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

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…

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

‘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

Lessons From The 1930s: The Stock Market And The Economy Are Not The Same [Zerohedge]

How often have we been told that the economy is recovering?

By my count we are now in our fourth “Recovery Summer.” The recession was officially (and mistakenly) declared over in June 09. Yet, no data series in economics not influenced drastically by liquidity and a zero interest rate policy (e.g., stock prices and home prices) supports the claim.

One has to wonder just how many summers it takes to add up to a recovery. Other than the Great Depression, no recovery has taken this long and this recovery has not taken yet.

Recovery advocates point to the stock market as a barometer of how well the economy is doing. Stock market performance has been impressive. The Dow ended the first quarter of 2009  at  7,600 (after an intra-quarter low of 6,500). At the end of May 2013, the Dow closed at 15,100. The difference between these two closes represents an increase of 99%. This result provides the ammunition for the economic cheerleaders.

Stock Market And The Economy Are Not The Same

The stock market is not the economy. Over the long term, its performance and that of the economy tend to correlate well. However, we are in a period where markets are less influenced by economics than by government interventions. The liquidity pumped into the economy and financial asset markets is highly unusual and cannot be maintained much longer. My take is that the stock market reflects Federal Reserve pumping more than an economic recovery.


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CELENTE: The Obituary For Democracy


Super Expensive Metals – Periodic Table of Videos

Fed’s Advisory Council Admits We’re Screwed

Taxation is legalized form of robbery

From Reinhart-Rogoff Witch Hunts To Krugman’s Contradictions [ZH]

Submitted by F.F.Wiley via Cyniconomics blog,

You may have seen the new skirmishes this weekend in the very public debate about Carmen Reinhart’s and Kenneth Rogoff’s government debt research. Reinhart and Rogoff (I’ll call them RR) posted a letter to Paul Krugman on Reinhart’s website, in response to a piece that Krugman wrote for The New York Review of Books.


Krugman, of course, is one of the pundits who last month published “incomplete, exaggerated, erroneous and misleading” reports about RR’s research, as I explained at the time. Unlike some of the others involved, he kept the smear campaign alive and all but guaranteed RR’s latest response. I’ll recap the weekend’s exchange in a moment, but not before offering my take on Krugman’s MO.

Observations on Krugman’s campaign for more deficit spending

I’ll start with an excerpt from my April 27 article, “More Reasons to Call Off the Reinhart-Rogoff Witch Hunt”:

[The] question of how much debt is too much is an extremely important question. And RR’s many critics make no attempt whatsoever to answer it (if I’m wrong about this, please send me the research), even as they bash two researchers who’ve been leading the way to possible answers since well before their 2010 paper.


It seems to me that you can say two things about the many pundits on this issue:

  1. Commentators in the U.S. who’ve both looked under the surface of our fiscal challenges (see the problems with official numbers in articles such as this and this) and seriously considered the question “How much is too much?” have come away alarmed.
  2. Of the commentators on the other side – those now crowing over the misinformation that’s spread all the way from Rortybomb to the Colbert Report – I don’t know of any who’ve attempted to do the same due diligence and answer the all-important question.

Well, I still haven’t found an RR critic who’s made a genuine effort to estimate how much debt is too much.


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