Day-Long Ramp Job

Today's action is precisely what was referenced in yesterday's post.

There's absolutely no telling where or when the market (forget individual stocks, that's another story) is going to move. At the close yesterday was a vast selloff, normally indicating trouble ahead, but, if you sold at the close yesterday, you were shut out this morning unless you wanted back in at a much higher price because the market gapped up tremendously at the open and stayed right up there for the remainder of the session, closing just about where it opened.

This kind of activity may be meaningless to the casual investor, but it's death to day-traders, options players and short-term speculators unless you're on the inside and know the game plan. It's all pre-arranged, pre-planned and if you're not on the short list, you're, well... screwed. Royally. On. A. Big. Stick.

Just look at what happened to JC Penny yesterday. Entering the close of trading, word goes out that CIT has cut their lines of credit and the stock gets hit for about 10% in just a five-minute span, right before the close.

Word has it that Goldman Sachs (yeah, those guys) had recently arranged financing for the troubled retail chain, to the tune of about $2.25 billion, with JCP putting up its real estate - which is extensive - as collateral. So, when word comes that CIT has pulled their lines of credit, hastening the path to bankruptcy court, one can assume that the great Lloyd Blankfein and the criminal John Thain (CEO of CIT, formerly of BOfA's Merrill Lynch and before that, head of the NY stock exchange) must have had lunch at some point over the past few months and arranged the untidy undoing of JC Penny.

Today, via the same source, the NY Post, comes word that the CIT story was a complete fabrication and that JC Penny is still receiving shipments and has ample cash on hand.

Either way this plays out, true story or not, per CIT, somebody lost a lot of money yesterday, and, somebody made a bunch today as the stock recovered most of the losses.

Best guess is that Thain and Blankfein and their firms (or their off-shore accounts) were the main beneficiaries of this bit of dis-or-mis-information. How anybody can trade in this environment is a question for the ages or sages. It's a sick-o world out there in the land of high-finance.

Tomorrow's non-farm payroll report comes out at 8:30 am EDT, prior to the opening bell. As we used to say in high school, BFD. Look it up.

Dow 15,628.02, +128.48 (0.83%)
NASDAQ 3,675.74, +49.37 (1.36%)
S&P 500 1,706.87, +21.14 (1.25%)
NYSE Composite 9,673.39, +114.56 (1.20%)
NASDAQ Volume 1,835,171,500
NYSE Volume 4,175,730,750
Combined NYSE & NASDAQ Advance - Decline: 4375-2251
Combined NYSE & NASDAQ New highs - New lows: 698-89
WTI crude oil: 107.89, +2.86
Gold: 1,311.20, -1.80
Silver: 19.62, -0.004

Our Dysfunctional Economy Won't Be Repaired Until Bankers Go to Jail

The popular phrase, "it's better to light a candle than curse the darkness," was once spoken in public by Peter Benenson, the English lawyer and founder of Amnesty International, at a Human Rights Day ceremony on 10th December 1961. There are disputes over the origin of this nugget of wisdom, some attributing it as an "ancient Chinese proverb."

Whatever the case, Mr. Benenson, and the American Christopher Society, which adopted the phrase as its motto, certainly had meritorious intentions in keeping to the spirit of the words.

When it comes to our current economic climate and the out-of-control, corrupt worldwide banking and political liaison, the cabal of bankers and politicians are the darkness, and, as much as one tries to be at all times civil, they need to be cursed.

Market manipulations aside, this week could well have been the utter, disgusting end of years of rigging, price, fixing, fraud and associated crimes, none of which having been prosecuted.

It's been mentioned in this space before that the end of manipulation is eventual failure or stagnation and this week was a prime example. Sure, it's summer and the height of vacation season, but the entire range of trade over the past five days on the Dow Jones Industrials was 115 points. On the NASDAQ, 45 points, while the S&P 500 vacillated between a low of 1391 and a high of 1406, which, incidentally, was close to where it closed on Friday. The S&P finished higher every day this week, though the biggest gain was a whopping seven points.

By the way, all of todays gains were made in the final 40 minutes of trading and the day's volume was embarrassing. Free and fair markets - that's what we used to have in the United States. What we have now is a dangerous, insider-controlled contrivance.

Were there a way to "light a candle" amidst the fraud that has enveloped our financial, political and media systems, it would probably be blown out in an instant. We the people are seemingly bred to watch, listen, obey and not ask questions. The banking elite, however, can do no wrong, as evidenced by a number of stories which emerged from the flotsam of the week that wasn't.

On Tuesday, the CFTC shut down a four-year-long investigation into silver market manipulation, focusing on JP Morgan and HSBC, saying there was insufficient evidence to bring any charges.

Thursday, the US Department of Justice decided not to pursue criminal charges against Goldman Sachs or any of its employees on mortgage securities fraud, concluding "that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time.” The investigation, which took over a year, was prompted by Goldman Sach's CEO Lloyd Blankfein testifying to a congressional panel that the firm actually took the opposite sides of trades that they sold to their clients. But, that's not sufficient for the bought-and-paid-for invisible man, Eric Holder, to bring a case forward. (Here's an idea: to help balance the budget, why not just shut down the DoJ? They apparently aren't interested in prosecuting anybody connected with the financial industry for anything. Big savings there.)

Thursday night, CBS ran, as the second story on their nightly national "news" broadcast, that the housing market was finally recovering (this probably was the sixth or seventh time over the past two years the shills at CBS had run such a story). Why then does Gary Shilling suggest that existing home prices could fall another 20%?

Flood of Foreclosures Could Cause Home Prices to Drop 20%: Gary Shilling

So, make up your own mind. Is the banking system, government oversight and the media working for you and your fellow citizens? Or are there two levels of justice in the USA (and probably everywhere else): one for rich bankers and one for the rest of us? Can we really trust our leaders to do the right things for the people? Or are we caught up in a fascist corporotocracy that feeds upon individuals for the benefit of the rich and powerful?

Go ahead and curse the darkness, because it needs to be cursed. Then light a candle. Take care of your family and friends and do something for yourself, like buying some raw land, growing some of your own vegetables, or investing in physical gold or silver.

To close out the week, or, if you're in need of additional reinforced rancor over the weekend, check out the latest Keiser Report, with Max Keiser and Stacy Herbert, below:


Dow 13,207.95, +42.76 (0.32%)
NASDAQ 3,020.86, +2.22 (0.07%)
S&P 500 1,405.86, +3.06 (0.22%)
NYSE Composite 8,042.59, +17.58 (0.22%)
NASDAQ Volume 1,568,909,750
NYSE Volume 2,586,105,500
Combined NYSE & NASDAQ Advance - Decline: 2753-2759
Combined NYSE & NASDAQ New highs - New lows: 153-43
WTI crude oil: 92.87, -0.49
Gold: 1,622.80, +2.60
Silver: 28.06, -0.04

Government Sues 17 Banks Over Faulty Mortgage Backed Securities

This news broke early on Friday, but details were just coming in as the markets were closing.

The Federal Housing Finance Agency is the conservator for failed federal GSEs, Fannie Mae and Freddie Mack. The agency seeks a total of $196 billion in damages in state and federal courts from the named defendants, including some $24.853 billion from Merrill Lynch and First Franklin Financial (owned by Bank of America). All of the charges are made in connection with false or misleading representations and warranties made to Fannie and Freddie by the banks.

The list is pretty much a who's who of the sub-prime and general mortgage crisis which pushed the global economy to the brink of disaster back in 2008, including such notables as Goldman Sachs, Bank of America, JP Morgan Chase, Citigroup, Countrywide Financial (now part of Bank of America), Deutsche Bank and others.

American Banker points out that the largest exposure - $57 billion - belongs to Bank of America (BAC) because the bank not only sold $6 billion of MBS to Fannie and Freddie, but the figure grows larger when factoring in the damages charged against Merrill Lynch and Countrywide, both acquired by BofA during the financial crisis. JP Morgan Chase has to deal with $33 billion in claims, including those of Bear Stearns and Washington Mutual, both of which were taken over by JP Morgan Chase.

Below is the press release in which the agency lays out the charges. Here is a link to the individual cases.

FHFA

While most of the American public must be cheering this news, it's about the worst that could happen to the TBTF banks, being that their reputations and balance sheets are both on shaky footing. The hardest hit will surely be Bank of America, which is being sued by virtually the whole planet, including AIG and USBancorp.

The litigation involved in these cases will likely take many months, if not years, to settle and will cost the banks dearly in legal costs, which are already taking their tolls on profits.

In addition to the banks, a multitude of individuals are charged with various violations of securities laws, though none of the CEOs - such as Jaime Dimon, Dick Fuld or Lloyd Blankfein - are among the defendants. Obviously, the government is going after the lowest-hanging fruit in an attempt to garner public support by going after "bad guys."

This is a developing story with far-reaching implications for the global economy. MoneyDaily will stay abreast of events as they develop.

With any luck, we may witness actual "perp walks" as the lower-level employees implicate the top rung of the banking elite. The thought of seeing Jaime Dimon or Lloyd Blankfein in leg irons and handcuffs is almost too delicious to consider.

US Banking Sector Flattened as Secret Fed Loans Are Revealed

If you're fond of following foreign markets (and who isn't in today's meltdown environment?), the oddest of patterns emerged as planet Earth spun East to West.

Most Asian markets opened with gains, though ended up sporting losses by the end of their trading sessions. As the focus turned to Europe, gains were seen across the board early, though those faded late in the day, with the German DAX finishing slightly in the red.

When it was America's turn, the futures pointed to a bright open following a dismal end to the prior week and the Dow burst to an early 200-point gain. After that initial boost of enthusiasm, with the major indices hitting their highs of the day in the opening minutes, it was mostly downhill as investors sold the rally and the markets ended essentially flat for the week's opening session.

To the surprise of almost nobody, financial stocks were hard hit again, led downward by old, reliable Bank of America (BAC), which is facing a serious liquidity/solvency/honesty/continuity crisis after announcing on Friday that it intended to cut 3,500 jobs in the third quarter, with perhaps as many as 10,000 job cuts by the second quarter of 2012. Bank of America closed down 55 cents, at 6.42. The funeral dirges should begin any moment for the nation's largest bank by deposits.

While that news was certainly a disheartening blow to the non-productive paper-shufflers in the financial cesspool sector, a story that has gone largely unreported by the mainstream media was quite possibly the underlying cause for much of the weakness in the banking business.

Bloomberg reports that the Federal Reserve secretly doled out as much as $1.2 trillion to US banks, foreign banks and other financial and non-financial firms - including McDonald's and Caterpillar - from 2007 to 2010. Not of word of the story was spoken on CNBC, though the news spread rapidly through the blogosphere and the web's alternative media.

Reactions ranged from disgust to contempt, with a healthy dose of outrage from most astute followers of the Fed's financial foibles. It is unprecedented that the Fed would stoop to such lows as to attempt to conceal transactions from the prying eyes of the press and the American public, though it is hardly unexpected.

What may be worse than the contemptible actions by the Fed is the depth of the subterfuge within the halls of congress and the White House. The bulk of these secret loans were being made while the public was languishing over the absurdity of TARP and the Obama stimulus in early 2009. How many congressional members and presidents - Bush and Obama - knew of the skullduggery while it was being undertaken are questions to which the American people deserve answers, though judging by how many firms received loans over such a long period of time and with a Justice department that is loathe to issue subpoenas to anyone connected in any way with the financial services industry, the wait for such answers may be a long time in coming, if ever.

The information was obtained by Bloomberg through a Freedom of Information Act request that was continually blocked, challenged and evaded by the Fed. Now that it is out, it's evident that most of the popular media wants no part of the story, focusing instead on the fall of Tripoli and the end of the reign of Colonel Gaddafi in Lybia. The implications of tis story are breathtaking in scope and what it means for democracy and freedom, not only in America, but in the rest of the world, against an increasingly desperate global banking oligarchy.

Of course, with the media hitting the ignore button on the story and most Americans less-than-concerned with the fate of their own country, it's likely that the thievery and secrecy will continue unabated without even a hint of impropriety at the highest levels of the government.

One more story caught the attention of traders late in the day, that being reported first by Reuters with about 20 minutes remaining in the session. Apparently, Goldman Sachs CEO Lloyd Blankfein - yes, the very one who equated the business of Goldman Sach's with "doing God's work" - has hired, along with other executives at the firm, attorney Reid H. Weingarten, a partner with Steptoe & Johnson in Washington D.C. amid accusations that his firm acted fraudulently leading up to and during the 2008 financial crisis.

Goldman Sachs (GS) ended the day off 5.25 points (nearly 5%) on the day, with all of the losses occurring in the final fifteen minutes of the session.

Speculation will almost certainly run rampant with this news, but it could be yet more evidence that the global banking system has run completely afoul of the totally-corrupt political system and the long knives are about to be unsheathed. Should Blankfein and others from his firm be criminally charged, the end of fiat money could be at hand in short order with many undetected and unknowable circumstances to follow.

Corruption at the highest levels of government has been a feature in America for many years. The only remaining question is when Americans will finally have had enough of it.

Dow 10,854.65, +37.00 (0.34%)
NASDAQ 2,345.38, +3.54 (0.15%)
S&P 500 1,123.82, +0.29 (0.03%)
NYSE Composite 6,980.62, +10.52 (0.15%)

On a day in which volume was repulsively weak, declining issues led advancers, 3562-3027. New highs on the NASDAQ numbered just nine (9), with 244 stocks reaching new 52-week lows. On the NYSE, a similar story, with just 13 new highs and 247 new lows. The combined tally of 22 new highs and 491 new lows is a screaming sell signal.

NASDAQ Volume 1,983,095,500
NYSE Volume 5,436,260,000

While it was expected that oil prices would decline upon the fall of Lybia, since that nation's supply would soon go back online again, Brent crude fell, though the other oligarchy - that of the oil barons - managed to tighten its grip on the American consumer a bit, raising WTI crude futures $1.86, to $84.12 per barrel.

The largely unguided public is fighting back against the perception of fraud and debauchery and the failure of the global economy by buying precious metals with gusto. Gold set yet another record, rising $39.70 on the COMEX, to $1,891.90, though being reported at kitco.com at $1907.20. Silver gained 89 cents, to $43.32, but, as of this writing, was quoted at $43.85.

Events are moving a breakneck speed, despite Wall Street attempting to cool off prior to Fed Chairman Ben Bernanke's Jackson Hole speech on Friday. While many pundits await the all-clear signal from the chairman for another round of quantitative easing (money printing), the evidence is clear that the first two rounds - QE1 and QE2 - did more harm than good in the overall scheme of things, plus, in light of the breaking news by Bloomberg, the chairman and his cronies in the banking business and politics will do as they please, the public be damned.

This is the environment in which we must now tread. It is one of complete disregard for laws, principles of economics or even the most simple forms of common decency, honesty and principle.

Goldman Sachs' Power on Display; Blankfien Should Be Jailed

Make no doubt about it. The only reason stocks gained today was because the traders at Goldman Sachs were boosting prices, especially for their own stock and others in the banking sector.

One must really have to stretch credulity to its most outer limits to believe that actual investors - real people playing with their own money - would have so much as touched financial shares with as many ten-foot poles as one could offer them.

Today's argument was that the SEC decision to bring fraud charges against Goldman Sachs came down to a 3-2 vote, thus, the charges cannot be well-founded. While that may be so, and well and good, the argument is as superfluous as what little hair remains on Goldman CEO Lloyd Blankfein's (left) head. There's something there, surely, but it has no meaning.

Looking at the larger scheme, suppose Goldman Sachs is completely innocent, all the way down the line. They did nothing wrong throughout the period from 2003-2007, in which trillions of dollars were packaged, sold and then vaporized. Suppose that is true.

If that's the case, then why would anyone do business with the most incompetent firm on the planet? They must not have known that housing values should not rise by 15% a year, that loans for mortgages should be closely scrutinized and offered only to potential borrowers with the highest credit standards and ability to pay.

Truly, if the chiefs at the Goldman Sachs roundtable didn't see anything wrong with the deals they were facilitating, packaging and selling, then they must be the greatest buffoons on the planet.

The argument simply doesn't work, unless, of course, you are dealing with what actually may be the greatest gathering of idiots in the history of the world, the American public, who still might buy their story, though even that is doubtful.

Politics comes into play in the SEC, just as in any organization. The two dissenters on the decision to charge the firm with fraud might have been concerned over their futures. Goldman Sachs is an incredibly powerful organization, with tentacles throughout the government and society. Taking them on in the courts is a task not for the meek. The regulators who finally, after nearly two years of dawdling, mustered enough courage to do what is right, will likely become pariahs on Wall Street, as unwelcome as a sell rating by any analyst.

Thus, Goldman's political muscle must be weighed in this light, as well as in any trading while the matter is being litigated. Just as the control freaks at Goldman Sachs made sure today would be a shining moment for capitalism, they will be equally resolute in promoting a massive sell-off should the tide turn against them.

It's a simple argument once one boils out all of the politics and media spin: Goldman Sachs either committed fraud on a grand scale or they are completely incompetent and unfit to handle even the simplest financial transactions.

So it is that as of today, all trading in equities and commodities - Goldman's playgrounds - should be eyed with the highest degree of skepticism possible. The firm controls so much of the markets, to such an extraordinary degree, that they may not only be too big to fail, but too big to even be a fair, honest and practical participant.

Dow 11,092.05, +73.39 (0.67%)
NASDAQ 2,480.11, -1.15 (0.05%)
S&P 500 1,197.52, +5.39 (0.45%)
NYSE Composite 7,596.56, +11.94 (0.16%)

Offering credence to the "control" argument are the indices, today hopelessly out of kilter. While the Dow was up sharply, the NASDAQ was down, and the NYSE Composite barely registering a gain. Further, DECLINING ISSUES LED ADVANCERS, 3774-2621. New highs ebbed lower, to 259, while there were only 48 new lows. Volume was magnificent, especially on the NYSE, because it took a lot of trading to boost specific stocks (ones that were, in reality, being sold off by spooked investors).

NYSE Volume 7,341,836,000
NASDAQ Volume 2,163,046,500

This New York Times article about the loyal Goldman Sachs' employees rallying around their beleaguered company and their head honcho, Mr. Blankfein, speaks not only of the company's incredibly adroit reach into the media, but also of the levels of deceit they will employ to save themselves.

The game is up at Goldman, whether they like to admit it or not. Blankfein, if he pushes back hard enough, may find himself looking out at the world from behind bars, which is probably where he belongs, as do many of his cadre of overstuffed, self-important, greed merchants.

Oil prices fell for a third straight day, probably because the Goldman traders were too busy propping up the stock market. Oil slipped another $1.79, to $81.45. Gold fell $1.10, to $1,135.20. Silver gained 6 cents, to $17.72.

Goldman Sachs is still in control, for now, but if there is any justice remaining in what little is left of our democracy, they won't be for long. We can only hope that they don't blow up the economy for good as their final tribute to greed.