Monday, January 16, 2017

The Assayer and The Judge

Isn't it interesting that financial services fines, which have been levied upon banks in the last 4 years or so, have steadily and increasingly been in the news. I haven't made a comparison (though I suspect someone will), but it does seem that litigation regarding market rigging, customer front running and other forms of control fraud have increased considerably in recent years.

More civil fines have been paid between 2013 and 2014 than in the 9 years prior. Paltry millions admittedly, but total fines levied upon primary dealers add up to over a quarter trillion since 2008. The wheels of justice do turn slowly, but turn they eventually do.


I think the trend will continue ... because derivatives always need protection from the rule of law. As fines are paid, counter parties are made whole, or at least partly whole, and at least in cases which matter to counter parties that can have systemic impact. Things have changed much since the era of AIG, and even later, MF Global.

Further, as the system continues to be challenged, so shall derivatives in the global marketplace. Claims will continue to be questioned, especially those involving transactions between banks which serve the emerging multi-polar vs. those who serve the existing dollar-centric system. The interdependence of banks will break down, just as the interdependence of cultures (through forced migration and the "political correctness" of cultural homogenization) continues to falter.

The "legal tender" value of wealth by decree will continue to be contested, and courts of law will be called upon to interpret and rule.

Conversely, gold is either 99.9% pure or not. There is no interpretation of purity, nor of weight. A tonne is a tonne. Only the assayer is called upon to verify - no judge is needed to rule. Not to split hairs but the correct analogy is a tonne of gold in possession vs. a contractual claim upon a tonne of gold. Which requires the rule of law to enforce or interpret?

We enter a time when people begin to question the value of contract paper, and it's printers call upon the courts to rule in favor of whatever outcome keeps the system in continuation, such that profits continue to flow.

But trends are duly noted, and change is inevitable, as time proves time and time again.

2 comments:

  1. Ownership is nine-tenths of the law, but gold will "legally" be confiscated if they know where you keep it!

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    1. What do fines matter? All money is created out of thin air.
      Like I've said:
      1) our system is in terminal decline, collapse, whatever you want to call it
      2) the jews own and control america, and therefore the world
      3) gold is useless, as it is the one asset that will never be allowed to be independent of the system; agreed they can do whatever they want to it, they can tax it, outlaw it, confiscate it...and trust me, nobody will complain but some indian and chinese peasants who don't matter at all
      3) fofoa is a crazed lunatic who says some interesting things, but none of which matter in the least bit to the system; maybe in time it will but who really knows

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