Lessons in
Dishonesty - from U.S. Government Agencies and the Banking System
By Victor
Sperandeo with the Curmudgeon
Introduction
(Curmudgeon):
The United States scored 71 points out of 100 on Transparency
Internationals 2018 Corruption Perceptions Index. That number ties the
all-time low set in 2010. The Corruption
Perceptions Index ranks countries and territories based on how corrupt their
public sector is perceived to be. A country or territorys score indicates the
perceived level of public sector corruption on a scale of 0 (highly corrupt) to
100 (very clean).
However, many people (including these two authors) believe
that U.S. corruption is much worse than reported, due to so many secret deals
and tactics that get exposed almost daily (most recently concerning the
FBI). As the U.S. is still the worlds
#1 economy, measured by nominal gross domestic product, massive corruption here
has a global economic and political impact.
Lets look at an example of stock market corruption weve
written about several times before - HFT and front running orders:
Wall Street banks and high frequency traders (HFT) at hedge
funds are buying high speed access to trading data from the New York Stock
Exchange (NYSE) at a cost of tens of thousands of dollars a month. The NYSE is
allowing these firms to co-locate, i.e., to locate their computers next to
those of the inter-connected computers at the stock exchange. That results in a
much lower delay (aka latency) when placing HFT orders. The Exchange is also
selling a faster data feed to these high frequency traders.
Combined, these practices effectively enable high frequency
traders to manipulate stock prices and front-run orders from the public. That is, their ultra-fast computers detect
incoming large buy/sell orders and they put in their orders ahead of those to
scalp quick profits.
Reference: Assessment and Perspective of
High Frequency Trading (HFT) by
Victor Sperandeo with the Curmudgeon
Victor expands on this broad topic in his essay below.
.
.
U.S. Corruption is off
the Charts (Victor):
For a person that reads the national (and international) news
avidly, what stands out to me is the grandiose
corruption by those in the highest political offices, and those who hold
the greatest influence in power. For
example, the FBI, DOJ, CIA, and State Department all participated, to varying
degrees in a fabricated scheme to frame the latest Presidential candidate, and
current President of the U.S., for Collusion (Conspiracy), and Obstruction of
Justice aka the Mueller Probe.
The former President of the NY Federal Reserve Bank and
constant voting member (the second most powerful FOMC member) from 2009-2018
and former Goldman Sachs chief economist wrote an editorial published by
Bloomberg News on July 30, 2019 which is truly shocking. Heres the beginning of an article by Kristinn Taylor in The
Gateway Pundit which references that editorial
Former New York Fed President Bill Dudley on Tuesday called
on the Federal Reserve to manipulate the economy to stymie President Trumps
reelection. Dudley made the plea in an op-ed
published by Bloomberg News. Dudley argued that Trumps effort to reset
trade with China is hurting the economy and that the Fed should enact policies
that hinder Trump and hurt his reelection chances.
The article contains an excerpt from Dudleys op-ed published
by Bloomberg News:
U.S. President Donald Trumps trade war with
China keeps undermining the confidence of businesses and consumers, worsening
the economic outlook. This manufactured disaster-in-the-making presents the
Federal Reserve with a dilemma: Should it mitigate the damage by providing
offsetting stimulus, or refuse to play along?
I understand and
support Fed officials desire to remain apolitical. But Trumps ongoing attacks
on Powell and on the institution have made that untenable. Central bank
officials face a choice: enable the Trump administration to continue down a
disastrous path of trade war escalation, or send a clear signal that if the
administration does so, the president, not the Fed, will bear the risks
including the risk of losing the next election.
Theres even an argument
that the election itself falls within the Feds purview. After all, Trumps
reelection arguably presents a threat to the U.S. and global economy, to the
Feds independence and its ability to achieve its employment and inflation
objectives. If the goal of monetary policy is to achieve the best long-term
economic outcome, then Fed officials
should consider how their decisions will affect the political outcome in 2020.
[1]
Curmudgeon Note 1. Yet the Fed is
supposed to be independent of political parties and politics? Is this a new Fed
mandate- to conduct monetary policy based on political outcome?
.
So, the most prestigious institutions along with U.S.
government are all doing the most egregious things that never have been known
to be done before- both illegal, corrupt seditious and treasonous. The mainstream
media press has been very subdued in reporting on any of this skullduggery.
Also, the U.S. government has not prosecuted any of its own
yet. The FBI under Chris Wray is stonewalling any and all requests for
documents, as if x-FBI Director Jim Comey was still in charge?
Moreover, JP Morgan
Chase, the biggest bank in the U.S. and by many measures the largest bank
in the world ($2.5 trillion in assets) has just been indicted for precious metals manipulation. U.S. prosecutors have
charged a group of bigwigs at JPMorgans precious metals desk with conspiracy
to conduct the affairs of an enterprise involved in interstate or foreign
commerce through a pattern of- racketeering- activity.
The traders allegedly manipulated prices of metals like gold,
silver, platinum, and palladium from 20082016 using a technique called spoofing. Whats spoofing? Its when
traders make (show/expose) buy and sell orders for precious metals futures
contracts with zero intention of actually executing
the bogus orders...but with every intention of influencing prices in their
favor.
A headline you dont see every day:
JP Morgans Metals Desk Was a Criminal
Enterprise, U.S. Says, by Tom Schoenberg and David Voreacos September 16, 2019, 11:25 AM CDT Updated on
September 16, 2019, 12:47 PM CDT.
U.S. invokes racketeering law in charging three metals
traders. RICO [2] statute is rarely (If not uniquely) used in cases involving
big banks
Curmudgeon Note 2. Racketeer Influenced and Corrupt Organizations Act (RICO) is a
United States federal law that provides for extended criminal penalties and a
civil cause of action for acts performed as part of an ongoing criminal
organization. RICO is a criminal
violation, which is much more than the usual fines banks get, which their
shareholders ultimately pay for.
Based on the fact that it was conduct that was widespread on
the desk, it was engaged in in thousands of episodes over an eight-year period
-- that it is precisely the kind of conduct that the RICO statute is meant to
punish, Assistant Attorney General Brian Benczkowski
told journalists.
..
All this chicanery despite the fact that
JPMorgan has one of the largest long positions in Silver ever accumulated of
more than 153,353,926 million oz. worth $2.7 billion dollars (almost 31,000
futures contracts worth).
The bottom line suggests that the mega bank was shorting
silver futures to knock down the price to buy the physical spot silver.
Reference: Who Owns the Most Silver Bullion Today?
Notwithstanding DoJ's success here,
private actions brought in the civil courts are more likely to hold crooked
bankers fully accountable than the regulators who have been tasked with that
job. The CFTC (Commodity Futures
Trading Commission) has yet to take responsibility for JP Morgans silver price
fixing actions. As thats a complete and
utter failure, it is safe to assume that the agency remains beholden by Wall
Street.
This is a common disease as the U.S. regulators are, in
general, owned by those they regulate -see the Pharmaceutical industry and the
FDA for example. Thats an inherent conflict of interest!
It is telling that CFTC investigators spent five years
investigating silver market manipulation, four of them during the time that Mr.
Edmonds and his accomplices were operating with impunity at JPMorgan Chase. Yet
that investigation was closed without a single banker ever being charged with
wrongdoing! That was to the dismay of
silver and gold market whistle-blowers everywhere.
->Gold and silver investors are being swindled
and the so-called press is silent. The so-called free press sells influence not
the news these days.
I think you get the picture.
No matter where you look within government and powerful institutions you
can see corruption and no one seems to care or is
embarrassed anymore.
The DOJ and FBI are so corrupt it makes the mafia look like
the epitome of integrity? The great economist Allen Meltzer (Professor of Political Economy Carnegie Mellon, who
died two years ago at age 89, strongly stated the only two rules in the political
economy that are universal and always apply:
1.
No nation ever became rich
without the rule of law;
2.
No nation that was rich, ever
remained rich, without the rule of law.
America is in decline. You can see it daily -just look around
you. The reason is that those in power
do not want to risk losing their power.
Thereby, these leaders care more about getting around the U.S.
Constitution, and the statues that are in sync with it (in order to retain and
get power and money), than be concerned with the rule of law.
Not only money is being lost by favoritism, but the cost of
liberty and freedom are part of the package deal and are being lost every day.
Closing Quotes:
As Russian dissident Aleksandr
Solzhenitzen learned the hard way: We didnt
love freedom enough to fight.
And from courageous author Salman Rushdie: Two things form the bedrock of any open society
freedom of expression(speech) and rule of law. If you dont have those things,
you dont have a free country."
..
Good luck and till next time
The Curmudgeon
ajwdct@gmail.com
Follow
the Curmudgeon on Twitter @ajwdct247
Curmudgeon is a retired investment professional. He has
been involved in financial markets since 1968 (yes, he cut his teeth on the
1968-1974 bear market), became an SEC Registered Investment Advisor in 1995,
and received the Chartered Financial Analyst designation from AIMR (now CFA
Institute) in 1996. He managed hedged equity and alternative (non-correlated)
investment accounts for clients from 1992-2005.
Victor
Sperandeo is a historian, economist and financial innovator who
has re-invented himself and the companies he's owned (since 1971) to profit in
the ever changing and arcane world of markets, economies and government
policies. Victor started his Wall Street
career in 1966 and began trading for a living in 1968. As President and CEO of
Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and
development platform, which is used to create innovative solutions for
different futures markets, risk parameters and other factors.
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