“Credit Suisse Group AG (CS), Goldman Sachs Group Inc. (GS) and Royal Bank of Scotland Group Plc (RBS) each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public…
They paid interest rates as low as 0.01 percent that December, when the Fed’s main lending facility charged 0.5 percent…
Zurich-based Credit Suisse borrowed as much as $45 billion…
Goldman Sachs’s borrowing peaked at about $30 billion…the program’s loans to RBS, based in Edinburgh. Deutsche Bank AG (DBK), Barclays Plc (BARC) and UBS AG (UBSN) each borrowed at least $15 billion…
Goldman Sachs, led by Chief Executive Officer Lloyd C. Blankfein, tapped the program most in December 2008, when data on the New York Fed website show the loans were least expensive. The lowest winning bid at an ST OMO auction declined to 0.01 percent on Dec. 30, 2008, New York Fed data show. At the time, the rate charged at the discount window was 0.5 percent…
Goldman Sachs’s borrowing from other Fed facilities topped out at $43.5 billion.”
“Fed Gave Banks Crisis Gains on Secretive Loans”
Bob Ivry, Bloomberg.com, 5/26/11
Nice Game that! Borrow from the Fed for free nearly and deposit at the Fed for Interest, or Speculate to your heart’s content with near-zero-cost Money! Imagine what you could do if you could borrow money at 1/100th of 1%. Sorry! Players in this Game are limited to the too-big-to-fail Mega-Banks and their connected Allies and Insiders. (Indeed, it is remarkable to us that these loans were revealed in a Mainstream Financial Media Story, by Bloomberg, no less!)
But consider the Serious Negative Consequences (of unfettered Fed largesse to the Mega-Banks) to Investors-Citizens and their Sovereign Nations.
“ ‘irresponsible banking and irresponsible currency policy in China…
This really drives up commodity prices and in turn strangles growth in the United States and in Europe.’ (emphasis added)
As for financial institutions, Morici says banks ‘hold too much sway’ with their governments. It is not that markets are not regulated enough, but rather that Wall Street is not regulated properly. Why? Because wealthy bankers are able to ‘game politicians so effectively’.
U. of Maryland Professor Peter Morici quoted in “‘Irresponsible’: Banks and China Put Global Economy at Risk, Morici Says” by Stacy Curtin in Daily Ticker (5/26/11)
Morici correctly identifies a Major Negative Consequence of The Fed’s ongoing QE and China’s refusal to allow the Yuan to float freely – it “really drives up commodity prices and strangles growth”. But the Deleterious Effects of QE (whose Main arguably “Positive” Effect has been to continue to richly support the Mega Bankers) do not stop there. Jim Willie graphically outlines others.
“To make the cost of money free encourages speculation in the most general systemic sense… they cannot hike interest rates and exit the policy corner without sending home prices into a fast acceleration downward. They will bottom out 20% to 30% below construction costs…
Worse, a rate hike would trigger a credit derivative series of explosions from the Interest Rate Swaps… If the USFed holds steady, as they must, they generate significant rising costs for everything from food to energy to metals to cotton… The current path lifts the cost structure to such a level that both businesses and households are experiencing a pinch…
The USFed is caught in a gigantic bind, cannot raise rates, and must endure the global price inflation problem that festers on the cost side of the equation… The government deficits are out of control. Few analysts prefer to point out how the foundation for the global monetary system is supported by the gaggle of crippled sovereign bonds…
The extended PIIGS pen of nations, fully ruined and recognized widely as ruined, do not have the tools to prevent rising bond yields. They uniformly rise versus the German Bund benchmark… The Chinese were responsible for much of the Euro rise from 130 to 150, as they dumped USTBonds in favor of discounted PIGS debt, later to be converted into shopping malls, commercial buildings, and factories. Somehow, that factor did not appear on the US news networks. The USGovt has tools, wondrous electronic tools, which enable them at zero cost to fight off the barbarians at the gate. It is the Printing Pre$$. Unfortunately, its backfire is a powerful rising cost structure that has shown visibly in the high food & gasoline costs. So hardly at zero cost!
“Green Shoots, Exit Strategy, No QE3”
Jim Willie CB, GoldenJackass.com, 5/25/11
Willie makes two Key Points required for understanding Investor Antidotes to Fed QE.
That first point is that there must be, and will eventually be QE 3. But what it will be called (and whether Overt and/or Covert) and when it will be implemented – Aye, there’s the Rub.
The second Point is that that QE 3 etc. will virtually guarantee continued Price Inflation, especially of Food and Energy.
Here it is important to note that the Official Inflation Figures are Bogus and low – see Shadowstats.com chart below.
And former Reagan Budget Director indicates why the U.S. Congress is not likely to solve the Problem.
David Stockman the Budget Director in the Reagan Admin indicated why Congress is not likely to help. He had some choice words in summary. He said, "The real problem is the de-facto policy of both parties is default. When the Republicans say no tax increases, they are saying we want the US government to default. Because there is not enough political will in this country to solve the problem even halfway on spending cuts. When the Democrats say you cannot touch Social Security, when you have Obama sponsoring a war budget for defense that is even bigger than Bush, then I say the policy of the White House is default as well. That is the question that really needs to be understood better and appraised by the bond market. Both parties are advocating default even as they point the finger at each other."
A final Prefatory Point Well-Made by Daily Bell is that the Ultimate Cause of our Worsening Economic and Financial Condition is the Central Banks.
“…it is the ECB mainly that is behind the European Union's "immoveable rigor" when it comes to enforcing austerity measures on Greece, and other EU PIGS as well. It is always this way with central banks. Their members and operators tend to be the most holy about fiscal integrity because they are the least so in practice.
The ability to print money from nothing is the singular achievement of modern elites and the single most ruinous practice of the modern state. It is responsible for most if not all of the abuses of modern history, from torture, to war, to genocide. Money-printing (not money) is at the root of all evil.
It is strange that EU protests and Greek protests in particular have not in particular taken aim at central bankers and their banks…
The ECB, for instance, needs to be targeted intensively… Only by showing that Greeks actually understand what is going on – and who is to blame – shall austerity and other oppressive measures be overcome. That goes for Ireland and Portugal (and Spain)…
“Why Aren't EU Protests Aimed at Central Banks?”
Staff Report, Daily Bell, 5/27/11
Issuance of U.S. Dollars, Euros or other de facto Fiat Currencies in excess of any increase in GDP is Price inflationary.
That is, any such Excess Issuance, diminishes the Purchasing Power of the U.S. Dollars, Euros, etc. already in circulation.
This results in Price Inflation, which we have, for example, recently seen in Food and Energy.
Indeed, recent Food and Energy Prices Inflation is mainly the Direct Result of The Private For-Profit Fed QE – “printing” Money out of thin air for free and then Purchasing U.S. Treasury Debt Instruments on which U.S. Taxpayers must pay interest. Unfortunately, a Similar Analysis and result is appropriate for other Fiat Currencies as well.
Among the Benefits claimed for QE were improving the Economy and Reducing Unemployment.
But Neither of these has happened. The Real Numbers** (as opposed to Bogus Official Ones) say otherwise.
**Shadowstats.com calculates Key U.S. Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported May 13, 2011
3.16 % / 10.69 % (annualized April, 2011 Rate)
U.S. Unemployment reported May 6, 2011
9% / 22.3%
U.S. GDP Annual Growth/Decline reported May 26, 2011
2.31% / - 2.60%
U.S. M3 reported May 16, 2011 (Month of April, Y.O.Y.)
No Official Report / 0.64%
Instead, most of the Fruits of QE and other Fed policies show that the Fed’s Price Inflationary Largesse has mainly helped the Mega-Bankers (and those connected with them), some of whom are shareholders of the Fed itself.
Matt Taibbi of Rolling Stone has done us all a service by exposing several Fed Outrages including loaning $220 Million to an entity beneficial interests in which were owned by the wives of the two Morgan Stanley Executives.
Now we learn that the U.S. Fed Made Mega-loans to Mega-Banks (several of which are not even American) at rates as low as 1/100 %. That’s Right 1/100th (0.01%) of one Percent!
American, European, and other Investors/Taxpayers who suffer the Price Inflation and Fiat Currency Purchasing Power Degradation (i.e. Wealth Confiscation) resulting from these de Facto Gifts (who could not make Money when borrowing at 1/100 % ?!?) need to consider Antidotes to these Price Inflationary and Wealth Confiscatory Policies.
They especially need to consider them since (for the aforementioned reasons) it is highly unlikely that Excessive Money Printing (whether via QE 3 or 4 etc. or otherwise) will end. Therefore, Degradation of the Purchasing Power of Fiat Currencies will likely continue resulting eventually in Hyperinflation. Thus, we shall suggest some Antidotes.
Consider that The private-for-profit Fed and allied Mega-Bankers around the world have put us all in a no win situation – More QE and Food and Energy Inflation run even wilder. No more QE and the Economy and Markets Crash.
Until the last week of April, 2011, an Investor relatively new to the Markets would likely have concluded that one should “Buy Gold and Silver for Wealth Protection and Profits”.
Today, after the Brutal Cartel Takedown of Precious Metal prices since then, that Investor might have “Sworn off” Gold and Silver as Safe Havens altogether.
What a pity! Such Takedowns provide Great Opportunity to buy Gold and Silver “on the cheap” and in doing so to buy their Wealth Protection and Profit Potential as well.
So the following are some Guidelines indicating how Investors may take advantage of the Opportunities presented by Fed largesse to the Mega-Banks and their Allies, and help avoid at least some of the risks and losses:
- Understand that a Cartel* of Central Bankers and their Mega-Bank Allies have for years been suppressing Precious Metal prices, because the increasingly widespread acknowledgement that Gold and Silver are the Ultimate Stores and Measures of Value and thus delegitimize their Treasury Securities and Fiat Currencies as such.
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
- Understand that it is now increasingly harder for The Cartel to successfully suppress Precious Metal prices, because there is an increasingly severe supply shortage of Physical Gold and Silver, especially of Silver, because ever more investors are becoming aware that certain Mega-Banks do not have the Physical Gold and Silver they claim and thus these wise Investors are taking physical possession, and delivery. As of June 1, 2011, Comex registered (Physical) Silver dropped under 30 Million ounces!
- Nonetheless, The Cartel’s Price Suppression Regime is still Potent as late April-early May Takedowns show, once again.
- Realize that these Price Suppression Interventions form Patterns and reveal tendencies, aka Interventionals, which are useful in forecasting the next Intervention. They facilitated Deepcaster’s earlier correct forecast that Precious Metal prices would be taken down as they have been late April-early May, 2011 (And that is why Deepcaster recommended taking profits on Silver twice earlier this year)
- Develop a Strategy for Buying at Interim Lows during takedowns (see below) and taking profits (at least partial profits near interim highs)
- If one chooses to liquidate a portion of one’s Paper Gold and Silver, do so before the Takedown begins in earnest
- Use Takedowns as an Opportunity to Convert Paper Silver and Gold into Physical Silver and Gold. Not only do you get to buy these Precious Metals “on the cheap” but you also give the Mega-Bank Market Riggers Fits, because they have a greatly diminished supply of these Physical Precious Metals, but unlimited quantities of “Paper Gold and Silver”. Deepcaster has recommended a particular Physical Form of these Metals which is resistant to Takedowns.
- And if one wants to trade the Precious Metal Markets, the following are important consideration:
- Get the Real Data from sources such as Deepcaster, Shadowstats.com and GATA, among others
- Assume the Mainstream Media is not providing the Full Story on Key Issues, or, indeed, at times is reporting “Manufactured News”, and, therefore, Search for Alternative Sources, and/or Additional Facts.
- Consider whether a particular Mainstream Media Story is Reliable, or whether it is likely it is “Manufactured News”.
- Consider The Interventionals as well as the Fundamentals and Technicals.
- Buy and Hold Rarely Works Anymore, as the last decades miserable Equities Performance has Demonstrated
- Be aware of Tangible Resource Realities, especially, regarding Water, Food and energy.
- Make Provisions for Personal Safety and Wealth Protection. Multiple Black Swans can turn ugly very quickly.
- Finally, Work to Audit and then Abolish The Fed. President John F. Kennedy took a Giant Step toward accomplishing this Goal by authorizing the issuance of U.S. Notes to ultimately supplant Federal Reserve Notes. After his death, U.S. Notes disappeared from circulation.
Cartel Attacks on Precious Metals Prices has resulted in Justified Anger arising not only from past losses unfairly incurred as a result of these Cartel attacks, but also because The Cartel’s Precious Metal Price Suppression Operation is but one Part of The Globalist’s Regime which has resulted in Many Businesses, Individuals, and Sovereign Nations around the World being increasingly mired in Unpayable Debts. (See Deepcaster’s “Saving Investments, Sovereignty, and Freedom from The Cartel ‘End Game’ (1/13/11)” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.)
This Mega-Banker created “Global Debt Prison” (to use Giordano Bruno’s Clever Term) has resulted in a Decades-long Diminishment of the Purchasing Power of the U.S. Dollar and other Fiat Currencies, thus working a de facto confiscation of the Wealth of Investors, Savers, Taxpayers, and Retirees, as well as in the recent Dramatic Inflation of Food and Energy costs, that is, of the costs of Goods Essential for life.
BUT the Achilles Heel of the Mega-Banker Globalists is Real Money – Physical Gold and Silver privately Possessed. This increasingly Widespread Recognition of Gold and Silver as Real Money increasingly delegitimizes the Mega-Bankers Fiat Currencies and Treasury Securities, their source of Power and seemingly ever-increasing Wealth.
Therefore, Gold and Silver serves as an Essential Bulwark of Precious Metal Investors’ Political and Economic Freedom.
Thus Personal Holdings of Gold and Silver are one important Guarantee of Liberty itself for the Precious Metal Holders.
The aforementioned considerations indicate a Strategy for Weakening The Cartel, Preserving Liberty, and Profiting.
The Strategy as it Relates to Silver
Even the Mainstream Financial Media (while it still rarely acknowledges ongoing Cartel Precious Price Suppression Attempts) does occasionally acknowledge present and prospective Increasingly Severe Physical Silver Shortages.
Demand for Delivery and Personal Possession (i.e. not in Bank Vaults!) of Physical increasingly supports the Paper Silver Price even in the face of ongoing Cartel Price Suppression attempts. The Brutal Fact is that Physical Silver is getting ever harder to obtain.
- The U.S. Mint Recently Announced it would suspend minting Silver Eagles until a sufficient supply of Silver Blanks was obtained
- In 2010 Industrial Demand for Silver increased 19%
- Silver gets “used up” by Industry
- Monetary Inflation via e.g. Q.E. 2 (and eventually 3, etc) continues to degrade the Purchasing Power of Fiat Currencies, thus driving up the price of Real Assets including Silver, Gold and Other Commodities
Perhaps most important is what is not reported in the Mainstream Financial Media. There are increasingly well-documented Reports that large Silver Buyers on the Comex who “Stand for Delivery” are being given “Offers They Cannot Refuse” to agree to non-Delivery in return for a cash payment plus a cash premium over the Spot Price.
Specifically, large Buyers are being offered 25%, 50%, and reportedly in at least one case, 80% Cash Premiums, over their contract purchase price on condition they agree to non-delivery.
Couple this report with the Report that the largest Alleged Silver Price Manipulator – JPMorgan Chase – has in recent month sold short 25,000 Silver Contracts – one fourth of World Annual Production, and one realizes that it would realistically be impossible to actually deliver 25,000 Contracts of Physical Silver at 5,000 oz per contract.
But The Source of Cartel Power has been and is their ability to successfully suppress the Prices of Gold and Silver by Selling increasing numbers of Contracts of Paper Silver (and Paper Gold) into the Market, Contracts on which they cannot possibly actually deliver Physical.
However, Cartel Precious Metal Price Suppression Power has been diminished in Recent Months by Revelations that Major Repositories do not have the Physical Silver (and Gold) they say they have.
The Payment of Cash Premiums for Non-Delivery (above) confirms this situation.
Finally, there is even evidence that certain Cartel Price Suppressors have, or are, practicing what one might call Fractional Reserve Precious Metals “Storage”.
Selling, that is, the Same Physical Gold or Silver to more than one Buyer.
The Cartel Banker “Pitch” would be “We will sell you Physical Silver (or Gold) provided you ‘store’ it in our Vault”.
Thereby, to the extent that Silver (especially) and Gold purchasers demand Delivery of, and retain personal physical possession of Silver and Gold, The Cartel, led by the private for-profit Fed, is weakened, and Individual Liberty, Economic Health and National Sovereignty strengthened.
Thus the Wise, Freedom-loving and Profit-seeking Citizens will follow the advice of Astute Trader Dan Norcini: Demand that those who sell you Silver and Gold “Stand and Deliver”.
