I’ve watched the Facebook phenomenon with considerable skepticism, and have refrained from commenting on it, save linking to stories such as GM canceling all of its Facebook ads because they didn’t see the benefit.
But this item via reader Chuck L was a real eye-opener. It suggests that Facebook may be a large-scale fraud. If not Facebook, who would be running the bots in question? Their second complaint, about the cost of a name change, is merely tacky customer-gouging, but the first suggests that the Facebook business model is a complete fail, whether the clicks are from Facebook bots or other bots.
I’ve snapshotted this page in case it disappears, but this is on Facebook now, from Limited Run:
Hey everyone, we’re going to be deleting our Facebook page in the next couple of weeks, but we wanted to explain why before we do. A couple months ago, when we were preparing to launch the new Limited Run, we started to experiment with Facebook ads. Unfortunately, while testing their ad system, we noticed some very strange things. Facebook was charging us for clicks, yet we could only verify about 20% of them actually showing up on our site. At first, we thought it was our analytics service. We tried signing up for a handful of other big name companies, and still, we couldn’t verify more than 15-20% of clicks. So we did what any good developers would do. We built our own analytic software. Here’s what we found: on about 80% of the clicks Facebook was charging us for, JavaScript wasn’t on. And if the person clicking the ad doesn’t have JavaScript, it’s very difficult for an analytics service to verify the click. What’s important here is that in all of our years of experience, only about 1-2% of people coming to us have JavaScript disabled, not 80% like these clicks coming from Facebook. So we did what any good developers would do. We built a page logger. Any time a page was loaded, we’d keep track of it. You know what we found? The 80% of clicks we were paying for were from bots. That’s correct. Bots were loading pages and driving up our advertising costs. So we tried contacting Facebook about this. Unfortunately, they wouldn’t reply. Do we know who the bots belong too? No. Are we accusing Facebook of using bots to drive up advertising revenue. No. Is it strange? Yes. But let’s move on, because who the bots belong to isn’t provable.
While we were testing Facebook ads, we were also trying to get Facebook to let us change our name, because we’re not Limited Pressing anymore. We contacted them on many occasions about this. Finally, we got a call from someone at Facebook. They said they would allow us to change our name. NICE! But only if we agreed to spend $2000 or more in advertising a month. That’s correct. Facebook was holding our name hostage. So we did what any good hardcore kids would do. We cursed that piece of shit out! Damn we were so pissed. We still are. This is why we need to delete this page and move away from Facebook. They’re scumbags and we just don’t have the patience for scumbags.
Thanks to everyone who has supported this page and liked our posts. We really appreciate it. If you’d like to follow us on Twitter, where we don’t get shaken down, you can do so here: http://twitter.com/limitedrun
Needless to say, this finding should prompt similar investigations by bigger players.
It’s a story that will put further pressure on Merkel and may eventually provide a clue to what may happen. PressTV is reporting that over 50% of Germans now want to leave the euro but that should come as no surprise.
Most Germans think their country’s economic conditions would improve if Europe’s top economy leaves the 17-member debt-stricken eurozone, a poll suggests.
The Emnid poll for the Bild am Sonntag weekly showed 51 percent of Germans believed their country would be better off without Europe’s single currency, AFP reported on Sunday.As recently as last month, German finance ministry said it feared the country could face a significant economic slump in the event of a eurozone breakup.
The June 24 report in Spiegel news weekly suggested that German economy could contract up to 10 percent in the first year after the currency bloc break up, while unemployment could jump to more than five million people.
Various eurozone’s member states have been struggling with deep economic stagnancy since the bloc’s financial crisis began roughly five years ago. Rising unemployment in Germany signals that even Europe’s biggest economy is not immune to the economic crisis in the eurozone and cannot be depended on to prop up growth.
Some might agree with making people on the dole work for their money but where do you draw the line? The story in the UK is getting worse on this subject and here is the latest. Where does it led to, modern-day slavery? More importantly who benefits?
A thinktank has warned that the British government’s project to tackle long-term unemployment may prove to be a great failure as it involves six months of unpaid work.
The thinktank refers to a new government work scheme being issued across Britain, where up to a million people will be forced to do unpaid work for six months otherwise their benefits will be stopped.
Under the Department for Work and Pensions community action programme, people who have been claiming jobseeker’s allowance for over three years will be forced to work for six months unpaid, or face the consequences of having their benefits completely cut.
The Centre for Economic and Social Inclusion (CESI) predicted that 1.78 million people will be unable to find work through the British government’s current two-year-long employment scheme even they meet the necessary targets.
There is hope depending on a court case taken by a jobseeker.
Meanwhile, a 41-year-old jobseeker who refused to attend the community action programme is waiting to hear from the high court if he had won a judicial review, as he accuses the programme of promoting “slave labour”.
The British economy is being affected by the Euro crisis and if it continues to decline with the current employment schemes, the number of jobseekers are said to reach 1.06 million.
Interview with John Williams from ShadowStats giving his opinion that Hyperinflation is coming by 2014. His gives a good sumation of where the US is right now and where he sees it going.
1 August: Monti meets Finnish PM. Italian PM Monti is due to meet his Finnish counterpart in Helsinki.
2 August: Spain auction. Bonds
2 August: ECB Governing Council meeting. Our expectation is that 2 August is likely to be an occasion for non-standard (“quantity”) monetary policies. Standard (“price”) monetary policy, or the level of policy rates, we suspect will take a backseat this month. A monetary policy “price” response would in any case be more effective after a “quantity” response given the current impairments of the monetary transmission mechanism. We expect a further 25bp refi rate cut at the September meeting. We suspect the deposit rate will remain at zero for now. See “Eurostress” in this issue of Focus Europe.
7 August: Italian Q2 GDP flash estimate. A weak figure would reignite the ‘austerity versus growth’ debate (DB forecast –1.0% qoq).
13 August: Italy auction. Bills
14 August: Italy auction. Bonds
14 August: Euro area Q2 GDP flash estimate, from Eurostat.
Mid-August: French Constitutional Court/Fiscal Compact. In Mid-August the French Constitutional Court is due to rule whether the Fiscal Compact, which euro area countries are due to endorse by the start of 2013, needs to be ratified into the French Constitution. If so, a joint vote by the French Assembly would be required. Signals are that this would happen in September if required. See accompanying article on France in this issue of Focus Europe.
16 August: Spain auction. Bonds
20 August: Greek bond redemption. Greece is due to repay EUR3.1bn of GGBs. Following the PSI, these would be GGBs owned by the ECB and EIB. While agreement on how to reconfigure the second loan programme is unlikely before September, it is unlikely the EU will hold-out from paying funds to Greece to repay the ECB/EIB. In a consolidated sense, the official sector’s exposure to Greece remains the same, but the creditor changes (to the EFSF). Alternatively, Greece could issue T-bills and the Greek banks could absorb them with the assistance of ELA from the Greek central bank.
21 August: Spain auction. Bills
28 August: Spain auction. Bills
28 August: Italy auction. Bonds
29 August: Italy auction. Bills
30 August: Italy auction. Bonds
End-August: DBRS rating on Spain/Ireland. By the end of August, the DBRS ratings agency is due to have concluded its review of Spanish and Irish sovereign ratings.
September:
September: Moody’s due to conclude review of Spanish sovereign rating. Logically Moody’s should wait until there is clarity on direct recap before making a decision on Spain’s rating. Since governments have not made progress fleshing out a direct recapitalisation facility — indeed, have created some ambiguity as to whether it will be non-recourse — there is a distinct risk that Moody’s, in another move to be “ahead of the curve”, decides to downgrade Spain within the next 3 months. Moody’s currently rates Spain Baa3, the lowest investment grade rating.
September: Detailed bottom-up Spanish bank stress tests due for publication.
6 September: Spain auction. Bonds
6 September: ECB Governing Council meeting. If we are right about the outcome of the 2 August ECB meeting (dominated by “quantity” measures), we suspect that revisions to staff forecasts for growth and inflation are likely to be a basis for a 25bp rate cut.
11 September: Greece auction. Bills
12 September: German Constitutional Court ESM ruling. The German Constitutional Court is to rule on the complaints lodged against the ESM and fiscal compact. The chances of the ESM being vetoed are low. However, the Court might again strengthen the German Parliament’s prerogatives as regards future European integration (see Focus Germany, 20 July). Germany is the last approval needed for the ESM to come into effect. Then the first instalment of the capital has to be paid by the ESM members within 15 days of the ESM treaty entering into force. There are three other countries where Constitutional Court queries are outstanding — France, Austria and Ireland. France’s Constitutional Court will be deciding by mid-August. Neither Austria (which may take another 3-6 months) nor Ireland are large enough to hold back the ESM — the ESM will come into force when countries representing 90% of the subscribed capital have approved it. Both Germany and France have an effective veto power in that case.
12 September: Dutch Election. In April, the VVD/CDA minority government failed when Geert Wilders’ PVV party withdrew its support amid negotiations for the 2013 austerity budget. A crisis was averted when three smaller parties came forward to give support to a budget, but an early election was unavoidable. Domestic austerity and European crisis issues will likely play important roles in the election. Compared to the configuration of parliament at the October 2010 election, the latest opinion polls (Maurice de Hond) show PM Rutte’s VVD liberal party vying with the Socialist Party for the dominant party position. Both would gain 31 seats in the 150 seat parliament on the latest polls. This is an unchanged position for VVD, but a doubling of SP seats. SP are gaining at the expense of all other parties except VVD and neo-liberal D66. This may reflect a backlash against the austerity for 2013 which has broad party political support. SP have also taken a stance against euro rescue initiatives, voting against the ESM alongside the PVV and extracting a pledge from Dutch FinMin De Jager that parliament will vote on any future direct bank recapitalisation disbursements. Given the typical distribution of the vote among several parties, the questions are what coalition emerges from this election, how long it takes to form a government and what policies will it support? Markets in particular will be watching the ramifications for domestic fiscal policy (the 2013 Budget is a week after the election) and euro rescue initiatives.
12 September: Italy auction. Bills
13-14 September: G20 Finance Ministers and Central Bankers meeting. In Mexico.
13 September: Italy auction. Bonds
14 September: ECOFIN meeting. This is very likely the finance ministers meeting when adjustments to Greece’s second loan programme will be considered. The remaining EUR23bn recapitalisation of the Greek banks is due to complete by the end of September, assuming a positive review of the loan programme. This is also when finance ministers should have their first discussion on the proposals for a common bank supervisory regime under the ECB. Any delays, with knock-on delays for a direct bank recapitalisation mechanism, will disappoint the market. Options for a reconsideration of Ireland’s legacy bank bailout policies may also be discussed (decision not due until October ECOFIN meeting).
Its the same old technique used over and over again. Say you are going to do something, get the markets hyped up and then do nothing or as little as possible. Why stop when it works every time. During the week Draghi took his opportunity when Merkel was on vacation to hint at bond buying. The markets rallied as usual but watch for the sell off on monday because Schaeuble has denied any such action.
For days, it is speculated that the European Central Bank (ECB) is planning, together with the bailout fund EFSF Spanish government bond buy – so come back to Spain to cheaper capital. The “Sueddeutsche Zeitung” According to the euro countries willing to support this approach . Federal Finance Minister Wolfgang Schäuble (CDU) has now dismissed the reports in an interview with the newspaper “Welt am Sonntag”.
“No, at this speculation is not true,” Schäuble said the newspaper. The Finance Minister said it was already a sufficiently large aid package for Spain have been laced.
…….
Why will Germany, which Schauble says himself is in a very difficult position, and has already been very helpful to Spain, not provide more funding? Simple – unlike all other broke globalist neo-socialists, he believes that the market is actually right in punishing profligate spenders, and having bonds trade above 7% is not the end of the world. Of course, he is absolutely right.
CarlosMurphyUncategorizedComments Off on Spanish Finance Minister Begging Germany For Credit Line To Stall Full Bailout Request
With Spanish Bonds hitting 7.5% and €28 billon to be rolled over in October, Spain has been hoping that the ECB would go back to buying their bonds but unfortunately Germany looks to have blocked that route. The next step is to send Finance Minister Luis de Guindos to Germany and beg Schäuble for a line of credit to keep the country running. It is most likely going to be rejected to force a request for a full sovereign bailout, thus joing the club. Who’s next?
Spain faces a bond rollover of €28 Billion in October and is rightfully scared about 2-year bond rates of 6.5%.
This is a heavily Mish-modified translation from the article ….
Luis de Guindos will meet with Wolfgang Schäuble to negotiate measures noting the ECB is already 19 weeks without buying debt.
Eeconomy minister, Luis de Guindos, now travels to Germany for talks with German Finance Minister, Wolfgang Schäuble. The appointment is key because Spain is running out of time. With the 10-year bond about 7.5% and the risk premium on the 632 basis points, Guindos nevertheless insisted that Spain will not have to ransom all for a full sovereign bailout.
Instead, he asks for the European Central Bank (ECB) to resume purchases of Spanish bonds in the market.
Guindos believes Mario Draghi is not the problem. Rather, bond purchases have stopped primarily because Germany is opposed. To mutate this position and to convince Schauble to give permission to his emissaries at the ECB, Jörg Asmussen, and Jens Weidmann, Luis de Guindos traveled to Germany
Analysts are unanimous: An imminent financial collapse is at stake. If pressure on Spanish bonds continues and Treasury loses its access to the bond market, Spain cannot cope with the massive debt maturity that awaits him in October, close to the 28 billion euros. Amounts may be even greater if Spain has to funnel money to the regions requesting the help of special liquidity fund.
Therefore, sources close to the government have admitted they are considering other alternatives. For example, the negotiation of a temporary line of credit with which to address the maturity of its debt, and perhaps even financial assistance for Spain’s regional governments.
This option is based on a premise well known in the eurozone, of buying time. A credit line would serve to dampen fears today, waiting for the agreements reached at the June summit, including the implementation of a single banking supervisor and an operational Stability Mechanism.
Wow, the banking system around the world is taking a beating. In the last few weeks we have had LieBor, HSBC money laundering, Irish bankers arrests and now in South Africa, the 4 biggest banks and Reserve Banks are to be taken to court because the money lending (fractional reserve lending system that we all use) is fraudulent and unconstitutional.
In what certainly has the hallmarks of a David vs Goliath battle, SA’s four biggest banks and the Reserve Bank have been served with summons to defend themselves against allegations of unconstitutional banking practices.
The papers were served by the sheriff of the court on behalf of the plaintiff, a non-governmental and not for profit organisation, New Economic Rights Alliance (NewERA).
NewERA is asking the High Court to declare SA’s money lending system fraudulent and unconstitutional. The system of loans and credit advancements is an “unfair, self-serving, monopolistic, economic activit[y] that [results in] arbitrary deprivation of property, monetary depreciation and inappropriate conduct,” court papers allege.
According to Scott Colin Cundill, director of NewERA, the action is not financially motivated. “We are not suing for money. We are asking the court to suspend all legal action between the banks and SA citizens, until a full investigation has been undertaken into our banking system.”
FNB, Standard Bank, Absa and Nedbank confirmed receipt of the summons. While Nedbank was still studying the summons, FNB, Absa and Standard Bank confirmed that the matter will be fully defended.
3 practices at the heart of the case. 1 Fractional Reserve banking, 2 Seigniorage, 3 Securitisation.
At the heart of the issue are three trade practices (in particular) conducted by banks. NewERA intends to show that these are unconstitutional.
The first is the fractional reserve banking system. The conventional view of this system is that only a fraction of bank deposits are backed by actual cash-on-hand and are available for withdrawal. This is done deliberately in order to expand the economy by freeing up capital that can be loaned out to other parties. “Our issue with this is that new loans can be created without having the actual cash to back them,” says Cundill.
The second is the process of seigniorage. This is the profit that the SA Reserve Bank (and governments around the world) earn from the difference in the cost of printing money and the face value of that money. “The way in which these notes enter the banking system and therefore the public, and thus how seigniorage is charged, is a very little known or understood process.”
The last matter that NewERA is taking issue with is securitisation. This is the financial practice of pooling various types of contractual debt such as residential home or car loans, repackaging it and selling this consolidated debt to various investors. It was the practice of selling toxic debt, packaged as collateralised mortgage obligations, which triggered the financial crisis in 2008.
NewERA will also argue that the lack of transparency regarding how banks make use of depositors’ money, prevents individuals from making informed decisions when dealing with agreements that affect their financial well-being.
“What we want is the development of co-operative, sound economic principles to ensure that risk and, or fault does not devolve onto the consumer unnecessarily and unconditionally, causing loss of property, investments and value,” says Cundill.
NewERA has 154 members who are joined in the application.
The application is also supported by more than 115 000 people, Cundill says.
The banks have ten days in which to file their intention to defend.
This euro debt crisis lurches on as early reports are surfacing from Italy of many cities struggling, so much so that they are even considering closing schools. Last week it was regions in Spain that were bust followed by a spike in Spanish bonds, now the focus will shortly shift to Italy and already we are seeing an increase in bond prices. The EURUSD is currently at 1.208, at what level will it be by the end of the summer?
ITALY’S financial outlook darkened today amid warnings that 10 cities are at risk of bankruptcy and schools may not be able to open in the autumn because of drastic spending cuts.
The cities at risk of running out of money include Naples, Palermo in Sicily and Reggio Calabria, on the toe of the Italian boot, according to the Italian press.
“The situation is becoming worse by the day,” said Graziano Del Rio, the president of a national association of municipal councils.
The warning came just days after Mario Monti, the prime minister, expressed fears that Sicily, which has a high degree of fiscal autonomy, was on the brink of a default.
Cities and towns in southern Italy have for years been plagued by mismanagement, corruption, the wasteful use of EU funds and infiltration by the Mafia. But the “black list” of cities at risk also includes some in the north of Italy such as Alessandria, in the Piedmont region.
Italy’s regions face “a serious situation”, said Annamaria Cancellieri, the interior minister, although she downplayed concerns that Sicily would be forced to default.
Since when have things got so bad that schools need to close? Obviously, this points to how serious the situation is brewing in Italy. Why couldn’t it have happened in my day? Somebody always benefits from a crisis 😉
Deep cuts to Italy’s provinces may mean that some schools will not be able to open after the summer holidays, the president of the provincial government association said. “With these cuts we won’t be able to guarantee the opening of the school year,” said Giuseppe Castiglione.
Mr Monti hopes to reduce the country’s €2 trillion national debt by dissolving 64 of Italy’s 107 provinces, addressing long-standing concerns that they are an unnecessary and wasteful tier of government.
The government plans to slash €500m from the provinces’ budgets this year and a further €1bn in 2013.
The Monti government is pushing ahead with an ambitious spending review that envisages cuts to government services worth €26bn over the next three years.
Mr Monti reiterated that he will step down in Spring 2013, paving the way for elections.
Finally, Berlusconi will make another bid to be president once Monti steps down. The way look at it is, this presidential election can be viewed as an IQ test for the nation. A vote for the corrupt Berlusconi is a vote for Dumocracy.
Silvio Berlusconi has indicated that he will try to become prime minister for a fourth time, a declaration that has only increased market nervousness over Italy’s economic future.
First Catalonia followed this week by Valencia and now it looks like the rest are queuing up for their handout. Wisdom tells you to get in their first otherwise it may be too late. But if this is happening to Spain, is Scilly only the start of it for Italy? Its more likely we will also be hearing from Italy in a similar manner.
…now virtually everyone else is set to demand a bailout. From Bloomberg: The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone.”
“Spain created the 18 billion-euro ($23 billion) bailout mechanism last week to help cash-strapped regions even as its own access to financial markets narrows.” What Spain’s perfectly insolvent and highly corrupt regions also know is that the bailout money, like in the case of the ESM, will be sufficient for one, perhaps two, of the applicants. The rest will be out of luck.
Obviously everyone is going to be looking to the Germans to bail them out, but at what price to Germany?
Where the bailout money will come from? Ultimately from Germany of course. There is however one minor glitch. Some 80 millions Germans may soon be rather angry to learn that while they are working extra hours to fund the rescue of a few insolvent windmills, their own most legendary racetrack, the Nürburgring, is facing bankruptcy as soon as next week.
……
You want to piss a German off? Stand between them and their local Formula 1 race.
What is most concerning however, as FAZ reports, is that “the money will last [only] until September”, and “Spain has no ‘Plan B”. Yesterday’s market meltdown – especially at the front-end of the Spanish curve – is now being dubbed ‘Black Friday’ and the desperation is clear among the Spanish elite. Jose Manuel Garcia-Margallo (JMGM) attacked the ECB for their inaction in the SMP (bond-buying program) as they do “nothing to stop the fire of the [Spanish] government debt” and when asked how he saw the future of the European Union, he replied that it could “not go on much longer.” The riots protest rallies continue to gather pace as Black Friday saw the gravely concerned union-leaders (facing worrying austerity) calling for a second general strike (yeah – that will help) as they warn of a ‘hot autumn’. It appears Spain has skipped ‘worse’ and gone from bad to worst as they work “to ensure that financial liabilities do not poison the national debt” – a little late we hesitate to point out.
Egon von Greyerz interviewed by King World News does a quick calculation but you get the picture. With debts somewhere in the region of $1.5 quadrillion is quite clear politicians are only interested in nursing the situation on until finally it all comes down around them.
“Spanish rates have broken back above the 7% level once again, but in reality we know that many European countries will never be able to repay these debts. You now have a total worldwide debt of around $150 trillion. If you add to that contingent liabilities, unfunded liabilities, pension funds, etc., you are talking about $500 trillion. If you add to that the outstanding derivatives, which are around one quadrillion dollars, and there are no reserves for them. These are issued without any real asset backing them. If you combine the two figures you are at a staggering one and a half quadrillion dollars. That’s against world GDP which is around $50 trillion.
So you are talking here about a leverage of 30 times global GDP….”
“How can anyone in the world invest in any government bond when they know that it can never be repaid? The world is simply drowning in debt. This is why it is guaranteed that governments will print money.
So the money printing will come and the hyperinflation will come because without that we have no banking system and no financial system left. You are talking about hundreds of trillions of dollars that potentially need to be printed. The effect of this on the global economy will be disastrous.
Prices of hard assets will go into the stratosphere, and this, of course, includes gold and silver. Last time we talked about my target on gold of $3,500 to $5,000 over the next 12 to 18 months, and then over $10,000 in 3 years. But with all of the money creation we are talking about, the world will experience massive inflation. We already know that gold went from 100 marks to 100 trillion marks, from 1919 to 1923, during the Weimar Republic.
With world debt at much greater levels today vs that time period, the gold price will eventually have lots and lots of zeros after it. But people who are still holding paper money may very well find it is worthless. At least gold will protect your purchasing power.
What has to be said today to holders of government debt, which yields nothing, is when you have governments like the US, Spanish, Greek, and now even the German government with all of their ballooning commitments, there is no government that will ever be able to repay these debts.
This is why it’s so important for KWN readers to understand the consequences and be able to protect themselves. Readers and listeners must understand the risks in the system here and take precautions. We may be in the summer doldrums, but the next move will come. It’s not far away at this point.”
More good news if true, that the price fixing by the LBMA of gold is coming to an end. The LondonTrader gave and interview on KingWorldNews from his source regarding the moves in the gold market including China’s continuing aggressive buying.
With many global investors still concerned about the recent price action in gold and silver, today King World News interviewed the “London Trader” to get his take on these markets. The source told KWN that “… the LBMA’s price fixing scheme is coming to an end.” The source also said that because of this, the eventual “move in gold and silver will literally frighten most people.”
Here is what the source had to say: “It is now beginning to be discussed, openly, that the unallocated gold is not at the banks. This is definitely the case with many of the allocated accounts as well. The reason I’m pointing this out is you have a more ‘open’ disclosure that’s taking place with regards to this.”
“This tells me there is something major that is happening behind the scenes. It tells me that the LBMA’s price fixing scheme is coming to an end. You have these naked short positions, that are incomprehensible to most people, in both gold and silver….
“As this scandal is brought to light, that the unallocated gold and silver are not there, and much of the allocated gold and silver is not at these banks either, and as you see these naked short positions unwound, the world will witness a massive price rise in in both gold and silver. The move in gold and silver, at that point, will literally frighten most people. They simply won’t understand what is happening.
When someone goes to a bank and deposits money, if you look at the small print, you don’t actually own that money, you’ve simply loaned it to the bank. The banks will then turn right around and lend ten to one or whatever leverage they determine to use with your cash. Well, when there is a run on the banks, as there has been in Europe, the money is printed by governments and given to the customers to calm things down.
The underlying problem here is that when the run on physical gold and silver begins, how will the banks print the gold and silver? It’s not possible. So something is brewing here. There’s no smoke without a fire. The reason this information is beginning to be discussed more openly is because of legal reasons. They need to be able to say, ‘We disclosed to people that the gold and silver wasn’t there.’
Yes, this will include a scandal at the LBMA in those unallocated accounts. The paper leverage in the LBMA system is off the charts. Investors believe their gold and silver is sitting in those unallocated accounts, and they will be in shock when they find out it isn’t there.
We are talking here about a run on the bullion bank. As this unfolds there will be a failure. These people will only receive the fixed price before trading is halted. This will not be called a default. Then there will be a massive gap in the price of gold and silver. But the bullion banks will not be allowed to go bankrupt during this process. There is a ring of counterparties here. If one of them fails, the whole system can fail. So they will not be allowed to fail.”
The London Trader also stated: “I would also add that demand for gold from China is unceasing. The Chinese not only want to diversify out of dollars, but now they also want to diversify out of the euro as well. They are trying to do this in size. They want out of those currencies, and what they are doing is exchanging them at the fixes in London for gold, and this will surprise some people, but we are beginning to see it in silver as well.
Demand from China.
Gold is the primary focus, but very recently, and on every dip, we are seeing significant purchases of silver in size. So yes, demand from China, it’s unceasing. They want out of these debasing currencies. I would add that they are buying anything that’s tangible, land, timber, mines, art, etc..
It is absolute nonsense when people speculate the Chinese may stop buying gold and silver. When you see 315 tons of gold was purchased by China in the first five months of the year, that’s just the tip of the iceberg. That 315 ton figure that was recently reported is patently false. That’s just what they can’t hide. The actual amount of gold China has accumulated is many times that 315 ton figure.
The buying is relentless. It’s every single fix, every single day. The Chinese are eventually planning to have gold back their new currency, which is going to replace the dollar as the reserve currency.”
The London Trader also added: “It’s not just Chinese demand impacting the physical markets. It’s the Middle-Eastern countries and Russia and so on. Investment demand for silver is also picking up at these levels. Demand is coming from the Middle-East, and India has also become a bigger buyer of silver.
I would also add that you see a great deal of negative press regarding gold. Many are saying, ‘Look at 2008, they are going to sell gold along with everything else and it’s going to crash.’ What people don’t understand is gold is on its way back into the financial system.
We had the recent proposal to have gold categorized as a Tier-1 asset. This moves the risk weighting from 50% to 0%. Most people have not grasped the full significance of this proposal. This will change the entire mechanics of the gold market when there is a time of stress, such as the one we witnessed in 2008.
Talk of making Gold a Tier-1 asset and what this could mean.
This is one of the major reasons why those calling for a collapse in gold are going to be proven wrong. Yes, in 2008/2009 we did see a significant correction in the price of gold, and that was a result of the liquidity drying up. But in 2008, because gold was not considered a Tier-1 asset, it forced the banks to sell their only remaining liquid asset in order to raise cash. This was done to meet margin requirements.
There was so much gold hitting the bid all at once that it was like a huge bottleneck. This instigated a $200, waterfall-type decline, that amounted to a roughly 20% correction in gold in just 30 days. This took place against tremendous fundamentals for gold. In fact, the fundamentals for gold were so strong, that when gold bottomed in 2009, it only took just over 30 days for gold to break back above the level where the waterfall decline first began.
The difference this time around is that gold may be considered a Tier-1 asset, and what that means is that it will be equal to cash or Treasuries. So there will be no need for banks to liquidate gold in order to meet margin requirements. You may, instead, see fresh new money entering the gold market. It’s going to provide a bid where there was no bid in 2008.”
Excellent article from Michael Krieger. May the waking process continue. One positive in all this shift fest were are experiencing is more and more people are waking up and understanding. Go Back to Sleep.
As reported in ZeroHedge, Spanish bond yields went over 7% and the Budget Minister in the Spanish Parliament this morning came out with the line
“There’s no money in the public coffers.”
What a start to the day but it got even worse than that from the Minister
The Budget Minister went on in Parliament, this morning, to proclaim that “There is no money to pay for public services” which is quite a statement to make after the Prime Minister had told everyone that Spain was fine and that only the banks were having some issues. Of course this same Prime Minister said bailing out the Spanish banks was a “Great victory for Europe” so we already know that he is suffering from some serious psychological deficiencies and needs some help. Poor Mr. Rajoy; where is Sigmund Freud when you need him?
“The European Central Bank intervened in the secondary market to buy public debt to avoid the European monetary system collapsing. Spain would have collapsed without this intervention.”
-Budget Minister Montoro in Parliament this morning in Madrid.
Economists are not noted for their humour but this story is a classic.
Recently two noted Spanish economists were interviewed. One was always an optimist and one was always a pessimist. The optimist droned on and on about how bad things were in Spain, the dire situation with the regional debt, the huge problems overtaking the Spanish banks and the imminent collapse of the Spanish economy. In the end he said that the situation was so bad that the Spanish people were going to have to eat manure. The pessimist was shocked by the comments of his colleague who had never heard him speak in such a manner. When it was the pessimist’s turn to speak he said that he agreed with the optimist with one exception; the manure would soon run out.
It should come as no surprise that China, the world’s largest gold producer and buyer should want to become a major gold trading center. The Wall Street Journal has reported such plans after being briefed by an insider.
China has proposed to broaden trading of precious metals in its local market in order to help China become a “major gold trading centre” (see News).
The Wall Street Journal was briefed about China’s plans by “a person involved with the matter.” The paper reports that “the move could increase liquidity and help Beijing gain stronger pricing power for key commodities like gold”.
China is the largest consumer and now the largest producer of gold in the world and has aspirations to become a major gold trading center on a par with London and New York. China is also the fifth largest holder of gold reserves in the world after the U.S., Germany, France, Italy (see table).
Clearly they have ambitions far beyond a major Gold trading center but as a worlds reserve currency, possibly even THE worlds reserve currency.
Chinese officials have spoken of China’s aspirations to have gold reserves as large as the U.S. in order to help position the yuan or renminbi as a global reserve currency. Indeed, it would be only natural for China to aspire to have their currency become the global reserve currency in the long term.
In the longer term, being a major gold trading center would make China a more powerful financial and economic player and indeed could allow them to influence commodity and other important market prices. Indeed, Reuters reported that becoming a major gold trading center “would boost the country’s clout in setting global prices”.
The journal reports that “Beijing’s tight grip on commodities trading and rigid capital controls are among the obstacles in the way.”
The move is also part of the broader financial reforms that Beijing has launched in recent weeks, loosening some of the restrictions on securities investment and allowing banks to price loans at cheaper rates than in the past, that seek to grant market forces a bigger role in both the economy and the capital market.
The moved proposed by market officials would expand trading of precious metals from designated exchanges to the country’s vast interbank market, according to the person involved. The Shanghai Gold Exchange has released draft rules for such interbank precious metals trading, which will include spot, forward and swap contracts for the commodities, said the person.
Current limitations.
At the moment, producers, consumers and investors can trade only spot and futures contracts in gold and silver on the Shanghai Gold Exchange and the Shanghai Futures Exchange, respectively.
Due to limited membership on the two exchanges, many investors, including banks, aren’t able to directly trade the precious metals on the exchanges.
The draft rules were jointly developed by the Shanghai Gold Exchange, which is the world’s biggest marketplace for spot gold trading, and the China Foreign Exchange Trading System, a central bank subsidiary that oversees onshore currency trading.
Plans are afoot to get around this and expand gold trading.
According to the draft rules, the authorities are aiming to launch the interbank trading on Aug. 31, starting with gold contracts, said the person.
That would make gold the first commodity to trade on the interbank market.
The authorities will introduce a “market maker” system for the planned precious metals trading—the first time the system will be used to trade a commodity on the interbank market—with transactions done on an over-the-counter basis as compared to the exchange-based pricing mechanism.
Market makers are firms that stand ready to buy and sell a product at a publicly quoted price to facilitate trade.
An over-the-counter market would allow investors, in this case banks, to trade in large quantities that far exceed the Shanghai Gold Exchange’s current trading volumes, analysts said.
According to the draft rules, banks are allowed to use the new precious metals contracts in the interbank market for proprietary trading only.
The Shanghai Gold Exchange is inviting banks, mostly members of the exchange, to submit applications to take part in the trading, said the person, who expects most major and midsize banks to participate.
The move to let banks become market makers also shows the authorities’ desire to give such better-established and more sophisticated institutions more power in setting prices for major commodities, a common practice in developed markets, said Jiang Shu, senior precious metals analyst at Industrial Bank Co.
Current restrictions and capital controls remain an obstacle to China becoming major gold trading center and to the renminbi becoming an accepted global reserve currency.
The move by China to expand precious metals trading to their glowingly important and vast interbank market is important and another step towards China becoming an economic power on the world stage and one that will rival European nations and the U.S.
Probably the first of many case to be taken against the banks for the Libor scandal as Baltimore City looks set to be first up. The difficulty is going to be the burden of proof whereby Baltimore has to show that the allege fixing in London directly affected Baltimore. This could open the floodgates to similar lawsuits from other US cities.
Baltimore is lead plaintiff in a class action lawsuit that alleges that banks including Barclays, Bank of America, HSBC, JP Morgan and UBS conspired to fix a set of key interest rates – the London Interbank Offered Rate, or Libor – costing the city millions in the process. So far, the Libor scandal has played out mostly under the radar in the US. But now it is gaining traction in Washington, and Baltimore’s suit is putting a human face on a scandal legal experts predict could end up being the most costly of the credit crisis.
Firefighters, services for the elderly, school programmes – all these and more are being cut as a direct result of the actions of colluding bankers, Rawlings-Blake claims.
According to the court documents, Baltimore bought “tens of millions of dollars worth of interest-rate swaps” during the period when the alleged fixing took place. The suit, filed with top Washington law firm Hausfeld, alleges that between August 2007 and May 2010 the defendants conspired to suppress Libor below the levels at which it would have been set had they accurately reported their borrowing costs. Those manipulations had “severe adverse consequences” for Baltimore and others, according to the suit. Other cities are watching carefully and a raft of litigation is expected in the US.
The city had no choice but to fight, said Rawlings-Blake. “We are faced with closing fire companies, closing recreational centers … We have services that have been cut year after year; services that people depend on. Opportunities for young people, the cleanliness of the city: everything is affected by the budget,” she said.
Ultimately the US may take an Anti-trust case similar to that taken against the tobacco industry.
Stephen Bainbridge, a professor of law at UCLA, said the case was “one of the worst examples of abuse of trust that I can remember in 25 years of following corporate governance”. Given the scale of Libor’s influence, Bainbridge said, this could emerge as “the defining financial scandal of the meltdown”.
Bainbridge believes the justice department may build an anti-trust case against those involved that could ultimately lead to a settlement as large as that agreed in the US’s massive suit against the tobacco industry. Anti-trust laws allow three times the damages for those convicted of collusion.
But he believes a suit like Baltimore’s may prove harder to prove. The city’s lawyers will have to prove direct “loss causation” – in other words, that bankers allegedly fixing rates in London directly hit Baltimore’s bank balance.
“Proving that chain of events can be difficult,” said Bainbridge.
phenomenon with considerable skepticism, and have refrained from commenting on it, save linking to stories such as GM canceling all of its Facebook ads because they didn’t see the benefit.
alternative economics 