Tag Archives: Wells Fargo

Run, Cyprus! Leave the Euro

Posted on by Lan Pham   

How does the island of Cyprus in the Mediterranean Sea get vaulted into international headlines in the past few weeks of March 2013. Moody’s downgrade was in January 2013. In November 2012, Germany intelligence warned about KGB money in Cyprus banks. June 2012? Why now? Why Cyprus?

Insolvency? Not in the same league as the largest insolvent member banks of the Federal Reserve Bank and European Central Bank. Money laundering? A United Kingdom fund manager, William Browder of Hermitage Capital warned Germany (Reuters, Mar 27, 2013) of KGB money laundering in Cyprus banks. The extent of laundering is unknown, but for reference, London’s HSBC  – Europe’s largest bank – laundered $250 billion from 2001-2007 but is “sorry” for aiding drugs lords, rogue states and terrorists. Wells Fargo-Wachovia laundered $378.4 billion for cocaine drug lords from 2004-2007. Some others.

Cyprus resembles a trial run (attempted on lot of Russian money) of the new “bail in” bank bail-out scheme outlined in a joint paper by the FDIC and Bank of England in December 2012 titled, “Resolving Globally Active, Systemically Important, Financial Institutions”. Deposit insurance is becoming a thing of the past (FDIC insurer has been in a state of insufficient funds at least since 2010 with transfusions from the Federal Reserve printer), as bank depositors-savers are now considered unsecured creditors to banks. For instance, this means in the event of a bank failure, reported as of March 30, 2013 Bank of Cyprus big depositors (over 100,000 euros or US $130,000) could lose up to 60% of their money in an EU-IMF restructuring.

Cyprus. Greece. Italy. Spain. Portugal. Ireland,… RUN. Leave the euro. It is a trap.

There is not much that is made visible, except for Cyprus’s proximity to Syria and Turkey where NATO and Russia have been stockpiling missiles. It is almost as if one were spectator to Zbigniew Brzezinski and company’s (Henry Kissinger, Rockefeller – the Chase part of JP Morgan Chase, Goldman Sachs, etc.) Grand Chessboard moves on the European continent, that incidentally, is a block of real estate adjoining Russia and China.

For a moment, let’s look at the plight of Hermitage Capital’s William Browder who warned Germany. Russia banned Browder from entering the country since 2005 (WSJ Mar 18, 2006), but he is on trial in absentia on tax evasion charges. On March 5, 2013 (Bloomberg), Russia opened a case against Hermitage Capital for illegally purchasing 131.6 million shares in Russia’s Gazprom for about 2.1 billion rubles ($70 million) at a time when foreign ownership of the world’s biggest natural-gas producer was prohibited; Browder said buying Gazprom shares through “derivative structures” was “perfectly legal”. Back in 2008, the WSJ reported Kameya, an investment vehicle on Cyprus linked to Hermitage, figured in a “gray scheme” that allowed foreign investors to get around the restrictions.

In 2009, Browder wrote a tribute “They Killed My Lawyer [Sergei Magnitsky died in a Moscow prison]” decrying Russia’s lack of rule of law, which was published in Foreign Policy (Dec. 22), whose CEO and chief editor David Rothkopf is former managing director of Kissinger Associates. In 2006, the Washington Post reported (July 13) three U.S. Senators (J.McCain, B.Frist, C.Schumer) wrote a letter to 43rd President G.W. Bush to take Browder’s – a British citizen with ties to the President and Prime Minister Tony Blair – case to Moscow as some U.S. investors had $1 billion in Hermitage, to set an example for rule of law. (Khodorkovsky’s similar plight on his purchase of Russia’s Yukos Oil and Bush (41st) is in the upcoming Part II ideological subversion of the United States.)

Browder and Edmond Safra founded Hermitage Capital Management in 1996 (WSJ Jul 13, 2006) and to 2005 was among the biggest foreign investors in Russia. Safra founded the Republic National Bank of New York (known as a gold bullion house, currency dealer) and Safra Republic Holdings of Luxembourg. Safra sold both to London’s HSBC for nearly $10 billion before his death on December 3, 1999. Safra’s murder from an arson in his Monaco house remains shrouded in mystery that extended to much of his bank dealings. Henry Kissinger’s comments upon Safra’s death (WSJ Dec. 6, 1999) are rather interesting given they were personal friends for 20 years. Denials of Safra’s Republic Bank alleged links to drug money laundering, the Iran-contra affair, CIA operations accompany suggestions Republic laundered Russian money.

On March 13, 2013, Russian journalists reported Safra was planning to give testimony to the FBI when Safra was killed. The bureau was investigating the fate of the stabilization credit that the IMF extended to Russia in 1998, which vanished from accounts at Safra’s bank at a time when Browder’s Hermitage Capital turned up significant sums of money to buy Gazprom shares. On March 26, 2013,  HSBC (Hermitage Capital’s trustee) shut down Hermitage Fund(link) as Browder is sued in London and Russian investigators threaten to seize documents from HSBC in Moscow.

[One of Republic’s largest customers was Martin Armstrong, accused of using his accounts, which represented 90% of Republic’s securities business, to defraud Japanese investors of $1 billion, described as Ponzi (USA Today Nov 21, 2001); HSBC settled. Questions remain about how much Republic knew. In a telemarketing scheme thousands of investors, many elderly, were persuaded into purchasing commodities (gold, platinum, etc.) with a 20% cash downpayment as SafraBank financed the remaining through a Texas subsidiary what came to be over 10,000 precious metals loans. Investors had no idea what they purchased in the 1980s was an OTC derivative and lost millions; in 1992, Republic settled some lawsuits.]

Leave the Euro

It is a trap. It is like telling people to go back inside a burning building. Cyprus. Greece. Spain. Italy. Portugal. Germany …and other nations in line to join the euro. Run. Walk away from it. Leave the euro with what is left of your nation’s wealth and sovereignty, if sovereignty is what you value. One can ponder the thought as a few months ago, the IMF sees the European banks face $4.5 trillion sell-off of assets (yours and the nation’s assets in exchange for printed money that was lent to you). In 2005 when the Dominican Republic suffered an economic collapse, the New York Observer (Dec 25, 2005) reported the IMF forced the country’s central bank to sell 2,000 acres of prime beachfront to a group of “20 American luminaries” – financiers, intellectuals – to “vacation, play golf and bask in the glow” of each other. The same has been done to the people in the United States. But consider a plan much bigger.

Consider that what was put forth to the people – the euro – as an integration of the European economy is subverted to control over the European Continue reading →

Quantitative Easing 0-1-2-3∞ & The Federal Reserve’s Love Affair with its Banks and Mortgage Bonds: Levitating The Black Hole

Posted on by Lan Pham   

“A black hole is a region of spacetime where gravity prevents anything, including light, from escaping… Around a black hole there is a mathematically defined surface called an event horizon that marks the point of no return.”—Wikipedia

When Did QE Stop?

To much frenzied media coverage, the Federal Reserve Bank announced a third round of quantitative easing “QE 3∞“ on September 13, 2012. The Federal Reserve will essentially print unlimited quantities of dollars to purchase agency mortgage bonds and maintain nominal interest rates targeted at 0% (“ZIRP”) to keep borrowing costs reasonable for its member banks, among others.

“QE 3∞” in 2012 is the unlimited version of “QE 1” in 2009 following the banking and financial system crisis in September 2008. What does this mean?

QE is simply the printing of dollars in paper or digital form by the quasi-private Federal Reserve Bank, as the Federal Reserve does not have this money. In QE 1 (web), the Federal Reserve Bank printed $1.25 trillion to purchase agency mortgage-backed securities (MBSs). Agency MBSs are mortgage bonds (akin to a mutual fund filled with mortgages, peoples’ homes) issued and guaranteed or held by the quasi-private Fannie Mae and Freddie Mac.

On a practical level this means the Federal Reserve Bank printed $1.25 trillion with a computer stroke and became the owner or recipient of homeowners’ mortgage payments.  The Federal Reserve will do this on an unlimited basis in QE 3 going forward, as it states ‘to foster maximum employment and price stability’.

What is it about the Federal Reserve Bank’s love affair with mortgage bonds that the media and the Federal Reserve will not speak of?

 I.  QE0: Insolvency of the Largest Banks in the Federal Reserve System

Let’s pause for a moment. The most significant QE was not even called QE. It was the suspension of the Financial Accounting Standards Board’s (FASB) mark-to-market accounting rule 157 in April 2009. The rule required banks to value assets on their balance sheets at current market price or fair value, but since 2009, became what the banks hope it is worth or what they paid for it.

Doing so helps insolvent banks avoid the appearance of insolvency by not having to write-down the amount of losses on assets, such as mortgage bonds, assuming there is a willing buyer (There isn’t really). Private sector financing for the housing market through demand for private label MBSs, which are mortgage bonds backed by mostly subprime mortgages reincarnated as prime issued and sold by the largest banks, collapsed since fall 2008.

Let’s give this FASB suspension of mark-to-market accounting event a name, QE0 , to mark the point of no return in April 2009 about six months after the banking and financial collapse in September 2008.

Following the collapse, lawmakers in the U.S. House of Representatives lined up to threaten FASB in a series of hearings to suspend mark-to-market accounting, as Representative Michael E. Capuano (D-Mass.) warned FASB’s chairman in March 2009: “Do not make us tell you what you have to do.” (Transcript of the U.S. House of Representatives Mark-to-Market Hearing, March 12, 2009). The American Bankers Association, Citigroup, and the Bank of New York Mellon Corp., the world’s largest custodian of financial assets, also pressured for the rule change (web).

[On a side note:  MIT finance professor-CBO chief economist revised my memo to say that assets may already fully reflect market values. After I was fired I learned that MIT Professor Deborah Lucas called by the U.S. President to CBO in 2009 (web) has a CBO economist sit on FASB. This CBO economist and CBO Director Elmendorf are part of the Hamilton Project at the Brookings Institution. Robert Rubin is the project’s founder and Dr. Lawrence Summers, once chief advisor to the U.S. President, sits on its Advisory Council to promote economic growth and health care. Former Federal Reserve Bank Chairman Alan Greenspan, Robert Rubin, and Lawrence Summers were instrumental in the proliferation of derivatives in the late 1990s. ]

Let’s look at a few simple charts. What does QE0 FASB look like for the largest banks?

Voodoo Assets and Liabilities Chart 1:U.S. Commercial Banks Net Worth: Assets minus Liabilities - Can you spot the banking and financial crisis?

From Voodoo Chart 1, was there a banking and financial crisis in 2008 that froze global markets? From the crisis in fall 2008 to 2009, there is no change between assets and liabilities! No change, for what has been considered the worst banking and financial crisis in a century (a few?). Continue reading →