Saturday, July 14, 2012

Stacking Fraud Like Cordwood.

The scandals and disasters within the financial sectors are starting to stack up like cordwood and the so-called regulators continue turn a blind eye to blatant criminal activity. One political side screams for more regulation while the other side screams for less. What difference does it make when nobody is enforcing the regulations already in place? Is anyone really surprised when the regulators come from the very banks and institutions that are committing the fraud in the first place? 

The bankers profited hugely from the housing bubble and then when it burst they dumped their huge losses onto the taxpayer at par while they continued to collect their massive yearend bonuses. 

Jon Corzine, former Goldman Sachs chairman, US Senator and Governor of New Jersey, quite literally oversees the theft of $1.6 Billion out of supposedly segregated customer accounts as his MF Global operation goes bankrupt. And yet he remains free and walking the streets for no other reason than because he is connected to the Obama campaign and the banks that own it. 

PFG Financial implodes in the wake of its President and sole owner failing on an attempted suicide.  Another $220 Million of supposedly segregated customer accounts goes poof.  What was the CFTC doing while PFG was filing forged paper reports while the law required that the reports to the CFTC were to be electronic copies of the original bank statements. This apparently went on for over two years while “former” Goldman Sachs employee and CHTC Chairman Gary Gensler apparently sat on his hands. 

The banksters commit fraud after fraud after fraud and when they get caught they do nothing but pay a fine of only a fraction of what they gained from the fraud. No individuals are prosecuted for the crimes, so they then just move on to the next fraud.  These criminals don’t consider the fines to be anything more than a cost of doing business. And why should they when as I said before the politicians and regulator in charge of enforcement are their “former” employees. 

And now we have a new scandal, LIBOR (London Interbank Offered Rate) interest rate fixing.  They have for years been putting out a published rate lower than what they were actually charging.  By doing so they have lowered the cash margins they are required to put up for their trillions in derivatives and futures positions and cheated other investors who hold instruments who’s rates of return are based upon the published LIBOR number out of their fair return on investment. The class action lawyers are lining up in droves and the litigation costs alone may well expose these banks for the corrupt and insolvent institutions that they are for once and for all.  

Looming on the horizon is yet another scandal.  One that may be at the base of all the others, namely the manipulation and suppression of bullion spot prices and the theft of allocated customer bullion deposits as a means of doing it.  Just as futures traders like MFG and PFG are supposed to treat customer cash accounts as in viable, so are the bullion banks supposed to treat customer allocated bullion deposits.  In fact an allocated deposit certificate list not just the amount of the deposit, but the specific serial numbers of the bars on deposit as well.  For this the customers pay the banks a monthly fee for the secure storage of their property.  This is as opposed to an unallocated account which is merely a promise to deliver X amount of bullion on demand, not specific bars and carries no storage fees.  The problem that has come up is that holders of allocated accounts are asking for delivery and receiving bars who serial numbers don’t match their deposit certificates and in some cases are receiving bars that were not produced until after they had made their deposits. This logically raises the question of where did the original bars go? Did the banks lease them or sell them into the market to cover their naked short positions based on their alleged unallocated account deposits? Are the banks replacing allocated bars with paper gold certificates in order to maintain reported account balances? If they actually have adequate unallocated deposits to cover their shorts why are allocated bars disappearing? 

As word of this spreads among allocated deposit holders, and if they suspect any of this speculation is true they could start a run on the bullion banks. This could force the bankers into the physical market to try and replace bars they may have illegally sold or leased to try and cover their crimes. 

When, not if this happens, gold and silver prices will explode and it will be game over for the likes of JP Morgan and HSBC and any other banks caught up in their web of deception.  Their collapse will in turn pull down the rest of the banks and possibly the dollar itself.  The only question then will be one of who goes to jail and when and for how long.

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