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  • Markets Rigged Against You?

    Why watch CBC NEWS “The National”? Got Stock?
    Amanda Lang looks at ways the financial system is rigged in some people’s favour

    CBC News Posted: Dec 09, 2013 12:45 PM ET Last Updated: Dec 09, 2013 11:22 PM ET

    Why watch CBC NEWS “The National”?
    Because “The National” exposes and reports
    on CRITICAL WORLD NEWS frequently IGNORED by US NEWS Media.
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    How markets are rigged against you
    it’s getting harder and harder to ignore the stories of powerful people cheating the system for their own gain. As the bad apples add up, it gets harder and harder to ignore a troubling realization — “everything is rigged.”
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    Case study: Detroit
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    Sorry, Fast and furious UPDATE on Detroit Dec.10, 2013

    Detroit the largest municipal bankruptcy in the history of the United States of America

    Detroit that has Guaranteed losers in a bankrupt city: Detroit’s promised pensions in doubt Opinion by D. Alexander Bullock | December 9, 2013 at 1:59 PM

    Detroit included in JPMORGAN $13 BILLION justice SETTLEMENT with $4 Billion in consumer relief directed at hard-hit areas

    and the same Detroit Hard hit with GOVERNMENT CORRUPTION
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    Case study: Detroit continued
    Detroit’s best known today as a case study in what happens to a declining manufacturing base. But the city was also home to a type of financial fakery that’s becoming all too common.
    ———————————————————————————————————

    How markets are rigged against you
    WATCH Amanda Lang’s piece on how the system is rigged against you on The National on Monday night. It airs tonight at 9 and 11 p.m. on CBC News Network, and at 10 pm on CBC Television

    I did watch.

    Amanda Lang looks at ways the financial system is rigged in some people’s favour
    CBC News Posted: Dec 09, 2013 12:45 PM ET Last Updated: Dec 09, 2013 11:22 PM ET

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    U.S. banks face scrutiny over hoarding metals to fix prices
    Ex-Goldman director charged with insider trading
    Detroit’s bankruptcy shows even pensions aren’t safe
    Every day, trillions of dollars are exchanged by buyers and sellers on trading floors across the world. The places where that happens are colloquially known by the faceless moniker of “the markets” but every time somebody buys a barrel of oil, a shipment of potash, a Royal Bank share or a Japanese yen, there’s a real person behind that transaction.

    Historically, the system works because people have confidence in the rules and believe they are treated the same as anybody else.

    But it’s getting harder and harder to ignore the stories of powerful people cheating the system for their own gain. As the bad apples add up, it gets harder and harder to ignore a troubling realization — “everything is rigged.”

    That’s what financial journalist Matt Taibbi says in an interview with Amanda Lang airing on Monday night’s The National. After years of reporting on some of the best examples of Wall Street stacking the deck in its favour, Taibbi has concluded that the entire system underpinning the global economy is rigged in some form or another.

    And it’s not just financial markets that are at stake. The real economy, with factories, services, goods and jobs for real people, is under threat.

    ‘Certain people always win and certain people always lose.’- Matt Taibbi, financial journalist
    “There’s a few smaller, inside actors who always seem to win,” he told Lang. “They have more information than anyone else.”

    Everything from the price of food, to currencies, financial transactions known as “swaps” and interest rates are implicated, he says.

    “We’ve got a lot of work to get it back to some place where it’s at least close to fair. [Right now] it seems certain people always win and certain people always lose.”

    Case study: Detroit
    Detroit’s best known today as a case study in what happens to a declining manufacturing base. But the city was also home to a type of financial fakery that’s becoming all too common.

    Investment bank Goldman Sachs has been accused of creating an artificial shortage of aluminum by buying warehouses in the city to store the metal, and then intentionally causing delivery delays to create artificial profits.

    Why a Detroit-style bankruptcy is unlikely in Canada
    Through a subsidiary, Goldman owns 27 warehouses around the city, housing 1.5 million tons of aluminum, for customers who pay to store it there.

    The longer it’s there, the longer Goldman can charge its customers. But some started to complain that Goldman was making money by shuffling the metal between its warehouses — instead of out to its owners — and charging them more rent in the process.

    The story drew the eye of New York Times journalist David Kocieniewski.

    Galleon founder Raj Rajaratnam is accused of earning $63 million on illegal stock tips. (Kathy Willens/AP) (The Associated Press)

    “It used to be a six-week wait for metal and now it’s 16 months, what happened?” Kocieniewski asks.

    “You hear their explanations — ‘there aren’t enough trucks [and] forklift drivers’ but Detroit’s unemployment rate is 25 per cent, so that seems kind of implausible. It was clear it was something that they were doing,” he says of the sudden scarcity.

    The bank claimed it was working “feverishly” to deliver the metal to its eager customers. But in one video posted online by a warehouse worker, all you could see was aluminum stacked to the rafters, but not a single employee working to move it anywhere.

    “One of the drivers who moved the metal said ‘well we just move it from one place to another, once we get one warehouse filled up we close it down and it’s a merry-go-round,’” Kocieniewski said. Every hour that metal is sitting there Goldman is just collecting money on it.

    And that gets passed on to consumers by increasing the price of real goods like aluminum foil, pop cans and the siding on your house.

    Goldman Sachs declined to make anyone available for an interview, but emailed CBC News a statement saying they deny the allegations.

    Case study: inside information
    New York’s Wall Street is a place where rigging has become sadly too commonplace.

    One of the biggest recent examples was at New York hedge fund Galleon, run by a man named Raj Rajaratnam. Insider trading is one of the oldest and least sophisticated ways of rigging a market, and Galleon is one of the most egregious recent examples. Under Rajaratnam’s watch, Galleon would routinely pay corporate insiders for information about their companies ahead of when they were disclosed to others. (That way the fund could trade in advance on any good news or bad news to come.)

    What was so shocking about Galleon was the brazenness — how employees were caught on tape rigging the system, and not seeming to care. Rajaratnam was eventually found guilty of insider trading and sentenced to 11 years in prison but even today, some people involved still don’t seem to quite see the problem.

    “The bottom line was to make money … and if you weren’t adding to the end goal you were kind of useless,” says Turney Duff, a former trader at Galleon who’s written a book about his experiences there.

    ‘I didn’t feel like we were going to get caught. You know, it felt like jaywalking’- Former hedge fund employee Turney Duff
    “I’m not making excuses for my behaviour,” he says in the piece. “I made a lot of mistakes and a lot of the decisions that I made … [weren’t] based on right or wrong it was based on [lack of] consequences.

    “I didn’t feel like we were going to get caught. You know, it felt like jaywalking.”

    That mentality may be part of the problem — that there’s insiders at the top of a pyramid who feel they have the right to set prices and profit wherever they see fit, Taibbi and others say.

    “The basis of all these problems that we’ve had in the last decade or so is that it’s a very insular community, this financial community. It’s a very small group of people making very, very weighty decisions and I think these guys, to them, it’s not real. It’s just a bunch of numbers on a paper,” Taibbi said.

    Case study: rigging LIBOR
    One of the most serious examples of rigging might be the London Interbank Overnight Rate or LIBOR which has apparently been manipulated by a handful of trading firms for their own profit. Trillions of dollars of real things like mortgage rates and student loans payments are priced off LIBOR.

    WATCH Why the complex LIBOR story deserves your attention
    LIBOR is set today the same way it has been for more than a century — via phone calls between traders, telling each other what rates they were giving out and taking in that day. In retrospect, it was gapingly open to abuse.

    In a series of wiretapped phone calls unearthed by British regulators, traders could be heard doing favours for each other, lying to officials about the rate in order to meet their targets. It was a game to them, but one where people in the real world economy were the losers.

    Conclusion: new tools needed
    There’s a sense among the general public that nobody seems to be maintaining the integrity of the system. Bart Chilton, the head of U.S. regulator the Commodities and Future Trading Commission, says his office is committed to maintaining the system’s integrity. But, he says his office isn’t given the tools he needs to properly do the job.

    Goldman Sachs has been accused of stockpiling aluminum in its warehouses in order to charge more rent for storing it. (Ilya Naymushin/Reuters) (REUTERS)

    “They don’t have enough people to do this stuff,” Chilton says. “[Washington]
    doesn’t care about about this, and unfortunately Congress and government is very reactive.”

    He notes that his office has 158 agents to police more than $5 trillion worth of financial contracts per year.

    In contrast, the more well-known Securities and Exchange Commission has more than 100 agents assigned to its investigation of baseball pitcher Roger Clemens alone.

    Until the powers that be make levelling the playing field a priority, the system is likely to remain skewed. And the people doing the rigging getting caught will be the exception, not the rule.


  • Whale Tales on U.S. Justice

    A Whale Tale on Justice SEP 20, 2013
    JPMorgan Pays $920 Million to Settle London Whale Probes …

    www.bloomberg.com/…/jpmorgan-chase-agrees-to-pay-920-million-for-…‎
    SEP 20, 2013 – JPMorgan Agrees to $920 Million `Whale” of a Fine … While the lender made admissions in yesterday’s SEC settlement that tarnish Dimon’s …
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    ce.fortune.cnn.com/tag/us-securities-and-exchange-commission/

    In the end, the whole SEC settlement with JPMorgan is kind of bizarre

    The rest of the settlement that is being collected by U.S. regulators is going back to the Treasury?

    A restitution fund for people?

    How can we expect our citizens to have any faith in the rule of law?
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    Monday, December 09, 2013 11:49 a.m. CST
    And then there is this $13 BILLION JPMORGAN SETTLEMENT
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    My comment So what’s new?

    How will the GOVERNMENT divide the record $13 billion payout?

    $4 BILLION IN CONSUMER RELIEF?

    “FLOP, FLOP, FIZZ, FIZZ, OH, WHAT A RELIEF? IT IS?” … IS MARKETED FOR RELIEF OF MINOR ACHES, PAINS, INFLAMMATION, FEVER, HEADACHE, HEARTBURN, SOUR …

    In the end, the whole SEC $13 billion settlement with JPMorgan is kind of bizarre

    Believe it or not? The JPMORGAN bank will also receive credit for demolishing abandoned homes and other efforts focused on curbing urban blight.(CAUSED BY CORRUPT GOVERNMENT)

    IS The rest of the settlement that is being collected by U.S. regulators is going back to the Treasury?

    IS THERE DIRECT Restitution for people?

    How can we expect our citizens to have any faith in the rule of law?
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    The announcement, expected as soon as Tuesday Dec.. 10, 2013, will detail how the GOVERNMENT will divide the record $13 billion payout, with $4 billion directed to struggling homeowners.

    The $4 BILLION in consumer relief, directed at hard-hit areas like DETROIT,

    is a crucial element of the deal. Nearly half of that sum, one person briefed on the deal said, will go to reducing the balance of mortgages in foreclosure-racked areas
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    My comment

    Hard-hit areas like DETROIT? Hard hit with GOVERNMENT CORRUPTION

    Kwame M. Kilpatrick, Former Detroit Mayor, Sentenced to 28 Years …
    www.nytimes.com/…/former-detroit-mayor-kwame-kilpatrick-sentencing…‎

    Oct 10, 2013 – Former Mayor Kwame M. Kilpatrick apologized for putting the people of his city through a corruption scandal so vast that prosecutors say it …

    INDEED, $4 BILLION in consumer RELIEF?

    If JPMorgan fails to spend the entire $4 billion before that 2016 deadline, it will have to pay an amount equal to the unexpended funds either to the government or to a nonprofit organization designated by the government.

    Hard-hit areas like DETROIT? Hard hit with GOVERNMENT CORRUPTION

    34 PEOPLE CONVICTED IN FEDERAL PROBE OF DETROIT CORRUPTION | DETROIT …
    www.freep.com/article/20131010/NEWS/310100184/‎
    by Jim Schaefer – in 168 Google+ circles

    Oct 10, 2013 – Counting Kwame Kilpatrick, Bobby Ferguson and Bernard Kilpatrick, 34 people have been convicted in the federal government’s probe of …
    How corruption deepened Detroit’s crisis – USA Today

    www.usatoday.com/story/news/nation/…corruption…detroits…/2929137/‎
    Oct 6, 2013 – DETROIT — Former Detroit Mayor Kwame Kilpatrick was a spender, a schemer and a liar. And taxpayers paid for it, by the millions. Over seven …

    Under the $4 billion in relief settlement, the people briefed on the deal said, JPMorgan will have to hire an independent monitor to oversee the distribution of the $4 billion in relief, a black mark for a bank once considered one of Wall Street’s most trusted institutions.

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    Monday, December 09, 2013 11:49 a.m. CST
    Republican SEC member blasts $13 billion JPMorgan settlement
    ————————————————————————————–
    THE Whale tale on Justice

    ce.fortune.cnn.com/tag/us-securities-and-exchange-commission/
    Did the SEC let JPMorgan off the hook?

    In the end, the whole SEC settlement with JPMorgan is kind of bizarre.
    The SEC is putting the $200 million JPMorgan is paying to settle the charges into a restitution fund for people who were harmed by the London Whale trading fiasco. Good luck finding them.

    (The rest of the settlement that is being collected by U.S. regulators is going back to the Treasury.

    Taxpayers, when will you stop being subsidized by the big banks?)
    —————————————————————————————–
    If you are up to it? get out the Alka-Seltzer and continue reading
    —————————————————————————

    http://billmoyers.com/2013/10/22/the-13-billion-jpmorgan-settlement-is-a-good-start-%E2%80%94-now-someone-should-go-to-jail/

    “People know that if they rob a bank they will go to jail,” Kaufman said. “Bankers should know that if they rob people they will go to jail too.” Can we hear an amen on that? Not yet. But the complaint Kaufman voiced repeatedly is now on the table. “At the end of the day,” the senator warned, “This is a test of whether we have one justice system in this country or two. If we do not treat a Wall Street firm that defrauded investors of millions of dollars the same way we treat someone who stole $500 from a cash register, then how can we expect our citizens to have any faith in the rule of law?” (See my piece from April 2011, “How Wall Street Crooks Get Out of Jail Free.”)

    The offenses include an all-star list of duped victims — of mortgage fraud against home-buyers, investor fraud against people and pension funds that purchased the rotten mortgage securities and defrauded the federal agencies (Fannie Mae and Freddie Mac) that bought the mortgage bonds and applied federal guarantees to them
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    U.S. Poised to Announce $13 Billion Settlement
    By BEN PROTESS and JESSICA SILVER-GREENBERG
    Manuel Balce Ceneta/Associated Press Attorney General Eric H. Holder Jr. played a hands-on role in settlement talks with JPMorgan Chase’s chief executive.

    The Justice Department is set to announce a $13 billion settlement with JPMorgan Chase over the bank’s questionable mortgage practices in the run-up to the financial crisis, people briefed on the deal said on Monday, as prosecutors and the bank hashed out the final details of the deal.

    The announcement, expected as soon as Tuesday, will detail how the government will divide the record $13 billion payout, with $4 billion directed to struggling homeowners. Under the settlement, the people briefed on the deal said, JPMorgan will have to hire an independent monitor to oversee the distribution of the $4 billion in relief, a black mark for a bank once considered one of Wall Street’s most trusted institutions.
    The settlement, which comes after months of negotiations, will resolve an array of state and federal investigations into the bank’s sale of troubled mortgage securities TO INVESTORS. Such securities, sold by banks across Wall Street, were at the center of the 2008 financial crisis.
    Related Links

    • Graphic: Tracking the JPMorgan Inquiries
    When the securities soured, generating billions of dollars IN LOSSES FOR PENSION FUNDS AND OTHER INVESTORS, federal and state authorities opened wide-ranging investigations into whether the banks had properly warned investors of the risks.

    JPMorgan, the nation’s largest bank, has become a symbol of that crackdown. And the size of the settlement reflects its magnitude. The $13 BILLION DEAL dwarfs all other settlements the Justice Department has exacted from a single company.

    The $4 BILLION in consumer relief, directed at hard-hit areas like DETROIT, is a crucial element of the deal. Nearly half of that sum, one person briefed on the deal said, will go to reducing the balance of mortgages in foreclosure-racked areas;
    ————————————————————————————————————
    Hard-hit areas like DETROIT? Hard hit with CORRUPTION
    INDEED, $4 BILLION in consumer RELIEF?

    If JPMorgan fails to spend the entire $4 billion before that 2016 deadline, it will have to pay an amount equal to the unexpended funds either to the government or to a nonprofit organization designated by the government.

    Hard-hit areas like DETROIT? Hard hit with CORRUPTION

    34 PEOPLE CONVICTED IN FEDERAL PROBE OF DETROIT CORRUPTION | DETROIT …
    www.freep.com/article/20131010/NEWS/310100184/‎
    by Jim Schaefer – in 168 Google+ circles
    Oct 10, 2013 – Counting Kwame Kilpatrick, Bobby Ferguson and Bernard Kilpatrick, 34 people have been convicted in the federal government’s probe of …
    How corruption deepened Detroit’s crisis – USA Today
    www.usatoday.com/story/news/nation/…corruption…detroits…/2929137/‎
    Oct 6, 2013 – DETROIT — Former Detroit Mayor Kwame Kilpatrick was a spender, a schemer and a liar. And taxpayers paid for it, by the millions. Over seven …

    ————————————————————————————————————
    JPMorgan will also be credited with up to $500 MILLION FOR BRIEFLY HALTING the collection of mortgage payments.

    For the remaining $2 BILLION in relief, the person said, JPMorgan has agreed to reduce interest rates on existing loans, offer new loans to low-income home buyers and keep those loans on its books. The bank will also receive credit for demolishing abandoned homes and other efforts focused on curbing urban blight.
    In addition to the $4 BILLION in consumer relief, JPMorgan will pay about $2 billion as a fine TO PROSECUTORS IN SACRAMENTO, CALIF. The prosecutors, who were planning to sue the bank until settlement talks heated up in September, suspected JPMorgan had failed to fully disclose the risks of buying mortgage securities.

    The government earmarked the final $7 billion as compensation for investors. The largest recipient will be the Federal Housing Finance Agency, which announced a $4 billion deal with JPMorgan last month. The agency oversees Fannie Mae and Freddie Mac, the housing finance giants that purchased billions of dollars in mortgage securities that later imploded.

    THE REST WILL BENEFIT A CREDIT UNION ASSOCIATION, ALONG WITH THE NEW YORK AND CALIFORNIA ATTORNEYS GENERAL. The authorities are likely to pass on the compensation to investors in their states.
    A version of this article appears in print on 11/19/2013, on page B3 of the NewYork edition with the headline: JPMorgan Settlement Nearly Ready.