Friday, January 25, 2013

Never Had A Real Job

For once, Turbo told the truth on a weekend talk show.  Sort of.  We could add that Geithner never paid taxes like a real taxpayer either.  Geithner's ongoing attempt to distance himself from Wall Street's decade of fraud is laughable.  As President of the New York Fed, Geithner was criminally negligent in his role as Wall Street's chief regulator.

Timmaaayy tells the truth.
"I find that the charge that — the myth that I worked in Wall Street all my life, somewhat amusing.  But it is part of a narrative that hardened.  People came to view the judgments we were making through the prism of a myth … it’s actually very damaging.  It’s completely false, of course, and it, you know, should have been corrected a long time ago.  What I say is that I never had a real job."
Flashback - Geithner with Fareed Zakaria - WSJ

Tim Geithner's Last Day In Office

 Four Years Of Tim Geithner - By The Numbers

U.S. Bailout Secretary says goodbye.
Jan. 24 -- Peter Cook reports on Treasury Secretary Tim Geithner's last day in office and the possibility he will replace Ben Bernanke as Federal Reserve chairman.
First, Bernanke actually has to leave.  He has told friends he won't seek a third term in 2014, but consider us skeptical until we see the door hit him in the a$$.  If he does leave, William Cohan thinks Geithner is the most likely candidate.
Second, Larry Summers really wants the job.
Third, don't forget former Goldman Sachs director William Dudley.

Withdrawn: $114 Billion From Big U.S. Banks

Business Week – by Nick Summers
More than $114 billion exited the biggest U.S. banks this month, and nobody’s quite sure why.
The Federal Reserve releases data on the assets and liabilities of commercial banks every Friday. The most current figures, covering the first full week of 2013, show the largest one-week withdrawals since the Sept. 11, 2001, attacks. Even when seasonally adjusted, the level drops to $52.8 billion—still the third-highest amount on record, and one for which bank experts and analysts were reluctant to give a definitive explanation.
The most obvious culprit is the expiration of the Transaction Account Guarantee program, the extraordinary federal effort to shore up the country’s non-gigantic banks during the 2008 financial crisis. Big banks were considered “too big to fail,” while smaller ones were vulnerable to runs. The TAG program backstopped their deposit bases by temporarily offering unlimited insurance on money kept in non-interest-bearing accounts. That guarantee ended on Dec. 31, so a decrease in deposits would be expected first thing in January.
But hold on: The Fed data show $114 billion leaving the 25 biggest banks—about 2 percent of their deposit base. Only $26.9 billion left all the others, equivalent to 0.9 percent of their deposit base. Experts had predicted that the end of TAG would hurt the nation’s small banks because the big ones are still considered too big to fail. “I think [customers] are going to go back to the mega banks,” the head of a regional bank in Bethesda, Md., toldThe Washington Post in December. “They’ve been assured by the government that mega banks are too big to fail. It’s a horrible, bad, poorly-thought-out situation.”Small banks fearfully lobbied the Senate to extend TAG, with analysts telling the New York Times that they expected $200 million to $300 million—yes, with an m—to move from affected accounts into money market funds or elsewhere.
So if the missing $114 billion is not the result of the TAG program expiration—or at least not all related to TAG—what’s going on? Paul Miller, a bank analyst with FBR Capital Markets, cautions against reading too much into the Fed’s weekly data. “It’s a noisy database,” he says. Among large U.S. banks, there have been movements of greater than $50 billion (not seasonally adjusted) during 107 different weeks since 2000. It’s not uncommon to see 11-figure swings—that is, tens of billions of dollars—from positive to negative, or vice-versa, one week to the next.
Noise can increase near the start of a year. “The first quarter is always a wacky quarter,” Miller says. And January 2013 has seen an incredible amount of change. First, the fiscal cliff drama had companies shifting dividends and had bank clients guessing what their tax liabilities would be, which might explain the $60.4 billion pumped into the largest banks during the week ending Dec. 26. (Seasonally adjusted, it was the sixth-highest level on record.) Second, the payroll tax just went up, sticking most wage earners with paychecks that are 2 percent smaller.
Third, ordinary investors may be ready to move out of federally guaranteed accounts and into investments. Stocks did very well in 2012. As Bloomberg Businessweek’s Roben Farzad wrote on Jan. 16, equity mutual funds saw their second-highest inflows on recordin the first week of the year. Economists are worrying that market exuberance is getting too high, with one measure of risk aversion at a three-decade low.
“If deposits are really trending down—and at the end of the month, we’ll be smarter than we are now—if that’s the case, it can tell us a few things,” says Dan Geller, executive vice president of Market Rates Insight. “And one thing that it could tell us is that the law of elasticity is finally catching up with deposits.” In other words, contrary to what economic theory predicts, deposits have been piling up at banks ever since the crisis, even though they offer pitiful yields. Geller says that may finally be ending—though like Miller, he says not to put too much stock in just one burst of Fed data.
“One week is just a very thin slice,” he says. Still, $114 billion is a big figure, and it’s one to keep an eye on in order to understand where the economy is headed in 2013.

McGrath - World Debt Domination

How the Obama administration protected Wall Street from prosecutions

Eric Holder Breuer
Eric Holder talks to DOJ Criminal Chief Lanny Breuer in 2010. Photograph: Jason Reed/Reuters
(updated below - Update II)
PBS' Frontline program on Tuesday night broadcast a new one-hour report on one of the greatest and most shameful failings of the Obama administration: the lack of even a single arrest or prosecution of any senior Wall Street banker for the systemic fraud that precipitated the 2008 financial crisis: a crisis from which millions of people around the world are still suffering. What this program particularly demonstrated was that the Obama justice department, in particular the Chief of its Criminal Division, Lanny Breuer, never even tried to hold the high-level criminals accountable.
What Obama justice officials did instead is exactly what they did in the face of high-level Bush era crimes of torture and warrantless eavesdropping: namely, acted to protect the most powerful factions in the society in the face of overwhelming evidence of serious criminality. Indeed, financial elites were not only vested with immunity for their fraud, but thrived as a result of it, even as ordinary Americans continue to suffer the effects of that crisis.
Worst of all, Obama justice officials both shielded and feted these Wall Street oligarchs (who, just by the way, overwhelmingly supported Obama's 2008 presidential campaign) as they simultaneously prosecuted and imprisoned powerless Americans for far more trivial transgressions. As Harvard law professor Larry Lessig put it two weeks ago when expressing anger over the DOJ's persecution of Aaron Swartz: "we live in a world where the architects of the financial crisis regularly dine at the White House." (Indeed, as "The Untouchables" put it: while no senior Wall Street executives have been prosecuted, "many small mortgage brokers, loan appraisers and even home buyers" have been).
As I documented at length in my 2011 book on America's two-tiered justice system, With Liberty and Justice for Some, the evidence that felonies were committed by Wall Street is overwhelming. That evidence directly negates the primary excuse by Breuer (previously offered by Obama himself) that the bad acts of Wall Street were not criminal.
breuer frontline
Numerous documents prove that executives at leading banks, credit agencies, and mortgage brokers were falsely touting assets as sound that knew were junk: the very definition of fraud. As former Wall Street analyst Yves Smith wrote in her book ECONned: "What went on at Lehman and AIG, as well as the chicanery in the CDO [collateralized debt obligation] business, by any sensible standard is criminal." Even lifelong Wall Street defender Alan Greenspan, the former Federal Reserve Chair, said in Congressional testimony that "a lot of that stuff was just plain fraud."
A New York Times editorial in August explained that the DOJ's excuse for failing to prosecute Wall Street executives - that it was too hard to obtain convictions - "has always defied common sense - and all the more so now that a fuller picture is emerging of the range of banks' reckless and lawless activities, including interest-rate rigging, money laundering, securities fraud and excessive speculation." The Frontline program interviewed former prosecutors, Senate staffers and regulators who unequivocally said the same: it is inconceivable that the DOJ could not have successfully prosecuted at least some high-level Wall Street executives - had they tried.
What's most remarkable about all of this is not even Wall Street had the audacity to expect the generosity of largesse they ended up receiving. "The Untouchables" begins by recounting the massive financial devastation the 2008 crisis wrought - "the economy was in ruins and bankers were being blamed" - and recounts:
"In 2009, Wall Street bankers were on the defensive, worried they could be held criminally liable for fraud. With a new administration, bankers and their attorneys expected investigations and at least some prosecutions."
Indeed, the show recalls that both in Washington and the country generally, "there was broad support for prosecuting Wall Street." Nonetheless: "four years later, there have been no arrests of any senior Wall Street executives."
In response to the DOJ's excuse-making that these criminal cases are too hard to win, numerous experts - Senators, top Hill staffers, former DOJ prosecutors - emphasized the key point: Obama officials never even tried. One of the heroes of "The Untouchables", former Democratic Sen. Ted Kaufman, worked tirelessly to provide the DOJ with all the funds it needed to ensure probing criminal investigations and even to pressure and compel them to do so. Yet when he and his staff would meet with Breuer and other top DOJ officials, they would proudly tout the small mortgage brokers they were pursuing, in response to which Kafuman and his staff said: "No. Don't show me small-time mortgage guys in California. This is totally about what went on in Wall Street. . . . We are talking about investigating senior level Wall Street executives, even at the Board level". (The same Lanny Breuer was recently seen announcing that the banking giant HSBC would face no criminal prosecution for its money laundering of funds for designated terrorist groups and drug networks on the ground that the bank was too big to risk prosecuting).
As Kaufman and his staffers make clear, Obama officials were plainly uninterested in pursuing criminal accountability for Wall Street. One former staffer to both Biden and Kaufman, Jeff Connaughton, wrote a book in 2011 - "The Payoff: Why Wall Street Always Wins" - devoted to alerting the nation that the Obama DOJ refused even to try to find criminal culprits on Wall Street. In the book, this career-Democratic-aide-turned-whistleblower details how the levers of Washington power are used to shield and protect high-level Wall Street executives, many of whom have close ties to the leaders of both parties and themselves are former high-level government officials. This is a system, he makes clear, that is constituted to ensure that those executives never face real accountability even for their most egregious and destructive crimes.
The reason there have been no efforts made to criminally investigate is obvious. Former banking regulator and current securities Professor Bill Black told Bill Moyers in 2009 that "Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong." In the documentary "Inside Job", the economist Nouriel Roubini, when asked why there have been no such investigations, replied: "Because then you'd find the culprits." Underlying all of that is what the Senate's second-highest ranking Democrat, Dick Durbin, admitted in 2009: the banks "frankly own the place".
The harms from this refusal to hold Wall Street accountable are the same generated by the general legal immunity the US political culture has vested in its elites. Just as was true for the protection of torturers and illegal eavesdroppers, it ensures that there are no incentives to avoid similar crimes in the future. It is an injustice in its own right to allow those with power and wealth to commit destructive crimes with impunity. It subverts democracy and warps the justice system when a person's treatment under the law is determined not by their acts but by their power, position, and prestige. And it exposes just how shameful is the American penal state by contrasting the immunity given to the nation's most powerful with the merciless and brutal punishment meted out to its most marginalized.
The real mystery from all of this is that it has not led to greater social unrest. To some extent, both the early version of the Tea Party and the Occupy movements were spurred by the government's protection of Wall Street at the expense of everyone else. Still, Americans continue to be plagued by massive unemployment, foreclosures, the threat of austerity and economic insecurity while those who caused those problems have more power and profit than ever. And they watch millions of their fellow citizens be put in cages for relatively minor offenses while the most powerful are free to commit far more serious crimes with complete impunity. Far less injustice than this has spurred serious unrest in other societies.
[The one-hour Frontline program can be viewed in its entirety here.]

New feature

We're going to institute a new feature tomorrow (Thursday), beginning at 10:00 am EST: a live question-and-answer session between myself and readers regarding columns I've written over the last month. At that time tomorrow morning, a column will be posted here in which readers can leave questions, and from 2:00 pm to 4:00 pm EST, I'll be here live to answer selected ones. The exchange will then be posted in a form similar to this one previously done by the Guardian with Clay Shirky. The Guardian has several really good ideas for maximizing the involvement of and interaction with readers in the journalism that it does - a goal that has been important to me since I first began writing about politics online - and this is the first of the features we'll try in pursuit of that end. I hope everyone inclined to do so is able to participate.


The New York Times' Dealbook section hosted a Q-and-A today with Martin Smith, the producer of "The Untouchables". Here is one quite revealing exchange from that (via @QuietAmerican55):
dealbook untouchables
The Obama administration is not accustomed to actual adversarial journalism that sheds light on their malfeasance. They do not like it. And when they see it, they respond about as petulantly as possible: we will never cooperate with you again! It's not Frontline's fault that the Obama administration actively shielded Wall Street from all forms of criminal accountability. If, as seems to be the case, that fact embarrasses them, they should blame those responsible (themselves), not those reporting it.


The Washington Post is reporting this afternoon that Breuer is planning to leave the DOJ. Don't worry: he'll be fine. Given how valiantly he protected Wall Street and HSBC, one need not be Nate Silver to predict with a fair degree of confidence that he'll land on his feet. When public officials use their government power to serve the interests of private sector elites, they are often lavishly rewarded by the faction they served upon leaving government. That's one of the key dynamics greasing the sleazy revolving door of Washington. Beyond that, Breuer's contacts in and influence with the DOJ will be in high demand by corporations, banks and other assorted oligarchs seeking to exercise the legal immunity which US political culture has bestowed on them.

From the man who left Goldman Sachs, advice to Stanford about saving Wall Street from itself

Greg Smith, a Stanford alumnus who resigned from Goldman Sachs in a New York Times op-ed last year, gave an Ethics of Wealth talk Thursday at the Stanford Graduate School of Business.
L.A. Cicero Greg Smith speaking at Stanford Greg Smith speaking at Stanford on Thursday about the 'behavioral and cultural shift' that has tilted the Wall Street playing field over the past decade.
Goldman Sachs is a notoriously secretive company, even by Wall Street standards. So when the head of the company's U.S. equity derivatives business in Europe, the Middle East and Africa publicly resigned in early 2012 with a New York Times op-ed criticizing the firm's corporate culture, he drew instant attention.
"If you were an alien from Mars and sat in on [a derivatives sales meeting], you would believe that a client's success or progress was not part of the thought process at all," he wrote.
The opinion piece drew praise from figures like Paul Volcker and Mike Bloomberg, sparked counters from Goldman Sachs and spawned a book-length reflection on Smith's Wall Street experience, Why I Left Goldman Sachs.
On Thursday, Smith, a Stanford alumnus, spoke on campus about the "behavioral and cultural shift" that has tilted the Wall Street playing field over the past decade.
"I don't think Goldman Sachs is the problem," he said. "I think this is a systemic problem."
The talk was part of the Ethics of Wealth lecture series, organized by Stanford's Bowen H. McCoy Family Center for Ethics in Society in collaboration with the Graduate School of Business.

'Very much a capitalist'

Smith went to work for Goldman Sachs straight out of college, and he maintains a love of finance. His reviewers have often characterized his early relationship with the firm as a love story, and he characterizes himself as "very much a capitalist."
But, Smith said, the culture of Wall Street changed in the mid-2000s. Trading began to account for a larger and larger share of Wall Street's profits, and bankers were encouraged to view the client as "an information provider that can make you rich, rather than as a partner."
Smith views this as a switch from Goldman Sachs's traditional "long-term greedy" approach – in which profit is maximized, but over a long time scale, with a focus on maintaining relationships with clients – to "short-term greedy." Analysts were expected to encourage unsuspecting clients to buy products the company knew were risky.
Admitting that Wall Street has always been a gamble, Smith pointed out that the average casino offers much fairer odds. The average dealer isn't actively misleading a blackjack player about the value of the cards he's holding, he pointed out. Nor is he secretly looking at the other players' hands and then going out and placing his own bets.
"You would expect someone not to lose very often when you can see everyone's cards," Smith said. And it's not uncommon for Wall Street traders to post huge profits – a phenomenon made possible by the fact that Wall Street firms know more about their products than their clients do, he said.

Way forward

Little has changed since the global economic meltdown, Smith said – there have been zero criminal prosecutions of Wall Street executives, and implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act has been slow and ineffective. He pointed out that America's five largest banks are bigger now than they were before the financial crisis.
Three basic steps are needed in order to rein in the financial sector, Smith said: regulate derivatives markets, outlaw proprietary trading and split banks into smaller units.
His recommendations aren't radical – in large part, they derive from the Glass-Steagall Act, the Depression-era regulatory legislation repealed in 1999. And Smith repeatedly assured the audience that he wasn't a fan of regulation.
"I think people should be able to get rich," he said. "I just think they need to do it in a way that's transparent."

Apple Shares Plunge 10% on Slowing Growth, New Product Jitters

For years, Apple consistently beat Wall Street expectations, not only because the company habitually low-balled its financial projections, but also because it was growing at a rate and scale that was virtually unprecedented in the history of corporate America. It appears those days are over.

For the third consecutive quarter, Apple, the world’s largest technology company, fell short of analyst estimates, sending the company’s stock down a whopping 10% in after-hours trading, wiping out nearly $50 billion in shareholder value. Although it reported record financial results, Apple’s slowing growth has raised questions about the next phase in the company’s evolution.
(MOREApple Profit Surges 24% Ahead of Holiday Blowout; CEO Tim Cook Disses Microsoft)
One thing is for sure: The numbers associated with Apple’s business are staggering. Apple sold 47.8 million iPhones and 22.9 million iPads during the holiday quarter, but both of those figures were about one million short of analyst expectations. The company generated profit of $13.1 billion, but that was flat compared to the year ago period — the company’s lowest rate of profit growth in a decade — in part because of higher production costs associated with new products. Revenue came in at $54.5 billion, an 18% increase over one year ago, but less than the $55 billion that analysts had been expecting.
For the current quarter, Apple projected sales of between $41 billion and $43 billion, but that number also fell below the $45.6 billion that analysts had been expecting. That translates to revenue growth of about 7%, which is lower than the double-digit sales growth that Apple had enjoyed in recent years.
The fundamental question facing Apple is whether its existing, wildly popular products like the iPhone and the iPad can continue to power revenue and profit growth, or whether it needs new, breakthrough products. After all, during his legendary career, Apple’s late co-founder Steve Jobs radically disrupted several industries with iconic products like the iPod, iPhone and iPad.
(MOREApple Earnings Miss Wall Street Target as Buyers Wait for New iPhone)
“It has been an overriding concern with Apple that they would not be able to generate revenue growth just rolling out new versions of old products,” Jeff Sica, president and chief investment officer of SICA Wealth Management, told the Associated Press. “Now they’ve proven it in their numbers.”
What will be Apple’s next revolutionary product? On a conference call with analysts, Apple CEO Tim Cook didn’t say — he likes to keep people guessing — but he did insist that the company has some surprises up its sleeve.
“We’re working on some incredible stuff,” Cook said. “The pipeline is chock full.” There has been speculation that Apple could introduce a new television product, especially after Jobs told his biographer Walter Isaacson that he cracked the code on a revolutionary new TV. But so far, those rumors remain just that — rumors. “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world,” Cook added in a statement.
(MoreIs Apple Losing Its Shine After Steve Jobs?)
Apple’s most recent quarter was just the latest period to fall short of Wall Street expectations. (Though to be fair, the most recent holiday quarter was one week shorter than the previous year. Also, new products — and there were several this holiday season — are more expensive to produce.) Last October, sales of the company’s iPad tablet device fell short of analyst forecasts, as many consumers held off buying in anticipation of the new iPad Mini. And in July, Apple’s iPhone sales disappointed analysts, again, as buyers waited for the new model. This suggests that consumers are becoming more savvy — and perhaps selective — about Apple’s product cycle.
Apple’s latest quarter raised questions for some Wall Street analysts. ”It’s going to call into question Apple’s dominance in the space,” Sterne Agee analyst Shaw Wu told Reuters. “It’s still one of the strong players, the others being Samsung and Google. It’s still a two-horse race, but Android continues to grow rapidly.” Indeed, Google’s Android mobile operating system is the most ubiquitous platform in the world, although it’s vastly less profitable for Google than the iOS devices are for Apple.
Apple’s slowing growth rate has taken a major bite out of the company’s stock price, which has declined by nearly 30% since its peak in September — and that’s before Wednesday’s 10% after-hours free fall. Still, despite the pessimism, which is being driven by typically sky-high expectations, there’s is little doubt that Apple’s fundamental business remains very strong. “Sentiment has turned super-pessimistic on Apple, where they’ve gone from being able to do no wrong to suddenly being able to do no right,” Rob Cihra, an analyst at Evercore Partners, told the New York Times. “I tend to think the company’s momentum is a heck of a lot more solid than people are concerned about.”

AXE FALLS: Morgan Stanley Slashes 1,600 Jobs

The $9 billion check that saved Morgan Stanley.
Morgan Stanley, the sixth-largest U.S. bank by assets, plans to eliminate about 1,600 jobs from its investment bank and support staff in coming weeks, a person with direct knowledge of the matter said.
The cuts total about 6 percent of the New York-based company’s institutional securities group, which includes investment banking and trading units, and support staff, the person said, asking not to be identified because the decision hasn’t been made public. About half the reductions will be in the U.S., the person said.
Morgan Stanley reduced staff by about 4,200 people in the first nine months of last year through job cuts and unit sales, after saying in December 2011 it would trim 1,600 jobs. Chief Executive Officer James Gorman, 54, has pledged to lower costs as return on equity remains below the bank’s cost of capital.
All levels of employees will be affected, with a focus on senior workers, the person said. The cuts will be distributed across all investment banking and trading units, and some workers have already been notified, the person said.
Morgan Stanley, which had 57,726 employees as of Sept. 30, has laid out a plan to cut $1.4 billion of annual expenses by next year. The firm produced a return on equity of about 5 percent in the first nine months of 2012, excluding charges related to its own credit spreads. That’s below Gorman’s target of 15 percent.
Continue reading...

Spanish unemployment leaps to new high of 26% with 55% of young people out of work

  • 5.97 million without jobs following prolonged recession and spending cuts
  • It is the highest level since measurements began in the 1970s
  • Over past 12 months a further 691,700 people have fallen out of work
  • There are now 1.8 million Spanish households in which no one is employed
  • And financial experts warn 'we haven't seen the bottom yet'

  • Spain's unemployment rate has soared to record levels with a shocking 55 per cent of young people now out of work and experts warning worse is to come.
    The jobless total rose to 26 per cent in the fourth quarter of 2012, equivalent to 5.97 million people according to the National Statistics Institute and up from 25 per cent in the previous quarter.
    It is the highest level since measurements began in the 1970s as a prolonged recession and deep spending cuts left almost six million people out of work at the end of last year.
    Crisis: A man waits outside a Madrid employment office. Latest figures reveal Spanish unemployment has reached an all-time high
    Crisis: A man waits outside a Madrid employment office. Latest figures reveal Spanish unemployment has reached an all-time high
    Over past 12 months 691,700 more people have fallen out of work, the institute said, adding that there were now 1.8 million households in which no one was employed.

    'We haven't seen the bottom yet and employment will continue falling in the first quarter,' said Citigroup strategist Jose Luis Martinez.
    Spain sank into its second recession since 2009 at the end of 2011 after a burst housing bubble left millions of low-skilled laborers out of work and sliding private and business sentiment gutted consumer spending and imports.
    Unemployment in Spain now stands at a record 26 per cent, higher than any other EU country
    Unemployment in Spain now stands at a record 26 per cent, higher than any other EU country
    Efforts by Prime Minister Mariano Rajoy's government to control one of the euro zone's largest deficits through billions of euros of spending cuts and tax hikes have fueled general malaise, further hampering demand.
    When Rajoy took office in late 2011 there were 5.27 million jobless in Spain.
    The economic downturn put an average of 1,900 out of work every day through 2012 and with the recession expected to last at least until the end of 2013, net job creation is unlikely this year.
    Sorry scene: Over the year, 691,700 more Spanish people lost their jobs, meaning there are now 1.8 million households in which no one was employed
    Sorry scene: Over the year, 691,700 more Spanish people lost their jobs, meaning there are now 1.8 million households in which no one was employed
    Joblessness has been particularly acute for Spain's youth, with 60 percent of people under the age of 25 unemployed in the fourth quarter.
    In the fourth quarter, the economy shrank at its fastest pace since the recession began, the Bank of Spain said on Wednesday, dragged down by a steep drop in private consumption due in part to a September VAT hike and public wage cuts.
    Spain is in the throes of its second recession in just over three years following the collapse of its once-booming real estate sector in 2008.
    Battling to reduce a swollen deficit and avoid a bailout, the year-old conservative government has brought major financial and labor reforms and applied severe cutbacks in wages and spending but so far the economy has shown few signs of recovery.
    The austerity measures are aimed at lowering the deficit, but are hurting the economy in the short-term, while the reforms will only help growth in the longer-term. That means the economy will suffer more before it recovers.
    The central bank this week estimated that the recession deepened in the fourth quarter of last year, the economy shrinking by 0.6 percent compared with the previous three-month period.
    It was the sixth consecutive quarterly contraction. The economy contracted by 0.4 percent in the third quarter.
    The bank estimated economic activity was down 1.7 percent in the fourth quarter from the year-earlier period and down 1.3 percent for the whole of 2012.
    The statistics institute will announce official economic growth figures on Jan. 30, while Europe's main statistics office Eurostat unveils its estimate on Feb. 14.

    'I paid off my Virgin credit card TWICE but got hit with £100 in charges': How phantom interest can ruin your credit score

    You would think paying off a credit card would be as simple as checking the remaining balance, and coughing up that amount.
    But one This is Money reader found that a card he had assumed had been cleared had a sting in the tail - and would end up costing him more than £100 in sneaky charges months down the line.
    Last January, Mark Zimmerling paid off the remaining £3,895.76 he saw was left on his Virgin/MBNA card, the remainder of a balance transfer made a year and half earlier.
    Credit car woe: Mr Zimmerling has been left out of pocket and seen a blotch on his credit record after MBNA/Virgin troubles
    Credit car woe: Mr Zimmerling has been left out of pocket and seen a blotch on his credit record after MBNA/Virgin troubles
    He assumed the account was then closed. Unfortunately, he didn’t realise that interest had accrued in the time between the balance he saw was issued, and the date he paid.
    The first he learned of this was four months later when Virgin/MBNA contacted him to tell him he owed £9.30 interest and a £12 late payment fee for missing the payment - a total of £21.30.

    He stated his case over the telephone but decided the best course of action was to pay this off so the account was up-to-date and closed - something he says MBNA/Virgin confirmed to him at the time was the case.
    However, in June, he received another letter advising he had missed more payments, with further interest and late payment charges added, to the tune of £36.61.
    This was followed by an email telling him his name would be registered with the credit reference agency as a defaulter.
    Credit record: Mr Zimmerling says the debacle has dragged his credit rating down
    Credit record: Mr Zimmerling says the debacle has dragged his credit rating down
    Exasperated, Mr Zimmerling spoke to ’20 different advisers’ to sort the spiraling situation. He also wrote to them stating his case.
    He requested that further charges be put on hold until a resolution was found but says this was refused. The fees and interest continued to mount until, in November, Mr Zimmerling received a request for a further £86.20, made up of seven £12 late payment charges plus interest.
    It took the amount demanded by Virgin/MBNA overall to £154.11. Potentially even more costly was the damage done to his credit rating. He says his credit worthiness has been ‘ruined’ by the affair, with one agency now rating him as 'very poor’ despite never being in arrears with his mortgage or other credit card before.
    He has taken his case to the Financial Ombudsman Service (FOS) but it has told him it could take a further six months to process.
    Mr Zimmerling said: ‘I think this is all grossly unfair, unjust and surely not good banking practice. They have been negligent in not advising of the consequences and have racked up their charges because of this.'

    This is Money takes up the case

    On Friday 18 January 2013 This is Money contacted Virgin about Mr Zimmerling's case, and the company said it would investigate.
    A spokesman explained the appearance of the unforeseen interest payments. He said: ‘Because we calculate interest on a daily basis, the balance can change between the customer making the payment and it being credited to their account.
    ‘This is standard practice across the industry, and any difference is carried over to a customer's next statement.
    ‘As happened in this case, if this is not paid then interest and charges can begin to accumulate, which is why we encourage all of our customers to check their statements every month and open the letters, read the text messages or respond to the calls we make.’
    However, it agreed it could have done more to deal with the issue more effectively, and promised to review the case internally.
    It also said that despite the fact the issue is being decided upon by the FOS, it will reimburse the fees and charges, and will also make necessary amendments to the credit file.


    Virgin Money stepped up its efforts to become a rival to high street banks with a £1billion deal to run a portion of its credit cards itself.
    Virgin announced at the weekend that it would scale down a tie-up with MBNA, a division of Bank of America, and confirmed it mean the purchase £1billion of assets in the process.
    While it will still have £2billion of credit card accounts run by MBNA, Virgin did not rule out taking these in house in future as well.
    Virgin is expected to launch its own current account before the end of the year that will extend its banking bid even further.

    LEE BOYCE: Using just my name and address a fraudster took £1,000 of Wonga loans - yet it won't reveal how this can happen

    This is Money’s banking correspondent Lee Boyce fell victim when a fraudster managed to take out payday loans under his name with Wonga.
    What has ensued is a number of unsatisfactory responses from Wonga which has left him in the dark as to how the fraud has happened and questioning just how seriously Wonga takes treating fraud victims. He delves a little deeper…
    Wonga barrier: The payday lender is staying tight-lipped as to how I became a victim of fraud
    Wonga barrier: The payday lender is staying tight-lipped as to how I became a victim of fraud
    On Christmas Eve, I received an unwanted present when I went back to my mum’s house in Essex for the festive period.
    Opening old post, as I hadn’t been back to the property since September, I had three separate letters from payday lender Wonga – final demands for money I had allegedly borrowed from it.
    I felt my pulse race and hands tremble; I had become a victim of identity fraud and someone had managed to take two loans in my name to the tune of more than £1,000.
    Frantically, I called the number on the letter to no avail. Frustratingly, it rung-out. I knew if I didn’t sort it before Christmas, I would struggle to relax.

    I took the route not open to most – I called its public relations (PR) team. I explained the situation and I was told it would be looked into. If I wasn’t a journalist with such access to getting a problem I planned to write about looked at, I dread to think how powerless I would have been feeling.
    A few days after Christmas, Wonga informed me that it had investigated the situation, the money would be written off and my credit record would be adjusted.
    It turns out a fraudster using just my name and address had managed to open a loan.
    Two small pieces of information which are easily available – how could Wonga let this fraud happen so effortlessly?
    You think this answer could be easily obtained. I asked the payday lender to describe to me, in detail, how the fraud happened. After all, this is just the latest in a spate of Wonga fraud cases that This is Money has seen and as a journalist I felt a duty to explain to others how this can occur.
    After a week of waiting, a member of its PR team contacted me to say I was simply a victim of ‘identity fraud.’ It was clear to me it was putting the barriers up with such a derisory response.
    Simple information: Just my name and address were needed to open a Wonga loan - in my opinion, the payday lender needs to be much more thorough with its checks
    Simple information: Just my name and address were needed to open a Wonga loan - in my opinion, the payday lender needs to be much more thorough with its checks
    Eventually, a member of its fraud department contacted me and said: ‘I’m afraid we won’t go into how the fraud may have happened as publication may encourage copycat attempts.’
    I didn't agree with this statement, but never-the-less I wanted to know for personal reasons as a victim and for professional reasons to get some off-the-record understanding and, as such, wouldn't have published it in this article.
    However, Wonga wouldn't even agree to do this.
    I have been a victim of fraud, yet it wasn’t willing to tell me how it had happened and I find that disgusting.
    I believe I have a right to know, as should any fraud victim, no matter what company they are dealing with.
    So, as a journalist I am asking: does Wonga have a fraud problem it is trying to hide from public view and is it all-too-simple for scammers to get cash in your name?
    Wonga tells me that 8,000 pieces of data are analysed when assessing a loan application – but the fraudster needed to only use two things  to get a loan, my name and address.
    Not even my bank details were compromised. My bank says there is no evidence of them ever having been used for a Wonga account and the lender says they were not put in.
    Yes, that’s right; they managed to get the money paid straight into another bank account.
    So what I want to know is how they are managing to comb through 8,000 pieces of data in just fifteen minutes to properly check loans?
    And how can loans be opened with such little information when, for instance, you need photo identification and copies of bills to even open a current account in a bank?
    Getting an answer from Wonga, however, is like getting blood from a stone and it chose not to answer when I asked how its processes work.
    I also asked how, if the money was paid into another bank account that is not my own, they cannot establish who the fraudster is.
    It said: ‘We did make the bank, which held the account where the money was deposited, aware. Data Protection rules mean they will not share the details with us. You should also inform the police.’ 
    Yet This is Money's previous investigations have suggested that it is actually Wonga that should be reporting this to the police, as it is actually considered the victim of the theft, despite this having been done in my name.
    Is Wonga at all taking my case seriously? And is it taking other members of the public, who have been victims of fraud, seriously? It certainly doesn’t feel like it and it doesn’t appear the police are being notified by the payday lender when fraud happens.
    So what about my all important credit file?
    Wonga said: ‘References to the loans have been removed.’
    I told it I wanted to check for myself that it had been done, but it took three times of asking to get an answer to which agencies it uses.
    All of these hurdles to get the information are very frustrating.
    How someone can use just my name and address to access high interest payday loans is frightening. I understand that identity fraud is a widespread problem that affects a number of companies, but what worries me more is how tight-lipped Wonga is about the subject.
    I have lodged a Subject Access Request (SAR) with the Information Commissioner’s Office (ICO) in hope this can shed some light about how my data was used and where the money was paid to.
    It can take a few weeks for this to be processed – I will keep readers updated when I get the result. I am also in the process of checking my credit report with Experian to make sure Wonga has been true to its word and updated my credit file.
    This isn’t an attack at Wonga as a payday lender and the APR rates on its loans - it’s an attack at how frustrating it has been at giving simple answers to questions to someone who has been a victim of fraud.
    In my opinion all organisations, not just Wonga, should be more transparent when it comes to this growing problem and advise ways to protect your data from fraudsters in the future.


    Wonga states that its fraud rates are some way below the UK average for online transactions – but This is Money’s inbox has had a steamy stream of complaints.
    My colleague Tara Evans has reported on Wonga fraud in the past and also has ongoing cases  – some with similar problems as mine highlighted above and others who have had payments for loans they never took out swiped from their current accounts.
    Have you been a victim of fraud with Wonga similar to my experience above? Let us know in the comments box below or e-mail and

    Brits have paid off half their personal loans since the financial crisis, with debts at their lowest since 1999

    Counting the pennies: Cautious consumers chose to pay off more than they borrowed in 2012
    Counting the pennies: Cautious consumers chose to pay off more than they borrowed in 2012
    Cautious households are making considerable headway clearing their debts, with the amount owed on personal loans dropping to its lowest level in 14 years, according to a report.

    The total balance owed by consumers on all personal loans fell to £34.5billion in December, the lowest figure seen since August 1999 and almost half its pre-financial crisis peak.

    The figure has been falling for some time as people try to clear existing debts and steer clear of new loans, the report by the British Bankers’ Association (BBA) said. 
    Overall, the outstanding level of non-mortgage consumer borrowing shrank back by 1.6 per cent over the year to December, which was driven by a sharp 7 per cent contraction in personal loan and overdraft lending.
    There was a net repayment of £48million in personal loans and overdrafts in December, it added.

    However net spending on credit cards increased by £278million in the month, suggesting that people relied more heavily on plastic to get them through Christmas. 
    As savings rates became even more abysmal, savers piled their money into cash Isas over the year in search of better rates of interest. Personal deposits increased to 6.1 per cent on the year to December, the BBA said. 
    Loans and overdrafts continued to fall over the year while credit card debt continued to rise (Source: BBA)
    Loans and overdrafts continued to fall over the year while credit card debt continued to rise (Source: BBA)
    Households have also been taking advantage of low interest rates to make high mortgage repayments and cut down what they owe, reducing net mortgage lending to a ‘flat balance through much of 2012’, the report said.

    BBA statistics director David Dooks said: ‘2012 was a year of holding on to deposits and repaying debt for companies and households.
    ‘New mortgage lending of £92billion was offset by £91billion of repayments, and slow economic growth also continued to suppress new borrowing demand from consumers and from companies.’
    Personal deposits continued to increase over the year as people shored up their savings (Source: BBA)
    Personal deposits continued to increase over the year as people shored up their savings (Source: BBA)
    Howard Archer, chief European and UK economist at IHS Global Insight, said that a significant number of people could have borrowed more on their credit cards in late 2012 to make their finances stretch further over Christmas.
    But he added: ‘The impression remains that consumer appetite for taking on new borrowing is limited.’
    The BBA's figures also showed that mortgage approvals to home buyers increased for the sixth month in a row in December. There were 33,636 approvals for house purchase in December worth £5.2billion, continuing a trend of increases seen every month since last July.
    Lending to businesses continued to drop over all in December as firms continued to reduce their debts (Source: BBA)
    Lending to businesses continued to drop over all in December as firms continued to reduce their debts (Source: BBA)
    Lenders have said they expect house sales to pick up this year amid signs that the market is improving following a Government scheme launched last August to boost lending, which has prompted lenders to slash their mortgage rates.
    The BBA's figures also showed that net lending to non-financial companies decreased by £3.5billion in December.
    The report said that firms were continuing to reduce their debts while waiting for more certain trading conditions and an increase in consumer confidence.

    Report: Asst. Atty. General Who Shied Away From Wall Street Prosecutions To Step Down

    Assistant Attorney General Lanny Breuer has been accused by some of being overly fearful of prosecuting big banks.
    Assistant Attorney General Lanny Breuer has been accused by some of being overly fearful of prosecuting big banks.
    Less than 24 hours after his appearance on PBS’ Frontline, where he struggled to explain why his office had brought not one single indictment against a high-level Wall Street executive related to the 2008 financial crisis, Assistant Attorney General Lanny Breuer has reportedly decided to step down. The Washington Post reports that no specific time-frame for Breuer’s departure has been given, so it’s possible he’ll continue to not prosecute bank executives for some time.
    In spite of the fact, under his direction, the U.S. Attorney General’s Criminal Division has prosecuted a huge number of financial frauds and other crimes, Breuer has been unable to shake the reputation — and did himself no favors on Frontline — that he is either unwilling or unprepared to go after high-ranking executives at large financial institutions.
    “[We] don’t let these institutions go,” he tried to explain about the lack of criminal prosecutions. “We’ve brought civil cases. We’ve brought regulatory cases and the entire approach here is to have a multi-pronged, comprehensive approach to what gave to the financial crisis.”
    Breuer and his office have been criticized for not having confidence in the mountain of evidence — turned up by regulators, lawmakers, the Financial Crisis Inquiry Commission, and dozens of private lawsuits against banks — that shows bank executives were complicit in fraud related to toxic mortgages and the mortgage-backed securities created from them.
    The Asst. A.G. has also received scorn — and calls for his resignation — from critics for his office’s part in “Operation Fast and Furious,” and other “gun walking” operations wherein government agents knowingly allowed buyers for Mexican drug cartels to purchase weapons at U.S. dealers. It was intended that these weapons would then be tracked to locate higher-level criminals in the organization. However, a number of the guns ended up on the streets, including one that was believed to be used in the killing of a U.S. Border Patrol agent.

    Blind Sheik Prosecutor Mary Jo White to be nominated to lead Securities and Exchange Commission

    U.S. Attorney for the Southern District of New York from 1993-2002

    Barack Obama picks Mary Jo White to lead Securities and Exchange ...

    President Obama on Thursday will nominate former federal prosecutor Mary Jo White as chairwoman of the Securities and Exchange Commission and re-nominate Richard Cordray for a full term as director of the Consumer Financial Protection Bureau, according to a White House official.
    Both nominations are central to Obama’s hopes of more tightly regulating Wall Street in his second term, as many of the new rules created by the Dodd-Frank overhaul of financial regulation take effect.
    Read the whole story.

    Senate Democrats will accept House GOP debt-ceiling plan

    Senate Democratic leaders announced Wednesday that they plan to accept the House GOP plan to extend the Treasury’s borrowing authority,Reid21356047598_image_1024w committing themselves to approving a budget outline this spring and putting off any potential default on the nation’s swelling debt until well into the summer.
    About an hour before the House’s expected passage of the new plan, Senate Majority Leader Harry M. Reid (D-Nev.) and his leadership team formally said that they would accept the latest offering from House Speaker John A. Boehner (R-Ohio), in large part because Boehner had dropped his previous demands that every dollar in increased borrowing authority be met with a corresponding dollar in spending cuts.
    “We will not hold the full faith and credit of the United States hostage,” Reid told reporters, vowing “regular order” to bring a budget to the Senate floor for the first time since 2009.

    Boehner’s team, which has struggled to corral its caucus behind past compromises, believes it has finally unified the rank-and-file behind the proposal to lift the debt ceiling until May 19 in exchange for demands that the Senate and House approve budgets. This is meant to set up an attempt at what insiders call “regular order,” in which House Budget Chairman Paul Ryan (R-Wis.) will attempt to negotiate a deal with Senate counterparts to start the process toward tax and entitlement reform.
    It’s a recognition that the past two years of negotiating — lurching from crisis to crisis, often with President Obama and Boehner getting close but then faltering on a deal, leading to last-minute intervention by Senate leaders — have been a political and policy disaster for the House GOP.
    Assuming the House passes the new plan, the Senate could act within the next week. That would come almost a full month before the next debt-ceiling limit is slated to hit, an unusual accomplishment for a congressional leadership that has seemed to thrive on 11th hour deals after weeks of ugly finger-pointing negotiations.
    “For four years, with our economy on the line, they did nothing. With their paychecks on the line for one week, they’re springing into action,” Rory Cooper, spokesman for House Majority Leader Eric Cantor (R-Va.), said in reaction to the Senate announcement.
    The new timeline would suspend the current limit of $16.4 trillion in debt and allow Treasury to continue borrowing through May 18, and the next day Treasury could begin using extraordinary measures to manage the debt until July or August.

    Inside China: War hysteria blamed on U.S.

    Source: WT
    War hysteria in China has not been this screechy since the 1970s.
    The newly appointed supreme leader President Xi Jinping has completely revamped the command structure of the People’s Liberation Army and given the world’s largest military force a central mission: get ready for a war, quickly.
    Much of China’s call to arms is related to Beijing’s increasingly unyielding stance on many of its territorial disputes with neighbors, and China has disputes with almost all of them.
    Some of the more-tense discord is with China’s maritime neighbors, including Japanthe PhilippinesSouth KoreaTaiwan and Vietnam.
    As the clouds of war appear to be gathering ominously over China’s various territorial disputes, China has one arch enemy in mind: the United States.
    The official communist newspaper, The Global Times, accused Washington of an “insidious strategic plot to make trouble for the Chinese-Japanese relations” in the conflict over the Diaoyudao islands, which Japan also claims and calls the Senkaku islands.
    “Under the direct control by the United States, right-wing forces in Japanare using the dispute to challenge China’s sovereignty, and other countries such as the Philippines in the South China Sea region, are provoking us and acting ridiculously,” the newspaper said last week in an unusually harsh commentary stated.
    “We must be clear that the United States never wants China to be strong. The U.S. is changing China from a peaceful competitor to aSoviet Union-like Cold War-era enemy.”
    The article stopped short of calling for a direct war with the United States, but it warned that “China must be prepared for war; speed up economic and military preparations required of a military struggle; speed up our nuclear second-strike capabilities; and actively develop overseas strategic and military support bases.”

    Last Friday, Secretary of State Hillary Rodham Clinton met with Japan’s Foreign Minister Fumio Kishida in Washington and reiterated the U.S. policy of neutrality in China’s territorial dispute with Japan.
    “Although the United States does not take a position on the ultimate sovereignty of the islands, we acknowledge they are under the administration of Japan,” she said.
    “We oppose any unilateral actions that would seek to undermineJapanese administration, and we urge all parties to take steps to prevent incidents and manage disagreements through peaceful means. … Our alliance with Japan remains the cornerstone of American engagement with the region.”
    In response to Mrs. Clinton’s remarks, Chinese Foreign Ministry spokesman Qin Gang registered his government’s “strong dissatisfaction and resolute objection.”
    “The United States bears a historical responsibility that it cannot deny over the Diaoyudao problem,” said the government spokesman, without elaborating.
    “These statements [by Mrs. Clinton] are without factual support and without regard to the right and the wrong.”
    Propaganda on the Internet
    More than 540 million people currently use the Internet in China, but there are also millions of Internet-based “opinion-guiding” agents employed by the Chinese government to control and censor every single Internet forum and portal.
    Secretly in the employment of the Chinese government, these censors officially are called “Internet commentators” but popularly known as the “50-Cents Party.” The nickname can be traced to October 2004 when the Hunan provincial Community Party Propaganda Department pioneered the system of paying 50 cents in Chinese yuan per posting to Internet agents hired specifically to write postings that seek to counter every piece the government dislikes.
    Based on the Hunan model in 2007, then-Communist Party General Secretary Hu Jintao issued a directive in creating a massive “Internet commentator army” made up of “comrades who are ideologically resolute, skilled in Internet technology and familiar with the approach and language of the common Internet users.” The job of the agents is to “guide public opinions expressed on the Internet.”
    Since then, these diligent 50-Cents Party members have proliferated by the millions at every Internet portal in China’s vast cyberspace, scanning and searching, incognito, for any “negative opinions” to counter. The postings are designs to appear as spontaneous, individual responses.
    In reality, these 50-Cents Party members are under the control of Communist Party propaganda apparatus at all levels of government.
    In Beijing alone, 1 in 10 residents in the capital city of 20 million are “propaganda workers,” according to the city’s vice mayor and municipal party propaganda chief Lu Wei, who spoke at a Propaganda Workers’ Conference on Jan. 17.
    He disclosed that 60,000 professional “propaganda workers” are directly in the employed by the city government and more than 2 million informal collaborators work as the city’s propaganda team, most of them on university campuses and youth-oriented organizations that are most likely Internet-based.
    At the conference, the Beijing propaganda chief ordered his propaganda army troops to master the Internet posting skills “in order to create positive energy” by posting Twitter-like messages exalting the Communist Party’s image and achievement, providing “opinion-guidance” on “hot topics” such as corruption, housing, and inequality.

    Jim Rickards: Currency Wars Simulation

    In this MUST WATCH video, Jim Rickards discusses ‘currency war games’ and how the in progress currency war between the US/West and China/Russia is likely to be played out. Not surprisingly, GOLD plays a pivotal role in the currency war games.
    The end of the current fiat monetary system is coming, and a GOLD BACKED CURRENCY will replace the fiat petro-dollar.


    Video: German Repatriation Of Gold Is “World Historical” – Yahoo

    Gold is rebounding. News that the Bank of Japan set a 2% inflation target and is buying 13 trillion yen worth of assets ($146 billion) rallied gold prices Tuesday, to near a one-month high of $1,697.80 set last week.
    That’s not surprising since gold, more than any other commodity, rises and falls along with changing government policies globally.
    Germany made even bigger splash than Japan in the gold market recently with its surprise announcement last week that the Bundesbank would begin repatriating gold reserves held overseas. The central bank said it wanted to keep more than 50% of its gold reserves at home, up from slightly less than one-third currently. With that in mind, the Bundesbank will move all its gold reserves now held in Paris back to Germany, and reduce its reserves held in New York City.
    “Germany is saying that gold is money,” says Jim Rickards, author of Currency Wars: The Making of the Next Global Crisis. Otherwise, says Rickards, they would just leave the gold where it currently is stored.
    And Germany isn’t alone. There’s talk that the Netherlands and Azerbaijan will also repatriate gold reserves.
    China, the second largest global economy but the sixth largest holder of gold, according to the World Gold Council, is increasing its gold reserves, Rickards tells The Daily Ticker.

    The world is on the brink of a fresh “currency war,” Russia warned!!! UBS: Stocks Could Plummet 42% From Here!!!

    MARK HULBERT: Four leading indicators of a market top
    UBS: Stocks Could Plummet 42% From Here, Our Studies Are ’100% Accurate Going Back To The 1800s’
    Russia Says World Is Nearing Currency War as Europe Joins
    FIDELITY: Here’s Where We Are In The Business Cycle
    Faber Warns “Everything Will Collapse”

    Euro Could Be Next to Join Currency War – FT

    Who would have thought six months ago that in early 2013 the euro would rank among the world’s strongest-looking currencies?
    Europe’s single currency has risen almost 7 percent on a trade-weighted basis since late July. It is up more than 25 percent against the yen and 10 percent against the dollar.

    (Read MoreChristmas Turkeys, Holidays Push Up Euro Zone Prices)
    The currency’s strength follows European Central Bank action to remove the risk of a eurozone break-up. It also reflects global economic power playing – or what Jens Weidmann, Bundesbank president, warned on Monday was the “increased politicization” of exchange rates.
    Mr Weidmann meant Japan, which on Tuesday starting pushing more aggressively for an inflationary stimulus. But the US remains bent on quantitative easing, while sterling’s weakness has been semi-officially endorsed in the UK (the eurozone’s most important export destination) and encouraged by talk of exiting the European Union.

    Massive Squeeze Coming As WGC Confirms Gold-Backed Yuan – KWN

    King World News is pleased to break the news first in the world for our global readers that the World Gold Council has now confirmed the Chinese are going to back the yuan with gold. Today a legend in the business, Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, informed KWN of this development and also stated, “… the gold and silver bulls are going to begin to trample the bears at some point in the near future.”
    Here is what Barron had to say: “This is what I have heard firsthand regarding the silver shortage. I spoke to a dealer where I purchase gold and silver in the United States. He just told me that immediately after the Presidential Inauguration his firm immediately began selling the hell out of monster boxes of US silver eagles.”

    The World Is Moving Closer To A Full-Blown Currency War Just Like The Great Depression of The 1930s.
    Devaluations became common: Japan to join currency wars as exports slump after both Fed and ECB launched unlimited QE
    Markets: Monetary Explosion Goes Global
    Global Leaders Fail To Resolve Differences That Threaten Full-Blown Currency War
    1930s again? WTO official warns of rising protectionism, trade barriers is greater today than it was even in 2008-2009
    CURRENCY WARS!: World Flash Clash Center: [Keiser Report] E343
    Currency War in the Great Depression
    During the Great Depression of the 1930s, most countries abandoned the gold standard, resulting in currencies that no longer had intrinsic value. With widespread high unemployment, devaluations became common. Effectively, nations were competing to export unemployment, a policy that has frequently been described as “beggar thy neighbour”.[30] However, because the effects of a devaluation would soon be counteracted by a corresponding devaluation by trading partners, few nations would gain an enduring advantage. On the other hand, the fluctuations in exchange rates were often harmful for international traders, and global trade declined sharply as a result, hurting all economies.

    The Entrance To The Second Phase Of The Gold Market Ascendancy – JS Mineset
    Silver Dollar From 1794 Could Go for $6 to $7 Million – Bloomberg
    Gold Super-Spike To Be Dwarfed By The Mania In Silver – King World News
    Gold, Jack Lew and the Circle Game – Financial Post
    A Visual History Of Gold – Zero Hedge

    Oldest Bank In The World Plunges, Halted As Chairman Resigns In Aftermath Of Latest Derivatives Fiasco

    Source: Zero Hedge

    Last week, following documentation from Deutsche Bank (and Nomura), it became clear that Italy's Monte Paschi (BMPS) bank (the oldest in the world) has engaged in derivatives with the German and Japanese banks in order to save itself during the financial crisis. The derivatives, according to Bloomberg, were done off-market and allowed the booking of large upfront gains which covered losses optically that the bank faced as European liquidity dried up completely - the offsetting 'losses' are now coming due. Today, amid growing outcry over the 'deal', the former head of BMPS has resigned. Bloomberg reports that Giuseppe Mussari, now Italy's top banking lobbyist, was the Chairman of BMPS during the derivative deal period. BMPS shares were halted after plunging dramatically as investors are still unclear of the extent of losses it faces on derivatives. If that was not enough chicanery, there is a twist in that none other than Mario Draghi, as Director of the Bank of Italy, would have had to vet Mussari (and his banks' regulated books) during this period - as BMPS accumulated what is obviously undocumented derivatives positions to intentionally obscure losses. Once again, years later, it seems the truth comes out - and of course we would expect no-one to go to jail - and the lying in Europe (then and now) continues unabated - as the reality of financial system health remains hidden from view.

    Via Bloomberg,
    Former Banca Monte dei Paschi di Siena SpA Chairman Giuseppe Mussari quit as Italy’s top banking lobbyist as scrutiny of the lender’s use of derivatives deepens.

    The resignation is effective immediately, he said in a letter posted to the Italian Banking Association today. He leaves as Monte Paschi, where he was chairman from 2006 until April, comes under growing pressure to disclose the extent of losses it faces on derivatives.

    The lender fell 5.7 percent to 27.75 cents in Milan trading today, the biggest decliner in Europe’s 46-member Stoxx 600 Banks Index, after Il Fatto Quotidiano reported Monte Paschi’s former managers signed contracts with Nomura Holdings Inc. (8604) three years ago that will reduce 2012 earnings by 220 million euros ($293 million). Nomura said in a statement Mussari “fully reviewed and approved” the trade.

    I always acted according to the law,” Mussari, 50, wrote. “I took the decision to not damage the association.”

    Monte Paschi said on Jan. 17 it will review its accounts after Bloomberg News first reported that the lender engaged in a derivative with Deutsche Bank AG in 2008 that obscured losses before the Siena-based bank sought a government bailout. The Italian lender, which was bailed out in 2009, is seeking 500 million euros more from taxpayers, bringing the total cost of its rescue to 3.9 billion euros.

    JP Morgan's Jamie Dimon Spurs Outrage in Davos

    Remarks such as these, coming from the head of JPMorgan, are maddening'

    - Beth Brogan, staff writer
    Amid calls for stricter regulations of the banking industry, JP Morgan CEO Jamie Dimon came under fire Wednesday after telling corporate and political leaders at the World Economic Forum that banks had been wrongly "scapegoated" as the cause of the global economic crisis, and resisted calls for increased regulation of the financial industry.
    JP Morgan CEO Jamie Dimon. (Photograph: Karen Bleier / AFP / Getty Images) Dimon's remarks on Wednesday—the first day of the WEF in Davos, Switzerland—came in response to comments by Min Zhu, deputy managing director of the IMF, who argued that the financial sector is too big and greater regulations—including of the "shadow banking" sector—are critical, The Guardian reports.
    Sam Mamudi at Barrons writes, "This line of reasoning echoes that of Goldman Sachs CEO Lloyd Blankfein when he told the Times of London newspaper in late 2009 that his bank was 'doing God’s work.' It’s also nonsense, and it shows just how deeply inside their own bubble many bankers live these days."
    Mamudi continues:
    Lending to “schools, hospitals, governments” is good business for JPMorgan, and that’s why they do it — which is as it should be, but it’s no reason to celebrate. And giving money to organizations which in turn help the economy, and by extension society, grow is a bank’s basic function, as anyone who’s watched It’s a Wonderful Life will tell you.
    The fact that we’ve reached a point where these defenses are trotted out by some of finance’s most powerful men is ridiculous, because no one is arguing the opposite.
    The criticisms, rather, are about pay structures and incentives that encourage reckless risk-taking, a system of too-big-to-fail that privatizes profit and socializes losses, and the fact that no-one at the biggest banks ever seems to be punished for malfeasance. Compare Dimon’s umbrage at mild criticism with PBS’ latest Frontline documentary, The Untouchables, about how pretty much the entire financial industry got away scot-free for its role in the mortgage meltdown.
    Dimon came out of the 2008 financial meltdown with a better reputation than arguably any banker on the planet. But his attacks on proposed regulations — calling Basel III capital rules “anti-American” for example — and the London whale trading losses have stripped some of the sheen off his image. (As Felix Salmon notes there are still questions about Dimon’s role in that disaster, and still no full explanation of how the losses grew to more than $6 billion.)
    His comments at Davos only go to further show that he’s just another Wall Streeter, convinced he’s doing nothing but good, and doing so mostly in the face of unfair and uninformed criticism. If even one of the ‘good guys’ of the banking industry sees the world in this way, then there really is nothing to do but start counting down to the next economy-shredding financial calamity.
    "Remarks such as these, coming from the head of JPMorgan, are maddening," Jonathan Weil at Bloomberg writes. "Here he is saying all the right things and making all the right moves from a public-relations standpoint. Of course we should eliminate too-big-to-fail, most of us can agree. Of course we should ensure these monster institutions can fail without harming the public."
    Zhu, of the IMF, told the panel at Davos that much more regulation must be implemented.
    "Transparency is not there. In this sense, I say the financial sector still has a long way to go. With all the debates going on, the financial market structure didn't change very much," Zhu continued. "We're not safer yet."
    * * *