Charles Biderman and Chris Martenson: The Problem With Rigged Markets

Here is a fascinating Chris Martenson interview with Charles Biderman.

This interview highlights the Ponzi-like, artificial nature of the current stock market rally.

It reminds me very much of the 2003-2007 bull market that ended in tears. I have included a chart of what I called at the time 'The Great Reflation' at the end.

Charles Biderman: The Problem with Rigged Markets
Friday, March

Gold Daily and Silver Weekly Charts

The only thing surprising about the precious metals market is how few people really understand what is going on, even at this stage of its bull run.

SP 500 and NDX Futures Daily Charts - Paint Dries on End of Quarter

This is a liquidity driven market with very thin underpinnings.

Have a pleasant weekend.

Stanley Haar Reviews the Latest Developments on MF Global - Edith O'Brien's Gioconda Smile

Edith O'Brien, 46 year old Assistant Treasurer at MF Global, smiles enigmatically throughout her Congressional
appearance during which she pled the Fifth Amendment to every question.

I am given to understand that Edith has been working for the MF Global Bankruptcy Trustee.
I hope she is not counting on a bonus.

MF Global's Edith O'Brien Talking Deal with Justice.



Edith O'Brien's

Who Captured the Fed?

Future generations will look back and ask themselves, 'How could they not see what was happening? Were they blind?'

The Fed is not the only problem here, but a key enabler. White collar crimes and fraud flourished amongst the robber barons even in the days of the gold standard. It just was not as convenient, as easy, to defraud the people en masse through the debasement of the currency.

The

Net Asset Value Premiums On Certain Precious Metal Trusts and Funds

Rather modest premiums even in silver.

Taleb: How to Prevent Other Financial Crises

Nassim Taleb presents a very simple principle for avoiding financial crises.

But sometimes the simplest principles are the most difficult to implement.  For example:
Thou shalt love the Lord thy God, with your whole heart, and your whole mind, and your whole strength, and love your neighbor as yourself.  This is the whole of the law.But even as we fail to achieve its simple perfection, the

Clear and Present Danger: Why We Must Break Up the Too Big To Fail Banks Now - Dallas Fed

What makes the attached essay on the US banking system so striking is not so much what is being said,  since others have said it before, but rather, who is saying unequivocally that the status quo in the US banking system presents 'a clear and present danger' to the national economy.

"More than three years after a crippling financial crisis, the American economy still struggles. Growth

Gold Daily and Silver Weekly Charts - Silver Refused to be Used

Tomorrow is the end of quarter for the funds and prop desks.

Here is where we are on the options calendar.

I think it can help one to understand the relative weakness of gold as compared to silver.
March 27 Comex April gold options expiry
March 27 Comex April copper options expiry
March 28 Comex April miNY gold futures last trading
March 28 Comex March silver futures last trading day
March

SP 500 and NDX Futures Daily Charts - Another Light Volume Wash and Rinse - Quarter's End

Durable Goods, Stock Market, Fed in the Driver's Seat & Why
by Ilene

After reading Lee's article, I asked him, "Why is it the Fed's job to be propping up the stock market? Doesn't it make the whole market a Fed-controlled game, rather than what it started as - a mechanism for companies to raise money and people to invest in public companies?"

Lee answered: "Bernanke has made no bones about it

Such a Parcel of Rogues in a Nation

History's recurring and resplendent rhymes.

Fareweel to a' our Scottish fame,
Fareweel our ancient glory;
Fareweel ev'n to the Scottish name,
Sae famed in martial story!
Now Sark rins over Solway sands,
And Tweed rins to the ocean,
To mark where England's province stands—
Such a parcel of rogues in a nation!

What force or guile could not subdue
Thro' many warlike ages,
Is wrought now by a

MF Global: Forbes Sums It Up Well, And My Take, 'Abandon All Hope, Ye Who Enter Here'

"Lasciate ogne speranza, voi ch'intrate."

Dante, The Inferno
Forbes has been head and shoulders above the rest of the mainstream media in reporting on MF Global.

Francine McKenna provides an excellent summation of the entire three part scandal.

Part one. There was the conscious transferring of customer assets to meet a margin call by JP Morgan in London in what was intended to be an 'over

Blueprint For Accountability: The Wall Street - Washington Connection

A panel at Georgetown University, called "Blueprint for Accountability," is a wide-ranging discussion about Wall Street that includes Eliot Spitzer, Ron Suskind, OWS activist Jesse LaGreca, and Matt Taibbi.

Culture Project: Blueprint for Accountability from Culture Project on FORA.tv

Gold Daily And Silver Weekly Charts - Jeff Christian Calls 'The Top' In Gold

In one of the more bullish developments for precious metals the CPM group has announced that 'The Top' is in gold.

Jeff Christian and CPM Calls 'The Top' In Gold

Given their track record in forecasting the metals this is rather bullish.

SP 500 and NDX Futures Daily Charts

Wash and rinse day within the trend as indicated intraday.

The sharp downward reaction was attributed by the spokesmodel to the miss on the GDP report, at 2.2%, which had me choking on my coffee. I checked and it turns out he just misspoke.

He obviously meant the durable goods order number which came in at 2.2% rather than 2.5%. Durable Goods is notoriously volatile and means little. The

MF Global Testimony Has Begun - Watch Now on C-Span

MF Global Testimony Live on C-Span

Moyers and Bacevich: Endless War

"As prophet, Reinhold Niebuhr warned that what he called 'our dreams of managing history' — dreams borne out of a peculiar combination of arrogance, hypocrisy, and self-delusion — posed a large and potentially mortal threat to the United States. Today we ignore that warning at our peril.

Since the end of the Cold War the management of history has emerged as the all but explicitly stated

SP 500 June Futures Daily Chart Close Up

The larger trend is intact as the market retreats from a short term overbought condition.

Within almost every trend there is a short term 'wash and rinse' cycle.

Let's see if the primary trend holds. It has almost grown sufficiently to be called 'the Bernanke Bubble.'

Banks Hold a Billion In Overseas Customer Money

If the financial crisis were more widespread how much worse do you think these customers would be faring?

Banks Hold $1 Billion in MF Global U.K. Cash, KPMG Says
By Kit Chellel
March 28, 2012

About $1 billion of MF Global Holding Ltd. U.K. clients’ money remains locked away in other financial institutions five months after the brokerage’s collapse, administrators KPMG LLP said.

KPMG has

Little Known Rule Gives Wall Street Ability To Misuse Overseas Customer Money

The wall of spin shifts and ebbs with every day, retreated and advancing, always to hide the truth.

Professionals in the industry read these things and either laugh themselves silly, or continue to make moves to safeguard their own funds. And I have told you that is what I have done for myself.

I did forecast about four or five years ago that when things started to fall apart, the foreign

Warren Pollock: Overall Derivative Market Contracts - Warning Signs

I have spoken before about the fallacy of netting and the danger of instability in the derivatives market.

Critical Mass: The Mispricing of Derivatives Risk and How the Financial World Ends

Here is Warren Pollock's take on this and on the recent contraction in nominal value of the global derivatives market.
"Ponzi schemes can go on for a long time under the mask of expansion; these frauds

Gold Daily and Silver Weekly Charts

"We have entered the most favourable era for gold prices in our lifetime, and the share prices of the great mining companies will eventually outperform bullion prices. Central banks are printing money and creating liquidity beyond the forecasts of all but the most paranoid goldbugs a year ago."

Don Coxe, Bank of Montreal
Updates are early this evening because of a prior commitment.

SP 500 and NDX Futures Daily Charts

The markets paused today.

Charts are early because of a prior commitment.

Franklin Roosevelt's First Inaugural Address

"And finally, in our progress towards a resumption of work, we require two safeguards against a return of the evils of the old order.

There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people's money."

Franklin Delano Roosevelt, First Inaugural Address, 4 March 1933
The year 1933 was a pivotal year in modern history.

A Brief Look at the 2012 French Political Landscape

I doubt that most non-French readers will know the complete cast of characters, but the video is so well done and funny in and of itself that it is worth showing. Its not Pixar, but I was impressed. And the caricatures cross the language barrier.

I would like to see something as witty and clever done with the American or British cast of characters.

Tavakoli on the Ongoing Fraud in the Financial System 'Epitomized By MF Global'

Janet Tavakoli and Lauren Lyster discuss the widespread control frauds that permeate the US financial system, continuing after the financial crisis and Dodd-Frank, and epitomized by the reckless disregard for the employees and customers at MF Global as led by Jon Corzine.

Tavakoli has one word for the 'CEO defense' being parroted by the mainstream US media in this case. "Nonsense."

She has

Barofsky: MF Global Still Looks Like a Fraud

I doubt very much justice will be done, unless Edith O'Brien cuts a deal for immunity and has some proof of what was said and known by the executives of MF Global.

The foundations for the cover stories have been well laid already in the press.

Gold Daily and Silver Weekly Charts - A Burst of Liquidity Expectations Sparks a Flight to the Metals

A sharp rally in the metals as Bernanke dispels the deflationary delusion.

SP 500 and NDX Futures Daily Charts - The Bernanke Bubble

A big rally, but on remarkably light volume.

Bernanke is running the presses, but pumping another paper asset bubble that primarily benefits the already wealthy.

As noted earlier today, I think we are seeing the American financiers starting to leave Europe and Asia. If this trend continues, look for the currency war to enter another phase in which its effects will be unmistakable, even for

NY Times Says They Saw an Email that Says Corzine Did Not Know, Was Apparently Misled

Now it starts to get really interesting.

Of course Jon Corzine did not know. He's only the CEO.

Leak, and counter-leak.

He said.  She said.

Check your closet floor, Edith. What were you wearing that day?

You look like the designated patsy.

One thing that the email seems to indicate, however, is that at least $175 million of the customer money was never missing or vaporized, but was

Gold Futures Daily Chart - Intraday With Key Support and Resistance

The short term trend is downwards and in red.

The longer term trend is upwards and in green.

The very long term trend is steep and pointing to much higher prices.

The support and resistance on the chart is rather easily seen.

I would put the key levels in blue.

JPM's Asia-Pacific CEO Leaving the Firm

The spokesmodels were crying insipid crocodile tears for Gaby this morning. "With all this regulation, it's just not fun anymore."

Yes, even plunder can become tedious.

Except I think this is part of a greater trend.

The American derivatives dealers and agents of fortune are leaving Europe and Asia, as the currency wars intensify, and the Banksters are sent home.

WSJ
J.P. Morgan's

Bernanke Spurs Stock Market with Pledge to Inflate the Currency

The problem with this approach is that only the wealthy can gain the greatest benefit from it, and the real economy picks up the scraps.

The banks can borrow at almost zero, and buy treasuries paying two or three percent, and the wealthy can continue to buy income producing assets and other companies to strenghten their monopolies.

There will be no sustainable recovery until the system is

Martin Luther King - On Civil Disobedience

Excerpt of Transcript of the Sermon "But If Not" by Martin Luther King

O Nebuchadnezzar, we do not need to defend ourselves before you in this matter. If we are thrown into the blazing furnace, the God we serve is able to save us from it, and he will rescue us from your hand, O king.

But if not, even if he does not preserve us, we want you to know, O king, that we will not serve your gods or

Weekend Reading for Sunday 25 March 2012

“We are slow to master the great truth that even now Christ is, as it were, walking among us, and by His hand, or eye, or voice, bidding us to follow Him. We do not understand that His call is a thing that takes place now. We think it took place in the Apostles' days, but we do not believe in it; we do not look for it in our own case.

God's presence is not discerned at the time when it is

NY Times Floats the Corzine 'CEO Defense'

As the NY Times notes in its expansion of the statements of Corzine's attorney, it is going to be a bit hard to pin Mr. Corzine down in the case of MF Global, because it is unlikely that he sent an email to Ms. O'Brien saying "Please meet our margin call with funds stolen from the customers' accounts."

The defense will be that Mr. Corzine, who had been personally running the prop trading

W. C. Handy: Father of the American Blues

Listen to the PBS Radio Documentary W. C. Handy's Blues.

"William Christopher (better known as WC) Handy didn’t invent the blues -- but he heard them in a deep and understanding way. He figured out how they worked. He wrote them down, arranged them, and did the business of bringing them to the world.

Handy’s classic “St. Louis Blues” is one of the most recorded songs ever. But even though

Five Simple Rules to Remember

It is amazing what one can find on the Internet.

I was looking for a quote about suffering and love, to be able to source it, and I found this bit of foolishness from 2001, an old posting from a chatboard, nine days before Sept 11, 2001.

I had recently 'retired' from corporate life, and was just starting to act on some personal plans that were to be changed radically by unexpected events.

Corzine Gave 'Direct Instructions' To Transfer $200 Million From Customers to JPM London

Jamie's crew is probably safe, but it looks like Jon is facing his 'Kenny Boy' Enron moment, although he may find some shelter in the Sargeant Schultz defense. I know nothing. NOTHING.

I guess the fellows who said that they had found nothing incriminating in the emails forget to mention this one.

Edith O'Brien's appearance before the Congress just became potentially more interesting,

Gold Daily And Silver Weekly Charts - HFT Distorts Commodity Prices

At the close there was breaking news regarding an email at MF Global identifying Jon Corzine as having ordered the customer funds transferred to meet a margin call. There is a more complete discussion and story of that topic above.

Gold and silver bounced back today, but they still finished up below key resistance. We'll have to see if they can continue to gain their footing and move higher

SP 500 and NDX Futures Daily Charts - Breaking News, MF Global 'Smoking Gun'

A dull day with only a little excitement as BATS exchange went IPO, and flubbed its own price quotes trading it for pennies, and a major error in APPl to the downside set off circuit breakers.

Other than that a snooze, with the usual uplift into the afternoon close after having been down most of the day.

Have a pleasant weekend.



"...How vainly seek
The selfish for that happiness denied
To

Vanity Fair: Jon Corzine's Riskiest Business

This is an interesting article on MF Global and Jon Corzine more broadly.

It is the story of industry wide greed, influence peddling, and the weakening of the regulatory agencies in a combination of powerful persuasion and anti-regulatory ideology aggressively promoted by money from self-serving financial interests.

It is good to remember that attempts to regulate and reform the industry are

In Honor of the 70th Anniversary of the Munich Students Movement - 3rd Leaflet

I have been remembering the 70th Anniversary of Die Weiße Rose, the Munich Students Movement and the series of leaflets which they produced and distributed in Nazi Germany during the height of the reign of terror and the madness.

You may read more about these brave souls here and here.

The two saddest words in any language are 'If only...'

The White Rose
Third Leaflet
Munich, 1942

Salus

Bill Black on the MF Global Financial Collapse and Aftermath - Obama's Hurricane Katrina

Bill Black is interviewed on the Capital Accounts Show on RT.

I would be glad to show a video of Bill Black discussing important financial matters such as this on a mainstream US video program but there don't seem to be any.

There were a number of disturbing things in Gary Gensler testimony to the Congress about the role of the CFTC in this. Some of these things are discussed here.

I doubt

Taibbi: Gangster Banks Keep Winning Public Debt Business - Surprised By Joy

Matt Taibbi is out with a double barrelled critique of Bank of America and JP Morgan.

It is a very important issue, vital to the public good, and it receives almost no attention from the mainstream media or the political candidates.

Why are a few large financial institutions, the recipients of enormous amounts of public monies, able to maintain an active hand in the public debt markets after

Gold Daily and Silver Weekly Charts - Welcome to the Jungle

"It is critical that the derivatives markets – both futures and swaps – work for hedgers, the farmers, ranchers, producers and commercial companies in the real economy. Futures and swaps markets allow them to lock in a price and focus on what they do best – servicing customers, producing products and investing in our country’s future. As it’s the hedgers in the real economy – the non-financial

SP 500 and NDX Futures Daily Charts - Poltergeist, the Presidency

The political demonstrators of days gone by, when people actually cared about things,  assumed a posture of non-violence.

The leadership class of today has adopted a culture of general non-involvement in almost everything about what they have agreed, or even sworn, to do, except collecting enormous paychecks for not doing it, of course.

When anything goes wrong, none of the leaders knows

MF Global's Edith O'Brien Comments on the Safeguards of Customer Segregated Accounts

This is from a transcript of the CFTC Roundtable Discussion of Individual Customer Collateral Protection on Oct. 22, 2010.

As you may recall, Edith O'Brien is the Assistant Treasurer of MF Global whom Jon Corzine identified in his own Congressional testimony as the key manager over fund transfers of monies, and who has been recently subpoenaed to appear before the House.

In talking down to

Net Asset Value Premiums of Certain Precious Metals Trusts and Funds

The premiums are rather low by historical standards.

Did the SEC Facilitate the Fraud at MF Global?

I did not treat this particular issue of the MF Global scandal sufficiently when I first became aware of it thinking, perhaps foolishly, that additional facts and information from the financial press and the investigation would be forthcoming.

That does not appear to be the case. So here is the story that suggests that the SEC had been providing MF Global special treatment to mask its

Gold Daily and Silver Weekly Charts - Heart of Gold

Anatomy of a Silver Bear Raid - ZeroHedge

SP 500 and NDX Futures Daily Charts - Por Mi Amigos y Amigas

House Subpoenas MF Global's Assistant Treasurer O'Brien

As the article notes, Edith O'Brien oversaw the fund transfers at MF Global, and almost certainly knows exactly what transpired, and who knew what about the misuse of the customer funds.

Reports have stated that Ms. O'Brien has been refusing to cooperate with investigators unless she is granted immunity from prosecution. And as the article notes, she is likely to plead the Fifth Amendment in

Gold Daily and Silver Weekly Charts - Classic Bang Into the Close of the Comex

Intraday commentary here.

As I said of stocks, despite their bravado, the fear runs deep in New York and Washington these days.

William K. Black has a new piece out called "The Criminogenic JOBS Act."

Apparently the only jobs that the US oligarchy can generate these days are fraud related.

And it appears that the Lady Hilary has backed off the US threat of imposing sanctions against those

SP 500 and NDX Futures Daily Charts - Another Day, Another Low Volume Uplift

I think we might actually go down hard at least once before the end of the month. But that is hard to say.

Despite their bravado, the people in New York and Washington seem very afraid these days.

The Continuing Rhyme of History: "The Order of the Star Spangled Banner"

"As late as 1850, the two party system was, to all outward appearances, still healthy. Both the Democrats and Whigs were able to attract support in every section and neither party was able to win more than 53 percent of the popular vote. Then, in the space of just five years, the two-party system disintegrated in response to two issues: foreign immigration and the reemergence of the issues of

Silver: 'Banging the Close' of the Comex Session

There was a fairly heavy-handed smackdown of silver into the close of the Comex day session.

Maybe four or five years from now the CFTC will do something about it as they did with the MF Global trader, who had been 'banging the market close' for a couple of years, when they wanted to show they were finally doing something about the markets.

Except he was just 'one of the usual suspects', and

Martin Luther King: 'It Is Time For All People of Conscience To Call America To Come Home'

"...A true revolution of values will soon cause us to question the fairness and justice of many of our present policies. On the one hand, we are called to play the Good Samaritan on life's roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be changed so that men and women will not be constantly beaten and robbed as they make their journey

Melin and Koutoulas: Did JP Morgan 'Loot Accounts' At Lehman and MF Global As Bankruptcy Tactic

It is one thing for an organization to use its privileged position to seize assets in a firm that it knows is going to go bankrupt. That is certainly a possible crime under the fraudulent conveyance laws, as well any violations of fiduciary responsibility.

If a lawyer, for example, knows that a client is going to go bankrupt because of their privileged view of the situation, do they have

The US Government Is Where Everybody, Every Policy, Everything Is Now For Sale At the Right Price

Tim Price puts things in perspective, and includes an extended quote from Doug Noland's excellent Credit Bubble Bulletin.

"I have no problem with the staff of Goldman Sachs earning millions...I have no problem with their clannish, hubristic, insular culture, having never wanted to work for the Moonies.

My main problem with Goldman Sachs is that if it operated like any other business in the

Gold Daily and Silver Weekly Charts - New Moon, New Year, Dollar Oil

A slam in the early morning, a sharp rally on much higher volume, and then sideways on light volume all afternoon.

Over at KWN The London Trader reminds us that:
“This is when you see things turn and the manipulators rip it to the upside. There are buy stops on the upside that are attractive for them to target at this point.

Traders are also watching the US dollar now because tomorrow the

SP 500 and NDX Futures Daily Charts - Another Low Volume Drift Higher for Equities

The point gain in the SP futures was equal to the point gain in the DJIA.

End of quarter coming. We'll probably go down at least once before they start the end of quarter tape painting, assuming nothing else happens.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Opening the Fraud Gates: New JOBS Bill 'A Colossal Mistake of Historic Proportions'

"The premise is that the economy and startups are being held back by regulation, a favorite theme of House Republicans for the past 3 ½ years – ignoring completely the banking crisis that caused the recession...

The bill’s proponents point out that Initial Public Offerings (IPOs) of stock are way down. That is true – but that is also exactly what you should expect when the economy teeters on

Labor and Dividend Income From 1959 - 2011

This is what some of the US industrialists and Wall Street have defined as 'Perfect Capitalism.'

The implications of this model are mercantilism and neo-colonialism, for the obvious reason that the process of subordinating wages to narrow profits erodes domestic market demand.

The only sort of schemes that must keep expanding in order to maintain their sustainability are essentially Ponzi

Damning the Demimonde: Thomas Frank Versus the Oligarchs' Enablers

The defense being offered for Goldman Sachs, and Wall Street, is that since they are serial cheaters and everyone knows it, the victims should only blame themselves for thinking otherwise, and doing business with them, and being cheated.

I have heard this one quite a bit lately. When someone from the Street offers this defense it is a bit ironic and almost funny.

If you are a member of a

A Nation of Princelings and Paupers

Max Keiser has made a simple but absolutely brilliant observation about crony capitalism.

There is a certain prevailing attitude being broadly promoted that if a person can pay for something, then they should have it, and if they cannot pay for it, then they can't have it.

This is a fundamentally valid idea for ordering the discretionary aspects of an economy. Like most principles it is based

How America Avoided A Fascist Coup in 1933

The plot was exposed by a highly decorated Marine Corps veteran and war hero, Major General Smedley Butler.



BBC Documenary on 'The Business Plot' of 1933 in which a powerful group of wealthy Americans attempted to set up an organization patterned on the French fascists and German Storm Troopers and overturn democracy and the Constitution.



If they had succeeded, and formed an alliance with

Harvard Business Review: Psychopaths on Wall Street

I think that the salient point in all this, the technical details of percent and depth of psychopathy in the US financial industry aside, is that self-regulation is at best a vulnerable strategy in any human concern involving trust, but is absolute folly in an industry where the emphasis and incentives are based on the ruthless pursuit of performance at any cost, and where such behaviour is

When the Abuse of Insider Information and Control Grows So Large as to Become the Market

"This is a ‘bubble ready’ financial system, and will continue to produce bubbles until it is reformed. The financial sector is primarily a wealth transference mechanism. And with the productive economy foundering because of gross mishandling over the past twenty years or more, the sector is transferring wealth from the future of the economy in the form of Treasury debt to the monied interests on

Are the Regulators Allowing Banks To Act on Privileged Information with MF Global Customers?

Francine McKenna writes the blog, Re: the Auditors. I like her writing quite well, as it is clear and concise, and enjoy the depth of understanding of the accounting profession she brings to bear on the issues of the day.

In this guest post at the blog BankThink of The American Banker she illuminates the ongoing mistreatment of the MF Global customers whose money was stolen three times:

Gold Daily and Silver Weekly Charts - the 'Five Point Palm Exploding Heart Technique' of Pai Mei.

"The failure was and is of the entire market and the rules upon which it is built. For the Liabilities side of each bank is connected to and to a large extent made up of the assets side of all the other banks. And the Assets side of every bank is tied to and, in large part, made from from the liabilities side of all the others. When people talk of ‘the Market’ it is an abstraction only. There is

SP 500 and NDX Futures Daily Charts - Triple Witching Calm Before Next Weeks CDS Auction

An exceptionally calm triple witching day. They took the market to the levels that they wanted and left them there.

I have now rolled over the futures charts to the new front month of June. So some of the levels may be a bit different.

The SP 500 futures finished just below 1400. There was a negative divergence in tech.

Have a pleasant weekend.








Lessons from a Master Investor

Episodes of Hyperinflation from Diocletian to Bernanke - How It Might Unfold Today

Both hyperinflation and protracted deflation are extraordinary economic events. And it is telling that they are much more common in the 20th century and after than in all preceding recorded history. Ah, the joys of modernity.

While prices can certainly increase based on fluctuations in supply and demand, by definition 'a general price inflation is an increase in the money supply without a

One Half of Italy's New Sales Tax Receipts Go Directly to Morgan Stanley in New York

Complex derivatives deal from the 1990s backfires on Italy.

Bankers win.  The people pay.

One of my less scrupulous bosses once told me, "The way I like to win a race is to punch the other guy in the stomach and then yell, 'Let's race.'"

And I replied, "Well that may be all well and good, but if the guy you punch is Italian or Greek, I would not stop running at the finish line."

He was a

Barclays and Others Seeks Bulk Claim Purchases from MF Global Customers

I have spoken to one customer of MF Global who has already accepted an offer of 91 1/2 cents on the dollar for his claims. He could no longer bear the waiting and the uncertainty, and wanted to move on. Others have indicated that they are going that to accept offers as well.

Although the sums of money involved may not seem substantial to those on Wall Street and in Washington, to the retail

Bill Moyers Journals: 'Crony Capitalism' Part Two with Gretchen Morgenson

Here are a few of the reasons why there is no genuine financial reform, and as a consequence, no robust, sustainable recovery.



This is part of the same show in which Bill interviewed David Stockman.

I was looking at some figures today, and the Obama recovery is very weak compared to the performance of the Roosevelt Administration for example.

But this makes sense. Obama is more Hoover

Tavakoli: An Anecdotal Peek at the Mispricing of Counter Party and Derivatives Risk

Here is an entertaining excerpt from Janet Tavakoli, Collateralized Debt Obligations & Structured Finance, John Wiley & Sons, 2003. She reiterates the incident in the expanded second edition, Structured Finance, 2008.

This is a nice example of the mispricing of risk and the related fallacy of netting in the derivatives markets which I discussed the other day, Critical Mass: The Mispricing of

Gold Daily and Silver Weekly Charts - A Rendezvous With Destiny

"In this world of ours, in other lands, there are some people who, in times past, have lived and fought for freedom. And they seem to have grown too weary to carry on the fight. They have sold their heritage of freedom for the illusion of a living. They have yielded their democracy.

I believe in my heart that only our success can stir their ancient hope. They will begin to know that here in

SP 500 and NDX Futures Daily Chart

“While the financial crisis destroyed careers and reputations, and left many more bruised and battered, it also left the survivors with a genuine sense of invulnerability at having made it back from the brink. Still missing in the current environment is a genuine sense of humility.”

Andrew Ross Sorkin

As a reminder, tomorrow is the March triple witch.

Deutsche Bundesbank's External Position in the EU: Saving Buba

External Position of the Deutsche Bundesbank in the EU




Source: Deutsche Bundesbank

Trustee To Payout 80 Percent: Goldman and MF Global: Where the Customer Is Always Ripe

I have given up any hope that we will see justice in this scandal, but I remain optimistic that the poor customers will receive close to 90 percent of their money back over time.  And this seems to be the assumption behind the operations of the vulture funds, who have been recently supplied customer lists by KPMG.

While the Obama Administration and the Congress remain complacement about fraud

Real Estate 4 Ran$om: Role of Speculation in Financial Collapse - The Recurrency of Fraud

This is an Australian produced film, but the principles carry.

I would not focus on land to the exclusion of financial assets like stocks, and other vehicles for producing income and capital gains, that allow speculators to game the system.

The US internet bubble for example, had nothing to do with land per se. And the Florida land boom in the US preceded by several years the stock market

Trustee Sells the MF Global Customers' Gold and Silver to Jefferies and Company

Who says that Wall Street does not take care of their customers.

The clients didn't have to do a single thing for themselves. They didn't have to decide when to sell, or to whom, or at what price. And they did not even have to hire a trustee to liquidate their assets.

This is what they call 'end to end' customer service.

WSJ
Jefferies to Buy MF Global Precious-Metals Assets
By PATRICK

CFTC Charges MF Global Trader With 'Banging the Close' - Four Years Ago

Bart Chilton and the CFTC have charged an MF Global Trader with 'banging the close' in the palladium and platinum markets, four years ago.

Four years is a long time. That is about the time they started their intense investigation into the silver market manipulation that has been slow cooking like a pork shoulder in a smoker. We can't hardly wait.

Not to appear too cynical, but this sounds

Gold Daily and Silver Weekly Charts - Bonus Army and Business Plot

Another bear raid.

As a reminder this is the big 'triple witching' option expiration for stocks this week. The miners are fair game.

As you may recall, there was a significant amount of civil unrest in 1932, which was a presidential election year.

The Bonus Army of WW I veterans occupied Washington until they were forcibly dispersed by the US military led by Douglas MacArthur. The veterans

SP 500 and NDX Futures Daily Charts

Just another glorious day in the Pax Americana.

At least we have the Republican primary for comic relief. 

I heard one of the funniest lines of the season so far from Chris Matthews.
"When you watch footage of Mitt Romney on the campaign trail in Mississippi and Alabama, he looks like Prince Charles on a royal tour of New Guinea."It is remarkable how the Party and their Media ignore Ron Paul.

Currency Wars: Are American Derivatives Dealers Leaving Europe?

Or possibly being invited to leave?

It is probably nothing, but I could not help but notice that Mr. Greg Smith, who has famously resigned from Goldman Sachs and company, was
"an executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa."
Perhaps in addition to the anger he felt in the spoiled climate of his firm, Mr. Smith was

David Stockman on Crony Capitalism

David Stockman on crony capitalism.

David should know, because he has been knee deep in serving the monied interests and profiting from their activities for most of his life. He often strikes one as a very sly and self-serving 'reformer.' And he may be a Judas goat.

While I do not agree with his characterization with the extent of the panic that froze the paper markets necessarily, and do

Smith: Why I am Leaving Goldman Sachs

"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control."

John Dalberg Lord Acton
This is an interesting commentary not only on Goldman but on the entire Anglo-American banking cartel as well. An executive at the 'bank' has resigned in moral revulsion.

But Wall Street need not fear those who refuse, in acts of

SP 500 March Futures Shorter Term Chart - Once More Into the Breach Dear Ben

We're at the top of the longer term channel. There is still some room in the short term.

Or Ben could just throw caution to the wind and go for bubble number three.

“The world says: 'You have needs -- satisfy them. You have as much right as the rich and the mighty. Don't hesitate to satisfy your needs; indeed, expand your needs and demand more.'

This is the worldly doctrine of today.

And

CME Clearing Europe Limited Pulls Up Stakes

"CME Clearing Europe has been established to offer greater choice of central counterparty clearing infrastructure to users of derivatives outside the US. CME Group has developed systems and operational and risk management standards that support its position as the world's largest and most diversified derivatives marketplace; and since 2002 has extended its clearing in the US to cover OTC

CFTC Fines Goldman Clearing $7 Million For Account Supervision Failures

Apparently Goldman Clearing turned a blind eye to 'questionable' (using false statements to enhance performance, and carrying negative capital balances) activity by a client broker in order to accept the fees.

CFTC
March 13, 2012
CFTC Orders Goldman Sachs Execution & Clearing, L.P., a Registered Futures Commission Merchant, to Pay $7 Million for Supervision Failures in Handling Accounts it

Gold Daily and Silver Weekly Charts - FOMC Raid and Bonus Time for Favored Banks - Winning!

I had expected a rough time for the metals today, as is often the case with an FOMC announcement day.

But a decline turned into a smackdown, as JPM chose to make their own announcement of their stress test results and shock a quiet market. I almost think that this was Jamie Dimon's way of telling James Koutoulas, and the MF Global customer, to shove their open letter where the moon don't

SP 500 and NDX Futures Daily Charts - JPM Front Runs the Fed

JPM chose to front run the Fed's stress test announcement scheduled for tomorrow, and dropped their own announcement, along with a rich stock buyback and a dividend increase, into a quiet market this afternoon.

The Fed heard their master's voice, and changed their plans to release the results after the close today. Bernanke has repeatedly shown he is incapable of independent judgement as a

JPM Front Runs the Fed, Raises Dividend, Announces $15B Stock Buyback - MBA's Are Passé

At least two of the big US banks have decided to pre-release the news, intended for a formal release on Wednesday, that they have 'passed' their Fed stress tests.

Bending the rules and front-running the Fed is what Wall Street does best, and no one does it better than JPM. Do you think their traders were short the market? lol.

Note: Because of these pre-announcements and the objections of

MBF Clearing Sued By CFTC For Failing to Segregate Customer Funds at JPM

MBF Clearing describes itself as:
"widely-recognized for our preeminent role within the global futures markets, and for being one of the Industry’s leading futures commission merchant (FCM). Our status in 2012 has changed from Clearing to Non Clearing FCM with a clearing relationship with FC Stone.

Our presence extends across all major exchange-traded futures markets, including energy, metals,

John Williams on the Retail Sales Number - A Brief Interlude on Hyperinflation and Deflation

Although I am still firmly in the stagflation camp, I do allow at least for the possibility of a protracted deflation or a bout of serious inflation, or even a hyperinflation.

Just because something is possible does not make it probable, much less inevitable. I exhausted the subject of deflation, at least to my satisfaction, some years ago. Please do not recommend I read anything more about

European Money Aggregates - No Deflation Yet - Policy Responses to Deleveraging

A few asked me about the monetary situation in Europe, one person prefacing it with the statement that 'they are collapsing.'

Well, they are not, at least not yet. And there is nothing that says that they must. But since the person saying this has been desiring this outcome for more than ten years now, I should have known they were not. 

We are now in a global deleveraging after a massive

Monetary Deflation - Not Visible Yet

As a reminder, in a purely fiat monetary system, inflation and deflation are the result of policy decisions, and not any endogenous factors in the economy.    Extreme outcomes such as a protracted deflation or hyperinflation are almost always the result of some policy decision which may be in error, unless they are caused by some exogenous shock or force.

This is a fundamental fact of how a

Gold Daily and Silver Weekly Charts - Coiling for a Move

The metals are coiling for a move.

The odds favor an upwards breakout, but there is still the possibility of a drop, most likely if stocks drop as well, most likely in a liquidation driven sell off.

SP 500 and NDX Futures Daily Charts - Holding the Paper Flows Steady

VIX is signaling a rather complacent market, which is remarkable given the Greek credit event and all that it implies.

The US economy is stagnating, or should I say, 'stagflating.'

The growth in the economy is being captured by a very small minority of market participants, which is impeding any attempts at stimulus. Austerity is even worse, so there is the standoff.

Without genuine reform,

MF Global: Mark Melin Interviews Haar And Koutoulas On What Really Happened

The MF Global story is being largely ignored by the mainstream media in the US, with a few notable exceptions like Forbes. Most of the stories that are carried merely parrot the cover story that the money just 'vaporized' and no one is to blame.

"I have been told by multiple members of the media that JPMorgan Chase has called them and stated that if their media outlet has me on television

James Koutoulas: An Open Letter To Jamie Dimon - Censorship of the MF Global Story

"Through my role as the co-founder of the Commodity Customer Coalition and pro bono counsel for some 8,000+ customers whose property it looks like your institution may be holding without their consent, I have loudly advocated for JPMorgan Chase to return this property.

In response to this, rather than doing the right thing, you closed all of my personal and corporate bank accounts and my

Biderman: Fed Helping Wall Street and Corporate America Rig the Stock Market

And other markets as well.

There will be a 'reversion to the mean' and a return to the primary trends. And if it happens precipitously, it will shake the nation.

The problem with the Fed's 'stimulus' is that it is a blunt instrument, and is largely channeled by those with their hands on the financial throttle into their own pockets, and not into the productive efforts of the real economy.

'

Gold Daily and Silver Weekly Charts - Metals Bears Stuffed - ISDA Declares Credit Event

The early bear raid on the metals in honor of the Non-Farm Payrolls report fizzled and the shorts got stuffed as the metals rebounded back.

This was highly bullish action.

Late in the day the ISDA declared the Greek bond action as a credit default event triggering the CDS. The market largely ignored it, but it did take the wind out of a fairly insubstantial equity rally.

See you Sunday

SP 500 and NDX Futures Daily Charts - ISDA Calls Greece a 'Credit Event'

The market sloughed this late day news that ISDA declared a Greek credit event.

Let's see how they chew on it over the weekend. I think the algorithms missed it.
(Reuters) - Greece triggered the payment on default insurance contracts by using legislation that forces losses on all private creditors, the International Swaps and Derivatives Association said on Friday.

The decision by the EMEA

MF Global Trustee Freeh Asks Court to Pay MF Global Executive Bonuses

The entitlement of the financial class is the gift that keeps on giving.

And as for the customers? They are being asked to surrender their legal rights in order to receive partial payments.

Let them eat...er, is that even cake?

WSJ
MF Global Still Set to Pay Bonuses
By AARON LUCCHETTI and MIKE SPECTOR
March 9, 2012

Three top executives of MF Global Holdings Ltd. when it collapsed could

MF Global Trustee Giddens Asks Customers To Release Legal Claims In Return For Their Money

It is hard to believe that the Trustee Giddens intends to ask customers to surrender their right to sue Jon Corzine and other parties in return for only a partial repayment of their stolen money. 

This could be a simple misunderstanding. This would be a bit much even by the outrageous double standards of this scandal.

Let's see how this is resolved.

Bloomberg
MF Global Customers Call

Gold Daily and Silver Weekly Charts

"When the international monetary system was linked to gold, the latter managed the interdependence of the currency system, established an anchor for fixed exchange rates and stabilized inflation. When the gold standard broke down, these valuable functions were no longer performed and the world moved into a regime of permanent inflation.

What will be the character of the international monetary

SP 500 and NDX Futures Daily Charts

The stock market seems to be pricing in an outcome in the Greek debt crisis that is favorable to the international banks.

Gold Daily and Silver Weekly Charts - Remembering Django Reinhardt

I am concerned about the Greek situation, and a little guarded about the non-Farm Payrolls report on Friday.

On the bullish side, the Fed is going to start up QE again as soon as they get the proper excuse. Their rationale is going to include the notion that by printing new money to buy debt from the banks, they will not contribute to inflation because they will lock up the money on their

SP 500 and NDX Futures Daily Charts - Bounce Day Ahead of Greece and Payrolls

I added back some short positions to balance new longs in the beaten down silver added yesterday.

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.

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

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,

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

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."

"

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

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

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

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

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

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

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

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

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

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

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.