Steven Lendman is a self-educated retired small business man. He publishes two columns daily on OpEdNews treating worldwide political and economic issues. His writing is kind of choppy, but in a way that engages the reader. From my own knowledge of things, he messages have consistantly been bang on. I suggest that you go to the original and subscribe to his email notifications. Otherwise note that I have posted yesterday the column Lendman that cites by the highly educated and experienced economist Paul Craig Roberts.

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Headlined to H3 4/16/13
Gold Drops Most in 30 Years
By Stephen Lendman (about the author)                                   Permalink



opednews.com

Gold Drops Most in 30 Years

by Stephen Lendman

Market manipulation bears full responsibility.

It's getting hammered. In August 2011, it rose above $1,900 an ounce. It was an all-time high. At midday April 15, it was $1,364. It's a 28%+ decline.

Silver's also hit hard. In 2011, it exceeded $48 an ounce. It plunged to its midday April 15 $23.45 level. It's more than a 50% decline.

What's next for both metals remains to be seen. Volatility characterizes them. Major factors drive them.

Gold is a global thermometer. It reflects monetary, geopolitical and economic conditions. It's driven by supply and demand considerations.

It's the longstanding hedge against uncertainty. It's bought to do so against inflation, the declining value of fiat money, and disturbing global geopolitical conditions.

It has real value. It's the ultimate safe haven. It's been so for thousands of years. It's track record is unmatched. Views differ on what's happening now.

Wall Street manipulates all markets. Pumping and dumping reaps enormous profits. Bankers and insiders win. Ordinary investors lose out.

Market-rigging mechanisms are longstanding. On March 18, 1989, Ronald Reagan's Executive Order 12631 created the Working Group on Financial Markets (WGFM). It's called the Plunge Protection Team (PPT).

Its officials or designees include:

• the President;

• the Treasury Secretary as chairman;

• the Fed chairman;

• the SEC chairman; and 

• the Commodity Futures Trading Commission chairman.

Its "Purposes and Functions".Recognize the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets"."
They focus on "maintaining investor confidence"."

"(T)he Working Group shall identify and consider:

(1) the major issues raised by the numerous studies on the events (pertaining to the) October 19, 1987 (market crash and consider) recommendations that have the potential to achieve the goals noted above; and

(2)....governmental (and other) actions under existing laws and regulations....that are appropriate to carry out these recommendations."

Government and Wall Street collude. They manipulate markets doing so. They move them up and down. Enormous profits are made both ways. Most people don't know what goes on.

Manipulation is as commonplace as investing. Tools get increasingly sophisticated. Market prices and true worth often diverge. Claiming markets move randomly doesn't wash.

In 1999, the Counterparty Risk Management Policy Group (CRMPG) was established. It came in the wake of the Long Term Capital Management (LTCM) crisis.

It's used to manipulate markets. It lets financial giants collude through large-scale program trading. They move markets up or down as they wish.

They bail out troubled members. They eliminate others. They do so to consolidate to greater size. They do what ordinary investors don't understand. Many lose out and get trampled.

Financial history is strewn with examples. Big players win. Small ones get crushed. Profits are privatized. Risks are socialized. Wealth is increasingly distributed up.

Financial oligarchs benefit most. Free lunch benefits are gotten at the public's expense. Wealth gets more than ever concentrated.

Paul Craig Roberts explained more. He discussed Fed market rigging. He was the first to do so. Among other reasons, it's done "to protect the US dollar's exchange value""

Fed QE threatens it. By increasing dollar supply faster than demand, its "price or exchange value".is set up to fall."

Doing so raises import prices. Domestic inflation follows, "and the Fed would lose control over interest rates."

"The bond market would collapse, and with it the values of debt-related derivatives on the 'banks too big too fail' balance sheets. The financial system would be in turmoil, and panic would reign."

Rising gold prices reflect declining dollar valuation confidence. Fed-used "paper gold market" "naked shorts" offset "rising demand for bullion possession."

They drive prices lower. Naked shorts reflect what sellers don't have. They sell short regardless. "In the paper gold market," they don't plan taking gold delivery. They want cold hard cash.

Dumping hundreds gold tons on the market affects it greatly. It "drives down the price." Unwary holders lose out big. If things go as planned, naked short sellers benefit enormously. The dirty game works that way.

Roberts expects gold prices to fall further. It's hard knowing for sure. Plans perhaps could backfire. Generally, as gold goes, silver follows.

China, Russia and other central banks are loading up on gold. They'll likely jump in at bargain prices. Doing so would pressure "the dollar's exchange value."

Manipulative attempts to protect it may end up "hastening (its) demise." The fullness of time alone will tell.

It hasn't happened so far. On April 15, gold plunged more than $140 an ounce. Its 9.3% decline was the biggest one-day drop since February 1983. It settled at $1,361.10 an ounce.

What's a holder to do?

Investor Marc Faber "love(s) the fact that gold is finally breaking down because that will offer an excellent buying opportunity."

"The bull market in gold is not completed.

"He expects a "major low in gold within the next couple of weeks."

"(Y)ou should actually buy (it) as a trade."

Before Friday's decline, it was way overbought. Faber now thinks we're "as oversold" as during the 1987 stock market crash. It proved a major buying opportunity.

For now, Faber recommends treading carefully. "From a longer term perspective, (he'd) give it some time." He maintains his longterm bullish outlook. He's not alone. He's not selling.

Market analyst Graham Summers blames the selloff largely "on institutional liquidation in Asia where Japanese bonds are being sold."

Doing so followed the Bank of Japan's massive QE announcement. It's doubling down on previous policy. It's high-risk. What failed for over 20 years is being repeated.

"With this in mind," said Graham, "the move in gold looks to be several large institutions liquidating positions to meet margin calls or redemptions due to the plunge in Japanese bonds."

China's slowdown is another factor, he says. Its growth stimulated post-2009 recovery. Heading south now bodes ill. Graham expects an eventual financial market "bloodbath." It could come anytime, he believes. Commodities could crash with it.

Gold's technical damage is "severe." Prices may decline further. They've had a great run. Nothing goes up forever. Stay tuned for what follows. No one knows for sure.

Stephen Lendman lives in Chicago. He can be reached at Email address removed .

His new book is titled "Banker Occupation: Waging Financial War on Humanity."
http://www.claritypress.com/LendmanII.html

Visit his blog site at sjlendman.blogspot.com.

Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.

It airs Fridays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.
click here
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MATT TAIBBI FREAKS OUT OVER THE LIBOR BANKING SCANDAL

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Matt Taibbi at Skylight Studio in New York, 10/27/10. (photo: Neilson Barnard/Getty Images)

Why Is Nobody Freaking Out About the LIBOR Banking Scandal?

By Matt Taibbi, Rolling Stone

05 July 2012

he LIBOR manipulation story has exploded into a major scandal overseas. The CEO of Barclays, Bob Diamond, has resigned in disgrace; his was the first of what will undoubtedly be many major banks to walk the regulatory plank for fixing the interbank exchange rate. The Labor party is demanding a sweeping criminal investigation. Mervyn King, Governor of the Bank of England, responded the way a real public official should (i.e. not like Ben Bernanke), blasting the banks:

It is time to do something about the banking system…Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal.

The furor is over revelations that Barclays, the Royal Bank of Scotland, and other banks were monkeying with at least $10 trillion in loans (The Wall Street Journal is calculating that that LIBOR affects $800 trillion worth of contracts).

The banks gamed LIBOR for two semi-overlapping reasons. As noted here last week, there were instances of Barclays traders badgering the LIBOR submitters to "push down" rates in order to fatten their immediate bottom lines, depending on what they were trading or holding that day. They also apparently rigged LIBOR downward in order to produce a general appearance of better health, essentially tweaking their credit scores a few ticks upward.

Most intriguingly, or perhaps disturbingly, there were revelations last week that Bank of England deputy Governor Paul Tucker had a conversation with Diamond at the peak of the crisis in 2008. The conversation reportedly left Diamond, and subsequently his traders, with the impression that the bank had carte blanche to rig LIBOR downward in order to help allay spiraling public fears about the banks’ poor financial health.

British officials, and Tucker individually, deny that Tucker gave Diamond permission to rig rates. But a report by British regulators did conclude that the two were talking about Barclays LIBOR submissions on October 29, 2008, and that as a result of that conversation, Diamond came away with a “misunderstanding.” The Daily Mail quotes the Financial Services Authority report:

However, as the substance of the telephone conversation was relayed down the chain of command at Barclays, a misunderstanding or miscommunication occurred.

This meant that Barclays’ submitters believed mistakenly that they were operating under an instruction from the Bank of England (as conveyed by senior management) to reduce Barclays’ Libor submissions.

That is explosive stuff. Members of Parliament will be grilling Tucker tomorrow about those events in what is sure to be a far more combative and entertaining legislative inquiry than the Jamie Dimon dog-and-pony show we just went through here in the states in recent weeks.

The implications of that part of the story should be particularly chilling to Americans, who in recent years have been party to a number of revelations about strange and seemingly inappropriate contacts between senior regulatory officials and big bankers during the heat of the crisis.

We know that American officials in 2008-2009 were extremely concerned about the appearance of weakness in the financial markets, so much so that they may have resisted pursuing criminal prosecutions against big banks, and we also know that they spent a lot of time commiserating with Wall Street figures before and during the crisis.

If Bob Diamond and Paul Tucker were having these talks about LIBOR, is it fair to wonder what else Hank Paulson and Lloyd Blankfein were talking about in the 24 discussions they had in the six days following the AIG disaster? When Paulson had a secret meeting with the entire board of Goldman Sachs in, of all places, his hotel suite in Moscow, in June of 2008? Or what other material nonpublic information was exchanged when Paulson met with a gang of hedge fund chiefs at the offices of Eton Park management in July 2008, and laid out for them a possible scenario for putting Fannie and Freddie into receivership?

Anyway, the LIBOR story is leading the front pages of most of Britain’s dailies, it’s on TV, and it’s producing blistering editorials and howls of outrage amongst politicians and activists. But as compadre Yves Smith at Naked Capitalism put it, where’s the outrage here in America?

The big story on our shores in the last few weeks has been the health care ruling, which makes sense, but then after that… what? The heat? Tom and Katie? (There’s actually a story about how Katie can wear heels again, now that she’s not married to a short person). Joe Sandusky? Nightline’s big story tonight, which is already being hyped on the net, is about how fat Chris Christie is and why the hell he hasn’t done the bypass surgery yet:

New Jersey Gov. Chris Christie opened up about his weight problem in an interview with ABC News and stressed he is "trying" to lose weight, a battle he's waged for 30 years, but said he's never considered gastric bypass surgery because it's "too risky."

"I mean, see, listen, I think there's a fundamental misunderstanding among people regarding weight and regarding all those things that go into, to people being overweight," Christie said in an interview that will air Tuesday on "Nightline."

Glad to be informed! The New York Times, meanwhile, did chime in with a house editorial yesterday, and it was appropriately somber. And there has been some coverage in the financial press.

But to me what’s missing from all of this is the “Holy Fucking Shit!” factor. This story is so outrageous that it shocks even the most cynical Wall Street observers. I have a friend who works on Wall Street who for years has been trolling through the stream of financial corruption stories with bemusement, darkly enjoying the spectacle as though the whole post-crisis news arc has been like one long, beautifully-acted, intensely believable sequel to Goodfellas. But even he is just stunned to the point of near-speechlessness by the LIBOR thing. “It’s like finding out that the whole world is on quicksand,” he says.

So as far as the stateside press goes, I’ve got to assume the cavalry is coming soon. But when?

THE LIBOR SCANDLE "IS THE LARGEST RIGGING OF PRICES IN THE WORLD BY MANY ORDERS OF MAGNITUDE" -- ECONOMIST AND CRIMINOLGIST, BILL BLACK

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UK to launch inquiry into banking scandal 

http://youtu.be/R0PkXPRUvP0  

Published on Jul 2, 2012 by AlJazeera

English Prosecutors in Britain are considering filing criminal charges against Barclays Bank. The UK lender is at the centre of a market manipulation scandal that could involve more than a dozen international banks. While much of the fallout has been confined to Britain - it's likely to spread overseas because Barclays manipulated a key interest rate known as libor - which is used to determine the value of financial products ranging from credit cards to ordinary loans. Al Jazeera's Laurence Lee reports from London. 

How Barclays manipulated the libor rates 

http://youtu.be/ZC_la9ar93w

Published on Jul 2, 2012 by AlJazeeraEnglish 

The Barclays Bank scandal centres around a key interest rate known as Libor. Al Jazeera's Dominic Kane reports on exactly what that is. We also speak to Bill Black, a former US banking regulator for more clarity on how this multi-million dollar fraud was perpetrated. 

YES, JP MORGAN IS MANIPULATING THE PRICES OF GOLD AND SILVER, BUT NOW THAT THEY'VE MANIPULATED IT DOWNWARD IT IS A GOOD TIME TO BUY THESE *PHYSICAL* METALS (NEVER PAPER CERTIFICATES!)

Mike Maloney breaks down Price Manipulation in the Gold and Silver Market

http://youtu.be/UWK5UQDCDTc

Uploaded by CapitalAccount on Apr 6, 2012

Follow us @
http://twitter.com/laurenlyster
http://twitter.com/coveringdelta

Welcome to Capital Account. Hedge funds and investors have reportedly been puzzled by weird movements in credit markets. According to the Wall Street Journal, markets have been rattled by one trader with deep pockets being called the "London Whale" who it's believed works for JP Morgan. It just goes to show how individuals and firms can move markets. Today, we'll talk about manipulation in the gold and silver markets with Mike Maloney, of GoldSilver.com. He believes that manipulation is going on (contrary to the words of Blythe Masters, who spoke with CNBC yesterday, affirming that JP Morgan is simply "hedging" it's silver positions with large open shorts), but that rather than being a bad thing for individual investors, simply presents an opportunity for buying more metal and cheaper prices. This is something that the state of South Carolina failed to grasp in a recent report it conducted, in which it found that the price of gold and silver is manipulated. Rather than concluding that this manipulation, rather than presenting an opportunity for investment, prohibits the state of South Carolina from investing in precious metals.

An US payrolls for March rose far less than expected which means people are talking about an extension of the Federal Reserve's stimulus measures -- buzzing about more. We talk often about the malevolent effects of fractional reserve banking based on a pyramid of fiat liabilities and fiat currency, but what about the fractional reserve gold pyramid scheme? What about the gold ponzi scheme? We'll examine the evidence of, what CTFC commissioner Bart Chilton calls, "ponzimonium."

And how does the entire manipulation go down? Mike Maloney has presented us with a fantastic chart that shows how trading in Gold during market ours in the US differs greatly from that in after-market hours, and how well an investor would do had he or she bought gold at various times during the day over the course of the bull market.

Two Must-Watch Democracy Now! Segments: CIGNA Whistleblower Wendell Potter Apologizes to Michael Moore for PR Smear Campaign ...and Joe Nocera on The Hidden History of the Financial Crisis

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I. The Fear of Sicko: CIGNA Whistleblower Wendell Potter Apologizes to Michael Moore for PR Smear Campaign; Moore Says Industry Was Afraid Film Would Cause A 'Tipping Point' for Healthcare Reform

Democracy Now! hosts a joint interview with Academy Award-winning filmmaker Michael Moore and Wendell Potter, who was the head of corporate communications for the health insurance giant CIGNA when Moore’s film, Sicko, was released in 2007. Potter left the company in 2008 and has since become the industry’s most prominent whistleblower. In the interview, Potter apologizes for his role in the industry’s attack on Moore and the film. [includes rush transcript]

Blogger's Note: Unlike the sound bites you hear on U.S. TV newscasts, these three segments evolve slowly as the interviewees carefully choose their words to accurately recount the facts ...as well as their feelings about these facts. Bear with them. It's worth your time.

Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans
Wendell Potter (Author)
http://www.amazon.com/Deadly-Spin-Insurance-Corporate-Deceiving/dp/1608192814/ref=sr_1_1?ie=UTF8&s=books&qid=1290620406&sr=1-1
Sicko
Michael Moore (Actor), Tucker Albrizzi (Actor), Michael Moore (Director)
http://www.amazon.com/Sicko-Special-Michael-Moore/dp/B000UNYJXQ/ref=sr_1_1?ie=UTF8&s=dvd&qid=1290624150&sr=1-1

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II. Joe Nocera on "All the Devils Are Here: The Hidden History of the Financial Crisis"

As federal agents raid the offices of three major hedge funds amidst news of a sweeping probe of insider trading at Wall Street firms, we speak with New York Times business columnist, Joe Nocera, about his new book, All the Devils Are Here: The Hidden History of the Financial Crisis. The book describes how most of the underlying structures and key players behind the financial crisis have emerged relatively unscathed. [includes rush transcript]



All the Devils Are Here: The Hidden History of the Financial Crisis
Bethany McLean (Author), Joe Nocera (Author)
http://www.amazon.com/All-Devils-Are-Here-Financial/dp/1591843634/ref=sr_1_1?ie=UTF8&s=books&qid=1290621873&sr=1-1

Blogger's Note: At the opening of this interview, Amy Goodman states that "Federal agents have raided the offices of three major hedge funds amidst news of a sweeping probe of insider trading at Wall Street firms. ... Collectively, the three firms manage nearly $10 billion in assets."
One might hope that this is just the tip of the iceberg, since convicted Ponzi scheme operator Bernie Madoff managed about $65 billion and lost and estimated $18 billon of his investor's money.
 
Actually, it seems to me that a far bigger Wall Street fraud was exposed by Joe Nocera in a New York Times article entitled "Markets Quake, and a ‘Neutral’ Strategy Slips" on August 18, 2007. But if Joe recognized what really happend then, he hasn't spelled it out even in his new book.
 
I beleive that I've figured it out. The essence of this Nocera column had to do with the so-called quant (short for quantitative) funds based on computer programs developed by physicists who are particularly good at analyzing complex systems by means of mathematical algorithms. By means of these computer algorithms AQR Capital Management's flagship hedge fund had been up over the previous seven years on average, 13.7% a year, out performing the S&P which gained only 2.9% during that time. Then in a single week (August 6-10, 2007) this quant fund LOST 13% ...and all other quant funds had similar losses.
 
"And then," Nocera wrote on August 18th, "in the blink of an eye, it turned around, at least for the moment. As of today [the AQR quant] fund had gained back half of what it lost in the previous two weeks..."
 
Nocera posed some big questions: "What really happened during the Great Quant Meltdown of early August? More to the point, should it scare us or reassure us?"
 
I decided that even more important was the question: Why did everything turn around “in the blink of an eye”?
 
And it wasn't hard to answer it. Physicists and IT experts using computers have an expression, "Garbage in equals garbage out."
 
Normally the "garbage" is the data, but it this particular situation the data are rightly assumed to be correct. Therefore, the algorithm that was totally correct for seven years running must have transmogrified into total garbage by August 10, 2007. And the reason everything was cool again with the quant funds by August 18, 2007, was that the physicists had revised the algorithm to take into account the new trend in the data. Duh!

Because I had been graphing both the market indices and commodities stocks at the time, the algorithm fix immediately became clear to me: Up to August 10, 2007, when the stock market weakened, investors had intuitively switched their money into commodities. Just common sense.
 
And by August 18, 2007, the quant physicists had figured out why common sense is now out the window: Now when the major market indices begin to slide, their new algorithm (counter intuatively) sells a five-times larger bundle of commodities than the baskets of S&P, Dow-Jones, and NASDAQ stocks others are dumping and uses the cash from the commodity sales to prop up the New York markets.  And the new algorithm reverses this process once these major exchanges show renewed signs of life due to duped investors reentering these markets.  My evidence for this conclusion can be downloaded here.
 
What led to this paradigm change? Obviously, it was the sudden inception of full manipulation of the stock markets by the U.S. government and/or Wall Street criminals. The object is to keep the Wall Street indexes from crashing (as they must) until some future time when 'The Powers That Be' are fully poised to profit from the market-crashing event they are cooking up.
 
So this part of the "hidden history" is still hidden from us.

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.

Where Is Goldman Now Making It’s Big Profits? Why, by Stealing from our Pension Funds!

Have you watched what the markets have been doing recently? I don’t mean the usual basket of stocks that make up the Dow Jones Industrial Average, which contain corporations that can permanently lose profitability – or even go bankrupt – (remember that previous components of the Dow included Sears, Kodak, AIG, GM, and Citigroup). Rather, I mean the big mining companies and productive oil-field trusts which, though they may be less profitable during a global recession, still own stuff in the ground that the world’s developed nations will ultimately need. And these outfits have the means of extracting their mineral wealth on demand. There is no conceivable way such resource-rich companies could ever go bankrupt.

Let’s consider a few. Gold is being used in jewelry and electronics as fast or faster than it is brought out of the ground – and is also widely used as a source of wealth immune to currency crashes. One of the best gold mining stocks is Gold Corp (symbol GG). Then there are the Royal Canadian Oil Trusts, which pay their stock holders a percentage of the value of the oil they pump out of the ground each month. An example is Penn West Energy Trust (NYSE: PWE) currently paying at an annual rate of 13%. And then there is bauxite. According to an article in the August 2008 American Ceramic Society Bulletin, demand (at that time) was greatly outstripping supply. The same article mentioned that “China ... has become the world’s largest smelter of aluminum, responsible for nearly one-third of the world’s production.” The Aluminum Company of China (NYSE: ACH) is reported to be buying up and hoarding bauxite. And last but not least, there is Brazil's Companhia Vale Do Rio Doce (NYSE: VALE.P), which “...produces iron ore and iron ore pellets, nickel, manganese ore, ferroalloys, and kaolin ...bauxite, alumina, aluminum, copper, metallurgical and thermal coal, metallurgical coke and methanol, cobalt, potash, and other non-ferrous minerals, as well as precious metals, including platinum-group metals, gold, and silver. In addition, the company operates logistics systems in Brazil, including railroads, maritime terminals, and a port.” The stock prices of all of these outfits suffered greatly during the so-called “bursting of the commodities bubble,” which hit ACH in October 2007 and struck the rest around June 2008.

So why is Goldman Sachs the big winner of late? Well, in today’s column Paul Krugman has this to say:

Goldman’s role in the financialization of America was similar to that of other players, except for one thing: Goldman didn’t believe its own hype. Other banks invested heavily in the same toxic waste they were selling to the public at large. Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed. All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers.

And Wall Streeters have every incentive to keep playing that kind of game.

Krugman does not speculate as to just what “kind of game” Goldman is playing now. But I believe that I have the answer. Goldman, and probably every other investment banking company, has been operating hedge funds which garner minute-to-minute gains by rapid computer buying and selling. They make assured profits by either having advanced information as to which direction the markets are going to move in a given time interval, or by using computer programs capable of finding historical patterns which support high-probability guesses based on precursor events.

Either way, I believe the core of “the game” to be government manipulation of the markets. I am not alone in this belief. However, I believe that I have deduced the fundamentals of this game, namely, massive naked short-selling of commodities when bad economic news causes the Dow and other major indices to begin “heading south.” Using money taken in by these short sales, they buy baskets of the Dow, S&P, NASDAQ Composite, etc., thus propping them up again, giving us little guys confidence that no crash is in the offing.

Where’s my proof? Well, I believe you should be able to figure it out yourself by studying the graphs above. Clue: Traditionally, when the markets seem about to collapse, the investor flees to commodities. Now the exact opposite is happening.

Apropos, you might want download an essay I wrote on this back in August of 2007 – at the very time when “full court press” market manipulation first began ...wiping out a half-year’s profits of the big hedge funds whose “quant” computer programs had up to then presumed the markets to work as normally expected.

So, in summary, Goldman and their ilk are back to making big money by stealing from our pension funds!

Post Script 1: I based this article on original research that involved graphing the markets (as illustrated at the top) and simply guessed Goldman Sachs' likely role in the market manipulation that I inferred was going on. I had somehow missed the story a week before about the former Goldman executive that was accused of stealing Goldman's market-manipulating computer codes. Then a week later the New York Times came out with a front-page article on the high-speed codes that a few market participants are using to gain a significant advantage over the rest of us, including the managers of the mutual funds that may be part of our 401 K and/or IRA pension/retirement monies.
BTW The graphs I show above were easily created on Google Finance. Try it!
Post Script 2: In his 3 August 2009 column, Paul Krugman mentions high-frequency trading and notes that this is "one reason Goldman is earning record profits and likely to pay record bonuses." He concludes with this remark:
"Neither the administration, nor our political system in general, is ready to face up to the fact that we’ve become a society in which the big bucks go to bad actors, a society that lavishly rewards those who make us poorer."