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Saturday, September 28, 2013




Kudos to the Fed/State Prosecutors!  US Fed. Banking Officials;  DOJ;  FBI;  SEC; and Many Others Fed/State Agencies for their Continuing Criminal and Civil Indictments of JP Morgan Chase;  Bank Of America; and Steven A. Cohen [SAC Insider Trading].


In a time when we seem to be beaten down by news of real or false terrorist/massacre killing here and abroad,   we can see some light at the end of the tunnel of despair and anger.   I personally found that glimmer of hope in recent WSJ articles  highlighting the continuing civil and criminal indictments of JP Morgan Chase BankSteven A. Cohen and his insider trading as well as the fact that the overblown balloon called ‘Bank Of America’ is finally being brought to criminal trial for their miscreant activities regarding mortgage fraud.

  Of course,  one can simply respond with the effortless resignation: "So what? Who really  cares?"  Or more dastardly,  "It’s about time!!"
  I don’t agree with this cynical resolve.   At a time when the economy is flushed with cash and there is what one economist calls Moral Hazard  throughout the official and ‘black banks’ [money markets,  Structured Investment Vehicles [SIV], et al.  or ‘zombie banks’ [toxic banks that were rescued],   the series of federal and state prosecutions is a upbeat counterpoint to what could be a very dark and gloomy financial scenario.   Without elaborating too much about the impending perils of Moral Hazard of Zombie Banks,  it is sufficient to say at this point that Federal and State Prosecutorial bodies as well as the FBI  [which I have carped about for a long time] have been active in trying to correct that lack of accountability in the over-compensated financial systems in Paulson’s/ Bernake’s ‘bail out’ programs.
It has become more apparent to me that JP Morgan Chase continues to demonstrate an unrelenting and completely indifferent attitude of self-destructive greed.   Their singular focus is to fleece the American citizen/taxpayer.
  The feds have correctly brought not one,  but SEVEN Federal Criminal/Civil charges against Jamie Dimon and the nefarious Board of Directors on JP Morgan Chase.
  Why?
1.   Chase decided to fleece the American citizens on the electricity—continuing the Enron scam a la Cheney/Bush administration. 
2.   Next JPMC went on to rob the American public on aluminum prices
3.   Trading/ increasing  EPA tax credits
4.   fraudulently foreclosing on non-existent mortgages 
5.   losing six billion dollars on the London whale trade 

Not to be outdone in the criminal insider trading and greed department we have the nouveau rich Steve Cohen who raised 15 billion dollars in a hedge fund. 
  He showed a consistent thirty per cent return year in and year out!
  Poor Pettifogger Bernie Madoff showed a similar consistency of return –about 10%.   Remember he went to jail running a Ponzi scheme.
Cohen thinks he is so smart but I can assure you that he bought and sold insider tips from the physicians in and around the FDA and other ‘private consultants’ whose ersatz job was to provide nothing but ‘insider trading’ information.
I find this type of behavior not only reprehensible but exceedingly cowardly.    If one really wants to make an ‘honest buck‘ with the passage of a drug through the FDA,   it is not so easy.   The FDA  for the most part,  is quite discrete and professional about the licensing of new products and tries to keep integrity and professionalism at the forefront.   I know because I tried to bring a product through the FDA system and found it quite complicated,  severely costly but understood it was necessary.
 

As for Bank Of America and I might add Citibank,   they are so replete with toxic assets and a highly distorted balance sheet with very tricky ‘off-the-books accounting’ that both should be taken apart.   They are in effect both Zombie Banks which were artificially propped up by the Feds in order to make certain that they did not ‘destroy’ the rest of the financial markets.  Unfortunately,  both Ron Rubin and Sandy Weil,  are completely compromised professionally and personally-  the only thing keeping them ‘alive’ is their political cronyism with all legislators.   Otherwise,  both men should be in prison along with Madoff;  Cohen;  Corzine;  Dimon; and a host of other “Zombie Bank Managers” and Corporate Vultures [AIG, GMAC].

I know that you,  like me,  are impatient for a complete denouement of the financial crises.
  But that will not happen soon.
Let us await the ascendancy of the new Fed Chairwoman—Ms Janet Yellen and let us give her a chance to resolve the liquidity,  net worth, and fiscal problems inherent in the flying albatross called the American Financial System.
Lets watch its flight pattern before we shoot it down!!!
BTW,  forget gold,  silver and diamonds ---Their trading value still boils down to their inherent perceived value and the trust that only a functioning financial system and a transparent, efficient government/financial system can provide. 
  The rest is all self-delusion.

9 comments:

  1. No cheers from me. As you know, five years ago, my financial adviser instructed me to buy Lehman Brothers. It was a total loss within six months and no one has gone to jail--not even the credit rating agency that gave Lehman its highest rating, or the accounting firm that hid its liabilities.

    The CFTC ( Commodity Futures Trading Commission) recently spent five years investigating the manipulation of the silver market, concluding this week that there was "nothing to see here." Five years, lots of delay and lots of legal fees, only to declare that there was nothing there? It's a big joke.

    Just look at the month of September. At a certain time on many mornings, the prices of gold and silver are driven down, as Zero Hedge has pointed out. Everyone knows that it's corrupt, but nothing is done.I could go on.

    So no cheers from me.

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    Replies
    1. I disagree with your criticism.

      Yes these banks are not loaning money like banks should. Instead they're using their funds to speculate, and 99% of the time they're making more money doing that than if they loaned money to industry. I think all these banks had very profitable years of late, way more profitable than if they'd loaned money to businesses, which in itself has its own set of risks and is probably riskier.

      The problem is that these banks found themselves overinvested in housing, and when housing took a dive their asset values plunged, and the worth of any trading company is the appraised market value of its assets, which can change overnight.

      They didn't want to believe that housing could crash again, like it did in the 1980s. But it did, and the reason why it did is because government policy encouraged loose qualifications for home ownership because if normal standards were used few people could afford a house anymore.

      The reason why conditions haven't improved goes to the reason why the government wanted qualifications lowered - without it few people could afford a house anymore.

      The bigger problem isn't just that these banks are making more money speculating, but the economy can't use these banks anymore because there's less economic activity.

      None of this would be a problem if the US had a strong industrial/manufacturing sector as it used to have.

      As it is most manufacturing is gone, most of the economy now depends on consumer spending, and wages aren't high enough to sustain that.

      So what are the banks supposed to do?

      There's not enough industry anymore to loan to them anyway. Now there's not enough people who qualify for mortgages either.

      To prop up these banks balance sheets the Fed gives them huge amounts of cash, and this they use leveraging more speculation, which is safer and more lucrative than making loans.

      The central problem is America's colossal and hopless trade imbalance, the loss of manufacturing, high unemployment with no solution in sight, and stagnant wages.

      And if you think this is bad think how much worse it would be if the US hadn't experienced the oil and gas boom going on right now.

      The US is actually moving toward oil and gas self-sufficiency! Who would have thought ten years ago that would ever have happened.

      If we were importing more instead of less energy like everyone assumed we'd be in a 1930s era dire depression right now.

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    2. The train wreck that's ahead is that by the end of Obama's second term the debt will be so high that the next President will have to slash deficit spending, which is the only thing keeping the economy at least growing enough to make up for population increase.

      When deficit spending is slashed there will be less phoney money dollars, which are now being used by people receiving them to pay for food, rent and gasoline.

      When government spending is slashed the economy will have to survive only on the consumer spending created by the private sector, and that's not enough.

      Consumer spending will plunge, and the economy will go into a tail spin like it did in the 1930s, which would have gone on forever if it weren't for the war.

      And if you have any doubt about my pessimism ask yourself the question......

      If there wasn't a horrible shortage of normal consumer spending than how is it that trillions of dollars of funny money can be injected into the economy like it has since 2008 AND THERE IS NO INFLATION.

      These trillions of phoney dollars that have been pumped into the economy haven't bee inflationary because wages are so low that nobody can afford to pay more for anything.

      Yeah there's ,more money in circulation but it's not even enough to offset puny wages and unemployment which would be causing massive DEFLATION if this phoney money wasn't around.

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    3. My family in Norway has been urging me to move there but I'd have to give up my American citizenship to become a citizen there, which wouldn't be bad if my income didn't come from Norway.

      Only the US, and I repeat this.....

      Only America taxes it's citizens based on citizenry alone instead of where the money was made.

      If you're in Norway or El Salvador they won't tax you on money you made in other countries....

      But in the US they demand to know every penny you've made anywhere in the world.

      The American government is f****d, and no one here will do anything about it.

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    4. Barry,
      There are several Active Class action law suits against standard & poors; however you will recover no more than 1/3. Lawyers steal the settlement.

      As for Dimon Corzine et al., they can blackmail their accuser.
      They ALL ARE MONEY-LAUNDERERS ON BOTH SIDES OF the courtroom; like Obama's eligibility lawsuits, they will quietly be dismissed (or assassinated).

      Delete
    5. MITmichael "disagrees" with my criticism that the markets are corrupt, but then doesn't respond to it! He disagrees that the people who lied on Lehman Brothers should be punished? I agree with what he said about the U.S> economy, but the point I made was that the markets are corrupt, everyone knows it, and the U.S. government allows it...Thanks, Patriarch. No one has contacted me about the lawsuits. The lawyers and accountants have made over a billion and a half so far, and Lehman CEO Dick Fuld hasn't had to pay back one cent.

      For example, there's this from Zero Hedge that I was referring to:

      Deja Deja Deja Vu Gold Smackdown
      Submitted by Tyler Durden on 09/26/2013 10:32 -0400
      For the 3rd day in a row, precious metals have been monkey-hammered lower in the first hour of trading on the US markets... no news, no headlines, no technicals - just good old-fashioned $10 cliff-dives in gold...
      (...)
      COMMENTS
      Pladizow
      Thu, 09/26/2013 - 10:36
      But there's NO manipulation, Right CFTC?!?
      (...)
      Stuart
      Thu, 09/26/2013 - 10:40
      it's like living in a corrupt, mafia controlled neighborhood where even the cops are bought off.
      (...)
      RealityCheque
      Thu, 09/26/2013 - 11:22
      But there's no manipulation, the CFTC said so.

      Delete
    6. There's tons more. For example, LIBOR was rigged. No one has gone to jail from HSBC after years of money laundering. I don't care what shape the U.S. economy is in--we must have a nation of laws. No criminal is "too big to jail."

      See these comments from the Wall Street Journal:

      September 25, 2013, 11:45 a.m. ET
      Silver Price-Manipulation Probe Closes
      CFTC Files No Charges, Says Not Enough Evidence
      COMMENTS
      Joel Bowen Wrote:
      Disgusting...Whistleblowers from inside JP Morgan presented verifiable proof that the bank was manipulating the silver market. It appears that the CFTC is derelict in their duties to oversee these markets.
      (...)
      BRIAN KUSZMAR Wrote:
      Nonsense.

      This is the second investigation that they have stuffed.

      Verifiable evidence has been given to the CFTC by GATA, Ted Butler, Whistleblower Andrew McGuire, etc...

      The (supposed non-riggable) Libor rate fixes were happening for nearly twenty years before they just got so blatant about (where were the regulators for 20yrs?) it they got busted by emails and texts.

      F the worthless CFTC!

      These banks and their manipulative short positions, banging openings and closings, HFT games on low volume and evening mkts, etc.. Will take themselves down one day, could not happen soon enough.

      CFTC will be once again shown for what they are, worthless...

      Delete
  2. I can see a little of both worlds. Dr. Pieczenik is trying to see some good in an otherwise very bad situation, one that could cause the whole U. S. and, indeed, world financial system to collapse (the U. S. financial system has penetrated, or should I say, "infected," the world financial system, although, don't claim the European bankers are models of moral probity -- their crimes are yet to be as fully exposed as their American counter-parts).

    And Dr. Pieczenik has reason for hope. There are professionals within the regulatory & prosecutorial ranks who see the danger and respect their own duty to act.

    But it's the political leadership dependent on Bankster campaign cash and other sources of campaign finance, which ultimately rests on the financial system, that allows the stinking carcass of abuse, fraud, and corruption to continue on, long after their crimes have been exposed to the public.

    The big banks are out of control. And big corporations depend on big banks for credit and cash flow, and, also, in many instances, are controlled by big banks.

    There is a web of group-think corruption in the upper echelons of finance, industry, and government.

    Fascist, is a word that doesn't have political currency to covey meaning in America (because Americans don't see themselves or their society that way -- "We're not a bunch of Hitlerites"), but Fascism, as in the "combine of corrupt business & government" is fast becoming the most accurate description of our present situation.

    There is a concentration of control over mega corporations that is unprecedented in history and it flows from the financial industry, which, in turn, controls the government in the absence of mass public objection, i.e., how the American People rose up and stopped the Syrian military strike, the Syrian War which never happened due to mass public opposition.

    Therefore, politicians of both the left & the right have mostly done nothing and failed to insist on criminal prosecution. Obama is especially absent considering his persona of protecting the little people -- he doesn't -- isn't that manifest by now?

    But below the political level, the putrid cream at the top are professional, who have loyalty to their duty, moral conscience, and an awareness that without prosecution the whole house of cards is likely to fall.

    Can we say that banksters are an example of compartmentalized sociopaths? Yes, they may not lie about everything, but when it comes to how they make their money, they are unconscionable.

    And is it about personal wealth and comfort?

    I don't think so, rather it is about power and status. Of course, wealth equals power, but surely, their personal wealth provides accoutrements that places them in the lap of luxury.

    So, it must be something more than mere personal comfort.

    America is beyond "red" & "blue" team, blind partisan politics.

    Each "team" is corrupted in their own way. Blind partisan politics, where one can not see the rot and smell the stench from his own "team," will only lead to a Dr. Strangelove moment where the American People ride the bomb down, Slim Pickens style, shrieking in madness.

    So, it is those professionals that can see past partisan politics.

    In truth, Americans are starting to wakeup to this reality.

    The question left to answer: Is it in time?

    Just a thought: Is not our mass entertainment an agent of debauchery and moral decline because for the corrupt top of the pyramid to survive, it is necessary to thoroughly corrupt the little people as well?

    Who will call out the corruption if the little people are wallowing in the same bath of immorality as the top 1%?

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  3. Dr. Pieczenik, it is not "carping" to express disgust and point out failure & corruption, it is an expression of humanity & caring. A caring that reaches beyond ones own circumstances.

    If that is "carping," we need a whole lot more carping in this world.

    Dr. Pieczenik, keep fighting the good fight!

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