(SacBee) “Eighty-eight-year-old retired metallurgist Bob Wallace is a self-described tinkerer, but he hardly thinks of himself as the Thomas Edison of the illegal drug world. He has nothing to hide. His product is packaged by hand in a cluttered Saratoga garage. It’s stored in a garden shed in the backyard. The whole operation is guarded by an aged, congenial dog named Buddy.”

“But federal and state drug enforcement agents are coming down hard on Wallace’s humble homemade solution he concocted to help backpackers purify water. Wallace says federal and state agents have effectively put him out of business, because authorities won’t clear the way for him to buy or sell the iodine he needs for his purification bottles. Rejected for a state permit by the Department of Justice, he is scheduled to appeal his case before an administrative judge in Sacramento next month.”

“Meanwhile, the exasperated Stanford-educated engineer and his 85-year-old girlfriend said the government – in its zeal to clamp down on meth labs – has instead stopped hikers, flood victims and others from protecting themselves against getting a really bad case of the runs.”

“.. But about four years ago, the DEA began to look closely into the product, even citing it in a position paper, and suggesting that it was being used by cranksters as well as campers. And in 2007, federal regulations were passed strictly regulating the chemical. Wallace said the new rules mandated that he had to pay a $1,200 regulatory fee, get federal and state permits, keep track of exactly who was buying his product and report anybody suspicious .”

“Wallace ignored the fee. And if they wanted a list of his customers, he fumed, all they would get would be camping equipment store managers and wholesalers.”

“In May, his Oklahoma distributor – warned by the DEA – said he could no longer send Wallace iodine. .. For Wallace to comply, the state Department of Justice fingerprinted the couple and told Wallace he needed to show them such things as a solid security system for his product . Wallace sent a photograph of Buddy sitting on the front porch. ‘These guys don’t go for my humor,’ Wallace said. ‘Cops are the most humorless knotheads on the planet.’ ”

Full Story: Federal agents say 88-year-old man’s invention is being used by meth labs (SacBee)

Now granted, I understand that methamphetamines are terribly destructive (though ironically they were once legal and openly provided to soldiers by the military to help them “keep on going”). But how does imposing such outrageous regulatory restrictions on a small business (with products built in the back of someone’s garage) that sought only to help people have greater access to cheap, safe and clean drinking water, help anyone? I also understand that Brita and others may do quite a bit of lobbying (especially in California), so there’s also the possibility that some companies didn’t appreciate competition from an inexpensive self-purifying water bottle without consumables and sought to have action taken against it. And while here’s another small business destroyed, I’m sure meth labs have already secured an alternative source of iodine to continue creating their wares. Not sure how hard it would be to extract iodine from everyday table salt, but hopefully that’s not the DEA’s next target… And maybe the government can start going after some of the real thieving crooks out there like Jon Corzine and other members of the criminal banking elite who have probably turned more people towards drugs in the past few years alone than did all of Vietnam and Woodstock.

Interview with Trends Research founder Gerald Celente, who had his own six figure gold investment account completely looted by MF Global‘s chapter 11 trustees, and he is fighting to get it back. Also interesting is how certain higher-profile clients such as the Koch brothers and others clearly must have known of the cratering positions and imminent collapse of MF Global, as $$billions of dollars of accounts were “coincidentally” withdrawn just before the MF “house of cards” collapsed.

I don’t believe that people truly understand the ramifications of what has happened over at MF Global.  People still seem to believe that clients who had money with MF were basically gamblers and “should have known better” by placing their money with “more secure” entities such as Interactive Brokers.  That’s not to say Interactive Brokers is not secure (especially as they “seem” to practice extremely sound risk management). But what happens when one of their banks or counterparties also decides to “waive” their account holders’ rights? And what exactly would have given customers of MF any less reason to believe that MF Global would be any less secure, especially since the Federal Reserve granted them “Primary Dealer” status last year? Regulations are very strict on “segregated funds”.  Those funds “should” actually be “SAFER” than a straight-up bank account (because the funds should generally be locked away at either the CME as margin or sitting in Treasury Bills so the banks can’t even lend that money out in REPO markets).  If an Occupy Wall Street protester stole a sandwich, they’d probably be thrown in jail for 5 years.  Jon Corzine recks New Jersey, and a year later, wrecks MF Global and steals HUNDREDS of MILLIONS from 150,000+ client accounts to cover more reckless gambling debts, and he’ll probably end up being the next secretary of the treasury.  This guy should be hanged and held up to the standards of the Hammurabi Code (If a builder build a house for some one, and does not construct it properly, and the house which he built fall in and kill its owner, then that builder shall be put to death). If such a “code” were implemented, I’d bet such horrendous thefts and shenanigans would all but disappear. Instead, we have banks stealing $$BILLIONS from clients through cockamamie schemes, then paying $100 MILLION to the SEC without admitting or denying guilt while they pocket the rest, still leaving the clients/investors out most if not all of their losses. This is likely the tip of the iceberg, as there is no way to know how many other firms may have also made similarly reckless bets with client funds (or are unknowingly directly connected to others that do).

To help clarify what this really means, here is the “Safety of Funds” assertions by two reputable futures clearing firms:

(DormanTrading) “The funds in your account with Dorman are held as “Customer Segregated” funds. Our principal bank is Harris, NA, a subsidiary of BMO Financial Group of Toronto Canada. The segregated funds that Dorman holds at Harris, are primarily invested in US Treasury Bills, with the remainder in cash or deposited with the Chicago Mercantile Exchange as margin deposits. The Treasury Bills at Harris are specifically identified to Dorman and on Dorman’s books they are specifically identified to those accounts that have asked us to invest their funds.

The segregated account structure of your futures trading account protects you from suffering a loss, should your broker, your clearing firm, Dorman, or Harris file for bankruptcy. This segregated structure means that your funds on deposit are not subject to any offset, indebtedness, obligation, or the liabilities of any entity besides the customers themselves. These regulations are in place so that neither your clearing firm, Dorman, nor their bank Harris can dip into the customer segregated funds to offset losses elsewhere.” – Dorman Trading Safety of Funds

(RCG-Direct) “Pursuant to the Commodity Exchange Act and Commodity Futures Trading Commission (CFTC) regulations, Rosenthal Collins Group LLC (RCG), a Futures Commission Merchant (FCM), is required to treat all customers’ money, securities and other property received to margin, guarantee or secure futures or options on futures trades, as customer property. With regard to futures and options on futures accounts, RCG is required to account separately for and segregate customer money, securities and property and not to commingle those assets with RCG’s own operating assets. Customers’ segregated assets cannot be used to margin any other person’s trades. These segregation requirements apply to futures and options trades on exchanges located in the United States.” – Rosenthal Collins Group Customer Protection

Understanding Big Money, Banks, and the REPO Market…

(MartinArmstrong) “When you deal in REAL money, there is a problem. How do you store it? You can’t just put a billion on deposit at a bank. They will sell it every night and don’t have to tell you. If the REPO market blows up and you go to the bank and say I want my billion, they lost it, and so you turn to FDIC to collect your $100,000. Right! The ONLY way to park serious money is in treasuries.” – Will a Downgrade of USA FROM AAA Really Mean Anything? (MartinArmstrong)

(PeterBrandt) “According to the Commodity Exchange Act (the overarching law governing futures trading) customer funds at futures commission merchants ‘shall not be commingled with the funds of such commission merchant or be used to margin or guarantee the trades or contracts…of any customer or person other than the one for whom the same are held.’ CFTC Regulation 1.25 provides that:

‘No futures commission merchant and no clearing organization shall invest customer funds except in obligations of the United States, in general obligations of any State or of any political subdivision thereof, or in obligations fully guaranteed as to principal and interest by the United States. Such investments shall be made through an account or accounts used for the deposit of customer funds and proceeds from any sale of such obligations shall be re-deposited in such account or accounts.’ ” – MF Global: Proof that the U.S. government is not able or willing to protect investors (PeterBrandt)

(TheMarketTicker) Great article by Karl Denninger sums up our greatest financial problem perfectly… “ is the process by which something very ordinary (say, a TV set) becomes financed. In doing so there is inherently created the use (and usually the abuse) of leverage. .. Leverage is simply the ability to act as though you have much more of something than you really do. ”

“See, in economics there is this thing called ‘supply and demand’. The more demand there is for something with a given supply, the higher the price tends to be. In ordinary times a gallon jug of drinking water in a store is a dollar, and from the tap it costs so little we don’t ordinarily put a price on it. Yet if there was just a hurricane, and there is no fresh water available, what would the price of that same gallon be? Ah, now we have much demand and very short supply, and as such the price will be quite dear. Perhaps the price of that water might be several gallons of gasoline (for the seller’s generator, of course.) So what has happened to our economy over the last three decades? In short, things that never should have been became financialized. And as the goods and services became financialized, demand was shifted upward – people were made “able” to allegedly “buy” things they could not otherwise afford. The expected response in the marketplace to such a thing, predicted by basic economics, was that prices would rise.”

“If you’re wondering why you can’t afford to pay for college by flipping burgers or pizzas in your off hours, this is the reason.  It was precisely the distortion of the government making student loan debt non-dischargeable, which made it available to almost everyone at a “low interest rate”, that drove up the price of college educations to the moon.  And to the moon they went – up 450% since the 1980s, more than five times as much as average salaries increased.

How about houses?  A middle-class house in 1960 sold for $12,000. .. That wasn’t so hard to do when you could buy a house at twice the average income.

What happened when we financialized houses?  Prices went up.  A lot.  They went up much faster than did incomes.  First to 3x incomes, and in some parts of the nation in the 2000s they went to utterly ridiculous multiples, like 5, 6 even 10x.  How?  Nobody ever really actually owned the damn house; the bank owned it and you were turned into a financial slave!“

“How about medical care?  In the 1960s your parents wrote a check to the doctor.  If it was really serious they probably had insurance; they got billed and then filed a claim.  Bankruptcy due to medical costs was extremely rare, and you could almost always afford whatever you needed medical attention for by paying with the money in your wallet.“

“Where do you think that money went? Why, right in the pockets of JP Morgan, Goldman Sachs, Morgan Stanley, Citibank, Bank of America and yes, the bank on the corner.  I’m sure you’ve noticed that bank buildings tend to be quite nice.  Grand exteriors, high-rise buildings in the middle of cities (very, very expensive real estate), fabulous lobbies with marble floors and other similar visible elements of opulence.  Where do you think all the money came from to buy that stuff?  Why, from you – the rube standing there in the lobby!  Never mind the bankster’s bonuses!”

“Was this all the “free market” at work?  Absolutely not! Student loan debt was given “special status” and cannot be discharged in bankruptcy.  Fannie Mae and Freddie Mac massively distorted the housing market.  Medical insurance companies are exempt from anti-trust laws, and drug makers were given the ability to legally prohibit you from doing what you’d like with what you own (specifically, reselling things you purchased and paid for.)

All of this distortion in the market occurred due to the direct acts of government acting at the behest of fat cat banksters and industry insiders, using the threat of force to strip your wealth.

Every morning in the financial media we hear about how horrible it will be if we put a stop to this financial rape and the financial system’s size and influence shrink dramatically!“

THE SOLUTION

“But what happens if tomorrow all the ‘free money’ loans stop?  Now the college has empty classrooms because nobody comes any more.  Students can’t afford to attend, so they don’t.  What happens the next morning at that college?  Oh that’s simple: See, it doesn’t cost much to provide a few desks, chairs, and a roof over head along with a calculus book, does it?  Nor does an instructor cost that much when spread across a student body.  Let’s see how cheaply a college can educate you, if they’re unable to extract from you promises from the future and must instead talk you into providing them with economic surplus from your current efforts.”

“The important point here is that if we cut off the financialization of college you will still get an education.  The schools will scream and many will go bankrupt, but soon on the same ground where there was a bankrupt college there will be a new one, and this one will charge $2,000 a semester to attend instead of $10,000 or $20,000.  The difference?  You’ll have to pay cash, but you’ll be able to work a part-time job for the two grand and thus you’ll have no debt!”

“Houses are no different and neither is medical care.  The screaming about how “nobody will be able to go to the doctor” or “nobody will be able to buy a house” is a lie.  The doctor can set his fee at $100,000 for his services if he wants but if nobody can or will pay him $100,000 then he sells no service.  That doctor goes bankrupt immediately, soon there will be a different doctor (or maybe the same one after he goes through bankruptcy) and suddenly medical care will be much-more reasonably priced! After all, if nobody can buy then the seller can’t make a living either, can he?  Prices will be forced down to what the ordinary person can afford to pay.”

“There is no way that such a price disparity would hold for more than 10 minutes were these laws to be dropped.  You get screwed on your prescriptions and devices you buy intentionally by our government through their protection of these industries.  You get financially raped so that everyone in the world can enjoy our medical technology at the mere reproduction cost and the banksters and drug companies can get rich.  It’s an outrage and again, it happens due to financialization of the medical industry and the force of government coercion, NOT the free market.”

“You can bet the banksters, universities, medical societies and housing industry insiders know this, and they’re scared. They know that if you figure it out their income is cut in half or more.  They are returned to middle-class working people rather than the fat cat status they enjoy today.  Doctors, college professors, home builders, bankers and Realtors used to be middle-class citizens, not gold-clad elites driving around in Lamborghinis and living in mansions!

What’s worse (to them) is that if you succeed in breaking the back of financialization these people will lose the ability to enslave you.  You will have returned to yourself the power to choose when you work, how hard you work, and what you do with your own economic surplus, instead of having pledged it to the bank to buy the car, the bank to buy the house, and the insurance company in the event you get sick.”

“We did not find ourselves here because of the “free market.”  We are here because the rich and powerful demanded special protections from government that allowed them to enslave you, they enticed you into taking that first hit off the crack pipe of cheap money, and then once you were hooked good they used the jackboot of the government to screw you through changes in the law and special protections for themselves so that you could not easily escape. The solution is not to demand “free stuff” or “fairness.”  The only solution is to remove the excess leverage from the economy – to get rid of the debt that has been accumulated and force recognition of the fact that not only are many people bankrupt but the financial institutions are as well.  Only when the balance sheets on both sides are cleared can the economy.”

Full Story: OWS: Want To Turn The Tide? (TheMarketTicker)

If the “bad rich” always find manage to find ways to control and manipulate the government, why do so many want to empower them further with addition tax revenue, regulatory power, and more spending, … For all the calls to “more heavily tax the rich”, let’s finally go after the real controlling, manipulative, and politically-connected “rich” people / politicians / banksters / special interest groups, and stop empowering those who are the greatest benefactors of people’s rage and “wealth redistribution” agenda. Let’s also call for a return to a fair and balanced “Rule of Law“.

And for the record, I don’t consider myself a Republican, a Democrat, or a Libertarian, so much as a “Classical Liberal“.

(TheMarketTicker) “.. there’s really nothing more-serious than grabbing client funds internally, and it appears to have happened in the case of MF Global…  It’s black-letter wrong, and The ‘mainstream media’ outlets this morning are talking about this being a “risk management” issue. Nonsense. This is a trust issue and Corzine is a former Goldman guy and the former governor of New Jersey.”

“But this much we do know: This is not an issue of a firm that allegedly broke every rule in the book when it comes to the sanctity of customer funds. Rather it is a story of utterly failed regulation and oversight that continues four years after the collapse that initiated in 2007. It is the story of willful and intentional blindness by our government and the instrumentalities within it that are supposed to prevent this sort of crap from happening.”

“Let us remember that MF Global was just added to the primary dealer list in 2010! The bankruptcy does raise questions, however, about how the Fed picks the primary dealers — especially since MF Global was one of four firms added to the ranks after new, more stringent requirements were put in effect in 2010.”

“I have to ask: Was that a political addition and where in the hell were the examiners that are supposed to be paying attention to what these firms are doing? If this is the result of “more-stringent” requirements can someone tell me why I should believe that any of the other Primary Dealers are in fact solvent and why I should not believe that they’re all doing the same thing?”

“This is the continuing story, as I lay out in Leverage, of “two worlds” where one has the rule of law (you and I) enforced, where robbing a bank gets you a nice long prison sentence and some cops looking for bank robbers to stop them while in the other, inhabited by politically-connected and powerful men and women you can pretty much do anything you damn well please and nothing happens to you — in fact, you get rewarded with calls from The President of the United States and pick the pockets of the public with essential impunity.”

“There are no checks and balances and the banksters wield their briefcases like John Dillinger wielded his tommy gun.  There has been no reform since 2008.  Dodd-Frank was a joke, Glass-Steagall was not put back in place, and there was no prosecution of those who did wrong.

SEVENTEEN PAGES IN GLASS-STEAGALL – 17 PAGES – KEPT THE BANKING SYSTEM SAFE FOR FIFTY YEARS.

And now we have another collapse that appears to show that there is no regulation, there is no oversight and nobody in the government gives a damn when one of the primary dealers that the government charges with making an orderly market in Treasuries appears to have co-mingled more than half a billion in customer funds with their own trading book.”

Full Story: Can You Survive It Being Over? (TheMarketTicker)

Amazingly, the media has been parroting as to how MF Global proves that the Frank-Dodd bill actually worked!

(Mish) “In spite of that background, (or do I mean because of it), MF Global thought Corzine was a perfect fit. Indeed, those looking for reckless behavior, massive risk taking, and willingness to bet the farm on marriage, in politics, and in life, Corzine represented rare ‘impossible to pass up’ talent.”

Full Story: Regulators Investigate MF Global for Missing Customer Money; MF Global Goes Bankrupt Before Making 1st Interest Payment; Corzine’s Achievement Sheet (Mish)

(Bloomberg) “The Volcker rule, as written in the Dodd Frank Act, had ‘so many different exemptions and exceptions and loopholes that it almost became nearly impossible for the regulators to fashion a rule that can live up to its original intent,’ said Barofsky, a Bloomberg Television contributing editor.”

Full Story: MF Exposes Risk Volcker Wants to Curb (Bloomberg)

Best summed up by this comment by black swan on the BusinessInsider post:

“@Tom Hunter: ‘indicating that they will use additional asset purchases to help bring actual nominal GDP back to trend over time’

translation: this ship is sinking and we want to stick the taxpayers with trillions of dollars more of our impaired financial sewage, like we did with QE1, AIG and the GSEs, before we get stuck with it and go down with the ship. Allow us to sail away in our own ship, loaded down with looted treasure and flying the Jolly Roger, to the land of offshore accounts.”

In his latest US Economics Analyst note, Goldman’s Jan Hatzius offers up his suggestion for the next phase of Fed policy:

“With short-term interest rates near zero and the economy still weak, we believe that the best way for Fed officials to ease policy significantly further would be to target a nominal GDP path such as the one shown in the chart on the right, indicating that they will use additional asset purchases to help bring actual nominal GDP back to trend over time. The case would strengthen further if deflation risks reappeared clearly on the radar screen.”

Full Story: Goldman Advises The Fed To Go Nuclear, And Set A Target For Nominal GDP (BusinessInsider)

This awesome and quick video explains quantitative easing in a simple and easy way for everyone to understand, and it’ll keep you laughing (or crying) the whole way through…

One note, granted this video hits heavily on Ben Bernanke, it’s certainly not all his fault – not by a long shot.  Living beyond our means can only go on so far, and politicians are more than happy to take advantage of public sentiment to fulfill their own agendas and help their “friends” through gargantuan spending programs and greater controls enacted under the guise of serving the “greater good”.

]]> http://www.vlogolution.com/hot/2010-11-15-quantitative-easing-video-explains-q-e-2-in-terms-everyone-can-understand/feed/ 1 http://www.vlogolution.com/hot/2009-08-20-only-goldman-sachs-can-get-away-with-illegal-insider-trading/ http://www.vlogolution.com/hot/2009-08-20-only-goldman-sachs-can-get-away-with-illegal-insider-trading/#comments Thu, 20 Aug 2009 22:33:04 +0000 http://www.vlogolution.com/hot/?p=541

It’s kind of ironic how Martha Stewart became the poster child for cracking down on insider trading activity, even though it was never even proven or substantiated.  For those of you that remember the movie Airplane with Leslie Nielsen, it reminds me of the scene where the police officers detain the little old lady while allowing a dozen terrorists to walk right through the security gate armed with bazookas.  Now with Goldman Sachs, we’re faced with likely the greatest inside information and market manipulation scheme of all time — way larger than the usual trading on inside information that seems to go on every day in the markets.  And once again, I doubt a single one of the people responsible will end up in jail over it (let alone receive anything much more than a slap on the wrist, if that).  More likely, it’ll be brushed under the rug with the rest of the manure and never heard of again.  But should we really expect anything different from our government, which at this point exists as little more than a taxpayer-subsidized wholly-owned subsidiary of Goldman Sachs?!  Shhhh, thou shalt not use the lordGoldman’s name in vain!

It was also quite telling that Goldman was able to have the FBI detain their programmer Sergey Aleynikov within a day’s notice on charges that the theft of their code was an issue of national security as it could enable others to manipulate the markets.  Of course, I’m sure that’s not what Goldman would be using it for (uh huh)…  But I suppose that the Plunge Protection Team a.k.a. Goldman Sachs does require “special access” to the markets to do its job and assure it stays in the black (and then sooooome).

(read more...)]]> http://www.vlogolution.com/hot/2009-08-20-only-goldman-sachs-can-get-away-with-illegal-insider-trading/feed/ 3 http://www.vlogolution.com/hot/2007-10-09-the-truth-about-the-federal-reserve-money-out-of-nothing/ http://www.vlogolution.com/hot/2007-10-09-the-truth-about-the-federal-reserve-money-out-of-nothing/#comments Mon, 08 Oct 2007 22:00:00 +0000 http://www.vlogolution.com/hot/?page_id=134

]]> http://www.vlogolution.com/hot/2007-10-09-the-truth-about-the-federal-reserve-money-out-of-nothing/feed/ 0 http://www.vlogolution.com/hot/2007-05-06-whats-interactive-brokers-really-worth-watch-ipo-ibkrs-first-day-trading-at-the-speed-of-light/ http://www.vlogolution.com/hot/2007-05-06-whats-interactive-brokers-really-worth-watch-ipo-ibkrs-first-day-trading-at-the-speed-of-light/#comments Sat, 05 May 2007 22:00:00 +0000 http://www.vlogolution.com/hot/?page_id=88