Stocks and Precious Metals Charts - Balancing Act

"It has been the longest bull market in modern history, enabled by massive Central Bank intervention. But with trade wars raging, Brexit, Presidential impeachment over something, etc., there remains a significant risk of a recession over the next 12 months.

If we look at the normalized change in the 10Y-3M curve minus normalized change in 10Y yields, we can see a heightened recession risk. Lower yields and steeper curves are not a good recipe. And then we have the decline in S&P 500 earnings estimates. Recession coming?"

Anthony Sanders, Confounded Interest


"Day by day the money-masters of America become more aware of their danger, they draw together, they grow more class-conscious, more aggressive. The [first world] war has taught them the possibilities of propaganda; it has accustomed them to the idea of enormous campaigns which sway the minds of millions and make them pliable to any purpose.

American political corruption was the buying up of legislatures and assemblies to keep them from doing the people's will and protecting the people's interests; it was the exploiter entrenching himself in power, it was financial autocracy undermining and destroying political democracy. By the blindness and greed of ruling classes the people have been plunged into infinite misery."

Upton Sinclair, The Brass Check

Stocks slumped again today on renewed concerns about global trade.

December 15^th may be a date of interest, tariff-wise.

As you can see from the charts, the major stock indices managed to crawl back up to a reasonable level of trend support.

The rest of the week into the Non-Farm Payrolls Report should tell us the story.

Gold and silver had a nice rally higher after a long coiling process.

But we are still well within the short term declining (coiling?) patterns on the chart. So no breakout yet.

The underpinnings of the market are vulnerable to exogenous shocks. So I would proceed with caution.

The equity and high yield bond markets are leaning heavily on the Fed's balance sheet. And that may not be a longer term sustainable arrangement, and certainly not any formula for sustainable economic recovery.

What would I do?  Reform.   It's obvious.  The system is bent, and consciously so, to sweep the wealth up to a few 'at the top.'  It's a racket.

But the credibility trap will not allow the powers that be and their enablers and politicians to consider it as an option, or even to cite systemic imbalance and corruption as a problem.   Those that do are ignored, smeared, and villified by those that thrive on the existing imbalance.

The banks must be restrained, and balance restored to the economy, and the dark money power limited from its manipulation of policy, politics, and public discourse, before there can be any sustainable recovery.

Have a pleasant evening.

Citi and a Cartel of Global Banks Fined $1.2 Billion By EU over FX Market Rigging

I wanted to call your attention to this story about brazen manipulation in the forex exchange markets by the Banks for three reasons:

1. The markets are too large to be manipulated. When accusations of market manipulation are made, spokesmodels and apologists will dismiss them by saying 'the market is too big to be manipulated' and then cite some gross total of the market trade. This is utter baloney and they know it. Prices are set at the margins, not on the whole, and there is no market that is too big to be manipulated in some manner by big enough players.

2. The government is the problem. If there was a free market you would not see any manipulation. Get rid of all government involvement. This is such a howler that I won't even waste many words on it, except to say that this sophistry implies that if we eliminated the law, then there would not be any crime.  This is utopian nonsense, repeated as slogans by those who have stopped thinking for themselves.

3. The Banks are too well regulated to manipulate markets.  It is the same big banks that are involved in these market manipulation schemes, again and again. They are serial felons who always blame each instance of the felony crime to some 'rogue element' or isolated trader, which is also nonsense. And in each case the fine, while nominally large by individual standards, is really just a cost of doing business.

These market manipulation schemes will end when people reject the narratives put forward by the Bankers and their enablers and think tanks, and choose to elect people who are serious about financial and political reform.

At some point the long term price/physical manipulation in the gold market is going to blow up, and no one in authority could have seen it coming. Because their eyes are firmly closed and gaze averted.

And Trump is no different from his predecessors, and in some ways may be worse.

"Citigroup Inc.[aka Dr. Evil], Royal Bank of Scotland Group Plc and JPMorgan Chase & Co. are among five banks that agreed to pay European Union fines totaling 1.07 billion euros ($1.2 billion) for colluding on foreign-exchange trading strategies.

Citigroup was hit hardest with a 310.8 million-euro penalty, followed by fines of 249.2 million euros and 228.8 million euros for RBS and JPMorgan, the European Commission said in a statement on Thursday. Barclays Plc was fined 210.3 million euros and Mitsubishi UFJ Financial Group Inc. must pay nearly 70 million euros as part of the settlement with the EU’s antitrust regulator.

Traders ran two cartels on online chatrooms, swapping sensitive information and trading plans that allowed them to make informed decisions to buy or sell currencies, the regulator said. Many of them knew each other, calling one chatroom on the Bloomberg terminal the "Essex Express n’ the Jimmy" because all of the traders but one met on a commuter train from Essex to London. Other names for rooms were the "Three Way Banana Split" and "Semi Grumpy Old Men."

"Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day," EU Competition Commissioner Margrethe Vestager said. "These cartel decisions send a clear message that the commission will not tolerate collusive behavior in any sector of the financial markets."


...The effects of the EU decision on banks will be “relatively mild, because the fines aren’t huge,” said Aitor Ortiz, an analyst at Bloomberg Intelligence. Referring to the third probe involving Credit Suisse, he said “we may still have to wait another year” to see the decision, because the bank has refused to join a settlement that would grant lower fines.

Traders exchanged information about outstanding customers’ orders, bid-ask spreads, their open-risk positions and details of current or planned trading activities. They would sometimes agree to "stand down" or stop a trading activity to avoid interfering with another trader in the group. They traded 11 currencies, including the euro, the U.S. dollar, the British pound and the Japanese yen...

Read the entire story here.

Regulatory Capture: The Banks and the System That They Have Corrupted

"But the impotence one feels today— an impotence we should never consider permanent— does not excuse one from remaining true to oneself, nor does it excuse capitulation to the enemy, what ever mask he may wear.  Not the one facing us across the frontier or the battle lines, which is not so much our enemy as our brothers’ enemy, but the one that calls itself our protector and makes us its slaves.  The worst betrayal will always be to subordinate ourselves to this Apparatus, and to trample underfoot, in its service, all human values in ourselves and in others."

Simone Weil


"And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not.  And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions.  And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else...

If TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car... I think it's inevitable. I mean, I don't think how you can look at all the incentives that were in place going up to 2008 and see that in many ways they've only gotten worse and come to any other conclusion."

Neil Barofsky


"Written by Carmen Segarra, the petite lawyer turned bank examiner turned whistleblower turned one-woman swat team, the 340-page tome takes the reader along on her gut-wrenching workdays for an entire seven months inside one of the most powerful and corrupted watchdogs of the powerful and corrupted players on Wall Street – the Federal Reserve Bank of New York.

The days were literally gut-wrenching. Segarra reports that after months of being alternately gas-lighted and bullied at the New York Fed to whip her into the ranks of the corrupted, she had to go to a gastroenterologist and learned her stomach lining was gone.

She soldiered through her painful stomach ailments and secretly tape-recorded 46 hours of conversations between New York Fed officials and Goldman Sachs. After being fired for refusing to soften her examination opinion on Goldman Sachs, Segarra released the tapes to ProPublica and the radio program This American Life and the story went viral from there...

In a nutshell, the whoring works like this. There are huge financial incentives to go along, get along, and keep your mouth shut about fraud. The financial incentives encompass both the salary, pension and benefits at the New York Fed as well as the high-paying job waiting for you at a Wall Street bank or Wall Street law firm if you show you are a team player.

If the Democratic leadership of the House Financial Services Committee is smart, it will reopen the Senate’s aborted inquiry into the New York Fed’s labyrinthine conflicts of interest in supervising Wall Street and make removing that supervisory role a core component of the Democrat’s 2020 platform. Senator Bernie Sanders’ platform can certainly be expected to continue the accurate battle cry that 'the business model of Wall Street is fraud.'"

Pam Martens, Wall Street on Parade

This is a good example of both regulatory capture and the credibility trap that co-opts those who benefits from the system as it is, even if it is by turning a blind eye and saying nothing, going along to get along, taking the 'bullet or the bribe.'

Never assume that because a person, such as media analyst or reporter, is highly paid that they are somehow beyond the temptation to violate their trust.  Quite the contrary.   They do not believe that change can come because they have anaesthetized their integrity as a matter of convenience.  And when called upon, they will support and defend and excuse the system as it is, at first by their inaction, and then by their willing cooperation.

The corruption takes a person one seemingly innocuous decision and event at a time.  their separate their fingers, one by one, until they finally let their souls slip through and fall— and they belong to the darkness of this world.  And at the end of the day, for what?   A little more money, the patina of prestige and superiority, access to power?

Who then can stand against the world, when power and money are assumed and created out of nothing, and distributed in an unjust, interconnected system of favors and services, without duty and without honor?

And so those captured in this system excuse and accept their own part in it, for their personal benefit and professional ego and advancement, that heady feeling of sophistication and acceptance by the worldly.

It's an old story  It is so old that at times it seems as if distant, just a story from another time— a fable.   But it is real.  It is the very fundamental core of this reality.  It is the continuing struggle.

It is, in the end, the only thing that matters, the only triumph or personal tragedy.  It is the only consequence that you will dwell upon, when the husk is stripped bare, and you yourself face the only certainty in this world alone, and as your truly are.

Bernie Sanders: Concentrated Wealth Is Concentrated Power

"I will never forget, Lloyd Blankfein, the head of Goldman Sachs, came to Congress a few years ago. And this is after the taxpayers of this country bailed them out because of their greed and their illegal behavior.  This is chutzpah.  These guys, after being bailed out by the middle class and working families of this country, after causing incalculable harm, which–the Wall Street crash cost us millions of jobs, people lost their homes, they lost their life savings.

These guys, after getting bailed out, they come to Congress.  They say, you know, what we think Congress should do is you gotta cut Social Security, and Medicare, and Medicaid.  And by the way, lower corporate tax rates and give more tax breaks to the wealthy. 

That’s power. That’s chutzpah.  We have it all, we can do whatever we want to do.  And I think the power of Wall Street—  you’ve got a half a dozen banks that own over 50 percent, equivalent to 50 percent of the assets in our GDP. 

And we have got to stand up to them."

Bernie Sanders

Financial reform is necessary and essential, but of little interest to the established elite.

And so it receives little attention and even less meaningful discussion.

They will discuss any other distracting issue, event, meaningless squabble and gossip, first.  They will play the fear card, and identity politics, but won't touch the flow of money that helps to make a few and their enablers, unbelievably rich.

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


The source and a transcript for this interview are here.

Fed: JP Morgan Poses a 'Serious Adverse Effect To US Financial Stability' While Media Ignores

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Upton Sinclair


"Hell is empty and all the devils are here."

William Shakespeare, The Tempest

And these days it is not always so obviously a question of salary. But it is often a question of access to the powerful, and the great favors, money, and privileges that they may grant as a reward.

There has been no meaningful and sufficient financial reform in the US, thanks in large part to the money power of the Banks and their faithful courtiers in the professional and political classes.

How can we not expect political failures in financial reform when almost fifty percent of Super Pac money comes from just 50 sources?

Do you reasonably expect any movement on changing this corrupt system from the establishment Republicans or the Wall Street Democrats?  They and their friends are doing very well financially as the data shows.

One of the reasons why the Fed is raising this alarm now is in part to the serious grilling that Senator Elizabeth Warren gave to Janet Yellen in a hearing last year, to which Janet had no good answers.

As JPM showed in their most recent financials, they are prospering once again while risking the rest of the US economy by their pursuit of greed and socialization of their losses.

And as we learned yesterday, Deutsche Bank admitted that they had been manipulating the prices of gold and silver in the world markets, and that they were certainly not alone in this fraudulent behaviour.  As I have asked so many times, if the Banks have been shown to have manipulated so many other markets of consequence, how can anyone be so skeptical when the evidence showed that they were doing the same thing in the gold and silver markets.

A rank amateur might not see it on the tape and the data, but any seasoned pro could not miss it unless they were wilfully blind.  Keep this sort of thing in mind as you take your pick of analysis and associated spinning of the facts.  I have seen a lot of nastiness on the Street over the past thirty five years, but this is one of the most rotten financial market climates that I can remember.  What used to be the exceptional misbehaviour seems to have become the accepted standard of doing business.  This is one of the most brutally cynical political and financial climates that I can remember and my memory of this goes all the way back to the early 1960's, to LBJ and Nixon.

The mainstream media continues to yawn, and when the next financial crisis comes, one well may ask 'why didn't anyone see it coming?'

The Fed Sends a Frightening Letter to JPMorgan and Corporate Media Yawns
By Pam Martens and Russ Martens
April 14, 2016

Yesterday the Federal Reserve released a 19-page letter that it and the FDIC had issued to Jamie Dimon, the Chairman and CEO of JPMorgan Chase, on April 12 as a result of its failure to present a credible plan for winding itself down if the bank failed. The letter carried frightening passages and large blocks of redacted material in critical areas, instilling in any careful reader a sense of panic about the U.S. financial system...

At the top of page 11, the Federal regulators reveal that they have “identified a deficiency” in JPMorgan’s wind-down plan which if not properly addressed could “pose serious adverse effects to the financial stability of the United States.”   Why didn’t JPMorgan’s Board of Directors or its legions of lawyers catch this?

It’s important to parse the phrasing of that sentence. The Federal regulators didn’t say JPMorgan could pose a threat to its shareholders or Wall Street or the markets. It said the potential threat was to “the financial stability of the United States.”

That statement should strike fear into even the likes of presidential candidate Hillary Clinton who has been tilting at the shadows in shadow banks while buying into the Paul Krugman nonsense that “Dodd-Frank Financial Reform Is Working” when it comes to the behemoth banks on Wall Street...

JPMorgan’s sprawling derivatives portfolio that encompasses $51 trillion notional amount as of December 31, 2015 is also causing angst at the Fed and FDIC. The regulators wanted more granular detail on what would happen if JPMorgan’s counterparties refused to continue doing business with it if rating agencies cut its credit ratings. The regulators asked for a “narrative describing at least one pathway” for winding down the derivatives portfolio, taking into account a number of factors, including “the costs and challenges of obtaining timely consents from counterparties and potential acquirers (step-in banks).”

Read the entire article here.

Saving the Banks and Fabulously Enriching a Few On the Back of the Real Economy

"Give a small number of people the power to enrich themselves beyond everyone's wildest dreams, a philosophical rationale to explain all the damage they're causing, and they will not stop until they've run the world economy off a cliff."

Philipp Meyer


"Wall Street is not being made a scapegoat for this crisis: they really did this."

Michael Lewis


"My daughter asked me when she came home from school, “What’s the financial crisis?” and I said, it’s something that happens every five to seven years."

Jamie Dimon


"The greatest tragedy would be to accept the refrain that no one could have seen this coming, and thus nothing could have been done. If we accept this notion, it will happen again."

Financial Crisis Inquiry Commission (2009–2011)

The US has been in a cycle of bubbles, busts, and crashes since at least 1995, and more likely since Alan Greenspan became the Chairman of the Federal Reserve in August, 1987.

The cycle is the same, only the depth and duration seems to change in a continuing 'wash and rinse' of the public money and the real economy.

It has become a machine for transferring income, wealth, ownership, and power to the very top.

This is not 'the new normal.'   This is financial corruption and the erosion of systemic integrity.

Are there any markets that have not been shown to have been systematically manipulated, for years?

This is just institutionalized looting.

The Warning: A Financial Cauldron of Very High Leverage and Interwoven Risks

"The current bubbles in junk bonds and foreign debt are not in any way driving the economy. Presumably we are seeing somewhat more investment as a result of the fact that uncreditworthy companies were able to borrow at a low cost, but there is no notable boom in such investment.

Similarly, if foreign borrowers have a harder time getting access to credit, it may be bad news for them, but the impact on the U.S. economy will be limited.

If some banks or other financial institutions have over committed themselves in these areas, the plunge in prices may threaten their survival. This could lead to some late nights for folks at the Fed and other regulators, but it will not pose a major risk to the economy."

Dean Baker, Bubbles that We Have to Worry About and Bubbles We Don't, 18 December 2015

And how large was Long Term Capital Management? And the Knickerbocker Trust?

Could they have been said to be 'driving the economy?

And most importantly, is the failure of any major financial institution likely to be an 'isolated incident' in this current financial structure?

I like Dean Baker quite a bit, and read his column every day, often linking to it.

But he may be greatly underestimating the size and interconnectedness and the leverage in the derivatives markets, which while it is a bit harder to see than the housing or tech bubbles is nonetheless there and even more deadly.

It is not the bubble itself that causes the problem alone, but the context in which a risk like that develops, the 'transmission' of the failure throughout the system.  Often in a system that has become sufficiently vulnerable the actual event that causes a collapse can seem relatively minor, until it is examined with an open systems mind after the fact.

The system is at the heart of the problem, not the source of the particular failure that sets its tumbling.

Should one ignore the estimated notional size of the $1.2 quadrillion global derivatives market. And the estimates that put it at more than 10 times the total world GDP.

Oh yes, I know, the insurance and cross-party netting surely mitigates these risks.  And this is the same bad estimate and theory that feeds and precedes almost every major financial panic and crisis.

What happens when a large failure of a 'single institution' takes down a major counterparty affecting multiple financial firms in a cascading of mispriced risks?

Suddenly these theoretically controlled derivatives turn into a tsunami of cross party financial contagion.   This is the real risk, not the derivatives themselves, but their size and their relative fragility to the unexpected, and the concentration of their holdings in a few systemically important places.

Does Dean really believe that it may be too bad for some 'foreign borrowers' but the exceptional American financial system will be able to withstand the winds that blow through the world markets?

What is the estimate of the damage that can be done when confidence fails and there is a widespread and sudden withdrawal of liquidity and a freezing of the short term global credit markets from an enormously interconnected and grossly leveraged financial system that resembles a pyramid scheme?

Are we going to go through all of this again, with the hopes that only the Fed and few Bank regulators will have some sleepless nights but otherwise all is well?   The last time they quickly panicked and went to the Congress with a blank check and a threat of civil chaos.

And what is so different now?   Now they are like the 300 Spartans, willing to risk all and lay down their careers for the sake of the American public, saving them from the consequences a financial system that has been gorging itself on the rich rewards of massive speculation?

Are you kidding me?

Genuine financial reform and hard systemic firewalls like Glass-Steagall are the only remedy.  And we most certainly do not have them now.

Why are there so many plans that now include the 'bail-ins' of public savings and pensions?

I am not fear-mongering.  I am raising all of the hard questions that politicians like Elizabeth Warren and Bernie Sanders have been asking, and which have largely gone unanswered behind a wall of opaque secrecy inside a crony club of the revolving door,  with deriding dismissals and vague assurances of hope for change.

And we had all of that before the financial crisis of 2008 as well.

Remember Brooksley Born?

"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

PBS Frontline, The Warning

And the risks are still hidden, and growing rather than diminishing, such is the tide of the influence of Big Banking and Big Money.

In this current financial system, no TBTF Bank is an island of secular failure anywhere in the world.

Why the Fed's Policy Actions Are Not Working

“Trickle-down theory - the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.”

John Kenneth Galbraith

As I said earlier today in a reaction to the FOMC announcement:

"This is all a bit moot really, because except for the betting parlors it doesn't matter whether the Fed raises 25 basis points or not. You can print money and give it to the banking system and the very wealthy for their personal gambling and asset acquisitions activities all day long.

The system is broken, the real product of the nation has been hijacked by financialization, the international monetary exchange is in chaos, and almost all of the gains are going to the top.

And the Fed and the government are doing virtually nothing to change this."

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be an sustainable recovery.

And keep the financial system on life support while the rest of the economy languishes, the poor suffer, and the middle class deteriorates is not coherent, except for a narrow band of beneficiaries.

Let us be reminded that the Fed is also a primary regulator of the financial system as well as an interest rate joystick operator.

And the mainstream media and the politicians wonder why the public is not doing what they expect.

This chart below is from Bloomberg News, The Richest Americans Are Winning the Economic Recovery.

"U.S. Census Bureau data out Wednesday underscore just how lousy the recovery has been if you aren't rich.
Looking at eight groups of household income selected by Census, only those whose incomes are already high to begin with have seen improvement since 2006, the last full year of expansion before the recession. Households at the 95th and 90th percentiles had larger earnings through 2014, the latest year for which data are available.

Income for all others was below 2006 levels, indicating they're still clawing their way out of the hole caused by the deepest recession in the post-World War II era."

And this result, after eight years of some of the biggest expansion of a central bank balance sheet in US history!

Fed Does Nothing, Lacker Dissents - And the Band Played On

All is well in the US. The rest of the world, however, is a problem.

Explication to follow with Janet Yellen's press conference.

In their separate economic projections statement they appear to have lowered their inflation expectations.

Given their track record on forecasting I think this is more of a Rorschach test than a reliable guide to the future.

We're in the new normal of high employment, low wages, sluggish growth, and slack inflation.

And we're are doing just fine.   Depending on how you define 'we.'

Even though the Bloombergians were later laughing at this, I tend to lean towards Ray Dalio's prognosis.

“I don’t care whether they raise 25 basis points,” Dalio said Wednesday in an interview with Tom Keene and Michael McKee that was broadcast on Bloomberg radio and television. “What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy.”

He predicted that returns across asset classes over the next decade will only average 3 percent or 4 percent. Narrower spreads will make it much harder for asset purchases to have a big effect on the market, he said."

This is all a bit moot really, because except for the betting parlors it doesn't matter whether the Fed raises 25 basis points or not.  You can print money and give it to the banking system all day long.

The system is broken, the real product of the nation has been hijacked by financialization, the international monetary exchange is in chaos, and almost all of the gains are going to the top. And the Fed and the government are doing virtually nothing to change this.

And the band played on.

Release Date: September 17, 2015

For immediate release

Information received since the Federal Open Market Committee met in July suggests that economic activity is expanding at a moderate pace. Household spending and business fixed investment have been increasing moderately, and the housing sector has improved further; however, net exports have been soft. The labor market continued to improve, with solid job gains and declining unemployment. On balance, labor market indicators show that underutilization of labor resources has diminished since early this year. Inflation has continued to run below the Committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation moved lower; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. Nonetheless, the Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad. Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams. Voting against the action was Jeffrey M. Lacker, who preferred to raise the target range for the federal funds rate by 25 basis points at this meeting.

Greece and Goldman: Can the World Afford the American Elite's Addiction To Abusive Banking Practices

 

Und das große Feuer in Soho
sieben Kinder und ein Greis -
in der Menge Mackie Messer, den
man nicht fragt und der nichts weiss.

Und die minderjährige Witwe
deren Namen jeder weiss
wachte auf und war geschändet -
Mackie, welches war dein Preis?


Kurt Weill, Bertholdt Brecht, Die Moritat von Mackier Messer, 1928

Here is an example of the consequences of the failure to reform the outsized and kleptocratic financial system after bailing it out, even years after the latest financial crises.

The former Greek government was certainly more compliant to Western banks and political suggestions.  It was the introduction of a 'reform government' in Syriza that rustled the feathers of the international kleptocrats and their organizations.  

But we have heard all this before, many times, from investigative reporters and whistle-blowers such as John Perkins, on the 'economic hitmen.'

I would like to see Europe and Asia begin to take stronger measures to prohibit these banking cartels with long records of banking violations and market rigging from doing business in their regions and with any of their official financial instruments.

The US apparently does not have the political will to reform its banking system.

How much damage will they stand by and permit these sorts to visit on their people, who always seem to be picking up the pieces, through austerity and privatizations of their national assets.   Will these new trade agreements even allow them to exercise their national sovereignty to protect their people from fraudulent financial practices and price gouging in the future? 

The apologists for white collar criminality like to say, 'don't hate the player hate the game.'  But the only way to make the game honest again is to have these bent players take responsibility for their actions, and for the judges to start handing out red cards to any repeat offenders.

That would be more statesmanlike than visiting harsh punishments, and austerity, and slanders on their victims.  

Wall Street On Parade
Goldman Sachs Doesn’t Have Clean Hands in Greece Crisis
By Pam Martens and Russ Martens
June 30, 2015

Are Goldman Sachs executives Lloyd Blankfein, Gary Cohn and Addy Loudiadis losing any sleep over elderly pensioners waiting outside shuttered banks in Greece, desperately trying to obtain their pension checks to pay their rent and buy food? Are these Goldman honchos feeling a small pang of conscience over the humiliation by creditors of this once proud country?

Perhaps Blankfein, who famously espoused that he’s “doing God’s work” might shed a tear or two for the small child clinging to her elderly Grandmother’s hand as she searches in Athens for an ATM that will give her $66 from her bank account – the maximum allowed per day under the newly imposed capital controls.

According to investigative reports that appeared in Der Spiegel, the New York Times, BBC, and Bloomberg News from 2010 through 2012, Blankfein, now Goldman Sachs CEO, Cohn, now President and COO, and Loudiadis, a Managing Director, all played a role in structuring complex derivative deals with Greece which accomplished two things: they allowed Greece to hide the true extent of its debt and they ended up almost doubling the amount of debt Greece owed under the dubious derivative deals.

A February 2012 BBC documentary on the Goldman Sachs deal provides a layman’s view of the dirty underbelly of the deal, calling it “a toxic import” from America that is “hastening” the downfall of Greece...

For the unschooled to the ways of Wall Street, one might jump to the conclusion that Greece and its finance officials were knowing participants in the deal. That would be a reasonable assumption were it not for counties and cities and school districts across America that were similarly fleeced and hoodwinked by investment banks on Wall Street.

In March 2010, the Service Employees International Union (SEIU) released a study showing that from 2006 through early 2008, Wall Street banks are estimated to have collected as much as $28 billion in termination fees from state and local governments who were desperate to exit abusive derivative deals. That amount does not include the ongoing outsized interest payments that were, and still are being paid in some cases. Experts believe that billions of these abusive derivative deals may still remain unacknowledged by embarrassed municipalities.

Back in 2010 when German Chancellor Angela Merkel first heard of these derivative deals to hide sovereign debt among European Union partners, she had this to say: “It’s a scandal if it turned out that the same banks that brought us to the brink of the abyss helped to fake the statistics.”

Well, that’s exactly what happened...

Read the entire article here.

Elizabeth Warren: The 14 Trillion Dollar Scam and the Unfinished Business of Financial Reform

1.  Financial Institutions should not be allowed to cheat people through confusing and complex products, or just plain lying about credit cards and mortgages.
2.  Financial Institutions should not be allowed to use taxpayers to pick up their risks through deposits or bailouts.

We know what needs to be done.   Big financial institutions are flexing their political power to keep us from doing it, and to undermine what has already been attempted.

Auto loans now look like the pre-crisis mortgage market because they were exempted by Congress from Consumer Financial Protection Bureau oversight.

Department of Justice relies on deferred prosecutions and does not take repeat offending institutions to trial, and the SEC is even worse.  They are abusing a system that was designed for low level non-violent offenders.

It is time to end the slap on the wrist culture at DOJ and SEC.  Fines should be equal, at a minimum, to every dime of profits gained, and there should be an independent judicial review of these deals.

It is time for the Fed to make enforcement a top priority.  Big financial institutions have every incentive to commit large financial offenses, and that is what they do.  They rig global markets, and launder criminal funds and help the very wealthy to engage in tax cheating.

Dodd-Frank did not end 'too big to fail.'  We need to stop talking about it and break up the Big Banks now, and force them to face the consequences of their own investment decisions.  Too much of a technocratic approach is undermined over time, favoring a few well-connected, lawyered-up firms over time.   What is needed is a structural approach, not a heavier layer of regulation.  We need a new Glass-Steagall Law. 

Congress must be able to limit the Fed's emergency lending of subsidized loans to global financial institutions without oversight.

Reforming the tax laws is critical to effective reform.  Corporations are incented for short term thinking and using stock buybacks to manipulate price performance.   The tax code incents Banks to engage in higher leverage and lower capitalization.

High Frequency Traders introduce more volatility without adding value.  A targeted financial transaction tax would curb this without affecting mom and pop investors.

The shadow banking system is unregulated and open to serious short term financial risk before the next Lehman or Bear Stearns starts another financial crisis.

The system is rigged, and those that rigged it want to keep it that way. 

Gold Daily and Silver Weekly Charts - The Inevitable Interconnectedness of It All

The Bucket Shop was very quiet today. There was no precious metal action noted in the delivery report from yesterday, and in the warehouses we saw the usual moving around of bullion.

This is certainly a change from the beginning of this active month for gold, which saw a sizable number of contracts being claimed for 'delivery.'  

 

Well, there is always some benefit in anything, and the quiet markets give one time to think, about things past in the light of the present.  I was thinking about the manipulation of the markets, and of the unfolding tragedy in Greece, and of the serial abuses of political power , enable by a remarkable harshness and willful ignorance which seems to be endemic to our times.

Earlier today in a short piece about the discouragement in the people I recalled a famous quote from William Gladstone, said during his efforts to extend suffrage to the working class people of Great Britain.   It was related to the long effort to achieve justice.  You may read it here. 

One may cite any number of other figures from different periods of time, who took the long hard fight with unfailing energy and good spirits.   More recently Gandhi and Martin Luther King come to mind.

 

I think that in his attempt to extend suffrage to the working, landless classes of Britain, Gladstone rightly assumed, or perhaps more properly believed, that the working poor of his day were educable, that no human being was without value, was useless. He is an interesting figure in a period of history that itself was interesting, with great figures who are too often forgotten now. 

 

How many educated people really know anything about an earlier figure from that century, William Wilberforce, who was a leading proponent in the long fight for the abolition of slavery? He provided an example and an inspiration for that same effort later in the US though an effort that was long and arduous.

The 19th century, in the wake of the post-Napoleonic victory, was a time of desperate differences and dichotomies in England, of the miserably poor and the incredibly rich, with London itself at the epitome of one of the world's greatest empires.  One encounters this sort of thing quite famously in Dickens, for example.  We marvel at the grandeur of empire, and forget to look at its foundations built on squalor and human misery.

I find that the times where certain key people notably consider the quality of human life, what it means to be human, to be often situated at pivotal moments in history.   The response to that question by a nation often plays an important role on the path that their society takes.

 

Justice is most often not an issue for a single person or a class of people per se. It is more often the manifestation of a more general disorder in thinking.   The same sort of thought process that sends the disabled to houses of death can propagate itself to the weak, the outcast, and the other. It is not a great leap once the threshold of inhumanity has been breached.

 

Injustice rarely travels alone.  It is always accompanied by a cohort of issues.  And therefore justice cannot be achieved in one matter, unless it has a more general place in the hearts of those who would pursue it.

 

So it would seem to be that those who ignore the manipulation of gold and silver, for example, might have a care that such abuse of power does not become so commonly accepted for the sake of expediency.  Because the abuse of one form of wealth by the state can quite easily be extended to any other holdings, whether they be pension, or savings, or even livelihoods.  As we saw so vividly in the past, the arguments that one form or wealth or person is unworthy is a malleable thing in the hands of the unscrupulous.

 

And further, those who fight for justice in the area of precious metals and other markets would do well to consider how hollow and uninspiring their fight might be, if they care only for those forms of justice that fill their pockets, but care little or even accept and promote other forms of injustice against other people and classes of property and human values.  Even the worst of the crooks will cry foul when they perceive an injustice done to themselves, and quite loudly as we have seen.

 

Justice in interconnected.  It is a well known platitude of course, but it is also a fact, that no man is an island, sufficient unto himself.   Our modern masters of the universe may fancy themselves to be exceptional, better than any in all of history, but like other they are standing not only on the shoulders of giants, but on the common base of all their fellows, of their own good will and pursuits of happiness.  

 

They make seek to distinguish and raise themselves up in their own minds and society by stigmatizing and stereotyping others as less worthy of justice and life.  But they may soon enough find themselves on the receiving end of that same sort of dehumanization at the hands of the more powerful.  History has proven this over and over again. 

 

As Edmund Burke famously observed,  'when bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle.'

 

Or to more simply quote the Boss,  'no one wins unless everyone wins.'

 

Have a pleasant evening.

 

 

 

 

 

 

Reich: Restore Balance, Break Up the Big Banks, Financial Transaction Tax

Hillary Clinton and her husband Bill are charter founders of the Wall St Wing of the Democratic Party. They removed one of the great counterbalances to the corporatists, and have organized political corruption into a cottage industry like Lansky and Luciano organized crime into a business.

The problem is that neither most Republicans nor many Democrats make any bones about serving Big Money first anymore. It is understood that this is how things are. Soft corruption and the revolving door is the fashion.

Mitch McConnell's new chief is a former lobbyist for Koch, for example. And the Republican presidential field is devoted to Big Money while confounding their constituents with emotional sideshows and manipulative pandering to their worst impulses and scapegoating.

Reich's ideas of reinstating Glass Steagall and a nominal Financial Transactions tax have potential. It was a mistake to repeal Glass-Steagall in the first place. I wonder who presided over that? Oh yes, Bill and Hill. And NAFTA. Everything had a price tag including the Lincoln bedroom and Presidential pardons. Very entrepreneurial.

The emphasis on the Transaction Tax should be very 'nominal' and without exemptions on professionals and institutions and 'market makers' so that the HFT crowd and raw speculation from the Banks' trading desks are the targets, and not the average investor.

I also think the Fed itself, in particular the NY Fed, should be banned from making trades in anything but the official and quasi-official bond markets. And all their public markets activity should be transparent with no more than a quarter lag.

The Congress and their staffers cannot be exempt from 'insider trading' and selling information for favors to the funds and trading desks. I mean, come on. Management of companies and the media get plenty of access to insider information as well, and they are not above the law because 'it is too hard' not to use it.

Given the regulatory capture we have today I am not optimistic about reform until there is another crisis. There are only a handful of genuine reformers, but many flavors of opportunists in sheep's clothing.

So Robert, how can you be so gung ho for reform, but so unqualifiedly endorsing the unreformed Hillary Clinton?

Why don't more Beltway and media progressives and liberals come out for Liz Warren or Bernie Sanders? Because they want reform, but cannot offer their supporters the biggest Washington payoff, which is money and power, which are the mother's milk of the politically corrupt.

Why There Has Been No Recovery In One Simple Chart - A Harvest of Corruption

"The money was all appropriated for the top in the hopes that it would trickle down to the needy."

Will Rogers, Nov 26, 1932

“Trickle-down theory - the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.”

John Kenneth Galbraith

"It is no exaggeration to say that since the 1980s, much of the global financial sector has become criminalised, creating an industry culture that tolerates or even encourages systematic fraud."

Charles H. Ferguson

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Upton Sinclair

"In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest. Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods.  They say nothing concerning the bad effects of high profits.  They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

Adam Smith, The Wealth of Nations

"What we have are asset PRICES being whipped up as median real wages deflate."

Anthony Sanders, Whip It! Real Median Wages Down 3.4% Since Q1 2010

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent.   This pattern of government action shows up in all areas of government policy."

Dean Baker

If the people have no money, they may buy no goods, even essentials, without falling ever more deeply into debt.

That is not so difficult to understand.  Unless your paycheck demands that you not only cannot understand it,  but not even see it, or talk publicly about it. 

And so we have this sad spectacle of Our Great Reformer desperately trying to ram two trade deals through the Congress, without a real examination and debate, in the waning days of his office. 

And we see the continuing attempts by the Congress itself to thwart and undo financial reform under cover of rhetoric and canards, so that they too might get paid by the moneyed interests.

The harlots of finance and economics will say, 'You laymen simply do not understand the mysteries of our science.  Wages always lag in a recovery.'

Seven years is some lag.   Unfortunately economics these days has less in common with a natural science than it has with marketing.   And at its worst, it has become a carney sideshow.

But we might feel better about all this uncertainty if the corruption and distortion that have become embedded in our laws and economic theories, that preceded this and led to a long term secular stagnation in median incomes, had been changed in any meaningful way since the financial crisis. 

And they have not.    But yet we marvel that our condition seems intractable, unsolvable.

This is the root of our problem.  It is old as Babylon, and evil as sin.  If we sow greed to the worst of our desires, we will reap a harvest of corruption.

Elizabeth Warren: The Unfinished Business of Financial Reform

If Elizabeth Warren were running for President, serious financial reform would be a key part of the national debate and her agenda.  The same can be said of Bernie Sanders.

Hillary may talk the talk but I am afraid that she, like the Republicans, are bought and paid for by the moneyed interests.   They are creatures of the system, caught in a credibility trap of deep capture by financial corruption.

 

Matt Taibbi:  Hillary's Fake Populism

 

We could be surprised. There is always that possibility.  We were certainly surprised by hope and change, in the wrong way. 

But I am not very optimistic.   The next President will most likely be from the same lineage of the last five as shown below.   They will most likely preside over the general trend in Western governments that, by distraction and deception, will continue to burn down the poor, the weak, the young, the aged, and eventually the middle class, to make room for the temple of Mammon.   And the love of many will grow cold.

The text of Senator Warren's speech may be downloaded in PDF form here.