Dec 142013
 

By J. Iddhis Bing, 99GetSmart

Bob Diamond

Where’s Bob Diamond Now?

Early in the summer of 2012, Bob Diamond was an American banker with a talent for making numbers say what he wanted them to say. He was legit and was sitting in the catbird seat at Barclays Bank UK. He’d made $100 million over the previous six years.

A few weeks later, in early July, the world had flipped. Instead of sitting at his desk at Barclays Diamond was answering questions from a Parliamentary committee investigating LIBOR rate-fixing in 2008. A week after that he was out of work.

What’s LIBOR? The London Interbank Offered Rate measures the price at which banks lend currencies to each other. It gauges how much banks charge each other when they carry out interbank trades and it affects the rates businesses and households all over the world pay on loans and other financial products.

Diamond lost his job and Barclays was fined £290m. It was the financial scandal of the summer. Some say of the century, but we’ve got plenty of time to go yet.

July, 2012 was just the first act. The European Union wasn’t asleep at the wheel and started to investigate two other currency markets, the EURIBOR and the Yen LIBOR. They took their time and announced their findings two days ago. It turns out to be a good deal more serious than having to sweat through a rough morning in Parliament. Barclays got off with a £290m penalty in 2012 for their bad behavior. Maybe that wiped out a quarter or a half year’s earnings, and brought them some bad publicity. They found a way to dodge the bullet this time.

On Wednesday it was Joaquín Almunia’s job to announce EU charges against the banks involved. Almunia is the European Commission Vice-President in charge of competition policy. He stood behind the podium in Brussels looking like the stern accountant with the big glasses who comes in to set things straight after the wild party’s over. The European Commission was going to levy €1.7bn in fines on seven banks and a brokerage firm for their roles in the worldwide interest rate manipulation. Banks named were Barclays, UBS, the Royal Bank of Scotland (RBS, bailed out at taxpayer expense), Deutsche Bank, Société Générale and two American banks, Citigroup and JP Morgan. A brokerage house, RP Martin, is in the mix, too. They’re contesting the charges and the fine. The tables with the damages, courtesy the EC, are included here as illustrations.

EU penalties in the Euribor scandal, by duration and number of incidents

EU penalties in the Euribor scandal, by duration and number of incidentsOfficial EU data on the instances and duration of Yen Euribor violations.Official EU data on the instances and duration of Yen Euribor violations

For its part of the deal, RBS will pay another £300m on top of the £390m it has already paid to US and UK regulators. RBS is a nationalized bank. That means English taxpayers will pick up the tab for the bank’s behavior.

Barclays was the first bank caught in the sting back in 2012. They knew which way the wind was blowing. They decided to cut a deal: by exposing the cartel in Euribor rate-fixing they avoided an additional £570m fine. Swiss bank UBS was spared a £2bn fine by doing the same for the rigging of yen interest rates. A cartel? The banks were working together? This is where things get interesting.

“What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other,” Almunia said.

Barclays tried to make it sound like they were Boy Scouts who got a little lost in the woods and stumbled on a coven of witches: “The European Commission has today announced that it has reached a settlement with Barclays and a number of other banks in relation to anti-competitive conduct concerning Euribor. The settlement acknowledges that the banks’ conduct infringed EC competition law by attempting to distort the normal course of pricing components for interest rate derivatives referencing Euribor. As today’s announcement from the Commission confirms, Barclays voluntarily reported the Euribor conduct to the Commission and cooperated fully with the Commission’s investigation.”

Which is a nice, elaborate way of saying, we burned the witches and got off scot-free. Would the EU have known about the Euribor fix if they hadn’t?

JPMorgan Chase, not a bank that makes nice to anybody, used the “Rogue” defense, citing “two former traders during a one-month period in early 2007.”

“The settlement makes no finding that JPMorgan Chase management had any knowledge or involvement in the conduct at issue, or that the traders’ actions had any impact on the firm’s LIBOR submissions or the published LIBOR rates. JPMorgan Chase has cooperated fully with the European Commission throughout its investigation and does not believe that the firm engaged in wrongdoing with respect to the EURIBOR benchmark. The company intends to defend itself fully.”

What we know now that we didn’t know in June 2012 was that the banks acted in concert. They didn’t compete on rates, they put their heads together and figured out a way to make even more money by jiggering them. Maybe you’ve read the emails where the traders promise each other crates of champagne if they help each other out. Which is something else that makes it difficult to believe in those “two former traders during a one-month period in early 2007.” The banks are all bonus-driven, and maybe the best way to survive is not to let your boss know what you’re doing. Results are what matter. JP Morgan and the others have cleaned house, and those two rogues won’t be heard from again.

Welcome to the world of the international cartels. The banks now work together to raise interest rates on everybody across the globe. The compliance officer at UBS saved his bank a €2.5bn by blowing the whistle on the yen scam. Maybe bankers only object when the numbers go over a billion.

Almunia said there is more to come. “This will not be the end of the story.” The EU is investigating the firms that refused to settle with the EC over the EURIBOR and yen LIBOR charges, and is taking a look at possible shenanigans in the FOREX market. Regulators in other countries are hard at work as well.

But that’s the problem. We’ve been stuck at the beginning for a while now: the banks find a new way to transgress, they make a bundle, investigators announce fines a few years later, somebody walks the plank and on we go to the next round.

The fines are big but they won’t hurt the banks too much. Nobody’s going out of business. They’ve got Quantitative Easing to thank for that. It’s a nice little program that helps out when the banks get tight.

You get knocked around on the market these days but there’s always a government somewhere to help you out. Even the moderate Socialist “enemy of finance” French government. Whenever Dexia in Belgium gets in a tight spot, François Hollande sends somebody over with a few billion to stop the bleeding. Too much old French money there to take any chances.

Bob Diamond’s long gone. He at least lost his job. Nobody remembers him. Where’d he go with all his millions? Who cares? There’s another millionaire to take his place, saying the same things about how it was all done by subordinates and he had no knowledge. Nobody knows what’s going on at the banks, the traders and compliance officers are running wild. Then one or two of them get caught, there’s an investigation, the bank shells out, somebody leaves and somebody else takes his place and life goes on, right over the waterfall until we all get soaked. Where’s Bob Diamond these days? In some nice paradise where he’s laughing his head off. What’s that to any of us?

J Iddhis Bing
Paris

Dec 172012
 

Posted by greydogg, 99GetSmart

* AUSTERITY EXPLAINED: A POCKET GUIDE TO THE EU CRISIS

By Collettivo Prezzemolo, ROARmag

TNI-Pocket-Guide

By blaming the crisis on public spending, politicians’ and bankers’ only solution was to impose austerity. This has predictably worsened the debt crisis.

Excerpt via the Transnational Institute in Amsterdam.

“We are punishing the innocent through austerity, and we are rewarding the guilty because the banks are continuing to receive huge privileges and subsidies from our governments. That is why we must defeat this austerity treaty, and all the measures that come with it unless we want Europe to be retrograded to, shall we say, the 19th century.”

Susan George, President of the Board of the Transnational Institute, author of Whose Crisis, Whose Future?

Austerity measures have never worked, and have led growth to collapse across the EU. Greece witnessed its battered economy shrinking by 6.2% in the second quarter of 2012, and is forecast to enter its sixth straight year of recession in 2013. Austerity means less national income from taxation, reducing governments’ capacity to pay back spiraling debts, leading to even higher debts. […]

Download the full ‘EU Crisis Pocket Guide via the Transnational Institute.

READ @ http://roarmag.org/2012/12/transnational-institute-eu-crisis-pocket-guide/

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* THE INSUFFERABLE HUMAN DRAMA OF EVICTIONS IN SPAIN

By Jerome Roos, ROARmag

Juana-Madrid-04

With 500 families being evicted in Spain every day, foreclosures have become a source of great suffering. But luckily, there are still those who resist.

Throughout this crisis, there has always been a certain alienating quality to the pronouncements of European leaders and technocrats. Sometimes one is led to wonder if these people are actually talking about the same continent — or the same universe, for that matter. Just today, for instance, the European Central Bank announced that “the eurozone is starting to heal.” Indeed, the major weakness the central bankers could detect from the commanding heights of their glass-and-steel tower in downtown Frankfurt was “falling bank profits.”

But this morning, huddled together with activists and independent journalists in a small apartment in Madrid, the eurozone seemed to be far from healing. Together with Santiago Carrión from the Associated Whistleblowing Press, we were there because the Platform for those Affected by their Mortgage (PAH), which runs the Stop Desahucios (Stop Evictions) campaign, had called on the city’s indignados to protect Juana Madrid and her two daughters of 21 and 17, who were about to be evicted from their humble home in the poor neighborhood of Orcasur. The atmosphere, of course, was tense.

The living room was full of people, most of them photographers, while outside the first chants of activists could be heard as people prepared to physically block the entrance to the apartment. Nervously dragging on her cigarette, Juana’s baggy and dark-ringed eyes said it all: this was a woman on the verge of a breakdown. Her voice was calm and subdued, but her facial expression exuded despair. “We have nowhere to go,” Juana’s 21-year-old daughter Isa told us in the kitchen. “If they evict us today we will end up on the street tonight.”

Sadly, the story of Juana and her daughters is by no means an exception. Ever since the start of the crisis in late 2008, over 350.000 families have been evicted from their homes. According to government figures, Spain currently faces a staggering wave of 500 evictions per day — 150 of them in Madrid alone. The vast majority of these involve families whose main breadwinner lost his or her job in the recession and who have inadvertently fallen behind on their mortgage payments to the bank. At 25.02%, Spain’s unemployment rate is the highest in the developed world, higher even than in the U.S. at the peak of the Great Depression. […]

READ @ http://roarmag.org/2012/12/spain-evictions-suicide-bankia-rajoy/

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* POVERTY AND SOCIAL EXCLUSION RISING IN GREECE

By Leonidas Oikonomakis, ROARmag

Greece-poverty

[…] In Greece, we know well who is paying for the crisis. A good question to ask would be: who gains? Apart from Greece’s private creditors, could it be the multinational corporations, which are now swooping in to benefit from the country’s dramatically reduced labor rights and privatization schemes? Again, I will give you an example that I recently read in the press. Kostis Hatzidakis, the Minister of Development, announced proudly that Unilever, an Anglo-Dutch multinational consumer goods company, will from now on produce 110 of its products that it used to produce abroad, in Greece. He also mentioned that this will boost employment and that his government wants to create a business-friendly environment in Greece in order to attract “investments” for “development”.

What Hatzidakis did not mention are the conditions under which the future employees of Unilever — and whatever other multinational decides to “invest” in Greece bringing its production facilities or, maybe, buying its state owned enterprises — will have to work. Let me present them to you: Unilever’s Greek employees will be paid slave salaries (586 euros is the minimum wage today, down from 751 euros before the crisis, while for young workers under the age of 25 it stands at 510 euros: below the poverty threshold!). They will only have minimum labor rights. They will have to work 6 and maybe 7 days a week. They will only have a minimum of 11 hours rest before getting back to work (from 13 that it was so far). And they will be extremely easy to fire without compensation — as the government effectively rid itself of pesky labor rights. […]

READ @ http://roarmag.org/2012/12/poverty-and-social-exclusion-rising-in-greece/

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* SPECIAL REPORT: GREECE’S TRIANGLE OF POWER

By Stephen Grey and Dina Kyrakidou, Reuters

In late 2011 the Greek finance minister made an impassioned plea for help to rescue his country from financial ruin.

“We need a national collective effort: all of us have to carry the burden together,” announced Evangelos Venizelos, who has since become leader of the socialist party PASOK. “We need something that will be fair and socially acceptable.”

It was meant to be a call to arms; it ended up highlighting a key weakness in Greece‘s attempts to reform.

Venizelos’ idea was a new tax on property, levied via electricity bills to make it hard to dodge. The public were furious and the press echoed the outrage, labeling the tax ‘haratsi’ after a hated levy the Ottomans once imposed on Greeks. The name stuck and George Papandreou, then prime minister, felt compelled to plead with voters: “Let’s all lose something so that we don’t lose everything.”

But not everyone would lose under the tax. Two months ago an electricity industry insider revealed that some of the biggest businesses in the land, including media groups, were paying less than half the full rate, or not paying the tax at all. Nikos Fotopoulos, a union leader at power company PPC, claimed they had been given exemptions. […]

READ @ http://uk.reuters.com/article/2012/12/17/us-greece-media-idUKBRE8BG0CF20121217

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* TAIBBI, SPITZER FUME OVER HSBC SETTLEMENT

Source: Eliot Spitzer’s Viewpoint

VIDEO @ http://current.com/shows/viewpoint/videos/matt-taibbi-on-hsbc-settlement-i-think-even-people-on-wall-street-were-blown-away-by-the-result/

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* NOAM CHOMSKY: US INTELLECTUAL CLASS IS MORALLY DEGENERATE

By Noam Chomsky and Eric Baily, InformationClearingHouse

Eric Bailey: The last four years have seen significant changes in American federal policy in regards to human rights. One of the few examples of cooperation between the Democratic and Republican parties over the last four years has been the passing of the National Defense Authorization Act (NDAA) of 2012. This bill has given the United States military the power to arrest American citizens, indefinitely, without charge, trial, or any other form of due process of law and the Obama administration has and continues to fight a legal battle in federal court to prevent that law from being declared unconstitutional. Obama authorized the assassination of three American citizens, including Anwar al-Awlaki and his 16-year-old son, admittedly all members of Al Qaeda — all without judicial review.

Additionally, the Guantanamo Bay prison remains open, the Patriot Act has been extended and the TSA has expanded at breakneck speeds. What is your take on America’s human rights record over the past four years and can you contrast Obama’s policies with those of his predecessor, George W. Bush?

Noam Chomsky: Obama’s policies have been approximately the same as Bush’s, though there have been some slight differences, but that’s not a great surprise. The Democrats supported Bush’s policies. There were some objections on mostly partisan grounds, but for the most part, they supported his policies and it’s not surprising that they have continued to do so. In some respects Obama has gone even beyond Bush. The NDAA, which you mentioned, was not initiated by Obama (when it passed Congress, he said he didn’t approve of it and wouldn’t implement it), but he nevertheless did sign it into law and did not veto it. It was pushed through by hawks, including Joe Lieberman and others.

In fact, there hasn’t been that much of a change. The worst part of the NDAA is that it codified — or put into law — what had already been a regular practice. The practices hadn’t been significantly different. The one part that received public attention is what you mentioned, the part that permits the indefinite detention of American citizens, but why permit the indefinite detention of anybody? It’s a gross violation of fundamental human rights and civil law, going all the way back to the Magna Carta in the 13th century, so it’s a very severe attack on elementary civil rights, both under Bush and under Obama. It’s bipartisan! […]

READ @ http://www.informationclearinghouse.info/article33336.htm

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* ANOTHER GOLDMAN CREATURE GIVEN VITAL GOVERNMENT POST

By Matt Taibbi, Rolling Stone

Big news yesterday in the United Kingdom, where the citizenry surveyed its domestic banking system and discovered that it couldn’t find a single person trustworthy enough to put in the top job at the Bank of England. So they went to Canada and stole that country’s central banker, Mark Carney, who just happens to be a former Goldman, Sachs executive – he was once Goldman’s managing director of investment banking.

Carney’s appointment may be seen as an admission that the British banking sector is now so tainted, only an outsider can be trusted to govern them. Almost all of the major English banks have been dinged by ugly scandals. The LIBOR mess, in which banks have been caught messing around with global interest rates for a variety of sordid reasons, has most infamously implicated Barclays, but the Royal Bank of Scotland is also a cooperator in those investigations.[…]

READ @ http://www.rollingstone.com/politics/blogs/taibblog/another-goldman-creature-given-vital-government-post-20121206

Jul 092012
 

 

* LIBOR MEGA SCANDAL – TOTAL CORRUPTION

Viewpoint:  Eliot Spitzer, Matt Taibbi, and Dennis Kelleher

Viewpoint – host Eliot Spitzer, Matt Taibbi, Rolling Stone contributing editor, and Dennis Kelleher, president and CEO of Better Markets, analyze the Libor interest rate–rigging scandal engulfing the banking industry.

VIDEO @ http://www.youtube.com/watch?v=qZWDemn_njg&feature=player_embedded

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* THE LIBOR AFFAIR: BANKSTERS

How Britain’s rate-fixing scandal might spread—and what to do about it 

Source: The Economist

“SINCE we have not more power of knowing the future than any other men, we have made many mistakes (who has not during the past five years?), but our mistakes have been errors of judgment and not of principle.” So reflected J.P. Morgan junior in 1933, in the middle of a financial crisis. Today’s bankers can draw no such comfort from their behaviour. The attempts to rig LIBOR (the London inter-bank offered rate), a benchmark interest rate, not only betray a culture of casual dishonesty; they set the stage for lawsuits and more regulation right the way round the globe. This could well be global finance’s “tobacco moment”.

The dangers of this are obvious. Popular fury and class- action suits are seldom a good starting point for new rules. Yet despite the risks of banker-bashing, a clean-up is in order, for the banking industry’s credibility is shot, and without trust neither the business nor the clients it serves can prosper. […]

READ / VIDEO @ http://www.economist.com/node/21558260

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* THE COLLAPSING US ECONOMY AND THE END OF THE WORLD

By Paul Craig Roberts, Activist Post

[…] Washington has been at war since October, 2001, when President George W. Bush concocted an excuse to order the US invasion of Afghanistan. This war took a back seat when Bush concocted another excuse to order the invasion of Iraq in 2003, a war that went on without significant success for 8 years and has left Iraq in chaos with dozens more killed and wounded every day, a new strong man in place of the illegally executed former strongman, and the likelihood of the ongoing violence becoming civil war.

Upon his election, President Obama foolishly sent more troops to Afghanistan and renewed the intensity of that war, now in its eleventh year, to no successful effect.

These two wars have been expensive. According to estimates by Joseph Stiglitz and Linda Bilmes, when all costs are counted the Iraq invasion cost US taxpayers $3 trillion dollars. Ditto for the Afghan war. In other words, the two gratuitous wars doubled the US public debt. This is the reason there is no money for Social Security, Medicare, Medicaid, food stamps, the environment, and the social safety net. Americans got nothing out of the wars, but as the war debt will never be paid off, US citizens and their descendants will have to pay interest on $6,000 billion of war debt in perpetuity.

Not content with these wars, the Bush/Obama regime is conducting military operations in violation of international law in Pakistan, Yemen, and Africa, organized the overthrow by armed conflict of the government in Libya, is currently working to overthrow the Syrian government, and continues to marshall military forces against Iran. […]

READ @ http://www.activistpost.com/2012/07/collapsing-us-economy-and-end-of-world.html

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* FOR SPAIN’S RESCUED BANKERS, THERE WILL BE NO AUSTERITY

Now that Spain has become the fourth country to receive an EU bailout, the question arises why its corrupt bankers are getting away unscathed.

By Jerome Roos, RoarMag

With eurozone finance ministers agreeing late Saturday night to bail out Spain’s failing banks to the tune of 100 billion euros, the root of Europe’s protracted three-year debt crisis is finally revealed for what it always already was: a dramatically over-leveraged financial system that speculated wildly on real estate (in the case of Ireland and Spain) and government bonds (in the case of Greece and Portugal) without any consideration for the possible consequences.

As we have argued repeatedly over the past year, the euro crisis was never about excessive public expenditure; this was a banking crisis from the very start. That reality is now forcefully being driven home to Europe’s suffering population as 100 billion euros in taxpayer money are being put on the line to “rescue” Spain’s failing banking sector. And while the Spanish people suffer the brunt of two years of disastrous austerity measures, the bankers who put them in this mess are still running away with multi-million dollar bonuses.

With 400.000 families having lost their homes since the crisis began and with one in four Spaniards (and over one in two young people) now out of work, there is no doubt the average population is suffering immensely. Earlier this year, Caritas found that 22 percent of Spanish households now live below the poverty line, while another 30 percent are on the brink. As labor rights are being abolished, social safety nets dismantled and public services slashed across the board, a shocking 11 million people suddenly find themselves at risk of falling into poverty. Make no mistake: these are Depression-era figures. […]

READ @ http://roarmag.org/2012/06/for-spains-rescued-bankers-there-will-be-no-austerity/

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* OAKLAND CITY COUNCIL DEMANDS DEBT-SWAP RENEGOTIATIONS WITH GOLDMAN SACHS

By David Dayen, Firedoglake

If the LIBOR scandal did end up hurting local governments to a large degree, you can just add that to the list. Local governments have been easy marks for the financial industry during the last decade, engaging in all kinds of interest rate-swap deals and other vehicles for financing operations. When they turn sour, the locals, not the banks, end up holding the bag.

One city is trying to flip that script. The Oakland City Council unanimously voted to break off a deal with Goldman Sachs, using the city’s leverage to try and get out of the deal that is hurting their taxpayers. The issue concerns a familiar interest rate-swap deal, which financial institutions sell to cities as a way to hedge against higher interest rates, but which have cost cities millions by locking in higher borrowing costs.

The council voted to demand Goldman Sachs to negotiate with the city to get out of a 1998 interest rate-swap deal without having to pay a $15 million penalty. Currently, because of the locked-in rates, the deal is costing the city $4 million a year. Oakland estimates they have lost $17.5 million on the deal so far, and even though the underlying bonds were sold back four years ago, because of that $15 million penalty, the city will have to continue losing money on the deal until 2021.

So the City Council simply voted to terminate the deal. And if Goldman Sachs won’t let Oakland out, the city will stop doing any business with the bank, per the resolution. […]

READ @ http://news.firedoglake.com/2012/07/06/oakland-city-council-demands-debt-swap-renegotiation-with-goldman-sachs/

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* THE PARAGUANYAN COUP: HOW AGRIBUSINESS, LANDOWNING AND MEDIA ELITE, AND THE U.S. ARE PAVING WAY FOR REGIONAL DESTABILIZATION

By Francesca Fiorentini, War-Times

It has been nearly two weeks since the parliament of Paraguay orchestrated an institutional coup that removed President Fernando Lugo from power and installed vice president Fernando Franco in his place, a mere 9 months before the next presidential elections.

Reading articles coming out of South America, I have been trying to wrap my head around not just what happened in Paraguay but what it could mean for the region. And I’m afraid it’s not good. When one connects the dots – many of which require further investigation–it suddenly feels as though the gains that countries in the region have made toward multi-lateral cooperation in order to guarantee economic and political sovereignty and are dangerously vulnerable.

I have always been skeptical of claims by Hugo Chavez or even anti-militarist voices here in the region that believe that the U.S. has not let go of its plans for the region in its fulfillment of “Full Spectrum Dominance”—controlling natural resources indirectly through elite puppet governments and directly through the threat of military force. Between the U.S’ refocus on the Middle East and the rise of left-leaning governments in Brazil, Venezuela, Bolivia, Argentina, Ecuador, and Uruguay, the idea of the region falling victim to the kinds of imperial/neoliberal bullying of the 70s, 80s, and 90s seemed both politically overblown and strategically unfeasible.

I am no longer so sure. […]

[…] Beyond simply the old ruling parties wanting to keep their grasp over the country, there are deeper interests at work in the coup against Lugo.

First and foremost is agribusiness. None other than the infamous Monsanto is a major player in Paraguay. The company collects royalties on the transgenic soy and cotton seeds planted throughout Paraguay, and in 2011 it collected $30 billion tax-free. And 40% of the production and refining of Paraguayan soy is owned by private U.S.-based giant Cargill ($100 billion annual profits a year). Again, agribusiness giants in Paraguay enjoy broad protections from Congress and pay no taxes. […]

READ @ http://war-times.org/node/463

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* MAKING MONEY – GREECE

Source: Journeyman Pictures

VIDEO @ http://www.youtube.com/watch?v=xsD1I9bOgEs