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Showing posts from March, 2013

Analysis: Insider case against SAC manager may be tough to prove - Yahoo! Finance

Analysis: Insider case against SAC manager may be tough to prove - Yahoo! Finance

Or maybe it will be easy to prove the insider trading case! However, it probably will be likely that some additional corroborating evidence that could verify the testimony of a known liar. Insider trading is a fraud, though smaller than the LIBOR scandal and other frauds associated with bankers wanting to drive down interest rates.

Straight Talk: It could let you dump AT&T or T-Mobile — Tech News and Analysis

Straight Talk: It could let you dump AT&T or T-Mobile — Tech News and Analysis

This older article doesn't include the new $30 Straight Talk plan, which is for 1000 minutes and something like 1000 texts. For old guys like me this is an awesome plan. They still have the unlimited $45 plan. Either way, you are on Verizon and save a bundle of money.

Banks score major win in private Libor suits - Yahoo! Finance

Banks score major win in private Libor suits - Yahoo! Finance

Libor was manipulation of interest rates down in order to make the banks big bucks in counterparty swaps. Governments and businesses were screwed. I hate everything this "judge" stands for. 

Speculation, Liquidity and the Cost of Living

With the bailout of the Eurozone by the central banks, Fed included, liquidity is supplied by the central banks to the big European banks. That is the good part, as long as the assets the Fed gets back, held to maturity, are paying a reasonable return.
The bad part is that this international banker cartel refuses to put a damper on speculation in commodities that will increase with this liquidity unchecked.
It is one thing to bail out the banks with the reserve currency, the dollar, for the purpose of getting banks to trust one another again, and make the money markets sound. It is quite another to allow rampant speculation in commodities that must be stopped if main street, especially in the United States, is to have a financial chance at recovery. With proper regulation of the big banks, bailouts would become more infrequent and much less necessary.
Already, before the November 30 Euro bailout, Thanksgiving dinner in 2011 was the most expensive in 20 years. And with the …

Recipe for Disaster: The Formula That Killed Wall Street

Recipe for Disaster: The Formula That Killed Wall Street

This is one of the most important articles ever written that captures the danger of the formula that hid the real risk of mortgages all going bad at the same time through a bogus formula called the Gaussian Copula.

One Supply Side Economist Who Will Restore Your Faith In Humanity - Business Insider

One Supply Side Economist Who Will Restore Your Faith In Humanity - Business Insider

This article makes me sick. My posts should tell it all:


Crony capitalism is the only game, JJG. With the new use for treasury bonds, as collateral for massive interest rate swap trades, and a keeping of this easy money away from Main Street, the criminals can steal for centuries. And:



And Joe, this restores no one's faith in humanity, which is a bankrupt concept. Just because you and I agree that interest rates will stay low for longer than people can protest doesn't mean I think banks are good or humanity like Kudlow is good. These are bad people, Joe. Now go take a shower. You will feel cleaner.

The Price Of Gold Is Pointless - Business Insider

The Price Of Gold Is Pointless - Business Insider 

The gold bugs hate me regarding comments that I made on this article. But what is true is that gold has nothing to do with the real economy, nor does it have anything to do with the financial world. It has a place as good collateral, but it is not pristine. And low interest rates are here to stay.

I said in the comments:


We face a greater liklihood of deflation than we do of massive inflation. It is all about collateral: http://seekingalpha.com/article/1300741-we-face-derivative-collateral-deflation-and-ecb-banks-could-be-the-losers

The game has to stay as it is, because the Fed no longer can do a Volcker and raise interest rates. and:

 Sorry to disappoint the gold bugs. However, gold is being looked at as pristine collateral [though it is not yet pristine collateral]. Gold has been released from tier 3 to tier 1 for the banks. So it has a place. But inflation is not the game and as my article above shows, …

We Face Derivative Collateral Deflation And ECB Banks Could Be The Losers - Seeking Alpha

We Face Derivative Collateral Deflation And ECB Banks Could Be The Losers - Seeking Alpha

This is my newest article on Seeking Alpha. I highly recommend it because it shows just how the game is being played in big finance. You don't want to miss this.

Both Kind of Bank Bailouts Suck

The Fed loaned money with no haircuts required to accounts in the Cayman Islands. I was furious as were many, who believed that the Fed was selling out the USA and the taxpayer. I wanted a piece of the bank bondholders and knew uninsured depositors should be at risk.Well, I got what I wanted, not from the Fed, but from the ECB. This Cyprus resolution was a classic bank resolution. But now that I think about it, I am not so happy about this method of resolution either.After all, the ECB put more risk into the banking system than did the Fed. People now will likely hide some money under the mattress, simply because the Eurozone banks are potentially risky places to keep a hoard of cash. And what about contagion to US banks?So, why didn't the Fed help the ECB out more?

Dijsselbloem: Cyprus Deal Is A Template - Business Insider

Dijsselbloem: Cyprus Deal Is A Template - Business Insider 

We see markets tanking and there may be bank runs as well. The weaker Euro banks could be subject to the Cypriot Template. That means, you take the cash of the uninsured depositors. That can't be lost on the elderly and the companies who have excess money in these banks of Italy, Spain, Etc.

Bank Forecloses On Elderly Woman Over $49 in Unpaid Taxes Reverse Mortgage!

Activist Post: Bank Forecloses On Elderly Woman Over $49 in Unpaid Taxes

This story is a good reason to avoid a reverse mortgage if at all possible. And I would avoid any company doing what this company is alleged to have done.

What Is A Russian Oligarch? - Business Insider

What Is A Russian Oligarch? - Business Insider

This article shows how, even in Russia, the banksters always win. They got the spoils of the shift from communism to capitalism. Linette, the author of the article stated that the lesson learned was that you need to be in the right place at the right time.

I posted that that was not the lesson:

 No Linette, the lesson is the bankers always win. We see that in Cyprus, in the rates your dad receives in his passbook account, etc. It is theft, plain and simple.

Derivatives, even more than the national debt, have made it impossible for central banks to raise interest rates or else the member banks will be destroyed. So, instead of giving a fair return they steal what they have to to survive. From you and I Linette. 
and


Linette, if there was a free market, and no one knew which way interest rates were going, then there could be a market for interest rate derivatives. But the banks know they must stay low, and…

Municipal Bond Insurance | Financial Guaranty | Muni Bond-Are These Guys Thugs?

Municipal Bond Insurance | Financial Guaranty | Muni Bond

This is the scumbag company that is attacking Calpers in the Stockton bankrupcy case. This company says Calpers should share the pain, but must know Calpers stands first in line in a municipal bankruptcy. That is California law. This company is located in a low tax haven, Bermuda and guarantees loaned money that comes from Wall Street.

So this is how it works: big corporations don't pay taxes, then they invest offshore with folks in Bermuda. Then the folks in Bermuda use the money that should have gone to taxes to guarantee the bonds of cities who must borrow instead of collecting the taxes in the first place! What a rip off! Oh, I am perfectly assured that this is all legal.

Assured Guaranty then goes around stating how Calpers is bad and how Calpers should not reap the rewards. But that is the law. Assured Guaranty either didn't know the law or wants to lean on Calpers and US politicans to change the law so that the W…

Cyprus Should Take the Bank Holdings and Create a State Bank

If the leaders of Cyprus are serious about keeping their economy afloat, they should sovereignly take the deposits in the existing troubled bank. They then could set up a state bank, with accounts guaranteed with no confiscation whatsoever.

That would put the EU in its place. It would stop Merkel's mad desire to just steal money from the accounts.

Turkey warns Cyprus of 'new crisis' if gas revenues included in solidarity fund

ekathimerini.com | Turkey warns Cyprus of 'new crisis' if gas revenues included in solidarity fund

Turkey says the Greek Cypriots cannot just make a deal to use natural gas deposits as collateral for any loan scheme that would capitalize the banks. So, while the ECB wants some guarantee of capitalization for the banks to reopen, the Turks are making sure that it is not done in a way that destroys the value of the natural resources of the nation.

Perhaps the Turks are trying to save the Cypriots from themselves?

CVS threatens to fine employees who refuse to take health assessment - Boycott CVS!

CVS threatens to fine employees who refuse to take health assessment - Silicon Valley Business Journal

CVS is acting like Merkel in Germany, forcing employees to share private information just like Merkel forces a confiscation of private banking accounts in Cyprus. Perhaps a boycott of CVS would be in order if the company decides to go fascist on this.

Because Of Cyprus A New Movement To Demand Collateral Before We Deposit Money

With the advent of turmoil in Cyprus, what we need to understand for ourselves is just how the banking system works. The lesson we need to know is about the status of the money we deposit in the banking system. Well, it is clear that these deposits are loans to the banks. The money is not technically ours while it is in the banking system.

Banks are not for keeping our money safe as a primary task. Banks are for borrowing and lending to make profit.

Well, we know that the ECB has demanded a confiscation of some money from the accounts in Cyprian banks. We know that the deal is being worked out and that the trump card is owned by the ECB. It has the power just to shut the banks down. It isn't your money in there anyway. It doesn't belong to you, the people of Cyprus or the wealthy Russians.

So, in the face of this confiscation, it is my view that people should not deposit money into banks without some collateral in return. After all, banks require collateral when they lend. Wh…

The Cyprus Bank Tax | Bankers Anonymous

The Cyprus Bank Tax | Bankers Anonymous


Bond holders of the banks always get treated better than the depositors, which is not the way it should be. Depositors should start demanding some collateral from the banks for the privilege of receiving a loan from the depositors. After  all, it isn't your money once the bank gets its hands on it!

Gold Not ‘Antifragile’ Enough for ‘Black Swan’ Author | Michael Santoli - Yahoo! Finance

Gold Not ‘Antifragile’ Enough for ‘Black Swan’ Author | Michael Santoli - Yahoo! Finance

Taleb makes the case that the safest stores of value are not gold, which has doubled in value in a few years. No, he looks at silver, cash (ie. treasury bonds), non speculative ag land, etc.

Truth is, I agree with him. While gold has been moved to tier one from tier 3 on the balance sheet of banks, the most pristine collateral for the purposes of backing interest rate swaps, etc, is the treasury bond of highly rated nations, like the US, Japan and Germany.

There is, as I have said here, a shortage of good collateral. Treasuries fulfill that purpose as long as there is not too much rehypothecation. The most certain way that treasury bonds will keep low yield, and steal from savers in order to secure pristine collateral, is the printing of more of those bonds.

I know that sounds crazy, but it is true. 

What is good for our economic system is not necessarily good for main street. However, we aren…

A Safe And A Shotgun, Or Public Sector Banks? The Battle Of Cyprus - Seeking Alpha

A Safe And A Shotgun, Or Public Sector Banks? The Battle Of Cyprus - Seeking Alpha

If governments no longer want to bail out bankers, then plan B is to tax your bank deposits.

Boycott the banks!

Is it Time for Floating-Rate Bank Loans? - Yahoo! Finance

Is it Time for Floating-Rate Bank Loans? - Yahoo! Finance

This article is pure bull. Fear of interest rates rising when they don't rise is irrational. Investors who want to invest in these variable bank loans in an effort to protect against rising interest rates are playing a fools game, IMO.

Not only are the businesses who receive these loans possibly highly leveraged and potentially weak to the point of default, but the banks know interest rates aren't going to rise and sucker investors into these funds. Beware is a prudent warning.

I an not an investment counselor nor am I an attorney. Seek advice of those before making investment decisions.

Restoring Confidence in an Age of Fractional Reserve Banking

The Fed has admitted that there is a leverage bubble, and this comes with interest rates being too low and from fractional reserve lending in a risky environment. There is risk in the banking sector when collateral is subpar. There is risk when banks are way bigger than the GDP of a nation, as in Cyprus.

But it is tough to maintain confidence when the ECB seeks to tear down confidence by raiding bank accounts. This is unacceptable bank behavior and is purely confiscatory. This could happen elsewhere in the poorer Eurozone countries and makes keeping money in a bank dangerous. Since the ECB has spoken of taking insured deposits as well, no deposits are safe.

It is destroying confidence in the banking system to seek to have government or bank depositors pay for the insolvency of banks. It is high time the bondholders of the banks pay as well. But that never seems to happen.

In a low interest rate environment, capital gets misallocated. Yet we will have low interest rates for a long, lon…

Cyprus Bailout Risks Europe Bank Runs - Business Insider

Cyprus Bailout Risks Europe Bank Runs - Business Insider

Instead of going after the owners of the banks in Cyprus, the bondholders, they go after the governments in austerity. And now they go after the depositors by stealing part of their savings.

Emailed a Guy at Seeking Alpha About Canada and Collateral

I posted this email to a guy who frequents Seeking Alpha. He lives in Canada and is concerned about the housing bubble there and the tight money on main street here in the USA. He has posted at Business Insider as well.

Hey Doug, I have about 21 articles here. Read about collateral here where I say that treasuries, unlike what gold bugs say, are in massive demand for collateral for ccp (clearinghouse) trades.

The PMI [article] may prove to be like y2k or it could be a big deal. I learned about it from a real estate broker in Las Vegas.

I guess in Canada you have the 5 year roll over mortgage which is really easy money.

It is a momentum ponzi created by the banksters and their friends no doubt.
My article here shows that the Fed, missing the tool to raise interest rates like Volcker had, has to keep everything slow growth:How the Fed Is in a Box in Terms of Creating Sound Collateral. Read the two newer ones as well which show more of what they are up to.

I think low interest rates a…

FHA; Is May 6, 2013 the Day of Reckoning for the New Housing Bubble?

FHA; Is May 6, 2013 the Day of Reckoning for the New Housing Bubble?

I posted this at Patrick.net. This sums up in a nutshell my view about neoclassical versus Keynesian economics. A plague on both their houses would be in order!


It isn't about Keynes versus Neoclassical economists. Krugman has been both. As a neoclassical economist he said that we should have a housing bubble in 2002. His neoclassical model says lending does not cause risk to society. Boy was he wrong! Neoclassical's wanted supply side funding that lead to the housing speculation. Now Krugman is a Keynesian. Keynes only works where you have bank regulation like Glass-Steagall, limiting speculation in futures markets. We don't have that now. So the money would go to drive up prices of goods we buy. That won't help main street. So, a plague on both economics houses. They are both wrong under the wrong circumstances.

Live Blogging JP Morgan Senate Hearing – a Rogue Institution on the Hot Seat

Live Blogging JP Morgan Senate Hearing – a Rogue Institution on the Hot Seat � naked capitalism


Rogue institution? Well, in one sense that is JP Morgan. It is just that congress will rant and rave and do little to stop the TBTF banks and their desire to sock it to everyone else including future homeowners.

If more regulation by governments that are supposed to be sovereign slows down these supersovereign banksters, it would be a good thing. But is our government powerful enough? That is the question.

Greenspan: No 'Irrational Exuberance' in Stocks Now - Yahoo! Finance

Greenspan: No 'Irrational Exuberance' in Stocks Now - Yahoo! Finance

Here is the problem I have with Greenspan. He knows the stock market has been pushed up with thin trades of a few people. He knows there is speculation in the markets.

And he wants more bank capital. He didn't seem to care at Basel 2, so why would he care now? Is he trying to rewrite his biography which includes the fact he said you could get a "better deal" by getting an adjustable mortgage? He couldn't be trusted then and he shouldn't be trusted now.

CCP | derivatiViews; No Margin for Error

CCP | derivatiViews

This blog takes the position that rehypothecation of collateral offered to clearing houses is a good thing, because there will be large collateral requirements otherwise. However, it is worth noting, IMO, that rehypothecation, or the pledging of the same collateral over and over again is probably risky. 

I carry this blog on my blogroll because I am interested in the positions it takes regarding collateral.

EuroCCP and EMCF merge | Securities Finance Monitor

EuroCCP and EMCF merge | Securities Finance Monitor

CCP's are the clearing houses for derivatives that were before just two party contracts. The clearing houses are middlemen who take collateral in exchange for clearing the trades between parties. This new business requires a lot of collateral, a lot of good collateral preferably. That makes pristine high quality treasury bonds in demand so uncle Ben Bernanke can continue to sell treasury bonds, his main and most important job.

The clearing houses could help, unless bad collateral floods the system, or unless the clearing houses take too much risk.

Why Bitcoin lives in a “legal gray area” | Ars Technica

Why Bitcoin lives in a “legal gray area” | Ars Technica

I am not familiar with Bitcoin and do not use it. However, Chuck Schumer is a well known bankster b**ch. He knows that if people lose confidence in the dollar and go to another currency, the little game is over. He knows. He bends over to Bendoverben Bernanke daily.

Sorry to be crude, and normally I don't like that, but Schumer needs to come clean. He is a NY politician who depends on banksters for his livelihood. He knows that among the biggest drug money launderers in the world are the world's big banks. 

Interest Rates Will Stay Low In The Midst Of Bad Bank Behavior And Paul Ryan's Mistake

Will Rogers was the most popular man in America in the Great Depression. He said:
"Borrowing money on what's called 'easy terms,' is a one-way ticket to the Poor House. If you think it ain't a Sucker Game, why is your Banker the richest man in your Town? Why is your Bank the biggest and finest building in your Town? Instead of passing Bills to make borrowing easy, if Congress had passed a Bill that no Person could borrow a cent of Money from any other person, they would have gone down in History as committing the greatest bit of Legislation in the World." WA #14, March 18, 1923 and:
"I have been trying my best to help (the President) and Wall Street "Restore Confidence." Confidence, is one of the hardest things in the World to get restored once it gets out of bounds..." WA #362 Dec. 1, 1929 *****
A lying financial system is certain to scare away investors and could create a credit crisis. Bank contagion is about banks lying to one another…

Scott E.D. Skyrm � April Collateral Shortage – Preview

Scott E.D. Skyrm � April Collateral Shortage – Preview: There was a severe shortage of quality AAA collateral in 1997 to 2000 when the government ran surpluses. A balanced budget for a long time would force the repo market to use collateral that was likely compromised and not pristine AAA collateral. With the need for collateral for interest rate swaps, balancing the budget of the US government is not really a good idea.

Is Money Velocity Picking Up? - Seeking Alpha

Is Money Velocity Picking Up? - Seeking Alpha

For anyone who worries about inflation, don't. Money velocity is not picking up. How can it when the Fed refuses to help main street?

Thanks To Japan We Know How Central Banks Can Control Inflation - Seeking Alpha

Thanks To Japan We Know How Central Banks Can Control Inflation - Seeking Alpha

Here is my newest article on Seeking Alpha. I believe we are nearly Japan. The Fed will use the same remedies to keep interest rates low as Japan does. Huge demand for interest rate swap collateral will keep bonds in demand and the Fed has other means to keep inflation in check. Mark my words.

Banks saved, but Europe risks "losing a generation" - Yahoo! Finance

Banks saved, but Europe risks "losing a generation" - Yahoo! Finance

Here is the problem, the banks, in order to be saved, sacrificed many young people. And growth must be slow for the banks to be maintained, because the Central Banks no longer have a means of fighting inflation by raising interest rates. They have to keep interest rates low to protect their loans and their interest rate swaps. So we, MainStreet, are screwed.

We're Betting Big on Real Estate: Blackstone CEO - Yahoo! Finance

We're Betting Big on Real Estate: Blackstone CEO - Yahoo! Finance

So, why would Blackstone announce this? Does Schwarzman want to dump RE now? This should be monitored. He has ruined real estate for the masses by pushing up prices.

Kuroda Says Bank of Japan Will Consider Buying Derivatives

Kuroda Says Bank of Japan Will Consider Buying Derivatives - Bloomberg

Massive deflation abyss is causing the BOJ to think about buying derivatives. This can be risky, but surely the banks that buy interest rate derivatives have a vested interest in keeping interest rates low. So, if that is the case, how will the BOJ stop inflation if it happens? After all, raising interest rates while holding a boatload of adjustable swaps doesn't seem smart.

Subprime mortgage crisis - Wikipedia, the free encyclopedia

Subprime mortgage crisis - Wikipedia, the free encyclopedia:

From the site, an argument I have made since 2009. [Too bad so sad Faux News pundits. You got it wrong. Some admitted it, and from memory I believe it was Stossel and Cavuto. Yet they dwelled on the CRA for political reasons.]: 


The Financial Crisis Inquiry Commission reported in January 2011 that "the CRA was not a significant factor in subprime lending or the crisis. Many subprime lenders were not subject to the CRA. Research indicates only 6% of high-cost loans – a proxy for subprime loans – had any connection to the law. Loans made by CRA-regulated lenders in the neighborhoods in which they were required to lend were half as likely to default as similar loans made in the same neighborhoods by independent mortgage originators not subject to the law."[64] Critics claim that the use of the high-interest-rate proxy distorts results because government programs generally promote low-interest rate loans – even when th…

Has NPR Joined Peter Peterson's Crusade Against Social Security and Medicare?

Has NPR Joined Peter Peterson's Crusade Against Social Security and Medicare? | Beat the Press

Pete Peterson is an evil man. There I said it. He refuses to see the problem of income inequality, which he has a part in, and would rather focus on generational inequality. But main street is composed of all generations and the real battle is between Wall Street and the rest of us, not a dividing of main street, which Wall Street pays for!

From Dean Baker's blog:

Peter Peterson, the Wall Street investment banker, has been most visible in this effort, committing over $1 billion of his fortune for this purpose. Recently he enlisted a group of CEOs in his organization, Fix the Debt, which quite explicitly hopes to divert concerns over income inequality into concerns over generational inequality. It argues that programs like Social Security and Medicare, whose direct beneficiaries are disproportionately elderly, are taking resources from the young. If the young fall for this balo…

Will there be a steady supply of homes for sale from aging baby boomers in this decade?

Will there be a steady supply of homes for sale from aging baby boomers in this decade? Who will they sell to and at what price? � Dr. Housing Bubble Blog

People 55 and older own 49.5 percent of the houses in the USA. That bodes ill for the housing market going forward. Sure, there will be a spike, and there is a bubble, but sustaining people in homes when prices are going up and wages are declining are a banker's dream. But that is all it is, a dream.

Wall Street’s latest idea - FT.com

Wall Street’s latest idea - FT.com

Collateral transformation is different than turning MBS into pristine collateral. Collateral transformation is the newest bankster rage. They take bad collateral and penalize you for the lack of quality in the collateral. That is not what Ben Bernanke wants to do with MBS. He wants those guaranteed by the government.

Indeed, even this crap collateral could end up being guaranteed by the government if the banks teetered on the brink again. That would be a disaster.

Johnson & Johnson Could Tap The Huge Diabetes Market With New Drug Approval - Seeking Alpha

Johnson & Johnson Could Tap The Huge Diabetes Market With New Drug Approval - Seeking Alpha

Type two diabetes is a problem. I have it. But I highly suggest you exercise your way out and only try a drug as a last resort. Why? Because these drugs can be particularly dangerous. Diabetes sucks, but the drugs can be worse than the disease. Hopefully we won't hear about a bunch of problems emanating from this new diabetes drug.

The U.S. economy is ready to take off, says... - Seeking Alpha

The U.S. economy is ready to take off, says... - Seeking Alpha

While I hope this is correct, one wonders how the economy can "take off" while wages remain depressed and are hurt by global competition? Tell us Larry Fink, how this is can be when our banks refuse to lend. Or they lend in ways that assure ponzi, easy money loans. That is coming for sure.

I don't like it, going from bubble to bubble Larry Fink. I don't think that is a way to run a country.

Ben Bernanke's Diabolical Plan To Turn Mortgage-Backed Securities Into Pristine Collateral - Seeking Alpha

Ben Bernanke's Diabolical Plan To Turn Mortgage-Backed Securities Into Pristine Collateral - Seeking Alpha

Here is my newest article from Seeking Alpha. I believe I have succeeded in predicting how Ben Bernanke will allow interest rates to rise and how he will create more pristine collateral. From the article:

I wrote an article on Business Insider a long time ago showing how the TBTF banks wanted all mortgages guaranteed going forward. Ben Bernanke has a plan to force this reality upon the American government.
In the Knights of the Round Table, the magicians could turn lead into gold. That is exactly what Ben Bernanke wants to do, and it could cause massive uncertainty going forward, or bring in a period of financial bliss.

Shame on You Rick Santelli: A Little Bubble History

Here is a little history of Santelli and the banks worth reading as we ready for the next housing bubble:

The problem with Rick Santelli is that he had no clue about what happened in the housing crisis. He had no clue because he didn't understand that people were told lies as they took on toxic mortgages. First, they were often told that the mortgage rates were fixed. But more importantly, they were told that the mortgages will be able to be refinanced later. They were not told that house prices could decline, and the real estate agents were in on this as I listened to David Lereah (NAR) continually state that Real Estate willl bounce back because it rarely goes down.
Now I resisted these loans, and so did my daughter, because we were afraid to pay more for a house than it was worth. In other words, many of us understood that what must go up must come down. And we know what we are worth and what we could buy and it was unnatural for us to think we could qualify for ma…

Coppola Comment:The Strange World of Negative Interest Rates (must read)

Coppola Comment: The strange world of negative interest rates

Here is the most significant statement in this must read article as scarcity of collateral and Fed MBS purchases are already with us:

  As safe collateral became scarce, central banks would inevitably extend the range of acceptable collateral to other bank assets, such as mortgages.....eventually all forms of lending would be pledged to the central bank in return for funding. Banks would no longer carry the risk of that lending: in the event of default, the loss would rebound to the central bank to whom the asset was pledged, and the state - not the bank - would take the loss. The ECB is already a long way down this path even without negative rates.
This is the Fed's plan, to force the state (the nation) to be responsible for all lending losses as the central bank takes on all the risk. I suggest the state better stop this or the state will be engulfed by losses. This applies no less to the United Stat…

How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral - Seeking Alpha

How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral - Seeking Alpha

This is my newest article on Seeking Alpha. It is exclusive to Seeking Alpha and it explains the process by which the Fed creates good collateral in exchange for bad collateral. Good collateral is scarce, and bad collateral does very bad things to bank lending, interbank lending, and ultimately the economy. 

But the banks are still loaded with toxic collateral, and their weakness and fear of risk is causing main street to wither. Their profits come from speculation, which further hurts main street.

The Fed has failed, and now we are facing a Great Depression if something does not change. The worst case is a slow growth world, with not enough money on main street. That is a best case scenario.

Collateral management - Wikipedia, the free encyclopedia

Collateral management - Wikipedia, the free encyclopedia

82 percent of collateral is cash and government securities. There is a shortage of good collateral. This collateral is used to back traders, runs on banks, speculation, interbank lending, etc.

This collateral is the currency of the financial system. Unfortunately, profits based off this collateral are in speculation that hurts main street. That is the problem. There is no real investment by the TBTF banks into the real economy!

So, on the one hand, with trillions in derivatives, collateral shortages become problematic, and on the other hand, having good collateral hurts main street badly as commodity prices soar.

Once banks run out of good collateral, they use less good collateral, like mortgage backed securities, stocks, gold, and corporate bonds. Then if those lose value, the banking system freezes up and interbank lending is curtailed. Speculative commodities futures drop in value. 

Main street gets a reprieve from high prices…

JP Morgan: The $592trillion Ponzi scheme is a time bomb ticking under your house

JP Morgan: The $592trillion Ponzi scheme is a time bomb ticking under your house | Mail Online

Increasing the money supply by loans for speculation at the expense of main street just sucks. Yet the banks are doing that very thing today. Add to this the revelation that CDS swaps insured everyone (including the insurers) in order to play this game and you see why the only party not insured, your government, had to pay up.

We are held hostage to a ponzi scheme that forces bubbles to happen, that forces main street and your government to pay continually. The bankers need more good capital and more bad capital if they can't find good capital. What better way to do this than to bid up house prices, cause a crash, and force the government to have a deficit, and issue more bonds. 

To make it palatable to the American people, the bankers want the safety net pared back. That way there is a bigger backstop for them, and more bonds will be issued without the rich having to pay their fair shar…

Peter Schiff And The Coming Housing Collapse: The Fed, Instead Of Lehman, Owns The Mortgage Market - Forbes

Peter Schiff And The Coming Housing Collapse: The Fed, Instead Of Lehman, Owns The Mortgage Market - Forbes

I responded to this article in this way because I don't have a crystal ball:

Here is the problem. There is a lack of quality AAA paper. There is a need for it in order to keep banks making profits lending to traders, etc. There is a real economy that is deflating and a bankster economy that is inflating.

So, I can see Bernanke's point of view.

It would be nice to get rid of the derivatives market and we would not need Bernanke to do what he is doing. But we can't. We are stuck with it.

So, then Schiff could ultimately be right. The next housing bubble (which is starting with cash hedge funds) to create more collateral could be short lived. Then the crash would be on, big time.

But if that is the case, cash would be king not gold. You can't eat gold.

Sometimes I don't know what to think about Schiff.

Important Update:

I have written an article on…

The Fed's Big Secret - Quantitative Easing Isn't Free - Seeking Alpha

The Fed's Big Secret - Quantitative Easing Isn't Free - Seeking Alpha

I disagree with this article on Seeking Alpha. I believe that the Fed, as I commented, will keep the economy  growing at a rate slower than snail's poop. The Fed will lose a butt load of money, oh, I mean the taxpayers will lose a butt load of money bailing out the Fed, if the interest rates are allowed to rise and even less quality collateral exists to pump bank profits.

A housing bubble will be the only way the Fed can get rid of all these mortgage backed securities, and interest rates will be allowed to rise. But everyone is ready for a housing bubble and the millenials are forewarned.

So it would seem that the Fed is in a box, and can't get out. We will see how events work out. For now, cash is king.

Are the Damn Bankers Running Out of Collateral? Article List

I recommend you bookmark this page in order to preserve these articles in one place. Then follow what these articles are following, the collateral, in order to see the fate of the banks and the economies of the world. The drying up of sound collateral, with only risky collateral taking its place is a recipe for a financial crisis.

One wonders how long we will have this crisis of collateral. We know that the crisis of collateral is always the catalyst for banks no longer lending to each other, for a credit crisis to occur. This is the way it happens folks.

Will we get past the current crisis of collateral, or will the banks freeze up again, putting the world economy in jeopardy? We face deflationary, not inflationary, risks in this collateral squeeze environment.

One wonders how long this relentless chipping away of sound collateral will continue and what it will ultimately do to interbank lending. Failure of Interbank lending is the ultimate source of financial contagion and the onset…

Stalled Las Vegas Strip project to get new owner - Yahoo! News

Genting buys Echelon for $2 billion Resorts World Las Vegas - Business - ReviewJournal.com

Good news for Las Vegas, as Genting, a deep pocket casino owner from Singapore is buying the old Stardust property from Boyd Gaming.

The project started there ground to a halt in the Great Recession and this project will go a long way in removing blight from the north end of the strip, besides providing new visitors to Las Vegas and more jobs, sorely needed.

Simple Primer on International Banking Power

Simple Primer on International Banking and Collateral Power

This is one of most important articles. It is always shown at the top of my blog. While others have said similar things, I see this quest for banking power as a huge conspiracy against the nations and the people. The banks have gobbled up all the quality collateral and are hungry for more. They seek risky collateral when that can lead to financial catastrophe. They seek to have that risky collateral guaranteed by the governments, leading to the moral hazard of wanting still more risky collateral.

I hope you take the time to read the article, and realize that with the derivatives gone wild and with the refusal to unwind these derivatives, lies massive danger to the financial system the world over. Derivatives are the disease and the medicine, toxic collateral assets, can kill the patient and won't cure the disease.

Matt Busigin On Peak Capitalism - Business Insider

Matt Busigin On Peak Capitalism - Business Insider

There are lies, Damn lies, and statistics. This article represents the lies, damn lies through statistics.

Here are some things I said about the chart, which shows transfer payments from government to the private sector are fairly stable:

But transfer payments also include bailouts of banks, right? What about banks ability to borrow at zero and buy bonds that yield more? Are those counted as transfer payments? If not, Joe, why not?  and:

Also banks make massive profits on interest backed securities, that governments are forced to pay because of low interest rates. Those are transfer payments and I bet those take a mighty toll on mainstreet. And what about speculation in commodities? Speculation comes from transfer payments to Wall Street, but act as a tax on mainstreet as gasoline is about a buck fifty higher than it would be without the speculation.

I think you need to take a closer look at the transfe…

Hedge Fund Druckenmiller says Old Steal from the Young, Diverting Their theft

Druckenmiller On Entitlement Transfers - Business Insider

This article is pure crap. For one thing, the bankers are stealing from the rest of us. For another, it is the hedge fund/banker way to divert attention off their stealing through speculation in futures contracts leading to higher gasoline and food costs. The banksters want to divide us. It is disappointing that Henry Blodget allows this crapola to be published on Business Insider. It is pure crap. 

I emailed Julia La Roche, the author of this article with the following message:



Julia,
I am sure you have showered after posting that Druckenmiller filth but realize that his buddies stole trillions from the wealth of seniors,
that his buddies are bidding up the costs of gasoline and food, and that this con of dividing us is what the banksters do.
If you consider the banksters as being international you are nothing but a traitor to America Julia.
Gary Anderson Las Vegas, NV

The-Mom-Store: Central Valley Business Times: House Bubble Is Investor Driven

The-Mom-Store: Central Valley Business Times: House Bubble Is Investor Driven


Here is a warning to women and men about why you need to buy a house beneath your means or rent and save the rest. Read about volatility in the housing market and what it can do to your financial future.

Spending Cuts Signal Austere Future for Domestic Programs - Yahoo! Finance

Spending Cuts Signal Austere Future for Domestic Programs - Yahoo! Finance

A little austerity probably won't hurt, but we can't go the way of Spain, Italy, and the UK, where austerity is so massive that it is killng everyone but the wealthy financially. However, if the House of Representatives, controlled by the Republicans, insists on greater austerity, all bets are off and we could have a worldwide recession.