1.5 Quadrillion Dollar Conspiracy: EU Accuses 13 Banks Of Operating An OTC Derivative Trading Cartel
by Phil T Looker
14 July 2013
Conspiracy: Collusion or some kind of agreement between two or more parties, sometimes illegal and therefore secretive, to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair advantage. A conspiracy in other words, you know, one of those things that only happens in the febrile imagination of right wing nut jobs. The Conspiracy in question is an agreement among investment banks and investors to control a market, set prices, limit production or limit opportunities for those outside the cartel to trade in certain products. Such a conspiracy can involve price fixing, kickbacks, or misrepresenting the independence of the relationship between the conspirators. In legal terms, all acts affected by collusion or conspiracy are considered fraudulent and thus legally void.
The European Commission announced on Monday 3 July that it 13 top investment banks including Barclays, Deutsche Bank and Goldman Sachs, (all of which were represented at the recent Bilderberg Group meeting colluded to operate a certel in derivatives trading in breach of EU antitrust rules. A preliminary investigation has revealed that banks conspired to exclude stock exchanges from the derivatives market because they feared involvement of the exchanges, in which trades are governed by strict transparency regulations “would have reduced the bankers' revenues from acting as intermediaries”.
The banks instead allegedly continued covert trading in massive credit default swaps (CDS) market between 2006 and 2009 — an opaque business that was seen as a major factor in triggering the global financial crisis, the Commission said in a statement.
EU Competition Commissioner Joaquin Almunia told media representatives the banks would now be assked to respond to the accusations, and that if the allegations were proved, they could face fines.
“If it is confirmed that banks collectively blocked exchanges from the derivatives market, the Commission could decide to impose sanctions,” Almunia said at a press briefing.
“Exchange trading of credit derivatives improves market transparency and stability,” he said, adding that collusion between the banks to prevent this type of trading would be a serious breach of our competition rules.
There could be something in this, in fact we think there probably is, but experience tells us the EU tends to go off the deep end about financial matters without giving the big picture a lot of thought. They seek to divert attention from the quadrillion dollar cock up that is the Euro (European Monetary System single currency) and generate support for a globalist a view of the finance that is unworkable and detrimental to member countries interests just to promote their political ideology of establishing a federal European superstate along the lines envisaged by karl Marx - the financial transaction tax, which wuld destroy European stock and commodity markets, is a classic recent example. The economic wizards in the bureaucracy proposed a half percent tax on all financial transactions. As the margin on currency and derivatives trades is often only one half per cent (half a per cent of £1billion is not a bad days wages) , the tax would have doubled the costs of dealing via european financial centres. Dubai, Singapore, Hong Kong and Tel Aviv were rubbing their hands and saying "Lovely Jubby, we'll have some of that."
Estimates, and it can only be a rough estimate, by the BIS 9the real villains) put the total derivatives market at a nominal $1.4 quadrillion dollars a few years ago - much bigger that than the entire GDP of the world.
But the whole point of these bets on bets is that they are secret, off the radar in any exchange where transparency rules mean sales and liabilities can be accurately calculated. People would then see which of the 'too big to fail' banks were monumentally overstretched and at risk of going down without vast injections of taxpayer cash.
In this respect the USA is much more transparent than Europe. US banks do disclose their derivatives trades book and it can be seen they account for just under half of the estimated total. It is impossible to know the liabilities of European banks without resorting to legal injunctions because they are not disclosed. It is worth noting that most of the money allocated by US Government TARP (Troubled Asset Relief Program)funds went to European banks.
The fact is all banks are so insanely far beyond the safe 'reserves to debt ratio' the fractional reserve banking system depends on they are technically insolvent. Not one of them has remotely enough liquidity or risk capital to cover the losses should one major domino fall. That's why Greece and Cypris, although they had blatantly and obviously defaulted, was not allowed to declare default mode and money had to be stolen from elsewhere (in the case of Cyprus, from the savings and deposits of bank customers).
It's amazing how long it's taken for the EU bureaucrats to notice how lucrative the OTC (Over The Counter, i.e. unregulated) derivatives business is - much more lucrative than selling common loans. Now they've noticed they want a slice of the action.
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