Tuesday, April 10, 2012

A Too-Big-To-Fail Whale Tale, a Lousy Jobs Report, and "Lazy Methodology" 9/4/2012

Welcome to Capital Account. Last week we told you about the "London Whale" - the London-based Bruno Iksil of JP Morgan Chase. He has reportedly amassed derivative positions so large that he's driving price moves in the $10 trillion market for credit derivative indexes. Is this yet another sign that too big to fail banks are taking outsized risks with federally insured money? Would they take this huge positions that have the ability to drive price movements in this fashion if they didn't know that their very existence was subsidized and that they had an implicit backstop from the central banks? Does this make the case for the Volcker Rule, and if not, what does it make the case for? We will speak to author and financial commentator Karl Denninger about it during the show.

And US stocks fell today after the S and P closed out its worth week of 2012. Media reports are saying it is the reaction to a bad jobs report. We'll back up and look at the big unemployment picture with Karl Denninger, and get his take, as he has been writing about this since last week. And speaking of economic problems, 60 minutes ran a piece this weekend that we took a little offense at, namely the perpetuation of this myth that Greeks are "lazy." In one part of the erroneous segment, the reporter claimed that "in the past, if Greece found its accounts overdrawn it would simply print more money in order to accommodate the relaxed Greek lifestyle." This is ABSURD. It shows a complete lack of understand of monetary policy. The only way that a country can subsidize its lifestyle by printing money is if its currency is the global reserve currency. Ergo, the United States. When the united states prints money, it steals purchasing power from people all over the world who hold dollars. When the Greek government would print Drachmas, there were no foreign holders of that currency to rob from. The effect was only to steal money from the industrious Greeks in the private sector and transfer the wealth over the public sector. If there were any "lazy Greeks" who were being subsidized, it was at the expense of the "industrious Greeks."

Reality Check: CBS 60 Minutes Propagates "Greeks are Lazy" Mythology 9/4/2012

60 minutes ran a piece this weekend that we took a little offense at, namely the perpetuation of this myth that Greeks are "lazy." In one part of the erroneous segment, the reporter claimed that "in the past, if Greece found its accounts overdrawn it would simply print more money in order to accommodate the relaxed Greek lifestyle." This is ABSURD. It shows a complete lack of understand of monetary policy. The only way that a country can subsidize its lifestyle by printing money is if its currency is the global reserve currency. Ergo, the United States. When the united states prints money, it steals purchasing power from people all over the world who hold dollars. When the Greek government would print Drachmas, there were no foreign holders of that currency to rob from. The effect was only to steal money from the industrious Greeks in the private sector and transfer the wealth over the public sector. If there were any "lazy Greeks" who were being subsidized, it was at the expense of the "industrious Greeks."

The 60 minutes piece titled, "An Imperfect Union," also attempts to paint the problems of Europe as those caused by an indulgent and profligate south that was living beyond its means at the expense of industrious northerners. One of the mistakes the producers make is to claim that the Germans run balanced budgets. In fact, Germany was a country that broke the very Maastricht treaty that it so clamored for by running deficits in excess of 3% of GDP. It continues to run budget deficits, despite the claims made by the producers at 60 minutes.

We don't want to hammer CBS and 60 minutes too much for this. They do some good work, and we are appreciative. However, the way that Greece and the southern european countries are characterized in the media has become farcical. They have their own problems, no doubt, but these were problems that the southern countries had before they joined the Euro Area, and things were not as bad then. The subsidies did not come without a price. They meant more jobs and higher wages for the north, which was collecting future IOU's from countries like Greece and Italy.

Mike Maloney breaks down Price Manipulation in the Gold and Silver Market 6/4/2012

Welcome to Capital Account. Hedge funds and investors have reportedly been puzzled by weird movements in credit markets. According to the Wall Street Journal, markets have been rattled by one trader with deep pockets being called the "London Whale" who it's believed works for JP Morgan. It just goes to show how individuals and firms can move markets. Today, we'll talk about manipulation in the gold and silver markets with Mike Maloney, of GoldSilver.com. He believes that manipulation is going on (contrary to the words of Blythe Masters, who spoke with CNBC yesterday, affirming that JP Morgan is simply "hedging" it's silver positions with large open shorts), but that rather than being a bad thing for individual investors, simply presents an opportunity for buying more metal and cheaper prices. This is something that the state of South Carolina failed to grasp in a recent report it conducted, in which it found that the price of gold and silver is manipulated. Rather than concluding that this manipulation, rather than presenting an opportunity for investment, prohibits the state of South Carolina from investing in precious metals.

An US payrolls for March rose far less than expected which means people are talking about an extension of the Federal Reserve's stimulus measures -- buzzing about more. We talk often about the malevolent effects of fractional reserve banking based on a pyramid of fiat liabilities and fiat currency, but what about the fractional reserve gold pyramid scheme? What about the gold ponzi scheme? We'll examine the evidence of, what CTFC commissioner Bart Chilton calls, "ponzimonium."

And how does the entire manipulation go down? Mike Maloney has presented us with a fantastic chart that shows how trading in Gold during market ours in the US differs greatly from that in after-market hours, and how well an investor would do had he or she bought gold at various times during the day over the course of the bull market.

Economic Hit Man John Perkins on the New Banana Republic and USA, Inc. 5/4/2012

Welcome to Capital Account. US President Barack Obama signed the J.O.B.S. act today, otherwise known as the jumpstart our business startups. Only this so called success rolls back securities laws for companies going public with up to a billion dollars in revenue and according to critics, what it really does is jumpstart frauds like wall street pump and dump schemes. Surprisingly, or maybe not so surprisingly, it has been touted as a bipartisan achievement. Is this simply just another commitment by the washington machine, politicians and subsidized corporations to get their "corporate welfare" fix? It's something that our guest, economic hitman John Perkins, has been writing about for a long time. His latest book "Hoodwinked," covers the power of corporations, and their ability to influence laws in such a way so that outcomes are delivered in their favor.

And although banks, too, are corporations, they are a special kind and deserve special attention. After all, they are so special, that Ben Bernanke had, what appeared to be his semi-annual job evaluation last week. Fortune magazine reports on a private lunch between Bernanke, and the biggest bank CEO's and executives on wall street (and heads of other large financial services firms). Attendees included Jamie Dimon of J.P. Morgan, Bob Diamon of Barclays, Brady Dougan of Credit Swuisse, Larry Fink of Blackrock, Gerald Hassell of Bank of New York Mellon, Glenn Hutchins of Silver Lake, Colm Kelleher of Morgan Stanley, Brian Moynihan of Bank of America, Steven Schwarzman of Blackstone Group and David Vinar of Goldman Sachs. We ask our guest, author of Hoodwinked and Confessions of an Economic Hitman, John Perkins, for his thoughts on the power of the financial sector and its role in our economy and political system.

And sticking with banks, it looks like the God metaphor made famous by Goldman Sach's CEO Lloyd Blankfein, just won't go away from the public rhetoric concerning the heralded investment bank turned holding company turned...god knows what...Now it appears Goldman is featuring top executives with nuns. What's next, will Blankfein appear amongst a pantheon of Gods? And it isn't just the banks that are pushing this, the financial media doesn't stop short of deifying the big bank executives. We'll show you what went on between Jim Cramer and his colleagues on a CNBC panel discussing Jamie Dimon and his "whining" routine on "Loose Change."

Krugman "Knocked out of Neoclassical Orbit" by Steve Keen's Meteoric Rise! 4/4/2012

Welcome to Capital Account! The internet has been abuzz over the blogosphere boxing match between Nobel Laureate and New York Times columnist Paul Krugman and debunker of economic conventional wisdom and superhero economist, Steve Keen. Remember that game "Mike Tyson's Punch Out?" Well, let's just say that Steve Keen gave Paul Krugman one upper-cut too many for the establishment intellectual to handle. Krugman declared victory and walked away before he could be dealt any more blows to his economic ego -- not before Krugman could land one more low blow though...we'll break it down!

And a too big to fail bank agrees to pay 20 million bucks to settle allegations from regulators that it mishandled customer funds before a major broker's collapse, but the details may surprise you. If you guessed JP Morgan, then you got half of the story right, but if you guessed the broker was MF Global, well, we have news for you: it's Lehman Brothers. That's right, JPMorgan Chase agreed to pay a $20m fine to settle allegations that the bank mishandled Lehman Brothers' customer funds for roughly two years before the broker filed for bankruptcy court protection. The Commodity Futures Trading Commission alleged that JPMorgan, at the request of Lehman, began using customer funds in November 2006 to calculate how much credit it would extend to Lehman Brothers intraday, in violation of customer segregation account rules.

And last Friday we exposed the myth of the billionaire investor/regular joe Warren "All You Can Eat" Buffett's proclaimed desire to be taxed more. Now he's singing a different song...LITERALLY. The owner of the Omaha World-Herald newspaper serenaded a crowd singing I'm just a paper boy. We'll attempt to demystify the oracle's message.

Marc Faber, "The Ego of Mr. Bernanke has been Badly Inflated" 3/4/2012

US President Barack Obama gave a speech accusing Republicans of "social darwinism" with budget cuts they are proposing, calling them antithetical to the country's history as a land of opportunity. But how much opportunity is there left exactly? We speak with Dr. Marc Faber, publisher of the Gloom Boom & Doom report. He says that wealth destruction and social unrest may be on the way for Western economies, whose citizens are being outcompeted by those in emerging economies who are willing to work harder and are far hungrier than Westerners are.

And yesterday, Wall Street had a strong start to the second quarter, with the S&P 500 marking its highest close since mid-May 2008. And the FOMC minutes today reveal the Federal Reserve is holding off on more monetary easing unless US economic growth falters or inflation goes below two percent. So is this inflation or deflation? Is this risk on or risk off? And what does it mean for the economy that this is the way we are always looking at things? Marc Faber has his own thoughts on the matter. He believes that this debate is not quite so simple. He says inflation in money and credit can cause bubbles, but it is hard to know where they are, and it is not easy to know where inflation is taking place. Governments hide inflation through various official numbers and estimates, and also, much of that inflation goes into asset prices. We do not know exactly how much the Federal Reserve, the ECB, the BOJ, etc. are propping up the prices of stocks, commodities, etc. We can only estimate. The money printing and loose language of the central bankers and policy makers around the world certainly does distort the price mechanism, however, and Marc Faber is not optimistic about the ramifications of these actions.

And finally, we've heard talk about the possibility of a student loan bubble -- a more than $1 trillion debt problem. Well, it appears some senior citizens are on the hook along with kindergarteners. But what is the value of education really? After all, central bankers and economists have PhD's from the best ranking universities in the country. We'll break it down for you during our segment of "Loose Change," though Marc Faber weighs in on student debt as well.

Raw Video: Funnel Clouds Over Oklahoma 10/4/2012

At least two tornadoes and hail the size of softballs hit northwest Oklahoma. The storms injured two people, and damaged a county jail and numerous vehicles. Video silent from source.(April 10)


Raw Video: Search for 9 Trapped Miners in Peru 9/4/2012

Workers from nearby mines have arrived to help with efforts to rescue nine miners trapped in Peru's Ica region. The country's prime minister said it may take two or three more days to rescue the men. (April 9)


Today in History for April 10th 2012

Highlights of this day in history: Good Friday Agreement signed in Northern Ireland; Titanic sets sail from England; "The Great Gatsby" is first published; Sam Kinison dies. (April 10)


911 Calls Recount Horror, Panic From F-18 Crash 9-4-2012

Emergency calls just moments after a Navy F-18 slammed into an apartment complex in Virginia Beach, Va. show the horror and panic residents felt before rescue workers got to the scene. No one was killed in the incident. (April 9)


Bernanke Says Fed Working on Regulatory Failures 9/4/2012

Chairman Ben Bernanke said Monday that the Federal Reserve is working to address the regulatory failures that were exposed by the 2008 financial crisis. But he cautioned that as the financial system evolves, new risks will emerge. (April 9)


Reino Unido exige a Argentina que pague un préstamo concedido al país en 1979

El Reino Unido quiere que Argentina le devuelva una deuda de 45 millones de libras (71,41 millones de dólares al cambio actual) por un préstamo concedido en 1979 a la Junta Militar argentina que financió, en parte, armamento empleado en la guerra de las Malvinas.

Con esa cantidad, el Gobierno de Argentina compró, según el periódico Financial Times, equipos militares y armamento que más tarde utilizó para invadir las Islas Malvinas, en el Atlántico Sur, cuya soberanía se disputan los gobiernos de ambos países.

UK Export Finance, una división del Ministerio británico de Empresa, heredó esa deuda después de que Argentina no pagara el préstamo a los exportadores británicos, asegurado por el Gobierno del Reino Unido.

Rousseff critica la política monetaria de EE. UU. tras reunirse con Obama

En la reunión celebrada este lunes en la Casa Blanca entre el presidente estadounidense, Barack Obama, y la presidenta de Brasil, Dilma Rousseff, la mandataria brasileña criticó la política monetaria de los países avanzados y expresó su preocupación por ese hecho.

Esa política expansiva de EE. UU. y la Unión Europea "en última instancia conduce a la depreciación de las monedas de los países desarrollados, lo que perjudica el crecimiento de los países emergentes", sostuvo la mandataria brasileña.

Asimismo, Brasil criticó a EE. UU. por promover políticas cambiarias para aumentar su exportación, lo que disminuye la competitividad de países como Brasil.

En este sentido el analista político Alfredo Gutiérrez cree que Brasil podría cambiar las políticas monetarias existentes, impuestas por EE. UU., para lograr una mayor justicia financiera hacia las economías pequeñas.

"Creo que a Brasil le inspira mayor igualdad, mayor justicia económica y el mantenimiento de un equilibrio. Creo que Brasil puede convertirse en líder de una nueva era de mayor respeto a las economías de los países pequeños y esperamos en Latinoamérica esa clase de respuesta de parte de la nación brasileña", dijo el experto en sus declaraciones a RT.

EE. UU. podría haber entrenado a miembros de un grupo insurgente iraní

EE. UU. podría haber entrenado a miembros de un grupo insurgente iraní que figura en su lista de movimientos terroristas. Así lo reveló un rotativo norteamericano, basándose en información de un ex empleado de la Inteligencia estadounidense.

Según estos datos, la preparación de los integrantes de Los Muyahidines del Pueblo Iraní arrancó en 2005. El programa de preparación tuvo lugar en territorio secreto en el estado de Nevada y finalizó en 2009. El entrenamiento incluía criptografía, manejo de armas, tácticas de combate e interceptación de comunicaciones.

Recientemente se difundió la información de que miembros de este grupo podrían haber sido responsables de la eliminación de científicos atómicos iraníes.

El gobierno de Israel propone retirar el premio Nobel a Günter Grass

El Ministerio del Interior israelí ha declarado este domingo al escritor alemán Günter Grass 'persona non grata' en el país por la publicación esta semana de su poema Lo que hay que decir, en el que critica duramente la hipocresía occidental ante el programa nuclear israelí y cataloga al país como una "amenaza para la paz mundial".

El ministro del Interior israelí, Eli Yishai, anunció la decisión y declaró que ésta se basa en la pertenencia de Grass a las Waffen SS, el cuerpo militar del Tercer Reich durante la Alemania Nazi, en las que sirvió durante los últimos años de la Segunda Guerra Mundial, según reconoció el propio escritor en 2006.

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