Archive for November 9th, 2012
Yes, I know that’s a provocative statement. However, I must point out that at one point in history the phrase, ‘The Fall Of Rome’ was considered just as melodramatic. The thing is, I’m going to defend the title of my post with the following very thorough analysis. Long-time readers of FedUpUSA aren’t strangers to the concept that our financial system and therefore, our economy, is riddled with devastating problems, not the least of which are massive fraud and exponential leverage. What the following presentation will clarify is precisely how damaged the system truly is. Some people have equated our economy and financial system to a house of cards. Well, after watching these videos, a house of cards will look like a steel cage in comparison to our financial system.
The following seminar was conducted by Ms. Ann Barnhardt. Because she gives little to no background on herself in the videos, I will provide a little for you. Ann Barnhardt is a former commodities futures broker/trader. For years she operated her own company, specializing in cattle. This was up until the collapse of MFGlobal destroyed many of her customers. It was after this that she shut down her firm because she knew then that there was no way that she could guarantee her customers’ safety in the market. Not only did she shut down her firm, she has now refused to pay federal taxes until or unless our government sees fit to prosecute the frauds that have been committed against thousands upon thousands of people who were victims of the organized crime racket that we call our financial markets. At this point in time, the IRS has seized her bank accounts. What is important to understand is that Ms. Barnhardt worked for years within our financial structure; it was her business. It was also her business to fairly represent and protect her clients, many of whom used this market to offset or hedge the intrinsic risk of cattle ranching and farming. These were not ‘evil speculators;’ they were people trying to make a living in a profession exposed to uncontrollable risk like weather and disease. Without the ability to offset these risks, it only takes one bad storm, or one outbreak of an illness amongst their livestock to wipe out a lifetime of work. Little did they know that their very participation in our financial markets posed a much bigger risk than any drought or Hurricane Sandy. You can read Ms. Barnhardt’s blog here if you’d like to learn more about her.
If you take the time to watch all 8 parts of this presentation, I guarantee that you will never be mislead by the the media, our politicians or the banks ever again. You will be more knowledgeable and know more truth than 90% of the people on this planet. Yes, this presentation is that profound, and that is not hyperbole. It should be mandatory viewing for every person in existence. In effect, the following presentation is the most thorough summary and a coalescence of nearly everything FedUpUSA has been trying to educate the public about since 2008. The most important thing is that once you’ve seen this, you can’t UN-see it and you will CEASE TO BE A VICTIM to the greatest fraud ever perpetrated on mankind.
The Workbook referenced in the videos may be downloaded here.
Part One Topics:
Systemic Counterparty Risk
Money is a Fungible Proxy for Your Very Humanity
All Currencies are Fiat
The Gold Standard is Not Necessary
Part Two Topics:
The Gold Standard is Not Necessary Continued
WE Are the Gold
The Morality and Economically Essential Nature of Interest
The Real Problem in Banking System: Unbacked Unsecured Lending
Bank Balance Sheet Exercise
Part Three Topics:
Sample Bank Balance Sheet Continued
The Lie of FDIC Deposit Insurance
Part Four Topics:
One Dollar of Capital Banking Paradigm
Denninger Axiom & Chart — Debt and GDP Change since 1980
The Debt Cycle — A Snake Eating Its Tail
Intelligent People Must Reassert Themselves as the Leaders of Society
The Rule of Law and Justice Must Be Reasserted
Part Five Topics:
Wealth Transfer: European Context
Wealth Transfer: U.S. Context
The Bribing Set-up of the Underclass by the Regime in Preparation for Mass Slaughter
Credit Default Swaps
Part Six Topics:
Credit Default Swaps Continued
Repos and Reverse Repos
Why are These Exotic Products Being Traded So Widely?
Review of 90 Day T-Bill Rates 2007-2012
Part Seven Topics:
WHO is doing these exotic and risky derivatives?
Review of top banks’ assets versus derivatives exposure
High Frequency Trading Scope & Solution
U.S. Government Unfunded Liabilities
The destructive nature of non-catastrophic insurance
Lies from Politicians
Part Eight Topics:
More Lies From Lying Politicians
The Impossibility of Financial Planning Products and “Returns”
Why Inflating Debt Away is Impossible
The New Financial Objective: Holding Wealth Together and Minimizing LOSSES
There is Nowhere to Run
The Need to Position Into Physical Commodities
Quo Vadis? Where Are You Going?
A word about free speech: Ms. Barnardt is a religious person. She makes a number of references to her beliefs in these videos. In no way, shape or form is FedUpUSA making any judgments on her religious perspective. We would only ask that if these views are not something that you share, that you not allow your own (valid) perspective to take away from her excellent and thorough analysis on our financial system and economy. Free speech is the very foundation upon which our nation was built. FedUpUSA asks that everyone respect others’ right to free speech.
U.K. prosecutors are poised to arrest former traders and rate setters at UBS AG (UBSN),Royal Bank of Scotland Group Plc (RBS) and Barclays Plc within a month for questioning over their role in the Libor scandal, a person with knowledge of the probe said.
The arrests will be made by police under the direction of prosecutors at the Serious Fraud Office within the next month, said the person, who declined to be identified because the matter isn’t public. Arrests in the U.K. are made at an early stage of the investigation, allowing police and prosecutors to question people under caution and may not lead to charges.
The SFO has 40 people working on the probe into manipulation of the London interbank bank offered rate, a benchmark for financial products valued at $360 trillion worldwide, and has involved the City of London Police, said David Green, the agency’s director.
“Significant developments” in the case are coming “in the near future,” Green said yesterday in an interview at his office in London without giving further details and declining to comment on any possible arrests.
The SFO opened the investigation in July at the request of British politicians after Barclays was fined a record 290 million pounds ($462 million) for rate manipulation. Regulators across the globe are investigating claims banks altered submissions that were used to set Libor in an effort to benefit traders, or to appear financially healthier than they were.
The arrests could be temporarily delayed because of disruptions to the SFO’s schedule caused by moving the prosecutor’s offices from Elm Street to Trafalgar Square.
Green said the agency is focusing on the most egregious attempts to manipulate Libor and other related benchmarks, with probes into firms, managers, traders and rate setters at lesser- offenders coming later.
Regulators in the U.S. and U.K. are probing how derivatives traders and bankers who submitted interest-rate data colluded to rig benchmarks to benefit their own trades, and whether banks low-balled submissions in 2008 to hide their true cost of borrowing. Criminal probes by the SFO and U.S. Department of Justice are running in parallel with civil investigations being conducted by the DOJ’s fraud division, the U.S. Commodity Futures Trading Commission and the U.K. Financial Services Authority.
Barclays spokesman John McGuinness, UBS spokesman Richard Morton and RBS spokesman Michael Strachan all declined to comment.
UBS and RBS are next in line to settle with the regulators, people familiar with the case have said. Edinburgh-based RBS has fired four traders following an internal probe.
UBS has fired more than 25 people after an internal review of interest-rate manipulation, a person familiar with the matter said. Robert Diamond, who stepped down as Barclays chief executive officer after the fine, said 14 traders were involved in wrongdoing at the bank.
The SFO has “hoovered up all the stuff from the FSA and loaded it onto our computers,” Green said. It has also received evidence from the U.S. Federal Bureau of Investigation and some of the banks.
The SFO is cooperating with a request from the U.S. Department of Justice for access to information from the U.K., Green said. That could include investigators from the DOJ sitting in on interviews that the SFO conducts with suspects, or having access to evidence the agency has gathered.
The request, which came under a mutual legal assistance treaty, or MLAT, was initially stalled while the SFO sought to get up to speed on the case. The DOJ submitted an amended request in recent months with “very substantial” information sought, Green said.
“Obviously when we first received it there was anxiety that execution of the request could mop up SFO resources,” he said. “We are anxious to execute it” and will “certainly” assist, he said.
Green said the agency, while working closely with the DOJ, is also competing to bring charges first in order to handle the prosecution of any British citizens in the U.K., reducing the chance of extradition.
The SFO’s previous director, Richard Alderman, had declined to get involved in the case. Green took over as director in April.
It’s anecdotal thus far, but I don’t believe it will remain that way for long.
I am getting repeated reports of large layoff actions, both pending and immediate. Some of these appear to be focused on the impact of Obamacare, some are small businesspeople who are simply quitting and closing up shop due to expected higher tax rates on a forward basis, and some are firms that were hanging on by the skin of their teeth that giving up the ghost.
Many of these folks appear to have held out a “last and final” hope that the Republicans would win and somehow change the dynamic. This was a foolish premise — indeed, foolish beyond words, as the Republicans are the party of funny money just as are the Democrats.
The game of funny money has reached its terminus.
There are a number of commentators who have said that based on this model in the market or that Bernanke should be running QE at a rate that is “$X”, where the rate he’s running today is “$X – Y” (that is, much smaller.) They’re missing something important — Bernanke is many things, including being an ideologue and self-deluded, but one thing he’s not is stupid.
The fact of the matter is that he knows full well that he has become the crutch upon which the US House and Senate can and have relied to evade their responsibility to produce any budget at all – say much less a balanced one.
There are limits to monetary policy and all actions have reactions. Bernanke has not appeared to care, but remember that one of the most-powerful tools any central bank has is the jawbone and the appearance of both omniscience and omnipotence.
In truth central banks, like all humans and human institutions, possess neither attribute.
What Bernanke has not done, but could and should have, is demand that the fraudulent leverage come out of the system. But he has not done that, and a big part of the reason why is that there is no support for it in the Congress. Incidents like Rochdale, which apparently put on a $700 million position in Apple stock with somewhere around $3 million in actual capital point to the intentional lack of risk controls up and down the line.
There will always be people who will either evade limits prospectively or do so willingly with the support of management on the sly, expecting to make a killing but prepared to call it a “rogue trade” if things go wrong. The purpose of orderly market regulation is to prevent this by imposing margin requirements and thus forcing all market participants irrespective of their size and reputation to prove the ability to clear each and every trade before it is exposed to the market.
You and I are subject to these limits every single day when we trade in our accounts.
It is now clear that this lesson of 2008, which I repeatedly wrote on and in fact faxed copies of to every single Representative and Senator, was intentionally ignored.
This morning the market is continuing to sell off and the FX — foreign exchange — is the ugliest I’ve seen in months. There are many who think this is simply a reaction to the election and the US “fiscal cliff.”
The entire world has played the same game — allow “market participants” (big banks and other connected financial institutions) to cheat. It wasn’t enough that we walked right over the cliff in 2008 due to massive, pervasive and outrageous levels of cheating — fraud up and down the line.
That didn’t lead to a single bankster going to jail and it didn’t change one thing about how our financial institutions are structured, here or anywhere else.
Greece, which many people think is a “no big deal” sort of sideshow, is anything but. The fact of the matter is that Greece runs out of money in about a week. There will be no more money for them, as the limits of doing so without openly and blatantly violating not only publicly-taken positions but legal restrictions have been reached. This cannot be done in secret any more, and that makes for an intractable problem, because now any such “forbearance” has to be donein the open.
CNBC this morning is talking about the “Fiscal Cliff” as if there’s some sort of solution that does not involve admission of the frauds of the last four years at a fiscal and monetary level; a cessation of the claims that we can have “Economic Growth” that is literally all the result of credit creation in excess of production, and recognition of the embedded damage that has been done to the economy.
Everyone who has made this claim is wrong.
They’re wrong because 2 + 2 = 4, no matter what else you want to claim it is. It will never be other than 4. There are people in the Libertarian Party who tried to tell me that they simply didn’t believe that these chickens would come home to roost and that “the can will be kicked forever.” This is the same polemic that I hear over and over again every day in the mainstream media, or alternatively, that there is some “glide path” to resolution of the problem.
I left the Libertarian Party formally at all levels — County, State and National — yesterday. I did so because they ran their experiment this election cycle and now with the results in they refused to admit they were wrong. They ran a political approach that was focused on sideshows rather than the fact that arithmetic dictates what you can and cannot do, and that the economy was and is on the precipice of a full-on meltdown, along with the Federal and State governments. I refuse to place effort into a political group that wants to stick its head up its own ass, no matter what label it has.
I tried to move the conversation in that party and generate consensus on this point and failed. I admit my failure to persuade but I refuse to tilt at windmills. I am not Don Quixote and I do not fit Einstein’s definition of insanity. My efforts, my resources and my willingness to place both into the field of play are both finite and are and will be constrained to productive use.
I want to bring this graph back, one of the first in my book Leverage, because it is the root of all that is going on.
This represents a rough approximation of our economy and debt over the last 50 years. The “spread” between debt and growth has been about 3% during that entire time, up until the last couple of years. Notice that the green line accelerates away from the red one. The green line is total debt and the red line is economic output — the ability to pay across everything in the economy. While it appears your economy is growing, it really is not — you are purchasing every dollar of that output with an ever-greater level of indebtedness and the acceleration is unrelenting.
What must be understood is that the above graph is not some invention. It is a simple mathematical relationship; two exponential functions graphed over time (the blue line is interest on the green at 6%, and what happens to that — the inevitable intersection of it with the red, thus your guaranteed insolvency — happens at about year 100.) You can reproduce this graph in Excel in a couple of minutes or you can use a calculator and a piece of graph paper.
This result will happen each and every time you allow debt to expand faster than production, without exception, as the outcome is defined by the laws of mathematics.
There isn’t another graph that looks kinda like this, is there? Oh wait….
This is not about politics, it’s about arithmetic.
Now consider folks what happens when we can’t buy forward economic output with ever-increasing amounts of debt?
The economy collapses back to its sustainable size. The government is forced to collapse itself back to its sustainable size. Government will kick, scream and shove, and so will the so-called “entitled”, but it doesn’t matter; arithmetic doesn’t care about politics nor shouting. It just is.
And by the way, from 2010 forward debt is no longer expanding; the total systemic debt change upward from 1Q 2010 to today, including the furious rate of new federal debt, is +0.9%.
The pattern from 1953 until 2010 has now been violated; we went off the Wile-E-Coyote cliff and have been furiously pedaling our legs in the air wondering why we’re not moving forward any more — but have yet to look down.
It’s a long way down.
In 2000 we had to accept about a 10% contraction in the size of government to restore balance after the tech bubble. In 2007, after we played “kick the can” with a housing bubble, we had to accept about a 20% contraction. In 2007 and 2008 when I wrote to Congress and started The Ticker, I pointed out that were this cycle to be extended by more games the expected contraction that would be built into the government would be forty percent and the expected time before this outcome became emergent and blew up in our face was, based on the previous cycle times, about four years.
I wasn’t right, and the market is not taking a header, because I’m the smartest guy in the room.
I was and am right because arithemetic is not comprised of suggestions, it is comprised of laws that cannot be violated. Each and every time you cheat, no matter who is doing the cheating or for what purpose, you are simply compounding damage into the economy and markets that must eventually be recognized in some form or fashion. It cannot be otherwise because it is impossible for any other outcome to occur in a world where none of us are God and thus we cannot wave our hand or give a nod and violate the laws of mathematics and physics.