Internal Bundesbank Report Predicts New Greek Bailout In Early 2014, More Headaches For Merkel [Zerohedge]

An internal Bundesbank document discovered by Der Spiegel states, in opposition to the comments by Germany’s electioneering Chancellor Merkel, that Europe “will certainly agree to a new aid program for Greece” by early 2014 at the latest. As Reuters reports, Frau Merkel has repeatedly played down suggestions Greece will require more aid (or debt relief) in light of German voters major skepticism over moar of their money being flushed into the Mediterranean. The document notes that the risks of the current aid package for Greece are “extremely high” and that recent approval of the tranche payments were politically motivated – directly contradicting Merkel’s ‘praise’ for Greek efforts as the report concludes Athens’ performance as “hardly satisfactory.” Opposition parties suggest Merkel is throwing “sand in the eyes” of the electorate as the Bundesbank warns “there is no private buffer left that could protect the European taxpayer.”


Via Reuters,

German opposition parties accused Chancellor Angela Merkel on Sunday of lying before elections next month about the risks of a new bailout for Greece, after a magazine reported the Bundesbank expects it will need more European aid in early 2014.


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U.S. Government Prepares Mass Pension-Rape [bullionbullscanada]

How has the bankrupt United States of America kept its entire (paper) house-of-cards from crumbling all around it? Two words: fraudulent accounting.

As many readers know, following the Crash of ’08 U.S. Big Banks were hopelessly bankrupt. They were leveraged well in excess of (the legal) 30:1, with the vast majority of that leverage tied directly to the (fraud-saturated) U.S. housing market – and house prices.

The effect of this leverage was that (as a matter of arithmetic) only a 3% decline in U.S. house prices would render all these banks insolvent (3% X 30). In fact the U.S. housing market plummeted lower by roughly ten times that amount (in just its first down-leg). The mere $15+ trillion in hand-outs/loans/guarantees from the Bush regime was only a band-aid which would keep these fraud-factories afloat for a few months, barring other equally extreme action. And soMark-to-Fantasy accounting was born.

Beginning in February 2009, U.S. Big Banks weren’t required to account for their assets (or liabilities) at “market value” (i.e. what people were willing to pay for them in the real world). Instead, the Banksters were allowed to do their accounting on the basis of what they thoughttheir own assets should be worth.

Suddenly, the same corporations which had just all been bankrupted ten times over were able to pass a “stress test.” Of course that Cinderella Stress Test proved nothing about the solvency of U.S. banks. However simply being instantly able to cobble-together a façade of solvency did illustrate the magnitude of the fraud in this Mark-to-Fantasy accounting.

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Aluminum Manipulation Leads to Lawsuits Against Goldman etc – The Days of Proprietary Trading Are []

Proprietary Trading 31.4 Years

There are many lawsuits being filed against the New York Bankers for manipulating the commodities. Suits have been filed in Florida, Chicago, and New York. It is no secret that I have stood up to these people an opposed their manipulations. But this has been the name of the name in the commodity field for probably a century.

The manipulation in interest rates and the financial sector began when PhiBro took over Salomon Brothers back in 1981. They got caught manipulating the US Treasury Auctions within 10 years. That’s when Warren Buffett got involved and I believe it was PhiBro traders that drew him into the commodities playing with silver in 1993 then again in 1997-1998. The Goldbugs hated me then because if the metals go up it is always REAL and manipulations are only down. Buffett bough the silver in London so that drew down the supply in NY shifting it to London and that fact was used to get the Goldbugs to buy the high as always. But they were desperate to get me to join them fearing that Princeton was the largest adviser ever having more than $3 trillion under contract (see testimony before Congress). PhiBro floor traders walked over to my traders and showed them the Buffett orders to buy $1 billion in silver. If I say something is happening, everyone knows I have the real contacts and am not speculating unless I say I “think”.


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Syria’s Assad bans foreign currency transactions [France24]

AFP – Syrian President Bashar al-Assad issued a decree Sunday banning the use of foreign currency in commercial transactions, state news agency SANA said.

“It is prohibited to make payments, reimbursements, commercial transactions and any other commercial operation in foreign currency or in precious stones,” SANA quoted the decree as saying.

“The Syrian lira is the only currency” allowed in business and commerce, it added.

Those breaking the law risk jail sentences from between six months to 10 years of hard labour, depending on the sum involved, and will be fined.

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Phishing Chips: Sim card bug exposes users to surveillance & fraud

Insolvent Spain Forced To “Borrow” From Social Security Fund To Pay Pensions [zerohedge]

Spain’s slow-motion implosion into an insolvent singularity has been one of the most amusing sideshows for over a year. The chief reason for this is the sheer schizophrenic and absurdist polarity between the sad reality, visible to everyone, and the unprecedented propaganda by the government desperate to paint a rosy picture. While on one hand the economic data shows very clearly the painfully obvious sad ending for this chapter of European integration, it continues to be punctuated almost daily by such amusing confidence games as Spain’s Economy Minister de Guindos telling anyone who cares to listen that the labor market is improving “beyond the seasonal pick up” and that Q2 GDP would be close to zero (because 0% GDP is the new killing it). That’s the good news.  The bad news is that as Reuters reports, and contrary to fairy tales of unicorns and soaring 0% GDP, Spain’s government is so insolventit was just forced to “borrow” from its social security reserve to fund pension payments.

From Reuters:

Spain tapped its social security reserve fund for the second time in a month on Monday, the Labour Ministry said, to help with extra summer pension payments as unemployment and retirement costs deplete government funds.

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Fed Expected to Taper Bond Purchases by 24% [Financial Sense]

On Track For September Taper

As noted on July 15, our guess is the tapering dialogue at the Fed is more about escalating fears of another round of asset bubbles rather than confidence in the economy or fears about escalating inflation.


To help stem the bubble tide, the Fed may still announce some tapering at their September meeting. However, any tapering statement will most likely be accompanied by a pledge to support the economy with low rates for an extended period. A Bloomberg survey suggests a slight bias toward a change coming in September:

Federal Reserve Chairman Ben S. Bernanke in September will trim the Fed’s monthly bond buying to $65 billion from the current pace of $85 billion, according to a growing number of economists surveyed by Bloomberg News. Half of economists held that view in the July 18-22 survey, up from 44 percent in last month’s poll. Even as expectations of a September taper rose, 10-year Treasury yields continued to fall last week from an almost two-year high after Bernanke said reducing bond-buying wouldn’t constitute policy-tightening.


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GLD loses another 1.5 tonnes of gold/gold and silver rebound in the access market []

Gold fell  $1.30 to $1335.10 (comex closing time ).  Silver was also down by 25 cents to $20. 25 (comex closing time)
In the access market at 5:00 pm, gold and silver skyrocketed northbound for no apparent reason:
gold: $1347.70
silver:  $20.46

It seems that our specs are in deep trouble with the commercials net long. We will have in the next few weeks a plethora of buyers and a scarcity of suppliers of paper gold. The next two weeks will be a very exciting to watch.

At the Comex, the open interest in silver rose by 909 contracts to 133,641.
The open interest on the entire gold comex contracts fell by 5291 contracts to 439,441 despite  gold’s spectacular rise in price on Friday of $46.00.
Tonight, the Comex registered or dealer inventory of gold  remains below the 1 million oz mark at 950,441.152 oz or 29.56 tonnes.  This is dangerously low especially when we are coming up to the August delivery month.
Remember in June we had almost 31 tonnes of gold stand for delivery.  The total of all gold at the comex (dealer and customer) rises slightly again tonight still well below the 7 million oz barrier resting at 6.895 million oz or 214.47 tonnes.
JPMorgan’s customer inventory remains constant tonight at only 46,069.447  oz or 1.43 tonnes.  It’s dealer inventory rests at 390,092.326 oz (12.13 tonnes) but it still must settle upon contracts issued in the May and June delivery month which far exceeds its inventory.  (see last Wednesday’s  Bill Kaye interview with Lars Schall on the lack of deliveries at the comex per outstanding issues).


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Singapore Central Bank Rocked By Losses, Money-Laundering, And Terrorism-Financing [Zerohedge]

With the Singapore Dollar (NEER) continuing its surge higher (+6% against the USD in 2012), the Monetary Authority of Singapore (MAS) saw a S$10.6 billion loss this year as the “FX impact exceeded the interest, dividend income and other gains from the foreign assets held.” This is the 3rd loss in the last 4 years and 2nd largest on record, but of course the central bank notes, “this is not a cause for concern.”

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GDP growth sliding away, inflation remains elevated, currency continues to strengthen…

Portugal boots on the ground. A street view of the economy

We recently traveled to Portugal to take a “boot on the ground” view of the conditions and economic activity in the second largest Portuguese city: Porto.

As Zero Hedge explains:

The economy is still contracting. The IMF assumes real GDP growth of -2.3% in 2013 and +0.6% in 2014 and unemployment reaching 18.5% next year. There have been clear signs of adjustment fatigue with Finance Minister Gaspar’s resignation a reflection of that. The opposition Socialist Party, that withdrew its support for the adjustment programme, is now ahead in the polls.

Still, looking at the large elderly population and at the condition of  real estate market, one has to wonder what IMF analysts have been smoking to assume that in a 12 months time growth can resume from -2.3% to +0.6%.

The airport as well as underground transportation facilities are modern, clean and functional, having undergone a massive programme of refurbishment due to the Euro 2004 football championships being partly hosted in the city. However, immediately above ground, the harsh condition of buildings is striking: probably 1 over 10 buildings are abandoned or partially collapsed.

One would expect that abandoned buildings are concentrated in the periphery of the city, but surprisingly even in front of the beach the proportion of  ruined and unoccupied houses remains astonishing.


Even in the main square of Porto, where Porto City Hall is located in the Avenida dos Aliados, large historic buildings are left in ruin.


This building is located no more than 500 meters from the Porto City Hall, (by comparison, this is the picture shown on Wikipedia)

With so many broken windows, one would guess that the economy would soon be booming!


House prices only partially reflect the situation:



While looking to gold and silver dealers to check prices and sales, we discovered that the old-fashioned type writers are still found on the desks and used to do business:


An independent journal reports “we are in a war without weapons, an economic war“:


Would Krugman be surprised that in such economic environment, gold buyers are fighting each other with pamphlets and advertisements to get their hands on the barbarous relic still owned by people who need some cash?

Two “we buy gold” in front of each other in the main commercial street of Porto. We asked if they were also selling and the answer was a direct “No, we just buy.”


In case you want to buy, physical comes at a decent premium (I’m sorry my phone did not pick up the prices of bars) you can see silver eagles below going for 35 euros.










A quick e-bay search confirms the prices found on the ground.


In Braga, I picked up these two placards placed in front of the train station. On the left side the socialist candidate (whose advertisements were everywhere) and on the right side the advertisement fort the communist  party’s annual festival. I sincerely hope for the Portuguese people that these aren’t the only choices left…


One Third of Kenyans Now Have a Bitcoin Wallet [motherboard blog]

Image via Flickr

Thanks to bitcoin, it’s about to become a lot easier to move money in Africa. M-Pesa, a successful mobile money platform in Sub-Saharan Africa, is embracing bitcoin. The service will give rise to transactions with negligible fees (~$0.04), and could dramatically slash revenues of existing money transfer services like Moneygram, Western-Union and Paypal. That is, if the famed untraceable digital currency catches on.

Kipochi, the bitcoin wallet service is now being integrated into M-Pesa, which more than one third of Kenyans have already signed up for, as well as five million Tanzanians. A team of 8,300 brand agents is also currently canvassing East India, targeting ‘unbanked’ people. (Update: Just to clarify, that one third of Kenyans now has access to a bitcoin wallet service doesn’t mean that all of those people use bitcoins. We’ll see how usage growth pans out after Kipochi is fully integrated.)

Like many bitcoin businesses that advocate the digital currency’s mainstream proliferation, Kipochi boasts these tenets on its front page:

  • Free of inflation
  • Global
  • Secure
  • Transparent
  • Low cost

The wallet service allows government-ID-carrying users to swap funds by using their phone numbers as account numbers.

Read more:

Comment is free How cryptography is a key weapon in the fight against empire states [guardian]

A telecommunications station in Addis Ababa, Ethiopia

‘Africa is coming online, but with hardware supplied by China. Will the internet be the means by which Africa continues to be subjugated into the 21st century?’ Photograph: Mao Siqian/Corbis

The original cypherpunks were mostly Californian libertarians. I was from a different tradition but we all sought to protect individual freedom from state tyranny. Cryptography was our secret weapon. It has been forgotten how subversive this was. Cryptography was then the exclusive property of states, for use in their various wars. By writing our own software and disseminating it far and wide we liberated cryptography, democratised it and spread it through the frontiers of the new internet.

The resulting crackdown, under various “arms trafficking” laws, failed. Cryptography became standardised in web browsers and other software that people now use on a daily basis. Strong cryptography is a vital tool in fighting state oppression. That is the message in my book,Cypherpunks. But the movement for the universal availability of strong cryptography must be made to do more than this. Our future does not lie in the liberty of individuals alone.

Our work in WikiLeaks imparts a keen understanding of the dynamics of the international order and the logic of empire. During WikiLeaks’ rise we have seen evidence of small countries bullied and dominated by larger ones or infiltrated by foreign enterprise and made to act against themselves. We have seen the popular will denied expression, elections bought and sold, and the riches of countries such as Kenya stolen and auctioned off to plutocrats in London and New York.

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Portugal’s bond market tanks as crisis deepens [cnbc]

The yield on Portugal’s benchmark government bonds surged on Friday, following demands for a renegotiation of its bailout program, reigniting investor fears about the deteriorating political situation in the country.

Portuguese 10-year government bond yields rose to 7.77 percent at lunchtime on Friday, up from 6.88 percent on Thursday, before paring back slightly. The country’s 5-year government bond yields increased from 6.57 percent on Thursday to peak at 7.72 percent on Friday, before falling back to 7.4 percent.

(Read MoreRecovery in Europe’s Periphery? Not So Fast)

On Friday, the leader of Portugal’s socialist opposition, Antonio Jose Seguro, told parliament that Portugal must end its commitment to austerity.

“We have to abandon austerity politics. We have to renegotiate the terms of our adjustment program… The prime minister has to recognize publicly that his austerity policies have failed,” Seguro said.

Alessandro Giansanti, a senior interest rate strategist at ING, said that Friday’s jump in bond yields was in direct response to Seguro’s comments.

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Draghi Impotent as Fed Trumps ECB on Yield Curve [Bloomberg]

The widest gap between two- and 10-year German yields in more than a year suggests theEuropean Central Bank is struggling to protect the region’s economy from a U.S.-led surge in borrowing costs.

ECB President Mario Draghi pledged last week to keep interest rates low for an “extended period of time,” capping yields on bonds with maturities of three years or less. Longer-dated borrowing costs tracked Treasury yields higher after the U.S. Federal Reserve signaled it may scale back its bond-buying program. Borrowing costs for companies in the euro region rose to the most in eight months in June.

ECB President Mario Draghi

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Keiser Report: Real Estate Auschwitz

Gold-Oil Ratio Declines to Lowest Since 2008: Chart of the Day [Bloomberg]

Crude oil is trading at the highest price relative to gold in more than four years as a rebounding U.S. economy is increasing fuel demand while cutting the appeal of haven assets.

The CHART OF THE DAY shows one ounce of gold bought about 11.75 barrels of oil on July 5, the fewest since November 2008. The ratio reached 28.26 in February 2009, the highest since 1988, as the U.S. struggled to recover from the worst recession since the Great Depression. The measure has averaged 12.47 since 2000, and was near 11.92 today.

Through yesterday, crude futures traded in New York jumped 13 percent this year as American employers added more jobs and manufacturing gained. The U.S accounted for 21 percent of global demand last year, according to the International Energy Agency. Prices also climbed on concern that protests in Egypt will disrupt supplies from the Middle East. Gold tumbled 26 percent in that time as the Federal Reserve signaled it will scale back its stimulus program as the economy improves.



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Exposing the Student Loan Racket (Infographic)

Exposing the Student Loan Racket in America

The situation on the ground in Athens [sovereignman]

My friend Illias took a drag of his cigarette as he contemplated my question.

“Our government tells us that this will be a better year. No one really believes them. But all we can do is be optimistic. Too many people are committing suicide.”

His statement probably best sums up the situation in Greece right now. It’s as if the hopelessness has gone stale, and the only thing they have to replace it with is desperate, misguided, faux-optimism. And anger.

There are roughly 11 million people in this country. 3.4 million of them are employed, of which roughly one third work for the government.

1.34 million people are ‘officially’ unemployed. To put this in context, it would be as if there were 36 million officially unemployed in the US.

More startling, if you add the number of ‘inactive’ workers (i.e. those who gave up looking), the total number of unemployed is roughly 57% of the entire Greek work force.

And as you probably know, the situation for young people is even worse. Only 1 in 3 people aged 25 and under has a job.

This phenomenon, sustained for several years now, has cut deeply into the psyche of an entire generation that is growing up without productive work experience or the prospect of improving their lives.

The middle class here has been completely gutted. Aside from a few pockets of wealth, the country is either unemployed or working poor, hamstrung by debilitating debt.

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‘Snowden case shows US is bully boy of world’

What if the government froze your bank account? They just passed a law to do it. [Chris D'Costa ]

In this article from the BBC online news today, it was announced that Europe is about to extend the powers it is giving banks to freeze bank accounts in a process called bail-In. This is very serious news, in fact most modern countries have done the same in the last two years not just Europe. I don’t want to scare people but everyone should know what this term means. After that you can make your own minds up as to what you should do with your money as contingency.

Bail-in legislation simply means (if you didn’t already know it) that preparations are being made to do exactly what they did in Cyprus – freeze everyone’s banks accounts without warning. The real question is why? Why introduce this legislation if there is nothing wrong? Of course that sounds like a crazy conspiracy theory, but actually the evidence of a problem is in plain sight: governments publish the statistics of how much they borrow, and how much they make. Go find it, there’s an explanation on how to read it below.

I recently had the pleasure to meet Tuur Demeester here in Brussels and we were able to discuss some of the issues he raised in the Bitcoin conference 2013. Up until then I had no idea what bail-in was or what it meant, and his presentation was a good starter to explain what it is and why it might be necessary. I’ll try to summarise here:

    • Countries raise tax to pay for running the country.

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World’s largest Bitcoin exchange suspends US withdrawals

For the next two weeks Bitcoin users in the US will be unable to withdraw the virtual currency in dollars. Major exchange Mt. Gox cited an unusually high demand as the reason for the suspension, while customers worried the company has run out of cash.

Mt. Gox, based in Tokyo, Japan, handles approximately 80 per cent of Bitcoin transactions in the US and 70 per cent internationally. The popularity of the service, which allows customers to buy and sell items with relative anonymity, has led, indirectly, to the current transaction freeze.

Over the past week Mt. Gox has experienced rising volumes of deposits and withdrawals from established and upcoming markets interested in Bitcoin,” a company statement explained. “This increased volume has made it difficult for our bank to process the transactions smoothly and within a timely manner, which has created unnecessary delays for our global customers. This is especially so for those in the United States who are requesting wire transfer withdrawals from their accounts.”

Users are still able to deposit into Mt. Gox and continue trading on other Bitcoin services, but the update has fueled speculation that the largest Bitcoin provider has grown too quickly and simply run out of cash, an allegation the company has not addressed publicly.

We are currently making improvement to process withdrawals of the United States Dollar denominations, and as a result are temporarily suspending cash withdrawals of USD for the next two weeks,” the statement continued. “Please be reassured that USD deposits and transfers to Mt. Gox will remain unaffected, as will deposits and withdrawals in other currencies, and we will be resuming USD withdrawals once the process is completed.”

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Mediobanca Shares Fall as Stake-Selling Unveiled

Investors shaved more than 4.7% off Mediobanca’s shares this morningfollowing news that the bank will shed large stakes in some of Italy’s pre-eminent companies, including Telecom Italia TIT.MI +2.55% andAssicurazioni Generali G.MI -2.06%. The move could open the doors to foreign investors, who have long worried about a lack of transparency in the Italian corporate world.

For decades, many Italian banks have held large stakes in the biggest companies, giving them enormous influence over corporate strategy. Now the downturn is forcing a rethink.

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China Money-Market Turmoil Poses Test for New Leaders: Economy [Bloomberg]

China’s cash squeeze over the past two weeks is testing the management skills of new Communist Party leaders saddled with risks from a record credit expansion under their predecessors.

The one-day repurchase rate touched an unprecedented high of 13.91 percent yesterday, prompting speculation the central bank was forced to pump liquidity, before diving today by the most since 2007. Premier Li Keqiang signaled determination to stamp out speculation funded by cheap money with a June 19 State Council statement saying banks must make better use of existing credit and step up efforts to contain financial risks.


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Bernanke bond announcement ‘inappropriately timed:’ Fed’s Bullard

(Reuters) – St. Louis Federal Reserve Bank President James Bullard on Friday issued a sharp rebuke of his colleagues’ decision this week to announce a plan to reduce the central bank’s bond buying, calling the move premature and worrying the Fed is risking its credibility as a force for price stability.

Neither the central bank’s own economic growth forecasts nor its expectations for continued weak inflation supported a decision to dial back soon on the $85 billion a month it has been pumping into the financial system, the St. Louis Fed said in explaining Bullard’s thinking.

“President Bullard … felt that the committee’s decision to authorize the chairman to lay out a more elaborate plan for reducing the pace of asset purchases was inappropriately timed,” the regional Fed bank said in a statement.

Global financial markets have sunk sharply since Wednesday when Federal Reserve Chairman Ben Bernanke laid out the central bank’s strategy for cutting the pace of asset purchases later this year, provided the economy continues to improve as the Fed expects.

Bullard’s vote against the majority, his first-ever dissent, was one of two cast by members of the U.S. central bank’s policy-setting Federal Open Market Committee. The other dissent, by Kansas City Fed President Esther George who has cast a no vote at each meeting this year, was in the opposite direction, as she worried that bond buying could stoke financial instability.

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Obama destroyed & called a war criminal in Irish Parliament


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