Gold Daily and Silver Weekly Charts - Remembering

More tiresome histrionics from LavaGirl and the money masters today.

When their positions finally implode, perhaps they will make pretty sparks in the night sky for the children. And then they will be gone, their gifts and talents not only wasted, but their names blackened shamefully, and forgotten as if written in ashes.

Silver is carving out a massive triangle pattern on the weekly chart.

Gold is a little more guarded here, but the next week or so should give it a clearer voice.

Below I remember those who are worth remembering, and forget those who have been weighed, and are found wanting.

On 22 February 1943, Scholl, her brother Hans and their friend Christoph Probst were found guilty of treason and condemned to death. They were all beheaded by executioner Johann Reichhart in Munich's Stadelheim Prison only a few hours later, at 17:00 hrs. The execution was supervised by Walter Roemer, the enforcement chief of the Munich district court. Prison officials, in later describing the scene, emphasized the courage with which she walked to her execution. Her last words were:

"How can we expect righteousness to prevail when there is hardly anyone willing to offer themselves up individually for a righteous cause?

Such a fine, sunny day, and I have to go."

The White Rose
Fourth Leaflet
Munich, 1942

We will not be silent.

"...It is the time of the harvest, and the reaper cuts into the ripe grain with wide strokes. Mourning takes up her abode in the country cottages, and there is no one to dry the tears of the mothers. Yet Hitler feeds those people whose most precious belongings he has stolen and whom he has driven to a meaningless death with lies.

Every word that comes from Hitler's mouth is a lie. When he says peace, he means war, and when he blasphemously uses the name of the Almighty, he means the power of evil, the fallen angel, Satan. His mouth is the foul maw of Hell, and his power is at bottom accursed. True, we must conduct a struggle against the Nazi terrorist state with rational means; but whoever today still doubts the reality, the existence of demonic powers, has failed by a wide margin to understand the metaphysical background of this war.

Behind the concrete, the visible events, behind all objective, logical considerations, we find the irrational element: The struggle against the demon, against the servants of the Antichrist.

Everywhere and always demonic powers lurk in the dark, waiting for the moment when man is weak; when of his own volition he leaves his place in Creation, as founded for him by God in freedom; when he yields to the force of evil, he separates himself from the powers of a higher order; and after voluntarily taking the first step, he is driven on to the next and the next at a furiously accelerating rate.

Everywhere, and at times of greatest trials, men have appeared, prophets and saints who cherished their freedom, who preached the One God and who with His help brought the people to a reversal of their downward course. Man is free, to be sure, but without the true God he is defenseless against the principle of evil. He is a like rudderless ship, at the mercy of the storm, an infant without his mother, a cloud dissolving into thin air..."

Please distribute this as widely as possible.

"God has a way of standing before the nations with judgment. And it seems that I can hear God saying to America, 'You're too arrogant! And if you don't change your ways, I will rise up and break the backbone of your power, and I will place it in the hands of a nation that doesn't even know my name. Be still, and know, that I'm God.'"

Martin Luther King, It's A Dark Day In Our Nation, 30 April 1967

SP 500 and NDX Futures Daily Charts - Downdraft Day as Europe Scares Risk Off

The markets pulled back sharply today as traders took profits and felt for support to gain a toehold in the prices from which to consolidate.

The trading desks are squaring up for news, on the US economy in the Jobs Report on Friday, and on the Greek bailout, perhaps on Thursday.

I should not care to fight the market on this one, although it has yet to fully tip its hand. Recall that the current rally has never had a major correction, only slight pullbacks of which this is, so far at least, one.

Caution is advised.

I did take down a significant portion of my oversized 'short stock indices' positions today. I may have been early.

The Failure of the Current Banking Model and the Deliberate Mispricing of Risk For Personal Gain

“Fraud and falsehood only dread examination. Truth invites it...Whoever commits a fraud is guilty not only of the particular injury to him who he deceives, but of the diminution of that confidence which constitutes not only the ease but the existence of society."

Dr. Samuel Johnson

This enlightening essay excerpted below is remarkable because the author strikes right to the heart of the matter, rather than endlessly talking around technical details of how to 'fix' things, adjusting this and that, which is what people close to, if not caught up in, the financial problem are often wont to do.

And such a tinkering discussion  of it is a trap.

The patient does not require a pill or a poultice, a better diet or dental health regime, but surgery, and the sooner the better. The Volker Rule is a dulled knife, but directionally correct.  And the banks fear it, and hate it, as they do all meaningful reform. Theirs is the art of privileged deception, and it is the common cause they find with their political systems.

And of course and unfortunately it is the same with their central banks and the corporations that have grown up around them, who are upholding the exorbitant privilege, and danger, of the dollar reserve currency, which is to their benefit, by the massive mispricing of risk every day in the bond and currency, metal and derivatives markets. And the interval between major interventions is decreasing, such is the decay of their position.

The ongoing and conscious mispricing of risk is going to cause a second financial crisis that will be much worse than the first, which was also due to the conscientious mispricing of risk with the intent to take advantageous profit, which is a euphemism for fraud.

Fraud is corrosive, and impinges on what Samuel Johnson called that confidence which constitutes the ease and existence of society. And taken to the extreme levels which we have seen from the Wall Street Banks, the manipulating of markets to achieve personal profits, even under the excuse of governmental ends, becomes an assault on society as a whole.

The author is David Malone, a second generation documentary film maker.

And a special thanks to friend and City maven 'Harry' for sending this my way. And for passing along the amusing commonplace in the City of JPM and GS as Professor Moriarity and Colonel Sebastian Moran.

I have previously imagined the US Ratings Agencies with a Pythonesque twist, as The Crimson Permanent Assurance. And perhaps in a similar whimsical vein, JPM and GS are more like Captain Flint and Long John Silver, with Canary Wharf as Dry Tortuga.

And Bernanke is the Parrot. Pieces of Eight!   Arrrrrr.

Propaganda Wars : Our Version – Risk Weighted Lies. 1
By Golem XIV
February 28, 2012

The core claim of the Big banks and those who support them is that the financial system, as it is presently constituted, is not only fair and fit for purpose, but essential for our continued welfare. People should therefore stop complaining and knuckle down to suffer whatever deprivation is necessary. All must serve the greater good. Or as it should really be known – the Good of the Greater.

The banks are not frightened by a bank failure or two. As long as governments are prepared to force their people to bleed for the banks’ welfare it can actually be an opportunity. A bank failure is just a chance for the better connected ones to predate. Neither are they worried by a case of fraud here or an indictment there. They will settle for a sum which is of no significance to them, in return for a “no admission of guilt” clause. If necessary they are even prepared to throw one of their own to the baying crowd. No one in banking shed a tear for Fred the Shred. And why should they? Call him greedy if you want. See if he cares. He’d already sucked his millions from the wreak he left behind.

What scares the banks is any criticism that goes beyond claims of greed or fraud or even incompetence, and instead questions the system itself. The sanctity and perfection of the system and its right to ‘regulate’ itself, is what they are totally committed to protect. The system is what gives them their status and wealth. Question that and you threaten them where they are vulnerable.

It seems to me therefore that it is high time we questioned not just the probity, or even the solvency of the big global banks but their very intellectual foundation. It is time for us to wrench back the initiative from the banks. The financial elite have spent all this last year rewriting history so that blame for the banking crisis has been turned away from them and laid instead at the door of ‘people’ and then entire nations who ‘took’ on debts they coudn’t afford.

It is time to counter-attack and make the case, that it was and is the way that banks and banking go about their normal business that caused this crisis and are still causing it. We have to show that it was not a break down in an otherwise fine system which caused this crisis but that it was a result and consequence of a system which is an utter failure at doing what it prides itself most on being able to do – managing risk. Not just a onetime failure but a systemic failure which presents an on-going danger to the rest of us.

So let’s be clear. There is no systemic risk at all in welfare spending, no matter how large it becomes, for the simple reason that there is no surprise in welfare spending. It does not jump out at you unexpectedly. Welfare and social spending are a slow moving behemoths that can be seen coming for decades ahead. The only danger is they will trample you to death if you are stupid enough to stand there for decades listening, slack jawed, to the competing teams of witless cretins whose flatulent play-acting is all that remains of our political process.

There is, I suggest, a very clear, present and on-going systemic risk and danger from global banking. It was, after all, banking not welfare which gave us the phrase ‘systemic risk’. Bankers deal in risk. The welfare state deals in…welfare. Like it or loath it, there is no ‘risk’ in welfare or in social spending. They are linear and entirely predictable problems. Banking on the other hand not only deals in risk, it manufactures it. Risk is what bankers bank on.

Don’t take my word for it. Andrew Haldane is the Executive Director for Financial Stability at the Bank of England. In his speech at the London ‘Future of Banking’ conference held in July 2010 he said rather clearly (Page 14),

…banks are in the risk business…’

His entire paper was analysing the ways in which banks create risk and then systematically mislead us and even each other about what they have created.  He goes on to say (Page 14),

…it should be no surprise that the run-up to crisis was hallmarked by imaginative ways of manufacturing this commodity, with a view to boosting returns to labour and capital. Risk illusion is no accident; it is there by design. It is in bank managers’ interest to make mirages seem like miracles.

The mirage he refers to is the contribution banks claim to make to our over all economic well-being and security...

Read the rest here.

Net Asset Value Premiums of Certain Precious Metals Trusts and Funds

Gold Daily and Silver Weekly Charts

LavaGirl huffs and puffs, like one of her ponies, in the most repetitive and tedious of ways.

SharkBoy is staring into the abyss, blaming all others but himself.

Time for a little music, and then a nap.

Zzzzz....

Django Reinhardt et Le Quintette du Hot Club de France

The Chief Architect Surrounded and Trapped by Her Nemesis

SP 500 and NDX Daily Futures - Blue Skies and Paper Moons

"In 1929 the discovery of the wonders of the geometric series struck Wall Street with a force comparable to the invention of the wheel."

John Kenneth Galbraith, 'In Goldman Sachs We Trust,' The Great Crash of 1929

The Great Crash of 1929 by PBS: American Experience is one of the best documentaries on the subject of a stock market bubble and collapse that I have seen. I hear it is available on Netflix streaming. It is also occasionally available on the internet.

Here are two excerpts.

Net Asset Values of Certain Precious Metal Trusts and Funds

JP Morgan's Blythe Masters Is the 2011 Queen of Commodities - Sharkboy and LavaGirl

Blythe Masters is the chief of commodity trading at JPM, and the apparent mastermind behind their gargantuan short position in silver.

Previously, Ms. Masters attained fame for having helped to create credit default swaps.

Their fierce performance in crushing Goldman Sachs in the commodity pits has earned Jamie Dimon and Blythe Masters the fearsome nicknames, "Sharkboy and Lava Girl."

"Isabelle can't cope with our superior platform and industry connections," a certain dark Mistress of the Universe has been heard to say.  If you are the Queen you don't make markets; you own the markets. And everyone, including  Goldman, pays.

The Independent
JPMorgan's British commodities chief notches up $2.8bn
By Jim Armitage
03 March 2012

Blythe Masters, the British woman who runs JPMorgan's commodities division, has steered the department to record turnover exceeding $2.8bn (£1.8bn) in 2011, more than long-time industry leaders Goldman Sachs and Morgan Stanley.

Reuters research shows that Cambridge-educated Ms Masters beat her arch-rival, Isabelle Ealet at Goldman Sachs in London, whose commodities division's revenues stagnated at $1.6bn. JPMorgan's performance, a threefold leap in revenues, is a huge bounceback for one of the most powerful women on Wall Street.


In 2010 there had been serious concerns about staff defections and sluggish growth, but Ms Masters, who started at the bank aged 18 as an intern in London, had the firm backing of the chief executive, Jamie Dimon, and investment banking head, Jes Staley. He praised her for being "one tough kid" and stuck with her.

Ms Masters gained notoriety for pioneering credit default swaps, blamed by many for the financial crisis. She acknowledged in a 2008 speech that she had been branded "the woman who created weapons of mass destruction", although she defends the products, saying the people using them were at fault.

Ms Masters built the bank's commodities business through acquisitions including the takeover in 2010 of Royal Bank of Scotland's Sempra Commodities, a large trader of natural gas.

By contrast, rivals have stumbled lately, with Morgan Stanley's revenues shrinking for a third consecutive year, the worst streak since at least 1995, and Goldman Sachs' commodity unit nursing a large drop in revenues since raking in more than $4.5bn in 2009.

The blunt-speaking Ms Masters told staff in 2010 rivals were "scared shitless of us", adding: "They'd better be. This is a platform that's going to win."

Dramatic re-enactment of JPM's Pan European Commodity Victory Tour from Zurich to London

MF Global: What Happened to the Money - 'This Is Not a Boat Accident'

Money does not just 'vaporize' or go missing because of sloppy bookkeeping.  The crony capitalists and their friends would have you think that it was just an accident, or some unfortunate act of God for which no one can be held responsible.   Like the financial crisis in the world caused by massive fraud at the big Banks for which no one has been held accountable.

The facts suggest that the customer money at MF Global was stolen, twice.

First, it was stolen by the management of MF Global, who brazenly used it to cover their own gambling losses.

Then it was stolen by the recipients of the stolen money, probably the Banks and powerful financiers, who knew that MF Global was going under, and did not want to take the losses on their own unsecured claims.

So the system was twisted to hide the involvement of powerful figures with strong ties to the political system and multinational corporations operating out of New York and the City of London.

As Richard Dreyfuss said in the movie, Jaws, "Well, this is not a boat accident."

And until the people do something, say something, to stop it, this kind of wanton theft will almost certainly happen again.

CNN
Farmer faces planting season with seeds of distrust
By Wayne Drash
March 4, 2012

...Tofteland held the farm together after his father was killed, survived drought and the great flood of 1993. Then, commodity prices sank in the mid-1990s. And like most farmers, he has seen too many friends die young.

Such are the hazards of life on a farm.

But all that Tofteland has worked for was nearly lost in one fell swoop last October. This time, it wasn't a crisis brought on by tragedy or Mother Nature. It was the work of Wall Street and commodity power players in Chicago, a scandal that has become known simply as MF Global.

Tofteland had $253,000 in an account with the brokerage firm, money he planned to use to cover his farm's operating loan. As MF Global went bankrupt last fall, customers' segregated accounts were raided in clear violation of exchange rules. When the dust settled, more than 38,000 MF Global customers -- including thousands of farmers, ranchers and grain operators who used the firm to hold money for transactions on the futures market -- were out more than $1.2 billion.

On a recent February day, Tofteland points to the stirrups hanging in his barn. They've been there since the 1930s, when the first tractor arrived. Nearby, his fields stretch nearly to the horizon.

His seed bill last year was $230,000; fertilizer cost $150,000. In addition to his own land, he farms acreage he rents at a cost of $450,000. He has another $1 million tied up in equipment, plus four full-time employees. "We're talking big numbers, and you're taking all these risks," he says. "And you can get hailed out, droughted out, flooded out at any time."

That's why the MF Global scandal hurt so much: a financial tsunami that nearly wiped everything away. Tofteland had come to rely on the futures market. So eroded is his trust in the system, he hasn't used it since.

He notes he can track a hog from his farm to somebody's table. Yet somehow, he ponders, authorities haven't fully tracked the missing $1.2 billion, or who was behind it.

"It's either ignorance or fraud," he says. "Money doesn't vaporize. If my account is empty, somebody else's is full."

Tofteland opens the door to one of his four hog barns. More than 250 piglets scamper in pens in the climate-controlled barn. The smell is so wretched it takes every ounce of strength for a newcomer not to vomit. The analogy is inescapable: What stinks worse, a hog barn or ...?

Tofteland doesn't even pause to think. "I would say MF Global. Our money was stolen and nobody is being held accountable..."

Read the rest here.

In a cover up like this it is never the initial act, but almost always the subsequent actions to hide the truth, that festers, and can bring down corrupt organizations.

Former Japan Government Officials Promoted AIJ to Pension Funds

Crony capitalism is one of the reasons for Japan's stagnant economy.

Their economic system is highly structured, and almost feudal in nature, organized around keiretsus. Crony capitalism in the States and the UK is more informal, gang-oriented, and fluid, more beneficial to a few powerful men than entire organizations.

But in both cases what makes it 'work' is the revolving door and mutually beneficial relationships between government and the corporations.

One key difference is that in Japan the power is held more by the organization, and not a narrow personal elite. There is also a much stronger 'safety net' for the public at large. Both societies tend to cover up their financial scandals involving the powerful: the Japanese out of a deep sense of shame, and in the West, out of a deep sense of personal entitlement.

In other words, Japanese crony capitalism it is not as predatory with respect to its own people as is seen in the West. Their policies are designed to procure advantage internationally. That is what makes this AIJ scandal so shocking to the Japanese public.

It has defrauded pensioners and involved western financial firms. We're not in Hokkaido anymore, Toto.

Even with their aging demographics, such protracted stagnation, when not attributable to an exterior force, almost always involves a serious policy error on the part of the fiscal and monetary authorities.

The Japan Times
Ex-insurance official plugged AIJ to pension pals
Saturday, March 3, 2012
Kyodo

A former official of the defunct Social Insurance Agency has revealed he used to recommend troubled AIJ Investment Advisors Co. to pension fund executives.

The former official said Friday that AIJ, which is believed to have lost some ¥210 billion in corporate pension money under its management, invested heavily in his consulting company and also paid fees to it.

He said he recommended AIJ to other former agency officials he met at pension fund seminars. While he denied forcing them into contracts, these former officials may have contributed to AIJ's expansion.

His firm received half its capital from AIJ, as well as some ¥6 million annually in consulting fees for about four years. AIJ also lent employees to his company and paid their salaries.

According to a labor ministry survey, 23 former senior officials of the agency, the predecessor to the Japan Pension Service, landed jobs at pension funds across the country after retiring between August 1999 and September 2010.

A pension fund in Hokkaido where one of the 23 retired officials was offered a post had a pension management contract with AIJ...

A Closer Look At This Week's Intervention In the Metals Markets

Here is a somewhat lengthy video but is quite good.

It goes into a long discussion of bullion bank activity and leasing.

I think that the silver shorts are still staring into the abyss and are quite concerned about their precarious market positions.

But it could have been something more 'official.'

The recent rigging of the LIBOR market is not a bad model for the carry on effect of this market operation that I alluded to the other day. However, I think some of the participants who went along for the ride are getting set up as 'the Big Shorts' are trying to offset their untenable risk.

Silver looks like a ticking time bomb waiting to blow a hole in the paper markets.




Additionally, there was nothing unusual in the lease rates.

Gold Daily and Silver Weekly Charts

The metals continued to consolidate after this week's very calculated and heavy handed 'selling for effect.'

SP 500 and NDX Futures Daily Charts - Orwell Just Threw Up

"When it comes to fighting financial fraud, the Obama Administration’s record of success has been nothing less than historic."

Eric Holder, Attorney General for Obama Administration, Address To Columbia University

May I remind the Attorney General that, in the words of Charles Ferguson, " three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that's wrong."

Mr. Holder went on to say:

“We found that much of the conduct that led to the financial crisis was unethical and irresponsible. But we have also discovered that some of this behavior — while morally reprehensible — may not necessarily have been criminal.”

And if that is the current standard of justice being applied to wanton, pervasive, and obvious financial fraud and white collar crime by powerful insiders in Washington DC these days, then it will come as no surprise to the thousands of victims of MF Global that no one will be held accountable.  Not to mention the millions of victims of fraud in the mortgage crisis, and the ongoing predatory banking and market fixing.

And the rest of us should not be surprised when we find that nothing is safe from those who think that the law and words mean whatever they want them to mean.

When Obama said "Yes We Can" I think most Americans thought he meant something else.

And the shame and the pity is that this November Americans will be given a choice between Brand A and Brand B, which are in reality the same corporate products, manufactured by the same people, with just different marketing messages.

Corporate Psychopathy: An Interview With One of the Researchers of the Hare Project

This interview was done by my friend 'Davos' who has agreed to post it here in addition to his own site, Psychopathic Economics 101.

I had always felt that there was something not right with one of the higher up bosses I had in a major division of a Fortune 100 company. Now there is little doubt in my mind that he was a psychopath.

He had the verbal acuity to talk his way in and out of almost anything, and was quite proud of it, and of being hard to pin down. And he gathered a subculture around himself, both above and below, of similar personality types and sycophants, with a few captive enablers who were technically very competent.  His powerful personal style fatally marked everything.

I left, not because I could not deal with it, but rather because I saw where this all was heading.  The only reason he  lasted as long as he did was because the CEO was hands off and weak, and the board was servile and largely clueless. His reputation caught up with him and I heard he did not fare well, and ended up being indicted and went to prison. He ruined the lives of thousands of people. To this day he admits no guilt and no regrets, except in getting caught.

It should be said here that just because you don't like or understand your boss does not mean that he or she is a psychopath, or even a bad person. There are places where people who don't like their bosses meet to discuss it. They are called bars, and they meet there every Friday night.

I was interested in what the researcher called The Dark Triad of Personality: Machiavellianism, Psychopathy & Narcissism.

Why is this study of corporate psychopathy more than a morbid concern? Because it drives a spike in the heart of the assumption that on the whole people in business (and politics for that matter) are rational and naturally good, and that this therefore permits us to forge an economic structure based on self-restraint and self-regulation (or little to no regulation at all for that matter), the so called efficient markets hypothesis. 

Anyone who has acted in the real business world knows this is utter nonsense.  The unscrupulous can not only act for many years without hindrance, they can often prosper and thrive, and distort whole sections of an economy through preying on the weaknesses of even the most ordinary of men.

And yet an economic theory based on this assumption of perfect rationality shaped American culture for the past thirty years, from the days of Reagan at least.

As they say, the devil's greatest success is in convincing people that he does not exist.

First Study Where Fortune 100 Executives Were Screened For Psychopathy [Podcast] Interview With Dr. Daniel N. Jones, Ph.D. Postdoctoral Researcher for Dr. Robert Hare Ph.D.
Posted on March 2, 2012 by Davos

I Am Fishead caught my eye on Jesse’s Café Américain. In this documentary psychopathy researchers “fish for psychopaths” inside Fortune 100 corporations.

Dr. Robert Hare is in the movie. He was a familiar face. I had remembered him from the documentary The Corporation. In that documentary Dr. Hare analyzes a corporation, a soulless entity given the rights of a person. A person whose DNA makes him put profit above everything else—even his fellow citizens. In The Corporation, the corporation is compared against the WHO’s psychopathic diagnostic checklist. Corporations meet the criteria. I wrote about this problem in Why We Are Totally Finished. The movie is linked within that piece.

The second thing I realized after watching the other documentary that Dr. Hare was in, I Am Fishead, was that I had a ton of questions. ”The Dark Triad’s” negative externalities that we’ve had to endure are pretty apparent after the crash of 2008: Unemployment is 22.5%; 47 million Americans are on food stamps; our children have been saddled with even more debt which went to bailing out insolvent institutions who deserved to fail; prime foreclosures now rival subprime foreclosures; home prices are through the first floor and will be subterranean soon; 25% of kids age 18-34 live in mom and dad’s basements; 46% of kids 18-24 have no job; 12% of homes are vacant; there are schools just for homeless children; tent cities have sprung up; and 60 Minutes now runs stories of children living in cars with their unemployed parents.

So I wasn’t surprised to hear that there was a magnetism between corporations and psychopaths. What caught my ear was that in I Am Fishead, Dr. Hare said he interviewed 203 employees at Fortune 100 companies. He then went on to say that 8 of them had very high scores. Sample the population and you’ll find 1% of them are psychopaths.

Eight out of 203?

I also wondered how this came about. I mean, I just couldn’t picture a Fortune 100 company calling anyone up and saying, “Hey, I think not only is the corporation a psychopath, but I’m concerned many of our executives are as well.”

Dr. Daniel N. Jones

Here is a summary, of which some of the following is verbatim, some isn’t, quotes were omitted, please listen to audio as it is far more precise, I’m an economic blogger, not a transcriptionist ;-).  The summary is merely for those in a rush who want to tune into what is of interest, and also for the search engines to find.  Not only do I think this is fantastic work, a super cause but I truly feel it is something that should be utilized a lot more.

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Psychopathic Economics Interview: Psychopath Study Conducted at Fortune 100 Companies

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• 0:05 Genesis of Fortune 100 psychopathy study as seen in the movie documentary I Am Fishead.
• 0:16 Dr. Paul Babiak Ph.D, Dr. Crag S. Neumann PhD., Dr. Robert Hare Ph.d got together and worked on that particular project.
• 0:30 Dr. Paul Babiak is a consultant for industrial organizational psychology, does consulting work for various organizations.
• 0:40 They approached Dr. Babiak because they wanted some high-level executives screened.
• 0:48 Dr. Babiak felt it would also be appropriate to screen for psychopathy, in this particular instance, as an informative measure.
• 1:00How the test was administered, he gave the Psychopathy Checklist Revised, the “Gold-Standard” of psychopathy assessments.
• 1:12 Twenty items, standard clinical interview administered to employees being considered for executive level positions.
• 1:39 Individuals are extremely cooperative, very happy to help.
• 1:43 One thing we know about people individuals high in psychopathy, through the literature, they don’t think there is anything wrong with them—it’s just the rest of the world that is screwed up.
• 1:52 If they run into problems it is not their fault.  Or at least that is how they perceive it.
• 2:00 Individuals were extremely happy to help and cooperative.
•  2:15 Individuals who scored high in psychopathy were rated as much more effective in their communication skills and their creativity, so these individuals that were actually, we considered toxic people both in society and corporations, were actually evaluated higher than others in their communications skills and creativity.  Which I find to be kind of a scary thing.
• 2:50 Psychopathy is measured by the psychopathy checklist which breaks into four different aspects.
• 3:00 Aspect 1.)  Being a manipulative person or a liar.
• 3:05 Aspect 2.) Callous, kind of a lack of empathy towards others.
• 3:08 Aspect 3.) Impulsivity, or more specifically a lack of impulse control.
• 3:15 Aspect 4.) Antisocial behavior, some kind of breaking rules, whether it be social rules or legal rules.
• The first two aspects were particularly related to positive overall outcomes in the sense that they were evaluated as more effective leaders and communicators.  They were more creative. 
• 3:44 But what these first two aspects giveth, the second two aspects taketh away.  Evaluations were lower, productivity was lower and their ability to work with others.
• 4:10 Depending on the short or long checklist you consult, you get 4 to 5 percent of these executives that were interviewed meeting the threshold criteria for being a psychopath.
• 4:30 That is quite frightening when you consider that in the general population that you have about 1 percent of people walking among us that are psychopathic.  Maybe 1.5 percent of men and 0.5 percent of women.
• 4:44 So that is startling a 4 to 5 fold increase.
• 4:50 NONE of the CEO’s met the threshold for psychopathy!!!  It was really the up and comers, vice presidents, senior managers, middle managers.
• 5:25 Good theories as to why that is.
• 5:38 All the malevolence doesn’t come from just one type of person.
• 5:50 There is actually a cluster of traits that we refer to as, “The Dark Triad of Personality” called Machiavellianism, Psychopathy & Narcissism. 
• 6:00 Overlap, but are distinct their unique aspects.
• 6:10 Machiavellian’s are liars and callous but they also have a lot of long-term planning.
• 6:30 The narcissist is the spokesperson
• 6:37 The henchmen are the frontment, aggressively climbing his way, that is really the psychopath.
• 6:50 When you get these 3 together in an organization it is a particularly toxic outcome because they feed off each other’s unethical behavior.
• 7:15 Asocial Offenders and Antisocial Offenders.  Asocial Offenders are introverts, socially awkward, unable to communicate.  Antisocial Offenders gets along quite well impersonally.  It’s just they Antisocial Offender has no regard for rules.
• 7:45 B-Scans (Business Scans). How to better equip and inform corporations and other organizations for providing more information.  No one gets fired or disciplined.  It is extremely confidential.
• 8:15 We want to work with corporations to better inform them where there might be problematic areas.  We really try to work at the departmental level if there is a cluster of red flags in finance or you are struggling with personality clashes in HR.  Want to be able to provide corporations with tools to flag problematic  areas and ultimately deal with people at the corporate level who don’t see the mission of the corporation properly.    Helping also screen at the entry level.  Solutions for chronic problems.
• 9:37 The B-Scan is written in business not criminal language.  Context appropriate.  The B-Scan is not divorced from the target audience.
• 12:11 Over 800 stories given.  Individuals higher in psychopathy were less likely to go through the penal justice system.  The higher the score the more they stole and the less they got caught.
• 13:20 Bernie Madoff and average psychopath and the people below Madoff.
• 14:00 Just scratching the surface.  Everything before has been leadership and fostering cooperative work environments.
• 14:19 We’re only now beginning to realize how these clinical and personality research can really form kind of derailing type of behaviors that we see in corporations.  Now never has it been more critical at this juncture.  Forty-three percent of all corporations report some major fraud at some point in the past few years.
• 14:50 There research reports estimating anywhere between $160,000,000,000.00 to $600,000,000,000.00 annually are pumped out of our economy as the result of corporate fraud.  People are loosing their livelihood essentially because of these individuals.
• 15:09 It’s amazing and baffling to me that we are almost starting now to ask these questions.
• 15:17 Corporations are relatively new.
• 15:32 Hervey M. Cleckley and Robert Hare both kind of fed off each other.  It was really late 1970s early 1980s before we really kind of had any working conception of what a psychopath really was.
• 15:50 Startlingly fast considering the history of the organization versus the working conception.

Rate the personality of your boss and coworkers

Research site website.

Gold Daily and Silver Weekly Charts: Markets Settle After a Clown Show Smash and Grab

Intraday commentary here.

The guys who ran the clumsy rigging of the  metals market,  up and down  this week, are embarrassing.   Do they actually get paid for this sort of thing?

For all the money the nation has given away to Wall Street, I would like to think it can afford a better class of white collar criminal, who know how to run a scam, and not a clown show smash and grab. 

This obvious incompetency of the whole thing made me wonder if it was not in fact a more 'official' type of operation, and not something orchestrated by more experienced trading desks.

A big tech IPO may get squeezed out tonight. YELP may price at $840M. They are an online restaurant reviewing business.

Not sure, but they are losing money, and it sounds like GRPN^2.

postscript: Sharps Pixley had a particularly good commentary.

"A reported 31 tonne sell order on the CME rocked gold which saw prices collapse from a high of $1790 in London hours to $1703 during NY trading, followed by a further dip to the low of $1687 in out of hours electronic trading. A fall of over 6% which erased roughly half of the gains since the beginning of the year...

Ordinarily if a seller wanted to get the best price for his metal he would seek to finesse the selling over time, hunting out liquidity (finding people who are the other side of his sell order) and thereby ensure he gets the best possible profit. This seller was clearly simply out for effect."

SP 500 and NDX Futures Daily Charts

A quiet day, with the usual light volume rally in stocks after mixed to bad economic news.

Make way for the YELP IPO.

Bank of America announced today that it is going to start charging a $6 to 25 per month checking account fee for retail customers in Arizona, Georgia, and Massachusetts.  Depending on how that works for them, they intend to expand it to the rest of the country.

As the spokesmodels chuckled, that's not so bad, you pay at least that much for a gym membership. You pay for service in a restaurant and you don't complain to them.

Typically checking accounts had been free in return for receiving no interest on the balance in the account. But given the ZIRP environment of today, and the high cost structures but shrinking revenues of the TBTFs, Banks are looking to maintain their bubble economy lifestyles with more transactional fees.

The shame of course is that the only retail customers who will pay this outrageous fee are older people who are afraid to change, and will not use online banking to save fees.

Waiter, what's this pig doing in my soup? Oh I'm sorry I'm at the bank.

AIJ: Japan Regulators Look Overseas for Rest of ¥200 Billion in Missing Customer Pension Funds

So far they have found about ¥20 Billion in the local Japanese accounts. The rest is 'missing.'

Word has it that AIJ lost the money trading futures. Should have gone to Vegas.

A list of 36 of the 84 pension funds who lost money is now available.   The rest declined to be identified for fear of stirring up 'public unrest.'  

These pensioners are apparently a cranky lot.

Since the Japan press seems to think the money was 'burned through,' perhaps they should look for the vapor trails like the MF Global team is doing.

Hong Kong and the Cayman Islands are prime destinations in their own right, but I will be surprised if a big western financial firm is not involved here somewhere.

The Japan Times
AIJ likely lost pension funds trading futures
March 2, 2012
AIJ Investment Advisors Co. used clients' corporate pension money to conduct futures trading in Japan, after first transferring the money to the Cayman Islands and Hong Kong, sources said.

The details offer clues on how the suspended asset manager allegedly burned through most of what is now believed to be ¥210 billion entrusted to it by 84 employee pension funds covering more than 880,000 people as of the end of 2011.

In a related development Thursday, the Health, Labor and Welfare Ministry published the names of 36 of the 84 corporate pension funds damaged by AIJ after they agreed to be publicly identified.

The others refused on the grounds that disclosure might fuel public "unrest."

Those that lost money include software developer SCSK Corp., Cosmo Oil Co., Nihon Unisys Ltd., Lion Corp., Dai Nippon Printing Co. and Fuji Electric Co.

Wall Street Journal
Japan Looks Abroad for AIJ Funds
By KANA INAGAKI
March 1, 2012, 11:40 a.m.

TOKYO—Japanese regulators plan to ask Hong Kong and other overseas authorities for help as they try to track down nearly $2.5 billion in allegedly missing pension funds, according to a person familiar with the matter.

The Securities and Exchange Surveillance Commission is looking at whether AIJ Investment Advisors Co., a little-known Tokyo asset-management firm, channeled pension money it managed into private investment trusts in the Cayman Islands, the person said. Accounts may also have been set up with financial institutions in Bermuda and Hong Kong, the person added.

While such moves wouldn't violate Japanese rules, regulators need the help to check on overseas accounts.

Japan's Financial Services Agency suspended AIJ's operations last week, saying the firm can't account for most of the money it managed...

AIJ has told regulators that it believes about 90% of the roughly ¥200 billion in pension assets that it managed is gone, and only around ¥20 billion remain, the person familiar with the matter said...

Israeli Central Bank to Use Its Reserves to Buy US Equities

Not even bonds yet, but stocks?

It makes sense that some Central Banks have started to buy in the stock markets for private corporations. After all, central banks have always held the debt of their sovereigns, and this is just the reality of corporatism.

It is hard to figure out who might be more upset about this story: the US stock bears, or the Israeli taxpayers.

Well, Stan Fischer, the Governor of the Bank of Israel, was Ben Bernanke's mentor at MIT. Maybe he is just helping?

This adds a new dimension of flexibility to the Fed's swap lines with foreign central banks. 

Can you say ponzi scheme, bubbe? תוכנית פונזי

I know it's over when the fat lady sings, but the cantor?

Bloomberg
Israel to Begin Investing Reserves in U.S Equities Today
By Alisa Odenheimer
Mar 1, 2012 4:45 AM ET

The Bank of Israel will begin today a pilot program to invest a portion of its foreign currency reserves in U.S. equities.

The investment, which in the initial phase will amount to 2 percent of the $77 billion reserves, or about $1.5 billion, will be made through UBS AG and BlackRock Inc. (BLK), Bank of Israel spokesman Yossi Saadon said in a telephone interview today. At a later stage, the investment is expected to increase to 10 percent of the reserves.

A small number of central banks have started investing part of their reserves in equities. About 9 percent of the foreign- exchange reserves of Switzerland’s central bank were invested in shares at the end of the third quarter, the Swiss bank said on its website.

The investment will be made in equity index trackers and will include between 1,500 to 2,000 shares, among them stocks like Apple Inc. (AAPL), Saadon said.

The central bank decided to add equities to its investment portfolio in order to diversify, reduce risk and give better performance, Barry Topf, senior adviser to Governor Stanley Fischer, said in a Dec. 1 interview.

Note: When they say 'Securities' on the balance sheet below, they mean debt as in sovereign bonds. I don't know how they will characterize equities.

James Koutoulas: MF Global Financial Collapse And the Shadow Banking System

Here is James Koutoulas of Typhoon Capital Management, and the founder of the Commodity Customer Coalition, discussing what happened with MF Global on Russia Today. As an aside, I would be more than pleased to present an informative interview with Mr. Koutoulas on US or British television, but there do not appear to be any.

What could be alarming is that the conditions that led to the loss of customers' funds at MF Global have not been corrected, and it could be happening again at some other firm even now. We just may not realize it because the losses have not yet been publicly disclosed.

As in the case of MF Global, the insiders and powerful customers learn about the impending loss first, and take steps to secure their accounts before the collapse and downfall occurs.

A Single Large Seller Smashed the Gold Market Yesterday: Dr. Evil Strategy?

There are a variety of reasons to liquidate a large position.

But whatever the reason, no experienced trader would take a very large position into a thin market and then just dump it at the market, if they wanted to achieve some sort of reasonable economic benefit from selling that position.  One does not do this unless they were under significant duress, or have some motive other than profit. Such a trade is called 'selling against yourself.'

Usually one diversifies their positions slowly and carefully, selling some and buying others without roiling the markets. At some point their trading objective becomes known, but by then it is fait accompli.

Unless of course they may have a strategy to lose some in one market while making huge profits and buys in others at cheap prices, as in the case of buys in the mining sector while slamming bullion for example. Here is one old hand explaining how funds rig the markets.

A trader who was being paid to obtain the best value for the seller would be fired if they simply dumped a large position in the market, driving the prices realized down almost 10 percent in less than an hour.

The same situation occurred at roughly the same time in the silver market, as hundreds of millions of paper ounces of silver were just dumped in the market in less than an hour, breaking the price down dramatically.

Such unbridled selling triggers other selling, as the complex web of trades and relationships drive other parties to liquidate their positions and trigger stop loss orders.

I have described in the past how the big trading desks use the Dr. Evil tragedy to artificially disrupt markets. Regulators are in place to prevent such things from happening.

And this is the story of the economy and the governance of the US markets today. There is little rule of law, only the power of size. And it will get worse as the paper game comes closer and closer to default.

Personally I think there were multiple reasons and beneficiaries from yesterday's market action in the metals. When the word goes out from some powerful party, others in the market find out and craft their own strategies and trades to benefit from this insider information. This is how outsized profits are made.

I believe that some parties who were heavily short silver were staring into the abyss, seeing a first delivery notice going out into a paper market that is many multiples larger than their ability to deliver silver bullion into it. And a default of a major commodity exchange would have disastrous results for the confidence in the markets, already stretched thin by fraud and scandal.  So the interests of the big short, the government and the exchange might be aligned.

Let's see what happens. Because when these artificial market operations occur in a long term trend, they often are short lived, and tend to reinforce the primary trend, in this case the shortage of real bullion caused by many years of price manipulation and the resulting underinvestment to meet demand.

Still, there should be no need for speculation about what happened. The CFTC have the direct responsibility to question the seller's motives and trades, and to reassure the public about what happened. I am sure they will be doing that shortly, if they are actually doing their jobs.

When this tide of corruption goes out, 'we will see who was swimming naked,' as someone who some years ago owned a huge amount of silver, and then capitulated under duress and sold it, once said. And he remains bitter about it to this day.

“Large Seller in the Market” as COMEX Gold Hits $1,708
By GoldAlert Staff
February 29, 2012, 11:39am EST

...Commenting on the sell-off, CIBC World Markets wrote in a note to clients that “Gold – looks like a large seller of gold in the market. a 10k contract traded, down ticked the price by $40/oz. roughly 200k contracts trade per day, but unusual to see such a large single trade. not likely due to contract expiry either. That transaction represents 1mln oz of gold.

Postscript: Apparently I am not the only trader who saw this in the market. Caesar Bryan of Gabelli raises exactly the same concerns.

“What we saw yesterday in the gold market was very large volume just pounding the market lower and it raises the question, is this a seller who is trying to maximize his revenues? The answer is, maybe not because it was very sudden and the volume appeared to be very large.

This is actually similar to other experiences that we’ve seen in the last year where there has been a very sharp, sudden pullback in the gold market. But what I can tell you is the seller was not looking to maximize his revenue from the sales and to market participants like myself and others this is strange. The design of the selling raises serious red flags and leaves some questions unanswered.

I can only say the action was very odd and that’s as far as I want to go because I don’t know what the seller’s or sellers’ motivations were. We have seen this on a number of occasions over the last year where indiscriminate large selling will come in and the gold price falls like a stone. Sometimes gold falls $50 to $80, literally, within a few minutes..."

Read the rest here at King World News.

But If Not...

November 1967



April 1967




April 3, 1968, the day before he was murdered for speaking truth to power.


A time comes, for every one of us, all children of God, Muslim, Jew, Buddhist, Hindu, and Christian alike, and all who love God and hear these words, when we must choose. We will choose to bear the mark of the dark powers and principalities of this world, or we will refuse, and bind ourselves to the one God in heaven. It may be hard on some, easier on others. But we will all make that decision, and carry the mark of that choice with us forever.

That choice is not made once, but is forged with every action, every day, on our hearts.  So when the final choice is made, we will choose by whom we have served.   And keep in mind that although God is loving, He is also just. And there are sins against the Spirit that even a merciful God will not forgive.

So when you consider your actions, ask yourself, 'Is this God's will? Does it stand in the light of God's witness, His mercy and love? Am I listening to His Messenger, His Word, His Law, and serving the one God, or another, or myself?'

But God reserves justice, and vengeance, and wrath for Himself, and His command for us is simple: 'Thou shalt love the Lord your God, with your whole heart, and your whole mind, and you shall love your neighbor as yourself.'



Someone told me that in Germany these days, no one really knows or cares about Sophie Scholl, and the White Rose Society.

I know. I remember. And I care. And in doing so I save myself, je me souviens.

And if I ever meet her and the others like her, who gave themselves up for what is good, who became beacons of light for us in the long, dark hallways of history, I hope I can say, "I did not forget you."

Gold Daily and Silver Weekly Charts - Bear Raid Marks First Notice Day For Comex Silver

The silver shorts have their backs up against the wall. And that makes them dangerous.

Intraday commentary here.

It looks like there will not be a criminal case in the MF Global theft of customer funds, but they could face a fine of up to $140,000.  

The viral moral hazard unleashed by TARP continues to multiply and reverberate through US financial markets to their detriment.   It has a marked dampening effect on market participants, and encourages unethical behaviour and a spirit of lawlessness.  In that sense MF Global is just one symptom among many of a major set of policy errors committed by the Fed, the Congress, and the last two administrations at least. 

"In economic theory, moral hazard is a tendency to take undue risks because the costs are not borne by the party taking the risk. The term defines a situation where the behavior of one party may change to the detriment of another after a transaction has taken place...Economists explain moral hazard as a special case of information asymmetry, a situation in which one party in a transaction has more information than another. In particular, moral hazard may occur if a party that is insulated from risk has more information about its actions and intentions than the party paying for the negative consequences of the risk. More broadly, moral hazard occurs when the party with more information about its actions or intentions has a tendency or incentive to behave inappropriately from the perspective of the party with less information."

From a practical standpoint, I guess this clears the way for Corzine to be the next Treasury Secretary, a fitting replacement for Geithner the amoral technocrat.

Hide your women, children, IRA's and 401k's.   The economic hitmen are coming to town.

NYT: No Criminal Case, But MF Global May Possibly Face a Fine of Up To $140,000

As Janet Tavakoli said the other day, the media coverage of this scandal has been a comedic lightweight fly by that no one in the know could possibly take seriously.

And as Chris Whalen said, we always have known where the money ended up. And that is a big part of the problem. Corzine is Too Big to Jail and the Banks are Too Big To Fail.

Perfect illustration of the credibility trap that is destroying the economy.

Now the elite New York Times chimes in with its own version of the mysteriously vaporizing, blameless money meme. Maybe someone should look in Judge Crater's pockets, or Jimmy Hoffa's wallet.

Et tu, Gray Lady?

As I said, I have now given up all hope of justice being done in this case. But I think obtaining some of the stolen customer money back from the banks and MF Global Holdings is still possible.

We're not in Kansas anymore, Toto. Smells more like 1920's Chicago.

What we need are The Untouchables, honest public servants not compromised in the web of a credibility trap.

NYT
Doubtful Signs of a Criminal Case Against MF Global
By AZAM AHMED and BEN PROTESS
February 28, 2012, 8:45 pm

Federal authorities are struggling to find evidence to support a criminal case stemming from the collapse of MF Global, even after a federal grand jury in Chicago has issued subpoenas.

Investigators, unable to find a smoking gun amid thousands of e-mails and documents, increasingly suspect that chaos and poor risk control systems prompted the disappearance of more than $1 billion in customer money, according to several people involved in the case.   (Are these the emails that the lawyer for the Creditors in the bankrputcy case had sole possession of for months?  Vaporization by honest sloppiness - Jesse)

When the money first went missing, prosecutors in New York and Chicago scrambled to stake a claim. Now, four months later, both Preet S. Bharara, the United States attorney in Manhattan, and Patrick J. Fitzgerald, his counterpart in Chicago, are shying away from leading the case, one of those people involved in the case said.

Indeed, a number of federal prosecutors have expressed doubts to others involved in the case that anyone at MF Global — including the firm’s chief executive, Jon S. Corzine, and back-office employees in Chicago — intentionally misused customer money, said people involved in the case who were not authorized to speak publicly about the investigation.

The subpoenas by the grand jury in Chicago were disclosed by the CME Group, MF Global’s chief regulator, in a securities filing on Tuesday. But the grand jury, according to the person involved in the case, has yet to hear any evidence on the case — a sign that the investigation has yet to bear fruit.

Still, it is early in the investigation, and regulators and others have yet to finish plowing through the mountain of documentation they recently received from the company. (And what investigative principle suggests the wisdom of allowing the company to go over the evidence first before handing it over to the investigators? - Jesse)  In addition, authorities have yet to interview key witnesses — including a person who is believed to have transferred client funds in the firm’s final days.

The inability to bring a criminal case would certainly disappoint thousands of clients, including farmers, traders and hedge fund managers, who are still without access to at least a third of their money.

The government is still hopeful it can file a civil suit against the company, people close to the case said, though doing so against a bankrupt firm with a long line of creditors could be seen as more symbolic than substantive.

Such a case would most likely center on the firm’s failure to safeguard client money, a cardinal sin in the world of futures firms. The penalty for improperly dipping into customer money is a roughly $140,000 fine, equal to about a thousandth of the overall shortfall that clients are enduring....

Read the rest here.

SP 500 and NDX Futures Daily Charts - Retreat Back to Support

Anyone who thought Bernanke was going to announce QE3 today is delusional.

Today is the First Notice Day for Silver and So We Have This Shameless Bear Raid on Metals

Feb. 29 Comex March silver futures first notice day
Feb. 29 Comex March copper futures first notice day
Feb. 29 Nymex March palladium futures first notice day


Last night Harvey Organ said:

"This is the first time in quite a while that gold and silver rose big time a day before first day notice. The bankers try and influence our longs not to take delivery so they generally raid. Today was different."

Well, Harvey spoke too soon; it really wasn't different. The metals rallied higher yesterday, and then were smacked down in a very calculated and violent bear raid today.

I was expecting something like this, and here it is. These fellows have their backs to the wall in silver.

I have seen reports that 225 million ounces of paper silver were dumped on the Comex in less than thirty minutes.

The last time I checked there were less than 35 million ounces of silver registered with the dealers for delivery in at the Comex.

First day notice is when holders of paper futures give notice to the exchange that they intend to take delivery the silver claims they hold from the Comex warehouse. The amount of paper held is multiples of the bullion that can be delivered at current prices.

The 'tell' is the lack of a serious sell off in equities. The yawning divergence in the risk trade is hard to miss.

This notion that gold and silver are selling off because Bernanke is not going to do QE3 is ludicrous.  He does not need to do QE3.  The Fed is all over these markets in Operation Twist.  Jim Rickards has explained this scenario many times that I have linked here.

What is the answer? Unless you are a full time experienced trader playing with 'cool money,' stop trading. This market is far too thin and given over to gimmicks for the average person to participate. It really is.

Take long term positions that suit your investment situation, and then ignore the noise that the trading desks throw out to shake people from their positions, painting pictures on the charts to shape perception.

Bernanke is still powerful, but the trends in the longer term are even more powerful.

The volatility and gaming in the markets will only get worse, as they are thinly traded and dominated by a few big trading houses that act as they choose, almost with impunity. And if a major default is coming, the volatily will go through the roof.

You have three choices. Buy, sell, or stay out of the daily trade.

And for the vast majority, the last choice is the best, especially while the markets are given over to such inefficiency and corruption. I'm sorry, but that is the way it is. And its a shame on the government, but unfortunately these days the powerful and the elite have none.

If you have the overwhelming urge to gamble with your money, take a trip to Las Vegas or Atlantic City.  The food is better, the drinks are cheaper, and the games, although still stacked against you, are at least relatively honest.

And you don't have to worry about the Casino looting your accounts and safe deposit boxes to cover their own personal gambling losses.