Monday, June 13, 2011

Greece With A Triple Hook and Rampant Manipulation In The U.S.

In college we referred to getting a "C" as "getting a hook."  I had one or two in undergrad and one marketing in B-School (I have no idea why they required one Marketing course at the University of Chicago, but I hated it and I hated the guest professor from Northwestern - talk about a b.s. subject).  Greece just got "triple-hooked" by S&P.   This is not good.  The reality is that Greece is insolvent and technically should be rated "D" for "defaulted."  It will be interesting to see how the restructuring of Greece's debts are effected.  I'm sure the most important issue for the big banks and Central Banks is how to effect the reorg without triggering the $100's of billions in Credit Default Swaps.  I guess this isn't as bad as what happened with AIG.  But then again Goldman Sachs does not have a stoolie like Geithner or a plant like Henry Paulson sitting in positions to bail out its losses in this situation...

Even more interesting is the situation heating up in the U.S.  The U.S. is hopelessly insolvent as well, only the degree is Greece x 10.   And who knows how much notional value in derivatives is outstanding on U.S.-related debt. 

I was chatting with someone over the weekend and we treaded on the subject of how corrupt the entire U.S. banking system and Government has become.  It really irritates that me that the CFTC refuses to acknowledge the extreme manipulation going on in the gold/silver markets on the Comex.   Anyone who has looked at all the evidence, and/or has traded the silver market for as long as me (9 years now), would have to have their head up their ass to not see just how obvious and blatant the manipulation is and has become.  I actually thought JPM would give it a rest after Andrew McGuire's smoking gun.  But they've continued on with their typical illegal activities while Gary Gensler and his band of merry thieves at the CFTC look the other way.

The reality is that, just like Francisco D'Anconia's famous speech proclaimed back in 1957 - when "Atlas Shrugged" was published, the people who the laws are supposed to protect us from are in power legislating laws to protect themselves from us (Patriot Act, Homeland Security Act, Detainee Bill).  So I guess that for me to expect that Gary Gensler and Eric Holder, and anyone else in the current Presidential Administration for that matter, including the President, would be willing to enforce the remaining laws in order maintain some semblance of Rule of Law would mean that I would have to have my head up my ass. 

Well, the good news is I've been seeing the light of day for nearly 10 years now and the corruption in this country, especially in DC, gets worse by the day.  And for all those who don't believe that the markets are manipulated or that Government is now operating against your best interests, just ask yourself how many of Obama's campaign promises has he honored?  Why is a tax-dodging moron operating as the Secretary of the Treasury?  Why was Bush's Secretary of Defense kept on under Obama?  Speaking of Obama-lies, I read that Obama's Defense budget is now substantially larger than the Defense budget under George W. Bush.  Did all you who voted for Obama really expect that to be a fact nearly three years into Obama's presidency?  Take your head out of your ass if you didn't...and then read this:  LINK


  1. You are not alone...

    Why No handcuffs For Wall Street Bankers?

  2. I agree with everything you say...and I have to admit on days like today, I feel like throwing in the towel as it pertains to a real price discovery mechanism for gold/silver...oh well, let the manipulation continue....

  3. Could someone enlighten me - with all news, every single news item, from Japan, Europe, USA, the dollar down - precious metal positive. Why would they be the only ones down harshly.

    Its time that the Newsweek article - Mad as hell - starts right now....

  4. dave,

    Any comments on ECU's performance today (+17%) in an otherwuse horribe day for miners.


  5. (Dave in Denver)

    Ari, GDXJ did some rebalancing today and they added some ECU today. That doesn't explain the most of the move though. I think they may be getting close to releasing MSZ drilling results and maybe that's spooking the big shorts...

    Anonymous, re-read the part of my post today about the manipulation. Silver started from the get-go yesterday evening when Globex re-opened. Silver was bombed for 36 cents at the open. Explain that. It then rallied to green and then got bombed again. They're getting desperate and no one is willing to enforce the laws to stop them... about throwing in the towel, the good friend who opened the door for me to this sector back in mid-2001 is finalizing his boat and getting ready to sail away, likely for good. He's got computers, ammo, weapons, lots of gold/silver on board...satellite phone, etc. His trial-run is for 8 weeks but he might not come back...he thinks we collapse by the end of the summer but I think it will be 12-24 months beyond that...I think Bernanke/Obama can get away with one more big QE and that will take us down the path to hell for another 18-24 months...

  6. Dave,

    At what price would you recommend buying ECU? I was thinking about it, but today it went up too fast too quickly.


  7. Think small...small shop keeper, small cafe,small farmer markets,etc

    have small wants...til things change...squeeze back...stay away from national chains if you can.
    ...that's if you want things to change!

    Our Participation Fuels Financial Tyranny

    Our debt and transactional consumerism fuels the tyranny which oppresses us.

    The basic dynamic is profound: the political and financial tyranny of Wall Street and the "too big to fail" banks is fueled by our own participation. "Reformers" both within the Central State and outside its halls of delirium-inducing power, keep hoping that some tweaking of policy or regulations will relax the grip of Wall Street and the big banks on the nation's throat.

  8. (Dave)

    I could never point to a specific price. See if it pullsback a bit from today and buy 1/3 - 1/2 of how much you ultimately want to own. That way you have money to buy more if it goes lower and you own it if doesn't go lower but moves higher. A stock like this is either a big home run or will languish forever below a buck. If it's the former, you won't care if you paid 95 cents, 85 cents, 60 cents or 1.20 cuz it will more than triple from here if it works.

  9. What you can't get go around...

    UPDATE 2-China builds Kazakh ties, bypasses USD with FX swap

    The three-year currency swap deal, the latest in a series of bilateral agreements between China and its trading partners, was agreed by the countries' central banks during Chinese President Hu Jintao's seventh visit to Kazakhstan.
    "After signing this agreement, we will open correspondent accounts and this sum will be digested in about three years," Tadzhiyakov said. "By doing so, we will bypass a third currency, for instance the U.S. dollar."

  10. The False Dichotomy Between Banking Honesty And A Sound Financial System

    Bill Black

    It's exceptionally hard to kill bad ideas. The most spectacularly bad idea in economics and finance is that regulating business honesty is bad for business. The idea is exceptionally criminogenic.

    "The Lilliputians look upon fraud as a greater crime than theft. For, they allege, care and vigilance, with a very common understanding, can protect a man's goods from thieves, but honestly hath no fence against superior cunning. . . where fraud is permitted or connived at, or hath no law to punish it, the honest dealer is always undone, and the knave gets the advantage."

    Swift, J. Gulliver's Travels, London, Penguin (1967) p. 94. See Levi, M. The Royal Commission on Criminal Justice. The Investigation, Prosecution, and Trial of Serious Fraud. Research Study No. 14, London, HMSO (1993) p. 7.

    Read more:

  11. I think Bill's comments tonight on LeMetropole Cafe are spot on and explains why the metals/miners are getting beat up so bad at the moment. If we get a decent pullback it might be the last opportunity to buy physical at these relatively affordable prices.

    cont'd: 1 of 2


    At the crossroads.

    To all; after 6 weeks of negative global equity markets the world's central banks are now posed with "decision time". In reality this is rapidly becoming a game of "chicken" where investors are liquidating assets and more or less demanding more "juice" from the punchbowl. The central banks need to be very careful here in their "bluffing" because should ANY link in the global financial daisy chain break it will not be repairable.

    I watched the movie "Too big to fail" again this weekend and realized that this next "episode" can't be fixed. Not that I didn't already know this but the message was driven home that EVERYTHING available to TPTB was used back in 2008-2009 and no bullets remain. We were literally hours away from a complete cascading meltdown on a global basis back then that only reversed when sovereign governments put their balance sheets on the line. Since then they have remained "on the line" and been abused to the point of virtual insolvency. The point is, there is no longer any "White Knight" who can ride in and save the day again.

    THIS is exactly why the central banks need to be very careful in this "game of chicken" with investors because it is now entirely all about confidence (as it has been for years). The difference now is that Hank Paulson's "bazooka" has already been fired and now sits hollow and empty. I have said all along (many disagree with me) that once the panic begins it will progress very rapidly and literally become an overnight event. I still believe this and the fact that central bank and Treasury "ammo" has already been spent reinforces my thinking. Yes I know, Yra Harris and others have cautioned that the central banks will get even more "creative" in waving their magic wands. I really believe that "the system" has gotten so large and relies so entirely on confidence that central banks and Treasuries will be dwarfed and overrun even with their use of 100 to 1 or more leverage.

  12. cont'd: 2 of 2

    I have this view because everything we have been told and spun are now obviously lies and the common man in the street knows it. He knows the economy is sucking wind and is now watching the last bastion of bullshit (the stock markets) begin to shrink. Panics are a very peculiar animal in that no one can ever pinpoint "when" they begin, all I can tell you is that the time is MORE THAN RIPE! Not only is the time ripe, TPTB have been publicly demonstrated to be full of hocus pocus and everyone knows it. Add to this that "THEY" (meaning sovereigns and their respective Treasuries) are now part of the problem!

    As this thought process festers and spreads further, more scared capital will find its way into the metals and create bids so strong as to scare away any and all offers. In other words as this coming panic blooms there will be NO PLACE TO HIDE because NO ONE will be willing to part with their metal! As I have said all along, you must have your positions in place ahead of the music stopping because once it does you will "have what you have and that's all you'll have". Sovereign governments will huff and puff but investors will already know that are a big part of the problem and not the solution. This next episode will run its full course and not be aborted, this is THE BIG ONE!

    Does Gold or the shares "go down" in this panic? Yes probably they do for a time. The problem is ...for how much time and once they turn, how much are they "marked up"? The other problem as I have written about before is what happens if they are "marked up" AFTER/DURING the markets are shutdown for "holiday" and then reopened? How do you regain your position? The answer is that you cannot which is why you must HOLD ON to anything and everything "precious" no matter what happens here. You must be strong in your knowledge of "how this ends", your financial future depends on it!


    Bill H.

  13. Don't events like this usually occur when you look back in history as an event that precedes something big?..doesn't it signal control is lost?

    Missing Iraq money may have been stolen, auditors say
    U.S. Defense officials still cannot say what happened to $6.6 billion, sent by the planeload in cash and intended for Iraq’s reconstruction after the start of the war.
    By Paul Richter, Los Angeles Times
    June 13, 2011,0,4414060.story

  14. Great comments, thx.

    Firstly this game of chicken is very important in two respects, 1) prevention is less costly than cure and 2) previous prevention would have been for naught - (however many trillions have already been used). This really is only true if you are a believer that the road that was chosen was in actual fact a preventative step!!!!

    There is however one more bullet....

    Pay your debtors in GOLD with a much elevated revaluation of it, ie use your Gold as collatoral as already spoken about for Europe.

    This however presupposes that the peoples GOLD is aloud to be used through a referendum or infact it is there???

  15. Just something interesting.

    Here a little Silver history.

    Note the paragraph.....on the effect on the USA and China...

    So would a conclusion be correct that the US needs to get out of its malaise and China could do with some deflation????

    It seems President Roosevelt decided to increase the price of silver by allowing the Treasury to purchase
    400,000,000 ounces of the white metal in 1933, above the market price. The idea here, in part was to raise
    silver’s price through a sequence of open market purchases and hence help drive the U.S. economy out of its
    deflationary funk by remonetizing silver. The Roosevelt Administration was interested in creating a silver
    monetary economy given the depth of the Depression. In April 1933 the President authorized the Treasury to
    pay $.71 per ounce when silver was selling for $.64. The world took note. Speculators bid the price of silver

    On May
    6, 1933 Time wrote,
    “Last week silver standard China had a taste of the same (editor: the US had experienced a similar demand
    for gold before it was confiscated), though silver instead of gold was the metal wanted. Ever since the U. S.
    began to boost the price of silver, China has had deflation.”

  16. (Dave)

    Interesting re: silver. I did not know that about FDR.

    Re US gold: anyone who believes that it's still there also believes in the tooth fairy. Now, it may only largely be leased out, but try to send your lessees out to re-purchase 8000 tonnes of gold right now...

  17. Think about this hard...the implications to me will be whatever valuations they can conjure up will become instant wealth. Who will audit? Who has to be accountable?..The collateral values are already insane!
    Real assets will always be under pressure but this fugazy wealth will be manufactured via exclusive cartel membership.

    from mk..

    Banks and their clients will be able to buy and sell billions in shares – without oversight or a public market – giving those outside of their private club any access. The lesson of Madoff was, ‘how do we make the fraud bigger.’

  18. billy joe and bobby sue were ex partners...

    Goldman Sachs, If You Are Looking For Love Here, You Won't Find it!

    "What all this adds up to is a successful campaign of obfuscation on Goldman’s part, something the firm has been pretty darn good at through much of its 142-year history, proving repeatedly that it can get out of the trouble it gets into. The fact remains that Goldman -- alone on Wall Street -- was net short in the mortgage market for much of 2007 and one of its proprietary trading desks made about $4 billion as a result, helping the firm to book $17.2 billion in pre-tax profits for the year, while the rest of Wall Street was blowing up. Thanks to those enormous profits -- the second-best year in its history -- the top five executives at Goldman split about $350 million in compensation. "

  19. Another reference to FDR Silver purchase in two days....