How “Bail-outs” and Bail-ins” Are Just a Huge Transfer of Wealth

In our continuing effort to educate even those who call themselves “experts” on the economy, we have to continue with the facts that the banksters, MSM, and dupes that call themselves legislators don’t want you to see or understand.  We have, in recent past articles, shown you just the facts about the bailouts and now the bail-ins going on in the EU for what they are, just a huge transfer of public wealth to the hands a few elites in banking and the central banking system.

As we watch the economy continue to falter, and jobs vanish, don’t you wonder where all the so-called QE monies really went that were meant to stimulate the economy? Here we are, 5 years into this so-called recovery and unemployment in the US is still 7.6% and only 47% of Americans hold full time jobs.  The number one employer is WalMart and the number two employer is Kelly Temp Services! In the EU, there is a 40% unemployment rate and people’s bank accounts are being raided without consent to supposedly prop up the banks (Bail-Ins). Government services are being slashed everywhere and still nothing seems to be improving.

Well, even though you are not supposed to understand this, let’s look at the Central Bank Practices and especially at the issue of banks’ reserves at the FED and other central banks in the world. This is a complex subject with much technical jargon that confuses a lot of people. Besides, don’t be surprised that your bank branch manager on Main Street as well as lecturers in finance and economics are also ignorant on this issue. In the case of the latter, this subject is hardly taught in universities. And this is the reason why the scam has not been exposed or understood. But, for those who have a basic idea of bank reserves and how this huge amount of “excess reserves” have been created by the FED, have you asked yourself, “Why have I not spotted this scam earlier?”

Many have been taken in by the propaganda that “excess reserves” is the means to encourage banks to extend credit (give out loans) to desperate borrowers who needed urgent funds to survive and to jump-start their businesses. This propaganda is grounded on the assumption that there is insufficient liquidity in the market. This assumption is misleading.

What are Excess Reserves? The latest figures obtained from the H.3 release from the Board of Governors of the Federal Reserve System (the FED) shows excess reserves of about $1.794 trillion (data as of April 17, 2013)! This level of excess reserves is unprecedented and is the highest since reserves were legislated as a requirement.

Excess reserves are the surplus of reserves against deposits and certain other liabilities that depository institutions (collectively referred to as “banks”) hold above the statutory amounts that the FED requires in accordance with the law. The general requirement is that banks maintain reserves at least equal to ten percent of liabilities payable on demand. There is now data to show that as much as 50% of these “excess reserves” are held for United States banking offices of foreign banks.

 

Let me elaborate. Banks receives deposits from their customers which are inter-alia placed in current accounts (checking accounts) or time deposits (fixed deposit accounts) and which the customer can at any time withdraw from the bank. But, banking practice shows that at any one time, only a small fraction of customers would withdraw their deposits in full. So, there was no need for banks to keep all the deposits in their vaults to meet such a demand for payment. Laws were enacted to allow banks to keep in reserve a small amount of monies to meet such demands. That being the case – if only 10% reserves is all that is required according to banking regulations to meet repayment demands, why should there be such a huge amount of reserves, beyond the legal requirement of 10%?

Understand the fact that when a customer deposits monies in a bank, he is in law a “creditor” (he has loaned the monies to the bank) and the bank is a “debtor” (and he can use the money in any way at his absolute discretion, even to speculate). This is because the ownership of the money has been transferred to the bank. The money is no longer the money of the customer. It now belongs to the bank. And as long as the bank is solvent, and there is a demand for repayment of the deposit, the law of contract stipulates that the bank must repay together with the agreed interest that has accrued.

silver-coins-bars

Now here is where, legally it gets interesting.. if at the time when demand for repayment is made, the bank is bankrupt (i.e. in a liquidation) then the depositor/customer in law is deemed an “unsecured creditor” and must join the queue of all unsecured creditors to share the proceeds of any remaining assets after all secured creditors have been paid. If there are no remaining assets, the depositors get zilch! That is why and as illustrated in the bank confiscation of deposits in Cyprus banks acting in concert with central banks can expropriate all customers’ deposits to pay their secured creditors. You catching on here?

How did the Excess Reserves balloon to a massive US$1.794 Trillion? The Fed’s overall balance sheet has expanded from about $909 billion before the crisis (i.e. before 2008) to about $3.3 trillion in 2013. Of the $2.4 trillion increase, approximately $1.8 trillion is excess reserves. Banks were up to their eyeballs in toxic assets (financial sewage) and they are drowning in this cesspool but for the rescue efforts of the FED and other central banks they would have sunk to the bottom of the cesspool.

The FED created trillions of money out of thin air by a digital entry in its books to purchase the toxic assets (financial sewage) in batches from the banks. The objective of QEs is to save the banks and to save the US Treasury from bankruptcy and not Joe Six-Pack. However, in this article we are focusing on the banks. So, let’s say that the banks HAVE OVER US$10 trillion of financial sewage AND WANT TO DISPOSE THEM WITHOUT AROUSING ANY ALARM.  The monies flowed from the FED to the banks to purchase the financial sewage. The financial sewage is sucked into the FED’s financial vacuum. However the monies are not channeled to the banks’ branches in Main Street to be loaned out to Joe Six-Pack. It is re-routed back to the FED as “reserves”. When the reserves exceed the minimum 10% requirement, the excess is classified as “excess reserves.” This is merely a book entry! And adding insult and injury to Joe Six-Pack, interest of 0.25% is paid on the reserves (i.e. giving profits to the banks).

The banks are allowed to survive in spite of their massive frauds and other financial hanky-pankey. The banks are allowed to use digital technology (e.g. high-frequency trading) to corner the market and destroy Joe-Six-Pack. But, Joe-Six-Pack has to suffer the indignity of unemployment, foreclosures, reduced unemployment benefits, surviving on food-stamps, and other austerity measures. Starting to see the picture here and how this crap is how we are being fleeced like passive little lambs?

“The money flows from the FED to the Too Big To Fail (TBTF) Banksters to Buy Toxic Assets, which is sucked in by the FED’s Financial Vacuum, thereby cleansing the TBTF banks’ balance sheets. The money is then re-routed back to the FED as “excess reserves”.

The FED create monies out of thin air to bail-out the Too Big To Fail banks (TBTF banks) by purchasing their financial sewage (valued at book value as opposed to mark-to-market i.e. instead of paying only 10 cents on the dollar or less, the FED pays dollar for dollar) thereby removing the financial sewage from the balance sheet of the TBTF banks to reflect a “healthier” balance sheet as there are now less financial sewage in the banking system. And, because the TBTF banks are suffering losses, the FED pays 0.25% interest on the “excess reserves” created so as to generate easy profits for the TBTF banks for doing nothing at all. They are earning profits merely from a book-entry in the FED’s books!

The propaganda which I referred to earlier that such monies were meant to enable the TBTF banks to extend credit is therefore bullshit and a load of financial nonsense. So why are the so-called reputable economists at leading universities such as Harvard, Princeton, Cambridge, Oxford etc. touting this propaganda?  In spite of all this past mismanagement, the practices by the TBTF banks is continuing unabated, including the so-called record profits declared by the TBTF banks and the huge bonuses given out to the bankers and their hire-lings. These practices are all just window dressing as long as the toxic assets are not marked-to-market and not declared as junk. If such assets are properly declared, the fiat money banking system would be staring at a bottomless black-hole of toxic assets and indebtedness! What’s worse is these same TBTF banks are still up to their eyeballs in toxic debt, such as derivatives, credit swaps, etc.  In fact JP Morgan Chase alone has exposure more than twice the US GDP! JPMC is exposed just in interest rate derivatives at $45 TRILLION. Take a look at the Fed’s H.8 report to understand how bad it really is.

This has compounded the problem. After the Global Financial Tsunami, all the TBTF banks don’t have enough reserves to meet the withdrawal of deposits placed by customers before the crash. The TBTF banks don’t even have the requisite 10% reserves to meet these demand deposits (Old Deposits).  However, banks are continuing to receive deposits from customers of which 10% of these deposits must be transferred to the FED as reserves. Data shows that customers’ deposits are at an all time high (since 2007), but bank lending is not keeping pace.

Banks are not lending out what they are entitled to do so for two reasons:

1) The banks are using a portion of the “New Deposits” to meet the liability of having to repay the “Old Deposits” in the system. This is because even the excess reserves (created under the QE) are insufficient to meet the demand for repayment of the Old Deposits. So, part of the current New Deposits would be utilized for that purpose. This is the Deposit Ponzi Scheme.

2) Banks are earning no risk profits from interests on “Excess Reserves” at the FED and are only willing to lend to credible borrowers. In the present economic climate, there are just too few credible customers. This is another reason why banks are not lending.

When QE stops, the FED would not be out on a limb because the monies used to purchase the financial sewage from the TBTF banks are still in the FED’s books. The Fed need only to have a reverse entry in it’s books after re-packaging the financial sewage INTO SOME NEW FORM OF FINANCIAL PRODUCT OR WHATEVER (which the TBTF banks are adept at doing before the crash and are still continuing to do so) and dumping them back to the banks and another generation of stupid investors at such time when and if the banks would have recovered. But with the TBTF banks continuing their same toxic practices unabated there is no recovery, ever. Further, with the bank’s unbridled right (sanctioned by law) to confiscate the customers’ deposits (now commonly referred as “Bail-In”) using the Cyprus template, banks have additional financial resources to continue with the plunder and financial rape of the public.

I hope this helps us understand that this unabated transfer of wealth ends with our economic enslavement. The public must be able to understand these fundamentals and demand the end to this fractional banking system and the end of the FED. Your congressmen and women are dupes in this game, as they really don’t understand and therefore do what they are told to do. Inform them WE GET IT and WE DON”T LIKE IT, AND IT MUST STOP NOW! Fire the Fed, break up the TBTF banks and return to pre-1913 banking system controlled by the US Treasury. WAKE UP!  A special thanks to Matthias Chang of Global Research, who unknowingly contributed so much to this article.

Advertisements

The Purpose of the Modern Monopolized Press is not to Inform but to Generate and Maintain the Consent of the Governed.

When we look at the events of the last month especially, it should have become more apparent, even to the casual and unawakened people that this is our reality.  Here are just a few examples of major events that have been grossly unreported in MSM.

Fireballs, meteor, and meteorites are raining down like a spring shower, at more than twice the normal rate, and are associated with more and more intense sonic booms (meaning they are low in the atmosphere) and many witnessed fragmentation and explosions occurring.  Yet MSM may report some of the individual events that they couldn’t ignore, but they are going out of their way to not have us link these events as something more specific.  An interesting side note to this is a few alternative news reporters sought information from the Air Force Space Command as to whether or not they “detected” any of the incoming salvo.  Their response was that was “classified information”.  What? After these reports were published yesterday, some attempts have been made to explain that this response was made because the AFSC and more importantly the NRO does not want to reveal the nature of their technology now operating. Interesting, huh?

The true reasons for the Pope’s resignation are not even being mentioned, even though there was specific acknowledgement by the Vatican.  The fact that the Pope would be arrested by Italian authorities for money laundering has not been mentioned.  Check it out for yourself, the arrest warrant is a matter of public record. This also accounts for the fact that the Pope will be cloistered within the walls of the sovereign Vatican nation. If he were to leave, he would be subject to immediate arrest.  There are also the issues of sex crimes against children, and maintaining secret accounts for various politicians and corporate moguls, but that is a whole other story.

There is a major magma pool rising under the Solomon Island, and is being heralded by huge swarms of 5+ earthquakes over the past three weeks.  This is similar in size to the “Jellystone” caldera, being nearly 600 square kilometers in size and sitting on a major Pacific plate conjunction zone. If this were to erupt, the tsunamis generated could have global effects as these would literally travel around the world and affect all oceans.  The steam volume sent into the atmosphere by such an eruption could literally create giant rivers of atmospheric water that would create massive rainfalls inland on all continents.  Not a word said in MSM.

Currency wars are beginning to erupt as central banks and nations try to stave off the coming financial collapse.  The concern of course is that historically when currency wars do erupt (and they have officially begun), global war is not far behind.  Yet MSM is talking about “the fiscal cliff” approaching in the US. Speaking of CONgress, we did have one humorous insight this week. Did you know that the correct term for a large group of baboons is a congress of baboons. Hmmm, that explains a lot.

Then, of course, we have this developing debate concerning gun control. The monopoly media is reporting these stories from within the confines of the false Left/Right paradigm and is ignoring the written purpose of the 2nd Amendment by attempting to frame the debate as one of crime and an irrational fear of violence. We see endless discussions from collectivists insisting that citizens do not “need” military type weapons for hunting or self defense – the System’s accepted purpose for your irrational desire to own firearms. So called assault weapons are evil and unnecessary, therefore only the police should be thus armed. The so called Right counters that gun bans do nothing but make crime worse and that citizens must be able to defend themselves, with these weapons if need be.

Both are false premises because the 2nd Amendment was clearly written as an individual right so that citizen’s militias would be independent of the State. A counter balance the founders left us to prevent what has arisen: a State monopoly in the legitimate use of force. A doomsday provision that would never be needed until the State tried to take it. Even though this element does not seem to be the debate in MSM, the people seem to have understood clearly what’s up as the latest monthly volumes of gun and ammunition sales has skyrocketed, setting records.

These events and others affecting all of us directly and globally are simply not being reported or to find the kind way of saying it, grossly under-reported by MSM.  If there is any good news in this, people have been migrating to alternative news sources that are doing their best to report these issues in the light of what is really going on.  However, these venues are also loaded with disinformation specialists and shills, so it does take effort to sort the rat poop from the pepper. We do have one question that may be relevant. Are there any journalists out there in MSM with the courage or ability to do the right thing.  I know from many sources you are out there and frustrated, find a way to collectively “do the right thing”.

3 news monkeys

So here is the lesson. If it does resonate with you, don’t accept it.  If you don’t accept it, make an effort to find the “truth” of the issues on your own as best you can. You won’t always be successful given the fact this is very time consuming, but make the effort.  Share what you find with as many people as possible. Finally, as we are seeing in the Arab Spring, Anonymous, and Occupy efforts, withhold your consent to be governed and managed in this manner.  This only continues if we consent to let it continue. The oldest law of civilized communal living is that those who govern only really can do so by the consent of the people.

Finally, The Banksters Are Being Exposed By a Brave Member of the Senate

It is all too often easy to look at the political process and feel the deck is so stacked against the regular guy that we must resign ourselves to the fact our democratic process has been bought and sold to the highest bidder.  The Citizens United ruling by the Supreme Court seemed to “seal the deal” for the banksters. Now we get a breath of fresh air from at least one senator who has had the balls to call them out in the light.

Bernie Sanders from Vermont released this  roadmap of  how the banksters stole our money yesterday and it is a must read!  Here is the highlights.

“1. Jamie Dimon, the Chairman and CEO of JP Morgan Chase, has served on the Board of Directors at the Federal Reserve Bank of New York since 2007. During the financial crisis, the Fed provided JP Morgan Chase with $391 billion in total financial assistance. JP Morgan Chase was also used by the Fed as a clearinghouse for the Fed’s emergency lending programs. In March of 2008, the Fed provided JP Morgan Chase with $29 billion in financing to acquire Bear Stearns. During the financial crisis, the Fed provided JP Morgan Chase with an 18-month exemption from risk-based leverage and capital requirements. The Fed also agreed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired this troubled investment bank.

2. Jeffrey Immelt, the CEO of General Electric, served on the New York Fed’s Board of Directors from 2006-2011. General Electric received $16 billion in low-interest financing from the Federal Reserve’s Commercial Paper Funding Facility during this time period.

3. Stephen Friedman. In 2008, the New York Fed approved an application from Goldman Sachs to become a bank holding company giving it access to cheap Fed loans. During the same period, Friedman, who was chairman of the New York Fed at the time, sat on the Goldman Sachs board of directors and owned Goldman stock, something the Fed’s rules prohibited. He received a waiver in late 2008 that was not made public. After Friedman received the waiver, he continued to purchase stock in Goldman from November 2008 through January of 2009 unbeknownst to the Fed, according to the GAO. During the financial crisis, Goldman Sachs received $814 billion in total financial assistance from the Fed.

4. Sanford Weill, the former CEO of Citigroup, served on the Fed’s Board of Directors in New York in 2006. During the financial crisis, Citigroup received over $2.5 trillion in total financial assistance from the Fed.

5. Richard Fuld, Jr, the former CEO of Lehman Brothers, served on the Fed’s Board of Directors in New York from 2006 to 2008. During the financial crisis, the Fed provided $183 billion in total financial assistance to Lehman before it collapsed.

6. James M. Wells, the Chairman and CEO of SunTrust Banks, has served on the Board of Directors at the Federal Reserve Bank in Atlanta since 2008. During the financial crisis, SunTrust received $7.5 billion in total financial assistance from the Fed.

7. Richard Carrion, the head of Popular Inc. in Puerto Rico, has served on the Board of Directors of the Federal Reserve Bank of New York since 2008. Popular received $1.2 billion in total financing from the Fed’s Term Auction Facility during the financial crisis.

8. James Smith, the Chairman and CEO of Webster Bank, served on the Federal Reserve’s Board of Directors in Boston from 2008-2010. Webster Bank received $550 million in total financing from the Federal Reserve’s Term Auction Facility during the financial crisis.

9. Ted Cecala, the former Chairman and CEO of Wilmington Trust, served on the Fed’s Board of Directors in Philadelphia from 2008-2010. Wilmington Trust received $3.2 billion in total financial assistance from the Federal Reserve during the financial crisis.

10. Robert Jones, the President and CEO of Old National Bancorp, has served on the Fed’s Board of Directors in St. Louis since 2008. Old National Bancorp received a total of $550 million in low-interest loans from the Federal Reserve’s Term Auction Facility during the financial crisis.

11. James Rohr, the Chairman and CEO of PNC Financial Services Group, served on the Fed’s Board of Directors in Cleveland from 2008-2010. PNC received $6.5 billion in low-interest loans from the Federal Reserve during the financial crisis.

12. George Fisk, the CEO of LegacyTexas Group, was a director at the Dallas Federal Reserve in 2009. During the financial crisis, his firm received a $5 million low-interest loan from the Federal Reserve’s Term Auction Facility.

13. Dennis Kuester, the former CEO of Marshall & Ilsley, served as a board director on the Chicago Federal Reserve from 2007-2008. During the financial crisis, his bank received over $21 billion in low-interest loans from the Fed.

14. George Jones, Jr., the CEO of Texas Capital Bank, has served as a board director at the Dallas Federal Reserve since 2009. During the financial crisis, his bank received $2.3 billion in total financing from the Fed’s Term Auction Facility.

15. Douglas Morrison, was the Chief Financial Officer at CitiBank in Sioux Falls, South Dakota, while he served as a board director at the Minneapolis Federal Reserve Bank in 2006. During the financial crisis, CitiBank in Sioux Falls, South Dakota received over $21 billion in total financing from the Federal Reserve.

16. L. Phillip Humann, the former CEO of SunTrust Banks, served on the Board of Directors at the Federal Reserve Bank in Atlanta from 2006-2008. During the financial crisis, SunTrust received $7.5 billion in total financial assistance from the Fed.

17. Henry Meyer, III, the former CEO of KeyCorp, served on the Board of Directors at the Federal Reserve Bank in Cleveland from 2006-2007. During the financial crisis, KeyBank (owned by KeyCorp) received over $40 billion in total financing from the Federal Reserve.

18. Ronald Logue, the former CEO of State Street Corporation, served as a board member of the Boston Federal Reserve Bank from 2006-2007. During the financial crisis, State Street Corporation received a total of $42 billion in financing from the Federal Reserve. ”

{end press release quote}

We need to support this courageous effort by being totally outraged and begin demanding that a criminal investigation begin immediately.  We should also demand that Congress does not renew the Federal Reserve Charter to “handle” the job the US Treasury should be doing.  That charter is up for a vote in 2013. Everyone who reads this should inform everyone they know about these facts and ask them not only to read it but to pass it on to everyone they know and then we all should put our representatives on notice that we absolutely want our financial system back.

There is no single issue more important to each and everyone of us, literally.  Get informed, wake up, and act. Forget the clown circus that is the presidential campaigns and get to the REAL Chains that bind us.  Let’s set ourselves free and here are the keys to the cuffs.

Some Fact Checking on the BIG BAILOUT and Its Effect on the Economy

Remember back in 2008, when Uncle Ben Bernanke and Little Timothy Geithner went to the Hill and said they needed $700 B to bailout the banks or else the world economy would collapse?  Yeah we all remember, there have been millions of articles, documentaries, and movies made about it.

Ok so when the Congress called Uncle Ben back to testify about what he did with the money and was asked to explain how the bailout had saved the economy, he REFUSED to disclose who got how much, defending his position by saying that divulging such information could jeopardize the public faith in the individual banks who had received monies.  Congress said, ‘Oh OK that makes sense’.

Then, in 2009, the discussion was that if banks were too big to fail that those banks should also be too big to exist, as that would put us right back in the position that got us into the jam in the first place.  Bernanke agreed, but offered no statements as to what should be done to prevent it.  Some in CONgress did and the Dodd-Frank Bill was passed.  At the time some said it was too weak as written, but hey, at least it was a start.

So, here we are now.  How has Dodd-Frank or Federal Reserve policy worked?  I do hope you are sitting down for this.  You may also want to pour a stiff dink, if you are so inclined, or at least have a pair of vise grips handy to occasionally pinch yourself.

First, too big to fail has resulted in the following: Five banks — JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc., Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve. Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy!  WHAT????  Yeah you read it correctly.  Back in 1970, the 5 biggest U.S. banks held 17 percent of all U.S. banking industry assets.  Today, the 5 biggest U.S. banks hold 52 percent of all U.S. banking industry assets.  What say you Uncle Ben? What say you CONgress?

At a recent lecture at George Washington University, Mr. Benanke said ,according to CNNMoney, — “The bailouts of Bear Stearns and AIG were “distasteful” but still necessary. Meanwhile, the Fed was “helpless” when it came to saving Lehman Brothers, he said.

“Lehman Brothers was in itself probably too big to fail, in the sense that its failure had enormous negative impacts on the global financial system,” Bernanke said. “But there we were helpless, because it was essentially an insolvent firm.”

In a lecture about the Fed’s emergency efforts during the financial crisis, Bernanke explained that the central bank was willing to bail out AIG (AIG, Fortune 500) and Bear Stearns because it expected both firms would eventually be able to pay back their loans. Bear Stearns was ultimately acquired by JPMorgan Chase (JPM, Fortune 500).

Lehman Brothers, on the other hand, had no collateral to put up in exchange for the Fed’s assistance.

“It was very difficult and in many ways distasteful intervention that we had to do on the grounds that we needed to do that to prevent the system from collapsing,” Bernanke said. “But clearly, it is something fundamentally wrong with a system in which some companies are ‘too big to fail.'”

Oh! Then I guess we really had no choice except to fork over the $700 Billion.  It was exactly $700 Billion though, wasn’t it Uncle Ben?  It took a court case by Bloomberg (because CONgress wouldn’t or couldn’t demand the info) to reveal the true number of the bailout.  Vise grips and shot glasses at the ready, here are the real numbers we are all on the hook to the FED for.

The amount of money in secret loans that some of the big Wall Street banks received from the Federal Reserve is absolutely staggering.  The following figures come directly from a GAO report….

Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Bank of America – $1.344 trillion
Goldman Sachs – $814 billion
JP Morgan Chase – $391 billion

OMG that’s $7.1 TRILLION and then with the bailouts of foreign banks, yes most of the major banks in Europe, and yes we did those too, but you know the information is “so sensitive”.  The total is $16.115 TRILLION and that is more than the annual GDP of the entire country!

But this has been good for the economy right?  I mean if we, as the American people, throw that much money at the problem things are getting better.  I mean the banks did the responsible thing to fix the problem, after all we have trusted them with an entire year’s worth of labor by everyone and every company in the US.  Well…..consider these two facts.

1). Over the past few years, big Wall Street banks have made huge amounts of money speculating on the price of food.  This has caused food prices all over the globe to soar and it has caused tremendous hardship for hundreds of millions of families around the planet.  The following is from a recent article in The Independent….

Speculation by large investment banks is driving up food prices for the world’s poorest people, tipping millions into hunger and poverty. Investment in food commodities by banks and hedge funds has risen from $65bn to $126bn (£41bn to £79bn) in the past five years, helping to push prices to 30-year highs and causing sharp price fluctuations that have little to do with the actual supply of food, says the United Nations’ leading expert on food.

Hedge funds, pension funds and investment banks such as Goldman Sachs, Morgan Stanley and Barclays Capital now dominate the food commodities markets, dwarfing the amount traded by actual food producers and buyers.

Goldman Sachs alone has earned hundreds of millions of dollars in profits from food speculation.

2). According to the New York Times, the too big to fail banks have complete domination over derivatives trading.  Every month a secret meeting that includes representatives from JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup is held in New York to coordinate their control over the derivatives marketplace.  The following is how the New York Times describes those meetings….

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan. The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

When the derivatives market fully implodes, there will not be enough money in the world to bail everyone out.  According to the Comptroller of the Currency, the too big to fail banks have exposure to derivatives that is absolutely outrageous.  Just check out the following numbers….

JPMorgan Chase – $70.1 Trillion

Citibank – $52.1 Trillion

Bank of America – $50.1 Trillion

Goldman Sachs – $44.2 Trillion

That’s over $200 TRILLION dollars, more than 3 ½ TIMES the global GDP! And that is just the Big Five’s exposure to the derivatives market.

This is beyond insane and would be funny except we are being enslaved to keep it floating. When you combine these facts with the current crisis in the EU, and the fact CONgress has gutted Dodd-Frank and even voted down the Volcker rule that would not allow banks to speculate with our deposits, it doesn’t even make sense to a brick wall.

I write this article because the banksters are counting on us not understanding how well they have fleeced our global economy with no hopes of any recovery.  They hope we will all just say this is high finance and we don’t need to understand it.  You would understand if your teenage ran up $5,000 in credit card bills wouldn’t you? And I am certain what you would say and do to your irresponsible teenager who did such a thing.  THEY would be grounded for LIFE, and you certainly wouldn’t give them any more of your money!  For each and every one of us, we need to understand this is the very same thing, only the irresponsible teenagers in this scenario are the FED, the banksters, and our CONgress, and I am being nice. Criminals could also be used to replace irresponsible teenager in this real life scenario, lots of criminals.  So what are we going to do about this, DAD? MOM?  There really isn’t anybody else stepping up, nowhere in the world.  Sorry to be such a bummer, but it is what it is.

Financial Sector Resignations Continue.. This Phenomena Really Has Legs.

In a continuation of our previous article, we continue with the assistance of those previously acknowledged to follow this seemingly mass migration of senior financial experts globally.  This now far exceeds “normal attrition”.  If we are to believe Benjamin Fulford and others, this is the “taking down” of the cabal that has been responsible for the biggest theft of wealth in history. As we also said, the nature of these resignations is most telling.  Fifty-one percent resigned or stepped down, 26 percent retired, and only 9 percent left to take other jobs….

I would welcome anyone in “the know” to comment.  I know a lot of financial industry folks read this blog.  Maybe it is time and it may be the only time to contribute positively to this discussion and the events unfolding.

Certainly, the evidence is supporting that events are unfolding as Fulford and others are contending.  If that is so, then we should be seeing some sort of major media announcement within the next week.  We will continue to follow this closely.  It does seem important enough to pay close attention.

Also, if this is what is happening (a complete do-over of the global financial system), it is the most important event of our lifetimes.  Anyone who can help us understand this correctly is welcome to join the discussion.

3/07/12 (AUSTRALIA) Customers Ltd, Tim Wildash has cashed himself out as chief executive of Australia’s largest ATM operator
http://goo.gl/eZJMb

3/07/12 (USA CA) CALSTRS, Pascal Villiger, senior private equity portfolio manager at the $145 billion California State Teachers’ Retirement System resigns
http://goo.gl/ub0ke

3/07/12 (USA) Astaire quits Bank of America Merrill to dance to Barclays Capital’s tune
http://goo.gl/Zv6Ny

3/08/12 (UK)  Schroders, Chairman  Michael Miles  depart as fees, inflows drop. UK’s biggest fund management firm.
goo.gl/TgURM

3/08/12 (USA NY) Schroders, CIO Alan Brown is steps down
http://goo.gl/ZTtYo

3/08/12 (USA IL) CBOE Executive Patrick Fay Put on Leave Amid SEC Probe
http://goo.gl/x5snO

3/08/12 (USA NH & RI) Bristol County Savings Bank president E. Dennis Kelly retires after 35 years
http://goo.gl/8KVKn

3/08/12 (GERMANY) Clearstream Banking AG – Katja Rosenkranz To Leave Deutsche Börse Group [stockmarket]
http://goo.gl/RiVNi

3/08/12 (UK) B&CE CEO Brian Griffiths is to retire later this year
http://goo.gl/AV7Sk

3/08/12 (UK) Invesco Trimark Ltd, portfolio manager Dana Love has resigned.
http://goo.gl/MyQ90

3/08/12 (ISRAEL) Bank of Israel Governor Stanley Fischer will hand in his shock resignation in the coming days and take up a new position as head of the Bank of Zambia. Finance Minister Yuval Steinitz is believed to be furious with Fischer’s decision. Treasury officials said he even canceled his participation in the office’s annual Purim party in order to convince Fischer to reverse his decision.
http://goo.gl/0DlSA

3/08/12 (SOUTH AFRICA) Standard Bank Group Limited (SBK), board member Sir Paul Judge retires.
http://goo.gl/SjSPg

3/08/12 (SOUTH AFRICA) Standard Bank Groupl Limited (SBK), board member Sir Sam Jonah retires.
http://goo.gl/SjSPg

3/09/12 (MONGOLIA) Mongol Bank President Alag Batsukh submitted his resignation letter to Speaker of Parliament D. Demberel at the end of last month. He described his reason for resigning as a lack of support by Parliament.
http://goo.gl/RDmNx

3/09/12 (MONGOLIA) Asia Pacific Securities, General Manager Narantuguldur Saijrakh recently resigned, to focus on his role as Director of Khan Investment Management, investment advisor to the Khan Mongolia Equity Fund – the first open-ended investment vehicle with monthly dealing that invests in Mongolia related equities listed both domestically and internationally.
http://goo.gl/2T4R6

3/09/12 (Côte d’Ivoire) Banque Central des Etats d’Afrique de l’Ouest (BCEAO) The Ivorian governor of the multi-billion dollar West Africa Francophone bank, Philippe-Henry Dacoury-Tabley, resigned his post.
http://goo.gl/CevLn

3/09/12 (UK) Lazard , co-head of investment banking Alexis de Rosnay quits. De Rosnay specialises in the healthcare sector, he has advised Teva Pharmaceutical and Novartis.
http://goo.gl/3gzbi

3/09/12 (UK) Deutsche Bank PWM, UK head of portfolio management Martyn Surguy resigned.
http://goo.gl/5Ti2p

3/09/12 (UK) Deutsche Bank PWM, head of discretionary management, Kypros Charalambous, having also stepped down.
http://goo.gl/5Ti2p

3/09/12 (HONG KONG) Bank of America Merrill Lynch, K.J. Kim, responsible for Southeast Asia, resigned
http://goo.gl/sE7xh

3/09/12 (HONG KONG) Bank of America Merrill Lynch, Jimmy Choi, who was in charge of high-yield debt, resigned.
http://goo.gl/sE7xh

3/09/12 (HONG KONG) Bank of America Merrill Lynch, Leonard Ng, a vice-president in Hong Kong resigned.
http://goo.gl/sE7xh

3/09/12 (AUSTRALIA) Bank of Queensland CFO Ram Kangatharan plans to leave the bank.
http://goo.gl/ieNea

3/09/12 (USA) Cerberus Capital Management LP, CEO Robert Nardelli resigns.
http://goo.gl/9uKVx

3/10/12 (AUSTRALIA) WESTPAC, Rob Chapman opted to quit running its regional subsidiary St George Bank.
http://goo.gl/G6MD

3/10/12 (TURKEY) Garanti Bank, The deputy CEO of Turkish lender Tolga Egemen, has decided to quit.
http://goo.gl/vAMzV

3/10/12 (CHINA) Korea Development Bank, Shanghai unit senior manager Stella Wen resigned.
http://goo.gl/55CqZ

3/10/12 (HONG KONG) Deutsche Bank, Johan Sudiman resigns as director.
http://goo.gl/6CYGP

3/12/12 (USA) John Lewis Partnership Pension Trust, head of investments Andrew Chapman, resigns
http://goo.gl/hevqh

3/12/12 (USA CA) California’s Department of Financial Institutions, commissioner William Haraf resigned. The DFI did not say why he is leaving.
http://goo.gl/zquTc

3/12/12 (KUWAIT) Gulf Bank, Chairman Ali Rashaid Al Bader quits
http://goo.gl/LDz9b

3/12/12 (UK and IRELAND) Allfunds Bank, head of UK and Ireland Alan Gadd is stepping down from his role at the end of April.
http://goo.gl/4DF6i

3/12/12 (USA) ICAP, CEO of the electronic broking business David Rutter step down following a restructuring of the business.
http://goo.gl/SUHqW

3/12/12 (UK) SVG Capital, chairman Nicholas Ferguson resigns. His departure left him well placed to succeed James Murdoch as chairman of BSkyB should the latter bow to investor pressure and step down. Other investors in the satellite broadcaster suggested Ferguson might be seen as too close to Murdoch to win the support of institutional shareholders.
http://goo.gl/z19wH

3/12/12 (UK) Park Hill Group – Blackstone Group’s fundraising advisory arm, Managing Partner of private equity and hedge fund distribution Chris Leach resigns
http://goo.gl/jnHax

3/12/12 (UK) Park Hill Group – Blackstone Group’s fundraising advisory arm, Managing Partner Justin Bower resigns
http://goo.gl/jnHax

3/12/12 (UK)  The chief executive David Rutter of the electronic broking business at interdealer broker Icap stepping down.
http://goo.gl/sxk4y

3/12/12 (SOUTH AFRICA) The Development Bank of Southern Africa (DBSA), CEO Paul Baloyi resigns.
http://goo.gl/yX4xo

3/12/12 (USA) Lehman Brothers Holdings Inc, CEO Bryan Marsal Resigns Title, Remains on as Adviser
http://goo.gl/1K9zV

3/12/12 (USA IL) CME Group Inc, CEO Craig Donohues will step down at year end.
http://goo.gl/lvzgC

3/13/12 (USA) Eaton Vance Corp, Treasurer and CFO Robert J. Whelan has stepped down.
http://goo.gl/oxmbL

3/12/12 (USA IL) CBOE Holdings Inc. (CBOE), senior compliance executive Patrick Fay has resigned. The options exchange being investigated by the Securities and Exchange Commission, Fay had been placed on leave after the SEC began investigating the options-market operator’s oversight of traders.
http://goo.gl/gj4W6

3/13/12 (USA) Mithras Investment Trust, chairman Mike Wooderson will step down
http://goo.gl/UjO2e

3/13/12 (USA) PHH Mortgage, President Luke Hayden resigned from to pursue what the company calls “other interests.” http://goo.gl/iaqQf

3/13/12 (USA) PHH Mortgage, Treasurer Mark Johnson.resigned
http://goo.gl/iaqQf

3/13/12 (AUSTRALIA) WESTPAC, head of corporate affairs after David Bell decided to step down from the role. Bell is the latest top executive to leave the bank.
http://goo.gl/FntUz

3/13/12 (UK) Capula’s Systemic Trading Head Qiang Dai to Leave Fund
http://goo.gl/zkrN2

3/13/12 (UAE) National Bank of Abu Dhabi, CEO Michael Tomalin, will retire from the post in a few months.
http://goo.gl/dzBW8

3/13/12 (ISRAEL) Osem Investments Ltd, CEO Gazi Kaplan has tendered his resignation, effective April 2, citing heath reasons. Nestlé SA owns 58.8% of Osem.
http://goo.gl/t032l

3/13/12 (USA) Paulson & Co.’s, partner and head of the global bank team Robert Lacoursiere has quit to form his own hedge fund
http://goo.gl/I8UNd

3/13/12 (AUSTRALIA) ASX Ltd, Chairman David Gonski will step down from his role at Australia’s main stock market operator after being appointed to oversee almost A$90 billion ($95 billion) in the nation’s sovereign-wealth funds.
http://goo.gl/gJN33

3/13/12 (UK) JP Morgan, Asset Management European chief Jamie Broderick is to step down more than 20 years at the firm.
http://goo.gl/MV65V

3/13/12 (UK) SVG Chairman Nicholas Ferguson retires.
http://goo.gl/hTDDY

3/13/12 (UK) SVG Director Edgar Koning retires.
http://goo.gl/hTDDY

3/13/12 (UK) SVG Director Denis Raeburn retires.
http://goo.gl/hTDDY

3/13/12 (UK) SVG Director Francis Finlay retires.
http://goo.gl/hTDDY

3/14/12 (UK) Goldman Sachs, executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, Greg Smith, is resigning today.
http://americankabuki.blogspot.com/2012/03/why-i-am-leaving-goldman-sachs.html

3/14/12 (SOUTH AFRICA) ABSA chairman Garth Griffin to retire
http://goo.gl/Mhjb5

3/14/12 (UK)  WorldSpreads, CEO Conor Foley  resigns
http://goo.gl/GgT4z

3/15/12 (US WA) HomeStreet Bank, EVP and CFO  David Hooston  resigns
goo.gl/UUlc0

3/15/12 (DENMARK)  Sparekassen Faaborg board member  Steen Grønved Nielsen  resigns
http://tinyurl.com/6rd3m74

3/15/12 (UK)  RBC Capital Markets head of SSA syndicate desk Noel Williams  resigns
http://tinyurl.com/7zcf4z8

3/15/12 (UK)  Novia London sales manager Dave Chassell  quits
http://tinyurl.com/7gx6sn2

3/15/12 (US CA)  Prosper Finance (online venture captial services) CEO  Chris Larsen  steps down
http://tinyurl.com/6lhu8xx

3/15/12 (UK)  The Royal British Legion’s (fund) director of corp. communications  Stuart Gendall  resigns
http://tinyurl.com/7bhtysl

3/15/12 (IRELAND)  President of Sinn Fein USA (fund)  Larry Downes  steps down
http://tinyurl.com/7uqnwcg

3/16/12 (AUSTRALIA)  Investorfirst CFO and company secretary  Ariel Sivikofsky resigns
http://tinyurl.com/7jdshty

3/16/12 (MALAYSIA)  Amanah Raya Bhd (trust) managing director  Datuk Ahmad Rodzi Pawanteh  steps down
http://tinyurl.com/7wbujpm

3/16/12 (UK) Towry (investment & fin. advice)  Non-exec chairman Glyn Jones steps down
http://tinyurl.com/83g3y8b

3/16/12 (GERMANY)  Deutsche Bank Chief risk officer (CRO)of  Hugo Bänziger  steps down
http://tinyurl.com/7pmal9k

3/16/12 (US IL)  Henderson Global Investors Inc. head of the International Opportunities Fund  Iain Clark  steps down
http://tinyurl.com/7kfxz3j

3/16/12 (US CA)  Executive VP and Chief Compliance Officer of Heritage Bank of Commerce  Margaret Incandela  resigns
http://tinyurl.com/6wcaqaz

3/16/12 (US VA)  Genworth Financial board member  J. Robert Kerrey  resigns to campaign for senate seat
http://tinyurl.com/7566f74

3/16/12 (UK)  CEO of the FSA (Financial Services Authority)  Hector Sants  to leave
http://tinyurl.com/7av7v5n>

3/19/12 (US IA)  ISU Foundation (fund), President and CEO of the  Dan Saftig  to step down
http://tinyurl.com/7jvb24x

3/19/12 (BRAZIL)  HSBC Brazil CEO Conrado Engel  steps down
http://tinyurl.com/89uayoo

3/19/12 (UAE)  Finance head at SNR Denton Islamic  Sheikh Muddassir Siddiqui  resignsto pursue advisory role
http://tinyurl.com/84avxch

3/19/12 (SWITZERLAND)  Julius Baer bank’s chairman  Raymond Baer  steps down in a “surprise departure”
http://tinyurl.com/84gcl3z

3/19/12 (GERMANY) Deutsche Bank, asset management chief  Kevin Parker  to leave executive committee
http://goo.gl/ahZlJ

3/19/12 (GERMANY) Deutsche Bank, head of private wealth management Pierre de Weck resigns from executive committee
http://goo.gl/wRZkU

3/19/12 (HONG KONG)  China Development Bank HK branch CEO  Di Weiping  retires
http://tinyurl.com/7xcskmp

3/19/12 (US ID)  SunTrust Bank president and CEO  Thomas Rueger  to retire
http://tinyurl.com/7n2l6sr

3/19/12 (SWEDEN)  AP6 (private equity) CEO  Marianne Dicander Alexandersson steps down
http://tinyurl.com/7bnvygp

3/19/12 (SWITZERLAND)  FINMA (Swiss Financial Market Supervisory Authority)  Vice-chair Monica Mächler  to step down
http://tinyurl.com/7r9akho

3/20/12 (KUWAIT)  National Investments Co. chairman  Yousef Al Majid  resigns
http://tinyurl.com/7maw3xx

3/20/12 (UK)  Bank of America, Co-head of distressed debt at  Michael Guy  resigns
http://tinyurl.com/75eml6v

3/20/12 (US PA)  Penseco Financial Services Corp, Former state senator Robert J. Mellow resigns from board
http://tinyurl.com/6rxqeo9

3/20/12 (US TX)  Acquisition chief Dan Magder  quits Lone Star Investments
http://tinyurl.com/6qm2rj4

3/20/12 (NIGERIA)  Chairman of House Committee on Capital Markets  Hon. Herman Hembe  resigns due to allegations of bribery
http://tinyurl.com/7r6dk54

3/20/12 (Hong Kong)  Head of Deutsche Bank Asia-Pac  Loh Boon Chye quits
http://tinyurl.com/6muckmq

3/20/12 (US NY)  Deutsche Bank, head of asset management  Kevin Parker  steps down from executive committee
goo.gl/4NO66

3/20/12 (GERMANY) Deutsche Bank, Chairman and CEO  Josef Ackermann exits with pension of €18.7 million
http://goo.gl/eiF39

3/20/12 (UK) Coller Capital, CEO Charles Hippsley has left to help lead a Christian organisation in London.
http://goo.gl/rVFz0

3/21/12 (GERMANY)  Deutsche Bank AG, Co-head Wolfgang Hammes  leaves
http://tinyurl.com/74ks8jk

3/21/12 (UK)  Aviva Investor’s European equity head  John Botham  exits
http://tinyurl.com/7qwlc26

3/21/12 (CANADA)  National Bank’s Ontaria, Atlantic region manager  Mike Miller leaves
http://tinyurl.com/7kq4bdp

3/21/12 (UK)  Royal Bank of Scotland Group’s global head of equity prime services  Gregory Wagner  resigns
http://tinyurl.com/6vz8f8k

3/21/12 (US DC)  Liquidity Services Inc, Chief information officer Eric Dean  resigns
http://tinyurl.com/7v2c4ku

3/22/12 (UK)  Global equity head Neil Rogan  resigns from Henderson Global Investors
http://tinyurl.com/7v2c4ku

3/22/12 (NETHERLANDS) CIO at Nedlloyd Pension Fund  Bert Tibben  step down
http://goo.gl/NHE94

3/22/12 (UK) Bank of America Corp, chairman of global banking and markets, Andrea Orcel steps down, goes to UBS
http://goo.gl/AVXL2

3/22/12 (UK) Bank of America Corp, Jonathan Moulds steps down, helped build the bank’s over-the-counter derivatives trading business and held positions including global head of rate derivatives trading, head of global derivatives and head of global rates and commodities.
http://goo.gl/AVXL2

3/25/12 (EGYPT) National Bank of Egypt, CEO Tarek Amer said that he will step down from his position at the end of 2012.
http://goo.gl/tC7Ma

It is not however just the number of resignations, but more interesting is the nature of how a lot of these players are exiting.  Consider this very revealing OP-ED piece from the New Times Opinion Page, which appeared on 14 March.  It is like the saying, when it walks like a duck, talks like a duck, and now THE DUCK himself says it’s a duck.  Well, you be the judge.

Op-Ed Contributor – New York Times Opinion Section

Why I Am Leaving Goldman Sachs By GREG SMITH, Published: March 14, 2012

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.

My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

Greg Smith is resigning today as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa.

All I can say is I expect an exciting next few months.  I also think it needs to be said here that it also appears that there is a major effort by some very courageous people (like Greg Smith), who are taking great personal risk, to assist in this “cleansing”.  We owe them a large debt of gratitude.

Why the Collapse of the EU is Important to You

U.S. bank exposure to the European debt crisis is estimated at $640 billion, nearly 5% of total U.S. banking assets, according to recent research papers written for Congress. Need we say more than that?  Yet, U.S. banks increased sales of insurance against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the first half of 2011, boosting the risk of payouts in the event of defaults.

Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, accounting for two-thirds of the total related to the five nations, BIS data show.

The payout risks are higher than what JPMorgan Chase & Co. (JPM), Morgan Stanley and Goldman Sachs Group Inc. (GS), the leading CDS underwriters in the U.S., report. The banks say their net positions are smaller because they purchase swaps to offset ones they’re selling to other companies. With banks on both sides of the Atlantic using derivatives to hedge, potential losses aren’t being reduced, said Frederick Cannon, director of research at New York-based investment bank Keefe, Bruyette & Woods Inc.

Similar hedging strategies almost failed in 2008 when American International Group Inc. couldn’t pay insurance on mortgage debt. While banks that sold protection on European sovereign debt have so far bet the right way, a plan announced by Greek Prime Minister George Papandreou to hold a referendum on the latest bailout package sent markets reeling and cast doubt on the ability of his country to avert default.  In addition, the real axis of financial power, the emergence of a new “political-economic lobby” was hatched in a chance meeting at the Frankfurt Opera House on 19 October, where all of its members attended a ceremony to mark the end of Jean-Claude Trichet’s tenure as President of the ECB. This group, consisting of German Chancellor Angela Merkel, French President Nicolas Sarkozy – increasingly dubbed ‘Merkozy’ in the European press – but also Eurogroup President Jean-Claude Juncker, IMF Managing Director Christine Lagarde, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy, ECB President Mario Draghi, and Olli Rehn, the EU Commissioner for Economic and Monetary Affairs have emerged as a new power bloc.

Their discussions concerning redrawing the European Union have already leaked in the press and have sent quivers through the international financial markets.  In order to “ditch” the bad assets, those 29 banks with the greatest exposure would need to take severe “haircuts, and they are NOT as hedged with swaps as they are pretending they are at the moment.

The CDS holdings of U.S. banks are almost three times as much as their $181 billion in direct lending to the five countries at the end of June, according to the most recent data available from BIS. Adding CDS raises the total risk to $767 billion, a 20 percent increase over six months, the data show. BIS doesn’t report which firms sold how much, or to whom. A credit-default swap is a contract that requires one party to pay another for the face value of a bond if the issuer defaults.

Five banks — JPMorgan, Morgan Stanley, Goldman Sachs, Bank of America Corp. (BAC) and Citigroup Inc. (C) — write 97 percent of all credit-default swaps in the U.S., according to the Office of the Comptroller of the Currency. The five firms had total net exposure of $45 billion to the debt of Greece, Portugal, Ireland, Spain and Italy, according to disclosures the companies made at the end of the third quarter (don’t laugh here).  So if you believe the BIS here, these same banks have at risk $767 billion, but only a net exposure of $45 billion. What’s that smell?

Last Friday at the meeting of the G20 in Cannes, the Financial Stability Board (FSB) revealed a list of 29 global systemically important financial institutions (known as the G-Sifis). These institutions are deemed to be so important to the interconnected global financial system that the unexpected and disorderly failure of any one of them could seriously threaten the world’s financial markets. Of the batch, seven US banks made the list: Bank of America Corp. (NYSE: BAC), Bank of New York Mellon (NYSE: BK), Citigroup Inc. (NYSE: C), Goldman Sachs Group Inc. (NYSE: GS), JP Morgan Chase & Co. (NYSE: JPM), State Street Corp. (NYSE: STT), and Wells Fargo & Co. (NYSE: WFC). Now things start to get interesting.

These 29 banks have been awarded an implicit guarantee that they are, indeed, ‘too big to fail.’ That’s the good news. The not-so-good news — at least from the institutional point of view — is that capital requirements for the banks will increase and each bank must create a plan by the end of 2012 describing how they would wind themselves down if necessary.  Read more: 29 Global Banks ‘Too Big To Fail’, But Not Too Big to Tell the Truth (BAC, BK, C, GS, JPM, STT, WFC, MS) – 24/7 Wall St. http://247wallst.com/2011/11/08/29-global-banks-%e2%80%98too-big-to-fail%e2%80%99-but-not-too-big-to-tell-the-truth-bac-bk-c-gs-jpm-stt-wfc-ms/#ixzz1dNbkihCX

It doesn’t take genius to figure out the gig is up.  The real question now is how hard does the EU fall down and who does it knock down with it?  Does it deliver the knock-out blow to the US economy?  The short answer is probably not, but it absolutely assures a period of hyperinflation that the government will not be able to deny as it is now denying related to the current impacts already being felt.  Just two words for you, food and fuel, enough said, huh?

Given this current situation, bank transfer day isn’t all a lefty progressive thing, is it?  Remember, when banks need money, they always take ours, isn’t that right Jon?

The European Union Has Entered Final Meltdown Phase

As we have outlined in previous articles, The EU will collapse, it was a matter of time.  Well, that time has arrived.  The falsely placed hope was that Greece would go silently into the night and then the politicos in Germany and France then could consolidate any impacts from the rest of the PIIGS and somehow manage the overwhelming debt over time. It was a fool’s dream from the onset.

It was so because first there is no way the German and French People would settle with being saddled with the cost of that bailout. The big secret is that both Germany and France are not in that good a shape themselves.  France’s external debt to GDP is 208% and Germany’s external debt to GDP is 163%.  Here is what the house of cards really looks like:

 

It is deceptive, at least, to use the Public Debt to GDP to honestly evaluate the situation, given the enormous exposure of the German and French banks are facing in the derivatives market float that currently exists. Keep it in your mind always that is the banks behind all of this and the ECB would have to bail them out when the final wheel falls off the joy wagon.

There is no way that German and French banks can cover their exposure and the ECB cannot possibly print that much money without setting off massive hyperinflation that would follow any effort to try and print that many Euros. The hope was that Greece would accept the draconian austerity demanded by the bankers to cover the 220% external debt (ED) to GDP.

Where it gets really crazy is that IF Greece went silently into what can only be described as a deep depression, somehow the EU could then manage the Italian ED (135%), the Irish ED 1098%, the Portuguese ED 239%, and the Spanish ED of 173%, basically on the backs of the French and Germans.  See how crazy it gets.

Well it just got a whole lot crazier in the last 72 hours.  The country that invented drama and democracy is not disappointing the world on either front. Greek Prime Minister George Papandreou on Monday called for two high- stakes votes.  The first asks parliament to say by the end of this week whether it has confidence in his leadership. The second is a referendum in which Greek voters would approve or reject, possibly by year’s end, Europe’s latest debt-crisis workout. The move blindsided European leaders on the eve of a global summit and rocked lawmakers in Papandreou’s party, some of whom are now calling for him to step down. The next day, stocks tumbled worldwide, the euro declined and Italian bonds plunged.

French banks and other lenders exposed to Greece and other weak euro zone countries slumped on Tuesday after Greece’s leader said he would put a bailout plan to a referendum, raising the risk of a disorderly default.  Papandreou knew all along he could not force the Greek people to accept the austerity plan proposed by the ECB and IMF.  Europe’s latest bailout proposal falls far short of what’s needed. Under the deal, private banks holding Greek debt would voluntarily accept a 50 percent write-off on their returns; the European Financial Stability Facility, the EU’s bailout fund, would be leveraged to 1 trillion euros ($1.37 trillion) from 400 billion euros; and European banks would raise 106 billion euros ($145 billion) in new capital by June 2012. As for Greece, it is due to receive 130 billion euros ($180 billion) in public funds on top of 110 billion euros pledged in 2010.

Writedowns of Greece’s sovereign debt should be much steeper. Greek bonds held by the European Central Bank would not be covered, so the writedown is really less than 50 percent. It needs to be closer to 70 percent to make Greece’s debt burden bearable. In addition, the EFSF needs a war chest of at least 3 trillion euros to make sure Europe’s banks are recapitalized and to guarantee the financing needs of Italy and other struggling governments.

Greeks know that this latest bailout proposal will also come with many unpopular strings attached, including further austerity measures. In an Oct. 27 poll for the Greek weekly To Vima, the majority said the deal should be put to a national vote, with 58 percent calling it “negative” or “probably negative.” Deep budget cuts, broken pension promises and heavy government job losses have already led to strikes, street protests and violence.

Then Monday’s surprise was, as Greek politics grew ever more chaotic, strong political protests erupted as the government moved to replace military chiefs with officers seen as more supportive of George Papandreou, the prime minister.  In a surprise development, Panos Beglitis, Defence Minister, a close confidante of Mr. Papandreou, summoned the chiefs of the army, navy and air-force and announced that they were being replaced by other senior officers.

Neither the minister nor any government spokesman offered an explanation for the sudden, sweeping changes, which were scheduled to be considered on November 7 as part of a regular annual review of military leadership retirements and promotions. Usually the annual changes do not affect the entire leadership. “Under no circumstances will these changes be accepted, at a time when the government is collapsing and has not even secured a vote of confidence,” said an official announcement by the opposition conservative New Democracy party.

Add to this Greece’s government looked on the verge of implosion on Tuesday ahead of a Friday confidence vote as a socialist deputy defected and another cadre called for early elections after the prime minister called a referendum on his EU debt rescue. Greek Prime Minister George Papandreou called the referendum late Monday in a bid to secure approval of his disputed economic policies without early elections. But the gambit backfired when a former deputy minister defected, reducing the ruling party’s majority in the 300-seat parliament to 152 deputies. Moments later, the head of parliament’s economic affairs committee Vasso Papandreou called for an early ballot and a temporary unity government to “safeguard” the EU deal agreed last week to slash Greece’s huge debt by nearly a third.

This “popular revolutionary” move is going to spread rapidly to the rest of the PIIGS. The unraveling will be rapid.  The exposure of the American banks is significant and they have already been slammed this week with MF Global filing for bankruptcy on Monday, investors pummeled many financial stocks, fearful that problems were lurking on the books of other Wall Street firms. It was a crisis of confidence, not unlike in 2008 when the markets punished stocks on mere speculation of trouble.  An interesting note is that Jon Corazine, the ex-head of Goldman Sachs, was at the helm at MF Global.  Imagine that! A leopard doesn’t change its spots!

We are going to witness the largest transfer of wealth in the history of the world within the next few weeks and the citizens of Germany, France, US, and Britain are NOT the winners, and neither is the 1%.  The winners are the 1/4%.  Are we catching on yet?