The price of Bitcoin accelerated its recent exponential trend higher, soaring to daily all-time highs over the past few days, rising above $1,300 on Friday, then pushing $1,400 on Monday, and even above $1,500 on the second-largest BTC exchange, and was last trading just above $1,460 on Coinbase amid a buying frenzy attributed to speculative investment across the cryptocurrency sector, coupled with liquidity problem at some exchanges which were having problems processing fiat-based transactions.
Assuming a price of $1,400 – which is a rough estimate as there has been a wide discrepancy across the exchanges over the past week – would make bitcoin one of the best performing currencies, or assets – depending on one’s view – of the year. Bitcoinhas never traded above $1,300, $1,400, or $1,500 before Friday. On the Hong Kong-based exchange Bitfinex, the second-largest cryptocurrency exchange, the price rose as high as $1,548. On CoinDesk, the price crossed $1,400 on Monday, and traded as high as $1,422.
As the WSJ’s Paul Vigna observes, “Bitcoin has been struggling with a seemingly intractable internecine debate over network scaling, while similar projects have been drawing talent and investment dollars. But the price in 2017 has been generally rising, and rising sharply, amid a confluence of factors. Not all of the factors, ultimately, may turn out to be positive.”
For now however, holders of bitcoin, as well as various other cryptocurrencies have been rejoicing at the move higher, expressing little concern about the possible negative implications.
“The space is definitely seeing more traction,” Charles Hayter, CEO of research site CryptoCompare. He pointed out, however, that a “mixed bag of reasons” was behind the weekend surge. One reason is a surge of investing across cryptocurrencies. Another are withdrawal problems plaguing specific exchanges, with liquidity drying up and supply-and-demand factors forcing the price higher.
In addition to Bitcoin, ethereum, ripple, and other established cryptocurrencies have all soared in the past week amid a new trend, called the initial coin offering, or ICO, that has been growing in the sector. In an ICO, a startup issues its own bitcoin-like asset, either as a straight-ahead investment or as a token for use with a service or product offering. There have been dozens of new coins minted and offered for sale, the WSJ notes.
Putting bitcoin’s recent gains in the dust has been Ethereum, the leading bitcoin alternative, which traded above $80 on Monday, rising more than fourfold from under $20 as recently as the beginning of March.
Even an alternative version of Ethereum called Ethereum Classic has been rising. On March 1, it traded at $1.29. On Monday, it was trading at $6.59. Ethereum has a more direct connection to the ICO trend than bitcoin, since many of the firms issuing these new coins are building products and services on the Ethereum network.
In addition to ICO, another catalyst cited for the move higher is “plain old supply and demand.” While unclear if the result of a regulatory crackdown seen recently in Chinese-based exchanges, Hong-Kong based Bitfinex and some other crypto exchanges in the industry “have been dealing with liquidity and withdrawal issues the past few weeks.” Specifically, Bitfinex had trouble processing transactions after the Taiwanese banks that handle them started blocking requests. That’s part of a trend where some banks are pulling out of sectors they deem risky.
While we will have a more comprehensive writeup on the recent troubles at Bitfinex, a representative from the xchange confirmed to the WSJ that the inability of investors to withdraw bitcoin is affecting the price. Perversely, instead of forcing the price of bitcoin lower, the liquidity squeeze is forcing traders to offer higher bids to get their bitcoin out, which is subsequently forcing the price up.
“This is not healthy,” said Vinny Lingham, CEO of bitcoin-based startup Civic and a high-profile trader.
For now, however, just like in the stock market, traders – at least those who are long the various cryptocurrencies – are happy with the move higher. If and when structural problems emerge, and the price tumbles, it may be a different story, although that may not take place for a while, because as the Nikkei reports, more than 10 Japanese companies are launching exchanges for bitcoin and other virtual currencies, with an eye to tap growing demand after legal changes that make such trades cheaper and easier in the country.
As discussed previously, starting July, Japan’s consumption tax will no longer apply to purchases of virtual currencies. Exchanges in Japan have also been required since April to obtain a special license, which has requirements for finances and asset management structures, from the Finance Ministry.
One example: SBI Holdings has set up SBI Virtual Currencies, an exchange between the yen and cryptocurrencies like bitcoin and that of the Ethereum platform. The GMO Internet group is also establishing its own company, with plans to increase the number of digital currencies it trades based on demand. Kabu.com Securities and foreign exchange trader Money Partners Group plan to enter the field as well.
Which means that just as the Chinese bubble frenzy in bitcoin is fading, it may be replaced with a new one, in which thousands of Mrs. Watanabe traders shift their attention away from the FX market and toward digital currencies. If the transition is seamless, there is no telling just how far this particular bubble can grow.
On several occasions we’ve pointed out that the baby boomer generation is, to put it mildly, ill-prepared for retirement. In fact, over 50% of baby boomers have basically no savings set aside for retirement at all. Now, a new survey from Northwestern Mutual helps to shed some light on why Americans are completely incapable of saving money.
First, roughly 50% of Americans have debt balances, excluding mortgages mind you, of over $25,000, with the average person owing over $37,000, versus a median personal income of just over $30,000.
Therefore, it’s not difficult to believe, as Northwestern Mutual points out, that 45% of Americans spend up to half of their monthly take home pay on debt service alone.…which, again, excludes mortgage debt.
Of course, if Americans are incurring this much debt then it must be for absolute necessities like healthcare and basic nutritional needs, right? Afterall, the entire federal entitlement farce is dependent upon helping good hardworking, trustworthy Americans who, for the most part, spend their money wisely but sometimes need just a little extra help to make ends meet.
Well, at least that’s the illusion that Democrats would love for you to subscribe to…unfortunately it couldn’t be further from the truth. In reality, the Northwestern Mutual survey found that Americans spend 40% of their monthly income on discretionary expenses including “entertainment, leisure travel and hobbies.”
Adding insult to injury, nearly a quarter of all respondents said that “excessive/frivolous spending” was the cause of their debt problems.
Aside from basic necessities, on average, Americans spend about 40% of their monthly income on discretionary expenses such as leisure travel and hobbies. In fact, one quarter cite “frivolous/excessive spending” as a financial pitfall.
Meanwhile, nearly 20% of people can only afford to make minimum payments each month on their credit card debts.
So, for the taxpayers of this great country, rest assured that your tax dollars are being put to good use to buy Joe and Jill Schmo a nice annual trip to Cancun.
A Balch Springs, Tex., police officer who has not been identified shot and killed 15-year-old Jordan Edwards, who was the passenger in a car police initially insisted was backing down the road toward them “in an aggressive manner,” before the police chief contradicted that account, saying the car was driving away from police when the officer shot at it, and was not being driven aggressively.
The officers responsibile for the initial false narrative did not explain why they could not move out of the way. They also said they heard gun shots before the shooting. An attorney for the Edwards family said the surviving teems had heard gun shots at the party to which police were called, and left the home and went to their car because of that.
At a press conference the family attorney, Lee Merritt, insisted the teenagers in the car were not drinking and said they were not being charged with anything nor were they the reason police were called. He said the police account of the event would not hold up to scrutiny, and disputed the idea the car was backing up “in an aggressive manner.” The police chief’s statement, which came after Merritt’s press conference, bear that out.
A medical examiner ruled Edwards’ death a homicide, but as DallasNews.com explains, that doesn’t necessarily mean anyone will be charged in the killing—the shooting is being investigated by the Dallas County Sheriff’s Department and the district attorney’s office. Merritt said he hoped the investigation would be impartial because it was not being conducted by the local police department.
Merritt pre-emptively dismissed attempts to smear Edwards’ character, saying he was a straight-A student. “We’ve heard excuses before in the past: You know why it happens, because the dads aren’t present,” Merritt said, according to DallasNews.com “That excuse isn’t here. Or the kid was violent. That excuse isn’t present here.”
The high school the ninth grade boy attended, Mesquite High School, said it was postponing a biology exam scheduled for today and had extra counselors on duty at the school.
In the aftermath of the 2016 US Presidential election, "fake news" was blamed as a major reason for Donald Trump's upset victory over Hillary Clinton. A wide range of players, from Russian propagandists to paid partisan puppeteers, were accused of fabricating stories which were then widely circulated via social media to influence the hearts and minds of voters.
A national debate then raged — and still does — about whether "fake news" truly exists and, if so, should it be tolerated. And, immediately after the election, a number of major media outlets, including Google and Facebook, announced planned steps to block 'suspect' content sources on their platforms.
Amidst this tumult, a college professor compiled an aggregated list of "False, Misleading, Clickbait-y, and/or Satirical “News” Sources", which quickly became known as the "fake news list". The mainstream media immediately latched on to this list of culprits, and circulated it heavily across the headlines of major outlets like CNN, The Washington Post, Fox News, The Boston Globe, New York Magazine, USA Today, Business Insider and The Dallas Morning News
(Full disclosure: this website, PeakProsperity.com, was initially included on the list. We've learned it has since been removed.)
So many questions have been raised by this list. Is naming these sources a public service? Or it is censorship? What criteria are used to declare content "fake"? Who comes up with those criteria, and who is making the decisions? What are their qualifications? Is it the media's job to "protect" the public from information? Or is it the reader's responsibility to judge for themselves what is and isn't a trustworthy source?
To explore answers to these — and many more — questions, on this week's podcast we discuss the "fake news list" with its creator, Dr. Melissa Zimdars, assistant professor of communications at Merrimack College.
Chris' line of inquiry is brutally direct. And many of Dr. Zimdars' answers are more nuanced then many of her critics will expect. Wherever you fall on this topic, you'll find this an exceptionally open, frank debate of the key issues at stake on the public's right to information in the modern age.
Click the play button below to listen to Chris' interview with Dr. Melissa Zimdars (33m:57s).
Full Transcript below:
Chris Martenson: Hello, everyone. And welcome to this Peak Prosperity podcast. I am your host Chris Martenson and it is April 13, 2017. Fake news. Now, it hit the airwaves in the weeks especially after the election of 2016. And we’re gonna be talking about fake news today.
A website, opensources.co, assembled a list of fake news sites and was flooded with new entries in the aftermath of the election of Donald Trump. In November and December of 2016 news organizations extensively featured that list, with The Los Angeles Times headlining a story, “Want to Keep Fake News Out of Your News Feed? College Professor Creates List of Sites to Avoid.” News organizations such as CNN, The Washington Post, Boston Globe, New York Magazine, USA Today, Business Insider and The Dallas Morning News, all cited the list in their articles. Full disclosure, Peak Prosperity made it on that list for a brief period of time in what was called the unknown category but has since been removed. However, other websites you will know remain on the list.
Speaking with us is Dr. Melissa Zimdars, who is an assistant professor of communications at Merrimack College. Dr. Zimdars, welcome to the program.
Melissa Zimdars: Thanks for having me.
Chris Martenson: First, right at the top, what is fake news?
Melissa Zimdars: Yeah. So fake news, originally actually communication and media, referred mostly to satire or tabloid press, but through the election it became a term used to describe outright false information, sort of fabricated to circulate basically any kind of information online in order to generate profit. And, of course, we’ve seen the term fake news now expand to include a lot of different definitions, some more accurate than others.
Chris Martenson: Well, you mention the profit motive, but there’s also sometimes political motives, are there not? I’ve noted, in times past, political parties on both sides have circulated things that have proven to be untrue as part of campaign cycles. Are you – would that be included as well?
Melissa Zimdars: Yes. So I think when the fake news frenzy really took off, a lot of people, especially in mainstream news organizations, were focusing mostly on the Macedonian teenagers producing a lot of news, the St. Louis suburban dad who became famous for circulating news, but you’re right in that fake news can also be released by various political organizations or really far sort of information sources, often in the form of propaganda.
Chris Martenson: Okay. Great. So this list. First, what made one necessary, in your mind?
Melissa Zimdars: So, it wasn’t actually supposed to be a list originally. This all started as media literacy exercise in my Intro to Mass Communication course. I felt like my students were having a difficult time determining the credibility of sources.
Because most people now get their news on social media, and social media kind of democratizes information in the sense that it all looks the same as we see it coming through our news feeds. So, I created some tips, some that I thought of, some that I took from media literacy resources or elsewhere, and the goal of the original document I created was to have students try to figure out what these sources were. And then that took off, inaccurately actually, as a fake news list when it never was. And so that’s why OpenSources sort of developed, to try and delineate between different kinds of sources, ranging from outright fake news to political information that is still credible, because partisan information is inherently problematic, and just more neutral, credible sources.
Chris Martenson: All right. So we have a list and it consists of websites almost entirely. But they’re categorized in various ways. As you say, fake news was this catch-all bucket. But it was more granular than that. What are those categories?
Melissa Zimdars: So, the categories are: fakes news, and that can be any kind of political orientation. A lot of fake news does target different political parties. It can also be very – sort of more the click-bait style, sort of just outright fake, how to lose ten pounds in ten days for ten dollars type stuff.
Then it can also include conspiracy information. So, this normally encapsulates fairly well-known conspiracy theories, such as the flat earth theory or Ken Trails. And again, conspiracy can travel across the political spectrum.
And then junk science. So, this was mostly information that is contrary to established medicine or scientific knowledge. So, stuff like anti-vaccines or vaccines causing autism.
And then click-bait, which even reputable organizations sometimes use. So click-bait was to denote a kind of style or sensational reporting.
And then hate, which categorizes websites that are basically circulate news from organizations that are categorized by various organizations as being hate groups.
And then bias, which is politically motivated reporting that often uses very loaded language that can decontextualize information or circulate misleading information.
And then political, which is also political or partisan, but that doesn’t always do that. So they maybe sometimes sensational, but generally they’re credible. They maintain informational integrity.
And then the final is just credible. Generally neutral, striving for objectivity. They, of course, may make mistakes, but usually those mistakes become publicized, they’re retracted, apologies go out, et cetera.
So again, it’s a whole range of different kinds of information.
Chris Martenson: All right. So, within these categories then, I noticed some of them, like bias, is fairly often a subjective term, unless you’re really careful with it. I, myself, notice bias all the time in what basically are essentially editorial pieces masquerading as news articles. I see them come out all the time in my newspaper. Many of them you recognize. But I’m very sensitive to understanding when loaded, bias oriented language that’s facts-free and without context is up. Because this is something I study very carefully and I’m alert to. So you mention at OpenSources that there’s a research team that is helping to sort of collate and curate this list. Who’s on that team and how do you assure that there’s neutrality there?
Melissa Zimdars: Yeah. So, the team was basically a group of kind of kind of volunteer librarians. As this was sort of going viral, my original google doc, a few different librarians reached out to me, or to the creators of some browser plug-ins who were working – who were helping support OpenSources develop into a database. And so I haven’t asked permission to make those names public because I received a lot of hate mail. So, I kind of became the transparent lightening rod for any kind of criticism. But right now, actually, I am the only one, me and one other librarian, are the only ones actively analyzing.
And there’s transparency in the fact that if an outside source, for example, questions a labeling or if we internally questions something, it’s reviewed multiple times. So we have multiple spaces for people to debate and contest each other. Because textual analysis, or discourse analysis, which is basically what I’m doing on these websites, is open to a certain level of interpretation.
Most often we find agreement through discussion, but then I think that makes the list at least more reliable.
It’s also meant to be a guiding tool. We take snapshots of websites and the information they circulate and if the website substantially changes over time, or if we analyze it and we find that it’s not circulating the kind of news information that we’re interested in, it may be removed or altered. So, it’s meant to be somewhat dynamic and responsive to critique.
That being said, I agree with your comments about bias, especially – I think one of the major problems in general concerns for bias is that often times it’s not clear whether we’re dealing with opinion, punditry, or news. And this is a problem in credible mainstream journalism. When something isn’t labeled as opinion on Facebook all the way to partisan sources. So, I agree with you on that one for sure.
Chris Martenson: Well, and it’s a very dynamic, interesting field out there. And so this is my business is to be very deep into the information system on the web and understand what’s going on. I see it happen all over the place. One of the areas, for instance, that I track very closely is energy and energy policy and where it’s going. And there was this term that came out awhile ago where the United States is now energy independent. Now, I tracked that all the way back, and I’m pretty sure I can locate the month it was launched. It came out as a block of collateral. It hit op-eds all over the newspapers, and it was meant to achieve a certain design. And if I was gonna guess it came from the American Petroleum Institute or possibly a lobbying firm that they had put on their behalf. But they did a very good job of pushing it all across a variety of places. One of the things that they do, as well, is they set up websites and they promote certain things. So, I’ve watched this happen as a function of corporate policy
And so some of these websites that are on your list raise my alarm bells as fronts that are put out there spread disinformation on purpose, to achieve the opposite aim. It’s very complex sometimes, what’s actually happening. But the role of corporate fingers in shaping media is really strong, and friends of mine who are journalists say they will get collateral packages from Old Monsanto that help them understand how they can write stuff. But when you see the exact paragraphs that are in the collateral show up in article after article, allegedly by independent journalists, you get a sense of what’s happening here. Right?
Melissa Zimdars: Yeah. I completely agree.
Chris Martenson: There’s a degree of subtlety to what’s happening.
Melissa Zimdars: It’s blurring.
Chris Martenson: It’s blurring. Did you say –
Melissa Zimdars: Yeah, Well, I think part of the problem is with declining budgets in newsrooms, you have evidence that a local new station will play in full a video news release or a press release or like you’re saying, full paragraphs are lifted. There’s also a term in communication, or a theory, called information laundering. And so it’s when information might originate from a corporate source like you’re identifying, or it could be a hate group and it’s packaged and sort of filtered through multiple layers to just appear as if it’s neutral information. And then you can see the way that this is picked up and circulated throughout mainstream journalism.
And so, I think part of the reason we’re debating fake news and thinking about all these different kinds of news is because they really do stem, I think like you’re saying, from some of the worst practices that we do have in contemporary journalism. I mean, there is definitely a lot that needs to change and become more transparent in how we relay information to the public.
Chris Martenson: Well, I’m glad to hear that, not just as another example, everything that we do at Peak Prosperity, it has to be data, the data has to be sourced and we have to consider that the source is reliable. So, I won’t talk about energy without having all the databases myself.
I interview widely, and one of the people, groups, I interviewed had been actually measuring the degree of Roundup that shows up as trace residues in our foods. And, oops, guess what? They’re much higher than anybody thought and EPA doesn’t actually look at this stuff. And there’s this whole scandal that we could go down around that. But one of the ways this group was being targeted by, presumably, Monsanto, or somebody like them, was they were labeled, oh, a conspiracy group. Even though it’s hard data. Here’s some data. It comes from a reputable app. Here’s our sources. Here’s how we did it, with double blind, the whole nine yards, right? It was science, but they got targeted. And so I’m allergic to the idea of conspiracy because it’s a very loaded, emotional term. It carries – it’s kind of the modern version of calling somebody a witch, I think. Because I see the emotional response. It shuts down the rest of the conversation.
I was looking through your list. There’s a hundred and seventy-three out of seven hundred seventy plus that are listed as conspiracy. So, one of my questions then is how does a site get on your list like that? How would it get there and labeled?
Melissa Zimdars: Yeah. So, firstly, I do think you offer a very fair critique on conspiracy. For example, Watergate originated as a conspiracy, right? And it turned out to be a very true situation. And people who originally pushing it and following it were thought to be just really cynical and skeptical of what was happening. So, yeah, I think that’s very fair. And the way that sites get on the list is mostly through various suggestions. I originally made a list that contained almost two hundred sites. And that was from – I saw a random list circulating online. And I went through all of those websites on the list that I collected individually to determine are they active? Do I agree with this rational? So some of it was cultivated from other lists, trying to put it together in a master document. But the rest were from emails, people suggesting through various tech online social spaces; yeah, it’s sort of generating from everywhere.
I also am an avid reader of news from across the spectrum and from mainstream sources, so I was paying attention even to other websites or to stories that were being played in the media or by political sites. And I would analyze those, add them or reject them. So it’s mostly – the information is largely crowd-sourced. And then I, or if one of my active librarian volunteers is around, we will analyze it, and then hopefully someone else will analyze it again to determine whether or not we agree with that analysis.
So it’s – does that make sense? It’s crowd-sourced but then analyzed or removed as with the case with Peak Prosperity when I determined it to be beyond the scope of the project.
Chris Martenson: Well, sure. I’ll tell you, the – some of my process concern shows up – I was just interviewing a gentleman named J. Edward Griffin. He wrote a book called Creature from Jekyll Island, It’s a seven hundred seventy page tome, well researched, about the origin of the Federal Reserve. It’s in its fifth edition. He’s received exactly zero pieces of pushback from anybody saying, “Here’s where you got this wrong. This fact isn’t right. Here’s where the story's wrong.” And it tells a very credible tale of how the Federal Reserve came to be, which was somewhat of a conspiracy, as it were. And it’s all a matter of record at this point. Nothing controversial about what happened between the years 1910 and 1913 when it was finally passed as a bill.
However, you go to his Wikipedia page and the word conspiracy – he’s a noted American conspiracy theorist. Conspiracy. Conspiracy. Conspiracy. And that’s how he’s categorized and he found out that a couple of Wiki editors we trying to say, “Hey, that’s a label. Can you back that up?” and other Wiki editors said, “If you push on this too hard we’re gonna get you fired, that we’re keeping these labels.”
So, this is a label that I’ve seen used, and it gets applied in increasing numbers, I discovered, when the content is objectionable to somebody who holds some sort of power. That happens a lot. And there’s obvious things that I think if we’re gonna say that conspiracy is a – also applies to things where people have really unformed opinions like, “I think the leaves turn earlier this year because radio waves are coming from Moscow,” or something, right. There’s that. But there are people who have deeply researched stuff. They get branded, as well.
And so one of the sites on your list is the site oftwominds.com, which is run by Charles Hugh Smith. He’s a well-known contributor to our audience and there’s literally nothing I know about all of Charles body of work, which I know very well, is even remotely conspiracy oriented. He’s a nice – he’s the nicest guy you ever want to meet. He’s an author. He lives in Berkeley. Dozens of thoughtful, well-researched books. I’m interested. How did – how would his site have gotten on there and labeled, given that – I can’t – I know his work really well.
Melissa Zimdars: Yeah. So for that particular website – because I’ve analyzed almost a thousand at this point – I would have to dig through my files and footnotes and see why it was labeled that way, or if I was the primary labeler, or if one of the librarian volunteers was a primary labeler. But I do agree with your point about critical thought sometimes being labeled conspiracy erroneously. And I think there is a fine line between holding corporations and governments and institutions in power in check and in questioning and in being healthily skeptical of what’s happening. And so, I do agree. And I will definitely double-check that website if you are flagging it to me as being inaccurately errored.
Chris Martenson: And I’ll tell you why this matters a lot to me personally, is because my Ph.D. is in a science. It’s in toxicology, neurotoxicology is my background. Did a lot of basic research, post-doc, the whole nine yards. And so, one of the statements that I learned that was really scarily accurate was the statement by the physicist, Niels Bohr, which is, “Science advances one funeral at a time,” meaning those that hold entrenched beliefs often are blockages to advancing ourselves and our culture. And so, to the extent that powerful people can simply block legitimate inquiry that’s there to advance us, right, even though it may harm certain entrenched interests, I think we have to preserve that carefully. I think that the open spirit of really challenging authority, is essential, because we need accountability at all levels, and that’s been something that has been just been dreadfully lacking. The utter lack of accountability, for instance, under Eric Holder's Department of Justice with zero prosecutions for people who committed overt banking felonies, time after time after time.
That lack of accountability, I fear, elicits such a saying, these are unapproved sites – my concern is that somebody in power will think that that’s a great idea, not because it’s a great idea necessarily, but because they can find a way to use it to advance their interests and stifle the legitimate inquiry. Do you worry about that angle on this at all?
Melissa Zimdars: Well, I mean, I, firstly, completely agree with you in terms of a lack of transparency. I’ve spoken out against – and I even explicitly say on original google doc that I do not agree with any attempts to block information or to prevent it from showing up, because even outright fake news is a protected form of speech, of course within certain legal confines as determined by dockets of case law. But that doesn’t mean that it should be censored, right? That the government should step in and shut it down. I’ve never, ever believed anything like that. Because I agree that critical thought and often alternative ways of thinking about the world and challenging sedimented beliefs is how we advance as a society, as a country, as a world. And so, I agree. And that’s why I was very disheartened when a lot of the original take-up of my resources just labeled it a fake news list. And I remember speaking to reporters and being like, “Please do not use fake news list in the headline.” And they would be like, “Well, now I don’t really know what to call it because ‘Professor Makes Media Literacy Document with Sources Ranging from Credible to Fake Goes Viral’ isn’t really a snappy headline that’s gonna generate advertising revenue in a crowded market.
So, I do agree. But here’s where I’ll say why I still I have this resource, this list, out there is because I think all of these forms of information should exist, but that doesn’t mean that I can’t apply a critical lens to them in trying to understand them. So, it’s just another layer of checking and balancing, I guess, how information circulates. And so I don’t think every aspect of this that we have is perfect – not just talking about me but various fact-checking organizations or whatever. But I do think that it’s an important sort of part of the debate over being critical, over alternative sources of information and holding journalists accountable, as well as producers of partisan information. Does that make sense, hopefully?
Chris Martenson: It does. And so you mentioned sort of the legal edge of this. So hypothetical question. Let’s imagine a big name site on the list, maybe Drudge Report or Zero Hedge or something. They break a story. It’s using unnamed sources. It turned out it provided utterly bogus information, but that then was used and caused actual quantifiable harm, deaths, destruction, things like that. The story leads to harm. Should that site be trusted again? Or shut down? Or face consequences? Or is there anything here where you’re saying that you’re promoting an idea of how we might as a society begin to deal with sites that cause harm like that?
Melissa Zimdars: Yeah. I feel like I hope smarter people than me can figure out the best way to handle that, because of course, we can see examples. Turn back the clock to the beginning of our U.S. involvement in Iraq and Afghanistan and looking at all the errors of reporting across media and we’ve seen many high-profile instances of this happening, and that can have major consequences. We can also see – I know you like the term conspiracy, but across a group of websites online propagating the Pizza Gate conspiracy lead to someone bringing a gun into an actual pizza shop. So, should those websites be held accountable? Should people who tweet alleged evidence that Newsweek was engaging in trying to rig the election because they produced a Hillary Clinton cover as President and Donald Trump to be the first on the newsstands? I don’t know.
So, at what point do we keep everyone accountable for the information they circulate? And I honestly don’t have the best answer for that.
Chris Martenson: Well, my own accountability is that if you lose my trust, it’s very hard to get it back. And I’m glad you brought up the early Iraq stuff, because in my mind always is the “Aluminum Tube Story,” by Judith Miller ran on September 8, 2002, and that one was entitled “U.S. Says Hussein Intensifies Quest for Avon Parts”. Now, it turned out to have been completely bogus information, supplied by Scooter Libby to Judith Miller. He was kept anonymous, of course. It was then used to justify a war against Iraq that turned out to be entirely based on lies and deception. Lies that were easily editorially catchable. Those particular aluminum tubes – your editor calls somebody up and knows something like, “Oh no, totally wrong size for a centrifuge.” That’s easy. But these were somehow overlooked. Purposely a war was sold. I lost trust in The New York Times and I will never regain from that. So, but that’s me. Is that an appropriate response, you think?
Melissa Zimdars: I think if that is – for you, maybe it is. For me, I think in other ways, they have regained my trust. I think say that only because I feel like the only way to ultimately trust what I'm consuming is to read as widely as possible. And so, no, I don’t think anyone should get all of their news from The New York Times nor Fox News, nor Politico or whatever, or National Review. I even read The Cato Institute information on their website. And no one should go to any one of those places. But I think in media literacy circles they call it triangulation. And so if you are reading multiple stories about these topics, hopefully you can get a sense of the way that there – they may be differently framed by different sources. And hopefully, you can get a fuller understanding of that picture.
And so, I won’t write off The New York Times even though I’m often disappointed in mistakes that they make or The Washington Post, and on and on and on. Just as I’m disappointed in sometimes local news stories that get it really, really wrong. But again, I feel like we have to – part of the functioning of our democracy is being able to trust skeptically. Right? So, not to believe everything in a foolish way but to have enough trust that you are willing to consider it one part of a larger and more complex story.
Chris Martenson: Well, certainly, I think that we’re raised and trained to trust authority. The person at the front of the classroom in the beginning, and so on. And I think it’s healthy to begin to understand, of course, of course. Everybody has their own motivations. Everything is biased, of course. Stuff I produce. We all have our lenses and frames we look through and that colors how we gather information and how we choose to frame it in the presenting. That’s just part of it. Learning to parse through that is important. It sounds exhausting, but it’s actually necessary, I think. And I agree.
I don’t trust any one source and I’ll be clear. I don’t trust The New York Times on their political reporting. I think far too many times, more times than I care to count, they proved to be just a conduit for talking points from the entrenched power structure for political stuff. I really trust their environmental reporting. I really trust – there’s certain areas. But it takes sophistication to get there. And so, beyond spending as much time being a news junkie as I am, how can somebody – or you, apparently – how can somebody go about beginning to go about beginning to cultivate that same awareness?
Melissa Zimdars: Yeah. I think some of it is also weirdly just very simple. So, it’s not about being a news junkie, but I think reading past the headline, very simple things like that, a lot of people increasingly do not do. So, we tend to share information without actually engaging with it or reading it. And so, very simply, if we actually were at least reading what we’re sharing through social media where so much information is circulated and found, I think that would go a long way to perhaps stymy some information that is unreliable.
I also think it’s up to journalists, for publishers of news information, to do their due diligence to try to prevent some of these mistakes that we are talking about. I do think it’s up to technologies – not to filter or shut down information, but when a very clearly fake news website shows up as a number one google news item – we’re talking about a website that still has WordPress in the domain and has no authors and it’s existed for only two weeks, that might be a problem. So, I think it’s a multi-layered issue and I think the best thing that individual can do is – even if they’re not reading all the time is just to read widely, expose yourself to different points of view and alternative points of view, and just be open to being challenged and debated. Too often when we’re challenged we just dig in further into those beliefs instead of being humble and having an open mind.
Chris Martenson: I totally agree with that. And I’ll just add one last thing to that list is I am completely allergic to any article from anybody that cites unnamed sources. It became de rigueur about 15 years ago. I don’t understand why, but now it’s just how people operate. I don’t trust any of that stuff now. Because again, it could be a political group. It could be a corporation. It could be an ex-general with a very deep interest in Raytheon's next quarter. I don’t know what’s going on. So these things are a real problem for me, but it seems to be something that I would love for us to challenge and push back and say, “Hey. No. We’re not gonna read this article. Unnamed sources. Not good. What else you got?”
Melissa Zimdars: Yeah. Or to definitely approach that as perhaps a story in its nascent form to not read too much into what something like that might indicate or mean.
Chris Martenson: Right. And I do interview widely, and so another group that I spend time with people who are ex-military, particularly special forces. And they say flat out their personal experience and what they read about in the newspaper couldn't be further apart. So there’s always a level of re-packaging that happens over here. So, particularly when it comes to geopolitics I got both eyes mostly closed. And I tilt my head sideways when I read this stuff. Very hard to figure out what actually happening. So, today, if I'm reading about Syria, I have to read Pravda, I have to read Haaretz. I have to read stuff coming out of Iraq, as well as Europe, as well as the U.S., and they all disagree wildly.
Melissa Zimdars: But I think you raise a good point about even stepping outside of information originating outside of the United States. So sometimes it’s important to see what is the lens that is separate from us? How do we understand information the way it’s being reported from quote, unquote, the outside?
Chris Martenson: Very good. Very good. So, all very reasonable. What are your plans for the list now? What happens with it from here, do you think?
Melissa Zimdars: Honestly, I'm not 100 percent sure because it really became sort of a secondary area of my sort of scholarly interests. But one thing I actually think – you bring up transparency and challenging the list, and that’s actually where I would want to improve it. And so, you bring up about bias and I'm very self-reflective about my own self-bias and creating it. And I have to think twice. Am I seeing a liberal website and not recognizing the ways in which it’s flawed as easily as I do others?
And so, my goal would be to specifically have people that identify across the political spectrum. Also more involved so it’s less about me and more about a range of people with analytical skills coming together to talk about these sources. I would also like to match sort of what I think with a transparent sort of crowd-sourced label or multiple labels where people could up or down vote whether agree or suggest other labels just to see how much does this match. Does the aggregate support what I’ve come up with? Does it differ? And what does that mean? So, to make those labels, this kind of analysis, even more transparent than I’ve tried to so far.
Chris Martenson: Well, excellent. I’m a big student of history so ever since I saw that picture of Abraham Lincoln that said, “You can’t believe everything you read on the internet,” I’ve been much more cautious.
Melissa Zimdars: I agree.
Chris Martenson: I raise that as a joke. That’s what I do with my kids though. There’s obviously false stuff and it just floods across Facebook with people just tagging stuff and putting stuff on there that’s completely wildly inappropriate. But you know what? Learning how to be – have discrimination abilities, discernment abilities, out to really understand, to develop that level – I won’t call it cynicism, but certain jadedness, but it’s important to understand everybody’s got an angle. And that’s not a bad thing. But understanding that is the first layer of maturity in saying, “Oh. They’re telling me this. Why?” Those are good questions to ask. Always.
Melissa Zimdars: Yup. I agree.
Chris Martenson: All right. Well, thank you very much for taking the time to talk with us today. Please tell people how they can follow your work as it progresses or interact with the list if they wanted to help you curate it.
Melissa Zimdars: Yeah. So if you go to opensources.co there’s a get help page where you can log in and basically, you can suggest updates, or questions if you notice an error, etcetera, so that’s really the easiest way to sort of create feedback. Otherwise, I guess this all happened so quickly I don’t have a great way for people to track what I do. I do have a researchgate account. I’m on Twitter as Mishmc, M-I-S-H-M-C. You can follow me there, too.
Chris Martenson: All right. Well, Melissa. Thank you so much for your time today.
Toronto police have closed off a number of streets in downtown – near RBC offices – after several explosions and thick dark smoke was seen…First Explosion…
???????? FLASH #Toronto Fumée provenant d’un immeuble après une énorme explosion dans le centre-ville. Plus d'informations à venir. http://pic.twitter.com/aA4evEFrPa
On Saturday, we discussed what may be the “last remaining cheap asset“, namely wheat, which contributor Kevin Muir pointed out had been stuck in a vicious bear market for years, and added that over the past few years, “the weather has been as close to perfect growing conditions as a farmer could ask. All of the droughts have been on the West side of the Rockies, with the grain growing conditions on the other side experiencing ideal weather.” He asked rhetorically, “how long this can continue. This winter the West Coast experienced a record amount of precipitation, will the opposite now happen in the plains?“
Incidentally, one may not even need adverse weather conditions to spark a buying frenzy. As Muir also noted, a catalyst for a spike may be purely technical: “this terrible bear market has not gone unnoticed by the speculators. Have a look at the net speculator position in the CBOT wheat contract. Specs have never been this short! Everyone believes prices can only go one way – lower! After all, we are all top performing bbq’ers and lovers.”
Muir, adding he is long grains, concluded that “few are talking about the real reason that grains offer a compelling risk reward from the long side. If this Central Bank experiment goes off the rails, we could have a return of 1970’s style inflation. That happens to coincide with the last great bull market in grains. When you are busy dismissing the possibility of a 1970’s style bull market in grains, don’t forget – we all want to be contrarians, but it sure is hard. Don’t look now, but I think your steak is burning.”
And while his secular thesis has yet to pan out, an unexpected “perfect storm” so to speak took place just 24 hours later, when wheat prices posted record gains in Chicago on Monday as the U.S. winter crop faced substantial losses from a freak winter storm that brought in snow and high winds that slammed into four Midwest states including Kansas, the top grower.
Satellite imagery of the storm forming over the midwest from April 28 to May 1, 2017
As David Streit, the senior lead forecaster at Bethesda, Maryland-based Commodity Weather Group LLC, said in a telephone interview cited by Bloomberg, more than 12 inches of snow fell on ripening wheat in parts of Kansas, Colorado, Oklahoma and Nebraska in the past 24 hours. And while it will take several days before the damage can be assessed accurately as the snow melts, early estimates suggest losses could exceed 50 million bushels, according to Pira Energy.
Couple this with the record net spec short in wheat and the result was today’s record surge in July futures for soft red winter wheat, which is used to make cookies and cake, and which jumped 5.5% to $4.56 while corn prices climbed 3 percent in active trading.
“The depth and weight of yesterday’s snow has certainly caused irreversible damage to some of the Kansas crop, given the advanced stage of development,” Peter Meyer, a senior director at Pira Energy in New York, said in a telephone interview. “We probably lost 50 million bushels in the area, and it may reach 100 million bushels depending on the weather the next month.”
The early indications were not good: Bloomberg adds that there were “many reports of snapped wheat stems, and for a crop in the early stage of forming grain, that suggests there could be “substantial” production losses, INTL FCStone chief commodity economist Arlan Suderman said in a note. Heavy rain also fell over the southern portion of the Midwest over the weekend, and floodwaters need to recede this week to assess how much of the crop needs to be replanted, he said.”
Making matters worse, about 25 percent of the Kansas crop was forming grain as of April 23, up from 20 percent a year earlier and above the 17 percent average in the previous five years, U.S. Department of Agriculture data showed. About 23 percent of this year’s winter-wheat acreage was planted in Kansas in the autumn, making an accurate assessment of losses days – or weeks – away, Meyer at Pira Energy said. The warm weather in February and March pushed the crop further along, leaving it vulnerable to damage from the heavy snow.
“It was a pretty nasty storm,” Streit of Commodity Weather Group said. “It is probably the most snow I can remember for the region” for this time of year, he said.
Further anecdotal estimates suggest that today’s price spike may indeed be just the beginning:
In 2016, Kansas, Colorado, Oklahoma and Nebraska combined to produce almost half of the U.S. winter wheat crop. Right now, the snow has crushed many plants in the western third of Kansas, Aaron Harries, a vice president of research at Kansas Wheat in Manhattan, said in a telephone interview. The crop in the Plains, where hard red winter wheat is primarily grown, has been more advanced than normal following a mild winter.
“The wheat was a little bit taller than it might normally be,” Harries said. “In a lot of places, the stems actually snapped or kinked over. If that’s the case, it can’t get nutrients to the head anymore, and it’s done.”
The snowstorm followed a freeze late last week that also threatened the state’s crop. According to a map from Kansas State University Extension, wheat in more than 20 counties throughout central Kansas was at “high risk” of freeze injury on April 27.
It has yet to be seen if this weekend’s freak winter storm is the catalyst that unleashes Muir’s long-running bet on a surge in wheat prices, a move which would have a dramatic impact on the Fed’s stated intentions to tighten monetary conditions as a surge in food prices would lead to a lot of unhappy Americans. However, as of Monday’s close, it is reasonable to say that what until just 48 hours ago may have been the “last remaining cheap asset” just got substantially more expensive.
The Washington state legislature voted to ban the use of “inflatable tube displays, persons in costume, or wearing, holding, or spinning a sign with a marijuana-related commercial message” by retail businesses selling cannabis products. On April 20, of all days.
The omnibus marijuana bill, SB 5131, has some good provisions as well: Washington residents would be allowed to share marijuana with other legal adults for the first time, and cannabis retailers would be able to operate five dispensaries (right now they are limited to three). But those liberalizations come at a cost to commercial speech.
The stated purpose behind this prohibition of pot-promoting blow-up ads is to protect children. Washington’s legalization initiative—passed by voters in 2012—set the legal age for cannabis consumption at 21. And current regulations already prohibit marijuana advertisements from using cartoon characters, toys or other depictions deemed “especially appealing to children or other persons under legal age to consume marijuana.”
But this apparently did not go far enough for Washington state legislators, who felt that a number of outdoor advertisements from recreational dispensaries were flouting the spirit, if not the letter of the law.
Particularly scandalous was a billboard put up by Tacoma dispensary Clear Choice Cannabis featuring a cat wearing a “thug life” collar along with text saying “I’m so high right meow.” Images of that billboard—which has since been voluntarily taken down by business owner—circulated around the Washington legislature as proof of cannabusinesses potentially targeting children.
Said state Rep. Christine Kilduff (D–University Place): “When you have those big billboards out there for our youth to see, it just telegraphs legitimacy.”
An amendment banning billboards was initially proposed, but this was later dialed back over First Amendment concerns. Instead signs will be limited to displaying only the name, location, logo, and type of business being advertised. Which should still raise First Amendment concerns, but apparently doesn’t.
Unusual restrictions on cannabusinesses’ advertising for the purpose of keeping the stuff out of the hands of children are not limited to Washington state. Colorado bans marijuana ads in radio, TV, and print unless the advertiser can produce reliable evidence that no more than 30 percent of the audience is under 21. And in Oregon the strain name “girl scout cookie” can’t be displayed on packaging because it is named after a product sold both to and by children.
SB 5131 is currently waiting on the governor’s signature before it becomes law.
Having been pestered by CBS reporter John Dickerson over what great advice President Obama had given him (and his wiretapping accusations); President Trump's frustration briefly boiled over as he turned his back and remarked "ok, that's enough, thank you, goodbye," gesturing for the reporter to leave The Oval Office…
As Washington Free Beacon reports, the exchange, which aired Monday, began when Dickerson asked Trump if his predecessor had given him any advice since taking office. Trump said Obama had been "very nice" initially but since then there had been "difficulties."
"Words are less important to me than deeds, and you saw what happened with surveillance," he said, calling it "inappropriate."
Trump was referring to a claim he made on March 4 that Obama tapped his phones during the presidential campaign. There is no evidence to substantiate the claim, but Trump has never retracted it.
When Dickerson pressed for details about the surveillance, Trump responded, "You can figure that out yourself."
The reason he asked, Dickerson said, was that Trump called Obama "sick" and "bad" in the March 4 tweet-storm that kicked off the saga.
"Look, you can figure it out yourself. He was very nice to me with words, and when I was with him, but after that there has been no relationship," Trump said.
Dickerson repeated his questioning about the wiretapping claim against Obama, but Trump simply said Dickerson could "take it any way you want."
"But I'm asking you because you don't want it to be fake news," Dickerson said. "I want to hear it from President Trump."
"You don't have to ask me," Trump said.
"Why not?" Dickerson asked.
"Because I have my own opinions," Trump said. "You can have your own opinions."
"But I want to hear your opinions. You're the president of the United States," Dickerson said.
Trump finally waved his hand at Dickerson, saying, "OK, that's enough. Thank you. Thank you very much."
Warning: Humor, sarcasm, and an ability to discern conjecture from fact are needed. While facts may be undiscoverable, truth is not. The end game is not path-dependent. The Comex is dead and metals will rise in part aided by manipulation.
Other Warning: We are on the road and apologize in advance if this post is a little more disjointed than usual. It is really 4 stories in one.
COMEX DEMISE / METALS MARKET STRUCTURE
The Long Good Bye
The Comex should be put out of its misery now. It’s a toxic albatross around the CME neck. It has no reputable brand to market overseas. It is a walking liability. If you think the LBMA has lost its credibility due to the banks pulling their flow and the Fix becoming untethered to reality; then wait until the Comex contracts die a slow, painful, denial laden death. It will likely recede into the fade. Or worse, it will explode in the CME’s face.
Out With a Bang?
It could end with a bang. Imagine if someone took delivery all at once. This would play on the Fractional Reserve Banking market structure in place for decades. The difference in size between actual metal and derivatives traded on Gold and Silver created the opportunity and framework for price manipulation for decades.
This is not to blame the derivatives market. It is simply to say, when the derivative market is larger than the real underlying, there is opportunity for “tail wagging dog” manipulation. When you combine this market structure with compensation incentives and “blind eye management you have the perfect mix for manipulation.
Simply put, deeper pockets have and continue to lever themselves to make themselves right. Now imagine if legacy positions had to be unwound. Four claims for every 1 ounce of metal. Think “It’s a Wonderful Life” but Mr Potter winning.
Using silver as an example. Add up the total amount of paper silver traded on a single day from both US exchanges and you get about 950MM ounces of silver traded. Compare that with the approximate 900MM ounces a year that is mined. Get it?
Now look at the Comex silver vault actual,versus potential claims against that silver.
This can openly end when someone stands for delivery. But do not hold your breath. Also keep in mind that much of the physical that has come out of the Comex vaults is now in Asia by way of London.
Corporate Lobbied Market Structure is the Enemy
The “Take delivery of ALL the Silver” situation will not happen. It won’t happen until the ROR (and exit risk) for cash-and-carry play is better than the ROR on levered ‘short cons’. Even then, the regulatory risk is too great.
Look at it this way. You have to borrow stock to short it. You need that stock up front to be able to short it. If it is not available, you cannot short the stock. Meanwhile, the long who makes his stock available for shorting gets paid interest on his “loan”. Even more, the bank holding that stock will give leverage of 2x or more for the cash value of that share of stock.
Conversely,in precious metals, you can short Gold without borrowing it first. And the ‘long’ must declare intent to take delivery come first notice day. Only then does the “short’ have to decide if he wants to make delivery or cover in the open market. And as to collateral value? Forget leverage. if you keep your metal in abank, you’d be lucky to get 50% of its value in collateral.
For example, Buffet in 1997 – Remember when the Government begged Warren Buffet to NOT take delivery from improperly hedged producers in 1997? – What a swell guy. He loaned it back to them at 40% interest. He NEVER intended to take delivery. He sold in the $8.00 area and was ironically front run by bullion banks on his exit.
COMEX DEMISE / GOLDENYUAN RISE
Vaya con Dios Comex
Dubai’s Gold Exchange (DGCX) is now listing the Shanghai Gold Futures contract.
So Comex will fade away. What is bearish for Comex, is however bullish for Gold and Silver. Here is the DGCX‘s Product Description:
China is known as the one of the biggest gold producing and consuming countries in the world. It is also one of the top two importers of gold globally. Traditionally, China has been deficient in gold investments at both the sovereign and investor level. Gold consumption in China has risen significantly with consistent purchases by the Government of China. The government has also encouraged the Chinese public to invest in gold and use it as an instrument for their savings.
Dubai has historically been a central hub for gold trading in the MENA region. The China Belt and Road initiative also passes through the region and holds strategic value for both China and the UAE. A large part of the trading community in the Americas, Europe and Asia are keen to participate in Chinese physical and derivative markets. At the same time the Chinese government wants to increase the acceptance of Chinese Yuan and the Chinese Gold price benchmark prices globally. The launch of the DGCX Shanghai Gold Futures Contract provides all stakeholders including the government in China, UAE and Dubai, market participants, SGE and DGCX a suitable opportunity to progress together on the chosen path with one singular goal.
Tracks and prices the largest Gold market in the world by production and consumption
Settlement based on the Chinese Gold benchmark Price as declared by the Shanghai Gold Exchange (SGE) – in Yuan Bitches = Comex Nail
Traded and Cash settled in Chinese Yuan (CNH) – see above
Zero Capital Gains Tax and Zero Corporate Tax – Tax Arb = Comex Nail
Contract size of 1000 grams (1kg); Tick Value of CNH 10
Efficient margining for optimal leverage – Bullion dealers and PBOC will use that for price control when they need to buy
Trade your view on the Chinese Gold market – or alternately, your view on the US Comex
Trade the spread between Shanghai Gold and correlated Gold products listed on DGCX = Comex Nail
The margin offsets by DCCC for inter-commodity spreads offers greater capital efficiency – Arab oil profits buys chinese gold, bullion dealers arb it with cross margining. -= US Oil and Gold contract Death
Comex demise and DGCX success are Bullish for Gold and Silver. This is because the Asian players ARE taking delivery of Gold and Silver. This is in part because of the Petrodollar’s coming demise. From Connect the Dots
Then : Gold > USD > PetroDollar
Create Gold Demand: 1944 we steer world towards gold for good reason (we have it, and Germany’s lack of Gold was the cause for WW2)
Inflate Debt: 1971 we have to monetize debt to pay for wars in vietnam and korea > go off gold standard
Create USD Demand: 1974 cut Arab deal USD for Oil > we sell them military arms, they buy UST
Now: PetroDollar > Gold / PetroYuan
Arabs have their own strong army, US not buying as much oil, China wants more Oil
China wants to replace USD as world reserve, Arabs want to sell more oil (without shale competition)
Arabs cut deal to sell oil to china in Yuan. Arabs will buy gold with Yuan
Arab world increasing trust in China, Russia a product of implicit backing of currencies with Gold
Arab world increasing mistrust of US intentions- ambivalent to US policies
Endgame– Arabs get to sell oil locally to China and Russia. avoid shale oil competition in U.S. This is underpinned by Yuan and Rubble implicit backing by Gold, increasing mistrust of US, especially since Saudi’s don’t need our weapons any more.
So, the levered shorts are beginning to feel the pain now.
The question is, how do the shorts fight back? That answer is a version of what was done in the West. When everyone is finally done buying, the players lobby for leverage, higher margins, and institutionalize micro advantages to being short. This will happen. Perhaps in 100 years, after China has transitioned from USD peg to (implicit) Gold peg,.and then to its own PetroYuan. When it needs more leverage, it will undo its Gold peg and debase the Yuan. In the mean time, manipulation will increase in the Far East via spoofing lower, and price-gouging higher. Just like it happened here for 50 years.
Comex Fleecing Regulated Now? Move to Asia
Hopefully, the free markets will kill Comex for us. And those bullion banks, brokers, producers, players ( talking to you Buffet, Soros, et al) that have cooked prices for years, will start to cook them on other exchanges. Manipulation is not dead. It has just moved East.
LME’s “liquidity provision” program is nothing more than a level 1 ECN for old LBMA dealers to “transparently” lean on their own order book.
If only those firms had no order flow, then we’d see what great traders they really are. We remember one time when a bullion bank trader was unhappy with his bonus. He foolishly approached the MD and complained in front of the group on their trading floor .The MD crushed the trader.
‘Do you think you made the money for us?’ he reportedly shouted. ‘This chair you sit in made the money. I can put anyone I want in this char with basically the same results. The order flow we provide for you is why you are profitable. The chair is the money maker, not you!’
But we digress
Skin the Comex? Why Not!
Dear U.S. Bank with a lot of physical Metal: After relocating all your allocated silver to some vault in Asia, feel free to lift your Comex hedges, then get long, and then announce you are taking delivery on Comex. Then re-apply your hedges in Asia, sell the backwardation on Comex (like Buffet did) and walk away from the exchange.
We understand that you don’t want to give up your US “rule of law” protections. We also know you’d rather not be subject to a DOJ investigation. So feel free to fire a couple traders and seed their new hedge funds. Then do all your deals with them via a closely held Singapore shell in which you control the voting shares. And it would help to have one of your own be on a US regulatory body. Even better, convince a Chinese national to do it as a client. Fees, storage, marketmaking profits, and no risk. the US cant extradite a Chinese national. Think of Buffet, but with balls.
And learn from DB’s mistakes. They had to turn traitor to their co-conspirators in their own metals fraud because of more pressing (DOJ) issues. Why else would they sell their vault business to China 2 years after opening it?
So go for it! Kill the Comex. Don’t worry about regulators. Remember, Government can be bought, or at least rented.
Government: Here to Help
Do you, the reader not think the banks and/or the government influence the timing of margin calls? Do you believe that an exchange will not do everything in its power to rescue the player with the largest marketshare at the expense of its own counterparty diversity? Worked for POTUS in 2009.
Barack Obama inverted contract law when he “rescued” GMAC and Chrysler bondholders.
….. the Obama administration in 2009 bullied Chrysler’s secured creditors—who were entitled to “absolute priority”—into accepting 30 cents on the dollar, while junior creditors such as labor unions received much more. This subversion of creditor rights violates not just bankruptcy law, but also the Constitution’s Takings and Due Process Clauses.
Do you think a regulatory officer would be less risk to violate the law? We know from experience the answer to that is an emphatic NO. Ask any eczema- laden compliance officer you know. So, it’s all good Bullion Banks. Just make sure you have a couple guys to throw under the bus.
In other EXCHANGE NEWS
ICE completed TMX Atrium all-cash acquisition. Financial impact will be immaterial to ICE.
SGX offered to open its clearing infrastructure to APEX, a new Singapore commodity futures exchange backed by a Chinese hedge fund. Reported by the Financial Times.
LSE purchased 67.0k shares at 3,366p per share, as part of its £200m repurchase program. Total purchases add 1.10m shares up to date.
NZX revenues from continuing operations increased 3% y/y to NZ$18.6m.
Calypso and R3 are testing their FX trade matching solution on Corda distributed ledger technology (DLT) platform.
DGCX: the recently launched Shanghai Gold Futures contract helped DGCX see a boost in precious metals trading in April.
Bloomberg is partnering with Twitter to launch a streaming television news service on the social networking platform, according to WSJ. The channel is expected to begin operations this fall.
SEC: Senate will cast an initial vote today on Jay Clayton’s nomination as Chairman of the SEC.
Just Sayin’
Dear CME
Comex is a liability. The demand is now Eastern. The vaults are going east. The Banks are trading Far Eastern time. The price premium to spot is Asian. The money to be made is in the east. The retail are newly minted middle class Chinese, and Singapore citizens.
You know that exchanges ultimately succeed in regions of commodity demand. And you are expert in ring-fencing your liquidity pools. Time to be more aggressive in porting your franchise to Asian markets maybe.
So how are you going to do it? Acquisition? Partnership? Because next up is the Oil business. The global benchmark is already Brent and moving further east as we speak.
We know 70% of your revenue comes from interest rate products. We also feel strongly that CME is a buy as interest rate risk becomes a bigger factor. So you can afford to wait here as a company. But do you really want to? Effort at the margin is so little to preserve your commodity franchises. Maybe we are wrong.
Comex – The Hope Diamond of Exchanges
The Comex was cursed with ineptitude and corruption from the beginning. Did you know they had the S&P 500 index offered to them, but turned it down? But that’s not all.
Tax straddles – actually saw an ashtray that said “Tax Straddles Save Lives” – or something to that effect
Hunt Brothers’ Forced Out – Government usurping the free market ordering “liquidation only” to save the silver producers and bullion dealers – and all board members who were short.
The “Red seat / Green Seat” fiasco(s)? – NMX and then CME were blackmailed by members to get paid as equity holders. – We recommended the “seat arb” to a client based on the exchange ineptitude and it paid off. Vincent Viola truly inherited a headache there.
Remember in 2011 when Shak and other spread traders were manipulated out of their jobs by cooked spreads?- That case isn’t over yet. And it is likely the last decent con of Comex participants we will ever see, unless…
Those that were predicting that the U.S. economy would be flying high by now have been proven wrong. U.S. GDP grew at the worst rate in three years during the first quarter of 2017, and many are wondering if this is the beginning of a major economic slowdown. Of course when we are dealing with the official numbers that the federal government puts out, it is important to acknowledge that they are highly manipulated. There are many that have correctly pointed out to me that if the numbers were not being doctored that they would show that we are still in a recession. In fact, John Williams of shadowstats.com has shown that if honest numbers were being used that U.S. GDP growth would have been consistently negative going all the way back to 2005. So I definitely don’t have any argument with those that claim that we are actually in a recession right now. But even if we take the official numbers that the federal government puts out at face value, they are definitely very ugly…
Economic growth slowed in the first quarter to its slowest pace in three years as sluggish consumer spending and business stockpiling offset solid business investment. Many economists write off the weak performance as a byproduct of temporary blips and expect healthy growth in 2017.
The nation’s gross domestic product — the value of all goods and services produced in the USA — increased at a seasonally adjusted annual rate of 0.7%, the Commerce Department said Friday, below the tepid 2.1% pace clocked both in the fourth quarter and as an average throughout the nearly 8-year-old recovery. Economists expected a 1% increase in output, according to a Bloomberg survey.
Even if you want to assume that it is a legitimate number, 0.7 percent economic growth is essentially stall speed, and this follows a year when the U.S. economy grew at a rate of just 1.6 percent.
Economists blamed the weather. It was too warm this time around, rather than too cold, which is the usual explanation for Q1 debacles.
And they blamed the IRS refund checks that had been delayed due to last year’s spectacular identity theft problem. Everyone blamed everything on these delayed refund checks, including the auto industry and the restaurant industry. But by mid-February, a veritable tsunami of checks went out, and by the end of February, the IRS was pretty much caught up.
So March should have been awash in consumer spending. But no. So we’ll patiently wait for that miracle to happen in second quarter.
They always want us to think that “boom times” for the U.S. economy are right around the corner, but those “boom times” have never materialized since the end of the last financial crisis.
Instead, we have had year after year of economic malaise and stagnation, and it looks like 2017 is going to continue that trend. The following are 11 reasons why U.S. economic growth is the worst that it has been in 3 years…
#1 The weak economic growth in the first quarter was the continuation of a long-term trend. Barack Obama was the only president in history not to have a single year when the U.S. economy grew by at least 3 percent, and this is now the fourth time in the last six quarters when economic growth has been less than 2 percent on an annualized basis. So essentially this latest number signals that our long-term economic decline is continuing.
#2 Consumer spending drives the U.S. economy more than anything else, and at this point most U.S. consumers are tapped out. In fact, CBS News has reported that three-fourths of all U.S. consumers have to “scramble to cover their living costs” each month.
#3 The job market appears to be slowing. The U.S. economy only added about 98,000 jobs in March, and that was approximately half of what most analysts were expecting.
#4 The flow of credit appears to be slowing as well. In fact, this is the first time since the last recession when there has been no growth for commercial and industrial lending for at least six months.
#5 Last month, U.S. factory output dropped at the fastest pace that we have witnessed in more than two years.
#6 We are in the midst of the worst “retail apocalypse” in U.S. history. The number of retailers that has filed for bankruptcy has already surpassed the total for the entire year of 2016, and at the current rate we will smash the previous all-time record for store closings in a year by nearly 2,000.
#7 The auto industry is also experiencing a great deal of stress. This has been the worst year for U.S. automakers since the last recession, and seven out of the eight largest fell short of their sales projections in March.
#8 Used vehicle prices are falling “dramatically”, and Morgan Stanley is now projecting that used vehicle prices “could crash by up to 50%” over the next several years.
#11 The student loan bubble is starting to burst. It is being reported that 27 percent of all student loans are already in default, and some analysts expect that number to go much higher.
And of course some areas of the country are being harder hit than others. The following comes from CNBC…
Four states have not yet fully recovered from the Great Recession. As of the third quarter of last year, the latest data available, the economies of Louisiana, Wyoming, Connecticut and Alaska were still smaller than when the recession ended in June 2009.
Other states that have recovered have seen their economic recoveries stall out. Those include Minnesota, North Dakota, New Mexico, Oklahoma, South Dakota and West Virginia.
We should be thankful that we are not experiencing a full-blown economic meltdown just yet, but it is undeniable that our long-term economic decline continues to roll along.
And without a doubt the storm clouds are building on the horizon, and many believe that the next major economic downturn will begin in the not too distant future.
