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

Momentum Monday - Digital Dominance...This Week Semiconductors and 5G

 

Momentum Monday – Digital Dominance…This Week Semiconductors and 5G

Courtesy of Howard Lindzon

Good Monday morning everyone.

As always here is this weeks Momentum Monday from Ivanhoff and I.

I walk through the Apple explosion to new highs and what that means for my stops and area where I would get defensive.

Google is the weakest of the FAANG stocks.

I shared some fresh ideas with Ivanhoff in the software and 5G sector which include $ESTC $SWKS $QRVO and $QCOM.

I hope you enjoy it.

I also wanted...



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Biotech/COVID-19

There aren't enough batteries to electrify all cars - focus on trucks and buses instead

 

There aren't enough batteries to electrify all cars — focus on trucks and buses instead

Garbage trucks, buses and the van that delivers your Amazon purchases are all prime candidates for electrification. (Shutterstock)

Courtesy of Cameron Roberts, Carleton University

We need to change our transportation system, and we need to do it quickly.

Road transportation is a major consumer of fossil fuels, contributing 16 per cent of all human-caused greenhouse gas emissions, which warm up the Earth’s atmosphere and cause changes to the climate. It also ...



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Zero Hedge

"August Snoozer" On Deck With Dealers Back In "Long Gamma" But Everything Changes In September

Courtesy of ZeroHedge View original post here.

Charlie McElligott's prediction from last week that the Nasdaq could suffer from a nasty spill as dealer gamma had turned increasingly negative...

... was foiled by the blockbuster earnings from the mega tech companies which sent the Nasdaq to new all time highs, forcing dealers - and frankly everybody else - to chase the year's best performing sector into the stratosphere.

And indeed, in his latest note f...



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ValueWalk

Coronavirus stimulus check: Tell IRS if you didn't get the payment yet

By Aman Jain. Originally published at ValueWalk.

We are now in the final week when a decision on the next coronavirus stimulus package is expected. However, many still haven’t received their first stimulus check. The IRS has said that it would continue to send payments through the end of the year. Yet, if you meet the eligibility requirements and haven’t gotten the coronavirus stimulus check, you should let the IRS know.

Q2 2020 hedge fund letters, conferences and more

When to contact IRS for coronavirus stimulus check

The IRS has already send the majority of the payments. Though the agency would be sending ...



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Kimble Charting Solutions

Here's How To Buy The Top Stocks In The Hottest Sectors During The Covid Crisis

Courtesy of Chris Kimble

Tech has been the place to be during the Covid-19 crisis. Investors Business Daily recently highlighted how one can own the strongest of the strong by just owning one ETF (See article here).

This chart looks at the Dorsey Wright Focus Five index ETF (FV), which reflects that it is attempting a bullish breakout while creating higher lows over the past 6-years.

The $2.1 billion fund tracks the Dorsey Wright Focus Five Index, which provides access to five First Trust sector and industry ETFs. Dorsey Wright & Associates selects the funds based on relative price momentum, then weights the compone...



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Digital Currencies

Twitter Says "Human Error" And "Spear-Phishing Attack" Responsible For Massive Bitcoin Hack

Courtesy of ZeroHedge

Twitter suffered from a major hack about two weeks ago and has now said that its staff was tricked by "spear-phishing", which is a targeted attack to trick people into simply handing out their passwords. 

Twitter staff were targeted through their phones, according to a new report from the BBC. The attacks then allowed hackers the ability to Tweet from celebrity Twitter accounts. Twitter has said it was "taking a hard look" at how it could improve its permissions and processes.

"The attack on July 15, 2020, targeted a small number of employees through a phone spear phishing attack. This attack relied on ...



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The Technical Traders

ARE THE MARKETS ABOUT TO TURN?

Courtesy of Technical Traders

Deborah Honig from Adelaide Capital asks Chris the question on everyone’s mind – where are the markets heading? Where is the ‘big money’, the early movers in the market, going? Chris and Deborah also look at the technicals for Gold and Silver and discuss whether Gold and Silver are starting a big run-up now, or should we wait before taking positions?

Learn more about our latest research and alerts on Gold, Silver, Oil, and Equities at www.TheTechnicalTraders.com.

...

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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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Chart School

US Dollar Cycle Review

Courtesy of Read the Ticker

If investors can correctly forecast the US Dollar then their portfolio will be standing on better ground.

Jesse Livermore said investors must familiarise themselves with all matters of the market. The sine wave cycle below shows regular tops and bottoms and if the investor ignores this repeating phenomena it could be at their peril. If you decide to do so, you best have a good technical or fundamental reason.

The sine wave cycle below was found with readtheticker.com 'Cycle Finder Spectrum' use of 'Bartels' logic. Yes it is mathematics, but within the site RTT Plus service we also examine the dollar fundamentals  (like: inflation, money s...

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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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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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TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

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

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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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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