J P MORGAN - TO BIG MANAGE - TO BAIL -TO TRIAL - TO JAIL

J P MORGAN - TO BIG TO MANAGE - TO BAIL - TO TRIAL - TO JAIL

Following the recent US Senate hearings on the circumstances surrounding the USD 2 Billion, subsequently revised to USD 6.2 Billon, losses caused by J P Morgan's proprietary trading activities, by the so called "London Whale" an exasperated Senator Carl Levin, chairman of the inquiry commented: 

"the trading culture at J P Morgan ... piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight and misinformed the public."

What more devastating indictment can there be, and one has to wonder why the executives involved and their masters behind the scenes were not immediately arrested after giving evidence?

The initially reported losses prompted Jamie Dimon the CEO of the "Fortress Bank" to comment that it was a storm in a tea cup, and just to ensure that it remained so, he apparently ordered his subordinates NOT to report the true financial situation to regulators. It would appear that London also was not reporting the true situation to New York, just to add another ripple to the storm in a teacup.

When many months after external analysts had estimated far more accurately than J P Morgan the extent of the losses, management finally admitted the truth, they obviously stated there had been no wrongdoing and that they were working hard on amending internal controls and procedures.

The rogue trader and some other staff members were retired/fired and as an illustration of how seriously the CEO Jamie Dimon took the whole affair, he did not even turn up to this Senate hearing. Perhaps it was a good thing as last time he appeared in committee he was wearing prominently a set of White House gift cuff links.

So now this incident caused by the proverbial "Rogue Trader" acting as always completely alone, within the framework of America's biggest bank, has been swept under the table, we can rest assured that J P Morgan will go back to business as usual. 

There are of course just a few niggling little facts that have not been mentioned, which makes the London Whale story look exactly like business as usual, inside a vast constellation of similar activities, some alleged, some proven and many settled out of court. 

The list is so extensive as to turn my Blog into a full length novel so I provide a link below for your perusal:

http://www.scribd.com/doc/130290952/Gf-Co-Executive-Summary-JPM-Out-of-Control

Malpractice includes money laundering for drug cartels, sanction violations, violation of commodities and exchange acts, failure to segregate customer funds, executing fictitious trades, misrepresentations of CDO and MBS, foreclosure fraud, fraudulent sale of unregistered securities, energy market manipulation, shifting trading losses to client accounts, municipal bond market manipulation, obstruction of justice and the list goes on........and on !!!

This list does not include ongoing investigations such as LIBOR rigging etc

So how is it possible for such an institution to survive and thrive? The answer as always is its not what you know its who you know.

J P Morgan has the biggest financial lobbying machine in Washington, and a vast part of its income comes from State patronage either directly or indirectly. Examples include distribution of food stamps, probably America's biggest growth industry, dealing in Government securities, manipulating markets for the account of the treasury, plus  direct bail outs and subsidies like the attempt at the moment to get the state to bail them out of losses arising from its acquisition of Washington Mutual.

Without the state help J P Morgan would struggle to break even, while at the same times flaunting laws, regulators, violating client and the general public interests, and taking colossal risks. This serves solely to pay the massive outrageous salaries of mediocre people whose only real talent is knowing how to hijack the system and make it work in their favour, and traffic influence with greedy and corrupt politicians to maintain the status quo.

When will the next whale surface?

SWISS GOLD INITIATIVE - DEADLINE 20.03.2013

SWISS GOLD INITIATIVE - DEADLINE 20.03.2013

There is currently in Switzerland an initiative to change Swiss Law regarding the state's Gold reserves.

However this requires a minimum of 100,000 people entitled to vote in Switzerland signing the initiative.

The main changes proposed to the current law include:

• Full physical verification of the Swiss Gold reserves
• Ensuring that all Swiss Gold is actually held in vaults in Switzerland
• Ensuring that no currency can be issued if it is not backed by Gold

This is of particular importance in view of the difficulties experienced by Germany in getting their Gold reserves back from the USA, and the massive money printing backed by nothing, going on worldwide.

If you support this initiative please find below the necessary signature forms:

UPLOAD SIGNATURE FORM: http://www.patrigest.ch/CRAC-ini-or.pdf 
PLEASE SEND TO YOUR CONTACTS ON LINKED IN OR E MAIL.
RETURN THE SIGNED FORM BY POST BEFORE  20 MARS 2013!!! 

For more information, please refer to http://www.lldc.ch 



Thank you in advance for your support of this extremely important initiative

NO-ONE ATTACKS ME WITH IMPUNITY

NO-ONE ATTACKS ME WITH IMPUNITY

The events surrounding the Cyprus "bail out",  or perhaps more appropriately for the Russian Oligarchs and the poor Cyprus citizens, a "bail in" are of enormous importance.

Firstly, it displays that German politics and upcoming elections justify throwing the widows, orphans, pensioners and a plethora of lower income Cypriot residents,  such as serving and ex British servicemen  and citizens under a bus.

Secondly, it shows that EU Law protecting deposits under EUR 100K can be abrogated at will by  Group of EU finance ministers, desperately trying to save their own skins. This means there is no rule of law, and certainly no equality before the law.

Thirdly, it shows a staggering arrogance and naivety that the EU/IMF/ECB can simply arbitrarily appropriate the wealth of some of the most powerful oligarchs in Continental Europe, who directly have control over the flow of Oil and Gas from East to West.

Fourthly, it shows the shape of things to come for all the PIIGS countries, where even the uninformed citizen cannot be blind to the fact that if he leaves his money in a bank account, it can be stolen by Government at will. Alternatively,  if it is kept under the mattress it is "safe" from the most professional of robbers, the state!

The direct and indirect consequences of this monumental strategic error will be with us for a long time.

The Russians will certainly not take this lying down, and their methods are ruthless in the extreme, as can be demonstrated by a number of corpses found in Moscow and London, and their treatment of powerful investment groups such as Hermitage. Additionally, the Russians, who have been accumulating Gold at a significant rate may accelerate their buying program to get away from toxic paper held in EU bank traps. Following the Bank Holiday, there will be massive capital flight which will bring the banks again to their knees.

The average PIIGS citizen, should no longer be completely blind to the reality, and by moving his money out to safe havens, this will stretch the resources of the ECB even further. This may well trigger imposition of capital controls, supposedly illegal in the EU, but who cares about the law these days?

There is little doubt that the Cyprus Government will sell their people down the river in response to external pressures, but my hope is that  history will remember this act of economic rape, as a turning point for Oligarchs and ordinary citizens alike.

CORBETT REPORT - ITALIAN ELECTIONS, JAPANESE QE, ILLUSORY US REAL ESTATE RECOVERY, LEHMAN v JPM, SWISS GOLD INITIATIVE, KILLER DRONES.

Please find below a link to a recent VIDEO interview, between myself and James Corbett, founder and owner of the Corbett Report – www.CorbettReport.com. where we discuss a wide range of subjects covering economics, finance and politics.

This interview discusses, the recent Italian elections and the resurgence of democracy as a protest against austerity imposed by the technocratic government; the ultimate futility of QE by Mr Abe in Japan following the nomination of a new BOJ governor; the illusory US real estate market recovery as portrayed by Bernanke and the National Association of Realtors; the scandal that JPM actions may have been the final straw that led to the bankruptcy of Lehman and triggered the financial crisis; the movement in Switzerland to organise a referendum on having Gold to back the currency; Rand Paul's filibuster and opposition to unconstitutional powers, allowing the President to kill Americans in the US without trial by executive fiat.

http://www.corbettreport.com/italian-clowns-false-housing-starts-swiss-update/

http://www.youtube.com/watch?v=1XqzPYptvig

The Corbett Report provides a weekly podcast as well as interviews, articles and videos about current events and suppressed history from an independent perspective.

I am very pleased that my message is reaching an ever wider audience.

DEBUNKING THE US REAL ESTATE RECOVERY

DEBUNKING THE US REAL ESTATE RECOVERY

This month the National Association of Realtors (“NAR”) announced soaring median house prices USD 174K up from USD 155K the previous year and a mere 1.75 million homes, 4 months supply remaining in inventory. The message is clear buy now before it is too late. The NAR is one of the main sources of “irrational exuberance” for the US property market.

Believing this assumes one has a very short memory of previous forward looking statements by the NAR such as those in 2005-7 that the housing market could never collapse. Indeed David Lereah the NAR spokesman making them at the time was fired, and when interviewed by the media admitted he was pressured into making optimistic forecasts, and left to be the fall guy when the market collapsed.

Could history be repeating itself for Lawrence Yun, Lereah’s successor?

US Residential Real Estate Market Overview

Based on the National census the market consists of 133 Million homes. The average price, not the median price, based on Zillow statistics, is currently USD 152K. This means that the total value of all US residential real estate is approximately USD 20 TRILLION

Of the 133 million homes, 75 million are owner occupied, 40 million are rented, 4 million available for rent and 5 million are secondary residences. This leaves 9 million homes totally vacant.

From the above, there are estimated to be 14 million residential mortgages nationwide currently underwater. Some 5.5 million homes are already either delinquent or in foreclosure and this trend is accelerating.

Imagine the impact on prices of all the excess inventory above, some USD 2-3 Trillion in value hitting the market. One can see why Bernanke has tried desperately to re-inflate the bubble and save his banking buddies from the massive loan losses they would inevitably have incurred, by passing the burden to the taxpayer.

This is why Fannie Mae and Freddie Mac, the mortgage lender GSE’s were effectively nationalized and now issue virtually all new mortgages in the US. It is also why the FED is buying up to USD 45 Billion in mortgage backed securities monthly from the banks and other lenders.

This shadow housing inventory has a major impact on new construction where volumes are now 400,000 per month up from 300,000 over the last 3 years. This represents a 70% drop from the peak of 1,400,000 per month in 2006 and is back at levels last seen in 1982.

The product mix has also changed, where instead of building Mac mansions, current new construction is concentrated on low cost student apartments or lower middle class housing units frequently government financed.

The only bright light in selected areas, South California, New York, Boston, Nevada, Arizona etc. is that private equity/hedge funds and high net worth individuals have also been investing in high end properties. These are mainly buy, to let at good yields, when the investor's sources of finance are either cash down, or close to 0% interest loans. This is a game for the rich and the well connected, and normal buyers are excluded. This increase in supply will also push rentals down in prime areas, driving the lower quality property prices down even further.

The NAR members, are specifically exempted by Congress, from Money laundering regulations. Thus real estate purchases are frequently little more than a vehicle to recycle drug money.

In conclusion, it is mathematically impossible for many reasons for the market to enjoy a broad based recovery. There is a massive shadow inventory of properties. Too many owners who would move up the ladder are currently underwater on their loans. The first time buyer is saddled with massive student loans and no cash and probably no job. More children are moving back with their parents. Baby boomers faced with sharply declining retirement prospects are offloading large and secondary residences. 

This is why the NAR and the FED whose interests are directly aligned are working hard to entwine the trusting investor in their spider’s web of deception.

As always “Caveat Emptor” buyer beware.

THE BERNANKE HIGH

THE BERNANKE HIGH

Today saw the Dow reach a new all time high of 14254, exceeding 2007 levels. At the same time  the FTSE saw 5 year highs. The mainstream media slavishly and mindlessly report this   euphoric situation, linking it to the economic recovery, particularly in the US, and of course the financial genius of Ben Bernanke and the FED.. 

They fail to mention a few troubling little details about the US economy now, compared with then in 2007:

• GDP Growth: Then +2.5% without QE; Now +1.6% with 1 Trillion QE
• Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
• Labor Force Participation Rate:Then 65.8%; Now 63.6%
• Americans On Food Stamps: Then 26.9 million; Now 47.69 million
• Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
• US Debt as a Percentage of GDP:Then ~58%; Now over 100.0%
• US Deficit (LTM): Then $97 billion; Now $975.6 billion
• Total US Debt Oustanding: Then $9.01 trillion; Now $16.43 trillion

Adjusted for inflation over the last 5 years the new "high" is still well below the 2007 level in purchasing power terms.

These figures do not take into account the stagnation in the real estate market, where shadow inventory will weigh on the market for years to come, despite the gross misrepresentations in this regard from the NAR (National Assoc of Realtors).

Also ignored is the student loan market, which  now exceeds USD 1 Trillion, and default rates are soaring, as hapless students with worthless degrees are unable to find work. The good news for politicians is up to now students were excluded from the unemployment statistics.

If one considers that USD 1 Trillion of new cash pumped into the economy generated only a 1,6% growth, or USD 250 Billion of GDP increase, then QE seems  an ineffective tool to create a meaningful recovery.

In reality the rise in the Dow has nothing to do with economic fundamentals. It is purely down to the QE and ZIRP driven "Bernanke High". Excess liquidity from QE finds its way into the stock and bond markets, driving prices up and yields down. Zero interest rates drive prudent investors like lemmings into taking unwanted risks to get some/any return on capital.

ITALY DEBATE - ELECTIONS, EU AND ECB CONSTERNATION, BERLUSCONI THE COME BACK KID?

ITALY DEBATE - ELECTIONS, EU AND ECB CONSTERNATION, BERLUSCONI THE COME BACK KID?

Please find below a link to a recent Financial TV interview between myself, leading economist Dr. Frank Hollenbeck, and Doireann McDermott of Dukascopy TV, discussing:

The Italian election results and the consequences within Italy; the wider impact that the disavowal of Mario Monti, the technocratic puppet of Brussels and the ECB, will have on the financial markets; the future stability of the Euro Zone in general.

To view  the broadcast please follow the link:

http://www.youtube.com/watch?v=lYEjFIgB-kI

Dukascopy Bank SA offers direct access to the Swiss Foreign Exchange Marketplace. This marketplace provides the largest pool of ECN spot Forex liquidity available for banks, hedge funds, other institutions and investors.

The Swiss Forex Marketplace (SWFX) is the technological solution for Forex trading utilizing a centralized-decentralized marketplace model. Its successful launch is the result of home-made IT solutions and close cooperation with selected banks and other financial institutions.

I am very grateful to Frank Hollenbeck that he took part in this debate, and pleased that thanks to Dukascopy TV, my message is reaching an ever wider audience.