Tuesday, January 24, 2012



No review of financial Regulators would be complete without a few words on that “paragon of ethical virtue, transparency and professionalism”, the Commodities and Futures Trading Commission (“CFTC”). This organization is for commodities the equivalent of the SEC for stocks and shares.

The stated mission of the CFTC is “to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures”. Let’s see how well they do their job.

They are an “Independent Government Agency”, which means they are not directly under Presidential control. That sounds good, so whose control are the under? The present Chairman is Gary Gensler, who previously worked for “you’ll never guess …Goldman Sachs”. He also worked in the Clinton administration under Robert Rubin, treasury secretary who previously was joint chairman of “you’ll never guess …..Goldman Sachs”. He is part of the revolving door policy between Washington and Wall Street, practiced so effectively elsewhere. Why would a highly paid Goldmanite take a low paid Government job, well because he is very useful in that position. At the end of his tenure he will be the Financial Mafia equivalent of a “Made Man” with a very useful address book.

The CFTC is funded by the US Government and oversees multi-trillion dollar markets, and with over 600 staff and a budget approaching USD 200 Million, one would have thought they are well equipped for the task. However ……

Recently, MF Global, a major trading house, run by Jon Corzine, ex Champagne socialist Governor of New Jersey, and yet another former Joint Chairman of “you’ll never guess…..Goldman Sachs”, imploded, with losses exceeding USD 1 Billion, the sixth largest bankruptcy in US history. Incidentally Corzine almost succeeded in bankrupting New Jersey as well.

This caused Mr Gensler to refuse to handle the file due to his close personal relationships with Corzine. Did nobody notice this conflict when Gensler was being confirmed in the position, or perhaps that is why he got the job?

An amazing feature of bankruptcies is that sensational newspaper headlines always cover those who lost the money. They never go looking for the guys on the other side of the trade who MADE a billion. If you know in advance you will lose a billion it should be easy to find friends to help you out on the winning side of the trade. Oh forget it,  just a nasty thought, I ‘m sure it could never happen.

In another case of willful blindness the CFTC has failed to investigate the multi year 24/7 fraudulent manipulation of the gold and silver markets, perpetrated by notably JPMorgan Chase and HSBC. These banks have for years maintained massive short positions in both precious metals, and the shares of producing companies with a view to suppressing price. The CFTC has been inundated with literally thousands of letters of complaint and have heard from expert testimony, notably from Harvey Organ, the impact these short positions have on price.

They even heard directly from a “Whistle Blower”. Isn’t it curious how honest citizens are called whistleblowers, but crooks are not called crooks? Mr Andrew McGuire having advised when J P Morgan traders were going to attack the market and having recordings of their conversations when the raid was going on, actually was deliberately cut short during his detailed testimony of events to the CFTC.

If this sounds incredible both testimonies are available on You Tube.


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