Stock Market News for May 20, 2013

Positive investor sentiment towards encouraging economic data released throughout last week ensured that major indices posted record gains on Friday. The day was also marked by major corporate developments and profits booked by energy and industrial stocks. Meanwhile, the Euro Zone had a sliver of positive news after car registrations for April increased marginally. All the top ten S&P 500 industry groups finished in the green, among which energy stocks outperformed others.

The Dow Jones Industrial Average (:DJI) gained 0.8% to close the day at 15,354.40. The S&P 500 increased 1.0% to finish Friday’s trading session at 1,666.12. The tech-laden Nasdaq Composite Index rose 1.0% to end at 3,498.97. The fear-gauge CBOE Volatility Index (:VIX) dropped 4.8% to settle at 12.45. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.33 billion shares, marginally below 2013’s average of 6.36 billion shares. Advancing stocks outnumbered the decliners. For the 68% that advanced, 28% declined.

Benchmarks posted gained for the fourth week in a row. The Federal Reserve’s monetary stimulus coupled with strong corporate earnings and encouraging domestic data fuelled the rally. The Dow Jones, the S&P 500 and the Nasdaq have advanced 17.2%, 16.8% and 15.9%, respectively since the start of 2013. This week, the Dow, S&P 500 and the Nasdaq gained 2.0%, 1.5% and 1.7%, respectively. In comparison with level which was prevailing during March 2009, the S&P 500 has gained nearly 1000 points. A removal of monetary stimulus might curb U.S. economic growth in the second quarter. However, markets seem to be buoyant thanks to encouraging retail sales and job market numbers.

On the domestic front, according to a report, released by Thomson Reuters and University of Michigan, the consumer confidence index in May improved to 83.7, above the consensus estimate of 77.6 and previous month’s reading of 76.4. Meanwhile, another report released by the Conference Board, indicated an improvement in the Conference Board Leading Economic Index (LEI) for April. The index increased 0.6% compared to a marginal decline during the previous month.

Major components of this index are building permits, initial claims, average work week in manufacturing and ISM new orders. For the six months ending April 2013, the index has improved 1.7% compared to 0.5% during previous six months. The Conference Board Coincident Economic Index (:CEI) improved marginally 0.1%. However, for the six months ending April 2013, the index advanced at much faster pace of 1.3% compared to 0.4% in the previous six months.

On the international front, according to figures released by the European Automobile Manufacturers' Association, new car registrations for the month of April increased marginally for the first time in 19 months, by 1.7%. The increase is attributable to growth in Spain and Germany. This report comes after the Euro Zone slipped into recession for the first quarter. Germany’s Volkswagen gained 2% out of 27% market share in Europe, compared to April 2012. Car sales have slumped in the recession hit Euro Zone mainly because of low income and high unemployment.

Energy stocks were the biggest gainers. The Energy Select Sector SPDR (XLE) gained 1.7%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Hess Corp. (NYSE:HES), Occidental Petroleum Corporation (NYSE:OXY) and Marathon Petroleum Corp (NYSE:MPC) increased 1.2%, 0.5%, 0.8%, 2.0% and 5.3%, respectively.

Read the analyst report on XOM
Read the analyst report on CVX
Read the analyst report on HES
Read the analyst report on OXY
Read the analyst report on MPC
Zacks Investment Research

Global shares grind higher, yen edges up on Amari comments

By Marc Jones

LONDON (Reuters) - Rising optimism about global growth pushed world shares to a near five-year high on Monday, while comments from Japan's economy minister that consumers could suffer if the yen falls further lifted it off a 4-1/2 low.
Data last week that showed U.S. consumer sentiment at its strongest in nearly six years continued to support equity markets. MSCI's world index <.miwo00000pus> is at its highest since June 2008 as top European shares (.FTEU3) started the week up 0.2 percent.
With risk appetite dominating, safe-haven German Bunds fell 45 ticks, while gold, also pressured by signs the U.S. Federal Reserve could start winding down its support, extended it longest losing streak in four years to hit a 1-month low. (GOL/)
"We have started to see a series of positive readings coming out of the United States. We are positioned for a rising market and think that the best way is to invest in financials," said HSBC equity strategist Robert Parkes.
In the currency market, focus remained largely on the yen and it edged up from last week's 4-1/2 year low after Japan's economy minister suggested over the weekend the government might be satisfied with its level after it recent slump. (FRX/)
"People say the excessively strong yen has corrected quite a bit. If the yen continues to weaken steadily from here, negative effects on people's lives will emerge," Japanese Economics Minister Akira Amari told a Sunday talk show.

As European trading gathered pace Brent crude held steady at $104.60 a barrel while copper eased 0.36 percent to $7,282.50 a metric ton (1.1023 tons) as the talk of the Fed tapering its bond purchases weighed on sentiment.

(Reporting by Marc Jones; Editing by Toby Chopra)

Silver Plunges As Yen Stop Surge Triggers Margin Liquidation

Not a moment after someone was slammed with a massive margin call following the hit of 102 USDJPY stops as we noted moments ago, was that same someone(s) forced to dump a whole lot of silver in thin, no volume trading taking out the entire bid stack on what can only be described as "get me the hell out and pay me anything" liquidation, sending the precious metal to just over $20, before yet another round of buying programs kicked in, and sent it right back up, allowing those quick enough to capitalize on some foolish macro trader's blowing up to pocket a huge profit before Japan has even woken up.

Thank you Kuroda, Bernanke and co for this total farce of a "market."

The Greatest Medical Fraud in History – The Pain, Profit and Politics of AIDS

Poll: Congress Not Overreaching on Obama Scandals

A new poll found that Americans by a large margin believe that Congress is not overreacting to the burgeoning scandals plaguing the Obama administration.

A CNN/ORC poll found that 54 percent of Americans don't believe that Congress is overreacting to the IRS scrutiny of conservative groups, while 42 percent said that it is. By an even larger margin, 59 percent to 37 percent, respondents said that Congress is making the right moves on the administration's actions regarding the Benghazi terror attack.

The poll came as White House senior adviser Dan Pfeiffer made the round of Sunday talk shows, defending President Barack Obama over charges that he was unaware of the IRS scandal until hearing press reports.

"Here's the cardinal rule … for all White Houses," Pfeiffer said. "You do not interfere in an independent investigation, and you do not do anything to give off the appearance of interference in an independent investigation."

Pfeiffer said Obama learned about the IRS scandal on May 10, the same day as the public, even though Treasury Secretary Jack Lew and Rep. Darrell Issa, a California Republican, were aware of the probe earlier but alert the White House about it while the investigation was ongoing.

The White House might not have commanded Internal Revenue agents to target conservative groups, but a "culture of intimidation throughout the administration" made them think it was acceptable, says Senate Minority Leader Mitch McConnell.

The Department of Health and Human Services, the Federal Communications Commission, and the Securities and Exchange Commission all have targeted groups with a right-wing bent, McConnell, a Kentucky Republican, said on "Meet the Press" Sunday.

"What we're talking about here is an attitude that the government knows best," McConnell said. "The nanny state is here to tell us all what to do, and if you start criticizing you get targeted."

The IRS admitted that agents singled out groups with "tea party," "patriot" and other conservative key words for additional scrutiny when they applied for 501(c)(4) status over the past two years. The status allows the groups not to pay taxes, keep their donor lists private, and engage in some political activity as long as it is not the group's main focus.

A clip of McConnell on C-SPAN from June 11, 1987 showed him critical of such groups at the time, when he feared liberal organizations could use the status to hide donors who were contributing to political causes. Now, it is clear that the federal government is trying to target people on donor lists to shut them up, McConnell said.

"I was wrong 25 years ago; I've been right for the last two decades," McConnell said. "The government should not be trying to intimidate citizens who criticize the government from exercising their First Amendment rights."

Pfeiffer found some welcome news while on CNN's "State of the Union," which reported Obama's job approval at 53 percent. The numbers were up 2 percent from early April, and up 6 points from their low of 47 percent in mid-March.

"I think the American people have great faith in the president," Pfeiffer said.



© 2013 Newsmax. All rights reserved.

The IRS Is Seeing Everything You Do Online

The IRS may be watching your online activities — including what you post on social media sites, what you sell online, even what you write in emails and text messages.

Some tax experts and civil liberties groups are disturbed by what they call the agency's secretive practices. Taxpayers know little about how it uses big data and "robo-audits."

"It's well-known in the tax community, but not many people outside of it are aware of this big expansion of data and computer use," Edward Zelinsky, a tax expert at Cardozo Law School and Yale Law School, told U.S. News & World Report.

Forbes Columnist: ‘Who the Hell Cleared This?’

"I am sure people will be concerned about the use of personal information on databases in government, and those concerns are well-taken."

Anything you do or say on the Internet can be used against you in IRS enforcement actions, he stressed.

The IRS spent about $1 billion in its recent data-mining modernization.

As a result, the agency's is rolling out an effort to deploy sophisticated data-matching and pattern-recognition technology, and match up taxpayer returns with third-party information, according to U.S. Treasury Inspector General for Tax Administration J. Russell George.

The IRS is collecting massive amounts of data, tracking Internet users' online movements, and using Social Security numbers, health records, credit card transactions and other information that private companies cannot obtain, according to U.S. News.

The IRS Criminal Tax Division has long believed that it can read your emails without a warrant, said American Civil Liberties Union staff attorney Nathan Freed Wessler, citing IRS documents. The ACLU examined 247 pages of IRS records obtained through a Freedom of Information Act request to learn if the IRS obtains search warrants before reading emails, texts, and other digital communications.

"So does the IRS always get a warrant?" Wessler wrote in an ACLU blog post.
"Unfortunately, while the documents we have obtained do not answer this question point blank, they suggest otherwise."

The agency should be upfront about its policies and obtain warrants, he argued, saying the federal law on email access is hopelessly outdated.

"Let's hope you never end up on the wrong end of an IRS criminal tax investigation. But if you do, you should be able to trust that the IRS will obey the Fourth Amendment when it seeks the contents of your private emails."

The Sixth Circuit Court Appeals Court in United States v. Warshak ruled that the IRS must obtain a warrant to read private emails, but the IRS has not said if it now obtains warrants everywhere or only in the Sixth Circuit.

Forbes Columnist: ‘Who the Hell Cleared This?’

© 2013 Moneynews. All rights reserved.

'Bitcoin bomb may blow up banks' bondage, hence US attacks'

shar.es/ZC8pT 

Finance – “Après Moi, Le Déluge – Make Money Now To Hell With Tomorrow

Dr. Heiner Flassbeck: We’re in worst shape now than in 2008 because at least then there was hope governments would face up to the situation Support TheRealNews

Is EVERY Market Rigged?

European Union Launches Investigation Into Manipulation of Oil Prices Since 2002

CNN reports:

The European Commission raided the offices of Shell, BP and Norway’s Statoil this week as part of an investigation into suspected attempts to manipulate global oil prices spanning more than a decade.
None of the companies have been accused of wrongdoing, but the controversy has brought back memories of the Libor rate-rigging scandal that rocked the financial world last year.
***
A review ordered by the British government last year in the wake of the Libor revelations cited “clear” parallels between the work of the oil-price-reporting agencies and Libor.
“[T]hey are both widely used benchmarks that are compiled by private organizations and that are subject to minimal regulation and oversight by regulatory authorities,” the review, led by former financial regulator Martin Wheatley, said in August . “To that extent they are also likely to be vulnerable to similar issues with regards to the motivation and opportunity for manipulation and distortion.”
***
In a report issued in October, the International Organization of Securities Commissions — an association of regulators — said the ability “to selectively report data on a voluntary basis creates an opportunity for manipulating the commodity market data” submitted to Platts and its competitors.
Responding to questions from IOSCO last year, French oil giant Total said the price-reporting agencies, or PRAs, sometimes “do not assure an accurate representation of the market and consequently deform the real price levels paid at every level of the price chain, including by the consumer.” But Total called Platts and its competitors “generally… conscientious and professional.”
***
“Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers,” the European Commission said this week.

USA Today notes:

The Commission … said, however, that its probe covers a wide range of oil products — crude oil, biofuels, and refined oil products, which include gasoline, heating oil, petrochemicals and others.
***
The EU said it has concerns that some companies may have tried to manipulate the pricing process by colluding to report distorted prices and by preventing other companies from submitting their own prices.
***
Unlike oil futures, which set prices for contracts, the data used in the MOC process is based on the physical sale and purchase of actual shipments of oil and oil products.
***
According to Statoil, the EU investigation stretches back to 2002, which is when Platts launched its MOC price system in Europe. The suspicion is that some companies may have provided inaccurate information to Platts to affect the oil products’ pricing, presumably for financial gain.

Fox points out:

At issue is whether there was collusion to distort prices of crude, refined oil products and ethanol traded during Platts’ market-on-close (MOC) system – a daily half-hour “window” in which it sets prices.
But the European Commission also is examining whether companies were prevented from taking part in the price assessment process.

The Guardian writes:

The commission said the alleged price collusion, which may have been going on since 2002, could have had a “huge impact” on the price of petrol at the pumps “potentially harming final consumers”.
Lord Oakeshott, former Liberal Democrat Treasury spokesman, said the alleged rigging of oil prices was “as serious as rigging Libor” – which led to banks being fined hundreds of millions of pounds.
He demanded to know why the UK authorities had not taken action earlier and said he would ask questions of the British regulator in Parliament. “Why have we had to wait for Brussels to find out if British oil giants are ripping off British consumers?” he said. “The price of energy ripples right through our economy and really matters to every business and families.”
***
Shadow energy and climate change secretary Caroline Flint said: “These are very concerning reports, which if true, suggest shocking behaviour in the oil market that should be dealt with strongly.
“When the allegations of price fixing in the gas market were made, Labour warned that opaque over-the-counter deals and relying on price reporting agencies left the market vulnerable to abuse.
“These latest allegations of price fixing in the oil market raise very similar questions. Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders.”
Shadow financial secretary to the Treasury Chris Leslie said: “If oil price fixing has taken place it would be a shocking scandal for our financial markets.

The Telegraph reports:

“97 per cent of all we eat, drink, wear or build has spent some time in a diesel lorry,” said a spokesman for FairFuel UK, the lobbyists. “If it is proved, they have been gambling with the very oxygen of our economy.”
***
Platts – to determine the benchmark price – examines just trades in the final 30 minutes of the trading day. A group of half a dozen analysts gather round a trading screen and decide on the final price. As with much that goes on in the City, it is a surprisingly old-fashioned method, reliant on gentlemanly conduct. Critics say it leaves the market open to abuse, and the price can suddenly spike or fall in the final minutes of the day.

The New York Times notes of agencies like Platt and Argus Media:

Their influence is extensive. Total, the French oil giant, estimated last year that 75 to 80 percent of crude oil and refined product transactions were linked to the prices published by such agencies.

The Observer writes that manipulation of the oil markets has long been an open secret:

Robert Campbell, a former price reporter at another PRA, Argus – he is now a staffer at Thomson Reuters, which also competes with Platts and others on providing energy news and data – said this a few days ago in a little-noticed commentary: “The vulnerability of physical crude price assessments to manipulation is an open secret within the oil industry. The surprise is that it took regulators so long to open a formal probe.”

Reuters points out that the probe may be expanding to the U.S.:

In Washington, the chairman of the Senate energy committee asked the Justice Department to investigate whether alleged price manipulation has boosted fuel prices for U.S. consumers.
“Efforts to manipulate the European oil indices, if proven, may have already impacted U.S. consumers and businesses, because of the interrelationships among world oil markets and hedging practices,” Sen. Ron Wyden (D-Ore.), chairman of the Senate Energy and Natural Resources Committee, wrote in a letter to Attorney General Eric H. Holder Jr.
Wyden also asked Justice to investigate whether oil market manipulation was taking place in the United States.

Not only are petroleum products a multi-trillion dollar market on their own, but manipulation of petroleum prices would effect virtually every market in the world.
For example, the Cato Institute notes how many industries use oil:

U.S. industries use petroleum to produce the synthetic fiber used in textile mills making carpeting and fabric from polyester and nylon. U.S. tire plants use petroleum to make synthetic rubber. Other U.S. industries use petroleum to produce plastic, drugs, detergent, deodorant, fertilizer, pesticides, paint, eyeglasses, heart valves, crayons, bubble gum and Vaseline.

The India Times explains that:

The price variation in crude oil impacts the sentiments and hence the volatility in stock markets all over the world. The rise in crude oil prices is not good for the global economy. Price rise in crude oil virtually impacts industries and businesses across the board. Higher crude oil prices mean higher energy prices, which can cause a ripple effect on virtually all business aspects that are dependent on energy (directly or indirectly).

The Federal Reserve Bank of San Francisco points out:

When gasoline prices increase, a larger share of households’ budgets is likely to be spent on it, which leaves less to spend on other goods and services. The same goes for businesses whose goods must be shipped from place to place or that use fuel as a major input (such as the airline industry). Higher oil prices tend to make production more expensive for businesses, just as they make it more expensive for households to do the things they normally do.
***
Oil price increases are generally thought to increase inflation and reduce economic growth.
***
Oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers.
***
Oil price increases can also stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of producing them. In economics terminology, high oil prices can shift up the supply curve for the goods and services for which oil is an input.
High oil prices also can reduce demand for other goods because they reduce wealth, as well as induce uncertainty about the future (Sill 2007). One way to analyze the effects of higher oil prices is to think about the higher prices as a tax on consumers (Fernald and Trehan 2005).

The Post Carbon Institute notes (via OilPrice.com) that high oil prices raise food prices as well:

The connection between food and oil is systemic, and the prices of both food and fuel have risen and fallen more or less in tandem in recent years (figure 1). Modern agriculture uses oil products to fuel farm machinery, to transport other inputs to the farm, and to transport farm output to the ultimate consumer. Oil is often also used as input in agricultural chemicals. Oil price increases therefore put pressure on all these aspects of commercial food systems.

Figure 1: Evolution of food and fuel prices, 2000 to 2009
Sources: US Energy Information Administration and FAO.

Economists Nouriel Roubini and Setser note that all recessions after 1973 were associated with oil shocks.

Interest Rates Are Manipulated

Unless you live under a rock, you know about the Libor scandal.
For those just now emerging from a coma, here’s a recap:

• The big banks have conspired for years to rig interest rates … upon which $800 trillion in assets are pegged

• This was the largest insider trading scandal ever … and the largest financial scam in world history

• Local governments got ripped off bigtime by the Libor manipulation

• Libor is still being manipulated

Derivatives Are Manipulated

The big banks have long manipulated derivatives … a $1,200 Trillion Dollar market.
Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way that interest rates are fixed: through gamed self-reporting.

Gold and Silver Are Manipulated

The Guardian and Telegraph report that gold and silver prices are “fixed” in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be.

Everything Can Be Manipulated through High-Frequency Trading

Traders with high-tech computers can manipulate stocks,  bonds, options, currencies and commodities. And see this.

Manipulating Numerous Markets In Myriad Ways

The big banks and other giants manipulate numerous markets in myriad ways, for example:

• Engaging in mafia-style big-rigging fraud against local governments. See this, this and this

• Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here

• Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts

• Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)

• Pledging the same mortgage multiple times to different buyers.  See this, this, this, this and this.  This would be like selling your car, and collecting money from 10 different buyers for the same car

• Cheating homeowners by gaming laws meant to protect people from unfair foreclosure

• Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this

• Engaging in unlawful “frontrunning” to manipulate markets. See this, this, this, this, this and this

• Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this

• Otherwise manipulating markets. And see this

• Participating in various Ponzi schemes. See this, this and this

• Charging veterans unlawful mortgage fees

• Cooking their books (and see this)

• Bribing and bullying ratings agencies to inflate ratings on their risky investments

S&P says Cypriot deposit grab may set eurozone precedent

Source: Cyprus Mail
THE GRAB on bank deposits that accompanied Cyprus’ bailout could be repeated elsewhere in the eurozone, and the bloc’s banking union may not be strong enough when it is introduced, Standard & Poor’s said yesterday.
“We believe that the events in Cyprus highlight the increased reluctance of financially stronger eurozone countries to make their taxpayers’ funds available to recapitalise banks outside their home jurisdictions,” the credit ratings agency said in a report.
“For this reason, although the key features of the Cypriot banking system are not shared by other eurozone countries, we consider that the bail-in may indeed create a precedent.”
Speaking at the London School of Economics, Athanasios Orphanides, who headed Cyprus’ central bank during much of the run up to the crisis, slammed the handling of the situation by both the island’s government and eurozone leaders.
“I read this (deposit grab) as another Deauville,” Orphanides said, referring to the groundbreaking agreement between German Chancellor Angela Merkel and then French President Nicolas Sarkozy to impose losses on Greek bondholders.
“It is not yet clear what has been done to the banking sector in the periphery… The issue is how this may play out going forward.”
S&P’s report also raised concerns that the eurozone’s plans for a banking union – designed to break the link between costly bank bailouts and unmanageable sovereign debt levels – may fall short of requirements.
The union is due to come into force by mid-2014 but there has been substantial backsliding on the original blueprint, with Germany in particular resistant to committing taxpayers’ money to supporting banks outside its borders.
S&P credit analyst Richard Barnes said the increasingly “minimalist”-looking plans would “do little to make the eurozone a more cohesive monetary union or address banks’ direct and indirect dependence on the creditworthiness of their national governments.”
“Unless the banking union delivers greater integration than currently appears achievable, the creditworthiness of banks will likely remain dependent on their home sovereigns’ creditworthiness. Therefore, they would remain vulnerable to any further deterioration in the operating environment,” he added.

Facebook’s stock has lost 31% of its value since it went public one year ago

On May 18th, 2012, Facebook went public at a per-share price of $38. The company experienced a brief gain, spiking into the 40s, but ended its first day of trading just a few cents above the set $38 price.
The following days saw the stock decline, under its listing price. The stock would fall as low as $17.55 before it began a period of recovery. As Facebook has grown its income from mobile users, and proven that its desktop market share isn’t transitory, investors have warmed to its shares.
Facebook has since recovered from its lows, and is now closing its first year as a public company at $26.25. That’s a 30.9 percent decline from its IPO price, but is up essentially 50% from its historic, 52 week low. Facebook investors that bought the company when it was mired in the doldrums have done well. Folks who bought on day one have endured nothing but decline, of varying degrees, since their purchase.
In its most recent quarter, Facebook bested revenue expectations, with top line of $1.46 billion. However, it missed forecasted profit by reporting just $0.12 per share in earnings. Facebook price-earnings ratio is remarkably high.
Today, Facebook closed regular trading worth $63.47 billion. When it went public, the company was valued at over $104 billion.
In retrospect, Facebook is now a much larger company, with stronger profits and revenues. And investors are valuing below the price that the market bore when it went public. It’s a lesson worth remembering; what the market will allow in an IPO doesn’t always fully reflect the value of a company.
Zynga and Groupon investors can confirm the idea.
Facebook finds itself in a strong posistion, with plenty of cash, profits, and growing revenues. It’s work in mobile is also to its benefit, at once expanding its core offerings in the space, and also enjoying the quick growth of Instagram, which it wholly owns.
A final note: Instagram’s final purchase price was $715 million. Why not the oft floated $1 billion figure that was offered? The deal had a huge stock component. And as Facebook’s stock fell, so too did the value of the deal.
Market declines regardless, in the past year Facebook’s usership, incomes, user activity are all up and to the right. Botched IPO or not, Facebook is healthy.
 Image EMMANUEL DUNAND for AFP / Getty Images

All relevant data via Google Finance.

Obama Administration Knew of IRS Probe During 2012 Campaign

WASHINGTON  — Senior Treasury officials were made aware in June 2012 that investigators were looking into complaints from tea party groups that they were being harassed by the Internal Revenue Service, a Treasury inspector general said, disclosing that Obama administration officials knew there was a probe during the heat of the presidential campaign.
J. Russell George, the Treasury inspector general for tax administration, testifying alongside ousted IRS head Steven Miller on Friday, said he had told the department's general counsel about his investigation on June 4, 2012, and Deputy Treasury Secretary Neal Wolin "shortly thereafter."

But, George cautioned, those discussions were "not to inform them of the results of the audit. It was to inform them of the fact that we were conducting the audit."
After the hearing, inspector general spokeswoman Karen Kraushaar said George "informed Department of Treasury officials that we were looking into the IRS' handling of applications for tax-exempt status, partly due to allegations raised by conservative organizations."
Latest: Is Obama in Cover-Up on Benghazi? Vote Here
Kraushaar said the disclosure was part of a routine briefing about the office's activities.
The Treasury Department issued a statement Friday saying officials first became aware of the actual results of the investigation in March of this year, when they were provided a draft of George's report, a standard practice.
George's disclosure came before the House Ways and Means Committee in the first of several congressional hearings on the matter. He was joined by Miller, who spoke publicly about the controversy for the first time.
Miller was contrite as he apologized for the actions of agents who singled out conservative political groups for additional, often burdensome scrutiny.
"First and foremost, as acting commissioner, I want to apologize on behalf of the Internal Revenue Service for the mistakes that we made and the poor service we provided," he told the committee. "The affected organizations and the American public deserve better."
But the hearing turned prickly when Miller insisted he did not deceive Congress, though he repeatedly failed to reveal the controversy last year when he was asked about it by lawmakers — even after he had been briefed.
"I did not mislead Congress or the American people," Miller said.
The administration is on the defensive for a trio of issues that are threatening to derail the president's second-term agenda. In addition to the IRS case, President Barack Obama and other officials are being pressed about last September's terrorist attack in Benghazi, Libya, that killed the U.S. ambassador and three other Americans, and the government's seizure of Associated Press telephone records as part of a leaks investigation.
"Listening to the nightly news, this appears to be just the latest example of a culture of cover-ups and political intimidation in this administration," said Rep. Dave Camp, R-Mich., chairman of the Ways and Means Committee. "It seems like the truth is hidden from the American people just long enough to make it through an election."
Committee Democrats were also critical of the IRS, but several took offense at Camp's assertion that this matter is part of a wider problem within the administration. They noted that there has been no evidence so far that anyone outside the IRS was involved in targeting conservative groups.
"If this hearing becomes essentially a bootstrap to continue the campaign of 2012 and to prepare for 2014, we will be making a very, very serious mistake," said Rep. Sander Levin of Michigan, the top Democrat on the panel.
Levin said Lois Lerner, who heads the IRS division that makes decisions about tax-exempt groups, "should be relieved of her duties." Lerner is the IRS official who made the scandal public May 10 in what Miller said was a planned event at a legal conference.
Obama forced Miller to resign this week though he will remain on the job a few days until a new acting director takes over. Obama named Daniel Werfel, a top White House budget officer, to replace Miller and met with Werfel on Friday.
Miller is a 25-year IRS employee who was a deputy commissioner when the tea party groups were being targeted. In that job, Miller was over the division that dealt with tax-exempt organizations.
He became acting head of the agency in November, when IRS Commissioner Douglas Shulman's five-year term expired. Shulman had been appointed by President George W. Bush, a fact highlighted by several Democrats at Friday's hearing.
Camp said Miller's departure wouldn't be enough.
"The reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers," Camp said.
Two other committees have hearings scheduled for next week, and the Justice Department has launched its own criminal investigation. Miller is also scheduled to testify on Tuesday before the Senate Finance Committee. He will be joined by Shulman and George.
Underscoring the seriousness of his testimony Friday, Miller was sworn in as a witness, an unusual step for the Ways and Means panel.
He told committee members that before the episode became public, he had no contact with the Treasury Department, the White House or Obama's re-election campaign about targeting conservative groups.
"Absolutely not," Miller said.
He surprised committee members when he said "it is absolutely not illegal" for IRS agents to single out conservative groups for additional scrutiny.
"Please don't get me wrong," he added. "It should not happen."
George, the inspector general, backed up Miller's assertion when he said the yearlong investigation did not uncover illegal activity.
"It is not illegal, but it was inappropriate," George said of targeting conservative groups.
George's report concluded that an IRS office in Cincinnati, which screened applications for the tax exemptions, improperly singled out tea party and other conservative groups for tougher treatment. The report says the practice began in March 2010 and lasted in various forms until May 2012.
Latest: Is Obama in Cover-Up on Benghazi? Vote Here
Agents did not flag similar progressive or liberal labels, though some liberal groups did receive additional scrutiny because their applications were singled out for other reasons, the report said.
The IG's report blamed ineffective management in Washington for letting the inappropriate singling out occur for so long.
Miller said he was notified that conservative groups had been singled out for additional scrutiny on May 3, 2012. After he was briefed, members of Congress repeatedly asked the IRS about complaints from tea party groups that said they were being harassed by the IRS.
But Miller was not forthcoming back then about groups being targeted in at least two letters to members of Congress and in testimony before a Ways and Means subcommittee.
"Didn't this committee have the right to know that groups were treated differently?" asked Rep. Dave Reichert R-Wash.
"I answered all the questions I was asked," Miller replied.
"So your answer is a non-answer, once again," Reichert retorted.
As the hearing drew to a close, Camp, the committee chairman, declared, "I promise the American people this investigation has just begun."

Said Rep. Mike Kelly, R-Pa.: "I don't know that I got any answers from you today. I am more concerned today than I was before."

© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

WHEN WE GROW, This is what we can do (Full Documentary)

IRS-GATE: BEWARE THE "FAIR-TAX" FLIM-FLAM!

As the IRS-gate scandal continues to unfold, we are seeing a renewed push to replace the IRS and income tax with the so-called "Fair Tax" or a national sales tax. But this is merely trading one form of slavery for another. Indeed the inspiration for writing this article was a spirited debate I got into on another discussion board with an individual who insisted that switching from the income tax to the Fair Tax or a national sales tax and that there was absolutely beyond-al-doubt no reason at all to even think about getting rid of the Federal Reserve! But does that make sense?
Think of the Federal Reserve as Blackbeard the Pirate and his crew. Both institutions existed to loot the public. During his career, Blackbeard replaced his pirate crews on numerous occasions, in particular after violating his royal pardon. So getting rid of the IRS...
... only to replace it with a different crew...
... does not make life better for the people. Captain Fed Blackbeard will continue his thieving ways!
Likewise, getting rid of the IRS and replacing it with the "Fair Tax" or a national sales tax, but leaving the Federal Reserve in place to issue all public currency as a loan at interest will not solve the suffering of the people of the nation. There will continue to be hunger and homelessness as the wealth created by the labor of the people is siphoned off as booty for Captain Fed! The particular mechanism may change, but the purpose of the mechanism remains the same; poverty for the people and wealth for the money-junkies.
There is another agenda at work behind the push to replace the Income Tax with the "Fair Tax" or a national sales tax. The current income tax is illegal. It violates Article 1 Section 2 of the Constitution. An earlier version of the income tax was struck down by the United States Supreme Court in that very argument. The IRS and Federal Reserve claim that the 16th Amendment overturned Article 1 Section 2 of the Constitution, but nobody has been able to prove the 16th Amendment was actually ratified. Even if it had been ratified, the United States Supreme Court ruled in Stanton Vs Baltic Mining that the 16th Amendment did no in fact confer any new taxing authority on the government.
So the real agenda behind "Fair Tax" and the national sales tax is to replace an illegal tax on the public with a legal one, to replace a weak set of slave chains with a far stronger one. And after the switch is made they can admit that, yes, there had been some minor technical issues with the 16th Amendment, but that is, after all, history now, for which there is no remedy possible!
In the end, the problem isn't the particular pirate who has his hand on your gold; it is the pirate lord himself that must be dealt with. The IRS are just the scurvy dogs of the crew. And scurvy dogs willing to pillage the people are all too easy to find. The pirate lord who recruits and commands the scurvy dogs is the Federal Reserve itself!

Rep. Mike Kelly Receives Standing Ovation at Ways & Means Hearing on IRS Scandal

How Russia deals with Banksters...

The Head of Societe Generale, a french bank, in Russia gets arrested for taking bribes.

America’s Broken Dreams: The New American Poor – The Middle Class

Lose your job in Australia and there’s a good chance there will be a safety net to catch you. The Newstart allowance, Medicare benefits, along with other programs provide help. But it’s a very different story in the United States.
It may be the wealthiest country in the world but as documentary maker Philippe Levasseur shows in America’s Broken Dreams, when you lose your job in the US there is very little to protect you. In 2008 the global financial crisis hit the poor first, but now America’s middle class is being devastated.
Larry, 52, used to manage a large customer service department. But two years ago he lost his job and house. Today he lives in a motel room with his wife and two children and scrapes by on $820 dollars a month, welcoming tourists to Disney World. After he has paid the motel fees, he’s left with just $70 a week for food and other necessities.
Terry used to be a sales manager and enjoyed a good life until he was made redundant. He ended up roaming from motel to motel in Florida in his car and eventually was judged ‘economically incapable’ of raising his six children. The three eldest were placed in foster care.
There are currently 1,800 children growing up in the motels around Disney World. They move from school to school as their parents are forced to find cheaper accommodation.
Amber and Daniel are married but are forced to live on different sides of the United States. Why? It’s the only way they can honestly make enough money to stop themselves and their children going hungry.
Three unique stories, but all have one thing in common: they are America’s new poor, who struggle for work but can barely survive.
Filmmaker Philippe Levasseur takes his camera into car parks, trailer homes and motels across the country as middle class families try to regain the American dream. What he found is simply shocking.

Debtocracy (Full Version)

For the first time in Greece a documentary produced by the audience. “Debtocracy” seeks the causes of the debt crisis and proposes solutions that remain hidden by the government and the dominant media.

Billionaire Bloomberg urges teens to skip college and become plumbers

Some advice from career counselor Mayor Bloomberg: If you are a so-so high school student, steer clear of college — and learn to clear clogged drains.

Bloomberg said on his weekly radio show Friday that going to trade school to become a plumber is a better economic bet for many teenagers than obtaining an undergraduate degree.
“The people who are going to have the biggest problem are college graduates who aren’t rocket scientists, if you will, not at the top of their class,” he said.

“Compare a plumber to going to Harvard College — being a plumber, actually for the average person, probably would be a better deal.”
He said plumbers make a good living without having to pay off college loans.
“You don’t spend ... four years spending $40,000, $50,000 in tuition without earning income,” he explained.

Another benefit: Plumbers don’t have to worry about their jobs being outsourced or handled by computers. “It’s hard to farm that out ... and it’s hard to automate that,” he said.
The mayor said “a number” of studies conclude that plumbers start their careers with less debt and higher wages than their peers who attend college.

Mark Kantrowitz, an authority on college financial planning, said the mayor is partly right.
With the loss of income for four years, plus student debt, some people who go to college will have less to spend over their lifetime than people who skip school and land well-paying jobs in trades like plumbing and electrical work. “Not everyone has to go to get a college degree to get a good job,” he said.
But, Kantrowitz added, for most people, “college is a good investment.”

By attending a state school or a less prestigious private college, some students can improve their chances of faring better financially over the long haul, he said. “The only schools that cost $40,000 or $50,000 like the mayor said are elite schools,” Kantrowitz said.

HKMEX to Cease Trading, Will Close Out & Cash Settle Open Contracts Monday!

When the Rothchild’s HKMEx was launched in 2011, much of the metals community assumed that the COMEX & LBMA, were they not to outright default, would fade into irrelevance with the advent of the new Asian metals exchange.
Two years to the day after the exchange’s launch however, in perhaps the most glaring evidence of physical gold & silver shortage to date, the HKMEx has announced it will voluntarily cease trading, and all open positions will be closed out and financially (cash) settled on Monday 5/20!

As Commodities Now reports, the HKMEx has voluntarily made the decision to cease trading and close out all open positions:

The Hong Kong Mercantile Exchange (HKMEx) announces today it has decided to voluntarily surrender the authorisation to provide automated trading services (“ATS”) granted by the Securities and Futures Commission (“the SFC”). With immediate effect, no new orders may be placed and all open positions will be financially settled at the settlement price determined by HKMEx and its designated clearinghouse.

The HKMEx’s Chairman claims that their priority is to protect members’ interests by closing their positions:

“The favourable conditions under which HKMEx was founded have not changed. Global commodity demand continues to shift towards Asia as the region undergoes sustained growth, presenting great opportunities that we will continue to exploit,” said Barry Cheung, Chairman of HKMEx. “Our priorities now are to protect members’ interests by ensuring effective closing of open positions while strengthening our shareholding base and developing new products that play to our distinctive strengths.”
In closing out the open positions, the Exchange has developed a plan in consultation with the SFC to ensure the process is orderly and that investors are well informed of the matter. The Exchange will disseminate settlement prices to its members the morning of next Monday, 20 May 2013.

In an interview with the South China Morning Post, Cheung claimed that defaulting on metals contracts has no impact on investors:

HKMEx chairman Barry Cheung Chun-yuen told the Sunday Morning Postthat the decision to surrender the trading licence and not reopen for business tomorrow would have no impact on investors and that client contracts would be honoured.
“There is no question of not getting your money back or anything like that. People absolutely do not have to worry about that and I don’t think they are.
“The only thing they will want to know is what settlement price will be used,” Cheung said.
HKMEx was working with LCH.Clearnet – the world’s largest clearing house for financial transaction settlements – to arrange settlement pricing on the exchange’s roughly 200 outstanding contracts, Cheung said.
The tiny number of outstanding contracts reflects the difficulty HKMEx has had in attracting trades to the platform that officially opened almost two years ago to the day on May 18, 2011.

We suspect that come Monday morning, more than one Chinese investor who believed he owned a gold position (and learns that in fact he held paper) will immediately attempt to source and take delivery of physical metal.  As the Shanghai Gold Exchange appears to have stopped delivering gold as well, we suspect that the LBMA may be in for a bit of a physical run.
The first domino appears to have fallen in the ponzi fractional gold system.
Got PHYZZ?

Economic insanity: Obama spends $11 million to create each 'green' job

(NaturalNews) There has been nothing you could call "successful" about President Obama's so-called "green energy" initiatives, but the worst thing of all is the billions in taxpayer dollars he has utterly wasted on failed companies who were trying to push unproven, and ultimately failed, initiatives.

Indeed, according to new data, the Obama Administration has spent an incredible $11 million for each "green" job that has been created, Breitbart News reports.

Recall for a moment that candidate Barack Obama, in 2008, promised he would create a whopping 5 million new green energy sector jobs if elected.

"Drilling (for new oil supplies) is not a long-term solution to our problem, not even close," Obama said in Denver. "And that is why I will invest (i.e. spend) $150 billion over the next decade, working in partnership with states and local governments and the private sector...we are going to invest in affordable, renewable sources of energy. Wind power, and solar power, and the next generation of bio-fuels...an investment that will lead to new industries and 5 million new jobs that pay well and cannot be outsourced."

Well, that was then. Today, more than four years later, Obama's "vision" has been an abject, expensive failure.

Billions tossed in the wind - and solar

A study by the Institute for Energy Research found that the Department of Energy, under Obama's tenure, has spent in excess of $26 billion since 2009, creating just 2,298 permanent positions - at a cost of more than $11.45 million per job (see the data chart here).

Here are some of the highlights - or lowlights, depending on how you want to look at it:

-- The bulk of the projects for which DOE funded with your money were for solar energy, a still-unproven and expensive energy source in which science has yet to make much additional progress;

-- Just one project that made the data list dealt with nuclear power generation, but it cost taxpayers more than $8 billion;

-- More than $1.5 billion was spent on "wind generation," though there isn't much improvement to be made to a technology that still depends on, well, the wind to blow.

In all, especially at a time of dire budget constraints and gross overspending, the money spent was not spent well.

"The losers are the American workers who would otherwise be gainfully employed but for the tremendous waste of taxpayer dollars on the administration's obsession with 'green energy,'" IER Policy Associate Alex Fitzsimmons said. "As the economy continues to suffer and dollars for federal programs get harder to come by, it is getting increasingly difficult to defend a program that costs so much and produces so little."

Also, notes Breitbart's Winton Hall: "In his New York Times bestselling book, Throw Them All Out, Government Accountability Institute President Peter Schweizer revealed that 80 percent of Department of Energy loans went to companies owned by or connected to President Barack Obama's top campaign fundraisers."

It's a lose-lose situation

What's more, several companies that received taxpayer-funded loans went bankrupt. According to an analysis by The Daily Caller, more than 50 green energy firms have gone belly-up since Obama took office:

The blog Green Corruption's "Obama green-energy failure" list contains 23 bankrupt and 27 troubled green energy companies which were backed by the federal government. ... According to the Heritage Foundation, $80 billion was set aside in the 2009 stimulus package for clean energy loans, grants, and tax credits, and 10 percent of these funds have gone to companies that have filed for bankruptcy or are in dire straits.

As evidenced by his administration's anti-oil policies, Obama is obviously comfortable with making you pay higher prices for gasoline while he wastes your tax dollars on industries with unproven technologies that aren't doing a thing to lower your energy costs - a lose-lose for most Americans.

Congress Is Ready to Fight Over Deep Food Stamp Cuts

Volunteers fill bags for a school lunch program. (AP Photo/Amy Sancetta.)
Late Wednesday night, the House Agriculture Committee passed a comprehensive, $940 billion farm bill. This was a first step towards making a real, five-year bill law—something the last Congress failed to do, and something that, by all accounts, this Congress deems an absolute necessity.
But one central issue could derail the farm legislation once again: food stamp cuts. Republicans are demanding even deeper cuts than what they proposed last year, and Thursday morning on Capitol Hill, several House Democrats made it clear they are willing to let the farm bill die if it contains those steep cuts.
The bill passed by the House Agriculture Committee last night slashed $20.5 billion from the Supplemental Nutrition Assistance Program, $4 billion more than what the committee proposed last year. These cuts would take away food stamps from nearly 2 million people, and several hundred thousand low-income children would stop receiving free school meals.
At a press conference Thursday morning, several prominent Democrats drew red lines around the cuts. “Lest anyone think that this [debate] is going quietly into the night, you have another thing coming,” said Representative Rosa DeLauro. “Maybe, and I can’t say for sure, maybe we’ll take a look at whether this bill can move at all.”
Representative Jim McGovern was more direct. “The $20.5 billion cut in SNAP is a poison pill. It means that we shouldn’t be supporting the farm bill,” he said.
The stakes are extremely high here. The agricultural community—from farmers to the multibillion-dollar industry players—badly wants a new farm bill, and powerful senators from rural states, in particular, are bent on enacting it. President Obama has repeatedly pressed Congress to pass one.
These threats from McGovern and DeLauro, who were joined by Representatives Marcia Fudge and Barbara Lee at Thursday’s event, carry real weight. The backdrop is that many conservatives oppose the House Agriculture committee bill in part because the SNAP cuts are too small—Paul Ryan’s 2013 budget calls for $135 billion in cuts to food stamps and for the program to be block-granted to the states.
Many far-right conservatives will likely oppose the farm bill for this reason, and for many other reasons—voting yes on a nearly trillion-dollar bill isn’t easy for them. That means Democrats will be needed to secure House passage, and if liberal members can mobilize enough colleagues to join them in steadfast opposition to the food stamp cuts, the farm bill might not pass. (House Minority Leader Nancy Pelosi did not return a request for comment about how she would instruct members on this issue.)
Even if the bill does pass the House, food stamp cuts could still blow up final passage when the House and Senate try to reconcile their bills. The Senate version of the farm bill cuts one-fifth of what the House proposes. Senator Debbie Stabenow, chair of the Senate Agriculture Committee, told reporters on a conference call Thursday afternoon that she would not accept the food stamp provisions of the House bill.
“I absolutely reject the level of cuts [to SNAP] and the way this is done in the House,” Stabenow said. “That policy does not have support in the United States Senate. I won’t support it the conference.”
McGovern said he hopes Obama, too, will prioritize the food stamp fight over simply getting a bill passed. “We need the White House to come up here and help us a little bit on this,” he said. “I really do believe there ought to be a line in the sand drawn, by this White House, that you’re not going to sign a farm bill with any SNAP cuts. Certainly not cuts of $20 billion.”

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The House Agriculture Committee bill cuts SNAP primarily by eliminating “categorical eligibility”—a method that forty states use to make sure needy families get food stamps. The 1996 welfare law allowed states flexibility with food stamp qualification limits by aligning them to more generous rules used under the Temporary Assistance for Needy Families program, and that’s the flexibility the GOP wants to eliminate.
Generous, of course, is really a misnomer here. The qualification for food stamps—130 percent of the poverty level—often excludes needy families who technically exceed that limit, but have disposable income well below 130 percent because of childcare and other expenses, as the Center for Budget and Policy Priorities explains. Also, the SNAP asset limit of $2,000 hasn’t been adjusted for inflation since 1986 and has fallen 53 percent in real terms.
So forty states, both red and blue, use the flexibility provided by categorical eligibility to make sure needy families don’t get screwed out of food stamps. If that eligibility is scrapped, as the GOP proposes, the Congressional Budget Office estimates 1.8 million low-income will stop getting food stamps and 210,000 needy children will stop getting free meals at school.
This is an outcome that far-right members of the House proudly champion. “It seems to me that the goal of this administration is to expand the rolls of people who are on SNAP benefits, the purpose of which is to expand the dependency class,” said Representative Steve King during Wednesday’s committee debate.
McGovern and his colleagues also see this debate in moral terms, though naturally very different ones. “Here’s the deal: we have 50 million people in the United States of America who are hungry. Seventeen million of them are children. We’re the richest, most powerful country in the world. We all should be ashamed,” he said Thursday.
“The debate around the farm bill yesterday should not have been focused on how we should cut SNAP. We should be talking about how we improve and expand SNAP,” he added. “We should be talking about how we invest more in nutrition, invest more in the effort to end hunger.”

Wall Street has no moral conscience. No public values. Zero. Will never change. Why?

By Paul B. Farrell, MarketWatch

Wall Street has no moral conscience. No public values. Zero. Will never change. Why? Wall Street insiders have one goal: get personally rich.

How? Wall Street gets rich by stealing money from America’s 95 million investors. Yes, they steal, skim, scam, siphon off your money, using the neurosciences that a decade ago promised to level the playing field for investors. But today it’s worse.

Too harsh? No. Vanguard’s Jack Bogle has been comparing Wall Street to Vegas for decades. He sees gambling casinos with a million “croupiers” manipulating Wall Street’s gaming tables 24/7, skimming a third of your returns off the top.

You can’t win. They get richer pocketing millions by betting against average Americans who work all day. Yes, the games are fixed. They have zero morals. The house always wins. Always.

And we should go easy on Wall Street? No, they are crooks, stealing your life savings, skimming, siphoning, scamming you. In his classic on neuroeconomics and brain science, “Thinking, Fast and Slow,” Nobel economist Daniel Kahneman uses similar gambling imagery: “50 years of research” proves the stock-picking skills of fund managers are “more like rolling dice than like playing poker.” Most underperform. The few winners rarely repeat.

Worse, Wall Street brain scientists — all the neuroeconomists, quants and behavioral-finance experts — all believe they’re “making sensible, educated guesses.” But they “are not more accurate than blind guesses,” says Kahneman. “This is true for nearly all stock pickers, whether they know it or not … and most do not.”

Get it? Wall Street insiders don’t even know they are not beating the market. They are in denial, lying to themselves and to you.

Brain science feeds Wall Street’s addiction, killing its moral conscience

Wall Street’s million insiders are so blinded by their addiction to getting richer they’ve lost their moral compass. They’re so deep in denial, so convinced they’re beating the market even when they’re not, that they must project the lies hidden deep in their brain’s dark shadows.

So they must manipulate data, hiding the truth from the outer world, lying in an endless barrage of PR material to the 95 million investors who are risking (and losing a third of) their hard-earned retirement money to the croupiers running the casinos.

Folks, behavioral science is not complicated. And the DNA guiding Wall Street’s brain is simple: Markets go up. Markets go down. Their DNA loves the action. And they know how to get rich in markets, up and down. Yes, the casino makes money skimming a third off the top … on the way up, and on the way down. And the house always wins. They pocket millions skimming a third off average Americans. Just ask Bogle.

But you already know all of this, right? Wrong. You forgot. Your brain’s on overload. Wall Street knows you’re vulnerable, takes advantage of you. Yes, all of today’s “smart technology” is just giving investors an illusion they’re smarter.

Wrong. Wall Street’s lying to us, transforming us into the dumbest investors in history. You even forget you’re being scammed, that Bogle and Kahneman are right: Wall Street is stealing a third of your money.

Wall Street’s decade-long brain-science “revolution” really has accelerated the investor’s worst nightmare, with broken promises, deceit and betrayal. This “new science of irrationality” is a combo scam/snow job/cover-up. Since 2002, Wall Street’s new neuroscience tools have failed America in six ways, with dire moral consequences:

1. Wall Street uses brain science to gain even more control of investors

Back in 2002 when Kahneman won the Nobel Prize in economics we had hopes for a level playing field. It’s worse today. Kahneman exposed Wall Street’s centuries-long myth of the “rational investor.” Gave us hope investors could change, hope the brain sciences would give investors new tools, new technologies, teach new behaviors, that Wall Street might even help.

Just the opposite. Casinos and their cohorts were the “first adapters” of neuroscience advances like high-frequency trading algorithms and investor profiling in marketing. Plus neuroscientists got paid big bucks to come work for Wall Street banks, Corporate America, for politicians … to manipulate investors, consumers, savers, voters and taxpayers.

2. Brain scientists keep investors predictably irrational for Wall Street

Kahneman proved investors have always been irrational. But note, he also proved investors brains will always be irrational. Always. So Wall Street can control our irrational brains using their high-tech neuroeconomic data, strategies and algorithms.

As University of Chicago Prof. Richard Thaler writes in “Advances in Behavioral Finance II”: Wall Street “needs investors who are irrational, woefully uninformed, endowed with strange preferences.”

Why? Wall Street’s a money machine generating hundreds of billions in fees, commissions, bonuses, options for insiders. Their casinos will always be one step ahead of you, monitoring your action, mapping, manipulating your behavior with algorithms that guarantee you can never beat the market with your perpetually irrational brain.

3. Brain scientists will never deliver on Kahneman’s promise in 2002

When Kahneman, a psychologist, won the Nobel Prize in economics, there was an implied promise that if investors, taxpayers, voters simply followed the advice of the new brain sciences, they would prosper because behavioral economists promised this new science would make you “less irrational,” in control, and a successful investor.

Get it? Yes, brain science would give all investors the right tools to become “less irrational,” and more successful investors … but that would obviously hurt Wall Street’s bottom line.

Sorry, but that will never happen. Never. Neuroeconomics is based on a false premise: That “irrational investors” can teach themselves to become “less irrational.” No way, the human brain is — and always will be — irrational, genetically “irrational,” and incapable of reprogramming itself. No can do.

And ironically, the more we learn about our irrational brains, the more we’re just kidding ourselves (with the help of the casino’s neuroscientists) into believing we’re in control, acting rationally. We’re not.

Remember, 88% of our behavior is driven by the subconscious, stuff we don’t grasp but quants control with their algorithms. So they can manipulate you into making irrational decisions. Amazing isn’t it: Your brain really is your worst enemy.

4. Brain scientists mislead investors, only help the super-rich get richer

In congressional testimony a few years ago, former Fed Chairman Alan Greenspan admitted that his capitalist ideology had failed America: “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity.” But there was a huge “flaw in the model … that defines how the world works.” Except nothing’s change.

Greenspan admitted: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told Congress. Unregulated markets “held sway for decades,” then “the whole intellectual edifice, however, collapsed.”

Capitalism failed because it lost its moral compass, and there was America’s long-term monetary head confessing his guilt. Unfortunately, it’s worse today.

5. Brain scientists are partisan mercenaries with political biases

Bloomberg BusinessWeek put it this way: All economists, including neuroeconomists, are political animals whose opinions are up for sale: “No surprise, the equilibrium school mainly leans Republican, and the interventionist school seems to be crawling with Democrats.”

In short, all economists are mercenaries for hire who can “prove” either ideology, prompting “Black Swan” author Nassim Nicholas Taleb to predict that the 2008 crash will happen again unless we “build a society that doesn’t depend on forecasts by idiotic economists.” We didn’t.

6. Brain-science books are useless self-help pop-psychology solutions

But investors keep asking: Aren’t there some of their books that will help investors become “less irrational?” Well, the promise of neuroscience is imbedded in all their books. And they’re by the best-of-the-best. But don’t be misled by the titles: “Blind Spots: Why Smart People Do Dumb Things”; “Blunder: Why Smart People Make Bad Decisions”; “Sway: The Irresistible Pull of Irrational Behavior”; “Drunkard’s Walk: How Randomness Rules Our Lives”; “The Logic of Life: Rational Economics in an Irrational World”; “Nudge: Improving Decisions About Health, Wealth and Happiness”; or “Predictably Irrational: Hidden Forces That Shape Our Decisions.”

Unfortunately, no book can ever teach investors how to make their brains “less irrational.” It’s impossible, because Wall Street’s brain scientists will always be way ahead of that illusion … constantly inventing new technologies, algorithms and marketing tools that’ll run circles around America’s 95 million “predictably irrational” investors.

So you can’t change. Only Wall Street can change … but won’t. They have no moral conscience. You should never expect Wall Street to give up its addiction to getting rich off others … at least till after the coming collapse, a market megacrash bigger than 1929, 2000 and 2008 combined.

So forget about making your brain “less irrational.” As Thaler put it, Wall Street “needs investors who are irrational, woefully uninformed” … and that’s you.

Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.

Italians Protest at Cuts and Unemployment in Rome

A protester in Rome passes beneath a poster of Germany's Angela Merkel

Thousands of Italians have protested in Rome, chanting "we can't wait anymore" and "we need money to live", as pressure mounted on incoming prime minister Enrico Lette to abandon the austerity drive favoured by his predecessor, Mario Monti.

Callling for an end to budget cuts, and measures to alleviate unemployment, protesters urged Letta to make job-creation his priority in getting the economy moving.
After assuming power less than an month ago, Letta is struggling to hold together an uneasy coalition between his centre-left Democratic party and the centre-right People of Freedom, led by former prime minister Silvio Berlusconi.
Confidence in the government is already falling, with one poll by the SWG institute putting its approval rating at 34%, down from 43% at the start of the month.
"We hope that this government will finally start listening to us because we are losing our patience," said Enzo Bernardis, who joined the demonstration to call for more workers' rights and better contracts.


Letta promised to make jobs his top priority when he came to power in April after two months of political deadlock.
But opponents complain he has not stuck to his vow, allowing himself to become distracted by property tax reforms outlined this week.
Union leaders say he needs to shift away from the austerity agenda pursued by his predecessor Monti, who brought in spending cuts, tax hikes and pension reform to placate Eurozone finance ministers and central bankers.
"We need to start over with more investment. If we don't restart with public and private investments, there will no new jobs," said Maurizio Landini, secretary-general of the left-wing metalworkers union Fiom.
Italy is in the throes of its longest recession since quarterly records began in 1970, with the number of jobless at a record high, and youth unemployment at 38%.

This article is copyrighted by IBTimes.co.uk, the business news leader

In Italy, Austerity Is Served on Homemade Bread

Money is tight, so Italians are upending decades of food culture by frequenting bakeries less and baking more loaves at home.

A bakery in downtown Rome on September 18, 2008. (Tony Gentile/Reuters)

In the land that invented La Cucina Povera -- literally, the poor man's kitchen -- it's no surprise to witness an increase in home baking. Figures recently released by Coldiretti, the association of Italian farmers, are staggering. Italians are buying record amounts of flour, eggs, and butter - the highest since World War II. A third of Italians are using these ingredients to make more pizza, and 19 percent are baking more bread at home.
A combination of Italy's financial crisis and a greater awareness of local food are pushing the trend, says Jeannie Marshall, a Canadian expat and author living in Rome. "I bought a loaf of wonderful bread recently, which lasted us two days, but it was more than 5 euros for the loaf, so it's not really cheap. You can make the same thing for about 80 cents, so there's definitely an economic component to it."
Austerity means that more Italians are making bread at home -- but ten percent of small bakeries in and around Rome have shut in the last two years alone.
The surge in bread making is a stark contrast to 2007, when Italian bread consumption was at its lowest.
That's because Italian bread wasn't very good, Marshall explains. "The 2007 low was partly due to the quality of bread being so poor. It was really bad, but it's gotten a lot better now, you can find all these great grains, like the Lario, which is semi-grain bread. The price for good bakery bread has gone up too, though. "
Pierluigi Roscioli comes from a family of Roman bakers, and owns Forno Roscioli, a bakery in Campo de Fiori, a neighborhood well-known to tourists and wealthy residents.
"The quality of middle-of-the-road bread is very low in Italy, so a lot of people who appreciate good bread and like to eat healthy have started to make bread at home. There is also a large group of people who make their own bread for economic reasons. In the last five years, the trend has increased steadily," Roscioli said. For the unemployed, less money and more time makes bread-making a no brainer. "You save money and feel you're doing something good for your family."
But this cottage industry has had a serious impact on local bakeries. Ten percent of small bakeries in and around Rome have shut in the last two years, according to CNA, the Italian Association for Small and Medium Artisan Businesses.
Bernardino Bartocci, president of the CNA in Rome, says local bakeries can't compete with the buying power of hypermarkets, massive supermarkets that pile goods high and offer low prices -- now a staple of Italy's suburbs. The choice: adapt or die.
"They have to sell more than bread. Now, bakeries are producing traditional Italian cookies and cakes to increase their offering."
Bakers like Roscioli, with his central location, haven't seen a drop in retail business, but he has suffered a loss of 10 to 15 percent in the last two years because of his increased wholesaling. He supplies bread to supermarkets in the middle class suburbs of Rome. "People like the quality, but they prefer to save money on bread."
Roscioli and others are changing the everyday eating culture in Rome by offering prepared food, and more importantly, sandwiches. Once limited to alimentari, small corner stores where for years workers bought their lunches, fresh panini are now sold at bread bakeries as well. It's a trend that has only developed in the last five years, says Roscioli.
For Roscioli, turning a 40-cent roll into a 4-euro sandwich is an obvious solution. One loaf of bread can make several sandwiches, and that means fewer leftovers.
"We make two to three times our cost on a sandwich ... A loaf of bread creates more profit through sandwiches than on its own."
But as Roscioli and other bakers innovate, they bite into the profits of other traditional businesses, like the alimentari and pasticceria, or pastry shops. This domino effect is creating a survival of the fittest culture, one which Elizabeth Minchilli, a food journalist and 40-year resident of Italy, claims is anything but the death knell for Italian food. Instead, she sees it as progress.
"I'm on the side of the bakery. I would hate to see the pastry shops go out of business, but I don't think they should be artificially supported by any kind of protectionism."
Minchilli says one of the reasons Italy has been among the last countries to modernize its food culture is not so much because of public resistance to relinquish the old ways, but because of the stranglehold trade guilds have had over much of the industry.
"You could only get certain things in a bakery because of the political power of these guilds protecting their turf in a way that wasn't in sync with the economy. It covers a lot of the food business. That's finally being broken down. Now, bars which used to only be allowed to serve coffee are allowed to serve full meals and are also serving breakfast."
The increase in competition has brought about higher quality, something Marshall says is necessary to breathe life into the businesses -- some of which, like their loaves, had gone stale.
Most of Italy's bakeries now offer whole grains, whereas the old-fashioned alimentari typically don't serve whole-wheat panini because they're run by an older generation who refuse to update ingredients. Marshall says pastry shops could also do with a few new recipes.
"Some of these places have been serving the same thing since after the war, the same Sacher torte which is a huge thing here. I'm sentimental, but tastes have changed. "
But Italians still share a passion for their own, home-grown food. Dedication to local ingredients remains steadfast.
"I did a class recently learning how to make bread and I was the only foreigner there. Many people are going for refresher courses. It's a re-appreciation of their culture. People are taking food seriously again."