The Big Picture

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• The Golden Dilemma
• 10 Tuesday PM Reads
• JPM’s Big Book of Interactive Fun!
• Gold to Real USD Chart
• 10 Tuesday AM Reads
• To Catch a Trader
• Interest Rates Are Manipulated

The Golden Dilemma Posted: 08 Jan 2014 02:00 AM PST

10 Tuesday PM Reads Posted: 07 Jan 2014 01:30 PM PST My afternoon train-reading: • US investment case remains compelling (FT) but see Will the bull market in U.S. stocks last? (Financial Post) • CNN Poll: Support for legal marijuana soaring (CNN) • 200 Years of American Financial Crises (Economix) but see Study Suggests Recovery in U.S. Is Relatively Vital (NY Times) • Goldman to JPMorgan Say Sell Emerging Markets After Slide (Bloomberg) • We No Longer Have a Pension Crisis (Sort of) (Motley Fool) • Enlarging the House of Representatives (Economix) • The Real Belfort Story Missing From ‘Wolf’ Movie (DealBook) • Another Phony Obamacare Victim Story (Prospect) see also The Myth of Health Care’s Free Market (Newsweek) see also Good news! Health spending as a share of the economy is shrinking. (Washington Post) • Chromebooks and the Cost of Complexity (stratēchery) • ’Highly significant’ heatwave smashes Australian records (Sydney Morning Herald) see also Australia Would Like to Shove Your Climate Change Denial Up Your Ignorant Arse (Rude Pundit) What are you reading?   U.S. Bank Stocks Regain Their Allure Source: WSJ

JPM’s Big Book of Interactive Fun! Posted: 07 Jan 2014 10:00 AM PST Source: JP Morgan     At the start of each quarter, my inbox is brightened with The Big Book of Charts – or as it is formally known, JP Morgan's interactive “Guide to the Markets.” You can download the full PDF here. It contains about 70 pages of equity, fixed income, economic and asset class charts that are delightful to look at, and thought-provoking as well.   Continues here

Gold to Real USD Chart Posted: 07 Jan 2014 09:00 AM PST Source: RT

10 Tuesday AM Reads Posted: 07 Jan 2014 07:30 AM PST My train delayed, man it’s cold outside morning reading: • Never Mind the Predictions: What Did We Learn? (NY Times) • Of brains and balls: Nassim Taleb's macro bets (Noahpinion), see also Nassim Taleb used to be my hero. But today, he's just plain wrong. (The Week) • Buybacks, Great Rotation, and Melt-Up (Dr. Ed's Blog)   Continues here

To Catch a Trader Posted: 07 Jan 2014 05:00 AM PST Tonight on Frontline: To Catch a Trader. FRONTLINE correspondent Martin Smith goes inside the government's ongoing, seven-year crackdown on insider trading, drawing on exclusively-obtained video of hedge fund titan Steven A. Cohen, incriminating FBI wiretaps of other traders, and interviews with both Wall Street and Justice Department insiders. click for video

Interest Rates Are Manipulated Posted: 07 Jan 2014 03:30 AM PST RBS Pays $600 Million for Manpulating Interest Rates … But Big Banks Are Manipulating EVERY Market to the Tune of Trillions of Dollars Bloomberg reports today: Royal Bank of Scotland Group Plc was ordered to pay $50 million by a federal judge in Connecticut over claims that it rigged the London interbank offered rate. RBS Securities Japan Ltd. in April pleaded guilty to wire fraudas part of a settlement of more than $600 million with U.S and U.K. regulators over Libor manipulation, according to court filings. U.S. District Judge Michael P. Shea in New Haventoday sentenced the Tokyo-based unit of RBS, Britain's biggest publicly owned lender, to pay the agreed-upon fine, according to a Justice Department Justice Department. Global investigations into banks' attempts to manipulate the benchmarks for profit have led to fines and settlements for lenders including RBS, Barclays Plc, UBS AG and Rabobank Groep. RBS was among six companies fined a record 1.7 billion euros ($2.3 billion) by the European Union last month for rigging interest rates linked to Libor. The combined fines for manipulating yen Libor and Euribor, the benchmark money-market rate for the euro, are the largest-ever EU cartel penalties. Global fines for rate-rigging have reached $6 billion since June 2012 as authorities around the world probe whether traders worked together to fix Libor, meant to reflect the interest rate at which banks lend to each other, to benefit their own trading positions. To put the Libor interest rate scandal in perspective: The big banks have conspired for years to rig interest rates … upon which $800 trillion in assets are pegged This was the largest insider trading scandal ever … and the largest financial scam in world history Local governments got ripped off bigtime by the Libor manipulation Even though RBS and a handful of other banks have been fined for interest rate manipulation, Libor is still being manipulated.  No wonder … the fines are pocket change – the cost of doing business – for the big banks Indeed, the experts say that big banks will keep manipulating markets unless and until their executives are thrown in jail for fraud. Why? Because the system is rigged to allow the big banks to commit continuous and massive fraud, and then to pay small fines as the "cost of doing business".  As Nobel prize winning economist Joseph Stiglitz noted years ago: "The system is set so that even if you're caught, the penalty is just a small number relative to what you walk home with. The fine is just a cost of doing business. It's like a parking fine. Sometimes you make a decision to park knowing that you might get a fine because going around the corner to the parking lot takes you too much time." Experts also say that we have to prosecute fraud or else the economy won't ever really stabilize. But the government is doing the exact opposite.  Indeed, the Justice Department has announced it will go easy on big banks, and always settles prosecutions for pennies on the dollar (a form of stealth bailout. It is also arguably one of the main causes of the double dip in housing.) Indeed, the government doesn't even force the banks to admit any guilt as part of their settlements. Because of this failure to prosecute, it's not just interest rates. As shown below, big banks have manipulated virtually every market – both in the financial sector and the real economy – and broken virtually every law on the books. And they will keep on doing so until the Department of Justice grows a pair. Currency Markets Are Rigged Currency markets are massively rigged. And see this and this. Derivatives Are Manipulated The big banks have long manipulated derivatives … a $1,200 Trillion Dollar market. Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way that interest rates are fixed: through gamed self-reporting. Oil Prices Are Manipulated Oil prices are manipulated as well. Gold and Silver Are Manipulated Gold and silver prices are "fixed" in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be. Bloomberg reports: It is the participating banks themselves that administer the gold and silver benchmarks. So are prices being manipulated? Let's take a look at the evidence. In his book "The Gold Cartel," commodity analyst Dimitri Speck combines minute-by-minute data from most of 1993 through 2012 to show how gold prices move on an average day (see attached charts). He finds that the spot price of gold tends to drop sharply around the London evening fixing (10 a.m. New York time). A similar, if less pronounced, drop in price occurs around the London morning fixing. The same daily declines can be seen in silver prices from 1998 through 2012. For both commodities there were, on average, no comparable price changes at any other time of the day. These patterns are consistent with manipulation in both markets. Energy Markets Are Manipulated The Federal Energy Regulatory Commission says that JP Morgan has massively manipulated energy markets in California and the Midwest, obtaining tens of millions of dollars in overpayments from grid operators between September 2010 and June 2011. Commodities Are Manipulated The big banks and government agencies have been conspiring to manipulate commodities prices for decades. The big banks are taking over important aspects of the physical economy, including uranium mining, petroleum products, aluminum, ownership and operation of airports, toll roads, ports, and electricity. And they are using these physical assets to massively manipulate commodities prices … scalping consumers of many billions of dollars each year. Everything Can Be Manipulated through High-Frequency Trading Traders with high-tech computers can manipulate stocks, bonds, options, currencies and commodities. And see this. Manipulating Numerous Markets In Myriad Ways The big banks and other giants manipulate numerous markets in myriad ways, for example: Engaging in mafia-style big-rigging fraud against local governments. See this, this and this Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here Charging "storage fees" to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this) Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car Cheating homeowners by gaming laws meant to protect people from unfair foreclosure Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this Engaging in unlawful "frontrunning" to manipulate markets. See this, this, this, this, this and this Engaging in unlawful "Wash Trades" to manipulate asset prices. See this, this and this Otherwise manipulating markets. And see this Participating in various Ponzi schemes Charging veterans unlawful mortgage fees Cooking their books (and see this) Bribing and bullying ratings agencies to inflate ratings on their risky investments The criminality and blatant manipulation will grow and spread and metastasize – taking over and killing off more and more of the economy – until Wall Street executives are finally thrown in jail. It's that simple …

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