SP 500 March Futures Shorter Term Chart - Once More Into the Breach Dear Ben

We're at the top of the longer term channel. There is still some room in the short term.

Or Ben could just throw caution to the wind and go for bubble number three.

“The world says: 'You have needs -- satisfy them. You have as much right as the rich and the mighty. Don't hesitate to satisfy your needs; indeed, expand your needs and demand more.'

This is the worldly doctrine of today.

And they believe that this is freedom. The result for the rich is isolation and suicide, for the poor, envy and murder.”

Fyodor Dostoyevsky, The Brothers Karamazov

CME Clearing Europe Limited Pulls Up Stakes

"CME Clearing Europe has been established to offer greater choice of central counterparty clearing infrastructure to users of derivatives outside the US. CME Group has developed systems and operational and risk management standards that support its position as the world's largest and most diversified derivatives marketplace; and since 2002 has extended its clearing in the US to cover OTC derivatives: commodities, IRS and CDS. On the basis of those systems and the accumulated clearing experience and investment, CMECE aims to offer a full range of OTC derivatives clearing from its London base."

CFTC
March 13, 2012
CFTC Vacates CME Clearing Europe Limited Registration as a Derivatives Clearing Organization

Washington, DC — At the request of CME Clearing Europe Limited (CMECEL), pursuant to Section 7 of the Commodity Exchange Act, the Commodity Futures Trading Commission issued an Order on March 13, 2012, vacating the registration of CMECEL as a derivatives clearing organization.

The Order of Vacation is available on the CFTC’s website.

CFTC Fines Goldman Clearing $7 Million For Account Supervision Failures

Apparently Goldman Clearing turned a blind eye to 'questionable' (using false statements to enhance performance, and carrying negative capital balances) activity by a client broker in order to accept the fees.

CFTC
March 13, 2012
CFTC Orders Goldman Sachs Execution & Clearing, L.P., a Registered Futures Commission Merchant, to Pay $7 Million for Supervision Failures in Handling Accounts it Carried

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Goldman Sachs Execution & Clearing, L.P. (GSEC), a registered futures commission merchant based in New York, N.Y., agreed to pay a $5.5 million civil monetary penalty and $1.5 million in disgorgement to settle CFTC charges that it failed to diligently supervise accounts that it carried from about May 2007 to December 2009. The

CFTC order also requires GSEC to cease and desist from violating CFTC regulations requiring diligent supervision. Additionally, the order states that GSEC represented in its settlement offer that it has made changes in light of the events discussed in the order, including implementing enhanced supervision policies, procedures, and training.

GSEC provided back-office and other services to some clients who themselves are broker-dealers, according to the order. One such broker-dealer (Broker-Dealer) offered memberships to investors to trade commodities in subaccounts of the Broker-Dealer carried by GSEC, the order finds. GSEC failed to diligently supervise the handling of these subaccounts when it did not investigate signs of questionable conduct by the Broker-Dealer, according to the order. For example, in May 2007, at the beginning of GSEC’s relationship with the Broker-Dealer, the Broker-Dealer’s lawyer represented that the Broker-Dealer would not engage in commodity futures trading and therefore would not need to register as a commodity pool operator with the CFTC. However, the order further finds that the Broker-Dealer had already opened a commodity futures trading account with GSEC and, thereafter, traded commodity futures. Nevertheless, GSEC did not investigate the apparent contradiction between the lawyer’s representations and the Broker-Dealer’s actions, the order finds.

The order states, as another example, that in August 2009, GSEC learned that the Broker-Dealer distributed to at least one of its members a subaccount statement that falsely purported to have been issued by a non-existent GSEC affiliate. In addition to noting that no such GSEC affiliate existed, GSEC told the Broker-Dealer that the statement created an inaccurate picture of the Broker-Dealer’s overall performance. Yet, as the order further finds, despite these signals of questionable conduct, GSEC simply instructed the Broker-Dealer not to issue such an account statement and accepted the Broker-Dealer’s assurances that it had not done so before and would not do so again. In December 2009, the Broker-Dealer provided to GSEC a draft disclosure statement that disclosed that the Broker-Dealer had carried negative capital balances of approximately $6.8 million since October 2009, according to the order.

From May 2007 to December 2009, GSEC received approximately $1.5 million of gross fees and commissions for transactions it executed and/or cleared on behalf of the Broker-Dealer, the order finds.

According to CFTC Division of Enforcement Director David Meister: “The CFTC’s rules mandate that registrants diligently supervise their employees and agents. When registrants become aware of questionable activity, they must not simply rely on assurances from interested parties and their representatives, but instead must diligently investigate. As this case indicates, the Commission will hold registrants accountable if they fail in this regard.”

The CFTC appreciates the assistance of the National Futures Association, the Chicago Board Options Exchange, and the U.S. Securities and Exchange Commission.

CFTC staff members responsible for this case are Laura Martin, Janine Gargiulo, Candice Aloisi, Judith Slowly, David Acevedo, Manal Sultan, Lenel Hickson, Lisa Hazel, Annette Vitale, Ronald Carletta, Stephen Obie, and Vincent McGonagle.

Media Contacts
Dennis Holden
202-418-5088

Gold Daily and Silver Weekly Charts - FOMC Raid and Bonus Time for Favored Banks - Winning!

I had expected a rough time for the metals today, as is often the case with an FOMC announcement day.

But a decline turned into a smackdown, as JPM chose to make their own announcement of their stress test results and shock a quiet market. I almost think that this was Jamie Dimon's way of telling James Koutoulas, and the MF Global customer, to shove their open letter where the moon don't shine.

Four banks have failed the Fed's stress test: Citigroup, Allied Financial, MetLife, and Sun Trust. Most of them have capital adequacy problems. And like Dick Fuld, no one on the Street really likes Vikram Pandit. Someone had to fail to give the test some 'credibility.' That was the entire point of this exercise.

Moral hazard does not even begin to describe the regulation of the banks and the markets by the Obama and Bush Administrations.

Give this a few days, and then watch as the markets return to trend. The Fed can create the appearance of wealth, but is unable to create real wealth that lasts.

I would almost like to see Ron Paul elected President, just to see him ripping through the embedded old boy network in Washington that serves Wall Street.

The problem is that he will never obtain the endorsement of his own party, much less the monied interests and their faithful retainers in the media. Still, if he does decide to go third party, the key tell would be his choice of running mate. Such is the stuff of dreams.