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Posts tagged ‘Lehman Brothers’

Exactly As I Warned, “Cyprusization” Goes Mainstream! Ireland On Tap, Next Up For Citizen Fund Confiscation (Again)

from : Reggie Middleton

Last year I wrote “The “Believe In Germany Bailing The EU” Trade: Go Long Magic Wand Raw Materials & Harry Potter Paraphernalia” wherein I warned of both the risk in Germany as a save all, and the risks posed to European FIRE sector companies (and insurers in particular) as a result of this belief in magic over math.

Well, now Bloomberg reports that Poland has literally confiscated private pension manager’s (read insurance companies) bonds with essentially no compensation, ex., they stole them, as per Bloomgerg – Poland to Cancel Bonds From Pension Funds in System Revamp:

Poland will take over and cancel government bonds held by its privately managed pension funds, stopping short of fully “nationalizing” the system as it seeks to curb public debt, Prime Minister Donald Tusk said.

Whaaaat!!!??? Cancel bonds? Outright theft! Listem carefully here. It’s not as if I didn’t tell you so. Now, what happens to those insurers whose pension funds under management were robbed? Again, revisit “The “Believe In Germany Bailing The EU” Trade: Go Long Magic Wand Raw Materials & Harry Potter Paraphernalia“. This plain as day and easy to see coming, and there’s a lot more coming!

Remember my many warnings this year on the Irish and EU banking system:

Transparency In The European Banking? Madness, I say! Sheer, Utter Madness!!!

If I Provide Proof That The Entire Irish Banking System Is A Sham, Does It Set Up A Much Needed System Reboot? Let’s Go For It…), the chances of there being any recovery is somewhere between zilch and nil, give or take a euro or two – reference LGD 100+: What’s the Possibility of Certain European Banks Having a Loss Given Default Approaching 100%? and The Anatomy of a Serial European Banking Collapse to realize that once a counter party driven bank run starts, there may be less than nothing to divy up in the end. Lehman Brothers’ US creditors received roughly 10 to 40 cents on the dollar, but after 5 years of wrangling, the European International arm was full repaid. Hey, do you feel lucky with your life savings? Even if you do feel lucky, you’ll still need 5 years to spare and a ton of cash for legal fees.

However, some member states have not ruled out the possibility that insured deposits, i.e. deposits under €100,000, would be forced to bear losses in the event of a bank collapse even though these deposits would be likely to be protected by the deposit guarantee scheme.

full article at source: http://www.zerohedge.com/contributed/2013-09-07/exactly-i-warned-cyprusization-goes-mainstream-ireland-tap-next-citizen-fund

The response to Europe’s banking crisis

Dan O’Brien Economics Editor with the Irish times writes in to-days Irish Times the following

ANALYSIS : The response to Europe’s banking crisis raises issues over its ability to deal with the threat

WHEN CENTRAL banks start lending money to each other, things are usually grim. The last time it happened in large amounts was in October 2008. Then, the West’s financial system went into cardiac arrest following the collapse of Lehman Brothers.

It was revived in the nick of time but now is suffering the sort of chest pains that could be an indication of a second full-scale arrest in the offing.

The US central bank has lent its Swiss counterpart €200 million so the latter could lend it on to its banks. Separately, one euro area bank has tapped the European Central Bank’s (ECB’s) dollar stash to the tune of $500 million (€347.5 million). All this shows some European banks can’t borrow dollars in the normal way – on the markets – because their peer institutions fear they won’t get their money back.

full article at source:http://www.irishtimes.com/newspaper/finance/2011/0820/1224302758446.html

The French Government Creates A Bank Run?

By Reggie Middleton

You know, if it wasn’t so damn destructive, it would actually be funny how regulators appear to find it genetically impossible to learn from mistakes – whether it be theirs or somebody elses. In 2008, when the US foolhardedly decided to allow banks to misreport their long term toxic assets bought with excessive, short term leverage, said banks collapsed. It was not as if this was unforeseen. France is anxious to repeat that exercise with its banks and sovereign debt. In 2008, when the US foolhardedly decided to ban shorts on insolvent financial companies, I made a small fortune constructing synthetic short positions with options that skyrocketed in value because regulators dabbled in markets in which they really had no clue. ZeroHedge reminds us that the short ban in the US ended in a 48% drop in financial company share prices.

full article here at source:http://boombustblog.com/BoomBustBlog/The-French-Government-Creates-A-Bank-Run-Here-I-Prove-A-Run-On-A-French-Bank-Is-Justified-And-Likely.html

IMF: Names keep on rolling in

Monday, May 30, 2011 –
 by Staff Report from the Daily Bell

Christine Lagarde

Why Christine Lagarde should never be head of the IMF … Christine Lagarde is in poll position. Having put her name forward last week, the silver-haired French finance minister may well become the new managing director of the International Monetary Fund (IMF). Lagarde has, with a depressing inevitability, secured the backing of most European countries. The UK was among the first to endorse her. There are rumours the mighty US could soon throw its weight behind Lagarde – making her bid a fait accompli. Europe seems determined to retain its prerogative of appointing the boss of the world’s most important financial watchdog. Throughout the IMF’s 65-year history, all 11 bosses have been from Western Europe. In return for allowing this stitch-up, America has traditionally provided the IMF deputy, while securing the top spot at the World Bank. – UK Telegraph

Dominant Social Theme: At this most critical time, this Western powers are about to make a critical mistake regarding this critical facility!

Free-Market Analysis: There seems to be emerging consensus in the constitutionally suspicious alternative Internet press that Dominique Strauss-Kahn was “stung” for any one of a variety of reasons. It was not rape, therefore, that brought him down but his effectiveness in dealing with the EU’s economic crisis.

Alternatively, we have read, his arrest provided a distraction from the real and serious failures surrounding the great powers ability to deal with the unfolding crisis.

Finally, there is the idea that DSK wanted to continue to rejigger the voting mechanisms of the IMF. The US currently holds 17 percent of the votes in the IMF and IMF bylaws demand a majority of 85 percent for any substantial moves or changes in policy. Thus, the IMF is the US’s creation and is beholden to it.

Anyway, we’ve stayed away from speculating. We don’t seen any specific promotional value in what happened to DSK, other than to reinforce the meme that American justice is absolutely pure and non-discriminatory. But that’s a pretty small, sub dominant meme, not one that would seem especially worth reinforcing at this point in time.

While we are not tempted to join the fray regarding DSK conspiracy theories, we have presented on several occasions the one powerful dominant social theme that has predictably emerged from the affair, which is that the IMF is an incredibly important institution and that its leaders are really, really, really important people.

In fact, if there were no IMF and no leadership it is likely – so we are informed – that the world’s economies would probably collapse sooner rather than later. You can see our previous articles on the topic here:



We recently analyzed the memes in an article by Joseph Stiglitz on this topic, entitled, “The IMF cannot afford to make a mistake with Strauss-Kahn’s successor.” Now the UK Telegraph has issued yet another jeremiad on the importance of the IMF from columnist Liam Halligan. This focuses on the meme of IMF-as-most-important-institution-ever.

The institution he writes, “needs to reflect the extent to which the world has changed since it was launched from the ashes of the Second World War.” Why? Because the markets could soon face another “Lehman moment.” Lehman Brothers is widely held to have destabilized global markets in 2008.

From this (fallacious in our view) perspective, Halligan goes on to argue that it would be a “historic” mistake to appoint a European to head the IMF, especially given that non-Western countries compose most of the world’s population now, some 80 percent. He cites other statistics too: The world’s markets produce half the GDP and out-trade the West. They hold most of the world’s currency reserves and are not mired in debt.

The IMF, he concludes, needs a leader from the developing world, a world that has arranged its finances better than the Western world. The West does not have a moral argument to make regarding IMF leadership. The mess it has made collectively of its finances has removed its credibility and “moral authority.”

Halligan is also upset over the idea that the new leader of the IMF might be what he calls a “politician.” Halligan claims the IMF “works properly” when it is taking an adversarial role and “banging political heads.” The IMF must be seen as “tough – even unreasonably tough … an IMF that colludes with the political classes isn’t enacting reform. It is simply helping the politicians bury their mistakes and kick any problems into the long grass where they will fester.” Here’s some more from the article:

The IMF should be respected – even feared. It is for the politicians to stand up and face the political music – explaining to their electorates why harsh actions are needed and why nations can’t go on living beyond their means. Perhaps the most dangerous type of politician to run the Fund is a politician still hankering after high office. Strauss-Kahn, of course, was using the post and the influence it bestowed over trillions of dollars of bail-out cash, as a platform for a French presidential bid. As such, he turned the IMF into a soft-credit society for the eurozone’s periphery nations, holding the single-currency together for the benefit of his Franco-German friends.

Strauss-Kahn’s continued insistence on “just one more bail-out”, rather than forcing Greece, Portugal and the rest to face up to genuine debt-restructuring, also made sure that the losses stayed with plebian taxpayers, rather than being shifted on to Europe’s banks. He could have called in the favour, no doubt, when the need came to finance his campaign for the ultimate prize. It was not to be for Strauss-Kahn, of course. But what is to stop Lagarde following the same route? …

Running the IMF, now more than ever, requires economic expertise, massive intellectual authority and a willingness to be deeply unpopular – particularly, if you are a European, on your home turf. The emerging economies need to stop moaning, put their differences aside, and set their combined authority behind a world-class economic policy-maker to run the IMF. Such nations should be doing everything in their power to wrestle control of this pivotal institution from a Western political elite that is not only intellectually inadequate, but which seems determined to compound the world’s economic problems …

Halligan is convinced that Lagarde has her own unfortunate political ambitions. As we can see from the above excerpt, he seeks a person of “massive intellectual authority” – and believes that person can only be found in the developing world.

We wonder exactly why somebody of massive intellectual authority would want to run the IMF in the first place. Anyone with massive intellectual authority would realize that the IMF is a dysfunctional organization that was constructed to increase Western dominance over the developing world, not to “help” countries recover from excessive debt.

The IMF is part of a fiscal and monetary tag team with the World Bank. The World Bank encourages dysfunctional, developing-world leaders to borrow more than their countries can withstand. Once the money has been wasted or spirited away, the country is effectively broke and the big western banks call for the IMF to step in.

The IMF’s solutions are always the same. They tend to crush the middle class by reducing public subsidies and hiking taxes. Then they put tremendous pressure on remaining government officials to sell off a country’s prime assets under the pretext that these are assets that need to be privatized. In truth these are mostly monopoly assets, like water and electrical facilities – and thus even privatization does not remove the monopoly status. One has just transferred a public monopoly into private hands. The profits are tremendous.

It is hard to avoid the conclusion (we won’t) that the EU acted as the World Bank when it came to Europe’s PIGS. These southern countries were given tremendous amounts of cash to supposedly make them financially healthy – or healthy enough to join the EU. But in addition to outright grants were numerous huge loans that were presented to all these countries during the faux-boom of the 2002-2007, many no doubt with EU cooperation. Now that the bill has come due, the EU is cynically calling on the IMF to ensure these countries make their payments.

Why isn’t it working this time? Why have the protests only become stronger and deeper, threatening to tear apart the entire EU? We’ve presented the idea that the Internet itself has helped mobilize people in a way that Western elites were not expecting. Instead of crushing European middle classes and strengthening the EU, Eurocrats are discovering they may fundamentally weakened it and the euro besides.

The IMF, of course was supposed to play an integral role in this slaughter of the PIGS. The IMF is always involved in such pillaging. Of course, Anglosphere elites would much rather have the developing countries clamoring to “get in” than ignoring such institutions or seeking to remove themselves. This may yet happen however if the US continues to insist on its 17 percent control of the IMF.

Conclusion: Times are changing substantially, as are the attitudes of developing countries. The control that Western elites expected to exercise over these institutions is coming increasingly into question. Ironically, if the West does give up control and allow these institutions to play their putative role, they will become fairly useless to their creators. They will also be seen, increasingly, as they ineffective entities they actually are. For this reason, the US is not likely to cede any part of its 17 percent. Lagarde may get her dream post, but she may soon come to regret it.

Source: http://www.thedailybell.com/2416/IMF-Memes-Roll-On.html


 According to Shane Ross all year the lady has been tormenting us. And all week we have been love bombing her.

Christine Lagarde, French Finance Minister and no friend of Ireland, has become the darling of our Cabinet.

The love-in began in Brussels on Monday when minister of state Lucinda Creighton launched the whirlwind courtship. “I would anticipate,” enthused the lively Lucinda, “that we would be very well disposed to her candidature.” Christine had been testing the waters for her campaign to succeed Dominique Strauss-Kahn as IMF boss.

Eyebrows were raised at Lucinda’s enthusiasm; but it was probably just Lucinda showing a little sisterly solidarity. Lining up behind Christine after all the grief she has given Ireland in recent months was hardly government policy.

Not until Tuesday, anyway. When Tanaiste and Foreign Affairs Minister Eamon Gilmore headed for the Elysee Palace. Eamon was greeted by no less a person than French foreign minister, Alain Juppe.

Eamon emerged from the meeting cooing like a love bird. Suddenly (according to the Tanaiste) France was “showing greater understanding of Ireland’s position on corporation tax and the interest on our EU/IMF bailout”. He even promised to support the lovely Christine if she just happened to put her name forward for the vacancy at the IMF. Lo and behold, within 24 hours her hat was in the ring.

A pity Eamon did not tell the Taoiseach that he had committed the Cabinet to Christine. A few hours later Enda Kenny told the Dail that the matter had not yet been decided at the top level.

But an agenda was emerging: Ireland was shaping up to back Christine, the nation’s tax tormentor.

On Wednesday, the courtship was consummated. Our own Finance Minister, Michael Noonan, was granted an audience in Paris with the French phenomenon. He was given a full 30 minutes. The meeting was flagged as yet another turning point in our bid for a lower interest rate on the bailout terms. It was widely assumed that the pair were cooking up a deal, that we were cannily trading support for Christine’s IMF ambitions in exchange for a less penal interest rate on our loans.

The cameras were called in to record the meeting. Michael was filmed by RTE greeting the elegant Christine with what Irish Times journalist Mary Minihan described as “an awkward continental kiss”.

Body language suggested Michael was not enjoying one of the few remaining perks of the Irish Finance Minister: you get to kiss the cheek of your French tax tormentor, deferentially of course.

The consummation proved a damp squib for Ireland. Michael’s spinners issued a po-faced press release, lacking in credibility. The statement explained that it was a “coincidence that she was a candidate for the IMF”. No progress was reported on the interest rate.

Michael enthused about Christine’s suitability for the IMF gig. His spinners insisted that the vacancy should not be decided on geographic region, but on quality. Christine was the quality candidate. Our Finance Minister, fresh from his date with Christine, was peddling the lady’s line that her European pedigree was irrelevant. Quite a contrast with the Taoiseach and Lucinda’s assertions that they preferred a European.

The routes might have been different, but all roads led to Christine. All the ministers were on message, even if the reasons given for their decision were contradictory.

The Government quartet probably got their wires crossed in their stampede to endorse Christine. Enda wanted her because she is a European. Michael wants her because she is a wonderwoman. His account of the meeting gushed on about her, dubbing Christine as an “excellent candidate, very capable, who not only fulfils the qualities that we would require in the job, but would be in a position that would assist us to meet the requirements of our programme”.

Michael even told the media that Lagarde has a “strong appreciation” of the Irish position on corporate tax.

She can stuff her appreciation. We needed a concession. None came.

Indeed she has never shown any sign of “appreciation” before she became interested in the IMF job. Until last week, she was the mouthpiece of Nicolas Sarkozy — the most implacable enemy of our corporate tax rate living on the planet.

Irish Government sources are spinning that the hawkish Christine is a secret sympathiser with our corporate tax regime. She is apparently a covert dove, wishing to aid our efforts to reduce our crippling interest rate on the EU/IMF loan. Once she is in New York in Dominique’s old job, she will be free of the shackles of Sarkozy and will emerge as a champion of our cause. So say the spinners.

There is not a shred of evidence on the public record to suggest that she will change her spots. The French president is hardly aware of it. Noble Nicolas was lobbying frantically for Christine at the G8 summit in Deauville on Thursday.

If Christine is really a friendly sleeper batting for Ireland, surely we should try to keep her locked in the Elysee Palace, constantly at Sarkozy’s side moderating his militant exploitation of our difficulties? Remember the words of Hilaire Belloc: “Always keep a hold of nurse for fear of finding something worse.”

If Christine escapes across the Atlantic, far away from the grip of Nicolas, perhaps he will install an even more hardline finance minister?

The charade of Ireland cheering for Christine hardly adds up. So why are we leading the charge?

Part of the reason could be that both Michael and his predecessor, Brian Lenihan, have both succumbed to the legendary charms of the French femme fatale: but even in the overwhelmingly male world of European finance ministers, human frailties cannot provide a full explanation.

The root cause is more alarming. We have pawned the nation’s future in the hands of Europe’s bully boys. At the beginning of the week, as Christine’s campaign gained momentum, we were terrified of being seen as reluctant supporters. We are now too deep in the European manure to pull out.

So we began to bandwagon. There was no point in alienating Christine if she was a certain winner.

What a craven piece of diplomacy. Yet it is part of a pattern. Both recent Irish governments have refused to stand up to ECB boss Jean-Claude Trichet, German Chancellor Angela Merkel, French President Sarkozy and their banker friends. We have bowed the knee to their diktats on sparing the bondholders; we have refused to default; we have begged them in vain to reduce their penal interest rates; we have become their puppets.

In return for our acquiescence we are the victims of German and French ingratitude, fending off demands that we face final ruin by giving up our last lifeline — our 12.5 per cent corporate tax. Charming Christine has been in the vanguard of our European “friends” determined to kick us with her stiletto when we were on the canvass.

Instead of accepting our humiliation we should have kept our own counsel. Michael should have indulged himself in his well-practised brooding mood. We could have seized the high ground, pointing out that there are several other good candidates; that Europe hardly speaks with one voice as the big powers decide the fate of the smaller ones; that the policies of Christine are not those of Ireland.

Even more credibly, we could have offered a highly convincing reason for a delay. On June 10 a French court will rule on whether to investigate fragrant Christine over a very serious €240m arbitration settlement with Bernard Tapie, a convicted ex-minister who backed Nicolas Sarkozy.

Our haste to endorse Madame Lagarde, despite this cloud hanging over her candidacy, underlines our desperation.

It never pays to love bomb your tormentor.

source :http://www.independent.ie/opinion/columnists/shane-ross/shane-ross-sarkys-lady-wows-noonan-2660646.html

The Queen of England is gone back to England so you can get up off your knees Lads and we don’t need a new Queen imposed on us by the IMF or the EU .

Could Greece be the next Lehman Brothers?

It was less than three years ago that the failure of Lehman Brothers sent tremors through the global financial system, threatening the existence of every major bank and triggering the most severe economic crisis since the Great Depression. As Europe’s policy elite met for fresh crisis talks today, the dark fear that haunted everyone around the table was this: if the bankruptcy of a middling-sized Wall Street investment bank with no retail customers could have such dire consequences, what would happen if the Greeks decide they have had enough and renege on their debts?

Could Greece, in other words, be the new Lehmans? Given the structure of modern financial markets, with their chains of derivative trades and their pyramids of debt, there is only one answer. Greece could certainly be the next Lehmans. The likelihood that a Greek default would pose a threat to the future of the eurozone as well as to the health of the world economy means it has the potential to be worse than Lehmans. Much worse.

Given that gloomy prognosis, the European Union and the currently rudderless International Monetary Fund know something has to be done but are not quite sure what.

To be fair, it’s a tough one. A single currency that involved a hard core of European countries that were broadly similar in terms of economic development and industrial structure might just have worked. Bolting together a group of 17 disparate economies with different levels of productivity growth, different languages and different business cultures was an accident waiting to happen, and so it has proved.

The weaker countries, on the fringes of the single currency area, have not been able to cope with the disciplines involved in giving up control of their interest rates and their currencies, with the problem going much wider than the three countries – Greece, Ireland and Portugal – that have sought bailouts. Spain’s housing boom and bust was the result of the pan-European interest rate being too low; Italy’s increasing lack of competitiveness stems from a lack of exchange-rate flexibility.

It was also clear from the outset that the structure of monetary union would result in struggling countries being subjected to deflationary policies. Since the eurozone is not a sovereign state there is no formal mechanism for transferring resources from rich parts of the monetary union to the poor parts. Nor, given language barriers and bureaucratic impediments, is it easy for someone made unemployed in Athens to get a job in Amsterdam. Instead those countries seeking to match Germany‘s hyper-competitive economy have to cut costs, through stringent curbs on wage increases and fiscal austerity.

This was the plan A that was wheeled out for Greece last spring, when it became the first eurozone country to run into trouble, and it has been repeated for Ireland and Portugal. Plan A involved providing Athens with a bridging loan so that it could continue to meet its debt obligations, while at the same time insisting on draconian steps to cut Greece’s budget deficit. Pain plus procrastination: the traditional recourse for policymakers who lack imagination, as Europe’s have done throughout the sovereign debt crisis. Clearly, plan A has not worked, as anyone who has piled up too much debt on their credit card could have predicted.

Just like an individual who can’t stop interest charges going up and up, despite trading down to a budget supermarket, cancelling the gym membership and abandoning the holiday, Greece has found that the belt-tightening has left it with a bigger central government budget deficit in the first four months of 2011 than it had in the first four months of 2010.

It’s not difficult to see why this has happened. Those who put together Greece’s programme underestimated the extent to which public spending cuts and tax increases would hamper the growth potential of the economy, particularly given the lack of scope for the currency to fall. Historically the IMF’s structural programmes for troubled developing countries have involved devaluation, so exports became cheaper; but Greece’s membership of the single currency has meant there has been no external safety valve to compensate for the domestic squeeze.

Greece needs to have the scope to grow its way out of its debt crisis. Failing that, the rest of the eurozone has to be prepared to stomach not just a second, but a third and perhaps even a fourth bailout so Athens can keep up with its debt repayments. Hence the drumbeat of speculation that Greece would be better off defaulting, or leaving the eurozone altogether.

There is no suggestion that the Greek government is planning anything of this nature. Default and devaluation pose big risks, particularly since the debts would have to be in a redenominated currency (like the drachma) that creditors would deem to have junk status. In the short term, Greece’s economic and financial crisis would almost certainly deepen. Athens would prefer the EU to provide a second bridging loan and to reschedule its debts over a longer period so the interest payments become less onerous.

But that is at best a stopgap solution, because it does nothing to address the structural weaknesses of the eurozone. For this, there are really only two solutions. The first is to turn monetary union into political union, creating the budgetary mechanisms to transfer resources across a single fiscal space. That would fulfil the ambitions of those who designed the euro, and would recognise that the current halfway house arrangement is inherently unstable.

The second would be to admit defeat by announcing carefully crafted plans for a two-tier Europe, in which the outer part would be linked to the core through fixed but adjustable exchange rates. Neither option, it has to be said, looks remotely likely, although the collapse of Lehmans shows the limitations of the current muddling-through approach.

The eurozone’s future will not be decided in Athens or Lisbon but in Paris and in Germany. Both the big beasts have invested vast stocks of political capital in “the Project”, and insist that there will be no defaults and no departures from the club.

Yet German public opinion was sniffy about the Greek bailout in May 2010, kicked up a fuss at being asked to pick up the tab for Ireland last November, and is positively furious about having to sort out the mess in Portugal. Despite the strength of the German economy, Angela Merkel is facing strong political resistance to more bailouts. The political calculus is clear: cutting Greece and the other weaker euro-area economies adrift would end the dream of monetary union as a club where European countries, big and small, weak and strong, could rub along together with a single economic policy. But failing to cut them adrift could cost Merkel her job.

Source: http://www.guardian.co.uk/commentisfree/2011/may/17/greece-debt-crisis-lehman-brothers


Take the time to read this *article in full ,anyone with a fleeting interest in world financial affairs will only cringe .The Greeks are going to default and the Irish are going to do so a swell I am prepared to bet on it .As a market trader I haven’t come across such a sure bet ever!



September 2008 launched an extraordinary chain of events:

* General Motors, the world’s largest company, went bust.
* Washington Mutual became the world’s largest bank failure.
* Lehman Brothers became the world’s largest bankruptcy ever:
* The damage quickly spread around the world, shattering global confidence in the fundamental structures of the international economy.

The CBC’s Terence McKenna takes viewers behind the headlines and into the backrooms at the highest levels of world governments and banking institutions, revealing the astonishing level of backstabbing and tension behind the scenes as the world came dangerously close to another Great Depression.

What can we learn here in Ireland from this??

WikiLeaks, Bernanke, and Hyperinflation

NIA is deeply disturbed by how U.S. politicians and the mainstream media have been calling for WikiLeaks founder Julian Assange to be charged with treason. Some people in Washington are even calling for the assassination of Assange like he is some kind of a terrorist, all because he helped spread the truth about our country’s foreign policy and other sensitive topics. The U.S. is in very serious trouble if it has now become a crime to speak the truth.
In recent years with the help of the Internet, there has been a rise in alternative media sites that speak the truth, while the mainstream media has simultaneously experienced collapsing television ratings and newspaper circulation levels. CNBC’s average television show now only has 47,000 U.S. viewers in the 25-54 demographic, down 36% from one year ago. NIA’s latest inflationary depression update video has already surpassed 47,000 views, and we don’t have the advantage of being on cable television in 95 million American homes.
Americans today have an appetite for the truth. For decades, Americans were brainwashed into believing anything the mainstream media said as the truth. Now that America is waking up and realizing that they have been deceived and lied to their whole lives by the mainstream media, the media is losing its stranglehold over the public. The politicians and corporate elites who control the media are becoming very scared.
Although NIA is not a supporter of Assange, we are a supporter of constitutional rights and there is no more important constitutional right than our freedom of speech. If Americans don’t take a stand now to protect their freedom of speech, the U.S. government soon might make it a crime to warn Americans about the hyperinflation that is ahead. With the current path our country is on, there is a chance that as the U.S. approaches the point of hyperinflation, organizations like NIA will be made illegal to exist in the U.S. Those associated with NIA and organizations like us may one day be charged with treason or targeted for assassination, just for warning Americans to get out of fiat paper money (U.S. dollars) and into real money (gold and silver).
If there is one American who deserves to be charged with treason, it is Federal Reserve Chairman Ben Bernanke. Bernanke, this past Sunday on ’60 Minutes’, outright lied to the American public when he said that the Federal Reserve isn’t printing money. Less than two years earlier on the same television program, Bernanke admitted that the Federal Reserve is printing money. However, back then, nobody was questioning the Federal Reserve’s actions. Thanks to alternative media organizations that have worked tirelessly to help expose the Federal Reserve’s dangerous and destructive actions, Americans are starting to finally question the Federal Reserve and Bernanke is now clearly on the defensive.
Bernanke’s lie on ’60 Minutes’ that the Federal Reserve isn’t printing money is similar to the lie he made under oath on June 3rd, 2009, when he testified in front of Congress saying, “The Federal Reserve will not monetize the debt.” Today, the Federal Reserve is monetizing the debt (as admitted by both the Kansas City and Dallas Fed Presidents). When Bernanke uses the term “quantitative easing”, he is insulting the intelligence of Americans. “Quantitative easing” is nothing more than printing money.
Bernanke said in his interview that the purpose of the Federal Reserve’s “quantitative easing” is to keep interest rates low, but the yield on 10-year U.S. treasuries rose to a new six month high today. The truth is, “quantitative easing” is causing interest rates to rise because all of the money being printed is about to cause an outbreak of massive price inflation. The yield on the 10-year bond has risen by 38 basis points during the past three days alone and is now up to 3.26%. NIA continues to believe that interest rates have seen their lows and yields on the 10-year bond will likely rise above 4% in the first half of 2011.
When the 10-year bond yield rises to above 4%, instead of Bernanke admitting that he lied to the American public and his money printing actually caused interest rates to rise, Bernanke will likely claim that his “quantitative easing” just wasn’t large enough. Bernanke will use rising interest rates as an excuse to expand the size of QE2 and/or possibly launch QE3. Remember, every 1% rise in interest rates means an extra $100 billion that will need to be spent each year on interest payments on our national debt. Rising interest payments on our national debt can only be paid by Bernanke printing even more money.
Bernanke promises that he won’t let price inflation in the U.S. rise above 2%, but all Americans who live in the real world realize that price inflation is already well above 2%. Whether it be food, gas, heat, clothes, healthcare, college tuition, entertainment, or just about anything else, prices have risen over the past twelve months for just about all goods and services in America by a lot more than 2%. It is a real shame that absolutely nobody in the mainstream media has acknowledged this fact and called Bernanke out on it. Bernanke deserves to be impeached for his previous acts of perjury and for blatantly ignoring the price inflation that exists all around us.
Bernanke is currently leading a misinformation campaign that will prevent the majority of Americans from preparing for and surviving U.S. hyperinflation. Bernanke’s misinformation campaign is similar to what took place in Weimar Germany in the 1920s when they experienced hyperinflation. In Weimar Germany, the misinformed public always focused on rising prices, but never understood that prices were rising because the German mark was losing its purchasing power.
The Germans believed that there was a shortage of marks and it was therefore necessary to print as many marks as possible. Germans placed all of the blame for their crisis on the symptoms of inflation. They blamed greedy tourists, selfish industrialists and profiteers, the wage demands of labourers, speculators in Germany who were buying foreign currencies and sending their wealth out of the country, and other nations that were buying up German assets with foreign currencies. They failed to grasp that it was their government’s own printing of marks and increasing the money supply that caused the inflationary disease.
Bernanke is trying to convince the world that he can create an economic recovery through “quantitative easing” (printing money), without creating price inflation, because he claims to have the tools to unwind the Federal Reserve’s massive asset purchases. He is trying to trick the world into believing that he has the ability to pinpoint an exact time in which the U.S. economy is recovering without massive price inflation, where he can exit his inflationary strategy before prices start to dramatically rise. Bernanke has no exit strategy that he can implement without sending the U.S. economy into the next Great Depression.
Bernanke, being a self-proclaimed scholar of the Great Depression, is not going to allow another one to occur. Bernanke didn’t like the market’s reaction when he allowed Lehman Brothers to fail (the only right decision he made during the whole panic of 2008). After the failure of Lehman Brothers caused the stock market to crash, Bernanke didn’t allow another major U.S. bank to fail. NIA predicts that we will one day see Bernanke attempt to launch his exit strategy by raising the Federal Funds Rate, but as soon as the stock market begins to go south like in late-2008, Bernanke will reverse his decision and either lower the Federal Funds Rate again or leave it at artificially low levels until the U.S. dollar loses all of its purchasing power.
One organization out there that has perhaps played the largest role in helping expose the Federal Reserve’s manipulation of gold and silver prices is the Gold Anti-Trust Action Committee (GATA). NIA considers GATA’s President Bill Murphy to be a hero for having the courage to expose evidence of gold and silver price manipulation at the CFTC hearing on position limits that was held on March 25th of this year. A short time after the hearing took place, Murphy was leaving a restaurant less than two blocks from where he lives when somebody jumped out from behind a wall and sucker-punched him with brass knuckles. He was knocked out cold and thought his jaw was broken. NIA just conducted a shocking interview with Bill Murphy that we will be releasing Friday evening. You will definitely want to listen to this interview.

source http://inflation.us

Bondholders Look out

Allied Irish Banks Plc and Bank of Ireland Plc’s senior debt slumped on concern the government will force some of the cost of bailing out the country’s banks onto senior bondholders.

European Union and International Monetary Fund officials are taking legal advice on how senior bondholders can share the cost of Ireland’s 85 billion-euro ($113 billion) bailout without triggering lawsuits, the Irish Times reported today, without saying where it got the information. Negotiators plan to finalize the aid package on Nov. 28 before markets re-open after the weekend, an EU official said on condition of anonymity.

Allied Irish’s 750 million euros of 5.625 percent senior notes due 2014 fell 2 cents on the euro to 75 cents, a 2.6 percent decline, according to composite prices on Bloomberg at 4:30 p.m. in London. Bank of Ireland’s 974 million euros of 4.625 percent senior unsecured notes maturing in 2013 fell 3 cents on the euro, or 3.4 percent, to 82 cents.

“While junior bondholders always faced the prospect of taking a haircut on their investments,” senior bondholders “have been sacrosanct” until now, Eamonn Hughes, an analyst with Goodbody Stockbrokers in Dublin, said in a note to clients. “It is clear that more radical solutions than simply pumping more equity into the bank system are in the offing.”

Two years ago, the Irish government assured senior bondholders that they wouldn’t lose their money if banks failed. Holders of the debt are typically the last investors to lose out when a bank or company founders.

Allied Irish

Allied Irish has about 5.9 billion euros of senior unsecured debt and 12.1 billion euros of senior secured notes, all of which are covered bonds, according to data compiled by Bloomberg. Bank of Ireland has 5.4 billion euros of senior unsecured debt and another 5.9 billion euros of government- guaranteed bonds, the data show.

Anglo Irish Bank Corp. Ltd., which is buying back some of its subordinated securities at an 80 percent discount, also had its senior bonds tumble on speculation of burden-sharing.

Anglo Irish’s 1.25 billion euros of floating-rate notes maturing in January 2012 dropped 7 cents on the euro, or 9 percent, to 70 cents, Bloomberg composite prices show. The Dublin-based lender’s 750 million euros of FRNs due in January 2011 plunged 9 cents, or 10 percent, to 83 cents.

Anglo Irish had its long-term credit rating cut six levels by Standard & Poor’s to B, or junk, from BBB today.

Paid at Par

Holders of European senior bank bonds have been paid the par value of their investments in troubled lenders, except in the case of Iceland, Morgan Stanley analysts including Carlos Egea said in a note on Oct. 15. There, creditors of Iceland’s Kaupthing Bank hf, Glitnir Bank hf and Landsbanki Islands hf are owed as much as $86 billion. Bondholders of Lehman Brothers Holdings Inc. weren’t bailed out after the firm filed for bankruptcy in 2008.

The rescue talks taking place in Dublin have focused on how Bank of Ireland and Allied Irish may buy back or exchange subordinated debt rather than burden-sharing by senior bondholders, according to three people familiar with the situation, who declined to be identified because the discussions are private.

Allied Irish shares surged as much as 24 percent to 37 cents on speculation that burden-sharing with bondholders would help the bank avoid outright nationalization, before falling back to 34 cents in Dublin trading.

‘Benefit’ Shareholders

“While shareholders would still get diluted, Allied Irish could avoid being nationalized, which would potentially benefit investors” as the shares would still have some value and be tradable, Oliver Gilvarry, head of research at Dolmen Securities in Dublin, said in a telephone interview.

Bank of Ireland shares were 6 percent higher at 27 cents after earlier rising 9 percent. The five-member ISEQ Financial Index has fallen about 98 percent from its peak in February 2007.

To help prevent another crisis, Ireland’s government will seek to raise its banks’ so-called core Tier 1 capital ratio, a measure of financial strength, to between 10.5 percent and 12 percent, two people familiar with the situation said Nov. 24. That’s up from the central bank’s 8 percent target.

Allied Irish would require an additional 3 billion euros to the 6.6 billion-euro fundraising the government is already underwriting to meet the 12 percent target, Niall O’Connor, a London-based analyst with Credit Suisse Group AG, said in a note to clients yesterday. The government’s Allied Irish stake would rise to as much as 97 percent from 19 percent today, he said.

Default Insurance

The cost of insuring the debt of Ireland’s two biggest lenders against default soared to records today.

Credit-default swaps insuring Allied Irish’s senior bonds for five years rose 5 percentage points to 25 percent upfront and 5 percent annually, according to CMA. The upfront cost of protection on its subordinated debt climbed 3 percentage points to 67 percent.

The upfront cost of Bank of Ireland senior swaps rose 5 percentage points to 16 percent in advance, while that cost on its junior debt insurance increased 5.5 percentage points to 47.5 percent upfront.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point on a credit-default swap protecting 10 million euros of debt for five years is equivalent to 1,000 euros a year.

Forcing losses on senior bondholders “sets a nasty,” if understandable, “precedent,” Marc Ostwald, a strategist at Monument Securities Ltd. in London, said in a note today. “The constant ‘goal-post moving’ in terms of regulation” does “enormous damage to investor and entrepreneurial confidence.”

To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; John Glover in London at johnglover@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

Anglo and Lehman

Anglo and Lehman

By Gavin Sheridan

A common refrain heard from representatives of the Government is that Anglo Irish Bank had to be saved in September 2008; else it would have brought the entire banking system down with it. Government ministers consistently and still come on air to tell us that Anglo was systemically important and that we had to save it. Just look at Lehman Brothers, they say, look at the disaster Lehman caused.
Yes Lehman collapsed. Is the US better or worse off as a result, two years later?
Ben Bernanke, the Fed chairman, has said something rather interesting in the context of Lehman:
“I regret not being more straightforward there because clearly that has supported the mistaken impression that, in fact, we could have done something. We could not have done anything.”
Bernanke told the Financial Crisis Inquiry Commission that any loan the Fed could have provided Lehman would not have stopped a run on the bank by customers.
“If we lent the money to Lehman,” Bernanke said, “we would have saddled the taxpayers with tens of billions of dollars in losses.”
So if the US government had saved Lehman, it would have saddled taxpayers with tens of billions of dollars in losses.
Except in Ireland, we did save our Lehman, leading to tens of billions of euros in losses for the taxpayer.
And what have we got to show for it?

Saving Anglo was in most Irish people’s minds was a total disaster and the only explanation why Lenihan and Clown nationalized was that they are completely incompetent or at worst they did it to save their Galway tent gombeen pals in the building industry
Either way they have destroyed our country and I believe they are guilty of treason!
At this stage at least a hundred people have taken their own lives as a direct result of the illegal actions they took .They have saddled me and the rest of the nations family’s with the debts of unscrupulous gamblers within the banks and the building industries
I refuse to lie down and just take it. We as a people must stand up and say no the corrupt bankers. The gambling and corrupt bankers and multi millionaire developers must bail themselves out and not expect the taxpayers of the nation to do so: The economic treachery of the current government must not be forgotten and in time the culprits and their cronies will have to pay the price for this treachery!
The ultimate result of the government’s bailout of their pals has been the socialization of private debts. In effect the plunder of the public purse for the benefit of a select few, a golden circle without any concern of the ability of the nation to service this extraordinary debt in the first place
No amount of media spin, with help from their lackeys in the pay of the government can fool all of the people all the time. More and more people are beginning to see through the lies we are been told on a constant bases by the clowns in Government and their supported agencies Like Anglo Irish Bank, and NAMA

Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!

If this article goes viral around the web, I wouldn’t be surprised if the euro tanks and several European sovereign states’ spreads blow out. I have busted several of them in another of a long series of “creative” economic forecasting schemes to fudge the appearance of “austerity”. 

Well, its official (sort of). Greece, a Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!member of the European Union, will probably join the ranks of countries like Latvia (where policies are limited by the choice of the currency regime), Iceland (where the crisis has resulted in a very heavy external debt burden), the Ukraine (which is still affected by financial and political fragility) and a bevy of third world and emerging market countries in distress from the (not very) esteemed club of IMF financial aid recipients. What does this portend for the Euro? Well, I have blogged earlier in the year that the Euro’s credibility is now highly suspect and those pundits who dared contemplate the Euro potentially replacing the dollar as the global reserve currency now see the folly of their ways. The chances of a break-up are significantly higher and quite realistic. Credit Agricole’s currency strategist puts it succinctly:

“If Greece goes with the IMF, that says something terrible about the political process within Europe,” said Stuart Bennett, a senior foreign-exchange strategist at Credit Agricole Corporate and Investment Bank in London. “This undermines any confidence in the currency.”

Greece will probably end up defaulting on their debt, with or without the aid of the IMF, and they will probably have good company with several other EU members. I say so, and so does UBS Economist Donovan.

“I think it’s in an impossible situation,” said Donovan, who is based in London, in an interview with Bloomberg Radio today. “Europe has failed to clear its first serious hurdle. If Europe can’t solve a small problem like this, how on earth is it going to solve the larger problem, which is the euro doesn’t work. It’s a bad idea.”

How dare I make such a proclamation? Well, because I am telling the truth based upon facts and the many forecasts from the various sovereign nations are basically based upon lies, fiction and farce! As it is look at how the market is viewing the Greek tragedy:

European governments have yet to agree on how to fund any rescue for Greece, which says it will struggle to pay its debts at current market interest rates. While Prime Minister George Papandreou announced a 4.8 billion euro ($6.4 billion) austerity package on March 3, the extra yield that investors demand to hold Greek debt over German counterparts has since risen.

The spread was at 324 basis points today compared with 316 points at the start of the month. The euro fell 1 percent today to $1.3358, extending its decline this year to 6.7 percent.

I am willing to bet the “market” has not taken a strong, hard, objective look at those proposed austerity measures and uncovered the secrets that I am about to reveal. If they have, these spreads would have been blown out much wider. 

A German finance official said yesterday that both countries may agree to involve the IMF. Papandreou said March 19 that Greece, which needs to sell about 10 billion euros ($13.4 billion) of bonds in coming weeks, is a step away from not being able to borrow and may need to turn to the IMF if European aid isn’t forthcoming.

Europe’s fiscal crisis shows the need for the euro region to create a common fiscal policy, former U.K. Chancellor of the Exchequer Norman Lamont said in an interview in London today.

“That would be the logical step,” Lamont said. “I don’t think they are prepared to do that, and without doing that I think the euro is a contradiction, a currency without a state.”

Bingo! The man hit the point right on the head. There are too many chiefs and not enough Indians.

I want to visually and verbally demonstrate what an absolute joke European economic estimates have been throughout this crisis, and more importantly how politicians and sovereign states are interpreting this joke in such a way that can deliver a punch line that can most assuredly end in sever global recession, or worse. This document/blog post alone should serve to sink the Euro and blow out CDS spreads for several European sovereign. Why? Because the truth hurts and the truth is not what has been coming from European sovereign states as of late.

The IMF and the EU have been consistently and overtly optimistic from the very beginning of this crisis. Their numbers have been dramatically over the top on the super bright, this will end pretty, rosy scenario side – and that is after multiple revisions to the downside!!! We can visit the US concept of regulatory capture (see How Regulatory Capture Turns Doo Doo Deadly  and Lehman Brothers Dies While Getting Away with Murder: Regulatory Capture at its Best) for the EU, but due to time constraints we will save that topic for a later date. To make matters even worse, the sovereign states have taken these dramatically optimistic and proven unrealistic projections and have made even more optimistic and dramatically unrealistic projections on top of those in order to create the illusion of a workable “austerity” plan when in reality there is no way in hell the stated and published plans will come anywhere near reducing the debts and deficits as advertised – No Way in Hell (Hades/Tartarus/Anao/Uffern/Peklo/Niffliehem – just to cover some of the Euro states caught fudging the numbers)!

Let’s take a visual perusal of what I am talking about, focusing on those sovereign nations that I have covered thus far.

Notice how dramatically off the market the IMF has been, skewered HEAVILY to the optimistic side.  Now, notice how aggressively the IMF has downwardly revsied their forecasts to still end up widlly optimistic.

Ever since the beginning of this crisis, IMF estimates of government balance have been just as bad…

The EU/EC has proven to be no better, and if anything is arguably worse!




and the EU on goverment balance??? Way, way, way off. 

If the IMF was wrong, what in the world does that make the EC/EU?

The EC forecasts have been just as bad, if not much, much worse in nearly all of the forecasting scenarios we presented. Hey, if you think tha’s bad, try taking a look at what the govenment of Greece has done with these fairy tale forecasts, as excerpted from the blog post

Think about it! With a .5% revisions, the EC was still 3 full points to the optimistic side on GDP, that puts the possibility of Greek  government forecasts, which are much more optimistic than both the EU and the slightly more stringent but still mostly erroneous IMF numbers, being anywhere near realistic somewhere between zero and no way in hell (tartarus, hades, purgatory…).

Now, if the Greek government’s macroeconomic assumptions are overstated when compared with EU estimates, and the EU estimates are overstated when compared to the IMF estimates, and the IMF estimates are overstated when compared to reality…. Just who the hell can you trust these days???

 source link http://boombustblog.com/reggie-middleton/2010/03/14/qgreek-crisis-is-over-region-safeq-prodi-says-i-say-liar-liar-pants-on-fire/

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