German Media Says Merkel Can Not Afford To Bail Out Deutsche Bank

Having kept mostly silent during the past week when Deutsche Bank stock was crashing, its default risk soaring, and only a spurious rumor by French AFP, based on a Twitter report, prevented the bank’s stock from going into a three day weekend at all time lows , on Saturday the German press woke up to the ongoing local banking crisis, reiterating what stoked the crisis in the first place, namely Angela Merkel’s statement last weekend that it won’t bail out Deutsche Bank.

Repeating not only what Merkel herself said last week – a statement which first prompted this week’s plunge in DB stock – but what we have said all along, namely that a bailout of Deutsche Bank would be political suicide for the Chancellor due to pressure from AfD, and may lead to the collapse of Europe, where other nations, namely Italy, have been pushing for a similar bailout of their own banking systems only to be met with stern denials by German, Reuters reports that according to much of the German media, Angela Merkel cannot afford to bail out Deutsche Bank given the hard line Berlin has taken against state aid in other European nations and the risk of a political backlash at home. 

Last week’s events, which have prompted numerous flashbacks to that certain historic week in September 2008 when Lehman failed after counterparties yanked cash from the doomed bank, culminated when the German government denied a newspaper report on Wednesday that it was working on a rescue plan for the Germany lender, unleashing a plunge in DB shares, which was accelerated after a Bloomberg report that hedge fund counterparties to DB’s prime brokerage had quietly withdrawn cash from the bank.

Only a so-far unconfirmed and very improbable report on Friday morning that the DOJ is willing to cut the $14 billion penalty to DB by more than half, prevented the stock from plunging further into the Friday close. 

And while we wait to find what the real story about the DOJ’s settlement decision is, Germany’s press is already making it clear – once again – that a Deutsche Bank bailout is out of the picture.

As Reuters adds, Germany, which has insisted Italy and others accept tough conditions in tackling their problem lenders, can ill afford to be seen to go soft on its flagship bank, the Frankfurter Allgemeine wrote. “Of course Chancellor Merkel doesn’t want to give Deutsche Bank any state aid,” it wrote in a front-page editorial. “She cannot afford it from the point of view of foreign policy because Berlin is taking a hard line in the Italian bank rescue.”

The Munich-based Sueddeutsche Zeitung wrote that Merkel would be breaking a promise to taxpayers if she were to bail the bank out, which could spell disaster for her re-election bid next year as the anti-immigration AfD party gains ground. The AfD is already benefiting from a backlash against Merkel’s open-door refugee policy, making huge gains in two regional elections last month and hitting an all-time high of 16 percent support in an opinion poll last week.

“A state aid package would drive voters into the arms of the AfD,” the Sueddeutsche wrote in an editorial. “Domestic political considerations make it unlikely that Berlin would play this joker. Even more unlikely is that the European Commission would agree. The political risk would be simply too high.”

The Stuttgarter Zeitung wrote on Saturday: “Deutsche Bank has to win back ground here because as exaggerated as the reports of an existential danger to the bank may have been, just as obvious are its continuing difficulties.”

“Trust is a bank’s most important currency” it concluded, seemingly oblivious that it was an unsourced report, one which will likely end up being a fabrication, that led to the biggest rebound in DB stock in years just to prevent a potential depositor bank run during Germany’s holiday weekend.

* * *

While we applaud the idealistic German press for holding out such a hard line stance, we are certain that the collective sentiment will quickly change if and when some €560 billion in German deposits are suddenly in danger of being either bailed-in or defaulted upon, and – just as in the US – will promptly demand a taxpayer funded bailout if confidence in DB once again vaporized, leading to the next leg lower in the bank’s securities.

And perhaps sensing what the endgame is, overnight Bank of Italy Ignazio Visco told Italian daily Il Foglio that state aid for Italian banks is something that “should be considered even if it remains a remote possibility.”

“It is wise to get ready for the idea of state aid even if that does not mean it will be necessary,” Visco told the newspaper.

We doubt Visco is so naive not to realize that the mere speculation that state aid is on the table is usually more than sufficient to lead to a self-fulfilling prophecy where it is also used as a result of investor and depositor panic of what comes next.

Luckily for Italy, Germany may itself have to do the same in the not too distant future, so at least Merkel’s opposition this time around will be far more muted, if any.

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Sacramento Cops Shoot and Kills Homeless Man 30 Seconds After Trying to Run Him Over

Police called in over an apparently mentally ill homeless man who allegedly wielded a knife in front of spooked resident tried to run the man over with their vehicle before fatally shooting him. Police released video from three dash cams as well as 911 recordings related to the July incident late last month within an hour of the Sacramento Bee releasing footage taken by a witness of the shooting itself.

In one of the recordings, one of the officers is heard saying “fuck this guy” and suggesting he would try to run the man over. The second cop agrees. A little over thirty seconds later, the cops fire at the man 14 times, killing him. Police were originally called because the man, Joseph Mann, was allegedly staring at residents who were having coffee outside in a way that made them uncomfortable, as the Sacramento Bee reports. Residents say Mann then began to pretend he was typing on an imaginary keyboard and urinated his pants. Residents say they told him he had to leave. Mann responded by pulling out a knife described as a steak knife, and then residents called police. The resident who called told police Mann had a knife and also suggested he may have had a gun, saying he had seen Mann reach for something in his waistband he said “looked like a gun.” Dispatchers told police Mann was armed with a knife and a gun, but a gun does not appear on the footage nor did police find one after canvassing the area.

The incident, which happened days after high profile police shootings in Baton Rouge and Minnesota and the ambush on police officers in Dallas, led members of the Sacramento city council to demand to see the footage, but the city attorney advised them to wait until the investigation was over. Police released the footage only after the Sacramento Bee released footage taken by a witness. The two cops were placed on “modified duty” after the incident.

Watch the cellphone video:

And dashcams:

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Why Krugman, Roubini, Rogoff And Buffett Hate Gold

Why Krugman, Roubini, Rogoff And Buffett Dislike Gold

By Jan Skoyles  Edited by Mark O’Byrne 

A couple of weeks ago an article appeared on Bitcoin Magazine entitled ‘Some economists really hate bitcoin’.

I read it with a sigh of nostalgia. As someone who has been writing about gold for a few years, I am used to reading similar criticisms as those bitcoin receives from mainstream economists, about gold.

gold price performance

As with bitcoin, gold is just a step too far for many economists. Criticism is often, as with bitcoin, targeted at the people who invest in it, rather than the asset’s own track record, fundamentals and safe haven attributes – classic attacking the ball and not the man.

This frequently involves name calling and the pejorative ‘goldbug’ label. This is used to try and discredit anyone who says anything positive about gold including being bullish on the price or seeing it as an important diversification. Often some of the gold naysayers refuse to distinguish between gold as a diversification in an investment or pension portfolio and gold’s role as a hedge against currency devaluations on one side and on the other calls for a gold standard.

Two completely separate matters – one pertaining to monetary policy and the other to investing, saving and personal finances.

In my experience to invest in gold is seen by the critics as the ultimate rejection of central banks, financial systems and government. These critics believe that faith in something that just gets mined out of the ground is baseless compared to something that ‘involves human endeavors (like stocks)’ as Joe Weisenthal of Bloomberg argued.

This ignores the fact that the production of gold, refining of gold, minting and fabricating of coins and bars and indeed the brokering, delivery and storage of bullion, and the running of the myriad of different precious metal companies involved in this quite large industry involves human energy, innovation and endeavours.

Below I touch upon some of those critics who continue to dismiss either gold as an investment or as a form of money which may play some role in the monetary system.

Nobel Prize Winning Krugman

If anyone could be accused of having a caricature of gold, it would be Paul Krugman. For him, gold investment is a push for the gold standard and anyone who advocates diversifying into gold is a lunatic, right wing “gold bug”.

Krugman most recently riled fans of gold when he went after Republicans during candidate nominations and mocked their apparent desire to return to a gold standard. (Despite it being a Republican who ended the gold standard).

What Krugman failed to acknowledge was that the push for gold in the financial system is not just coming from a the “Tea Party” movement and a bunch of Republican voters, but rather it is coming from the East – from China and the People’s Bank of China and indeed the Russian central bank who are buying up all the gold they can.

It’s coming from Western investors who are looking for a hedge against economic risk and for portfolio diversification. It is coming from countries who still see gold as a form of money and a safe haven, such as the people of India and people in Germany and Switzerland in Europe.

When asked why he celebrated the fall of the gold price in 2013 he told Business Insider:

“Well, the inflationistas/goldbugs are really, really annoying — all this air of having the secret wisdom when they actually haven’t a clue. And they have been a real destructive factor in policy debate, standing in the way of effective policy by raising fears of Weimar and Zimbabwe. So seeing the one thing they got right — betting on higher gold prices — turn sour is cause for a bit of celebration.”

To be fair, the gold price had fallen sharply in 2013 but Krugman ignored the performance over the medium and long term – a cardinal sin in investing which should always be about the long term.

Even at the end of 2015 when a few of us were doing some soul-searching and asking ‘did we miss something? It wasn’t as though we had returned to the days of a few hundred dollars per ounce. Gold and silver were some of the best assets to hold before, during and after the global financial crisis. Gold rose every single year from 2001 through to 2012, prior to the sharp correction in 2013. Gold rose in all fiat currencies – none of which acted as a safe haven during the financial crisis.

Gold acted as a hedge during the crisis when most property, stock and bond markets had seen sharp falls. When these markets stabilised and began to recover, gold prices fell. Exactly what a hedge should do.

This year gold and silver prices were up 26% and 38% respectively, in the first half of the year and have consolidated on those gains in Q3, 2016.

Stocks in many markets have come under pressure in 2016 – especially in Japan and Germany and some currencies have been devalued including the British pound after Brexit. Gold is acting as a hedge again in 2016 – exactly when investors around the world need a hedge.

To my knowledge Krugman is yet to address this year’s gold performance. The last time he did try to explain the bull-market in gold (early September 2011) he dismissed the idea that it was because of inflationary concerns. But for some reason used numbers that exclude inflation to support his argument.

He did, however make the valid point (which I entirely agree with) that “because expected returns on other investments have fallen” is why more people were buying gold. Yet given near negative and negative interest rates today, and the fact the “expected returns” on deposits, bonds and indeed the entire pensions complex “have fallen”, you would think that Krugman might now understand and concede the value of diversification an allocation to gold in a diversified portfolio.

Ideologues of the right and the left never allow the facts to get in the way of their arguments.

Oracle of Omaha, Warren Buffet

Warren Buffett is not an economist but you can guarantee that more investors pay attention to the Oracle of Omaha’s views than the majority of those economists – particularly statist ideologues.

Buffet has even debated with Marc Andreeson over bitcoin. Many believe that he dislikes bitcoin, but this may not be the case, he may just see it as a development in the world of payments – an upgrade from writing a cheque or sending a wire transfer. It is not ground-breaking stuff.

Where Buffet’s problem with bitcoin lies is exactly where it lies with gold – he fails to see the intrinsic value of it. Bitcoin is ‘not a currency’ it is a ‘mirage’ according to Buffett.

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When interviewed by CNBC in 2009 he said of gold “… it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that,” he said. “The idea of digging something up out of the ground, you know, in South Africa or someplace and then transporting it to the United States and putting into the ground, you know, in the Federal Reserve of New York, does not strike me as a terrific asset.”

At the beginning of the year Berkshire Hathaway increased its shareholding in oil refining company Philips 66 to 13.7%. This was seen as a bet on oil prices. The company had chosen to ignore the current top performing commodities that were gold and silver, and the shares of Berkshire Hathaway were underperforming in comparison.

In 2009, prior to gold going parabolic from 2010 to 2012, GoldCore also pointed out how gold has performed Berkshire Hathaway over a 4 year and a 10 year period. We pointed out and were quoted by Bloomberg how gold’s utility was simply “in balancing a portfolio.” We said that the point is that gold had “preserved a chunk of wealth that would have been otherwise taken down with other financial instruments,” see here.

The Daily Reckoning also pointed out “an investor who purchased gold at any time after January of 1998 would have received a higher investment return over the following 10 years than an investor who purchased Berkshire Hathaway.”

This is not to suggest that Berkshire Hathaway has not been a great investment for its owners – it has. Rather it shows that there are periods of time when gold outperforms most, and frequently all, other investments and hence its importance as a hedging instrument and a safe haven asset.

Dr. ‘Doom’ Roubini

We have some respect for Dr Roubini as a macroeconomist and have indeed shared many of his concerns in many years and shared them with our clients and the wider public as long ago as 2005 and 2006 when he and we warned that the US would soon follow in Iceland’s footsteps and have its own financial crisis. However, giving financial advice is not his expertise and he may be better suited focusing on his strengths.

As Roubini is regarded as a guru by many experts and opinion makers internationally, there is a real risk that his opinions regarding gold could lead to poor and imprudent investment decisions.

In December 2009, when gold was at $1,100/oz, he said that “all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense.”

In the following years gold rose to over $1,500/oz and nearly reached $2,000/oz when it surged to $1,915/oz in 2011.

One of our clients actually sold their gold allocation on the basis of this statement. Despite gold being the one asset class that had protected them in the early stages of the crisis in 2007, 2008 and 2009. Gold nearly doubled after Roubini’s pronouncement.

gold_chartGold in USD – 10 Years

In August, 2013, when gold has already fallen in price and was trading at $1,300/oz, Roubini predicted that gold would fall another 23%, back to $1,000. Not only that but he said that this would happen “at the end of next year”.

Reasons given were that: “Now with the economy recovering, nobody wants to be in rocks that don’t pay any dividends. Real interest rates are rising. That kills gold…Governments with debt issues are selling gold…Gold was juiced by right-wing fanatics in the US. That boom is over… gold remains John Maynard Keynes’s “barbarous relic,” with no intrinsic value and used mainly as a hedge against mostly irrational fear and panic.”

Where to start with this logic and poor analysis? There has not been an economic recovery of real substance, real interest rates do not appear to have risen and the gold price has performed quite well over the medium and long term. Gold has gone sideways after a period of multiple annual yearly gains.

To be fair, it is difficult to call Roubini an all out gold-hater as he does suggest that “all investors should have a very modest share of gold in their portfolios as a hedge against extreme tail risks.” However, he doesn’t think it’s crucial and that “other real assets can provide a similar hedge, and those tail risks – while not eliminated – are certainly lower today than at the peak of the global financial crisis.” Given the deteriorating financial position of systemic Deutsche Bank, Roubini may need to revise that assumption soon.

Roubini has been very vocal in his anti-gold stance. Indeed, he has even engaged in Twitter wars with GoldCore’s Mark O’Byrne and James Rickards, over the gold standard.

There is little doubt that Roubini is a very smart economist, however he just cannot get to grips with the role of gold. Describing those who like gold as ‘gold bugs – a combination of paranoid investors and others with a fear-based political agenda.’ He likes to throw gold and bitcoin fans into the same category. He tried to engage Jim Rickards and goldbugs in Twitter war back in April 2013. When Rickards pointed out a few truths about the gold price he turned his attentions “Gold-bug suckers found another irrational useless bubble fad, the Bitcoin, the bubble flavor of the day. So they are dissin gold 4 Bitcoin.”

nouriel
Roubini has also resorted to the silly old argument that “you can’t eat gold” and said that: “If you want to hedge against inflation, stock up on Spam or other canned food”

Ignoring the somewhat obvious fact that you cannot eat any investment or currency – whether that be stocks, bonds or dollars, euros or pounds. Unlike, spam and canned food, gold is one of the most traded assets and liquid investments in the world – especially in a crisis. There is always a market for gold and it can always be exchanged for cash or indeed used to buy food, farms, property and businesses. A cursory analysis of gold’s performance in economies suffering financial and economic crisis would show Roubini the value of gold as a currency hedge and indeed a hedge against systemic contagion in an economy.

Thus, Roubini has a questionable track record when it comes to gold and his arguments against it are poor.

Rogoff

In many ways I have saved the best until last, but at the same time wish to not say too much here as I have a further article planned around the Grand Chess master, American economist, Kenneth Rogoff.

Many of you will recognise the name as his latest book ‘The Curse of Cash’ was released over the summer. As someone who straddles both the fintech world as well as the gold world I am used to the push for a cashless society.

Going cashless is seen as the new sexy side to financial services as it is purported to prevent bad things happening with money and will allegedly empower the poor of the Developing World and the unbanked. Save your scoffing, I’ll deal with those claims in my later article.

For Rogoff the clamp down on cash would be beneficial because of its impact on money laundering and tax evasion. Why would this mean that he is against gold? It might not. In fact he has quite prominently appeared to support gold (or at least not dismiss it) earlier this year.

In May, writing on Project Syndicate he outlined how emerging economies should shift their US dollar reserves entirely into gold, praising it as ‘an extremely low-risk asset with average real returns comparable to very short-term debt.’. He argued that emerging economies should ignore the West’s push to demonetise gold, ‘There has never been a compelling reason for emerging markets to buy into the rich-country case for completely demonetizing gold. And there isn’t one now.’

But, in a recent interview to promote his book he told CNBC that there was a need to clamp down on assets that could be used instead of good, sturdy fiat money, ‘“You have to play whack-a-mole with all these things,” he stated during a recent appearance on CNBC. “There are always going to be these other things: gold coins, uncut diamonds, [and] now bitcoin.”

‘These other things’ are real, tangible assets (forget bitcoin for now). They allow freedom of movement, of purchases and there can be significantly less counterparty risk than when using fiat money. The push for a cashless society, for all the talk of fighting crime, is really to support the banking system.

As we outline in our upcoming/recent report on bail-ins. The push for a cashless society will help to support the new bail-in regime. With assets such as gold, bail-ins become trickier and not as straightforward as using customer deposits to prop up a failing bank system.

Rogoff dislikes gold because it removes power from the banking system within reach of tax strapped governments, and puts it back in the hands of the saver who opts to save in gold bullion rather than fiat, electronic currency.

In this vein, libertarian academic economist, Saifedean Ammous, wrote on Twitter

“Statist economists hate Bitcoin for same reason taxi drivers hate Uber: it frees the rest of us from their bull$h*t …”

How true. Substitute the words Bitcoin for gold and it reads just as well if not better:

“Statist economists hate gold for same reason taxi drivers hate Uber: it frees the rest of us from their bull$h*t …”

Conclusion

Keynes once argued “gold has become part of the apparatus of conservatism and is one of the matters which we cannot expect to see handled without prejudice.” This is certainly true with regards to gold today and the many prejudices and lack of evidence based research regarding gold and its role as a hedging instrument and safe haven diversification.

“The modern mind dislikes gold because it blurts out unpleasant truths” said economist and political scientist Joseph Schumpeter. The unpleasant truth today is that today’s financial and monetary system is fragile in the extreme and likely to suffer another financial crisis very soon.

For all of those mentioned above the main dislike for gold appears to be due to a combination of a lack of understanding and the desire to keep the unsustainable status quo going. A surging gold price frequently makes their analysis and prognosis look bad. In the case of Buffett, were a the ‘chunk of metal’ gold to outperform his Berkshire Hathaway shares his God-like ‘Oracle’ status would be questioned.

In the words of my karaoke go-to Taylor Swift “Haters gonna hate, hate, hate …”

Gold and Silver Bullion – News and Commentary

“Given strong fundamentals of increasing geopolitical and economic risk … gold should move higher in Q4” (MarketWatch)

Gold Advances as Deutsche Bank Concerns Stoke Demand for Haven (Bloomberg)

Gold rises as stocks slip, on track for weekly loss (Reuters)

Is another German bank in trouble? Commerzbank to cut 9,600 jobs and suspend dividend (Telegraph)

Russian Central Bank To Continue Diversifying Into Gold (Reuters)

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HEDGE FUND LEGEND JULIAN ROBERTSON: Everything is a bubble – Will end in ‘chaos’ (YahooFinance)

HSBC Warns Of 1987-Like Crash (Investing)

The New Banking Crisis — In Two Frightening Graphs (WallstreetOnParade)

Chinese Property is ‘Biggest Bubble in History’ – Billionaire (CNNMoney)

TOP FOUR PRECIOUS METALS: Which Will Be The Best Investments During The Next Financial Crash (Silverseek)

Gold Prices (LBMA AM)

30Sep: USD 1,327.90, GBP 1,025.01 & EUR 1,187.67 per ounce
29Sep: USD 1,320.85, GBP 1,016.92 & EUR 1,177.14 per ounce
28Sep: USD 1,324.80, GBP 1,020.10 & EUR 1,181.06 per ounce
27Sep: USD 1,335.85, GBP 1,031.01 & EUR 1,187.84 per ounce
26Sep: USD 1,336.30, GBP 1,033.23 & EUR 1,188.91 per ounce
23Sep: USD 1,335.90, GBP 1,027.17 & EUR 1,192.16 per ounce
22Sep: USD 1,332.45, GBP 1,019.59 & EUR 1,186.68 per ounce

Silver Prices (LBMA)

30Sep: USD 19.35, GBP 14.92 & EUR 17.33 per ounce
29Sep: USD 19.01, GBP 14.61 & EUR 16.95 per ounce
28Sep: USD 19.12, GBP 14.69 & EUR 17.05 per ounce
27Sep: USD 19.42, GBP 14.99 & EUR 17.26 per ounce
26Sep: USD 19.44, GBP 15.04 & EUR 17.29 per ounce
23Sep: USD 19.82, GBP 15.28 & EUR 17.66 per ounce
22Sep: USD 19.88, GBP 15.22 & EUR 17.69 per ounce


Recent Market Updates

– ECB Refused “To Answer Questions” – Deutsche Bank “Systemic Threat” Is “Not ECB Fault”
– Euro “Might Start To Unravel” If Collapse Of Deutsche Bank
– Do You Really Own Your Gold?
– “Gold Will Likely Soar To A Record Within Five Years”
– Savings Guarantee? U.N. Warns Next Financial Crisis Imminent
– Gold Up 1.5%, Silver Surges 3% – Yellen Stays Ultra Loose At 0.25%
– Trump and Clinton Are “Positive For Gold” – $1,900/oz by End of Year
– Gold Bugs Rejoice – Central Banks Think You’re On To Something
– ‘Hard’ Brexit Looms For Ireland
– EU Bail In Rules Ignored By Italy – Mother Of All Systemic Threats and World War?
– Buy Gold – Bonds Are ‘Biggest Bubble In World’ – Billionaire Singer Warns
– Silver Bullion Market – “Most Bullish Story Ever Told?”
– “Sorry, You Can’t Have Your Gold Bullion”

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Three Reasons Why The Banking System Is Rigged Against You

Submitted by Simon Black via SovereignMan.com,

f there were ever any doubt about how completely RIGGED the banking system is against depositors, allow me to introduce the following:

Exhibit A: Governments are working to make banks LESS safe

Yesterday an unelected bureaucrat that no one has ever heard of made a stunning announcement that has sweeping implications for anyone with a bank account.

Dombrovskis is Europe’s top financial services official, so he controls bank regulations in the European Union.

He issued a stern warning to global bank regulators yesterday that he is prepared to reject any further plans they might have to tighten bank capital requirements.

This might sound rather dry, but it’s incredibly important.

“Bank capital” is the most critical component of any bank balance sheet.

Capital is like a bank’s rainy day fund; when things start to go bad, a bank’s capital provides a margin of safety to ensure that their depositors’ funds are safe.

Strong banks have ample capital and are able to withstand crises.

Weak banks with low levels of capital collapse. And that’s precisely what happened in 2008.

Most banks across the west had very low levels of capital. They had spent years making appallingly stupid ‘no money down’ loans with 0% teaser interest rates to borrowers with pitiful credit.

When that bubble burst, the banks lost billions of dollars. And it turned out that most of the banks at the time had razor thin levels of capital.

If you’re wondering why, the answer is quite simple: the less capital a bank maintains, the more money it can invest… so poorly capitalized banks tend to make more money.

Lehman Brothers was quite profitable.

But the bank infamously had capital worth just 3% of its total assets… meaning that if Lehman’s investments fell by just 3%, they would be wiped out.

Lehman’s investments fell by a lot more than 3%… so the bank’s capital was totally insufficient to weather the storm. The bank folded, and a huge crisis erupted.

Regulators vowed to never let that happen again.

And in the years since, the Basel Committee on Banking Supervision, the primary global bank regulator, has been pushing banks to increase their capital levels higher.

European banks in particular still have pitiful balance sheets.

Their investment portfolios are stuffed full of negative-yielding bonds issued by bankrupt European governments.

And their capital levels are still so low with many of them that there are whispers of taxpayer funded bailouts, from Italy’s Monte dei Paschi to Germany’s global titan Deutsche Bank.

But despite these pitiful bank fundamentals, Dombrovskis is rejecting the Basel Committee’s latest push to make banks safer.

According to the Financial Times, Dombrovskis is specifically complaining that the Basel proposals might lead to a “significant” increase in the amount of capital that banks would maintain.

… so in other words, the head of European financial services thinks it’s a bad idea for banks to have an extra margin of safety.

Bank profits are being prioritized over depositor safety, even at a time when so many of the banks are seeking taxpayer-funded bailouts.

In the eyes of the bureaucracy, bank profits come before depositor safety… which makes it completely obvious how rigged the system is against you.

* * *

Exhibit B: The Volker Rule farce

In another effort to make banks safer, the US government passed the Volker Rule as part of their new post-crisis financial regulation.

The Volker Rule forces banks to sell their riskiest assets, i.e. the stuff they shouldn’t have been buying to begin with, especially with their depositors’ savings.

Problem is, those risky assets aren’t worth very much, and the banks are having a hard time finding a buyer willing to pay them 100 cents on the dollar.

So rather than take the loss, banks in the US keep requesting extension after extension.

They’ve already had six years to offload their assets. Now the deadline has been extended all the way to 2022.

Yet in the meantime, the banks get to continue holding those assets on their balance sheet at 100 cents on the dollar, even though they’re clearly not worth a fraction of that.

The whole thing is a giant scam designed to conceal obvious bank losses… a neat little arrangement between the political elite and banking elite.

* * *

Exhibit C: No one from Wells Fargo is going to jail

Wells Fargo is getting a very public slap on the wrist for falsifying customer bank accounts in its efforts to meet their sales goals.

And in addition to the embarrassment they’ll probably pay a series of steep damages, most of which will go to the government and class action lawyers.

But don’t hold your breath for any senior executives to be criminally indicted.

If you or I engaged in what Wells Fargo did, we’d already be turning big rocks into little rocks wearing a DayGlo orange jumpsuit.

There’s a word for what they did. It’s called fraud. And the people at the top were either part of the scam, or they were too stupid to recognize an obvious crime.

Once again, it’s proof of a system that’s totally rigged in favor of the banking elite… literally at your expense.

* * *

Modern banking is truly bizarre.

They’ve created a system whereby we entrust our hard-earned savings to institutions that never miss an opportunity to abuse that trust.

In making a deposit at a bank, we become merely an unsecured creditor.

And in exchange for taking on that counterparty risk they provide almost zero transparency in what they’re doing with the money.

Even still, they work in partnership with their friends in government (where a very swift revolving door exists) to legally conceal their true financial condition.

Your reward for all this risk? A whopping 0.1%, if you’re lucky.

Why take the chance? Think about withdrawing at least a portion of your savings. Gold and physical cash are great alternatives.

via http://ift.tt/2cJAo4Z Tyler Durden

Russia Warns US Military “Aggression” In Syria Would Lead To “Terrible, Tectonic” Consequences

As the drums of war beat louder, following last week’s ultimatum by John Kerry that the US is contemplating a direct military intervention in Syria, including potentially sending US troops on the ground in the war-torn country for the first time, on Saturday Russia warned the US against carrying out any attacks on Syrian government forces, saying it would have repercussions across the Middle East. The warning comes as government forces captured a hill on the edge of the northern city of Aleppo under the cover of airstrikes.

It has been one year since Russia became officially involved in the Syria conflict. The maps below show zones controlled by different forces before Russian intervention in September 2015 and the situation now.

The most obvious change is the collapse in territory controlled by ISIS, as well as the expansion of territories held by the Syrian regime, which is the biggest concern to the US, whose main directive in the Syrian conflict has been less to crush the Islamic State as to minimize the influence and territory of Assad’s regime, replacing it with US-controlled “rebel” forces.

And with Russia – long an ally to Assad as the conflict is fundamentally about Gazprom’s loss of influence over Europe should a Qatari natgas pipelines cross under Syria  – having become the biggest hurdle to US strategy in Syria, there has been a notable shift in the US strategy, with western media slamming Russia’s “barbarous airstrikes“, focusing on recent bombing strikes of the rebel-held city of Aleppo, a repeat of US strategy from the summer of 2013 when a doctored “chemical attack” YouTube video was used to justify US presence in the local conflict.

In response, Russian news agencies quoted Foreign Ministry spokeswoman Maria Zakharova as saying that “U.S. aggression” against the Syrian army “will lead to terrible, tectonic consequences not only on the territory of this country but also in the region on the whole.

She said regime change in Syria would create a vacuum that would be “quickly filled” by “terrorists of all stripes.”

As AP notes, U.S.-Russian tensions over Syria have escalated since the breakdown of a cease-fire last month, with each side blaming the other for its failure. Syrian government forces backed by Russian warplanes have launched a major onslaught on rebel-held parts of the northern city of Aleppo. Syrian troops pushed ahead in their offensive in Aleppo on Saturday capturing the strategic Um al-Shuqeef hill near the Palestinian refugee camp of Handarat that government forces captured from rebels earlier this week, according to state TV. The hill is on the northern edge of the Aleppo, Syria’s largest city and former commercial center.

The al Qaeda-linked Ahrar al-Sham militant group said rebels regained control Saturday of several positions they lost in Aleppo in the Bustan al-Basha neighborhood. State media said 13 people were wounded when rebels shelled the central government-held neighborhood of Midan.

Adding to the propaganda, airstrikes on Aleppo struck a hospital in the eastern rebel-held neighborhood of Sakhour putting it out of service, according to the Britain-based Syrian Observatory for Human Rights, the same entity that created the infamous doctored 2013 YouTube video. 

Opposition activist Ahmad Alkhatib described the hospital, known as M10, as one of the largest in Aleppo. He posted photographs on his Twitter account showing the damage including beds covered with dust, a hole in its roof and debris covering the street outside. A doctor at the hospital told the Aleppo Media Center, an activist collective, that thousands of people were treated in the compound in the past adding that two people were killed in Saturday’s airstrikes and several were wounded.

“A real catastrophe will hit medical institutions in Aleppo if the direct shelling continues to target hospitals and clinics,” said the doctor whose name was not given. He said the whole hospital is out of service.

In a familiar repeat of the 2013 media narrative, opposition activists have blamed the President Bashar Assad’s forces and Russia for airstrikes that hit Civil Defense units and clinics in the city where eastern rebel-held neighborhoods are besieged by government forces and pro-government militiamen.

On Friday, the international medical humanitarian organization Doctors Without Borders demanded that the Syrian government and its allies “halt the indiscriminate bombing that has killed and wounded hundreds of civilians_many of them children,” over the past week in Aleppo. “Bombs are raining from Syria-led coalition planes and the whole of east Aleppo has become a giant kill box,” said Xisco Villalonga, director of operations for the group. “The Syrian government must stop the indiscriminate bombing, and Russia as an indispensable political and military ally of Syria has the responsibility to exert the pressure to stop this.”

It said from Sept. 21 to 26, hospitals still functioning in Aleppo reported receiving more than 822 wounded, including at least 221 children, and more than 278 dead bodies_including 96 children_according to the Directorate of Health in east Aleppo.  Sweden’s Foreign Minister Margot Wallstrom criticized attacks on civilian targets writing on her Twitter account: “Unacceptable to bomb civilians, children and hospitals in #Aleppo. No humanity. Assad & Russia moving further away from peace.”

Surprisingly, few if any in the western media have complained about the thousands of civilians killed by the US-backed Saudi bombing campaign in neighboring Yemen.

* * *

Meanwhile, according to leaked closed-door comments by US Secretary of State John Kerry it was revealed how angry John Kerry is about being unable to topple President Bashar Assad by military means.

The New York Times previously acquired a taped conversation between the US
Secretary of State and two dozen Syrian civilians from education,
rescue, and medical groups working in rebel-held areas, during a meeting
on the sidelines of the United Nations General Assembly. “I’ve argued for use of force. I stood up. I’m the guy who stood up and announced we’re going to attack Assad because of the weapons, and then you know things evolved into a different process,” the Secretary of State said in the tape.

He told the civilians that “you have nobody more frustrated than we are (the US)” that the Syrian issue is now being solved diplomatically. Kerry also warned the Syrians, who sounded clearly unhappy with Washington’s contribution, that attempts to intervene militarily or provide more support to the rebels by the US may have a reverse effect.

“The problem is that, you know, you get, quote, ‘enforcers’ in there and then everybody ups the ante, right? Russia puts in more, Iran puts in more; Hezbollah is there more and Nusra is more; and Saudi Arabia and Turkey put all their surrogate money in, and you all are destroyed,” the diplomat explained.

* * *

We expect the Syrian proxy war to continue to escalate until either Assad is removed, which however seems unlikely with Russian, and now Chinese backing, behind the Syrian president, or until the proxy war escalates into a full blown world war once US troops are sent to Syria, a move which would be met by a proportional response by Russia and, perhaps, China.

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Equities, Bonds and Oil Technical Analysis (Video)

By EconMatters


We look at the S&P 500, Oil and the 10-Year Bond Markets in this video focusing on the key technical areas to watch for in the futures market. These are 3 key markets to watch every week along with Gold and the VIX.

 

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Judge Denies Attempt To Block Transfer Of Internet Oversight

As reported last week, in a last ditch effort to block Obama’s plan to allow the US Commerce Department to hand over oversight of the Internet Corporation for Assigned Names and Numbers (ICANN), or the “Internet’s address book” to a multi-stakeholder community – which includes the technical community, businesses, civil society and foreign governments – 4 state attorneys general from Arizona, Oklahoma, Nevada and Texas filed a lawsuit in a Texas federal court alleging that the transition, in the absence of congressional approval, amounts to an illegal forfeiture of U.S. government property. The lawsuit also expressed concern that the reorganized ICANN would be so unchecked that it could “effectively enable or prohibit speech on the Internet.”

Texas Attorney General Ken Paxton, Arizona Attorney General Mark Brnovich, Oklahoma Attorney General Scott Pruitt and Nevada Attorney General Paul Laxalt filed a lawsuit on Wednesday night to stop the White House’s proposed transition of ICANN functions. A primary function of ICANN is done by its Internet Assigned Numbers Authority (IANA) department, which coordinates the internet’s domain name and IP address system. 

However, as of midnight last night, the transfer is officially complete after Obama-appointed US District Judge George Hanks ruled on Friday afternoon that the transfer of internet domain systems oversight to an international governing body can move forward, overruling the opposition from several state attorneys general and lawmakers. 

As a result, the transfer of the Internet Corporation for Assigned Names and Numbers (ICANN) from the U.S. to an international entity representing 162 countries will proceed on Saturday as planned.

As WND reported, it was the late Phyllis Schlafly who, earlier this year, characterized Obama’s plan as “like telling the fox to guard the chicken coop,” trusting the likes of Cuba, Venezuela and China to ensure the continued freedom of the Web.

The transfer of oversight to an obscure non-profit called the Internet Association for Assigned Names and Numbers, ICANN, set for Saturday, “could be the most dangerous use yet of Obama’s now-famous pen,” the conservative icon said at the time. The states’ lawsuit against the National Telecommunications and Information Administration, the Department of Commerce and others sought a halt to the transfer.

Filed in U.S. District Court in Galveston, Texas, the lawsuit argued the U.S. funded the foundations of the Internet and for decades has been managing it appropriately, including through contracts such as the NTIA’s agreement with ICANN to perform Internet Assigned Numbers Authority functions.

The complaint cited constitutional concerns and security risks of potentially losing the .mil and .gov domains for the military and government, respectively.

Republican lawmakers Sens. Ted Cruz (Texas), John Thune (S.D.) and others had previously pushed to include language delaying the transition in the continuing resolution to fund the government, but were unsuccessful.

Presidential nominee Donald Trump also backed the effort to keep control of the organization in U.S. hands.

As WND adds, the lawsuit wasn’t the only opposition that has arisen in the fourth quarter. A coalition of 77 national security, cybersecurity and industry leaders wrote a letter to Defense Secretary Ash Carter and Gen. Joseph Dunford, the chairman of the Joint Chiefs of Staff, just days ago asking for intervention.

“As individuals with extensive, first-hand experience with protecting our national security, we write to urge you to intervene in opposition to an imminent action that would, in our judgment, cause profound and irreversible damage to the United States’ vital interests,” the letter said.

“Indeed, there is, to our knowledge, no compelling reason for exposing the national security to such a risk by transferring our remaining control of the Internet in this way at this time. In light of the looming deadline, we feel compelled to urge you to impress upon President Obama that the contract between NTIA and ICANN cannot be safely terminated at this point.”

The signers included former Assistant Secretary of Defense Frank Gaffney Jr., former Deputy Under Secretary of Defense for Intelligence Lt. Gen. William “Jerry” Boykin (Ret.), former Senate Minority Whip Jon Kyl, former Director of the Defense Nuclear Agency Vice Adm. Robert Monroe (Ret.) and former Chief Assistant U.S. Attorney for the Southern District of New York Andrew McCarthy, among others.

They warned: “In the absence of U.S. government involvement in IANA, it seems possible that, over time, foreign powers – including potentially or actually hostile ones – will be able to influence the IANA process. Even coercing the delay in approving IP addresses could impact military capabilities. From a broader view, given the well-documented ambition of these actors to restrict freedom of expression and/or entrepreneurial activity on the Internet, such a transfer of authority to ICANN could have far-reaching and undesirable consequences for untold numbers of people worldwide.”

Just a few days earlier, GOP senators, including Chuck Grassley, Ted Crux, Roy Blunt, Richard Burr and Ron Johnson, released a statement opposing the giveaway.

“It is profoundly disappointing that the Obama administration has decided to press on with its plan to relinquish United States oversight of crucial Internet functions, even though Congress has not given its approval. For years, there has been a bipartisan understanding that the ICANN transition is premature and that critical questions remain unanswered about the influence of authoritarian regimes in Internet governance, the protection of free speech, the effect on national security, and impacts on consumers, just to name a few,” they said.

“Without adequate answers to these questions, it would be irresponsible to allow the transition to occur in 15 days simply because of an artificial deadline set by the Obama administration.

“In fact, Democrats at both the state and national level have echoed many of these concerns. For example, former President Bill Clinton has warned that ‘[a] lot of people who have been trying to take this authority away from the U.S. want to do it for the sole purpose of cracking down on Internet freedom and limiting it and having governments protect their backsides instead of empower[ing] their people.’

“The issue of Internet freedom should unite us Americans – Republicans, Democrats and independents alike. Partisanship and political gamesmanship have no place when it comes to the Internet, basic principles of freedom, and the right of individuals in our great nation and across the globe to speak online free from censorship.” In the lawsuit, the states warned that .gov addresses are at risk.

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No More Accidental Crimes: New at Reason

Hillary Clinton got the benefit of mens rea considerations from the FBI, so why doesn’t everyone?

Jacob Sullum writes in the October issue of Reason:

Hillary Clinton supporters should have a new appreciation for the legal concept of mens rea—usually translated as “guilty mind”because it saved her from federal prosecution for using a personal email server as secretary of state. In recommending that the Justice Department not bring charges against the former first lady, FBI Director James Comey differentiated her “extremely careless” handling of “very sensitive, highly classified information” from other cases involving “intentional and willful mishandling.”

Not everyone gets the benefit of such distinctions. Consider the retiree on a snowmobile outing in Colorado who got lost in a blizzard and unwittingly crossed into a National Forest Wilderness Area; the Native Alaskan trapper who sold 10 sea otters to a buyer he mistakenly believed was also a Native Alaskan; and the 11-year-old Virginia girl who rescued a baby woodpecker from her cat.

The first two incidents resulted in misdemeanor and felony convictions, respectively, while the third led to a fine (later rescinded) and threats of prosecution. All three qualify as federal crimes, even though the perpetrators had no idea they were breaking the law.

View this article.

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Caught On Tape: Militarized Police Turn Peaceful Native American Protest Into War Zone

Submitted by Nick Bernabe via TheAntiMedia.org,

Following the activation of the North Dakota National Guard on September 8, peaceful Dakota Access Pipeline protests quickly became flooded with militarized law enforcement. Native American activists, or “water protectors,” have been standing in the way of the pipeline’s construction for months, successfully blocking it at the Sacred Stone camp near the Missouri River.

When the situation initially took a turn for the worse earlier this month, journalists on the ground who were broadcasting live video complained Facebook was blocking their streams. Now, videos and images from Wednesday are emerging that show an overwhelmingly militarized response to the peaceful prayer and protest.

 

 

In the video, law enforcement can be seen using armored vehicles (MRAPs), shotguns, assault rifles, riot gear, tear gas, and helicopters to disperse the protesters. The police have turned peaceful prayers and acts of civil disobedience into a what now resembles a war zone. The Morton County Sheriff’s department confirmed to Anti-Media that 21 water protectors were arrested Wednesday. Several water protectors at the scene said a plane was used to drop tear gas — or some other form of crowd dispersants — on the group, though the Morton County Sheriff’s department has denied these allegations.

 

 

The protests are rooted in the Standing Rock Sioux tribe’s concerns that the Dakota Access Pipeline would pollute the area’s water supply and violate tribal treaties. Hundreds of Native American tribes have joined the blockade in solidarity. Landowners also joined the ongoing demonstrations after their land was seized through eminent domain to build the pipeline.

The protests received mainstream news coverage after the Department of Justice ordered a halt to construction on land owned by the Army Corps of Engineers. However, construction continues outside that area, and protests are growing more frequent and direct.

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