Wednesday, August 21, 2013

10 Signs We Live In a "Minority Report" World

image source
Activist Post

As we look around at the Police State being built across the world, combined with enhanced mind control techniques, it is easy to draw direct parallels with books like 1984 and Brave New World. It's almost as if these books formed a clear blueprint for anyone seeking control over large populations.

With the quickening pace of technological advancement it is no surprise to see "ideas" become reality quicker than ever before. Philip K. Dick explored the concept of pre-crime in his short story "The Minority Report" in 1956, but it wasn't until Steven Spielberg offered it on the big screen as Minority Report in 2002 that the audience got a true look at a potential day-to-day existence under corporate and government data management and control.

We are now at the point where "Minority Report" is being used as a sound description of current technological applications, even in mainstream news, which means that the future is actually the present.

Individual pieces of news often get lost or forgotten rather easily in today's fast-paced news cycle, so let's look at an aggregate of 10 mainstream news items that offer a comprehensive picture of where we are and where we are likely to be headed both from a government surveillance standpoint, as well as targeted advertising.

1. They're watching ... Japanese electronics company NEC develops 'Minority Report' style billboard, The Telegraph, 3/10/2010: "Engineers have developed the billboard, similar to one used in the Tom Cruise blockbuster, that uses built in cameras to instantly identify a shopper’s age and gender as they walk past. The facial-recognition system, called the Next Generation Digital Signage Solution, then offers consumers a product it thinks is suited to their demographic."

2. Microsoft Kinect Learns to Read Hand Gestures, Minority Report-Style Interface Now Possible, IEEE Spectrum, 3/10/2013:
3. The Long Eye of the Law: So Who's Ready for a 'Minority Report'-Style Future? Motherboard, 3/20/2013: On Monday, Japanese tech developers Fujitsu announced they had created . . . a bit of technology that can measure a person’s pulse using a camera or a computer webcam, just by analyzing that person’s face . . .  It’s Minority Report-style technology, to be sure—another in a burgeoning list of tech-driven ways police could prevent crimes before they happen."

*Also see New York's Domain Awareness System helped along by Microsoft.

4. Minority Report moves step closer as Lord Sugar launches face recognition adverts, The Telegraph, 7/9/2013: "The media company has launched OptimEyes, which will be used in more than 6,000 of its screens to target over 50m people in the UK, Germany, Poland, Switzerland, UAE, Oman, Kenya, Angola and South Africa. However, the majority of the screens, some 3,561, are in the UK in doctors' surgeries, hospitals, convenience stores, petrol forecourts, Halifax banks, airports and train stations . . . The product comes less than a week after Sky Deutschland revealed it has developed technology to transfer adverts from train windows directly and silently into commuters' heads.
5. Brain scans of inmates could lead to 'Minority Report' style ability to predict if they will re-offend, The Daily Mail, 7/15/2013: "Groundbreaking new research could allow scientists to predict if prisoners will re-offend - potentially condemning those convicted of serious crimes to a lifetime behind bars . . . It could also be used to the benefit of society in using brain imaging in deciding parole."

6. Gesture Through News Minority Report-Style With New York Times' Leap Motion App, Fast Company, 7/18/2013: Rather than having to flick through headlines on a touch-screen device or scroll through articles using a mouse -- how antiquated! -- the company's new app allows readers to navigate through stories by motioning their hands in mid-air, with Leap Motion sensors interpreting the signals . . . The New York Times has also suggested it will give the company an opportunity to implement new advertising capabilities 'that [will] allow brands to connect with readers using motion-controlled ad units.'"

7. Minority Report finally becomes a reality: new hi-tech video wall will let law enforcement agencies sift through data with a wave of their hand, The Daily Mail, 7/23/2013: "The hi-tech computer system behind the film Minority Report - where Tom Cruise speeds through video on a large screen using only hand gestures - is making its way into the real world. American computer experts have revealed the software has become a reality - and they hope to sell it to law enforcement agencies around the world. The interface developed by scientist John Underkoffler has been commercialized by the Los Angeles firm Oblong Industries as a way to sift through massive amounts of video and other data."

*Also see this report on Big Data and pre-crime software.

8. Control Google Earth with Minority Report-style gestures, via Leap Motion, TNooz, 8/5/2013:
9. Minority Report-style Advertising Coming to NYC, 247Sports, 8/8/2013: "Recycling bins data mine your smartphone when you are in proximity to tailor ads when you walk by the screen and stuff. Already in London, looking to expand to NYC and other World cities soon."

10. Google Submits Patent For Minority Report Style Eye Tracking Device, Prison Planet, 8/15/2013: "The patent filing describes a “head mounted device”, for example hi-tech glasses, that would have the ability to track eye movement, effectively monitoring reactions to external stimuli, including changes in emotion." From The Verge: "Google could be betting that advertisers will pay to know whether consumers are actually looking at their billboards, magazine spreads, and online ads."

From the patent application, which was filed in May 2011:
Pay per gaze advertising need not be limited to on-line advertisements, but rather can be extended to conventional advertisement media including billboards, magazines, newspapers, and other forms of conventional print media. Thus, the gaze tracking system described herein offers a mechanism to track and bill offline advertisements in the manner similar to popular online advertisement schemes.

The ways that we are tracked, traced, and databased are increasing every day. Some of it is arriving without our agreement and is being utilized by private corporations and governments without our explicit approval, as the recent revelations of data spying have exposed. If we have learned one thing it is that information is knowledge and knowledge is power. The power of data collection in the hands of those who wish to exert more control is not likely to halt.  And all indications show that it is not enough to have logged and charted where we have been; the surveillance state wants to know where we are going.

Our Orwellian world is beginning to look nostalgic compared to what is in production. Neuroscientists in 2010 stated that they know you better than you know yourself.  Meanwhile, it is being estimated that computers know to a 93% accuracy where you will be, before you make your first move. The recent major global funding of neuroscience and narrative control indicates that the final target is the human brain and every thought that resides there.

However, we ought to be aware that much of our data is willingly being given via social media and the gadgets we choose to buy. As technology continues to march forward at an exponential rate, we might do well to consider how much of this we are comfortable buying into.  And if we must, should we be seeking ways to subvert the information stream?

Read other articles by Activist Post Here

$2,001,093,000,000: Fed’s Ownership of U.S. Debt Breaks $2T for First Time

( - The Federal Reserve’s holdings of publicly traded U.S. Treasury securities—federal government debt—pushed above $2 trillion for the first time last week, hitting approximately $2,001,093,000,000 as of Aug. 14, according to the Fed’s latest weekly accounting.
The Fed’s accounting for the previous week showed that it had owned approximately $1,993,375,000,000 in U.S. Treasury securities as of Aug. 7.
Back on Dec. 31, 2008, before the Fed began its strategy of “Quantitative Easing," the Fed owned only $475.9 billion in U.S. Treasury securities. Since then, the Fed’s holdings of U.S. government debt have more than quadrupled.
Launched in 2009, the Fed's Quantitative Easing (QE) efforts have attempted to stimulate the economy.
“Under QE,” explains a February 2013 Congressional Research Service report, “the Fed attempts to lower long-term Treasury and MBS [mortgage-backed security] yields directly through purchases that drive down their yields, in the hope that lower Treasury and MBS yields will indirectly filter through to reductions in other private long-term yields. (Lower Treasury yields do not directly stimulate economic activity—they are only stimulative if other yields fall as a result.) This could occur because Treasury securities are considered a ‘benchmark’ against which other private securities are priced, so that other securities are automatically repriced when Treasuries are repriced (although the change is unlikely to be one-to-one).”
(In its latest weekly accounting, the Fed also said that as of Aug. 14, it owned approximately $1.299831 trillion in mortgage-backed securities that had been issued by Fannie Mae, Freddie Mac and Ginnie Mae. Back on Jan. 14, 2009, the Fed owned only $5.6 billion in mortgage-backed securities.)
By law, the Fed is not permitted to buy U.S. Treasury securities directly from the Treasury. Instead it buys them in the secondary market. However, when the Fed buys U.S. government debt even on the secondary market it creates a closed circle: The Treasury pays the Fed the interest owed on that part of the federal government’s debt, and almost all of that interest--considered “profit” by the Fed--is paid back to the Treasury.
“Monetizing the deficit refers to financing the budget deficit through money creation rather than by selling bonds to private investors,” said the CRS. “Hyperinflation in foreign countries has consistently resulted from governments’ decision to monetize large deficits.
“According to this definition, the deficit has not been monetized,” said CRS. “Section 14 of the Federal Reserve Act legally forbids the Fed from buying newly issued securities directly from the Treasury, and all Treasury securities purchased by the Fed to date have been purchased on the secondary market from private investors.”
“Nonetheless," said CRS, "the effect of the Fed’s purchase of Treasury securities on the federal budget is similar to monetization whether the Fed buys the securities on the secondary market or directly from the Treasury. When the Fed holds Treasury securities, Treasury must pay interest to the Fed, just as it would pay interest to a private investor. These interest payments, after expenses, become profits of the Fed. The Fed, in turn, remits about 95 percent of its profits to the Treasury, where they are added to general revenues. In essence, the Fed has made an interest-free loan to the Treasury, because almost all of the interest paid by Treasury to the Fed is subsequently sent back to Treasury.
“The Fed could increase its profits and remittances to Treasury,” said CRS, “by printing more money to purchase more Treasury bonds (or any other asset)."
As of Aug. 15, according to the Bureau of the Public Debt, the total value of Treasury securities held by the public was $11,952,073,953,024.85. (The rest of the federal government’s debt is “intragovernmental” debt—n.b. money that the Treasury owes to federal trust funds, such as the Social Security trust fund.)
The $2,001,093,000,000 in Treasury securities now owned by the Fed equals 16.7 percent of the U.S. government’s debt held by the public. Another $5.6006 trillion in U.S. Treasury securities is owned by foreign entities, according to the Treasury's latest report on foreign holders of U.S. debt. The combined $7,601,693,000,000 in U.S. Treasury securities owned the Fed and foreign entities equals about 64 percent of all extant U.S. Treasury securities.
After the Fed, entities on Mainland China are the largest owners of U.S. government debt, holding $1.2758 trillion as of the end of June. is not funded by the government like NPR. is not funded by the government like PBS. relies on individuals like you to help us report the news the liberal media distort and ignore. Please make a tax-deductible gift to today. Your continued support will ensure that is here reporting THE TRUTH, for a long time to come. It's fast, easy and secure.
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Bank of America Works Intern to Death… Literally


A pre-graudate intern working at the London branch of the Bank of America Merrill Lynch collapsed in his home after working overnight until 6 a.m. for three consecutive days. Nearing the end of his seven-week pre-graduate internship, Moritz Erhardt’s body was found by his roommates. “The circumstances of the 21-year-old’s death are unknown but Scotland Yard is not treating it as suspicious,” reads a report in The Independent.
One unnamed intern working in Erhardt’s program told The Independent that punishing hours are part of the job.
“We all work long hours but the guys working regularly until 3 or 4am are those in investment banking,” the unidentified intern said. “You’re only doing it for up to 10 weeks so there’s a general acceptance of putting up with it.”
I see many people wandering around, blurry-eyed and drinking caffeine to get through but people don’t complain because the potential rewards are so great. We’re competing for some very well paid jobs.
“Another intern living at Claredalem [House student accommodation complex in Bethnal Green] claimed Mr. Erhardt, earning £2,700 a month or £45,000 pro rata, collapsed from exhaustion,” The Independent reported.
“He apparently pulled eight all-nighters in two weeks,” another intern said.” They get you working crazy hours and maybe it was just too much for him in the end.”
Bank of America Merrill Lynch expressed their condolences over Erhardt’s death and said that the company’s thoughts are with his family.
h/t The Independent

India, Brazil, other emerging economies hit by currency rout

Source: TOI
The Indian rupee plummeted to a record low against the dollar on Monday, leading a rout by Brazil’s real and other emerging market currencies seen by investors as the most vulnerable to an exodus of foreign capital.
A fierce selloff in many emerging currencies shows no sign of abating as the expected withdrawal of U.S. monetary stimulus prompts investors to shun markets seen as riskier because of funding deficits, slowing economies and inflation.
The rupee fits that bill, as do the Indonesian rupiah, the South African rand and the Brazilian real. The rupiah plunged to four-year troughs on Monday while the rand lost another 1 per cent to bring year-to-date losses to almost 17 per cent against the dollar.
Brazil’s real extended last week’s fall of more than 5 per cent fall to trade at its weakest level since March 2009 even as the central bank sold nearly $3 billion worth of currency swaps, which are derivatives that mimic an injection of dollars in the futures market. Like the rupee, it has been hammered by doubts over the efficacy of policy actions to stem the rout.
The rupee and the real, respectively, have been the worst performers in Asia and Latin Americasince late May when the Fed first signalled that it may begin winding down its monetary stimulus this year. India’s currency has lost 13 per cent against the dollar this year while the real has plunged 15 per cent in the same period.
A decline in the Fed’s bond purchases will push government debt yields higher, which should raise the attractiveness of the dollar and dollar-denominated assets.
In Brazil, the currency weakness has complicated policymakers’ efforts to rein in inflation, leading many investors to bet the central bank may speed up the pace of monetary tightening next week.
In India, the rupee’s sell-off threatens to drive Asia’s third-largest economy towards a full-blown crisis.
“Our primary concern is that the policy authorities still don’t ‘get it’ – thinking this is a fairly minor squall which will simmer down relatively quickly with fairly minor actions,” Robert Prior-Wandesforde, an economist at Credit Suisse in Singapore, wrote in a note on the Indian currency on Monday.
The partially convertible rupee has continued to weaken despite the central bank’s dollar sales and its latest curbs on outflows from companies and individuals, announced last Wednesday, which have dented India’s stock and bond markets.
As the global flow of cheap money wanes, many emerging markets are feeling the heat. Among the most vulnerable to sudden capital flight are the currencies of countries already struggling with wide current account deficits, such as India and Indonesia.
“The market is still acting on the negative current account and fiscal deficits,” said Nizam Idris, a strategist with Macquarie Capital, when asked about the two Asian laggards.
The latest blow for the Indonesian rupiah came late on Friday when central bank data showed the current account deficit jumped to 4.4 per cent of GDP in the second quarter of the year, from 2.4 per cent in the previous quarter.
South Africa’s central bank, unlike its peers, has not stood in the way of the rand’s weakness.
The rand hit a five-week low at around 10.2 per dollar on Monday as Fed-fuelled headwinds were exacerbated by fresh labour strife and upcoming Chinese data that is expected to paint a picture of weaker growth in South Africa’s biggest export market.
“They have very weak growth but can’t cut interest rates so they are using the currency as the lever,” said Guillaume Salomon, a strategist at Societe Generale in London.
Tapering threat
The risk for these so-called deficit economies is that as global liquidity is reeled back by the Fed, weakness in the real or the rupee will force investors to flee stocks and bonds. That could exacerbate the currency selloff in a self-perpetuating vicious cycle leading potentially tobalance of payments crises.
All these countries rely heavily on foreign capital inflows to plug current account gaps that range from 3 per cent in Brazil and 4.8 per cent in India to 6.5 per cent in South Africa.
“India and South Africa are the two currencies that are most at risk. As long as the currency trades with a weak bias, concerns about outflows will remain,” Salomon of Societe Generale said.
Those fears are now evident in financial markets, with Indian equities .BSESN sliding nearly 2 percent and 10-year borrowing costs rising above 9 percent to the highest since 2008. Stocks in Jakarta .JKSE fell 3 percent and bond yields surged to March 2011 peaks. South African yields were at their highest in over a year.
Markets are waiting to see what else Brazil’s central bank can do to reassure investors after an estimated $30 billion worth of intervention this year via currency swaps. So far, however, Brazilian policymakers seem unwilling to deplete their $370 billion foreign reserves to fight a global depreciation trend.
As in India, Brazil’s previously fast-growing economy has slowed, disappointing investors and Brazil, like Indonesia, has seen a sharp deterioration in its balance of trade due to a cooling in China’s appetite for commodities.
Other Latin American currencies, despite being seen as less vulnerable than the real, have also weakened sharply in the past few days. The Mexican peso lost about 1 percent on Monday after sliding 2.3 percent last week. Chile’s peso, which is strongly correlated to copper prices, dropped 1 percent on Monday to close at its weakest level in more than a year.

Greece will need new bailout, says Germany's Schaeuble

Wolfgang Schaeuble has joined a list of people who say Greece will need more money

Germany's finance minister Wolfgang Schaeuble has said for the first time that Greece will need another bailout to plug a forthcoming funding gap.
His comments come at a sensitive time for his party as Germany will hold elections in five weeks' time.
Germans are uncomfortable with the size of European country bailouts, for which they pay the lion's share.
His boss is Germany's leader is Angela Merkel, who said recently it was too early to talk about new funding.
But Mr Schaeuble told an election rally: "There will have to be another programme in Greece."
Mr Schaeuble's comments place him as one among many who believe Greece will have to be given new funding to balance its books, but they are at odds with his party leader's public stance on the matter.
Smaller The amount of new money in question is likely to be far smaller than the 240bn euros (£205bn, $320bn) already granted by the International Monetary Fund (IMF), the European Central Bank and the European Union.
The IMF last month estimated Greece will need around 11bn euros in 2014-15.
A Greek finance ministry official told the Reuters news agency that any new bailout would involve sums far smaller than in previous rescues and would focus on plugging an expected funding shortfall over 2014-16.
The country's economy has shrunk further than any other in Europe, with bailout money only released on condition that the government imposes cuts and implements restructuring.
Inspectors from the bodies overseeing Greece's bailout conditions, the European Commission, European Central Bank and IMF, will next visit the country in the autumn to see if further cuts and reforms are needed to help Greece reduce its debts.

We Are Now On The Verge Of A Historic Meltdown & Collapse

On the heels of a tremendous rally in gold and silver, today a man who has been involved in the financial markets for 50 years shocked King World News when he said that we are on the verge of a historic and catastrophic global financial “meltdown.”  He also spoke about events that are unfolding behind the scenes at the White House right now.  This is without question one of John Embry’s most powerful interviews ever.
Embry: “I guess I’m always unnerved as a result of what happened in April, the last time the President of the United States had a meeting with all of the bank heads, and two days later the price of gold was trading smashed for over $200.  Now, the President is meeting with all of the heads of the various agencies, institutions, the Fed, and all of the other key money entities in the United States today.  What’s that all about?

But clearly if the President is having this meeting, there is a crisis unfolding somewhere in the background, and it could very well relate to the dollar, interest rates, and the massive derivatives market associated with interest rates.... 
“Rising interest rates are a killer in an over-levered economy, and that’s exactly what we’ve been seeing in the United States.

This surge in interest rates may have already seriously destabilized the entire financial system, and that’s why there is this meeting taking place in the White House today.  The fact is that the vast majority of derivatives in the global financial system are related to interest rates. 

Now, the entire financial system may be on the precipice of some sort of catastrophic event unfolding because of what we have already seen in the bond market, and how the derivatives are so heavily intertwined.  Meaning, we may be on the verge of another disastrous derivatives meltdown.

We have an unbelievable amount of interest rate derivatives in the financial system.  So the winners theoretically take the profits on them, and the losers simply misprice them on their books.  But as you get higher interest rates it becomes even more destabilizing. 

I firmly believe the reason the President has called this meeting today is because if interest rates in the U.S. continue to rise, it could really unleash something disastrous.  We are talking here about the possibility of a meltdown.  It’s interesting that the President would call in that many big hitters, the head of every significant financial agency in the United States, as well as the Fed and the Comptroller of the Currency, etc -- this is a very large meeting today.

I’ve always believed that the global financial crisis of 2008 was just the opener.  We have now bought the better part of 5 years now through unlimited money creation.  But as we head into this next massive, and what I believe will be a larger round of destabilization, I want KWN readers around the world to understand that the central planners don’t have the same weapons to fight this global financial crisis.  This is why I believe they are desperately attempting right now, today in this meeting, to stave off this crisis.”

Embry also added:  “When you have a vastly over-levered economy, higher interest rates suck money out of the system, and you have to remember that the system is already struggling.  So we may well be looking at something catastrophic unfolding right now.  As I said, this could be destabilizing the entire financial system.

The mainstream media continues to put out propaganda about a so-called economic recovery that’s going on.  Even the Economist put out a piece essentially saying that the Western world economic recovery is going to be driven by the United States, which is the strongest entity in the Western industrialized world.

If the U.S. is your strongest entity, then you’ve got huge problems.  I believe that if inflation were correctly accounted for in the United States, instead of these bogus numbers they come out with, then the deflator in the nominal GDP would be materially higher.  This means that real growth would be materially lower.

It’s the split between real growth and inflation that determines what the real growth number is.  And if inflation is understated, and I believe they have just manipulated the hell out of the inflation rate, then I don’t really think there is much recovery, if any, going on in the United States.  All of this is in the face of $85 billion each month being pumped in by the Fed, and interest rates near rock-bottom levels.

But now we are beginning to see U.S. interest rates climbing inexorably, at the same time that the oil price is remaining elevated, those are two major factors in determining the future of the economy.  If rates go up and the oil price is very high, that just knocks the struts out from under the consumer.

When you look at the oil price, just when you think it can’t get worse, the situation in the Middle-East deteriorates even further.  It’s becoming a battlefield with the Russian and China basically lined up against Western interests.  So I’m extremely worried about the overall picture.

When I look at what is unfolding right now in Europe, markets are clearly unsettled over there.  I also see the German Finance Minister has come out and said that Greece is going to need a third bailout.  So the idea that anything is getting better in Europe is preposterous.

So, when watching currencies, the only thing I am interested in is the price of gold and silver, which is real money.  Gold and silver are putting in a better performance, although they are still being restrained.  The fact is that they are building a super-base, and that’s what the central planners should really be afraid of, the U.S. dollar collapsing against gold and silver.

I said it last week and I will say it again, we will now see historic and catastrophic wealth destruction.  It’s going to be something to behold, and investors who want to survive this financial holocaust had better be properly positioned.”

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

Gold, Silver Spike as U.S. Stocks Slump – Jerry Robinson

Workers Planning Massive Union Backed Walkout In Push To Hike Minimum Wage -RPT – Cavuto

Workers Planning Massive Union Backed Walkout In Push To Hike Minimum Wage -RPT – Cavuto

BOOM: Goldman Sachs Could Suffer Losses Over $100 Million On Erroneous Options Trades Placed Today!

Goldman faces losses on erroneous trades
Goldman Sachs could lose as much as $100m after making erroneous trades that disrupted trading activity across multiple options exchanges on Tuesday, market participants have told the Financial Times. …
We Have Confirmation: This Morning’s Market #Fail Brought To You By Goldman Sachs
This morning’s debacle in the options pit appears - just as we noted - to be due to Goldman Sachs ‘erroneous’ trades:
But, as we also noted earlier, unlike Knight (which was wiped out when its market-making algos went rogue), in Goldman’s case:
They get everything DK’ed…
Goldman Sachs is forecasting a dollar-lira rate of 2.2 #Turkish Market is in trouble
Surprising Late-Day Slump Extends Dow To 5-Day Losing Streak
The 5th close in a row for the Dow – most since the last week of 2012; second largest 5-day loss of the year; but largest 12-day loss in 9 months….
Goldman issues mistaken options orders
Prices in some contracts were roiled by the mistaken orders
U.S. stock-options exchanges on Tuesday were reviewing a wave of mistaken orders tied to Goldman Sachs Group Inc. that hit just after the market opened, with many likely to be canceled, according to exchange officials.
Goldman Sachs /quotes/zigman/188479/quotes/nls/gs GS +0.59% mistakenly issued the orders into the stock-options market, roiling prices in some contracts early Tuesday.
A technical problem at Goldman unleashed orders that pushed some stock-options prices to $1 just after the market opened Tuesday, forcing exchanges to review the trades and potentially cancel many of them, people familiar with the matter said.
The erroneous orders, placed for options on securities with ticker symbols beginning with the letters H through L, drove some contract prices sharply lower, said traders, who suspected a misfired trading algorithm. The options were linked to both individual stocks and exchange-traded funds.

Alarm Bells Go Off: 10-year Treasury Note Hits 2.9%, S&P 500 Is “Crashing” Now

Art Cashin says “alarm bells” will go off for stocks if the yield on the 10-year Treasury note hits 2.9 percent.
10-year Treasury Note Hits 2.9%
CBOE Interest Rate 10-Year T-No (^TNX)^tnx
This bond sell off looks a lot like 2010, and that’s an ugly sign for stocks
The last six months have been a unique time for the bond market as benchmark rates have moved sharply higher on fears about when the Federal Reserve will wind down its easy money policies. But if you’re looking for a historical comparison, it was actually just three years ago.
Since 1989, the period that looks most like the one we’ve just been through was in 2010, when the Fed was in the midst of its second round of quantitative easing, an earlier iteration of the central bank’s bond-purchase program, and yields were rising on optimism about the economy. The correlation between the Treasury10_YEAR -0.04% yield curve then and now is about 96%, writes David Keeble, global head of interest-rate strategy at Crédit Agricole Corporate and Investment Bank, in a Monday note.
This market shift could be signaling the end of the rally
Years ago, one of the first things that I learned when I ventured into technical analysis was sector and industry rotation.
Technical (which are not necessarily economic) bull phases start with leadership from interest-rate-sensitive groups, such as banks and homebuilders.
The leadership baton is then passed to consumer related sectors, capital goods, and so on.
The terminal phase is signaled by the leadership of deep cyclical resource sectors.
I believe that’s what we are witnessing now.
First, there is little question that the leadership of homebuilding stocks are rolling over…
Is the S&P 500 “crashing” now?
While some only now begin to debate “crash” or “no-crash,” the best idea is to follow the clues that the market leaves for us, writes Avi Gilburt.

With the high we have made so far, we really only completed 3 waves up in the S&P500. This classifies the top as a higher b-wave top, as it currently stands. After a b-wave, we expect a c-wave decline, which is an impulsive 5 wave pattern. While we are currently only trying to complete wave 1 of that 5 wave decline, this wave 1 will not be the “crash” which some are expecting.
Rather, this current drop will likely set up a countertrend rally which will take many out of the crash mode, especially if the market can rally up into the 1680ES region once again. It is from that top that we will see a 3rd wave down, which will feel like a crash to most market participants. But, most will no longer expect it due to the rally back towards 1680ES, which we will likely see at the end of the month.
But, such a move up, if it begins after we see 5 waves completed toward the 1620-1630ES region, will likely set up another 100-plus-point move down in a 3rd wave, which may only take a week or two to complete. This will be the “crash” scenario, which will likely begin when many may have been dissuaded from its possibility.
Stocks fell around the world.

First, the scoreboard:
  • Dow: 15,010.7, -70.7, -0.4%
  • S&P 500: 1,646.0, -9.7, -0.5%
  • NASDAQ: 3,589.0, -13.6, -0.3%

With Tapering Imminent, Spot The Consumer Loans Trend

Total Public Debt Now Eclipses GDP

Hard Assets Alliance Team: The Federal Reserve has put pressure on precious-metals markets over the last few months. Although gold has been up since April, any signal that the Fed will reduce its bond-buying program could further weigh on gold and other precious metals. Silver has also been under pressure from central banks and has also felt the heat from falling industrial demand.
On the other hand, platinum and palladium could be poised for resurgence. Rising mining costs as a result of wage increases, regulations, and political risks in South Africa – which accounts for 80% of world platinum production and is also the second-largest palladium producer – may cause a fall in production in coming months, which is a bullish sign for spot platinum prices.
Though a pullback by the Federal Reserve (and thus a stronger US dollar) could weigh on all of our metals in the short run, our long-term outlook remains intact.

We previously warned of what can transpire when desperate governments are no longer able to shoulder unbearable debts. As one can see in the chart above, total public debt in the United States recently crossed the proverbial Rubicon and now equals 104.95% of GDP. Though some would argue that a healthy dose of debt is necessary to foster economic growth, the US’s unsustainable public debt exceeds the same debt measures of crisis-stricken Cyprus and fragile Spain, where public debt as a percentage of GDP have been most recently estimated at 85.8% and 84.2%, respectively.

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A Global Financial Crisis On The Horizon?

You can see it coming, can’t you?  The yield on 10 year U.S. Treasuries is skyrocketing, the S&P 500 (NYSEARCA:SPY) has been down for 9 of the last 11 trading days and troubling economic news is pouring in from all over the planet.  The much anticipated “financial correction” is rapidly approaching, and investors are starting to race for the exits.  We have not seen so many financial trouble signs all come together at one time like this since just prior to the last major financial crisis.  It is almost as if a “perfect storm” is brewing, and a lot of the “smart money” has already gotten out of stocks and bonds.  Could it be possible that we are heading toward another nightmarish financial crisis?  Could we see a repeat of 2008 or potentially even something worse?  Of course a lot of people believe that we will never see another major financial crisis like we experienced in 2008 ever again.  A lot of people think that this type of “doom and gloom” talk is foolish.  It is those kinds of people that did not see the last financial crash coming and that are choosing not to prepare for the next one even though the warning signs are exceedingly clear.  Let us hope for the best, but let us also prepare for the worst, and right now things do not look good at all.  The following are 18 signs that global financial markets are entering a horrifying death spiral…
#1 The yield on 10 year U.S. Treasuries has risen for 5 of the past 6 days, and it briefly touched the 2.90% level on Monday.
#2 Rapidly rising interest rates are spooking investors and causing them to pull money out of bonds at a very rapid pace

Investors have yanked nearly $20 billion from bond mutual funds and exchange traded funds so far in August. That’s the fourth highest pullback ever, according to TrimTabs data. In June, investors took out $69.1 billion — the highest on record.
#3 The sell-off of U.S. Treasuries is being led by foreigners.  In particular, China (NYSEARCA:FXI) and Japan (NYSEARCA:EWJ) have been particularly aggressive in selling off bonds…
China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries.
The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed on Thursday.
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.
#4 Thanks to rapidly rising bond yields, some of the largest exchange-traded bond funds are getting absolutely hammered right now
• The $18 billion iShares iBoxx $ Investment Grade Corporate Bond fund (NYSEARCA:LQD) has fallen 7.94% since May 2, according to S&P Capital IQ. That’s including reinvested interest from the fund’s bond holdings.
• The 3.7 billion iShares Barclays 20+ Year Treasury Bond (NYSEARCA:TLT) has plunged 15.9% the same period. Longer-term bonds typically get hit harder when rates rise than shorter-term bonds. For example, the iShares Barclays 3-7 Year Treasury Bond fund (NYSEARCA:IEI) has fallen 3.2% since May 2.
• PowerShares Emerging Markets Sovereign Debt (NYSEARCA:PCY), which invests in government bonds issued in developing countries, has fallen 12.7%. The fund has $1.8 billion in assets.
#5 In recent weeks we have witnessed the largest cluster of Hindenburg Omens that we have seen since prior to the last financial crisis.
#6 George Soros has bet a tremendous amount of money that the S&P 500 is going to be heading down.
#7 At this point, the S&P 500 has fallen for 9 out of the last 11 trading days.
#8 Margin debt has spiked to extremely dangerous levels.  This is a pattern that we also saw just before the last financial crash and just before the dotcom bubble burst…
The exuberant mood comes as margin debt on Wall Street hovers near $377bn, just below its all-time high and well above peaks before the dotcom crash and the Lehman crisis.
“Investors have rarely been more levered than today,” said Deutsche Bank, warning that the spike in margin debt is a “red flag” and should be watched closely.
#9 The growth rate of new commercial bank loans and leases is now the slowest that it has been since the end of the last financial crisis.

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JPMorgan Chase Hit With China Bribery Probe

JPMorgan Chase & Co., one of the Big Four banks of the United States, is facing yet another scandal — and another federal probe for possible crimes and improprieties. This time the federal Securities and Exchange Commission (SEC) is investigating whether JPMorgan Chase violated the U.S. Foreign Corrupt Practices Act by hiring Chinese “princelings” — sons and daughters of China’s super-wealthy Communist Party officials — in order to win business contracts from China’s state-owned enterprises (SOEs). While it is not illegal for U.S. companies to hire people who are politically connected, doing so with the expectation of winning business from their relatives is considered bribery.
It is hardly shocking that JPMorgan Chase may be guilty of this practice; what else would one expect when one of the wealthiest and most corrupt banks in the world partners with one of the wealthiest, most corrupt, and ruthless regimes in the world? But JPMorgan Chase is hardly alone; virtually all of the big investment banks operating in China have been using the “hire-a-princeling” strategy as standard operating procedure for the past two decades.
Last week, two of the bank’s former London traders — Javier Martin-Artajo and Julien Grout — were indicted for allegedly concealing massive bank losses in the infamous “London whale” debacle. When we reported on the matter last year, the losses were listed as $2 billion. Now, it turns out, those losses were seriously under counted; the real losses are around $6.2 billion.
So far, the bank’s CEO, Jamie Dimon, has not only managed to evade any personal responsibility for the company’s ongoing massive scandals, but continued to profit — at taxpayer expense. Dimon, a top Wall Street insider, continues to serve as a Class A Director of the Board of Directors of the New York Federal Reserve and JPMorgan Chase continues to enjoy its sweetheart status with the Fed as a “primary dealer,” giving it access to the Fed’s magic money-out-of-thin-air machine. For helping create the mortgage meltdown crisis of 2008, Dimon’s bank was rewarded with $390 billion in emergency “loans” from the Fed.
As we reported in May of 2012, an audit by the Government Accountability Office (GAO) revealed that:
• Dimon served on the board of the Federal Reserve Bank of New York at the same time that his bank received over $390 billion in total emergency loans from the Fed.
• JPMorgan Chase was used by the Fed as a clearinghouse for the Fed’s emergency lending programs.
• Dimon was successful in getting the Fed to provide JPMorgan Chase with an 18-month exemption from risk-based leverage and capital requirements.
• Dimon convinced the Fed to take risky mortgage-related assets off of Bear Stearns’ balance sheet before JPMorgan Chase acquired this troubled investment bank.
$390 billion isn’t small change, even considering our current stratospheric government spendathons that are now measured in trillions. And since we’re mentioning trillions, it is apropos to bring up another figure that came out of the GAO audit of the Fed: $16 Trillion.
Related articles:
Jamie Dimon, JP Morgan Chase & The Fed: Billions & Trillions for Insiders
China: The New Investment Savior?
…read more
Republished from: The New American

Matt Taibbi: U.S. Student Loan Bubble Saddles a Generation With Debt and Threatens the Economy - On the heels of President Obama’s signing of a measure keeping federally subsidized student loans at a relatively low rate through 2015, Rolling Stone political reporter Matt Taibbi joins us to discuss how the high price of U.S. college tuition and the federal expansion of student debt to pay for it pose a major threat to the economy. In his new article, “Ripping Off Young America: The College-Loan Scandal,” Taibbi writes: “The dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It’s not the cost of the loan that’s the problem, it’s the principal — the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008. … Throw off the mystery and what you’ll uncover is a shameful and oppressive outrage that for years now has been systematically perpetrated against a generation of young adults.” “The government now projects that it’s going to make $185 billion over the next 10 years in student loans,” Taibbi says. “There is no way out of these loans. Even gamblers can declare bankruptcy, but kids who enter into student loans will never, ever be able to get out of this debt.”

The Resident: Evil Monetary Fiction

Peter Schiff: Pilot Bernanke Admit This Is a Great Flight Even if We'll Inevitably Crash Land

Pelosi: Unemployment Checks Fastest Way to Create Jobs

House Speaker Nancy Pelosi gestures during a news conference on Capitol Hill June 24. (AP Photo)

Unemployment benefits are creating jobs faster than practically any other program, House Speaker Nancy Pelosi said Thursday.
Talking to reporters, the House speaker was defending a jobless benefits extension against those who say it gives recipients little incentive to work. By her reasoning, those checks are helping give somebody a job.
"It injects demand into the economy," Pelosi said, arguing that when families have money to spend it keeps the economy churning. "It creates jobs faster than almost any other initiative you can name."
Pelosi said the aid has the "double benefit" of helping those who lost their jobs and acting as a "job creator" on the side.
"It's impossible to think of a situation where we would have a country that would say we're not going to have unemployment benefits," Pelosi said.
Democrats have been trying for more than a month to pass a bill extending jobless benefits to more than 1 million people. Currently, jobless benefits last nearly two years -- up to 26 weeks paid by state treasuries with federal help for up to an additional 73 weeks.
Of course, those workers could be sending a lot more money into the economy if they had jobs since unemployment benefits generally do not cover the entire cost of lost wages.
The counterintuitive statement drew jeers from Republicans, who claim Democrats can't figure out any way to tackle the economic slump that doesn't involve spending massive amounts of taxpayer money.
"No plan to create jobs -- just more stimulus spending," House Republican Leader John Boehner said at a dueling press conference.
Despite the wave of unemployment aid and stimulus spending dating back to the end of the Bush administration, the jobless rate is still hovering close to 10 percent. New figures out Thursday showed new jobless benefits claims rising for the second time in three weeks.
Rep. Dave Camp, R-Mich., on Thursday called the newest extension plan "fiscal insanity" because it is not paid for and will only create future problems.
"I support, and Republicans have supported, extending unemployment benefits, but we must not do so at a cost to the deficit, to the economy and to future generations. Our inability to get our fiscal house in order isn't just damaging future generations; it is wreaking havoc on jobs today," he said in a statement.
Pelosi criticized Republicans Thursday, saying she's still optimistic the bill will pass though it failed again in the Senate Wednesday night. 

How a big US bank laundered billions from Mexico's murderous drug gangs

As the violence spread, billions of dollars of cartel cash began to seep into the global financial system. But a special investigation by the Observer reveals how the increasingly frantic warnings of one London whistleblower were ignored

Mexico drugs
A soldier guards marijuana that is being incinerated in Tijuana, Mexico. Photograph: Guillermo Arias/AP
On 10 April 2006, a DC-9 jet landed in the port city of Ciudad del Carmen, on the Gulf of Mexico, as the sun was setting. Mexican soldiers, waiting to intercept it, found 128 cases packed with 5.7 tons of cocaine, valued at $100m. But something else – more important and far-reaching – was discovered in the paper trail behind the purchase of the plane by the Sinaloa narco-trafficking cartel.
During a 22-month investigation by agents from the US Drug Enforcement Administration, the Internal Revenue Service and others, it emerged that the cocaine smugglers had bought the plane with money they had laundered through one of the biggest banks in the United States: Wachovia, now part of the giant Wells Fargo.
The authorities uncovered billions of dollars in wire transfers, traveller's cheques and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme. Of special significance was that the period concerned began in 2004, which coincided with the first escalation of violence along the US-Mexico border that ignited the current drugs war.
Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year's "deferred prosecution" has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine.
More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn – a sum equivalent to one-third of Mexico's gross national product – into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business.
"Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations," said Jeffrey Sloman, the federal prosecutor. Yet the total fine was less than 2% of the bank's $12.3bn profit for 2009. On 24 March 2010, Wells Fargo stock traded at $30.86 – up 1% on the week of the court settlement.
The conclusion to the case was only the tip of an iceberg, demonstrating the role of the "legal" banking sector in swilling hundreds of billions of dollars – the blood money from the murderous drug trade in Mexico and other places in the world – around their global operations, now bailed out by the taxpayer.
At the height of the 2008 banking crisis, Antonio Maria Costa, then head of the United Nations office on drugs and crime, said he had evidence to suggest the proceeds from drugs and crime were "the only liquid investment capital" available to banks on the brink of collapse. "Inter-bank loans were funded by money that originated from the drugs trade," he said. "There were signs that some banks were rescued that way."
Wachovia was acquired by Wells Fargo during the 2008 crash, just as Wells Fargo became a beneficiary of $25bn in taxpayers' money. Wachovia's prosecutors were clear, however, that there was no suggestion Wells Fargo had behaved improperly; it had co-operated fully with the investigation. Mexico is the US's third largest international trading partner and Wachovia was understandably interested in this volume of legitimate trade.
José Luis Marmolejo, who prosecuted those running one of the casas de cambio at the Mexican end, said: "Wachovia handled all the transfers. They never reported any as suspicious."
"As early as 2004, Wachovia understood the risk," the bank admitted in the statement of settlement with the federal government, but, "despite these warnings, Wachovia remained in the business". There is, of course, the legitimate use of CDCs as a way into the Hispanic market. In 2005 the World Bank said that Mexico was receiving $8.1bn in remittances.
During research into the Wachovia Mexican case, the Observer obtained documents previously provided to financial regulators. It emerged that the alarm that was ignored came from, among other places, London, as a result of the diligence of one of the most important whistleblowers of our time. A man who, in a series of interviews with the Observer, adds detail to the documents, laying bare the story of how Wachovia was at the centre of one of the world's biggest money-laundering operations.
Martin Woods, a Liverpudlian in his mid-40s, joined the London office of Wachovia Bank in February 2005 as a senior anti-money laundering officer. He had previously served with the Metropolitan police drug squad. As a detective he joined the money-laundering investigation team of the National Crime Squad, where he worked on the British end of the Bank of New York money-laundering scandal in the late 1990s.
Woods talks like a police officer – in the best sense of the word: punctilious, exact, with a roguish humour, but moral at the core. He was an ideal appointment for any bank eager to operate a diligent and effective risk management policy against the lucrative scourge of high finance: laundering, knowing or otherwise, the vast proceeds of criminality, tax-evasion, and dealing in arms and drugs.
Woods had a police officer's eye and a police officer's instincts – not those of a banker. And this influenced not only his methods, but his mentality. "I think that a lot of things matter more than money – and that marks you out in a culture which appears to prevail in many of the banks in the world," he says.
Woods was set apart by his modus operandi. His speciality, he explains, was his application of a "know your client", or KYC, policing strategy to identifying dirty money. "KYC is a fundamental approach to anti-money laundering, going after tax evasion or counter-terrorist financing. Who are your clients? Is the documentation right? Good, responsible banking involved always knowing your customer and it still does."
When he looked at Wachovia, the first thing Woods noticed was a deficiency in KYC information. And among his first reports to his superiors at the bank's headquarters in Charlotte, North Carolina, were observations on a shortfall in KYC at Wachovia's operation in London, which he set about correcting, while at the same time implementing what was known as an enhanced transaction monitoring programme, gathering more information on clients whose money came through the bank's offices in the City, in sterling or euros. By August 2006, Woods had identified a number of suspicious transactions relating to casas de cambio customers in Mexico.
Primarily, these involved deposits of traveller's cheques in euros. They had sequential numbers and deposited larger amounts of money than any innocent travelling person would need, with inadequate or no KYC information on them and what seemed to a trained eye to be dubious signatures. "It was basic work," he says. "They didn't answer the obvious questions: 'Is the transaction real, or does it look synthetic? Does the traveller's cheque meet the protocols? Is it all there, and if not, why not?'"
Woods discussed the matter with Wachovia's global head of anti-money laundering for correspondent banking, who believed the cheques could signify tax evasion. He then undertook what banks call a "look back" at previous transactions and saw fit to submit a series of SARs, or suspicious activity reports, to the authorities in the UK and his superiors in Charlotte, urging the blocking of named parties and large series of sequentially numbered traveller's cheques from Mexico. He issued a number of SARs in 2006, of which 50 related to the casas de cambio in Mexico. To his amazement, the response from Wachovia's Miami office, the centre for Latin American business, was anything but supportive – he felt it was quite the reverse.
As it turned out, however, Woods was on the right track. Wachovia's business in Mexico was coming under closer and closer scrutiny by US federal law enforcement. Wachovia was issued with a number of subpoenas for information on its Mexican operation. Woods has subsequently been informed that Wachovia had six or seven thousand subpoenas. He says this was "An absurd number. So at what point does someone at the highest level not get the feeling that something is very, very wrong?"
In April and May 2007, Wachovia – as a result of increasing interest and pressure from the US attorney's office – began to close its relationship with some of the casas de cambio. But rather than launch an internal investigation into Woods's alerts over Mexico, Woods claims Wachovia hung its own money-laundering expert out to dry. The records show that during 2007 Woods "continued to submit more SARs related to the casas de cambio".
In July 2007, all of Wachovia's remaining 10 Mexican casa de cambio clients operating through London suddenly stopped doing so. Later in 2007, after the investigation of Wachovia was reported in the US financial media, the bank decided to end its remaining relationships with the Mexican casas de cambio globally. By this time, Woods says, he found his personal situation within the bank untenable; while the bank acted on one level to protect itself from the federal investigation into its shortcomings, on another, it rounded on the man who had been among the first to spot them.
On 16 June Woods was told by Wachovia's head of compliance that his latest SAR need not have been filed, that he had no legal requirement to investigate an overseas case and no right of access to documents held overseas from Britain, even if they were held by Wachovia.
Woods's life went into freefall. He went to hospital with a prolapsed disc, reported sick and was told by the bank that he not done so in the appropriate manner, as directed by the employees' handbook. He was off work for three weeks, returning in August 2007 to find a letter from the bank's compliance managing director, which was unrelenting in its tone and words of warning.
The letter addressed itself to what the manager called "specific examples of your failure to perform at an acceptable standard". Woods, on the edge of a breakdown, was put on sick leave by his GP; he was later given psychiatric treatment, enrolled on a stress management course and put on medication.
Late in 2007, Woods attended a function at Scotland Yard where colleagues from the US were being entertained. There, he sought out a representative of the Drug Enforcement Administration and told him about the casas de cambio, the SARs and his employer's reaction. The Federal Reserve and officials of the office of comptroller of currency in Washington DC then "spent a lot of time examining the SARs" that had been sent by Woods to Charlotte from London.
"They got back in touch with me a while afterwards and we began to put the pieces of the jigsaw together," says Woods. What they found was – as Costa says – the tip of the iceberg of what was happening to drug money in the banking industry, but at least it was visible and it had a name: Wachovia.
In June 2005, the DEA, the criminal division of the Internal Revenue Service and the US attorney's office in southern Florida began investigating wire transfers from Mexico to the US. They were traced back to correspondent bank accounts held by casas de cambio at Wachovia. The CDC accounts were supervised and managed by a business unit of Wachovia in the bank's Miami offices.
"Through CDCs," said the court document, "persons in Mexico can use hard currency and … wire transfer the value of that currency to US bank accounts to purchase items in the United States or other countries. The nature of the CDC business allows money launderers the opportunity to move drug dollars that are in Mexico into CDCs and ultimately into the US banking system.
"On numerous occasions," say the court papers, "monies were deposited into a CDC by a drug-trafficking organisation. Using false identities, the CDC then wired that money through its Wachovia correspondent bank accounts for the purchase of airplanes for drug-trafficking organisations." The court settlement of 2010 would detail that "nearly $13m went through correspondent bank accounts at Wachovia for the purchase of aircraft to be used in the illegal narcotics trade. From these aircraft, more than 20,000kg of cocaine were seized."
All this occurred despite the fact that Wachovia's office was in Miami, designated by the US government as a "high-intensity money laundering and related financial crime area", and a "high-intensity drug trafficking area". Since the drug cartel war began in 2005, Mexico had been designated a high-risk source of money laundering.
"As early as 2004," the court settlement would read, "Wachovia understood the risk that was associated with doing business with the Mexican CDCs. Wachovia was aware of the general industry warnings. As early as July 2005, Wachovia was aware that other large US banks were exiting the CDC business based on [anti-money laundering] concerns … despite these warnings, Wachovia remained in business."
On 16 March 2010, Douglas Edwards, senior vice-president of Wachovia Bank, put his signature to page 10 of a 25-page settlement, in which the bank admitted its role as outlined by the prosecutors. On page 11, he signed again, as senior vice-president of Wells Fargo. The documents show Wachovia providing three services to 22 CDCs in Mexico: wire transfers, a "bulk cash service" and a "pouch deposit service", to accept "deposit items drawn on US banks, eg cheques and traveller's cheques", as spotted by Woods.
"For the time period of 1 May 2004 through 31 May 2007, Wachovia processed at least $$373.6bn in CDCs, $4.7bn in bulk cash" – a total of more than $378.3bn, a sum that dwarfs the budgets debated by US state and UK local authorities to provide services to citizens.
The document gives a fascinating insight into how the laundering of drug money works. It details how investigators "found readily identifiable evidence of red flags of large-scale money laundering". There were "structured wire transfers" whereby "it was commonplace in the CDC accounts for round-number wire transfers to be made on the same day or in close succession, by the same wire senders, for the … same account".
Over two days, 10 wire transfers by four individuals "went though Wachovia for deposit into an aircraft broker's account. All of the transfers were in round numbers. None of the individuals of business that wired money had any connection to the aircraft or the entity that allegedly owned the aircraft. The investigation has further revealed that the identities of the individuals who sent the money were false and that the business was a shell entity. That plane was subsequently seized with approximately 2,000kg of cocaine on board."
Many of the sequentially numbered traveller's cheques, of the kind dealt with by Woods, contained "unusual markings" or "lacked any legible signature". Also, "many of the CDCs that used Wachovia's bulk cash service sent significantly more cash to Wachovia than what Wachovia had expected. More specifically, many of the CDCs exceeded their monthly activity by at least 50%."
Recognising these "red flags", the US attorney's office in Miami, the IRS and the DEA began investigating Wachovia, later joined by FinCEN, one of the US Treasury's agencies to fight money laundering, while the office of the comptroller of the currency carried out a parallel investigation. The violations they found were, says the document, "serious and systemic and allowed certain Wachovia customers to launder millions of dollars of proceeds from the sale of illegal narcotics through Wachovia accounts over an extended time period. The investigation has identified that at least $110m in drug proceeds were funnelled through the CDC accounts held at Wachovia."
The settlement concludes by discussing Wachovia's "considerable co-operation and remedial actions" since the prosecution was initiated, after the bank was bought by Wells Fargo. "In consideration of Wachovia's remedial actions," concludes the prosecutor, "the United States shall recommend to the court … that prosecution of Wachovia on the information filed … be deferred for a period of 12 months."
But while the federal prosecution proceeded, Woods had remained out in the cold. On Christmas Eve 2008, his lawyers filed tribunal proceedings against Wachovia for bullying and detrimental treatment of a whistleblower. The case was settled in May 2009, by which time Woods felt as though he was "the most toxic person in the bank". Wachovia agreed to pay an undisclosed amount, in return for which Woods left the bank and said he would not make public the terms of the settlement.
After years of tribulation, Woods was finally formally vindicated, though not by Wachovia: a letter arrived from John Dugan, the comptroller of the currency in Washington DC, dated 19 March 2010 – three days after the settlement in Miami. Dugan said he was "writing to personally recognise and express my appreciation for the role you played in the actions brought against Wachovia Bank for violations of the bank secrecy act … Not only did the information that you provided facilitate our investigation, but you demonstrated great personal courage and integrity by speaking up. Without the efforts of individuals like you, actions such as the one taken against Wachovia would not be possible."
The so-called "deferred prosecution" detailed in the Miami document is a form of probation whereby if the bank abides by the law for a year, charges are dropped. So this March the bank was in the clear. The week that the deferred prosecution expired, a spokeswoman for Wells Fargo said the parent bank had no comment to make on the documentation pertaining to Woods's case, or his allegations. She added that there was no comment on Sloman's remarks to the court; a provision in the settlement stipulated Wachovia was not allowed to issue public statements that contradicted it.
But the settlement leaves a sour taste in many mouths – and certainly in Woods's. The deferred prosecution is part of this "cop-out all round", he says. "The regulatory authorities do not have to spend any more time on it, and they don't have to push it as far as a criminal trial. They just issue criminal proceedings, and settle. The law enforcement people do what they are supposed to do, but what's the point? All those people dealing with all that money from drug-trafficking and murder, and no one goes to jail?"
One of the foremost figures in the training of anti-money laundering officers is Robert Mazur, lead infiltrator for US law enforcement of the Colombian Medellín cartel during the epic prosecution and collapse of the BCCI banking business in 1991 (his story was made famous by his memoir, The Infiltrator, which became a movie).
Mazur, whose firm Chase and Associates works closely with law enforcement agencies and trains officers for bank anti-money laundering, cast a keen eye over the case against Wachovia, and he says now that "the only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom".
Mazur said that "a lot of the law enforcement people were disappointed to see a settlement" between the administration and Wachovia. "But I know there were external circumstances that worked to Wachovia's benefit, not least that the US banking system was on the edge of collapse."
What concerns Mazur is that what law enforcement agencies and politicians hope to achieve against the cartels is limited, and falls short of the obvious attack the US could make in its war on drugs: go after the money. "We're thinking way too small," Mazur says. "I train law enforcement officers, thousands of them every year, and they say to me that if they tried to do half of what I did, they'd be arrested. But I tell them: 'You got to think big. The headlines you will be reading in seven years' time will be the result of the work you begin now.' With BCCI, we had to spend two years setting it up, two years doing undercover work, and another two years getting it to trial. If they want to do something big, like go after the money, that's how long it takes."
But Mazur warns: "If you look at the career ladders of law enforcement, there's no incentive to go after the big money. People move every two to three years. The DEA is focused on drug trafficking rather than money laundering. You get a quicker result that way – they want to get the traffickers and seize their assets. But this is like treating a sick plant by cutting off a few branches – it just grows new ones. Going after the big money is cutting down the plant – it's a harder door to knock on, it's a longer haul, and it won't get you the short-term riches."

The office of the comptroller of the currency is still examining whether individuals in Wachovia are criminally liable. Sources at FinCEN say that a so-called "look-back" is in process, as directed by the settlement and agreed to by Wachovia, into the $378.4bn that was not directly associated with the aircraft purchases and cocaine hauls, but neither was it subject to the proper anti-laundering checks. A FinCEN source says that $20bn already examined appears to have "suspicious origins". But this is just the beginning.
Antonio Maria Costa, who was executive director of the UN's office on drugs and crime from May 2002 to August 2010, charts the history of the contamination of the global banking industry by drug and criminal money since his first initiatives to try to curb it from the European commission during the 1990s. "The connection between organised crime and financial institutions started in the late 1970s, early 1980s," he says, "when the mafia became globalised."
Until then, criminal money had circulated largely in cash, with the authorities making the occasional, spectacular "sting" or haul. During Costa's time as director for economics and finance at the EC in Brussels, from 1987, inroads were made against penetration of banks by criminal laundering, and "criminal money started moving back to cash, out of the financial institutions and banks. Then two things happened: the financial crisis in Russia, after the emergence of the Russian mafia, and the crises of 2003 and 2007-08.
"With these crises," says Costa, "the banking sector was short of liquidity, the banks exposed themselves to the criminal syndicates, who had cash in hand."
Costa questions the readiness of governments and their regulatory structures to challenge this large-scale corruption of the global economy: "Government regulators showed what they were capable of when the issue suddenly changed to laundering money for terrorism – on that, they suddenly became serious and changed their attitude."
Hardly surprising, then, that Wachovia does not appear to be the end of the line. In August 2010, it emerged in quarterly disclosures by HSBC that the US justice department was seeking to fine it for anti-money laundering compliance problems reported to include dealings with Mexico.

"Wachovia had my résumé, they knew who I was," says Woods. "But they did not want to know – their attitude was, 'Why are you doing this?' They should have been on my side, because they were compliance people, not commercial people. But really they were commercial people all along. We're talking about hundreds of millions of dollars. This is the biggest money-laundering scandal of our time.
"These are the proceeds of murder and misery in Mexico, and of drugs sold around the world," he says. "All the law enforcement people wanted to see this come to trial. But no one goes to jail. "What does the settlement do to fight the cartels? Nothing – it doesn't make the job of law enforcement easier and it encourages the cartels and anyone who wants to make money by laundering their blood dollars. Where's the risk? There is none.
"Is it in the interest of the American people to encourage both the drug cartels and the banks in this way? Is it in the interest of the Mexican people? It's simple: if you don't see the correlation between the money laundering by banks and the 30,000 people killed in Mexico, you're missing the point."
Woods feels unable to rest on his laurels. He tours the world for a consultancy he now runs, Hermes Forensic Solutions, counselling and speaking to banks on the dangers of laundering criminal money, and how to spot and stop it. "New York and London," says Woods, "have become the world's two biggest laundries of criminal and drug money, and offshore tax havens. Not the Cayman Islands, not the Isle of Man or Jersey. The big laundering is right through the City of London and Wall Street.
"After the Wachovia case, no one in the regulatory community has sat down with me and asked, 'What happened?' or 'What can we do to avoid this happening to other banks?' They are not interested. They are the same people who attack the whistleblowers and this is a position the [British] Financial Services Authority at least has adopted on legal advice: it has been advised that the confidentiality of banking and bankers takes primacy over the public information disclosure act. That is how the priorities work: secrecy first, public interest second.
"Meanwhile, the drug industry has two products: money and suffering. On one hand, you have massive profits and enrichment. On the other, you have massive suffering, misery and death. You cannot separate one from the other.
"What happened at Wachovia was symptomatic of the failure of the entire regulatory system to apply the kind of proper governance and adequate risk management which would have prevented not just the laundering of blood money, but the global crisis."