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Discussion and analysis of the latest economic issues.

By Sean O'Grady, Economics Editor of The Independent.

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Diamond gets tough on banking regulation

Posted by Sean O'Grady
  • Wednesday, 27 January 2010 at 10:40 am
In the winter war between the bankers and the politicians, another battle this morning at Davos.

Bob Diamond, president of Barclays Plc and head of its investment banking arm, BarCap laid into the Obama plan to break up the banks virtually accusing the president of coming up with his "isolated actions"for "electoral" reasons.

To be fair he - Diamond - has a point. It's better all around (and more likely to stick) if as he says every nation one agrees on tightening up on the bankers, otherwise they can just scuttle off to the least demanding financial centre. Really, though, Diamond knows that acting through the G20 and the varous central bank committees in Basel will just end up with the lowest common denominator and be a much less tough regime.

Suits Barclays, that, but maybe less comfortable for the rest of us.

Comments

Gold Default
billyell wrote:
Wednesday, 27 January 2010 at 04:18 pm (UTC)
During the trend decline or the counter rally for the USDollar, a constant event persists. The London metal inventory is being totally depleted of gold bullion. Fast approaching is the event of GAME OVER for London, a condition that has already reached critical level according to a key reliable source of information with London connections and direct experience there. The paper gold market and the physical gold bullion market have finally separated in a practical manner, meaning actual gold has almost no role anymore in London paper contract settlement. The absence of gold in London requires extraordinary tactics to settle contracts and to obtain gold bullion. Intimidation and bribes accompany gold delivery demands. They have almost zero gold, its supply having been drained in high volumes since early December, a process currently in acceleration. The opportunity to convert fiat money into precious metal weight is closing, at least at prices considered reasonable. The London gold banker said, "There is going on a lot more than meets the eye. The physical system is actually consolidating bigtime and is organizing itself with lightning speed, totally hidden from pretty much anyone, even the so-called insiders. The paper precious metal market and the physical precious metal market have defacto disconnected. The paper and physical gold markets currently operate in parallel universes. The outflow of physical metal from bank vaults is happening at a mind bending pace." The true gold price might very soon become unknown, an extremely positive development. Gold market disruption leads to chaos, followed by much greater clarity. Like a bankruptcy process, the event is sudden but the cleanup takes weeks as dust settles. Right now, we see strong attempts using naked gold short contracts at the London metals exchange (LBMA) and the COMEX in the United States to drive down the gold price. It is all illegal and permitted. Margin calls have hit, forcing further selling of paper contracts. Before long, no gold metal will be available until clarity and prosecutions begin. When the combined magnus financial crisis blossoms, it will go ballistic and the sovereign debt default will comes full circle to kill the USDollar and USTreasury Bond. The warning signal will be default of the UKGilt (British debt security). FUTURES CONTRACT IN GOLD ARE BROKEN, AND FAILURES TO DELIVERY WILL BECOME COMMON. ANTICIPATE COUNTER-PARTIES TO GO BANKRUPT AND INVESTORS TO BE STUCK WITH WORTHLESS PAPER GOLD DERIVATIVES. PHYSICAL GOLD IS THE BEST PROTECTION. $$$ For investors to profit from a short squeeze in gold, they must be in a position to deliver physical metal. Having a paper substitute for gold may not necessarily provide the same results." My best gold & banker contact made the following brief observations. He provided lead notice to the Wall Street collapse in September 2008, one month in advance with details. That earned my deep respect and steady desire for contact. He said, " China is buying Au and Ag in off-market transaction in a grand concealed accumulation. China is in possession of 5 times as much gold as the gold councils report, maybe more. They will keep doing so for a long time to come. It will all unfold quite differently from what people might expect. A one ounce gold coin could have the purchasing power over US$10 thousand in today's USDollar paper purchasing power. The Au/Ag ratio will return 15:1 when that happens. Timing will be much faster than you can imagine. A single event will lead to an incredible firestorm, as its effects will be misunderstood and miscalculated. The Boyz will be caught flat-flooted after celebrating an unsinkable USDollar. Right now they have been forced to relinquish almost all London gold in inventory. We are soon to experience a flash point, a tipping event, which leads to the current system breaking down in accelerated fashion. The event referred to will not be taken seriously, but will cause incredible damage to the surprise of the Powerz as the New Paradigm unfolds in full glory."

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