2 Jul 2012
Early in 2011, the London Bullion Market Association began to push for gold to be recognised by the Basel Committee on Banking Supervision as the ultimate high-quality liquid asset. It has been a planned approach involving the wider financial community, with the European Parliament voting unanimously to recommend that central counterparties (basically regulated settlement intermediaries for securities markets) accept gold as collateral under the European Market Infrastructure Regulation (EMIR). Lobbying by the LBMA certainly contributed to this favourable outcome. A growing acceptance of gold as collateral in regulated markets is forcing the Basel Committee to reconsider the position of gold as a banking asset, which currently has a 50% valuation haircut. It is now a racing certainty the haircut will be revised to zero, the same status as secure cash.
This is an important development for the physical gold market, and early warning of the change was signalled by a consultation document issued by the Fed and banking regulators in the light of forthcoming Basel 3 regulations1. It must have stuck in the Fed’s craw to have to circulate a proposal that “A bank holding company or savings and loan holding company may assign a risk-weighted asset amount of zero to cash owned and held in all offices of subsidiary depository institutions or in transit; and for gold bullion held in a subsidiary depository institution’s own vaults, or held in another depository institution’s vaults on an allocated basis, to the extent the gold bullion assets are offset by gold bullion liabilities.”(Page 291 and elsewhere).
There can be little doubt if history is any guide that the US Treasury and the Fed would rather not give gold a status that rivals the dollar, but they cannot boss the Basel Committee around.
Submitted by Tyler Durden:There is a saying that it is better to remain silent and be thought a fool than to speak out and remove all doubt. Today, the San Fran Fed's John Williams, and by proxy the Federal Reserve in general, spoke out, and once again removed all doubt that they have no idea how modern money and inflation interact. In a speech titled, appropriately enough, "Monetary Policy, Money, and Inflation", essentially made the case that this time is different and that no matter how much printing the Fed engages in, there will be no inflation.
To wit: "In a world where the Fed pays interest on bank reserves, traditional theories that tell of a mechanical link between reserves, money supply, and, ultimately, inflation are no longer valid. Over the past four years, the Federal Reserve has more than tripled the monetary base, a key determinant of money supply. Some commentators have sounded an alarm that this massive expansion of the monetary base will inexorably lead to high inflation, à la Friedman.Despite these dire predictions, inflation in the United States has been the dog that didn’t bark." He then proceeds to add some pretty (if completely irrelevant) charts of the money multipliers which as we all know have plummeted and concludes by saying "Recent developments make a compelling case that traditional textbook views of the connections between monetary policy, money, and inflation are outdated and need to be revised." And actually, he is correct: the way most people approach monetary policy is 100% wrong. The problem is that the Fed is the biggest culprit, and while others merely conceive of gibberish in the form of three letter economic theories, which usually has the words Modern, or Revised (and why note Super or Turbo), to make them sound more credible, they ultimately harm nobody. The Fed's power to impair, however, is endless, and as such it bears analyzing just how and why the Fed is absolutely wrong.
First, here is our rule of thumb to determine if someone who talks about money, inflation or monetary policy has even a vague clue of what they are talking about: do a text search for the words: repo, shadow banking, collateral, collateral-chains, rehypothecation, or deposit-free money creation. If not one of those terms appears anywhere, feel free to toss the reading material right into the trash.
CNBC invited Chris Whalen of Tangent Capital onto Squawk Box to discuss JP Morgan’s Q2 earnings report July 13th, the widening LIBOR scandal, and the European debt crisis.
Shockingly, at 9:26 into the clip, the CNBC host Andrew Sorkin (not Whalen, the CNBC host Sorkin!) brings up Barclays’ manipulation of LIBOR rates, and states: ‘You hear about these things and you used to think these are conspiracy theories! You used to hear things that people are manipulating LIBOR, people are manipulating the silver markets- CNBC’s Michelle Caruso-Cabrera: ‘And they are!!‘ - Sorkin: ‘And they are!!‘ - Chris Whalen: ‘It’s because these markets have become so concentrated that a few players can do it.‘
It appears Blythe and JP Morgan’s Commodities Desk have a serious issue on their hands, as now even CNBC hosts are openly admitting that silver is manipulated and that silver manipulation is a fact, and NOT a conspiracy! Watch Video
ESM: Social Security (Welfare) for the Rich! Financial Coup D’Etat in Europe: Government by the Banks, for the Banks - Ellen Brown
Ellen Brown: On Friday, June 29th, German Chancellor Angela Merkel acquiesced to changes to a permanent Eurozone bailout fund—“before the ink was dry,” as critics complained. Besides easing the conditions under which bailouts would be given, the concessions included an agreement that funds intended for indebted governments could be funneled directly to stressed banks.
According to Gavin Hewitt, Europe editor for BBC News, the concessions mean that:
[T]he eurozone’s bailout fund (backed by taxpayers’ money) will be taking a stake in failed banks.
Risk has been increased. German taxpayers have increased their liabilities. In future a bank crash will no longer fall on the shoulders of national treasuries but on the European Stability Mechanism (ESM), a fund to which Germany contributes the most.
In the short term, these measures will ease pressure in the markets. However there is currently only 500bn euros assigned to the ESM. That may get swallowed up quickly and the markets may demand more. It is still unclear just how deep the holes in the eurozone’s banks are.
(Above: Historic warning)The ESM is now a permanent bailout fund for private banks, a sort of permanent “welfare for the rich.” There is no ceiling set on the obligations to be underwritten by the taxpayers, no room to negotiate, and no recourse in court.
Tony Robinson asks if bankers are human and the BBC asks, Gold vs paper money: Which should we trust more?
Speaking after Barclays was fined £290m for manipulating banking interest rates, Robinson catalogued how the banks had let down the country for their own interests.
Likely False Flag Report claims Norwegian trained by al Qaeda in Yemen plans to crash U.S. airline during Olympics
By Madison Ruppert: If missiles on top of London apartments, spy drones, warships, LRAD sonic weaponry, and even the potential downing of airliners authorized by British officials including Prime Minister David Cameron himself weren’t enough reasons to avoid the 2012 London Olympics like the plague, here’s another one for you.
According to a report in the Sunday Times, al Qaeda in the Arabian Peninsula (AQAP) has recruited a Muslim convert from Norway to hijack and crash a U.S. passenger plane, citing intelligence sources.
However, it is not yet clear if the target is actually any of the venues in which the Olympic Games are being held or if it is just timed to coincide with the major event.
It is also unclear if this plot is real or yet another instance of state manufactured terrorism (which is all too common nowadays in the United States) engineered to keep the people in a constant state of fear and blind compliance.
One noteworthy aspect of this report, which was also covered by Israeli news outlet Haaretz, is the focus on AQAP, the group which Anwar al-Awlaki was affiliated with.
An anonymous insider from one of Britain's biggest lenders – aside from Barclays – explains how he and his colleagues helped manipulate the UK's bank borrowing rate. Neither the insider nor the bank can be identified for legal reasons.
It was during a weekly economic briefing at the bank in early 2008 that I first heard the phrase. A sterling swaps trader told the assembled economists and managers that "Libor was dislocated with itself". It sounded so nonsensical that, at first, it just confused everyone, and provoked a little laughter.
Before long, though, I was drawing up presentations to explain the "dislocation of Libor from itself" for corporate relationship managers. I was deciphering the subject in emails, internally and externally. And I was using the phrase myself openly with customers of the bank.
What I was explaining was that the bank was manipulating Libor. Only I didn't see it like that at the time.
What the trader told us was that the bank could not be seen to be borrowing at high rates, so we were putting in low Libor submissions, the same as everyone. How could we do that? Easy. The British Bankers' Association, which compiled Libor, asked for a rate submission but there were no checks. The trader said there was a general acceptance that you lowered the price a few basis points each day.
According to the trader, "everyone knew" and "everyone was doing it".
By Madison Ruppert: The New York Police Department apparently classifies individuals who choose to exercise their right to videotape police engaging in their public duties “professional agitators” as revealed by a poster inside the NYPD’s 30th Precinct.
While this is hardly surprising coming from a police department so woefully corrupt that an officer who actually attempted to do his job by exposing rampant, systematic corruption ended up being thrown in a psychiatric ward by his superiors, it is troubling nonetheless.
One of the most laughable parts of this poster – aside from the glaring errors which most high school graduates would likely catch – is that the upper left hand corner appears to show the seal for the NYPD’s “Intelligence Division”.