Thomas Frank: What Happened To the 'Party of the People'

"Inequality is a euphemism, a kind of shorthand, for all of the things that have gone to make the lives of the rich so much more delicious, year on year, for the last three decades.  And also for the things that have made the lives of working people so wretched and so precarious in that same time.

This word inequality. It's visible in the ever rising costs of healthcare and college, in the coronation of Wall Street, and the slow blighting of wherever it is that you happen to live. And you catch a glimpse of inequality every time you hear about someone that had to declare bankruptcy because a child got sick, or you read about the lobbying industry that drives Washington DC, or the new political requirement, the new constitutional requirement that every presidential candidate has to be a billionaire's favorite, or a billionaire themselves.

Inequality is about the way in which speculators, and even criminals, get a helping hand from Uncle Sam, while the Vietnam Vet down the street from you loses his house. Inequality is the reason that some people find such incredible significance in the ceiling height of an entrance foyer, or the hop content of a beer, while other people will never believe in anything again."

Thomas Frank

Change is coming. It must come, because the status quo is unsustainable, and has been so for some time.

How many times will our 'very serious people' with access to the public information channels continue to miss the obvious dissonance of the common reality from the official story that they tell each other about everything from the economy to politics?

At the root of this inequality, hidden as it is in the fog of fine sounding theories and economic models, is simple injustice.

The longer that change is delayed, the longer that the professional class continues to insulate itself, looking down on the broader public with smug contempt from privileged perches, blinding themselves with hypocritical arguments that deny what is happening all around them, the more disruptive that change will finally be.

And, as always, 'no one,' or at least no one who matters in their world, will have ever been able to see it coming.   Because by definition no one who is an insider can ever publicly admit that the insiders have blown it completely, once again.

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason.  But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich."

John Kenneth Galbraith

Gold Daily and Silver Weekly Charts - Opera Buffa

Although there will be a stock option expiry on this Friday, which might call for some shenanigans in the mining stocks, the next big Comex precious metals expiration will be next Wednesday the 25th.

This is for the gold June contract which could be significant.

HSBC, also known as the custodian for GLD, delivered 101,200 ounces of gold yesterday from their house account.  The gold was taken up by the house accounts at Nova Scotia and JPM.

Nothing much happened with silver.

And a chunk of gold was moved, at least on the books, in the warehouses from HSBC to JPM as well.

Both the precious metals and equities are going to break up or down sometime in the next seven to ten days.   At least this seems to be the case judging by the 'tension on the tape.'

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wibbly Wobbly

Stocks have been chopping sideways in a trading range for about 8 days now.

This coming Friday is a stock option expiration.

Have a pleasant evening.

Above the Law: The Age of Impunity and the Credibility Trap

"A credibility trap is a condition in which the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves."

The bureaucrats, politicians, professional enablers, and financial elite are so intricately complicit in, and so benefited by, the broken system which we have now that they cannot talk about the systemic problems that are driving the real economy into a perpetual stagnation. They may talk a good game, and pledge themselves to reform in passing, but quickly turn the conversation to some emotional distraction, some other group of people to blame, some other social cause, anything but the serious subject of substantial financial reform.

They are very much a part of the problem, if not at the heart of it.

They cannot engage in effective reforms because in doing so they would:
a) indict themselves and their predecessors and colleagues, and impugn their reputation for competency and/or integrity, and
b) would hamper their very lucrative careers in a system that they cannot afford to change or meaningfully reform.

There are very serious consequences for speaking the truth these days.  Insiders do not speak ill of other insiders, or they lose access to information and power.  This explains much of our current problems.

Perhaps the slogan for these pampered princes and princesses should be 'it may be a rotten, broken system, but I am personally doing just fine by it.'

How can one expect real reform when the privileged control the mechanisms of power and regulation, including the very selection process that chooses which candidates can even run for public office?

This is the credibility trap.

The Age of Impunity
Jeffrey Sachs
May 13, 2016

THE PANAMA PAPERS opened yet another window on the global system of financial corruption, showing how political leaders and businesses use shell companies in secrecy havens like the British Virgin Islands and many US states to evade taxes and hide corruption and other crimes.

Yet the system of corruption depends on another factor beyond secrecy, one that is perhaps even more important: impunity. Impunity means that the rich and powerful escape from punishment even when their malfeasance is in full view.

Impunity is epidemic in America. The rich and powerful get away with their heists in broad daylight. When a politician like Bernie Sanders calls out the corruption, the New York Times and Wall Street Journal double down with their mockery over such a foolish “dreamer.”

The Journal recently opposed the corruption sentence of former Virginia governor Bob McDonnell for taking large gifts and bestowing official favors — because everybody does it. And one of its columnists praised Panama for facilitating the ability of wealthy individuals to hide their income from “predatory governments” trying to collect taxes. No kidding.

Our major institutions, the ones that should know better, are often gross enablers of impunity...

Read the entire article here.

Gold Daily and Silver Weekly Charts - Plus C'est la Même Chose - Restless

"That we are overdone with banking institutions which have banished the precious metals and substituted a more fluctuating and unsafe medium, that these have withdrawn capital from useful improvements and employments to nourish idleness, that the wars of the world have swollen our commerce beyond the wholesome limits of exchanging our own productions for our own wants, and that, for the emolument of a small proportion of our society who prefer these demoralizing pursuits to labors useful to the whole, the peace of the whole is endangered and all our present difficulties produced, are evils more easily to be deplored than remedied."

Thomas Jefferson, 14 March 1810

And the remedy was not found for this corruption of the banking system cited by Jefferson until the coming of 'Old Hickory,' who although with Jefferson is sometimes reviled by the oligarchs and statists of today, nevertheless brought reform and relief to the general public, for whom they never broke their faith or betrayed their confidence, despite all the failings and shortcomings of their times.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

There was intraday commentary here.

"In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society — the farmers, mechanics, and laborers — who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their government.

There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing."

Andrew Jackson, Veto of the Second Bank of the United States

Have a pleasant evening.

Related: Franklin Roosevelt on Andrew Jackson

"You have made us for Yourself, O Lord, and our hearts are restless until they rest in You." - St. Augustine of Hippo

SP 500 and NDX Futures Daily Charts - Purposeful Mispricing of Risk

The charts seem fairly clear.

The mispricing of risk continues.

The rationales for this are increasingly thin and self-serving.

The consequences are going to be historic.

Have a pleasant evening.