A hedge fund run by a former JPMorgan Chase & Co. executive who helped create the credit- derivatives market is aiding the lender as it unwinds trades in an index at the heart of a loss of more than $2 billion.

BlueMountain Capital Management LLC, co-founded by Andrew Feldstein, has been compiling trades in recent weeks that would offset JPMorgan’s risk in Series 9 of the Markit CDX North America Investment Grade Index, then selling the positions to the bank, according to three people outside the firms who are familiar with the strategy. That allowed the bank, which is said to have amassed as much as $100 billion in bets on the index, to unwind trades outside the traditional web of dealers.

“They used BlueMountain to disguise what they were doing,” Peter Tchir, founder of New York-based macro advisory firm TF Market Advisors, said in a telephone interview. “It all gets a little bizarre and shows how screwy this whole market is.”

There are no markets anymore...only interventions. I thank Edmonton reader Ray Hay for sending this Bloomberg story my way...and the link is here.

Regulators in at least four different countries – the U.S., Canada, Japan, and the U.K. – are conducting a probe into the manipulation of LIBOR. At least one bank, UBS, is cooperating with authorities, and Wall Street has been abuzz with rumors in recent months that another major cooperating witness has come forward. That, coupled with news this winter and spring of dismissals of rate traders at several major banks in connection with these probes, suggests that these investigations are gaining momentum.

Many of the bigger banks have been targets. J.P. Morgan Chase, for instance, has been targeted by the Canadian probe (not that you would have heard about that in the recent congressional hearings with Jamie Dimon), along with Deutsche and HSBC. Barclays, the Royal Bank of Scotland, Citigroup, and a host of others are also being investigated.

There have been a number of major civil lawsuits filed over the LIBOR issue, and as in the muni bid-rigging scandal, the list of defendants in these civil cases reads like a Who’s Who of the top banks in every major western country: Bank of America, Citigroup, Chase, Bank of Tokyo-Mitsubishi, Barclays, Lloyds, Rabobank, Credit Suisse, and Royal Bank of Canada, among others.

If the allegations of LIBOR manipulation turn out to be true, it would present governments with the mother of all regulatory dilemmas: when virtually all the top banks in all places have been fixing something as elemental as interest rates, what do you do? Issue more fines?

This blog is an "add on" to his big Rolling Stone essay that I posted in this space yesterday. It's definitely worth the read...and I thank Australian reader Wesley Legrand for bringing it to my attention. The link is here.

There are no signs of rioters, wind-damaged homes or flooding. The brand new City Hall features gleaming marble floors and the public recreation centers offer Zumba, karate and Pilates classes.

Despite all of its suburban trimmings, North Las Vegas is officially a disaster area.

After five years of declining property taxes, massive layoffs and questionable spending, leaders of the blue-collar, family-oriented city outside Las Vegas declared a state of emergency, invoking a rarely used state law crafted for unforeseen disasters.

This AP story was posted on the news.yahoo.com website yesterday...and it was brought to my attention by reader U.D. The link is here.

For many years, I was an active supporter of the IPCC and its CO2 theory. Recent experience with the UN's climate panel, however, forced me to reassess my position. In February 2010, I was invited as a reviewer for the IPCC report on renewable energy. I realised that the drafting of the report was done in anything but a scientific manner. The report was littered with errors and a member of Greenpeace edited the final version. These developments shocked me. I thought, if such things can happen in this report, then they might happen in other IPCC reports too.

Good practice requires double-checking the facts. After all, geoscientists have checked the pre-industrial climate, over the past 10,000 years: this isolates natural climate drivers. According to the IPCC, natural factors hardly play any role in today's climate so we would expect a rather flat and boring climate history.

Far from it: real, hard data from ice cores, dripstones, tree rings and ocean or lake sediment cores reveal significant temperature changes of more than 1°C, with warm and cold phases alternating in a 1,000-year cycle. These include the Minoan Warm Period 3,000 years ago and the Roman Warm Period 2,000 years ago. During the Medieval Warm Phase around 1,000 years ago, Greenland was colonised and grapes for wine grew in England. The Little Ice Age lasted from the 15th to the 19th century. All these fluctuations occurred before man-made CO2.

This story from The Telegraph earlier this week was sent to me by Roy Stephens...and is worth reading. The link is here.

From a very small base, and from a tiny position in world energy supply, the build-out of global solar power is starting to go parabolic. Last year, according to the just released BP Statistical Review, global solar generation nearly doubled to reach 55.7 TWh (terrawatt hours).

To put this power capacity in context, North America generated almost 100 times as much power in 2011 from all sources (coal, natural gas, hydro, nuclear, wind, solar), to reach 5204.5 TWh. By that measure, solar power capacity on a global basis can barely be detected, and is therefore a kind of joke, right? Uhm no, that would be wrong.

This is a short read...and the graph is excellent. I thank Wesley Legrand for sending it our way...and it's posted over at the gregor.us Internet site...and the link is here.

As convenient as it is for someone in a cubicle in the Nevada desert to press a button and incinerate a Pashtun wedding party in North Waziristan, now, with only a click, anyone can download a 359 KB file available on Amazon for only $8.99 - including free wireless delivery - and learn everything there is to learn about All Things Drone.

This digital file becomes even more crucial now that US and world public opinion knows US President Barack Obama is the certified Droner-in-Chief; the final judge, jury and digital Grand Inquisitor on which suspicious Muslim (for the moment, at least, they are all Muslims) will get his paradise virgins via targeted assassination.

Obama owns his newspeak-drenched "kill list". He decides on a "personality strike" (a single suspect) or a "signature strike" (a group). "Nominations" are scrutinized by Obama and his associate producer, counter-terrorism czar John Brennan. The logic is straight from Kafka; anyone lurking around an alleged "terrorist" is a terrorist. The only way to know for sure is after he's dead.

This Asia Times story by Pepe Escobar on June 17th was picked up by the alternet.org Internet site...and it's a very interesting and disturbing read. I thank Roy Stephens for finding it...and the link is here.

A UN investigator has called on Washington to provide justification for the increasingly widespread use of military drones to carry out targeted killings. He says drone attacks, which take innocent civilian lives, may be violating international law.

The US military and CIA use drones in Afghanistan, Pakistan, Iraq, Yemen and Somalia. Washington should clarify the legal basis for the policy of killing suspected Al Qaeda and Taliban leaders and associates rather than trying to capture them, Christof Heyns, Special Rapporteur on Extrajudicial, Summary or Arbitrary Executions, said in a report. The 28-page document addressed to the UN Human Rights Council was released ahead of the body’s debate on the issue in Geneva.

"The government should clarify the procedures in place to ensure that any targeted killing complies with international humanitarian law and human rights and indicate the measures or strategies applied to prevent casualties, as well as the measures in place to provide prompt, thorough, effective and independent public investigation of alleged violations," the report says.

The UN official cites figures from the Pakistan Human Rights Commission, which said American drone strikes killed at least 957 people in Pakistan in 2010 alone. Out of the thousands killed by drones since 2004 roughly 20 per cent are believed to be civilians.

This story appeared in the Russia Times earlier this week...and is another Roy Stephens offering. The link is here.

The use of drone strikes by the US to combat terrorism flouts international law and may encourage other nations to follow suit, a UN rapporteur says. He stressed that some of the attacks may constitute war crimes.

Christof Heyns, the UN special investigator on extrajudicial killings told a UN conference in Geneva that the US needs to be held legally accountable for the use of armed drones.

"Are we to accept major changes to the international legal system which has been in existence since World War Two and survived nuclear threats?" he said.

He underlined the fact that recent US drone strikes threatened the rule of international law in that many “targeted killings take place far from areas where it's recognized as being an armed conflict." Heyns added that drone strikes may be legally justifiable in conflict zones such as Afghanistan.

This is another story from the Russia Today website...this one from yesterday. It's also courtesy of Roy Stephens...and the link is here.

After reports that the US designed the greatest cyber viruses in history with Flame and Stuxnet, Washington faces a predicament in justifying the duality in its cyber policy and defending its anti-piracy rhetoric.

While the US has repeatedly condemned cyber-attacks and hacking when aimed at itself, Washington’s involvement in the coordinated US-Israeli cyber attack on the Natanz nuclear facility raises a troubling problem for the government.

“We’re setting a precedent for other nations,” Trevor Timm of the Electronic Frontier Foundation told RT. “And that’s where the real problem lies, because we’ve been criticizing China for allegedly attacking United States companies and the US government, while at the same time we’ve been engaging in the same conduct with other countries.”

Given the US policy of cyber-espionage, some analysts are concerned that this aggressiveness may provoke a reciprocal response.

This is third and final story from the Russia Today Internet site...and it's also courtesy of Roy. The link is here.

Power traders in at least four countries have reduced or halted electricity exports to Greece due to non-payments, helping to force market prices sharply higher in a potential blow to struggling industries and raising the risk of blackouts during the tourist season.

With Greece deep in crisis, power grid operator LAGHE owes foreign and domestic suppliers 3 27 million euros ($410 million), a court document obtained by Reuters showed, as its revenue falls due to the recession and a refusal by many Greeks to pay their bills.

Trading sources said that at least four trading companies in Switzerland, Italy, Bulgaria and Germany have either lowered or cut off sales to Greece due to high credit risk and delays in payments over the past 2-3 months for power they sold.

"We have stopped power sales to Greece," said Claus Urbanke, head of new markets at Statkraft, a Nordic utility which trades electricity throughout Europe.

This story was posted on the telegraph.co.uk website late yesterday afternoon in London...and is another story from Roy Stephens. The link is here.

Germany's highest court asked the country's president on Thursday to delay ratification of the permanent euro bailout fund, the European Stability Mechanism, and the fiscal pact into law next week. If she complies, the move could delay the implementation of the ESM by several weeks in the latest setback for Chancellor Angela Merkel.

The Constitutional Court, anticipating challenges to the legislation, wanted more time to review documents. Gauck, hardly three months in office, was already faced with an important decision. If he complied with the request from Karlsruhe, at least one piece of legislation proposed by Chancellor Merkel and her coalition government -- the permanent bailout fund known as the European Stability Mechanism (ESM) -- would undoubtedly be delayed. The ESM was originally scheduled to come into force on July 1, 2012.

Now the ESM will have to wait.

This story was posted on the German website spiegel.de on Thursday...and I thank Roy for digging it up on our behalf. The link is here.

German Chancellor Angela Merkel has shot down calls for full mobilisation of the eurozone's bail-out funds to halt the raging bond crisis in Spain and Italy, ignoring unprecedented pleas for action from the International Monetary Fund.

"Each country wants to help but if I am going to call on taxpayers in Germany, I must have guarantees that all is under control. Responsibility and control go hand in hand," she said after a crucial summit of the eurozone's Big Four powers in Rome.

Mrs. Merkel -- or La Signora No in Italy -- doused hopes of a break-through on proposals by the "Latin Bloc" leaders of Italy, France, and Spain to deploy the funds (EFSF and ESM) to cap the bond yields of "virtuous" countries vulnerable to contagion, or to recapitalize banks directly to take the strain off sovereign states.

"If I give money straight to Spanish banks, I can't control what they do. That is how the treaties are written," she said.

This story was posted on The Telegraph's website yesterday evening...and I thank Roy for sending it. The link is here.

The message that Germany, France, Italy and Spain want to come out of next week's European Union summit is that the euro will survive, Italian Prime Minister Mario Monti said on Friday.

Monti said he and the other leaders also want the June 28-29 summit to come up with a "clear medium- and long-term vision for greater integration" in the euro zone.

Finally, said Monti, next week's summit should "put at ease financial markets expectations" before shifting into English from Italian to add "the euro is here to stay and we all mean it".

And you believe him...right? This Thomson/Reuters piece was posted on the cnbc.com website yesterday...and I thank West Virginia reader Elliot Simon for sending it. The link is here.

Iceland, whose economy has recovered rapidly following the 2008 collapse of its banking sector, on Friday repaid $483.7 million in loans to the International Monetary Fund.

The early repayment, which follows another one of more than $900 million in March, is a symbolic step for the country of just 320,000 people as it works its way out of a financial meltdown that ravaged the economy.

The country's rebound has been surprising. Iceland's economy expanded in the first quarter at its fastest pace since its near-meltdown, powered by a surge in exports, tourism and domestic consumption.

This is what happens when countries do what they have to do and let their banks fail. Why should the taxpayer pay for the sins of the bankers? This is very short story was filed late yesterday evening on the telegraph.co.uk Internet site...and it is, of course, courtesy of Roy Stephens. The link is here.

Last night the Asia Society, in conjunction with the New York Review of Books, hosted a speaker series with guest speakers Ian Johnson – Beijing-based writer and foreign correspondent for the Wall Street Journal – and Roderick MacFarquhar, a Professor of History and former Director of the John King Fairbank Center for East Asian Research at Harvard University. The session was moderated by the Director of the Center on U.S.-China Relations at the Asia Society in New York, Orville Schell.

The panel topic was, "How Stable is China: Can Its Economic Miracle Continue Under Its Current Political System?"

In the process of answering that question, three things were made very clear: no one is quite sure what China means anymore, no one is quite sure how much progress China is making, and no one is quite sure where China's power lies.

This Business Insider story from yesterday is courtesy of Roy Stephens as well...and I consider it a must read. The link is here.

The first is with Nigel Farage...and it's headlined "Europe is About to Impose Extreme Repression". The second is with Jeffrey Saut, Chief Investment Strategist for Raymond James. It's entitled "Europe To Launch Massive Two Trillion Euro Bailout Package".

There are only a handful of top writers on the Internet that are in the same league as Casey Research's own David Galland...and he's at the top of his game in yesterday's edition of Casey's Daily Dispatch. It's a very long read, but well worth your while...and the link is here.

Sprott Asset Management's Eric Sprott and David Baker enumerate some of the quickly disproved recent assertions of high political and financial officials -- some of them plainly lies -- and conclude that no official financial policy is working and that debt repudiation is likely the only outcome of the world financial crisis.

This is the June edition of Sprott's "Markets at a Glance" commentary...and it's a must read for sure. I thank Chris Powell for wordsmithing the above introductory paragraph...and the link is here.

For the first time in my career, I see the international establishment, sometimes called the New World Order, facing a crisis so large that its very survival is at stake. For the first time, these people are scared.

There are not many of them. In his book, “Superclass,” author David Rothkopf estimates that there are only about 6,000 people at the top of the pyramid of world power and influence. They are mostly males, and at least a third of them have attended America’s most prestigious universities. Most of the others have attended comparable universities in Europe.

The crisis in Europe is clearly beyond anything that this generation of establishment leaders has ever seen. The last time that anything like this faced the European establishment, it led to World War II.

A story such as this one is normally subscriber protected, but Roy Stephens managed to find it posted in the clear over at thepoog.com website yesterday...and it's a must read from one end to the other. The link is here.

GoldMoney founder James Turk, longtime consultant to GATA, argues that a precise and reliable public accounting of euro-zone gold reserves might do much to restore confidence in the regional currency. Of course, if such an accounting might reveal that euro-zone gold reserves are leased, double- or triple-counted and hypotheticated to infinity, vaulted outside the euro-zone itself, and recoverable only at the cost of terrible international political problems, Europe still will have a long coastline and pretty seashells always can be pressed into service.

I thank Chris Powell once again for writing the preamble for me/us. Turk's commentary is posted at the GoldMoney.com research page here.

Glencore has demanded compensation from Bolivia after the country's left-wing government nationalised one of the commodities group's tin and zinc mines.

The company warned President Evo Morales that his actions risked driving out foreign investment, saying it "strongly protests the action and reserves its rights to seek fair compensation pursuant to all available domestic and international remedies."

Mr. Morales has already seized the country's natural gas and electricity industries under a policy of resource nationalism that has swept across South America from Ecuador to Argentina.

This story was posted on The Telegraph's website yesterday...and I found it hiding in a GATA release...and the link is here.

Ian Gordon of Longwave Analytics and Longwave Strategies believes we're on the precipice of very difficult and frightening times and predicts complete financial collapse. But it's in those periods of darkness that gold really shines. Gordon, who recently published a special edition of his Investment Insights entitled "The Gold Rush of the 1930s Will Rise Again," believes that companies with gold in the ground now will be the ones to prosper. In this exclusive Gold Report interview, Gordon discusses where he thinks the Dow will bottom and what companies will come out on top.

This short interview with my good friend Ian Gordon was posted over at theaureport.com Internet site yesterday...and the link is here.

With gold prices too hot for many in India, silver has regained its sheen. Sales of silver coins are soaring in India, with most consumers buying silver coins which herald good luck and prosperity. Gold, on the other hand, has hit several highs in the last couple of days, deterring buyers from the precious metal.

Delayed monsoons in India have all but grounded sale of gold too. In rural India, sales of the yellow metal are closely linked to monsoon, since good rains that bring on a rich harvest will boost gold purchases by farmers.

So far, in June, rain deficit has already reached 41%. Rural India still accounts for 60% to 70% of gold sales in the country and if the monsoon is below normal this year, gold purchases will struggle to cross the 600 tonne mark this year, say bullion dealers.

This is similar to the silver story that I posted in this space yesterday. It was filed from Mumbai yesterday...and is posted on the mineweb.com Internet site...and I thank Elliot Simon for sending it along. It's certainly worth reading...and the link is here.

Over the past several months, the markets have tested investors’ conviction to gold. Since February, the price of the yellow metal has steadily stepped lower, rallying somewhat in May before falling again when Ben Bernanke disappointed by not providing the U.S. with more stimulus. Meanwhile, the dollar gained ground as global investors fled the euro.

As gold bugs know, when central banks increase the supply of money, currencies become devalued and investors seek a better store of value. The excess liquidity in the market has historically found its way to riskier assets, benefiting gold.

This currency devaluation is what we believe will eventually bring Indians back to gold. Take a look at what gold costs in rupees. India has seen ongoing weakness in its currency as its economy has slowed. This has kept gold near record highs, causing the Love Trade in India to stumble.

GATA's good friend Frank Holmes posted this gold commentary in his weekly "Investor Alert" column that was posted on the usfunds.com website yesterday. It's also courtesy of West Virginia reader Elliot Simon...and the link is here.