Morgan Stanley pays damages for Precious Metals Fraud

From Jeff Nielson :
I have been warning people for several months not to confuse “bullion-ETF's” with actually owning real gold and silver (see “Bullion-ETF's: a multi-purpose scam”). In the case of silver, I've pointed out that it simply isn't possible that both the silver bullion-ETF's and the massive “short” positions at the Comex could be fully-backed since the two total more than 100% of existing inventories – with nothing left over for the other 95% of the world (see “History of Silver, Part III: inventories gone!”). What is important to note is that the bullion banks with those massive, short positions are also the custodians for most of the silver (supposedly) “owned” by the bullion-ETF's.

Now, this week we find out that one of the members of the U.S. financial crime syndicate has agreed to pay a multi-million dollar fine for pretending to buy and hold bullion on behalf of clients. This is not the first time that Wall Street banks have been caught engaging in bullion-fraud, and it won't be the last.

Despite the rising reek of corruption, we have a scenario where the bullion-ETF's claim to be fully-backed because they can produce serial numbers for the gold and silver bars they claim to own. However, since the massive short positions of the bullion-banks are NEVER audited, there is a potential shortage here of billions of dollars in bullion – and in the case of the silver bullion-ETF's, there is nothing hypothetical about it. There simply can't be enough silver to back everyone.

The question which ETF-holders must ask themselves is this: when it comes time for the Wall Street bullion-banks to have to choose between covering their own short positions, or honouring their custodial agreements, is there a single, rational individual who doesn't believe that Wall Street will protect itself first?

As the Morgan Stanley bullion-fraud demonstrates, there is no chance of any court ordering “performance” of these agreements, that is, to force the Wall Street fraudsters to go out into the open market to purchase enough bullion necessary to honour their contracts. Instead, all they get is a slap on the wrist, and a fine. And what is typical with corrupt, U.S. regulators (or in a court settlement) is that the fine handed out is only a small percentage of the profits 'earned' in the fraud – thus encouraging Wall Street to engage in fraud whenever they see the potential for profits.
Therefore, we have a scenario today where investors have poured tens of billions of dollars into bullion-ETF's to protect themselves from suffering currency-losses on their un-backed fiat currencies – and many of whom will ultimately end up getting nothing out of their “bullion-ETF” investments other than more paper.

There are a handful of reputable bullion-ETF's who do actually buy and hold their own bullion, with the CEF group of funds (in Canada) coming to mind, as one example. The legitimate bullion-ETF's invariably charge a premium for the bullion purchased by their clients, because unlike the phony, paper-bullion of GLD, SLV and others, these funds must pay for storage, security, and insurance on their holdings.What makes the bullion-ETF's even more laughably fraudulent is that not only do they claim that all their bullion is being held on their behalf by the Wall Street fraud-factories, but they claim that these same greedy, parasitical institutions are holding billions of dollars of bullion on their behalf for free!!
In other words, to believe that the bullion-ETF's are legitimate, rather than fraudulent, empty shells, we must believe that out of the goodness of their hearts the Wall Street bullion-banks are backing bullion-ETF's as a “public service”, free of charge – simply to make it easier for small investors to hold “real bullion”.
Not only is it patently absurd to think that a Wall Street fraud-factory would do anything for free, but fostering the growth of legitimate, bullion-ETF's would be directly against their own interests – as they are huge “shorts” in the bullion market.
Thus, the bottom-line is that only about half of the total bullion/short position ever audited at all, and to believe that bullion-ETF's are legitimate you must also believe that Wall Street bullion-banks are providing critical services (bullion storage) for multi-billion dollar businesses for free – despite the fact that if the bullion-ETF's were legitimate it would be directly under-mining their own “short” positions, by providing billions of dollars more exposure on the “long side”.
Putting all the facts together, along with Wall Streets current and prior history of bullion-fraud, and not even your average naïve child could actually believe that (most) bullion-ETF's are legitimate businesses. For those with money in one of these fraud-vehicles, dump what you are holding now and buy real bullion – either through a legitimate bullion-ETF, or through directly buying and holding your own bullion (my personal preference).
[Disclosure: I hold no position in GLD or SLV, but do hold "physical" gold and silver.]
Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada (http://www.bullionbullscanada.com/#content). He has a personal background in law and economics. Bullion Bulls Canada provides general macro-economic and political commentary, since the precious metals markets are among the most complex (and misunderstood) in the world.It also provides basic coverage of Canadian precious metals mining companies. Canada is the global leader in mining exploration, and Canadian-listed mining companies (on the Toronto Stock Exchange and Venture Exchange) are responsible for the majority of the world's most-promising discoveries.

Europe on the Brink of Collapse: The World to Follow

by John Mauldin. Quote:

"...Now, the next graph underscores the problem of "too big to save." Let's say the US will eventually pump $1 trillion into the banking system (in taxpayer losses). That is about 7% of US GDP. We may not like it, but it doesn't stop the game. US bank assets are only twice US GDP. Switzerland and Ireland are over 7 times, the UK is over 5, and the Eurozone is at 4 times. And so it goes.

Eurozone banks are already reeling from losses from US subprime-related problems. They are now getting ready to deal with even deeper losses from their own lending portfolios. If the losses were just 5% of the portfolio (an optimistic assumption), it would be 20% of Eurozone GDP. But each country is responsible for its own banks. While it is thought Germany will be able to handle its problems, the prognostication for Austria and Italy is not so sanguine. Italy is already running a massive deficit, and has no central bank to monetize its debt. The same goes for Portugal, Spain, Greece, and Ireland. 5% loan losses in Ireland would be 40% of GDP, the equivalent for my fellow US citizens of about $5 trillion. Where does Europe find a few trillion dollars?
I was writing in late 2006 that the subprime lending market would end in tears. And I think the European banking crisis that is on the horizon has the potential to be every bit as big a problem as subprime loans. The world depended on Europeans banks for much of the lending that allowed for growth and development. Like their counterparts in the US, they are going to have to reduce their loan portfolios. Deleveraging is not fun.
It takes time to build up a banking infrastructure that can raise the capital necessary to make and process loans. A lot of time. Europe is a big customer of the US and Asia. Their businesses are going to be hit hard by the lack of capital, which is of course no good for employment, etc. We are all connected. What happens in Rome no longer stays in Rome.
Let me reprint a graph from last week. Burn it into your mind. The world is going to need to find $5 trillion to finance government debt issuance. And we need to fund private business and consumer debt. Where is all this money going to come from? "If you lend me $5 trillion today, I will gladly repay you Tuesday." Read all here

Look Out, Are You About to Join the White Underclass?

Joe Bageant
"We're starting to hear a little discussion about the white underclass... Mainly because so many middle class folks are terrified of falling into it."
"White underclass" is a term I've used often in my writing, and most American readers seem to know what I mean. They've got eyes and live in the same nation I do. But in a sudden burst of journalistic responsibility, I decided that if I am going to throw around the word underclass, then I should offer some clearer, perhaps more scientific definition.
So I started writing this with a pile of published research papers before me. Now they are in the trash can by my side. Looking down on them, I can see the gobbledygook titles, the stuff of which government policy and political platforms are made. They run together in slurry of the language of our society's commissars: Concerning-Prevalence-Growth-and-Dynamics-Concentrated Urban Poverty Areas- block-level vs. tract-level segregation-800-tract-tables-urban abstracts-Defining-and-Measuring-the-Underclass-from-The Journal of Policy Analysis and Management-statistical-summary-of…
What I find is that nobody in social science seems to agree on the term, or, being firmly placed in the true white middle class themselves, even agree if such a thing as a white underclass exists. You can't smell the rabble from the putting green. To others, some blacks for example, the term white underclass is an oxymoron, or maybe yet another new white social code word to be deciphered. I can't blame them for their wariness. You have to be an American to even get these code words. For instance, for all practical purposes and to most Americans, regardless of race, the term "middle class" means "white." Plain and simple. We all know that, even members of the "black middle class."
Middle class also has implications of people's occupations, usually white collar occupations, though it also includes some of the ever thinning ranks of blue-collar workers. But this comes down to describing human beings solely in terms of their jobs in the capitalist labor marketplace, and assumptions about income and whether one takes their daily shower before they go to work or after they come home. By that definition, anyone of working age who doesn't have a steady job of the right type, for whatever reason, is in some sort of "economic underclass." In other words, they are the people that middle class folks feel should damned well be working, if they are over age 18 and have a pulse. ("If I gotta do time in this meaningless workhouse of a nation, you do too!") This underclass includes any people of color seen on the street at midday during the week, single mothers, and paraplegics too, now that the middle class is paying taxes for handicap parking spaces and wheelchair access to the public shitters.
Another way we define underclass is as "losers." People who cannot talk, think, or act like middle class professional and managerial workers, people who cannot even be posers. There is absolutely no excuse for these people. We've got television 24/7 to show'em how to behave. They could learn to act like the blue collar workers we see on the endless reruns of The King of Queens (an American sitcom about a parcel service delivery truck driver.). They could at least be funny and amiable fer godz sake.
From reading the studies, I can see that social scientists dislike plural nouns, and thus shun the word losers. So they call this the "educational underclass." Either way, it comes down to folks too wooly and uncurried for office water cooler society. Nobody is denying that they all should have jobs, of course, just nowhere near the water cooler.
Yes, eight to eighty, crippled blind or crazy, Americans generally agree that every man or woman in America should have a full-time job, except those women who manage to snag a wealthy man. They are exempt, as are the middle class commissariat's own beer guzzling spawn keeping the pizza delivery and the all-night video arcade businesses thriving in college towns across the republic.
Then you've got your moral underclass. Like the rest of us, they come in two major varieties - male and female. Females who don't bother to get married before they have babies (the non-technical term is "welfare sluts"), and men who have things more serious on their national police state blotters than a parking ticket. "Non-mainstreamers," in socio-demographic speak. Many of these are men who say, "Screw it, I ain't gonna even bother to work my ass off and be treated like dirt for six bucks an hour. I'd rather shoot pool." Me too.
The unwed mothers come in two varieties. There are those who decide they want children, but are choosy about the husband that traditionally comes with the deal. And there are those who are so young and naive due to cultural circumstance and environment they do not know what this country does to, not for, single mothers. They often find themselves working at least part time (workfare), yet permanently institutionalized into poverty by our social services industry, instead of being lifted out of it. More than 45 percent of U.S. single mothers are poor, compared five percent in Sweden and Finland, where no stigma is attached and substantial public resources are applied to child health and development. But research done in Europe shows that even if U.S. women had a zero rate of single motherhood, poverty among American women would still be higher than in European and other socially advanced nations.
Armchair sociologist that I am, I have a theory about this: Millions of American women are in poverty because they are paid poverty wages. I could be wrong, I often am, but there seems to be a connection between poverty and money. I started developing this theory when I was in a Melbourne, Australia hotel and learned from a single mother hotel housekeeper there that she made $19 an hour, had government assisted childcare and was going to college at night toward becoming a medical technician. Hmmm Over here we tell single mothers, "Get a six dollar an hour job or get married bitch! Workfare, baby, workfare." Then too, contrary to the American middle class belief system, out-of-wedlock babies are increasing at all levels of white American society. Even more contrary to popularly held notions, as many of these children turn out to be as well adjusted people as do children of the middle class. But for damned sure poorer in most cases.
And finally we have simple snottiness as a line of underclass demarcation - one's manner of physical gesture or accent. Believe me from personal experience, a Southern accent in America is no ticket to the top. But even with a Southern accent, if you talk like a college grad, don't wear bib overhauls or gang banger gear, and appear to know where South America is on a map, Americans will deem you middle class. Actually, if you smile a lot, and sound like any sort of white customer service type, it will fly. It's called having the appropriate social and cultural skill set. Yeah, right, appropriate to be hired as a telemarketer so you can piss people off by interrupting their dinner hour.
But even if you gather aluminum cans from dumpsters for a living, with effort, you can "pass" like light skinned black folks used to do in this country. As testimony to this, I, who am a high school dropout with a Southern accent, have successfully managed entire magazine publishing groups for a living. (The secret is balls). If I'd been black or Hispanic though, I'd have been distributing the urinal cakes in the rest rooms at night. So yes, there is a slight edge to whiteness, though not nearly as much as minorities assume. Still, you gotta make the most of that little edge.
In the end, race, gender or sexual preference are just moving parts of the class machine, with middle class perceptions setting the standard. You can indeed be black or queer, but with the properly buffed patina of white middle class mojo you can make it to the top, or near to the top of the heap (in America, proximity to the top of our cultural garbage heap is everything. All the rest of us are mere consumer refuse, as the Michael Jackson Morbidity Festival demonstrated. You can even be celebrated as an icon of diversity if you act white and middle class enough. Obama is Harvard white guy enough, Ellen DeGeneres is going strong ten years after coming out, gay Congressman Barney Franks still gets reelected. They've all got white middle class mojo. Al Sharpton on the other hand, has cootie mojo. (Tip for Al: They need golf cart drivers at the Congressional Country Club.. A year of that and you'd know all you need to know about the white mojo shtick. Because you can watch Obama play golf there).
When it comes to the underclass, there is no arguing that some people are members because they are so damned uneducated they cannot count their toes or read well enough to fill out a job app, the causes of which are too deep and tangled to go into at the moment. Others just don't care to do the smiling grammatically correct wimp assed customer service zombie thing. They prefer swinging a bigger hammer than that - doing real work, like America used to do. And doing it without kissing ass, which is why they are called the "permanently jobless." As sociologist Christopher Jencks points out, "There is no absolute standard dictating what people need to know in order to get along in society. There is however, an absolute rule that you get along better if you know what the elite knows than if you do not." He also cautions that "the term underclass combines so many different meanings that social scientists must use it with extreme care."
Which is fine. But I'm no social scientist. If in my travels and experience in American life I see that tens of millions of Americans being screwed silly by a handful of chiselers at the top, or if I see one percent of Americans earning as much annually as the bottom 45 percent of Americans, then that 45 percent is an underclass. When I see a 70 year old man on his second pacemaker limping through Wal-mart as a "greeter" so he can pay at least something on last winter's heating bill this month, then he is part of an underclass. When I see the humiliated single mom waitress tugging downward on the ridiculously short red plastic skirt she must wear at the Hooter's type joint so her crotch won't show, she's part of an underclass of humiliated and socially oppressed people. Screw the hairsplitting about who qualifies as underclass and what color they are. Just fix it. Or reap the consequences.
We're finally starting to hear a little discussion about the white underclass in this country. Mainly because so many middle class folks are terrified of falling into it. Frankly, I hope they do. We've got room for them. All the lousy, humiliating jobs have not yet been outsourced. The Devil still has plenty for them to do down here.
Call all of this anecdotal evidence. You won't be the first. I was on a National Public Radio show last year with a couple of political consultants, demographers as I remember. One, a lady, was obviously part of the Democratic political syndicate, the other was part of the Republican political mob. The Democratic expert said dismissively of my remarks, "Well! Some people here seem to believe anecdotal evidence is relevant." Meaning me. I held my tongue. But what I wanted to say was this:
Sister, most of us live anecdotal lives in an anecdotal world. We survive by our wits and observations, some casual, others vital to our sustenance. That plus daily experience, be it good bad or ugly as the ass end of a razorback hog. And what we see happening to us and others around us is what we know as life, the on-the-ground stuff we must deal with or be dealt out of the game. There's no time for rigorous scientific analysis. Nor need. We can see the guy next door who's drinking himself to death because, "I never did have a good job, just heavy labor, but now I'm all busted up, got no insurance and no job and it looks like I'll never have another one and I've got four more years to go before Social Security." He doesn't need scientific proof. He doesn't need another job either. He needs a cold beer, a soft armchair, some Tylenol PM and a modest guarantee of security for the rest of his life. Freedom from fear and toil and illness.
And furthermore, Sister, we cannot see much evidence that other, more elite people's scientific analysis of our lives has ever benefited us much. When you're fucked, you know it. You don't need scientific verification.
I wanted to say that on the radio. But I didn't. The little white guy mojo voice in my head told me not to. So I just laughed good naturedly. Like any other good American.
May God forgive me.
With ironic gratitude to Christopher Jencks of the Center for Urban Affairs and Policy Research at Northwestern University.

Joe Bageant is author of the book, Deer Hunting With Jesus: Dispatches from America's Class War. (Random House Crown), about working class America. A complete archive of his on-line work, along with the thoughts of many working Americans on the subject of class may be found on his website.
http://www.alternet.org

Many Predict US Financial Collapse in September

July 18, 2009,
Charles (A Reader) Let us contemplate the day in the near future when the consequences of financial chicanery finally outpace the ability of the governments, central banks and big media to cover up and obfuscate the truth. Many respected voices have now gone on record that September 30 or thereabouts will be that day.

Bob Chapman [Internationalforecaster.com] revealed that the US State Dept has advised embassies worldwide to stock up on a year's worth of the local currency in anticipation of collapse of the US dollar. Look for a temporary banking shutdown timed for around September 2009. As under Roosevelt, some banks won't reopen. 96% of bank reserves are currently held with the Federal Reserve who tells the banks not to loan the money, but rather to save it for further banking acquisition and consolidation. Chapman foresees a bank holiday lasting 4-5 days. Chapman thinks this first bank holiday presages a much more significant bank holiday months to years later which will involve simultaneous devaluations of multiple currencies as well as other significant changes in the banking system.

Harry Shultz [as quoted in marketwatch.com] says "Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that 'something' is about to happen ... within 180 days, but could be 120-150 days."

Benjamin Fulford [http://benjaminfulford.typepad.com/benjaminfulford/] states that for almost a century the US Treasury Dept has been issuing specialized debt instruments to countries with which the US has had a trade surplus. These complex debt instruments are tailored by complex treaties. Unfortunately, the recent US Treasury funding needs exceed the willingness of these creditor nations to extend additional credit. Fulford writes, "The problem is that after nearly a century of issuing these debt instruments, the chickens are coming home to roost. President Obama tried at the recent G8 plus 5 meeting in Italy to borrow more money than George Bush junior did in 8 years. He was told a resounding no. The result should be total economic chaos in the U.S. by September 30th . "

Jim Willie [goldenjackass.com] writes of an Asian led initiative ending dollar hegemony beginning this weekend. Willie suspects that the Fed/Treasury is covertly loaning foreign central banks the money with which the central banks are now using to buy US debt. Increasingly, US debt is being bought by foreign central banks taking up the slack of investors abandoning US Treasury debt. Willie confirms Chapman's comments and says he solicited and received "multiple confirmations." He adds, "CHAOS WILL PREVAIL WITHIN SEVERAL MONTHS, PERHAPS A YEAR AT MOST{his emphasis}."

Jim Sinclair [jsmineset.com] has recently visited China meeting with its leaders. He states that China is increasingly more willing to take on the United States in its apparent maneuvers to inflate its way out of its debt crisis. In early July Sinclair started a 120 day countdown till breakdown of the US dollar ends market manipulation and all those sour economic chickens come home to roost.


OUT OF TRICKS

Seemingly the Federal Reserve/US Treasury have exhausted their bag of tricks. The Fed is fighting rising interest rates, a difficult task given the hyperinflationary debt financing it is now doing. Once rising pressure on interest rates become too much for the Fed to control, there will probably be several sudden economic and financial surprises cascading with currently known dilemmas: crashing dollar; increasing home mortgage defaults;

commercial mortgage defaults reaching critical mass; falling bond and stock markets extending insolvency of pension funds; defaults on debt by state and local governments. And don't forget derivatives and further exposure of corruption and criminality on Wall Street. Bernie Madoff may soon have lots of company.

Unable to produce any more financial wizardry, the cynical federal government is arrayed in full battle dress uniform:

1] Mass forced swine flu vaccinations scheduled this fall performed under the specter of martial law;

2] Rumblings of extending the wars in Asia into Iran and Pakistan;

3] Rekindling the Korean conflict may also be in the cards. Of course, don't forget that both Iran and North Korea are client states of the British World Order.

All the recent saber rattling involving Iran and North Korea is wholly orchestrated. We need the distractions from the economic crisis, so our clients Ahmadinejad and Kim provide us with the necessary theater. So what will come first, further banner headlines of dollar collapse and market crashes or the distracting theater of more war or 911 type events?

What will this fall really bring? It is not too far away so we shall soon know. Unfortunately, it may make last fall look pretty tame.
When the government answers economic distress by preparing for the worst, then the worst may very well be what happens.
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Related: "Western World Faces Fiscal Ruin"

That commenter on your blog may actually be working for the Israeli government

MuzzleWatch After they became an inseparable part of the service provided by public-relations companies and advertising agencies, paid Internet talkbackers are being mobilized in the service in the service of the State. Read all here

More: Web Warfare Team Unveiled - By Jonathan Cook

Israel's Foreign Ministry is reported to be establishing a special undercover team of paid workers whose job it will be to surf the internet 24 hours a day spreading positive news about Israel. http://informationclearinghouse.info/article23111.htm

Feds Declare Tennessee Gun Law Invalid

Infowars July 18, 2009 - It is yet another example of the federal government running roughshod over the states.

Last month, the state of Tennessee's General Assembly passed House Bill 1796, the 'Tennessee Firearms Freedom Act,' which states that any firearms or ammunition manufactured within the state and legally owned and kept within the state by citizens are 'not subject to federal law or federal regulation, including registration' due to provisions in the Second, Ninth, and Tenth Amendments to the United States Constitution.

But according to Assistant Director Carson W. Carroll of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the U.S. Constitution is little more than a g.d. piece of paper, as George W. Bush so infamously deemed it during his reign as the decider-in-chief.

On July 16, Carroll dispatched his agency's official response to the law passed in Tennessee - the BATFE asserts that 'Federal law supersedes the Act, and all provisions of the Gun Control Act and the National Firearms Act, and their corresponding regulations, continue to apply.'

It will be interesting to see how Tennessee reacts to this official proclamation.

Out of work, out of benefits, out of luck

From CLG:
Out of work, out of benefits, out of luck --By August, 65% of all filers for unemployment insurance will have run out of their standard 26 weeks.
17 Jul 2009 More than 650,000 Americans will have used up all of their unemployment benefits by September, in what experts say could be the start of a looming crisis. In the early days of the downturn, the government extended unemployment benefits beyond the standard 26 weeks to as many as 79 weeks in hopes of giving the jobless a longer lifeline. With the recession now 18 months deep and the national unemployment rate standing at 9.5%, it appears that the effort wasn't robust enough for those in the crisis' first wave of layoffs.
More: 500,000 Will Exhaust Unemployment Benefits by September, 1.5 Million by Year-end

Unemployment Tops 10% in 15 States, D.C. --Mich. Surpasses 15% - The Highest Jobless Rate in Any State Since 1984 17 Jul 2009 Unemployment topped 10 percent in 15 states and the District of Columbia last month, according to federal data released Friday. The rate in Michigan surpassed 15 percent, the first time any state hit that mark since 1984. The Federal Reserve this week projected that the national unemployment rate, currently at a 26-year high of 9.5 percent, will pass 10 percent by the end of the year.

Severe state cuts could leave food banks' cupboards bare 18 Jul 2009 Representatives of food banks across Louisiana expected the state to cut their financing this year, but they never dreamed their budgets would be slashed by 90 percent -- especially when the need for provisions is increasing. The blow has left them scrambling.

Tensions rise over US Iraq role

CLG - 19 Jul 2009 - There appear to be growing tensions between the US military and Iraqi security forces. They have arisen over cooperation and the restrictions imposed on the movement of American forces in urban areas inside Iraq... According to an agreement signed between the two sides, US forces are not allowed to enter Iraq's towns and cities unless specifically requested to do so by the Iraqi authorities, except in cases of self defence. The spokesman said the ministry adhered to a strict interpretation of these new rules, but some in the American military appear to take a different view. The report suggests that US military figures did not expect the new rules to be implemented so literally, and for a limited number of joint patrols to continue following the withdrawal. More