Largest U.S. Bank failure ever

 

NEW YORK/WASHINGTON (Reuters) - Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.

Thursday’s seizure and sale is the latest historic step in U.S. government attempts to clean up a banking industry littered with toxic mortgage debt. Negotiations over a $700 billion bailout of the entire financial system stalled in Washington on Thursday.

Washington Mutual, the largest U.S. savings and loan, has been one of the lenders hardest hit by the nation’s housing bust and credit crisis, and had already suffered from soaring mortgage losses.

Washington Mutual was shut by thefederal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. This followed $16.7 billion of deposit outflows at the Seattle-based thrift since Sept 15, the OTS said.

“With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business,” the OTS said.

Customers should expect business as usual on Friday, and all depositors are fully protected, the FDIC said.

FDIC Chairman Sheila Bair said the bailout happened on Thursday night because of media leaks, and to calm customers. Usually, the FDIC takes control of failed institutions on Friday nights, giving it the weekend to go through the books and enable them to reopen smoothly the following Monday.

Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The largest previous U.S. banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.

JPMorgan said the transaction means it will now have 5,410 branches in 23 U.S. states from coast to coast, as well as the largest U.S. credit card business.

It vaults JPMorgan past Bank of America Corp to become the nation’s second-largest bank, with $2.04 trillion of assets, just behind Citigroup Inc. Bank of America will go to No. 1 once it completes its planned purchase of Merrill Lynch & Co.

The bailout also fulfills JPMorgan Chief Executive Jamie Dimon’s long-held goal of becoming a retail bank force in the western United States. It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price through a government-financed transaction.

On a conference call, Dimon said the “risk here obviously is the asset values.”

He added: “That’s what created this opportunity.”

JPMorgan expects to incur $1.5 billion of pre-tax costs, but realize an equal amount of annual savings, mostly by the end of 2010. It expects the transaction to add to earnings immediately, and increase earnings 70 cents per share by 2011.

It also plans to sell $8 billion of stock, and take a $31 billion write-down for the loans it bought, representing estimated future credit losses.

The FDIC said the acquisition does not cover claims of Washington Mutual equity, senior debt and subordinated debt holders. It also said the transaction will not affect its roughly $45.2 billion deposit insurance fund.

“Jamie Dimon is clearly feeling that he has an opportunity to grab market share, and get it at fire-sale prices,” said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati. “He’s becoming an acquisition machine.”

BAILOUT UNCERTAINTY

The transaction came as Washington wrangles over the fate of a $700 billion bailout of the financial services industry, which has been battered by mortgage defaults and tight credit conditions, and evaporating investor confidence.

“It removes an uncertainty from the market,” said Shane Oliver, head of investment strategy at AMP Capital in Sydney. “The problem is that markets are in a jittery stage. Washington Mutual provides another reminder how tenuous things are.”

Washington Mutual’s collapse is the latest of a series of takeovers and outright failures that have transformed the American financial landscape and wiped out hundreds of billions of dollars of shareholder wealth.

These include the disappearance of Bear, government takeovers of mortgage companies Fannie Mae and Freddie Mac and the insurer American International Group Inc, the bankruptcy of Lehman Brothers Holdings Inc, and Bank of America’s purchase of Merrill.

JPMorgan, based in New York, ended June with $1.78 trillion of assets, $722.9 billion of deposits and 3,157 branches. Washington Mutual then had 2,239 branches and 43,198 employees. It is unclear how many people will lose their jobs.

Shares of Washington Mutual plunged $1.24 to 45 cents in after-hours trading after news of a JPMorgan transaction surfaced. JPMorgan shares rose $1.04 to $44.50 after hours, but before the stock offering was announced.

119-YEAR HISTORY

The transaction ends exactly 119 years of independence for Washington Mutual, whose predecessor was incorporated on September 25, 1889, “to offer its stockholders a safe and profitable vehicle for investing and lending,” according to the thrift’s website. This helped Seattle residents rebuild after a fire torched the city’s downtown.

It also follows more than a week of sale talks in which Washington Mutual attracted interest from several suitors.

These included Banco Santander SA, Citigroup Inc, HSBC Holdings Plc, Toronto-Dominion Bank and Wells Fargo & Co, as well as private equity firms Blackstone Group LP and Carlyle Group, people familiar with the situation said.

Less than three weeks ago, Washington Mutual ousted Chief Executive Kerry Killinger, who drove the thrift’s growth as well as its expansion in subprime and other risky mortgages. It replaced him with Alan Fishman, the former chief executive of Brooklyn, New York’s Independence Community Bank Corp.

WaMu’s board was surprised at the seizure, and had been working on alternatives, people familiar with the matter said.

More than half of Washington Mutual’s roughly $227 billion book of real estate loans was in home equity loans, and in adjustable-rate mortgages and subprime mortgagesthat are now considered risky.

The transaction wipes out a $1.35 billion investment by David Bonderman’s private equity firm TPG Inc, the lead investor in a $7 billion capital raising by the thrift in April.

A TPG spokesman said the firm is “dissatisfied with the loss,” but that the investment “represented a very small portion of our assets.”

DIMON POUNCES

The deal is the latest ambitious move by Dimon.

Once a golden child at Citigroup before his mentor Sanford “Sandy” Weill engineered his ouster in 1998, Dimon has carved for himself something of a role as a Wall Street savior.

Dimon joined JPMorgan in 2004 after selling his Bank One Corp to the bank for $56.9 billion, and became chief executive at the end of 2005.

Some historians see parallels between him and the legendary financier John Pierpont Morgan, who ran J.P. Morgan & Co and was credited with intervening to end a banking panic in 1907.

JPMorgan has suffered less than many rivals from the credit crisis, but has been hurt. It said on Thursday it has already taken $3 billion to $3.5 billion of write-downs this quarter on mortgages and leveraged loans.

Washington Mutual has a major presence in California and Florida, two of the states hardest hit by the housing crisis. It also has a big presence in the New York City area. The thrift lost $6.3 billion in the nine months ended June 30.

“It is surprising that it has hung on for as long as it has,” said Nancy Bush, an analyst at NAB Research LLC.

(Additional reporting by Paritosh Bansal, Christian Plumb and Dan Wilchins; Jessica Hall in Philadelphia; John Poirier in Washington, D.C. and Kevin Lim in Singapore; Editing by Gary Hill and Carol Bishopric)

The unknown 20Trillion Dollar company

 

The unknown 20 trillion dollar company 2003-10-30 17:37 28 comments

by Flemming Funch There is a busy little private company you probably never have heard about, but which you should. Its name is the Depository Trust & Clearing Corporation. See their website. Looks pretty boring. Some kind of financial service thing, with a positive slogan and out there to make a little business. You can even get a job there. Now, go and take a look at their annual report. Starts with a nice litte Flash presentation and has a nice message from the CEO. And take a look at the numbers. It turns out that this company holds 23 trillion dollars in assets, and had 917 trillion dollars worth of transactions in 2002. That’s trillions, as in thousands of thousands of millions. 23,000,000,000,000 dollars in assets.  As it so turns out, it is not because DTCC has a nice website and says good things about saving their customers money that they are trusted with that kind of resources. Rather it is because they seem to have a monopoly on what they do. In brief, they process the vast majority of all stock transactions in the United States as well as for many other countries. And – and that’s the real interesting part – 99% of all stocks in the U.S. appear to be legally owned by them.  In the old days, when you owned stocks you would have the stock certificates lying in your safe. And if you needed to trade them, you needed to get them shipped off to a broker. Nowadays that would be considered very cumbersome, and it would be impractical to invest via computer or over the phone. So the shortcut was invented that the broker would hold your stocks instead of you. And in order for him to legally be able to trade them for you, the stocks were placed under their “street name”. I.e. they’re in the name of the brokerage, but they’re just holding them in trust and trading them for you. And you’re in reality the beneficiary rather than the owner. Which is all fine and dandy if everything goes right. Now, it appears the rules were then changed so the brokers are not allowed any longer to put the stocks in their own name. Instead, what they typically do is to put the stocks into the name of “Cede and Company” or “Cede & Co” or some such variation. And the broker might tell you that it is just a fictitious name, and will explain why it is really more practical to do that than to put it in your name.  The problem with that is that it appears that Cede isn’t just some dummy name, but an actual corporation that DTCC controls. And, well, if you ask anybody about this, who actually knows about it, they will naturally tell you that it is all a formality. To serve you better, of course. And, well, maybe it is. DTCC seems like a nice and friendly company. It is a private company, owned by the same people (major U.S. banks) who own the Federal Reserve Bank. And if they all stick to their job, and just keep the money and your stocks flowing smoothly, I’m sure that is all well and good. But if somebody at some point should decide otherwise, and there’s a national U.S. emergency and/or the U.S. government becomes unable to pay its debts, well, they might just not give you your stocks back. Because legally they own them. Something to think about.  An fascinating article about this whole thing is here. I will include it at the bottom too, in case it should disappear. Not that I can vouch for or agree with everything the guy is saying, and some of it is a little whacko, but obviously he’s been researching this quite a bit. You’ll find very little about it on the net otherwise.       The Unknown $19 Trillion Depository Trust Company  by Anthony Wayne  Part I of II  This exclusive report is a compilation of interviews and background research from October 1995 through April 1999.  The Depository Trust Company (DTC) is the best kept secret in America. Headquartered at 55 Water Street in New York City, the average American has no clue that this financial institution is the most powerful banking corporation in the world. The general public has no knowledge of what the DTC is or what they do. How can a private banking trust company hold assets of over $19 trillion and be unknown? In a recent press release dated April 19, 1999, the Depository Trust Company stated:  The Depository Trust Company (DTC) is the world’s largest securities depository, holding nearly $19 trillion in assets for its Participants and their customers…. Last year, DTC processed over 164 million book-entry deliveries valued at more than $77 trillion.  In dealing with the trust department of Midlantic Bank, N.A. in New Jersey [now PNC Bank, N.A.], this writer was authorized, as trustee and power of attorney, to transfer original trust assets comprising of common stocks and bonds to a new trust set up in another jurisdiction. An Assistant Vice President from the Trust & Financial Management Office of Midlantic Bank said to me “it will take at least 6 weeks to do this as the majority of the stocks and bonds are not held in the name of the trust”. This same Midlantic Bank Assistant V.P. also stated in a letter dated November 17, 1995, “Of the 11 municipal bonds, 8 are held in book entry only. This means they cannot be physically re-registered with a certificate sent to the new trustees.” (* these are not the actual figures quoted in the letter in order to protect the privacy of the account holder, at their request. Also, we were asked not to name the Midlantic Assistant V.P. in order to protect her privacy Rights. We respect these requests with full moral compliance). In disbelief, I brought this matter to the attention of our research assistants at the Christian Common Law Institute [formerly the North Bridge News] and we began our lengthy investigation into the matter. After 3 years, the can of worms we’ve opened up should frighten every American. With the advent of reported Y2K computer glitches and the possible collapse of our ‘paper asset’ economy, every person who has a stock or bond in their portfolio had better read this report and act on the information we are disclosing here.  In November 1995, after encountering numerous “no comments” and a myriad of “that’s not my department” excuses via telephone, I eventually spoke with Mr. Jim McNeff who told me his position was Director of Training for the DTC. He said he’d been employed there for 19 years and was “very proud” of his employer. During my initial telephone interview, either Jim’s employer or some other unknown person or persons were illegally listening or taping our telephone conversation according to the electronic eavesdropping equipment we have installed on our end. Why did anyone feel it was necessary to illegally record our conversation without advising us? Was some federal alphabet agency monitoring DTC calls to safeguard National Security? That in itself is suspicious enough to warrant a big red warning flag.  Jim informed me back then (1995) that “the DTC is the largest limited trust company in the world with assets of $ 9.1 trillion”. In July 1998, I spoke with Ms. Rose Barnabic of the DTC Finance Department who said that “DTC assets are currently estimated at around $11 trillion”. As of April 19, 1999, the DTC itself has stated that their assets total “nearly $19 trillion” (see above). Mr. McNeff had also stated “the DTC is a brokerage clearing firm and transfer center. We’re a private bank for securities. We handle the book entry transactions for all banks and brokers. Every bank and brokerage firm must secure their membership with us in case they become insolvent, so your assets are secure with DTC”. Yes, you read that correctly. The DTC is a private bank that processes every stock and bond (paper securities) for all U.S. banks and brokerage houses. The big question is this; Just who gave this private bank and trust company such a broad range of financial power and clout?  The reason the public doesn’t know about DTC is that they’re a privately owned depository bank for institutional and brokerage firms only. They process all of their book entry settlement transactions. Jim McNeff said “There’s no need for the public to know about us… it’s required by the Federal Reserve that DTC handle all transactions”. The Federal Reserve Corporation, a/k/a The Federal Reserve System, is also a private company and is not an agency or department of our federal government, according to the 1998 Federal Registry. The Federal Reserve Board of Governors is listed, but they are not the owners. The Federal Reserve Board, headed by Mr. Alan Greenspan, is nothing more than a liaison advisory panel between the owners and the Federal Government. The FED, as they are more commonly called, mandates that the DTC process every securities transaction in the US. It’s no wonder that the DTC (including the Participants Trust Company, now the Mortgage-Backed Securities Division of the DTC) is owned by the same stockholders as the Federal Reserve System. In other words, the Depository Trust Company is really just a ‘front’ or a division of the Federal Reserve System.  “DTC is 35.1% owned by the New York Stock Exchange on behalf of the Exchange’s members. It is operated by a separate management and has an independent board of directors. It is a limited purpose trust company and is a unit of the Federal Reserve.” -New York Stock Exchange, Inc.  Now, let’s see how this effects the average working American family. If you’re not aware how the system works, you should visit or call a stock broker or bank and instruct them you want to purchase some shares of common stock or a small municipal bond, for example. They will set up a brokerage account for you and act as your agent with full durable power of attorney (which you must legally sign over to them) to conduct business on your behalf, upon your buy or sell instructions. The broker will place your stock or bond purchase into their safekeeping under a “street name”. According to Mr. McNeff of the DTC, no bank or broker can place any stock or bond into their firm’s own name due to Federal Trade Commission (FTC) and Security and Exchange Commission (SEC) regulations.  The broker or bank must then send the transaction to the DTC for ledger posting or book entry settlement under mandate by the Federal Reserve System. Remember, since your bank or broker can’t use their name on the certificate, they use a fictitious street name. “Since the DTC is a banking trust company, we can’t hold the certificates in our name, so the DTC transfers the certificates to our own private holding company or nominee name.” states Mr. McNeff. The DTC’s private holding company or street name, as shown on certificates we have personally examined from numerous certificate holders, is shown as either “CEDE and Company”, “Cede Company” or “Cede & Co”. We have searched every source known to learn who CEDE really is, but have been unable to get any background information on them. Is Cede Company fictitious or is their identity perhaps a larger secret than DTC? We must presume that the information Mr. McNeff gave us was correct when he confirmed that Cede Company was a controlled private holding company of the DTC. We have now found the following proof that CEDE is real from the Bear Stearns internet site:  NEW YORK, New York – March 16, 1999 – Bear Stearns Finance LLC today announced that it will redeem all of the 6,000,000 outstanding 8.00% Exchangeable Preferred Income Cumulative Shares, Series A (“EPICS”) of Bear Stearns Finance LLC, liquidation preference of $25.00 per Series A Share, CUSIP number G09198105. All of the Series A Shares are held by Cede & Co., as nominee of The Depository Trust Company, and the payment of the redemption price will be made to Cede & Co. by ChaseMellon Shareholder Services, LLC, as paying agent, whose address is: 85 Challenger Road, Ridgefield Park, New Jersey 07660.  The banks and brokers are merely custodians for their clients. By federal law (SEC), they cannot hold any assets in the customer’s name. The assets must be held in the name of DTC’s holding company, CEDE & Co. That’s how DTC has more than $19 trillion dollars of assets in trust… or is it really in “trust” if the private Federal Reserve System is technically holding it in their “unknown” entity’s name? Obviously, if stock and bond certificates you’ve purchased aren’t in your name, then the “holder” (the Federal Reserve System) could theoretically refuse to surrender them back to you under a “national emergency” according to the Trading with the Enemy Act (as amended). Is this the collateral being held by the private Federal Reserve System to pay off the national debt owed to them by our federal government, first initiated by Lincoln’s debt bonds of 1864?  According to Mr. McNeff, the DTC was a former member of the New York Stock Exchange (NYSE), and “Our sister company is the National Securities Clearing Corporation… the NSCC” (they have since merged). He was correct since we now know that the NYSE holds 35.1% of the “ownership” of the DTC on behalf of their NYSE members. Simply put, the Depository Trust Company absolutely controls every paper asset transaction in the United States as well as the majority of overseas transactions, and they now physically hold (as of April 1999) 99% of all stock and bond book-entrys in their street name, not the actual owner’s names. If you have stock or bond certificates in your name buried in your back yard or under your mattress, we suggest you keep them there. If not, it might be very wise to cancel your brokerage account and power of attorney status, re-register the stocks and bonds in your name (if you still can), and keep them hidden where only you know their location. Otherwise, you have absolutely no control over them (see Part II of our exclusive research report on the DTC for more information on beneficial ownership status). However, getting a stock or bond certificate these days is not so easy if possible at all:  “For the most part, issuers know little about the role of the Depository Trust Company (DTC). The DTC was created in 1973 as a user-owned cooperative for post-trade settlement. Our members are banks and broker/dealers, whom we refer to as participants. We handle listed and unlisted equities, including 51,000 equity issues and 170,000 corporate debt issues, equating to more than 78% of shares outstanding on the New York Stock Exchange (NYSE). We also have more than 95% of all municipals on deposit.  In the 1980s, the “Group of 30″ [business leaders] recommended that stock certificates be eliminated, because physical certificates create risk. The Securities Exchange Commission (SEC) issued a concept release in 1994 to gradually decrease certificates, providing optional direct registration on the books of the issuer instead of a certificate…. this enhances the portability of shares between transfer agents and brokerage accounts. With the direct registration system, brokers transmit instructions to purchase through DTC, which the issuer or transfer agent then registers, so shares can be delivered electronically.” -John D. Faith, Manager, Corporate Trust Services, The Depository Trust Company (1996)  Now we’re about to reveal to you the most shocking discovery we came across during our research into this matter. Most of us remember a few years back the purported computerized selling of stocks that resulted in Wall Street’s “Black Monday”:  Dow Dives 508.32 Points in Panic on Wall Street  “The largest stock-market drop in Wall Street history occurred on “Black Monday” — October 19, 1987 — when the Dow Jones Industrial Average plunged 508.32 points, losing 22.6% of its total value. That fall far surpassed the one-day loss of 12.9% that began the great stock market crash of 1929 and foreshadowed the Great Depression. The Dow’s 1987 fall also triggered panic selling and similar drops in stock markets worldwide” -Source: Facts on File World News CD ROM  The stock exchanges had dramatic record losses, and a record volume of shares were traded on that infamous Monday in October 1987. We all asked ourselves how computers could have done this by themselves without someone knowing about it. After all, someone has to program a computer to tell it what to do, what not to do, or even when to do or not do it.  During my telephone conversation, Mr. McNeff was trying to assure me that they [the DTC] have “never lost a certificate or made a mistake in a book ledger transaction”. In attempting to give me an example of how trustworthy the DTC is when I asked him how he could back up such a statement, he replied “DTC’s first controlled test was 4 or 5 years ago. Do you remember Black Monday? There were 535 million transactions on Monday, and 400 million transactions on Tuesday”. He was very proud to inform me that “DTC cleared every transaction without a single glitch!”. Read these quotes again: He stated that Black Monday was a controlled test. Black Monday was a deliberately manipulated disaster for many Americans at the whim of a controlled test by the DTC.  What was the purpose of this test? Common sense tells you that you test something before you intend to use it. It’s quite obvious that the stock markets are going to ‘crash and burn’ at some future date and for some ‘unknown’ reason since the controlled test was so successful. Was this just one of the planned tests for a Y2K internationally planned worldwide economic meltdown? The Great Depression is about to be repeated, and it will be as deliberate and manipulated as the first one that began with the stock market crash of 1929. We are, without a doubt, on the brink of the Mother of all economic Depressions. As of May 3, 1999, the Dow Jones Industrial Average (DJIA) went above a record 11,000 points. Just prior to the 1929 stock market crash, Wall Street was posting record prices, record earnings, and record profits…. just like the scenario we are experiencing today. Will Y2K be a manipulated and deliberate a financial meltdown? Too many facts already support this probability.  On June 7, 1995, the federal government issued a new regulation requiring stock and bond certificate transfers to be cleared in three days instead of the previous five day time period. It coincided with the infamous Regulation CC that purportedly gave us faster three day availability of funds from deposited checks. This means that brokers and banks must get your stock or bond transaction into the street name (Cede & Co.) of the DTC within 3 working days. That’s hard to do considering banks claim it takes 3 or more days to clear a check that you’ve submitted to pay for a stock purchase. But, there’s a reason for this new regulation and it coincides with the introduction of the new FRS “dollars”.  On February 22, 1996, “the DTC will flip the switch” according to Mr. McNeff. “What switch?”, I asked. “This is the day that clearing house funds will no longer be accepted for stock or bond transactions” was my reply from Jim. “Instead, only Fed Funds will be accepted”. Fed Funds, or a Fedwire, are electronic computer ledger debit transfers between Federal Reserve System member banks. No checks or drafts have been allowed from that day, just as Mr. McNeff accurately stated. This is more commonly called a ‘cashless transaction’. I call it the reality of the mark of the beast. This is the manifestation of the new international god, the New World Order [I prefer the term 'New World DISorder' as a more accurate description].  Consider this my fellow Christian Americans: All pension funds and other institutional ‘managed funds’ are comprised of paper asset investments such as stocks, bonds, and mutual funds. These certificates are technically in the name of DTC’s private holding company, CEDE and Company. The DTC is owned by the private Federal Reserve System owners (Click for a complete list of names). Congress has attempted, on no less than two occasions since 1995, to pass legislation allowing pension funds to be used by the government as purported ‘loans’. All the Federal Reserve System has to do is hand it over. But, what happens to the people counting on those pension fund investments in order to feed themselves in their retirement? Too bad for them…. they’re out of luck because for the ‘good of the nation’, they may be forced to share or relinquish their lifetime of hard-earned wealth. This can be done without the consent of Congress under an Executive Order based on the War and Emergency Powers Act and a state of National Emergency, just like we are already under (See further Executive Orders). Since the Federal Reserve System already holds our stocks and bonds in their fictitious DTC “street name”, CEDE, then perhaps they’ll cash them in for the federal government’s failure to repay the loans that have become way overdue. Heck, some of Lincoln’s gold backed bonds from 1864 have not been repaid yet…. and for a reason.  On March 6, 1933, all bullion gold and gold coins were forcibly taken from the hands of private citizens (see New York Times). Under the War Powers Act, President Roosevelt declared a national emergency touted as a “Banking Holiday”. It was declared due to the deliberately calculated stock market crash that preceded the Great Depression. Where did this gold end up? Into the hands of the Federal Reserve System owners. The majority is stored in the impervious rock vaults they own beneath New York City. Is it any surprise that the DTC physically holds all the remaining non-book entry issued stock and bond certificates in the same place?  Technically, our entire nation is still under the Executive Order declaration of the War Powers Act and in a continual state of national emergency (See Clinton’s 1994 Executive Order 12919). The President can enforce any new emergency at any time under Executive Order or Presidential Directive. In 1995, we [the former North Bridge News] published that we expected a new national “dollar” emergency to be declared within a year or two. Just like we thought at the time, they have now blamed it on the purported drug dealers who are allegedly destroying our currency by money laundering schemes.  Since late 1996, old U.S. $100 FRB notes issued by the Federal Reserve Bank are being exchanged for new $100 FRS issued by the Federal Reserve System. These new notes have scanable magnetic platinum encryption on the plastic strips embedded inside the bills. The U.S. Treasury claims this is for “the blind”. Now, new $20 and $50 FRS’s are replacing the older notes as well. What people don’t realize is that very soon, the older FRB notes will no longer be ‘legal’ and there will be a penalty for hoarding them. This is what happened to those Americans holding gold and gold coins after 1933.  “We are most gratified with the successful introduction of the new $100 and $50 notes and look forward to the same success with the new $20s,” Chairman Greenspan said. For the first time, a machine-readable capability has been incorporated for the blind. A new feature in the $20 will facilitate the development of convenient scanning devices that could identify the note as a $20. -U.S. Treasury, Office of Public Affairs, RR-2449 released May 20, 1998.  Why new paper ‘money’ and for what purpose? Because the new FRS notes in your pocket can be scanned and whoever scans them can know exactly how much money you have on you. The older FRB notes are not encoded to do this. This writer knows firsthand of at least one machine, manufactured by Diebold, Inc. (a/k/a InterBold) that scans the money in your pockets, wallet or purse no different in theory than a credit card scanner, but much more sophisticated. I participated in a ‘test’ of this machine at a U.S. international airport in 1998. To me, it looks much like the standard metal detector scanners you walk through at all airports. I was asked (by who I believe was a U.S. Treasury Agent, as he introduced himself and flashed his ID quickly in my face so I couldn’t read it) if I had any of the new $100 or $50 bills in my pockets. I looked in my wallet and saw I had one new $100 FRS note. I told him “yes”, then he said “Good, but don’t tell me how much”. After saying he would “really appreciate it” if I would help them with a test, he asked me to walk through what looked like a typical airport scanner. No beeps. No noise. No sound at all. He looked at a computer screen and said “Do you have a new $100 bill?”. When I confirmed that was true, he thanked me and told me to please move on. I tried to ask him how the machine knew that, but he ignored my question. I took a good look at the scanning system and believe I have now spotted them at Kennedy, Atlanta, Miami and Los Angeles airports.  The odd part about this is that these machines seem to all be located in the customs areas where you enter the U.S. from a foreign country. Obviously, they want to know if someone is carrying more than $10,000 into the U.S. Common sense dictates that they should be more concerned about people leaving with more than $10,000 if they’re really trying to thwart the drug dealers…. until you begin to realize that there must be some other hidden agenda: They are apparently going to stop money from entering the U.S. for a reason.  Will the President call for the confiscation of all gold bullion and bullion coins as Roosevelt did? Who will end up with it? The Federal Reserve System owners, just like before. Since June 1998, international gold supplies have been so low that some private Swiss Banks have been paying a premium above the market wholesale value for gold bullion. This was confirmed to us by a gold and diamond mining Chief Executive from Rex Mining in Guinea, West Africa, who supplies raw gold to a major Swiss Banking company smelter and processor The spot gold market has been manipulated to keep the price low so that the Federal Reserve System owners can purchase all that is available through their various trusts and corporations. World gold availability on the open market is now at a record low and mining production of gold is also at a record low output.  What happened to ‘supply and demand’ with gold and silver? Normally, when supply is high the price decreases. When supply is low, precious metal prices increase. Perhaps the private FED will peg the new dollar to gold prices, as many experts have already speculated. What will stocks and bonds purchased with old dollars be worth then? Pennies to the dollar, so to speak. Who ends up being the only winner? The Federal Reserve System stockholders. They control the circulation amounts of paper money in the U.S. Combine that with the new scanner to stop large amounts from entering into the U.S., and the scenario amounts to a planned shortage of paper FRS notes, the banning of the older FRB notes, and the soon to be astronomical price of gold which most Americans will be forbidden to have or hoard, once again. The facts we’ve presented in this report all point to this.  People will be at the mercy of the federal government for daily food and for jobs. Checks are soon to be totally phased out. Banks issue ATM debit cards and tell you they must charge more for your account if you use a real live human teller instead of the machine. The switch is being turned on. This is not speculation. This is the truth of reality. It’s already been tested, and their new system works. Just ask Jim McNeff of the DTC.  The day has come when you must decide to accept or reject the beast and the New World Disorder.  Part II of II-  You don’t own your Stocks….or any of your Bonds…The Depository Trust Company does.  by Anthony Wayne  In Part I of this series, excerpts of which were first published in November 1995 by the former North Bridge News, we exposed The Depository Trust Company (DTC) as the Unknown $ 9.1 Trillion Company. It appears that our startling discoveries of the inner-workings of the DTC had only scratched the surface. We’d like to add more fuel to this blazing fire by further exposing the DTC and those behind it.  The Depository Trust Company has grown since October 1995. On July 1998, this amount was estimated by a DTC employee at more than $11 Trillion. As of April 19, 1999, the DTC itself has stated in a press release that their asset value is nearly $19 trillion. In 3 1/2 years, their assets increased nearly $ 10 Trillion. That’s a lot of stocks and bonds supposedly held in trust. The latest trend over the past ten years is for stock and bond brokers to offer “book-entry ownership” only. Every book-entry stock or bond is literally owned by the DTC. Since 1985, most bond and many stock issuers have converted from the issuance of certificates to book-entry systems administered and controlled by the DTC. As of March 1999, the National Securities Clearing Corporation (NSCC) and the Participants Trust Company (PTC) are now merged into the DTC. Practically, there isn’t one stock or bond issued that is not controlled by the DTC.  If you purchase any stock or bond through a broker, it is being held for you under a “street name” by the DTC unless you have specifically requested to hold the certificate yourself. If you have a book entry stock or bond, you won’t be issued a certificate. It’s important to note that you have purchased that particular stock or bond without becoming a registered holder of the actual stock or bond certificate. Instead, you have become a beneficial owner. The difference between the two is like night and day. Take the time to absorb and understand the following definitions:  REGISTERED HOLDER- A Registered Holder literally possesses, owns, and holds, his stock or bond with his name appearing on the face of the certificate. The company that issued the certificate has registered the owner’s (holder’s) name on their official books. This is the safest way to own a paper asset. You literally possess the fully registered certificate and only you can transfer or sell it. By all Rights and definition of law, you are the owner. You have it, you hold it, you possess it, and you keep it. You have the complete control over it.  BENEFICIAL OWNER- A Beneficial Owner is nothing more than a beneficiary, “One who is entitled to the benefit of a contract”- A Dictionary of Law, 1893. All book-entry stocks and bonds you purchase make you the beneficial owner, not the registered holder. The owner of a book-entry stock or bond is the entity or name that it is registered under.  The DTC owns that bond or stock, not you. Rather than in your name, it’s registered (as the legal Registered Owner or agent) in their “street name”, Cede & Company. (In the past, it may have been registered in your broker’s street name, but this is no longer allowed). The DTC is the Registered Owner – holder – of your stock or bond. The DTC is the legal property-holder, share-holder, stock-holder, owner and purchaser. Your name appears nowhere on the book entry or certificate as the actual owner. Instead, you have been designated by the legal registered owner, the DTC, as the Beneficial Owner. This means that your lawful Rights in that stock or bond are confined to that of a successor or heir.  At the University of Utah College of Law, we found the following examination question about Cede & Co.:  The common stock of LargeCo, Inc. is publicly traded on the New York Stock Exchange. Over 2/3rds of the shares are registered on LargeCo’s books in the name of Cede & Co. Cede is a depository company which holds the shares as nominee on behalf of brokerage firms, mutual funds and other active traders. The brokerage firms in turn are also nominees with respect to some of the shares, which they hold on behalf of their customers. Nominees, such as Cede and brokerage firms holding for customers, view the customer as the beneficial owner of the shares and consider the customer to be the one with the right to vote the shares; mutual funds, however, view the fund as the owner of the shares it holds and vote the shares themselves.  Most of the remainder of LargeCo’s stock (26% of the total) is held by the Large family, which is still actively involved in management. LargeCo is aware that the beneficial owner of about half the stock registered in Cede’s name is the Small family, who live next door to the Larges in downtown Rome, and that the remainder of the Cede stock is beneficially owned by several well known mutual funds.  According to the DTC, under the US Security and Exchange Commission (SEC) rules, you only have the right to “receive proceeds or other advantages as the beneficiary”. You are not the owner… you are the consignee, “One who has deposited with a third person an article of property for the benefit of a creditor”- A Dictionary of Law, 1893. In legal terms, you are considered the heir presumptive or heir at law to the stock or bond you paid for. The DTC controls, possesses as creditor, holds and owns your book-entry stock or bond. This is a difficult pill to swallow for those who have placed their assets in stocks and bonds over the past decade. Your broker sends you a fancy accounting every month of your purported holdings, along with dividend and interest payments paid. The fact is, you only receive the benefit of ownership (interest and dividends) without holding title to your property. You are at the mercy of the registered owner, the DTC. If you don’t believe this is true, then call your broker right now and ask them who’s name is listed as the Registered Holder of your book-entry stocks and bonds. If you’re lucky, the broker will tell you “why of course you’re the Beneficial Owner”, then you’ll know the truth. He may emphasize to you that the stocks and bonds are being held in “safe keeping” for your own protection. This is broker language for “your stocks and bonds are held by the DTC in their street name as the creditor”.  From J.P. Morgan’s internet site:  Registered and beneficial shareholders  There are two types of shareholders: registered, who hold an ADR in physical form, and beneficial, whose ADRs are held by third-parties and are listed under a “nominee” or “street” name.  Registered shareholders are listed directly with the issuer or its U.S. transfer agent. The transfer agent handles the record-keeping associated with changes in share ownership, distribution of dividend payments, and investor inquiries; it also facilitates annual meetings. An issuer’s depositary bank can provide the identities of registered shareholders on a regular basis. However, this may not provide the level of shareholder identification required for a successful investor relations effort. Registered shareholders are typically individual investors who have physical possession of their share certificates, generally in lots of 100 shares or fewer. The registered list also includes nominee names such as Cede & Co., which represent the aggregate position of the Depository Trust Company (DTC), the primary safekeeping, clearing, and settlement organization for securities traded in the United States. DTC uses electronic book-entry to facilitate settlement and custody rather than the physical delivery of certificates.  Beneficial shareholders, which can include individual as well as institutional investors, do not have physical possession of their certificates; third-party broker-dealers or custodian banks hold their securities on their behalf. These shares are said to be held in street name because they are kept with the DTC in the name of the broker-dealer or the custodian bank – not the underlying shareholder. Lists of beneficial shareholders who do not object to disclosing their holdings are available from banks and broker-dealers. These lists, called NOBO for Non-Objecting Beneficial Owner, typically provide the names of individual investors.  To help identify institutional investors, who do not usually disclose their holdings, issuers use publicly available filings. Large holders, including investment managers, are required to make periodic filings – such as 13-F, 13-G, and 13-D – with the Securities and Exchange Commission (SEC) disclosing the name and value of the positions in their portfolios.  Which brings us to the street name used, registered, and designated by the DTC as the registered owner of over $19 Trillion (USD) of our stocks and bonds… CEDE & Co. Everyone in the brokerage business keeps pronouncing this name as “See Dee” and Company, but it’s spelled C-E-D-E and pronounced “Seed”. This is where the real irony comes.  According to Black’s Law Dictionary, Sixth Edition, 1990, the word Cede is defined as “To yield up; to assign; to grant; to surrender; to withdraw. Generally used to designate the transfer of territory from one government to another”. In the Black’s 1951 Fourth Edition, it lists the following as supportive case law; Goetze v. United States, C.C.N.Y., 103 Fed. 72.  Have you made the connection yet? Your book-entry stocks and bonds and all stock and bond certificates purchased through your broker and held by them under your brokerage account are owned by CEDE & COMPANY (the DTC) as the registered owner. You have surrendered, assigned and granted ownership to someone else other than yourself. Their name says it all.  How ironic and sarcastic can they be?  “CEDE- To surrender possession of, especially by treaty. See Synonyms at ‘relinquish’.” -American Heritage Dictionary of the English Language, 3rd Edition of 1992  If Americans had any idea that they have relinquished the lawful ownership of their stocks and bonds to someone or something else, there would be a revolution. In a sense, that’s why we are exposing this paper asset scam to you. The point is, now that you know the truth, do something about it and get your assets back into your name.  Our suggestion to you is this: If you don’t literally have every stock and bond registered certificate in your possession, then promptly call your broker and tell him you want all your securities transferred and re-registered into your name as the Registered Holder and Owner. If he says he can’t do that because your stock or bond is a book-entry transaction only, we strongly suggest, for your own security, that you sell your book-entry assets immediately. Don’t let the broker tell you that it’s “safer” for you if they keep your certificates. Remember, you know the truth. Even if all your stock and bond certificates were burned in a fire, the process to have them replaced is simple. If someone were to steal your certificates, you simply report them stolen to the company that issued them and they’re automatically cancelled, just like a stolen credit card. Replacement certificates are then issued to replace the lost or stolen originals.  Most people don’t realize that when they open a brokerage account, they have entered into an contractural agreement allowing the broker to assign the stocks and bonds to an undisclosed creditor, the DTC. (We suggest you read the small print on your brokerage agreement). This gives the broker your express written permission to place all your securities into the ownership of the DTC. Your broker is an agent for the DTC through mandatory Securities and Exchange Commission regulations and mandates by the Federal Reserve System private bank. Your broker represents them, not you. Your brokerage account is nothing more than a ledger of accounting. It reflects no assets held in your name. The assets are registered in a “street name” that is not you or your name. Sure…. you receive the interest and dividends, but you do so as a beneficiary to the real owner. Your brokerage account in no way, shape, or manner reflects who literally owns your securities. What you own is a brokerage account and nothing more.  A greater consideration is just exactly who does the DTC hold these securities for? As the owner, who has the DTC pledged these securities to? Our research points to the Federal Reserve System, an international private banking cartel with major offices found in Moscow, London, Tokyo, and Peking. By treaty with the United Nations and in compliance with the Bretton Woods Agreement, the DTC under regulation of the Federal Reserve System has pledged all those stocks and bonds to the International Monetary Fund (IMF). These are the same paper securities found in your IRA and pension fund accounts, as well as in your brokerage account. Remember, you don’t own them…. you’re just a beneficiary.  The truth is, the securities you purchased and paid for with your hard earned money is collateral for the United Nations which is backed by the Federal Reserve System and it’s associated agencies, such as the International Monetary Fund. Is it any wonder that the UN can operate year after year with increasing budgets, but without sufficient funds? The UN has nearly $19 Trillion of backing and reserves, thanks to millions of duped Americans. We are financing the New World Dis-Order with our stocks and bonds.

 

We Are In One Of The Great Vortexes of History

We Are In One Of The Great 
Vortexes Of History 
Earl Of Stirling
9-21-8

 

We are in one of the great vortexes of history now. One of my degrees is in history. In many ways this is considered to be a largely “worthless” degree. Not too many jobs out there for historians. However, the study of history is the study of “us”; of what we are, of from where we came, and an indication of where we are going. If you stand back, from the “trees” of daily life, and look at the broad “forest” of our joint history as the human race, you can see clear patterns. Every so often the human race, or major parts thereof, goes through major life changing events: wars, revolutions, economic crisis/recessions/depressions. It is clear that we are now in one of the largest of such events; that we are in a great vortex and we have not even gone half way into this experience.   Terms like “global financial meltdown”, “global financial catastrophe”, “World War III”, “global depression” are becoming standard in describing where we are and where we are headed. The world’s central banks are pumping hundreds of billions of dollars into the global economy. Additionally government backed bailouts and arranged sales in the tens and hundreds of billions are now daily events, the total in America alone is now about one trillion dollars; and still the news continues to get worse.   Many are rightly claiming to have warned us of the financial nightmare that we are now in. A nightmare that is more and more like a “tar baby”; the more we handle it, the worst it gets. One economic/financial crisis leads to another. Already serious worries about the US$455 trillion derivative market are beginning to creep into worried conversations and news stories. Elderly people, who can remember the “Great Depression” are saying we are going into another one; and increasingly serious economic experts are voicing the same opinion.   We “knew”, or should have known, that the dismantling of governmental controls, erected in the aftermath of the Great Depression, would eventually cause a financial firestorm. We “knew”, or should have known, that the “hands off” approach of the last several administrations in America, and the United Kingdom and elsewhere, would lead to no good. We “knew”, or should have known, that all these new financial instruments, debt swaps, derivatives, etc., etc., were nothing but trouble. So, why did “we” let this happen. The answer is two-fold: the “we” is not us; and the “we” is us. The true masters of the financial world, and political world for that matter, are simply not the elected political leaders ~ they are largely just “front men” ~ the real power always is largely unseen and “behind the throne” and constitute a very tiny percentage of the human race. However, we ~ the great masses of people ~ are the very ones that empower those behind the throne/curtain, who like the Wizard of Oz can only maintain control if the masses chose to remain blind, stupid, and too lacking in courage and morality to see and change reality.   The world’s economy and politics are largely controlled by a small number of global banking families, some of whom have been at the game for over 200 years. They have simply massive levels of money and resources of all types at their disposal. They control the central banks of America (the Federal Reserve, which is privately owned ~ no more a part of the constitutional Federal government than Federal Express [Fed Ex] is), the European Union, etc.   These families follow a formula when they want to institute changes for their own benefit: thesis, antithesis, synthesis. For example, they organized the First World War, and it resulted in mass murder and economic crisis as it went on for years. In the Russian Empire the “thesis” was WWI, the “antithesis” was the effect on the population and the political “blow back” from the war. The “synthesis” was the rise of communism, which they financed and controlled, and the total police state control of the former Russian Empire that it gave them. Prior to WWI the Russian Tsar would not allow the Rothschilds and other global bankers to control his economy. The “synthesis” was one of the true goals of the “thesis” (WWI) and the “antithesis” (the population’s response to the horrors of war).   The Great Depression was the antithesis to the excesses (thesis) of the 1920s and the result (synthesis) was a greatly expanded Federal government with massive programs (aimed at ending the Great Depression) that required vast amounts of funding from their privately owned Federal Reserve Bank and its ability to create money out of thin air and loan this back to the government and collect interest on it (instead of the government just creating the money itself without any interest being due to private bankers). Side benefits to the global banking families was a great shake out of wealthy Americans and their ability to capture a much larger amount of corporate ownership/control than had existed before (using cutouts, front men, and corporate control mechanisms established by them).   The Rothschild’s Illuminati organization was instrumental in setting up (thesis) and controlling the French Revolution (antithesis) and the rise of Napoleon (synthesis). He in turn was instrumental in reshaping the world, and in a massive growth in governmental debt as nations throughout Europe borrowed money to arm themselves and fight in the various Napoleonic wars.   The game of thesis, antithesis, synthesis is played on many levels and many such “games” are often ongoing at the same time (think of it as multiple interrelated games of space chess). The unchecked banking greed and the lack of proper legal controls and governmental oversight (thesis) has led to the current nightmare events of major banks and insurance companies failing or being bought out or funded by governments (antithesis). The synthesis is that, just in the United States alone, one trillion dollars of new public debt has been created in the last week or so to “solve” the problems. New debt that enriches the private owners of the Federal Reserve System. One trillion dollars of debt, on top of the already massive US national debt, that the American public has to pay interest on for many, many, years. Of course, the “debt solution” is itself a antithesis in a broader game with the synthesis being the New World Order (or a major step towards it).   The current “solution” to the crisis that the FED and the Bush Administration have come up with allows the corrupt gains to remain privatized while socializing the losses that Wall Street and the global bankers have created.   Its all a great evil scam and we, the public, are too stupid, too scared, too blind, too wrapped up in television/etc. to be educated as to what is really going on. And most importantly, we are simply too lacking in good morality to have the strength, the moral strength, to fight it.   We are being told by the same governmental “leaders” that allowed the current economic crisis to happen on their watch, that they have fixed the problem with the latest round of new debt and governmental slight of hand. Don’t believe it for a second. We have just had a little more chewing gum and bailing wire slapped on the global economic system, but the system is collapsing and adding more national debt, no matter how many trillions are involved, will not cure the problem. In fact the cure, in this case, is simply more poison for the dying system.   All of this has been planned. Do not let yourselves play the village fool saying “why did they let this get so out of hand”, or “you would think that they could come up with something….”. The global banking families, whose hands control the levers of political and economic power in most nations of the world (and certainly America, the United Kingdom, France, etc.), are very intelligent and are playing a very sophisticated game ~ actually the eco-political grand strategic control of the world is the most sophisticated of all games. As FDR use to say, “if something happens in politics you can bet that someone planned it to happen”.   They are moving the world to a New World Order in which they will have absolute and total control of all wealth and all levers of political and military power. To a world that utilizes 21st Century technology to enslave the population. To a world that has a large percentage of the “unnecessary eaters” purged by the coming next world war. Don’t think that such a thing is possible? They organized, bankrolled, and created the communists and killed about 80 to 100 million people in the former Russian Empire and enslaved the remainder (and added most of Eastern Europe after the Second World War) in a communist police state using old technology. They bankrolled Hitler and his goons and set up the Second World War. They organized the beginning of the First World War; Trotsky was the controller of the team that killed the Hapsburg Archduke that was the spark that began the war (of course, they had spent years funding the military buildup and manipulating events to get Europe “ready” for the “Great War”).   In the United Kingdom there is now one police spy camera for every seven citizens; it is impossible to travel down a major roadway for any distance without being under computer controlled police observation. The laws passed in the aftermath of 9/11, their organized false flag operation, are designed to control the population and to end Americans’ God given rights that our ancestors fought for. Similar laws have been passed in the United Kingdom in the aftermath of the 7/7 false flag operation. Across Europe and much of the world, draconian measures have been passed into law by national parliaments, all in response to the so-called “war on terrorism”. All based on lies and the greed of a very small number of very powerful people leading the masses into the worst nightmare of human history.   The fact that so many of the secret ruling elite are satanists should not be surprising. Ultimately, where their current End Game in the drive for a New World Order is taking us is a place of total global destruction. The various 21st Century weapons of mass destruction, such as global strategic advanced biowar and global strategic nuclear war and scalar war, are not weapons that are survivable for the human race in a new world war. When you view the current strategic scenarios in a cold analytical light and extrapolate what will happen you can only come to the conclusion that the game is a satanic one that the human race cannot win, and in fact, seems very similar to the rather strange last book of the Christian Bible.   Sadly, there is no force, political or otherwise, that seems capable of reversing the trend to global economic disaster and global war.   Stirling

 

 

Gold—lots of it

This CSI is a nugget of gold. Its chemical symbol Au is derived from the Latin word for gold, “aurum.” In its pure form, gold is sun yellow, but when mixed with other metals it produces alloys of different colors. White gold is produced by alloying gold with silver, palladium, nickel and copper. Yellow, green and red gold is produced by alloying gold with copper and silver.

Pure gold is soft and dense. It can be easily shaped (malleable) and stretched thin without breaking (ductile). In fact, it is the most malleable and ductile of all metals. Gold’s density allows it to be fairly easily separated from clay, silt, sand and gravel.

The most widely accepted hypothesis on how gold deposits form goes like this: Rain falls through cracks (fractures) into the cooler parts of the Earth’s crust. The water then moves laterally to areas of the Earth’s crust that are heated by magma. The water is then driven upward through more fractures. As it is heated, the water dissolves metals from surrounding rocks on the walls of the fractures. When the waters reach the cooler rocks, nearer to Earth’s surface, metallic minerals separate from the water to form veins or blanket-like ore bodies. Voila! Gold deposits.

While gold is mainly used in jewelry making and the arts, its high electrical conductivity, malleability, ductility, and resistance to corrosion favor its use in dentistry, electronic and computer circuitry, radar equipment and satellites, communications equipment, spacecraft, jet aircraft engines and much more.

Image courtesy of the California Geological Survey.

By JAIME BEDRIN
April 28, 2008

He’s a New Jersey-based stockbroker who spends his weekends at garage sales, combing through other people’s junk. He walks around with a large wad of greenbacks and a small magnifying glass attached to his key ring. He’s looking for old bracelets, pendants, rings, even dental fillings.

With the price of gold hovering above $900 per ounce, Schnoll buys it up, as much of it as he can get his hands on, and later sells it to an assayer in New York City.

Since the start of the year, he said, he has spent more than $100,000 buying gold. He made so much extra income selling it that he had to report it to the IRS.

Phil Flynn is a senior vice president and market analyst with Alaron Trading. He said he wasn’t surprised that people like Schnoll are hunting for gold. Gold is generally seen as a hedge against oil-led inflation, and it moves in the opposite direction of the dollar.

Right now, the dollar is weak, and that, combined with the current housing market downturn, is sending the price of gold to record highs.

“At $1,000 an ounce,” Flynn said, “you can make some good money.”

And frankly, it doesn’t take much work to rake in the big bucks. There are several companies devoted to buying gold and other metals, places such as Cash4gold. The company sends you a secure, prepaid envelope, and you mail it your goods. It examines your gold, weighs it and then cuts you a check, or for a small fee, deposits the money into your bank account. Another option is to bring your junk pile to a jeweler who’s in the business of buying gold.

Either way, Flynn said with a chuckle, it’s a good time to “see what fillings you have in your teeth. You may want to knock them out.”

Schnoll, the stockbroker, said that last week he went to a townwide garage sale in New Jersey and spent about $9,000 on baubles. Now he will sell that gold and turn a profit of roughly $1,500. He said he likes the extra money, but added that mostly he does it for the “kicks and giggles.”

Jeweler Frank Pollack said that what’s happening now is pretty typical of what happens whenever the price of gold spikes.

“When it approached $800, which was the previous high from 1979, people came running to sell gold quickly,” he said.

Sitting in his Manhattan office overlooking Fifth Avenue, Pollack said customers need to pay very close attention to what they are selling. In many instances, gold jewelry is sold as scrap metal. It’s weighed and sold with the intention of being melted down. But sometimes a well-crafted necklace has a greater value as a piece of jewelry and should command more money, especially if it was made by a trendy designer.

Business partners Oshri Reuven and Steve Madar have been in the luxury jewelry business since 1990, but they started buying and selling gold about eight months ago when the price of gold started to soar. Their clients are selling old watches or gifts they got from old boyfriends — things they don’t wear anymore.

It’s hard to say how high gold will go in the future. Flynn said some people are “wildly bullish” and are speculating it could hit $2,500 an ounce, though he says that’s unlikely to happen.

Reuven said that gold is already high enough. He suspects it will settle somewhere between $800 and $950.

“I don’t feel that gold should be over $1,000 — no way, shape or form,” he said.

Reuven fears if gold climbs much higher, no one will be able to afford to buy fancy jewelry anymore.

The Great 2008 Transfer Of Wealth (The Final Destruction of the Middle Class)

Americans are confronted with what appears to be the worse economic situation since the Great Depression. What will history say about the U.S. credit crisis turned global financial crisis? At every turn investors are faced with new problems, new crises, and less than desirable solutions which include debt, deflation and a transfer of wealth.

With regard to debt, the American taxpayer has been made the lender of last resort for international bank Bear Stearns and now the two Government-sponsored Enterprises-GSEs, Fannie Mae and Freddie Mac. On top of the $29B for Bear Stearns, Fannie and Freddie’s debt of $5.4T has been effectively transferred to the balance sheet of the USA. This is equal to the entire publicly traded debt of the U.S. which is also the same as the total of America’s mortgage-related assets. In addition to personal debt, every American now has a financial responsibility for Bear Stearns and Fannie and Freddie.

We, the people, have saved the foreign investors such as China which owns $376B, Japan which owns $228B, South Korea which owns $65B, Taiwan which owns $55B, and Australia which owns $33B, from losing faith in America. It is the stockholders, both common and preferred, that have been given the raw end of the deal. While large financial institutions such as JP Morgan, which owns $1.2B of Freddie and Fannie stock, said a complete loss would only erase one or two months of profits, contrast this to smaller banks such as the Central Virginia Bank in Richmond which has $20M in shares of Freddie and Fannie. That type of loss will put them in the same kind of trouble as Lehman Brothers, not enough capitalization. There are 15 other banks that hold 10% or more of their capital in shares of Freddie and Fannie.

The Federal Accounting Standards Board is requiring more stringent standards for banks and savings and loans to maintain a certain amount of capital to protect against insolvency. Those rules are in the process of being changed to conform to international rules issued by the Bank for International Settlements in Basel, Switzerland which Congress has voted on. These rules which were only to pertain to international banks are now being applied to national banks.

Furthermore those in retirement who thought their money was safe-invested in the highest ranked bonds in the country are going to lose their dividends. Depending on the price they invested, they could have principal losses of up to 80 or 90% of their investment. Ouch.

The credit crunch began a year ago when the various investment banks both here and abroad stopped buying each others paper, a very uncommon practice between them. As a result of no liquidity for mortgage paper caused by their decision, we have the most serious slowdown in real estate in decades. The decision to not buy mortgage paper includes the sub-prime loans made to home buyers that had no down payment. To relate, I recently met a young Latino who is worried about her home. Five years ago she bought a $370,000 townhouse with $14,000 down. Her interest rate varies causing her monthly payment to jump from $2700 per month to $3500. She cleans houses for a living.

Freddie and Fannie decided they could make more money by buying subprime mortgage paper. Today there is an eleven month inventory of unsold homes. Higher interest rates as a result of the hidden clauses on floating interest rates have put many people in jeopardy of foreclosure. All of these problems have given the Federal Reserve the opportunity to seize total control of powers they did not oversee in order to protect our economy. Perhaps we should ask where the desire to put poor people into homes came from? It was part of the Bush Administration’s policy to conform to the United Nations’ Millennium

Development Goals unveiled in the year 2000.

Exacerbating the credit crunch have been the historically high oil prices which have caused pain at the gas pumps and a weak dollar which has made imports more expensive. To counter high oil prices, Americans have drastically reduced how many miles they drive and a number of buying habits. In light of a tight job market and job losses in housing and the automotive industries, we are confronted with higher energy costs to heat and cool our homes, increased costs for food, and the inability to refinance mortgages. Basically the economy is now in deflation. When people stop spending, it moves from deflation to stagflation-no matter how cheap an item becomes, people can’t afford to buy. All this without knowing what the real fall out will be from the bailout of Freddie and Fannie.

The situation we are confronted with did not happen in the last few years, but began in 1913 when a group of cunningly deceitful legislators passed the Federal Reserve Act on December 24 at 11:45 p.m., after those who were opposed went home for Christmas. The entire financial system of the U.S. was transferred from Congress to a private corporation that is NOT accountable to Congress. They create and destroy the business cycle by various means: raising and lowering interest rates. The government of the United States is in bondage to a group of individuals who own the Federal Reserve. The reason why the American people cannot forgive themselves the interest on our debt is because we do not owe it to ourselves we owe it to the Federal Reserve! Every single time since then that the Federal Reserve Act was amended, over 195 times, the Federal Reserve gathered more power over various aspects of our economy. However, they are in the final throes of stripping America of any remaining vestiges of sovereignty as has been laid out in the Treasury “Blueprint for a Modernized Financial Regulatory System.”

The Blueprint was written under the watchful eye of one of America’s most successful international bankers, former Goldman Sachs CEO Hank Paulson, who is now our illustrious Treasury Secretary. Is this not a case of the fox in the chicken coup? Long time investment sage Marty Whitman commented on his actions, “Paulson thinks he is in Russia and is not giving any value to stockholders. It is outrageous that the Treasury Secretary is not giving any consideration to the shareholders.”

The Blueprint calls for key components of our financial system, not currently under Federal Reserve control, to be transferred to them. In order to do this, a number of changes will be necessary which Congress will have to approve. First, it recommends changing the banking charter to include all financial institutions, thus effectively transferring control over “national banks, federal savings associations, and federal [and state] credit union charters.” For your information, Washington Mutual is a savings and loan while Lehman Brothers is and Bear Stearns was an international bank. The Fed is to be given authority over the U.S. Payment and Settlement System thereby controlling the settlement process for securities. It will be given the role of Market Stability Regulator and it will have total control over the market. The Blueprint provides for the entire mortgage system of the U.S. to be federalized and to be under the control of the Mortgage Origination Commission. The Federal Reserve will be part of the Commission. Additionally the Federal Reserve will be given a say in the insurance industry which will be federalized and a new Office of Insurance Oversight will oversee its activities. The Federal Reserve will have a place on the Insurance Oversight commission.

By the time Congress votes on the Blueprint, there will be so many reasons for them to transfer the last vestiges of our financial sovereignty to the Federal Reserve that they will not even have to read the prepared legislation. So far, we have the bailout of Freddie and Fannie by giving Treasury a blank check to act; the Federal Reserve worked all weekend to find a buyer to Lehman, another international bank, their next project might be to rescue Washington Mutual, a savings and loan, and the Fed has been given initial powers to act as the Market Stability Regulator. The only component that is missing is the demise of an insurance company, AIG anyone?

For the record, at the heart of the Blueprint is changing our financial/banking and securities regulatory system from a national system to an international system to bring America into the world governmental system that functions above the nation-states. I have maintained that in order to get Congress to go along, we would have to have a huge problem which would allow Congress to be convinced that they need to act, however, the truth of the matter is they no longer have the power they once had because the majority has been transferred to the Federal Reserve.

History will determine how the final stage was set but I believe it started in 2000 with the Crash of the Nasdaq. Who would have ever thought that a stock would drop 90% in value? About $7T vanished from the balance sheets of investors. But we did not have to worry, as a result of 9/11, the Federal Reserve started to reduce interest rates to 45 year lows to get Americans to support the economy by buying the dream home. We bit the bait. It was the Roaring 20s all over again. At one point in the housing boom, one out of four jobs was created by the housing industry. No one asked if they could afford the debt, they only asked if they could afford the payment: a big difference. They did not ask the right questions about their mortgage because the mortgage industry was not required to disclose to them, when it should have. At one time the mortgage industry was run on honesty and integrity, but that changed too and people have been caught in a terrible snare.

The Bailout of Freddie and Fannie provide us with the latest excitement in the diabolical saga of the raping, robbing, and pillaging of America. Interestingly enough it took place 13 months after the beginning of the credit crunch. Lastly, I have maintained since the beginning of the credit crunch last August that it was planned and managed destruction in order to accomplish the final transfer of America’s financial sovereignty. All of the above only confirms my original suspicion. Sadly, only the strong will survive, only those who did not use their house as a checking account will survive, only those who turn to the Creator of the Universe, the Lord God who created heaven and earth, and His Son, Jesus, will survive in the midst of the Great 2008 Transfer of Wealth.- By Joan Veon 9-18-8

© 2008 Joan Veon – All Rights Reserved

HBOS – Lloyds TSB: Biggest rescue deal in British banking history

By Robert Winnett

Last Updated: 11:03pm BST 17/09/2008

The biggest rescue deal in British banking history was under way last night as the credit crisis reached new heights. HBOS, the country’s biggest mortgage lender, was poised to accept an emergency takeover from rival Lloyds TSB following the collapse of its share price.

Gordon Brown intervened to try to secure the deal in an attempt to prevent further market panic after three of the most tumultuous days witnessed on the stock market.

However, concerns were growing last night that the proposal may not be enough to quell the turmoil on the financial markets amid fears that other financial institutions could be vulnerable.

·  Investors balk at HBOS rescue by Lloyds

·  Lloyds and HBOS in talks over job losses

·  HBOS was easy meat when the confidence ran out

·  Scots in shock over crash of revered institution

As investors continued to show their lack of confidence in the economy, the FTSE-100 index of Britain’s biggest companies fell again yesterday, closing below 5,000 at 4,912, its lowest level for three years.

The American stock market also recorded sharp falls despite the Federal Reserve effectively nationalising American International Group (AIG), the world’s largest insurer, to prevent it going bankrupt.

The share prices of the Wall Street investment banks Goldman Sachs and Morgan Stanley fell by 26 per cent and 44 per cent respectively as US financial stocks hit their lowest level in five years.

Shareholders have been warned to expect further upheaval on the stock market today.

And there were predictions that this week’s chaos may just be the start of the crisis for ordinary consumers.

The bleak forecasts came as:

• Experts warned that the proposed takeover of HBOS would lead to higher mortgage costs;

• Staff at the bank were told that up to 40,000 employees could lose their jobs;

• Unemployment hit a 10-year high;

• The banking industry moved to reassure customers that their savings are safe.

Last night it emerged that the emergency deal had been put together after fears that HBOS customers would begin to take out their savings following the sudden drop in the bank’s share price.

If completed the takeover would create Britain’s biggest bank with assets of about £1?trillion which would control more than a quarter of the mortgage market.

In normal circumstances the so-called “super monopoly” would be outlawed by regulators fearful of the impact on consumers.

·  Profile: Andy Hornby of HBOS

·  Profile: Eric Daniels of Lloyds TSB

But the Prime Minister has agreed to rewrite competition laws to allow the deal to proceed. The Bank of England also announced that it would continue to offer tens of billions of pounds in government funds to mortgage lenders until at least next year.

City institutions may still attempt to block the deal while millions of shareholders have lost money on their holdings.

HBOS has 22 million customers and employs 74,000 people.

Over the past few days it has come under sustained attack from stockmarket speculators. Its share price has almost halved this week.

The bank and its regulators insisted that it was “solid” but yesterday it emerged that it has been locked in emergency takeover talks with Lloyds TSB.

Senior government officials feared that without help to secure a deal, HBOS might have run into difficulty – a problem that would far outstrip the crisis caused by the smaller Northern Rock.

Economic experts warned consumers to brace themselves for the financial fallout to reach the “real economy”. Sir Alan Budd, the Treasury’s former chief economic adviser and former founding member of the Bank of England’s Monetary Policy Committee, said: “It is difficult to know what is going to happen next as people normally look at what happened last time. But when there isn’t a last time what do you say?

“The big question now is whether consumers are going to lose confidence and stop spending.”

Lord Lamont, who was the Conservative Party chancellor during the last serious economic crisis in the early 1990s, predicted that unemployment could rise by between 700,000 and 800,000. “I think it is a very serious situation,” he said. “We are nearer the beginning than we are to anywhere else. This is like the early 1970s.”

He added: “The causes of this are not all international; we have created our own bubble here. It has been obvious for three or four years that something like this was going to happen. I think we might now have a prolonged slowdown. People will struggle; it will be harder to get credit.”

Alistair Darling, the Chancellor, said last night: “We are clearly going through a time of significant global turbulence in the banking system. The key thing is to maintain stability in the banking system banner. HBOS has 320 branches in Scotland.

The group has about 1,100 branches and employs 65,000 people across the UK, with a further 10,000 based abroad.

The union Unite warned that any merger could be “catastrophic” for the 17,000 HBOS staff in Scotland.

The attack on HBOS came on another day of turmoil as:

• The FTSE-100 index dipped below 5,000 for the first time since 2005.

• Inflation rose to 4.7 per cent — a 16-year high — as the Bank governor Mervyn King said it may increase to five per cent.

• Alistair Darling said he would act against people seeking to manipulate markets.

• Home owners were warned that mortgage rates may start rising again after lending rates between banks rose to the highest level for six years.

• A warning was sounded that 100,000 jobs in finance and banking could go.

• The Bank of England pumped a further £20 billion into the money markets to ensure banks continued lending to one another.

Gold Skyrockets on Global Uncertainty

Gold bulls have something to smile about today as it is soaring by more than $50 in the wake of renewed financial seizures. The markets have greeted the news Nationalization of AIG: Treasury to get 80% stake in return for $85 billion with a bang. Treasury Secretary Paulson has been on the phone all day assuring multiple countries Don’t Worry, The Banking System Is Sound. With that backdrop let’s consider some of today’s seizures starting with Russia.

Russian Markets Halted Bloomberg is reporting Russian Markets Halted as Emergency Funding Fails to Halt Rout.

Russian markets stopped trading for a second day after emergency funding measures by the government failed to halt the biggest stock rout since the country’s debt default and currency devaluation a decade ago. The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10 p.m. after its index erased a 7.6 percent gain and plunged as much as 10 percent within an hour. The benchmark fell 17 percent yesterday, the biggest drop since Bloomberg started tracking the gauge in May 2001. The dollar- denominated RTS halted trading after similar declines. The government yesterday injected $20 billion into the interbank lending market via central bank and Finance Ministry auctions in a bid to contain soaring borrowing rates as credit dried up in the wake of the Lehman Brothers Holdings Inc. bankruptcy. The one-day MosPrime overnight rate, a gauge for monitoring liquidity demand, leapt 25 basis points to a record 11.08 percent today. “The bond market remains effectively closed and banks are reluctant to lend to one another,” said Julian Rimmer, head of sales trading at UralSib Financial Corp. in London. “The problems experienced by KIT Finance have heightened counterparty risk and reduced liquidity further.”

Genius Fails Again It is fitting that Russia is back in the news because it was the demise of Long Term Capital Management that kicked off a string of moral hazard interventions by the Fed that continues to this day. Please see Genius Fails Again for a recap of LTCM and the 1997 Russian Bond market collapse that then threatened the financial system. The derivatives mess today is thousands of times greater.

Hedge Funds Frozen One has to wonder what today’s derivatives geniuses were thinking (or rather not thinking) as they watched the collapse of Bear Stearns while munching on popcorn headed into last weekend’s poker party with Merrill Lynch (MER), J.P. Morgan Chase (JPM), Goldman Sachs (GS), Citigroup (C), Bank of America (BAC), Barclays, sitting at the table with Lehman (LEH) as the pot. See Fed Sponsored Poker Party Morphs Into “Old Maid” No bets made revealing what we all knew, Lehman was worthless. That forced Lehman into bankruptcy at midnight Sunday.

Hedge Funds Frozen Today Hedge Funds Are Frozen In Wake of Collapse of Lehman.

The collapse of Lehman Brothers Holdings Inc. is creating a quandary for hedge funds: Who to do business with in a tumultuous prime-brokerage industry. Late last week, many hedge funds scrambled to shift that business away from Lehman and to other so-called prime brokers, which provide trading and lending services to the funds. But some were caught up in the bank’s move to file for bankruptcy protection on Monday, say lawyers and other industry specialists. As a result, they have found their holdings effectively frozen, with no indication of when they might be able to access them. Legal experts cautioned that it could be weeks or months before the mess is sorted out, leaving hedge funds unable to unwind positions at a time when many assets are falling sharply in value.

Money Markets Frozen Reserve Primary Fund (RFIXX), the oldest US money-market fund, became the first in 14 years to break the buck after writing off $785 million of debt issued by bankrupt Lehman Brothers Holdings Inc. Shareholders pulled more than 60 percent of the fund’s $64.8 billion in assets in the two days since Lehman folded. Reserve Primary Fund reacted by placing a seven-day freeze on redemptions. Please see Money Market Fund Breaks $1, Suspends Withdrawals for more details.

Massive Flight To Safety Bloomberg is reporting Treasury 3-Month Bill Rates Drop to Lowest Since at Least 1954.

U.S. Treasury three-month bill rates dropped to the lowest since at least 1954 on concern that credit market losses will widen after the bankruptcy of Lehman Brothers Holdings Inc. and the federal takeover of American International Group Inc. Investors pushed the rate as low as 0.233 percent as the loss of confidence in credit markets deepened. Reserve Primary Fund, the oldest U.S. money-market fund, became the first in 14 years to expose investors to losses after writing off $785 million of debt issued by Lehman. “People are extremely cautious with respect to who they’re lending money to at the moment,” said Richard Bryant, a Treasury trader at Citigroup Global Markets Inc., one of the primary dealers that trade government securities with the Federal Reserve. “They’re willing to buy very short-dated Treasury instruments and forgo returns and in some cases pay for the privilege of knowing their money is safe.” Central banks around the world pumped more than $280 billion into the financial system this week as they sought to ease a credit-market seizure. The Fed offered the loan to AIG, the biggest U.S. insurer by assets, in exchange for control. The AIG rescue “smacks of sweeping the problem under the carpet rather than solving it in a structural sense,” said Padhraic Garvey, head of investment-grade debt strategy at ING Bank NV in Amsterdam, in a note to clients.

Global money market rates hit 9-yr high Business Standard is reporting Global money market rates hit 9-yr high.

The cost of borrowing in dollars for three months has jumped the most since 1999, with banks hoarding cash amid concern that more financial institutions will fail. The London Inter-Bank Offered Rate, or Libor, rose 19 basis points to 3.06 per cent, the British Bankers’ Association (BBA) said today. The increase was the biggest since September 29, 1999. The overnight dollar rate fell 1.41 percentage points to 5.03 per cent today. It soared 3.33 percentage points yesterday, the largest increase in its history. It was at 2.14 per cent a week ago. “Everybody is worrying about which bank is going to go bankrupt next,” said Ronald Tharun, a money-market trader in Stuttgart at Landesbank Baden-Wuerttemberg, Germany’s biggest state-owned bank. “There’s almost nothing being traded in the money markets. Nobody trusts anyone else.” Credit markets seized up as the collapse of Lehman Brothers Holdings and the US government’s rescue of the American International Group (AIG) spurred concern that more financial companies may collapse. HBOS, the UK’s biggest mortgage lender, slid as much as 52 per cent today on speculation that it may not have access to funding. The shares rebounded after two people familiar with the situation said the Lloyds TSB Group is in talks to buy the bank. The cost of borrowing in the euro for three months rose half a basis point to 4.97 per cent today, the European Banking Federation said. That’s the highest level since December 5, 2000.

Global Systemic Distrust “There’s almost nothing being traded in the money markets. Nobody trusts anyone else.” Welcome to the wonderful world of derivatives and 30 times leverage Mr. Bernanke. Not many can claim to threaten the world’s financial system. It took years of hard effort, but you, Greenspan and the Fed, in conjunction with fractional reserve lending, managed to pull it off. You and the Fed should be proud. Stand up and take a bow.

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

Lehman exposes Wall Street’s moral bankruptcy

PHILIP DELVES BROUGHTON asks who will pay for the incompetence that led to the financial collapse

The enduring image of Wall Street’s last systemic scandal, the insider-trading crimes of the mid-1980s, was that of a young trader sobbing as he was led off the trading floor in handcuffs. As the tears dribbled down onto his red braces, his peers gazed on in both pity and terror that they might be next.

These were the Gordon Gecko years when punishment followed crime and even the mightiest financiers found themselves donning the striped pyjamas.

The sums involved in those scandals, however, look trivial compared to the colossal heist committed against ordinary investors and taxpayers these past few years by some of the world’s biggest financial institutions.

The bankruptcy of Lehman Brothers and fire sale of Merrill Lynch are cataclysmic events for Wall Street. Many thousands of employees and investors have seen savings evaporate,

not to mention lost their jobs.

At Lehman as at many banks, every employee, from the most senior executive to the humblest secretary, received roughly half of their compensation (salary plus bonus) in stock, which they were not allowed to convert to cash. They could borrow against that stock to buy homes, which many did, but suddenly their collateral is worthless.

In New York, the carnage on Wall Street is an intimate, local story. Thousands are suddenly scrambling for work, struggling to pay for homes they bought when they thought they were rich. Investment banks are huge employers and the demise of three in a year – including Bear Stearns – has left the city angry and considerably poorer.

Those at the very pinnacle of these banks, however, walk away exceedingly rich despite what they leave behind. Execs at Fannie Mae and Freddie Mac, the mortgage firms bailed out by the US Treasury last week, continued to receive multi-million dollar pay packages even as they plunged towards disaster.

For all the immediate pain of these past 24 hours, bankers have gorged for years on the very system which has now collapsed. They built a pyramid scheme of debt, charging fees for every misguided layer they added until they lost sight of what was going on at the foundation: bad loans being issued to people who should never have been borrowing to buy assets they could not realistically afford.

And so where are the handcuffs? The trials? The plea bargains for just a few months in a country club jail? Nowhere.

How can it not be a crime to mismanage a business to the point where the US Treasury has to step in with more than £100bn in taxpayer funded credit lines, as it did with Freddie Mac and Fannie Mae? Or to tell investors that your business was robust, even as it was disappearing down the plughole, as Lehman’s executives did? At what point does incompetence become so disastrous it turns criminal?

One has to assume either that the only offence in this financial meltdown was mismanagement or that the regulatory system has no teeth. From 2000 to 2004, the SEC spent much of its time trying to right the wrongs which led to Enron – notably by tightening up accounting standards. Meanwhile, the banking sector was pressing ahead with the massive lending frenzy which has just ended in disaster. It was a classic case of regulators looking in the rear-view mirror while the opportunists were forging ahead into new, un-policed territory.

To a certain extent, the market has inflicted its punishment, driving down the value of assets and forcing even the mightiest institutions to their knees. But there must be a further reckoning to come. For an ordinary citizen who defaults on his taxes, the punishment can be awful. For a financier who sets the banking system on fire and costs the taxpayer billions, it seems you can walk away merely chastened and marginally poorer.

And yet, their greedy behaviour has recklessly endangered both their employees and the millions of people who have been duped into trusting their banks and lenders to behave responsibly. This cycle won’t be complete until this fiasco’s perpetrators face a more severe judge than the markets. 

FIRST POSTED SEPTEMBER 16, 2008

The Crash

All the while, banks figured that if they really got into trouble, the federal government would back them up with taxpayer funds. And the government reluctantly complied twice this year, backing up the reckless behavior of high-flying bankers at Bear Stearns in March, and Fannie Mae and Freddie Maclast week with loan guarantees costing untold billions.

It may be hard for most people to realize what a shocking development this was. Virtually no one on the Street anticipated that the Federal Reserve would put its foot down on the throat of the bankers who had always gotten their way. If anyone had believed this would happen, global banks’ stock prices would have been a lot lower last week as Lehman Brothers’ liquidity unraveled, for anyone who had looked at the investment bank’s books as a potential buyer knew that it owed its 10 largest unsecured creditors more than $157 billion – and had no virtually no hope of paying up.

Wall Street crisis could put Fed rate cut in play

Fed to Wall Street: Drop dead

XL Leisure goes to the wall

 

 

XL Leisure Group, Britain’s third biggest holiday group, is being put into administration after its lenders pulled the plug on the ailing company. 

Travel operators have struggled to cope with a weakening in consumer confidence and high oil prices and XL has become the latest casualty after the failure of package holiday firm Seguro earlier this week. 

Kroll, the insolvency specialist, is expected to be formally appointed to handle the administration today. 

Talks have been going on for the last two weeks to try to refinance the company but creditors to XL, which include Icelandic bank Straumur, are understood to have lost patience.

  Thousands stranded as XL collapses

  More on leisure

XL owns XL Airways, a carrier that flies to more than 50 destinations, and is the shirt sponsor to West Ham United football club following a £2.5m-a-year deal signed last February.

 

XL Airways said in August that it was scrapping its entire winter Caribbean schedule of flights, citing rising fuel costs as the driver.

The travel group was acquired from Icelandic transportation company Eimskipafelag Islands (Eimskip) in a management buyout at the end of 2006.

Eimskip provided a €207m (£165m) loan guarantee to the purchasers which remains valid and the company said yesterday that it had lined up several investors, including West Ham owner Bjorgolfur Gudmundsson, to assume the loan if it reverted to Eimskip.

 

The company said: “Without making any assumptions in relation to the process, Eimskip wishes to underline that, given the conditions in the European aviation market and information about the operation of XL, the likelihood that the loan guarantee will fall on Eimskip has increased.”

XL, which sells holidays under brands including Freedom Flights and Medlife Hotels, made an operating loss of £24m in the 12 months to October last year.

Net liabilities increased from £8m to £59m during the period, according to documents filed with Companies House. Money owed to creditors grew from £114m to £205m.

Peter Owen, who was chairman of failed airline Silverjet, resigned as chief executive of XL in June. Phil Wyatt, deputy chairman and former chief executive, led the MBO in 2006 and replaced Mr Owen as chief executive.

Low-cost airline Zoom went into administration at the end of August, following the demise of fellow carriers including Maxjet, Eos, Silverjet and Oasis Hong Kong Airlines.

Sources:  telegraph.co.uk first.post.uk

Credit Crunch

This bail-out has turned the world on its head. The next election will be the last fought on the primacy of markets

Tuesday, 9 September 2008

The huge sums paid out to save the American mortgage groups Fannie Mae and Freddie Mac are staggering. The changed assumptions that lie behind the government intervention are even more significant, challenging the orthodoxy that has shaped economic and social policy here and in the United States for nearly three decades.

In the same way that Gordon Brown struggles to come to terms with the ideological and political implications of nationalising a bank, the right-wing US administration cannot quite accept what is happening either. Only two months ago, the Treasury Secretary, Hank Paulson, stated that Fannie and Freddie could continue as private companies, echoing Mr Brown’s desperate determination to find a private buyer for Northern Rock. Even now the Prime Minister cannot bring himself to accept that Northern Rock is nationalised, preferring the term “temporary public ownership”. Similarly in the US, Mr Paulson does not use the dreaded word. But that is what has happened. We are witnessing what could become the biggest state bail-out of the lot.

As a result, the world is turned on its head. Yesterday, on the BBC’s Today programme a leading figure from Goldman Sachs hailed the nationalisation. When John Humphrys pointed out this was not exactly an example of capitalism working with light touch regulation, he replied without any hesitation that “the government has a duty to intervene in such circumstances”. What a change from the screams of disapproval when governments have sought to regulate more actively in the past.

The leap is complete with the news that it is the depositors who will be protected and not the shareholders. Here is another cultural contrast with so many assumptions that have shaped policy here and in the US. To take one example of many when Tony Blair summoned Railtrack to explain its dire performance, the baffled company’s executives explained to him that they were accountable to their shareholders and not the passengers or the government. After that exchange, even defensive New Labour made a tentative attempt to address the structure of the railways.

From a political perspective, we are living through the mirror image of the 1970s. Then leaders from both main parties were trapped by the assumptions that had shaped their political upbringings. They could not change, even though they could see what was happening in front of their eyes. For noble reasons, Tory and Labour British politicians brought up in the recession of the 1930s would not tolerate the idea of even short-term high unemployment. They intervened to prevent job losses soaring even though their interventions brought about bigger problems. When the pivotal industries of that era looked as if they were going to go bust, they moved to save them. The corporatist consensus endured well beyond its natural life.

In the 1970s something bigger was going on which, in the end, brutally challenged previous assumptions. Britain was competing weakly against countries that were far more productive and efficient. In order to flourish, it had to change rather than subsidise the inefficiencies, but the political parties did not get the message for a long time. In the mid 1970s Labour scraped a couple of election victories and continued to make the same miscalculations as Edward Heath had done. Only towards the end of that period did Jim Callaghan and others recognise the need to change.

Now politicians are trapped by the assumptions they formed in the 1980s when Thatcherism was rampant. David Cameron and George Osborne were the most passionate opponents of the nationalisation of Northern Rock and assumed wrongly that they would benefit politically when the deed was done. Mr Brown also feared that the Conservatives would make hay. He was wrong too. So far, Mr Cameron’s brilliant insight as a leader is to recognise that far from being a threat, Tony Blair vindicated much that his party believes in. With a single leap, he freed the Conservatives from the introspective nightmares of the previous decade and threw Labour into disarray. In particular, Mr Cameron did not make the fatal mistake of his predecessors, projecting Mr Blair as a reckless leftie and moving well to the right of him.

The astute move has enabled the Conservatives to come to terms with what has happened since 1997, a significant move forward. But the important re-positioning does not make them prepared in any way for the new challenges intimidating governments around the world and causing even ardent republican right wingers to act in ways they would never have dreamt of doing not so long ago. The politics of the Blair era pre-dates the market failures of the credit crunch.

Ironically, one of those who wrote perceptively about the relationship between governments and markets is Gordon Brown. He gave a lecture on the theme during Labour’s second term, daring to state that markets do not work always in the delivery of public services. But he stated the obvious when the unfettered free market orthodoxy was at its most overwhelming and all hell let loose. He does not make many references to the speech these days.

As it turns out, Mr Brown was being typically cautious. Imagine if in that speech he’d added that the mortgage market was dangerously flawed and required massive government intervention, including the nationalisation of banks. He would have been dismissed as so old Labour that Mr Blair would have been able to carry out his occasional fantasy and sack him. Yet this is what has happened. Banks and building societies are being nationalised amidst cries across the political spectrum for much tougher government regulation.

In Britain the next election will be the last to be fought on the politics of the mid 1990s, in which there will be an outdated consensus on the primacy of markets and the need for government to keep out of the way. Similarly, in 1974, the two elections of that year focussed on arguments over who could intervene more successfully as if the failed interventions of the previous Tory government did not raise questions about whether this was the appropriate response. The elections of that year did not address a changing world. The one here conducted by politicians trapped by their own pasts will probably be the same.

Over the next few weeks, during the party conference season, you will read and hear a lot about who is up and who is down in British politics. When I come to think of it, you will read much on the theme in this column. But the long-term future belongs to the politician and party that come to terms with the ending of one global era and the beginning of another, one in which a new relationship will be required between governments and markets, subtler than the flawed models from either the 1970s or the 1980s.

Who realises how big the change is and has the vision to address it? Whoever that person happens to be will dominate British politics as Clement Attlee did in 1945 and Margaret Thatcher managed to do after 1979.

s.richards@independent.co.uk

 

Devvy Kidd on U.S. Gold

 

There’s no question America is in a dark and dangerous period of history. The world’s banking cartels have had their way for centuries, manipulating, strangling and raping the wealth of nations with America at the top of their agenda. For those of us who own gold, we fully understand the importance of owning it to protect us from the machinations of truly evil men. GATA (Gold Anti-Trust Action Committee), has been on a relentless crusade for quite some time to expose the manipulation of gold by the Masters of the Game. It is only by exposing the evil doers can we hope to prevail in our fight to free our nation and our people from financial slavery and bondage.

 

Few things get me excited these days because most of the news is bad, although we are seeing victories. But, when this latest move by GATA came to my attention, I was ecstatic. Oh, make no mistake and I say this from experience: the battle will be fierce because I have fought on the FOIA battle ground on other issues. The federal government will lie and commit fraud protect their secrets. If you think that’s a strong indictment, nothing less is the truth if you have done the research. This is GATA’s new press release:

 

GATA Will Demand Truth About U.S. Gold Reserves June 14, 2007

 

“Constitutional scholar, writer, and lawyer Edwin Vieira has been retained by the Gold Anti-Trust Action Committee Inc. to lead an inquiry into the disposition and possible impairment of United States gold reserves. Dr. Edwin Vieira, author of the monetary history of the United States, “Pieces of Eight,” is a graduate of Harvard College and Harvard Law School and a renowned spokesman for sound money. <>

 

“Consulting for GATA, using the federal Freedom of Information Act, and retaining a Washington-area law firm, Vieira will seek to compel the U.S. government to disclose records showing how much gold is in the government’s custody; who owns it; whether it has been leased or otherwise made available to foreign governments or gold market participants; and whether the policies and practices behind the use of U.S. gold reserves have been meant to influence the price of gold.

 

“GATA, a non-profit civil rights and educational organization founded in 1999, has published evidence that central banks and government financial agencies, including the U.S. Treasury Department and Federal Reserve, work together, usually surreptitiously but sometimes openly, to rig nominally free gold markets as part of their general program of controlling international currency exchange rates. That evidence includes the transcript of the meeting of the Federal Reserve Board’s Federal Open Market Committee on January 31, 1995, which confirmed the U.S. government’s participation in gold swaps, exchanges of gold with other governments so that gold might be introduced into markets without being easily traced to the originating government.

 

“Because gold is a measure of all currencies, government bonds, and the value of labor, a free gold market is crucial to the freedom of all markets and, indeed, to honest dealing and personal liberty throughout the world,” GATA Chairman William J. Murphy said. “As the nominal holder of the largest official gold reserves in the world and the issuer of the primary world reserve currency, the U.S. government has much to answer for here. No one is more expert in these issues than Ed Vieira, and all GATA wants is the truth. In a democracy that should not be too much to ask.”

 

“In addition to hiring a Washington-area law firm, Murphy said, GATA’s demand for the U.S. government to produce information about its gold reserves probably will lead to litigation under the Freedom of Information Act. So, he added, “We now will be especially grateful for financial contributions to underwrite our legal campaign for the truth.” <>

 

“GATA is recognized as tax-exempt by the U.S. Internal Revenue Service and contributions to it are federally tax-deductible in the United States. Contributions may be sent to: Gold Anti-Trust Action Committee Inc., c/o Chris Powell, Secretary/Treasurer, 7 Villa Louisa Road, Manchester, Connecticut 06043-7541 USA”

 

I have been privileged to meet Bill Murphy; the folks at GATA are great people. Their choice in retaining my friend, Dr. Edwin Vieira, to file and fight this FOIA (Freedom of Information Act) is one smart move. Edwin is a regular contributor to NWVs, a brilliant writer with a legal mind sharp as a razor. When I say fight, there’s no doubt in my mind the feds will stonewall, lie, obfuscate and do everything in their power to keep this information from we the people. However, Edwin Vieira is a very formidable adversary.

 

Back in December 2000, I wrote a column titled, “From Riches to Rags in 34 Days” where I wrote the following: “My good friend, Harvey Gordin, is a former Wall Street player (29 years). Harvey owns El Dorado Gold and he keeps me well informed of what’s going on in the world of money and the manipulation of gold. A funny thing has been going on that I discussed with Harvey: How come during the election cycle, Mr. Gore, all his mouthpieces, including the boob tube “experts,” kept telling America that Billy’s administration brought America the strongest economy in 50 years, yet once Gore conceded, we have the media and politicians telling everyone Bush is facing a recession and that it’s his greatest challenge? What? In about 34 days the economy has gone from riches to rags, just like that? What hogwash.”

 

The truth is that you cannot have a “strong, robust economy” that is based on debt because debt is not prosperity. A nation’s monetary system cannot and will not survive under a fiat currency such as we’ve had shoved down our throats since 1913. This is why so many of us own gold. We know history has a nasty way of repeating itself. This brings me to a recent column which just came out titled, It’s Official: The Crash of the U.S. Economy Has Begun by Richard C. Cook. This column has flooded the Internet. Cook’s so called solution to the monetary crisis facing this country is dangerous. In his column he states:

 

“Could there ever be a real try at reform, maybe even an attempt just to get back to the New Deal? Since the causes of the crisis are monetary, so would be the solutions. The first step would be for the Federal Reserve System to be abolished as a bank of issue and a transformation of the nation’s credit system into a genuine public utility by the federal government. This way we could rebuild our manufacturing and public infrastructure and develop an income assurance policy that would benefit everyone.”

 

A return to FDR’s New Deal? Has Mr. Cook never read history? FDR deliberately and with malice of forethought issued the edict: “We desire the Japanese to strike first.” His New Deal so alarmed many, two newspapers had the courage to call it for what it was: Arthur Henning of the Chicago Tribune said, “The New Deal will bring the Communist Party within striking distance of overthrow of the American form of government…” Mark Sullivan of the Buffalo Evening News: “This may be the last presidential election America will have. The New Deal is to America what the early phase of Nazism was to Germany…”

 

How about this statement Cook makes in the same column: “Times of economic crisis produce international tension and politicians tend to go to war rather than face the economic music. The classic example is the worldwide depression of the 1930s leading to World War II.” A worldwide depression led to WWII? Can he really be that naive? I was appalled when I read that, even though I had already been to Mr. Cook’s site and read one of his speeches, The Basic Income Guarantee and Monetary Reform: A Tale of Two Ideas, where he mentions William Jennings Bryan. William Jenning Bryan, Secretary of State for the United States, should have been indicted for fraud. On May 31, 1913, he concocted a resolution declaring the Seventeenth Amendment to the U.S. Constitution as ratified when he knew it clearly was not. The damage Bryan did has been horrific and he should be soundly comdemned.

 

Cook goes on to say in this speech: “The election of 1980 was a watershed in U.S. history. It was a takeover of the policy apparatus of government by the extreme right-wing. This affected every aspect of American politics and culture. Those of us who remained in government but still believed we had a positive role to play in supporting the progressive aspirations of the American people thereafter kept a low profile….. believe that today we are finally seeing the pendulum swing back in the direction of more progressive attitudes as the conservative ideology crashes into ruins. I believe that today we are finally seeing the pendulum swing back in the direction of more progressive attitudes as the conservative ideology crashes into ruins.

 

“After a generation of conservative rule, and in spite of three years of a balanced budget at the end of the Clinton presidency, public finance in the United States today is in crisis, if not total collapse. A quarter century of politics devoted to the dismantling of social welfare programs, privatization of public assets, huge tax cuts for the wealthy, continuing export of manufacturing jobs, deregulation of the financial industry, and gigantic expenditures on the war machine have eroded the ability of the federal government to do anything meaningful about income security.”

 

Pray tell me how Clinton had a balanced budget when the national debt at the conclusion of during his term was $5.7 TRILLION dollars? How do you balance your budget when you’re $5.7 TILLION DOLLARS in the hole? This is just more propaganda. In one of Cook’s columns on solving the monetary problem, he writes: “The remainder of the total societal gap between production and purchasing power would be filled by a non-taxable National Dividend of two types. One would be a cash stipend paid to all citizens which would also serve the purpose of eliminating poverty by providing everyone with a basic income guarantee.”

 

Tell me Mr. Cook: Where in the U.S. Constitution, specifically Art. 1, Sec. 8, which gives Congress the power to steal from the people’s treasury to pay a stipend to all citizens for any reason and his convoluted “basic income guarantee”? The welfare clause? If that’s your justification, Mr. Cook, you are way off base. “Progressive” is another one of those words used by “liberal Democrats,” but in reality, their political ideology is communism. I submit to you that Cook’s ideas are dangerous and should be discounted. I would also encourage you to read two columns I wrote to better understand “progressives” and their agenda. It is only by learning the under pinnings of the evil being thrust upon us can we hope to save our beloved republic.

 

I further submit to you that Edwin’s words in one of his Monographs on Money, says it all:http://home.hiwaay.net/%7Ebecraft/WeNeedSpecie.pdf

 

“There is no need, moreover, for Americans to tax their brains to devise some new, supposedly “ideal” systems of money and banking, because the constitutional systems the Founders enacted are, both politically and economically, good ones. As explained above, constitutional money and banking are, for all intents and purposes, free-market money and banking, with a particular form of money (silver and gold coins based on the “dollar” as the unit) fixed for the government.”

 

There are dozens of columns and news articles coming out everyday on the Internet about the rise in foreclosures, bankruptcies, lay offs and other indications of just how bad the economy really is. Of course, the controlled dominant media also, at the same time, puts out news items about how good the economy is, retail sales are up, they’re down and round and round. I’ve written about this coming crisis for years. If you would like to speak with an expert on owning gold, give Harvey a call at El Dorado Gold; 1.432.264.7869. Protect your assets because the government won’t and you can “take money to the bank on it.” You and your family’s future will depend on it.

 

I hope you will support GATA’s efforts with Dr. Vieira to expose the chicanery and deceit that has been going on far too long. Please take the time to read the links below from the real experts on the issue of our monetary system. I have read each and everyone over time, along with Edwin’s historical tome, Pieces of Eight (Revised). This is how I have learned over the past 18 years. I’ve had to give up the “good times” because I wanted to know the truth and I needed to learn about central banks and our monetary system in order to understand the bigger picture.

 

www.devvy.com

devvyk@earthlink.net

 

 

Will You Outlive Your Money?

WILL YOU OUT LIVE YOUR MONEY?

By: Devvy
June 19, 2008

© 2008 – NewsWithViews.com

The American people continue to suffer the failed policies of Congress and sitting presidents. There can be no clinging to the illusion any longer that the economy is merely “soft.” The financial picture for most Americans continues to be bleak with no end in sight. As Dominic Frisby said in a recent column, “Central bankers can’t talk down inflation.” Eighteen years ago, I fell into the issue of the privately owned Federal Reserve Banking System and my journey began. I educated myself about inflation, fiat currency, what happens when the dollar falls, why gold goes up. Oh, yeah, it can be dry and it can be confusing, but without knowledge, we can’t solve problems. Here’s one example: How many Americans know anything about derivatives? Oh, boy, this one is a killer:

Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion. “This means that no OTC derivative house can be allowed to go broke. This means that whatever funds are required to rescue failing international investment banks, banks and financial entities will be provided. Keep this economic law in mind. Monetary inflation proceeds price inflation and is its primary cause in economic history from Rome to present. Nothing can stop the juggernaut of price inflation heading towards every nation like a runaway freight train down a mountain.” Jim Sinclair would know he because he’s an expert in this field and he’s always on target.

How many of the 170 million adult aged Americans in this country understand our monetary system, fiat currency and the federal income tax scheme? Ten, twenty million, tops? Right now, many millions continue juggling credit and too little cash to put food on the table and gas in the tank. Little do they know what is still to come: the equivalent of a Category 5 hurricane:

June 4, 2008. Staring Into The Abyss With Wide Open Eyes: “Millions must have seen this report. The presidential candidates had nothing to say. The White House had nothing to say. Congress had nothing to say. Economically, this much is certain. The debt is unpayable, even if Americans who still have any are stripped of all their assets to pay for it.”
June 8, 2008. Credit crisis expands, hitting all kinds of consumer loans
June 12, 2008. “When Bush invaded Iraq in 2003, the average price of oil that year was about $27 per barrel, or about $31 in inflation adjusted 2007 dollars. The price rose another $10 in 2004 to an average annual price of $42 (in 2007 dollars), another $12 in 2005, $7 in 2006, and $4 in 2007 to $65. But in the last few months the price has more than doubled to about $135. It is difficult to explain a $70 jump in price in terms other than speculation…Of course, Americans don’t get real inflation numbers from their government and have not since the Consumer Price Index was rigged during the Clinton administration to hold down Social Security payments by denying retirees their full cost of living adjustments.”

June 10, 2008. Mortgage Delinquencies Rise Nearly 62 Percent in First Quarter
June 13, 2008. Biggest Inflation Jump in 6 Months
June 13, 2008. Foreclosures Rise 48% in May as Repossessions Double. “One in every 483 U.S. households either lost the home to foreclosure, received a default notice or was warned of a pending auction, RealtyTrac said. That was the highest rate since the Irvine, California-based company began reporting in January 2005 and the 29th consecutive month of year-over-year increases.” Do people realize what this does to the local economy and how it affects the ability of someone to save for their golden years so they won’t be a burden on society?

36 Retail Stores Closing Their Doors

Credit Default Swaps The Next Crisis. Sub Prime is Just ‘Vorspeise’. “While attention has been focussed on the relatively tiny U.S. “sub-prime” home mortgage default crisis as the center of the current financial and credit crisis impacting the Anglo-Saxon banking world, a far larger problem is now coming into focus. Sub-prime or high-risk Collateralized Mortgage Obligations, CMOs as they are called, are only the tip of a colossal iceberg of dodgy credits which are beginning to go sour. The next crisis is already beginning in the $62 TRILLION market for Credit Default Swaps. You never heard of them? It’s time to take a look, then.

June 6, 2008. Pet owners fear tough economic choices. Franklin, Massachusetts (AP) — “Diana Bardsley wiped tears from her eyes as she recalled taking food off her plate to feed her beloved spaniel Hunter and two Siamese cats. Doreen Kazijian said she delayed buying her own medication so she could afford to treat her cats’ ailments. Her greatest fear: that she could be forced to surrender the animals as she struggled to stretch her food stamps and Social Security income to meet the escalating cost of living.”

January 30, 2008. Pets Abandoned by Owners After Foreclosure. “The house was ravaged — its floors ripped, walls busted and lights smashed by owners who trashed their home before a bank foreclosed on it. Hidden in the wreckage was an abandoned member of the family: a starving pit bull. The dog found by workers was too far gone to save — another example of how pets are becoming the newest victims of the nation’s mortgage crisis as homeowners leave animals behind when they can no longer afford their property.

I feel very bad for Americans who have lost their homes and the millions more who will over the next year or two. Sadly, millions bought into mortgages they should never have qualified for and are now paying the price of a contract between them and the lender, not between them and Congress. While that body of fools continue their attempt to divert the people’s attention away from THEIR massive failures (blame the oil companies) and the banking system, the same hypocrites have benefited from disaster: June 14 (Bloomberg) — “Senator Kent Conrad said he was given preferential treatment on a mortgage from Countrywide Financial Corp. and will write a $10,500 check to charity.” How big of him. Had he not got caught, there would be no check to charity. Let’s not forget how many of these crooks in Congress (and the ones who have jumped ship the past few years) are raking in the bucks from the sweat of your labor via earmarks. Let’s not forget the 151 members of the U.S. Congress who directly profit from these grotesque, unconstitutional “wars of liberation” over in Iraq and Afghanistan:

“Who profits from the Iraq war? More than a quarter of senators and congressmen have invested at least $196 million of their own money in companies doing business with the Department of Defense (DoD) that profit from the death and destruction in Iraq. According to the latest reports, 151 members of Congress invested close to a quarter-billion in companies that received defense contracts of at least $5 million in 2006. These companies got more than $275.6 billion from the government in 2006, or $755 million per day, according to FedSpending.org, a web site of the watchdog group OMBWatch.” The rest of the column with all the numbers and names of these thieves can be found here.

Their profits are stolen from you, from your labor every day via the federal income tax. Because there is NO money in the U.S. Treasury, the trillion dollars blown over in the Middle East has to be borrowed from the banking cartel. You, me, our children and grand children, little better than oxen to the yoke, are forced to pay the massive interest so these crooks in Congress can continue to borrow “money” for their wars from which they profit. Because there is no more bling to scratch from the weary American worker to pay for their folly and endless wars, where will the voracious appetite for money by Congress come from? More our of debt sold off to our enemies like Communist China?

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One of the most dangerous ideas thrown out there (besides Richard C. Cook) comes from William Glynn, the founder and Managing Director of Collective IQ, ranked the #1 Corporate Venture Capital Platform in the world:

“Right now, China, Russia, India and Saudi Arabia basically own the United States. Our economy is the real target of terrorists and this is our potential downfall,” says Glynn. His solution is transparent and uncomplicated… a 10% solution. “If we are to prevent another Great Depression we need to pass one simple law: All pension plans, endowments, 401(k)s and the like will be required to allocate 10% of their portfolios to buy back U.S. debt and currency.”

“Right now, China, Russia, India and Saudi Arabia basically own the United States. Our economy is the real target of terrorists and this is our potential downfall
With more than 40 trillion dollars currently invested in these types of accounts, Glynn asserts that some four trillion dollars could be freed up in a matter of days to wipe out the national debt, buy back the $1.6 trillion in U.S. debt currently owned by China and more. He suggests that approximately one trillion dollars go into a 10-year Zero Coupon Bond with the proceeds ultimately going back to the endowments and pension plans. “Rather than seeing this as simply giving money back to the government, it’s really a 10-year interest-free loan that has incredible benefits,” he explains.”

Andy Jackson would have taken Mr. Glynn to the nearest oak tree. Americans had better pray the looters in Congress don’t pick up on this lunacy: Steal 10% of your 401(k) to pay down the “national debt” to the banking cartel for the massive fraud Congress has perpetrated on us? Is he that naive to think these buzzards in Congress would ever stick to the game plan? Oh, please. All you would be doing is handing them a new credit card. Don’t look to Comrade Barack Hussein Obama to cure this hemorrhaging. He has never so much as whispered the real and only solutions to our monetary and banking crisis and neither did Comrade Hillary Clinton during her 17 month ego trip. Just where in the U.S. Constitution does it give Congress the authority to steal the fruits of your labor to give to others for any reason? Congressman Davy Crockett said it best; click here.

Juan McCain by his own admission: ‘The Issue Of Economics Is Not Something I’ve Understood As Well As I Should’ is completely unqualified to sign spending bills and legislation dealing with our monetary system. Those committed to the Obama-McCain Titanic should get their affairs in order because they have sealed their fate.

Inflation is killing the middle class and the poor. As my friend, constitutional attorney and expert on fiat currency, Larry Becraft, recently said, “When hyper-inflation hits and gold is one million dollars an ounce, no one will part with their gold.” This short, concise column by Derry Brownfield will give you a good understanding of what Larry means: Silver, Gold and the IRS. Federal Reserve Chairman Bernanke says: “Risk of ‘Substantial Downturn’ Lessens, Vows Inflation Fight.” Old Ben’s had his head stuck in rectal darkness for so long, he couldn’t tell you how to solve a ten piece puzzle much less “fight inflation.” Inflation and deflation is caused by his central bank. It is the cancer eating this nation alive. The power brokers controlling our lives know they’ve screwed things up royally, now it’s time for the solution! NY Fed chief in push for global bank framework. This is another gigantic step in cementing one world government and enslaving all of us under foreign dictatorship.

Back to the original question: Will you out live your money? If we don’t get rid of as many incumbents in Congress as possible and put a man in the White House who knows the central bank and monetary issue and who will appoint brilliant individuals like Dr. Edwin Vieira as Secretary of the Treasury, no amount of hand wringing by these deceivers in Congress is going to return America to a prosperous nation. We will only continue to sink further into national poverty and yes, TENS of MILLIONS of Americans will find they have nothing but social security and perhaps a small pension to eke out their “golden years,” while the fat cats in Congress enjoy their millions from the sweat off your back.

Have people forgotten what happened to our fellow Americans who worked for ENRON? Everything they worked for all their lives, poof! Gone. Americans seem oblivious to the fact that these crooks and just plain ignorant members of Congress are playing with their future. Look at where we are now and while I wish I could say different, it is going to get much worse.

Do Americans have any idea the numbers we’re talking here when tens of millions of Americans out live their money and must depend on the state for food, lodging and medical treatment? Too many Americans have forgotten what I was taught by my parents who were taught by theirs (they all lived through the manufactured “Great Depression): Save for a rainy day. Save for your old age. Don’t spend more than you make. Tens of millions are guilty of this and they don’t seem to give a damn, but they will.

Those who do know their personal obligations for their golden years can’t get ahead because we are being raped by the federal and state governments to pay for their complete and total mismanagement of our money and lives. People send me email all the time asking me, when will people wake up? When will the reality and the numbers finally sink in? My reply: hungry bellies make for angry mobs. Wait until the grocery stores have little to choose from and people still don’t have enough coin to purchase that loaf of bread because diesel is $5.75/gallon and the truckers have to pass along the cost to the consumer. Is it any wonder so many incumbents in Congress are taking their ill gotten gains and will not seek reelection? (5 Democrats, 27 Republicans as of February 10, 2008.) Rats jumping ship.

If you would like to learn more about gold and why it is imperative you own some, you might check out El Dorado Gold’s web site. They have a substantial amount of educational information to help better understand the issue of gold.

Change cannot and will not happen with the same players. Congress has refused to abolish the central bank, get rid of the unnecessary federal income tax and take swift, decisive action on other issues like withholding and a sane energy policy. These same players (with the exception of Congressman Ron Paul) will NOT do it next January because they didn’t do it last January or the ten January’s before that. The solutions have always been there, but until you put individuals in office who fully understand the U.S. Constitution (or State Constitution for your legislature), things will remain the same. Is that what you want?

Educational Links:

1 – How HUD Mortgage Policy Fed The Crisis
2 – Clueless: Bernanke Blames Saving Glut For Housing Bubble
3 – Long View: Fall in US house prices heralds problems for all
4 – Economist challenges government data
5 – Pelosi & her Brassiere Brigade
6 – Minimum Wage and Fascism
7 – How to Create Jobs and Cut Medical Care Costs
8 – The Next Big Spending Spree

Comrade Obama

1 – Hike Social Security tax, says Obama
2 – Obama Would Tax Wealthy to Pay for Universal Health Care (how very communist of him)
3 – Obama’s Energy Stance as Capricious as the Wind
4 – Hike Social Security tax, says Obama
5 – Obama Funder Soros Is Bush War Profiteer
6 – Obama wants higher payroll tax on incomes above $250,000

Juan McCain

1 – Foreclosure Phil
2 – McCain, Obama Trade Fire on Tax Plans
3 – McCain Lies About Social Security Privatization
4 – McCain promises billions in spending
5 – McCain temper boiled over in ’92 tirade, called wife a ‘c**t’
6 – The wife U.S. Republican John McCain callously left behind

Truth and solutions

1 – March 17, 2005: Are Monetary & Banking Crises Inevitable
in the Near Future?
2 – March 21, 2005. Will The Coming Monetary Crisis Provide Opportunity For Reform?
3 – 6:06 video: Ron Paul grills Bernanke on monetary deception
4 – The Federal Reserve Monopoly Over Money
5 – The Federal Reserve System: A Fatal Parasite on the American Body Politic
6 – Short treatise: A Caveat Against Injustice, written in 1752 by Roger Sherman, author of Art. 1, § 10, cl. 1, of the U.S. Constitution

Total Notional Value Of Derivatives
Outstanding Surpasses
One Quadrillion
By Jim Sinclair
6-10-8

The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.

This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since they started to report. As of the last report it appeared that both listed and OTC derivatives was under $600 trillion. Now listed credit derivatives alone stood at $548 Trillion. The OTC derivatives are shown as $596 billion notional value, as of December 2007. One can only imagine what number they are at now.

Well we hit a QUADRILLION. We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion.

It would be an interesting piece of research to see what the breakdown is of listed derivatives according to exchange to see if it adds up to the reported number. Spin is now everywhere.

This means that no OTC derivative house can be allowed to go broke. This means that whatever funds are required to rescue failing international investment banks, banks and financial entities will be provided.

Keep this economic law in mind. Monetary inflation proceeds price inflation and is its primary cause in economic history from Rome to present.

Nothing can stop the juggernaut of price inflation heading towards every nation like a runaway freight train down a mountain.

http://jsmineset.com

Credit crisis expands, hitting all kinds of consumer loans

By Kevin G. Hall | McClatchy Newspapers

WASHINGTON — The credit crisis triggered by bad home loans is spreading to other areas, forcing banks to tighten credit and probably extending the credit crisis that’s dragging down the economy well into next year, and perhaps beyond.

That means consumers are going to have an increasingly difficult time getting bank loans for car purchases, credit cards, home equity credit lines, student loans and even commercial real estate, experts say.

When financial analyst Meredith Whitney wrote in a report last October that the nation’s largest bank, Citigroup, lacked sufficient capital for the risks it had assumed, she was considered a heretic.

However, Whitney was proved correct: Citigroup pushed out its CEO, sought foreign investors and slashed its dividend. Her comments now carry added weight on Wall Street, and she has a new warning for ordinary Americans: The crisis in credit markets is far from over, and it increasingly will affect consumers.

“In fact, we believe that what lies ahead will be worse than what is behind us,” Whitney and colleagues at Oppenheimer & Co. wrote in a lengthy report last month about threats faced by big national banks, including Bank of America, Wachovia and others.

The warning is scary considering what’s already behind us in the credit crisis — the resignation or firing since last August of CEOs at almost every large commercial or investment bank; the Federal Reserve lowering its benchmark lending rate by 3.25 percentage points; a Fed-brokered deal to sell investment bank Bear Stearns; and weekly auctions of short-term loans from the Fed worth billions of dollars to keep credit markets functioning.

Whitney argues that the worst is still ahead because the financial tools that enabled credit to flow so freely to homeowners and consumers for most of this decade are likely to remain in a prolonged shutdown indefinitely.

“After years of inherently flawed underwriting, banks face the worst yet of the credit crisis — over $170 billion in write-downs and charge-offs from consumer loans,” Whitney told McClatchy. The same kind of losses from housing may be ahead for credit extended to consumers, she said.

At the heart of the nation’s lending boom from 1996 to 2006 was a process called securitization. In housing, this process involved pooling mortgages for sale to investors as special bonds called mortgage-backed securities. Monthly mortgage payments were also pooled and served as the return to investors.

Securitization meant that most home loans no longer sat on a bank’s balance sheet. Instead, they were sold into a secondary market, where they were sliced and diced in a process that was supposed to spread investment risk a mile wide and an inch deep.

For every dollar of mortgage loans that banks kept on their balance sheets since 2000, another $7 of these loans were sold to the secondary market and securitized. This led to the industry joke that “a rolling loan gathered no loss.” Risk was passed along to the next holder of the debt. Securitization added what bankers call liquidity, a fancy term for having more money on hand to lend.

Now, the structured finance that enabled Americans to borrow cheaply has gone away, at least in the housing market.

“With that source of liquidity removed, the sheer number of buyers who can qualify for mortgages and therefore buy homes will decline dramatically,” Whitney told McClatchy. “It stands to reason, therefore, that less demand and more supply will drive home prices down well below current expectations.”

In addition, interest is waning in other areas of lending where securitization has also been common — car loans, credit cards, home equity lines of credit, student loans and even commercial real estate. It means that lending in those areas is growing tighter.

“There are still many areas where people aren’t going to be able to do transactions that they were able to a year ago,” said Sean Davys, managing director of the Securities Industry and Financial Markets Association (SIFMA), the trade association for big finance. “We do expect that it will take a significant amount of time for the market to return to any sense of normalcy. What’s your reference to normalcy? It’s going back several years, not just a couple of years.”

These other areas of lending are suffering through a buyer’s strike. Investors just don’t have much interest in buying anything whose underlying asset are pooled loans.

Because there are no buyers, banks are taking an accounting hit as they mark down the value of the securitized mortgages they own, and Whitney believes they’ll have to do so with other types of securitized loans, such as car loans and credit card debt.

That’s likely to result in a large pullback in bank lending. She forecasts tighter lending standards, banks with increasingly limited capital, a growing need for banks to set aside more money to offset losses and tough new federal regulations to protect borrowers, which would reduce lending further.

If the positive side of securitization was that it let banks lend more by passing loans into a secondary market, the inverse is now true. Banks are less willing or able to lend — they collectively set aside more than $10 billion to shore up their balance sheets in the first quarter of 2008. That’s meant that consumers must pay more to borrow to buy a car or fix a home, and it’s harder to get loans.

“There are a lot of businesses and individuals that are going to find that their access to credit is a lot more limited than it used to be and it’s a lot more expensive,” said Mark Vitner, a senior economist with Wachovia, a large national bank headquartered in Charlotte, N.C. “And the reason why is the lessened ability to securitize these loans and sell them in the secondary market. That lack of liquidity is being priced into all new loans.”

Higher borrowing costs are on top of tighter lending. The Whitney report estimated that by 2010 credit card issuers would withdraw more than $2 trillion in credit that they’ve been extending to consumers.

“We’re already seeing examples of people seeing their credit limits reduced,” said Joseph Ridout, a spokesman for Consumer Action, a consumer rights group based in San Francisco.

More troubling, he said, some banks are doubling interest rates on customers who are current on payments but considered a credit risk because of changes in their credit profile. The hikes apply to credit-card debt already racked up.

Federal Reserve Chairman Ben Bernanke worried about the state of the credit markets in a June 3 speech. Financial institutions already have taken $300 billion in write-downs and credit losses, he said, noting that “balance sheet pressures and the relatively high cost of new bank capital have reduced the willingness and ability of these institutions to make markets and extend credit.”

Translation: Expect less credit for consumers and businesses and higher borrowing costs.

It’s a bad omen for a sluggish economy struggling to stay out of recession.

Still, not everyone is so downbeat.

Bert Ely, a banking consultant who was prominent during the savings and loan crisis, thinks that once the economy rebounds, banks will look a lot stronger. That’s because the loans they’re bringing back on their balance sheets will look better over time.

“Many of the losses financial institutions have reported will essentially reverse out (and become accounting gains) . . . that’s why large institutions have been raising capital to hang on to these securities so they don’t have to sell them at what would be unrealistically high losses,” said Ely.

He nonetheless agreed with Whitney that “there are still some serious issues with securitization” and the credit markets are unlikely to bounce back within two or three years.

ON THE WEB

To ask a question about this story or any economic question, go to McClatchy’s Econ Q and A here:

www.mcclatchydc.com/qna/forum/questions_and_answers_about_the_economy/index.html

02:06:03 06/10/2008

annashere

Thank you so much for the reasoning behind the credit crunch.
So – greedy lenders? What a surprise…

01:06:38 06/10/2008

catriley

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Corporate America is sick. I agree with “strangetimes”, it makes absolutely NO sense to jack up the interest rates on people who have a change in their credit “profile”, it only makes the spectre of default more possible.

I’m a small biz owner, and I would never hire a consultant who had such ridiculous ideas as corporate America now espouses. Let’s see.. punish your best customers and make it more likely they will default on their debt to you. Make it harder for qualified buyers with good credit to qualify for a mortgage. And still award enormous, multi-million $$ parachutes to disgraced CEOs.

Brilliant.

01:06:43 06/09/2008

strangetimes

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Swell. So these institutions will be forced to conduct business the relatively sane way they did 40 years ago – still grasping & greedy, but not repossessing the first-born?

Note the item about doubling credit card interest rates on customers who are current with payments, but have a change in their credit profile. Can I cut my Wachovia mortgage payment in half because the CEO changed their business profile?

Great logic: assume that if a customer MIGHT POSSIBLY PERHAPS have some financial problems in the future, you should raise the interest rates now thus guaranteeing the situation you’re worried about. Idiots.

Can’t afford to buy anything, put US companies out of business, rising unemployment, more foreclosures, more bankruptcies, more illness – yup, trickling down on the serfs always produces the same results. Give the tax breaks & incentives to Big Business and this is always how it ultimately shakes out.

Thank God I have my leaden parachute (pitiful pension) and Social Security (ha, ha, ha) and penny wrappers.

10:06:54 06/09/2008

wardpo

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Without corporate welfare the US banking system would collapse. The current crop of capitalists running this country are mostly small-minded, greedy, rather uninteligent, corrupt losers. They don’t understand sound buisness practice. They blow whatever earnings their corporations make on frivolities. They stick it to the shareholders. American business is mostly a giant scam. We have become a nation of snake oil salesmen. Warren Buffet, one of the few true capitalists left in this country gets it right when he tells you to invest outside the US.

06:06:55 06/09/2008

jfmxl

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‘Because there are some people in this country, in this administration, who have an unshakable faith that government regulation of economic activity is unalterably per se evil.’

That’s just for public consumption. They know full well what’s going to happen once they’ve kicked out the jambs, they make their money and run… ‘the resignation or firing since last August of CEOs at almost every large commercial or investment bank’ was accompanied by those same crooks cleaning out the cookie jar on the way out the door, on top of what they’d paid themselves for coming up with the brilliant scams they’d used to print money in the first place.

All this “conservative philosophy” pretense is dropped the instant their over weaning greed gets them into trouble.

It’s nothing but a cover to get them into power on the backs of the people they hurt the most once they start wielding power’s levers.

And when the house of cards suffers total collapse you’ll find them long gone.

Warren Buffet has been out of the USD for years.

01:06:00 06/09/2008

borisjimski

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Why is it at all necessary that our economy keep bouncing from one extreme to the other? Because there are some people in this country, in this administration, who have an unshakable faith that government regulation of economic activity is unalterably per se evil.

Why Oil Prices Are So High

A Weak Dollar, Bad Fed Policies and Hedge Fund Speculators

How to explain the oil price? Why is it so high? Are we running out? Are supplies disrupted, or is the high price a reflection of oil company greed or OPEC greed. Are Chavez and the Saudis conspiring against us?

In my opinion, the two biggest factors in oil’s high price are the weakness in the US dollar’s exchange value and the liquidity that the Federal Reserve is pumping out.

The dollar is weak because of large trade and budget deficits, the closing of which is beyond American political will. As abuse wears out the US dollar’s reserve currency role, sellers demand more dollars as a hedge against its declining exchange value and ultimate loss of reserve currency status.

In an effort to forestall a serious recession and further crises in derivative instruments, the Federal Reserve is pouring out liquidity that is financing speculation in oil futures contracts. Hedge funds and investment banks are restoring their impaired capital structures with profits made by speculating in highly leveraged oil future contracts, just as real estate speculators flipping contracts pushed up home prices. The oil futures bubble, too, will pop, hopefully before new derivatives are created on the basis of high oil prices.

There are other factors affecting the price of oil. The prospect of an Israeli/US attack on Iran has increased current demand in order to build stocks against disruption. No one knows the consequence of such an ill-conceived act of aggression, and the uncertainty pushes up the price of oil as the entire Middle East could be engulfed in conflagration. However, storage facilities are limited, and the impact on price of larger inventories has a limit.

Saudi Oil Minister Ali al-Naimi recently stated, “There is no justification for the current rise in prices.” What the minister means is that there are no shortages or supply disruptions. He means no real reasons as distinct from speculative or psychological reasons.

The run up in oil price coincides with a period of heightened US and Israeli military aggression in the Middle East. However, the biggest jump has been in the last 18 months.

When Bush invaded Iraq in 2003, the average price of oil that year was about $27 per barrel, or about $31 in inflation adjusted 2007 dollars. The price rose another $10 in 2004 to an average annual price of $42 (in 2007 dollars), another $12 in 2005, $7 in 2006, and $4 in 2007 to $65. But in the last few months the price has more than doubled to about $135. It is difficult to explain a $70 jump in price in terms other than speculation.

Oil prices have been high in the past. Until 2008, the record monthly oil price was $104 in December 1979 (measured in December 2007 dollars). As recently as 1998 the real price of oil was lower than in 1946 when the nominal price of oil was $1.63 per barrel. During the Bush regime, the price of oil in 2007 dollars has risen from $27 to approximately $135.

Possibly, the rise in the oil price was held down, prior to the recent jump, by expectations that Democrats would eventually end the conflict and restrain Israel in the interest of Middle East peace and justice for the Palestinians.

Now that Obama has pledged allegiance to AIPAC and adopted Bush’s position toward Iran, the high oil price could be a forecast that US/Israeli policy is likely to result in substantial supply disruptions. Still, the recent Israeli statements that an attack on Iran was “inevitable” only jumped the oil price about $8.

Perhaps more difficult to understand than the high price of oil are the low US long-term interest rates. US interest rates are actually below the rate of inflation, to say nothing of the imperiled exchange value of the dollar. Economists who assume rational participants in rational markets cannot explain why lenders would indefinitely accept interest rates below the rate of inflation.

Of course, Americans don’t get real inflation numbers from their government and have not since the Consumer Price Index was rigged during the Clinton administration to hold down Social Security payments by denying retirees their full cost of living adjustments. According to statistician John Williams, using the pre-Clinton era measure of the CPI produces a current CPI of about 7.5%.

Understating inflation makes real GDP growth appear higher. If inflation were properly measured, the US has probably experienced no real GDP growth in the 21st century.

Williams reports that for decades political administrations have fiddled with the inflation and employment numbers to make themselves look slightly better. The cumulative effect has been to deprive these measurements of veracity. If I understand Williams, today both inflation and unemployment rates, as originally measured, are around 12 per cent.

By pumping out money in an effort to forestall recession and paper over balance sheet problems, the Federal Reserve is driving up commodity and food prices in general. Yet American real incomes are not growing. Even without jobs offshoring, US economic policy has put the bulk of the population on a path to lower living standards.

The crisis that looms for the US is the loss of world currency role. Once the dollar loses that role, the US government will not be able to finance its operations by borrowing abroad, and foreigners will cease to finance the massive US trade deficit. This crisis will eliminate the US as a world power.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@yahoo.com

Global Research Articles by Paul Craig Roberts

http://globalresearch.ca/index.php?context=va&aid=9300

Mortgage Delinquencies Rise Nearly 62 Percent in First Quarter

By AMY MCALISTER
Published: June 10, 2008

Related stories:

Mortgage Delinquencies To Jump 34 Percent By Year End: TransUnion

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Home Equity Line Delinquencies Continue to Rise: Report

Home Equity Delinquencies Jump

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While it’s likely no longer surprising for many market participants, a report by consumer credit bureau TransUnion released Monday found that mortgage delinquencies had increased for the fifth straight quarter during Q1, while consumers managed to add to their overall mortgage debt load during the quarter as well.

Borrowers more than 60 days in arrears on their mortgages hit a record high 3.23 percent for the first three months of 2008, TransUnion said — that’s up 8 percent over the previous quarter’s 2.99 percent average, and is a staggering 61.5 percent higher than the first quarter 2007.

Mortgage borrower delinquency rates in the first quarter of 2008 were highest in Nevada (5.81 percent) followed closely by Florida (5.38 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.17 percent), Wyoming (1.41 percent) and South Dakota (1.48 percent). Delinquency trends clearly mirror the regional distress being felt in key states, although it’s worth noting that even states with comparatively lower rates of mortgage distress are still exhibiting historically high amounts of borrower delinquencies.

Somewhat confoundingly, the average national mortgage debt per mortgage borrower rose slightly to $191,917 from the previous quarter’s $191,370 total, TransUnion reported; the first quarter 2008 average represents a 5.38 percent increase in average mortgage debt load compared to the first quarter 2007 of $182,126.

The credit bureau suggested in a press statement that increasing mortgage debt is the result of consumers’ expectation that perhaps 2008 could represent a year with excellent buying opportunities. It also could reflect the distress being felt by consumers, many of whom are seeing their reported loan balances increase due to workouts or loan recapitalization, sources suggested to Housing Wire.

“The market continues to see the effect of the mortgage crisis across the country as delinquency rates again increased over the previous period,” said Keith Carson, a senior consultant in TransUnion’s financial services group. “However, this increase was not as substantial as was seen between the third and fourth quarters of 2007, possibly reflecting the impact of a tightening in the lending policies of financial institutions.”

Delinquencies grew the fastest in Alaska, of all places, during the first quarter — rising 28.4 percent, enough to top rising delinquencies in California, which saw DQs jump 25.4 percent, and Nevada, where DQs jump 24.1 percent.

Carson said that he expected the national deliquency rate to top 4 percent by the end of 2008, and then stabilize in 2009 as home prices bounce off of what the credit bureau is predicting as a bottom in housing prices.

http://www.freedomsphoenix.com/Find-Freedom.htm?At=034329&From=News

Friday, June 13, 2008

Inflation Jumps 0.6% in May

Inflation shot up in May at the fastest pace in six months, pushed higher by soaring costs for gasoline and other types of energy.

The U.S. Labor Department reported Friday that consumer prices rose by 0.6% last month, the biggest one-month increase since last November, as gasoline costs surged by 5.7%. Food prices, which have also been rising sharply, were up 0.3% as the cost of beef and bakery products showed big increases.

Core inflation, which excludes energy and food, edged up a more moderate 0.2% in May. But even there, core prices are up 2.3% over the past 12 months, above the Federal Reserve’s comfort zone.

http://www.foxbusiness.com/story/markets/economy/inflation-jumps-/

Foreclosures Rise 48% in May as Repossessions Double (Update2)

By Bob Ivry

June 13 (Bloomberg) — Banks repossessed twice as many homes in May and foreclosure filings rose 48 percent from a year ago as falling house prices trapped borrowers in mortgages they couldn’t afford, RealtyTrac Inc. said in a report today.

One in every 483 U.S. households either lost the home to foreclosure, received a default notice or was warned of a pending auction, RealtyTrac said. That was the highest rate since the Irvine, California-based company began reporting in January 2005 and the 29th consecutive month of year-over-year increases. Nevada, California and Arizona posted the highest rates in the U.S. and New Jersey entered the top 10.

“It’s definitely a different kind of market than what we got used to a couple years ago,” said Devin Reiss, owner of Realty 500 Reiss Corp. in Las Vegas. “We used to sell homes in a day. Now 50 percent of our sales are foreclosures.”

Foreclosures add to inventory and crowd out regular sales, Michelle Meyer and Ethan Harris, economists at Lehman Brothers Holdings Inc. in New York, wrote in a report yesterday. Foreclosures will account for 30 percent of national home sales this year as 1.2 million foreclosed single-family homes will eventually enter the market, they said. They estimate foreclosed properties, which typically sell for about 20 percent less than other homes, will depress home prices nationally by 6 percent.

Feedback Loop

“The risk is that an adverse feedback loop will develop, in which problems in the housing market undercut the economy, causing even more stress in the housing and mortgage markets,” Meyer and Harris wrote.

The percentage of total outstanding U.S. homes in some stage of foreclosure in the first quarter was 2.47, the Washington-based Mortgage Bankers Association reported. The average over the last 30 years has been 0.98 percent, the industry group said. RealtyTrac’s numbers reflect new filings.

A homeowner usually receives a notice of default after falling more than 90 days behind on mortgage payments. If the borrower still doesn’t pay what’s owed, the property is sold to the highest bidder at an auction, typically held at a county courthouse. If bids don’t reach a set amount, the lender takes ownership. Such houses are referred to as REO, or “real estate- owned.”

Repossessions

Lenders took possession of 73,794 houses in May, more than doubling the 28,548 REOs in May 2007, RealtyTrac said. That pushed total REOs to more than 700,000, RealtyTrac said.

“Right now, lenders are afraid to lend and buyers are afraid they’ll be under water in a year, so unless something dramatic happens we’re going to continue to see the trend go in the wrong direction,” said Rick Sharga, RealtyTrac’s vice president of marketing.

Legislation that would allow the federal government to guarantee up to $300 billion in refinanced mortgages passed the House of Representatives and awaits debate in the Senate, which is scheduled to recess before the July 4 holiday.

Government help would make it easier for homebuyers to get loans and would ease the number of foreclosures, said John Gall, president of the Arizona Association of Realtors and owner of Arizona Land Quest LLC in Kingman, Arizona.

“Resolving credit issues is going to require cooperation between Wall Street and Washington to provide a secure platform for lenders to loosen up their criteria,” Gall said. “It would absolutely help here in Arizona.”

Arizona

Arizona‘s foreclosure rate — one in every 201 households received a filing in May — was a 119 percent increase compared with May 2007 and ranked third in the U.S., RealtyTrac said.

Only Nevada, with one in every 118 households, and California, with one in every 183, had higher filing rates in May, the company said.

One in every 467 New Jersey households received a foreclosure filing in May, making it No. 10 on RealtyTrac’s list of states. That represented an 89 percent increase from a year ago and a 44 percent increase from April, RealtyTrac said.

Other states in the top 10 were Florida, Ohio, Michigan, Georgia, Texas and Illinois.

The number of national foreclosure filings grew 7 percent from April, according to RealtyTrac.

The nationwide rate of default warnings in May increased 1 percent from April and the number of auction notices fell 3 percent, the company said.

Stockton, California

Metropolitan areas in California and Florida accounted for nine out of the top 10 metro foreclosure rates for the second month in a row, RealtyTrac said. Seven California metro areas were in the top 10: Stockton, Merced, Modesto, Riverside-San Bernardino, Vallejo-Fairfield, Bakersfield and Sacramento.

Stockton‘s rate, one in every 75 households, was more than six times the national average, the company said.

“One of the big problems is the banks have been deluged and are way behind in actually doing the foreclosures,” said Alan Nevin, chief economist with the California Building Industry Association in San Diego. Nevin said he’s forecasting lower foreclosure rates in California starting in the last three months of the year.

The Cape Coral-Fort Myers area, on Florida‘s Gulf Coast, had the second-highest metro foreclosure rate in May, with one in every 79 households. The other Florida area in the top 10 was Port St. Lucie-Fort Pierce, on the Atlantic coast, at No. 10.

The only city outside Florida and California in the top 10 was Las Vegas.

RealtyTrac said it has a database of more than 1.5 million properties and monitors foreclosure filings, including default notices, auction sale notices and bank seizures.

To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net.

Last Updated: June 13, 2008 11:08 EDT

http://www.bloomberg.com/apps/news?pid=20601068&sid=aA1ZBbzQ6gzA&refer=home

36 Retail Stores
Closing Doors

Lehman Brothers files for bankruptcy as credit crisis bites

The Daily Telegraph obtained a copy of this Lehman Brothers

memo issued to staff. Click here to enlarge

By James Quinn, Wall Street Correspondent

Last Updated: 10:22am BST 15/09/2008

 

Lehman Brothers, one of the world’s biggest investment banks, has announced it is filing for bankruptcy, in one of the worst banking collapses in history.

As the world economy prepared for a round of devastating blows caused by the credit crisis, Bank of America also agreed to buy Merrill Lynch, another giant of investment banking, for $50 billion in a deal creating the world’s largest financial services company and saving Merrill from Lehman’s fate.

Asian markets tumbled on the news, while European and American markets were expected to follow soon after opening.

Coupled with moves by other Wall Street giants, billions of pounds worth of value from pension funds and other investments could be wiped by the end of the day.

Lehman Brothers had been left on the verge of collapse after a weekend of talks to find a willing buyer ended without success.

 

Hank Paulson, the US Treasury Secretary, led the efforts to identify a buyer but the British bank Barclays walked away from a deal.

The news of its crumbling came as the global financial system faced its biggest test in at least half a century as several other of the world’s leading firms took drastic emergency action.

American International Group, the world’s largest insurance company, was planning a radical restructuring of its business, which would see it sell its aircraft leasing arm and raise $20 billion from new investors.

Alan Greenspan, the former chairman of the US Federal Reserve and a leading economic expert, warned: “Let’s recognise that this is a once in a half-century, probably once in a century type of event.” He added that it was the worst “by far” he has seen in his career.

The former central banker also warned that “we will see other major firms fail”.

The collapse of Lehman Brothers, which fell into difficulty as a result of its exposure to the troubled American mortgage market, could also threaten the 4,000 jobs at the bank’s European headquarters in London.

The accountancy firm PriceWaterhouseCoopers confirmed this morning that the UK operations of Lehman had gone into administration.

Workers have begun to leave the bank’s London headquarters, their personal belongings hastily piled into boxes.

“This is it, I think it’s going to be all over,” said one, who identified himself only as Gordon before he was moved on by security staff.

It had been hoped that a weekend of talks between some of the world’s most senior bankers and leading regulators from the Bush administration would produce a deal to save the bank.

A consortium led by Bank of America was believed to have been first to pull out of the negotiations. Barclays, the UK’s third largest bank, has been keen to move into the top tier of global financial institutions, but terminated the talks because of the US government’s unwillingness to guarantee Lehman’s assets.

The US Treasury was unwilling to commit taxpayers’ cash to a bailout of Lehman, marking a distinct change in its attitude to coping with the credit crisis.

Mr Paulson went into the weekend discussions insisting that government money should not be used to resolve Lehman’s problems, and that the administration had to draw a line in the sand.

The US Treasury and the Federal Reserve had previously committed taxpayers’ money to rescuing Bear Stearns, another bank, in March.

Fannie Mae and Freddie Mac, which underwrite most of America’s mortgages, were “nationalised” just a week ago after running into serious difficulties.

In the case of Lehman, however, the US government was unwilling to pursue a similar policy. City analysts had called into question the health of Lehman’s balance sheet in spite of several rounds of fund-raising.

Source:  telegraph uk

FTSE 100 slumps as Lehman bankruptcy sparks fear

By Graham Ruddick

Last Updated: 10:34am BST 15/09/2008

The FTSE 100 slumped almost 3pc at the open in London as traders digested one of the most dramatic weekends in Wall Street’s history.

Lehman, the single biggest underwriter of US mortgages last year, is the first major bank that government authorities have let go under, and some traders fear that decision may lead to further paralysis in financial markets.

Lehman’s fate was sealed when Barclays and then Bank of America pulled out of an 11th hour rescue. Hours later, Bank of America announced a $50bn deal to buy Merrill Lynch.

Banks across the UK and Europe led the declines, with Credit Suisse falling 5pc, HSBC more than 3pc and Standard Chartered 3pc.

The FTSE was down 120 points at 5,295.5 in early trading.

Comment: Free markets are our best hope

AIG close to emergency restructuring

Read the Lehmans Brothers memo to staff

“I would say this is the most serious weekend we’ve had over the last year,” said Simon Denham of Capital Spreads.

“The consequences of what has gone over the last three days will probably dictate what is going to happen for the next six months. It can’t be emphasised how serious this is.

“We as a company are wondering where to put our money. We’ve had a board meeting this morning and we can’t be the only ones. If you have a sizeable sum of money, where the hell would you put it?”

“What happens to the cross-bank lending? This is the kind of stuff that everyone wants to know about. If I work on a bank’s money desk and I lent Lehmans money – am I going to get that money back? Trillions of dollars gets lent every day on the money market desks and that’s the bits that’s worrying everybody at the moment.”

The slide in the FTSE follows a drop in Asian and a tumble in the dollar.

In Australia, Macquarie, the country’s biggest bank, led the fallers with a 9.8pc slump. Indexes tumbled more than 2.5pc in Australia, Singapore, the Philippines and Taiwan. US stock futures fell 4pc, signalling markets on Wall Street will be hit when they open.

Richard Spencer: Why Hank Paulson will rescue China but not Lehman Brothers

“It’s mayhem,” said Hans Kunnen, head of investment market research at Colonial First State Global Management. “If you thought the US economy was slowing, that fear has been amplified, and that has implications for overall global economic activity.”

Investors across the global are digesting one of the most dramatic weekends in Wall Street’s history, which saw buyers for Lehman Brothers disappear and Bank of America hatch a last-minute deal to acquire Merrill Lynch.

Investors’ flight to safety saw the dollar weaken sharply against the yen, the euro and sterling, while US government bonds and gold rose. The cost to shield corporate debt from default also surged on fear the turmoil on Wall Street will tip the global economy into a recession.

Many stock markets in Asia were closed for a holiday, but the MSCI Asia Pacific Index fell 1.5pc to 348.78. Stock markets in Japan, South Korea, Hong Kong and China are closed for holidays.

The US Treasury and Wall Street banks are hoping to ease the panic from any Lehman bankruptcy by making it easier for the Federal Reserve to make emergency loans to banks.

A group of 10 banks including JPMorgan Chase, Goldman Sachs and Citigroup formed a $70bn fund in a bid to ensure market liquidity.

Source: telegraph.co

Lehman collapse means all bets for the financial system are now off

Any bank harbouring hopes of an end to the credit crunch had a rude awakening today.

 

Lehman Brothers’ bankruptcy has dealt the money markets another crippling blow, incapacitating them for who knows how long. Since the crunch struck last year, the markets have been in seizure. But, with the careful nursing by governments and central banks, they appeared to be on the slow road to recovery. No longer.

Fears about other banks’ exposures to Lehman and renewed uncertainty as to where the crisis may strike next will freeze the wholesale markets up again. The crunch is back with a vengeance.

It’s not hard to see why. Lehman’s collapse into bankruptcy protection is the biggest corporate debt default in history and, in the complex interwoven world of modern banking, no one properly understands where the risks lie.

Wall Street’s titans gathered on Sunday afternoon to start the process of working out their positions by sitting down with other banks and tracking the paths of these impenetrable credit structures. It will take months at the very least for them to establish their “naked” exposure.

Establishing those positions is vital. Last week, for example, David Wright, deputy head of the European Commission internal market unit, noted that regulators still didn’t know the full size of global securitised product issuance.

“We have to believe the numbers, ” he said. “If we can’t, we can’t restore confidence.” Without confidence, banks will not secure wholesale market funding. As the largest user of the wholesale markets in the UK, HBOS’ 30pc share price fall on the London Stock Exchange this morning appeared to reflect those concerns.

What little confidence the markets had restored in recent months has been knocked for six. According to experts, Lehman has $150bn of debt outstanding. By comparison, US telecoms group WorldCom – the largest debt default until today – had $23bn to $30bn (depending on whose estimates you use) when it went bust in 2002.

Lehman bonds and loans that were trading at 80 cents to 90 cents in the dollar last week on fears of collapse are this morning worth little more than 40 cents, according to credit market experts.

In other words, about $70bn of Lehman debt held by other institutions has been wiped out. The holders of that debt, therefore, are facing huge potential losses with untold ramifications of their own.

The scale of the potential crisis is exacerbated by the credit default swap (CDS) markets. CDS’s are insurance contracts for holders of corporate debt that guarantee to pay back the loan in the event of the company’s bankruptcy.

Most of these products are offered by other banks to low-risk institutions like pension funds. Sandy Chen, a banks analyst at Panmure Gordon, reckons this is “where the real stress will come from”.

He estimates that the “CDS market as a whole had notional contracts worth four times greater than the underlying debts issued”. By his calculations, which differ slightly to the credit analyst’s above, that would make “$350bn in CDS’s written on Lehman debts”.

Even using a more optimistic valuation of 60 cents in the dollar for the value of the debt, he says this could cost the banks providing the insurance $140bn. By comparison, when the sub-prime crisis struck last year – tipping the markets into seizure – the initial cost was estimated at $200bn, though it has turned out to be multiples more.

Furthermore, Lehman’s collapse will flood the market with assets for which there are very few buyers anyway. The banks are already having to writedown their positions on a quarterly basis, often because the valuation of these assets is declining.

With a flood of such securities now expected to deluge the market, prices will tumble further – necessitating more writedowns.

Central banks know it will be touch and go. Hence the $70bn liquidity pool provided by ten of the biggest investment banks for any one of them that needs to tap it.

Hence the decision by the US Federal Reserve to widen the set of assets eligible as collateral for Treasury loans to include all investment grade paper, and to almost double the size of these Treasury loans to $200bn.

Hence the extra £5bn of liquidity the Bank of England is providing the UK money markets.

As CDS contracts are called in and financial counterparties pull back from the money markets, the same funding crunch that did for Northern Rock and Bear Stearns will rear its head. Another even more opaque “unknown” is the “second order implication” for banks – the indirect effect as those banks badly damaged by Lehman start to reel.

As to the size of the counterparty risk – defined as other banks that have complex financial instruments held through Lehman – no analyst or credit market expert could hazard a guess as to the likely cost. Mr Chen said Lehman had $729bn of “notional derivatives contracts” that Lehman believed in May were worth $16.6bn.

Again, any losses will have to be punched into the complex, interlaced banking system to work out where the liabilities ultimately may lie.

At the very least, the collapse of Lehman is potentially as costly as the $200bn initial estimate of the US sub-prime mortgage fall out.

Given where that has left the world’s banks – in terms of losses, writedowns, capital raisings and share price falls – there’s every reason to be worried.

As Alan Greenspan, the former chairman of the Federal Reserve, said over the weekend: “We will see other major firms fail.”

10 ways to protect your money now

As the country’s financial system teeters on the brink of disaster, you need a game plan to minimize the damage.

By The Wall Street Journal

Here are 10 things you can do amid the current financial panic:

1. Check that your bank accounts are federally insured.

The Federal Deposit Insurance Corp. (FDIC) guarantees deposits up to $100,000 per person. If you have to hold more than that, spread it across multiple banks. As a taxpayer, you are paying for this insurance, so use it.

2. Make sure your brokerage accounts are federally insured, too.

The Securities Investor Protection Corp. (SIPC) guarantees you at places like Lehman Bros.(LEH, news, msgs), Merrill Lynch (MER, news,msgs) and E-Trade Financial (ETFC, news,msgs) up to $500,000, including $100,000 in cash. The same rules apply: If you have more to invest, spread it across multiple firms. Note that the SIPC only makes sure you get your shares and bonds back if a brokerage fails. It does not, obviously, guarantee those investments’ value.

• Readers talk: Worried about your bank?

3. Put money in thy purse.

If this market and this economy get any tougher, cash isn’t going to be just king anymore. It’s going to be king, queen, emperor, lord high chamberlain and the whole court. The easiest way to make or find a buck is to save it. So take an ax to those family budgets — the restaurant meals, the Superduper Everything Cable package, the rip-off checking account with the high fees and low interest. It’s all costing you.

4. Set up a home-equity line of credit while you still can.

Normally it would not be advisable to take on more debt, but if access to ready cash might be a lifesaver, it’s best to line it up now. That’s true especially if you are worried about your job. Credit is already tight, and it may get a lot tighter.

5. Refinance your mortgage.

The panic on Wall Street just caused a collapse in the interest rate on long-term U.S. Treasury bonds, as lots of investors rushed there for safety. And that usually leads to a fall in long-term mortgage rates.

6. Don’t wait for your worst investments to “recover.”

If you ever saw John Cleese and Michael Palin perform their famous skit about the dead parrot, you know exactly what I mean. No, your Fannie Mae (FNM, news, msgs) shares aren’t “resting.” They’re lying at the bottom of the cage with their feet in the air. What more do you need to know? Stop waiting for them to “recover” before you sort out your portfolio.

7. Don’t panic.

Journalists, like markets, tend to move in herds. And by the nature of their jobs, they write about the plane that crashes instead of the thousands that land safely. Remember, too, that pundits want to seem really wise by putting on serious expressions and saying things like “We don’t know how this thing is going to play out” and “The situation could get a lot worse.” Bah.

Guess what. We never know how things are going to play out. And the situation could get a lot better, too.

8. When it comes to your short-term money needs, nothing has changed.

Any money you might need within the next year or two should be held in cash or equivalents. That was true two years ago, and it is true now. The stock market is no home for money you may need urgently. It could fall 30% or jump 30%. Nobody knows. You can get a one-year CD paying 5% right now, and it’s federally guaranteed.

9. If you are investing for five years or more, buy some stock.

The investment outlook is much, much better today than it has been for several years, because shares are much cheaper. World markets overall have fallen 27% from last year’s peak. They’re not a steal at current levels, but they are not particularly expensive either. Invest globally.Vanguard Total World Stock (VTWSX) gives you the whole world and low fees.

If you are looking for a value, Morningstar analyst Bridget Hughes likes Oakmark Global(OAKGX). Another good one is Tweedy, Browne’s new Worldwide High Dividend Yield Value(TBHDX).

This list is not comprehensive. Remember: I am not trying to call the bottom of the market. Things could fall quite a bit further. No one knows. So invest little, often and broadly.

10. If you want to worry about anything, worry about your taxes.

The worse this crisis gets, the more the feds will end up putting taxpayers on the hook to prevent a meltdown. Taxes will go up sooner or later anyway, no matter who wins the election, because of our gigantic federal deficit. If you think Lehman Bros. was bad, you should look at Uncle Sam. You can forget about any talk of tax breaks. Oh, and if you want a break from worrying about taxes, worry about Treasury bonds. Deficits won’t do anything good for them.