Has God commanded Goldman Sachs to manipulate the markets on Wall Street?

AlterNet

Amped Status / By David DeGraw

Was Last Week's Market Crash a
Direct Attack By Financial
Terrorists?

In a market where 70 percent of all trades are executed by computer algorithms via High Frequency Trading, Goldman Sachs has the power to make the market crash or rise at will.

Last week, the U.S. stock market suffered the greatest sudden drop in its history, for reasons that nobody on Wall Street can seem to decipher. But of all the explanations being examined—a tech glitch, Greek debt worries and fraud have all been discussed--the most troubling is not being given sufficient attention.

Coming on the very day that Congress considered two key financial reforms, the timing of the "flash crash" raises concerns that Wall Street is resorting to extreme tactics in its efforts to intimidate politicians who want to rein in the capital markets casino. Thursday's market plunge could have been an act of financial terrorism. Wall Street has both the motive and the means: Goldman Sachs, which is currently under investigation for a very different kind of fraud, has the trading power to make just such a market crash occur, and has much to lose from financial reforms moving through Congress.

On Thursday afternoon, the Dow Jones Industrial Average plummeted 700 points in about 10 minutes. A few hours later, top Democratic negotiators reached a compromise with Sen. Bernie Sanders, I-Vermont, over a plan to audit the Federal Reserve's secret bailout operations. The Fed has pumped nearly $4.3 trillion in bailout funds into the banking system since the onset of the crisis, and we know almost nothing about that money. The "Audit The Fed" amendment would finally tell the public the full extent of Wall Street's bailout operations.

Later Thursday night, Congress voted on—and rejected—an amendment that would have forced the break-up of the six largest U.S. financial behemoths into banks that can fail without wrecking the economy. Goldman Sachs would have been one of those six banks. Meanwhile, riots in Greece and inaction from the European Central Bank raised the possibility of major trouble for our financial titans across the pond.

This amalgamation of events is eerily similar to what took place on Sept. 29, 2008, after the U.S. House of Representatives shot down the Troubled Asset Relief Program. Immediately after the vote, big banks made the market plunge a record 778 points, sparking widespread fear and panic that helped convince Congress to eventually pass the bailout.

Can these conveniently timed market freak-outs be chalked up as a simple, if stunning, response to significant political events? Or is there something more sinister going on?

Right now, there is enough financial firepower concentrated in the hands of a few individuals to move the stock market whichever way these people want it to go. These 10-minute 700 point drops could very well be a precision-guided High Frequency Trading (HFT) attack designed to show Congress who's boss.

In today's stock market, 70 percent of all trades are executed by computer algorithms via High Frequency Trading. And Goldman Sachs completely dominates the HFT business, with a virtual monopoly over trading at the New York Stock Exchange, as Tyler Durden describes for Zero Hedge:

Goldman's dominance of the NYSE's Program Trading platform, where in addition to recent entrant GETCO, it has been to date an explicit monopolist of the so-called Supplementary Liquidity Provider program, a role which affords the company greater liquidity rebates for, well providing liquidity, and generating who knows what other possible front market-looking, flow-prop integration benefits. Yesterday [5/6/10], Goldman's SLP function was non-existent. One wonders -- was the Goldman SLP team in fact liquidity taking, or to put it bluntly, among the main reasons for the market collapse.

Importantly, Durden notes that in April, Goldman executed a huge proportion of trades for its own account—enough to significantly move the market, if it wanted to.

What is notable here is that of the 1.4 billion in principal shares, or shares traded for the firm's own account, Goldman was the top trader by a margin of over 100% compared to the second biggest program trader.

We have long claimed that Goldman is the de facto monopolist of the NYSE's program trading platform. As such, it is certainly the case that Goldman was instrumental in either a) precipitating yesterday's crash or b) not providing the critical liquidity which it is required to do, when the time came. There are no other options.

For further investigation, I turned to Max Keiser, who has written and authored similar Program Trading and HFT computer algorithms.  I asked him if he thought this was an attack, and here is his response:

May 6th was an unequivocal act of domestic financial terrorism in America. A day that will live in infamy. To scare the lawmakers, themselves large owners of the very banks and stocks that they are supposed to be regulating, a financial weapon of mass destruction was put to their head and they acquiesced.

As the inventor of the continuous double-action, market-making technology (VST tech. US pat. no. 5950176) that is referenced 132 times by program trading and HFT patents since 1996, I can tell you that Goldman, JP Morgan and the gang simply pulled the "buys" from their computer trading programs and manufactured a crash. And when the coast was clear, and it was clear the politicians were not going to vote for anything that would break up the "too big to fail" banks; all the "sells" were pulled from the computers and the market roared back.

This is a Manchurian Candidate market where program trading bots start the ball rolling in whatever direction Wall St. wants the market to go -- and then hundreds of thousands of day traders watching Cramer on CNBC jump on the momentum bandwagon and commit the crime for the Wall St. financial terrorists, who then say, "It wasn't us, it was 'the market!'"

On Friday, the day after the "flash crash" and the defeat of the "break up the banks" amendment, Goldman just happened to be meeting with the SEC to work out a settlement in the Abacus fraud case.

These two major market crashes are not the only grounds for suspicion. On January 21 and 22 of 2010, President Barack Obama had a press conference and came out in favor of the Volcker Rule, which would have limited these HFT and "proprietary trading" schemes. At that time, the market dropped 430 points. Soon afterward, the Volcker Rule faded away and Obama has not seriously addressed this reform since then.

We know banks are willing to put the entire global economy at risk in order to pursue their own reckless profits. We also know that bankers at the largest U.S. financial firms are fighting like hell to keep their too-big-to-fail gun pointed at the head of the U.S. economy, and to keep their riskiest and most abusive activities beyond the scope of regulators. Consider what they've already accomplished over the past two years:

• 50 million Americans are now living in poverty, which is the highest poverty rate in the industrialized world; 
• 30 million Americans are in need of work;
• Five million American families foreclosed on, with 15 million expected by 2014;
• 50 percent of U.S. children will now use a food stamp during childhood;
• Soaring budget deficits in states across the country and a record high national debt
• Record-breaking profits and bonuses for themselves.

Motive and means are not enough to prove a case. You have to show that someone actually executed the dirty deed. But right now there is an alarmingly narrow scope of the calls for investigation into the flash crash. The SEC is considering "market manipulation" investigations, while members of Congress want to investigate whether technological malfunctions are to blame. But shouldn't somebody at least be looking into whether the flash crash was not merely fraud perpetrated for profit, but outright political intimidation—an act of economic terrorism? We'll never know if we don't investigate.

Blogger's Note: I inferred almost a year ago that Goldman was manipulating the markets.

Breaking: This just out from the NY Times:
"[F]our giants of American finance managed to make money from trading every single day during the first three months of the year." Good luck? Or playing with totally stacked decks?
Attention individual investors! You can't win.

Uncle Sam's Ponzi Scheme Will Make Bernie Madoff Look Like a Piker ...and Impoverish Millions MORE Americans

(Original article here)
Many Predict US Financial Collapse in September

July 18, 2009
by Charles (A Reader)

Let us contemplate the day in the near future when the consequences of financial chicanery finally outpace the ability of the governments, central banks and big media to cover up and obfuscate the truth. Many respected voices have now gone on record that September 30 or
thereabouts will be that day.

Bob Chapman [Internationalforecaster.com] revealed that the US State Dept has advised embassies worldwide to stock up on a year's worth of the local currency in anticipation of collapse of the US dollar. Look for a temporary banking shutdown timed for around September 2009. As under Roosevelt, some banks won't reopen. 96% of bank reserves are currently held with the Federal Reserve who tells the banks not to loan the money, but rather to save it for further banking acquisition and consolidation. Chapman foresees a bank holiday lasting 4‐5 days. Chapman thinks this first bank holiday presages a much more significant bank holiday months to years later which will involve simultaneous devaluations of multiple currencies as well as other significant changes in the banking system.

Harry Shultz [as quoted in marketwatch.com] says "Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that 'something' is about to happen ... within 180 days, but could be 120‐150 days."

Benjamin Fulford [http://benjaminfulford.typepad.com/benjaminfulford/] states that for almost a century the US Treasury Dept has been issuing specialized debt instruments to countries with which the US has had a trade surplus. These complex debt instruments are tailored by complex treaties. Unfortunately, the recent US Treasury funding needs exceed the willingness of these creditor nations to extend additional credit. Fulford writes, "The problem is that after nearly a century of issuing these debt instruments, the chickens are coming home to roost. President Obama tried at the recent G8 plus 5 meeting in Italy to borrow more money than George Bush junior did in 8 years. He was told a resounding no. The result should be total economic chaos in the U.S. by September 30th . "

Jim Willie [goldenjackass.com] writes of an Asian led initiative ending dollar hegemony beginning this weekend. Willie suspects that the Fed/Treasury is covertly loaning foreign central banks the money with which the central banks are now using to buy US debt. Increasingly, US debt is being bought by foreign central banks taking up the slack of investors abandoning US Treasury debt. Willie confirms Chapman's comments and says he solicited and received "multiple confirmations." He adds, "CHAOS WILL PREVAIL WITHIN SEVERAL MONTHS, PERHAPS A YEAR AT MOST{his emphasis}."

Jim Sinclair [jsmineset.com] has recently visited China meeting with its leaders. He states that China is increasingly more willing to take on the United States in its apparent maneuvers to inflate its way out of its debt crisis. In early July Sinclair started a 120 day countdown till breakdown of the US dollar ends market manipulation and all those sour economic chickens come home to roost.

OUT OF TRICKS
Seemingly the Federal Reserve/US Treasury have exhausted their bag of tricks. The Fed is fighting rising interest rates, a difficult task given the hyperinflationary debt financing it is now doing. Once rising pressure on interest rates become too much for the Fed to control, there will probably be several sudden economic and financial surprises cascading with currently known dilemmas: crashing dollar; increasing home mortgage defaults; commercial mortgage defaults reaching critical mass; falling bond and stock markets extending insolvency of pension funds; defaults on debt by state and local governments. And don't forget derivatives and further exposure of corruption and criminality on Wall Street. Bernie Madoff may soon have lots of company.

Unable to produce any more financial wizardry, the cynical federal government is arrayed in full battle dress uniform: 1] Mass forced swine flu vaccinations scheduled this fall performed under the specter of martial law; 2] Rumblings of extending the wars in Asia into Iran and Pakistan; 3] Rekindling the Korean conflict may also be in the cards. Of course, don't forget that both Iran and North Korea are client states of the British World Order. All the recent saber rattling involving Iran and North Korea is wholly orchestrated. We need the distractions from the economic crisis, so our clients Ahmadinejad and Kim provide us with the necessary theater. So what will come first, further banner headlines of dollar collapse and market crashes or the distracting theater of more war or 911 type events?

What will this fall really bring? It is not too far away so we shall soon know. Unfortunately, it may make last fall look pretty tame. When the government answers economic distress by preparing for the worst, then the worst may very well be what happens.