Financial Market Manipulation Is The New Trend: Can It Continue?

Paul Craig Roberts

Financial Imperialists Attack Russia

A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.

People pay to park their money in Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value (minus the fee) of their investment in government debt instruments.

The fee is paid in a premium, which raises the cost of the debt instrument above its face value and is paid again in accepting a negative rate of return, as the interest rate is less than the inflation rate.

Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.”


Losing Credibility: The IMF’s New Cold War Loan to Ukraine

Michael Hudson

In April 2014, fresh from riots in Maidan Square and the February 22 coup, and less than a month before the May 2 massacre in Odessa, the IMF approved a $17 billion loan program to Ukraine’s junta. Normal IMF practice is to lend only up to twice a country’s quote in one year. This was eight times as high.

Four months later, on August 29, just as Kiev began losing its attempt at ethnic cleansing against the eastern Donbas region, the IMF signed off on the first loan ever to a side engaged in a civil war, not to mention rife with insider capital flight and a collapsing balance of payments. Based on fictitiously trouble-free projections of the ability to pay, the loan supported Ukraine’s hernia currency long enough to enable the oligarchs’ banks to move their money quickly into Western hard-currency accounts before the hernia plunged further and was worth even fewer euros and dollars.

This loan demonstrates the degree to which the IMF is an arm of U.S. Cold War politics. Kiev used the loan for military expenses to attack the Eastern provinces, and the loan terms imposed the usual budget austerity, as if this would stabilize the country’s finances. Almost nothing will be received from the war-torn East, where basic infrastructure has been destroyed for power generation, water, hospitals and the civilian housing areas that bore the brunt of the attack. Nearly a million civilians are reported to have fled to Russia. Yet the IMF release announced: “The IMF praised the government’s commitment to economic reforms despite the ongoing conflict.”[1] A quarter of Ukraine’s exports normally are from eastern provinces, and are sold mainly to Russia. But Kiev has been bombing Donbas industry and left its coal mines without electricity.


US Economy Is A House Of Cards

Paul Craig Roberts

The US economy is a house of cards. Every aspect of it is fraudulent, and the illusion of recovery is created with fraudulent statistics.

American capitalism itself is an illusion. All financial markets are rigged. Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free. Large enterprises, such as mega-banks and auto manufacturers, that go bankrupt are not permitted to fail. Instead, public debt and money creation are used to cover private losses and keep corporations “too big to fail” afloat at the expense not of shareholders but of people who do not own the shares of the corporations.

Profits are no longer a measure that social welfare is being served by capitalism’s efficient use of resources when profits are achieved by substituting cheaper foreign labor for domestic labor, with resultant decline in consumer purchasing power and rise in income and wealth inequality. In the 21st century, the era of jobs offshoring, the US has experienced an unprecedented explosion in income and wealth inequality. I have made reference to this hard evidence of the failure of capitalism to provide for the social welfare in the traditional economic sense in my book, The Failure of Laissez Faire Capitalism, and Thomas Piketty’s just published book, Capital in the 21st Century, has brought an alarming picture of reality to insouciant economists, such as Paul Krugman. As worrisome as Piketty’s picture is of inequality, I agree with Michael Hudson that the situation is worse than Piketty describes.


On Economic Violence: The Ruination of Ireland

Greg McInerney

An Interview With Professor Michael Hudson

Greg McInerney: This is Greg here from the MeltingPress.com. This the first installment of our “Alternative Voices” series where we talk to people who give us different perspectives on everything from economics, to politics, to culture. Today we’re joined by Professor Michael Hudson. He’s a research professor of economics at the University of Missouri in Kansas City. He’s also the author of “The Bubble and Beyond” which is his latest book, and “Super Imperialism: The Economic Strategy of American Empire” which I’ve read myself and is a brilliant read, you should go out and check that out.

GM: Professor Hudson, thanks so much for joining us today.

Michael Hudson: Good to be here.

GM: Professor, we’re based here in Ireland which is a country, as we both know, currently in economic ruin at the moment. Unemployment is at 14%, graduate unemployment is probably double that. Where did it all go wrong for Ireland?

MH: Your unemployment is intentional policy by the Irish leadership, of both parties. None of this unemployment is necessary. It doesn’t have to be this way. The government was suckered in to paying the debts for its corrupt bankers.

The problem is that even when you Irish did – as you should have done – and voted out the party in power, the incoming party has the same policy as the former one. It’s much like the United States, where we voted out Republican George Bush, and then got an even more Republican Democrat – Barack Obama. They all promise change, and then follow the financial sector’s directions.

So the underlying problem is that there is no body of theory or policy in Ireland to show that there is an alternative to this unemployment. There’s a belief, a Thatcherite belief that There Is No Alternative, and of course there is an alternative! You shouldn’t have paid uninsured bank depositors and bondholders, and you should not have to pay the European Central Bank, the I.M.F. or the other parties that misinformed you by telling your leaders that the cost of government bailouts would be easily managed, not a lost decade and economic disaster.


The Money Changers Serenade: A New Plot Hatches

Paul Craig Roberts

Former Treasury Secretary Timothy Geithner, a protege of Treasury Secretaries Rubin and Summers, has received his reward for continuing the Rubin-Summers-Paulson policy of supporting the “banks too big to fail” at the expense of the economy and American people. For his service to the handful of gigantic banks, whose existence attests to the fact that the Anti-Trust Act is a dead-letter law, Geithner has been appointed president and managing director of the private equity firm, Warburg Pincus and is on his way to his fortune.

A Warburg in-law financed Woodrow Wilson’s presidential campaign. Part of the reward was Wilson’s appointment of Paul Warburg to the first Federal Reserve Board. The symbiotic relationship between presidents and bankers has continued ever since. The same small clique continues to wield financial power.

Geithner’s career is illustrative. In the 1980s, Geithner worked for Kissinger Associates. In the mid to late 1990s, Geithner served as a deputy assistant Treasury secretary. Under Rubin and Summers he moved up to undersecretary of the Treasury.

From the Treasury he went to the Council on Foreign Relations and from there to the International Monetary Fund (IMF). From there he was appointed president of the Federal Reserve Bank of New York, where he worked to make banks more profitable by allowing higher ratios of debt to capital, thus contributing to the financial crisis.

Geithner arranged the sale of the failed Wall Street firm of Bear Stearns, helped with the taxpayer bailout of AIG, and rejected saving Lehman Brothers from bankruptcy in order to create the crisis atmosphere needed to more fully subordinate US economic policy to the needs of the few large banks.

Rubin, a 26-year veteran of Goldman Sachs, was rewarded by Citibank for his service to the banks while Treasury Secretary with a $50 million compensation package in 2008 and $126,000,000 between 1999 and 2009.

When a person becomes a Treasury official it is made clear that the choice is between serving the banks and becoming rich or trying to serve the public and becoming poor. Few make the latter choice.


Gold Wars

Kelly Mitchell / Paul Craig Roberts

Introduction by Paul Craig Roberts: I do not know what role facts, evidence, or a desire to know the truth any longer play in American lives. This article confirms my experience as a scholar, journalist, public policy maker, and corporate director. The vast majority of people believe what they want to believe. Facts and evidence have little to do with it. People believe what serves their hopes and self-interests as they perceive their interests (often incorrectly) and what validates their emotional commitments. A select few can think independently, but their voices are usually drowned out.

To help those who are capable of independent thought, I am posting with permission the Introduction to a new book, GOLD WARS by Kelly Mitchell, from Clarity Press. I encourage you to order this book and to study it. American institutions are so corrupted that no leadership can rise from the political parties, media, corporations, or universities. We are on a many-faceted course of destruction. Leadership will have to come from non-traditional sources. Perhaps those who can think independently can produce the needed leadership.

The economics profession, Wall Street, and the financial media are committed to maintaining the status quo. There is no independent thought there. The voices maintaining the Matrix in which we live are far more numerous and loud than my voice and the voices of Michael Hudson, Herman Daly, John Williams (shadowstats.com), Mike Whitney, Nomi Prins, Pam Martens, Matt Taibbi, Gerald Celente, Dave Kranzler and the few others who endeavor to break people free of the false consciousness that blinds them to reality. “Free market” economists pretend that financial markets are efficient and do not need to be regulated. Kelly Mitchell shows us that financial markets are manipulated and serve narrow private interests at the expense of society.


Update to the Update: The Attack on Gold

Paul Craig Roberts


Yen firms, investors dump gold and crude. Cash gold and U.S.
gold futures plunged to their weakest in over two years, pulling
silver lower and dragging Tokyo gold futures down almost 10 %.

Paul Craig Roberts: Assault On Gold - Update
Paul Craig Roberts: The Assault On Gold

Tuesday, April 16. The orchestrated attack on bullion in the paper gold market took the spot prices of gold and silver down on Friday and Monday, but actual physical purchases rose during this period. The sales were of paper claims, not of real metal.

The demand for physical possession of bullion rose so strongly that large wholesalers such as www.tulving.com and large retailers such as Gainesville Coins reported sold out items. Also, dealers raised the premiums above the spot price that is charged for coins. From Friday to Monday the premium on Silver Eagles at the large online retailer, Gainesville Coins, rose from $3.75 to $5.99 above the spot price of silver. The percentage increase in premium was larger than the percentage decline in the silver price. Thus, the price of a silver one Troy ounce coin did not drop despite the drop in the spot price. Today (April 16) the price of a silver eagle purchased with a credit card from retailer Gainesville Coins is $30.36. You would never know that the market had fallen out.

Today (Tuesday, April 16) Tulving reported 29% of its bar and coin bullion categories sold out and had almost no silver coin stock. The premium over spot on new gold eagles was $63.95. At large online retailers the premium was $71. Gainesville Coins has no silver Buffalos and lists shipment of orders to commence when coins are available, estimated to be May 10.

What I am reporting are facts, not a theory. We have just had two days of massive sales of paper claims on bullion, but during these days when the price of gold and silver collapsed under short sales, it was difficult to get your hands on the metal itself. On telephone orders you wait in long queues to place an order and are told that delivery awaits availability.

Listening to the media and to academic economists such as Paul Krugman, you would think no one any longer wants gold and silver. But try getting your hands on some.


Truth Is Offensive

Paul Craig Roberts


Where is the good to rise up against the evil?

In America truth is offensive. If you tell the truth, you are offensive.

I am offensive. Michael Hudson is offensive. Gerald Celente is offensive. Herman Daly is offensive. Nomi Prins is offensive. Pam Martens is offensive. Chris Hedges is offensive. Chris Floyd is offensive. John Pilger is offensive. Noam Chomsky is offensive. Harvey Silverglate is offensive. Naomi Wolf is offensive. Stephen Lendman is offensive. David Ray Griffin is offensive. Ellen Brown is offensive.

Fortunately, many others are offensive. But how long before being offensive becomes being “an enemy of the state”?

Throughout history truth tellers have suffered and court historians have prospered. It is the same today. Gerald Celente illustrates this brilliantly in the next issue of the Trends Journal.

Over the past 35 years I have learned this lesson as a columnist. If you tell readers what is really going on, they want to know why you can’t be positive. Why are you telling us that there are bad happenings that can’t be remedied? Don’t you know that God gave Americans the power to fix all wrongs? What are you? Some kind of idiot, an anti-American, a pinko-liberal-commie? If you hate America so much, why don’t you move to Cuba, Iran or China (or to wherever the current bogyman is located)?

The ancient Greeks understood this well. In Greek mythology, Cassandra was the prophetess who no one believed despite her 100 percent record of being right. Telling the truth to Americans or to Europeans is just as expensive as telling the truth to the Greeks in ancient mythology.


Americans’ Economic Prospects And Civil Liberties Have Been Stolen

Paul Craig Roberts

I receive numerous questions from readers about our economic situation and the condition of civil liberty. There is no way I can answer so many inquiries, and no need. I have written two books that provide the answers, and they are inexpensive. I have done my job. It is up to you to inform yourself. Kindle Reader software is available as a free online download that permits you to read ebooks in your own web browser. No Kindle device is required.

My latest, The Failure Of Laissez Faire Capitalism And Economic Dissolution of the West, is available as an ebook in English as of March 2013 from Amazon.com and from Barnes&Noble. My book is endorsed by Michael Hudson and Nomi Prims and has a 5 star rating from Amazon reviewers (as of March 23, 2013). Pam Martens’ review at Wall Street On Parade is available here.

Libertarians who have not read the book have had an ideological knee-jerk reaction to the title. They demand to know how can I call the present system of crony capitalism laissez faire. I don’t. The current system of government supported crony capitalism is the end result of a 25-year process of deregulation. Deregulation did not produce libertarian nirvana. It produced economic concentration and crony capitalism.

Amazon provides as a free read the introduction by Johannes Maruschzik to the German edition. Below is my Introduction to my book.


Fiscal Cliff: Time to Call Their Bluff

Ellen Brown

The “fiscal cliff” has all the earmarks of a false flag operation, full of sound and fury, intended to extort concessions from opponents. Neil Irwin of the Washington Post calls it “a self-induced austerity crisis.” David Weidner in the Wall Street Journal calls it simply theater, designed to pressure politicians into a budget deal:

The cliff is really just a trumped-up annual budget discussion. . . . The most likely outcome is a combination of tax increases, spending cuts and kicking the can down the road.

Yet the media coverage has been “panic-inducing, falling somewhere between that given to an approaching hurricane and an alien invasion.” In the summer of 2011, this sort of media hype succeeded in causing the Dow Jones Industrial Average to plunge nearly 2000 points. But this time the market is generally ignoring the cliff, either confident a deal will be reached or not caring.

The goal of the exercise seems to be to dismantle Social Security and Medicare, something a radical group of conservatives has worked for decades to achieve. But with the recent Democratic victories, demands for “fiscal responsibility” may just result in higher taxes for the rich, without gutting the entitlements.

The problem is that no deal is going to be satisfactory. If we go over the cliff, taxes will be raised on everyone, and GDP is predicted to drop by 3%. If a deal is reached, taxes will be raised on some people, and some services will be cut. But the underlying problems – high unemployment and a languishing economy – will remain. More effective solutions are needed.


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