Charles Biderman and Chris Martenson: The Problem With Rigged Markets

Here is a fascinating Chris Martenson interview with Charles Biderman.

This interview highlights the Ponzi-like, artificial nature of the current stock market rally.

It reminds me very much of the 2003-2007 bull market that ended in tears. I have included a chart of what I called at the time 'The Great Reflation' at the end.

Charles Biderman: The Problem with Rigged Markets
Friday, March 30, 2012

"Even Wile E. Coyote had to come back down to earth sooner or later", says Charles Biderman, founder of TrimTabs Investment Research. In his opinion, the prices of stocks and bonds - enabled by excessive financialization of our economy and central bank money printing - have been defying gravity for a dangerously long time.

If we continue to do all we can to preserve the status quo -- to maintain "phony" asset price levels as Charles calls them -- at best we will restrict overall growth and handicap the economy.

The problem isn't so much the unfairness and malinvestment evident in a rigged market. As Charles shrewdly asks: what happens when the market becomes un-rigged?

We've never experienced the unwinding of an entirely manipulated financial system, so we can't predict for sure. But at this point, a painful collapse of our markets and loss of the US dollar as the world's reserve currency seem entirely plausible...

Read the rest here.

Gold Daily and Silver Weekly Charts

The only thing surprising about the precious metals market is how few people really understand what is going on, even at this stage of its bull run.

SP 500 and NDX Futures Daily Charts - Paint Dries on End of Quarter

This is a liquidity driven market with very thin underpinnings.

Have a pleasant weekend.

Stanley Haar Reviews the Latest Developments on MF Global - Edith O'Brien's Gioconda Smile

Edith O'Brien, 46 year old Assistant Treasurer at MF Global, smiles enigmatically throughout her Congressional
appearance during which she pled the Fifth Amendment to every question.

I am given to understand that Edith has been working for the MF Global Bankruptcy Trustee.
I hope she is not counting on a bonus.

MF Global's Edith O'Brien Talking Deal with Justice.

Edith O'Brien's profile at LinkedIn.

Who Captured the Fed?

Future generations will look back and ask themselves, 'How could they not see what was happening? Were they blind?'

The Fed is not the only problem here, but a key enabler. White collar crimes and fraud flourished amongst the robber barons even in the days of the gold standard. It just was not as convenient, as easy, to defraud the people en masse through the debasement of the currency.

The Fed has merely proven to be as vulnerable as the regulators and the Congress to the power of the monied interests.  If the political campaign process had not been corrupted by money, if the fairness doctrine in the media and Glass-Steagall in banking had not been overturned by the mindless impulse to cast aside the best of the laws, many of the problems we have today would not be so great.

These fellows creates crises, and then 'save us' from them, while lining their own pockets and perpetuating the swindle for their less publicly visible puppet masters.

There is little doubt in my own mind that Greenspan knew exactly what he was doing, and made his fateful decision after a meeting with Robert Rubin in the 1990's shortly after his famous 'irrational exuberance' speech. What was said, what was promised or threatened, I cannot say. But the change in direction became clear. It became open season on the voices of reason and restraint in Washington.

What Clinton hatched, Bush brought to full fruition, particularly with his tax cuts, stock bubble, and unfunded wars. And when the Great Reformer came to Washington in the midst of the collapse, he brought back the very advisors who had helped to create the problem in the first place and betrayed the mandate of those who had elected him, prosecuting no one.

And in the aftermath of the financial collapse, the first popular reform movement that rose up in anger against the bailouts, The Tea Party, was quickly turned into a corps of willing tools that turned on the weak and the least among us, the very victims of a corrupt system, in their petulant pride and misdirected anger.

I only fear that the Fed, and some of the perpetual outsiders of history, will be made the scapegoats by the real culprits when the time of reckoning comes, and that genuine reform will be thwarted once again as it has been so many times in the past.  Their hypocrisy and shamelessness knows no bounds.

NYT
Who Captured the Fed?
By DARON ACEMOGLU and SIMON JOHNSON
March 29, 2012, 5:00 am

...But in the light of the crisis of 2008 and its aftermath, we have to ask: Has our central bank fallen back under the influence of special interests?

...At the dawn of the republic, Thomas Jefferson railed against the risks posed by government backing for concentrated power in the financial sector. President Andrew Jackson fought to abolish the Second Bank of the United States in the 1830s, the leading private bank of his day, which helped manage public finances and the banking system. Consequently, there was nothing resembling a central bank in the United States for much of the 19th century.

The Federal Reserve System, created in 1913, was a uniquely American compromise, trying to balance public and private interests. Banks controlled the boards of the 12 regional Feds – with big Wall Street firms holding great sway over the New York Fed, which had a disproportionate influence within the system as a whole — and still does.

This version of the system presided over a crazed and highly leveraged stock market boom in the 1920s and the catastrophic collapse of credit in the early 1930s, while protecting the big Wall Street firms.

...Unfortunately, as the United States and other countries learned after 1945, clever politicians can use central banks to manipulate the business cycle, boosting output growth and cutting unemployment ahead of elections. Richard Nixon, for example, famously pushed the Fed to ease monetary policy when it suited him.

...Increasingly, however, it seems that technocratic policy-making is just a myth. We have come full circle, and the Wall Street banks are calling the shots again.

Crucially, the idea that politics is just about electioneering misses the point. Politics is about getting what you want, not just through the ballot box but by persuading people in public office to take actions that help you. So declaring the central bank independent doesn’t move it outside the orbit of politics.

Monetary policy has an impact on inflation, output and employment. But it also has a major impact on stock market prices. Any central banker raising interest rates is reducing stock market values and thus eroding the bonuses of top bankers and other chief executives.

Those people will lobby, asserting that higher interest rates will undermine the economy and cause us to plummet into recession, or worse.

In principle, the Fed could stand up to the bankers, pushing back against all specious arguments. In practice, unfortunately, the New York Fed and the Board of Governors are quite deferential to financial-sector “experts.” Bankers are persuasive; many are smart people, armed with fancy models, and they offer very nice income-earning opportunities to former central bankers.

We have lost track of the number of research notes from major banks pleading for easier credit, lower capital requirements, delay in implementing financial reforms or all of the above.

In recent decades the Fed has given way completely, at the highest level and with disastrous consequences, when the bankers bring their influence to bear – for example, over deregulating finance, keeping interest rates low in the middle of a boom after 2003, providing unconditional bailouts in 2007-8 and subsequently resisting attempts to raise capital requirements by enough to make a difference.

As the American economy begins to improve, influential people in the financial sector will continue to talk about the need for a prolonged period of low interest rates. The Fed will listen.

This time will not be different."

Read the entire article here.

Net Asset Value Premiums On Certain Precious Metal Trusts and Funds

Rather modest premiums even in silver.

Taleb: How to Prevent Other Financial Crises

Nassim Taleb presents a very simple principle for avoiding financial crises.

But sometimes the simplest principles are the most difficult to implement.  For example:

Thou shalt love the Lord thy God, with your whole heart, and your whole mind, and your whole strength, and love your neighbor as yourself.  This is the whole of the law.

But even as we fail to achieve its simple perfection, the principle remains, and one can judge how well they are doing by how close, or far away, they are to it.

Obviously the failure to aggressively prosecute fraud, and even the rewarding of participants as agents, when they both succeed and fail, has created a system that is completely, utterly broken.  The regulations proposed as remedy are complex, and that is no accident, because fraud revels in complexity and loopholes.

And the watershed event in all this was the decision, and I would say the glaring policy error, to bailout the banks and cover up their crimes.  That cover up continues and grows like a cancer, distorting policy and public discussion with its corruption, even to the highest reaches of the system. 

There are no heroes here, just craven, compromised, and even badly used men who promote the interests of the powerful monied interests, and their own illusions and delusions, on the broken backs of their fellows and their oaths to uphold the law. 

They will either change and reform the system, or they will eventually be thrown down and cast out in disgrace and dishonor.   It is hard to imagine it while they are riding high, but that is the simple lesson of history.

SAIS Review Volume XXXII No. 1
How to Prevent Other Financial Crises
Nassim Nicholas Taleb and George A. Martin

This article argues that the crisis of 2007–2008 happened because of an explosive combination of agency problems, moral hazard, and “scientism”—the illusion that ostensibly scientific techniques would manage risks and predict rare events in spite of the stark empirical and theoretical realities that suggested otherwise. The authors analyze the varied behaviors, ideas and effects that in combination created a financial meltdown, and discuss the players responsible for the consequences. In formulating a set of expectations for future financial management, they suggest that financial agents need more “skin in the game” to prevent irresponsible risk-taking from continuing.

Introduction

Let us start with our conclusion, which is also a simple policy recommendation, and one that is not just easy to implement but has been part of history until recent days. We believe that “less is more” in complex systems— that simple heuristics and protocols are necessary for complex problems as elaborate rules often lead to “multiplicative branching” of side effects that cumulatively may have first order effects.

So instead of relying on thousands of meandering pages of regulation, we should enforce a basic principle of “skin in the game” when it comes to financial oversight: “The captain goes down with the ship; every captain and every ship.”

In other words, nobody should be in a position to have the upside without sharing the downside, particularly when others may be harmed. While this principle seems simple, we have moved away from it in the finance world, particularly when it comes to financial organizations that have been deemed “too big to fail.”

The best risk-management rule was formulated nearly 4,000 years ago.  Hammurabi’s code specifies:

“If a builder builds a house for a man and does not make its construction
firm, and the house which he has built collapses and causes the death of the
owner of the house, that builder shall be put to death.”

Clearly, the Babylonians understood that the builder will always know more about the risks than the client, and can hide fragilities and improve his profitability by cutting corners—in, say, the foundation. The builder can also fool the inspector (or the regulator). The person hiding risk has a large informational advantage over the one looking for it...


Read the rest here.

All those who are in favor of reform, and justice,
and equal protection under the law for all, including
the weakest and the least among us, please raise your hand.

Clear and Present Danger: Why We Must Break Up the Too Big To Fail Banks Now - Dallas Fed

What makes the attached essay on the US banking system so striking is not so much what is being said,  since others have said it before, but rather, who is saying unequivocally that the status quo in the US banking system presents 'a clear and present danger' to the national economy.

"More than three years after a crippling financial crisis, the American economy still struggles. Growth sputters. Job creation lags. Unemployment remains high. Housing prices languish. Stock markets gyrate. Headlines bring reports of a shrinking middle class and news about governments stumbling toward bankruptcy, at home and abroad.

Ordinary Americans have every right to feel anxious, uncertain and angry. They have every right to wonder what happened to an economy that once delivered steady progress.

They have every right to question whether policymakers know the way back to normalcy. American workers and taxpayers want a broad-based recovery that restores confidence. Equally important, they seek assurance that the causes of the financial crisis have been dealt with, so a similar breakdown won’t impede the flow of economic activity.

The road back to prosperity will require reform of the financial sector. In particular, a new roadmap must find ways around the potential hazards posed by the financial institutions that the government not all that long ago deemed “too big to fail”—or TBTF, for short.

In 2010, Congress enacted a sweeping, new regulatory framework that attempts
to address TBTF. While commendable in some ways, the new law may not prevent the biggest financial institutions from taking excessive risk or growing ever bigger.

TBTF institutions were at the center of the financial crisis and the sluggish recovery that followed. If allowed to remain unchecked, these entities will continue posing a clear and present danger to the U.S. economy.

As a nation, we face a distinct choice. We can perpetuate TBTF, with its inequities and dangers, or we can end it. Eliminating TBTF won’t be easy, but the vitality of our capitalist system and the long-term prosperity it produces hang in the balance.

Harvey Rosenblum, Choosing the Road to Prosperity: Why We Must End Too Big To Fail - Now, Dallas Federal Reserve Bank

Harvey Rosenblum is the Dallas Fed’s executive vice president and director of research.

Read the rest here.

The perpetuation of the status quo is favored by the monied interests on Wall Street and the very powerful New York Fed which has always been their house bank.

It is also supported by the politicians and advisors of both parties who have become addicted to taking Wall Street money, both as campaign contributions, as well as highly paid sinecures and consulting fees when they leave office.

The Banks must be restrained, and the financial system reformed, with balance between individuals and the corporations restored to the economy, before there can be any sustained recovery.

Gold Daily and Silver Weekly Charts - Silver Refused to be Used

Tomorrow is the end of quarter for the funds and prop desks.

Here is where we are on the options calendar.

I think it can help one to understand the relative weakness of gold as compared to silver.

March 27 Comex April gold options expiry
March 27 Comex April copper options expiry
March 28 Comex April miNY gold futures last trading
March 28 Comex March silver futures last trading day
March 28 Comex March copper futures last trading day
March 28 Comex April E-mini copper futures last trading day
March 28 Nymex March palladium futures last trading day
March 29 Comex April E-mini gold futures last trading day
March 30 Comex April gold futures first notice day
March 30 Comex April copper futures first notice day

SP 500 and NDX Futures Daily Charts - Another Light Volume Wash and Rinse - Quarter's End

Durable Goods, Stock Market, Fed in the Driver's Seat & Why
by Ilene

After reading Lee's article, I asked him, "Why is it the Fed's job to be propping up the stock market? Doesn't it make the whole market a Fed-controlled game, rather than what it started as - a mechanism for companies to raise money and people to invest in public companies?"

Lee answered: "Bernanke has made no bones about it. He sees the stock market as a legitimate instrument of policy manipulation. It's his biggest tool, much bigger than the ones between his ears and his legs. The Fed works for the banks, and the capital markets exist as a means for 'capitalists' to extract wealth from the public. Stock markets weren't started for the purpose of enriching the public, that's for sure... The Fed has two clients, the US Treasury, and the banking system. It operates to make sure that they stay in business."

Lee also noted that the history of the Fed is replete with a variety of programs where it tried to manipulate something. "The stock market manipulation is relatively new as an overt policy tool, but the Fed can't manipulate indefinitely. Eventually the unintended consequences will rise up and bite it in the ass."

Worth moving up, "the grateful unemployed" asked an excellent question in the comment section of Zero hedge: "So why did the Fed precipitate the 2008 crash? Any thoughts?"

Lee: "It was just another one of their serial blunders. It's just that some of their mistakes look good on the surface for a while until the unintended consequences overwhelm the intended ones. That one went bad immediately. I was shocked at the time that they would sterilize the alphabet soup programs that started with the TAF in 2007, by pulling the funds from the SOMA, thus crippling the Primary Dealers. I warned repeatedly that it would precipitate a crash, especially as the Treasury began selling over $100 billion a week in new debt to fund the TARP in Q3 2008. Bernanke fucked up, plain and simple. They started to realize the mistake in November by starting direct purchases of limited amounts of GSE paper, but didn't go full bore until they started massive Treasury purchases in March 2009. That turned the market."

Read the rest here.

Tomorrow is the end of the first quarter. hi ho

Such a Parcel of Rogues in a Nation

History's recurring and resplendent rhymes.

Fareweel to a' our Scottish fame,
Fareweel our ancient glory;
Fareweel ev'n to the Scottish name,
Sae famed in martial story!
Now Sark rins over Solway sands,
And Tweed rins to the ocean,
To mark where England's province stands—
Such a parcel of rogues in a nation!

What force or guile could not subdue
Thro' many warlike ages,
Is wrought now by a coward few,
For hireling traitor's wages.
The English steel we could disdain,
Secure in valour's station;
But English gold has been our bane—
Such a parcel of rogues in a nation!

O, would or I had seen the day
That treason thus could sell us,
My auld grey head had lien in clay
Wi' Bruce and loyal Wallace!
But pith and power, till my last hour,
I'll mak this declaration:
We're bought and sold for English gold—
Such a parcel of rogues in a nation!

Robert Burns, A Parcel of Rogues In a Nation, 1791

Is there for honest poverty
That hings his head, an' a' that?
The coward slave, we pass him by --
We dare be poor for a' that!
For a' that, an' a' that,
Our toils obscure, an' a' that,
The rank is but the guinea's stamp,
The man's the gowd for a' that.

What though on hamely fare we dine,
Wear hoddin grey, an' a' that?
Gie fools their silks, and knaves their wine --
A man's a man for a' that.
For a' that, an' a' that,
Their tinsel show, an' a' that,
The honest man, tho' e'er sae poor,
Is king o' men for a' that.

Ye see yon birkie ca'd 'a lord,'
Wha struts, an' stares, an' a' that?
Tho' hundreds worship at his word,
He's but a cuif for a' that.
For a' that, an' a' that,
His ribband, star, an' a' that,
The man o' independent mind,
He looks an' laughs at a' that.

A prince can mak a belted knight,
A marquis, duke, an' a' that!
But an honest man's aboon his might --
Guid faith, he mauna fa' that!
For a' that, an' a' that,
Their dignities, an' a' that,
The pith o' sense an' pride o' worth
Are higher rank than a' that.

Then let us pray that come it may,
As come it will for a' that,
That Sense and Worth, o'er a' the earth,
Shall bear the gree, an' a' that.
For a' that, an' a' that,
It's coming yet for a' that,
That Man to Man, the world o'er,
Shall brothers be for a' that.

Robert Burns, For a' That, 1795

MF Global: Forbes Sums It Up Well, And My Take, 'Abandon All Hope, Ye Who Enter Here'

"Lasciate ogne speranza, voi ch'intrate."

Dante, The Inferno

Forbes has been head and shoulders above the rest of the mainstream media in reporting on MF Global.

Francine McKenna provides an excellent summation of the entire three part scandal.

Part one. There was the conscious transferring of customer assets to meet a margin call by JP Morgan in London in what was intended to be an 'over the weekend' transaction with the funds replaced on Monday. Edith O'Brien is at the center of this, although it is almost inconceivable that she acted alone.

Part two. In part the failure of MF Global was caused by the refusal of certain parties to honor requests for wire transfers of legitimate funds. These parties almost certainly had insider knowledge of MF Global's finances, and may have even had a financial interest in MF Global's failure.

Part three. In hiding funds seized at the last hour from MF Global, and using influence to steer the bankruptcy to Chapter 11 versus the much more appropriate Chapter 7, certain parties, which may include some regulators most likely at the SEC and CFTC, and the hiding of the funds from investigators and the customers, it is quite possible that there was a conspiracy to obstruct justice.

And as in all scandals such as this, it is the obstruction of justice that can become the real giant killer in covering up 'a third rate burglary.'

Obviously neither Francine McKenna or I have all the facts. The way in which the bankruptcy was handled helps to insure that. And of course in the US people have the right to plead the Fifth Amendment, and are 'innocent and proven guilty.'

Plausible deniability and the 'CEO defense' are very much en vogue these days, which is ironic because as in the case of Enron, the defense if invoked by exceptionally well-compensated 'professionals' who were being paid for their performance and expertise. Until something goes wrong that is, and then no one knows anything. And this is why corporate America hates Sarbanes-Oxley, because it strikes to the heart of that plausible deniability, and says, 'you should know.'

From my perspective,  MF Global is a symptom of what is wrong with the system in addition to being a shocking injustice. It has all the elements of a system gone wrong. White collar criminality, privileged elites, the double standard of law,  secretive proceedings, craven media, posturing Congressmen, non-involved Justice Department, seizure of private property, compromised regulators, and a culture of fraud and deceit that serves the monied interests above all else, above oaths and honor. The sign on the entrance to the Anglo-American financial system should read, 'Abandon all hope. ye who enter here.'

There will be no sustainable recovery until the banks are restrained and the system is reformed.

Forbes
The Story Behind Today's MF Global Congressional Testimony
By Francine McKenna
3/28/2012 @ 5:15PM

If the only stories you read about MF Global come from the major daily media reports and congressional testimony, you’ll miss most of the truth and quickly become confused about who knew what and when. The Wall Street Journal, New York Times, and Reuters, in particular, have gone back and forth on the story many times, flip-flopping around with every new leak, every new published document, every supposed scoop. I’d have whiplash by now if I’d jerked my head one way and then the other and back again as often as their reporters have when telling you, today, who done it.

What you should really wonder is why none of these reporters are doing any real investigative work. Why aren’t the reporters cultivating sources other than those who have a strong motivation for steering the story in one direction and then another, perpetuating misdirection and buying time until they they figure out the political and practical ramifications of what really went on? Why aren’t they reporting the corrections and contradictions to the versions they’ve been repeating?

I’m sticking to the same theory I’ve had since I published it here on November 9th: MF Global and its executives ran out of time and legitimate sources of funding for the growing amount of collateral demands on the sovereign debt repo-to-maturity transactions and customer redemption requests. By Wednesday October 26, 2011 they were out of options. They had no plan to file bankruptcy until they were forced to at least plan for the contingency and, according to the first day filings with the bankruptcy judge, hired Skadden on Friday the 28th.

Corzine and Co.’s goal was to sell the company or, at least, the broker dealer. To do that required keeping it all viable until that deal could be sealed. To do that, I believe, senior executives illegally pledged customer assets – Treasuries and Bunds – as collateral for a short-term loan over the weekend of the 28th. The plan was to put those assets back in the accounts when the buyer paid. Unfortunately for everyone, MF Global was forced to file Chapter 11 on Monday October 31. General Counsel Laurie Ferber did not admit until later that day that executives had “discovered a significant shortfall in its segregated funds account”.

Unlike similar bankruptcies before that – Lehman and Refco – the broker dealer was not sold cleanly. There was eveidence of potential fraud on day 1, October 31. The regulators never should have allowed the holding company to be put in Chapter 11 – debtor in possession – versus Chapter 7. By doing so, Judge Glenn allowed the pirates – the executives who caused the shortfall – to continue to control the ship until Freeh was appointed Trustee for the holding company a month later.

The customer assets that had been illegally pledged were seized by the “lender of last resort” as soon as bankruptcy occurred. I have evidence someone was worried almost immediately about a clawback. That party took the excess collateral for the loan as well as the value of what they lent. They will have to be forced to give it back.

And with that you explain the huge hole in the balance sheet.

Everything we’ve heard since then – revelations, testimony, secret emails and admissions – supports my theory. They only thing left is to identify the “lender of last resort”...

Read the rest here.

"It is no use trying to escape their arrogance by submissiveness and good behaviour. They pillage the world. When the land has nothing left to ravage, they scour the sea. If an enemy is rich, they are greedy, if he is poor, they lust for dominion; neither the east nor the west has been able to satiate them.

Among mankind they alone covet with the same greed both the poor and the rich. To plunder, to massacre, to steal, this they call Empire; and where they make a desert, they call it peace."

Tacitus, Agricola

Blueprint For Accountability: The Wall Street - Washington Connection

A panel at Georgetown University, called "Blueprint for Accountability," is a wide-ranging discussion about Wall Street that includes Eliot Spitzer, Ron Suskind, OWS activist Jesse LaGreca, and Matt Taibbi.

Culture Project: Blueprint for Accountability from Culture Project on FORA.tv

Gold Daily And Silver Weekly Charts - Jeff Christian Calls 'The Top' In Gold

In one of the more bullish developments for precious metals the CPM group has announced that 'The Top' is in gold.

Jeff Christian and CPM Calls 'The Top' In Gold

Given their track record in forecasting the metals this is rather bullish.

SP 500 and NDX Futures Daily Charts

Wash and rinse day within the trend as indicated intraday.

The sharp downward reaction was attributed by the spokesmodel to the miss on the GDP report, at 2.2%, which had me choking on my coffee. I checked and it turns out he just misspoke.

He obviously meant the durable goods order number which came in at 2.2% rather than 2.5%. Durable Goods is notoriously volatile and means little. The third estimate of 4Q 11 GDP comes out on Thursday and is projected at 3%, and it *should* be a snore.

MF Global Testimony Has Begun - Watch Now on C-Span

MF Global Testimony Live on C-Span

Moyers and Bacevich: Endless War

"As prophet, Reinhold Niebuhr warned that what he called 'our dreams of managing history' — dreams borne out of a peculiar combination of arrogance, hypocrisy, and self-delusion — posed a large and potentially mortal threat to the United States. Today we ignore that warning at our peril.

Since the end of the Cold War the management of history has emerged as the all but explicitly stated purpose of American statecraft. In Washington, politicians speak knowingly about history's clearly discerned purpose and about the responsibility of the United States, at the zenith of its power, to guide history to its intended destination.

In Niebuhr's view, although history may be purposeful, it is also opaque, a drama in which both the story line and the dénouement remain hidden from view. The twists and turns that the plot has already taken suggest the need for a certain modesty in forecasting what is still to come. Yet as Niebuhr writes, 'modern man lacks the humility to accept the fact that the whole drama of history is enacted in a frame of meaning too large for human comprehension or management.'

Such humility is in particularly short supply in present-day Washington. There, especially among neoconservatives and neoliberals, the conviction persists that Americans are called up on to serve, in Niebuhr's most memorable phrase, 'as tutors of mankind in its pilgrimage to perfection.'"

Andrew J. Bacevich

I might have subtitled this, A Plunder Society: The Three Trillion Dollar self-serving adventures of the military-industrial empire.

Auferre, trucidare, rapere, falsis nominibus imperium; atque, ubi solitudinem faciunt, pacem appellant.

Calgacus, as chronicled by Tacitus in his Agricola

The homepage for this interview is here.

SP 500 June Futures Daily Chart Close Up

The larger trend is intact as the market retreats from a short term overbought condition.

Within almost every trend there is a short term 'wash and rinse' cycle.

Let's see if the primary trend holds. It has almost grown sufficiently to be called 'the Bernanke Bubble.'

Banks Hold a Billion In Overseas Customer Money

If the financial crisis were more widespread how much worse do you think these customers would be faring?

Banks Hold $1 Billion in MF Global U.K. Cash, KPMG Says
By Kit Chellel
March 28, 2012

About $1 billion of MF Global Holding Ltd. U.K. clients’ money remains locked away in other financial institutions five months after the brokerage’s collapse, administrators KPMG LLP said.

KPMG has collected more than $500 million from those accounts to date, the firm said in an update published on its website. The figures relate to unsegregated client accounts, which MF Global was allowed to mix with its own funds and which have proved difficult for the administrators to recover.

KPMG said it was taking action to obtain the $1 billion of unsegregated assets from a “small number of financial institutions” that it didn’t identify. The firm threatened to sue banks that don’t hand over funds, it said at a London creditors meeting in January.

KPMG, appointed to wind up the London-based unit when the New York-based parent filed for bankruptcy in October, plans to produce statements setting out the account positions of 75 percent of customers by March 30. MF Global was the fifth- largest financial company to file for bankruptcy when it sought protection on Oct. 31 after getting margin calls on its bets on European sovereign debt.

MF Global customers that traded on the London Metal Exchange are unlikely to receive statements until April because of the complexity of their positions, KPMG said...

Read the rest here.

Little Known Rule Gives Wall Street Ability To Misuse Overseas Customer Money

The wall of spin shifts and ebbs with every day, retreated and advancing, always to hide the truth.

Professionals in the industry read these things and either laugh themselves silly, or continue to make moves to safeguard their own funds. And I have told you that is what I have done for myself.

I did forecast about four or five years ago that when things started to fall apart, the foreign funds in the US would be the most vulnerable.

And that includes assets held on deposit, even with receipts, including gold and silver. If the Constitution is 'just a goddam piece of paper' what is a receipt?

On a related topic the FASB Acts To Reform 'MF Global Accounting.' The US accounting industry is a disgraced profession right along with economics, perhaps moreso.

As another story from Reuters makes more clear, when word leaked out that the customer funds had been tapped, and that the proposed acquisition of MF Global had fallen apart, the banks started freezing its funds.

This story is spin, but it can be made to stick. If justice is done, I will be astonished. I would just like to see the customers get their money back.

Warning Flags Were Raised in MF Global Transfers
By BEN PROTESS and AZAM AHMED
March 27, 2012

...The misuse of customer money is expected to be a focus of the hearing before the oversight panel of the House Financial Services Committee. It will feature testimony from central figures at MF Global, including Laurie Ferber, its general counsel, and Ms. Serwinski, the chief financial officer for North America...

While using customer funds was a serious red flag at MF Global, it was not necessarily illegal.

A little known loophole in futures regulations permits firms to spend some money belonging to customers who traded abroad, an exemption that contradicts a cornerstone of the industry to always protect client funds. It also differs from the law policing trading in the United States.

Other employees in the firm’s back office have also told lawyers that they knew of a potential deficit in customer accounts on Oct. 27, according to the people involved in the case. One employee on Oct. 30 told an outside firm that was reviewing MF Global’s books that the brokerage firm was worried about a shortfall earlier in the week, according to one of the people involved in the conversation. Federal authorities are also investigating whether MF Global was improperly using customer money as early as August, one of the people involved in the case said.

It is unclear whether the firm’s top executives were aware of a potential shortfall...

The document showed “a substantial deficit” in the amount of firm money used to protect customer accounts, according to the prepared testimony by Ms. Serwinski, who was planning to leave MF Global. Futures firms typically keep a cushion of cash in customer accounts as a buffer to cover losses in case of volatile market swings.

The deficit did not in and of itself violate federal laws, because of the loophole for extra cash in foreign trading accounts. The loophole dates to 1987, when few American traders kept money overseas, and was intended to add controls to a market that was essentially unregulated...

Read the rest here.

Warren Pollock: Overall Derivative Market Contracts - Warning Signs

I have spoken before about the fallacy of netting and the danger of instability in the derivatives market.

Critical Mass: The Mispricing of Derivatives Risk and How the Financial World Ends

Here is Warren Pollock's take on this and on the recent contraction in nominal value of the global derivatives market.

"Ponzi schemes can go on for a long time under the mask of expansion; these frauds blow up during a contraction of new money being input into them.

Such may be the story of credit derivatives as we see a working contraction in the notional value of these instruments as reported by the comptroller of the currency. In simple terms the number of these instruments has gone down to a mere 240 Trillion!

The premise for this ponzi is the concept of netting whereby risks off offset on paper under the false justification that positions can become risk neutral. In this ponzi scheme the efficacy of the netting process has magically risen from 50% or so to an astounding 92.2%.. This means that the reported risk of 240 Trillion is only 8% of the notional amount.

In less insane times the notional risk was reduced to a mere 50% through the netting process. Even with 8% risk not covered by netting the liabilities of JPM and others are far greater than their assets under management. The problem being that JPM's assets are secured by its liabilities and the liabilities of banks tend to be YOUR Savings.

With changes to Safe Harbor rules the government is not only facilitating fraud with these netting assumptions but they are also putting your savings at risk by giving the coverage of derivatives priority should there be a dispute. This very issue is being worked out presently with MF Global."

Gold Daily and Silver Weekly Charts

"We have entered the most favourable era for gold prices in our lifetime, and the share prices of the great mining companies will eventually outperform bullion prices. Central banks are printing money and creating liquidity beyond the forecasts of all but the most paranoid goldbugs a year ago."

Don Coxe, Bank of Montreal

Updates are early this evening because of a prior commitment.

SP 500 and NDX Futures Daily Charts

The markets paused today.

Charts are early because of a prior commitment.

Franklin Roosevelt's First Inaugural Address

"And finally, in our progress towards a resumption of work, we require two safeguards against a return of the evils of the old order.

There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people's money."

Franklin Delano Roosevelt, First Inaugural Address, 4 March 1933

The year 1933 was a pivotal year in modern history. While Roosevelt spoke these words, Adolf Hitler had already risen to the post of Chancellor of Germany after the Reichstag fire. By April 1 the Enabling Act had made him the dictator of Germany. The autocratic leader of Italy, Mussolini, published La dottrina del fascismo, The Doctrine of Fascism. Japan withdrew from the League of Nations and had invaded Manchuria and bombed Shanghai.

And a small group of wealthy Americans were already plotting a fascist military coup by a band of hired brigands designed to overturn the Constitution and place the country in the hands of the rich and the powerful as they had helped to do in Germany.

It is our generation that allowed the repeal of these safeguards created during the depths of the Great Depression, epitomized by the long campaign to overturn Glass-Steagall, and the handing back the republic, and the fate of our children and their children, to the unscrupulous monied interests.

Even now, people act reflexively to this warning, conditioned by years of propaganda and public relations to hate their protectors and love those who plunder them, in the hopes that they will be spared, and perhaps even participate in such spoils.

What a generation of the craven, the self-loving, the deluded, and the foolishly proud.

President Hoover, Mr. Chief Justice, my friends:

This is a day of national consecration. And I am certain that on this day my fellow Americans expect that on my induction into the Presidency, I will address them with a candor and a decision which the present situation of our people impels.

This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure, as it has endured, will revive and will prosper.

So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life, a leadership of frankness and of vigor has met with that understanding and support of the people themselves which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.

In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; and the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

And yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered, because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.

Primarily, this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and have abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True, they have tried. But their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

Yes, the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy, the moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days, my friends, will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves, to our fellow men.

Recognition of that falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, and on unselfish performance; without them it cannot live.

Restoration calls, however, not for changes in ethics alone. This Nation is asking for action, and action now.

Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing great -- greatly needed projects to stimulate and reorganize the use of our great natural resources.

Hand in hand with that we must frankly recognize the overbalance of population in our industrial centers and, by engaging on a national scale in a redistribution, endeavor to provide a better use of the land for those best fitted for the land.

Yes, the task can be helped by definite efforts to raise the values of agricultural products, and with this the power to purchase the output of our cities. It can be helped by preventing realistically the tragedy of the growing loss through foreclosure of our small homes and our farms. It can be helped by insistence that the Federal, the State, and the local governments act forthwith on the demand that their cost be drastically reduced. It can be helped by the unifying of relief activities which today are often scattered, uneconomical, unequal. It can be helped by national planning for and supervision of all forms of transportation and of communications and other utilities that have a definitely public character. There are many ways in which it can be helped, but it can never be helped by merely talking about it.

We must act. We must act quickly.

And finally, in our progress towards a resumption of work, we require two safeguards against a return of the evils of the old order. There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people's money. And there must be provision for an adequate but sound currency.

These, my friends, are the lines of attack. I shall presently urge upon a new Congress in special session detailed measures for their fulfillment, and I shall seek the immediate assistance of the 48 States.

Through this program of action we address ourselves to putting our own national house in order and making income balance outgo. Our international trade relations, though vastly important, are in point of time, and necessity, secondary to the establishment of a sound national economy. I favor, as a practical policy, the putting of first things first. I shall spare no effort to restore world trade by international economic readjustment; but the emergency at home cannot wait on that accomplishment.

The basic thought that guides these specific means of national recovery is not nationally -- narrowly nationalistic. It is the insistence, as a first consideration, upon the interdependence of the various elements in and parts of the United States of America -- a recognition of the old and permanently important manifestation of the American spirit of the pioneer. It is the way to recovery. It is the immediate way. It is the strongest assurance that recovery will endure.

In the field of world policy, I would dedicate this Nation to the policy of the good neighbor: the neighbor who resolutely respects himself and, because he does so, respects the rights of others; the neighbor who respects his obligations and respects the sanctity of his agreements in and with a world of neighbors.

If I read the temper of our people correctly, we now realize, as we have never realized before, our interdependence on each other; that we can not merely take, but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress can be made, no leadership becomes effective.

We are, I know, ready and willing to submit our lives and our property to such discipline, because it makes possible a leadership which aims at the larger good. This, I propose to offer, pledging that the larger purposes will bind upon us, bind upon us all as a sacred obligation with a unity of duty hitherto evoked only in times of armed strife.

With this pledge taken, I assume unhesitatingly the leadership of this great army of our people dedicated to a disciplined attack upon our common problems.

Action in this image, action to this end is feasible under the form of government which we have inherited from our ancestors. Our Constitution is so simple, so practical that it is possible always to meet extraordinary needs by changes in emphasis and arrangement without loss of essential form. That is why our constitutional system has proved itself the most superbly enduring political mechanism the modern world has ever seen.

It has met every stress of vast expansion of territory, of foreign wars, of bitter internal strife, of world relations. And it is to be hoped that the normal balance of executive and legislative authority may be wholly equal, wholly adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure.

I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption.

But, in the event that the Congress shall fail to take one of these two courses, in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis -- broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.

For the trust reposed in me, I will return the courage and the devotion that befit the time. I can do no less.

We face the arduous days that lie before us in the warm courage of national unity; with the clear consciousness of seeking old and precious moral values; with the clean satisfaction that comes from the stern performance of duty by old and young alike. We aim at the assurance of a rounded, a permanent national life.

We do not distrust the -- the future of essential democracy. The people of the United States have not failed. In their need they have registered a mandate that they want direct, vigorous action. They have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it.

In this dedication -- In this dedication of a Nation, we humbly ask the blessing of God.

May He protect each and every one of us.

May He guide me in the days to come.

A Brief Look at the 2012 French Political Landscape

I doubt that most non-French readers will know the complete cast of characters, but the video is so well done and funny in and of itself that it is worth showing. Its not Pixar, but I was impressed. And the caricatures cross the language barrier.

I would like to see something as witty and clever done with the American or British cast of characters.

Tavakoli on the Ongoing Fraud in the Financial System 'Epitomized By MF Global'

Janet Tavakoli and Lauren Lyster discuss the widespread control frauds that permeate the US financial system, continuing after the financial crisis and Dodd-Frank, and epitomized by the reckless disregard for the employees and customers at MF Global as led by Jon Corzine.

Tavakoli has one word for the 'CEO defense' being parroted by the mainstream US media in this case. "Nonsense."

She has some fairly hard words for the Congress and the media in their coverage of the financial scandals.

Barofsky: MF Global Still Looks Like a Fraud

I doubt very much justice will be done, unless Edith O'Brien cuts a deal for immunity and has some proof of what was said and known by the executives of MF Global.

The foundations for the cover stories have been well laid already in the press.

Gold Daily and Silver Weekly Charts - A Burst of Liquidity Expectations Sparks a Flight to the Metals

A sharp rally in the metals as Bernanke dispels the deflationary delusion.

SP 500 and NDX Futures Daily Charts - The Bernanke Bubble

A big rally, but on remarkably light volume.

Bernanke is running the presses, but pumping another paper asset bubble that primarily benefits the already wealthy.

As noted earlier today, I think we are seeing the American financiers starting to leave Europe and Asia. If this trend continues, look for the currency war to enter another phase in which its effects will be unmistakable, even for the mainstream muppets.

This will end badly.

NY Times Says They Saw an Email that Says Corzine Did Not Know, Was Apparently Misled

Now it starts to get really interesting.

Of course Jon Corzine did not know. He's only the CEO.

Leak, and counter-leak.

He said.  She said.

Check your closet floor, Edith. What were you wearing that day?

You look like the designated patsy.

One thing that the email seems to indicate, however, is that at least $175 million of the customer money was never missing or vaporized, but was sitting in an account at JPM in London. And they never received back confirmation that the money was NOT customer funds.

That account was MF Global's account. Did JPM seize the money when MF Global went bankrupt? Their rationale would be that it was a settlement, and therefore exempt from laws against fraudulent conveyance based on a 2005 law.

NYT
E-Mail to Corzine Said Transfer Was Not Customer Money
By BEN PROTESS and AZAM AHMED
March 25, 2012

Jon S. Corzine, the former chief executive of MF Global, was told during the brokerage firm’s final day of business that a crucial transfer of $175 million came from the firm’s own money, not from a customer account, according to an internal e-mail.

The e-mail, sent by an executive in MF Global’s Chicago office, showed that the company had transferred $175 million to replenish an overdrawn account at JPMorgan Chase in London. The transfer, the e-mail said, was a “House Wire,” meaning that it came from the firm’s own money. The e-mail, sent at 2:20 p.m. on Oct. 28 to Mr. Corzine and two of his assistants in New York, says the transfer came from a “nonseg” account, industry speak for a noncustomer account.

But the e-mail, a copy of which was reviewed by The New York Times, did not capture the full story behind the wire, which turned out to contain customer money. MF Global employees in Chicago had first transferred $200 million from a customer account to the firm’s house account, people briefed on the matter said. Once it was in the firm’s coffers, the people said, Chicago employees then promptly transferred $175 million of the money to the MF Global account at JPMorgan in London — the account that was overdrawn....

Miloš Kopecký and the mainstream media financial cold war boogie woogie.

Gold Futures Daily Chart - Intraday With Key Support and Resistance

The short term trend is downwards and in red.

The longer term trend is upwards and in green.

The very long term trend is steep and pointing to much higher prices.

The support and resistance on the chart is rather easily seen.

I would put the key levels in blue.

JPM's Asia-Pacific CEO Leaving the Firm

The spokesmodels were crying insipid crocodile tears for Gaby this morning. "With all this regulation, it's just not fun anymore."

Yes, even plunder can become tedious.

Except I think this is part of a greater trend.

The American derivatives dealers and agents of fortune are leaving Europe and Asia, as the currency wars intensify, and the Banksters are sent home.

WSJ
J.P. Morgan's Asia-Pacific CEO Leaving
By ALISON TUDOR
March 26, 2012

HONG KONG—J.P. Morgan Chase & Co.'s chairman and chief executive officer for the Asian Pacific region, Gaby Abdelnour, is leaving the bank after 14 years and the building up of the bank's platform in China.

Mr. Abdelnour, 58 years old, will leave the New York-based bank this summer to pursue personal interests, according to a memo signed by Chief Executive Officer James Dimon and investment-banking head Jes Staley and circulated internally. The bank hasn't named a successor...

Bernanke Spurs Stock Market with Pledge to Inflate the Currency

The problem with this approach is that only the wealthy can gain the greatest benefit from it, and the real economy picks up the scraps.

The banks can borrow at almost zero, and buy treasuries paying two or three percent, and the wealthy can continue to buy income producing assets and other companies to strenghten their monopolies.

There will be no sustainable recovery until the system is reformed. The greater fault is of Obama and the Congress, since they control fiscal policy and enforcement of the law, although the Fed as regulator does very little to reform the financial system and the Banks.

The limit of this current quantitative easing policy is the value of the dollar in international trade, or the spontaneous action of the people to demand change.

Reuters
Wall Street gains after Bernanke comments
By Ryan Vlastelica March 26, 2012

NEW YORK (Reuters) - Stocks rallied on Monday after Federal Reserve Chairman Ben Bernanke suggested the central bank would continue supportive monetary policies even as the unemployment rate improves.

The economy needs to grow more quickly if it is to produce enough jobs to bring down the unemployment rate further, Bernanke told a gathering of the National Association for Business Economics.

"Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," he said.

Leo Grohowski, the chief investment officer at BNY Mellon Wealth Management in New York, called the remarks "the best of both worlds..."

Martin Luther King - On Civil Disobedience

Excerpt of Transcript of the Sermon "But If Not" by Martin Luther King

O Nebuchadnezzar, we do not need to defend ourselves before you in this matter. If we are thrown into the blazing furnace, the God we serve is able to save us from it, and he will rescue us from your hand, O king.

But if not, even if he does not preserve us, we want you to know, O king, that we will not serve your gods or worship the images of gold you have set up and commanded us to worship." Daniel 3:16-18

Now I want you to notice first, here, that these young men practiced civil disobedience.

Civil disobedience is the refusal to abide by an order of the government or of the state or even of the court that your conscience tells you is unjust. Civil disobedience is based on a commitment to conscience. In other words, one who practices civil disobedience is obedient to what he considers a higher law.

And there comes a time when a moral man can't obey a law which his conscience tells him is unjust. And I tell you this morning, my friends, that history has moved on, and great moments have often come forth because there were those individuals, in every age and in every generation, who were willing to say "I will be obedient to a higher law." These men were saying "I must be disobedient to a king in order to be obedient to the king."

And those people who so often criticize those of us who come to those moments when we must practice civil disobedience never remember that even right here in America, in order to get free from the oppression and the colonialism of the British Empire, our nation practiced civil disobedience.  For what represented civil disobedience more than the Boston Tea Party.

And never forget that everything that Hitler did in Germany was legal. It was legal to do everything that Hitler did to the Jews. It was a law in Germany that Hitler issued himself that it was wrong and illegal to aid and comfort a Jew in Hitler's Germany. But I tell you if I had lived in Hitler's Germany with my attitude, I would have openly broken that law. I would have practiced civil disobedience.

And so it is important to see that there are times when a man-made law is out of harmony with the moral law of the universe, there are times when human law is out of harmony with eternal and divine laws. And when that happens, you have an obligation to break it.

And I'm happy that in breaking it, I have some good company. I have Shadrach, Meshach, and Abednego. I have Jesus and Socrates. And I have all of the early Christians who refused to bow...

And this is what I want to say finally, that there is a reward if you do right for righteousness' sake...Don't ever think you're by yourself. Go on to jail if necessary but you'll never go alone.

Take a stand for that which is right, and the world may misunderstand you and criticize you, but you never go alone, for somewhere I read that "One with God is a majority," and God has a way of transforming a minority into a majority.

Walk with him this morning and believe in him and do what is right and he'll be with you even until the consummation of the ages. Yes, I've seen the lightning flash, I've heard the thunder roll, I've felt sin breakers dashing trying to conquer my soul but I heard the voice of Jesus saying still to fight on, he promised never to leave me, never to leave me alone; no, never alone, no, never alone. He promised never to leave me, never to leave me alone.

Where you going this morning, my friends, tell the world that you're going with truth. You're going with justice, you're going with goodness, and you will have an eternal companionship. And the world will look at you and they won't understand you, for your fiery furnace will be around you, but you'll go on anyhow.

But if not, I will not bow, and God grant that we will never bow before the gods of evil."

"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Weekend Reading for Sunday 25 March 2012

“We are slow to master the great truth that even now Christ is, as it were, walking among us, and by His hand, or eye, or voice, bidding us to follow Him. We do not understand that His call is a thing that takes place now. We think it took place in the Apostles' days, but we do not believe in it; we do not look for it in our own case.

God's presence is not discerned at the time when it is upon us, but afterwards, when we look back upon what is gone and over. The world seems to go on as usual. There is nothing of heaven in the face of society, in the news of the day.

And yet the ever-blessed Spirit of God is there, ten times more glorious, more powerful than when He trod the earth in our flesh.

God beholds you. He calls you by your name. He sees you and understands you as He made you. He knows what is in you, all your peculiar feelings and thoughts, your dispositions and likings, your strengths and your weaknesses. He views you in your day of rejoicing and in your day of sorrow. He sympathizes in your hopes and your temptations. He interests Himself in all your anxieties and remembrances, all the risings and fallings of your spirit.

He encompasses you round and bears you in His arms. He notes your very countenance, whether smiling or in tears. He looks tenderly upon you. He hears your voice, the beating of your heart, and your very breathing.

You do not love yourself better than He loves you. You cannot shrink from pain more than He dislikes your bearing it; and if He puts it on you, it is as you would put it on yourself, if you would be wise, for a greater good afterwards.

There is an inward world, which none see but those who belong to it. There is an inward world into which they enter who come to Christ, though to men in general they seem as before. If they drank of Christ's cup it is not with them as in time past. They came for a blessing, and they have found a work.

To their surprise, as time goes on, they find that their lot is changed. They find that in one shape or another adversity happens to them. If they refuse to afflict themselves, God afflicts them.

Why did you taste of His heavenly feast, but that it might work in you—why did you kneel beneath His hand, but that He might leave on you the print of His wounds?

God has created me to do Him some definite service; He has committed some work to me which He has not committed to another. I have my mission -- I may never know it in this life but I shall be told it in the next.

I am a link in a chain, a bond of connection between persons. He has not created me for naught.

I shall do good, I shall do His work. I shall be an angel of peace, a preacher of truth in my own place while not intending it if I do but keep His commandments.

Therefore I will trust Him. Whatever I am, I can never be thrown away. If I am in sickness, my sickness may serve Him; in perplexity, my perplexity may serve Him. If I am in sorrow, my sorrow may serve Him.

He does nothing in vain. He knows what He is about.

He may take away my friends. He may throw me among strangers. He may make me feel desolate, make my spirits sink, hide my future from me -- still He knows what He is about.

Let us feel what we really are--sinners attempting great things. Let us simply obey God's will, whatever may come. He can turn all things to our eternal good. Easter day is preceded by the forty days of Lent, to show us that they only who sow in tears shall reap in joy.

Contemplate then yourself, not as yourself, but as you are in the Eternal God. Fall down in astonishment at the glories which are around you and in you, poured to and fro in such a wonderful way that you are dissolved into the Kingdom of God.

The more we do, the more shall we trust in Christ; and that surely is no morose doctrine, that leads us to soothe our selfish restlessness, and forget our fears, in the vision of the Incarnate Son of God.

May the Lord support us all the day long, till the shades lengthen, and the evening comes, and the busy world is hushed, and the fever of life is over, and our work is done.

Then in His mercy may He give us safe lodging, and a holy rest, and peace at last.”

John Henry Newman

This is a collection of quotations from J. H. Newman woven into a whole cloth by Le Proprietaire as a young man for a small circle of Christian humanist friends.

NY Times Floats the Corzine 'CEO Defense'

As the NY Times notes in its expansion of the statements of Corzine's attorney, it is going to be a bit hard to pin Mr. Corzine down in the case of MF Global, because it is unlikely that he sent an email to Ms. O'Brien saying "Please meet our margin call with funds stolen from the customers' accounts."

The defense will be that Mr. Corzine, who had been personally running the prop trading gambits that took MF Global down, could not be bothered in understanding his own firm's cash position, and that no one dared to tell him that they were dipping into customer funds.

The weight of this of course would naturally have to seem to fall on someone, but the defense offered will be that this will have been an inadvertent error, that the firm was so hopelessly mismanaged and out of control that they were not even able to keep their own books straight.

Like most of the mainstream media, the NY Times expands on the Talking Points being promoted the spokesmen and public relations campaign for Mr. Corzine.   Given the nature of this story, and the blanket of secrecy that was thrown over it by most of the involved parties, except the customers of course, it would be a real effort to do otherwise. 

I am still quite intrigued by who leaked the Congressional memo to Bloomberg news.

Dealbook/NY Times
New Details Emerge on MF Global, but No Smoking Gun
By AZAM AHMED and BEN PROTESS
March 23, 2012, 6:19 pm

New details have emerged about MF Global’s chaotic final days and a critical transfer of customer money that has become a central focus in the wide-ranging federal investigation into the firm’s collapse.

In a memo prepared for a coming Congressional hearing, investigators described how Jon S. Corzine, the firm’s former chief executive and former New Jersey governor, asked an executive in the Chicago office to transfer $200 million to replenish an overdrawn account at JPMorgan Chase in London.

The Congressional memo cites an e-mail from the Chicago employee, Edith O’Brien, who authorized the transfer, saying it was “Per JC’s direct instructions,” referring to Mr. Corzine.

At first, the revelation fueled speculation that Mr. Corzine had instructed the transfer of customer funds, despite his assertions to the contrary. But it appears to be no smoking gun.

While the memo makes clear that Mr. Corzine was involved in patching the overdraft, it does not indicate that he requested the funds be drawn from customer accounts. He asked only that the overdraft be fixed. And in a footnote, the memo noted that futures brokerage firms like MF Global frequently deposit firm money into customer accounts and may withdraw it at will.   (Do they?  Do they frequently deposit their own money into customer accounts? Is that what this memo really says? - Jesse)

While the memo makes clear that Mr. Corzine was involved in patching the overdraft, it does not indicate that he requested the funds be drawn from customer accounts. He asked only that the overdraft be fixed. And in a footnote, the memo noted that futures brokerage firms like MF Global frequently deposit firm money into customer accounts and may withdraw it at will.

In a statement on Friday, a spokesman for Mr. Corzine said the former chief executive stood by his earlier testimony before Congress. In December, Mr. Corzine told lawmakers that he did not authorize the illicit transfer of customer money.

“I never gave any instructions to misuse customer money, never intended to give any instructions or authority to misuse customer funds, and I find it very hard to understand how anyone could misconstrue what I’ve said as a way to misuse customer money,” Mr. Corzine, a Democrat who also served in the Senate, said before the Senate Agriculture Committee.

The spokesman, Steven Goldberg, added that Mr. Corzine “never directed Ms. O’Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose. Nor was he informed that customer funds had been used for that purpose...”

Read the rest here.

W. C. Handy: Father of the American Blues

Listen to the PBS Radio Documentary W. C. Handy's Blues.

"William Christopher (better known as WC) Handy didn’t invent the blues -- but he heard them in a deep and understanding way. He figured out how they worked. He wrote them down, arranged them, and did the business of bringing them to the world.

Handy’s classic “St. Louis Blues” is one of the most recorded songs ever. But even though Handy’s blues were phenomenally popular, he also strove to secure respect for himself and for other African-American composers. He was one of the first black composers to hold onto the rights to his music, and he published his own and other black composers’ work.

In this hour-long radio special, host Dr. Ysaye Maria Barnwell (of Sweet Honey in the Rock) celebrates the life and legacy of WC Handy the musician, the composer, the arranger, the publisher and the pioneer."

Here is the PBS Documentary Home Page For W. C. Handy's Blues.

Five Simple Rules to Remember

It is amazing what one can find on the Internet.

I was looking for a quote about suffering and love, to be able to source it, and I found this bit of foolishness from 2001, an old posting from a chatboard, nine days before Sept 11, 2001.

I had recently 'retired' from corporate life, and was just starting to act on some personal plans that were to be changed radically by unexpected events.

Jesse's Rules for Life

Rule 1: Nothing is worth doing before 8 AM with your clothes on.

Rule 2: Never attribute to evil what can be attributed to stupidity.

Rule 3: To learn to love, we must first yearn to be comforted.

Rule 4: In any game, at least one guy has YOU pegged as a sucker.

Rule 5: Don't be a sucker.

I suppose I should add:

Rule 6: "No one knows the day or hour, not even the angels in heaven, nor the Son, but only the Father."