Minutes of Secretary of State Kissinger’s Principals and Regionals Staff Meeting

FOREIGN RELATIONS OF THE UNITED STATES, 1973–1976
VOLUME XXXI, FOREIGN ECONOMIC POLICY, DOCUMENT 63

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63. Minutes of Secretary of State Kissinger’s Principals and Regionals Staff Meeting 1

Washington, April 25, 1974, 3:13–4:16 p.m.

[Omitted here is discussion unrelated to international monetary policy.]

Secretary Kissinger: Now we’ve got Enders, Lord and Hartman. They’ll speak separately or together. (Laughter.)

Mr. Hartman: A trio.

Mr. Lord: I can exhaust my knowledge of gold fairly quickly, I think.

Secretary Kissinger: Now, I had one deal with Shultz—never to discuss gold at this staff meeting—because his estimate of what would appear in the newspapers from staff meetings is about the same as mine.

Are you going to discuss something—is this now in the public discussion, what we’re discussing here?

Mr. Enders: It’s been very close to it. It’s been in the newspapers now—the EC proposal. 2

Secretary Kissinger: On what—revaluing their gold?

Mr. Enders: Revaluing their gold—in the individual transaction between the central banks. That’s been in the newspaper. The subject is, obviously, sensitive; but it’s not, I think, more than the usual degree of sensitivity about gold.

Secretary Kissinger: Now, what is our position?

Mr. Enders: You know what the EC proposal is.

Secretary Kissinger: Yes.

Mr. Enders: It does not involve a change in the official price of gold. It would allow purchases and sales to the private market, provided there was no net purchase from the private market by an individual central banker in a year. And then there would be individual sales between the central banks on—

Secretary Kissinger: How can they permit sale to the private market? Oh, and then they would buy from the private market?

Mr. Enders: Then they would buy.

Secretary Kissinger: But they wouldn’t buy more than they sold.

Mr. Enders: They wouldn’t buy more than they sold. There would be no net increase in gold held by the central banks that was held by the EEC. It could be held by others.

I’ve got two things to say about this, Mr. Secretary. One is: If it happens, as they proposed, it would be against our interests in these ways.

Secretary Kissinger: Have you accepted it or is this just a French proposal?

Mr. Enders: It’s an informal consensus that they’ve reached among themselves.

Secretary Kissinger: Were they discussed with us at all?

Mr. Enders: Not in a systematic way. They’re proposing to send over to Washington the Dutch Finance Minister and the Dutch Central Governor would talk to the Treasury.

Secretary Kissinger: What’s Arthur Burns’ view?

Mr. Enders: Arthur Burns—I talked to him last night on it, and he didn’t define a general view yet. He was unwilling to do so. He said he wanted to look more closely on the proposal. Henry Wallich, the international affairs man, this morning indicated he would probably adopt the traditional position that we should be for phasing gold out of the international monetary system; but he wanted to have another look at it. So Henry Wallich indicated that they would probably come down opposing this. But he was not prepared to do so until he got a further look at it.

Secretary Kissinger: But the practical consequence of this is to revalue their gold supply.

Mr. Enders: Precisely.

Secretary Kissinger: Their gold reserves.

Mr. Enders: That’s right. And it would be followed quite closely by a proposal within a year to have an official price of gold—

Secretary Kissinger: It doesn’t make any difference anyway. If they pass gold at the market price, that in effect establishes a new official price.

Mr. Enders: Very close to it—although their—

Secretary Kissinger: But if they ask what they’re doing—let me just say economics is not my forte. But my understanding of this proposal would be that they—by opening it up to other countries, they’re in effect putting gold back into the system at a higher price.

Mr. Enders: Correct.

Secretary Kissinger: Now, that’s what we have consistently opposed.

Mr. Enders: Yes, we have. You have convertibility if they—

Secretary Kissinger: Yes.

Mr. Enders: Both parties have to agree to this. But it slides towards and would result, within two or three years, in putting gold back into the centerpiece of the system—one. Two—at a much higher price. Three—at a price that could be determined by a few central bankers in deals among themselves.

So, in effect, I think what you’ve got here is you’ve got a small group of bankers getting together to obtain a money printing machine for themselves. They would determine the value of their reserves in a very small group.

There are two things wrong with this.

Secretary Kissinger: And we would be on the outside.

Mr. Enders: We could join this too, but there are only very few countries in the world that hold large amounts of gold—United States and Continentals being most of them. The LDC’s and most of the other countries—to include Japan—have relatively small amounts of gold. So it would be highly inflationary, on the one hand—and, on the other hand, a very inequitable means of increasing reserves.

Secretary Kissinger: Why did the Germans agree to it?

Mr. Enders: The Germans agreed to it, we’ve been told, on the basis that it would be discussed with the United States—conditional on United States approval.

Secretary Kissinger: They would be penalized for having held dollars.

Mr. Enders: They would be penalized for having held dollars. That probably doesn’t make very much difference to the Germans at the present time, given their very high reserves. However, I think that they may have come around to it on the basis that either we would oppose it—one—or, two, that they would have to pay up and finance the deficits of France and Italy by some means anyway; so why not let them try this proposal first?

The EC is potentially divided on this, however, and if enough pressure is put on them, these differences should reappear.

Secretary Kissinger: Then what’s our policy?

Mr. Enders: The policy we would suggest to you is that, (1), we refuse to go along with this—

Secretary Kissinger: I am just totally allergic to unilateral European decisions that fundamentally affect American interests—taken without consultation of the United States. And my tendency is to smash any attempt in which they do it until they learn that they can’t do it without talking to us.

That would be my basic instinct, apart from the merits of the issue.

Mr. Enders: Well, it seems to me there are two things here. One is that we can’t let them get away with this proposal because it’s for the reasons you stated. Also, it’s bad economic policy and it’s against our fundamental interests.

Secretary Kissinger: There’s also a fundamental change of our policy that we pursued over recent years—or am I wrong there?

Mr. Enders: Yes.

Secondly, Mr. Secretary, it does present an opportunity though—and we should try to negotiate for this—to move towards a demonetization of gold, to begin to get gold moving out of the system.

Secretary Kissinger: But how do you do that?

Mr. Enders: Well, there are several ways. One way is we could say to them that they would accept this kind of arrangement, provided that the gold were channelled out through an international agency—either in the IMF or a special pool—and sold into the market, so there would be gradual increases.

Secretary Kissinger: But the French would never go for this.

Mr. Enders: We can have a counter-proposal. There’s a further proposal—and that is that the IMF begin selling its gold—which is now 7 billion—to the world market, and we should try to negotiate that. That would begin the demonetization of gold.

Secretary Kissinger: Why are we so eager to get gold out of the system?

Mr. Enders: We were eager to get it out of the system—get started—because it’s a typical balancing of either forward or back. If this proposal goes back, it will go back into the centerpiece system.

Secretary Kissinger: But why is it against our interests? I understand the argument that it’s against our interest that the Europeans take a unilateral decision contrary to our policy. Why is it against our interest to have gold in the system?

Mr. Enders: It’s against our interest to have gold in the system because for it to remain there it would result in it being evaluated periodically. Although we have still some substantial gold holdings—about 11 billion—a larger part of the official gold in the world is concentrated in Western Europe. This gives them the dominant position in world reserves and the dominant means of creating reserves. We’ve been trying to get away from that into a system in which we can control—

Secretary Kissinger: But that’s a balance of payments problem.

Mr. Enders: Yes, but it’s a question of who has the most leverage internationally. If they have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power. For a long time we had a position relative to theirs of considerable power because we could change gold almost at will. This is no longer possible—no longer acceptable. Therefore, we have gone to special drawing rights, which is also equitable and could take account of some of the LDC interests and which spreads the power away from Europe. And it’s more rational in—

Secretary Kissinger: “More rational” being defined as being more in our interests or what?

Mr. Enders: More rational in the sense of more responsive to worldwide needs—but also more in our interest by letting—

Secretary Kissinger: Would it shock you? I’ve forgotten how SDR’s are generated. By agreement?

Mr. Enders: By agreement.

Secretary Kissinger: There’s no automatic way?

Mr. Enders: There’s no automatic way.

Mr. Lord: Maybe some of the Europeans—but the LDC’s are on our side and would not support them.

Mr. Enders: I don’t think anybody would support them.

Secretary Kissinger: But could they do it anyway?

Mr. Enders: Yes. But in order for them to do it anyway, they would have to be in violation of important articles of the IMF. So this would not be a total departure. (Laughter.) But there would be reluctance on the part of some Europeans to do this. We could also make it less interesting for them by beginning to sell our own gold in the market, and this would put pressure on them.

Mr. Maw: Why wouldn’t that fit if we start to sell our own gold at a price?

Secretary Kissinger: But how the hell could this happen without our knowing about it ahead of time?

Mr. Hartman: We’ve had consultations on it ahead of time. Several of them have come to ask us to express our views. And I think the reason they’re coming now to ask about it is because they know we have a generally negative view.

Mr. Enders: So I think we should try to break it, I think, as a first position—unless they’re willing to assign some form of demonetizing arrangement.

Secretary Kissinger: But, first of all, that’s impossible for the French.

Mr. Enders: Well, it’s impossible for the French under the Pompidou Government. Would it be necessarily under a future French Government? We should test that.

Secretary Kissinger: If they have gold to settle current accounts, we’ll be faced, sooner or later, with the same proposition again. Then others will be asked to join this settlement thing.

Isn’t this what they’re doing?

Mr. Enders: It seems to me, Mr. Secretary, that we should try—not rule out, a priori, a demonetizing scenario, because we can both gain by this. That liberates gold at a higher price. We have gold, and some of the Europeans have gold. Our interests join theirs. This would be helpful; and it would also, on the other hand, gradually remove this dominant position that the Europeans have had in economic terms.

Secretary Kissinger: Who’s with us on demonetizing gold?

Mr. Enders: I think we could get the Germans with us on demonetizing gold, the Dutch and the British, over a very long period of time.

Secretary Kissinger: How about the Japs?

Mr. Enders: Yes. The Arabs have shown no great interest in gold.

Secretary Kissinger: We could stick them with a lot of gold.

Mr. Sisco: Yes. (Laughter.)

Mr. Sonnenfeldt: At those high-dollar prices. I don’t know why they’d want to take it.

Secretary Kissinger: For the bathroom fixtures in the Guest House in Rio. (Laughter.)

Mr. McCloskey: That’d never work.

Secretary Kissinger: That’d never work. Why it could never get the bathtub filled—it probably takes two weeks to fill it.

Mr. Sisco: Three years ago, when Jean 3 was in one of those large bathtubs, two of those guys with speakers at that time walked right on through. She wasn’t quite used to it. (Laughter.)

Secretary Kissinger: They don’t have guards with speakers in that house.

Mr. Sisco: Well, they did in ’71.

Mr. Brown: Usually they’ve been fixed in other directions.

Mr. Sisco: Sure. (Laughter.)

Secretary Kissinger: O.K. My instinct is to oppose it. What’s your view, Art?

Mr. Hartman: Yes. I think for the present time, in terms of the kind of system that we’re going for, it would be very hard to defend in terms of how.

Secretary Kissinger: Ken?

Mr. Rush: Well, I think probably I do. The question is: Suppose they go ahead on their own anyway. What then?

Secretary Kissinger: We’ll bust them.

Mr. Enders: I think we should look very hard then, Ken, at very substantial sales of gold—U.S. gold on the market—to raid the gold market once and for all.

Mr. Rush: I’m not sure we could do it.

Secretary Kissinger: If they go ahead on their own against our position on something that we consider central to our interests, we’ve got to show them that that they can’t get away with it. Hopefully, we should have the right position. But we just cannot let them get away with these unilateral steps all the time.

Mr. Lord: Does the Treasury agree with us on this? I mean, if this guy comes when the Secretary is out of the country—

Secretary Kissinger: Who’s coming?

Mr. Enders: The Dutch Finance Minister—Duisenberg—and Zijlstra. I think it will take about two weeks to work through a hard position on this. The Treasury will want our leadership on the hardness of it. They will accept our leadership on this. It will take, I would think, some time to talk it through or talk it around Arthur Burns, and we’ll have to see what his reaction is.

Mr. Rush: We have about 45 billion dollars at the present value—

Mr. Enders: That’s correct.

Mr. Rush: And there’s about 100 billion dollars of gold.

Mr. Enders: That’s correct. And the annual turnover in the gold market is about 120 billion.

Secretary Kissinger: The gold market is generally in cahoots with Arthur Burns.

Mr. Enders: Yes. That’s been my experience. So I think we’ve got to bring Arthur around.

Secretary Kissinger: Arthur is a reasonable man. Let me talk to him. It takes him a maddening long time to make a point, but he’s a reasonable man.

Mr. Enders: He hasn’t had a chance to look at the proposal yet.

Secretary Kissinger: I’ll talk to him before I leave. 4

Mr. Enders: Good.

Mr. Boeker: It seems to me that gold sales is perhaps Stage 2 in a strategy that might break up the European move—that Stage 1 should be formulating a counterproposal U.S. design to isolate those who are opposing it the hardest—the French and the Italians. That would attract considerable support. It would appeal to the Japanese and others. I think this could fairly easily be done. And that, in itself, should put considerable pressure on the EEC for a tentative consensus.

Mr. Hartman: It isn’t a confrontation. That is, it seems to me we can discuss the various aspects of this thing.

Secretary Kissinger: Oh, no. We should discuss it—obviously. But I don’t like the proposition of their doing something and then inviting other countries to join them.

Mr. Hartman: I agree. That’s not what they’ve done.

Mr. Sonnenfeldt: Can we get them to come after the French election 5 so we don’t get kicked in the head?

Mr. Rush: I would think so.

Secretary Kissinger: I would think it would be a lot better to discuss it after the French election. Also, it would give us a better chance. Why don’t you tell Simonthis?

Mr. Enders: Good.

Secretary Kissinger: Let them come after the French election.

Mr. Enders: Good. I will be back—I can talk to Simon. I guess Shultz will be out then. 6

Mr. Sonnenfeldt: He’ll be out the 4th of May.

Mr. Enders: Yes. Meanwhile, we’ll go ahead and develop a position on the basis of this discussion.

Secretary Kissinger: Yes.

Mr. Enders: Good.

Secretary Kissinger: I agree we shouldn’t get a consultation—as long as we’re talking Treasury, I keep getting pressed for Treasury chair-manship of a policy committee. You’re opposed to that? 7

[Omitted here is discussion unrelated to international monetary policy.]

1 Source: National Archives, RG 59, Transcripts of Secretary of State Kissinger’s Staff Meetings, 1973–1977, Entry 5177, Box 3, Secretary’s Staff Meeting, April 25, 1974. Secret. According to an attached list, the following people attended the meeting: Kissinger, Rush, Sisco, Ingersoll,Hartman, Maw, Ambassador at Large Robert Mc-Closkey, Assistant Secretary of State for African Affairs Donald Easum, Hyland, Atherton, Lord, Policy Planning Staff member Paul Boeker,Eagleburger, Springsteen, Special Assistant to the Secretary of State for Press Relations Robert Anderson, Enders, Assistant Secretary of State for Inter-American Affairs Jack Kubisch, andSonnenfeldt.

2 Meeting in Zeist, the Netherlands, on April 22 and 23, EC Finance Ministers and central bankers agreed on a common position on gold, which they authorized the Dutch Minister of Finance, Willem Frederik Duisenberg, and the President of the Dutch central bank, Jelle Zijlstra, to discuss with Treasury and Federal Reserve Board officials in Washington. (Telegram 2042 from The Hague, April 24, and telegram 2457 from USEC Brussels, April 25; ibid., Central Foreign Policy Files)

3 Jean Sisco was Joseph Sisco’s wife.

4 From April 28 to 29, Kissinger was in Geneva for talks with Soviet Foreign Minister Andrei Gromyko.

5 France held a Presidential election on May 19.

6 George Shultz’s tenure as Secretary of the Treasury ended on May 8, when he was replaced byWilliam Simon.

7 The summary attached to the front page of the minutes notes that “The Secretary is inclined to oppose the proposal on grounds of non consultation by the Europeans as well as on the proposal’s merits. The Secretary agreed to talk to Arthur Burns in this sense.”

London knocks off New York City as top spot for foreign investors

A combination of factors, such as the financial crisis, a false recovery, new government regulations, and a general mistrust from investors, has dented Wall Street.  This is now showing up based on the recent survey conducted by the Wisconsin School of Business.  London now is the #1 destination for foreign investors:

London is the top choice for foreign investors, beating New York City, which finished second in a poll released today.
San Francisco ranked third, followed by Houston and Los Angeles. Washington, D.C., fell out of favor as a destination for foreign money, dropping to ninth, after Tokyo, Madrid and Munich. New York ranked first in the previous three years.
The survey was conducted in the fourth quarter of last year by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business. Respondents were members of the Association of Foreign Investors in Real Estate (AFIRE.)

Read more here: http://www.mcclatchydc.com/2014/01/06/213625/london-knocks-off-new-york-as.html#storylink=cpy

The Dubai Bubble - Hot money in frontier and emerging markets

For more info on Forex Robots, see OneStepRemoved.com

Keiser Report: NSA manipulates bank accounts?

Indian tribe to create their own cryptocurrency Maza Coin

An American Indian tribe in South Dakota is experimenting with the use of their own BitCoin alternative, MazaCoin.  They believe it will help the economic situation of their tribe, and also be a boost for the local community where they live.  Indian Reservations have a semi-sovereign status, so if this MazaCoin does take off, it will be interesting to see how any disputes will be resolved, if any.

Will Bitcoin become the new virtual gold for the Oglala Lakota Nation? The impoverished tribe's reservation is based in rural Rapid City, South Dakota. Payu Harris, the tribal council representative, thinks the Bitcoin (BTC) can empower his people.
Harris is spearheading theBTC Oyate Initiative Project, an "exciting chance for Bitcoin to prove its market viability as a means of trade, identify potential pitfalls and security challenges, and showcase its availability as a merchant-payment solution for small business and entrepreneurs," states the website.
The tribe's currency, the MazaCoin "will be as simple & easy to use as BitCoin of which it is a fork custom designed for the socio-economic needs of the Oglala Lakota," statesMazaCoin on Twiiter.
"We're estimating the initial price on the going market of copy.25, which gives us a $2 billion market capitalization," Harris toldKOTARadio.com.

The Oyate Project will assemble a small-scale "mining cluster" to generate bitcoins while providing the public a hands-on chance to learn about mining and how bitcoins are generated, explains the project's website. "The btc generated will be forwarded to the second aspect of the project which is Crypto Currency Exchanges and trading and will be used to help train beginning Native American traders on the basics of cryptocurrency trading, futures contracts, market strategy, CC pairs, and more," states the Oyate Project description. "Also lastly the project aims to produce a massive promotional campaign aimed at small business owners to help facilitate their acceptance of bitcoin as a viable means of payment for goods and services."

Read more athttp://indiancountrytodaymedianetwork.com/2014/01/03/can-bitcoin-alleviate-poverty-pine-ridge-reservation-tribe-pursues-its-own-cryptocurrency

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Cap Ex nabbed by NFA for overcharging for 'software fees'

In an amazing case of lies and overcharging on fees, a CTA charged a customer so many fees that they would have needed to make 12% a month just to break even!  This complaint is a must read.

From the NFA:

For Immediate Release
December 31, 2013

For more information contact:
Larry Dyekman (312) 781-1372, ldyekman@nfa.futures.org
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org

NFA orders Westminster, California commodity trading advisor Cap Ex Partners LLC to permanently withdraw from NFA membership and sanctions its principals, Keith R. Bramlett and Ralph H. Johnson

December 31, Chicago - National Futures Association (NFA) has ordered Cap Ex Partners LLC (Cap Ex), a commodity trading advisor Member of NFA located in Westminster, California, to permanently withdraw from NFA membership. NFA has also orderedKeith R. Bramlett (Bramlett) and Ralph H. Johnson (Johnson), associated persons and listed principals of Cap Ex, to withdraw from NFA membership. Bramlett and Johnson are prohibited from applying for NFA membership or associate membership for a period of two years from the date of their withdrawals. In addition, Bramlett and Johnson are prohibited from acting as a principal of any NFA Member for a period of three years from the date of their withdrawals. The Decision, issued by a designated panel (Panel) of NFA's Hearing Committee, is based on a Complaint filed against Cap Ex, Bramlett and Johnson on August 29, 2013, and a settlement offer submitted by Cap Ex, Bramlett and Johnson.

The Panel found that Cap Ex, Bramlett and Johnson charged their customers excessive fees and failed to provide customers with a break-even analysis as required by NFA rules. In addition, Cap Ex and Bramlett willfully submitted false information to NFA. Further, Cap Ex used a misleading disclosure document, did business with an entity that was required to be registered as a commodity pool operator but was not registered in such capacity and failed to list an entity as a principal of the firm.

The complete text of the Complaint and Decision can be viewed on NFA's website (www.nfa.futures.org).

Trade Forex - Open a Forex Account

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Moguls Rent South Dakota Addresses to Dodge Taxes Forever

One of many interesting tax havens is right here in USA - South Dakota.  $121 Billion in assets is now being managed through trusts registered in South Dakota, according to Bloomberg News:

Among the nation’s billionaires, one of the most sought-after pieces of real estate right now is a quiet storefront in Sioux Falls, South Dakota.

A branch of Chicago’s Pritzker family rents space here, down the hall from the Minnesota clan that controls the Radisson hotel chain, and other rooms held by Miami and Hong Kong money.

Don’t look for any heiresses in this former five-and-dime. Most days, the small offices that represent these families are shut. Even empty, they provide their owners with an important asset: a South Dakota address for their trust funds.

In the past four years, the amount of money administered by South Dakota trust companies like these has tripled to $121 billion, almost all of it from out of state. The families needn’t actually move to South Dakota, or deposit their money at a local bank, or even touch down in the private jet. Little more than renting an address in Sioux Falls is required to take advantage of South Dakota’s tax-friendly trust laws.

Read more here

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Be prepared: Wall Street advisor recommends guns, ammo for protection in collapse

Being prepared is always a good plan, but now money managers are recommending being prepared 'just in case'.

From the Washington Examiner:

A top financial advisor, worried that Obamacare, the NSA spying scandal and spiraling national debt is increasing the chances for a fiscal and social disaster, is recommending that Americans prepare a “bug-out bag” that includes food, a gun and ammo to help them stay alive.David John Marotta, a Wall Street expert and financial advisor andForbes contributor, said in a note to investors, “Firearms are the last item on the list, but they are on the list. There are some terrible people in this world. And you are safer when your trusted neighbors have firearms.”His memo is part of a series addressing the potential for a “financial apocalypse.” His view, however, is that the problems plaguing the country won't result in armageddon. “There is the possibility of a precipitous decline, although a long and drawn out malaise is much more likely,” said the Charlottesville, Va.-based president of Marotta Wealth Management.

One more reason to subscribe to Global Intel Hub 

ALERT: Cryptolocker Ransomware infecting computers and demanding payment in Bitcoin

Warning to PC users - a new malware "Ransomware" will encrypt your files and then demand payment before countdown clock expires.  See here what you need to know about Cryptolocker, including how to clean.  As a general security practice, never open any email with an attachment from unknown persons.  Also, be wary of clicking on links in emails from unknown senders that may direct you to an infected site.

From Sott:

It is being called the perfect crime and it has law enforcement around the globe baffled. 

It all starts with a simple email. "They are scared and they are angry. It is a real terrible experience for them." Joe Ruthaford is talking about computer users who mistakenly launched a potent internet phishing scheme. He recently saw one of those ravaged computers in his Beacon Hill repair shop. 

"It is extremely damaging. It is one of the worst ones." It's called cryptolocker ransomware. Kevin Swindon is with the FBI in Boston. "I would think about this particular type of malware as what would happen if your computer was destroyed," Swindon said. 

In the past 90 days, thousands of people worldwide have opened a seemingly innocuous link to track a holiday package. Suddenly, all the files on their computer are encrypted. 

Joan Goodchild is the editor of "CSO," Chief Security Officer magazine based in Framingham. "This is a criminal operation. They are holding your folders and files ransom. We call this ransomware because that is exactly what it is. You need to pay in order to have access to them once again." 

And that is exactly what happened last month at the Swansea Police Department. Cryptolocker ransomware took over the department's entire computer system and the police were forced to pay a $750 ransom to get back control. As the ransomware takes over your computer, a countdown clock appears and shows victims how long they have to pay up. That means purchasing a key, or software, to reverse the process. And victims must do that using the online virtual currency known as bitcoins. 

"Once you have purchased a bitcoin, then the transaction that you use that bitcoin in is encrypted, and therefore you cannot trace it," explained Goodchild. Swindon says it appears to be the perfect crime. The FBI tells WBZ-TV they are very worried about this spreading in 2014. The scheme could be the work of organized gangs overseas. So far, no one has been caught.

Cryptolocker Ransomware Being Described As ‘The Perfect Crime’ « CBS Boston

Cryptolocker Ransomware: What You Need To Know | Malwarebytes Unpacked

Update 12/20/2013: A new version of Cryptolocker—dubbed Cryptolocker 2.0—has been discovered by ESET, although researchers believe it to be a copycat of the original Cryptolocker after noting large differences in the program’s code and operation. You can read the full blog comparing the two here.

Just last month, antivirus companies  discovered a new ransomware known as Cryptolocker.

This ransomware is particularly nasty because infected users are in danger of losing their personal files forever.

Spread through email attachments, this ransomware has been seen targeting companies through phishing attacks.

Cryptolocker will encrypt users’ files using asymmetric encryption, which requires both a public and private key.

The public key is used to encrypt and verify data, while private key is used for decryption, each the inverse of the other.

Below is an image from Microsoft depicting the process of asymmetric encryption.

The bad news is decryption is impossible unless a user has the private key stored on the cybercriminals’ server.

Currently, infected users are instructed to pay $300 USD to receive this private key.

Infected users also have a time limit to send the payment. If this time elapses, the private key is destroyed, and your files may be lost forever.

Files targeted are those commonly found on most PCs today; a list of file extensions for targeted files include:
3fr, accdb, ai, arw, bay, cdr, cer, cr2, crt, crw, dbf, dcr, der, dng, doc, docm, docx, dwg, dxf, dxg, eps, erf, indd, jpe, jpg, kdc, mdb, mdf, mef, mrw, nef, nrw, odb, odm, odp, ods, odt, orf, p12, p7b, p7c, pdd, pef, pem, pfx, ppt, pptm, pptx, psd, pst, ptx, r3d, raf, raw, rtf, rw2, rwl, srf, srw, wb2, wpd, wps, xlk, xls, xlsb, xlsm, xlsx

In some cases, it may be possible to recover previous versions of the encrypted files using System Restore or other recovery software used to obtain “shadow copies” of files. The folks at BleepingComputer have some additional insight on this found here.

Removal:

Malwarebytes detects Cryptolocker infections as Trojan.Ransom, but it cannot recover your encrypted files due to the nature of asymmetric encryption, which requires a private key to decrypt files encrypted with the public key.

In order to make removal even easier, a video was also created to guide users through the process (courtesy of Pieter Arntz).

While Malwarebytes cannot recover your encrypted files post-infection, we do have options to prevent infections before they start.

Users of Malwarebytes Anti-Malware Pro are protected by malware execution prevention and blocking of malware sites and servers.

To learn more on how Malwarebytes stops malware at its source, check out thisblog.

Where's the Gold? China prefers Gold to USD

Asia, and specifically China, has recently developed a very strong appetite for Gold.  For those who say Gold is irrelevant, bear in mind Gold's interesting relationship to fiat currencies, and key events in Global monetary history, such as when Nixon defaulted on the Gold standard thus creating the Forex market, or Roosevelt's confiscation of privately held Gold in 1933.  See this video (below) about what Asians are doing with their newly found taste for the shiny metal.

Barry Ritholtz - what's going on with the markets

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Taper!

Fed to taper by 10 Billion a month in asset purchases:

Hilsenrath Unveils 712 "Tapering Is Not Tightening" Words Of Wisdom In 3 Minutes

The "swap" of $10 billion of asset purchases for a lower employment threshold and lower-rates-for-longer forward guidance knne-jerked stocks dramatically higher (for now). But while that was occurring, the Wall Street Journal's Hon Hilsenrath was busy preparing 712 words in a record-setting 3-minutes to explain how the Fed remains data-dependent... and will remain dovish for longer than previously thought.
Via WSJ,The Federal Reserve said it would reduce its signature bond-buying program to $75 billion per month, taking a step away from a policy meant to recharge economic growth, and said that it will continue in "further measured steps at future meetings" if the economy stays on course.After months of intense discussion at the Fed and in financial markets, the Fed's policy-making committee announced Wednesday it would trim its purchases of long-term Treasury bonds to $40 billion per month, a reduction of $5 billion, and cut its purchases of mortgage-backed securities to $35 billion per month, a reduction of $5 billion."In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases,"the Fed said in its formal policy statement.The Fed also sought to enhance its commitment to keep short-term interest rates low for a long time after the bond-buying program ends.Fed officials inserted new language in the policy statement that stressed they will be in no rush to raise rates once unemployment reaches the 6.5% threshold the central bank has set out as the point at which they would start considering raising rates, as long as inflation remains in check.The Fed said that "it likely will be appropriate to maintain the current target range for the federal funds rate well past the time" that the jobless rate dips below the 6.5% threshold, "especially if projected inflation continues to run below the Committee's 2 percent longer-run goal."Short-term rates have been pinned near zero since late 2008. Most Fed officials expect to keep interest rates low well into the future. In their latest economic projections, also out Wednesday, 12 of 17 Fed officials said they expected the central bank's benchmark interest rate, which is called the fed funds rate, to be at or below 1% by the end of 2015. Ten of 17 officials expected the rate to be at or below 2% by the end of 2016.The Fed acknowledged concerns that inflation continues to run stubbornly below the central bank's 2% target, saying that it is "monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term." The Fed's preferred inflation gauge, the price index for personal consumption expenditures, increased just 0.7% in October from a year prior, according to a Commerce Department data release earlier this month.Officials by and large stuck with their economic forecasts for 2014, making only slight adjustments to projections of growth, unemployment and inflation that they made in September. In the statement, officials said that risks to the economy and jobs market have become "more nearly balanced."

Read more here...

Fed "Tightens", Tapers $10 Billion - Full Redline | Zero Hedge

Before decision

The case in favor of the Fed tapering today - Michael Casey's Horizons - MarketWatch

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United States Is Now the Most Unequal of All Advanced Economies

According to the most accurate data we have to measure, the US is now the most unequal of all advanced economies, being beat only by countries such as Ukraine and Russia.  Of course, Americans typically look at those countries as run by a bunch of mafia oligarch thugs, and believe the dream that people in the US gained their wealth through "hard work, dedication, and innovation."  Of course, statistics are not published on the millions of bankrupt potential billionaires, or the fact that the DOW removes losers every so often, or that Bill Gates comes from a family of corporate lawyers (whose father was on the board of IBM at the time of the big 'deal' that made Microsoft what it is).

From Popular Resistance:

The most authoritative source comparing wealth-concentration in the various countries is the successor to the reports that used to be done for the United Nations, now performed as the Credit Suisse Global Wealth Databook. The latest (2013) edition of it finds (p. 146) that in the U.S., 75.4% of all wealth is owned by the richest 10% of the people. The comparable figures for the other developed countries are: Australia 50.3%, Canada 57.4%, Denmark 72.2%, Finland 44.9%, France 51.8%, Germany 61.7%, Ireland 58.4%, Israel 68.9%, Italy 49.8%, Japan 49.1%, Netherlands 54.6%, New Zealand 57.6%, Norway 65.9%, Singapore 61.1%, Spain 54.0%, Sweden 71.1%, Switzerland 71.5%, and U.K. 53.3%. Those are the top 20 developed nations, and the U.S. has the most extreme wealth-concentration of them all. However, there are some other countries that have wealth-concentrations that are about as extreme as the U.S. For examples: Chile 72.5%, India 73.8%, Indonesia 75.0%, and South Africa 74.8%. The U.S. is in their league; not in the league of developed economies. In the U.S., the bottom 90% of the population own only 24.6% of all the privately held wealth, whereas in most of the developed world, the bottom 90% own around 40%; so, the degree of wealth-concentration in the U.S. is extraordinary (except for underdeveloped countries). 

 ...

The broadest mathematical measure of wealth-inequality is called “Gini,” and the higher it is, the more extreme the nation’s wealth-inequality is. The Gini for the U.S. is 85.1. Other extremely unequal countries are (pages 98-101 of this report) Chile 81.4, India 81.3, Indonesia 82.8, and South Africa 83.6. However, some nations are even more-extreme than the U.S.: Kazakhstan 86.7, Russia 93.1, and Ukraine 90.0. But Honduras and Guatemala are such rabid kleptocracies that their governments don’t even provide sufficiently reliable data for an estimate to be able to be made; and, so, some countries might be even higher than nations like Russia.

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Deutche Bank investigated for Gold price manipulation

DB is a major Forex trading bank, according to figures DB is the largest FX trading bank in the world.  So when they are investigated for Gold price manipulation, FX traders should listen.  Probably all traders should listen, but the implications for FX are uniquely disturbing.

Dec 13 (Reuters) - German banking regulator Bafin has demanded documents from Deutsche Bank as part of a probe into suspected manipulation of benchmark gold and silver prices by banks, the Financial Times reported, citing sources.

Bafin has interrogated the bank's staff during several on-site inspections over the past few months, the newspaper said on its website, citing people familiar with the matter.

Currently, gold fixing happens twice a day by teleconference with five banks: Deutsche Bank, Bank of Nova Scotia-ScotiaMocatta, Barclays Bank Plc, HSBC Bank USA, NA and Société Générale. The fixings are used to determine prices globally.  Full story

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The Next Financial Paradigm

Zero Hedge users mostly agree the financial system will implode.  It doesn't take more than high school math skills to calculate that the current debt based money system has implosion built in, and it's guaranteed (this is one rare case we can use such a word in finance!), because at some point, not enough new money can be created to pay off an ever increasing debt base.  Collapse is a mathematical certainty.  What is not certain is when this will happen, what will be the trigger, how entities will react, and other wildcard factors.

Many of us know this collapse is coming, and are either feathering our nests as much as possible, or just waiting to time the collapse that we all exit at the same time (as is the Wall Street way).  What we don't do often, is discuss what's next?  Maybe we should ask Bob, he'll tell us what's next.  

What happens after the financial collapse?   Hopefully, and this is one of the more likely scenarios, there are enough resources in the west to keep the system running on a temporary basis until a new system can be implemented.  This is up to debate but we aren't betting on Zombie Apocalypse or end of Mayan calendar or Alien invasion.  Of course anything is possible.  But let's think about it for a moment.  The financial system is a complete illusion, money does not exist.  But there is a huge physical economy, a real economy, that will not be destroyed at all during the collapse (unless people are upset and burn down buildings).  We'll still have factories, machines, tools, fuel, commodities, and last but certainly not least, human capital.  So restarting will theoretically be easy, it's just a question of organization.  And whoever is in power at that time, will have the largest vote.  So the most likely scenario is they will decide what the new system will be.  Is this why large organizations, such as The Feds, are targeting nobodys on the fringe, with a vengence?

http://www.zerohedge.com/contributed/2013-12-13/next-financial-paradigm

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Get better VPS for your Forex Trading

A VPS is a remote server "Virtual Private Server" that you connect to via software such as Windows Remote Desktop.  VPS offerings are fairly similar, but depending on where you live, your internet connection, and what broker you use, some VPS may be better for you.  So EES works with several VPS providers, as well as our own FX System Hosting.

Commercial Network Services (CNS), is an interesting provider, having several data centers, low latency to many FX brokers, and excellent customer service.  Checkout CNS latency chart here.

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VPS Comparison: Why the options?

Each strategy is different, each broker is different, and they are always changing.  Some strategies may depend on latency and the number of hops, others may require a more robust trading machine.  By providing multiple options, EES FX gives traders the choice to use the VPS that suits their needs, and the ability to use multiple VPS at the same time.

Also, EES works with Introducing Brokers and other institutions to provide wholesale VPS solutions for their clients.  Also we have a data center in a secure location for backup and other redundancy.  Please contact us for these services.

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What the Fed can do to save the economy, give money to people, not banks

An Idea! Let the Fed Drop Money into Your Bank Account Instead of Raining it Down on the Rich

Dec 08, 2013 – 05:56 PM GMT

By: Ellen_Brown

The Fed could be an institution that serves all the people, not just the 1%.

The Federal Reserve is the only central bank with a dual mandate. It is charged not only with maintaining low, stable inflation but with promoting maximum sustainable employment. Yet unemployment remains stubbornly high, despite four years of radical tinkering with interest rates and quantitative easing (creating money on the Fed’s books). After pushing interest rates as low as they can go, the Fed has admitted that it has run out of tools.

At an IMF conference on November 8, 2013, former Treasury Secretary Larry Summers suggested that since near-zero interest rates were not adequately promoting people to borrow and spend, it might now be necessary to set interest at below zero. This idea was lauded and expanded upon by other ivory-tower inside-the-box thinkers, including Paul Krugman.

Negative interest would mean that banks would charge the depositor for holding his deposits rather than paying interest on them. Runs on the banks would no doubt follow, but the pundits have a solution for that: move to a cashless society, in which all money would be electronic. “This would make it impossible to hoard cash outside the bank,” wrote Danny Vinik in Business Insider, “allowing the Fed to cut interest rates to below zero, spurring people to spend more.” He concluded:

. . . Summers’ speech is a reminder to all liberals that he is a brilliant economist who grasps the long-term issues of monetary policy and would likely have made an exemplary Fed chair.

Maybe; but to ordinary mortals living in the less rarefied atmosphere of the real world, the proposal to impose negative interest rates looks either inane or like the next giant step toward the totalitarian New World Order. Business Week quotes Douglas Holtz-Eakin, a former director of the Congressional Budget Office: “We’ve had four years of extraordinarily loose monetary policy without satisfactory results, and the only thing they come up with is we need more?”

Paul Craig Roberts, former Assistant Secretary of the Treasury, calls the idea “harebrained.” He is equally skeptical of quantitative easing, the Fed’s other tool for stimulating the economy. Roberts points to Andrew Huszar’s explosive November 11th Wall Street Journal article titled “ Confessions of a Quantitative Easer,” in which Huszar says that QE was always intended to serve Wall Street, not Main Street. Huszar’s assignment at the Fed was to manage the purchase of $1.25 trillion in mortgages with dollars created on a computer screen. He says he resigned when he realized that the real purpose of the policy was to drive up the prices of the banks’ holdings of debt instruments, to provide the banks with trillions of dollars at zero cost with which to lend and speculate, and to provide the banks with “fat commissions from brokering most of the Fed’s QE transactions.”

A Helicopter Drop That Missed Its Target

All this is far from the helicopter drop proposed by Ben Bernanke in 2002 as a quick fix for deflation. He told the Japanese, “ The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” Later in the speech he discussed “ a money-financed tax cut,” which he said was “ essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.” Deflation could be cured, said Professor Friedman, simply by dropping money from helicopters.

But there has been no cloudburst of money raining down on the people. The money has gotten only into the reserve accounts of banks. John Lounsbury, writing in Econintersect, observes that Friedman’s idea of a helicopter drop involved debt-free money printed by the government and landing in people’s bank accounts. “He foresaw the money entering the economy through bank deposits, not through bank reserves which was the pathway available to Bernanke. . . . [W]hen Ben Bernanke fired up his helicopter engines he took the only path available to him.”

Bernanke created debt-free money and bought government debt with it, returning the interest to the Treasury. The result was interest-free credit, a good deal for the government. But the problem, says Lounsbury, is that:

The helicopters dropped all the money into a hole in the ground (excess reserve accounts) and very little made its way into the economy. It was essentially a rearrangement of the balance sheets of the creditor nation with little impact on the debtor nation.

. . . The fatal flaw of QE is that it delivers money to the accounts of the creditors and does nothing for the accounts of the debtors. Bad debts remain unserviced and the debt crisis continues.

Thinking Outside the Box

Bernanke delivered the money to the creditors because that was all the Federal Reserve Act allowed. If the Fed is to fulfill its mandate, it clearly needs more tools; and that means amending the Act. Harvard professor Ken Rogoff, who spoke at the November 2013 IMF conference before Larry Summers, suggested several possibilities; and one was to broaden access to the central bank, allowing anyone to have an ATM at the Fed.

Rajiv Sethi, Barnard/Columbia Professor of Economics, expanded on this idea in a blog titled “ The Payments System and Monetary Transmission.” He suggested making the Federal Reserve the repository for all deposit banking. This would make deposit insurance unnecessary; it would eliminate the need to impose higher capital requirements; and it would allow the Fed to implement monetary policy by targeting debtor rather than creditor balance sheets. Instead of returning its profits to the Treasury, the Fed could do a helicopter drop directly into consumer bank accounts, stimulating demand in the consumer economy.

John Lounsbury expanded further on these ideas. He wrote in Econintersect that they would open a pathway for investment banking and depository banking to be separated from each other, analogous to that under Glass-Steagall. Banks would no longer be too big to fail, since they could fail without destroying the general payment system of the economy. Lounsbury said the central bank could operate as a true public bank and repository for all federal banking transactions, and it could operate in the mode of a postal savings system for the general populace.

Earlier Central Banks Ventures into Commercial Lending

That sounds like a radical departure today, but the Fed has ventured into commercial banking before. In 1934, Section 13(b) was added to the Federal Reserve Act, authorizing the Fed to “make credit available for the purpose of supplying working capital to established industrial and commercial businesses.” This long-forgotten section was implemented and remained in effect for 24 years. In a 2002 article on the Minneapolis Fed’s website called “ Lender of More Than Last Resort,” David Fettig noted that 13(b) allowed Federal Reserve banks to make loans directly to any established businesses in their districts, and to share in loans with private lending institutions if the latter assumed 20 percent of the risk. No limitation was placed on the amount of a single loan.

Fettig wrote that “the Fed was still less than 20 years old and many likely remembered the arguments put forth during the System’s founding, when some advocated that the discount window should be open to all comers, not just member banks.” In Australia and other countries, the central bank was then assuming commercial as well as central bank functions.

Section 13(b) was eventually repealed, but the Federal Reserve Act retained enough vestiges of it in 2008 to allow the Fed to intervene to save a variety of non-bank entities from bankruptcy. The problem was that the tool was applied selectively. The recipients were major corporate players, not local businesses or local governments. Fettig wrote:

Section 13(b) may be a memory, . . . but Section 13 paragraph 3 . . . is alive and well in the Federal Reserve Act. . . . [T]his amendment allows, “in unusual and exigent circumstances,” a Reserve bank to advance credit to individuals, partnerships and corporations that are not depository institutions.

In 2008, the Fed bailed out investment company Bear Stearns and insurer AIG, neither of which was a bank. Bear Stearns got almost $1 trillion in short-term loans, with interest rates as low as 0.5%. The Fed also made loans to other corporations, including GE, McDonald’s, and Verizon.

In 2010, Section 13(3) was modified by the Dodd-Frank bill, which replaced the phrase “individuals, partnerships and corporations” with the vaguer phrase “any program or facility with broad-based eligibility.” As explained in the notes to the bill:

Only Broad-Based Facilities Permitted. Section 13(3) is modified to remove the authority to extend credit to specific individuals, partnerships and corporations. Instead, the Board may authorize credit under section 13(3) only under a program or facility with “broad-based eligibility.”

What programs have “broad-based eligibility” is not clear from a reading of the Section, but it isn’t individuals or local businesses. It also isn’t state and local governments.

No Others Need Apply

In 2009, President Obama proposed that the Fed extend its largess to the cash-strapped cities and states battered by the banking crisis. “Small businesses and state and local governments are having serious difficulty obtaining necessary financing from debt markets,” Obama said. He proposed that the Fed buy municipal bonds to cut their rising borrowing costs.

The proposed municipal bond facility would have been based on the Fed program to buy commercial paper, which had almost single-handedly propped up the market for short-term corporate borrowing. Investors welcomed the muni bond proposal as a first step toward supporting the market.

But Bernanke rejected the proposal. Why? It could hardly be argued that the Fed didn’t have the money. The collective budget deficit of the states for 2011 was projected at $140 billion, a drop in the bucket compared to the sums the Fed had managed to come up with to bail out the banks. According to data released in 2011, the central bank had provided roughly $3.3 trillion in liquidity and $9 trillion in short-term loans and other financial arrangements to banks, multinational corporations, and foreign financial institutions following the credit crisis of 2008. Later revelations pushed the sum up to $16 trillion or more.

Bernanke’s reasoning in saying no to the muni bond facility was that he lacked the statutory tools.. The Fed is limited by statute to buying municipal government debt with maturities of six months or less that is directly backed by tax or other assured revenue, a form of debt that makes up less than 2% of the overall muni market.

The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their interests. It is their own private club, and its legal structure keeps all non-members out. A century after the Fed’s creation, a sober look at its history leads to the conclusion that it is a privately controlled institution whose corporate owners use it to direct our entire economy for their own ends, without democratic influence or accountability. Substantial changes are needed to transform the Fed, and these will only come with massive public pressure.

Congress has the power to amend the Fed – just as it did in 1934, 1958 and 2010. For the central bank to satisfy its mandate to promote full employment and to become an institution that serves all the people, not just the 1%, the Fed needs fundamental reform.

http://www.marketoracle.co.uk/Article43468.html

http://zeropointportal.us/fed-save-economy-give-money-people-banks/

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Luxury Home Foreclosures Soar – Up 61% Versus Last Year

During much of the real estate crash, it was said that the high end market was not affected, and even increasing when other demographics were struggling.  Why then now are foreclosures on luxury homes soaring?

As the housing market improves, foreclosure activity has been steadily declining — with one exception: The number of multimillion-dollar homes going into foreclosure has spiked, new research finds.Foreclosure activity on homes worth $5 million surged 61% year over year through October, according to data released Wednesday by RealtyTrac, a real-estate data firm. In sharp contrast, overall foreclosures fell by 23% during the same period. While the number of these high-end foreclosures is relatively small — fewer than 200 homes, compared with 1.2 million properties overall — they may also represent a buying opportunity for high-net-worth home buyers, says Daren Blomquist, vice president at RealtyTrac.

Nikkei Futures Tumble 800 Points As JPY Strengthens And "Beta" Soars

Confirming the stocks-are-just-high-beta-FX meme, Japanese stocks in the Nikkei 225 have collapsed 800 points in the last 2 days as JPY began to strengthen against the USD (on better data bringing taper talk and potential capital outflows as hot money chases something else). Relative to the initial 4 months of Abenomics which saw a 'beta' of 2.3 NKY points per USDJPY pip; the last week's "beta" of 5 Nikkei points per 1 pip in USDJPY, the leverage is starting to get out of hand (with a correlation of 0.965).

From November to March, the Nikkei rallied from 8700 to 13500 and USDJPY from 79 to 100 (approx 2.3x beta)

That beta has done nothing but increase and this week's sell-off is peaking at 5x!!

http://www.zerohedge.com/news/2013-12-05/nikkei-futures-tumble-800-points-jpy-strengthens-and-beta-soars 

Deutsche Bank Exits Commodity Trading, Fires 200

It is amazing what a few short months of intense regulatory scrutiny, a few multi-billion fines, and the occasional janitorial arrest can do to fraudulent bank business lines. First, recall that as we showed a week ago, and as we have been saying for the past five years, banks were recently "found" to manipulate, in a criminal sense, pretty much everything. Then recall that yesterday the European Union lobbed the biggest monetary fine in history against bank cartel behavior, with the guiltiest party, at least based on monetary amounts, being Deutsche Bank. So now that outsized profits as a result of illegal "trading" become virtually impossible to procure, what is a self-respectable criminal enterprise to do? Why shut down all formerly infringing lines of business of course. Which is what Deutsche Bank just did, which announced a few hours ago that it has pulled the plug on its global commodities trading business, cutting 200 jobs in the process (200 jobs that will certainly be able to find a job in a jurisdiction where criminal trading behavior is still not as intensely scrutinized).

Germany's largest bank (whose total notional derivative exposure relative to German GDP has to be seen to be believed), which was one of the top-five financial players in commodities, will cease energy, agriculture, base metals, coal and iron ore trading, it said in a statement. What will DB keep? Drumroll: only precious metals alongside a limited number of financial derivatives traders. Because one always need to be able to sell "paper-backed" gold derivatives in order to keep the price of gold low while the NY Fed keeps procuring the hundreds of tons of physical gold demanded by the Bundesbank. That, and of course, because gold is the only product in the history of banking to have never been manipulated.

Reuters has more:

The cuts are expected to largely fall on its main commodity desks in London and New York.

The move comes as the financial sector's role in commodity trading has been squeezed by lower margins, higher capital requirements, and growing political and regulatory scrutiny of the role of banks in the natural resources supply chain.

DB's justification for the shutdown is quite amusing:

"This move responds to industry-wide regulatory change and will also reduce the complexity of our business... The decision to refocus our commodities business is based on our identification of more attractive ways to deploy our capital and balance sheet resources," said Colin Fan, co-head of Corporate Banking & Securities at Deutsche Bank, in a statement.

Such as mortgage orgination? Just kidding. It's not as if anyone even pretends banks are anything more than just taxpayer-backed hedge funds.

Then again, Deutsche had figured out which way the wind blows as long as a year ago, when the head of global commodities trading David Silbert suddenly picked up and left:

Deutsche Bank was among the first financial firms to try and challenge the long dominance of Goldman Sachs and Morgan Stanley in commodities trading a decade ago, but suffered a series of ups and downs and personnel changes over the years, including the departure of global chief David Silbert a year ago.

Silbert's departure was the first sign that the bank was withdrawing from the one-time billion-dollar business, which had included a substantial U.S. and European power and gas book, a major market-making operation in oil options, and base metals trading.

"Silbert built up Deutsche Bank's commodity group to make it a top five contender in the space of five years and then left rather than pull down the house he built," said George Stein, managing director of New York-based recruiting firm Commodity Talent LLC.

"The destruction of the commodities business at Deutsche Bank is one more sign that the large global banks no longer see commodities as viable," Stein added.

As for everybody else...

The bank announced the decision to staff at a meeting shortly after lunch on Thursday, with around half the 200 traders affectedclearing their desks and leaving immediately, according to a person familiar with the matter.

Supposedly these are the traders at high risk of being subpoenaed and with whom DB wants to cut ties as quickly as possible, so as to be able to claim full ignorance of all their actions (see: every other bank in history).

Finally, DB's loss is someone else's gain.

Not all banks are scaling back in the sector, however. London-headquartered Standard Chartered, which does a lot of its business in emerging markets, said this month it plans to double revenues from its commodities business in the next four years and plans to add 10-20 staff to its existing team of 100 in the next six months.

Global commodity merchants such as Vitol, Glencore and Mercuria, which are not as affected by growing regulation, are also looking to step into the vacuum left by the big U.S. and European financial heavyweights. Asian-Pacific and South American banks, including Australia's Macquarie and Sao Paulo-based BTG Pactual, are also expanding their commodities businesses.

Then again, since these far smaller and non-government backed entities will hardly have the balance sheet to suppress commodity prices either up or down, even as equities trade in Bernanke's lala land, commodities may soon become the only market with some semblance of normalcy.

http://www.zerohedge.com/news/2013-12-05/deutsche-bank-exits-commodity-trading-fires-200