Thursday, May 6, 2010

The US Dollar: The World's Tallest Midget

Does ANYBODY find it alarming that the current death spiral in European debt and currency is at the hands of American financial ratings firms? The same firms that qualified toxic mortgage assets as AAA safe for investment consumption, and helped sow the seeds of a global economic catastrophe.

These same ratings organisations took payment from the banks issuing these toxic assets BEFORE rating them. It is a well known fact that these same banks have bets on the failure of European debt via their usual web of credit default swaps and the like. Is it merely a coincidence that these rating agencies, once again late to the party, come forward and state the obvious with regards to European nationals credit worthiness as the debt crisis engulfing the region was accelerating? Not likely when one considers the mammoth profits their puppet master banks stand to reap upon the debt destruction in Europe.

To deny that recent "proclamations" from S&P regarding Greece and it's sister nations in the Euro Zone has been a major catalyst to this regional debt crisis is to admit one's in ability to see or hear. To be sure there are overwhelming debt problems in the region, as there is around the majority of the western financial system...chiefly right here in America. But S&P's, and now today's Moody's recitation on the solvency of European Debt, has done nothing but make a bad situation worse.

Considering these rating agencies credibility AND their culpability in the entire global financial meltdown these groups should either be held accountable for fanning the flames of the debt crisis or simply be put out of business. Clearly their sole existence is to provide cover for America's "too big to fail" banks to continue to fleece the world of it's wealth and destroy civilization as we've grown to know it.

Moody's warns of sovereign debt contagion
MADRID (MarketWatch) -- Pressing the button on a red-hot subject for financial markets, Moody's Investor Service on Thursday warned that severe contagion threat to banking systems of southern Europe could "become a common theme."

Moody's, which put Portugal's credit rating on three-month review on Wednesday for a downgrade, said the banking systems of Portugal, Spain, Ireland, Italy, as well as the U.K., are "increasingly moving into the focus of the markets."

"Although the challenges in these six countries are different, the potential for contagion from their sovereign as observed in Greece is also spreading to some other countries, and to the extent this affects these countries it could dilute some of the inherent differences of the banking systems and impose a common threat," said Ross Abercromby, senior analyst at Moody's who authored the report.

Specifically, he cited Portugal as the forefront of investor concern, despite its many "fundamental differences" to Greece. A key factor will be the market's view of the success of the recently agreed support package from the International Monetary Fund and the Europe Union.

But in Greece, Portugal, Italy the banks are challenged, or could potentially be, "more as a consequence of the pressures on the sovereign rather than due to their own inherent creditworthiness. And this contagion could also extend to the systems of Spain, Ireland and the UK where the sovereign has been weakened by the developments within the banking system," said Abercromby.

Rating firms under fire
By Stevenson Jacobs and Daniel Wagner - The Associated Press, April 30, 2010
NEW YORK -- The downgrading of European debt is turning up the heat on the firms that issue the ratings.

Some European officials are calling for curbs on rating agencies like Standard & Poor's, Moody's Corp. and Fitch Ratings. They argue that conflicts of interest and bad information make the agencies' assessments unreliable, even dangerous.

Germany's foreign minister went so far Thursday as to suggest that the European Union should create its own rating agency. He spoke after downgrades of Greece and Portugal roiled financial markets and stoked fears that Europe's debt crisis was spreading.

How ratings agencies are paid is also coming under scrutiny. The money they earn comes from the institutions whose products and debt they rate - a point of contention in the U.S. and Europe. At a hearing last week on the agencies' role in the financial crisis, U.S. Sen. Carl Levin called that pay system an "inherent conflict of interest."

Legislation in Congress to overhaul the financial regulatory system could change how the rating agencies do business. Critics note that the agencies gave safe ratings to high-risk U.S. mortgage investments that later imploded, triggering the financial crisis and a deep recession.

Germany says Europe needs its own rating agency
(AP) – Apr 29, 2010
BERLIN — Germany's Foreign Minister says the European Union should create its own rating agency because of the financial crisis.

Guido Westerwelle on Thursday told "WAZ" newspaper group the EU "should counter the work of rating agencies with efforts of its own."

Westerwelle said rating agencies must not develop, sell, and rate financial products all at the same time. He said such conflicts of interest must be ruled out.

Peter Bofinger, a member of the government's independent economic advisory panel, criticized Standard & Poor's move to lower the ratings for Greece and Portugal.

The economist told the "Welt" newspaper that "we should not make the welfare of Europe dependent on rating agencies," pointing to their failure to spot problems ahead of the financial crisis.

Probably the most noteworthy observation over the past two weeks as the European Debt Crisis has accelerated is that the biggest downside moves in their currency and debt markets has occurred during the market hours in America. Why should that be? The crisis is in Europe. It is really quite clear that the large American "too big to fail" banks are behind the European debt crisis. Wasn't Goldman Sachs recently cited for being behind Greece's ability to "hide it's debt problems" by helping them structure that debt with derivatives? Certainly Goldman and others, in particular JPMorgan, have their fingerprints all over this European debt catastrophe. Doubtless they are the ones that structured and sold the European debt products to the banks in Germany and France that are loaded to the gills with it. It is the pending destruction of these banks that have forced their governments to bail out Greece in an effort to save their banks at home.

All because of a debt crisis launched by the buying off of credit ratings firms here in the US to rate toxic debt instruments around the globe as AAA. Ultimately, no matter who does the investigation into the cause of the world financial crisis, the root cause will be determind by the relationship between the credit ratings firms and the large American "too big to fail" banks.

Today there is this naive belief that this debt "contagion" in Europe will not rear it's ugly head here in the USA. Financial news talking heads love to point out that as the Acropolis burns, investors are rushing to the US Dollar and treasuries. This ALWAYS occurs during times of global financial uncertainty. Presently, the US Dollar is still the "global reserve currency", of course investors will park their money their until the dust settles. That is, "until the dust settles". The US Dollar and it sovereign debt is a s fundamentally flawed as that in Europe, perhaps even more so as it is ground zero for this global financial crisis.

Right now the US Dollar is nothing more than the tallest midget in the Tallest Midget Competition. Chase the Dollar if you think you must, but be prepared for catastrophe, for it is sure to wash up on our financial shores sooner than most can imagine.

Bets against debt markets by the large American "too big to fail" banks are not focused solely on European sovereign debt. These banks greed and penchant for wealth destruction is also squarely focused on Main Street America, her cities AND states. The problems in Greece are a pimple on an elephants ass compared to what's ahead for the debt markets here in the USA.

Banks Bet Against U.S. Cities, States
Amidst growing pessimism about the financial condition of U.S. cities and states, investors are increasingly buying financial instruments that essentially allow them to short sell - or bet against - cities and states, says a Wall Street Journal report.

Offered by banks like JP Morgan, Bank of America, and Citigroup, the so-called municipal credit default swaps can be used by investors to bet that insurance contracts protecting holders of municipal bonds will default.

Some states say the derivatives not only scare away potential buyers of municipal bonds by creating a perception of risk, but ultimately drive up states' borrowing costs. Others contend that the instruments are traded too thinly to affect municipal bond markets or a state's credit rating.

The California treasurer is just one of a number of state treasurers that have launched a probe into the sale of these derivatives and the sale of municipal bonds by big Wall Street firms that might reveal "speculative abuse of CDS in the muni market," says one regulator.

Wouldn't it be the ultimate irony if their involvement in this nefarious debt market manipulation by a large American "too big to fail" bank were to come home and drop a bomb on the doorstep of the institution that created it?

JPMorgan Has Biggest Exposure to Debt Risks in Europe
By Gavin Finch
April 29 (Bloomberg) -- JPMorgan Chase & Co., the second- biggest U.S. bank by assets, has a larger exposure than any of its peers to Portugal, Italy, Ireland, Greece and Spain, according to Wells Fargo & Co.

JPMorgan’s exposure to the five so-called PIIGS countries is $36.3 billion, equating to 28 percent of the firm’s Tier-1 capital, a measure of financial strength, Wells Fargo analysts including Matthew Burnell wrote today. Morgan Stanley holds $32.4 billion of debt in the region, which equates to 69 percent of its Tier 1 capital, Burnell wrote.

“Regulatory data suggests JPMorgan’s exposure is largest in aggregate, but Morgan Stanley held the largest aggregate exposure to the PIIGS relative to Tier 1 capital,” the analysts wrote. Overall U.S. bank “exposure to Greece is lower than exposure to Ireland, Italy and Spain.”

Bonds and stocks plunged across Europe in the past week on concern the Greek debt crisis is spreading across the euro area. Standard & Poor’s this week cut Greece, Portugal and Spain’s credit ratings as concern the nations may fail to meet their debt commitments increased.

U.S. banks held a total of $236.8 billion of exposure to the five nations, including $18.1 billion to Greece, Wells Fargo said. European banks have claims totaling $193.1 billion on Greece, according to the Bank for International Settlements, with another $832.2 billion of claims on Spain.

You can be sure the US Federal Reserve will supplying a mountain of US Dollars created out of thin air to the IMF to help facilitate the bailout of Greece, and ALL of Europe if neccessary. Ah blessed is the American taxpayer.

Jim Rogers in the Economic Times of India:
"I am shorting a stock market index in the US, I am shorting an emerging market index and I am shorting one of the large western international financial institutions.

It is an emerging market index; it is not a specific country. It is an index of many emerging markets and that is mainly because the emerging markets have grown more than most things here during this big recovery. So that is where some of the excesses are developing.

As far as the large western banks is because it is a bank which people think is extremely sound if I am right, there are going to be more currency problems and more turmoil in the markets, it will have to come down."

It isn't too difficult to guess that Jim Rogers may be short JPMorgan. That is like shorting the US Federal Reserve.

Gold yesterday, once again, hit new ALL-TIME highs in the Euro. This cannot be discounted. Dollar based Gold has been whacked over the last couple of days by the usual CRIMEX goon tactics. These are the last gasps of a dying malevolent entity. Silver prices have been smashed hard as the big bullion banks are short almost one year of global Silver production, and the supply of Silver to cover that short is quickly disappearing. A 10% drop in the price of Silver in two days is a signal that these banks are in one helluva hurry to get out of as many of these Silver short positions as they can. It is an exquisite buying opportunity for Silver investors.

Do not be dismayed by the daily market cacophony we've witnessed here in Gold and Silver. The CRIMEX cabal has exposed their drop dean lines in the sand this week. 1178 Gold and 18.82 Silver. As we pointed out earlier this week, weekly closes above these closing price points open the door to the destruction of the CRIMEX. Desperation has set in amidst the paper traders of the TRUTH. They will soon be burned to a crisp. The US Dollar and it's treasury markets are NOT the safe-haven they are being portrayed as by western financial news media. Buying into either would be akin to the horses running back into the burning barn, and certain destruction.

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