Sunday, April 18, 2010

Is It Real, Or Make Believe?

Breaking news? SEC charges Goldman Sachs with fraud? Listen, if you didn't know Goldman Sachs was involved in "Wall Street Fraud" prior to this mid-morning "revelation" Friday, then you've been living under a rock.

Goldman Sachs is the poster child for Wall Street Fraud.

The great vampire squid has been caught by the SEC with one of it tentacles in the cookie jar and this makes the fraud newsworthy? Is it really news?

Goldman Sachs is the Crime Syndicate Of The Century. They were one of the largest contributors to the Obama campaign and own close to half the "positions" in US Government. And on Friday, April 16, 2010 they were charged with fraud by the Securities Exchange Commission...a US Government regulator that oversees Wall Street?

Call me a cynic, but, "Yeah right." How can we be sure this is not a calculated effort by the Oracle Of Orwell to stir up public anger at Wall Street in an effort to get financial regulatory reform "on-track"...or to quell public anger at the obscene bank profits JPMorgan, Bank of America, [and this week Goldman Sachs] are reporting?

The financial markets reaction to this "news" Friday was, sadly, predictable. The equity markets were lead down by the financial sector, commodities ...particularly Gold and Silver... tanked, bond prices rose, and a panic into the US Dollar ensued.

Why would anybody buy the Dollar when one of the most manipulative banks on Wall Street is charged with fraud? Goldman Sachs is one of the central figures involved in the rigging of financial markets around the planet. They have been implicated in the destruction of the Greek debt market. They were behind the escalation in Oil prices to $147 a barrel in 2007-08. They have been accused of front-running their own clients in trades on the NYSE and NASDAQ. Their nefarious activities on Wall Street are too numerous to mention here. In Short, Goldman Sachs is synonymous with fraud.

Why would the price of Gold fall 2% when one of the most manipulative banks on Wall Street is charged with fraud. Gold should have vaulted higher on this news. So what if the Paulson hedge fund implicated in the Goldman fraud is the "largest shareholder of the Gold ETF GLD". There isn't any physical Gold bullion in the fund. And even if there is, his share of the fund is insignificant relative to it's alleged holdings. The "big bullion banks" are all short Gold, so it wouldn't make sense for them to "sell gold" on the news to raise cash. They would have to cover those shorts to raise cash. Gold was taken down Friday to swindle the options players in the Gold mining stocks. The Goldman Sachs news only allowed a planned take down "exceed expectations". Only a fool sold his Gold and Silver related positions into this false market.

We can only "hope" that these charges by the SEC not only stick, but open the flood gates to further charges, both civil AND criminal. We can only "hope" that this is the beginning of the end of Goldman Sachs. For now I stand by my cynicism. Goldman Sachs is too well connected within high levels of the US Government for this to go much beyond restitution and a "slap on the wrist" fine. The Oracle Of Orwell risks much by actually biting the hand that feeds.

Does Goldman case help Chris Dodd?
(Fortune) -- Could the civil fraud case against Goldman Sachs be the break regulatory reformers have been looking for?

At first blush, the idea seems far-fetched. Republicans in the Senate have steadfastly opposed Democratic plans to rein in the big banks. Bankers' deep pocketbooks give them enormous pull in Washington, and public outrage over financial industry wrongdoing has been blunted by the hair-pulling detail of reform proposals.

Yet some observers say the Goldman (GS, Fortune 500) case could swing the balance against the too-big-to-fail banks. It exposes the games Wall Street was playing while the housing boom inflated and then collapsed -- with devastating consequences on jobs, incomes and communities.

"This will strengthen the hand of the Democrats in pushing reform," said Douglas Elliott, an economic studies fellow at the Brookings Institute in Washington.

The shift could pave the way for the enactment of reform legislation sponsored by Sen. Chris Dodd, D-Conn., who chairs the Senate Finance Committee. The latest version of the Dodd bill, introduced last month, hasn't found a single Republican supporter.

Dodd and other Democrats wasted no time making the case for reining in the big banks on Friday.

"We must pass Wall Street reform to bring practices like these into the light of day and protect our economy from another devastating blow," Dodd said in a statement.

Obama: Fresh crisis without new financial rules
WASHINGTON (AP) -- The U.S. is destined to endure a new economic crisis that sticks taxpayers with the bill unless Congress tightens oversight of the financial industry, President Barack Obama said Saturday.

The overhaul is the next major piece of legislation that Obama wants to sign into law this year, but solid GOP opposition in the Senate is jeopardizing that goal.

"Every day we don't act, the same system that led to bailouts remains in place, with the exact same loopholes and the exact same liabilities," Obama said in his weekly radio and Internet address. "And if we don't change what led to the crisis, we'll doom ourselves to repeat it.

"Opposing reform will leave taxpayers on the hook if a crisis like this ever happens again," the president said.

A proposal that Senate Democrats are readying for debate creates a mechanism for liquidating large financial companies to avoid a meltdown.

For the first time, the government would regulate derivatives, those financial instruments whose value depends on an underlying asset, such as mortgages or stocks. Derivatives can help hedge risks. But derivatives can produce steep losses, or huge profits, if the value of their underlying asset sinks.

The proposal also would create a council to detect threats to the financial system and set up a consumer protection agency to police people's dealings with financial institutions.

On Friday, Obama promised to veto the bill if it doesn't regulate the market for derivatives, which contributed to the nation's economic problems after their value plummeted during the housing crisis.

"No regulation means a damn thing now because regulations are simply from now looking forward. Nothing whatsoever can erase these trillions of dollars of toxic fraudulent BS paper out there."
-Jim Sinclair,

The Oracle Of Orwell knows the other shoe in this financial crisis is sure to drop, but he wants you to believe that the government can "stop it". Chris Dodd has only one goal in mind, "How can I polish this turd, before I leave office?" The Democrats know their banking reform proposal is weak at best, and, like the Republicans determined to pass into law reforms that mistakenly strengthen the banks ability to suck money from the taxpayers to cover their bad bets.

Why are both political parties afraid of the Fed. Congress created the Fed. By refusing to audit the Fed and hold them accountable for the financial crisis, the Congress of The United States is complicit in the Nation's financial destruction. The financial crisis can not end until the Fed is destroyed. The Fed is Constitutionally illegal. It is a crime syndicate that has been sucking the wealth from Americans for close to 100 years. Only the Congress AND the Treasury are Constitutionally responsible for the finances of the United States.

Dylan Ratigan exposes the Great Con Job, we know as the US Federal Reserve, with this great interview with Alan Grayson and Bill Fleckenstein.
This new financial reform bill is going to be all bluster, and in the end only empower the big banksters further by giving the Fed even more regulatory oversight.

Gold falls 2 percent as Goldman sparks liquidation fear
(Reuters) - Gold dropped to a 10-day low on Friday, losing 2 percent as investors cashed in long positions after U.S. regulators charged investment bank Goldman Sachs, a leading and commodities player, with fraud.

A wide range of financial markets from Wall Street stocks to commodities sold off after the U.S. Securities and Exchange Commission charged Goldman Sachs Group Inc (GS.N) with fraud over its marketing of a debt product tied to subprime mortgages.

Many in the gold market voiced concern over the SEC's allegation that Paulson & Co, a major hedge fund run by billionaire John Paulson, worked with Goldman in creating a collateralized debt obligation.

"Gold may be down because the market believes that Paulson & Co may need to sell some of its gold position," said Joseph Arsenio, managing director of California-based Arsenio Capital Management.

Paulson, one of most notable gold investors, is the biggest owner of SPDR Gold Trust, holding 8.4 percent of the world's biggest gold exchange traded fund. The company also owns significant stakes in a number of gold mining companies.

"The market is reacting to Goldman's extensive trading positions across all asset classes and the threat that those markets will all be disrupted as an unintended consequence of this investigation."

Safe-haven demand was absent in gold as the market fretted over further selling related to Goldman and the prospect of tighter financial regulations in metals and commodities, traders said.

"Goldman is one of the biggest players in commodities, so there is fear that there could be some forced liquidation of positions," said Bill O'Neill, partner of New Jersey-based LOGIC Advisors.

Traders said that the Goldman news prompted investors to take profits on gold's rally since it stood at about $1,040 an ounce in early February.

Forced liquidations? So what! There is a line as far as the eye can see waiting to snap up any Gold on offer. Well, real Gold that is. This story is an obvious plant by the CRIMEX goons to aid their take down of the Precious Metals. A take down that was planned in advance of the Goldman Fraud revelation as Friday was the expiration of stock options. The mining stocks as represented by the HUI and XAU Indexes were going to cost the goons serious money if they were allowed to expire Friday in the money.

Options Expiration Friday - Another Manufactured Sell Off?
By Jason Hamlin, on April 16th, 2010
It is amusing to see the media cite a million different reasons for the sell off in both precious metals and stocks today. Chief among them was Goldman Sachs being charged with fraud, as if we didn’t already know they were manipulating the markets to suck the remaining wealth from the middle class and unsuspecting funds. The rationale is that Goldman [actually Paulson & Co., mine] holds a large paper position in the unallocated ETF, GLD, and might need to liquidate a portion of this position following the charges.

Others point to the advancing dollar as the reason for today’s sell off in gold, but Kitco’s own analysis suggests dollar strength accounted for less than one quarter of today’s decline in gold. The remaining 75% or so had to do with predominant selling, not the strengthening dollar.

But the more probable reason for today’s sell off is one that none of the mainstream press are willing to touch, except the NY Post (link to article). Today is options expiration Friday for stocks, the day when the investment banks have a vested interest in making sure the call options they sold expire absolutely worthless. Given this context, one might be inclined to view today’s action as more than mere coincidence. Indeed, it was exactly the type of action that whistleblower Andrew Maguire recently detailed in an email to the Commodity Futures Trading Commission (CFTC).

If you are a precious metals investor, you should no longer be surprised by these routine manipulations. Instead, you should view them as a gift and opportunity to purchase gold, silver and quality mining stocks at a steep discount to where they were trading a few days prior and where they will likely be trading a few days after the event. If you have weak hands and press the panic sell button, you are playing exactly into their game, helping to perpetuate the decline and likely harming your long-term return.

The tale of Goldman's fraud charges [Fascinating reading]
By Annalyn Censky, staff reporterApril 16, 2010: 6:09 PM ET
NEW YORK ( -- In a 22-page complaint filed Friday, the Securities and Exchange Commission charged Goldman Sachs with defrauding investors on real estate securities likely to go bust.

The legal document reads less like a court filing, and more like a twisted story of how actions by Wall Street's most notorious investment bank allegedly caused losses of $1 billion for investors.

Here's what it said:

The opportunity: real estate bubble
In late 2006 and early 2007, when the United States housing market is beginning to show signs of distress, hedge fund Paulson & Co. takes a "bearish view on subprime mortgage loans," according to the SEC complaint.

The fund -- run by John Paulson -- identifies more than 100 bonds with the lowest credit ratings, which are likely to experience defaults. Paulson cherry-picks these bonds by favoring adjustable rate mortgages, borrowers with low credit scores, and mortgages in states like Arizona, California, Florida and Nevada, where the real estate bubble hit the hardest.

The strategy: create a product to bet against
In January 2007, Paulson meets with Goldman Sachs vice president Fabrice Tourre, and asks for help betting against these bonds through the use of credit default swaps -- essentially, Paulson is asking to buy insurance on the weakest subprime-mortgage bonds.

Paulson and Goldman Sachs discuss creating -- and then betting against -- a package of the low-rated bonds.

Paulson would hand-pick the securities, but Goldman Sachs and Tourre also need other investors. And they know it would be a hard sell if they disclosed that Paulson had selected the securities, given that he wanted the value to go down.

So they seek out a reputable third party to, as internal Goldman memos state, put its "name at risk...on a weak quality portfolio."

In January 2007, Goldman Sachs approaches ACA Management to act as that "portfolio selection agent."

Goldman e-mail, March 12, 2007: "We expect to leverage ACA's credibility and franchise to help distribute this Transaction."

Selecting the portfolio
In February 2007, Tourre, Paulson and ACA meet to discuss the portfolio.

While both Goldman Sachs and Tourre are completely aware of Paulson's intent to short the portfolio, ACA is unaware, according to the SEC.

On that same day, ACA e-mails Paulson, Tourre and others at Goldman Sachs a list of 82 real estate bonds on which they already agree, but adds 21 "replacement" bonds to the list and asks for Paulson's approval. Paulson deletes eight of the bonds recommended by ACA, leaves the rest, and states that it agrees that the remaining 92 bonds make a sufficient portfolio.

An internal e-mail at ACA asks, "Did [Paulson] give a reason why they kicked out all the Wells [Fargo] deals?" Wells Fargo was generally perceived as one of the higher-quality subprime loan originators, the SEC said.

On or around February 26, 2007: Paulson and ACA agree on the portfolio to be called ABACUS 2007-AC1.

What a scam. And if you believe this was the only one like it on Wall Street in 2006-2007, you really should WAKE UP! All those involved in this scam should face the death in prison at the very least.

The case for Precious Metals only got stronger Friday. As each day passes, the TRUTH grows stronger, and lift-off nears.

Jim Sinclair’s Commentary

If you think that Goldman’s problems are not shared by the entire derivative market, you are bonkers.

If you see the Goldman situation as negative to gold you are a total fool.

If you see the Goldman situation as being bullish to the dollar, you are hopeless.

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