XIAM007

Making Unique Observations in a Very Cluttered World

Friday, 31 July 2009

Ron Paul: Why Is The Fed So Afraid?

Watching - Ron Paul: Why Is The Fed So Afraid? http://www.lewrockwell.com/...

Congressman Paul: Millions Of Americans Have Had Enough Of The Fed

Reading - Congressman Paul: Millions Of Americans Have Had Enough Of The Fed http://tinyurl.com/xiam007-6

Texas Congressman Ron Paul, the driving force behind HR 1207, legislation that would see an audit of the Federal Reserve, joined Alex Jones live on air yesterday to provide a short update on the progress of the bill.

“I think it’s rather amazing,” the Congressman told listeners, “a year or two ago I imagine very few people even thought about the Federal Reserve.”

“But I think because of the economic crisis, because of the blundering with TARP funds, when the American people said we need to know what you guys are doing with and how you’re wasting the money, we saw an opening that we could call attention to about what kind of shenanigans has been going on at the Federal Reserve.” Paul commented.

The Federal Reserve Transparency Act now has 279 co-sponsors in the House and 20 in the Senate, meaning that more than 64% of the House of Representatives is already co-sponsoring the bill.

“There’s a lot more yet to come.” Congressman Paul said. “We need to know what they are doing, that’s why our audit bill is so important, but eventually though we need a sound monetary system, and I think that if we continue with our progress, hopefully we’ll reach that point some day.

There is strong bipartisan support for the bill with both Republicans and Democrats getting behind the legislation.

In addition, recent polls conducted by Gallup and Rasmussen have found that a vast majority of the public are suspicious of the Federal Reserve, with 75% in favour of an audit.

“The new survey finds that an overwhelming majority of Americans in every demographic category – including age, gender, political affiliation, race and income – disagree with Bernanke and favor auditing the Fed to make its secretive deliberations public.” Rasmussen writes.

“The Fed feels so much on the defense that they send the Chairman of the Federal Reserve Board out to hold town hall meetings.” Congressman Paul told listeners, chuckling. “That is hilarious.”

Paul spoke of bigger challenges to come.

“The dollar crisis will be a ten times bigger event than the financial collapse, and then the big deal will be which way are we going to go. Are we going to say as Americans that we had a taste of freedom, we want our freedom back? Or are we going to be complacent and the majority of people say ‘yes let the government do whatever they want, they take care of us, we trust the government’?”

“Right now in Washington everybody is still pushing more government.” Paul told listeners. “Just look at what Obama is doing with more war, more spending, more borrowing, more socialized medicine, more cap and trade, more taxes. But when I go home or go around the country or talk on radio shows, I find there’s not tens of thousands but literally millions of people who understand exactly what is going on and they’ve had enough.”

“We have truth on our side, the absurdity that they can control us forever by just printing money and claiming that they will always have wealth by printing money is so absurd that the people realise. Since we have honest money, truth, limited government and freedom on our side, if we don’t win there’s something awfully wrong.” Paul said.

The Congressman also warned, however, that the Obama administration has the wherewithal to use staged events to their advantage in order to dissolve growing public dissent.

“It may be an accident that they play on or blow up, or react to, so it doesn’t necessarily have to be absolutely contrived. They may have an accidental confrontation or sometimes they’ll just go out and something gets blown up and this will incite the people.” Paul urged.

“I don’t have any immediate insights, but I’m always on the alert and vigilant… If there isn’t enough fear in the hearts of the people, they will create the fear because people succumb and they give up their liberties when they are very fearful.” he commented.

Listen to the interview below:

Wednesday, 29 July 2009

Let’s Break up the Fed

Reading - Let’s Break up the Fed http://online.wsj.com/artic...

The Obama administration’s plan to increase the powers of the Federal Reserve, says one critic, is like giving a teenager “a bigger, faster car right after he crashed the family station wagon.” Treasury Secretary Timothy Geithner disagrees. He argues that the Fed is “best positioned” to oversee key financial companies, and that the Obama plan would give the Fed only “modest additional authority.”

Mr. Geithner is right about one thing: The Fed’s power is already vast.But it wasn’t even well-positioned to supervise the likes of Citicorp. Broadening the Fed’s responsibilities won’t help. Instead, we should think of how best to dismantle an overextended Fed.

Though advanced economies like ours require organizations capable of taking on a wide range of activities, there are limits. As Frank Knight, the great Chicago economist, pointed out in his 1921 classic “Risk, Uncertainty, and Profit,” individuals who control large organizations have to delegate many decisions to subordinates. Entities like hedge funds, where individuals such as George Soros make most of the consequential choices, are exceptions.

Therefore, good judgments about people—picking the right subordinates, refereeing staff conflicts, evaluating performance, and so on—are crucial.

Good judgment requires experience, not just exceptional intelligence or raw ability. Although many lessons about managing people can be applied to different fields, good judgment also requires some specific expertise. You can’t manage plumbers without knowing something about plumbing.

Unfortunately no one can learn everything about everything. Yes, Lou Gerstner turned around IBM without any prior experience in the computer business. But he had decades of general management experience, was an exceptionally quick study, and had to come up to speed in just one industry. Individuals who can learn how to effectively lead conglomerates, especially during periods of transition, are exceedingly rare.

This mismatch between what even the most talented minds can learn and the challenges of controlling widely disparate businesses has helped bring our financial system to the brink of collapse. The great names in finance once had distinctive identities and capabilities: Salomon Brothers was the champion in bond trading; Merrill Lynch’s thundering herd was tops in retail brokerage; Morgan Stanley and J.P. Morgan’s white-shoe bankers built formidable blue-chip client lists; and Bear Stearns’s PSDs—poor, smart and driven staff—cultivated scrappy entrepreneurs. Willy-nilly diversification turned these focused outfits into highly leveraged, unwieldy agglomerations of unrelated fiefdoms.

Likewise, the Fed has been incapacitated by its transformation into an omnibus enterprise with responsibilities ranging from boots-on-the-ground regulation to high-level monetary policy. The Federal Reserve Act of 1913, which created the Federal Reserve System, did so to forestall financial panics rather than pursue macroeconomic policies. The gold standard defined monetary policy. The Fed was merely meant to “provide an elastic currency” by serving as lender of last resort in times of crisis. The Act also assigned the Fed routine responsibilities for maintaining and improving the financial system—examining banks, issuing currency notes, and helping clear checks.

The adoption of Keynesian and monetarist ideas by central bankers and elected officials subsequently cast the Fed in a proactive macroeconomic role. William McChesney Martin, who served as chairman from 1951 to 1970, said that the job of the Fed was “to take away the punch bowl just as the party gets going.” This might have been wise in theory, but it wasn’t mandated by the law. In 1977, an amendment to the 1913 Act explicitly charged the Fed with promoting “maximum” employment and “stable” prices. The Humphrey-Hawkins Full Employment Act that followed in 1978 mandated the Fed to promote “full” employment and while maintaining “reasonable” price stability.

Legislation also has increased the Fed’s responsibilities for overseeing the mechanics of the financial system. The Bank Holding Company Act of 1956 gave the Fed responsibility over holding companies designed to circumvent restrictions placed on individual banks. It was tasked with regulating the formation and acquisition of such companies.

Congress further tasked the Fed with enforcing consumer-protection and fair-lending rules. The Fed was made the primary regulator of the 1968 Truth in Lending Act that required proper disclosure of interest rates and terms. Similarly, the Community Reinvestment Act of 1977 forced the Fed to address discrimination against borrowers from poor neighborhoods.

The expansion of bank holding companies into activities such as investment banking and off-balance-sheet exposures to complex instruments such as credit-default swaps also required the Fed to increase the scope of its supervisory capabilities.

In principle, an exceptionally talented theorist might capably run a Fed focused just on monetary policy. Setting the discount rate and regulating the money supply are centralized, top-down activities that do not require much administrative capacity. But without deep managerial experience and considerable industry knowledge, effective chairmanship of a Fed that relies on far-flung staff to regulate financial institutions and practices is almost unimaginable. The vast territory the Fed covers would challenge the most exceptional and experienced executives.

As it happens, the Fed has been led for more than 20 years by chairmen who had no senior management experience. Prior to running the Fed, Alan Greenspan started a small consulting firm and Ben Bernanke was head of Princeton’s economics department. Given their understandable preoccupation with monetary and macroeconomic matters, how much attention could they be expected to devote to mastering and managing the plumbing side of the Fed? While the record of the Fed’s monetary policy has been mixed, its supervision of financial institutions has been a predictable and comprehensive failure.

The Fed’s excessively broad mandate also has thwarted accountability. The CEOs of Citibank, AIG, Bear Stearns, Lehman and Countrywide are all gone—albeit with too much delay and with no clawback of unmerited compensation. At the Fed, no high-level heads have rolled. Mr. Geithner was promoted to treasury secretary. Mr. Bernanke is treated with great deference as he solemnly testifies that if it weren’t for the Fed, the crisis would have been much worse. But then, how can anyone be held responsible for failing at a job no human could do?

At the very least we should split the monetary policy and regulatory functions of the Fed, as was done through the Maastricht Treaty that established the European Central Bank. What we need now is a debate about how to break up the Fed—and some of the sprawling financial institutions it supervises—in order to make both the regulator and the regulated more manageable and accountable.

Tuesday, 28 July 2009

Bernanke: Why are we still listening to this guy?

Watching - Bernanke: Why are we still listening to this guy? http://bit.ly/Z4j7s

Monday, 27 July 2009

Sticker Shock: $23.7 Trillion Bailout?

Reading - Sticker Shock: $23.7 Trillion Bailout? http://bit.ly/1LXViV

"If you spent a million dollars a day going back to the birth of Christ, that wouldn't even come close to just $1 trillion

"The total potential federal government support could reach up to $23.7 trillion," says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a report released today on thegovernment's efforts to fix the financial system.

Yes, $23.7 trillion.

"The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn't even imaginable," said Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and Government Reform Committee.

"If you spent a million dollars a day going back to the birth of Christ, that wouldn't even come close to just $1 trillion -- $23.7 trillion is a staggering figure."

To be sure, we aren't there yet.

The government has about 50 different programs to fight the current recession, including programs to bail out ailing banks and automakers, boost lending and beat back the housing crisis. So far they've cost taxpayers around $4 trillion.

Continue reading - http://abcnews.go.com/Business/Politics/story?id=8140184

Sunday, 26 July 2009

FIREWALL - In Defense of Nation State

Watching - FIREWALL - In Defense of Nation State http://tinyurl.com/xiam007-4

Federal Reserve is ‘a Ponzi scheme, an inside job’

Reading - Federal Reserve is ‘a Ponzi scheme, an inside job’ http://bit.ly/YaHm0

The Federal Reserve — the quasi-autonomous body that controls the US’s money supply — is a “Ponzi scheme” that created “bubble after bubble” in the US economy and needs to be held accountable for its actions, says Eliot Spitzer, the former governor and attorney-general of New York.

In a wide-ranging discussion of the bank bailouts on MSNBC’s Morning Meeting, host Dylan Ratigan described the process by which the Federal Reserve exchanged $13.9 trillion of bad bank debt for cash that it gave to the struggling banks.

Spitzer — who built a reputation as “the Sheriff of Wall Street” for his zealous prosecutions of corporate crime as New York’s attorney-general and then resigned as the state’s governor over revelations he had paid for prostitutes — seemed to agree with Ratigan that the bank bailout amounts to “America’s greatest theft and cover-up ever.”

Advocating in favor of a House bill to audit the Federal Reserve, Spitzer said: “The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since [former Fed Chairman] Paul Volcker left.

“The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.

“The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent. We [taxpayers] didn’t get stock in those banks, they didn’t ask what was going on — this begs and cries out for hard, tough examination.

“You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy.

“The Fed needs to be examined carefully.”

Spitzer resigned as governor of New York in March, 2008, after news reports stated Spitzer had paid for a $1,000-an-hour New York City call girl.

At the time, Spitzer had been raising the alarm about sub-prime mortgages. In the wake of the economic meltdown triggered last fall by sub-prime loans, some observers have suggested that Spitzer may have been targeted by law enforcement because of his high-profile opposition to Wall Street financial policies.

Investigative reporter Greg Palast wrote that federal agents’ revealing of Spitzer’s identity as a call-girl customer was no coincidence.

Palast wrote that the principle of “prosecutorial discretion” is often used to keep the names of high-profile persons out of the media when they are tangentially linked to a criminal investigation. In the case of Spitzer, the Justice Department chose not to invoke prosecutorial discretion.

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Spitzer recently told Bloomberg News that President Obama’s regulatory reforms of the financial sector are “irrelevant” because regulatory agencies have not been enforcing corporate laws to begin with.

“Regulatory agencies already had the power to do everything they needed to do,” he said. “They just affirmatively chose not to do it.”

– Daniel Tencer

The following video was broadcast on MSNBC’s Morning Meeting, Friday, July 24, 2009:

The Money Masters - How International Bankers Gained Control of America

Watching - The Money Masters - How International Bankers Gained Control of America http://tinyurl.com/xiam007-3




Friday, 24 July 2009

World Prepares to Dump the Dollar

Reading - World Prepares to Dump the Dollar http://bit.ly/5MLLM

American economists think the world can’t afford to let go of the dollar’s reserve currency status. The world is about to teach them differently.
ROBERT MORLEY
What do China, India, Brazil, Russia, France and Germany have in common? These countries most often can’t agree on anything. But they are united in one strange—and ominous—way. They blame the United States for wrecking the global economy. And they think the dollar is the wrecking ball.

One rock-solid, foundational belief underpins almost all economic theory in America: faith in the dollar’s unassailable status as the world’s reserve currency. Foreigners hold so many dollars that they can’t afford to stop buying them, the theory goes. Therefore the dollar’s status as the world’s reserve currency is sound. But the dollar is now coming under a concentrated attack. Are American economists about to get schooled?

Has a dollar-killer been minted?
Angela Merkel summed up the dollar-skeptic viewpoint last year. “Excessively cheap money in the U.S. was a driver of today’s crisis,” she told the German parliament. And America’s solution—even more cheap money—was just setting the world up for another crisis, she said. It was just a matter of time.

The irony is that America is completely blind to the catastrophe heading its way. As the economic crisis unfolded at the end of last year, investors made a mad rush out of global stock markets and into other assets. The biggest beneficiary of the panic was the one market large enough and liquid enough to handle the trillions of dollars being moved: the U.S. dollar market. This caused the dollar to surge in value.

America grossly misdiagnosed the demand for dollars as a vote of confidence in the U.S. economic system. In fact, it was primarily a case of investors looking for a place they could quickly and easily get their money in—and out.

Now that the initial panic has subsided, the dollar’s international purchasing power has resumed its former downward trajectory. Since the post-crisis high in March, the dollar has fallen by a portfolio-shredding 10 percent.

America’s foreign creditors are again questioning the wisdom of holding so many U.S. dollars. And they’re looking for a way out.

“Leaders from Brazil, Russia, India and China are demanding a greater stake in the management of the global economy and challenging the dollar as the primary denomination for world reserves,” reported Bloomberg about the recent G-8 summit.

But is dumping the dollar just wishful thinking on the part of these nations? Or is there some tangible alternative? Well, how about this: Some think they’ve already minted a dollar-killer.

Russia’s president is pushing to remove the dollar and reinstate some version of a gold standard. Dmitry Medvedev unveiled a newly minted gold bullion coin that he said was a true “symbol of unity,” and “our desire to solve such issues.” It was a test sample of a new supranational currency referred to as the United Future World Currency. Samples were issued to each of the world leaders attending the G-8 summit.

“We are discussing the creation or, to be more correct, the appearance of new reserve currencies,” said Medvedev.

“Debate” about Bretton Woods is flowery code for an attack on the dollar.
What is even more surprising is that the dollar assaults have come not only from perennial U.S. antagonists but also from its more democratic allies. At the G-8 summit, French President Nicolas Sarkozy called for a complete revamp of the global currency system, saying that the dollar’s supremacy is outdated. “[W]e’ve still got the Bretton Woods system of 1945,” Sarkozy stated on July 9. “Frankly, 60 years afterwards, we’ve got to ask: Shouldn’t a politically multipolar world correspond to an economically multi-currency world?”

Bretton Woods was the historic conference that laid the foundation for a postwar global economy centered on the dollar. “Even if it’s a difficult topic,” Sarkozy said, “There has to be a debate.” “Debate” about Bretton Woods is flowery code for an attack on the dollar.

India too seems to be moving into the anti-dollar camp. Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, is urging the government to diversify its foreign-exchange reserves and hold fewer dollars. India holds over $250 billion worth.

Such a decision could break the U.S. dollar bond market.
But the next blow to the dollar may come as a complete surprise to Washington policymakers. Since World War ii, Japan has been a stalwart dollar supporter and a close collaborator with Federal Reserve monetary policy. That may be about to end. For only the second time in 54 years, the opposition in Japan is close to taking over the government. Japan’s economy, like those of the rest of the world, is in severe contraction, and disgruntled voters are upsetting the balance of power and pushing for radical reforms.

Back in May, Masaharu Nakagawa, the chief finance spokesman for the opposition, told the bbc that he was worried about the future value of the dollar. He said that if his party were elected in the upcoming national elections, Japan would refuse to purchase any more U.S. treasuries unless they were denominated in Japanese yen instead of dollars.

Such a decision could break the U.S. dollar bond market.

Japan is America’s second-most important creditor nation—lending the U.S. billions of dollars each year. If Japan won’t lend unless America pays it back in yen, then China and other major lenders may quickly follow suit. This would eliminate America’s ability to use inflation to cheat on its debt payments. America’s debt burden would soar, interest rates would jump, and national default—Argentina-style—could be staring America in the face within months instead of years.

“America is making a terrible mistake which will result in the greatest fall in all of mankind’s history!” Tim Thompson wrote for the Trumpet in 2000. “As soon as America is no longer a safe place for foreign money, that money will be gone. And once the foreign money is gone, it will leave us with a mountain of debt that we cannot repay.”

What Japan is proposing could be the first steps of a great exodus from the U.S. bond market and consequently the end of the dollar as the world’s reserve currency.

America’s leaders seem blind to the looming dollar revolt. Global economies are in crisis. Unemployment rolls are soaring. People want answers and solutions. The jobless will demand action, and culpable politicians will look for scapegoats and distractions. The first step, blaming the U.S. and its currency for the global recession, has already begun.

A new global currency—and leveraging it to knock the U.S. down—will be the solution.

The highly trained economic theorists who keep telling us that foreigners can’t afford to stop supporting the U.S. are about to get reeducated at Reality U.

Thursday, 23 July 2009

Scams And Bailouts The Cause of World Depression

Reading - Scams And Bailouts The Cause of World Depression http://tinyurl.com/xiam007

economic destruction of America a real threat, debts too massive for paper to absorb, mysteries still surround Madoff, the Goldman scam, 57 banks have now gone under this year, families struggle to pay college bills, TARP a mystery to taxpayers, no stability at AIG, jobless benefits drying up for workers

The US Illuminists are gambling big. This is the most dangerous part of their strategy, namely, how to take down America and the dollar without destroying themselves in the process, both financially and politically. They are going to get smoked. Even now the stock, bond and commodities markets are spiraling out of their control, and their new outrageous salaries and bonuses are about to be debauched as they are left holding the bag with huge positions in dollar-denominated paper assets. They will try to dump this paper without sending gold and silver on a moon-shot, but they are doomed to failure. The amounts of paper assets and debt are simply too massive, and the commodities markets and other tangible assets are too small to absorb these gargantuan sums of money and credit without exploding to the upside. Just keep buying gold, silver and their related shares on the dips, and you just can't lose in the long term. The trend is your friend. Gold and silver are trending up, and stocks, bonds and derivatives are trending down - way down!!!

About two months ago our sources informed us that the US government had begun sending large amounts of cash to embassies throughout the world to be exchanged for local currency. We have had a number of reports that this in fact has been the case.

Having been involved in counterintelligence and for some 50 years in economics and finance, I believe this is a precursor to problems centered around the US dollar.

It was just a few months ago that the USDX was 89.5. The USDX is a dollar index, and is computed by using a trade-weighted geometric average of six currencies and their weights are: the euro 57.6%; the Japanese yen 13.6%; the British pound 11.9%; the Canadian dollar 9.1%; the Swedish Korona 4.2% and the Swiss franc 3.6%.

We recommended the sale of the dollar at 89.5. It recently closed at 79.5.

We believe that between now and the end of October that the USDX could fall to 71.18, its former low of 18-months ago. At that time a number of businesses outside the US were refusing to take US dollars and we believe that will happen again, and that is what the Treasury Department is anticipating and the reason for sending the cash to the embassies for conversion to local currencies.

We also believe these events could precipitate a short bank holiday in the US due to disruption of capital flows in and out of the US and concern if not panic in the US banking community. We also believe the government will use such events as a trial run for a future major banking shutdown. They will be interested in the public’s reaction as a precursor to what might happen in the future if there were a major banking shutdown.

Americans are well aware of the Madoff scandal, but procedures used in his conviction leave many unanswered questions.

Conspiracy charges were never brought against Mr. Madoff. We had information we published just prior to the story breaking of what Mr. Madoff had been doing. Our contacts not only gave us the story, but details of how the funds were transferred from NYC to Israel and other offshore locations, such as the Cayman Islands, Belize and Switzerland. There were many wire transfers and also the physical transfer of bearer bonds to these locations.

What was interesting was Mr. Madoff’s association with veteran officers in the US military. That leads us to intelligence sources that have told us that Mr. Madoff was operating his scheme with elements of the CIA, the Russian-Israeli mafia and the Mossad. This would explain Mr. Madoff’s closed trial.

A number of banks were used in the operation. The Israeli Discount Bank, Bank Leumi, Bank of New York, Chase and Citibank’s private banking facility.

There is no question funds were being used by government agencies just as were those of AIG.

For his efforts Mr. Madoff received 150 years in prison, a ludicrous sentence under the circumstances. The nature of his trial was unusual. No media coverage, no attempt to charge any co-conspirators and no effort that we are aware of to recover funds, except for a billion here and a billion there. You don’t run a scheme like this out of your back pocket. Many on Wall Street knew what was going on and scores of others were involved. In the case of following the money all the court has to do is check with the NY Federal Reserve and the Treasury Department, both of which have access to every money wire out of his company and the banks he used. That would be too easy or is the avenue deliberately not being pursued. Then there is the case of the SEC, which knew for years a scam was being perpetrated. They were served up proof positive of a scam and did nothing to stop it. That tells us higher up in government they were told hands off, look the other way. The whole episode stinks, just like BCCI, Iran-Contra and Nugan-Hand, all CIA scam operations.

Mr. Madoff was convicted on 11 criminal charges – none of which included conspiracy. In other words, who assisted you in your criminal acts? Strangely the court had no interest in uncovering who else was involved. Thus far only a few billion dollars have been recovered.

The only reason Mr. Madoff turned himself in and pleaded guilty to all 11 counts of criminal activity was to protect his co-conspirators by not having to testify and government willingly allowed that. Mr. Madoff kept insisting he acted alone. After 28 years on Wall Street we ca hardly believe that. None of his family was charger, yet they had to know what was going on.

There are just too many unanswered questions that government and Wall Street have been all too willing to sweep under the rug.

THE GOLDMAN SCAM:

There is absolutely no question that Goldman Sachs is a criminal enterprise and that they have co-opted our government.

We believe that they have been involved in massive unlawful activity using a program that may have been given to them by the government. The program is a major front running device that capitalized in picking up trades by snipping them out in nanoseconds and opportuning the system with a program no one else has. The Street has been and is furious that the media, regulators and our duly elected are not even discussing what could be the second biggest scam and abuse of our times. The biggest is the suppression of gold and silver prices.

Worse yet, few people realize that exchanges actually pay firms to trade against order flow when they act as a “supplementary liquidity provider.” Exchanges pay firms ¼ of a penny if they provide liquidity when an order appears in the system. This is an extra incentive to front run order flows. Can you imagine that this is a policy of the NYSE, led by the pirates at Goldman Sachs?

During the past two weeks, since these revelations, we have heard nothing from the SEC and their course of action. If something is not done nobody in their right mind would want to trade on our markets again.

If there is, as we suspect there is wrongdoing, this scam is bigger than Madoff and Stanford combined. Due to the position that the NYSE allowed Goldman to be placed in, they have a virtual monopoly on the NYSE’s Supplemental Liquidity 2 Provider Program.

It is Nasdaq’s view; these irregularities reveal that the NYSE’s true motivation for these SLP operations is to discriminate among its members and to burden some member’s ability to compete with the NYSE. This is as sinister as it gets.

We spent 28 years on Wall Street and we know that when a firm has an 87.5% trading accuracy record, something unnatural is going on. That is Goldman Sachs followed by JPMorgan Chase and Citigroup.

It was only six months ago Goldman received $10 billion from the US Treasury and relied on government guarantees to issue debt. This, in part, was how such enormous profits were made, up 64% year-on-year. As well, the government, via the Fed, stepped in and had the taxpayers pay $13 billion of AIG debt to Goldman, their part of a $105.4 billion rescue. This program has allowed Goldman to make record profits in the middle of a depression, some $27 billion a year.

As usual the media refuses to dig in and get the story we and a few others have dug up. Nor, as expected, has the SEC done anything.

The cat got out of the bag with the arrest of Russian-American programmer Sargey Aleynikov, by Goldman and the FBI. Goldman contends Aleynikov tried to steal Goldman’s secret code, which would unlock Goldman’s method of front running stocks, and commodity trades.

What is really important about this arrest is that Goldman said, ”There is a danger that someone who knew how to use this program could use it to manipulate markets in unfair ways.” We ask, is that what Goldman was doing?

Goldman has been able to read data on trades before they are committed. They place their buys and sells according to that nanosecond, thus, allowing them to essentially steal boatloads of money every day from traders and others worldwide. Goldman has been able to front run any transaction, stealing pennies in each transaction.

Will Goldman continue to steal from the public, or will they be forced to abandon the program, which would allow markets to return to normal? A curtailment of this program could put a major crimp in the market manipulations of the US government via the “Working Group on Financial Markets.”

In addition, why does Goldman have a federal exemption for VaR Calculations? They are using the Fed Board’s Market Risk rules used for state member banks and bank holding companies and the risk based capital rules. It seems some are more equal then others.

We might add that Goldman is the major force behind CAP and Trade legislation, the carbon market scam that will enable them to make billions trading. Goldman owns 19% of the Chicago Climate Exchange. CCX is also 10% owned by Generation management, a firm founded and chaired by Al Gore and co-founded by Goldman’s ex-CEO Hank Paulson. Passage of this legislation will lead to a 20% tax increase for every American taxpayer.

There is no genius in what Goldman Sachs has been doing. They control our government in that they were able to get the latest version of the Inslaw/PTECH/PROMIS software and front run the market including their own clients and too, at the same time, fulfill the demands of the market manipulations by the “Working Group on Financial Markets” of both stock, commodity and gold and silver markets. These people are lowlife white-collar scum. Goldman Sachs is simply a criminal enterprise as is our government.

Profits are good, but when they are supported by government guarantees or insured deposits, taxpayers have a special interest in how companies conduct their business. Goldman’s license to steal should send shivers down the backs of every hard working American who has lost a large chunk of retirement savings in this economic debacle, as well as the millions who have lost their jobs.

This administration and the previous one have done nothing to address fundamental reform of the structural problems that got us into trouble in the first place. The Fed, banking and Wall Street caused all the problems and they are supposed to be fixing them, which they are not doing. They are just further looting the system.

The WSJ thinks this is great fun and says we should impose a tax, an FDIC-style bailout tax, for those too big to fail. This is unbelievable.

It could be Goldman has stopped using its program, because the market is trading naturally or organically. The changes occurred exactly on the day the NYSE had “computer problems” and extended trading 15 minutes. We ask, was it to make configuration changes in the networking infrastructure? Did the NYSE get cold feet? Or did the treasury call and tell them to stop allowing Goldman its preferred advantage?

The way to solve this front running is to have the FBI and SEC subpoena all market exchanges and every participant who had or has equipment collocated on the NYSE infrastructure submit all operating software operating on every machine connected to the infrastructure for immediate forensic investigation to see if any participants were “sniffing” traffic and front running orders.

This is a serious matter. It is a matter of stealing from every market participant by government, the NYSE and Goldman Sachs. If we were to get a serious investigation we will find that the Treasury, the Fed, Goldman and the NYSE were involved in actions to enrich Goldman and at the same time to keep the stock market from collapsing.

Large, urban teaching hospitals - including hospitals that are the biggest engines in the Boston economy - are facing the possible loss of hundreds of millions of dollars under national healthcare reform as rural lawmakers on Capitol Hill wage a fight to win more federal cash for their local institutions.

Big hospitals affiliated with medical schools around the country receive heftier reimbursements for treating elderly patients covered by Medicare, part of a government policy that rewards them for maintaining things such as trauma centers and burn units, as well as for training future generations of doctors.

Rural members of Congress, however, angry at what they see as an unfair advantage to glitzier facilities in cities, are demanding a bigger share of the pie for smaller hospitals, which serve remote populations and often struggle to survive.

The intense competition is among the key political subplots in the debate over expanding healthcare coverage to more than 46 million Ameri cans with no insurance. Although Republicans have stronger representation in the nation’s heartland, it’s not simply a red state-blue state divide. Plenty of rural Democrats think the current system - which favors facilities such as Massachusetts General Hospital in Boston and Mount Sinai in New York - is unfair.

The FDIC Friday night Financial Follies had regulators last Friday shutting down the Temecula Valley Bank, in Temecula, California, with $1.5 billion in assets and deposits of about $1.3 billion and Vineyard Bank of Rancho Cucamonga, California with assets of $1.9 billion and $1.6 billion in deposits.

Two smaller banks were First Piedmont Bank of Winder, GA., with $115 million in assets and $109 million in deposits, and BankFirst, based in Sioux Falls, SD., with abut $275 million in assets and $254 million in deposits. That is 57 banks that have gone under this year that they admit to.

The June index of leading indicators continued to march higher as the U.S. economy has moved closer to recovery. The leading index increased 0.7%last month, after a revised 1.3% gain in May, the Conference Board reported Monday.

May's increase was originally reported as 1.2%.

Economists surveyed by Dow Jones Newswires had expected an increase of 0.7% in the June index.

"The recession has been losing steam since the spring, although very large job losses continue," said Ken Goldstein, economist at the Board.

Interest rate spreads, building permits, stock prices and jobless claims were among the positive contributors to the June index. Real money supply and nondefense capital goods orders were negative contributors.

The coincident index fell 0.2%in June, after a revised drop of 0.3%in May. May's decline was first reported as 0.2%.

The lagging index dropped 0.7%in June, after a revised 0.4% decline in the prior month. The May drop was originally reported as 0.2%.

Almost a third of U.S. private colleges expect freshman enrollment to decline in the 2009-2010 school year as families struggle to pay bills and hold down debt, according to a survey.

Fourteen percent of schools surveyed from May 18 to June 19 predicted new undergraduate student enrollment would fall more than 5 percent, the National Association of Independent Colleges & Universities, a Washington trade group, said today in a statement. Forty-four percent of the schools said tuition deposits for the semester that starts in September declined from a year ago.

U.S. taxpayers may be on the hook for as much as $23.7 trillion to bail out financial companies, according to Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

Barofsky made the estimate in testimony prepared for a congressional hearing tomorrow.

No officer or agency of the United States shall have any authority to require the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Federal Housing Finance Board, or the National Credit Union Administration to submit legislative recommendations, or testimony, or comments on legislation, to any officer or agency of the United States for approval, comments, or review, prior to the submission of such recommendations, testimony, or comments to the Congress if such recommendations, testimony, or comments to the Congress include a statement indicating that the views expressed therein are those of the agency submitting them and do not necessarily represent the views of the President.

U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.

Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.

“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”

Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs.

Williams said the programs include escalating fee structures designed to make them “increasingly unattractive as financial markets normalize.” Dependence on these federal programs has begun to decline, as shown by $70 billion in TARP capital investments that has already been repaid, Williams said.

Barofsky offered criticism in a separate quarterly report of Treasury’s implementation of TARP, saying the department has “repeatedly failed to adopt recommendations” needed to provide transparency and fulfill the administration’s goal to implement TARP “with the highest degree of accountability.”

As a result, taxpayers don’t know how TARP recipients are using the money or the value of the investments, he said in the report.

“This administration promised an ‘unprecedented level’ of accountability and oversight, but as this report reveals, they are falling far short of that promise,” Representative Darrell Issa of California, the top Republican on the oversight committee, said in a statement. “The American people deserve to know how their tax dollars are being spent.”

The Treasury has spent $441 billion of TARP funds so far and has allocated $202.1 billion more for other spending, according to Barofsky. In the nine months since Congress authorized TARP, Treasury has created 12 programs involving funds that may reach almost $3 trillion, he said.

Treasury Secretary Timothy Geithner should press banks for more information on how they use the more than $200 billion the government has pumped into U.S. financial institutions, Barofsky said in a separate report.

The inspector general surveyed 360 banks that have received TARP capital, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. The responses, which the inspector general said it didn’t verify independently, showed that 83 percent of banks used TARP money for lending, while 43 percent used funds to add to their capital cushion and 31 percent made new investments.

Barofsky said the TARP inspector general’s office has 35 ongoing criminal and civil investigations that include suspected accounting, securities and mortgage fraud; insider trading; and tax investigations related to the abuse of TARP programs.

The largest U.S. conglomerate reported earnings on Friday that beat expectations despite a drop in revenue that was more dramatic than Wall Street had predicted. Those earnings reflected the pay-off from major cost-cutting over the past year, a greater reliance on the high-margin service business but also a sharp drop in the company's tax rate.

Thanks to higher loss provisions at the company's hefty GE Capital finance arm, the company's tax rate fell to 7 percent from 16 percent a year ago, a change that helped the bottom line, but which some investors consider a sign of poor "earnings quality."

While companies across the economy are cutting jobs, closing facilities and looking for any other ways to bring costs in line with falling revenue, some investors note there is a limit to how long companies can rely on belt-tightening to hold up their profits.

"It's not sustainable," said Peter Klein, senior portfolio manager at Fifth Third Asset Management, which owns GE shares. "The story of the second quarter is that a lot of companies are reporting better- than-expected earnings, but it's coming all through the middle."

The largest U.S. conglomerate reported earnings on Friday that beat expectations despite a drop in revenue that was more dramatic than Wall Street had predicted. Those earnings reflected the pay-off from major cost-cutting over the past year, a greater reliance on the high-margin service business but also a sharp drop in the company's tax rate.

Thanks to higher loss provisions at the company's hefty GE Capital finance arm, the company's tax rate fell to 7 percent from 16 percent a year ago, a change that helped the bottom line, but which some investors consider a sign of poor "earnings quality."

While companies across the economy are cutting jobs, closing facilities and looking for any other ways to bring costs in line with falling revenue, some investors note there is a limit to how long companies can rely on belt-tightening to hold up their profits.

"It's not sustainable," said Peter Klein, senior portfolio manager at Fifth Third Asset Management, which owns GE shares. "The story of the second quarter is that a lot of companies are reporting better- than-expected earnings, but it's coming all through the middle."

American International Group Inc.’s trading partners may force the insurer to bear the risk of losses on corporate loans and mortgages for years beyond the company’s expectations, complicating U.S. efforts to stabilize the firm, analysts said.

European banks including Societe Generale SA and BNP Paribas SA hold almost $200 billion in guarantees sold by New York-based AIG allowing the lenders to reduce the capital required for loss reserves. The firms may keep the contracts to hedge against declining assets rather than canceling them as AIG said it expects the banks to do, according to David Havens, managing director at investment bank Hexagon Securities LLC.

“For counterparties to voluntarily terminate those contracts makes no sense,” Havens said in an interview. “There’s no question that asset values have soured on a global basis. With the faith and credit of the U.S. government backing those guarantees, why would they give that up?”

Gov. Ed Rendell has urged legislators to pass a bill to extend benefits.

Gov. Ed Rendell said 17,800 Pennsylvanians exhausted their jobless benefits in the week that ended Saturday, the first big wave of Pennsylvanians to do so. He urged legislators to pass a bill to extend the benefits.

Around the country, the number of people exhausting their benefits is piling up. By the end of September, more than 500,000 people will exhaust their benefits checks, with the biggest groups in Pennsylvania, California and Texas, according to estimates by the National Employment Ladvocacy group for low-wage workers based in New York City.