My Dear Friends,
I have written to you on multiple occasions concerning the need to Get Out of the System, GOTS.
This something that now is certain to happen. It has become part of law in the West and the subject of white papers written by the Bank of England and the FDIC.
Please give some attention to the subject.
Big Banks Will Take Depositors Money In Next Crash -Ellen Brown & Greg Hunter Video
Tuesday, December 9, 2014 23:19
By Greg Hunter’s USAWatchdog.com
The G-20 met recently in Australia to make new banking rules for the next financial calamity. Financial reform advocate Ellen Brown says these new rules will allow banks to take money from depositors and pensioners globally. Brown explains, “It became rules we agreed to actually implement. There was no treaty, and Congress didn’t agree to all this. They use words so that it’s not obvious to tell what they have done, but what they did was say, basically, that we, the governments, are no longer going to be responsible for bailing out the big banks. These are about 30 international banks. So, you are going to have to save yourselves, and the way you are going to have to do it is by bailing in the money of your creditors. The largest class of creditors of any bank is the depositors.”
It gets worse, as Brown goes on to say, “Theoretically, we are protected by deposit insurance up to $250,000 in the U.S. and 100,000 euros in Europe. The FDIC fund has $46 billion, the last time I looked, to cover $4.5 trillion worth of deposits. There is also $280 trillion worth of derivatives that the five biggest banks in the U.S. are exposed to, and under the bankruptcy reform act of 2005, derivatives go first. So, they are basically exempt from these new rules. They just snatch the collateral. So, if you had a big derivatives bust that brought down JP Morgan or Bank of America, there is no way there is going to be collateral left for the FDIC or for the secured depositors. This would include state and local governments. They all put their money in these big banks. So, even though we are protected by the FDIC, the FDIC is not going to have the money. . . . This makes it legal for these big 30 banks to take our money when they become insolvent. They are too-big-to-fail. This was supposed to avoid too-big-to-fail, but what it does is institutionalizes too-big-to-fail. They are not going to go down. They are going to take our money instead.”
Part of the coming financial calamity will involve hundreds of trillions of dollars in un-backed derivatives. Brown contends, “If the derivative bubble pops, nobody knows what is going to happen, and it’s obvious it has to pop. It can’t just keep growing. Depending on who you read, some people say it is up to two quadrillion dollars. It’s virtual money, and it cannot keep going on.”
When a financial crash does happen, you can forget about getting immediate access to your money. Brown says, “The banks will say, well, we don’t have it. All the money goes into one big pool since Glass Steagall was repealed. They are allowed to gamble with that money and that’s what they do. I think maybe Bank of America is the most vulnerable because of Merrill Lynch. Everybody is concerned, and they do very risky deals and they are on the edge. I think they have over $50 trillion in derivatives and over $1 trillion in deposits. . . The Dodd-Frank Act says we, the people, are no longer going to be responsible for the big banks when they collapse. It is not clear the FDIC will even be able to borrow from the Treasury, but even if they could, who is going to pay that money back? Let’s say they borrowed $1 trillion. Who is going to pay that $1 trillion back? It will bankrupt all the small banks that had to contribute to this premium. They will say we’re raising your premium to everything you got, basically. Little banks will go out of business, and who is going to survive–the big banks. . . . What we’re going to have left is five big banks, and everybody else is going to be bankrupt.”
Join Greg Hunter as he goes One-on-One with Ellen Brown from the Web of Debt Blog.
(There is much more in the video interview.)
Jim Sinclair’s Commentary
This could easily be good market timing.
Mexico vows to sell dollars to halt peso’s slide
By E. EDUARDO CASTILLO
MEXICO CITY (AP) — Mexico is ready to intervene in currency markets to fight the peso’s fall against the dollar amid concerns over dropping oil prices and a possible increase in U.S. interest rates.
Mexico’s Exchange Commission said that as of Tuesday, the government will hold a daily auction of $200 million whenever the peso falls at least 1.5 percent from the previous day.
The idea is to provide liquidity to a currency market that has been volatile in recent weeks. Experts attribute the instability to fears that investment in Mexico could slide in coming years in the face of lower oil prices and the possible flight of dollars away from Mexican debt toward higher interest rates elsewhere.
Economists also expect the U.S. Federal Reserve to raise interest rates in 2015, after keeping them low for six years trying to stimulate the economy. If that happens, those holding Mexican debt could pull their money out of Mexico to invest in the U.S.
"That generates the mentality that it is time to begin to leaveMexico," Coutino said.
Joel Virgen, assistant director of economic research at Grupo Financiero Banamex, said that so far they have not detected a flight of dollars from the country, but the nervousness is evident in the currency market.
"This should be seen as a preventative measure," he said. "It’s like when you buy auto insurance: Basically, you buy it to not use it."
Jim Sinclair’s Commentary
All is not rosy out there.
Retailer’s Subprime Explodes, Shares Crash 40%, Junk Bonds Fall into “Price Discovery”
by Wolf Richter • December 10, 2014
When Conn’s – a retailer of furniture, home appliances, and consumer electronics with 91 stores in Texas and surrounding states – announced earnings on Tuesday, its stock crashed 29% premarket and ended the day down 41%. It has lost 73% from its peak a year ago when it still had been a hot miracle retailer that could do no wrong. And the junk bonds it issued six months ago at the very peak of the junk-bond bubble went into “price discovery.”
Turns out, it also finances in-house about 75% of what its customers buy.
And people buy at Conn’s because they can’t buy anywhere else. They’re subprime. They’re the strung-out consumers with bad credit and no cash, the modern American proletariat, the hollowed-out, hard-working middle class whose real wages have declined for years. They’ve been turned down elsewhere. Their credit cards are maxed out, have been cancelled, or are past due. And they walk into Conn’s, and the pressure is on to buy, buy, buy what they can’t afford and didn’t want and may not need. But no problem because Conn’s is going to finance it all.
Selling to these folks and charging for the privilege is one of the most irresistible money makers. It doesn’t matter if they find the same product for a lot less on Amazon because they can’t buy it there. Subprime customers are sitting ducks.
This works wonderfully. Until it’s time to collect….
President who vowed to end war, now seeks sweeping power to expand it
By Stephen Dinan – The Washington Times – Tuesday, December 9, 2014
Secretary of State John F. Kerry told Congress Tuesday that President Obama wants expansive war powers to pursue the Islamic State terrorists wherever and however he deems necessary, stunning lawmakers by requesting a war authorization that would even allow the Pentagon to commit American combat troops to the fight.
Though Mr. Obama doesn’t want combat troops, he won’t have Congress tie his hands against unforeseen directions the war could take should the Islamic State evolve, expand its fight to other countries or prove more difficult to rout, Mr. Kerry said.
“I don’t think anybody wants to get into a long-term ground operation here. But we also don’t want to hamstring the generals and the commanders in the field and the president, who’s commander in chief, from their ability to be able to make some decision they need to make,” Mr. Kerry told the Senate Committee on Foreign Relations.
Mr. Kerry was deployed to try to quell a growing furor over the administration’s approach, but his appearance didn’t appear to help, with lawmakers of both parties saying the White House appears to be trying to delay Congress from acting while doing little to step up on its own.
“The reason we’re here is a total failure of the president to lead on this issue,” said Sen. Bob Corker, the ranking Republican on the committee.
U.S. Navy Allowed to Use Persian Gulf Laser for Defense
By: Sam LaGrone
Published: December 10, 2014 11:47 AM • Updated: December 10, 2014 12:14 PM
PENTAGON — The U.S. Navy is has declared an experimental laser weapon on its Afloat Forward Staging Base (AFSB) in the Persian Gulf an operational asset and U.S. Central Command has given permission for the commander of the ship to defend itself with the weapon, the head of the Office of Naval Research (ONR) told reporters on Wednesday.
The 30 kilowatt Laser Weapon System (LaWS) was installed aboard USS Ponce this summer as part of a $40 million research and development effort from ONR and Naval Sea Systems Command (NAVSEA) to test the viability of directed energy weapons in an operational environment, said ONR Rear Adm. Matthew Klunder.
“The captain of that ship has all of the authorities necessary if there was a threat inbound to that ship to protect our sailors and Marines [and] we would defend that ship with that laser system,” Klunder said.
“It would be [used] against those [unmanned aerial vehicles], slow moving helicopters, fast patrol craft.”
Jim Sinclair’s Commentary
In truth, this is a good thing.
Leaked EU summit conclusions: Draghi left hanging?
Peter Spiegel Author alerts | Dec 10 14:36
The dance had become so routine that we at the Brussels Blog were thinking of giving it a name, the Eurozone Two-Step.
Ever since the eurozone crisis first rocked international markets nearly five years ago, European Central Bank chiefs – first Jean-Claude Trichet, then Mario Draghi – sent a very clear message to the currency union’s political leaders: we can only act if you act first.
The deal was never explicit, but both sides knew what was required. The ECB’s first sovereign bond purchase programme in May 2010 came only after eurozone leaders created a new €440bn bailout fund; its €1tn in cheap loans to eurozone banks in early 2012 only came after political leaders agreed to a new “fiscal compact” of tough budget rules.
But with the markets watching Frankfurt closely for signs Draghi is about to launch another bold move –US-style quantitative easing, purchasing sovereign bonds to halt fears the bloc is headed into a deflationary spiral – there are new indications one of the partners is no longer dancing.
Back in October at a eurozone summit, Draghi was able to get a little-noticed statement out of the assembled leaders committing them to another “Four Presidents Report”, a reference to the blueprint delivered in 2012 that set a path towards further centralisation of eurozone economic policy. The report helped kick-start the EU’s just-completed “banking union.”
Progress on that 2012 blueprint has since stalled, however, and at his last summit press conference, then-European Council president Herman Van Rompuy said the new “Four Presidents Report” would be delivered at the December EU summit, which starts next Thursday. Many in Brussels saw this as the quid for Draghi’s quo – once the leaders agreed to another blueprint for eurozone integration, Draghi would have a free hand to launch QE.
Jim Sinclair’s Commentary
This was one of the outstanding commodity houses of my youth.
Crashing Crude’s First Casualty: One-Time Commodities Giant Phibro Liquidating
Tyler Durden on 12/10/2014 09:20 -0500
While we were expecting that one-time "god of crude oil trading" would have a poor year as a result of his consistent bullishness on the crude space, we were quite astounded to learn, as Bloomberg first reported yesterday, that Andy Hall – the man whose name was for a decade legendary in the commodity space -would call it a day. And yet that pales in comparison to the WSJ report overnight than Phibro itself, Andy Hall’s 113 year old employer currently owned by Occidental Petroleum after its sale by Citigroup, would liquidate in the US after it failed to buy a buyer, marking the end of an era.
What is paradoxical, and as we reported yesterday, Hall’s hedge fund Astenbeck, has not done badly in 2014. In fact, it was up another 1.2% in November and was up 7.2% year to date despite a roaring bear market in commodities.
Alas, that is cold comfort for Phibro. As the WSJ reports, "the 113-year-old company, founded in Germany by two scrap-metal dealers, is winding down its U.S. operations after it failed to find a buyer, according to a person familiar with the situation. The sale process for units in London and Singapore continues, the person said. Phibro specialized in physical trading of oil and other raw materials, seeking to profit by moving actual barrels and acting as an intermediary between producers and consumers. The pool of potential buyers for these kinds of operations has dwindled in recent years amid a regulatory crackdown on Wall Street banks’ involvement in these markets."
Gold holds close to 7-week high on safe-haven demand
Reuters | Dec 10, 2014, 02.07PM IST
SINGAPORE: Gold rose for a third session in a row to trade close to a seven-week peak on Wednesday as weakness in the dollar and global equities prompted investors to seek safety in the precious metal.
The dollar index nursed hefty losses after a brutal shakeout of bullish positions, with investors finding excuses to take profits as the year-end looms.
Global equities took a hit from political turmoil in Greece and after China’s market posted its worst day in five years.
"The best chance for gold to go higher would be for the financial market to become unnerved over equity declines in China, fresh sovereign risk worries in the euro zone and currency market volatility," said HSBC analyst James Steel.
"There may be some additional short covering left in the market, especially if Asian equities wobble further. Further gains will begin to crimp price-sensitive Asian demand and could threaten one of the planks of the recent rally," he said.
Spot gold rose 0.5 per cent to $1,236.10 an ounce by 0718 GMT. The metal jumped to $1,238.70 in the previous session, its highest since Oct. 23, before closing up 2 per cent.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.37 per cent to 721.81 tonnes on Tuesday, another factor that could boost prices.
Jim Sinclair’s Commentary
Do we intend war with Russia and China at the same time?
China tells US to “speak and act cautiously” on maritime dispute
December 9, 2014, 12:13 pm
China told the United States on Tuesday to stay out of disputes over the South China Sea and denounced a US State Department report on the disputed waters.
“The document ignores basic facts and international legal principles,” said China’s Foreign Ministry spokesperson Hong Lei at a daily press briefing in Beijing.
He was reacting to a US State Department document, “Limits in the Seas — China: Maritime Claims in the South China Sea” issued Friday.
“The United States has violated its commitment of not holding position and not taking sides in the South China Sea issue. Such a move is inconducive to the resolution of the South China Sea disputes and the peace and stability of the South China Sea,” Hong said.
China claims about 90 per cent of the South China Sea.
The State Department report says China’s claims were both unclear and inconsistent.
China’s sovereignty and rights in the South China Sea have been upheld by successive Chinese governments, Hong said.
China had always upheld resolving the issue based on direct talks with the countries involved “on the basis of respecting historical facts and international law”, the Chinese spokesperson said in Beijing.
Why Is The US Treasury Quietly Ordering "Survival Kits" For US Bankers?
Submitted by Tyler Durden on 12/10/2014 – 15:32
The Department of Treasury is spending $200,000 on survival kits for all of its employees who oversee the federal banking system, according to a new solicitation. As FreeBeacon reports,survival kits will be delivered to every major bank in the United Statesand includes a solar blanket, food bar, water-purification tablets, and dust mask (among other things). The question, obviously, is just what do they know that the rest of us don’t?