The Phaserl


A Fly on the Wall

by Bill Holter,

Yesterday the CEO’s of many major banks are meeting with the president in Washington…again. This will be the third such meeting in 5 months. Speculation and rumor has it that these CEO’s will be queried and discuss the current government shutdown and the debate to raise the debt ceiling. As I’ve said before several times, I would love to be a fly on the wall to hear not only what is discussed but the “tone” of these discussions.

I say this because gold was trashed last April right after one of these meetings and trashed again yesterday one day ahead of the meeting. Tuesday saw 40 tons of gold sold in 3 separate 1 minute intervals and exactly 1 minute after the pre COMEX open, again 1 minute after the COMEX open and then again 1 minute after the London morning fix.

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1 comment to A Fly on the Wall

  • Ed_B

    “What is this…35-1 leverage? Think about this, if they “lose” 3% on this derivatives portfolio…they lose EVERYTHING! They don’t even have to be wrong on their bets as they can be a winner on every single one of them…but, what if 3% of their counterparties cannot perform? …like I said, EVERYTHING!”

    If we listen carefully to banksters like Blankfein and Dimon, they continually stress that their derivatives books are net neutral. By this, they mean that for every dollar of potential derivatives losses they have, they also have a dollar of potential derivatives profit. What they never explain, however, is what happens if some of their counter-parties go bust and cannot pay Goldman Sachs or JP Morgan Chase the money that they owe them for their derivatives bets? The answer is obvious… the entire derivatives house of cards will tumble down in a catastrophic financial collapse, the likes of which the world has never before seen. It will be so bad that the 1930s will look like “the good old days”. Of course, as was true during the Great Depression, those who have REAL money will be able to buy food, electricity, gas, and just about anything else they need… and cheaply too! Those who do not will be well and truly economically and financially f**ked.

    “So here we are in a system that is too levered up to take on any more leverage… but must increase the leverage in order for past leverage not to deflate. Houston we have a problem!”

    Indeed we do. But this is nothing new. We have exactly the same problem in the US economy today because of the interest obligation that is attached to all US currency the moment it is printed or zapped up out of thin air via computer entries. The economy MUST grow at a rate that is sufficient to repay this interest. If it does not, then MASSIVE financial problems ensue. It is interesting to note that the US economy has been shrinking and not growing since late 2005. This is because growth has been minimal but inflation has not. We have an inflation rate that is approaching 10% now. Bernanke claims that he cannot find it, so obviously he does not shop for groceries, gasoline, college tuition, insurance, or pay his taxes. Were he to do so, he would find all kinds of inflation. But the Fed is basically dishonest, so cannot admit that its policies and learned leaders have failed and failed miserably, just as did their forebears during the Great Depression. To hide this failure they jump through all manner of dumb-math hoops to ensure that real inflation is not counted. That allows them to set the number anywhere they want and what they want is LOW inflation and HIGH employment. As with inflation, it is not the number of jobless people that interests the Fed, it is how they are counted so as to appear to be less than they are. When someone becomes so discouraged that they cease looking for the jobs that aren’t there anymore, the Fed stops counting them. How convenient! They do the same with inflation by refusing to count the things that are inflating while counting other things that are not. Presto! Low inflation and unemployment numbers; neither of which actually describe the real world but go a long way towards making the bean counters and politicians happier. That way, they can puff out their chests, thump each other on the back, have some photo ops, and say “Look at us and what an excellent job we are doing for you!”. Personally, I think that they ALL ought to be fired and then thoroughly investigated for criminal wrong-doing. Any who can have charges against them proved via this investigation procedure should then be sent to prison for a long long time. Those who are exonerated should be freed and allowed to participate in governing the country, if they so choose. If either case, we need to get to the bottom of all this BS that is being tossed around as if it was gospel. The cows have come home and the chickens are now roosting. Severe economic problems are not “coming”. They are here and will only get worse the longer they are ignored.

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