A recent article in the WSJ talks of “China Nurtur[ing] Futures Markets in Bid to Sway Commodity Prices“:
Chinese leaders are concerned that their nation’s enormous economic expansion is becoming an excuse for foreign suppliers to inflate commodity costs. So, they hope to use their three futures exchanges to fight back.
Government officials say the country is positioning its futures markets to be major players in setting world prices for metal, energy and farm commodities. By letting the world know how much its companies and investors think goods are worth, China hopes to be less at the mercy of markets elsewhere.
Its easy to see why China would want to protect itself from recent large fluctuations in commodity (mainly oil) prices, when they spent $180 billion importing oil last year. They won’t have a very easy time doing it, however. China is still a communist government and they do not have a legal system in place to support futures contracts. None of them would be enforceable. There is also a huge policy bias towards large state-owned enterprises like China Oil. The Shanghai Futures Exchange won’t be an open, competitive, and effective market until small players in the exchange can get equal rights. The authoritarian Chinese Government policy makers (dictators) only allow the economy cake to grow on the condition that the largest piece is received by their friends in high positions at giant state-owned enterprises.
Unfortunately, just as the Chinese economy is manipulated by a small group of people, the US (and world) economy is manipulated in the same manner by the FED and entities like Goldman Sachs. China should be setting it’s sites on getting rid of Goldman Sachs instead of setting up its own pitiful exchanges. There is not much of a link between the HUGE fluctuations in oil prices and China’s steady increase in demand for oil (and other commodities). The true culprit and beneficiary behind these things is (government sponsored) Goldman Sachs. GS manipulated who would be rescued by with its immense amount of government cronies in Washington, successfully killing off its competitors, and then rode the energy curve up and down gaining huge rewards in the mean time.
If China’s goal is control and manipulate the biggest economy in the world (it is), all it has to do is take a look at the US’s Federal Reserve. We do it much better here in the states! We set up an authoritarian entity, claim that its “private” and separate from any form of oversight, then let it freely give out trillions of tax payer dollars to support whatever manipulative policy it desires! All without any of its skeletons coming back to haunt any elected officials.
I think it most certainly will be. But in any case, mainstreamers dismiss him at their peril. Taibbi represents a challenge to the conventional business press’s increasingly narrow focus, its incrementalism, its concern with petty scoops at the expense of asking the big questions of the big institutions on its beat.
The lesson of Taibbi is that if conventional business journalism is unwilling or unable to step back and take in the sweep of this crisis, and the systemic distortions that underlie it, somebody else will.
What the Columbia piece does not spend any time researching is the vested interest the main stream media (like Gasparino and the Wall Street Journal’s Heidi Moore) have in protecting Goldman. For example, Gasparino admits he was “invited” to the Goldman inner sanctum and shown the light (and presumably consequences of criticizing Goldman Sachs- like no future scoops from powerful Goldman. A couple of days later Gasparino’s criticism of Taibbi begins. Coinicidence? –we think not. Taibbi’s critics get much more revenue from Goldman Sachs than they will ever get from Matt Taibbi or Rolling Stone, so it’s easy to see who gets thrown under the bus. But the truth in Taibbi’s story is mainstream outside of the financial community, as well as within it and there’s now little the vested interests can do about it.
Goldman Sachs’ uncanny trading prowess, in which it makes money on like 80% of trades, extends to its “forecasts” of the unemployment numbers. Goldman projected -250,000 and the report comes in at -247,000. Well, well, surprise, surprise. The only thing that puzzles us is whether Goldman tells the government what to report, or the governmnet tells Goldman what it will report. Oh well, no big difference in the end…
In addition to the federal money it took last fall, it benefited from the government’s bailout of the American International Group, being paid 100 cents on the dollar for its $13 billion counterparty exposure to the insurer, and it has $28 billion in outstanding debt issued cheaply with the backing of the Federal Deposit Insurance Corporation.
They simply should not be allowed to continue doing this. Making record profits by trading with tax payer protection is not going to create the jobs that are needed for the economy. Gasparino has some remarks about the topic in the video below.
A link to a Google Code repository created by Sergey Aleynikov appeared today on the Sergey Aleynikov Facebook Fan Club. Numerous blogs and forums (here, here, and here as examples) have suggested that it may contain the infamous stolen Goldman Sachs trading source code. I have looked at the freely available, GNU licensed, code myself and it is NOT the aforementioned stolen GS code.
===== UPDATE =====
The moderator of the Facebook group has commented on this article if you are interested in his take.
The code is in fact, as the Wiki says, a “OS Process Manager for Erlang”. I have uploaded the documentation for the code in a zipped file here so that people can see for themselves, without having to use SVN, what the code does.
OS Process Manager for Erlang Documentation:
A Description of the code from the source:
Erlang port program for spawning and controlling OS tasks. It listens for commands sent from Erlang and executes them until the pipe connecting it to Erlang VM is closed or the program receives SIGINT or SIGTERM. At that point it kills all processes it forked by issuing SIGTERM followed by SIGKILL in 6 seconds.
This description can be seen in the source itself here:
The Google Code project was created on August 2nd, 2008 and is listed under the Open Source New BSD License.
According to Reuters and ZeroHedge, a Russian immigrant and former Goldman Sachs developer named Sergey Aleynikov was picked up at Newark Airport on July 4th by the FBI on charges of industrial espionage. Sergey supposedly, prior to his early June exit from Goldman, copied, encrypted, and uploaded source code inferred to be the code used by Goldman Sachs to process in real-time (micro-seconds) trades between multiple equity and commodity platforms to a German server. While trying to cover his tracks, the system backed up a series of bash commands so he was unable to erase his history that would later give him away to Goldman and the authorities.
Coincidentally (or maybe not so much), the NYSE changed its methodology for reporting program stock trading. For example: On the week ending June 19, Goldman was ranked first on the NYSE program trading list. But on the week of June 22, Goldman didn’t appear on the list of the top 15 firms at all. It simply vanished without any explanation from the NYSE or Goldman at all. Later, the NYSE announced that it would change some of the data it used to calculate the trading report.
All of this may not mean anything to you, but to put it simply: The software that was stolen is what has given Goldman Sachs the leg-up on program trading for so long, earning it the number 1 position on the NYSE list for years, until a couple of weeks ago. The software is arguably worth hundreds of millions of dollars. Now that the software is gone, Goldman isn’t on that list anymore and the source code is in the wild.
So, where are the 32MB of encrypted files that Sergey uploaded to a German server, and who wants to use it?
NYT Cargo Ships Treading Water Off Singapore, Waiting for Work The root of the problem lies in an unusually steep slump in global trade, confirmed by trade statistics announced on Tuesday.
WSJ Goldman Takes Heat for Conflicts at Whitehall Goldman is in an especially tricky position when acting as both a borrower and lender to itself, critics say.
WSJ US Median Home Price Declines 14% …first-time home buyers accounted for half of all purchases in the quarter, and many of them zeroed in on foreclosed homes.
FT Willem Buiter Inflection Popints and turning points – since you asked President Trichet’s statement that the cycle is at an inflection point is therefore quite consistent with the IMF’s forecast that real economic activity in the Euro Area will continue to decline for this year and much of the next.
FT US Foreclosure Program may be insufficient …the growth in problem loans is now migrating to prime borrowers and ordinary loans with 30-year terms and fixed interest rates.
Swamp Report would not be the first to say “takes one to know one”. 24/7 Wall St. reports that Friday, May 1, JP Morgan issued a negative bank research call for the major money center and super-regional banks:
“Bank of America Corporation (NYSE: BAC), Citigroup, Inc. (NYSE: C), U.S. Bancorp (NYSE: USB), Wells Fargo & Company (NYSE: WFC), SunTrust Banks, Inc. (NYSE: STI), and others were all hit by the note. Analysts do not actually cover their own companies, but you can’t really get away from the notion that the analyst downgrade also throws JPMorgan under the bus as well.”
Effectively, JP Morgan has labeled several of its fellow money center banks as goats and contrary to 24/7′s opinion, wants us to think that JP Morgan is a sheep. Richard Ramsden of Goldman Sachs boldly called Citigroup a goat, er, sell on April 20, citing Citigroup’s looming credit losses. But of course, Goldman is a sheep, after all “we can sell bonds to suckers, er, public investors without government gaurantees”. An earlier, April 3 Bloomberg quote of Ramsden:
The relaxation of fair-value accounting rules won’t prevent bank shares from falling because growth in bad loans is accelerating, according to Goldman Sachs Group Inc. “Our core view is that banks will not bottom until underperforming asset growth decelerates,” Richard Ramsden, a New York-based analyst at Goldman Sachs, wrote in a report today. “Loans are going bad faster than banks earn money.”
Estimates of Ramsden from a still earlier Bloomberg report on April 1:
A March 24 report from Goldman Sachs Group Inc. analyst Richard Ramsden [ ] estimated that Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are all carrying commercial mortgages at 100 percent of face value. Yet commercial mortgages may be the next shoe to drop for banks. “Commercial credit losses are likely to be quite onerous during 2009,” Friedman Billings Ramsey Group Inc. analyst James Abbott wrote in a report this week. These losses “will be significantly larger than what most are expecting.”
Apparently, a sheep can call a goat a goat, but a goat can’t call itself a sheep, unless a bonifide sheep backs him up. The market didn’t really react on Friday to JP Morgan’s call… So, is JP Morgan a bonifide sheep? What about Goldman?
FT reports that Goldman Sachs sold $2billion in notes yesterday before the announcement of stress test results:
“…pushing the boundaries of the bank’s agreements with regulators to keep the outcome of the tests confidential. Corporate governance experts questioned Goldman’s timing. “It is an odd day to raise debt. Out of an abundance of caution, Goldman should have waited until all material information was in the public domain,” said Charles Elson, director of the corporate governance centre at the University of Delaware.”
Think the government will punish their Goldman boy?
Financial stocks also helped to inspire a late burst in the S&P 500-stock index, which advanced 8.37 points, or 1%, to 851.92. Credit-card issuer Capital One Financial soared 18%, and banks like Wells Fargo and PNC Financial Services, which rose 11% and 7.5%, respectively, also surged.
Swamp Report figures its the advance information Mr. Geithner gives to Goldman Sachs, which in turn trades for its own account… The information must be good, like, “the stress tests were really tough, but we think all the banks are in fine shape to withstand an economy that will rebound next quarter.”