David Stockman: The End of Sound Money and the Triumph of Crony Capitalism

[Winehole23]

http://mises.org/daily/5113/The-End-of-Sound-Money-and-the-Triumph-of-Crony-Capitalism

[boutons_deux]

nah, let's trust the financial division of the autocratic, plutocratic, crony VRWC as innocent until proven guilty.

They're legitimately operating in the highly competitive, deregulated, pure free market.

Please ignore their "invisible hand" up our asses.

The UCA will do much better if we leave these guys alone. The trickle down will make us all wealthy, will float all our $1M yachts, and provide very comfortable retirements.

[CosmicCowboy]

Great read...thanks!

[CavsSuperFan]

Privatization of profits and Socialization of losses….Elephants & Asses are misleading the masses….

[EVAY]

Terrific find, WH. Thanks a million.

I just sent this article to about 5 people, two of whom might actually read it!

[Marcus Bryant]

http://mises.org/daily/5113/The-End-of-Sound-Money-and-the-Triumph-of-Crony-Capitalism

:tu. Thanks.

[greyforest]

Privatization of profits and Socialization of losses….Elephants & Asses are misleading the masses….

[Winehole23]

Tim Geithner: another symptom.


Geithner has already made his own views clear. In testimony before the Senate Agricultural Committee in December 2009, he declared (http://www.realclearpolitics.com/articles/2009/12/02/geithner_testimony_to_the_senate_agriculture_commi ttee_99371.html) that the foreign-exchange market needed no special regulation. "The FX [foreign exchange] markets are different," he said. "They are not really derivative in a sense, and they don't present the same sort of risk, and there is an elaborate framework in place already to limit settlement risk."



Geithner added, "These markets actually work quite well. We have a basic obligation to do no harm, to make sure that as we reform, we don't make things worse and our judgment is because of the protection that already exists in these foreign-exchange markets and because they are different from derivatives, have different risks and require different solutions, they require a different approach." This week, Treasury spokesperson Steve Adamske told me that Geithner stands by those views.



However, previously confidential information recently made public by the Federal Reserve Board reveals that in the aftermath of the collapse of Lehman Brothers in September 2008, the Fed pumped in $5.4 trillion over a three-month period to keep the foreign-currency market from collapsing. The Fed's peak injection of dollars on any one day occurred on Oct. 22, 2008, when it reached $823 billion, according to a Wall Street watchdog group's, Better Markets, analysis of the Fed data release.



The extent of the massive intervention by the Federal Reserve is now public information only because the Sanders Amendment to Dodd-Frank, which passed the Senate 96-0 in 2010, required the Fed to disclose more details of its financial operations. The extent of the intervention is buried in a massive data dump released by the Fed last December and was recently analyzed by Better Markets. This finding was contained in a letter sent by Better Markets President Dennis Kelleher to Geithner on Feb. 25. In his letter, Kelleher wrote (http://www.bettermarkets.com/assets/pdf/FX-Ltr-Supp-2-25-11.pdf), "The data refute the claim that the foreign-exchange markets performed well during the financial crisis and thus should be exempt from regulation."
http://prospect.org/cs/articles?article=blowing_a_hole_in_doddfrank

[Winehole23]

Without the amendment offered by that commie Sanders, we'd have very little idea how big a lie Geithner is telling us about the forex loophole to Dodd-Frank.

[Winehole23]

More forex shenanigans:


With revenue of almost $400 billion last year and operations in about 80 countries, BP trades large quantities of currency each day. Traders at the company regularly received valuable information from counterparts at some of the world’s biggest banks -- including tips about forthcoming trades, details of confidential client business and discussions of stop-losses, the trigger points for a flurry of buying or selling -- according to four traders with direct knowledge of the practice.

http://www.bloomberg.com/image/i3xq7RFYUNI0.jpg (http://www.bloomberg.com/photo/wharf-pool-/-iEG9J_P_z04E.html) Photographer: Simon Dawson/Bloomberg Those who make it to the top of the waiting list for membership of the Wharf Pool... Read More (http://www.bloomberg.com/news/2014-12-30/-cartel-chat-room-tied-to-bp-gave-fx-tips-from-banks-to-client.html#)

Chat Room Copies of messages sent to BP traders over the course of a year were provided to Bloomberg News by a person with access to the online conversations. The person, who redacted the names of banks sending the messages and dates of conversations, said they came from firms whose senior foreign-exchange traders belonged to a chat room called “The Cartel” that was set up by Usher and included dealers at JPMorgan, Citigroup Inc. (C) (http://www.bloomberg.com/quote/C:US), Barclays Plc and UBS Group AG. (UBSN)

(http://www.bloomberg.com/quote/UBSN:SW)

The information offered an insight into currency moves minutes, sometimes hours before they happened. The messages could drag the U.K.’s biggest energy company into a scandal that has enveloped 11 banks and led to more than 30 traders from London to Singapore losing or being suspended from their jobs. Last month six banks were fined $4.3 billion for passing along information about their clients and working together to rig foreign-exchange markets.


While there’s no evidence that any BP traders were members of the Cartel, Usher participated in at least one chat room with White, according to a person who has examined conversations that included both men. It couldn’t be determined from the messages reviewed by Bloomberg News who sent the information to BP or whether BP employees acted on any of the tips.


In the clubby, lightly regulated world of foreign exchange, traders passed around tips to their circle of trusted contacts like candy. The victims: mutual-fund investors, pensioners and day traders who took the other side of a transaction at a lower price than they would have if they had the same information.

http://www.bloomberg.com/news/2014-12-30/-cartel-chat-room-tied-to-bp-gave-fx-tips-from-banks-to-client.html

[Winehole23]

In an undated message seen by Bloomberg News, a trader at a bank told BP he would be buying U.S. dollars against Australian dollars at the WM/Reuters fix at 4 p.m. in London, the one-minute window during which traders around the world exchange billions of dollars of currency on behalf of pension funds and asset managers. The message was received at BP about 30 minutes before the fix. By tipping his hand, the sender was telling BP about a potential fall in the Australian currency.

At about 3 p.m. in London on a different afternoon, BP traders were informed that banks were selling dollars against the yen at 4 p.m. In a third message, this one arriving as the oil company’s traders drank their first coffee of the morning, a trader at a bank said he had just sold a quantity of an emerging-market currency, to whom and the price he received.


The four banks in the Cartel controlled about 45 percent of the global spot-currency market, according to a survey by Euromoney Institutional Investor Plc, so information about their plans was valuable. Some days they worked together to push around the 4 p.m. fix, settlements with the banks show.

[boutons_deux]

"four banks in the Cartel"

insider information, fraud, cheating, stealing: the Coin of the Financial Realm