Did Germany Secretly Fund Israel’s Nuclear Weapons?

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Courtesy of Rebecca Miller @ The National Interest::

The conservative German daily Die Welt, well-known for its unflinching support for Israel, recently published an article stating “with near certainty” that the Federal Republic of Germany, or West Germany, helped finance Israel’s nuclear program in the 1960s.

According to the Welt report, in 1961 West Germany agreed to loan $500 million to Israel over ten years. Although the official purpose of this funding was said to be the development of the Negev Desert— where Israel’s Dimona nuclear reactor is located— it is widely suspected that the money was actually meant to finance Israel’s nuclear weapons program.

This agreement was reportedly hatched during a 1960 meeting between then-Israeli Prime Minister David Ben-Gurion and German Chancellor Konrad Adenauer at the Waldorf Astoria hotel in New York City. Franz Josef Strauss, a former West German defense minister, previously claimed Ben Gurion and Adenauer discussed Israel’s nuclear weapons program during a meeting in Paris in 1961.

This top secret initiative was reportedly named “Aktion Geschäftsfreund,” which translates as “Operation Business Partner.” It bypassed both the Israeli cabinet and the German parliament, with the money being funneled through Kreditanstalt für Wiederaufbau, a West German-government owned development bank.

The Welt report comes after former Israeli President Shimon Peres (who was the head of Israel’s nuclear-weapons program at the time of its inception in the 1950s) denied that funding for Israel’s nukes came from Germany earlier this month.

The Welt article dismissed this denial, however, arguing that when it comes to German-Israeli cooperation on nuclear weapons, secret-keeping is part of the game. (Indeed, the practice—or art, rather—of secret-keeping with regards to sensitive matters of defense should be expected of any regime, nuclear or otherwise.) Continue reading

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The Silver Saga

Courtesy of Professor Fekete @ Silverseek.com:

What says the silver with her virgin hue?
“Who chooseth me shall get as much as he deserves.”

(Shakespeare, The Merchant of Venice)

THE INCREDIBLE COLLAPSE OF THE VALUE OF SILVER COINS
IN THE 19TH CENTURY
̶ DON’T BLAME COMSTOCK! ̶

Antal E. Fekete

An Address Delivered at the Conference Held at the University of Padova
on November 30, 2012
“Coin Finds and Historical-Economic Processes in the Ancient World:
Ten Years of Research 2002-2012”

The silver standard did not die a natural death. It was deliberately killed. A proper search for the assassins was never carried out. There was never a post-mortem. In this paper we focus on the conspiracy as it might have unfolded between the two dates: April 9, 1865 (the day General Lee of the Confederacy surrendered at Appomattox to General Grant of the Union marking the end of the War Between the States) and January 1, 1879 (Resumption Day, when payment of the victorious Union’s currency, the greenback was resumed in gold specie ̶ but not in silver).

China has been on the silver standard since time immemorial. The Chinese did not use coins for monetary purposes such as bank reserves until the end of the 19th century; they used the sycee, a shoe-shaped ingot of approximate size 5 x 3 x 3 inches, weighing approximately 50 taels or about 5 pounds (avoirdupois). No one can pretend to know, however approximately, how much monetary silver has gone into hiding in China and in India, these two most populous countries also known as the world’s sink for silver, over the millennia. In comparison estimates of monetary gold having gone into hiding over the same period of time are far more reliable. Be that as it may, the amount of monetary silver unaccounted for is probably greater than any estimate ever made.

In the 19th century silver coins did most of the money-work in the world. The turnover of silver coinage (the value of silver coins times their velocity) was at an all-time high, eclipsing the turnover of gold coinage by far. Inept governments did not follow the lead of Isaac Newton, and they tried to enforce a rigid exchange rate between the two monetary metals (called the Mint ratio). This system was called bimetallism ̶ a stillborn idea.

Bimetallism did not stabilize the exchange rate. On the contrary, it has destabilized it. The natural monetary system is based on silver and gold valued at a variable rate, as Newton’s monetary system in Britain did. Bimetallism was the disease, the demise of the silver standard was the unfortunate consequence. In the Western countries by 1879, in India by 1893, in China, the last stronghold of silver, by 1935, silver was demonetized. Between the two dates 1879 and 1935 the world witnessed a most spectacular event: the collapse of the value of silver by more than 80% in a little over half of a century. Silver fell from $1.29/oz in 1873 to 25¢/oz in 1935. Putting it differently, the gold/silver price ratio rose from 15:1 to more than 80:1. Never in history, ancient or modern, have markets put such fancy values on gold in terms of silver.

Who killed the silver standard? Continue reading

THE MANIPULATORS WILL LOSE THEIR #GOLD WAR: GATA’S BILL MURPHY

Courtesy of Inteligencia Financier Global:

Bill Murphy
The Inteligencia Financiera Global blog (Global Financial Intelligence Blog) is honored to present another exclusive interview now with GATA’s Bill Murphy.

Thanks Bill for accepting this interview.

-Maybe most of people in the gold world know about you and GATA. Nevertheless, for those who don’t know: Who is Bill Murphy? Where do you come from a financial point of view and what did motivate you to found the Gold Anti- Trust Action Committee (GATA)?

Hello Memo.

Thanks so much for your interest in what GATA has to say. I have a Wall Street background and worked for Shearson Hayden Stone and Drexel Burnham Lambert in Manhattan in the late 1970’s and early 80’s. At one point I became a limit position trader in the copper market after forming my own company, so I am very versed in how the futures market works in the US. In 1998 I realized the Internet was going to be a big deal and opened up http://www.LeMetropoleCafe.com as a subscription website which would focus on the gold/silver markets, as well as provide coverage of the US and world economies. Soon after opening up for business, the famed hedge fund Long Term Capital Management blew up. They were known to be short hundreds of tonnes of gold and that would have to be covered. However, it was clear that bullion banks such as Goldman Sachs, JP Morgan, and Deutsche Bank were capping the price around $300 in a collusive manner. My future colleague Chris Powell had anti-trust experience via his newspaper business. He suggested we try and stop it, so GATA was formed.

-In our last interview, Hugo Salinas Price told us that only a blind or a Harvard economist with a doctorate would not see the gold market is being manipulated. Do you agree? As I understand it, one of the main purposes of GATA is to communicate this fact to as many people as possible, and end this manipulation, but, Bill, isn´t it a lost war? Aren’t the manipulators “too strong to be stopped”?

Yes, Hugo is right on the money. It could not be more obvious. So much so that James McShirley, a speaker at GATA’s London conference in 2011, has written in advance at times what the gold will do on a given day. From a bigger picture someone only need to appreciate what the price of gold did last year compared to the DOW on the same quantitative easing news. The DOW went up 3,000 points and the gold price went down $600. That would have made no sense to anyone ahead of time. Gold went lower as it did because “The Gold Cartel” forced the price down with massive raids in the derivatives paper market, often when few traders were around. Continue reading

Gold Manipulation, China, Germany and the US – Geopolitics is going to get interesting

Geo-politics is about to get very interesting as China have announced that they have expanded their gold reserves by 76% ergo having the 3rd largest gold reserves in the world. According to the voluntary reporting system of IMF which monitors international gold reserves, China’s gold reserves have increased from 1,054 Tons in 2009 to April to 2,710 metric tons. To stir the plot a lot more, those naughty yanks have been manipulating the gold market and it’s out in the open, tinfoil is the new black. Courtesy of The Hedge:

Remember when banks were exposed manipulating virtually everything except precious metals, because obviously nobody ever manipulates the price of gold and silver? After all, the biggest “conspiracy theory” of all is that crazy gold bugs blame every move against them on some vile manipulator. It may be time to shift yet another conspiracy “theory” into the “fact” bin, thanks to Elke Koenig, the president of Germany’s top financial regulator, Bafin, which apparently is not as corrupt, complicit and clueless as its US equivalent, and who said that in addition to currency rates, manipulation of precious metals “is worse than the Libor-rigging scandal.” Hear that Bart Chilton and friends from the CFTC?

More on what Eike said from Bloomberg:

The allegations about the currency and precious metals markets are “particularly serious, because such reference values are based — unlike Libor and Euribor — typically on transactions in liquid markets and not on estimates of the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt today. Continue reading

The Three Types of Austerity

Courtesy of Frank Hollenbeck from Ludwig von Mises Institute:

Reading the financial press, one gets the impression there are only two sides to the austerity debate: pro-austerity and anti-austerity. In reality, we have three forms of austerity. There is the Keynesian-Krugman-Robert Reich form which promotes more government spending and higher taxes. There is the Angela Merkel form of less government spending and higher taxes, and there is the Austrian form of less spending and lower taxes. Of the three forms of austerity, only the third increases the size of the private sector relative to the public sector, frees up resources for private investment, and has actual evidence of success in boosting growth.

Let’s take a closer look at the Merkel form of austerity being implemented in Europe in which governments “plan” to cut their spending and raise tax revenues. Of course, “planned” cuts are not actual cuts. Four years after the crash of 2008, the UK government had only implemented 6 percent of planned cuts in spending and only 12 percent of planned cuts in benefits. In almost all European countries, government spending is higher today than it was in 2008. A new study by Constantin Gurdgiev of Trinity College in Dublin examined government spending as a percentage of GDP in 2012 compared with the average level of pre-recession spending (2003–2007). Only Germany, Malta, and Sweden had actually cut spending.

Although several governments have raised tax rates, tax revenues have collapsed in response. The large and growing black markets in Greece, Italy, Spain, and even France are a testament to wrongheaded European tax policies. Current commitments to reign in tax fraud are a joke when tax rates are already at nosebleed levels.

Notably, the Merkel form of austerity has led to an increase, not a decrease, in the relative size of the public sector. For example, the Greek public sector, while getting smaller, has nonetheless been contracting at a slower rate than the private sector. Since the first bailout, Greece lost at least 500,000 private sector jobs but shed far fewer public sector jobs. For years, the Greek government has been pledging to cut 500,000 public sector jobs, and in recent months, the Greek government has finally pledged to begin laying off public sector workers over the next two years. A total of 12,500 civil servants, including teachers and police, face reassignment or the axe by the end of the year, with a further 15,000 facing the same options next year. Not only is this too little, too late, but it is also only a pledge.

The Keynesian form of austerity is no better. According to these economists, we need even more government spending to boost demand to obtain growth. For the Keynesians, the lavish amounts of money already spent was apparently too little and not spent in the right places, yet the last five years are a testament to the failure of this type of austerity. We are now left with a massive debt overhang and little growth to show for it. Government spending has simply “crowded out” private spending.

Ignored is the fact that we don’t need government to boost demand because there is never a deficiency of demand. Governments instead should be more concerned with the ability of the private sector to produce the right supply.

Growth will come from the private sector, and the austerity we need is one that makes the private sector larger than the public sector and one similar to that implemented in 1920 in the United States. In what Thomas Woods calls “The Forgotten Depression of 1920,” the U.S. government cut spending 50 percent and sharply reduced taxes. The public debt was reduced by a third, while monetary policy was kept on hold. The economy recovered quickly (in 18 months) and by 1923 the unemployment rate had fallen below 3 percent.

A more recent example of similar tactics is Latvia which followed a similar strategy in 2009-2010. It cut government spending from 44 percent of GDP to 36 percent. It fired 30 percent of the civil servants, closed half the state agencies, and reduced the average public salary by 26 percent in one year. Government ministers took personal wage cuts of 35 percent, although pensions and social benefits were barely reduced and the flat tax on personal income was left untouched at 25 percent.

The Latvian economy dropped 24 percent in two years, but rebounded sharply in 2011 and 2012 with yearly real growth of over 5 percent. Unemployment hit 20.7 percent in 2010, but has steadily declined to a little over 12 percent today. Because the cuts prompted deregulation, Latvia enjoyed a boom in the creation of new enterprises in 2011. It was able to transition from a bloated construction sector to a vibrant economy of many small- and medium-sized enterprises.

Latvia borrowed heavily from the IMF, and was criticized in 2009 for its overly aggressive economic strategy. Latvia recently repaid its loan to the IMF three years early, indirectly silencing its critics.

Austerity worked because it was the right form of austerity: one which gave people hope and one with a light at the end of the tunnel. Today, Europe has austerity fatigue. It missed the opportunity to implement the right type of policies.

Since it now seems impossible to implement the right form of austerity, what should Europe do? To get back on the path to growth, Europe needs to dump policies to spur aggregate demand, and focus on policies which bring the right products at the right prices. As J.B. Say said:

The encouragement of mere consumption is no benefit to commerce, for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone, furnishes those means. Thus, it is the aim of Good Government to stimulate production, of bad Government to encourage consumption.
Without growth, Europe is heading for a train wreck since it will shortly be unable to finance its debt. It must refocus its strategy toward stimulating production, freeing up Europe’s entrepreneurial spirit. This is a policy much more likely to succeed.

Germany recognizes Bitcoin as ‘private money’

Bitcoin is slowly gaining mainstream traction, courtesy of RT:

Bitcoin has been recognized for legal and tax purposes in Germany, making it the first country to take an official stance on the status of using the online currency as money.

Berlin has acknowledged the virtual tender as a “currency unit” and “private money,” according to German newspaper Die Welt.

The classification means that some commercial profits on Bitcoin related endeavors may be taxable, but personal use of the currency will remain tax-free, the paper reported.

The recognition was laid out in a Finance Ministry response to a query from Frank Schaeffler, a member of parliament’s Finance Committee.

“For the first time, the federal government recognizes Bitcoins as private money,” said Schaeffler.

In July, the first trading platform for Bitcoins in Europe with direct cooperation with a bank regulated by the Financial Supervisory Authority was set in Germany. Bitcoin Deutschland GmbH agreed to convey Bitcoins on its platform as an intermediary through the German web 2.0 bank Fidor.

Bitcoin has been a popular form of payment around the globe since it was first introduced in 2009, as people became dissatisfied with the conventional banking system. Meanwhile, the currency’s viability has been questioned because Bitcoins are backed by neither a government nor a central bank.

At the beginning of August, a US federal judge in Texas ruled that Bitcoin is a legitimate currency. The decision came after Trendon Shavers, a 30-year-old businessman, was charged with running a Ponzi scheme, scamming customers out of roughly US$4.5 million worth of the crypto-currency through his online hedge fund. He argued that Bitcoin is not real money and therefore is not subject to regulation by the US government. However, the court dismissed his claim.

The ruling brought Bitcoin one step closer to being recognized as a real currency. However, the decision opened up the possibility for the virtual money to be regulated by governments, which oppose the original concept of Bitcoin – a peer-to-peer, relatively anonymous payment.

Supporters of the virtual currency argue that it helps protect the identities of users from theft and credit card fraud. Critics argue that the lack of regulatory oversight and alleged greater privacy makes the currency more attractive to scammers. In addition, skeptics question the currency’s volatile exchange rate, inflexible supply, high risk of loss, and minimal use in trade.

An overseer group called the Bitcoin Foundation limits the total number of currency units to 21 million. Currently, the price of a unit is around $ 110 (82 euros), according to online currency conversion sites.

Derivatives and the Real World Implications

The derivatives market is part of the financial system which operates behind the stock market and shadow banking system. It essentially leverages bets (forward, option or swaps) on the value of commodities, stocks, bonds, interest rates, currencies and anything else they can think of. The value of the market which is hard to nail down but estimates at $700 trillion-$1.4 quadrillion, considering the worlds GDP is about $65 trillion a year, its rather under reported.

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Straight from wiki:

“A derivative is a financial instrument which derives its value from the value of underlying entities such as an asset, index, or interest rate. “A derivative is a financial contract whose value is derived from the performance of underlying market factors, such as interest rates, currency exchange rates, and commodity, credit, and equity prices. Derivative transactions include an assortment of financial contracts, including structured debt obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations thereof.”

Why is this relevant? Silverdoctors broke the news below and were subsequently hacked. Here’s a slice:

In the introduction, the resolution informs readers that the FDIC and the Bank of England have been working together to formulate the new bail-in model for future bank failures:

The Federal Deposit Insurance Corporation (FDIC) and the Bank of England—together with the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, and the Financial Services Authority— have been working to develop resolution strategies for the failure of globally active, systemically important, financial institutions (SIFIs or G-SIFIs) with significant operations on both sides of the Atlantic.

The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability. They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers.

The joint US/UK resolution states that depositor haircuts are already legal in the UK thanks to the 2009 UK Banking Act:

In the U.K., the strategy has been developed on the basis of the powers provided by the U.K. Banking Act 2009 and in anticipation of the further powers that will be provided by the European Union Recovery and Resolution Directive and the domestic reforms that implement the recommendations of the U.K. Independent Commission on Banking. Such a strategy would involve the bail-in (write-down or conversion) of creditors at the top of the group in order to restore the whole group to solvency. And that the legal authority has already been given in the US buried in Dodd-Frank Act.

In Laymans terms, if and when a systemic crash happens, customers accounts will be raided!

But today it was revealed that Deutcshe Bank and not JP Morgan, who has the highest derivatives exposure in the world. Located on page 87 of the annual 2012 report it states that its derivatives exposure is €55,605,039,000,000.

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Convert that into USD at the current EURUSD exchange rates 29/4/13, it amounts to $72,842,601,090,000…About $2 trillion more than JPMorgan. Through the magical and mythical accounting procedure of netting, this number collapses into €776.7 billion in positive market value exposure (assets), and €756.4 billion in negative market value exposure (liabilities). Rather than magic I’d like to call it what it is, ACCOUNTING FRAUD.

What does that much exposure look like compared to the German GDP?

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It’s worrying that big banks can have so much exposure to highly leveraged instruments and when it goes South, Mr Joe Public will have to take the hit, Cyprus was just a try out and it’s coming to a bank near you!

The question is how to protect yourself? Hard assets like land, property and precious metals such as gold or silver would be a good investment and act as a hedge against a bank collapse, as well as inflation. Having a supply of fiat currency would also help protect you if the banks decided to carry out a bail-in.

Testing times are ahead of us.