Last week, Goldman Sachs was on the congressional hot seat, grilled for fraud in its sale of complicated financial products called "synthetic CDOs." This week the heat was off, as all eyes turned to the attack of the shorts on Greek sovereign debt and the dire threat of a sovereign Greek default. By Thursday, Goldman's fraud had slipped from the headlines and Congress had been cowed into throwing in the towel on its campaign to break up the too-big-to-fail banks. On Friday, Goldman was in settlement talks with the SEC.
Goldman and Wall Street reign. Congress appears helpless to discipline the big banks, just as the European Central Bank appears helpless to prevent the collapse of the European Union. . . . Or are they?
The shorts circled like sharks in the Greek bond market, following a highly suspicious downgrade of Greek debt by Moody's on Monday. Ratings by private ratings agencies, long suspected of being in the pocket of Wall Street, often seem to be timed to cause stocks or bonds to jump or tumble, causing extreme reactions in the market. The Greek downgrade was unexpected because the European Central Bank and International Monetary Fund had just pledged 120 billion Euros to avoid a debt default in Greece. Strategically-timed ratings downgrades of this sort are so suspicious that Indian market regulator SEBI recently created a stir by asking the rating agencies operating in India for periodic reporting concerning their fees and rating norms.
Markets were roiled further on Thursday, when the U.S. stock market suddenly lost 999 points, and just as suddenly recovered two-thirds of that loss. It appeared to be such a clear case of tampering that Maria Bartiromo blurted out on CNBC, "That is ridiculous. This really sounds like market manipulation to me."
Manipulation by whom? Markets can be rigged with computers using high-frequency trading programs (HFT), which now compose 70% of market trading; and Goldman Sachs is the undisputed leader in this new gaming technique. Matt Taibbi maintains that Goldman Sachs has been "engineering every market manipulation since the Great Depression." When Goldman does not get its way, it is in a position to throw a tantrum and crash the market. It can do this with automated market making technologies like the one invented by Max Keiser, which he claims is now being used to turbocharge market manipulation.
Whether Goldman actually crashed the market in this case will be left to conjecture, but Keiser explained in an email how it could theoretically be done:
Remove all the buy orders that you control (since HFT traffic is 70% of the order flow, if you simply pull your HFT buy orders, you remove a huge chunk of the market - in a heartbeat - leaving a sudden price vacuum). If you wanted to scare congress to vote the way you wanted them to vote - a congress that is directly invested in stocks trading on the exchange and ETF's tied to the prices on the exchange - just pull your buys. When they do what you want them to do - replace your buys. If you want to make the market go up - pull your sell orders. It works both ways. (It's all detailed in my Virtual Specialist Technology patent - how to make markets in an 'infinite inventory environment.')
Goldman was an investment firm until September 2008, when it became a "bank holding company" overnight in order to capitalize on the bank bailout, including borrowing virtually interest-free from the Federal Reserve and other banks. In January, when President Obama backed Paul Volcker in his plan to reinstate a form of the Glass-Steagall Act that would separate investment banking from commercial banking, the market collapsed on cue, and the Volcker Rule faded from the headlines.
When Goldman got dragged before Congress and the SEC in April, the Greek crisis arose as a "counterpoint," diverting attention to that growing conflagration. Greece appears to be the sacrificial play in the EU just as Lehman Brothers was in the U.S., "the hostage the kidnappers shoot to prove they mean business."
It is still possible, however, for the European Central Bank to snatch Greece from the fire and rout the shorts. It can do this with what has been called the nuclear option -- "monetizing" the debt of Greece and other debt-laden EU countries by effectively "printing money" (quantitative easing) and buying the debt itself at very low interest rates. This is called the "nuclear option" because it would blow up the hedge funds and electronically-driven sharks prowling in Greek waters, which specialize in bringing down corporations and countries for strategic and exploitative ends.
Will the ECB proceed with this plan? Perhaps, say some experts, since the Greek bailout has evidently not quelled the bond crisis. Germany, harboring fears of a Weimar-style hyperinflation, would be expected to contest the nuclear alternative; but there is evidence that what actually triggered the Weimar inflation has been distorted in the history books. The Federal Reserve has lent massively to its member banks at near-zero interest rates without triggering hyperinflation in the United States.
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Mike Lux: Loosening the Iron Grip of Corporate Power
A citizen movement is bubbling up through the barriers of special interest concrete in Washington that is not driven by tea party anti-government fervor, but by the hopes of regular folks who believe we can take our country back.
Why would the "nuclear option" blow up the hedge funds?
Not a problem, therefore.
I'm not so sure about this point:
"So if the government steps in with more federal debt, it's just replacing the debt-money that was lost." - due to the private money contraction(cancellation/extinguishing debts).
But, does the government create new(additional) money when issuing debt.
It seems if that debt is sold to private persons, being marketed through primary dealers rather than being held by the Fed, then those private persons are taking already existing monies from either their checking or savings accounts and buying the Treasuries.
So, it seems to be a private-public sector transfer of existing monies.
And it seems that only if the Fed buys-holds the Treasuries using its money-creation powers does it actually add to the amount of money in existence.
So it seems.
Of course, if those Treasuries are purchased by the bankers and deposited in any Fed account, they become reserves, capable of generating the multiplier effect of loan generation - possibly increasing the money supply.
But given today's excessive reserve quantities in the $Trillion-plus range, adding more Treasuries appears of no immediate consequence.
Seeking clarification here.
joe
this is where the world should have stopped and everyone got off.
Certainly was a giant road sign saying trouble ahead
I remember reading that Andrew Jackson said, "I killed the bank"
Perhaps, it's time to blow it up?
I know one thing unless hostile aliens invade there's no way out of this mess it's either accepting indentured-slavery or state/regional secession.
"remove all the buy orders that you control (since HFT traffic is 70% of the order flow, if you simply pull your HFT buy orders, you remove 70% of the market - in a heartbeat - there is a sudden price vacuum). If you wanted to scare congress to vote the way you wanted them to vote - a congress that is directly invested in stocks trading on the exchange and ETF's tied to the prices on the exchange - just pull your buys. When they do what they want them to do - replace your buys. If you want to make the market go up - pull your sell orders. It works both ways. (it's all detailed in VST patent - how to make markets in a 'infinite inventory environment')" [VST patent refers to the Virtual Specialist Technology Keiser patented that has been copied in many other HFT programs.]
Eurodollars plunged on Thursday creating a wave in the interest rate swaps market. The largest cash market in the world. These swaps are what most ETFs actually trade, not baskets of stocks. Is it a coincidence the majority of stocks NASDAQ froze were ETFs like FAZ? Stocks designed to profit off a market crash failed on Thursday.
How international banks manipulate markets to service the U.S. war debt:
http://www.gamingthemarket.com/financial-armageddon-zombies.html
Regarding the monetization of debt, I doubt the Germans will go along with it. Merkel is just posturing. In reality she is a member of the Bilderberger group and her real interests are otherwise captured by the neo-feudal model that is rapidly developing. The debt leverage will be used by world banksters to subjugate whole populations, this seems to be the intent.
As a Jew I was never educated in some of the real causes of anti-semitism and the rise of Hitler following the Weimar hyperinflation. It would behoove everyone to go back and study that period and especially investigate such names as Warburg and Rothschild and their 'contributions'. Frankly I regard Goldman now as Jewish mafia basically. Meyer Lansky would turn green with envy. Sadly there will probably be another wave of anti-semitism coming as a result of the grotesque thievery,racketeering and malfeasance seen among the upper echelons of financial power.
“Yup, I was one of the “suckers” who had all of his long-side stops triggered. Since they were not anywhere near tight enough, this event cost me about $10K. Thank goodness I own a hefty amount of 30-Yr Treasuries, FNMA & FHLMC bonds and Gold which actually put me slightly ahead at the end of the day. Nonetheless, I was forced to swallow $10K in REALIZED losses on long positions thanks to the way this casino is run. It’s the last dime they will get out of me, I can tell you that.”
Keep 'em comin' Ms Brown, we heart you.
Your book, "WEB of DEBT" (www.WebOfDebt.com) should be on EVERY American's TOP 5 reading list, in this day and age, to be FINANCIALLY ILLTERATE is to be a POORLY INFORMED citizen, and a poorly informed citizen is one who is EASILY MANIPULATED by BLAME-MONGERING DEMAGOGUES.
Fortunately, your writing is very easy to read, and each chapter is a story in and off itself, so readers can jump around from chapter to chapter to better digest the story of how BIG FINANCE now RULES our way of life. (As, indeed, the wealthy - then called "The Nobility" - RULED the peons & serfs during the medieval era, and, indeed, throughout most of human history.)
you mention that, outside of Berlin at the height of the family-wrecking HYPER-INFLATION that would ultimately lead to the rise of A.H. and the Nazis coming to power, you explain that outside of Berlin the WORTHLESS currency was called "Berlin Jewish bankers' funny-money" or something like that.
I'd just like to point out that today, Max Keiser (www.MaxKeiser.com) uses an IDENTICAL TERM to describe AMERICAN DOLLARS, which Mr. Keiser has called "BERNANKE's TOILET PAPER."
Mr. Obama was FOOLISH, bordering on INSANE, to RE-NOMINATE Ben Bernake to be Chairman of the Federal Reserve, and if SOMEONE DOESN'T SLAM THE BRAKES on Bernanke & Golddamn-Sachs (loot, plunder, bribery, swindler, EXTORTION) "bailouts for bankers, EVICTION NOTICES, PINK SLIPS, & CRUSHED social safety net for EVERYONE ELSE" INSANITY, America's "financial elites" will be (ARE!) RECREATING the EXACT CONDITIONS that led to the rise of the Nazi Party and WWII.
The only silver lining in all of this is to see the big picture. Greed has propelled evolution into the Age of Empathy and has further advanced the species. It's job is done now and so is the socio-economic landscape as we know it. Bad biology, the selfish gene, has dismantled the economy.
http://www.huffingtonpost.com/andy-borowitz/goldman-sachs-reveals-it_b_558774.html