Matt Taibbi explains illegal LIBOR fixing by the banksters
John Aziz of Azizonomics / Propping Up The Gold Price?
Ultimately, the surge in demand for gold reflects one thing alone: distrust of the increasingly messy, interconnected, over-leveraged and fraudulent financial system. Whether it is China — fearful of dollar debasement — loading up on bullion, or retail investors in the United States or Europe — fearful of another MF Global (or PFG, or Lehman Brothers) — stacking Krugerrands in their basement, demand for gold reflects distrust in finance, distrust in the financial establishment, distrust in banks, distrust in regulators, distrust in government and distrust in the financial media. And it is that distrust — not (by any stretch of the imagination) central bank interventionism — that is the force moving demand for gold.
The distrust is not going anywhere because the system is still rotten. We all know — even Business Insider readers know deep down, I think — that there is something exceedingly rotten at the heart of the global financial system. We don’t know quite how rotten, how deep the rabbit hole goes, who will be implicated, or how fast. But with every LIBOR-rigging scandal (which the Fed, of course, was aware of), every raided segregated account, every devalued pension fund, every failed speculative “hedge”, every Facebook or Zynga pump-and-dump, we get closer to the truth.
There will be no bear market for physical gold until trust in the financial system and regulators is fixed, until markets trade fundamentals instead of the possibility of the NEW QE, until governments represent the interests of their people instead of the interests of tiny financial elites.
Roubini has a suggestion…
ROUBINI: Break Up The Banks Or Hang Someone In The Streets
“Nobody has gone to jail since the financial crisis. The banks, they do things that are illegal and at best they slap on them a fine. If some people end up in jail, maybe that will teach a lesson to somebody. Or somebody hanging in the streets.”
New York Times, Gretchen Morgenson Applaud British, Issue Challenge To American Regulators Over LIBOR Scandal
POSTED: July 9, 11:17 AM ET
Morgenson notes that the Barclays CEO, Diamond, seemed shocked that there were actual consequences for his misbehavior:
MR. DIAMOND seemed shocked to be pushed out. An American by birth, he probably thought he’d be subject to American rules of engagement when confronted with evidence of wrongdoing at his bank. You know how it works on this side of the Atlantic: faced with a scandal, most chief executives jettison low-level employees, maybe give up a bonus or two — and then ride out the storm. Regulators, if they act, just extract fines from the shareholders.
Libor Exposure Of Banker Corruption, Bank Of England And U.S. Fed Both Implicated
Interest-Rates / Market Manipulation
Jul 05, 2012 – 03:03 AM
Few observers make the connection, but the current LIBOR scandal is a middle inning of two important events. The first is the demise of the Western banker leadership crew. The executives from the most powerful banks will be last to be deposed, all sharing an ethnic strain. The second is the open fracture of the Western financial system.
… The London Interbank Offered Rate scandal will erupt into an uncontrollable firestorm, hitting one chamber and then the next, with rapid contagion.
The Bank of England and the US Federal Reserve are both implicated, but they will skate until the end game. They control the prosecutors and the news networks. Few yet connect the LIBOR rigged prices to the important parts of the financial kingdom run by the harried banker elite.
… The evidence for price rig has been glaring for years. The big banks have skimmed the difference for profit for years. Imagine selling milk or concrete with a variation in price at the wholesale level, enabling vast profits from skimming. It has been permitted for the big banks, a grand blemish on an already scarred sector.
Anyone with a solid intelligence quotient, a curious manner, and a suspicious streak can detect the recent trail. The MFGlobal client account thefts were a coming out event for the corruption. The JPMorgan margin calls on various positions had become an acute problem. They were very short on cash. With the upcoming December 2011 gold & silver delivery notices adding strain to the near breakpoint, JPMorgan made a decision. They stole the MFGlobal client accounts. They reneged on all precious metals contract delivery. They put all the to-be-delivered metal in their own account.
Mission Accomplished, the catch phrase for unspeakable colossal permitted corruption in the USGovt and US financial markets. The losses in May by JPMorgan in the sovereign bond and Interest Rate Swap arena provided the Prima Facie case for the MFGlobal thefts, showing deep losses that will escalate over time.
The officials at JPM have been telling scattered truths over the course of the last several weeks. They admit at times that their profound losses are tied to Interest Rate Swaps, which experienced analysts and traders can tell are for defense of the USTreasury Bonds and their entirely unwarranted 0% yield.
TBTF Get TBTFer: Top 5 Banks Hold 95.7%, Or $221 Trillion, Of Outstanding Derivatives
Submitted by Tyler Durden on 03/26/2012
AIG American International Group Bond Central Banks Fail Morgan Stanley Too Big To Fail
Every quarter the Office of the Currency Comptroller releases its report on Bank Derivative Activities, and every quarter we find that the Too Big To Fail get Too Bigger To Fail. To wit: in Q4 2011, of the total $230.8 trillion in US outstanding derivatives, the Top 5 banks (JPM, BofA, Morgan Stanley, Goldman and HSBC) accounted for 95.7% of all Derivatives.
In some respects this is good news: in Q2, the Top 5 banks held 95.9% of the $250 trillion in derivatives. Unfortunately it is also bad news, because $220 trillion is more than enough for the world to collapse in a daisy chained failure of bilateral netting (which not even all the central banks in the world can offset).
What is the worst news, is that the just released report indicates that in addition to everything else, we have now hit peak delusion, as banks now report to the OCC that a record high 92.2% of gross credit exposure is “bilaterally netted.”
While we won’t spend much time on this issue now, it is safe to say that bilateral netting is the biggest lie in modern finance(read How US Banks Are Lying About Their European Exposure; Or How Bilateral Netting Ends With A Bang, Not A Whimper for an explanation of this fraud which was exposed completely in the AIG collapse).
And just to put this in global perspective, according to the BIS in the first half of 2011, global derivative gross exposure increased by $107 trillion to a record $707 trillion.
It will be quite interesting to get the full year report to see if this acceleration in gross exposure has increased. Because if it has, we will now know that in 2011 European banks were forced up to load up on several hundred trillion in mostly interest rate swap exposure.
Which can only mean one thing: when and if central banks lose control of government bond curves, an rates start moving wider again, the global margin call will be unprecedented. Until then we can just delude ourselves that central planners have everything under control, have everything under control, have everything under control.
Top 5 bank derivative exposure: