Baltic Dry Index. 1146 -10
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“It’s a complete tempest in a teapot. Every bank has a major
portfolio. In those portfolios, you make investments that you think are wise, that
offset your exposures. Obviously it’s a big portfolio, we’re a large company,
and we try to run it – it’s sophisticated, obviously with complex things, but
at the end of the day, that’s our job is to invest that portfolio wisely and
intelligently over a long period of time to earn income and to offset other
exposures we have.”
CEO Dimon April 13 2012.
Here we go again, with the world’s biggest
derivatives gambling bank, dinning high on the hog with an implied too big to
fail US taxpayer guarantee, making gigantic prop trading bets. Heads we win,
tails you lose. Gambling or speculation if you prefer, has no business carrying
a taxpayer guarantee against losses, has no business in banking. We must return
banking to a business that if the bank fails, the losses stay with the owners
and the reckless executives operating the bank. Bring back personal liability
for top executives. Worryingly, CEO Dimon said that the losses could easily get worse this
quarter and beyond and that JPMC’s capital
positions under Basel III will fall to 8.2% from 8.4% under the loss so far.
That’s how it started for Northern Rock, Bear Stearns, Lehman Brothers and MF
Global.
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Bear Stearns CEO Alan Schwartz. March 12, 2008. Bust March 17, 2008.
May 10,
2012, 7:06 p.m. EDT
J.P. Morgan reveals surprise $2 billion trade loss
SAN FRANCISCO (MarketWatch) — J.P. Morgan Chase
& Co. is looking at a $2 billion trading loss that will eat into
second-quarter results, pressuring shares of the bank after-hours Thursday.
----The
losses stemmed from trades at the bank’s chief investment office, where a
single trader -- dubbed the “London Whale” -- was reported to have taken large
positions for the bank in credit-default swaps.
J.P.
Morgan Chief Executive Jamie Dimon said in a surprise conference call after the
market closed Thursday that the loss was a “big mistake” but that it did not
violate the Volcker Rule
“These were egregious mistakes, they were
self-inflicted,” Dimon said, adding that the losses could easily get worse this
quarter and beyond.
Earlier
in a regulatory filing late Thursday, J.P. Morgan said it had “significant”
mark-to-market losses in its synthetic credit portfolio.
In the
Securities and Exchange Commission filing, the bank said its synthetic credit
portfolio had proved to be riskier and more volatile than expected. J.P. Morgan
said losses have been partially offset from sales in the chief investment
office’s available-for-sale securities portfolio.
J.P.
Morgan Chase now expects to lose $800 million within the corporate/private
equity segment, down from prior guidance of net income of $200 million.
Trader
Bruno Iksil had earned the nickname “the London Whale” in recent months by
selling huge amounts of credit-default swaps to hedge funds, a strategy that
soured in recent weeks.
More
April 6, 2012, 1:19 p.m. ET
'London Whale' Rattles Debt Market
In recent
weeks, hedge funds and other investors have been puzzled by unusual movements
in some credit markets, and have been buzzing about the identity of a
deep-pocketed trader dubbed "the London whale."
That
trader, according to people familiar with the matter, is a low-profile,
French-born J.P. Morgan Chase & Co. employee named Bruno Michel Iksil.
Mr. Iksil
has taken large positions for the bank in insurance-like products called
credit-default swaps. Lately, partly in reaction to market movements possibly
resulting from Mr. Iksil's trades, some hedge funds and others have made heavy
opposing bets, according to people close to the ...
More
Next, battle lines draw in Europe as France, supported by Italy, Spain,
and Greece, take on Germany. In an all too telling sign of the relative
strengths of the sides, it’s French President Hollande that’s summoned to
Berlin just hours after his inauguration. Long gone is the era in Euroland when
they ran up the French tricolour everyone had to salute twice. Stay long
physical precious metals. When France and Germany clash in Europe, history
records that currencies crash.
Francois Hollande threatens to block eurozone's new financial treaty
Francois Hollande has threatened to block the eurozone's new financial treaty unless Germany agrees to renegotiate its stringent austerity measures.
The new
French president wants the treaty, seen as crucial to ensuring the survival of
the single currency, to focus more on encouraging growth.
Angela
Merkel, the German chancellor, on Thursday told France that there was no
alternative to spending cuts and painful deficit cutting measures, warning that
"growth through debt" would take Europe back to square one.
But Benoît
Hamon, spokesman for Mr Hollande's Socialist Party, said that the
"politics of austerity" was failing to improve the continent's
financial crisis.
He said
the French president was determined to win a "trial of strength" over
the new fiscal pact, which aims to impose tough budgetary discipline on the 25
European Union countries who have signed up.
"We
want to renegotiate. Angela Merkel is defending her position but she cannot
bypass the will of the French people," Mr Hamon said. "If nothing
moves, the treaty will not be submitted for ratification."
Mrs
Merkel delivered a blunt message of her own however, telling France and Greece
not to abandon debt cutting policies in the wake of elections at the weekend
that saw both countries turn against the path of austerity.
"The
European sovereign debt crisis will not be beaten overnight, there is no magic
bullet," she said. "Growth through structural reform is important and
necessary. Growth through debt would throw us back to the beginning of the
crisis."
Mr
Hollande will meet Mrs Merkel for the first time since becoming French
president next Tuesday when he travels to Germany just hours after his
inauguration.
It’s too late for Germany to save the euro
Despite belated gestures from Berlin, the single currency cannot survive if and when Greece leaves it.
Greece’s
motorcycling Marxist, Alexis Tsipras, makes an unlikely champion, with his
commuter leathers and largely unrealistic Left-wing views, but he seems to be
about the best of a bad bunch right now. As far as I can see, he’s the only
member of the Greek political class who makes any kind of sense, albeit only
marginally so and with one rather important deficiency.
Rightly,
he’s rejected Berlin’s austerity programme as “barbaric” and counter-productive
(though, incongruously, he rides to parliament on a German-made BMW), but he’s
not yet managed to reconcile himself to the logical corollary of this analysis
– that Greece must take back control of its own destiny by leaving the euro. As
it is, the economy is condemned only to permanent depression.
Youth
unemployment in Greece was yesterday revealed to have overtaken even that of
Spain, at an almost unbelievable 53.8 per cent. This for an economy which, if
it sticks to the programme, has a further 150,000 public sector jobs still to
shed. Those who think that, with the requisite degree of structural reform, the
private sector will automatically move in and fill the gap can forget it.
The
banking system is insolvent, credit is plummeting, the flight of capital
continues unabated and businesses are going bust in record numbers. As long as
Greece remains in the euro, there is no plausible path back to growth.
Greeks May Hold $510 Billion Trump Card in Renegotiation
By John Glover - May 10, 2012 11:04 AM GMT
Greece’s next government may hold a trump card worth more than $510 billion
if it heeds voters’ demands to renegotiate its bailout with the European Union.
The nation owes about 400 billion euros ($517 billion) to private bondholders, public bodies such as the International Monetary Fund and European Central Bank, and other creditors, according to data compiled by Bloomberg. About 252 billion euros of that’s due to official organizations that used their status to avoid the losses suffered by ordinary bondholders when Greece restructured its debt two months ago.
----With Greece owing a sum roughly equal to Switzerland’s economy, the fallout for taxpayers could be calamitous if the country walks away.
“Greece has got some strong cards to persuade them to go easy on austerity,” said John Whittaker, an economist at Lancaster University Management School in England. “Everyone fears a Greek departure from the euro because they’ll lose money and lose political capital.”
The ECB also stands to lose much if Greece walks away from its obligations. First, the central bank bought about 50 billion euros of the government’s bonds to push down yields and help the nation retain access to the capital markets.
In addition, the ECB’s so-called Target2 system -- which tallies trade imbalances between the 17 national central banks using the single currency -- indicates that the Bank of Greece owes its counterparts 104 billion euros, according to Whittaker.
The Athens-based central bank has also issued 18 billion euros more banknotes than the size of its economy would indicate as Greeks tuck bills under their mattress or spirit them out of the country, Whittaker said.
That would bring Greece’s total liability to the ECB to 172 billion euros.
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
At the Comex silver depositories Thursday final figures were: Registered 35.57
Moz, Eligible 104.90 Moz, Total 140.47 Moz.
Crooks and
Scoundrels Corner.
The bent,
the seriously bent, and the totally doubled over.
Today we
take a break from bent banksters, crooked politicians and great vampire squids.
We even take a break from the Muppets who trade with Ebenezer Squid. Today it’s
the MF Global of the violin world. Not just any old violins either, these
violins were seriously old, until they weren’t.
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
Ending on a Sour Note How the World's Top Stradivarius Dealer Misplayed
By Carsten Holm 05/10/2012
Dietmar Machold was the world's most successful dealer of Stradivari instruments -- and probably a fraud. Many instruments have disappeared, while creditors are demanding €100 million that is owed to them. Once a high society favorite who lived in a castle, Machold now awaits trial in a Vienna prison.
The
gentlemen from the Bremen Sparkasse savings bank have gathered around a table
holding two icons of Western culture, violins by the godfather of
violin-making, Antonio Stradivari. They are 294 and 325 years old, respectively,
and they have a combined value of €5.2 million ($6.8 million).
Or so the
gentlemen from the bank believe.
They have
invited violinmaker Roger Hargrave, 64, from the nearby town of Schwanewede in
Lower Saxony, to join them. He glances at the instruments and quickly delivers
his devastating verdict: "These are not Stradivaris." When Hargrave
thinks about the meeting early last year, he remembers that the Bremen bankers
were "completely shocked -- there was no oxygen left in the room."
One of then, he says, urged him to exercise discretion. "They were
extremely embarrassed to have fallen for such a huge scam."
It was
their longstanding client Dietmar Machold, 62, who had given them the two
violins as collateral for a loan in the millions. The businessman, who had
lived in Bremen for many years, had a good reputation. His business had been in
the family for five generations, and after moving from Bremen to Vienna, he had
risen to the top of the industry worldwide.
Machold
was the Stradivarius man. There are still about 600 violins, 60 cellos and 12
violas from the famous workshop in Cremona, Italy in existence today, and
Machold has held about half of these instruments in his hands. His reputation
was so stellar that he was permitted to prepare the appraisals himself for the
two Stradivarius instruments given to the Bremen bank as collateral, and he has
also appeared in court as an expert witness.
But
Machold will appear in court in a different role -- as a defendant --
presumably this summer. The Vienna public prosecutor's office has charged him
with embezzlement, bankruptcy fraud and grand commercial fraud. The prosecutors
received 46 criminal complaints from Australia, the United States, the
Netherlands, Belgium and Germany, where he is accused of the loss of valuable
instruments.
For
months, Austrian investigators and 72-year-old Jörg Beirer, the administrator
in the bankruptcy proceedings, have been trying to shed light on Machold's
business dealings. Their efforts have pieced together a picture of a businessman
who was probably cash-strapped for years and sold violins he had taken in
commission for millions -- often failing to pass on the proceeds to the
instruments' owners or to banks, allegedly using the money to pay off other
debts instead.
The
investigators and the administrator have discovered how Machold went about his
fraudulent activities, but also how the banks made it easy for him. No one
noticed when he used the same violin as collateral for loans with two different
financial institutions.
Last
April, the gentlemen from Bremen Sparkasse, who are now unwilling to comment on
the incident, citing bank secrecy regulations, finally realized that the
violins in their safe were more or less worthless. The bankers had Hamburg
forestry expert Micha Beuting examine the alleged Stradivari instruments. If
they had been genuine, the trees used to make them would have to have been
felled before 1737, the year of Antonio Stradivari's death.
In his
report, Beuting noted that based on the growth rings, the trees had been cut
down decades after Stradivari's death -- probably in the northern Alps or the
Bavarian Forest, but clearly not in the southern Alps, where the spruce trees
Stradivari used to make his violins grew.
More
http://www.spiegel.de/international/germany/the-case-of-disgraced-stradivari-dealer-dietmar-machold-a-832274.html
“Those who don't know history are destined to repeat it.”Edmund Burke
Another
weekend and will Greece quietly place the order to start printing the new
Drachma? Though the kindness of northern strangers released another 4.2 billion
euro to Greece to pay some of its bills and repay some sovereign debt, these
“kindly northerners” held back into June another billion that had been promised
for earlier austerity. Two can play at that game it seems to me. It also seems
to me that it is only a matter of time until Greece exits the euro but stays in
the European Union biding its time for revenge. The euro now only works for
Germany, but for how much longer is the question. Have a great weekend
everyone. Here in the spring like Thames Valley, I am living through the
wettest drought I’ve ever seen!
The monthly
Coppock Indicators finished April:
DJIA: +89 Down. NASDAQ: +97 Down. SP500: +63 Down. All
three indicators remain down but downward momentum is stalling.
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continue reading subscribe to the LIR at Currency Countdown.
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