Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress - Bloomberg - Bob Ivry, Bradley Keoun and Phil Kuntz - November 27, 2011 - Banks worldwide earned an estimated $13 billion by taking advantage of below-market rates on emergency U.S. Federal Reserve loans from August 2007 through April 2010. The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets Magazine reports in its January issue.
The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma -- investors and counterparties would shun firms that used the central bank as lender of last resort -- and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011. $7.77 Trillion The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.
Home Prices in 20 U.S. Cities Fall More Than Forecast, Case-Shiller Says - Bloomberg - Alex Kowalski - Nov 29, 2011 - Residential real estate prices dropped more than forecast in the year ended September, showing the industry at the center of the 2008 financial crisis continues to struggle.
The S&P/Case-Shiller index of property values in 20 cities dropped 3.6 percent in September from the same month in 2010 after decreasing 3.8 percent in the year ended August, the group said today in New York. The median forecast of 32 economists in a Bloomberg News survey projected a 3 percent decrease.... “We continue to expect home prices to fall through mid- 2012,” said Anika Khan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We still have an oversupply of existing homes, and distressed transactions continue to drive down home prices.”
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I Got Effed by MF Global.KINGSTON, NY, 28 November 2011 — The MF Global bankruptcy has more far reaching implications than are currently being acknowledged. Not simply an isolated instance of corporate mismanagement resulting in disastrous and irreparable effects on options and commodity futures markets, the MF bankruptcy – the eighth-largest in US history – is a harbinger of much worse to come.
Who’s Going to Eff U?
Don't be taken in by today's stock market bounce that's based on the belief that Europe is coming closer to resolving its debt crisis, and that strong US Black Friday retail sales are a sign recession has been averted.
The European debt crisis is a long term trend with no quick fixes. And the retail surge is no more than a flash mob spending spree hyped by a corporate media. The more they hype it and the more consumers spend, the more advertising space the media sells to retailers
The MF meltdown, however, is symptomatic of a global economic system on the verge of collapse. No financial sector will escape unscathed: banks, brokerages, hedge funds, insurance companies, stocks and stock markets are all at risk.
Do you know where your money is? Will you get it back? Are you prepared?
When the evidence is pieced together, it proves how corrupt, bankrupt and dishonest the financial/political cabal that runs America is, and reveals the complicity of the media in covering up their masters’ misdeeds.
The MF crash provides glaring examples of the failure of the CME Group (the options and commodity exchange of which MF was a member) to do its own due diligence of member firms. It exposes the incestuous relationship between government agencies, such as the Commodity Futures Trading Commission, and the entities they are charged with regulating and monitoring – in this case, the CME and its member firms (such as MF Global).
The government’s response to the crash exposes a terminally corrupt justice system, committed to prosecuting any minor violation of the law by any average citizen, but turning a blind eye on the rich, powerful and well connected. It shows how, as in any authoritarian, fascist or communist system, members of the “party” are granted party privileges … immunity from prosecution among them.
Such is the case for Jon Corzine, the man who headed MF Global and brought it to bankruptcy. The former Democratic Governor and Senator of New Jersey and former co-head of Goldman Sachs, has been given a free pass. Despite authorities’ inability to find more than a billion dollars of customers’ segregated funds, enforcement agencies, DA’s, the FBI et al., have not even called Corzine in for questioning, much less indicted him.
For a media that feasts on titillation, gossip, scandal and sleaze – and has shown its passion for accusing, trying and convicting people before they are accused of a crime or brought to trial – it is instructive to note that when it came to White House-connected Corzine, his privacy was respected and he was left unaccused. There were no camera crews massed outside his house or reporters hounding him, demanding to know, “Where’s the money?”
It is becoming clear that, in the final days before bankruptcy, MF Global raided its customer accounts. The failure to separate customer and house funds is a violation of US law. Moreover, even if MF Global were to claim the comingling of funds was inadvertent, that would not serve as a valid excuse. CFTC enforcement chief David Meister has stated that proof of intent was not a requirement for his agency to take action. “You should know the commission takes the laws on segregated funds very seriously,” Meister said.
But evidently, not too “very seriously.” For the White House-connected and White Shoe Boy lawyer-protected Corzine, no questions asked, no indictments, no Perp walk and, as yet, no trial. So far, the only inconvenience facing Corzine is his scheduled testimony before Congress on December 15th (a full month and a half after the bankruptcy), at which time he will be allowed to plead the Fifth and refuse to testify on grounds that he could incriminate himself.
How I got Effed by MF Global, And Why it is Important to You I’ve been trading and buying gold since 1978. I am not a “speculator.” I buy coins and bullion as well as futures contracts. My involvement with MF Global went like this: I made an agreement with the well-respected firm Lind-Waldock (subsequently bought by MF Global) to purchase gold future contracts, with due date for delivery of the gold in December 2011. Holding the gold “contracts” entailed a substantial “margin” requirement … in essence a deposit (similar to a lay-away plan at a retail store). From the time I bought the contracts, I kept building my account so that when it came time to take delivery in December, I would have a substantial amount of money in my account to complete the purchase.
Within days of announcement of the MF Global bankruptcy, I received a call from my broker informing me that the funds had been taken from my account and transferred to a trustee, and that my gold contracts were now with another brokerage firm. Because most of my funds were no longer in my account, he said, I now faced a margin call to cover my open gold positions. Concerned with the integrity of the futures exchange itself (CME Group) and its failure to honor its claim to be “the guarantor of every transaction that happens in our markets” (click here for CME Group’s statement of “guarantee”). I refused to put up more money, so they closed out a number of my open positions at the current market price.
Subsequent to the transfer of my contracts, statements from the new brokerage to which they’d been assigned indicated that that I had bought gold at $1,767 an ounce … the price of gold on the day of the transfer from MF Global to the assigned brokerage. This was not the case. Earlier statements prove that I bought my December gold contracts at $1,443 … not $1,767. So, although I had contracted to take delivery at $1,443, under the rules of the “we will do as we please, shut your mouth and do as you’re told” dirty deal made by the inside dealmakers, I was told I would have to pay $1767 an ounce.
I had been Effed, and I had a lot of company. Others, who had seen the bankruptcy coming, closed out their accounts. But rather than wire transferring them their funds, MF Global Effed them by mailing checks that bounced. Those who had previously taken delivery but were holding warehouse receipts for physical gold and silver being stored via an MF appointed repository, also had their assets seized by the trustee.
I want to make this absolutely clear: Buying gold to take delivery is NOT speculation! And it is delusion to believe that you are immune to the systemic criminality that pervades virtually every aspect of the financial sector. MF Global, Lehman, Merrill Lynch, Washington Mutual, IndyMac Bank, Bear Stearns, Northern Rock, Countrywide, Dexia, Anglo Irish, Wachovia, Goldman Sachs, Citigroup, Bank of America, Wells Fargo, Morgan Stanley, Fidelity, Schwab, Vanguard … do you really know what went on, or is now going on behind the closed doors of these firms?
Which will be the next crooked insurance company, bank, brokerage, savings and loan, or financial institution to go belly up? And if and when it happens, what assurance do you have that you won’t be robbed and victimized? Sure, sure, your savings and checking accounts, up to $250,000, are protected by the FDIC in the event of bank failure. But how long will it take to get your money when banks start falling like dominoes? Sure, sure, under SIPC rules, stock accounts are partially protected when your broker/dealer goes bankrupt. But will you still be alive by the time the legal fight is over?
The Big EFF is Coming The Berlusconi government fell on November 16, and bond yields have risen to unsustainable levels in Italy, the euro-zone’s third largest economy. Before that, it was the ongoing Greek sovereign debt crisis, and the fall of that nation’s Prime Minister. Last week, Hungary was begging for an IMF bailout that, 18 months ago, it pledged it would never need. Spain has just celebrated the election of a new Prime Minister who ran on a pro-austerity platform. To the bond markets, his election changed nothing. Spanish borrowing costs continued to rise, approaching their highest levels since the European debt crisis began.
Distress signals were even sounding from Germany, the strongman of the euro-zone, considered a safe haven of financial stability amid the ongoing euro crisis. Last Wednesday, just two-thirds of the once much sought-after German bonds were sold at what has been described as a "disastrous" government bond auction. One analyst called it “…a complete disaster," while another said the auction was a "vote of no confidence against the entire euro zone … a change in sentiment has taken place."
On Thursday, the “change in sentiment” hit Hungary and Portugal:
Hungary Cut to Junk at Moody’s After IMF Plea
Nov. 25 (Bloomberg) -- Hungary lost its investment-grade rating at Moody’s Investors Service after 15 years as the Cabinet seeks International Monetary Fund help to boost confidence in the European Union’s most-indebted eastern member. Elliott Gotkine reports on Bloomberg Television's "Countdown" with Owen Thomas.
Fitch cuts Portugal credit rating to junk status
FRANKFURT, 25 November 2011 – Fitch Ratings on Thursday cut Portugal's sovereign credit rating to BB-plus from BBB-minus, putting the country's rating in junk status. The rating carries a negative outlook, which means a further cut is possible. "The country's large fiscal imbalances, high indebtedness across all sectors, and adverse macroeconomic outlook mean the sovereign's credit profile is no longer consistent with an investment-grade rating,” Fitch said in a news release.
Meanwhile, in the United States, the failure of the optimistically named “Super Committee” to reach a deal to rein in America’s spiraling deficit, was being blamed for dragging down financial markets around the world.
MF Global, Europe’s sovereign debt crises, the intractable American deficit and all the other financial problems plaguing the planet are interconnected and cumulative in their impact.
Want to Buy a Bridge in Brooklyn? The big lie being peddled by politicians and parroted by the media, is that star-studded groups – possessed of superior brain power far beyond that of mere mortals – are putting their heads together to solve the mounting crises.
Don’t buy into the lie. The same people that removed regulations and safeguards while passing laws and promoting policies that helped produce the global financial crisis are now undertaking the task of fixing what they have broken. Germany brags about its kitchen cabinet of economic “wise ones.” The Italians and Greeks celebrate their technocrats. The US simply assembles a bipartisan dozen of Republican and Democratic hacks, repackaging and promoting them to the public as a “Super Committee.”
Even those of us with lesser brains know full well that the crises cannot be solved by these people or by the methods they prescribe.
In a few weeks, we will be releasing a synopsis of our Top Trends for 2012. Among them will be a warning of the high probability for some form of “economic martial law” to be imposed early in the New Year to stop runs on banks and equity markets from collapsing. The reason we believe it will not occur sooner? Governments will wait until consumers finish their holiday spending spree.
The Lesson I Learned The MF Global bankruptcy is just one example of how even knowledgeable and cautious people taking precautionary measures to protect their assets can still be robbed by the Wall Street mob. Having taken a hard hit from the MF Global scandal, it is now extremely difficult for me to put any trust in any financial institution.
The Trends Research Institute is not permitted to provide financial advice or to recommend investments to prepare for the coming “Winter of Economic Discontent.” However, my own strategy (as I have repeatedly stated) is to keep only operating expenses in banks, and to invest only in gold and silver. Furthermore (again speaking only for myself), it makes absolutely no sense to leave my hard-earned money in the hands of others and get virtually no interest on deposits while taking the risk that I may never see my money again.
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