This is very interesting to check out…
Public Banking — it already works in the United States and is catching on! 20 States are considering some form of state banking legislation.
This is very interesting to check out…
Public Banking — it already works in the United States and is catching on! 20 States are considering some form of state banking legislation.
Submitted by Tyler Durden on 04/24/2013 21:34 -0400
We know that back in early October 2010, when gold closed at a then record high of $1,320, JPM decided to reopen its previously mothballed precious metal vault due to soaring demand for metal vaulting, thus becoming only the fifth official Comex private gold depository in New York in addition to HSBC, Bank of Nova Scotia, Brinks and MTB (and of course the New York Fed).
We also know, courtesy of a Zero Hedge exclusive, that the JPM vault – the largest private gold vault in the world – is located at 1 Chase Manhattan Plaza, and is literally adjacent to the vault of the New York Fed 80 feet, and 5 sublevels, below street level.
We know that for a long time the vault held around 2.5 million ounces of eligible (commercial) gold, a number which declined only gradually until very recently.
We know that the total amount of registered (investment) gold has been steady for the past 4 years (after peaking in early 2006).
Finally, everyone knows that in the past month gold has experienced a very severe move lower which is still largely unexplained.
What many may not know, is that while registered Comex gold has been flat, the amount of eligible gold in Comex warehouses (the distinction between eligible and registered gold can be found here) in the past several weeks has plunged from nearly 9 million ounces, to just 6.1 million ounces as of today- the lowest since mid-2009.
What nobody knows, is why virtually the entire move in warehoused eligible gold is driven exclusively by one firm: JPMorgan, whose eligible gold has collapse from just under 2 million ounces as of the end of 2012 to a nearly record low 402,374 ounces as of today, a drop of 20% in one day, though slightly higher compared to the recent record low hit on April 5 when JPM warehoused commercial gold touched a post-vault reopening low of just over 4 tons, or 142,700 ounces.
This happened just days ahead of the biggest ever one-day gold slam down in history.
JPMorgan’s Eligible Gold Plummets 65% In 24 Hours To All Time Low
Submitted by Tyler Durden on 04/25/2013 17:30 -0400
We are confident that in the aftermath of our article from last night “Just What Is Going On With The Gold In JPMorgan’s Vault?” in which we showed the absolute devastation of “eligible” (aka commercial) gold warehoused in JPM’s vault just over the Manhattan bedrock at 1 Chase Manhattan Place (and also in the entire Comex vault network in the past month), we were not the only ones checking every five minutes for the Comex gold depository update for April 25. Moments ago we finally got it, and it’s a doozy. Because in just the past 24 hours, from April 24 to April 25, according to the Comex, JPM’s eligible gold plunged from 402.4K ounces to just 141.6K ounces, a drop of 65% in 24 hours,and the lowest amount of eligible gold held at the vault on record, since its reopening in October 2010!
Everyone has seen what a run on the bank looks like. Below is perhaps the best chart of what a “run on the vault” is.
The Managing Director of the International Monetary Fund (IMF), Christine Lagarde, said today that the real heroes of the economic crisis that erupted in 2008 are not heads of state and finance ministers but central bankers.
“Who have been heroes since the crisis began,” said Lagarde to start a two-day seminar on macroeconomic policies at the headquarters of the International Monetary Fund and in the framework of the joint spring meeting with the World Bank held this week in Washington.
“I recognize some in this room,” said the head of the Fund, who insisted that “the heroes are not the heads of state and finance ministers,” but the heads of the central banks around the world.
Of course this discourse is full of lies. Bankers, along with governments, are the responsible parties of the current global financial crisis. That has been proven many times. A completely interconnected world is more vulnerable to systemic collapse, and that interconnectedness was created by the global financial institutions that control the world.
Recently, a group of researchers studied how the world’s interconnectedness has truly handed over the control of the global economy to as few as 146 individuals, entities and governments, and how their decisions directly affect the stability of the global economic system. One curious finding about how a corporate global network controls it all, is that the data utilized to determine how much influence a few corporations exercise over the rest of us, has been available for years, but no study had been conducted to find what they found.
Because bankers cannot be prosecuted for breach of trust
I challenge anyone to prove me wrong that confiscation of bank deposits is legalized daylight robbery
Bank depositors in the UK and USA may think that their bank deposits would not be confiscated as they are insured and no government would dare embark on such a drastic action to bail out insolvent banks.
Before I explain why confiscation of bank deposits in the UK and US is a certainty and absolutely legal, I need all readers of this article to do the following:
Ask your local police, sheriffs, lawyers, judges the following questions:
1) If I place my money with a lawyer as a stake-holder and he uses the money without my consent, has the lawyer committed a crime?
2) If I store a bushel of wheat or cotton in a warehouse and the owner of the warehouse sold my wheat/cotton without my consent or authority, has the warehouse owner committed a crime?
3) If I place monies with my broker (stock or commodity) and the broker uses my monies for other purposes and or contrary to my instructions, has the broker committed a crime?
I am confident that the answer to the above questions is a Yes!
However, for the purposes of this article, I would like to first highlight the situation of the deposit / storage of wheat with a warehouse owner in relation to the deposit of money / storage with a banker.
The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There’s no price the big banks can’t fix.
Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.
Michalis Sarris was a big man in the banking world. He was a former governor of the Central Bank, Cypriot Finance Minister from 2005 to 2008, and Chairman of the Laiki Bank, the bank that is now being torn apart by the EU. He was a graduate of the London School of Economics and held a position at the World Bank.
The strange ordeal of Mr. Sarris begins on October 14, 2011, when he was arrested, along with one of his employees, at a house in Nicosea, Turkish Occupied Cyprus. Sarris, then 65, was found naked and accused of having unnatural sexual relations with a minor, a 17 year old Turkish settler. The claims of Mr. Sarris, who said he was getting a 20 euro “massage” didn’t fly with the Turkish police, who arrested all three, Sarris, his employee, and the minor. After a short stint in jail, Sarris posted a huge 50,000 euro bond and returned to the Greek part of Cyprus. He later skipped showing up for his trial at a Turkish court and forfeited the bond. One wag said that the 2011 massage cost Sarris 50,020 euros, the most expensive massage in the history of Cyprus.
Shortly after his arrest, he was appointed Chairman of the Laiki Bank, and it was in this position that he negotiated with the Troika of Doom, The EU, The International Monetary Fund, and the European Central Bank. This is the power trio that forced Cypriot President Nikos Anastasaides to sign an agreement that surrendered the depositors’ funds to the EU. The Cypriot Parliament did not vote on this, and some legal experts question the legality of the agreement that put possibly millions of depoitors at risk. With the forced collapse of the Laiki Bank, Sarris was appointed by President Anastasaides to be Finance Minister of Cyprus once again in February 2013.
Mr. Sarris did not remain long as Finance Minister. He Resigned on April 2,
2013. After his resignation, he decided to “set the record straight” about his negotiations with the Troika. Sarris claims that the deal he made was for the depositors to only take a 21/2% “haircut” on interest, and further, in order to avoid a run on the banks, that if any deposits dropped down to 70%, than a tax of 2 1/2 percent would be put on interest received on the account, not the principal. This 2 1/2% on interest is a long way from the 77.5% the Troika is now seizing from the accounts of customers of Laiki Bank and The Bank of Cyprus who have over 100,000 euros on deposit. This recent information on the secret negotiations brings to mind several questions. Did the Troika “double-cross” Mr. Sarris, leading him to believe that the so-called “haircut” would only be on interest, then slamming a different deal by surprise on President Anastasiades? Or did Mr. Sarris know all along about the huge bite that was going to be taken out of his bank’s customers? Did Mr. Sarris throw his own customers to the wolves of the Troika? Did the Troika, or any of their operatives, have even more secret information about Mr. Sarris’ homosexual life-style and threaten to reveal it and ruin him if he didn’t “play ball”? It would not be the first time in history that sexual blackmail had taken place. Or is Mr. Sarris telling the truth, revealing the Troika to have negotiated in bad faith, with a hidden agenda, and were planning to blindside Mr. Sarris all along? These and other questions should be investigated by the Cypriot government if they want to get to the bottom of this morass.
The thing to remember is that the Cyprus banks did business in many countries other than Cyprus. The Bank of Cyprus has branches in the Ukraine, Romania, Russia, the UK, and the Channel Islands, as well as representatives in many other cities in the Eastern European area. The people in those areas who thought they were outside of the EU bankster’s area of influence were wrong, as they are finding out, much to their distress. Their deposits will lose, just like the people who actually live in Cyprus.
The Laiki Bank, or Cyprus Popular Bank, the second largest in Cyprus, was turned into a “bad” bank by the EU who illegally and fraudulently seized the bank. Laiki was stuck with all the bad Greek Bonds, derivative and other similar debt. The accounts under 100,000 euros were moved to the Bank of Cyprus, while those accounts over 100,000 euros were held in the “bad” bank and readied for the guillotine, and what now is reported by the N.Y. Times, a 77.5% beheading, converting their cash money into frozen shares, or “equity” that cannot be sold for years or maybe never.
Phoney propaganda reports in the U.S. press tried to convince readers that the people getting screwed were a bunch of foreign mobsters – mainly Russian mobsters who were “hiding” vast amounts of money in these “secret” Cyprus Banks. Let’s take a look at the reality of this and a short history of the Laiki Bank that has been eviscerated by the EU Banksters.
The Laiki Bank started in 1901 in Cyprus. We are not going to go through every moment of their history, just the highlights that bear on this article. But this is not a “newcomer”, it is a very old bank and was certainly respected in many places in the world. In 1972, the Hong Kong Bank, one of the largest banking groups in the world, thought enough of Laiki to acquire 21.16% of the Bank. They held this all the way until 2006 when the HSBC, the successor to Hong Kong Bank, sold their shares.
In 1983, Laiki Bank bought Grindlays Bank, the oldest and largest foreign bank in Cyprus and the third largest bank there. In 1992 they opened their first European office in Athens, paving the way for expansion. By 1995 they were opening offices in South Africa and Canada, and 1997 saw expansion into Yugoslavia and Russia. In 2001, they opened 5 Branches in Australia; in 2005 they expanded to the Channel Islands and bought the CentroBanko in Serbia. 2007 saw expansion to the Ukraine, Malta and Russia; 2011 saw an office in Beijing, China and investment from major banks and big investors. In fact, the Marfin group pumped in a huge 488.2 million euros in 2011.
The bottom line is that this was a world-class operation, a bank operating around the world, with 439 branches and with 8,464 staff servicing one million three hundred fifty thousand customers. So much for the phoney news from mainstream American media that it was just a few Russian mobsters that got clipped in this operation. No, it was people from Australia, China, Serbia, Greece, Ukraine, Romania, Malta and other countries who are getting thrown under the bus. The burgeoning business communities in the former “Eastern Block”, the up and coming middle class around the world, these are the true victims of this complete scam perpetrated by the Central Bankers of Europe and their partners, the world-wide net of operatives from banks like Goldman Sachs.This is the legacy of the Banksters who are now feasting on the deposits of innocent people around the world like a pack of wild jackals tearing apart an antelope on the plains of Africa.
The never-ending story of the destruction of a modern State continues as the millions of people in the affected areas watch helpless while the financial vultures devour their countries and dump them into a pit of poverty.
The latest outrage in this drama is now taking place in the government vaults in Cyprus, where the EU banksters have demanded Cyprus transfer 10 tons of gold to them in order to receive “loans” to re-capitalize their banks. This raid on the gold vaults will bankrupt the government of Cyprus, leaving them a mere 3 tons of gold left to “back” their currency. And even this may vanish into the vaults of the EU, as the estimated value of 400 million euros of the gold is now dropping daily as the big international banksters are at the same time trying to drive down the price of gold on the spot market.
As of 15 April, 2013, gold has been driven down to $1378.00 U.S. per ounce, a huge 12 percent slide since just 11 April. The big banksters, spreading fear and propaganda around the world, are causing a “panic sell-off” on gold. Hedge funds and big investors dumping gold is driving down the price, the shorts shaking out anyone long on gold, and at the same time making the gold in the vaults of the Cypriot government less valuable every day, pushing them to “hurry up and transfer the gold to us before it becomes worth less (or worthless?)”. This is a trick as old as humanity, but the pressure on the Parliament in Cyprus is enormous, and they must be reeling under it. The events of the last couple of months has shown that in actuality, democracy is finished in Cyprus – it is done. The very fact that the second “offer” of the E.U. banksters was never passed by Parliament, but only signed directly by the President and the representative of the E.U. was the last nail in the coffin of democracy. For Cyprus, it is now the rule of the banksters.
Meanwhile, trying to add fuel to the fire sale on gold, banks like Morgan and Goldman Sachs have revved up their propaganda machines, spreading the lie that inflation is “gone” and there is now no chance of inflation, so all you out there who own gold are stupid to hold it. Sell it now and get into the stock market they say.
Goldman Sachs: “the retreat of gold is accelerating.”
J.P. Morgan: “inflation is moving down to around 2 percent in the second half of 2013.”
National Securities Corp. in NY: “The perception is that gold is not really needed as a safe haven. People are looking at the stock market, and they’re stunned, and there’s no inflation. So people are saying, ‘What do we need gold for?’”
Bloomberg: “The price of gold is crashing.”
This propaganda push by the big banksters will yield them a huge profit in a short term gold slide. Morgan, pushing the line that inflation is going to bottom at 2% this year, should talk to some common folks and ask them how they have seen skyrocketing prices in food, gasoline, and rents in the last couple of years. Ooooops! We don’t count that, say the banksters. Yeah, the things that matter the most to common folks, aren’t even counted in their phoney statistics. Meanwhile, Morgan has piled up trillions of dollars of derivatives obligations, and the U.S. Fed and the E.U. have pumped up trillions of dollars and euros in their “quantitative easing” schemes, meaning they have massively inflated the money supply by “creating” and printing it, backed by nothing but hot air.
This may be the biggest gold heist in history, since the post-WW 2 theft of the gold and treasures of the Pacific Basin countries by the U.S. and the Vatican, secretly taking the gold from the caves in the Philippines where the Japanese Imperial forces had hidden it. That gold was used mainly by the U.S. C.I.A. in black operations and to prop up the post-war Japanese government. (see “Gold Warriors” by the Seagraves for details).
This article first appeared at Web of Debt.
Cyprus-style confiscation of depositor funds has been called the “new normal.” Bail-in policies are appearing in multiple countries directing failing Too Big To Fail banks to convert the funds of “unsecured creditors” into capital; and those creditors, it turns out, include ordinary depositors. Even “secured” creditors, including state and local governments, may be at risk. Derivatives have “super-priority” status in bankruptcy, and Dodd Frank precludes further taxpayer bailouts. In a big derivatives bust, there may be no collateral left for the creditors who are next in line.
Shock waves went around the world when the IMF, the EU, and the ECB not only approved but mandated the confiscation of depositor funds to “bail in” two bankrupt banks in Cyprus. A “Bail in” is a quantum leap beyond a “bail out.” When governments are no longer willing to use taxpayer money to bail out banks that have gambled away their capital, the banks are now being instructed to “recapitalize” themselves by confiscating the funds of their creditors, turning debt into equity, or stock; and the “creditors” include the depositors who put their money in the bank thinking it was a secure place to store their savings.
The Cyprus bail-in was not a one-off emergency measure but was consistent with similar policies already in the works for the US, UK, EU, Canada, New Zealand, and Australia, as detailed in my earlier articles here and here. “Too big to fail” now trumps all. Rather than banks being put into bankruptcy to salvage the deposits of their customers, the customers will now be put into bankruptcy to save the banks.
Why Derivatives Threaten Your Bank Account
The big risk behind all this is the massive $230 trillion derivatives boondoggle managed by US banks. Derivatives are sold as a kind of insurance for managing profits and risk; but as Satyajit Das points out in Extreme Money, they actually increase risk to the system as a whole.
In the US after the Glass-Steagall Act was implemented in 1933, a bank could not gamble with depositor funds for its own account; but in 1999, that barrier was removed. Recent congressional investigations have revealed that in the biggest derivative banks, JPMorgan and Bank of America, massive commingling has occurred between their depository arms and their unregulated and highly vulnerable derivatives arms. Under both the Dodd Frank Act and the 2005 Bankruptcy Act, derivative claims have super-priority over all other claims, secured and unsecured, insured and uninsured. In a major derivatives fiasco, derivative claimants could well grab all the collateral, leaving other claimants, public and private, holding the bag.
The tab for the 2008 bailout was $700 billion in taxpayer funds, and that was just to start. Another $700 billion disaster could easily wipe out all the money in the FDIC insurance fund, which has only about $25 billion in it. Both JPMorgan and Bank of America have over $1 trillion in deposits, and total deposits covered by FDIC insurance are about $9 trillion. According to an article in Bloomberg in November 2011, Bank of America’s holding company then had almost $75 trillion in derivatives, and 71% were held in its depository arm; while J.P. Morgan had $79 trillion in derivatives, and 99% were in its depository arm. Those whole mega-sums are not actually at risk, but the cash calculated to be at risk from derivatives from all sources is at least $12 trillion; and JPM is the biggest player, with 30% of the market.
It used to be that the government would backstop the FDIC if it ran out of money. But section 716 of the Dodd Frank Act now precludes the payment of further taxpayer funds to bail out a bank from a bad derivatives gamble. As summarized in a letter from Americans for Financial Reform quoted by Yves Smith:
Section 716 bans taxpayer bailouts of a broad range of derivatives dealing and speculative derivatives activities. Section 716 does not in any way limit the swaps activities which banks or other financial institutions may engage in. It simply prohibits public support for such activities.
There will be no more $700 billion taxpayer bailouts. So where will the banks get the money in the next crisis? It seems the plan has just been revealed in the new “Bail-in” policies.
All Depositors, Secured and Unsecured, May Be at Risk
The bail-in policy for the US and UK is set forth in a document put out jointly by the Federal Deposit Insurance Corporation (FDIC) and the Bank of England (BOE) in December 2012, titled Resolving Globally Active, Systemically Important, Financial Institutions.
In an April 4th article in Financial Sense, John Butler points out that the directive does not explicitly refer to “depositors.” It refers only to “unsecured creditors.” But the effective meaning of the term, says Butler, is belied by the fact that the FDIC has been put on the job. The FDIC has direct responsibility only for depositors, not for the bondholders who are wholesale non-depositor sources of bank credit. Butler comments:
Do you see the sleight-of-hand at work here? Under the guise of protecting taxpayers, depositors of failing institutions are to be arbitrarily, de-facto subordinated to interbank claims, when in fact they are legally senior to those claims!
. . . [C]onsider the brutal, unjust irony of the entire proposal. Remember, its stated purpose is to solve the problem revealed in 2008, namely the existence of insolvent TBTF institutions that were “highly leveraged and complex, with numerous and dispersed financial operations, extensive off-balance-sheet activities, and opaque financial statements.” Yet what is being proposed is a framework sacrificing depositors in order to maintain precisely this complex, opaque, leverage-laden financial edifice!
If you believe that what has happened recently in Cyprus is unlikely to happen elsewhere, think again. Economic policy officials in the US, UK and other countries are preparing for it. Remember, someone has to pay. Will it be you? If you are a depositor, the answer is yes.
The FDIC was set up to ensure the safety of deposits. Now it, it seems, its function will be the confiscation of deposits to save Wall Street. In the only mention of “depositors” in the FDIC-BOE directive as it pertains to US policy, paragraph 47 says that “the authorities recognize the need for effective communication to depositors, making it clear that their deposits will be protected.” But protected with what? As with MF Global, the pot will already have been gambled away. From whom will the bank get it back? Not the derivatives claimants, who are first in line to be paid; not the taxpayers, since Congress has sealed the vault; not the FDIC insurance fund, which has a paltry $25 billion in it. As long as the derivatives counter-parties have super-priority status, the claims of all other parties are in jeopardy.
That could mean not just the “unsecured creditors” but the “secured creditors,” including state and local governments. Local governments keep a significant portion of their revenues in Wall Street banks because smaller local banks lack the capacity to handle their complex business. In the US, banks taking deposits of public funds are required to pledge collateral against any funds exceeding the deposit insurance limit of $250,000. But derivative claims are also secured with collateral, and they have super-priority over all other claimants, including other secured creditors. The vault may be empty by the time local government officials get to the teller’s window. Main Street will again have been plundered by Wall Street.
Super-priority Status for Derivatives Increases Rather than Decreases Risk
Harvard Law Professor Mark Row maintains that the super-priority status of derivatives needs to be repealed. He writes:
. . . Derivatives counter-parties, . . . unlike most other secured creditors, can seize and immediately liquidate collateral, readily net out gains and losses in their dealings with the bankrupt, terminate their contracts with the bankrupt, and keep both preferential eve-of-bankruptcy payments and fraudulent conveyances they obtained from the debtor, all in ways that favor them over the bankrupt’s other creditors.
. . . When we subsidize derivatives and similar financial activity via bankruptcy benefits unavailable to other creditors, we get more of the activity than we otherwise would. Repeal would induce these burgeoning financial markets to better recognize the risks of counter-party financial failure, which in turn should dampen the possibility of another AIG-, Bear Stearns-, or Lehman Brothers-style financial meltdown, thereby helping to maintain systemic financial stability.
In The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences, Mr. David Skeel agrees. He calls the Dodd-Frank policy approach “corporatism”“ a partnership between government and corporations. Congress has made no attempt in the legislation to reduce the size of the big banks or to undermine the implicit subsidy provided by the knowledge that they will be bailed out in the event of trouble.
Under-girding this approach is what Mr.Skeel calls “the Lehman myth,” which blames the 2008 banking collapse on the decision to allow Lehman Brothers to fail. Mr. Skeel counters that the Lehman bankruptcy was actually orderly, and the derivatives were unwound relatively quickly. Rather than preventing the Lehman collapse, the bankruptcy exemption for derivatives may have helped precipitate it. When the bank appeared to be on shaky ground, the derivatives players all rushed to put in their claims, in a run on the collateral before it ran out. Mr. Skeel says the problem could be resolved by eliminating the derivatives exemption from the stay of proceedings that a bankruptcy court applies to other contracts to prevent this sort of run.
Putting the Brakes on the Wall Street End Game
Besides eliminating the super-priority of derivatives, here are some other ways to block the Wall Street asset grab:
(1) Restore the Glass-Steagall Act separating depository banking from investment banking. Support Marcy Kaptur’s H.R. 129
(2) Break up the giant derivatives banks. Support Bernie Sanders’ “too big to jail” legislation.
(3) Alternatively, nationalize the TBTFs, as advised in the New York Times by Gar Alperovitz. If taxpayer bailouts to save the TBTFs are unacceptable, depositor bailouts are even more unacceptable.
(4) Make derivatives illegal, as they were between 1936 and 1982 under the Commodities Exchange Act. They can be unwound by simply netting them out, declaring them null and void. As noted by Paul Craig Roberts, “the only major effect of closing out or netting all the swaps (mostly over-the-counter contracts between counter-parties) would be to take $230 trillion of leveraged risk out of the financial system.”
(5) Support the Harkin-Whitehouse bill to impose a financial transactions tax on Wall Street trading. Among other uses, a tax on all trades might supplement the FDIC insurance fund to cover another derivatives disaster.
(6) Establish postal savings banks as government-guaranteed depositories for individual savings. Many countries have public savings banks, which became particularly popular after savings in private banks were wiped out in the banking crisis of the late 1990s.
(7) Establish publicly-owned banks to be depositories of public monies, following the lead of North Dakota, the only state to completely escape the 2008 banking crisis. North Dakota does not keep its revenues in Wall Street banks but deposits them in the state-owned Bank of North Dakota by law. The bank has a mandate to serve the public, and it does not gamble in derivatives.
A motivated state legislature could set up a publicly-owned bank very quickly. Having its own bank would allow the state to protect both its own revenues and those of its citizens while generating the credit needed to support local business and restore prosperity to Main Street
For more information on the public bank option, see here. Learn more at the Public Banking Institute conference June 2-4 in San Rafael, California, featuring Matt Taibbi, Birgitta Jonsdottir, Gar Alperovitz and others.
Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are www.webofdebt.com and www.ellenbrown.com.