“I think Goldman Sachs is a racketeering entity that does whatever they can to make a dime without conscience, thought, foresight or care about ramifications...I think they are cold-blooded and could care less about the law. That’s my opinion. I think I can back it up.” -- Former hedge fund head Marc Cohodes, testifying in a deposition brought by Overstock.com against Goldman Sachs.
Dear All,
With an interest in indoctrinating young minds into the cult of central economic planning as practiced at the Kremlin of central banking -- the U.S. Federal Reserve, Ben Bernanke gave a lecture to students at George Washington University recently on the wonders of helpful central banks such as his. Mr. Bernanke took that occasion to denigrate gold. The talk was not intended to inform his students about the monetary metal's historical role; Mr. Bernanke never explained to the students why gold has endured as a currency for at least 5000 years where no paper version has survived more than a few hundred, nor did he mention that it has managed to do so without having ever been subjected to the oversight of a central bank. GATA's Chris Powell put out this dispatch following the professor's lecture:
"Since the gold standard determines the money supply," Bernanke said, "there's not much scope for the central bank to use monetary policy to stabilize the economy." You bet, there isn't! That's the whole #@*^!#$ point! Half the world is screaming at the Fed, "Spare us your 'stabilization'!" And the Fed is "stabilizing" only what it messed up in the first place. Then, with supreme cheek, Bernanke blames the gold standard for spreading to the rest of the world the U.S. central bank's "policy errors," as if spreading policy errors around quite without the gold standard hasn't lately been the Fed's main business. Well, that's American college education for you. And people come here from all around the world to get it."
A Wall Street Journal editorial on Friday referenced this scathing report commissioned by the UCLA Regents and published by the National Association of Scholars: A CRISIS OF COMPETENCE, The Corrupting Effect of Political Activism in the University of California. The report condemns the indoctrination of students to leftist thinking as well as the bastion of intolerance that the university has become. Noting that their findings are likely not UCLA specific, the association found that the infiltration of academic curriculum by political agenda comes at the cost of broad learning, civic sensibility and intellectual curiosity.
"One study after another has found that they [students] write badly, can’t reason, can’t read any reasonably complex material, have alarming gaps in their knowledge of the history and institutions of the society in which they live, and are in general poorly prepared for the post-college workplace"
Guess who is not? EconomicMusings: Who is REALLY paying in the $25bil TBTF mortgage settlement This deal, which the Obama administration promoted as a punishment for the abusive practices of the large mortgage lenders, is a sham. It's actually another banking industry giveaway under which the federal government is confiscating the capital of innocent bondholders in order to pay the banks' costs.
"As former SIGTARP Neil Barofsky tells Bloomberg, 'this would be comical if it wasn't so tragic'"
The denigration of truth generally comes subtly and incrementally until one day one wakes up and everything is a lie. And so it is that we have come to live in a country where the inflation rate is three and a half times the official government one. Shadowstats places the February consumer inflation rate at 10.5% vs. the official 2.9% CPI. The 10.5% figure is nothing more than the calculation using the Labor Departments very own CPI methodology from 1980, the year the Bureau of Labor Statistics began the process of incrementally corrupting the index through substitutions, hedonics, 'seasonal adjustments' and other forms of alchemy that weed out those unpleasant index components that contribute to politically unacceptable increases.
""We are here to work and not to play, so our income is very important...We are worried we will have less money to spend. Of course, if we work less overtime, it would mean less money...This is a good company to work for because the working conditions are better than a lot of other small factories."
The reputation of a website that is the largest U.S. under-aged prostitution sex trafficker was tarnished by the revelation that Goldman Sachs holds a 16% ownership stake in it. It may be that these [Wall] street thugs in suits are following the model of other organized crime syndicates which muscle in and infiltrate more legitimate businesses. NYTimes: Anger at Goldman Still Simmers
Aha! So it all comes together: Bloomberg: Perpetrator of Afghan massacre had Troubled Broker Career Before Army
Demand for Sturm Ruger guns is so strong that the company announced it is temporarily turning down new orders: Sturm, Ruger & Co. received orders for more than a million firearms in first quarter
In the two jobs this gentleman held, it was the productive one that caused him trouble: FoxDC: TSA Manager Arrested for Running Prostitution Ring
The trend...
Bloomberg: Bank of Korea pares US dollar holdings
Reuters: HKMEx to launch yuan-settled gold, copper futures by July
Brics’ move to unseat US dollar as trade currency
Regarding gold and silver...
I often make reference to the inane gold commentary from Wall Street lightweights regularly paraded on financial television; Accordingly, I draw your attention to this dimly lit bulb. The enlightenment begins at around 2:00.
In a report to the state legislature, South Carolina's Treasurer's Office determined that investing the state's funds in gold, silver and derivatives would be inappropriate. However, a notable inclusion in the report is this:
"Similar to other commodities, the value of gold and silver is determined by supply and demand, as well as speculation. The Federal Reserve, London Bullion Market Association, JP Morgan Chase, and HSCB Holdings have practiced fractional-reserve banking and engaged in naked short selling causing artificial price suppression."
The S.C. State Treasurer's Office has thus been able to conclude something the CFTC has been officially investigating for at least 4 years. But then, the CFTC has yet to determine that MF Global customer money was stolen by the Commission head's former mentor and partner at Goldman Sachs.
The U.S. Federal Reserve is the dam line in a daily war to prevent reality from colliding with confidence. The balance sheets of the largest banks are a horror of toxic derivative liabilities marked at fictitious values, the flat-lined economy and employment is not responding to gargantuan stimulus. In spite of the massive run-up in the monetary base, money velocity is abysmal. The Fed will see no solution other than to keep the stimulus coming -- if not accelerate, and hope for the best. All the while it is the largest buyer of U.S. Treasury debt (price manipulation), propping up the stock market through futures buying (price manipulation), intervening in the currency and gold markets (price manipulation) and supported in its activities by phony government economic reports (lying). Lee Adler did a nice job of describing this week's gold bashing operation upon the release of the Fed minutes, although this is only partially what's behind it:
"But here’s the thing. The minutes are fake. They are fabricated, false, phony, ginned up and sterilized garbage, designed for public consumption. To put it bluntly, they’re propaganda. They are what the Fed and the Wall Street casino owners want you to think. They are a blatant attempt to manipulate the behavior of market participants through the use of clever turns of phrase. The Fed wants the market to go higher, but it doesn’t want commodities to go with it, so its story line is that the economy is healthy enough to continue growing without more QE."
No markets are more manipulated than the precious metals markets, which given the state of official intervention in both the stock and bond markets, is saying quite a lot. Gold is the messenger of financial stress and management of the gold price is what central banks do, particularly when stress is great. When a financial system is actually on the cusp of collapse, the banks become desperate in their efforts. The "tell" in these manipulative operations is their character -- their frequency, the duration of their short term effect and the size of the footprints. Now, on an almost daily basis we are seeing clumsy interventions of little lasting effect but embarrassing pretense, One day a Fed governor is sent out to push perceptions this way, the next day another governor yaps to move it that way. FOMC minutes are released to alter perceptions away from stimulus, soon thereafter a governor makes comments with implications to the contrary.
After a week of a similar hammering of the gold price two years ago I posted commentary, the title of which I am reprising. It was a brutal week in February 2010 when that operation took place with gold closing the week at $1,058.00 and silver at $15.17. Nothing since has changed since except that the manipulation is continuing at substantially higher prices. I've been observing these shenanigans since 1998. What is most encouraging is the desperation of the central banks and the increasingly transparent character of their suppressive operations, Never in the course of this bull market have I been more confident and excited about the prospects for gold, but more particularly the silver and gold shares, which are being given away at absurd valuations.
Let them play their games. Trying to prevent the price of gold from moving higher is akin to attempting to hold back the oceans.
Relax and enjoy what the volatility portends.
Jeff
"However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter."
"MF Global CEO Jon Corzine, a former head of Goldman Sachs, signed off on statements that said his internal controls were adequate. After Enron, the Sarbanes Oxley Act was meant to assure Americans that officers that signed such statements would be held accountable for their accuracy...Federal law enforcement is trying to get away with saying no crime has been committed, because there was no direct criminal intent. Proving intent is very difficult. Here's something that isn't at all difficult to prove. Jon Corzine should have a big problem under Sarbanes Oxley."
"The girl’s turkey and cheese sandwich, banana, potato chips, and apple juice did not meet U.S. Department of Agriculture guidelines, according to the interpretation of the agent who was inspecting all lunch boxes in her More at Four classroom that day"
"He [Lincoln] was the most tyrannical, most disingenuous, least faithful to the constitution president we've had in American history."
"If you spend a little time with these numbers you will know that they are being made up."-- Former Reagan budget director David Stockman, 2/5/12, commenting on the Bureau of Labor Statistics' employment report.
Dear All,
On Thursday evening, February 2nd, as the pencil-pushers at the Bureau of Labor Statistics put the finishing touches on the theoretically modeled fictional labor report they would release the following morning, a mass of unemployed Americans were theoretically summoned to a hastily called meeting at the U.S. Department of Labor's headquarters on Washington's Constitution Avenue. Funneling into a basement level meeting room they were largely silent as they sought seats. The vast majority was forced to stand; there were 1.2 million of them. A representative from the BLS took a microphone and spoke.
"Good evening. Thank you for coming on such short notice. I'll get right to the point. We've got a Labor Report due out tomorrow and we've had to make some tough decisions. I know how difficult the past number of months have been and that you've been diligently looking for work for quite a while now. But this isn't working out and we need to make a change in the headcount. So we're letting you go. You're no longer unemployed."
As discussed here often (most recently Discarded Denominators -- 12/4/11) the U.S. Department of Labor drastically overstates the percentage of the country's employed workers by simply reducing the stated size of the U.S. labor force. True to form, it produced a report on February 3rd that "beat" unemployment rate expectations by notably (which is not to ignore the other BLS fantasy modeling techniques) simply removing 1.2 million people from the labor force in one month. By so doing the government was able to cosmetically shrink the visible rate of unemployment in January, although the labor force participation rate (the ratio between the labor force and the population) dropped in January to a new 30 year low of 63.7%. Zerohedge neatly sums it up: Explaining Yesterday's Seasonally Adjusted Nonfarm Payroll "Beat"
"What is very notable is that in January, absent BLS smoothing calculation, which are nowhere in the labor force, but solely in the mind of a few BLS employees, the real economy lost 2,689,000 jobs, while net of the adjustment, it actually gained 243,000 jobs: a delta of 2,932,000 jobs based solely on statistical assumptions in an excel spreadsheet!"
Shadowstats' John Williams in fact calculates that the rate of unemployment actually moved higher in January to 22.5% from 22.4% in December.
In reviewing the most recent release from the Ministry of Disinformation, the Bureau of Labor Statistics, Charles Biderman notes that last Friday's happy unemployment report also flies in the face of real-time daily income tax collection receipts, something almost nobody questions:
"Remember, most financial journalists and even stock market strategists do nothing more than rewrite government press releases. So do not expect very few others to question the good news"
As Biderman points out, to the extent that the theoretically modeled BLS reports even use hard data, it is many months stale. But then, why use hard real-time hard data when you can concoct modeling propaganda in a laboratory that better suits your political agenda, particularly when hardly anyone questions it?
And then, in the face of the uplifting unemployment report there is this: Challenger: Planned layoffs surge in January
Contrast BLS stats with others that are not seasonally adjusted,' subject to substitutions or 'birth-death" modeling, to wit:
Gee, I dunno....perhaps it's because people don't have jobs? OfTwoMinds: Why Is Gasoline Consumption Tanking?
"Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff...Even if you dismiss the recent plunge as an outlier, the declines in retail gasoline deliveries are mind-boggling."
Establishing yet again that crime pays, The 5 largest banks have agreed to partly fund a $26 billion settlement that will result in payments to a select group of Americans, some of whom were actual bona fide victims of mortgage fraud. It is an Obama administration led wrist-slap upon the banking industry from which it receives oodles of campaign cash. The settlement is another thinly disguised bank bailout and immunity from prosecution deal for bank executives and servicers, dressed up as punitive enforcement using government/taxpayer largess. Bank fraud expert William Black was asked about the pending settlement in an interview Tuesday: "The bad news is that the Obama administration has proven even more disgraceful failures in holding elite criminals accountable than did the Bush administration. "The Obama administration has convicted a few bankers from non-elite banks and it may eventually convict a token elite banker, but it will continue to fail systemically to hold elite bankers accountable for their frauds."
Here is the president in his State of the Union address:
"Let's never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It's time to apply the same rules from top to bottom. No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.
We've all paid the price for lenders who sold mortgages to people who couldn't afford them, and buyers who knew they couldn't afford them. That's why we need smart regulations to prevent irresponsible behavior...And I will not go back to the days when Wall Street was allowed to play by its own set of rules."
Nice speech. Sure, pile on more regulations for ineffective agencies such as the CFTC and SEC to pretend to enforce. Prosecute criminals? Not so much: Washington'sBlog: Obama Prosecuting Fewer Financial Crimes Than Under Reagan or Either Bush
If you've never seen a bank run, here's what one looks like (Source: Credit Suisse):
As discussed here previously, narco-finance is one of the structural pillars of the banking system and perhaps its most important private source of liquidity. Who is kidding whom? The investigation will go nowhere: Former HSBC employee claims evidence of an international $ multi-billion money laundering scheme
ReutersExclusive - Senate investigating HSBC for money laundering
I would add an additional point; in regulated insurance it is unacceptable to insure a party that lacks an insurable interest in the subject asset: OfTwoMinds: Counterfeit Value Derivatives: Follow the Bouncing Ball
In a letter to the Wall Street Journal sixteen highly distinguished scientists stated that CO2 (even at 10x the current amount) is beneficial, not harmful, global warming alarmism is motivated by money and power, and that governments fund academics who promote alarmism because it justifies more political control and higher taxes. They point as well to academic intimidation of those who dissent from the party line.
For the melting busybodies... -- TheGuardian: The Himalayas and nearby peaks have lost no ice in past 10 years, study shows
"The discovery has stunned scientists, who had believed that around 50bn tonnes of meltwater were being shed each year and not being replaced by new snowfall."
And in a new book, "Die kalte Sonne" ["The Cold Sun'"] that comes as a huge blow to Europe's climate change movement, one of the fathers of Germany’s modern green movement has changed his view and is now calling global warming a myth and the product of UN's IPCC twisted science to further its political agenda:
"Vahrenholt’s skepticism started when he was asked to review an IPCC report on renewable energy. He found hundreds of errors. When he pointed them out, IPCC officials simply brushed them aside. Stunned, he asked himself, “Is this the way they approached the climate assessment reports?”
The bubble in graduate degrees is an extension of the college bubble: The Law School Bubble TheIveyFiles: "We should be Ashamed of Ourselves"
"At 50 law schools, 20% of the students are either unemployed, flunked out, or are unknown, yet the ABA and LSAC disavow the use of data to rank law schools.”
The trend...
RussiaToday: Chinese 'gold rush': Country diversifying assets
On gold and silver...
As the paper prices of both precious metals bide their time the financial system deteriorates daily. The inevitability of drastic gold and silver re-pricing is a lock -- the fate of the dollar and other paper currencies assures it. Well managed gold and silver companies with meaningful reserves are simply a slam-dunk.
Block out the noise. Keep your ear to the tracks, not to the pundits.
Jeff
Dear All,
On Friday the Commerce Department reported 2.8% annualized GDP growth. The New York Times reported this on its front page as follows:
ECONOMY GREW AT QUICKER PACE IN 4TH QUARTER -- RECESSION FEARS FADING.
Shadowstats reported the story a bit differently:
'Net of Involuntary Inventory Build-Up, GDP Growth Was 0.8% Instead of 2.8%.'
The Fourth Estate is thoroughly complicit in conveying government propaganda. Worse, with few exceptions economists are content using false data as the basis for their work.
NYTimes: U.S. Banks Tally Their Exposure to Europe’s Debt Maelstrom Here the New York Times ignores and whitewashes the central truth to the story, which is that the 5 largest banks in the U.S. are actually the obligors on the very insurance the Times is describing. This has been a cute game whereby the banks have been creating gigantic paper earnings by writing worthless insurance and shuffling premiums. Game over. The unthinkable has happened -- Greece is defaulting. The ISDA (a wholly owned agent of these banks) cannot formally declare a default without bringing down these banks. A mountain of paper is the only way out. This alone assures the price of gold going parabolic.
Reporters Without Borders publishes its annual review of worldwide media and compares journalistic freedom internationally. The latest index ranks the United States 47th in press freedom, barely nudging out Latvia and Haiti but trailing Ghana and Botswana: Press Freedom Index 2011-2012
Misccellaneous...
The trend...
The days of the dollar's supremacy are fading. The east is thumbing its nose at the west. Recall that several months ago the head of the U.S.' central bank proclaimed that gold is not money:
India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned
NYTimes: U.S. Drones Patrolling Its Skies Provoke Outrage in Iraq
Wikipedia: The Embassy of the United States in Baghdad is the largest and most expensive of any embassy in the world. At 0.44 square kilometers it is nearly as large as Vatican City.[1] It also employs 15,000 people and cost $750 million to build. The Embassy opened in January 2009 following a series of construction delays. It replaced the previous embassy, which opened July 1, 2004 in Baghdad's Green Zone in a former Palace of Saddam Hussein.[2]
Regarding gold and silver...
No respectable money manager or mainstream financial publication dares talk-up the incredible investment potential for precious metals; the bull market in gold and silver is antithetical to Wall Street's interests. So long as hushed-tones are the rule though, the wall-of-worry is firmly in place. The source here is quite correct -- "[G]old is at the intersection of money trends." Barron's: 'Anonymous' Hedge Fund Guru Sees Gold Price Soaring
Position yourself for the inevitable and ignore the daily noise. The Fed must lower the value of the dollar and raise the value of gold. The Federal Reserve's particular brand of paper has been -- for far longer than any Open Market Committee member can recall -- the Coca Cola of currencies. The fizz is gone.
All the best,
Jeff
