Oil Prices Need Government Supervision

The bankers have Britain's Gordon Brown and France's Nicolas Sarkozy so deep in their pockets that they have to pump daylight down to them. For proof one need look only look at how eager the pair is to push their respective economies, already clinging by the fingernails, off the cliff into certain depression at the behest of their corporate masters.

The despicable duo released a joint statement which amounts to a manifesto by government to take over the oil industry and keep the prices high. As you can guess it took a lot of tortured reason and it's logic is child's play to dispatch with, but will do the exercise anyway.

For two years the price of oil has been dangerously volatile, seemingly defying the accepted rules of economics. First it rose by more than $80 a barrel, then fell rapidly by more than $100 before doubling to its current level of around $70. In that time, however, there has been no serious interruption of supply.

Here ignorance and arrogance mingle dangerously. The rise and fall did defy accepted rules of economics, the ones economists and financial institutions in the credit markets play by, but not the ones Goldman Sachs plays by. Goldman it's well known has the largest commodities trading floor in the world which regularly raids those markets reaping huge takes from wild volatility. Any floor trader or blogger knows this, but Nicolas Sarkozy and Gordon Brown pretend that they don't. Menacing.

In that time, however, there has been no serious interruption of supply, a condition governments find untenable, because it leaves them on the sidelines out of sight.

The oil market is complex, but such erratic price movement is cause for alarm. The surge in prices last year gravely damaged the global economy and contributed to the downturn. The risk now is that a new period of instability could undermine confidence just as we are pushing for recovery.

The oil market is simple supply and demand, Goldman's market manipulations injects the complexities of which government is ignorant or complacent, good reasons both for you two to butt out.

The price surge did no did no damage, because it could not. The global economy was already gravely damaged last year, the surge in prices was the result of manipulation by Goldman Sachs and the bubble itself, it was a symptom rather than a cause of the bubble. Free free market pricing is the only thing that will bring stability to the oil markets. If governments intervene there is no risk of a period of instability, it is a certainty.

Governments can no longer stand idle. Volatility damages both consumers and producers. Importing countries, especially in the developing world, find themselves committed to big subsidies to shield domestic consumers from potentially devastating price shifts.

Governments must stand idle, it is the best they can do anything else just adds weight to the load.

In Britain and France we know how the price of crude dictates the price of petrol at filling stations -- and the effect it has on families and businesses. And for countries heavily reliant on income from oil exports, the windfalls from brief price surges are offset by the consequent difficulties of planning national budgets and investment strategies.

That means I want to keep my government job. But governments are impotent in free market affairs, rather than acknowledge it they make matters much worse.

Extreme fluctuations in price are encouraging energy users to reconsider their reliance on oil. The International Energy Agency, for instance, has cut its long-term forecast of oil consumption by almost a quarter. Producers are in danger of finding out that oil is losing its market and its long-term value.

High prices rather than an extreme fluctuations are encouraging energy users to cut back on oil thereby pressuring prices downward. The downward pressure minus Goldman Sachs meddling will stabilize oil prices.

How much hope can French and British citizens have when Brown and Sarkozy say what they must do, then do exactly the opposite.

We are committed to the ongoing dialogue between producers and consumers through theInternational Energy Forum. Saudi Arabia and the Organization of Petroleum Exporting Countries (OPEC) have expressed interest in this as well. Producers and consumers are closer now than at any time in the past 30 years to recognizing the huge common interest in giving clear and stable signals to long-term investment.

It's no ones fault, but the world is not always fair nor the choices clear-cut.

Nicolas Sarkozy has demanded Iran free a French teacher detained after taking photos of protests and dismissed accusations she was spying as "high fantasy".

Gordon Brown described the continuing detention of four British Embassy staff in Iran as "unacceptable" and "unjustified".

Yea Ok , that's going to do it!

There will always be conflics especially between consumer and producer nations, but even in the midst of that conflict those nations will seek the best price in the open market providing the price stabilization you two pretend to want.

More immediately , we as consumers must recognize that abnormally low oil prices, while providing short-term benefits, do long-term damage. They diminish our incentives to invest not only in oil production but in energy savings and carbon-free alternatives.

Low oil prices do long-term damage! Britian and France are in trouble. Now we know what Sarkozy and Brown mean by price stability, but still wonder who they work for and for how much.

Upstream investment world-wide is already down by 20% over the past year. And with some sources of supply in decline, such as Alaska and the North Sea, the resource we will all need as the economy recovers is being developed in neither an adequate nor a timely way.

Investment world-wide is down because there isn't as much oil as there used to be, heard of peak oil dummy. Oh just when will that economy recover, any idea bright guy? That's what I thought.

There are no easy solutions, and any progress must be made with the full cooperation of the world community and the oil industry. On Monday, we used the U.K.-France summit in Evian to explore a way forward. We hope our ideas inform meetings today at the G-8 summit in Italy, and in future talks between world leaders.

At the London Energy Meeting last December, all participants agreed that closer coordination between the International Energy Agency, the International Energy Forum, and OPEC was necessary to develop a shared analysis of future demand and supply trends. The Expert Group of the International Energy Forum should take the lead in establishing a common long-term view on what price range would be consistent with the fundamentals.

The Free free market does that all by it's little self. What you are trying to disguise is market manipulations.

These experts should also consider any measures that could be put in place to reduce volatility. And they should look again at whether trading activity is amplifying erratic price movements.

We therefore call upon the International Organization of Securities Regulators to consider improving transparency and supervision of the oil futures markets in order to reduce damaging speculation. This would serve the interests of orderly and adequate investment in future supplies, since volatility and opacity are the enemies of growth. Climate change is also altering government attitudes to energy.

They need not look again at whether trading activity is amplifying erratic price moving trading activity especially by Goldman Sachs is exactly producing erratic price movements. But the only measures any experts can put in place to reduce market volatility is to keep manipulation out of the markets which is something that governments actually can do, but choose not to. How do you know governments choose not to keep manipulation out of the markets? Because there is manipulation in the markets.

The world's economy is still reliant on secure supplies of oil at prices that are not so high as to destroy the prospects of economic growth, but not so low as to lead to a slump in investment, as happened in the 1990s.

If oil companies want to slump their investments as happened in the 1990s, then let them, that is where free-market capitalism is all about. The oil companies know what the return on a dollar invested in exploration is and whether or not it is worth it. Increasingly it is not, but who are you to tell them in one way or the other.

It is a thorny issue, but complex markets need not be volatile or damaging to the wider global economy. We are convinced that producers and consumers alike would benefit from greatertransparency, greater stability and greater consensus on the market fundamentals. After two years of destructive price volatility, the time has come for both sides to work together to build on our common interest.

It's a distracting issue, because the oil markets are not that complex. It's a simple matter of supply and demand in which the free market provides fair and stable prices for free. Greater transparency is the only thing producers and consumers alike would benefit from and your governments by passing laws could provide them any time they wanted.

Trade Alert: GS

Well morning has broken and how. As feared Goldman Sachs rebounded powerfully today gapping almost four dollars on the open. Apparently it's too unseemly to have Goldman Sachs trading below $140 and the specialists seems determined to keep it above that. As you can see in the five-day chart above they are trying to push it back above the local high of $147.

Now take a look at the 10 day chart below. You can see a high last Tuesday of $149.02 followed (significantly) by a lower high of $148.87 on Wednesday of last week. As you can see the trailing lower highs including today's high of $144.44. A series of lower highs is by definition a downtrend, so even though they got Goldman Sachs back above $140 they weren't able to break the downtrend that is developing.

The strength of the downtrend line is even more pronounced in the 52-week chart. Notice the descending 100 day and 200 day moving averages. actually $150 looks like resistance right about now and if you wanted to be little bit aggressive you could short Goldman right here with us stop just above $150.

I think shorting Goldman Sachs will be a very profitable, it's already in a downtrend. But we don't want to be too aggressive and we certainly don't want to guess, be patient and trade the break.

Trade Alert: GOLD

It looks like GOLD is bouncing off of yesterday's low which was nearly the 100 day moving average. Also on the daily chart above you can see the stochastics at 20 and turning up.

The point is that GOLD is finding support. We are short a 1/4 or 25 shares from $66.10, so let's just take our profits here. If gold falls below yesterday's low of 58 week and shorted it again.

Buy to cover 25 shares of GOLD at $60.65

On The Edge

Max Keiser with some good stuff on Goldman Paulson and the rest of the mess.

Trade Alert GS,

Well it finally happened Goldman Sachs closed under $140 a share. The two-day chart in the 15 minute time frame shows how, it opened yesterday's close dropped all the way down to $136 with two touches there and then went up into the close.

In the six-month chart in the daily timeframe you can see the drop and a little support at $136 level. Also the stochastics are about 20 and turning up. The last selling bar is relatively high and the only one above the 50 day volume moving average. So this could be just one and done. Is it? There is no way to tell, but I will not guess. If and only if Goldman Sachs stays below $140 tomorrow I will short it. No promises let's just see what the morning brings.

Goldman Scams

The Wall Street Journal is asking "Goldman Sachs Quant Code Case: How Big a Deal Is It?" The short answer is not a very big deal at all. Why? Let me count the ways, but where do I begin.

First it's Goldman Sachs so they will get away with what ever it is. Just look at how its former CEO behaved when on loan to the United States treasury. Hank Paulson admitted to bullying Bank of America CEO Ken Lewis into swallowing the regurgitated mess of what had been before the credit crisis, Merrill Lynch. He has admitted to market manipulation on his skill at Martha Stewart never dreamed but he is free to walk the streets and respected member of society. I don't really need to go into this do I? So you know it will not be a big deal.

Second whatever super quant gizmo software is supposed to be jeopardized you can be sure that there's nothing to it. Remember the highly publicized fully disgraced Quant space of nano second black box trading algorithms that could take advantage of any market under all conditions. We see how far that got the quant funds.

The platform is one of the things that gives Goldman an advantage over the competition when it comes to the rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and, using secret mathematical formulas, allows the firm to make highly profitable automated trades.

See what I mean, sounds just like the hype that got a lot of people throw a lot of money at the quant funds to begin with, that cash has now disappeared into the black box only to reappear in the managers bank accounts. The fact that Federal authorities are now advertising Goldman Sachs is secret mathematical formulas just goes to show how in control Goldman Sachs really is.

The criminal case has the potential to shed a light on the inner workings of an important profit center for Goldman and other Wall Street firms. The charges also raise serious questions about the safeguards that Wall Street firms deploy to protect these costly-to-build proprietary trading systems.

The only important profit center for Goldman Sachs is insider connections bribes, intimidation and trading its partners position against its clients position. Guess whose positions come out better. Nor did the charges raise any questions about the safeguards Wall Street firms deploy to protect these costly to build proprietary trading systems. Before anyone goes reading what they think is Goldman Sachs's lost playbook they had better realize the only reason Goldman Sachs lost it is because they wanted you to find and play by it. Goldman Sachs neither plays nor fits the victim role well, it's a part they have in mind specifically for you.

Trade Alert: GDX

I don't think it's worth trying to squeeze much more out of our short GDX position. in fact looking at the daily chart you can see it trying to form a W with touches on the 100 day moving average last month and again yesterday.

So the sellers drove he shares the shares down to just under $36 last month, but failed to push it any further. Now they will try to push it under $36 again if they are successful it could go down quite a bit but let's not guess, just take your profits.

Buy to cover 25 shares GDX at $36.99.

China Pulls Away

Inflation or deflation which will it be? There are people smarter than me on both sides of the argument, but until now nobody with their butts on the line has had to make a move one way or the other. For the past few months China has made some guttural uttering about internationalizing their currency a move which was derided by Mish. But now all the brains that butts on the line can muster have the Chinese are making a real move in that direction.

China has officially opened a pilot program to allow companies to settle imports and exports in renminbi in selected regions, marking a major step toward eventually internationalizing the Chinese currency.
Three pairs of Shanghai companies with their Hong Kong and Indonesian counterparts signed contracts on Monday to be the first to settle business deals in the Chinese currency. Executives said the move would save costs and avoid exchange rate risks.

Bank of China and Bank of Communications were the first lenders to clear transactions in renminbi, considered a lucrative business given China’s expanding economy and huge presence in international trade.

Hong Kong also kicked off the long-awaited yuan settlement program on Monday.
HSBC said it completed its first renminbi trade settlement with Shanghai and its first cross-border credit transaction.

There are some kinks to be worked out for sure.

Caught off guard and partly lacking the skills to hedge against foreign exchange volatility, many small Chinese exporters have closed after China revalued the renminbi by 2.1 percent against the dollar in July 2005. The renminbi has appreciated by a further 19 percent against the dollar since then.

But the Chinese were gladly work out their own kinks rather than massage a beat to near-dead US dollar off of life support even as the federal reserve tries to snuff out what little life remains.

Caught between a rock and a hard place the Chinese can ill afford to hastily divest their US dollar denominated assets without severely diminishing divide you of those assets by the sheer weight of their own selling, and often cited fact by US government officials and deflationists alike. Nor can they simply hold tight as the Fed reduces the value of their holdings for them.

Despite the deflationists ramblings by Mish and Keynesian apologists like Paul Krugman the Chinese are certainly afraid of something and I doubt that it's deflation.

Give us More More More Stimulus

The banker billionaires must be a bellowing up to the give us more more more bar. Seems a little bit of reality in the jobs numbers chopped the green shoots down to size and since the first stimulus did not work so well Congress has decided to do a second. Nancy Pelosi the corporate house whore master is leading the charge for the Democrats.

Today's disappointing jobs number is certain to trigger a serious push for a second stimulus bill.

The talk was already happening. Earlier this wek, John Judis at The New Republic argued that one was needed. Also this week, Obama responded to a question about a possible second stimulus by saying it was "too soon" to know whether one would be needed, suggesting that it's certainly on the table. Of course, House Speaker Nancy Pelosi was in favor of a second stimulus before the ink even dried on the first one, so it shouldn't be much of a stretch to get it through the Congress, especially with the Democrats newly-solidified supermajority in the Senate (welcome Sen. Franken!).

And now we've heard it at least 10 times this morning on CNBC. The market is looking for its hit.

And of course anything for the market.

This is how it's supposed to work: we have spent and indebted ourselves to the verge of bankruptcy, so we will borrow once again to buy time to repay more debt than we can repay now. In other words we're trying to dig ourselves out of the hole that we dug ourselves into by digging deeper. We've been hearing analogies of this type for so long now you can be sure that even the White House understand what's going on, but they just keep digging it deeper for us.

Prediction: We'll get it by the end of the year.

Observation: We've already got it, but good. With a Ponzi scheme like this it kind of makes you wonder what they had against Madeoff.

Question: Last month, when the layoffs came in light, Obama aides Christina Romer and Austan Goolsbee were all over the airwaves, playing up the green shoots stuff. Will they be taking an early 4th of July weekend today?

Update: Oops, we were too cynical; Romer will be on CNBC at 9:35 (sorry!). Looking forward to what she has to say.

Update 2: When asked about the second stimulus, Romer told Rebecca Jarvis: "Well do whatever it takes."

But honey of course you would, just like a good whore should!

Founders Bank, Worth, IL

The FDIC was busy this holiday weekend seizing seven banks after the close of business this fourth of July weekend. Founders Bank, Worth, IL, was the 52nd bank to be shut down by the agency in 2009 and the seventh of the night. Here is the story from Reuters.

U.S. bank regulators closed Founders Bank, of Worth, Illinois, the largest of 7 financial institutions seized on Thursday.

The Federal Deposit Insurance Corp said Founders had $962.5 million in assets and approximately $848.9 million in deposits. The failure is expected to cost the FDIC deposit insurance fund an estimated $188.5 million.

The PrivateBank and Trust Co of Chicago will assume all of the deposits of Founders Bank.

Do not hesitate to visit the offical FDIC webpage for Founders Bank, if you should have any further questions.

Millennium State Bank of Texas, Dallas, TX

The FDIC was busy this holiday weekend seizing seven banks after the close of business this fourth of July weekend. Millennium State Bank of Texas, marked the 51st bank to be shut down by the agency in 2009. Here is the story from Bizjournals.

The Texas Department of Banking on Thursday closed Dallas-based Millennium State Bank of Texas, the first bank failure in Texas this year and the first in the Dallas area in more than a decade.

The six-year-old bank had one office in Dallas on Webb Chapel Road near Interstate 635.

Irving-based State Bank of Texas has acquired essentially all the assets of Millennium, according to the Federal Deposit Insurance Corp.

Seven groups put in bids for Millennium, according to the FDIC.

All depositors of Millennium State Bank will have access to their funds over the July Fourth weekend, according to the FDIC. On Monday July 6, they will automatically become depositors of State Bank of Texas.

“From a customer perspective, they woun’t see any disruption in service,” said Marvin Payne, an FDIC spokesman.

FDIC and Texas Banking Department staffers are working through the holiday weekend closing out the books of Millennium State Bank and integrating them into State Bank of Texas.

As of June 30, Millennium had $118 million in total assets and $115 million in deposits.

State Bank of Texas has $588 million in assets. Millennium’s Northwest Dallas office will be its fourth branch.

But that won’t be for long. State Bank of Texas is selling its headquarters location on State Highway 183 to the Texas Department of Transportation for planned widening of that freeway, said Chan Patel is the president and CEO of State Bank of Texas.

Millennium was started by a group of investors including businessman George Gouldsby and bankers J.D. Sibilsky and Clyde Hensley. Sibilsky once ran Small Business Administration lending for Comerica Bank. Hensley was chief lending officer at Dallas’ Eagle National Bank, which was acquired by Houston-based Sterling Bank in September 2002.

Millennium first focused on small-business lending and owner-occupied real estate loans.

Millennium was profitable in 2005, but has produced losses ever since.

Millennium tapped Don Flatt to be its president in spring 2008. At the time, board chairman Gouldsby said the bank should have a wider range of offerings.

“You have to do a lot of things and do a lot of things well to make money for yourself and your investors,” he said in April 2008.

Millennium is one of seven banks closed on Thursday. Thus far this year, the 52 banks have failed this year nationwide. In all of 2008, 26 banks failed nationwide.

Do not hesitate to visit the official FDIC webpage for Millennium State Bank if you should have any questions.

First National Bank of Danville, Danville, IL

The FDIC was busy this holiday weekend seizing seven banks after the close of business this fourth of July weekend. The First National Bank of Danville, Danville, IL marked the half century nunber of 2009 being the 50th bank to be shut down by the agency in 2009. Here is the story from TribStar.

As part of a federal government bank closure in Danville, Ill., First Financial Bank, N.A., of Terre Haute has assumed all of the assets of the Illinois bank.

The First National Bank of Danville was closed Thursday by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation as receiver.

To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Financial Bank.

The seven offices of the First National Bank of Danville will reopen Monday as branches of First Financial.

Depositors of the Danville bank automatically will become depositors of First Financial.

Do not hesitate to visit the official FDIC webpage for First National Bank if you should have any questions.

Elizabeth State Bank

The FDIC was busy this holiday weekend seizing six banks after the close of business this fourth of July weekend. Elizabeth State Bank became the 49th bank to be shut down by the agency in 2009. From the official FDIC press release.

The Elizabeth State Bank, Elizabeth, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation, Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Galena State Bank and Trust, Galena, Illinois, to assume all of the deposits of The Elizabeth State Bank.

Do not hesitate to visit the official FDIC webpage if you should have any questions.

Rock River Bank

The FDIC was busy this holiday weekend seizing seven banks after the close of business this fourth of July weekend. The Rock River Bank, Oregon, Il became the 48th bank to be shut down by the agency in 2009. Here is the story from Marketwatch.

Rock River Bank of Oregon, Ill. became the 48th bank failure of 2009, and the ninth Illinois bank failure of the year, according to the Federal Deposit Insurance Corp. late Thursday. Harvard State Bank of Harvard, Ill. will assume the deposits and purchase about $72.9 million of assets. As of April 30, Rock River Bank had total assets of $77 million and total deposits of about $75.8 million. Rock River also marks the 73rd bank to fail since the beginning of the recession.

Do not hesitate to visit the official FDIC webpage for Rock River Bank if you should have any questions.

First State Bank of Winchester, Winchester, IL

The FDIC was busy this holiday weekend seizing seven banks after the close of business this fourth of July weekend. The John Warner Bank, Clinton, Il became the 47th bank to be shut down by the agency in 2009. From the official FDIC press release. Here is the story from Marketwatch.

First State Bank of Winchester of Winchester, Ill. became the 47th bank failure of the year and the eighth bank to close in Illinois, the Federal Deposit Insurance Corporation (FDIC) said Thursday. First National Bank of Beardstown, Beardstown, Ill. will assume all deposits of the failed bank. As of April 30, First State Bank of Winchester had total assets of $36 million and deposits of about $34 million. The closure also marks the 72nd bank failure since the start of the financial crisis.

Do not hesitate to visit the official FDIC webpage if you should have any questions.

The John Warner Bank, Clinton, IL

The FDIC was busy this holiday weekend seizing seven banks after the close of business this fourth of July weekend. The John Warner Bank, Clinton, Il became the 46th bank to be shut down by the agency in 2009. From the official FDIC press release. Here is the story from Bloomberg.

John Warner Bank of Clinton, Illinois, was closed by state regulators, pushing the toll of failed lenders to 46 this year as the worst financial crisis since the Great Depression fuels unemployment and foreclosures.

The bank, with $70 million in assets and $64 million in deposits, was closed today by the Illinois Department of Financial and Professional Regulation, according a statement released by the Federal Deposit Insurance Corp., which was named receiver.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship,” the FDIC statement said.

Regulators this year have closed the most banks since the savings-and-loan crisis of the early 1990s as lenders struggle with mounting losses on real estate-related loans. The total for 2009 is nearly double the 25 banks shuttered in 2008.

State Bank of Lincoln, Illinois, will assume the failed bank’s deposits and about $63 million in assets, the FDIC said. The John Warner Bank’s three branches will open tomorrow as branches of State Bank of Lincoln.

Do not hesitate to visit the official FDIC webpage if you should have any questions.

Times of a Kind

It was a time when doing our best for others meant bringing out our worst, out into the streets, beyond the reach of the political machine. A time when crisis in the making gave birth to crisis, a precarious time of risk for the champions of the status quo, and danger to all who would challenge it.

It was a time of missiles in October, and a place called Vietnam. A time with freedom hanging just over the edge, beyond reach of the common citizen. A time yet on the verge of out of control for the controlling elite.

It was an ill fated time for men of principle, when a man named King shared his dream with a King named Kennedy, who reached out rather than down to touch the common man. And while King fought violence with non-violence, Kennedy dreamed peace, and their dreams together mythologized becoming our dream forging a a dangerous new reality to the rulers. King would not see his dream realized, Kennedy's would not be fulfilled, both would be shot dead shot dead in the angry summer of our discontent.

It was a time of bitter broken dreams, civil rights denied and Camelot lost. A time when with the country coming apart around him Lyndon Johnson maintained the status quo, the bloody war. It was a time like these times.

Now in a world struggling to overcome the New World Order the manufactured credit crisis provides another time of opportunity for both the principled and practical. When 247 men and women whose principle known, unknown and questionable stand with one man of unquestioned principle to finally ask the serious questions of the hydra of corruption, from which spring all things corrupt in economy and politics. When Ron Paul introduced a measure similar to HR 1207 a decade ago it inspired exactly zero co-sponsors, it now has 247 demonstrating how much the times are a coming around, and a nation too easily distracted once again wakes up, waking up in turn disturbing the beast in the process of reaching for empire on it's own.

The system threatened retaliates, with impunity.

When asked by Rep. John Duncan on Thursday about the fact that a majority of Congress is co-sponsoring Ron Paul’s HR 1207 bill to audit the Federal Reserve, Ben Bernanke responded:

Ben Bernanke: “My concern about the legislation is that if the GAO is auditing not only the operational aspects of the programs and the details of the programs but making judgments about our policy decisions would effectively be a takeover of policy by the Congress and a repudiation of the Federal Reserve would be highly destructive to the stability of the financial system, the dollar and our national economic situation.”

That threat is serious and severe, to deliberately ruin the economy, forcing every man, woman and child in a nation of 250 million to suffer for the sake a smitten few. Ironically it has already been carried out. It would take over $21 today to buy what $1 would in 1913, when this the third US central bank was born. That is a threat, should be greeted with the grave seriousness of a Presidential assignation --Andrew Jackson's not Kennedy's--.

The Second Bank of the United States was run by a genius named Nicholas Biddle who graduated from Princeton as the class valedictorian at age 15. The bank had a twenty year charter to drive the United States deeply into it's debt. Jackson refused to summarily renew it, events culminated in a failed assignation attempt by a man with ties to Biddle.

Jackson believed that his reelection was a mandate from the people to break the power of what he called “this hydra of corruption,” the Second Bank of the United States. To accomplish this, Jackson decided to withdraw government money from the bank to pay current expenses and to deposit future government revenues in selected state banks. These banks were called pet banks. Jackson appointed Roger B. Taney of Maryland as secretary of the treasury to carry out this policy after his two previous secretaries refused.

Bank President Biddle and his congressional supporters, led by Clay and Webster, were determined to save the bank. Biddle used the bank’s money to buy political favors. In 1834 the Senate passed a resolution of censure against Jackson and refused to confirm Taney’s appointment to the Cabinet. Biddle said, “This worthy President thinks that because he has scalped Indians and imprisoned Judges he is to have his way with the bank. He is mistaken.”

Biddle began to restrict credit and call in loans from state banks. Business leaders pleaded with Jackson to approve the bank and end the crisis. However, Jackson placed the blame for the panic on the doorsteps of Biddle’s bank and advised all callers to “Go to Nicholas Biddle.” Biddle’s reply was: “All the other banks and all the other merchants may break, but the Bank of the United States shall never break.”

In this struggle for power, Biddle was doomed to defeat. Jackson rallied public opinion behind him, and Biddle was pressured into restoring credit and loans. All he had proved was that Jackson was correct in his contention that a private monopolistic bank, independent of government regulation, should not be entrusted with public finances. Jackson won his greatest political victory, and the Second Bank of the United States passed out of existence when its charter expired in 1836.

The Second Bank of the United States was the spawn of the money from nothing creature and though it passed out of existence, the creature did not, rising as it did from Jekyll Island in 1913, it has been consuming us since.

Goldman Sachs Bribed Senate To Pass Bailout Bill

This is a little old, but it's chalked full of good campaign contribution data and remember able sound bites.

$300 an Ounce for Silver?

$300 an Ounce for Silver?, Oh yes!. I am in physical silver, but this is not want. I want the country to survive,but what we will get is Hyperinflation Nation. Watch!

Hyperinflation Nation starring Peter Schiff, Ron Paul, Jim Rogers, Tom Woods, Gerald Celente, and others. Prepare now before the US dollar is worthless.

“Ghetto Loans” and the “Mud People” By Mandelman -

Here's a great piece by Mandelman on Wells Fargo's pushing ghetto loans for decade.

“Ghetto Loans” and the “Mud People”

Apparently, one Mr. Paschal worked as a loan officer in Wells Fargo’s Annandale, Virginia offices for 10 years, from 1997 to 2007. Speaking about Wells Fargo, his affidavit states:

“They referred to sub-prime loans made in minority communities as ghetto loans and minority customers as ‘mud people.’” He also said a Wells Fargo Bank office in Silver Spring, Maryland had an “affinity group marketing” department, whose purpose was to hire African Americans to call on African-American churches.”

I suppose that was their “Mud People Helping Mud People Program”. I have got to watch more television, because I completely missed that ad campaign.

“The company put ‘bounties’ on minority borrowers,” Mr. Paschal said. “By this I mean that loan officers received cash incentives to aggressively market sub-prime loans in minority communities.”

Perhaps the Wells posters said: “Get Down and Dirty. Bring in a Mud Person, and Win a Trip to Hawaii!”

The City of Baltimore has filed a lawsuit against Well Fargo Bank, and the N.A.A.C.P. has filed a class action against the bank, as well. According to a story written by Michael Powell that appeared in the New York Times on June 7th:

“City and state officials across the nation have investigated and sometimes sued Wells Fargo over its practices. The Illinois attorney general has investigated whether Wells Fargo Financial violated fair lending and civil rights laws by steering black and Latino homeowners into high-interest loans. New York’s attorney general, Andrew M. Cuomo, raised similar questions about the lending practices of Wells Fargo, JPMorgan Chase and Citigroup, among other banks.”

Beth Jacobson says that she and fellow loan officers at Wells Fargo Bank systematically singled out blacks in and around Baltimore in order to sell them high-interest sub-prime mortgages, whether they would have qualified for prime loans or not.

In fact, both Ms. Jacobson and Mr. Paschal said in affidavits related to the suit filed by the City of Baltimore, that Wells Fargo had given bonuses to loan officers who referred borrowers to the sub-prime division that should have qualified for a prime loan. Jacobson said that she made $700,000 in one year and that Wells paid for her and other sub-prime officers to vacation at resorts across the country.

See, and I can’t even say anything about that. Because that just made me physically ill.

Paschal also stated in his affidavit that:

In 2001, Wells Fargo created a unit in the mid-Atlantic region to push expensive refinancing loans on black customers, particularly those living in Baltimore, southeast Washington and Prince George’s County, Maryland.

Powell’s story in the Times ran under the euphemistic headline, “Bank Accused of Pushing Mortgage Deals on Blacks,” said that the City of Baltimore’s lawsuit claims that Wells Fargo’s practices caused hundreds of homeowners to lose homes to foreclosure, which cost the city tens of millions in tax dollars.

Yep, that’s exactly what offended me about the whole thing. As soon as I started reading I thought to myself: “Wow… I wonder how much the whole mud people strategy thing cost the city in tax dollars.”

The Times reported that, in an interview, Jacobson said that Wells Fargo saw the black community as an ideal market for pushing sub-prime mortgages because “working-class blacks were hungry to be part of the nation’s home-owning mania”.

Is that true, working-class blacks? Write to me and let me know. By the way, do you guys have a newsletter or anything? I’d like to be able to keep track of what you guys are hungry for at any given moment. I think it’s cool that you all hunger for the same thing. I’m a Jew and you can’t get three of us to agree that the sky is blue.

As written in the Times:


“We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing sub-prime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out sub-prime loans.”

Well you know what they say… Grab mud people by their religious leaders and their hearts and minds will follow.


The Times also reported that Baltimore officials say that data released by the city as part of the lawsuit show that more than half of the properties subject to foreclosure on a Wells Fargo loan between 2005-2008 are now vacant. The city’s officials also say that 71% of those are in predominantly black neighborhoods.

Baltimore filed the lawsuit against Wells Fargo in January of 2008. But as of June 7, 2009, Judge Benson E. Legg of Federal District Court asked the city to file additional paperwork and had not decided whether the lawsuit would move forward. I think I better print that again… here you go…

Baltimore filed the lawsuit against Wells Fargo in January of 2008. But as of June 7, 2009, Judge Benson E. Legg of Federal District Court asked the city to file additional paperwork and had not decided whether the lawsuit would move forward. Did that sink in the second time around?

The Times story said that officials from Wells Fargo have declined to be interviewed since the suit was filed… IN JANUARY OF 2008! Apparently, Wells has issued some drivel, saying things like:

“We have worked extremely hard to make homeownership possible for more African-American borrowers,” wrote Kevin Waetke, a spokesman for Wells Fargo Home Mortgage.

Oh, Kevin… you so need a new job. Run, my lad, run.

Recently, The New York Times conducted an analysis of mortgage lending in New York City. Among other things, they found that when looking at Wells Fargo borrowers, among black households making more than $68,000 a year, 16.1% had sub-prime loans, compared to just 2% of whites in that same income group.

And no doubt some lawyer for Wells is getting ready to make a case for why that data isn’t conclusive.

Eric Halperin, director of the Washington office of the Center for Responsible Lending, said that his organization has known that African Americans and Latinos end up with sub-prime loans far more frequently that whites with the same credit profile. “The question has been why, and the gory details of this complaint may provide an answer,” Halperin told the Times.

It MAY provide an answer, may it? One more statement like that and I’m going to lose my lunch.

According to the Times:


“For a homeowner taking out a $165,000 mortgage, a difference of three percentage points in the loan rate — a typical spread between conventional and sub-prime loans — adds more than $100,000 in interest payments.”

Relman & Dane, a civil rights law firm working with the City of Baltimore, has had no specific response from Wells Fargo as of June 7, 2009. Of course not. What’s to respond to?

Baltimore city officials, however, think the conclusion is clear… thank the Lord.

“They confirm our worst fears: that this is not just a case based on a review of numbers and a statistical analysis,” said the city solicitor, George Nilson. “You don’t have to scratch your head and wonder if maybe this was just an accident. The behavior is pretty explicit.”

Yet, somehow I just know that somewhere there’s someone doing some head-scratching… and we should find that person and make sure that he or she is not in a position to make decisions that affect others.

And the Times story ended with the sentence: Both sides expect to appear in court at a hearing in the case in late June.

So, it’s late June… and I’m waiting and waiting… and nothing. No news whatsoever. Go ahead… Google it yourself. Not a word from Wells Fargo. Not a word from the City of Baltimore. Nothing.

Not even a peep from what some at Wells Fargo might term “the mud person” in the White House. Oh, wait… maybe they’d consider him only half a mud person.

Weekend Technical Guidance -

There will be a shortened trading week next week so there will be light and high volume. We will let inthemoneystocks guide us into it.

Max Keiser: Revolution in America

Before I am ready make the claim that I am a liberal it might be wise to say just what I think a liberal is. A liberal is just someone who generally supports the little guys rights over the rights of government and big business. Okay so now you know why this liberal who has never owned or shot a gun is a strong second amendment proponent.

I also argue that if the government can deny the citizens second amendment right then they can deny any constitutional rights, which of course they now do with impunity.

The elites must have seen the credit crisis coming for at least as long as Greenspan's Fed headship. So, they must have at least been preparing to keep order and protect themselves during food riots for at least 20 years. Then the first order of business would be to get the guns.

Peasants with pitch forks are fine, but impoverished gun owners crashing the gate could upset the table. Conspiracy theory?

Yup!

Michigan Braces for a Surge in Welfare Applications

By SARA MURRAY

Michigan's generous jobless benefits and strict eligibility rules have kept the welfare rolls down despite the state's 14.1% unemployment rate, the highest in the country. But a surge in jobless workers reaching the time limit for unemployment benefits in coming months could change that.

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Zuma Press

More than 5,000 unemployed residents of southeast Michigan looked for work at a job fair sponsored by the city of Detroit in March. Some filled out job applications on computers, while others waited to speak to recruiters.

A major test for the state's welfare system could come by January, when nearly one in seven unemployed workers will have exhausted their jobless benefits, unless the laws change, said Norm Isotalo, a spokesman for Michigan's unemployment-insurance agency. Many of the more than 680,000 unemployed workers in the state are collecting jobless benefits, which last for as long as 79 weeks.

Other states with high unemployment, such as Florida and Oregon, have already seen significant increases in welfare caseloads.

"We're expecting a huge influx of applications in the next few months," said Barbara Anders, the director of adult and family services at the Michigan Department of Human Services. About 100,000 people's jobless benefits will expire by January. Officials hope for funding to add staff to handle the influx, and the state Senate appropriations committee has approved hiring 200 more staffers.

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"We believe that the safety net remains strong in Michigan," said Liz Boyd, a spokeswoman for Democratic Gov. Jennifer Granholm. She added that the state's food-assistance and Medicaid programs have expanded.

In contrast to most other big states, welfare caseloads in Michigan are 4.8% below year-ago levels, though the total number of cases has stopped falling in the past four months. In April, the state reported about 70,000 families were receiving welfare under the federal-state Temporary Assistance for Needy Families program, or TANF. But nearly one in seven residents, or 1.4 million in all, are receiving food stamps -- a clear symptom of Michigan's economic distress.

The state has some of the strictest welfare rules in the nation, dating back to its pioneering welfare-overhaul efforts in the 1990s. Michigan is one of four states that closes a family's case the first time it fails to comply with a requirement -- such as spending a set amount of time searching for a job -- according to the Urban Institute, a Washington think tank.

Michigan is the only one of those four states that also suspends a family's benefits for three months when it doesn't comply; the other three suspend them for one month. Families that are suspended for breaking the rules must reapply for benefits.

Local advocates for low-income people cite Michigan's rules limiting the income or assets of would-be welfare recipients. A family of three that earns more than $814 a month is ineligible for welfare in Michigan, a threshold that hasn't changed in more than two decades, said Sharon Parks, president of the Michigan League for Human Services, an advocacy group for low-income people.

"The fact that it's stayed the same means that you have to be poorer and poorer to qualify for cash assistance," Ms. Parks said.

In the 1990s, under Republican Gov. John Engler, Michigan developed one of the nation's first programs to push welfare recipients to work, an approach adopted nationally in 1996. The rules tightened further under Ms. Granholm in 2006. The rules allow families to receive benefits for a maximum of two years, and toughened penalties for not following work requirements.

Before Michigan's welfare office will open a case, an applicant must first visit a Michigan Works office to register for a job-search program, and report frequently thereafter, which some advocates say has discouraged applications in a state where jobs are scarce.

"It's just perceived to be this roadblock to getting assistance," said Kristin S. Seefeldt, assistant director of the National Poverty Center at the University of Michigan, who has followed 45 low-income women for the past four years.

For those who already have jobs, the job-search program doesn't bend around work schedules. For others, the job-search program primarily consists of spending hours looking at want ads. "They could do that on their own, and the amount of money they'd get from TANF isn't worth it" for some people, Ms. Seefeldt said. The monthly welfare check for a family of three in Michigan is $492, or $5,904 a year

Citi Cover Up

Citigroup share holders and taxpayers alike thought the blood bath in what at onetime was the worlds biggest bank would never end, and even the bank celebrates it's first profit in five consecutive quarters, the bleeding hasn't. The bank's fiscal first quarter 2009 $1.6 B profit is the result of a concerted public relations effort spun with accounting nuance which began immediately upon reporting it's fourth quarter 2008 loos of $8 billion on $5.6 billion of write-downs.

After more than a year of crippling losses and three bailouts from Washington, Citigroup, a troubled giant of American banking, said Friday that it had done something extraordinary: it made money.

But the headline number — a net profit of $1.6 billion for the first quarter — was not quite what it seemed. Behind that figure was some fuzzy math.

With more than $200 billion of taxpayer handouts in hand management obviously felt they had some explaining to do, so the very day after the earnings reportCiti announced that it was firing its chairman Sir Win Bischoff, and it's top three executives would forfeit their bonuses in the same breath. Six days latter they nixed plans to buy a corporate jet.

But the headline number — a net profit of $1.6 billion for the first quarter — was not quite what it seemed. Behind that figure was some fuzzy math.

Like several other banks that reported surprisingly strong results this week, Citigroup used some creative accounting, all of it legal, to bolster its bottom line at a pivotal moment.

The litany of extra legal legalities comes from a well worn hit parade of oldies, but goldies, SFAS 157 not the least of them.

One of the maneuvers, widely used since the financial crisis erupted last spring, involves the way Citigroup accounted for a decline in the value of its own debt, a move known as a credit value adjustment. The strategy added $2.7 billion to the company’s bottom line during the quarter, a figure that dwarfed Citigroup’s reported net income. Here is how it worked:

Citigroup’s debt has lost value in the bond market because of concerns about the company’s financial health. But under accounting rules, Citigroup was allowed to book a one-time gain approximately equivalent to that decline because, in theory, it could buy back its debt cheaply in the open market.

Wouldn't you kill to do the same to your under water house in practice? It didn't make the bank any healthier than you sucking your stomach in does, but it makes you look better.

“It’s junk income,” said Jack T. Ciesielski, the publisher of an accounting advisory service. “They are making more money from being a lousy credit than from extending loans to good credits.”

Give that a banks business is making money from extending loans to good credits, this bodes ill for the future, but where SFAS 157 was the victim of a cover up, SFAS 159 was buried alive. During the interim between fourth quarter 2008 and Q1-2009 earnings reporting sessions the banks put your bailout dollars to good use lobbying congress to axe murder the Fair Value Accounting Standard.

Citigroup also took advantage of beneficial changes in accounting rules related to toxic securities that have not traded in months. The rules took effect last month, after lobbying from the financial services industry.

Previously, banks were required to mark down fully the value of certain “impaired assets” that they planned to hold for a long period, which hurt their quarterly results. Now, they must book only a portion of the loss immediately. (Any additional charges related to the impairment may be booked over time, or when the assets are sold.)

For Citigroup, this difference helped inflate quarterly after-tax profits by $413 million and strengthened its capital levels.

That means that Citi would have a net of $413 million more level 3 assets on it's fat ass, but that's not the kind that goes away by sucking your stomach in. In just the prior quarter the bank would have to provision for that fat, but like the emperor's new clothes this quarter they can tell to just feign blindness.

Citigroup and other banks also benefit simply by taking a sunnier view of their prospects. Banks routinely set aside money to cover losses on loans that might run into trouble. By squirreling away less money, banks increase their profits.

That is what Citigroup did. During the fourth quarter, Citigroup added $3.7 billion to its consumer loan loss reserves, more than analysts had expected. In the first quarter, even though more loans are going bad, it set aside just $2.4 billion.

Profits over provisions aren't you glad Citigroup doesn't have an airline division. For the banks part financial chief Edward J. Kelly, like everyone who didn't see the credit crunch coming, remains unconcerned.

Mr. Kelly said that Citigroup would increase its provisions if the recession deepened and that its reserves would be adequate.

Who does he think he is Bull sh!tting the the recession will most certainly deepen if Citigroup’s prepared or not.

And what all the bull spin flying and landing in layers on the ground could not cover up was the writedowns taken on the mortgage related assets. The housing sector still hasn't bottomed.

The company took $5.62 billion of writedowns on subprime- mortgage-related securities and other investments in its trading division, reflecting a further erosion in their market value. That compared with $14.1 billion of writedowns in the first quarter of 2008, for a positive $8.47 billion revenue swing.

The banks biggest fear is the future, theirs not yours. Desperate to have you not see what is right in front of your face, and wont go away, Citi is broke. Standing at the dead end of Ponzi finance and at the begining of the greatest credit crunch in history the bank has no way to consistently drive earnings. The major gains this quarter for Citi and the other big banks came from one time trading gains, not from doing what profitable banks do, making money from extending loans to good credits. Good credits are gone the credit crunch is here and that is what the real cover up is.

Don Bernake

My favorite movie of all time is the godfather. Not for the gangster violence as much as the metaphor it draws. What a strange coincidence that there were five brothers of Rothschild and five families (Mafia) of New York.

The federal reserve is a private enterprise owned by the wealthiest families in the world. It seems as though Godfather Ben has been doing some strong-arming of his own.

It looks like Peter Boockvar at The Big Picture has the fascination too.
If you have ever seen the Godfather you will get it instantly.

Someone commented on the post that "Life imitates art". I say no in this case it is art that imitates life.

Trade Alert: GDX

We are short 25 shares of GDX from $38.09. Move the stop down to $39.52

Trade Update: GOLD

We were short 25 shares GOLD from $63.21, but got stopped out yesterday @$66.10.

We are still short 25 shares of GOLD from $70.1/4 move the stop down $2.00 to $68.14.

Roubini-No Stablization

Interview and discussion with Nouriel Roubini of the New York University. He talks about home sale revenues, health-care reform, and currencies.

But Only on Sunday

Information is the lifeblood of freedom, both financial and political. The new media are the gatekeepers to the info-flow, so it is no wonder that wars are fought with false justification and false flag attacks remain as historical reality. The corporate grip on the main stream media is powerful and pervasive. For proof one need look no farther than the the lost freedoms and wealth of the average American since the dom-com blow up. The hype highway to financial ruin was build by the mainstream media for those who listened, many because they knew no better. The raison d'être for this site.

As previously stated here any true economic recovery will be lead by a true housing capitulation and subsequent recovery and the mainstream media will stop at nothing to lead you to believe that's what is happening. A sample of perusing of a google news search for National Association of Realtors’ leads to titles such a U.S. Home Resales Probably Rose as Foreclosures Reduced Prices-Bloomberg, Real Estate's Spring Awakening-istockanalyst, US Home Sales Rise Second Straight Month In May-The Wall Street Journal, and I could go on, but can't bring myself to. The reality is that house prices went up in May for the same reason church attendance went up on Sunday.

Imagine a reporter writes a story about a priest telling everyone who wants to hear it that attendance in his church has gone up enormously. The story quickly gathers steam as other reporters quote it. It's a juicy story, because it makes just about everyone feel a little bit better in difficult times.

The predictable headline reads: "Church attendance soars" . Well chosen, since the reporter leaves open the option that it's not just one church, but a potentially larger drive. Just like in advertising campaigns for cars, detergent and presidents, picking the right words is imperative.

There is one detail of the story that escapes attention, though, amidst the happy feelings. It turns out that what the priest really told the reporter is that Sunday attendance was much higher than Saturday's. And that little tidbit of course makes it a non-story, because church attendance is always higher on Sunday.

Shows how a partial truth is far more misleading than outright lie. So much the better as far as National Association of Realtors (NAR) is concerned.

Thing is, home sales in May are historically ALWAYS higher than in April. And there, of course, lies the link with the priest and his church attendance numbers, which are ALWAYS better on Sunday then on Saturday. In other words, the WSJ headline hides a non-story. But that doesn't matter. The same message, in varying words, went out through dozens of media outlets this morning. And people feel a bit better, becasue they think home sales went up. They did not. That is to say, they went up from April to May, but they always do that.

The real story, the one the headline conveniently hides, is that homes sales are down 3.6% from a year ago, and that prices in the same period fell 16.8%. And those are numbers from the NAR, an organization known for and set on bending both reality and the numbers that come with it until they will bend no more.

It's a sad fact, but this is what we've come to, this is the kind of sneaky hype we have to put up with from the corporate state controlled media. Blind believe has and will lead to bankruptcy.

The Collapse has Barely Begun: Peter Schiff

This is about a month old, but it's an excellent reminder of what is really going on. What is really going on is another bubble, a mini bubble at that, dressed up in drag as a recovery

Insiders Out

The nice thing about being caught short in a bear market rally is that you don't have to do a thing, unless you consider waiting doing something.

The deflationists are right about one thing, you will be able to buy stocks at at much lower prices, soon.



Take a look at the six month daily chart of the SPY and pretend you were born on that day in March when the index hit bottom at 67.10. i.e. zoom in on the March to today part of the chart. Then all you know is a bull market, everything prior to that, namely the huge crash from 1600 that landed with a thud at 67.10 on your birthday is outside of your data set. The idea of shorting would seem unnatural to you and that is exactly what the Street elite want. The talking heads on CNBC and Faux business news are at it again as if they have no memory of July 2007 to March 2009. Don't let them suck in. As I have shown with the DJIA recently the SPY is in the process of forming a local high in a downtrend, otherwise known as a higher low. When you zoom back to the full year you see the downward stair stepping I'm talking about.


Novice investors get caught up in the media hype and get burned. Remember this the news is always the best, the outlook always the most promising, the bullishness is always the highest AT THE END OF THE RUN. Why? Because as they are pulling the outsiders in, the insiders are getting out. And right now the insiders are getting out.

Not to belabor the point, but just to belabor the point check out the SPY for the last three years. see an uptrend in there?


The really bad thing about these insiders is that they aren't just satisfied with their bailouts and profits on insider trading, they want to squeeze every last cent by conning you in as they get out. Can't get blood from a stone huh.