Money Matters

More BIS Bull About Inflation

May 12, 2008

Elaine Meinel Supkis

As the Bank of China raises the reserve ratio for Chinese banks, there is a massive earthquake and Mother Nature, which sent tornadoes into the US and a huge typhoon into Burma. The costs of these catastrophes will stress global banking systems even further, of course. The looming earthquake that will rend California will, like the ones in Asia, create further stresses. China is, unlike the US, seriously trying to grapple with inflation and is using classic methods to do this. But the US persists in pretending inflation is all a psychological matter and it is OK to have interest rates very low and bank ratios at laughable levels while creating more Funny Money™ via that ever-widening new window installed in the Fed bank vaults. So today, we examine the most recent BIS report about all this.

China Raises Bank Reserve Ratio as Inflation Surges

China ordered banks to set aside more deposits as reserves for the fourth time this year after inflation accelerated, approaching the fastest pace since 1996.

Banks must park a record 16.5 percent of deposits with the central bank, up from 16 percent, the People's Bank of China said today on its Web site. Consumer prices rose 8.5 percent in April from a year earlier driven by food costs, the statistics bureau said today.

The increase will freeze about 208 billion yuan ($30 billion) in the banking system, helping to cool the world's fastest-growing major economy by restraining lending. A 7.5 percentage point increase in the requirement since the start of last year has failed to stop lending growth that's helped Chinese banks to record profits.

``The central bank needs to do more and do it sooner rather than later,'' said Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong. ``The reserve requirement is not sufficient to curb inflation.''

China has been hammered by Mother Nature lately. The severe winter storms this year laid waste to southern agriculture as well as paralyzing a good part of the country for a number of days, collapsing roofs and damaging equipment. Today's massive earthquake felt across nearly all of China has killed possibly thousands of people. Perhaps 900 children in a middle school are trapped or dead in rubble. It breaks our heart to hear this news. The agony of the mothers and fathers frantically seeking their loved ones! Mother Nature is the ultimate ruler of this planet. We struggle to control or contain Her but this can be swept aside contemptuously by her vast powers which is why we must understand the intersection of life, death and reality when we discuss anything here at Culture of Life News. For one can't appreciate things unless one recognizes that we control only a small part of our own lives.

China has huge reserves. Both human as well as monetary. The US central bankers and the international banking community that plots day and night, how they can take over all the planetary financial systems, have been telling China for the last three years, they don't need big reserves. The US has run entirely on red ink since the Vietnam War and intends to continue this for the foreseeable future. The international bankers even claimed there was this fabled 'savings glut' which had to be fixed by the US borrowing epic sums. Of course, banks can lend any amount based on any reserve ratios including -0%. So there is no need for this 'savings glut' to allow wild lending.

China, with a memory of a long history of bad years interspaced with good ones, has striven to build a secure base for when there is need due to the malicious nature of Mother Nature. Japan is in the same boat and note that they, too, have huge reserves. Also, this terrible earthquake in China is a stark reminder that we cannot ignore the coming San Andreas event. Obviously, the entire Pacific rim is under tremendous stress. We had a fairly large quake in Japan last week and now a big one in China. And a volcanic eruption in Chile. I cannot fathom how the US plans to pay for rebuilding the highway, water, energy and public service systems in California if the middle section of the San Andreas shifts northwards by 45-60 feet in one second! Impossible.

Lack of foresight coupled with a refusal to take responsibility for all systems characterizes the US mind set. We seem to have this childish faith that we can rebuild or renew things simply by waving a magic wand and creating enough Funny Money™ to take care of all things. The Bank for International Settlements which was set up to deal with both German reparations and US loans to France and England after WWI sponsors papers and holds meetings concerning their ongoing efforts to explain and control all banking across the planet. They, like the Fed's regulators, believe that if they just control the players in this international game of money creation, they can increase the money supply so governments and businesses can expand and increase debt levels infinitely. With the one proviso, that there be little inflation.

As we see in the news today, international inflation caused by wild money creation is hammering China who has had the greatest growth and the biggest expansion of all the nations on earth. China now has to deal with the global money supply flowing into China like the Yangtze river. It is flooding the plains now and it threatening people's lives in China just like winter storms, spring floods and earthquakes. China has sopped up a lot of this overwhelming flood of dollars so far but now can't do it fast enough since the bankers in the West have turned on the taps full blast.

Globalisation and the determinants of domestic inflation

by William R White

Abstract

The remarkable stability of low domestic inflation in many countries requires explanation. In this paper, a number of competing hypotheses are evaluated on a stand-alone basis, and all are found to be inadequate. This includes the view that this outcome has been solely the result of more effective disinflationary monetary policies. However, a combination of these hypotheses (including a significant role for increased global competition) seems to provide a plausible explanation, not only for continuing low inflation, but also its
coexistence with rapid growth and low real interest rates. Unfortunately, the analysis also leads to the conclusion that rising inflation, unwinding financial imbalancthe welcome stability seen to date.

All global charts showing inflation show it shooting upwards when two things happened to the world's biggest economy as well as global empire: the US lost the Vietnam War to the communists and was chased out of all of Southeast Asia and wars in the Middle East between Israel and its neighbors, the oil boycott and then the overthrow of the Shah of Iran and the Iran/Iraq wars caused energy prices to shoot up as oil deliveries were severely disrupted. It wasn't mere oil price hikes but the RATIONING that created inflation to ripple through the world's markets. The US ran up giant debts to pay for the Vietnam war and this was coupled with a tax revolt at home as workers rose through the Income Tax system into higher and higher rate brackets while taking home pay that bought less and less for the dollar. The usual method of all countries to pay for wars via either higher taxes or inflating away the value of the currency so old debts could be paid off with cheaper dollars collided with each other.

Unwilling to take a hit one way or another, the American workers began a race against their own central bankers and the government itself. As the bankers and the government conspired to inflate away the debts, the workers upped the ante and we got raging inflation. All of this, of course, was blamed on the workers. The government...TO THIS DAY....refuses to change income tax rates to reflect inflation and instead, all tax 'reforms' were aimed at flattening rates so poor workers pay the same rate or more than the richest 1%. This malicious game has created a creature we call 'budget deficits'.

This grew fiendishly over the years since 1970 to the point, we are now approaching $10 trillion in debt. Nearly all government debts are paid to the bankers in the form of 'Treasuries' so this flood of an extra $9 trillion into the Federal Reserve who holds the vast majority of Federal Treasuries until recent years meant the power of the central bank consortium has grown vastly greater. The Fed also has declared these debts to not be liabilities but rather, ASSETS. So the faster the Treasury bonds pile up at the Fed, the more the Fed can lend to its fellow bankers. Since the Fed can unilaterally decide what its reserve ratio is, it can ignore even this 'asset base' and simply make up loans if necessary. We are rapidly approaching this very thing as the Fed frantically lends increasing amounts to bankrupt bankers pretending solvency.

Back to the delusion of stability and lack of inflation since the inflation peak of the early 1980's: The world price of oil rose relentlessly from 1974 until 1984. Interest rates set by the Fed lagged far behind the real rate of inflation until Volcker got fed up and crushed inflation via ruthlessly raising rates almost to 20% and thus sopped up a huge amount of excess dollars from the previous banking inflation due to easy lending below the real rate of inflation.

This and the Germans beginning to buy Soviet oil and gas as well as the North Sea oil bonanza and the Alaskan oil finds, led to two things: the breaking of the back of OPEC's pricing powers and the flooding of the world with cheaper energy. Thanks to these things, even if a desperate Saddam crushed under the costs of financing his failed invasion of Iran, when he invaded Kuwait and disrupted oil deliveries, the price hike from all this was very limited in time. But even so, it was a shot across the prow of the planet's banking systems. For this small event that caused oil prices to go up only a little bit caused a global recession!

The utter collapse of Russia saved the Western bankers. The taps were turned on in Russia and energy poured out at basement level prices. Russia was bankrupt and in the grip of the international bankers who gleefully declared an end to inflation. And they assured everyone, inflation had NOTHING to do with energy. This paper by the BIS is classic: the connection between inflation showing up on everyone's ledgers is very much connected to the price of energy. Let's first look at some of the graphs in this latest BIS report to understand what is possibly going on:

CLICK ON ALL IMAGES TO ENLARGE

This chart shows how worker's wages, in particular, at the bottom, has been ruthlessly pushed down into negative territory via the nifty tool of allowing a flood of illegal aliens come in and displace the citizens. The US is not alone in this matter. As the Soviet Union collapsed and Western European powers desired a flood of cheap labor, they enabled this to happen quite legally, in the European Union. Like in the US, wages at the bottom collapsed. Wages of all workers fell relative to inflation.

In Japan, wages were dropped by offshoring jobs to China and Southeast Asia. So we had a DEPRESSION in wages of workers while at the same time, INFLATION in the money supply which has grown.

Note how the money base, credit and money supply all began to shoot up in...1995. And government debt grew, too. Here is a chart from the Dallas Fed from 2003 that clearly shows, Japan dropped its rates to 0% in 1995:

It is a constant irritation for me, seeing the pig-headed refusal to draw obvious parallels or connect obvious events. The author of this BIS BS report has nothing about the incredible 0% Japanese interest rate regime which incidentally, began right at the same time house prices, equity growth and all monetary systems took off like a ROCKET straight upwards! What is supposed to stop ridiculous inflation with bidders? INTEREST RATES THAT ARE HIGH ENOUGH. If you have a 0% down, 0% lending and 0% payment of principal on loans, you get 100% inflation! If one half of this system goes to zero, the other shoots to infinity. It is pretty simple. If everyone remembers this, they can then stop runaway inflation.

More BIS graphs:

Thanks to the Japanese exporters crushing wages in Japan, claiming falsely, there was no inflation, the price of manufactured goods in the West dropped. Japan invaded many domestic markets and crushed the competition. Profits soared due to the super-cheap yen compared to the 'strong dollar' regime we all saw back in the 1990's. Remember when the euro was launched on a 1:1 parity with the dollar? It fell by over 18% in one year. Consumer prices in exporter countries relentlessly climbed from 1992 onwards and is still climbing. But prices of imports diverged greatly when China entered export markets aggressively. Part of this was due to the Japanese industrialists moving their factories to China and then exporting their production to the US. This masked Japanese benefits from 'free trade' and gave Americans the erroneous idea that the crafty Chinese were hammering us even as Toyota, for example, surged to become the worlds' #1 automaker, just for example.

Prices of many Japanese and American products fell drastically since ALL the global corporations were exploiting cheap labor and the free trade mania. Note that all the remaining politicians who are running for President are pro-war, pro-deeper government debt and pro-free trade expansion!

What a cruel graph this is! The lack of 'inflation' since 1980 has been at the expense of the workers! Not only have wages fallen with 'inflation' but also the SHARE of the economic pie workers get. A serious collapse. In the US and Europe, this has been offset by the bankers handing out easy payment loans. But this process is ending. Like with Japan that sopped up all lending for 20 years in a huge real estate bubble, Europe and the US and the other 'Western' nations have done the exact same thing. Today, Japanese workers have had their wages crushed, the price of all things needed to stay alive have seen tremendous inflation, and even with near 0% lending via the Bank of Japan, the workers can't afford to go into debt at all.

In the West, it will be the same. Either the value of all assets held by the middle class has to collapse or lending has to be so open-handed, inflation takes off. Even the periodic infusions of Funny Money™ by the central bankers are instantly translated into commodity inflation.

I just got a call from a man who deals with scrap metals. He reports the price fall in metals is over and the price of aluminum has nearly doubled to 70¢ a pound compared to around 35¢ last month. The 'stabilization' of the dollar pushed by the G7 bankers caused the commodity markets to contract briefly. The 'strong dollar' is supposed to be the dam that holds back this flood of Funny Money™ spilling over into places where public unrest is greatest.

The BIS inflation report:

Prior to the period of financial turmoil that began in August of last year, there were many financial and economic series in many countries that had deviated significantly from historical norms. Consistent with the premise of this being a credit- (or liquidity-) driven phenomenon, the prices of virtually all illiquid assets were driven to record highs. Consider the associated “conundrum” of low yields on US Treasuries, low spreads on high yield and sovereign bonds, high house and equity prices and record prices at global auction houses for antiques, stamps, fine wines and other collectibles.

Moreover, it was also the case that the price of buying liquidity (rather than selling it) also fell significantly. Implied volatility in many markets had fallen to record lows by mid-2007, as the costs of buying insurance against all sorts of extreme events plummeted.47 While it is true that valid, idiosyncratic arguments can be put forward to help explain developments in each of these markets individually, applying the principle of Occam’s razor would seem to have some merit here. And to these financial imbalances must be added some economic ones.

Most notable, the household saving rate has fallen to very low levels in a number of countries as easy access to credit has fostered more borrowing and rising household debt levels. Closely related, the resulting increased demand for housing services has led to a boom in construction which has pushed up that sector’s share of GDP well above normal levels.48 A number of the countries most affected by these phenomena have also been running large current account deficits, as described above. Finally, while corporate balance sheets have generally improved in recent years, many companies that have recently been merged or acquired have been left with very heavy debt loads.

While these credit-driven imbalances might or might not reverse, history indicates that they often do. One possibility is that the reversal begins in the financial markets with a so-called “Minsky moment”.49 Another is that spending spontaneously falters as some catalyst forces borrowers to reassess their exposures to debt and debt service. Where the reversal first manifests itself is less important than the character of the reversal itself. In the same way that real and financial forces interact in the expansionary phase of the credit cycle, they are also likely to interact in the contractionary phase. For example, as seems to have been the case in recent months in the United States, a sudden loss of confidence in credit markets could lead to a tightening of credit conditions that could reduce spending and lead to an economic slowdown. In turn, this would lead to more credit losses materialising, which could further lower confidence, further inhibit credit growth and so on. And simultaneously, a fall could occur in the prices of previously overvalued assets (like housing), reducing the value of collateral to back loans and, in extremis, increasing the probability and expected costs of bankruptcies in both the real and financial sectors.

History also teaches us that the economic losses associated with downturns of this nature can be very great and the recovery time can be very long.50 Should nascent inflationary pressures turn to deflationary ones, under the influence of a sharp global slowdown, this would not only enhance the seriousness of the problem (debt deflation issues) but also put constraints on resolving it (the zero lower bound issue). This immediately raises two policy questions; how best to respond to such prospective developments, and how to make reforms to ensure that such difficult situations could be made less likely in the future.51 Answers to these questions are, unfortunately, beyond the scope of this paper.

We will learn the obvious answer to all these questions in due time, alas! The writer should have read the paragraph I highlighted and said to himself, 'Oh no! My entire report is pure GARBAGE! I have to start over! I have to explain why ALL the low-inflation, non-Japanese nations had a Japanese-style housing boom, increase in debt, etc! And the fact that ALL the nations with 'no or little inflation' ended up with NO SAVINGS or negative savings! And huge, huge inflation in housing! And all the businesses got dumped with trillions in debts that DIDN'T GET USED FOR EXPANSION! Wow!' Then this poor man could begin to see the truth. This would mean, he would write a frightful report chastising the central bankers of the BIS. He could write a report accusing them of enabling and promoting all this. He could then writer about who they are and their history of messing around with the planetary banking system and why this caused the Great Depression and endless wars!

And then he would have to live in a tent or the Paris sewers and change his name or join a revolutionary gang in the Himalayan mountains or something radical. Maybe join al Qeada.

Below is a trio of Bloomberg News headline stories which show clearly, the impatient people who brought us this disaster want it all over NOW and are pushing hard for this. The price of oil has stabilized for the last two days and they now imagine the sun will shine and despite the US talking wildly about wars with Iran and strangling Iran's oil business, all will be well and the price of energy will no longer reflect the huge growth in the money supply. Of course, there are still giant losses being reported by the top investment banking houses but like in the last six months, they will pretend this is the end, it is over, no more losses. Heh.

Money Markets Signal Worst of Credit Market Crisis May Be Over

he worst of the credit crisis that prompted banks to restrict lending and the Federal Reserve to rescue Bear Stearns Cos. may be over, short-term borrowing rates show.

The difference between the yield on three-month Treasury bills and the rate on dollar-denominated loans in London, an indication of credit risk known as the TED spread, narrowed 7 basis points to 0.93 basis points, the smallest since Feb. 25. The gap reached 2 percentage points on March 19.

``It indicates at least that the worst part is over,'' said Theodore Ake, head of Treasuries trading in New York at Mizuho Securities USA Inc., one of the 20 primary dealers that trade with the Fed. ``There was a lot of panic built into that trade, which is going to continue unwinding. There was a massive flight to quality.''

The flight to 'quality' was all the scam artists and cons running to the governments for protection. Instead of protecting their nations, the political classes unite in saving people who should be put in prison, not saved. Everyone hopes these tricks that 'save' everything via the creation of lots and lots of Funny Money™ will restore the 'low inflation/crush the damn workers' nexus and bring even more loot to the pirates and hell hounds and their offshore tax haven accounts.

Carlyle's Rubenstein Says `Enormous' Bank Losses Unrecognized

U.S. and European banks and financial institutions have ``enormous losses'' from bad loans they haven't yet recognized and may have a harder time wooing sovereign-fund rescuers, Carlyle Group Chairman David Rubenstein said.

``Based on information I see,'' it will take at least a year before all losses are realized, and some financial institutions may fail, Rubenstein said at a breakfast meeting of the Institute for Education Public Policy Roundtable in Washington. He didn't name any companies.

This is really a message from the Chinese, the Abu Dhabi sheikhs and the Saudi royals. All the major news media, addicted to the idea that they create reality and not the other way around, have been harping on how this nightmare brought to us by the central bankers, is now over, kaput. Of course, absolutely nothing has been fixed but this is to be ignored. Just like in the DTCC story yesterday, the broken systems are still very much broken!

Meruelo Maddux Tumble Puts Los Angeles on Sale at 65% Discount

A package of Los Angeles real estate on sale for 35 cents on the dollar is attracting investors to the depressed shares of Meruelo Maddux Properties Inc., the biggest private landowner in the city's four-square-mile downtown.

The stock has plummeted 85 percent since an initial public offering 15 months ago as the global credit crisis threatens to disrupt refinancing of $200 million in mortgage debt coming due in the next 12 months, as well as completion of the city's tallest downtown residential tower.

Wow. Prime real estate is crashing even worse and worse. And this is the end? I seriously doubt it. I have played the real estate markets much of my life. NEVER do these downturns end in less than 2 years and it takes over 5 years for MILD drops to recover. This is an epic collapse unlike any we have seen since the Great Depression.

Email this post

Culture of Life News Main Page

Naked Short Traders In Red Hell And Black Ice

May 11, 2008

Elaine Meinel Supkis

A reader kindly sent me a new link, 'Deepcapture.com' which is a site run by a businessman who believes that the phantom financial world of naked short sellers in the hedge fund pirate/hell hound high seas has defrauded himself and other business people. To explore this story means plunging deep into the darker pools of finance, news reporting and downright demonic affairs with everyone pointing fingers at each other. There are no 'good' people in this story. But lots of lost souls and quite a few swindlers not to mention outright criminals, corrupt politicians and the many despicable follies and wild games of the people who are the bleeding heart at the center of our financial world. Like the DTCC, the organization originally set up to transfer ownership of stocks! All are now in this bizarre universe where there are many secret portals, secret chambers and invisible monsters that destroy or create wealth.

The easiest way to figure out what is going on is to first watch this Bloomberg TV story. Bloomberg is by far, one of the least biased or outright fraudulent of the mainstream business news services today. Now that Murdoch has bought the Wall Street Journal, even the little sanity there has vanished.

Bloomberg News story From March 13, 2007,about phantom share sales:

It turns out, more than one media service like NBC or ABC has tried to cover this controversial story launched by the owner of Overstock.com, Mr. Byrne and the former editor of the business section of the Columbia School of Journalism's publications, Mark Mitchell. All the other media got cold feet or rather, realized their very best friends were in the bleeding core of this dark story, they all bailed. But not Bloomberg. In this video, we meet the head of Kynicos, a hedge fund whose Greek name means 'Cynical'. He, of course, considers this issue about using phantom stocks to 'short', stocks that are made out of thin air, to be so much immaterial junk, why would anyone notice this multi-billion dollar daily error rate? For this is what 'naked shorts' are: mistakes. At least, that is the story. Yes, whenever in business we encounter 'mistakes' that make the mistaken ones lots and lots of money, we are seeing 'fraud'. I remember over the years many a battle with billing agents who made, nearly universally, mistakes in their own favor. While cleaning up the messes they created, they would invariably demand I pay them first!

Nuts to that! Then I make a threat of going to the company headquarters in Manhattan and making tremendous noise while screaming about their stupid mistakes. Usually, they settle very quickly with me. Once in a blue moon, some corporation would take me up on this and I would show up in a full raging fury, shouting from the subway entrance, into the elevators and down the halls and past all the receptionists and onwards, not paying the slightest attention to anyone trying to stop me.

A typical line: 'Go ahead and arrest me! This will BE IN THE NEWS!!!' And of course, back then in the old days, they would retreat and do as I ask. Not bill me until they fix their own mistakes. This mentality is rampant in business for there is no better way to get one's paws on someone else's money than to keep making 'mistakes' that allow one to use or access someone else's money! Nothing is better than that! Not even playing gambling games on borrowed money! The only thing better is to be a mugger who is the son of the mayor or chief of police.

Being muggers, the people who play the naked shorts that take advantage of stock ownership being 'in limbo' usually focus their activities on weaker stocks in trouble already. So if they tank, no one notices that 50% or more of the outstanding stocks being traded downwards DON'T EVEN EXIST. They are made up, like all things in the Derivative Beast's universe, out of thin air. Like money itself. The actions of these fake stocks have real effects. But tracing them when a company goes bankrupt is very hard and no one really bothers! So the hell hounds and pirates troll the information stream by hanging out with their buddies in the media, seeking organizations that are going to go belly up, anyhow. Then they pile in and make some loot off of this, while not ONCE, owning any actual stocks.

Why is this? Simple: if they OWNED stocks, they might LOSE MONEY when the victim goes belly up! But if they never owned any stocks at all and are simply riding on phantom stocks that are the result of the organization set up to process the ownership of stocks, they might get some free loot with no strings attached and no one the wiser! Elegant and easy. And ILLEGAL. Now, let us visit 'Deep Capture.com' and it is an interesting read from the time but very time consuming so I will talk about only one aspect of all this:

The Story of Deep Capture - by Mark Mitchell

It is also important to recognize the role of The Depository Trust and Clearing Corporation (DTCC), an organization headquartered in New York City. DTCC is where stock trades are processed — more than $1.5 quadrillion worth of them every year. That’s 30 times larger than the entire gross product of the entire planet. According to the Wikipedia entry on the DTCC, authored largely by Gary Weiss, the DTCC “streamlines processes that are critical to the safety and soundness of the world’s capital markets.”

Indeed, the DTCC is one of the world’s most important financial institutions. But what the Wikipedia entry does not mention is that the DTCC is one of the least transparent organizations on earth. No joke: America’s founding fathers would take up arms if they knew that anything like the DTCC could exist in this country. There are funds exceeding 30 times global output flowing through a sealed black box that is not understood even by the SEC officials who are supposed to regulate it.

One former SEC official describes his colleagues visiting the DTCC and asking, “So, what is it you guys do here, again?” A former DTCC employee confirms that the SEC would occasionally send junior people, and summarizes their oversight as follows: “The SEC staffers would say, ‘What do you do?’ and ‘How do you do it?’ After we would explain to the SEC folks what the DTCC did, the SEC people would say, ‘OK, are you doing it?’” These meetings would occur about once per year, and take no more than two or three hours. That was the oversight provided by regulators to the sealed black box corporation through which 30 times the economic output of the entire world flows.

Because the DTCC processes every short sale, it knows which brokers have hedge fund clients that are selling stock and not delivering it. The organization also knows precisely how much phantom stock is circulating in at least one part of the system (additional phantom stock is created outside the DTCC, or “ex-clearing”). Yet, perhaps because it is “user owned” - that is, it is owned and operated by the very Wall Street brokerages that sell the phantom stock - the DTCC refuses to release any information.

Meanwhile, the organization leads an energetic public relations campaign denying that phantom stock is a problem. It sics lawyers and a pit bull flack named Stuart Z. Goldstein on journalists who attempt to report on the subject. The few journalists who have managed to secure an interview with a DTCC official describe having to pass through a security cordon of machine-gun wielding guards, X-ray machines, and written questionnaires.

So, what is the DTCC? A crypt! A hiding place for invisible things! The place where ALL THE DERIVATIVE CONTRACTS ARE PROCESSED! HAHAHA.

What does the Cave of Wealth look like? We always have to answer this question when reading anything about the systems we depend on to create or regulate the flow of 'wealth'. Stocks and bonds are pieces of paper that are processed by humans and computers. Their relative level of wealth is very uncertain and shifts like the desert sands in the sighing night winds. The guardians of these various chambers in the Cave of Wealth call themselves 'wizards'. They know they are dealing with magical things and via joint efforts can assign values and purpose to all that they control. These wizards are supposed to be the gatekeepers who protect our joint wealth.

But they are sly and self-centered. They love to rig things and do riddles and such. They are also prone to playing games with gods and dragons. Always greedy and seeking some advantage over the masses of humans and giants working up above in the sunshine, these wizards hammer away in the darkness, seeking errors to exploit. They hope that gullible humans would say, 'Oh, you made a mistake,' or 'It takes you five days to process my check?' etc. I am old enough to remember the pre-DTCC days when stock certificates had to be moved from one broker to another. My previous husband had summer jobs working on Wall Street as a courier carrying these pieces of paper from broker to broker. He would go to the outer edges of the trading floor and wait to be called by a frantic trader and then would run off with a scrap of paper to some broker's office. A guy with the legendary green eyeshades would fetch the appropriate stocks from a big, fancy safe with lots of gold trim and pass it through a grill and he would have to sign off and put it in a pouch and physically carry it to the destination where the process was reversed. This took so much time, by the end of the day, there were stocks still not finished with this fetch and carry.

Eventually, during the run up to the big stock crash that ushered in the stagflation years where stocks were flatter than a pancake on a hot tin roof, every Wednesday the market had to close! Totally shut down so the young boys could run back and forth and finish moving stocks to their rightful owners who paid for them. Well, the Big Brains in charge of things said to the governing board, 'Let's build a house of bricks and the Big Bad Wednesday Wolf who shuts us down every week will huff and puff and we can still trade stocks!' So they built this big, brick and marble tower and locked the doors and not even young men wishing to get a start on Wall Street ever touched a piece of paper being traded again.

And when this new system happened, did the time lag between buying a stock and ACTUALLY GETTING IT vanish? HAHAHA. Being greedy, vicious monsters seeking eternal wealth with no labor or even ownership, the guys who set up this system said to each other, 'Those foolish humans and working giants are stupid. We will tell them that even though ALL the stocks are held now in our new brick and marble tower that looks like the Cave of Death, we will pretend that it STILL takes DAYS AND DAYS to process the paperwork and settle affairs! HAHAHA.' So they continued to pretend that it took at least 3 or more days to move the actual stocks into the hands of the actual buyers. Just like bankers, when computers removed all need to process mere 'money', pretend to this very day, it takes them several days to communicate with other computers that have electronic 01010s. Why, they have to use boys like 100 years ago to carry the bags to the front door and the the Brinks guards have to carry it to the other banks, etc! HAHAHA. Of course not. But it is a great fiction that allows banks to use our money for a few days on the overnight LIBOR markets which is yet another ancient thing that used to take time and now takes only a micro second to operate.

We see a pattern here: upgrade and modernize, speed things up to light speed or faster while at the same time, tell all the people being ripped off that the system is very slow and ancient and has many barriers to speed. Then, exploit this time frame ruthlessly to enrich the people who are 'in the know.' How simple is this? And it is also fraud, a swindle and totally evil. Thus, the childish glee this gives the wizards pulling off these tricks.

So the story here is about how the regulators of the stock markets who happen to all be PIRATES and RIP OFF ARTISTS have fixed flaws in the system so it gives them this open door in time and space which they may exploit to line their own pockets. This is why they have to be SECRETIVE about the entire thing! They have to prevent anyone from figuring out their system. They spend many, many billions of dollars buying off politicians or better still, being the rulers themselves. They must insure that no one from the outside interferes with their systems. This is why we must ask, 'Where did the Clintons get their $125 million in just 7 years after leaving office?' The list of buddies is long and coincides with the list of the wizards who run things. Obama is breaking into the system so he is being reeled in the exact same way. McCain was born inside the system as was his wife.

From Deep Capture.com:

As the media whines about the SEC’s investigation of Gradient being a violation of the First Amendment right to free speech, Rod Young, CEO of a telecom company called Eagletech, argues that the SEC has violated Fifth Amendment property rights by “grandfathering” the undelivered stock of all the companies on the SEC’s Reg SHO victim list. At this point, phantom stock is “pervasive” or “under control” depending on which SEC official is speaking. Either way, the agency has listed more than 300 companies whose stock has been sold and not delivered in excessive quantities.

And to add insult to injury, it has “grandfathered” much of that stock, saying that anything sold before January 2005 doesn’t have to be delivered - ever. The SEC says it is allowing this phantom stock to remain in the system because forcing delivery of real stock would cause “excessive volatility from large preexisting open positions.” So on the one hand, the official policy of the SEC is that it has naked short selling under control. On the other hand, it seems to believe there is so much phantom stock in the system that there would be market chaos if it were to actually do something about it.

As many, many billions, nay, trillions of dollars vanish into thin air, we look at this other mess and see the same thing: our government's main aim is to make all the Funny Money™ as well as the Phantom Wealth™ remains or becomes actual dollar bills or Treasury bonds. The central bankers know that the more this stuff vanishes, the more the entire banking system collapses. So they try to make even total frauds become 'rationalized' or 'real'. So if it is discovered that a pile of CDOs are all worthless, the central bankers can declare them full value except maybe minus a small 'hair cut' which reduced the Phantom Wealth™ by say, 20% before the rest is converted into dollars. These dollars become 'inflation' since they are not expressing either real wealth or labor. As we see, the entire planet is suffering from inflation caused by this system.

The SEC, seeing that the three day lag for stocks has grown to sometimes a 600 day lag, they have decided all these fake stocks stuck in limbo should be given authenticity and declared real. Just like governments accepting counterfeits as real. This is inflationary, of course. They dare not paint lead bricks with gold paint and then tell us, these are real gold ingots. So this is identical but so 'mysterious', it being magical, we must accept this. Just like the new window the Fed opened: it leads directly into the Outer Darkness and the money that gushes out, first in small amounts as the bankers said they were 'testing' the new window to see if we panic. Now out comes fabulous billions and the bankers are swiftly shifting ALL their wretched paper to the central bank where it will lie in a dark, evil Cave of Death and not see the light of day again. This SEC solution to the dark pools of fake stocks is the same thing. Instead of arresting the people running the DTCC and stringing them up along Broadway or shooting them at Yankee Stadium or enrolling them in a Chinese reeducation camp in Tibet, the people who perpetrated this fraud are running the system still. Just like Bush has not been arrested for Crimes Against Humanity.

The guys gaming this system should be forced to go back to the old days when they could not claim ownership of a stock while it was in transit. THERE IS NO TRANSIT. Since it doesn't move at all, much less across Broadway and Wall Street, they should have 'right on time delivery' of less than a minute. If Walmart can do this, they can too. Let's look at attempts to fix this obvious con game:

A Silent Lynch Mob - An Open Letter From Rod Young

Eagletech has alleged in its affirmative defenses that the SEC has illegally taken the property of shareholder’s in violation of the 5th amendment to the U.S. Constitution. By ‘Grandfathering’ pre-regulation SHO delivery failures this agency of our Federal Government has conducted an ‘inverse taking’ of shareholder’s property without due process and without compensation when ‘Grandfathering’ suspended the settlement process which they are mandated to maintain in the Securities Exchange Act of 1934. By Grandfathering and then by De-registering Eagletech shares the SEC has taken shareholder’s property and given it to the criminal perpetrators who have sold counterfeit shares to the public with no intention of, and now no requirement to ever deliver them.

To everyone’s astonishment Administrative Law Judge Kelly gave leave to appeal his decision on this theory (see pages 4 and 5 of his opinion attached to this email).

The SEC’s Enforcement Division has chosen to blatantly ignore evidence of criminal Naked Short Selling misconduct and instead has chosen to sweep the crimes under the rug by De-Registering the Company’s stock. Eagletech has provided to the SEC the following evidence of criminal misconduct:

[List of charges against how the SEC handled the naked short selling scandal vis a vis Eagletech Communications]

17. Grandfathering! The SEC didn’t have the courage to make it a part of regulation SHO. Even they know how much it smells! They leaked it to the press in late December 2004 to an uproar of detractors, many of them still calling for a Constitutional test of their authority to suspend the settlement portion of their Congressional mandate to oversee the maintenance of an efficient clearing and settlement system. To the SEC and the DTCC efficient means de-materialization. De-materialization without transparency (access to short sale data) would be the final step in the perfect crime. I don’t know who to quote, reportedly somebody at NASAA said “Over my Dead Body.” Boo-Yaa!

18. Which brings us back to the subject of this appeal before the Commission; every shareholder of any Company in America who purchased shares and can not get delivery has a cause of action against the SEC as an agency of the U.S. Federal Government for violation of their 5th Amendment Constitutional property rights. An action brought as a Constitutional Tort under the ‘Federal Tort Claims Act’ in multiple Federal District Courts across the country is governed by the State eminent domain law where the shareholder’s property was taken (your home state). There is a multitude of case law in every state in the Union covering illegal inverse taking of property by Governments and their agencies. The governments successful defense using the discretionary exemption from Tort Claims in most cases since the 1947 case ‘Elizabeth Dalehite, et al. v. United States’ does not apply here. The SEC does not have discretion to suspend the settlement process (Grandfathering), even temporarily as they claim. The bottom line is they are vulnerable here. An agency with a strained budget, 1,500 mostly inexperienced attorneys, that brings 500 new enforcement actions per year would crack under the burden of 50 or 100 or 500 Constitutional Tort cases brought against it. The real benefit of such cases would be court ordered discovery of the short selling data that the SEC routinely denies shareholders, issuers and the media, under FOIA (Freedom of Information Act). The first survival of a motion to dismiss could alter the landscape.

Some companies have discovered to their horror, there are literally MILLIONS of their own stock that is owned by PIRATES who have NEVER PAID A PENNY FOR THEM floating around Wall Street, being traded madly back and forth sometimes for YEARS. And this was due to that tiny little loophole created by the Victorians who had to use boys to physically move stock papers from point A to point B. I agree with the litigants here who resent the Federal government stepping in and unilaterally diluting their own stock this way. Note the highlighted terminology here: this de-materialization without transparency is a CRIME. And I agree with this lawsuit filed against the SEC. It will take years to travel through the courts. Meanwhile, the characters who are criminals have to figure out a new open window, a door to the Cave of Death where they can cheat everyone or make money out of thin air. Like the Japanese Carry Trade which is predicated on the fiction of no inflation in Japan coupled with a cheap yen despite being the world's #1 export profiteer, so it is here: a system has been rigged up that is false from top to bottom and incidentally, leads to something rising to infinity. If they can create 100 million phantom stocks, why not create 100 billion phantom stocks? And this is why it must be ruthlessly terminated and the people doing this, punished. Here is a report from the Senate from last summer right when the Japanese Carry Trade window slammed shut on everyone's greedy little fingers:

SENATOR BENNETT DISCUSSES NAKED SHORT SELLING ON THE SENATE FLOOR

July 20, 2007

Replacing paper with electrons has allowed stock-trading volume to rise to billions of shares daily. The cost of buying or selling stock has fallen to less than 3.5 cents a share, a tenth of paper-era costs.

But to keep trading moving at this pace, the system can provide cover for naked shorting, critics argue. If the stock in a given transaction isn't delivered in the 3-day period, the buyer, who paid his money, is routinely given electronic credit for the stock. While the SEC calls for delivery in three days, the agency has no mechanism to enforce that guideline.

This is where the practice of naked short selling comes in. I did not really understand it until I had some investment bankers--not the kind you find on Wall Street but the more modest kind you find in Salt Lake City--sit me down in front of a screen and show me what happens with stock trading. To put it in the simplest terms, someone who wants to sell short--that is, sell stock he does not own--will place a sale order.

Now, when I first sold short as a participant in the market, my broker gave me this crude little poem to remember. He said: ``He who sells what isn't his'n, must buy it back or go to prison.'' He said: You have to understand, if you sell a stock short, the time is going to come when you are going to have to buy it back to cover that sale by delivering shares. In the days the Wall Street Journal talked about, that meant buying a crinkly piece of paper--a stock certificate--and delivering it so you have covered your short sale.

Today, that is not the case because all of the stock certificates are gone, and the crinkly pieces of paper have been replaced by electronic impulses in a computer. So this is what happens. A short seller enters the market and says: I want to short--I want to sell--1,000 shares of XYZ stock. That means at some point he has to produce 1,000 shares to cover his sale. How do you do that? You borrow the shares, and then you buy them back at some future time.

All right. From whom do you borrow them? The DTCC. They have all the shares on deposit, and so you go to the DTCC and you say: I want to borrow 1,000 shares of XYZ stock. They say: Fine, we have them on deposit. We will lend them to you so you can use them for your short sale. All right, everything is fine--except in this electronic age, it is possible for you to keep shuffling around the electronic impulses that represent the stock and never ever have to buy it back.

Stop and think about that. That is a pretty good business plan. You can sell as much as you want and never ever have to pay for it. If a stock is trading at $5 a share, you could go in and sell 1,000 shares, and you get paid $5,000 for selling 1,000 shares, and you never have to buy them. Because you are constantly moving around the electronic impulses that represent those shares, you never have to cover.

Now, when you talk to the DTCC people, they say, “No, we always make sure there is a delivery. And if there is not, it is not our fault. It is not our responsibility to police this. It is up to the brokerage houses to do this.”

Of course, the criminals running the DTCC never handed over anything. They held to stocks and they simply looked the other way while their lovers, buddies and drinking partners PRETENDED to have these stocks 'for only a few days' before the REAL owners would demand their stocks. But of course, why bother returning what was never actually physically picked up in the first place? Why not pretend ALL THE TIME, one is the real owner when one is a thief pretending to be the owner? Eh. So criminal minds think.

Our Faithful Senator continues:

So you can have a situation where people are selling shares that don't exist, taking commissions on the sale, and the profits of the sale, and never, ever having to produce the shares.

I think it is serious enough that we ought to have a hearing about this in the Banking Committee. I have spoken to the chairman of the Banking Committee, Senator Dodd, and asked him if it wouldn't be possible for us to have such a hearing at some point in the future. He has expressed a willingness to do that. I understand we can't set a time for that right now; there are too many other things going on in the Banking Committee.

But I am delighted to know he is willing to cooperate with us in examining this issue. I would like to suggest several things I would like to discuss at that hearing. First, by the way, I want the officials of the DTCC to have the opportunity to come in and explain how it works. I have seen letters to the editor in the Wall Street Journal, where they say this article is inaccurate, and I don't want to be relying on this article if it is inaccurate. I think a congressional hearing is a good place for those who are running the DTCC to explain to us how it works. I would like the SEC to come in and give us their background and information as to how their rules are working to try to stop the naked short selling. But I have these two additional recommendations that I would hope we could get done by regulation and, if not, I am prepared to introduce legislation to deal with them.

First, I think there should be a rule which says there cannot be borrowing, that brokers cannot borrow for short sales more stock than is on deposit with the DTCC. I think that is obvious. If there are 3 million shares of XYZ Company on deposit at the DTCC, people should not be able to short sell 4 million shares. I have seen the situation where people with these small companies--and all this happens primarily in little companies--people with small companies, in an effort to defend their stock against the short sales that are rolling over, are buying stock, and it is electronically credited to them and end up on paper, or at least on computer, owning more shares than exist. How can that be? If somebody buys the stock for his company and ends up owning 110 percent of the issued stock, and people are still selling that stock, you know you are dealing with phantom shares.

So my first recommendation would be that the DTCC cannot make available as loans for short sellers more stock than they have on deposit. Once they have reached the point that 100 percent of the shares they have on deposit have been loaned out, they can't loan out any more. I think that is an obvious commonsense recommendation, but it doesn't apply now.

Secondly, I think there ought to be a rule which says a broker cannot be paid a commission on a short sale until the shares are delivered. Back to the business model. The broker sells $5,000 worth of stock. He can do it every day. He can get $5,000 every day, without ever having to cover the stock, and he gets a commission on making the sale. So if you say, no, there will be no commissions paid until the stock is delivered, you will have a significant impact on stopping this activity.

I hear no hearings! DEAD SILENCE. What happened after this brave Senator made this demand for a hearing? Remember: last July, the stock market was roaring towards its final peak. It bounced around until late September and then in a repeat of 1929, went off the cliff in October. But the BANKING system went off the cliff the instant the Japanese carry trade ended with a loud bang. 'There is no liquidity!' screamed the bankers. Duh.

Anyway, the need to 'fix' a totally corrupt, stupid and utterly out of control banking system that flooded the entire planet earth with way, way, way too much 'liquidity' took precedent to stopping a bunch of Cramer-clones screaming, 'There is BLOOD in the streets!' demanding the Federal Reserve flush even more red ink, more bloody liquidity upon them. Stopping their financial games ended. They all snarled, 'If you stop ANY of our rip off schemes and plans to sink the entire planet into an ocean of red ink, we will destroy the banking system and the entire economic system and there will be a Great Depression!'

This black mail by black guards is working. Our entire government is focused on one thing: enabling a bunch of pirates, hell hounds, reckless bankers and exploiters of loopholes to continue their games and indeed, to increase this ten fold. And deep inside of all of this lurks the fearful Derivatives Beast! For its home is the DTCC. This is where all those 'swaps' are made. This is where the fearful 'interest rate swaps' are amassed. And lord knows how these things are multiplying in the dark over there! All I know is, this aspect is growing at a mad rate, doubling every two years and is now over $500 trillion in size, we just don't know how big it is.

All the debts of Americans, our governments at every level, all our own debts, our corporate debts are less than $45 trillion. The Derivatives Beast is well over $500 trillion. How can this mythological creature born in the bowels of this building in Manhattan grow over ten times bigger? It is impossible. But if a bunch of smirking con artist wizards can park all possible potential 'risks' this way, they will. And they will multiply these 'risks' so they can EXPLOIT THEM FOR PROFIT. The only cure is bankruptcy of our entire nation for at least 20 years if not forever. Why this is allowed baffles me except this Funny Money™ produced via magic is used to control our entire government. Let's go back even further, back to the height of the last bubble:

Sep 20, 2005

Congress Sells America Short

In yet another twist in the stock market scandal known as Stockgate, the Faulking Truth has learned that Senator Richard Shelby (R-AL), Chairman of the Senate Banking Committee, has shelved a planned Senate Subcommittee Hearing investigating the issue. Originally scheduled for February of this year, and then postponed several times, the hearing, which has been advocated by Senator Robert Bennett (R-UT), has been cancelled indefinitely.

According to a reliable source inside of the planned investigation, "The authority and the responsibility to take the necessary steps to deal with the issue of naked short selling lies squarely at the feet of Senator Shelby, and he has chosen not to allow the planned Senate Banking Subcommittee hearing to go forward." In an earlier interview with the same source, we were told that "Senator Shelby tends to grab things like this for his own purposes, and his own purposes don't always mesh with what's best for the public."

Translation: Senator Shelby has sold out America in the name of special interests, and sold out the small investors to the hedge funds and their multi-millionaire clients. According to a trader who has been in the business for over 20 years, "the issue of naked short selling, or to put it more bluntly, 'stock counterfeiting', affects nearly every person who has ever bought or sold stock or invested in mutual funds. This scandal has cost investors and companies trillions of dollars, cost our country billions in tax revenues, and the money stolen from investors has even found its way into the hands of organized crime and terrorist organizations."

HAHAHA. The Senate has brought this up before. And was silenced. But note how the other corrupt Senators lay all the blame on Shelby. When the Democrats took over after 2006, they claimed they would clean house. Which is why Senator Bennett spoke up and suggested a hearing. Only he was sidelined, too. The Senate has had YEARS to clean this up. Indeed, the problem has existed much of my life. It just was a small problem back in 1980 with Volcker stalking the deck of the Federal Reserve and Jimmy Carter trying hard to be non-corrupt. Once Reagan came into power, out the door went any controls and they have been less and less each year and the temptation to use all these glitches and time lags to expand criminal operations has strengthened to the point that it is totally out of control and utterly destructive and STILL no hearings! No laws are passed! And certainly no candidates at any level are talking about this.

Here is an example from the SEC files back in 2005, how the Phantom Stock fraud works:

SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C. 20549

On March 4, 2005, the Reporting Person acquired 100,000 shares, and on March 7, the Reporting Person acquired 80,000 shares, constituting a total of 15.45 percent of the issued and outstanding common stock of the Issuer, in the open market.

And, if that wasn't enough,

another investor, Paul J. Floto of Dallas, Oregon, bought another 15% of Global Links' stock just his week, and filed his shares with the SEC as well, even though Simpson had filed his claim to 100% of the shares of the same company a month earlier. "On February 3, 2005 a single investor reportedly purchased all the common shares issued by the company, plus 145 additional unissued shares.

Subsequent to that date, over 95 million shares, or over 82 times the total shares issued, were reportedly traded, none of which were reportedly sold by the 100% owner of the common stock.

On March 4 and 7, I purchased a total of 180,000 shares, resulting in my obtaining 15.54% ownership of a stock reportedly already 100% owned by another investor. I assume that there may be additional investors who may also claim ownership of common shares of this company.

I have requested that certificates be issued to me representing my full 15.54% ownership interest, to protect my right to vote and enforce any other claims that may accrue to an actual documented owner.

In other words, when the stocks for Global Links were issued, a party owned 100% of the shares yet MORE shares were traded by broker who were 'borrowing' the 100% owned shares? And eventually, so many hedge fund scammers piled in, they ran over to the criminals running the vaults at the DTCC and 'borrowed' the shares 'sitting there in the vault' 82X over? Wow. Talk about speeding round and round through the same turnstile until it was spinning faster than a black hole! Again: in the secretive Cave of Death we find infinity. This poor man is suing back then because he thought he had a 15.54% ownership share only it was dreadfully diluted. And what is Global Link?

It is a trading firm! It plays the FX markets! It does spot trading! It is...hahaha....part of the scheming system itself! And it feeds the Derivatives Beast. It plays with future interest rate contracts. It is a bunch of wizards. Let's look at yet another SEC filing:

The SEC, March 24, 2008
Subject: File No. S7-08-08
From: THOMAS THORTON, Sir

Affiliation: Bear Stearns Bond holder

"Legal" naked shorting would normally be invisible in a liquid market, as long as the short sell is eventually delivered to the buyer. However, if the covers are impossible to find, the trades fail. A sudden rise in number of fail reports will alert the SEC that something irregular is going on. In some recent cases, it was claimed that the daily activity was larger than all of the available shares, which would normally be unlikely.

The North American Securities Administrators Association (NASAA) held a conference on naked short selling in November 2005. An official of the New York Stock Exchange stated that NYSE had found no evidence of widespread naked short selling, and alleged "fear mongering that there's this rampant naked shorting that's gone unregulated." Cameron Funkhouser, NASD senior vice president of market regulations, noted that although companies have alleged stock manipulation through the Berlin stock exchange, the NASD has seen not one instance of naked short selling on the Berlin stock exchange". Ralph Lambiase, head of the Connecticut Securities Agency and the NASAA, declared his disappointment at how the industry was handling the issue as a whole.

A report issued in early 2006 found no evidence of naked short selling in US markets, despite allegations from many companies. The SEC's short selling FAQ also cites common misconceptions about the practice, such as the belief that naked shorting causes "phantom" shares to enter the market, as one source of confusion over the practice's market effect. Naked short selling, the SEC said, would not increase a company's shares outstanding shares nor result in "counterfeit shares."

Statistics on failures to deliver securities are sometimes used as evidence of naked short selling in specific stocks. However, the U.S. Securities and Exchange Commission stated in January 2008 that "fails-to-deliver can occur for a number of reasons on both long and short sales. Therefore, fails-to-deliver are not necessarily the result of short selling, and are not evidence of abusive short selling or 'naked' short selling."

Current legal naked shorting rules allow brokerages to make large profits doing "bona-fide market making" while stock markets are falling. The market maker exemption to the rules governing the practice is intended to allow market makers to naked short sell on a very temporary basis, in order to increase liquidity and stabilize markets.

However, Robert J. Shapiro, former undersecretary of commerce for economic affairs, has claimed that naked short selling has cost investors $100 billion and driven 1,000 companies into the ground.

The Depository Trust and Clearing Corporation has been criticized for its approach to naked short selling. DTCC has been sued with regard to its alleged participation in naked short selling, and the issue of DTCC's possible involvement has been taken up by Senator Robert Bennett and discussed by the NASAA and in articles -- disagreed with by DTCC -- in the Wall Street Journal and Euromoney Magazine.

While there is no dispute that illegal naked shorting happens, there is a fight as to the extent to which DTCC is responsible. Some blame DTCC as the keeper of the system where it happens, and say DTCC turns a blind eye to the problem. DTCC says naked shorting is not widespread enough to be a major concern. "We're not saying there is no problem, but to suggest the sky is falling might be a bit overdone," DTCC's chief spokesman Stuart Goldstein said. DTCC General Counsel Larry Thompson calls the claims "pure invention." The SEC, however, views naked shorting as a serious enough matter to have made two separate efforts to restrict the practice. And in July 2007, Senator Bennett suggested on the U.S. Senate floor that the allegations involving DTCC and naked short selling are "serious enough" that there should be a hearing on them with DTCC officials by the Senate Banking Committee. The committee's Chairman, Senator Christopher Dodd, indicated he was willing to hold such a hearing. The North American Securities Administrators Association, representing state stock regulators, filed a brief saying that if the claims were correct, its shareholders "have been the victims of fraud and manipulation at the hands of the very entities that should be serving their interest."

Critics also contend DTCC has been too secretive with information about where naked shorting is taking place. In 2007, WayPoint Biomedical sued DTCC for DTCC's refusal to comply with a subpoena request for documents Waypoint needs to track trades in the company's shares. Ten suits concerning naked short-selling filed against the DTCC were withdrawn or dismissed by May 2005.

A system with this many 'flaws' should be utterly overhauled, not excused. The SEC should have a ZERO TOLERANCE for flaws, slow receipts of stocks to the real owners, etc. They have the ability! They have the powerful computers! They have the staff! IF they don't have this, they should be SHUT DOWN NOW. And replaced with something more reliable. Better computers, better staff and better systems. If they want me to help design this, I am willing and ready. HAHAHA. Good for a few laughs.

SEC lawsuit:

The illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short. But due to various loopholes in the rules and discrepancies between paper and electronic trading systems, naked shorting continues to happen.

Naked shorting is illegal because it allows manipulators a chance to force stock prices down without regard for normal stock supply/demand patterns.

This Rule must be passed and not covered up. As it looks today on Wall street the word is out on naked shorting and must be stopped , and all who profited from stealing trillions be put in jail.

And this is the final word: ARREST THEM ALL! This is like an open rat hole leading to the sewer system. You have to plug the holes and kill the rats.

Back to Deep Capture.com:

Less than a week later, short sellers come close to toppling the American financial system. They do this by taking down Bear Stearns, the country’s fifth largest investment bank.

On March 10, 2008, Bear’s chief executive, Alan Schwartz, says that the firm’s “balance sheet, liquidity and capital remain strong.” But a small group of hedge funds circulate rumors that Bear Stearns is in crisis. At the same time, they pull their money out of the bank in order to create a crisis. Days later the stock is plummeting and money is exiting the bank at such an accelerated rate that it appears that it might have to declare bankruptcy - which would send shockwaves through the entire financial system.

To prevent this, the Federal Reserve, for the first time since the Great Depression, invokes a law allowing it to lend money to banks. JP Morgan, a rival bank, steps in to swallow Bear Stearns’ mangled remains.

Perhaps to distance himself from the scandal, Jim Cramer goes on CNBC to decry the antics of short-sellers. He says, “a bunch of hedge funds come in to do a gang tackle…is that capitalism? I don’t regard that as capitalism. I regard it as the destruction of capitalism”

The SEC, meanwhile, launches an investigation into hedge funds who may have coordinated the attack on Bear Stearns. SEC Chairman Christopher Cox, just a couple of days after the Inspector General’s meeting with “bozo” Dave Patch, tells Congress that he is “very aggressively” pursuing “the market manipulation and the kinds of illegal naked short selling that have been very publicly alleged in this case.” In other words, the chairman of the SEC tells the Senate that it is investigating the possibility that phantom stock contributed to the demise of Bear Stearns and the near collapse of the US financial system.

But this does not deter short-sellers from launching a similar attack on Lehman Brothers, an investment bank that is even larger than Bear Stearns. Richard Fuld, Lehman’s chairman, tells lawyers and the SEC that he has information proving that hedge funds orchestrated the demise of Bear Stearns - and that they have similar intentions for his bank.

We are still trying to figure out the Bears Steans business. This is a good thing to take into consideration. Remember: all the hell hounds and pirates don't attacks HEALTHY, STRONG organizations. They go after the weak, floundering, sick ones. Like any good hunting lions or other predators, they systematically cut out from the herd, the weaker members and pull them down and rip them apart. The SEC should not allow this since it is very destructive and it is causing the damn Derivatives Beast who is where they park their risks, to grow like Gargantua.

Mark Mitchell, the assistant managing editor of CJR Daily who often took on business journalists with his criticism, has left the online outlet of the Columbia Journalism Review.

In an e-mail to some business journalists and sources, Mitchell wrote, “I have resigned from my job at the Columbia Journalism Review and will no longer be using this email.”

Mitchell’s experience includes stints with the Wall Street Journal in Europe, Time magazine in Asia, the Far Eastern Economic Review, and the English-language Cambodia Daily. He also put in several years as a management consultant to Fortune 100 companies. Mitchell holds a BA from Wesleyan University and an MBA from the Kellogg Graduate School of Management.

The CJR Daily has had a section called The Audit that was designed to critique business journalism. But there have been just three posts on it in the past month. Earlier in the year, the CJR Daily staff was posting on it almost daily.

Two other editors resigned at CJR Daily back in August after the dean of the Columbia journalism school cut its funding.

Mitchell and business journalism Gary Weiss got into it earlier this year after Weiss criticized a post on The Audit. Mitchell then responded with anonymous posts on Weiss’ blog. Mitchell also had a run-in with journalists at BusinessWeek about its 2006 investment outlook issue.

Meanwhile, former Wall Streeter and current writer Joseph Wiesenthal criticized Mitchell for a commentary about corporate earnings that missed the real story. Cal-Berkeley economist Brad DeLong, who helps teach an economics reporting class at its journalism school, also expressed some disappointment with Mitchell and the site.

Mitchell was the writer who worked on all these stories and who broke some of them. He lost his job which is the reward anyone gets who figures out the con games that control our systems. Just as I am not on TV or published by the mainstream, he is now in the Cone of Silence and can be heard only dimly, online, if we seek him out. He will never be allowed 'inside' again. Many a reporter commits suicide when treated this way, I have tried to help more than one by begging them to not give in to despair or fear. After all, I lived in a tent for ten years due to being too proud to bend a knee! I hope Mitchell doesn't give up. His position at Columbia was replaced by a woman whose job is subsidized by a hedge fund which gives the University money to keep her on as a cover for their criminal actions. She will probably teach students how to work with the Bad Guys and never, ever uncover real crimes or real problems. And so our Faux media grows ever dimmer.

But not Culture of Life News!

Email this post

Culture of Life News Main Page

Citibank Tanks World Markets In Blackmail Attempt Against US

Long Island drunk driver ends up hitting third rail of train tracks and bursts into flames.
May 9, 2008

Elaine Meinel Supkis

All the world markets are struggling to keep from drowning in the red due to the startling news that Citibank is going to hold a huge fire sale. Yesterday, the Japanese muttered darkly about selling off nearly a trillion dollars in FOREX reserves and now Citibank is ditching half a trillion. All the other Big Bankers are trying to unload this ugly mess in drips and drabs using the new Federal Reserve Window of Opportunity™ that will accept any Tier III asset parading as a AAA Tier I property. Price of oil surges upwards so this masks the true losses on Wall Street since energy companies are traded there. And during all this hurricane and earthquake economic news, the Fed claims they are 'talking up' the dollar which is about as deluded as one can get. The banking collapse is far from over, it has really barely begun.

Pandit's Shrinking Citi

The banking giant said Friday it will sell or run off at least $400 billion of the $500 billion in assets it identified as "not central" to its mission, including $170 billion worth of marked-to-market assets in its investment banking division. The balance sheet shrinking, which will take place over the next three years, is more than double the amount analysts expected.

Vikram Pandit, Citigroup's (nyse: C - news - people ) new chief executive, is calling these "non-core" or "legacy" assets, and it's easy to conclude that he means all of the junk accumulated over the last few years of aggressive expansion into leveraged lending and structured finance at the direction of his predecessor, Charles Prince.

For example, of the $500 billion in "legacy assets," $30 billion is in highly leveraged loan commitments, another $25 billion is toxic subprime collateralized debt obligations, and $55 billion is in off-balance-sheet entities that are highly illiquid. The rest are in real estate ($175 billion) and auto loans ($20 billion).

Some of those assets are distressed and would be difficult to sell at the moment, if at all, even at steep discounts. And Citi is offering them at the same time rival Wall Street banks are shedding assets, making it all the harder to unload them quickly.

As oil hit $126 a barrel, the same crew that is trying to jawbone up the value of the dying dollar are also trying to jawbone down the price of oil. Or, failing in that, they hope to shove the blame onto someone who isn't responsible for this mess: the US government, the Federal Reserve and the American people themselves. No politician is going to say, 'I warned you not to drive SUVs and to double the gasoline tax and have severe mpg rules! But did you listen to me? NNNOOOOO.' Of course, the American public wants someone to blame, not the parties who are waging one war after another on top of oil fields. The US has worked day and night to insure that not one drop of Iranian oil makes it to the market. HAHAHA.

And we hope to drive that nation to bankruptcy. But we are the ones going bankrupt! And we deserve it.

The Arabs who are increasingly using their Sovereign Wealth Funds to buy up our systems own a big stake in Citibank and they have dropped the boom big time. Citibank is going to hold its nose and dump half a trillion or so of stinking manure right on top of global markets that can't sop up even small loads of BS. Who is going to buy all this mess? Well, only someone who has access to magic money machines, magic wands and has absolutely no personal stake in how much money he pours down the Money Pit of Hell: Bernanke. Already, Bear Stearn's dark pool of crud has been sopped up by this reckless lunatic. So why shouldn't he sop up this mess? The arm twisting will be severe.

Do we want oil? Eh? The Saudis are screaming this in our ears. If we want more oil, we better figure out some way of sopping up half a trillion in bad debts! And we will, I am predicting. The reason this made the news was the opening to the 'There is BLOOD in the streets!' screaming for the Federal Reserve to take over all this mess and give Treasuries in return. Treasuries we, the American taxpayers, must pay for in the end via either taxes or inflation or both.

Otherwise, Citibank would have dribbled this mess out as best they could, not a huge, nasty blanket announcement. And they did this on FRIDAY: just like the other times, the Fed will now meet with the Treasury this weekend and Mother's Day be Damned! They will hammer out a half a trillion dollar deal. And then the other guys holding a mountain of Tier III assets will come roaring in, demanding the same. As I have predicted in the past, we will see a multi-trillion dollar banking rescue. One we can ill afford. One that tips the US itself into bankruptcy. The only escape from this is for us to drop our military pretensions like a hot potato and run for cover, fast.

Citigroup Plans to Shed About $400 Billion of Assets

He has already announced plans that would reduce the bank's $2.2 trillion of assets by at least $65 billion, according to Susan Roth Katzke at Credit Suisse Group. Last week, Citigroup agreed to sell employee-benefit joint venture CitiStreet LLC. In April, the bank opted to sell the Diners Club International credit-card payment network and CitiCapital, a provider of leases and financing for industries including health care and construction.
*snip*
``He's carting off the non-significant operations and raising money so that he can reinvest it in the business he's in, which is loaning money,'' said Robert Olstein, chief investment officer of Purchase, New York-based Olstein Capital Management, which owns Citigroup shares.

Pandit has raised $44 billion in capital, more than any financial-services company, through stock sales and private offerings to investment funds controlled by foreign governments including Abu Dhabi.

What Citibank is saying is, they will take a $65 billion [!!!!!] haircut if the Fed takes up these assets. For if they try auctioning them all off at once in a massive bonfire of the vanities sale, they won't pick up $335 billion in hot cash. We know this is IMPOSSIBLE. Who, who, who is going to buy this junk if the Arabs are forcing this sale and they are one of the very few rich Sovereign Wealth Fund people? Not the Chinese! Nor the Japanese! There is literally NO ONE ELSE ON EARTH. If the hell hounds have access to infinite Japanese carry trade loans, they could do this but they can't because no one is lending to them at this point! Indeed, they are the ones who created this problem in the first place.

Only the #1, 2 or 3 economic powers can buy this and two of them won't. Which leaves #1, the US, as the sole bidder. We get to buy back all our garbage. All the good stuff will be kept by Citibank. All the dogs will be kenneled at the Fed. So let's call this what it is: BLACKMAIL. The news it BLACKMAIL.

Morgan Asset's Kelsoe Set to Lose Seven Funds After

The last step in James Kelsoe's transformation from top-ranked bond investor to subprime-crisis poster boy may come July 11 when shareholders of his seven funds vote on whether to dump him for a new manager.

The funds, with combined assets of $611 million, have lost an average 67 percent in the past 12 months, prompting investor lawsuits against Kelsoe and his employer, Memphis, Tennessee- based Morgan Asset Management Inc. Assets in his largest fund, Regions Morgan Keegan Select High Income, have plunged to $104 million from a peak of $1.23 billion in 2006.

The funds' meltdown followed three years in which Kelsoe outperformed peers by betting heavily on bonds with below- investment-grade ratings, trading an increased risk of default for yields higher than those on investment-grade debt. He developed what he called in a July 2007 interview an ``intoxication'' for securities backed by subprime mortgages. Then came the hangover.

American International Group Inc., the world's largest insurer by assets, plans to will raise $12.5 billion after posting its second straight record quarterly loss, sending the shares down 7.7 percent.

AIG had a first-quarter net loss of $7.81 billion, or $3.09 a share, compared with earnings of $4.13 billion, or $1.58, a year earlier, the company said in a statement. Standard and Poor's lowered AIG's credit rating after the insurer reduced the value of contracts it sold to protect fixed-income investors by $9.11 billion and marked down other holdings by $6.09 billion.

Chief Executive Officer Martin Sullivan's job may be on the line unless he stems losses from the subprime mortgage collapse and reverses a 12-month stock decline of 38 percent. Sullivan in December said writedowns from the housing market would be ``manageable.'' In February, the New York-based insurer said losses by the unit that sells the fixed-income contracts won't be ``material'' over time.

SEC to Make Banks Reveal Capital, Liquidity Levels

``One of the lessons learned from the Bear Stearns experience is that in a crisis of confidence, there is great need for reliable, current information about capital and liquidity,'' SEC Chairman Christopher Cox told reporters in Washington today. ``Making that information public can certainly help.''

The SEC is re-evaluating its oversight of securities firms after the Federal Reserve had to help rescue New York-based Bear Stearns in March to prevent a market panic amid a worldwide credit contraction. Concern that Bear Stearns was running short of cash prompted customers and lenders to desert the firm in March, forcing it to accept a takeover by JPMorgan Chase & Co.

Data on capital and liquidity will be required this year ``in terms that the market can readily understand and digest,'' Cox said in a speech today before the Securities Traders Association in Washington. The SEC already collects much of this information without giving it to the public, he said.

As we still try to probe the murky darkness surrounding the 'rescue' of Bears Stearn, we are in the middle of a much more audacious scam concerning Citibank. An honest detailing of numbers and facts is nearly impossible. We can't fathom this mess so long as all parties are anxious to not see the bottom of this dark pit. The SEC is honest in seeking some illumination. But the bosses over the SEC who are the political powers in DC do NOT want the truth known or they would be yelling about the lies surrounding simple calculations of our inflation rate or our trade problems! Instead, of all people, they are even more anxious to avoid all this. So I expect this second rescue to be manhandled through even more secretively than the Bears Stearns business.

Toyota Sees FY08 Op Profit Plunging 30% On High Materials Costs

NAGOYA (Nikkei)--Toyota Motor Corp. (7203) said Thursday it expects fiscal 2008 group operating profit to tumble 30% to 1.6 trillion yen as rising resource prices and the strong yen eat into its bottom line.

The Japanese are absolutely livid with fear and anger over the yen. And this is why today's news is also about talking up the dollar. After all, this is supposed to help the US by making oil cheaper only it has failed. But it will save Toyota! Why we are saving Toyota has to be explained later when we try to explain why investors in Bears Stearns took huge losses but the Arabs owning Citibank won't. Mexico and Venezuela are cutting oil exports to the US. Do we want to see Saudi Arabia join them? Blackmail goes hand in hand with economic black pools. The US banking system is 100% dependent upon the Japanese carry trade. And to enable this, we have to make the yen weak against the dollar no matter what! More about that later, here.

The house-price bust has a long way to go

The discrepancy between supply and demand suggests that prices could fall a lot more. By historical standards there is a huge glut of unsold homes on the market. The homeowner-vacancy rate has soared to a record level of 2.9%: there are some 1.1m “excess” houses for sale compared with the average between 1985 and 2005. Although the inventory of new homes is falling as builders have slashed their production, the supply of homes for sale is being pushed up by foreclosures.

By most measures, prices are still above the levels implied by the fundamentals. Using a model that ties house prices to disposable incomes and long-term interest rates, analysts at Goldman Sachs reckon that the correction in national house prices is only halfway through. They expect an 18-20% correction overall, or another 11-13% decline from now. But their models suggest that six states—Arizona, Florida, Virginia, Maryland, California and New Jersey, could see further price declines of 25% or more.

Citibank is giving up. Last fall, everyone pretended that all we needed was more easy money, more Funny Money™ from the Fed and the housing market would shoot up like a rocket, I and others mocked this childish dream. Incomes can't meet payments even if the rates are very low. The aggregate charges are now too high. Until incomes rise, housing is falling. Houses long ago ceased to go for 3X income. It was more like 10X income. This disparity is rock hard and won't vanish no matter what our wizards say.

And this news is what prompted Citibank to pretend to be ready to jump off the top of their Manhattan headquarters. I said last year, the Arabs would begin sending out assassins against Citibank if they didn't cough up some money. I see some energetic and frightened men wailing at Paulson and Bernanke's feet tomorrow.

As we can see from this Wall Street Journal graph, the drop in housing indices is now far, far worse than the 1990 drop. I lost a lot of money in 1990. I swore, 'I will never want to see another stupid Bush in the White House' when that happened to me. Well, ever since the clown there got in by hook and crook, I have been very pessimistic even as everyone rejoiced in the easy money for a while. The worst it was back in 1990 wa -6%. It is already below -15% and heading towards Great Depression levels.

Oil taps $126 high, ready for an over 7% weekly gain

Crude prices tacked on more than $11.17 a barrel as of Thursday, during a winning streak that began May 1. It closed out last Friday at $116.32.
Demand for oil is "outstripping supply at a drastic rate in the global picture, so despite a few weeks of positive reports via the U.S. EIA [Energy Information Administration] data, there is a general shift in attitudes," said Ryan, in emailed comments.

"A year or two down the road, we're staring at a supply/demand paradigm that is just ugly, no matter how it gets spun by pundits and policy wonks," he said.

"Too little drilling, too many restrictions, too little conservation and alternative energy efforts combined with skyrocketing global demand are going to make things look bleak 1-2 years out on the price curve," he said.

The oil news gets worse and worse. If we rush over to Iran and make some deals, we will see global oil prices drop by around 30% or more. Russia just joined the embargo on Iran in the hopes this will raise the price of RUSSIAN ENERGY another 20-50%. They are praying this embargo will drive world over to over $200 a barrel! Russia be rich! America be...hold on...BANKRUPT.

Now, I don't care how crazy Iran is, we buy oil from cruel Burma! Burma's dictators just decreed they will kill off most of their poor people and have sent away the UN food and medicine! And they are dying, those poor, poor people. But we get oil from them! YUP. We want that oil! So how is Iran different? They aren't half as bad, I would suggest. No, we want them weak. But this scheme is making RUSSIA very strong! Is that smart?

Iran has no nukes. Russia has the world's other biggest nuclear arsenal and is huge and can survive WWIII. Iran can't. So why are we enriching Russia while beggaring OURSELVES???? This makes no sense. And note that no one makes this obvious connection in public.

US Leads Effort To Prop Up Dollar

The Bush administration is leading the international effort to put a floor under the falling dollar.

The conventional wisdom holds that the Europeans, worried that the mighty euro is making their companies less competitive, prodded Treasury Secretary Henry Paulson and other group of seven finance ministers last month into signaling their joint disapproval of the dollar’s plunge. Canada has also been troubled by the strong loonie.

But a senior U.S. Treasury official says that the move actually came at the behest of the American side.

“Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability,” the G-7 statement said. Behind the carefully crafted code of G-7 communiqués, the message was clearly intended to warn markets that the dollar shouldn’t fall much further.

“The G-7 language was meant to direct attention beyond the short-term U.S. financial market turmoil,” said the senior Treasury official on Friday. The official noted that the administration expects faster growth in the U.S. and slower growth in euro zone countries in the coming months, a combination that would presumably strengthen the dollar against the euro.

Treasury officials declined to say whether they believe the G-7’s verbal push achieved its end. Currency movements are unpredictable and respond to interest rates, economic growth and other factors.

Arrest these madmen! For the last...35 amazing years, the US has tried to weaken the dollar to stop the flood of imports. But every time we start to make tiny headway, they reverse gears and save our competitors and doom us! They are TRAITORS. Or insane or both. NOTHING real is taken into account when we discuss FX markets. If reality intruded, the US would have a dollar worth less than a dime. And it will be soon enough. But only after everyone overseas unloads all their US junk bonds.

From the ALFRED series at the Federal Reserve Bank:

This Fed chart shows that the ratio of nonperforming loans versus reserves was very bad in 1990. It shot upwards into healthy territory in the 1990s. Then, after 9/11 and the Dot Com mess, it was unstable. Then, off the cliff it falls. Already, nearly at 1990 levels.

This is a very important chart. It shows not our trade balance with Mexico, China, Canada and Japan. It shows only their exports to the US. The two energy export powers, Mexico and Canada, both have rising trade in energy with us. They are very much, aside from China, our main trade partners as well as our neighbors. Note how China has started from the very bottom and has finally caught up with the #1 exporter to the US, Canada, only this last year! Japan's share has flattened but they fattened their bottom line via the weak yen. They have factories here so they don't 'import' stuff from these locales, of course. The huge spikes in the Chinese export trade are due 100% to the stupidest thing on earth: Xmas buying frenzies. Japan no longer sells us toys, they sell us Toyotas so there is less and less an annual spike. Canada's spikes are due to energy vacillations due to a host of causes from weather to manufacturing needs.

Many Americans are very aware of Chinese trade. A handful are aware of Japanese trade. But few are aware of this dual Canada/Mexico trade that is a huge volume. Ultimately, we have to grasp this and understand or we will continue in trouble here. And the latest crash boom of a major, huge banking house means we have to get our trade house in order soon. For any solution we apply to one problem pops up over here with a vengeance.

Email this post

Culture of Life News Main Page

Scylla And Charybdis: Depression And Inflation Are Unavoidable

More car crashes on Long Island this year due to speeding.
May 9, 2008

Elaine Meinel Supkis

As the Fed open window to lending to banks allows a flood of Funny Money™ to return to the system, Japan's top economic advisors have recommended the government shed 80% of foreign reserves which are mostly US dollars rather than make a Sovereign Wealth Fund like China. This would kind of destroy the dollar, by the way. But instead, all of Asia without exception, have renewed buying and holding US dollars and assets so their own currencies can drop in value in concert with each other. Japan has ceased working with the other G7 to strong arm China into strengthening the yuan. Everyone is trapped in a system where everyone will be hurt when the US goes bankrupt. But now the conversation behind closed doors is, 'How do we salvage something for ourselves when this happens'. And as usual, I suggest the US should have a massive, strategic retreat from our mad empire and its wars before it is too late. And Bush insults India, claiming they are the cause of global inflation, not Japan or the US.

Edward Ulysses Cate, aka The Great Red Dragon:

The Fed: " In addition, the Fed could theoretically combat the credit crunch by buying securities or extending loans without limit without causing the federal-funds rate to fall to zero, something that could fuel inflation or distort markets."

Whoa, Nellie! Did I read that right? . . . buying securities or extending loans without limit . . .?

Remembering that the Feds have always said that they are owned by their member banks, this looks like they'd like Congress to legally give them an "unlimited credit card" to be used to buy anything and everything the member banks want, and extend those loans into never-never-land where loans never have to be paid back.

At the beginning of Chapter One of the 1889 Great Red Dragon book, it plainly stated that the goal was to "own the earth in fee simple." I've always wondered how that could be accomplished. So if the Feds can dish out unlimited loans to Barclays and others, along with help from the Bank of England, then well-connected private equity funds, hedge funds and other fronts could be funded with unlimited monopoly money. The mergers and acquisitions could continue unabated until nothing is left to purchase.

Latest Fed Reserve total borrowings from the new windows:

I remember back in the old days of about ten months ago: the Fed had to open this new window so that the entire G7 banking system could borrow infinite funds while handing over, as collateral, useless paper that was worthless. The bankers said, they were 'testing' this new window to see if it would work and were worried it would punish them. For they are supposed to be the ones handing out loans, not the Fed!

Well, the 'test' worked. No one panicked and pulled savings out. Well, HAHAHA. They did. Indeed, the rate which savers have removed savings is rapidly climbing to infinity as we can see in this chart! Everyone is unloading and the Fed is hoovering it all up. This transfer of all OBLIGATIONS to the Fed is rapid. And won't stop. The banking crisis is INCREASING.

We cannot trust anyone who has money to translate into new forms. All these people from Soros and Buffett to all the pirates, politicians and rulers, all these people are in full-lie mode. They are very fearful that someone who is saving money will notice something is very, very wrong. And getting wronger by the minute.

Us bear buffs have been watching this particular chart now since November. I remember when it shot up to three times the size of the biggest borrowings in the history of the Fed. Wow! We were all aghast. Then, each month, the amount climbed. I predicted it would hit a trillion by next January. And indeed, it will, if not sooner.

When the borrowings from this new window hit $40 billion, we were all amazed. We, the denizens on the web who seldom get to appear in the mainstream news. Since last month, this has now DOUBLED! Wow. It is probably already over the $100 billion mark and rapidly climbing. Looking at this chart, we see that it never, ever passed $5 billion and that was in the chaos of Volcker killing inflation the hard way. Otherwise, there was this big peak on 9/11 when the government propped up the system. That seemed big at the time. Now it is barely a tiny blip. Anyone writing the history of the decline and fall of the US empire will use this graph to illustrate the complete collapse of the entire banking system. Note that in the 1930's, there was no blip like this. Bernake and his buddies will claim, the depression was due to lack of a sudden surge in borrowings against the Fed and so this caused the depression.

Of course, back then, money became more and more valuable even though the amount of gold a dollar bought declined by half! Huh? The dollar was actually devalued but since the banks weren't lending and the central bank wasn't giving away money like crazy, inflation collapsed into deflation. Today, this isn't happening. We are having raging inflation! Isn't that great. Like the Greek myth of Ulysses' voyages, our banking system has to sail between the Scylla of inflation and the Charybdis of depression. Of course, the way to sail past these two hazards is to be a very good sailor and be very smart and to make the right choice.

Odysseus was told by Tiresias that he would have a choice of two paths home. One was the Wandering Rocks, where either all make it through or all die and which had been passed only by Jason with the help of Zeus, but he chooses the second path. On one side was a whirlpool, called Charybdis, which would sink the ship. However, on the other side of the strait was a monster called Scylla, daughter of Crataeis with six heads who would seize and eat six men.

The advice was to sail close to Scylla and lose six men but not to fight, lest he lose more men. However, he did not dare tell his crew of the sacrifice, or they would have cowered below and not rowed and everyone would have ended up in Charybdis. Six men died, and Odysseus announced that the desperate cries of the wretched betrayed men were the worst thing he had ever known. Undoubtedly, this affected morale and left the survivors feeling mutinous.

As usual, the ancient stories are very close to the truth. The whirlpool is where things get sucked into the Outer Darkness. Depressions are deadly. Certainly, they kill off workers and launch wars. The Great Depression ended up creating an orgy of deaths starting with artificial and real famines that killed many millions of Asians and Russians. Then came WWII. Starting with the Japanese invasion of China. Around 100 million plus people died premature deaths in that hideous eruption of violence.

The bankers and rulers vacillate between the lust to start WWIII and the fear that it will, like WWI and WWII, lead to revolutions and the annihilation of the ruling elites. So they chose the route whereby a portion of the population is eaten by the Scyllian Inflation monster. Depressions lead to idle workers. But inflation speeds up things. So everyone is inflating...except for the Japanese and the Americans. Or rather, this is a schizophrenic approach to this monstrous choice: both Japan and the US are encouraging inflation while pretending there is no inflation. So we get this horrid hybrid, 'Stagflation'. Stagflation is both a whirlpool and a balloon at the same time. It is very hard to slay or avoid. The rescue operation by the Federal Reserve is very inflationary. But the destruction of asset values because no banks are lending to nearly anyone means we get deflation of all previously valuable things like SUVs, houses, etc. All the junk owned by the masses and often, their only wealth.

This graph means we should be all having a national conversation about what is happening in the banking system. People must understand, the Federal Reserve has FEW reserves! And thus, this $100+ billion in sub-inflation rate lending is very inflationary.

Japan should sell 80 percent of FX reverses to cut risk

Japan should steadily sell off 80 percent of its foreign reserves rather than set up a sovereign wealth fund to actively manage this money, said a former government official who advised then-Prime Minister Junichiro Koizumi on economic policy.

Mitsuru Taniuchi, now a professor at Waseda University in Tokyo, said there was a growing risk of valuation losses due to currency moves because Japan's reserves are now the world's second-largest behind China at more than $1 trillion.

"It would be appropriate to gradually sell them, possibly over several years, while monitoring the market," the former director-general of the Cabinet Office's research bureau told Reuters in an interview.

"If we sold $800 billion quickly, it would of course disrupt the market."

The fact that high former Japanese officials are now saying, 'Ditch the dollar! Throw it into the maw of Charybdis!' is a sign that the end is nigh. Of all the contrarian financial reporters online, I must be one of the very, very, VERY few who focuses on Japan and the yen. Correctly, I may add. This is now proving to be correct. Even though China has exploited cheap labor to flood our markets, Japan has done this on EXPENSIVE labor! This is due to the simple mechanism of having high taxes in Japan, low or no lending to workers so they can go shopping or even have children anymore. And to make lending super-cheap for Americans. And to do this, they must have a weak yen and also a huge FOREX reserves.

Note the caution of the Japanese financial advisor here. He would dearly love for Japan to go crab-wise into world markets while dumping a heroic and huge amount of dollars. This, of course, is supposed to happen in a fantasy world whereby someone who speaks Chinese or Arabic, buys up all these now-useless dollars. Of course, this is pure insanity. The new head of the Bank of Japan has repudiated the Koizumi approach and is now openly conspiring with the Bank of China to deal with the dollar. The US should be in total hysterics seeing the world's two biggest holders of US dollars holding secret meetings to discuss how to deal with these damn dollars.

These holders of over $2.5 trillion US dollars which dwarf the Federal Reserve's holding of $74 billion in international reserve assets and foreign holdings. According to the IMF, Japan is holding $1,015,587,000,000 while no one has any idea how much China is holding, we just know it is an amazing amount and the biggest fund on earth. So let's put all of this together: If the Federal Reserve's open window which is connected to the Outer Darkness cause $1 trillion in Funny Money™ to flood into our empty bank vaults AND Japan sells off 80% of its FOREX trillions which would be nearly a trillion dollars, this makes $2 trillion in money now circulating in the world's economic systems. Of course, if Japan dumps the dollar, the Chinese will NOT buy it up.

For this is the signal for the next step in the 50 year plan the Chinese hatched while studying economics here in the US and while they were arguing about capitalism with me at the dinner table. So I will issue yet another warning to the State Department: I TOLD YOU GUYS THIS WOULD HAPPEN. The US has NO WAY to escape this except one: cease our empire and do a strategic retreat as fast as possible and stop importing oil. Period! This is the only outcome we can survive.

The other is WWIII. True, the Chinese will then dominate Asia and Russia will dominate Europe. But that is their problem. Both Russia and China are capitalist systems with a vengeance so if Europe and Japan, etc, want to survive, they have to have diplomatic relations and good business relations with both empires and all will be well. Neither of these empires wish to invade anyone right now. They do wish to be in control and frankly, they earned this! We lost it due to stupidity.

But killing America, turning our great nation into a nuclear nightmare mess, will not give us our SUV lifestyle back! This is gone, everyone. Gone with the Wind. We can't go back. Best to go forwards and rebuild. We can dominate the Northern and Southern Hemispheres. We can't dominate the entire planet. It is bankrupting us.

But Japan has the option of trimming its reserves by selling foreign assets, Taniuchi said.

If Tokyo