Goldman Data Admits to Naked Short Selling, Disclosing Client Positions, Abusive Legal Practices

“He should be someone we can work with, especially if he sees that cooperation results in resources, both data and funding, while resistance results in isolation.”

Goldman Sachs


"To be a sophisticate in the 21st century requires the ability to shut one's eyes and one's mind to anything that one does not want to see or think about. The more glaring that the contradiction between what is said and what is done becomes, the harder it is to remain sophisticated. The tragedy is that the only alternative, that of becoming an independent thinker, is looked upon as more terrifying than to go on pretending to be deaf, dumb and blind."

Bill Buckler, The Privateer

Is there any wonder why economics stands as a disgraced profession, and the mainstream media is so oddly silent on so many things? Financial corruption permeates and undermines the fabric of society and its thought, by action and example.

It both frightens and tantalizes, rewards and victimizes. And as that contagion spreads into the government, as it inevitably does seeking power and greed, no one is safe.

"False opinions are like false money, struck first of all by guilty men, and thereafter circulated by honest people who perpetuate the crime without knowing what they are doing."

Joseph de Maistre

Standing for the truth can be isolating and painful, especially in a people who have given themselves over to selfishness and corruption. So much easier to take the money, and just go along to get along.

Often all one has to do is to close their eyes and say the words. It starts so easily. Who does not want to be flattered and favored, to be accepted as one of the better people, not one of them?

"This is the way in which he conceals from you the kind of work to which he is putting you...He scoffs at times gone by; he scoffs at every institution which reveres them. He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods.

Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J.H.Newman, The Time of Antichrist

Do you imagine that this time will be different? This is how an educated people of ordinarily good spirits can learn over time to tolerate almost anything, and in the end ignore even torture, cruelty, and murder, and to defend the indefensible with glib lies and slogans, until one day their grandchildren look at them with horror and revulsion asking, 'How could you have allowed this? What were you thinking? What have you become?'

Rolling Stone
Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling'
By Matt Taibbi
May 15, 2012

It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.

The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed...

Read the rest here.

Here is the link to the Goldman court filing.

Eliot Spitzer on JPM and Bank Reform

“For all sad words of tongue and pen, The saddest are these, 'It might have been'.”

John Greenleaf Whittier

Flawed indeed.

Slate
Flawed Dimon
By Eliot Spitzer
May 14, 2012

What to do with Jamie Dimon? The CEO and Chair of JPMorgan Chase has tried so hard in the past several years to seem the “good banker.” He is so charming and gracious, yet all the while lobbying, cajoling, pushing, and wheedling to eviscerate any semblance of real reform on Wall Street. He shrugged off the cataclysm of 2008 as just something that happened, like the weather—no need for any structural reform.

Now the chickens have come home to roost—at least 2 billion of them—and it is clear that Chase is like every other big financial institution with distorted incentives. Thanks to a backstop of a federal guarantee, these gigantic institutions get to keep all the upside of crazy bets while the government gives them all the downside protection they need. Earlier this year, Dimon pooh-poohed concerns about the risks his traders were taking. Did Dimon not understand those risks, not care to know about them, or actually mislead the public about them?

But it isn’t so much money, they cry! True, in the context of Chase’s balance sheet, a $2 billion loss can be absorbed. But it shows once again the impossibility of trusting the banks in the absence of structural reform and regulation to control their willingness to take almost unmitigated risk. Of greater significance than the size relative to Chase’s balance sheet is that the loss was in a relatively stable market in which most people are finding it easy to trade. Imagine if the market had been choppy—the losses could have been even more gargantuan—and if several institutions had been in the same position, then the aggregate effect could have become once again cataclysmic.

It was Chase’s own lobbying on Capitol Hill and with the Treasury, the Fed, and other agencies that made these bets arguably permissible within the scope of hedging under the Volcker rule. Had they not lobbied and pushed and delayed and made the rule more complicated, these bets would have been illegal or at a minimum so transparent as to have been smaller and less damaging. The banks love to complain about the complexity of these rules. But the rule as proposed by Paul Volcker was simple. It is only because of the very lobbying by the banks that the complexity and loopholes crept in...

Read the rest here.

Gold Daily and Silver Weekly Charts - More Liquidation on Greece and Facebook

More concern on Greece and what will happen if it leaves the Euro had traders fleeing risk and commodities including gold and silver.

There is also quite a bit of secondary liquidation being done as traders raise cash for 'the Big Flip' when Facebook comes out after the bell on Thursday.

Expectations are for the stock to price in the 30's, and then run up in the secondary market into the 60's at which point those who had the IPO can liquidate if the momentum traders provide liquidity and institutions and mom and pop pick up the slack.

I am still long gold and short stocks. I hold no miners or silver. I am holding about 25% cash in my trading account and thinking about when to deploy it. Unless Europe collapses I think the bottom is very close. I would like to see an 'intraday V' to punctuate it.

SP 500 and NDX Futures Daily Charts - RNN Interviews Bill Black on JPM

Fears about what will happen with Greece and the Euro weighed on stocks.

There is also secondary liquidation as funds raise cash to play the big pop in the Facebook IPO which prices after the bell on Thursday.

Expectations are that the stock will come out in the 30's and pop higher to 50's at which point the momentum traders will start to flip it and hand it off to mom and pop and the pension funds.