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Jim Rickards Discusses Financial Warfare
Jim Rickards, who some may say has gotten a little too much media exposure recently, is on King World News this morning, discussing the presentation he gave to the US Treasury (closed to the public) in which he lectured Tim Geithner on financial warfare, read China, and how flawed trade policies can impact this ever so critical and increasingly tenuous relationship. To be sure, it is better late than never that someone advised the UST on what the right path is. Unfortunately, righting the US(S) Titanic at this point is impossible as it would mean undoing 2 years of flawed actions and policies, and the cost would be unbearable. Another topic touched upon is the recent correction in gold. The price move over the past week should come as no surprise to anyone. On May 19th we noted Goldman's most recent move to a bullish stance in gold, and we concluded that "we may well be in for a gold retracement, at least from a purely
technical standpoint, as Goldman "distributes" its newfound gold
holdings" as Goldman moved to sell its gold to whatever few clients it has left. Sure enough, $70 dollars lower later, Goldman's ever-angrier clients who listened to this most recent horrendous tactical call, are only left with a receipt for a metric ton of KY. The gold move is nothing more than liquidation of real assets to cover margin calls in imaginary ones, such as LBO bonds which have moved from 10 cents on the dollar to par during the melt up, and are now seeing a bidless environment, a groupthink phenomenon of which a plunging FDC is the prime example. Those who have no reason to sell gold should obviously hold right - Rickards notes: "for every seller there is a buyer. The sellers are the daytraders, speculators and people in distress who need to raise cash, buyers could be foreign sovereigns, China, Russia, India, so we could be seeing a move from weak hands into strong hands. I see gold at $2,000 in the short-term, and $5,000 in the long-term." Also discussed is Germany's ban on naked shorting, which Rickards applauds, not so much as a policy move, but as a symbolic stand by European sovereigns against the bullying power of Wall Street, something we fully agree with is long overdue. "Merkel will definitely be supported by others. I know the French were a little but upset that she did it, but they are not upset because she did it, but that she did it first. Sarkozy will join in."
Curiously Rickards is very much against CDS - fair enough, however the problem with that is that eliminating the most natural way to hedge long credit positions (which make no mistake is what CDS really are all about, good luck finding cash bond borrow in some obscure HY name, even with market monopolist Goldman, or especially with Goldman if it has soaked up all the cash shorts) will have an adverse impact on the market one thousand times worse than banning all shorts, not just naked, in equities. On the other hand, just the expectation of a global CDS short, without recourse mechanism to hedge bond exposure, would push the S&P to our very long-term S&P target of approximately 0, as it would immediately force an unwind in that biggest of all uncharted territories, the IR OTC swap market.
Some critical insight from Rickards in terms of European geopolitics is the following: "People get so hung up on economics, and efficient markets, and all that which has been largely discredited at this point. But these are NATO allies. Greece controls the ceiling of the Eastern Mediterranean and the Aegean, they have a very robust military budget. Same thing with Spain. Spain's been a very important NATO ally throughout the cold war, Italy etc. Can you imagine if during the cold war the Soviet Union had undermined all the countries, it would have been the start of World War III. And yet we are letting investment banks do the same thing. We are letting investment banks undermine the finances, cast doubt on the credibility, create civil unrest, riots, death. It's the kind of thing that in a military frontal assault would be repelled, but somehow we let Wall Street attack the countries and do nothing about it. I am glad that someone is finally standing up, and I expect that Merkel will be joined by others. I am not against speculation. Let speculators put up some money, let them do on an exchange, let the pricing be transparent, let them do variation margin... This no money down shadow credit default swap market is completely destructive." A little hyperbolic but you get it.
For those of you who just can't get enough of Jim, you can follow him on twitter @JamesGRickards
Full King World News interview with Jim Rickards can be found here.
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Amen.
Further, I find it astounding that humans the world over think it's acceptable to have a few ruling elites determine money supply for the planet. Astounding.
When one country tries to destroy another, that is financial warfare. When a country tries to destroy itself, that is financial cancer.
When the elites destroy one of their playthings, it is an afternoon's entertainment. When the elites motivate entire cultures, change their mental being via "edumatainment," create the songs they drink for, fuck for, and march for. Then they pair up these cultures on "sides" and bring the sides together for grand slaughter. Now that is an game worthy of being called Great.
And in the end, its always, "Yes, yes, you were right. Here's $1."
Most cogent comments, LeBalance!
"We are letting investment banks undermine the finances, cast doubt on the credibility, create civil unrest, riots, death. It's the kind of thing that in a military frontal assault would be repelled, but somehow we let Wall Street attack the countries and do nothing about it."
Rickards' remarks, while I fully agree with them, suggest some ignorance of the end game. "We," kimosabe, aren't "letting" them do anything, they control the show.
To those not paying attention, the Financial-Intelligence Complex has been running the show for quite some time, and incrementally, by way of predatory legislation (US Congress) and predatory jurisprudence (US Supreme Court and federal circuit judges) and Executive Orders, changing our reality over the past forty or so years.
I would recommend he pays more attention to the writings of Glenn Greenwald (salon.com) and Russ Baker, along with some other salient stuff.
And how anyone who has been paying attention hasn't yet figured out that the CDS, along with all the rest of the thousands of types of credit derivatives, controlled in concentrated fashion principally by Goldman Sachs, JP Morgan Chase and Morgan Stanley (with additional help from Bank of America and Citigroup), are utilized as a global financial virus to bring down companies and countries, is truly out to lunch!
Right, like they are making you write nonsensical comments like that.
Or, are you magically immune to the mind control?
thesapin , whose comment are you referring to as non sensical? And who is controlling your mind? Are you SURE? So common sense will have to do.
The comments I responded to, of course.
I was actually trying to show how ridiculous it is to think that a few people can control the actions of populations.
Subtle and surreptitous influence is a form of "control", is it not?
Just as the anti-gold cartel has manipulated the prices of gold and silver to the downside,even as those prices have risen. They do not CONTROL those markets, but it does not require 100% control to INFLUENCE those markets.
I agree, but to an extent.
Even the most "powerful" dictators actually have no godlike powers. All they can really do is try to convince others to carry out their wishes, but then whose wishes?
These people aren't supernatural beings.
Silver is a perfect example, thank you. We have always had the power to end this silver manipulation. But, We, for the most part, like easy borrowing.
Subtle and surreptitous influence is a form of "control", is it not?
Just as the anti-gold cartel has manipulated the prices of gold and silver to the downside, even as those prices have risen. They do not CONTROL those markets, but it does not require 100% control to INFLUENCE those markets.
Give me 8 thousand tons of gold and some people who will cooperate with me. I'll manipulate the hell out of the gold market.
I don't have the power to give you 8 thousand tons of gold.
WTF? that's not ridiculous at all, read your history man.
Word.
This is a sentence.
Here's another one.
This sentence no verb.
I am so up my own ass, I use Jesus as my avatar.
Is that a sentence?
Just give me one example, and I'll do my best to demonstrate how the leaders were human just like every body else.
I think we just have an almost mythological view of power structures, falsely looking for an origin of power centered on larger than life characters in history and today.
It's kind of self-dis-empowering and a reverence for authority.
“fifty men in these United States have it within their power, by reason of the wealth which they control, to come together within twenty-four hours and arrive at an understanding by which every wheel of trade and commerce may be stopped from revolving, every avenue of trade blocked, and every electric key struck dumb. Those fifty mean can paralyze the whole country, for they control the circulation of currency and can create a panic whenever they will”. Chauncey M. Depew.
and the people could end it at any moment.
"...principally by Goldman Sachs, JP Morgan Chase and Morgan Stanley (with additional help from Bank of America and Citigroup)...
The above do nothing...they are only conduits, strawmen, fronts, apparencies through which actual persons act to accomplish ends.
As if there was some agreed-upon gameplan that works through fronts to control, say, resources money Senators foreign leaders populations the planet.
Who might be these persons?
Are they poor? Middle-class? The powerless? Wage-slaves? The appointed? Newly rich?
Perhaps the covert appointers?
"edumatainment"
Ya meant "edumbotainment" ?
Exactly. Now shove that chemo and bring in the surgeon.
Hello Mikla. I also enjoy your posts.
Past:
Titanic (1943)
http://www.youtube.com/watch?v=Pwh3LthX2Es
Future:
http://www.youtube.com/watch?v=_xNhL39uD7I
Present:
Exporting America --Straight from Communist News Network --March 27, 2009
http://www.youtube.com/watch?v=VVTtj9MHB_M
only thing that makes your country aaa class in moodys is that u have a-bomb, opportunity to legalize and tax pot smoking and put the ho´s under tax
selling crack and killing eachother doesnt make any contribution to GDP only in
birth/rate company models
Doesn't anyone pay attention. The takedown in gold is related to futures expiry on Tuesday. Every options expiry, like clockwork, gold gets taken down at the Crimex. Why should this time be an exception. As traders roll into the next contract the Crimex crowd push the price downknowing few will come in to establish new long positions in the last couple of days. The same thing happened in oil this past week.
We have always seen it, but its game over now..Position limits are comming now that fin reg has passed.Look for a statement from Gary Ginsler very shortly.That will put a cap on it..Ive already heard 3 people say it was comming and just this morning Ted Butler makes the 4th..
I hope it's game over, but it wouldn't surprise me if there are loopholes to allow business as usual.
Been hearing “game over” since fucking ’97 when the banter then was, “When the national debt hits 6 trillion, we will have surpassed our ability to service the debt.” Remember that?
This is slow cooked frog shit, man. More new bubbles; more wringing out of our liberties; more extraction of productivity for less wages.
We just keep getting fooled again.
You're missing the point: Yes, cycles exist. No, the amplitude has never been like we see it today. Further, today we have more stochastic input through direct manipulation like we've never seen in the past. What we have is this:
The direct manipulation shifts the period left-and-right (you can't account for that, because you're not on the phone when the central banks do their thing). The increasing system leverage has so dampened impact from productivity (e.g., sector performance, corporate yield, inflation, unemployment, state budgets, etc.), that you can't use technicals nor fundamentals as predictive, nor correlative.
The fact that patterns *did* exist, and those same patterns *do still* exist doesn't matter. Those patterns are dwarfed through new manipulation, and thus don't reflect the market.
Literally, our "market" now is an over-full sloshing bucket of water, continuously kicked by central bankers (and you can't predict ahead of time the amplitude and direction of the kicks).
I applaud you that you are able to predict the waves in the top of the bucket. I can't.
I bought 3 ase Silver Eagles from my local coin shop about an hour ago..The Last 3 he had..He told me that the mint has halted all silver and gold eagle sales and he could not get anymore right now...I had to pay $27 each, up $2 from 2 days ago..PAPER MEET PHYSICAL..Decoupling begins..
what part of the country? i bought a roll of uncirculated silver eagles for $21 (+ "the vig") Thursday morning. SoCal. Are people here unaware or are your people hyper aware or is your man jerking your chain?
Respectfully,
bol
Im in Virginia..I have no doubt that prices will vary in different places..I did also go down to my local Flea/trade/farmers market, whatever you wanna call it, and the vendors there,maybe 4 total, did not have any rounds/bars but did have some 90% and it was selling for $20 per troy with dimes being the most popular.I dont know about him pulling my chain because we are not buddies, I just do business there and move along, but he has always kept them ASE's in the same spot and they were cleaned..I have no idea if he may be holding back because of last weeks dive or not, very possible..But thats what I had to pay and I would never spread false information..
Thank you silver for greater insight as to what's happening throughout the country.
http://www.apmex.com/Category/160/Silver_American_Eagles_Uncirculated_2010__Prior.aspx
http://cgi.ebay.com/2002-Silver-American-Eagle-Uncirculated-Pristine-/2$20610169390?cmd=ViewItem&pt=Coins_Bullion&hash=item335d640a2e
http://cgi.ebay.com/2007-AMERICAN-EAGLE-1-OUNCE-999-FINE-DOLLAR-BU-/390199557452?cmd=ViewItem&pt=Coins_Bullion&hash=item5ad9b4bd4c
http://www.blanchardonline.com/blanchard_products/bullion_silver_american_eagle.php
Good links!
I have a lot of 20 ASEs coming from an eBay purchase this week. They were $21 each including shipping. That saves me the sales taxes by NOT buying locally as well. After 10 years + of buying in small lots I have put together some impressive accumulations of ASEs and AGEs. The small amount of money spent is not missed but the accumulation has been something that lets me sleep well.
There you go Rocky. Sleep well, that is the kind of thinking I do as well.
Monex.com is good. You can see their prices online, bullion and coins. They will take a personal check, they will give you their priority post code to overnite it free. I comparsion shopped in '08 and they won. Probably worth a new round of comparison shopping. I bought silver maple leafs in Feb, and it took a month for delivery. It used to take about 5 days.
"Literally, our "market" now is an over-full sloshing bucket of water, continuously kicked by central bankers". Good one mikla! Sometimes I feel like I'm inside the bucket.
Excellent visual and explanation Mikla.
Water is a good comparison, I liken it to liquidity and all boats rise and fall with the water level.
In ten years of the stock market the people = flat but losing when calculating loss of purchasing power while bankers have pocketed increasing billions in a skimming operation on capital markets. Some of the unusual movements look like money laundering operations - like making a hundred thousand in cattle futures over 10 months starting with $1000 (if you remember the Clinton cattle futures scandal).
These results are quite remarkable. Two-thirds of her trades showed a profit by the end of the day she made them and 80 percent were ultimately profitable. Many of her trades took place at or near the best prices of the day. Only four explanations can account for these remarkable results. Blair may have been an exceptionally good trader. Hillary Clinton may have been exceptionally lucky. Blair may have been front-running other orders. Or Blair may have arranged to have a broker fraudulently assign trades to benefit Clinton's account.
There was never a formal investigation, how often do you think this happens?
money laundering in capital markets. big issue
Max Keiser says it happens often. He says that he did it all the time when he traded on Wallstreet, and these "back-dated" contracts are common to explicitly transfer money between accounts, hidden as profitable trades.
If we look at the recent failed legislation that would have outlawed insider trading for representatives (they voted that they could trade on inside information), this cattle futures example, the failed real financial reform initiative (passed a toothless do nothing bill written by wall street), and the miracle that poor representatives leave office wealthy, one could surmise that democracy truly is two wolves and a lamb voting on what to have for dinner.
It is possible that many representatives, members of the media, bankers, and regulators are in on the scam. Tyler should do a piece on ownership of all the exchanges and their connections. How else could you explain eight years of complaints to investigate Madoff with no activity?
I don't think an investigation is necessary. I think it's obvious what's going on to all but the most dense (which, unfortunately, still accounts for a majority of people).
The loss of control is accelerating. Western leaders are getting more desperate, more brazen in their despotism. We see it here in America. It affects us every day now, and soon we'll be enveloped in it entirely.
I don't need a jury to tell me what I already know to be true from empirical and prima facie evidence. It is what it is: we live under a de facto corporate dictatorship.
We are approaching an inflection point in human history. Presently, our lives operate based on millenias old precepts founded in superstition and ignorance. However, the Internet has allowed humans to reach a new potential: our ability to communicate with effectively anyone anywhere in any language has made us all truly one. The body Human has become sentient.
We are alive.
The next phase will entail an awakening, a rude one, in which a good number of formerly bourgeois people suddenly have austerity thrust unto them. The curtain will fall away and "God" will be revealed to be an aged and decrepit power structure eons old, and a new conception of God will arise, one which eschews the used up concept of central authority.
From here on out, it's all about me, you, and everyone. It's about Us. We no longer need the paternal overseer (the State) to guide us. We'll learn to take care of ourselves, and each other, because we truly are One.
But this will only happen in time. For now, we must suffer.
I am Chumbawamba.
Thats what I was proposing with my "The Audacity of Austerity" jab. There may well be some people with that attitude who are typically unprepared for a more austere existence that will be hurtin' clinging to flat screens, European sport luxury sedans and Juicy Couture as if they are state-ordained rights. Chalk it up to self-preservation of the PTB?
Well stated Chumb.
well, either that or a severe consolidation of centralized power and a dark age...its all up to us
+ 50,000,000 Chumbawamba!
Yes, things are radically changing. Things are heading into a bad time. And that is required. Perhaps things will work out OK (probably so) in the longer run. But, many will be hurt, perhaps you or me. And MANY others.
Danger, danger, danger is what I see around every corner and every curve. Buy/hold gold. Drive carefully. Care for your family! Do NOT believe in lies from .gov! DANGER is all around us, please look out for yourself and loved ones!
Disclosure: Long in gold, guns & ammo as well as conventional investments.
Long live America! Long live ZeroHedge!
Finally, remember, He is Chumbawamba, an observer extraoridinaire of what cometh our way.
"Disclosure: Long in gold, guns & ammo as well as conventional investments."
May I also recommend long shelf life food stores, water purification devices and trauma-level first aid kits?
The canned goods can be eaten! <-(for the PM detractors, you get it, I'm sure).
Don't forget skills!
Take a First Aid / CPR class and your trauma kits will be more effective.
Local Fire Depts around me offer this for a modest fee or free for volunteers.
Despotism & Democracy video
http://www.youtube.com/watch?v=yfrQalpmdqk
Insanity: doing the same thing over and over again and expecting different results.
--Albert Einstein
Well done sir! Well done.
Sounds right to me.
Knowing politics and central bank politics is more important than fundamentals. I'm looking for the best spokes-of-the-wheel connections pictorial I can find. (anyone have a good one, like http://news.muckety.com/ ?)
Gee, how did GE got it's special deal with the FRBNY. Sitting on the FRBNY board was more important than fundamentals.
There's the connected and the perceived "needed" and then there's capitalism for everyone else.
I'm looking for the best spokes-of-the-wheel connections pictorial I can find. (anyone have a good one.
Glen Beck's chalk board has been tracing back through various people/organizations and landing on Soros. I keep thinking GBP == EUR. Did Soros luck out on his GBP short? Or did he almost kick the whole thing over? Wasn't my area of interest back then.
Ned
Here is one of the spokes that is looking a little worn:
http://static.reuters.com/resources/media/global/assets/images/20100521/tiptoeing.jpg
Don't let 'em get away, Tim!
http://www.google.com/url?q=http://s0.ilike.com/play%23LeAnn%2BRimes:I%2BNeed%2BYou:16561:m2417771&ei=4kT5S-eoAYjYMP36lYQI&sa=X&oi=music_play_track&resnum=1&ct=result&cd=2&ved=0CBMQ0wQoADAA&usg=AFQjCNF8XpS47CGmrYEdsRp7O1kgqGvXtA
because it's not stockprice related. It's sentiment related.
These panic fluctuations are indeed getting bigger and bigger, untill someone decides to break out of the cycle and the way that it's following at that exact moment will be the direction where it shoots. Up or down.
Up: So much money is created on the market, liquidity is created in such vast numbers, it would be like nothing ever happend and this crisis goes into the history books for at least 3 to 4 years.
Down: Whatever, but it ends with a mayor conflict.
Mikla, that post was awesome.
Here's a link for you, really interesting stuff, I think you'll like it.
http://glafreniere.com/matter.htm
Whoa, that's a cool site!
It's going to take me a while to dig through there ... thanks!
I disagree with Glafreniere on the below:
<<No, there is no new sort of energy which could be cleaner or cheaper then petroleum.>>
In terms of Quantum Mechanics and Quantum Physics, since the last of the quarks (the 6th quark otherwise known as the god particle) has been discovered and observed the door is open for quantum synthesis.
Meaning that with the four forces, the six leptons and the six quarks you can find a way to synthesize any material including petroleum, gold and everything else. Petroleum may be the least difficult as it does not require super-pressurization.
We just need the geniuses amongst the chemists and the quantum theorists to start research and just do it.
Additionally, once a simple chemical process is discovered to isolate the hydrogen from water with less than 10% of energy ratio, Bingo. You have super cheap transportation fuel.
http://www.free-energy-info.co.uk/
There's no such thing as a free lunch. Absolute zero means that there is zero molecular or sub-molecular motion. You could have a rock sitting on a table edge at zero Kelvin and there would be potential energy. However to disturb the rock so that it falls would imply an input of energy and a temperature above absolute zero. Physics is nobody's bitch.
Transitioning from petro-calories will be rough due to the eons of solar energy conveniently distilled and sequestered into dwindling fossil fuel reserves.
ETA: late to the party I am
That is sme crazy shit! I'm definitely spending some time there.
Thanks for the link!
I am Chumbawamba.
holy christ
those visualations really help...thanks!
CC, that is indeed an interesting site, but since it has been 30 years since I studied physics, well, I cannot comment reliably.
Crab, your posts of late have been quite interesting! Please keep them coming...
Hey DoChen
To provide a visualization of electrons, protons and neutrons, is indeed 30 year old physics. It might as well be 30 light years old.
This will be a fun website to explore. However, I would want to hear from a reputable physicist to see if it is crank science or not. If you are interested in a possible non-material basis for reality, the Bogdonov brothers have written some fascinating books. My copies are in French and my favorite is "Avant le Big Bang"--Before the Big Bang. They have a supplement in the back which shows some of the high level math they are using to reach their conclusions. Basically, they seem to succeed in crossing the Planck barrier by using some dazzling mathematical concepts and seem to conclude that before the big bang, all was static order in holographic form where all the future evolution of the universe is contained as "information" in the form of crystalized spheres that exist in the complex domain. Due to certain asymmetries, there was an implicit instability that "caused" the big bang. Thus, ultimately, there is only mathematics and no material reality as we commonly believe. Les frères Bogdonov were defended by a renowned physisist Lukos Motl in a book entitled "L'équation Bogdonov". Fascinating reading, to say the least! http://tinyurl.com/236bwf3
I read elsewhere that the electron can be thought of as a soliton--which is a longstanding wave expressed by the Kortweg-DeVries equation--but I forget where. See http://en.wikipedia.org/wiki/Soliton
By the way, it is well established that the universe is expanding, as is shown by the fact that neighboring galaxies are red-shifting. However, does anyone know whether this expansion is an expansion of space-time or just the three dimensions of space? Is time dilating as well?
What does this have to do with exp(-kt)*sin(t) (the wave form shown by Mikla)--no idea, really, but the interplay of math and reality is fascinating. The question is, is there any solid science behind fibonacci support levels or Gann cycles? I doubt that and recommend as an antidote brushing up on John Ehlers' books, such as "Rocket Science for Traders". Check it out at Amazon.com
Wow, great stuff.
Two things:
1) Who made the crystals? Or who arranged the matrix? "They just are" isn't an answer, but perhaps that's because our minds are not capable of comprehending it.
2) This lends credence to the "Universe as Computer Simulation" theory. Energy is quantized, because energy is bits, and Planck's Constant may well be the distance between memory cells in the Computer ;)
http://en.wikipedia.org/wiki/Simulated_reality
I am Chumbawamba.
"This lends credence to the "Universe as Computer Simulation" theory."
OK, but what happens when the subjects in the simulation become self-aware (i.e. discover that they exist only as a computer model)? Is that the endgame scenario?
Perhaps you should take a look at Gurdjieff and his Law Of Octaves. Do Re mi fa sol la ti
http://technical-analysis-addins.com/book-ouspensky.php
http://www.google.com/search?hl=en&client=safari&rls=en&q=%22Law+of+octa...
Interesting to see someone like Rickards so bullish on gold. He seems like an establishment guy, especially given the access he has to the FEDS. Everyone has their motives, I guess.
I wonder if another gold bull will ever get the same access to the Treasury? WIll Bill Murphy or any GATA member ever have the chance to sit down with Timmay and Co and lay down the case for gold?
HA!
He's the guy that once said on national tv that if you own gold you're going up against central banks.
I've been tracking him since.
How much copper would one have to add to gold in order to manufacture a, oh, I don't know, .30 cal projectile that can travel 2400 fps without coming apart before it gets to a central bank?
Wouldn't you prefer a silver bullet? It is customary, as well as having a few good reasons behind it.
Copper jacketed gold projectile? Hmmm, makes Speer Gold Dot Hollowpoints seem tame.
Figure that a mid-range 0.308" diameter bullet (think .308, 30-06, 300 pick your poison/mag/short mag, etc.) is about 160 grains. Work from there.
Oh, and good luck!
Do you put money down when you purchase insurance on your home/car? (No)
Do you pay a variable premium monthly/yearly as protection? (Not tied to LIBOR mind you, but yes, yes you do)
The CDS market is not going away folks. Any regulation will simply bring a cut to whoever oversees it. And we all know what a good job the SEC does with the equity markets.
But unlike CDS', when you buy home owners insurance, you own the underlying asset/mortagage. Not the case with CDS'. Like the man said, "completely destructive".
Depends.
If you (not retail) own some CDOs you could hedge with CDSs of whoever sold you them.
Are you a large MNE and are have exposed yourself to a country's poli/translation risk? Hedge that with the country's CDSs. Again this would be a 2nd derivative type of hedge since obviously you dont actually own the country, but thats what financial instruments are created for, hedging.
And then of course there's speculation, which is the real thing this argument is over. There has always been speculation, people have done it since the Dutch tulip days, and have gone so far as weather derivatives and no doubt new instruments in the future.
You just can't say they're completely destructive without realizing what these hedges entail for corporations and countries around the world. The MSM has chosen a scapegoat in these CDSs to argue they are 'immoral' and simply not right, and too many have chosen to follow this view without inspecting the underlying reasons for these securities.
If your salary involves CDS, it would be difficult to have an objective view.
These were a way to game the system by creating instruments that would not be reflected on balance sheets. You could theoretically create 1 trillion in CDS off balance sheet on the same underlying - then kill the underlying. An example is buying 10 insurance policies on your house, burning it down and then collecting 10 times. This is how GS gamed the system with AIG.
What is the figure right now on derivatives, 600 trillion +? These are weapons of mass destruction and the only reason the too big to fail banks were not able to be broken up. They have booby trapped the system with tools like CDS.
The quote that GS could make CDS quicker than Europe could print money is very telling. I do not want GS to take over the world through fraudulent CDS - there is no real capital there.
CDS must be traded on an exchange, transparent, standardized, with a max pay out limit (known exposure), and reserve capital and premium must be put up front by the writer (especially if naked). If it is covered, it could act like insurance but it should be 1 for 1, not writing 100 insurance policies on one underlying (that we have to ultimately bailout like AIG). Look at the market for gold, we have 100 paper tickets for 1 bar of gold and that should never be allowed.
totally agree AND 2) off-balance sheet disclosure rules must be changed too. The U.S. in tinkering with it but not going far enough.
Since we're talking about OBS accounting, CDSs are such a small fraction (and not a totally convenient one anymore, based on the associated coverage in the press) of what firms (especially financial firms who know their ways around financial statements) can do to either hide profits, decrease taxes, or basically 'improve' their image to investors.
SIVs and SPEs are just 2 acronyms for a multitude of choices contained within them that act as contra-asset accounts on a firms b/s. Eg: they have a great year due to actual revenue/profit increases - great, theyre gonna add back a SPE to the current B/S to reduce said gains. On the flip side, in a terrible year, they can either big bath it all away or choose to offset the losses by packaging those up in a pool (similar to CDO style) and sending them to a subsidiary which shouldn't even be called a sub because its b/s isnt consolidated onto the parents.
My point there is just to say CDSs from around last year have started to show up on co's books when it comes to auditing because they know the recent heat the government has started placing on firms which deal in these securities. Now, having said that, they just come up with new ways to hide these. Heard of CDS^2? Well, whats to say you can't make a bet on a bet, in which case the original bet will no longer be on the books, and this new offsetting bet (offsetting in the direction the firm requires as i prev explained) will be on the books.
To the weapons of mass destruction part... thats a glorified name for them. Why not call the FED by the same thing? Yes all the big banks have insane exposure to each other via CDSs, but to say they weren't broken up BECAUSE of this is a moot point. Look at Lehman, you know how much notional was tagged on to whoever would take the other side of the bet (just as co's are doing with Greece today, for a quick turnaround buck) on those CDSs when their stock price started to decline? The Fed could break up and disintegrate or sell off for pennies (Bear Stearns) any co they wish. But theyre not breaking them up anymore because this implies a negative view for the America's financial system. No more breakups, no more firesales. Perhaps only more regulation at best, as seen in the finreg bill being introduced.
I wouldnt argue against if CDS were to be traded on an exchange, but this is not something that happens overnight and probably would be met with much opposition from the big players in the market. This would bring retail into the CDS market, and because of that a whole slew of new consumer laws and protection would have to be introduced. Something that involves fees for the CTFC or whatever regulating body would have oversight. Why you'd want a max payout limit on them is beyond me, unless you don't understand how CDS are created and unwinded.
Agree with your stance on GLD and its lack of backing, though im afraid any other PM etc (and perhaps even USO, UNG etc, who knows?) is the same. I guess thats why ETFs should only be on indices and industry sectors (anyone ever tried to take delivery of FAS? don't think so..) though again here comes the retail day trader with his voice telling the banks 'hey create an ETF so i can bet on the price of a big mac!!1' The GLD would not have been created if there wasnt a back office hack modeling the potential profits on that ETF and coming with a very very substantial +NPV.
PS - i have absolutely no vested interest in the sale or trade of any sort of CDS.
A contra asset account is an asset account with a credit balance. It should not be held off balance sheet. SPEs are set up specifically to hide actual financial position of the company by keeping liabilities off the balance sheet.
"To the weapons of mass destruction part... thats a glorified name for them. Why not call the FED by the same thing?"
Really? Just hide behind the Fed’s skirt? That’s your cover?
Fucking die already.
The CDS syndrome is a clever-stroke to game the system by masquerading as valid contracts, thus qualifying for enforcement via the justice system of Federal and State courts.
Without the threat of enforcement by the established system of justice, there would be no threat to society. No one would touch them with their own money without real trust in the real deal.
The "public" trusted because the financial agents were supposed to be trustworthy. The electrician is trusted to do an honest job...the electrician trusted the broker to do an honest job. The former could easily be taken to court and damages demonstrated. The latter could only be taken to court at prohibitive expense and travail.
As for "needing" CDS for purpose of "hedgeing", who would enter into contract so unconfident that they "needed" a hedge? CDS are NOT insurance because CDS are not regulated. All insurance is.
Buyers of CDS do not need to have any "skin" in the game...I can buy a CDS on another party's investment, then sell short that investment to force it to fail...and collect on the full value of another's loss.
CDS cannot be regulated any more than the gov can regulate my opinion. CDS as unregulated betting should not be subject to contract law...hence no court enforcement....hence bye-bye to CDS schemes.
As the buyer, you are the one who decides whether or not 100:1 leverage is "allowed."
"And then of course there's speculation, which is the real thing this argument is over. There has always been speculation, ..."
There's a major, qualitative difference between real speculation --- and super-leveraged speculation utilizing insider trading knowledge -- which is what we have seen repeatedly over the past decade.
Who owns all the exchanges? The bank-oil cartel, obviously.
If you wish to differ with that fact, simply investigate the original financing and ownership of the InterContinental Exchange, ICE Futures, ICE Clear, ICE Europe, Markit Group, SwapsWire, the Climate Exchange PLC, ELX Futures, DTCC, MarkitSERV, and of course, that newest "clearinghouse" -- ICE US Trust.
They who own the exchanges, own the market --- anyone should be able to comprehend that.
Next lesson: who owns the software behind the NYSE and NASDAQ?
Any levered ETF which you or I can trade from our home in our pajamas is also leveraged speculation, minus the insider trading knowledge. Though insider info can never really be stopped, there are those who are in, and those who aren't. Definitely not saying its right, but im a realist, and the little job the SEC does on controlling it, they'll never stop it entirely regarding equities and options trading. For CDS speculation, well thats where the lack of governance comes in.
DTCC and the equivalent in Canada, CDS Ltd., have a minute influence on the exchanges, but mostly for clearing and bookkeeping purposes only. Wont disagree on who owns exchanges as i simply don't know but your assumption about it being a powerful group is fair.
"Next lesson: who owns the software behind the NYSE and NASDAQ?"
http://www.opengroup.org/dce/successes/siac.htm
http://www.nyse.com/corpgovernance/1133487611965.html
best I could do...
"Do you put money down when you purchase insurance on your home/car? (No)"
You want to tell me who buys thousands of policies on the same, exact car or home????
Wise up, dood!
The comparison of CDSs to home insurance is very weak and i brought it up only because it seems the media and people against CDS always bring it up to illustrate how the 2 should be exactly the same and how you cant take out insurance on something not yours and, as you mentioned, how you can only take out insurance on your home once. So the comparison is weak at best.
The fact is, those leveraged bets and multiple insurance claims on a single entity are what enables firm to hedge. You bet on a firm's demise by shorting it, getting puts, whatever. It hedges by its own methods, and unless you can fully describe a CDS transaction in its entirety, not solely what Ratigan gives you on MSNBC, then you shouldnt be fully against it simply because its the popular theme here. I agree with some topics on ZH, and with some i don't. I just try and give my best reasons why. Maybe less to try and influence someone but more to educated someone in an area where im more experienced, just as i reap knowledge in areas where im not so versed.
Ill say again, im all for a clearing agency to deal with such securities, but it won't happen o/n and it won't come at no cost either.
Do you put money down when you purchase insurance on your home/car? (No)
-What?
My thoughts, exactly.
Anyone who buys insurance just lost money to the insurance company who profits off of its costumers, duh.
I only take part in insurance scams when threatened by superior forces, such as in the US. Auto, health, etc.
I dont know if u guys know this already, but these european bankers will have an (emergency) meeting in stockholm...I can smell the taste of bankfailure and somekind of bailout (is it a failure if u can transfer all the loss to taxpayers??)
Source?
The European bank organisation, Institut International d'Etudes Bancaires (IIEB), has been described as a secret club for top bankers.
Its three-day annual spring conference in Stockholm, hosted by the Swedish banks Handelsbanken, SEB and Nordea, is being slammed for its lack of insight.
"If it happened in the construction industry it would be called a cartel. But IIEB has never had any problems," a former member told business daily Dagens Industri.
The club's general secretary Eddy Wauters was utterly annoyed by the drop-out and furious over how Swedish media tried to "create chaos" in its way of describing the organisation and conference.
"You think you have to know everything and write everything. You think it is you who are the bosses", he told DI.
The bank organization is an exclusive members club and was officially founded in 1951. But there’s little information to be found about the society.
“You don’t talk about IIEB”, the former member told the business daily.
The conference kicked of Thursday.
Some of the participants:
• Josef Ackermann, CEO Deutsche Bank
• Klaus-Peter Müller, chairman Commerzbank
• Frédéric Oudéa, chairman and CEO Société Générale
• Baron David de Rothschild, senior partner Rothschild & Cie Banque
• Peter Straarup, CEO Danske Bank
• Pier Francesco Saviotti, CEO Banco Popolare
• Marcus Agius, chairman Barclays Bank
Source: DI
It's called change you can believe!
Western governments do not spy on their respective citizenry. Or they spy on them according to laws.
So how does a western government achieve spying on its citizenry?
By asking another western government to spy. In exchange, the other western government can ask for its own citizenry to be spied.
In the end, every one is happy, citizenry in the west live without being spied on by their respective governments and western governments get the information they need by this spy game.
How topical? The US government has nearly incestuous relationship with Wall Street. Yet this relationship might be destructive to the US government. The US government cannot take measures against WS without jeopardizing itself.
Maybe, in this case, Merkel and the German government only plays the part the US government would like to but is unable to.
It's odd that so many politically-oriented people have a belief that the Wall Street - government connection is somehow secret.
The big houses issue the bonds and assist governments in the auctions.
Without Wall Street, the government has to turn to printing and taxes to finance everything, which is politically unsustainable in the long run.
In addition, Wall Street handles all the mortgage securities created by Fannie/Freddie/FHA etc. to keep everything together.
Odd how?
I dont see how it connects.
Save on the part on self inflicting pain.
The US might ask Germany to do something they cant do by themselves.
Amdocs.
An Israeli company that has contracts to do 90% of telephone billing in the US.
I am Chumbawamba.
I love Mr. Rickards, Always have.He has never wavered on anything he hasd ever said.Very in tune. He last interview in kingworldnews before this one, he talks about the Imf and SDR's etc. A Must listen to. He knows whats going down and is even more bullish on Silver.Look for position limits comming to Silver comming right up now that the fin reg bill pushes through to be signed.That will eliminate the naked shorts and then we will find out what the true value is..
Dido.
I love the way he thinks; very much like a gifted scientist.
I'd already listened to his interview, and was happy to find it being discussed here.
Did you listen to his last one about the IMF?
King World News is my Saturday morning cartoons.
Now I'm curious if there's something spicy I'm not remembering regarding Rickards comments on the IMF. Their new paper isn't based on any metal, and they likely don't have any of the gold they claim to be selling.
I posted this on another thread, too, so sorry in advance for the double post but I'd like to hear some thoughts.
The Turdman is NOT a conspiracy theorist. But there is so much disinformation out there...
With that in mind, does anyone have any thoughts on this? Is there even a 1% chance that this is accurate?
http://www.eutimes.net/2010/05/us-orders-blackout-over-north-korean-torp...
When I read stuff like that, I reminded of Ockham's razor.
What's the simplest explanation for bringing in the military then? Maybe just an excuse to have more homeland security?
+ 1,000
Never ascribe to malice that which is adequately explained by stupidity. ~ Napolean Bonaparte
Good point.
yes, stupid military, always blowing things up.
There are multiple eye-witness accounts by the drillers on the rig how gas-infused mud blew up out of the well, spraying all over the deck, and that this is what blew up. The oil-producing zone they were drilling into was overpressured, and they had been having problems w/ this while drilling. This is what caused a blowout up through the cement plug. A hit from a torpedo would not have produced this effect.
How is this different? Had a sub torpedoed the pipe, wouldn't the same observations on deck occur? It's only different in cause, not effect.
If a sub torpedoed the pipe, the break would have been somewhere underwater well below the drilling deck. Depending on where the torpedo impacted, it may or may not have taken out the cement plug within the pipe. If it somehow managed to do so, then depressurization would have been through the broken end of the pipe, directly into the water with no explosion.
What witnesses described however, was a bubble of gas (a "kick") that came up through the pipe and depressurized at the drilling deck. It was the gas, mixed in w/ the mud and seawater in the pipe, that blew out all over the drilling platform, where it found an open ignition source (e.g., electrical equipment) and ignited.
A mini Nork sub hits a drilling pipe from 130 miles away then sneaks up and kamikaze's the platform 2 days later after exiting from a Cuban port all the while averting arguably one of the most comprehensive U.S. sub/sonar nets? I don't buy it.
I would short that story, as well. But, I can think of many other versions that make more sense than the reality I'm told to believe. All of my versions have the platform explosion resulting from the deep water explosion. None of my versions involve North Koreans.
May I ask, how do you know this with the certainty you speak with? Are you an engineer? I'm not trying to be rude. I'm just trying to understand how a rig can accidentally explode, quite easily apparently, with a ready explanation already known, yet it's impossible for an attack from deep water on the pipe to cause an explosion on the surface? I'm find this very hard to believe.
I'm a geologist who's worked for an oil company (no offense taken whatsoever :D ). My statements are based upon reading eye-witness accounts which described the explosion as occurring ON the drilling deck. How could an explosion have occurred on the drilling deck if the pipe was severed underwater by a torpedo? Besides which, before anything catastrophic happened, the 5000 feet of pipe between the ocean floor and the rig was filled with 1) cement and 2) drilling mud and seawater -- none of which would be ignited via a torpedo exploding. Even if one makes a leap and assumes there somehow might have been methane gas within the supposedly cement-sealed pipeline, exactly where a torpedo might have impacted, I'm not sure that the resulting explosion would have ignited the methane underwater. Someone more expert than I would have to answer that. But if we assume for the sake of argument that it did ignite the gas, the corresponding explosion would occurred underwater at the point of impact, not up on the drilling deck.
Okay, let me see if I got this right.
Too much pressure from the area of drilling caused a blowout of methane which busted the pipe and ignited at the surface.
We also see methane still coming from the pipe.
But a torpedo or other such sabotage wouldn't have resulted in a blowout at the surface? I say we call Mythbusters.
To: Sheila @ FDIC
Dear Sheila,
The BP/GOM crisis is a Control-Failure.
Get on it !
I doubt this story is true. Highly unlikely.
This is the first time I have ever responded to a turd.
The arcticle was written by Sorcha Faal.
The chances of any of it being accurate less than 0.00000000000000000000001%.
do chen lol what the response of the tissue paper
whats up...
I doubt it, too.
Yet, I always doubt whatever officials tell me, as well.
It's amazing that so many are still so eager to believe entities that constantly lie to you. Oh, wait, maybe this time they're telling me the truth.
CBS 60 Minutes interview of survivor: http://www.youtube.com/watch?v=0onXmlFgF8I
North Korea?
The damage does look like it could have been cause by a torpedo, judging from the video of the leak. It looks oddly like attacks on above ground pipes. It also occured about the same time as one such attack on a major pipeline in Iraq.
Obama did immediately respond by "securing" the Gulf region with a military force that I thought was overly absurd. Right, like the military is going to fix this?
So, I have no clue. However, I'm not as clueless as many others here.
But North Korea?
Hey, your weblink contains a virus, and it's anyway commie propaganda gibberish.
Put away the tin-foil hat dude. If N. Korea had anything to do with it, it would be the goose that laid the golden egg. The corporation is just itching for a war – any war.
This ain’t the one.
The March 2009 lows won't hold.
Updated DOW daily and weekly charts:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
Unfortunately, righting the US(S) Titanic at this point is impossible as it would mean undoing 2 years of flawed actions and policies, and the cost would be unbearable.
Nothing we do now will stop collapse.
Not the bs fraud status quo, hyperinflation, or the reality of insolvency default and depression will stop it.
We are damned if we do and damned if we don't; simple as that.
The only considerations one should have, logically, at this point are when is it coming, and what comes after.
"what comes after" is the million dollar question, do you have an opinion?
There are only two available options as the fraudulent status quo won't hold much longer:
A) Sanity returns, losses are realized, default is a given, and a vast deflationary depression ensues. The inherent default from the realization of insolvency will curtail government spending, the American "empire" disintegrates, and unfunded liabilities will become unfunded. The public supported social safety net would evaporate.
B) Hyper Fraudation/Inflation/Stagflation, ensues because reality is just too terrible, and the Haves of the world won't give up their precious wealth and power. DOW 20k, $10 milk and gasoline, and whole traunches of the middle class are now below the poverty line and are unable to provide for their families basic needs.
Historically speaking both of the above possible outcomes leads to societal instabilities that are not limited to but include:
Large national social movements, civil unrest, and martial law.
Break downs in supply chains that lead to resource conflicts, rationing, and famine.
War, civil war, and world war.
Radicalized government that usually morphs into various states of ideological totalitarianism.
There are a lot of scary scenarios that could very well happen, but this one seems more credible and it wouldn't require total social collapse. Anything that stops store inventories (especially grocery stores) from being restocked for a week or two would get ugly very quick, especially deep within major metropolitan areas. A simple thing like loss of faith in electronic payment systems for shippers, drivers, etc could do this and the damage would be long lasting even if government and commerce survived and got the problem fixed.
Loss of faith in the availability of credit has proven to be a situation that made things get ugly quick.
ixnay the ratavaray
I miss you already
AAAAK!
MsCreant has been bodysnatched!
I like your term "Hyperstagflation" which you used on here yesterday. Scenario B) is the most likely outcome. I would like to add my bet that internet access will be severely restricted.
It could be not very exciting, like Japan.
Reserve currency status, makes this impossible at a national level.
I think you might have an argument that supra national currency like SDRs could create a global Japanese situation, and suppose an arrangement like that could include the US.
The above is actually what I suspect the end game to be. A preplanned demoltion of sovereign economics, and a surprise prefabricated path of least resistance to a supra national CB entity conducting monetary policy for the world.
I'm not so sure these criminals fully understand that they are opening Pandora's Box in their demolition/bust phase this time around though. I believe that they will not be able to control and channel the events to come, history points to this, and the world will be gripped by a time of lightning changes, madness, and war.
Wish I could post images 'cause this one is a doozy:
S&P 500 Rally Draw Downs
This comes from Ritholtz's latest, chart from Jim Bianco, showing the extent of drawdowns, since this rally began in March 2009
I think they need S@P at about 1350 to keep the pensions from being a total train wreck but even with HFT and a market stuffed to rim with greater fools it's not possible.
Curiously Rickards is very much against CDS.
I'm not against insurance and hedging, BUT it should be on an open market in the light of day not OTC, AND the synthetic/derivative versions should be illegal. Just my .02
This entire "hedging" thing is nothing but a scam. They can continue to reframe it and reframe it, but it is nothing but a financial scam, or to be exact, a Ponzi-Tontine structure.
agree. They're very good a re-framing, aren't they. They want to continue to sell insurance and not be regulated as an insurance product, exactly what is wrong, yet everyone moved on didn't they.
Well when people like Schiff start calling for 5-10 thousand dollar prices on Gold, you can bet that is the direction we all will be taken. Schiff has Jewish family, banking ties going back to at least the 1300's in Germany. These people have played this book over and over using the savior White Horse or Change many times.
I just posted this because I wanted to log in.
Welcome, glad you did..
Schiff has been calling for gold to go to 5000 for years you schmuck
You have a tiny world view Schmuck.
Hey, you only got called "Schmuck"! That's pretty tame. Coulda been worse.
Oy vey.
Yes, the Jews have it all planned. That is why you must throw them down the well, you brave man.
If Schiff were such a fucking genius, his fund wouldn't be down something like 70-80% from the high.
He basically only plays a hedge fund manager for TV.
Which fund? I think he's only got the one that they just started in April, but I could be wrong.
Also I don't think Peter Schiff is from the Schiff banking family from long ago. Again, could be wrong. But I do remember reading he's not related to the Schiff who was a participant at the Jeckyll Island meeting.
Peter's not related to the banking ties as you suggest.
Is Irwin Schiff Related to Jacob Schiff? Submitted by andrewschiff on Fri, 02/01/2008 - 19:18.Yes and No .
Irwin's Father was Jacob Schiff but not THE Jacob Schiff. Like the banker, Irwin's father (Jacob) immigrated to the United States in about 1900 after having completed 10 years as a carpenter's apprentice in modern day Poland. Unlike the other one, he came to the U.S. as a penniless teenager. But he did have tremdendous old-world carpentry skills. He moved from New York to New Haven, CT around 1908 to help build the Yale University football stadium. That's where Irwin was born. Jacob's skills were sufficient to raise 8 Children in America, but they were never well-to-do. Solidly working class.
How do I know? Irwin is my father.