Tag: banks

The end of the US banking system

Ann Barnhardt explains why it is time to not only get one’s assets out of the US financial markets, but the US banks as well.

What this [Sentinel ruling] means is that even if Jon Corzine is somehow dragged into court by private citizens, because you know damn good and well that the Justice Department will never, ever touch him, Corzine now has a legal precedent, likely from a bribed or otherwise coerced Federal Appeals Court, explicitly stating that an FCM can use customer deposits to pay its debts, and that the customers themselves are subjugated and have basically no legal right to their own monies, no matter what the law says, or what legal assurances, claims or guarantees are made to that customer about their funds held with an FCM or any other brokerage or depository institution. The “secured” party at the front of the line will always be the mega-bank who made the fraudulent loan using the stolen customer funds as collateral.

In other words, all customer funds in the United States are now the legal property of JP Morgan, Goldman Sachs, BNYM, or whichever megabank is the counterparty on the loans the FCM or depository institution takes out in order to fund its mega-levered proprietary in-house trading desks.

For the love of God, I don’t know what more there could possibly be to say to snap you people out of your normalcy bias trance. You have GOT to get ALL MONIES out of the financial system NOW. This ruling sets precedence for every depository institution, not just futures brokerages. It is now legal in the United States for any financial institution to steal customer funds, borrow money against those funds for the uber-levered proprietary trading use of the financial institution, and the customers have ZERO CLAIM TO THEIR OWN FUNDS once they are in the custody of the financial institution.

The court has ruled that once your money passes out of your PHYSICAL POSSESSION, and I mean PHYSICAL possession, it is no longer yours, and you have no legal claim or legal recourse to it when it is stolen. This includes BANK ACCOUNTS. Money in a bank is in the possession of the BANK, not you. Do you comprehend this? The entire system is utterly devoid of any integrity or genuine security and is breaking down catastophically before our very eyes. You HAVE to comprehend that your money sitting in an account is no longer legally yours. You have to force your brain to process and comprehend this, no matter how incomprehensible it may seem. IT IS OVER. This is Marxist hell. We have arrived.

This ruling and precedent will be used by every brokerage, every bank, every insurance company and every pension fund to deny you your money when the financial system finally collapses, be it on Monday, or be it two years from now.

This is the Reuters article to which she is referring. The reason the ruling is so disastrous is that it grants all depository institutions ownership of the funds on deposit with it. While this is a logical continuation of the Bankers First and Foremost policy we’ve been seeing from the federal government since 2008, it is burning down the village and salting the earth upon which it stood in order to save it, because there is now absolutely no sound reason to keep your money in a US bank.

Now, obviously, no banks are going to be dumb enough to take this ruling and run with it… unless it is a matter of their own survival. But the fact remains that a bank deposit is now legally considered no different than a gift from you to the bank, and depositors are now entirely dependent upon the bank’s good will to spend its money on their behalf.

I tend to suspect this ruling will be reversed upon appeal once the Powers That Be realize that saving the personal fortunes of Corzine and other failed bankers isn’t worth the price of destroying the US banking system. But if not, it should cause the largest banking run the world has ever known. I say “should” rather than “will”, because as we know, most people are idiots and will probably continue blithely assuming that it doesn’t matter what the fine print and the court rulings say, they’ve got a receipt showing they put their money in the bank, and money in the bank is safe, by definition.

On the other hand, I find this ruling particularly intriguing because I have observed that one can anticipate events, to a certain degree, by seeing through which hoops the elite institutions force the federal government to jump. While they wouldn’t have any reason to take such risks for Corzine and company, it would make a great deal of sense to do so if they are anticipating a U.S. financial collapse in the near-to-middle term.

For example, we can safely assume Romney will win the election November on the basis of the Goldman Sachs contributions. “Four years ago, employees of New York-based Goldman gave three-fourths of their campaign donations to Democratic candidates and committees, including presidential nominee Barack Obama. This time, they’re showering 70 percent of their contributions on Republicans.”

The state of the kleptocracy

Barry Ritholtz provides a useful summary of the crimes committed by the financial sector, complete with links and sources:

Laundering money for drug cartels. See this, this, this and this (indeed, drug dealers kept the banking system afloat during the depths of the 2008 financial crisis)

Laundering money for terrorists

Engaging in mafia-style big-rigging fraud against local governments.

Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide.

Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts

Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them.

If it is not eminently clear that there is no rule of law whatsoever in the USA, this should suffice to prove it. It should come as no surprise that financial crime and corruption are on the upswing, as it has become increasingly obvious, even to those who don’t pay any attention to the financial sector, that the entire system is a criminal enterprise run by short-sighted financial gangsters. However, since they’re fast running out of other people’s cows to milk, as exhibited by the fact that less than one-third of the people who owe $1 trillion in school loans are repaying anything, the whole structure appears to be rapidly approaching collapse.

Some say it will end in fire (inflation), others in ice (deflation). But either way, it will end.

In the meantime, be sure to start a corporation and hire yourself before committing any crimes. Then fire yourself, and tell the police that you are no longer with the company when they come to investigate. They will then turn the matter over to the appropriate regulatory agency, which will fine the corporation about five percent of the profit you made from your illegal acts. This is what passes for criminal justice in America circa 2012.

Another day, another whitewash

It doesn’t seem to matter how much the banks steal or how much fraud they commit, no one ever goes to jail:

Regulators delivered the first blow in a major investigation into whether big banks had improperly set key interest rates that affected how consumers and companies borrowed money around the world.

On Wednesday, Barclays agreed to pay $450 million to resolve accusations that it had tried to manipulate rates to benefit the bank’s own bottom line. At the height of the financial crisis, regulators say, the big British bank reported bogus figures that in some cases had influenced a benchmark for student loans, credit cards and mortgages.

The Barclays deal, struck with regulators in Washington and London and the Justice Department, caps a multiyear investigation that yielded one of the largest regulatory penalties tied to the financial crisis. The settlement is the first in a series of potential cases against other financial firms, including HSBC, Citigroup and JPMorgan Chase….

Some of the most troubling actions, regulators say, occurred between 2007 and 2009. As bank financing costs rose to new highs after the collapse of Lehman Brothers, regulators worried that firms might have submitted low interest rate figures that underpin Libor, making their financial positions look stronger. Amid speculation that the bank was struggling to raise money, Barclays’ senior management asked employees to lower the rates submitted to the Libor committee, according to the regulatory filings. Management wanted the bank’s rates in line with rivals.

The way these things are reported is always in a manner suggesting that there were some complex financial details that are hard to understand or report accurately, but the LIBOR-fixing was pretty simple. Barclays and the other banks simply reported false prices, claiming to have loaned money at higher rates and borrowed money at lower rates than they did, depending upon what served their interest at the time. Since the interest rate is determined by this activity, that activity was fraudulent and affected anyone borrowing money at that time.

An assistant attorney general says: ““For this illegal conduct, Barclays is paying a significant price.” But once more, no criminal charges. So, the message is clear. Commit all the fraud you like. Commit all the crime you want. Steal without hesitation or remorse. If you’re caught, you’ll merely be fined pennies on the dollars you stole. So when you read about the corruption in Rome and other historical societies, don’t deceive yourself into thinking that Man has progressed in any way beyond the technological. It’s no different, and in fact, as Jean-Jacques Rousseau once pointed out, the Romans abided by their own laws better than any other historical society, and far more than Americans do.

A billion here, a billion there

JPM misplaces a bit of money:

JPMorgan Chase disclosed in a regulatory filing on Thursday that a trading group had suffered “significant” paper losses in a portfolio of credit investments. The troubles at the unit, the so-called chief investment office that makes trades to balance the bank’s assets and liabilities, could weigh on the bank’s broader earnings. The corporate group, which includes the C.I.O. group, is expected to lose $800 million in the second quarter, although the final results will depend on the market and other activity, the company said in the filing. Previously, JPMorgan had estimated that the group would report net income of roughly $200 million.

How long will it be before the first giant US bank is nationalized? Before the end of the year? Before the election?

HSBC’s grand scale ID theft

It’s hardly news that the big banks are criminal organizations, but this report of grand scale identity theft for money-laundering purposes is really rather remarkable.

The global banking giant HSBC is a “criminal” operation, charges a former officer for the company’s southern New York region in a video interview with WND. John Cruz, a former vice president and relationship manager, has turned over to WND more than 1,000 pages of documents, including customer account ledgers for dozens of companies through which, he charges, the financial institution was laundering money each month….
Cruz charges that the 1,000 pages of customer account records suggest HSBC relied on identity theft to capture legitimate Social Security numbers that were then used to create the bogus retail and commercial bank accounts through which employees systematically deposited and withdrew hundreds of millions of dollars on a daily basis, apparently without the knowledge of the identity theft victims. “When an individual finds out they got a loan they never knew about, 5 percent of that loan went to the accounting firm that made up the phony tax returns, and the other 95 percent of that loan went to the manager,” he said. “One manager was involved in the transaction, another manager was involved in notarizing the transaction, and senior management was involved where they signed off permission to give the loans even when the loans get rejected by underwriting.”

It is perhaps worth noting that the Obama administration has not arrested a single banking executive despite the regular reports of large scale criminal activity by the organizations they are running.

Mailvox: the fifty trillion dollar question

KJ offers the opportunity to ask a question of some European functionaries:

The former and long-serving vice chancellor of Germany (Dr Joschka Fischer) and the EU’s High Representative for Common and Security Policy (Dr. Javier Solana) are here… debating the economic situation (and potential solutions). The Spaniard is (in summary) saying the situation is looking pretty shit right now and it could be fixed by Germany “opening up” to the rest of poorer/less-productive Europe (when pressed he confessed that includes offering up more of its – i.e. Germany’s – money).
The German is (in summary) saying the situation is looking pretty shit and what we need is to centralise and consolidate political power in Europe. Lol! 4th Reich anyone!? According to both, the Euro breaking up would just be catastrophic. We can ask questions but I don’t have the heart to ask any. It’s so depressing listening to this glossy, typical politic speak from which no straight answers can be extracted. Do you questions for the German Vice Chancellor or EU’s High Representative?

I wrote back: Yes. Since inflation or default are the only way to escape debt of this magnitude, which is the vice-chancellor’s preference? If you get a second question, ask why the successful bank defaults in Iceland have not been permitted to take place in the EU.

Completely admits that historic 1920s inflation destroyed the German middle class, and admits not a result of market developments but intentionally by German central bank to write off war debt, so accepts inflation is going to have to play its part in the current situation!! Greek default, (and kicking them out), is not an option apparently, not forthcoming as to why other than that it would be “hugely detrimental to the rest of Europe”. No luck on the second question; earlier on he had alluded to “endless lawsuits” and “serious capital restrictions” to anyone taking the opt-out of paying their debts which he implied would make that option not viable. I didn’t hear Iceland mentioned at all.

This lends further support to what most of us here have always assumed, that the central banks and governments will inflate. The question is, can they do so? This is where the question of the nature of money, and if credit is more properly considered money or simply the accounting of money, becomes the 50 trillion dollar question. Nate and I will be debating this in the reasonably near future, but I’ll leave you with this thought: given their performance over the last four years, what are the chances that the core monetary assumption of the central banks and governments is correct?

MF Global, Mark II

Ann Barnhardt says it’s time to get out of the markets entirely:

The Penson ship is going down, it appears. They were in trouble last year when MF Global happened and were looking to dump their European divisions, and they did bounce a bit after MF Global when they unloaded their Aussie holdings, but it looks like it is all but over for them. The stock is cratering, and there is chatter on the net that they are taking forever to get cash withdrawls out, posted and cleared. That’s a very bad sign. MF global was the same way in the weeks before the end. The extreme danger is that the CME is going to do with Penson what they did with MF Global and NOT backstop and keep customers liquid when the end comes. MF Global proved that the CME is no longer going to fulfill its fiduciary duty and will screw clients twelve ways from Sunday without hesitation. DO NOT get caught up in that crap. Just get out of the whole, stinking, festering, putrefied mess. Get out of the markets ENTIRELY.

If you’ve still got your money in the markets, you really need to think again. Something like 90 percent of the trading is now just machines trading with other machines. The brokers are using their customers’ money as a backstop and the regulators aren’t stopping them. You’d arguably be better off, and have a better time, simply going to Vegas and playing blackjack. No one knows when the entire mass of corruption and crap will finally melt down under its own weight, all we really know is that it’s eventually going to happen. But MF Global has taught us that there are no consequences for the financial industry’s criminal shenanigans. No one is going to stop them, most likely because everyone on the inside knows that as soon as the music stops, it all comes crashing down.

The hurricane of fraud

Matt Taibbi on Bank of America:

There are two things every American needs to know about Bank of America.

The first is that it’s corrupt. This bank has systematically defrauded almost everyone with whom it has a significant business relationship, cheating investors, insurers, homeowners, shareholders, depositors, and the state. It is a giant, raging hurricane of theft and fraud, spinning its way through America and leaving a massive trail of wiped-out retirees and foreclosed-upon families in its wake.

The second is that all of us, as taxpayers, are keeping that hurricane raging. Bank of America is not just a private company that systematically steals from American citizens: it’s a de facto ward of the state that depends heavily upon public support to stay in business. In fact, without the continued generosity of us taxpayers, and the extraordinary indulgence of our regulators and elected officials, this company long ago would have been swallowed up by scandal, mismanagement, prosecution and litigation, and gone out of business. It would have been liquidated and its component parts sold off, perhaps into a series of smaller regional businesses that would have more respect for the law, and be more responsive to their customers.

But Bank of America hasn’t gone out of business, for the simple reason that our government has decided to make it the poster child for the “Too Big To Fail” concept. Because it is considered a “systemically important institution” whose collapse would have a major, Lehman-Brothers-style impact on the economy, two consecutive presidential administrations have taken extraordinary measures to keep Bank of America in business, despite a staggering recent legacy of corruption schemes, many of which were simply overlooked by regulators.

The frightening thing is that this isn’t rhetorical exaggeration. The real case is almost surely much worse than Taibbi paints it. And he asks a very pertinent question of so-called conservatives.

“When did we make it the job of the taxpayer to buy failed companies, and rescue companies from their own bad decisions? How is that conservative?”

Green shoots redux

The IMF’s Lagarde announces “economic spring is in the air“:

A couple of weeks ago, I sat on the speakers’ podium during the opening panel of the Euromoney Bond Investors’ Congress in London. Together with leading industry experts, including senior ratings agencies’ officials, we engaged in a detailed discussion of the contentious aspects of the Greek debt debacle and the fate of the eurozone.

The audience was “top drawer; the room packed with 500 of the world’s biggest bond market participants; the combined assets under management measured in the trillions of dollars.

“Who thinks the upcoming Greek bail-out will be the last, drawing a line under the eurozone’s sovereign debt crisis?” asked the senior Euromoney staffer chairing the panel. “Put your hands up”.

Delivered with a serious demeanour, this was exactly the right question. So deadly was the inquiry, and so germane, that the mood in the room grew uneasy, barely camouflaged by an outbreak of coughing. Scanning this ultra-influential audience, I saw rows of delegates cowed, keeping their eyes locked forwards but staring down slightly, not daring to look elsewhere.

Not a single hand was raised. Not a single hand among hundreds of the world’s leading bond market practitioners was stirred to support a debt swap now presented as the key to the world economy shaking off the post sub-prime torpor and taking us into the sun-lit uplands of sustainable global growth.

On Friday, Greece pressed ahead with the largest sovereign debt restructuring in history. By “securing adequate participation” from the private sector, Athens avoided a big, disorderly default in late March. Holders of €172bn (£143bn) of the €206bn of eligible bonds agreed to take part in the write-down, or 83.5pc. Participation has since risen to 95.7pc after the Greek government triggered retrospective “collective action clauses”, forcing objecting investors to play ball.

This deal was “voluntary”, in the words of one market wag, “in the same way confessions were voluntary during the Spanish Inquisition”. In other words, unless this deal was agreed, bond-holders faced ending-up with nothing at all. Under the current terms, investors swap their bonds for new ones worth 53.5pc less and with easier repayment terms for Greece.

So, Greece has defaulted, despite all of the assurances to the contrary. So, the next question is, who is next? And, of course, how long until Germany pulls the plug on the EU project. Also, there is this to consider: “With the addition of the new IMF/EU loans of $172 billion and the revelation of the guaranteed debt at $107 billion Greece now has $279 billion of new and hidden debts.”

Secretary of the Treasury arrested?

This is certainly an interesting and unexpected development. I have absolutely no idea what it signifies, but it does appear as if the massive pyramid of cards is looking increasingly flimsy of late.

Nope, old news. Business as usual. Dow 13,000! Nothing to see. Move along, move along…. And if at first, second, and third you don’t succeed, try, try again!