THE NEW NORMAL

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Posted on 26th August 2014 by Administrator in Economy |Politics |Social Issues

“Now listen to the first three aims of the corporatist movement in Germany, Italy and France during the 1920s. These were developed by the people who went on to become part of the Fascist experience:

  1. shift power directly to economic and social interest groups;
  2. push entrepreneurial initiative in areas normally reserved for public bodies;
  3. obliterate the boundaries between public and private interest — that is, challenge the very idea of the public interest.

This sounds like the official program of most contemporary Western governments.”

John Ralston Saul

 

Via Jesse

A Warning From 1995 About the Repeal of Glass-Steagall

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Posted on 22nd August 2014 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse

 

Here is a reprint of a warning that was published in the NY Times in 1995 about Robert Rubin’s and Alan Greenspan’s misguided attempts to overturn Glass-Steagall.
Any reasonably informed student of economic history ought to have understood this argument.
There was a well-funded, decade long campaign led by the Banks to overturn Glass-Steagall.  A lot of propaganda was written, and lot of political connections were made, and a lot of money was spent.
Too many were willfully blind. Some through their devotion to utopian ideology.  Others through devotion to their careers.  And even more just kept their heads down and hid their noses in their books and reams of irrelevant data.
And for the most part they still are, with many caught in a credibility trap.
Until the music stops.
NY Times
End Bank Law and Robber Barons Ride Again
 Sunday, March 5, 1995
To the Editor:
Re “For Rogue Traders, Yet Another Victim” (Business Day, Feb. 28) and your same-day article on Treasury Secretary Robert E. Rubin’s proposal to eliminate the legal barriers that have separated the nation’s commercial banks, securities firms and insurance companies for decades: The American Bankers Association, Senator Alfonse M. D’Amato, Representative Jim Leach and Treasury Secretary Rubin are gravely misguided in their quest to repeal the Glass-Steagall Act.
Their contention that insurance companies, commercial banks and securities firms should be freed from legislative obstructions is predicated on fallacious, historically inaccurate statements. If the Baring Brothers failure does not give them pause, a history lesson is our only hope before the Administration and bank lobby iron out their differences and set the economy back 90 years.
The argument that American financial intermediaries will become “more efficient and more internationally competitive” is false. The American financial system is the most stable, most profitable and most dynamic in the world.
The notion that Glass-Steagall prevents American financial intermediaries from fulfilling their utmost potential in a global marketplace reflects inadequate understanding of the events that precipitated the act and the similarities between today’s financial marketplace and the market nearly a century ago.
Although Glass-Steagall was enacted during the Great Depression, it was put in place because the Aldrich-Vreeland Act of 1908, the blue-sky laws following 1910 and the Federal Reserve System of 1913 failed to keep the concentration of financial power in check.The investment climate that ultimately led to Glass-Steagall was one filled with emerging markets, interlocking control of productive resources and widespread bank ownership of securities.
Ever since railroad securities began driving secondary capital markets in the late 1860′s, “emerging markets” have existed for investors looking for high-yield opportunities, and banks have been primary agents in industrial development. In the 19th century, emerging markets were scattered throughout the United States, and capital flowed into them from New York, Boston, Philadelphia and London. In the same way, capital flows from the United States, Japan and England to Latin America and the Pacific rim — today we just have more terms to define the market mechanisms.
The economy and financial markets were even more interconnected in the 19th century than now. Commercial and investment banks could accept deposits, issue currency, underwrite securities and own industrial enterprises. With Glass-Steagall lifted, we will chart a course returning us to that environment.
J. P. Morgan and Andrew Mellon made their billions through inter locking directorates and outright ownership of hundreds of nationally prominent enterprises. Glass-Steagall is one crucial piece of a litany of legislation designed to place checks and balances on the concentration of financial resources. To repeal it would be tantamount to bringing back the days of the robber barons.
The unbridled activities of those gifted financiers crumbled under the dynamic forces of the capital marketplace. If you take away the checks, the market forces will eventually knock the system off balance.
MARK D. SAMBER
Stamford, Conn.
Feb. 28, 1995
The writer is a management consultant specializing in business history.

I AM NOT WORTHY

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Posted on 21st August 2014 by Administrator in Economy |Politics |Social Issues

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Via Jesse

Nomi Prins: All the President’s Bankers

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Posted on 15th August 2014 by Administrator in Economy |Politics |Social Issues

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Via Jesse’s Cafe Americain

This is a walk through the twentieth century, and how the United States became, by design, a combination military, industrial, and financial global superpower.  And how the US dollar hegemony was created over a number of political administrations by groups of well connected, powerful families and friends.
It may seem a bit long, but she opens it for questions about the 48 minute mark, so it really is not. Nomi speaks briskly with many fact laden vignettes and scenarios that help to explain how the current system has evolved.
The facts she brings out about the 50′s onwards were sometimes new to me, and absolutely fascinating.   About minute 40 she shows the culmination of this historical process with the Clinton Whitehouse, and begins to describe where we are today, and how it appears that the problem will be insoluble without some major events taking place to change this alliance in power between the financial and the political.
The talk served to solidify some of my own thinking, and removed some of the shadows of doubt that I have had about where things are going and why.
She does is not able to delve into the international ties between the global central Banks, particularly between London and New York.  She instead concentrates on what she might call ‘the Big Six’ of American Banks, which is a large enough subject itself.
I strongly recommend that you listen to it if you are at all interested in this subject.
 Or if you have the time to invest, you may wish to read her book which also sounds very interesting.  I have not done so yet, and I am not sure when I could get to it.
But this video is a very good start, and will probably make you much better informed than 90 percent of the people out there.  Whether that is a good thing or not is another matter.

AND THE TIMES, THEY ARE A CHANGIN’

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Posted on 8th August 2014 by Administrator in Economy |Politics |Social Issues

Guest Post by Jesse

“In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists.”
Eric Hoffer

 

There was intraday commentary here.   I was struck by the continuing erosion of gold from Western trusts and funds, in stark contrast to silver.   I like both metals, but gold is the deffest dog.  And from my perspective the reasons are pretty obvious.

 

We have come to the end of the informal Bretton Woods II agreement, which was to stay with the US dollar as the primary basis for world trade, an arrangement that had been in place since the end of WW II.  The US dollar based on a relationship to gold became the petrodollar when Nixon unilaterally closed the gold window in 1971.

 

The banks agreed to continue to use it as the de facto standard for international currency valuation  The ‘management’ of gold as just another currency was carried out through leasing arrangements and targeted sales.  By 2004 at the latest, a number of the world’s central banks broke from this arrangement, which started quickly falling apart. By 2006 the central banks turned from net sellers of gold to net buyers.

 

The agreement finally succumbed to the Greenspan Fed, and the band of Merry Pranksters in the government, who finally played one too many one-sided games with the other sovereign nations.  The credibility of the US hit a virtual brick wall in the aftermath of the obtuse behaviour that followed the world’s outpouring of favourable sentiment for the US after 9/11.

 

Bush laid the egg, and Obama hatched it, to borrow a historical metaphor about another Reformation that came after a long period of abuses and a rising tide of nationalism after the long fall of an Empire.

 

We know who these central banks are, and we have a good idea of why they are doing it, if we are still a little rough on the details, which is understandable given the strategic nature of their actions.

 

There are still a range of outcomes, obviously, even if all these assumptions and estimations we are making are correct.  One outcome, that is very much desired by many in power, is to have a one world financial and currency system based on the dollar as it is defined and managed by a small elite group of bankers.  That deal has been on the table for so long that it might have died of old age.

 

The greedy shenanigans of Wall Street, and the slavish acquiescence of their friends at the Fed and in the government, have thrown a serious monkey wrench into those longer term aspirations. Propaganda may serves to persuade and relieve your own people in their confusion and anxiety, and make them more compliant in believing just about anything, but it doesn’t always fool those who are looking in from the outside, and see things more objectively.

 

This seems to me to be one of those periods of very significant evolutionary change, that happen infrequently enough so that they do not seem to have much of a place in most people’s models and mindsets.  And of course since they threaten the status quo, many of our modern King Canutes are standing on the shore, command the tide to stand fast, and exclaiming, “It ain’t happening man, it ain’t happening.’  Wait until the bloodbath in high yield garbage assets starts.

 

I have taken the liberty of using a good general revolutionary change chart, and include it below.

 

Have a pleasant evening.

 

C. S. Lewis On Kindness and Civility at the Table (And Online)

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Posted on 27th July 2014 by Administrator in Economy |Politics |Social Issues

He couldn’t be talking about TBP. Could he?
Guest Post by Jesse
“We hear a great deal about the rudeness of the rising generation. I am an oldster myself and might be expected to take the oldsters’ side, but in fact I have been far more impressed by the bad manners of parents to children than by those of children to parents.Who has not been the embarrassed guest at family meals where the father or mother treated their grown-up offspring with an incivility which, offered to any other young people, would simply have terminated the acquaintance? Dogmatic assertions on matters which the children understand and their elders don’t, ruthless interruptions, flat contradictions, ridicule of things the young take seriously – sometimes of their religion – insulting references to their friends, all provide an easy answer to the question “Why are they always out? Why do they like every house better than their home?”Who does not prefer civility to barbarism?

If you asked any of these insufferable people – they are not all parents of course – why they behaved that way at home, they would reply, “Oh, hang it all, one comes home to relax. A chap can’t be always on his best behaviour. If a man can’t be himself in his own house, where can he? Of course we don’t want Company Manners at home. We’re a happy family. We can say anything to one another here. No one minds. We all understand.”

Once again it is so nearly true yet so fatally wrong.

Affection is an affair of old clothes, and ease, of the unguarded moment, of liberties which would be ill-bred if we took them with strangers. But old clothes are one thing; to wear the same shirt till it stank would be another. There are proper clothes for a garden party; but the clothes for home must be proper too, in their own different way. Similarly there is a distinction between public and domestic courtesy. The root principle of both is the same: “that no one give any kind of preference to himself.”

C. S. Lewis, The Four Loves

I suspect Mr. Lewis would be inclined to make similar observations about online manners as compared to public manners, where electronic anonymity tempts the worst part of a person to be belittling, dismissive, condescending, and in short, a bully.

Sometimes people come to confuse rudeness with strength and position, and choose to exercise it when they feel that they have some power, even if it is just the power to say what you will with relative impunity given the distance of electronics. The culture of the internet is nascent; and intelligence without education and cultural broadening can quickly degenerate into barbarism, even amongst people, not only commenters but bloggers, who might be otherwise appalled by how they act online.

Understanding, compassion, and kindness are the signs of real power and strength. Rudeness, incivility, and bad manners are the signs of ill-breeding and ignorance, of the disordered mind of the narcissist, who proceeds through life unaware and uncaring of those around them.

I am certainly no stuffed shirt. Manners does not mean that famous English reserve. Rather, manners are no ritual. Ritual manners, like accents, are too often an artificial construct with the purpose of promoting a type of class system. Civility is a certain ease of behavior, supported by kindness.

Barbarism can become fashionable, almost contagious. One may even have learned such dismissive and condescending behaviour from a parent, who learned it from one of theirs, or in some deep disappointment in their lives.

Don’t tell yourself that this is just the way it is. Rather, tell yourself that this is just wrong, and let such incivility stop with me.

Beloved CEO Fired By Board For Being Insufficiently Ruthless: Employees Walk Off Their Jobs In Protest

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Posted on 25th July 2014 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse
“Just remember this, Mr. Potter, that this rabble you’re talking about,  they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?
Anyway, my father didn’t think so. People were human beings to him. But to you, a warped, frustrated old man, they’re cattle. Well in my book, my father died a much richer man than you’ll ever be!”
George Baily in It’s a Wonderful Life
This is by far the most remarkable story I have seen in a while.
In the latest development, Mr. Demoulas has made an offer to buy his company back.
If only more of us would put people before power and greed, and insist that our leaders live up to their duties to the people first, and not wallow in money and privileges for themselves and their cronies, while spreading fear and hatred to keep the people compliant.
Then that really might be ‘a wonderful life.’
Meet America’s Most Beloved CEO—Too Bad He Just Got Fired
Brad Tuttle
July 23, 2014
After the wealthy CEO of a supermarket chain was fired, thousands of workers walked off the job in protest—some getting fired themselves. What’s up with that?
Workers understandably tend to go on strike or protest for selfish reasons—more pay, better benefits, improved working conditions. Over the last week in New England, however, thousands of employees at Market Basket, a supermarket chain with 71 stores in New Hampshire and Massachusetts, have been sticking their necks out (and in some cases putting their jobs on the line) in support of Arthur T. Demoulas, who was the company CEO until he was fired in June.
Rallies pushing for “Arthur T.” to be given his job back were held at the Market Basket headquarters in Tewksbury, Mass., on Friday and Monday, drawing upwards of 5,000 protestors. Meanwhile, the shelves of many Market Basket locations have gone barren, as there are too few employees still on the job to stock them. At least eight employees were fired over the weekend related to the protests…
“He’s George Bailey,” Trainor explained to the Washington Post, comparing Arthur T. Demoulas to the beloved savings-and-loan manager played by Jimmy Stewart in It’s a Wonderful Life. “He cares more about people than he does about money….”
Read the entire story here.

Nanex: The Market Is Rigged, With Details

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Posted on 16th July 2014 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse

“A rogue does not laugh in the same way that an honest man does; a hypocrite does not shed the tears of a man of good faith. All falsehood is a mask; and however well made the mask may be, with a little attention we may always succeed in distinguishing it from the true face.”

Alexandre Dumas

The market is rigged.  Oh no, this could not possibly be correct, say the trolls, shills, revolving door careerists, media carnival barkers, and conmen’s assistants. They simply do not understand it!

The analysis from Nanex, rich in details, does not only apply to very large orders in excess of 10,000 shares.  I have seen the same type of activity in smaller markets with orders of only a few thousand shares.  Anyone who has Level 2 access can observe it if they look closely enough, and have the will to look with their eyes and see.

These pampered princes of Wall Street are steadily degrading the markets, and distorting and taxing the real economy with their bias to speculative grifting rather than facilitating productive investment.

I do not agree that a ‘free for all market’ would be better than this.  Some of these schemes are as basically corrupt as a West Coast gangster’s attempt to control all the horse racing wire services information for his own benefit.  And you don’t fix corruption by firing all the police and prosecutors.

There are a few things that would go a long way to fixing this.  Fairness is not so terribly hard to establish if you do not wish to twist it with the faux complexity of a confidence racket that advantages some because.

I suspect that nothing will work until we root the big money out of politics.  Its corrupting influence touches everything and is corrosive to the common good, giving scandal to all by its shameful example.

In some sense, this would be turning the markets back to what they were before they became utter casinos dominated by big players unleashed by the repeal of Glass-Steagall and the divestment of sound regulation in the name of a utopian market ideology that serves to promote a new level of systemic criminality.

This is analysis and conclusion below is from NANEX.

“…All this evidence points to one inescapable conclusion:

The order cancellations and trade executions just before, and during the trader’s order were not a coincidence. This is premeditated, programmed theft, plain and simple.

Michael Lewis probably said it best when he told 60 minutes that the stock market is rigged.

To the High Frequency Traders (HFT) that make fantastic claims about providing liquidity, perhaps one should ask: “what kind of liquidity”? To the now obvious, ludicrous claim that “everyone’s order uses the same tools that HFT uses”, we’ll just say, the data shows otherwise. To Mary Jo White and other officials who claim the market isn’t rigged and that regulators need to look at the data before making any decisions: well, you made it this far – if things aren’t clear, re-read this expose (or the nearly 3000 others pages we’ve published), or simply call us and we’ll explain it to you. Or dust off Midas and lets us show you how to work with market data.

One more note to the SEC in particular – if you believe that the industry can fix these problems on their own, then we believe you are no longer fit to regulate, because that is not, and never was, how Wall Street works. Honestly, a free for all, no–holds–barred environment would be better than the current system of complicated rules which are partially enforced, but only against some participants. And make no mistake, what is shown above is as close to automatic pilfering as one can get. It probably results in a few firms showing spectacularly perfect trading records; it definitely results in people believing the market is unfair and corrupt.

And to CNBC and other financial media companies who say these problems have all been fixed – we think you might have been lied to. Probably by the ones doing the market rigging. A certain HFT lobbyist group immediately comes to mind – the one that presents the same tired “liquidity, spreads, costs” argument, without data to back it up. This paper shows that the liquidity claim is clearly a lie.

Academics interested in continuing the study shown on this page – we believe we know how you can find and quantify these events. Serious inquiries only please.

Note that none of this would be possible if the direct feeds weren’t illegally supplying HFT with faster information than the SIP.

And finally, to our regular readers: we are taking a break. Everyone has a limit to how much corruption they can witness and digest in a given period of time and we’ve simply reached our limit.”

You may read the detailed examination and explanation of this from Nanex here.