Friday, 7 January 2011

MA’s Solomon Case.

Baltic Dry Index. 1544 -77

LIR Gold Target by 2019: $30,000. Revised due to QE.

"We have to face the fact that we are bankrupt and we can't pay our bills."

Congressman Ron Paul.

For more on the Massachusetts Supreme Court’s dilemma, scroll down to Crooks and Scoundrel’s Corner. They can destroy their banks or destroy MA’s contracts and counterparty reputation, all thanks to the banksters’ greed in the Fed’s 2002-2007, deliberately created, real estate bubble. Another of disgraced, fallen guru Greenspan’s unintended consequences. Is fiat money banksterism great or what?

Up first, Japan trying to leap ahead of Britain, the EU and America in the race to Reykjavik. Daiwa Asset Management Co. in Tokyo think they have 5 years to fix the problem. My guess, 5 months if they are lucky. With most of the world’s giant mega banks insolvent and on central bank life support, Japan winning the race generates the “next Lehman” in droves. Stay long physical precious metals, adding on dips. The whole house of cards built up by duplicitous central banks since August 15, 1971 is collapsing one card at a time. I think we all know how this game ends.

Japan's Fiscal Situation `Approaching the Edge of a Cliff,' Sengoku Says

By Takashi Hirokawa and Aki Ito - Jan 6, 2011 5:38 AM GMT

Japan’s top government spokesman said the country’s fiscal situation is “approaching the edge of a cliff,” underscoring Prime Minister Naoto Kan’s call for a national debate on raising the 5 percent sales tax.

Kan is “expressing his deep sense of crisis and resolution about the sustainability of social security as the aging population increases under a low birth rate,” Chief Cabinet Secretary Yoshito Sengoku told reporters today in Tokyo. “The supporting fiscal conditions don’t allow for any delays, it’s finally approaching the edge of a cliff.”

The prime minister last night said in an interview with TV Asahi that he would “stake my political life” on addressing Japan’s rising social welfare costs and increasing public debt. The day before he said “now is the time” to face these problems.

Japan’s public debt is set to exceed twice the size of the economy this year and reach 210 percent of gross domestic product in 2012, both estimates the highest among countries tracked by the Organization for Economic Cooperation and Development, according to the group’s forecasts.

“Concern of a fiscal crisis isn’t something that’s going to grow this year or the next, but it’s on the horizon say in the next 5 years,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. “Raising the sales tax will take a considerable amount of time, and neglecting the issue will lead to sovereign bankruptcy.”

Next, the EU knows best and will now decide which group of banksters are to be saved and which are not. A committee of unelected, unelectable Brussels Eurocrats will from 2014 become yet another layer of bureaucracy in the sclerotic, Walter Mitty world of the Disunited States of Europe. The Euroserfs will just have to work harder for longer for under this new system, the Eurocrats will quickly become best buddies with the banksters, relying on them for lucrative jobs once out the revolving door. Better simply to announce that from 2014 on, banksters are entirely on their own. Gamble away if you like, but if you destroy your bank, don’t look to the taxpayer for help. Shareholders, bond holders, and depositors beware. It’s up to you to invest your money wisely. Bagehot covered all this in 1873.

Europe unveils sweeping plans to govern reckless banks

Brussels has called for sweeping powers for regulators to seize failing EU banks, sack board members, and impose haircuts on senior bank debt, aiming to ensure that taxpayers are never again held hostage by high finance.

By Ambrose Evans-Pritchard, International Business Editor 5:27PM GMT 06 Jan 2011

The European Commission’s "Framework for Bank Recovery and Resolution" draws on Scandinavia’s hard-line approach during their banking crises in the early 1990s. The goal is to end the pattern of moral hazard and mispricing of risk that generated Europe’s debt woes.

"Banks will fail in the future and must be able to do so without bringing down the whole financial system," said Michel Barnier, the internal market commissioner Mr Barnier’s consultation paper will lead to a "legislative proposal for a harmonized EU regime" as soon as this summer, with an insolvency structure in place by 2012.

The final phase will be the creation of a European Resolution Authority by 2014, adding a fourth pillar to the EU’s new architecture of financial regulation. EU "authorities" typically have their own permanent staff and powers to override national bodies.

The document said regulators should be given "statutory power" to write down senior bank debt, by any amount necessary, or to convert debt into equity. "Such a power would only apply to new debt (or existing debt contracts renewed or rolled over) after entry into force of the power."

Worries over the exact shape of the bondholder haircuts caused credit default swaps on senior European bank debt to rise sharply earlier in the day, with the Markit iTraxx Senior Financials index rising 16 basis points to 196.


A permanent Governor of the Bank of England would be one of the greatest men in England. He would be a little `monarch` in the City; he would be far greater than the `Lord Mayor.` He would be the personal embodiment of the Bank of England; he would be constantly clothed with an almost indefinite prestige. Everybody in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked. A day might come when his favour might mean prosperity, and his distrust might mean ruin. A position with so much real power and so much apparent dignity would be intensely coveted.

Walter Bagehot. Lombard Street. 1873.

Below, more from the Consumer Electronics Show 2011.

Jan. 6, 2011, 1:30 p.m. EST

CES sports 2011’s top gadgets: a pictorial

Tablets steal the thunder but other hot electronics appear at show

A model stands by a Sharp Quattron 70-inch LCD TV after the television was introduced at the 2011 International Consumer Electronics Show in Las Vegas. The show, which runs through Sunday, showcases the tablets, 3D- and Internet-enabled TVs expected to make the biggest splash in 2011. The battle for recession-weary consumers will pit Samsung Electronics, Sony Corp, LG Electronics, Google Inc, Netflix and Apple Inc against each other, all fighting to make their technology the standard.

More. 11pages.

We end for the week with more of the decline and fall of dumbed down former Great Britain. In bankster run, government life support Britain, modern Britain doesn’t stand for anything anymore. Modern leftist, new age media have so trashed morality in brand Britain, that what passes for informed discernment and judgment in now more akin to the fall of Rome. In the UK it’s later than most think. Great Britain may yet win out in the race to Reykjavik, but unlike Iceland, an Icelandic Britain lacking identity, a past and morality will be a hell hole place to live and do business. Gin Lane here we come.

YWCA loses Christianity from title

The Young Women's Christian Association, which is one of Britain's oldest charities, has dropped the word "Christian" from its name to better reflect its role in society.

7:07AM GMT 07 Jan 2011

The YWCA, which was set up in 1855 to help young women going to London for the first time, has now become "Platform 51".

The name was chosen because 51 per cent of people are female and "women use us as a platform for having their say and for helping them into the next stage of their lives".

The rebranding is likely to raise questions among the charity's donors, many of whom give to it because of the organisation's Christian links.

However, officials at the World YWCA headquarters in Geneva told the Daily Mail that none of the 124 branches in other countries intended to follow suit.

The spokeswoman said: "We are not even discussing a change. We see our name as an opportunity for promoting Christian values and principles."

The YWCA is not the first body to move away from Christian associations in its name. In 2009, the chairman of Churches Action for the Homeless said it needed to start looking for a new name because the religious connotations made it harder to get grants.

A spokesman for the think-tank the Christian Institute said: "Many believe there is an anti-Christian bias among those who decide which charities get state funding.

"It was the Christian character of the YWCA that made it great. It is a shame that it is turning its back on those values."


Beer Street and Gin Lane

A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.

Walter Bagehot. Lombard Street. 1873.

At the Comex silver depositories Thursday, final figures were: Registered 45.66 Moz, Eligible 60.66 Moz, Total 106.32 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Today, the crooks and scoundrels in the US “triple-A” residential mortgage backed securities scam. They wrote the rules and then deliberately and willfully ignored them because it cost too much. Now the Massachusetts highest cort faces a Solomon like dilemma. Whichever way they rule there’s no good outcome. Either they bankrupt the banks or the legitimize everyone cutting corners for financial gain whenever it suits them. Who would then trust any contract subject to MA law, or want to deal with any MA counterparty? Nice one, an unintended consequence of deregulation and unenforcement of the remaining regulations. What happens when avarice and deception and worse trump rule of law and common sense.

Oh what a tangled web we weave, when first we practice to deceive.

Ebenezer Squid. With apologies to Sir Walter Scott.

Foreclosures May Be Undone by State Ruling on Mortgage Transfer

By Thom Weidlich - Jan 6, 2011 5:01 AM GMT

Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real- estate law governing how mortgages may be transferred.

The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues.

A victory for the homeowners may invalidate some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools. Such a ruling may also be cited in other state courts handling litigation related to the foreclosure crisis.

“This is the first time the securitization paradigm is squarely before a high court,” said Marie McDonnell, a mortgage-fraud analyst in Orleans, Massachusetts, who wrote a friend-of-the-court brief in favor of borrowers. The state court, under its practices, is likely to rule by next month.

Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether hundreds of thousands of foreclosures were properly documented as the housing market collapsed. The probe came after JPMorgan Chase & Co. and Ally Financial Inc. said they would stop repossessions in 23 states where courts supervise home seizures and Bank of America Corp. froze U.S. foreclosures. Massachusetts is one of 27 states where court supervision of foreclosures generally isn’t required.

Took Their Homes

The Massachusetts homeowners argued that the banks that took their homes didn’t follow their own rules for transferring mortgages into mortgage-backed trusts that issued bonds. The banks and the mortgage-bundling industry counter that the securitization documents themselves assign the mortgages.

If loans weren’t transferred properly, the banks that sponsored such trusts may have to repurchase them, Adam J. Levitin, an associate professor at Georgetown University Law Center in Washington, said in prepared testimony in the U.S. House of Representatives in November.

If the problem is widespread enough, it may cost the banks trillions of dollars and make them insolvent, Levitin said.

Again, it may be said that we need not be alarmed at the magnitude of our credit system or at its refinement, for that we have learned by experience the way of controlling it, and always manage it with discretion. But we do not always manage it with discretion. There is the astounding instance of Overend, Gurney, and Co. to the contrary. Ten years ago that house stood next to the Bank of England in the City of London; it was better known abroad than any similar firm known, perhaps, better than any purely English firm. The partners had great estates, which had mostly been made in the business. They still derived an immense income from it. Yet in six years they lost all their own wealth, sold the business to the company, and then lost a large part of the company`s capital. And these losses were made in a manner so reckless and so foolish, that one would think a child who had lent money in the City of London would have lent it better. After this example, we must not confide too surely in long-established credit, or in firmly-rooted traditions of business. We must examine the system on which these great masses of money are manipulated, and assure ourselves that it is safe and right.

Walter Bagehot. Lombard Street. 1873.

Another wintry weekend, and higher prices and taxes too, in modern Godless Britain. For now, the deception of a fiat money recovery continues, just as long as central banks are willing to continue on with quantitative easing, and rigged interest rates. But once on QE there’s no way of getting off except via a crash. Stay long precious metals as recovery insurance. Self delusion never ends well. Whether rain, snow or shine, have another of God’s great winter weekends everyone.

The monthly Coppock Indicators finished December:

DJIA: +171 Down 7. NASDAQ: +238 Down 9. SP500: +165 Down 2.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. December is the seventh down month, but the downward momentum has virtually stopped. I would put on (purchased) synthetic double options here for a breakout in either direction. Professional traders would adopt much more risky granted option strategies.

No comments:

Post a Comment