Oldspeak: ““Ultimately there is going to be a price all around the world to be paid for this and the longer it continues the bigger that price is going to be.” – Peter P. Schiff, President Euro Pacific Capital “When the world’s financial bubble blew, the solution was to lower interest rates and pump trillions of dollars into the sick banking system. “The solution is the problem, that’s why we had a problem in the first place”. For Economics Nobel laureate Vernon Smith, the Catch 22 is self-evident. But interest rates have been at rock bottom for years, and governments are running out of fuel to feed the economy. “The governments can save the banks, but who can save the governments?” Forecasts predict all countries’ debt will reach 100% of GDP by next year. Greece and Iceland have already crumbled, who will be next?” The bailout bubble will inevitably pop. It is many times larger than any other financial bubble yet seen and it is global. Corporations world wide are being bailed out by governments, but as we’ve seen in Greece, Iceland, Spain, Italy, Portugal, governments themselves are collapsing under weight of the bailouts. Now governments need bailouts, ceding control to technocrats who go about the business of privatizing public assets, cutting social services and increasing taxes to facilitate extraction of the government and nations resources. Conditions are very much similar to those that existed in 2008 before the last collapse. When it pops this will be the mother of all bubbles. Interest rates are at or near zero across much of the world. There is no more rate lowering to be done to make possible more “stimulus packages”. It will be very interesting to see how thing proceed past that point. My guess is not well.
Posts Tagged ‘U.S. Dollar’
Goldman Sachs, Citibank, JP Morgan Chase, Bank Of America Have Assets of $5 trillion & Carry $235 TRILLION In Risk Exposure, 1/3 Of World TotalIn Uncategorized on October 4, 2011 at 5:17 pm
Oldspeak:”With Megabanks carrying 50 to 1 leverage on a hundreds of trillions dollar sized largely unregulated and non-public OTC derivatives market, the next collapse of the global economic system is not a matter of if, but when. “OTC derivatives are an unregulated dark pool of money with no public market. These are basically debt bets between two entities on things such as credit risk, currencies, interest rates and commodities. According to the latest report from the Comptroller of the Currency, just four U.S. banks have an eye popping $235 trillion of OTC derivative leverage. (Click here for the complete Comptroller of the Currency report.) As a nation, U.S. banks have a total OTC derivative exposure of $250 trillion. So, the fact that just four U.S. banks have this much leverage and risk is astounding!” -Greg Hunter It’s going to be really interesting to see what happens when this gargantuan house of cards falls down. I’ll bet quite a few more people will be for occupying wall street then.”
By Greg Hunter @ USAWatchdog.com :
I keep hammering away at the fact the Fed doled out $16 trillion in the wake of the credit crisis of 2008. This is an enormous sum that is greater than the all goods and services produced in the U.S. in a single year. Domestic banks and companies got the money, right along with foreign banks and companies. In effect, the Federal Reserve bailed out the world financial system. Now, we are right back to square one facing another financial meltdown with European banks and sovereign debt. If the Fed spent $16 trillion, why in the heck is this problem not fixed and why isn’t the world economy taking off like a rocket?” The simple answer is it wasn’t enough money.
The Bank of International Settlements pegs the total world over-the-counter (OTC) derivative exposure at around $600 trillion, but many experts say the real figure is more than twice that amount. No matter which figure you use, it is a gargantuan sum. OTC derivatives are an unregulated dark pool of money with no public market. These are basically debt bets between two entities on things such as credit risk, currencies, interest rates and commodities. According to the latest report from the Comptroller of the Currency, just four U.S. banks have an eye popping $235 trillion of OTC derivative leverage. (Click here for the complete Comptroller of the Currency report.) As a nation, U.S. banks have a total OTC derivative exposure of $250 trillion. So, the fact that just four U.S. banks have this much leverage and risk is astounding! The banks are listed below in order of size and approximate OTC exposure:
1.) JP MORGAN CHASE BANK NA OH
$78.1 trillion OTC derivatives
2.) CITIBANK NATIONAL ASSN
$56.1 trillion OTC derivatives
3.) BANK OF AMERICA NA NC
$53.15 trillion OTC derivatives
4.) GOLDMAN SACHS BANK USA NY
$47.7 trillion OTC derivatives
Considering that the total assets of these four banks are a little more than $5 trillion, I see a frightening amount of risk with a total derivative exposure of $235 trillion! This is nearly 50 to 1 leverage. On top of that, assets such as real estate or mortgage-backed securities can be held on the books at whatever value the banks think they can sell them for in the future. I call this government sanctioned accounting fraud, or mark to fantasy accounting. Who knows what the true value of the banks “assets” really are.
I am sure the banks would say that the net exposure is really not near that great because the banks have hedged their bets. The banks will probably say, by and large, these debt bets will cancel out or back up one another. It is known in the banking world as “bilateral netting.” A recent article in Zerohedge.com explained the enormous risk by saying, “The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. And while the argument can further be extended that in bankruptcy a perfectly netted bankrupt entity would make someone else whole on claims they have written, this is not true, as the bankrupt estate will pursue 100 cent recovery on its claims even under Chapter 11, while claims the estate had written end up as General Unsecured Claims which as Lehman has demonstrated will collect 20 cents on the dollar if they are lucky.”(Click here to read the complete Zerohedge.com story.)
The global economy is still in trouble. Everyone is focusing on Europe because the sovereign debt crisis there is likely to cause the European Union to break apart and kill the Euro. The Head of UniCredit global securities, Attila Szalay-Berzeviczy said recently, “The euro is beyond rescue . . . . “The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits . . . . A Greek default will trigger an immediate “magnitude 10” earthquake across Europe.” (Click here for more on that story.) If the EU goes under, do not expect all the highly leveraged U.S. banks to walk away unscathed. They will need another bailout to stay afloat.
You must remember the U.S. still is at the epicenter of the ongoing credit crisis. At the moment, America looks like it is in better shape than Europe, but that will not last. According to the latest report from John Williams of Shadowstats.com, “The root source of current global systemic instabilities largely has been the financially-dominant United States, and it is against the U.S. dollar that the global markets ultimately should turn, massively. The Fed and the U.S. Treasury likely will do whatever has to be done to prevent a euro-area crisis from triggering a systemic collapse in the United States. Accordingly, it is not from a euro-related crisis, but rather from within the U.S. financial system and financial-authority actions that an eventual U.S. systemic failure likely will be triggered, seen initially in a rapidly accelerating pace of domestic inflation—ultimately hyperinflation.”
Sure, the dollar may gain in value for a while in absence of the Euro as a competing currency, but, ultimately, the dollar too will crash, right along with a few very big banks.
Oldspeak:“Don’t get me wrong, Gaddafi is kind of a dick. He’s a very bad man. He needs to step down and work toward real democracy in Libya. But why is the U.S. trying to kill him? Last I checked he hasn’t launched/ been behind any terrorist strikes against the U.S. or NATO. (Unless you consider planning to introduce an African gold backed Dinar that would challenge the U.S. Dollar terrorism.) He’s doing basically the same shit that Dictators in U.S. client states Syria, Bahrain and Egypt have done for decades but that qualifies as pretext for invading his country, dropping radioactive uranium bombs on civilian structures, homes, hotels and hospitals, and repeatedly killing the innocents the U.N. mandate declares the U.S. and NATO are allegedly there to protect? Add to that a recent report by Amnesty International that questions the veracity of claims levied against Gaddafi that constituted U.S./NATO pretext for invasion and what is now obviously a regime change and assassination campaign? These vital details are given little to no coverage in Corporate Media. It seems as though Corporate Media is entirely to eager to parrot the sound bites of the official story. Bottom line, there are waaay to many holes and shady unreported dealings going on for me to believe this “Revolution” is organic and indigenous. “Ignorance Is Strength”.
By Patrick Cockburn @ Counterpunch:
In the first months of the Arab Spring, foreign journalists got well-merited credit for helping to foment and publicize popular uprisings against the region’s despots. Satellite TV stations such as Al Jazeera Arabic, in particular, struck at the roots of power in Arab police states, by making official censorship irrelevant and by competing successfully against government propaganda.
Regimes threatened by change have, since those early days, paid backhanded compliments to the foreign media by throwing correspondents out of countries where they would like to report and by denying them visas to come back in. Trying to visit Yemen earlier this year, I was told that not only was there no chance of my being granted a journalist’s visa, but that real tourists – amazingly there is a trickle of such people wanting to see the wonders of Yemen – were being turned back at Sanaa airport on the grounds that they must secretly be journalists. The Bahrain government has an even meaner trick: give a visa to a journalist at a Bahraini embassy abroad and deny him entry when his plane lands.
It has taken time for this policy of near total exclusion to take hold, but it means that, today, foreign journalistic coverage of Syria, Yemen and, to a lesser extent, Bahrain is usually long-distance, reliant on cellphone film of demonstrations and riots which cannot be verified.
I was in Tehran earlier this year and failed to see any demonstrations in the centre of the city, though there were plenty of riot police standing about. I was therefore amazed to find a dramatic video on YouTube dated, so far as I recall, February 27, showing a violent demonstration. Then I noticed the protesters in the video were wearing only shirts though it was wet and freezing in Tehran and the men I could see in the streets were in jackets.
Presumably somebody had redated a video shot in the summer of 2009 when there were prolonged riots.
With so many countries out of bounds, journalists have flocked to Benghazi, in Libya, which can be reached from Egypt without a visa. Alternatively they go to Tripoli, where the government allows a carefully monitored press corps to operate under strict supervision. Having arrived in these two cities, the ways in which the journalists report diverge sharply. Everybody reporting out of Tripoli expresses understandable scepticism about what government minders seek to show them as regards civilian casualties caused by Nato air strikes or demonstrations of support for Gaddafi. By way of contrast, the foreign press corps in Benghazi, capital of the rebel-held territory, shows surprising credulity towards more subtle but equally self-serving stories from the rebel government or its sympathizers.
Ever since the Libyan uprising started on February 15, the foreign media have regurgitated stories of atrocities carried out by Gaddafi’s forces. It is now becoming clear that reputable human rights organizations such as Amnesty International and Human Rights Watch have been unable to find evidence for the worst of these. For instance, they could find no credible witnesses to the mass rapes said to have been ordered by Gaddafi. Foreign mercenaries supposedly recruited by Gaddafi and shown off to the press were later quietly released when they turned out to be undocumented laborers from central and west Africa.
The crimes for which there is proof against Gaddafi are more prosaic, such as the bombardment of civilians in Misrata who have no way to escape. There is also proof of the shooting of unarmed protesters and people at funerals early on in the uprising. Amnesty estimates that some 100-110 people were killed in Benghazi and 59-64 in Baida, though it warns that some of the dead may have been government supporters.
The Libyan insurgents were adept at dealing with the press from an early stage and this included skilful propaganda to put the blame for unexplained killings on the other side. One story, to which credence was given by the foreign media early on in Benghazi, was that eight to 10 government troops who refused to shoot protesters were executed by their own side. Their bodies were shown on TV. But Donatella Rovera, senior crisis response adviser for Amnesty International, says there is strong evidence for a different explanation. She says amateur video shows them alive after they had been captured, suggesting it was the rebels who killed them.
It is a weakness of journalists that they give wide publicity to atrocities, evidence for which may be shaky when first revealed. But when the stories turn out to be untrue or exaggerated, they rate scarcely a mention.
But atrocity stories develop a life of their own and have real, and sometimes fatal, consequences long after the basis for them is deflated. Earlier in the year in Benghazi I spoke to refugees, mostly oil workers from Brega, an oil port in the Gulf of Sirte which had been captured by Gaddafi forces. One of the reasons they had fled was that they believed their wives and daughters were in danger of being raped by foreign mercenaries. They knew about this threat from watching satellite TV.
It is all credit to Amnesty International and Human Rights Watch that they have taken a sceptical attitude to atrocities until proven. Contrast this responsible attitude with that of Hillary Clinton or the prosecutor of the International Criminal Court, Luis Moreno-Ocampo, who blithely suggested that Gaddafi was using rape as a weapon of war to punish the rebels. Equally irresponsible would be a decision by the ICC to prosecute Gaddafi and his lieutenants, thus making it far less likely that Gaddafi can be eased out of power without a fight to the finish. This systematic demonization of Gaddafi – a brutal despot he may be, but not a monster on the scale of Saddam Hussein – also makes it difficult to negotiate a ceasefire with him, though he is the only man who can deliver one.
There is nothing particularly surprising about the rebels in Benghazi making things up or producing dubious witnesses to Gaddafi’s crimes. They are fighting a war against a despot whom they fear and hate and they will understandably use propaganda as a weapon of war. But it does show naivety on the part of the foreign media, who almost universally sympathize with the rebels, that they swallow whole so many atrocity stories fed to them by the rebel authorities and their sympathizers.
Patrick Cockburn is the author of “Muqtada: Muqtada Al-Sadr, the Shia Revival, and the Struggle for Iraq.
Oldspeak:” Why indeed. Innocents are being tortured and shot and disappeared in Bahrain, Syria, and countless other tyrannical governments around the globe, why this faux and urgent need to “protect innocents” in Libya and assassinate its leader? The popular answer is oil and while that is probably true, but the lesser known and more urgent motivation is ‘that Gaddafi was planning to introduce the gold dinar, a single African currency that would serve as an alternative to the U.S. dollar and allow African nations to share the wealth. It is surely no coincidence that Iraq’s prior leader, Saddam Hussein, was trying to do the same thing just prior to U.S. invasion for all of those “weapons of mass destruction.” ‘ We’ve seen the fate Mr. Hussain met for his trouble. Any threat to the global economic system based on fiat currencies like the U.S. Dollar and Euro are quickly squashed. No comment on this from corporate press. Innocent lives continue to be lost in these U.S. client states. ‘Ignorance Is Strength’.
By Robert Fisk @ The U.K. Independent:
Christopher Hill, a former US secretary of state for east Asia who was ambassador to Iraq – and usually a very obedient and un-eloquent American diplomat – wrote the other day that “the notion that a dictator can claim the sovereign right to abuse his people has become unacceptable”.
Unless, of course – and Mr Hill did not mention this – you happen to live in Bahrain. On this tiny island, a Sunni monarchy, the al-Khalifas, rule a majority Shia population and have responded to democratic protests with death sentences, mass arrests, the imprisonment of doctors for letting patients die after protests and an “invitation” to Saudi forces to enter the country. They have also destroyed dozens of Shia mosques with all the thoroughness of a 9/11 pilot. But then, let’s remember that most of the 9/11 killers were indeed Saudis.
And what do we get for it? Silence. Silence in the US media, largely silence in the European press, silence from our own beloved CamerClegg and of course from the White House. And – shame of shame – silence from the Arabs who know where their bread is buttered. That means, of course, also silence from al-Jazeera. I often appear on their otherwise excellent Arabic and English editions, but their failure to mention Bahrain is shameful, a dollop of shit in the dignity that they have brought to reporting in the Middle East. The Emir of Qatar – I know him and like him very much – does not need to belittle his television empire in this way.
CamerClegg is silent, of course, because Bahrain is one of our “friends” in the Gulf, an eager arms buyer, home to thousands of Brit expatriates who – during the mini-revolution by Bahrain’s Shia – spent their time writing vicious letters to the local pro-Khalifa press denouncing Western journalists. And as for the demonstrators, I recall a young Shia woman telling me that if only the Crown Prince would come to the Pearl Roundabout and talk with the protesters, they would carry him on their shoulders around the square. I believed her. But he didn’t come. Instead, he destroyed their mosques and claimed the protests were an Iranian plot – which was never the case – and destroyed the statue of the pearl at the roundabout, thus deforming the very history of his own country.
Obama, needless to say, has his own reasons for silence. Bahrain hosts the US Fifth Fleet and the Americans don’t want to be shoved out of their happy little port (albeit that they could up-sticks and move to the UAE or Qatar anytime they wish) and want to defend Bahrain from mythical Iranian aggression. So you won’t find La Clinton, so keen to abuse the Assad family, saying anything bad about the al-Khalifas. Why on earth not? Are we all in debt to the Gulf Arabs? They are honourable people and understand when criticism is said with good faith. But no, we are silent. Even when Bahraini students in Britain are deprived of their grants because they protested outside their London embassy, we are silent. CamerClegg, shame on you.
Bahrain has never had a reputation as a “friend” of the West, albeit that is how it likes to be portrayed. More than 20 years ago, anyone protesting the royal family’s dominance risked being tortured in the security police headquarters. The head of it was a former British police Special Branch officer whose senior torturer was a pernicious major in the Jordanian army. When I published their names, I was rewarded with a cartoon in the government newspaper Al-Khaleej which pictured me as a rabid dog. Rabid dogs, of course, have to be exterminated. It was not a joke. It was a threat.
The al-Khalifas have no problems with the opposition newspaper, Al-Wasat, however. They arrested one of its founders, Karim Fakhrawi, on 5 April. He died in police custody a week later. Ten days later, they arrested the paper’s columnist, Haidar Mohamed al-Naimi. He has not been seen since. Again, silence from CamerClegg, Obama, La Clinton and the rest. The arrest and charging of Shia Muslim doctors for letting their patients die – the patients having been shot by the “security forces”, of course – is even more vile. I was in the hospital when these patients were brought in. The doctors’ reaction was horror mixed with fear – they had simply never seen such close-range gunshot wounds before. Now they have been arrested, doctors and patients taken from their hospital beds. If this was happening in Damascus, Homs or Hama or Aleppo, the voices of CamerClegg, and Obama and La Clinton would be ringing in our ears. But no. Silence. Four men have been sentenced to death for killing two Bahraini policemen. It was a closed military court. Their “confessions” were aired on television, Soviet-style. No word from CamerClegg or Obama or La Clinton.
What is this nonsense? Well, I will tell you. It has nothing to do with the Bahrainis or the al-Khalifas. It is all about our fear of Saudi Arabia. Which also means it is about oil. It is about our absolute refusal to remember that 9/11 was committed largely by Saudis. It is about our refusal to remember that Saudi Arabia supported the Taliban, that Bin Laden was a Saudi, that the most cruel version of Islam comes from Saudi Arabia, the land of head-choppers and hand-cutters. It is about a conversation I had with a Bahraini official – a good and decent and honest man – in which I asked him why the Bahraini prime minister could not be elected by a majority Shia population. “The Saudis would never permit it,” he said. Yes, our other friends. The Saudis.