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Third Point Down 3.6% In September: Liquidations To Shift From Gold Back To Stocks Next?

Tyler Durden's picture




 

One of the sterling performers in the hedge fund arena so far has just gone negative in several of his hedge funds for the year after another painful month. And if one of the best is unch, what can the rest say? Remember when we said 25% of the hedge fund space may be "redeemed"? We were being very optimistic...

Per Third Point, whose latest top holdings can be found here:

Dear Prospect,

 

Please find the following estimate of the net returns of funds managed by Third Point LLC for the month of September and for the year 2011.

 

In case we are right, now that gold has seen it dose of liquidations, hedgies will next move to dumping their stock holdings. Which means that as a preemptive attempt to defect first, the stock most held by hedge funds will be the first to go, particularly the winners among them. Conveniently, ss a reminder, here are the 50 most widely held hedge fund names as of June 30, per Goldman Sachs.

 

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Sat, 10/01/2011 - 15:27 | 1729334 King_of_simpletons
King_of_simpletons's picture

I will get back to stocks when greed is out and logic is in... that's probably never given the number of crooks around.

Sat, 10/01/2011 - 16:09 | 1729371 Pladizow
Pladizow's picture

Birth, Growth, Maturation, Declination and Death - EVERYTHING!

Sat, 10/01/2011 - 16:16 | 1729421 DoChenRollingBearing
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ZH-ers fed up with everything that sucks so bad might consider reading my blog.  Send me a mail (tell me who you are and promise to behave, my blog is not Fight Club): ?o?·l????@?u????q?u?llo?u???op for the link.

And you can learn that neat trick too from my reader "Richard" too!  Thanks, Richard!

EDIT:

Well that neat trick did not work (here).  Anyone wanting to read my blog gmail me at my name, and you can read about gold, listen to pretty women singing in Italian and learn Richard's neat trick!

Sat, 10/01/2011 - 16:57 | 1729500 snowball777
snowball777's picture

UTF codepoints are not a "trick", DCRB.

Sun, 10/02/2011 - 08:23 | 1730500 GetZeeGold
GetZeeGold's picture

 

I don't need anyones blog to tell me to buy subsidized gold.

Neither do the Chinese.

Thank you Benji!!! Take X amount of the trillions of QE and drive gold down. My kid sister is smart enough to know what to do with this.

Gold IS Fight Club......it's the only thing real.

 

 

 

Sat, 10/01/2011 - 16:43 | 1729470 Howard
Howard's picture

Being greedy (looking out for one's self intrest) is logical. I'll stay short stocks until it's money printing time again.

Sat, 10/01/2011 - 16:50 | 1729485 DosZap
DosZap's picture

Howard,

Look for QE 3 VERY SOON.

Sat, 10/01/2011 - 16:59 | 1729506 css1971
css1971's picture

I think Europe is printing several hundred billion right now. Ink prices just went up.

Sat, 10/01/2011 - 17:19 | 1729546 AldousHuxley
AldousHuxley's picture

900 for S&P500 seems to be the bernanke put

 

but bernanke put doesn't help but to persist the stink.

 

The victims of debt in the next generation aren't going to take it:  "Fuck the Fed" protest in Boston Fed by OccupyBoston

http://www.youtube.com/watch?v=0fV0YjQQzYk&feature=related

 

Sun, 10/02/2011 - 00:28 | 1730205 Hephasteus
Hephasteus's picture

Get the fuck out of canada you war criminal dick cheney protests in vancouver. I'm currently about .1 percent open right now and I'm fucking seething. I think they opened up the whole can of pissed off at this point in history.

Sat, 10/01/2011 - 18:16 | 1729684 DormRoom
DormRoom's picture

The Feds know any QE will lead to stagflation without fiscal stimulus.  They'll wait until the markets crash, and the Republicans to yield on Obama's plan, to concurrently announce QE3.

 

The American political system is a mess.  You had Democratics & Republicans playing chicken in Congress.  Now you have the Congress & the Fed playing chicken.

 

game theory with 3 agents is far more complex, and exist in a higher risk threshold.

Sat, 10/01/2011 - 15:30 | 1729340 Motley Fool
Motley Fool's picture

Heh. The apple is about to fall from the tree?

Gravity sucks that way. :P

Sat, 10/01/2011 - 16:15 | 1729424 DoChenRollingBearing
DoChenRollingBearing's picture

There is a similar saying here in the USA, but it is used in a much more negative way, I'll send it to you MF!

Sat, 10/01/2011 - 15:38 | 1729355 Cursive
Cursive's picture

No tears for the 2 and 20 crowd.  A pox on all of them, AAPL included.  Try working for a living and making something of value.

Sat, 10/01/2011 - 16:03 | 1729403 GeneMarchbanks
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GREEN. Notice Tha JP Morgue is up there, so... there's that to look forward to...

Sat, 10/01/2011 - 16:47 | 1729480 smlbizman
smlbizman's picture

honestly, how fuckin smart do you have to be to combine that list of stocks......and on the other hand, how fuckin stupid do you have to be to pay somebody to apply your money to that list....

Sat, 10/01/2011 - 19:48 | 1729847 Socratic Dog
Socratic Dog's picture

Yeah.  Someone please tell me what makes a "hedge fund" so different from a boilerplate (low cost) large-cap mutual fund.  Why the hell would you pay someone top dollar for that?  'Cause you're a dumb fuck I guess.

Sun, 10/02/2011 - 08:37 | 1730527 css1971
css1971's picture

Because when you are at the top, you only use The Best, and The Best costs money. If it didn't cost money it wouldn't be The Best. Now would it?

Sat, 10/01/2011 - 16:59 | 1729507 snowball777
snowball777's picture

Soon to be the 0 and -20 crowd. Agreed on the tiny violins.

Sat, 10/01/2011 - 20:03 | 1729864 JSchroe
JSchroe's picture

One of the most brilliant, abstute comments I've ever read. Thank you Cursive.

Sat, 10/01/2011 - 15:45 | 1729361 DormRoom
DormRoom's picture

It's a vicious feedback loop.  stocks & commodities go down, bringing leverage ETFs and hedgefunds down [1].  ETFs & hedgefund deleverage, bringing stocks & commodities down [2].  Go back to [1].

 

During Q1 the Feds used the shadow banking system (hedgefunds) as a mechanism to produce a wealth effect.  The hedgefunds applied leverage on top of leverage (ETFs), to push equities & commodities higher.  So if the shadow banking system unwinds, we could easily see SPX 666 again, as deleveraging accelerates, USD carry trade unwinds, and hedgefunds implode.

 

The assymetry of markets (investors sell all @ once, but stagger their buys) implies hedgefunds will all head for the exits at once.  And shows the failure of leverage capitalism.  Or that is to say, leverage was used to distort prices (equities & commodities), underminding the price discovery mechanism, and lead to HUGE misallocation of capital (oil @ 140, lead to huge investments in oil sands projects that have gone bust. ditto for the natural gas industry)

 

The more regulators allow commodities to be turned into financial assets/vehicles via ETFs, the greater the incentive for big money to distort commodity prices, through grey market warehouses (JPM copper ETF prospectus says 4/5 of copper production is stored in non-bonded warehouses, or stutters them to market (Aluminium) to distort supply metrics).  If we lose the price discovery mechanism, we lose the efficiency of the capitalist system. Instead of an invisible hand lifting us up there is an iron fist at our necks.

 

 

Sat, 10/01/2011 - 16:03 | 1729385 FinalCollapse
FinalCollapse's picture

Just like October 2008 - I predicted the collapse three weeks ahead, by knowing that the Hedge Fund redemption wave is coming. The same shit this year - exact replay. This weekend most of the hedge fund investors are biting their nails and trying to figure out what next. It is easy to predict, that many, if not most of them, will want to pull the money out to safety.

Two years ago, I consulted for the Wealth group in huge American bank. The wealthy ones survived the crash of 2008 remarkably well, because they were diversified, and they quickly pulled their money at risk from the stock market. The people at the lower end of wealth spectrum suffered terrible losses, with many wipe outs. When I charted the wealthiest group, there was almost no impact. 

Same shit in 2011. The huge wave of redemptions is coming. This will force massive liquidations.

Happy trading All!

Sat, 10/01/2011 - 15:58 | 1729396 Mr_Wonderful
Mr_Wonderful's picture

Misreading the ongoing dollar rally from cyclical low will continue to be very costly for those long stocks and commodities. Dollar built up tons of energy muddling along that low from May through August. Could already be the mother of all short squeezes.

Sat, 10/01/2011 - 16:17 | 1729428 Stoploss
Stoploss's picture

You would be correct.

Sat, 10/01/2011 - 16:59 | 1729508 Mr_Wonderful
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SEC Proposes Cut in Threshold for Trading Halts

The U.S. Securities and Exchange Commission began an overhaul of rules adopted a quarter century ago to shut down the stock market and related futures trading during periods of volatility, proposing that curbs be triggered when the Standard & Poor’s 500 Index falls 7 percent.

The changes would switch the index used for circuit breakers to the S&P 500 from the Dow Jones Industrial Average, according to proposals submitted by U.S. equities exchanges and the Financial Industry Regulatory Authority. Index declines that set off halts in stocks, options and futures would be reduced and their duration shortened, according to a summary of the proposals from the SEC......

http://www.bloomberg.com/news/2011-09-27/sec-reports-propsals-to-revise-...

Sat, 10/01/2011 - 19:38 | 1729836 scatterbrains
scatterbrains's picture

I wouldn't be surprised if they engineer 2 consecutive lock limit down moves in order to get everyone begging for more printing. I can envision the 2nd lock limit down to around 950 will be when they announce multi trillion dollar printing and before the unlock we lock up again to the upside and kill off any remaining bears.

Sun, 10/02/2011 - 09:41 | 1730594 Smiddywesson
Smiddywesson's picture

Index declines that set off halts in stocks, options and futures would be reduced and their duration shortened

Absolutely.  This will be the ultimate example of the little guy holding the bag.  You will see multiple and repeated limit downs with the big algo traders abandoning ship and everybody else who can't trade in microseconds chained to their rowing benches.

Sun, 10/02/2011 - 00:38 | 1730217 cranky-old-geezer
cranky-old-geezer's picture

 

 

Enjoy your USD safe haven while you can. 

Behind the scenes Bernanke is printing USD like crazy for currency swaps trying to keep Euro-zone banks and the Euro itself afloat, not to mention proxy purchase of US Treasury debt to keep our government going.   It's not QE openly.  It's stealth QE.  Out of public view.

So USD is headed for currency collapse at some point.  Of course nobody knows when.  And that's the point.  There won't be any warning.  

Sun, 10/02/2011 - 03:55 | 1730360 MFL8240
MFL8240's picture

No the mother of all shorts is the long end of the trasury.  The clown show may continue buying but, soon with prices where they are, the Chines will dump their crap.

Sat, 10/01/2011 - 16:17 | 1729426 The Swedish Chef
The Swedish Chef's picture

Time to short AAPL then?

 

Regards; Shorty

Sat, 10/01/2011 - 17:02 | 1729512 snowball777
snowball777's picture

Brilliant idea! two weeks ago

Sun, 10/02/2011 - 00:37 | 1730216 Hephasteus
Sat, 10/01/2011 - 16:25 | 1729441 DeadFred
DeadFred's picture

I'm already positioned on two of these stocks but would be interested in any rank speculation on which would be big losers in a liquidation, and particularly if things get 'crashy' who is most vulnerable to big artificial swings. I like throwing out an occasional low cost position aiming for a big drop, they sometimes work and options pricing structure seems poor at reflecting those risks.

Thanks Tyler for this great material. Like a dog with a bone I can gnaw on this table all weekend.

Sat, 10/01/2011 - 16:42 | 1729468 FinalCollapse
FinalCollapse's picture

AAPL is at huge risk. The ETFs will pull it down, together with the market.

Sat, 10/01/2011 - 17:09 | 1729523 DeadFred
DeadFred's picture

AAPL and EMC are my two along with QQQ. Can a megacap company with $400 shares crash without any company specific news? I can only envision a multiday decline, but what I don't know would fill volumes.

Sat, 10/01/2011 - 18:26 | 1729709 DormRoom
DormRoom's picture

,.

 

 

 

Sat, 10/01/2011 - 16:35 | 1729456 bulldog5
bulldog5's picture

Stampede!!!!! I hope Warren and Kramer get run over by the bac frontrunners

Sat, 10/01/2011 - 16:45 | 1729475 SILVERGEDDON
SILVERGEDDON's picture

You all are smoking crack investment wise with this little doggie in the manger biting at the world economy's nuts. Read on, and think again about where your bux should be stashed...........................

 

The Federal Reserve is neither Federal nor a "Reserve". This private bank run by the "Bank of England" has been stripping the US of its assets since the days of Andrew Jackson.  If the $16,000,000,000,000.00 given away secretly, since 2007, to the member banks isn't reason enough to overhaul our entire government financial system then our country is doomed to financial failure. You won't read this in the mainstream media....but it may emerge in the coming elections. Read about this first ever audit of the Fed and understand why we are in such trouble.  Tuesday, September 27, 2011 First Ever GAO Audit Of The Federal Reserve

(You can click on the site and read the report).

The first ever GAO audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill (HR1207), so that a complete audit would not be carried out. Ben Bernanke, Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve nearly 100 year history were posted on Senator Sanderâs webpage earlier this morning.

sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3   (Summarized below)

What was revealed in the audit was startling:

$16,000,000,000,000.00 (TRILLION) had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the worldâs banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs. To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is only $14.5 trillion.


The budget that is being debated so heavily in Congress and the Senate is only $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world. In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. 
That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion. ****

 

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self-identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

 

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and super-corporations like Halloween candy.

 

The list of institutions which received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows:

Citigroup: $2.5 trillion($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion* ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)

 

IT WILL BE INTERESTING AS TO HOW MUCH ATTENTION (AS WELL AS THE SLANT) THE MAINSTREAM MEDIA GIVES THIS UNBELIEVABLE POSITION OF OUR GOVERNMENT HAS PLACED US IN WITH NEVER PREVIOUSLY HAVING AN AUDIT OF THE FEDERAL RESERVE.

I AM CONFIDENT THAT WE WILL HEAR SOMETHING LIKE THE FED HAD TO GIVE STIMULUS TO WHOM THE $16 TRILLION WENT TOO BECAUSE IF WE HAD NOT ALLOWED THIS IT WOULD BE THEIR COLLAPSE AND THE OURS.

HAS ANYONE EVER HEARD OF CLOWARD AND PIVEN ECONOMICS? (PARAPHRASING) IT INVOLVES TWO HARVARD PROFESSORS WHOSE BOOK SAID TO CHANGE ANY GOVERNMENTâS ECONOMIC SYSTEM INTO A SOCIALIST ONE, IT SIMPLY DRIVES THEIR ECONOMY INTO THE DITCH THEN THE CITIZENS ALLOW THE GOVERNMENT TO DO WHAT THEY WISH TO SAVE THEM

  

Sat, 10/01/2011 - 17:51 | 1729511 DosZap
DosZap's picture

Silvergeddon,

This OLD news, we knew about the 16 T weeks ago.................

Now to WHO it went exactly no, we did not know.

To me,it doesn't matter.(they have gone past the Twilight Zone a long time ago.)

Simply because the Federal Reserve is not Federal,has nothing to do with me,I owe them Zero, and I will not pay them a dime of this insane ponzi they have been running.

And NO American citizen should be on  the hook for one DIME of this.

The Fed's powers should be taken away, and back to Congress where it belongs.

The Treasury should issue ONE note the size of a $1.00 bill, with the entire amount printed on it, that the Fed has spent behind the curtain, and it should read PAID IN FULL.

(like the Zimbabweian notes)

Congress could do this in ONE day,if it sop desired.

They do not have the power, nor the right to have done this................so let them eat it.

Shit sandwiches are bad anytime.

 

http://www.24hgold.com/english/news-gold-silver-the-real-cost-of-the-bailout-so-far-.aspx?article=3636222424G10020&redirect=false&contributor=Rob+Kirby

Sat, 10/01/2011 - 18:12 | 1729679 Melin
Melin's picture

Congress shirks, Atlas shrugs.

Sat, 10/01/2011 - 17:03 | 1729514 snowball777
snowball777's picture

They have this technology...on the interwebs...called a 'link'...

You've mastered Ctrl+C and Ctrl+V so you should be able to handle it.

Sat, 10/01/2011 - 17:21 | 1729551 DosZap
DosZap's picture

snowballs,

Who the F you posting to?.

Sat, 10/01/2011 - 17:09 | 1729521 Quinvarius
Quinvarius's picture

The stock market may lose another 15% tops.  We printed too much money.  The EFSF and the IMF about to create another 3 trillion. Fed at 0% and giving out secret loans.  Whatever predicts inflation the best will be the first thing to rise.

Sat, 10/01/2011 - 19:47 | 1729846 Debugas
Debugas's picture

the problem is all the money printed were given to the wallstreet not the mainstreet so what it means is that the demand for goods is not going to pick up so businesses going to continue to have losses and their stocks go down

Sun, 10/02/2011 - 22:47 | 1732119 searcher68
searcher68's picture

Interesting how old Bernie, while appearing to be on the correct side of the argument, still refers to the fed as an "agency of the United States government". What a boner.

Sat, 10/01/2011 - 17:30 | 1729569 RSloane
RSloane's picture

To answer the question in the thread title - yes, stocks are next.

Sat, 10/01/2011 - 17:50 | 1729617 DeadFred
DeadFred's picture

Monday, October 3

Sat, 10/01/2011 - 18:02 | 1729648 RSloane
RSloane's picture

Germany just said no to giving any more money to the EU bail-out fund. In the US, the discussion has shifted to when the recession will hit instead of if there is going to be another recession. China's manufacturing output is dragging. Global aggregate demand is sinking. So yah, Monday is thoroughly possible.  

Sun, 10/02/2011 - 10:12 | 1730647 Smiddywesson
Smiddywesson's picture

That's right Fred.  The markets were forced to channel for a reason, and now that reason is over.  It's time to face the music.

Sat, 10/01/2011 - 17:58 | 1729634 molija6
molija6's picture

I question why people think hedge funds would ever be "surprised" by their redemptions. Most have a notice period so it's not like they found out on September 15th that they'd be getting redemptions on September 30th...

Don't doubt that recent sales are being done to fund redemptions though. 

Sat, 10/01/2011 - 18:02 | 1729645 americanspirit
americanspirit's picture

October 4, 1957 the Russians launched Sputnik and the world was transfixed and fearful. Nothing was ever the same again.

October 4, 2011 the S&P will plunge below 800 (having slipped below 900 the day before to everyone's fear and disbelief) and keep falling, and nothing will ever be the same again.

"O man, take care!
What does the deep midnight declare?
"I was asleep—
From a deep dream I woke and swear:—
The world is deep,
Deeper than day had been aware.
Deep is its woe—
Joy—deeper yet than agony:
Woe implores: Go!
But all joy wants eternity—
Wants deep, wants deep eternity."

Also sprach Zarathustra

Sat, 10/01/2011 - 18:09 | 1729667 Mr.Sono
Mr.Sono's picture

i just don't get. people are seating with loads of cash, so that when the market crash. as they all think it will. they can invest in the market. and make huge sum. Is anyone also doing the same and why?

 

I don't believe in the market. We have seen what happen in Egypt. They sold there gold and bought in to there stock market. Look at them now.

Sat, 10/01/2011 - 18:17 | 1729687 r3vbr
r3vbr's picture

Wow, that list looks a lot like my portfolio. Of that list, I own AAPL, MSFT, CSCO, JPM, GOOG, HPQ, JNJ, WLP, XOM, PG, and these stocks are like 75% of my AUM. Should I be worried?

Sat, 10/01/2011 - 23:55 | 1730159 data_monkey
data_monkey's picture

That looks like my portfolio pre-08. I don't own any of them anymore and I've learned a lot since then...buy and hold...physical PM's. Play with stocks. "Blue Chips" will drain you, not save you.

Sat, 10/01/2011 - 18:33 | 1729713 Haole
Haole's picture

Dow/Gold 1:1 or less.

Sat, 10/01/2011 - 18:45 | 1729747 Father Lucifer
Father Lucifer's picture

Should be positive for my SQQQ position when they sell all them apples.

Sat, 10/01/2011 - 18:50 | 1729763 kill switch
kill switch's picture

 

Long read for Amerikans...

Europe Must Fight Back Against US-UK Speculative Attacks

WGT October 1, 2011

The speculative attack by Wall Street and City of London banks and hedge funds against European countries, European banks, and the euro is now reaching a crescendo. The current European crisis does not derive primarily from economic fundamentals, but rather represents a cynically planned assault carried out by Anglo-American financiers, whose philosophy is the traditional Beggar My Neighbor. The goal is to shift the epicenter of the world economic and financial depression from London and New York onto the continent of Europe, and this operation has already partially succeeded. London and New York are exporting their own derivatives depression into the EU, using credit default swaps, corrupt credit ratings agencies, and their entire panoply of financial dirty tricks. We are not dealing here with the normal functioning of markets; we are dealing with all-out economic warfare.

The Wall Street zombie bankers are aiming at a chaotic breakup of the euro with the intention of buying up the old continent at bargain-basement prices. The jackals of the City of London are seeking to smash the euro as a means of breathing new life into the moribund British pound, thereby masking the fact that Britain is more bankrupt than the vast majority of EU member states. The Anglo Americans are also acting to destroy the euro as a possible competitor for the dollar in the role of world reserve currency for the pricing of oil, the activities of international lending institutions, and other functions. The dollar is now so weak and unstable that it can only survive through the downfall of all the alternative currencies.

Because of the arrogance and stupidity of the Eurocrats and Eurogarchs who are running Brussels today, and especially because of the monetarist incompetence of Trichet and the other officials of the European Central Bank, resentment against the euro and the ECB is rising in a number of European states. But those who are being swept up in the anti-Euro hysteria need to ask themselves why they have chosen to advance the destruction of the euro, when this project coincides so totally with the intentions of the Anglo-American financiers, who are clearly the biggest enemies of Europe and of civilized humanity in general. Many of the anti-Euro agitators have not thought concretely about where the successful accomplishment of their current campaign would actually leave them. It is certainly reckless and irresponsible to propose the destruction of the euro without having a viable and concrete alternative in mind.  

The Euro’s Raison D’etre in Self-Defense Against Speculative Attacks

By the time of the international monetary crises of the late 1960s that eventually destroyed the Bretton Woods system, it was clear that the economic integration of western Europe had become so advanced that wild fluctuations in the currency exchange rates among European countries would severely disrupt manufacturing and trade. Between 1971 and 1973, as the fixed parities of the Bretton Woods system were breaking up (with the active complicity of Nixon, Kissinger, and Milton Friedman), a number of European states grouped around West Germany established and defended fixed parities among their currencies. This was the old Europeans snake, which became a snake in a tunnel when some other countries became more loosely associated with it. This evolved into a European currency grid, and into the European Rate Mechanism attacked by Soros with some success in September 1992. Out of the ERM grew the euro.

The basic problem faced by Germany and its neighbors was that even 40 years ago, individual European currencies were destined to be mercilessly attacked by Anglo-American speculators. The German mark was constantly attacked by speculators going long, placing bets à la hausse, assuming that D-Mark would rise. This always tended to make the D-Mark so astronomically expensive that German exports would be priced out of the world market, causing domestic depression and social chaos. The other currencies, be they the French franc, the Italian lira, the Benelux franc, the Greek drachma, the Spanish peseta, and others were all candidates to be sold short by speculators betting à la baisse. As long as they stood alone, these currencies were sure to be pounded into dust, reduced to minimal values, thus creating runaway inflation and a catastrophic decline in the standard of living in the states. All this was long before the age of credit default swaps, when the arms available to speculators were relatively primitive compared to the present-day weapons of financial mass destruction, modern derivatives.

One of the basic motors of European integration was therefore the idea that any stand-alone European currency, whether weak or strong, would inevitably be massacred by Anglo-American speculation. It was only by joining together that these currencies could hope to put up a common front against the speculative predators. Individual fingers can be easily broken, but a fist is harder to fracture. There were many reasons for the creation of the euro, some of which were and are totally spurious, but the hope of joining together for common defense against international hot money speculation must be seen as one of the rational and valid purposes for a common European currency.

In 2008-2009, the Bank of England, the Federal Reserve, the British Exchequer, and the US Treasury began flooding the world with easy money being lent at virtual 0% interest to banks, hedge funds, money market funds, credit card companies, and other troubled financial institutions. This policy soon generated something approaching $20 trillion of hot money, which promptly fled the dollar and the pound to seek windfall returns in the hottest speculative markets of the world. Since so many dollars and pounds were being sold, a downward pressure emerged against these currencies no later than the summer of 2009.

The Euro Too Strong To Succumb To Frontal Attack in 2009-2010

In looking around for a way to shift the fury of the world economic depression onto Europe, the Anglo Americans were first dismayed by the poor chances of making a frontal attack against the euro itself. With about €1 trillion a day of turnover, the European currency markets were simply too big and too liquid for a direct assault, even by a wolf pack of the largest zombie banks. Therefore, Anglo-American financial strategists had to look for the weak points in the European system, where a speculative attack could hope to do the maximum damage. They focused their attention on the markets for government securities of some smaller Euro land countries – Greece, Portugal, and Ireland. The markets for these bonds were relatively narrow, shallow, and illiquid, meaning that a moderate influx of speculative cash could offer a considerable bang for the buck. Using credit default swaps to maximize the destructive power of speculative hot money, and with the help of the corrupt readings agencies and venal mass media, the Anglo-American financiers were soon able to create largely artificial crises in the public finances of these countries.

In May 2010, the German Finance Minister banned naked credit default swaps against Euro land bonds, and limited short selling in general. The failure of the other European countries to join aggressively in this ban and related measures has given the Anglo Americans an easy way to attack the euro.

Europe needed then and needs now to ban credit default swaps along with collateralized debt obligations as the two most toxic and dangerous types of over-the-counter derivatives, while at the same time imposing a 1% Euro-Tobin tax on financial transactions, with the proceeds being paid into the national treasuries to maintain the social safety net. If the speculation persists, certain forms of capital controls and exchange controls would be in order. These traditional methods of financial self-defense were and remain the key to warding off the current round of financial warfare.

These are the roots of the current European crisis – not the laziness of the Greeks and Portuguese, not the self-indulgence of the French, not the churlishness of the Germans, not the escapades of Berlusconi. Those who demand the breakup of the euro under these conditions are giving aid and comfort to a brutal enemy. They are also cutting their own throats.

The illusion is now widespread that a return to the individual European currencies, even under conditions of chaotic collapse, would represent a cure-all for the continent’s economic woes. This is a radically anti-historical view, and quite fatuous.

You Can’t Go Home Again, Europe

Nostalgics for the D-Mark and the other individual currencies need to recall Thomas Wolfe’s masterpiece, You Can’t Go Home Again. The process leading to the euro is largely irreversible, except under conditions of absolute, genocidal, chaotic disintegration. The main reason is that hot money speculation is now immensely stronger than at any time in the recent past, and possesses a devastating new weapon in the form of the credit default swap. Helmut Schmidt, the elder statesman of Germany, has warned that the D-Mark attempting to go it alone would be driven into intergalactic space by international speculation, leaving the German export sector totally ruined and the country in severe depression. Supposedly serious Greek economists appear on Al Jazeera to paint an idyllic picture of Greece once more using drachma and able to devalue its own currency, and thus capable of reducing its debt burden and making its exports more attractive at the same time. The problem is that the devaluation would not stop where these economists imagine, but would begin to asymptotically approach a value of zero. Or maybe the drachma, like the rasbucknik, the East Bloc monetary unit in the old Al Capp L’il Abner cartoons, would acquire negative value because of the added expense of paying sanitation men to come and take it away as waste paper. An isolated drachma, in short, would mean absolute immiseration and virtual genocide of the population of Greece, with an unimaginable hyperinflation of the prices of basic food staples, energy, and other imported necessities.

Most other countries would fall between these two extremes, but all would share in a common European ruin. Their only hope for survival would be to implement a Tobin tax, a ban on collateralized debt obligations and credit default swaps, capital controls, exchange controls, and other anti-speculative measures. But, since this is so, why go through the long agony of suffering just described and then attempt to fight the speculators from a tragically weakened, fragmented position? Why not take advantage of the stronger defensive line still afforded by the euro, and fight back against the speculators here and now?

Obviously, the euro needs a very radical reform. It was designed by Eurogarchs and Eurocrats as the basis for a neoliberal Europe of the banks and cartels – a monstrosity which betrayed the roots of European integration in a postwar convergence of social democratic pro-labor economics with Catholic social doctrine, typified by great Europeans like Adenauer, Schumann, and de Gasperi. The most obvious reform for the euro is the Europeanization of the European Central Bank, taking this institution out of the control of unelected and unaccountable cliques of bankers, and making it subject to public laws, debated and passed in the light of day by European Parliament that would become a serious institution in the process of assuming responsibility for the ECB.

1914, 1939, 2011 – Will Europe Commit Collective Suicide Again?

In the 20th century, Europe managed to commit collective suicide not once, but twice – in 1914, and again starting in 1939. Have the European elites learned absolutely nothing? Has the European public learned absolutely nothing? Is a third collective suicide – this time by a failure to prevent the catastrophic and chaotic breakup of the euro under Anglo-American speculative attack– really inevitable?

Those who advocate the demolition of the euro must explain why they insist on surrendering to the brazen aggression of London and New York. Why are they determined to appease Goldman Sachs, Barclays Bank, J.P. Morgan Chase, and the rest of the Anglo-American wolfpack?

The only way the euro can be destroyed is if the Europeans deliberately let this happen. For those Europeans who want to fight for their own independence and their own future, the following guidelines as suggested.

What Europe Must Not Do

A number of counterproductive policies must be strictly avoided.

No Austerity – Budget-cutting is a total failure in its own terms, since in the current depression reductions in government spending necessarily generate bigger deficits and more red ink in later years. The suicidal futility of austerity cuts has been dramatically demonstrated from Brüning in Germany 1930-1932 to Schwarzenegger in California to Papandreou today. The Greek deficit is growing because of budget cuts. A policy based on budget cuts will never balance the budget, although it may well destroy the economic and political system of nations during the attempt, opening the door to further economic breakdown and to fascism.

No Bailouts – The world derivatives bubble amounts to approximately $1.5 quadrillion ($1,500 trillion or $1, 500, 000,000,000,000), which adds up to about 25 times the total world gross domestic product of perhaps $65 trillion, although this latter figure would need to be deflated to remove speculative hot air. The European share of the world derivatives bubble is certainly in excess of one third, meaning more than $500 trillion. This sum alone exceeds the capacity of the planet Earth to generate credit and liquidity. It is a black hole capable of eating up the exertions of all of the central banks of the globe. It cannot be bailed out. Derivatives can only be disintegrated, meaning in practice shredded or deleted. The fate of civilization itself rides on understanding this problem. Mrs. Merkel is on the wrong track.

No Eurobonds — Because the bankruptcy of the European banks is largely a matter of their kited mass of bankrupt derivatives, it is also futile to borrow money from China or from Dilma of Brazil. Barroso’s plan must be defeated.

No Recapitalization of Banks to Mask Derivatives Losses — No amount of recapitalization could ever hope to cancel out the derivatives which are hiding inside these banks. Under Secretary of the Treasury Henry Paulson, the US zombie banks were allowed to keep their toxic derivatives in their vaults, even if they received bailouts from the Treasury and 0% Federal credit from the Fed. These zombie banks still do not and cannot lend. There is no point in repeating the failed American experience in Europe.

No Sixpack— The budget reforms known as the sixpack are an attempt to revive the Maastricht convergence criteria that limited European deficits to 3% of GDP. Maastricht was a plan to strangle the productive economy of Europe, and make sure that employment remained depressed. These failed policies should be jettisoned, instead of making attempts to revive them. Drink the sixpack, and you will end up with a monumental deflationary hangover.

No Leveraging of the EFSF — If the European economies have too much debt, say the Anglo-Americans, the answer is obviously to accumulate more debt by using the existing European Financial Stability Fund as collateral for wider borrowing. But this foolish suggestion would leave the EFSF wide-open to the attacks by credit rating agencies who act as thinly veiled proxies for Wall Street and the City of London. If the EFSF borrows big and then gets downgraded, the power of Europe to generate credit in order to create jobs (Kreditschöpfung für Arbeitsbeschaffung) in the tradition of Lautenbach and Woytinsky will be diminished. It is better to divert the EFSF into infrastructure investments.

No IMF — The meddling and bungling economists of the International Monetary Fund have left a trail of tears across the globe, and have never been able to point to a single story of successful economic development as a result of their prescriptions. The IMF is the bearer of the absurd and discredited Washington Consensus in economic policy based on deregulation, privatization, union busting, the destruction of the social safety net, the liquidation of the state sector, the systematic reduction of wages and benefits, and a generally barbaric race to the bottom. By 2008, there was a revolt against these draconian recipes, but they have now been imposed on Greece, Portugal, and Ireland. Europe must be the Europe of the peoples, and not the Europe of the banks and cartels. The failed neoliberal and monetarist policies of the IMF must have no place in European development.

What Europe Must Do

Liquidate Zombie Banks; End Too Big to Fail — About a dozen of the top European money center banks are clearly insolvent, and are being kept alive because of political considerations. These Euro-zombies are benefiting from the continental version of Too Big to Fail. These banks do not and cannot provide commercial lending for new plant and equipment that could create new productive jobs. Instead, they trade in toxic derivatives, increasing the size of the world derivatives bubble. They also add to the crushing burdens on the productive economy by speculating in commodities and energy futures, all of which makes the depression worse. They also gouge their own customers with outrageous fees. These banks serve no constructive social or economic purpose. They must be subjected to bankruptcy proceedings, and their derivatives wiped out.

1% Euro-Tobin on All Financial Transactions— European leaders must ignore the hysterical opposition and sabotage coming from Secretary Geithner, Chancellor Osborne, and a few of their Trojan horses inside the EU, and proceed to enact a robust Euro-Tobin in the form of a 1% tax on all financial transactions, emphatically including derivatives. The European economy cannot survive as a casino of derivative betting. A 1% Euro-Tobin will serve to subdue speculation in general, and particularly to bridle the activities of the insolent and sociopathic hedge funds, who seem to delight in tearing down the civilization of three thousand years. The United States had a de facto Wall Street sales tax from World War I until 1967, and New York State continues to have one today, although successive governors have foolishly insisted on sending the proceeds back to lower Manhattan. Even in a US administration dominated by Wall Street influence like the current Obama regime, a top economic adviser like Peter Orszag strongly advocated a Wall Street sales tax, only to be browbeaten into submission by Larry Summers, one of the architects of the derivatives deregulation during the second term of Clinton, who screamed that a plan to tax Wall Street turnover represented absolute evil. The money coming from the Euro-Tobin should be paid into the national treasuries of the individual European states, where it should be earmarked for maintaining the social safety net – not for bailouts or other financial activities.

Universal Cancellation/Freeze of Derivative Debts— In June 1931, US President Herbert Hoover – whose name is now synonymous with immobilism and capitulation in the face of economic depression – reacted to the collapse of the Austrian Kreditanstalt and the imminent failure of the German Danatbank with the Hoover Moratorium, a most instructive policy for our times. In those days, the two most dangerous and oppressive categories of debt were the reparations imposed on Germany, and the war debts owed by the Allies, principally France and Great Britain, to the United States. Hoover proposed and obtained a freeze on all payments of interest and principal on this crushing debt burden by all the interested parties for the period of one year. The fatal flaw of the Hoover moratorium was that it needed to last longer – at minimum, for five years or for the duration of the world economic depression. Today, the most dangerous type of international financial debt is debt based on derivatives. It should be subjected to a moratorium of at least five years or for the duration of the depression, whichever lasts longer. Hoover is considered a failed president, but he appears as a giant compared to the feckless officials of our time. The world urgently needs a statesman capable of advocating effective measures to alleviate the debt burden which is presently crushing the future of humanity. In a choice between civilization and the sanctity of debt, we must choose civilization.

Ban CDS, CDOs— In line with the same reasoning, the most dangerous kinds of derivatives need to be permanently prohibited. During his appearance before Congress in May 2010, even Lloyd Blankfein of Goldman Sachs advanced the idea that Collateralized Debt Obligations should be banned. As for Credit Default Swaps, they are either illegal as gambling, or else, if they are considered insurance, they are illegal because their issuers did not fulfill the legal requirements – including reinsurance, cash reserves, etc. – that are demanded of registered insurance companies. As stated above, the greatest single cause of the current European financial breakdown is the inability of the European Union to ban Credit Default Swaps on all European stocks and bonds, subject to stiff criminal penalties. It should be recalled that all derivatives were illegal in the United States from 1936 until 1982 under the terms of the Commodities Exchange Act. The ill-advised deregulation of derivatives between 1982 and 1999 must be considered the single greatest factor in the financial tempests of the past three years.

Raid the Ratings Agencies— Reports have surfaced in the United States that credit ratings agencies have engaged in insider trading by giving speculators advance notice of their attacks on US Treasury bonds. Italian prosecutor Michele Ruggiero has provided a profile in courage with his raids on the offices of credit ratings agencies in Milan, and he deserves a continent of imitators. When President Kennedy was engaged in his confrontation with the House of Morgan in the form of United States Steel, JFK mobilized Robert Kennedy’s Justice Department and FBI to put the fear of God into these malefactors of great wealth, thereby carrying the day. Are there no European officials with the courage of a Kennedy? Either the national states will declare the zombie banks and their associated apparatus, including the credit ratings agencies, in default and liquidate them, or else the zombie banks will find ways to bankrupt and destroy the national states, leading towards a new dark age of neo-feudalism.

Debt Moratoria Now for Crisis Economies, Who Should Stay in the Euro – Some countries, like Greece, Portugal, and Ireland, have already been brought to their knees by the relentless speculative attacks of the Anglo-American zombie banks and hedge fund hyenas. Once these countries find that they can no longer sell their bonds on reasonable terms, they need to draw the obvious consequences and retaliate by declaring an immediate, unilateral, and total debt moratorium on all international financial debt. There is no shame or opprobrium involved in doing this. Great nations, including Brazil, Mexico, and Argentina have done precisely this with varying degrees of success over the past three decades, as have a host of smaller states — including Costa Rica, a country that notoriously has no military forces whatsoever. Once the debt moratorium is in place, these sovereign nations can confront the rapacious and predatory bankers on an equal footing, and can usually attain a goal of reducing their total indebtedness by at least half. Greece is already experiencing all the pain of a debt moratorium, without any of the benefits. There is absolutely no reason for any country declaring a debt moratorium to leave the euro. When the United States had existed for about as long as a united Europe has today, the Jackson-van Buren panic of 1837 lead to default and bankruptcy for the states of Mississippi, Louisiana, Maryland, Pennsylvania, Indiana, and Michigan. None of these states thought for one minute about leaving the Union merely because they had gone bankrupt. Fragile indeed is a political construct that even considers excluding one of its organic components simply because of financial difficulties, which history shows to be a recurring disturbance in human affairs. The debt, in short, must be radically reduced, precisely so that Europe might live.

Europeanize The ECB, Set Up a Rediscount Guarantee for Infrastructure Bonds — Contrary to many superficial analysts of the Soros school, the most dysfunctional feature of the current European system is the European Central Bank, today ruled by the incorrigible Trichet, and soon to pass into the even more sinister hands of Draghi. The rules of the ECB make it impossible to carry out an economic recovery policy, which must be based on dirigism, neo-mercantilism, and protectionism. The ECB as currently constituted cannot distinguish between parasitical speculative activity on the one hand, and productive investment in capital goods, infrastructure, and hard-commodity production on the other. Nevertheless, the inherent credit-creating capacity of the ECB represents a vital resource for European economic recovery. The ECB must be taken permanently out of the control of secret cliques of unelected and unaccountable bankers and subjected to the democratic control of representative political institutions. The only conceivable way to provide democratic legitimacy for the ECB is to have the size of the European money supply, the interest rates that will be applied, and the approved categories of lending be determined via public laws debated and approved by the European Parliament in the full glare of public opinion. Given the undeniable fact of a world economic depression of unprecedented proportions, the leaders of European states need to take the lead in declaring a state of economic emergency that should allow them in practice to suspend the existing rules of the ECB to allow this institution to begin purchasing successive tranches of €1 trillion each of bonds and securities of European nations, super-regional authorities, regions, provinces, and municipalities, with the money being exclusively destined for infrastructure and public works. In effect, the ECB must offer a rediscount guarantee for these new bonds. These bonds should carry a coupon rate of 0%, and should mature in the general time frame of 50 to 100 years, depending on the life expectancy of the infrastructure that is being installed. In general, the existing policy of near-0% credit for banks and other financial institutions should be recognized as a failure and definitively abandoned.

€1 Trillion For Infrastructure – These €1 trillion tranches of ECB lending should be used for the systematic modernization and expansion of the European network of superhighways, fast rail and maglev rail, modern energy production and delivery, water systems and canals, housing, hospitals, schools and other educational institutions , libraries, public buildings, and other necessary public works. The goal is to accomplish a permanent increase in the European stock of capital goods, while quickly upgrading the productivity of European labor.

40 Million New Productive Jobs for Full Employment – The best current estimate puts the total of unemployed, underemployed, and discouraged workers in the European Union in the neighborhood of 40 million persons. This is a tragic waste of some of the most qualified manpower to be found anywhere in the world. Any system which permits this outrageous dilapidation of human capital condemns itself to automatic oblivion. Modern productive jobs must be created which are capital-intensive, energy-intensive, high-value added, and compensated according to the best union pay scales, with full benefits. This is necessary to provide a level of household prosperity and culture that will equip the coming generation of Europeans to successfully face increasingly intense global competition. The capitulation to permanent levels of high unemployment which is embodied in the German Hartz system and in similar policies must be repudiated.

End Afghanistan, Libya, Kosovo, and Other Military Meddling – The era of colonial adventurism is definitively over, and to attempt to revive it is simply to court useless tragedy. All European troops must therefore be repatriated. It is time to turn away from any notion of neo-colonialism or neo-imperialism, since these too are radically anti-historical. Instead, it is imperative to foster a development community of sovereign states which would embrace Europe, Russia, Africa, the Middle East, and other parts of the world. Steps for the reform of the international monetary system to permit this kind of a world reorganization on the basis of reciprocal advantage should be undertaken without delay.

Sat, 10/01/2011 - 18:55 | 1729770 AGoldhamster
AGoldhamster's picture

wishful dreaming ... that is definitely NOT the way politicos and banking lobbies work.

Sat, 10/01/2011 - 19:01 | 1729777 kill switch
kill switch's picture

YOUR YOUNG!! 5 MIN TO READ??

Sun, 10/02/2011 - 02:04 | 1730278 DeadFred
DeadFred's picture

As you say Kennedy tried this courageous approach and his rotting body still has a hole in it. The European leaders will be hesitant to follow that path for good reason. I hope they do but I won't hold my breath while waiting.

Sun, 10/02/2011 - 05:49 | 1730429 AGoldhamster
AGoldhamster's picture

not a matter of 5 min to read - but of 55 years where I have learned that politicos and bankers just rule the world. There is no interest in changed anything - except it leads to more (sustained) power for them. Next election is all that is in their mind.

So again ... above proposal might be a nice dream and theory - but in real life it will never ever work. Didn't work in thousands of years. Darwins law of selection "rules" - not humanity and sound minds. Humanity is for the sheep and lemmings - which do NOT rule the world. Either you get that or you belong to the sheep and lemmings.

Sun, 10/02/2011 - 21:29 | 1731973 kill switch
kill switch's picture

Hey numb nuts,,,,, you didn't read the fucking thing..55 mins You are the LEMMING not a matter of 5 min to read...your words expose you... for the sound bite mentality..

The hamster,,without gold

Sat, 10/01/2011 - 19:18 | 1729813 Mr.Sono
Mr.Sono's picture

nice read and good points. But seems like the system needs to collapse before some of the fundamentals that you mention can be applied. So why not just keep the party train keep going. no one knows when or where the tracks end. And some hope to even put more tracks so that future generation pay the price. it's human nature not wanting to deal with pain. Thats why Americans are prescription junkies. Plus war would be an easer solution for the most older generation.

Sat, 10/01/2011 - 19:51 | 1729853 Bicycle Repairman
Bicycle Repairman's picture

Got to break it down, dude.  I can read something that long, but you got no credibility here, so I won't.

Sun, 10/02/2011 - 21:52 | 1731872 kill switch
kill switch's picture

dude??? got to break it down??....long for you....got no....as in have no?? You suck at it youngster!!

Sat, 10/01/2011 - 19:29 | 1729829 SILVERGEDDON
SILVERGEDDON's picture

The Federal Reserve is neither Federal nor a "Reserve". This private bank run by the "Bank of England" has been stripping the US of its assets since the days of Andrew Jackson.  If the $16,000,000,000,000.00 given away secretly, since 2007, to the member banks isn't reason enough to overhaul our entire government financial system then our country is doomed to financial failure. You won't read this in the mainstream media....but it may emerge in the coming elections. Read about this first ever audit of the Fed and understand why we are in such trouble.  Tuesday, September 27, 2011 First Ever GAO Audit Of The Federal Reserve

(You can click on the site and read the report).

The first ever GAO audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill (HR1207), so that a complete audit would not be carried out. Ben Bernanke, Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve nearly 100 year history were posted on Senator Sanderâs webpage earlier this morning.

sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3   (Summarized below)

What was revealed in the audit was startling:

$16,000,000,000,000.00 (TRILLION) had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the worldâs banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs. To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is only $14.5 trillion.


The budget that is being debated so heavily in Congress and the Senate is only $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world. In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. 
That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion. ****

 

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self-identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

 

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and super-corporations like Halloween candy.

 

The list of institutions which received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows:

Citigroup: $2.5 trillion($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion* ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)

 

IT WILL BE INTERESTING AS TO HOW MUCH ATTENTION (AS WELL AS THE SLANT) THE MAINSTREAM MEDIA GIVES THIS UNBELIEVABLE POSITION OF OUR GOVERNMENT HAS PLACED US IN WITH NEVER PREVIOUSLY HAVING AN AUDIT OF THE FEDERAL RESERVE.

I AM CONFIDENT THAT WE WILL HEAR SOMETHING LIKE THE FED HAD TO GIVE STIMULUS TO WHOM THE $16 TRILLION WENT TOO BECAUSE IF WE HAD NOT ALLOWED THIS IT WOULD BE THEIR COLLAPSE AND THE OURS.

HAS ANYONE EVER HEARD OF CLOWARD AND PIVEN ECONOMICS? (PARAPHRASING) IT INVOLVES TWO HARVARD PROFESSORS WHOSE BOOK SAID TO CHANGE ANY GOVERNMENTâS ECONOMIC SYSTEM INTO A SOCIALIST ONE, IT SIMPLY DRIVES THEIR ECONOMY INTO THE DITCH THEN THE CITIZENS ALLOW THE GOVERNMENT TO DO WHAT THEY WISH TO SAVE THEM
 

  THIS is a five minute read.

Sun, 10/02/2011 - 06:03 | 1730432 BigDuke6
BigDuke6's picture

Thanks for pasting this on every thread on ZH.  

How long to you intend to keep this up before u come up with something original to say for urself?

Sun, 10/02/2011 - 21:19 | 1731948 kill switch
kill switch's picture

Until you get it..

 

P.S. It should be how long do you

Sat, 10/01/2011 - 21:01 | 1729926 Go Tribe
Go Tribe's picture

With a portfolio like that, why don't the hedge funds simply buy the SPY? These are the smart guys?

Sat, 10/01/2011 - 21:33 | 1729966 youngman
youngman's picture

I agree..its not that impressive..mostly blue chips.....

Sat, 10/01/2011 - 22:01 | 1730008 americanspirit
americanspirit's picture

Doom. Doom. Sayeth Jeramiah. ( just kidding) An old guy's sense of humor.

Doom.

Sat, 10/01/2011 - 22:16 | 1730026 Bansters-in-my-...
Bansters-in-my- feces's picture

Are hedgies like wedgies,just not as "uptight"...?

Sat, 10/01/2011 - 22:29 | 1730051 High Plains Drifter
High Plains Drifter's picture

number 1 is apple. oh my. that is really going to hurt.............

Sun, 10/02/2011 - 01:05 | 1730238 EhKnowKneeMass
EhKnowKneeMass's picture

Third Point = Bruce's 'Unnatural Acts'?
http://www.zerohedge.com/contributed/unnatural-acts

Sun, 10/02/2011 - 01:39 | 1730261 DeadFred
DeadFred's picture

Percent changes are pretty close, could be.

Sun, 10/02/2011 - 02:21 | 1730297 Grand Supercycle
Grand Supercycle's picture


Analysis originally posted on my blog Feb 16, 2011.

“When DOW/S&P500 correction gathers momentum I expect:
UP ~ USD, various USDXXX currencies, VIX Index
DOWN ~ EURUSD, AUDUSD, NZDUSD, GOLD/SILVER, Base metals like COPPER etc, CRUDE OIL”

http://stockmarket618.wordpress.com

Sun, 10/02/2011 - 03:17 | 1730337 chistletoe
chistletoe's picture

too damn many people short.  beware ....

Sun, 10/02/2011 - 08:58 | 1730551 RiverRoad
RiverRoad's picture

Re "AAPL":  Has nobody noticed the insider selling that has been going on the past week???  Look out below.....

Sun, 10/02/2011 - 09:24 | 1730576 FoieGras
FoieGras's picture

Remember CNBC pundits are calling AAPL *cheap*... while 999 out of 1000 hedge funds have AAPL as one of their top 3 positions. This will end up being a blood bath.

Sun, 10/02/2011 - 13:50 | 1730969 slaughterer
slaughterer's picture

Apple has an iPhone event scheduled for Tuesday next week.  Whether the announced new iphone is a 4S or a more revamped 5 is the key question.  If 4S, then AAPL goes down, if 5, then AAPL goes up.    

Sun, 10/02/2011 - 14:30 | 1731066 ivars
ivars's picture

Comparison charts between DJIA prediction and actual prices 8 months after forecast:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=0&st=0&sk=t&...

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2860#p34298

http://saposjoint.net/Forum/download/file.php?id=3031

 

Accuracy  for last 2 months ( since it was long term forecast, I consider that most important) - 0-5%.

Future trend- accelerating downturn, reaching 10 000  in November 1st, 2011, 9500 end of December 2011, 7500 March 1, 2012, then more or less stable ( as USD takes a hit-devaluation from q2, 2012) , 7000 Nov 2012 ( elections)!

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=0&st=0&sk=t&...

From earlier correlations, such stock market prices means 2-4% drop in GDP starting from Q1 2012.

And loss of internal and external creditor trust in the USA debt leading to default - starting from Q2 2012 once double recession is obvious and future is even less happy.

Sun, 10/02/2011 - 21:32 | 1731895 Conax
Conax's picture

 disregard

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