Showing posts with label EndTheFed. Show all posts
Showing posts with label EndTheFed. Show all posts

Thursday, February 13, 2014

The Banker Commodity Cartel: Koch, JP Morgan Chase, and Goldman Sachs


The story of how JPMorgan, Goldman and the rest of the Too Big To Fails and Prosecutes, cornered, monopolized and became a full-blown cartel - with the Fed's explicit blessing - in the physical commodity market is nothing new to regular readers: to those new to this story, we suggest reading of our story from June 2011 (over two and a half years ago),  "Goldman, JP Morgan Have Now Become A Commodity Cartel As They Slowly Recreate De Beers' Diamond Monopoly." That, or Matt Taibbi's latest article written in his usual florid and accessible style, in which he explains how the "Vampire Squid strikes again" courtesy of the "loophole that destroyed the world" to wit: "it would take half a generation – till now, basically – to understand the most explosive part of the bill, which additionally legalized new forms of monopoly, allowing banks to merge with heavy industry. A tiny provision in the bill also permitted commercial banks to delve into any activity that is "complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally."Complementary to a financial activity. What the hell did that mean?... Fifteen years later, in fact, it now looks like Wall Street and its lawyers took the term to be a synonym for ruthless campaigns of world domination."
Some key excerpts:
Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals. They likewise can now be found exerting direct control over the supply of a whole galaxy of raw materials crucial to world industry and to society in general, including everything from food products to metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum. And they're doing it not just here but abroad as well: In Denmark, thousands took to the streets in protest in recent weeks, vampire-squid banners in hand, when news came out that Goldman Sachs was about to buy a 19 percent stake in Dong Energy, a national electric provider. The furor inspired mass resignations of ministers from the government's ruling coalition, as the Danish public wondered how an American investment bank could possibly hold so much influence over the state energy grid.
...
The motive for the Kochs, or anyone else, to hoard a commodity like oil can be almost beautiful in its simplicity. Basically, a bank or a trading company wants to buy commodities cheap in the present and sell them for a premium as futures. This trade, sometimes called "arbitraging the contango," works best if the cost of storing your oil or metals or whatever you're dealing with is negligible – you make more money off the futures trade if you don't have to pay rent while you wait to deliver.

So when financial firms suddenly start buying oil tankers or warehouses, they could be doing so to make bets pay off, as part of a speculative strategy – which is why the banks' sudden acquisitions of metals-storage companies in 2010 is so noteworthy.

These were not minor projects. The firms put high-ranking executives in charge of these operations. Goldman's acquisition of Metro was the project of Isabelle Ealet, the bank's then-global commodities chief. (In a curious coincidence commented upon by several sources for this story, many of Goldman's most senior officials, including CEO Lloyd Blankfein and president Gary Cohn, started their careers in Goldman's commodities division.)
Then there are the political connections:
In 2010, a decade after the Rich pardon, Holder was attorney general, but under Barack Obama, and two Rich-created firms, along with two banks that have been major donors to the Democratic Party, all made moves to buy up metals warehouses. In near simultaneous fashion, Goldman, Chase, Glencore and Trafigura bought companies that control warehouses all over the world for the LME, or London Metals Exchange. The LME is a privately owned exchange for world metals trading. It's the world's primary hub for determining metals prices and also for trading metals-based futures, options, swaps and other instruments.

"If they were just interested in collecting rent for metals storage, they'd have bought all kinds of warehouses," says Manal Mehta, the founder of Sunesis Capital, a hedge fund that has done extensive research on the banks' forays into the commodities markets. "But they seemed to focus on these official LME facilities."

The JPMorgan deal seemed to be in direct violation of an order sent to the bank by the Fed in 2005, which declared the bank was not authorized to "own, operate, or invest in facilities for the extraction, transportation, storage, or distribution of commodities."The way the Fed later explained this to the Senate was that the purchase of Henry Bath was OK because it considered the acquisition of this commodities company kosher within the context of a larger sale that the Fed was cool with – "If the bulk of the acquisition is a permissible activity, they're allowed to include a small amount of impermissible activities."

What's more, according to LME regulations, no warehouse company can also own metal or make trades on the exchange. While they may have been following the letter of the law, they were certainly violating the spirit: Goldman preposterously seems to have engaged in all three activities simultaneously, changing a hat every time it wanted to switch roles. It conducted its metal trades through its commodities subsidiary J. Aron, and then put Metro, its warehouse company, in charge of the storage, and according to industry experts, Goldman most likely owned some metal, though the company has remained vague on the subject.

If you're wondering why the LME would permit a seemingly blatant violation of its own rules, a good place to start would be to look at who owned the LME at the time. Although it eventual­ly sold itself to a Hong Kong company in 2012, in 2010 the LME was owned by a consortium of banks and financial companies. The two largest shareholders? Goldman and JPMorgan Chase.

Humorously, another was Koch Metals (2.32 percent), a commodities concern that's part of the Koch brothers' empire. The Kochs have been caught up in their own commodity-manipulation schemes, including an episode in 2008, in which they rented out huge tankers and sed them to store excess oil offshore essentially as floating warehouses, taking cheap oil out of available supply and thereby helping to drive up energy prices. Additionally, some banks have been accused of similar oil-hoarding schemes.
And then there is of course Blythe, who is now looking for a new job precisely as a result of the cartel story:
Chase's own head of commodities operations, Blythe Masters – an even more famed Wall Street figure, sometimes described as the inventor of the credit default swap – admitted that her company's warehouse interests weren't just a casual thing. "Just being able to trade financial commodities is a serious limitation because financial commodities represent only a tiny fraction of the reality of the real commodity exposure picture," she said in 2010.

Loosely translated, Masters was saying that there was a limited amount of money to be made simply trading commodities in the traditional legal manner. The solution? "We need to be active in the underlying physical commodity markets," she said, "in order to understand and make prices."

We need to make prices. The head of Chase's commodities division actually said this, out loud, and it speaks to both the general unlikelihood of God's existence and the consistently low level of competence of America's regulators that she was not immediately zapped between the eyebrows with a thunderbolt upon doing so. Instead, the government sat by and watched as a curious phenomenon developed at all of these new bank-owned warehouses, in the aluminum markets in particular.
Finally, the big picture:
[T]he potential for wide-scale manipulation and/or new financial disasters is only part of the nightmare that this new merger of banking and industry has created. The other, perhaps even darker problem involves the new existential dangers both to the environment and to the stability of the financial system. Long before Goldman and Chase started buying up metals warehouses, for instance, Morgan Stanley had already bought up a substantial empire of physical businesses – electricity plants in a number of states, a firm that trades in heating oil, jet fuels, fertilizers, asphalt, chemicals, pipelines and a global operator of oil tankers.

How long before one of these fully loaded monster ships capsizes, and Morgan Stanley becomes the next BP, not only killing a gazillion birds and sea mammals off some unlucky country's shores but also taking the financial system down with them, as lawsuits plunge the company into bankruptcy with Lehman-style repercussions? Morgan Stanley's CEO, James Gorman, even admitted how risky his firm's new acquisitions were last year, when he reportedly told staff that a hypothetical oil spill was "a risk we just can't take."

The regulators are almost worse. Remember the 2008 collapse happened when government bodies like the Fed, the Office of the Comptroller of the Currency and the Office of Thrift Supervision – whose entire expertise supposedly revolves around monitoring the safety and soundness of financial companies – somehow missed that half of Wall Street was functionally bankrupt.

Now that many of those financial companies have been bailed out, those same regulators who couldn't or wouldn't smell smoke in a raging fire last time around are suddenly in charge of deciding if companies like Morgan Stanley are taking out enough insurance on their oil tankers, or if banks like Goldman Sachs are properly handling their uranium deposits.

"The Fed isn't the most enthusiastic regulator in the best of times," says Brown. "And now we're asking them to take this on?"
Read the full story here (Rolling Stone link), or alternatively for those curious, here is a presentation highlighting all the key aspects of the aluminum price manipulation story by the big banks.

Friday, July 12, 2013

Financial Revolution Begins with Glass-Steagall and Public Banking

Watch this and think about the control the banking oligarchy has over the world.



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Recommended reading (these links are to free electronic versions, none of them are protected by copyright):
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"From Dictatorship to Democracy" by Gene Sharp:
http://thepiratebay.sx/torrent/683367...

twistedpolitix
  • Additionally in order to DECENTRALIZE financial power, we must pursue PUBLIC BANKING as supported by the Public Banking Institute, by replicating publicly owned State banks, like the one in North Dakota. Proposals for this have been reviewed in many State senates. Ellen Brown has recently published a book on public banking.
    We must localize more of our economies, our markets, in order to strip the power elits of their centralized warmaking machine.
     · 
  • twistedpolitix 
    The financial aspect of this revolution may begin with reinstating Glass-Steagall. For more info on that, google "More Hope Than Tragedy if Glass-Steagall is Passed". It currently sits on the docket in Congress and the Senate. There are over 60 co-sponsors.
    Most importantly, it will break up the big banks and eventually the Federal Reserve System that have been financing the global false flags, war on terror, war on drugs, the military industrial complex, and more.

Saturday, July 6, 2013

Top 10 Reasons to Reinstate Glass Steagall

TAKE ACTION NOW - CALL YOUR CONGRESSMAN, CALL YOUR SENATOR, SUPPORT the Return to Prudent Banking Act of 2013.  Learn more here.




The term Glass-Steagall usually refers to the set of rules that kept a savings-and-loan type bank from engaging in speculative, risky training with customers’ deposits. If a bank took deposits, it could not trade in anything other than government bonds; if it underwrote securities or engaged in market-making, it could not take deposits.

The motivation for this separation rested on alleged conflicts of interest. Glass and Steagall, as well as others, accused banks of partnering with affiliates which later sold securities to repay banks’ debts, or accepted loans from banks to buy securities. They also worried that banks engaged in risk-taking speculation, rather than investing in corporations to promote growth.

 Five provisions of the Banking Act pertained to this separation:

  • Section 19: Federally chartered banks could not buy or sell securities, unless they were investment securities, government bonds or trades made on behalf of a customer. 
  • Section 5(c): Glass-Steagall would also apply to state-chartered banks. 
  • Section 20: Banks could not be affiliated with firms whose primary purpose was trading securities. 
  • Section 21: If a bank did trade securities, it could not take deposits. 
  • Section 32: Officers and directors of commercial banks (banks part of the Federal Reserve System)

Beyond a doubt there are more than 10 reasons to reinstitute Glass-Steagall, the infamous legislation from the 1930's put into place to regulate banks after the horrific abuses of the 1920's and beyond.  But simplicity sake, here are the 10 best reasons I can think.  Send your own to twistedpolitix at gmail when you have a moment.

  1. Prevent systemic failures similar to those that occurred during the 2008 crisis by splitting the power and concentration of wealth into many hands
  2. Split up the too big to fail and too big to jail banks
  3. Prevent the bankruptcy of the FDIC since the next financial crisis will most certainly mean the loss of depositors money
  4. Decentralize the wealth, assets liabilities and risk of the Big 5 banks that control 80% of all the assets in the United States
  5. Breath life into local economies around the country by opening up new opportunities for local investment and local banking
  6. Bring to light the deceptive practices of the Federal Reserve system and their charter members
  7. End the deceptive practices of the big investment banks that have created over $700 trillion in derivatives and sold them to unsuspecting investors
  8. Decentralize the creation and destruction of the money supply since it is fractional reserve banking that allows banks to lend money into existence.
  9. Bring the hundreds of trillions of dollars in derivatives out of the dark and onto exchanges and back to reality. 
  10. Eliminate the inherent conflict of interest from the massive banks that circumvent all stte and national laws while corrupting politicians, judges, and government bureaucrats with an infinite supply of money.   
TAKE ACTION NOW - CALL YOUR CONGRESSMAN, CALL YOUR SENATOR, SUPPORT the Return to Prudent Banking Act of 2013.  Learn more here.

Joseph Stiglitz of the Roosevelt Institute, a Nobel Prize winner, contended:
Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively…Investment banks, on the other hand, have traditionally managed rich people’s money — people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risk-taking. 
Senators Maria Cantwell (D-WA) and John McCain (R-AZ) advocated the return of Glass-Steagall as well:
So much U.S. taxpayer-backed money is going into speculation in dark markets that it has diverted lending capital from our community banks and small businesses.em) were barred from holding advisory positions in companies whose primary purpose was trading securities.
Remember too big to fail and too big to jail means that the Big 5 banks in this country are ABOVE the LAW!  TAKE ACTION NOW - CALL YOUR CONGRESSMAN, CALL YOUR SENATOR, SUPPORT the Return to Prudent Banking Act of 2013.  Learn more here.


This is not a left or a right issue.  This is COMMON SENSE!


Spend a little time to understand the issue and the it should be clear.


TAKE ACTION NOW - CALL YOUR CONGRESSMAN, CALL YOUR SENATOR, SUPPORT the Return to Prudent Banking Act of 2013.  Learn more here.

Thursday, March 28, 2013

CNBC, Banker, and Analyst Nonsense

Look at this article from CNBC, a popular mass media tool for luring individual savers and investors into the shark infested stock market.

Apparently strong 1st quarter earnings supported a rally, but expected slower earnings in 2nd quarter will result in a 5-10% drop in the market. 

A 10-20% drop in the market is typical in Q2 based on the last 3 yrs as a reference? The last 3 year's we have seen the central bankers pump trillions into the markets in the UK, Japan, EU, and US.

Don't worry. You should buy stock on those dips.

Besides, who needs strong corporate earnings when we've got the Federal Reserve pumping trillions into banks, who aren't lending that out quite yet. Maybe they are saving for the upcoming dips too! I mean if you could socialize losses with bailouts and privatize the gains with super cheap Fed money, wouldn't you?

At what point will people wake up to the scientifically engineered economic boom bust cycles and SCREAM, RIOT, at least ACT!

After April Showers, Market Could Spring Higher CNBC.com | March 28, 2013 | 10:13 AM EDT

The stock market is likely to see its typical, seasonal pullback in the second quarter after the first quarter's sharp gains, but unlike previous years, more bullish Wall Street strategists expect a significantly higher end-of-year finale...

Major averages have been on a tear in the first quarter, thanks largely to better-than-expected earnings, further evidence of a healing economy, and ongoing support from the Federal Reserve...

Analysts have jumped aboard the bullish momentum.  Goldman Sachs, Deutsche Bank, Morgan Stanley, and S&P Capital IQ boosted their targets significantly, citing the improving U.S. economic growth and liquidity from the Federal Reserve.

In the last three years, strong market run-ups in the first quarter have led to pullbacks of between 10 to 20 percent during the first few weeks of the second quarter.

"It looks like the rally's gotten tired and we're due for a pullback for stocks. And while we may not see the huge pullback like in the past years, a smaller decline of about 5 to 10 percent is what we're expecting," said Jeff Kleintop, chief market strategist for LPL Financial. "But we'll see a bounce after that, so individual investors can use this market to their advantage and look to buy on the dips."

Some analysts point to slow earnings growth as a possible catalyst for the pullback.

Earnings growth expectations for the first quarter are at a modest 1.5 percent, according to the latest data from Thomson Reuters.

So far, a little over 100 companies on the S&P 500 have provided negative earnings guidance compared to 23 positive pre-announcements for the first-quarter. Still, earnings growth is forecast at 9.2 percent for the year.

"Earnings expectations have not risen as much as in prior years, which may limit the disappointment," wrote Kleintop. "It is too early to say whether [the earnings revision] indicator is flashing a warning sign."

" if investors are going to be nervous, Europe's going to be an excuse," said Thomas Lee, chief U.S. equity strategist at JPMorgan. "But at the end of the day, I don't think this is a big enough threat to say the bull market's over and global recession's starting because there's another financial crisis."

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Questions? Comments? Email us at marketinsider@cnbc.com