Debt Ceiling Talks Breakdown/Temporary Default in Europe/gold and silver rebound

Good morning Ladies and Gentlemen:

I am so sorry that I could not give you a complete commentary on Thursday due to problems with
our service provider.  However I will make up for it this morning.

Before beginning, I would like to introduce to you the latest 3 entrants into the banking morgue, two banks in Florida and one in Colorado:

Bank Failures Rise to 58 in 2011

By THE ASSOCIATED PRESS

Published: July 22, 2011

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WASHINGTON (AP) — Regulators on Friday shut down two small banks in Florida and one in Colorado, bringing to 58 the number of bank failures this year.

The Federal Deposit Insurance Corporation seized the SouthShore Community Bank in Apollo Beach, Fla., the LandMark Bank of Florida in Sarasota, Fla., and the Bank of Choice in Greeley, Colo.

SouthShore Community Bank had about $46.3 million in assets and $45.3 million in deposits. LandMark Bank had about $275 million in assets and $246.7 million in deposits. That lifts to nine the number of lenders to collapse this year in Florida.

American Momentum Bank, based in Tampa, Fla., agreed to assume all of the deposits from the two Florida banks and to buy essentially all of their assets.

The Bank of Choice had about $1.07 billion in assets and $924.9 million in deposits. It is the fifth bank to fail this year in Colorado.

Bank Midwest, based in Kansas City, Mo., agreed to assume all of Bank of Choice’s deposits and buy about $853 million of its assets. Bank Midwest is a division of NBH Holdings, a privately held company based in Boston.

The failures are expected to cost the deposit insurance fund $331.4 million, combined.

SouthShore had two branches, LandMark had six and Bank of Choice had 17.

end

Gold closed at comex closing time  at $1601.30 up a cool $14.50.  Silver also rebounded firmly up $1.11 to $40.11.  The bankers tried to defend our 1600 gold level and 40 dollar silver level due to the massive calls placed on these metals.  Options expiry on the metals is on Tuesday.  First day notice for gold is Friday.  Gold and silver also responded to the temporary default on Greece and the massive bailout for that country.  The bailout in total is around 109 billion euros.  The rating agencies has determined a credit event and there will be payments made and we will watch this closely. Last night, Obama went on television to state there the two sides are wide apart on the debt ceiling debate.  Obama wants tax increases, the republicans want spending cuts without tax increases.  They have until August 2nd to come to an agreement.

Let us head over to the comex and see how trading fared yesterday.
The total gold comex OI fell by about 8000 contracts to 538,624 from  Thursday's level of 546,631.  Some of the longs were fleeced again by the crooked bankers. The front options expiry month of July saw the OI fall from 57 to 47 for a drop of 10 contracts with zero deliveries on Thursday.  We thus lost 10 contracts to cash settlements as time is running against Blythe Masters.  She must pony up more dollars to entice the last longs to accept cash.
The next delivery month is August and we are less than 1 week ago from first day notice.
The OI remains very high at 215,439 as approximately 30,000 contracts rolled out of the August contract and in the latter months.  The volume at the gold comex was pretty decent at 192,612 despite the roll overs.  The confirmed volume on Thursday was very high at 238,887.

The silver comex open interest remains relatively constant at the 116,000 contract level.
The OI reading for Friday was 116,016 down about 300 contracts from Thursday's level of 116,336.  The front delivery month of July saw its OI fall from 352 to 314 for a loss of 38 contracts.  We had 29 deliveries on Thursday so we lost 9 contracts to cash settlements as again JPMorgan must increase fiat to settle on our remaining longs. The next front month of September saw its OI fall by about 1000 contracts.  The new September OI is 58,893 having fallen from 59,833.  The estimated volume at the silver comex was 55,165 contracts.  The confirmed volume on Thursday was 75,421.

Here is the chart for 7/23/2011 regarding deliveries and inventory changes at the comex. 

Gold	Ounces
Withdrawals from Dealers Inventory	nil
Withdrawals fromCustomer Inventory	97,333 (Scotia Manfra)
Deposits to the Dealer Inventory	nil
Deposits to the Customer Inventory	nil
No of oz served (contracts)  today	0  nil
No of oz to be served  (notices)	4700 oz (4700 )
Total monthly oz gold served (contracts) so far this month	16,800 (168)
Total accumulative withdrawal of gold from the Dealers inventory this month	8700
Total accumulative withdrawal of gold from the Customer inventory this month	593,982

Let us begin with gold.  Again for the past 3 and 1/2 months no gold has been deposited
to the dealer.  We also had no gold withdrawn from the dealer.
We did have a massive 97,333 0z of gold withdrawn from the customer:

1. 97,204 oz removed from scotia
2.  129 oz removed from Manfra.

total withdrawal:  97,333 oz.

There were two major adjustments:

1.  a huge 130,735 oz of gold removed from the dealer back to the customer.
2. another huge 200,388 oz of gold leased from a customer to the dealer.

the boys are getting ready for first day notice.

The comex folk notified us again for the 7th straight day that there were no notices to deliver upon sent in gold so the number of notices filed so far this month remain at 168 or 16800 oz of gold.  To obtain what is left to be served, I take the OI standing at 47 and subtract out Friday deliveries at zero which leaves 47 or 4700 oz left to be served upon.

Thus the total gold oz standing in this non delivery month of July is as follows:

16,800 (served)   +  4700 oz (to be served)  =  21,500 oz
we lost 1000 oz of gold standing as these were cash settled.

And now for silver 

First the chart:

Silver	Ounces
Withdrawals from Dealers Inventory	nil
Withdrawals from Customer Inventory	639,844 oz (Brinks,Scotia,Delaware)
Deposits to the Dealer Inventory	nil
Deposits to the Customer Inventory	nil
No of oz served (contracts)  today	5,000 (1)
No of oz to be served  (notices)	1,565,000  (313)
Total monthly oz silver served (contracts) so far this month	3,940,000 (788)
Total accumulative withdrawal of silver from the Dealers inventory this month	nil oz
Total accumulative withdrawal of silver from the Customer Inventory this month.	6,303,901

Now for silver:

Again we had no silver enter as a deposit to the dealer.  We did have huge amount of silver 

leaving the customer:

Withdrawals:

1. 51,067 oz leaving Brinks

2. 10,444 oz leaving Scotia

3.  578,333 oz leaving Delaware

total withdrawal: 639,844. oz

there were no adjustments.

Thus the total registered or dealer silver inventory remains at 26.745 million oz and the total silver lowers to 102.226 million oz.

The comex folk notified us that only 1 contract was filed for delivery on Friday for 5000 oz.

The total number of notices filed so far now total 788 or 3940,000 oz.

To obtain what is left to be filed I take the OI standing (314) and subtract out Friday's 

deliveries (1) which leaves me with 313 or 1,565,000 oz left to be served upon.

Thus the total number of silver oz standing so far in this delivery month is as follows:

3,940,000 oz (served) +  1,565,000 oz (to be served)  =  5,505,000 oz

we had 5,555,000 on Thursday so we lost 50,000 oz to cash settlements

you can see the trouble that the bankers have trying to locate any silver.

end.

Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:

Sprott and Central Fund of Canada.

 The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

Thus a default at either of the LBMA, or Comex will trigger a catastrophic event.

First GLD inventory changes:  July 23.2011 

Total Gold in Trust

Tonnes: 1,241.77

Ounces:39,924,130.28

Value US$:
63,941,096,777.12

Total Gold in Trust: July 21

Tonnes: 1,242.68

Ounces:39,953,349.38

Value US$:
63,948,653,675.75

we lost another .91 tonnes of gold lost.  This gold was tendered from the GLD putting out fires elsewhere. 

Now let us see inventory movements in the SLV:  July 23:2011

Ounces of Silver in Trust	316,658,278.100
Tonnes of Silver in Trust	9,849.17

July 21.2011:

Ounces of Silver in Trust	316,658,278.100
Tonnes of Silver in Trust	9,849.17

we neither gained nor lost any silver.

1. Central Fund of Canada: it is trading at positive 3.3  percent to NAV in usa funds and positive 13.3% in NAV for Cdn funds.  ( July 23.2011).   .  We are back in business with the Central Fund of Canada in positive territory despite the vicious attack orchestrated by the bankers this week. The central fund of Canada is finally out of the bankers illegal short position prison.

2. Sprott silver fund  (PSLV):  Premium to NAV rose big time  to a  positive 20.51% to  NAV (July 23.2011
3. Sprott gold fund (PHYS): premium to NAV fell slightly to a  2.93 to NAV  (July 23..2011).

.

Pl;ease note the huge premium on the silver Sprott.  Investors are piling into this entity as they 


know that his metal is real.   Funds are also congregating into the Central Fund of Canada


also knowing that they are for real. Investors are fleeing the SLV and GLD knowing it is a 


fraud.


end




Now let us head over to the COT report and see what we can glean from it:

Gold COT Report - Futures
Large Speculators			Commercial		Total
Long	Short	Spreading	Long	Short	Long	Short
277,492	58,195	34,731	162,395	426,209	474,618	519,135
Change from Prior Reporting Period
14,977	-6,723	14,719	-5,411	14,154	24,285	22,150
Traders
229	72	80	48	56	314	183
	Small Speculators
	Long	Short	Open Interest
	67,724	23,207	542,342
	-2,145	-10	22,140
	non reportable positions		Change from the previous reporting period
COT Gold Report - Positions as of				Tuesday, July 19, 2011

The COT report is positions by groups of players from Tuesday the 12th of July to the 19th of 


July.  It always misses the last 3 days of trading, Wednesday, Thursday and Friday




Those  speculators that have been long gold saw economic danger throughout the globe and 


these guys loaded the boat adding 14,997 contracts to the gold long positions.


Those large speculators that have been short gold saw the light and covered a rather large 


6723 contracts.


And now for our commercials:


Those commercials that are long in gold and close to the physical scene covered a rather 


large 5,411 contracts.




And now for our famous bankers, JPMorgan and friends who are perennially short gold:


they added a monstrous:  14,154 contracts.


Our small specs:


Our small specs that have been long in gold covered a smallish 2,145 contracts.


Our small specs that have been short in gold covered a minuscule 10 contracts.


Summary;  this is not a bullish gold COT report as the bankers continue to supply the gold 


paper.  The game will end when the last physical ounce leaves London and the Comex.






And now for the silver COT report:

Silver COT Report - Futures
Large Speculators			Commercial		Total
Long	Short	Spreading	Long	Short	Long	Short
34,248	13,499	20,535	31,009	70,522	85,792	104,556
4,281	4,035	-3,334	297	2,320	1,244	3,021
Traders
73	40	43	33	45	132	108
	Small Speculators
	Long	Short	Open Interest
	30,207	11,443	115,999
	1,960	183	3,204

The large silver speculator longs also continued to add to their positions to the tune of 4,281 
contracts.


The large silver speculators that are short silver added a tiny 40 contracts to their shorts.


And now for our commercials:


Those commercials that are long in silver added another 297 contracts to the longs. 


And now for our fraudulent JPMorgan and buddies:  they continued to add to their short positions to the tune of 2320 contracts.


The small specs seem to want to get into the action despite the criminal paper shorting by the bankers:


the small specs that have been long in silver added 1,960 contracts to their longs.
The small specs that have been short in silver added 183 contracts.


Conclusion:  also not a bullish report as the bankers continue to supply the non backed paper and the specs continue to pile on.  War will break out eventually in both the gold and silver arenas.


end.








I would like to present to you the following important report from the Fed audit from the desk of


Senator Bernie Sanders.  (courtesy, Alexander Higgins blog and Bernie Sanders)


Bernie Sanders in an amendment last year put the CBO in charge of a Fed audit.

This was completed yesterday and released to the public through Bernie Sanders.


Please note the huge 16 trillion dollars of money released by the Fed to bail out the banks.


Note the general public got nothing.


Note that a huge number of foreign banks got money without congressional approval.


And the following  angers me greatly. JPMorgan receives 390 billion dollars of aid and lied to 


Congress that they did not need or receive any money.  These dollars were used as collateral


against the huge short positions in gold and silver. Also note the huge conflict where 


our good friend, Jamie Dimon the CEO of JPMorgan serves on the board of the NY Fed 


which received the money.  I do not think I have to say any more...you will get the picture!!!




The report:

• e

An audit of the Fed reveals why the establishment resisted an audit for so long – The U.S secretly provided an eye-popping $16 Trillion in secret loans to bailout U.S. and foreign bankers.

From Senator Bernie Sanders:

The Fed Audit

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. “No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed,” he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. “The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.”

The entire GAO report is here: [link to sanders.senate.gov]

end.


As I explained in my opening remarks, the two sides in the USA failed to come to an agreement on the debt ceiling. (courtesy  Jim Sinclair, and authors Carl Hulse and Jackie Calmes New York Times)

Debt Ceiling Talks Collapse as Boehner Walks Out By CARL HULSE and JACKIE CALMES
Published: July 22, 2011

WASHINGTON — Negotiations over a broad deficit reduction plan broke down in acrimony Friday after House Speaker John A. Boehner suddenly broke off talks with President Obama, raising the risk of an economy-shaking default.

The epic clash between the White House and Congressional Republicans came just a week before the government hits its borrowing ceiling, and set off sharp accusations from both sides about unwillingness to compromise.

A visibly angry Mr. Obama, in a hastily scheduled White House news conference,  demanded that Congressional leaders come to the White House on Saturday morning.  

“I want them here at 11 a.m. tomorrow,” Mr. Obama said. “They are going to have to explain to me how it is that we are going to avoid default.”

The president spoke moments after Mr. Boehner, the Republican from Ohio, released a letter that he had sent to House colleagues, saying he was breaking off the budget negotiations because of differences over revenues and would instead try to strike an agreement with Senate leaders to raise the debt limit by Aug 2 and avoid sending the government into a potential default.

More…

end.

The following kind of shows you how the criminal bankers are being protected from criminal prosecution:

Jim Sinclair’s Commentary

The Banksters only need to change the law to be clear of their dastardly deeds.

(courtesy  JIM Sinclair and Reuters)

States negotiating immunity for banks over foreclosures By Scot J. Paltrow
NEW YORK | Wed Jul 20, 2011 6:24pm EDT

NEW YORK (Reuters) – State attorneys general are negotiating to give major banks wide immunity over irregularities in handling foreclosures, even as evidence has emerged that banks are continuing to file questionable documents.

A coalition of all 50 states’ attorneys general has been negotiating settlements with five of the biggest U.S. banks that would include payment of up to $25 billion in penalties and commitments to follow new rules. In exchange, the banks would get immunity from civil lawsuits by the states, as well as similar guarantees by the Justice Department and Department of Housing and Urban Development, which have participated in the talks.

State and federal officials declined to say if any form of immunity from criminal prosecution also is under discussion. The banks involved in the talks are Bank of America, Wells Fargo, CitiGroup, JPMorgan Chase and Ally Financial.

REUTERS REPORT PROMPTS LETTER

Reuters reported Monday that major banks and other loan servicers have continued to file questionable documents in foreclosure cases. These include false mortgage assignments, and promissory notes with suspect or missing "endorsements," which prove ownership. The Reuters report also showed continued "robo-signing," in which lenders’ employees or outside contractors churn out reams of documents without fully understanding their content. The report turned up several cases involving individuals who were publicly identified as robo-signers months ago.

Reuters found that such activity has continued even after 14 major mortgage lenders signed settlements with federal bank regulators promising to halt such practices and give remediation to some homeowners who were harmed.

More…

Here is the latest on the Greek bailout as the rating agency Fitch has ruled a restricted default
as holders will receive a 20% present value haircut:  (courtesy Jim Sinclair)

Greek debt plan would be restricted default: Fitch By William L. Watts

An earlier version of this item misstated the likely post-default ratings.

FRANKFURT (MarketWatch) — Fitch Ratings on Friday said the plan for private-sector participation in the Greek rescue plan approved by euro-zone leaders Thursday will constitute a "restricted default." Noting that the proposed debt exchange implies a 20% net present value loss for banks and other holders of Greek government debt, Fitch said "any exchange that offers new securities with terms worse than the original contractual terms of the existing debt and where the sovereign is subject to financial distress constitutes a default event." The debt plan was widely expected to result in default designations by ratings firms. Fitch said it will place the Greek sovereign rating in restricted default when the debt exchange closes and will assign new post-default ratings once new bonds are issued to participating bondholders. The new ratings are likely to be "low speculative-grade," the firm said.

More…

end.


And the deal to bail out Greece which was announced on Thursday: (courtesy Reuters)

Euro Leaders Clinch 109 Billion Euro Greek Bailout

BRUSSELS — After weeks of uncertainty that revived fears about the foundations of the euro, European leaders on Thursday clinched a new rescue plan for Greece that could push the country into default on some of its debt for a short period but would give Europe’s bailout fund sweeping new powers to shore up struggling economies.

At a press conference late Thursday, Chancellor Angela Merkel of Germany confirmed the aid package of 109 billion euros ($157 billion) for Greece. European officials also said that financial institutions that own Greek bonds would contribute 50 billion euros through 2014 through a combination of debt extensions and the purchase of discounted Greek bonds on the secondary market.

The outlines of the plan worked out by leaders of the 17 euro zone nations seemed particularly bold, dealing with the economic problems of bailed-out Ireland and Portugal as well as Greece, and calling for nothing short of a “European Marshall Plan” to get Greece itself on a road to recovery. The underlying economies of those countries — and others — remain remarkably frail, however.

On the central issue of extending debt, rating agencies had already issued strong warnings that such steps might constitute a limited form of default because creditors would not be repaid in full on the original terms.

The agreement came after days of conflict among Europe’s leaders over how to keep the debt crisis from engulfing the much-larger economies of Italy and Spain. Any contagion would not only pose a potent threat to the euro — the most important symbol of the European integration — but could destabilize the entire global financial system.

More…

end.


This one takes the cake:

Frits Bolkestein: BIS shelters money for dictators and deadbeats

Submitted by cpowell on Sat, 2011-07-23 04:03. Section: Daily Dispatches

Where Buenos Aires Hides its Cash

By Frits Bolkestein
The Wall Street Journal
Thursday, July 21, 2011

http://online.wsj.com/article/SB1000142405311190346110457645989066590612...

In December 2001 the Argentine state was finally served the bill for decades of economic Peronism. The government decided to default on a debt worth some $81 billion—the largest debt default in international monetary history. Now, 10 years later, international investors who lost significant sums still have no way of knowing whether they'll ever get their money back -- thanks in part to the Argentine government's unwitting accomplice, the Basel-based Bank for International Settlements.

The BIS has a long and checkered history. It was founded in 1930 as a transfer vehicle for the reparations agreed to in the Treaty of Versailles and subsequent international negotiations. During World War II, the Nazi regime used it as a shadow bank to hide most of its ill-gotten gains. During the Bretton Woods negotiations, John Maynard Keynes intervened to save it from disappearing along with most of the pre-war financial architecture. It eventually ended up playing a central role in the coordination of international capital supervision and helped to set benchmarks for the monetary policies of the world's central banks. As the de facto central bank of the world's central banks, the BIS also allowed its members to use its accounts to conduct a range of transactions.

The BIS has played a vital role in creating a more stable and predictable international monetary system. Unfortunately, the fact that both the BIS and its customers have immunity from international jurisdiction and regulation provides an unintended legal loophole to regimes that care very little for the solidity of the international monetary system. From last year's Wikileaks scandal, we know that in the mid-1990s, Nigerian dictator Sani Abacha used that same legal loophole to store billions of dollars that he had stolen from his own people at the BIS, thus protecting it from litigation.

Which brings us to Argentina. Following its 2001 default, that country's central bank openly began transferring large parts of its capital reserves to the BIS, a process that accelerated after Argentina's 2005 debt restructuring. And indeed, even on the eve of the 2001 default, Buenos Aires announced its intention to move assets to other institutions such as the BIS, where they would be beyond the reach of creditors. Today, the Argentine central bank holds $45 billion in its account at the BIS -- a staggering 86% of Argentina's total capital reserves. By comparison, the size of other central banks' average deposits held at the BIS is a mere 4% of their total capital reserves.

By refusing to pay its bills, Argentina is defying the judicial systems of Italy, the United States, Germany, and Japan, which have issued hundreds of judgments ordering Argentina to repay its debt. By hiding its assets at the BIS, it has also been depriving its creditors the ability to settle their claims since the unilateral 2005 and 2010 debt restructurings. This is in clear violation of the ancient Roman legal principle of actio pauliana, which specifically forbade any transfer of property in the case of an imminent bankruptcy, when that transfer put a creditors' property beyond his reach.

Just recently Dow Jones Newswires reported that a number of Argentine bond investors have filed a complaint in a Swiss court accusing the BIS of complicity in money laundering. It is disappointing to say the least that the BIS, which has always championed transparency in central banks' monetary reserve policies, may have allowed itself to be used for these kinds of disappearing acts by its own member banks.

The BIS committee must now demonstrate its commitment to a sound global financial system by tackling what looks very much like the corruption of its own regulations. Rooting out abuses such as the Nigerian and Argentine cases is vital to re-establishing the proper mandate of the world's central bank.

----

end.


What the author did not disclose was that the Argentine government bought 55 tonnes of gold 
and then offered it to the bankers to whitewash their debt to zero.  The bankers refused the offer so Argentina defaulted on their paper obligations and now you see what happened in those 10 years.
The BIS is probably sheltering their reserves in cash and gold as an accomplice to the crime.


end


I would like to leave you this weekend with this report on the flagrant tax evasion orchestrated by Greek citizens upon their government.  Needless to say, Greece will come begging for more Euros same time next year.  In an earlier commentary, the Greek government receives tax revenue from only 17 swimming pools even though there are hundreds of thousands of pools in Greece.  Once you read the following commentary you will clearly understand why Greece is hopeless!!:  (special thanks to Robert H for providing the report)


courtesy:  Andrew Malone Dailymail, United Kingdom)

Big Fat Greek Gravy Train: A special investigation into the EU-funded culture of greed,        tax evasion and scandalous waste. By Andrew Malone - dailymail.co.uk Last updated at 9:09 AM on 25th June 2011 Even on a stiflingly hot summer's day, the Athens underground is a pleasure. It is air-conditioned, with plasma screens to entertain passengers relaxing in cool, cavernous departure halls - and the trains even run on time. There is another bonus for users of this state-of-the-art rapid transport system: it is, in effect, free for the five million people of the Greek capital.  With no barriers to prevent free entry or exit to this impressive tube network, the good citizens of Athens are instead asked to 'validate' their tickets at honesty machines before boarding. Few bother. Cracking up: The Euro is at risk of collapse because of the Greek financial crisis This is not surprising: fiddling on a Herculean scale — from the owner of the smallest shop to the most powerful figures in business and politics — has become as much a part of Greek life as ouzo and olives. Indeed, as well as not paying for their metro tickets, the people of Greece barely paid a penny of the underground’s £1.5 billion cost — a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer) to help the country put on an impressive 2004 Olympics free of the city’s notorious traffic jams. The transport perks are not confined to the customers. Incredibly, the average salary on Greece’s railways is £60,000, which includes cleaners and track workers - treble the earnings of the average private sector employee here. The overground rail network is as big a racket as the EU-funded underground. While its annual income is only £80?million from ticket sales, the wage bill is more than £500m a year — prompting one Greek politician to famously remark that it would be cheaper to put all the commuters into private taxis.  ‘We have a railroad company which is bankrupt beyond comprehension,’ says Stefans Manos, a former Greek finance minister. ‘And yet, there isn’t a single private company in Greece with that kind of average pay.’ Significantly, since entering Europe as part of an ill-fated dream by politicians of creating a European super-state, the wage bill of the Greek public sector has doubled in a decade. At the same time, perks and fiddles reminiscent of Britain in the union-controlled 1970s have flourished. Greek farce: Living it up in swanky harbour-side restaurants Ridiculously, Greek pastry chefs, radio announcers, hairdressers and masseurs in steam baths are among more than 600 professions allowed to retire at 50 (with a state pension of 95 per cent of their last working year’s earnings) — on account of the ‘arduous and perilous’ nature of their work.  This week, it was reported that every family in Britain could face a £14,000 bill to pay for Greece’s self-inflicted financial crisis. Such fears were denied yesterday after Brussels voted a massive new £100bn rescue package which, it insisted, would not need a contribution from Britain.  Even if this is true — and many British MPs have their doubts — we will still have to stump up £1billion to the bailout through the International Monetary Fund. In return for this loan, European leaders want the Greeks’ free-spending ways to end immediately if the country is to be prevented from ‘infecting’ the world’s financial system. Naturally, the Greek people are not happy about this. In Constitution Square this week, opposite the parliament, I witnessed thousands gathering to campaign against government cuts designed to save the country from bankruptcy. After running battles with riot police, who used tear gas to disperse protesters, thousands are still camped out in the square ahead of a vote by Greek politicians next week on whether to accept Europe-imposed austerity measures. Yet these protesters should direct their anger closer to home — to those Greeks who have for many years done their damndest to deny their country the dues they owe it. Clash: Protesters continue to riot in Athens Take a short trip on the metro  to the city’s cooler northern suburbs, and you will find an enclave of staggering opulence. Here, in the suburb of Kifissia, amid clean, tree-lined streets full of designer boutiques and car showrooms selling luxury marques such as Porsche and Ferrari, live some of the richest men and women in the world. With its streets paved with marble, and dotted with charming parks and cafes, this suburb is home to shipping tycoons such as Spiros Latsis, a billionaire and friend of Prince Charles, as well as countless other wealthy industrialists and politicians. One of the reasons they are so rich is that rather than paying millions in tax to the Greek state, as they rightfully should, many of these residents are living entirely tax-free.  Along street after street of opulent mansions and villas, surrounded by high walls and with their own pools, most of the millionaires living here are, officially, virtually paupers. How so? Simple: they are allowed to state their own earnings for tax purposes, figures which are rarely challenged. And rich Greeks take full advantage. Astonishingly, only 5,000 people in a country of 12 million admit to earning more than £90,000 a year — a salary that would not be enough to buy a garden shed in Kifissia. Yet studies have shown that more than 60,000 Greek homes each have investments worth more than £1m, let alone unknown quantities in overseas banks, prompting one economist to describe Greece as a ‘poor country full of rich people’. Running battles: The riots are threatening to destabilise the Euro Manipulating a corrupt tax system, many of the residents simply say that they earn below the basic tax threshold of around £10,000 a year, even though they own boats, second homes on Greek islands and properties overseas. And, should the taxman rumble this common ruse, it can be dealt with using a ‘fakelaki’ — an envelope stuffed with cash. There is even a semi-official rate for bribes: passing a false tax return requires a payment of up to 10,000 euros (the average Greek family is reckoned to pay out £2,000 a year in fakelaki.) Even more incredibly, Greek shipping magnates — the king of kings among the wealthy of Kifissia — are automatically exempt from tax, supposedly on account of the great benefits they bring the country. Yet the shipyards are empty; once employing 15,000, they now have less than 500 to service the once-mighty Greek shipping lines which, like the rest of the country, are in terminal decline. With Greek President George Papandreou calling for a crackdown on these tax dodgers — who are believed to cost the economy as much as £40bn a year — he is now resorting to bizarre means to identify the cheats. After issuing warnings last year, government officials say he is set to deploy helicopter snoopers, along with scrutiny of Google Earth satellite pictures, to show who has a swimming pool in the northern suburbs — an indicator, officials say, of the owner’s wealth. Officially, just over 300 Kifissia residents admitted to having a pool. The true figure is believed to be 20,000. There is even a boom in sales of tarpaulins to cover pools and make them invisible to the aerial tax inspectors. ‘The most popular and effective measure used by owners is to camouflage their pool with a khaki military mesh to make it look like natural undergrowth,’ says Vasilis Logothetis, director of a major swimming pool construction company. ‘That way, neither helicopters nor Google Earth can spot them.’ But faced with the threat of a crackdown, money is now pouring out of the country into overseas tax havens such as Liechtenstein, the Bahamas and Cyprus. Parliament: It could be all over for Greece, which is effectively bust from relying on EU cash from richer northern European countries ‘Other popular alternatives include setting up offshore companies in Cyprus or the British Virgin Islands, or the purchase of real estate abroad,’ says one doctor, who declares an income of less than £90,000 yet earns five times that amount. There has also been a boom in London property purchases by Athens-based Greeks in an attempt to hide their true worth from their domestic tax authorities.  ‘These anti-tax evasion measures by the government force us to resort to even more detailed tax evasion ploys,’ admits Petros Iliopoulos, a civil engineer. Hotlines have been set up offering rewards for people who inform on tax dodgers. Last month, to show the government is serious, it named and shamed 68 high-earning doctors found guilty of tax evasion. ‘We will spare no effort to collect what is due to the state,’ said Evangelos Venizelos, the new Greek finance minister of the socialist  ruling party. ‘We promise to draft and apply a new and honest tax  system, one that has been needed for decades, so that taxes are duly paid by those who should pay.’ Yet, already, it is too late. Greece is effectively bust — relying on EU cash from richer northern European countries, but this has been the case ever since the country finally joined the euro in 2001. Two years earlier, the country was barred from entering because it did not meet the financial criteria.  No matter: the Greeks simply cooked the books. Two years later, having falsely claimed to have met standards relating to manufacturing and industrial production and low inflation, the Greeks were allowed in.  Funds poured into the country from across Europe and the Greeks started spending like there was no tomorrow. Money flowed into all areas of public life. As a result, for example, the Greek school system is now an over-staffed shambles, employing four times more teachers per pupil than Finland, the country with the highest-rated education system in Europe. ‘But we still have to pay for tutors for our two children,’ says Helena, an Athens mother. ‘The teachers are hopeless — they seem to spend their time off sick.’ Although Brussels has now agreed to provide the next stage of its debt payment programme to safeguard the country’s immediate economic future, the Greek media still carries ominous warnings that the military may be forced to step in should the country’s foray into Europe end in ignominy, bankruptcy and rising violence. For now, the crisis has simply been delayed. With European taxpayers facing the prospect of saving Greece from bankruptcy for the second year in a row, some say even the £100bn on offer will pay off only the interest on the country’s debts — meaning it will be broke again within two years. Meanwhile, there are doom-laden warnings that the collapse of the Greek economy could be the catalyst for another global recession. Perhaps if the Greeks themselves had shown more willingness to tighten their belts and pay taxes due to the state, voters across Europe might not now be feeling such anger towards them.  But having strolled the streets of Kifissia, and watched the Greek hordes stream past the honesty boxes on the underground, it does not take a degree in European economics to know when somebody is taking advantage — at our expense. -----------------------------------------------------------------------------------------------------------------------------.

      I am getting more updates on the Tropos non payment of funds.  As soon as I get them,

      I will send them down to you.

      I hope you have a grand weekend

      see you on Monday,


       Harvey