Stocks and Precious Metals Charts - Lions, and Tigers and Bears, Oh My

 

"Unequal enforcement of the law will distort and destroy any capitalist society, and we may be witnessing just such a downward spiral in the financial sector.  Capitalism is not an abstract idea.  It is an economic system with a distinct set of underlying principles that must exist in order for the system to work.  One of these principles is equal justice.  In its absence, parties will stop entering into transactions that create overall wealth for our society.  Justice must be blind so that both parties — whether weak or powerful — can assume that an agreement between them will be equally enforced by the courts.

There is a second, perhaps even more fundamental, reason that equal justice is essential for capitalism to work.  When unequal justice prevails, the party that does not need to follow the law has a distinct competitive advantage.  A corporation that knowingly breaks the law will find ways to profit through illegal means that are not available to competitors.  As a consequence, the competitive playing field is biased toward the company that does not need to follow the rules.

The net result of unequal justice is likely to be the destruction of the overall wealth of our society.  I don’t mean the wealth of individuals; I mean the total wealth of goods and services that are the benefits of healthy competition.  To the extent that unequal justice prevails, entities that are exempt from the laws will, in all likelihood, be more profitable than law abiding competitors.  Then they use their profits to further weaken competitors by using their illegal profits to further build their businesses at the expense of competitors.  All of this business building activity is based on a foundation of sand, and ultimately the entire industry — or even the larger economy — becomes distorted.  The 'rogue' company gains power, changes markets, and destroys direct and indirect competitors because it is playing by different rules."

Bruce Judson, For Capitalism to Survive, Crime Must Not Pay, April 12, 2012
 

"Back in December of 2012, when it was proved in U.S. court that billions of dollars of drug money had been laundered through HSBC and yet somehow it was also found that HSBC was NOT guilty of laundering and neither was anyone in the bank, there was an outcry.  Who in the bank knew about this? Evidence uncovered by investigations into HSBC’s activities revealed, 'senior bank officials were complicit in the illegal activity.'

In the UK it was noted that during the time the laundering was going on, the chief executive of HSBC in 2003 who then became its chairman in 2006, was Lord Green, who is now the UK trade minister. So obviously no great concern to get to any truth about HSBC, in the hierarchy of the UK establishment.

Senator Elizabeth Warren asked, 'So what does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?'

Warren’s question, ‘What does it take?’ was finally answered by U.S. Attorney General Eric Holder in March 2013, when he told the U.S. Judiciary Committee that the Justice department had decided not to pursue any criminal prosecution of HSBC.  The U.S. Justice Department felt it could not criminally prosecute the bank because a criminal conviction would mean the bank would lose its license to bank in the US which would kill it and a whole range of other institutions, which the bank relies on to buy its debts and its investment products would be prohibited from doing so as soon as the bank was deemed to be criminal.

Twenty-eight banks are officially above the law and WILL NOT be criminally prosecuted no matter what they do.  Remember that’s not me saying this.  It is the U.S. Department of Justice saying it.

Not only twenty-eight banks but all their senior executives, chairman/woman and board members.  It would be very difficult to find a senior person in a bank to be criminally guilty but yet not find the institution guilty. So we could compile a list of people who are now, at least as concerns any financial and professional actions, also above the law.

When we say a bank is above the law, not only should we remember that this means specific people are above the law (at least in how they make money) but we should also remember that this also means the assets in those banks are above the law. This means if a banks does things which are illegal but lucrative – such as laundering money in order to get the use of those laundered billions to then use them as, lets say, capital to underpin loans or for speculating, for example, and by doing those illegal things it makes out sized profits for its shareholders and staff, that money, those profits are also above the law.

Since the bank and its senior staff are above the law and breaking the law is profitable, a) no one has an interest to say no, b) shareholders and staff will directly benefit from breaking the law. They will make more money by participating in law breaking or by investing in a bank which is law breaking. They will, in fact have an interest making sure it continues."

Golem XIV, The Twilight of Justice, March 2013

"Let your love be sincere.   Hate what is evil, and hold on to what is good.   Love one another with with the love of a family.   Be an example in showing respect to others.  Do not be neglectful in your service, but enthusiastic in spirit, as a servant of the Lord.  Rejoice in hope; be patient in suffering, and faithful in prayer.  Contribute to the needs of the holy ones, and provide hospitality to strangers.

Bless those who provoke you.  Pray for them, and do not curse them.   Rejoice with those who rejoice; weep with those who weep.  Live in harmony with one another.   Do not be arrogant, but associate with the humble.  Do not claim to be wiser than you are.  Do not repay anyone evil for evil, but have a regard for what is good in the sight of all.  If it is possible, as best as you can, live peaceably with all.   Friends, never avenge yourselves, but leave room for the judgement of God, for it is written, 'Vengeance is mine, and I will do justice, says the Lord.'”

Romans 12:9-19

 

Stocks managed to extend their rally and edged a little higher.

This has the hallmarks of a squeeze on those who took cash or short positions as a result of the new hostilities in the Mideast.

VIX continues to wallow with its MACD histogram now at a low for the year.

Gold and silver endured a major bear raid this morning, no doubt led by the bullion banks and their cronies.  

The Banks are the dreadnoughts in the ongoing financial and currency wars.

Speaking of gold, analyst Jan Nieuwenhuijs believes that the People's Bank of China is covertly buying large amounts of gold in preprartion for a change in the global monetary structure. You can read the full article here.

"The PBoC is in a hurry to buy enormous amounts of gold, indicating it’s preparing for substantial changes in the dollar-centric international monetary system.  

Based on information from industry sources and my personal calculations, total gold purchases by the Chinese central bank (reported and unreported) in Q3 accounted for 179 tonnes.  Year-to-date the PBoC bought 593 tonnes, which is 80% more than what it bought in the first three quarters last year.  Its total estimated gold holdings are 5,220 tonnes, more than twice what’s officially disclosed at 2,192 tonnes.

The movement towards gold by central banks is showing no sign of slowing down. Mainly the Chinese central bank is on a voracious buying spree since 2022, and it’s obtaining way more metal than what is officially reported."

I think we're going to need a bigger boat.

The big, tectonic changes happen slowly, gradually, and then like an avalanche or earthquake of revelation, all at once.

Have a pleasant evening.

Stocks and Precious Metals Charts - Financial Dreadnoughts

 

BILL MOYERS: And you say that this oligarchy consists of six megabanks.   What are the six banks?

JAMES KWAK: They are Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo.

BILL MOYERS: And you write that they control 60 percent of our gross national product?

JAMES KWAK: They have assets equivalent to 60 percent of our gross national product. And to put this in perspective, in the mid-1990s, these six banks or their predecessors, since there have been a lot of mergers, had less than 20 percent. Their assets were less than 20 percent of the gross national product.

BILL MOYERS: And what's the threat from an oligarchy of this size and scale?

SIMON JOHNSON: They can distort the system, Bill. They can change the rules of the game to favor themselves. And unfortunately, the way it works in modern finance is when the rules favor you, you go out and you take a lot of risk. And you blow up from time to time, because it's not your problem. When it blows up, it's the taxpayer and it's the government that has to sort it out.

BILL MOYERS: So, you're not kidding when you say it's an oligarchy?

JAMES KWAK: Exactly. I think that in particular, we can see how the oligarchy has actually become more powerful in the last since the financial crisis.  If we look at the way they've behaved in Washington. 

For example, they've been spending more than $1 million per day lobbying Congress and fighting financial reform.  I think that's for some time, the financial sector got its way in Washington through the power of ideology, through the power of persuasion. 

And in the last year and a half, we've seen the gloves come off.  They are fighting as hard as they can to stop reform.

Bill Moyer's Journal, The Financial Oligarchy in the US, April 16, 2010

It was risk on today, as stocks rallied pretty much until the end of the day, going out on the highs.

VIX dropped as one might expect.

The Dollar gave up the 110 handle and more.

Gold and especially silver rallied hard off the recent price suppression.

Silver was kicking butt with both legs.

Let's see is this was just a flash-in-the-pan bear market relief rally or the beginning of a genuine bottom.

There was intraday commentary Authoritarianism of the Utopias.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Will the Fed Ever Learn?

"They will act in accord with the proverbs, 'that a dog will return to his own vomit; and the sow that was washed will go back to her wallow in the mud.'"

2 Peter 2:21-22

No. The Fed will not learn. 

The Fed will keep repeating their policy errors because they are well paid not to learn.  And the economic bobble heads will keep agreeing with them and rationalizing their failures.  This is the judicious thing to do if you wish to succeed in a disgraced profession,  trafficking in expedient fantasies that may last as long as everyone that matters agrees with them.

The Fed wishes for the ECB and the other central banks to do dumb things like they and some of their friends are doing so that they all do the same dumb things together.  There is safety in numbers apparently.  Hey, we all did dumb things out of good intentions.  Who could have known?  No one saw the bubble coming.   No one could have known that what we were doing was making things worse. 

It worked for Greenspan.  And it's working for the Banks.

The Fed is a creature of the Banks.   Its members are all members of the same 'Club.'   They are from the ranks of the financial demimonde, and their livelihoods and privileges are supplied by the financial-political complex.

Insiders never speak ill of insiders. And whistleblowers and reformers are left at the curb. Or tossed under a bus.

As a regulator the Fed is one of the worst possible choices, just a quarter step removed from pure 'self-regulation' by the Banks.  The Fed acts as their proxies and manservants. 

 

The recent tapes of NY Fed meetings with Goldman are no surprise, except perhaps to those who live in an illusion of morally superior technocrats, ruling wisely with perfect virtue, cloaked in their models and jargon.  And of course, you have no need to know, and could not understand it if you did.

I'm sorry, but this is just not how things are in the real world.   The US and UK are caught in an awful credibility trap, and are destined to suffer stagnation and growing inequality until reform comes.  And as we have seen in the case of Japan, that can be a very long time.

Speaking of things that make you go what the heck?, on CNBC this morning the assertion was that 'the gold market is not driven by supply and demand. It only responds to fear and greed.'  That is, it's only fundamental basis is emotion.

And you know what? In the West, in London and New York, that's true. 

The gold and silver markets have the depth and substance of a game of Liar's poker. They are rigged, like most of the other markets with global consequences have been.  The precious metals market hasn't been cleaned up yet because the pinheads who are running the scam have no real track record or experience in trading physical commodity markets. 

 

They think they can keep leasing out what isn't theirs and leveraging up ad infinitum, without ever incurring any real world consequences.  And the Banks are perfectly willing to take their cuts because they are covered with plausible deniability, just following orders. 

But this divergence from reality is not the case everywhere. Certainly not in the Asian and Mideastern markets where some accountability still exists, and delivery tends to imply taking possession.

And in that convergence of these two markets, the physical and the paper, there is both risk and opportunity. When the reckoning comes it is likely to be quite impressive.

There will be a Non-Farm Payrolls report on Friday.

The Comex Delivery Report for Friday is late, as if it is about anything that is actually delivered anywhere but on paper.  There was the usual moving around the plate in the silver bullion warehouses.  Gold was a snoratorium.

There is speculation now by the economists about when wage inflation will return. They are looking at 2015 for it.

I would point to the Japanese experience of 3.6% unemployment, at least on paper, and a massive underemployment running about 40%, with general wage stagnation and a large portion of the population struggling along on near subsistence wages. 

Tell me again what is going to change to allow Labour to demand higher wages from a system totally dominated by two political parties both paid to represent the moneyed interests, driven by an insatiable greed for more? 

Change will come, but not from within.

 

 Something will have to happen to bring people back to their senses, and put some humility and a sense of obligation and proportion back into the masters of the universe.  I won't go so far as to suggest a sense of shame.  Perhaps just respect, if not for the law, then for justice.

 

What that will be I do not know.

Have a pleasant evening.

 

Related:  Criminal Investigation Into JP Morgan's Currency Trading

 

 

From India: Corrupting Power Of Wealth In Politics Is Making the People Angry

This could be a headline in any number of countries.

Sonia Gandhi (born Edvige Antonia Albina Maino, 9 December 1946) is an Italian-born Indian politician and the President of the Indian National Congress, one of the major political parties of India. She is the widow of former Prime Minister of India, Rajiv Gandhi and belongs to the Nehru–Gandhi family.

Times of India
Corruption in politics riling people, Sonia Gandhi warns party
By Subodh Ghildiyal & Palak Nandi
Jan 19, 2013

JAIPUR: Taking serious note of middle class protesters taking to the streets over corruption, Congress president Sonia Gandhi said the lifestyles of leaders is giving rise to questions about the source of their wealth.

Speaking at Congress's chintan shivir (brainstorming session) here, Sonia said, "Celebrating weddings, festivals and happy events is one thing, what of lavish and ostentatious displays of wealth, pomp and status? Does this not beg the question, where is this wealth coming from?"

Her direct remarks caused a hush to descend on the meeting. "Our citizens are rightly fed up with the levels of corruption that they see in public life at high levels, but equally with the corruption they have to deal with in their daily lives,'' she said.

Sonia urged the party not to lose touch with the middle classes that backed the Congress in the 2004 and 2009 general elections. The party cannot afford "our growing educated and middle classes to be disillusioned and alienated with the political process".

The candid references to the middle class drift away from Congress, the need to keep alliances intact, a commitment to make women feel safer, and an admission that the party's base has eroded in traditional strongholds were key aspects of her speech as she set out the political tasks for her party.

Some of her comments were also seen to reflect her concern over the government's response to the outpouring of public anger over the Nirbhaya gang rape and criticism of police action against young protestors. "We have to recognize the new changing India, peopled by a younger, more aspirational, more impatient and more demanding generation. Our people are expecting much more from their political parties. Today's India is better informed and better equipped to communicate. This is a phenomenon, a churning that we must understand and continue to respond to."

Taking cognizance of the growing concern about women's safety, she said, "Atrocities on women, both in urban and rural India, are a blot on our collective conscience and a matter of great shame."

Sonia's carefully crafted speech referred to the principal political challenges before the party and the government at a time when UPA 2's credibility is seen to have taken a beating due to corruption scandals, an anemic economy and demoralizing electoral losses. "Is it not the case that we have squandered many opportunities that people are willing to give us simply because we have been unable to function as a disciplined and united team," she said...

Bill Black Educates the Media On the Nature of Financial Fraud, With Little Apparent Effect

Although I linked to this last week, I thought I would like to feature it today.

In one of his rare appearances on the 'mainstream media' Bill Black educates the CNBC news anchor Maria Bartiromo and news contributor Bethany Maclean on the nature of financial fraud.

It is interesting to see the NBC news people acting as apologists for the financial powers, trotting out false arguments and talking over or rushing past the facts when they are presented. At least Bloomberg is more straightforward in their presentation of blatant hucksterism, making little pretense to journalism or presenting any other side of the Wall Street story. They are salespeople and spokesmodels for the financial industry and the monied interests.

Just putting a letter or two in front of a storied call sign, as in the case of MSNBC and CNBC, does not protect that brand from the tarnish of increasingly low standards and future scandal. All of the major media seems to be dancing to Rupert's pied piper's tune.

As storied NBC news anchor David Brinkley once said:

"Being an anchor is not just a matter of sitting in front of a camera and looking pretty."

"News is what somebody somewhere wants to suppress; all the rest is advertising." Lord Northcliffe