The Smoking Gun Document That Could Terminate George Papandreou's Career

From ZeroHedge 
by Tyler Durden on 05/09/2010 07:14 -0500


Let's back up for a second and go through the events of the past week: the market's record flash crash, which certainly accentuated by HFT algos gone haywire, was to a big part caused by the live broadcasting of the real-time storming of the Greek parliament on Thursday night in Athens. The reason for the storming was the Greek population's general displeasure with imminent austerity measures to be imposed by the IMF which has now become the de facto saviour not just of Greece but all of the PIIGS and soon of the European core. The IMF in turn had to come in, after the EU realized that using the empty "Paulson bazooka", as we wrote extensively, did not work back then, and would not work now (CDS trader scapegoating campaigns aside), and also realized it is too fragmented politically to rescue Greece on its own, in essence confirming that the European Monetary Union is a sham and the euro is on its deathbed. And what it all really boils down to is liquidity: Greece was fully aware of the sad state of its financial affairs long ago, and unlike every debt-laden High Yield company in the US which is furiously refinancing debt or issuing equity to fix (if temporarily) its balance sheet, Greece did not take advantage of a generous market to shore up its liquidity. Well, one can say nobody was shoving term sheets before George Papandreou in January and February of early 2010, giving the country cheap and plentiful financing, which if executed could have resulted in not just the IMF not getting involved, and austerity measures not being instituted, but a far-smoother sovereign transition process, which at the very least could have bought the country another 6 months of time, during which the world economy may have well given the impression it had healed sufficiently courtesy of the slow and gradual market melt up (see HFT).

All that changes today - Greek blog DosePasa has released several smoking gun documents in which Boston-based Hayman Private Equity (no relation to the Kyle Bass firm, at least none that we can find), discloses it intention to offer a E20 billion loan through a non-binding Memorandum of Understanding to Greece at roughly LIBOR+125bps in February 2010. If the documents are proven legitimate, and with a plethora of executive-level signatures it appears they would be difficult to forge, Athens will likely now demand G-Pap's head on a platter, or at least a coherent explanation why he refused to do this transaction at massively beneficial to Greece terms, which most importantly, did not involve the IMF's austerity measures, which have been the source of so much consternation to date, not to mention a proximal cause for the biggest market drop in history.

Below are the scanned documents in question:

The sequence of events appears rather straightforward: in early January Hayman approaches G-Pap directly with a E7 billion L+125 loan offer. A month later the amount offered is raised to 20 billion, and while the interest on the loan is unknown it is hardly much higher.

What is most amusing is that the entity negotiating on behalf of Greece is the infamous Hellenic Post Bank, which as we noted previously, was uncovered to have been the party buying substantial CDS on Greece itself. What is even more amusing is point 6 of the MOU: "A necessary precondition is also that the Second Party Hayman will not hedge the credit risk of the Hellenic Republic in the CDS market." Now this is pure comedy: Greece may have sunk itself because of its idiotic insistence that any official counterparties on new issuance transactions are prohibited from hedging their exposure. We are convinced that this is what likely sank the deal, although we do not know for a fact what happened with the negotiations post February 8. We are certain that Hayman considered the inability to hedge their generous offer and told Greece to shove it. The sad result - three months later, Greek 2 Years spreads are 20%+. We have noted repeatedly that CDS hedges are absolutely critical to new issuance activity. Greece did not realize this - and now it is bankrupt.

It is likely that at at or around this time, is when Greece was also being courted by Russia and China about potential rescue loans, as was also previously reported. Those talks also led nowhere.

In summary Greece said no to both a US-fund based rescue effort, as well as sovereign rescue overtures by key non-American foreign powers. In the end the market called the country's bluff and Greece has now folded, stuck with any and all austerity terms that the IMF will impose upon it.

The bottom line as far as G-Pap is concerned, is that there is now a smoking gun document (pending authentication - we have called the Hayman Group at (617) 217-2084 for an official comment, but have only gotten voicemail which is not surprising since it is Sunday), which indicates that Greece, as far as the public is concerned, could have avoided or at least delayed the imposition of austerity. And this will likely be the straw that breaks the back of G-Pap's political career, and could possibly lead to even more violent riots (surely no longer televized by CNBC, as the stock price of GE tends to correlate inversely with the number of people watching CNBC and panicking) in Athens in the upcoming days.

The return of massive daily volatility in the US equity markets is now here.

Rig firm's $270m profit from deadly spill

Mmm. It seems that a lot of insiders profited handsomely from this catastrophe (see previous post about the others). What is the point of insuring anything for a greater value, apart having good reasons to expect to cash in? I smell a big rat here.


CLG: Rig firm's $270m profit from deadly spill --Transocean has already received a cash payment of $401m with the rest due in the next few weeks. 09 May 2010 The owner of the oil rig that exploded in the Gulf of Mexico, killing 11 people and causing a giant slick, has made a $270m (£182m) profit from insurance payouts for the disaster. The revelation by Transocean, the world’s biggest offshore driller, will add to the political storm over the disaster. The company was hired by BP to drill the well. The "accounting gain" arose because the $560m insurance policy Transocean took out on its Deepwater Horizon rig was greater than the value of the rig itself.

[Breaking]: German Finance Minister Rushed To Hospital and Angela Merkel Coalition Loses Majority In German State Vote According To Exit Polls

German Finance Minister Rushed To Hospital On Eve Of Last Greek Bailout

Submitted by Tyler Durden on 05/09/2010 11:02 -0500

• Reuters
 

The reason given by Reuters why the FinMin is in the hospital is due to an adverse reaction to a new medicine. While we wish Schaeuble all the best, his the timing could not possibly have been worse: the whole world is watching with baited breath to see what happens in Europe before 6pm eastern tonight. Anything less than an "ironclad" bailout program will result in a total market wipeout tomorrow.

We will bring you more as we get it.

_________---

Breaking News: Angela Merkel Coalition Loses Majority In German State Vote According To Exit Polls

Political doctrine - meet Newton's third law. Headline from Reuters. This will serve as a huge setback to a consolidated European rescue of not only Greece but all PIIGS (and then all of Europe itself). Polls are now closed and the first preliminary read is as follows: 34.5 CDU, SPD 34.5, 12.5 Green, FDP 6.5 Left 5.5.


From Reuters:
Chancellor Angela Merkel's centre-right coalition parties failed to retain their majority in a state vote on Sunday, an exit poll showed, robbing her government of a majority in the upper house of parliament.
An exit poll by ARD television put Merkel's Christian Democrats (CDU) on 34.5 percent and their Free Democrat (FDP) allies on 6.5 percent, short of a majority and leaving the make up of North Rhine-Westphalia's next government unclear.
The CDU and FDP have ruled in the state -- Germany's most populous -- since 2005, when they won 44.8 percent and 6.2 percent of the vote respectively.
Their loss of a majority in the state -- and as a consequence in the federal upper house -- means Merkel will have to rely on opposition parties for support for her policy programme, which includes tax cuts, health reform and extending the lives of some nuclear power plants. 
______________-


More from Mish:

Euro Witch Hunt Escalates; Obama on the Hotline to Angela Merkel; France, Germany "Completely Agree" (Except for German Voters)

The news is flying once again today, and all eyes are the results of a meeting that will send a coordinated "message to the market".

The meeting was interrupted when German Finance Minister Wolfgang Schäuble had an "adverse reaction to medication" and had to be take to the hospital.

I think a more likely explanation is a stress related nervous breakdown. Hmmm. Will that statement make me a witch hunt target?
Euro Witch Hunt Escalates

You know someone or something is in deep trouble when the search for scapegoats happens in the middle of a crisis rather than after it has ended. With that in mind, please consider EU's Barnier Calls For Tougher Sanctions On Market Speculators.

The European Union's internal market commissioner Sunday called for tougher sanctions on stockmarket speculators.

Speaking on French radio Europe 1, Michel Barnier said sanctions against speculators will take various forms "including legal action, when there is proof." "We are ready to increase the sanctions against abnormal speculative action," he said.

"Regulatory authorities need to be extremely severe with those that are launching rumors to manipulate stock prices in order to make money on the back of the suffering of the people," Barnier said.

Is that lame or what?
IMF approves $40 Billion Greece Bailout

Today we learn the IMF finally got its act together to approve $40B Greece bailout.

The board of the International Monetary Fund has approved its part of a $140 billion bailout package for Greece.

The board met in Washington Sunday to approve a three-year, $40 billion (euro30 billion) loan for the troubled European nation. Greece has enacted broad cutbacks on government spending to address its mounting debt, sparking riots and social unrest.

Eurozone leaders on Saturday approved a $100 billion package of loans to Greece for the next three years to keep it from imploding. The bailouts are an effort to stabilize global markets rocked last week by fears of a spreading European debt crisis.

Obama's On The Hotline

This will not do a bit of good but Obama calls Merkel on debt crisis

US President Barack Obama spoke to German Chancellor Angela Merkel for the second time in three days Sunday and pressed for "resolute" EU steps to build market confidence, the White House said.

"President Barack Obama spoke with Chancellor Merkel this morning as part of his ongoing engagement with regard to the economic situation there," White House deputy spokesman Bill Burton told reporters here.

"They discussed the importance of the members of the European Union taking resolute steps to build confidence in the market."

The conversation went something like this. ... Hello Chancellor Merkel, the dollar is rising in spite of our best efforts to kill it. Please do something!

That is my intrepretation of this official quote: "We agreed on the importance of a strong policy response by the affected countries and a strong financial response from the international community."
France, Germany in "Complete Agreement"

Reuters reports France, Germany agree on EU measures

France and Germany "completely" agree on the measures to be unveiled on Sunday by the Ecofin group of EU finance ministers to help solve the crisis-hit euro zone, the French presidency said.

Complete Agreement? Excuse me for asking but what do German voters think?
Merkel’s Party Defeated in Key State Election

To show how ridiculous the statements from the French president are, please consider Merkel’s CDU Defeated in Key State Election.

Chancellor Angela Merkel’s party unexpectedly lost control of Germany’s most populous state in a regional election, television projections showed, potentially swinging the balance of power in Berlin and dealing Merkel a blow after criticism of her handling of the Greek crisis.

Merkel’s Christian Democratic Union, or CDU, took 34.3 percent in today’s election in North Rhine-Westphalia, and the opposition Social Democrats 34.7 percent, latest projections showed. The Greens took 12.3 percent, the Free Democrats 6.7 percent and the Left Party 5.7 percent, enough to win seats in the state parliament in Dusseldorf for the first time.

The results may give the Social Democrats and Greens a slim majority, ending the CDU-led coalition that has governed North Rhine-Westphalia, or NRW, since 2005. That would cost Merkel her majority in the upper house of parliament in Berlin, where Germany’s 16 states are represented.

“This is a double blow to confidence in Merkel’s party: a rout at regional level that’s sent a huge wave to the national coalition,” Hans-Juergen Hoffmann, managing director of Berlin- based polling company Psephos, said in an interview. “Her own bedrock CDU voters are worried. The crisis is spinning out of control and confidence in her ability to tame it is evaporating.”

That is what happens when you override the will of the people. Eventually they get fed up. I am hoping US voters are equally fed up with Obama, enough to cause him a severe pounding in the November mid-term elections.
Adverse Reaction To Medication

Hoping to send a "clear message to the financial markets" all 27 EU finance ministered were summoned to a crisis meeting in Brussels. The EU crisis meeting was disrupted when German finance minister was rushed to the hospital, reportedly due to an "adverse reaction to medication".

Wolfgang Schäuble was taken to hospital in Brussels shortly after arrival for the meeting. He is reportedly suffering from an adverse reaction to medication.

He will be replaced by Thomas de Maiziere, who is currently Germany's interior minister but was for four years the head of the private office of Chancellor Angela Merkel.

The EU's finance ministers were called to Brussels today to approve the creation of a ‘European stabilisation fund' capable of providing emergency funding to countries unable to raise money on the capital markets at sustainable levels of interest.

The €70 billion fund was agreed by national leaders from the 16 members of the eurozone on Friday (7 May), but it needs the endorsement of the EU's 27 member states.

The decision to call the EU's finance ministers together less than 48 hours after the end of the emergency summit reflected a desire to send a clear message to financial markets before they opened on Monday that the EU was determined to shield the euro.

Crisis Recap

• 48 hours ago there was an emergency summit to discuss the European financial crisis.
• A second crisis meeting was held Sunday.
• Germany and France are in "Compete Agreement" except that German voters obviously are not.
• In a vote showing no-confidence, German Chancellor Angela Merkel's CDU party unexpectedly lost control of Germany’s most populous state as well as her majority in the upper house of parliament.
• German Finance Minister Wolfgang Schäuble had an "adverse reaction" to something, reportedly medication.
• 27 finance ministers want to send a "message to the markets", that the people of Germany do not agree with
• A witch hunt is on to lay the blame for this crisis on speculators

Got it?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Bob Chapman: "These are the type of things that led up to the French Revolution in 1789"

Some snippets from the latest article by Bob Chapman, May 8 2010:

"...What is going on concerning sovereign debt is eventually going to bring the world financial system down. It did not just happen that way; it was planned that way.

“The annual operating shortfall is running between $4 and $5 trillion; not $500 billion as we saw before the crisis or the $1.4 trillion that they announced for fiscal 2009. Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit.” John Williams

The latest Greek tragedy continues to leave carnage in its wake. Some 30% of the intended Greek bailout financing will come from the IMF, of which US taxpayers will pay for 40%. This has been done to subsidize European countries and banks, which are holding Greek bonds. A deal obviously worked out in some back room by fellow Illuminists. Needless to say, American’s should be outraged. The Greek populace in general probably has little intention of paying back these loans, who can blame them. The politicians and the bankers lied to them, telling them things were just fine and they were not just fine. No one told them successive governments and Goldman Sachs were cooking the books.

We do see one thing in the future and that is that the Illuminists are losing their grip on total control. The information being disbursed over the Internet and talk radio is exposing more and more of what they are up too. At least at this time things are going very badly for the elitists, especially in Greece.

These are the type of things that led up to the French Revolution in 1789, during which some 300,000 elitists lost their heads. We have mentioned these similarities a number of times, particularly on the radio. Then as now the same type of elitists ran things. Then it was a corrupt aristocracy – today it is those who believe they are the masters of the universe, and plan to give us world government. We are quite sure that the end result this time worldwide will be far more extensive. Today you can run but you cannot hide.
...
...All sovereign debt is essentially unpayable. Debt has swallowed up the world. Even if the system continues to function the only way debt can be paid on a short or intermediate term basis is to arbitrarily create more money and credit out of thin air, the result of which will be hyperinflation, a lower stock market, higher interest rates and lower bond prices and higher gold and silver prices. These coming events are an absolute lock. All bets are off if we plunge directly into a deflationary depression, although the above results will be the same. It is just the path to failure will have changed. Many more problems are on the way the US and UK are leading the pack. Governments worldwide will have to raise $4.5 trillion in 2010 of which the US will raise just about $2.2 trillion or 45% during a period when these requirements exceed available funds. In England over the last few months the Bank of England has bought 70% of Treasuries and in the US the Fed continues to buy 80% by having others front the orders for them.

Worse yet the UK could end up with a “Hung Parliament.” When that happened in the mid-1970s the IMF had to be called in. England could very well become the nextGreece. The hung parliament will bring lower sterling, unless the liberals and the conservatives can form a coalition, which is certainly possible. Even with a coalition that could govern the disastrous debt problems are not going to go away anytime soon and the UK will follow in the footsteps of Greece. This is going to be a long hot summer forEngland. Sterling will trend lower and budget problems will worsen.

US financing needs dwarfs all others. There is a good chance the demand could cause an explosion in the debt market, especially in the US Treasury market. This would cripple the financial system and cause many bankruptcies. As well, it is not impossible for the Fed to collapse under worthless assets. A 2/3’s devaluation, which we expect, could easily accomplish that. No matter which way you cut in, we are in for big trouble.

_________-

More? 

GoldSeek.com Radio: John Williams, Richard Daughty (The Mogambo Guru), The International Forecaster, and your host Chris Waltzek

1st Hour: Headline news the Market Weatherman Report. Spotlight Stock Picks. Host Chris Waltzek The International Forecaster discussion and listener's questions. 2nd Hour: - John Williams, Shadow Stats - Richard Daughty, The Mogambo Guru Report

Jim Willie Macroanalysis Report

Here. Hat tip to Robert Busser for this too.


Some snippets:

Over a million US citizens are scheduled to lose emergency jobless benefits. When the USEconomic recession began in December 2007, the USCongress extended the length of unemployment benefits for the jobless a total of three times. Finally the USGovt has reached its limit. Without fanfare, without publicity, but with a cold stroke of hand, the USGovt has quietly drawn the line at 99 weeks of aid, called emergency extended benefits. Hundreds of thousands of Americans have already reached that mark. In coming months, the proejcted number of workers who will be cut off is estimated to exceed one million. Republicans have delayed aid due to cost, while Democrats lack the consensus to push through another extension. The mounting concerns over the federal deficit have weighed down the generosity, expected to reach $1.5 trillion this year. Unemployment aid has become one of the federal budget's most substantial component, and one of the fastest growing. This year its costs will hit $200 billion. That figure is an incredible six times what was typical in previous recessions.

Sounds like the recession is declared over, victory is claimed, but dead proletariat soldiers litter the field and countless more are set to die in triage. In past recessions, only 26 weeks of payments had been delivered to furloughed workers. The limit has been declared at 99 weeks. In March, the total victims tallied to about 11 million Americans, roughly 70% of the national jobless count, who received unemployment checks. They averaged $320 per week. According to the Bureau of Labor Statistics, 44% of the jobless have been out of work for at least six months. That level stands as the biggest share since the USGovt began keeping track in 1948. Worse, 3.4 million Americans have been out of work for more than a year, according to a study by the Pew Fiscal Analysis Initiative. A parade comes. Interviews with state officials produced state estimated counts who will fall off the emergency support. In New York 57 thousand, in Florida 130 thousand, and in Ohio 30 thousand have exhausted their benefits and will not receive any further insurance. Goldman Sachs analysts expect nationwide more than 400 thousand will soon begin losing benefits every month. See the Bloomberg article (CLICKHERE).

Despite a slight downtrend in weekly jobless claims, the news continues to be bad enough to remind of the human tragedy and recession firmly in place. A lift in the labor market is the general message trumpeted, but the jobless claim magnitude is sufficiently high to contradict any claim of recovery. A rebirth of the USEconomy requires the hire of a couple million people, not the ongoing slow hemorrhage of over 400 thousand workers on a weekly basis. In the week ended April 24th, a list of 448 thousand workers filed jobless claims, 11k less than the previous week. In the week of May 1st, 444 thousand workers filed jobless claims. The weekly job losses stubbornly remain well over 400 thousand. The trend is down, but the declining trajectory needs to be several times greater. The continuing claims are also on a downtrend. What was once 5.186 million in mid-December has fallen to 4.594 million in the last plumb read. Still, these figures are not recovery levels.

So the April official Jobs Report is out, claiming to reflect 290 thousand net job growth, and upward revisions to the last two months of over 100k job growth. What nonsense! What desperate deception! The official jobless rate grew from 9.7% to 9.9% during this net job growth episode, a testimony to its fabrication. Also, the under-employment rate, as the U-6 series is called nowadays, rose from 16.9% to 17.1% in the last month. The SGS Alternative Jobless rate (free from all types of accounting fraud) rose from 21.7% to 22.0% in the last month. Higher jobless rates but more net jobs, total deception and works of fiction. The official explanation, again twisted logic passing for analysis, is that formerly discouraged workers have lifted themselves to go seek work, encouraged by the expanding economy, and thus are considered jobless again. Worse, the mythical Birth-Death Model that receives hardly a peep of mention, is responsible for 188k of the 290k in net job growth. Last year, it contributed only 62k fewer mythical jobs in April, so it is leaned upon more heavily. This has taken place while consumption is down, home sales are flat, and lending is curtailed. It is important not to give such reports too much credibility, since so easily dismissed with a little thought! Shadow Govt Statistics actually estimates that a baseline 230k phantom jobs are integrated every month generally from the Birth-Death Model overall distortions.

...

Another 450 thousand census jobs are expected to be registered in the months ahead, surely to be touted as a wondrous economic recovery. Let's do some easy arithmetic. Remove the 188k jobs from the Birth-Death Model. Remove the 66k jobs from the Census project. One is left with only 36k jobs in the April tally, a far cry from the 290k posted in the official USGovt Jobs Report. Furthermore, every February, the USGovt does a quiet benchmark correction of past exaggerations. Last year, it resulted in a few hundred thousand in reductions. Expect the same next February.

...

Contrary to the popular propaganda promulgated by the intrepid lapdog US press networks, consumer demand has been on the decline in nearly non-stop fashion since 2008. It has merely varied in the speed of the downward trajectory. Green Shoots were a convenient fiction. In 2009, a pause was seen, due to rampant USGovt stopgap and incentive programs. They have since come to an end. With banks unwilling to loan, and M2 and M3 plunging, it will not be long before wider recognition comes. Notice how the 2008 recovery turned up only slightly, but the 2010 recovery is caught in a sluggish pattern lasting 60 to 80 days. No economic recovery is remotely evident.

Jim Willie Crisis Coverage

A must read. Hat tip to Robert Busser for this.


Excerpts: "Rumors also persist and circulate about how the only party large enough to conduct the stock market temporary collapse, recovery, and ensuing raid was the US Federal Reserve itself, of course with supporting cast assistance from key Wall Street firms loyal to the syndicate. Direct attention to JPMorgan, Goldman Sachs, and Citigroup, the biggest snakes in the pit. Rumors indicate that a $200 to $300 billion Snatch & Grab heist took place within the stock market during the swoon and recovery, with outrageous profit quickly obtained. The operation was managed by computer programs, necessarily in coordination. Some point to the USFed Snatch & Grab sting as being motivated to fund the Greek Govt bond situation, or more likely the European Union sovereign debt situation, and provide it immediate aid. That is possible in my view, but only for quick aid to key private banks with Greek and EU sovereign bond exposure, all within the brethren of banksters. My more thoughtful view is that Wall Street conducted their own private Snatch & Grab operation, to fleece the public of around $250 billion, all planned with coordinated efforts, exploiting the worrisome atmosphere, with two powerful motives. First, basic greed with a well planned profitable heist. Second, to discourage the US Senate from following through with a USFed audit. A full independent audit would reveal extortion, insider trading, counterfeit operations, bond fraud, and money laundering from narcotics channels. In other words, it would reveal the center of the financial crime syndicate. Furthermore, the Snatch & Grab would provide a slush fund from which to pay Senators directly, for future blockage of the USFed audit bill. The level of danger and threatened collapse has turned real. USFed Governors actually threatened that the system could suffer major breakdown, if not collapse, if the audit is forced. We saw it!!! If you do not think like a criminal about the syndicate, you will rarely comprehend their actions.
...

...Word came from a bank source in Germany. He said, "On a side note you might be interested to learn that Goldman Sachs might be declared a criminal organization. If that happens, a 90% likelihood in my opinion, then there will be Interpol arrest warrants issued for all GS executives globally. The bankers in London already had their passports lifted." WOW!!! That aint in the news!

...

...One must wonder if RICO law application comes eventually. The Racketeer Influenced & Corrupt Organizations (RICO) Act calls for seizure of assets purchased and involved in criminal groups. The "Doing God's Work" comment was a powerful call to arms to kill GSax globally in my view. This spring, Wall Street firms were banned from participating in EU Govt bond issuance sales. The ban cost Wall Street firms over $22 billion so far, rabid implications. Alert observers can sense an internal war between the US Attorney General office and USDept Treasury in its early stages. It might result in Geithner resignation and no further Goldman Sachs preppies considered for the post of Treasury Secy, the GSax stronghold.

...

...The pressure against GSax is powerful and global, as risks are acute. Look for a GSax suicide, which would create a vast new convenient black hole for the disappearance of a raft of important documents. One must consider why Tim Geithner was selected as Treasury Secy. Compared to his predecessor Hank Paulson, Geithner is a mere minion, with fewer powerful friends, less intelligence, less power, less defensive capability. In my view, Geithner was chosen to serve as the Fall Guy, to serve a larger purpose. Geithner is an excellent litmus test for tipping off the breakdown of GSax high level reinforcement column of support. Watch for attacks against Geithner to preview lost control by the syndicate. Critical is that GSax still controls the USDept Treasury. If GSax is under attack, then somehow Geithner should be under attack. Watch for weakness and cracks in the Geithner office. Geithner's involvement in the mortgage bond accounting coverup from his New York Fed post is known. Watch for charges of obstruction of justice against GSax, from their armtwisting or bribery in defense. Somebody could make a career by exposing them at their routine games...

...

...The tragic fact of economic history is that the Fascist Business Model destroys an entire economy, as the powerful large corporations merge with the state, and then are protected by the state. Nowhere is this destructive acidic economic model more evident than Goldman Sachs, with its elite position among Wall Street firms, and its tight control 20-year of the USDept Treasury. That is where the USDollar is managed, and all USGovt purse outlays are approved.  Inefficiency follows, eclipsed by corruption, then breakdown of law, lastly economic collapse. In my view, Goldman Sachs represents the embodiment of this business model on the US landscape in a very thorough fashion. See the Washington Post article about how the Goldman Sachs business model contradicts the public interest at every turn, by Roger Martin (CLICK HERE).

...

...The principal path to Third World debt default and national ruin is the inability of a national government to roll over its short-term debt, as refinance becomes an impossible event. The USGovt is setting consecutive records on debt issuance and redemptions. The financial press is quiet on the subject. The risk is two-fold. First, the total size of the deficits to convert to debt are staggering, greater than anything any government in world history has ever contended with. The magnitude seems to be manageable in the view of the supposed banking and bond experts. The volume does not appear in any way to be on the decline, as new records are set regularly. Second, the reliance upon the monetization solution puts the entire US$ system at grave risk. Little attention is given such risk, or attempt to unmask its hidden devices. To date, great lies have been told to the USCongress and American people by USFed and USDept Treasury officials about the usage of printed money to cover the debts. Hyper-inflation is here now on the monetary aspect. At stake is the confidence and integrity of the USDollar and USTreasury. In my view, the respected image is lost. The USGovt has an acquired image of being a powerful rogue, with crafty inventive methods used to conceal its illicit activity. Supports are uniformly artificial. The game is lost. The reputation of the USGovt has irreparably fallen. The allies are lost. Apart from the narcotics wars and money laundering and merchants of death, the USGovt has fallen victim to debt and ruin. What remains is the final chapter to play out, one already written.

In April alone, the USGovt redeemed a gargantuan $643 billion in USTreasurys. The great majority, $596 billion, was in short-term securities, the US Treasury Bills. The needs and requirements to fulfill the debt issuance is beyond most description, as the USGovt must have access to moutains of cash in order to keep rolling its ridiculously short average maturity debt load. An accelerated need for money is the trademark of a bubble. A past priority was to reduce the maturity, in doing so lower the borrowing costs. Clinton and then Bush II created a time monster. The USDept Treasury has redeemed $596 billion in USTBills in April, an all time world record. Add $47 billion in longer term USTreasury Notes and the total is almost $650 billion in redemptions. This number is absurdly ridiculous and out of control. The financial markets seem oblivious. They do not attempt to reckon where the money comes from to cover the debt issuance and rollover. It does not exist, and thus the Printing Pre$$ has been the last resort. Due to the interest expense, the USFed can never exit from the 0% corner. All experts recognize this fact, and thus ignore official Exit Strategy pronouncements. The specter of the USGovt debt putting the US and world economy at risk is gradually gaining attention. The USDept Treasury is unable to keep issuing shorter and shorter dated debt, the limit already breached. Global recognition of the monetization solution being used for several months is the next removed pillar in the world of trust. See the Zero Hedge article (CLICK HERE).

The fiat monetary system depends heavily upon trust, confidence, and perceived integrity. The USDollar is fast losing all in world view. In recent months, a new pillar holding up the US$ as world reserve currency is the dreadful condition of the major competitor currencies. Every single major currency is in trouble. Ironically the US$ fares poorly against emerging nation currencies. The last currency standing on the dance floor will clearly be gold, with silver holding its business card.

As preface, let it be known that the USGovt debt has nearly identical metrics as the Greek Govt. See debt versus national economy, growth rate in federal deficits, falling revenues, lack of economic growth, bloated government expenditures, and other metrics. Another more tangible connection is the actual shared payouts, as the USGovt is in line to pay for 17% of the Greek Govt bailout...

...Tyler Durden points out the risk of how the sovereign debt fire will spread through the periphery and into the Anglo core. Already, check the Credit Default Swap contracts. Traders are betting on a collapse of the UKGilt debt complex as the next bastion of sovereign spending gone amok. When the UK goes and British financial ship at sea is grounded, look for Japan Govt Bonds and finally the USTreasurys to suffer severe shocks and possible bouts with default. Durden anticipates at that point the only buyer of USGovt debt will be the USTreasury itself, as in pure monetization, the stuff of hyper-inflation. This intrepid adept analyst forecasts massive consumer deflation amidst economic collapse within the US borders, coupled with asset price hyper-inflation. Basic supplies like milk and gasoline would double quickly in price, and the Dow Jones Industrial Index could double also. American life would have to adjust to extraordinary conditions, that could feature supply rationing, and very likely, if history repeats itself, include a wider war. See the Zero Hedge article (CLICK HERE)....

 

Feds probing JPMorgan trades in silver pit

NYPOST EXCLUSIVE

Federal agents have launched parallel criminal and civil probes of JPMorgan Chase and its trading activity in the precious metals market, The Post has learned.

The probes are centering on whether or not JPMorgan, a top derivatives holder in precious metals, acted improperly to depress the price of silver, sources said.

The Commodities Futures Trade Commission is looking into civil charges, and the Department of Justice's Antitrust Division is handling the criminal probe, according to sources, who did not wish to be identified due to the sensitive nature of the information.

The probes are far-ranging, with federal officials looking into JPMorgan's precious metals trades on the London Bullion Market Association's (LBMA) exchange, which is a physical delivery market, and the New York Mercantile Exchange (Nymex) for future paper derivative trades.

JPMorgan increased its silver derivative holdings by $6.76 billion, or about 220 million ounces, during the last three months of 2009, according to the Office of Comptroller of the Currency.

Regulators are pulling trading tickets on JPMorgan's precious metals moves on all the exchanges as part of the probe, sources tell The Post.

JPMorgan has not been charged with any wrongdoing.

The DOJ and CFTC each declined to comment, as did JPMorgan.

The investigations stem from a story in The Post, which reported on a whistleblower questioning JPMorgan's involvement in suppressing the price of silver by "shorting" the precious metal around the release of news announcements that should have sent the price upwards.

It is alleged that in shorting silver, JPMorgan sells large blocks of silver option contracts or physical metal -- actions that would bring down the price of the metal -- closely following news that would otherwise move the metals higher.

Last week, The Post got a telling e-mail the Justice Dept. sent to a concerned investor. "Thank you for your e-mail regarding allegations that JPMorgan Chase, and perhaps other traders, are manipulating the silver futures market," the e-mail read.

Telling, indeed, as the concerned investor, in an e-mail to Justice's Anti-trust division, never mentioned any companies or traders.

mgray@nypost.com

Read more: http://www.nypost.com/p/news/business/feds_probing_jpmorgan_trades_in_gZzMvWBqOJpB55M7Rh9vwM#ixzz0nQPGqjpQ

Globalization Is the Contagion: On the Idiocy of Interdependency

A must read. Absolutely agreeable and relevant:

Friday 07 May 2010

by: Kent Welton  |  Op-Ed News

Were there no European union there would be no Greek crisis beyond Greece, Greece would have retained its currency and paid its price for budget problems in the value of its currency.

But the stitching together of so many diverse countries and cultures into one unit, with one currency, has presented far more problems than it has solved and, worse, has removed national and cultural liberty, sovereignty, as well as necessary freedom for tariff-based re-balancing mechanisms.

As a result, we now have synchronized global pain and ruin serving to give the banksters more opportunities to gain evermore resources and power over our lives with their out-of-thin-air private money machines.

Worst of all is exactly this private central bank contagion, in which nations have given up their rights to create their own money and credit, and without interest if they see fit. The world-wide sovereign debt problem is essentially a private central bank, debt-money, problem. It's the interest, stupid. Its the inevitable Kondratieff wave of debt-money.

Indeed, it is the unnecessary and predatory interest on private debt that countries and municipalities alike are forced to pay to parasitic bankers and Fed-owning bond dealers, instead of creating their own money and credit, and keeping their collected taxpayer funds in state and national banks.

The banksters then have us in their grip and are attempting to use this crisis of their own making to mount a global coup of "global governance" - in which all nations give up their money and credit freedom and enter the banker hell roach motel... then try to get out?

Interdependency is not stopping wars, riots, revolutions or currency trade wars. It's merely removing freedom, democracy, and domestic re-balancing mechanisms. It is also producing a dismal sameness around the world and ruining the beauty and freedom of cultural diversity.

Speaking of counterproductive interdependency, take "free trade" for example. Ruling-elite driven trade treaties, bypassing democratic referendums of the wage-earning majorities, have removed necessary tariff adjustment freedoms. First world countries have lost their manufacturing capabilities and become dependent, not interdependent.

Reality is that our independence, or that of any other nation, does not preclude global cooperation or any free as needed and wanted trade, it simply makes these processes more free, voluntary, democratic, more easily subject to course correction, and so less exploitive and truly productive... as they should be.

By defaulting production to a few greater-slave-rewarding locales, economies are upended, creativity minimized, historic regional independence ruined, and climate-screwing "goods" shipped in fossil-fuel vehicles over great distances to market. Not good, not efficient, not free, and not a useful "comparative advantage."

Further, no country elects their representatives to the WTO or the World Bank or the FED or BIS, or even the United Nations. There is no effective democracy anymore, we're all trapped inside a ruthless, top-down, fascism. Unless you're a "rogue" nation that has managed to avoid the global grip of the banksters, you're stuck with usury, predation, extortion, ruin and rioting until the game is changed.

We, the people, need to perform our own "structural adjustment" on our money and credit and trade processes in order to recreate the better world that has been screwed up and destroyed by corporate giants and their pigmy sycophants.

Today, as a result of top-down integration and forced interdependence, we have global oligarchy and global oligopoly, and the demise of First World wages and Standards - terrible, counterproductive, results.

What we are witnessing today is simply the entire foisted-upon-us "interdependency" idiocy coming home to roost. To repair and reform, we need to break out of the fascist trade and banking straight-jackets and rebuild local, national and regional freedoms - all according to real democratic processes and prerogatives. 

Exec. Dir. The Center For Balance.org - Websites: PanditPress.com, OligarchyUSA.com, PublicCentralBank.com, EditorFreedom.com, FascismUSA.com

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