USA Watchdog | May 18 2012
The big news is what is coming up over the next four days. There are two sets of meetings: one in Camp David with the G8 and one in Chicago with NATO. Forget the protests in Chicago; that is just noise and distraction.
There are three big problems that will be talked about at these meetings. Syria is in the middle of a revolution, and Russia has warned the West to stay out. Nothing is settled there, and the cease fire was short lived. Any NATO action, such as what happened in Libya, could spark World War III.
The European debt crisis is getting worse, not better. Spanish banks are in trouble, more than two dozen Italian banks have been downgraded and the Greeks took nearly a billion dollars (700 million euros) out of the banks there. Germany is under Pressure to come to the rescue, but Angela Merkel is in trouble from all the bailouts. The fear is if Greece leaves the EU, then other countries will follow, and the banks could all take big losses.
The other big topic for discussion will be the Iranian nuclear program and the big meeting in Iraq next week. The last meeting in April with the U.S., Germany, France, Britain, China and Russia ended with nothing more than an agreement for the meeting next week. Israel is not happy and, basically, said Iran was free to enrich uranium. Iran has repeatedly said its nuclear program is for the peaceful production of energy. The U.S. Senate is working on new economic sanctions on Iran, and word there is that containment of Iran is not an option.
JP Morgan’s $2 billion loss will probably turn into a $3 billion loss and may go higher. It will not sink JP Morgan, but this shows how risky derivatives are, and all the banks are backed by the FDIC. This is a warning flare that big financial icebergs are ahead. At some point, the loss might be big enough to trigger another meltdown. Goldman Sachs, for example, had $44 trillion in derivatives and a little more than $100 billion in assets. The banks will tell you that this is all hedged risk, it’s called bilateral netting. This is done to keep losses tiny, if any occur. But we know how well that worked with AIG, Lehman, MF Global and, now, JP Morgan.
Finally, there is a new story on the internet about how President Obama was born in Kenya. It seems Obama’s literary agent accidentally released it. Please remember, a few months ago, Arizona Sheriff Joe Arpaio alleged the President’s birth certificate was a forgery. The MSM ignored the story, but it might be harder to ignore now. Greg Hunter has analysis of these stories and more on the Weekly news Wrap-Up.