And lastly is this Reuters piece that was [courtesy of Ted Butler] the first story of the day in my in-box yesterday morning. If this doesn't shake the ground under the U.S. banks... nothing will. The headline reads "Beijing's derivative default stance rattles banks". "A report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades provoked anger and dismay among investment bankers on Monday, as they feared it may set a damaging precedent." [Ya figure!!! - Ed] "Spokespersons at Goldman Sachs and UBS declined comment, and media officials at Morgan Stanley and JPMorgan were not immediately available for comment. All are major global providers of commodity risk management." [They left out HSBC USA Ltd. - Ed] The story, which is a must read is linked here.

And there's a silver tie-in to this story... which I thought about the moment I read the headline. For years, Ted Butler has made the assumption in writing [to the public and the CFTC] that a lot of these big silver shorts were being held by foreign entities. In a piece Ted wrote back in 2007 to CFTC Commissioner, Bart Chilton, Ted Butler said the following... "If and when these four large traders decide they have had enough of the short side of silver, instead of covering their short positions or delivering actual silver, they could declare force majeure and simply walk away and leave the regulators and NYMEX clearing members holding the bag. Since they are outside the jurisdiction of the Commission, there is, currently, little to prevent this."

"The silver [and gold - Ed] price reaction will be violent and disorderly to the upside if the controlling foreign shorts fold their tents and walk away. How could the COMEX continue to function as a market if its most dominant force suddenly disappeared? Aside from that shock to the system, the NYMEX, because it was repeatedly forewarned, will then be faced with a firestorm of litigation that could destroy it, if it was still standing. This could be another American financial scandal that will damage us all, only this time it will be caused by corrupt foreign interests, in conjunction with lax regulatory oversight."

"If all this comes to fruition, the only question everyone will ask in hindsight is, "how could the regulators and NYMEX directors have allowed this to happen after they were warned?"

"Commissioner Chilton, this is truly a grave situation. This is not about the sharply higher silver prices to come, as nothing can prevent that. This is about doing the right thing for our country."

The entire essay, entitled "The Cop On The Beat - Part 3" is another must read and the link is here.