I have been warning that there has been a “Club” that has been targeting market after market to make a quick buck. The LIBOR Scandal has caused the tide to turn as well as having to bail out the banks in 2008 that has fundamentally altered the course of everything. Now the Swiss regulators said they are investigating several Swiss financial institutions for possible manipulation of foreign-exchange markets, which is a dramatic expansion of the latest probe into potential rigging of widely used market benchmarks. The Swiss have come out and stated the they are now cooperating with authorities in other countries very closely. They have also stated publicly that “multiple banks around the world are potentially implicated.”  The UNTOUCHABLES have started to lose their standing because they constantly blow themselves up and turn to government to save them whenever they lose money.

Our models on this issue of “The Club” have been spot on. The crisis came in 2008, which was 8.6 x Pi or 27.004  years  from the date that Phibro took-over Salomon Brothers. That is the start date when the aggressive commodity trading culture infiltrated Wall Street. The full cycle for how long that would last should have been 31.4 years and that is when this trend came to an end idealized on February 24th, 2013. From here on out, the banks have pushed the envelope too far. We are starting to see J.P. Morgan charged criminally. When this ECM turns down again after 2015.75, the bankers will find that they are the escape-goats for politicians and will most likely be imprisoned.

The Year 1981 was truly monumental. It was the major peak on the 1981.35 Public Wave of the Economic Confidence Model. On January 20th, 1981, Ronald Reagan was sworn in as the 40th President. Iran freed the 52 hostages taken in 1979 on January 25th. By March 30th, 1981, Reagan was shot by a gunman in an attempted assassination along with his press secretary. On May 14th, 1981 Pope John Paul II was shot in an attempted assassination. On October 6th, 1981, Anwar el-Sadat was assassinated by Islamic extremists during a military parade in Cairo. Then, on December 14th, 1981, Israel annexed the disputed Golan Heights.

In 1981, seeking a larger and more permanent source of capital, Salomon Brothers agreed to its sale to Phibro for $554 million. Phibro was then one of the world’s largest commodities traders. John H. Gutfreund of Salomon Brothers became its chairman of the Salomon Brothers subsidiary and co-chief executive (along with the Philipp Brothers chairman, David Tendler) forming a new holding company, Phibro-Salomon Inc.

On September 28th, 1987, Warren E. Buffett, agreed to pay $700 million for a 12 percent stake in Salomon Inc., the parent company of Salomon Brothers Inc., Wall Street’s largest investment banking-house. That is how Buffett got into trading commodities instigated by Phibro.

This aggressive trading culture has led the world into all sorts of trading scandals and manipulations with numerous fine only prosecutions of the major players. This time, however, the LIBOR Scandal took place in London and the bankers do not control the Europeans as they do the Americans. This aggressive manipulating culture has now run its course and the cycle has changed direction.

….more from Martin Armstrong:

Manipulations & Exceptions – One-Dimensional Thinking

Death of the Euro?

France Makes it Illegal to Close Your Company

• Troops Forage for Food While Golfers Play On in Shutdown (BBG)
• Police suspect dental hygienist Miriam Carey was behind the wheel of Capitol chase (WaPo)
• Italian Senate committee starts Berlusconi expulsion process (Reuters)
• Swiss Regulator Probing Banks Over Foreign-Exchange Manipulation (WSJ)
• GOP Begins Search for Broad Deal on Budget (WSJ)
• No Jobs Report Means Economists Chew on Football Instead of Data (BBG)
• U.S. default seems unthinkable but investors have options (Reuters)
• Citigroup fined $30 million after analyst sent report to SAC, others (Reuters)
• FBI Snags Silk Road Boss With Own Methods (BBG)
• Recession Warnings Found in Asset Price Falls (BBG)
• Bank of Japan warns of severe global impact from U.S. fiscal standoff (Reuters)
• Germany’s Merkel to start tricky coalition talks with SPD (Reuters)
• Twitter reveals rip-roaring growth, big losses ahead of IPO (Reuters)
• Steve Ballmer’s bonus hit by Surface and Windows 8 disappointment (FT)
• Goldman Said to Make $1.5 Million Error in Ford Bond Sale (BBG)

….more HERE

“If ever there was a set of circumstances that came together that would give an asynchronous event the ability to take the financial system off the rails again, it would be this month…the dysfunction of the US congress with regards to the spending authorizations and the upcoming problem with regards to the debt ceiling, and the fact that those occur…[during] a psychologically important month raises the specter in everybody’s mind…of a black swan event that takes down all markets and drives everybody to respect liquidity.”

….read it all HERE

This morning I received a research note from a private bank I work with occasionally. 

Buried in the text was a call for lower gold prices, and the analysts listed five reasons why they think gold prices will decline. Here’s what they had to say: 

1) “We expect the scaling back of [the Fed’s] stimulus to happen this year at the December meeting. A reduction in monetary stimulus . . . shallreduce the attractiveness of gold as a zero-income asset.” 

2) “Inflation pressures in the developed world should remain subdued, lowering demand for gold as an inflation-hedge.” 

3) “We expect the US recovery to accelerate, reducing the attractiveness for gold as a safe-haven asset.” 

4) “A subsequent improvement in investor sentiment shall also reduce demand for gold as safe-haven asset.” 

5) “Physical demand from India should be discouraged by the gold import duty increases and other measures that aim to reduce the current account deficit.” 

My analysis? These guys are completely missing the point. 

The reality is that today’s financial markets are controlled and manipulated by central bankers who are destructively expanding their balance sheets to the point of insolvency. Many central banks are already insolvent. Most “rich” countries are bankrupt. 

And the “richest” country in the world has entered yet another sad, farcical episode public fiscal humiliation. 

The US government is so broke that they fail to collect enough tax revenue to cover mandatory entitlement spending (like Social Security) and interest on the debt. And that’s with interest rates at all-time lows. 

The debt is growing by the day. The US government reached its statutory debt limit back in May, and as soon as they raise the debt ceiling, they’ll quickly reach the new limit again. The US government cannot even afford the 1.968% average interest that it is currently paying. (This is compared to 6.620% back in January 2001, and 3.665% in September 2008 when Lehman collapsed…) 

Investors are addicted to cheap money like meth junkies. Stock markets are at all-time highs. Bond markets are near all-time highs. Many other asset classes (US farmland) and commodities (cattle) are also near all-time highs. 

There’s very little in this world that makes sense.

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