The ministry of Truth

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The ministry of truth
Lies, lies and nothing else than lies



Before going into the topic of manipulation and the ministry of truth, I’d like to give you some thoughts about my remarks in my last post and at the same time to give you a follow up regarding predictions

Regarding my predictions, I guess that some of you were surprised and some were certainly a bit shocked and worried. First of all I’d like to mention as I did from time to time, especially for the benefit of the increasing number of readers who might not know me at all, that I have no pleasure at all writing things that seem negative. If there is information that might seem negative to you it does not mean that it necessarily is so. In the case the information is really negative, please note that it is not my interest at all to make you feel bad or worried. I see it rather as an information service that should allow you to prepare yourself, at least mentally. It is important that we keep up good faith at all times. Please enjoy your life as much as possible. Take your time to do what you always wanted to do but might not have done so because of whatever reason. Take the time to enjoy whatever makes your heart feel great. Enjoy everything you can enjoy, even if it might seem as a rather unimportant. Enjoy everything, be it the smile of a person you love or like or be it the smile of a stranger. Be it the beauty of a sunny day or if you rather prefer a rainy day. Be it the flower that smells so well. Be it the person that opens the door for you. Be it the driver that let you pass first. There are so many things happening that could make you feel good. With all the stress we have, we easily forget or have not the time, to see these things that seem rather unimportant but in fact are very important. So let us enjoy those things. Take the time to do what you always wanted to do and enjoy it.

Coming back to my predictions. Some of those predictions really seemed rather negative at first sight. However, dear reader, that does only seem so, because we have been programmed for many years to see such things as negative. We have been programmed to fear changes even if the changes would be and will be positive. There is no need at all to be afraid or to worry that much. Of course some things that can and probably will happen will not be to our liking. So what? How many times during your life have you been in a situation where you felt uneasy or uncomfortable or even afraid before an important change and a couple of months later you had to say, “thanks god it happened that way”? Changes per se are not bad at all. Changes are in my opinion rather opportunities. So if I write that I believe that the USD will disappear that might worry some. However if you really look at it without worries, it must not be that bad at all. Why keep the USD? Why keep a currency that has no value at all and only represents liabilities? To me it does not make sense at all. Personally I believe that a world without the USD or any paper currency not backed by anything with real value is certainly better than what we have now. Of course the changes will not necessarily be that easy to adapt. But we will get used to it as well.

Me writing that the FED will disappear might worry some of you as well. But once again, do we need to keep the FED? Why keep an organization that, since it's creation in 1913, is only loyal to its masters and not to the citizens it should represent? Why keep an organization that is responsible for the loss of more than 95% of the purchasing power of the USD? Why keep an organization responsible of prolonging the great depression in 1930. Why keep an organization with a poor track record of basically everything they should do? Once again I truly believe that the world will do much better without the FED or any other organization having the same owners.



Banks to big to fail. Of course we are worried knowing, although possibly not yet admitting, that most or all of the big banks will fail. Unfortunately too many banks have grown that big that they represent a systemic risk. On the other hand it is in my humble opinion high time that we let these banks fail. If we keep these broken institutions alive, by giving them more and more infusions of cash (like drug addicts), their problems will not be solved at all and the future cost to the public will be a lot higher than solving the problem now. Giving the drug addicts more and more of the same does not solve their problem. The same is true for the big banks. Of course any of these big banks failing will hurt the economy and therefore all of us will feel it. But we should not forget that cutting losses early almost always is a much better solution than holding on to the problem and having to solve the problem later at a much higher cost. Once we will have gone through the rough time of major bank failures we will be in a much healthier environment. Smaller banks in the long run are better for the economy. Smaller banks are more flexible, closer to their markets, are seldom a systemic risk and can be controlled in a much better way by their stakeholders. Personally I do prefer well run small banks with state guarantees from states that are conservative.

Government defaults. Yes that will hurt. But once again is it really that bad? Do we need those governments that spend more than they should? Do we need those governments that spend the money of the next generations? Do we need the governments that are organized in a way that only a few get all the benefits while the average Jo and Jane do not? Do we need governments that apparently (at least that is what they tell us) want to solve all our problems but all they do is enslave us? My guess is that we are in a much better situation without these mainly corrupt governments. We do not need a huge apparatus of bureaucrats costing us an arm and a leg. We need a light and efficient government that only provides the basic needs. We do not need governments that treat us as if we were children and therefore want to solve everything for us because we are not capable to solve our problems ourselves. No, we definitely do not need them. Their attitude has rather the opposite effect because they force many people to get lazy and to lay back and wait that the government will solve everything. Hey that is not the way it should be. So let’s stop it.



So dear reader what I want to say is that not all I mentioned in my last post is really negative. Yes I agree that it might look so at first sight. However I truly believe that our future will be bright although the path to it might bear some great challenges.

After having given you my predictions for 2010 I realized that we are at the beginning of a new decade. As this decade will be the decade of major changes, I feel like inclined to let you know my predictions for the whole decade. In case that any of my predictions might look as negative, please try to look at it from an other angle. Most probably it will be positive for us.

FED.
I mentioned the failure of the FED already in my past post. Of course I cannot know if the FED will fail in 2010. However I am quite sure that by the end of the decade the FED, an organization with an absolutely poor track record will not exist anymore

USA
By the end of the decade the USA as a union of states will not exist anymore. There might be some states still unified. However many of the states that still are part of the USA will go their own way and will leave the union.

Free Energy
Free energy will be in full use by the end of this decade. All oil producing countries and companies dealing with oil and gas will have lost importance.

EU
The European Union will not exist anymore. If we are lucky there will still be a certain union of some European countries. However my guess is that there will be at least a split between the northern countries and the southern countries

Government defaults
In the first years of this decade we will see a considerable increase in government defaults. These defaults might shape the landscape in the sense that many countries will change. Regions that do well will try to get their independence from countries they belong to at this point. In that sense we might see soon separatist movements getting more support in places like Catalonia, Basque, Corsica, Flemish Belgium, Scotland, Northern Ireland, North Italy and so on.

Technology
Technological advancements will become less and less important as the humans will advance as a race. The DNA of the human race will develop and we all will find out that our ego has limited us, the human race, for centuries. We will find out that we have enormous capabilities, which our ego did not let us use. Taking into consideration that we use only 10% of our brains it goes without saying that the opportunities of what our brain could do is for most of us difficult to imagine. Telepathy for example is one of those capabilities we all have but do not use due to the programming of our brains. I truly believe that we will move through a time period that will awaken our capabilities. Therefore more and more people will be able to use their capabilities such as, but definitely not limited to, telepathy. Once having woken up and using these capabilities, will we still need phones or Internet or any other similar technology? What will the impact be, if we can use our remote seeing capabilities? If we use free energy? If we can perform time travel? If we can move to other places faster than what we can imagine? Maybe that sounds like science fiction. However, dear reader, quantum physics shows us that although it might sound as daydreaming it certainly is not so.



Globalization
Although there is a clear movement by certain powers to establish a One World Government and their tactics to lead the world economy into a deep crisis and make us cry for solutions, I do believe that they will not be successful. However I believe we will have another kind of globalization. Once we accept and use our capabilities as described before (personally I have no doubt that it will happen as I see more and more people awakening) it will be an enlightened globalization.
The globalization we know now will in my opinion cease soon because I believe we will head towards a kind of tribal or regional economy and therefore there will not be a need to move goods several times around the world until the goods get to the end user. This again is positive. If you study the nonsense that globalization brought us, it is high time to make some major changes. We need to go back towards regional trade, which is more in line with ecology and Mother Nature.


Manipulation
All Obama has done so far is rearrange the deck chairs on the Titanic
Joseph Stiglitz

Well dear reader what is going on in the markets is manipulation. The presidential working group for financial markets (also known as the plunge protection team) is doing whatever they can in order to keep stock markets from free fall, avoid that the Dollar plunges (what will happen anyway soon), that precious metals to not rise more than 2% maximum per each trading day and that US Treasury yields stay low. So far I must admit they have been quite successful indeed. However rigging the market does work for some time but will stop eventually and that will happen soon in my humble opinion. Following some examples re market manipulation or the presidential working group for financial markets etc.
http://news.goldseek.com/RickAckerman/1263452460.php


http://www.zerohedge.com/article/massive-spike-sp-futures-volume-rallies-market-breaks-dollar-trend

If you believe what is sold in the mainstream medias business of thought control, then you are following a program and are being used.

Learn how to look behind the stories that are being sold by the media and politicians, and form your own conclusions. Keep your doubt intact about everything you’re told from the political stage, especially when you’re induced to be patriotic. It is one of the clearest signals to be suspicious of what you’re being told.
“When enemies are created – especially new ones, be wary of the motivations of those who claim them to be enemies. Investigate the facts. Look under all the rocks and verify your evidence. Each of you must become investigators and learn the art of research and analytical study if you want to feel more a part of the movement to globalization.

The ministry of truth


The ministry of truth has been very active over the past days cooking some incredible numbers. Wow is the word that comes into my mind when I look at the magic these spin masters are able to produce. Incredible indeed. What surprises me more is that there are people that do believe these numbers. Wow again. Well we all might sleep much better at night after having been told that the unemployment picture is improving and that the economy is picking up. But is it really so? Can we lay back and relax? Sorry folks but that does not seem to work out well for the coming months. Maybe it is rather more important to be attentive and to move into safe havens. No I am not speaking about the USD and Treasury bonds. Both of them are far away from safe haven and are more like safe hell. Why? Because the truth is something else than what we are told by the ministry of truth. The truth is that unemployment is increasing (not only in the US). Read more about that further below. The truth is that the US is getting deeper and deeper into dept. A dept that they never will be able to repay. The only way out will be to inflate out. I simply do not see any other doable solution. Dave at http://truthingold.blogspot.com mentions the following about the deficits.
Quote
Obama did NOT include the Government guarantee of Fannie and Freddie in his absurd budget proposal. BUT, the U.S. is guaranteeing roughly $6 trillion of FNM/FRE mortgage debt. Given current default rates, it's not unreasonable to assume a 10% loss on that paper this year. That means you add another $600 billion on top of Big O's budget numbers. There are plenty of other off-budget black holes just like that, although maybe not as large (GMAC, AIG, etc.).
Unquote

Yes he sure is right. Following a chart that shows the Total US Debt as a % of GDP. Please keep in mind that the GDP is grossly overstated and that therefore this chart would look a lot worse taking the real GDP numbers. Just for the new readers the chart the follows the before mentioned chart is a chart with the GDP numbers as John Williams from www.shadowstats.com calculates it. Interesting isn’t it? The whole US growth story of the past has been a blatant lie, one more produced by the ministry of truth.





Now to the jobs or unemployment reports. The last report as the previous ones too have been a fine and superb Orwellian work. Following some information about the real picture

MontyHigh, www.worldofwallstreet.us
TrimTabs Employment NewsFlash – February 5, 2010
Real-Time Tax Data Says Job Losses Much Worse than BLS Reports
TrimTabs’ Estimates 104,000 Jobs Lost in January, while BLS Reports Decline of 20,000
BLS Revises Job Losses Up Almost 500,000 in 2009, and a Whopping 930,000 in 2008
TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 104,000 jobs in January. Meanwhile, the Bureau of Labor Statistics (BLS) reported the U.S. economy lost 20,000 jobs. We believe the BLS has underestimated January’s results due to problems inherent in their survey techniques.

In addition to their regular report, the BLS published benchmark revisions to their employment estimates derived from an actual payroll count for March 2009. As a result, job losses from April 2008 through March 2009 were revised up a whopping 930,000, or 23% from their earlier revisions. In addition, the BLS revised their job loss estimates for 2009 up 617,000, or 14.8%.

While the BLS originally reported job losses of 4.2 million in 2009, TrimTabs reported 5.3 million, a difference of more than a million lost jobs. We consistently reported that based on real-time tax data, job losses were much higher than the BLS was reporting. This past January, the BLS revised their job loss estimate to 4.8 million, an increase of almost 600,000 lost jobs. The new total brought the BLS’ revised estimates much closer to TrimTabs’ original estimate based on real-time tax data.
Since July 2009, TrimTabs estimates and the BLS estimates have diverged again. While the tax data points to a weak job market, the BLS estimates point to a steadily improving job market. We believe the job market is much worse than the BLS is reporting and that in January 2011, when the BLS revises their estimates for 2010, their April 2009 through December 2009 results will move much closer to TrimTabs’ results.

The BLS has seriously underreported job losses for the past two years due to their flawed methodology. TrimTabs has identified the following four problems:

1. The BLS employment estimate is based on a survey, and not on an actual count of employees. While the BLS survey is large and supposedly designed to capture the complex nature of the employment market, it is still a survey and therefore subject to error. TrimTabs believes that rapid changes in an employment cycle cannot be captured by surveys.
2. Several times a year, the BLS applies enormous seasonal adjustments to their survey results to account for seasonal fluctuations in the job market. For example, this January, the BLS added 1.92 million jobs to their survey results to report a job loss of 20,000 to account for the layoff of retail holiday workers. In our opinion, the sheer magnitude of the seasonal adjustment which dwarfs the monthly result renders this month’s job loss estimate meaningless.
3. At the time of the first release, only 40% to 60% of the BLS survey is complete and is subject to large revisions over the next two months.
4. The BLS applies a mysterious “birth/death” adjustment to their survey results to account for business openings and closings. While the payroll data was adjusted substantially, the “birth/death” adjustments were left unchanged. In 2008 and 2009, the BLS’ “birth/death” adjustment added 904,000 and 882,000 jobs, respectively, for a total of 1.79 million. By way of comparison, in 2006 and 2007, the BLS’ “birth/death” adjustment added 964,000 and 1.13 million jobs, respectively. We find it highly unlikely that in 2008 and 2009, during the worst recession since the 1930’s, more businesses opened than closed netting 1.79 million jobs.

In our opinion, flawed BLS survey results, month-after-month, does the public a huge disservice. While its results point to a slowly recovering economy, TrimTabs’ results point to a dangerously weak economy.



One reason why the reports are of bad quality at least, is the following
Birth-Death/Bias Factor Adjustment. As discussed in previous writings, the Birth-Death Model biases tend to overstate payroll employment during recessions. The flaws here initially were confirmed when the BLS first announced the massive 2009 benchmark revision, with the BLS indicating that the underlying assumptions to the Birth-Death Model were missing certain jobs losses.
Nonetheless, the Birth-Death Model survives, albeit scaled down minimally. The unsupportable premise that jobs created by start-up companies in this downturn have more than offset jobs lost by companies going out of business, continues. So, if a company fails to report its payrolls because it has gone out of business, the BLS assumes it still has its previously-reported employees and adjusts those numbers for the trend in the company’s industry.
The "surplus" jobs created by start-up firms, which get added on to the payroll estimates each month as a special add-factor, have been revised lower. Prior to the benchmark revision, the Birth-Death Model appears to have been adding an average of about 72,000 extra jobs per month (roughly 861,000 per year), but that appears to have been revised now to an average of about 42,000 per month (roughly 509,000 per year). This monthly bias should be negative, on average. Since it is not, the BLS continues to overestimate monthly growth in payroll employment.
That said, the unadjusted January 2010 bias was a monthly subtraction 427,000 (January is the one month of big subtraction) versus a pre-benchmark 356,000 subtraction the year before, and a revised 25,000 (pre-benchmark 59,000) addition for December 2009.




Of course we can say in a very simple way these statistics like all others coming from the same source are cooked and absolutely useless.


With respect to the big picture, and the big problems of massive debt loads and over-the counter derivatives, nothing has been done and there are no proposals on the table. The state of California is the 7th largest economy in the world and it is bankrupt. It needs US $10 billion right now and can’t find a lender, and that’s just a one finger in the financial dyke. Dubai is broke and Greece, Ireland, Portugal, and Spain are headed down that same load. The US has been reduced to printing money in order to monetize its own debt because the rest of the world finally woke up. Important economists and analysts around the globe are finally calling the US what it is, the largest Ponzi scheme in the history of the world.

And finally, just a quick note on the situation in Europe. It surprises me that everyone one is focused on the financial troubles occurring in Greece. Greece is about 3% of the total EU GDP. In reality California's problems are much worse in terms of its potential impact on the global economy. California is about 13% of the U.S. GDP and California is the world's 7th largest economy. And what about the list of other States teetering on bankruptcy: Illinois, Michigan, Pennsylvania, New Jersey, New York, Florida and so on. It seems to me that the financial media, Wall Street and the Obama Government is spending a lot of energy keeping Europe front and center in front of everyone when, in reality, we should be looking at ourselves.


Economy

Think the PIGS Are in Trouble? These 7 U.S. States Could Be Heading for Something Worse
The seven states to make my list are California, Florida, Illinois, Ohio, Michigan, North Carolina, and New Jersey. Each has a population above 8 million people. Each has had to borrow more than a billion dollars, so far, to pay claims out of their now bankrupt unemployment insurance fund. Also, each state currently registers broad, underemployment above 15% as indicated by the U-6 measure for the States. And finally, each state is a large net importer of either oil, natural gas, electricity, or all three of these energy sources.
http://seekingalpha.com/article/187051-think-the-pigs-are-in-trouble-these-7-u-s-states-could-be-heading-for-something-worse?source=article_sb_popular

Dr. Edwin Vieira, Jr. on the Failure of the Public Sector, the Coming Military Crackdown and What Can Be Done to Stop It
Two stand out. The foremost problem-because it is the source of, or contributes significantly to, almost every economic difficulty now plaguing this country-is the inherent and ineradicable instability of the present monetary and banking systems centered around the Federal Reserve System.
The second problem derives from the first. It is the ever-accelerating development of a first-class para-militarized police-state apparatus centered around the United States Department of Homeland Security, with its tentacles reaching down into every police force throughout the States and localities. Fundamentally, this apparatus is not, and never was, designed to deal with international "terrorism". If that were its goal, its first task would be absolutely to secure the southern border of the United States, which it has never seriously attempted to do. Rather, it is being set up to deal with what the political-cum-financial Establishment anticipates (and I believe rightly so) will be massive social and political unrest bordering on chaos throughout America when the monetary and banking systems finally implode in the not-so-distant future-surely in hyperinflation, and probably in hyperinflation coupled with a gut-wrenching depression.
Read on
http://www.thedailybell.com/724/Edwin-Vieira-the-Coming-Military-Crackdown.html




One week down and fifty-one more to go! As the New Year begins it seems that Americans still have no clue as to what’s going on. The unemployment rate is at 10% and six million people live on US $200 worth of food stamps each month as their only source of income. A politician in Washington, DC spends that on a lunch with a friend or two. All told, a record thirty-six million people are now on food stamps as a way to supplement income. I guess they failed to read the news about the economic recovery. Since these people can’t afford lobbyists and they don’t have a special interest group, politicians can’t be bothered with their simple everyday problems. Fannie Mae and Freddie Mac are bankrupt, have been for years, but pay millions dollars of taxpayer money to lobby Wall Street, so they get unlimited credit. The few good people, like Paul Volker, are used by the Obama’s of the world to get elected and then locked in a closet until the next election. The truth need not apply in Washington, DC.

AIG is another perfect example of how a bad company gets unlimited financing. The Treasury Secretary, Timothy Geithner, is about to be questioned by Congress of his instructions to AIG to withhold information from public filings about debt to banks. I have no doubt that AIG owed billions to Goldman Sachs, so Goldman sent their man Timmy in to clean up the mess and pay his old boss one hundred cents on the dollar for garbage assets that have no market. Of course the White House says even though Timmy headed the New York Fed, he played no role in the decisions to buy these swaps for full value. Let’s think about that for a minute: the head of the New York Fed played no part, had no knowledge, of a decision by his bank to spend billions of dollars for worthless assets. When I hear that I have to wonder just what the hell he did there to earn his salary. Now of course Congress has committees investigating in an effort to close the barn door long after the horse is dead and gone.

Residential and Commercial: The property crises continues but in different ways
Whereas the crisis of residential real estate is still raging (including the United States), it is now up time for the commercial real estate to fall into disarray. No surprise ahead for the readers of the GEAB, but the trends differ according to regions. In some cases, it is about time to follow the market developments to decide when to re-enter; in others, leave the market as quickly as possible. The major trends seem to be already established for the period running till summer 2010
http://www.leap2020.eu/residential-and-commercial-the-property-crises-continues-but-in-different-ways_a4235.html


Unemployment
Three of America’s largest firm announced firings or signaled them during the last week. Wal-Mart (NYSE:WMT) cut the deepest, which is frightening because it is the most financially healthy company in the world. In a surprise announcement, the world’s largest retailer said it would cut 10% of its Sam’s Club division, which means nearly 12,000 workers will get axed
http://247wallst.com/2010/01/25/signs-of-the-apocalypse-the-return-of-the-layoff/


Gold

When there is panic in the air and blood in the streets it is the moment to buy. I do fully agree with James Turk. Please read his comments on the following link
http://www.fgmr.com/precious-metals-at-bargain-basement-prices.html


Tungsten/GLD
Following up on a note about gold bars filled with Tungsten, please have a look at the following video
http://www.youtube.com/watch?v=y5JP3S3zJbw
(a bit technical but very interesting)

If you or somebody you know owns GLD it might make sense to change into something that hold physical. If you have questions on how to invest, please send me an e mail.
http://www.youtube.com/watch?v=opGwEp6U4U0&feature=related



Jim Sinclair regarding comments of Soros at the WEF
Today I have received many emails concerning Mr. Soros’ dislike of gold. You may have noticed that Mr. Buffett and Mr. Soros seem to be in a PR contest for the position of spokesperson for the future of the USA.
Many Americans erroneously see gold as anti-American and those that do not see a major future for the US dollar as traitors.
You will recall Mr. Buffett’s recent entry into the railroad business was deemed by him and others as being a vote of absolute confidence in America’s continued economic recovery and its sustainability. It is sort of a quasi-competition for economic President of the USA.
I file his bearishness as what he sees as a patriotic position
Nobody can jawbone the gold market for more than a very short term period. Gold is going to and through $1224.10 on its way to $1274-$1278. Following this gold will move onward to $1650 prior to reaching Alf’s and Martin’s published price objectives. This will happen regardless of the many top callers and self deemed patriots screaming out of the woods today.
Respectfully, 
Jim

Is Soros Buying Gold Ready For The ‘Ultimate Bubble’?
By: Peter Cooper,
www.Ababianmoney.net.

Given the moves by rival hedge fund managers like John Paulson into the yellow metal, it would be surprising if that living trading legend George Soros is not buying gold at the moment.
Indeed, you should always buy when this man hints he might be selling. His comments at the World Economic Forum in Davos this week seem classic trader double-speak. What does Soros mean when he says gold is the ‘ultimate bubble’ asset class?
False prophets
Newspapers like the normally sensible Daily Telegraph fell for his ruse, immediately jumping the gun to a prediction about a massive tumble for the yellow metal. Yet Soros said no such thing.
He merely pointed out what even the most ardent gold bug would concede. Namely that if you study the history of financial crises then the credit-induced asset price inflation that causes them moves from one asset class to another until it reaches gold as the ‘ultimate bubble’ or the last of the bubbles.
Soros did not say that we are nearing that position with gold around $1,080, having last month touched $1,226 an ounce. What he did create was a buying opportunity, presumably for funds controlled by himself.
For why should gold be running out of steam at this point? Even if credit growth slows the gold market is still so small that only the tiniest fraction of this money is required to send the price much higher.
Trader talk
Soros knows that. He also knows that gold prices show no sign of the parabolic spike that we saw in oil prices in July 2008. Surely the next most obvious spike will be in bond prices – when the current stock market sell off really gets moving.
Only after the bond bubble has blown up will gold become a candidate for the next bubble, and given the relative sizes of the bond market and the gold market that could be one humdinger of an ‘ultimate bubble’.
Soros is playing his own book in Davos. Gold investors should not be alarmed but take some delight in what he is saying.

Living in a Powder Keg and Giving Off Sparks
An excellent piece of the recent gold history and what happened with the Gold Pool. Very interesting read
http://fofoa.blogspot.com/2010/01/living-in-powder-keg-and-giving-off.html


FED
The Ultimate Shell Game: The Federal Reserve Funds 91% Of 2009 U.S. Deficit

Submitted by Tyler Durden on 01/11/2010 19:25 –0500
In the current hodge podge of abstract finance, it is easy to get lost in the numbers and lose sight of the forest for the trees. Which is why we provide the ultimate simplification: In calendar (not fiscal) 2009, the US grew its budget deficit by $1.47 trillion. In the same time, the Federal Reserve grew its securities holdings from $500 billion to $1.85 trillion, a $1.34 trillion increase. Keeping it simple: 91% of the budget deficit increase in 2009, under the authority of President Obama, was funded by the... United States.,,
http://www.zerohedge.com/article/ultimate-shell-g
ame-federal-reserve-funds-us-deficit


Banks and Banksters

Found on www.lemetropolecafe.com
Thursday, January 21, 2010
Goldman's Earnings: The Market-to-Market Miracle at 85 Broad St.
Nice try Larry "I am the real Jesus" Blankfein. Next time you announce your earnings, make sure you bring plenty of lube for everyone who is willing to bend over and believe what you have to say. I know that at least Steve Liesman is buyin' it.

Goldman's earnings were ushered in with great fanfare on Bubblevision TV (CNBC and Bloomberg). And of course this is based solely on looking at the net income number, which blew away estimates and expectations. Of course, as per usual, there is a much different story to tell if you examine the bowels of a financial statement, especially bank financial statements. So I took out my "Greg House" marker pen and board and took a look at Goldman's 8-K SEC filing, which contains an expanded version of the press release that the monkeys on CNBC regurgitate.

The bottom line is that a substantial portion of Goldman's net income for Q4 '09 appear to have been derived from marking up illiquid positions sitting in its Fixed Income operations and is not attributable to the interest rate and currencies segment of FICC, which means the numbers came from fixed income products like mortgage and asset-backed securities. 

I'm going to summarize and analyze some of the details from the 8-K, but the link to it s here: GS 8-K.

Most of Goldman's revenues (66%) come from its "Trading and Principal Investments." In Q4 '09 Goldman reported $6.4 billion in net revenues for TPI vs. negative net revenues of $4.4 billion in Q4 '08. The negative number is based on the massive write-downs Goldman took at the end of the year last year (remember those huge markdowns Wall Street took?), before Tim Geithner funnelled billions of taxpayer dollars to monetize a lot of these catastrophic "Principal" bets. 

Specifically, the big bump in revenues came from Goldman's "Fixed Income, Commodities and Currency" segment within its TPI Division. Regarding the Q4 '09 results, Goldman states: "The increase in net revenues [in 2009] compared with the fourth quarter of 2008 reflected significantly improved results in credit products and mortgages." Translation: "the FASB and SEC extended the timeframe and framework by which we can mark up to fantasy all of the remaining positions that Tim Geithner has not yet monetized."

They specifically cite "credit products and mortgages," which means most of the revenue bump this quarter came from the kind of garbage that buried Lehman and Bear. How do I know this? Because they explain in the 8-K with respect to the FICC business: "Net revenues in interest rate products and currencies were significantly lower [in Q4 '09] compared with the fourth quarter of 2008, while net revenues in commodities were essentially unchanged." This means that most of the revenue differential in just the FICC segment, which represents close to 40% of Goldman's total revenues for the quarter, came from fixed income products AND most of that revenue is likely can be attributed to mark-to-fantasy accounting.

Just to mention Goldman's other operating segments: Asset Management revenues were 10% lower in Q4 '09 vs. Q4 '08 and Investment Banking revenues were up 58% in Q4 '09 vs. Q4 '08 - but IB represents a mere 11% of Goldman's revenue base. The 600 pound gorilla is the FICC segment of Goldman's operations and that's where the proverbial canary in the coal mine is caged up.

Of course, we have to wait until Goldman files its 2009 10-K to see the most recent balance sheet and cash flow statement,. And since it's a 10-K, they have 90 days to file it. By then everyone who participates in the financial markets will be on to the next crisis and forget to look at the entrails buried in the Goldman 10-K in order to get a sligthly better idea just how accurate my analysis is. Until then, unless Goldman is willing to lift its skirt and show the world why I am wrong, we can assume that Goldman's profits are no more real than the fiat paper used to buy Blankfein's next Mercedes.


Goldman Will Benefit From Obama’s Proposal, Bove Says
Jan. 21 (Bloomberg) -- Goldman Sachs Group Inc. will benefit from President Barack Obama’s proposal to limit Wall Street risk because it may force deposit-taking banks to unwind trading operations, Rochdale Securities analyst Dick Bove said.
Obama called for limiting the size and trading activities of financial institutions as a way to reduce the risk of another financial crisis. The proposals would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds…
http://bloomberg.com/apps/news?
pid=20601087&sid=anWa3pOh_gIs&pos=2

AIG Draws $2.4 Billion From Fed Credit Line, Most Since October
http://www.businessweek.com/news/2010-01-28/aig-draws-2-4-billion-from-fed-credit-line-most-since-october.html

Looks Like Bernanke Was Saved By Big Bank Payouts to Senate Republicans...
Big banks exercised their 1st Amendment right, as upheld by the Supreme Court last week, and utilized the funding of some Senate Republican flex-spending accounts to buy support for Bernanke:
Ben Bernanke's future as the leader of the Federal Reserve was in doubt late last week, but he's been bailed out by a strange coalition: The White House and the Senate Republican leadership. Here's the article: Bank Money For Republicans Saves Bernanke
If nothing else, this demonstrates the fact that Corporate America has become our Government. Based on polling conducted before Senate reconfirmation hearings, Americans strongly opposed the reappointment of Bernanke. Last week his reappointment was in serious doubt, but the Republicans, who mostly opposed him, now seem to have found Bernanke religion. You can connect the dots for yourself.

JP Morgan “Rigs” Food Stamps Too!
http://solari.com/blog/?p=5668

Liquidating firms claim billions in U.S. stimulus
Failed financial firms may claim billions
http://www.reuters.com/article/idUSN1114600020100111


USD

Sarkozy: Dollar Must Be Stripped of Global Power
http://moneynews.com/StreetTalk/Sarkozy-Euro-Competitive-Dollar/2010/01/06/id/345566?s=al&promo_code=94E6-1



The spinnmasters wants us to believe that the Euro is at risk and therefore holding USD is much better. Their argument is Greece situation. With out doubt Greece situation is far from being well and will not improve soon if ever. But I do not see why the problems Greece faces should be worse (for the Euro) than the problems California faces for the Dollar. How come? Keep in mind that the GDP of Greece is a mere 2 to 3% of Euroland while Californias GDP represents more than 12% of the US Economy. So what you think, dear reader? Do you believe that the situation of Greece is more negative to the Euro than Californias situation to the Dollar? Following more information about this topic.
ECB—Greece No California
http://www.theaureport.com/pub/na/3519


Fixed Income

Two More Reasons to Sell Treasury Bonds
http://dailyreckoning.com/two-more-reasons-to-sell-treasury-bonds/

Bond

The world is getting to crazy in order to report on. Please read the following information
http://www.ft.com/cms/s/0/c12edfae-0951-11df-ba88-00144feabdc0.html?nclick_check=1

Following Jim Sinclairs remarks, remarks on which I agree 100%
Unbelievable. The FDIC is going to offer OTC derivatives to save the banking system that has been brought to its knees by OTC derivatives.
These guys in government really do not have a clue!

It is indeed unbelievable. Who is going to buy these papers? Any person that is still sane certainly will not do it even with a state guarantee. So who or which entity will be the buyer? As there is already so much crap on the books of the FED some more might not do much harm, doesn’t it?


Moody's warns US of credit rating fears

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