Saturday, February 18, 2012

Greece updates/Iran/High amounts of physical silver standing in February/

Good morning Ladies and Gentlemen:

The boys decided on Friday that a raid was necessary and their motive is to try and quell physical demand for our precious metals.   The global financial scene is rapidly deteriorating and all citizens realize their paper currency is nothing but paper and seek the safe haven of physical gold and silver.  Bank runs are occurring daily especially in the weaker PIIGS nations.  The country welcoming their deposits is Switzerland who then take orders from the depositors to switch to gold and hold that metal as a currency for them.

The price of gold finished the comex session down by only $2.10 to a close at $1724.50.
Silver finished the regular session at $33.20 down 16 cents. The raid drove the price of gold down to $1717 but that was it and brave souls entered the comex and drove the price back to a minor loss.
Silver was the object of the bankers interest again.  It is much easier to whack this metal as players have abandoned the arena and only physical players wishing actual metal are buying silver contracts.  These buyers are actually quite delighted at the opportunity of picking up cheap metal on these "raid days".

Let us head over to the comex where you will see some very interesting developments.First the gold comex:

The total gold comex open interest rose by 2502 contracts from 438,174 to 440,676 contracts.On Thursday you will recall we had quite a reversal on gold and silver as these metals rebounded from their lows to finish slightly up.  The bigger demand for metals caused our OI to rise.  The bankers lick their chops every time they see higher OI as they try to remove these longs from their contracts.  The front options delivery month of February saw its OI fall from 385 to 376 for a loss of 9 contracts.  We had only 2 delivery notices filed on Thursday so again we lost 7 contracts to cash settlements or 700 oz.  It seems Blythe has no other way to settle upon our longs except to offer them cash and a big fiat bonus. The next delivery month is April and here the OI remained relatively constant at 238,397 dropping by a touch higher of 200 contracts. The estimated volume at the gold comex was a miserable 116,731 as many investors are seeking their metal, or playing, elsewhere. No doubt the MFGlobal commentaries of late showing that customers will not receive any of their money is surely scaring people from playing at the comex in the USA.  The confirmed volume on Thursday, the day of the big reversal registered 182,499 contracts but many of those were high frequency day traders.

The total silver comex OI breached its narrow channel by rising 649 contracts to finish the session at 107,270.  No doubt that this rise is surely bothering our bankers as they know the players are serious in taking delivery.  I am pretty sure that this was the reason for another raid in broad daylight. The front options expiry month of February registered a gain of 30 contracts rising from 187 to 217 contracts.  This is the 8th straight day that we have seen a net OI gain in the front February month which no doubt is a signal to all that silver is needed badly in other jurisdictions.  The bankers buy the front month to secure the metal and send it off probably to London to feed needy investors over there. We are now less than two weeks away from first notice in the March silver contract.  Surprisingly the OI fell ever so slightly from 32,232 to 31,030. The players who sold rolled their contracts to May.  The confirmed volume on Thursday, the day of the reversal was 60,903.  Both volumes are very good as of  late.

Now let us begin with February inventory movements  in Gold

  February 18.2012                               :

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
450 (Brinks)
Deposits to the Dealer Inventory in oz

Deposits to the Customer Inventory, in oz
No of oz served (contracts) today
6 (600)
No of oz to be served (notices)
370 (37,000)
Total monthly oz gold served (contracts) so far this month
2799 (279,900)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month


Again we witnessed hardly any activity in the gold comex.  We had no dealer deposit
and no dealer withdrawal.

The only transaction was a tiny 450 oz withdrawal by the customer at Brinks.
We did have two adjustments: addition error at Brinks were 54 oz was removed from its totals.
2. 1100 oz of gold was adjusted out of the dealer and back to the customer at Scotia as a payment of a prior liability.

The registered or dealer gold lowers to 2.447 million oz or 76.11 tonnes of gold.

The CME notified us that we had only 6 deliveries for 600 oz of gold. The total notices filed so far this month total 2799 for 279,900 oz .  To obtain what is left to be served,  I take the OI for February (376) and subtract out Friday's deliveries (6) which leaves us with 370 notices or 37,000 oz of gold left to be served upon.

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

279,900 oz (served) +  37,000 (oz to be served)  =  316,900 oz.  In tonnes 9.85 tonnes,
as we lost 700 oz to cash settlements on Friday.


the silver chart: February 18. 2012:

Withdrawals from Dealers Inventorynil
Withdrawals fromCustomer Inventory329,691 (HSBC,Brinks)
Deposits to theDealer Inventorynil
Deposits to the Customer Inventory7491 (Brinks)
No of oz served (contracts)124  (620,000)
No of oz to be served (notices)93 (465,000 oz)
Total monthly oz silver served (contracts)709 (3,545,000 oz)
Total accumulative withdrawal of silver from the Dealersinventory this month2,287,779
Total accumulative withdrawal of silver from the Customer inventory this month 6,820,726

The silver vaults were surprisingly quiet on Friday.
We had no dealer activity whatsoever in that we had no dealer deposit and no dealer withdrawal.

We had a very tiny 7491 oz of silver deposited into the customer at Brinks.
We had the following withdrawal of silver by the customer:

1. Out of Brinks:  82,006 oz
2. Out of HSBC  247,685 oz

total withdrawal:  329,691 oz
we had no adjustments.

The registered or dealer silver remains at 35.07 million oz
The total of all silver lowers to 128.8 million oz.

The CME notified us late Thursday night that we had a very chunky 124 notices filed for 620,000 oz
The total number of silver notices filed so far this month total 709 for 3,545,00 oz.  To obtain what is left to be served upon , I take the OI standing for February (217) and subtract out Friday deliveries (124) which leaves us with 93 notices or 465,000 oz left to be served upon.

Thus the total number of silver oz standing in this non delivery month continues to advance:

3,545,000 (oz served)  +  465,000 (oz to be served upon)  =   4,010,000 oz

I now have the delivery notices filed for Monday:

gold:  only 1 notice
silver:   57 notices

It seems that the comex is having trouble finding the necessary metal to feed our patient longs.

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.

Feb 18.2012:

Total Gold in Trust



Value US$:70,960,443,080.79

Feb 16.2012




Value US$:70,549,272,793.6

we neither gained nor lost any gold at the GLD on Friday.

And now for silver Feb 18 2012:

Ounces of Silver in Trust308,381,076.800
Tonnes of Silver in Trust Tonnes of Silver in Trust9,591.72

Feb 16.2012:
Ounces of Silver in Trust308,381,076.800
Tonnes of Silver in Trust Tonnes of Silver in Trust9,591.72

Feb 15.2012

Ounces of Silver in Trust309,449,951.200
Tonnes of Silver in Trust Tonnes of Silver in Trust9,624.97

Feb 14.2012

Ounces of Silver in Trust310,518,841.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,658.22

Feb 13.2012
Ounces of Silver in Trust311,879,302.200
Tonnes of Silver in Trust Tonnes of Silver in Trust9,700.53

For a change we lost zero oz of silver at the SLV on Friday.

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

1. Central Fund of Canada: traded to a positive 3.2 percent to NAV in usa funds and a positive 3.2% to NAV for Cdn funds. ( Feb 18 2012.).
2. Sprott silver fund (PSLV): Premium to NAV rose slightly  to  6.86% to NAV  Feb 18.2012 :
3. Sprott gold fund (PHYS): premium to NAV fell slightly to  3.13% positive to NAV Feb 18. 2012). 


Let us now head over to see how positions changed  with our players with Friday's COT report:

first gold.

Gold COT Report - Futures
Large Speculators
Change from Prior Reporting Period

Small Speculators

Open Interest



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, February 14, 2012

Our large speculators:

Those speculators that have been long in gold lightened up a bit on their longs to the tune of 7,288 contracts as the weaker longs succumbed to the wishes of the crooked bankers.

Those speculators that have been short in gold, increased those shorts to the tune of 2,799 contracts.

The commercials;

Those commercials who have been long in gold and close to the physical scene, added 3733 contracts to their long side.

Those commercials who have been perennially short in gold e.(JPMorgan and friends) covered 7933 contracts from their short side.  The raid allowed them to cover these contracts.

Our small specs:
Those small specs that have been long in gold pitched a rather large 2519 contracts and these guys were also victims to the criminal collusive action of the bankers.

Those small specs that have been short in gold covered 942 contracts from their short side.

Conclusion:  now more bullish for gold as the bankers are covering their short positions and they went net long this reporting week.

Remember that the report is from Tuesday Feb 7 through to the 14th of February.  We had interesting days on Wednesday, Thursday and Friday.

Now for our Silver COT:

Silver COT Report - Futures
Large Speculators

Small Speculators

Open Interest



non reportable positions
Change from the previous reporting period

COT Silver Report - Positions as of
Tuesday, February 14, 2012

 Our large specs:

Those large specs that have been long in silver continued by slowly adding another 621 contracts to their long side.  (Note the difference in the large specs with silver in contrast to the large gold specs)

Those large specs that have been short in silver,did not like the lay of the land and covered a rather large 1460 contracts from their short side.

Our commercials;

Those commercials who are long in silver covered a very tiny 368 contracts.
Those commercials who have been perennially short in silver and subject to the criminal probe on manipulation reluctantly supplied 2292 contracts

Our small specs:

those small specs that have been long in silver pitched 741 contracts from their long side;
those small specs that have been short in silver covered a rather large 1,320 contracts.

Conclusion:  the large specs are taking on the bankers.  The large specs will win if they seek the physical from the bankers in the delivery process and remove that metal from all registered comex vaults.


Here is a great interview on gold and what will happen to all of those derivatives once they explode
into vapour:

(courtesy Chris Powell/GATA/KingWorldNews and Von Greyerz

Debt derivatives and gold will explode shortly, von Greyerz tells King World News

9:35p ET Friday, February 17, 2012
Dear Friend of GATA and Gold:
Fund manager Egon von Greyerz, interviewed by King World News today, expects debt derivatives to start exploding across Europe and the United States soon, and gold to end its consolidation phase and to start moving up again as soon as next week. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Let's see some of the big stories which shape the price of gold and silver.  No doubt the Greek debt problem heads the list.  The Euro boys are meeting this weekend and we should have some sort of announcement  on Monday as to how they powers to be will sort on this mess.

Early Friday morning we were greeted with this story from Credit Suisse who candidly suggest that the default will be disorderly:

(courtesy zero hedge/Credit Suisse)

Credit Suisse The Sequel: "Probability Of The Largest Disorderly Default Loss In History On March 20 Has Increased"

Tyler Durden's picture

A week ago we presented an excerpt from Credit Suisse's most excellent piece "The Flaw" - merely the latest in one of the best overviews of the neverending Greek soap opera by William Porter. Yet every soap opera eventually ends. Although when it comes to Nielsen ratings, the denouement is usually a whimper. In the case of Greece, it will be anything but. Yet listening to the daily cacafony of din from Europe's leaders, who are likely more clueless than the average reader as to what is really going on, one may be left with the impression that there is a simple solution to the problem, and Greece may be "saved... in hours." It can't. In fact, as of today, Porter's s conclusion is: "we are left with a sense that the probability of delivering the largest default loss in history in a disorderly way on or before 20 March has increased relative to doing so in an orderly way."
As a reminder, Credit Suisse was the one smart enough bank which chose to completely ignore day to day newsflow out of Greece as it is literally noise with absolutely no signal. Wish we could say the same for FX traders. As such, CS' "view remains that, in any case, the chance of a disorderly outcome after 20 March is high, so to that extent the immediate events are not really central to our view, but of course are fascinating." Quite fascinating indeed, because they show to what extent an unravelling financial system will go to pretend that the number one unfixable problem in Europe - the lack of money good assets, available to either be sold, repoed, pledged, equitized, or otherwise monetized. As we have observed previously, at this point it doesn't matter for Greece- even if the country gets the second bailout, which will be used almost exclusively to recycle cash into the banking system, Europe will have a first lien on nearly 150% of its GDP. At that point the country is both a de facto and de jure colony of the Troika. The longer the bang, or whimper, is delayed, the fewer assets will remain in Greek possession, and the poorer the population will be for the inevitable fresh start, with or without the Euro.
So meandering regurgitations aside, because all this has been said one hundred times already, here is Credit Suisse's latest attempt at a fresh take on events.

We are cautious about reports of the exchange “running out of time”: the 20 March binding constraint is a GGB maturity. Greece is sovereign and has run out of money; it can choose the timetable. The case might be different if the maturity were an English law bond (but perhaps not much.)

The real issue remains the ECB’s exposure to the BoG, in our view. Protecting that (i.e., ensuring that Greece does not systematically default via introducing a new currency) becomes the bottom line, as the latest Flash explored.

Since our objection to ‘leaving EMU’ is that its corollary is systematic default, bank nationalization and the like, once the latter problems are a given, a situation towards which we seem to be heading rapidly in Greece, then the cost of the incremental step of introducing a new currency become less. Our view remains that the economy would subsequently euro-ize but potentially at a different cost level. The effect of the delay would have been to transfer the cost from Greek citizens (who have now moved substantial sums out of the country, providing in fact a source of subsequent BoP financing that makes the equation even more attractive) to the ECB. The core has a very serious problem and again should swerve, but the probability of a ‘crash’ is rising.

We remain very cautious about the long-term sustainability of the debt after restructuring, and it is just possible (not our core case) that the troika takes the rational decision that it is cheaper to let Greece default and reimburse the ECB for its approx. €30bn of GGB  losses than to pay the rising but nominally €130bn. Yet it was only on 14 February (two days before writing) that the ECB was confidently talking of distributing its GGB profits, so we are cautious about second-guessing the analytical framework being used.

Overall, we are left with a sense that the probability of delivering the largest default loss in history in a disorderly way on or before 20 March has increased relative to doing so in an orderly way. (Our view remains that, in any case, the chance of a disorderly outcome  after 20 March is high, so to that extent the immediate events are not really central to our view, but of course are fascinating).


This doesn't look good.  The President of Germany resigned in a scandal on political favours, dealing a blow to Angela Merkel:

(courtesy Reuters)

(Reuters) - Angela Merkel's hand-picked choice for the ceremonial post of president resigned on Friday in a scandal over political favors, dealing a blow to the German chancellor in the midst of the euro zonecrisis.
In a curt five-minute statement at the Bellevue presidential palace, Christian Wulff said he had lost the trust of the German people, making it impossible to continue in a role that is meant to serve as a moral compass for the nation.
"For this reason it is no longer possible for me to exercise the office of president at home and abroad as required," Wulff said, standing next to his wife Bettina.
Merkel postponed a trip to Rome where she was to hold talks with Italian Prime Minister Mario Monti and made a brief statement after Wulff spoke, saying she regretted his departure.
The situation changed dramatically for Wulff on Thursday evening when state prosecutors in Hannover asked parliament to end his legal immunity over accusations he accepted favors in a prelude to opening an investigation into him.
It is the first time ever that prosecutors have wanted to investigate a German president and the move triggered direct calls from opposition parties for the 52-year old Wulff to go.
He is the second president to step down within two years. His predecessor, former International Monetary Fund chief Horst Koehler, resigned unexpectedly in 2010 after coming under fire for comments he made about the German mission in Afghanistan.
Until now, Wulff, who was conservative state premier of the state of Lower Saxony before becoming president, had said he would stay in office to clear his name. He reiterated his desire to hang on to his post in a briefing with journalists on Thursday evening.
At a time when Merkel is trying to solve the crisis enveloping the single currency bloc, the last thing she needs is the distraction of a presidential resignation and a potentially divisive search for a replacement.
Analysts say Wulff's departure could become a problem for Merkel's Christian Democrats (CDU) who are struggling to retain control of the states of Schleswig-Holstein and Saarland in elections later this year.
The resignation reflects badly on Merkel's judgment as she forcefully pushed for Wulff's election against a strong opposition candidate who polls show was backed by most Germans. Merkel said she would talk to the opposition this time to find a consensus candidate.
"This won't be without consequences for Merkel, her reputation will suffer from it," said Gerd Langguth, political scientist at Bonn University.
"She has a good ratings in opinion polls at the moment but what effects it will have on her depends who she names as a new candidate and whether they are convincing or not. If not, she could have problems," he said.
Wulff's image as head of state has suffered badly in recent months and he has been mocked in the German media.
He belatedly apologized for misleading the Lower Saxony state parliament about a cheap 500,000 euro ($650,000) home loan from a businessman friend.
Wulff also admitted to making a "grave mistake" by leaving a message on the answering machine of the editor of Germany's best-selling Bild newspaper threatening a "war" if the daily published a story about his private finance dealings.
He was later criticized for accepting free upgrades for holiday flights for himself and his family as well as staying free of charge at the holiday villas of wealthy businessmen.
A possible successor is Joachim Gauck, an anti-Communist human rights activist in East Germanywho ran against Wulff in 2010 and embarrassed Merkel by forcing the election into a third round.
Other potential candidates include Defense Minister Thomas de Maiziere, Labor Minister Ursula von der Leyen and possibly Finance Minister Wolfgang Schaeuble, though shifting him to Bellevue palace would leave a gaping hole in Merkel's cabinet in the midst of the euro zone sovereign debt crisis.
(Reporting by Madeline Chambers, Andreas Rinke, Thorsten Severin, Stephen BrownBrian Rohan; Editing by Noah Barkin)


And now we witness Merkel and her Financial Minister Schauble in a squabble:

(courtesy zero hedge)

Greece Becomes Apple Of Discord Between Merkel And Schauble As Dissent Grows

Tyler Durden's picture

One of the redeeming features of the failed experiment known as Europe, at least to date, was that while everyone else may bicker, squabble and posture, Germany, or the true core of the Eurozone kept a cohesive front, and at least pretended to have a unified view vis-a-vis daily events. This is no longer the case, as the approach as pertains not only a broke Greece but every other insolvent European country has now caused a schism at the very top, and created a rift between Angela Merkel (whose political position was dealt a huge blow today with the resignation of German President Wulff) and Finance Minister Wolfgang Schauble. Goldman explains.
Growing dissent between Chancellor Merkel and finance minister Schäuble regarding Greece.Several newspapers report about diverging views among the German government regarding the second Greek financial help package. Süddeutsche Zeitung, for example, is citing a source in the EU Commission as saying that "depending whether one speaks with someone from the chancellery or the finance ministry, the message can be quite different".

While Chancellor Merkel seems to be worried about the potential contagion on the rest of the periphery, the finance minister seems to be increasingly of the view that a ring-fencing would be possible. According to these news reports the finance minister has little hope that the Greek government would be able to implement the necessary reforms. In fact, the finance minister said himself in a recent interview that "we had to find out over the last several months that it is easier to promise something than to implement it. This is a problem". The second Greek package will need to be approved by the Bundestag and the skepticism of the finance minister is probably shared by a growing number of MPs.
A bigger problem is that now Merkel is again in salvage mode, and the general public which has handled her handling of the European situation, which involved implicitly pushing Greece away, will now be tested, and if Merkel backtracks and says she was only kidding, and is willing to risk tens of billions of German capital to preserve what little is left of Greek pensions, then the electoral question mark comes into play once again.


As I pointed out to you on Thursday, the swap arranged with the ECB for them to swap their old Greek bonds for new Greek bonds is having a negative effect.  The Greek 1 year bond rose in yield to 639%. The realization that holders of Greek bonds will now be subordinate to official sector
holdings.  The risk of "voluntary" haircut will turn into a compulsory haircut on the PSI;

(courtesy zero hedge)

Market Slowly Figures Out ECB Fake Out Is Euro And Greece Negative As Greek 1 Year Bonds Hit 639%

Tyler Durden's picture

Yesterday, when the rumor (because it has not been confirmed by the ECB, and most certainly not by the Bundesbank) that the ECB would distribute its "gains" (i.e., personally fund the difference between cost basis and par on Greek bonds - incidentally, a development which BUBA president Jens Weidmann has said would only happen over his dead body) we urged readers  "to ignore the constant barrage of meaningless noise and flashing red headlines" as apparently nobody who trades the EURUSD has any clue what subordination means or has ever participated in any debt for equity transaction. Specifically, with regard to the idiotic EURUSD reaction we said: "Today [yesterday] is a great case in point of a tangential detour which does nothing to change the reality that Germany no longer wants Greece in the Eurozone (remember, oh,yesterday), and that the ECB is merely playing possum with PSI creditors who will block the deal with even greater vigor than before (anyone recall the FT story about the PSI deal being on the verge of collapse not due to the ECB but due to private creditors?) as the ECB's even bigger subordination will simply make the amount of hold outs even greater." We concluded by assuming that "algos will take the required 12-48 hours to figure out what just happened today." Well, the algos are still lost in idiot vacuum tube world, but at least the banks are starting to comprehend what the 'deal' really means and that the Nash Equilibrium is even worse than before. From Bloomberg: "A plan being considered by the European Central Bank to shield its Greek bond holdings from a restructuring may hurt the euro because it implies senior status for the ECB over other investors, UBS AG said. “There are at least two euro-negative dimensions, which will likely lead to euro weakness” as a result of the plan, Chris Walker, a foreign-exchange strategist at UBS in London, wrote in a research report today." Once again, we urge all FX traders to read our primer on subordination, and why and how it will define trading this year, as reactions such as the one yesterday confirm that the market is not only broken but also very stupid. Which is just as those in charge like it.
The risk of a voluntary restructuring morphing into a coercive one has arguably increased significantly,” Walker said. “It may appear that the ECB is receiving preferential treatment, raising questions about whether the ECB is senior to private sector bondholders, not only in the case of Greek debt, but also regarding the debt of other euro-zone nations that the ECB may be purchasing.

A private sector bondholder that has been suddenly and unexpectedly subordinated may have a reduced incentive to continue to hold onto that debt,” he said.

UBS, the world’s third-biggest currency trader, estimates the shared currency will slide to $1.25 in three months and $1.15 in one year, according to today’s report.
And while FX, and naturally stock, markets are getting dumber by the minute, the one final bastion or rationality remains credit. Indeed, Greek 1 year bonds just dropped to a new all time low, yielding a jaw-dropping 583% and trading as high as 639%.

Ze Price Stabeeleetee...
One day yield moves. Self explanatory:


CACs are compulsory sale of Greek bonds.  This is the Credit Default Swap trigger, ie.
forced conversion of their bonds.  Athens is drawing up plans to retroactively introduce the CACs into the bond indenture:

(zero hedge)

Here Come The CACs: CDS Trigger Is Next

Tyler Durden's picture

First comes the CACs. Then the forced debt exchange offer. Finally - default: as defined by both the rating agencies and ISDA, together with triggered CDS.
From Bloomberg:
The Greek government is drawing up legislation that could be used to impose loses on investors who don’t support the debt swap that’s part of the country’s new bailout package, said two euro-region officials familiar with the situation.

The law may be introduced to parliament in Athens in the coming days, said one of the officials, who spoke on condition of anonymity because the deliberations are confidential

Euro region finance ministers are prepared to back the use of so-called collective action clauses if a voluntary debt swap doesn’t draw enough participation, the other person said


Peter Tchir summing up all the happenings this week with Greece:

(courtesy Peter Tchir)

Greek Bailout Or Deliverance?

Tyler Durden's picture

Via Peter Tchir of TF Market Advisors,

Bailout somehow seems too nice of a word.  It implies working together, giving a helping hand, making a real effort to help someone out.  As I read the headlines coming out of Greece for the past 2 weeks, all I can think of is, how do you say “squeal like a pig” in German.

The market is happy because it looks like PSI will go through and that in theory will be enough to convince the Troika to send money to Greece, so long as they live by the latest austerity package.  That all seems fine, I guess, but looking beneath the headlines, it seems far worse than that.

The ECB is getting special treatment on their bond holdings.  They will not participate in PSI, in fact it looks like they are just going to change the bonds they own to identical bonds that aren’t subject to retroactive collective action clauses.  This may help the current situation, where bonds are already trading at 20% of par, but the implications for the market as a whole aren’t so good.  All none ECB holders are subordinated.  Period, end of story.  Right now as the markets are in a period of calm, that can be ignored, but it will come up again.  Possibly the moment the ink is dry and Portugal and Ireland want new deals.

Then there is the retroactive collective action clause.  On the bright side, triggering that will actually allow a Credit Event to be declared.  On a scarier note, is the fact that not only are the rules changing, but investors are being told they have been changed as though they were always in place.   That is about as Orwellian as you get.  The message should be clear – once the entire economic system functions on printed money and government programs, they will treat the system like they own it – since they do.  So far investors are buying into the idea that this is a unique situation and a one-time thing.  But this seems like an incredibly slippery slope – a government, with the blessing of the ECB, is changing bond laws after the fact and forcing investors to deal with that new law as though it had always been in place.  Once this tactic has been used, it will be tempting to use again when it suits them – and them being any government, not just the Greek government.

And the Greek government has been a complete failure.  They are represented in these negotiations who owes his job to the people he is negotiating with.  His job was not to represent the Greek people, but to force a deal down their throats.  No work was done on alternatives to the bailout (until recently).  He didn’t explore what options Greece had other than the bailout.  All he did was create fear that without a bailout Greece would fall into total chaos and used that to get his job done – passing austerity measures imposed on the people by the Troika.  The situation in Greece seems awful.  The economy is collapsing.  The human toll is growing, yet the puppet didn’t spend time looking for alternatives, looking for paths that might be good for Greece, but instead tried to promote irrational fear and get his job done.
Any attempt by Greeks to explore alternatives has been shut down.  Remember when the last Greek leader had the silly idea of a referendum?  Samaras mentioned that the April elections could change things, which led to some demands that the elections be changed, but ended (so far) with him just groveling for forgiveness.  And that is a trend that is growing.  This is no longer any attempt by one nation to help another, this is now about creating a pecking order.  Too many things have been said that cannot be unsaid that hurt the dignity of the Greeks.  If they had a leadership that had worked on alternatives to the bailout, maybe the PSI talks would already be over.  Instead, there is a real risk they accept a deal and allow their dignity and sovereignty to be stripped away, all for a deal that probably isn’t in their best interests.  The deal is in the best interest of the Troika – not Greece.

The worst part is that all these talks go on while in the background everyone is acknowledging that this deal won’t even work anymore.  That level of denial is scary.

The one element not being addressed by this Greek default, is what happens to all the bonds they guaranteed?  Are those guarantees still “good” in the eyes of the ECB?  That is the only way Greek banks are funding.  But yes, in this world, if the ECB decides they are valid guarantees, they can fund the banks based on those guarantees, in spite of the fact that they are worthless.

Quietschen wie ein schwein  (according to google translate).


Iran has just been dropped from the Swift system in Belgium and thus cannot receive or wire money from there.  To the Iranians this is financial warfare:

(zero hedge)

Iran To Be Dropped From Swift System in Belgium

My Dear Friends,
Iran is to be dropped out of the Swift system in Belgium. That means Iran could neither send or receive bank money wires.
That would slam Iran’s economy.
This is economic war at the highest level of conflict. This could start a greater move of central banks with fears of the West to increase and retrieve their gold positions. It certainly puts cash reserves held by central banks (which are computer entries anyway) into serious question as to security.
This is as serious as it gets in nuclear and economic terms. The only weapon that can be effective against Iran’s nuclear industry is Western nuclear deep penetration bunker busters.
Hold tight to your insurance investment positions.


In the news, we see that a suicide bomber was arrested in the USA as these guys were threatening Washington DC,

(courtesy zero hedge)

Suicide Bomber Arrested Near Capitol As Iranian Ships Cross Suez

Tyler Durden's picture

It is time for the US administration to remind everyone that while every other piece of bad news may be priced into the markets in perpetuity, there is still geopolitics. Although that may also be priced in. Either way, the WSJ has just reported that "Federal agents on Friday arrested a man who they allege planned carry out a suicide bombing at the U.S. Capitol, part of a sting operation in which undercover agents posing as al Qaeda operatives provided fake explosives. The Federal Bureau of Investigation's Washington field office said the man was arrested "in the vicinity of the U.S. Capitol." It said the suspect never posed a danger to the public." Ah yes, the good old "threats are among us" gambit. And let's just go with the most trivial cliche possible. If nothing else, it sets the stage for next steps. As for what next steps may be, here is a hint, viaReuters: "Two Iranian naval ships have sailed through Egypt's Suez Canal into the Mediterranean, in a move likely to be keenly watched by Israel. "Two Iranian ships crossed through the Suez Canal (on Thursday) following permission from the Egyptian armed forces," a source in the canal authority said Friday. Two Iranian warships sailed along the strategic waterway on February 17 last year, in a move that Israel called a "provocation." Either way, Suez developments may be Israel's issue for the time being. We now apparently have our own suicide bombers to be 'very worried about.'
From the WSJ:
"The arrest was the culmination of an undercover operation during which the suspect was closely monitored by law enforcement," a Justice Department spokesman said. "Explosives the suspect allegedly sought to use in connection with the plot had been rendered inoperable by law enforcement and posed no threat to the public."

Fox News, which reported the arrest, said the suspect was arrested in an alley blocks from the Capitol building, carrying a vest that the suspect allegedly believed was packed with explosives.

Federal authorities are expected to file charges against the suspect, who wasn't identified, later Friday.
As for Iran being aggressive in the Mediterranean (by doing what the US and Israel do all the time), and cause heart palpitations in Israel, or so the media would want us to believe, here is more from Reuters:
The destroyer and a supply ship could be on their way to the Syrian coast, the source added. Iran and Syria agreed to cooperate on naval training a year ago, and Tehran has no naval agreement with any other country in the region.

Egypt's military, which has a close defense ties with the United States, has been governing the country since the overthrow of President Hosni Mubarak a year ago.

The Suez Canal cuts through Egypt and allows shipping to pass from the Middle East to Europe and vice versa, without going around southern Africa.
Yes America, so many deadly dangers out there. Just sit back on your comfortable lay-away couch, and be happy to enjoy that American Idol rerun. And whatever you do, don't think, or use a calculator (it's not like the US $15.4 trillion in debt even fits on a regular calculator anyway).
All that matters is that the nominal DJIA is about to pass 13k and everyone can retire rich.


In this Graham Summers commentary, we see Geithner refuse to testify as to how JPMorgan received massive dollars prior to the Lehman failure which no doubt played a big part in their bankruptcy.  Geithner uses is office of Sec. treasury as reasons for not obeying a subpoena to testify.  What happens if Obama will not allow him a second term?

(courtesy Graham Summers/Phoenix Capital Research/)

The Triumvirate of Wall Street/ the Fed/ and US Politicians is Crumbling Pt 2

Phoenix Capital Research's picture

Months ago, I warned that a tsunami of litigation was going to be coming to Wall Street and Washington. At the time I noted that Goldman Sachs CEO Lloyd Blankfein had recently hired a mega-defense attorney, as well as the fact that the Fed had gone into damage control mode (staging town-hall meetings, opening itself up to Q& A sessions, defending its actions to Congress, etc.).

I also noted in a recent article that the triumvirate of Wall Street/ the Fed/ and US Politicians would be crumbling in the future as these three groups tried to shift the blame for what happened during 2008 from one to another in an attempt to divert public outrage.

Indeed, the only reason this process hasn’t already reached a fever pitch is because the benefits of not talking for most of those who were in on the corruption still outweigh the consequences of keeping their mouths shut.

This process has already changed for some players in the financial game: we have recently seen some minor players get taken down, but those have primarily been insider trading cases involving expert networks, hedge funds, and corporate directors.

The main issue or question is: when do we start seeing the realpower players at the heart of the Financial Crisis come under scrutiny (what Blankfein is clearly anticipating by hiring a defense lawyer).

By the look of things, it’s coming sooner rather than later:

            Lehman Brothers Subpoenas Geithner In J.P. Morgan Fight

Lehman Brothers Holdings Inc. (LEHMQ) and its creditors late Thursday said they want to subpoena Treasury Secretary Timothy Geithner to question him under oath over allegations J.P. Morgan Chase & Co., (JPM) illegally siphoned billions of dollars from the collapsing investment bank in the days before it filed for the largest bankruptcy in U.S. history.

In a filing accompanying Lehman's filing, made in U.S. District Court in Washington, Lehman's official committee of unsecured creditors said Geithner has thus far refused to comply with an Aug. 9, 2011, subpoena, and it wants a court to force Geithner to give a deposition by a March 16 deadline.

"Despite being a crucial fact witness on these issues, Secretary Geithner has refused to appear at a deposition in accordance with a valid subpoena issued by the Committee," the committee's lawyers said in the filing. Geithner was president of the Federal Reserve Bank of New York at the time of the Lehman collapse.

This could represent a potential sea change in the legal environment in the US. It’s clear Geithner thought he could get out of this mess by virtue of the fact he’s among the highest level of the power elite. However, the announcement that he doesn’t expect Obama to keep him as Treasury Secretary mayhave changed this.

For one thing, it’s clear that Obama is trying to distance himself from Geithner for political reasons (more than one GOP candidate has stated Geithner should be fired). The real issue is whether it’s been decided that Geithner will be the one who gets the albatross hung around his neck.

It’s too early to know, but one thing is for certain, the litigation is beginning to shift from minor players to major players at the core of the Financial Crisis. Investors take note, this is a major shift and needs to be monitored as it will have major implications for market dynamics going forward.

Remember, the markets have been on life support from the Fed and Treasury ever since 2008 hit. If those behind that life support begin facing major legal trouble the aggressive “we willsave the day” attitudes of the Fed et al may change.

And when this happens the life support will get pulled.

Make no mistake, we are heading into a Crisis that will make 2008 look like a joke. The money for all of these various programs (both in Europe and the US) simply isn’t there. So this time around we’re going to see stock crashes AS WELL as civil unrest, food shortages, and the like.

If you’ve yet to take steps to prepare for this, I can show you how: my Surviving a Crisis Four Times Worse Than 2008report is chock full of information on how to not only survive but thrive during the months to come.

Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).

Best of all, this report is 100% FREE. To pick up your copy today simply go to: and click on the OUR FREE REPORTS tab.

Good Investing!

Graham Summers


I brought this to your attention on Thursday where the Obama is using taxpayer funded money to pay for the bankers sins in the robo-signing affair.

In this commentary, Dave from Denver shows his anger at Obama and all the hidden tricks he pulls against the taxpayer:

(courtesy of the Golden Truth/Dave from Denver)


Classic Obama "Screw The Public" Move

When the public finally figures out just how much they've been screwed by the banking system, in collusion with the Government, there's going to be a violent revolution  - a friend of mine last night

The $40 billion settlement deal the Government struck with the big banks over foreclosure fraud is not exactly what Obama is promoting it to be.  In fact, it turns out that $30 billion of it will actually be paid for by the taxpayers.  Did everyone see that particular detail being discussed in any of the U.S. media?  Here's the Truth as reported by The Financial Times (London): 
However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter. The existing $30bn initiative, the home affordable modification programme, or Hamp, provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.
Here's the link, which might require a quick registration in order to read the whole article:  LINK

Under the HAMP program, another Obama taxpayer funded beaut, the banks reduce dead-beat mortgages by $30 billion and get reimbursed by the Taxpayers.  The real cost of the "punishment" Obama doled out to the banks for foreclosure fraud is $10 billion.  Nice huh? 

Is this what all you Obama supporters voted for?  Direct subsidy of dead-beat homeowners and big banks using your money?  And all the while Obama flashing his grin, reading from the teleprompter and telling us how much he punished the banks on behalf of the public.

The country is being hijacked right in front of anyone who's actually paying attention.  Most of the public is conveniently distracted by things like Whitney Houston or American Idol concerns.  But once they've figured out that the Rule Of Law is destroyed, we'll hopefully decide to turn to our 2nd Amendment remedies. 

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