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The Goldsmiths—Part LXXXXII



-- Posted Friday, 24 July 2009 | | Source: GoldSeek.com

By R. D. Bradshaw

 

In the 1930s, Hollywood talkies were still in their infancy.  Many stars and directors in the silent film days of the 1920s found it hard to adjust to talking pictures.  One who did make the transition was director John Ford.  Ford was in his prime in the 1930s.  He was at the top of the heap—a success in Hollywood where so many other persons struck out.  In those days, Ford met a young, aspiring, prop man in 1928 who was hoping to make it big in the movies.  Marion Morrison was the name of the would-be actor.  Ford befriended the young man and suggested that he change his name. 

 

In the meantime, in 1937, Collier’s magazine published a short story by Ernest Haycox on the “Stage to Lordsburg.”  Ford bought the filming rights and was ready to shoot it in Monument Valley, Arizona in late 1938 under the title Stagecoach.  For the male lead, Ford selected Morrison who had played in some 80 cheap B Westerns and serials in the 1930s, using the stage name John Wayne. 

 

Stagecoach was the first talking Western for Ford.  It was an adult film which departed from many of the cheap B westerns shot in those days.  With the expert hand of Ford, Stagecoach was a fantastic success when it was released in 1939.  It made an absolute star of Wayne and earned Thomas Mitchell an Academy Award as best supporting actor.  Ford himself picked up the New York Film Critics Award for Best Director. 

 

But the character in the story that really epitomized the question of arrogance, pride, meanness and dishonesty was a fat cat banker named Ellsworth Henry Gatewood (played by Breton Churchill).  Often, when watching Stagecoach, I want to equate Gatewood with the modern Bernie Madoff and the bankers’ Cabal, both of which have successfully stolen and plundered the wealth of the people of the United States.  Gatewood, too, was a crook who swindled the people of Tonto, Arizona out of $50,000 (which was big money in the film days of the 1880s). 

 

This mythological Gatewood had some very revealing one liners.  For example, just before he decided to take the stage from Tonto to Lordsburg, a local company brought in their $50,000 payroll to deposit in his bank.  Gatewood appropriately reacted with a couple of choice statements.  He said that it was a good practice for local Tonto businesses to deposit their payroll funds in his bank six months in advance of the payroll dates.  And then, in a state of banker brilliance, he said that what’s good for the banks is good for the country (this linkage of the banks to the nation is still the practice today as it is hard to say where one ends and the other begins). 

 

Once the $50,000 was in his greedy hands, Gatewood proceeded to steal it, abandon his wife, and leave the country with the money.  He caught the stagecoach to Lordsburg and planned on getting away with the loot.  At this point, Gatewood was in total harmony with the modern financial market manipulators in the Cabal who have successfully stolen trillions of dollars from would be investors over the years—all with the tacit approval of the controlled media and government regulators who always conveniently look the other way when the Cabal players are busy ripping off the markets. 

 

And next, in this story we come to Gatewood’s similarities with Bernie Madoff.  Geronimo had been on the loose and the telegraph line was down from Tonto to Lordsburg.  By the time that the stage got to Lordsburg, the telegraph line had been fixed; and the people in Tonto had discovered the Gatewood theft and flight, and had wired ahead.  The Sheriff in Lordsburg arrested him.  It’s too bad there is no way to arrest and try the banker crooks today who have been stealing from the people since 1913. 

 

The Banks and the Bad Paper They are Holding

 

Almost daily, the controlled media bombards us with reports about how bad the banks have it with their bad loans and paper.  Real estate mortgage foreclosures continue.  Furthermore, there is the derivative problem which was laid out in the Goldsmiths, Part LXXXXI, with a note on the possibility of a meltdown and especially with Credit Default Swaps.  This Goldsmiths will now address the meltdown option more carefully. 

 

In order to address the situation with the banks, please note that the US banks’ balance sheets have turned to using an accounting valuation called “fair” value in our time whereas historically such paper and current assets have been valued at cost or market value, whichever is lower. 

 

In the previous presentation on derivatives, the common reference to value was often in the context of this “fair” value concept.  The abandonment of the historic basis of cost or market, whichever is lower, came about in early April 2009 with a decision of the Financial Accounting Standards Board.  Here, this concept of “fair” value crept into the definition.  And what is fair? 

 

Bloomberg of Apr 2, 2009 had this statement by Ian Katz on the change to using fair value by banks to value their loan portfolios.  “The Financial Accounting Standards Board, pressured by U.S. lawmakers and financial companies, voted to relax fair-value accounting rules… Changes to fair-value, or mark-to-market accounting, approved by FASB today allow companies to use ‘significant’ judgment in gauging prices of some investments on their books, including mortgage-backed securities.  Analysts say the measure may reduce banks’ write downs and boost net income.” 

 

So what is fair value?  Well, apparently, it is a subjective, judgmental value which is about whatever the banks want it to be in order to manipulate their balance sheets and income statements (if the banks are acquiring paper from another bank, they want fair to be low; if they are reporting values for their balance sheets, they want fair to be high).  In the sense of fair, whatever that is, it is clear that the banks are holding huge sums of bad paper on their balance sheets which are often valued at very inflated figures. 

 

There is another slight of hand trick the banks are using to increase their profits without justification.  On Jul 17, 2009, Money Morning had a report by Jason Simpkins which addressed the recent earnings report of profits from JP Morgan-Chase.  Per Simpson, these profits were made possible because of a trick used by Morgan to book profits on loans before they are actually earned. 

 

Simpson says:  “the Financial Accounting Standards Board has made it possible for the biggest U.S. banks to book profits on loans that have not been fully repaid.”  These profits are called accretable yield, whereby mega banks book income on loans that have reduced credit quality by recognizing the value of the bonds on their balance sheets and the cash flow those securities are expected to earn. 

 

On this, Money Morning says “please understand, we’re not talking about cash that’s already been earned, and not cash in the bank … we’re talking about cash flow those banks are expected to earn.  In JPMorgan’s case, the firm took on $118.2 billion in toxic debt when it acquired Washington Mutual Inc. last year. As a receiver of that debt, JPMorgan was allowed to mark that debt down to fair value, or $88.65 billion. But now, the bank says that those same debts may appreciate by some $29.1 billion over the life of the loans.  And as those loans are paid back, that money is booked as profit.  Of course, this distorts banks’ earnings and camouflages the deterioration in other banking segments.” 

 

This cited trick occurs when a bank can acquire so-called worthless or bad loans/bonds at a discount from their face value and then proceed to start collecting the loans on the premise that they will be fully paid off.  Thus, when Morgan took over Washington Mutual, they took over the outstanding loans at pennies on the dollar on the premise that they were bad (with the Washington Mutual stock holders losing the discount amounts of the loans).  Once Morgan gained these loans, Morgan commenced collecting them on the basis of the full amount due without regard to the discounted amounts which Morgan effectively paid for them. 

 

The Rothschild Cabal players have followed this scam for ages where they buy up so-called worthless bonds at a big discount and impose on governments and politicians to make the bonds good and payable in full (for information on how the Cabal has worked this scam in history, see Understanding Money and War VI at www.analysis-news.com and what happened with the Continentals and recently the old Iraqi bonds). 

 

Clearly, Morgan is doing this same trick with the loan portfolios of companies going broke and being absorbed by Morgan.  Along with trying to collect them in full, Morgan has added the trick of booking profits on them with each collection in order to boost Morgan’s current income statement (yet, you can bank on it that Morgan is not paying taxes on a current basis for this unrealized income). 

 

By the way, here, let me note that this exact same situation prevailed in the 1930s when the Cabal agents in the Fed brought on the great depression which forced thousands of small town banks out of business to be absorbed by bigger and more powerful banks.  This same scam was launched in 2007 to bring on another depression and the forcing of smaller banks out of business with larger banks absorbing their business.  Every week, we hear something about another bank or financial institution closing and its business being taken over by a succeeding larger bank (the FDIC arranges this from one to ten times each week). 

 

You can bank on it that the assets of the closing banks are acquired by the succeeding banks at pennies on the dollars (with the stockholders of the closing banks losing in the deal).  Once the successor banks get the loans and other assets at sharp discounts, they go to work to make the borrowers pay off the full face amounts.  If this doesn’t work, these big gaining banks turn to the taxpayers at the Fed and Treasury to dole out trillions to them in order to cover their losses on loans.  Whichever way it turns out, the big Cabal banks win. 

 

More on the Valuation Problem

 

As a matter of information, I have written about the valuation problem in previous Goldsmiths 80, 82 and 91, as well as other writings.  Back in May, I noted the derivatives problem of $200 trillion, the pledge of $13 trillion by the Fed and Treasury to bail out the banks and more coming losses in the trillions. 

 

On May 21, 2009, Goldsmiths 82 said:  “The most obvious thing of all is that the trillions now given the bankers or in the pipeline to the bankers is not enough.  If the Cabal banks could be faced with losses of $100 trillion, they will be asking for or demanding more money from the US, Europe and other developed states.  The payments made so far are only small down payments with much of the principal still to be paid.  I’m not altogether sure of what turn the Cabal will take now.  But someway or somehow, more of the Western wealth will end up in the hands of the Cabal.”  And, on Jul 20, 2009, a news report said that the latest estimate of government bail-out costs has reached $23.7 trillion.  So the costs keep going up. 

 

Besides the $200 trillion in derivatives (with the US banks holding some $14.6 trillion in Credit Default Swaps, as discussed in the Goldsmiths 91), there is the general debt situation of the nation.  Michael Hodges’ Grandfather Economy Reports put the total at $57 trillion with some $10.6 trillion owed by government at the end of 2008 ($3.2 trillion by the Federal government which is understated since the government lies to us about the US debt).  Foreigners own some $13.6 trillion of that $57 trillion.  US banks and financial institutions appear to own much of the rest of the $57 trillion. 

 

Per Wikipedia, outstanding residential mortgages were $10.6 trillion at the end of 2008.  Another trillion dollars is owed on credit cards.  Here, creditcard.com shows that Chase leads the pack with $183.32 billion; Bank of America is next with $166.32 billion; and Citibank is third with $106.74 billion.  Part of these receivables the banks carry has been financed by foreigners.  The Treasury gives the foreign deposit/note figures at $4.664 trillion with just the US National Banks at the end of 2008 (by the way, the subsequent figures from the Treasury suggest that foreigners are slowly withdrawing their funds from US banks.  The figure was at $4.532 trillion in March). 

 

I unsuccessfully tried to find data on the total loans and receivables now on the books of the banks and financial institutions.  From the above, one could guess something well over $12 trillion.  When we add that to the $200 trillion in derivatives, it is easy to see that America’s banks and lending institutions are setting on a ticking time bomb which could cause the greatest financial collapse in history if it ever starts coming apart.  If the Cabal keeps on with its present deflationary fall, this thing could evolve into a soon catastrophe. 

 

Besides the staggering totals involved, the problem is compounded because there are serious questions about both the totals and valuation of the data being reported.  Our government lies so much that it’s hard to be sure of how much government debt there is.  As for as data from the banks, it is clear that they too are in no mood to tell the truth about their situations.  On the valuation problems, the above remarks outline the stupidity of valuing loan portfolios on the basis of something called fair which is a subjective term based on judgment. 

 

There is still one more valuation issue.  Frankly, I long ago suggested in the Goldsmiths (particularly 80 and 82) the presence of legitimate questions of how toxic is the debt being carried by the banks.  Market Ticker recently had two excellent articles which addressed this problem by suggesting that the banks are intentionally hiding their losses on their balance sheets (and income statements). 

 

Ticker’s address was prompted by the Administration efforts to force the banks to modify the terms of existing loans.  But the banks so far are not interested in modifying loans.  By the same token, it is clear that the banks are not really pursuing the foreclosure options one would suppose.  Ticker gave an example of the bank balance sheet problem by citing a mortgage loan of $500,000 where the home had lost 75% of its value to $125,000 and asked if the bank would modify that loan (when they know the debtor still can't pay, and will re-default) or will they foreclose?  The answer is no way on any modification. 

 

But, per Ticker, the banks are also reluctant to foreclose which will make them have to recognize the losses in their financial statements.  The banks have been carrying loans that have turned delinquent but which have not been foreclosed or modified at or near their full principal balance.  This is an outright scam, but it is what has been happening, both in the residential and commercial real estate marketplace (it must be said that some persons in Congress would like to see this change; but it is doubtful). 

 

Ticker says “The reason these loans are not being modified and people are literally living for a year or more in their homes after they stop paying their mortgage without having a foreclosure processed against them is that if the bank modifies the loan or forecloses it must recognize the actual loss, as there has now been an event that makes the possibility of self-cure go away and you can't claim that a loan might perform once it has been extinguished through modification or foreclosure!” 

 

The conclusion from the above is obvious.  The bank is certainly in no mood to modify loans which will again default.  And even in a default, they are not anxious to have to foreclose since foreclosures will hurt their income statements and balance sheets.  The result is that many banks are using the excuse of fair value judgments to valuate bad debts which are not written off but are kept open in the books with very high inflated valuation figures. 

 

America’s Debt Structure is in a Giant Mess Waiting for the Biggest Collapse in History

 

The whole system is a house of cards built on lies and deception—starting with the government, on to the media (which hides and covers up the corruption) and on to the banks and financial institutions.  Any system this corrupt and built on this much deception and lies will at some point in time collapse.  There is no other way.  Actually, the Fed and government are using bubble gum and bailing wire to bail out the banks as we go along with no thought as to the basic problems and their solutions (with the totals to perhaps reach $23.7 trillion).  So if the leadership is not willing to correct things, what course will it take? 

 

Well, there are several things which can go wrong.  Of course, any single one could be all that it takes to bring about an implosion.  But if two or more surface at the same time, it will be good-by to the whole apple cart. 

 

One of the things which I am most suspicious of is the result to the US banking system if foreigners accelerate their withdrawal of assets from the US.  A report on this issue on Jul 16, 2009 noted that foreigners are already fleeing long term US debt (May 2009 was down by $20 billion).  The only reason many foreigners are still willing to take US debt and hold US dollars (overseas or in US accounts) is because the dollar is still the reserve currency that can be used to buy things on the market.  But this is changing because many nations are abandoning the dollar and doing their trading with local currencies. 

 

There are other reasons at work which might also bring about a flight of foreigners from US assets.  Here, we can surmise problems erupting when the US makes its inevitable attack on Iran and/or the coming of WWIII, both of which are on the drawing boards.  There remains the overall $200 trillion in derivatives.  Hence, almost anything could cause a run on derivatives that would collapse the whole house of cards. 

 

Another very explosive issue has to be the status of the Credit Default Swaps which Congresswoman Maxine Waters has brought up (as discussed in the Goldsmiths 91).  What in the world will happen to these instruments if the banks ever start foreclosing on bad paper in earnest while the CDSs are presence in volume to supposedly insure and protect the accounts at the banks. 

 

Who knows if the writers of these agreements could make good if they were faced with numbers of foreclosures?  This problem is like the one the old goldsmiths had when they issued more receipts than they had of gold.  Once a run starts, the people would find that the goldsmiths didn’t have the gold to cover the receipts.  On the CDSs, how many could be covered in case of a massive need to pay off? 

 

The Bottom Line

 

Right now, the system is designed to protect the big banks (especially the five big banks cited in the Goldsmiths 91).  Everything being done so far is pointed in that direction.  It is clear that nothing positive will be done to do anything but try to save the banks for the ruling Rothschild Cabal.

 

The next big feature of this presentation is the fact that the big five banks involved are all owned/controlled by the Rothschild Cabal of big bankers—the Rothschilds, Oppenheimers, Warburgs, Lazards, Rockefellers, Montegus, etc.  So there is enormous collusion at the top on how this game is played. 

 

Last, an acquaintance of mine once said that if we, the common/little people, try to enter into a financial transition with any member of this manipulating class, we lose.  Yes, if you or I should try to deal with one of them, there is no way that we can win in the game (because they have rigged the game in their favor in advance). 

 

Since our government and system has turned over our money and commodities to these expert speculators for them to manipulate, massage and manage, there is no way that any of the little people can come onto their playing field and win.  They get up early in the mornings to plan and scheme how they will take our money from us.  Hence, the best thing to do is to stay away from them. 

 

Alex Wallenwein, in his Euro Monitor newsletter, put it well—stay out of the futures markets.  If one of us tries to make some money in the futures’ markets, we are doing exactly what they want us to do.  This team of market manipulators has been at this game for $3,000 years.  There is no way we can win with any of them. 

 

Perhaps this reality in the present situation is beginning to soak in on people.  This real world approach makes a thinking person turn to one of the most sure things of all--gold.  A number of analysts and students of gold have begun recommending the purchase and holding of gold physically for the long pull.  This seems like good advice.  When the big collapse comes, gold will be one of the few things still holding value. 

 

__________________________________________________________________________

 

Back issues of the Goldsmiths, by the editor of the Analysis of News, can be accessed from a Google or Yahoo search engine by typing in “R. D. Bradshaw” Goldsmiths.  Several hundred web sites can be found with the back issues and with translations to Spanish, Italian, German, Chinese, Dutch, Polish and other foreign languages.  Finally, the “Archives-Goldsmiths” of this website (www.analysis-news.com ) has all of the Goldsmith articles issued to date. 

 

Besides the revelations contained in the Goldsmiths’ articles, the work of the plutocratic financial market manipulators to conspiratorially manipulate and control the financial markets (to make more profits and install a world government under their management) is also addressed at length in the periodic analysis of the news and in other articles produced at www.analysis-news.com.  This website has an article of interest to any person interested in understanding the market Manipulators.  It is the Hidden Secret of the Manipulators, why they succeed and how to follow their manipulations. 

 

Readers of the above articles are invited to visit www.analysis-news.com and become a subscriber to regularly read some of the material from the world of information which will further reveal how extensive the manipulation, control and dishonesty realities are in the financial, currency and commodity markets, not only in the US but indeed around the world.  To go to the home page of this website, please click at the link here:  www.analysis-news.com.


-- Posted Friday, 24 July 2009 | Digg This Article | Source: GoldSeek.com




 



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