Are The Markets Rigged?

The Dow Jones Industrial Average was up an astonishing 254.71 points
on Monday. Wow! Is this the market recognizing that The Fed's locking in
free money with zero interest loans for the next two years means easy -read
free- money for capital strapped banks? Could it be that the Market was
reacting to the incredibly bad Dallas Fed report. Or the bad Richmond Fed
report or the really bad Philadelphia Fed report? Did this huge run up on
the DJIA run up on the bad news from Europe and their banking issues?
Apparently not. Dark clouds are forming over our financial world, looking
like a prequel to the crisis of 2008, of the numbers are backing this up,
yet the market went up. Stunning.

Well if you think this is the time to get into the stock market, I would suggest
that you think again before getting chopped up by the Wall Street hucksters.

The market could go up more this week, but beware, the holiday weekend
looms with the Employment Situation Summary scheduled for release on
Friday, September 2, 2011.

Is September 7th, 2011 the Beginning TEOTWAWKI?

TEOTWAWKI - The End Of The World As We Know It.

If you haven't been paying attention to the frothing churn of the Euro banks
outrageous dancing around the financial armageddon abyss of Greece, Italy
and most recently France's  Bank Societe Generale, you should be.

On Septemeber 7th, 2011, German courts are going to rule if it is legal for
Germany to loan 440 billion Euros to the EFSF Rescue Fund. The issue is,
if this proposed German loan breaks Treaty law or will undermine German
fiscal sovereignty.  Either way, this will set off torches and pitchforks across
Germany and then the rest of Europe.

The German populace, already seriously angry about bailouts to Greece and
Ireland and want nothing to do with loaning anymore Euros to, well anymore
Euros.

German politicians are denouncing any more German participation in the
EFSF and there are rumblings about Germany returning to the Deutsche
Mark, essentially destroying the Euro as a currency.

You can read Ambrose Evans-Pritchard's assessment here in today's Telegraph.

What does this mean to you and why should you care about European issues?
Well, if  European banks fail, and I believe they will, this will become a world
banking contagion.  Yep, Something Wicked this Way Comes to the shores
of North America in a digital  nanosecond and "POOF" there go the unstable
and illegally insolvent, To Big To Fail  American banks like Bank of America,
Wells Fargo, Citibank and JP Morgan Chase.

This is real, live as it happens news going on right now, today.

This is bigger than hurricane Irene and no doubt about it, reeking much more damage to
everyone in the world.

Are you prepared? Do you have a banking tsunami kit for you and your family?

You should. If you don't, you should consider putting one together ASAP!

So will TEOTWAWKI jump up and bite us in nine days?!?

Maybe it will, maybe it won't, but it will be soon.

The banks, The Fed and Mr. Bernanke might be able to slow ride this crisis through September
and into October. Timing is very difficult to spot.

Remember, it is Not a matter of  if, it IS a matter of when.

Iran Lobs Scuds At Kuwait....From Iraq

Sounds confusing?  Nope. Just politics as usual in the Middle East.

Three scud missiles were launched from Iraq at Kuwait early Friday morning August 26th, 2011.
They were launched by the Iran-backed Ketaeb Hizballah of Iraq, a terrorist group.
See report here from the DEBKAFile.
1st use of scud by any terrorist group, excluding Iraq, when they launched them against Israel.
Aren't we, USA, controlling Iraq?  Oooooppppps!

So a terrorist group has control of a bunch of Scud missiles and the US military can't do anything about it?

Please, someone remind me again, why we are there and didn't we "win" the war on Terror?

One more lie from our CONgress and the Teleprompter President.

Bernanke Speaks and says.....

Not much.

He did try to blame Congress for their lack of insight and political games, but that doesn't fly when looking at the debt crisis debate. It is laughable that Bernanke is chastising Congress for their lack of transparency when the Fed has done everything they can to avoid having their books examined by Ron Paul. No mention of QE III but, if you look at the M1 and M2 tables for the 2nd quarter you will see a huge amount of money being infused into the economy. So regardless of Mr. Bernanke's comments today at Jackson Hole, Wy. he is using other tools to prop up the economy. The FED Link here or see chart below.

What does it mean?  Heavy inflation heading your way. It means that The Fed is increasing the money supply and trying to increase liquidity to the markets or a under the radar QE III, just like the mysterious 1.2 trillion The Fed lent to various favorite banks in the US and europe. SUPRISE!  Screwed again!  No one asked you. You couldn't vote on this, they - The Fed and your elected officials are trying to add a little more juice to the system to keep a dead hors going. So the reaction on Wall Street to Mr. Berneke's comments were kinda... Oh Hum, he has got our backs?!?! Markets up, DOW up 130 plus point and the TV shills were all happy, but distracted by Hurricane Irene threatening to wash out Congress and then move on to NYC and scrub down the Wall, Street as well as COney Island, battery park and quite a bit of lower Manhattan and Brooklyn.

Hurricane Irene should be good for the markets, lots of things bought and sold, all of that damage to be fixed. Bad for insurers, but lots of jobs to fix the damage. A first a earthquake and smaller damage and now a hurricane QE for the East coast! Thank you Mother Nature!

Should be interesting to see what Monday brings. WIll Wall Street still be there? Will the markets be open if Manhattan is flooded? The subway closed and major damage?  Or is Irene all bluster and potential or another miss?  Better to be prepared and not need to be rather than not and get hammered.

Wall Street Holds Its Breath

What will Ben do?

What will Ben do?

That is what Wall Street is worried about at the moment. It wasn't enough for Ben to tell the markets easy money will be here for the next two years with unchanging interest rates. They want more!  And they want it from you! And they will get it. As an aside.. To Big To Fail continues with Bank of America today giving Warren Buffett special investor Warrants and Perferred Stock for infusing 5 billion into BAC, who has said repeatedly that they don't need to raise capital.

Well who would believe it?

A bank caught repeatedly lying about their accounting!?!?    

Quelle horreur!

Well if that didn't shock you, dig deeper.  Why do you think Mr. Buffett jumped in the morass of BAC today? Is it a good value? To calm the markets? Or do you really believe that he came up with the idea in the bath!?! I need to take more baths! However, I would suspect that Mr. Buffett knows, and more than likely made a deal, that if BAC fails, his investment will be bailed out by The FED and dumped on Freddie and Fannie Mae. All WIN WIN for Mr. Buffett and another big loser for the American taxpayer. While the assets are sold to J.P. Morgan on 10 cents on the dollar. Cynical? Yes I am. The criminality is so blatant that it is mind boggling.

The markets are in fluxxx. Yep. A triple XXX  wild ride. Gold got hammered in a criminal shorting by the Comex and JP Morgan. Seems that the Comex leaked their intention to raise margins on Gold. Surprised!?! Angry!?! YOu shouldn't be, we all knew that options expiry was coming today and knew the criminal banks would knock out paying as many future contracts as they could. And they did. However, did you notice that Silver kicked back up over $ 40.00 to $ 41.12?  US $ 40.00 looks like a solid bottom for Silver at the moment. Gold also jumped up over $ 20.00 to US $ 1,771.30
  
I noticed that many pundits on CNBS were gloating at Golds drop and belittling metals in general.  Don't believe it. Gold & silver are a store of wealth and is insurance against a dropping fiat US Dollar. There is no stopping the US government from avoiding cutting spending and there are no good jobs coming to the USA.  So, the dollar will continue dropping. Simple as that.

Remember it's all about jobs!

What will Ben do?

We will find out tomorrow.

Don't be surprised if it is all cooked in already, Wall Street is ready to party and the market is up 200 plus points on friday!

Gold Margin Calls This Week?

Gold has literally gone straight up $ 400.00 since June, 2011, which is a 20% plus rise in less than 2 months. You can see the Kitco chart below.

This leads me to think that there will be a bear raid this week before market expiry on thursday. The  shorts are getting blasted and are taking huge losses. I would think the CME will add to this attack with a hammering of margin raises on Gold to shake out the weaker players. If nothing else, gold taking a breather lets the market settle and short term players will take profits. Gold will back fill its recent rise, all leading to a healthier and less extreme ride in Gold.

Futures are up big overnight. Asia is all green and Europe is continuing the trend for the day.

What will happen in the Financials for the rest of the week?  Bank of America is looking wobbly after
all of the bad news out of the Euro banks last week. And Bloomberg reports that the Fed has propped up Citibank.......

Citigroup was in debt to the Fed on seven out of every 10 days from August 2007 through April 2010, the most frequent U.S. borrower among the 100 biggest publicly traded firms by pre- crisis market valuation. On average, the bank had a daily balance at the Fed of almost $20 billion.


It seems that every day we get new reports that all of our major banks are insolvent. If this story continues, all bets are off on gold and gold heads to the moon!

Could Bullion Banks Go Bust?

Could Mr. Chavez's repatriation of Venezuela's physical gold take out the worlds bullion banks?
Could the fiat currencies become unwound and exposed for the worthless paper that they are?
All because of a small request of gold to be returned to Venezuela? From the seemingly smallest of acts, the tyranny of fiat could be exposed?!? Could happen. Grant Williams of "Things That Make You Go Hmmm" nicely explains how Venezuela's  request for it's own gold is shaking up bullion markets.

Metal Manipulation Next Week?

Zero Hedge is reporting that Interactive Brokers are warning of a Margin hike from the CME.
This worked on rising Silver a few weeks ago and the market manipulators are going to try it on Gold.
Problem is that this just gets the weak hands and the newbies out and sets up the metals for a huge run.
John Embry writing in Investors Daily Of Canada explains how this will happen. IF the CME does increase margins on Gold, expect prices to cool off for awhile.

Interactive Brokers Warns Gold Margin Hike Imminent, CME Next?
Submitted by Tyler Durden on 08/19/2011 - 13:58NYMEX

The first shot was just fired in today's battle with daily record gold prices. IB always tends to be a few minutes ahead of the CME. And following last week's 22% margin hike in gold, we are confident the CME will do everything in its power to pull a "silver" on gold. Are we about to experience a barrage of margin hikes in gold? Stay tuned and find out.

Is SEC Covering Up Wall Street Crimes?

Is Rolling Stone magazine the only American media outlet who seeks the truth in America today?!?  Apparently. Where is the NY Times, Washington Post or the Wall Street Journal? Too fearful of having their advertising cut by digging to deep? These former bastions of truth, justice and the American way have become stringers, hoping for a bone. Is the SEC
covering up financial crimes on Wall Street?  Hell yes, along with the American government and the above mentioned papers. Something I have been saying for a long time.  They knew about Madoff in 2000 and did nothing, they knew about Lehman Brothers and ignored the evidence. Finally an attorney for the SEC blew the whistle on their criminal behavior. These major financial crimes have been ignored by the SEC  for the last 12 years America. Matt Taibbi at Rolling Stone magazine breaks the story here....


Is SEC Covering Up Wall Street Crimes?

A whistleblower claims that over the past two decades, the
agency has destroyed records of thousands of investigations,
whitewashing the files of some of the nation's worst financial
criminals.



By

 MATT TAIBBI

AUGUST 17, 2011 8:00 AM ET

Pete Gardner/Getty

Imagine a world in which a man who   is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records – "including case files relating to preliminary investigations" – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term "Orwellian," devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or "Matters Under Inquiry" – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission's internal website. "After you have closed a MUI that has not become an investigation," the site advised staffers, "you should dispose of any documents obtained in connection with the MUI."

Many of the destroyed files involved companies and individuals who would later play prominent roles in the economic meltdown of 2008. Two MUIs involving con artist Bernie Madoff vanished. So did a 2002 inquiry into financial fraud at Lehman Brothers, as well as a 2005 case of insider trading at the same soon-to-be-bankrupt bank. A 2009 preliminary investigation of insider trading by Goldman Sachs was deleted, along with records for at least three cases involving the infamous hedge fund SAC Capital.

The widespread destruction of records was brought to the attention of Congress in July, when an SEC attorney named Darcy Flynn decided to blow the whistle. According to Flynn, who was responsible for helping to manage the commission's records, the SEC has been destroying records of preliminary investigations since at least 1993. After he alerted NARA to the problem, Flynn reports, senior staff at the SEC scrambled to hide the commission's improprieties.

As a federally protected whistle-blower, Flynn is not permitted to speak to the press. But in evidence he presented to the SEC's inspector general and three congressional committees earlier this summer, the 13-year veteran of the agency paints a startling picture of a federal police force that has effectively been conquered by the financial criminals it is charged with investigating. In at least one case, according to Flynn, investigators at the SEC found their desire to investigate an influential bank thwarted by senior officials in the enforcement division – whose director turned around and accepted a lucrative job from the very same bank they had been prevented from investigating. In another case, the agency farmed out its inquiry to a private law firm – one hired by the company under investigation. The outside firm, unsurprisingly, concluded that no further investigation of its client was necessary. To complete the bureaucratic laundering process, Flynn says, the SEC dropped the case and destroyed the files.

Much has been made in recent months of the government's glaring failure to police Wall Street; to date, federal and state prosecutors have yet to put a single senior Wall Street executive behind bars for any of the many well-documented crimes related to the financial crisis. Indeed, Flynn's accusations dovetail with a recent series of damaging critiques of the SEC made by reporters, watchdog groups and members of Congress, all of which seem to indicate that top federal regulators spend more time lunching, schmoozing and job-interviewing with Wall Street crooks than they do catching them. As one former SEC staffer describes it, the agency is now filled with so many Wall Street hotshots from oft-investigated banks that it has been "infected with the Goldman mindset from within."

The destruction of records by the SEC, as outlined by Flynn, is something far more than an administrative accident or bureaucratic fuck-up. It's a symptom of the agency's terminal brain damage. Somewhere along the line, those at the SEC responsible for policing America's banks fell and hit their head on a big pile of Wall Street's money – a blow from which the agency has never recovered. "From what I've seen, it looks as if the SEC might have sanctioned some level of case-related document destruction," says Sen. Chuck Grassley, the ranking Republican on the Senate Judiciary Committee, whose staff has interviewed Flynn. "It doesn't make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what time frame and to what extent its actions were consistent with the law."

To see the entire article click here: 

Rolling Stone Magazine

Venezuela Demands Gold From Bank of England

Well, this should shake up the paper gold market. GLD has it's gold stored in the vaults of the Bank of England. But the real problem here lies under the headlines. Most of the Gold in the vaults of the Bank of England and many other vault banks is often pledged (leased) out to paper markets about 100 times. Can't let good gold sit around, gotta keep it working, which is great for the banks until the clients demand it returned. Oooops!, the physical gold is long gone. This should also shake up JP Morgan who is one of the 5 vault banks in operation. Today, JP Morgan showed only 338,303 ounces of physical gold in storage, or 10.6 tons of gold. I wonder how much Venezuelan gold in in their vaults? This, I would bet, is causing a lot of hand wringing at JP Morgan tonight. In the US, the CME has been having a hard time getting ahold of physical gold and Silver for awhile and Venezuela's demand for their physical gold returned to them will cause more pressure on the metal markets to deliver physical to their clients. Why is this important? Because with Venezuela pulling 99 tons of gold off the market, The B of England will have to unwind 9900 tons of paper gold!!! Should be interesting to see how this effects the gold market.

Venezuela to Repatriate Up to $11 Billion Gold Reserves From U.S., Europe

By Daniel Cancel and Corina Rodriguez Pons - Aug 17, 2011 2:05 PM PT

Venezuelan President Hugo Chavez said he will move forward with a proposal to repatriate as much as $11 billion of gold reserves held in the U.S. and Europe as part of a plan to shift assets away from American institutions.

Venezuela will transfer 99 tons of gold from the Bank of England to the South American country’s central bank, Chavez said today on state television. Venezuela also has gold at JPMorgan Chase & Co., Barclays Plc, Standard Chartered Plc and the Bank of Nova Scotia, he said.

“It’s a healthy decision to bring the gold back to Venezuela,” Chavez said.

Chavez, who has said he wants to eliminate the “dictatorship” of the U.S. dollar, has called on Venezuela’s central bank to diversify its $28.7 billion in reserves away from U.S. institutions. Cash reserves will be shifted into currencies from emerging markets including China, Russia, Brazil and India, Central bank President Nelson Merentes said today at a press conference.

To contact the reporters on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net; Corina Pons in Caracas at crpons@bloomberg.net

To contact the editor responsible for this story: Bill Faries at wfaries@bloomberg.net

Bill Black On The Keiser Report

CNN, Fox News, CBS, NBC, ABC Manipulate Your World

If you ever thought you were getting straight up news reporting from American News outlets, think again. News bias holding up the only approved Democrat or Republican candidates is clearly and succinctly blown up by John Stewart on the Daily Show. It is so obvious, it is amazing!  This is what they do to you everyday America!  They manipulate your perspective and only give you THEIR choices. Look beyond our shores for what is really happening in America and the rest of the world without a neocon spin-wash.  Try All Africa, Al Jezera,   Asian Times,  China Daily,  Russia Today, they will offer a different view point than what we are force fed in the American media.

Daily Show Outs Media Bias Against Ron Paul

The Daily Show - Indecision 2012 - Corn Polled Edition - Ron Paul & the Top Tier
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Who Is Going To Buy US Bonds?

The US Dollar took a tumble on Monday and continues overnight.We can only assume that the Fed will buy these treasuries. There are almost no buyers of US securities on Monday.

NEW York Aug 15 (Reuters) - The U.S. Dollar fell to a session low against the euro on Monday after data showed foreigners were new sellers of all U.S. assets in June for a second straight month.
Overseas investors also bought the fewest long-term securities in more that two years, data from the U.S.
Treasury Department showed.

Paul Krugman: Fake Alien Invasion Would End Economic Slump

Fake Aliens Save World Economy

Wow! This the kind of ideas coming from Economic Nobel Prize winner Paul Krugman. More inane ideas to push us further into debt. What color is the sky in your world Mr. Krugman? Yes, we need more, quality, high paying jobs for Americans. But starting a war, fake or not is just plain idiotic.

Dog Days Of Summer

Not this year.  Metals did not take the summer off. Gold is on a tear topping US $ 1,800.00 before falling back to the mid US $ 1,750.00's. European banks in the PIIGS states and France are teetering on the brink of the abyss. Where do we go now?  Seems the world is spinning in more and more  chaos. Reports out of Japan claim that Japan is burning their radioactive waste from Fukushima. This is
creating a  radioactive rain out that is not only coming down in Japan, but in Hawaii, British Columbia, Washington, Oregon and California. What the hell are they thinking?

Look to Europe to for market direction this week.  Will French bank SocGen survive the week as everyone is questioning their viability while leveraged at 50x to 1. This is much more leverage than Lehman Brothers had when they blew up! The ECB will quietly demand that they raise capital, SocGen has no choice and when the market hears they are trying to raise cash, which would mean they are admitting they are under- capitalized, this will drive their stock price down. It becomes a downward spiraling effect where no one wants to be the last man with SocGen's stock in their portfolio.   If this happens, SocGen will pull down the rest of Europes banks like a house of cards.

Rick Perry - New Neocon - Gettin' Right With God

From: Azizonomics: 

Rick Perry: Heir to Bush & Cheney

August 13, 2011

azizonomics Current Affairs military industrial complex, neocon, rick perry, tea party, teabagging Leave a comment

So a slick, folksy Governor of Texas just parachuted into the Republican Presidential race. Remind you of anyone? Hair coiffed, teleprompter set to patronisingly moralistic, Rick Perry — who previously promised America he would not run for President — has decided that the country needs yet more faith-based initiatives, public prayer and foreign excursions. In his own words:

More......

If The Market Crashes, Who Cares?

This is from Zero Hedge and makes an interesting point......

Submitted by Tyler Durden on 08/13/2011 17:22 -0400

Submitted by Charles Hugh Smith from Of Two Minds

If the Market Crashes, Who Owns Enough Stock to Even Care? 

Since 81% of all stocks are owned by the top 10%, a stock market crash has little effect on the bottom 90% of Americans.

It is assumed without question that the stock market is some quasi-sacrosanct barometer of the U.S. economy. But who even cares if the market crashes? Only the top 10% who own it. Yes, millions of (generally government) workers have an indirect stake in stocks and bonds via their state/union pension funds, but it's still informative to look at the distribution of who actually has a stake in the market's rise and fall.

This data is from pre-recession 2007, so I suspect ownership has become even more skewed to the top 5% as those below liquidated stocks to pay the bills as household income and housing equity plummeted.

More......

Hire The Right Monkey For The Job - Congress Are You Listening?

Trunk Monkeys Don't Do Probes

To QE III Or Not To QE III, That Is The Question?

After a roiling roller coaster week of financial turmoil, we end the

week just about where we started in all of the major indices. Gold staged

quite a run, reaching $ 1,800.00 and ounce before receding on profit taking

and weak hands jumping out of the market as the CME raised margins on

gold. 

What happened this week?  Why was there so much turmoil in the

financial markets? Well you can start with the banking problems in Europe.

Italy's banks, especially UniCredit, are teetering on the brink of Failure.

This is the same story in Spain. When you add the technical default by 

Greece, Irelands and Portugal's woes you have a shaky Euroland. 

American banks are interconnected with their European cousins and will fall
if Europe falls. So it is very shaky out there. Beyond this, my perspective is
that the market is broken. It is teetering on the brink of failure and the
financial markets reflect this fact. There is so much fraud and thievery in the
markets from manipulation of front running computer trading algorithms to
naked shorting in the gold and silver markets, to banks not marking their
assets to market that the average investor has no chance to beat the big
boys pulling the strings and is going to get fleeced. If you don't have inside
information, you are always going to get beaten. There aren't a lot of easy
profits in a calm market, but in a volatile market a lot of money can be
made,and I think we saw some of that used in a panic ploy this week. For
the markets to reverse turning negative to positive as they did so quickly
also speaks of government involvement to prop up the markets. The mantra
is never waste a good crisis!  This may also be read as the beginning
of QE III. 

Late Tuesday the Fed announced that they were going to hold interest rates
at zero for the next two years. This was seen by Wall Street as the Fed
backstopping the markets, offering cheap, easy money for the big banks and
speculators to keep pumping out free profits and big bonuses. This is the Fed
sweeping our broken financial system under the rug. And the market responded
because the Fed,  holding interest rates low means that the stock market will
be a better bet than the bond market, because bonds will return less money in
a low interest environment. Many analyst's have noted that the Feds statement
on Tuesday suggests that it might  take further steps to stimulate the economy
in the future. Or, hint, hint..... QE III.

So here we are pre-depression, muddling in a recession. Yes, we are in a recession, regardless of what the MSM tells you, there is NO Recovery, America is struggling. How do you know we are in a recession?  22% unemployment, if you use the governments methodology from U6 Unemployment calculations and the SGS Alternative Unemployment Rate that were phased out in the Clinton years. This gives a much better picture of employment in this country. Doesn't look good to show the underemployed or discouraged unemployed, who disappear off the books after a year of looking for a job. The government drops these numbers from its official estimate and thus can offer a better looking unemployment number around 10%. How about 46 million American now receiving food stamps? An unbelievable number of Americans -1 in six - are receiving government food stamps. Cities and states are facing extreme budget shortfalls and bankruptcy. One only has to look to Central Falls, Rhode Island or to California. Central Falls is facing bankruptcy amid manufacturing job losses and raising costs of government. They are facing a 50% reduction in pensions paid to city workers, firemen and police, and are considering consolidations with the neighboring city of Pawtucket or Cumberland. California, 3000 miles from Rhode Island, but with bigger problems, built a state budget hoping for an economic recovery and a  4 billion dollar fantasy wind fall to fill their budget gap, is seeing their pie in the sky projections failing as July 2011 tax revenues missed expectations by $ 538 billion.That is 12.5% of the total money they were betting on to fill the budget gap and this comes only 2 months after reaching a budget for the new fiscal year!!! 10 more months to go in their fiscal year. This really looks bad California.

Which brings us back to QE III. I believe QE III is coming because of the causes I mentioned above and the total lack of leadership from our President and Congress. One only has to look back to last weeks theatrical "Debt Ceiling" shenanigans to see what Washington can accomplish and the American publics total loss of faith in them.

The Fed doesn't have much else to work with, so by leaving interest rates low, they are signaling to the stock market that they will inflate as much as they can to bring about a change in the economy. QE III is coming because the Fed will throw mountains of cash at banks and Wall Street hoping that that cash will stimulate the economy. It won't work, but it will cause incredible inflation, especially in food and energy costs. Why do they keep going to the well when it doesn't work? A short history of recent Fed stimulus. They started with the original TARP give a-ways, and giving money to AIG, the Auto Industry, $ 540 Billion to backstop money market funds in '08, Obama's Stimulus of $ 787 billion stimulus in Jan. '09, QE Lite in August of '10 and QE II in November of 2010. None of this stimulus has helped get the economy going again. Why doesn't this work? Simple. It hasn't created new industry and new jobs. Banks have a lot of capital but are afraid to loan this capital to small businesses. That is why a lot of people in the banking industry and on Wall Street are calling for QE III. They will make gobs of money and get great bonuses from QE III, but most of us won't. 

Many people believe, myself included, that QE in any form doesn't work and is a well documented failure, however, that won't stop Mr. Bernanke from dropping money from helicopters if he has to make his case and bend the economy to his will.  Or so he hopes.

Past experience shows us this stimulus will not work. It will create a hyperinflation that might rival the Weimar Republic or todays Zimbabwe.  Don't let yourself get caught in this inflation eddy. Take action now that will protect you and your family from this coming financial debacle.

Appeals Court Strikes Down Obama Care Insurance Mandate

From The Washington Post

By N.C. Aizenman and Robert Barnes, Published: August 12

A federal appeals court struck down a central provision of the 2010 health-care law Friday, ruling that Congress overstepped its authority by requiring virtually all Americans to obtain health insurance.

The divided three-judge panel from the U. S. Court of Appeals for the 11th Circuit in Atlanta is the first appellate court to rule against any portion of the statute. The decision marks a significant victory for the 26 Republican attorneys general and governors who challenged the health-care law on behalf of their states.

More....

Debt Crisis, Excuse To End Democracy? YES!

China Downgrades U.S. Treasury Bonds to A+

Hello Mr Obama and Congress!

The Lies continue from the MSM about the worlds credit ratings. This morning on CNBS Steve Liesman
whipped out the charts showing that America has a solid AAA bond rating right behind Germany and Canada. He based this information and created the dog and pony show charts on conversations he had with "several market participants." Really Steve!?!? Why is only Greece hammered with junk bond status as an irresponsible degenerate credit junkie, while the USA has a debt to GDP ratio of over 100 %. Of course
Standards and Poors downgraded the USA credit rating, with the US Congress acting like drunken sailors avoiding any responsible debt ceiling legislation, they had no choice. China's Dagong Global Credit Rating

dropped the US credit rating even more to A+ last week. The rest of the world is paying attention and watching the carnival debt casino here in the USA with wonder, awe and fear.

JPMorgan Rape Of jefferson County

From Bloomberg

JPMorgan’s Jefferson County Sleaze

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By William Selway and Martin Z. Braun - Aug 11, 2011 9:01 PM PT

JPMorgan Chase & Co. (JPM)’s Charles LeCroy said the key to landing bond deals in Jefferson County, Alabama, was finding out whom to pay off. In one example, that meant a $2.6 million payment to Bill Blount, a local banker and longtime friend of County CommissionerLarry Langford.

“It’s a lot of money, but in the end it’s worth it on a billion-dollar deal,” LeCroy told a colleague in 2003, according to a complaint filed by theSecurities and Exchange Commission.

That’s because in the $2.9-trillion market for state and local government debt, where 80 percent of all financings are negotiated in private, conflicts of interest prevail. While Langford and Blount are in jail, LeCroy is fighting an SEC action. JPMorgan, which provided most of the toxic debt that devastated Jefferson County, has suffered no loss of business as the nation’s third-largest underwriter of municipal bonds, according to data compiled by Bloomberg.

Just 21 months ago, JPMorgan agreed to a $722 million SEC settlement to end a case over secret payments to friends of Jefferson County commissioners. The financings arranged by JPMorgan, a package of floating-rate debt and derivatives, exposed taxpayers to the 2008 credit crisis and dealt a blow that may lead the county to approve the biggest U.S. municipal bankruptcy as soon as today.

“As an outsider looking in, it just certainly appears to me that JPMorgan ravaged this county,” said Robert Brooks, a finance professor at the University of Alabama in Tuscaloosa and the author of a textbook on derivatives. “They convinced Jefferson County to pursue a strategy they never would have followed to generate a lot of fees.”

Deals Backfired

Jefferson County’s financing shows how Wall Street peddled complex bond-and-derivative deals that backfired on taxpayers, from small Pennsylvania school districts to California’s state government. Banks may have charged $20 billion in hidden fees on the derivatives alone, Andrew Kalotay, a New York-based financial consultant who specializes in such agreements, told an SEC hearing in Jefferson County last month. The agreements allowed lenders to earn fees that were rarely, if ever, disclosed, while exposing municipalities to unexpected increases in borrowing costs.

Yet while JPMorgan’s deals denuded Jefferson County, the company has emerged with its municipal-debt underwriting business unscathed. During the past two years, public officials fromCalifornia to Massachusetts hired the New York-based bank to arrange $64.7 billion of bond offerings, making it the third- largest underwriter in the market for state and local securities, according to Bloomberg data.

‘Very Aggressive’

“The issuers need the bankers,” said Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics, which assesses banks. “Morgan’s a big house and they’re very aggressive and they’re out there looking for business everywhere. So people tend to forget.”

Last month, without admitting or denying wrongdoing, JPMorgan agreed to pay $211 million in a separate settlement with state and federal regulators over charges that its municipal-derivatives unit participated in an industry-wide scheme to fix prices and overcharge local governments on investment contracts. The bank blamed former employees and said it has increased oversight of its public finance business.

In a motion to dismiss a lawsuit by Jefferson County, JPMorgan said the county was inappropriately attempting to lay blame for the debt crisis at the bank’s feet.

“The simple fact is that the county took on too much debt and vastly underestimated the cost of building out its sewer system,” lawyers for JPMorgan argued. “These problems were only exacerbated by the county’s poor management of its sewer system and the current credit crisis.”

Dodd-Frank Law

JPMorgan spokesman Justin Perras declined to comment for this story and said Chief Executive Officer Jamie Dimon, who joined JPMorgan after the Jefferson County deals were done, wasn’t available for an interview. William B. Harrison Jr., the bank’s CEO at the time it sold the contracts, didn’t return phone calls seeking comment.

The county’s collapse has loomed over the municipal bond market for more than three years and inspired provisions in the Dodd-Frank law seeking to protect localities from complex financial trades involving derivatives. Officials are asking JPMorgan and other creditors to forgive about $1 billion of the bonds or may decide as soon as today to file for bankruptcy protection to escape the debts.

Money-Saving Plan

In Jefferson County, JPMorgan pitched a money-saving plan that converted almost all the county’s $3 billion of sewer- system debt into floating-rate securities coupled with derivatives. The deals comprised the largest transactions in municipal swaps and auction-rate bonds, a form of floating-rate borrowing, in the bank’s history, according to the SEC.

Like homeowners who turned to exotic mortgages, officials refinanced 93 percent of the sewer bonds into securities with adjustable interest rates. They bought interest-rate swaps, in which two parties make periodic payments based on an underlying measure of borrowing costs. The contracts were supposed to offset the floating rates the county paid and give it a fixed rate that was lower than on traditional bonds.

The county paid JPMorgan, Bear Stearns Cos, Bank of America Corp. and Lehman Brothers Holdings Inc. $120 million in fees for swap trades. Those fees were as much as six times the prevailing rate, according to a report by former county financial adviser Porter White & Co. of Birmingham, Alabama.

The money-saving strategy backfired. JPMorgan’s financings unraveled in early 2008 as the subprime mortgage-market meltdown sent ripples through Wall Street, undermining the credit ratings of the companies that insured Jefferson County’s bonds.

Interest Costs Soared

The county’s interest costs soared as investors dumped the bonds. After banks demanded early payoffs, the county defaulted. The swaps exposed the county to hundreds of millions in fees to refinance.

JPMorgan’s Dimon has moved to put the municipal crisis behind him.

In 2008, the bank said it got out of the business of selling interest-rate swaps to state and local governments. In November 2009, it settled with the SEC over allegations that LeCroy and former JPMorgan colleague Douglas MacFaddin funneled $8 million of secret payments to bankers, including Blount, who had ties to Jefferson County politicians.

“It looks like they’ve done the right things to limit the reputational damage,” said Matt Fabian, who tracks the state and local government securities industry for Municipal Market Advisors Inc. in Concord, Massachusetts.

In the Jefferson County case, much of the blame for the collapse has been cast on corrupt politicians.

‘Hasn’t Hurt’

“It hasn’t hurt them a bit because the whole thing has been sold that they were dealing with corrupt officials,” said Christopher Taylor, the executive director of the Municipal Securities Rulemaking Board from 1978 until 2007. “But the truth of the matter is they were in bed with the issuer.”

Larry Langford, the former commissioner in charge of finance, was found guilty on U.S. criminal charges of accepting bribes from Blount, who pleaded guilty in the case.

LeCroy and MacFaddin, the former head of municipal derivatives for the bank, are fighting SEC civil claims that they failed to disclose payments to Blount and others. JPMorgan fired LeCroy in 2004 and terminated MacFaddin in 2008. No one from JPMorgan is accused of criminal wrongdoing.

MacFaddin and LeCroy have argued that the SEC lacks authority to pursue them under federal anti-fraud statutes because the interest-rate swaps aren’t securities.

Richard Lawler, MacFaddin’s attorney, declined to comment. LeCroy’s lawyer, Lisa Mathewson, also declined to comment.

21 People

In Jefferson County, 21 people, including four county commissioners, were convicted or pleaded guilty to charges related to the sewer construction or financing.

Former County commissioner Langford, 63, a longtime friend of Blount’s who was responsible for finance, was convicted of taking $242,000 in bribes in exchange for steering business to Blount. Langford lost an appeal of his convictions, according to a notice posted Aug. 5 by the federal appeals court in Atlanta.

According to the SEC, LeCroy also paid fees to two other local firms to win the support of another former commissioner.

LeCroy joked about the tactics with a fellow JPMorgan banker in 2003. “We have to pick the partners who are going to get free money from us this time,” he said, according to the SEC complaint.

Deals Raised Questions

Bond insurer Syncora Guarantee Inc., which backed about $1 billion of the bonds, said in a lawsuit that JPMorgan knew that the county wouldn’t have enough revenue to pay its debts in a few years but kept a report documenting that secret.

A least one banker at JPMorgan, Charles Giffin, raised internal questions about the risk.

“Do these guys know the risks they are taking (in large doses)?” Giffin wrote in a May 12, 2003, e-mail to a colleague, when asked to prepare materials explaining why the county should buy more derivatives, according to SEC records. “Shouldn’t we be pitching diversification arguments?”

To contact the reporter on this story: William Selway in San Francisco atwselway@bloomberg.net Martin Z. Braun in New York at mbraun6@bloomberg.net;

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net