Stockman's "The Great Deformation" a must read! A brief bullet review

[mamboni]

I just finished reading David Stockman's 700+ page tome The Great Deformation: The Corruption of Capitalism in America. It is really hard hitting. Here is the prior budget director under president Reagan, a true insider with legitimate Wall Street insider stripes who has written a thoroughly referenced scholarly work on the US financial system and economy. The book is dense with facts yet well written and it reads smoothly. However, this is a thinking man's book on the subject, assuming the reader has basic familiarity of the FED, the monetary system, fractional reserve banking, hedge funds, derivatives, the large Wall Street banks and the mechanics of the federal government. Here are his essential conclusions, hard hitting and blunt in most cases:

1. The FED has destroyed the free market. Keynesianism is a crackpot intellectually bankrupt theory that a detached committee of "academics" at the FED has applied to the US with disastrous results. Over and over again, Stockman utterly destroys the FED with facts and figures.

2. The destruction of the US economy started with WWI and the FED charter, leading to the first major damage to the gold-backed dollar by FDR in 1932. All of the sequence of events leading up to the gold seizure and dollar devaluation are documented.

3. FDR's New Deal, which Stockman proves had absolutely no salutary effects on the Great Depression, succeeded in planting the seeds of the social welfare state which now is destroying the US economy.

4. Events leading up to Nixon's closure of the gold window in 1972 are explained, especially the roles of the Vietnam War and Johnson's Great Society in fatally wounding the Bretton Woods gold exchange standard. Nixon's act was the coup de grace for the US dollar.

5. The broken US economy has compelled to FED to engage in endless monetizations, market interventions and ultimately outright cartel-like coordination with Wall Street Banks and Hedge funds. The FED is now captive to the interests of Wall Street and the 0.01% elite superwealthy.

6. The S&P 500, Russell 2000 and other stock indices are worthless, manipulated numbers which have completely disconnected from the real Main Street economy. The MSM is a propaganda arm of the rich and powerful who promulgate the deception that the stock indices indicate a healthy economy. They do not.

7. There is no recovery since 2008 and there will not be one. In fact, the US economy is in accelerating disintegration, a structural failure whose solution is far beyond any political or fiscal strategies.

8. The interest rate oppression by the FED has forced savers out of previously safe cash accounts into speculative investments in search of yield. But the financial markets are now completely in the thrall of hedge funds and the Wall Street banks/brokers and the small investor has no chance of surviving in this market. Stockman doesn't say it outright, but the logical conclusion is that the only safe place for cash to run to is literally physical gold and silver held outside the banking system. In other words, savings accounts are a guaranteed loser (no yield, inflationary destruction of value, bail-ins risk), stocks are controlled by hedgies and algorithms and market fundamentals are meaningless, and the bond market is hanging at the edge of the abyss.

9. The best the US economy can hope for is decades of virtually no growth, high taxes, a stagnant standard of living and high unemployment because of the massive debt overhang at the federal, corporate, public and private citizen levels. Keynesianism has destroyed the productive economy and is all but burnt out - all that remains is for the majority of Americans to come to realize this.

There is much much more in this fabulous book. I recommend it highly. Stockman has confirmed what fringe analysts like Willie have been predicting for over a decade: markets are hopelessly corrupt, the dollar is a dead currency walking, the the US economy is in terminal breakdown. After reading this, I am more convinced than ever of the wisdom of holding physical gold and silver, despite the anomalous price action of the last 2 years. Stockman has pulled the curtain up on our corrupt system and the level and breadth of market manipulation is breathtaking, more than the worst nightmares of a conspiracy theorist. We are headed for a major economic shit storm - very soon.

http://www.amazon.com/The-Great-Defo.../dp/1586489127

[Sparky]

I've seen a couple of Stockman's speeches summarizing the book. He's spot on, and not afraid to tell the story.

[Jewboo]

The Education of David Stockman

Reagan "took him behind the woodshed" and Stockman resigned OBM on 01 August 1985.

His wife is President of the Solomon R. Guggenheim Foundation Board of Trustees. He just mopes now.

[mamboni]

I've seen a couple of Stockman's speeches summarizing the book. He's spot on, and not afraid to tell the story.

Stockman is acting as a true patriot and trying to get the truth out vis-a-vis our corrupted financial system and federal government. Unfortunately, there are obstacles like small minded hypocrites that are obsessed with Jew-hatred while simultaneously living off the very system they decry like veritable parasites. These scabs won't lift a finger or a voice to help; but they have the wherewithal to cash in their government benefit checks and smear Stockman's name with insinuations and associations. These are the low lives at the heart of the slow rot of the nation's soul.

[Jewboo]

While David Stockman would speak passionately against the government in Washington and its self-aggrandizing habits, there was this small irony about his siblings and himself: most of them worked for government in one way or another—protected from the dynamic risk-taking of the private economy. Stockman himself had never had any employer other than the federal government, but the adventure in his career lay in challenging it. Or, more precisely, in challenging the "permanent government" that modern liberalism had spawned.

[mamboni]

FRIDAY, OCTOBER 11, 2013

The CME/Comex And Truth In Reporting

The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.

The above legal disclaimer mysteriously, and with no explanation, showed up one day on the Comex gold and silver warehouse stock reports about 8 months ago (roughly). After several years of publishing the warehouse stock reports, why all of a sudden did the CME feel compelled to stick this disclaimer specifically on the gold and silver warehouse reports?

I bring this up because I was having a discussion with a couple of long-time colleagues about the unprecedented level of manipulation of gold and silver that is occurring specifically on the Comex and primarily during Comex trading hours. Today's activity is a perfect example. And the behavior of the price action in the paper Comex market completely defies the unprecedented amount of physical gold being bought for accumulation by Asia, Russia and the Middle East. In fact, India and China together are on track to inhale more gold in 2013 than is currently being produced by every single gold mine globally this year.

The nature of the discussion had to with the fact that, according to the CFTC Commitment of Traders report (COT), the four biggest gold futures traders on the Comex are, and have been, net long a record amount of gold contracts. In an ordinary, unmanipulated and uncorrupted system, that positioning stance would be extraordinarily bullish.

But my view is that the data being reported by the CME/Comex and the CFTC is not to be trusted. In fact, if we could get a completely independent audit done of the CME/Comex, I think we would find a fraudulent horror show there beyond anyone's imagination.

But then there's Ted Butler. He'll tell anyone who wants to be spoon fed by his drivel that the CME/Comex numbers are 100% accurate and there's no fraudulent reporting. And it's pure speculation on Ted Butler's part that it's JP Morgan who's long Comex gold futures - he's the originator of the idea. I place a heavy discount on anything Butler speculates on that I can't verify with my own eyes.

The other BIG problem with basing analysis the way Butler does - and he unbelievably puts full faith in the notion that the CFTC/COT reporting is accurate and honest - is that I do not trust the data that is reported by the CME or the CFTC. The CFTC COT report is based on the data it gets from the CME. The CME bases its reports on the data it gets from the banks. Obviously the CME recently put a legal disclaimer on the data coming from the banks. But then again, Butler has to maintain religious-like faith that the CME/Comex reports are not fraudulent because he makes a healthy living selling newsletter subscriptions to his newsletter that is based on analyzing that data. He has no choice but to believe the data is uncorrupted.

IF the banks are honestly reporting the CME data, it would be the ONLY aspect of their financial reporting that is being done honestly. The irrefutable laws of probability would suggest that the CME/COT/open interest reports are fraudulent, just like every other aspect of the Comex. Let's take JP Morgan as an example. In it's latest earnings report released today, it reported that it is taking $9.2 billion in pre-tax legal expenses this quarter. This is $9.2 billion that JPM is forced to spend to defend itself from the very type of fraud and corruption in every other aspect of JPM's trading and banking business that Ted Butler says does not exist with respect to JPM's reporting of its trading positions and its gold/silver warehouse stock on the Comex.

I know that myself and several other long-time precious metals and financial market professionals are confident that JPM's warehouse stock report is full of fraud - that most of the gold/silver it reports is either not there or is sitting there but has been hypothecated in some form. It would be a mistake to overlook the fact that the MF Global bankruptcy and fraud case - with which JPM was intimately involved - has set the precedence in terms of protecting banks who hypothecate customer assets. I highly suspect that the daily open interest positions reported by JPM and the other banks is also corrupted.

If Ted wants to believe that the CME/CFTC/Comex data is accurate and honest, I have a bridge that I own that connects the upper east side of Manhattan to the borough of Queens that I would love to sell him. What's your bid, Ted? And, just for the record, I was highly critical of Ted's undying view in the early 2000's that eventually the CFTC would crack down on the obvious manipulation of gold/silver on the Comex by the big banks and specifically JPM. He was wrong then and he's wrong now.

That tragedy of all of this is that the crime/corruption/fraud on the Comex reflects the same on all of Wall Street and, in fact, our entire political and economic system. This country's "wealth" has been built on the back of the giant Ponzi scheme that is the U.S. Treasury market and the $17 trillion in debt that has been issued to keep the system alive. In other words, our entire system of economics and politics is one giant facade of complete deception. And I'm not even addressing here the massive insolvency of the cities, States and public/private pension funds.

This will not end well. The volatility exhibited by the economy, the stock market, the political situation in DC and in the gold and silver markets - especially the latter - reflects just how broken and corrupted our system is. Try to enjoy what you can, while you can - because there's no telling when the inevitable occurs and life becomes extraordinarily unpleasant for everyone.

POSTED BY DAVE IN DENVER AT 11:16 AM