Scam Alert: PayPal Credit, Synchrony Bank Playing Hide and Seek With Special Financing Purchase Offers

by Fearless Rick Gagliano, editor, Money Daily

     When it comes to banking in general, most Americans (Europeans and Asians, as well, we might assume) are skeptical about institutional sincerity and customer care. After all, it was just a decade ago that some of the biggest banks in the world were caught up in a messy triage with overzealous rating agencies and absent regulators that sent global finance to its knees.

Since the Great Financial Crisis (GFC) of 2008, there have been more than few dubious practices entertained by major banks. Wells-Fargo comes to mind, whose employees, paragons of virtue all, no doubt, opened accounts in people's names without their knowledge, among other scandalous activity.

Certainly, the annals of banking history are rife with examples of financial trickery, pandering and assorted crimes and misdemeanors carried on by monied institutions, all in the name of profit and greed.

With the advent of the internet age, banking has become more streamlined, varied and accessible to anyone with a smartphone, tablet or computer. Offerings from non-bank institutions abound. The leader among transactional vendors being PayPal, the the online business-consumer, peer-to-peer middleman company founded in part by Elon Musk, Max Levchin, and Peter Thiel made its name by offering online accounts to anybody who could "fog a mirror" and with a few nickels to rub together.

With an IPO in 2002 and subsequent acquisition by online auctioneer eBay, PayPal became the de facto standard for online payments. Reacting to a squabble from investor Carl Ichan, eBay divested itself from PayPal in 2014 and since then PayPal has been a stand-alone company. It was late in 2008 and early 2009 that PayPal, after acquiring the company known as Bill Me Later, began to offer credit to consumers. Aptly named PayPal Credit, a complete credit and debiting system aimed at the massive consumer audience worldwide was established.

Among their many marketing tactics, PayPal Credit offered a wildly popular option called special purchase financing, bearing zero interest for six months on purchases of $99 or more if paid in full during the allotted time. That promotion still exists today, but the present and recent past are where the issues of dubious claims and incomplete disclosure of terms begins.


Enter Synchrony

PayPal partnered with consumer credit giant, Synchrony Financial, to offer credit cards to PayPal account holders in 2004 and took the relationship even further in 2017, when it sold $5.8 billion in consumer credit receivables to Synchrony Financial, effectively yielding control over the operation of PayPal Credit to Synchrony.

It was around that time in 2017 that how payments on PayPal Credit accounts were allocated was altered. When parent company PayPal was operating PayPal Credit, allocations of payments on accounts were handled roughly as anything over the minimum required payment on the entire account was then allocated to the special purchase financing.

For example, a PayPal Credit account holder, with, say, $1000 existing outstanding balance and a minimum monthly payment of $40, makes a purchase for $500 and takes advantage of the Zero Interest for Six Months if Paid in Full Special Financing Purchase. When the account holder makes a payment, say $100, $40 would cover the outstanding minimum credit payment and the remaining $60 would be applied to the Special Financing Purchase. That was pretty standard, and logical.

No more. Now, when that same account holder (or any account holder) with an existing outstanding balance makes the same transaction, the entirety of his or her payment goes toward the account balance and NONE is allocated to the Special Financing Purchase until the final 60 days of said Special Financing Purchase. In the meantime, interest accrues on the Special Financing Purchase at the full amount, in our case, $500. If the Special Financing Purchase balance is not paid off in full at the expiration of the six months, all of the accrued interest becomes part of the account balance due.

Nowhere in the terms and conditions of Special Financing Purchase is this made obvious or even mentioned to consumers. It is only revealed when (as our Editor found out) one questions PayPal Credit customer support by phone or by online chat. The response to why this devious practice is maintained, is that PayPal Credit and/or Synchrony Financial uses best practices in allocating funds in this manner. It's almost a certainty that said best practices are what's best for the bank, not the consumer, and here's why:

Beyond the failure to disclose this in-house allocation rule, the bank (Synchrony, in this case), has interest accruing on that Special Financing Purchase (remember, ZERO interest for six months if paid in full) at the full amount of the purchase, not at a lesser amount if account holder payment allocations were done the old way, in a moral, reasonable, and logical manner. It also sets up the casual account holder for a shock, when he/she looks at the Special Financing Purchase and realizes that with two months left to pay off the Special Financing Purchase at Zero Percent he or she still owes the full amount.

Unless one is careful enough to scrutinize the monthly statements generated by PayPal Credit, this poor or mis-allocation of payments - done in the name of best practices - can easily go unnoticed, especially if one makes automatic or automated monthly payments, a practice which all banks and credit card companies strongly encourage.

There is some relief, maybe.

Calls to PayPal Credit on this or any credit account issue result in referral to Synchrony. The supervisor with which Money Daily spoke on Thursday, November 7, elicited the response that payments can be allocated to the Special Financing Purchase if one calls Synchrony at 1-844-373-4961 and requests the payments be directed according to the wishes of the account holder, and NOT in the manner usually employed by the BANK (Synchrony). Synchrony says they will honor such requests and process them, but allocations will not show up on online accounts for "a few days."

Additionally, none of this would apply to anybody who isn't carrying a balance (the wise and fortunate 20-30% of account holders) with PayPal Credit and the only purchase made was a Special Financing Purchase. In that case, all of the monthly payment would be applied to the deferred interest financing because that's all there is.

Therein lies the problem. Instead of doing business in a morally correct, logical, reasonable, responsible, and customer-friendly manner, Synchrony Financial has chosen the usual path of 21st century bankers: deceit, incomplete disclosure, "gotcha" terms and "special financing" with in-house rules designed to maximize the bank's profitability, the customer be damned. To do business in what would normally be considered the "best practice" for the consumer, the account holder has to go out of his or her way to make a special phone call, jump through hoops, listen to all of the recordings and prompts to get what should have been done automatically. This is, after all, the age of high-speed communications and the internet, not Ma Bell's twisted copper.

If this practice isn't illegal, it would be no shock today. Financial institutions have been afforded wide latitude in their dealings with the public, to encourage loans, credit, and debt in a wide array of products and offerings.

In a world in which sanity, fairness, and reasonableness would be the norm, this kind of operation might be considered fraud at worst, bait-and-switch at best. But today, in our world of glorification of all things money and financial, where the dollar sign is revered and worshipped, it barely registers a "lookie here." It's a sad commentary on the state of morality and banking when gigantic, faceless institutions are able to run roughshod over consumers. It goes against the public interest, an interest, incidentally, that nobody - from bankers to consumer credit agencies to politicians - seems to be even remotely interested in protecting.

So, what do you think? Is this practice just run-of-the-mill deceit and standard underhandedness by PayPal Credit and Synchrony Financial, or does it rise to or border on criminal mischief, something banking regulators or congress should address? Comments are open, and are moderated.

Anybody experiencing issues such as those outlined above should call Synchrony at 1-844-373-4961 and complain loudly.

Be polite, but overall, be careful.

UPDATE: Found a thread on the PayPal boards dealing with this very issue. Many are fuming about it.
See here: https://www.paypal-community.com/t5/PayPal-Credit/PayPal-Credit-Promotional-Payment-Allocation/m-p/1553309/highlight/false#M8392

UPDATE 11/27/19: This issue will remain, as the actions of Synchrony are guided by Regulation Z. See the updated blog post:
https://moneydaily.blogspot.com/2019/11/weekend-wrap-paypal-creditsynchrony.html

At the Close, Thursday, November 7, 2019:
Dow Jones Industrial Average: 27,674.80, +182.24 (+0.66%)
NASDAQ: 8,434.52, +23.89 (+0.28%)
S&P 500: 3,085.18, +8.40 (+0.27%)
NYSE Composite: 13,395.55, +43.98 (+0.33%)

For US Markets, It's Splits-ville Again

Another day, another session punctuated by divergent indices.

The NASDAQ goes up; the Dow goes down, or vice versa. The S&P 500 and NYSE Composite seem to go their own ways, more often than not, separate. All of this reeks of manipulation, selectivity, goal-seeking, and just about anything other than rational investing.

Upon examination, the stock market is nothing more than pieces of paper representing shares in company X or Y or Z, being traded for other pieces of paper known as yen, dollars, euros or pesos. It's the ultimate paper chase, based entirely on faith and foolery of grand design by the world's central bankers. It's a confidence game being played at the highest levels of finance, a dangerous precedent for the entire planet.

Unless the public detaches from the fraud, it will continue. The unique phenomenon at work in today's financial arenas is commonly known to psychiatrists as normalcy bias. It is the belief that everything seems to be working all right, so the urge to change is minimized, which is precisely the condition present in the debt-infested governments, businesses, and households everywhere.

The ultimate fear is that confidence is lost in the fiat system. After eight long years of propping up governments, businesses, and households with freshly-printed-or-minted cash, confidence is still durable, thanks to normalcy bias.

But, there are canaries in the coal mine, so to speak. These are burgeoning, non-repayable government debt, underfunded pensions (especially public union pensions), slack demand, disinflation, demographics, and the undeniable eventuality of recession, either in the US, Europe, or globally.

Fighting these trends with some degree of success has been the role of the central banks, but they are running out of viable options to keep global finance operating while also quelling local discontent, which is growing rapidly.

Money Daily does not pretend to know who is buying stocks and/or causing the variations in the major indices, but it is apparent that some entity other than brokerages are buying and it is well known that the Bank of Japan (BOJ), Swiss National Bank (SNB), and European Central Bank (ECB) have been and will continue to be outright buyers of equities.

When these entities become sellers, there will be no bottom to the markets.

Caveat Emptor.

At the Close, 7/24/17:
Dow: 21,513.17, -66.90 (-0.31%)
NASDAQ: 6,410.81, +23.05 (0.36%)
S&P 500: 2,469.91, -2.63 (-0.11%)
NYSE Composite: 11,904.71, -19.89 (-0.17%)

Stocks Finish Week With Gains, Remain Range-Bound

If one were to view Friday's market action in a vacuum, without context, one would think everything is just peachy in Wall Street wonderland. The NFP jobs report for June was solid and the major indices put up strong gains to close out the week.

But, nothing exists in isolation.

Taking a little bit broader view, over the shortened, four-day week, all that Friday's gains managed to do was life all the major indices from red to green for the week, with the exception of the NYSE Composite, which finished just nine points underwater, but, not to worry, nobody pays attention to the "comp" anymore, even though it is the most diverse, broadest of the majors.

Fraud, manipulation, massive central bank intervention?

Yes, sure, of course. Since central banks have been the primary drivers of the eight year recovery since the GFC, why would anybody believe they have stopped their high-stakes involvement. Lowering interest rates - even to negative - didn't work. Massive injections of funny fiat money didn't work. Talking about how the labor market and the general economy was doing so great (it isn't) didn't work, so, why not resort to outright purchasing of equities in a vain attempt to create a "wealth effect?"

Of course, the Fed will never admit to such activity, but Switzerland (SNB), Japan (BOJ), and the European Central Bank (ECB) have all openly been buying stocks for the past few years, at least, and probably longer.

Therefore, the entire week of trading was a nonsensical, uneventful kabuki play, designed to give the impression that all is well and there's no reason to sell... anything... even though many did. As they say in the current newsspeak nomenclature, a major league nothing-burger.

Balderdash. You're being culled, cuckolded, marinated, stuffed, and baked by people who control your baseless currency when you could be using that same valueless "money" to purchase goods, food, machinery of trade, gold, silver (currently on sale, as it has been for four years running), land, land and more land, some with actual buildings erected.

But, no. Americans (not to the exclusion of Canadiens, Japanese, and Euroland dwellers) instead purchase garbage college educations for garbage jobs, cell phones, 70-inch TVs, overpriced cars (mainly on leases), and run up enormous amounts of credit card and other debt for baseball tickets and extraordinary "experiences."

With the US government $19.965 trillion in debt, something along the lines of 10,000 seniors retiring every day, underfunded pensions galore, and monstrous debt and unfunded liabilities under-and-overhanging nearly every developed nation...

Good luck with that.

At the Close, 7/7/17:
Dow: 21,414.34, +94.30 (0.44%)
NASDAQ: 6,153.08, +63.61 (1.04%)
S&P 500: 2,425.18, +15.43 (0.64%)
NYSE Composite: 11,752.98, +50.55 (0.43%)

For the week:
Dow: +64.71 (0.30%)
NASDAQ: +12.66 (0.21%)
S&P 500: +1.77 (0.07%)
NYSE Composite: -8.72 (-0.07)

Why Bother With This Yo-Yo Market?

Since Money Daily is still on the camping-off-the-grid-who-cares schedule, some readers (all three of you) might be wondering why.

The answer is simple. Just like the US electoral process, the stock market is rigged. It's been rigged since 2008 at least, when the wheels actually did fall off, but the central bank consortium, in association with various elected and unelected governments worldwide, managed to pull wool over the public's eyes (after a good and righteous fleecing of course) and get the global economy chugging along again.

One problem, however, remained, and remains until this very day.

The wheels fell off.

When stocks crashed in 2008 and banks were about to become entities controlled by conservators or administrators in receivership, the Federal Reserve swooped in and rescued them. All of them. Even banks and institutions in Europe. All except for Lehman Brothers, which was quickly bankrupted and sold piecemeal to entities such as Barclay's and Nomura. Other banks sucked up such failed entities as Countrywide, Merrill Lynch, and Indymac. Had they not, the bankruptcies would have proceeded as normal.

Instead of the orderly process of bankruptcy and the wholesale disposition of assets, the Fed and the banks (again, with help from the government, i.e., taxpayer money) bailed out the system, which is why it's still broken. There are pieces of failure floating all around the financial universe though rarely is a word spoken of them.

For just one instance, consider the fates of Fannie Mae and Freddie Mac, the two quasi-government mortgage institutions that are still under government receivership. Congress has been and continues to be unwilling to unwind these GSAs because all the bad would come out of them. The Fed is sitting on bad mortgages from a decade ago, the US housing market in many areas is in a shambles and interest rates have nowhere to go but down.

The Fed, the ECB and the bank of Japan - among others - have circled the wagons and there's no way out... for anybody. Prosperity is a word reserved for history books. Job growth is non-existent, wage growth is stagnant, GDP is a made up number that barely suffices to cover the ultimate fraud of excessive government and central bank intervention.

In case anyone wonders why stocks haven't budged since breaking out to new highs in July (a direct result of Brexit and resulting manipulation to hide the sins) it's precisely because there is no real market. There is no price discovery because that's been blown apart by the Fed. There's only guessing and manipulation.

What used to be the most robust and dynamic markets in the world have been reduced to pixie dust and unicorns. None of it is real. From the dollar bills we use for currency to the massive treasury bond auctions that fund the continued fantasy of a working financial system, it's all fake. Every price is contrived; there is no such thing as fundamental financial analysis.

There is only the Fed, the EU and the BOJ. And they're all phonies.

God, when will it all end?

Stocks Pop, Stop, Drop Friday; Week Ends With Losses Across The Board

With the political world in a complete media-induced frenzy, Wall Street took matters in stride eventually giving up ground for the week despite a naked attempt at a rally Friday.

The Dow was up more than 150 points early on Friday morning, but euphoria turned to skepticism as the session wore on, with all the indices slipping back toward what ended up being marginal gains.

Despite the weak action, there was the usual last-half-hour bid, which boosted the the Dow, for a while, to something of a more respectable level. The action was likely a function of short-covering, considering that there may still be short players in the mix, despite eight years of continuous gains without so much as a 15% correction. Such is the level of fraud involved in indices and trading after a full century of Fed interventions, trickery, thievery and mostly, inflation.

Still, at the end of the day, all the averages closed near the low points of their respective sessions, an ominous sign when one considers that the status quo seems to have everything under control in the political, social, and financial arenas, if, what one means by "under control" is $20 trillion of non-payable debt.

Investing used to be fun. Nowadays, it's just painful, whether one is merely watching or participating.

The NASDAQ took the biggest spill of the week, down nearly 1 1/2 percent. Oddly enough, the NASDAQ and S&P both ended the day higher, but each by less than one point. Weird.

Friday's Fumble:
Dow Jones Industrial Average
18,138.38, +39.44 (0.22%)

NASDAQ
5,214.16, +0.83 (0.02%)

S&P 500
2,132.98, +0.43 (0.02%)

NYSE Composite
10,533.83, +8.90 (0.08%)

For the week ended 10/14/16:
Dow: -102.11 (-0.56%)
S&P 500: -20.76 (-0.96%)
NASDAQ: -78.24 (-1.48%)
NYSE Composite: -91.36 (-0.86%)

Fraud, Corruption Rampant In All Financial Markets

It's once again becoming more and more difficult to post anything even remotely resembling real market analysis when there is so much fraud, corruption, and manipulation of markets.

This is primarily the fault of the world's central banks, who now control practically every financial market in the world. What is especially troubling is that these central banks - via their conduits and proxies in the commercial banking world - routinely corrupt the prices of gold and silver, the only real money.

Just a few days ago, gold and silver were smashed down to save shorts (central bank proxies) who have been dying a slow death for most of the year.

The losses in price were massive and still have not relented. Silver, for instance, has been close to $20 per ounce for most of 2016, but today was pounded down to $17.29 per ounce.

Gold was battered from $1320 an ounce on Monday to $1250 today.

The only sound advice when it comes to precious metals is to buy the dips and hold. Also, for silver investors, solar panels are very inexpensive and also provide usable value in terms of free electricity.

Otherwise, we're all being screwed by banks and governments. Someday, it will end. Hopefully, before we're all dead.

Thursday's Garbage Plate:
Dow Jones Industrial Average
18,268.50, -12.53 (-0.07%)

NASDAQ
5,306.85, -9.17 (-0.17%)

S&P 500
2,160.77, +1.04 (0.05%)

NYSE Composite
10,675.17, -8.78 (-0.08%)

Suspicious Behavior In Stocks Leads To Belief That Fed Is Buying

After dismal data out of Japan and some troubling manufacturing numbers in the US, stocks opened sharply lower on Wednesday, reversing the short-covering faux rally into Tuesday's close.

But, the trauma was short-lived, ending abruptly, absolutely minutes after the open. Some people surely got caught short at the wrong moment, thinking, wrongly, that the era of central bank noise and confusion was about to meet a fitting end. Stocks continued an inexorable ascent throughout the day, based on nothing other than front-running computer bots and anti-competitive algos run by criminal banks.

Of course, no such thing would happen. The signs of a collapsing global economy have been with us for the past seven or eight years now, but somehow, stocks continue to pace along, and lately, they just fluctuate in a narrow zone.

This trading conundrum - in which outflows from equities has been ongoing for seventeen weeks - has to be the work of the central bank, or banks, acting in concert to keep asset prices from collapsing to where they might belong, about 40-=0% lower than where they currently reside.

Since the Bank of Japan has been spotted owning a hefty percentage of the biggest companies on the Nikkei, it shouldn't surprise anybody that the Federal Reserve is working behind the scenes to keep US equities floating on vapors.

It's a disgusting, completely inappropriate condition. The Fed is engaged in the worst form of market manipulation, in secret, buying selectively to keep prices from collapsing, in a most offensive manner.

While Money Daily considers this kind of activity to be nothing short of criminal behavior at best and immoral destruction of the whole economy at worst, others are entitled to their opinions, such as the corrupt Keyenesians and insiders on Capitol Hill who profit handsomely from Fed interventions.

Their opinions are typically based on nothing other than self-interest, greed and keeping their jobs. They should all be out on the street. Hope springs eternal.

Maybe by November.

Oh, Happy Day!
S&P 500: 2,099.33, +2.37 (0.11%)
Dow: 17,789.67, +2.47 (0.01%)
NASDAQ: 4,952.25, +4.20 (0.08%)

Crude Oil 48.91 -0.39% Gold 1,215.20 -0.19% EUR/USD 1.1188 +0.02% 10-Yr Bond 1.85 +0.65% Corn 412.00 +1.79% Copper 2.07 -1.07% Silver 15.98 -0.12% Natural Gas 2.74 +0.84% Russell 2000 1,163.04 +0.71% VIX 14.20 +0.07% BATS 1000 20,677.17 0.00% GBP/USD 1.4411 -0.01% USD/JPY 109.4650 -0.03%

End The Fed; Hawkish Tone Sends Dow Below Key Level; Gold, Silver Mercilessly Hammered

While it may seem nothing but a triviality, Money Daily has been following the most recent renge on the Dow Jones Industrial Average (DJIA) as it bounced its way between 17,500 and 18,000 since mid-March.

Today, the most widely-watched equity index in the world crossed below the lower end of that range, exclusively due to hawkish jawboning from various Federal Reserve operatives, who have spent the better part of the last seven years engaged in radical interest rate and money-creation policies, putting the entire global finacial system at risk.

To the uninformed masses - those 90-plus percent of the adult population who doesn't care or isn't bright enough to comprehend the ramifications of a global central banking system - life goes on. A debt-ridden, over-taxed population in the developed world plays giddily along as private banking interests push them one way or another. A few have escaped to off-the-grid lifestyles, some have prospered in the fiat money world of counterfeit currencies, but most are forced to take what is given, or rather, keep the small scraps the banks and governments leave on the floor after their orgy of inflation, deflation, false promises, fake data points and market mayhem and manipulation.

Thanks to the Fed and their fellow central bankers in Japan, Europe, and now China, the global population is left without price discovery mechanisms which make $30,000 cars with seven-year payment plans sound "affordable", homes which have skyrocketed in value due to artificially-low mortgage rates, fuel prices that are anything but transparent and/or stable and a general climate that continues to be counter to general principles of economy and thrift.

The Fed (and their central banker brethren) is pernicious, malevolent, deceitful, dishonest, greedy and carnivorous. They seek nothing but complete dominance without competition, a monopoly on the medium of exchange. Governments are more than willing to accept their bribery and thievery in order to retain feigned positions of power, selling out their constituents with nary a care toward the ultimate consequences of their actions.

Mandated to enact policies that promote full employment and stable prices, the Fed openly does neither, or, at best, adheres to their promises only as occasion allows, in fact promoting an inflation rate of two percent per year, which is anything but stable for prices.

So intent is the Fed on controlling every last aspect of financial activity, that they have undermined the best open markets of the world, in bonds, stocks, commodities and anything else they can get their greedy hands upon.

Markets no longer move on supply and demand or fundamental forces, but are solely and completely tethered to proclamations and idle talk of agents of the Federal Reserve, the Bank of Japan (BOJ), the People's Bank of China (PBOC), and the European Central Bank (ECB).

It's all rigged, all the time and readers are urged to do their own research into financial matters. Unless and until the fraud of banks and the agents of the Fed and other central banks are brought entirely to light there will be no financial freedom, only crony capitalism, fascist rhetoric and insane, unbalanced economic polices.

May the Farce Be With You:
S&P 500: 2,040.04, -7.59 (0.37%)
Dow: 17,435.40, -91.22 (0.52%)
NASDAQ: 4,712.53, -26.59 (0.56%)

Crude Oil 48.68 -0.20% Gold 1,255.70 -1.47% EUR/USD 1.1203 -0.12% 10-Yr Bond 1.85 -1.86% Corn 390.00 -2.38% Copper 2.07 -0.63% Silver 16.51 -3.63% Natural Gas 2.04 +1.75% Russell 2000 1,094.78 -0.74% VIX 16.33 +2.38% BATS 1000 20,677.17 0.00% GBP/USD 1.4609 +0.09% USD/JPY 109.9550 -0.20%

Jobs Miss Mark: To Markets, OK, But FED COURTS DEPRESSION

Jobs. Who needs 'em?

Friday's epic non-farm payroll data turned out to be disappointing to the Fed cheerleaders and assorted brain-dead economists and analysts who are still touting the "recovery" mantra.

Instead of the predicted 205,000 net new jobs that were supposed to be created in April, the BLS reported a net gain of just 160,000, a 20% miss, but at least something to seize upon by those who believe in ultra-low interest rates (aka, free money).

Thus, in the world of bass-ackward economics, stocks actually gained on the final day of the week, thinking (probably correctly) that more evidence of a weak economy would cause the Fed to continue to pause on their relentless rate-hiking journey, which, to date, has been confined to one measly 0.25% hike in December of last year, which was a prima facia cause for a wicked stock market decline in January.

Since then, however, the Fed has talked down the rate hike theme with alarming accuracy as relates to paper assets (stocks), and the markets have responded in kind, reversing all of the losses from January and the first two weeks of February.

Odds of the Fed raising the federal funds rate in June are now approaching infinity, because the one thing the Fed wants to avoid is another market correction. They are, in the estimation of many leading private money managers, OUT OF THEIR MINDS.

A return to "normalized rates," - something on the order of 3-5% on the fed funds front - is still years out, and, since the only data the Fed is interested in happens to be the levels on the Dow, S&P and NASDAQ, the market is probably going to overrule the ivory tower charlatans at the Fed. Corporate profits are and have been heading south since the third quarter of 2015, and will likely continue to do so, as capital is being mis-allocated to an alarming degree.

The levels of absurdity between stock prices and profits also are approaching extreme levels. It's only a matter of time before investors (and the term is used loosely, because most of the market is algo-driven, speculative, and dominated by institutional buyers and sellers) give up on future gains, cash out and head to the safety of alternatives, those being cash, bonds, and precious metals to a small degree.

In other words, the Fed has not abolished the business cycle. They've managed only to delay the inevitable, and by delaying, in a perverse avoidance of any pain, will cause degrees more devastation to not just financial markets, but markets in everything.

The Fed is courting depression by denying the failure of their experiment in fiat money with no backing save faith, and that faith has been on the wane. Expect a cratering of the economy just in time for the November presidential election. Between now and then, plenty of market noise, but nothing any good at all.

For the Week:
Dow: -33.01 (-0.19%)
S&P 500: -8.16 (-0.40)
NASDAQ: -39.20 (-0.82)

On the day:
S&P 500: 2,057.14, +6.51 (0.32%)
Dow: 17,740.63, +79.92 (0.45%)
NASDAQ: 4,736.16, +19.06 (0.40%)

Crude Oil 44.56 +0.54% Gold 1,289.70 +1.37% EUR/USD 1.1405 -0.04% 10-Yr Bond 1.78 +1.83% Corn 377.25 +0.94% Copper 2.15 -0.09% Silver 17.50 +1.03% Natural Gas 2.09 +0.82% Russell 2000 1,114.72 +0.61% VIX 14.72 -7.48% BATS 1000 20,677.17 0.00% GBP/USD 1.4431 0.00% USD/JPY 107.1050 -0.02%

US Stock Markets Are Massive Frauds, So Are Banks, How About Investment Advisors?

Thanks to frequent articles on Zero Hedge, Money Daily has been entertained by following the investment "wisdom" of one Dennis Gartman, a regular contributor on CNBC, especially on the show, Fast Money.

Now, not everybody has done well this year, but according to his own words, Mr. Gartman claims to be up 12.3% year-to-date. See below (and the original quote on ZH):

For those who wish to follow our progress, we are up 12.3% for the year-to-date, outperforming our International Index rather pleasantly and outperforming the S&P too by 14.4%. We have been quite lucky thus far this year. We are simply hoping that our good fortune thus far obtains through the remainder of the year. If we continue to “Do more of that which is working and less of that which is not”… perhaps our most important Rule of Trading…

So, after the Erin Andrews $55 million verdict set hair on fire yesterday, editor Fearless Rick sent the following request to liz@thegartmanletter.com:

I keep reading that Dennis is up 12.3 to 14% year-to-date, and I would like to know how he’s managed to outperform the markets this year.

Mr. Gartman makes bold statements that affect the thinking of many investors and speculators by his frequent appearances on CNBC.

Essentially, I think he’s a fraud and unless you offer bona fide proof that he’s ahead by what he says he is, I will expose him.

Best regards,

Rick Gagliano
Downtown Magazine
dtmagazine.com

Awaiting a response, or a subpoena. Maybe a drone strike. Stay tuned.

Crooked Markets Will Remain At or Above Key Levels Until the End

Pretty much within a few percent either way, the key levels for economic fraud remain at DJIA, 16,000; S&P 500, 1,800; NASDAQ, 4,500.

Global equity markets are being bought by central banks. Eight years ago, Money Daily told you to move your money out of retirement accounts, 401k and IRAs into cash, precious metals and useful machinery. It's still not too late.

DJIA: 16,196.41, +222.57
S&P 500: 1,895.58, +30.80
NASDAQ: 4,435.95, +98.44

Crude Oil 28.91 -1.80% Gold 1,204.30 -2.83% EUR/USD 1.1144 -0.16% 10-Yr Bond 1.7780 +1.72% Corn 361.50 +0.77% Copper 2.05 +1.03% Silver 15.27 -3.29% Natural Gas 1.90 -3.10% Russell 2000 995.80 +2.45% VIX 24.11 -5.08% BATS 1000 20,426.37 +1.68% GBP/USD 1.4304 -0.91% USD/JPY 114.0750 -0.35%

David Tepper Appears, Stocks Fly Higher

So much for yesterday's "slow as she goes" commentary.

This morning, CNBC welcomed hedge fund manager, David Tepper, to the Squawk Box show, and the founder and manager of Appaloosa Management - with $17 billion in funds under management - did as instructed, calling everything under the sun "bullish" and giving the rest of the investment community the "all clear" sign, as he did about a year ago in much the same manner.

This is how the fraud of Wall Street works and continues to work. Trot out the most recognizable bull onto the most-acceptable financial TV show, let him goose the futures, wave his arms around and signal another 800-point rally on the Dow. That's about what happened the last time he appeared on the CNBC pre-market show, so there's no reason to believe that the plan was not afoot once again.

On the subject of whether or not now is an optimum time to invest, consider that the Dow and S&P are at all-time highs and the NASDAQ continues to set 12 1/2-year records. So, unless you think the time-worn advice of "buy low, sell high" should be turned completely on its head, right now could not be a worse time to initiate positions.

However, if one has had enough of sitting on the sidelines watching the major averages gain 120-140% over the past four-to-five years, by all means, jump in. The water's fine. Just don't be like the proverbial frog and fail to notice when it begins to boil. Otherwise, you might just "croak" on your own stock picks.

Dow 15,215.25, +123.57 (0.82%)
NASDAQ 3,462.61, +23.82 (0.69%)
S&P 500 1,650.34, +16.57 (1.01%)
NYSE Composite 9,515.86, +78.68 (0.83%)
NASDAQ Volume 1,771,770,375
NYSE Volume 3,716,203,250
Combined NYSE & NASDAQ Advance - Decline: 4362-2166
Combined NYSE & NASDAQ New highs - New lows: 749-28 (the new normal!)
WTI crude oil: 94.21, -0.96
Gold: 1,424.50, -9.80
Silver: 23.38, -0.317

Europe, Ratings Agencies In Focus as Markets Zig-Zag

Editor's Note: Our regrets and apologies to readers for missing our regularly-scheduled post after the close on Monday. There were negotiations from which we could not extricate ourselves in a timely manner.

Stocks took a dive on Monday, but rebounded sharply on Turnaround Tuesday, raising the indices nicely, but not back to levels seen before Monday's decline.

In the news on Monday was Europe (remember them?), once again rearing its ugly, socialist head over stories emanating from Spain over alleged corruption in the government of Prime Minister Mariano Rajoy (no, really?), which the Spanish PM has denied. While there's little doubt that corruption exists in all levels of government worldwide, especially at the sovereign or federal level, proving such becomes a task not for the feint of heart, as there are vested interests which will defend their salaries, positions and perks like maddened pit bulls.

Italy was also in the news Monday, as fraud and conspiracy charges are being levied against the world's oldest bank, Banca Monte dei Paschi di Siena, and are slowly but surely finding their way to the top of government, eventually to land in the lap of Prime Minister Mario Monti.

National elections are slated for February 24-25, with former Premier Silvio Berlusconi, 76, gaining on front-runner Pier Luigi Bersani. Unemployment and rampant waves of criminality are among major issues in Italy.

On the US home front, the Justice Department finally found some level of damming evidence over which to bring charges against Standard & Poor's. The rating agency is alleged with fraud over their ratings of sub-prime loans in the 2004-06 period, helping bring about the 2008-09 market crash and financial panic. The government is seeking $5 billion in damages.

While the DoJ has reportedly combed through two million pages of emails and internal documents, the real reason for the agency to now bring charges is that - after four months of negotiations with the firm - it wants and needs the money that fines will bring to the federal coffers. Besides that, statues of limitations on fraud are expiring quickly, prompting action. It's a shame this is happening so late in the game and also that the banks which originated and packaged the faulty loans aren't being prosecuted as well.

There was a rush of earnings news, mostly positive, though YUM Brands (YUM) was hard hit on Tuesday even though the company beat on both the top and bottom lines. At the heart of the company's issues is KFC, and tainted chicken sold though their Chinese outlets. The government is continuing its probe of the company which guided forward flat earnings due to the issues arising from the problematic cluckers. KFC is highly profitable in China. More than 40% of YUM's profits come from China.

Dow 13,979.30, +99.22(0.71%)
NASDAQ 3,171.58, +40.41(1.29%)
S&P 500 1,511.29, +15.58(1.04%)
NYSE Composite 8,920.13, +67.31(0.76%)
NASDAQ Volume 2,150,602,500
NYSE Volume 3,859,714,750
Combined NYSE & NASDAQ Advance - Decline: 4674-1828
Combined NYSE & NASDAQ New highs - New lows: 386-22
WTI crude oil: 96.64, +0.47
Gold: 1,673.50, -2.90
Silver: 31.88, +0.159

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

You Owe the Fed $312,606.56; Net is Still Neutral; NJ vs. BofA

As Wall Street slowly wends its way to a year end with a blow-off topping Santa Rally, a few news items - that you won't get on CNBC, promise - were worth noting.

First, the Federal Reserve bought another $9.5 billion in Treasuries today, bringing their total to over $1 Trillion, or, for those who like lots of zeroes, $1,000,341,000,000. The Fed passed China as the largest holder of US government debt a few weeks ago, and now has surpassed the magic $1 Trillion mark, making everybody in the country indebted to the Federal Reserve (well, if you believe we are the government and thus responsible for their debt) to the tune of $312,606.56, roughly speaking.

So, rube, pay up!

The second of the day's big issues was the proposed FCC rules on Net Neutrality, or how the government will allow the big media companies to slice up the internet. What the FCC board did was pass, by a 3-2 vote, new rules, which are essentially the same as the old rules, except that they didn't publish them (rumored to be 100 pages long) and they don't apply to wireless services (phones, iPads, etc.). So, really, what they did isn't really news at all, but might be some day, like when the FCC gets sued again because most people don't believe they have the authority to regulate the internet at all. Larry Downes' guest column on Cnet has most of the dirt.

Our third newsy item is really juicy, however. It appears that some judges in New Jersey's Supreme Court haven't taken kindly to being abused and hoodwinked by some of the nation's largest banks.

The court has ordered a halt to all foreclosure proceedings in the state and has given the largest lenders, Bank of America, JP Morgan Chase, Citigroup, GMAC, Wells-Fargo and OneWest, until the 19th of January, 2011, to “show cause why the processing of uncontested residential foreclosure matters they have filed should not be suspended.”

Apparently, the judges are not convinced that the robo-signing and other frauds perpetrated on the state's courts were mere technicalities and wants the full mea culpa from the banks along with admissions of guilt. This really puts the banks in a tough spot, because they have to honestly and steadfastly assert their positions, which are largely lies and falsehoods about their fatally-flawed foreclosure practices.

Should they fail to convince the justices, they'll face a very long uphill road to ever be heard without prejudice in New Jersey courts. This also opens up the possibility that hundreds of thousands of flawed - and already settled - foreclosures could be reopened if New Jersey's stand becomes a precedent, not only in the state, but across the country.

Get ready for round two of fraudclosure-gate, or whatever they're calling it these days. In a similar vein, the 50 state Attorneys General investigating the foreclosure practices of the biggest banks, have said nothing since rumor broke three weeks ago that they were nearing a settlement with the offending and offensive banks, thus making the current rumor that all deals are off the table, especially since the states of Nevada and Arizona have separately sued Bank of America and Iowa AG Tom Miller, who heads the 50 states' AG investigation, has, together with the US Attorneys office, formed the Iowa Mortgage Fraud Working Group.

The Working Group will "identify and investigate targets for criminal prosecution" and, on the federal level, "will utilize the investigative expertise of agencies such as the Federal Bureau of Investigation (FBI) and U.S. Department of Housing & Urban Development--Office of Inspector General (HUD-OIG). Other federal agencies that may participate in the working group include the Secret Service, Internal Revenue Service, United States Postal Inspection Service, and Social Security Administration."

Ouch, double ouch and triple ouch! Of course, Julian Assange, the operator of WikiLeaks, also contends that he has information that could bring down executives from a major bank, widely assumed to be none other than Bank of America, which, from all appearances, may be in need of a bigger bandage. The bank is currently involved in no less than 35 major lawsuits, most stemming from their mortgage business.

The question then arises, why are people buying Bank of America (BAC) stock, or, the shares of any of the big banks embroiled in the mortgage business, like JP Morgan Chase (JPM), Wells-Fargo (WFC) or Citi (C)?

One would assume, with all of the aforementioned issues, that investors would shun these stocks, yet the reality is that they have been leading the December rally. Since November 30, Bank of America is up 15%; JP Morgan up more than 9% and Wells-Fargo and Citigroup are both up 13%. Either the investor class is being sold a phony bill of goods (wouldn't surprise anybody) or they know something most of the casual-viewing public don't.

They were all up better than two per cent today, leading a broad-based rally.

Dow 11,533.16, +55.03 (0.48%)
NASDAQ 2,667.61, +18.05 (0.68%)
S&P 500 1,254.60, +7.52 (0.60%)
NYSE Composite 7,906.10, +59.14 (0.75%)

Advancing issues trampled decliners, 4680-1871. NASDAQ new highs were 213, to 26 new lows. On the NYSE, new highs led new lows, 257-34. Of course, all of this movement was on dismally-low volume levels.

NASDAQ Volume 1,680,521,625.00
NYSE Volume 3,925,677,000

Oil pushed higher by 45 cents, reaching $89.82. Gold was held in check, losing 30 cents, to $1385.50, while silver posted a two-cent gain, to $29.37. Copper reached an all-time high of $4.3626 per pound, making pennies minted between 1909 and 1982 worth $0.28, nearly triple their face value.

Time to break out the kid's piggy bank?

Stocks Are Cheap, I Guess

According to the expert headline writers at Yahoo! Finance, "Insurance Companies and Homebuilders Sparked Wednesday's Rally."

Really! They said that, which doesn't adequately explain why the NASDAQ was sporting an 85-15% up to down volume bias, and probably wasn't the reason for any rally at all. Why stocks rallied today may have been hope for more crookedness, in the form of a relaxation of shorting rules proposed by the SEC, or maybe they were right in part, at least as far as concerns insurance companies, because the Treasury is rumored to be planning to include some life insurance companies under the bailout umbrella of TARP.

As for homebuilders, Pulte Homes (PHM) agreed to purchase Centex (CTX) for $1.3 billion in stock, which is amazing in that its hard to believe any homebuilder could even be worth $1.3 billion, let alone have that amount of stock available for the purchase of another homebuilder. Maybe they've been getting secret TARP funds from Tim Geithner.

In any case, the rally was not all that large as to get uptight about it, considering that it is occurring in the middle of the worst financial meltdown in the history of the world. Yes, you read that right. The worst EVER. Beating the tulip bust, the fall of Rome and even our very own Great Depression. Additionally, the rally fell apart precisely at 2:00 pm. So much for homebuilders and failed insurance providers.

Why is this the worst financial meltdown ever, you ask? Simple, because during the Great Depression the USA was a net exporter and routinely ran budget surpluses rather than deficits. We were on the gold standard then, as compared to the "thin air" standard we've been on since 1971, when the great (satire), late Richard Nixon repudiated our debts by refusing to honor the Bretton Woods agreements, thus taking our currency from one being backed by gold to one being backed by "the full faith and credit" of the United States of America, which is a very bad joke today because nobody has any faith in America anymore and we are a nation strung out on credit. The burgeoning national debt, now surging past $12 trillion, will never be repaid, ever, so, yes, this is the worst economic crisis and collapse in the history of the planet.

There are other reasons, such as the fact that we no longer have an industrial base, having shipped all of that to foreign countries, and the social safety net, which includes social security, welfare, and unemployment benefit recipients, were not even around during the Great Depression, though now they act only as an increase on GDP and a net productivity loss. Those people are freeloaders, producing nothing. So, those of you who believe the official government figure of 8.5% unemployment, start including retirees, welfare loafers and people supposedly seeking work, and you can just jump that number up to about 20-25% of the population, the same unemployment that we had during the 30s, but now we simply don't count those people as it might scare some other people.

America is collapsing quickly, so one naturally wonders why stocks are going up when all indications are that they should be going down. Maybe not you, but that's how I spend my idle hours, which are growing by the day due to my outstanding investment (make that trading) skills, thank you.

Apparently, today's little rally was short-circuited precisely at 2:00 pm because that's when the Fed minutes from the last FOMC meeting were released, and, of course, the Fed said that conditions sucked (they use bigger words) and the geniuses on Wall Street - who apparently were unaware of the horrible economic conditions - decided they should sell.

This market sucks, though. It has no direction except down. The rally of the last 4 weeks was a mirage, a total fraud. The economy sucks, your stocks suck, this country is headed straight into a black hole, and the worst part of it is that because of our corrupt politicians, bankers, CEOs and news media, the American public is largely unaware of the condition. That, however, is expected, as the majority of Americans have college degrees but are dumber than nails about anything that really matters, like the economy, the constitution, the rule of law, etc.

Dow 7,837.11, +47.55 (0.61%)
NASDAQ 1,590.66, +29.05 (1.86%)
S&P 500 825.15, +9.60 (1.18%)
NYSE Composite 5,176.48, +55.81 (1.09%)

On the day, advancing issues actually outdid decliners, 4628-1772, but the one true gauge which has remained constant throughout this episode, stretching back to October of 2007, new lows exceeded new highs, 69-10. Volume was weak, well off levels of just a week ago, another signal that nobody is buying except insiders with positions to protect.

NYSE Volume 1,314,803,000
NASDAQ Volume 1,851,850,000

Commodities also spent most of the day yo-yoing up and down, like there was something to decide as concerns the direction of prices. Oil was down, then up, then finished with a minuscule gain of 23 cents, at $49.38. Whoop-de-do! Gold gained $2.26, but remains at depressed levels, closing at $885.90. Silver also was up 13 cents, to $12.34.

Our fabulous Treasury Secretary, Timothy Geithner, said that results of the bank stress tests will not be released until after earnings for the guilty parties are announced, a sure signal that all the books have been fully cooked. Geithner is an obvious obfuscator and a complete, incompetent liar.

The nation has been led by elite crooks and criminals and the American people are paying a huge price for allowing it. In the end, one can only hope that the politicians and bankers will receive the treatment they so richly deserve. While today's tidy gains may look positive to some, they were merely a means for the banksters to steal again from both sides, buyers and sellers.

Stocks were completely out of kilter. The NASDAQ gapped up and stayed up, the Dow underperformed, all manner of technical levels were violated, including the most important support at 7775 on the Dow, but none of that matters since fundamentals don't matter, nor does sentiment, economic reports, earnings or any other measure. The big money makes the markets dance and they are playing all the wrong tunes right now.

The move engulfed yesterday completely, marking the 4th straight day of lower highs and lower lows, leaving investors scratching their heads in search of direction. Don't be fooled. The fundamentals are horrid and the markets will continue to decline. It's just a matter of when and by how much. Dow 5500 is looking pretty good, but 4000 is certainly not out of the question.

Stocks really aren't cheap, considering that in the near future, say six to nine months, most of them will be bankrupt or close to it. Some already are.