Sunday, September 28, 2014

Hong Kong's 17-Year-Old 'Extremist' Student Leader Arrested During Massive Democracy Protest

17-year-old Joshua Wong, a student protester and the leader of the "Scholarism" movement in Hong Kong, has reportedly been arrested by police during a student protest.

Wong was arrested along with four other demonstrators at Hong Kong government headquarters and has been accused of police assault, Yvonne Leung Lai-kwok, president of the University of Hong Kong's students' union, told South China Morning Post.

The incident comes at the end of weeklong student boycott protesting China's rejection of full universal suffrage in the city, a development that had long been promised.
More than 5,000 high school and university students in Hong Kong have been protesting illegally outside of Hong Kong government headquarters in Tamar Park for the last five days. This evening, at least 100 of those students broke into Civic Square, a public space that has been sealed off for months.
After the break-in, the police moved in with pepper spray to disband the protest and arrest those who broke into the area.
When Hong Kong returned to Chinese rule in 1997, it was agreed that the former colony would coexist with China under the principle of "one country, two systems," meaning that Hong Kong would have a high degree of autonomy and eventually achieve genuine democracy. Those promises have never materialized, much to the chagrin of Hong Kong residents.

Hong Kong students storm government HQ to demand full democracy

Over 100 pro-democracy students stormed Hong Kong government headquarters and scuffled with police late on Friday in protest against the Chinese government's tightening grip on the former British colony.
Police used pepper spray on protesters who forced their way through a gate and scaled high fences surrounding the compound to oppose Beijing's decision to rule out free elections for the city's leader in 2017.
Student leader Joshua Wong was dragged away by police kicking, screaming and bleeding from his arm as protesters chanted and struggled to free him.
"Hong Kong's future belongs to you, you and you," Wong, a thin 17-year-old with dark-rimmed glasses and bowl-cut hair, told cheering supporters hours before he was taken away.
"I want to tell C.Y. Leung and Xi Jinping that the mission of fighting for universal suffrage does not rest upon the young people, it is everyone's responsibility," he shouted, referring to Hong Kong's and China's leaders.
"I don't want the fight for democracy to be passed down to the next generation. This is our responsibility,"
About 100 protesters linked arms as police surrounded them with metal barricades, some chanting "civil disobedience".
In the early hours of Saturday, about a thousand students remained outside the government headquarters.
At least four people were carried off on stretchers with slight injuries. The scene marked the biggest escalation in street protests since Beijing's decision in late August to rule out free elections for Hong Kong.
About 100 protesters remained within the compound while thousands of supporters outside chanted: "Free the people."
"We're still demanding universal suffrage," said Hong Kong Federation of Students leader Alex Chow.
The protest came after more than 1,000 school pupils rallied to support university students demanding full democracy for Hong Kong, capping a week-long campaign that has seen classroom strikes and a large cut-out depicting the city's leader as the devil paraded in public.
Earlier on Friday, hundreds of school children, some barely in their teens and dressed in school uniforms, assembled in a park close to government headquarters sporting yellow ribbons and stickers saying "smash Chinese Communist Party dictatorship".
"We have to act right now and not sit back. Too many people in Hong Kong are left cold by politics, but that's not right. These politics will deeply affect our future prospects," said 17-year-old Louis Yeung.
About 200 students camped outside the home of chief executive Leung Chun-ying on Thursday night after he ignored their 48-hour ultimatum to meet them to discuss the special administrative region's democratic future as tensions escalate.

After work on Friday evening, thousands more people rallied to the side of the 1,500 or so secondary pupils who had skipped classes, bringing the week-long class boycott to a close.

Blind faith in dollar will lead world to financial Armageddon – PeterSchiff

View image on Twitter
Blind faith in dollar will lead world to financial Armageddon - @PeterSchiff to @SophieCo_RT 


This year has seen plenty of political turmoil – the waves of instability seem to do little to the world’s economy. Will that remain so for long? And if not – is there an another crisis looming, like the one that left thousands if not millions helpless and in poverty in 2008? And, finally, what does tomorrow hold for dollar? We ask these questions to leading financial analyst and CEO of Euro Pacific Capital. Peter Schiff is on Sophie&Co today.
Follow @SophieCo_RT
Sophie Shevardnadze: Peter Schiff, leading financial analyst, CEO of Euro Pacific Capital, welcome to the program, great to have you with us. Now, you’ve said it’s not global turmoil, but the Federal Reserve that’s causing damage to investors and the U.S. economy. How so?
Peter Schiff:Well, right now, a lot of people don’t appreciate how much damage the Federal Reserve is actually doing, because there’s a lot of false optimism right now regarding the success of the Federal Reserve’s QE program, and its 0% interest rates. People believe that it’s been successful at reviving the U.S. economy, and that’s why there’s some interest in the dollar in our markets – but all what Fed has succeeded in doing is exacerbating all of the problems that caused the 2008 financial crisis and they’ve inflated a much bigger bubble – so I think the crisis that we have coming is unfortunately going to be much worse that the one we passed.
SS: But if you look at all the geopolitical turmoil across the world, you have the crisis in Ukraine, you have the Middle East, you have ISIS – it does seem that to a large extent the markets are shrugging it all off too – why is that?
PS: I think a lot of people are delusional. They believe in this false narrative, they have confidence in what the Federal Reserve has done, the believe the forecasts of many of the economists about vibrant growth in the U.S. economy in years ahead, and of how Fed will raise interest rates, and the economy continues to expand. All that is impossible. The Federal Reserve has placed itself into position where they can never raise any interest rates – in fact, I don’t think they’re going to be able to go very long without launching another round of quantitative easing, because our bubble economy is completely dependant on the continuation of that policy. When the Fed takes it away, we’re headed for a massive economic collapse.
SS: So just let me clarify: are you saying that the worst is still to come? Is that your prediction?
PS: Why, absolutely. We haven’t solved any of the problems that led to the 2008 financial crisis. In fact, all those problems are now larger than ever, because of what the Fed did. The Fed interfered and prevented the market from solving the problems that years of bad monetary policy created. As a result, those problems are bigger and the crisis looms larger than ever.

Peter Schiff “People Are A Lot Dumber Than I Thought!”

The Secret Goldman Sachs Tapes

(Updates fourth paragraph to include reference to ProPublica article containing Carmen Segarra's allegations.)
Probably most people would agree that the people paid by the U.S. government to regulate Wall Street have had their difficulties. Most people would probably also agree on two reasons those difficulties seem only to be growing: an ever-more complex financial system that regulators must have explained to them by the financiers who create it, and the ever-more common practice among regulators of leaving their government jobs for much higher paying jobs at the very banks they were once meant to regulate. Wall Street's regulators are people who are paid by Wall Street to accept Wall Street's explanations of itself, and who have little ability to defend themselves from those explanations.
Our financial regulatory system is obviously dysfunctional. But because the subject is so tedious, and the details so complicated, the public doesn't pay it much attention.
That may very well change today, for today -- Friday, Sept. 26 --- the radio program "This American Life" will air a jaw-dropping story about Wall Street regulation, and the public will have no trouble at all understanding it.
The reporter, Jake Bernstein, has obtained 46 hours of tape recordings, made secretly by a Federal Reserve employee, of conversations within the Fed, and between the Fed and Goldman Sachs. The Ray Rice video for the financial sector has arrived.
First, a bit of background -- which you might get equally well from today's broadcast as well as from this article by ProPublica. After the 2008 financial crisis, the New York Fed, now the chief U.S. bank regulator, commissioned a study of itself. This study, which the Fed also intended to keep to itself, set out to understand why the Fed hadn't spotted the insane and destructive behavior inside the big banks, and stopped it before it got out of control. The "discussion draft" of the Fed's internal study, led by a Columbia Business School professor and former banker named David Beim, was sent to the Fed on Aug. 18, 2009.
It's an extraordinary document. There is not space here to do it justice, but the gist is this: The Fed failed to regulate the banks because it did not encourage its employees to ask questions, to speak their minds or to point out problems.
Just the opposite: The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them.
The report quotes Fed employees saying things like, "until I know what my boss thinks I don't want to tell you," and "no one feels individually accountable for financial crisis mistakes because management is through consensus." Beim was himself surprised that what he thought was going to be an investigation of financial failure was actually a story of cultural failure.
Read more: Michael Lewis on the occupational hazards of working on Wall Street
Any Fed manager who read the Beim report, and who wanted to fix his institution, or merely cover his ass, would instantly have set out to hire strong-willed, independent-minded people who were willing to speak their minds, and set them loose on our financial sector. The Fed does not appear to have done this, at least not intentionally. But in late 2011, as those managers staffed up to take on the greater bank regulatory role given to them by the Dodd-Frank legislation, they hired a bunch of new people and one of them was a strong-willed, independent-minded woman named Carmen Segarra.
I've never met Segarra, but she comes across on the broadcast as a likable combination of good-humored and principled. "This American Life" also interviewed people who had worked with her, before she arrived at the Fed, who describe her as smart and occasionally blunt, but never unprofessional. She is obviously bright and inquisitive: speaks four languages, holds degrees from Harvard, Cornell and Columbia. She is also obviously knowledgeable: Before going to work at the Fed, she worked directly, and successfully, for the legal and compliance departments of big banks. She went to work for the Fed after the financial crisis, she says, only because she thought she had the ability to help the Fed to fix the system.
In early 2012, Segarra was assigned to regulate Goldman Sachs, and so was installed inside Goldman. (The people who regulate banks for the Fed are physically stationed inside the banks.)
The job right from the start seems to have been different from what she had imagined: In meetings, Fed employees would defer to the Goldman people; if one of the Goldman people said something revealing or even alarming, the other Fed employees in the meeting would either ignore or downplay it. For instance, in one meeting a Goldman employee expressed the view that "once clients are wealthy enough certain consumer laws don't apply to them." After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement -- to which the regulator replied, "You didn't hear that."
This sort of thing occurred often enough -- Fed regulators denying what had been said in meetings, Fed managers asking her to alter minutes of meetings after the fact -- that Segarra decided she needed to record what actually had been said. So she went to the Spy Store and bought a tiny tape recorder, then began to record her meetings at Goldman Sachs, until she was fired.
(How Segarra got herself fired by the Fed is interesting. In 2012, Goldman was rebuked by a Delaware judge for its behavior during a corporate acquisition. Goldman had advised one energy company, El Paso Corp., as it sold itself to another energy company, Kinder Morgan, in which Goldman actually owned a $4 billion stake, and a Goldman banker had a big personal investment. The incident forced the Fed to ask Goldman to see its conflict of interest policy. It turned out that Goldman had no conflict of interest policy -- but when Segarra insisted on saying as much in her report, her bosses tried to get her to change her report. Under pressure, she finally agreed to change the language in her report, but she couldn't resist telling her boss that she wouldn't be changing her mind. Shortly after that encounter, she was fired.)
Read More: Michael Lewis on Deeb the Conquerer baring his soul before Mama
I don't want to spoil the revelations of "This American Life": It's far better to hear the actual sounds on the radio, as so much of the meaning of the piece is in the tones of the voices -- and, especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman Sachs. But once you have listened to it -- as when you were faced with the newly unignorable truth of what actually happened to that NFL running back's fiancee in that elevator -- consider the following:
1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.
2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.
So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over. It shouldn't.

Primed for work but out of a job: 1 out of 4 Americans 25-54 not working and the continued expansion of those not in the labor force.

For most Americans, the best indicator of a healthy economy is having a job. With many Americans entering older age, the number of those not in the labor force is booming. It doesn’t appear to be on the radar of people that the reason the unemployment numbers look the way they do is because a massive number of Americans simply are not counted in the labor force. This ability to ignore a large portion of your population allows the numbers to appear better than they are. But this is for the entire US population. If we look at those 25-54 we find that 1 out of 4 is without a job. This is the prime working years for many Americans. The Great Recession has been a challenge for many working families. The lack of good paying work, weaker benefits, and inflation has dug deep into the pockets of many Americans. When 1 out of 4 Americans in their prime working years is out of work, something else has to give.

25-54 and 25% out of work
A Senate Budget Committee report shows an inordinately large number of Americans in their prime working years out of work. The problem for many Americans is the inability to find good jobs (or any jobs) in the current economy. We have skills being mismatched but also, many companies have found it better to provide low wage work and simply filter profits up to the top. This is a reason why the stock market is doing so well while most families are not.
The chart is sobering to look at:
1 in 4 americans not working
The argument that this entire jump has come from older age Americans is simply not true. Yes, a big push has come from demographic changes but this doesn’t fully address why so many prime aged working Americans are without a job:
“(Weekly Standard) Those attempting to minimize the startling figures about America’s vanishing workforce—workplace participation overall is near a four-decade low—will say an aging population is to blame. But in fact, while the workforce overall has shrunk nearly 10 million since 2009, the cohort of workers in the labor force ages 55 to 64 has actually increased over that same period, with many delaying retirement due to poor economic conditions.
“In fact, over two-thirds of all labor force dropouts since that time have been under the age of 55. These statistics illustrate that the problems in the American economy are deep, profound, and pervasive, afflicting the sector of the labor force that should be among the most productive.”
Part of this is coming from the trend of creating a very large low wage labor force in America. The recession destroyed many good paying jobs and replaced them with many lower wage jobs. Given that inflation is happening (just look at the price of food, housing, cars, college, etc) and you will realize that having less income is not healthy when most costs of goods are going up.
The non-labor force in the United States is massive:
not in labor force
“You’ll notice over this 10 year period, those not in the labor force increased by 16 million. What is even more telling is that 12 million of that growth came in the last 5 years alone (a time of economic recovery on paper). But the recovery in many respects has come from firms cutting wages, slashing benefits, and suffocating the middle class. This has done wonders with increasing profits for Wall Street but 90 percent of stock wealth is controlled by 10 percent of the population.”
92 million Americans are counted as not part of the labor force. And it is important to note the rate of growth only in the last five years alone. Older Americans certainly have a part here but there are other forces at work as well. The 25-54 chart above highlights some deeper structural changes. Unfortunately very little attention has been given to the US middle class in a generation. Ignore something and it will rarely get better. I think this is the problem that we are facing. Having a high number of your prime aged workers out of work can’t be seen as a positive.

The ‘New Normal’ of 1 Percent Growth

Note: Average income per tax unit. Real income is expressed at 2011 US Dollars. Tax units are families. Source: The World Top Incomes Database, - See more at:
Note: Average income per tax unit. Real income is expressed at 2011 US Dollars. Tax units are families. Source: The World Top Incomes Database, - See more at:

Over the past thirty years, income has grown much faster for the top 1 percent than for everyone else.
Lars Osberg
During the so-called “Golden Age of Capitalism” (1940 to the late 1950s), the bottom 99 percent of the income distribution saw their incomes grow much faster than those of the top 1 percent, which reduced income inequality. This was followed by a long period (from the late 1950s to the early 1980s) of roughly balanced growth, which meant that income inequality remained approximately constant. Since then, the incomes of the top 1 percent have, with occasional recessionary intermissions, grown much more rapidly than those of everyone else.
To put the brakes on rising inequality, all parts of the income distribution must have equal rates of income growth. Unfortunately, the ‘new normal’ of the United States is that incomes of the top 1 percent have grown significantly faster than the incomes of just about everyone else.
This differential in income growth rates has been with us for the last thirty years. What happens if it continues for another twenty years? Table 1 presents an answer: a steadily widening gap between the top 1 percent and everyone else. The ratio of top 1 percent average income to median income more than doubled (8:1 to 20:1) from 1984 to 2012. A continuation of the same growth rates implies that it will almost double again (to 38:1) by 2032.
Table 1. Implications of income growth at historic rates – United States
Real income in US dollars at 2012 prices

Median Household Income Top 1% average Income Absolute Gap Top 1% annual income gain Ratio of top 1% to median income
1984 47 181 383 919 336 739 13 421 8.1
2012 51 017 1 021 761 970 744 35 720 20.0
2032 53 943 2 031 476 1 977 533 71 108 37.7
Average annual growth Rate 1984-2012 0.28% 3.5%

Note: Real incomes of the top 1 percent of taxpayers and of the median household in 2012 are assumed to grow over the period 2012 to 2032 at the same compound rates observed over the period 1984-2012. Source: The World Top Incomes Database; Census Bureau Table H-8. Median Household Income by State: 1984 to 2012.
The size of these emerging income gaps may seem extreme, but what exactly will equalize the underlying income growth rates which now produce steadily widening income gaps?
Is there any chance of a rapid acceleration of the rate of income growth of the bottom 99 percent? Income inequality shrank substantially after 1940 because of the more rapid growth of real incomes of the bottom 99 percent. However, the conditions that made that possible are unlikely to be repeated. For instance, wartime mobilization and controls were “once only” events. The structural changes of greater urbanization, increased female labor force participation and more widespread post-secondary education had large impacts on family incomes, spread over a number of years, but they all eventually reached a maximum. And unions had significant influence in both workplace bargaining and social policy determination.
Overall, balanced growth is not the norm. The thirty year period 1952-1982 appears to be a happy accident of history during which income growth rates at the top and the bottom were roughly equal.
“Increasing inequality over time” and “more rapid income growth at the top” are just two different ways of describing the same reality. Stabilizing income distribution requires income growth rates to be the same. Either an acceleration of the income growth rate of the bottom 99 percent or a decline in the income growth rate of the top 1 percent could accomplish this result.
No automatic ‘equilibrating’ mechanism is apparent in economic markets. Thus the crucial question of the next twenty years is whether political economy can rise to the challenge of preventing ever increasing inequality.
This piece was reprinted by RINF Alternative News with permission or license.

How Much Control Does Goldman Sachs Have Over the Federal Reserve?


A confidential report and a fired examiner’s hidden recorder penetrate the cloistered world of Wall Street’s top regulator—and its history of deference to banks.
Jake Bernstein
Barely a year removed from the devastation of the 2008 financial crisis, the president of the Federal Reserve Bank of New York faced a crossroads. Congress had set its sights on reform. The biggest banks in the nation had shown that their failure could threaten the entire financial system. Lawmakers wanted new safeguards.
The Federal Reserve, and, by dint of its location off Wall Street, the New York Fed, was the logical choice to head the effort. Except it had failed miserably in catching the meltdown.
New York Fed President William Dudley had to answer two questions quickly: Why had his institution blown it, and how could it do better? So he called in an outsider, a Columbia University finance professor named David Beim, and granted him unlimited access to investigate. In exchange, the results would remain secret.
After interviews with dozens of New York Fed employees, Beim learned something that surprised even him. The most daunting obstacle the New York Fed faced in overseeing the nation’s biggest financial institutions was its own culture. The New York Fed had become too risk-averse and deferential to the banks it supervised. Its examiners feared contradicting bosses, who too often forced their findings into an institutional consensus that watered down much of what they did.
The report didn’t only highlight problems. Beim provided a path forward. He urged the New York Fed to hire expert examiners who were unafraid to speak up and then encourage them to do so. It was essential, he said, to preventing the next crisis.
A year later, Congress gave the Federal Reserve even more oversight authority. And the New York Fed started hiring specialized examiners to station inside the too-big-to fail institutions, those that posed the most risk to the financial system.
One of the expert examiners it chose was Carmen Segarra.
Segarra appeared to be exactly what Beim ordered. Passionate and direct, schooled in the Ivy League and at the Sorbonne, she was a lawyer with more than 13 years of experience in compliance – the specialty of helping banks satisfy rules and regulations. The New York Fed placed her inside one of the biggest and, at the time, most controversial banks in the country, Goldman Sachs.
It did not go well. She was fired after only seven months.
As ProPublica reported last year, Segarra sued the New York Fed and her bosses, claiming she was retaliated against for refusing to back down from a negative finding about Goldman Sachs. A judge threw out the case this year without ruling on the merits, saying the facts didn’t fit the statute under which she sued.
At the bottom of a document filed in the case, however, her lawyer disclosed a stunning fact: Segarra had made a series of audio recordings while at the New York Fed. Worried about what she was witnessing, Segarra wanted a record in case events were disputed. So she had purchased a tiny recorder at the Spy Store and began capturing what took place at Goldman and with her bosses.
Segarra ultimately recorded about 46 hours of meetings and conversations with her colleagues. Many of these events document key moments leading to her firing. But against the backdrop of the Beim report, they also offer an intimate study of the New York Fed’s culture at a pivotal moment in its effort to become a more forceful financial supervisor. Fed deliberations, confidential by regulation, rarely become public.
The recordings make clear that some of the cultural obstacles Beim outlined in his report persisted almost three years after he handed his report to Dudley. They portray a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority while integrating Segarra and a new corps of expert examiners into a reorganized supervisory scheme.
Segarra became a polarizing personality inside the New York Fed — and a problem for her bosses — in part because she was too outspoken and direct about the issues she saw at both Goldman and the Fed. Some colleagues found her abrasive and complained. Her unwillingness to conform set her on a collision course with higher-ups at the New York Fed and, ultimately, led to her undoing.
In a tense, 40-minute meeting recorded the week before she was fired, Segarra’s boss repeatedly tries to persuade her to change her conclusion that Goldman was missing a policy to handle conflicts of interest. Segarra offered to review her evidence with higher-ups and told her boss she would accept being overruled once her findings were submitted. It wasn’t enough.
“Why do you have to say there’s no policy?” her boss said near the end of the grueling session.
“Professionally,” Segarra responded, “I cannot agree.”
The New York Fed disputes Segarra’s claim that she was fired in retaliation.
“The decision to terminate Ms. Segarra’s employment with the New York Fed was based entirely on performance grounds, not because she raised concerns as a member of any examination team about any institution,” it said in a two-page statement responding toan extensive list of questions from ProPublica and This American Life.
The statement also defends the bank’s record as regulator, saying it has taken steps to incorporate Beim’s recommendations and “provides multiple venues and layers of recourse to help ensure that its employees freely express their views and concerns.”
“The New York Fed,” the statement says, “categorically rejects the allegations being made about the integrity of its supervision of financial institutions.”
In the spring of 2009, New York Fed President William Dudley put together a team of eight senior staffers to help Beim in his inquiry. In many ways, this was familiar territory for Beim.
He had worked on Wall Street as a banker in the 1980s at Bankers Trust Company, assisting the firm through its transition from a retail to an investment bank. In 1997, the New York Fed hired Beim to study how it might improve its examination process. Beim recommended the Fed spend more time understanding the businesses it supervised. He also suggested a system of continuous monitoring rather than a single year-end examination.
Beim says his team in 2009 pursued a no-holds-barred investigation of the New York Fed. They were emboldened because the report was to remain an internal document, so there was no reason to hold back for fear of exposure. The words “Confidential Treatment Requested” ran across the bottom of the report.
“Nothing was off limits,” says Beim. “I was told I could ask anyone any question. There were no restrictions.”
In the end, his 27-page report laid bare a culture ruled by groupthink, where managers used consensus decision-making and layers of vetting to water down findings. Examiners feared to speak up lest they make a mistake or contradict higher-ups. Excessive secrecy stymied action and empowered gatekeepers, who used their authority to protect the banks they supervised.
“Our review of lessons learned from the crisis reveals a culture that is too risk-averse to respond quickly and flexibly to new challenges,” the report stated. “A number of people believe that supervisors paid excessive deference to banks, and as a result they were less aggressive in finding issues or in following up on them in a forceful way.”
One New York Fed employee, a supervisor, described his experience in terms of “regulatory capture,” the phrase commonly used to describe a situation where banks co-opt regulators. Beim included the remark in a footnote. “Within three weeks on the job, I saw the capture set in,” the manager stated.
Confronted with the quotation, senior officers at the Fed asked the professor to remove it from the report, according to Beim. “They didn’t give an argument,” Beim said in an interview. “They were embarrassed.” He refused to change it.
The Beim report made the case that the New York Fed needed a specific kind of culture to transform itself into an institution able to monitor complex financial firms and catch the kinds of risks that were capable of torpedoing the global economy.
That meant hiring “out-of-the-box thinkers,” even at the risk of getting “disruptive personalities,” the report said. It called for expert examiners who would be contrarian, ask difficult questions and challenge the prevailing orthodoxy. Managers should add categories like “willingness to speak up” and “willingness to contradict me” to annual employee evaluations. And senior Fed managers had to take the lead.
“The top has to articulate why we’re going through this change, what the benefits are going to be and why it’s so important that we’re going to monitor everyone and make sure they stay on board,” Beim said in an interview.
Beim handed the report to Dudley. The professor kept it in draft form to help maintain secrecy and because he thought the Fed president might request changes. Instead, Dudley thanked him and that was it. Beim never heard from him again about the matter, he said.
In 2011, the Financial Crisis Inquiry Commission, created by Congress to investigate the causes behind the economic calamity, publicly released hundreds of documents. Buried among them was Beim’s report.
Because of the report’s candor, the release surprised Beim and New York Fed officials. Yet virtually no one else noticed.
Among the New York Fed employees enlisted to help Beim in his investigation was Michael Silva.
As a Fed veteran, Silva was a logical choice. A lawyer and graduate of the United States Naval Academy, he joined the bank as a law clerk in 1992. Silva had also assisted disabled veterans and had gone into Iraq after the 2003 invasion to help the country’s central bank. Prior to working on Beim’s report, he had been chief of staff to the previous New York Fed president, Timothy Geithner.
In declining through his lawyer to comment for this story, Silva cited the appeal of Segarra’s lawsuit and a prohibition on disclosing unpublished supervisory material. The rule allows regulators to monitor banks without having to worry about the release of information that could alarm customers and create a run on a bank that’s under scrutiny.
Silva had been in the room with Geithner in September 2008 during a seminal moment of the financial crisis. Shares in a large money market fund – the Reserve Primary Fund – had fallen below the standard price of $1, “breaking the buck” and threatening to touch off a run by investors. The investment firm Lehman Brothers had entered bankruptcy, and the financial system appeared in danger of collapse.
In Segarra’s recordings, Silva tells his team how, at least initially, no one in the war room at the New York Fed knew how to respond. He went into the bathroom, sick to his stomach, and vomited.
“I never want to get close to that moment again, but maybe I’m too close to that moment,” Silva told his New York Fed team at Goldman Sachs in a meeting one day.
Despite his years at the New York Fed, Silva was new to the institution’s supervisory side. He had never been an examiner or participated as part of a team inside a regulated bank until being appointed to lead the team at Goldman Sachs. Silva prefaced his financial crisis anecdote by saying the team needed to understand his motivations, “so you can perhaps push back on these things.”
In the recordings, Silva then offered a second anecdote. This one involved the moments before the Lehman bankruptcy.
Silva related how the top bankers in the nation were asked to contribute money to save Lehman. He described his disappointment when Goldman executives initially balked. Silva acknowledged that it might have been a hard sell to shareholders, but added that “if Goldman had stepped up with a big number, that would have encouraged the others.”
“It was extraordinarily disappointing to me that they weren’t thinking as Americans,” Silva says in the recording. “Those two things are very powerful experiences that, I will admit, influence my thinking.”
Silva’s stories help explain his approach to a controversial deal that came to the New York Fed team’s attention in January 2012, two months after Segarra arrived. She said the Fed’s handling of the deal demonstrated its timidity whenever questions arose about Goldman’s actions. Debate about the deal runs through many of Segarra’s recordings.
On Friday, Jan. 6, 2012, at 3:54 p.m., a senior Goldman official sent an email to the on-site Fed regulators – including Silva, Segarra and Segarra’s legal and compliance manager, Johnathon Kim. Goldman wanted to notify them about a fast-moving transaction with a large Spanish bank, Banco Santander. Spanish regulators had signed off on the deal, but Goldman was reaching out to its own regulators to see whether they had any questions.
At the time, European banks were shaky, particularly the Spanish ones. To shore up confidence, the European Banking Authority was demanding that banks hold more capital to offset potential future losses. Meeting these capital requirements was at the heart of the Goldman-Santander transaction.
Under the deal, Santander transferred some of the shares it held in its Brazilian subsidiary to Goldman. This effectively reduced the amount of capital Santander needed. In exchange for a fee from Santander, Goldman would hold on to the shares for a few years and then return them. The deal would help Santander announce that it had reached its proper capital ratio six months ahead of the deadline.
In the recordings, one New York Fed employee compared it to Goldman “getting paid to watch a briefcase.” Silva states that the fee was $40 million and that potentially hundreds of millions more could be made from trading on the large number of shares Goldman would hold.
Santander and Goldman declined to respond to detailed questions about the deal.
Silva did not like the transaction. He acknowledged it appeared to be “perfectly legal” but thought it was bad to help Santander appear healthier than it might actually be.
“It’s pretty apparent when you think this thing through that it’s basically window dressing that’s designed to help Banco Santander artificially enhance its capital position,” he told his team before a big meeting on the topic with Goldman executives.
The deal closed the Sunday after the Friday email. The following week, Silva spoke with top Goldman people about it and told his team he had asked why the bank “should” do the deal. As Silva described it, there was a divide between the Fed’s view of the deal and Goldman’s.
“[Goldman executives] responded with a bunch of explanations that all relate to, ‘We can do this,’ ” Silva told his team.
Privately, Segarra saw little sense in Silva’s preoccupation with the question of whether “should” applied to the Santander deal. In an interview, she said it seemed to her that Silva and the other examiners who worked under him tended to focus on abstract issues that were “fuzzy” and “esoteric” like “should” and “reputational risk.”
Segarra believed that Goldman had more pressing compliance issues – such as whether executives had checked the backgrounds of the parties to the deal in the way required by anti-money laundering regulations.
Segarra had joined the New York Fed on Oct. 31, 2011, as it was gearing up for its new era overseeing the biggest and riskiest banks. She was part of a reorganization meant to put more expert examiners to the task.
In the past, examiners known as “relationship managers” had been stationed inside the banks. When they needed an in-depth review in a particular area, they would often call a risk specialist from that area to come do the examination for them.
In the new system, relationship managers would be redubbed “business-line specialists.” They would spend more time trying to understand how the banks made money. The business-line specialists would report to the senior New York Fed person stationed inside the bank.
The risk specialists like Segarra would no longer be called in from outside. They, too, would be embedded inside the banks, with an open mandate to do continuous examinations in their particular area of expertise, everything from credit risk to Segarra’s specialty of legal and compliance. They would have their own risk-specialist bosses but would also be expected to answer to the person in charge at the bank, the same manager of the business-line specialists.
In Goldman’s case, that was Silva.
Shortly after the Santander transaction closed, Segarra notified her own risk-specialist bosses that Silva was concerned. They told her to look into the deal. She met with Silva to tell him the news, but he had some of his own. The general counsel of the New York Fed had “reined me in,” he told Segarra. Silva did not refer by name to Tom Baxter, the New York Fed’s general counsel, but said: “I was all fired up, and he doesn’t want me getting the Fed to assert powers it doesn’t have.”
This conversation occurred the day before the New York Fed team met with Goldman officials to learn about the inner workings of the deal.
From the recordings, it’s not spelled out exactly what troubled the general counsel. But they make clear that higher-ups felt they had no authority to nix the Santander deal simply because Fed officials didn’t think Goldman “should” do it.
Segarra told Silva she understood but felt that if they looked, they’d likely find holes. Silva repeated himself. “Well, yes, but it is actually also the case that the general counsel reined me in a bit on that,” he reminded Segarra.
The following day, the New York Fed team gathered before their meeting with Goldman. Silva outlined his concerns without mentioning the general counsel’s admonishment. He said he thought the deal was “legal but shady.”
“I’d like these guys to come away from this meeting confused as to what we think about it,” he told the team. “I want to keep them nervous.”
As requested, Segarra had dug further into the transaction and found something unusual: a clause that seemed to require Goldman to alert the New York Fed about the terms and receive a “no objection.”
This appeared to pique Silva’s interest. “The one thing I know as a lawyer that they never got from me was a no objection,” he said at the pre-meeting. He rallied his team to look into all aspects of the deal. If they would “poke with our usual poker faces,” Silva said, maybe they would “find something even shadier.”
But what loomed as a showdown ended up fizzling. In the meeting with Goldman, an executive said the “no objection” clause was for the firm’s benefit and not meant to obligate Goldman to get approval. Rather than press the point, regulators moved on.
Afterward, the New York Fed staffers huddled again on their floor at the bank. The fact-finding process had only just started. In the meeting, Goldman had promised to get back to the regulators with more information to answer some of their questions. Still, one of the Fed lawyers present at the post-meeting lauded Goldman’s “thoroughness.”
Another examiner said he worried that the team was pushing Goldman too hard.
“I think we don’t want to discourage Goldman from disclosing these types of things in the future,” he said. Instead, he suggested telling the bank, “Don’t mistake our inquisitiveness, and our desire to understand more about the marketplace in general, as a criticism of you as a firm necessarily.”
To Segarra, the “inquisitiveness” comment represented a fear of upsetting Goldman.
By law, the banks are required to provide information if the New York Fed asks for it. Moreover, Goldman itself had brought the Santander deal to the regulators’ attention.
Beim’s report identified deference as a serious problem. In an interview, he explained that some of this behavior could be chalked up to a natural tendency to want to maintain good relations with people you see every day. The danger, Beim noted, is that it can morph into regulatory capture. To prevent it, the New York Fed typically tries to move examiners every few years.
Over the ensuing months, the Fed team at Goldman debated how to demonstrate their displeasure with Goldman over the Santander deal. The option with the most interest was to send a letter saying the Fed had concerns, but without forcing Goldman to do anything about them.
The only downside, said one Fed official on a recording in late January 2012, was that Goldman would just ignore them.
“We’re not obligating them to do anything necessarily, but it could very effectively get a reaction and change some behavior for future transactions,” one team member said.
In the same recorded meeting, Segarra pointed out that Goldman might not have done the anti-money laundering checks that Fed guidance outlines for deals like these. If so, the team might be able to do more than just send a letter, she said. The group ignored her.
It’s not clear from the recordings if the letter was ever sent.
Silva took an optimistic view in the meeting. The Fed’s interest got the bank’s attention, he said, and senior Goldman executives had apologized to him for the way the Fed had learned about the deal. “I guarantee they’ll think twice about the next one, because by putting them through their paces, and having that large Fed crowd come in, you know we, I fussed at ‘em pretty good,” he said. “They were very, very nervous.”
Segarra had worked previously at Citigroup, MBNA and Société Générale. She was accustomed to meetings that ended with specific action items.
At the Fed, simply having a meeting was often seen as akin to action, she said in an interview. “It’s like the information is discussed, and then it just ends up in like a vacuum, floating on air, not acted upon.”
Beim said he found the same dynamic at work in the lead up to the financial crisis. Fed officials noticed the accumulating risk in the system. “There were lengthy presentations on subjects like that,” Beim said. “It’s just that none of those meetings ever ended with anyone saying, ‘And therefore let’s take the following steps right now.'”
The New York Fed’s post-crisis reorganization didn’t resolve longstanding tensions between its examiner corps. In fact, by empowering risk specialists, it may have exacerbated them.
Beim had highlighted conflicts between the two examiner groups in his report. “Risk teams … often feel that the Relationship teams become gatekeepers at their banks, seeking to control access to their institutions,” he wrote. Other examiners complained in the report that relationship managers “were too deferential to bank management.”
In the new order, risk specialists were now responsible for their own examinations. No longer would the business-line specialists control the process. What Segarra discovered, however, was that the roles had not been clearly defined, allowing the tensions Beim had detailed to fester.
Segarra said she began to experience pushback from the business-line specialists within a month of starting her job. Some of these incidents are detailed in her lawsuit, recorded in notes she took at the time and corroborated by another examiner who was present.
Business-line specialists questioned her meeting minutes; one challenged whether she had accurately heard comments by a Goldman executive at a meeting. It created problems, Segarra said, when she drew on her experiences at other banks to contradict rosy assessments the business-line specialists had of Goldman’s compliance programs. In the recordings, she is forceful in expressing her opinions.
ProPublica and This American Life reached out to four of the business-line specialists who were on the Goldman team while Segarra was there to try and get their side of the story. Only one responded, and that person declined a request for comment. In the recordings, it’s clear from her interactions with managers that Segarra found the situation upsetting, and she did not hide her displeasure. She repeatedly complains about the business-line specialists to Kim, her legal and compliance manager, and other supervisors.
“It’s like even when I try to explain to them what my evidence is, they won’t even listen,” she told Kim in a recording from Jan. 6, 2012. “I think that management needs to do a better job of managing those people.”
Kim let her know in the meeting that he did not expect such help from the Fed’s top management. “I just want to manage your expectations for our purposes,” he told Segarra. “Let’s pretend that it’s not going to happen.”
Instead, Kim advised Segarra “to be patient” and “bite her tongue.” The New York Fed was trying to change, he counseled, but it was “this giant Titanic, slow to move.”
Three days later, Segarra met with her fellow legal and compliance risk specialists stationed at the other banks. In the recording, the meeting turns into a gripe session about the business-line specialists. Other risk specialists were jockeying over control of examinations, too, it turned out.
“It has been a struggle for me as to who really has the final say about recommendations,” said one.
“If we can’t feel that we’ll have management support or that our expertise per se is not valued, it causes a low morale to us,” said another.
On Feb. 21, 2012, Segarra met with her manager, Kim, for their weekly meeting. After covering some process issues with her examinations, the recordings show, they again discussed the tensions between the two camps of specialists.
Kim shifted some of the blame for those tensions onto Segarra, and specifically onto her personality: “There are opinions that are coming in,” he began.
First he complimented her: “I think you do a good job of looking at issues and identifying what the gaps are and you know determining what you want to do as the next steps. And I think you do a lot of hard work, so I’m thankful,” Kim said. But there had been complaints.
She was too “transactional,” Kim said, and needed to be more “relational.”
“I’m never questioning about the knowledge base or assessments or those things; it’s really about how you are perceived,” Kim said. People thought she had “sharper elbows, or you’re sort of breaking eggs. And obviously I don’t know what the right word is.”
Segarra asked for specifics. Kim demurred, describing it as “general feedback.”
In the conversation that followed, Kim offered Segarra pointed advice about behaviors that would make her a better examiner at the New York Fed. But his suggestions, delivered in a well-meaning tone, tracked with the very cultural handicaps that Beim said needed to change.
Kim: “I would ask you to think about a little bit more, in terms of, first of all, the choice of words and not being so conclusory.”
Beim report: “Because so many seem to fear contradicting their bosses, senior managers must now repeatedly tell subordinates they have a duty to speak up even if that contradicts their bosses.”
Kim: “You use the word ‘definitely’ a lot, too. If you use that, then you want to have a consensus view of definitely, not only your own.”
Beim report: “An allied issue is that building consensus can result in a whittling down of issues or a smoothing of exam findings. Compromise often results in less forceful language and demands on the banks involved.”
In Segarra’s recordings, there is some evidence to back Kim’s critique. Sometimes she cuts people off, including her bosses. And she could be brusque or blunt.
A colleague who worked with Segarra at the New York Fed, who does not have permission from their employer to be identified, told ProPublica that Segarra often asked direct questions. Sometimes they were embarrassingly direct, this former examiner said, but they were all questions that needed to be asked. This person characterized Segarra’s behavior at the New York Fed as “a breath of fresh air.”
ProPublica also reached out to three people who worked with Segarra at two other firms. All three praised her attitude at work and said she never acted unprofessionally.
In the meeting with Kim, Segarra observed that the skills that made her successful in the private sector did not seem to be the ones that necessarily worked at the New York Fed.
Kim said that she needed to make changes quickly in order to succeed.
“You mean, not fired?” Segarra said.
“I don’t want to even get there,” Kim responded.
It would be unfair to fire her, Segarra offered, since she was doing a good job.
“I’m here to change the definition of what a good job is,” Kim said. “There are two parts to it: Actually producing the results, which I think you’re very capable of producing the results. But also be mindful of enfolding people and defusing situations, making sure that people feel like they’re heard and respected.”
Segarra had thought her job was simple: Follow the evidence wherever it led. Now she was being told she had to “enfold” business-line specialists and “defuse” their objections.
“What does this have to do with bank examinations,” Segarra wondered to herself, “or Goldman Sachs?”
Segarra worked on her examination of Goldman’s conflict-of-interest policies for nearly seven months. Her mandate was to determine whether Goldman had a comprehensive, firm-wide conflicts-of-interest policy as of Nov. 1, 2011.
Segarra has records showing that there were at least 15 meetings on the topic. Silva or Kim attended the majority. At an impromptu gathering of regulators after one such meeting early that December, her contemporaneous notes indicate Silva was distressed by how Goldman was dealing with conflicts of interest.
By the spring of 2012, Segarra believed her bosses agreed with her conclusion that Goldman did not have a policy sufficient to meet Fed guidance.
During her examination, she regularly talked about her findings with fellow legal and compliance risk specialists from other banks. In April, they all came together for a vetting session to report conclusions about their respective institutions. After a brief presentation by Segarra, the team agreed that Goldman’s conflict-of-interest policies didn’t measure up, according to Segarra and one other examiner who was present.
In May, members of the New York Fed team at Goldman met to discuss plans for their annual assessment of the bank. Segarra was sick and not present. Silva recounts in an email that he was considering informing Goldman that it did not have a policy when a business-line specialist interjected and said Goldman did have a conflict-of-interest policy – right on the bank’s website.
In a follow-up email to Segarra, Silva wrote: “In light of your repeated and adamant assertions that Goldman has no written conflicts of interest policy, you can understand why I was surprised to find a “Conflicts of Interests Section” in Goldman’s Code of Conduct that seemed to me to define, prohibit and instruct employees what to do about it.”
But in Segarra’s view, the code fell far short of the Fed’s official guidance, which calls for a policy that encompasses the entire bank and provides a framework for “assessing, controlling, measuring, monitoring and reporting” conflicts.
ProPublica sent a copy of Goldman’s Code of Conduct to two legal and compliance experts familiar with the Fed’s guidance on the topic. Both did not want be quoted by name, either because they were not authorized by their employer or because they did not want to publicly criticize Goldman Sachs. Both have experience as bank examiners in the area of legal and compliance. Each said Goldman’s Code of Conduct would not qualify as a firm-wide conflicts of interest policy as set out by the Fed’s guidance.
In the recordings, Segarra asks Gwen Libstag, the executive at Goldman who is responsible for managing conflicts, whether the bank has “a definition of a conflict of interest, what that is and what that means?”
“No,” Libstag replied at the meeting in April.
Back in December, according to meeting minutes, a Goldman executive told Segarra and other regulators that Goldman did not have a single policy: “It’s probably more than one document – there is no one policy per se.”
Early in her examination, Segarra had asked for all the conflict-of-interest policies for each of Goldman’s divisions as of Nov. 1, 2011. It took months and two requests, Segarra said, to get the documents. They arrived in March. According to the documents, two of the divisions state that the first policy dates to December 2011. The documents also indicate that policies for another division were incomplete.
ProPublica and This American Life sent Goldman Sachs detailed questions about the bank’s conflict-of-interest policies, Segarra and events in the meetings she recorded.
In a three-paragraph response, the bank said, “Goldman Sachs has long had a comprehensive approach for addressing potential conflicts.” It also cited Silva’s email about the Code of Conduct in the statement, saying: “To get a balanced view of her claims, you should read what her supervisor wrote after discovering that what she had said about Goldman was just plain wrong.”
Goldman’s statement also said Segarra had unsuccessfully interviewed for jobs at Goldman three times. Segarra said that she recalls interviewing with the bank four times, but that it shouldn’t be surprising. She has applied for jobs at most of the top banks on Wall Street multiple times over the course of her career, she said.
The audio is muddy but the words are distinct. So is the tension. Segarra is in Silva’s small office at Goldman Sachs with his deputy. The two are trying to persuade her to change her view about Goldman’s conflicts policy.
“You have to come off the view that Goldman doesn’t have any kind of conflict-of- interest policy,” are the first words Silva says to her. Fed officials didn’t believe her conclusion — that Goldman lacked a policy — was “credible.”
Segarra tells him she has been writing bank compliance policies for a living since she graduated from law school in 1998. She has asked Goldman for the bank’s policies, and what they provided did not comply with Fed guidance.
“I’m going to lose this entire case,” Silva says, “because of your fixation on whether they do or don’t have a policy. Why can’t we just say they have basic pieces of a policy but they have to dramatically improve it?”
It’s not like Goldman doesn’t know what an adequate policy contains, she says. They have proper policies in other areas.
“But can’t we say they have a policy?” Silva says, a question he asks repeatedly in various forms during the meeting.
Segarra offers to meet with anyone to go over the evidence collected from dozens of meetings and hundreds of documents. She says it’s OK if higher-ups want to change her conclusions after she submits them.
But Silva says the lawyers at the Fed have determined Goldman has a policy. As a comparison, he brings up the Santander deal. He had thought the deal was improper, but the general counsel reined him.
“I lost the Santander transaction in large part because I insisted that it was fraudulent, which they insisted is patently absurd,” Silva said, “and as a result of that, I didn’t get taken seriously.”
Now, the same thing was happening with conflicts, he said.
A week later, Silva called Segarra into a conference room and fired her. The New York Fed, he told Segarra, who was recording the conversation, had “lost confidence in [her] ability to not substitute [her] own judgment for everyone else’s.”
Producer Brian Reed of This American Life contributed reporting to this story. ProPublica intern Abbie Nehring contributed research. 
This piece was reprinted by RINF Alternative News with permission or license.

Gold And Silver – PetroDollar On Its Deathbed? PMs About To Rally? No

by Michael Noonan
As we near the end of the 3rd Q for 2014, time is running out for all the 2014
enthusiasts that are calling for higher prices by year-end.  The lessons learned from
2013 have been forgotten as not only are not prices beginning to move higher, they
are making new recent lows.  Incredibly enough, many of these prognosticators are
paid pretty well by their subscribers.  Lesson to be learned?  Absolutely no one can
divine the future.
Here we are, in the cheap seats, showing our unadorned, simple charts each week,
repeating the most basic advice possible:  The single most piece of information one
can have is knowledge of the trend.  If the trend is down, do not be long, [at least
not in the paper futures market].  Buying and holding physical gold and silver is a
totally different issue.
It may be evident, at times, that we have no pre-determined agenda for each week’s
article. Already, we are far away from what we thought we would write just as of last
night.  A function of this more stream of consciousness weekly endeavor is that we
are no locked into maintaining a false hope, pitching something that is contrary to
what the market is advertising.
Last year, there was “hope” when news would come out about record coins sales,
huge Chinese lines queued to buy gold, record tonnage purchases by China,  Russia,
sometimes India.  We are amused to see similar articles appearing again, recently.
Does that information really matter?  Is it impacting the market?  Not in the least.
We could be wrong, at least about our “story” that attends the charts, but we are not
wrong about reading the chart direction.  There is a reason why we keep saying to stop
listening to what others are saying, and pay attention to what the charts are saying about
those others who actually participate in the markets.  Once more, there is no better source
for what is happening in the markets than the market itself.
Our story is that the precious metals[PMs] markets will not turn until the US and the UK
lose their control over the money markets.  It could not be any simpler.  When will that
control be lost?  Not any time soon, and 2014 could very well bleed into 2015 and 2016
just as 2013 did in 2014.  It could all change next month or sometime thereafter, but until
it does, no change is happening, yet.
The UK is less problematic because it does not have the military might that the US has,
the Empire of Chaos, led by the Nobel Peace Prize winner cum War Lord of the Flies,
Barack Husain “Obomba”   “If we do not have a coalition, we will not bomb Syria.”  He
had no coalition because his “closest allies” bailed on him.  True to form, he bombed
anyway, and he was joined in a last-minute “coalition” of other Arab nations that want
to get rid of Bashar al-Assad, president of Syria, at all costs.
No one can stop the United States from inflicting its debt pain and military might against
those who do not go along with the NWO [a wolf in US clothing], or “you will pay the price
by having your country wrecked.”  In the world of international laws, none apply to the US
when they get in the way, and there are no consequences.  Did international law stop the
Obomba administration from backing a coup against a sovereign Ukrainian president,
kicked out and replaced with a puppet loyal [at the end of a gun barrel] to Washington?
It used to be only Mao Tse Tung who ruled with power from the end of a gun barrel.
Why Ukraine?  An effort by the NWO to keep Russia from supplying gas to Europe.
[Always follow the money].  Ukraine is a way to disrupt the flow of liquid gas, but Russia
made a huge deal with China, last May, and has its biggest partner and recipient of
Russian gas ready and willing to deal with each other, and without using the petrodollar!
The pillars are crumbling for the debt-laden, gasping for life petrodollar [the US "dollar"
used for all international trade contracts, at least until recently].
Why Syria?  Certainly not ISIS.  ISIS is a product of the CIA, just as al-Qaeda was.  These
were anti-Bashar fighters trained and armed, even financed by the CIA.  Because the CIA
does not understand Islam and the too-many different factions, most of whom do not get
along with each other, these newly armed and trained fighters decided to go their own way
according to their own version of Islam. Kind of like Obama:  If you do not agree with us,
then like Alice in Wonderland’s Queen of Hearts, “Off with their heads!”
Syria is an important end route for planned gas pipelines from Russia en route to Europe.
The West will not tolerate competition from Russia, a country unwilling to relent its
national sovereignty and cater to the NWO and their bearing-gifts-of-debt to overtake
any country willing to accept such “gifts,” not with any strings attached, but chains and no
hope of escape.  It is just like the Eagles song,  Hotel California, “You can check out any
time, but you can never leave.”
For a point of clarity, to not be misunderstood, when we talk about the US, Obama, UK,
or any other country, we talk about the government in charge and not about the people
being governed.  Americans, as individuals, are a fun-loving people, so are Brits, Russians,
Palestinians, Chinese, almost every culture.  People just want to get along and be content
living their lives.  The problem is the governments that control the people.
The federal government is in charge of the US, but only as a corporation, doing everything
possible to enrich those who control and are a part of it.  The US, all Western countries,
are under total control of the moneychangers, the elites, a handful of people who control
the entire central banking system, which in turn, controls the governments.  None of
these governments, none, care about the people being governed, except for lip service.  BFD.
The Empire of Chaos war machine is in full gear, and it will go after any country, any
people who get in their way, and that includes going after Americans in their  own
country.  The NSA, FEMA, TSA, Homeland Security.  All of these organization have
one purpose and one purpose only:  Protect the interests of the banking system that
controls the nation.  If you think hell hath no fury like a woman scorned is something
to be avoided, try getting in the way of the elites.  Lincoln and Kennedy did.  Bang Bang,
[My Baby Shot Me Down - Cher]
That is the war side, and we are just scratching the surface.  Always remember, gold and
silver are the antithesis to the elites fiat paper, now computer blips.  Central bankers are
suppressing the PMs to eliminate any competition to their paper debt Ponzi scheme that
is beginning to unravel, thanks to China and Russia, now BRICS and a larger number of
countries willing to tie their future to the growing prosperity plans of China and Russia.
Both countries are always engaged in deals to foster growth, constructively utilizing their
energy or making deals with, and not bombing, other countries with their own energy
sources willing to cooperate without having to give up their sovereignty or become debt
Germany flinched after asking New York to return its gold.  [Gone, Germany, long gone
by the same powers with whom you continue to deal.]  Bush, Clinton, Bush II, now
Obama have done the bidding of the elites and traded away or sold all the gold for money
and power.  Germany stopped asking for the return of its gold, most likely under the
threat from the elites to back off, or else.  She backed off.  There is no gold.
If Germany, considered the sole powerhouse of the EU, will not stand up, what country
will?  Maybe the AfD party, Alternative fur Deutschland, will embarrass Merkel into
doing the right thing for Germany and her people.  The AfD is a new party that wants to
leave the EU and stop funding the other parasitic EU countries.  As long as countries are
willing to sacrifice their economies, crippling companies, hurting the economy, and
harming the economic viability of their people, gold and silver are not going anywhere.
What about Switzerland?  There is a gold referendum on 30 November that would require
the Swiss central bank to keep at least 20% of assets in gold.  The Swiss people want this,
but the Parliament [government] opposes it.  Why?  It would “impinge on the Swiss
National Bank’s ability to conduct monetary policy.”  In other words, it would stop the
Swiss economy from being more “fiatized” [our word], to being less “fiatized,” or less
burdened by debt.  The Swiss Bank would not be able to “print” [digitize] more fiat.  The
gold-asset holding right now is at 8%.  It used to be higher, but the Swiss caved-in to the
elites and joined the fiat crowd, as demanded.
What people want does not matter.  What the elite-controlled Western government
sycophants want is what the people will get.
None of these stories are news-headline-grabbing, but they are pieces of the puzzle that,
when put together, a picture of how the elites run the world suddenly appears.  They are
in control.  No one can oppose their power.  China and Russia are opposing them, right
now, and their strength, backed by huge natural resources, [Russia], and massive amounts
of gold, [China and Russia], engaging and encouraging other countries to build and grow
from within, may very well win the day and be the catalyst to bring down the Empire of
Chaos, led by the evil cabal of debt serpents, the elites.
Neither China nor Russia are in any hurry to see gold and silver rise, as long as they can
continue to buy both at absurdly low, artificial prices.  In fact, low PM prices are a huge
leveraging source for China to continue to buy up the United States assets as this country
self-destructs into Third World oblivion.  The elites are encouraging this process for they
have bled this country dry of all its wealth.  Now they just want control of the carcass and
its military capabilities.
We received many positive feed-back e-mails, lately.  Thank you.  Our inbox was also
inundated with an abnormal amount of spam.  In the process of erasing the spam, we
also erased several e-mails before we could respond.  Our apologies to those who did
not receive a response after sending such kind words.  Any time any of you have some
tips or information not being reported, do not hesitate to send it along.
The charts:
Something happened to our chart sizing, and our computer guy is unavailable to make
the changes.  Apologies.
The strong rally on the monthly chart says to pay attention and do not ignore this higher
time frame.  Volume was the highest up volume, and it erased the higher volume when
price sold off in 2013, first arrow.  The ease of upward movement shows no sign of any
stopping activity, so all one can do is watch and let it play out.  Despite detractors on the
future viability of the “dollar,” and we are one, the elites are not about to let it roll over
and die without a strong fight.  PMs are likely to remain weak with a strong dollar.
Expect more of the same from the war-monger US, and if things get more desperate,
there could well be another 9/11-type event to scare people into accepting more and
more governmental control, and the government using such an event, [created by the
elites, of course] to blame its failures on others.  Anything to deflect the blame away
from the bankers who created all the economic problems, and continue to do so with

DX M 27 Sep 14

The chart comments are self-explanatory.  The smallness of the weekly range is like a shot
across the bow for the bears, at least seemingly.  It acts as an alert, as opposed to a signal
upon which to act.  What we want to do now is see how the market responds/respects what
could be the start of the end of the bottoming process.
Keep in mind, it takes markets longer to bottom or top than most expect.  This market is
already two years in process, so as price moves farther along the RHS [Right Hand Side]
of the trade range, it is closer to a final resolve.

SI W 27 Sep 14
The high volume from Monday, 5th bar from right, explains why the weekly bar was so
small.  It could be that Monday is a form of stopping volume, and Thursday’s lower bar
on increased volume without continuing lower adds credence to how Monday’s bar is
viewed.  NMT   [Needs More Time]
SI D 27 Sep 14
Any time you see a market making lower highs consistently, as gold has done, it is a
sign of weakness.  Where silver had a small range bar, gold’s close is barely lower
from the previous week, and that indicates a loss of downside momentum.  Is it
enough to say the market is turning?  No.   NMT.
GC W 27 Sep 14
We often mention clustering of closes as being either a resting spell before resuming
the trend, or a possible turning point for a counter move of some kind.   The lower
volume when price tried to rally, during the clustering, was an indication that the
downside was more than likely to resume.
The holding of price, at 2, after a new recent low, and the strong close are positives,
as is the holding of Friday’s decline on lower volume, but these are observations that
need to be watched for confirmation that a potential rally may develop, [a bias here],
or more sideways activity, possibly eventually still lower.  As always, let the market
declare itself more conclusively, as it always does.
The market will turn when it is ready, and not a day before.  Understand that.
GC D 27 Sep 14