New Trojan - US Dollars

US Fed is Allegedly manipulating the World Economy

Note: The winter issue of Gerald Celente’s Trends Journal identifies financial market manipulation as a Top Trend for 2015.

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 (Fed) 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.

Indian Independence - Financial Strength

Indian financial markets and the economy are not immune to developments in the global economy. Therefore, if anything is unfavourable anywhere, we always have an impact here, but only in the short run.

However, at the fundamental level, India is at a comfortable position. Economic growth is picking up, inflation is falling after a long time, government finances are in a better shape and the external account is no longer a cause of concern. Therefore, it is being argued by money managers that once the dust settles, which could take its own time, India will once again emerge as an attractive investment destination.

US Fed (Federal Reserve) is Allegedly manipulating the US Economy, directly affecting World Economy 

Governments and economists take their hats off to free markets. Yet, the markets are rigged, not free. How long can stocks stay up in a lack-lustre or declining economy? How long can bonds pay negative real interest rates when debt and money are rising? How long can bullion prices be manipulated down when the world’s demand for gold exceeds the annual production?

For as long as governments and banks can rig the markets.

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.

US Economy Recovery

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.”

Normally an economic recovery produces rising consumer spending, rising profits, and more investment. But what they are experiencing is flat and declining consumer spending as jobs are offshored and retail stores close. Profits result from labor cost savings from employee layoffs.

Then… Why is US stock market not falling?

The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.

In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing (QE), by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.

Allegedly, QE is over, but it is not. The Fed intends to roll over (re-issue/ renew and not pay back) the interest and principle from its bloated $4.5 trillion bond portfolio into purchases of more bonds, and the banks intend to fill in the gaps by using the $2.6 trillion in their cash on deposit with the Fed to purchase bonds. QE has morphed, not ended. The money the Fed paid the banks for bonds will now be used by the banks to support the bond price by purchasing bonds.

Then… Why is Dollar strengthening?

Normally when massive amounts of debt and money are created the currency collapses, but the dollar has been strengthening. The dollar gains strength from the rigging of the gold price in the futures market. The Federal Reserve’s agents, the bullion banks, print paper futures contracts representing many tonnes of gold and dump them them into the market during periods of light or nonexistent trading. This drives down the gold price despite rising demand for the physical metal. This manipulation is done in order to counteract the effect of the expansion of money and debt on the dollar’s exchange value. In other words, declining dollar price of gold makes the dollar look strong.

The dollar also gains the appearance of strength from debt monetization by the Bank of Japan and the European Central Bank. The Bank of Japan’s Quantitative Easing program is even larger than the Fed’s. Even Switzerland is rigging the price of the Swiss franc. Since all currencies are inflating, the dollar does not decline in exchange value.

As Japan is Washington’s vassal, it is conceivable that some of the money being printed by the Bank of Japan will be used to purchase US Treasuries, thus taking the place along with purchases by the large US banks of the Fed’s QE.

Then… How US GDP is increasing?

The government even manipulates economic statistics in order to paint a rosy economic picture that sustains economic confidence. GDP growth is exaggerated by understating inflation. High unemployment is swept under the table by not counting discouraged workers as unemployed. We are told US is enjoying economic recovery and have an improving housing market. Yet the facts are that almost half of 25 year old Americans have been forced to return to live with their parents, and 30% of 30 year olds are back with their parents. Since 2006 the home ownership rate of 30 year old Americans has collapsed.

Banking Casinos – Citi Group

The repeal of the Glass-Steagall Act during the Clinton regime allowed the big banks to gamble (tarde in Stocks) with their depositors’ money. The Dodd-Frank Act tried to stop some of this by requiring the banks-turned-gambling-casinos to carry on their gambling in subsidiaries with no access to deposits in the depository institution. If the banks gamble with depositors money, the banks’ losses are covered by FDIC, and in the case of bank failure, bail-in provisions could give the banks access to depositors’ funds. With the banks still protected by being “too big to fail,” whether Dodd-Frank would succeed in protecting depositors when a subsidiary’s failure pulls down the entire bank is unclear.

The sharp practices in which banks engage today are risky. Why gamble with their own money if they can gamble with depositors’ money. The banks led by Citigroup have lobbied hard to overturn the provision in Dodd-Frank that puts depositors’ money out of their reach as backup for certain types of troubled financial instruments, with apparently only Senator Elizabeth Warren and a few others opposing them. Senator Warren is outgunned as Citigroup controls the US Treasury and the Federal Reserve.

The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the Omnibus Appropriations Bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars. Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.

GOLD

The price of gold is not determined in the physical market but in the futures market where contracts are settled in cash. If every time the demand for gold pushes up the price, the Federal Reserve or its bullion bank agents dump massive amounts of uncovered futures contracts in the futures market and drive down the price of gold, the result is to subsidize the gold purchases of Russia, China, and India. The artificially low gold price also artificially inflates the value of the US dollar.

BONDS

The Federal Reserve’s manipulation of the bond market has driven bond prices so high that purchasers receive a zero or negative return on their investment. At the present time fear of the safety of bank deposits makes people willing to pay a fee in order to have the protection of the government’s ability to print money in order to redeem its bonds. A number of events could end the tolerance of zero or negative real interest rates. The Federal Reserve’s policy has the bond market positioned for collapse.

US vs Russia - War on Economy

It is too risky for the US to take on Russia militarily. Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened herself to Western financial predation.

No country dependent on foreign capital is sovereign. A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings. Russia should self-finance. If Russia needs foreign capital, Russia should turn to its ally China. China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.

If every time the stock market tries to correct and adjust to the real economic situation, the plunge protection team or some government “stabilization” entity (QE) stops the correction by purchasing S&P futures, unrealistic values are perpetuated.

The US government, perhaps surprised at the ease at which all financial markets can be rigged, is now rigging, or permitting large hedge funds and perhaps George Soros, to drive down the exchange value of the Russian ruble by massive short-selling in the currency market. On 15^th December 2015 the ruble was driven down 19%.

Just as there is no economic reason for the price of gold to decline in the futures market when the demand for physical gold is rising, there is no economic reason for the ruble to suddenly loose much of its exchange value. Unlike the US, which has a massive trade deficit, Russia has a trade surplus. Unlike the US economy, the Russian economy has not been off shored. Russia has just completed large energy and trade deals with China, Turkey, and India.

If economic forces were determining outcomes, it would be the dollar that is losing exchange value, not the ruble.

The illegal economic sanctions that Washington has decreed on Russia appear to be doing more harm to Europe and US energy companies than to Russia. The impact on Russia of the American attack on the ruble is unclear, as the suppression of the ruble’s value is artificial.

The American attack on the Ruble is also teaching sovereign governments that are not US vassals the extreme cost of allowing their currencies to trade in currency markets dominated by the US.

China should think twice before it allows full convertibility of its currency. Of course, the Chinese have a lot of dollar assets with which to defend their currency from attack, and the sale of the assets and use of the dollar proceeds to support the yuan could knock down the dollar’s exchange value and US bond prices and cause US interest rates and inflation to rise. Still, considering the gangster nature of financial markets in which the US is the heavy player, a country that permits free trading of its currency sets itself up for trouble.

Washington intends to subvert Russia and to turn Russia into a vassal state like Germany, France, Japan, Canada, Australia, the UK and Ukraine. If Russia is to survive, Putin must protect Russia from Western economic institutions and Western trained economists.

Conclusion

What we are experiencing is not a repeat of the past (2009). The government is supposed to be the enforcer of laws against market manipulation but is itself manipulating the markets. The ability or, rather, the audacity of the US government itself to manipulate the major financial markets is new. Can this new trend continue? 

Stock Market Manipulation - Types

A true history of Finance Fraud would have to start in 300 B.C., when a Greek merchant name Hegestratos took out a large insurance policy known as bottomry. Basically, the merchant borrows money and agrees to pay it back with interest when the cargo, in this case corn, is delivered. If the loan is not paid back, the lender can acquire the boat and its cargo.

Hegestratos planned to sink his empty boat, keep the loan and sell the corn. It didn't work out, and he drowned trying to escape his crew passengers when they caught him in the act. This is the first recorded incident as of yet, but it's safe to assume that fraud has been around since the dawn of commerce.

If you think investors are protected from all market manipulations by SEBI, RBI, Government and Stock Exchange Policies, they make a good team, but you live in a dreamland. Financial Market Manipulation, is the new trend and it takes a variety of forms, including:

·         Dark Pools: What is a dark pool? Institutions trading large blocks of stocks over the counter among themselves, out of public view. Investigating authorities say, that it is investigating to determine if dark pool activity detracts from the quality of publicly quoted prices of the stocks involved. There are agreements, often written, among group of traders to delegate authority to a single managing institution to trade in a specific stock for a specific period of time and then to share in the resulting profits or losses. It’s just like a Mutual fund, but without any governmental restrictions and without public knowledge.

·         Churning: When a trader places both buy and sell orders at about the same price and to prove the (undue) increase, the promoter advertises a possible future plan. The increase in activity is intended to attract additional investors and increase the price. In simple words, just by increasing the volume of trade (at the expense of brokerage) investors are manipulated to think that the increase in volume and price is due to the future plans of the company. There are different ways of Churning like, Ramping the market, Wash Trading

·         Stock Bashing: This scheme is usually orchestrated by savvy online message board posters (a.k.a. "Bashers") who make up false and/or misleading information about the target company in an attempt to get shares for a cheaper price. This activity, in most cases, is conducted by posting libellous posts on multiple public forums. The perpetrators sometimes work directly for unscrupulous Investor Relations firms who have convertible notes that convert for more shares the lower the bid or ask price is; thus the lower these Bashers can drive a stock price down by trying to convince shareholders they have bought a worthless security, the more shares the Investor Relations firm receives as compensation. Immediately after the stock conversion is complete and shares are issued to the Investor Relations firm, consultant, attorney or similar party, the basher/s then become friends of the company and move quickly to ensure they profit on a classic Pump & Dump scheme to liquidate their ill gotten shares (see P&D). Example: In January 2005, someone using the name “Rahodeb” went online to a Yahoo stock-market forum and posted this opinion: No company would want to buy Wild Oats Markets Inc., a natural-foods grocer, at its price then of about $8 a share.“Would Whole Foods buy OATS?” Rahodeb asked, using Wild Oats’ stock symbol. “Almost surely not at current prices. What would they gain? OATS locations are too small.” Rahodeb speculated that Wild Oats eventually would be sold after sliding into bankruptcy or when its stock fell below $5.
A month later, Rahodeb wrote that Wild Oats management “clearly doesn’t know what it is doing. . . . OATS has no value and no future.”The comments were typical of banter on Internet message boards for stocks, but the writer’s identity was Rahodeb, which was an online pseudonym of John Mackey, co-founder and chief executive of Whole Foods Market Inc. In 2007, his company agreed to buy Wild Oats for $565 million, or $18.50 a share.The company confirms, Mr. Mackey posted numerous messages on Yahoo Finance stock forums as Rahodeb. It’s an anagram of Deborah, Mr. Mackey’s wife’s name. Rahodeb cheered Whole Foods’ financial results, trumpeted his gains on the stock and bashed Wild Oats.

·         Pump and dump: This scheme is generally part of a more complex grand plan of market manipulation on the targeted security. The Perpetrators (Usually stock promoters) convince company affiliates and large position non-affiliates to release shares into a free trading status as "Payment" for services for promoting the security. Instead of putting out legitimate information about a company the promoter sends out bogus futuristic plans (the "Pump") to millions of unsophisticated investors (Sometimes called "Retail Investors") in an attempt to drive the price of the stock and volume to higher points. After they accomplish both, the promoter sells their shares (the "Dump") and the stock price falls like a stone, taking all the duped investors money with it. Example: A 15-year-old named Jonathan Lebed showed how easy it was to use the Internet, to run a successful pump and dump. Lebed bought penny stocks (stocks with negligible price) and then promoted them on message boards, pointing at the price increase. When other investors bought the stock, Lebed sold his for a profit, leaving the other investors holding the bag. He came to the attention of the U.S. Securities and Exchange Commission (SEC), which filed a civil suit against him alleging security manipulation. Lebed settled the charges by paying a fraction of his total gains. He neither admitted nor denied wrongdoing, but promised not to manipulate securities in the future.
Another example can be of Langbar International, Started as Crown Corporation, Langbar was the biggest pump and dump fraud on the Alternative Investment Market, part of the London Stock Exchange. The company was at one point valued greater than $1 billion, based on supposed bank deposits in Brazil which did not exist. None of the chief conspirators were convicted, although their whereabouts are known. A patsy who made a negligent false statement about the assets was convicted and banned from being a director.The investors who lost as much as £100 million sued one of the fraudsters and recovered £30 million.

·         Stock Runs: When a group of traders create activity, news or rumours (futuristic) in order to drive the price of a security up. An example is the famous Guinness share-trading fraud of the 1980s. In the US, this activity is usually referred to as painting the tape. Runs may also occur when trader(s) are attempting to drive the price of a certain share down, which is also referred to as Bear Raid, although this is rare (see Stock Bashing).

·         Lure and Squeeze: The way it works is a company is very distressed on paper, with impossibly high debt and consistently high annual losses, but very few assets, making it look as if bankruptcy must be imminent.
1)The stock price gradually falls as people new to the stock short it on the basis of the poor outlook for the company, until the number of shorted shares greatly exceeds the total number of shares that are not held by those aware of the lure and squeeze scheme (call them "people in the know").
2) In the meantime, people in the know increasingly purchase the stock as it drops to lower and lower prices.
3) When the short interest has reached a maximum, the company announces it has made a deal with its creditors to settle its loans in exchange for shares of stock (or some similar kind of arrangement that leverages the stock price to benefit the company), knowing that those who have short positions will be squeezed as the price of the stock sky-rockets.
4)Near its peak price, people in the know start to sell, and the price gradually falls back down again for the cycle to repeat.

·         Quote stuffing: This is a tactic employed by high-frequency traders that involves using specialized, high-bandwidth hardware to quickly enter and withdraw large quantities of orders in an attempt to flood the market, thereby gaining an advantage over slower market participants. Thus, you would observe greater deviation in stock prices in 1^st 10 mins and last 10 mins of the market.

·         Cornering (the market): Purchasing enough of a particular stock, commodity, or other asset to gain control of the supply and be able to set the price for it. This can be done by high net worth corporate or Dark Pool institutions, or to a stock whose market capitalization is low but number of shares is high. Example: During the financial crisis of 2007-2010, Porsche cornered the market in shares of Volkswagen, which briefly saw Volkswagen become the world's most valuable company. Porsche claimed that its actions were intended to gain control of Volkswagen rather than to manipulate the market. In this case, while cornering the market in Volkswagen shares, Porsche contracted with naked shorts resulting in a short squeeze on them. It was ultimately unsuccessful, leading to the resignation of Porsche's chief executive and financial director and to the merger of Porsche into Volkswagen. One of the wealthiest men in Germany's industry, Adolf Merckle, committed suicide after shorting Volkswagen shares.        

·         Insider Trading: When an insider, with important confidential information about a company, take advantage of that knowledge by buying or selling stocks himself, or informing or tipping someone else to make a profit or avoid losses. It is one of the easiest ways to make quick profits and thus you can find many examples online. Example: Martha Stewart: The Homemaking Hoaxer, R. Foster Winans: The Corruptible Columnist,  Levine, Siegel, Boesky and Milken: The Precognition Rat Pack.

      Market Manipulation is nothing but an unfortunate fact of the financial market. Stocks and commodities have always been subject to manipulation, whether by individuals, pools, central banks or even governments. If you are unable to come to terms with this reality then it’s best to avoid participating in the market altogether. But if you’re able to come to grips with this then there is money to be made once you’re able to spot the tell-tale signs of manipulation, a skill which becomes better with experience.

Facts, Figures, Accusations and are taken from Wikipedia and Investopedia.