Double Barreled Blast of Max Keiser and Matt Taibbi (With Outtakes)

Wall Street as organized crime.  An excellent discussion with Matt and Max.




The entire show including the first half with Stacy Herbert discussing Goldman Sachs and their $22 million dollar fine for sharing unpublished info between analysts and traders is here.


Outtakes from this week's Max Keiser Show (with Matt Taibbi As Max's Samoan Attorney)



The businessman in a suit is a young Jamie Dimon.

Gold Daily and Silver Weekly Charts - Winding Up for a Move - Tomorrow Is Stock Option Expiry

The trick in trading is not to 'predict' in advance which way the metals will break in the short term, or any market for that matter. I have seen plenty of guys waste their trading accounts and their time trying to find 'the perfect system.' 

Believe me, if there was such a system, you would not find it.   And especially you would not find it on a publicly available site.

The best system is to sit as the house, and make money no matter which way the market goes, and have plenty of advantageous knowledge of the order flows to boot.  The US markets are all about the asymmetrical dispersion and control of knowledge.  And HFT has taken it to a literally inhuman degree.

Well, absent that exorbitant privilege of insiders, all we can do is trade to avoid the losses, and learn to recognize trends, and play them with some discipline.

Right now gold and silver are not trending, they are consolidating and winding up before they begin another move. I can argue the reasons for a move either way, and unless you are Ben Bernanke and ready to show your hand honestly I am not particularly interested in what you have to say, because you just don't know. And neither do I.  This is not a 'natural market.'

But we can hope to find the trend as it begins again, miss part of it, but be sure to hop on board and take it for a ride. For most people, they have neither the time nor the inclination to do this for the short term, and probably even for the intermediate term. They just feed the trading letters and system creators and of course the brokerage firms.

Chat boards are a nice way to spend the time you may have on your hands in socializing, if you have nothing more pressing, but they offer little in the way of constructive trading advice.    To paraphrase Dr. Greg House, traders lie.   And most amateurs become bitter with their losses.  Misery loves company.

Don't get me wrong.  Fundamentals still matter in the longer term, and in the lesser covered stocks one can always find the undercovered gem or two, if you have the stomach for the risk and can wade through all the price manipulation and naked short selling that is tolerated, especially north of the US border.

So for now I am long bullion and short stocks, in a pretty robust hedge. I have taken the profits out of miners but am still willing to flip a trade in the case of some unusual deviations from trend.  And they certainly happen.  Sometimes you just have to wonder.

I am waiting to see which way the market breaks and if stocks continue to move with the metals or if there is a divergence developing.  My 'bias' if I have one is to see the metals bounce and rally up to the top of the larger symmetrical triangles, but that is a 60-40 proposition at best.  I mean, the market is being rigged, or isn't it?  And if it is, probabilities are being written by other than 'the invisible hand' of supply and demand.

I am not trading nearly as frequently or aggressively as in the past because a) I am getting older b) these markets are almost ridiculous.  Its like playing cards with the little girls.

If I put in a order for a few thousand shares, the liquidity from a large offered set of multiple positions evaporates instantly and I close on maybe 100 shares.   If I offer to buy above market but below ask I get ten 'friends' appearing instantly along with my bid. 

There is little genuine liquidity in the equity market.  It is mostly a sham, a flash crash waiting to happen unless the ESF intervenes which I am sure they will.  At the first sign of real trouble it will collapse like a house of cards.

As for gold and silver, price discovery is buried under a mountain of paper and faux trades.  With 100:1 leverage and naked positions dominating the trade, its a bit of game in the short term at best, and not a particularly honest one at that. 

Don't exhaust yourself chasing rainbows here.  Sometimes the best trade is to stay out of the short term scrums, the wash and rinse cycles, and just ride the macro trends, ignoring the day to day noise.  And judging by the shrinking volumes and low open interest, quite a few people are fine with that decision.

The pit crawlers had best start studying origami and advanced airplane design to while away their empy hours, with only phony computer generated order flows and Fed buying programs to light up their screens.

SP 500 and NDX Futures Daily Charts - Coiling Ever Tighter Into the Apex

VIX remains above the 50 DMA but fairly low so the 'yellow flag' is out.

Hedges in place.

As a reminder tomorrow is stock option expiration.

A Message on the Need to Reform the Financial System -- From Herbert Hoover

This speech was given by Herbert Hoover as the country was caught in the depths of the Great Depression 6 December 1932, as he was leaving office, largely perceived as a failure.

I have sympathy for Hoover and rightfully so. For many years I saw his portrait every time I would visit the headquarters of the IEEE in New York City. I read about his magnificent acts of logistical organization and the relief of suffering in the European famines. He was an accomplished and talented person.

And yet he failed, or at least has been judged a failure as President, because of a timidity and unwillingness to act, boldly and in a timely manner.  He was constrained by bad advice, and an ideological bent that prevented common sense action from moving the country forward. Afterwards in his Memoirs he blamed the advice he received from his Treasury Secretary, Andrew Mellon, the great liquidationist, who had been appointed by Warren Harding in 1921, and who throughout the 1920's preached the gospel of tax cuts for the wealthy to stimulate growth.

"Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."

This speech could be given with little alteration by Barack Obama today, although I am sure he would add quite a bit more flair.

The Too Big To Fail Banks are still with us, but even larger and more dangerous and powerful. Obama himself, despite pledges to the contrary, is taking large amounts of funds from the corrupt campaign process.

Instead of acting quickly to correct the causes of the financial collapse, he expended most of his early political capital on a healthcare plan that, despite some genuinely beneficial changes, serving to increase the control and reach of a few private healthcare monopolies by requiring all people to purchase insurance from them.

Fed policy still serves the few and is largely opaque in its dealings, becoming even more powerful as regulator.

And the markets are dominated by even fewer players, and tainted by a major scandal in which over a billion dollars was stolen from the customers.   

Corporate profits are excellent and the very wealthy few are making enormous strides in increasing their wealth. And yet the bulk of the nation suffers from fear and uncertainty.

The people's vehement objections to the bailout, marked by faxes, calls and emails in their millions, were ignored.

Yes, Obama faces a rigid and uncompromising opposition in the Congress, which achieved its House majority during his term I might add, but he still has broad Presidential powers, including the ability to direct the enforcement activities of the regulators and the Justice Department.

And not one major participant in the fraud has been indicted and prosecuted.  Instead, the perpetrators and beneficiaries of the fraud have crafted the words for the very reforms which they have opposed and weakened every step of the way.   And the regulatory agencies continue to hand out wristslap fines for egregious market frauds that continue to add to the deterioration of the confidence of average market participants.

If the US had a Parliamentarian system, Prime Minister Obama would have most likely already been ushered out the door.

Am I being too harsh? He promised much, and achieved little, and broke almost every major pledge he had made to his constituency in his zeal to curry favor with those who would have nothing to do with his mandate. In this he is more Chamberlain than Hoover, who at least acted on his principles that were unfortunately mistaken as he later admitted.

When he writes his memoirs I will be shocked if the current President does not paint a picture of magnificent accomplishments, and for the shortcomings, blame everyone but himself and his inability to execute on principle.

President Obama will undoubtedly provide a good case study for the failure in leadership in a crisis for future historians.

"There are three definite directions in which action by the government at once can contribute to strengthen further the forces of recovery by strengthening of confidence. They are the necessary foundations to any other action, and their accomplishment would at once promote employment and increase prices.

The first of these directions of action is the continuing reduction of all government expenditures, whether national, state, or local. The difficulties of the country demand undiminished efforts toward economy in government in every direction. Embraced in this problem is the unquestioned balancing of the Federal Budget. That is the first necessity of national stability and is the foundation of further recovery. It must be balanced in an absolutely safe and sure manner if full confidence is to be inspired...

The second direction for action is the complete reorganization at once of our banking system. The shocks to our economic life have undoubtedly been multiplied by the weakness of this system, and until they are remedied recovery will be greatly hampered.

The third direction for immediate action is vigorous and whole-souled cooperation with other governments in the economic field. That our major difficulties find their origins in the economic weakness of foreign nations requires no demonstration...

Banking Reform

The basis of every other and every further effort toward recovery is to reorganize at once our banking system. The shocks to our economic system have undoubtedly multiplied by the weakness of our financial system.

I first called attention of the Congress in 1929 to this condition, and I have unceasingly recommended remedy since that time. The subject has been exhaustively investigated both by the committees of the Congress and the officers of the Federal Reserve System.

The banking and financial system is presumed to serve in furnishing the essential lubricant to the wheels of industry, agriculture, and commerce, that is, credit.

Its diversion from proper use, its improper use, or its insufficiency instantly brings hardship and dislocation in economic life. As a system our banking has failed to meet this great emergency.

It can be said without question of doubt that our losses and distress have been greatly augmented by its wholly inadequate organization. Its inability as a system to respond to our needs is today a constant drain upon progress toward recovery. In this statement I am not referring to individual banks or bankers. Thousands of them have shown distinguished courage and ability.

On the contrary, I am referring to the system itself, which is so organized, or so lacking in organization, that in an emergency its very mechanism jeopardizes or paralyzes the action of sound banks and its instability is responsible for periodic dangers to our whole economic system."

Herbert Hoover, Annual Message to Congress, 6 December 1932