Project Mayhem Research: Multiple Anomalies Detected In Silver ETFs

During our research into the inventory lists of the iShares SLV and London-based ETFS physical silver funds, we discovered multiple anomalies which cannot be easily dismissed. These included the presence of internal duplicates, rough internal duplicates, weight duplicates, statistical clustering, and cross-reference duplicates. Taken together, these anomalies are cause for concern, and we suggest that more capable teams conduct further research into these issues, as they effect price discovery within the precious metals market, as these ETF shares are being used for settlement and possibly pricesuppression on the COMEX.

If these problems are caused by accounting errors, they are disturbing and perhaps profoundly incompetent, and we suggest both these funds should have their senior management replaced.

In our opinions, the only way for all of these anomalies to occur together as noted in this paper, is via systemic fraud or gross accounting error bordering on jaw-dropping incompetence.

Janet Yellen On The Outlook For The US Economy And Community Banks

In summation, credit needs to flow or the beast will starve:

"Although my message is that you should plan for the worst and exercise caution, I want to stress that it is also critical that you continue to make loans to creditworthy borrowers. The profits that quality loans generate will serve you well as you safeguard capital. They are the core earning assets that will power bank profitability as we head out of this recession. And, of course, the credit provided by prudent, well-functioning depository institutions will play an important role in supporting the broader economic recovery that now seems to be on the horizon.

Is The Mortgage Police Losing The Battle

The relationship between the 10 Year and the 30 Year Mortgage spread and the actual level of the 30 Year Mortgage has broken down in the last week. Did the (mortgage) vigilantes pull a fast one?

Bank Failure Friday Chart Approaching Exponential Curve

Sheila Bair's favorite math equation these days: 

where n = bank failures and x = tax rate

GE Capital Serving Kool Aid All Morning

GE Capital, aka the next CIT, is practicing its recently acquired hypnosis skillset (perfected via daily lessons from CNBC anchors) which has culminated with a 63 page presentation replete with far too much empty verbiage and green shootery.

The take home message:

• H1 Net Income has plunged to $1.7 billion on $557 billion in total assets, and only thanks to firing pretty much everybody: $1.9 billion in SG&A savings
• This is down $24 billion from Q4 as GECC is "continuing to rapidly reduce balance sheet"
• Loss reserves are skyrocketing: currently at $6.6 billion, up one billion from Q1
• 2009 TY original outlook: $5 billion; Fed base case: $2.0-$2.5 billion, Fed adverse case: $0
• How many more people can GECC fire as its balance sheet implodes?
• Oh yeah, and if CRE really blows up, CIT, here we come
  

Frontrunning: July 28

• Must read: Arizona set to implement recourse mortgages - this could be the beginning of the end (Housing Doom, h/t Credit Trader)
• Congratulations Ben - you have succeeded; dollar reaches 2009 low (Bloomberg) (yet less than $90 billion in foreign liquidity swaps left to pull... then what?)
• And here's to a healthy Euro: Lithuanian economy shrank 22.4% in Q2 (Bloomberg)
• High frequency traders say speed works to everyone's advantage (Bloomberg)
• Judge Drain does not lead to the sewer, stands up to pressure and follows arcane, little-appreciated thing known as the law: leaves Platinum Equity in the cold on Delphi (AP)