What Bernanke Did
What Ben Bernanke did by not Tapering was expose the fragility of the US economy for all to see. His actions, Mises Institute's Peter Klein explains in this brief clip, based on the premise that the US economy was not capable of sustaining any reduction in the $85 billion per month stimulus free-money, means once again "the economy is so dependent on artificial stimulation from the central bank... that the economy is in another artificial boom just like the artificial boom we have been trying to get out of." Critically, for all those proclaiming the US as a "cleanest shirt," Bernanke proved them wrong (and exposed the fallacy of data such as the unemployment rate and jobless claims as having any value - as we have explained). In conclusion, Klein notes "any signs of economic growth or progress that we have experienced since 2008 are solely the result of government stimulus; in other words, more malinvestment." This will not end well.
http://www.zerohedge.com/news/2013-09-21/jpmorgan-says-buy-gold
JPMorgan Says "Buy Gold"
Submitted by Tyler Durden on 09/21/2013 19:00 -0400
The FOMC shocked markets by deciding not to slow its large-scale asset purchase program, after all the signals it had sent out in previous months that it would do so. While increasing policy risk, JPMorgan notes, this puts the asset-reflation trades back on the table. In their view, the main driver of gold’s performance over the past five years has been QE. As QE continued and inflation expectations remained subdued, the demand for an inflation hedge subsided, ETF positions were unwound and gold prices fell. However, JPM now believes, as a result of the Fed's volte-face on tapering, uncertainty about future inflation may pick up and suggest a long position in gold. Of course, the question is - are they buying or is this a last ditch effort to drain what little remaining gold they have in their vault to their hapless clients?
JPMorgan On Gold:
This week’s surprise by the Fed in not tapering their asset purchases led to a 5% rally in precious metals. In our view, the main driver of gold’s performance over the past five years has been QE. Following the 2008 crisis, the unprecedented expansion of central bank balance sheets led to fears of inflation further down the road and resulted in very strong demand for gold, a large amount of which came via ETFs.As QE continued and inflation expectations remained subdued, this demand for an inflation hedge subsided, ETF positions were unwound and gold prices fell. Along with precious metals rallying, inflation breakevens widened following the Fed announcement, another indication that uncertainty around future inflation may pick up as a result of the Fed’s volte-face on tapering.Additionally, positions are much cleaner now, following the unwinding of ETF positions, and physical demand from retail buyers in Asia has been very strong.We open a long position in gold.
Policy Risk Up.
...
In one dramatic move, Mr. Bernanke has reversed this steady march to a rule-based policy and has brought discretion and flexibility back. The Fed may argue it never really gave up discretion, but we think the market nevertheless saw increased rigidity and thus a greater risk of policy errors.
By bringing back discretion, the economy broadly, rather than just unemployment, has retaken precedence. This has reduced economic uncertainty. To use popular terms, the Bernanke Put and asset reflation are back, while the end-of-easy money trade needs to await better economic data.
Some other relative-value charts for gold...
The Debt-Ceiling appears to have an uncanny relationship with the precious metal- the relationship should be clear why an ever-increasing debt load for the world's reserve currency would require a rising gold price to keep pace with its endgame-implying collapse...
And the world's central banks are printing - not just the Fed - and the world's central banks know that they need some anchor of value for their balance sheets. The ratio of global central bank balance sheets to the price of gold (i.e. how much gold is required to support the balance sheets of the world's money-printers) appears to be at an extreme.
In other words, for the 'stable' relationship between central bank balance sheets and gold to recouple, Gold would nee to be back to around $1800 an ounce; but given the Fed's U-turn and no sign of stopping at the BoJ (or PBOC for that matter) and we suspect Draghi about to try to unleash a collateral-free LTRO3, the price of gold will have to be considerably higher before the world's central banks are 'backed' again.
http://www.zerohedge.com/contributed/2013-09-20/5-years-after-financial-crisis-big-banks-are-still-committing-massive-crimes
Submitted by George Washington on 09/20/2013 12:12 -0400
5 Years After the Financial Crisis, The Big Banks Are Still Committing Massive Crimes
Preface: Not all banks are criminal enterprises. The wrongdoing of a particular bank cannot be attributed to other banks without proof. But – as documented below – many of the biggest banks have engaged in unimaginably bad behavior.
You Won’t Believe What They’ve Done …
Here are just some of the improprieties by big banks over the last century (you’ll see that many shenanigans are continuing today):
- Laundering money for terrorists (the HSBC employee who blew the whistle on the banks’ money laundering for terrorists and drug cartels says that the giant bank is still laundering money, saying: “The public needs to know that money is still being funneled through HSBC to directly buy guns and bullets to kill our soldiers …. Banks financing … terrorists affects every single American.” He also said: “It is disgusting that our banks are STILL financing terror on 9/11 2013“. And see this)
- Financing illegal arms deals, and funding the manufacture of cluster bombs (and see this and this) and other arms which are banned in most of the world
- Launching a coup against the President of the United States
- Handling money for rogue military operations
- Laundering money for drug cartels. Seethis, this, this, this and this (indeed, drug dealers kept the banking system afloatduring the depths of the 2008 financial crisis). A whistleblower said: “America is losing the drug war because our banks are [still] financing the cartels“, and “Banks financing drug cartels … affects every single American“. And see this.)
- Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here,here, here, here, here, here, here, hereand here
- Manipulating aluminum and copper prices
- Manipulating gold prices … on a dailybasis
- Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts
- Committing massive and pervasive fraudboth when they initiated mortgage loans and when they foreclosed on them (andsee this)
- Pledging the same mortgage multipletimes to different buyers. See this, this,this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
- Cheating homeowners by gaming laws meant to protect people from unfair foreclosure
- Committing massive fraud in an $800 trillion dollar market which effects everything from mortgages, student loans, small business loans and city financing
- Manipulating the hundred trillion dollar derivatives market
- Engaging in insider trading of the most important financial information
- Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this andthis
- Manipulating corporate bonds through derivatives schemes
- Charging veterans unlawful mortgage fees
- Helping the richest to illegally hide assets
- Cooking their books (and see this)
The executives of the big banks invariably pretend that the hanky-panky was only committed by a couple of low-level rogue employees. But studies show that most of the fraud is committed by management.
Indeed, one of the world’s top fraud experts – professor of law and economics, and former senior S&L regulator Bill Black – says that most financial fraud is “control fraud”, where the people who own the banks are the ones who implement systemic fraud. See this, this andthis.
Even the bank with the reputation as being the “best managed bank” in the U.S., JP Morgan, has engaged in massive fraud. For example, the Senate’s Permanent Subcommittee on Investigations released a report today quoting an examiner at the Office of Comptroller of the Currency – JPMorgan’s regulator – saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses. And Joshua Rosner – noted bond analyst, and Managing Director at independent research consultancy Graham Fisher & Co – notes that JP Morgan had many similar anti money laundering laws violations as HSBC, failed to segregate accounts a la MF Global, and paid almost 12% of its 2009-12 net income on regulatory and legal settlements.
But at least the big banks do good things for society, like loaning money to Main Street, right?
Actually:
- The big banks no longer do very much traditional banking. Most of their business is from financial speculation. For example, less than 10% of Bank of America’s assets come from traditional banking deposits. Instead, they are mainly engaged in financial speculation and derivatives. (and see this)
- The big banks have slashed lending since they were bailed out by taxpayers … while smaller banks have increased lending. See this, this and this
- A huge portion of the banks’ profits comes from taxpayer bailouts. For example, 77% of JP Morgan’s net income comes from taxpayer subsidies
- The big banks are looting, killing the economy … and waging war on the people of the world
- And our democracy and republican form of government as well
Indeed, top experts say that fraud caused the Great Depression and the 2008 crisis, and that failing to rein in fraud is dooming our economy.
We can almost understand why Thomas Jefferson warned:
And I sincerely believe, with you, that banking establishments are more dangerous than standing armies ….
John Adams said:
Banks have done more injury to religion, morality, tranquillity, prosperity, and even wealth of the nation than they have done or ever will do good.
And Lord Acton argued:
The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.
No wonder a stunning list of prominent economists, financial experts and bankers say we need to break up the big banks.
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