![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_7a.gif)
“The System of Liberty” by our own George H. Smith
George H. Smith has written a new book. For readers of Libertarianism.org, this is welcome news indeed. With his weekly “Excursions in the History of Libertarian Thought,” George shows off his enormous knowledge of intellectual history, and teaches all of us a great deal.
If you enjoy “Excursions,” think of The System of Liberty as a marthon session. George has arranged the book around conflicts within classical liberalism. This allows him to do what we strive for here at Libertarianism.org: show the libertarian intellectual tradition not as a monolithic single “school,” but as a big tent of ideas with significant overlap, but not total agreement. But, George notes,
Although much of this book deals with the internal problems of classical liberalism, and although I believe that liberals failed to resolve some of these problems, my sympathies with this school of thought will quickly become apparent to readers. In their search for answers to difficult questions, the classical liberals may not have been successful in every respect. But they did have many successes, both theoretical and practical, in their effort to justify and explain individual freedom, and we owe them an incalculable debt for many of the freedoms we enjoy today.
The System of Liberty explores natural rights and utilitarianism, anarchism, state sovereignty and self-sovereignty, positive versus negative liberty, the role of the state in education, charges of “social atomism” and “social Darwinism,” and methodological individualism. And it does so with George’s typical clarity and voluminous knowledge of the literature.
If you’re a regular read of “Excursions,” you owe it to yourself to check out The System of Liberty, too. Nobody does the history of political thought quite like George H. Smith.
View full post on Libertarianism.org
Other • Russia’s Plan For The BRICS To Dismantle The Dollar System
Russia’s Plan For The BRICS To Dismantle The Dollar System
SUNDAY, MAY 12, 2013 AT 3:38PM
Contributed by Valentin Mândr??escu, Editor of Reality Check @ The Voice of Russia. Former commodity trader, economist, journalist. Nomadic lifestyle. When not in Moscow, he can be found travelling across Eastern Europe. Areas of interest: world economy, East European politics, and the theory of propaganda.
The status of the US dollar as the world reserve currency gives the US a number of advantages over other countries. The world’s most important commodities are priced and traded in dollars, even if most of these commodities are not produced in the US. The fact that the world’s financial system is based on the dollar allows the Federal Reserve to export inflation to other countries, while the Federal Government runs a huge deficit with impunity.
So far, only China has been active in challenging the dollar supremacy. The internationalization of the yuan is an official priority of Chinese leaders. Currency swap agreements with major trade partners like Brazil, France, or Australia are small but important steps in the Chinese strategy. Changing the world financial system is not an easy task and certainly a very challenging undertaking for China. Now, it seems that Beijing has found an ally in the Kremlin. And there appears to be a consensus between the BRICS countries: the urgent necessity to dismantle the dollar system.
A week before the recent BRICS summit in Durban, the Kremlin administration has silently produced a document which describes the Russian strategy in the context of BRICS cooperation. The document makes for a fascinating read for anyone brave enough to plow through the dense Russian legalese. The strategy has been designed in the “inner circle” of Vladimir Putin’s team, so it is safe to assume that it represents the official view on the BRICS future.
In Russia, politics are Byzantine; the fact that the Kremlin decided not to hide the document or leak it to a chosen few journalists, but publish it outright is a very strong signal, a very vocal angry signal directed at the US. A signal that the Western media chose to ignore.
In the recitals section of the document, the authors point out that “there is a common desire of the BRICS partners to reform the outdated global financial and economic framework that doesn’t take into account the growing economic weight of the emerging markets.” Moreover, the Russian strategists view the BRICS as a tool to reform the way the world is being governed. Then the document hammers home its message:
Russia assumes that, given enough political will of the leadership of the BRICS countries to advance their cooperation, this alliance can become one of the key elements of a new system for global governance, primarily in the economic and financial domains.
Move aside New World Order! The BRICS are coming to change the world.
The goals are clear. In the section titled “Strategic goals,” the first point on the BRICS’ agenda is the reform of the world financial system in order to make it “fairer, more stable, and more efficient.” In the later chapters, it is spelled clearly that this “reform” is actually a dismantling of the dollar system.
It is worth noting that the place of this issue in the list of the BRICS’ priorities speaks volumes about its importance. Judging by the order of priorities, depriving the dollar of its status as the world reserve currency is more important than “preventing breaches of sovereignty” (a.k.a. the “Syrian problem”) or “expanding economic cooperation.”
The language used in this document indicates that it has been written or strongly influenced by Sergei Glaziev, the president’s economy advisor, who is known for masterminding the economic aspects of the Eurasian Union between Russia, Belarus, and Kazakhstan. Glaziev has repeatedly accused Fed Chairman Ben Bernanke of starting “a currency war” against the emerging markets. He also believes that Bernanke’s policy will ultimately lead to a military confrontation: “the conservation logic of the current financial and political system leads to a further escalation of military and political tensions, including the start of a major war” (read more).
A whole chapter of the strategy document is dedicated to step-by-step instructions on dismantling the existing global financial system. The list of measures includes:
Reformation of the world currency system in order to create a representative, stable and predictable system of world reserve currencies;
Reduction of the risks of destabilization of currency and equity markets linked to massive cross-border flows of capital;
Increasing the use of national currencies in the trade between BRICS countries;
Increasing the level of cooperation between BRICS countries in order to promote their interest in the domain of world trade;
Strengthening the BRICS Exchange Alliance;
Creating independent rating agencies.
Since the Durban Summit, at least one of those measures has been implemented: RT reported that “China’s Dagong Global Credit Rating agency is to set up the joint venture with US-based Egan-Jones Ratings Co (EJR) and Russia’s RusRating JSC to challenge the three major US ratings agencies.” As BRICS countries try to achieve the rest of their stated goals, it remains to be seen if the dollar system survives the joint onslaught of the biggest emerging economies.
http://www.testosteronepit.com/home/201 … ystem.html
Statistics: Posted by yoda — Sun May 12, 2013 11:10 pm
View full post on opinions.caduceusx.com
School Funding System Not Broken… It Just Doesn’t Work
Andrew J. Coulson
We do not claim that the school funding system… is fundamentally flawed, only that there is no correlation at all between the level of per pupil funding and educational outcomes. —Deloitte
Hahahahaha! Ha! Haha! Haaaaaah. Okay. Now a little context.
Last November, the British government “published” a study of its state school system that it had commissioned from the accounting firm Deloitte. Maybe “published” is too strong a word, since there was apparently no press release, no news conference, no effort of any kind to make the public or the media aware of its existence. Perhaps that’s because the study found no correlation between spending and achievement in Britain’s state schools, and the current government’s policy is to increase spending on state schools in an effort to be seen to be doing something.
The sad thing is, the same fundamentally flawed funding systems and dysfunctional political incentives exist in the United States, too… and with much the same effect:
Hat tip: Joanne Jacobs.
View full post on Cato @ Liberty
Unexpected Praise for Australia’s Private Social Security System
Daniel J. Mitchell
As part of my “Question of the Week” series, I said that Australia probably would be the best option if the United States suffered some sort of Greek-style fiscal meltdown that led to a societal collapse.*
One reason I’m so bullish on Australia is that the nation has a privatized Social Security system called “Superannuation,” with workers setting aside 9 percent of their income in personal retirement accounts (rising to 12 percent by 2020).
Established almost 30 years ago, and made virtually universal about 20 years ago, this system is far superior to the actuarially bankrupt Social Security system in the United States.
Probably the most sobering comparison is to look at a chart of how much private wealth has been created in Superannuation accounts and then look at a chart of the debt that we face for Social Security.
To be blunt, the Aussies are kicking our butts. Their system gets stronger every day and our system generates more red ink every day.
And their system is earning praise from unexpected places. The Center for Retirement Research at Boston College, led by a former Clinton Administration official, is not a bastion of laissez-faire thinking. So it’s noteworthy when it publishes a study praising Superannuation.
Australia’s retirement income system is regarded by some as among the best in the world. It has achieved high individual saving rates and broad coverage at reasonably low cost to the government.
Since I wrote my dissertation on Australia’s system, I can say with confidence that the author is not exaggerating. It’s a very good role model, for reasons I’ve previously discussed.
Here’s more from the Boston College study.
The program requires employers to contribute 9 percent of earnings, rising to 12 percent by 2020, to a tax-advantaged retirement plan for each employee age 18 to 70 who earns more than a specified minimum amount. …Over 90 percent of employed Australians have savings in a Superannuation account, and the total assets in these accounts now exceed Australia’s Gross Domestic Product. …Australia has been extremely effective in achieving key goals of any retirement income system. …Its Superannuation Guarantee program has generated high and rising levels of saving by essentially the entire active workforce.
The study does include some criticisms, some of which are warranted. The system can be gamed by those who want to take advantage of the safety net retirement system maintained by the government.
Australia’s means-tested Age Pension creates incentives to reduce one’s “means” in order to collect a higher means-tested benefit. This can be done by spending down one’s savings and/or investing these savings in assets excluded from the Age Pension means test. What makes this situation especially problematic is that workers can currently access their Superannuation savings at age 55, ten years before becoming eligible for Age Pension benefits at 65. This ability creates an incentive to retire early, live on these savings until eligible for an Age Pension, and collect a higher benefit, sometimes referred to as “double dipping.”
Though I admit dealing with this issue may require a bit of paternalism. Should individuals be forced to turn their retirement accounts into an income stream (called annuitization) once they reach retirement age?
I’m torn on this issue. Paternalists sometimes do have good ideas, but shouldn’t people have the freedom to make their own decisions, even if they make mistakes? But does the answer to that question change when mistakes mean that those people will be taking money from taxpayers?
Fortunately, I don’t need to be wishy-washy on the other criticism in the study.
Australia’s system does have shortcomings. It is heavily dependent on defined contribution plans and is vulnerable to weaknesses in such programs.
I strongly disagree. A “defined contribution” account is something to applaud, not a shortcoming.
The author presumably is worried that a “DC” account leaves a worker vulnerable to the ups and downs of the market, whereas a “defined benefit” account promises a specific payment and removes that uncertainty. Sounds great, but the problem with “DB” accounts is that they almost inevitably seem to promise more than they can deliver. And that seems to be the case whether they’re supposedly based on real savings (like company retirement plans or pension funds for state and local bureaucrats) or based on pay-as-you-go taxation (like Social Security).
*Since I’m somewhat optimistic that America can be saved, I’m not recommending you head Down Under just yet.
P.S. I’m also a huge fan of Chile’s system of private accounts. At the risk of oversimplifying, Chile’s system is sort of like universal IRAs and Australia’s system is sort of like universal 401(k)s.
P.P.S. There’s much to admire about Australia, but its government is plenty capable of boneheaded policy. Heck, the government even provides workers’ compensation payments to people who get injured while having sex after work hours, simply because they were on a business-related trip. Talk about double dipping!
P.P.P.S. Here’s my video explaining why we should implement personal retirement accounts in the United States.
P.P.P.S. The death tax has been abolished in Australia, so there’s more to admire than just personal retirement accounts.
View full post on Cato @ Liberty
Is The Takedown Of Gold A Sign That The Entire Global Financial System Is About To Crash?
Somebody out there is sure getting prepared for something really big. We have just witnessed a takedown of gold and silver unlike anything that we have witnessed in decades. On Monday, the price of gold had fallen by more than 10 percent at one point. It shocked investors all over the globe, and overall what we have just seen was the largest two day decline in the price of gold in 30 years. The price of silver dropped even more rapidly on Monday. It was down more than 14 percent at one point. There was an atmosphere of “panic selling” as investors and financial institutions raced to liquidate their holdings of silver and gold. But was this exactly what someone out there wanted? As I wrote about the other day, big banks and news outlets all over the world have been boldly proclaiming for weeks that gold is entering a “bear market” and that now is the time for all of us to sell our gold. In particular, Goldman Sachs reportedly told their clients earlier this month that they “recommend initiating a short COMEX gold position“. Was that just a “good guess” on their part, or was something else going on? Were they actually trying to help create a “selling frenzy” that would drive the price of gold much lower?
What we witnessed on Monday was absolutely jaw-dropping. Just check out this chart of the price of gold over the past 10 years. The takedown of gold on Monday sticks out like a sore thumb…
And that chart does not even show the full extent of the collapse. As I write this, the price of gold is sitting at $1355.20.
But this is just the beginning for gold and silver. As I have warned repeatedly, the price of gold and the price of silver will experience wild swings in the years ahead.
For example, the following is what I wrote about gold and silver on August 7th, 2012…
I like precious metals myself, but if you are going to invest you need to get educated so that you know what you are doing. If you go in blindly you are likely to get burned at some point.
In addition, you need to be prepared for wild fluctuations in price over the coming years. There will be times when gold and silver absolutely soar and there will be times when they drop like a rock.
So if you are going to play the game you need to be able to handle the ride.
Monday was an example of what I meant when I said that “you need to be able to handle the ride”. There are going to be a lot more days like Monday (both up and down) for gold and silver in the years ahead.
The foolish people are those that are scared out of their wits and that are selling off all of their gold and silver right now.
Sadly, there was reportedly a tremendous amount of panic selling of gold and silver during this collapse. The following is what Dennis Gartman told CNBC on Monday…
“There are a lot of people throwing up their hands. Throwing positions overboard. Panic is everywhere,” Gartman said in a “Squawk Box” interview on Monday. “I’ve never seen anything like this. I mean it.”
It just shows that there are a lot of stupid people out there. The following is an excerpt from another CNBC report about the panic selling that was happening on Monday…
“I think the last $20 has been margin selling. The market is falling like a knife. People are saying, ‘Get me out now,’ ” Phoenix Futures President Kevin Grady said. “You’re also seeing people selling energy profits to pay for metals losses. You’re seeing a tremendous amount of gold liquidation today.”
According to Dr. Paul Craig Roberts, Assistant Secretary of the Treasury under President Ronald Reagan, all of this panic selling is the result of an orchestrated takedown of gold and silver…
This is an orchestration (the smash in gold). It’s been going on now from the beginning of April. Brokerage houses told their individual clients the word was out that hedge funds and institutional investors were going to be dumping gold and that they should get out in advance.
Then, a couple of days ago, Goldman Sachs announced there would be further departures from gold. So what they are trying to do is scare the individual investor out of bullion. Clearly there is something desperate going on…
So who is behind all of this orchestration? Well, according to Dr. Paul Craig Roberts, it is actually the Federal Reserve…
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
In fact, Dr. Roberts says that former Goldman Sachs trader Andrew Maguire is reporting that the Fed orchestrated the dumping of 500 tons of naked gold shorts into the market on Friday…
According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.
As Dr. Roberts noted, this represents an absolutely massive amount of gold…
Consider the 500 tons of paper gold sold on Friday. Begin with the question, how many ounces is 500 tons? There are 2,000 pounds to one ton. 500 tons equal 1,000,000 pounds. There are 16 ounces to one pound, which comes to 16 million ounces of short sales on Friday.
Who has 16 million ounces of gold? At the beginning gold price that day of about $1,550, that comes to $24,800,000,000. Who has that kind of money?
If any of the allegations above are even remotely true, then a whole lot of people need to be criminally investigated.
Meanwhile, many are considering this takedown of gold to be an ominous sign that another major financial crisis may be heading our way.
Just remember what happened back in 2008. As Zero Hedge noted on Monday, the price of gold suddenly plunged 21 percent in July 2008. That was just a couple of months before the U.S. stock market crashed in the fall…
The rapidity of gold’s drop is impressive, concerning, and disorderly. We have seen two other such instances of disorderly ‘hurried’ selling in the last five years. In July 2008, gold quickly dropped 21% – seemingly pre-empting the Lehman debacle and the collapse of the western banking system.
Is this collapse in the price of gold a harbinger of another major stock market crash?
Time will tell.
Meanwhile, many average Americans are wondering if they should dump their gold and silver while they still can.
As I mentioned above, gold and silver are going to experience wild fluctuations over the next few years. When the next stock market crash comes, gold and silver are probably going to go even lower than they are today for a short time. But in the long run gold and silver are going to soar to unprecedented heights.
Investing in gold and silver is not for the faint of heart. If you cannot handle the ride, you should sit on the sidelines. We are entering a period of tremendous financial instability, and holding gold and silver is going to be like riding a roller coaster. The ups and downs are going to shake a lot of people up, but the rewards are going to be great for those that stick with it the entire time.
View full post on The Economic Collapse
American • You must now act to exit the system
You must now act to exit the system
Bail-in
(excerpt)
The US has already put in place bail-in-like powers as part of the Dodd-Frank financial reform act passed last year. The law includes a resolution scheme that gives regulators the ability to impose losses on bondholders while ensuring the critical parts of the bank can keep running.
Employees would be paid, the lights would stay on and derivatives contracts would not have to be instantly unwound.
Click here to read the full definition…
http://lexicon.ft.com/Term?term=bail_in
I have given my all to communicating the most important conclusions concerning your future financially and therefore on every level of life.
1. The operation to depress the gold price since the high was limited in time and is now behind us in terms of maximum pain for the bulls.
2. You must exit the system immediately because the Financial Nazis struck in Cyprus and now are moving directly towards you. This is simple fact, which if you ignore will be akin to the rise of the Nazis in Germany for those that knew they should, but never made the decision to leave that system.
The saddest fact is that many of you have thrown away your gold share and bullion insurances to the enriched Bankster bullies. You will now pay no attention to the need to exit the system. It is as if you are moths attracted to the flame of danger, and a sloth in that you are too lazy to take the actions required to protect yourselves. If you do not pay attention to this interview you are going to sacrifice all you have worked to accomplish in your lives. Most certainly those that are planning any form of retirement are right now dancing on the head of a needle.
Here are a few most important actions you, in my opinion, must take.
Government sponsored retirement tax preferential retirement programs must realize that one of the IMF plans in Cyprus was to nationalize all retirement programs. That means steal your retirement funds and assets, replacing them with some form of future paper assuming Cyprus returns to solvency.
You must, in my opinion, face whatever tax consequences there are and close your retirement programs. You are in clear and present danger of confiscation for questionable paper of whatever you hold in these type accounts. In a financial sense you are exactly what the ghettos in Germany and Poland were when they knew they should run but found any excuse possible not to do what was logically screaming at them to take action.
I am screaming at you from every pulpit I can find, with no personal benefit that you must take various actions and take them now. The fact the IMF, a major international body, had the audacity to demand that Cyprus nationalize all it pensioners and confiscate large percentages of the account values should be like a flashbulb going off in your eye to wake you from your sheeple slumber.
Bite the bullet.
Pay the tax.
Get your assets back.
Get out of the system.
The next action you must take is to get as far away from social media, and the use of credit cards for everything because you are painting a picture for the tax collectors that are going to go ballistic in their effort to collect your money from you in order to create revenue for governments going broke, or who are already hiding the fact they are broke.
It might take some effort, but stop your kids from informing the world of everything you and they have done on their social media. Computer based comparisons of family income to family activities will spur punitive audits when the apparent expenses are greater than the combined declared income.
The revenues services of every country are cranking up their computer search programs to grab information. You must stop so freely providing information, and maybe bragging on social media to make others think your lives are better than they really are. You must turn off the switch on your children use of social media if they are still under your authority. You must suggest to your emancipated children that they are foolish in informing the world of every little thing that do in search of 1000 friends on social media that would not really give a damn if they had a problem.
As an example of the new high tech snoops you are feeding with your credit cards and social media, research the following article.
IRS High-Tech Tools Track Your Digital Footprints – Yahoo! Finance
– Charting and analyzing social media such as Facebook
– Targeting audits by matching tax filings to social media or electronic payments
– Tracking individual Internet addresses and emailing patterns
– Sorting data in 32,000 categories of metadata and 1 million unique "attributes"
– Machine learning across "neural" networks
– Statistical and agent-based modeling
– Relationship analysis based on Social Security numbers and other personal identifiers
Click here to read the full article…
http://finance.yahoo.com/news/irs-high- … 16.htmlYou must eliminate to the greatest degree possible all the agents between you and your assets.
There is no question that leaving assets in street name with your brokers and bankers is a financial death wish. The preferred way of holding shares of stocks has always been in your own name as physical certificates. The second best method, but much better than street name, is to hold your shares in Direct Registration. Do not expect your banks, brokers or companies you are invested in to make it easy to get out of their system. They will fight you all the way, but you have to insist on your rights regardless of their refusal or false dire warning of negative circumstances when you succeed in demanding your rights. Most of it exaggerations of what is really minutia when it comes to protecting yourselves.
Large credit balances in the form of banking accounts in CDs or in pure cash is now holding up a red blanket for the fighting confection bull of governments seeking your assets to hold off their financial collapse from their own spending sins of decades.
We can discuss in open forum, face to face or in writing later what to do with your assets but right now, as Braveheart cried, they must have FREEDOM from the system. There is much more that needs to be done, but what you have here is what should be called first priority. This should be viewed as call to action. I have not been too much off the mark on calling the developments not only of the past 12 years, but for the entirety of my successful career of more than 50 years in finance.
You ignore me at your own severe personal risk.
Jim Sinclair is the Chairman and CEO of Tanzanian Royalty Exploration Corporation (TRX: NYSE MKT, TNX: Senior Toronto Stock Exchange). He is a precious metals and commodities specialist. Some of the highlights of his nearly 50 year career include the founding of Sinclair Group of Companies (1977), which offered full brokerage services. Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker. He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation and Global Arbitrage .
He has authored numerous magazine articles and three books dealing with a variety of investment subjects. He is a regular speaker at various commodities related events.
In January 2003, Mr. Sinclair launched, "Jim Sinclairs MineSet," which now hosts his gold commentary and is intended as a free service to the gold community.
Statistics: Posted by DIGGER DAN — Sat Apr 06, 2013 9:12 pm
View full post on opinions.caduceusx.com
The Big Banks Are Recklessly Gambling With Our Money, And It Will Cause The Global Financial System To Collapse
Have you ever wondered how the big banks make such enormous mountains of money? Well, the truth is that much of it is made by gambling recklessly. If they win on their bets, they become fabulously wealthy. If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are “too big to fail”. Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to “recapitalize” themselves by stealing money directly from our bank accounts. So if they win, they win big. If they lose, someone else will come in and clean up the mess. This creates a tremendous incentive for the bankers to “go for it”, because there is simply not enough pain in this equation for those that are taking the risks. If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street. But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened. In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.
Have you noticed how most news reports about Cyprus don’t even get into the reasons why the big banks in Cyprus collapsed?
Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them. In a recent article, Ron Paul explained how the situation played out once the bets started to go bad…
The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.
If those bets had turned out to be profitable, the bankers would have kept all of the profits. But those bets turned out to be big losers, and private bank accounts in Cyprus are now being raided to pay the bill. Unfortunately, as Ron Paul noted, what just happened in Cyprus is already being touted as a “template” for future bank bailouts all over the globe…
The elites in the EU and IMF failed to learn their lesson from the popular backlash to these tax proposals, and have openly talked about using Cyprus as a template for future bank bailouts. This raises the prospect of raids on bank accounts, pension funds, and any investments the government can get its hands on. In other words, no one’s money is safe in any financial institution in Europe. Bank runs are now a certainty in future crises, as the people realize that they do not really own the money in their accounts. How long before bureaucrat and banker try that here?
Unfortunately, all of this is the predictable result of a fiat paper money system combined with fractional reserve banking. When governments and banks collude to monopolize the monetary system so that they can create money out of thin air, the result is a business cycle that wreaks havoc on the economy. Pyramiding more and more loans on top of a tiny base of money will create an economic house of cards just waiting to collapse. The situation in Cyprus should be both a lesson and a warning to the United States.
This is an example of what can happen when the dominoes start to fall. The banks of Cyprus failed because Greek debt went bad. And the Greeks were using derivatives to try to hide the true scope of their debt problems. The following is what Jim Sinclair recently told King World News…
When people say that the Cypriot banks lost because of being in Greek debt, what was one of the Greeks’ greatest sins? They used over-the-counter derivatives in order to hide the real condition of their balance sheet.
Depositor money, brokerage money, and clearing house money have been tangled up in the mountain of derivatives as the banks have used this cash to speculate in an attempt to make huge bonuses for bank executives.
As I have written about so many times, the global quadrillion dollar derivatives bubble is one of the greatest threats that the global financial system is facing. As Sinclair explained to King World News, when this derivatives bubble bursts and the losses start soaring, the big banks are going to want to raid private bank accounts just like the banks in Cyprus were able to…
What do you think happens when Buffett reports that he made $10 billion in derivatives? Somebody else lost $10 billion and it was most likely one financial institution. There is no question that what we are seeing right now is not isolated to Cyprus. It has happened everywhere, but is has been camouflaged by making the depositors and the banks whole. What Cyprus will reveal is that losses do not stop with the bank’s capital. Losses roar right through bank capital and take depositors’ money.
This could have all been avoided if we had allowed the big Wall Street banks to collapse back in 2008. Reckless behavior would have been greatly punished and banks would have chosen to do business differently in the future.
David Stockman, the former director of the Office of Management and Budget under President Ronald Reagan, says that because we bailed out the big banks it was a signal to them that they could go back and freely engage in the same kind of reckless behavior that they were involved in previously…
Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.
Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.
The lessons that we were supposed to learn from the crisis of 2008 have not been learned.
Instead, the lure of huge returns and big bonuses has caused a return to the exact same behavior that caused the crisis of 2008 in the first place. The following is one example of this phenomenon from a recent article by Wolf Richter…
The craziness on Wall Street, the reckless for-the-moment-only behavior that led to the Financial Crisis, is back.
This time it’s Citigroup that is once again concocting “synthetic” securities, like those that had wreaked havoc five years ago. And once again, it’s using them to shuffle off risks through the filters of Wall Street to people who might never know.
What bubbled to the surface is that Citigroup is selling synthetic securities that yield 13% to 15% annually—synthetic because they’re based on credit derivatives. Apparently, Citi has a bunch of shipping loans on its books, and it’s trying to protect itself against default. In return for succulent interest payments, investors will take on some of the risks of these loans.
Yes, the Dow hit another new all-time high today. But the derivatives bubble that hangs over the global economy like a sword of Damocles could burst at literally any moment. When it does, the damage is going to be incalculable.
In a previous article entitled “Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers“, I noted a couple of statistics that show why derivatives are such an enormous problem…
-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
When the derivatives bubble finally bursts, where are we going to get the trillions upon trillions of dollars that will be needed to “fix” things this time?
And sadly, the reality is that we are quickly running out of time.
It is important to keep watching Europe. As I noted the other day, the European banking system as a whole is leveraged about 26 to 1 at this point. When Lehman Brothers finally collapsed, it was leveraged about 30 to 1.
And the economic crisis over in Europe just continues to get worse. It was announced on Tuesday that the unemployment rate in the eurozone is at an all-time record high of 12 percent, and the latest manufacturing numbers show that manufacturing activity over in Europe is in the process of collapsing.
So don’t be fooled by the fact that the Dow keeps setting new all-time record highs. This bubble of false hope will be very short-lived.
The unfortunate truth is that the global financial system is a complete and total mess, and at this point a collapse appears to be inevitable.
View full post on The Economic Collapse
Other • ..It Will Cause The Global Financial System To Collapse
The Big Banks Are Recklessly Gambling With Our Money, And It Will Cause The Global Financial System To Collapse
By Michael, on April 2nd, 2013
Have you ever wondered how the big banks make such enormous mountains of money? Well, the truth is that much of it is made by gambling recklessly. If they win on their bets, they become fabulously wealthy. If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are "too big to fail". Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to "recapitalize" themselves by stealing money directly from our bank accounts. So if they win, they win big. If they lose, someone else will come in and clean up the mess. This creates a tremendous incentive for the bankers to "go for it", because there is simply not enough pain in this equation for those that are taking the risks. If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street. But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened. In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.
Have you noticed how most news reports about Cyprus don’t even get into the reasons why the big banks in Cyprus collapsed?
Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them. In a recent article, Ron Paul explained how the situation played out once the bets started to go bad…
The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.
If those bets had turned out to be profitable, the bankers would have kept all of the profits. But those bets turned out to be big losers, and private bank accounts in Cyprus are now being raided to pay the bill. Unfortunately, as Ron Paul noted, what just happened in Cyprus is already being touted as a "template" for future bank bailouts all over the globe…
The elites in the EU and IMF failed to learn their lesson from the popular backlash to these tax proposals, and have openly talked about using Cyprus as a template for future bank bailouts. This raises the prospect of raids on bank accounts, pension funds, and any investments the government can get its hands on. In other words, no one’s money is safe in any financial institution in Europe. Bank runs are now a certainty in future crises, as the people realize that they do not really own the money in their accounts. How long before bureaucrat and banker try that here?
Unfortunately, all of this is the predictable result of a fiat paper money system combined with fractional reserve banking. When governments and banks collude to monopolize the monetary system so that they can create money out of thin air, the result is a business cycle that wreaks havoc on the economy. Pyramiding more and more loans on top of a tiny base of money will create an economic house of cards just waiting to collapse. The situation in Cyprus should be both a lesson and a warning to the United States.
This is an example of what can happen when the dominoes start to fall. The banks of Cyprus failed because Greek debt went bad. And the Greeks were using derivatives to try to hide the true scope of their debt problems. The following is what Jim Sinclair recently told King World News…
When people say that the Cypriot banks lost because of being in Greek debt, what was one of the Greeks’ greatest sins? They used over-the-counter derivatives in order to hide the real condition of their balance sheet.
Depositor money, brokerage money, and clearing house money have been tangled up in the mountain of derivatives as the banks have used this cash to speculate in an attempt to make huge bonuses for bank executives.
As I have written about so many times, the global quadrillion dollar derivatives bubble is one of the greatest threats that the global financial system is facing. As Sinclair explained to King World News, when this derivatives bubble bursts and the losses start soaring, the big banks are going to want to raid private bank accounts just like the banks in Cyprus were able to…
What do you think happens when Buffett reports that he made $10 billion in derivatives? Somebody else lost $10 billion and it was most likely one financial institution. There is no question that what we are seeing right now is not isolated to Cyprus. It has happened everywhere, but is has been camouflaged by making the depositors and the banks whole. What Cyprus will reveal is that losses do not stop with the bank’s capital. Losses roar right through bank capital and take depositors’ money.
This could have all been avoided if we had allowed the big Wall Street banks to collapse back in 2008. Reckless behavior would have been greatly punished and banks would have chosen to do business differently in the future.
David Stockman, the former director of the Office of Management and Budget under President Ronald Reagan, says that because we bailed out the big banks it was a signal to them that they could go back and freely engage in the same kind of reckless behavior that they were involved in previously…
Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.
Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.
The lessons that we were supposed to learn from the crisis of 2008 have not been learned.
Instead, the lure of huge returns and big bonuses has caused a return to the exact same behavior that caused the crisis of 2008 in the first place. The following is one example of this phenomenon from a recent article by Wolf Richter…
The craziness on Wall Street, the reckless for-the-moment-only behavior that led to the Financial Crisis, is back.
This time it’s Citigroup that is once again concocting “synthetic” securities, like those that had wreaked havoc five years ago. And once again, it’s using them to shuffle off risks through the filters of Wall Street to people who might never know.
What bubbled to the surface is that Citigroup is selling synthetic securities that yield 13% to 15% annually—synthetic because they’re based on credit derivatives. Apparently, Citi has a bunch of shipping loans on its books, and it’s trying to protect itself against default. In return for succulent interest payments, investors will take on some of the risks of these loans.
Yes, the Dow hit another new all-time high today. But the derivatives bubble that hangs over the global economy like a sword of Damocles could burst at literally any moment. When it does, the damage is going to be incalculable.
In a previous article entitled "Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers", I noted a couple of statistics that show why derivatives are such an enormous problem…
-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
When the derivatives bubble finally bursts, where are we going to get the trillions upon trillions of dollars that will be needed to "fix" things this time?
And sadly, the reality is that we are quickly running out of time.
It is important to keep watching Europe. As I noted the other day, the European banking system as a whole is leveraged about 26 to 1 at this point. When Lehman Brothers finally collapsed, it was leveraged about 30 to 1.
And the economic crisis over in Europe just continues to get worse. It was announced on Tuesday that the unemployment rate in the eurozone is at an all-time record high of 12 percent, and the latest manufacturing numbers show that manufacturing activity over in Europe is in the process of collapsing.
So don’t be fooled by the fact that the Dow keeps setting new all-time record highs. This bubble of false hope will be very short-lived.
The unfortunate truth is that the global financial system is a complete and total mess, and at this point a collapse appears to be inevitable.
http://theeconomiccollapseblog.com/arch … o-collapse
Statistics: Posted by yoda — Tue Apr 02, 2013 3:40 pm
View full post on opinions.caduceusx.com
Other • The present financial system can fold any time – that is to
The present financial system can fold any time – that is todays reality
Written March 22nd, 2013 by Moderator GoldS
Categories: Commentary (English), KWN weekly
The present financial system can fold any time – that is todays reality
KWN interview March 22, 2013
Egon von Greyerz: “Eric, Cyprus is a momentous event. Losses could be in the tens of billions of dollars. But like all major crises there is always a catalyst, and whether it was a shot in Sarajevo (assassination of Archduke Ferdinand which started World War I), or the fall of the Credit-Anstalt in Austria in 1931, there is always an event in history which people look back on as the start of tremendous global turmoil. Cyprus could very well be that event.
There will be some kind of solution eventually to the Cyprus problem, but it will be seen as unsatisfactory in the fullness of time. It is unlikely to come from Russia because I don’t think Europe would like to see Cyprus become an entirely Russian state, which would of course be the case if Russians were to give their support in a major way.
“But whether the bailout comes from the ECB or the IMF, of course they have no money.
“The IMF is financed by the US and Japan, and they have no money either. So wherever the money is going to come from, it isn’t there. It has to be printed, and we know this will impact world currencies and gold.
http://goldswitzerland.com/general-commentary/
Statistics: Posted by yoda — Sat Mar 23, 2013 2:10 am
View full post on opinions.caduceusx.com