SP 500 and NDX Futures Daily Charts - Russell Rebalancing, Tottering Into the End of 2nd Quarter

Stocks were wobbly today as traders were squaring up ahead of the weekend, and the end of the second quarter next week.

Much of the higher volumes today were technical moves as funds attempted to adapt, and trading desks sought to exploit, the changes in the composition of the Russell 2000.

Much of the trading in this market is not fundamental but index and derivative contingencies driven.

Let's see if anything happens to resolve the Greek debt situation as the deadlines continue to approach.

Have a pleasant weekend.

 

 

 

China, World Reserve Currencies, the SDR, and an Emerging 'Gold Standard'

“Gold has worked down from Alexander's time. When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory.”

Bernard M. Baruch

I thought this was interesting, particularly given the source of the interview at Bloomberg News.

It is short and so a little bit of a light touch perhaps, but a nice overview nonetheless.

 

One little point of fact I would raise is that the comparison of China M2 and the US M2 is not the whole story.  Since China is not a particularly international currency their M2 is probably a significant subset of their overall issuance. 

 

But in the case of the US, M2 does not account for 'eurodollars', which the Fed intentionally stopped tracking some years ago 'to save money' and thereby stopped issuing M3 figures.  This is a significant factor for the world's reserve currency as you might imagine, and a glaring omission in the validityof the comparison.

A key factor would be their price peg mechanism vis a vis the dollar, and any redeemability features.

They must approach this carefully, because the Anglo-American Banks and Funds will be using every trick of the trade if the yuan becomes less restricted, whether it is tied to gold or not.  

 

If they price it too cheaply, and the gold is redeemable, I can see the great flow of gold from West to East reversing to fill the pockets of the naked shorts.

But if they price it too highly, they cold do some damage to the value of their currency for international trade. I am not saying that they can't do it. And I do see them taking many of the steps required to do this sort of things well.

 

The inclusion of China as a reserve currency for global trade and the SDR has been a bubbling issue for a while.

 

The kind of 'pure fiat regime' we have had in place since 1971 is an historical secular event compared to the great stretch of monetary history. Typically the valuation of an enduring, widely used currency is tied to something external that disciplines its creation. 

But that is history, and our new masters of the universe are beyond the limits of human nature, like gods unrestrained, at least in their own minds and theories.

I should add again that I am not so sure about the power and reach of a gold standard at this point, given the exceptionally fraudulent and distorted nature of the financial system and the devious natures of unreformed, felonious denizens. 

 

Moral hazard is the rule of the day and the intentional mispricing of risk almost a benchmark.  I am sure the global financiers are already planning on how exploit such a development in their paper markets.

 

Our economists and bankers may have their faults, but they are the Michael Jordans of financial fraud.

Gold Daily and Silver Weekly Charts - Another Successful Option Expiration For the Insiders

The Bucket Shop managed to hold gold below the 1180 level, thereby allowing most of the calls for the option expiration to go out worthless. Oh well done.

There was intraday commentary about the Greek situation which may be actually coming to some sort of resolution over the next few weeks. You may read that here.

The Supreme Court upheld 'Obamacare' today, from a highly technical objection about some wording.  Despite Scalia's thuggish rant, it really was a no-brainer.  At the end of the day it is better than nothing but not by much. 

It is a hand-crafted piece of legislation from the healthcare and pharmaceutical industry that was spawned by the conservative corporatists and adopted by Barack 'Sell Out' Obama.  Same thing for the TPP by the way, which is why it was so easy for him to team up with the House GOP to defeat his own progressives.  Honor and service go begging when everyone is out for gettin' paid.

I had to laugh when I read that this is the most liberal Supreme Court in so many years.  The Citizen's United boys?  That is about as Orwellian it gets.  

Now that they have joined to pass the corporatist TPP, the Wall Strett Dems and Republicans can get back to role playing their opposition, and whipping their ardent constituencies into frothing yahoos who will continue to go out and vote for their own demise.

In other words, if the rubes keep buying it, they will keep selling it.  Just like Comex precious metal options.

I have included the statistics for the July 15 Comex Gold Calls and Puts from Last Friday when gold was about 1202 in the first two charts below.

I remember when I first looked at the distribution of the open interest on the right of them.  I was stunned at the size of the option open interest because July is not a big or active contract month for gold.  That comes in August.  As you know in my commentary I initially dismissed the significance of this option expiration for gold because of it.

And I remember vividly thinking to myself, 'they are going to take the price of gold down below 1180 into the expiration.  There is nothing to stop them in the futures contracts, no really buying pressure, and the options look like a setup.  Who the heck is writing and buying these things?'

And so here we are.

Obviously the details of exactly who was buying and selling what is the key, as the apologists for the Wall Street kleptocracy like to say, hiding the truth behind the opacity of unfree markets.  But the action was concentrated enough on a 'nothing contract month' to raise a skeptical eyebrow or two.

Have a pleasant evening.

 

 

 

SP 500 and NDX Futures Daily Charts - Slippery Roads For the Rickshaw Economy

Stocks were weak today on the 'better than expected' consumer spending number.

Jobs remain weak, despite the spin about The Recovery™.

There are jobs that will provide a poverty wage, and workers are increasingly insecure in an on-demand, rickshaw economy.

The Greek situation is hardly settled.

The web of lies tightens, slowly but surely.

Have a pleasant evening.

 

The European Union, Greece, the Will To Power, and the Viceroys of Monetary Repression

"Talk to IMF people and they will go on about the impossibility of dealing with Syriza, their annoyance at the grandstanding, and so on. But we’re not in high school here. And right now it’s the creditors, much more than the Greeks, who keep moving the goalposts. So what is happening? Is the goal to break Syriza? Is it to force Greece into a presumably disastrous default, to encourage the others?

At this point it’s time to stop talking about 'Graccident'; if Grexit happens it will be because the creditors, or at least the IMF, wanted it to happen."

Paul Krugman, 'Breaking Greece.'

"Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax."

Even more than she thinks about all those now struggling to survive without jobs or public services? "I think of them equally. And I think they should also help themselves collectively."

How?

"By all paying their tax. Yeah."

Christine Lagarde, Can the Head of the IMF Save the Eurozone 

 

This is no longer about the Greek debt. This is now about a small group of technocrats dictating domestic policy, and alas, enforced 'obedience' from a distant a central authority, using the power of monetary rather than military control.   It is painfully obvious.

So where are the economists?  Where are the analysts who pretend to authority on monetary matters, but who in fact blow with the wind from one incompatible position and crackpot theory to another, wherever their advantage may be?

Why are they not pointing out that monetary and public policy union over a large and diverse geographic area without 'fiscal transfers' between local economies, as exists in the US between the states for example, is inherently unstable, if not barking mad?  

You cannot have one distinct part of a region setting monetary and fiscal policy to suit their own needs, and expect the rest of a vast area with varying economic situations, demographics, and cycles to dance to their indifferent tune.   We know this.

This is not some theory.  This is hard experience, and one of the great issues of the 19th century in the US where New York Banks set monetary policy and drove the economies of the rest of the nation, particularly the agricultural areas of the West, into near rebellion through their callous disregard.

What are these people thinking?  This is not a political and economic union. This is neo-colonialism.  This is degenerating into a despicable parody of the white man's burden.  And they know this. 

So what is the purpose of their experiment?  What are they trying to prove?  That they are superior, apart from the power that they obtain solely from their privileged positions?

I was just listening to Larry Summers, speaking condescendingly (in his mind I am sure it was compassionately) about not trying to change the Greeks and countries like them culturally, but instead bringing them along gradually while offering 'competent administrative assistance.'  

Are you kidding me?  From the serial destroyers of wealth at the EU and the Fed?  What do these fellows imagine themselves to be, the new Viceroys of India?

Are they trying to show that if the world moved to a single currency that the different regions around the globe would still be able to maintain their national sovereignty while operating under a centralized monetary control in the City of London and Wall Street?   Well, if so, they have failed. 

They have shown such a notion to be ludicrous, a mere pretext for the eventual tyranny of an aloof central authority of self-defining and self-deluding 'superior beings,' whose burden it is to bring order and self-control to the weak minded inferior races.  

Inferior races!  This is Greece, the cradle of Western civilization.  This is the country that stood against the onslaught of the fascists, and bought time for the Allies.   This is the nation that was placed under a series of authoritarian puppet regimes by the Truman Doctrine as their thanks.  How convenient are our memories.  

And this is a nation that has been brought very low, into the spiral of a depression, by the monetary chicanery and neo-colonial vendor financing of Brussels and Berlin, through the puppet governments and Western economic hitmen under which they have suffered for far too long.

This is nothing more than the high water mark of a long trend to the will to power, that is as old as Babylon, and evil as hell.

Social change happens slowly at first, and then all in a rush. We have seen this recently in the States, and the rate of change, when it comes, can be breath taking. 

And the things that these hypocrites fear most are being brought about by their clumsy and incompetent pretensions.  There is no irony sweeter than the course of history, and human nature.

 

Gold Daily and Silver Weekly Charts - It Is Not About the Debt, But About Power and Obedience

"This nation is getting remarkably adept at turning its less affluent citizens upside down and shaking them, until literally every single cent falls out of their pockets.  And then it induces them to take on debt so they can be shaken down some more."

Malcom McMichael

"There is a certain irony to Europe starting to worry that austerity is hurting Greece's economy. For years, Europe's leaders have insisted Greece cut deficits in exchange for concessions. Greece's economy has already shrunk 25 percent, and it is having trouble honoring its obligations in part because it has had so much austerity."

Matt O'Brien, Europe Is Destroying Greece's Economy For No Reason At All

As we saw today, the celebrations about the 'capitulation' of Greece were premature to say the least, if not fabricated almost entirely in the case of the financial markets.

 

The amateurs may have gotten carried away by their own theories and predictions but the professionals in the markets and the media certainly knew better.

Greece offered what they labeled 'harsh cuts' for themselves, and crossed some mythical 'red lines.' And I think in sum they put most of the money up.  Whether they would have stuck with it is another matter entirely. 

But what people forget is that as it is now the EU is no longer about money.  It is all about power, and the gathering of more of that power for a central authority, and above all, obedience.    If it were about money, and bailing out their Banks which has largely been done, it would be over already. 

 

Greece is being made an example of for the benefit of the others.  And the liberal use of propaganda and financial terrorism, the stirring the emotions of the people against the Greeks by portraying them falsely, calls to mind, and may even be the prelude to the same sorts of crimes that haunted the twentieth century. 

 

And I would hope that the non-Europeans will take no comfort in this, because these same sorts of arguments and oppression are being used in our own places every day.  We cannot afford to pay these people a living wage.  We cannot provide adequate healthcare to everyone.  We cannot treat everyone the same in the legal system and afford them equal protection under the law.  We cannot afford to treat the mentally ill and the disabled humanely, so let us just throw them on the streets to fend for themselves.   It is too complex, too costly.  Let the markets sort them out.  Our new god will judge.

The Greek debt crisis is about money to the same extent that Germany claiming Czechoslovakia was about protecting native Germans, or the invasion of Iraq was about preventing the use of their weapons of mass destruction.  

 

These are blatant acts of will, the will to power. 

The manipulation of the gold and silver markets this week is mostly about skinning anyone foolish enough to have purchased option calls on the Comex. Given the balance of calls at about 1180 to 1220 coming into this week at 1200, I would say things went pretty much according to plan.

Who in the heck is still giving The Bucket Shop their money?  Because, as the old joke goes, it is the only game in town?

 

The Pope caused a fuss by saying that Christians who invest in the making and selling of armaments to wage aggressive war are hypocrites.  And that financial repression and fraud are the result of setting a love of money over the love of our neighbor.

 

The corporatists and their enablers do not want to hear about that.  The markets are their new gods.  It is never really the money, but the power and the willful pride to it.

 

So too are the hypocrites who make their money by knowingly participating in these control frauds and con games, even if they might say that they are just along for the ride. 

 

They did not mug that innocent traveler or stranger.   They just went through his or her pockets after the fact, they just fenced their property.  They just made a bet on whether the victim would receive a broken arm or a concussion.   All while saying and doing nothing to help.  As Czeslaw Milosz said, 'A true opium of the people is the huge solace of thinking that for our betrayals, greed, cowardice, murders we are not going to be judged.'  

 

And this will end badly, for many.  And especially for those who believe they are winning, again. 

 

The times they are a changing.  But not nearly fast or soon enough. And so history repeats.

Have a pleasant evening.