Thursday, March 19, 2015

Germany riot targets new ECB headquarters in Frankfurt

Dozens of people have been hurt and some 350 people arrested as anti-austerity demonstrators clashed with police in the German city of Frankfurt.
Police cars were set alight and stones were thrown in a protest against the opening of a new base for the European Central Bank (ECB).
Violence broke out close to the city's Alte Oper concert hall hours before the ECB building's official opening.
"Blockupy" activists are expected to attend a rally later on Wednesday.
In earlier disturbances, police in riot gear used water cannon to clear hundreds of anti-capitalist protesters from the streets around the new ECB headquarters.
Riot police carry away an activist during a demonstration organized by the Blockupy movement to protest against the policies of the European Central Bank (18 March 2015)
An activist at a demonstration organized by the Blockupy movement to protest against the policies of the European Central Bank in Frankfurt (18 March 2015)
Organisers were bringing a left-wing alliance of protesters from across Germany and the rest of Europe to voice their anger at the ECB's role in austerity measures in EU member states, most recently Greece.
The bank, in charge of managing the euro, is also responsible for framing eurozone policy and, along with the IMF and European Commission is part of a troika which has set conditions for bailouts in Ireland, Greece, Portugal and Cyprus.
A spokesman for the Blockupy movement said the troika was responsible for austerity measures which have pushed many into poverty.
Police set up a cordon of barbed wire outside the bank's new 185m (600ft) double-tower skyscraper, next to the River Main.
But hopes of a peaceful rally were dashed as clashes began early on Wednesday.
Tyres and rubbish bins were set alight and police responded with water cannon as firefighters complained they were unable to get to the fires to put them out. One fire engine appeared to have had its windscreen broken.
Protester in Frankfurt (18 March) Rubbish bins were set alight some distance from the new ECB building (background)
German police cars set on fire by anti-capitalist protesters Among the first targets for protesters were police cars
Activists said many protesters had been hurt by police batons, water cannon and by pepper spray.
Police said as many as 80 of their officers had been affected by pepper spray or an acidic liquid. Eight suffered injuries from stone-throwing protesters.
Police spokeswoman Claudia Rogalski spoke of an "aggressive atmosphere" and the Frankfurt force tweeted images of a police van being attacked. They were braced for further violence as increasing numbers of activists arrived for the rally.
Blockupy accused police of using kettling tactics to cordon off hundreds of protesters and appealed for supporters to press for their release.
line
What is Blockupy?
  • Europe-wide alliance of left-wing parties, unions and movements
  • Vehemently against austerity polices of European Commission, ECB and IMF
  • First Frankfurt protest attracted thousands in 2012
  • Activists from Greece's radical left governing party Syriza and Spain's anti-corruption Podemos are joining the rally
  • Also includes Germany's Die Linke and Occupy Frankfurt
  • Rallying call: "They want capitalism without democracy, we want democracy without capitalism"
line
As the number of protesters grew in the streets away from the new ECB building, the bank's president, Mario Draghi, gave a speech marking its inauguration.
Mr Draghi said that the it "may not be a fair charge" to label the ECB as the main perpetrator of unpopular austerity in Europe.
"Our action has been aimed precisely at cushioning the shocks suffered by the economy," he said.
"But as the central bank of the whole euro area, we must listen very carefully to what all our citizens are saying."
The new headquarters, which had been due to open years earlier, cost an estimated €1.3bn (£930m; $1.4bn) to build and is the new home for thousands of central bankers.
Blockupy activists said on their website that there was nothing to celebrate about the politics of austerity and increasing poverty.
Frankfurt police tweet A police tweet reads: New attacks against the police in #Frankfurt
Activists in Frankfurt (18 March) Thousands of activists were gathering in Frankfurt for the rally
Mario Draghi (18 March) Inside the building, ECB President Mario Draghi gave a speech marking its inauguration


Dozens of people have been hurt and some 350 people arrested as anti-austerity demonstrators clashed with police in the German city of Frankfurt.
Police cars were set alight and stones were thrown in a protest against the opening of a new base for the European Central Bank (ECB).
Violence broke out close to the city's Alte Oper concert hall hours before the ECB building's official opening.
"Blockupy" activists are expected to attend a rally later on Wednesday.
In earlier disturbances, police in riot gear used water cannon to clear hundreds of anti-capitalist protesters from the streets around the new ECB headquarters.
Riot police carry away an activist during a demonstration organized by the Blockupy movement to protest against the policies of the European Central Bank (18 March 2015)
An activist at a demonstration organized by the Blockupy movement to protest against the policies of the European Central Bank in Frankfurt (18 March 2015)
Organisers were bringing a left-wing alliance of protesters from across Germany and the rest of Europe to voice their anger at the ECB's role in austerity measures in EU member states, most recently Greece.
The bank, in charge of managing the euro, is also responsible for framing eurozone policy and, along with the IMF and European Commission is part of a troika which has set conditions for bailouts in Ireland, Greece, Portugal and Cyprus.
A spokesman for the Blockupy movement said the troika was responsible for austerity measures which have pushed many into poverty.
Police set up a cordon of barbed wire outside the bank's new 185m (600ft) double-tower skyscraper, next to the River Main.
But hopes of a peaceful rally were dashed as clashes began early on Wednesday.
Tyres and rubbish bins were set alight and police responded with water cannon as firefighters complained they were unable to get to the fires to put them out. One fire engine appeared to have had its windscreen broken.
Protester in Frankfurt (18 March) Rubbish bins were set alight some distance from the new ECB building (background)
German police cars set on fire by anti-capitalist protesters Among the first targets for protesters were police cars
Activists said many protesters had been hurt by police batons, water cannon and by pepper spray.
Police said as many as 80 of their officers had been affected by pepper spray or an acidic liquid. Eight suffered injuries from stone-throwing protesters.
Police spokeswoman Claudia Rogalski spoke of an "aggressive atmosphere" and the Frankfurt force tweeted images of a police van being attacked. They were braced for further violence as increasing numbers of activists arrived for the rally.
Blockupy accused police of using kettling tactics to cordon off hundreds of protesters and appealed for supporters to press for their release.
line
What is Blockupy?
  • Europe-wide alliance of left-wing parties, unions and movements
  • Vehemently against austerity polices of European Commission, ECB and IMF
  • First Frankfurt protest attracted thousands in 2012
  • Activists from Greece's radical left governing party Syriza and Spain's anti-corruption Podemos are joining the rally
  • Also includes Germany's Die Linke and Occupy Frankfurt
  • Rallying call: "They want capitalism without democracy, we want democracy without capitalism"
line
As the number of protesters grew in the streets away from the new ECB building, the bank's president, Mario Draghi, gave a speech marking its inauguration.
Mr Draghi said that the it "may not be a fair charge" to label the ECB as the main perpetrator of unpopular austerity in Europe.
"Our action has been aimed precisely at cushioning the shocks suffered by the economy," he said.
"But as the central bank of the whole euro area, we must listen very carefully to what all our citizens are saying."
The new headquarters, which had been due to open years earlier, cost an estimated €1.3bn (£930m; $1.4bn) to build and is the new home for thousands of central bankers.
Blockupy activists said on their website that there was nothing to celebrate about the politics of austerity and increasing poverty.
Frankfurt police tweet A police tweet reads: New attacks against the police in #Frankfurt
Activists in Frankfurt (18 March) Thousands of activists were gathering in Frankfurt for the rally
Mario Draghi (18 March) Inside the building, ECB President Mario Draghi gave a speech marking its inauguration

2014 totals Wall Street bonuses $28.5 billion, All full-time minimum wage earnings $14 billion

View image on Twitter
2014 totals Wall Street bonuses $28.5 billion All full-time minimum wage earnings $14 billion http://www.ips-dc.org/deep-end-wall-street/ …

THERE IS NO MONEY - "FREEDOM FROM FICTION"

             A4V 
                           
   
Accept For Value to Discharge Debt  _ A4V
For as long as we have been using FRN, there has been no real money to actually be able to pay for anything. All we can do is charge and discharge debt, and the books are balanced when an equivalent entry is recorded on both sides of the ledger.
“Accepted for Value” (A4V) is a method that can be effectively used to discharge bills/presentments sent with a payment voucher attached. I know from personal experience the IRS for one will not refuse or return your payment made in this method. It actually helps them settle their books. Credit collectors will typically write the balance off because they can't do anything else, and it's a tax write-off for them. Credit card companies don't want to admit it, but they will also write off the payment (and close your account) and receive a tax credit to settle their books.
In red ink, at a forty-five degree angle (called “Bankers Script”) on the upper portion of the bill write: “Accepted for value – Returned for value. Exempt from levy. Offset this billing by routing through and ledgering against the Private Exemption account of John-Quincy:Doe (your name),Private offset account # 123456789 (your SSN without dashes) at the Department of Treasury for credit to: (whoever offers you the contract/presentment) – for further credit to the account of: JOHN Q DOE, account # 123-45-6789 (your SSN with dashes). By: (signature), Authorized Representative, Principal. Date:_________
USPS Certified Mail Receipt # _________________________________________”
On the lower portion of the bill, under the perforation is the payment coupon or voucher. We are going to turn this into a Money Order. It must contain all the basic elements of a typical bank draft/check. Complete in blue or black ink as follows:
“Date” top right corner; “MONEY ORDER” top center; “Pay to the order of: (whoever offers you the contract/presentment): left center; “the amount written out in words”, second line, left center; “Amount in numbers”, right center; “By: (signature), Authorized Representative for JOHN Q DOE, EIN# 123-45-6789” lower right corner. Make sure to endorse it on the back like a check, with your signature and EIN#.
  

                      "FREEDOM FROM FICTION"

You Have An Exemption Account to Discharge Debt
House Joint Resolution 192, June 5, 1933 established a check and balance within Statutory jurisdiction under the new bankruptcy system. The American people were responsible for paying the Federal government's debts, in exchange for the Feds offsetting our personal debts “dollar for dollar” with a tax exemption account that operates as a trust.
Each birth certificate is connected to a trust and an exemption account, and was to be claimed by the individual at the age of majority and used to discharge their debts. There is a Public exemption account represented by your NAME in all capital letters and your Social Security Number with dashes: 123-45-6789. There is also your Private exemption account held by the US Treasury with your human name, not in all capital letters, and your Social Security Number without dashes.
The original intention was that we were to use the private account to charge, and the public account to discharge debt. Without the discharge process, the national debt is never actually paid down. Passing FRN around only delays payment, it doesn't effect it.

                                                Maxims of Law
A Maxim of Law is “an established principle of law universally admitted as being a correct statement, or as agreeable to reason.” Black's Law Dictionary.
Examples:
A workman is worthy of his hire. It is against equity for freemen not to have the free disposal of their own property.
All are equal under the law. No one is above the law.
In commerce truth is sovereign. To lie is to go against the mind.
Truth is expressed by means of an affidavit. Sworn truth.
An unrebutted affidavit stands as the truth in commerce. He who does not deny, admits.
An unrebutted affidavit becomes the judgment in commerce.
A matter must be expressed to be resolved. He who fails to assert his rights, has none.
He who leaves the battlefield first loses by default. He who does not repel a wrong when he can, occasions it.
Sacrifice is the measure of credibility. He who bears the burden ought also to derive the benefit.
A lien or claim can be satisfied only through rebuttal by Counter-affidavit point-for-point, resolution by jury, or payment. If the plaintiff does not prove his case, the defendant is absolved.
 

It is a maxim of American law that any statute contrary to the constitution, which is the supreme law of the land, is null and void and no citizen is bound to obey an unconstitutional law.
An affidavit is a written declaration made under oath before a notary public or other authorized officer giving the document legal status and force of law. 
    Quotes From the Front Line
Quoting Colonel Edward Mandel House, a legendary power broker, in a private meeting with Woodrow Wilson (US President 1913-1921):
"[Very] soon, every American will be required to register their biological property (that's us and our children) in a national system designed to keep track of the people and that will operate under the ancient system of pledging.
By such methodology, we can compel people to submit to our agenda, which will affect oursecurity as a charge back for our fiat paper currency. Every American will be forced to register or suffer being able to work and earn a living.
They will be our chattel, (property) and we will hold the security interest over them forever, by operation of the law merchant under the scheme of secured transactions. Americans, by unknowingly or unwittingly delivering the bills of lading to us will be rendered bankrupt and insolvent, secured by their pledges.
They will be stripped of their rights and given a commercial value designed to make us a profit and they will be none the wiser, for not one man in a million could ever figure our plans and, if by accident one or two should figure it out, we have in our arsenal plausible deniability. After all, this is the only logical way to fund government, by floating liens and debts to the registrants in the form of benefits and privileges.
This will inevitably reap us huge profits beyond our wildest expectations and leave every American a contributor to this fraud, which we will call “Social Insurance.” Without realizing it, every American will unknowingly be our servant, however begrudgingly. The people will become helpless and without any hope for their redemption and we will employ the high office of our dummy corporation to foment this plot against America.”
President Woodrow Wilson quoted after signing the Federal Reserve Bill in 1913:
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation iscontrolled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world — no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."
On December 22, 1913, the day before President Woodrow Wilson signed the Federal Reserve Act, Congressman Charles A. Lindberg Sr. (father of the famous aviator) said to the House:
"When the President signs this bill, the invisible government by the Monetary Powers will be legalized. The people may not know it immediately, but the day of reckoning is only a few years removed… The worst legislative crime of the ages is perpetrated by this banking bill… The greatest crime of Congress is its currency system… The people must make a declaration of independence to relieve themselves from the Monetary Power. This they will be able to do by taking control of Congress."
Quote from the Rothschild Brothers:
"The few who understand the system, will either be so interested in its profits, or so dependent on its favors that there will be no opposition from that class. The great body of people, mentally incapable of comprehending the tremendous advantages, will bear its burden without complaint."

Sir Josiah Stamp, President of the Bank of England in the 1920's and the second richest man in Britain at the time said:
"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them but leave them in power to create deposits, and with the flick of the pen they create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create deposits."

Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta Georgia, said:
"This is a staggering thought. We are completely dependent on the commercial banks.Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defect remedied very soon."
Thomas Jefferson is quoted in 1791 as saying:
"If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied."
Congressman Louis T. McFadden's speech before Congress on June 10, 1932 explains the type of organization we are dealing with in the Federal Reserve:
"Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve banks. The Federal Reserve Board, a government board, has cheated the Government of the United States and the people of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal Reserve banks acting together have cost this country enough money to pay the national debt several times over. 
This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.
Some people think the Federal Reserve banks are United States Government institutions. They are not government institutions. They are private credit monopolies which prey upon the peopleof the United States for the benefit of themselves and their foreign swindlers; and rich and predatory money lenders. In that dark crew of financial pirates there are those who would cut a man's throat to get a dollar out of his pocket; there are those who send money into states to buy votes to control our legislation; and there are those who maintain an international propaganda for the purpose of deceiving us and wheedling us into the granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime."
 The Real World Hierarchy of Power 
The source of all life, and therefore the pinnacle of our world hierarchy of power, is God. Let's agree that “God” is the Creator of Souls and Universes, and the source of Natural law. As our Creator, we can answer to no higher authority.
Human beings, as creative living souls, came together as communities and societies, then organized government, assigning “public servants” to facilitate a system that would uphold the rights of the individual and work for the greater good of the community. Since we humans created government, government answers to the people as its higher authority.
   
                         REAL MONEY
Banking Alchemy - Transforming Gold Into Paper
Throughout history, up to the 1700’s, all “real money” was either gold or silver. Gold was the money of the rich and silver the money of the poor.
Our present banking system finds its roots in the role played by goldsmiths in history. Mayer Amschel (Bauer) Rothschild (1744 -1812) was a German goldsmith turned banker who built a banking family dynasty that controls our economy to this day, by turning gold into paper.
Centuries ago, wealthy individuals who possessed quantities of precious metals would often store them with the local goldsmith for safe keeping. In exchange, the goldsmith would issue paper certificates as receipts that could be redeemed at a later date for various quantities of gold.
What the goldsmiths discovered was, very few gold owners would actually redeem their certificates for gold at any one time. This led some unscrupulous goldsmiths to issuing certificates to those who had no gold, but who were willing to pay back the loans with interest.
These conniving goldsmiths found they could issue many paper receipts and reap huge profits by collecting interest on made-up certificates when there was no actual gold backing them at all. With this began the acceptance of paper money and the beginning of the modern banking system of fractional reserve lending and compounding interest.

The American Coinage Act of 1792
Section 9 of the Coinage Act of 1792 states the following denominations and values:
Ten dollar “Eagles” - to contain two hundred and forty-seven and four eights (247 4/8) grains of pure gold, or two hundred and seventy (270) grains of standard gold.
(Today's gold price = $909.90)
Five dollar “Half Eagles” - to contain one hundred and twenty-three and six eights (123 6/8) grains of pure gold, or one hundred and thirty five (135) grains of standard gold.
(Today's gold price = $454.95)
Two dollar “Quarter Eagles” - to contain sixty-one and seven eights (61 7/8) grains of pure, or sixty seven and four eights (67 4/8) grains of standard gold.
(Today's gold price = $227.48)
One dollar - to contain three hundred and seventy one and four sixteenth (371 4/16) grains of pure silver, or four hundred and sixteen (416) grains of standard silver.
(Today's silver price = $24.96)
Half dollar - to contain one hundred and eighty-five and ten sixteenth (185 10/16) grains of pure silver, or two hundred and eight (208) grains of standard silver.
(Today's silver price = $12.48)
Quarter Dollar - to contain ninety-two grains and thirteen sixteenth (92 13/16) grains of pure silver, or one hundred and four (104) grains of standard silver.
(Today's silver price = $6.24)
Ten Cent Dimes - to contain thirty-seven grains and two sixteenth (37 2/16) grains pure silver, or forty-one and two sixteenth (42 2/16) grains of standard silver.
(Today's silver price = $2.53)
Five Cent Nickles or Half Dimes - to contain eighteen grains and nine sixteenth (18 9/16) grains of pure silver, or twenty and four fifth (20 4/5) grains of standard silver.
(Today's price = $1.25)
Historical Prices for One Troy Ounce of Gold
1792 = $19.30
1834 = $20.67
1935 = $35.00
1973 = $120.00
1979 = $850.00
2012 = $1,617.10
 Gold Prices as of June 5, 2012
1 gram gold bar = $51.97
1 grain of gold = $3.37
Silver Prices as of June 5, 2012
1 gram silver bar = $0.91
1 grain of silver = $0.06
CURRENT PRICES ARE BEING MANIPULATED TO HOLD UP A SYSTEM DOOMED TO FALL HARD SOON



Fannie And Freddie Are Headed For Another Bailout

Taxpayers pumped over $200 billion in to Fannie Mae and Freddie Mac after the financial collapse of 2008.   While the Obama Government used taxpayer subsidized loans to move  a large quantities of foreclosed housing inventory from the FNM/FRE and in to big investment funds, FNM/FRE were busy ballooning their mortgage holdings – again.
Now the Inspector General’s Federal Housing Finance Agency has issued a warning that both FNM/FRE are headed for another bailout, which is no surprise to me:
“Future profitability is far from assured,” Federal Housing Finance Agency Office of Inspector General said in a report, pointing out that the firms could again chalk up losses on their derivatives portfolios, similar to those they reported in the fourth quarter. “This increases the likelihood of additional Treasury investment,” the report stated.  - Reuters (LINK)
Similar to when Fannie was plugged full of derivatives under former CEO Franklin Raines – who by the way had no clue how catastrophic the situation was and should be in jail but instead received a $100 million “you’re fired” severance agreement – the Government has once again looked the other way while Wall Street unloaded another avalanche of derivatives onto FNM/FRE.   Once again the Taxpayers will pay for this.
This is not a ‘warning” – this is a “get ready here it comes” statement.   The fact is that most of FNM/FRE’s “profitablity” has been driven by the same fraudulent “mark to model” accounting that has generated most the big bank profits since 2009.
fragile-by-design
And the Government used this fraudulent accounting to suck money out of FNM/FRE.   The “improved” balance sheet has enabled both FNM/FRE to issue debt to investors.  The money raised has been used reload their mortgage holdings and for dividend “payback” payments to the Treasury.
FNM’s CEO warned of the possibility of another bailout in February, after announcing FNM’s smallest dividend payment to the Treasury in more than four years.  This is not a warning – it’s an inevitability.  The housing market is set to re-collapse, which will blow-up both Fannie and Freddie – once again.

China Dumps US Treasuries While European Allies Join China’s Development Bank


Greece needs more money so Tsipras plans to meet with Putin. If Greece exits the Euro Zone, Spain and Italy will follow.1 in 3 Americans are classified as the working poor. Housing starts implode throughout the country. European allies decide to join the China development bank to protect themselves from the collapsing dollar. China dumps more US treasuries. White House exempts itself from the FOIA. Kiev is doing everything it can to push war with Russia. The oil in Libya is now being sold not using the dollar. US preparing to go into Syria, trying the chlorine gas trick once again.

Dollar Demand = Global Economy Has Skidded Over the Cliff

by Charles Hugh-Smith
Borrowing in USD was risk-on; buying USD is risk-off.
There is a lively debate about the global demand for U.S. dollars:
Is There a US$ Shortage? Will it Sink the Global Economy? Again? (Mish)
The Dollar Squeeze – How Problematic Is It? (Acting Man)
The Global Dollar Funding Shortage Is Back With A Vengeance And “This Time It’s Different” (Zero Hedge), which references a Bank for International Settlements (BIS) paper: Global dollar credit: links to US monetary policy and leverage.

Correspondent Mark G. went through the BIS report and offered these insightful comments:
“Unless you enjoy multivariate regression analysis I suggest skimming the BIS working paper. Major points I got were:
1. Almost all of the dollar denominated debt and bond growth since 2009 was generated by the global shadow banking system. Banks per se were smaller players in issuing this debt, and US-based banks (i.e. the ones in reach of Federal Reserve life preservers) were minor. Sovereign wealth funds are large players in this. When we think of huge sovereign wealth funds held by major hydrocarbon exporters then the pucker factor rises.
One implied result of the BIS paper is that it will be extremely difficult or impossible for Federal Reserve emergency liquidity operations to stem a panic, even if the Fed is inclined to do so. AEP in the Telegraph article stated this more directly. The real problem is that modern bailout operations have large fiscal components as well as monetary components. Looking at the Bundestag’s chronic heartburn with Greece and the EFSF is educational. Alternatively, consider how well proposals for a larger TARP type program aimed primarily at foreign entities would be received by the US Congress. And especially in 2016.
2. A major revelation was that $1 trillion of the dollarized lending went into Chinese companies. However the authors claim most of this lending was through Chinese banks.
3. “Emerging Markets” again account for 1/2 of the total offshore dollarized loans and bonds. This is $4.5 trillion and mainly centered in Brazil, Russia, India, China, etc.
4. From page 20:
“Fourth, since the crisis, the Federal Reserve’s compression of term premia via its bond buying has led to a surge in US dollar borrowing through bond markets. Time-varying regressions and VARanalysis also indicate that inflows into bond mutual funds played a significant role in transmitting monetary ease, giving evidence of the portfolio rebalancing channel of the Federal Reserve large-scale bond purchases. In particular, given the low expected returns of holding US Treasury bonds (in relation to expected short-term rates), investors have sought out and found dollar bond issuers outside the US, many rated BBB and thus offering a welcome credit spread.”
These dollarized bond funds were the “conservative” play for those players unwilling to also assume exchange rate risk.
“BBB…” This is already the S&P/Fitch ground floor of “investment grade.” And that was the rating assigned to these foreign issuers during a time of free money and bubble expansion. We already know the bulk of bond mutual fund buyers are institutions. And many are required to flush any paper that falls below investment grade. And being ‘smart money’ they will have tried to hedge their risks against such a ‘Credit Event’ with credit default swaps (CDS).
We also know that CDS contracts typically require the CDS writer to begin posting progressively higher amounts of cash collateral as the credit outlook darkens for the underlying instrument. For instance, even if S&P/Fitch merely change the outlook from ‘positive’ to ‘neutral’ the required posted collateral percentage rises. And again from neutral to negative and so forth.
In the case of dollar loans and bonds the collateral needs to be in dollars.Therefore even if the CDS writer manages to borrow Euros with wet ink they still have to exchange these for dollars. See USD/Euro FX trend for the result.”
Thank you, Mark, for the detailed analysis. Here are my initial thoughts:
1. Currencies respond to supply and demand like any other commodity. As such, it’s instructive to to look at the supply of U.S. dollars and see how it’s changed since 2008:money supply (Wikipedia)
image: http://www.oftwominds.com/photos2015/money-supplyUSA.png
2. However you measure money supply, the supply of dollars hasn’t risen by much: MZM Money Stock has risen $2 trillion since 2010, Adjusted Monetary Base rose from $1 trillion to $3 trillion, and M2 Money Stock from around $8 trillion to around $10 trillion.
To put that roughly $2 trillion increase in money supply in context:
The GDP of the U.S. is about $17 trillion.
Global GDP is around $72 trillion.
Global debt rose $57 trillion from 2007 to 2014:
image: http://www.oftwominds.com/photos2015/Global-Debt-Growth2.png
3. If there is demand for $9 trillion USD, that dwarfs the increase in US money supply. It also dwarfs the expansion in the Federal Reserve’s balance sheet, roughly $3.5 trillion since 2008.
4. Borrowing in U.S. dollars was the easy, profitable trade as long as the dollar was declining. Traders being traders, everybody jumped into the easy, profitable trade with all four feet. Now that the dollar has reversed, everyone who is holding debt in dollars is losing money every time the USD ticks higher.
5. Much of the shadow banking system is opaque, and assumptions made about the outstanding debt in USD are likely to be not just wrong but grossly under-estimated. See #2 above.
If you wanted a trade that was guaranteed to blow up, you couldn’t do much better than “dollar bond issuers outside the US, many rated BBB.” As Mark noted, once this gunwales-at-sea-level debt gets downgraded a notch, institutional owners will be obligated to sell, regardless of any other conditions. Selling will beget selling.
6. U.S. Treasuries are essentially the only super-liquid safe haven offering a yield above 1%. And what do you need to buy Treasuries? U.S. dollars. The point here is the demand for USD is not limited to those scrambling for USD to pay off dollar-denominated debt–it’s a global consequence of the global economy skidding off the cliff into recession.
Borrowing in USD was risk-on; buying USD is risk-off. As the real global economy slips into recession, risk-on trades in USD-denominated debt are blowing up and those seeking risk-off liquidity and safe yields are scrambling for USD-denominated assets.
It’s important to recall that buyers of U.S. Treasuries are getting not just the 2+% yield– they’re getting the capital appreciation from the USD rising against their home currency. Depending on the home currency, those who dumped their home currency and bought USD last summer have gained 17% to 25%, even if they received 0% yield.
Add all this up and we have to conclude that, in terms of demand for USD–you ain’t seen nuthin’ yet.

More QE= More money= More Debt= More Interest/Fee’s= More profit banks= More staff+bonuses= Bigger banks= Bigger fairy tales

Shocking Stat: Wall Street Bonuses vs. Worker Bee Earnings
Report author Sarah Anderson found that 167,800 Americans potentially benefitted from the more than $28.5 billion in bonuses paid out by Wall Street banks in 2014. Some securities industries employees likely received large bonuses, while others received nothing.
“The $28.5 billion in bonuses doled out to Wall Street employees is double the annual pay for all 1,007,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour,” Anderson wrote.
If you’re having a hard time stomaching Anderson’s findings, you’re not alone. Sadly, they’re accurate.
In an article penned for The New York Times, Justin Wolfers, a senior fellow at the Peterson Institute for International Economics, said: “My judgment is that we can be pretty confident that Ms. Anderson’s estimate that the sum of Wall Street bonuses is roughly twice the total amount paid to all full-time workers paid minimum wage seems like a fair characterization.”
Wall Street bonuses were up 3 percent last year from 2013, despite a 4.5 percent drop in industry profits.
http://www.moneytalksnews.com/shocking-stat-wall-street-bonuses-worker-bee-class-earnings/
Household debt ratio hits all-time high of 163.3%
http://www.bloomberg.com/news/articles/2015-03-12/canada-household-debt-ratio-reaches-record-163-3-in-4th-quarter
South Korea now trying to fend off deflation as household debt reaches a record 1.08 quadrillion won.
http://asia.nikkei.com/Politics-Economy/Economy/South-Korea-trying-to-fend-off-deflation
REALIST NEWS – US Government and Household Debt Record Breaking $60 Trillion

Too big to fail banks just keep getting bigger: The idea that the TBTF institutions were going to get cut down… 
Too big to fail? It may turn out that the biggest banks in the U.S. are too big to break up.
The idea that the TBTF institutions were going to get cut down to size after the financial crisis has turned into a giant myth. If anything, the system has gotten even bigger.
JPMorgan Chase, No. 1 among banks and thrifts in total assets, has seen its base swell to more than $2.5 trillion, according to SNL Financial. The company’s deposit base alone has grown by 29 percent since the end of 2008.
http://www.cnbc.com/id/102480547?utm_source=twitterfeed&utm_medium=twitter
Global Debt Up $57 Trillion, 60% American Jobs Created Low Level, 50%+ Youth Living w/Parents
http://libertyblitzkrieg.com/2015/02/06/post-crisis-scorecard-global-debt-up-57-trillion-60-of-american-jobs-created-are-low-level-record-youth-living-with-parents/
U.S. Bank Profits Near Record Levels
Industry Posts Second-Highest Profit in 23 Years in Quarter Ended June 30; Improved Credit Quality Helps