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MOST CRITICAL TIPPING POINT ARTICLES TODAY | |||
EU BANKING CRISIS - Cyprus Pushes it Back Near the Edge Euro Bank Jog Turns into a Bank Run 03-18-13 AlphaNOW Reuters Target 2 balances HAD begun to unwind, while the deposit flight that had taken hold across much of the periphery was reversing course. Markets HAD become convinced that European policy makers had stared into the abyss, realised both the nature and the magnitude of the crisis, and decided to do something about it. Nothing fundamental had changed: the hard work was all still to come. But things WERE moving in the right direction, and policy makers APPEARED to be back in charge. All of a sudden, things now look shaky. |
03-19-13 | EU MONETARY |
4- EU Banking Crisis |
BANKRUPTCY - Does Anyone Care How a Capitalist System (versus a Crony Capitalist System) is Supposed to Work? Note: Don’t get confused by the word “capitalism” in the phrase “crony capitalism”. Crony capitalism is not at all free market capitalism. Instead, it is actually the same thing as fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption
Cyprus Bailout Math; Can Depositors Be Left Whole? 03-17-13 Mish First the bondholders should have been wiped out. If that was not enough then the deposits above the €100,000 deposit guarantee should have been hit. Then and only then should the average citizen been hit.Cyprus Bailout Math What I wrote above was a guess, but an accurate one. Reader Jeff Baryshnik, Baryshnik Capital Management Inc., in Toronto provides some specifics in an email to me a few hours ago. Much of the money in Cyprus was "hot money" from Russia seeing unfair tax advantages. So what? Is that any reason to punish every Cyprus citizen? Clearly the answer must be "no". Perhaps one can create additional spots for illegal deposits (if they could be proven), and one could (and should) distinguish between deposits above and below the deposit guarantee limit, but otherwise, the order suggested by Baryshnik seems quite reasonable. |
03-19-13 | EU CYPRUS |
4- EU Banking Crisis |
STATISM - The Silent Culture of Concealment & the Incentive System of Collusion Runs the governing bureaucracies. The presstitutes in the establishment media enable the warmongering Protection Racket as a condition of employment. Their lack of investigative reporting is only superseded by their ominous distortion of real patriotic loyalty Ignoring Whistleblowers 03-17-13 BATR.org "We say in this nation that we are looking for people with honesty, integrity, drive and dedication, and then when we find such people, we take them out and whip them." anonymous
A government whistleblower, disclosing classified secrets, risks criminal charges. Defining restricted material usually includes a broad scope of information that casts officials or agencies in a compromising embarrassment. The idea that public servants may be engaged in violating laws is no excuse for blowing the whistle on such abuses if it involves "National Security". This protect the state attitude at all cost argument, is the very definition of institutional cover-up. In war, truth is the first casualty, so said Aeschylus. So throwing the book at Bradley Manning comes as no surprise. Why should anyone be concerned about the intentional dissemination of raw evidence about war crimes, committed in the name of the War of Terror? Most would fail to be moved by the motivations of a stoic prisoner, who uploaded secured computer files to WikiLeaks. Many would cheer his interminable incarceration for disclosing military records. Yet, before you slam the jail shut, reflect upon the Secretly Recorded Audio Leaked of Bradley Manning's Court Statement. Listen to the Full Statement.
Also, view the YouTube video, Bradley Manning Tells Court Public Have the Right to Know About US War Crimes. A cogent reaction from another renowned whistleblower, Daniel Ellsberg of the Pentagon Papers fame, carries the weight of a brave man from another era.
In any political trial, the spirit of the law is sacrificed for the expediency of protecting a debased regime. Balance in prosecution is a concept unknown to a government consumed with punishing any perceived enemy of the state. Attorney Floyd Abrams and Professor Yochai Benkler provide a thoughtful perspective and legal opinion in The New York Times editorial - Death to Whistle-Blowers?
No such mercy from the imperial empire, Manning must suffer the supreme wrath for his transgressions. His admissions acknowledge expected official sanctions, but the sentiment of Daniel Ellsberg reflects the standpoint of many Manning supporters.
Another target of recrimination, seen in the Sibel Edmonds dismissal is a classic example of punishing the whistleblower. Edmonds took a job as a translator at the FBI shortly after 9-11. Her story, stated in the YouTube interview, The Government Is Raping You: Sibel Edmonds, is compelling. Sibel Edmonds Finally Wins, documents her observation in the book, "Classified Woman" and offers a disturbing assessment of her fellow workers.
This characterization of morally challenged federal employees is a direct consequence of a system that protects the cover-ups, while punishing disclosure of conflicting evidence of outright corruption. The silent culture of concealment or the worse incentive system of collusion runs the governing bureaucracies. The presstitutes in the establishment media enable the warmongering protection racket as a condition of employment. Their lack of investigative reporting is only superseded by their ominous distortion of real patriotic loyalty. Whistleblowers function as detectives doing the job that reporters abdicate. Woefully, so few citizens of conscience are willing to jeopardize their individual circumstance for the courage of genuine national security. The always insightful, William F. Jasper of the New American writes in Sibel Edmonds' "Classified Woman".
Forget about the false left-right paradigm. The "War of Terror" being waged by the imperium empire is designed to crush whistleblowers, and keep the brain dead in a zombie trance. Just consider the impact on the Afghanistan campaign if the FBI acted upon the evidence unclosed by Sibel Edmonds that cuts to the heart of the 911 myth assumptions. The military-industrial-security-intelligence complex closes ranks to protect their "Splendid Little Wars". The whistleblowers that expose the lies out of the War Party establishment are only a minor distraction, as long as the public sleeps in their self-induced coma. The Army Times item, Hagel to order review of drone medal precedence, is one such interlude, while the control and command structure continues to aim their weapons at imaginary threats. Who would doubt that the Bradley Mannings and Sibel Edmonds, squealers of state secrets, would be prime quarries for the hunt to eliminate enemies of the state? The only good government snitch is a Gitmo captive. So goes the claims of the governance prosecutors. Loyalty of country is a very dangerous attitude, when your government sponsors state terrorism as a normal activity. The fear to face up to the horrors of administration deceit is the prime activity of the flag waving drones that cheer for more carnage. When Edmonds describes the traitors within the national security structure, the fearful bureaucrats facilitate the ongoing treachery that passes for nationalism. When Manning exposes the documents that prove a genocide policy is in effect, the penalty demanded by the bellicose command is his execution. An honorable whistleblower is a citizen hero. Disobeying dishonest laws is true patriotism. In the end, A Different Philosophy of Civil Disobedience, is needed. Complacency is the countrywide disease of choice. Real patriots oppose jingoistic orders. Stand down . . . |
03-19-13 | THESIS | STATISM |
CRONY CAPITALISM - From the Mouth of Fed President Richard Fisher
Fed President: Too Big Banks Are Just Crony Capitalists
03-18-13 Washington's Blog
Big Banks Destroy Real American Style CapitalismReuters notes that the president of the Federal Reserve Bank of Dallas – Richard Fisher - said yesterday:
He’s right. The top economists, financial experts, and bankers say the big banks need to be broken up in order to save the economy. Why? Gee … I don’t know. Modern American conservatives and liberals both passionately hate crony capitalism – the malignant symbiotic relationship between governmental leaders and their cronies. The Boston Tea Party in 1773 was largely a protest against crony capitalism. And it’s not just Western governments which fall prey to crony capitalism. (For example, Egypt’s Mubarak family raked in between U.S. $40 and $70 billion dollars through cronyism.) Indeed, people all over the world are starting to demand an end to crony corruption. As Reuters global editor at large Chrystia Freeland noted, the “Arab Spring” and other protests around the world are really protests against crony capitalism:
Note: Don’t get confused by the word “capitalism” in the phrase “crony capitalism”. Crony capitalism is not at all free market capitalism. Instead, it is actually the same thing as fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption |
03-19-13 | THEME | CRONY CAPITALISM |
CRONY CAPITALISM - Bank Corruption Summary Jaw-Dropping Crimes of the Big Banks 03-14-13 Washington's Blog Preface: Not all banks are criminal enterprises. The wrongdoing of a particular bank cannot be attributed to other banks without proof. But – as documented below – many of the biggest banks have engaged in unimaginably bad behavior. You Won’t Believe What They’ve Done …Here are just some of the improprieties by big banks:
The executives of the big banks invariably pretend that the hanky-panky was only committed by a couple of low-level rogue employees. But studies show that most of the fraud is committed by management. Indeed, one of the world’s top fraud experts – professor of law and economics, and former senior S&L regulator Bill Black – says that most financial fraud is “control fraud”, where the people who own the banks are the ones who implement systemic fraud. See this, this and this. Even the bank with the reputation as being the “best managed bank” in the U.S., JP Morgan, has engaged in massive fraud. For example, the Senate’s Permanent Subcommittee on Investigations released a report today quoting an examiner at the Office of Comptroller of the Currency – JPMorgan’s regulator – saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses. And Joshua Rosner – noted bond analyst, and Managing Director at independent research consultancy Graham Fisher & Co – notes that JP Morgan had many similar anti money laundering laws violations as HSBC, failed to segregate accounts a la MF Global, and paid almost 12% of its 2009-12 net income on regulatory and legal settlements. But at least the big banks do good things for society, like loaning money to Main Street, right? Actually:
We can almost understand why Thomas Jefferson warned:
John Adams said:
And Lord Acton argued:
No wonder a stunning list of prominent economists, financial experts and bankers say we need to break up the big banks. |
03-19-13 | THEME | CRONY CAPITALISM |
MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - Mar. 17th - Mar. 23rd, 2013 | |||
RISK REVERSAL | 1 | ||
JAPAN - DEBT DEFLATION | 2 | ||
BOND BUBBLE | 3 | ||
EU BANKING CRISIS |
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CYRPUS
CYPRUS - Breaks Public Trust, Signals Enormnity of EU Banking Problems and Incites the Politics of Germany Distating Terms "I object to the entire scheme. First the bondholders should have been wiped out. If that was not enough then the deposits above the €100,000 deposit guarantee should have been hit. Then and only then should the average citizen been hit. ... And guess what. The average Cyprus citizen would likely not have been hit. Instead, the EU mandated a "screw every citizen" policy to protect the senior bondholders. This is not going to sit well in Cyprus or anywhere else, and all for a mere EU 5.8 billion Euros. The stupidity and arrogance of these nannycrats is staggering.The nannycrats think this will stop "contagion". They are nuts." Mish 03-17-13 PUBLIC TRUST It breaks a cardinal rule, namely public trust on which money relies. Had th public thought their savings were at risk from a restructuring, savers would have run on local banks, hence it is different from a tax SIGNALS & POLITICS Frederik Ducrozet, an economist with Credit Agricole, tells Business Insider: I think the Cyprus deal as it stands a big deal indeed, mostly in terms of bad signaling (as the ongoing normalisation in Eurozone capital flows remains fragile and vulnerable to sudden stops) and politics (Germany still imposing its rules despite growing discontent in the South). There were multiple reports which indicated that Germany told Cyprus: Confiscate your depositors' money or leave the Eurozone. That's a terrible political dynamic, and on top of Italy it exacerbates a bad overall political situation. #Cyprus Depositors Vent Fury Through Social Media 03-17-13 Zero Hedge
CYPRIOT PRESIDENT ADDRESSES NATION: We Were Given Two Options Like Blackmail 03-17-13 BI Cyprus President Nicos Anastasiades just addressed the nation in a dramatic Sunday night speech regarding the bailout of Cyprus, which will see a one-time tax on everyone with cash in Cypriot banks.
The basic gist:
Depositors Pay Price in Cyprus Bailout Deal 03-16-13 WSJ
The deal, announced early Saturday, marks the first time in the euro zone's five-year-old financial crisis that depositors in bloc's banks will lose money. "We have taken immediate measures so that electronic transfers cannot take effect before banks reopen on Tuesday," said the minister, who took office just two weeks ago. Jörg Asmussen, a member of the executive board of the European Central Bank, stressed that amounts in excess of the levy will remain fully available. Accounts held in Greek offshoots of Cypriot banks will also be spared. Cyprus, which first applied for help last summer, has proved a major headache for the euro zone, mostly because
As they struggled to bring down the rescue costs, euro-zone finance ministers and the troika of the European Commission, the ECB and the IMF chose to go ahead with the deposit tax despite warnings it could unsettle savers and investors in other weak European countries. "This is a special situation, with a very specific banking sector, with a very specific structure and size, which calls for this specific package," said Jeroen Dijsselbloem, the Dutch finance minister who chaired the discussions. He said similar measures weren't being considered for other countries that have received bailouts. Officials hoped that the contribution of depositors will make it easier to pass the rescue package through parliaments in rich countries like Germany, the Netherlands and Finland. Lawmakers there have balked at bailing out foreign depositors, many of them Russians, whom they suspected of taking advantage of Cyprus's lax banking laws.
The IMF, which had been the strongest advocate for having the bailout burden fall partly on depositors, will contribute to the rescue, said the fund's Managing Director Christine Lagarde. Two officials said the IMF is expected to chip in €1 billion of the overall €10 billion needed. Olli Rehn, the European Union's economic affairs commissioner, said Russia had indicated it was willing to give Cyprus more time to repay a €2.5 billion rescue loan from 2011, and may also lower the interest it charges. Mr. Sarris is expected to travel to Moscow on Wednesday to nail down the final terms. The struggle to agree on a bailout for tiny Cyprus, which accounts for just 0.2% of the euro zone's economy, once again underlines how vulnerable the currency union remains to economic shocks in any member nation. "Cyprus is of systemic relevance to the euro area," said Mr. Rehn. "Not to provide assistance to Cyprus would have posed a risk of undoing the progress that has been painstakingly made over the past year." Ministers also agreed to give Portugal and Ireland more time to repay their bailout loans, but didn't provide any details. The Cyprus Bailout Is Unfair, Short-Sighted, And Self-Defeating 03-17-13 The Economist IT IS not a fudge, but it is still a failure. The euro zone’s bail-out of Cyprus, which was sealed in the early hours of Saturday, did get the bill for creditor countries down from €17 billion to €10 billion, as had been rumoured. But the way it did so was somewhat unexpected.
Almost €6 billion of the savings for taxpayers in euro-zone countries came from losses imposed on depositors in Cyprus’s outsize banks. A one-off 9.9% levy will be imposed on all deposits over the insurance threshold of €100,000 before banks reopen after a bank holiday on Monday. That idea had been in the air for a while, not least because a lot of those uninsured deposits came from outside Cyprus, and from Russia in particular. The politics of saving wealthy Russians with money loaned by thrifty Germans were always going to be tricky. What had not been anticipated was a 6.75% loss for savers with deposits in Cypriot banks below the insurance ceiling. Cypriots woke up this morning to find bank branches closed to them. By the time they will be able to get at their money, it will be too late. The offer of equity in banks to replace the value of their savings is meant to be a balm but it’s not a choice they would have made. Why this decision was taken is not yet clear. The most plausible explanation is that the Cypriot government itself preferred to spread the pain rather than wipe out non-resident depositors and jeopardise its long-term prospects as an offshore financial centre for Russian and other money. Whatever the rationale, it is a mistake for three reasons.
The bail-out appears to move Europe further away from the institutional reforms that are needed to resolve the crisis once and for all. Rather than using the European Stability Mechanism to recapitalise banks, and thereby weaken the link between banks and their governments, the euro zone continues to equate bank bail-outs with sovereign bail-outs. As for debt mutualisation, after imposing losses on local depositors, the price of support from the rest of Europe is arguably costlier now than it ever has been. It is also hard to square this outcome with the ongoing overhaul of finance. The direction of efforts to improve banks’ liquidity position is to encourage them to hold more deposits; the aim of bail-in legislation planned to come into force by 2018 is to make senior debt absorb losses in the event of a bank failure. The logic behind both of these reform initiatives is that bank deposits have two, contradictory properties. They are both sticky, because they are insured; and they are flighty, because they can be pulled instantly. So deposits are a good source of funding provided they never run. The Cyprus bail-out makes this confidence trick harder to pull off. Other than that, it is a really good deal. MOHAMED EL-ERIAN: The EU Had Four Valid Reasons To Force Cypriot Depositors To Pay Up 03-17-13 BI According to El-Erian, the EU actually had four valid reasons to make such an unprecedented move.
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03-18-13 | EU CYPRUS |
4- EU Banking Crisis |
SOVEREIGN DEBT CRISIS [Euope Crisis Tracker] | 5 | ||
CHINA BUBBLE | 6 | ||
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MACRO News Items of Importance - This Week | |||
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2013 - STATISM |
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2012 - FINANCIAL REPRESSION |
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2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS |
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2010 - EXTEN D & PRETEND |
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CRONY CAPITALISM - Understanding Cyprus Top Banking Analyst: Subsidies to Giant Banks Exceed $780 Billion Dollars Per YEAR 03-13-13 Washingtons Blog Trillions In Subsidies to the Giant Banks Are Continuing to This Day
Preface: Bloomberg’s recent estimate that the big banks are subsidized to the tune of $83 billion dollars per year created tremendous controversy. But – as shown below – the real number is many times larger. Chris Whalen is one of America’s top banking analysts. Well-known economist Nouriel Roubini notes:
Whalen notes today that the big American banks get a subsidy in excess of $780 billion dollars per year. Specifically, Whalen estimates the following types of subsidies to the giant banks:
That totals $780 billion per year. But Whalen notes that there are many other subsidies as well:
The bailouts of the big banks amount to trillions of dollars, are never-ending … and continue to this day. (Indeed, the government is arguably paying trillions of dollars more in unnecessary interest payments just to have the banks “create” money, instead of creating it itself … as the Founding Fathers may have envisioned.) Whalen notes that the big banks are not really profitable:
Indeed, they are government sponsored enterprises where all of the profits are privatized, and all of the losses socialized. And the big banks are not helping – but are rather destroying – the economy. Indeed, failing to break up the big banks – and the malignant, symbiotic relationship between D.C. politicians and the banking giants – is destroying our country. |
03-18-13 | THEMES | CRONY CAPITALISM |
GLOBAL FINANCIAL IMBALANCE | |||
SOCIAL UNREST |
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