Biderman: Real Time Economic Data Shows No Recovery, US Dollar Is a 'Phantom.'

"Gold is not a phantom currency as many say, it is the US currency that is the phantom."

Charles Biderman, February 27, 2012

Charles Biderman gives a step by step analysis of the key data that some say shows an 'economic recovery.'

Accounting tricks, statistical smoke and mirrors, and a stock rally fueled by Fed printing do not reflect the real state of the US economy.

There is evidence that the situation has stabilized.  The problem is that the stimulus which the Fed is providing is not directed towards productive activity sufficient to spark a genuine recovery with a rising median wage. Rather, it is being used to prop up a dysfunctional economy that is still rife with corruption, malinvestment, and insider dealings designed to transfer even more wealth to the top one percent.   And the prescription being offered by the perpetrators, for the maladies of their crisis, is to take more from the poor and the weak, and pay for an excess of fraud with their pains.

And those who know better, with the exception of a notable few, either stand aside and are silent, or sell their integrity to a partisan cause, self-interest, or the highest bidder.

The financial crisis has provided the excuse for what has the appearance of institutionalized looting by a powerful elite through a dual standard of justice and the steady debasement of the national currency. Neither austerity or stimulus will work until the economy is restructured and reformed.   But stagnation is achievable, as long as the dollar lasts.  Or until the great reckoning comes, and the grapes of wrath are pressed.

Tavakoli: The Great MF Global Comedy Cover Up

Powerful interests are involved. Too Big To Fail and Too Connected To Jail.

This brief piece by noted financial analyst and author Janet Tavakoli is the sharp edge of her incisive wit.

The coverage of MF Global by the financial print media has been laughable, with the notable exception of Forbes. MF Global was the eighth largest bankruptcy in the US, with thousands of customers victimized by theft, and yet one hardly ever hears about it.

I have had a few conversations with people knowledgeable about Fedwire, the most reliable system for wire transfers in the states for large transfers between financial entities, and the one that MF Global might have used. After all, they were one of the Fed's own Primary Dealers. If so, is the Fed withholding information about the transfers? The problems in finding out who received certain transfers in excess of $100 million left the people I discussed this with incredulous.

"The Fedwire Services are the premier electronic payments and securities transfer services that banks, businesses and government agencies rely on for mission-critical same-day transactions. When it absolutely matters, trust Fedwire Services to deliver transactions with certainty and finality."

I wonder which mainstream news media program will finally interview someone informed and honest on the MF Global story, and bring this injustice to the awareness of the public. I have heard that they will attempt to drag this investigation out until after the national elections in November, but if it comes out before that it will be wrapped up in a "don't ask don't tell admit no guilt" settlement.

"Our government...teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy."

Louis D. Brandeis

Someone like the maverick Jon Stewart might break ranks from the corporate allegiance and political partisanship of the major television outlets. Corzine is a powerful figure in the Democratic funding machine, and JPM is the biggest kid on the Street.

And where better to discuss the protection of the US public trust from well-connected financial predators than on Comedy Central, which is fast becoming the premier news outlet in post-corporate America.

Huffington Post
MF Global: Crime, Comedy and the Cover-Up
By Janet Tavakoli
2/28/2012 5:37 am

MF Global's October 2011 bankruptcy was the eighth largest bankruptcy by assets in the United States. James Giddens, the bankruptcy trustee, issued a press release on February 6 stating that his investigation found that money from customer accounts that was supposed to be segregated was improperly used to fund MF Global's daily activities. Improper transfers of customer money occurred regularly in amounts under $50 million before MF Global's bankruptcy. MF Global wasn't caught, because it put the money back before customers knew it was missing.

On January 30, 2012 the Wall Street Journal did a hilariously bad job of reporting when its front page article stated that a "person close to the investigation" said that as a result of chaotic trading in the week before MF Global's October 31 bankruptcy, customers' money "vaporized." Money doesn't vaporize. It's true that tracing money transfers can be tedious, but that's why we call it work.

As for the Wall Street Journal's article, the editor should have made it vaporize. I was having breakfast with several traders at Chicago's East Bank Club. One trader read the passage aloud. The entire table burst out laughing. Then he got up and ceremoniously threw the paper in the trash. The entire table applauded.

Fox Business News had people in stitches when it reported that federal investigators are saying that this wasn't criminal, it's just a matter of sloppy bookkeeping.

The habitual filching of customers' funds -- even if the funds are later replaced -- goes way beyond sloppy bookkeeping. It goes way beyond bad judgment. Just because MF Global got away with it for a long time before it blew up in its face doesn't mean one can call it sloppy bookkeeping and have any reasonable person believe it. If federal investigators and law enforcement people want to make public statements like this, one should investigate corruption in their ranks. They seem to be providing undeserved excuses as a trial balloon to see if it will fly. Nice try, but it's not working.

According to the bankruptcy trustee, money was repeatedly filched from customers' accounts. That goes way beyond sloppy bookkeeping.

Senior officials of the Chicago Mercantile Exchange and of MF Global's regulator, the U.S. Commodity Futures Trading Commission (CFTC), have already testified to Congress their belief that MF Global violated regulations -- it broke the law -- because using customers funds, money that was supposed to be in segregated accounts, to pay off MF Global's creditors or to use that money to fund MF Global's day-to-day operations is not permitted.

MF Global CEO Jon Corzine, a former head of Goldman Sachs, signed off on statements that said his internal controls were adequate. After Enron, the Sarbanes Oxley Act was meant to assure Americans that officers that signed such statements would be held accountable for their accuracy....

Read the rest here.

Scientific Study Shows That The Powerful and Privileged Are More LIkely to Lie, Cheat, and Steal

I seem to recall my grandmother telling me this about 50 years ago.

I have encountered quite a few of the nouveau riche, barely upper middle class, that are unscrupulous and almost unbearable. And I have met a number of very wealthy people, both old money people and the accidental rich, who are kindly, enjoyable, and exceptionally hospitable.

From my own experience it is not whether a person has money per se. Rather it is the perceived power that a person feels that they have and their attitude towards it, and how differently they consider themselves to be therefore from others.

I have heard that it is easier for a camel to pass through the eye of a needle than a rich person to get into heaven. Perhaps it is a simplicity of heart that opens such doors for us, and the baggage of pride that closes them. None of the spirit can justly feel such pride compared to another. Our comparison, our aspiration, is not to the fellow next to us, but to a model so perfect and so loving that it leaves us equally alike in our unworthiness, attempting that which is unattainable to us on our own, except for the undeserved gift of grace.

But the world says 'Greed is good, baby.' Build the foundations of society on that historically untenable aphorism and enjoy the ride. It's been done many times before.

"Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals.

In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals.

Mediator and moderator data demonstrated that upper-class individuals’ unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed."

Higher Social Class Predicts Unethical Behaviour, Proceedings of the National Academy of Sciences of the United States of America, February 27, 2012 Paul K. Piffa, Daniel M. Stancatoa, Stéphane Côtéb, Rodolfo Mendoza-Dentona, and Dacher Keltnera

"According to Piff, unethical behavior in the study was driven both by greed, which makes people less empathic, and the nature of wealth in a highly stratified society. It insulates people from the consequences of their actions, reduces their need for social connections and fuels feelings of entitlement, all of which become self-reinforcing cultural norms.

“When pursuit of self-interest is allowed to run unchecked, it can lead to socially pernicious outcomes,” said Piff, who noted that the findings are not politically partisan. “The same rules apply to liberals and conservatives. We always control for political persuasion,” he said."

Greed Is Not Good, Wealth Can Make People Unethical

Gold Daily and Silver Weekly Charts - SP Cuts Greece to 'Selective Default'

Metals were capped most of the day. Could just be a consolidation.

Breaking news after the bell, S&P has cut Greece to 'selective default.' The action is based on the modification of the terms of the debt with some of the bondholders.