99.7%

If ever there was a "must read" financial piece, it is this one: http://www.zerohedge.com/article/fitch-financial-companies-hold-997-all-derivative-contracts.

The article begins as follows: "Fitch has released a comprehensive study on derivatives held by various corporations and has come out with some disturbing results: as Zero Hedge's recent disclosure of data from the Office of the Comptroller of the Currency confirmed, the bulk of the derivative risk is concentrated not merely in the "financial company" category (99.7%) but in a subset of just five companies, which account for an "overwhelming majority" of derivative assets and liabilities.

The companies in question (Total Notional Derivatives: Assets & Liabilities, $ in Trillions)

• JP Morgan:$81.7;
• Bank of America:$80.0;
• Citigroup:$31.5;
• Morgan Stanley:$39.3, and of course
• Goldman Sachs: $47.8 (this is an OCC estimate: Goldman has not disclosed notional amounts in their derivative book, only # of contracts);

If you want a preview of what the Basel III definition of "Too Big To Fail" will look like, the above five companies is a great place to start."

"Too big to fail," as in "more important than you or I or our nations." Lords and Masters of the Earth.

It's time for all of us who are NOT too big to fail to turn up the volume on what must become our anthem: the now-gender-neutral disco classic "Enough Is Enough," (aka "No More Tears") belted out by Donna Summer and Barbara Streisand.

The article, the reading of which I cannot recommend too highly, adds the following very useful information: "For those unfamiliar with the concept of derivatives, here is a good blurb provided in the Fitch report:

Companies use derivatives to manage risks related to interest rates, foreign currency exchange rates, equities, and commodity prices, as well as more obscure risks such as weather and longevity. According to the Bank of International Settlements, the notional amount of the global over-the-counter derivatives market was nearly $600 trillion at the end of December 2008. Furthermore, gross market value (the sum of gross derivative assets and gross derivative liabilities) stood at $33.9 trillion.

While improved disclosures and transparency are a good start to helping gauge the risks posed by these instruments, it is important for analysts and investors to take a fresh look at risk management practices, including the use of derivatives within that context.

The need for better disclosure on derivatives has been obvious since the implementation of Statement of Financial Accounting Standards (SFAS) 133, “Accounting for Derivative Instruments and Hedging Activities” (now Financial Accounting Standards Board [FASB] Accounting Standards Codification [ASC] 815). However, comprehensive derivatives disclosure did not become a U.S. GAAP requirement for most companies until March 2009 with the implementation of SFAS 161 (now ASC 815-10-50), “Disclosures about Derivative Instruments and Hedging Activities.”

For a more quantifiable overview of derivatives, we recommend the most recent quarterly report from the BIS, especially the data starting on page 28.

The key findings presented by the Fitch report are as follows:

• Not surprisingly, an overwhelming majority (approximately 80%) of the derivative assets and liabilities carried on the balance sheets of the companies reviewed were primarily concentrated in five financial services firms: JPMorgan Chase & Co. (JPMorgan); Bank of America Corp. (Bank of America); Goldman Sachs Group Inc. (Goldman Sachs); Citigroup, Inc. (Citigroup); and Morgan Stanley (Morgan Stanley).
• Fifty-eight percent of the companies reviewed disclosed the presence of credit risk related contingent features in their derivative positions. These contingent features generally require a company to post additional collateral or settle any outstanding derivative liability in the event of a downgrade of the company’s credit rating.
• The use of credit derivatives was limited to financial institutions, with 17 of these reporting such exposure.
• Proprietary derivatives trading by utilities and energy companies appear to be very limited, but most of the companies reviewed in both industries report the use of derivatives for hedging commodity risks.
• Generally, non-financial companies appear to use derivatives only for hedging specific risks.
  Derivative valuation is often model-based, making changes in significant valuation assumptions particularly important. Analysis would be enhanced if issuers provided additional disclosure on the sensitivity of their derivative valuations to major assumptions."

There is much more, but for the non-financially-minded among you, or those who are uncomfortable with technical-talk, the above summary tells you all you need to know.

Bankers own the world; they own governments; they are a cabal, and unless an end is put to their privileges, societal suzerainty and social engineering that reward untrammeled greed, their stranglehold will only become more suffocating. Matt Taibi's "giant squid" metaphor must surely have occurred to many of us; it came to me as a memory of a science-fiction novel title: The Kraken Wakes, published in 1953.

Ninety nine point seven per cent. How much of that is in your portfolio? How is it that a government tasked with protecting the well-being of its citizenry permits these financial leviathans to suck every last drop of the lifeblood out of the poor schleps (US, in case you hadn't noticed) in the name of a "free market?" How is it that nearly all of the people can be fooled nearly all of the time? How long can this go on before some sort of breaking point is reached?

And the most important question of all: Are the above questions all rhetorical questions?

It is probable safe to say that approximately ninety nine point seven per cent of the population takes no interest in any of these matters and that is the main reason the financial cabal can lord it over them and those of us trapped in the grip of those tentacles. Those of us who do take an interest find ourselves largely powerless to do anything about what we learn, but we are not necessarily powerless to take steps for ourselves that will put us largely out of the reach of those ever-further-extending tentacles, and it is that Paradigm Change that this site advocates and hopes to assist in making such change possible for those who have just recently begun to recognize the need for it.

Unless you truly believe in the dangers--political,social,economic--stalking you and your fellow citizens, there will be little point in postulating a Paradigm Change; posturing it will be the only result. Step One--tangible step one is the planning and execution of a move from the urban/suburban setting to a rural area in which you can either own arable land adequate for providing a high degree of self-sufficiency, or finding someone who owns such land and making an agreement with that person to carry out some sort of cooperative and mutually beneficial arrangement that will improve the position of both parties.

How is that to be done? Future posts will explore potential solutions.

Going Athens on Main Street?

"Going Athens," an expression I invented today, comes from the world of American history, from a little known incident--"The Battle of Athens"--that took place on Aug 1st, 1946, in Athens, Tennessee, an incident that deserves greater study for its possible contemporary implications. A brief account of the incident can be found here. A 1992 Hallmark movie, An American Story, was loosely based on the incident.

There is something vaguely apt about posting it on Bastille Day.

The concept occurred to me last night upon reading a comment placed on the board of a financial blog I follow: the comment can be found at 17:54:36 EDT posted by "Black Swan." It deals with the threat of citizen violence against the city council of Cape Coral, Florida, which "are doubling the number of police at Council meetings and are installing metal detectors. This comes after a meeting attended by 500 citizens erupted in many threats against Council members, and with half of the citizens were so enraged, that they stormed out before the end of the meeting." Read the comment and said rage is easily understood. How far might that rage take them? A look at the "Battle of Athens," also known as the "McMinn County War," might be illustrative.

What the "Battle of Athens" was all about was nothing less than a violent armed rebellion by a group of WWII veterans against a corrupt political machine, a rebellion that resulted in victory for the rebels and universal condemnation of them by the media of the time. Violence is not a good solution to problems, unless it furthers the interests of the financial oligarchy bent on dominating every aspect of all life on earth, in which case it becomes necessary force required to maintain order and therefore though lamentable, inevitable. Violence or even the threat thereof by the plebs is terrorism, plain and simple, particularly if it is directed against their betters: the financial overlords and their political lap dogs; there can be only one response to such effrontery.

Perhaps a better-known Twentieth Century American insurrection took place in 1920 in a West Virginia town that became the subject of the 1987 John Sayles film Matewan. The Battle of Matewan in turn led to "the largest armed insurrection in the United States since the American Civil War, the Battle of Blair Mountain," to quote a Wikipedia entry. The latter, larger battle has been written about in the 2006 history The Battle of Blair Mountain: The Story of America's Largest Labor Uprising and in the 1987 novel Storming Heaven, among other works, but this important part of American history is not taught in the indoctrination camps called schools, nor does one hear much about it. Instead, the news from Tennessee is that "After losing homes, families move into tents." "Tea Parties" have taken the place of hurling dynamite at the Athens jail.

"Going Athens," however, is a remote but nevertheless conceivable reaction on Main Street to the looting and repression being foisted upon the public by a globalist cabal determined to impose a global rule by a supposed intellectual elite that has replaced the corn-pone corruption of post-war McMinn County, Tennessee, with the slick Saul-Alinsky-style Acorn activist such as the one who occupies the White House.

This writer does not believe that "Going Athens" is a wise course of action, if for no other reason that the forces arrayed against any latter-day uprising would be devastating. It bears remembering that during the Battle of Blair Mountain, on orders of WWII hero Gen. Billy Mitchell, "Army bombers from Maryland were also used to disperse the miners, a rare example of Air Power being used by the federal government against US citizens. A combination of gas and explosive bombs left over from the fighting in World War I were dropped in several locations near the towns of Jeffery, Sharples and Blair. At least one did not explode and was recovered by the miners; it was used months later to great effect during treason and murder trials following the battle." Just imagine Predator drones instead of tasers and, well, you get the picture, I'm sure.

Going bye-bye might be a better option for those who believe that the U.S. and other northern hemisphere countries are becoming more like Caligula's Rome than Plato's Athens. Those of that turn of mind should give thought to resettlement in a rural Shangri-la, where "Going Athens" is called a "cacerolazo."

Independence Day

Yesterday, July 4th, was "Independence Day" in the United States of America, where "independence," like so much else in the post-modern era, is relative.

Independence Day for me is Sept. 24th, the day I moved into my just-completed straw bale house on my own property, not a penny owed on any of it. Three months and a bit from now, I'll celebrate my fourth anniversary in this home, although two years ago, the wife who entered it with me preferred to return permanently to apartment living in Sevilla, Spain, after repeated false starts with respect to living in another country. The rural, self-sufficient life made for a nice fantasy, but the reality was something else again. In retrospect, I suspect she had been humoring me, not believing that I was serious. I was and am. I was saddened by her departure, but not about to commit financial and psychological suicide, trading this for a sardine tin in a noisy city in a country that I was sure was soon to experience exactly what it is experiencing now, and worse to come.

Living alone in a 2700 sq. ft. house on three acres is not easy at 62, but when I reflect upon what my life would likely be in any northern hemisphere country, without wholly owned property not subject to confiscatory taxation, without my own trees and gardens producing food, without all the free range eggs and chickens, the pig I fatten and have butchered right here, the fresh milk straight from the cow, the homemade cheeses, the crystalline air, the gurgle of the arroyo, the birds, the peace and quiet... without any of this, well, it wouldn't be a harder life: it wouldn't be any sort of a life at all, not for me.

Independence.

The local people here are very poor by northern standards, but they have free health care (often they grow old waiting for the doctor, but...) and for the most part are content with their extremely simple lives; the young, however, are tempted by the allure (false, of course, but that takes time to learn) of bright lights, big city, at least for a while. Very, very few have full-time jobs, but neither do they have mortgages or pay rent in most cases. The have no debt. NO DEBT!! They are FREE!

More and more previously docile folk are beginning to chafe at the growing restriction upon even the mildest sorts of freedom once available in the north. One sees more and more rebellion talk, "throw-the-bums-out" talk with respect to governments, advice offered as to how to become independent once more. Here's one that I found particularly relevant to what I'd like to accomplish down here in the Catacombs: Fifty Things to Do NOW! Many of them have been advocated here and elsewhere, but it's encouraging that more and more systematization is being applied to the freedom and independence issue.

The new "Cap-and-Trade" Law is an abomination, pure and simple, and if it passes, it could be the straw that breaks the back of the up-to-now ruminant population that has been willing to swallow the "Patriot" Act, all the thievery entailed in the bailout programs, but this... As I joked in a separate post with respect to a different topic: "In my twenty years on the force I thought I'd seen everything, but this...this...". Will those in the northern hemisphere take back their rights and their countries? The jury is still out, but one fears it may have been "got to."

Hard copy those Fifty Things and begin putting them into practice if independence means more to you than a barbecue; firecrackers have been illegal up there for so long now, that...

And remember, here at The Catacombs, you've got a friend; in fact, more and more every day.