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Dear CIGAs,
This system capable of manipulating markets has a program for commodity markets, specifically crude oil and gold.
It is strange the way things change. The COMEX and Chicago once accused me of manipulating the world’s gold markets in 1979, convening a meeting in which every chair of the board of directors was occupied. Today the Dark Side admits it has a tool to manipulate the world commodity and gold markets, upsetting international flows of capital and possibly causing bankruptcies, market panic and bubbles, but so far where are the subpoenas?
From the article:
"That was two days after Goldman told the government he had stolen its secret, rapid-fire, stock- and commodities-trading software in early June during his last week as a Goldman employee. Prosecutors say Aleynikov uploaded the program code to an unidentified Web site server in Germany."
Goldman Sachs Loses Grip on Its Doomsday Machine: Jonathan Weil
Commentary by Jonathan Weil
July 9 (Bloomberg) — Never let it be said that the Justice Department can’t move quickly when it gets a hot tip about an alleged crime at a Wall Street bank. It does help, though, if the party doing the complaining is the bank itself, and not merely an aggrieved customer.
Another plus is if the bank tells the feds the security of the U.S. financial markets is at stake. This brings us to the strange tale of Goldman Sachs Group Inc. And Sergey Aleynikov.
Aleynikov, 39, is the former Goldman computer programmer who was arrested on theft charges July 3 as he stepped off a flight at Liberty International Airport in Newark, New Jersey. That was two days after Goldman told the government he had stolen its secret, rapid-fire, stock- and commodities-trading software in early June during his last week as a Goldman employee. Prosecutors say Aleynikov uploaded the program code to an unidentified Web site server in Germany.
It wasn’t just Goldman that faced imminent harm if Aleynikov were to be released, Assistant U.S. Attorney Joseph Facciponti told a federal magistrate judge at his July 4 bail hearing in New York. The 34-year-old prosecutor also dropped this bombshell: “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”
How could somebody do this? The precise answer isn’t obvious — we’re talking about a black-box trading system here. And Facciponti didn’t elaborate. You don’t need a Goldman Sachs doomsday machine to manipulate markets, of course. A false rumor expertly planted using an ordinary telephone often will do just fine. In any event, the judge rejected Facciponti’s argument that Aleynikov posed a danger to the community, and ruled he could go free on $750,000 bail. He was released July 6.
Market Manipulation
All this leaves us to wonder: Did Goldman really tell the government its high-speed, high-volume, algorithmic-trading program can be used to manipulate markets in unfair ways, as Facciponti said? And shouldn’t Goldman’s bosses be worried this revelation may cause lots of people to start hypothesizing aloud about whether Goldman itself might misuse this program?
Jim Sinclair’s Commentary
MOPE at the highest level is suggesting that actions taken today to force OTC derivatives onto exchanges, making them listed derivatives, can solve the problem. Anyone who thinks this will solve even one cent of the outstanding problem is a believer of baseless fabrication that lacks merit.
The absolute majority of all outstanding derivatives which makes up the number in the article herewith posted cannot be listed because it is impossible to have a clearinghouse guarantee. The reason for this is a lack of standards. There is no way at all to value them outside of cartoon computer modeling which destroys the key element required for a clearinghouse guarantee.
This article is total MOPE BS where the high number of outstanding OTC derivatives are concerned. Only derivatives written in light of new regulations with standards can be listed.
I wish to hell I did not know all this.
Derivatives reform and the potential for a Sarbanes-Oxley effect
July 11, 12:02 PM
In Congressional testimony on Friday, Treasury Secretary Tim Geithner aired concerns that the Obama administration’s efforts to reform the nearly $600 trillion (with a “t”) over-the-counter derivatives market might spur European authorities to allow more permissive governance. This, in turn, could send traders to European markets, in an effort to evade restrictive US trading laws.
Jim Sinclair’s Commentary
The extreme danger in doing this is that you spend your political capital now on a recovery and GM restructured future.
Since the possibility of a recovery is remote, the Fed will have increasing pressure on it to go to infinity with QE.
This is the biggest gamble this administration has taken since sworn in.
President Urges Public Patience on Economy
By ADAM NAGOURNEY and CARL HULSE
Published: July 11, 2009
WASHINGTON — President Obama is stepping up efforts to maintain public support for his agenda as rising unemployment presents him with the biggest test of his political strength since taking office.
Faced with an economic downturn that has proved deeper than the White House initially projected, Mr. Obama asked Americans on Saturday to remain patient, arguing that his $787 billion stimulus plan had saved the economy from collapse and put it on a gradual course to recovery.
“As a result of the swift and aggressive action we took in the first few months of this year, we’ve been able to pull our financial system and our economy back from the brink,” he said, deflecting calls for a new round of stimulus spending and saying that his plan was intended to work not in a few months but over two years.
Facing an array of challenges on Capitol Hill and concern about the huge budget deficit, he cast his main legislative initiatives, starting with his call for overhauling the health care system, as part of a long-term plan to rebuild the economy on a sounder foundation.
Mr. Obama returns to Washington on Sunday from a weeklong trip abroad at a time when Democrats have grown increasingly jittery about the economy and the political risks of the president’s ambitious agenda on health care, energy and climate change, financial regulation and other issues.
Jim Sinclair’s Commentary
Surge this!
Another Insurgency Gains in Pakistan
By CARLOTTA GALL
Published: July 11, 2009
TURBAT, Pakistan — Three local political leaders were seized from a small legal office here in April, handcuffed, blindfolded and hustled into a waiting pickup truck in front of their lawyer and neighboring shopkeepers. Their bodies, riddled with bullets and badly decomposed in the scorching heat, were found in a date palm grove five days later.
Local residents are convinced that the killings were the work of the Pakistani intelligence agencies, and the deaths have provided a new spark for revolt across Baluchistan, a vast and restless province in Pakistan’s southwest where the government faces yet another insurgency.
Jim Sinclair’s Commentary
Let’s have a round of applause for OTC derivatives, doomsday trading programs operated by the Dark Side Empire, algorithms and blameless Wall Street. Well done you sociopath Fat Cats.
More Families Are Becoming Homeless
Largest Increases in 2008 Came in Rural and Suburban Areas, Study Finds
Louis Gill doesn’t like to turn anyone away. The director of the Bakersfield Homeless Center in California has taken to laying out cots and mattresses between the shelter’s 174 registered beds to cope with the rush of homeless families brought to his doors by the financial crisis.
"Last year, we saw a 34 percent increase in homeless families and a 24 percent increase in homeless children," he said. "Why do we go beyond capacity? Because in a just society, a child should not have to sleep outside or in a car."
Gill is a frontline witness to the change in the makeup of the country’s homeless. The stereotype of a homeless person as a single man no longer applies. A resident of the Bakersfield center is far more likely to be a young mother with a "good, solid job and a mortgage that she just couldn’t pay."
Jim Sinclair’s Commentary
What does China know that very few others and almost no one in the West knows.
Hyperinflation is a CURRENCY EVENT and when that currency is a RESERVE CURRENCY the implications are worldwide price increases no one will understand.
China June copper imports hit new record 475,999 T
Fri Jul 10, 2009 5:47am EDT
BEIJING, July 10 (Reuters) – China’s imports of unwrought copper and semi-finished copper products in June hit an all-time record for a fifth straight month of 475,999 tonnes, from May’s record 422,666 tonnes, data from the General Administration of Customs showed on Friday.
But imports of copper scrap fell to 280,000 tonnes in June versus 330,000 tonnes in May.
Imports of unwrought aluminium and semi-finished aluminium products rose to 353,218 tonnes in June versus May’s 331,740 tonnes.
China is the world’s top consumer of copper and aluminium, and the biggest producer of aluminium. (Reporting by Tom Miles; Editing by Chris Lewis)
Jim Sinclair’s Commentary
This is the tentacles of the cancer of OTC derivatives as they reach down into the real economy.
Each time a real economy business goes belly up out goes the employees. Each employee faces painful economic problems, cutting back on everything. The downward spiral pulls and pushes its way down and down.
Hotel foreclosures spread throughout California
Andrew S. Ross
Sunday, July 12, 2009
The "challenges" for San Francisco’s biggest business are coming thick and fast. That oft-used word at last Tuesday’s San Francisco Visitors & Convention Bureau luncheon rang loud and clear two days later when the Four Seasons Hotel on Market Street defaulted on a $90 million loan. Those who might have forgotten were reminded that Nob Hill’s famedStanford Court Hotel had gone into receivership two weeks earlier, owing $89 million after its new owners bought the place for $93 million two years ago and spent $32 million in renovations. But wait, there’s more. Says Joe D’Alessandro, the bureau’s CEO: "I would not be surprised to see at least a couple more go in the next few months."
There’s a wave of hotel defaults and foreclosures sweeping up and down California, say D’Alessandro and other industry experts. Currently, 32 hotels are in foreclosure and 174 in default statewide, according to a June 28 report by the Atlas Hospitality Group in Irvine ( www.atlashospitality.com). Listed among the more recent ones are aHawthorne Suites and a Residence Inn in Sacramento.
"The bright spot is that this is going to be the best buying opportunity since the Great Depression," said Alan Reay, the group’s founder.
Opportunity costs: That presumably is what Hong Kong’s Keck Seng Investments Ltd. saw when it agreed to buy the San Francisco W last week for $90 million. As The Chronicle’s James Temple pointed out, the price represents a 50 percent drop from peak values two years ago. The seller, Starwood Hotels & Resorts Worldwide Inc., which owns numerous hotels in the Bay Area, including the recently opened four-star Rosewood Sand Hill in Silicon Valley, said the sale is one of those the company "is pursuing to further reduce its debt levels."
Jim Sinclair’s Commentary
Timothy F. Geithner vowed that the administration would impose tougher regulations on the largely unregulated market for financial derivatives.
"He told lawmakers that the plan would require that all “standardized” instruments be traded on a regulated exchange or through a central clearinghouse. Participants would have to disclose more information about their transactions, and they would have to meet strict new capital requirements."
Unresolved Questions After Hearing With Geithner
By EDMUND L. ANDREWS
Published: July 10, 2009
WASHINGTON — The issues were arcane and technical, but the hearing drew an extraordinary turnout: 110 members of Congress, many of whom waited three hours to ask questions for five minutes.
All eyes were on Timothy F. Geithner, the Treasury secretary, who testified Friday about the Obama administration’s proposal to regulate the multitrillion-dollar market for financial derivatives, the hedging instruments that bankrupted the American International Group in September.
But after three hours, many of the hardest questions remained unanswered.
Mr. Geithner vowed that the administration would impose tougher regulations on the freewheeling market for derivatives like credit-default swaps, which insure investors from losses on bond defaults.
He told lawmakers that the plan would require that all “standardized” instruments be traded on a regulated exchange or through a central clearinghouse. Participants would have to disclose more information about their transactions, and they would have to meet strict new capital requirements.
Jim Sinclair’s Commentary
2002 is a while back, but recall my mention of the main gold buyers as Chung Phat and Dr. No?
Golden Yuan?
China’s increase in gold reserves has another more profound implication that most commentators haven’t realized. It’s clear to me that China has plans to replace the U.S. dollar as a reserve currency with an at least partially gold-backed yuan. I have to give Jim Sinclair credit, as he predicted the Chinese were moving to a gold-backed yuan in 2002 as part of their “long term plan of Economic Ascendancy.” He deduced that the Chinese government allowed the private ownership and sale of gold by their citizens in order to re-monetize gold. China has experienced the folly of paper money many times before and – as Mr. Sinclair puts it – “their memory is culturally infinite.” The Chinese are aware they must step in to facilitate the move back to hard money.
China is doing little to hide its intentions. Chinese officials have long complained about the excesses allowed by the dominance of the USD, and have recently called for the use of Special Drawing Rights to settle trades. In April, the Chinese completed currency swaps with many countries including Indonesia, Malaysia, South Korea and Argentina for use in bilateral trade, avoiding the USD. The BRIC countries (Brazil, Russia, India, and China) just discussed a “supranational” currency to reduce dependence on the U.S. dollar at a summit in June, and American officials were not permitted to attend.
However, to have a true reserve currency, China would need to allow full convertibility. The Chinese government would need to loosen the trading band which manages the yuan-U.S. dollar exchange rate. The yuan has gained more than 6% since the dollar peg was eliminated in July 2005, but the currency is sure to rise sharply if permitted as it’s clearly undervalued.
