MARC FABER: Not Even Gold Will Save You From What Is Coming

Marc Faber, who authors the Gloom Boom & Doom newsletter, is usually pretty bearish on stocks and bullish on gold.

Lately, though, gold doesn’t seem like it can catch a bid.

“Despite the continued reverberations regarding the Cyprus bailout and its involvement of bank deposits, gold struggled to maintain the positive momentum created in the first two weeks of March and instead now looks very likely to move lower, towards $1580/oz,” wrote Deutsche Bank commodities analyst Xiao Fu in a note this morning.

So, what does Faber have to say about it?

This morning, on Bloomberg Surveillance with Tom Keene and Alix Steel, Dr. Doom was asked why gold wasn’t holding up.

Here’s his explanation:

When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. I just mentioned that it doesn’t flow evenly into the system.

Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S.

So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.

Faber is, of course, still bearish on U.S. stocks. He told Bloomberg that he sees “considerable downside risk” in the market.

Read more: http://www.businessinsider.com/faber-gold-wont-be-a-place-to-hide-2013-3#ixzz2P6nuBIsW

Wall Street’s Brightest Minds Reveal The Charts That Worry Them Most

http://www.businessinsider.com/wall-streets-most-worrying-charts-2013-3#niels-jensen-absolute-return-partners-1

Bitcoin Bubble 2.0: “From A Monetary Standpoint—It’s On Par With The Stuff You Find At Chuck E. Cheese’s”

March 28, 2013 | By Tekoa Da Silva

 

Publisher’s Note: One of the hardest working young college graduates I’ve met in recent years, Patrik Korda, was kind enough to contribute an essay shown below regarding the issue of “Bitcoin”.

For context, Bitcoin is a newly formed digital currency which has rapidly grown in popularity (as well as in price) following the Cyprus banking system collapse. The chart below is the price performance of Bitcoins, which have seen a market cap expansion of almost 20x—from about $50mm to roughly $1B where it stands today—in less than one year. 

(click to enlarge)

Bitcoin Bubble 2.0

By Patrik Korda

‘It is also important to make certain that our efforts are directed at the decisive core of the problem and not on distracting side issues. The more complex the difficulties we face, the more important it becomes to bear this in mind, for it is human nature to try to evade what we cannot cope with‘
– Bernard Baruch, My Own Story

A conversation with a typical bitcoiner usually leads into a whole series of ignoratio elenchi after ignoratio elenchi revolving around technological jargon. Thus, I think it would be useful to start this article off with a parable set in the past. Suppose that during the 1970′s, when consumer price inflation was an actual problem, someone went ahead and developed an alternative currency. Of course, there were no computers in the average household, no internet, and no peer-to-peer during that stagflation.

Coinstamp Parable

An entrepreneur named Wei Boyang sets up to take advantage of the situation. His proposal is to print a total of 1,000,000 units of what he calls coinstamps. He goes through great measures to insure that there would be no coinstamp counterfeits in the future, using various methods such as signing each stamp, classified materials, codes, et cetera. For the sake of argument, the coinstamp truly is counterfeit-proof. The only entity that could create more coinstamps is Wei Boyang. However, Boyang just happens to be a really nice guy, and having read Lord Acton, he even goes so far as to cut off his hand in order to make sure he cannot make more coinstamps.

Some may cry aloud that coinstamps have no intrinsic value or that they are not backed by anything. Wei Boyang, having also read his Carl Menger, points out that there is no such thing as intrinsic value. Value, explains Boyang, is a subjective phenomenon. Moreover, Boyang argues that it is actually a good thing that coinstamps are not backed by any commodity. If they were backed by something, such as platinum, then the underlying asset could easily be seized. Moreover, since there is no underlying asset to coinstamps, there are no storage fees and transfers are far cheaper than they would otherwise have been.

With inflation approaching double-digits, people who are worried about gold or silver confiscation start to pile into coinstamps. Similarly, investors who are worried about holding the least bad fiat currencies such as the Swiss Franc or the Deutsche Mark due to potential inflation in order to help exporters, also start to pile in. Coinstamps truly seem to be a stroke of genius. People start using them as a means of payment worldwide, even for long-distance transactions. The Federal government is unable to do anything meaningful about coinstamps because it does not have the resources to check every envelope that happens to be mailed. Moreover, since the stamps are so light and thin, lots of people mail them discreetly inside of other items, just to be on the safe side.

By all measures, coinstamp seems to be a hit. Through various ingenious methods, Wei Boyang helps prevent counterfeiting of the stamps. Moreover, Boyang ends up being labeled a domestic terrorist and arrested, which has the unintended consequence of increasing the popularity and awareness of coinstamps, leading people start piling in big time. There is but one problem, other fellows such as Jean de Meung, Johann Georg Faust, and Tycho Brahe also get in the game. While they are unsuccessful at counterfeiting coinstamps, they are successful at copying the protocol and making their own version. Although different in name, the knockoffs are virtually the same in substance. Jean de Meung makes meungstamps, making only 1,000 units, with his own fingerprints on every meungstamp as one of the security measures. Subsequently, he burns off his fingertips as part of a rigorous public relations campaign. With coinstamps trading at $750/cs, the new protocols start to gain traction. Since Wei Boyang wants nothing to do with the government, he has no patents on his invention. The fact that he was first to develop the alternative currency makes no difference to those flocking into the more affordable protocols. The lack of a moat on the scheme eventually sends the entire house of cards collapsing.

Back to Reality

While bitcoins cannot be hyperinflated in name, they certainly can be hyperinflated in substance. Already, there are numerous knockoffs such as namecoin*, freicoin*, and litecoin* in place. This is a particularly valid point because bitcoin is a starfish i.e., it is fully decentralized. As put by Ori Brafman and Rod A. Beckstrom, ‘The starfish doesn’t have a head. Its central body isn’t even in charge. In fact, the major organs are replicated throughout each and every arm. If you cut the starfish in half, you’ll be in for a surprise: the animal won’t die, and pretty soon you’ll have two starfish to deal with‘*. After Napster went under, Niklas Zennström (the creator of Skype) stepped in with his creation called Kazaa, which had no central server that could be shut down. Eventually, the peer-to-peer programs got more and more numerous, including Kazaa Lite, eDonkey, eMule, BitTorrent, et cetera. While this may be good news for people who like to download and share content for free, it certainly is not for people who are under the impression that bitcoin is a hedge against inflation.

Money

Does bitcoin jive with the Austrian stand on money? The only way to find out is to read what the Austrians had to say. Let’s start with Carl Menger. In Principles of Economics, Carl Menger made the point that money, a medium of exchange, has always tended to be the most saleable commodity of the time. Menger wrote, ‘In the earliest periods of economic development, cattle seem to have been the most saleable commodity among most peoples of the ancient world‘. This is perfectly understandable in a world where barebone subsistence is a reality for most people and the structure of production is virtually nonexistent. As society progressed, however, cattle became less and less marketable. Menger goes on to write, ‘With the progress of civilization, therefore, cattle lost to a great extent the broad range of marketability they had previously had with respect to the number of persons to whom, and with respect to the time period within which, they could be sold economically…They ceased to be the most saleable of commodities, the economic form of money, and finally ceased to be money at all‘

As civilization progressed, Menger states that ‘peoples who were led to adopt a copper standard as a result of the material circumstances under which their economy developed, passed on from the less precious metals to the more precious ones, from copper and iron to silver and gold, with the further development of civilization, and especially with the geographical extension of commerce‘ Gold won out due to a variety of reasons, such as being durable, amalgamable, malleable, divisible, homogeneous, and rare. Yet, the primary reason that gold won out is because it was the most saleable of commodities. As Menger goes on to write, ‘Gold nuggets extracted from the sands of the Aranyos River by a dirty Transylvanian gypsy are just as saleable in his hands as in the hands of the owner of gold mine, provided the gypsy knows where to find the right market for his commodity. Gold nuggets can pass through any number of hands without any decrease whatsoever in marketability. But articles of clothing, bedding, prepared foods, etc., would be suspect and almost unsaleable, or at any rate of greatly depreciated value, in the hands of the gypsy, even if they had not been used by him, and even if he had, from the beginning, acquired them only with the intention of passing them on in exchange‘

This point about marketability bears elaboration. One may have a Picasso at home, which will fetch quite a sum at a Sotheby’s auction during a boom, but a Picasso, like a poem by Friedrich Shiller, a work of Sanskrit, or a multi-decade old bottle of red wine can never be the most saleable good. As Menger put it, ‘Compare only the number of persons to whom bread and meat can be sold with the number to whom astronomical instruments can be sold‘. This leads us to another criticism of bitcoin: It can never be the most saleable good. The reasoning for this is quite simple, until the majority of the 7 billion or so people that inhabit this planet have either a smartphone or frequent access to the internet, a digital currency is out of the question. Gold, on the other hand, is easily recognizable, as opposed to silver that may be mistaken for other metals such as nickel. Moreover, it melts at a relatively low temperature and is a relatively soft metal, which provides superior amalgamation and explains partly why it historically won out to metals such as platinum. If one questions the role of gold in the present monetary system, one only has to walk down the street and see a ‘We Buy Gold’ sign. Moreover, central banks hold gold and lots of it, they do not hold cattle, wheat, soybeans, copper, silver, or bitcoins.

Menger also went on to write, ‘I am ready to admit that, under highly developed conditions of trade, money is regarded by many economizing men only as a token. But it is quite certain that this illusion would immediately be dispelled if the character of coins as quantities of industrial raw materials were lost‘*. This, of course, leads us to that pesky thing called the regression theorem. In an article entitled ‘Bitcoins, the regression theorem, and that curious but unthreatening empirical world‘ author Konrad S. Graf* attempts to reconcile the regression theorem with bitcoins. He states,

‘First, one element to consider for intangible objects such as bitcoins are various “inherent” direct-consumption values that may be primarily psychological or sociological in character. Consider, for example, the geek value hackers find in creating and attempting to crack encryption codes of any kind: “Dude, look at this code; I bet you can’t crack it,” may indeed be more highly valued to some people in some contexts than certain “real” economic objects or specific quantities of fiat money. Regardless of any potential future indirect-exchange value, one can imagine such persons expending hundreds of hours of effort in creating and breaking encryption codes, just because they like to. This may be true, separate from any degree of dependence on any particular expectations of future exchange values of code objects’

While it may very well be true that some early adopters valued bitcoins with what Menger described as imaginary value, the point of the most saleable good bears repeating. Gold is and has been seen as an object of beauty since the dawn of civilization. Thus, the argument that bitcoins are in accord with the regression theorem because a handful of people consume them as they would a Picasso is like saying paper money has value because John Law or Ben Bernanke really enjoy playing monopoly. In fact, we might as well say that Alchemy works, considering a significant amount of human history and energy was spent in attempting to find the philosopher’s stone. Some people may enjoy work just for the sake of working. Unfortunately, this is not a sufficient justification for slavery nor the labor theory of value.

So where does bitcoin stand when it comes to the Austrian framework of money? For this we have to turn to The Theory of Money and Creditby Ludwig von Mises. Mises never claimed that only gold or silver are money. On the contrary, he stated that ‘the market enables any commodity to be turned into money and money into any commodity‘. Furthermore, Mises went so far as to say that silver was no longer a monetary metal, which explains why the gold/silver price ratio has tilted significantly towards gold from the late 19th century onwards, in having written ‘If any kind of money is deprived of its monetary characteristics, then naturally it also loses the special value that depends on its use as a common medium of exchange, and only retains that value which depends upon its other employment. In the course of history this has always occurred when a good has been excluded from the constantly narrowing circle of common media of exchange. Generally speaking, we do not know much about this process, which to a large extent took place in times about which our information is scanty. But recent times have provided an outstanding example: the almost complete demonetization of silver. Silver, which previously was widely used as money, has been almost entirely expelled from this position, and there can be no doubt that at a time not very far off, perhaps even in a few years only, it will have played out its part as money altogether‘. He further went on to crystallize this point by classifying silver as fiduciary media, having written, ‘Of no greater relevance is the circumstance that the fiduciary media were in the one case predominantly bank notes and cheques and are in the other case predominantly silver coins. The silver rupee is in truth nothing but a metallic note, for the conversion of which its issuer, the State, is responsible‘. Those who rushed into silver in 2011 would have been well advised to have read the TMC, and so would bitcoiners.

Ludwig von Mises claimed that there were three main types of money: (1) commodity money, (2) fiat money, and (3) credit money. What is important when it comes to commodity money are the technological aspects. With fiat money, the important aspect is the stamp that (initially at least) represented a fixed weight of commodity money. Credit money, on the other hand, is a claim falling due in the future (IOU) used as a medium of exchange. We can safely assert that bitcoin is not a credit money. Nor is bitcoin a fiat money since there is not a sovereign proclaiming it to be a fixed amount of anything. So is bitcoin a commodity money? The answer is no.

Bitcoiners would have one believe that bitcoin is a digital manifestation of the gold standard, and thus should be considered a commodity money since it is technologically similar. The problem with this reasoning has already been touched upon: bitcoins can be hyperinflated in substance. In the real world, a Niklas Zennström cannot come along and create underground reserves ex nihilo of what in substance would be the equivalent of gold, except that it be blue and called jold. On the other hand, the amount of potential flavors of bitcoin on the cloud is theoretically restricted to the amount of aggregate geobytes available on the various smartphones, tablets, notebooks, and all other electronics capable of using peer-to-peer.

If bitcoins are not commodity, fiat, nor credit money, then what are they? Has Ludwig von Mises missed something? The answer, once again, is no. The aforementioned types of money are a narrow subset of the broad money scheme that Ludwig von Mises had formulated. There were, aside from the three types of money already mentioned, so-called money-substitutes. Within money-substitutes are two categories, (1) money-certificates, and (2) fiduciary media. Money-certificates are self-explanatory, examples of which include countless paper notes that promise to pay the bearer x amount of gold on demand. The relevant thing to bear in mind as far as this article is concerned is that bitcoins are not money-certificates.

Thus, we are left with only one remaining option: fiduciary media. Within fiduciary media, there are (1) uncovered bank deposits and notes, or (2) token money. The former stuff is what has periodically led to booms and busts as well as countless bank runs. However, bitcoins are definitely not uncovered bank deposits or notes. Thus, we have an answer before us: bitcoins are fiduciary media, or more specifically token money. From a monetary standpoint, as devised and formulated by Ludwig von Mises, they are on a par with the stuff you find at Chuck E. Cheese’s.

 

(click to enlarge)

Anonymity

With the imminent hyperinflation meme fading away and no longer holding much water, the new reason to hold bitcoins is the anonymity, nay, the freedom that it provides. Want to gamble online or buy something illegal? Bitcoins are the solution. It is a way of circumventing the Kremlin and uplifting free and voluntary trade, or so goes the story. Unfortunately for many of the misinformed, the reality is toto caelo. This article is too short and not intended to get into the details. Thus, it would be best to take it from bitcoin developer Jeff Garzik himself.

The fun starts at 3:20

The ironic part about this is that anyone and everyone who has participated in illegal activity using bitcoins, presumably because they thought it was anonymous, now has a permanent record of every single one of their transactions contained on the public ledger. Imagine if bitcoins existed 50 years ago. Chances are, none of the last three Presidents (including Barack Obama) would have ran for office.

Bubble Time?

The question left to be answered is whether or not bitcoin is once again taking the shape of a bubble. The answer is yes. There is present a reflexive pattern of people buying because prices are rising, and prices rising because people are buying. The myopic are extrapolating the price trend of the past three months, which they deem is normal, and in so doing they exacerbate it to the upside, thus attracting even greater fools. The inflection point will come when the continuity of bullish thought is broken, which could be anywhere between $49/bc to $69/bc. One thing is for sure, the amount of suckers left who are willing to jump on the moving and ever accelerating train is drawing thin, and so are their pockets.

When prices for any asset go parabolic, it does technical damage to a chart. It is sort of like someone deciding to go full speed in the middle of a marathon. Surely, one would look good for a few minutes. However, at a certain point one would inevitably collapse, with the possibilities of finishing the race being greatly diminished, let alone doing as well as they would have otherwise. Like Icarus, who had soared too high and melted the wax on his wings, parabolic moves always end in a crash. Ironically, the best thing that can happen for bitcoin naysayers is if bitcoin skyrockets to $100/bc within a week.

There is nothing anti-Austrian about acknowledging that there exists in the market place a lot of naïve, irrational, and misinformed players. During the dotcom bubble, for example, a maintenance and building company called Temco Services almost tripled in a matter of minutes in 1998. The reason is because by 1998 every other layperson was involved in the market. Thus, the level of competence significantly dropped. The ticker symbol for Temco is TMCO, which was fairly close to that of Ticketmaster Online, which was TMCS. Ticketmaster Online (then TMCS) just happened to trade publicly for the first time on the day that Temco Services (TMCO) tripled. Rising asset prices create euphoria, and euphoria significantly drops the IQ of the participants.

So why is it that people are attracted by rising prices and shy away from falling prices, when in fact the rational thing to do would be to buy low and sell high? The answer is that we are wired that way. As put by Jason Zweig, ‘Groundbreaking new research in neuroscience shows that our brains are designed to perceive trends even where they might not exist. After an event occurs just two or three times in a row, regions of the human brain called the anterior cingulate and nucleus accumbens automatically anticipate that it will happen again. If it does repeat, a natural chemical called dopamine is released, flooding your brain with a soft euphoria‘*. The process also works in reverse, which explains why most people are turned off by falling prices. A loss fires up the amygdala, which is the part of the brain that processes fear and anxiety. If one were to look at the Google Trends chart* of bitcoin and the USD price chart at mtgox* (formerly magic the gathering online exchange), the data is nearly identical with the google trend followingthe price. The bottom line is that people are attracted to bitcoin because the price is rising.

Another reason why bitcoin is so susceptible to becoming a bubble is because it is perceived as being something new. New Era thinking always attracts lots of attention. The tulip was introduced to Europe by way of Turkey in the middle of the sixteenth century. In fact, the word tulip came from the Turkish tulipan, which means turban. Aside from being something new to Amsterdam, a country which at the time possessed an abundance of newly discovered gold and silver from the New World, the tulip also had an intriguing element to it. The plain tulip may turn into a precious Semper Augustus, the most precious tulip of them all. The reason is that the various color schemes of tulips were caused by a virus that attacked the bulb. Likewise, the Mississippi bubble, which was perpetrated by John Law, promised vast richest to be had from the New World. The manias in railways, the radio, the internet, you name it, most of them involved something new or something perceived to be new.

Summary:
» Bitcoins can be hyperinflated in substance
» Bitcoins can never be the most saleable good
» Bitcoins cannot account for the regression theorem
» Bitcoins are the equivalent of token money
» Bitcoins are the opposite of anonymous
» The USD price of a bitcoin has been rising in an unsustainable fashion, the only thing missing being a blow-off top

* namecoin.info/

* freicoin.org/

* litecoin.org/

* The Starfish and the Spider was originally published in 2006

* Underline added by the present writer

* http://konradsgraf.squarespace.com/blog1/2013/2/27/in-depth-bitcoins-the-regression-theorem-and-that-curious-bu.html

* The Intelligent Investor by Benjamin Graham, Commentaries by Jason Zweig

* http://www.google.com/trends/explore#q=bitcoin

*http://bitcoincharts.com/charts/mtgoxUSD#tgCzm1g10zm2g25zi1gSStochzvzcv

 

Source  http://bullmarketthinking.com/bitcoin-bubble-2-0-from-a-monetary-standpoint-they-are-on-par-with-the-stuff-you-find-at-chuck-e-cheese/

FDIC & BANK OF ENGLAND CREATE RESOLUTION AUTHORITY FOR UNLIMITED CYPRUS-STYLE “BAIL-INS” FOR TBTF BANKS!

*BREAKING SD ALERT*

On Wednesday, SD broke the news that Canada had buried a provision for depositor bail-ins for systemically important banks deep inside its official 2013 budget, and stated that the Cypriot bail-in was not just a one-off event, but is in fact the new collapse template for the entire Western banking system.

We suspected that the same policy change had been made by the US & the UK, but was simply yet to be discovered, buried in the website of a Federal agency.

We suspected correctly…

In the introduction, the resolution informs readers that the FDIC and the Bank of England have been working together to formulate the new bail-in model for future bank failures:

The Federal Deposit Insurance Corporation (FDIC) and the Bank of England—together with the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, and the Financial Services Authority— have been working to develop resolution strategies for the failure of globally active, systemically important, financial institutions (SIFIs or G-SIFIs) with significant operations on both sides of the Atlantic.

The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability. They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers.

The joint US/UK resolution states that depositor haircuts are already legal in the UK thanks to the 2009 UK Banking Act:

In the U.K., the strategy has been developed on the basis of the powers provided by the U.K. Banking Act 2009 and in anticipation of the further powers that will be provided by the European Union Recovery and Resolution Directive and the domestic reforms that implement the recommendations of the U.K. Independent Commission on Banking.  Such a strategy would involve the bail-in (write-down or conversion) of creditors at the top of the group in order to restore the whole group to solvency.

And that the legal authority has already been given in the US buried in Dodd-Frank:

It should be stressed that the application of such a strategy can be achieved only within a legislative framework that provides authorities with key resolution powers. The FSB Key Attributes have established a crucial framework for the implementation of an effective set of resolution powers and practices into national regimes. In the U.S., these powers had already become available under the Dodd-Frank Act. In the U.K., the additional powers needed to enhance the existing resolution framework established under the Banking Act 2009(the Banking Act) are expected to be fully provided by the European Commission’s proposals for a European Union Recovery and Resolution Directive (RRD) and through the domestic reforms that implement the recommendations of the U.K. Independent Commission on Banking (ICB), enhancing the existing

resolution framework established under the Banking Act.

The development of effective resolution strategies is being carried out in anticipation of such legislation.

The unsecured debt holders can expect that their claims would be written down to reflect any losses that shareholders cannot cover, with some converted partly into equity in order to provide sufficient capital to return the sound businesses of the G-SIFI to private sector operation. Sound subsidiaries (domestic and foreign) would be kept open and operating, thereby limiting contagion effects and cross-border complications. In both countries, whether during execution of the resolution or thereafter, restructuring measures may be taken, especially in the parts of the business causing the distress, including shrinking those businesses, breaking them into smaller entities, and/or liquidating or closing certain operations.

The resolution states that while the US would prefer large financial institutions be resolved through ordinary bankruptcy, depositor wealth confiscation will be pursued in the case of a systemically important institution (i.e. BOA, JPMorgan, Goldman Sachs, etc):

As demonstrated by the Title I requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), the U.S. would prefer that large

financial organizations be resolvable through ordinary bankruptcy. However, the U.S. bankruptcy process may not be able to handle the failure of a systemic financial institution without significant disruption to the financial system.

The resolution authority states that shareholders would lose all value prior to depositor scalpings:

Under the strategies currently being developed by the U.S. and the U.K., the resolution authority could intervene at the top of the group.  Culpable senior management of

the parent and operating businesses would be removed, and losses would be apportioned to shareholders and unsecured creditors. In all likelihood, shareholders would lose all value and unsecured creditors should thus expect that their claims would be written down to reflect any losses that shareholders did not cover.

Under both the U.S. and U.K. approaches, legal safeguards ensure that creditors recover no less than they would under insolvency.

The banksters plans for a bail-in resolution agency include investment banks and clearing houses as well as deposit bearing institutions!!!

The introduction of a statutory bail-in resolution tool (the power to writedown or convert into equity the liabilities of a failing firm) under the RRD is critical to implementing a whole group resolution of U.K. firms in a way that reduces the risks to financial stability. A bail-in tool would enable the U.K. authorities to recapitalize an institution by allocating losses to its shareholders and unsecured creditors, thereby avoiding the need to split or transfer operating entities. The provisions in the RRD that

enable the resolution authority to impose a temporary stay on the exercise of termination rights by counterparties in the event of a firm’s entry into resolution (in other words, preventing counterparties from terminating their contractual arrangements with a firm solely as a result of the firm’s entry into resolution) will be needed to ensure the bail-in is executed in an orderly manner.

The existing Banking Act does not cover nondeposit-taking financial firms, notably investment banks and financial market infrastructures (clearing houses in particular), the failure of which, in many cases, would also have significant financial stability consequences. The Banking Act also has limitations with regard to the application of resolution tools to financial holding companies. The U.K. is in the process of expanding the scope of the Banking Act to include these firms. This is expected to be achieved through the introduction of the U.K. Financial Services Bill, which is due to complete its passage through Parliament by the end of this year.

 Exactly as played out with the Cyprus template, depositors will receive equity shares in the new, bailed-in institution:

The remaining claims of the debt holders will be converted, in part, into equity claims that will serve to capitalize the new operations. The debt holders may also receive convertible subordinated debt in the new operations. This debt would provide a cushion against further losses in the firm, as it can be converted into equity if needed. Any

remaining claims of the debt holders could be transferred to the new operations in the form of new unsecured debt.

 

Exactly as played out with the Cyprus template, depositor funds will be stolen in whatever quantities are required to keep the TBTF zombie bank afloat:

Once the recapitalization requirement has been determined, an announcement of the final terms of the bail-in would be made to the previous security holders.

This announcement would include full details of the write-down and/or conversion.

Debt securities would be cancelled or written down in order to return the firm to solvency by reducing the level of outstanding liabilities.  The losses would be applied up the firm’s capital structure in a process that respects the existing creditor hierarchy underinsolvency law. The value of any loans from the parent to its operating subsidiaries would be written down in a manner that ensures that the subsidiaries remain solvent and viable.

For now (until the rules are changed when a greater need for funds arises, funds will only be stolen from depositors with more than the FDIC insured $100,000 in their account:

Insofar as a bail-in provides for continuity in operations and preserves value, losses to a deposit guarantee scheme in a bail-in should be much lower than in liquidation.

Insured depositors themselves would remain unaffected. Uninsured deposits would be treated in line with other similarly ranked liabilities in the resolution process, with the expectation that they might be written down.

In order for the resolution to work, the banksters state that the public must be convinced their deposits are safe, when in fact they are subject to bail-in confiscation:

Similarly, because the group remains solvent, retail or corporate depositors should not have an incentive to “run” from the firm under resolution insofar as their banking

arrangements, transacted at the operating company level, remain unaffected.  In order to achieve this, the authorities recognize the need for effective communication to depositors, making it clear that their deposits will be protected.

0.1% interest on savings deposits with the now VERY REAL THREAT OF COMPLETE CONFISCATION in the US & UK doesn’t sound like such a great return to us.

The Fed appears to be making a calculated play to force savings out of the TBTF banks and into stocks and real estate, a move that is likely to backfire spectacularly.

More  http://silverdoctors.com/fdic-bank-of-england-create-resolution-authority-for-unlimited-cyprus-style-bail-ins-for-tbtf-banks/

ATS thread  http://www.abovetopsecret.com/forum/thread936688/pg1

Think Your Money is Safe? Think Again: The Confiscation Scheme Planned for US and UK Depositors

Web of Debt blog / By Ellen Brown

Confiscating the customer deposits in Cyprus banks was not a one-off. It could happen here.

Photo Credit: Tatiana Popova/ Shutterstock.com

March 28, 2013  |

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlierhere); and that the result will be to deliver clear title to the banks of depositor funds.

New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’sVoxy reported on March 19 ^th:

The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . .

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

Can They Do That?

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here andhere.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

The 15-page FDIC-BOE document is called “ Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:

An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S ., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country , the new equity holders would take on the corresponding risk of being shareholders in a financial institution.

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only  mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.

 

Source  http://www.alternet.org/economy/think-your-money-safe-think-again-confiscation-scheme-planned-us-and-uk-depositors?akid=10250.1078879.tQNWqO&rd=1&src=newsletter816371&t=5

Mexican vigilantes seize town, arrest police

Hundreds of armed vigilantes have taken control of a town on a major highway in the Pacific coast state of Guerrero, arresting local police officers and searching homes after a vigilante leader was killed. Several opened fire on a car of Mexican tourists headed to the beach for Easter week.

Members of the area’s self-described “community police” say more than 1,500 members of the force were stopping traffic Wednesday at improvised checkpoints in the town of Tierra Colorado, which sits the highway connecting Mexico City to Acapulco. They arrested 12 police and the former director of public security in the town after a leader of the state’s vigilante movement was slain on Monday.

A tourist heading to the beach with relatives was slightly wounded Tuesday after they refused to stop at a roadblock and vigilantes fired shots at the car, officials said.

The vigilantes accuse the ex-security director of participating in the killing of vigilante leader Guadalupe Quinones Carbajal, 28, on behalf of local organized crime groups and dumping his body in a nearby town on Monday. They reported seizing several high-powered rifles from his car, and vigilantes were seen toting a number of sophisticated assault rifles on Wednesday, although it was not clear if all had been taken from the ex-security director’s car.

Full story at http://news.msn.com/crime-justice/mexican-vigilantes-seize-town-arrest-police

Stunning Corn Comparison: GMO versus NON GMO

The claims that “There is no difference between GMO corn and NON Gmo corn” are false. Yesterday while on a playdate at the lake, Vince from De Dell Seed Company, Canada’s only NON GMO corn seed company called me to support the march and Americans finding out about GMOs. He emailed me this stunning report, clearly showing the nutritional value difference between GMO corn and NON GMO corn. I was floored. And at the same time, not totally surprised because Glyphosate draws out the vital nutrients of living things and GMO corn is covered with it.

The important thing to note in these deficiencies is that these are exactly the deficiencies in a human being that lead to susceptibility to sickness, disorders and cancer.  People who have osteoporosis are low in calcium and magnesium, people who have cancer are low in maganese. The list goes on and on.

GMO Corn has 14 ppm of Calcium and NON GMO corn has 6130 ppm. 437 X more.

GMO corn has 2 ppm of Magnesium and NON GMO corn has 113ppm. 56 X more.

GMO corn has 2 ppm of Manganese and NON GMO corn has 14ppm. 7X more.

Look at the levels of Formaldehyde and Glyphosate IN the corn! The EPA standards for Glyphosate in water in America is .7ppm. In Europe it is .2 ppm. Tests showed organ damage to animals at .1ppm of Glyphosate in water. This corn has 13 ppm!

In another study taht Dr. Huber reported,  .97 ppm of formeldehyde showed to be toxic in ingestion to animals. This corn has 200X that! That is why the animals , given a choice will not eat it at all, they can smell the formeldehyde!

Please share this report with your legislature, farmers, news editors, school district food services and Moms.

We will no longer be feeding our children food with nutritional deficiencies,  foreign proteins, food sprayed with Glyphosate, or injected with pesticides. Nor will we be fed their lies of safety!

THANK YOU De Dell sharing this report and supporting the Americas in GMO labeling and in going GMO Free!

Zen Honeycutt

Source  http://www.momsacrossamerica.com/stunning_corn_comparison_gmo_versus_non_gmo

ATS thread  http://www.abovetopsecret.com/forum/thread936136/pg1

Aliens worked with US military 2013 March 23 Australian TV

The truth is out there: aliens visit to help, and use the loo

Read more: http://www.smh.com.au/technology/sci-tech/the-truth-is-out-there-aliens-visit-to-help-and-use-the-loo-20130316-2g7el.html#ixzz2OrUVAoWH

The “tall white” aliens near Indian Springs NV  

UFO Contact – Former Canadian Defence Minister

Aliens Exist According to Mainstream Scientists

 

Obama signs Monsanto Protection Act! It’s Time to Label GMOs!

We regret to inform you that late last night President Barack Obama signed H.R. 993, which contained the Monsanto Protection Act into law. President Obama knowingly signed the Monsanto Protection Act over the urgent pleas of more than 250,000 Americans who asked that he use his executive authority to veto it. President Obama failed to live up to his oath to protect the American people and our constitution.

Today we’re calling on President Obama to issue an executive order to call for the mandatory labeling of genetically engineered foods.

Not only is GMO labeling a reasonable and common sense solution to the continued controversy that corporations like Monsanto, DuPont and Dow Chemical have created by subverting our basic democratic rights, but it is a basic right that citizens in 62 other countries around the world already enjoy, including Europe, Russia, China, India, South Africa and Saudi Arabia.

Source http://action.fooddemocracynow.org/sign/obama_signs_monsanto_protection_act_time_to_label_gmos/

Other source action.fooddemocracynow.org…

BRICS Nations Plan New Bank to Bypass World Bank, IMF

Tomohiro Ohsumi/Bloomberg

The leaders of the so-called BRICS nations — Brazil, Russia, India, China and South Africa — are set to approve the establishment of a new development bank during an annual summit that starts today in the eastern South African city of Durban.

The biggest emerging markets are uniting to tackle under-development and currency volatility with plans to set up institutions that encroach on the roles of the World Bank and International Monetary Fund.

4:43

March 22 (Bloomberg) — South African Trade Minister Rob Davies discusses the likelihood of starting a foreign-currency pool with Brazil, Russia, China and India, and the establishment of a BRICS Business Council. He spoke with Bloomberg’s Mike Cohen in Cape Town. (Source: Bloomberg)

11:47

March 26 (Bloomberg) — Stephen Roach, a senior fellow at Yale University and former non-executive chairman for Morgan Stanley in Asia, talks about Cyprus’s bailout and the outlook for the European debt crisis. Roach also discusses Japan’s central bank monetary policy, and China’s new leadership and economic growth. He speaks from Beijing with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Enlarge image

While BRICS leaders may approve the creation of a development bank in principle at the summit, there’s still disagreement on how it should be funded and operated. Photographer: Tomohiro Ohsumi/Bloomberg

Enlarge image

A security guard stands in front of a floral arrangement ahead of the BRICS Summit in Sanya, Hainan Province on April 12, 2011. The BRICS nations have combined foreign-currency reserves of $4.4 trillion and account for 43 percent of the world’s population. Photographer: Qilai Shen/Bloomberg

The leaders of the so-called BRICS nations — Brazil, Russia,India, China and South Africa — are set to approve the establishment of a new development bank during an annual summit that began today in the eastern South African city of Durban, officials from all five nations say. They will also discuss pooling foreign-currency reserves to ward off balance of payments or currency crises.

“The deepest rationale for the BRICS is almost certainly the creation of new Bretton Woods-type institutions that are inclined toward the developing world,” Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research on emerging markets, said in a phone interview. “There’s a shift in power from the traditional to the emerging world. There is a lot of geo-political concern about this shift in the western world.”

The BRICS nations, which have combined foreign-currency reserves of $4.4 trillion and account for 43 percent of the world’s population, are seeking greater sway in global finance to match their rising economic power. They have called for an overhaul of management of the World Bank and IMF, which were created in Bretton Woods, New Hampshire, in 1944, and oppose the practice of their respective presidents being drawn from the U.S. and Europe.

Reform Needed

“We need to change the way business is conducted in the international financial institutions,” South African International Relations Minister Maite Nkoana-Mashabane said in a March 15 speech in Johannesburg. “They need to be reformed.”

The U.S. has failed to ratify a 2010 agreement to give more sway to emerging markets at the IMF, while it secured Jim Yong Kim, an American, as head of the World Bank last year over candidates from Nigeria and Colombia.

Finance ministers and central bank governors from the BRICS nations, who met in Durban today, agreed to set up currency crisis fund of about $100 billion, Brazilian Finance MinisterGuido Mantega told reporters today. He didn’t give details of proposed funding for the new bank, which Brazil wants established by 2014. The nation’s leaders are due to sign a final accord tomorrow.

FDI Inflows

Goldman Sachs Asset Management Chairman Jim O’Neillcoined the BRIC term in 2001 to describe the four emerging powers he estimated would equal the U.S. in joint economic output by 2020. Brazil, Russia, India and China held their first summit four years ago and invited South Africa to join their ranks in December 2010.

Trade within the group surged to $282 billion last year from $27 billion in 2002 and may reach $500 billion by 2015, according to data from Brazil’s government. Foreign direct invesment into BRICS nations reached $263 billion last year, accounting for 20 percent of global FDI flows, up from 6 percent in 2000, the United Nations Conference on Trade and Development said on its website yesterday.

“If they announce a BRICS bank it will be quite something,” O’Neill said in an e-mailed reply to questions on March 15. “At a minimum it symbolizes they can achieve something as political group and means lots of other things could follow in the future. It also means that they will have their own kind of special World Bank, which may aid infrastructure and trade projects.”

Currency Pool

While BRICS leaders may approve the creation of a development bank in principle at the summit, details on funding and operations may take longer to finalize.

Russia favors capping each side’s initial contribution at $10 billion, Mikhail Margelov, PresidentVladimir Putin’s envoy to Africa he said in a March 15 interview in Moscow.

“It will be some time before it will be feasible for this bank to start financing say, a railway project,” Simon Freemantle, an analyst at Standard Bank Group Ltd., Africa’s biggest lender, told reporters in Durban yesterday. “That is some way out.”

Interest rates near zero in the U.S., Japan and Europe have fueled foreign investors’ appetite for higher-yielding assets, driving up currencies from Brazil to Turkey. Brazil has warned of a global currency war as nations take reciprocal action to weaken their currencies and protect export industries.

African Leaders

Brazil’s real has gained 1.9 percent against the dollar since the beginning of the year, whileSouth Africa’s rand has dropped 8.7 percent in the period.

For South Africa, which makes up just 2.5 percent of total gross domestic product in BRICS, the summit is a way to showcase its role as an investment gateway to Africa. President Jacob Zuma has invited 15 African heads of state, including Egypt’s Mohamed Mursi and Ethiopia’s Hailemariam Desalegn, for talks with the BRICS leaders at the summit. For most of the BRICS leaders, it’s also the first opportunity to meet Chinese President Xi Jinping after his appointment on March 17.

“We will discuss ways to revive global growth and ensure macroeconomic stability, as well as mechanisms and measures to promote investment in infrastructure and sustainable development,” Indian Prime Minister Manmohan Singh said in a statement yesterday.

 

Source  http://www.bloomberg.com/news/2013-03-25/brics-nations-plan-new-bank-to-bypass-world-bank-imf.html

Department of Homeland Security Insider Update: “It Has Begun”

(Before It’s News)

Much like my high-level source within the U.S. Department of Homeland Security outlined in a series of interviews beginning last year, the orchestrated collapse of the U.S. dollar and the entire world’s economic system has begun. The first shots in a global economic take-over were fired in Cyprus as my esteemed colleague and founding editor of Canada Free Press, Judi McLeod laid out in frank detail in hercolumn yesterday. Please read it and heed her advice, or suffer the consequences of your own normalcy bias that such an event will not happen in the United States, Canada, or from wherever you might be reading this. It will, and the plan appears to be on schedule for a shot across the bow later this spring here in the West, with a more aggressive take-over starting sometime this fall, according to my source.

The Plan

To those needing a quick refresher, the plan is quite simple and can be summarized by the Clinton-era quip attributed to political strategist James Carville, “the economy, stupid” and the June 9, 2010 statement by former Obama czar Van Jones, Socialist extraordinaire, “top down, bottom up, inside out.” It is a plan for a one world Communist economy where the “middle class” will be wiped out through a series of events that will have the same ultimate effect as we are seeing in present day Cyprus.

Based on the events in Cyprus, it should be quite clear to even the most vocal critic of the legitimacy of the information provided to me by my source within the DHS as published on this web site is no longer at issue. The U.S. dollar, the backbone of world currencies and the proverbial firewall preventing the erosion of our national sovereignty, is the ultimate target of a takedown by the global banking interests controlled by a handful of banks and families of the “royal elite.”

The plan for a global currency or a one world economic order is a matter that transcends political parties. Those who continue to argue in the Republican-Democrat meme are doing nothing more than providing entertainment to distract people from the real issue, that of the global elite versus the rest of us. The top of the pyramid in this Ponzi scheme is filled with members of both U.S. political parties who are systematically pillaging us and our future generations into financial debt, bondage and slavery. It is a plan that has been in the works for centuries. The problem, however, is that we have been conditionednot to think that big. Yet, the lie is that big.

The parties                                    

Our current financial situation was not bred out of incompetence, but by design. The occupancy ofBarack Hussein Obama as the putative President of the United States was a plan in the making long ago, to usher in this oppressive system where we will be left at the mercy of the global ruling class. It is not by accident that we have been prevented from knowing exactly who this man is, from the controversy of his birth records to his college transcripts and even his social security number. Contrary to what the state-controlled media wants you to believe, these questions have never been answered with any measure of authenticity.

For example, does anyone honestly believe that it is merely a coincidence that Obama’s alleged mother, Stanley Ann Dunham-Soetoro, just happened to work with Timothy Geithner’s father, Peter Geithner, at the Ford Foundation in Indonesia? Is it reasonable to believe that the Republican party had no knowledge of the background of Barack Hussein Obama? Yet not one word from the Republican establishment as they not only watched, but facilitated the takeover of the United States from within. As I’ve written before, our nation is a captured operation.

The plan was set into motion long ago, stemming back to the founding of the United States and the temporary resistance to the central banking system. In 1913, the creation of the Federal Reserve set the countdown clock in motion for the complete subjugation of the United States to the interests of the global bankers and the global elite. The secret supra-governmental cabals such as the Council on Foreign Relations and the Trilateral Commission worked behind the scenes, under the cover provided by the complicit media, to bring us to this point in history. Perpetual wars were induced to occupy the masses while the chess pieces were placed into their current positions. We are now about to pay the price for our inability or unwillingness to confront the establishment and incremental advancements leading to our own demise.

DHS source: Everything is not “coming up roses”

According to the most recent information provided to me from my source within the Department of Homeland Security known as “Rosebud,” the final preparations are being made to deploy heavily armed federalized forces onto the streets of America. They will be deployed under the pretext of “restoring and maintaining order from the chaos brought about by the economic collapse,” adding that “many will demand and embrace their deployment on the streets of America. They will get what they ask for, and more.“

Much like the security theater we have seen following the attacks of 9/11, we will be subjected to the jack-booted control of a federal army whose allegiance is not to the American people, but to the very architects of the chaos.

“This is the reason that drones are flying over U.S. cities and farmland, and gun control legislation is on the fast track for complete implementation,” stated this source. “How can people look at the situation in Cyprus and not think it won’t happen here? It will, and the blowback will be unlike this country has ever seen. Surveillance, disarming the public, and conditioning the people to believe it’s for their own safety is and has been  part of the plan all along. Anyone owing a gun will be demonized and described as contributing to the problem.”

“What happens when the middle class loses much of their wealth, or it is confiscated, by the stroke of a pen or a keyboard? What will the stores look like when people, unprepared due to the damn lies of the corporate media and the shills for the ruling elite, run to empty out everything they can get their hands on as the world, as they know it, collapses around them?”

It was during my most recent contact with my source yesterday that he admitted that the situation will be blamed not on the bankers and the elected leaders who are raping us of our wealth and buying power, but on “right-wing, gun-toting Conservative ‘militia’ groups who believe that the situation is orchestrated.”  And, of course, it is orchestrated.

“There is no Republican-Democrat argument to be made anymore. It’s all political theater to keep the majority of the masses occupied while the true enemy has already captured both parties,” he added. “They are all in on it, either knowingly or unwittingly, the takeover, that is. And it’s getting harder to believe that there are any who are unwitting accomplices at this point.”

“When the curtain is pulled back to reveal the true agenda of a single digital world currency, the people who have been yelling the loudest about such ‘conspiracy theories’ will be specifically singled out and demonized. They will be blamed for causing the panic we will see, and of course, dealt with by the army we asked for, accepted and even tolerated.”

Anyone who still believes that the information provided by this insider is “doom porn” or some self-created fantasy need to look at the events taking place in Cyprus. It’s coming to America. It has already begun.

ATS Thread   http://www.abovetopsecret.com/forum/thread935464/pg1