Posts Tagged ‘Eurozone’
by Mark H. Melin
December 21, 2011
Commodity Customer Coalition founder James Koutoulas is requesting that MF Global bankruptcy Judge Martin Glenn investigate three potential legal issues that are said to have occurred in transferring of MF Global assets. The key issues include the fact that JP Morgan was able to purchase MF Global bonds at a discount without any open bidding process and the assets were apparently sold without disclosure to or approval from the U.S. bankruptcy court or trustees. The third issue centers on JP Morgan seeking special favors from the Federal Reserve to receive priority treatment over investor segregated fund accounts.
The first such non-transparent movement of assets occurred when JP Morgan is said to have purchased MF Global’s Sovereign Debt at a significant discount without an open bidding process, paying $0.89 and later selling that debt to investor George Soros for $0.95. No one is going to complain about JP Morgan generating profit. However, purchasing assets of a bankrupt firm without an open bidding process or disclosure to the bankruptcy court and trustees is where JP Morgan may be in trouble, according to Mr. Koutoulas. This sale could be subject to clawback provisions, legal experts speculate. (On December 9, 2011 The Wall Street Journal reported the fact that bonds were moved to KPMG London office, which was the bankruptcy administrator, but at the time the article did not discuss sale details or approval through the bankruptcy process. See “Corzine’s Loss May Be Soros’s Gain” by Gregory Zuckerman and Dana Cimilluca.)
The key issue is that such transfers is the bonds were purchased at a discount without open bidding and the process was not disclosed to or authorized by the U.S. Bankruptcy Court, according to Mr. Koutoulas. “Who gave JP Morgan permission to purchase those bonds at a discount without open bidding?”
The second questionable movement of assets is said to have occurred when JP Morgan purchased MF Global’s stake in the London Metals Exchange (LME) without proper disclosure. The event was widely reported at a basic level on November 28, 2011. The larger issue, however, appears to center on the fact that such a transaction was not approved by the U.S. bankruptcy court and trustee.
“Was this disclosed in court?” Mr. Koutoulas rhetorically asked. “No. Was their trustee approval? No.”
The third issue occurred in congressional testimony Thursday, December 15, 2011 where it was discovered JP Morgan asked the Federal Reserve to write a letter claiming that the segregated funds should not be categorized as client money.
“How many letters like this have they asked for in the past? I want all the statistics regarding the number and content of letters,” Koutoulas questioned. “JP Morgan wanted a ‘get out of jail free card’ from the Fed. Guess what? That doesn’t fly with me.”
“Their hubris is so severe. They think we don’t know the industry, like we are Occupy Wall Street radicals or something and don’t have a clue or message,” Mr. Koutoulas said, noting that the CCC is comprised of experienced industry participants who understand the financial services industry from the inside.
Mr. Koutoulas seeks to solve the problem with JP Morgan without dragging the issue through court. In speaking to JP Morgan, Mr. Koutoulas said “Listen, you are buying vulture MF Global claims at $0.86 ½ on the dollar. Why don’t you pay a fair price of $0.97 ½ take the customers out of the bankruptcy and we will indemnify you from any class actions resulting from this.” A vulture claim occurs when an MF Global claimant such as a farmer or small business person is in desperate need of cash and sells their claim to someone such as JP Morgan, who purchases the claim at a lower rate than the value at maturity. In this example if JP Morgan purchased the claim at $0.87 and all clients were eventually “made good” JP Morgan would receive the par value of $1.00. With the MF Global bankruptcy proceedings apparently moving along much quicker than expected, JP Morgan stands to potentially make a quick 13% return on such vulture claims.
Mr. Koutoulas reports that JP Morgan would not even discuss the issues. “I can see that you disagree with me,” said Mr. Koutoulas, whose organization represents over 7,000 MF Global clients, mostly professional investors. “They won’t even meet with me and talk with me.”
Mr. Koutoulas is currently working Pro Bono and many of the lawyers are working at a highly discounted rates and requested that industry participants donate to help . “I need professional litigators and bankruptcy attorneys backing me up,” said Northwestern Law School grad Koutoulas who also operates Typhon Capital Management, which is an NFA-registered Commodity Trading Advisor and Commodity Pool Operator. “We’ve had an outpouring of lawyers who want to help,” Mr. Koutoulas said, sitting with a young Yale Law School grad as we spoke.
In calling on MF Global presiding bankruptcy Judge Glenn to investigate these issues, Mr. Koutoulas is rallying the futures industry to boycott use of JP Morgan. “Call your FCM and if they are using JP Morgan say ‘We won’t do business with you if you work with JP Morgan,’” he said, requesting that industry participants get on Twitter and follow the #BoycottJPM hash tag.
by Michael Piromgraipakd
September 26, 2011
The fear in this gentleman’s voice below is genuine and he speaks the truth the “establishment” does not want you to know. This mornings drop in the price of precious metals is the sign of a strengthening dollar. With the crash of the Euro, big money is flowing into what ever safe haven is available and apparently that is the Dollar. But jumping from a sinking ship into another will only make you wet. Below is an article by ZeroHedge detailing what’s going on.
ZeroHedge: In an interview on BBC News this morning that left the hosts gob-smacked (google it… it is the BBC after all), Alessio Rastani outlines in a mere three-and-a-half-minutes what we all know and most ignore. While the whole interview is worth watching, the money shot for us was “This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late!”. While he dreams of recessions, sees Goldman ruling the world, and urges people to prepare, it is hard to disagree with much (or actually anything) of what he says and obviously interventions and machinations means we will have days like this (in Silver for instance), there is only one endgame here and we hope there is less hopeful euphoria (and more preparedness) as we pull back the curtain further an further.
While we do not know who this trader is, one thing we can be 100% certain of is that he will never appear on CNBC.
Read the entire article HERE.
by Mac Slavo
September 9th, 2011
This week we returned from a trip to the Eurozone where we met with a host of different people across many countries and several industries. All of the indicators we’re seeing – construction starts, bank lending, personal borrowing habits, economic growth, and even the (lack of) items in grocery store carts – suggest that Europe is on the brink, though as is generally the case, the average European has no clue what’s coming their way.
The most alarming situation we identified is one relating to the purchase of gold coins and bullion – specifically in the country of Austria – but one that will likely make its way across the EU if it hasn’t already. Unlike the United States, where gold and silver can be purchased through traditional methods like visiting a local dealer directly, or even placing an order on the internet, it is much more difficult to find a gold/silver dealer outside of Germany or Switzerland. As a result, those individuals interested in acquiring gold are left with purchasing directly from local bank branches.
Had you visited an Austrian bank three months ago, you would have had absolutely no problem purchasing a large quantity of gold/silver from the bank. You’d simply call the bank about 24 – 48 hours in advance, let them know you’re coming and how much you needed, and you’d personally pick up your order within a couple days.
” A new trend in Austrian (and perhaps the rest of Europe’s) banking policies suggests that certain interested parties are attempting to control the sale and personal acquisition of gold/silver as safe haven assets. What we experienced first hand should be a wake up call for not just Europeans, but Americans as well.
The policy change was quiet, has not been reported by any media outlets that we’re aware of, and no mention of the new policies is made on the web sites of Austria’s largest banking institutions (though it is clear they vehemently comply with U.S. anti-money laundering measures and the Patriot Act)
According to the bank representatives and manager we spoke with, Austrian banks have now been ordered to restrict the sale of gold and silver bullion purchases and are limiting personal acquisitions of precious metals to 15,000€ (approximately $20,700 USD) at a time, or 11 ounces of gold at today’s prices.
Upon further discussion we learned that these policies were implemented over the course of the last 30 days, and they are now standard operating procedure. The reason given was the banks had come under pressure from EU, Austrian and U.S. officials, with this particular manager specifically citing U.S. money laundering initiatives and the EU’s Third EU Money Laundering Directive which was implemented across the zone in December of 2007.
The idea that these restrictions have been put in place as anti-money laundering measures is laughable. As we all know, if a drug cartel or other criminal organization wanted to launder money, they wouldn’t do it in person purchasing bullion coins at a local banking branch. They’d simply pick up the phone and contact a too-big-too-fail bank (video), as we’ve seen with the billions of dollars recently laundered through U.S. banks. You may remember there was very little reporting on this issue from mainstream media and it has been ignored by U.S. prosecutors.
As Austria is one of the more developed nations in the Euro Zone, there is a strong likelihood that they are not the sole country implementing these new policies – and that this has been, or soon will be, implemented across the entirety of EU nations.
To the average European and American this may not mean much. But if you’ve been paying attention to the events unfolding over the last several years, it’s becoming clear that the economies of the EU and US are under threat of a significant and potentially permanent financial collapse. This morning, IMF managing director Christine Lagarde was quoted as saying that the situation is so dire, “policymakers should stand ready, as needed, to take more action to support the recovery, including through unconventional measures.”
The new gold and silver purchasing limits would certainly qualify as unconventional, along with other recent proposed measures by EU officials and business leaders. One such proposal from Italian business leaders calls for all cash transactions over 300 Euro (About $400 USD) to be banned, and to be permitted only in electronic format.
The global trend across industrialized nations for the last twenty years has been to move towards a cashless society, but one that still utilizes centrally planned currencies. While central banks, large institutional funds and wealthy private investors across the world continue to buy up gold, governments seem to be moving quickly to restrict the ability of average people to do the same – and they are rapidly implementing policies to either restrict or track these types of transactions.
Many cities around the country, such as Houston, TX, have passed identification requirements that force sellers of precious metals to present a valid form of ID at the time of sale. Like Europe, the U.S. is expeditiously implementing direct methods of tracking these transactions, as well as indirect methods that target those who may be engaging in suspicious activities, namely using cash, as per FBI and Homeland Security bulletins issued last month.
The noose is tightening. Governments, large financial institutions and political chess players know exactly where real value exists. And it’s certainly not in the currencies that are being printed with reckless abandon.
Read the entire article HERE.
By Damon van der Linde
Tue, Jul 12, 2011
Exclusive to Gold Investing News
Insecurity over Italy’s financial stability and sinking confidence in the country’s government have made Italy the latest target of Euro Zone contagion fears. These concerns have called into question what role investment in gold will hold as a traditional safe-haven against inflation.
“I think there is great danger in gold being unloaded in specific countries in this problem, and very specifically Italy, which has a huge amount of gold not only as a percentage of the reserves, but the tonnage is one of the largest,” said Jon Nadler, a senior metals analyst at Kitco. “This is the very purpose you keep gold in the basement for the rainy day when you need absolutely to raise cash.”
The European Union is currently in the midst of talks to help determine solutions to Italy’s debt crisis, which is currently at 120 percent of gross domestic product (GDP), the second highest in the Euro Zone after Greece. This has prompted EU discussion encouraging the Italian government to pass an austerity budget to demonstrate it’s initiating reforms.
“I think the Euro has been quite an experiment and a lot of people have thought that maybe it will break up within the first two decades of its existence,” said Nadler. ”I’m not sure if that’s the most important part here. I think that the most important part is what happens with the various economies and how, with the austerity measures, translate into social problems, if any. That’s where the danger really lies.”
According to the June 2011 statistics from the World Gold Council, Italy holds 2,451.8 tonnes or 71.9 percent of its total reserves in the gold. In 2007, when Italy’s debt was 107 percent of the GDP, the country sold gold reserves to relieve the financial troubles. Nadler suggests that rather than selling gold reserves, Italy should consider using the metal as collateral while a more long-term solution can be achieved.
“There is nothing easier to reach for, nothing more liquid, nothing easier to pledge to the IMF or European Union than gold,” said Nadler. “If that goes as a further step to allowing them to breathe easier than great, it shows that gold has value in a central bank basement after all. I think it would highlight gold more positively to say it shined when it was more needed.”
This would, of course, require the co-operation of not only the EU, but of all the major players in the global economy who have holdings in the country’s debt.
“Right now I think we need to watch how the EU gets its act together and enlarges the stability fund, and we have to see to what extent China will utter supportive works to Italy as it did to Spain and Portugal in a vote of confidence,” said Nadler. “Obviously they do have some exposure to that type of instrument and I don’t think they’re going to be dumping it, knowing that it does more damage to the remaining holdings.”
The euro slid Monday on concerns about the situation in Italy, trading down 1.5 percent at $1.4050 at the start of US markets. European stock markets have also been falling, and the yellow metal hit a new all-time high in euro terms, though Nadler says that individual investors should not be too excited about the prospect of soaring gold prices as it would mean disaster for many other investments.
“Gold should be a core, long-term, ‘don’t touch,’ insurance asset. There’s no point in trying to ‘make money on gold’ because gold is not a money-making investment,” said Nadler. “People are rooting for $2,000, $3,000 and $5,000 gold, but they clearly have to weight that against what their entire portfolio would look like when gold achieved that magic number. It would be in shambles, so no one should wish for gold to go to the moon because that implies much, much suffering elsewhere.”
Read the entire article HERE.
by Ian Traynor and Helena Smith
May 10, 2011
The Sydney Morning Herald
THE euro zone’s first bailout of a debt-laden member country is failing and needs to be renegotiated just a year after the €110 billion ($147 billion) rescue package was agreed for Greece.
After secret talks in Luxembourg on Friday between Athens and key EU players, it emerged that Greece will not be able to meet the terms of last year’s rescue and is hoping to ask the euro zone for more.
As Britain made clear it did not want to offer any more support for Greece as part of an EU package or a bilateral loan, investors remained unconvinced of the ability of Athens to sustain its €340 billion debt.
Signalling that his government would struggle to finance itself on the bond markets by next year – which was part of the deal struck with the euro zone and the IMF – the Greek Finance Minister, George Papaconstantinou, said: ”We will either go out to markets or use the recent decision by the EU that allows the European fund to buy Greek bonds. The markets continue to disbelieve in our country.”
His trip to Luxembourg had been kept so quiet in Athens that only the Prime Minister, George Papandreou, knew about the discussions, which were led by Jean-Claude Juncker, the Luxembourg Prime Minister and president of the group uniting the 17 countries using the single currency. Mr Juncker confirmed that the Greek bailout would need to be renegotiated amid alarmist reports that the country was contemplating reintroducing the drachma.
After the talks – attended by the finance ministers of Germany, France, Italy and Spain as well as Olli Rehn, European monetary affairs commissioner – Mr Juncker said the Greek package needed a ”readjustment”. Haggling over a new Greek deal is set to dominate the weeks ahead.
EU finance ministers will debate the topic next week and the Germans, in particular, are digging in their heels.
The British Chancellor of the Exchequer, George Osborne, made clear Britain felt it had done enough to support Greece. He told the BBC: ”We certainly don’t want to be part of any bailout of Greece. There are some very difficult questions that Greece has to address now because the whole assumption when the euro zone put together a rescue package last year was that Greece could come back into the market next year and borrow.
”The market is quite sceptical about that happening, and I suspect a lot of my time over the next few weeks is going to be with other European finance ministers and others talking about how we try and help the Greeks.”
Britain provided a bilateral loan to Ireland last year, but Mr Osborne said: ”I can’t see us ever writing a cheque directly from the British taxpayer to the Greeks or the Portuguese or indeed anyone else. Ireland was a special case.”
There was tension in Ireland after the central bank governor was accused of contributing to Ireland’s financial crisis by woefully ”miscalculating” bank losses. The attack on Patrick Honohan came amid reports that the IMF, European Union and European Central Bank troika had agreed to a behind-the-scenes interest rate cut in Ireland’s €85 billion bailout.
Read the entire article HERE.