2014 is surely looking like a watershed type of year. We have seen a few slaps on the wrist here and there since 2008 for fraud, rigging markets, trading against customers, bogus ratings, multiple re hypothecations of the same asset many times over and on down the line …but no one ever seems to go to jail. I take that back, China has reacted harshly by even executing a billionaire for fraud, so I will clarify by saying no one in the West has gone to jail with the exception of 3 hedge fund managers. I say “watershed” year because even though no one seems to be doing jail time, some light is at least being shed on how crooked our markets are.
We’ve had the LIBOR and gold market revelations where firms paid fines (far smaller than their gains, so crime does in fact pay even after disgorging well over $30 billion in fines!) but no jail time. The important thing is that market participants are getting to see on a nearly monthly basis, all of the major firms say “we don’t deny or admit doing anything but we agree to your multi-billion dollar fine.” People are not foolish, well, they are, but not this foolish. There has been much smoke but so far, no “fire” so to speak as the regulators don’t seem to require ANY admission of guilt.
I will give you my opinion on “why” the admission of guilt is never required. It’s really quite simple, were a firm to actually admit guilt for any sort of fraudulent activity, they could be barred from doing business in certain jurisdictions and exchanges. In some cases they MUST be barred from doing business under current rules and laws …but this is only a side show to the reality.
The “reality” is that if a firm admitted guilt …of anything, can you imagine the private slam dunk lawsuits that would arise? These lawsuits could total more than ALL of the equity these firms have combined! But wait, this is still not the real reason. The real reason that these firms are not held to task is because of the word “discovery.” Do you understand? If there were private lawsuits that actually went to trial and were not settled ahead of time with “gag orders” included, the process of discovery would go forward and who knows what would be uncovered! “Who knows what?” such as what other firms were involved and yes …which central banks or sovereign treasuries?!!! Spam me if you like and tell me that “governments” would never participate in “frauds,” my answer will be as simple as suggesting you look at the fiat you have in your pocket. Would you like other examples?
So, this is why no one seems to go to jail and no firm ever “admits” guilt …because the chain will ultimately lead up the totem pole and end at the central banks themselves and no one likes a “squealer.” We got a glimpse of this yesterday as Bloomberg reported that Martin Mallett, the head trader of FX for none other than The Bank of England was fired. Please read this article closely, or maybe several times. Do you see anything strange? Maybe the author was smoking a left hander when it was written or maybe it is totally accurate but it doesn’t make sense to me. It seems that Mr. Mallett was fired 1 day prior to UBS being fined for FX fraud. The article claims Mr. Mallett had “concerns” of collusion in the FX market going back to 2012 but did not relay his concerns to his superiors. The story went on to note that Mallett had regular meetings with various FX traders every two months and then quotes Mark Carney (Governor at BOE) as saying “What Lord Grabiner found was that our chief dealer was aware of circumstances in the market that could facilitate or lead to improper behavior by market participants.” But wait, the article finishes with “Mallett “was not acting in bad faith,” according to the Grabiner report. He wasn’t “involved in any unlawful or improper behavior, nor aware of specific instances of such behavior.”
So why then was he fired? Was he fired because he did not relay his “concerns” of FX collusion or did he get fired because he did try to go whistleblower with it? This will be interesting to follow (if there is any follow up) because surely there has to be some sort of concrete reason for his termination. I would add, if it were serious enough for termination and related to his job rather than bad conduct or the like, shouldn’t he have been arrested? I get it, you can’t really “fine” a public servant so to speak and termination is the equivalent. Again, this is interesting, not only because of “who and where,” but because of “when” this is occurring.
The “when” is interesting not just because it was 1 day before this FX crackdown, negotiation, and fines being coordinated by UK, U.S. and Swiss authorities … it was done during and before the G-20 meeting and final communique. Do you see where I’m going with this? Are “we” trying to show the world we are “cleaning up our act”? In my opinion, this may have something to do with it for appearances but I also don’t believe there is a chance it will work.
As I wrote yesterday regarding a “G-20 massacre,” it is my opinion the world (led by China) may be sufficiently positioned to dictate all of the rules going forward. The Chinese are not foolish people and know fully that our markets are a rigged sham, ALL markets! Why have the Chinese not said anything prior to now? Well, they have, several times and done it politely as far back as 2010 regarding our fiscal and monetary decadence. The answer to “why” is quite simple in my opinion, it is because “we” the West, still had deliverable gold. Did they think or know the prices of gold and silver have been rigged? Of course, they would put in big orders to buy and then watch as the price went down. They have done the math, they know how much gold we “had” and they know how much is produced …and subtracted what they have imported to know probably within 100 tons of where exactly the bottom of the barrel is!
Let me finish with pure opinion and what I think the global mindset is. The Chinese have allowed the sham to run and I must think that they feel a little bit embarrassed for the people of the West. They have held the APEC and BRICS summits prior to this weekend’s G-20 meeting. President Obama showed up to meet President XI while chewing gum and then refused to ride in Chinese provided limousines. Do you see how bad this looks and really IS? Chewing gum? Did he believe his life was in danger riding in Chinese transportation? Any more danger than the 40 or so “fence jumpings” at the White House? Did he really believe the Chinese would ever let anything bad happen to a foreign head of state …especially the U.S.? These meetings are all about “pomp and circumstance,” even university professors have expressed their outraged opinions on China’s censored and monitored internet! None of these blogs would ever have been allowed without “official” permission, at the least, these professors would be out of a job without it.
As for the rest of the world, they are lining up behind China and gathering collectively to move out from under U.S. hegemony. Some Americans see this, many do not. The world is not happy with us and even many of our allies are shuffling away from us. If the intent on any of the fines (without jail time or “executions” of course) over the last 2-3 years was in any way to placate or “appear” as though we are cleaning up our act, forget it. Just like the crazy aunt in the basement that everyone knows about but won’t admit to or speak of, Western markets are too dirty and have been so for too long. Any attempt at “cleansing” at this point will require a total gutting of the house. This will happen not by the good intentions of our leaders, rather by Mother Nature burning the whole thing down to start over again from scratch.
Thanks Bill for this new piece.
However, I think you are too much optimistic regarding the big summits especially the G20, from which nothing ever came…
Moreover, it is in my opinion up to RC team to pull the plug as we have evidence that no QE amounts can really threaten the financial system, so they can kick out the can for much longer without eastern interference while not forever…
really? “no amount of QE can really threaten the financial system” …why, because the system is on more solid footing now than before the QE’s?
By financial system I mean elite’s pockets which is what is shown on a daily basis at CNBC ie bond, stock and real estate prices and fiat versus monetary metals and it is all good for them up to now.
The rest of the people and world has no more importance, as the USSR it can last for a while namely because people are more stupid than before as they believe in experts, economics and other science rather than moral principles for things such money : honest…or not !
again, really? No threat? No bubbles? Kumbayah?
Bubbles everywhere but always reinflated by central banks, the next crisis will be bigger than the previous ones and like kuroda’s actions, FED answer (and swiss, UK, ECB,…) will be even bigger QE (in open view and probably hidden) with even greater direct market intervention.
I cannot see any reaction from the public as they were none after lehman except a little gold and silver purchase but who have mostly disappeared in the west.
yes, “always”.
“except a little gold and silver purchase but who have mostly disappeared in the west.”
I would say it was record gold & silver sales, just like recently with record gold & silver sales.
did I say that?
Bill,
This past Tuesday Nov.11 it was reported that the Terrorist organization known as Islamic State (ISIS) wanted to back it’s currency by gold and silver
http://www.zerohedge.com/news/2014-11-11/isis-going-back-gold-standard
Today, it was just reported and confirmed that ISIS unveiled its new gold backed currency
http://www.zerohedge.com/news/2014-11-13/isis-unveils-its-new-gold-backed-currency-remove-itself-oppressors-money-system
This is the first sovereign state to announce sound money. Since the media in the west has portrayed ISIS as the “bad” guy It appears “we” gold bugs are about to be labelled a “Terrorist”. What a crock this whole sham has become.
Let’s hope this weekend at the G20 the BRICS will announce something similar to what ISIS just announced. That should get the party started!
Thanks for all you do
welcome ST, you are correct, they may lump in people who believe in The Constitution as terrorists?
Do not expect anything from the G20 except spending other people’s money…
I have an UN-easy feeling about the level MOPE the TPTB are exerting right now. Polite criminals indeed. Hence Greenspans admissions of Gold & Silver at a CFR event non the less! They wouldn’t allow him to say such things without approval (aside from him trying to wipe his slate clean) I think they’re gearing up for the next false flag before economic mother nature takes grip of things. They are not going to take blame for their corruption. If they sit idle all the swans you speak of will over come them. Blood moons anyone?
I know the feeling.
Thanks Bill for yet another excellent article.
As for us good ole folk in the USA if you let any one else manage your wealth (i.e., bank, stock market, etc.), you may never see it again in the near future. If you are not your own bank, then good luck to you.
I hope I have enough buried in the woods not to have to be a Chinese house boy!
By the way can your wife paint mushroom clouds as in those caused by a big bomb? Sad, but she may be able to do so soon (but I hope not).
welcome Farrell, I’m pretty sure that is not a subject she would like to paint!
It is my opinion that there is no limit to what some might do in an effort to avoid taking responsibility for their actions.
Over the last couple of years that I have been following this story line I have seen many developments occur that has only proved to me that the level of corruption in the world is beyond comprehension for many.
However, I am also extremely pleased to say that there are many honest and dedicated people like the ones we find here that are doing their best to get the truth told.
We are making progress but that progress we are making may also cause an escalation in the efforts some take to keep us in the dark and in denial of what has transpired.
The G20 and the Swiss vote have the potential of being important events that allows the process of repair to begin.
thanks Mike, we try our best!
In reality Bill what we are seeing happen today will be seen in the future as just another chapter in the Book of Currencies.
Since 1913 the USA and society as a whole has been living in a world where fiat currencies have not remained constant but have fluctuated in value.
In that time frame much has happened and through that time fiat currencies have consistently lost buying power.
(just as they have always done in historical past)
Now today we live in a world of digital money or should I say digital debt. The cracks in the system are beginning to widen to the point that the entire house of cards is now unstable.
We have also gone from people not realizing what the bankers and politicians were doing, to the point of it being too late for many to prepare for the reset.
In truth we likely have progressed past the point where lies can keep this system afloat.
Now it is time to pay the Piper and feel the pain.
Fiat currencies
too late.
Hey Bill, to start over again from scratch will be so scary. Many people’s thoughts will be extinguished. I know – the reset – is needed. But alot of people are still totally confident in the banking system (or “the government” that previously acted as back-up for bank insolvency). Patch it over right. Shift the burden to the Kids. All these men & women still put their savings right there, in the Black Hole. I think they’re gonna get their socks rocked, rather soon. I cannot prove, but too many negative events are converging at the same time. This just doesn’t seem OK, and it hasn’t been for all the previous months/years. I think it’s very difficult to explain “it” to my family & friends. Call me a louzy guy, but I’m quite sensitive to people’s feelings and therefore I prefer to keep ’em happy. I know this is totally wrong, but maybe I just need to send ’em one of your articles. There are many well informed, skilled writers out there. Well, maybe I just need to send their articles to them as well. Also, I’m really scared of the US police. What’s going on there. This is all getting a “little bit crazy”. Interesting times to say the least. Many groups of society will blame many groups of society for what’s about to happen. This is all a total mess. 90% is asleep. This is dangerous. “They” can do whatever they want at this point, if you know what I mean.
it’s not “OK”. I have spoken to many county Sherriffs and most of them “get it”, they will stay home and protect their own from my conversations with them.
Yes, well the problem I see is that no one cares that the PM market is manipulated by paper shorts and totally rigged and in fact, I think they encourage it as if it were allowed to be priced at its real value, their whole scheme would blow up. I don’t want to get off on a tangent, but I think most people will not shed a single tear for the savers or the sound investors and most like to see this as just a part of the transfer of wealth. I think the metals will not be allowed to appreciate until they are good and ready, meaning they have control over the natural resources and/or have given it all to China. Then there will be capital controls, confiscation, and anarchy as THEY TAKE what the savers and gold bugs have left, and then allow it to go up since they now own/control the assets themselves.
It is no different than when the lords of the land used to ride out before winter maurading all the peasant farmers who worked hard all year to grow and sotre supplies and TAKE IT. This is after taxing and manipulating them all year only to then come and take what they “as elites” feel is theirs.
As a small investor/saver, I really have no power and it has been brotal investing in fundementals / hard assets since I started just in 2010. I consider myself a strong long, but when 70% of my port-folio has been taken away from me by them, I don’t know if I can handle another 5 years of this or if it will happen next week after the G20. Of course 20/20 hindsight makes sense in that I should have invested in the DOW bubble as that is where all the money went to prop it up and supress the commodities. Back in 2010, I thought the manipulation would have been long over by 2014. Now I just don’t know any more. It could go on for years but I suspect not.
Keep your head up Rich.
Hi Bill, a little off the side. you have a fantastic understanding of China and Asia and how they work and wondered if you had seen this very new clip from Foster Gamble, author of Thrive, son of the P&G Gamble. he has brought out a revelation that ancient Asian family gold (Yamashuta Gold) is about to be included in the big picture. This would push the Chinese gold stores way above what they have now.
Have a great weekend.
cheers
Titus
https://www.youtube.com/watch?v=6_ZGloqmJIc
thanks Titus
Bill, I recall back in the 70’s, during the oil shortage and gasoline lines; someone remarking that there was plenty of oil being held both offshore in tankers and also that storage tanks were full around Houston. I can’t say of course what the facts were about this rumor. If there is any truth to this story, then we had the futures market determining price when the market was awash in supply. Isn’t this the inverse concept we have now in the metals market? Thank you for any thoughts on the subject and I also wondering about the Titus post? Cheers.
I don’t know about Houston but I do know there were tankers full and not delivering as an oil guy in the 80’s related to me about “the old days”. I saw the Gamble video earlier, I agree with him, there is going to be a re set, probably VERY soon as the world is fed up with the U.S..
Without a doubt there is a movement that is gaining momentum that is bringing honest people together with a genuine desire to be part of the solution.
That does give me hope for the future. However the million dollar question is…Have we really arrived at the time where mankind can overcome greed for the benefit of doing the right.
I rather believe that the can is now too heavy to be kicked down the road any further.
We will see soon…….
shortly.
Mother Nature… or Mother China & Mother Russia
yes, exactly Dan.
Bill,
It is interesting that Russia will build 2 nuclear power plants for Iran.
“Russia has reportedly considered accepting Iranian oil as payment in a barter arrangement for the nuclear reactors.”
http://www.nytimes.com/2014/11/12/world/europe/russia-to-build-2-nuclear-plants-in-iran-and-possibly-6-more.html
But, what about accepting gold for payment?
Iran launches Middle East’s ‘biggest’ gold plant, plans to double production.
http://rt.com/business/205863-iran-gold-plant-economy/
it’s possible.