Tuesday, March 8, 2011

Wall Street, one giant mafia

From: RTAmerica | Mar 7, 2011

In the United States gas prices is not the only commodity that is on the rise, food prices are high, millions are still losing their jobs and the economy continues to suffer. Many basic governmental programs are being cut. Journalist David Degraw says there is one giant mafia racket right now; Wall Street has taken control of the Republicans and Democrats, the criminals have taken over.

Libyan update

Don't Worry, Be Happy: Unemployment Is Down, The Stock Market Is Up And The Economy Is Going To Be Just Fine

Haven't you heard? The coming economic collapse has officially been canceled. The U.S. economy is in full recovery mode. It has just been announced that the U.S. unemployment rate fell to 8.9% in February. That was the third monthly decline in a row. 192,000 new jobs were created in the U.S. during February. That was the fifth month in a row in which the U.S. economy has gained jobs. Corporate profits are way up. For the most recent month that numbers are available, sales of GM vehicles were up 49%, sales of Chrysler vehicles were up 13%, and sales of Ford vehicles were up 10%. Can't you see? The great American economic machine has roared back to life. The stock market is way up this year. The recession is over. Our financial system is more stable than ever. Pretty soon all Americans that want jobs are going to be able to get jobs and all of our government debts are going to be paid off. The greatest days for the U.S. economy are just around the corner. So don't worry, be happy.

Don't worry, be happy - the U.S. unemployment rate is falling and it will continue to fall. Don't be concerned that according to Gallup, the U.S. unemployment rate actually rose to 10.3% at the end of February. Everyone knows that U.S. government numbers are far more accurate than the numbers that Gallup puts out. Just don't pay any attention to the "doom and gloomers" and just keep on watching American Idol. Very soon there will be plenty of jobs for everyone.

Don't worry, be happy - globalism is doing wonderful things for the U.S. economy. Just look at all the incredibly cheap products from foreign nations such as China that are available in our stores. Do you think that all of this stuff would be so cheap if we didn't have free trade? We may have a massive "trade imbalance" right now, but this is just temporary as we transition over to a one world economy. The job losses may look bad right now, but once our wage levels go down low enough we will be able to export more stuff to the rest of the world. So don't be alarmed when the "protectionists" tell you that between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost. Those workers just need to get more "education" so that they can be competitive in today's global economy. And please don't listen to people like Alan Blinder, an economist at Princeton, who is projecting that offshoring will ulti­mately affect up to 40 million American jobs. The truth is that there are many jobs that simply cannot be outsourced. For example, workers over in China and India will never be able to flip the burgers that need flipping here in the United States and they will never be able to welcome people to your local Wal-Marts.

Don't worry, be happy - the fact that the number of Americans on food stamps has set another new all-time high (44 million) is just an indication that more Americans are learning how to use government services. At some point this number will start to go down as the U.S. economy roars back to life.

Don't worry, be happy - the fact that new home sales in the United States have been setting record lows just means that the only direction they have to go is up. As the employment situation continues to brighten, it is inevitable that the housing industry in the U.S. will surge to greater heights than ever before.

Don't worry, be happy - the fact that so many Americans are going back to work means that lots of additional tax money will soon be pouring into the coffers of state and local governments. In Idaho, Boise County has just declared bankruptcy, but that is just an isolated incident. We shouldn't be seeing too many more local governments default on their debts.

Don't worry, be happy - the economic improvement that we are seeing right now will soon mean that the austerity measures being implemented across the United States will soon come to an end. Yes, times have been tough in many communities lately. The following is an excerpt from a recent New York Times article that describes the brutal austerity that has been implemented in Vallejo, California....

Vallejo is still in bankruptcy. The police force has shrunk from 153 officers to 92. Calls for any but the most serious crimes go unanswered. Residents who complain about prostitutes or vandals are told to fill out a form. Three of the city's firehouses were closed. Last summer, a fire ravaged a house in one of the city's better neighborhoods; one of the firetrucks came from another town, 15 miles away. Is this America's future?

Sadly, that article in the New York Times was far too negative. The truth is that things are starting to turn around. Soon our cities and towns will be more prosperous than ever and all of this "austerity" will just be a bad memory. It is only a matter of time.

Don't worry, be happy - Barack Obama has announced a great plan for reducing the federal budget deficit. As the U.S. economy grows at a 5 or 6 percent pace for the rest of the decade the budget deficit is going to just keep on shrinking. Thanks to Obama, our budget deficit will be reduced to 607 billion dollars by 2015. Obama's policies are going to lead to much greater financial strength for the U.S. government. Those that are warning that the U.S. government cannot handle this much debt simply do not understand history. As a percentage of GDP, our debt really isn't that bad. When analyst Mary Meeker recently told BusinessWeek that the U.S. government has a "net worth of a negative $44 trillion" she was just exaggerating the situation. The truth is that the U.S. government is on really solid ground financially.

Don't worry, be happy - the price of oil cannot possibly stay this high. Yes, U.S. crude rose to $104 a barrel today, but that is just because of the crisis in Libya. The American people are just going to have to deal with higher gas prices for a few weeks. ABC News is reporting that regular unleaded is selling for $5.29 a gallon at one gas station in Orlando, Florida. But of course that won't last for too long. Things will get back to normal soon.

Surely Barack Obama and his crack team of national security experts are on the verge of solving the crisis in Libya even as we speak. With incredibly competent diplomatic professionals such as Hillary Clinton on the job, it is only a matter of time until the chaos in the Middle East comes to an end.

The peace and stability that the Obama administration is going to bring to the Middle East is going to drive oil prices back down. So please don't worry - you will probably be paying 2 dollars for a gallon of gasoline by Christmas. The price of oil is not going to set a new record high and it is not going to cause another financial panic like we witnessed back in 2008.

Everything is going to be okay. Please do not listen to any of the "doom and gloomers", the "gold bugs", the "protectionists", the "armchair economists" or the "conspiracy theorists". Do you think that they know more than the highly educated experts in the Obama administration, the highly educated experts running the Federal Reserve or the highly educated experts on the mainstream media?

Yes, we have had some "glitches" in the economy recently, but very competent people are very busy fixing all of those problems. So instead of being obsessed with our "economic problems", you should just relax and have some fun. Baseball season is getting ready to start and all month fantasy baseball leagues are going to be forming. Now is a great time to join one. A new season of Dancing With The Stars is going to begin shortly, and this cast looks like the best one yet. Jennifer Lopez and Steven Tyler have been wonderful additions to American Idol this season. Did you see the dramatic unveiling of the "final 13" on Idol the other night? It was great television. A new Matt Damon has just come out and Justin Bieber just got a new haircut. Life in America is good.

Many of you already have to work two or three jobs just to pay the bills. Why spend your precious free time reading websites like The American Dream which will just get you all riled up about the state of the economy for no reason whatsoever?

There is nothing to worry about.

Everything is under control.

Don't worry, just be happy.


Ron Paul to Ben Bernanke "I want a definition of Money"

Silver Shocker

By Ted Butler:

The big surprise was in the silver COT, where the big 4 increased their net short position by 3000 contracts on the previously mentioned reduction of 1300 contracts in the total commercial net short position. This increase in the big four’s short position broke the pattern of a reduction in the concentrated short silver position that had been in force for months. The increase in the concentrated short silver position was so unexpected by me that I thought, at first, it must have been a mistake. Since the Bank Participation Report was released late yesterday, an hour or two after the COT, my first thought in the interim was that it would not be JPMorgan increasing its concentrated short position, but most likely the other three entities in the big four. After all, with all the negative attention (and losses) accruing to JPMorgan and its big silver short position, there would be no way JPM would have accounted for the 3000 contract increase in the COT for the big four.

If the silver COT was a surprise, then the Bank Participation Report was a shocker. There was a net increase in the US bank category of 6000 contracts to 25,000 held net short in silver. JPMorgan’s net silver short position, which had decreased by 11,000 contracts over the preceding three months to 19,000, had suddenly ballooned to 25,000 contracts (125 million ounces). From my reading of both these reports, it appears that the big increase in silver short selling by JPM took place during the last COT reporting week, even for the BP Report. Before I continue, let me explain that I consider JPMorgan to effectively account for all or the bulk of the entire US bank category in the Bank Participation Report for a variety of mathematical reasons. However, it matters little if there is another US bank also holding a significant net short position in COMEX silver, as all that would mean is that two US banks are colluding to manipulate the price of silver and not just one bank acting alone.

Two and a half years ago, I had a very similar experience of shock over a Bank Participation Report. This was before anyone knew that the Bank Participation Report even existed. The August 2008 Report caused me to write a series of articles that started with “The Smoking Gun” in the fall of that year. http://news.silverseek.com/TedButler/1219417468.php In turn, my analysis and writing led to the current CFTC silver investigation (still unresolved) and the revelation that JPMorgan was the big COMEX silver short by way of taking over Bear Stearns. I further believe that the revelation of the true size and nature of the concentrated silver short position has contributed to the current movement towards position limits by the CFTC.

As much as the August 2008 Bank Participation Report was shocking, the current one is even more so. That’s because we know so much more today than we did back then. We have waited two and half years to hear anyone legitimately explain how a US bank holding a short position equal to 25% of world production isn’t manipulation. No explanation has been forthcoming, nor is it likely to ever be offered. We know now that concentration is the prime requisite for manipulation. To witness the most concentrated participant suddenly increase its silver short position by more than 30% is something almost beyond comprehension.

Let me walk you through the mechanics of what just took place and then I’ll speculate on the motivation of JPMorgan increasing its silver short position so dramatically. Over the past two COT reporting weeks, it has been primarily a commercial versus commercial type affair. The big technical funds have largely refrained from adding to their net long silver position, even though prices have climbed very sharply. Two weeks ago the raptors (the smaller commercials away from the big 8) increased their net short position to 4000 contracts, the highest level in four years. The raptors were selling to the smaller unreported category traders who were buying. This week, the raptors bolted from their entire short position, buying it back completely and leaving them flat (not net long or short). JPMorgan was the sole seller to the raptors’ buying, resulting in the big increase in JPM’s short position.

As far as the motivations behind this trading, the most plausible explanation for the raptors running from their newly initiated big short position is the stark reality that shorting silver has been a very bad deal. My guess is that the raptors did their homework on silver only after they put on the big short and started to lose money on rising prices. That homework persuaded them to get off the short side of silver pronto, which they did. JPMorgan’s motivation for suddenly and greatly increasing its silver short position is less clear and more troubling. My own guess is that the JPMorgan silver trader thought he had no choice but to sell many more contracts short in order to control the price and protect their existing short position. That’s because there was no one else left to sell. If JPMorgan didn’t sell, no one else would have (at prevailing prices). That’s the problem and it goes to the heart of the crime. The raptors didn’t want to sell, nor did the 5 thru 8 large traders. Ditto for basically all the other silver traders. That left JPMorgan as the sole silver seller, as the COT and Bank Participation Reports clearly document. Please think about this.

We know that concentration in any market is to be avoided. The whole thrust of commodity law goes towards preventing concentration. We know that the ideal profile of a free market is where a wide diversity of market participants competes on both the buy and sell sides of the market. We also know that the most extreme state of concentration possible is where there is, effectively, only one buyer or one seller. Therefore, what the latest COT and Bank Participation Reports just confirmed was that the most extreme form of concentration possible just occurred during the latest reporting week.

This is the key point – what would have happened if JPMorgan hadn’t sold short the additional 6,000 silver contracts (30 million oz) when they did? Asked differently, in the current market conditions, what price would have been required to induce other market participants to sell the 6,000 contracts if JPMorgan hadn’t sold? My guess is that would have taken a price over $40 or $50 to attract that much legitimate selling. The fact that JPMorgan was the sole seller is the clearest proof possible that silver has been manipulated.

So egregious was this latest increase in JPMorgan’s short position that I am inclined to think that it may have been done on an unauthorized or rogue trader basis. Perhaps JPM management and the CFTC are not yet aware of it, seeing how recently it occurred. After all, the COT and Bank Participation Reports were only published less than 24 hours ago. (As is my custom, I will be sending this article to the Commission and JPMorgan and the CME Group).

I realize that I am making serious allegations of violations of commodity law, as there is no market crime more serious than manipulation. At the very least, this new government data release is so disturbing that it should be addressed immediately. Silence on the part of JPMorgan, the exchange and the CFTC is no longer constructive. If my accusations are off-base, then I should be set straight. I’m not out to cause trouble; I am trying to help correct what I see as a very serious market problem.

I can’t help but think that Chairman Gensler of the CFTC will be troubled by this recent action by JPMorgan to substantially increase its already concentrated silver short position. In recent speeches he has indicated his support for position limits to guard against concentration. Please scroll down to the section on position limits in this recent speech to see what I mean. http://www.cftc.gov/PressRoom/SpeechesTestimony/opagensler-71.html Chairman Gensler also solicits your public comments on this issue, as I have done previously. I found it interesting that he singled out position limits in this speech for encouraging you to comment. By the way, the number of public comments on position limits is now close to 3,000, a truly remarkable outpouring of public sentiment. http://comments.cftc.gov/PublicComments/CommentList.aspx?id=965

Please don’t assume that the sharp increase in short selling by JPMorgan is automatically bearish for the price of silver. Yes, such manipulative short selling in the past has led to sharp sell-offs and could again. But things do change and current conditions in silver are vastly different than they have been in the past. While we must be prepared for a sell-off (by not holding on margin), this situation could (and should) blow up in JPM’s face. They are increasingly isolated which makes them both dangerous and vulnerable. Most of you are holding silver from prices much below the current levels. This bestows on you a power that few newcomers to silver possess, namely, the power of a long term perspective and the ability to withstand short term price gyrations. You have a price cushion and the power of knowledge that should enable you to persevere against any short term manipulation. The proper approach is to hold silver to go much higher and not to lose your position, just as it has been all along.

James Turk on the US$ decline and his target of US$50 for Silver in 2011

James Turk is interviewed by Eric King of King World News on the future of the US$, Gold & Silver........listen here

Chart courtesy of Jesse (click on the chart to enlarge)

Will Saudi be the next to rise up?

From The Independent:

It is strange to read in the news that the Saudi monarchy has “banned” demonstrations; as if such demonstrations were allowed in the first place. Nevertheless, small protests in the east of Saudi Arabia do signal a change. With March 11th being ear-marked as a ‘day of rage’, thousands of security forces are being sent to the region to suppress any potential uprising.

The focus has shifted away from Egypt since the fall of ex-President Hosni Mubarak, but, from yesterday’s events, it is clear that his toppling was only the beginning of an Egyptian revolution. On Saturday, Egyptian activists stormed state security buildings in Cairo and Alexandria, including the secret police’s main headquarters in northern Cairo’s Nasr City neighbourhood, in a bid to recover documents detailing torture, interrogation and human rights abuses of all manners under thirty years of the Mubarak regime.

The people in Egypt have lost their fear. The army tried to get them to leave the buildings, but did not use force; they know that a change has happened in their country, and they cannot suppress the people’s will any longer.

But the protests also show how much work is still to be done. The overthrowing of Mubarak was a huge victory, not only for Egyptians, but for people across the Arab world; but what comes next?

It will be extremely interesting to see how events develop in Saudi Arabia later in the week. It will also be interesting to see if the US and Britain take the Mubarak-Gaddafi-Ben Ali line in the case of Saudi; disposing of friendly dictators once they pass their sell-by date, or if they make a little more effort in supporting their number one ally.

It is difficult to be optimistic, especially when the Saudi monarchy can fall back on handing out $37 billion in “benefits” to citizens in an attempt to appease unrest, but then again, I would not have imagined seeing a day when the headquarters of the secret police in Cairo were taken over by ordinary people. Stranger things have happened.........read in full

Marc Faber - On Precious Metals & Stocks