Nomi Prins' Financial Road Map For 2016: "The Potential For Chaotic Fluctuations Is Greater Than Ever"

Tyler Durden's picture




 

Authored by Nomi Prins, author of "All The Presidents' Bankers", via NomiPrins.com,

We are currently in a transitional phase of geo-political-monetary power struggles, capital flow decisions, and fundamental economic choices. This remains a period of artisanal (central bank fabricated) money, high volatility, low growth, excessive wealth inequality, extreme speculation, and policies that preserve the appearance of big bank liquidity and concentration at the expense of long-term stability. The potential for chaotic fluctuations in any element of the capital markets is greater than ever. 

The butterfly effect - the flutter of a wing in one part of the planet altering the course of seemingly unrelated events in another part - is on center stage. There is much information to process. So, I’d like to share with you – not my financial predictions for 2016 exactly - – but some of the items that I will be examining from a geographical, political and financial perspective as the year unfolds.

1) Central Banks: Artisans of Money

Since the Fed raised (hiked is too strong a word) rates by 25 basis points on December 16th, the Dow has dropped by about 3.5%. Indicating a mix of fear of decisive movements and a market awareness deficit regarding the impact of its actions, the Federal Reserve hedged its own rate rise announcement, noting that its "stance of monetary policy remains accommodative after this increase.”

These words seem fairly clear: there won’t be many, if any, hikes to come in 2016 unless economies markedly improve (which they won’t, or the words would be much more definitive.) Still, Janet Yellen did manage to alleviate some stress over the Fed's inaction on rate rises during the past 7 years, by invoking the slighted action possible with respect to rates. 

Projections are past reactions here. The Fed, to save face more than anything or to “appear” conclusive, raised the Fed Funds rate (the rate US banks charge each other to borrow excess reserves, of which about $2.5 billion are with the Fed anyway), to .25-.50% from 0-.25%. And yet, the effective rate stood within the old Fed target range, or at an average of .20% on December 31 for various reasons, the timing of which was not lost on the Fed. It was at .35% or so on the first day of 2016. The Fed’s rate move was tepid, and it’s possible the Fed moves rates up another 25 or 50 basis points over 2016, but less likely more than that and more likely it engages in heightened currency swap activities with other central banks as a way to “manage” rates and exchange rates regardless.

Meanwhile, most other central banks (Brazil being an extreme counter example) remain in easing mode or mirror mode to the Fed. It’s likely that more creative QE measures amongst the elite central banks will pop up if liquidity, markets or commodities head southward. Less powerful central banks will attempt to respond to the needs of their local economies while balancing the strains imposed upon them by the elite central banks.

2) Global Stock Markets

They say that behavior on the first day of the year is indicative of behavior in the year to come. If so, the first trading day doesn’t bode well for the rest. Turmoil began anew with Asian stock markets crumbling at the start of 2016. In China, the Shanghai Composite hit two circuit breakers and China further weakened the yuan.

Yes, there’s the prevailing growth-decline story, a relic of 2015 “popular opinion”, being served as a reason for the drop. But also, restrictions on short selling by local Chinese companies are expiring. Just as in last August, China will have to balance imposing fresh sell restrictions with market forces pushing the yuan down.

The People’s Bank of China will likely inject more liquidity through further reserve requirement reductions and rate cuts to counter balance losses. The demise in stock values is not simply due to slower growth, but to high debt burdens and speculative foreign capital outflows; the story of China as a quick bet is no longer as hot as it was when China opened its markets to more foreign investors in mid-2014, since which volumes and volatility increased. It will be interesting to see if China responds with more capital controls or less, and how its  “long-game” of global investments plays out.

Blood shed followed Asian into European markets. Subsequently, the Dow dropped by about 1.6% unleashing its worst start to a year since the financial crisis began. Last year's theme to me was volatility rising; this year is about markets falling, even core ones. This is both a reaction to global and local economic weakness, and speculative capital pondering definitive new stomping grounds, hence thinner and more dispersed volumes will be moving markets.

3) Global Debt and Defaults

As of November 2015, Standard & Poor’s tallied the number of global companies that defaulted at 99, a figure only exceeded by that of 222 in 2009. Debt loads now present greater dangers. Not only did companies (and governments, of course) pile on debt during this zero interest rate bonanza period; but currency values also declined relative to the dollar, making interest payments more expensive on a local basis.

If the dollar remains comparatively strong or local economies weaken by an amount equivalent to any dollar weakening, more defaults are likely in 2016. In addition, the proportion of junk bonds relative to investment grade bonds grew from 40% to 50% since the financial crisis, making the likelihood of defaults that much greater. Plus, the increase in foreign, especially dollar, denominated debt in emerging markets will continue to hurt those countries from a sovereign downgrade and a corporate downgrade to default basis.

I expect sovereign downgrades to increase this year in tandem with corporate downgrades and defaults. Also, as corporate defaults or default probabilities increase, so does corporate fraud discovery. This will be a year of global corporate scandals.

In the US about 60% of 2015 defaults were in the oil and gas industry, but if oil prices stay low or drop further, more will come. Related industries will also be impacted. In mid-December, Fitch released its leveraged loan default forecast of the TTM (Trailing Twelve Month index) predicting a 2.5% rise in default rates for 2016, or $24 billion in global defaults. That’s an almost 50% increase in default volume over 2015, and more than the total over the 2011-2013 period. Besides higher energy sector defaults, the retail sector could see more defaults, as consumers lose out and curtail spending.

4) Brazil and Argentina

Brazil is a basket case on multiple levels with nothing to indicate 2016 will be anything but messier than 2015. Even the upcoming Olympics there have reeked of scandal in the lead up to the summer games.

Brazilian corporations have already sold $10 billion in assets to scrape together cash in 2015, a drop in the bucket to what’s needed. Brazil’s main company, Petrobras, is mired in scandal, its bond and share prices took massive hits last year as it got downgraded to junk, and a feeding frenzy between US, Europe and China for any of its assets on the cheap won’t be enough to alter the downward trajectory of Brazilian’s economy. In fact, it will just make recovery harder as core resources will be effectively outsourced.

Fitch downgraded seven Brazilian sub nationals to junk, with more downgrades to come. Brazil itself was downgraded to junk by S&P with no positive outlook from anywhere for 2016. Falling revenues plus higher financial costs due to higher debt burdens will accentuate trouble. In addition, pension funds are going to be increasingly underfunded, which will enhance local population and political unrest, as unemployment increases, too.

Though Brazil will have the toughest time relative to neighboring countries, Argentina, will not be having a walk in the park under its new government either. The new centrist government removed currency capital controls in a desperate bid to attract capital. This resulted in crushing the Argentinean Peso (a.k.a. “Marci’s devaluation”) and will only invite further speculative and political volatility into the country. It could get ugly.

5) The Dollar and Gold

Despite what will be a year of continued pathways to trade and currency arrangements amongst countries trying to distance themselves from the US dollar, the fact that much of the world is careening toward global Depression will keep the dollar higher than it deserves to be. It will remain the comparative currency of choice, as long as central banks continue to fabricate liquidity in place of government revenues from productive growth.

Outside the US, most central banks (except Brazil which has a massive inflation problem) have maintained policies of rate reduction, lower reserve requirements, and other forms of QE or currency swap activities. As in 2015, the dollar will be a benefactor, despite problems facing the US economy and its general mismanagement of monetary policy. But the US dollar index and the dollar itself might exhibit more volatility to the downside this year, straying from its high levels more frequently than during 2015.

Last year, given the enhanced volatility in various markets, I expected gold to rise during the summer as a safe haven choice, which it did, but it also ended the year lower in US dollar terms. Because the US dollar preserved its strength, the dollar price of gold fell during the year - yet not by as much as other commodities, like oil.

I take that as a sign of gold finding some sort of a floor relative to the US dollar, with the possibility of more upside than downside for 2016, though in similar volatility bands to the US dollar. Gold relative to the Euro was just slightly down for 2015, relative to the approximate 10% decline in value relative to the US dollar. Considering the home currency is important when examining gold price behavior.

Also, it’s important to note that investing in gold requires a longer time horizon - months and years, rather than weeks and months - and should be done through physical gold, coins or allocated bars depending on disposable investment thresholds, not paper gold. 

In addition, as I mentioned last year, routinely extracting cash from bank accounts and keeping it in safe non-bank locations, remains a smart defensive play for 2016.

6) The People’s Economies

As companies default and economies suffer, industries will inevitably shed jobs this year around the world. The Fed’s publicly expressed optimism about employment figures and the headline figure decrease in US unemployment will be met with the realities of companies cutting jobs to pay the debts they took on during the ZIRP years and due to decreased demand.

Unemployment is already rising in many emerging countries, and it will be important to note what happens in Europe and Japan, as well as the US in that regard.  This Recession 3.0 (or ongoing Depression) could fuel further artisanal money practices that might again be good for the markets and banks, but not for real economies or jobs lost through reactive corporate actions.  

7) Oil

With Saudi Arabia and Iran pissed off at each other in a round of tit-for-tat power positioning, it’s unlikely either OPEC heavy weight will reduce oil production, this while tankers worldwide remain laden with their loads and rigs are quiet. Tankers off the coast of Long Beach in California for instance, that used to come in and unload, remain in stalling patterns away from the shoreline, waiting for better prices. This means tankers are making money on storage, but also that extra oil supplies are hovering off shore, and even if prices rise, release of that supply would have a dampening consequence on prices.

Oil futures have been a generally highly speculated product, so I’ve never believed that simple supply and demand ratios drive the price of spot oil as it relates to the futures price of oil. Only in this case, not only is there oversupply and weakening demand, but speculators are playing to the short side as well. That combination seems destined to keep oil prices low, or push them lower in the near future, but should be closely watched.

Meanwhile, signs of knock on problems are growing. In China, for instance, shipyards are struggling because global rig customers don’t need their rig model orders fulfilled.  

8) Europe

While Greece faces more blood-from-a-stone extortion tactics and none of the Troika get why austerity measures don't actually produce local revenues at high enough levels to pay expensive debts to foreign investors and multinational entities, other parts of Europe aren’t looking much better for 2016. Spain is facing political unrest, Italy, despite exhibiting a tenuous recovery of sorts, still has a major unemployment problem, and the Bank of Portugal lowered its growth estimates - for the next two years.

Mario Draghi, European Central Bank (ECB) head decided to extend Euro-QE to March 2017 from September 2016, having had the markets punish his less enthusiastic verbiages about QE late last year, because he has no other game. The Euro will thus likely continue to drop in value against the dollar, negative interest rates will prevail, and potential bail ins will appear if this extra dose of QE doesn’t keep the wheels, big banks and core markets of Europe properly greased.

9) Mexico

The Mexican Peso closed near record lows vs. the dollar for 2015. Much of the Peso’s weakness was attributed to low oil prices and Mexico’s dependence on its oil sector, but the Peso was already depreciating before oil prices dropped. If the US dollar remains comparatively high OR if oil prices continue to remain low or drop, the Peso is likely to do the same.

When I was in Mexico a few years ago, addressing the Senate on the dangers of foreign bank concentration, there were protests throughout Mexico City on everything from teachers’ pay to the opening of Pemex, Mexico’s main oil company to foreign players. The government’s promise then was that foreign firms would provide capital to Mexico as well as industry expertise that would translate to revenues. Oil prices were hedged then at 74 dollars per barrel. With oil prices at half of that, many of those hedges are coming off this year and that will cause additional pain to the industry and Pemex.

That said, though Mexico will feel the global Depression pain this year as a major player, it is still set to have a much better year than Brazil on every level; from a higher stock market to a higher currency valuation relative to the US dollar to lower inflation to lower unemployment to a better balance of trade with the US than Brazil will have with China. Plus, it has far less obvious inbred corporate-government corruption.

10) Elections and Media Coverage

It’s been a minute since the last debate or late night show fly-by from any Presidential hopeful, but this is the year of the US election. I look forward to continuing to post my monthly wrap on TomDispatch as the Democratic and Republican nominees emerge. I will be taking stock of the most expensive election in not just US history, but in the history of the World. Look for more on the numbers behind the politics later this month.

From a financial standpoint, this election has low impact on flows of capital. Given the platforms of everyone in reasonable contention (with the exception of Bernie Sanders’ platform), no one will actually touch excessive speculation, concentration risk in the banking or other critical sectors like healthcare, or meaningfully examine the global role of artisanal central bank policy, particularly as emanating from the Fed. 

Elsewhere, economic stress throughout the globe and a general sense of exasperation and distrust with politicians is putting new leaders in place that are pushing for more austerity or open capital flow programs rather than foundational growth and restrictions on the kind of flows that cause undue harm to local economies. That is a recipe for further economic disaster that will fall most heavily on populations worldwide. 

4.75
Your rating: None Average: 4.8 (16 votes)
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 01/05/2016 - 18:24 | 7002068 Cognitive Dissonance
Cognitive Dissonance's picture

And so the obvious ramping of the global war machine has nothing to do with the increasing financial reverberations heard in the distance. Right? Funny how the obvious has suddenly become.....well.....obvious just as the easy money disappears. As the herd turns......

Tue, 01/05/2016 - 18:26 | 7002090 knukles
knukles's picture

Love it how when in war, the gold always disappears.

Tue, 01/05/2016 - 19:59 | 7002408 SILVERGEDDON
SILVERGEDDON's picture

Nomi - no shit, Sherlock.

All them student loans, and some big words, and you got a handle on what a 5 year old can see and describe in two words.

" We're fucked. "

Even the E Trade baby got this one cold.

Back to your lords and masters for more indoctrination, mmmkay ?

Tue, 01/05/2016 - 20:31 | 7002594 Lets Buy The Dip
Lets Buy The Dip's picture

well there have been people in here saying the market will crash, even back in 2009.

Apple keeps getting KICKED IN THE BALLS lately!!! OUCH.

SEE THE CHART HERE ==> http://www.bit.ly/1B4K0wk

Down -2% today. I see lots of analysts saying to BUY APPLE, but if you see that chart, its no where near a buy signal. Went down 2% today. OUCHIE!!

Tue, 01/05/2016 - 18:32 | 7002114 Escrava Isaura
Escrava Isaura's picture

 

 

Naomi also knows that the US runs the world.

Article: Less powerful central banks will attempt to respond to the needs of their local economies while balancing the strains imposed upon them by the elite central banks. Brazil is a basket case…. 

 

And it will only get worse for the third world if commodities prices remain low while the dollar strengths.

 

Tue, 01/05/2016 - 18:45 | 7002152 Perimetr
Perimetr's picture

The Treasury has shown that it will create quadrillions and quadrillions in order to buy S&P futures and prop up the markets (all except, of course, precious metals, where it will allow the creation of endless COMEX paper contracts to push down the market).

In other words, the Treasury will not permit a crash unless it is told to cease and desist, or some external force intervenes (for example, global war, or the Chinese refuse to accept US fiat in exchange for the industrial products the US offshored to be produced there).

 

Tue, 01/05/2016 - 19:02 | 7002241 new game
new game's picture

it will get worse to the point of inflection. that point is "i have nothing moar to loose, so bomb the bastards, they fucked us over and now they will pay". that is the big ticket item coming to the world theatre and no popcorn will be distributed, but i am suggesting something far moar omnious - flak jackets and rabbit holes...

Tue, 01/05/2016 - 19:22 | 7002336 sgt_doom
sgt_doom's picture

Outstanding analysis!

But, there may be a remote possibility of pushback if every concerned citizen demanded of their elected representatives and presidential candidates the following:

Complete and full audits of the CIA, NSA, DIA, FBI and the Federal Reserve.

Tue, 01/05/2016 - 20:19 | 7002495 Cognitive Dissonance
Cognitive Dissonance's picture

As I said in my comment under the "Big Short" article (at the top) by RCWhalen.....

The possession of negative 'knowledge' or 'knowing' implies a responsibility to act upon the knowledge. The best way to avoid the implied responsibility is not to know.

"I see nothing. I was not here. I did not get up this morning." - The Sgt Schultz defense

Tue, 01/05/2016 - 18:28 | 7002082 Insurrexion
Insurrexion's picture

 

 

Nomi is absolutely right. 2016 will be a year of CHAOS.

 

Let me add another author's quote...

"Seven years later, here are the Truly Big Short stories:

  • The U.S. Government debt has doubled;

  • The Federal Reserve Bank continues to experiment with their printing machine;

  • Too-Big-Too-Fail banks continue to profit, hoard reserves and pay out large bonuses.

  • Commercial+Investment banking still equals conflicts of interest.

  • The LIBOR fixing, the gold price fixing, and the algorithm driven High Frequency Traders continue to cheat the system.

  • In 2008, the bond market was $80 trillion. It is now over $100 trillion.

  • The derivatives based upon this bond bubble as collateral is over $555 trillion in size.

  • Large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt.

  • In 2007, corporate bonds were $3.5 trillion. In 2015, corporate bonds are $7 trillion.

  • Puerto Rico is set to default on its $73 billion debt in January 2016.

    So, after we leave the theatre and as we approach 2016, we look to a flamboyant, reality television, real estate developer to save us from our complacent ignorance. We must also admit the dreadful truth that we have the same laws, the same players and the same corruption in global capital markets, on Wall Street and inside Washington D.C., we had in 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, and here at the end of 2015.

    Nothing has changed because it wasn’t ever meant to be changed."

Ref:

https://www.linkedin.com/pulse/truly-big-shorts-john-m-cunningham?trk=pu...

Tue, 01/05/2016 - 18:42 | 7002148 stumbLebum
stumbLebum's picture

Every year Zero Hedge claims that THIS YEAR will be the year it all comes tumbling down. And every New Year's Eve I lace up my blue suede shoes and do the foxtrot with a comely lass while quaffing the finest champagne from Swarovski crystal flutes.

Tue, 01/05/2016 - 18:44 | 7002168 GhostOfDiogenes
GhostOfDiogenes's picture

Fear prOn sells ad revenues brah

Tue, 01/05/2016 - 19:27 | 7002351 Hohum
Hohum's picture

And the champagne will continue to follow as long as debt increases faster than growth.  If it doesn't, ripple and da butt.

Tue, 01/05/2016 - 19:46 | 7002412 lincolnsteffens
lincolnsteffens's picture

ZeroHedge claims nothing. It is an information site that posts articles mostly by others and has a comment section. There is however a bias that for me tends toward truth or intelligent discussion.

Tue, 01/05/2016 - 20:03 | 7002464 prudent1nvestor
prudent1nvestor's picture

Quaffing? Last time I checked a quaff was a pussy fart

Tue, 01/05/2016 - 21:51 | 7002891 DanDaley
Tue, 01/05/2016 - 18:26 | 7002091 Bangin7GramRocks
Bangin7GramRocks's picture

Just a few of my patented chaotic fluctuations and uhhhhh! Pearl necklace for Nomi.

Tue, 01/05/2016 - 18:31 | 7002113 kliguy38
kliguy38's picture

I think I'm in love.......

Tue, 01/05/2016 - 18:41 | 7002151 GhostOfDiogenes
GhostOfDiogenes's picture

Yuck.

She worked at chase, lehman, goldman sachs, and bear sterns.

She is also a jewess ice princess post wall neoliberal.

Look at her pictures without photoshop. Just prepare to lose your boner....

And she seems to prefer slash, to dick.

Just sayin, bitchez.

Tue, 01/05/2016 - 18:44 | 7002171 stumbLebum
stumbLebum's picture

You're substituting anti-semitism for analysis.

Tue, 01/05/2016 - 18:48 | 7002189 Bay of Pigs
Bay of Pigs's picture

And you substitute stupidity for intelligence.

Tue, 01/05/2016 - 19:57 | 7002196 GhostOfDiogenes
GhostOfDiogenes's picture

Ho ho ho ho ho

Your ko$her mind tricks don't work on me, boy.

Tue, 01/05/2016 - 20:19 | 7002529 Squid Viscous
Squid Viscous's picture

stumblebum there were some great shorts last yr. FYI, while you were probly pulling your pud long some stupid shit like AAPL

Tue, 01/05/2016 - 18:54 | 7002212 Escrava Isaura
Escrava Isaura's picture

 

 

Nomi is great. And she is beautiful. But I do wonder if she is straight. Not that matter, or would change my opinion about her. Just curious.

 

 

Tue, 01/05/2016 - 18:37 | 7002135 Squid Viscous
Squid Viscous's picture

does she do anal?

Tue, 01/05/2016 - 18:42 | 7002153 Insurrexion
Insurrexion's picture

 

 

I do.

Bend over.

Tue, 01/05/2016 - 18:47 | 7002186 __Usury__
__Usury__'s picture

u fagala?

Tue, 01/05/2016 - 19:04 | 7002258 Insurrexion
Insurrexion's picture

Nein. Ich bin eine heiße Domina, Arschloch.

Tue, 01/05/2016 - 20:14 | 7002500 Squid Viscous
Squid Viscous's picture

what are you a fucking kike troll that speakz german?

Tue, 01/05/2016 - 20:17 | 7002518 Cognitive Dissonance
Cognitive Dissonance's picture

Too funny.

According to Google translate it reads "No. I am a hot dominatrix, asshole."

Tue, 01/05/2016 - 20:30 | 7002570 Squid Viscous
Squid Viscous's picture

great, welcome to the sad remnants of ZH - you dumb cunt

 

have at it!

Tue, 01/05/2016 - 19:57 | 7002157 GhostOfDiogenes
GhostOfDiogenes's picture

Shes a dyke.

She probably will stick something up your ass.

I bet you would like that too. You dirty freak.

Wed, 01/06/2016 - 07:13 | 7003797 omniversling
omniversling's picture

ArtisAnal.

(Who was the artist who canned his own shit? That's right Piero Manzoni..)

http://www.tate.org.uk/art/artworks/manzoni-artists-shit-t07667

Tue, 01/05/2016 - 18:38 | 7002137 ZippyBananaPants
ZippyBananaPants's picture

My thoughts are that the shitty day we had on Thursday dec 31 led the drop in the Asian markets which continued across the globe. Why does everyone think it was the Asians that started it?

Tue, 01/05/2016 - 18:40 | 7002141 4 wheel drift
4 wheel drift's picture

the more chaotic.....   the better for the opportunist....

let those scary [faux] crashes come.....  then buy and watch...   let the fed be your 'savior'

once the reasonable profit is made....  sell and don't come back until another one of those crashes return...

the 'neeedy' public cannot stand real crashes...   nor the fascist gov. will allow them....

 

take advantage of this charade... until of course... the real one arrives...  and no one knows when that will be

Tue, 01/05/2016 - 18:39 | 7002143 SgtShaftoe
SgtShaftoe's picture

Shit is about to get real.  Prepare to defend yourselves bitchez.

Tue, 01/05/2016 - 19:07 | 7002166 two hoots
two hoots's picture

Same ol' info, different format.  It will be an interesting day to day, week to week, month to month year with lots of entertainment.  I hope the millennia of social evolution to this hasty surge to regression is properly recorded for future study of our species. 

Tue, 01/05/2016 - 18:44 | 7002170 Bay of Pigs
Bay of Pigs's picture

Hey Nomi, gold has been on a tear against some other currencies the last few years. The Ruble, Rand and Real are up all over 80% over the last 5 years, and up 400% in 10 years for the Ruble and Rand and 250% for the Real. The USD is still up close to 100% the last ten years and will have it's day in the sun in regard to gold one day soon. The USD is so far overvalued compared to gold and silver right now it boggles the mind compared to the massive debt, real inflation and ZIRP.

End the FED. Hang the Banksters.

Tue, 01/05/2016 - 19:05 | 7002262 CHoward
CHoward's picture

I have a tremendous amount of respect for this woman.  Anyone notice how many times she used the word "depression"?  I found that very interesting.

Tue, 01/05/2016 - 19:26 | 7002335 scintillator9
Tue, 01/05/2016 - 20:18 | 7002303 Sorry_about_Dresden
Sorry_about_Dresden's picture

Butterfly effect my arse!!!!!

 

Here is the action filed by Third Ave (that just went under around Christmas Eve) against the Reserve Primary Fund, the money market fund, that BROKE THE BUCK, run by Bruce Bent I and Bruce Bent II.

 

The BENTS invented the money market fund, they were the best and managed risk for decades. Then in a blick of an eye, against every instinct that made them wealthy beyond imagination, these guys decide that taking on $785 million dollars in shitty Lehman paper was a solid investment strategy while the talking heads on CNBC were screaming about CDS spreads on this shitty paper?

 

 As I recall the CDS spreads on this paper was already going ballistic when these guys started buying this crap and they claim it was not intentional? ABSURD!

 

Although to suggest that the economy was INTENTIONALLY wrecked is sad. To suggest our country was intentionally torpedoed by those who have profited from it's destruction i.e. stockholders in the FRBNY, might seem bizarre and I would have to be bat shit crazy to suggest such a thing. Just read the action and you be the judge! If you give me mad thumbs up I will work on taking the 100 page complait and try to reduce it to it's essence. 

This is the part that "The Big Short" completely ignored and is the most damning crime exposed thus far. All this time in a court filing in the Southern District of New York,yet no one has said a word, except ME.

 

It is obvious, to me, that Reserve Primary was used by TPTB to intentionally cripple the US economy for their own purposes. Fascism! They intentionally made mal-investments for the purpose of creating the calamity in markets begun in 2006 . Just take a look at this court filing...it it obvious to me, although it is conjecture on my part, that The FRBNY used the willing BENTS, and RESERVE PRIMARY FUND as a vehicle for the destruction of this country. Here is but a taste:

 

THIRD AVE vs.THE RESERVE PRIMARY FUND No. 08-cv-8060-PGG

 

SECURITIES & DERIVATIVE CLASS ACTION

 

LITIGATION (Class Action)

 

Hon. Paul G. Gardephe

 

Case 1:08-cv-08060-PGG Document 50 Filed 01/05/2010 Page 27 of 95

 

64. The Primary Fund’s investments during this time represented a fundamental shift

 

in the Primary Fund’s investment strategy. As a result of this 6000% increase in commercial

 

paper – which occurred during a period when the Primary Fund continued to boast of its “stable”

 

“conservative” investment policy – the Primary Fund’s market share more than doubled between July 2007 and

 

July 2008.

 

 

 

Although the above representations may have been correct prior to 2006, in

 

March 2006, Defendants decided to lift the Primary Fund’s historical prohibition against

 

exposure to commercial paper – investments that Defendant Bent had previously called

 

“anathema to the concept of the money fund” – in order to increase investment capital, increase

 

yields, and secure for their own pockets hundreds of millions of dollars in new management fees.

 

4. By mid-2008, the Primary Fund was exposed to an unprecedented amount of risk.

 

A sizable part of that risk exposure took the form of $785 million in commercial paper issued by

 

Lehman Brothers Holdings, Inc. (“Lehman Brothers”).

My question to this nice lady is:

What was the cost of CDS on Lehman Paper when the Bents, and THE RESERVE PRIMARY FUND, started to buy LEHMAN COMMERCIAL PAPER? 

I recall CNBC going ape shit about CDS SPREADS on LEHMAN PAPER even before they started to buy this crap! How could this NOT be a conspiracy???????????? 

That was when $787 million  was a lot of money and not a mere rounding error!

Sorry about the VBE as my professor would say i.e. very bad english but, I have been writing cover letters all day and fighting job sites looking for a job and I am tired of editing.

Somebody give me a job please!

The court filing is on PACER, you can read for yourself, it is the Southern District of New York.....of course. That is why no one pays for their crimes. Good luck Bernie Sanders. Even if elected you won't able to stop them. Because to even be in the position you are in you have to be ONE OF THEM!

The filing is about 100 pages but, it is fascinating reading. I meant post this long ago and, eventually, I would like spend a week writing a piece on this but, I don't want to waste my time if no one cares. DO YOU PEOPLE THINK THIS IS INTERESTING???? Give me some up arrows and if I get enough I will polish their 100 pages down to a well written 10 or so pages. Lawyers can't write worth a damn. Probably because their underpaid assistants do most of the writing?

Wed, 01/06/2016 - 01:17 | 7003434 fowlerja
fowlerja's picture

Janet...  I could not have phrased it any better

We are currently in a transitional phase of geo-political-monetary power struggles, capital flow decisions, and fundamental economic choices. This remains a period of artisanal (central bank fabricated) money, high volatility, low growth, excessive wealth inequality, extreme speculation, and policies that preserve the appearance of big bank liquidity and concentration at the expense of long-term stability. The potential for chaotic fluctuations in any element of the capital markets is greater than ever. 

Are you listening?


 

Wed, 01/06/2016 - 06:07 | 7003687 Global Observer
Global Observer's picture

2016 will be the year of debt-free money creation in the US. Obama has already signalled his intent to fill in for the Congress when he signed the Executive Orders to plug the loopholes regarding background verification for sale of guns. He will be presented with another opportunity to fill in for Congress when the US hits the debt limit before the elections and the Congress refuses to raise it. Obama, faced with a debt default by the US, will authorise the creattion of High Face Value Platinum Coins by the Treasury to be sold to the Fed to finance government spending already approved by the Congress.

That, coupled with the issuance of gold backed currency for international payments by the New Development Bank (the BRICS Bank), will end the reign of fiat currencies in international commerce culminating in the US$ reaching parity with the Zimbabwe $.

Wed, 01/06/2016 - 07:21 | 7003818 omniversling
omniversling's picture

Bad comparrison, sorry, too late for $Zimba = $US:

http://www.theguardian.com/world/2015/dec/22/zimbabwe-to-make-chinese-yu...

Wed, 01/06/2016 - 13:42 | 7005752 Global Observer
Global Observer's picture

Bad comparrison, sorry, too late for $Zimba = $US

No, quite the apt comparison since the Zimbabwe $ is worth nothing and the US$ too will worth the same i.e. nothing.

Do NOT follow this link or you will be banned from the site!