fraud, and then to pay small fines as the “cost of doing business”. As Nobel prize winning economist Joseph Stiglitz noted years ago:
“The system is set so that even if you’re caught, the penalty is just a small number relative to what you walk home with.
The fine is just a cost of doing business. It’s like a parking fine. Sometimes you make a decision to park knowing that you might get a fine because going around the corner to the parking lot takes you too much time.”
Experts also say that we have to prosecute fraud or else the economy won’t ever really stabilize.
But the government is doing the exact opposite. Indeed, the Justice Department has announced it will go easy on big banks, and always settles prosecutions for pennies on the dollar (a form of stealth bailout. It is also arguably one of the main causes of the double dip in housing.)
Indeed, the government doesn’t even force the banks to admit any guilt as part of their settlements.
Because of this failure to prosecute, it’s not just interest rates. As shown below, big banks have manipulated virtually every market – both in the financial sector and the real economy – and broken virtually every law on the books.
And they will keep on doing so until the Department of Justice grows a pair.

Currency Markets Are Rigged

Currency markets are massively rigged. And see this and this.

Derivatives Are Manipulated

The big banks have long manipulated derivatives … a $1,200 Trillion Dollar market.
Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way that interest rates are fixed: through gamed self-reporting.

Oil Prices Are Manipulated

Oil prices are manipulated as well.

Gold and Silver Are Manipulated

Gold and silver prices are “fixed” in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be.
Bloomberg reports:
It is the participating banks themselves that administer the gold and silver benchmarks.
So are prices being manipulated? Let’s take a look at the evidence. In his book “The Gold Cartel,” commodity analyst Dimitri Speck combines minute-by-minute data from most of 1993 through 2012 to show how gold prices move on an average day (see attached charts). He finds that the spot price of gold tends to drop sharply around the London evening fixing (10 a.m. New York time). A similar, if less pronounced, drop in price occurs around the London morning fixing. The same daily declines can be seen in silver prices from 1998 through 2012.
For both commodities there were, on average, no comparable price changes at any other time of the day. These patterns are consistent with manipulation in both markets.

Commodities Are Manipulated

The big banks and government agencies have been conspiring to manipulate commodities prices for decades.
The big banks are taking over important aspects of the physical economy, including uranium mining, petroleum products, aluminum, ownership and operation of airports, toll roads, ports, and electricity.
And they are using these physical assets to massively manipulate commodities prices … scalping consumers of many billions of dollars each year.  More from Matt Taibbi, FDL and Elizabeth Warren.

Everything Can Be Manipulated through High-Frequency Trading

Traders with high-tech computers can manipulate stocks, bonds, options, currencies and commodities. And see this.

Manipulating Numerous Markets In Myriad Ways

The big banks and other giants manipulate numerous markets in myriad ways, for example:
  • Engaging in mafia-style big-rigging fraud against local governments. See this, this and this
  • Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
  • Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
  • Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this
  • Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this
  • Bribing and bullying ratings agencies to inflate ratings on their risky investments
The criminality and blatant manipulation will grow and spread and metastasize – taking over and killing off more and more of the economy – until Wall Street executives are finally thrown in jail.
It’s that simple …

China Condemns Unilateral Sanctions Against Russia – Envoy

Chinese Ambassador in Russia Li Hui (Archive)
13:52 30/04/2014
Tags: sanctions, Li Hui, Russia, China
MOSCOW, April 30 (RIA Novosti) – China strongly opposes unilateral sanctions against Russia, Beijing's ambassador to Moscow told reporters Wednesday, adding that US and EU sanctions would not resolve the crisis in Ukraine.
“We are against imposing unilateral sanctions on Russia. They are not a way out,” Chinese Ambassador Li Hui said.
The remarks followed Washington’s announcement on Monday that it had added seven high-ranking Russian officials and 17 Russian companies to a blacklist of sanctioned persons.
On Tuesday, the European Union agreed to fall in line with Washington and added another 15 Russian and Ukrainian individuals to its sanctions list. Among those targeted are Russia’s military chief of staff, Gen. Valery Gerasimov, and intelligence chief Igor Sergun, as well as six pro-federalization activists from Ukraine’s southeastern regions.
Li’s comments echoed a statement by Chinese Foreign Minister Qin Gang earlier this week that “imposing sanctions is not helpful in terms of solving the problem. It will only exacerbate tensions.”
The Chinese minister called on all parties to continue dialog and promote a political solution. “Imposing sanctions goes against the interests of all parties," he said.
At the same time, Li lauded the continued growth of Russian-Chinese bilateral cooperation, adding there was a marked rise in trade turnover in recent years.
Beijing has been cementing its business ties with Moscow amid strained relations between Russia and the EU. Russian President Vladimir Putin is expected to visit China in May to sign a number of bilateral agreements, including on potential Russian gas supplies to China.

Economic Collapse News – Russian Hammer coming down hard on morPetrodollar

Russia wages Petrodollar War: The Ministry of Finance (MoF) on President Putin’s order yesterday accelerated the opening of the St. Petersburg Exchange (SPE), where prices for Russian oil and natural gas will be set in rubles instead of US dollars.… 
Putin’s order regarding the SPE was in direct response to the US placing sanctions yesterday upon Igor Sechin the CEO of the Russian energy giant Rosneft and a nominated board member of the SPE, and of which Deputy Minister for foreign relations, Sergey Ryabkov, had warned: “A response of Moscow will follow, and it will be painfully felt in Washington DC.”

Macro Analytics – EU Financial Repression – w/ John Rubino

Ry on Bob Tuskin Show Separation of Business and State (1/2)

As NATO Builds It’s Forces The Economy Is On The Brink Of Collapse

The unemployment rate in Italy is still at all time highs. US savings rates are down to 2008 levels. The real estate bubble is ready to pop, construction spending has missed expectations again. FATCA goes into effect July 1, those US citizens who have foreign financial assets in excess of $50,000 will need to pay taxes. The military purge continues as DHS builds its forces.Ukraine needs to control the east or the IMF will rescind the bailout. NATO is building troops and Kerry warns Russia not to invade, be prepared for a false flag in Ukraine to get the war started. US officials have stated that Assad is using the last of the chemical weapons as a bargaining chip. The State Department has put out a warning about a decentralized al-Qaeda force.

France Plays Russian Roulette: Why Europe Is Scared Of Sanctions Against Russia

While everyone is by now fully aware just how dependent Europe is on Russia's energy supplies (and most are aware of the "nonsense" that the US will fill any gap if Russia steps up its actions - which Barroso said wouldn't happen because "Russia has self-interest not to play the energy card") but few are truly aware of the scale of contagious debt-driven defaults that could occur if the US (and a reluctant Europe) decide to undertake more aggressive economic sanctions, which, as Germany's Europe minister stated today, "are on the table." As the following chart of Europe's domestic bank exposure to Russia show, Roth's warning that Russia's retaliation could mean "anything is possible," is a major problem for the Germans, Italians, and most of all - The French.
Germany is nervous...
Because they know what happens if this house of cards falls down...
As The Council for Foreign Relations notes, in the fourth quarter of last year, with tensions rising between Russia and the West over Ukraine, U.S., German, UK, and Swedish banks aggressively dialed down their credit exposures in Russia... but levels remain huge...

But as the graphic above shows, French banks, which have by far the highest exposures to Russia, barely touched theirs.  At $50 billion, this exposure is not far off the $70 billion exposure they had to Greece in 2010.  At that time, they took advantage of the European Central Bank’s generous Securities Market Programme (SMP) to fob off Greek bonds, effectively mutualizing their Greek exposures across the Eurozone.  No such program will be available for Russian debt. 

And much of France’s Russia exposure is illiquid, such as Société Générale’s ownership of Rosbank, Russia’s 9th largest bank by net-asset value ($22 billion).

With the Obama Administration and the European Union threatening to dial up sanctions on Russia, is it time for U.S. money market funds and others to start worrying about their French bank exposures?
The bottom line - it's all well and good to let the people starve, freeze, or stagnate amid a lack of energy supplies... but start fucking our banking exposure and Russian sanctions just got real

Thanks to Obamacare, more companies are likely to dump health benefits

Doctor Chiou debrides a leg wound on patient Kirk in Peoria
View photo
REFILE - ADDING REFERENCE TO ACCOUNTABLE CARE ORGANIZATIONS Doctor Andy Chiou debrides a leg wound on patient Larry

Get ready for a trip back to the 1950s.
Back then, fast-growing companies were in the habit of offering health insurance as a fringe benefit to help recruit workers, a practice that got started during World War II to reward loyal employees when wage controls were in place. It helped that the government had passed a few tax breaks making it affordable for corporations. So it was basically by accident that employer-provided health insurance became the norm in the United States, even though the government came to oversee healthcare in most other developed nations.
We may soon go back to a model in which employers provide healthcare more as a perk than as a routine benefit, requiring workers to get insurance from other sources. That could save big companies up to $700 billion by 2025, according to a new report from S&P Capital IQ. It’s hard to think of any other single change that could save companies that much money, indicating how powerful the Affordable Care Act (ACA) could become once it has fully impacted the U.S. healthcare system.
S&P predicts that companies will do the math and find it irresistible to move more and more of their workers off company-run plans and into the exchanges established under Obamacare, as the ACA is known. Companies with more than 50 workers will have to pay a penalty if they don’t offer insurance, but it could still be cheaper when factoring in the savings on healthcare; that’s because insurance costs have skyrocketed during the last 20 years, making healthcare one of the costs companies find most difficult to control.
The rising and unpredictable nature of healthcare costs led AOL CEO Tim Armstrong to make his unfortunate comment about "distressed babies" earlier this year. Armstrong took a lot of heat and later apologized, but many CEOs expresss similar frustrations (usually privately).
Health Benefits Phased Out
The migration away from employer-based coverage would probably occur in phases. Companies might start by moving part-timers and new hires off their plans, since they tend to get paid less than other workers and would be more likely to qualify for subsidies under the exchanges. Established employees might be the last to lose employer-based coverage, and companies would still be free to offer healthcare benefits as they choose.
Such moves would probably be controversial at first, given that just about everything related to Obamacare is controversial. And most companies will probably be reluctant to make big changes likely to produce negative headlines. “However, once a few notable companies start to depart from their traditional approach to health care benefits, it's likely that a substantial number of firms could quickly follow suit,” S&P Capital predicts.
S&P likens this change to the evolution away from defined-benefit pension plans toward employee-managed 401(k) plans and IRAs. It would put more burden on individuals to choose a plan from among dozens that might be offered. Out-of-pocket costs could rise, since employers today essentially subsidize premiums at many companies. Companies could offer stipends meant to cover some or all of the premium for workers who buy coverage on an exchange, just as many companies make contributions to workers’ 401(k) plans. Still, some people undoubtedly would go without insurance, just as many workers who ought to save for retirement don’t.
There’s sure to be an uproar over such changes, since workers tend to resist any disruption to the status quo. But the whole model of employer-based healthcare has become a fragile, outdated mess that unduly burdens employers and workers both. American firms often face cost disadvantages because they must bear healthcare expenses that foreign competitors don’t.
Most workers view healthcare coverage as an important benefit, without realizing that it is at least partly responsible for stagnant pay. Since healthcare costs have been rising far more than overall inflation, many firms have continued to offer coverage in lieu of raises. In 2000, health insurance accounted for just 5.9% of average total compensation, according to the Labor Department; it now accounts for 8.5%. Wages and salaries, by contrast, have fallen from 72.6% of total compensation to 69% during the same time span. So removing health insurance from compensation packages could allow companies to offer more generous raises -- and give workers a rationale to ask for them.
There are other potential benefits to workers. People wouldn’t lose healthcare coverage when they leave an employer, making their coverage portable and more stable, thus allowing workers to stick with preferred doctors and other caregivers no matter what their work situation. That could give some people more flexibility to find work that suits them best instead of taking a job just because they need insurance, a factor the Congressional Budget Office cited in February when it said 2 million Americans could decide not to work or work less because of Obamacare. (Of course, that became "Obamcare kills jobs" for ACA's opponents, but it isn't what the CBO actually said.)
If employers do begin to push workers onto exchanges, it could intensify pressures to push healthcare costs lower. The Affordable Care Act includes some provisions for tackling rising costs, but that was never the primary focus of the law -- despite its name. As more individuals feel the direct sting of rising costs—without an employer to absorb part of the blow—the price of care could become an even more volatile political issue than it is now. The battles over Obamacare may have only begun.

Malaysian Prime Ministers And Where Did They Study

Malaysian Prime Ministers And Where Did They Study

GOP REPORT: 1 in 3 Obamacare ‘Enrollees’ Haven't Paid



WASHINGTON (AP) — House Republicans issued a report Wednesday saying that one-third of people who signed up for health insurance through new federal exchanges hadn't paid their first month's premium as of mid-April, which could undermine the Obama administration's claims of robust enrollment under the new health law.

But administration officials, outside experts and even the health insurance industry immediately questioned the report, offering the latest skirmish over questionable claims and counterclaims that have come to characterize debate over President Barack Obama's signature health law.
The report by House Energy and Commerce Committee Republicans said 67 percent of people who had signed up for health insurance through federal marketplaces had paid their first month's premiums as of April 15. That was far lower than the numbers emerging from individual insurance companies, which have been reporting payment numbers in the range of 85 percent and above. Wellpoint reported on an earnings call Wednesday that some 90 percent of people signing up for insurance actually had paid.
Administration officials, insurers and others were quick to point out that because the GOP data cut off in mid-April, it didn't capture a surge of health law sign-ups in March prior to the end of the first open enrollment period.
Rep. Henry Waxman, D-Calif., top Democrat on the Energy and Commerce Committee, called the report "inaccurate, irresponsible and out-of-date."
"It is another in a long line of Republican false allegations and scare tactics about the Affordable Care Act. The law is working and providing coverage to millions of Americans, yet Republicans in Congress continue to live in a state of denial," Waxman said.
In a statement, the committee said the administration itself has not provided figures on how many of the reported 8 million people who signed up for "Obamacare" actually paid premiums, something the administration says must come from insurers themselves. The number is important because until someone actually pays, they have not purchased insurance. Many Republicans have questioned whether the higher-than-expected sign-ups the administration has trumpeted under the health law would stand up under scrutiny.
Rep. Fred Upton, R-Mich., the Energy and Commerce chairman, said he was summoning insurers to a hearing next week to testify about Affordable Care Act enrollment.
"The Obama administration, from inside the Oval Office on down, has gone to extraordinary lengths to keep basic details of the health law from the public," Upton said. "Tired of receiving incomplete pictures of enrollment in the health care law, we went right to the source and found that the administration's recent declarations of success may be unfounded."
AP Medical Writer Carla K. Johnson in Chicago contributed to this report.

Hiring in U.S. Kicks Into Higher Gear as Unemployment Plunges to 6.3%

America’s job-creation machine kicked into higher gear in April as employers boosted payrolls by the most in two years and the jobless rate plunged to the lowest since the collapse of Lehman Brothers.
The 288,000 gain in employment marked the biggest upside surprise since February 2012 and followed a 203,000 increase the prior month, Labor Department figures showed today in Washington. Unemployment dropped to 6.3 percent, the lowest level since September 2008.
“The economy is gathering momentum after the bad winter,” said Michael Gapen, senior U.S. economist at Barclays Plc in New York, whose firm’s projection of 250,000 was among the closest in the Bloomberg survey. “It’s a very balanced number in the sense that we got it in goods as well as services.”
The report was not without pockets of weakness as wages stagnated and workforce participation matched a 36-year low. Nonetheless, job growth was broad-based and the hiring pace accelerated at factories, builders and service providers after households spent more freely as the first quarter drew to a close, showing the economy is perking up.
Stocks fell, after an earlier rally that sent the Standard & Poor’s 500 Index above its closing record, as concern about escalating tension in Ukraine overshadowed the jobs report. The S&P 500 fell 0.1 percent to 1,881.14 at the close in New York. The yield on the benchmark 10-year Treasury note fell to 2.59 percent from 2.61 percent late yesterday.
Photographer: Andrew Harrer/Bloomberg

Federal Reserve

The jobs figures corroborate the Federal Reserve’s view that the economy is rebounding from the weakest growth rate in a year, indicating central bankers will keep trimming stimulus.
“The soft patch is over, and the strong U.S. recovery will continue,” said Laura Eaton, an economist at Fathom Financial Consulting in London, whose firm’s projection of 250,000 jobs added was among the closest in the Bloomberg survey.
The median forecast in a Bloomberg survey of 94 economists called for a 218,000 advance. Forecasts for April payrolls ranged from increases of 155,000 to 292,000.
The difference between today’s outcome on payrolls and the average estimate of economists was 3.56 times larger than the poll’s standard deviation, or the average divergence between what each economist forecast and the mean.
Last year, the U.S. added more than 194,000 jobs each month, compared with about 186,000 in 2012. Economists surveyed by Bloomberg on April 4-9 project payroll gains to match 2013.
Photographer: Daniel Acker/Bloomberg
Students cut a piece of aluminum for a CNC Milling class project at the manufacturing... Read More

Construction Jobs

Today’s report showed construction payrolls increased 32,000 in April, the biggest gain in three months, while retailers added 34,500 workers, the most this year.
Private service-producing employment increased 220,000 last month, the strongest gain in 11 months and fueled by more hiring at temporary-help companies and education and health services.
Private payrolls, which don’t include government agencies, increased 273,000 in April after a 202,000 gain. Last month, hiring by companies surpassed the pre-recession peak for the first time.
Americans are the most upbeat about finding a “quality job” than at any time since January 2008, according to Gallup data released April 25. A recent report from the Conference Board showed the proportion of consumers who said jobs would become more plentiful in the next six months climbed in April to the highest level since January.

New Job

As a human resources specialist, Alan Janzen has first-hand knowledge of the improvement in the labor market. He started a job this week with the city of San Antonio after working as a personal trainer. He sent out 27 applications since beginning his job hunt in February.
“I expected it to be a long and frustrating search, from everything I hear,” said Janzen, 31, who has a master’s degree in human resources.
Such optimism extends to Ford Motor Co. (F) Boosted by record profits in North America, the second-largest automaker said it will probably hire more than the 12,000 new workers it promised in its 2011 contract with the United Auto Workers.
“The business has grown faster than we predicted it would in 2011,” Joe Hinrichs, Ford’s president of the Americas, said in an interview on April 30. The company said it hired 2,000 new workers at its factory in Claycomo, Missouri, and that it’s completed about 75 percent of its commitment to hire 12,000 workers by 2015.
One cloud in today’s figures is worker pay, which is stagnating. Average hourly earnings held at $24.31 in April, and were up 1.9 percent over the past 12 months, the smallest gain this year.

Participation Rate

The drop in the unemployment rate from March’s 6.7 percent came as the agency’s survey of households showed the labor force shrank by more the 800,000 in April. The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.8 percent, matching the lowest level since March 1978, from 63.2 percent a month earlier.
Reconciling such data, in the context of stronger employment gains, presents a challenge to Fed policy makers as they try to determine when to begin raising interest rates. Central bankers at this week’s meeting said the economy is showing signs of picking up and the job market is improving. The Fed’s Open Market Committee pared its monthly asset-buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in “measured steps” are likely.

Yellen’s Dashboard

“Yellen’s dashboard still looks abysmal in today’s data, with labor force participation falling, long-term unemployment still stubbornly high -- and could be improving for the wrong reasons -- and those working part-time instead of full-time for economic reasons unchanged,” said Diane Swonk Chief Economist at Chicago-based Mesirow Financial Inc. “Wage pressures remain nonexistent, further testimony that her dashboard of labor market slack is accurate.”
Gross domestic product rose at a 0.1 percent annualized rate from January through March, compared with a 2.6 percent gain in the prior quarter, the Commerce Department said earlier this week.
“Growth in economic activity has picked up recently, after having slowed sharply,” the Fed said this week in a statement following their meeting in Washington. “Household spending appears to be rising more quickly.”
Household purchases, which account for about 70 percent of the economy, climbed 0.9 percent in March, the most since August 2009, the Commerce Department said yesterday. Incomes increased by the most in seven months.
Today’s report “completely justifies the Fed’s statement this week that there is an improved assessment, things are looking better,” said Lindsey Piegza, the Chicago-based chief economist at Sterne Agee & Leach Inc. “This sets the Fed up for taking baby steps.”

Italy - Thousands protest against austerity and unemployment

Scuffles broke out between police and hundreds of protesters in Turin at one of several rallies against unemployment and austerity in Italy for May Day.
Activists lobbed smoke bombs at police, who charged against demonstrators in the northern industrial city, which has been badly hit by a painful two-year recession. A few protesters were seen being detained.
Thousands of people also took part in a peaceful demonstration called by the main trade unions in Pordenone, near Venice, where the closure of a nearby washing machine plant owned by Sweden's Electrolux has put 1,300 jobs at risk.
"We always hear talk about cuts in Europe instead of investment in labour," Susanna Camusso, leader of Italy's biggest union, the CGIL, said at the rally.
There was also a major protest in Milan and May Day concerts in Rome and Taranto - a heavily polluted industrial city in southern Italy where thousands of jobs at the local steel plant are at risk.
Source and full story: The Local (Italy), 2 May 2014

Big Banks Started Laundering Massive Sums of Drug Money In the 1980s … And Are Still Doing It Today

by GoldCore
Today’s AM fix was USD 1,285.00, EUR 927.26 and GBP 761.03 per ounce.
Yesterday’s AM fix was USD 1,283.00, EUR 924.15 and GBP 759.04 per ounce.
Gold fell $5.50 or 0.43% yesterday to $1,284.90/oz. Silver slipped $0.13 or 0.68% yesterday to $19.06/oz.
Please note GoldCore is closed for a Bank Holiday, this Monday, May 5th, reopening May 6th.
Gold remained in range bound trading yesterday and into this morning, fluctuating between $1,280 and $1,285/oz. Likewise, silver traded in a narrow band between $18.90 and $19.10/oz. The precious metals appear to be treading water while awaiting the open of New York morning trading, and the release of the latest U.S. non-farm payroll figures today.
Consensus payroll data estimates from surveyed economists indicate improving expectations for April and a possible drop in the unemployment rate. Any surprises in the U.S. payroll data today could be the catalyst to move the gold price out of its very narrow trading pattern, although given that it’s the end of the trading week, the short term direction for gold may not become apparent until next week.

Gold in USD Simple Moving Averages, 9 Years – (Thomson Reuters)
Italy May Have Over 1,000 Tonnes Of Gold At The New York Fed
Written by Ronan Manly for GoldCore

Italy’s central bank, the Banca d’Italia, has recently published an important document detailing the storage locations and composition of the country’s gold reserves. The document confirms that Italy’s gold is held across four vault locations, three of which are outside Italy.
This is a significant announcement given that the Banca d’Italia is the world’s third largest official holder of gold after the U.S. and Germany. Italy officially holds 2,451.8 tonnes of gold, worth more than €72 billion (US$ 100 billion) at current market prices [1].
In the detailed three page report focusing exclusively on its gold reserves (and only published in Italian), the Banca d’Italia reveals that 1,199.4 tonnes, or nearly half the total, is held in the Bank’s own vaults under its Palazzo Koch headquarters on Via Nazionale in Rome, while most of the other half is stored in the Federal Reserve Bank gold vault in New York. The report also states that smaller amounts are stored at the Bank of England in London, and at the vaults of the Swiss National Bank in Bern, Switzerland.
The Gold in RomeOf the 1,199.4 tonnes held in Rome, 1,195.3 tonnes are in the form of gold bars, with 4.1 tonnes held as gold coins (871,713 coins). There are 95,493 bars in the Rome vault, most of which are the standard trapezoidal shaped bars, however the holdings also include brick shaped U.S. Assay Office bars produced by the U.S. Assay Office, and another bar type which the Bank d’Italia refers to as ‘panetto’ (or loaf) shaped ‘English’ bars.
Like other major European central banks, the Banca d’Italia’s gold reserves were mainly accumulated during the late 1950s and early 1960s. Although Italy was already an important official gold holder during the first half of the 20th century, it still only held 402 tonnes of gold as of 1957. However, from 1958 until the late 1960s, the country’s gold reserves increased nearly 600% to exceed 2,560 tonnes by 1970[2].
Since 1970, Italy’s gold holdings have remained fairly constant, although at times some of the gold has been used in various financial transactions such as gold collateral against a German loan during the 1970s, and as contributions to the European Monetary Cooperation Fund (EMCF) and more recently to the European Central Bank (ECB).
The RAI Broadcast, the BIS and BernWhile the report from the Banca d’Italia appears to be the first official written confirmation that documents the exact storage sites of its gold reserves, the four storage locations were previously confirmed to Italian TV station RAI in 2010 when an RAI presenter and crew were allowed to film a report from inside the Bank’s gold vaults in Rome.
In the RAI broadcast for an episode of ‘Passaggio a Nord Ovest’, the presenter Alberto Angela states that in addition to Rome, the Italian gold is stored at the Federal Reserve Bank in New York, the Bank of England in London, and at the Bank for International Settlements (BIS) in Switzerland. The reporter uses the exact words “Banca dei Regolamenti Internazionali”.
The BIS connection was also confirmed in August 2009, when Italian newspaper “La Repubblica” published an article about Italy’s gold, stating that it was held in Rome, at the Federal Reserve in New York, in the vaults of the the Bank of England, and in the ‘vaults’ of the BIS in Basel.
This apparent contradiction between, on the one hand, the RAI and La Repubblica, who both state that some of the Italian gold is stored with the BIS in Switzerland, and on the other hand, the Banca d’Italia’s own document which states that its gold in Switzerland is stored at the Swiss National Bank (SNB) in Bern, is not really a contradiction since the BIS does not have its own gold storage facilities in Switzerland. The BIS simply uses the SNB’s gold vaults in Bern.
The BIS confirms this fact on its web site, under foreign exchange and gold services, where it states that it offers its clients “safekeeping and settlements facilities available loco London, Bern or New York”.[3] The term loco refers to settlement location for precious metals transactions.
By confirming that it stores gold at the Swiss National Bank in Bern, the Banca d’Italia has also inadvertently confirmed that the Swiss National Bank’s gold vaults are located in Bern. While this was generally known, the SNB currently will not confirm this fact publically and does not go beyond saying that it stores its own gold “domestically and internationally” in “decentralised” locations.[4]
However, Bern based Swiss newspaper “Der Bund” published an article in 2008 stating that the SNB’s gold vaults are in Bern, specifically underneath the Bundesplatz square which is adjacent to the SNB’s headquarters at No. 1 Bundsplatz. The SNB has two headquarters, one in Bern, the other in Zurich.
So it appears that the Italian gold in Switzerland is on deposit with the BIS (either earmarked or as a sight deposit) and is, at the same time, stored in Bern at the SNB vaults. Therefore the RAI and La Repubblica reports and the Banca d’Italia report are most likely both all in agreement, since they are merely saying the same thing, just in different ways. Another possibility is that the BIS sight deposit was converted back to earmarked gold in the SNB vault sometime since the 2010 RAI broadcast.
The reason for the confusion is because the Banca d’Italia will not confirm any of these details about how their gold in Bern is held, and they stated last week that they cannot comment beyond what is published in their April document.
Some of the details in the Bank’s gold reserve document were also confirmed a week prior to its publication when three Italian senators from Beppe Grillo’s political party Movimento 5 Stelle (Five Star Movement), namely, the party treasurer Giuseppe Vacciano, Andrea Cioffi and Francesco Molinari, visited the Rome vault on 31st March 2014.
The senators’ report states that as well as the 1,199.4 tonnes of gold held in Rome, “the remainder is mostly deposited at the Federal Reserve”, but also at the Bank of England and at “la Banca Centrale Svizzera” (which is the Swiss National Bank). The senators also reported that “For confidentiality reasons we were not notified of the exact extent of the deposits in different countries”.
Italian Gold in New YorkAs per the senators’ experience, the Banca d’Italia document does not specify how much of the Italian gold is held in New York, London and Bern, beyond stating that most of the gold that is not stored in Rome is stored in New York. However, the document does state that “the bulk” of foreign stored gold is in New York with “contingents of smaller size” located in London and Bern, so essentially it implies that the London and Bern holdings are not very large.
Of the 1,252.4 tonnes not in Rome, technically, a majority of this figure is anything greater than 626.2 tonnes. So with a simple calculation, there is at least 626.2 tonnes of Italian gold in New York.  But given that the “bulk” of 1,252.4 tonnes is in New York as the Bank’s document implies, and that “most of the remainder” not in Rome is in New York as the senator’s comments imply, then there could be anywhere up to between 1,000 tonnes and 1,200 tonnes of Italian gold in the FRB in New York.
In fact, 522 tonnes of this Italian gold that was earmarked at the Federal Reserve in New York in September 1974 was used as gold collateral for the Bundesbank loan to Italy during the first gold loan to Italy between 1974 and 1976. This collateral rose to 543 tonnes between 1976 and 1978.
London – The Bank of EnglandIt is possible using historical data and records of Italian gold movements to estimate how much, or how little, Italian gold may be in London.
It would appear that the Banca d’Italia does not hold very large amounts of gold in London. During the late 1960s, mainly between 1966 and 1968, the Banca d’Italia moved most of their gold that was stored at the Bank of England back to Italy. Regular shipments were exported and delivered to the Bank’s vaults in both Rome and Milan. By the end of 1969, the Banca d’Italia held less than 1,000 gold bars in London, or just under 400,000 ounces (approx. 12 tons).
Therefore, since Italian gold reserves have not in total changed very much since 1969, it would be realistic to assume that the Banca d’Italia’s London gold holdings have not changed very much since 1969, unless gold was moved back to London (or swapped back to London) after 1969. This would only make sense if it had been moved back to London for a specific reason such as to allow Italian gold lending through the London market. Gold lending only really began in London in the mid-1980s, and there is no public record that the Italians have engaged in gold lending through London.
Bern, SwitzerlandHistorical records from the BIS show that there wasn’t any Italian gold left in Bern after WWII, so whatever Italian balance is in Bern has been built up since 1946. It’s interesting to note that Sweden and Finland both recently published the international locations of their gold reserves, and revealed that only very small percentages of their gold is kept in the SNB vaults in Switzerland. Of Sweden’s 125.7 tonnes of gold reserves, only 2.8 tonnes or 2.2% is stored with the SNB vaults[5]. For Finland, only 7%, or 3.4 tonnes of its 49 tonnes of gold reserves are stored with the SNB in Switzerland[6].
If this Swedish-Finnish 2-7% range of allocations at the SNB was applied to the Italian gold that is reported to be outside Italy, it would work out at between 25 tonnes and 87.6 tonnes of Italian gold held at the SNB vaults in Bern. Assuming that there is very little Italian gold in London (400,000ozs or about 12 tonnes), and only a small allocation in Bern, then there could be nearly 1,200 tonnes of Italian gold at the Federal Reserve in New York.
Gold Audits and RepatriationThe Banca d’Italia state in their gold document that external auditors verify the gold held in Rome each year in conjunction with the Bank’s own internal auditors. The external auditors also verify the gold held abroad using annual certificates issued by the central banks that act as the depositories i.e.
This sound very similar to the way the German gold reserves stored abroad was audited. i.e. the gold stored abroad is not physically audited at all (although the Bundesbank did describe recently in quite a vague way that their gold in New York was recently audited by some of their own appointed representatives).
Given the widespread recent media coverage of the German Bundesbank’s plans to repatriate 300 tonnes of its gold reserves from the Federal Reserve in New York to the Bundesbank’s headquarters in Frankfurt, it will be interesting to see whether, in time, a critical mass is reached in Italian public opinion or even in Italian political opinion that would lead to the Banca d’Italia raising a similar request to the Federal Reserve.
The fact that the initial gold repatriated from New York by the Bundesbank needed to be melted down and recast (suggesting that it was low grade coin bars), does not inspire confidence that the Banca d’Italia might not face a similar problem if it attempts any gold repatriation from New York.
Source Links (all in Italian):
Banca d’Italia gold document, April 2014
Movimento 5 Stelle video of visit to Bank:
[1] Excluding the IMF, Italy is the world’s third largest official gold holder; including the IMF, Italy is the world’s fourth largest gold holder.
[2] Central Bank Gold Reserves, An Historical perspective since 1845, Timothy Green, Research Study No. 23, November 1999, WGC
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