SP 500 and NDX Futures Daily Charts - Want To Take you Higher

This will end badly.

Notice how equities hit the bottom of the trend channel, and then took off like a horse with a red hot poker applied to its posterior.

The real economy is not keeping pace with the financialisation of reality.  And that is a recipe for disaster, but in the future. 

In the meantime, try not to get in front of these drunk-with-power drivers.

Hong Kong Gold and Silver Exchange To Launch 1,500 Tonne Depository in China

Just a fad. Nothing to see here, move along.

Reuters
Hong Kong gold exchange eyes 1,500-tonne warehouse in mainland China
February 16, 2014

The Chinese Gold & Silver Exchange Society (CGSE), based in Hong Kong, aims to launch a physical bullion trading exchange and a 1,500-tonne depository in mainland China within the next year, its president said on Thursday. The century-old firm, which runs Hong Kong's only physical bullion trading exchange, is looking to tap the burgeoning demand for gold in China, which last year toppled India from its ranking as the world's top gold consumer.

Its 171 members include dealers, banks and jewellers, among them Chow Tai Fook Jewellery Group Ltd, the world's most valuable jewellery retailer. It has been in talks to open a warehouse in China's free trade zone in the Qianhai district of Shenzhen that has struggled to take off some three years after it was first touted as a new "mini-Hong Kong".

But talks are finally getting serious after last year's launch of the Shanghai free trade zone, CGSE President Haywood Cheung told Reuters. "Three years ago we started negotiating with them to build a vault for gold and silver. It is now finally down to an ad hoc committee," said Cheung, adding that Qianhai officials had asked for CGSE's plans and proposals...

Read the entire story here.

Margin Call: Ted Butler Wonders About the Real Cause of Bear Stearns' Collapse

Ted Butler has put one of his newsletters into the public domain.

It raises some interesting points.  As you may recall Bear was suffering losses in a number of financial instruments at the time.  But there has not been serious discussion about their precious metal positions.

At the time of the MF Global collapse it appeared that JPM had their fingerprints all over the squeeze and margin call that put them down.   JPM, In the City of London, With a Margin Call.

But I had never thought about it happening in the case of Bear Stearns.

Goldman may be the vampire squid, but JPM may be Mack the Knife.

And is MF Global Jenny Towler, and Bear Stearns Schmul Meier?   And if so, who then is Tiger Brown?

Mackie, what price did you pay?

Times may change, but the song remains the same.

What Really Happened To Bear Stearns?
By Theodore Butler
February 17, 2014

Six years ago the well-known investment bank Bear Stearns imploded. In February 2008, Bear Stearns stock traded as high as $93; by mid-March the insolvent company agreed to be taken over by JPMorgan for $2 a share (later raised to $10 after class-action lawsuits). In the annals of Wall Street, there was hardly a more sudden demise than the fall of Bear Stearns. The cause was said to be a run on the bank as nervous investors pulled assets from the firm. Bear Stearns was said to be levered by 35 times, meaning it had equity of $11 billion and total assets of $395 billion. This is a very small cushion if something negative suddenly appears.

Something negative did hit Bear Stearns in the first quarter of 2008; although there are remarkably few details of what went wrong. Since Bear had a significant presence in sub-prime mortgages and that market was in distress, it is assumed the fall of the firm was mortgage related. That may be true, but there was no general stress in the stock market through mid-March 2008 reflecting a credit crisis. Was there instead some specific trigger behind the company’s sudden collapse?

I believe that sudden and massive losses and margin calls of more than $2.5 billion on tens of thousands of short COMEX gold and silver contracts were the specific triggers that killed Bear Stearns. Let’s face it – Bear was so leveraged that a sudden demand of more than $2.5 billion in immediate payment for any reason could have put them under. Bear Stearns’ excessive gold and silver shorts on the COMEX are the most plausible reason for the sudden demise.

Bear Stearns did fail and due to a sudden cash crunch was acquired by JPMorgan for a fraction of what it was worth two months earlier. Bear Stearns was the largest short in COMEX gold and silver at the time. The day of Bear Stearns’ demise coincides precisely with the day of the historic high price points in gold and silver. That is also the same day the biggest COMEX gold and silver short would experience maximum loss and a cumulative demand for upwards of $2.5 billion in cash deposits for margin. It was no coincidence the music stopped for Bear Stearns that same day...

Read the entire article here.

Thomas Frank: Pity the Billionaires, Marxism for the Master Class

“Ayn Rand's 'philosophy' is nearly perfect in its immorality, which makes the size of her audience all the more ominous and symptomatic as we enter a curious new phase in our society....to justify and extol human greed and egotism.”

Gore Vidal


"It is not Man but nature that raises into one class those who are chiefly intellectual, in another those who are marked by muscular strength and temperament, and in a third those who are distinguished in neither one way or the other, but show only mediocrity -- the last-named represents the great majority, and the first two the select. The superior caste -- I call it the fewest -- has, as the most perfect, the privileges of the few...

The order of castes, the order of rank, simply formulates the supreme law of life itself; the separation of the three types is necessary to the maintenance of society, and to the evolution of higher types, and the highest types -- the inequality of rights is essential to the existence of any rights at all. A right is a privilege. Everyone enjoys the privileges that accord with his state of existence.

Wrong never lies in unequal rights; it lies in the assertion of equal rights."

Friedrich Wilhelm Nietzsche, Der AntiChrist

In light of the recent outcries by billionaire Tom Perkins for fair and loving treatment, I thought it might be interesting to explore the mindset that pictures the doyens of Wall Street, and those who have taken fortunes out of the dot.com and housing bubbles, as the real victims of the financial collapse and The Recovery™.

I think that part of this comes from the phenomenon that for some people, gratitude is their natural response to good fortune, even if it has come from hard work. Whereas others are possessed by a restlessness, an insatiable spirit, and their response to everything is 'I deserve more!.' 

Tom Perkins not only wishes his wealth, and his banal collection of toys, but he wishes to have public adulation as well, or at least the power to compel people to defer to him.

Mr. Frank thinks that this time around the cultural response to a Great Depression is 'backwards,' as compared to that of the 1930's, and one might tend to agree. There certainly has not been the rising of a national sympathy for victims, or a proper outrage at the arrogance and excesses of the financiers.

But this might overlook the fact that the US was a bit of an outlier back then, as only a few countries turned towards progressive reforms, while other developed nations embraced the hardness of totalitarianism, and even went so far as systematically murdering the weak.

But it is a mistake that the US is some sort of paragon, if one recalls John Steinbeck's The Grapes of Wrath. The allure of selfishness and evil is a natural tendency that we overlook in our economic models, among other things. And we certainly ought not overlook the consecration of the country to the principle that 'greed is good,' or more plainly to Mammon, in the latter part of the last century.

I agree with him that Obama has been a pivotal disappointment, and I was interested to hear the reasons why he thought this was so.  Overall I found his perspective to be interesting, as though he was not an American historian and journalist, but some foreign observer sharing an exterior perspective of wonderment.

I have started the tape beyond the introductory remarks and welcomes at this talk he gave in Seattle.

"Do you think he is so unskillful in his craft, as to ask you openly and plainly to join him in his warfare against the truth? No; he offers you baits to tempt you. He promises you civil liberty; he promises you equality; he promises you trade and wealth; he promises you a remission of taxes; he promises you reform.

This is the way in which he conceals from you the kind of work to which he is putting you; he tempts you to rail against your rulers and superiors; he does so himself, and induces you to imitate him; or he promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind. 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 Times of Antichrist