Top 10 Signs That Reveal Mounting Panic In The World Banking System

Dear Depositor:

We don’t want to cause you unnecessary stress or worry, but it might be prudent to pay attention to a series of unusual news reports recently emanating from the banking world.  Viewed independently, each event might be rather insignificant.

However, when examined collectively, these events paint a very dire warning for the safety of bank deposits everywhere.  Naturally, most all of these have received little to no coverage by the mainstream media.  That is to be expected.

The MSM’s job one is to always obfuscate any potentially dangerous news that has a chance of frightening investors or depositors.  After all, the goal of the world banking cartel/equities Ponzi scheme is to keep depositors and investors relaxed and passive in their comfort zones until the complete collapse of their positions is unavoidable.

Here is a timeline of these very disturbing banking events that have occurred since last fall:

1 – October 3, 2013:  US banks fearing default stock up on cash.  The Financial Times reported today that two of the country’s biggest banks are putting into place a “play book” as preparation for a possible banking panic.  A senior banking executive reported that his bank has delivered 20 – 30% more cash than usual in cash panicked customers try to withdraw cash in mass.

2 – October 12, 2013:  Food stamp card malfunction causes riots at Walmart stores in Louisiana.  The technical problem that eliminated spending limits on food stamp debit cards sets off a bizarre shopping frenzy at Walmart stores in Louisiana.

3 – November 2 – 8, 2013:  A reputed computer glitch wipes out ATMs and online banking on a massive scale.  Major shutdowns of online banking occurred in Alabama, Arizona, and California and affected such banks as Wells Fargo, Chase, Bank of America, Compass, Chase Fairwinds Credit Union, American Express, and others.  Tellers reportedly had a hard time with even simple transactions such as check cashing and checking balances.  Rumors circulated on the internet that the banks are using this temporary shutdown as a beta test for a future full bank “holiday” closure.

4 – November 17, 2013:  JP Morgan Chase halts international wire transfers from the US for many small businesses.  Also, Chase alerted its small business customers that the total cash activity (the combined total of cash deposits and withdrawals made at Chase branches and ATMs, including money orders and cashier’s checks) is hereby limited to a total of $50,000 per business customer per billing cycle.

5 – January 16, 2014:  Reports from Hong Kong indicate another HSBC scandal:  an $80B capitalization shortfall.  Forensic Asia, a Hong Kong based research firm, issued a “sell recommendation” on HSBC because of “questionable assets” on its balance sheet.  The London Telegraph reported Forensic Asia’s warning that HSBC “had between $63.6B and $92.3B of ‘questionable assets’ on its balance sheet, ranging from loan loss reserves and accrued interest to deferred taxes.”

6 – January 24, 2014:  HSBC imposes restrictions on cash withdrawals in Britain.  Reports circulated that British HSBC customers have been suddenly refused cash withdrawals as low as 3,000 pounds.  HSBC admitted that it did not inform its customers of the abrupt policy change.  HSBC officers putatively suggested that it is “only for the protection of its customers.”

7  China’s Banking Problems are Escalating Fast.  Beijing based ICBC, the world’s largest bank by assets, announced it will not take full responsibility for a trust investment equivalent to US $500 million that may go bust.  ICBC, one of China’s “Big Four” banks, may be linked to a loan default very similar to the type that precipitated the Lehman Brothers crisis in 2007.

In fact, this may be only the tip of the iceberg that has an outside chance of bringing down the entire Chinese banking world.  This ICBC “trust investment” is actually one of a vast array of loans that comprises China’s secret shadow banking system.  It is estimated that China’s total shadow banking debt is now in excess of $4.7 trillion – a staggering figure for any market, let alone an unregulated one.  It is believed that much of this secret lending system is fraught with high interest, high risk loans that contain a strong possibility of default.  Any major failure in this market can only have catastrophic outcomes, for not only markets in China, but for all types of markets worldwide.

8 – January 28, 2014:  One of Russia’s top two hundred lenders, “My Bank,” introduces a one week complete ban on cash withdrawals.  The reputed reason is customers wishing to exit the declining ruble in exchange for other currencies.

9 – February 17, 2014:  Chase imposes imposes new capital controls on cash deposits.  Chase alerted customers that they must now present a valid ID when making any cash deposit and that the bank will now only accept cash deposits in the customer’s own account.  As of February 1, 2014, Chase customers are asked for ID for cash deposits for their account while cash deposits for another customer’s account will be completely banned after March 3, 2014.

Some analysts speculated that such measures are a sign that banks are getting ready for economic turmoil and possible bank runs.

10 – February 20, 2014:  Royal Bank of Scotland group announces lay-offs of 30,000 employees in coming months.  The Financial Times reported that Britain’s largest state owned lender will shrink its work force by 30,000 and also pull out of “dozens of the 38 countries” in which it does business.  As initially reported in Bloomberg (but later revised for online posting), this dramatic pull-back by RBS (which is 80% government owned), was strongly encouraged by British Prime Minister David Cameron, who undoubtedly has become concerned by the bank’s overextension in non-British markets.  (A special thanks to David Lenihan of Wavesync Research LLC, for the tip on this story)

http://www.marketoracle.co.uk/Article44590.html

Ukrainians Withdrew 7% Of All Deposits In Two Days

Well that escalated quickly. It seems the ouster of Yanukovych, heralded by so many in the West as a positive, has done nothing to quell the fear of further economic collapse in Ukraine:

• *UKRAINIANS WITHDREW AS MUCH AS 7% OF DEPOSITS FEB. 18-20: KUBIV
• *DEPOSIT WITHDRAWALS STILL HIGH IN THE EAST, KUBIV SAYS

This is around a 30 billion Hyrvnia loss (over $3 billion) in just 2 days for the banks and the new central bank chief is considering "stabilizing loans" to help banks deal with the liquidity crisis (though Ukraine's reserves stand at a mere $15 billion).

Reserves are in freefall... and will only get worse if the bank run continues...

http://www.zerohedge.com/news/2014-02-25/bank-run-full-frontal-ukrainians-withdrew-7-all-deposits-two-days 

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ATMs limiting cash in Australia

With iron-ore stockpiles at record highs in China amid the escalating cash-for-steel financing debacles, one can only imagine the squeeze that is about to occur on the banks of a nation that is almost entirely economically dependent on said iron-ore mining production... which made us think when we saw this sign "justifying" holding low cash amounts in an Aussie bank ATM...  from Zero Hedge  http://www.zerohedge.com/news/2014-02-23/seen-atm-western-australia 

Banks struggle to fill staff gaps in forex rigging row

Chief dealers and traders at major Forex banks have been fired and otherwise left their jobs, leaving a void for banks to fill:

LONDON: A void is appearing in the upper reaches of the world's biggest and most powerful financial market as banks struggle to replace currency traders suspended or fired during a global investigation into allegations of foreign exchange rate-rigging. 
Recruitment firms and sources at some of the banks at the centre of the probe say there is huge reluctance to hire externally because replacements could be tainted by allegations of collusion themselves. 
That leaves managers wit .. 
Read more at:http://economictimes.indiatimes.com/articleshow/30901313.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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BOE Staff Said to Have Condoned Currency Traders’ Conduct

Bank of England officials told currency traders it wasn’t improper to share impending customer orders with counterparts at other firms, a practice at the heart of a widening probe into alleged market manipulation, according to a person who has seen notes turned over to regulators.

A senior trader gave his notes from a private April 2012 meeting of currency dealers and two central bank staff members to the Financial Conduct Authority about six weeks ago because of mounting media coverage of the investigation, said the person, who asked not to be named while probes are under way.

Traders representing some of the world’s biggest banks told officials at the meeting that they shared information about aggregate orders before currency benchmarks were set, three people with knowledge of the discussion said. The officials said there wasn’t a policy on such communications and that banks should make their own rules, according to the people. The notes could drag the U.K. central bank into another market-rigging scandal two years after it was criticized by lawmakers for failing to act on warnings that Libor was vulnerable to abuse.

If traders can show “they made Bank of England officials aware of practices in the FX market some time ago, then the bank will be at risk of being characterized as having endorsed, by its silence and inaction, the very practices which are now under investigation,” said Simon Hart, a lawyer at RPC LLP in London.

Photographer: Chris Ratcliffe/Bloomberg

Visitors walk up a staircase as a logo sits on a sign in the reception area of the... Read More

‘Brief Discussion’

A spokeswoman for the Bank of England declined to comment about the 2012 meeting beyond what was contained in a summary provided to Bloomberg News last month. Those notes included a reference to “a brief discussion on extra levels of compliance that many bank trading desks were subject to when managing client risks around the main set-piece benchmark fixings.” No further details of the discussion were provided.

“The Bank of England has already released its record” of the meeting, the central bank said in a statement today. “We are continuing to support the FCA in its investigations.”

The central bank had no responsibility for regulating U.K. lenders until April 2013. Chris Hamilton, a spokesman for the FCA, which supervises British markets, declined to comment.

“Allegations that banks may have been rigging the forex market are extremely serious, particularly for firms but also for regulators who had been telling Parliament that banking standards were improving,”Andrew Tyrie, the British lawmaker who led an inquiry into practices in the banking industry following the Libor scandal, said in a statement today.

Suspended Traders

Dealers at the April 2012 meeting with Martin Mallett, the Bank of England’s chief currency dealer, and James O’Connor, who works in its foreign-exchange division, were told not to record the discussion or take notes, one of the people said. One trader wrote down what was said soon after leaving because of concerns spawned by investigations of attempted manipulation of the London interbank offered rate, or Libor, the person said.

Two traders at the meeting -- Citigroup Inc. (C)’s Rohan Ramchandani and UBS AG (UBSN)’s Niall O’Riordan -- are among at least 20 employees of global banks who have been fired, suspended or put on leave since Bloomberg News first reported in June that dealers said they shared information about client orders to manipulate benchmark rates used in the $5 trillion-a-day currency market, the world’s biggest.

No firms or traders have been accused of wrongdoing by government authorities. Mallett and O’Connor didn’t respond to e-mails or return phone calls seeking comment. Ramchandani, who was fired, said he couldn’t comment. O’Riordan, who was suspended, didn’t respond to a message left on his mobile phone.

‘Bandits’ Club’

At the center of the inquiries are instant-message groups such as “The Cartel” and “The Bandits’ Club.” Their members, which included Ramchandani, exchanged information on client orders and agreed how to trade at the fix, the one-minute window when benchmark rates are set, five people with knowledge of the probes said in December.

The U.S. Justice Department, the Federal Reserve, the Swiss Competition Commission and the European Commission are among more than a dozen authorities on three continents investigating currency-trading practices. New York’s top financial regulator, Benjamin Lawsky, has asked more than a dozen banks, including Goldman Sachs Group Inc. (GS) and Deutsche Bank AG (DBK), for documents related to foreign-exchange trading, Bloomberg News reported this week, citing a person familiar with the matter. Spokesmen for those two banks declined to comment.

Sharing Positions

The 2012 meeting was one of three held that year by the chief dealers’ subgroup of the Bank of England’s Foreign Exchange Joint Standing Committee. The group was set up in 2005 to bring central bank officials together with spot traders from the world’s largest banks to discuss market issues.

The April session, held at BNP Paribas SA (BNP)’s London office on Harewood Avenue, was led by Mallett, according to the Bank of England summary. In addition to O’Connor, Ramchandani and O’Riordan, more than half a dozen traders from lenders including Royal Bank of Scotland Group Plc were in attendance, two of the people with knowledge of the meeting said.

During a 15-minute conversation on currency benchmarks, traders said they used chat rooms to match buyers and sellers ahead of the fix to avoid trading at one of the most volatile periods of the day, the people said. That required them to share aggregate positions. They instigated the discussion because they were concerned that similar practices were under scrutiny at the time in the Libor investigations, the people said.

Pooling Information

The Bank of England officials said they viewed the practices as positive to reduce market volatility and wouldn’t take the matter to the standing committee, according to the people with knowledge of the meeting. That body included a representative from the Financial Services Authority, the FCA’s predecessor, according to central bank records.

By pooling information on client orders, current and former traders interviewed by Bloomberg News have said they could gain an impression of probable moves in currency markets, knowledge they said they sometimes used to place their own bets before the benchmark WM/Reuters rates are set at the 4 p.m. London close.

Spokesmen for Paris-based BNP, New York-based Citigroup, Edinburgh-based RBS and Zurich-based UBS declined to comment.

The Bank of England, then under the leadership of Mervyn King, was criticized by lawmakers in July 2012 for failing to act on warnings about Libor, the benchmark interest rate used for $300 trillion of securities. While the U.K. central bank and the Federal Reserve Bank of New York discussed flaws in the rate-setting process for Libor in 2008, the benchmark fell outside their jurisdiction -- a conclusion the U.K. Parliament’s Treasury Select Committee agreed with in a 2012 report. Rate-rigging continued at several of the largest banks for years, according to findings by the committee.

“The Libor scandal demonstrated regulators need to be extra vigilant about how key benchmarks are set,” said Pat McFadden, a member of Parliament who sits on the Treasury Select Committee. “The Bank of England has taken over hugely increased responsibilities, but that system will only work if it shows a strong appetite for investigating any suggestion of improper market behavior.”

To contact the reporters on this story: Suzi Ring in London at sring5@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net; Liam Vaughan in London at lvaughan6@bloomberg.net

To contact the editor responsible for this story: Heather Smith at hsmith26@bloomberg.net

http://www.bloomberg.com/news/2014-02-07/boe-staff-said-to-have-condoned-currency-traders-conduct.html

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Currency Market Unsettled by Trader Exits on Lawsky Probe

The foreign-exchange trading business was in upheaval across Wall Street as senior executives resigned and others were fired amid an expanding probe of possible currency manipulation.

Benjamin Lawsky, superintendent of New York’s Department of Financial Services, asked more than a dozen firms including Deutsche Bank AG (DB), Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C) for documents on their currency-trading practices, said a person with knowledge of the matter. Deutsche Bank, the top foreign-exchange trader, fired four dealers after an internal probe, people with knowledge of the move said. Goldman Sachs lost two partners while Citigroup said its foreign-exchange chief will leave in March.

Lawsky’s investigation is at least the 12th opened by authorities in Europe, the U.S. and Asia since Bloomberg News reported that traders at the world’s largest banks colluded to manipulate the benchmark WM/Reuters rates. Even staff who aren’t being probed are reassessing career plans as the scandal forces firms to change fundamental practices as revenue falls.

“Currency traders are now sitting in an unprecedented and unwelcome spotlight,” said John Purcell, chief executive officer of Purcell & Co., a London-based executive-search firm. “Regulatory pressures, scandals and attendant reputational issues are making it a much more challenging environment.”

Deutsche Bank

At least 16 traders have been suspended or put on leave amid the global probe. Citigroup last month fired European spot trading chief Rohan Ramchandani.

Deutsche Bank dismissed three New York-based traders following an internal investigation, a person familiar with the matter said yesterday. Diego Moraiz, who dealt in Latin American currencies, Robert Wallden, who was questioned by the U.S. Federal Bureauof Investigation last year about his electronic communications concerning foreign-exchange markets, and Christopher Fahy were fired for inappropriate communications, according to the person.

The bank also fired Ezequiel Starobinsky, a trader based in Buenos Aires, Argentina, a person with knowledge of the matter said. A phone call to a number for Starobinsky wasn’t answered.

“Deutsche Bank has received requests for information from regulatory authorities that are investigating trading in the foreign-exchange market,” Renee Calabro, a spokeswoman for the company, said in an e-mail. “The bank is cooperating with those investigations and will take disciplinary action with regards to individuals if merited.”

Own Volition

Others are leaving the industry on their own volition. Citigroup, the third-largest U.S. bank, said foreign-exchange head Anil Prasad will depart the bank to “pursue other interests,” according to an internal memo. His exit isn’t related to the industry probe, said a person with knowledge of the situation.

Steven Cho and Leland Lim, two partners in Goldman Sachs’s currency-trading business, have also left, a person briefed on the matter said. Cho was global head of spot and forward trading of G-10 currencies in New York, while Lim was co-head of macro trading, which includes interest rates and currencies for Asia, excluding Japan, said the person. Cho and Lim were both named partners in 2010.

Prasad, Cho and Lim haven’t been accused of any wrongdoing.

Wall Street firms often see departures in February and March after awarding year-end bonuses, which can account for the majority of an employee’s pay. Some banks also make cuts in their senior ranks around this time to make room for new hires and internal promotions.

Lawsky Probe

Lawsky also requested information from Credit Suisse Group AG and Standard Chartered (STAN) Plc. Spokesmen at those two banks, Citigroup and Goldman Sachs declined to comment on the departures or Lawsky’s investigation.

Lawsky, who has authority over financial institutions chartered in his state, including several non-U.S. banks that do business in the country, asked for traders’ e-mails and instant messages to review whether they manipulated currency rates, according to the person. While he isn’t authorized to bring criminal charges, he can make referrals to prosecutors.

“You have a law enforcer with zeal who no doubt has numerous weapons, and he’s prepared to deploy them on behalf of the law and on behalf of consumers,” said Bartlett Naylor, a lobbyist for Washington-based consumer group Public Citizen. “The record shows that’s missing in so many other places including the federal level.”

Diminished Fluctuations

In August 2012, Lawsky garnered attention when he made public statements about possibly revokingStandard Chartered’s banking license over the firm’s violations of U.S. sanctions involving dollar transfers to Iranian clients.

The investigations come as diminished price fluctuations trigger a drop in trading revenue at the biggest banks. UBS AG (UBSN), Switzerland’s largest bank, said foreign-exchange revenue declined in the fourth quarter in part because of “client risk appetite,” according to a statement.

Volumes in the biggest financial market fell to $4.87 trillion in December compared with $5.7 trillion in June, according to the latest data from CLS Bank, which operates the world’s largest foreign-exchange settlement system.

Deutsche Bank’s Currency Volatility Index, which measures the market’s expectation of future price swings for nine currency pairs, slumped to as low as 7.41 percent on Jan. 13 from 10.6 percent on June 28. That’s a 30 percent drop. The measure was as high as 15.8 percent in September 2011.

Overhauling Rules

Germany is pushing firms to shift currency trading to regulated exchanges, Deputy Finance Minister Michael Meister said.

Banks are also overhauling rules governing how traders execute client orders and communicate before key benchmarks are set. Goldman Sachs, Royal Bank of Scotland Group Plc, UBS, JPMorgan Chase & Co. and Citigroup have all banned employees from taking part in chat rooms involving other banks. The move ended conversations used by traders across firms to agree on transactions, share gossip and exchange tips on business flows.

“The foreign-exchange landscape is rapidly changing, with increased automation and financial-services industry regulation,” said Andy Naranjo, finance professor at the University of Florida in Gainesville who specializes in foreign-exchange markets. “Not surprisingly, effective FX traders are talented people who choose to re-utilize their skills in other capital market areas with more upside potential.”

Wall Street foreign-exchange dealers will see a 2 percent rise in compensation in 2013, compared with a 19 percent increase for equities salesmen and traders, according to a November report by recruitment firm Options Group Inc.

“Currencies aren’t the flavor of the month anymore,” said Jason Kennedy, chief executive officer of London-based recruitment firm Kennedy Group. “It’s not what it used to be in terms of pay, career progression and management.”

http://www.bloomberg.com/news/2014-02-05/currency-market-unsettled-by-trader-exits-as-lawsky-opens-probe.html

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Capital controls spread to HSBC - Cash withdrawals restricted, questioned

First Chase restricted cash withdrawals on business accounts and limited international wire payments, calling it 'derisking' - now, HSBC is questioning customers 'why' they need to withdraw cash:

Following research last week suggesting that HSBC has a major capital shortfall [3], the fact that several farmer's co-ops were unable to pay back depositors [4] in China, and, of course, the liquidity crisis in China itself [5], news from The BBC [6] that HSBC is imposing restrictions on large cash withdrawals raising a number of red flags. The BBC reports [6] that some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it. HSBC admitted it has not informed customers of the change in policy, which was implemented in November for their own good: "We ask our customers about the purpose of large cash withdrawals when they are unusual... the reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime." As one customer responded: "you shouldn't have to explain to your bank why you want that money. It's not theirs, it's yours."

Via The BBC, [6]

Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt.

Listeners have told Radio 4's Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000.

HSBC admitted it has not informed customers of the change in policy, which was implemented in November.

The bank says it has now changed its guidance to staff.

"When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved."

Mr Cotton says the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have £5,000?' They said no. I said, 'Can I have £4,000?' They said no. And then I wrote one out for £3,000 and they said, 'OK, we'll give you that.' "

He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

Mr Cotton cannot understand HSBC's attitude: "I've been banking in that bank for 28 years. They all know me in there. You shouldn't have to explain to your bank why you want that money. It's not theirs, it's yours."

HSBC has said that following customer feedback, it was changing its policy: "We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for."

"The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologise to any customer who has been given incorrect information and inconvenienced."

But Eric Leenders, head of retail at the British Bankers Association, said banks were sensible to ask questions of their customers: "I can understand it's frustrating for customers. But if you are making the occasional large cash withdrawal, the bank wants to make sure it's the right way to make the payment."

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Turkish Lira leads the crash of emerging currencies

Daily Chart USD/TRY

A series of political scandals and accusations of mismanagement in some of the world's major developing economies triggered turmoil on international stock exchanges on Friday.

The FTSE 100 fell more than 100 points, or 1.6%, and the US Dow Jonesdropped 1.2% as traders reacted to concerns that Argentina, Turkey, South Africa and several vulnerable Central American nations might be on the brink of a currency crisis. Political instability in Ukraine and the nose-diving Venezuelan economy added to the nervous atmosphere on exchanges, which have spent the last few weeks galloping ahead on the back of stronger growth forecasts in the US, UK and Japan.

Central banks waded into the markets in an effort to stabilise currenciesthat were rapidly depreciating in an emerging markets selloff.

In the wake of the collapse of the Argentine peso, which kickstarted the latest wave of selling, the Turkish lira hit record lows despite spending an estimated £1bn to prop up the currency's value during the day. The rouble and the rand languished at levels not seen since the 2008-09 financial crisis.  http://www.theguardian.com/business/2014/jan/24/emerging-market-currency-chaos-stock-markets 

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Actual unemployment is 37.2%, 'misery index' worst in 40 years

Many know that the unemployment rate is far greater than the 7% or so reported officially.  But now a major Wall Street adviser is admitting the number is closer to 40%.  It doesn't sound so far off, with reports of +/- 100 Million 'not working' people and about 131 Million employed.  The 7% figure really comes down to how you define 'unemployed' - for example many seniors are now looking for work because their fixed incomes are not covering their bills.  Those above 65 are not counted, even though now many of them are struggling to find work.

Don't believe the happy talk coming out of the White House, Federal Reserve and Treasury Department when it comes to the realunemployment rate and the true “Misery Index.” Because, according to an influential Wall Street advisor, the figures are a fraud.

In a memo to clients provided to Secrets, David John Marotta calculates the actual unemployment rate of those not working at a sky-high 37.2 percent, not the 6.7 percent advertised by the Fed, and the Misery Index at over 14, not the 8 claimed by the government.

Marotta, who recently advised those worried about an imploding economy to get a gun, said that the government isn't being honest in how it calculates those out of the workforce or inflation, the two numbers used to get the Misery Index figure.

“The unemployment rate only describes people who are currently working or looking for work,” he said. That leaves out a ton more.
“Unemployment in its truest definition, meaning the portion of people who do not have any job, is 37.2 percent. This number obviously includes some people who are not or never plan to seek employment. But it does describe how many people are not able to, do not want to or cannot find a way to work. Policies that remove the barriers to employment, thus decreasing this number, are obviously beneficial,” he and colleague Megan Russell in their new investors note from their offices in Charlottesville, Va.
They added that “officially-reported unemployment numbers decrease when enough time passes to discourage the unemployed from looking for work. A decrease is not necessarily beneficial; an increase is clearly detrimental.”
Then there is the Misery Index, which is a calculation based in inflation and unemployment, both numbers the duo say are underscored by the government. He said that the Index doesn’t properly calculate how Uncle Sam is propping up the economy with bond purchases and other actions.
“These tricks, along with a host of other dubious accounting schemes, underreport inflation by about 3 percent,” they wrote, adding that the official inflation rate is just 1.24 percent.

“Today, the Misery Index would be 7.54 using official numbers,” they wrote. But if calculations tabulating the full national unemployment including discouraged workers, which is 10.2 percent, and the historical method of calculating inflation, which is now 4.5 percent, ‘the current misery index is closer to 14.7, worse even than during the Ford administration.” 

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EES: Binary Options for MT4

Elite E Services announces a project to develop the world's first fully automated Binary Options Expert Advisor for trading Forex Binary Options in Meta Trader 4.  The website for the project is http://binaryoptions-mt4.com.  Also, brokers who offer this have been added to Open Forex Account, such as Core Liquidity Markets and Direct FX.  Others will be added soon.  Only a select group of brokers offer this plugin for MT4.

The Binary Options Trader (BOT) system will be an Expert Advisor, not much different than common Forex Expert Advisors.  The difference between a Binary Options EA and a spot Forex EA is the symbols traded, which have different trading rules.

Non US Warning
Currently, there is no US broker who is offering Binary Options on MT4.

For Brokers
If you are a Meta Trader 4 broker that is interested in offering Binary Options to your customers, please contact Elite E Services by clicking here.

Custom Programming
Elite E Services can convert your existing Expert Advisor to trade on the Binary Options symbols for MT4.  If you are interested in this, please contact Elite E Services.  Generally the cost is about $75 - $200 to do a conversion, but in order to make a proper quote, we need to see the strategy and all related files (includes, indicators, etc.)

Federal Reserve Said to Probe Banks Over Forex Fixing

The Federal Reserve is investigating whether traders at the world’s biggest banks rigged benchmark currency rates, raising the risk that firms will be penalized for lax controls as regulators look for wrongdoing.

The Fed, which supervises U.S. bank holding companies, is among authorities from London to Washington probing whether traders shared information that may have let them manipulate prices in the $5.3 trillion-a-day foreign-exchange market to maximize their profits, said a person with direct knowledge of the matter, asking not to be named because it’s confidential.

“The Fed has discretion whether to and how much to fine the banks if deficient controls or lack of supervision resulted in traders at these banks manipulating currency rates,” said Jacob S. Frenkel, a former federal prosecutor and now a lawyer at Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland.

The Fed punished firms for internal-control lapses last year as it worked with state and federal authorities on cases involving Iranian sanctions and botched derivatives bets. The foreign-exchange inquiry looks at benchmark WM/Reuters rates used by companies and investors around the world.

Those rates are determined by trades executed in a minute-long period called “the fix” at 4 p.m. in London each day. By concentrating orders in the moments before and during the 60-second window, traders can push the rate up or down, a process known in the industry as “banging the close.”

‘The Cartel’

Bloomberg News reported in June that traders at banks have been manipulating spot foreign-exchange rates for at least a decade, affecting the value of funds and derivatives. Britain’s Financial Conduct Authority, the Swiss Competition Commission and the U.S. Justice Department also are investigating.

At least a dozen banks have been contacted by authorities, and at least 12 currency traders have been suspended or put on leave. Companies including Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc have announced their own internal reviews of the matter.

Citigroup said last week it fired Rohan Ramchandani, who was head of European spot trading. Ramchandani was part of a message group other traders in the industry referred to as “The Cartel,” which is under investigation. He had been on leave from the New York-based firm for almost three months. Ramchandani didn’t respond to messages left on his mobile telephone, and his lawyer didn’t return a call to his office.

Potential Risks

Fed supervision focuses on potential risks to banks and assesses a firm’s ability to “identify, measure, monitor and control these risks,” according to the central bank’s website.

The regulator examines banks for weaknesses that could affect their safety and soundness or violate laws. If lapses are found, it can send a report to the company, issue an order, impose fines, remove officers or directors and bar them from the industry. Its oversight can include international operations of U.S. banks and the U.S. operations of foreign banks.

The Fed fined JPMorgan Chase & Co., the nation’s largest lender by assets, $200 million last year after a U.K. trader known as the London Whale for his outsized bets lost more than $6.2 billion on botched derivatives transactions. The regulator cited deficiencies in the New York-based company’s risk management and internal controls. JPMorgan paid more than $1 billion in fines tied to the trades, including settlements with the Commodity Futures Trading Commission, the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the U.K.’s Financial Conduct Authority.

Libor, ISDAfix

Other recent Fed enforcement actions include a $50 million penalty last month against RBS, which is based in Edinburgh. The Fed faulted the firm for inadequate risk management and legal-review policies that are needed to prevent transactions with countries subject to U.S. economic sanctions.

Authorities are looking for manipulation in a widening list of benchmark financial rates, including the London interbank offered rate, or Libor, and ISDAfix, used to determine the value of interest-rate derivatives.

“Because foreign-exchange regulation is largely nonexistent, the task falls to the Fed to use its regulatory powers to ensure that the banks address all controls associated with currency trading,” Frenkel said.

November Meeting

Foreign-exchange dealers from the world’s biggest banks told the Federal Reserve Bank of New York the global probe into manipulation of currency rates could prompt an overhaul of the way they handle customer orders, minutes from the Nov. 13 meeting released by the central bank show.

Currency chiefs from banks including JPMorgan, London-based Barclays and Citigroup met with six officials from the New York Fed at a meeting of the Foreign Exchange Committee -- an industry group sponsored by the New York Fed -- according to minutes released by the group.

“Private sector members suggested that any investigations and/or supervisory activity related to this subject could eventually result in recommended changes to best practice guidance,” according to the minutes from the meeting, which was hosted by JPMorgan.

http://www.bloomberg.com/news/2014-01-13/federal-reserve-said-to-probe-banks-over-forex-fixing.html 

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.”