Beyond The Pale
I was going to write about this yesterday but got sidetracked by the CFTC stuff. I could not wait any longer to post it because, frankly, this story is far more important.
First, a little background. In 2008, Bank of America (which was already struggling based upon its nonsensical purchase of Countrywide Financial) was coerced by The Fed into purchasing Merrill Lynch. Merrill, that bastion of U.S. investment banking, private banking and retail financial services had been essentially run into the ground by its previous CEO, Stan O'Neal, and its current CEO, John Thain. Merrill's potential derivative and Credit Default Swap (CDS) losses were staggeringly high and the firm was on the verge of imploding.
{CDS Primer: A credit default swap is exactly as the name implies. It's an insurance policy that a creditor purchases against the default risk of the debtor. For example, Party A carried default risk of Party B because Party A owns some of Party B's bonds. To insure against default of Party B, Party A buys a CDS from Merrill Lynch at a price that isn't even close to reflecting the true risk being passed on to Merrill. If Party A has $100,000,000 in Party B's bonds and then B defaults, A loses its $100MM. However, Merrill is so confident of B's financial strength that they take on the entire $100MM in potential liability, often for just a paltry 2-3% premium. So, Party A pays $3MM to insure their default risk through an unregulated insurance policy, issued by Merrill Lynch. Merrill now is on the hook for the entire $100MM should Party B default.}
In walk The Bernank, Paulson and Geithner with a plan: Have BoA buy Merrill! It should have been clear to everyone paying attention at the time that this would never work. TPTB were only trying to buy time in a desperate attempt at holding the current system together. Well....time is up!
The counterparties to Merrill's $53,000,000,000,000 (yes, that's $53T!) in CDS are getting antsy that they'll never get paid for their side of the "bets". So, to shore up the impression that BoA will be able to pay off any of the losing CDS bets, BoA has transferred the liability of the CDS from their Merrill subsidiary to their regular, U.S. banking subsidiary. By doing this, BoA has essentially pledged as collateral the $1,000,000,000,000 (yes, that's $1T!) in retail deposits it currently has on its books.
So, if just 2% of Merrill's CDS exposure gets "exposed", the $1T in regular, average Joe savings accounts that BoA holds will get wiped out. Of course, all banking accounts at BoA are "insured" by the FDIC. And just who is the FDIC? The federal government. And how will the federal government come up with $1T in new money to reimburse the BoA depositors? Well, I think you know the answer to that one. (By all means, listen to that fool Gartman and sell all of your gold and silver right now!)
That this blatant criminal action is allowed by the Fed should come as no surprise. It was their idea for BoA to buy Merrill in the first place! Of course they're going to look the other way and stick the taxpayer with the bill. What would you expect them to do?
So, first up, here's a link to the Bloomberg summary from yesterday. Written with the usual, MSM flair:
For a more complete summary, I defer to the "George Washington Blog" that you can find through ZH. I don't subscribe to all of "George's" theories and often I find his posts to be a bit hyperbolic. Not is this case, however:
The current financial system and, by extension, global geo-political stability hangs by a thread. Sadly, it no longer seems a question of "IF". It has become a matter of "WHEN". Please continue to prepare as the process of the coming "reset" is wholly unpredictable and dangerous. An ancient Chinese proverb suggests "may you be blessed to live in interesting times". Some blessing. In the end, we'll find that the true blessing had been to live in peace and solitude, instead. TF
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Comments
b of a
fwiw,
i had a b of a account about twelve years ago. worst customer service i have ever encountered. never again. good riddance. scum.
THANKS AND GOOD MORNING
Thats a lot of "Ts!"
Turd!
Prepared accordingly Turd & apart from more phyzz silver (which I ordered another batch of today following your wise recommendation yesterday) my plans are now complete.
Thanks to all the community with providing me the information to keep my family as safe as is possible in these fast approaching 'interesting' times
RaRa
No worries...
The US Treasury will take care of it. The FED has a printing press and will help them.
Just another story that will counterintuitively drive down the price of gold. Just like the Swiss Franc devaluation, French bank crisis, Euro printing and Pound printing...
Not a proverb or a blessing
I have only ever seen the phrase "may you live in interesting times" referred to as an ancient Chinese curse.
btw: "Fifth".
I could sure use a fifth too.
re: help with homework - UPDATE
A while back I asked for help with a project for a small town business initiative.
Sadly, and perhaps not surprisingly, the town's chamber of commerce wasn't keen on my idea, in spite of my effort to get people to start thinking about real money vs fiat currency and the benefits it would provide...
I even set up a website for the project!
Since many of you, directly & indirectly, provided excellent material for it, I thought it only appropriate to give you the URL, so you can peruse it in your spare time... perhaps it might be of benefit to someone who is interested in doing something similar...
cheers & thanks...
http://meafordMoney.com
Sorry if I'm late...
Sorry if this has already been discussed, but I'm way behind on things this morning.
I think it is considered a "curse"
The "May you live in interesting times" proverb, that is
Some blessing. In the end,
Some blessing. In the end, we'll find that the true blessing had been to live in peace and solitude, instead.
But you'll miss out on all the excitement!
BTW, FDIC = private corporation (just like FRB, IRS, etc.)
-Chumblez.
Yet another thing that we can
Yet another thing that we can thank the wonderful Blythe for...credit default swaps!
The last rule of Monopoly
"If the Bank runs out of money, the banker may issue as much as needed by writing on any ordinary piece of paper." Sound familiar?
@ Shill re: RWM
Hey Shill - how do you play your inverses, straight up or with options? Also, do you choose RWM over TWM because of the leveraging?
I have played with SKF, TWM and EEV a LOT over the last few months.
Thanks.
May I offer some constructive
May I offer some constructive criticism? You have a page entitled, "What is Meaford Money?" That page then proceeds to not answer that question.
[ Meant in reply to http://www.tfmetalsreport.com/comment/73618#comment-73618 ]
-Chumblez.
FDIC = Funded by insurance paid by other banks
Not trying to say the whole mess above isn't ridiculous, it is. But let's be intellectually honest about where this bailout will come from.
@taojones
Good work! That's really trying to bring change. You are courageous ahead of your time. Not only protecting yourself, but helping others. That's being a real Turd:) Someday soon the people of Meaford will realize it!
Ok, now 3 for 3
On scooping Big Hat on the monster JPM, Citi, and BOA stories in the past week.
Dude, very nice background. On a story that was posted in Town yesterday. You might consider a shout out now and then to any who try to help you get key info out to your readers so that you don't also have to worry about that, too.
Early delivery of the most important and impactful stories here is one of the things that helps distinguish your Brand.
You're the Straw That Stirs the Drink here, no doubt about it. Just don't overlook the role ice cubes play in making it the truly superior cocktail it is.
Print, Baby, Print
That's all I have to say.
Dr G?
I do remember reading somewhere that Blythe had a lot to do with unleashing CDSs on an unsuspecting world. Let me join in on the hyperbole and ask what kind of paranormal forces are assisting her?
F U BoA. DIAF
F U BoA. DIAF
Kudos!
This is one of the scariest financial stories I have heard lately. People need to be aware of this blatent scam. Thanks for posting this. I hope more people will see it!
The FDIC has about $60b... what happens if they get hosed with this? Answer, nationwide bank runs.
As if we needed more reason to move our money...
I think that most do not realize just how vulnerable the banks really are.
How is that??
They are dependent on our participation.
If we remove our money from the banks, we starve the beast, as it were.
When we the people see such blatant examples of the system simply not playing by the rules and making new rules up, the ONLY answer is to leave the game.
http://www.msnbc.msn.com/id/44951203/ns/business-consumer_news/
Greek default effect on markets
I need this to be spelt out to me.... It should be obvious, but I need to see it in writing.
When Greece finally defaults [and when other countries will later as well] what will be the initial short term market response? I always thought the precious metals would rise on such news, but it always amazes me that the money goes into the reserve currency [USD] and US treasuries.
Is this what will happen? Will HUI drop with PMs.... will the stock market fall??
Thanks
John
Some FDIC insurance coverage is unlimited
Also thanks to the Dodd-Frank Bill, FDIC Insurance coverage on non-interest bearing accounts is unlimited through 2012 - from the FDIC website:
On November 9, 2010, the FDIC issued a Final Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. The unlimited insurance coverage is available to all depositors, including consumers, businesses, and government entities.
http://www.fdic.gov/deposit/deposits/changes.html
What kind of account is
What kind of account is non-interest bearing? Savings, CDs, checking, they all pay interest. Is this a special account?
why miners are getting creamed today
As action in the miners often foretell action in the PMs, I can only guess that mining stocks sense trouble ahead as a result of the new ruling on position limits...
- JPM saving themselves by bringing down the price of silver and gold.
GDX down 4% today, whereas nothing else seems to be anywhere near that.
BANK OF AMERICA
Thank you Turd, guess I'm not being silly after all.
Another great post Turd -
Another great post Turd - thank you for educating me almost daily!
non-interest bearing account defined
A noninterest-bearing transaction account is a deposit account where interest is neither accrued nor paid; depositors are permitted to make an unlimited number of transfers and withdrawals; and the bank does not reserve the right to require advance notice of an intended withdrawal.
Please note that Money Market Deposit Accounts (MMDAs) and Negotiable Order of Withdrawal (NOW) accounts are not eligible for this unlimited insurance coverage, regardless of the interest rate, even if no interest is paid on the account.
http://www.fdic.gov/deposit/deposits/changes.html
James Turk on KWN yesterday
I haven't had a chance to hear it yet. Probably already posted, here it is again for anyone else who wants to listen:
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/10/18_James_Turk_files/James%20Turk%2010%3A18%3A2011.mp3
Dumb Question redux:
I asked about this late last night but got no responses. Does anybody know if JPM or anyone else for that matter could skirt the pos limits by purchasing a miner and transftering their short positions to the entity as a 'legitimate hedge?' This is not at all that much different than BofA's action here.
They just "lifted and shifted"
All of the stinky doodoo they created over the past 15 years...
From: The EE's "balance" sheet
To: Yours and Mine
Elegant in its simplicity and all so quick n' easy when you own all the players on the board, eh? Please never mistake the fact that we are and have been living under a multi-generation criminal conspiracy.
If by now anyone is still in doubt over the way the world really works and who pulls the strings, I'm sorry to confirm the suspicion that they're hopelessly lost in denial and mired in the mental inertia of Cognitive Dissonance.
The unpleasant emotion that results from believing two contradictory things at the same time. The study of cognitive dissonance is one of the most widely followed fields in social psychology. Cognitive dissonance can lead to irrational decision making as a person tries to reconcile his conflicting beliefs.
No such thing as a dumb question
And I think that is just one of MANY things JPM et al can do, and will do.
We are dealing with sociopathic entities.
They do NOT act in good faith.
Yesterday's "victory" was nice, but in the end, probably pyrrhic.
The only language they understand is money. Act accordingly.
Most checking accounts are non-interest bearing
Most checking accounts are non-interest bearing.
For example, up until this July, this was mandated by Regulation Q for business checking accounts.
http://www.federalreserve.gov/newsevents/press/bcreg/20110714a.htm
Another great thread/Buffet and the WH
Some of the "deals" that happened back then were extraordinary. I'm pretty sure it would blow our minds if we knew the real numbers and liabilities.
The big banks aside, just look at what Buffet has been able to accomplish within the system as a quasi- private/public citizen and the access he's granted for being allowed to plow huge blocks of money into banks in a bid to exude confidence in "the system".
The trade off for him is that he allows his name (brand) to be used in conjunction with whatever the Obama WH needs it for. This arrangement blows my mind and it's so obvious, yet Buffet is portrayed as this kind and benevolant "Uncle Warren" within the MSM and the cozy relationship never gets called out. Ever.
FDIC
Ha!The FDIC is bankrupt and it has been looted time and time again. If I am not mistaken it has run in the red for around 30 months and the only few months it stepped out just ever so briefly was due to TAARP and QE supplementations.
If a panic were to ensue, (lets hope that doesn't happen) I would hope that most Turdites here were wise enough to have control of their own FRNs with most of it diversified and hedged into "real" assets. (PMs among them obviously) Trust FDIC, no thanks. Be that as it may I have no desire to stand in a que that wraps around the block to get my paper fiat then have my photo taken for future generations to giggle and anguish over. No Thanks. I will take control (to the best of my ability) of my own FRNs and assets.
BSD
Not with a Bang, but a
Not with a Bang, but a Whimper: Bank of America’s Death Rattle
http://neweconomicperspectives.blogspot.com/
Banks won't foot the bill for this
Yes, banks pay into FDIC to cover bank closings and guarantee depositors. And, in difficult periods, the banks see their payments rise.
However, don't make the mistake of thinking banks will bail out Bank of America or others. There is a pittance in FDIC money compared with bank deposits.
The government is involved, so you shouldn't be surprised that this is little different than Social Security, Medicare, etc. etc. etc. Or private pensions, for that matter.
The promises to pay and/or make good, far outstrip the resources to do so. If it hits the fan, the government stands as the make-good entity, which means creating money out of thin air to do the job.
Tweet FDIC
! I just tweeted: @FDICgov How can the FDIC be put on the hook for BofA's bad bets? This must be stopped! goo.gl/UBxa7 #OWS Please read and RT
@ mcbryde
My take on the miners is, there is a policy of quell the bullish sentiment in the PM sector. As a result mining stocks are bashed and gold and silver move violently up and down in a range. That is don't make them too cheap to encourage buying and don't let them rally to encourage the momentum play. This is the policy as time is being bought.
And like Cher once said...
"the beat goes on"
That's ok, Turd warned about this last night. It should not be coming as a shock. Things will get worse before they get better. If we can "Own" that idea, we'll all make it across the burning rope bridge to safety.
Scary? Hell yes. But the only crossing over a very deep gorge. Face it.
Submitted by Fortinbras on
I too mess with EEV from time too time. Yes with options 70% of the time, but will have a go at it strait up from time to time when Option are boring me. Such as recently :)
With options due to the current market forces I am considering Butterfly spreads on a few moves real soon. Maybe with SLV. Really trying to figure out why metals are down today considering all the news that came out today and yesterday is pretty much inflationary.
Money it seems is afraid too move JMHO.
Agnico Eagle
You guys see the news on AEM today? Utter disaster. Maybe that explains the whole sector today.
http://www.agnico-eagle.com/English/Investor-Centre/PressReleases/Detail...
Some harsh language there
Some harsh language there Eric...
Considering the safety of the Company's employees, and the integrity of the mine's infrastructure and that of the surrounding area, the decision was made to "stop production indefinitely"
Af/Pak
I know if Fortinbras is on here that Af/Pak just perked his ears up.
Fort...am I totally mistaken that your over in that region? I either have you mixed up with another poster or I'm right. Just wondering.
AEM
harsh language, by Eric?
LOL - where?
I would've said something like, 'unmitigated fucking nightmare for employees and shareholders alike'
I feel badly for both.
AEM
Wow...that was some kick to the gut news release right there.
Imagine if you actually worked at that mine? Double kick
@Shill... thanks...
... and I'm doing the same.
AEM
1st time commenting...love the site Turd
Agnico is a disaster. I don't fault the company...they have to protect their employees, but a huge disappointment nonetheless. The thing that is most upsetting is how the entire sector gets crushed because of this. I also agree with the statement made earlier that the miners sense danger in the gold and silver prices. I think it is safe to say that when equities begin their next leg down miners, gold and silver will be taken down as well. Good for buying physical...but extremely painful when sitting in the miners
Obama 'speechless' after teleprompter theft!
Obama 'speechless' after teleprompter theft!
Funeral services to be held on Halloween for missing teleprompter!
@DPH re: Af/Pak
It's me... I'm "home" in the FL panhandle right now, but just got back about 10 days ago. All my work is in Eastern/Central Europe/Russia, Central Asia (mainly Af/Pak... lived there for 2.5 years) and now parts of Africa (been to Libya twice in the last 120 days).
As for Af/Pak, what we've done over the last 10 years is basically just push the problem from AF into Pakistan. The ISI was "happy" for the last 20 years when they could keep their proxy fighters across the border in AF, but we've shoved the $hit into their yard and they aren't happy about it. We haven't fixed anything and we won't unless we are willing to stay there for about 100 years (literally, will require generations of change), just pushed the problem across another "line drawn by white guys 100 years ago". ;)