JESSE PONDERS WHY GOLD WAS TAKEN DOWN

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Posted on 17th April 2013 by Administrator in Economy |Politics |Social Issues

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Jesse is an extremely methodical, non-dogmatic thinker. He understands the markets. He also understands the manipulation and corruption that is rampant on Wall Street. I believe his suspicions are correct. Something wicked this way comes. The takedown of gold and silver was a coordinated effort by the powers that be to cover-up their criminality. JP Morgan and one or more of the Too Big to Trust criminal banks are in trouble. They can’t deliver physical gold or silver because they don’t have it. Their derivatives shenanigans are blowing up. Trust has been lost. The criminal banks are losing faith in each other. The Ponzi scheme is collapsing. This is not over. The worst is yet to come. 

 

How the Gold Market Was Crashed – But Most Importantly, Why?  Leveraged Default?  And Silver?

Many are still sorting through the data to try and figure out what happened, but it is hard to look at the available data and the market action and conclude that the recent ‘flash crash’ in gold was anything but a calculated takedown.

Some big players had been trying to work the market price of bullion down in stair step fashion for some time.  Their tracks on the tape were big enough to be hard to miss, and any number of people who watch the market structure as it develops were seeing them, and a few were reporting what they saw.

But it just wasn’t enough.  The pressures were building, and something had to be done.

A plan for a market operation to relieve the pressure was made, and then executed ahead of the upcoming option expiration on the Comex on April 25th.  The word was quietly spread so the important monied interests would not make a fuss about losses when the time came, as in the case of MF Global and Cyprus.

And then Goldman gave the signal to the market with their ‘short gold’ call.

As I said at the time, I was not sure if this was done to try and avert a disaster, or to cover up some longer term corruption.  Or perhaps a bit of both.  Motives are never easy to discern where leverage and opaque trading pools are involved.

This could be in advance of a major announcement out of Europe with regard to the Eurozone and also their monetary policy following along the lines of Japan.  Perhaps it is even something regarding US policy.  Obviously one has to have an open mind about that.

But there were persistent rumours of a potential default situation at both the LBMA and the Comex.  Well, one has to take those with a skeptical eye.  But there are some data that point to the LBMA in particular, although the drawdown of bullion from the two exchanges could have been more general.

Linked just below is a report that includes more data and it well worth reading. It tends to concentrate on the Comex.
How the Gold Market Was Crashed.

It seems that the word has gone out to the media and the stories are being spun to protect the system.   And the parrots dutifully pick up the chatter, without knowing why.

The story being spun that there was a speculative excess in gold being held by pension funds that panicked.   Foolish people, outsiders really, got over their heads and caused this regrettable incident.

There is probably a grain of truth in that, but I think it is more likely that they were forced out of their positions by a market operation designed to do just that.  And market insider knew exactly what they were holding.

Price declines caused by legitimate selling and panicked longs are not marked by increasing open interest.  That is the hallmark of short selling with a purpose.

This is a big deal, and it was writ large across the media.  And that suggests that there is an equally big problem that had to be dealt with quickly and brutally.  Ordinarily market operations are more adept and protracted.

Something was close to breaking, and it most likely still is.

And if it broke, it would prove to be embarrassing to quite a few very important people.  At least, that is what this situation suggests to me.

Even the endlessly levitating stock markets seem a bit ‘edgy’ with a tension on the tape.

I cannot possibly know what is at the root of this.  Can’t find Germany’s gold, and can’t buy enough at the LBMA to deliver it, because the market is leveraged 100 to 1?

Maybe not that but something of that magnitude.  A major TBTF tottering on the brink of a derivatives domino collapse?  There are rumours out of Switzerland about Italy and France.

Most eyes are on the States, but how quickly we forget that ABN/Amro declared a force majeure and stopped all physical delivery of bullion, forcing settlement in cash.  The soft default of a major bullion bank is no joke, especially when it appears they could not obtain suitable goods at any price.

This tends to point towards problems in Europe and the LBMA.  And one of the big sources of LBMA 400 oz. qualified gold is the big SPDR Gold ETF, GLD which is stored by HSBC in London.  I have included a chart of who tends to use 400 oz. bars below.  The COMEX does not.

As you may recall, Andrew Maguire reported early on that there were indications of problems on the LBMA with regard to gold inventory.  It is said to be leveraged 100 to 1.

“Entities went to the LBMA and said, ‘We don’t trust anybody anymore.  We want our physical metal.’  They were told they would be cash settled instead by a bullion bank.  The Western governments have been trying to plug holes, and the reason for it has to do with the default that was taking place at the LBMA.
This is why this smash has been orchestrated because of the run that has been taking place on physical metal.  So Western governments had to do this because of an imminent run on the unallocated LBMA system.  The LBMA bullion banks had become so mismatched at one point on their trading positions vs real world demand that they had to orchestrate this smash.”

The ‘entities’ in question are again just rumour, but they are most likely to be from the Mideast or Asia.    They could be a central bank, or even an ETF for that matter.  But the size was said to have been substantial, and untenable for withdrawal without a severe market disruption given the leverage on which the LBMA operates.  100 to 1 leverage is no joke when the drawdown is physical and available supplies are tight.

If you have not picked it up, the implication in this theory is that the big price declines allowed some non-allocated repositories, like GLD for example, to disgorge delivery ready bullion to the LBMA for delivery to the entity that had demanded delivery.

And something like this might not be a singular event.  People talk, and if one entity got nervous and took delivery that information cannot be kept from other sizable players in the same circles.  And so others step up and ask, and there is the threat of a run.  And it could be happening in more than one place, ie not just the LBMA.  Hence the decline in inventories at the Comex referenced above.

JP Morgan holds enormous derivatives positions in the precious metals not reported anywhere in detail except occasionally in the OCC report.  If something were to perturb the markets, it would almost certainly affect them.
And recall that the outrageous excesses of the ‘London Whale’ were not uncovered by regulators, but rather by market participants who reported JPM to be distorting the market because of the size of their position.  And the OCC is having a bit of recent notoriety from overlooking irregularities (some say crimes) to protect the banks.  So keep that in mind.
Changing the subject, if you wish to get a bit more baroque, gold may have been a necessary misdirection with the real target being silver, which hardly anyone is talking about, even the house economists and spokesmodels for the status quo.
Keep an eye on stocks and the markets.  The big money always moves first, because they get to know what is happening first.

But I have to remind you, your guess is as good as mine.   It is an opaque market, and it has gotten worse and not better, despite all the show of ‘reform.’

When the tide goes out, you not only get to see who is naked, you see who they are naked with.  And so the smokescreens go up.

I suspect that this is going to get ugly.

Related:  Update to the Update: The Attack On Gold – Paul Craig Roberts (this gets more into the general government-business-as-usual theory rather than something that was incidentally related, ie a major impending default.  As I pointed out I think those sort of antics tend to be a more elegantly executed and gradual.  The recent gold/silver smack down was sheer brute force.  Could have been shock and awe but it really was over the top and probably called far too much attention to itself to have been a ‘policy thing.’)

THE GREAT COLLUSION TO TAKE DOWN GOLD

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Posted on 15th April 2013 by Administrator in Economy |Politics |Social Issues

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Even Kunstler can see the blatant collusion that has occurred to take down gold. The powers that be are trying to distract the masses from how bad the real financial system has become. There is nothing normal about what is going on. This is not a free market. It’s a highly manipulated market. I bought some pre-1964 silver quarters this morning at $24 per ounce. I hope it drops to $20 per ounce and I’ll buy more. The desperation of the oligarchs is becoming clear to me. The big reset is coming. The world is entering a chaotic period that will bring earth shattering change. I hope you are ready.

Smack Down Time

By James Howard Kunstler
on April 15, 2013 7:46 AM

     What a humdinger last week was in a money world that is chugging toward maximum velocity and turbulence. Readers know (and may be sick of hearing) that I’m allergic to conspiracy theories, but my allergy is not absolute or total and there are excellent reasons to believe that the smack down of gold and silver was an orchestrated event. By whom? So far, in the opaque realm of paper gold sales, we don’t know, except that it was a 500-ton dump that set off the larger skid, and it is even quite possible, as one anonymous wag put it on James Sinclair’s website, that the buyer and seller were virtually the same entity — meaning that the probable naked short transaction only amounted to a mere bookkeeping jot when all was said and done. 

     Anyway, the 500-ton all-at-once dump could only be calculated to drive the price down. Any rational strategic sale of so much gold would be parceled out in smaller amounts over time so as not to drastically impair the sales revenue, as this sale did. And, by the way, who even has the roughly $25 billion holdings in paper gold besides a major government, a major central bank, or one of the Fed’s Too Big To Fail handmaidens (Goldman Sachs, JP Morgan, Morgan Stanley)? Or who could afford to eat the $billion-plus loss on the smacked-down sales value? In other words, the usual suspects. 

        I hate the term The Powers That Be, with its odors of recycled paranoia and lumpen extremism, but signs of collusion abounded last week. First, on Wednesday, Goldman Sachs issued an advisory to short gold as the price flirted with $1600/oz. Then on Thursday, The New York Times planted a front-page story headlined: “Gold, Long a Secure Investment, Loses Its Luster.” The story featured a quote by supreme market manipulator and world-class schmikler George Soros: “Gold was destroyed as a safe haven, proved to be unsafe,” Mr. Soros said in an interview last week with The South China Morning Post of Hong Kong. “Because of the disappointment, most people are reducing their holdings of gold.” 

     Well, there you have it. Soros sez: Gold = shit. If you get some on your shoe, scrape it off. All that set the stage for the Friday smack down. Notice how falling gold and silver prices make the US dollar look good — it takes fewer dollars to buy more precious metal. The dollar must therefore be sound! And this is in the interest of whom? Say, perhaps, a Federal Reserve busy systematically melting away the value of dollars through so-called quantitative easing (money “printing” or  promiscuous credit creation) plus financial repression (interest rate chicanery), and also a US government so deep underwater on its debt obligations that Treasury Secretary Jack Lew shares office space with the giant squid of the Aleutian Trench.

    To complicate matters, the day of the gold smash, rumors flew of a plan by the Cyprus government to sell off its relatively small gold holdings to pay off its EU debt — didn’t happen — but the rumor had the effect of further queering the gold price some more by implying that the EU would soon come calling on all the PIIGS nations to settle up their vigs with yellow metal.

    Thursday, interesting things happened in another ring of the circus. The novelty investment called Bitcoin, having developed a hockey-stick chart profile, shooting up from about $60 a month ago to $260, got smacked smartly back down to $60. It had been attracting a lot of attention as a shelter from international monetary shenanigans — and hypothetically as an eventual rival to funny-money central bank currencies. Bitcoin is a web-based species of virtual “money” invented by a shady character (or cohort of characters) called Satoshi Nakamoto whose true persona remains mysterious. Bitcoin’s supposed virtue is that it can’t be confiscated by governments — though experienced programmers know any website can be hacked — or otherwise meddled with, making it a more reliable store of value than the traditional “safe harbor” investments such as sovereign bonds and precious metals. Well, okay, but it raises a couple of questions: 1) Does the world need an even more abstract form of “money” than fiat currencies, CDOs, Fannie Mae promissory notes, and JC Penny stock? I don’t think so. If anything, the world needs more tangible instruments to represent a store of value, a medium of exchange, and an index of price. Bitcoin is little more than a bundle of algorithms. Granted, math helps with the management of money, but is math “money?” 2) what happens if you can’t get online to access your Bitcoin “wallet?” Is Bitcoin, after all, just another example of the techno-narcissism infecting contemporary culture?

     That idea is just off the radar screens of Bitcoin pimps such as Jon Matonis of Forbes Magazine who said last week that “civilization won’t regress to the state of having no electricity.” Really? You think so? Just watch. Electric grids all over the world are aging and decrepit — the USA’s in particular — and the capital is not there to renovate them. And perhaps you haven’t noticed the gathering scarcity problem with fossil fuels. You bet society could regress to, first, spotty electrical service and then possibly no electricity at all in many places. But that is an extreme case because in the meantime all it would take is a “denial of service” incident to render Bitcoin useless — and the mysterious Mr or Ms Nakamoto him/her/itself induced a half-day time-out in Bitcoin last week, taking its Mt.Gox trading platform off-line.

     The week ahead in world money matters looks bloody and gruesome. Japan is committing financial hara-kiri by central bank desperation. In artificially suppressing the gold price, the American Powers That Be (yccchhh….) give China, Russia and other rivals the opportunity to buy gold cheaply, and to do so by dumping some of their US Treasury holdings, weakening the dollar’s international exchange value — which the gold smack down was supposed to enhance! China and Russia have both been steadily accumulating their gold holdings in plain sight, with the possible motive of backing currencies with more appeal in international trade settlements than the dodgy US dollar.

     The weeks ahead could be a bloodbath for the four horsemen of monetary apocalypse: the dollar, the Japanese yen, the Euro, and Great Britain’s pound — that is, the core of the so-called advanced economies of the world. What a prankster history is! 

HOW JP MORGAN & THEIR CO-CONSPIRATORS ENGINEERED THE GOLD CRASH & WHY

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Posted on 14th April 2013 by Administrator in Economy |Politics |Social Issues

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Things are not as they appear. Those in control are panicked. They are flailing about attempting to give the appearance of normalcy. Anyone with a functioning brain can see the wheels are coming off this bus and we’re headed for a fatal crash. JP Morgan and the rest of the Wall Street cabal are growing desperate, as their physical supply of gold and silver has rapidly dissipated. They needed to cover-up their impending financial implosion with an engineered crash in metals prices. Bill Downey tells the story you won’t hear on CNBC or any other corporate controlled MSM outlet. Understanding how and why this is being done, is crucial to seeing where we go from here. The bus ride is about to get really interesting. 

12 Apr 2013 2:12 PM | Bill Downey (Administrator)

How the Gold Market was Crashed

There’s been a recent huge draw down of physical gold at the New York COMEX and at the JP Morgan Chase depository. Look at the physical market draw down on the charts below. It has taken a drastic plunge.
HOUSTON — we have a problem.
Physical inventory drawdown at JPM
Charts by Nick Laird of www.sharelynx.com
Physical Drawdown at COMEX
Charts by Nick Laird of www.sharelynx.com

You can imagine the dilemma this is causing for the market interests behind these inventories. If the inventory runs out and one cannot meet deliveries then it has to be bought on the open market. Not only that but it could cause a run up in prices that would hurt the shorts in the market.

So what to do?

There is only one way out of this for the market controllers would be to devise a plan that would collapse the market and trip up all the stops at the correction lows in gold of 1525 thereby setting off the stop loss orders under this important market low. And what if the plan included a way to stop the physical market from purchasing gold under 1525 while that correction was underway?

And how can that happen?

They have to hatch out a plan and carefully orchestrate it in a series of events that takes the gold market by surprise and force the players out of their positions.
Read on for today’s lesson in market manipulation and allow me to relay my speculation about what transpired last week.

A successful ambush usually involves surprise.

One of the main new weapons in the FEDS arsenal is TRANSPARENCY.
After a lifetime of silence the FED all of a sudden has come out of the closet and has decided that the best thing for the market is to be transparent and to that end they now have televised communication meetings with the general public so chairman Bernanke can explain the FED policy and answer any questions that the market has on its mind as well as the usual minutes that get released to the markets that review the policy decisions and discussion of prior meetings.

Why does the Fed need to explain what they are doing now?

Well it isn’t because everything is going just fine. Put it this way. They must figure when you have 50 million people on food stamps and the Dow Jones is going up a few hundred points a week and making all time highs and you have 16 trillion dollars in debt and interest rates are zero, its best to have a communiqué every month before someone asks you to explain what is going on. It’s called staying ahead of the curve if you will. If you tell them what’s going on it makes it look like you know what you’re doing. Otherwise all we have is the statistics and by themselves they tell you something is wrong, something is terribly wrong. So they have become transparent.
During the last communiqué the chairman made it abundantly clear that QE was here to stay until the unemployment rate reached acceptable levels. This communiqué whether by personal appearance or by releasing the FOMC minutes of the prior meeting is something the FED relies on so market participants can remain comfortable and abreast of Fed monetary policy.

Three strikes and you’re out

The FOMC minutes from the last meeting were due for release during last week. But a funny thing happened. They got released EARLIER than expected. It was all a big mistake and the FED let the SEC and the CFTC know right away that the error had occurred. And lo and behold even with all its transparency there happened to be some language we didn’t get updated on until the FOMC minutes were released. The notes say that several members have been discussing cutting back on the stimulus. That was strike one. It got the gold market thinking that stimulus cuts might be coming.

Strike one

Surprise number two

Then a bombshell was released from news sources. It was reported that Cyprus would have to sell 400 million Euro’s of gold as part of the bailout package of raising money for their failed banking system. Gold prices came down to 1550 on the news and the day passed by. Even though Cyprus bankers tell us the next day that they didn’t discuss selling any gold, market jitters seemed to remain and Friday was just around the corner. This was strike two.

Now we need a strike three and you’re out. Gold is a nervous market to begin with as a lot of people have already lost a lot of money in the last six months. With Gold at 1550, all that is needed for the market to drop is to get one more push where all the stops are (just below the 2 year low of 1525).

The selling began in the Friday sessions overseas. By time we got to the New York COMEX gold open, the price was down to 1542. Now all the players are there and the volume and liquidity is there to create the final blow to the market.

And then the attack began. Wave after wave of selling until gold got to 1525. Then they break down the price below the two year low and all the stops that have been accumulating there start getting tripped up and the selling accelerates as it begins to feed on itself. The physical market for gold sees this as a gift and gets ready to make their move and buy up the gold.

Now comes the part that is pure genius or a total coincidental thing that just so happens to be a gift to those who are short the market and those who would be responsible to deliver gold should the inventory deplete.

ALL OF A SUDDEN THE LONDON PHYSICAL PLATFORM THAT BUYS AND SELLS PHYSICAL GOLD GETS LOCKED UP. THE SYSTEM FREEZES.

The screens all freeze.

What does that mean?

No one can get to the physical market to buy at these low prices but at the same time, they can’t sell or protect their position either. The system is frozen. Yes, just like at Bit-coin. The system locks up. And of course the results are going to be the same, just on a lower percentage level.

What can the physical holders do?

Meanwhile the futures market continues to drop.

So what happens? The physical market holders begin to panic. How can they protect themselves as they can’t sell either?

What would I do if I were in that situation?

There is only one solution, especially during a panic. Short and ask questions later.
Therefore it is my speculation that based on 350,000 contracts sold on Friday and the massive drop, some of those contracts was the physical market having no choice but to enter into the futures markets and in order to hedge their physical position holdings, sell contracts or short the market. It’s either that or wait until Monday and be subject to potentially heavy losses should margin calls go out over the weekend. With no time to think and survival instinct kicking in, the physical holders most likely did what they could to protect themselves. They went in and shorted the futures market.

From there the market goes into a free fall as the physical market can’t buy at these low prices because the computer system is down; they can only sell futures to hedge their long physical holdings and so they do what they have to and begin selling futures.

Now it gets worse. As the price drops even more, underfunded players are getting wiped out and now they begin to liquidate. The market goes into a total collapse as all the stops below 1500 get tripped up and the market tanks to 1490.

The market finally closes in New York and returns to the 1500 area.

But it’s not over. There’s another situation going on. The weekend is arriving and players begin wondering about margin calls? How are holders going to get money to their brokers over the weekend for the Monday trade session? But there is not enough liquidity as the COMEX has closed and only the aftermarket GLOBEX is there to execute trades.

But guess what folks?

The banks and brokers are open all weekend and as long as it takes to go through all the accounts and issue all the MARGIN calls.

If they get the margin calls out by Saturday, the customers have 24 hours to get more money to their brokers. If the money is not received by Sunday night or Monday morning, the positions will have to be liquidated, just when the market is at its lowest liquidity and the longs have had all weekend to think about it and the media has had time to tell everyone that the bull market in gold is over.

Not only that but the shorts know exactly what is about to transpire.

I hope you got the picture on how the control boyz forced a major sell off. I speculate the panic over low gold inventory had someone hatch a plan to save their accounts and a lot that is at stake.

They started with leaked information with explosive potential changes in USA policy, and then they published information that Europe/Cyprus would have to sell 400 million Euro’s of physical gold. Finally once the sell off began the physical gold market platform in London locks up and no one has buy or sell access in the physical spot market.

As the market players begin to work this out in their mind there is only one thing left to do. Try and exit and get out in the Globex market. So the selling begins again. The market hits below 1500 and then 1490 get broken. The market sells as much as it can up until the very last minute of trade at 5PM New York time. Even then it’s not over. For some reason the volume and the price keeps moving. Was there special consideration going on for those connected who wanted out? I don’t know. But at 5:07 PM Eastern standard time the market closes at 352,248 contracts and a price of 1476.10 down a whopping 5.67% -88.80 dollars.

Did the control boys lock down the physical market platform or was it pure coincidence? Either way they have total plausible deniability. HOW?

The computer system went down. It couldn’t handle the traffic and it shut down or a glitch happened in the server. It can be any one of many reasons.

This exact same thing happened during the last take down of gold in late December 2011.

VOILA. The perfect excuse and the perfect scenario.

The physical markets couldn’t buy at those low prices. Let me repeat that. The physical markets couldn’t buy. They could only sell futures to hedge their physical gold positions.

Of course this will all be reported on the news and in the financials right?

Wrong.

None of it will be reported as none of it was reported on Dec 29th, 2011 when the control boyz did the same thing and locked out the computer and left the physical market holding the bag. Not one word hit the papers.

Most people are not even aware that the physical market is run by computers. They have never considered or thought about how the physical market works and executes. Guess what folks? It works the same way as Futures via computers and programs.
How do you think it works? Did you think that people show up with all their gold at an auction house and buying and bidding goes on with a mediator who can speak two hundred words a minute and gold is auctioned off like rugs or art?

No it runs off a computer system.

How do I know all of this happened today?

Because I was in direct contact with a big physical dealer out of the mid-east as it was happening. They have taken the time to explain the physical market and how they get SHUT out of the game — just like they did during the last panic (and physical shortage) in Dec of 2011.

Here is the screen shot of the actual physical market in action from January 4th 2012 that the physical trader sent me.

That completes our lesson for today on how to force a major sell off. You start the ball rolling with disinformation and early leaks and surprise with potential policy change considerations at the Federal Reserve level and you follow it up with a potential huge gold supply story that could come to the market.

You’ve shaken up the market and the selling begins and gets to within 20 dollars of two year lows where all the stops are and then you bring it down to where all the stops start getting tripped up and you just sit back and watch the market do the rest. Finally, you shut off the physical system and stop gold buying and at the same time you force physical dealers to sell the futures to hedge themselves.
There’s even a term for this in the trading world. It’s called “Beat the Beehive.” You smash the nest and then watch the total confusion feed on itself. By the next day all the bees are gone and all that’s left is a smashed up beehive.
There has been a lot of speculation on the markets and manipulation that is going on. What I’ve offered in this report using the fact that gold crashed on Friday is a scenario on how it could have been orchestrated. I leave it to the reader to pass judgment on the potential.
At 8:33 AM Friday morning with gold just beginning to trade, GoldTrends listed a potential for $1490 on twitter if $1525 was taken out. Here is the chart of the COMEX session. Note the low. That blue channel line was what we based our projection potential on. The rest as they say is history.
What Next?
I will be assessing the damage over the weekend.
If there really is a shortage then there will be clues that should show up that should show up in the physical markets. We will be on the watch for them if they develop. If we see these clues we will advise subscribers as they develop. The last system lock out was on December 29, 2011. The clues showed up then and a 270 dollar rally took place from 1525 to 1795 by February 29th. Interestingly on Feb 29th, gold fell 100 dollars an ounce on a Bernanke announcement that the Fed was considering slowing down on
QE.
Let me say this. IF the Feds were to slow down on QE the entire system would collapse in a major deflationary spiral. In a speech two months ago at a college Mr. Bernanke admitted that the FED always tries to “talk” control or what they want to see happen. When that doesn’t work they expand to other more important methods of policy.
There are only two things that can bring gold down. A manipulated event like we just saw or a liquidity squeeze like we saw in 2008 where an immediate need for cash forced the liquidation of all assets. Can it happen again? Yes, but this time it would be on a global scale and much more powerful than the Lehman crisis of 2008. While many think a sovereign default would create an inflationary spiral, it’s the opposite could happen. A default would result in liquidation and 99 cents out of every dollar in the banking system has been lent out. The need for cold hard cash would be enormous and the only way to get it to avoid leverage margin calls would be to sell assets at a low enough price to attract immediate cash. That is what happened in 2008. With one penny in banks and 99 cents of debt a spiral the other way could develop.
But you say the FEDS could print the money. Would they have time?
Once a deflationary collapse takes place, then a HYPER INFLATIONARY event can take place. But this is all for another report.
Stay tuned as it’s probably going to get real interesting.
We are now at a critical juncture in gold’s 21st century bull market. At www.GoldTrends.net we monitor the price patterns on an hourly, daily, weekly and monthly basis. We offer commentary on what it all means along with support and resistance levels along the way in advance of each day’s trade. If you would like to join us for 30 days we offer a free trial. Visit our website home page for details. We’d like you to join us and try us out.

 

 

JAMIE DIMON IS RICHER THAN YOU

14 comments

Posted on 15th March 2013 by Administrator in Economy |Politics |Social Issues

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If I recall, corporate executives who signed off on knowingly false financial statements were personally liable under the Sarbanes Oxley law. Jamie Dimon signed off on knowingly false financial statements. I always thought that lying under oath before Congress was a crime. Jamie Dimon lied under oath before Congress. There are hundreds of thousands of Americans behind bars for minor drug offenses. Why is a man who committed crimes that resulted in billions of losses still leading one of the biggest banks in the world? Why is he still living in a multi-million dollar luxury home in NYC? Why is he being paid $10 million per year?

Do you think your vote counts? Do you think our legal system is designed to protect you? Do you think the politicians you elected give a fuck about you and your best interests? Did you spend $8 million last year lobbying politicians in Washington DC?

The Complete History Of JPMorgan’s “Monstrous” Derivative Risks And Abuses – The Full Senate Report

 
Tyler Durden's picture

Submitted by Tyler Durden on 03/14/2013 17:50 -0400

Curious what according to Jamie Dimon is just a “tempest in a teapot“, or, alternatively, why Mr. Dimon is richer than pretty much all of you, here is the full 307 page report that explains everything, including all the events that transpired at the JPM CIO office, all the trades that led up to the “monstrous” Whale portfolio, leading to an epic prop trade failure, coupled with countless lies and misrepresentations to regulators, to investors, to the public, and to politicians, many of which under oath. Oh yes, free Jamie Dimon!

Finally, we are happy that our small contribution to exposing the catastrophic JPM TBTF prop trading behavior made its way into the report, and specifically footnote 1442.

REPORT – JPMorgan Chase Whale Trades (3!15!13)2

 

IT’S ALWAYS THE BEST TIME TO BUY

123 comments

Posted on 25th February 2013 by Administrator in Economy |Politics |Social Issues

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“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.” – David Lereah, NAR mouthpiece/economist – August 2005

“The steady improvement in home sales will support price appreciation despite all the wild projections by academics, Wall Street analysts, and others in the media.” – David Lereah, NAR mouthpiece/economist – January 10, 2007

“Buyer traffic is continuing to pick up, while seller traffic is holding steady. In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country. We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth.” – Lawrence Yun – NAR mouthpiece/economist – February 21, 2013

I really need to stop being so pessimistic. I’m getting richer by the day. My home value is rising at a rate of 1% per month according to the National Association of Realtors. At that rate, my house will be worth $1 million in less than 10 years. My underwater condo (figuratively – not literally) in Wildwood will resurface and make me rich beyond my wildest dreams. Larry Yun, the brilliant economic genius employed by the upstanding and truth telling NAR, reported that median home prices soared by 12.3% in January (down 3.7% from December) over the prior year and there is virtually no inventory left to sell – with a mere 1.75 million homes in inventory – the lowest level since 1999. The median sales price of $173,600 is up “dramatically” from last year’s $154,500 level. I’m sure the NAR meant to mention that home prices are still down 25% from the 2005 high of $230,000. Every mainstream media newspaper, magazine, and news channel is telling me the “strong” housing recovery is propelling the economy and creating millions of new jobs. Keynesian economists, Wall Street bankers, government apparatchiks and housing trade organizations are all in agreement that the wealth effect from rising home prices will be the jumpstart our economy needs to get back to the glory days of 2005. Who am I to argue with such honorable men with degrees from Ivy League schools and a track record of unquestioned accuracy as we can see in the chart below? 

 

Mr. Lereah added to his sterling reputation with his insightful prescient book Why the Real Estate Boom Will Not Bust—And How You Can Profit from It, which was published in February 2006. I understand Ben Bernanke has a signed copy on his nightstand. According to David, he voluntarily decided to leave the NAR in mid-2007 as home prices began their 40% plunge over the next four years. He then admitted in an interview with Money Magazine in 2009 that he was nothing but a shill for the real estate industry, no different than a whore doing tricks for $20. Except he was whoring himself for millions of dollars and contributing to the biggest financial fraud in world history:

“I was pressured by executives to issue optimistic forecasts — then was left to shoulder the blame when things went sour. I was there for seven years doing everything they wanted me to. I worked for an association promoting housing, and it was my job to represent their interests. If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it. It was easy to do during boom times, harder when times weren’t good. I never thought the whole national real estate market would burst.”

After Mr. Lereah slithered away from his post he was replaced by the next snake – Lawrence Yun. He proceeded to put the best face possible on the greatest housing collapse in recorded history, assuring the public it was the best time to buy during the entire slide. Five million foreclosures later he’s still telling us it’s the best time to buy. Why shouldn’t we believe the National Association of Realtors and the mainstream media that report their propaganda as indisputable fact? These noble realtooors only have the best interests of their clients at heart. Remember when they warned people about the dangers of liar loans, negative amortization loans, appraisal fraud, nefarious mortgage brokers, criminal bankers, corrupt ratings agencies and the fact that home prices had reached a high two standard deviations above the normal trend? Oh yeah. They didn’t make a peep. They disputed and ridiculed Robert Shiller and anyone else who dared question the healthy “strong” housing market storyline. In late 2011 this superb, above board, truth telling organization admitted what many financial analysts and “crazy” bloggers had been pointing out for years. They were lying about home sales. Their data was false. Between 2007 and 2010, the NAR reported 2.95 million more home sales than had actually occurred. This was not a rounding error. This was not a flaw in their methodology, as they claimed. It was an outright fraudulent attempt to convince the public that the housing market was not in free fall. These guys make the BLS look accurate and above board.   

  

We are now expected to believe their monthly reports as if they are gospel. The mainstream media continues to report their drivel about the lowest inventory level in 14 years without the slightest hint of skepticism.

The Incredible Shrinking Inventory

We are told by good old Larry Yun that there are only 1.74 million homes left for sale in this country and at current sales rates we’ll run out of inventory in 4.2 months. Oh the horror. You better buy now, before it’s too late. We must be running out of houses. Someone call Bob Toll. We need more houses built ASAP, before this becomes a crisis. But there seems to be problem with this storyline. Existing home sales are falling. Even using the NAR seasonally manipulated numbers, sales in January were lower than in November. In a country with 133 million housing units, there were 291,000 existing home sales in January. If there is an inventory shortage, why have new home sales fallen every month since May of 2012? There were a total of 10,000 completed new homes sold in December in the entire country. Housing starts plunged by 8.5% in January. Does this happen when you have a strong housing market? Do you believe the NAR inventory figure of 1.74 million homes for sale? The last time the months of supply was this low was early 2005 – during the good old days.

 

Let’s examine a few facts to determine the true nature of this shocking inventory shortage. According to the U.S. Census Bureau:

  • There are 133 million housing units in the United States
  • There are 115 million occupied housing units in the country, with 75 million owner occupied and 40 million renter occupied.
  • For the math challenged this means that 13.5%, or 18 million housing units, are vacant.
  • Only 4.3 million are considered summer homes, and 3.9 million are available for rent. That leaves 9.8 million homes completely vacant.
  • The Census Bureau specifically identifies 1.6 million of these vacant housing units as up for sale.

So, with 9.8 million vacant housing units in the country and 1.6 million of these identified as for sale, the NAR and media mouthpieces have the balls to report only 1.74 million homes for sale in the entire U.S. This doesn’t even take into account the massive shadow inventory stuck in the foreclosure pipeline. Of the 75 million owner-occupied housing units in the country, 50 million have a mortgage. Of these houses, a full 10.9% are either delinquent or in the foreclosure process. This totals 5.4 million households, with 1.9 million of these households already in the foreclosure process. The number of distressed households is still double the long-term average, even with historically low mortgage rates, multiple government mortgage relief programs (HARP), and Fannie, Freddie and the FHA guaranteeing 90% of all mortgages. Do you think the NAR is including any of these 5.4 million distressed houses in their inventory numbers?

 

Then we have the little matter of a few home occupiers still underwater on their mortgages. After this fabulous two year housing recovery touted by shills and shysters, only 27.5% of ALL mortgage holders are underwater on their mortgage. This means 13.8 million households are in a negative equity position. Those with 5% or less equity are effectively underwater since closing costs usually exceed 6% of the house’s value. That adds another 2.2 million households to the negative equity bucket. Do you think any of these 16 million households would be selling if they could?  

U.S. homeowners with a mortgage are slowly gaining equity back in their homes. 

The negative equity position of millions of homeowners gets at the gist of the effort to re-inflate the housing bubble. By artificially pumping up home prices, the Wall Street titans and their co-conspirators at the Federal Reserve and Treasury Department are attempting to repair insolvent Wall Street bank balance sheets, lure unsuspecting dupes back into the housing market, reignite the economy through the old stand-by wealth effect, and of course enrich themselves and their crony capitalist friends. The artificial suppression of home inventory has been working wonders, as 2 million homeowners were freed from negative equity in 2012. If they can only lure enough suckers back into the pool, all will be well. Phoenix must have an inordinate number of chumps with home prices rising by 22.5% in 2012 as investors and flippers poured into the market with cheap debt and big dreams. Of course everything is relative, as prices are still down 44% from the peak and 40% of mortgages remain underwater. I strongly urge everyone without a functioning brain to pour their life savings into the Phoenix housing market. Larry Yun says it’s a can’t miss path to riches.  

Despite the propaganda, hyperbole, and cheerleading from the corporate media, the fact remains that national homeowner’s equity is barely above its all-time low of 38%, down from 62% in 2000 and 70% in 1980. The NAR shills, Federal Reserve drug pushers, Wall Street shysters, and pliant media lured the middle class into the false belief that housing was an asset class that could make you rich. Homes became the major portion of middle class net worth. As prices were driven higher from 2000 through 2006, the middle class took the bait hook line and sinker and borrowed billions against their ever increasing faux housing wealth. This set up the impending collapse of middle class net worth, created by the 1%ers on Wall Street, in Washington DC, and in corporate executive suites across the land.  The median American household lost 47% of its wealth between 2007 and 2010. Average household wealth, which is skewed dramatically by the richest Americans, declined by only 18%. Real estate only accounts for 30% of the net worth of the rich. For the middle 60%, housing has risen from 62% to 67% of total wealth since 1983. Middle class families’ saw their cash cushion fall from 21% in 1983 to 8% before the crash. They were convinced that living on Wall Street peddled debt was the path to prosperity. After the crash, the middle class has been left with no cash, underwater mortgages, declining real wages, less jobs, and a mountain of credit card debt. Delusions have been crushed. But an on-line degree from the University of Phoenix funded by a Federal student loan of $20,000 will surely revive the fortunes of the average unemployed middle class worker.  

 

Despite the destruction of middle class hopes, dreams, and net worth, the ruling plutocracy has decided the best way to revive their fortunes is to lure the ignorant masses into more student loan debt, auto debt and mortgage debt.

Don’t Look Behind the Curtain

“The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives that they do not even struggle or suffer or develop symptoms as the neurotic does. They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.” – Aldous Huxley – Brave New World Revisited

 

What is normal in a profoundly abnormal, manipulated, propaganda driven society? The NAR and Federal government issue their public relations announcements every month and attempt to spin straw into gold. The media then fulfill their assigned role by touting the results as unequivocal proof of an economic recovery. This is all designed to revive the animal spirits of the clueless public. Statistics in the hands of those who have no regard for the truth can be manipulated to portray any storyline that serves their corrupt purposes. When I see a story about the housing market referencing a percentage increase as proof of a recovery I know it’s time to check the charts. You see, even a fractional increase from an all-time low will generate an impressive percentage increase. So let’s go to the charts in search of this blossoming housing recovery.

The media, NAHB, and certain bloggers look at this chart and declare that new home sales are up 20% from 2011 levels. Sounds awesome. I look at this chart and note that 2011 was the lowest number of new home sales in U.S. history. I look at this chart and note that new home sales are 75% below the peak in 2005. I look at this chart and note that new home sales are lower today than at the bottom of every recession over the last fifty years. I look at this chart and note that new home sales are lower today than they were in 1963, when the population of the United States was a mere 189 million, 40% less than today’s population. Do you see any signs of a strong housing recovery in this chart?    

 

The housing cheerleaders look at the chart below and crow about a 75% increase in housing starts. I look at this chart and note that housing starts in 2009 were the lowest in recorded U.S. history. I look at this chart and note that total housing starts are down 60% and single family starts are down 70% from 2006 highs. I look at this chart and note the “surge” in housing starts is completely being driven by apartment construction, because the student loan indebted youth can’t afford to buy houses. I look at this chart and note that housing starts are 40% below 1968 levels. Do you see any signs of a strong housing recovery in this chart?   

 

Those trying to lure the gullible non-thinking masses into paying inflated prices for the “few” houses available for sale declare that existing home sales are up 50% in the last two years. Of course, the 3.3 million low in 2010 was the lowest level in decades. Existing home sales are still 30% below the 2005 high of 7.2 million and the abnormal structure of these home sales is dramatically different than the normal sales of yesteryear.

 

The wizards behind the curtain don’t want you to understand how the 50% increase in existing home sales has been achieved. They just want you to be convinced that a return to normalcy has happened and it’s the best time to buy. The NAR wizards and the media wizards don’t publicize the composition of these skyrocketing sales. At the end of the NAR “buy a home before it’s too late” monthly press release you find out that distressed homes (foreclosed & short sales) now make up 23% of all home sales and have accounted for well over 30% of all home sales since 2010. Another 28% of home sales are all-cash sales to investors looking to turn them into rental units or flip them for a quick buck. Lastly, 30% of homes are being bought by first time home buyer pansies who have been lured into the market by 3.5% down payment loans through the FHA, with the future losses born by middle class taxpayers who had no say in the matter. Prior to the housing crash, normal buyers who just wanted a place to live, accounted for 90% of all home purchases. Today they make up less than 30% of home buyers. Does this chart portray a normal market or a profoundly abnormal market? Does it portray a healthy housing recovery based upon sound economic fundamentals?      

 all cash buyers

The answer is NO. The contrived elevation of home sales and home prices has been engineered by the very same culprits who crashed our financial system in the first place. This has been planned, coordinated and implemented by a conspiracy of the ruling oligarchy – the Federal Reserve, Wall Street, U.S. Treasury, NAR, and the corporate media conglomerates. Ben’s job was to screw senior citizens and drive interest rates low enough that everyone in the country could refinance, attract investors & flippers into the market, and propel home prices higher. Wall Street has been the linchpin to the whole sordid plan. They were tasked with drastically limiting the foreclosure pipeline, therefore creating a fake shortage of inventory. Next, JP Morgan, Blackrock, Citi, Bank of America, and dozens of other private equity firms have partnered with Fannie Mae and Freddie Mac, using free money provided by Ben Bernanke, to create investment funds to buy up millions of distressed properties and convert them into rental properties, further reducing the inventory of homes for sale and driving prices higher. Only the connected crony capitalists on Wall Street are getting a piece of this action. The Wall Street big hanging dicks have screwed the American middle class coming and going. The NAR and media are tasked with what they do best – spew propaganda, misinform, lie, cheerlead and attempt to create a buying frenzy among the willfully ignorant masses. The chart below reveals the truth about the strong sustainable housing recovery. It doesn’t exist. Mortgage applications by real people who want to live in a home are no higher than they were in 2010 when home sales were 33% lower than today. Mortgage applications are lower than they were in 1997 when 4 million existing homes were sold versus the 5 million pace today. The housing recovery is just another Wall Street scam designed to bilk the American middle class of what remains of their net worth.

 

The multi-faceted plan to keep this teetering edifice from collapsing is being executed according to the mandates of the financial class:

  • Distribute hundreds of billions in student loans to artificially suppress the unemployment rate, while the BLS adjusts millions more out of the labor force – CHECK
  • Have Ally Financial (80% owned by Obama) and Wall Street banks dole out subprime auto loans to millions and offer 7 year financing at 0%, while GM (Government Motors) channel stuffs its dealers, to create the appearance of an auto recovery – CHECK
  • Drive mortgage rates down, restrict home supply through foreclosure market manipulation, shift the risk of losses to the taxpayer, and allow Wall Street to control the housing market – CHECK
  • Have the corporate mainstream media continuously spout optimistic, positive puff pieces designed to convince an ignorant, apathetic public that the economy is improving, jobs are being created, and housing has recovered – CHECK

Free money, government subsidies, no regulation, Wall Street hubris, get rich quick schemes, media propaganda, and an ignorant public – what could possibly go wrong?   

Here is what could and will go wrong. Everyone in the country that could refinance to a mortgage rate of 4% or lower has done so. Contrary to Bernanke’s rhetoric that “QE to Infinity” would lower mortgage rates, they have just risen to a six month high as the 10 Year Treasury rose 60 basis points from its 2012 low. If mortgage rates just rose to a modest 5% the housing market would come to a grinding halt as no one would trade a 3.5% mortgage for a 5% mortgage. As I’ve detailed earlier, there are 3.9 vacant housing units available for rent. Almost half of the new housing units under construction are apartments. The Wall Street shysters are converting millions of foreclosed homes into rental units. This avalanche of rental properties will depress rents and destroy the modeled ROI calculations of the brilliant Wall Street Ivy league MBAs. These lemmings will all attempt to exit their “investments” at the same time. The FHA is already broke. The mounting losses from their 3.5% down payment to future deadbeats program will force them to curtail this taxpayer financed debacle. There will be few first time home buyers, as young people saddled with a trillion dollars of student loan debt are incapable of buying a home.

These are the facts. But why trust facts when you can believe Baghdad Ben and the NAR? It’s always the best time to buy.

    08-08-12c_baghdad_bob.jpg

“All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.” – Ben Bernanke – May 17, 2007

 

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