Gold Daily and Silver Weekly Charts - Capping

As boring days in the summer trade go this was right up there.

Bernanke speaks tomorrow.

These markets are not going to go anywhere unless 'something happens.'

US fired on a ship off coast of the UAE today, retail sales are weak, and the banks continue to suck the life out of the real economy.

SP 500 and NDX Futures Daily Charts - Lackluster Trade

Retail sales continued to show very weak demand.

Bernanke speaks tomorrow and Goldman reports its earnings in the morning.

Read This Book: Predator Nation by Charles Ferguson

Chapter 1 (an excerpt)

WHERE WE ARE NOW

MANY BOOKS HAVE ALREADY been written about the financial crisis, but there are two reasons why I decided that it was still important to write this one.

The first reason is that the bad guys got away with it, and there has been stunningly little public debate about this fact. When I received the Oscar for best documentary in 2011, I said: “Three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail. And that’s wrong.” When asked afterward about the absence of prosecutions, senior Obama administration officials gave evasive nonanswers, suggesting that nothing illegal occurred, or that investigations were continuing. None of the major Republican presidential candidates have raised the issue at all.

As of early 2012 there has still not been a single criminal prosecution of a senior financial executive related to the financial crisis. Nor has there been any serious attempt by the federal government to use civil suits, asset seizures, or restraining orders to extract fines or restitution from the people responsible for plunging the world economy into recession. This is not because we have no evidence of criminal behavior. Since the release of my film, a large amount of new material has emerged, especially from private lawsuits, that reveals, through e-mail trails and other evidence, that many bankers, including senior management, knew exactly what was going on, and that it was highly fraudulent.

But even leaving this crisis aside, there is now abundant evidence of widespread, unpunished criminal behavior in the financial sector. Later in this book, I go through the list of what we already know, which is a lot. In addition to the behavior that caused the crisis, major U.S. and European banks have been caught assisting corporate fraud by Enron and others, laundering money for drug cartels and the Iranian military, aiding tax evasion, hiding the assets of corrupt dictators, colluding in order to fix prices, and committing many forms of financial fraud. The evidence is now overwhelming that over the last thirty years, the U.S. financial sector has become a rogue industry. As its wealth and power grew, it subverted America’s political system (including both political parties), government, and academic institutions in order to free itself from regulation. As deregulation progressed, the industry became ever more unethical and dangerous, producing ever larger financial crises and ever more blatant criminality. Since the 1990s, its power has been sufficient to insulate bankers not only from effective regulation but even from criminal law enforcement. The financial sector is now a parasitic and destabilizing industry that constitutes a major drag on American economic growth.

This means that criminal prosecution is not just a matter of vengeance or even justice. Real punishment for large-scale financial criminality is a vital element of the financial re-regulation that is, in turn, essential to America’s (and the world’s) economic health and stability. Regulation is nice, but the threat of prison focuses the mind. A noted expert, the gangster Al Capone, once said, “You can get much further in life with a kind word and a gun than with a kind word alone.” If financial executives know that they will go to jail if they commit major frauds that endanger the world economy, and that their illegal wealth will be confiscated, then they will be considerably less likely to commit such frauds and cause global financial crises. So one reason for writing this book is to lay out in painfully clear detail the case for criminal prosecutions. In this book, I demonstrate that much of the behavior underlying the bubble and crisis was quite literally criminal, and that the lack of prosecution is nearly as outrageous as the financial sector’s original conduct.

The second reason that I decided to write this book is that the rise of predatory finance is both a cause and a symptom of an even broader, and even more disturbing, change in America’s economy and political system. The financial sector is the core of a new oligarchy that has risen to power over the past thirty years, and that has profoundly changed American life. The later chapters of this book are devoted to analyzing how this happened and what it means.

From:  Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America by Charles H. Ferguson

Weekend Viewing: Terror, Robespierre, and the French Revolution

One of the more interesting things in history which I have considered for some time is that contrast between the American and the French Revolutions.

Here is a video that is worth watching, with the caveat that like most short documentaries it does have its point of view, and that is reflected in the compression and emphasis of facts and details. 

It is perhaps understandable that Americans are accustomed to looking at European history through the eyes of the English, which creates its own set of perspectives, political assumptions and justifications for secular actions and expediences.

My own thinking is this.

First, a caution. One must not be triumphalist in comparing short term outcomes, and think that the American Revolution was a 'success' and the French Revolution a 'failure.'

Certainly they were different, and  in their time and circumstance are operating within very different historical contexts and political and social contingencies. And yet they were philosophically intertwined. The American founding fathers were inspired by much of the writing of the French thinkers in particular, and the French people were inspired by the achievement of the Americans in freeing themselves from the English monarchy.

Although one has to say that by resulting in the Terror and then Napoleon, the French Revolution can be said to have fallen into a great diversion from its original intent. But most importantly, neither the American nor the French experience is yet complete.

Despite its great early success, the American Revolution culminated in the bloody Civil War, and the American Empire of the 20th century.  And even today, this story continues to unfold.

The major difference between them, as concisely stated as possible, is that in the American Revolution the Declaration of Independence was followed by the creation of a Constitution, that by its nature and the existing political organization of the country guaranteed individual rights and the dispersion of centralized power amongst thirteen colonies with importantly distinct agendas. There was no Committee of Public Safety, there was no Robespierre.

And there was not an Oliver Cromwell for that matter, and the excesses of the Glorious Revolution of 1688 in England that in its own way helped to shape the American experience that followed. Or a Stalin, as the sad culmination of the Russian popular revolution.

Every country has its  high and low moments, except perhaps in their official legends and self-written history books of the moment.

The broadening perspective is perhaps why history seems to improve with distance and time, with the limitation of decreasing access to source material and factual references considered.

The American Revolution, as embodied in the Constitution, was first and foremost a practical matter of governance, although deeply embedded in philosophical first principles, and not particularly as given to broadly idealistic and Utopian change as was the French.  In other words, it was carefully and thoughtfully limited.

The French Revolution was much more expansive, as if the American Revolution, the War of 1812, and the great Civil War, and the rise of the Imperial Presidency were combined into one short period of history, without the definition of a stable and well-defined government of the people with God given rights and an overarching natural law first being established as a cultural icon.

Idealistic theories, such as the natural perfection of capital markets, and a growing centralized power jealous of its prerogatives, if not greedy for more of them, are a dangerous combination when confronted by limitations and threats to that power.

This reminds me very much of the modern Anglo-American financial system, which seeks to promote and hold on to theories and methods that have been proven false, but which support the enormously influential but unsustainble status quo.  And so society falls into a sort of cognitive dissonance, and official psychosis.

But again, the caution. This is a complex chapter in history, and it is still being written.