The Muddled Market

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The market is talking out of all sides of its many mouths:

  • USD/JPY is rallying and most currencies strengthened against the dollar, except the pound, suggesting a return to the risk trade.
  • But……the pound sank..suggesting risk aversion
  • But…the stock markets are up, suggesting an increase in risk appetite
  • But……. the bond  market is teetering as long bond yields are soaring, an indication that bond traders are skeptical about the future outlook
  • But…..gold and silver prices are hitting resistance and falling back, suggesting either technical exhaustion or some return of risk appetite
  • But….gold and silver prices are still high, especially for the season, which suggests widespread uncertainty about the economy
  • But….jobless claims are down, which is good news for the economy

What does your earnest blogging-trader do on a day like this? She sits on the sidelines and spends the day printing charts of the indices. She also reviews her most recent trading sins and repents. Here’s her mea culpa.

I repent that I entered a trade with panic rather than reason.

I repent that I entered it on a Friday morning before a long weekend (last week) when the markets were thin and volatility greater than normal.  I also didn’t calculate the spread and bought higher than I should have.

I repent that I forgot about position size and just dumped whatever I could into it

I repent that when the trade moved in my favor, I didn’t sell the whole position but left half in

I repent that I didn’t do the fundamental analysis but did a multicultural trade – picking 12 currencies that sounded good to me.

I came out alright, but it was pure fluke.

Your blogging-trader did not lose money. She made a bit. Enough to pay some pressing bills. She should be thankful, but being a trader, she knows that making money on a bad trade, is not the way to go.

Update: Non-farm payrolls came in at negative 345k after an expected negative 525k – signaling that the recession could have bottomed. This should feed the risk trade, which means my multi-currency trade (Koruna, Nordic currencies, and Singapore dollar) should end up alright (I’m a bit in the red now).  The time frame is one more week or two)

Is Madoff’s Ethnicity Relevant?

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Dr. Phyllis Chesler comments on the Madoff fraud,at Pajamas Media (originally published at Jewcy).

“Yes, of course, Madoff’s betrayal is unforgivable. He has gutted an entire generation of Jewish philanthropic wealth, destroyed trust within the Jewish philanthropic world but, far more important, impoverished widows, orphans, and the elderly and, in so doing, endangered and shamed the Jewish people at a time when we have many real, not merely neurotically imagined enemies.……..

In the Middle East, graft and nepotism make the wheels turn. Everyone is on the take. Beggars aren’t beggars, entire civil services are staffed by one or two clans. I could tell you a thing or two about corruption in southern Asia today, let’s say in Afghanistan, that would make Heller’s Catch-22 seem like child’s play. Everyone, from the President on down is on the take and opium is a most abundant and attractive cash crop. The Afghan drug lords are addicting, infecting, and murdering entire global populations with their poppies as are those who buy and sell the heroin. No one holds the Afghans accountable. But woe to the Jewish nation that has harbored, abetted, profited from, or has even been fleeced by Madoff, the greedmaster.”

My Comment

This is an interesting commentary from just after the Madoff story broke and it makes some good points.But I think it’s on shaky grounds in one or two other places..

I’m  posting it today because I recently posted two pieces that some might see as critical of the Jewish people. Mind you, I don’t.  I see criticism of Madoff or of US Israeli policy as simply criticism of a conman and of international criminality.

On the other hand, I also don’t think religion or ethnicity is irrelevant to that criticism, any more than religion or ethnicity was irrelevant to criticism of George Bush (hmmm…did I hear any voices raised to protest the attacks on fundamentalist Christianity, whites, Anglos, Wasps? No, I think not).

And  is there any let up whatever in the criticism of Islam (Islamofascists), Muslim extremism, jihadis, violent Middle Easterners, etc. etc? None whatever. Doesn’t the color black get dragged into discussion of crime in the ghetto? Didn’t the phrase “Hindu extremism” pop up in discussions about Godhra?

It seems pretty natural to me that people would point out the religion or ethnicity of conmen, especially when the con men are relying on both to play their con game.

Torture Pictures You Can See and Torture Pictures You Can’t…

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In the news last month, was a torture tape that implicates a UAE royal sheikh (who isn’t in the government) in acts of sadism. In it a uniformed policeman watches as the victim (who shortchanged the Sheikh in a grain deal) is whipped, beaten, electrocuted, and run over by an SUV).  From an ABC report on the tape:

“The Sheikh begins by stuffing sand down the man’s mouth, as the police officers restrains the victim. Then he fires bullets from an automatic rifle around him as the man howls incomprehensibly…..

He uses an electric cattle prod against the man’s testicles and inserts it in his anus. At another point, as the man wails in pain, the Sheikh pours lighter fluid on the man’s testicles and sets them aflame…….

The Sheikh then pulls down the pants of the victim and repeatedly strikes him with board and its protruding nail. At one point, he puts the nail next to the man’s buttocks and bangs it through the flesh.

“Where’s the salt,” asks the Sheikh as he pours a large container of salt on to the man’s bleeding wounds. The victim pleads for mercy, to no avail.

The final scene on the tape shows the Sheikh positioning his victim on the desert sand and then driving over him repeatedly. A sound of breaking bones can be heard on the tape.”

This is all pretty gruesome and horrific. The Sheikh is clearly a monster. But that torture exists in Arab countries is not new. Can there be more to explain the media highlighting of this tape? Remember, it took CBS several years before it got around to the Iraq torture story (it was first reported in the US in 2001. The CBS expose of Abu Ghraib was in 2004).

Could it have anything to do with a recent piece of legislation?

Barack Obama, is throwing his weight behind The Detainee Photographic Records Protection Act of 2009,  passed on June 1, 2009. What this does is make the Secretary of Defense certify whether any images of prisoner treatment between September 11, 2009 and January 22, 2009 would endanger military personnel or US citizens, and at his discretion and without any possible review, prevent their disclosure. The certification lasts for three years and can be renewed indefinitely.

Here’s Glenn Greenwald on the subject:

“For decades, we had laws in place authorizing citizens to sue their telecommunication carriers if the telecoms allowed government spying on their communications in violation of the law, but when it was revealed that the telecoms did exactly this, the Congress simply changed the law retroactively so that it no longer applied.  For decades, we had laws imposing civil and criminal liability on government officials who engaged in or authorized torture, but when it was revealed that our government did that, the Congress just retroactively changed the law to protect the torturers.  And now that courts have ruled that our decades-old transparency law compels disclosure of this torture evidence, the Congress is just going to retroactively change the law — again — this time to empower the President to suppress that evidence anyway.”

Greenwald acts surprised, which is a bit funny. What did he think? That Obama was going to change things?

It makes you wonder if the Abu Dhabi tape was given airtime simply to provide enough impetus (as in, See, they do it too – and  so much worse ) to pass this horrible bill.

Madoff Feeder Funds Sued for Complicity in Fraud

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After having said I won’t touch the Madoff story until my site gets a bit more protection, I
couldn’t resist this latest confirmation of something I said way back in December – that the feeder funds probably knew perfectly well what was going on and that “philanthropy” in many instances was just a cover for criminal activity or for misuse of funds.  Note the similarity to the scandals at Fannie and Acorn, where the mandate to help poorer people get housing loans also provided moral cover for crime.

One critic correctly points out that Madoff targeted charities, precisely because their pay out every year was only 5% of their capital. This was ideal for a Ponzi scheme, since it allowed Madoff to give out very little of what he took in each year.

“the American Jewish Congress which “defends Jewish interests at home and abroad through public policy advocacy using diplomacy, legislation and the courts.” It reported about 24 million dollars in assets, but only spends about 3 million dollars per year. At that rate, it could have continued its work through 2017 without further fundraising or investment income. Instead they invested their money with Bernie Madoff, losing 87% of the endowment!” [Who Made Off With Our Tzedakkah? Time to blame the victims,” Daniel E. Loeb]

I told you back then that people who’d made out like bandits would be suing as though they were victims. How did I know that? Well – I taught high school.  There’s nothing about human nature, good and bad, you don’t see there..

I know how well-heeled non-profits operate. Half the time, money meant to benefit children never gets to them. It ends up in the pockets of administrators, lawyers, and various salesmen and middlemen.

The whole educational/research establishment is rife with fraud of all kinds. Some of it is unintentional fraud – where the money gets to the intended recipient, although the activity of the recipient (the research or whatever else) is pretty much a dead-end or a waste. But in other cases, the fraud is intentional, as below.

Here’s the latest from Fox News:

“Also among those sued Tuesday is one of the leading educational philanthropies in the United States, which claims it was wiped out by Madoff’s far-reaching fraud.

The complaint filed Tuesday alleges the Picower Foundation and several related entities made nearly $7 billion by investing with Madoff. At least $5.1 billion of that came out of the pockets of victims of a giant Ponzi scheme, and should be returned, it [the complaint by court-appointed trustee Irving Picard] said.”

And more:

“The Palm Beach, Fla.-based foundation had given millions to the Massachusetts Institute of Technology, Human Rights First and the New York Public Library. It also funded diabetes research at Harvard Medical School.

The trustee’s Picower complaint says Madoff managed accounts that earned astronomical returns over 13 years. One purported to earn 950 percent in 1999.”

My Comment

Very different from the spin we first heard, right? Remember they were telling us back in January that the funds returned very average earnings and no one could be expected to have seen through the scheme? Turns out that that wasn’t quite the way it was.  Nearly thousand percent returns? How hard is that to question?

This also confirms what I said in “Nationalization in a Time of Monopoly,” as well as in a later piece “Nightmare on Wall Street”:  A lot of the fraud was committed at the height of the bubble economy and involved a number of players. [Note: Obviously, Picard’s allegations are just that at the moment. We will have to wait and see how the suit plays out to get a better idea and hear more of the evidence on either side].

Far-fetched conspiracy theory?

Not at all. There are only a limited set of powerful actors at the highest levels of Wall Street. Bernie Madoff wasn’t a sidekick. He played at the top.  The people at the top knew him (I mean, SEC honchos, leading bankers and money managers, government bigwigs). He didn’t do all this without a wink and a nod.

Which means there’s more going on here than meets even Picard’s eye. But  until I get my site better protected, I’m not planning on digging any more…

Meanwhile, on the Madoff connection to the mob, there’s an interesting post at Deep Capture blog, which has this:

“After Milken was indicted, Black rallied to Milken’s defense. It was Black [Leon Black], more than anyone, who prevented Drexel from firing Milken. And Black has remained obstinately loyal to the criminal Milken ever since. After Milken went to prison, Black founded the Apollo Group, an investment partnership that received most of its initial funding from a French aristocrat named Rene Thierry Magon de La Villehuchet.

Among Black’s first moves as an independent “prominent investor” was to launch a takeover bid for Executive Life, a bankrupt insurance and financial services conglomerate…….Later, though, it emerged that Black’s takeover of Executive Life had been illegal because he had secretly been fronting for certain French investors, including Monsieur Rene Thierry de La Villehuchet. Some of the French investors had illegally parked stock with Black to hide their involvement (“parking stock” being one of the favorite techniques of the Milken-Boesky-Thorp crew, and a recurrent theme in the 98-count indictment that sent Milken to jail).”

The French aristocrat, Rene Thierry de la Villehuchet, was the manager of one of the Madoff feeder funds. He killed himself earlier this year,  reportedly from a sense of honor toward his clients whose money was lost in the scam. But if the account at DeepCapture is to be believed, he seems to have been involved in rather shady deals even before getting together with Madoff.

Blogging Projects..

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Apologies for not having blogged for a while on Madoff and the “kleptocrat” angle of the financial story.

The reason is the web harassment I’ve talked about before. I’m not intimidated by it, but I think it’s a good idea for me to get my cyberhouse in order before I embark on more research on that. It looks like parts of that story might intersect with another story that’s been troubling me, which I can’t get into here.

When highly credentialed journalists start telling you to buy a revolver, you begin to wonder if you shouldn’t stop being bo-peep and try mata hari for real.

I also have some restructuring of my life going on that takes up most of my time and energy – so my posts have become a bit erratic.

My dream of becoming a professional wanderer, a vagabond of the net, is within a year (or so) of realization. Once I complete the structures I need to set up, this blog will become professional.

It will turn into a magazine and an online community, which is my dream.

Government Posts Highly Confidential Civilian Nuke Info on Internet

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Oh dear. The blunderbuss in Washington strikes again. AP reports:

“WASHINGTON – The government accidentally posted on the Internet a list of government and civilian nuclear facilities and their activities in the United States, but U.S. officials said Wednesday the posting included no information that compromised national security.

However, Energy Secretary Steven Chu, questioned about the disclosure at a House hearing, expressed concern with respect to a uranium storage facility at the department’s Y-12 facility in Oak Ridge, Tenn. The facility holds large quantities of highly enriched uranium, which if obtained can be used to fashion a nuclear weapon.

“That’s of great concern,” said Chu, referring to the Y-12 site. “We will be looking hard and making sure physical security of those sites (at Y-12) is sufficient to prevent eco-terrorists and others getting hold of that material.”

But later Chu told reporters that while the disclosure may be embarrassing “there’s no secret classified information that’s been compromised (and) the sites and everything are public knowledge” already available elsewhere.”

My Comment

The rest of the article, which refers to the material as “sensitive” and “highly confidential” and unavailable in one place anywhere else, seems to contradict the phlegmatic Mr. Chu.

But this is bureaucracy in action. Listen up, people. This is the lot that’s scaring you into thinking your safety is their number one priority. Right.  That’s why Congress has its underground bunker all fitted out and ready to go in case of some endgame fireworks.

And you have…what? A house. Oh yes. That paper-mache prefab box on which you’re upside down anyway…

That should be a real haven in case of a thermo-nuclear accident in the vicinity.

And I suppose you also have a great permanent job with fantastic medical coverage for you and all your little tots too, in case…just supposing, I mean…that said nuclear incident might have a teeny-weeny negative effect on your health.

Eduardo Galeano on the International Community

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Uruguayan writer, Eduardo Galeano, on the International Community:

“The Israeli army, the most modern and sophisticated in the world, knows who it kills. It does not kill by error. It kills by horror. The civilian victims are called collateral damages, according to the dictionary of the other imperial wars. In Gaza, three of every ten collateral damages are children. And the maimed add up to thousands, victims of human mutilation that the war industry is successfully rehearsing in this operation of ethnic cleansing. And as always, always the same: in Gaza, a hundred for one. For each hundred Palestinians killed, one Israeli.

Dangerous people –warning of another bombardment – in charge of the enormous manipulative media that invite us to think that each Israeli life is worth as much as a hundred Palestinian lives. And those media also invite us to think that the two hundred atom bombs of Israel are humanitarian, and that a nuclear power called Iran was the one that annihilated Hiroshima and Nagasaki. The so-called international community, Does it exist? Is it anything more than a club of merchants, bankers and war-makers?……..

Before the tragedy of Gaza, the Arab countries wash their hands off. As always. And, as ever, the European countries wring their hands. Old Europe, so capable of war and malignancy, sheds a tear or so, while secretly celebrating this master move. Because hunting the Jews was always a European custom, but since half a century that historical debt is being paid for by the Palestinians who also are Semites and who never were, nor are, anti-Semites. They are paying, in blood money, the price of others.

(This article is dedicated to my Jewish friends assassinated by the Latin American dictatorships to which Israel acted as consultant).”

Neither Right Nor Left Nor Stupid

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Increasingly, I find that I fit neither left nor right, as it’s conceived in the United States.  I’m not even a libertarian.

I’m not surprised.

People have a relationship to language that I find puzzling and foreign to me. Even repugnant. It’s an instrumental view. It’s also a very fundamentalist and dogmatic view.

Words are much more complex than that.  To fit our narrow ideologies into them, we have to drain them of their power, their ambiguity, their richness – all the ways in which they don’t mean what we say. They never do. And bless them for that. Bless them that they always escape us. As experience always escapes us.

I am not a progressive, if progress means latching on to every idiotic scheme that flatters its manufacturer’s vanity at the expense of hard-won experience.

I am not a conservative, if conservatism means mistaking your own prejudices and ignorance for immutable truths.

I am not a libertarian, if liberty is a theory that you force on the reality of freedom and unfreedom.

I am not a pragmatist, if pragmatism is simply opportunism disguising itself as prudence and state craft.

I am not an extremist, if extremism is driving a good idea into insanity by literalism.

I am not a moderate, if moderation means selling your conscience to mass opinion.

Large parts of public debate are simply stupid, in the broadest sense of that term.

First, they are stupid, because many of the people engaging in them aren’t smart. Sorry.  It’s just so –  they aren’t people who’ve subjected themselves to any discipline besides saying whatever they think at the moment, unrestricted by expertise, criticism, reality, history, memory, conscience, or anything else.

Journalists simply aren’t true professionals in many respects and don’t have standards equivalent to the legal or medical profession. The IQ necessary to practice journalism of any kind isn’t that high. Writers generally tend to be smart people, because it takes a high level of intelligence to sustain an argument through the length of a book or through a good academic paper. But most journalists write little reports of 5-8 paragraphs – most of it on the order of “he said,” “she said,”  and “then so and so did” – and sometimes they don’t even get around to doing that.

Second –  public debates have become stupid, because there’s too much chatter going on. And the quality of things tends to deteriorate when the quantity goes up. Good ideas get taken up by dumb people and at the end of it, the good idea isn’t recognizable any more as good…or even as an idea. It turns into a slogan, an idiocy, and it tends to produce idiocy even in intelligent people who take it up.

Third – public debate is stupid because ideology tends to make us stupid. It requires us to strait-jacket our thinking, to look through a particular lens, to read only our side sympathetically, to pick winners and losers competitively.

Words have their own destiny. They are not our pawns or hostages.