Category Archives: Financial

Pam Martens & Russ Martens ~ Wall Street Journal Reporter: “The Entire United States Market Has Become One Vast Dark Pool”

“Citigroup – the bank that was propped up after its crash in 2008 with $45 billion of TARP funds, over $300 billion in asset guarantees and more than $2 trillion in low-cost loans from the New York Fed, is now effectively an unregulated stock exchange operating in the dark and annualizing at over $1 trillion in dollar volume in stock transactions.” P Martens & R Martens

DarkPoolsWaterStockMarketIn 2012, Wall Street Journal reporter, Scott Patterson, released his 354-page prescient overview of U.S. market structure titled, Dark Pools: High Speed Traders, A.I. Bandits, and the Threat to the Global Financial System. (For those whose computer prowess is limited to turning on a laptop, like millions of fellow Americans, “A.I.” means artificial intelligence – machines teaching themselves to think like humans, but faster.)

Patterson comes to an epiphany on page 339 of his book, writing in the notes section: “The title of this book doesn’t entirely refer to what is technically known in the financial industry as a ‘dark pool.’ Narrowly defined, dark pool refers to a trading venue that masks buy and sell orders from the public market. Rather, I argue in this book that the entire United States stock market has become one vast dark pool. Orders are hidden in every part of the market. And the complex algorithm AI-based trading systems that control the ebb and flow of the market are cloaked in secrecy. Investors – and our esteemed regulators – are entirely in the dark because the market is dark.” (The italics in this excerpt are as they appear in the hardcover book.) Continue reading

Pam Martens & Russ Martens ~ Wall Street’s Regulators Sell Out On Illegal Wash Sales

“The 1930s Senate investigation was initiated less than three years after the 1929 crash. The 2008 crash occurred six years ago and yet, today, no such intense investigation of market structure has been undertaken by Congress. What we have seen instead are isolated hearings, most of which are devoid of oath-taking or subpoenas.” P Martens & R Martens

BartChiltonWash sales – one of the most virulent forms of stock manipulation that bankrupted banks and corporate conglomerates in the Great Depression and intensified the stock market crash of 1929 to 1932 – has reached scandalous proportions in today’s markets. The response from regulators? Gut the rules that make it a crime.

On March 18 of last year, Bart Chilton, then a Commissioner at the Commodity Futures Trading Commission (CFTC), stunned CNBC viewers with the announcement that wash sales were rampant in the futures markets. Speaking to Squawk Box host, Joe Kernen, Chilton stated:

“Well these wash sales, Joe, people know they’re illegal; they’re not allowed. A wash sale is when somebody trades with themselves. But what we’ve discovered is that they are going on at this large, voluminous level. I mean, to me, a shocking level. And they’re impacting what people see as volume. So this is an area that we’re going to review to ensure that markets are operating efficiently and effectively. Who knows what sort of impact they’re having. And it raises a host of policy questions that we have out there, because this stuff just shouldn’t be allowed.” Continue reading

Gerald Celente ~ Economy Will Crash, World War III Coming [Video]

Renowned trend researcher, Gerald Celente, said at the beginning of 2014 that the economy would tank and war is on its way.  It looks like his predictions are coming true.  On the economy, Celente contends, “This whole so-called recovery has been built up on unprecedented levels of cheap money.  They keep dumping it into the market.  They keep pushing it out there, and it’s not only in the United States.  You have, over in Europe.

You have negative interest rates.  You now have, coming out of China, their debt to GDP ratio is over 250%.  You are going to see default coming about in Argentinian bonds.  You are looking at one crisis adding up after another.  You heard Janet Yellen, the Fed Chief, come out a week ago warning there is trouble in the so-called housing recovery in the United States. . . . So, what is going to happen?  When interest rates go up, the economy is going to crash down. . . . They have built up an even bigger bubble.” Continue reading

Charles Hugh Smith ~ Are We Addicted To Failure?

“Like all addicts, Central Planners are confident they can manage the monkey on their back. But this is a self-serving illusion.” C H Smith

CharlesHughSmithAddiction is many things, but beneath its complexities it is a self-destructive expression of the desire to avoid or suppress pain. The pain might be physical or the stuff of the mind, memories or inner demons or tortured misgivings about one’s choices, soul and life.

Though the self-destructive aspects of the addiction are painfully visible to observers, to the addict they represent a solution: perhaps not the ideal one or even a good one, but a solution nonetheless.

Fear plays a big part in many addictions–fear of life without the addictive salve.The fear in an addict’s eyes when the fix is not forthcoming is haunting to all who witness it.

To the non-addicted observer, addictions are not successes; they are failures of one kind or another, and those who care about the addict seek some way to extract the addict from the grip of his/her addiction, and from the fear that often drives it.

I have recently been wondering if America is addicted to failure. The oft-repeated definition of insanity is doing the same thing over and over again and expecting different results, generally attributed to Albert Einstein. Continue reading

Pam Martens ~ Lawsuit Stunner: Half Of Futures Trades In Chicago Are Illegal Wash Trades

“The complaint explains that the ability to continuously enter orders and get trade confirmations “of the price at which these orders are filled, before the rest of the public even knows about the executed trades,” empowers high frequency traders with “a massive informational and time advantage in discerning actual price, market direction and order flow before anyone else.”” P Martens

Terrence Duffy of the CME Group Testifying Before the Senate on May 13, 2014

Terrence Duffy of the CME Group Testifying Before the Senate on May 13, 2014

Since March 30 of this year when bestselling author, Michael Lewis, appeared on 60 Minutes to explain the findings of his latest book, Flash Boys, as “stock market’s rigged,” America has been learning some very uncomfortable truths about the tilted playing field against the public stock investor.

Throughout this time, no one has been more adamant than Terrence (Terry) Duffy, the Executive Chairman and President of the CME Group, which operates the largest futures exchange in the world in Chicago, that the charges made by Lewis about the stock market have nothing to do with his market. The futures markets are pristine, according to testimony Duffy gave before the U.S. Senate Agriculture Committee on May 13.

On Tuesday of this week, Duffy’s credibility and the honesty of the futures exchanges he runs came into serious question when lawyers for three traders filed a Second Amended Complaint in Federal Court against Duffy, the Chicago Mercantile Exchange, the Chicago Board of Trade and other individuals involved in leadership roles at the CME Group.

The conduct alleged in the lawsuit, backed by very specific examples, reads more like an organized crime rap sheet than the conduct of what is thought by the public to be a highly regulated futures exchange in the U.S.

The lawyers for the traders begin, correctly, by informing the court of the “vital public function” that is supposed to be played by these exchanges in “providing price discovery and risk transfer.” They then methodically show how that public purpose has been disfigured beyond recognition through secret deals and “clandestine” side agreements made with the knowledge of Duffy and his management team. Continue reading

Ellen Brown ~ You Can’t Taper A Ponzi Scheme: Time To Reboot

“Our financial leaders, in conjunction with our political leaders, have continually re-created the web of money and credit that knits our economy together. But they have often taken only their own interests and those of the wealthiest citizens into account, not those of the general public. It is up to us to educate ourselves about money and banking, and to demand a system that is accountable to the people and serves our long-term interests.” E Brown

Ellen Brown

Ellen Brown

One thing to be said for the women now heading the Federal Reserve and the IMF: compared to some of their predecessors, they are refreshingly honest. The Wall Street Journal reported on July 2nd:

Two of the world’s most powerful women of finance sat down for a lengthy discussion Wednesday on the future of monetary policy in a post-crisis world: U.S. Federal Reserve Chairwoman Janet Yellen   and International Monetary Fund Managing Director Christine Lagarde. Before a veritable who’s-who in international economics packing the IMF’s largest conference hall, the two covered all the hottest topics in debate among the world’s central bankers, financiers and economists.

Among those hot topics was the runaway shadow banking system, defined by Investopedia as “The financial intermediaries involved in facilitating the creation of credit across the global financial system, but whose members are not subject to regulatory oversight. The shadow banking system also refers to unregulated activities by regulated institutions.” Examples given include hedge funds, derivatives and credit default swaps.

Conventional banks also engage in “shadow banking.” One way is by using their cash cushion as collateral in the repo market, where they can borrow to invest in the stock market and other speculative ventures. As explained by Bill Frezza in a January 2013 Huffington Post article titled “Too-Big-To-Fail Banks Gamble With Bernanke Bucks”:

If you think [the cash cushion from excess deposits] makes the banks less vulnerable to shock, think again. Much of this balance sheet cash has been hypothecated in the repo market, laundered through the off-the-books shadow banking system. This allows the proprietary trading desks at these “banks” to use that cash as collateral to take out loans to gamble with. In a process called hyper-hypothecation this pledged collateral gets pyramided, creating a ticking time bomb ready to go kablooey when the next panic comes around.

Addressing the ticking time bomb of the shadow banking system, here is what two of the world’s most powerful women had to say: Continue reading

Charles Hugh Smith ~ The Rot Within, Part III: Our Political Order Is Defined by Favoritism and Extortion

What’s the difference between the U.S. Congress and corrupt petty officials taking bribes at a Third-World border crossing? Only one of scale.” C H Smith

CharlesHughSmithCorruption ceases to be corruption when it becomes the Status Quo; what was once recognized as corruption is seen as just another cost of doing business. Our political order is structurally corrupt: the key dynamic in every level of governance is favoritism and extortion.

Favors must be bought: those foolish enough not to spend freely on lobbyists and campaign contributions find their competitors have gained the upper hand by buying favors such as tax breaks, federal subsidies, no-bid contracts, cost-plus contracts, backroom deals, regulations that exclude competition and so on.

Politicos must extort campaign contributions from the maximum number of supplicants seeking favors to maintain their perquisites and power.

Here’s how the system works.

There was much mainstream media hand-wringing and outrage in response to corporations moving their place of business offshore to lower their taxes. This outrage is completely misplaced–and indeed, seems designed to misdirect attention away from the systemic corruption that is the beating heart of the American political order.

Let me explain how favoritism becomes the Status Quo. There are two key dynamics at work.

1. Onerous, uncompetitive taxes and/or regulations. The U.S. corporate tax rate is 35%, the highest in the world, and various observers estimate the average state corporate tax tacks on another 4.1% for a total corporate tax rate of 39.1%. Continue reading

Michael Lombardi, MBA ~ Setting Up For Financial Slaughter

“Historically, since 1971, the average has been 0.70—the stock market has been worth seven-tenths of the economy. Today, it is worth 115% of the economy. According to this measure, the stock market is overvalued by 64.28%.” M Lombardi

NYSE1Investors poured $4.3 billion into the SPDR S&P 500 (NYSE/SPY) last week, an exchange-traded fund (ETF) that tracks the S&P 500. For the week, ETFs tracking U.S. equities witnessed the most inflows in the last four weeks. (Source: Reuters, July 17, 2014.)

And as investors continue to inject vast sums of money into the stocks, stock valuations are at historical extremes. When I want to see how expensive the stock market is getting, I look at the S&P 500 Shiller P/E multiple (the value of stocks compared to what they earn adjusted for inflation)…and it’s screaming overvalued.

In July, the S&P 500 Shiller P/E stood at 25.96. That means that for every $1.00 a company makes, investors are willing to pay $25.96. The stock market has reached this P/E valuation (25.96) only seven percent of the time since 1881.

The number suggests the stock market is overvalued by 57%, according to its historical average of 16.55. (Source: Yale University web site, last accessed July 18, 2014.) The last time the S&P 500 Shiller P/E was above the current level was in October of 2007—just before one of the worst market sell-offs in history.

But this isn’t the only indicator suggesting the stock market is overvalued. Continue reading

GE Christenson ~ The Global Economy – A Clear And Present Danger Zone

GaryChristensonDing, Ding, Ding!  The bell tolls, not for the 1%, but for the remaining 99% in Europe, the UK, Japan, and the US.

What Danger Zone?  The powers-that-be must find a way to keep the masses under control, raise taxes, enrich themselves and monetize the debt.  The result will be currency devaluations, blood, inflation, distractions (such as downed airliners and new wars), banker bonuses, continued payoffs to politicians, and so much more.

The Stock Markets:

The S&P 500 Index looks toppy and dangerous, as it has for many months.  Consider this graph:

There is no guarantee that the stock market will either crash or continue to rally, but the above chart is worrisome, in spite of the massive levitation by the central banks of the world.  This is a clear and present danger zone.

The Gold Market:

Gold has been fleeing the western world and is appreciated more in China, Russia, and India.  The citizens and bankers in the US, UK, Europe, and Japan value paper debt more than physical gold.  Danger Zone!

Paul Craig Roberts and Dave Kranzler on July 16, 2014:

“Between July 14 and July 15, contracts representing 126 tonnes of gold were sold in a 14 minute time window which took the price of gold down $43 dollars.  No other market showed any unusual or extraordinary movement during that period.” Continue reading