Stocks and Precious Metals Charts - Try To Keep a Little Grace

"Washing one's hands of the conflict between the powerful and the powerless means to side with the powerful, not to be neutral."

Paulo Freire


"Constantly choosing the lesser of two evils is still choosing evil."

Jerry Garcia

A very quiet trading day today saw stocks drifting higher on light volumes and puffs of fast money liquidity.

Gold and silver were slightly lower on a stronger dollar.

If something occurs to trigger selling, there is so much fluff underpinning this market that we *could* see quite a multi-day selloff. It might look like a big down move, a rally back that fails to set a new high, and then a steeper decline.

I would not look for this to happen in the near term since the volumes are so light. It is more likely in late September to the end of October.

Each day that goes by in this kind of narrowly focused price puffing lessens the significance of the 'trigger event' that will be required to provoke a sharp sell-off.

There is no doubt in my mind that the financiers know this. They just do not care when there is money to be made, by any and all means.

Have a pleasant evening.

The Volcker Rule and Strong Independent Oversight Is Required to Save the Public From the Banks

"The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil.  Perhaps this is inherent. In a community where the primary concern is making money, one of the necessary rules is to live and let live.  To speak out against madness may be to ruin those who have succumbed to it.  So the wise in Wall Street are nearly always silent. The foolish thus have the field to themselves.  None rebukes them...

People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.  Intellectual myopia, often called stupidity, is no doubt a reason.  But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right."

John Kenneth Galbraith


"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.

If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform."

Simon Johnson, The Quiet Coup


“As Treasury secretary under Clinton, Rubin was the driving force behind two monstrous deregulatory actions that would be primary causes of last year’s financial crisis: the repeal of the Glass-Steagall Act. and the deregulation of the derivatives market.”

Matt Taibbi


“It is difficult to get a man to understand something when his salary depends on his not understanding it.”

Upton Sinclair

Among the policy changes that the Clinton Democrats enabled, in bipartisan partnership with the corporate stooge Republicans who were amassing private fortunes, was to go along with the financial sector's long campaign for financial deregulation and the overturning of the Glass-Steagall Act.

There were also plenty of useful idiots who climbed aboard.  Independent thinking is a difficult burden and a rarity, especially when it runs counter to your own career self-interests.

But as 'populist Democrats' the Wall Street Democrats were able to provide a cover for legislation promoted by the financial class, along with the other courtiers to power and money in politics, universities, and the media, for the benefit of a wealthy few.  In retrospect, one might think of about several hundred million reasons why this happened.

And also why the complicity has continued even until today, almost to the point of absurdly low approval ratings and the implosion of the Democratic party after pivoting from the working public to the wealthy professional class in banking and Wall Street's many ventures in healthcare and technology.

In 1999, on signing Gramm-Leach-Bliley into law, Clinton said, 'This is a day we can celebrate as an American day' and that 'the Glass-Steagall law is no longer appropriate for the economy in which we live' and 'today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority' and 'This is a very good day for the United States.'

Columbia Journalism Review, Bill Clinton on Deregulation

After enormous bailouts and a near collapse of the global financial system, the Banks are back at it again. They are once more funding a clever campaign, with the help of the silent acquiescence of the mainstream media and those in the disgraced professions, who are more than willing to provide high sounding justifications and willing silence in return for money, access, and position.

"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population.  Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.

Charles Ferguson, Predator Nation

When this all goes wrong, the professional elite will claim benign ignorance, again.   And then the conversation will quickly shift to blame the public, whom they hold in utter contempt.  They are particularly cynical with regard to their vocal minority of supporters, who are easily swayed by negative misdirection and cynical ideology into blaming other, weaker victims.

The people are starting to become aware of this. And the wealthy few and their professional elite are resisting reform and change for the better. They like things just the way they are.

Related:

Five Critical Decisions that Led to the Financial Crisis
Pam Martens' Warning About Financial Deregulation in 1998
Brilliant Warning About Rubin's Proposal for Financial Deregulation in 1995
The Long Demise of Glass-Steagall

The Volcker Rule and the London Whale
By Chris Whalen

...Ina Drew was essentially running a hedge fund directed by Dimon and other senior managers, a fund that was largely kept outside of the bank’s risk management and reporting procedures. Consider the bizarre situation in 2011-2012 when counterparties of Iksil facing the JPM commercial bank were unable to make margin calls, but the JPM investment bank was making margin calls on these same counterparties for positions in the very same indexed credit derivatives.

Bruno Iksil has waited for the proverbial concrete to harden over the past few years before coming forward with his latest accusations. This makes it difficult or impossible for Dimon and his lieutenants to change their story now. It will be very interesting indeed to see if anyone from the financial media or even the regulatory community picks up the new trail illuminated by Iksil’s statements.

The episode involving the London Whale illustrates how difficult it is to learn the truth about the inner working of large banks. Big banks profit by exploiting information and conflicts found between the world of credit and the world of securities. Indeed, the CIO's office generated big returns for JPM over the decade or so that Iksil was with the bank.

But the London Whale episode also shows in graphic terms why the Volcker Rule prohibitions against banks trading for their own account need to be preserved and strengthened. There is a fundamental conflict between a bank acting as a lender and trading credit derivatives.

More, if the CEO of a bank – any bank – can short circuit the internal controls of his institution in order to enhance returns with a bet at the credit derivative roulette table, then by definition that bank cannot be safe and sound."

To read the entire article click here.

"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the Bank to speculate in the breadstuffs of the country.

When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!

You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table)  I will rout you out."

Andrew Jackson, From the original minutes of the Philadelphia bankers sent to meet with the President on February 1834, from Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels

Stocks and Precious Metals Charts - Standing Before the Nation With Judgement

"And they healed the pain of my people disgracefully, saying 'peace and prosperity,' when there was no peace or prosperity."

Jeremiah 6:12


"Easy is the descent into hell;
The door to death and darkness stands open, day and night.
But to retrace one's steps, to return once more
to the pure clean air, and cheerfulness and life:
That is our task, that is our true labour."

Vergil, Aeneid

The Non-Farm Payrolls came in 'better than expected,' as long as one did not look too closely, and not distinguish between low-paying, part time jobs versus jobs that carry a living wage that would enable further economic expansion.

Judgement and justice are long overdue—  but they are coming.

The highlight for next week will be the Producer and Consumer inflation figures.

I hope you have had a pleasant weekend.

For Friends In Troubled Times

“We are slow to master the great truth that even now Christ is, as it were, walking among us, and by His hand, or eye, or voice, bidding us to follow Him. We do not understand that His call is a thing that takes place now. We think it took place in the Apostles' days, but we do not believe in it; we do not look for it in our own case.

Every century is like every other, and to those who live in it seems worse than all times before it.

God alone knows the day and the hour when what will at length be, that which He is ever threatening; meanwhile, thus much of comfort do we gain from what has been hitherto, not to despond, not to be dismayed, not to be anxious, at the troubles which encompass us.  They have ever been; they ever shall be; they are our portion.

God's presence is not discerned at the time when it is upon us, but afterwards, when we look back upon what is gone and over. The world seems to go on as usual. There is nothing of heaven in the face of society, in the news of the day.

And yet the ever-blessed Spirit of God is there, ten times more glorious, more powerful than when He trod the earth in our flesh.

God beholds you. He calls you by your name. He sees you and understands you as He made you. He knows what is in you, all your peculiar feelings and thoughts, your dispositions and likings, your strengths and your weaknesses. He views you in your day of rejoicing and in your day of sorrow. He sympathizes in your hopes and your temptations. He interests Himself in all your anxieties and remembrances, all the risings and fallings of your spirit.

He encompasses you round and bears you in His arms. He notes your very countenance, whether smiling or in tears. He looks tenderly upon you. He hears your voice, the beating of your heart, and your very breathing. You do not love yourself better than He loves you. You cannot shrink from pain more than He dislikes your bearing it; and if He puts it on you, it is as you would put it on yourself, if you would be wise, for a greater good afterwards.

There is an inward world, which none see but those who belong to it. There is an inward world into which they enter who come to Christ, though to men in general they seem as before. If they drank of Christ's cup it is not with them as in time past. They came for a blessing, and they have found a work.

To their surprise, as time goes on, they find that their lot is changed. They find that in one shape or another adversity happens to them. If they refuse to afflict themselves, God afflicts them.

Why did you taste of His heavenly feast, but that it might work in you—why did you kneel beneath His hand, but that He might leave on you the print of His wounds?

God has created me to do Him some definite service; He has committed some work to me which He has not committed to another. I have my mission— I may never know it in this life but I shall be told it in the next.

I am a link in a chain, a bond of connection between persons. He has not created me for naught.

I shall do good, I shall do His work. I shall be an angel of peace, a preacher of truth in my own place while not intending it if I do but keep His commandments.

Therefore I will trust Him. Whatever I am, I can never be thrown away. If I am in sickness, my sickness may serve Him; in perplexity, my perplexity may serve Him. If I am in sorrow, my sorrow may serve Him.

He does nothing in vain. He knows what He is about.

He may take away my friends. He may throw me among strangers. He may make me feel desolate, make my spirits sink, hide my future from me— still He knows what He is about.

Let us feel what we really are— sinners attempting great things. Let us simply obey God's will, whatever may come. He can turn all things to our eternal good. Easter day is preceded by the forty days of Lent, to show us that they only who sow in tears shall reap in joy.

Contemplate then yourself, not as yourself, but as you are in the Eternal God. Fall down in astonishment at the glories which are around you and in you, poured to and fro in such a wonderful way that you are dissolved into the Kingdom of God.

The more we do, the more shall we trust in Christ; and that surely is no morose doctrine, that leads us to soothe our selfish restlessness, and forget our fears, in the vision of the Incarnate Son of God.

May the Lord support us all the day long, till the shades lengthen, and the evening comes, and the busy world is hushed, and the fever of life is over, and our work is done.

Then in His mercy may He give us safe lodging, and a holy rest, and peace at last.”

John Henry Newman


"In the Incarnation the whole human race recovers the dignity of the image of God. Thereafter, any attack even on the least of men is an attack on Christ, who took on the form of man, and in his own Person restored the image of God in all. Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind."

Dietrich Bonhoeffer

Only Ten Years After the Last Financial Crisis the Banks Are At It Again

Apparently the Banks have been lobbying heavily, and expending significant amounts of money again, leaning on their Congressmen and pressuring regulators, saying that their capital standards need to be relaxed so that they can make more loans to stimulate economic growth.

But that, according to the FDIC Vice-Chairman, is utter nonsense.

"Hoenig, who was a high-ranking Federal Reserve official during the crisis, cautioned Senate Banking Committee Chairman Mike Crapo and the committee's senior Democrat, Sherrod Brown, "against relaxing current capital requirements and allowing the largest banks to increase their already highly leveraged positions."

Using public data to analyze the 10 largest bank holding companies, Hoenig found they will distribute more than 100 percent of the current year's earnings to investors, which could have supported to $537 billion in new loans.

On an annualized basis they will distribute 99 percent of net income, he added.

He added that if banks kept their share buybacks, totaling $83 billion, then under current capital rules they could boost commercial and consumer loans by $741.5 billion.

'While distributing all of today’s income to shareholders may be received well in the short run, it can undermine their future returns and weaken the growth outlook for the larger economy,' he wrote."

Reuters, Payouts, not capital requirements, to blame for fewer bank loans: FDIC vice chairman

The Banks are spending a substantial amount of their current income on dividends to shareholders and very large stock buyback programs designed to increase their share prices.

The chart below shows in the first column the almost shocking Payout Ratios being maintained by some of the Banks.

In the second column there is an estimate of how many more loans the Banks could have made at current capital requirements if they had not spent their cash buying back their own shares.

Since Bank managers are personally heavily rewarded on the share price of the Banks through bonuses and share options, the cause of this is clear.

There has been insufficient reform in the Banks.  Lending and basic banking would better function like a utility, with much more efficient and effective levels of risk management.

Basic banking including loans and deposits ought not to be an adjunct or cover for the kinds of speculation and gambling with other people's money that led to the last financial crisis that brought the global economy to its knees.

This problem was addressed by Glass-Steagall and functioned very well, keeping the banking system essentially sound for almost seventy years, until it was repealed under the Clinton Administration in conjunction with a Congress all too willing to sacrifice the interests of their voters to Big Money.

And that is why Hillary lost the presidential election, and why the Democrats are in a steady decline as a political party despite the ability to raise huge sums of money from their wealthy patrons.

"If at times his [Andrew Jackson's] passionate devotion to this cause of the average citizen lent an amazing zeal to his thoughts, to his speech and to his actions, the people loved him for it the more. They realized the intensity of the attacks made by his enemies, by those who, thrust from power and position, pursued him with relentless hatred. The beneficiaries of the abuses to which he put an end pursued him with all the violence that political passions can generate. But the people of his day were not deceived. They loved him for the enemies he had made.

Backed not only by his party but by thousands who had belonged to other parties or belonged to no party at all, Andrew Jackson was compelled to fight every inch of the way for the ideals and the policies of the Democratic Republic which was his ideal.

An overwhelming proportion of the material power of the Nation was arrayed against him. The great media for the dissemination of information and the molding of public opinion fought him. Haughty and sterile intellectualism opposed him. Musty reaction disapproved him. Hollow and outworn traditionalism shook a trembling finger at him. It seemed sometimes that all were against him—all but the people of the United States.

Because history so often repeats itself, let me analyze further. Andrew Jackson stands out in the century and a half of our independent history not merely because he was two-fisted, not merely because he fought for the people's rights, but because, through his career, he did as much as any man in our history to increase, on the part of the voters, knowledge of public problems and an interest in their solution. Following the fundamentals of Jefferson, he adhered to the broad philosophy that decisions made by the average of the voters would be more greatly enduring for, and helpful to, the Nation than decisions made by small segments of the electorate representing small or special classes endowed with great advantages of social or economic power.

He, like Jefferson, faced with the grave difficulty of disseminating facts to the electorate, to the voters as a whole, was compelled to combat epithets, generalities, misrepresentation and the suppression of facts by the process of asking his supporters, and indeed all citizens, to constitute themselves informal committees for the purpose of obtaining the facts and of spreading them abroad among their friends, their associates and their fellow workers."

Franklin D. Roosevelt, Jackson Day Dinner Address, Washington, D.C.
January 8, 1936

It is telling that the current crop of Democratic Party plutocrats want nothing to do with the policies of Jackson or Roosevelt.  I would like to think that they are merely mistaken.   But it is clear that they are serving the corporate masters of Big Money that they love the most. As for the Republicans, they have long ago betrayed their roots, and seem to be beyond all hope of reform.