And the Band Played On
To say that events that unfolded in the world’s financial markets last week were ‘unprecedented’ is perhaps a little too cliché. So let us revisit some of the key events which reportedly unfolded in the wake of Lehman’s demise – a fate that was sealed last weekend [Sept. 13 / 14] when last attempts to rescue the storied U.S. Investment Bank hit-the-rocks [or ice, perhaps?].
Lehman’s Demise Was Most Assuredly All-About J.P. Morgan
First off, I found it perversely odd that there were allegedly serious suitors who got to take a peak at the state of Lehman’s finances. Institutions rumored to be involved were Korea Exchange Bank, Barclays and B of A. What stuck in my craw was the widely publicized revelation that,
The Lehman rescue failed because the US government was unwilling to issue guarantees to the potential purchasers.
Ladies and gentlemen, are we to believe that the U.S. Fed and Treasury preferred to shoulder, as it turns out, the bailout of the whole global financial system rather than provide some comfort for a would-be purchaser of Lehman?
This makes absolutely zero sense. But the following does:
Late last week, I wrote about a very strange occurrence – the reporting of J.P. Morgan “transferring” 138 billion dollars to Lehman, after Lehman had already filed for Chapter 11 bankruptcy early last Monday morning.
This bears repeating.
The advance was reportedly “to allow” Lehman to settle securities trades with clients. J.P. Morgan was then immediately reimbursed by the Federal Reserve for the same 138 billion.
What was not originally reported, or likely not understood at the time due to the types of securities that Lehman did most of their business in [Credit Derivatives], it is a virtual certainty that J.P. Morgan [the largest derivatives player in the world with 8.1 Trillion in Credit Derivatives alone] was the “client” [the other side of the Lehman trades that needed to be settled].
The critical piece of information that completes the daisy-chain: The world only learned about J.P. Morgan’s 138 billion advance from a bankruptcy court document, where Lehman was asking the court for the authority to give the settlement of claims of J.P. Morgan “special status.”
Here’s how this flow-of-funds looks visually:
It is highly likely [or a certainty on my planet] that J.P. Morgan was INSOLVENT and was “BAILED OUT” last Monday, September 15, to the tune of 138 billion dollars. This would explain why the Fed and Treasury dictated that Lehman fail – to disguise or otherwise obfuscate the recapitalization of or illicit transfer of 138 billion to A MUCH SICKER, TEETERING ENTITY, J.P. Morgan Chase.
This makes sense. Investment banks are dropping like flies, owing to their involvement in credit derivatives – this is a fact.
J. P. Morgan is – HANDS DOWN – the largest derivatives player in the world with a book of 90 Trillion in notional value on March 31, 2008 – with 9% of the book composed of Credit Derivatives. That amounts to a cool 8.1 Trillion worth of Credit Derivatives. We know this from the Office of the Comptroller of the Currency’s Quarterly Derivatives Report – pg. 24.
As to “how” J.P. Morgan could be insolvent without a public declaration, I remind you of something mentioned in this space on several occasions; it was Dawn Kopecki that reported in BusinessWeek Online, back in 2006, in a piece titled, Intelligence Czar Can Waive SEC Rules,
“President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.”
In this space over the past 4 years, much has been reported concerning charges of interference [by the Federal Reserve and Government] in what are allegedly “free markets.” Officialdom, along with their agents in the controlled mainstream media, has long dismissed these claims as the work conspiracy minded kooks. Then, just last week, the Chicago Tribune published an article – citing a private meeting that economist David Hale had with Fed Chairman Ben Bernanke,
NAPLES, Fla. — Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.
The problem with that approach is that the value of the dollar plunged against foreign currencies, causing crude oil prices to skyrocket because oil is pegged to the dollar. It affected food prices, gasoline and family budgets.
"Ben, you are playing a very unique role in world economic history," Hale recalled telling Bernanke, an expert in the Great Depression. "You are the first central bank governor of the United States to preside over a recession with no decline in commodity prices."
Bernanke could hypothetically limit inflation in commodities by raising interest rates, a policy that would restrict the flow of money but potentially lead to an avalanche of bank failures. At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.
"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."…
Where I come from, when one “loses control” of things – it implicitly means that they previously HAD control of the same.
Ergo; this amounts to confirmation – from Ben Bernanke himself – the Fed and / or Treasury HAS BEEN preoccupied with and actively involved in price suppression in the commodity complex.
Make no mistake, these vain attempts to “rig” or control the global markets alluded to above are primarily responsible to the distortions and dislocations which have destabilized our current global financial order.
To help drive this point home, consider how the Washington Post reported the tone of deliberations between monetary officials on Capitol Hill on Thursday night – Sept. 18th,
Congressional leaders gave bipartisan support to the administration's efforts after a meeting last night with Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke
Paulson and Bernanke presented a "chilling" picture of the state of the financial system, according to a participant in the meeting who spoke on condition of anonymity. Lawmakers were told that the consequences would be grave if they failed to pass legislation by the end of next week. Sen. Harry Reid (D-Nev.) and Rep. Nancy Pelosi (D-Calif.) committed to meeting that deadline.
So it really should come as no surprise that, as the text of Messer’s Paulson and Bernake’s latest “bailout plan” emerged this past weekend, it included such “ripe” stanzas as,
"Treasury will have authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled assets. Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States."
“Treasury's actions may also not be reviewed by any court of law or any administrative agency.”
It would now appear that we’ve come full-circle; the duopoly of the Fed / Treasury who have led us into the abyss are now being granted a blank check with no recourse available to anyone. The money changers are now writing their own laws, so it’s all going to be legal [or tolerated, perhaps?] too – at least for now – in America.
Given that the fiat U.S. Dollar is the world’s reserve currency, the flagship brand of the global Central Banking Cabal, it is now likely that real “undisclosed” struggle we are all really facing is, perhaps, the global collapse of fiat currency.
Goldman Sachs and Morgan Stanley have been granted banking charters and drinks will be served promptly on the stern of the Titanic.
Let the music play:
Overseas equity markets began the week on a positive note with Japan’s Nikkei Index gaining 169 points to 12,090. North American markets, on the other hand, fell hard. The DOW gave up 373.20 points to 11,015.20, the NASDAQ dropped 94.92 to 2,178.98 and the S & P lost 48 to 1,207.10. NYMEX crude oil futures added 15.45 to close at 120.00 per barrel.
On foreign exchange markets the U.S. Dollar Index was rocked for 1.52 to close at 76.06.
In the interest rate complex, yields soared with the benchmark 5 yr. bond ending the day at 3.01% while the 10 yr. government bond finished the day at 3.81%.
Precious metals were up strongly with COMEX gold futures adding 32.40 to 905.20 per ounce while COMEX silver futures gained .93 to 13.58 per ounce. The XAU Index gained 10.25 to 149.64 and the HUI added 30.39 to 354.13.
No scheduled economic news releases of note are due tomorrow, so I extend warm wishes and a pleasant fall evening to you all!
About Rob Kirby
Rob Kirby Archive
|01/13/2012||The Dollar Centric Derivatives Complex: Progenitor of Parasitic, Ponzi Price-Fixing||story|
|10/04/2010||The Federal Reserve Is Selling Paper Gold and Buying Physical Gold||story|
|09/30/2010||Treating Symptoms, Ignoring the Root Cause||story|
|08/16/2010||The Longest Fix (aka The Rudest Rig)||story|
|08/02/2010||The Extinction of the Bond Vigilantes||story|
|06/07/2010||Toronto G20 Summit||story|
|02/09/2009||Crime Scene Investigation||story|
|11/03/2008||Fudging, Fundamentals and the Electoral Cycle||story|