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“Real Housewives of Orange County” meets Wold of Wall Street – BBC’s ‘Traders: Millions By The Minute’ 2-part documentary goes inside the competitive world of financial traders to meet the men and women who play the markets in London, New York, Chicago and Amsterdam. As The BBC describes, this show offers a rare, personal portrait of what life is like for the people who do this lucrative but relentless job, against a backdrop of non-stop news, globalised markets and the rise of ultra-fast computers capable of placing millions of trades at a time. We can only assume that Johnny-5 and his algorithmic friends refused to be part of this in-depth look at market participants.

 

Episode 1 (of 2)

Manhattan hedge fund manager Karen believes that money is power, and making it is fun, as she juggles two sets of twins, a busy social calendar and her $200 million fund.

Bob has spent more than three decades yelling out his trades and jostling for position on Chicago’s cattle futures trading floor, but now he thinks it may be time wean himself off his “trading addiction”.

London day traders Will and Piers use their expertise to train others in the art of making money from tiny moves in the markets. But they warn their new trainees it’s going to be far harder to master the psychological and emotional skills needed for trading than the technicalities.

Ultimately, it’s a story of money, desire and emotion.

via Zero Hedge http://ift.tt/1rbIEzT Tyler Durden

Obama is now – after the fact – scrambling to justify bombing the sovereign nation of Syria without the permission of either the Syrian government or even the United States Congress by saying that we were going after the super-evil Khorasans, who were about to attack us.

My God!  That sounds terrifying … like a cross between Genghis Khan, Klingons and the Kardashians!

The U.S. is saying that they're even more dangerous than ISIS.

There's just one wee little problem … the Khorasan threat is as as fake as the Kardashians' physiques. (Admittedly, it's confusing, given that the Kardashians have also inserted themselves right in the middle of the Syrian conflict.)

Agence France-Presse reports:

The US says it has hit a little-known group called "Khorasan" in Syria, but experts and activists argue it actually struck Al-Qaeda's affiliate Al-Nusra Front, which fights alongside Syrian rebels.

 

In announcing its raids in the northern province of Aleppo on Tuesday, Washington described the group it targeted as Khorasan, a cell of Al-Qaeda veterans planning attacks against the West.

 

But experts and activists cast doubt on the distinction between Khorasan and Al-Nusra Front, which is Al-Qaeda's Syrian branch.

 

"In Syria, no one had ever heard talk of Khorasan until the US media brought it up," said Rami Abdel Rahman, director of the Britain-based Syrian Observatory for Human Rights.

"Rebels, activists and the whole world knows that these positions (hit Tuesday) were Al-Nusra positions, and the fighters killed were Al-Nusra fighters," added Abdel Rahman, who has tracked the Syrian conflict since it erupted in 2011.

 

Experts were similarly dubious about the distinction.

 

"The name refers to Al-Qaeda fighters previously based in Afghanistan, Pakistan, and Iran who have travelled to Syria to fight with… Al-Nusra," said Matthew Henman, head of IHS Jane's Terrorism and Insurgency Centre.

 

"They… should not be considered a new or distinct group as such."

 

Aron Lund, editor of the Syria in Crisis website run by the Carnegie Endowment for International Peace, raised similar doubts.

"The fact that news about this Al-Qaeda-run, anti-Western cell linked to Al-Nusra emerged just over a week ago, through US intelligence leaks — well, it's certainly an interesting coincidence," he told AFP.

 

***

 

Claims of a distinction are lost of many of Syria's rebels, who have also often rejected the world community's designation of Al-Nusra as a "terrorist" group.

 

When Washington added Al-Nusra to its list of "terrorist" organisations, even the internationally-backed Syrian opposition National Coalition criticised the decision.

 

***

 

On the ground, almost all rebel groups have been willing to cooperate with Al-Nusra, seeing them as distinct from the Islamic State group (IS), which espouses transnational goals and includes many non-Syrians among its ranks.

 

***

 

[The] history of cooperation [between the various crazies in Syria] has left some rebels and activists on the ground suspicious and even angry about the strikes on Al-Qaeda.

 

***

 

Some key members are believed to maintain channels of communication with Al-Nusra, including Qatar, which has helped negotiate the release of prisoners held by the group.

McClatchy adds:

Raad Alawi, the commander of a smaller group of fighters, the Squadrons of Al Haq, told McClatchy he was very angry.

 

“Starting the war with the bombing of Nusra is an indication that this is a war against the revolution and not [ISIS] … “Maybe next they will bomb the bases of the Free Syrian Army.”

Well, okay … experts and Syrian Islamic jihadis think there's no distinction between the Khorasans and plain vanilla Al Nusra/Al Qaeda/Free Syrian Army fighters.

But surely America and our allies treat the moderate Syrian rebels … I mean Al Nusra …  er, I mean the Khorasans … with a consistent iron fist?

Well, no … we've been – directly or indirectly – backing them.  And – as we've been warning for some time – the boys we're arming are threatening to attack us.

So – while I'd like to believe that I'm being shown the real deal as a justification for long-term, direct involvement – I'm just not buying it .

via Zero Hedge http://ift.tt/Y8f7KE George Washington

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Thanks to a dizzying barrage of lies, mainstream media fear-mongering and a couple of beheadings, the Obama Administration finally achieved its long sought after war in Syria. The tactic that proved most effective in mobilizing the American public back into a shivering, post-9/11 fetal position, was the same tactic used by elites in the UK to convince Scotland against voting for independence. That tactic, as I detailed in a recent post, is fear.

However, fear in itself is not enough. It must be coupled with endless slogans and misdirection by the mainstream media and politicians. It must lead the public to subconsciously embrace a thought process that is completely irrational. Such tactics can be labeled propaganda, and it results in a public suddenly supporting a war it strongly opposed only a year ago. All it takes is a little repackaging. Propaganda allows those who profit from war to push the American public into a tizzy of trepidation based on a couple of beheadings from ISIS, while not batting an eye over the daily beheadings that were simultaneously occurring in Saudi Arabia.

So the power structure and its impotent puppet, Barack Obama, intentionally pushed the American public into a frenzy of fear and finally got their little war. Nevertheless, serious people immediately began to call into question two very significant issues with respect to the aggression.

First, it appeared clear to almost everyone without a biased penchant for overseas death and destruction, that the war is completely unconstitutional and illegal no matter how you slice it. As I highlighted in the post, Obama’s ISIS War is Not Only Illegal, it Makes George W. Bush Look Like a Constitutional Scholar:

But the 2001 authorization for the use of military force does not apply here. That resolution — scaled back from what Mr. Bush initially wanted — extended only to nations and organizations that “planned, authorized, committed or aided” the 9/11 attacks.

 Not only was ISIS created long after 2001, but Al Qaeda publicly disavowed it earlier this year. It is Al Qaeda’s competitor, not its affiliate.

 

Mr. Obama may rightly be frustrated by gridlock in Washington, but his assault on the rule of law is a devastating setback for our constitutional order. His refusal even to ask the Justice Department to provide a formal legal pretext for the war on ISIS is astonishing.

 

Senators and representatives aren’t eager to step up to the plate in October when, however they decide, their votes will alienate some constituents in November’s midterm elections. They would prefer to let the president plunge ahead and blame him later if things go wrong. But this is precisely why the War Powers Resolution sets up its 60-day deadline: It rightly insists that unless Congress is willing to stand up and be counted, the war is not worth fighting in the name of the American people.

So that’s glaring problem number one. The second problem, which I highlighted in the post, The American Public: A Tough Soldier or a Chicken Hawk Cowering in a Cubicle? Some Thoughts on ISIS Intervention, is that:

Did you know that the US government’s counterterrorism chief Matthew Olson said last week that there’s no “there’s no credible information” that the Islamic State (Isis) is planning an attack on America and that there’s “no indication at this point of a cell of foreign fighters operating in the United States”? Or that, as the Associated Press reported, “The FBI and Homeland Security Department say there are no specific or credible terror threats to the US homeland from the Islamic State militant group”?

So as quickly as it began, Obama’s little war had some serious PR issues. So what did the chicken-hawks do? They repackaged and resold the entire thing. Enter Khorosan.

Yep, just as quickly as ISIS spontaneously generated like maggots on meat from the sands of Mesopotamia to open the door to another Middle East quagmire, another existential threat nobody had ever heard of suddenly emerged. Not only that, but this group supposedly posed an imminent threat to America. How incredibly convenient.

Here’s ABC News compliantly pushing the latest propaganda to its lobotomized readership in the article, US Averts ‘Active Plotting Against Homeland’ By Hitting Al Qaeda Cell Khorasan in Syria:

American airstrikes in Syria have taken out members of a shadowy al Qaeda unit known as the Khorasan Group who were planning “imminent” attacks against targets including the U.S., the Pentagon said today.

 

Pentagon spokesperson Rear Admiral John Kirby declined to go into specifics, but told ABC News’ George Stephanopolous, “We had very good indications that this group, which is a very dangerous group, was plotting and planning imminent attacks against Western targets to include the U.S. homeland and it was on that basis that we struck targets, Khorasan targets inside Syria.”

 

The Khorasan Group — consisting of about 50 or so hardened fighters of mixed past and current jihadi affiliations — has been holed up in Aleppo, Syria under the protection of al Qaeda’s official wing in the country, Jabhat al-Nusra, developing cutting edge weapons of terror with the help of al Qaeda’s Yemen affiliate to strike Western civilian aviation targets, according to a half-dozen officials with knowledge of the group who spoke to ABC News.

So all of a sudden the Pentagon identifies and targets a group of 50 fighters in Syria, which happens to be conveniently tied to al-Qaeda (thus justifying strikes under the 2001 AUMF), planning an imminent attack on the “homeland.”

There are two reasons I distrust this meme. First of all, the U.S. government employs an extremely bizarre definition when using the word imminent.

As Trevor Timm noted earlier today in the Guardian:

Take, for example, this definition from a Justice Department white paper, which was leaked last year, intended to justify the killing of Americans overseas:

 

An “imminent” threat of violent attack against the United States does not require the United States to have clear evidence that a specific attack on U.S. persons will take place in the immediate future.

 

To translate: “imminent” can mean a lot of things … including “not imminent”.

Fascinating, and all this time I thought “imminent” meant “imminent.” Someone should let Merriam-Webster know they’ve got it all wrong.

The employment of this new definition of imminent was further solidified in my mind after reading an article from the New York Times titled: In Airstrikes, U.S. Targets Militant Cell Said to Plot an Attack Against the West. In it, we learn that:

American military and intelligence analysts were still studying damage reports from the initial air assault, but senior Obama administration officials expressed hope that they had killed Muhsin al-Fadhli, the leader of Khorasan and a onetime confidant of Osama bin Laden. The officials said they had been contemplating military action against Khorasan in recent months, but President Obama’s decision to hit the Islamic State’s forces inside Syria provided a chance to neutralize the other perceived threat.

You’ve got to wonder what other unrelated opportunities the ISIS campaign might allow. But I digress.

Wake up America. You will continue to be raped, pillaged and economically strip-mined until you stand up for yourselves, but for now, it appears the fetal position suits you just fine.

via Zero Hedge http://ift.tt/1B9l0nG Tyler Durden

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Thanks to a dizzying barrage of lies, mainstream media fear-mongering and a couple of beheadings, the Obama Administration finally achieved its long sought after war in Syria. The tactic that proved most effective in mobilizing the American public back into a shivering, post-9/11 fetal position, was the same tactic used by elites in the UK to convince Scotland against voting for independence. That tactic, as I detailed in a recent post, is fear.

However, fear in itself is not enough. It must be coupled with endless slogans and misdirection by the mainstream media and politicians. It must lead the public to subconsciously embrace a thought process that is completely irrational. Such tactics can be labeled propaganda, and it results in a public suddenly supporting a war it strongly opposed only a year ago. All it takes is a little repackaging. Propaganda allows those who profit from war to push the American public into a tizzy of trepidation based on a couple of beheadings from ISIS, while not batting an eye over the daily beheadings that were simultaneously occurring in Saudi Arabia.

So the power structure and its impotent puppet, Barack Obama, intentionally pushed the American public into a frenzy of fear and finally got their little war. Nevertheless, serious people immediately began to call into question two very significant issues with respect to the aggression.

First, it appeared clear to almost everyone without a biased penchant for overseas death and destruction, that the war is completely unconstitutional and illegal no matter how you slice it. As I highlighted in the post, Obama’s ISIS War is Not Only Illegal, it Makes George W. Bush Look Like a Constitutional Scholar:

But the 2001 authorization for the use of military force does not apply here. That resolution — scaled back from what Mr. Bush initially wanted — extended only to nations and organizations that “planned, authorized, committed or aided” the 9/11 attacks.

 Not only was ISIS created long after 2001, but Al Qaeda publicly disavowed it earlier this year. It is Al Qaeda’s competitor, not its affiliate.

 

Mr. Obama may rightly be frustrated by gridlock in Washington, but his assault on the rule of law is a devastating setback for our constitutional order. His refusal even to ask the Justice Department to provide a formal legal pretext for the war on ISIS is astonishing.

 

Senators and representatives aren’t eager to step up to the plate in October when, however they decide, their votes will alienate some constituents in November’s midterm elections. They would prefer to let the president plunge ahead and blame him later if things go wrong. But this is precisely why the War Powers Resolution sets up its 60-day deadline: It rightly insists that unless Congress is willing to stand up and be counted, the war is not worth fighting in the name of the American people.

So that’s glaring problem number one. The second problem, which I highlighted in the post, The American Public: A Tough Soldier or a Chicken Hawk Cowering in a Cubicle? Some Thoughts on ISIS Intervention, is that:

Did you know that the US government’s counterterrorism chief Matthew Olson said last week that there’s no “there’s no credible information” that the Islamic State (Isis) is planning an attack on America and that there’s “no indication at this point of a cell of foreign fighters operating in the United States”? Or that, as the Associated Press reported, “The FBI and Homeland Security Department say there are no specific or credible terror threats to the US homeland from the Islamic State militant group”?

So as quickly as it began, Obama’s little war had some serious PR issues. So what did the chicken-hawks do? They repackaged and resold the entire thing. Enter Khorosan.

Yep, just as quickly as ISIS spontaneously generated like maggots on meat from the sands of Mesopotamia to open the door to another Middle East quagmire, another existential threat nobody had ever heard of suddenly emerged. Not only that, but this group supposedly posed an imminent threat to America. How incredibly convenient.

Here’s ABC News compliantly pushing the latest propaganda to its lobotomized readership in the article, US Averts ‘Active Plotting Against Homeland’ By Hitting Al Qaeda Cell Khorasan in Syria:

American airstrikes in Syria have taken out members of a shadowy al Qaeda unit known as the Khorasan Group who were planning “imminent” attacks against targets including the U.S., the Pentagon said today.

 

Pentagon spokesperson Rear Admiral John Kirby declined to go into specifics, but told ABC News’ George Stephanopolous, “We had very good indications that this group, which is a very dangerous group, was plotting and planning imminent attacks against Western targets to include the U.S. homeland and it was on that basis that we struck targets, Khorasan targets inside Syria.”

 

The Khorasan Group — consisting of about 50 or so hardened fighters of mixed past and current jihadi affiliations — has been holed up in Aleppo, Syria under the protection of al Qaeda’s official wing in the country, Jabhat al-Nusra, developing cutting edge weapons of terror with the help of al Qaeda’s Yemen affiliate to strike Western civilian aviation targets, according to a half-dozen officials with knowledge of the group who spoke to ABC News.

So all of a sudden the Pentagon identifies and targets a group of 50 fighters in Syria, which happens to be conveniently tied to al-Qaeda (thus justifying strikes under the 2001 AUMF), planning an imminent attack on the “homeland.”

There are two reasons I distrust this meme. First of all, the U.S. government employs an extremely bizarre definition when using the word imminent.

As Trevor Timm noted earlier today in the Guardian:

Take, for example, this definition from a Justice Department white paper, which was leaked last year, intended to justify the killing of Americans overseas:

 

An “imminent” threat of violent attack against the United States does not require the United States to have clear evidence that a specific attack on U.S. persons will take place in the immediate future.

 

To translate: “imminent” can mean a lot of things … including “not imminent”.

Fascinating, and all this time I thought “imminent” meant “imminent.” Someone should let Merriam-Webster know they’ve got it all wrong.

The employment of this new definition of imminent was further solidified in my mind after reading an article from the New York Times titled: In Airstrikes, U.S. Targets Militant Cell Said to Plot an Attack Against the West. In it, we learn that:

American military and intelligence analysts were still studying damage reports from the initial air assault, but senior Obama administration officials expressed hope that they had killed Muhsin al-Fadhli, the leader of Khorasan and a onetime confidant of Osama bin Laden. The officials said they had been contemplating military action against Khorasan in recent months, but President Obama’s decision to hit the Islamic State’s forces inside Syria provided a chance to neutralize the other perceived threat.

You’ve got to wonder what other unrelated opportunities the ISIS campaign might allow. But I digress.

Wake up America. You will continue to be raped, pillaged and economically strip-mined until you stand up for yourselves, but for now, it appears the fetal position suits you just fine.

via Zero Hedge http://ift.tt/1B9l0nG Tyler Durden

Day after day, the status-quo hugging, momentum-chasing talking heads that infest the world of investing will pile their clients’ money into ‘what is working’ with little regard for ‘value’, risk (as defined by Howard Marks), or business uncertainty. Precious metals are sliding so ‘sell’ anything related to the precious metals industry. Biotech and software are surging so buy it all with both hands and feet… However, as the following two charts from Harvard Business Review suggest that strategy is in fact the absolute ‘riskiest’ approach to managing money as they break down the most (and least) uncertain industries in America.

Although uncertainty is accelerating, it isn’t affecting all industries the same way. That’s because there are two primary types of uncertainty – demand uncertainty (will customers buy your product?) and technological uncertainty (can we make a desirable solution?) – and how much uncertainty your industry faces depends on the interaction of the two.

Demand uncertainty arises from the unknowns associated with solving any problem, such as hidden customer preferences. The more unknowns there are about customer preferences, the greater the demand uncertainty. For example, when Rent the Runway founder Jenn Hyman came up with the idea to rent designer dresses over the internet, demand uncertainty was high because no one else was offering this type of service.  In contrast, when Samsung and Sony were deciding whether to launch LED TVs, which offered better picture quality than plasma TVs at a slightly higher price, there was lower uncertainty about demand because customers were already buying TVs.

Technological uncertainty results from unknowns regarding the technologies that might emerge or be combined to create a new solution. For example, a wide variety of clean technologies (including wind, solar, and hydrogen) are vying to power vehicles and cities at the same time that a wide variety of medical technologies (chemical, biotechnological, genomic, and robotic) are being developed to treat diseases. As the overall rate of invention across industries increases, so does technological uncertainty.

If your industry is in the lower left quadrant, or in the bottom 10 in the above table, you face relatively low baseline uncertainty for both demand and technology.

If you’re in the upper right quadrant – or in the top 10 most uncertain industries as shown in the Table – you require greater innovation management skills than industries in the other quadrants or in the bottom 10. In fact, among the top 10 companies of the Forbes Most Innovative Companies list (since 2011 when we started the list), more than 80% of the most innovative companies compete in industries in the top right quadrant.  In other words, if you are in a high uncertainty industry, you must excel at innovation… or die.

Source: Harvard Business Review

via Zero Hedge http://ift.tt/1mWqCRi Tyler Durden

Day after day, the status-quo hugging, momentum-chasing talking heads that infest the world of investing will pile their clients’ money into ‘what is working’ with little regard for ‘value’, risk (as defined by Howard Marks), or business uncertainty. Precious metals are sliding so ‘sell’ anything related to the precious metals industry. Biotech and software are surging so buy it all with both hands and feet… However, as the following two charts from Harvard Business Review suggest that strategy is in fact the absolute ‘riskiest’ approach to managing money as they break down the most (and least) uncertain industries in America.

Although uncertainty is accelerating, it isn’t affecting all industries the same way. That’s because there are two primary types of uncertainty – demand uncertainty (will customers buy your product?) and technological uncertainty (can we make a desirable solution?) – and how much uncertainty your industry faces depends on the interaction of the two.

Demand uncertainty arises from the unknowns associated with solving any problem, such as hidden customer preferences. The more unknowns there are about customer preferences, the greater the demand uncertainty. For example, when Rent the Runway founder Jenn Hyman came up with the idea to rent designer dresses over the internet, demand uncertainty was high because no one else was offering this type of service.  In contrast, when Samsung and Sony were deciding whether to launch LED TVs, which offered better picture quality than plasma TVs at a slightly higher price, there was lower uncertainty about demand because customers were already buying TVs.

Technological uncertainty results from unknowns regarding the technologies that might emerge or be combined to create a new solution. For example, a wide variety of clean technologies (including wind, solar, and hydrogen) are vying to power vehicles and cities at the same time that a wide variety of medical technologies (chemical, biotechnological, genomic, and robotic) are being developed to treat diseases. As the overall rate of invention across industries increases, so does technological uncertainty.

If your industry is in the lower left quadrant, or in the bottom 10 in the above table, you face relatively low baseline uncertainty for both demand and technology.

If you’re in the upper right quadrant – or in the top 10 most uncertain industries as shown in the Table – you require greater innovation management skills than industries in the other quadrants or in the bottom 10. In fact, among the top 10 companies of the Forbes Most Innovative Companies list (since 2011 when we started the list), more than 80% of the most innovative companies compete in industries in the top right quadrant.  In other words, if you are in a high uncertainty industry, you must excel at innovation… or die.

Source: Harvard Business Review

via Zero Hedge http://ift.tt/1mWqCRi Tyler Durden

Despite the strong consensus view that the U.S. is on a stronger economic footing than a year ago, and clearly working with stronger momentum than other major economies, The PunchLine’s Abe Gulkowitz suggests the scary array of possible flashpoints in the U.S. and certainly overseas will continue to haunt policymakers and the markets.

U.S. labor markets have improved over the past year. Yet a range of indicators continue to point to significant underutilization and slack in U.S. labor conditions, particularly meager wage gains and adverse labor market participation rates.

 

Europe will not make much positive contributions to global growth in 2014, and forward trends point to numerous downside risks even for 2015. U.S. re-engagement in Iraq, and tensions in Ukraine will also punctuate the outlook with intermittent bouts of uncertainty.

 

Concerns about waning Chinese growth are suppressing demand for commodities, limiting Latin America’s upside and has come with a surge in the U.S. dollar.

These conflicting developments highlight the awkward challenges the Fed faces in charting a tightening posture, and in steering market expectations on the future course of interest rates.

Full PunchLine letter below…

TPL Sep 23 14

via Zero Hedge http://ift.tt/1mWqBgl Tyler Durden

Authored by Paul Craig Roberts & Dave Kranzler,

The Federal Reserve and its bullion bank agents (JP Morgan, Scotia, and HSBC) have been using naked short-selling to drive down the price of gold since September 2011. The latest containment effort began in mid-July of this year, after gold had moved higher in price from the beginning of June and was threatening to take out key technical levels, which would have triggered a flood of buying from hedge funds.

The Fed and its agents rig the gold price in the New York Comex futures (paper gold) market. The bullion banks have the ability to print an unlimited supply of gold contracts which are sold in large volumes at times when Comex activity is light.

Generally, on the other side of the trade the buyers of contracts are large hedge funds and other speculators, who use the contracts to speculate on the direction of the gold price. The hedge funds and speculators have no interest in acquiring physical gold and settle their bets in cash, which makes it possible for the bullion banks to sell claims to gold that they cannot back with physical metal. Contracts sold without underlying gold to back them are called “uncovered contracts” or “naked shorts.” It is illegal to engage in naked shorting in the stock and bond markets, but it is permitted in the gold futures market.

The fact that the price of gold is determined in a futures market in which paper claims to gold are traded merely to speculate on price means that the Fed and its bank agents can suppress the price of gold even though demand for physical gold is rising. If there were strict requirements that gold shorts could not be naked and had to be backed by the seller’s possession of physical gold represented by the futures contract, the Federal Reserve and its agents would be unable to control the price of gold, and the gold price would be much higher than it is now.

Gold price manipulation is used when demand for delivery of gold bullion begins to put upward pressure on the price of gold and hedge funds speculate on the rising price of gold by purchasing large quantities of Comex futures contracts (paper gold). This speculation accelerates the upward move in the price of gold. The TF Metals Report provides a good description of this illegal manipulation of the gold market:

“Over a period of 10 weeks to begin the year, the Comex bullion banks were able to limit the rally to only 15% by supplying the “market” with 95,000 brand new naked short contracts. That’s 9.5MM ounces of make-believe paper gold or about 295 metric tonnes.

 

“Over a period of just 5 weeks in June and July, the Comex bullion banks were able to limit the rally to only 7% by supplying the “market” with 79,000 brand new naked short contracts. That’s 7.9MM ounces of make-believe paper gold or about 246 metric tonnes.” http://ift.tt/1v3lGdx

 

In previous columns, we have documented the heavy short-selling into light trading periods.
See for example: http://ift.tt/1sqiPwa

The bullion banks do not have nearly enough gold in their possession to make deliveries to the buyers if the buyers decide to stand for delivery per the terms of the paper gold contract. The reason this scheme works is because the majority of the buyers of the contracts are speculators, not gold purchasers, and never demand delivery of the gold. Instead, they settle the contracts in cash. They are looking for short-term trading profits, not for a gold hedge against currency inflation. If a majority of the longs (the purchasers of the contracts) required delivery of the gold, the regulators would not tolerate the extent to which gold is shorted with uncovered contracts.

In our opinion, the manipulation is illegal, because it is insider trading. The bullion banks that short the gold market are clearing members of the Comex/NYMEX/CME. In that role, the bullion banks have access to the computer system used to clear and settle trades, which means that the bullion banks have access to all the trading positions, including those of the hedge funds. When the hedge funds are in the deepest, the bullion banks dump naked shorts on the Comex, driving down the futures price, which triggers selling from stop-loss orders and margin calls that drive the price down further. Then the bullion banks buy the contracts at a lower price than they sold and pocket the difference, simultaneously serving the Fed by protecting the dollar from the Fed’s loose monetary policy by lowering the gold price and preventing the concern that a rising gold price would bring to the dollar.

Since mid-July, nearly every night in the US the price of gold remains steady or drifts higher. This is when the eastern hemisphere markets are open and the market players are busy buying physical gold for which delivery is mandatory. But as regular as clockwork, following the close of the Asian markets, the London and New York paper gold markets open, and the price of gold is immediately taken lower as paper gold contracts flood into the market setting a negative tone for the day’s trading.

Gold serves as a warning for aware people that financial and economic trouble are brewing. For instance, from the period of time just before the tech bubble collapsed (January 2000) until just before the collapse of Bear Stearns triggered the Great Financial Crisis (March 2008), gold rose in value from $250 to $1020 per ounce, or just over 400%. Moreover, in the period since the Great Financial Collapse, gold has risen 61% despite claims that the financial system was repaired. It was up as much as 225% (September 2011) before the Fed began the systematic take-down and containment of gold in order to protect the dollar from the massive creation of new dollars required by Quantitative Easing.

The US economy and financial system are in worse condition than the Fed and Treasury claim and the financial media reports. Both public and private debt burdens are high. Corporations are borrowing from banks in order to buy back their own stocks. This leaves corporations with new debt but without income streams from new investments with which to service the debt. Retail stores are in trouble, including dollar store chains. The housing market is showing signs of renewed downturn. The September 16 release of the 2013 Income and Poverty report shows that real median household income has declined to the level in 1994 two decades ago and is actually lower than in the late 1960s and early 1970s. The combination of high debt and decline in real income means that there is no engine to drive the economy.

In the 21st century, US debt and money creation has not been matched by an increase in real goods and services. The implication of this mismatch is inflation. Without the price-rigging by the bullion banks, gold and silver would be reflecting these inflation expectations.

The dollar is also in trouble because its role as world reserve currency is threatened by the abuse of this role in order to gain financial hegemony over others and to punish with sanctions those countries that do not comply with the goals of US foreign policy. The Wolfowitz Doctrine, which is the basis of US foreign policy, says that it is imperative for Washington to prevent the rise of other countries, such as Russia and China, that can limit the exercise of US power.

Sanctions and the threat of sanctions encourage other countries to leave the dollar payments system and to abandon the petrodollar. The BRICS (Brazil, Russia, India, China, South Africa) have formed to do precisely that. Russia and China have arranged a massive long-term energy deal that avoids use of the US dollar. Both countries are settling their trade accounts with each other in their own currencies, and this practice is spreading. China is considering a gold-backed yuan, which would make the Chinese currency highly desirable as a reserve asset. It is possible that the Fed’s attack on gold is also aimed at making Chinese and Russian gold accumulation less supportive of their currencies. A currency linked to a falling gold price is not the same as a currency linked to a rising gold price.

It is unclear whether the new Chinese gold exchange in Shanghai will displace the London and New York futures markets. Naked short-selling is not permitted in the Chinese gold exchange. The world could end up with two gold futures markets: one based on assessments of reality, and the other based on gambling and price-rigging.

The future will also determine whether the role of reserve currency has been overtaken by time. The US dollar took that role in the aftermath of World War II, a time when the US had the only industrial economy that had not been destroyed in the war. A stable means of settling international accounts was needed. Today there are many economies that have tradable currencies, and accounts can be settled between countries in their own currencies. There is no longer a need for a single reserve currency. As this realization spreads, pressure on the dollar’s value will intensify.

For a period the Federal Reserve can support the dollar’s exchange value by pressuring Japan and the European Central Bank to print their currencies with which to support the dollar with purchases in the foreign exchange market. Other countries, such as Switzerland, will print their own currencies so as not to endanger their exports by a rise in the dollar price of their exports. But eventually the large US trade deficits produced by offshoring the production of goods and services sold into US markets and the collapse of the middle class and tax base caused by jobs offshoring will destroy the value of the US dollar.

When that day arrives, US living standards, already endangered, will plummet. American power will have been destroyed by corporate greed and the Fed’s policy of sacrificing the US economy in order to save four or five mega-banks, whose former executives control the Fed, the US Treasury, and the federal financial regulatory agencies.

via Zero Hedge http://ift.tt/1rbEYOA Tyler Durden