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Why Occupy Wall Street When You Can Control Wall Street?

Submitted by Reggie Middleton on 10/12/2011 10:42 -0400

Here is an interesting video that illustrates the extreme
vulnerability of the banks if the "Occupy Wall Street" movement truly
gets organized with direction from someone with a deep understanding of
the system. You know, someone tall, brown, charismatic and not afraid to
really speak the truth...

This video touches upon many taboos in society, business and Wall Street
finance... Right up my alley. One of the more interesting topics is that
of social class, and how the little naked woman in the video just
doesn't have the same impact as Carl Icahn. Careful, now. Don't laugh
prematurely. The lightning fast distributed method of communal
communication commonly known as social media is truly changing the way
thing get done around here. Think about how you are reading this message
and who you're reading it from.

One concept that I would like to
dwell on this post, but unfortunately will not be able do due to time
constraints, is the very real fact that there is NO MIDDLE CLASS! I
believe it is a construct created by the capitalist class and their
managers to placate the masses and muffle would be insurrectors who
would dare attempt to move up the ranks. The reality is everybody is a
member of the working class who is not a member of the capitalist class
and needs to work for a living. That's right, if you cannot live off of
your capital, then you are a working class citizen. Middle class and
upper middle class monikers, are just that... monikers. That goes for
you doctors, lawyers, accountants and well educated PhDs. You know the
old saying about the friends walking down the street in Greenwich. One
saw a neighbor and immediately urged the other to hustle across the
street. When his friend asked what the rush was, the 1st man replied, I
heard that Biff over there is starting to live off of his principle.
Long story short, many more of you are members of that 99% than may have
been led to believe by those in charge.

As excerpted from Super Brokers form to push Super Broken products to make those with High Net Worth Super Broke

Social Mobility: Unlike the Jefferson's, We're moving on down!

Social
class is defined (on this blog) as the amount of control one has over
one's socio-economic environment. It is much more than money, although
money is a large component. For instance, Barack Obama is in a higher
class than Robert DeNiro or Michael Jackson, although Robert DeNiro and
Michael Jackson are most likely wealthier (although that is quite
debatable after taking into consideration the value of Obama's campaign
contribution list and membership database from his social networking
site!). Obama's higher class stems from his ability to exert more
control over his socio-economic environment. The factors that this
author uses to determine class combine (with the associated weights) to
create a "socioeconomic index":

Socioeconomic Index=

(Occupation X 12) + (Income source X12) + (Income X 7) + (Wealth X 14) +

(Education X 7) + (Dwelling area X 15) + (Class Consciousness X 7) +

(Housing X 12)

There
is a handy dandy BoomBustBlog class model (based loosely upon the Index
of Status Charcteristics) available for download for anyone interested
in delving into this further. See boombustblog.com_social_class_model v.7.3 156.00 Kb.

As you can see, wealth is the largest contributor to the class standing, and coincidentally it is the factor
that is the most at risk in this current economic climate. I believe
that there will be a significant entry into the upper middle class by
those who were once firmly entrenched into the upper classes! While that
may not seem like a big deal to many, it is damn big deal to those who
are moving down the ladder. This also means, that there will be some
space for others to move (relatively speaking) up the ladder. One man's
(or woman's) misfortune is another's opportunity. I believe this blog
can not only be used to insure and proof against downward mobility

for those in the upper strata, but can also be used by those in the
lower, middle and lower upper strata to rise upward a notch or even two.
Social Mobility is the name of the game in times of severe dislocation - times like we are experiencing now.

Lower Strata	Underclass/Poor
	Working Poor
Middle Strata	Lower Middle Class
	Upper Middle Class
Upper Strata	Lower Upper Class	<-- 20% to 30% of BoomBustBloggers are here, roughly 1,000 of you!
	Higher Upper Class

Now,
in term of wealth (not social class and influence, just wealth) we can
split the upper strata into three different categories (there are only
two above because of the other factors that come into play when social
class or socioeconomic standing is taken into consideration).
There
is the poor wealthy, those guys and girls that are just a hair's breath
from being pulled into the upper middle class strata due to marginal
wealth. This would be the $1m to $10m net worth crowd, who rely on
business profits, salary and investment returns for income. The next
would be the middle strata of the wealthy, hailing between $10 to $100
million in Net Worth, and then there is the upper strata wealthy at
above $100 million. Each of these three strata of wealth represent, in
my opinion, distinct behavior tranches in terms of discretionary
expenditures, investment, and politics and (what passes as, this is a
story for another post) philanthropic activities.

	Demographic	Source of wealth	Net Worth
Lower strata wealthy (High net worth)	Service professionals, corporate executives, entrepreneurs, inheritors	Salaries, stock options, restricted stock, small business profits, investment returns	$1 m to $10 m
Middle strata wealthy (Very High Net Worth)	Corporate executives, entrepreneurs, inheritors	Business ownership, investment returns, salaries, restricted stock, stock options	$10 m to $100 m
Upper strata (the truly Rich!)	Entrepreneurs, inheritors, very few CEOs	Business ownership, investment returns	$100 m to several $billion

A
trip to practically any decent sized yacht club or recreational vehicle
port reveals the relatively stark differences in discretionary spending
behavior. The first strata can be found in the 36 ft. to 68 ft. yacht
docks (where a captain is optional, but not mandatory and you really
don't need a crew). The second strata can be found 50 ft to 120 ft
docks, where captains, crews and semi-custom fiberglass boats abound.
The third strata are almost exclusively in the super yacht category,
where the carrying cost alone for these (basically waste of money) fully
custom built hulls and vehicles are about million a year to start with.
You can also see the other social economic strata as well, upper middle
class in the 20 to 35 ft boats, the middle and working class in the
considerably smaller fishing boats - as opposed to the ultra fast Viking
and Hatteras deep sea fishers, etc. It is an interesting and
instructional study in social studies and anthropolgy just walking along
your local docks! Once you are aware of how these things break down,
you will see many settings in a different light.

The dark purples, deep greens and reds are most likely the general demographic to get hit hardest.
Fortunately, those who follow this BoomBustBlog closely, either
personally or through their advisor, should have seen a net increase in
networth rather than a net decrease. This has hurt non-BoomBustBloggers
in this demographic tranche significantly, and will hurt them even
farther. At the same time, let's hope that the opinion and research that
I bring to the blog helps, because many will need it. Download The new BoomBustBlog.com Socio-economic stratification model

And The European Bank Run Continues...

As
excerpted from the article titled above, we find corroborating evidence
that the common man/woman can indeed elicit significant cooperation
from Wall Street baks, for those very same banks' institutional
counterparties are quite skittish as it is. As a matter of fact, we are
seeing the makings of an insitutional run right now, one that will
easily be exacerbated if retail depositors pull their money out as well.

Since
the problems have not been cured, they're literally guaranteed to come
back and bite ass. Guaranteed! So, as suggested earlier on, download
your appropriate BoomBustBlog BNP Paribas "Run On The Bank" Models
(they range from free up to institutional), read the balance of this
article for perspective, then populate the assumptions and inputs with
what you feel is realistic. I'm sure you will come up with conclusions
similar to ours. Below is sample outout from the professional level
model (BNP Exposures - Professional Subscriber Download Version) that simulates the bank run that the news clippings below appear to be describing in detail...(Click to enlarge to printer quality)

image014

Bloomberg reports: Lloyd’s of London Pulls Euro Bank Deposits

Lloyd’s of London,
concerned European governments may be unable to support lenders in a
worsening debt crisis, has pulled deposits in some peripheral economies
as the European Central Bank provided dollars to one euro-area institution.

“There are a lot of banks who, because of the uncertainty around Europe,
the market has stopped using to place deposits with,” Luke Savage,
finance director of the world’s oldest insurance market, said today in a
phone interview. “If you’re worried the government itself might be at
risk, then you’re certainly worried the banks could be taken down with
them.”

European
banks and their regulators are trying to reassure investors and
customers that lenders have enough capital to withstand a default by Greece and slowing economic growth caused by governments’ austerity measures. Siemens AG (SIE), European’s biggest engineering company, withdrew short-term deposits from Societe Generale SA, France’s second-largest bank, in July, a person with knowledge of the matter said yesterday.

Lloyd’s,
which holds about a third of its 2.5 billion pounds ($3.9 billion) of
central assets in cash, has stopped depositing money with some banks in
Europe’s peripheral economies, Savage said, declining to name the
countries or institutions.

Simply fuel to the fire... As excerpted from my bank run post yesterday: Most Headlines Now Show French Bank Run …

Siemens shelters up to €6bn at ECB: Siemens withdrew more than half-a-billion euros...matter told the Financial Times. In total, Siemens has parked between €4bn ($5.4bn) and...to deposit cash directly with the ECB. Siemens’ move demonstrates the impact of the eurozone... By Daniel Schäfer in London and Chris Bryant and Ralph Atkins in Frankfurt...

... As excerpted from "The Fuel Behind Institutional “Runs on the Bank" Burns Through Europe, Lehman-Style":

The modern central banking system has proven resilient enough to
fortify banks against depositor runs, as was recently exemplified in the
recent depositor runs on UK, Irish, Portuguese and Greek banks – most
of which received relatively little fanfare. Where the risk truly lies
in today’s fiat/fractional reserve banking system is the run on
counterparties. Today’s global fractional reserve bank get’s more
financing from institutional counterparties than any other source save
its short term depositors. In cases of the perception of extreme risk,
these counterparties are prone to pull funding are request
overcollateralization for said funding. This is what precipitated the
collapse of Bear Stearns and Lehman Brothers, the pulling of liquidity
by skittish counterparties, and the excessive capital/collateralization
calls by other counterparties. Keep in mind that as some counterparties
and/or depositors pull liquidity, covenants are tripped that often
demand additional capital/collateral/ liquidity be put up by the
remaining counterparties, thus daisy-chaining into a modern day run on
the bank!

image006image006image006

...The
biggest European banks receive an average of US$64bn funding through
the U.S. money market, money market that is quite gun shy of bank
collapse, and for good reason. Signs of excess stress perceived in the
US combined with the conservative nature of US money market funds
(post-Lehman debacle) may very well lead to a US led run on these banks.
If the panic doesn’t stem from the US, it could come (or arguably is coming), from the other side of the pond. The Telegraph reports: UK banks abandon eurozone over Greek default fears

UK
banks have pulled billions of pounds of funding from the euro zone as
fears grow about the impact of a “Lehman-style” event connected to a
Greek default.

Senior
sources have revealed that leading banks, including Barclays and
Standard Chartered, have radically reduced the amount of unsecured
lending they are prepared to make available to euro zone banks, raising
the prospect of a new credit crunch for the European banking system.

Standard
Chartered is understood to have withdrawn tens of billions of pounds
from the euro zone inter-bank lending market in recent months and cut
its overall exposure by two-thirds in the past few weeks as it has
become increasingly worried about the finances of other European banks.

Barclays
has also cut its exposure in recent months as senior managers have
become increasingly concerned about developments among banks with large
exposures to the troubled European countries Greece, Ireland, Spain,
Italy and Portugal.

In
its interim management statement, published in April, Barclays reported
a wholesale exposure to Spain of £6.4bn, compared with £7.2bn last
June, while its exposure to Italy has fallen by more than £100m.

One
source said it was “inevitable” that British banks would look to
minimise their potential losses in the event the euro zone crisis were
to get worse. “Everyone wants to ensure that they are not badly affected
by the crisis,” said one bank executive.

Moves
by stronger banks to cut back their lending to weaker banks is
reminiscent of the build-up to the financial crisis in 2008, when the
refusal of banks to lend to one another led to a seizing-up of the
markets that eventually led to the collapse of several major banks and
taxpayer bail-outs of many more.

Make no mistake - modern day bank runs are now caused by institutions!

Make no mistake! And just for those who cannot catch the hint... Reuters reports:

Bank of China halts FX swaps with some European banks

The European banks include French lenders Societe Generale (SOGN.PA), Credit Agricole (CAGR.PA) and BNP Paribas (BNPP.PA), and Bank of China halted trading with them partly because of the downgrading from Moody's, the sources said.

Another Chinese bank said it had stopped trading yuan interest rate swaps with European banks.

The sources declined to be identified because they were not authorized to speak with the media.

Contacted
about this move by the Chinese banks, spokespeople for Societe
Generale, UBS and BNP Paribas declined comment. Credit Agricole was not
reachable for comment.

One
of the sources said that Bank of China's decision may apply across its
branches, including the onshore foreign exchange market.

"Apart
from spot trading, all swaps and forwards trading (with the European
banks) have been stopped," one source who is familiar with the matter
told Reuters.

A step by step tutorial on exactly how it will happen....

Again,
I believe the next big thing, for when (not if, but when) European
banks blow up, is the reverberation through American banks and how it
WILL affect us stateside! Subscribers, be sure to be prepared.
Puts are already quite costly, but there are other methods if you
haven't taken your positions when the research was first released. For
those who wish to subscribe, click here.