Gold Daily and Silver Weekly Charts - Raid Gets Stuffed As Silver Shines, Benny Aurophobic

Yes, Timmy. Operation Grand Slam!

There was an intraday bear raid on the metals as many had expected based on a drop to negative in Lease Rates that was shown by Kitco last week.

A special thanks to Bill Murphy of LeMetropoleCafe for pointing out some anomalies in the market yesterday, and the strength signal in silver as well. Bill often puts out indispensable insights into the gold and silver markets.

These types of market anomalies, or 'features,' often presage a bear raid .

Interestingly enough it was silver that was 'the tell' today, as it stubbornly resisted attempts to take it lower, and actually may have cheered the gold bugs, finished higher on the day.

As you know, the western governments have little access to silver bullion of their own anymore, and the bullion held by the system seems to be spoken for many times over.  The stockpiles of silver held by the US years ago are long gone.

Let's see what happens.

Note: The Leased Rates chart from Kitco that showed a plunge in rates to negative late last week was later removed by them as an error. A reader had questioned them about it, and informed me of their response. I have removed it as well. It is an odd mistake to make as it was a rather large plunge in rates, but these things do happen I imagine even with a service as established as Kitco.

SP 500 and NDX Futures Daily Charts - Down to Support

Intraday the SP 500 futures dipped down to the intermediate trend support of 1320. They bounced back from there closing just above the key support at 1328.

This is sleep 'technical' market action, very typical of a listless summer trade dominated by algos playing catch with the market prices.

Our markets are all LIBOR rigged now.

Until something happens that is, and then they will move, perhaps with a vengance, depending on what it is that happens.

 

Gold Daily And Silver Weekly Charts

The action in the metals markets is markedly artificial. 

Other than that it is quite boring and unremarkable.

SP 500 and NDX Futures Daily Charts - Turning Japanese

The market churned within a trend today, with much of the same effect as the House Republicans who symbolically voted to repeal the Affordable Healthcare Act for the 33rd time.

This slow and predictable market action is starting to make Waiting for Godot look like Philip Glenister in Life on Mars. Gene Genie.

The Fed did not offer hopes for more quantitative easing in the release of its June notes, so the market dipped and then bounced back to a tighter close.

Intraday commentary and a short term chart here.

Shorter Term SP 500 Futures Daily Chart

This is a well known chart formation, the low volume, trend channel boogie-woogie. Was on, was off.

A self-absorbed up and down motion which I am sure is familiar to most of these traders. Turning Japanese.

The objective is to keep the market in a mild uptrend, which is necessary to lure the money in, while sweeping it back and forth, sometimes violently, to wring some coin out of the shorter term, and often skittish, speculators whose blood pressure falls and rises with every wiggle on the charts.

Let's see if we get a real move in these markets, or if we stay in a loose drift higher with a regular channel 'sweep.'

This is Wall Street, with the adults off in the Hamptons.

PFGBest: F to the R to the AUD - Wasendorf 'Faked Bank Records For Years'

"The commercial world is very frequently put into confusion by the bankruptcy of merchants, that assumed the splendour of wealth only to obtain the privilege of trading with the stock of other men, and of contracting debts which nothing but lucky casualties could enable them to pay; till after having supported their appearance a while by tumultuary magnificence of boundless traffic, they sink at once, and drag down into poverty those whom their equipages had induced to trust them."

Samuel Johnson: The Rambler, January 7, 1752

The regulators are clueless and conflicted, the self-regulators are careless and complicit, the industry is enmeshed in cronyism, and fraud is broadly tolerated as way of doing business, a droit du seigneur of the elite over customer funds and assets, pricing and all other forms of news and information.  It has every character of an advanced form of control fraud.

And as for the politicians, one might conclude as the Parliament had done with Mr. Bob Diamond, that they are either incompetent or indirectly complicit as well, in the manner of a credibility trap.   It seems hard to explain it any other way.

The culture of privilege and corruption through the mispricing of risk and outright fraud in the Anglo-American financial system is pervasive, stuffed with phony paper. No outrage seems too extreme, too great, and therefore nothing can be said to be safe.

Reuters
Exclusive: Iowa futures broker forged bank records for years - source
By Ann Saphir

Jul 10, 2012 7:23pm EDT

CHICAGO (Reuters) - Russell Wasendorf Sr., the sole owner and chairman of stricken futures broker Peregrine Financial Group, Inc., intercepted and forged bank documents for more than two years to cover up hundreds of millions of dollars in missing money, a person close to the situation told Reuters.

The National Futures Association on Monday froze the funds of the Iowa-based brokerage, which does business as PFGBest, after discovering an estimated $220 million shortfall in PFGBest's customer accounts. The NFA had said in an affidavit that Wasendorf "may have falsified bank records."

Wasendorf, 64, is reported to be in a coma after a suicide attempt Monday morning, according to a complaint filed by the Commodity Futures Trading Commission on Tuesday that accuses Wasendorf and Peregrine of fraud.

The source offered new details on how Wasendorf allegedly carried out the deceit, which involved the forging of confidential documents that the NFA uses to verify a broker's cash balance with its depository institution.

Wasendorf intercepted these documents after they were mailed by the NFA, the broker's first-line regulator, to U.S. Bank, where PFGBest had said it had well over $200 million on deposit, the person said. The NFA has said the account actually held just $5 million this week.

Wasendorf had set up a post office box in Cedar Falls, Iowa, according to a second person involved in the matter. It was to that post office box that NFA sent the documents, which were addressed to the bank.

The post office box was neither in Wasendorf's name nor registered to the bank, the second person said.  (That is, it was a 'blind PO box, something that would not be acceptable to even eBay. - Jesse)

Wasendorf then forged signatures and fabricated bank balances on the documents and simply mailed them back to the Chicago-based NFA, the person said.

Calls to spokespeople for PFGBest and NFA were not returned. A woman who answered the phone at the home of Wasendorf declined to comment...

Read the rest here.

Just Between Friends: The DOJ's Handling of MF Global and America's Culture of Cronyism

It has all the hallmarks of a Third world banana republic. The economic hitmen have truly come home.

MF Global is a prime example of crony capitalism at work, and the capture of the political process by the easy money of the Fed supported financial system.

Perhaps capture is not the right word anymore. It is more like a marriage of corruption, sealed with a credibility trap of mutual self-destruction should the naked truth appear.

MFGFacts
Just Between Friends
By Nick Knight
July 7th, 2012

When facts, data and information are gathered, dots can be connected to reveal relationships and new information as patterns emerge.

There is a pattern. Scratch just below the surface of who is who and we find the intricate network of power players and patterns of events circling the MF Global crimes. I am not talking about Governor-Senator Jon Corzine, but Eric Holder, Edith O’Brien and Reid Weingarten. Who is Reid Weingarten? “Defense attorney Reid H. Weingarten is a Washington fixture,” Brook Masters of The Washington Post writes.

Weingarten, a long time close freind of Eric Holder is also Edith O’Brien’s defense attorney. O’Brien is apparently seeking immunity from Holder’s Department of Justice because she, and she alone, holds the threads in the investigation of the illegal use of customer funds at MF Global, Inc. and Holdings. To date, after eight months, she has not received immunity. (Yet notably the DOJ has already granted Barclay’s Bank immunity from prosecution for cooperating in its Libor-gate investigation.)

With time, evidence becomes stale to a prosecution. The longer she is kept off any witness stand and the longer DOJ waits to uncover all evidence, the weaker discovery becomes. Putrefying the evidence through delays and time decay is a tried and true practice. So it is reasonable to ask if there even a desire by the DOJ to uncover all the facts of the plundering of over 1.6 billion of private funds and build a case of wrong doing?

O’Brien can blow open the investigation

It was Edith who clarified to CFO Christine Serwinski that a shortfall of over $1 billion (depending on how it is counted) resulted from messy and hastily carried out transactions in the days before the bankruptcy filing. O’Brien made the transactions, she knew where the money came from and where it went. Very early on, it was known that an-mail from O’Brien noted that one major transfer was done “Per JC’s [Jon Corzine's] direct instructions.” Yet to date, we hear nothing from her, nor are there charges against her.

It was Edith O’Brien who was asked by MF Global general counsel, Laurie Ferber, to sign a letter to JP Morgan confirming that no customer funds were being sent to the bank. Even under pressure of Executive staff, she refused to sign the overly-broad, bogus statement Ferber asked her to sign. It is of note to remember that JP Morgan’s chief risk officer, Barry Zubrow personally called Jon Corzine asking him to verify that no funds transferred belonged to customers. Barry did not call Edith O’Brien.

Recall that under oath, Corzine pinned O’Brien by name as the one who provided assurances to him that all transfers were legal.

Eric Holder’s friendship with Edith’s attorney is very close, goes back years

When the DOJ is on your back, friendships and access goes a long way.

The personal and professional relationship between Holder and Weingarten go back decades: As young attorneys, they worked together in the Public Integrity section of the DOJ in the late 1970’s. There, as reported in Main Justice, they became “best friends.” In the 1980’s, Reid left the DOJ for the rich pastures of partnership with Steptoe & Johnson.

In 1997, Weingarten and Holder raised money together to launch a non profit foundation in the District of Columbia. Weingarten’s bio states that “He is the chairman and co-founder, along with US Attorney General Eric Holder, of a non-profit program, See Forever Foundation, which is designed to assist juvenile offenders in rehabilitation to prevent recidivism.”

As Weingarten was in the private sector, Holder remained with the DOJ only to come under investigation in 2001 for what was determined to be his inappropriate influence on the final approval to pardon fugitive, Marc Rich. Here, it is agreed by many that Holder massively blundered when he overstepped White House legal counsel opposition and gave a DOJ seal of support for the pardon. This was said to have “significant impact” for the final green light on the Marc Rich pardon fiasco.

When Holder came under investigation for his heavy hand in the Rich’s pardon, Reid Weingarten was his personal and strong-armed defense attorney as reported by Eric Lichtblaue and David Johnson of the New York Times in 2008.

More recently, and shortly after Holder took over the reins of the Department of Justice, he hired Weingarten’s son, Ross Weingarten for a job with the DOJ as a press staffer...

Read the rest here.

PFGBest Is MF Global All Over Again: Gambling and Living High With Customer Funds

And another failure of self-regulatory industry groups and the inept CFTC.

Once again I must turn to Lauren Lyster on RT for the in depth look into US financial fraud coverage.

The mainstream financial news networks in the States are an extended infomercial for Wall Street. And their coverage of economic news and issues might make even Rupert Murdoch blush.

And so many watch these official Wall Street channels with the volume turned low, for just the numbers and any headlines, and turn to alternative sources for the real news, judging from the ratings reports.

Increasingly surreal, as life imitates Orwell.

Chris Hedges: Days of Destruction, Days of Revolt

Gold Daily and Silver Weekly Charts

Obvious, heavy-handed, and on light volume.

You may not see it, but the pigmen are getting very nervous.

The lawsuits over LIBOR are just beginning. There will be more, and the outrage will spread to more investors and other markets, as they realize the extent of the fraud.

SP 500 and NDX Futures Daily Charts

Light volume and a quiet technical trade to the lower end of the trend channel on the shorter term charts as the market lost momentum and interest in the last hour of trade.

A more serious test *could* occur if the futures push below 1320, otherwise this is the same-old same-old.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

This Is Moral Hazard

"A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday."

The financial system has become a culture of white collar crime and control fraud. We all know it by now.

Bad behaviour drives out the good, if the bad behaviour is seen to be a quick route to success amongst the morally weak and ambivalent.

As the former CEO of Citigroup, one of the biggest TBTF banks, observed during the widespread credit derivatives fraud:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

The government, the regulatory bodies, the media, economists, and the corporate executives bear a heavy responsibility for this.

They will not admit it, and they cannot reform it, because they themselves are caught in the credibility trap.

Right now white collar crime in the financial system is all carrots and no sticks. The problem is obvious.

Don't whine. Don't pout. Don't complain. Do something.

Reuters
Many Wall Street executives says wrongdoing is necessary
By Lauren Tara LaCapra
Jul 10, 2012


(Reuters) - If the ancient Greek philosopher Diogenes were to go out with his lantern in search of an honest man today, a survey of Wall Street executives on workplace conduct suggests he might have to look elsewhere.

A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday.

In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.

Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to Labaton Sucharow. And 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law.

"When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk," Jordan Thomas, partner and chair of Labaton Sucharow's whistleblower representation practice, said in a statement...

LIBOR and the Mispricing of Risk: The Dark Heart of the Systemic Fraud - Do Something

"Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole. If price discovery is compromised by manipulation, then we will all be gradually impoverished and the economy will be imbalanced and unstable."

The blogger London Banker writes an extraordinarily insightful piece today that perfectly captures what I have said for some time now, and probably phrased more elegantly and persuasively than I have been able in my own efforts.

Fraud is the mispricing of risk and misreprenting the value of transactions for private benefit. And the fraud we are seeing exposed in the Anglo-American financial system is not incidental, it is not a lapse in safeguards, it is not a rogue operation, not a one-off, but rather it is a 'feature' of the system itself.

The financial system has become, through misplaced ideology and regulatory capture, and most importantly the corrupting influence of easy money on the morally weak and ambivalent, a gigantic con game run for the benefit of a few elite insiders who have been systemically looting the real economy for the past twenty years.

July 14 is Bastille Day. This might be a good time to resolve to do something peaceful but firm to let those around us know that this will not be tolerated any further, that it has gone on long enough, and that people are aware of it and care about it.

Write a letter, forward an article to friends, make comments on sites, stop doing business with bad actors, take your money out of Wall Street and the City of London, make some quiet gesture, and that little action will combine with other actions to form a swell of opinion that cannot be ignored.

If you don't like your choice in politicians, don't take it quietly. Boot them all out if you have to. Let them know that second rate is not good enough.  Refuse to be used.  Refuse to do business with them.  What they cannot take away from you is your refusal.

If you act like a sheep or a cockroach, then they will treat you like a sheep and a cockroach.

The most important thing is to do something, if only for yourself, so that you will not feel powerless and disconnected from your fellows, many of whom feel the same as you do. Then no one can you have done nothing. And if you can, get into the habit of doing something little every chance you get, every day, to assert your humanity as a small act of defiance. Sometimes its the little things that make life worth living.

And above all, stop passing the lies around, and listening to those who put them out there to trick and confuse you.  You can spot them by their ugliness and mean-spiritedness.   Do not be a part of the problem.  Reject the naysayers, the cynics, and those who sap the life and energy from you with their negativity and fatalism.  They may be dead to life, but you do not have to join them.

'Thou shalt not be a victim, thou shalt not be a perpetrator, but, above all, thou shalt not be a bystander.'

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

Lies, Damn Lies and LIBOR
By London Banker

I've been hesitant to write about the LIBOR scandal because what I want to say goes so much further. We now know that Barclays and other major global banks have been manipulating the calculation of LIBOR through the quotation data they provided to the British Bankers Association. What I suspect is that this is not a flaw but a feature of modern financial markets. And if it was happening in LIBOR for between 5 and 15 years, then the business model has been profitably replicated to many other quotation-based reference prices.

Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole. If price discovery is compromised by manipulation, then we will all be gradually impoverished and the economy will be imbalanced and unstable.

Over the past 25 years the forces of regulatory liberalisation and demutualisation of markets have allowed the largest global banks to set the rules, processes and infrastructure of global markets to their own self-interested requirements. Regulatory complexity and harmonisation benefit the biggest banks disproportionately, eroding the competitive stance of smaller, local banks and market participants. This has led to a very high degree of concentration in a very few banks in most markets that determine global reference rates for interest rates, currencies, commodities and investments. If those few collude with each other - as Adam Smith warned was always the result - then they impoverish us all.

We have allowed markets to evolve in ways that make supervision of markets almost impossible. Many instruments trade off-exchange or in multiple venues, making it nearly impossible for any single investor or regulator to supervise trading to prevent or detect manipulation or abuse. Many financial instruments are now synthetic compilations of underlying assets and derivatives, with multiple pricing components determined by reference to other prices or rates. Demutualisation and regualtory reforms stripped exchanges of the self-regulating interest in preventing manipulation and abuse by their members as mergers, profits and market share came to dominate governance objectives.

Off-exchange trading has been allowed to proliferate, creating massive ill-transparent and largely illiquid markets in almost every sector of finance. Pricing in these markets is based around calculated reference rates which, like LIBOR, are open to abusive quotation and data input practices. Many OTC derivatives are priced and margined using reference rates calculated against quotations unrelated to actual reported transactions. Synthetic securities such as ETFs are another example of an instrument that prices off a reference rate rather than the actual contents of an underlying asset portfolio. These instruments are open to consistent abusive pricing as a means of incrementally impoverishing those market participants who are the krill on which the global banks thrive.

How has it been possible for banks to grow from less than 4 per cent of the global economy to more than 12 per cent of the global economy without impoverishing others? How has it been possible for profits in the financial sector to be consistently higher than profits from other human endeavors with more tangible products or impacts on our daily lives - such as agriculture, transport, health care or utilities? How has it been possible that banks derive their profits not from the protected and regulated activities of deposit-taking and lending, but from the unsupervised and often unknowable escalation of off-balance sheet assets and liabilities? How has it been possible that pension savings have increased while pension returns have declined to the point where only bankers can expect a comfortable old age? Global banks have built the casinos and tilted the odds in the house's favour by rigging the data that determines the outcomes of most of the bets on the table. Every one of us that sits at the table long enough - whether saver, investor, borrower, taxpayer or pensioner - will be a loser. It is not a flaw; it is feature...

Read the rest here.

Gold May Have Been Manipulated Like LIBOR - St. Louis Fed Starts Tracking London Gold Prices

What is set in London by a small group of relatively unknown individuals, affects wealth as a benchmark of value around the world, is tracked by the US Federal Reserve and the financial system, and may have been subject to manipulation by some of the big Banks, with the silent acquiescence of the government and their central banks?

Given recent revelations one would likely answer LIBOR, but an equally correct answer might be gold.

The St Louis Fed has added six daily gold prices in their FRED database. The prices are all from the LBMA.

They are the AM and PM gold price fix in Dollars, Euros, and Pounds.

These Six Daily Gold Prices Added to FRED

Given the rather opaque and somewhat quixotic nature (100:1 leverage and volumes in excess of world production) of the trading at the LBMA, it would not surprise one at all if the gold price has its analogue in the LIBOR price-fixing scandal.

US Futures Brokerage Accounts Frozen - Hundreds of Millions In Customer Money Missing

Mr. Tucker of the Bank of England has indicated his recent disillusionment with rational expectations and the efficient markets hypothesis. 'The markets are a cesspit and not to be trusted,' said the pot to the kettles.

Abuse of the Libor system may be only one part of the banks’ dishonesty over crucial financial information, suggesting that other markets should now be investigated.   “I can't be confident of anything after learning of this cesspit.”   

In keeping with this unraveling of the serial fraud known as the Anglo-American banking system, The National Futures Association today shut down operations at PFGBest after hundreds of millions of dollars of customer money were found to be missing from bank accounts reportedly held on behalf of customer accounts by the futures and options brokerage.

Apparently the CFTC had missed this one when they took strict measures to prevent another MF Global from occurring in the futures markets.

Get your money as far away from the financial markets as is possible while you can. There will not be time to move if the counter party dominoes start falling, and even more customer money begins to vaporize.

From John Lothian Newsletter:
Update 3 (5:54 PM CST):

In a Member Responsibility Action, released Monday afternoon, NFA alleges that PFGBest’s reported customer funds deposited at U.S. Bank did not match the amounts NFA found when NFA contacted the bank Monday. On June 29, 2012, PFGBest reported to the NFA that they had nearly $400 million in customer funds, of which approximately $225 million was purportedly deposited at U.S. Bank. The actual funds found in the account were approximately $5 million.

Furthermore, the NFA alleges that in contrast to purported bank confirmations submitted to the NFA that sought to confirm U.S. Bank balances as of February 2010 and March 2011, reported balances of approximately $207 million and $218 million, respectively, were actually less than $10 million for each of these months.

NFA says in the MRA that PFGBest was unable to demonstrate to the NFA that it had sufficient capital to meet its minimum adjusted net capital requirements or segregated funds to meet its obligations to customers.

Reuters
US broker PFGBest freezes funds after founder's suicide attempt
By Tom Polansek and David Sheppard
9 July 2012

CHICAGO/NEW YORK, July 9 (Reuters) - Independent U.S. futures broker PFGBest said it had effectively frozen customer accounts on Monday after a suicide attempt by the company's founder set off an investigation into possible "accounting irregularities."

In a dramatic turn that may trigger a new round of anxiety over the stability of the brokerage industry less than a year after the collapse of much larger MF Global, the Cedar Falls, Iowa-based firm told customers that they would be limited to liquidating open positions until further notice.

The disclosure came hours after owner Russell R. Wasendorf Sr, a 40-year veteran of commodity markets, was found in his car near the company's new headquarters, having apparently attempted to commit suicide. He is in critical condition at the University of Iowa Hospitals, according to local news reports.

PFGBest, which brokered trades in U.S. commodity and foreign exchange futures and options, told clients that the National Futures Association (NFA) and other officials had put its funds on hold, and that it was in "liquidation-only" status with its futures commission merchant (FCM), which clears its trades.

"What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds," the note said.

PFGBest officials were not immediately available to comment. Messages and emails to NFA were not returned.

With about $400 million in segregated customer accounts, less than a tenth the amount MF Global had when it filed for bankruptcy, the fallout will likely be less severe. But news of more financial troubles in the brokerage sector still threatens to further erode confidence...

Read the rest here.

Excerpt From MP John Mann and Bob Diamond's Testimony - A Mackie Messer Moment

Here is an extended excerpt from Bob Diamond's Testimony to Parliament. It is the portion in which he is questioned by MP John Mann.

Here the video of the entire testimony.  John Mann's portion begins at 2:10.
The MP's forgot to ask Mr. Diamond for his advice  and indulgence on how better to run the country.   In this their American counterparts have the definite leg up. 

But then again, Diamond is no Dimon. 

Q264 John Mann: Before I ask my questions, I just wonder, Mr Diamond, if you could remind me of the three founding principles of the Quakers who set up Barclays?

Bob Diamond: I can’t, sir.

Q265 John Mann: I can help, and I could offer to tattoo them on your knuckles if you want, because they are honesty, integrity and plain dealing. That is the ethos of this bank that you have spent two hours telling us is doing so well-in fact, from what you have told us, doing so well that I wondered why you had not received an extra bonus rather than the sack.

You have told us that, as I understand what you are saying, it is right that there is a criminal investigation. Some people among the people that you employed may therefore go to prison. You have told us that other banks were doing the same thing. I understand from what you are saying that you are telling us that you never questioned or analysed the rates that were reported between 2005 and 2008 and that you never discussed at a senior level the possibility of your traders misreporting or misrepresenting. Is that accurate?

Bob Diamond: First, in terms of honesty, integrity and plain dealing, that is how I have behaved in my entire career in the business, so I agree with that, and that doesn’t mean that I knew or was aware of the bad behaviour. As soon as I was aware, I did what I could to make sure that it wasn’t there, so if there is an inference that Barclays is anything other than interested in honesty-

Q266 John Mann: In 2005 to 2008, you never questioned, you never analysed and you never asked about any kind of misreporting by anyone in the bank. That is the case, isn’t it?

Bob Diamond: No one was aware of any misreporting.

Q267 John Mann: You never asked. Did you ever read anything externally of other people suggesting that there might be some misreporting?

Bob Diamond: I think there were, as I said, reports that came out, probably in 2007-08 not 2005-06, but they were on the different issue of whether people were submitting appropriate LIBOR. That is more similar to the issues that we faced during the financial crisis. I was not aware of any reports on traders manipulating the submissions.

Q268 John Mann: You weren’t aware of anyone suggesting that? Nobody came to you, not even those people who had refused to act criminally but had been asked to do so? You said to Mr Garnier that some did and some didn’t. So even those who had refused to act improperly did not come and tell you-that never got to you during that three-year period?

Bob Diamond: Well, they didn’t act improperly.

Q269 John Mann: No, and they didn’t tell you. It does appear strange to the outside world that if people are asked to act criminally-and they choose to do so-by externals as well as internals, they don’t report that to the senior management. I put it to you that that does look rather incredulous to the outside world. You said, to quote your obligation to complete transparency, that "seeing is believing", but you seem to have seen nothing, known nothing and heard nothing in that three-year period.

Can I ask you about the following academic reports? In 1973, the first report into potential misreporting was written by a US academic called Spence. In the period up to 2007 there were a series of reports, and early in 2007 another group of US academics, led by someone called Ewerhart, produced a precise report into this scandal, alleging that it was going on. It did not name Barclays, but alleged that it was going on in companies like yours. That was then repeated by Abrantes-Metz, who has written extensively on it, and by Michaud and Upper. We have a series of academics who are reporting that this is going on; eventually it gets into The Wall Street Journal, and from that, the Fed report something. You’re in charge yet you are not seeing this; you are not reading it. I don’t understand what you are doing.

Bob Diamond: I think that you’ve conflated two separate issues. The issue of the traders and their attempts to manipulate submissions was not part of the report by The Wall Street Journal or the Federal Reserve report. That was about our institutions-

Q270 John Mann: Yes, I’ve read it, but I’m also-the academic reports that led up to that were explicit. You have not read them, but you are the man in charge. You’re getting paid huge bonuses. You are in charge; people are suggesting impropriety from the outside, and you are not even asking questions internally. People who have been told to act criminally are not coming to you to say that they’ve been acting criminally. Either you were complicit in what was going on, or you were grossly negligent, or you were grossly incompetent. That is the only conclusion.

Bob Diamond: Sorry, John, I agree-and I have agreed from the beginning-that the behaviour was wrong. It did not get above the supervisory level for a period of time, and as soon as it did we took action. It is hard to give another answer than that. We keep getting the same question asked.

Q271 John Mann: It’s not that it’s the same question. The point is-

Bob Diamond: We dealt with the activity as soon as we knew about it.

Q272 John Mann: The reason people out there are beginning to agree with me-you said last time, "You don’t really like Barclays do you?" Well, I’m in the more favourable group compared with people out there at the moment. What they are thinking is: hang on a minute, you’re in charge. You’re paid bonuses-£20 million-odd a year in pay and bonuses. You’re the man in charge and the buck stops with you. You are telling everyone that we’ve got to be judged on how we behave when no one’s watching, that we’ve got to have complete transparency and that you can’t work with the company-if someone can’t work with trust and integrity, they can’t be in your team. You are saying all of that. You are getting paid huge bonuses but you haven’t seen any of it. You must have been grossly incompetent in your job during that period of time if you weren’t complicit in this.

Bob Diamond: So, is there a question?

Q273 John Mann: A good question would be to go back to what you said to this Committee last time you were here. You said, "I think it is clear that, if any banking institution got into trouble, where you look first is at the chief executive." The Chairman asked you, "Okay, but how would you lose out?" You replied, "I would assume I would lose out by both losing my job and losing any shares that I had in the company." Will you, therefore, be forfeiting the unvested shares that you have in the company? That is what you told us you would do in this situation.

Bob Diamond: As I said earlier, that is a discussion with the board; I don’t make the decision.

Q274 John Mann: But you are a man who is in favour of consistency. That is what you told us you would do last time you came to the Committee. You have the choice in this. You can take the moral high ground.

Bob Diamond: John, we have been through this a number of times. The investigation of this was market leading. We have a profound issue that is an industry-wide issue, not just a Barclays issue, in terms of LIBOR submissions. I would suggest we wait and see, importantly, what the ramifications of the industry-wide investigation are.

Q275 John Mann: Yes, but the FSA has reported on you and it says that "there were no clear lines of responsibility for systems and controls". You are the man in charge, the man who carries the can, the man who has been paid these huge phenomenal bonuses. You are accepting all the good side-the bonuses-while the people working for you are fiddling the system, potentially some of them going to prison, criminality. You are the man in charge.

You tell us, modestly, that in such a situation you would lose your job-which you have-and that you would lose your shares. That is a pretty small price for you to pay. Have you another suggestion of how you can show some contrition to those Barclays staff across the country and the customers who are wondering and e-mailing me in vast numbers saying, "What do I do with my money? Do I take it out of this rotten, thieving bank?" That is what they are asking me. I am asking you, what are you going to do to put the record straight with your personal behaviour? Because you personally are responsible, either by being complicit or by being incompetent.

Gold Daily and Silver Weekly Charts.

I believe the general manipulation of markets we are seeing now will be traced back to Robert Rubin who formulated a principle of financial activism, or intervention before the fact, as being cheaper and more effective that repairing markets after they suffer a significant decline as Greenspan had done in 1987.

As you may recall the 1987 experience led Reagan to form the President's Working Group on Markets, which grew into the infamous 'Plunge Protection Team' of the 1990's which made generous use of the Exchange Stabilization Fund, an opaque kitty used for general market tinkering.

Treasury Secretary Rubin's favorite tool of choice in the markets was said to be the SP futures since they carry the best 'bang for the buck.'

Apparently LIBOR is quite good on the interest rate side of things as well.


The Federal Reserve is adding Daily Gold Prices to their FRED database.


Perhaps they think the price might become more interesting in the near future, or more deserving of their official concern.

SP 500 and NDX Futures Daily Charts

Lackluster trading day with the usual late day 'pop.'

William L. Shirer, In Time of War and the Life of the Spirit - Murrow and McCarthy

I have had the opportunity to read most of Shirer's works, including Berlin Diary, Rise and Fall of the Third Reich, and The Nightmare Years. I have his work on France in 1940, The Fall of the Third Republic, on my to-be-read list. I have also read a few books about him, that describe him in that milieu of the lead up to the second great war.  I also have a great appreciation of his colleague, Edward R. Murrow.

As an aside, you know I have read and enjoyed the account of the US ambassador to Berlin, In the Garden of Beasts by Erik Larson. I recently picked up a book that caught my eye with a similar name called A Garden of Beasts: A Novel of Berlin 1936 by Jeffery Deaver which was an interesting detective story with a great deal of period detail. I do recommend it if you like that sort of thing and that period.

Shirer is an interesting person. He is the camera that Isherwood thought himself to be, and was not, because he was at heart an artist interpreting reality and searching for his own identity.

Shirer is almost homespun and a typically Midwestern thinker and writer, which is what one might expect from a very good reporter whose purpose is to relay the events, rather than showcase himself. His books are still worth reading.

I recently came across this relatively rare piece of introspection by Shirer and thought I would share it with you.

"It’s rather difficult in these noisy, confusing, nerve-racking days to achieve the peace of mind in which to pause for a moment to reflect on what you believe in. There’s so little time and opportunity to give it much thought—though it is the thing we live by; and without it, without beliefs, human existence today would hardly be bearable.

My own view of life, like everyone else’s, is conditioned by personal experience. In my own case, there were two experiences, in particular, which helped to shape my beliefs: years of life and work under a totalitarian regime, and a glimpse of war.

Living in a totalitarian land taught me to value highly—and fiercely—the very things the dictators denied: tolerance, respect for others and, above all, the freedom of the human spirit.

A glimpse of war filled me with wonder not only at man’s courage and capacity for self-sacrifice, but at his stubborn, marvelous will to preserve, to endure, to prevail—amidst the most incredible savagery and suffering. When you saw people—civilians—who where bombed out, or who, worse, had been hounded in the concentration camps or worked to a frazzle in the slave-labor gangs—when you saw them come out of these ordeals of horror and torture, still intact as human beings, with a will to go on, with a faith still in themselves, in their fellow man, and in God, you realized that man was indestructible. You appreciated, too, that despite the corruption and cruelty of life, man somehow managed to retain great virtues: love, honor, courage, self-sacrifice, compassion.

It filled you with a certain pride just to be a member of the human race. It renewed your belief in your fellow men.

Of course, there are many days in this age of anxiety when a human being feels awfully low and discouraged. I myself find consolation at such moments by two means: trying to develop a sense of history, and renewing the quest for inner life.

I go back, for example, to reading Plutarch. He reminds you that even in the golden days of Greece and Rome, from which so much that is splendid in our own civilization derives, there was a great deal of what we find so loathsome in life today: war, strife, corruption, treason, double-crossing, intolerance, tyranny, rabble-rousing. Reading history thus gives you perspective. It enables you to see your troubles relatively. You don’t take them so seriously then.

Finally, I find that most true happiness comes from one’s inner life; from the disposition of the mind and soul. Admittedly, a good inner life is difficult to achieve, especially in these trying times. It takes reflection and contemplation. And self-discipline. One must be honest with oneself, and that’s not easy. You have to have patience and understanding. And, when you can, seek God.

But the reward of having an inner life, which no outside storm or evil turn of fortune can touch, is, it seems to me, a very great one."

William L. Shirer, A Reporter Quotes His Sources from This I Believe

Foreign correspondent William L. Shirer wrote the acclaimed World War II histories “The Rise and Fall of the Third Reich” and “Berlin Diary.” Shirer reported from numerous European cities including Paris, Vienna and Rome, and had the distinction of being bombed in Berlin by the British and bombed in London by the Germans.

And in addition, here is a famous piece of broadcast journalism by Shirer's colleague, Edward R. Murrow, on one of the episodes that reverberated throughout my early life, the demagogic phenomenon of Wisconsin Senator Joseph R. McCarthy.

"Those who cannot remember the past are condemned to repeat it." George Santayana