Break Up The Banks… ‘Not Going to Happen’ (with Nomi Prins)

According to the FDIC, in 2011, there were no new banks created in the US, making it the first year in decades the country has gone without the establishment of a single start-up lender, according to the Financial Times. We'll also show you a new video from Public Citizen, calling on Bank of America to break up. Nomi Prins, author of "Black Tuesday" discusses.

Nigel Farage: Mass anger could trigger Euro's Greek Spring

Eurozone finance ministers have also gathered in Brussels to discuss the 130 billion euro Greek bailout - but Greece must wait another week before the money starts to flow. The final say will be given on the first tranche after Athens reaches agreement with its private creditors next Thursday.

As another nervous week lies ahead for Greece, Nigel Farage, MEP and leader of the UK Independence Party, says the sacrifices it's being forced to make only drag the country deeper into trouble.

Another phase in the Greek tragedy - it could lose all its gold!

Author: Julian Phillips
Posted: Wednesday , 22 Feb 2012

With the Greek bailout a done deal, gold and the Euro have gained a little, but nervousness over Greece's prospects prevails and the consequences of failure for Greece are dire.

BENONI -

New York took the gold price up to $1,759 up $29 from yesterday's London close. This was a bit much for Asia and London who pulled it back to $1,753 at London's opening. The euro was relatively unchanged on yesterday's level of €1: $1.3228 at the opening in London. In London, gold Fixed today at $1,754.75 and in the euro at €1,325.040. The euro was unchanged ahead of New York's opening. Gold went slightly weaker ahead of New York's opening with an unchanged euro after the Fixing. Ahead of New York gold stood at $1,753.90 and in the euro to €1.325.55.

Silver opened in London at $34.02 up 34 cents on yesterday. Ahead of New York's opening it stood at $33.08.

Provided the private lenders to Greece can be forced, against their will, to accept voluntary loss on their Greek Bonds [while they have insurance that pays 100% of their investment back instead of less than 50%], then the Greek deal is a done deal.

But down there in the small print of the Greek deal lies the nasty side for Greece. There lies a heavy penalty clause; Greece's lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal. Greece has 111 tonnes of gold. In other words Greece has given up on its "money in extremis", gold. If they default they will have nowhere else to go. Its international assets will be seized and it will not be able to trade internationally at all.

Today we are watching both Iran and the Sudan use their gold to buy food for their country as they have nowhere else and nothing else to get it with. Under the terms of this new deal Greece has effectively forfeited that last resort. And if they wanted to pull a last card from the pack by insisting on a Greek jurisdiction for any final arbitration, they have forfeited that too, by agreeing that future bonds issued will be governed by English law and in Luxembourg courts, conditions more favorable to creditors.

The option of leaving the Eurozone and surviving independently has now gone. If they do default [and many think the shrinking economy will force them down that road] they will have to accept whatever terms they can scrape together from the E.U. in order to survive! Greece is now a colony of the E.U. not a member!

MORE

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Vincent Browne v The ECB

MISH'S
Global Economic
Trend Analysis

The video below is from a European Central Bank press-conference in Ireland. Journalist Vincent Browne demands that the ECB representative explain why the ECB required the Irish people to bail out a bank's uninsured creditors. The bureaucrat mouths bland reassurances, then asserts (despite all appearances to the contrary) that the question has been answered. Browne doesn't let up.

Nomi Prins: Bailouts + Downgrades = Austerity and Pain

Tuesday, January 17, 2012 at 5:07PM

The markets (read: traders with big books at mega financial firms and hedge funds) weren’t particularly shocked by last week’s wave of heavily pre-broadcast S&P sovereign debt downgrades. For months, the question wasn’t ‘if’, but ‘when.’ True to form, just as with the US downgrade, S&P’s reasons skated the surface of prevailing wisdom – governments have too much debt, and not enough income. That’s only a fraction of the story.

Nowadays, when any sovereign (including the US) gets downgraded by a rating agency, it's not just because its debt repayment ability is questionable (the publicized logic of rating agencies), but because it incurred more expensive debt to float its banking system. It chose to subsidize banks over people.

The S&P likes moving on Friday nights. It was on a Friday night that it downgraded US debt to AA+ from AAA. On Friday night, January 13, 2012, it downgraded France and Austria from AAA to AA+, and 7 other European countries, too; Cyprus, Italy, Portugal, and Spain by two notches; Malta, Slovakia, and Slovenia, by one notch. Portugal, Cyprus, Ireland and Greece are at junk status. Germany’s AAA rating is intact.

Nowhere in S&P’s statement about “global economic and financial crisis”, did it clarify that sovereigns were hit due to backing their largest national banks (and international, US ones) which engaged in half a decade of leveraged speculation. But here’s how it worked:

Covert QE Begins in Europe

Posted by Brittany Stepniak - Tuesday, January 17th, 2012

The Fed and central banks are off to a questionable start this year...

Quantitative easing has already begun in Europe. And they've got the U.S. to thank for the bail out.

"Essentially, we just bailed out Europe’s banking system with the full faith and credit of the United States" according to the New York Post's Jonathon Trugman. He goes on:

"Most Americans associate a covert action with the CIA, not the Fed. But that’s exactly what Ben Bernanke did at the end of November...In reality, the Federal Reserve has just extended essentially unlimited lines of credit, camouflaged as a swap to the world in US dollars."

Here's a run down on why you should be concerned:

* The Fed essentially borrows or is backed up by US taxpayers, already in debt through mortgages, credit cards, student loans.

* The ECB in turn borrows from the Fed and then leverages that money up under its ECB umbrella.

* The ECB then lends it out to 523 of Europe’s most overleveraged banks.

* The desperate banks keep some to fortify their balance sheets, and use the rest to buy sovereign debt in some of the most overleveraged countries in the world, like Italy and Spain, which were just downgraded Friday by S&P.

Awaiting a Greek Payout

By LANDON THOMAS Jr.
Published: January 10, 2012

LONDON — Could Greece’s next rescue payout go straight into the pockets of London hedge funds?
That, more or less, is the bet that a growing number of investors are making now as they load up on Greek government securities that mature in March. That is when Athens hopes to receive a potentially make-or-break bailout payment — a lifeline of as much as 30 billion euros ($38 billion) from the European Union and the International Monetary Fund.

Hungary Folds, Ready To Change Its Laws To Get European Bailout Money

If there is any one more vivid confirmation of Mayer Rothschild words "Let me issue and control a nation's money and I care not who writes the laws" then we have yet to find it. Today Hungary, which had "valiantly" defied Europe and the IMF in ignoring pressure to make its central bank more "malleable" finally folded, following a recent explosion in its bond yields, a surge in CDS to records, and a collapse in its currency.

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Greece will leave euro if second bailout fails, says Kapsis

Greece will have to leave the eurozone if it fails to clinch a deal on a second, 130 billion euro bailout with its international lenders, a government spokesman said on Tuesday.

It was an unusually public stark warning from the embattled country, aimed at shoring up domestic support for tough measures and possibly also at the lenders themselves.

"The bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro," spokesman Pantelis Kapsis told Skai TV. "The situation will be much worse."

Greece is racing against the clock to agree with the EU, the IMF and private bondholders on the details of the rescue plan before a major bond redemption in March. It risks a default if there is no deal by this date.

Athens and its EU partners have repeatedly ruled out a euro exit, which could drag the bloc even deeper into crisis, and usually avoid saying this is a possible scenario.

But top Greek officials, who need to push through unpopular reforms to clinch the bailout deal, have warned over the past few days that a return to the drachma would be "hell" and that the country must stick to austerity to avoid it.

If A Global Recession Is Not Looming, Then Why Are Bailouts Flying Around As If The End Of The World Is Coming?

I have learned that watching what people do is much more important than listening to what they say.  Back in 2008, financial authorities in the United States insisted that everything was gone to be okay.  But we all know now that was a lie.  Well, right now financial authorities in the U.S. and Europe are once again trying to assure us that everything is under control and that we are not headed for a global recession.  Unfortunately, their actions are telling a very different story.  All over the world, bailouts are flying around as if the end of the world is coming.  Governments and central banks are stepping in with gigantic mountains of money to prop up bond yields, major banks and even stock markets.  What we have seen over the past few months has been absolutely unprecedented.  So why are such desperate measures being taken if everything is going to be just fine?  Unfortunately, debt problems are never solved with more debt, so these bailouts really aren't solving anything.  We are still headed for a massive amount of financial pain.  It would just be nice if the authorities would quit lying to us and would actually admit how bad things really are.
Today it was announced that the European Central Bank has agreed to make $638 billion in 3 year loans to 523 different banks.  Never before (not even during the last financial crisis) has the ECB loaned so much cheap money to European banks at one time.
This move by the ECB made headlines all over the globe.  CNBC is calling them "ultra-long and ultra-cheap loans".
European authorities are hoping that European banks will use this money to make loans to businesses and to buy up the debt of troubled European governments.
But as we have seen in the United States, bailout money does not always get spent the way that the authorities intend for it to be spent.
The truth is that the banks could end up just sitting on the money.  That is what happened with a lot of bailout money in the United States during the last financial crisis.

Simple Math and $100,000 Gold

If I need to SHOCK you into attention, I will.
Given that I know gold is going, MUCH, MUCH higher, it doesn’t matter what number I put in the title.  At current prices, PHYSICAL precious metals are the bargain of a lifetime, far more so than when gold was $250/ounce a decade ago, and silver just $4/ounce.  The explosion of global MONEY PRINTING since 2000 will be remembered as the most insane financial experiment of all time, which unfortunately is just getting started.  That $100,000/ounce gold projection is NOT a joke, as you will see at the end of this RANT.
Before I get started, I want to darken the mood a bit, as the world is a bit too giddy about the hype of the abbreviation du jour, the LTRO funding facility that emerged out of Central Bank ether to yet again enslave – er, save Europe with another massive dose of crack – er, free bank loans.
Beware the Coming Bailouts of Europe
I see no difference between the LTRO bailout and the November 30^th Fed “swap facility,” only this time the ECB, which just two weeks ago said it wouldn’t print money, is the bank showering the world with paper.  THAT’S how bad things are, and wouldn’t you know it, the LTRO emerged, yet again, just as Bank of America was about to break down through $5.00/share, creating a landslide of margin-based selling that could have kick-started the END GAME.  Not to mention, right before the New Year, to ensure TBTF firms aren’t scrutinized for awarding gargantuan, taxpayer-funded bonuses to executives before the system collapses in the first half of 2012.
In my view, this ominous, apocalyptic cloud formation is more appropriate to the current financial situation than the horns and whistles of this morning’s BLATANT bank bailout, and accompanying stock market orgy, which will likely have the same decreasing HALF-LIFE of all previous salvation attempts.

Fed Loads Up Balance Sheets, Begins Europe Bailout On Same Week It Promises Not To: Data

By Eleazar David Meléndez: Subscribe to Eleazar's RSS feed
December 20, 2011 2:17 PM EST
In spite of spending most of the last week reassuring the public that it would not use its resources to bail out European banks and having decided against engaging on another round of balance sheet expansion, data shows the U.S. Federal Reserve engaged in precisely those two actions that week.
On Tuesday, the top decision-making body of the U.S. Federal Reserve held a monthly meeting in which -- according to a statement released that day -- it ultimately decided against the new round of monetary easing that many market observers had anticipated. On Wednesday, Fed Chairman Ben Bernanke met with Republican lawmakers, telling them behind closed doors that no bailout of Europe was forthcoming.
On Thursday, however, data released by that central banking entity showed that, in spite of public pronouncements and private promises to the contrary, the U.S. central bank tacitly did those very things last week.
A particularly troublesome datapoint further suggests the Fed quietly bailed out a major financial institution midweek, something at least one bank strategist has already surmised.

Beware the Coming Bailouts of Europe By Ron Paul: The real cause of economic depression is loose monetary policy: the creation of money and credit out of thin air and the monetization of government debt by a central bank. This inflationary monetary policy is the cause of every boom and bust, yet it is precisely what political and economic elites both in Europe and the United States are prescribing as a resolution for the present crisis. The drastic next step being discussed is a multi-trillion dollar bailout of Europe by the European Central Bank, aided by the IMF and the Federal Reserve.

By: Ron Paul | Mon, Dec 19, 2011

The economic establishment in this country has come to the conclusion that it is not a matter of "if" the United States must intervene in the bailout of the euro, but simply a question of "when" and "how". Newspaper articles and editorials are full of assertions that the breakup of the euro would result in a worldwide depression, and that economic assistance to Europe is the only way to stave off this calamity. These assertions are yet again more scare-mongering, just as we witnessed during the depths of the 2008 financial crisis. After just a decade of the euro, people have forgotten that Europe functioned for centuries without a common currency.

The real cause of economic depression is loose monetary policy: the creation of money and credit out of thin air and the monetization of government debt by a central bank. This inflationary monetary policy is the cause of every boom and bust, yet it is precisely what political and economic elites both in Europe and the United States are prescribing as a resolution for the present crisis. The drastic next step being discussed is a multi-trillion dollar bailout of Europe by the European Central Bank, aided by the IMF and the Federal Reserve.