They Actually Expect Us To Have Faith In These Financial Markets After This Week?

NASDAQ MarketSite TV studio - Photo by Luis Villa del CampoWhat in the world is happening to our financial markets?  Trading on the Nasdaq was halted on Thursday for more than 3 hours, and the only formal explanation that we got was that it was a “technical issue”.  On Tuesday, Goldman Sachs made thousands of “erroneous trades” that are now being canceled.  If those trades had not been canceled, it could have cost Goldman “hundreds of millions of dollars” according to the Wall Street Journal.  How nice for them that they get a “do over”.  When Knight Capital made a similar “trading error”, they were not so fortunate.  Our financial system has become completely and totally dependent on computers, and that means that it is extremely vulnerable.  After what we have witnessed this week, how can they actually expect us to have faith in these financial markets?  And what happens if these “technical issues” get even worse?

The stoppage on the Nasdaq on Thursday was unprecedented.  Trading in literally thousands of stocks and options was halted.  Big names like Apple, Netflix, Intel and Facebook were affected.

As of right now, officials are not telling us what caused the “technical issue”, but there are rumblings that hacking was involved.

And the Nasdaq would hardly be the first exchange to be hacked.  In fact, according to NBC News, about half of all the security exchanges around the world were hacked last year.

USA Today is suggesting that a group of Iranian hackers known as “Cyber Fighters of Izz ad-Din al-Qassam” may be responsible for what happened to the Nasdaq.  Apparently they have been quite active since last September…

The first wave of denial-of-service attacks attributed to the Cyber Fighters of Izz ad-Din al-Qassam began last September and lasted about six weeks. Knocked offline for various periods of time were Wells Fargo, U.S. Bank, Bank of America, JPMorgan Chase & Co. and PNC Bank.

The second wave commenced in December and lasted seven weeks, knocking out mid-tier banks and credit unions.

And a third wave of high-powered denial-of-service attacks commenced in March targeting credit card companies and financial brokerages.

But of course the Iranians have not been the only ones hacking financial institutions.  According to Gartner banking security analyst Avivah Litan, some “profit-minded hackers” have had quite a bit of success attacking U.S. banks…

More recently, a copycat group of profit-minded hackers has conducted denial-of-service attacks against certain U.S. banks as a smoke screen to divert attention while they execute an Ocean’s 11-style wire transfer fraud.

Litan earlier this month blogged about that caper. These bad guys, she says, set into motion sophisticated denial-of-service attacks that overwhelmed pretty sturdy bank network security. While tech staff labored manually to get the banks’ websites back into service, the crooks scrambled behind the scenes to extract funds from a bank employee’s privileged account, which they had gained access to.

Instead of getting into one customer account at a time, the criminals used the employee’s account to control the master payment switch for wire transfers, and moved as much money as they could from as many accounts as possible for as long as possible, Litan reports.

“Considerable financial damage has resulted from these attacks,” says Litan.

However, let’s certainly not blame all of the “technical issues” in the financial markets on hackers.  What happened to Goldman Sachs on Tuesday appears to be very much their own fault

A programming error at Goldman Sachs Group Inc. caused unintended stock-option orders to flood American exchanges this morning, roiling markets and shaking confidence in electronic trading infrastructure.

An internal system that Goldman Sachs uses to help prepare to meet market demand for equity options inadvertently produced orders with inaccurate price limits and sent them to exchanges, said a person familiar with the situation, who asked not to be named because the information is private. The size of the losses depends on which trades are canceled, the person said. Some have already been voided, data compiled by Bloomberg show.

Of course if those trades had made hundreds of millions of dollars for Goldman they would have been allowed to stand.

But because Goldman was about to lose hundreds of millions of dollars authorities worked very rapidly to start “breaking” those trades.

This is just another example that shows how much of a joke our financial system has become.

Wall Street has become a massive computerized casino, and at some point this fraudulent house of cards is going to come crashing down hard.

The seeds for all of this were planted back in the late 1990s.  The Glass-Steagall Act was repealed and the big banks started to go hog wild.

And according to an absolutely shocking memo uncovered by investigative reporter Greg Palast, a certain U.S. Treasury official was at the heart of the plot to make this possible…

When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it.

The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet. When you see 26.3 percent unemployment in Spain, desperation and hunger in Greece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears.

The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank.

If Summers and U.S. Treasury Secretary Robert Rubin had not been working so hard for the benefit of the big banks, we might not be facing a quadrillion dollar derivatives bubble today…

The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.

Second, the banks wanted the right to play a new high-risk game: “derivatives trading”. JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets”.

Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.

But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?

The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet — in one single move. It was as brilliant as it was insanely dangerous.

To learn more about how they used the WTO to transform the global financial system into a gigantic casino, head on over and read the rest of Palast’s outstanding article right here.

And you know what is truly frightening?

Larry Summers appears to be Barack Obama’s top choice to become the next chairman of the Federal Reserve.

That statement should send chills up your spine.

The truth is that Larry Summers should not even be running a Dairy Queen, much less the most powerful financial institution on the planet.

If Larry Summers becomes the next head of the Federal Reserve, it will be an unmitigated disaster.

But it looks like that is exactly what we are going to get.

We are rapidly heading toward the next major global financial crisis, and on top of everything else we will probably have Larry Summers running things soon.

What a nightmare.

All Of This Whining And Crying About The Sequester Shows Why America Is Doomed

CryingIf we can’t even cut federal spending by 2.4 percent without much of the country throwing an absolute hissy fit, then what hope does America have?  All of this whining and crying about the sequester is absolutely disgraceful.  The truth is that even if the sequester goes into effect, the U.S. government will still take in more money than ever before in 2013 and it will still spend more money than ever before in 2013.  So it is a bit disingenuous to call what is about to happen “a spending cut”, but for the sake of argument let’s concede that point.  Even if the budget really was being “cut” by 85 billion dollars, that only would only amount to a “cut” of 2.4 percent to federal spending.  It would barely make a dent in the federal budget deficit for 2013.  The U.S. government would still accumulate about as much new debt in fiscal year 2013 as it did in all the years from the inauguration of George Washington to the inauguration of Ronald Reagan combined.  Our debt to GDP ratio would continue to soar.  The sequester cuts would essentially only be a minor bump on the road to financial oblivion.  But if you listen to Barack Obama and his allies, they would have you believe that we are facing a great national crisis because of these impending cuts.  They would have you believe that hundreds of thousands of people will lose their jobs and that many government agencies will no longer be able to operate effectively.  They would have you believe that “granny won’t get her lunch” and “roofs blown off by Hurricane Sandy won’t get repaired”.  Well, if all of that is true, then what in the world would our country look like if we actually cut a trillion dollars from the federal budget this year and started living within our means?

Have you ever known people that are already hundreds of thousands of dollars in debt and yet go out and regularly blow thousands more dollars on wild shopping sprees?

Such debt addicts may be very proud of their new homes, their new cars, their new clothes and all of their fancy electronic gadgets, but it was all purchased with debt.  When a “day of reckoning” finally arrives, many debt addicts lose absolutely everything and end up in the street.

That is what America is like today.

Our politicians like to show off all of the stuff that our government is spending money on, but the truth is that we are spending gigantic mountains of money that we simply do not have.  We are literally stealing from our kids and our grandkids so that we can continue to enjoy a massively inflated standard of living that we have not earned.

But we can’t stop ourselves.  Americans are absolutely addicted to big government.  They want a gigantic government that sends out free money to more than 100 million Americans every month, but they absolutely do not want to pay for it.  They would rather steal money from their children and their grandchildren to pay for it.

This has got to stop, because we are literally destroying the future of this country.

If Americans really want a massively bloated government that takes care of everyone from the cradle to the grave then they should pay for it.

If Americans don’t want to pay for it, then they should reduce the size of the government to a level where they are willing to pay for it.

But stealing money from future generations of Americans to pay our bills is absolutely disgraceful.

As I talked about in a previous article, we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day.

Is there anyone out there that is willing to stand up and defend that kind of theft?

But the vast majority of Americans don’t want to do anything to stop it, because they don’t want to harm “the economy” (i.e. our ridiculously bloated standard of living).

Will the sequester cuts hurt the economy a bit?

Of course.

Government spending cuts always hurt the economy.

If we raised taxes to help pay the bills that the federal government has been racking up, would that hurt the economy?

Of course.

Tax increases always hurt the economy.

But if we continue on the path that we are today, America is doomed.

The U.S. national debt is the biggest single debt in the history of the world.  It is now more than 16.6 trillion dollars, and it has gotten more than 23 times larger since Jimmy Carter first entered the White House.

If our politicians suddenly decided to go to a balanced budget today, our debt-fueled “bubble economy” would disappear and we would immediately plunge into a deep economic depression.

Do the American people have the character to be able to handle that kind of an “adjustment” to our standard of living?

Of course not.

That is why so many of our politicians are scared to death of doing anything about the debt.

And even these small sequester “cuts” are freaking everyone out.  Many of our politicians and many in the mainstream media are openly declaring that “the sky is falling”.  Just check out the following short excerpt from a recent New York Times article

The owner of a Missouri smokehouse that makes beef jerky is worried about a slowdown in food safety inspections. A Montana school district is drawing up a list of teachers who could face layoffs. Officials at an Arizona border station fear that lines to cross the border could lengthen. And if Olympic National Park in Washington cannot hire enough workers to plow backcountry trails, they may stay closed until the snow melts in July.

But that is nothing compared to what others are saying.  CNN is declaring that if the sequester cuts happen, “granny won’t get her lunch” and “roofs blown off by Hurricane Sandy won’t get repaired”.

And check out these ominous warnings from Barack Obama about what will happen if the sequester cuts go into effect…

“Emergency responders like the ones who are here today — their ability to help communities respond to and recover from disasters will be degraded.  Border Patrol agents will see their hours reduced.  FBI agents will be furloughed.  Federal prosecutors will have to close cases and let criminals go.  Air traffic controllers and airport security will see cutbacks, which means more delays at airports across the country.  Thousands of teachers and educators will be laid off.  Tens of thousands of parents will have to scramble to find childcare for their kids.  Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings.”

The Obama administration has even decided to release hundreds of illegal immigrants in anticipation of the cuts…

Immigration and Customs Enforcement officials have released “several hundred” immigrants from deportation centers across the country, saying the move is an effort to cut costs ahead of budget cuts due to hit later this week.

Announcing the news Tuesday, ICE officials said that the immigrants were released under supervision and continue to face deportation. After reviewing hundreds of cases, those released were considered low-risk and “noncriminal,” officials said.

The claims about the sequester cuts just seem to get more ridiculous with each passing day.  Homeland Security Secretary Janet Napolitano is warning that the cuts will make the U.S. more vulnerable to terrorist attacks,  and Obama recently decided not to send an aircraft carrier to the Persian Gulf because of “budget concerns“.

Apparently he sees no problem with using the U.S. military to score political points.

And Federal Reserve Chairman Ben Bernanke says that the budget cuts will result in “less actual deficit reduction in the short run”.

Really?

How stupid do they think we all are?

Yes, the sequester cuts will have an impact on the economy, but they won’t cause the sky to fall.

The following is what the CBO says the economic impact of the cuts is likely to be

The Congressional Budget Office estimates the cuts will cost 750,000 jobs and hit growth by 0.6 percentage points, assuming the cuts remain in effect for the remainder of the fiscal year. Some economists expect a slightly bigger impact.

Remember, these are actually very small cuts.

In fact, according to U.S. Representative Lynn Jenkins, the U.S. government will actually be spending more money in 2013 than it did in 2012 even if the sequester cuts go into effect…

“There’s a fact that says we are going to take in more money this fiscal year than we have ever taken in before,” Jenkins said.  “The budget this year, we will spend more money this year than we spent last year even if the sequester goes into effect.  We will spend more money even if the sequester goes into effect.”

So why is everyone whining and crying over such a very small amount of money?

If you want to get upset about something, why not get upset about things that are increasing our debt by trillions of dollars?

For example, according to a Government Accountability Office report that was just released, Obamacare is going to cause the federal debt to rise by $6.2 trillion.

Why aren’t more people getting upset over that?

Sadly, it is because America is a debt addict.  Most Americans don’t really care much when federal spending skyrockets out of control, but if anyone tries to slow down the spending a little bit they throw hissy fits.

And please don’t tell me that “the big government Republicans” are much better than “the big government Democrats” on budget issues.  The Republicans have caved in and have gone along with all of this wild spending every single time.

On March 27th, they will have another opportunity to do something.  That is when the current continuing resolution expires.

At that time, the Republicans could refuse to pass anything but a balanced budget.

Or they could at least refuse to pass anything except a budget that would cut the federal budget deficit in half.

But they won’t do anything once again.  They will cave in and go along with the status quo because they are cowards.

So we will continue to rip off future generations to fuel our current bloated standard of living.

Thomas Jefferson understood that government borrowing is theft from future generations.  He once made the following statement….

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

Shame on you Democrats.

Shame on you Republicans.

Shame on you America.

You are destroying the future of America for your own selfish reasons.

If future generations get the chance, they will look back on what you did to them and they will curse you for it.

For much more on our exploding national debt, please see the following article: “55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know“.

Not that living within our means would be easy.

Like I said, it would mean a deep economic depression, and it would also likely mean a tremendous amount of societal chaos.

Even now, while we are still living in the boom times, things are really starting to get crazy out there.  Just check out what is going on in Oakland

Oakland’s crime problems have gotten so bad that some people aren’t even bothering to call the cops anymore; instead, they’re trying to solve and prevent crimes themselves.

KPIX 5 cameras caught up with a half dozen neighbors in East Oakland’s Arcadia Park neighborhood Monday as they walked the streets on the lookout for crime. The vigilance has never seemed more necessary than now; 25 homes in the neighborhood have been burglarized over the last two months alone.

In a neighborhood that has started to feel like the wild west, people have even started posting “wanted” signs.

“You have to walk around in your house with a gun to feel safe here,” said Alaska Tarvins of the Arcadia Park Board of Directors.

If this is how bad things are now, how bad will they be when a day of reckoning for our economy arrives?

And a day of reckoning is coming.

Our politicians can try to keep kicking the can down the road for as long as they can, but eventually time will run out.  Just take a look at what is happening in Greece and Spain.  Meanwhile, all of this can kicking is just making the eventual crisis even worse.

We can borrow our way to prosperity for a while, but in the end there is always a very bitter price to pay for doing so.

I would love to tell you that there is a chance that all of this will be turned around, but the truth is that all of this whining and crying about the sequester shows that America is doomed.

I hope that you are getting ready.

Cry

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