Now, this unusual story was shared by Mr. T.S., who sent it along with an email posing the question: "is this new account going to be used to bolster Commercial Banks with Funds from the FED in the Event of Margin Failures resulting from Extreme Gold demand forcing the shorting banks to liquidate their margin accounts?" Well, I'll let you read the short article, and "you can tell me":
So what's going on here? Well, I suspect that for one thing, Mr. T.S. is right, or at least, close, in that something like what he has proposed may be going on. But there are other possible explanations as well, and one of them is that this, too, is a manifestation of what, in part, may have transpired at that secret meeting of Mr. Obama, Mr. Biden, and Ms. Yellen, at the Fed last week. You'll recall two days ago that I blogged about the fact that most derivatives trades are currently still "over-the-counter" and not subject to central clearing. You'll also recall that the initial Obama-Biden-Yellen meeting was due to the Fed invoking "expedited procedures", and that this meeting was followed up by meetings of major bankers in Washington, and a letter to JP Morgan Chase warning it that its "wind down" plan - sort of a last willl and testament for banks about to expire - was simply inadequate, since the bank was exposed to seizures of its liquidity from "foreign jurisdictions"(the Fed's phrase) and unspecified "third parties"(again, the Fed's phrase).
So what's going on here? I suspect in realty that behind the scenes these meetings were all about the derivatives crisis. Remember, it didn't go away in the bailouts of 2008. The can was simply kicked further down the road, and as I outlined two days ago, the majar western banks are all exposed to each other in their derivatives, not the least of which are (you guessed it) JP Morgan Chase and Deutsche Bank. What therefore might in part be going on is a quiet but deliberate move by the Fed to become the clearing house for derivatives trade, of which currently approximately 60% remains over-the-counter.
One might be tempted to argue this this is a good thing, given the fact that the derivatives trade - meaning run amok finance capital and big banks - was largely responsible for the bubble-bust mess in the first place. We know the story: mortgages were wrapped in these derivative bundles, and bundles of bundles, and these mortgages in turn were often fraudulent, robo-signed documents (and oh, by the way, the newest scam of the banksters is to claim "the documents are missing", yet another argument against electronic records and mortgages, but that's a whole other story), When the housing bubble burst, this began the unravelling of the derivatives, which, as we also know, run into quadrillions of dollars, an order of magntude more "money on paper" than the entire annual GDP of the entire planet Earth.
But, of course, this really may not be such a good thing, for if the trend continues, and if Mr. T.S.'s insight is valid, and if the derivatives traders and Fed itself are trying to position that notoriously corrupt institution as the central clearing house for most derivatives trades and backer for margin failures, then another layer of secrecy and non-transparency, and non-accountability, has just been added to the mix. In short, it's more of the same from these people.
And you thought the Bank of Crooks and Criminals International (BCCI) was bad...
See you on the flip side...