Thursday, January 19, 2012

Greece and a report on the PSI/IMFGlobal/Bank of America earnings farce

Good evening Ladies and Gentlemen:

Gold closed down today to the tune of $5.40 dollars finishing the comex session at $1654.10  Silver finished down 4 cents to $30.48.

Today the raid was a no brainer on behalf of the bankers as we witnessed a huge run up in open interest and that is fodder for these crooks. Gold bounced off the $1650 price level four times today.  The weak gold and silver shares today probably foreshadows another raid.    Let us head over to the comex and assess trading, open interest positions, inventory movements and amounts of metal standing.

The total comex gold open interest rose by 5552 contracts to rest tonight at 438,390.  Please remember that we are always 24 hours back with respect to OI so in reality the closing figure of 438,390 OI is in reality the official OI for yesterday.  The front options expiry month of January saw its OI fall from 31 to 16 for a loss of 15 contracts.  We had 7 delivery notices filed yesterday so we lost 8 contracts or 800 oz to cash settlements.  The next big delivery month is February as first day notice is less than 2 weeks away.  Here the OI fell by 4000 contracts to 160,113 contracts.  The estimated volume at the comex today was very weak coming in at 145,097.  The confirmed volume yesterday was a touch better at 186,277 despite many rollovers on both days.

The total silver comex OI fell by  798 contracts to 102,870.  Silver is trading differently these past few weeks and we are witnessing this through the OI.  It appears that all the silver OI is in strong hands.
The front options expiry month of January mysteriously saw its OI rise from 81 to 175 for a gain of  94 contracts.  We had 12 delivery notices yesterday so we gained 106 silver additional contracts standing for delivery or  530,000 oz.  Someone was in great need of physical silver today.  The next big delivery month is March and here the OI fell by 1200 contracts to 53,240 contracts.  The estimated volume today was a very weak 30,713.  The confirmed volume yesterday was also weak at 46,029.  Leverage in silver has disappeared as business is leaving the comex to other jurisdictions.

 Inventory Movements and Delivery Notices for Gold: Jan 19 2012:

Withdrawals from Dealers Inventory in oz
201 (Scotia,Brinks)
Withdrawals from Customer Inventory in oz
297 (HSBC, Brinks,Manfra)
Deposits to the Dealer Inventory in oz

Deposits to the Customer Inventory, in oz
33,436 (HSBC,Manfra)
No of oz served (contracts) today
0 (zero)
No of oz to be served (notices)
16 (1600)
Total monthly oz gold served (contracts) so far this month
1081  (108,100)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month


No gold entered as a deposit to the dealer today.  However we did get two withdrawals by the dealer:

1.  Out of the dealer Scotia, 100 oz
2.  Out of the dealer Brinks, 101 oz

total withdrawal to the dealer:  201 oz.

we had the following customer withdrawal:

1. Out of  Brinks, 160 0z
2. Out of HSBC, 105 oz
3.  Out of Manfra:  32 oz

total withdrawal by the customer:  297.oz

On the deposit side for the customer another strange one:

1.  Exactly 32,150 oz of gold enters the HSBC
2.  Into Manfra 1,286 oz

total customer deposit:  33,436 oz

the entry 32,150 oz is exactly 1 tonne of gold.  To me this is a just a paper gold entry by HSBC.
very suspicious.

the total registered gold (dealer gold) lowers to 2.461 million oz or 76.54 tonnes.
The CME reported that we had zero notices filed so the number of delivery notices for the month remain
at 1081 for 108100 oz.  To obtain what is left to be served upon, I take the OI standing for January (16) and subtract out today's deliveries (0) which leaves us with 1600 oz left to be served upon.

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

108100 (oz served)  +  1600 (oz to be served)  =   109,700 oz or 3.412 tonnes of gold.

If we were to add the December delivery month with the two non delivery months of January and November
we have the following delivery notices filed in tonnes:  74.092 tonnes against a dealer inventory of 76.54 tonnes or 96.8% of available dealer gold.

And now for silver 

 the chart: January 19 2012:

Month of January now commences:

Withdrawals from Dealers Inventorynil
Withdrawals fromCustomer Inventory2994( , Scotia)
Deposits to theDealer Inventorynil
Deposits to the Customer Inventory300,366 (Brinks)
No of oz served (contracts)23 (115,000)
No of oz to be served (notices)152  (760,000)
Total monthly oz silver served (contracts)824  (4,120,000)
Total accumulative withdrawal of silver from the Dealersinventory this month268,115
Total accumulative withdrawal of silver from the Customer inventory this month 3,030,021

Today, no silver entered the dealer and no silver left the dealer.

We had only one customer deposit as follows:

1.  300,366 oz enter Brinks

We had only one customer withdrawal:

1.  Out of Scotia, 2994 oz.

We had another of those wild adjustments:

The dealer at Brinks had an addition adjustment to the tune of 70,124 oz
The customer at Brinks had an addition adjustment of exactly the same 70,124 oz.
It looks like the customer received 140,248 oz and sent 70,124 for lease or for sale. probably the former.
The registered silver (dealer silver) rests tonight at 36.79 million oz. The total of all silver rests at 125.62 million oz.

The CME reported that we had 23 notices filed for 115,000 oz of silver. The total number of notices filed so far this month total 824 for 4,120,000 oz of silver.  To obtain what is left to be served upon, I take the OI for January (175) and subtract out today's deliveries (23) which leaves us with 152 or 760,000 oz left to be served upon.

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

4,120,000 oz (served) +  760,000 oz (to be served)  =  4,880,000 oz.

Please note that we are within a whisker of the number of silver oz that stood in December
and that we had this huge number of silver oz standing in January despite the fact that January is generally the worst delivery month of the year for both gold and silver.  (November is second)

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.

Jan 19. 2012:

Total Gold in Trust



Value US$:66,797,175,408.39

jan 18.2012




Value US$:66,474,936,984.83

JAN  17.2018




Value US$:66,839,003,007.06

we neither gained nor lost any gold inventory at the GLD

And now for silver Jan 19 2012: 

Ounces of Silver in Trust305,970,641.100
Tonnes of Silver in Trust Tonnes of Silver in Trust9,516.75

Jan 18.2012

Ounces of Silver in Trust305,970,641.100
Tonnes of Silver in Trust Tonnes of Silver in Trust9,516.75

Jan 17: 2011:

Ounces of Silver in Trust305,970,641.100

we neither gained nor lost any silver today in the SLV.


And now for our premiums to NAV for the funds I follow:

1. Central Fund of Canada: traded to a positive 3.4 percent to NAV in usa funds and a positive 3.5% to NAV for Cdn funds. ( Jan 19 2012.).
2. Sprott silver fund (PSLV): Premium to NAV rose  to  10.15.% to NAV  Jan 19 2012:
3. Sprott gold fund (PHYS): premium to NAV fell  to a 4.88% positive to NAV Jan 19. 2012). 

the fall in the Sprott fund is due to the dilution of existing inventory with new silver inventory. The premium will resume in a month if Sprott gets his silver..and that is a big if...


From King world news on the silver and gold shortages:

(courtesy Jim Sinclair, Kingworld News and Egon von Greyerz)

Silver Shortages And Gold To Accelerate Higher

Dear CIGAs,
Eric King of King World News had a brief telephone interview with Egon von Greyerz on Tuesday. Egon says our gold is gone.
Silver Shortages & Gold to Accelerate Higher (Courtesy of
With gold closing above the critical $1,650 level and silver above $30, today King World News interviewed the man who told clients in 2002, when gold was $300, to put up to 50% of their assets into physical gold.  Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland.  When asked about the recent action in gold, von Greyerz said, “We like the action and it’s exactly what we’ve been predicting.  My view is that we have bottomed and we are on the way to much higher levels.  We are seeing a bit of sideways action here, but it’s sideways to upward and I think that will continue.  I like the pace, the fact that it’s not going up too fast, but I think we will see an acceleration to the upside in short order.”
Egon von Greyerz continues:
“I look at the banks here in Europe and they are an absolute mess, even before the French downgrade.  We deal with French banks and they’ve had their lines cut by billions and billions.  They couldn’t trade, and that was before the downgrade.  It must be even worse for them now.  This is what you are seeing in a lot of banks around Europe.
This just confirms we are very near a massive package of QE here because if they don’t do it there won’t be any banking system left here in Europe.  Because of that I’m seeing big buyers coming into gold and even bigger buyers becoming very interested.  So there is definitely a shift.
We are seeing steady demand, even as gold was turning down at the end of the year.  Now, in January, we are seeing demand keeping up, extremely strong.  So, there seems to be a totally different attitude to gold now and I expect for there to be incredible demand for 2012.  We are just seeing the very beginning of it
Central bankers don’t even understand gold.  Most of them don’t even understand why they have it.  If you listen to (Fed Chairman) Bernanke, he doesn’t have a clue as to why the US has it.  As a matter of fact, as you know, he probably doesn’t have it anyway.  The US simply doesn’t have the 8,100 tons of gold they say they possess…

Let us now see some of big stories that will shape the physical price of gold and silver.  There is no question that Greece is a big problem.  Even though Greece is only 3% of European GDP,  the problem over there stems from the massive credit default swaps bet against them and underwritten by the major banks and the collateral posted in the money market using Greek and other sovereigns in the murky shadow banking market.  The bank runs on the weaker nations are playing havoc to the ECB.

Greece has around 350 billion euros of sovereign debt of which 210 billion euros is held by the major private players namely the banks and hedge fund players, whereas smaller private insurance companies and fund managers hold around 90 billion euros of Greek sovereign debt.  The remainder is held by the ECB  (around 50 billion euros). The focus is on the 210 billion euros held by the hedge funds and private banks.

In this first article the hedge funds are hanging tough and stating no deal.  The plan is to eliminate 100 billion of the private debt load.  The offer is for a swap whereby the bondholders get new bonds with a low yield of around 4% and a 50% haircut.  Because the swap is voluntary, credit default swaps are not initiated.
The bankers are trying desperately trying to avoid a credit event as this should send Europe into a massive fall of dominoes, a contagion never witnessed before. The deal must be completed shortly due to the length of time to prepare the necessary papers. The swap with the low yield is equivalent to a 65% loss on value.

The hedge funds can be divided into 3 groups:

1.  The players who bought at 40 cents on the dollar
2.  The players who bought the Greek bonds with a credit default swap.
3.  The new hedge funds that jumped on the bandwagon buying the junk at 20 cents on the dollar.

The banks have been continually unloading the bonds and the hedge funds have been gobbling up the debt.
The second group who bought with a CDS will certainly not settle unless they receive par  or full value of the bond plus say 10% for their trouble.

The first group are worried as they have no defensive backing.  They will be happy to get out at 30 top 40 cents on the dollar.

The third group are looking for a killing having put only 20 cents on the dollar.  This group will be tricky to gauge.

Regardless as we get down to the wire, you can bet that the banks are going to offer greenmail.  The problem is  how much greenmail will it take and how many losses can the banks collectively afford:

(courtesy zero hedge)

"No Deal" - Greek Bondholders Do Not Think Agreement Can Be Reached Before "Crunch Date"

Tyler Durden's picture

Update: the NYT chimes in, just to make the point all too clear:
Hedge Funds May Sue Greece if It Tries to Force Loss

Hedge funds have been known to use hardball tactics to make money. Now they have come up with a new one: suing Greece in a human rights court to make good on its bond payments.

The novel approach would have the funds arguing in the European Court of Human Rights that Greece had violated bondholder rights, though that could be a multiyear project with no guarantee of a payoff. And it would not be likely to produce sympathy for these funds, which many blame for the lack of progress so far in the negotiations over restructuring Greece’s debts.

The tactic has emerged in conversations with lawyers and hedge funds as it became clear that Greece was considering passing legislation to force all private bondholders to take losses, while exempting the European Central Bank, which is the largest institutional holder of Greek bonds with 50 billion euros or so.

Legal experts suggest that the investors may have a case because if Greece changes the terms of its bonds so that investors receive less than they are owed, that could be viewed as a property rights violation — and in Europe, property rights are human rights.

According to one senior government official involved in the negotiations, Greece will present an offer to creditors this week that includes an interest rate or coupon on new bonds received in exchange for the old bonds that is less than the 4 percent private creditors have been pushing for — and they will be forced to accept it whether they like it or not.

“This is crunch time for us. The time for niceties has expired,” said the person, who was not authorized to talk publicly. “These guys will have to accept everything.”

According to one senior government official involved in the negotiations, Greece will present an offer to creditors this week that includes an interest rate or coupon on new bonds received in exchange for the old bonds that is less than the 4 percent private creditors have been pushing for — and they will be forced to accept it whether they like it or not.

“This is crunch time for us. The time for niceties has expired,” said the person, who was not authorized to talk publicly. “These guys will have to accept everything.”
Time to remind readers of our definition of nuisance value, long before anyone even considered hedge fund hold outs an issue? Thank you for confirming everything we have said so far.
Five minutes before market close yesterday, Bloomberg came out with an "exclusive" interview with Marathon CEO Bruce Richards, who may or may not be in the Greek bondholder committee any longer, in which the hedge fund CEO said that the Greek creditor group had come to an agreement and that the thorniest issue that stands between Greece and a coercive default (and major fallout for Europe) was in the bag, so to say. To which we had one rhetorical comment: "Well as long as Marathon is talking for all the possible hold outs..." As it turns out, he wasn't. As it further turns out, Mr. Richards, was just a little bit in over his head about pretty much everything else too, expect for talking up the remainder of his book of course (unsuccessfully, as we demonstrated earlier - although it does beg the question: did Marathon trade today on the rumor it itself spread, based on information that was material and thus only afforded to a privileged few creditors, especially if as it turns, the information was false - we are positive the SEC will be delighted to know the answer). Because as the supposed restructurng expert should know, once you have a disparate group of ad hoc creditors, which is precisely what we have in the Greek circus now, there is nothing even remotely close to a sure deal, especially when one needs a virtually unanimous decision for no CDS trigger event to occur (yes, ISDA, for some ungodly reason, you are still relevant in this bizarro world). Which also happens to be the fascination for all the hedge funds, whom we first and then subsequently repeatedly noted, are holding Europe hostage, to buy ever greater stakes of Greek bonds at 20 cents on the dollar. Because, finally, as the FT reports, the deal is nowhere in sight: "Several hedge fund managers that hold Greek debt have said they have not been involved in the talks and will not be agreeing with the “private sector involvement” (PSI) deal – which centres on a 50 per cent loss on bondholders’ capital and a reduction in the interest they receive... Even members of the committee concede the process is unlikely to succeed in time for the crunch date: a €14.5bn bond repayment falling due on March 20." But, wait, that's not what Bloomberg and Bruce Richards told us yesterday, setting off a 100 point DJIA rally. Time to pull up the Einhorn idiot market diagram once again.
Once again: here is why one should never trust the media, especially when it is serving ulterior conflicted interests. From the FT:
Fraught discussions on Wednesday – led on the creditor side by veteran technocrats Jean Lemierre, special adviser to the chairman of BNP Paribas, and Charles Dallara, managing director of the Institute for International Finance – have hit on a formula with Greek officials that an untested minority of bondholders could yet reject.

Several hedge fund managers that hold Greek debt have said they have not been involved in the talks and will not be agreeing with the “private sector involvement” (PSI) deal – which centres on a 50 per cent loss on bondholders’ capital and a reduction in the interest they receive.

Alongside them are insurance companies, fund managers and pension funds that also have little incentive in agreeing to the negotiated terms.

Several hedge fund managers that hold Greek debt have said they have not been involved in the talks and will not be agreeing with the “private sector involvement” (PSI) deal – which centres on a 50 per cent loss on bondholders’ capital and a reduction in the interest they receive.

Alongside them are insurance companies, fund managers and pension funds that also have little incentive in agreeing to the negotiated terms.

The creditor steering committee Mr Lemierre and Mr Dallara head represents bondholdings worth an estimated €155bn of Greece’s outstanding €260bn debt. That leaves a further €50bn or so of such uncanvassed private bondholders once European Central Bank and eurozone national central bank holdings are excluded, according to estimates by JPMorgan.

It is these private bondholders that must now be brought on board for a negotiated settlement if the Greek government is to succeed in its goal of a “voluntary” debt swap on its full borrowings and avoid a default.

“The [expected] agreement is a short-term fix. The market will be happy with it for a few days or a week but then we run into the hard stuff,” said an executive at one multibillion-dollar hedge fund that owns Greek bonds and has not been party to the negotiations. “The hard part is going to be getting the rest of the bondholders [outside the creditor committee] to agree.”
Punchline in 3...2...1...
Even members of the committee concede the process is unlikely to succeed in time for the crunch date: a €14.5bn bond repayment falling due on March 20.
And here is why naive Bloomberg reporters should not report anything and everything they hear hook, line and sinker:
“As a firm we are not convinced that any deal today is the last deal,” said Robert Rauch, director of research at the $2.7bn hedge fund Gramercy, which led negotiations for bondholders in the restructuring of Argentina’s debt in 2007. “This is a multiplayer negotiation and not all the players are even at the table.”

Gramercy is one of numerous hedge funds that say they have avoided buying into Greek debt – even though it has been trading at huge discounts in recent months – because they still do not see it as cheap enough.
The story from here on is familiar to all who have been following our narrative on this matter since June:
The options available to Greece and its advisers, Lazards and Cleary Gottlieb, should full agreement fail are hardly attractive. Foremost among them would be Greek legislation to insert “collective action clauses” into the country’s existing debt stock.

Such clauses could be exercised to force a recalcitrant minority of bondholders to agree new terms, but in doing so they could trigger credit default swaps written on Greek debt – a dangerous move that could trip the eurozone into a full-blown banking crisis.

Part of the problem was that many of Greece’s unknown creditors were thought to be holding out for exactly such a CDS trigger, one fund manager said.
Translation: subordination comethBut we will touch upon this topic in two months, when everyone else is talking about it and/or is an expert on it.
And since everyone is now at least a broad bankruptcy expert, or very soon will be, here, courtesy of FT's Sam Jones, is a refresher on bankruptcy negotiations game theory, and why one pretty much never gets what one wants, absent spending 4-7 years in bankruptcy court first:
“There isn’t much of a reason for anyone to agree to the terms precisely because of the threat of CAC clauses,” said a fund manager who owns Greek debt. “If people think they are going to get forced into a deal anyway, then why agree to the terms before you have to? Especially if by not doing so you can trigger your CDS.”

Whatever the outcome of negotiations in the run up to March, there is little doubt among many bond investors about the worth of the PSI process.

As the Emerging Sovereign Group, a $1bn hedge fund owned by US private equity giant Carlyle, told its clients last year, European politicians have opened a “Pandora’s box” that now looks likely to lead to a “repricing of sovereign default risk across the euro area”.
And with numbers like $500 billion€1 trillion and even €10 trillionflying around, to make sure the firewall in advance of the Greek default is at least half full, if not half empty, we can guarantee readers that the repricing won't be higher. But it will take stocks the usual 6-8 weeks to grasp what is patently obvious to anyone who has put in even 10 minutes of work in analyzing the complete fall out from Europe that is about to hit.


Today meetings are occurring amongst the private group in order to hammer out a deal:


Greece to meet private bond holders

Greece meets its private creditors today for a second day of bargaining on a crucial bond swap deal, with time running out for reaching a compromise needed to avoid an unruly default.
Negotiations between Prime Minister Lucas Papademos and Charles Dallara, head of the International Institute of Finance representing private bond holders, resumed yesterday after hitting an impasse last week. Hope has flickered of a deal in the coming days, but only after a period of intense haggling.

"The fact that they met for two and a half hours on Wednesday and that talks will continue on Thursday is an indication (that efforts are being made for a deal)," a Greek government official told Reuters on condition of anonymity. "Otherwise, the talks would not be continuing."

The stakes could not be higher. The two sides must thrash out a deal within days to pave the way for Greece to receive a new infusion of aid and avoid bankruptcy when €14.5 billion of bond redemptions fall due in March.

Even if a deal is struck rapidly, processing the paperwork will take weeks and Greece's official lenders, the European Union and the International Monetary Fund, have said the work must be cleared before Athens receives more international aid.

In Washington, an IMF spokeswoman said staff had sought executive board approval for talks with Greece that might lead to a deal requiring "exceptional access" to IMF loans.
Greece already has exceptional access to IMF funding that allows it to draw more than 600 per cent of its IMF quota and any further negotiations require fresh board approval.

The IMF is seeking to more than double its war chest by raising $600 billion in new resources to help countries deal with the fallout of the wider euro zone debt crisis, but the United States and other countries are throwing up roadblocks.

Kept afloat by bailout loans, Greece faces the prospect of leaving the euro zone and slumping into further economic and social misery if it fails to secure a deal with the private bond holders.

The bond swap deal is vital for clinching Greece's second, €130 billion rescue package and the EU/IMF lenders have warned Athens will not get any more funds without it.The swap is aimed at cutting €100 billion off Greece's over €350 billion debt load by getting the private holders
of Greek bonds to accept a 50 per cent writedown on their notional value.

But terms of the swap - including the interest rate and maturity date of new bonds Greece would sell to the private creditors in place of old debt - have yet to be agreed.

The talks ran into trouble last week over Greek demands for an interest rate below the 4 per cent that banks were willing to stomach and a plan to enforce losses on investors. A lower interest rate would push the actual loss investors take to well above the 50 per cent level initially envisaged.

Both sides were silent after yesterday's two-hour session other than to say they would meet again today, signalling more tough bargaining lay ahead.

Mr Papademos is expected to brief political party leaders on the talks and discuss reforms later today.

Greece is stumbling through its worst post-World War Two crisis, with unemployment at record highs and near-daily protests, strikes and work stoppages against austerity measures that have deepened an already brutal recession.

Its latest bailout, together with structural reforms, aim to reduce Greece's debt to a more manageable 120 per cent of gross domestic product in 2020 from about 160 per cent now.

But speculation has grown that Greece may need further funds than those promised by partners, with a growing sense among some that Greece's current state of affairs is untenable.

If a deal was close at hand, the Greek bonds would be rallying.  Nope! they are falling in price and rising in yields:

(zero hedge)

Sliding Greek Bond Reality Challenges "Debt Deal" Hopium

Tyler Durden's picture

We have been rather vociferous in our table-pounding that even if a Greek PSI deal is achieved (in reality as opposed to what is claimed by headlines only to fall apart a month later), then Greece remains mired in an unsustainable situation that will likely mean further restructuring in the future. JPMorgan's Michael Cembalest agrees and notes that Debt/GDP will remain well above 100% post-deal but is more concerned at the implications (just as we noted earlier in the week) of the process itself including ECB preferred credit status, retroactive CACs (law changes), and CDS trigger aversions. In his words, the debt exchange is a bit of a farce and we reiterate our note from a few days ago - if this deal is so close, why is the 1Y GGB (AUG 2012) price trading -8.75% at EUR 28.75 (or 466% yield) and while longer-dated prices are rallying (maybe bear flattener unwinds), the moves are de minimus (-17bps today on a yield of 3353bps?) as selling pressure is clearly in the short-end not being rolled into the long-end as some surmise.
1Y GGBs (AUG 2012s) have slipped further and further this week...and while 10Y is rallying the move is very small and does not suggest (as some headlines proclaim) that investors are extending into Greek duration - the selling is all front-end and obviously heavy. Perhaps we are seeing some of the banks who are heavily exposed to the CDS side of the market covering (buying CTD bonds) to manage exposure into an involuntary event? The CTD is the 5Y GGB for now, and that has been...falling too...

JPMorgan, Michael Cembalest...Greece: Sisyphus revisited
We noted 2 years ago that despite being only 2% of European GDP, Greece would probably end up having disproportionate consequences for markets. That remains true today as it stumbles through to some kind of restructuring of its private sector debt (see table for one possible iteration). To be clear, the debt exchange is a bit of a farce on its own, since even after the debt reduction shown in the table, Greece’s debt/GDP ratio is still well above 100%.

Greece will almost certainly have to default on/restructure official sector debt as well, at a time and place of the EU’s choosing. Nevertheless, here are 3 things to watch as this process unfolds that can have broader ramifications:

How will the ECB behave? There are no justifications I know of for the ECB to assert preferred creditor status, which would entitle it to avoid being restructured (as the IMF does). So far, however, ECB comments indicate a reluctance to participate with the private sector rabble. If the ECB is treated as a preferred creditor, does that mean that all 217 billion of its sovereign debt purchases so far should be seen as effectively senior to private investors? This issue could be solved by having the ECB sell its bonds at cost to the EU before the exchange.

Will Greece put “collective action clauses” (CAC) in place? Without getting too detailed, many Greek bonds were issued under language known as “universal consent”, which means that all creditors have to agree to changes to maturity, interest or principal. A CAC allows the issuer to obtain a plurality of support from bondholders for changes to the bond indenture, and then impose them on any holdout creditors. There’s nothing wrong with CACs, except for the fact that applying them retroactively changes the rules of the game, and makes a mockery of the quaint notion of contract law. As we explained in Appendix C in our 2012 Outlook, contract law protections for investors in sovereign debt are very weak. Don’t like retroactive CACs? Go sue in an Athens court; good luck to you.

Will credit default swaps (CDS) end up being triggered? If there are no missed payments and everyone voluntarily participates in an exchange (no matter how coercive the process, or how large the debt forgiveness), then a default even as per CDS rules has not occurred. I have no objection to adherence to contract terms; but how will this affect users of CDS contracts that assumed they could hold bonds and hedge with CDS, now that they face losses on their cash positions without their hedges paying off? From now on, investors will be incented to sell their bonds, since their hedges won’t “work” in the way they thought they would. By the way, why is the EU so intent on avoiding a trigger of CDS contracts? Could it be that some EU banks are long Greece through CDS? We may never know for sure.

Today we received the bank earnings from the Bank of America. The estimated range of losses to non GSE related items was itemized at  5 billion dollars and yet this was not taken as a charge.  So in reality just on this item, Bank of America should have shown a loss of 3 billion dollars and not a gain of 2 billion dollars.

However it want you to take a very close look at the very last chart provided below.  You will see the following under Representations and Warranties Exposure 2011:  (GSE's and Mortgaged back securities).  Please note the following:

Outstanding Balance     Amount Paid

768 billion dollars           15 billion dollars

Net exposure to the putback on all of those mortgages and lawsuits:  750 billion dollars.

(courtesy zero hedge on the phony earnings report)

Bank Of America Beats EPS Estimates, Misses Net Of One Time Items, Reports Could Be Underaccrued By Up To $5 Billion

Tyler Durden's picture

The just reported Bank of America top and bottom line numbers were better than expected, coming in at $24.89 billion compared to estimates of $24.5 billion, and EPS of $0.18 vs $0.15. The actual Net Income number number was $2.0 billion and $2.7 billion pre tax. So far so good. But a quick skim through the presentation (attached below), indicates that the $0.18 number may be grossly inflated. Because when one excludes the various selected one time items highlighted in the quarter, which are as follows: Gain on sale of CCB shares-$2.9; Gains on exchanges of trust preferred securities - $1.2; Gains on sales of debt securities - $1.2; Representations and warranties provision - ($0.3); DVA on trading liabilities- ($0.5); Goodwill impairment - ($0.6); Fair value adjustment on structured liabilities - ($0.8); Mortgage-related litigation expense ($1.5), all of which it appears are part of the pretax number, the final EPS comes in at a much less impressive $1.3 billion pre tax, which at the company's indicated tax rate, would have been $1.0 billion after tax, or $0.10 EPS, a notable miss. Which likely means that the Revenue "beat" on an apples to apples basis would also have to be pro forma'ing a bunch of items, and likely would be a miss. But for that we will need to go through the several hundred page 10-Q, something which management is hoping the machines which will send its stock much higher in the pre-market session, will never do. Another notable item is that for the first time in a long time, the company's average deposit balances declined by 1.2% in Q4 from Q3, from $422.3 billion to $417.1 billion (as the rate on deposits fell from 0.25% to 0.23%). Not a good trend, but certainly to be expected following the snafu with the company's electronic banking website last quarter. Also troubling is that in Q4, the company's Home Equity Non-Performing Assets increase for the first time in years, from $2.4 billion to $2.5 billion: it seems the improvement in housing has plateaued. Finally, and most troubling, is that BAC reported that "Estimated range of possible loss related to non-GSE representations and warranties exposure could be up to $5B over existing accruals at December 31, 2011." The reason: a surge in New Claims in Q4 "primarily related to repurchase requests received from trustees on private-label securitization transactions not included in the BNY Mellon settlement." Which means another $5 billion out of Net Income due to underreserving. Because how much did BAC provision for Reps and Warranties in Q4? Why a 'whopping' $263 million. And how much is the potential full notional value of underreserved contingent liabilities? Why $755 billion only.
Summarized as follows:
On the decline in the deposit base:
And why Reps and Warranties will soon be a major issue all over again, just like we predicted back in October 2010:
Spot the $755 billion in unreserved contingent liabilities.
Bloomberg summarizes the results as follows:
  • Bank of America 4Q oper EPS 15c with items, may not compare to 13c est.; rev. $25.15b may not compare to $25.50b est.
  • Global banking and markets net rev. $3.72b (inc. $474m DVA losses) vs $5.22b Q/q
  • Sales trading rev. $1.4b vs $2.8b Q/q
  • FICC rev ex-DVA $1.2b vs $314m Q/q, equity $660m vs $757m Q/q
  • I-banking fees $1.1b vs. $1.1b Q/q
  • Consumer real estate svcs. net rev. $3.28b, net loss ($1.5b) vs $2.82b/($1.14b) Q/q
  • Global card svcs. net rev. $4.1b vs $4.51b Q/q
  • Global commercial banking $2.56b vs. $2.53b Q/q
  • Wealth inv. mgmt. rev. $4.16b vs. $4.23b Q/q
  • 4Q provisions $2.93b vs. $3.41b Q/q, or 3.68% of loans vs 3.81% Q/q
  • Tang. BV-shr $12.95 vs $13.22 Q/q
Full earnings spin report here, and the presentation is below:


Dave from Denver discusses this comedy earnings statement and catches some of the fraud
as zero hedge has discussed above)

(courtesy Dave from Denver)


Bank Of America Earnings Comedy

The minute this thing [Comex/LBMA/ETF paper fraud vs. actual physical demand] gets away and we start to have a real market and prices start to reflect real supply/demand, it will bring in a lot more demand at the same time supply is being diminished. This is why you’re going to have price moves of staggering dimensions.  - John Embry, interview with King World News  LINK
John Embry is one of the few precious metals market participants that is worth paying attention to - at least that I've found in my 10+ years of doing exclusively this sector.  I couldn't agree more with the comments he makes in the link above.   It IS going to get very nasty out there and the increasing degree and blatantness of the fraud going on in our system is the number one symptom of the true state of collapse going on in this country (and globally).

At any rate, I didn't want to spend time with bank earnings this quarter but the manipulation and bullshit being reported by the likes of Wells Fargo, Bank of America, etc. is farcical to the point of tears.  As you are probably aware, Bank of America reported a $2 billion in net income, or 15 cents/share.  This was basically in line with Street guesstimates.  However, as always, it pays to comb through the 8-k/10-k in order to wipe away the lipstick and see what horrors are being covered up.

In Bank of America's case it is just too easy to strip away the lies and deceit and conclude that beneath the headlines BAC is a dying bank.   To start with - and I normally ignore the fancy slides attached to these 8-ks that are fabricated for the Wall Street analysts who do no more than regurgitate the vomit served up by bank CEO's - if you scan through the slide show you'll find an interesting comment about loss reserves.  It turns out in this case that BAC is part of a group of banks being sued over guarantees made to investors who invested in the fraudulent mortgages originated by these banks during the housing bubble.  In here, BAC acknowledges that they are under-reserved for this by at least $5 billion.  In other words, if Bank of America were honestly applying GAAP accrual accounting, they would have taken at $5 billion charge against earnings, thereby wiping out the $2 billion net income stated and they would have reported a $3 billion loss.  You can read about the litigation going on HERE and keep in mind that the judicial system is starting to deliver much more severe punishment to these banks.  So the $5 billion acknowledged may be too low.  You can see the slide show in the 8-k I've linked below.

The $5 billion reporting lie is the easiest to spot.  The other really easy one is the general "provision for credit losses" charge.  In 2010 they took $28.4 billion credit loss provisions (meaning, they estimate the loss expected on all of the crappy loans and mortgages not already sold to Tim Geithner's Treasury and create a loss reserve - a balance sheet item - which results in a GAAP income charge in the current year).   Just to make this quick and easy, BAC has $387 billion total in residential mortgages and home equity loans.  We know from past analysis that BAC is carrying the first mortgages on their books at too high of a valuation.  Since 1st liens are likely still substantially underwater, that means home equity loans are worthless, on average and in general.  BAC has $125 billion in home equity paper.  Even in the best case economic scenario, we can safely assume most of that will have to be eventually written down to zero.  But let's be spiritual and give BAC the benefit of doubt and say that only 1/3 will be written off completely.  That still leaves $42 billion in write-offs.  How about they start taking $4 billion per year in charges for this (and we know it will be a lot bigger) and run it honestly through their income statement?  Add that to the $3 billion loss as defined above and you know have $7 billion in losses.

And $7 billion in losses does not take into account many other items of interest that I simply do not have time to look into.  But you get the idea when I say that ultimately, with the test of time, the earnings released today will be revealed as a complete absurdity and fraud.  Here is BAC's 8-k if you want to do some work yourself or see what I saw and wrote about:  LINK

To compound the fraud going on - briefly - many of you have probably heard about the lawsuit filed against JP Morgan yesterday that alleges that JP Morgan fabricated and created documentation that has been used to collect on foreclosed mortgages, ahead of all other creditors in bankruptcy proceedings.  This fraud, if proved in court, will run into the billions and the potential damages awarded will be astronomical.  Here's a great summary of the circus proceedings from Yves Smith'  LINK  As she points out, it is likely JPM may offer up a big wad to settle this without admitting guilt.  I hope the plaintiff does not settle and forces JPM to admit to the fraud.  This case would not have been filed if the plaintiff didn't have rock solid evidence.  If the plaintiff holds ground with a lot of paper money being dangled to settle, this could reach all the way up and bite Jamie Dimon in the ass legally.

Folks, the degree of fraud and corruption gets worse by the day.  And even more troubling is that fact that the Obama administration enables it, rather than prosecuting it and cleaning it up.   Obama himself has been putting pressure on the judicial system to settle these cases and make them go away.  For of you voted for Obama, is this what you voted for?


Today we got data on the jobless claims, housing and CPI.
I would not pay any attention to the corrupted data released by the USA:

Economic Data Flood Summary: Claims, Housing Noisy, CPI May Return "Disinflation" Talk At FOMC Meeting

Tyler Durden's picture

First, Initial Claims - the new yoyo.
  • Initial claims drop from revised 402K (as expected) in last week, to 352K this week, 50K swing in one week, on expectations of 384K. All in the seasonal adjustment, which tries to compensate for the 124K drop in Non Seasonally Adjusted claims. Fired bankers and everyone else no longer registers to the B(L)S.
  • This number was below the lowest Wall Street estimate of 363K.
  • Continuing claims: 3.432MM, below expectations of 3.590MM, previous revised naturally higher from 3.628MM to 3.647MM. The reason? People on EUC and Extended benefits in last week: +105,000. More and more people move away from 6 month support to extended 99 week cliff.
  • The decline in continuing claims was 215K, and the number of 3.432MM was the lowest since Sept 6, 2008,the week before the Lehman collapse (h/t Stone McCarthy)
  • Decline likely “function of seasonal distortion,” likely“exaggerates strength in the labor market,” says BBG economist Joseph Brusuelas
  • Source
Housing Starts and Permits:
  • Largely irrelevant, as crawling at a bottom, but starts at 657K, below expectations of 680K, and down from 685K previously
  • Permits in line with expectations at 679K, down from 680K before
  • Volatile’’ multifamily dwellings category eased “slightly,” says Brusuelas. Even so, MFDs “likely to remain quite stout due” on modest increase in household formation, ownership-to-renter transition, tight apartments supply. Housing “still dead,” says Bloomberg economist Rich Yamarone
  • Source
  • Headline CPI at 0.0% vs expectations of 0.1%, unchanged from last month
  • Core CPI: +0.1% in line with expectations of +0.1 and down from 0.2% previously
  • "Weak domestic aggregate demand,’’ slowing global economy likely to continue downward pressure on prices, says Bloomberg economist Joseph Brusuelas
  • Fed “clearly concerned with the return of disinflation;” watch for “talk of further central bank action to support the economy” at next week’s FOMC meeting, says Brusuelas 
  • Source
Slowly all the high frequency economic data are becoming increasingly meaningless, noisy, volatile and unpredictable. Just as the government wants it to be.


It is Deutsche Bank's term to fudge the numbers:

(zero hedge)

Deutsche Bank Again Under Fire From Internal Whistleblower Accusing Bank Of Fudging Numbers

Tyler Durden's picture

Back In May 2009 Zero Hedge was the only website to post (following a NYT Dealbook takedown for reasons unknown) the lament of one, now former, Deutsche Bank employee and whistleblower, Deepak Moorjani, who made it very clear that going all the way back to 2006, Deutsche Bank was allegedly fabricating data, and misleading investors about its commercial real estate holdings, courtesy of a lax regulatory strcuture and the "lack of a system of checks and balances". To wit: "At Deutsche Bank, I consider our poor results to be a “management debacle,” a natural outcome of unfettered risk-taking, poor incentive structures and the lack of a system of checks and balances. In my opinion, we took too much risk, failed to manage this risk and broke too many laws and regulations. For more than two years, I have been working internally to improve the inadequate governance structures and lax internal controls within Deutsche Bank. I joined the firm in 2006 in one of its foreign subsidiaries, and my due diligence revealed management failures as well as inconsistencies between our internal actions and our external statements. Beginning in late 2006, my conclusions were disseminated internally on a number of occasions, and while not always eloquently stated, my concerns were honest. Unfortunately, raising concerns internally is like trying to clap with one hand. The firm retaliated, and this raises the question: Is it possible to question management’s performance without being marginalized, even when this marginalization might be a violation of law?" The story was promptly drowned, despite our attempts to make it very clear just what practices the bank was engaging in in the follow up exclusive titled "One Whistleblower's Fight Against Goliath Over the Definition of Risk." Today, the questionably legal practices by Deutsche Bank are once again brought to the forefront with the Propublica article of former WSJ journalist Carrick Mollenkamp titled "Deutsche Analyst Sounded Alarm When Asked to Alter Numbers." This is the second time a pseudo-whistleblower has spoken out against an endemic culture of fraud at the German bank in two years. And nobody cares of course, for obvious reasons - the Zen-like tranquility of the
status quo may never be disturbed, or else the endless crime and corruption lurking in the shadows will be exposed for all to see.
Just how much deep will this particular rabbit hole lead? Alas, not deep at all, as any in depth analysis of the actions taken by DB in 2007 will expose that they were not unique at all, and virtually every other bank engaged in precisely the same type of wholesale fraud, which however may result in people going to jail. Something which the status quo has said can not happen.
Mollenkamp's article can be summarized simply as follows: a low-level analyst was told to fudge numbers to make number attractive. While this is a practice which everyone who has worked on Wall Street has engaged in at some point, the implications here are just how far such "fudging" may have gone, who may have been responsible, and at its very core, why nobody is held accountable even following the trillions in real estate losses following years of in kind lies perpetuated by everyone else. That we realize, is a moot point: after all the whole point of the status quo is that nobody can be is guilty, ifeveryone is guilty.
From ProPublica:
At a time when mortgage-backed securities were imploding and customers were fleeing the market, a junior analyst at Deutsche Bank AG protested when he was asked to alter the numbers in a spreadsheet to make a Deutsche security look less risky to ratings agencies, according to a person with knowledge of the matter.

The analyst, this person said, was asked by a mid-level Deutsche executive in late 2007 to make it appear that the investment would produce more cash than the bank actually expected at certain time points.

The request came at a crucial moment. In the last months of 2007, investors had grown skittish about such investments amid signs that the housing bubble was deflating, if not bursting. Up and down Wall Street, banks were trying to persuade ratings agencies that large portions of their mortgage-backed securities merited the coveted AAA stamp, meaning that they posed negligible risks of default. The analyst was asked to alter the spreadsheets in order to get a better rating, the person said.

The analyst's protest prompted an internal investigation conducted by a law firm, according to five current and former Deutsche employees. The protest and probe have not been previously reported.
And so forth. Read the whole thing here but there will be nothing at all surprising or earthshattering to those familiar with how Wall Street used to operate, and how it still operates.

Jessie with 4 more stories on the MFGlobal scandal:


New Revelations On MF Global and Bank Complicity in 'Missing' Customer Funds

Financial violence and repression with impunity.

CFTC Rips Trustee, Says Customers Must Be Paid First

FSA Pressures NY Banks To Release Customer Funds

JP Morgan At the Center of the MF Global Failure

Futures Industry Regulator: No Way To Stop Brokers From Stealing


Eastman Kodak files chapter ll bankruptcy protection:

And Scene...Kodak Files For Chapter 11 Bankruptcy

Tyler Durden's picture

Headlines for now but the inevitable has become well 'evitable' as EK goes BK...headlines via Bloomberg:
We guess the 128% stock rally from 1/6 to 1/11 can be ignored now (and the Einhorn rumors)
Press Release:
Eastman Kodak Company and Its U.S. Subsidiaries Commence Voluntary Chapter 11 Business Reorganization

Flow of Goods and Services to Customers to Continue Globally in Ordinary Course

Non-U.S. Subsidiaries Are Not Included in U.S. Filing and Are Not Subject to Court Supervision

Company Secures $950 million in Debtor-in-Possession Financing in U.S.

Kodak’s Reorganization to Facilitate Emergence as Profitable and Sustainable Enterprise

Business Wire

ROCHESTER, N.Y. -- January 19, 2012

Eastman Kodak Company (“Kodak” or the “Company”) announced today that it and its U.S. subsidiaries filed voluntary petitions for chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

The business reorganization is intended to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines. The Company has made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011.

Kodak has obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital. The credit facility is subject to Court approval and other conditions precedent. The Company believes that it has sufficient liquidity to operate its business during chapter 11, and to continue the flow of goods and services to its customers in the ordinary course.

Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the U.S. are not subject to proceedings and will honor all obligations to suppliers, whenever incurred. Kodak and its U.S. subsidiaries will honor all post-petition obligations to suppliers in the ordinary course.

“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M. Perez, Chairman and Chief Executive Officer. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”

“After considering the advantages of chapter 11 at this time, the Board of Directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak,” Mr. Perez continued. “Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.

Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.”

Mr. Perez concluded, “The Board of Directors, the senior management team and I would like to underscore our appreciation for the hard work and loyalty of our employees. Kodak exemplifies a culture of collaboration and innovation. Our employees embody that culture and are essential to our future success.”

Kodak has taken this step after preliminary discussions with key constituencies and intends to work toward a consensual reorganization in the best interests of its stakeholders. Kodak expects to complete its U.S.-based restructuring during 2013.

The Company and its Board of Directors are being advised by Lazard, FTI Consulting Inc. and Sullivan & Cromwell LLP. In addition, Dominic DiNapoli, Vice Chairman of FTI Consulting, will serve as Chief Restructuring Officer to support the management team as to restructuring matters during the chapter 11 case.

More information about Kodak’s Chapter 11 filing is available on the Internet Information for suppliers and vendors is available at (800) 544-7009 or (585) 724-6100.

Kodak will be filing monthly operating reports with the Bankruptcy Court and also plans to post these monthly operating reports on the Investor Relations section of The Company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the Investor Relations section of


And just now the ISDA has declared an credit event with respect to Kodak bonds:

ISDA Finds An Event Of Default At Eastman Kodak, Whose Bonds Are Trading 27% Higher Than Greece

Tyler Durden's picture

ISDA, in which the I stands for Irrelevant or other even less flattering adjectives, has just released the following press release:
NEW YORK, January 19, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA) today announced that its Americas Credit Derivatives Determinations Committee resolved that a Bankruptcy Credit Event occurred in respect of Eastman Kodak Company.

The Committee determined that an auction will be held in respect of outstanding CDS transactions. ISDA will publish further information regarding the auction on its website,, in due course.
Which is great: apparently the default of Kodak will not lead to the end of the financial system as we know it. But we have a simply question: we would love if someone at ISDA would get back to us with the answer to the following rhetorical question: which of these two charts belongs to a benchmark Eastman Kodak 2 year bond, and which to  a 2 year Greek bonds, which apparently, ISDA will never find in default. And also, why is the one found to be in a credit event trading 6 cents higher than the non-credit event one.

P.S. here is the answer for what would happen if one bought GGBs and Sold EK bonds: a loss of nearly 7 absolute cents in cash.

Obama has decided to stick it to Canada.  

Canada's answer the royal finger:

(courtesy zero hedge)

Keystone Aftermath Arrives: Canada Pledges To Sell Oil To Asia, As US Becomes Source Of "Uncertainty"

Tyler Durden's picture

America's loss is China's gain. In the aftermath of the Keystone XL fiasco, which will see not only a number of jobs "uncreated" but a natural source of crude lost, Canada is already planning next steps. Which will benefit Shanghai directly and immediately. As Bloomberg reports, "Prime Minister Stephen Harper, in a telephone call yesterday, told Obama “Canada will continue to work to diversify its energy exports,” according to details provided by Harper’s office. Canadian Natural Resource Minister Joe Oliver said relying less on the U.S. would help strengthen the country’s “financial security.” The “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market,” Oliver told reporters in Ottawa." Ironically, it is diversifyingaway from the US, with its ever soaring, politically-predicated uncertainty, that is a source of stability and diversification. But it is not only crude. Wonder why no jobs are being created? Wonder why despite record low mortgage rates there is no bottom in sight for housing? Simple - nobody can plan one month, let alone one year ahead for any US-based venture or business. The political risk is simply too great - whether it is contract law (see GM and Chrysler) or simple solvency (see record high levels of cash hoarded by companies), it is there, and as long as it is there, there will be no hiring, no capex spending, no growth, and no real improvement in the economy, the real economy, not that defined by where the Russell 2000 closes on any given day.
More from the Keystone XL aftermath:
Harper “expressed his profound disappointment with the news,” according to the statement, which added that Obama told Harper the rejection was not based on the project’s merit and that the company is free to re-apply.

Canada this month began hearings on a proposed pipeline by Enbridge Inc. to move crude from Alberta’s oil sands to British Columbia’s coast, where it could be shipped to Asian markets.

Environmentalists and Canadian opposition lawmakers welcomed the Obama administration’s decision. Megan Leslie, a lawmaker for the opposition New Democratic Party, said the Keystone pipeline project was harmful to Canada’s energy security.

“What I’m opposed to is continuing the unchecked expansion of the oil sands,” Leslie said by telephone.

Enbridge (ENB)’s pipeline may now become the new flashpoint between Harper and the opposition. Harper has said building the capacity to sell the country’s oil to Asian markets is in the national interest, and the government will review regulatory- approval rules for new energy projects so they can be done more quickly. Harper has also said he will look more closely into complaints that “foreign money” is being used to overload the regulatory process.
Then there are those who have pointed out that in recent years the equity risk premium has soared to multi-year highs. There is a reason for that. It is called: America.
Yesterday’s rejection “certainly introduces new uncertainties into the economic relationship,” said David Pumphrey, deputy director of the energy and national security program at the Center for Strategic and International Studies in Washington. “This is a cornerstone of economic development for the country.”
And as pertains to this story, it is a good thing that the American Strategic Petroleum Reserve is safe and untapped for every eventuality. Oh wait...


From the courts, this report from Matt Reynolds who states what JPMorgan will do in bankruptcy court to win as they engage in criminal activity to defraud victims in the foreclosure mess .  Maybe this was a warm up to the MFGlobal scandal. This is the same report that Dave from Denver discusses today:

(court services/Matt Reynolds)
Courthouse News Service
Chase Accused of Brazen Bankruptcy Fraud
January 17, 2012

LOS ANGELES (CN) - JPMorgan Chase routinely fabricated documents to deceive bankruptcy judges, going so far as to Photoshop documents to "create the illusion" of standing "in tens of thousands of bankruptcy cases," according to a federal class action.

Lead plaintiff Ernest Michael Bakenie claims that Chase's "pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players" bore rich fruit: that Chase secured motions for relief of stay and proofs of claim in 95 percent of its cases.

"Through the use of fabricated assignments, endorsements and affidavits that purport to transfer deeds of trust, notes and the rights to all monies due under the terms of tens of thousands of non-negotiable promissory notes (the 'MLNs'); Chase has demonstrated a pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players," the complaint states.

"Chase intentionally conceals the identity of the true parties in interest entitled to enforce the tens of tens of thousands of residential non-negotiable promissory notes (the 'MLNs') for its own financial benefit, at the expense of the class and to the detriment of the integrity of the bankruptcy system."

Bakenie says Chase used a network of attorneys to file more than 7,000 motions for relief from automatic stay in bankruptcy cases in the Central District of California, "wherein they falsely claim to be the party entitled to monies due under the terms of MLNs."

Chase rewards attorneys based on how quickly they can secure the stays, and uses fabricated documents to establish chain of title on loans, according to the complaint...

Read the rest here.


It is late so I had better say goodnight.

I will see you on Saturday morning.



FunkyMonkeyBoy said...


Would it be ok if Bill Murray portraits you in the upcoming movie sequel Groundhog day II - It centers around your never ending commentary of the daily works of fiction at the COMEX.

Seriously though, has your pal Bart Chilton defined 'swaps' yet? Like you said he would be 1st Nov 2011?

How you give that piece of human crap a second of your time is beyond me... i don't care whether he was in Ghostbuster II or not, if he had any decency he'd step down from his highly paid thrown and publicly announce he was quitting because of all the corruption... but, hey, he just can't say no to the gravy train.

Eternal Student said...

There have been a couple of things which have apparently been forgotten by many in the financial community, about some of the news lately.

First, regarding BofA, people seem to have forgotten that they were the leader in branch closings in the last half of 2011:

Or perhaps this is the new business model. TBTF's need to close lots and lots of branches, and they'll have even better results. In fact, if they closed them all, they would be doing stunningly well. And would serve society a heck of a lot better than they are doing now.

Secondly, regarding PSLV and SLV, people seem to have forgotten that there are games which can be played with an ETF like SLV, that can't be done with a Closed-End Fund like PSLV.

Which was why Sprott set up PSLV as a Closed End Fund, and not an ETF.

Harvey had an article on this about a year ago, as I recall. Though it doesn't seem to come up easily on a search.

TheGilliom said...

I believe Bart is on our side. The problem is he is only one guy. He has come out on his own a couple times regarding silver as well has been a long time advocate of limits. Gensler seems to be a positive voice generally as well. The problem is the other 3 (Sommers, O'Malia, Dunn - who has or is stepping down) I will continue to give Bart the benefit of the doubt until he shows reason not to.

ChasVoice said...

LIBERTARIANISM AND INTERNATIONAL VIOLENCE - As the American People Lose their Liberties its Government Commits Genocide

Read more:

Zachary said...

FMB...Whats your deal mate? You act like a child who does not get their candy when they want it.

Why not start and take your garge comments with you.

You fail to see insulting Harvey, who provides HIS insight for free, removes all your credibility.

Any validity your comments have had are out the window every time you crawl down to the level of insulting. Its times like this that censorship seems like a good idea.

Great idea monkey boy, have Bart step down so the CTFC is ALL man can't change the system, only shed light on its dysfunctional operation.

Harvey, thank you for what you do mate. Hope all is well with you and your family.

Question for you Harvey, do you believe the Pan Asian Gold Exchange will really expose the COMEX in June, when it begins to operate at full throttle? The concept of a 24 hour rolling spot, where metals are at a 1:1 ratio with cash, seems like it could destroy the comex. Care to ponder on this? Should be an interesting event 6 months from now.

Anonymous said...

Portrait is not a verb. The word you want is portrays.

Anonymous said...

Just ignore FMB. The guy is either a paid shill or a psycho and maybe both.

When you pay attention to him, you give him what he wants, and allow him to continue his weird obsession.

Harvey Organ said...

To all: Yes the Pan Asian gold market is the real thing. There is no leverage here, as we see in London. This should destroy the comex when everyone realizes that they have no unencumbered metal.

Strong delivery notices today:

In gold we had 11 notices (out of 16 notices to be served upon)

In silver: 114 notices (out of 152 notices to be served upon)

I will now await for OI to see if additional oz standing.


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