Friday, March 27, 2015

Money does not talk, it screams: This is what is happening on a global scale. China’s establishment of a new international infrastructure bank is a sign of these times.


Money does not talk, it screams: This is what is happening on a global scale. China’s establishment of a new international infrastructure bank is a sign of these times. Beijing is rapidly making itself heard in the halls of power and finance. Is China challenging the West, or just going around it?

Some Countries ADMIT They Rig the Stock Market

Yes … the Stock Market Is Rigged

We noted last year:
Several central banks are directly buying stocks. They include the central banks of Switzerland, Japan, Israel, the Czech Republic, and a total of 23 percent of all nations worldwide. (And it has long been rumored that the Fed buys stocks through proxies.)
The Wall Street Journal adds details as to the Japanese stock purchases:
The Bank of Japan’s aggressive purchasing of stock funds has helped Japanese shares climb to multiyear highs in recent months. But some within the central bank are growing uncomfortable about the fast-paced rally and the bank’s own role in fueling it.
Since Gov. Haruhiko Kuroda took office in March 2013 and introduced monetary easing of what he called a “different dimension,” the central bank has sharply increased its buying of baskets of stocks known as exchange-traded funds. By directly underpinning the market, officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation.
During the past two years, the central bank entered the stock market roughly once every three days, picking up a total of ¥2.8 trillion ($23 billion) of ETFs that track Japan’s major stock indexes, according to Bank of Japan records.
***

Analysts say the bank’s action has been a significant driver of Japan’s stock-market rally in recent months, combined with hefty purchases by the $1.1 trillion Government Pension Investment Fund. Their buying has often countered selling pressure from individuals in the market and made up for a weaker appetite among foreign investors.
***
BOJ officials used to be cautious about purchasing ETFs, worried that it could distort market activities and put the central bank’s own financial health at risk. But under pressure from politicians following the global financial crisis, the bank changed its stance in late 2010.
Other countries aren’t so forthright …
John Crudelle notes:
The Wall Street Journal carried an intriguing story on March 11 about how the Bank of Japan was “aggressively purchasing stock funds.” (The Journal is owned by News Corp., the parent of The Post.)
“By directly underpinning the market, [Bank of Japan] officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation,” read the report with a Tokyo dateline.
That’s called rigging the market for a higher purpose, or hoping people who can afford to invest in stocks will make lots of money and spend it. The benefits, Japan’s central bank believes, will then trickle down to the rest of the economy.
The Journal provided lots of details that I won’t get into here. But the paper also presumed that all these central bank stock purchases were being done on the Tokyo market and that only the shares of Japanese companies were being rigged.
That’s not necessarily the case. The Bank of Japan — and other central bankers around the world — could easily be purchasing shares of American companies to help out the US stock market.
And Japan could even be doing it with the blessing of Washington, which is afraid any direct intervention in equities on its part would be discovered by nosy people like me.
Last fall, we learned that one American exchange has made intervention in — rigging — foreign governments easier and cheaper to accomplish. In October, it emerged that CME Group, the Chicago exchange that trades options and commodities, had an incentive program under which foreign central banks could buy stock market derivatives like the Standard & Poor’s futures contracts at a discount.
As I’ve reported many times, S&P futures contracts are the vehicle of choice for rigging the market. They are a cheap and very powerful way to cause an artificial buying frenzy.
After the market’s sizeable drop on Wednesday — the Dow alone lost 292.60 points — be on the lookout today for aggressive S&P futures buying today. It could start in Asia or Europe, but it almost always occurs.
Foreign central banks, of course, really don’t need a discount to buy S&P futures contracts. That’s like billionaires clipping cents-off coupons. But what the CME’s discount tells us is that the Bank of Japan and other central banks are probably already customers.
So the rigging of US stock markets by foreign entities has likely been going on for some time.
Has the US ever directly rigged the stock market? I’m sure it has. The sloppiest attempt seems to have occurred in 2008 during the financial crisis, when Washington was sure our whole financial system was toppling.
Phone logs that I received showed numerous calls between Treasury secretary Hank Paulson and Wall Street banks — Goldman Sachs, in particular — that seemed to coincide nicely with stock market rallies.
Unlike the Bank of Japan, Washington would have been coy about rigging the stock market and probably would have used proxies. The New York Federal Reserve Bank, for instance, would wink and nod at its favorite banks, and trades that turn the stock market upward would suddenly be made.
The Fed has admitted that one of its main policy objectives is to boost stock prices.  Many well-known financial analysts – such as Jeremy Grantham, Charles Biderman and Scott Nations – say that the feds manipulate the stock market. And see this, this and this.
And the government facilitates fraudulent acts and fraudulent accounting by big corporations, and always settles prosecutions for pennies on the dollar (a form of stealth bailout) … which allows the companies to avoid losses and to falsely inflate their valuations.

Soaring Corporate Buy Backs Help a Few … At the Expense of the Broader Economy

Corporations Artificially Make Themselves Look Good By Buying Their Own Stock

Stock buybacks by corporations
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are one of the main factors driving up stock prices (here’s another one). John Crudelle explains:
There’s another kind of market rigging that is also going on. This is being done by companies
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themselves. Since corporate profits and revenues aren’t growing enough to justify current high stock prices, companies have been aggressively buying back massive quantities of their own shares.
By doing this, companies reduce the number of their shares owned by the public. This accounting trick boosts the calculation of profit-per-shares because the numerator of the equation (earnings) remains the same while the denominator (outstanding shares) is reduced.
Paul Buchheit notes:
In 1981, major corporations were spending less than 3 percent of their combined net income on buybacks, but in recent years they’ve been spending up to 95 percent of their profits on buybacks and dividends.
Business
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Insider points out:
Ever since the financial crisis, S&P 500 companies have spent about $2 trillionbuying back shares of their own stock.
***
Goldman Sachs’ David Kostin believes a temporary pullback may explain why the S&P 500 has tumbled from its all-time high of 2,019 on Sept. 19.
“Most companies are precluded from engaging in open-market stock repurchases during the five weeks before releasing earnings,” Kostin notes. “For many firms, the beginning of the blackout period coincided with the S&P 500 peak on September 18. So the sell-off occurred during a time when the single largest source of equity demand was absent.
In other words, when companies stop buying so much of their own stock, the stock market goes down.
Indeed, zombie banks are so eager to redeem their shares that they are financing buybacks with preferred shares of stock they may never redeem.
A soaring stock market is not the only effect of corporate buybacks.
The Washington Post, Harvard Business Review, U.S. News and World Review, Forbes and others note that – while corporate buybacks may benefit a handful of people at the companies doing them – theyhurt the economy as a whole.

London Gold Fix Closed – Sign of Drastic Changes the World Financial System Is To Go Through

The closer of London Gold Fix (LGF) on March 20 is big news. The first London gold fixing was performed in 1919; it had a short way to go till its anniversary. The system of its functioning was simple enough. A number of leading participants started a fixing process to reach a balance between supply and demand to set the price. The gold fixing provided a recognized rate that was used as a benchmark for pricing the majority of gold products and derivatives throughout the world's markets. There were five participating banks and market makers that made up London Bullion Market Association – LBMA. London Gold Market Fixing Ltd. exercised the administrative control. 
For many years LGF was perceived to be an ideal instrument for fixing the gold price on the world market, especially for individual contracts and derivatives (paper gold). The rates were used for evaluating monetary gold reserves and liabilities pegged to the precious metal (for instance, bank deposits denominated in gold). The drawbacks of the system were hushed up, no matter more and more questions were being raised, especially during the recent 10-20 years. 
The Bretton Woods system disappeared in the 1970s. Gold stopped being a monetary metal to become a normal commodity. It would have been logical to trade gold with its price fixed as if it were an ordinary operation at commodity exchange. In recent years LGF looked like an anachronism, an old fashioned structure to add to or, to some extent, substitute ordinary markets trading non-ferrous and precious metals. 
The most perspicacious experts noticed that LGF was an ideal instrument for the Rothschilds  to control the gold market. As is known, the gold standard was created by Rothschilds  in the XIX century. After Napoleonic wars the family got hold of major part of European gold, so the gold standard made it fabulously rich guaranteeing stable demand for the precious metal. The Rothschilds  did not sell it to central banks or treasuries of other countries. Instead they granted gold credits. The First World War put an end to the functioning of gold standard mechanisms. The Rothschilds  wasted no time to react. In 1919 they created LGF to control the world gold market through London gold fixing. 
The Rothschilds -controlled N M Rothschild & Sons was the leading bank of the five. It was founded at the beginning of XIX century by Nathan Rothschild. Other members of «golden five» were related to the Rothschilds  by invisible ties. It can be said that LGF was the Rothschilds ’ creature. In 2003 N M Rothschild left gold fixing but it did not mean the family left the business. It controlled LGF behind the scenes. By that time there were many frauds and manipulations affecting the functioning of the market; the situation could have gone out of control. There was a risk of world-wide scandal. To avoid involvement the «financial geniuses» the Rothschilds  decided to go into the shadows. There were a lot of interesting things happening in the world of gold trading. The Rothschilds -controlled media did it best to hush it all up. For instance, the information on tungsten operations hit the pages only ten years after the fact was discovered. 
The elimination of LGF is part of big game played by the «money bosses» – the Rothschilds  and Rockefellers (the both are the leading shareholders of US Federal Reserve System). Gold is what the Rothschilds  are after, while the Rockefellers rely on the dollar – the world currency the Federal Reserve System issues. The correlation of forces (between the Rothschilds  sand the Rockefellers who are partners and competitors at the same time) is defined by the balance between the dollar and gold. It’s a well-known fact that since some time ago the gold has been greatly underestimated. The price has never returned to the peak reached in 1980 ($850 per troy). This is a comparable price. The nominal price has gone up exceeding $1000 since a long time ago. At first glance, one should come to conclusion that the Rockefellers won the battle and weakened the position of the Rothschilds . But there is a great possibility that this is just a trick on the part of Rothschilds  trying to turn the temporary retreat into a strategic win to defeat the Rockefellers. 
There are many indirect signs that the Rothschilds  played the game of lowering the gold price to automatically strengthen the dollar. It’s not financial masochism. The recent twenty years the Rothschilds  used different shady and criminal schemes to buy out the precious metal, so, naturally, they needed the lowest price possible. London gold fixing functioned to carry out this task. They got gold from everywhere they could. Central banks and treasuries were the main sources, especially the United States Treasury. According to official data, there are 8100 tons of gold stored in Fort Knox. The storage has not been audited for sixty years now. According to my estimates, the probability of finding eight thousand tons (the figure offered by the US Federal Reserve System and the Department of Treasury) of gold there is much less than 1%. Former congressman Ron Paul, who is very critical of US financial authorities, believes that the probability is even lower. 
There are many more examples of gold manipulations with the participation of Federal Reserve System, the US Department of Treasury, the Bank of England, the LGF «golden five», many banks of Wall Street and London City etc. At the beginning of the 2010s, there was enough discrediting evidence to make financial bodies of the United States, Great Britain and the European Union react somehow. After the end of the first wave of financial crisis the «untouchable» banks of Wall Street, London City and continental Europe came under investigation to trace manipulations. There were loud scandals, for instance the Libor scandal. There was a series of fraudulent actions connected to the Libor (London Interbank Offered Rate) and also the resulting investigation and reaction. The Libor is an average interest rate calculated through submissions of interest rates by major banks in London. The scandal arose when it was discovered that banks were falsely inflating or deflating their rates so as to profit from trades, or to give the impression that they were more creditworthy than they were. The courts handed down sentences severe enough and the banks had to pay billions in fines and compensations. The investigations of possible fraudulent actions were postponed for a long time (the gold market is a sacred place in the world financial system) but finally the time came to examine the operations of LGF. 
Last year it became evident that the fat was in the fire. The nerve of a bank making up the «golden five» failed it. Deutsche Bank tried to sell its place in LGF but no one wanted to buy it. In August 2014 the bank left LGF in fear. Now they were four instead of five with Scotia Mocatta, HSBC, Societe Generale, Barclays Capital left. Before that another financial regulator – the Financial Conduct Authority (FCA) - had launched an investigation against Barclays Capital. The British authorities tried to hush the scandal up with the help of a ridiculously small sum of around 30 billion euros Barclays was made pay as a fine. The financial bodies of Switzerland and Germany launched inquiries of their own. Besides the LGF participating banks, they also investigated the activities of other big actors on the market of precious metals (gold, silver, platinum). Those actors had close ties to LGF banks and central banks of some countries, including Bank for International Settlements (BIS). The information is explosive. To my mind, it prompted the closure of gold fixing. 
Somehow, the fraudulent schemes practiced by the «big five» (to later become «big four) are often called «manipulations with gold prices». True, the manipulations did take place. For instance, they regulated supply and demand for precious metals. The 2012-2014 investigation of fraudulent schemes practiced in relation to currency rates shows that the regulation of supply and demand did take place. Then why not spread this experience on gold? But the price manipulation was not the main wrongdoing. The major fraud was establishing monopoly on insider information related to prices. The process of prices fixing could last for a few minutes to a few hours. Getting the information of the price just a few seconds before its official announcement enabled to make a huge profit, especially in view of the fact that many speculators like to work with ‘paper gold» (its turnover exceed many times the turnover of physical gold). There is a great probability the Rothschilds  themselves made money by selling the insider information to the bodies under their control. 
It’s hard to predict the further situation creep on the world gold market. The available information shows that the new system of price fixing looks like the most transparent auction with great number of participants. They say Chinese banks and companies will become the leading actors of «gold fixing with broad participation». If so, the gold price will rapidly climb. This process could be regulated by preventing sky high hikes. 
Many things about LGF activities are still not known. One can only guess. One of the guesses says the gold has already gone to the Rothschilds ’ storage. They don’t need the mechanism of lowering prices anymore. The Rothschilds  were the main driving force behind the LGF closure. There is some logic here – the sooner the bucket shop called LGF is closed, the less chances investigators have to get to the bottom of fraudulent schemes practiced by «financial geniuses».
There is another version. Not all the money has been transferred and the risk of leak revealing dirty tricks practiced on gold market has grown. The LGF closure was an emergency action to destroy the traces. 
The third guess. The closure could be a result of bickering between the Rothschilds  and the Rockefellers. The Rockefellers decided to strike at the soft underbelly of the Rothschilds  – LGF. It was known as early as the beginning of 2015 that LGF was to stop functioning. The issue could have been gradually soft-pedalled but, all of a sudden, the US Department of Treasury launched a large-scale investigation related to the possible precious metals market machinations. At least ten banks were suspected: Barclays, JPMorgan Chase, Deutsche Bank, HSBC, Credit Suisse, UBS, Goldman Sachs, Societe Generale, Canadian Nova Scotia и South African Standard Bank. Three banks from the list are under strong influence of the Rothschilds, especially Chase. In any case the closure of London gold fixing is a sign of great changes the world financial system is to undergo.

Gerald Celente: U.S. Losing Financial Credibility


The birth death adjustment should have SUBTRACTED at least 2 million jobs since 2008, not added 4.7 million phantom jobs.

by James Quinn 
I’ve ranted about the BLS Birth/Death adjustment for years. It is BLS computer model generated estimate of the jobs added by start-up companies
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that are not captured in their surveys of large companies. The model is based upon long-term historical trends and would be relatively accurate if the world stayed the same. The BLS has pretended the world stayed the same after 2008, when it was really turned upside down. image: http://www.advisorperspectives.com/dshort/charts/guest/2014/Shedlock-140505-Fig-1.png
These are the annual phantom jobs added to the BLS calculations since 2008:
2008 – 904,000
2009 – 882,000
2010 – 510,000
2011 – 490,000
2012 – 535,000
2013 – 624,000
2014 – 733,000
This is a total of 4,678,000 phantom jobs supposedly created by small company start-ups since 2008. This assumes there have been more business start-ups than business failures, just as had always happened throughout U.S. history. There had always been approximately 100,000 net new businesses
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in the U.S. every year going back to the 1970s. But, the BLS model has been dreadfully wrong since 2008. There has been net closures of 70,000 per year for the last six years. image: http://4.bp.blogspot.com/-nhjksSmtdV0/VQ9u_MhR7XI/AAAAAAABbug/FCuKnmJRSPI/s1600/011414startups1%5B1%5D.jpg
The birth death adjustment should have SUBTRACTED at least 2 million jobs since 2008, not added 4.7 million phantom jobs.
There were 145 million Americans employed in 2008. The BLS says 148 million Americans are employed today. If you make the true birth/death adjustment, the real number of employed Americans would be approximately 141 million. Which figure makes more sense when you see the putridly stagnant real wages and the complete lack of retail spending from the supposedly employed masses?
Government statistics are like the American Dream. You’d have to be asleep to believe them.

All signs actually do point to a repeat of the Great Depression very soon. History repeats folks.

In October 1929 as we all know the markets crashed in a truly historic way. But what lead up to the Great depression? the events that lead up to it are VERY MUCH like the events unfolding around all of us right now.
One major difference is how the world has gotten smaller and nations rely on each other more than ever before.
– March 1929, Mini market crash.
– March 1929, Nation Bank approves $25 millionin credit to stop mini crash
– Stocks grow again. Stocks had been on a 9 year run (roaring 20’s!!)
– June – Sept 1929, Dow gains more than 20%!! and by July was at AN ALL TIME HIGH!
– By Mid-Sept 1929, after only 3 negative Dow days, financial expert Roger Babson makes the statement that the crash is coming. Three days later the London Markets crashed.
– a month later, Oct 24, 1929 Dow lost 11% at the opening bell.
– Days later, Black Monday lost 13%, and Black Tuesday lost 12%.
– On October 30 (Wednesday) the Dow GAINED back 12%.
– Following the Oct 30th rally, the makets steadily declined for YEARS. They did not get back to Sept 1929 levels until Nov 1954.
We are sitting right now at record highs. We keep topping them, all the while economists are warning that it’s all about to end very badly, just like Roger Babson did. We prop up the economy with quantitative easing, and offer too much credit to anyone looking for some. Countries that are TRILLIONS in debt are bailing other countries out of financial collapse, only so that cancer
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doesn’t spread to them next. WHAT THE FUCK ARE THEY ACTUALLY BAILING THESE COUNTRIES OUT WITH????? I believe it can only be hidden, covered up, and propped up for so long before it all comes tumbling down.
Many in the U.S. Intelligence Community fear a 25-year Great Depression is unavoidable…
STEVE MEYERS:
My name is Steve Meyers.
And I want to thank you for taking part in this exclusive Money Morning interview with Jim Rickards, the Financial Threat and Asymmetric Warfare Advisor for both the Pentagon and CIA.
Recently, all 16 branches of our Intelligence Community have come together to release a shocking report.
These agencies, that include the CIA, FBI, Army, and Navy, they’ve already begun to estimate the impact of the fall of the dollar as the global reserve currency.
And our reign as the world’s leading super power being annihilated in a way equivalent to the end of the British Empire, post-World War II.
And the end game could be a nightmarish scenario, where the world falls into an extended period of global anarchy.
http://moneymorning.com/jim-rickards-coming-great-depression/
Of course WWII helped pull the world out of the Great Depression, and we are certainly setting the table right now for what could potentially be WWIII.
History repeats.

2015 global recession warning from financial seers of the century
JULY 2014: David Levy’s family has correctly called every major financial event in the US for decades. Now he’s warning of a global recession next year.
“When the US sneezes, the rest of the world catches a cold” may need to be flipped.
Maybe the rest of the world will sneeze this time, and the US will get sick.
That’s the view of David Levy, who oversees the Levy Forecast, a newsletter analysing the economy that his family started in 1949 and one with an enviable record. Nearly a decade ago, the now 59-year-old economist warned that US housing was a bubble set to burst, and that the damage would push the country into a recession so severe the Federal Reserve would have no choice but to slash short-term borrowing rates to stimulate the economy. That’s exactly what happened. Now Mr Levy says the United States is likely to fall into a recession next year, triggered by downturns in other countries, for the first time in modern history.
“The recession for the rest of the world … will be worse than the last one,” says Mr Levy, whose grandfather called the 1929 stock crash and whose father won praise for anticipating turns in the business
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cycle, often against conventional wisdom. Mr Levy’s forecast for a global recession is extreme, but worth considering given so much is riding on the dominant view that economies are healing. Investors have pushed US stocks to record highs, and Fed estimates have the US growing at an annual pace of at least 3 per cent for the rest of the year, and all of 2015.
http://www.independent.co.uk/news/business/analysis-and-features/doom-and-gloom-2015-global-recession-warning-from-financial-seers-of-the-century-9624700.html
March 25, 2015: Dow tumbles 292 points as economy shows cracks
http://money.cnn.com/2015/03/25/investing/stocks-marketsdow-fall-growth-concern/index.html
World Markets:
Nikkei-1.39%
Japan
DAX-1.63%
Germany
CAC 40-1.54%
France
FTSE 100-1.40%
UK
Opening Bell: US stocks open lower amid data and geopolitical tensions; Dow off 100 points – @CNBC

Jim Grant: The Fed Is Still In Emergecy Mode After 7 Years. Greece Confiscating Pensions Is More Overt Than Central Banks Targeting Inflaton
 
What Kind Of Lipstick Will The Fed Put On It’s Pig Of A GDP? More QE? Steal More From Savers With Negative Rates? Audit & Close The Fed!
http://investmentwatchblog.com/what-kind-of-lipstick-will-the-fed-put-on-its-pig-of-a-gdp-more-qe-steal-more-from-savers-with-negative-rates-audit-close-the-fed/#xMXlRvo0hK31802u.99
Scary parallels and how to time the next crash
There are a lot of old saws out there that are simply wrong (Don’t fight the Fed comes to mind), but one that I’ve always loved is Samuel Clemens’ “History doesn’t repeat, it rhymes.”
Over time, we see a lot chartists and history buffs overlay charts from various time frames and/or markets and the charts will line up rather shockingly. Remember this one?
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http://www.marketwatch.com/story/scary-parallels-and-how-to-time-the-next-crash-2015-03-25?dist=beforebell
Wash

 

A 26% PRICE INCREASE THROUGH DECEPTION

by James Quinn 
I did my usual 7:00 am trek to Wal-Mart & Giant on Sunday morning to pick up the weekly food and various other daily living essentials. I go at 7:00 am to avoid the People of Wal-Mart, but I am still stuck with the Workers of Wal-Mart. I keep a bag of almonds in my drawer at work as a lunch time snack. Every couple weeks I purchase a new bag at Wal-Mart. They are pretty expensive from my viewpoint, but are relatively healthy
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as snacks go. image: http://i.walmartimages.com/i/p/00/07/87/42/35/0007874235366_180X180.jpg
A bag cost $6.98. It had been this price for as long as I can remember. This week I saw the price was $6.58 and thought to myself, Wal-Mart really does lower prices. Then I picked up the bag. It was different. It seemed smaller, but I couldn’t tell for sure. I brought the new bag to work this morning and compared it to the old bag. The new bag was only 12 ounces, while the old bag was 16 ounces.
The reduction in price I thought I was getting actually was a 26% price increase. This is the underhanded, dastardly way corporations
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increase prices, without increasing the actual price on the shelf. They count on the fact that most Americans are clueless noobs who couldn’t calculate their way out of wet paper bag. This method of price increase is rampant across the country as the ounces in detergent are reduced, the ounces in potato chip bags are reduced, and the ounces of everything are reduced. This doesn’t even take into consideration the use of lower quality materials in food, clothing, electronics, appliances, etc. When the BLS declares inflation is running below 2%, you know it’s a lie. They aren’t capturing these deceptive corporate practices in their little computer models. The screwing will continue until morale improves.

ANALYSIS: Still no sign that Central Bank money printing is working its way into the CPI.

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ANALYSIS: Still no sign that Central Bank money printing is working its way into the CPI. http://www.latimes.com/local/california/la-me-lopez-otherhalf-20150322-column.html#page=1 
 
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Still no sign that Central Bank money printing is working its way into the economy. http://www.wsj.com/articles/the-race-to-the-100-million-spec-house-1426780130 
 
View image on Twitter
 
 

US Stock Market Remains Negative Trend

Shares on the stock exchange in the United States remained lower on Thursday half-day operations, the fourth day the markets recorded negative behavior.
US stock market remains negative Casualties were more pronounced in European and Asian markets.
The Dow Jones industrial average fell 21 points (0.1%) to stand at 17,696 units at 11:45 am New York.
The Standard & Poor’s 500 index was down 2 points (0.1%) to settle at 2,058 integers. The Nasdaq composite fell 14 points (0.3%) to stand at 4,835.
Shares of energy companies rose due to higher oil prices, which gained $ 1.30 to $ 50.51 a barrel in New York.
In the debt market dropped the price of bonds. Instrument performance of 10-year Treasury increased to 1.93%

Bankers Hate Peace: All Wars Are Bankers’ Wars

As Lee Fang writesThe possibility of an Iran nuclear deal depressing weapons sales was raised by Myles Walton, an analyst from Germany’s Deutsche Bank, during a Lockheed earnings call this past January 27. Walton asked Marillyn Hewson, the chief executive of Lockheed Martin, if an Iran agreement could “impede what you see as progress in foreign military sales.” Financial industry analysts such as Walton use earnings calls as an opportunity to ask publicly-traded corporations like Lockheed about issues that might harm profitability.
Hewson replied that “that really isn’t coming up,” but stressed that “volatility all around the region” should continue to bring in new business. According to Hewson, “A lot of volatility, a lot of instability, a lot of things that are happening” in both the Middle East and the Asia-Pacific region means both are “growth areas” for Lockheed Martin.
The Deutsche Bank-Lockheed exchange “underscores a longstanding truism of the weapons trade: war — or the threat of war — is good for the arms business,” says William Hartung, director of the Arms & Security Project at the Center for International Policy. Hartung observed that Hewson described the normalization of relations with Iran not as a positive development for the future, but as an “impediment.” “And Hewson’s response,” Hartung adds, “which in essence is ‘don’t worry, there’s plenty of instability to go around,’ shows the perverse incentive structure that is at the heart of the international arms market.”
Former managing director of Goldman Sachs – and head of the international analytics group at Bear Stearns in London (Nomi Prins) – notes:
Throughout the century that I examined, which began with the Panic of 1907 … what I found by accessing the archives of each president is that through many events and periods, particular bankers were in constant communication [with the White House] — not just about financial and economic policy, and by extension trade policy, but also about aspects of World War I, or World War II, or the Cold War, in terms of the expansion that America was undergoing as a superpower in the world, politically, buoyed by the financial expansion of the banking community.
***
In the beginning of World War I, Woodrow Wilson had adopted initially a policy of neutrality. But the Morgan Bank, which was the most powerful bank at the time, and which wound up funding over 75 percent of the financing for the allied forces during World War I … pushed Wilson out of neutrality sooner than he might have done, because of their desire to be involved on one side of the war.
Now, on the other side of that war, for example, was the National City Bank, which, though they worked with Morgan in financing the French and the British, they also didn’t have a problem working with financing some things on the German side, as did Chase …
When Eisenhower became president … the U.S. was undergoing this expansion by providing, under his doctrine, military aid and support to countries [under] the so-called threat of being taken over by communism … What bankers did was they opened up hubs, in areas such as Cuba, in areas such as Beirut and Lebanon, where the U.S. also wanted to gain a stronghold in their Cold War fight against the Soviet Union. And so the juxtaposition of finance and foreign policy were very much aligned.
So in the ‘70s, it became less aligned, because though America was pursuing foreign policy initiatives in terms of expansion, the bankers found oil, and they made an extreme effort to activate relationships in the Middle East, that then the U.S. government followed. For example, in Saudi Arabia and so forth, they get access to oil money, and then recycle it into Latin American debt and other forms of lending throughout the globe. So that situation led the U.S. government.
Indeed, JP Morgan also purchased control over America’s leading 25 newspapers in order to propagandize US public opinion in favor of US entry into World War 1.
And many big banks, in fact, funded the Nazis.
BBC reported in 1998:
Barclays Bank has agreed to pay $3.6m to Jews whose assets were seized from French branches of the British-based bank during World War II.
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Chase Manhattan Bank, which has acknowledged seizing about 100 accounts held by Jews in its Paris branch during World War II ….”Recently unclassified reports from the US Treasury about the activities of Chase in Paris in the 1940s indicate that the local branch worked “in close collaboration with the German authorities” in freezing Jewish assets.
The New York Daily News noted the same year:
The relationship between Chase and the Nazis apparently was so cozy that Carlos Niedermann, the Chase branch chief in Paris, wrote his supervisor in Manhattan that the bank enjoyed “very special esteem” with top German officials and “a rapid expansion of deposits,” according to Newsweek.
Niedermann’s letter was written in May 1942 five months after the Japanese bombed Pearl Harbor and the U.S. also went to war with Germany.
The BBC reported in 1999:
A French government commission, investigating the seizure of Jewish bank accounts during the Second World War, says five American banks Chase Manhattan, J.P Morgan, Guaranty Trust Co. of New York, Bank of the City of New York and American Express had taken part.
It says their Paris branches handed over to the Nazi occupiers about one-hundred such accounts.
One of Britain’s main newspapers – the Guardian – reported in 2004:
George Bush’s grandfather [and George H.W. Bush’s father], the late US senator Prescott Bush, was a director and shareholder of companies that profited from their involvement with the financial backers of Nazi Germany.
The Guardian has obtained confirmation from newly discovered files in the US National Archives that a firm of which Prescott Bush was a director was involved with the financial architects of Nazism.
His business dealings … continued until his company’s assets were seized in 1942 under the Trading with the Enemy Act
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The documents reveal that the firm he worked for, Brown Brothers Harriman (BBH), acted as a US base for the German industrialist, Fritz Thyssen, who helped finance Hitler in the 1930s before falling out with him at the end of the decade. The Guardian has seen evidence that shows Bush was the director of the New York-based Union Banking Corporation (UBC) that represented Thyssen’s US interests and he continued to work for the bank after America entered the war.
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Bush was a founding member of the bank [UBC] … The bank was set up by Harriman and Bush’s father-in-law to provide a US bank for the Thyssens, Germany’s most powerful industrial family.
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By the late 1930s, Brown Brothers Harriman, which claimed to be the world’s largest private investment bank, and UBC had bought and shipped millions of dollars of gold, fuel, steel, coal and US treasury bonds to Germany, both feeding and financing Hitler’s build-up to war.
Between 1931 and 1933 UBC bought more than $8m worth of gold, of which $3m was shipped abroad. According to documents seen by the Guardian, after UBC was set up it transferred $2m to BBH accounts and between 1924 and 1940 the assets of UBC hovered around $3m, dropping to $1m only on a few occasions.
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UBC was caught red-handed operating a American shell company for the Thyssen family eight months after America had entered the war and that this was the bank that had partly financed Hitler’s rise to power.
Indeed, banks often finance both sides of wars:

And they are one of the main sources of financing for nuclear weapons.
(The San Francisco Chronicle also documents that leading financiers Rockefeller, Carnegie and Harriman also funded Nazi eugenics programs … but that’s a story for another day.)
The Federal Reserve and other central banks also help to start wars by financing them. Thomas Jefferson and the father of free market capitalism, Adam Smith, both noted that the financing wars by banks led to more – and longer – wars.
And America apparently considers economic rivalry to be a basis for war, and is using the military to contain China’s growing economic influence.
Multi-billionaire investor Hugo Salinas Price says:
What happened to [Libya’s] Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting tradeThe same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar.
Senior CNBC editor John Carney noted:
Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power? It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.
Robert Wenzel of Economic Policy Journal thinks the central banking initiative reveals that foreign powers may have a strong influence over the rebels.
This suggests we have a bit more than a ragtag bunch of rebels running around and that there are some pretty sophisticated influences. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” Wenzel writes.
Indeed, many claim that recent wars have really been about bringing all countries into the fold of Western central banking, and that the wars against Middle Eastern countries are really about forcing them into the dollar and private central banking.
The most decorated American military man in history said that war is a racket, and noted:
Let us not forget the bankers who financed the great war. If anyone had the cream of the profits it was the bankers.
The big banks have also been laundering money for terrorists. The big bank employee who blew the whistle on the banks’ money laundering for terrorists and drug cartels says that the giant bank is still aiding terrorists, saying:
The public needs to know that money is still being funneled through HSBC to directly buy guns and bullets to kill our soldiers …. Banks financing … terrorists affects every single American.
He also said:
It is disgusting that our banks are STILL financing terror on 9/11 2013.
And see this.
According to the BBC and other sources, Prescott Bush, JP Morgan and other leading financiers also funded a coup against President Franklin Roosevelt in an attempt – basically – to implement fascism in the U.S. See thisthisthis and this.
Kevin Zeese writes:
Americans are recognizing the link between the military-industrial complex and the Wall Street oligarchs—a connection that goes back to the beginning of the modern U.S. empire. Banks have always profited from war because the debt created by banks results in ongoing war profit for big finance; and because wars have been used to open countries to U.S. corporate and banking interests. Secretary of State, William Jennings Bryan wrote: “the large banking interests were deeply interested in the world war because of the wide opportunities for large profits.”
Many historians now recognize that a hidden history for U.S. entry into World War I was to protect U.S. investors. U.S. commercial interests had invested heavily in European allies before the war: “By 1915, American neutrality was being criticized as bankers and merchants began to loan money and offer credits to the warring parties, although the Central Powers received far less. Between 1915 and April 1917, the Allies received 85 times the amount loaned to Germany.” The total dollars loaned to all Allied borrowers during this period was $2,581,300,000. The bankers saw that if Germany won, their loans to European allies would not be repaid. The leading U.S. banker of the era, J.P. Morgan and his associates did everything they could to push the United States into the war on the side of England and France. Morgan said: “We agreed that we should do all that was lawfully in our power to help the Allies win the war as soon as possible.” President Woodrow Wilson, who campaigned saying he would keep the United States out of war, seems to have entered the war to protect U.S. banks’ investments in Europe.
The most decorated Marine in history, Smedley Butler, described fighting for U.S. banks in many of the wars he fought in. He said: “I spent 33 years and four months in active military service and during that period I spent most of my time as a high-class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”
In Confessions of an Economic Hit Man, John Perkins describes how World Bank and IMF loans are used to generate profits for U.S. business and saddle countries with huge debts that allow the United States to control them. It is not surprising that former civilian military leaders like Robert McNamara and Paul Wolfowitz went on to head the World Bank. These nations’ debt to international banks ensures they are controlled by the United States, which pressures them into joining the “coalition of the willing” that helped invade Iraq or allowing U.S. military bases on their land. If countries refuse to “honor” their debts, the CIA or Department of Defense enforces U.S. political will through coups or military action.
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More and more people are indeed seeing the connection between corporate banksterism and militarism ….
Indeed, all wars are bankers’ wars.

War Makes Banks Rich

Wars are the fastest way for banks to create more debt … and therefore to make more profit. No wonder they love war.
After all, the banking system is founded upon the counter-intuitive but indisputable fact that banks create loans first, and then create deposits later.
In other words, virtually all money is actually created as debt. For example, in a hearing held on September 30, 1941 in the House Committee on Banking and Currency, the Chairman of the Federal Reserve (Mariner S. Eccles) said:
That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.
And Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, said:
If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.
Debt (from the borrower’s perspective) owed to banks is profit and income from the bank’s perspective. In other words, banks are in the business of creating more debt … i.e. finding more people who want to borrow larger sums.
Debt is central to our banking system. Indeed, Federal Reserve chairman Greenspan was so worried that the U.S. would pay off it’s debt, that he suggested tax cuts for the wealthy to increase the debt.
What does this have to do with war?
War is the most efficient debt-creation machine. For starters, wars are very expensive.
For example, Nobel prize winning economist Joseph Stiglitz estimated in 2008 that the Iraq war could cost America up to $5 trillion dollars. A study by Brown University’s Watson Institute for International Studies says the Iraq war costs could exceed $6 trillion, when interest payments to the banks are taken into account.
This is nothing new … but has been going on for thousands of years. As a Cambridge University Press treatise on ancient Athens notes:
Financing wars is expensive business, and the scope for initiative was regularly extended by borrowing.
So wars have been a huge – and regular – way for banks to create debt for kings and presidents who want to try to expand their empires.
Major General Smedley Butler – the most decorated Marine in American history – was right when he said:
Let us not forget the bankers who financed the great war. If anyone had the cream of the profits it was the bankers.
War is also good for banks because a lot of material, equipment, buildings and infrastructure get destroyed in war. So countries go into massive debt to finance war, and then borrow a ton more to rebuild.
The advent of central banks hasn’t changed this formula. Specifically, the big banks (“primary dealers”) loan money to the Fed, and charge interest for the loan.
So when a nation like the U.S. gets into a war, the Fed pumps out money for the war effort based upon loans from the primary dealers, who make a killing in interest payments from the Fed.

War Is Horrible for the American People

Top economists say that war is destroying our economy.  But war is great for the  super-elites … so they want to keep it going.
And America’s never-ending wars are hurting our national security.
Never-ending wars are also destroying our freedom. The Founding Fathers warned against standing armies, saying that they destroy freedom. (update).
Perversely, our government – which is a wholly-owned subsidiary of the big banks –  treats anti-war sentiment  – or protest of big banks (and here) – as terrorism.