-- Posted Friday, 20 September 2013 | | Disqus
“Increased regulation and low interest rates are driving lending from the regulated commercial banking system into the unregulated shadow banking system. The shadow banks, although free of government regulation, are propped up by a hidden government guarantee in the form of safe harbor status under the 2005 Bankruptcy Reform Act pushed through by Wall Street. The result is to create perverse incentives for the financial system to self-destruct….
“Also called bankruptcy privileges, this ensures lenders secured on financial collateral immediate access to their pledged securities. . . .
“Safe harbor lenders, which at present include repos and derivative margins, can immediately repossess and resell pledged collateral.
“This gives repos and derivatives extraordinary super-priority over all other claims, including tax and wage claims, deposits (emphasis added), real secured credit and insurance claims. Critically, it ensures immediacy (liquidity) for their holders. Unfortunately, it does so by undermining orderly liquidation….”
“Armageddon Looting Machine: The Looming Mass Destruction from Derivatives,” Ellen Brown, webofdebt.com, lemetropolecafe.com, maxkeiser.com, 09/18/2013
Massive and Increasing Public and Private Debt, $700 Trillion or perhaps as high as $1.2 Quadrillion in Derivatives (see bis.org) and the 2005 Bankruptcy Reform Act, appear to put our Bank Deposits, Pension Fund Assets and many other financial “Assets” at Greater Risk than ever before.
And for those U.S. Bank Depositors who think, for example, that FDIC Insurance will protect their Deposits consider that the FDIC’s Reserve Fund holds only $37.9 Billion, but the Total Insurable Deposits are $5.25 Trillion. And, as Ellen Brown points out, the “Bail-Ins” (i.e., Bank Deposit Confiscation) which Cyprus (and now it appears Polish) Depositors suffer, are arguably applicable worldwide via the Financial Stability Board’s “Bail-In Templates.”
And The Fed’s refusal to even begin Tapering is ominous and indicates that Financial Armageddon may be closer than we think. And, worst of All, that Destruction could, at any time, be only hours, or minutes, away – read on.
Here, with Kudos to Ellen Brown for her excellent expose, we suggest possible Personal, and National, Antidotes for Wealth Protection and Profit.
Consider the following …
“Shadow banking comes in many forms, but the big money today is in repos and derivatives. The notional (or hypothetical) value of the derivatives market has been estimated to be as high as $1.2 quadrillion, or twenty times the GDP of all the countries of the world combined.”
Ibid.
It is this Massive, Largely Uncollateralized (except by other Paper “Assets”) $1.2 Quadrillion that would be immediately affected in the next financial crisis. The Counter-Parties to these Derivatives would be Immediately called upon to perform, but many would be unable to (as in the 2008 crisis) creating a ripple effect of Defaults.
Consider further what documentary Film-Maker, David Malone writes,
“…this (SuperPriority – ed.) allows the biggest banks …to profit from a bankruptcy which might otherwise have killed them…
Ibid.
There is a profit incentive, in other words, to create another financial crisis.
“Safe harbor status creates the sort of perverse incentives that make derivatives ‘financial weapons of mass destruction,’ as Warren Buffett famously branded them…
“All other creditors – bond holders – risk losing some of their money in a bankruptcy. So they have a reason to want to avoid bankruptcy of a trading partner. Not so the repo and derivatives partners. They would now be best served by looting the company – perfectly legally – as soon as trouble seemed likely….
“The global credit collapse was triggered, it seems, not by wild subprime lending but by the rush to grab collateral by players with congressionally-approved safe harbor status for their repos and derivatives….
“When MF Global went down it did so because its repo, derivative and hypothecation partners essentially foreclosed on it…. And because of the co-mingling of clients’ money in the hypothecation deals the ‘looters’ also seized clients’ money as well. . .”
Ibid.
The Solution/Antidote for Individuals and Institutional Investors is to place a significant Portion of the Assets outside of the Reach of the Current Fiat Money-based Banking System.
And of course Timing is Crucial. The U.S. Fed’s recent Decision Not to begin Tapering was yet another Signal that another such Crisis is all-too-close and it is not in the self-interest of the Private For-Profit Fed’s Mega Bank Owners and Allies to allow the System to Implode just now. However, given the $Trillions in QE (Fiat Money) The Fed and other Central Banks have already put into the financial system they cannot prevent an Implosion at some point in the not-too-distant future.
Thus Deepcaster pays heightened attention to Timing “Signals” and reports them in his Alerts.
As to Antidotes, i.e., Protection and Profit, we reiterate that Physical Gold and Silver held in one’s personal Possession, Productive Farm land, Essential Foodstuffs and other Assets held outside the “Financial Asset” System provide some (see our Analyses) greater measure of Protection.
The Risk to “Assets” (including Fiat Currencies, Bonds, Stocks) held within the System is already substantial, and had already proven lethal to the in-system “Assets” of some Investors, via legally sanctioned “Bail-Ins” Worldwide!
“MF Global was followed by the Cyprus “bail-in” – the confiscation of depositor funds to recapitalize the country’s failed banks. This was followed by the coordinated appearance of bail-in templates worldwide, mandated by the Financial Stability Board, the global banking regulator in Switzerland….
“Bail-in policies are being necessitated by the fact that governments are balking at further bank bailouts. In the US, the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivative activities. That means the next time we have a Lehman-style event, the banking system could simply collapse into a black hole of derivative looting. Malone writes:
“. . . The bankruptcy laws allow a mechanism for banks to disembowel each other. The strongest lend to the weaker and loot them when the moment of crisis approaches….
“All that is required is to know the import of the bankruptcy law and do as much repo, hypothecation and derivative trading with the weaker banks as you can.”
Ibid.
And we note that it appears a Major Polish Bank is already implement ting “Bail-Ins.”
Ellen Brown also offers two Systemic Solutions for Nations and Citizens of Nations.
“We should be directing where the credit goes and collecting the interest. Banking and the creation of money-as-credit need to be made public utilities, owned by the public and having a mandate to serve the public. Public banks do not engage in derivatives.
“Today, virtually the entire circulating money supply (M1, M2 and M3) consists of privately-created “bank credit” – money created on the books of banks in the form of loans. If this private credit system implodes, we will be without a money supply. One option would be to return to the system of government-issued money that was devised by the American colonists, revived by Abraham Lincoln during the Civil War, and used by other countries at various times and places around the world. Another option would be a system of publicly-owned state banks on the model of the Bank of North Dakota…”
Ibid.
Of course, the latter of these would involve abolishing The Fed as we know it.
Another possible approach was implemented by President John F. Kennedy, R.I.P., a few months before his assassination. He issued an Executive Order that U.S. Notes (as competition to Federal Reserve Notes) be issued. Some were actually issued and were backed by the Full Faith and Credit of the USA including its Gold Reserves. Most of these U.S. Notes were removed from circulation shortly after his death.
So what is likely to be one Trigger (of several possible ones) for the next Financial Collapse. John Williams explains:
“The United States faces a likely hyperinflationary depression before the end of 2014. That forecast has been in place for years, and still remains. The ultimate, complete debasement of the U.S. dollar became inevitable in recent decades, when those controlling the U.S. government—both sides of the aisle—deliberately took on federal debt and obligations that never could be satisfied through normal fiscal operations….
“The U.S. banking system remains under severe financial stress, as would appear to have been confirmed, yesterday, by the Federal Reserve’s decision not to cut back on its quantitative-easing program….
“Where the proximal trigger for the looming sharp increase in inflation and eventual hyperinflation likely will be massive selling of the U.S. dollar in the currency markets, two major illusionary props for the dollar are evaporating. …In combination, these factors suggest a rapidly approaching day-of-reckoning for the dollar.
“The first big the myth was that the Federal Reserve would extricate itself from its quantitative easing, due to the improving economy. That story appears now to have been confirmed as nothing more than jawboning, aimed at propping the dollar, depressing gold and silver prices and temporarily appeasing critics of Federal Reserve policies.
“The Fed has shown itself to be locked in now for the end game. …
“The Fed’s quantitative easing always has been about maintaining banking-system liquidity and solvency, not boosting the economy. Fed Chairman Bernanke has admitted that there is little the Fed can do to stimulate business activity. The Fed simply uses the weak economy as political cover for propping the banking system….
“The second big myth is that federal deficit is improving and no longer is a problem. While the cash-based deficit for fiscal 2013 will be lower than in 2012, thanks to some one-time factors and accounting gimmicks, that will not be true for the generally accepted accounting principles (GAAP)-based deficit that ran at an uncontrollable annual pace of $6.6 trillion in 2012.
“Long-term U.S. sovereign-solvency and fiscal issues, which the global currency markets have held in abeyance for two years, with waning patience, are about to explode anew. Washington is within weeks of having to deal with all the unresolved fiscal and debt-ceiling issues that have been pushed repeatedly into the future. Whatever actions are taken—even attempts at further delayed action—should have negative impact on the dollar. There is no chance of action that would resolve the fiscal crisis.
“Separately, the U.S. economy is turning down anew, noticeably, and the Presidential approval rating already is at low level that usually would be a negative for the dollar….”
“THE END GAME NEARS,” John Williams,
shadowstats.com, 09/19/2013
Fortunately for us, Gold Partisans it appears that the Banking Cartel’s (Note 1) ongoing Paper Price suppression of Gold and Silver is becoming ever more difficult to sustain.
“Since China (which reopens on Monday after a 2 day break) was a respectable buyer in the upper $1,300s a week ago (and a very strong buyer on Tuesday and Wednesday around $1,300) the Bears seem to be overplaying their paw. Especially when the respectable Indian premiums of the past couple of days are also taken into account.”
“Bears Misjudge Asia?,” John Brimelow,
JBGJ, LLC
We agree that it is likely the bears are “overplaying their paw.”
Best regards,
Deepcaster
September 20, 2013
Note 1: We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
-- Posted Friday, 20 September 2013 | Digg This Article
| Source: GoldSeek.com
