Posts Tagged ‘Volcker’

JPMorgan vs. Goldman Sachs: Why the Market Was Down 7 Days in a Row

JPMorgan vs. Goldman Sachs: Why the Market Was Down 7 Days in a Row

Courtesy of Ellen Brown at Web of Debt

Murray RothbardWe are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Rubin/Geithner). The bodies left strewn on the battleground could include your pension fund and 401K.

The late Libertarian economist Murray Rothbard wrote that U.S. politics since 1900, when William Jennings Bryan narrowly lost the presidency, has been a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties would sometimes change hands, but the puppeteers pulling the strings were always one of these two big-money players. No popular third party candidate had a real chance at winning, because the bankers had the exclusive power to create the national money supply and therefore held the winning cards.

In 2000, the Rockefellers and the Morgans joined forces, when JPMorgan and Chase Manhattan merged to become JPMorgan Chase Co. Today the battling banking titans are JPMorgan Chase and Goldman Sachs, an investment bank that gained notoriety for its speculative practices in the 1920s. In 1928, it launched the Goldman Sachs Trading Corp., a closed-end fund similar to a Ponzi scheme. The fund failed in the stock market crash of 1929, marring the firm’s reputation for years afterwards. Former Treasury Secretaries Henry Paulson and Robert Rubin came from Goldman, and current Treasury Secretary Timothy Geithner rose through the ranks of government as a Rubin protégé. One commentator called the U.S. Treasury “Goldman Sachs South.”

Goldman’s superpower status comes from something more than just access to the money spigots of the banking system. It actually has the ability to manipulate markets. Formerly just an investment bank, in 2008 Goldman magically transformed into a bank holding company. That gave it access to the Federal Reserve’s lending window; but at the same time it remained an investment bank, aggressively speculating in the markets. The upshot was that it can now borrow massive amounts of money at virtually 0% interest, and it can use this money not only to speculate for its own account but to bend markets to its will.

But Goldman Sachs has been caught in this blatant market manipulation so often that the JPMorgan faction of the banking


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Restoring Glass-Steagall

Restoring Glass-Steagall

Courtesy of Jesse’s Café Américain 

"Successful crime is dignified with the name of virtue; the good become the slaves of the wicked; might makes right; fear silences the power of the law." Lucius Annaeus Seneca

Restoring Glass-Steagall is such an obvious move that one has to wonder why it is not being more seriously considered.

Granted, it took a multi-year lobbying effort and the expenditure of many millions of dollar to subvert a national regulatory and political process to overturn it, largely led by Sandy Weill of Citigroup. Frontline: The Long Demise of Glass-Steagall.

And with the return of the Clinton crowd as Obama’s key financial advisers, led by Larry Summers and young Tim, supplemented by more mercenaries from the-investment-bank-that-must-not-be-named, perhaps it is unreasonable to expect the Reformer to enact such a simple, time-tested reform.

Perhaps Barney Frank and Chris Dodd can bring the Princes of Wall Street down to Washington again, profusely thank them for taking time from their busy day to speak to the people’s representatives, privately thank them for their generous campaign contributions, and simply ask them what they will accept as regulation again.

It is important to bear this in mind, because it tends to knock down the assertion that the current financial crisis is somehow an act of God, something that just happened. There was an intent to subvert the regulatory process, to increase leverage beyond what has long been known to be prudent, and to engage in systemic fraud with a group of enables and agencies, such as the ratings firms, in order to reap fabulous personal profits for a small group at the expense of the many. There was planning, premeditation, malice aforethought. They may not have intended to harm; they just did not care. They really truly did not care, if they got theirs.

Until the banks are restrained, and the financial system reform, and balance restored to the economy, there will be no sustained recovery.

And there can be no better start than to stop the gambling with the public money that is the core of the existing US banking system. The parallels with organized crime and the subversion of the public interest through graft and corruption are compelling. And one thing we must accept is that the financiers will never be able to reform themselves, to regulate themselves, to


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Volcker: Don’t Use Taxpayer Money to Prop Up Anything But Traditional Depository Banking Functions

Volcker: Don’t Use Taxpayer Money to Prop Up Anything But Traditional Depository Banking Functions

Paul Volcker Courtesy of Washington’s Blog

While many people have called for the giant, insolvent banks to be broken up, Paul Volcker argues for a different approach: making sure that the taxpayers aren’t paying for their speculative activities which lie outside of traditional depository banking functions.

As Bloomberg writes:

“I do not think it reasonable that public money --taxpayer money — be indirectly available to support risk-prone capital market activities simply because they are housed within a commercial banking organization,” Volcker said.

Since January, Volcker has advocated that regulators should prohibit financial companies whose collapse would pose a risk to the economy — those considered “too big to fail” — from engaging in certain types of trading and investing activities. The administration wants stricter oversight for such companies and tighter capital and liquidity requirements.

“Extensive participation in the impersonal, transaction- oriented capital market does not seem to me an intrinsic part of commercial banking,” Volcker said. “Substantial involvement in heavily leveraged finance and heavy proprietary trading almost inevitably entails risks.”

“I want to question any presumption that the federal safety net, and financial support, will be extended beyond the traditional commercial banking community,”

As the Wall Street Journal notes:

Mr. Volcker said banks should be banned from "sponsoring and capitalizing" hedge funds and private-equity firms, which are largely unregulated. He also said "particularly strict supervision, with strong capital and collateral requirements, should be directed toward limiting proprietary securities and derivatives trading."

He also said collateral and leverage restrictions against the largest nonbank financial institutions "may be needed."

The comments reflect Mr. Volcker’s long-held view that banks should act more in line with their traditional role and not take extremely risky gambles, which could threaten the viability of commercial banks and expose the Federal Reserve and taxpayers to large risks…

gamblingOf course, the people with real power in the Obama administration – Summers, Geithner and Bernanke – don’t want to break up or regulate the too-big-to-fails.

As Yves Smith has repeatedly pointed out, Volcker has been sidelined from the first days of Obama’s cabinet nominations . .. even before Obama was sworn in as President.

 


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The lie of the investment land, according to Hugh Hendry

The lie of the investment land, according to Hugh Hendry

Courtesy of Prieur du Plessis at Investment Postcards from Cape Town

Hugh Hendry, founder of Eclectica Asset Management, shares his views on the investment scene in his latest “Fund Manager Commentary” that has just been published. He is not only outspoken, but also a top-notch investment manager – just the right ingredients for compelling reading material.

The paragraphs below are the introduction to Hendry’s report.

“Good people are becoming desperate. I know a man who is planning to capitulate and buy stocks. He cannot comprehend what is happening today. He is, to employ Churchill, a fanatic; he won’t change his mind and he can’t change the subject. But, fearing the loss of his franchise, he will change his portfolio. He laments that it is as though last year’s events never happened. Rhetorically, he asks whether we have all been sent through time to invest in equities at the end of the 1970s when stocks were cheap and society had thoroughly deleveraged (the opposite of today). ‘Why do other investors not contemplate the prospect of further household deleveraging when building their profit forecasts?’ he fumes. ‘Can they not see that the private sector’s deleveraging is more than offsetting the public sector’s expansion?’ Despite such ranting my Minskian friend remains a most entertaining and charming individual.

“Now I know I have not covered myself in glory these last few months. Stock markets have gained 50% from their lows and the Fund has little to show for it except a modest reversal and no wild swings in our monthly NAV. Nevertheless, I would contend that this game of playing ‘chicken’ with the market is not for us. Our ambition has been modest. To survive the onslaught of a positive change in social mood without being forced to capitulate in the face of a frenzy of optimism; so far so good, I think?

“In this regard we have been helped immensely by a quote from Robert Prechter in early April. Having correctly called for a counter-trend rally in stock prices in late February, he then described the most likely nature of the advance, ‘… regardless of its extent, it should generate substantial feelings of optimism. At its peak, the President’s popularity will be higher, the government will be taking credit for successfully bailing out the economy, the Fed…
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Obama To Reappoint Bernanke

Obama To Reappoint Bernanke

Courtesy of Tom Lindmark at But Then What

Ben Bernanke

For all of the pixels that have been spilled over it, the announcement that Obama will reappoint Bernanke to another term as Chairman of the Fed seems sort of anticlimactic.

According to the WSJ, Chief of Staff Rahm Emanuel announced that the President will make it official on Tuesday. Now, the ball will be in Congress’s court.

I didn’t write much at all on this topic as I considered it a done deal from the beginning. There was little for Obama to gain by going with someone untested and equally little to lose with staying the course. If he had gone with new blood and the economy blew up, he would be second guessed forever about the move. Going with Bernanke, even if things go badly off course, he can always contend that he has the most experienced man at the helm and, of course, point out that Bernanke has been in control throughout, therefore, any major problems belong to him.

Hey, as Bush memories fade it pays to have a new fall guy waiting in the wings.

The Congressional hearings will be interesting but that’s about all. The chances of Congress disapproving the appointment are nil. Lots of hearings, press releases and pomposity but in the end it won’t amount to a hill of beans.

The real drama starts the first time that Bernanke has to take the inevitable actions that run counter to the administration’s plans. Will we find we have a Greenspan, a Volcker or something in between?

 


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Phil's Favorites

The Great Dispersion

 

The Great Dispersion

Courtesy of Scott Galloway, No Mercy/No Malice@profgalloway

The pandemic’s most enduring feature will be as an accelerant of existing trends. The trend that encapsulates the greatest reshuffling of stakeholder value in recent history is … the Great Dispersion. Similar to prior macro trends like globalization and digitization, it offers enormous opportunity, but also real threats.

 

In 1997, I was ask...



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Biotech/COVID-19

New DIY contact tracing app expands the fight against COVID-19, using the science of memory

 

New DIY contact tracing app expands the fight against COVID-19, using the science of memory

This app is different. Designed by psychologists, the free and anonymous web-based app can help you remember who you came in contact with. Ani Ka via Getty Images

Courtesy of Jacqueline R. Evans, Florida International University; Christian Meissner, Iowa State University; ...



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ValueWalk

Stephanie Kelton: Stop Worrying About National Deficits

By Jacob Wolinsky. Originally published at ValueWalk.

Tomorrow evening, Bernie Sanders’ economic advisor Stephanie Kelton, a leading voice behind the push to spend more on progressive priorities, is appearing in the Intelligence Squared U.S. debate on the motion “Stop Worrying About National Deficits.”

Q3 2020 hedge fund letters, conferences and more

Economic Advisor Stephanie Kelton Debates About The About National Deficits

She's arguing for the motion alongside James Galbraith, who was Executive Director of the Joint Economic Committee in Congress. Arguing against them are Todd Buchhol...



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Zero Hedge

Restaurants Slashed Jobs Last Month

Courtesy of ZeroHedge

By Jonathan Maze of Restaurant Business

The restaurant industry lost 17,400 jobs in November, according to new data from the U.S. Department of Labor released on Friday.

It was the first monthly decline in the number of restaurant workers since April, suggesting that a renewed virus and state shutdowns of dine-in service are taking their toll.

The data is likely to increase pressure on Congress and the president to approve a new stimulus package, one that includes specific aid to independent restaurants that have been devastated by the pandemic.

The industry had been adding jobs at a rapid clip since May, as restaurants reopened dining rooms and expanded while consumers grew more comfortable with dining out. But it remains far below its pre-pande...



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Kimble Charting Solutions

Is The US Dollar About To Reach A Melting Point?

Courtesy of Chris Kimble

It’s been 20 years since the last major peak in the US Dollar. Could the greenback’s latest turn lower confirm another peak?

Today’s chart takes a macro view of the US Dollar Index and highlights the long-term down-trend at each point (1). As you can see, the buck is on a topsy turvy ride, bouncing up and down within this down-trend.

The latest bottom formed after the financial crisis and has seen the US Dollar trade within a 9 year up-trend channel marked by each (2). This gave bulls some confidence that the US Dollar may have formed a long-term bottomȂ...



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Politics

Ignoring Warnings His Election Lies Could Get People Killed, Trump Posts 46-Minute Rant Full of 'Unhinged' Falsehoods

 

Ignoring Warnings His Election Lies Could Get People Killed, Trump Posts 46-Minute Rant Full of 'Unhinged' Falsehoods

"Georgia elections director yesterday: Trump's rhetoric is going to get people killed. Trump today: here's 46 minutes of unhinged conspiracy theories."

Courtesy of Jake Johnson, Common Dreams

Activists march through the city of Detroit on November 7, 2020 to denounce President Donald Trump's false claims of voter fraud. (Photo: Adam J. Dewey/NurPhoto via Getty Images)

Just days...



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Chart School

Gold Chart Review

Courtesy of Read the Ticker

Gold swing trade is due, lets review some charts to see if it is a viable move.

The seasonal period of gold is now upon us, gold should advance for the next 3 months.

Gold Gann Angle Chart ...



Gold Channel Chart .. close up!



 

Gold Channel Chart
 


Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Ang...



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Digital Currencies

Five Reasons Why Bitcoin is Going Up

 

Five Reasons Why Bitcoin is Going Up

Courtesy of 

Call it the “Respectability Rally”…

A few reasons for Bitcoin’s return to the record highs. It’s about $18,500 as of this writing, matching the previous highs from 2017’s original explosion.

Reason one: It’s going up because it’s going up. Don’t scoff, this is the reason most things in the markets happen and then the explanations are called for afterwards. I’m in financial television, I have literally watched this process occur in real-time. The more something moves in a given direction, the more peop...



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Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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