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Valdor Makes Submission to SEC for Listing on US OTCQB
VANCOUVER, British Columbia, March 26, 2014 (GLOBE NEWSWIRE) — Valdor Technology International Inc. (“Valdor”) (VTI) (VTIFF) is pleased to report that application to the Securities Exchange Commission (SEC) to have Valdor listed on the OTCQB Securities Market in the US is completed and is being filed today.
OTC Markets Inc., located in New York, N.Y., operates the world’s largest electronic interdealer quotation system for broker-dealers to trade over 9,000 securities not listed on any other U.S. stock exchange. It is organized into three tiers based on the level of disclosure: OTCQX, OTCQB and Pink Sheets. When this listing is completed, North American & International investors will be able to find news, current financial disclosure and real-time Level 2 quotes for Valdor on www.otcmarkets.com.
Mr. Brian Findlay, CFO/Director, states: “We want investors throughout the world to have ready access to Valdor stock ownership so we can facilitate stock distribution internationally. Listing on the US OTC Bulletin Board market will greatly help us achieve this objective.”
About Valdor Technology International Inc. (www.valdortech.com): Valdor is a technology company with two divisions: 1) Valdor Fiber Optics, a fiber optic components company specializing in the design, manufacture and sale of fiber optic splitters, connectors, laser pigtails and other optical and optoelectronic components, including some that use the Valdor proprietary and patented Impact MountTM technology. The company specializes in harsh environment products and in particular splitters and connectors and; 2) Niagara Streaming Media, a streaming video business that owns four patents and markets the Niagara and GoStream product lines. Streaming video is the future of television.
The Valdor business plan incorporates growth by acquisition. For further information on Valdor’s product lines please visit www.valdor.com.
Twitter: http://twitter.com/ValdorTechInt
Facebook: http://www.facebook.com/valdortech
ON BEHALF OF THE BOARD OF DIRECTORS OF VALDOR TECHNOLOGY INTERNATIONAL INC.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
Contact:
California Operations
3116 Diablo Avenue
Hayward, CA 94545
Telephone: (510) 293-1212
Fax: (510) 293-9997
Email: info@valdor.com
Canadian Office
450 – 789 W. Pender Street
Vancouver, BC V6C 1H2
Telephone: (604) 687-3775
Fax: (604) 689-7654
Email: bfindlay@valdor.com
Investor Contact:
Stuart T. Smith
SmallCapVoice.Com, Inc.
P. 512-267-2430
F. 512-267-2530
Skype: SmallCapVoice.com
Twitter: @smallcapvoice
www.facebook.com/SmallCapVoice
http://smallcapvoice.com/blog/valdor-makes-submission-to-sec-for-listing-on-us-otcqb/
Big Oil’s Drive for War With Russia
Mar 16, 2014 - 02:46 PM GMT
By: Mike_Whitney
“We are witnessing a huge geopolitical game in which the aim is the destruction of Russia as a geopolitical opponent of the US or of the global financial oligarchy…..The realization of this project is in line with the concept of global domination that is being carried out by the US.”- Vladimir Yakunin, former Russian senior diplomat
“History shows that wherever the U.S. meddles; chaos and misery are soon to follow.”- Kalithea, comments line, Moon of Alabama
Following a 13 year rampage that has reduced large swathes of Central Asia and the Middle East to anarchy and ruin, the US military juggernaut has finally met its match on a small peninsula in southeastern Ukraine that serves as the primary operating base for Russia’s Black Sea Fleet. Crimea is the door through which Washington must pass if it intends to extend its forward-operating bases throughout Eurasia, seize control of vital pipeline corridors and resources, and establish itself as the dominant military/economic power-player in the new century. Unfortunately, for Washington, Moscow has no intention of withdrawing from the Crimea or relinquishing control of its critical military outpost in Sevastopol. That means that the Crimea–which has been invaded by the Cimmerians, Bulgars, Greeks, Scythians, Goths, Huns, Khazars, Ottomans, Turks, Mongols, and Germans–could see another conflagration in the months ahead, perhaps, triggering a Third World War, the collapse of the existing global security structure, and a new world order, albeit quite different from the one imagined by the fantasists at the Council on Foreign Relations and the other far-right think tanks that guide US foreign policy and who are responsible for the present crisis.
How Washington conducts itself in this new conflict will tell us whether the authors of the War on Terror–that public relations hoax that concealed the goals of eviscerated civil liberties and one world government–were really serious about actualizing their NWO vision or if it was merely the collective pipedream of corporate CEOs and bored bankers with too much time on their hands. In the Crimea, the empire faces a real adversary, not a disparate group of Kalashinov-waving jihadis in flip-flops. This is the Russian Army; they know how to defend themselves and they are prepared to do so. That puts the ball in Obama’s court. It’s up to him and his crackpot “Grand Chessboard” advisors to decide how far they want to push this. Do they want to intensify the rhetoric and ratchet up the sanctions until blows are exchanged, or pick up their chips and walk away before things get out of hand? Do they want to risk it all on one daredevil roll of the dice or move on to Plan B? That’s the question. Whatever US policymakers decide, one thing is certain, Moscow is not going to budge. Their back is already against the wall. Besides, they know that a lunatic with a knife is on the loose, and they’re ready to do whatever is required to protect their people. If Washington decides to cross that line and provoke a fight, then there’s going to trouble. It’s as simple as that.
Perma-hawk, John McCain thinks that Obama should take off the gloves and show Putin who’s boss. In an interview with TIME magazine McCain said “This is a chess match reminiscent of the Cold War and we need to realize that and act accordingly…We need to take certain measures that would convince Putin that there is a very high cost to actions that he is taking now.”
“High cost” says McCain, but high cost for who?
What McCain fails to realize is that this is not Afghanistan and Obama is not in a spitting match with puppet Karzai. Leveling sanctions against Moscow will have significant consequences, the likes of which could cause real harm to US interests. Did we mention that “ExxonMobil’s biggest non-US oil project is a collaboration with Russia’s Rosneft in the Arctic, where it has billions of dollars of investments at stake.” What if Putin decides that it’s no longer in Moscow’s interest to honor contracts that were made with US corporations? What do you think the reaction of shareholders will be to that news? And that’s just one example. There are many more.
Any confrontation with Russia will result in asymmetrical attacks on the dollar, the bond market, and oil supplies. Maybe the US could defeat Russian forces in the Crimea. Maybe they could sink the fleet and rout the troops, but there’ll be a heavy price to pay and no one will be happy with the outcome. Here’s a clip from an article at Testosterone Pit that sums it up nicely:
“Sergei Glazyev, the most hardline of Putin’s advisors, sketched the retaliation strategy: Drop the dollar, sell US Treasuries, encourage Russian companies to default on their dollar-denominated debts, and create an alternative currency system with the BRICS and hydrocarbon producers like Venezuela and Iran…
Putin’s ally and trusted friend, Rosneft president Igor Sechin…suggested that it was “advisable to create an international stock-exchange for the participating countries, where transactions could be registered with the use of regional currencies.” (From Now On, No Compromises Are Possible For Russia, Testosterone Pit)
As the US continues to abuse its power, these changes become more and more necessary. Foreign governments must form new alliances in order to abandon the present system–the “dollar system”–and establish greater parity between nation-states, the very nation-states that Washington is destroying one-by-one to establish its ghoulish vision of global corporate utopia. The only way to derail that project is by exposing the glaring weakness in the system itself, which is the use of an international currency that is backed by $15 trillion in government debt, $4 trillion in Federal Reserve debt, and trillions more in unpaid and unpayable federal obligations. Whatever steps Moscow takes to abort the current system and replace the world’s reserve currency with money that represents a fair store of value, should be applauded. Washington’s reckless and homicidal behavior around the world make it particularly unsuitable as the de facto steward of the global financial system or to enjoy seigniorage, which allows the US to play banker to the rest of the world. The dollar is the foundation upon which rests the three pillars of imperial strength; political, economic and military. Remove that foundation and the entire edifice comes crashing to earth. Having abused that power, by killing and maiming millions of people across the planet; the world needs to transition to another, more benign way of consummating its business transactions, preferably a currency that is not backed by the blood and misery of innocent victims. Paul Volcker summed up the feelings of many dollar-critics in 2010 when he had this to say:
“The growing sense around much of the world is that we have lost both relative economic strength and more important, we have lost a coherent successful governing model to be emulated by the rest of the world. Instead, we’re faced with broken financial markets, underperformance of our economy and a fractious political climate.”
America is irreparably broken and Washington is a moral swamp. The world needs regime change; new leaders, new direction and a different system.
In our last article, we tried to draw attention to the role of big oil in the present crisis. Author Nafeez Ahmed expands on that theme in a “must read” article in Monday’s Guardian. Check out this brief excerpt from Ahmed’s piece titled “Ukraine crisis is about Great Power oil, gas pipeline rivalry”:
“Ukraine is increasingly perceived to be critically situated in the emerging battle to dominate energy transport corridors linking the oil and natural gas reserves of the Caspian basin to European markets… Considerable competition has already emerged over the construction of pipelines. Whether Ukraine will provide alternative routes helping to diversify access, as the West would prefer, or ‘find itself forced to play the role of a Russian subsidiary,’ remains to be seen.” (Guardian)
The western oil giants have been playing “catch up” for more than a decade with Putin checkmating them at every turn. As it happens, the wily KGB alum has turned out to be a better businessman than any of his competitors, essentially whooping them at their own game, using the free market to extend his network of pipelines across Central Asia and into Europe. That’s what the current crisis is all about. Big Oil came up “losers” in the resource war so now they want Uncle Sam to apply some muscle to put them back in the game. It’s called “sour grapes”, which refers to the whining that people do when they got beat fair and square. Here’s more from Ahmed:
“To be sure, the violent rioting was triggered by frustration with (Ukrainian President) Yanukovych’s rejection of the EU deal, (in favor of Putin’s sudden offer of a 30% cheaper gas bill and a $15 billion aid package) along with rocketing energy, food and other consumer bills, linked to Ukraine’s domestic gas woes ….. Police brutality to suppress what began as peaceful demonstrations was the last straw…” (Ukraine crisis is about Great Power oil, gas pipeline rivalry, Guardian)
In other words, Yanukovych rejected an offer from Chevron that the EU and Washington were pushing, and went with the sweeter deal from Russia. According to Ahmed, that pissed off the bigwigs who decided to incite the rioting. (“Putin’s sudden offer of a 30% cheaper gas bill and a $15 billion aid package provoked the protests…”)
Like we said before; it’s just a case of sour grapes.
So, tell me, dear reader: Is this the first time you’ve heard a respected analyst say that oil was behind the rioting, the coup, and the confrontation with Moscow?
I’ll bet it is. Whatever tentacles Wall Street may have wrapped around the White House, Capital Hill, and the US judiciary; Big Oil still rules the roost. The Apostles of the Fossil are the oldest and most powerful club in Washington, and “What they say, goes”. As Ahmed so articulately points out:
“Resource scarcity, competition to dominate Eurasian energy corridors, are behind Russian militarism and US interference…Ukraine is caught hapless in the midst of this accelerating struggle to dominate Eurasia’s energy corridors in the last decades of the age of fossil fuels.” (“Ukraine crisis is about Great Power oil, gas pipeline rivalry”, Guardian)
Did I hear someone say “Resource War”?
As we noted in an earlier article, NWO mastermind Zbigniew Brzezinski characterized the conflict with Russia in terms of cutting off “Western access to the Caspian Sea and Central Asia”. For some unknown reason, America’s behemoth oil corporations think the resources that lie beneath Russian soil belong to them. The question is whether their agents will push Obama to put American troops at risk to assert that claim. If they do, there’s going to be a war.
By Mike Whitney
Email: fergiewhitney@msn.com
Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. Whitney’s story on declining wages for working class Americans appears in the June issue of CounterPunch magazine. He can be reached at fergiewhitney@msn.com.
http://www.marketoracle.co.uk/Article44840.html
EDITORIAL: The criminal ‘link’ of forwarding websites
Justice Department wants to make sharing information a crime
By THE WASHINGTON TIMES
Tuesday, March 11, 2014
The genius of the Internet is that it seamlessly links from one item to another. The online “community” is without end; there’s always something else to click on.
A federal prosecutor in Texas wants to change that by making it a crime to link to things the government doesn’t want anybody to see.
For more than a year, a young journalist, Barrett Brown, has been held in custody, threatened with spending the rest of his life in prison because he shared a link.
Though the federal government retreated on some of the charges last week, the government’s threat to freedom of speech remains.
Mr. Brown writes for a number of left-leaning outlets, including the London Daily Guardian, Vanity Fair and the Huffington Post. His work drew the attention of the hacking group known as “Anonymous,” and his association with them made him a target of the Justice Department.
In December 2012, he was charged with 12 counts of “aggravated identity theft” and “device fraud” because he pointed out where Anonymous made available 200 gigabytes worth of emails and other data stolen from Stratfor Global Intelligence, a security contractor.
A member of Anonymous, Jeremy Hammond, was sentenced to 10 years in prison for the actual crime of stealing the data.
U.S. Attorney Sarah R. Saldana persuaded a grand jury to indict Mr. Brown for these acts: “Brown transferred a hyperlink from an Internet Relay Chat (IRC) channel to an IRC channel under his control.” That sounds bad, but it isn’t.
It describes the familiar process of cutting and pasting a website link that millions use every day to share a funny YouTube video with a friend. Mr. Brown distributed the link to the Stratfor documents so he could “crowdsource” it, persuading many to work together to find important facts in the large cache of documents.
The government does not argue that Mr. Brown participated in the actual theft, only that once the documents were in the open he merely pointed to them. The government argues that the act of creating a link violates credit card theft laws because one of the thousands of files contained personal credit card information.
The Electronic Frontier Foundation has been warning of the implications of the government’s pursuit of Mr. Brown. “The right of journalists — or anyone, for that matter — to link to already public information, including sensitive information,” the foundation observes, “is in serious jeopardy if Brown is convicted.”
Three years ago, federal agents arrested Yonjo Quiroa, the owner of the site ChannelSurfing.net, for creating a website that linked to videos of live sporting events. While held without bail, he took a deal to plead to copyright misdemeanor and was deported.
The Obama administration seems to be looking for a test case to punish those who view, read and distribute information it wants to hide. If they can’t get Edward Snowden, maybe they can get someone else for reading and passing on interesting information embarrassing to the government.
Whether on email, Facebook, Instagram or Twitter, links are the lifeblood of the Internet. Shut them down, and life at the White House becomes much more convenient.
This was to be “the most transparent administration in history” — Barack Obama himself said so. The First Amendment seems always under government assault.
Read more: http://www.washingtontimes.com/news/2014/mar/11/editorial-the-criminal-link/#ixzz2w2QS7NXZ
Follow us: @washtimes on Twitter
Is Russia Pulling Money Out of U.S. for Safekeeping?
Bloomberg Businessweek
By Peter Coy March 14, 2014
There’s circumstantial evidence that Russia may have yanked tens of billions of dollars in assets out of a custodial account at the U.S. Federal Reserve, possibly to keep it from being frozen by U.S. authorities in case of heightened conflict in Ukraine.
The Federal Reserve holds U.S. Treasury securities in custody on behalf of foreign central banks and other official institutions. This chart from Bloomberg shows the sharpest percentage drop in the Fed’s custodial holdings in records going back to 2002. It’s a decline of $105 billion, or 3.5 percent, from March 5 to March 12. (The Fed’s own report is here.)
The Fed doesn’t say who its custodial customers are. I spoke today to Marc Chandler, global head of currency strategy at Brown Brothers Harriman, who suspects Russia accounts for a big share of the draw-down. “It’s just to avoid being frozen,” Chandler says, not a protest against the U.S. He adds, ”You don’t let your politics dictate these decisions.”
In a note to clients, Chandler wrote, “The logic now is that Russia is bracing for the next round of sanctions.” He pointed out that this has happened before. In 1957, Russia shifted dollars from the U.S. to London, he said, fearing the U.S. would punish Russia financially for its invasion of Hungary. According to some accounts, that event gave birth to what’s known today as the Eurodollar market—dollar-denominated assets stashed outside of U.S. borders.
Bloomberg’s Susanne Walker reports today that Chandler isn’t the only one who sees Russia behind the big decline in Fed custodial holdings. She quotes Wrightson ICAP: “Escalating talk of sanctions over the Ukraine conflict would give [Russia] every reason to move those holdings to an off-shore custodian.”
Chandler suspects that Russia didn’t sell the Treasuries, but only moved them somewhere out of U.S. authorities’ reach. According to data compiled by Bloomberg, as of December, Russia held $139 billion in Treasuries, making it the ninth-largest country holder, accounting for about 1 percent of the total.
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.
http://www.businessweek.com/articles/2014-03-14/is-russia-pulling-money-out-of-u-dot-s-dot-for-safekeeping#r=rss
Is Russia Pulling Money Out of U.S. for Safekeeping?
Bloomberg Businessweek
By Peter Coy March 14, 2014
There’s circumstantial evidence that Russia may have yanked tens of billions of dollars in assets out of a custodial account at the U.S. Federal Reserve, possibly to keep it from being frozen by U.S. authorities in case of heightened conflict in Ukraine.
The Federal Reserve holds U.S. Treasury securities in custody on behalf of foreign central banks and other official institutions. This chart from Bloomberg shows the sharpest percentage drop in the Fed’s custodial holdings in records going back to 2002. It’s a decline of $105 billion, or 3.5 percent, from March 5 to March 12. (The Fed’s own report is here.)
The Fed doesn’t say who its custodial customers are. I spoke today to Marc Chandler, global head of currency strategy at Brown Brothers Harriman, who suspects Russia accounts for a big share of the draw-down. “It’s just to avoid being frozen,” Chandler says, not a protest against the U.S. He adds, ”You don’t let your politics dictate these decisions.”
In a note to clients, Chandler wrote, “The logic now is that Russia is bracing for the next round of sanctions.” He pointed out that this has happened before. In 1957, Russia shifted dollars from the U.S. to London, he said, fearing the U.S. would punish Russia financially for its invasion of Hungary. According to some accounts, that event gave birth to what’s known today as the Eurodollar market—dollar-denominated assets stashed outside of U.S. borders.
Bloomberg’s Susanne Walker reports today that Chandler isn’t the only one who sees Russia behind the big decline in Fed custodial holdings. She quotes Wrightson ICAP: “Escalating talk of sanctions over the Ukraine conflict would give [Russia] every reason to move those holdings to an off-shore custodian.”
Chandler suspects that Russia didn’t sell the Treasuries, but only moved them somewhere out of U.S. authorities’ reach. According to data compiled by Bloomberg, as of December, Russia held $139 billion in Treasuries, making it the ninth-largest country holder, accounting for about 1 percent of the total.
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.
http://www.businessweek.com/articles/2014-03-14/is-russia-pulling-money-out-of-u-dot-s-dot-for-safekeeping#r=rss
The Big Lie + What Happened To Ukraine’s Gold?
TND Guest Contributor: Dave Kranzler |
Mar. 15, 2014
The Big Lie is that Central Banks don’t care about gold. Nothing could be further from the truth. Ben Bernanke more than once claimed that he didn’t understand gold. When Ron Paul asked Bernanke in front of Congress why Central Banks own gold if it’s irrelevant, Bernanke flippantly suggested that it was out of tradition. In both cases Bernanke was lying and he knew it.
In comparison, Greenspan seemed to have some respect for the laws of economics and – at least that I can recall – never would outright state that gold was not an economic factor. Greenspan lied as much as Bernanke did about everything else but he never committed himself to lie about gold. Most of you have probably read Greenspan’s 1966 essay, “Gold and Economic Freedom” (linked). I have read it several times because it explains as well as anything out there why gold works as a currency and why Government-issued fiat currency does not.
What I find amazing about The Big Lie about Central Banks and gold is that if gold really is considered to be irrelevant, the how come Central Banks – especially the Fed – are so secretive about their gold storage and trading activities? What’s even more amazing is that no one other than Ron Paul and GATA asks them about this. Think about it. GATA spent a lot of money on legal fees attempting to get the Fed to publicly disclose its records related to the Fed’s gold activities. The Fed spent even more money denying GATA’s quest. And how come the Fed won’t submit to a public, independent audit of its gold vaults?
This brings me to the issue of the Ukraine’s gold. According to public records, the Government of Ukraine owns 33 tonnes of gold that was being safekept in Ukraine. Last week a Ukrainian newspaper reported that acting PM Arseny Yatsenyuk ordered the transfer of that gold to the United States. The actual report is here: LINK. Jesse’s Cafe Americain provided a translated version here: LINK.
On the assumption that the report is true, and so far I have not seen any commentary or articles suggesting it is not true, the biggest question is, how come the U.S. has absolutely no problem loading up and transporting 33 tonnes of gold from Ukraine to the U.S. but seems to have difficulty loading up and transporting any of Germany’s gold from New York to Berlin? And how come the U.S. and Ukraine seem to care about that gold at all, if indeed gold is irrelevant? It would seem that it would be a lot less expensive and logistically complicated just to have the U.S. military post a few armed guards around the gold if they’re worried about theft. On the other hand, I’m sure Putin would be happy to buy the gold from Ukraine.
What makes the story even more interesting is that GATA’s Chris Powell has spent considerable time trying to get an answer to the question of whether or not the U.S. has taken custody of Ukraine’s gold. When he queried the NY Fed, they responded with: “A spokesman for the New York Fed said simply: “Any inquiry regarding gold accounts should be directed to the account holder. You may want to contact the National Bank of Ukraine to discuss this report” (LINK). After trying for two days to get an answer from the U.S. State Department, they finally responded by referring him to the NY Fed (LINK).
The final piece in verifying that the report is true is deflection from Ukraine. Mr. Powell has queried the National Bank of Ukraine, the Ukrainian Embassy in DC and the Ukrainian mission to the UN in NYC. Crickets. As Chris states the case: “The difficulty in getting a straight answer here is pretty good evidence that the Ukrainian gold indeed has been sent to the United States.”
Unfortunately, it is likely that the citizens of Ukraine will end up paying the same price for allowing the U.S. to “safekeep” their sovereign gold. That price is the comforting knowledge that their gold has been delivered safely to vaults in China under U.S./UK bullion bank contractual delivery obligations, where it will be locked away for centuries.
All this skullduggery over a barbarous relic that has been deemed irrelevant by the U.S. Federal Reserve.
# # # #
Aspen1-daveAbout Dave Kranzler
I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too.
As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.
http://thenewsdoctors.com/the-big-lie-what-happened-to-ukraines-gold/
The Big Lie + What Happened To Ukraine’s Gold?
TND Guest Contributor: Dave Kranzler |
Mar. 15, 2014
The Big Lie is that Central Banks don’t care about gold. Nothing could be further from the truth. Ben Bernanke more than once claimed that he didn’t understand gold. When Ron Paul asked Bernanke in front of Congress why Central Banks own gold if it’s irrelevant, Bernanke flippantly suggested that it was out of tradition. In both cases Bernanke was lying and he knew it.
In comparison, Greenspan seemed to have some respect for the laws of economics and – at least that I can recall – never would outright state that gold was not an economic factor. Greenspan lied as much as Bernanke did about everything else but he never committed himself to lie about gold. Most of you have probably read Greenspan’s 1966 essay, “Gold and Economic Freedom” (linked). I have read it several times because it explains as well as anything out there why gold works as a currency and why Government-issued fiat currency does not.
What I find amazing about The Big Lie about Central Banks and gold is that if gold really is considered to be irrelevant, the how come Central Banks – especially the Fed – are so secretive about their gold storage and trading activities? What’s even more amazing is that no one other than Ron Paul and GATA asks them about this. Think about it. GATA spent a lot of money on legal fees attempting to get the Fed to publicly disclose its records related to the Fed’s gold activities. The Fed spent even more money denying GATA’s quest. And how come the Fed won’t submit to a public, independent audit of its gold vaults?
This brings me to the issue of the Ukraine’s gold. According to public records, the Government of Ukraine owns 33 tonnes of gold that was being safekept in Ukraine. Last week a Ukrainian newspaper reported that acting PM Arseny Yatsenyuk ordered the transfer of that gold to the United States. The actual report is here: LINK. Jesse’s Cafe Americain provided a translated version here: LINK.
On the assumption that the report is true, and so far I have not seen any commentary or articles suggesting it is not true, the biggest question is, how come the U.S. has absolutely no problem loading up and transporting 33 tonnes of gold from Ukraine to the U.S. but seems to have difficulty loading up and transporting any of Germany’s gold from New York to Berlin? And how come the U.S. and Ukraine seem to care about that gold at all, if indeed gold is irrelevant? It would seem that it would be a lot less expensive and logistically complicated just to have the U.S. military post a few armed guards around the gold if they’re worried about theft. On the other hand, I’m sure Putin would be happy to buy the gold from Ukraine.
What makes the story even more interesting is that GATA’s Chris Powell has spent considerable time trying to get an answer to the question of whether or not the U.S. has taken custody of Ukraine’s gold. When he queried the NY Fed, they responded with: “A spokesman for the New York Fed said simply: “Any inquiry regarding gold accounts should be directed to the account holder. You may want to contact the National Bank of Ukraine to discuss this report” (LINK). After trying for two days to get an answer from the U.S. State Department, they finally responded by referring him to the NY Fed (LINK).
The final piece in verifying that the report is true is deflection from Ukraine. Mr. Powell has queried the National Bank of Ukraine, the Ukrainian Embassy in DC and the Ukrainian mission to the UN in NYC. Crickets. As Chris states the case: “The difficulty in getting a straight answer here is pretty good evidence that the Ukrainian gold indeed has been sent to the United States.”
Unfortunately, it is likely that the citizens of Ukraine will end up paying the same price for allowing the U.S. to “safekeep” their sovereign gold. That price is the comforting knowledge that their gold has been delivered safely to vaults in China under U.S./UK bullion bank contractual delivery obligations, where it will be locked away for centuries.
All this skullduggery over a barbarous relic that has been deemed irrelevant by the U.S. Federal Reserve.
# # # #
Aspen1-daveAbout Dave Kranzler
I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too.
As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.
http://thenewsdoctors.com/the-big-lie-what-happened-to-ukraines-gold/
Fantastic article basserdan!
The Russians Have Already Quietly Pulled Their Money From The West
by Tyler Durden on 03/14/2014
Earlier today we reported that according to weekly Fed data, a record amount - some $105 billion - in Treasurys had been sold or simply reallocated (which for political reasons is the same thing) from the Fed's custody accounts, bringing the total amount of US paper held at the Fed to a level not seen since December 2012. While China was one of the culprits suggested to have withdrawn the near USD-equivalent paper, a far likelier candidate was Russia, which as is well-known, has had a modest falling out with the West in general, and its financial system in particular. Turns out what Russian official institutions may have done with their Treasurys (and we won't know for sure until June), it was merely the beginning. In fact, as the FT reports, in silent and not so silent preparations for what will be near-certain financial sanctions (which would include account freezes and asset confiscations following this Sunday's Crimean referendum) the snealy Russians, read oligarchs, have already pulled billions from banks in the west thereby essentially making the biggest western gambit - that of going after the wealth of Russia's 0.0001% - moot.
From the FT:
Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.
Sberbank and VTB, Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers.
The flight comes as last-ditch diplomatic talks between Russia’s foreign minister and the US secretary of state to resolve the tensions in Ukraine ended without an agreement.
Markets were nervous before Sunday’s Crimea referendum on secession from Ukraine. Traders and businesspeople fear this could spark western sanctions against Russia as early as Monday.
It probably will. What it will also do is force Russia to engage China far more actively in bilateral trade and ultimately to transact using either Rubles or Renminbi, and bypass the dollar. Perhaps even using gold, something which the price of the yellow metal sniffed out this week, pushing itself to 6 month highs. It will also make financial ties between the two commodity-rich nations even closer, while further alienating that "imperialist devil," the US.
Of course, the west thinking like the west, and assuming that all that matters to Russia is the closing level of the Micex, believes that a sufficient plunge in Russian stocks would have been enough to deter Putin. After all, the only thing everyone in the US cares about is if the S&P 500 closed at yet another all time high, right?
What the west didn't realize, as we predicted a month ago, for Putin it is orders of magnitude more important to have the price of commodities, primarily crude and gas, high than seeing the illusion of paper wealth, aka stocks, hitting all time highs. Especially since in Russia an even smaller portion of the population cares about the daily fluctuations of the stock market. As for the oligarchs, if there is someone who will be delighted to see their power, wealth and influence impacted adversely, if only for a short period of time, it is Vladimir Vladimirovich himself, whom the west misjudged massively once more. Not to mention that the general population will be even more delighted, and boost Putin's rating even higher, if these crony billionaires are made to suffer by the west, if only a little.
(Here we would be remiss not to comment on his easy it supposedly is for Obama to freeze the assets of a few corrupt Russian billionaires, and yet the very proud Americans who nearly brought the entire financial system to the brink in 2008, are now richer than ever.)
In the meantime, some of Russia's oligarchs are effectively welcoming the challenge. Bloomberg reports:
Alisher Usmanov, the country’s richest person, controls his most valuable asset, Metalloinvest Holding Co., Russia’s largest iron ore producer, through three subsidiaries, one of which is located in Cyprus, an EU member nation. The 60-year-old also owns a Victorian mansion in London that he bought in 2008 for $70 million, according to a May 18, 2008, Sunday Times newspaper report. He’s lost $1.5 billion since the crisis began, according to the Bloomberg ranking.
“We are concerned with the possible sanctions against Russia but don’t see any dramatic repercussions for our business,” Ivan Streshinsky, CEO at USM Advisors LLC, which manages Usmanov’s assets, including stakes in Megafon OAO and Mail.Ru Group Ltd., said in an interview at Bloomberg’s offices in Moscow today.
“Mail.Ru and Megafon revenue is coming from Russia and people won’t stop making calls and using the Internet,” he said. “Metalloinvest may face closure in European and American markets, but it can re-direct sales to China and other markets.”
Great job, Obama: you just pushed Russia and China even closer by necessity! Furthermore, it should come as no surprise that while Russians were pulling their money from the west, western firms were getting out of Dodgeski.
One senior Moscow banker said 90 per cent of investors were already behaving as if sanctions were in place, adding that this was “prudent exposure management”.
These moves represent the flipside of the more obvious withdrawal of western money from Russian markets that has been evident over the past fortnight.
Traders and bankers said US banks had been particularly heavy sellers of Russian bonds. According to data from the Bank for International Settlements, US banks and asset managers between them have about $75bn of exposure to Russia.
Joseph Dayan, head of markets at BCS, one of Russia’s largest brokers said: “It’s been quite an ugly picture in Russian bonds the last few days and some of it has to do with international banks reducing exposure.”
Although foreign banks have not yet begun cutting credit to Russian companies en masse, bankers said half a dozen live deals to fund some of Russia’s biggest companies were in limbo as lenders waited to see how punitive western sanctions would be.
So the bottom line is that Russia, thinking a few steps ahead, already has withdrawn the bulk of its assets from the West, and why not. Recall that a year ago it was revealed that the same Russians who were supposed to be punished in Cyprus had mostly withdrawn their funds in advance of the bail in: they tend to know what is coming. It was the ordinary Cypriot citizens, who had done nothing wrong, who were most impaired.
And so while the Russian response is already known, we wonder just how true is the inverse: just how prepared is the west, and especially Europe, to exist in a world in which a third of Germany's gas is suddenly cut off? We can't wait to find out early next week.
http://www.zerohedge.com/news/2014-03-14/russians-have-already-quietly-pulled-their-money-west
Move over, small-time Bitcoin exchange startups—Wall Street has arrived
Gentlemen, start your trading bots. Things are about to get crazy.
by Cyrus Farivar - Mar 12 2014, 1:45pm EDT
FINANCE
antanacoins
On Wednesday morning, Perseus Telecom and Atlas jointly launched their new high-speed trading platform for Bitcoin and likely other cryptocurrencies in the future. Perseus is a firm that specializes in high-speed financial data networks, while Atlas is a relative newcomer to the Wall Street scene since starting in 2013.
"The platform's debut puts Bitcoin trading much closer to the modern world of automated and secure trading. Atlas deals will have a matching speed of 30 millionths of a second. Modern trading firms colocate their systems as physically close to the “matching engines” as possible as a way to gain a few milliseconds of edge over others.
“Perseus offers high precision trading access in colocation centers worldwide, and adding Atlas as a new and highly liquid platform is an immediate response to customers demanding Bitcoin trading,” Perseus CEO Jock Percy said in a statement. “The Perseus Digital Currency Initiative is providing governance strictly supporting KYC (Know Your Customer) and AML (Anti-Money Laundering) principles.”
The two firms have founded what they call the “Digital Currency Initiative,” aimed at creating a set of industry-wide guidelines. The end goal is to reach “high precision trading standards executed each day by leading market makers, hedge funds, and investment banks.”
The new Atlas platform has already been running as a “soft launch” for some time now, Atlas CEO Shawn Sloves told Ars.
Sloves also noted that this new platform was not accelerated by MtGox's demise.
"[Perseus and Atlas'] backgrounds both on the trading infrastructure and the telecom side has been servicing ultra low latency clients, it takes years of capital and experience to achieve this type of setup," he said. "It cannot be replicated overnight or in a short period of time. This is an incredible achievement by both our companies. Regardless [of whether] MtGox failed or not, we went ahead and built this out. Our client focus is not necessarily users who had accounts at MtGox."
Enlarge / Here's the front-end of the new Atlas trading platform.
Atlas ATS
“I expect that this will help make more transparent liquid markets”
Bitcoin industry watchers say that this marks a notable turning point in the digital currency’s evolution.
“I expect more robust Bitcoin exchanges to emerge and replace the existing set of incumbents,” Gil Luria, a Bitcoin analyst at Wedbush Securities, told Ars by e-mail. “The new exchanges will be either venture capital-backed or units of existing financial institutions. That means they will have the resources to build robust platforms that are scalable, secure, and compliant. I expect that this will help make more transparent liquid markets for Bitcoin and its derivatives, which will translate to less price volatility and better utility for Bitcoin businesses.”
In an investor’s note released last month, Luria wrote that he is largely bullish on Bitcoin. Wedbush noted that it “will be accepting Bitcoin on a limited basis for previously published reports on the topic of cryptocurrency.”
Luria wrote:
More important, we see signs that entrepreneurs and developers are swarming to the Bitcoin platform (page 2). We see this as the best indication of the potential for Bitcoin as these developers are allocating their most valuable resource—development hours. We found nearly 3,000 Github repositories, double from six months ago, which was double from the previous six months. We believe nearly $86 million of venture funds have been invested in Bitcoin companies, mostly over the last 12 months, which does not include the >$200 million and counting we believe have been invested in mining equipment.
James Angel, a visiting finance professor at the Wharton School at the University of Pennsylvania, told Ars by e-mail that Atlas’ new platform debut is “not surprising.”
“With the interest of respectable [venture capital firms] and financial firms in Bitcoin, it makes sense for existing vendors of exchange services in other assets (like Atlas) to offer Bitcoin,” he said. “If you have a good trading platform that can trade currencies, it is pretty easy to add Bitcoin. Thus, it is a low-cost venture for an outfit like Atlas to do. By locating in the industry-standard data centers such as Equinix where the other financial players are located, they make it easier for mainstream financial industry participants to connect."
“Atlas claims to perform transactions in 30 microseconds, which is roughly the same speed as the best equity exchanges in the US," Angel said. "This kind of speed will allow electronic market makers to provide liquidity, lowering bid-ask spreads. Also, it will permit firms that scrape news feeds electronically to respond very quickly.”
The biggest takeaway from the Atlas news? The new platform may finally be a sign that Bitcoin’s freewheeling, anonymous, crypto-libertarian days are coming to an end.
“Wouldn’t you place your bitcoins at a place where the transactions are more likely to be honored?” Ivo Welch a finance professor at the University of California, Los Angeles, wrote to Ars. “There is an irony here. Bitcoins exist to avoid institutions, and now we will have institutions.”
http://arstechnica.com/business/2014/03/move-over-small-time-bitcoin-exchange-startups-wall-street-has-arrived/
Lord & Taylor’s Pounce Trial Could Be First Step in Bitcoin Plans
Pete Rizzo (@pete_rizzo_) Published on March 12, 2014 at 18:16 GMT
coindesk.com
A few months have passed since Overstock became, arguably, the most high-profile retailer to accept bitcoin. While only a handful of major brands have followed Overstock’s lead, that doesn’t mean its decision isn’t having an impact.
As evidence, Ryan Craver, senior vice president of corporate strategy at Hudson Bay Co., told CoinDesk that Overstock’s continued bitcoin sales were a key reason he decided to test the waters with bitcoin, albeit through a business partner.
On 10th March, it was revealed that Hudson Bay Co., which operates major brands like Lord & Taylor and Hudson’s Bay, would begin accepting bitcoin through omnichannel mobile shopping app Pounce.
Together, Lord & Taylor and Hudson’s Bay have more than 100 locations in the US and Canada.
Founded in 2012, the innovative mobile app allows customers to make purchases simply by scanning their smartphone over images in magazines and catalogs.
Pounce has inked a deal with Coinbase to accept bitcoin on behalf of its extensive list of clients, which include Macy’s, Ace Hardware and Toys “R” Us, among others.
It may surprise many readers to learn, however, that Pounce was encouraged to accept bitcoin by Craver, who was prompted by continued requests from Lord & Taylor and Hudson’s Bay customers.
A bitcoin news follower since mid-2013, Craver suggested that this could be just the beginning of his company’s work in the sector.
“We thought Pounce would be the best potential partner, that way we could figure out how large an audience we could truly have with bitcoin, and from there, make a determination about whether we roll this out on our mobile apps, our core site or even in stores.”
Craver notes that while he’s optimistic, ideas are still in their early stages. After all, Hudson Bay Co. won’t be accepting bitcoin payments directly, but both companies have high expectations for the deliverables this trial will return.
Project goals
Craver told CoinDesk that, his personal interest aside, he is still evaluating the business impact bitcoin could have on his brands. This means that so far he’s been following Overstock’s progress, and that he has had discussions with Coinbase.
However, Craver’s interest can also be seen as part of a larger experiment with omnichannel commerce.
Announced on 24th January, Hudson Bay Co. has seen what it considers a high level of success from its initial Pounce trial. Craver estimates Pounce users register seven engagements every time they use Pounce to browse its catalogs.
In turn, for Avital Yachin, CEO of Pounce, bitcoin arms his product with another incentive to appeal to early-tech adopters.
How buying works
Speaking to CoinDesk, Yachin was equally excited about brining bitcoin to Pounce, and provided a step-by-step overview of how the buying process will work with his app.
First, he said, users download the Pounce application. From there, they can browse products on the app itself or scan a Pounce-enabled printed catalog to shop or save products for later.
One of the biggest selling points for Pounce, however, is its one-click buying.
“You need to enter shipping and payment information, but this needs to be done only once. Once you have your payment information, you can then connect your Coinbase wallet [...] and you can continue purchasing through the app without typing your payment or shipping information again.”
Success so far
Yachin declined to provide hard figures for how well Lord & Taylor and other merchants are attracting bitcoin buyers, but indicated that a high percentage of new users are downloading Pounce and then connecting their Coinbase wallets to the app.
Said Yachin: “So far, we’re pretty happy with the results.”
Craver affirmed that this could be just the beginning of his company’s work with bitcoin as well.
“I think down the line, if we feel the attraction, we’ll need to evaluate it as a potential payment method.”
http://www.coindesk.com/lord-taylors-pounce-trial-could-be-first-step-in-bitcoin-payments-rollout/
Guess they've thought of everything take a look at this article dated Nov. 2013
No, You Can't Donate Bitcoin To Politicians Yet
Kashmir Hill Forbes Staff
Forbes
Welcome to The Not-So Private Parts where technology & privacy collide
Bitcoin goes before the Senate again Tuesday after having been given a tentative thumbs up by government agencies during a Senate Homeland Security hearing on Monday. The Banking Committee hearing Tuesday is a littler dryer — less about drugs and murder for hire for Bitcoin, and more about financial and banking issues around virtual currencies. During his opening remarks, hearing chair Senator Mark Warner said that he’s been “following Bitcoin for months” but is only now “wrapping his head around it.” He then remarked offhandedly that the Federal Election Committee recently approved Bitcoin for political donations. But he’s incorrect.
The Conservative Action Fund asked the FEC to decide whether PACs could accept Bitcoin donations. A draft opinion posted online suggested that the FEC would approve the request at its meeting last Thursday. It said that Bitcoins should be treated as as in-kind gifts like stocks and would need to be cashed out before they’re deposited with a campaign or used for goods and services. Media organizations started reporting that “soon you’ll be able to buy politicians with digital cash,” but the FEC actually wound up punting on the issue.
“The Commission discussed the drafts but held over the matter until next Thursday’s open meeting,” says FEC spokesperson Julia Queen. The issue comes up again this Thursday. One thing the committee is considering is a technical proposal by another PAC, Make Your Laws, that donation recipient must document the Blockchain transaction id for the donation as well as the Bitcoin addresses of the sending and receiving PAC.
“Without appropriate Bitcoin-specific transaction records, PAC transactions of Bitcoin would be completely unauditable,” writes Sai, of Make Your Laws PAC.
Whether donors can send cryptocoins to their party and politician of choice — and how that gets tracked — will get another look from the FEC this Thursday.
http://www.forbes.com/sites/kashmirhill/2013/11/19/no-you-cant-donate-bitcoin-to-politicians-yet/
Why Ukraine and Russia matter to commodity markets
Commentary: Conflict may have impact on natgas, palladium, potash
Mar. 7, 2014
By Myra P. Saefong, MarketWatch
The Ukraine-Russia conflict may influence much more than natural gas. Above: a section of the trans-Siberian Pipeline, Russia's main natural-gas export pipeline, in Ukraine.
SAN FRANCISCO (MarketWatch) — Oil, gold and wheat prices are in the limelight after Russia’s invasion of Ukraine’s Crimea region, but the conflict may have significant consequences for other commodities too — including natural gas, palladium and potash.
“Concerns over economic sanctions against Russia will put short-term pressure on [commodities] supplies,” said Jeffrey Sica, president and chief investment offer of Sica Wealth Management. “There is certain to be a significant element of the stockpiling of commodities in anticipation of escalation in the conflict.”
Once the situation in Ukraine heated up with Russia’s invasion of Ukraine’s Crimea region on Feb. 27, concern was evident in oil, gold and wheat markets.
On Monday, oil prices CLJ4 +0.99% surged to a five-month high and wheat WK4 +1.12% rallied by almost 5% to the highest level of the year on the potential for global supply disruptions, while gold prices GCJ4 -0.93% jumped to their highest in four months as investors fled to safety.
But the situation between Ukraine and Russia has a much wider reach in the commodities world.
Remember that Russia is the world’s largest producer of palladium and, together with Canada and Belarus is estimated to account for a little over two-thirds of global capacity for potash, a chemical compound used primarily in fertilizer. Ukraine, meanwhile, is the world’s fifth-largest exporter of wheat and third-biggest exporter of corn.
“Ukraine is known as the breadbasket of Eastern Europe and is one of the largest exporters of grain in the world, of which wheat exports would be the largest agricultural commodity impacted by an escalating conflict between Kiev and Moscow,” said Edmund Moy, strategist with gold-backed IRA provider Morgan Gold, who spent time in Ukraine and lectured at Kiev University.
Russia also supplies around a third of Europe’s natural gas, with more than half of that flowing through Ukraine.
“The real issue is natural gas,” said Matt Lasov, global head of advisory and analytics at Frontier Strategy Group. “Any sanctions led by Europe or the United States or further conflict with Ukraine’s government could cause Russia to squeeze Ukrainian gas flow in response, putting prices sharply higher.”
Ukraine itself is home to large shale natural-gas deposits that the U.S. Energy Information Administration says may allow it to diversify its supply need away from Russia, though commercial exploitation is years away.
Sanctions
Already, the U.S. has put limited sanctions in place, though they’re not a big concern yet.
U.S. President Barack Obama signed an executive order that authorizes sanctions on individuals who threaten the sovereignty of Ukraine, the White House announced on Thursday. The State Department has also put in place visa restrictions on a number of officials tied to what the U.S. calls the invasion of Crimea by Russia.
“These sanctions don’t make a difference,” said Martina Bozadzhieva, head of research for Europe, Middle East and Africa for Frontier Strategy Group. “They are the softest possible sanctions the U.S. could have imposed and effectively only hurt a small group of Russian individuals.”
That could soon change.
“If the situation were to escalate or if Russia hunkers down for the long haul and various sanctions by the U.S. and [United Nations] were imposed, then various key commodities can be expected to be impacted,” said Kevin Kerr, editor of CommodityConfidential.com.
“Clearly, any sanctions could upset the pricing matrix for oil and natural gas, as well as wheat and corn exports, especially if there is a real disruption,” he said, adding that potash, and key agricultural stocks like Deere & Co. DE +0.53% , could be impacted significantly as well.
“There would really be no winners if sanctions were forced to be imposed,” said Kerr.
Palladium and potash
Potash is among the commodities that have failed to come into the spotlight, despite the fact that Russia’s among the few countries that produce it.
Potassium chloride, also known as potash, at a processing plant at the OAO Uralkali mine in Berezniki, Russia.
A potential shortage of potash supplies is of “great concern since the lack of fertilizer is limiting the increase in crop output needed to accommodate the demand,” said Sica Wealth Management’s Sica.
Of course there are some non-Russian potash suppliers that could benefit if trade sanctions were to hurt Russian potash exports.
Those may be Potash Corp. of Saskatchewan POT -1.90% , Mosaic Co. MOS -0.88% and Intrepid Potash Inc. IPI -0.31% , according to Robbert van Batenburg, director of market strategy for Newedge. Shares of Potash Corp. have climbed nearly 5% this week.
Russia is also the largest producer of palladium PAM4 +0.05% , according to Johnson Matthey .
“My guess is that prices would move sharply higher if exports were affected by sanctions,” said Tim Murray, general manager of precious metals marketing at Johnson Matthey.
The metal has a variety of uses for medicine and electronics among others. Much of it is used to make catalytic converters that help reduce harmful vehicle emissions.
For now, however, the more important issue in the near term for the metal is South Africa, as the Association of Mineworkers and Construction Union-led walkout at the three largest platinum producers is in its sixth week, Murray said. Palladium prices on Comex climbed to their highest level in nearly a year on Thursday, fueled by concerns over the strikes as well as the conflict between Russia and Ukraine.
Natural gas
When it comes to energy commodities, shale may end up being Ukraine’s secret weapon.
Russia’s Gazprom has warned Ukraine to pay its bill or risk having its natural-gas supply cut off, according to an AFP report Friday. Ukraine owes Gazprom $1.89 billion, the energy giant said.
“Russia has a track record [of] using gas as a political tool, squeezing Ukraine in 2006 and 2009 with ripple effects in Europe,” said Frontier Strategy Group’s Lasov.
But the energy market needs to take into account Ukraine’s shale natural-gas reserves, which the country is working to develop for domestic consumption and exports to Western Europe by 2020, according to the EIA.
Ukraine has the fourth-largest shale natural-gas reserves in Europe — estimated at about 1.2 trillion cubic meters, EIA data show.
“The biggest threat to Moscow, in our view, may well be 21st-century shale technology,” said strategists at Bank of America Merrill Lynch, in a note this week.
“With NATO military protection, European capital and American technology, Ukraine could potentially become a competitive gas supplier to EU markets,” they said. “After all, the pipeline infrastructure is already in place.” Read: Russian natural-gas supplies aren’t a worry yet for Europe.
http://www.marketwatch.com/story/why-ukraine-and-russia-matter-to-commodity-markets-2014-03-07?pagenumber=1
Big banks jumping on bitcoin bandwagon
March 7, 2014, 1:21 PM
Marketwatch.com
Many major Wall Street banks are trying to understand bitcoin, the virtual currency that has gained interest in the last few years, and how it could change the global payment system, say industry experts.
Bloomberg A twenty-five bitcoin
“What we have learned is that many of the banks have individuals and teams now focused on getting to know bitcoin and how it impact the business,” said Barry Silbert, founder and CEO of SecondMarket, which is working on creating a U.S.-based bitcoin exchange and an investor in Bitcoin companies.
Silbert was speaking at a panel discussion at the MarketWatch Investing Insights event “Bitcoin: Boom and Bust” late Tuesday in New York.
Banks are trying to understand what a digital-currency world looks like from an infrastructure perspective, noted Silbert.
Bitcoin is a decentralized virtual currency that has been trumpeted as a faster and cheaper alternative to existing payments systems and has attracted the interest of high-profile venture capitalists. Some even say it has the potential to be a widely used currency. But it isn’t regulated and a prominent bitcoin exchange shut down last month after hackers stole all its customers’ bitcoins, leaving users with little recourse and raising concerns about security.
On Friday, Japan’s government said bitcoin isn’t a currency or a financial product and will be treated like other goods and services. Prices of bitcoin, meanwhile, have swung from $13 in early 2013 to above $1,000 in November and back down to around $625 on Friday.
So far, Bank of America Corp. BAC -0.46% , J.P. Morgan Chase & Co. JPM +0.48% , Citigroup Inc. C -0.45% , Goldman Sachs Group Inc. GS +0.30% and Wells Fargo & Co. WFC +0.60% have published reports on bitcoin for clients. Morgan Stanley has not.
J.P. Morgan analyst John Normand writes: “For corporates, bitcoin’s appeal is two-fold: no or low transaction costs from a peer-to-peer payments system, and potential brand recognition from trialing an innovative technology.”
Bank of America analysts say bitcoin may emerge as a serious competitor to traditional money-transfer providers. “As a medium of exchange, Bitcoin has clear potential for growth, in our view,” they add.
Wells Fargo hosted a panel on virtual currency in January that looked at bitcoin’s viability, compliance and future. Goldman Sachs included a panel on digital currency as part of a global macro conference on Thursday.
@barrysilbert discusses the world of digital currency at the @goldmansachs global macro conf #bitcoin
3:24 PM - 6 Mar 2014
“If payments or transactions can be done cheaper, there is an incentive for entrepreneurs and financial firms to get involved,” said Steven Englander, Citigroup’s global head of G10 FX strategy.
Financial firms have showed interest in key areas such as whether bitcoin is an investment opportunity, a commodity to be traded or a currency to be converted for clients.
A number of commodities and currency traders are digging into bitcoin and using their own money to to trade bitcoin, noted Silbert. And banks are also interested in the virtual currency, as exchanges are being to formed, to provide potential services to clients such as converting bitcoin into other currencies.
“Bitcoin’s primary attraction, in my view, is that it is a way to transfer funds instantaneously and cheaply with a pretty secure system,” said Englander.
Several high-profile business leaders have showed interest in bitcoin in recent months, including former Treasury Secretary Larry Summers, Nobel laureate economist Robert Shiller, Microsoft founder Bill Gates, former vice president Al Gore and venture capitalist Marc Andreessen, note industry enthusiasts, which is encouraging for the industry.
These are the early stages for banks getting involved in bitcoin, and the industry as a whole is hesitant in getting involved before regulators weigh in, says Silbert, the Secondmarket founder.
“Banks are waiting for clearer guidance at the federal level on how businesses are having interactions with bitcoin and there is still some questions on the state level,” he added.
– Sital S. Patel
Follow The Tell on Twitter @thetellblog
Follow Sital @Sital
http://blogs.marketwatch.com/thetell/2014/03/07/major-banks-are-looking-at-bitcoin/
China Sides With Russia On Sanctions; Ambassador Warns "Western Nations Would Be Hurting Themselves"
by Tyler Durden on 03/07/2014 12:22 -0500
Zerohedge.com
Amid a Russian spokesperson "hoping" tensions do not escalate into a new cold war with the US, China has come out (perhaps unsurprisingly) on Russia's side strongly condemning any sanctions:
"China has consistently opposed the easy use of sanctions in international relations, or using sanctions as a threat.”
The comments from China's Foreign Ministry reflect the country's close ties with Russia and confirm what Russia's ambassador to Canada noted, we "can always turn to China if the West follows through on threats of tougher sanctions," adding that "Western countries would largely be hurting themselves if they impose tougher sanctions."
China Sides With Russia On Sanctions; Ambassador Warns "Western Nations Would Be Hurting Themselves"
by Tyler Durden on 03/07/2014 12:22 -0500
Zerohedge.com
Amid a Russian spokesperson "hoping" tensions do not escalate into a new cold war with the US, China has come out (perhaps unsurprisingly) on Russia's side strongly condemning any sanctions:
"China has consistently opposed the easy use of sanctions in international relations, or using sanctions as a threat.”
The comments from China's Foreign Ministry reflect the country's close ties with Russia and confirm what Russia's ambassador to Canada noted, we "can always turn to China if the West follows through on threats of tougher sanctions," adding that "Western countries would largely be hurting themselves if they impose tougher sanctions."
Russian Dollar Dump Could Crash Financial System-John Williams
By Greg Hunter On March 5, 2014
By Greg Hunter’s USAWatchdog.com
Economist John Williams says if Russia sells its U.S. dollar holdings, it could trigger hyperinflation. Could it collapse the financial system? Williams contends, “Yes, it certainly has a potential to do that. Looking outside the United States, there is something over $16 trillion in cash, or near cash. That’s about the same size as our GDP. . . Nobody has wanted to hold the dollar for some time. The dollar, fundamentally, is weak. It couldn’t be weaker. All the major factors are against it. It’s just a matter of what would trigger the massive selling. Nobody wants to hold it. The Russians start selling, and you have China indicating a general alliance here in terms of what’s transpiring. If the rest of the world believes this is what’s going to happen, people who have been wanting to get out of the dollar for some time very easily could front-run the Russians. The scare is on. People will try to get out of it as rapidly as they can.
What would happen if there was massive dollar dumping globally? Williams says, “It would be disastrous for our markets. All those excess dollars coming in, with bonds being sold, interest rates would spike. The stock market would sell off and we’d see inflation. To prevent that and try and keep things stable, the Fed would tend to buy up those Treasuries. It would intervene wherever it could to stabilize the circumstance. It’s going to be very difficult, and it’s going to be very inflationary. Williams goes on to say, “You have to keep in mind, back in 2008, we had one of the greatest financial crises the United States had ever faced. The system was on the brink of collapse at that point in time. What the Fed and the federal government did was spend every penny they could, anything they could create or anything they could guarantee. They did everything they could possibly do to keep the system from crashing. They guaranteed all bank accounts. So, they saved the system, but now what they did has not borne fruit. We have not seen an economic recovery. We have not seen a return of health to the banking system. So, the system is very vulnerable; and if the Russians carry through with their threat, you have, indeed, the risk of it collapsing the system.”
Is this the end of the world as we know it in the U.S.? Williams says, “It does have the effect of creating a hyperinflation, which I think it would. It’s the type of circumstance that will not allow life to continue as we know it because the U.S. is not able to handle hyperinflation. We’re not structured for it. Zimbabwe had one of the worst hyperinflations that anyone has ever seen. They were still able to function for a while because they get paid in a rapidly depreciating currency. It was so rapid it became like toilet paper overnight, but they would go to a black market and exchange it for dollars. We (the U.S.) don’t have a black market to escape from our dollars. Gold is probably the closest thing to that. Gold will tend to rally here as the dollar sells off, baring very heavy intervention by the central banks which you may see. The fundamentals will eventually dominate, and you will see a very weak dollar and very strong gold coming out of this.”
Don’t look for the U.S. dollar as the safe haven because Williams says, “Historically the dollar has been the safe haven in a political or financial crisis, but that hasn’t been the case for four or five years now. Instead, what you have seen is a flight to other traditional safe havens such as gold and the Swiss Franc. The dollar has lost its magic. Nobody wants to hold it. So, if the Russians follow through and convince the rest of the world that they are going to do it and it looks like China may join them, a lot of countries will want to dump dollars and get out ahead of the crowd.”
On the overall economy, Williams says, “It is rolling over, and the numbers are starting to show we are starting into a new recession. You should have an actual quarterly contraction in the first quarter GDP. One of the best indicators of that are retail sales, and they gave a clear recession signal in January. That’s the strongest recession signal since September of 2007, which is three months before the ‘Great Recession’ took place, and I’ll contend it never ended.”
Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.
(There is much more in the video interview with John Williams.)
The Relentless, Systematic Tear-Down Of The Dollar Hegemony
by Wolf Richter - Testosterone Pit
Published : March 06th, 2014
China’s rapidly aging 1.3 billion folks are all trying to make it in the modern world, and they’ll see to it that their country will have major economic and political heft in the future. So in practically no time, China has become the second largest economy in the world. OK, its credit bubble of strenuously obfuscated magnitude will require a miracle, or else the noise of hot air hissing out of it will be deafening.
One of the long-term goals of consecutive Chinese governments has been to make China number one in just about everything. Including its currency. Displacing the dollar as the world’s reserve currency would be nice, and that’s certainly on the list, but first the yuan must become the most used payment currency. How long would that take, barring the accidental annihilation of the dollar as the Fed yanks on yet another experimental lever with unknown consequences?
Not that other currencies haven’t already tried to trounce the dollar, most notably – don't laugh – the euro. At the time of its invention, the thinking went that it would be the common currency of the entire European Union, a concept anchored in the treaties that each member state signed. There are 28 of them, now that Croatia has joined the ever expanding group. The next candidates have been cooling their heels for years, namely Iceland, Macedonia, Montenegro, Serbia, and Turkey. OK, Turkey, whose membership has been hung up in discord since 2004, has hit some big speed bumps recently. But hey. A slick regime change, and off we go.
But to the greatest chagrin of the Eurocrats, and quite inexplicably, only 18 of the 28 member states have adopted the sacrosanct currency, and a third of them quickly became casualties of the euro debt crisis and had to be bailed out to keep the Eurozone together.
During the early years of the euro, when euro-exuberance was still drowning out clear thinking in the business community, there was a whiff of certainty that the euro would become the world reserve currency and the number-one payment currency. Oil would soon be priced in euros. The petrodollar hegemony would be dismantled. It would make the eurozone burst with economic advantages and breathtaking growth. The dream turned into a nightmare in 2008. Meanwhile, the ECB’s promise to do “whatever it takes” in an “unlimited” manner has become the duct tape and bailing wire that keeps the Eurozone together. It's going to be a while before the euro trounces the dollar as payment currency.
So we stop grinning from ear to ear about the demise of the euro and take a closer look at the numbers provided by SWIFT, the NSA-infiltrated, member-owned cooperative that connects over 10,000 banks, securities institutions, corporate customers, and intelligence agencies in 212 countries and territories. If you’ve ever made an international wire transfer, you’ve dealt indirectly with SWIFT, which forwarded copies of your information to the NSA.
And SWIFT tells us that the euro’s share of world payments in January was 33.5%, just below the dollar, undisputed number one, with a share of 38.7%. Alas, undisputed only occasionally. In other months, the euro was number one, for example in January 2013, when 40.1% of world payments were in euros. The dollar was ignominiously in the second place with a share of 33.5%; or in January 2012, when the euro had a share of 44.0%, and the dollar a lowly 29.7%!
The loathed euro has beaten the green ink off the dollar in certain months! And given the Eurozone’s version of Manifest Destiny, the euro, despite all its problems, will continue to grow as payment currency – and by the time the Chinese yuan gets closer, it will have to aim for the euro, not the dollar.
And the yuan is getting closer. The Chinese government is systematically but gingerly boosting its convertibility and global use. In January, yuan payments increased by 30.6% – to “the highest payment value recorded,” said Michael Moon, a Director at SWIFT – versus 4.8% growth for all payments currencies. It edged out the Swiss franc for 7th place, behind the US dollar, euro, sterling, yen, Canadian dollar, and Australian dollar. In December, the yuan had been in 8th place, up from 12th place in October. Over the last three years, the yuan has passed 22 currencies.
But it isn’t there yet, as far as “global” is concerned: 73% of the yuan payment activity took place in Hong Kong. Most of the remainder was carved up between the UK, Singapore, Taiwan, the US, France, Australia, Luxembourg, and Germany. What share of the payments did it grab in January, compared to the euro’s 33.5% and the dollar’s 38.7%? It hit the phenomenal record of ... 1.4%.
So, a little ways to go.
But the yuan was already the second largest currency in traditional trade finance – Letters of Credit and Collections – that Chinese importers and exporters relied on, SWIFT reported in December. It had more than quadrupled its share between January 2012 and October 2013. This currency is hot! And it’s furiously breathing down the neck of the dollar. Its share of trade finance? 8.7%. Versus the dollar’s 81.1%.
“A top currency for trade finance globally and even more so in Asia,” is how Franck de Praetere, SWIFT’s Head of Payments and Trade Markets for Asia Pacific, described the yuan. OK, still a little ways to go.
But the writing is somewhere on the Chinese wall. The euro and now the yuan have been taking share away from the dollar. The euro’s campaign, which has already come very far, will be slow and halting, mostly triggered by countries acceding to the Eurozone. The yuan is the new kid on the block. It moves in leaps and bounds. The dollar’s iron grip on the number-one spot for payments has already loosened. And sometime in the future, its grip on the number-two spot will also loosen. Eventually, the same will happen – is bound to happen – to the dollar as the world’s sole reserve currency. And then the economic equations that the US has leaned on for decades to fund its gargantuan public debt and trade deficit will turn to mush.
The US has abused its phenomenal privileges – including the control of the only world currency – to put global financial stability at risk, “like a truck full of dynamite heading right toward us,” said the chairman of the International Advisory Board of the Universal Credit Rating Group. But a “new financial order” is forming. And there's a timeframe. Read....Next Step In Dismantling The Dollar And US Credit Hegemony
http://www.24hgold.com/english/news-gold-silver-the-relentless-systematic-tear-down-of-the-dollar-hegemony.aspx?article=5248320706H11690&redirect=false&contributor=Wolf+Richter
Russia prepares bill on foreign asset freeze in reply to sanctions – senator
Published time: March 05, 2014 08:56
Edited time: March 05, 2014 12:43
The entrance to the Russian Federation Council, on Bolshaya Dmitrovka Street.(RIA Novosti / Vladimir Fedorenko)
A top Russian lawmaker has revealed he is working on a bill that would freeze the assets of European and American companies operating in Russia in reply to Western economic sanctions.
The chairman of the upper house committee for constitutional law, Andrey Klishas, is sure that Russia must have an enough leverage to deal with the threat of sanctions coming from foreign countries.A team of lawyers are currently preparing a separate federal bill that would allow the Russian president and government to confiscate foreign owned property in Russia, including assets belonging to private companies, the senator told the RIA Novosti news agency.
The bill is in response to the major political crisis in Ukraine and the threat of sanctions against Russia coming from the USA and other countries.
“All sanctions must be mutual,” Klishas stated.
The senator added that he had no doubts that such a measure was in line with European standards. “We can recall the example of Cyprus where the confiscation was, in essence, one of the conditions for getting aid from European Union.
Klishas rejects the idea that the measure adds to the tension. “We are only suggesting that instead of threatening each other with sanctions we should together with our partners calmly read the Ukrainian Constitution and understand what has happened in this sovereign country,” the Russian lawmaker said. “The main thing we are trying to achieve, whether our European and American partners want it or not, is to make others listen to our legal arguments and adequately react to them,” Klishas said.
The senator added that the Federation Council planned to officially address parliaments of Poland Germany and France (the guarantors of the February 21 agreement between the Ukrainian authorities and the opposition) with a request to give a legal assessment of the Ukrainian events. Similar requests will be made to parliaments of other European countries and the USA.
Earlier this week the White House called off trade talks and suspended all military ties with Russia and President Barak Obama said that if Russia “continued on its current trajectory” the US administration was ready for “a whole series of steps — economic, diplomatic — that will isolate Russia and will have a negative impact on Russia’s economy and its standing in the world.”
Russian officials have already condemned these threats as one-sided and selfish. "Those who try to interpret the situation as a type of aggression and threaten sanctions and boycotts, are the same who consistently have encouraged the sides to refuse dialogue and have ultimately polarised Ukrainian society," Foreign Minister Sergey Lavrov told the UN Human Rights Council on Monday.
The Russian Foreign Ministry said in its official comment that US politicians are losing an accurateperception of real state of affairs in the 21st century. “Moscow has explained to the Americans, repeatedly and demonstrably, why their one-sided punitive measures are not matching the standards of civilized relations between nations. If this fails to take effect, we will have to retaliate, and not necessarily in a mirror way,” the ministry’s spokesman Aleksandr Lukashevich said.
http://rt.com/politics/russia-asset-freeze-sanctions-897/
Bitcoin Claims Its First "Real" Victim
Submitted by Tyler Durden
03/04/2014 20:45 -0500
Zerohedge.com
[UPDATE: Tech in Asia has updated the article to emphasize that suicide is only suggested and not certain]
The last few weeks have been dismally littered with two things. The virtual losses of virtual wealth from virtual currency speculation and the very real losses of very real humans with very real senior financial services positions. Sadly, as NewsWatch reports, tonight sees the two trends converge as the 28-year-old CEO of Singapore-based Bitcoin exchange First Meta has been found dead. The exact reason that may have led to the suicide is not known, and whether the Police have concluded that the cause of death is suicide is also unofficial.
Via NewsWatch,
According to Tech in Asia, Singapore-based Bitcoin exchange platform First Meta’s 28 year old CEO Autumn Radtke committed suicide.
Reasons are currently unknown.
First Meta is a Singaporean start up company that runs a exchange platform for virtual currencies such as Bitcoin. The news of suicide of its CEO Autumn Radtke spread on Facebook and Twitter, drawing attention from the BItcoin industry.
The exact reason that may have led to the suicide is not known, and whether the Police have concluded that the cause of death is suicide is also unofficial. First Meta has stated that an official announcement will be given by the company soon.
Before joining First Meta, Radtke was the Director of Business Development at Xfire – a company that develops IM systems for gamers. Radtke was also the Co-founder, Business Development at Geodelic Systems, Inc.
There have been 9 senior financial services deaths in recent weeks:
1 – William Broeksmit, 58-year-old former senior executive at Deutsche Bank AG, was found dead in his home after an apparent suicide in South Kensington in central London, on January 26th.
2- Karl Slym, 51 year old Tata Motors managing director Karl Slym, was found dead on the fourth floor of the Shangri-La hotel in Bangkok on January 27th.
3 – Gabriel Magee, a 39-year-old JP Morgan employee, died after falling from the roof of the JP Morgan European headquarters in London on January 27th.
4 – Mike Dueker, 50-year-old chief economist of a US investment bank was found dead close to the Tacoma Narrows Bridge in Washington State.
5 – Richard Talley, the 57 year old founder of American Title Services in Centennial, Colorado, was found dead earlier this month after apparently shooting himself with a nail gun.
6 -Tim Dickenson, a U.K.-based communications director at Swiss Re AG, also died last month, however the circumstances surrounding his death are still unknown.
7 – Ryan Henry Crane, a 37 year old executive at JP Morgan died in an alleged suicide just a few weeks ago. No details have been released about his death aside from this small obituary announcement at the Stamford Daily Voice.
8 - Li Junjie, 33-year-old banker in Hong Kong jumped from the JP Morgan HQ in Hong Kong this week.
9 - James Stuart Jr., a "very successful banker" and Former National Bank of Commerce CEO found dead (with no details of what caused the death) in Scottsdale, Az.
and numerous Bitcoin-related losses - from today's Flexcoin "bank" losses to the infamous Mt.Gox debacle:
As Wired notes,
... But beneath it all, some say, Mt. Gox was a disaster in waiting. Last year, a Tokyo-based software developer sat down in Gox’s first-floor meeting room to talk about working for the company. “I thought it was going to be really awesome,” says the developer, who also spoke on condition of anonymity. Soon, however, there were some serious red flags. ...
According to a leaked Mt. Gox document that hit the web last week, hackers had been skimming money from the company for years. The company now says that it’s out a total of 850,000 bitcoins, more than $460 million at Friday’s bitcoin exchange rates. When bitcoin enthusiast Jesse Powell heard this, he was reminded of June 2011.
read more here
http://www.zerohedge.com/news/2014-03-04/bitcoin-claims-its-first-real-victim
Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions
Tyler Durden's picture Submitted by Tyler Durden on 03/04/2014
While the comments by Russian presidential advisor, Sergei Glazyev, came before Putin's detente press conference early this morning, they did flash a red light of warning as to what Russian response may be should the west indeed proceed with "crippling" sanctions as Kerry is demanding. As RIA reports, his advice is that "authorities should dump US government bonds in the event of Russian companies and individuals being targeted by sanctions over events in Ukraine." Glazyev said the United States would be the first to suffer in the event of any sanctions regime. “The Americans are threatening Russia with sanctions and pulling the EU into a trade and economic war with Russia,” Glazyev said. “Most of the sanctions against Russia will bring harm to the United States itself, because as far as trade relations with the United States go, we don’t depend on them in any way.”
From RIA:
"We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”
...
US Secretary of State John Kerry on Saturday warned that Russian military interventions in Ukraine, which have been justified by the Kremlin as protection for residents in heavily ethnic Russian-populated regions, could result in “serious repercussions” for Moscow.
"Unless immediate and concrete steps are taken by Russia to deescalate tensions, the effect on US-Russian relations and on Russia's international standing will be profound," Kerry said.
Kerry mentioned economic sanctions, visa bans and asset freezes as possible measures.
Former deputy energy minister and lively government critic Vladimir Milov slammed Glazyev’s remarks, saying they would put further downward pressure on the ruble, which was pushed down Monday to a record low of 36.5 against the dollar amid fears about the possible outbreak of war.
“That idiot Glazyev will keep talking until the dollar is worth 60 [rubles],” Milov wrote on his Twitter account.
To be sure, a high-ranking Kremlin source was quick to distance his office from Glazyev’s remarks, however, insisting to RIA Novosti that they represented only his personal position. Glazyev was just expressing his views as an academic, and not as a presidential adviser, the Kremlin insider said.
That said, putting Russia's threat in context, the Federation held $138.6 billion in US Treasurys as of December according to the latest TIC data, making it the 11th largest creditor of the US, which appears to conflict with what the Russian said, making one wonder where there is a disconnect in "data." This would mean the Fed would need just two months of POMO to gobble up whatever bonds Russia has to sell.
The bigger question is if indeed, as some have suggested, China were to ally with Russia, and proceed to follow Russia in its reciprocal isolation of the US, by expanding trade with Russia on non-USD based terms, and also continue selling bonds as it did in December, when as we reported previously it dumped the second largest amount of US paper in history.
... especially when one considers the latest news released by the Kremlin:
PUTIN, XI DISCUSSED UKRAINE BY PHONE, KREMLIN SAYS
RUSSIA, CHINA SHARE SIMILAR POSITIONS ON UKRAINE, KREMLIN SAYS
http://www.zerohedge.com/news/2014-03-04/putin-advisor-threatens-dumping-us-treasurys-abandoning-dollar-if-us-proceeds-sancti
Putin Advisor Threatens With Dumping US Treasurys, Abandoning Dollar If US Proceeds With Sanctions
Tyler Durden's picture Submitted by Tyler Durden on 03/04/2014
While the comments by Russian presidential advisor, Sergei Glazyev, came before Putin's detente press conference early this morning, they did flash a red light of warning as to what Russian response may be should the west indeed proceed with "crippling" sanctions as Kerry is demanding. As RIA reports, his advice is that "authorities should dump US government bonds in the event of Russian companies and individuals being targeted by sanctions over events in Ukraine." Glazyev said the United States would be the first to suffer in the event of any sanctions regime. “The Americans are threatening Russia with sanctions and pulling the EU into a trade and economic war with Russia,” Glazyev said. “Most of the sanctions against Russia will bring harm to the United States itself, because as far as trade relations with the United States go, we don’t depend on them in any way.”
From RIA:
"We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”
...
US Secretary of State John Kerry on Saturday warned that Russian military interventions in Ukraine, which have been justified by the Kremlin as protection for residents in heavily ethnic Russian-populated regions, could result in “serious repercussions” for Moscow.
"Unless immediate and concrete steps are taken by Russia to deescalate tensions, the effect on US-Russian relations and on Russia's international standing will be profound," Kerry said.
Kerry mentioned economic sanctions, visa bans and asset freezes as possible measures.
Former deputy energy minister and lively government critic Vladimir Milov slammed Glazyev’s remarks, saying they would put further downward pressure on the ruble, which was pushed down Monday to a record low of 36.5 against the dollar amid fears about the possible outbreak of war.
“That idiot Glazyev will keep talking until the dollar is worth 60 [rubles],” Milov wrote on his Twitter account.
To be sure, a high-ranking Kremlin source was quick to distance his office from Glazyev’s remarks, however, insisting to RIA Novosti that they represented only his personal position. Glazyev was just expressing his views as an academic, and not as a presidential adviser, the Kremlin insider said.
That said, putting Russia's threat in context, the Federation held $138.6 billion in US Treasurys as of December according to the latest TIC data, making it the 11th largest creditor of the US, which appears to conflict with what the Russian said, making one wonder where there is a disconnect in "data." This would mean the Fed would need just two months of POMO to gobble up whatever bonds Russia has to sell.
The bigger question is if indeed, as some have suggested, China were to ally with Russia, and proceed to follow Russia in its reciprocal isolation of the US, by expanding trade with Russia on non-USD based terms, and also continue selling bonds as it did in December, when as we reported previously it dumped the second largest amount of US paper in history.
... especially when one considers the latest news released by the Kremlin:
PUTIN, XI DISCUSSED UKRAINE BY PHONE, KREMLIN SAYS
RUSSIA, CHINA SHARE SIMILAR POSITIONS ON UKRAINE, KREMLIN SAYS
http://www.zerohedge.com/news/2014-03-04/putin-advisor-threatens-dumping-us-treasurys-abandoning-dollar-if-us-proceeds-sancti
Let’s You and Him Fight
James Howard Kunstler
March 3, 2014
(special thanks to basserdan)
So, now we are threatening to start World War Three because Russia is trying to control the chaos in a failed state on its border — a state that our own government spooks provoked into failure? The last time I checked, there was a list of countries that the USA had sent troops, armed ships, and aircraft into recently, and for reasons similar to Russia’s in Crimea: the former Yugoslavia, Somalia, Afghanistan, Iraq, Libya, none of them even anywhere close to American soil. I don’t remember Russia threatening confrontations with the USA over these adventures.
The phones at the White House and the congressional offices ought to be ringing off the hook with angry US citizens objecting to the posturing of our elected officials. There ought to be crowds with bobbing placards in Farragut Square reminding the occupant of 1400 Pennsylvania Avenue how ridiculous this makes us look.
The saber-rattlers at The New York Times were sounding like the promoters of a World Wrestling Federation stunt Monday morning when they said in a Page One story:
“The Russian occupation of Crimea has challenged Mr. Obama as has no other international crisis, and at its heart, the advice seemed to pose the same question: Is Mr. Obama tough enough to take on the former K.G.B. colonel in the Kremlin?”
Are they out of their chicken-hawk minds over there? It sounds like a ploy out of the old Eric Berne playbook: Let’s You and Him Fight. What the USA and its European factotums ought to do is mind their own business and stop issuing idle threats. They set the scene for the Ukrainian melt-down by trying to tilt the government their way, financing a pro-Euroland revolt, only to see their sponsored proxy dissidents give way to a claque of armed neo-Nazis, whose first official act was to outlaw the use of the Russian language in a country with millions of long-established Russian-speakers. This is apart, of course, from the fact Ukraine had been until very recently a province of Russia’s former Soviet empire.
Secretary of State John Kerry — a haircut in search of a brain — is winging to Kiev tomorrow to pretend that the USA has a direct interest in what happens there. Since US behavior is so patently hypocritical, it raises the pretty basic question: what are our motives? I don’t think they amount to anything more than international grandstanding — based on the delusion that we have the power and the right to control everything on the planet, which is based, in turn, on our current mood of extreme insecurity as our own ongoing spate of bad choices sets the table for a banquet of consequences.
America can’t even manage its own affairs. We ignore our own gathering energy crisis, telling ourselves the fairy tale that shale oil will allow us to keep driving to WalMart forever. We paper over all of our financial degeneracy and wink at financial criminals. Our infrastructure is falling apart. We’re constructing an edifice of surveillance and social control that would make the late Dr. Joseph Goebbels turn green in his grave with envy while we squander our dwindling political capital on stupid gender confusion battles.
The Russians, on the other hand, have every right to protect their interests along their own border, to protect the persons and property of Russian-speaking Ukrainians who, not long ago, were citizens of a greater Russia, to discourage neo-Nazi activity in their back-yard, and most of all to try to stabilize a region that has little history and experience with independence. They also have to contend with the bankruptcy of Ukraine, which may be the principal cause of its current crack-up. Ukraine is deep in hock to Russia, but also to a network of Western banks, and it remains to be seen whether the failure of these linked obligations will lead to contagion throughout the global financial system. It only takes one additional falling snowflake to push a snow-field into criticality.
Welcome to the era of failed states. We’ve already seen plenty of action around the world and we’re going to see more as resource and capital scarcities drive down standards of living and lower the trust horizon. The world is not going in the direction that Tom Friedman and the globalists thought. Anything organized at the giant scale is now in trouble, nation-states in particular. The USA is not immune to this trend, whatever we imagine about ourselves for now.
http://kunstler.com/clusterfuck-nation/lets-you-and-him-fight/
Putin Adviser Warns U.S. On USD As Reserve Currency And "Crash" Of U.S. Financial System
GoldCore Gold Bullion Tue, Mar 4 2014, 11:27 GMT
by Mark O'Byrne | GoldCore Gold Bullion
Today’s AM fix was USD 1,339.50, EUR 973.90 and GBP 802.87 per ounce.
Yesterday’s AM fix was USD 1,344.25, EUR 975.58 and GBP 803.50 per ounce.
Gold climbed $26.80 or 2.02% yesterday to $1,351.40/oz. Silver rose $0.26 or 1.23% at $21.43/oz.
U.S. Dollar Index, 1968-March 4, 2014 - (Bloomberg)
Gold dropped 0.8% today as equities bounced higher after reports that Russian President Vladimir Putin had ordered troops engaged in exercises in an area which borders Ukraine to return to their base.
Gold rallied to a four-month high yesterday after investors sold risk assets following Russia's military intervention, which prompted the United States to look at a series of economic and diplomatic sanctions to isolate Moscow.
As ever, it is always difficult to be prescriptive and pinpoint price movements on specific events. It is arguable, that gold could have risen over 1.5% yesterday even if events in Ukraine were not leading to a deterioration in relations between Russia and the West.
This is because gold still has strong fundamentals which is leading to robust global demand - especially from China.
However, the situation in the Ukraine is potentially one of the greatest geopolitical risks since the end of the Cold War.
A senior adviser to Putin said this morning that if the United States were to impose sanctions on Russia over Ukraine, Moscow might be forced to drop the dollar as a reserve currency and refuse to pay off loans to U.S. banks.
As newswires reported the comments from Putin’s senior aide Glazyev, the USD Index fell marginally to session lows and broke below 80.00 before recovering.
Russia could reduce to zero its economic dependency on the United States if Washington agreed sanctions against Moscow over Ukraine, politician and economist Glazyev said, warning that the American financial system faced a "crash" if this happened.
Sergei Glazyev, a senior adviser to President Putin, added that if Washington froze the accounts of Russian businesses and individuals, Moscow will recommend to all holders of U.S. treasuries to sell their U.S. government debt.
Glazyev is often used by the authorities to stake out a hardline stance. He does not make policy but has the ear of Putin and would be aligned with the more hawkish elements in the Russian government and military.
"We would find a way not just to reduce our dependency on the United States to zero but to emerge from those sanctions with great benefits for ourselves," said Kremlin economic aide Sergei Glazyev.
He told the RIA Novosti news agency Russia could stop using dollars for international transactions and create its own payment system using its "wonderful trade and economic relations with our partners in the East and South."
Russian firms and banks would also not return loans from American financial institutions, he said.
"An attempt to announce sanctions would end in a crash for the financial system of the United States, which would cause the end of the domination of the United States in the global financial system,” he added.
Late Monday, U.S. President Barack Obama said the U.S. plans to impose penalties on Russia unless it withdraws its military forces, and on Tuesday, Russia reportedly called troops on military exercises back to their bases.
Glasyev’s comments were likely sanctioned by the Kremlin and by Putin himself. They would appear to be a warning to the U.S. regarding isolating Russia politically and imposing economic sanctions.
If diplomacy does not prevail, then trade wars and currency wars will ensue with attendant consequences for the already vulnerable financial system and global economy.
http://www.fxstreet.com/analysis/gold-investments-market-update/2014/03/04/
Putin Adviser Warns U.S. On USD As Reserve Currency And "Crash" Of U.S. Financial System
GoldCore Gold Bullion Tue, Mar 4 2014, 11:27 GMT
by Mark O'Byrne | GoldCore Gold Bullion
Today’s AM fix was USD 1,339.50, EUR 973.90 and GBP 802.87 per ounce.
Yesterday’s AM fix was USD 1,344.25, EUR 975.58 and GBP 803.50 per ounce.
Gold climbed $26.80 or 2.02% yesterday to $1,351.40/oz. Silver rose $0.26 or 1.23% at $21.43/oz.
U.S. Dollar Index, 1968-March 4, 2014 - (Bloomberg)
Gold dropped 0.8% today as equities bounced higher after reports that Russian President Vladimir Putin had ordered troops engaged in exercises in an area which borders Ukraine to return to their base.
Gold rallied to a four-month high yesterday after investors sold risk assets following Russia's military intervention, which prompted the United States to look at a series of economic and diplomatic sanctions to isolate Moscow.
As ever, it is always difficult to be prescriptive and pinpoint price movements on specific events. It is arguable, that gold could have risen over 1.5% yesterday even if events in Ukraine were not leading to a deterioration in relations between Russia and the West.
This is because gold still has strong fundamentals which is leading to robust global demand - especially from China.
However, the situation in the Ukraine is potentially one of the greatest geopolitical risks since the end of the Cold War.
A senior adviser to Putin said this morning that if the United States were to impose sanctions on Russia over Ukraine, Moscow might be forced to drop the dollar as a reserve currency and refuse to pay off loans to U.S. banks.
As newswires reported the comments from Putin’s senior aide Glazyev, the USD Index fell marginally to session lows and broke below 80.00 before recovering.
Russia could reduce to zero its economic dependency on the United States if Washington agreed sanctions against Moscow over Ukraine, politician and economist Glazyev said, warning that the American financial system faced a "crash" if this happened.
Sergei Glazyev, a senior adviser to President Putin, added that if Washington froze the accounts of Russian businesses and individuals, Moscow will recommend to all holders of U.S. treasuries to sell their U.S. government debt.
Glazyev is often used by the authorities to stake out a hardline stance. He does not make policy but has the ear of Putin and would be aligned with the more hawkish elements in the Russian government and military.
"We would find a way not just to reduce our dependency on the United States to zero but to emerge from those sanctions with great benefits for ourselves," said Kremlin economic aide Sergei Glazyev.
He told the RIA Novosti news agency Russia could stop using dollars for international transactions and create its own payment system using its "wonderful trade and economic relations with our partners in the East and South."
Russian firms and banks would also not return loans from American financial institutions, he said.
"An attempt to announce sanctions would end in a crash for the financial system of the United States, which would cause the end of the domination of the United States in the global financial system,” he added.
Late Monday, U.S. President Barack Obama said the U.S. plans to impose penalties on Russia unless it withdraws its military forces, and on Tuesday, Russia reportedly called troops on military exercises back to their bases.
Glasyev’s comments were likely sanctioned by the Kremlin and by Putin himself. They would appear to be a warning to the U.S. regarding isolating Russia politically and imposing economic sanctions.
If diplomacy does not prevail, then trade wars and currency wars will ensue with attendant consequences for the already vulnerable financial system and global economy.
http://www.fxstreet.com/analysis/gold-investments-market-update/2014/03/04/
The Rape of Ukraine: Phase Two Begins
WILLIAM ENGDAHL | MARCH 3, 2014
This Drama is Far from Over-Further Wars as the Prime Instrument of Policy
The events in Ukraine since November 2013 are so astonishing as almost to defy belief. An legitimately-elected (said by all international monitors) Ukrainian President, Viktor Yanukovich, has been driven from office, forced to flee as a war criminal after more than three months of violent protest and terrorist killings by so-called opposition.
His “crime” according to protest leaders was that he rejected an EU offer of a vaguely-defined associate EU membership that offered little to Ukraine in favor of a concrete deal with Russia that gave immediate €15 billion debt relief and a huge reduction in Russian gas import prices. Washington at that point went into high gear and the result today is catastrophe. A secretive neo-nazi military organization reported linked to NATO played a decisive role in targeted sniper attacks and violence that led to the collapse of the elected government. But the West is not finished with destroying Ukraine. Now comes the IMF with severe conditionalities as prerequisite to any Western financial help.
After the famous leaked phone call of US Assistant Secretary of State Victoria Nuland with the US Ambassador in Kiev, where she discussed the details of who she wanted in a new coalition government in Kiev, and where she rejected the EU solutions with her “Fuck the EU” comment,[1] the EU went it alone. Germany’s Foreign Minister, Frank-Walter Steinmeier proposed that he and his French counterpart, Laurent Fabius, fly to Kiev and try to reach a resolution of the violence before escalation. Polish Foreign Minister, Radoslaw Sikorski was asked to join. The talks in Kiev included the EU delegation, Yanukovich, the three opposition leaders and a Russian representative. The USA was not invited.[2]
The EU intervention without Washington was extraordinary and reveals the deeping division between the two in recent months. In effect it was the EU saying to the US State Department, “F*** the US,” we will end this ourselves.
After hard talks, all major parties including the majority of protesters, agreed to new presidential elections in December, return to the 2004 Constitution and release of Julia Tymoshenko from prison. The compromise appeared to end the months long chaos and give a way out for all major players.
The diplomatic compromise lasted less than twelve hours. Then all hell broke loose.
Snipers began shooting into the crowd on February 22 in Maidan or Independence Square. Panic ensued and riot police retreated in panic according to eyewitnesses. The opposition leader Vitali Klitschko withdrew from the deal, no reason given. Yanukovich fled Kiev.[3]
The question unanswered until now is who deployed the snipers? According to veteran US intelligence sources, the snipers came from an ultra-right-wing military organization known as Ukrainian National Assembly – Ukrainian People’s Self-Defense (UNA-UNSO).
Members of UNA-UNSO marching in Lviv
Strange Ukraine ‘Nationalists’
The leader of UNA-UNSO, Andriy Shkil, ten years ago became an adviser to Julia Tymoshenko. UNA-UNSO, during the US-instigated 2003-4 “Orange Revolution,” backed pro-NATO candidate Viktor Yushchenko against his pro-Russian opponent, Yanukovich. UNA-UNSO members provided security for the supporters of Yushchenko and Julia Tymoshenko on Independence Square in Kiev in 2003-4.[4]
UNA-UNSO is also reported to have close ties to the German National Democratic Party (NDP). [5]
Ever since the dissolution of the Soviet Union in 1991 the crack-para-military UNA-UNSO members have been behind every revolt against Russian influence. The one connecting thread in their violent campaigns is always anti-Russia. The organization, according to veteran US intelligence sources, is part of a secret NATO “Gladio” organization, and not a Ukraine nationalist group as portrayed in western media. [6]
According to these sources, UNA-UNSO have been involved (confirmed officially) in the Lithuanian events in the Winter of 1991, the Soviet Coup d’etat in Summer 1991, the war for the Pridnister Republic 1992, the anti-Moscow Abkhazia War 1993, the Chechen War, the US-organized Kosovo Campaign Against the Serbs, and the August 8 2008 war in Georgia. According to these reports, UNA-UNSO para-military have been involved in every NATO dirty war in the post-cold war period, always fighting on behalf of NATO. “These people are the dangerous mercenaries used all over the world to fight NATO’s dirty war, and to frame Russia because this group pretends to be Russian special forces. THESE ARE THE BAD GUYS, forget about the window dressing nationalists, these are the men behind the sniper rifles,” these sources insist. [7]
If true that UNA-UNSO is not “Ukrainian” opposition, but rather a highly secret NATO force using Ukraine as base, it would suggest that the EU peace compromise with the moderates was likely sabotaged by the one major player excluded from the Kiev 21 February diplomatic talks—Victoria Nuland’s State Department.[8] Both Nuland and right-wing Republican US Senator John McCain have had contact with the leader of the Ukrainian opposition Svoboda Party, whose leader is openly anti-semitic and defends the deeds of a World War II Ukrainian SS-Galicia Division head.[9] The party was registered in 1995, initially calling itself the “Social National Party of Ukraine” and using a swastika style logo. Svoboda is the electoral front for neo-nazi organizations in Ukraine such as UNA-UNSO.[10]
One further indication that Nuland’s hand is shaping latest Ukraine events is the fact that the new Ukrainian Parliament is expected to nominate Nuland’s choice, Arseny Yatsenyuk, from Tymoshenko’s party, to be interim head of the new Cabinet.
Whatever the final truth, clear is that Washington has prepared a new economic rape of Ukraine using its control over the International Monetary Fund (IMF).
IMF plunder of Ukraine Crown Jewels
Now that the “opposition” has driven a duly-elected president into exile somewhere unknown, and dissolved the national riot police, Berkut, Washington has demanded that Ukraine submit to onerous IMF conditionalities.
In negotiations last October, the IMF demanded that Ukraine double prices for gas and electricity to industry and homes, that they lift a ban on private sale of Ukraine’s rich agriculture lands, make a major overhaul of their economic holdings, devalue the currency, slash state funds for school children and the elderly to “balance the budget.” In return Ukraine would get a paltry $4 billion.
Before the ouster of the Moscow-leaning Yanukovich government last week, Moscow was prepared to buy some $15 billion of Ukraine debt and to slash its gas prices by fully one-third. Now, understandably, Russia is unlikely to give that support. The economic cooperation between Ukraine and Moscow was something Washington was determined to sabotage at all costs. This drama is far from over. The stakes involve the very future of Russia, the EU-Russian relations, and the global power of Washington, or at least that faction in Washington that sees further wars as the prime instrument of policy.
# # # #
F. William Engdahl, BFP contributing Author & Analyst
William Engdahl is author of A Century of War: Anglo-American Oil Politics in the New World Order. He is a contributing author at BFP and may be contacted through his website at www.engdahl.oilgeopolitics.net where this article was originally published.
Endnotes:
[1]F. William Engdahl, US-Außenministerium in flagranti über Regimewechsel in der Ukraine ertappt, Kopp Online.de, February 8, 2014, accessed in http://info.kopp-verlag.de/hintergruende/enthuellungen/f-william-engdahl/us-aussenministerium-in-flagranti-ueber-regimewechsel-in-der-ukraine-ertappt.html
[2] Bertrand Benoit, Laurence Norman and Stephen Fidler , European Ministers Brokered Ukraine Political Compromise: German, French, Polish Foreign Ministers Flew to Kiev, The Wall Street Journal, February 21, 2014, accessed in http://online.wsj.com/news/articles/SB10001424052702303636404579397351862903542?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303636404579397351862903542.html
[3] Jessica Best, Ukraine protests Snipers firing live rounds at demonstrators as fresh violence erupts despite truce, The Mirror UK, February 20, 2014, accessed in http://www.mirror.co.uk/news/world-news/ukraine-protests-snipers-firing-live-3164828
[4] Aleksandar Vasovic , Far right group flexes during Ukraine revolution, Associated Press, January 3, 2005, Accessed in http://community.seattletimes.nwsource.com/archive/?date=20050103&slug=ukraine03
[5] Wikipedia, Ukrainian National Assembly Ukrainian National Self Defence, Wikipedia, the free encyclopedia, accessed in http://en.wikipedia.org/wiki/Ukrainian_National_Assembly_%E2%80%93_Ukrainian_National_Self_Defence
[6] Source report, Who Has Ukraine Weapons, February 27, 2014, private to author.
[7] Ibid.
[8] Max Blumenthal, Is the US backing neo-Nazis in Ukraine?, AlterNet February 25, 2014, accessed in
http://www.salon.com/2014/02/25/is_the_us_backing_neo_nazis_in_ukraine_partner/
[9] Channel 4 News, Far right group at heart of Ukraine protests meet US senator, 16 December 2013, accessed in
http://www.channel4.com/news/ukraine-mccain-far-right-svoboda-anti-semitic-protests
[10] Ibid
- See more at: http://www.boilingfrogspost.com/2014/03/03/the-rape-of-ukraine-phase-two-begins/#sthash.KAiQgkx4.dpuf
Native Americans adopt bitcoin clone as official currency
The Oglala Lakota Nation, which occupies land in North and South Dakota, has adopted "MazaCoin" as its official currency and mined a national reserve for times of hardship
Developer and Lakota Payu Harris has now developed a new digital currency called MazaCoin, based on the existing ZetaCoin protocal Photo: TWITTER
By Matthew Sparkes 3:11PM GMT 28
Feb. 28, 2014
Telegraph.co.uk
A new crypto-currency in the style of bitcoin has been adopted as the official reserve currency of the Oglala Lakota Nation.
The Lakota people are indigenous to parts of North and South Dakota and are made up of a confederation of seven Sioux tribes, with notable members including Sitting Bull and Crazy Horse, who defeated Custer at the Battle of Little Bighorn.
They now live in a semi-autonomous “nation” within the United States. This frees them to diverge from US law to a certain extent – some tribes have legal gambling operations, for example - but they remain overseen by the US Congress.
Developer and Lakota member Payu Harris has now developed a new digital currency called MazaCoin, based on the existing ZetaCoin protocol, and convinced chiefs to adopt it as the official national currency.
Harris told Forbes that he hoped it would help lift the tribe out of poverty: “I looked at how things were for the tribe now and suddenly had an idea about how we might fix it. We can’t continue to be 20 years behind the times, always trying to catch up. We have to be forward-thinking.
“I think crypto-currencies could be the new buffalo. Once, it was everything for our survival. We used it for food, for clothes, for everything. It was our economy. I think MazaCoin could serve the same purpose.
“We’re not going to ask the federal government if we can do this. I refuse to ask them to do anything within my own borders.”
Reports suggest that the FBI has since contacted the tribe’s chief to inform him that crypto-currencies are not yet considered legal tender. This leaves the future validity of its adoption as an official currency under question.
Nonetheless, the Traditional Lakota Nation has pre-mined 25 million MazaCoins as a starting point for a national crypto-currency reserve. A further 25 million coins have been mined to form a Tribal Trust, from which grants of coins will be given to any tribe member, local business or non-profit organisation.
Unlike the bitcoin protocol, which will only allow 21 million coins to ever be mined, MazaCoin is inflationary. In the first five years it is estimated that 2.4 billion will be mined, with one million each year after that.
The very first block mined was dedicated to the “Great Spirit and the prosperity and wealth of the Oglala Lakota Nation”.
James Barcia of the Bitcoin Center NYC, set up to promote the adoption of bitcoin, said that he would lend any help possible to MazaCoin.
“Bitcoin Center NYC congratulates the Lakota Nation on being the first native people to launch their own currency (digital) and declare it to be the official one. MazaCoin like its digital currency peers holds great promise for humankind due to its speed, security, and versatility," he said.
“Blockchain technology is scarcely understood outside of the growing but still tight circle of digital currency adopters. The Lakota Nation is stepping way out in front of most other populations in establishing MazaCoin and in placing big bets on digital currency’s endless good. In addition, having a powerful currency will advance the cause of Lakota sovereignty for generations to come."
http://www.telegraph.co.uk/technology/news/10668018/Native-Americans-adopt-bitcoin-clone-as-official-currency.html
Schlichter: "Bitcoin Is Cryptographic Gold"
Submitted by Tyler Durden on 03/02/2014 19:23 -0500
Submitted by Detlev Schlichter via DetlevSchlichter.com,
The Bitcoin phenomenon has now reached the mainstream media where it met with a reception that ranged from sceptical to outright hostile. The recent volatility in the price of bitcoins and the issues surrounding Bitcoin-exchange Mt. Gox have led to additional negative publicity. In my view, Bitcoin as a monetary concept is potentially a work of genius, and even if Bitcoin were to fail in its present incarnation – a scenario that I cannot exclude but that I consider exceedingly unlikely – the concept itself is too powerful to be ignored or even suppressed in the long run. While scepticism towards anything so fundamentally new is maybe understandable, most of the tirades against Bitcoin as a form of money are ill-conceived, terribly confused, and frequently factually wrong. Central bankers of the world, be afraid, be very afraid!
Finding perspective
Any proper analysis has to distinguish clearly between the following layers of the Bitcoin phenomenon: 1) the concept itself, that is, the idea of a hard crypto-currency (digital currency) with no issuing authority behind it, 2) the core technology behind Bitcoin, in particular its specific algorithm and the ‘mining process’ by which bitcoins get created and by which the system is maintained, and 3) the support-infrastructure that makes up the wider Bitcoin economy. This includes the various service providers, such as organised exchanges of bitcoins and fiat currency (Mt. Gox, Bitstamp, Coinbase, and many others), bitcoin ‘wallet’ providers, payment services, etc, etc.
Before we look at recent events and recent newspaper attacks on Bitcoin, we should be clear about a few things upfront: If 1) does not hold, that is, if the underlying theoretical concept of an inelastic, nation-less, apolitical, and international medium of exchange is baseless, or, as some propose, structurally inferior to established state-fiat money, then the whole thing has no future. It would then not matter how clever the algorithm is or how smart the use of cryptographic technology. If you do not believe in 1) – and evidently many economists don’t (wrongly, in my view) – then you can forget about Bitcoin and ignore it.
If 2) does not hold, that is, if there is a terminal flaw in the specific Bitcoin algorithm, this would not by itself repudiate 1). It is then to be expected that a superior crypto-currency will sooner or later take Bitcoin’s place. That is all. The basic idea would survive.
If there are issues with 3), that is, if there are glitches and failures in the new and rapidly growing infra-structure around Bitcoin, then this does neither repudiate 1), the crypto-currency concept itself, nor 2), the core Bitcoin technology, but may simply be down to specific failures by some of the service providers, and may reflect to-be-expected growing pains of a new industry. As much as I feel for those losing money/bitcoin in the Mt Gox debacle (and I could have been one of them), it is probably to be expected that a new technology will be subject to setbacks. There will probably be more losses and bankruptcies along the way. This is capitalism at work, folks. But reading the commentary in the papers it appears that, all those Sunday speeches in praise of innovation and creativity notwithstanding, people can really deal only with ‘markets’ that have already been neatly regulated into stagnation or are carefully ‘managed’ by the central bank.
Those who are lamenting the new – and yet tiny – currency’s volatility and occasional hic-ups are either naïve or malicious. Do they expect a new currency to spring up fully formed, liquid, stable, with a fully developed infrastructure overnight?
Recent events surrounding Mt Gox and stories of raids by hackers would, in my opinion, only pose a meaningful long-term challenge for Bitcoin if it could be shown that they were linked to irreparable flaws in the core Bitcoin technology itself. There were indeed some allegations that this was the case but so far they do not sound very convincing. At present it still seems reasonable to me to assume that most of Bitcoin’s recent problems are problems in layer 3) – supporting infrastructure – and that none of this has so far undermined confidence in layer 2), the core Bitcoin technology. If that is indeed the case, it is also reasonable to assume that these issues can be overcome. In fact, the stronger the concept, layer 1), the more compelling the long-term advantages and benefits of a fully decentralized, no-authority, nationless global and inelastic digital currency are, the more likely it is that any weaknesses in the present infrastructure will quickly get ironed out. One does not have to be a cryptographer to believe this. One simply has to understand how human ingenuity, rational self-interest, and competition combine to make superior decentralized systems work. Everybody who understands the power of markets, human creativity, and voluntary cooperation should have confidence in the future of digital money.
None of what happened recently – the struggle at Mt. Gox, raids by hackers, market volatility – has undermined in the slightest layer 1), the core concept. However, it is precisely the concept itself that gets many fiat money advocates all exited and agitated. In their attempts to discredit the Bitcoin concept, some writers do not shy away from even the most ludicrous and factually absurd statements. One particular example is Mark T. Williams, a finance professor at Boston University’s School of Management who has recently attacked Bitcoin in the Financial Times and in this article on Business Insider.
Money and the state: Fact and fiction
Apart from all the scare-mongering in William’s article – such as his likening Bitcoin to an alien or zombie attack on our established financial system, stressing its volatility and instability – the author makes the truly bizarre claim that history shows the importance of a close link between currency and sovereignty. Good money, according to Williams, is state-controlled money. Here are some of his statements.
“Every sovereignty uses currency.”
“Trust and faith that a sovereign is firmly standing behind its currency is critical.”
“Sovereigns understand that without consistent economic growth and stability, the standard of living for its citizens will fall, and discontentment will grow. Nation-state treasuries print currency but the vital role of currency management– needed to spur economic growth — is reserved for central bankers.”
Williams reveals a striking lack of historical perspective here. Money-printing, central banking and any form of what Williams calls “currency management” are very recent phenomena, certainly on the scale that they are practiced today. Professor Williams seems to not have heard of Zimbabwe, or of any of the other, 30-odd hyperinflations that occurred over the past 100 years, all of which, of course, in state-managed fiat money systems.
Williams stresses what a long standing concept central banking is, citing the Swedish central bank that was founded in 1668, and the Bank of England, 1694. Yet, human society has made use of indirect exchange – of trading with the help of money – for more than 2,500 years. And through most of history – up to very recently – money was gold and silver, and the supply of money thus practically outside the control of the sovereign.
The early central banks were also very different animals from what their modern namesakes have become in recent years. Their degrees of freedom were strictly limited by a gold or silver standard. In fact, the idea that they would “manage” the currency to “spur” economic growth would have sounded positively ridiculous to most central bankers in history.
Additionally, by starting their own central banks, the sovereigns did not put “trust and faith” behind their currencies – after all, their currencies were nothing but units of gold and silver, and those enjoyed the public’s trust and faith on their own merit, thank you very much – the sovereigns rather had their own self-interest at heart, a possibility that does not even seem to cross William’s mind: The Bank of England was founded specifically to lend money to the Crown against the issuance of IOUs, meaning the Bank of England was founded to monetize state-debt. The Bank of England, from its earliest days, was repeatedly given the legal privilege – given, of course, by its sovereign – to ignore (default on) its promise to repay in gold and still remain a going concern, and this occurred precisely whenever the state needed extra money, usually to finance a war.
Bitcoin is cryptographic gold
“Gold is money and nothing else.” This is what John Pierpont Morgan said back in 1913. At the time, not only was he a powerful and influential banker, his home country, the United States of America, had become one of the richest and most dynamic countries in the world, yet it had no central bank. The history of the 19th century US – even if told by historians such as Milton Friedman and Anna Schwarz who were no gold-bugs but sympathetic to central banking – illustrates that monetary systems based on a hard monetary commodity (in this case gold), the supply of which is outside government control, is no hindrance to vibrant economic growth and rising prosperity. Furthermore, economic theory can show that hard and inelastic money is not only no hindrance to growth but that it is indeed the superior foundation of a market economy. This is precisely what I try to show with Paper Money Collapse. I do not think that this was even a very contentious notion through most of the history of economics. Good money is inelastic, outside of political control, international (“nationless”, as Williams puts it), and thus the perfect basis for international cooperation across borders.
Money was gold and that meant money was not a tool of politics but an essential constraint on the power of the state.
As Democritus said “Gold is the sovereign of all sovereigns”.
It is clear that on a conceptual level, Bitcoin has much more in common with a gold and silver as monetary assets than with state fiat money. The supply of gold, silver and Bitcoin, is not under the control of any issuing authority. It is money of no authority – and this is precisely why such assets were chosen as money for thousands of years. Gold, silver and Bitcoin do not require trust and faith in a powerful and privileged institution, such as a central bank bureaucracy (here is the awestruck Williams not seeing a problem: “These financial stewards have immense power and responsibility.”) Under a gold standard you have to trust Mother Nature and the spontaneous market order that employs gold as money. Under Bitcoin you have to trust the algorithm and the spontaneous market order that employs bitcoins as money (if the public so chooses). Under the fiat money system you have to trust Ben Bernanke, Janet Yellen, and their hordes of economics PhDs and statisticians.
Hey, give me the algorithm any day!
Money of no authority
But Professor Williams does seem unable to even grasp the possibility of money without an issuing and controlling central authority: “Under the Bitcoin model, those who create the software protocol and mine virtual currencies would become the new central bankers, controlling a monetary base.” This is simply nonsense. It is factually incorrect. Bitcoin – just like a proper gold standard – does not allow for discretionary manipulation of the monetary base. There was no ‘monetary policy’ under a gold standard, and there is no ‘monetary policy’ in the Bitcoin economy. That is precisely the strength of these concepts, and this is why they will ultimately succeed, and replace fiat money.
Williams would, of course, be correct if he stated that sovereigns had always tried to control money and manipulate it for their own ends. And that history is a legacy of failure.
The first paper money systems date back to 11th century China. All of those ended in inflation and currency disaster. Only the Ming Dynasty survived an experiment with paper money – by voluntarily ending it and returning to hard commodity money.
The first experiments with full paper money systems in the West date back to the 17th century, and all of those failed, too. The outcome – through all of history – has always been the same: either the paper money system collapsed in hyperinflation, or, before that happened, the system was returned to hard commodity money. We presently live with the most ambitious experiment with unconstrained fiat money ever, as the entire world is now on a paper standard – or, as James Grant put it, a PhD-standard – and money production has been made entirely flexible everywhere. This, however does not reflect a “longstanding bond between sovereign and its currency”, as Williams believes, but is a very recent phenomenon, dating precisely to the 15th of August 1971, when President Nixon closed the gold window, ended Bretton Woods, and defaulted on the obligation to exchange dollars for gold at a fixed price.
The new system – or non-system – has brought us persistent inflation and budget deficits, ever more bizarre asset bubbles, bloated and unstable banking systems, rising mountains of debt that will never be repaid, stagnating real incomes and rising income disparities. This system is now in its endgame.
But maybe Williams is right with one thing: “If not controlled and tightly regulated, Bitcoin — a decentralized, untraceable, highly volatile and nationless currency — has the potential to undermine this longstanding bond between sovereign and its currency.”
Three cheers to that.
http://www.zerohedge.com/news/2014-03-02/schlichter-bitcoin-cryptographic-gold
What’s Not Being Said About Bitcoin
Techcrunch.com
Feb. 28, 2014
Posted 22 hours ago by Brian Armstrong (@brian_armstrong)
Editor’s note: Brian Armstrong is the co-founder and CEO of Coinbase, a leading consumer, merchant, and developer platform for Bitcoin purchasing, selling, and payment acceptance. Follow him on Twitter.
Mt.Gox is gone. The one-time biggest Bitcoin exchange closed its doors this week and filed for bankruptcy this morning. Questions about the future of Bitcoin have once again been up-leveled to the headlines of nearly every major media outlet.
Over the past few weeks, we’ve seen a string of issues in the Bitcoin space, from the transaction malleability bug that ultimately closed Mt.Gox’s doors to a corresponding distributed denial of service (DDoS) attack that delayed transfers on multiple exchanges and services. These attacks, along with recent phishing scams and money-laundering arrests, have cast doubt on the Bitcoin space and caused consumer panic — which is fair.
But what hasn’t been communicated well is how those who are truly invested in the future of Bitcoin remain totally confident, because with every attack, breach, and arrest, Bitcoin is getting stronger and proving to consumers and businesses it is not going away.
Here is what is not being said about Bitcoin that should be.
Open networks keep growing even if individual participants fail.
It is critical to understand just how different an open payment network is from the proprietary payment networks that exist today. To illustrate this differently, let’s look at another open protocol: email.
Bad actors are quickly weeded out of open networks because consumers have choice — the choice of many new entrants coming on the market to vie for their business.
Email is a good example of an open network with a standardized protocol; and this standardization is one reason why email is fast, free, and works just about anywhere in the world. There is no single company or country who controls the email protocol (just like Bitcoin), so thousands of different clients and implementations have been created all over the world giving it great reach and driving down prices for consumers who have many email options to choose from. You may have noticed you can successfully send emails between different service providers (such as Gmail to Outlook). This is also due to the open nature of the protocol.
If an individual email provider has a security breach, or loses the integrity of its customers, this doesn’t reflect on the concept of email generally — it merely reflects on the integrity of the individual provider. Further, the beauty of open networks is that they provide a low barrier to entry for competing services to come in and vie for your business as a consumer. Bad actors are quickly weeded out of open networks because consumers have choice — the choice of many new entrants coming on the market to vie for their business. Open networks do a great job of keeping incumbent companies honest, because if they make a mistake and lose their customers’ trust, their customers will be gone in a flash.
An open payment network is a game changer.
Unlike Bitcoin or email, our financial institutions and payment systems today are proprietary. This limits the ability for consumers to easily switch between payment providers and creates less competition for services. If the provider of a proprietary payment network isn’t serving its customers’ needs, where else will their customers turn? There is only one company you can use to access a proprietary payment network — the company that owns it. This higher switching cost has a few side effects: less competition in the market, higher fees, limited geographic reach of any individual network, and less innovation around things like speed of transactions.
Clearly open networks offer a number of benefits, so why hadn’t an open payment network existed previously? Until recently, many people thought it wasn’t possible to build a payment system on an open network. The core issue was around preventing duplicate spending without using a central company to verify each transaction. Nothing prevents you from sending duplicate emails multiple times, for example, if you wanted to do this.
Bitcoin will take time to mature as the protocol is tested and strained with new types of attacks.
This problem (the “double spending” problem) is what Bitcoin solves, and in this sense it truly was a technological breakthrough or invention (one that I think will be viewed as very important historically). If you’re someone in the business of verifying transactions on a proprietary network, the invention of Bitcoin cannot be safely ignored. It will change or disrupt the providers of most proprietary payment networks in the coming years.
New technologies take time to mature.
Just like email, there are growing pains for any new technology. Spam, phishing, and hacking have “attacked” email for two decades, but with each new breach comes the ability to make the protocol stronger, to innovate (as Google has with machine learning to detect and prevent spam email). These technologies weren’t developed overnight, or even conceived when email was created. Yet they were key to making email stable and reliable in people’s minds, until it became a part of their everyday life.
In the same way, Bitcoin will take time to mature as the protocol is tested and strained with new types of attacks. Most of the obvious attacks were considered in the original Bitcoin paper, and have been patched in the early years of Bitcoin development. More complex attacks, such as the “transaction malleability” issue we saw just a few weeks ago, can still have a moderate impact, affecting a limited set of service providers.
Within the coming years, disrupting the Bitcoin network will become increasingly more difficult as Bitcoin wallet software and the protocol become more mature and resilient. Like the spam filters developed on top of email, the best Bitcoin services providers will develop the best software to iron out any details the Bitcoin protocol has still left open to abuse.
All new technologies take time to mature and work the details out. When trying to predict the future, you should never look at the state of a technology today, but the trend of how it is growing or maturing over time.
Bitcoin is gaining traction with merchants.
The No. 1 reason to have confidence in Bitcoin despite all of the recent turbulence is incredible demand among businesses to accept Bitcoin (thus giving consumers more territory to spend them).
When trying to predict the future, you should never look at the state of a technology today, but the trend of how it is growing or maturing over time.
Beyond lower fees and instant transactions, companies are also waking up to the fact that accepting Bitcoin means acquiring new, sophisticated, wealthy customers (top line revenue growth). Take Overstock.com, which began accepting Bitcoin on January 9. To date, Overstock has seen over $850,000 in Bitcoin purchases, with an average cart of $216, or 30 percent higher compared to customers paying in U.S. dollars. These were “almost all new customers,” according to the CEO, Patrick Byrne.
Just in the past few months, sites like Mint.com, Bing, and point of sales software like Revel Systems (used in many retail outlets across the United States) have also integrated Bitcoin payments.
Around San Francisco, New York City and other major cities across the globe, Bitcoin acceptance is rapidly moving into brick-and-mortar shops, restaurants and even professional businesses like dentists and law firms. Consumers are paying with a quick scan of a QR code or using technologies like NFC and Bluetooth low energy. Merchants are enjoying instant transactions at lower fees, and this momentum will only accelerate in 2014 – with thousands more companies beginning to accept Bitcoin.
Bitcoin companies will be audited in old and new ways.
If there is one positive takeaway from the collapse of Mt.Gox it is the willingness of a new generation of Bitcoin companies to work together to ensure the future of Bitcoin and the security of customer funds. Going forward, the security and solvency of Bitcoin companies will be verified in several ways. First, through the traditional audit industry (the big four accounting firms), as they’ve done for many industries. Second, through novel techniques using cryptography to prove ownership of funds with Bitcoin’s public blockchain ledger.
A new wave of Bitcoin companies – Coinbase, Bitstamp.net, Kraken, BTC China, Blockchain.info, Circle, The Bitcoin Foundation and more – represent trustworthy and responsible companies and groups involved in Bitcoin that are proactive about engaging on regulation and policy and independently auditing and testing security measures to ensure consumer confidence.
Mt.Gox is in no way the end of Bitcoin — quite the opposite, in fact. Just as the closing of Silk Road in 2013 led to the biggest boost in value of the Bitcoin to date, weeding out immature companies and bad actors is paving the way for a legitimate Bitcoin marketplace. While it may be coincidence that during the Mt.Gox debacle, Coinbase hit 1 million consumer wallets, it is also representative of what legitimate Bitcoin companies have known through the big ups and the low lows – Bitcoin is fundamentally the best payment system for the Internet era.
http://techcrunch.com/2014/02/28/whats-not-being-said-about-bitcoin/
New Spy Technology to Spawn Oil Revolution
By James Burgess | Thu, 27 February 2014 23:32
Oilprice.com
The future of oil exploration lies in new technology--from massive data-processing supercomputers to 4D seismic to early-phase airborne spy technology that can pinpoint prospective reservoirs.
Oil and gas is getting bigger, deeper, faster and more efficient, with new technology chipping away at “peak oil” concerns. Hydraulic fracturing has caught mainstream attention, other high-tech developments in exploration and discovery have kept this ball rolling.
Oil majors are second only to the US Defense Department in terms of the use of supercomputing systems, which find sweet spots for drilling based on analog geology. These supercomputing systems analyze vast amounts of seismic imaging data collected by geologists using sound waves.
What’s changed most recently is the dimension: When the oil and gas industry first caught on to seismic data collection for exploration efforts, the capabilities were limited to 2-dimensional imaging. The next step was 3D, which gives a much more accurate picture of what’s down there.
The latest is the 4th dimension: Time, which allows explorers not only to determine the geological characteristics of a potential play, but also tells them how a reservoir is changing in real time. But all this is very expensive. And oilmen are zealous cost-cutters.
The next step in technology takes us off the ground and airborne—at a much cheaper cost—according to Jen Alic, a global intelligence and energy expert for OP Tactical.
The newest advancement in oil exploration is an early-phase aerial technology that can see what no other technology—including the latest 3D seismic imagery—can see, allowing explorers to pinpoint untapped reservoirs and unlock new profits, cheaper and faster.
“We’ve watched supercomputing and seismic improve for years. Our research into new airborne reservoir-pinpointing technology tells us that this is the next step in improving the bottom line in terms of exploration,” Alic said.
“In particular, we see how explorers could reduce expensive 3D seismic spending because they would have a much smaller area pinpointed for potential. Companies could save tens of millions of dollars.”
The new technology, developed by Calgary’s NXT Energy Solutions, has the ability to pinpoint prospective oil and gas reservoirs and to determine exactly what’s still there from a plane moving at 500 kilometers an hour at an altitude of 3,000 meters.
The Stress Field Detection (SFD) technology uses gravity to gather its oil and gas intelligence—it can tell different frequencies in the gravitational field deep underground.
Just like a stream is deflected by a big rock, SFD detects gravity disturbances due to subsurface stress and density variations. Porous rock filled with fluids has a very different density than surrounding solid rocks. Remember, gravity measurement is based on the density of materials. SFD detects subtle changes in earth’s gravitational field.
According to its developers, the SFD could save oil and gas companies up to 90% of their exploration cost by reducing the time spent searching for a reservoir and drilling into to it to determine whether there’s actually any oil and gas still there.
“Because it’s all done from the air, SFD doesn’t need on-the-ground permitting, and it covers vast acreage very quickly. It tells explorers exactly where to do their very expensive 3D seismic, greatly reducing the time and cost of getting accurate drilling information,” NXT Energy Solutions President and CEO George Liszicasz, told Oilprice.com in a recent interview.
Mexico’s state-owned oil company Pemex has already put the new technology to the test both onshore and offshore in the Gulf of Mexico, and was a repeat customer in 2012. They co-authored with NXT a white paper on their initial blind-test used of the survey technology.
At first, management targeted the technology to frontier areas where little seismic or well data existed. As an example, Pacific Rubiales Energy is using SFD technology in Colombia, where the terrain, and environmental concerns, make it difficult to obtain permits and determine where best to drill.
The technology was recently contracted in the United States for unconventional plays as well.
By. James Burgess of Oilprice.com
http://oilprice.com/Energy/Energy-General/New-Spy-Technology-to-Spawn-Oil-Revolution.html
I should be thanking you for all the great articles you post basserdan.
The Shocking Deals Behind Banksters' Fines
By SHAH GILANI, Capital Wave Strategist
Money Morning February 20, 2014
Editor's Note: Yesterday Shah showed you the easiest way to make a fortune in the markets, as long as you're willing to break one of Wall Street's golden rules. Today, here's another reason Shah's so willing...
Headline news about banks settling charges for violating rules, regulations, and laws - and announcements of the fines they agree to pay - appears every day...
Rarely - if ever - do they reveal how much money is really being paid or where it's going...
They also seldom explain what kinds of settlements are reached...
Or how banks negotiate what they'll actually pay and to whom... or how they negotiate tax deductibility of fines... or how they get "credits" for fines they never pay... or how insurance covers some of it...
This is not one of those stories... this is about what really happens behind the banksters' doors.
The details are shocking...
These Massive Penalties Are Quieted to Protect "Us"
First of all, some settlements never see the light of day. They can be deemed "confidential" by regulators settling with a miscreant bank.
Why are some settlements confidential? Because bank lawyers argue their clients are exposed to "reputational risk" and details of their "alleged" wrongdoing, which they typically "neither admit nor deny," could impact the health of the bank. Of course, that could create "systemic risk," they argue, due to the damage to the public's perception of trust in their banking institutions.
The FDIC, the Federal Deposit Insurance Corporation, is one agency that thinks keeping settlements confidential will keep folks from withdrawing money from law-breaking banks. They believe it protects the agency from having to bail out remaining depositors if those banks eventually fail.
Last year, for example, the FDIC, ignoring the Federal Deposit Insurance Corp. Improvement Act of 1991 that mandates settlements be made public, fined Deutsche Bank $54 million for packaging and selling bad mortgage-backed securities to a failed bank, but no one heard about it.
According to E. Scott Reckard, who reported on the confidential settlement for the Los Angeles Times, "The deal might have made big headlines, given that the bad loans contributed to the largest payout in FDIC history, $13 billion. But the government cut a deal with the bank's lawyers to keep it quiet: a 'no press release' clause that required the FDIC never to mention the deal 'except in response to a specific inquiry.'"
Also last year, according to the Financial Times, Wells Fargo "quietly settled" with the Federal Housing Finance Agency "for allegedly misleading disclosures on mortgage securities" it sold to Fannie Mae and Freddie Mac. The FT went on to say, "unlike deals with UBS and JPMorgan, Wells' settlement, which is believed to be worth less than $1 billion, is governed by a confidentiality agreement."
The Real Reason No One Goes to Jail
Of course, whether their settlements are confidential or not, too-big-to-fail banks have only faced civil charges, for which they have to pay fines. There have been no criminal prosecutions of any banks or banksters. That's because of the doctrine: too-big-to-fail and too-big-to-jail.
None of the agencies that bring civil actions against the big banks can pursue them criminally. If a bank's actions are so egregious that they warrant a criminal investigation, the agency passes along their files to the Department of Justice.
But, the DOJ hasn't pursued any criminal action against any bank or bankster.
Why? Because as Lanny Breuer, who was chief of the Criminal Division of the DOJ from April 2009 to March 2013, explained in a 2012 speech to the New York City Bar Association, "To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects."
Lanny Breuer left the DOJ last year to return, for a reported $4 million a year, to his old white-collar criminal defense firm Covington & Burling, who represents Morgan Stanley, Bank of America, and others. Attorney General Eric Holder is also a Covington alumni.
Besides not being pursued criminally, when banks and banksters are caught breaking laws they are slapped on the wrist and gifted with Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs). These consistently handed out agreements, in the 20 years since their emergence as an alternative to indictments, are, in the words of the Harvard Law School, "a mainstay of the U.S. corporate enforcement regime, with the U.S. Department of Justice (DOJ) leading the way."
According to the Harvard Law School Forum on Corporate Governance and Financial Regulation, "These types of agreements have achieved official acceptance as a middle ground between exclusively civil enforcement (or even no enforcement action at all) and a criminal conviction and sentence. DPAs and NPAs allow companies and prosecutors to resolve high-stakes claims of corporate misconduct - often the subject of sizable media attention - through agreements to obey the law, cooperate comprehensively with the government, adopt or enhance rigorous compliance measures, and often pay a hefty monetary penalty."
You'll Be Surprised Where the Fine Money Lands
So, how does the DOJ and how do attorneys general, and the SEC and CFTC, and the FHFA and FREC and any and all of the other alphabet soup of regulators overseeing the Lords of the Banking Underworld determine what settlement fines banks have to pay?
They negotiate them, of course, with the banks.
Before they get to any settlement amounts, the banks first negotiate their DPAs and NPAs (deferred and non-prosecution agreements) and confidentiality, if they can get it.
They always want to "neither admit nor deny" allegations, and usually get that, although the SEC recently changed its longstanding settlement policy and now requires "admissions of misconduct in cases where heightened accountability and acceptance of responsibility by a defendant are appropriate and in the public interest." The first settlements under the new policy just came in actions against Philip A. Falcone and his firm, Harbinger Capital Partners, and JPMorgan Chase & Co.
At the same time the banks are negotiating how much they will pay, they are negotiating who they will pay what to, whether they will pay in cash, make restitution in some other way, or get credit for costs and systems to be put in place to help the harmed or not commit the same violations again.
It's important to negotiate who gets paid. The banks don't like paying the federal government. Why? Because federal law prohibits deducting fines and other penalties paid to the government, but allows write-offs for non-federal entities.
To be sure, the federal government wants to extract its pound of flesh. Why? Because monies paid (wired directly) to the Department of Treasury help reduce the deficit. Some people call that government extortion, and it may be, but the banks wouldn't have to pay "get out of jail" money if they weren't guilty of violations and crimes in the first place.
State attorneys general get money for their state, which is passed through the Treasury, which puts it in the state's "fund."
The Securities and Exchange Commission extracts large fines too. Before the passage of the Sarbanes-Oxley Act in 2002, the SEC usually sent civil monetary penalties to the Treasury. Now, a provision in Sarbanes-Oxley known as "Fair Funds" lets the SEC add civil penalties to ill-gotten gains, put them in a Fair Fund, and return all of the money to victims. If there are no ill-gotten gains disgorged, the penalty goes to the Treasury.
In some cases the SEC has added $1 in disgorgement to civil penalties so that fines paid by companies can be used to compensate investors.
In any event, the regulatory agencies don't get to keep any of the civil monetary penalties they extract from banks, which would make sense if they could use fines to offset federal budget outlays that fund the agencies.
For example, the CFTC, which has expanded responsibilities because of Dodd-Frank financial reform legislation and has to step up enforcement actions (besides Libor settlements, the agency brought civil charges against brokerage MF Global and is examining whether banks owning commodity warehouses manipulated metals prices) still has to grovel to get adequately funded to do its job.
The agency is facing a huge budget crunch this year after the Republican-dominated House of Representatives last year approved maintaining the current CFTC funding level of $195m, which is less than the Obama administration's 2014 fiscal year budget request of $315m.
But it is difficult to change the budgeting process for the CFTC, partly because lawmakers on the agriculture committees in Congress rely on their jurisdiction over the CFTC to help raise money for their political campaigns. Which is how it goes with regard to funding all the regulatory agencies.
So, where does the money we read about the banks paying actually go? Here are some examples and explanations about what's behind the curtain.
JPMorgan Chase just agreed to the largest single settlement fine ever, $13 billion for its part in causing the mortgage-related financial meltdown. Here's the breakdown of payments:
Bank Settlements 2014The headline number was $13 billion. But, $4 billion of that had already been paid to Fannie and Freddie, who passed that along to the Treasury in the form of dividends because the Treasury Department essentially owns Fannie and Freddie. Another $4 billion was in the form of "credits" that the bank gets for setting up facilities to aid aggrieved homeowners, credits that aren't cash outlays and that will ultimately help the bank's bottom line as they force borrowers to continue to be clients and customers of the bank to get any "restitution" or ancillary benefits.
Of the $13 billion, JPMorgan is going to take a $7 billion write-off. While the IRS has the authority to challenge that write-off, the IRS has rarely ever challenged a big bank on the write-offs they take against settlements. Maybe that has something to do with the negotiations that the public never hears about.
Prior to the JPM $13 billion settlement headline, there was the $25 billion settlement a joint state-federal group announced with the nation's five largest mortgage services: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup, Inc., and Ally Financial, Inc. (formerly GMAC). The five banks service nearly 60% of the nation's mortgages.
"This agreement delivers real help to homeowners affected by the banks' dual tracking and other improper mortgage- and foreclosure-related processes," said Colorado Attorney General Suthers. "As a result of this settlement, the banks will end a series of problematic processes that put homeowners at a severe disadvantage during the foreclosure process. This settlement will not solve every problem with the housing market, but it goes a long way to helping homeowners in distress now and leveling the playing field for consumers."
Under the agreement, the five servicers agreed to the $25 billion penalty under a joint state-national settlement structure:
1. Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction.
2. Servicers commit $3 billion to an underwater mortgage refinancing program.
3. Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
4. Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
5. An independent monitor will ensure mortgage servicer compliance.
6. States can pursue civil claims outside of the agreement including securitization claims as well as criminal cases.
7. Borrowers and investors can pursue individual, institutional, or class action cases regardless of agreement.
Sounds like a good deal for the poor folks who were illegally foreclosed and thrown out of their homes, for the folks who lost everything and had their credit destroyed by manipulating banks, right?
No really. It's a good deal for the banks because they get to write off all the "credits" they get for setting up these homeowner relief facilities. And they get to write off all the principal amounts they "forgive."
For homeowners who get relief starting in 2014, it's not such a good deal.
Why? Because the Mortgage Forgiveness Debt Relief Act expired Dec. 31, 2013.
The Act prevented homeowners who go through a short sale or foreclosure from being taxed on the amount of their mortgage debt that had been forgiven. (Normally, debt that has been forgiven by a lender counts as taxable income.) A short sale transaction would have had to close before Dec. 31, 2013 in order to take advantage of the Act's tax exemption.
By way of example, if a homeowner makes $40,000 in 2014 and by the grace of one of the big banks gets their mortgage principal reduced by $100,000 in the same year, their taxable income for 2014 would be on $140,000. That's some deal the government cut to teach the banks a lesson (who write off the $100,000) and the homeowners who suffered at their greedy hands.
Of course, the always-considerate IRS offers a tax-saving alternative with their "Insolvency Clause," which is a way to avoid paying income tax on forgiven debt.
The clause states that a seller is exempt from paying tax on any forgiven debt to the extent that they are insolvent. In other words, if the seller's debts and liabilities exceed their assets by more than the amount of debt forgiven, they do not have to pay taxes on the forgiven debt.
Even when the big banks have to pay, they often don't have to pay. That's because they have insurance.
Traditional D&O (directors and officers) insurance policies typically cover losses based on damages, judgments, settlements, and cover defense costs. In the past, D&O policies expressly excluded from "covered loss" things like punitive damages, exemplary and multiplied damages.
But that's changed. Many insurance policies now allow coverage for such damages, while some allow coverage only for vicarious liability for such damages, and still others preclude coverage entirely.
Recently however, the FDIC announced that it will impose a fine on any financial institution that has purchased D&O or other insurance to cover civil money penalties. And as far as state governments and the question of insurability in regard to coverage for punitive, exemplary, and multiplied damages, responses have been anything but uniform.
Besides the question of legal insurability, there's the question of market willingness to insure.
Which apparently isn't much of a question after all. From a covered loss perspective, D&O insurance has continued to expand, even in the face of mounting financial exposures.
A recent report on D&O insurance I came across states, "This split among the states on insurability has resulted in the inclusion of 'most favorable jurisdiction' language on this issue in most D&O policies, providing that the policy's coverage will be interpreted by that state's law that most favors the insurability of such damages and that has some connection to the claim. For many insureds, this uncertainty over coverage for punitive, exemplary and multiplied damages, particularly when domiciled or operating in a state that prohibits insurance for such damages, has made the purchase of insurance 'off shore' - and therefore potentially outside the reach or jurisdiction of the U.S. court system - more attractive."
It doesn't seem to matter: Whether settlements are confidential or seemingly public, however settlements are structured, or whomever pays, the banks have been getting away with murder - well, almost.
There are a few voices in Congress trying to be heard above the banks' never-ending ringing cash registers. Three bills have been floated to make settlements fairer and more transparent. None have gone anywhere.
In the first week of January 2014, Senators Elizabeth Warren (D-MA) and Tom Coburn (R-OK) introduced the Truth In Settlements Act. Before that in November 2013 Senator Jack Reed (D-RI) and Senator Charles Grassley (R-IA) introduced the Government Settlement Transparency and Reform Act. And a few weeks before that bill was introduced, over at the House of Representatives, Rep. Peter Welch of Vermont and Luis Gutierrez of Illinois introduced the Stop Deducting Damages Act. None of the bills have gone anywhere.
That's how the settlements games are played.
Next week I'm going to have some heavy-hitters weigh in on what should be done about this, why things aren't being done, and whether anything should be done, or are the banks just getting a bad rap. That conversation will be interesting, I can guarantee you that.
http://moneymorning.com/2014/02/20/shocking-deals-behind-banksters-fines/
The Shocking Deals Behind Banksters' Fines
By SHAH GILANI, Capital Wave Strategist
Money Morning February 20, 2014
Editor's Note: Yesterday Shah showed you the easiest way to make a fortune in the markets, as long as you're willing to break one of Wall Street's golden rules. Today, here's another reason Shah's so willing...
Headline news about banks settling charges for violating rules, regulations, and laws - and announcements of the fines they agree to pay - appears every day...
Rarely - if ever - do they reveal how much money is really being paid or where it's going...
They also seldom explain what kinds of settlements are reached...
Or how banks negotiate what they'll actually pay and to whom... or how they negotiate tax deductibility of fines... or how they get "credits" for fines they never pay... or how insurance covers some of it...
This is not one of those stories... this is about what really happens behind the banksters' doors.
The details are shocking...
These Massive Penalties Are Quieted to Protect "Us"
First of all, some settlements never see the light of day. They can be deemed "confidential" by regulators settling with a miscreant bank.
Why are some settlements confidential? Because bank lawyers argue their clients are exposed to "reputational risk" and details of their "alleged" wrongdoing, which they typically "neither admit nor deny," could impact the health of the bank. Of course, that could create "systemic risk," they argue, due to the damage to the public's perception of trust in their banking institutions.
The FDIC, the Federal Deposit Insurance Corporation, is one agency that thinks keeping settlements confidential will keep folks from withdrawing money from law-breaking banks. They believe it protects the agency from having to bail out remaining depositors if those banks eventually fail.
Last year, for example, the FDIC, ignoring the Federal Deposit Insurance Corp. Improvement Act of 1991 that mandates settlements be made public, fined Deutsche Bank $54 million for packaging and selling bad mortgage-backed securities to a failed bank, but no one heard about it.
According to E. Scott Reckard, who reported on the confidential settlement for the Los Angeles Times, "The deal might have made big headlines, given that the bad loans contributed to the largest payout in FDIC history, $13 billion. But the government cut a deal with the bank's lawyers to keep it quiet: a 'no press release' clause that required the FDIC never to mention the deal 'except in response to a specific inquiry.'"
Also last year, according to the Financial Times, Wells Fargo "quietly settled" with the Federal Housing Finance Agency "for allegedly misleading disclosures on mortgage securities" it sold to Fannie Mae and Freddie Mac. The FT went on to say, "unlike deals with UBS and JPMorgan, Wells' settlement, which is believed to be worth less than $1 billion, is governed by a confidentiality agreement."
The Real Reason No One Goes to Jail
Of course, whether their settlements are confidential or not, too-big-to-fail banks have only faced civil charges, for which they have to pay fines. There have been no criminal prosecutions of any banks or banksters. That's because of the doctrine: too-big-to-fail and too-big-to-jail.
None of the agencies that bring civil actions against the big banks can pursue them criminally. If a bank's actions are so egregious that they warrant a criminal investigation, the agency passes along their files to the Department of Justice.
But, the DOJ hasn't pursued any criminal action against any bank or bankster.
Why? Because as Lanny Breuer, who was chief of the Criminal Division of the DOJ from April 2009 to March 2013, explained in a 2012 speech to the New York City Bar Association, "To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects."
Lanny Breuer left the DOJ last year to return, for a reported $4 million a year, to his old white-collar criminal defense firm Covington & Burling, who represents Morgan Stanley, Bank of America, and others. Attorney General Eric Holder is also a Covington alumni.
Besides not being pursued criminally, when banks and banksters are caught breaking laws they are slapped on the wrist and gifted with Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs). These consistently handed out agreements, in the 20 years since their emergence as an alternative to indictments, are, in the words of the Harvard Law School, "a mainstay of the U.S. corporate enforcement regime, with the U.S. Department of Justice (DOJ) leading the way."
According to the Harvard Law School Forum on Corporate Governance and Financial Regulation, "These types of agreements have achieved official acceptance as a middle ground between exclusively civil enforcement (or even no enforcement action at all) and a criminal conviction and sentence. DPAs and NPAs allow companies and prosecutors to resolve high-stakes claims of corporate misconduct - often the subject of sizable media attention - through agreements to obey the law, cooperate comprehensively with the government, adopt or enhance rigorous compliance measures, and often pay a hefty monetary penalty."
You'll Be Surprised Where the Fine Money Lands
So, how does the DOJ and how do attorneys general, and the SEC and CFTC, and the FHFA and FREC and any and all of the other alphabet soup of regulators overseeing the Lords of the Banking Underworld determine what settlement fines banks have to pay?
They negotiate them, of course, with the banks.
Before they get to any settlement amounts, the banks first negotiate their DPAs and NPAs (deferred and non-prosecution agreements) and confidentiality, if they can get it.
They always want to "neither admit nor deny" allegations, and usually get that, although the SEC recently changed its longstanding settlement policy and now requires "admissions of misconduct in cases where heightened accountability and acceptance of responsibility by a defendant are appropriate and in the public interest." The first settlements under the new policy just came in actions against Philip A. Falcone and his firm, Harbinger Capital Partners, and JPMorgan Chase & Co.
At the same time the banks are negotiating how much they will pay, they are negotiating who they will pay what to, whether they will pay in cash, make restitution in some other way, or get credit for costs and systems to be put in place to help the harmed or not commit the same violations again.
It's important to negotiate who gets paid. The banks don't like paying the federal government. Why? Because federal law prohibits deducting fines and other penalties paid to the government, but allows write-offs for non-federal entities.
To be sure, the federal government wants to extract its pound of flesh. Why? Because monies paid (wired directly) to the Department of Treasury help reduce the deficit. Some people call that government extortion, and it may be, but the banks wouldn't have to pay "get out of jail" money if they weren't guilty of violations and crimes in the first place.
State attorneys general get money for their state, which is passed through the Treasury, which puts it in the state's "fund."
The Securities and Exchange Commission extracts large fines too. Before the passage of the Sarbanes-Oxley Act in 2002, the SEC usually sent civil monetary penalties to the Treasury. Now, a provision in Sarbanes-Oxley known as "Fair Funds" lets the SEC add civil penalties to ill-gotten gains, put them in a Fair Fund, and return all of the money to victims. If there are no ill-gotten gains disgorged, the penalty goes to the Treasury.
In some cases the SEC has added $1 in disgorgement to civil penalties so that fines paid by companies can be used to compensate investors.
In any event, the regulatory agencies don't get to keep any of the civil monetary penalties they extract from banks, which would make sense if they could use fines to offset federal budget outlays that fund the agencies.
For example, the CFTC, which has expanded responsibilities because of Dodd-Frank financial reform legislation and has to step up enforcement actions (besides Libor settlements, the agency brought civil charges against brokerage MF Global and is examining whether banks owning commodity warehouses manipulated metals prices) still has to grovel to get adequately funded to do its job.
The agency is facing a huge budget crunch this year after the Republican-dominated House of Representatives last year approved maintaining the current CFTC funding level of $195m, which is less than the Obama administration's 2014 fiscal year budget request of $315m.
But it is difficult to change the budgeting process for the CFTC, partly because lawmakers on the agriculture committees in Congress rely on their jurisdiction over the CFTC to help raise money for their political campaigns. Which is how it goes with regard to funding all the regulatory agencies.
So, where does the money we read about the banks paying actually go? Here are some examples and explanations about what's behind the curtain.
JPMorgan Chase just agreed to the largest single settlement fine ever, $13 billion for its part in causing the mortgage-related financial meltdown. Here's the breakdown of payments:
Bank Settlements 2014The headline number was $13 billion. But, $4 billion of that had already been paid to Fannie and Freddie, who passed that along to the Treasury in the form of dividends because the Treasury Department essentially owns Fannie and Freddie. Another $4 billion was in the form of "credits" that the bank gets for setting up facilities to aid aggrieved homeowners, credits that aren't cash outlays and that will ultimately help the bank's bottom line as they force borrowers to continue to be clients and customers of the bank to get any "restitution" or ancillary benefits.
Of the $13 billion, JPMorgan is going to take a $7 billion write-off. While the IRS has the authority to challenge that write-off, the IRS has rarely ever challenged a big bank on the write-offs they take against settlements. Maybe that has something to do with the negotiations that the public never hears about.
Prior to the JPM $13 billion settlement headline, there was the $25 billion settlement a joint state-federal group announced with the nation's five largest mortgage services: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup, Inc., and Ally Financial, Inc. (formerly GMAC). The five banks service nearly 60% of the nation's mortgages.
"This agreement delivers real help to homeowners affected by the banks' dual tracking and other improper mortgage- and foreclosure-related processes," said Colorado Attorney General Suthers. "As a result of this settlement, the banks will end a series of problematic processes that put homeowners at a severe disadvantage during the foreclosure process. This settlement will not solve every problem with the housing market, but it goes a long way to helping homeowners in distress now and leveling the playing field for consumers."
Under the agreement, the five servicers agreed to the $25 billion penalty under a joint state-national settlement structure:
1. Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction.
2. Servicers commit $3 billion to an underwater mortgage refinancing program.
3. Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
4. Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
5. An independent monitor will ensure mortgage servicer compliance.
6. States can pursue civil claims outside of the agreement including securitization claims as well as criminal cases.
7. Borrowers and investors can pursue individual, institutional, or class action cases regardless of agreement.
Sounds like a good deal for the poor folks who were illegally foreclosed and thrown out of their homes, for the folks who lost everything and had their credit destroyed by manipulating banks, right?
No really. It's a good deal for the banks because they get to write off all the "credits" they get for setting up these homeowner relief facilities. And they get to write off all the principal amounts they "forgive."
For homeowners who get relief starting in 2014, it's not such a good deal.
Why? Because the Mortgage Forgiveness Debt Relief Act expired Dec. 31, 2013.
The Act prevented homeowners who go through a short sale or foreclosure from being taxed on the amount of their mortgage debt that had been forgiven. (Normally, debt that has been forgiven by a lender counts as taxable income.) A short sale transaction would have had to close before Dec. 31, 2013 in order to take advantage of the Act's tax exemption.
By way of example, if a homeowner makes $40,000 in 2014 and by the grace of one of the big banks gets their mortgage principal reduced by $100,000 in the same year, their taxable income for 2014 would be on $140,000. That's some deal the government cut to teach the banks a lesson (who write off the $100,000) and the homeowners who suffered at their greedy hands.
Of course, the always-considerate IRS offers a tax-saving alternative with their "Insolvency Clause," which is a way to avoid paying income tax on forgiven debt.
The clause states that a seller is exempt from paying tax on any forgiven debt to the extent that they are insolvent. In other words, if the seller's debts and liabilities exceed their assets by more than the amount of debt forgiven, they do not have to pay taxes on the forgiven debt.
Even when the big banks have to pay, they often don't have to pay. That's because they have insurance.
Traditional D&O (directors and officers) insurance policies typically cover losses based on damages, judgments, settlements, and cover defense costs. In the past, D&O policies expressly excluded from "covered loss" things like punitive damages, exemplary and multiplied damages.
But that's changed. Many insurance policies now allow coverage for such damages, while some allow coverage only for vicarious liability for such damages, and still others preclude coverage entirely.
Recently however, the FDIC announced that it will impose a fine on any financial institution that has purchased D&O or other insurance to cover civil money penalties. And as far as state governments and the question of insurability in regard to coverage for punitive, exemplary, and multiplied damages, responses have been anything but uniform.
Besides the question of legal insurability, there's the question of market willingness to insure.
Which apparently isn't much of a question after all. From a covered loss perspective, D&O insurance has continued to expand, even in the face of mounting financial exposures.
A recent report on D&O insurance I came across states, "This split among the states on insurability has resulted in the inclusion of 'most favorable jurisdiction' language on this issue in most D&O policies, providing that the policy's coverage will be interpreted by that state's law that most favors the insurability of such damages and that has some connection to the claim. For many insureds, this uncertainty over coverage for punitive, exemplary and multiplied damages, particularly when domiciled or operating in a state that prohibits insurance for such damages, has made the purchase of insurance 'off shore' - and therefore potentially outside the reach or jurisdiction of the U.S. court system - more attractive."
It doesn't seem to matter: Whether settlements are confidential or seemingly public, however settlements are structured, or whomever pays, the banks have been getting away with murder - well, almost.
There are a few voices in Congress trying to be heard above the banks' never-ending ringing cash registers. Three bills have been floated to make settlements fairer and more transparent. None have gone anywhere.
In the first week of January 2014, Senators Elizabeth Warren (D-MA) and Tom Coburn (R-OK) introduced the Truth In Settlements Act. Before that in November 2013 Senator Jack Reed (D-RI) and Senator Charles Grassley (R-IA) introduced the Government Settlement Transparency and Reform Act. And a few weeks before that bill was introduced, over at the House of Representatives, Rep. Peter Welch of Vermont and Luis Gutierrez of Illinois introduced the Stop Deducting Damages Act. None of the bills have gone anywhere.
That's how the settlements games are played.
Next week I'm going to have some heavy-hitters weigh in on what should be done about this, why things aren't being done, and whether anything should be done, or are the banks just getting a bad rap. That conversation will be interesting, I can guarantee you that.
http://moneymorning.com/2014/02/20/shocking-deals-behind-banksters-fines/
Shadow Banking Stealth Mutation: The Acronyms for the Next Financial Crisis
Feb 21, 2014 - 06:15 AM GMT
By: Gordon_T_Long
According to the latest study by the Financial Stability Board (FSB) the unregulated $72 Trillion Global Shadow Banking System is now larger than the global regulated banking system. How could an unregulated and opaque industry, which is larger than the entire world's GDP, operate with such little attention? Even the FSB is not a government entity and operates under the auspices of an entity with a highly checkered and mysterious background - The Bank of International Settlements in Basel Switzerland.
The FSB has had only two Chairmen since its inception who were able to see the full extent of the operations of this global industry: Mario Draghi who is now head of the European Central Bank (ECB) and Mark Carney who is now the Governor of the Bank of England (BOE). Ben Bernanke's wrote academically on the subject before being quickly catapulted to the Chairmanship of the Federal Reserve. Sounds like these are important qualifications if you are to run the world's financial apparatus.
The Acronyms for the Next Financial Crisis
A tipping point for the 2008 Financial Crisis was short term lending problems associated with Asset Backed Commercial Paper (ABCP) liquidity which was used to fund the Shadow Banks Structures Investment Vehicles (SIVs). It was this short term funding that was used to buy what is after the fact now euphemistically referred to as 'toxic waste' (CDOs et al).
Dodd-Frank has done absolutely nothing to change any of this despite the CCP (Central Counter Party) exchange, if it is ever implemented. What has changed is that the Shadow Banking System by necessity, and with policy makers turning a blind eyed, morphed into something far more dangerous.
Same Game, New Acronyms
The New Shadow Banking Structure
Conclusions
The Shadow Banking System is almost completely unregulated.
How can a $72 Trillion banking function which is larger than the highly regulated Banking System go unregulated?
How can a $700 Trillion OTC, Off-Balance Sheet, Off-Shore, Unregulated SWAPS market go unregulated?
The global GDP is smaller than the Shadow Banking System and less than 10% of the SWAPS market.
Until we can answer these questions we should conclude that risk is mispriced and price discovery for global financial markets is obscured!
Request your FREE TWO MONTH TRIAL subscription of the Market Analytics and Technical Analysis (MATA) Report. No Obligations. No Credit Card.
Gordon T Long Publisher & Editor general@GordonTLong.com
http://www.marketoracle.co.uk/Article44515.html
Which Corporations Control the World?
By Global Research News
Global Research, February 21, 2014
internationalbusinessguide.org
by Hannah Williams
A surprisingly small number of corporations control massive global market shares.
Banks and Finance, Media, Big Oil, The Global Food Conglomerates,
The World’s largest banks hold a total of $25.1 trillion in assets
Source: InternationalBusinessGuide.org
A surprisingly small number of corporations control massive global market shares. How many of the brands below do you use?
It’s a Small World at the Top:
Banking
Largest banks hold a total of $25.1 trillion:[1]
1.) ICBC, China, $2.95 trillion in assets, over 18,000 outlets, 108 branches globally
2.) HSBC holdings, UK, $2.68 trillion in assets, 6,600 offices in 80 countries, 55 million customers
3.) Deutsche Bank, Germany, $2.6 trillion in assets, 2,963 branches, 70 countries, 46 million customers
4.) Credit Agricole Group, France, $2.58 trillion in assets, 60 countries, over 21 million clients
5.) BNP Paribas, France, $2.51 trillion in assets
6.) Mitsubishi UFJ Financial Group, Japan, $2.49 trillion in assets
7.) Barclays PLC, United Kingdom, $2.41 trillion in assets
8.) JPMorgan Chase & Co., U.S., $2.39 trillion in assets
9.) China Construction Bank Corp., China, $2.36 trillion in assets
10.) Japan Post Bank, Japan, $2.12 trillion in assets
Enough to fund the federal U.S. government for over 7 years.[2]
Or roughly $3500 per person on earth.
Media
1.) Comcast Corporation: $62.5 billion revenue, $6 billion in profit
Owns:
MSNBC
NBC Universal
MLB Network
E! Entertainment
Golf Channel
Xfinity
AT&T Broadband
2.) The Walt Disney Company:$42 billion revenue, $5.5 billion in profit
Owns:
ABC
ESPN
Pixar
Marvel Comics
Touchstone Pictures
Lucasfilm
Walt Disney Records
Hollywood Records
Disney Music Publishing
The Baby Einstein Company
50% of A&E Networks
3.)Time Warner Company
Owns:
HBO
Time (Southern Living, Sports Illustrated, Time, Golf Magazine, Health, Entertainment Weekly)
IPC Media
Grupo Editorial Expansion
Turner Broadcasting (TNT, TruTV, TBS, TCM, NBC, Cartoon Network, March Madness, CNN)
Warner Bros. Picture Group
4.) Viacom $15 billion revenue and $2 billion profit
Owns:
Paramount Pictures
MTV
VH1
BET
Nickelodeon
Spike
Comedy Central
5.) News Corporation, $34 billion revenue, $1.1 billion profit
Owns:
Fox
Wall Street Journal
Times of London
Barron’s
Harper Collins
Food and Beverage Companies
1.) PepsiCo Inc
Makes:
Gatorade
Propel
Pepsi
Aquafina
Sobe
Mountain Dew
Sierra Mist
Cheetos
Doritos
Frito Lay
Funyun’s
Lay’s
Ruffles
Tostitos
Quaker
Amp Energy
Lipton
Rockstar Energy
Seattle’s Best Coffee
Starbucks: Doubleshot, Frappucino, Iced Coffee
2.) Tyson Foods Inc–World’s largest Chicken Processor
Supplies:
KFC
Taco Bell
McDonalds
Burger King
Wendy’s
Wal-Mart
Kroger
IGA
Beef O’Grady’s
3.) Nestle (U.S. And Canada)
74 brands of water
38 brands of ice cream:
including Haagen-Dazs
Dreyer’s
And Nestle Drumstick
Frozen food:
Stouffers
Lean Cuisine
Hot Pockets
Tombstone Pizza
DiGiorno Pizza
California Pizza Kitchen
Candy:
Wonka brands,
Baby Ruth
Chips Ahoy!
Goobers
Icebreakers
Pet Food:
Alpo
Beneful
Fancy Feast
Friskies
Gourmet
Mighty Dog
ONE
Pro Plan
Purina
Tidy Cats
Cosmetics:
30% share in L’Oreal, Garnier, Maybelline, and Lancome, and The Body Shop Stores
4.) JBS USA–Subsidiary of the world’s largest beef processor
Beef Brands:
Swift
G.F. Swift 1855 Brand Premium Beef
Aspen Ridge Natural Beef
Swift Black Angus
Cedar River Farms
5 Star Beef
Chef’s Exclusive
Showcase Premium Ground Beef
Chicken Brands:
Pilgrim’s
Pierce Chicken
Wing Dings
Wing Zings
Speed Grill
Country Pride
To-Ricos
Pork Brands:
1855 Premium Pork
Swift Premium Dry Rubbed Pork
Swift Premium Natural Guaranteed Tender Pork
Swift Premium Natural Pork
Swift La Herencia Natural Pork
5.) Anheuser-Busch InBev
Over 200 beer brands made in 30 countries
Sold in 130 countries
Including:
St. Pauli Girl
Stella Artois
Spaten
Rolling Rock
Michelob
Hoegaarden
Busch
Budweiser
Bud Light
Beck’s
Bass
Oil
The top five oil producing companies produce almost twice what the US’s refined petroleum product consumption per day is.
1.) Saudi Aramco
Saudi Arabia
12.5 million barrels a day
$1 billion plus in DAILY revenue
2.) Gazprom
Russia
9.7 million barrels per day
$40 billion a year profits
3.) National Iranian Oil Co.
Iran
6.4 million barrels per day
State owned
4.) ExxonMobil
America
5.3 million barrels per day
$40 billion in profit
5.) PetroChina
China
4.4 million barrels per day
$21.93 billion in profits
Corps-Control-World
Citations:
Bankrate, 10 largest banks of the world
WIkipedia, 2013 United States Federal budget
Wikipedia, ICBC
HSBC
Deutsche Bank
Deutsche Bank at a Glance
Assets Owned by Comcast
Assets Owned by Disney
Assets owned by Time Warner
Assets Owned by News Corp
Food processing Top 100
Tyson Acquisitions
Nestle Brands
JBS US Beef Brands
JBS US Pork Brands
JBS US Chicken brands
InBEv Brands
Forbes, top oil producers
US Oil Consumption
What Corporations Control Almost Everything You Buy Infographic
http://www.globalresearch.ca/which-corporations-control-the-world/5369928
Obama Administration Embeds "Government Researchers" To Monitor Media Organizations
Tyler Durden on 02/20/2014 20:59 -0500
Submitted by Mike Krieger of Liberty Blitzkrieg blog,
Last week, I highlighted the fact that the latest Press Freedom Index showcased a 13 point plunge in America’s press freedom to an embarrassing #46 position in the global ranking. If the authoritarians in the Obama Administration have their way, this country is set to fall much further in next year’s index.
Incredibly, the Federal Communications Commission (FCC) is set to roll out something called the Critical Information Needs study, which will embed government “researchers” into media organizations around the nation to make sure they are doing their job properly.
No this isn’t “conspiracy theory.” It is so real, and represents such a threat to the First Amendment, that a current FCC commissioner, Ajit Pai, recently wrote an Op-Ed in the Wall Street Journal, warning Americans of this scheme. He writes:
News organizations often disagree about what Americans need to know. MSNBC, for example, apparently believes that traffic in Fort Lee, N.J., is the crisis of our time. Fox News, on the other hand, chooses to cover the September 2012 attacks on the U.S. diplomatic compound in Benghazi more heavily than other networks. The American people, for their part, disagree about what they want to watch.
But everyone should agree on this: The government has no place pressuring media organizations into covering certain stories.
Unfortunately, the Federal Communications Commission, where I am a commissioner, does not agree. Last May the FCC proposed an initiative to thrust the federal government into newsrooms across the country. With its “Multi-Market Study of Critical Information Needs,” or CIN, the agency plans to send researchers to grill reporters, editors and station owners about how they decide which stories to run. A field test in Columbia, S.C., is scheduled to begin this spring.
The purpose of the CIN, according to the FCC, is to ferret out information from television and radio broadcasters about “the process by which stories are selected” and how often stations cover “critical information needs,” along with “perceived station bias” and “perceived responsiveness to underserved populations.”
I have no idea what country I am living in at this point.
How does the FCC plan to dig up all that information? First, the agency selected eight categories of “critical information” such as the “environment” and “economic opportunities,” that it believes local newscasters should cover. It plans to ask station managers, news directors, journalists, television anchors and on-air reporters to tell the government about their “news philosophy” and how the station ensures that the community gets critical information.
Participation in the Critical Information Needs study is voluntary—in theory. Unlike the opinion surveys that Americans see on a daily basis and either answer or not, as they wish, the FCC’s queries may be hard for the broadcasters to ignore. They would be out of business without an FCC license, which must be renewed every eight years.
Should all stations follow MSNBC’s example and cut away from a discussion with a former congresswoman about the National Security Agency’s collection of phone records to offer live coverage of Justin Bieber‘s bond hearing? As a consumer of news, I have an opinion. But my opinion shouldn’t matter more than anyone else’s merely because I happen to work at the FCC.
I am simply speechless.
Read the full Op-Ed here.
http://www.zerohedge.com/news/2014-02-20/obama-administration-embeds-government-researchers-monitor-media-organizations
The "Ukraine Situation" Explained In One Map
Submitted by Tyler Durden
02/20/2014 09:39 -0500
Sadly, everything you need to know about the crisis in Ukraine in one worrisome map which summarizes all the relevant "red lines."
Given this - is there any doubt this will not end with peaceful resolution.
As Martin Armstrong warned this morning:
BOTH the USA and EU will now fund the rebels as Russia will fund Yanukovych. At the political level, Ukraine is the pawn on the chessboard. The propaganda war is East v West. However, those power plays are masking the core issue that began with the Orange Revolution – corruption. Yanukovych is a dictator who will NEVER leave office. It is simple as that. There will be no REAL elections again in Ukraine. This is starting to spiral down into a confrontation that the entire world cannot ignore.
h/t JS
http://www.zerohedge.com/news/2014-02-20/ukraine-situation-explained-one-map
11 States Fight Back Against NSA Spying
February 11, 2014
by WashingtonsBlog
Can American States Rein In An Out-Of-Control Federal Spy Agency?
The American people aren’t falling for NSA’s propaganda. They want the rogue agency reined in.
But Obama refuses to rein in the NSA, Dianne Feinstein says that Congress “doesn’t have the votes” to do anything about mass surveillance, and at least some judges are supporting the NSA’s spying (and it’s not clear what the Supreme Court will do).
But states are trying to fight back …
Legislation has been introduced in 10 states (and counting) proposing one or both of the following:
(1) Cutting off water, electricity or other resources to NSA facilities within the state
(2) Prohibiting the state’s cooperation with the NSA; for example, sharing data about its citizens, or university research support for NSA
For information about the state legislation:
Arizona
California
Indiana
Kansas
Maryland
Mississippi
Missouri
New Hampshire
Oklahoma
Tennessee
Washington
And see this.
While this may sound to some like a Republican approach, Democrats who support the NSA will be vulnerable next election, and progressives need to re-claim freedom from mass surveillance as a core issue:
This Is Why The Gold & Silver Shorts Are So Terrified Today
Feb. 14, 2014
Kingworldnews.com
The man who has been one of the most accurate in the world at calling movements in the price of gold spoke with King World News about the ongoing war in the gold market and why the shorts are on the run today. William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, also spoke with KWN about physical demand for gold and why the price is migrating higher right now.
Eric King: “Astonishingly, sentiment in the gold market remains more bearish today than it was at the bottom of the 2008/2009 collapse -- your thoughts on gold.”
Kaye: “The gold market is looking better. I think it’s looking better primarily because at these levels demand is just insatiable in China...
The cartel has demonstrated they will continue to manipulate the paper or electronic market for gold. That is where their power lies.
When you have a digital printing press, which the Fed and the BIS both have, and you’re backstopping massive banks that are your agent banks, like JP Morgan and Goldman Sachs, in a market where almost no one stands for delivery, such as the Comex, essentially you can abuse and manipulate virtually at will. This simply requires that they don’t mind violating rules, and these guys don’t mind. This is why they are constantly being charged with illegal behavior. They’ve admitted to a number of different counts already.
So if they want to try to take the gold market significantly lower, they can do so by showing up with a naked 400 ton short sale order. Of course no one has 400 tons of good delivery bars that they can deliver, but let’s not let that fact get in the way. There is absolutely no one in the private sector, including JP Morgan, within the net capital rules would be able to create an order like that, but that order actually hit the market in April of last year.
The main argument for that not occurring again at these levels is the off-take in China is enormous at the moment. For the suppression scheme to succeed, there has to be an ability to deliver gold that is under the control of the cartel from places like London and Switzerland, to Shanghai and Hong Kong, and to be able to do it in reasonably short order.
So my take on why we’ve seen this retreat by the cartel is that at these price levels demand for physical is simply too great. It strains their ability to meet these obligations if they try to keep the price below $1,300 any longer. So the bias I have at the moment is gold will continue migrating higher until some of these strains get removed.
In the near-term, the GOFO lease rates have gone negative and gold has stayed consistently in backwardation territory for the last several weeks and even months. So unless some of these strains get removed, gold will migrate higher to the low-to-mid $1,400s before it becomes a vicious battle again.”
© 2014 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.
IMPORTANT - KWN will be releasing interviews all day today with William Kaye, Egon von Greyerz and others.
The audio interviews with David Stockman, John Mauldin, Eric Sprott, Bill Fleckenstein, Egon von Greyerz, Dr. Paul Craig Roberts, MEP Nigel Farage, James Dines, Gerald Celente, Andrew Maguire, Art Cashin and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/2/14_This_Is_Why_The_Gold_%26_Silver_Shorts_Are_So_Terrified_Today.html
6 Financial Monsters That Have Only Gotten Bigger After Destroying the Economy
Alex Henderson
Feb. 13, 2014
Before the crash of September 2008—the worst economic downturn in the United States since the 1929 crash that marked the beginning of the Great Depression—most Americans had never heard the term "too big to fail." But that term became all too familiar when hundreds of billions of dollars were set aside to bail out the nation's largest financial institutions. And many of the mega-banks that caused the panic of 2008 have become even larger.
In November, Democratic Sen. Elizabeth Warren of Massachusetts warned that "the four biggest banks are 30% larger than they were five years ago" (JPMorgan Chase, Bank of America, Citigroup and Wells Fargo). Warren isn't the only one who is worried. Many other proponents of financial reform, from economists Dean Baker (co-founder of the Center for Economic and Policy Research), Joseph E. Stiglitz (a professor at Columbia University) and Simon Johnson to politicians like Democratic Florida Rep. Alan Grayson, have been warning Americans about the ongoing threat too-big-to-fail banks pose.
Johnson and Baker have both said one benefit of breaking up mega-banks would be decreasing their political influence, while Stiglitz has warned that mega-banks are "too big to manage and be held accountable" and that the bigger banks are allowed to become, "the greater the threat to our economies and our societies."
Apologists for the bankster bailouts and the Troubled Assets Relief Program (TARP) like to point out that most of the major recipients of bailout money paid back everything they owed. But economist Robert Reich, former secretary of labor under the Clinton administration, frequently responds that those apologists neglect to mention the long-lasting damage those banks did to the U.S. economy and all of the poverty, unemployment and home foreclosures they caused. Also, in November 2011, Bloomberg News revealed that the Federal Reserve had secretly loaned the U.S.' largest banks an estimated total of $13 billion (the loans had not been disclosed to Congress, and that information was obtained via the Freedom of Information Act).
Although Federal Reserve officials have said all of that money was repaid, critics of the Fed have said the Fed's loans were detrimental to the U.S. economy because they encouraged mega-banks to grow even larger and more reckless. Reich has warned that because those banks have grown even bigger than they were half a decade ago, future bailouts could be even more costly. According to Reich: "The danger of an even bigger cost in coming years continues to grow….In fact, now that they know for sure they'll be bailed out, Wall Street banks—and those who lend to them or invest in them—have every incentive to take even bigger risks."
Below are six too-big-to-fail banks that should have been reined in back in 2008, yet continue to pose a major threat to the U.S. economy.
1. Bank of America
Originally Bank of Italy, BofA has been around since 1904. And a company that had about 100 branches in 1926 now has more than 5,300. BofA played Russian roulette with the economy prior to the 2008 crash, robo-signing countless mortgages on expensive homes for low-income people it knew wouldn't be able to handle them. After the U.S. economy went into cardiac arrest in September 2008, BofA received $45 billion in bailout money. But instead of being reined in, the company was allowed to continue growing.
BofA presently controls a whopping 17% of all home mortgages in the U.S. (almost one in five) and at least 12% of U.S. bank deposits. BofA's total assets, according to the Comptroller of the Currency (OCC) in Washington, DC, now total $1.4 trillion. The mega-bank's exposure to derivatives now exceeds $50 trillion (in finance, a derivative is a type of financial contract whose value is derived from an underlying financial instrument). In a scathing article he wrote for Rolling Stone in 2012, journalist Matt Taibbi asserted that with BofA, "the FDIC, and by extension you and me, is now on the hook for as much as $55 trillion in potential losses."
2. Goldman Sachs
In April 2012, Bloomberg Businessweek's website posted a chart showing how much the U.S.' five largest banks—JP Morgan Chase, Bank of America, Wells Fargo, Goldman Sachs and Citigroup—had grown in terms of the country's GDP (gross domestic product). In 2006, the five of them together, according to Businessweek, comprised 43% of the country's GDP; in 2011 they comprised 56% of American GDP. Goldman Sachs, the smallest of that "big five," is a veteran of the financial world and was founded in 1869 by financier Marcus Goldman and his son-in-law Samuel Sachs. But Goldman Sachs is not only much larger than it was during the 19th century, it is much larger than it was in 2008, when it received $10 billion in bailout money.
For all of 2007, Goldman Sachs reported net revenues of $46 billion. But Goldman Sachs' commercial bank unit now oversees about $113 billion (according to the OCC), while its exposure to derivatives (which tycoon Warren Buffet famously describes as "financial weapons of mass destruction") now exceeds $44 trillion (according to Business Insider). Taibbi has accurately characterized Goldman Sachs as "a company that in a pure, free capitalist system would definitely have been bust in 2008 had it not leeched parasitically off the taxpayer."
3. JPMorgan Chase
JPMorgan Chase is a name that didn't exist prior to 2000, when J.P. Morgan & Co. (founded in 1871) merged with Chase Manhattan Bank (which had been formed in 1955, when Chase National Bank merged with the Manhattan Company, an institution that started in 1799). In 2011, JPMorgan Chase surpassed BofA as the U.S.' largest financial institution. JPMorgan Chase has been a major recipient of corporate welfare: the company received $25 billion in bailout money in October 2008, and in 2012, Bloomberg News estimated that JPMorgan Chase had been receiving government subsidies worth about $14 billion a year (a figure partially based on research by the International Monetary Fund). JPMorgan Chase now has $2.4 trillion in assets (according to its own website), which is 12% of the size of England's economy. If a behemoth of that size runs into problems, the results could be disastrous not only for the U.S., but around the world.
JPMorgan Chase was inundated with bad publicity last year. In October 2013, the mega-bank was the subject of a probe by the Commodity Futures Trading Commission (CFTC) and agreed to pay a $100 million fine for recklessly distorting prices during a series of London trades. Less than a month earlier, the Securities and Exchange Commission accused JPMorgan traders of fraudulently overvaluing investments and concealing hundreds of millions of dollars in trading losses; JPMorgan Chase agreed to pay a $200 million fine. Between probes by the SEC, the Federal Reserve, the U.K. Financial Conduct Authority and the Office of the Comptroller of the Currency, JPMorgan Chase faced $920 million in penalties in September 2013. But despite all those fines, JPMorgan Chase's board recently voted to give CEO Jamie Dimon a 74% pay raise.
4. Wells Fargo
When CoreStates Bank (previously Philadelphia National Bank) merged with First Union Bank in 1998, many CoreStates customers in and around Philadelphia (where CoreStates had its headquarters) were apprehensive about becoming part of the much larger mega-bank that resulted from the merger. It was the largest merger in commercial banking that had taken place in the U.S. up to that point, but ironically, many of those CoreStates customers—assuming they didn't take their money elsewhere—eventually became part of a much larger mega-bank than the one created in 1998. First Union merged with Wachovia Bank in 2001, and when Wachovia suffered major problems in 2008, Wells Fargo acquired it.
Wells Fargo was already gigantic during the 2008 crash, when it should have been broken up into at least 20 or 25 smaller banks as Michael Moore and others have recommended. But instead, Wells Fargo received $25 billion in bailout money and kept growing. Wachovia was a huge acquisition for Wells Fargo, and other acquisitions followed (including Merlin Securities and the Rock Creek Group in 2012). The Los Angeles Times has reported that Wells Fargo went from having $609 billion in assets before 2008 to $1.4 trillion in assets in late 2013 (its exposure to derivatives, according to Business Insider, is over $3 trillion). If Wells Fargo received $25 billion in bailout money not long before its acquisition of Wachovia, one can only imagine how much more expensive a bailout for Wells Fargo would be now.
5. Citigroup
One of the cardinal rules of free enterprise is that capitalism works best when there is a great deal of competition, but the banking field has become increasingly anti-competition. In 2011, BofA announced it would begin charging a new $5-per-month fee for using debit cards, and the outcry was so vehement the bank ended up backing down from that idea. BofA apologists argued that if consumers didn't like the fee, they could simply bank elsewhere. But as Lynn Stuart Parramore pointed out in 2011, the problem with that argument is that consumers have fewer and fewer options when it comes to banking. The more mega-banks are allowed to swallow up everything in sight and minimize the competition, the fewer options there are for consumers—and the more mega-banks can get away with abusing their customers. Parramore noted that in the 1930s, an important element of the New Deal was protecting smaller banks and making sure they could remain competitive, but that hasn't happened in the current economic crisis.
In the banking field, there has been a lot less competition and a lot more consolidation since the crash of 2008. More than 1,400 banks have disappeared in the last five years: roughly 485 of them failed, while others merged with other banks. As the number of small banks has plummeted, Citigroup has continued its expansion. The name Citigroup came about in 1998, when Citicorp merged with Travelers Group. Citigroup, like other mega-banks, ran into trouble in 2008 thanks, in part, to its heavy exposure to subprime mortgages. Citigroup ended up receiving $45 billion in bailout money. Initially, Citigroup "only" received $25 billion, but the company was in such bad shape that two months later another $20 billion was added. Instead of being reduced in size, however, Citigroup's too-big-to-fail status grew. Citigroup's total assets now exceed $1.3 trillion, and its exposure to derivatives is roughly $58 trillion.
6. Morgan Stanley
In 1999, many American politicians, both Republicans and Democrats, forgot the lessons of the Great Depression when they supported the disastrous repeal of the Glass-Steagall Act of 1933, which mandated the separation of commercial and investment banking and was designed to prevent a repeat of the crash of 1929. Glass-Steagall served the U.S. well for many years: although there some tough recessions along the way (including the early 1980s and early 1990s), none were as catastrophic or cut as deep as the meltdown of September 2008.
A Wall Street giant that came about as a direct result of Glass-Steagall was Morgan Stanley, which was founded by Henry S. Morgan (J.P. Morgan's grandson), Harold Stanley and others in 1935 during President Franklin Delano Roosevelt's first term. Thanks to Glass-Steagall, J.P. Morgan & Co. could no longer be involved in both commercial and investment banking—it had to pick one or the another—and when J.P. Morgan & Co. chose commercial banking, a new and separate company called Morgan Stanley was created for investment banking. But with the repeal of Glass-Steagall 64 years later, Morgan Stanley was no longer bound by the rules that had caused it to come into existence in the first place. Along with other Wall Street giants, Morgan Stanley was bailed out in 2008 (when it received $10 billion in TARP money). The too-big-to-fail status of Morgan Stanley (which acquired Smith Barney in 2009) has continued, and its net assets climbed to $832 billion in 2013. Morgan Stanley's exposure to derivatives is around $1.7 trillion.
In 2011, the Federal Reserve Bank of Dallas released its annual report, titled "Choosing the Road to Prosperity: Why We Must End Too Big to Fail Now." Richard W. Fisher, president of the Dallas Fed, called for a drastic downsizing of the megabanks and argued that not doing so would eventually result in more taxpayer-funded bailouts.
Fisher isn't alone in that assertion. But reforming the U.S.' dysfunctional banking system will take a lot of work. The Glass-Steagall Act needs to be reinstated and vigorously enforced with a strict separation of commercial and investment banking. Mega-banks in their present size should cease to exist, resulting in an abundance of smaller, more manageable regional and local banks—and the number of bank mergers needs to be seriously limited. But given the enormous power banking lobbyists exert on Capitol Hill, accomplishing those things will be difficult. As long as the mega-banks are allowed to continue growing, the U.S. economy will continue to be imperiled.
Alex Henderson's work has appeared in the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications.
http://www.silverbearcafe.com/private/02.14/monsters.html