- Money Morning Australia

Taking a Leak On The Banking System


Written on 01 December 2010 by Kris Sayce

Taking a Leak On The Banking System

“I think you have a hit an all time low on this one.

“Having no interest in NAB’s success, but being very knowledgeable of the inner workings of the payments industry the conclusions are absurd. I support a lot of the messages in your newsletters. But stick to what you know something about, rather than looking for a sensational headline. It would be a sad world if all your conspiracy theories were actually true.”

That was a letter from reader AW in response to Monday’s Money Morning. We suggested National Australia Bank’s [ASX: NAB] so-called computer glitch was just a beard or a cover-up for something much more sinister.

That is, the problem at the NAB was more a question of solvency rather than glitchery.

But maybe we’re wrong. Maybe it was just a computer error that caused the bank to stop processing payments for a week. And maybe it was a glitch that caused its investment banking division to not know the value of the assets in its accounts.

We’ve received emails from technical guys telling us that the major problem with all banks’ IT systems is that they’ve got layers and layers of different software and hardware that has been patched together.

And that in most cases, because these have been layered over time, there’s no one person who has any idea about how the entire network works.

While that may be true – and we’d imagine it’s true – there’s absolutely no way a single “corrupted file” would have the widespread impact on the bank’s payment systems as the bank claims happened over the past week. No way.

The banks spend millions on software, hardware and networks. They have redundancy and back-up and data recovery systems. All of which should be designed to kick-in and bypass a problem in the network.

There is zero chance that the NAB wouldn’t have such belt-and-braces IT system in place to kick-in in the event of a so-called corrupted file causing a problem.

It would be the equivalent of McDonald’s only having one deep fryer, or a petrol station only having one pump.

When your entire business revolves around tallying up what’s in which account and who owns what to whom, it’s just not possible for a glitch to cause the widespread problems that happened to the NAB over the past week.

The fact is, the way banks operate, all of them are insolvent. I won’t cover old ground on this one, but to put it simply, the banks have larger obligations to pay demand depositors than the amount of deposits held at the banks.

Any way you crunch the numbers on this, banks are insolvent.

Here’s just one example. NAB has a total of $134 billion of “on-demand and short-term deposits”, yet it only has $26 billion of “cash and liquid assets” on its books.

Yet despite that, every depositor is under the impression that if they wished to withdraw their money today they could go into the bank and the bank would be able to honour this obligation.

Only it wouldn’t, not without a massive cash injection of newly printed dollars from the Reserve Bank of Australia (RBA), or newly created electronic numbers on the banks’ balance sheet, again courtesy of the RBA.

The banks operate on the basis that not everyone will demand their money at the same time. Besides, for a start, there aren’t enough bank notes in existence to honour this obligation. The banks merely create the money from thin air knowing that not everyone will want their cash out at the same time.

Should a greater number of depositors ask for their cash than the bank expects then it’s in trouble. It’s called a bank run. Or, on the other side of the ledger, if certain assets on the bank’s balance sheet become less valuable than previously – oh, let’s say European sovereign debt exposure – then that’ll also impact the bank’s liquidity.

The NAB’s problem was a liquidity or solvency problem rather than a software problem.

It seems more likely to us that NAB simply needed to prevent cash flowing out of the bank’s accounts for a period, rather than it being the fault of a computer problem.

Because don’t forget how fragile the global banking system is. In recent months you’ve heard a lot of rubbish from the mainstream press about competition among the banks and how the government should create a “fifth pillar” by making Australia Post a so-called People’s Bank.

In reality all this is irrelevant. It doesn’t really matter whether Australia has three banks, four banks, five banks or fifty banks. It’s not the number of banks that’s the problem, it’s how banks function that’s the problem.

The ability to create money from thin air, backed by nothing is the entire cause of the banking problem, and by extension the problem with asset bubbles.

Banks worldwide are on the ropes, and if Wikileaks makes the kind of impact on banks that it’s having on governments then it could be curtains for the entire current monetary system – and that would be a good thing.

Wikileaks should be applauded and praised. We notice the corrupt politicians and bureaucrats claim that the leaks threaten national security. What they’re really saying is that they’ve done and said a whole bunch of bad things and they don’t want anyone to know about it.

It shows you how dangerous politicians and bureaucrats become when they are put in power. They act recklessly, they assume that they know how best to control everyone’s lives. And their lust for power leads them to do unconscionable things – usually in the guise of protecting your freedom.

Protecting their position of power more like.

Anyway, in an interview with Forbes magazine, Wikileaks founder Julian Assange was asked, “So do you have very high impact corporate stuff to release then?”

Mr. Assange’s response was as follows:

“Yes, but maybe not as high impact [as the political cables]… I mean, it could take down a bank or two.”

[Spits coffee across desk]

Sorry. Blimey, that’ll do it. Now we’re talking… which bank? What is it that could bring the bank or two down? When is Wikileaks going to reveal this?

We skim through the rest of the interview… something about Russia… something about Apple iPhones… what about the banks? What about the banks?

Well, the interview draws a blank on that score. Nothing more is said about it. But apparently investors are looking at Bank of America [NYSE: BAC] which dropped 3% overnight as the possible target.

As we’ve said for some time, we don’t care for investing in the banks. Even though we missed out on the 50% or more gain they made through 2009. There are plenty of other things to invest in, why bother risking money on a supposedly blue-chip stock you know is prone to collapse?

But we found Mr. Assange’s comments on free markets interesting. He told the interviewer:

“So as far as markets are concerned I’m a libertarian, but I have enough expertise in politics and history to understand that a free market ends up as monopoly unless you force them to be free.”

While it’s good to see Mr. Assange is a free markets fan and a lover of freedom – exposing the criminal and manipulative activities of government and politicians is proof of that. But we’d argue that in a truly free market it’s actually hard for monopolies to be formed – or abusive monopolies anyway.

Because free markets are light on bureaucracy and political meddling, there are far fewer barriers to entry for competing businesses to enter a given market.

If a particular industry does tend towards a monopoly then new businesses will enter the industry to compete and offer a lower price or a better service or product.

If new businesses don’t enter the market then it’s because entrepreneurs see no opportunity to offer a lower price or a better quality service. In that instance, even though there may be a monopoly, the consumer is still receiving the best possible price and service.

But if the monopoly business takes advantage of its position by increasing prices or reducing quality then entrepreneurs will see the opportunity to enter the market, and so competition resumes.

This can only happen in a free market.

Any attempt by government to force competition is actually a violation of free markets. Forcing competition can only be done by coercion or through subsidy or favours to a government chosen entity. As soon as that happens it’s no longer a free market but a government controlled market – and that’s when the problems and abuse begin.

Mr. Assange may have some expertise in politics and history, but we’ll bet that any example through history of abusive monopolies will show that they have formed because of government coercion, abuse and intervention rather than because of free markets.

Getting back to our starting point, sure, there’s always a chance we’re wrong. Your editor doesn’t claim to be always right on everything.

But the role of Money Morning is to explain things that you’ll never read in the mainstream press. No one is going to write a column for The Age or the Australian Financial Review claiming that Australia’s banks are insolvent.

We’ve received a number of requests from print journalists asking for a quote on things such as property or retirement savings, but after our first experience when 95% of what we said was cut out, we don’t waste our time with it.

What we’ve got to say won’t make it past the editor’s desk of a mainstream publication.

But, by the same token, we don’t take a contrary position just for the sake of it. Any muggins can do that. We take a position because we believe it’s true and correct. And we’ve got history on our side too…

You see, we take our position on the basis that a truly free market economy is the only viable economy to achieve prosperity and individual freedom.

And that anything which involves intervention by politicians, bureaucrats or cronies of those two, will ultimately lead to a negative outcome for the majority of Australians. That’s been proven time and again.

But so far, the grandest, most extravagant and also the most dangerous of manipulations – the current financial system – is still alive… but only just.

It has been saved once by the unauthorised use of taxpayer dollars by governments, but the way things are shaping up in Europe, the US, and indeed here in Australia, it won’t be long before the system completely fails.

There simply isn’t enough capital in the world to bail out the financial system again. Not even the wholesale pilfering and expropriation of private pension funds, as has already started in Hungary, Argentina, France, Ireland… and yes, don’t forget about Australia.

The Great Depression the politicians told you had been avoided in 2008 was merely postponed to a later date. And unfortunately that date is approaching. That’s why we’re happy to hold gold and silver as an insurance policy.

Alternately, you could continue to think that the NAB just had a tiny little software problem and everything is fine again! I’ll let you make up your own mind on that.

Cheers.

Kris Sayce
For Money Morning Australia



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Kris Sayce
Kris is never one to pull punches when discussing market developments and economic events that can affect your wealth. He’ll take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money. Kris is also the investment director for Australian Small-Cap Investigator, Diggers and Drillers and Revolutionary Tech Investor. If you’d like to more about Kris’ financial world view and investing philosophy then join him on Google+. It's where he shares investment insight, commentary and ideas that he can't always fit into his regular Money Morning essays. Read more about Publisher and Investment Director Kris Sayce.

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73 Comments For This Post

  1. Tim Says:

    Monopoly: Telstra disproves your theory. They DID need to be regulated because no one could get access to the exchanges at a price where they could make a profit. Before you go off saying well build their own exchanges or ducts, I’ll say that would be the daftest response you could make.

    Second, I like how the whole NAB thing went from being a heavy conspiracy to being back pedalling which resulted in the above.

    I’m involved in telco and IT and I can tell you that whilst your comment: “There is zero chance that the NAB wouldn’t have such belt-and-braces IT system in place to kick-in in the event of a so-called corrupted file causing a problem” taken literally and in isolation is correct, there is absolutely every chance that enough things went wrong (have you read Fooled by Randomness?) to cause this.

    The comments from your correspondents that multiple software and hardware systems (read: complexity) VASTLY increases the chances of something going wrong.

    Tim

  2. RD Says:

    Wow, you continue to confirm my suspicions that you in fact have no academic qualifications in economics at all. The idea that the NAB could be even close to insolvent is simply ludicrous… as you yourself point out they have $26 billion in liquidity. Explain to me how all this liquidity got instantly consumed last week, and then suddenly is back and available again this week?

    If NAB had even come close to running out of liquid assets, it would be a permanent on-going issue that would have every major business customer with large cash flows grinding to a halt. I don’t see that happening… do you?

  3. Daniel Says:

    Kris
    A quick note (other than saying I have really enjoyed and looked forward to daily musing) on the IT side.

    I have been in IT for over 30 years and of late have worked with several of the big banks (and mid size brokers) on business continuity, IT risk and Disaster recovery. Unfortunately, I am often the guy brought in post system disaster to shoot the wounded or try and resuscitate the brain dead. The common theme is that these organisations (and its not just Aus finance houses) do not have the levels of belt and braces systems you might expect.

    As per your other readers comments – it is a shambles of patch upon patch (i like the swiss pastry analogy) – thats why most of the big guys are going through major systems upgrades at the moment. The fragility is appearing on front pages enough to warrant attention.

    On another note – i look forward to the next few years as the behemoth systems go live – as I will be very busy!!!!
    Cheers Daniel

  4. Beauner Says:

    “But this is Australia — we’re different!” — “Aussie Aussie Aussie! Oi Oi Oi!”

    :D

  5. J.C. Says:

    To CB and the other gold followers:

    The GOLD ETF is up 2.3% on the ASX. I couldn’t understand what the hell was going on. Had North Korea attacked overnight? Had the penny dropped in Spain? No. The answer is that China’s securities regulators are allowing mainland Chinese to invest in foreign exchange-traded gold funds for the first time. This is massive in my opinion. If gold’s in a bubble, my guess is that we aint seen nothing yet.

    http://online.wsj.com/article/SB10001424052748703994904575647101705626846.html

  6. SV Says:

    Of course banking systems are a handful. Some core systems are perhaps 30 years old. And they are not as automated and error-proof as we are made to believe. And if, like you suggested before, they just “unplug” their computers and then re-run the whole thing again, this could double transactions – like in CBA glitch a few years back.
    None of which increases our confidence in the banks.

  7. Peter Fraser Says:

    JC @ 4 – as you know I’m not a gold bug, but I have seen recent predictions of $6000USD an ounce for gold.

    This is a new dimension added to the market – interesting stuff.

  8. Mike Says:

    “There is zero chance that the NAB wouldn’t have such belt-and-braces IT system in place to kick-in in the event of a so-called corrupted file causing a problem.”

    Umm, sorry Kris, I like you’re writings but you really overestimate the capabilities of IT people and systems. I’m speaking as someone who has worked in the industry for over a decade.

    While I don’t know the truth behind the NAB debacle, the IT screw-up thing is perfectly plausible to me.

    Really, most systems ARE held together by chewing gum and sellotape, it’s quite shocking seeing some of them. But the truth is the industry is really still in it’s infancy and most organisations don’t have the resources or capability, and this includes banks, to have really good systems. Remember this next time someone says the system is really secure or someone thinks that a cashless society is a good idea.

  9. Mike Says:

    I’ll make another point about FRB that I’ve made elsewhere. People want it. They want it because they want immediate access to their money and for that money to earn interest.

    If you have full-reserve banking you have to give up one of those.

    NB: that’s not to say I approve of the banks, I don’t, but I don’t have a problem with FRB.

  10. Peter Fraser Says:

    Mike – if your still there – I understood all banks have shadow off site systems.

    As I understand it you are saying they are not as good as they are made out to be, which is more of a worry to me than the “edge of bankruptcy” theories which we all understand (hopefully).

  11. KP Says:

    “”Monopoly: Telstra disproves your theory.””
    Not at all, it is the pefect proof of it.

    The Govt uses its jackbooted thugs to make sure no-one can set up a telecommunications system in competition to its own telegraph system, and rides that for 100years. Then they discover there is no way to easily dismantle a Govt monoply in practice, and have to have more and more Govt intervention to get competitors in, who are not real competitors as the Govt is still in there picking winners.

    If Govt had not entered the telephone market at all, then you would have had competition.

    This is from NZ, but the Aussie Govt is just as bad- How the hell can they say we have free enterprise when they are-
    o The biggest owner of dairy farms in New Zealand;
    o The biggest fund managers in New Zealand;
    o The 50% owner of a large chain of petrol stations;
    o By far the biggest owner of rental properties;
    o The dominant generator of electricity;
    o The dominant owner of our trains and planes;
    o The owner of our most aggressively growing bank.

    Nanny State- sticking its nose into a life near you…

  12. k Says:

    Banks are required (as are many other financial institutions) to have off site systems, however oftn the capacity of thise systems is far far below what the everyday system is- there appears to be an assumtion that should it be needed everything can operate at a slower pace.
    The more legacy systems are lying around the place, entangled into the new ones, the better the chance that something like this will happen- a variation on the Y2k threat- but without the attention and push to fix.
    That said- it shouldn’t have taken 6 days- I had a brief conversation with an ex Centrelink person- they had similar servers/server issues and it took about a day to rectify. 6 days does indicate something else was happening, particularly when the debits continued to flow- so all of the corrupt code was only on the credit side?
    If I were inclined to the criminal mode and had access to those servers and historical data- I would be going after any big unattended accounts and getting some odd debits in- it could be yers before anyone thinks to object, and easy money.

  13. JB Says:

    RD @ 2
    Based on how moronic the mainstream economists are i’d have to say that it is a compliment to Kris that he has no “academic qualifications in economics” …

    His analysis of various topics is generally top notch – and shows actual insight – unlike the moronic economic drones you seem to admire.

  14. michael francis Says:

    My apologies to NAB.
    Had a fat fingered error at a NAB ATM last week. Typed in to transfer $260 for my Wikileaks subscription but the zero key jammed and it went in is as a transfer of $26 Billion.
    Looks like NAB can kiss that good-bye.

  15. RD Says:

    JB @ 12. My drunk uncle can tell what seem to be some pretty interesting and insightful stories… unfortunately that doesn’t mean they have any basis in reality.

  16. Peter Fraser Says:

    RD – does your drunk uncle post here?

  17. Nick Says:

    JB…..PF has many “avatars”.

  18. Peter Fraser Says:

    Nick – no one uses avatars here, and in fact I don’t use them anywhere.

    Perhaps you are confused with something else – not sure of your meaning actually…

  19. Peter Fraser Says:

    Nick – perhaps you mean sock puppet?

    http://en.wikipedia.org/wiki/Sockpuppet_(Internet)

  20. JB Says:

    RD @ 14
    i’m not saying i agree with Kris on this one.
    however, you insinuated that this is just another one in a long list of topics in which he has it totally wrong.

    i dont think so…. what he says generally is on the money.

    a prime example is his revelations of the ridiculous farce surrounding our property market.

    his take on the goings on on the world financial stage are also spot on – analysis you’ll never see by so-called economists who dont see to be able to distinguish their arses from their elbows…

  21. Al Says:

    We’ll probably never know what caused a 7 day glitch in NAB’s system. Your raising the possibility of deliberately using the glitch as a cover to freeze payments is just the sort of twisted cynical thinking I find refreshing.
    A lot cheaper than troubling the RBA for a top up as well.

  22. michael francis Says:

    http://www.debtdeflation.com/blogs/2010/11/30/competition-is-not-a-panacea-in-banking/

    Kris’s exposure of CBA diddling of household income V’s property prices makes it too a Senate enquiry courtesy Steve Keen’s report into banking competition.

  23. david Says:

    cb,did ya get gold/silver on monday,i did

  24. cb Says:

    JB – What stands out in my mind was Kris’s exposure of the CBA’s ridiculous sales pitch with those patched and selected stats from here and there. Remember?

  25. david Says:

    c,mon pf do you believe in god?

  26. cb Says:

    Hi David, Yes, thankfully I did dip in for some 1kg bars, although reluctantly at the time. I was still kicking myself over procrastinating too long just following my dive in purchase that was cancelled by that dealer. He later moved to redeem himself by offering me some coins at the price I made my initial purchase, but only for about 10% of the quantity. Anyhow, I took him up on that offer, even though it is clear that he is a dog.

    The very next day after he reversed my payments he jacked up his prices and ever since the products have been claimed to be in stock and ready to ship on his website. So, I just took what he offered at the old price, and then went shopping elsewhere for the 1kg bars. Bought them for $951 each, which could have been worse, but still nowhere nearly as good as the $25/oz price when I dived in on the pullback. The premiums on coins are too high, I reckon. The larger bars are the most economical. Which ones did you go for?

  27. cb Says:

    hahaa, MF, I see we both got struck by the same bolt of lighning :-)

  28. cb Says:

    hshahaaaa, david, I don’t think PF believes in God, but he does appear to believe to be doing God’s work. With Blankfein and Stevens he probably believes himself to be in good company.

  29. cb Says:

    MF – Yes, Keen makes a good argument of it, but I did not see any acknowledgement of the fact that it was Sayce who picked up on the slight of hand first. It is another deplorable instance where academics “borrow” other people’s works and ideas without acknowledgement. It stinks. I only skimmed through it thoug, so I am happy to stand corrected if Sayce was referenced.

  30. J.C. Says:

    CB@24

    You sure that was a 1-kg bar you bought for 951 dollars?

    Someone alerted me to this brief commentary on AUD and gold. Thankfully all the bullshit artists in the media and bank comms depts have taken off their invincible coats.

    http://delusionaleconomics.blogspot.com/2010/12/did-you-buy-gold.html

  31. cb Says:

    Well, JC, that is what my invoice says. They better be 1kg bars when I pick them up. These were silver bars, mind you. I wish they were gold for that price, though. But maybe I should start studying alchamy, no? Then I could just turn lead bars into gold bars, coz even silver is getting pricey. Incidentally, I bought them last Monday on the 22nd, not on Monday 29th. It was from a dealer I bought from before and he gave me a small discount on the asking price.

  32. david Says:

    cb,i bet pf believes in god but he wont say for personal reasons.

  33. KP Says:

    “”The premiums on coins are too high, I reckon.””

    Agreed- I’d like to get a stack of coins, because if you ever want to actually spend your silver a Kg is lot to take shopping. However the premium on coins make them a lot less economic.

  34. david Says:

    cb,i only buy bars,coins too dear.
    kp,it might take a kilo to buy food at the shop in five/ten years

  35. Peter Fraser Says:

    David – I have every right to maintain some privacy, and you know that. Only a fool would divulge private information on the internet on demand.

    So you may speculate til the cows come home, what you say or claim means nought to me.

  36. Nick Says:

    Your Right PF “only a fool” …as you did with you’re website and now?…Puff! it’s gone!!! You took my advice?? Good man. now we work on getting you a membership on the mothership… Huh! I’m a poet and I didn’t know it!

  37. J.C. Says:

    CB,
    Well the kg bars in the following link are 30,000 pounds which is similar to the prices I saw in Osaka 2 weeks ago. AUD941 is pretty damn cheap.

    http://www.taxfreegold.co.uk/onekilogoldbars.php

  38. J.C. Says:

    Apologies CB. I need to read more carefully.

  39. N Says:

    A few years ago I project managed the IT transition from one building to another, for one of the very well known 2nd tier banks. The whole thing was in shambles. Example – under a desk we found a very old PC (90′s) which, it turned out, was also the host of an ancient application that enabled visa payments for a particular (large) product class. The application was unsupported and only ran on one of the 90′s Windows versions. My initial advice from the propellerheads was just… don’t… touch… it.

    Investigations kicked off (this was about 1% of total project scope) and no replacement system could be identified. Hence we had to move the damn thing to the new building, and even more frightening TURN IT OFF in order to do so. There was less than 50% chance that the damn thing would start up again. We managed to get it across and it booted back up. If it hadn’t worked, well…

    I can imagine that it still sitting under a desk somewhere, and by now the turnover in the IT department probably guarantees that no-one knows about it anymore.

    So in summary – No, there is no limit to the risk incurred by utterly sub-standard IT infrastructure in our banks. I could give you a dozen more examples.

  40. Peter Fraser Says:

    Nick – I’m posting from a different computer that is all, my desktop is still linked to my website. I could link it to yours if you prefer.

    Are you so closed minded you have a problem with that link to my website. You don’t even understand websites so what is the big deal to you.

    I don’t think the mothership has enough room for both of us, we are both a little tubby and I am much taller than you, so I may have to duck under the bulwarks in the spacecraft.

    I will stay here with my two feet firmly planted on the ground if that is ok – but you can take off now.

  41. cb Says:

    hahahaaa, JC, I was almost thinking that I should double check the latest quotes on silver. I might have offloaded a few bars at that price, lol.

  42. cb Says:

    Wow, N, what a story!!! It is a miracle we don’t have more system crashes. But what puzzles me is why, once the fragility of the whole thing was made so plain to see, did management order a replacement program to be written to take over the function? Machines can die on you at any time, so the attitude stikes me as downright cavalier.

  43. PJ Says:

    I support the commentary of the person who suggested you “stick to what you know something about”.
    I’ve enjoyed your alternative views to what is expressed in the mainstream media and by the spruikers over the past few weeks regarding investment markets, but your commentary on NAB’s computer glitch takes the cake in terms of being sensationalistic and ignorant of any basic facts.
    Believe it or not, large companies like NAB, do not have backup plans for every possible permutation of error condition that might arise during daily processing. While they spend millions on ensuring business continuity and disaster recovery operations are viable (which is an obligation to the regulators like APRA), these generally only allow for extreme situations like a World Trade Centre attack taking out operations. The event that occurred at NAB was a true glitch caused by a data error, where subsequent human intervention to correct the error did not go according to plan. Your comment that “There is zero chance that the NAB wouldn’t have such belt-and-braces IT system in place” is totally misinformed – there is no IT system in existence on this planet that can take into account every possible failure scenario. When IT systems fail, the fallback is usually to human processes, in any industry.

    There was no conspiracy or underlying need to maintain liquidity, and I wonder what your purpose is in trying to suggest this, as it is so preposterous to contemplate that NAB or any other bank would deliberately create such a situation. The brand damage to NAB from this incident is probably immeasurable, so why would NAB deliberately create this situation knowing this implication.

    In my view you have lost all credibility as a result of your commentary on this topic. It is totally misinformed. I am now starting to doubt the credibility of your other commentaries. I suggest as per what the other commentator stated, you stick to what you know something about.

  44. cb Says:

    But enough of all this serious stuff. Let’s have some fun with numbers:

    Sea levels rising at top end of estimates, reports The Australian.
    Oh, yes, according “Senior CSIRO scientist John Church this week launched a book that says sea levels are rising at about 3mm a year against a long-term average of 2mm a year. “We have been tracking sea level since 1993 and it is now at the upper end of the IPCC projections of 80cm by the end of the century,” he said.”
    http://www.theaustralian.com.au/national-affairs/climate/sea-levels-rising-at-top-end-of-estimates/story-e6frg6xf-1225937892875

    And now to the fun part, with the numbers. But maybe I should leave it to stalwart pillars of the establishment, such as PF and GTO to interpret and explain to us conspracy nuts how these credible scientists get from an annual 3mm sea level rise to 80mm rise in a few short 90 years.

    So, c’mon gentlemen of the establishment, you paragons of reason and rationality, show us the magic by which the circle is squared, so that we may all start to belive all the spruiking and statistics, along with much else that we are being fed through the megaphones we distrust.

  45. dc Says:

    Wow… Looks like I missed out on all the fun today! This is from the other thread, I’ll post in here as it seems a touch less lively lol

    cb @ 55 – You Said: All, I thought I should point out something obvious: Assange is largely reliant, from what I understand, on information that is given to Wikileaks by insiders and whistle blower.

    I was about to say that if WikiLeaks is just a tool that Assange might just simply be a puppet who is being told what to say, but then I found the following article that suggests that Assange is running the show authoritarian style without allowing anyone within his organisation a say. A bunch of them have quit apparently

    “Wikileaks came to prominence after it released 91,000 documents related to the Afghanistan War. Now, officials inside the organization have begun leaving in protest over its founder’s insistence on releasing nearly 400,000 similar documents from the Iraq War. ”

    Last month he effected, apparently with no collaboration or consultation, a media review of the Iraq documents. When asked to consider taking more time to more carefully redact the Iraq documents, Assange refused.

    Among the dozen so far who’ve jumped ship are Herbert Snorrason, who ran Wikileaks’ secure chat room; and Daniel Domscheit-Berg, Wikileaks’ German spokesman.

    “I am the heart and soul of this organization, its founder, philosopher, spokesperson, original coder, organizer, financier and all the rest. If you have a problem with me, piss off.”

    http://www.readwriteweb.com/archives/wikileaks_officials_quit_over_iraq_war_doc_release.php

  46. cb Says:

    DC – Yes, Assange is an enigma. If he is not a Zionist channel, then his neck would be on the line for what he does. In such a case, democracy in his organisation might not exactly figure as the supreme consideration. Plus, ss with any workplace where the buck stops with you, if you are the boss, you are the boss. End of story.

  47. cb Says:

    Clueless Patsy Set-up by FBI in Christmas Tree Bombing Plot
    http://current.com/1gu854c

  48. The Wolf Says:

    New childrens book about air travel in the US today…

    http://www.boingboing.net/2010/11/11/tsas-new-book-for-ki.html

  49. Nick Says:

    Here is a beautiful summation from a legend. I could not agree more. All else is just BS.

    “What most people look at, no what almost everyone looks at is a picture in time, something like looking at a still. Up comes the chart, it’s a picture in time. Very few people will focus on motion, direction over time. And you can’t predict the future unless you can see things in motion. So, to the static thinker the picture in time has to have an excuse of why the market did this or why the market did that or what technical thing happened to make it happen. While in truth, you and I know we are watching something unfold.”

  50. Nick Says:

    PF…@38..you are worming your way out again. Oh dear!

    As for taller than me??? Lol, lol,… is there not ANYTHING you can get right!!! Perhaps thats why your resort to BS and bullying, to satisfy your small man syndrome…LOL

  51. JB Says:

    Guys
    Do you reckon that silver may pull back briefly again before 7 December?
    If not i’m going to be mighty upset with myself …
    i was hoping to get in one more suckerpunch to JP Morgan without having to pay $1000/kg.
    your thoughts?

  52. cb Says:

    lol, Nick, I did not say anything on this, coz I wanted you to shoot it down, but I was thinking: Good G-d, why isn’t he just claiming to have a bigger d!ck than everybody else here? It is getting that pathetic.

  53. cb Says:

    A very good discussion by Bob Chapman in this interview. He explains how the bankers through the IMF have now robbed Ireland (and Greece) of their sovereignty. Also, a very interesting and startling revelation that some Austrian banks are now offering gold-backed deposit accounts to customers. This is an incredible, and very bullish development for the metals, because these banks will have to collateralise those deposits in order to back them with gold in one way or another.

    Unfortunately, whether they would actually do it with physical metal is unclear. It maybe that what they are offering is simply some sort of paper gold backing, such as through an ETF, or through some gold related derivatives, in which case, in my view, counterparty risk to deposits would be enormous.

  54. earlwag Says:

    I think, as do a number of others given the early sell off of shares, that Bank of America will feature in the Wikileaks info. Some stuff that made it through the “politically correct” news channels mid last year is on my website.

    I worked in a bank IT group and have to say there were plenty of ongoing problems with the payments and interbank system but the old work around bit of band aid plaster was always ultimately trotted out – hell even ITIL supports work arounds, why fix the actual problem. Trouble is as the French say “the more things change the more they stay the same” so while work around 1 fixes problem 1 and work around 2 fixes problem 2 the net effect is that it brings you back to needing to modify the work around put in place for problem 1 which leads you to problem 2 workaround mods etc etc etc. In the end you have the original “mouse” problem that covered in band aids its the size of an elephant and of course we DONT TALK ABOUT THE ELEPHANT IN THE ROOM DO WE. Just keep paying the IT boys and the CEOs mega bucks…….

  55. cb Says:

    JB – Why 7 December? Do you expect that the campaign is going to shake the banking world? I am rather skeptical. People’s inertia is probably far too great for that. However, I would love to hear different perspectives on it. What is yours?

    As for a pullback, I don’t know. Prices are once again climbing today. The pressure on the shorts is building and it is relentless. There is blood in the water, so anything can happen. A sharp, if brief sell-off is always possible. JPM and HSBC are unlikely to go down without a fight, so who knows what they might do next. Even so, they are achieving less and less with each sell off. From what I understand, they hardly managed to cover much with the last bout of violent manipulation down. All they managed to do is to lose more physical metal from the exchanges. When they sell off, there are lots of buyers ready to pounce and back up the price goes again.

    The shorts are trapped, and pullbacks tend to be more and more brief and more and more shallow as time passes, while the price keeps pressing higher. I wish I could be of more use than reahashing what is going on.

  56. cb Says:

    Sorry, the link to the Chapman interview is here:
    Bob Chapman on The National Intel Report – 30th Nov
    http://bobchapman.blogspot.com/2010/12/bob-chapman-on-national-intel-report.html

  57. JB Says:

    7 Dec is the date which Celente, Keiser, Maloney and others have mentioned …
    but i reckon i’ve left it too late – i reckon this past monday was the last semi decent pullback – and i’ve missed the bloody boat!

  58. cb Says:

    Gerald Celente: Wikileaks exposes doublespeak

    Thousands of US sensitive documents has been released by whistleblowing website WikiLeaks this weekend. Gerald Celente of the Trend Research Institute says those documents is another example of the US incompetence.

    http://geraldcelentechannel.blogspot.com/2010/12/gerald-celente-wikileaks-exposes.html

  59. cb Says:

    Keiser Report – John & Yoko Style, $500 Silver If You Want It
    http://maxkeiser.com/2010/12/01/keiser-report-john-yoko-style-500-silver-if-you-want-it/

  60. cb Says:

    The slow but steady descent into fascism. You have to see this to believe it. Establishement mouthpieces are now openly calling for Assange’s murder. And of all people, it is a fuckwit university professor and advisor to the Canadian government. If our academics, the intelligentsia, who are supposed to fight the hardest for our freedoms, are stooping this low into the mud, our situation is worse than we have suspected.

    Is It Open Season On Advisors And Professors?
    http://market-ticker.org/akcs-www?post=173651

    Is It Open Season On Advisors And Professors?

  61. cb Says:

    Keiser Report №99: Markets! Finance! Scandal!
    http://www.youtube.com/watch?v=C-XinYo58lw&feature=player_embedded

  62. Peter Fraser Says:

    cb @ 57 – I agree that guy is a loony (well he is Canadian).

    I’m going to have to make the mothership even bigger than I imagined.

    So much work to do….

  63. JB Says:

    Come on PF – come out of the closet…

    it’s okay to admit that you’ve sold all your property and have bought silver bullion with it… we’ll respect you for being honest!! ;p

  64. JB Says:

    it may not give Chris much joy … but hey – you gotta look after your own interests first.
    and there’s a lovely property on the Sunshine Coast with your name on it… so no shame in admitting you’re saying one thing and doing quite another ;p

  65. cb Says:

    Wednesday, December 1, 2010
    Congress leaves unemployed Americans in the cold

    Hundreds of thousands of Americans will see their federal unemployment benefits expire this week, and millions more by the end of the year, just in time for the holiday season. Economist Max Fraad Wolff says there is a lot of room to cut the deficit instead of these benefits, starting with military which spends more than half the world’s defense budget.
    http://geraldcelentechannel.blogspot.com/2010/12/congress-leaves-unemployed-americans-in.html

  66. Peter Fraser Says:

    JB @ 60 – Cheers mate, no I haven’t done that, but that doesn’t mean that I don’t think that is an ok plan, as long as you can make enough on the sale of your property to cover the costs involved when selling and buying back in.

    Everyone has to make their own decisions on that, and different solutions are needed for different people in different situations.

    Many here are expecting quite large falls in property prices, but there are no guarantees either way, so to sell in the hope of buying again at a good enough price to profit and cover costs is a gamble IMHO. If you have done that, then the best of luck to you.

    As I see good buys come on the market, I will move into buying mode, but I’m in no rush.

  67. michael francis Says:

    CB

    Your correct, Kris Sayce got no mention in Steve Keens report.

  68. Peter Fraser Says:

    Nick @ 47 – no it was just an observation, nothing more.

    cb – you may be right – perhaps I do have the smallest here, but who cares. Please don’t post any photos as proof of your size, I’ll take your word on that.

    You do over think things don’t you.

  69. Drew Says:

    michael francis and cb,
    you are right there is not mention of Kris – but there was in Keen’s original post on the issue:
    http://www.debtdeflation.com/blogs/2010/09/11/overseas-investors-the-commonwealth-bank/

  70. JB Says:

    Drew @ 66
    that’s a shame that he didnt credit Kris with this all important revelation. i hope he sets the record straight!

  71. cb Says:

    Thanks, Drew. Yes, that was the right thing to do, but he should not have negelected crediting Sayce again in his report and submission. He is an academic and should know better.

  72. Drew Says:

    True.

  73. Thy Says:

    The use of batch processing in mainframe computing is nowhere near as complex as economics, until something goes wrong. Unpicking batch failures is time consuming and complex.
    Applications containing multiple jobs are daisy chained together in a specific sequence to execute programs to manipulate data . Each of these jobs has multiple steps, including uploading, copying processing and re-organising data files.
    During the almost twenty years that I have spent in the IT Industry, I have had the opportunity to witness this type of failure on too many occasions. In most cases, the failure is caught early enough and restoration is discreet and not externally visible, there are some real clangers though.
    Once a “corrupted” file is processed and consequential processing is executed you are faced with the challenge of working out how to “undo” and verify the processing, which may now involve multiple files, and technical staff having to write code to “reverse-engineer” the processing.
    Maintaining data integrity is critical to Business Continuity long term, as failing to do so will result in a genuine loss of customer confidence, and failure to comply with both internal and external audit requirements,.
    While it has taken time to recover from the incident, it is unrealistic to try and link the incident with insolvency theories. To do so is ridiculous given the business impact of the incident. If planning to orchestrate an intentional outage to address insolvency, it would make sense to target those systems that facilitate the inter-bank exchanges, rather than just a few million worth of payrolls. Billions are exchanged daily in these transactions as paper cheques and electronic transacations flow through the process.
    I feel that you lessen your credibility by continuing to suggest that this incident was anything other than a technical failure.

    Cheers and thanks for your daily newsletter.

    Thy



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