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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Zero Hedge

The Era Of Gains Is Over

Courtesy of ZeroHedge. View original post here.

Submitted by Adam Taggart of Peak Prosperity

Ever since the central banks became serial bubble blowers twenty years ago, household wealth has mostly been driven by asset price inflation:

But this has been a quixotic pursuit. Created by pulling tomorrow's prosperity into today, these asset price bubbles are u...



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Phil's Favorites

Meet The "Heavy Labor" Humanoid Robot Set To Revolutionize Construction

Courtesy of Zero Hedge

Japanese researchers at the Advanced Industrial Science and Technology (AIST) research center have developed a prototype humanoid robot, the HRP-5P, designed to autonomously perform heavy labor in hazardous environments. 

Standing just under 6-feet tall and clocking in at 222 lbs, the HRP-5P has "unsurpassed physical capabilities," according to Phys.org, and is fitted with an array of sensors in order to fully assess its environment to perform various tasks. 

In one demonstration, the HRP-5P shows of its skills grabbing ...



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Chart School

The Power of the Dow Jones Cycle

Courtesy of Read the Ticker.

Once again the data confirms cycles exists in the market. Value and other fundamental investors must concede cycles are in the stock market. [You can learn more about our Hurst Cycle tools here].

Previous Post Kitchin Cycle warned of market volatility

In the past this blog has posted the chart below, the Kitchin cycle or 900 periods, and you can see its success.

The cycle source:

.."Joseph Kitchin (1861–1932) was a British busine...



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Kimble Charting Solutions

King Dollar Creating A Topping Pattern This Week?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

King Dollar has spent the majority of the past 7-years inside of rising channel (1), as it’s created a series of higher lows and higher highs.

The 2018 rally has it kissing the underside of potential resistance this week at (2), where it could be creating a bearish reversal pattern. This one week action has NOT changed the upward trend in King Dollar.

If it breaks rising support at (3), odds favor that some selling pressure takes place in the US$, which metals would lov...



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Insider Scoop

Analysts Cautious On Williams-Sonoma After Q3 Print

Courtesy of Benzinga.

Related WSM 48 Stocks Moving In Friday's Mid-Day Session 28 Stocks Moving In Friday's Pre-Market Session ...

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Members' Corner

NY Times: OPERATION INFEKTION

 

This is a three-part Opinion Video Series from NY Times about Russia’s meddling in the United States’ elections as part of its "decades-long campaign to tear the West apart." This is not fake news. Read more about the series here.

OPERATION INFEKTION

RUSSIAN DISINFORMATION: FROM COLD WAR TO KANYE

By Adam B. Ellick and Adam Westbrook

EPISODE 1

MEE...



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Digital Currencies

Bitcoin's high energy consumption is a concern - but it may be a price worth paying

 

Bitcoin's high energy consumption is a concern – but it may be a price worth paying

Shutterstock

Courtesy of Steven Huckle, University of Sussex

Bitcoin recently turned ten years old. In that time, it has proved revolutionary because it ignores the need for modern money’s institutions to verify payments. Instead, Bitcoin relies on cryptographic techniques to prove identity and authenticity.

However, the price to pay for all of this innovation is a high carbon footprint, created by Bitc...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

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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