“Market Shock” Coming This Fall: UK Telegraph Sources

By Dominique de Bailleul

“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” an unnamed source at a major European bank told the U.K Telegraph, Friday.

With the fear of, yet, more war—especially with Iran, a likely spark for WWIII —liquidity-trapped central bankers, political squabbling within German and between eurozone members over the fate of the euro, solid evidence of a global economic catastrophe lurking, and a nasty U.S. presidential election between two grotesque candidates nearing, any hopes of consumer spending or capital formation to come to the aid of an insolvent banking system has already been thoroughly discounted in the price of the bank stocks.

And of course, it was the smart money skipping town during the two-year-long phony ‘rebound’, leaving the inevitable ‘act II’ of despair to the retail investor and captured institutionals as the usual bag holders.

“A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way,” according to the Telegraph journalists, Harry Wilson and Philip Aldrick.

Contrary to the paid cheerleaders of U.S. economy, no one is in the mood to commit to anything productive or able to consume the products (if he could) during the most tumultuous times since the Great Depression, leaving the middleman, the banks, with nothing to do.

“The problem is a shortage of liquidity – that is what is causing the problems with the banks.  It feels exactly as it felt in 2008,” a senior London-based banker told the Telegraph.

Whether the problem is a shortage of liquidity or an abundance of banks with an overabundance of bad assets, several very big banks are on the brink of failure—again.  And all the banker insiders know who is who, and who isn’t going to make it unless the money printing and bailouts increase more rapidly—and soon.

This time, the world’s no. 1, 5 and 10 ranked European banks (by assets) are in trouble, with combined assets totaling $7.6 trillion.

“Credit default swaps (CDS’s) on the bonds of Royal Bank of Scotland (no. 10), BNP Paribas (no. 5), Deutsche Bank (no. 1) and Intesa Sanpaolo, among others, flashed warning signals on Wednesday,” stated the Telegraph.

The article goes on to quote that the CDS rates on RBS paper reached record highs, Wednesday, surpassing the spike premium paid during the height of the global financial meltdown of October 2008.

So, ‘act II’ of the global financial crisis is about to begin, just as George Soros had warned.  According to Soros’ SEC 13-F (ending Jun, 30), the billionaire insider reported selling all of his fund’s banking sector shares, and showed his appetite for holding gold increased markedly.

Therefore, the question doesn’t appear to be whether the Fed will be there to save the U.S. banking system (it will), the question is whether the ECB will be allowed to copycat the Fed.  We’ll know on Sept. 12, when the German high court rules on the constitutionality of participating further in eurozone bailouts.

And a further question is: when will the central banks overtly announce more easing?  Will the ECB (assuming Germany somehow gives it the green light) and the Fed wait for something to ‘break’ before acting, or will the central bankers preempt the inevitable collapse?

We’ll find out in September and/or October.  In the meantime, there are always the black and gray swans of war (or something out of the blue) to further complicate any expectation of a direction to these markets.

Source: UK Telegraph

MF Global: Beta Test For Bank Holiday & Martial Law

By Dominique de Kevelioc de Bailleul

On the heals of the Department of Justice’s determination of no wrongdoing in the case of Goldman Sachs’ contribution to the kickoff of the financial meltdown in 2008, writer and researcher Susanne Posel tells the SGT Report that the bizarre overnight bankruptcy of MF Global of Oct. 31, 2011, was a beta test for the final, grand theft planned by the banking cartel.

Nearly 10 months later, no charges have been levied against the mastermind of the theft of $1.2 billion, former CEO of Goldman Sachs Jon Corzine.  No charges appear to be forthcoming, either.

The Corzine incident was a beta test implemented by the banking cartel to measure the extent of public and Congressional reaction to overt theft of customer funds, according to Posel.

Through a Deutche Bank informant, she says the banks intend to steal as much of clients money as possible to cover bad bets made following the enactment of the Gramm–Leach–Bliley Act (GLB) of 1999, a piece of legislation passed by Congress which rendered the separation between commercial banks and investment banks covered under the  Glass-Steagall Act of 1932 null and void.

GLB was spearheaded by the then-Secretary of Treasury and former Goldman Sachs CEO Robert Rubin during the Clinton administration.

“They know the collapse is coming,” says Posel. “So they are preparing for it.”

Posel says the collapse of the financial system of 2008, with the abrupt bankruptcy of Lehman Brothers, sparked a currency war between the European Union and the United States over which currency would be left standing and who would hold the underlying assets or tax base of citizens from which to tap revenue.

“In 2008, we should have collapsed,” says Posel.  “We should have gone the way of Greece.  The only reason why we didn’t was because the global elite and banking cartels put it off on the eurozone and [to] collapse the eurozone in order to gain sovereign debt.”

That additional sovereign debt would then compel governments responsible for paying the debt to raise taxes upon its citizens, cut recipient benefits and confiscate property in a government-sanctioned transfer of underlying real wealth to bankers away from the citizenry.  In that way, not repaying bankers via taxes levied by the middleman of government now becomes a criminal offense, not a civil matter between bank and customer.

In the case of Europe, Greece is the weak link.  Greece was sold mortgage-back securities (MBS) from American broker-dealers, which were then attacked through wholesale selling of the securities, creating the kickoff to the euro crisis that began in March 2009.

Hedge fund manager John Paulson was possibly implicated as the short-seller of the mortgage-back securities held by Greece in a hearing between Congress and the ‘Fab Four’ traders at Goldman Sachs.  During testimony, Paulson was revealed as the man who sat with other Goldman Sachs employees when a handpicked basket of overpriced mortgage-back securities was created, including those MBS’s sold to Greece.  Paulson shorted the basket of MBS’s and profited approximately $3.7 billion.

No criminal charges have been filed against Paulson, the employees of Goldman Sachs who created the basket of securities, or any of Goldman’s Fab Four.

But there is more, according to Posel.  China needs assurances that it gets paid, as well.

“They’re extracting wealth so that the only thing the governments will have left to give them [Chinese] is the actual land that they [Americans] own,” says Posel.

Goldman Sachs was first to deploy the banker scheme of extracting funds from public coffers.  In addition to paying interest on $1.1 trillion of U.S. Treasuries held by the Chinese, the banking system and the U.S. dollar were saved through pushing the problem of global insolvency onto the Eurozone nations.

“In 2008, when Hank Paulson went to the Congress and said that they had to bail out the banks for $700 billion or martial law would be declared, they weren’t lying,” says Posel.

Goldman Sachs CEO Henry Paulson’s extortion of a $700 billion TARP bill from Congress with the threat of martial law was essentially a classic bait-and-switch scheme.  Americans were told that the unprecedented appropriation was earmarked for a jobs and economic stimulus program.  Instead, the money was redirected to the “too big to fail” banks, with subsequent hearings between Congress and Federal Reserve Chairman Ben Bernanke yielding no disclosure as to which banks received the money under TARP.

In Congressional testimony, Bernanke stated he will not disclose the recipients of TARP, unless Congress orders him to do so, because to disclose the recipients of the appropriated funds may trigger a bank run on those institutions.  No such order from Congress has been passed.

And the mechanism for foreclosing properties that were backed by mortgage securities was immediately deployed, as in the ubiquitous ‘robo-signing’ incidences that appeared months later.

The final coup planned by the bankers involves a bit of deception, a false-flag attack blamed on China, Russia or Iran, maybe, in which the Federal Reserve will initiate a ‘bank holiday’ on a Friday due to a computer ‘virus’ which allegedly threatens the banking system, according to Posel.

Posel’s informant told her that the banks would open on the following Monday.  At that time, declaration of martial law by the U.S. president comes next, presumably as a result of massive civil unrest due to a dollar devaluation or another event blamed on the perpetrator of the virus.  But the overarching reason for martial law is to protect the banks from an angry public, according to her.

“If you hear about this in the news, you have 72 hours to do whatever you plan to do before the collapse,” says Posel.

Lehman-like Meltdown Looms Large

Greece may be a small European nation with small financial problems when compared to a backdrop of a quadrillion dollars of accumulated global debt (according to the Bank of International Settlements), but Greece has also become the litmus test for the resolve of political leaders to fix the problem with the euro and its dependent counter-parties worldwide.

As the pressure from the IMF on the Greek president intensifies while the crowds on the streets of Athens grow in size and violence, traders have been monitoring sovereign debt interest rates for signs of contagion amid the crisis in Greece.

Signs have appeared in the European bond market, whereas the yields on Greek, Irish and Portuguese 10-year sovereign debt have all surpassed the 10% print, with all three moving higher every week to levels which are now higher than the lofty rates of March 2010 when the Greek crisis emerged in earnest.

What everyone seems to fear is another Lehman-like meltdown.  And for good reasons, too.  But this time crisis could be much worse.  A major financial institution failing is one thing.  It’s together another story if the ones doing the bailing out need bailing out.  And as the crisis deepens, the loan amounts grow while the number of pockets left to guarantee the additional debt grows smaller and smaller.

Germany and France are financial backbones of the EU, and both countries’ politicians feel pressure from those determined to keep the euro together as well as from constituents who want nothing to do with bailing out “lazy” Greeks.

Asked if the markets need to fear a Greek debt default, Belgian finance minister Didier Reynders told Belgium’s RTL Radio, “We can indeed fear it because that’s what we experienced in 2008.”

“Remember — the collapse of an American bank, Lehman Brothers, Reynders continued.  “Everyone said ‘OK, a bank’s gone under.’ But that triggered a collapse in confidence right through the financial sector and banks could no longer borrow money amongst themselves. And we saw what that meant.”

Reynders warned of a repeat of another contagion if Greece, the EU, and the IMF cannot come to a deal on tranche number two of the original Greek debt restructuring agreement reached last year—which Greece had failed to achieve key financial metrics stipulated within the initial terms for a second tranche.

“If we turn our backs on Greece, it won’t be able to repay its debts to banks and therefore savers in our country (and savers, globally),” he said.  “The domino effect will begin and there will be consequences in Ireland, in Portugal and perhaps even here (in Belgium).

A collapse of Greece and the contagion that is sure to follow could happen “tomorrow,” bullion expert Jim Sinclair told Eric King of King World News.

“It’s just that bad . . . this thing can blow at any time,” Sinclair continued.  “Wiemar Republic had no more problems than we have right now.”

The saga in Europe continues next week as German Chancellor Angela Merkel and French President Nicolas Sarkozy meet today before they head off to an EU summit scheduled for next week.  Merkel wants one-third of the bailout package to come from banks, while Sarkozy’s French banks seeks a resolution as well after downgrades of French banks were issued by credit rating agencies this week.