Part 1 is here: http://tradewithdave.com/?p=16576

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Niels Bohr, Werner Heisenberg, and Wolfgang Pauli talking in the Niels Bohr Institute lunchroom presumably about the what would happen if Dee Hock was successful in building the VISA payment system on a network using a Rochdale plan and the implications to chaos theory of the bitcoin blockchain.

(from the Wall Street Journal)

Bitpay Raises $2 Million

Also joining this round is Max Keiser’s fund Heisenberg Capital, a London-based fund focused on bitcoin companies. The terms of the seed round were not disclosed, although 100% of the existing seed shareholders exercised their pro rata rights to maintain their ownership percentage in BitPay.

“We were not looking to raise any capital until later this year, but we could not ignore the opportunity to have Founders Fund involved with BitPay,” says Tony Gallippi, co-founder and CEO of BitPay. “There’s no single investment firm we would rather have on our team right now than Founders Fund.”

http://online.wsj.com/article/PR-CO-20130516-908741.html?mod=googlenews_wsj

Dee calls it “chaordic” while Dave just calls it “trading.”

http://tradewithdave.com/?p=12962

http://tradewithdave.com/?p=16045

http://tradewithdave.com/?p=11489

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Most people don’t know it, but Jesus had one heck of a right… and a pretty good uppercut too.  Notice the original Mt. Gox version 1.0 table overturned.

Things are heating up in the Bitcoin/JPMorgan/Means Testing world and if you ask Dave the Fed is officially in the game via the Department of Homeland Security.

Dave has written numerous times in the past about the Hegelian synthesis of Bitcoin.  To put it in a single sentence, Bitcoin loses a bit of its utility if the internet goes away and the internet goes away if PGP gets cracked.  The irony of that, if you ask Dave, is that the only distributed computing network with the power to hack PGP will be the Bitcoin network in the next couple of decades.  Hmmm?

Max Keiser has been quite discerning if you ask Dave when it comes to his correlation between Bitcoin and Jesus Christ.  Max has referred to the most likely fictional Satoshi Nakamoto (supposed creator of Bitcoin) as “the cyberchrist”.  Jesus Christ did turn over the tables of the money changers in the temple.  Bitcoin appears to be turning over the money changers at the Fed, at least to the point that they have rousted certain individuals in Maryland from their prosecutorial slumber (most likely the result of the Breurian ripple effect) long enough to issue a Department of Homeland Security warrant.  To add insult to the $17 million just invested in Dwolla last month, Janet Napolitano went so far as to injure the money changers over at Mt. Gox via a confidential informant/customer in Maryland.  I guess it’s time for a Patriot Act refresher course in “know thy customer.”

Forbes play-by-play here: http://www.forbes.com/sites/kashmirhill/2013/05/15/the-feds-are-cracking-down-on-mt-gox-not-on-bitcoin/

Arstechnica on what happens if you are a money transmitter without a license: http://arstechnica.com/tech-policy/2013/05/feds-reveal-the-search-warrant-that-seized-mt-gox-account/

TOKYO – JAPAN – May 15, 2013 – MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. MtGox takes this information seriously. However, as of this time MtGox has not been provided with a copy of the court order and/or warrant and does not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known.

Regards,
Mt.Gox Co. Ltd Team.

Adam L. Penenberg for Pando Daily on the religion of Bitcoin:

http://pandodaily.com/2013/05/15/give-me-that-old-bitcoin-religion/

Here’s how Dave commented this morning relative to Adam’s article on Bitcoin:

Dave on christ ver 2.0

http://tradewithdave.com/?p=16060

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President Obama’s half-brother is plenty busy taking care of his twelve wives.  Thank goodness the IRS liked his non-profit foundation enough to streamline the application process in time for tea. 

Looks like the idea of throwing a tea party wasn’t exclusive to the Boston Harbor and the Oval Office.  From all appearances they were trying to throw one in Liberty Township, Ohio too. That is until the IRS came along.

Courtesy of The Hill:

http://thehill.com/images/stories/news/2013/05_may/14/irs-letter-to-teaparty.pdf

Considering the context of President Obama’s call for an investigation into the IRS and their targeting of groups associated with the Tea Party, you may want to reconsider the “agenda” of this documentary.  Dave’s position is fairly simple.  The “free market” of classic liberalism built atop the ideas of Adam Smith and John Locke seems to have run its course.  Dave would suggest that ideas such as civil liberties, limited government and the rule of law have stood atop the cornerstone of the Ten Commandments or what is often termed “Judeo-Christian principles” although that language came along much later.

From the White House:  May 14, 2013:  Statement by the President of the United States

I have now had the opportunity to review the Treasury Department watchdog’s report on its investigation of IRS personnel who improperly targeted conservative groups applying for tax-exempt status.  And the report’s findings are intolerable and inexcusable.  The federal government must conduct itself in a way that’s worthy of the public’s trust, and that’s especially true for the IRS.  The IRS must apply the law in a fair and impartial way, and its employees must act with utmost integrity.  This report shows that some of its employees failed that test. 

I’ve directed Secretary Lew to hold those responsible for these failures accountable, and to make sure that each of the Inspector General’s recommendations are implemented quickly, so that such conduct never happens again.  But regardless of how this conduct was allowed to take place, the bottom line is, it was wrong.  Public service is a solemn privilege.  I expect everyone who serves in the federal government to hold themselves to the highest ethical and moral standards.  So do the American people.  And as President, I intend to make sure our public servants live up to those standards every day.

end

Basically that system doesn’t function when personal accountability is not an acceptable concept and personal accountability is fundamentally possible when you forgiveness of sins is freely available.  In the absence of forgiveness there is an absence of personal accountability and since man is imperfect it is that access to forgiveness, in the eyes of God, that essentially made classical liberalism functional since the industrial revolution.  From all appearances, it is not going to be able to stand up to technology-enabled behavioral economics and libertarian paternalism.

What’s the answer.  Although Dave doesn’t deny that his viewpoint comes from “the right”, I have no confidence that the current false dichotomy is going to hold.  Ultimately Dave’s foundation is based on Isaiah Chapter 9.

⁶ For unto us a child is born, unto us a son is given: and the government shall be upon his shoulder: and his name shall be called Wonderful, Counsellor, The mighty God, The everlasting Father, The Prince of Peace.

⁷ Of the increase of his government and peace there shall be no end, upon the throne of David, and upon his kingdom, to order it, and to establish it with judgment and with justice from henceforth even for ever. The zeal of the Lord of hosts will perform this.

The Agenda

http://vimeo.com/user2695043/agendamovie

In other new out of Canada, the same IRS representative who was responsible for targeting anyone with the name Tea Party in their name, was able to streamline the President’s brother’s foundation for its tax exempt status in less than 30 days.  In the spirit of Citizens United, Lois Lerner of the IRS made it very clear that what is good for the Too Big To Fail banks in avoiding cooking anyone’s actual goose is also good for helping the IRS find its voice.  Take a gander.

“That was absolutely incorrect, it was insensitive and it was inappropriate. That’s not how we go about selecting cases for further review.”  “The IRS would like to apologize for that.”

Lois Lerner of the IRS explaining what the IRS would like to do, if only the IRS could talk or sign letters itself, not to mention being good at math.

http://bigstory.ap.org/article/irs-apologizes-targeting-conservative-groups

If the IRS could actually apologize, then it should be able to sign its own letters.  Then why did Lois sign this letter approving the President’s brother’s foundation in record time.  I bet Ms. Lerner would have liked it if the IRS had liked to sign the letter too.

http://www.barackhobamafoundation.org/letter.pdf

Do you know Jon Stewart of The Daily Show on Comedy Central?  Dave doesn’t have cable, but he knows who Jon is and his boss Sumner.  You have to give Jon credit for how he handled this.  You see Jon is a big supporter of government and he didn’t like this IRS thingy because it makes him look bad.  So how did Jon deal with it?  He put a segment on his show criticizing the White House and the IRS for basically… uh… let’s call it fascism…. or uh…. tyranny.  Okay tyranny… that’s better.  Then to make sure the video didn’t get passed around too much or so that no kids who are forming their beliefs would have a chance to watch it he filled it with the most foul-mouthed expletives imaginable…. over and over and over again.

So, Dave can’t post Jon’s segment here on the site courtesy of Comedy Central and Sumner Redstone.  That wouldn’t work for Dave because Dave’s kids, including his ten year old and who knows my future grandchildren (if I am so blessed) may want to read the blog.  So John was successful in eliminating a huge percentage of the world that doesn’t want to hear him describe his relationship with someone’s mother (maybe his own) so near Mother’s Day.  Dave’s warning you not to click on this if you’re mother is anywhere nearby.  Dave has actually had dealings with Sumner before and knows just how low he can stoop.

http://www.thedailyshow.com/watch/mon-may-13-2013/barack-trek–into-darkness

If you are interested in a more in-depth review of Dave’s concepts relating to forgiveness of sins and how it pertains to the structure of governments and their ultimate demise (essentially the raison d’etre for this blog), here you go.

http://tradewithdave.com/?s=%22karl+marx%22+

http://tradewithdave.com/?s=%22libertarian+paternalism%22+

For more on whether or not the IRS is investigating your Tea Party related activities:

http://en.wikipedia.org/wiki/IRS_Tea_Party_investigation

On how to get your non-profit IRS status streamlined:

http://dailycaller.com/2013/05/14/irs-official-lerner-approved-exemption-for-obama-brothers-charity/

http://canadafreepress.com/index.php/article/55193

Big Brother doesn’t have time to watch you because he’s watching over twelve wives and the Barack H. Obama foundation:

http://www.dailymail.co.uk/news/article-2290803/My-little-brother-Barack-Obama-Hes-12-wives-accused-o-beating-wants-President-Kenya–Meet-Obamas-VERY-outspoken-sibling.html

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On the other hand, the banks (the private side) tried to put themselves forward as some sort of model citizen rather than simply admitting to being involved in every form of business from trash collection to culture creation and bid rigging. The fact something as subjective as “culture” on the private side can be blamed for everything and that the enforcement remedy is yet another financial fine where proceeds are handed over to the public side (smells like the world’s oldest profession to Dave, the one where everything is for sale if the price is right) is a clear display of the effort to do anything and everything to avoid accountability.  Count on the BBC’s Hegelian synthesis to leave you wondering what exactly happened.

As far as putting trust in banks, institution or government for that matter is laughable if you ask Dave. Who could or would ever put trust in an inanimate object? Up until this point, the whole idea of who we (including Barclay’s Quakers) are putting our trust in is printed right on the face of the world’s reserve currency: In God We Trust. Trust can only be realized between two people or a person and their Creator. Sure, it is people that make up an institution and the trust is manifest in business-to-business and person-to-business transactions. But to try to convince me that somehow “culture” can be manifest in an entity rather than in individuals is nothing short of insanity and as far as what’s printed on the face of money, in the all electronic form, they will be able to do away with that pesky recognition of God altogether.

Clearly, these models are in the final throes of life. If you ask Dave, this BBC presentation is nothing more than the road map towards Mervyn King’s vision of a divorced currency model brought to the TV screen. It may not show us how to get there, but it clearly shows that the current system based on two parallel roads of regulation and commerce is corrupt. Is the divorced currency model the answer? If you’re a loyal Dave reader, then you know how I feel about that or you can read it for yourself (http://tradewithdave.com/?s=%22divorced+currency%22+)

Honesty, integrity and plain dealing are, and have always been, something that only people can do. Government cannot do it. Institutions, either public or private, cannot do it. How long will it take to restore trust in an inanimate form or select animate forms such as the CFTC’s Gary Gensler? Don’t hold your breath.  Trust in the Lord with all your heart and lean not unto thy own understanding.

Then again, maybe you will choose to put your trust in the Lord Mayor of the City of London as he explained that the rule of law just isn’t good enough when it comes to dealing with eventualities.  According to Lord Mayor we need “culture” and as the Mayor of the sovereign, you can choose to put your trust in a government of men rather than one of laws and the promise of those men (issued from some pretty nice offices if I say so myself) to once and for all wrestle down that greased pig known as business.

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Captain Nemo and the professor consider the CME’s ultimate price discovery version of the lost city of Atlantis

In case you missed it, Terry Duffy and your friends over at the CME Group did some “self-certifying” back on April 26, 2013 with your favorite regulator Bart Chilton at the Commodity Futures Trading Commission.  Why did the CME self-certify?  That’s simple.  The self-certification, namely “Trading At Settlement”, according to Team Terry “is being adopted based on requests from market participants.”  Why else would you self-certify?  Dave can’t think of any better reason.  As to the question of just why is the CME even allowed to self-certify, I guess that’s a question for your governor or your congressman, or maybe your broker or maybe Jon Corzine if you run into him this summer in the Hamptons since he was kind of a Governor-Senator-Broker-Bundler all wrapped up in one man.

What is Trade At Settlement exactly?  If you ask Dave, I would call it the “sandbagging rule.”  You see Dave has been a sales manager more than once and Dave can sniff out a sandbagger quicker than you can say “where’s my allocated account?”  What is sandbagging exactly?  Sandbags can be used to keep a flood out, but they can also be used to keep a flood in.  Let’s take a simple example of sandbagging.  Let’s say Dave is sales managing a car dealership and that Dave’s paying $500 bonuses to every salesman who sells fifteen cars per month.  If you sell sixteen cars the first month and fourteen cars the next month then you would only get the $500 bonus in the first month even though you sold thirty cars in two months.  It doesn’t take long to figure out if someone is sandbagging a car sale on the last day of the first month in an attempt to move that sale to the second month.  Maybe the salesman calls in sick.  Maybe the salesman asks the customer to come back tomorrow.

If the salesperson is attempting to defy that verse from the Holy Scriptures (Matthew 6:24) “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.”  Maybe the salesperson might go so far as to tell the customer “Hey come back tomorrow and I’ll slide you an extra Benjamin when you pick up the keys”.  That my friends is a classic example of “Trading At Settlement” or making a trade within a trade.  When you Trade With Dave At Settlement, the price discovery process which occurred when the customer and the salesperson “shook on the deal” is no longer the genuine deal because now the car has been sold for $100 less than the original price, and an extra $500 in commission has been paid.  Who’s to know the difference?

Well Dave knows and believe me so does every other sales manager at the CME.  Dave has not only been a sales manager he’s also been a VP of Marketing and a company President and he’s had more than one sales manager working for him who, if the salesperson was willing to split yet another Benjamin with the sales manager, the sales manager would then comply with the salesperson’s scheme.  I guess you could describe a scheme where the salesperson and the sales manager were colluding to extract an additional $500 in bonus money from the company at a cost of $200 to the salesperson individually as a scheme that would be “adopted based on requests from market participants” if those market participants could make extra money.  Why not, especially if you can self-certify?

Let’s take a look at what other forms of self-styling went on over at the CME around the same time as the self-certification hair styling (also known as the business mullet policy – that being all business in the front while there’s a party in the back) was going down.

From Harvey Organ: http://harveyorgan.blogspot.com/2013/04/silver-and-gold-risesilver-oi-rises-to.html

Do you remember April 25th?  That was the day when the Comex reported that JP Morgan’s eligible gold fell from 402.4K ounces to 141.6K ounces or 65% in 24 hours.  This was the lowest recorded level since JPM’s “vaulting capabilities” were touted and the vault opened in late 2010 (http://tradewithdave.com/?p=5814).

Did anyone notice that on May 8th there was a silver “adjustment” out of Scotia for 573,219.091 ounces?  No destination for the mother lode was offered as an explanation of the adjustment.  It appeared to be an accounting error, at least according to Harvey Organ.  The fact that the amount is exactly the same and exactly two weeks have gone by… nothing to see here folks… move along.

What is the definition of Trading At Settlement exactly?  Here you go, according to some financial glossary and the initiator of adoptions based on requests from market participants, but not according to Trade With Dave’s rogue salesman metaphor.  Here’s the official definition:

Trading at settlement is an exchange rule which permits the parties to a futures trade during a trading day to agree that the price of the trade will be that day’s settlement price or the settlement price plus or minus a specified differential.  What differential exactly?  At the CME,  TAS transactions may be executed at the current day’s settlement price or at any valid price increment ten ticks higher or lower than the settlement price.

How did the folks over at the CME manage to explain to the folks over at the CFTC via email on the very day in question why they were “lastly” establishing the Trading At Settlement block trade minimum threshold?  Here’s the explanation in their own words:

Lastly, the establishment of TAS block trades in Gold and Silver futures at the existing block trade minimum threshold of 25 contracts for each product is being adopted based on requests from market participants.

This rule change was made on April 26th the day after the noted transfers and the full documentation of the notice to the CFTC is here:

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Pam, can you call my mom?

“Look at all America has accomplished.  Look at how big we’ve been. I dare you to do better. I dare you to do better.”

President Obama double dog daring the 2013 graduating class of Ohio State to remain tranquil and stop trading with Dave.

“From what I have seen of your generation, I have no doubt you will.  I wish you courage, and compassion, and all the strength you need for that tranquil and steady dedication of a lifetime.”

The president shares more thoughts on that “tranquil dedication” of a lifetime, hearing voices (although Nyquil no longer contains pseudoephedrine) and “they” suggesting experimental shams.  I’m not certain, but I think the “they” in the speech may be bloggers… jus’ sayin’.

“We, the people, chose to do these things together.  Because we know this country cannot accomplish great things if we pursue nothing greater than our own individual ambition.  Still, you’ll hear voices that incessantly warn of government as nothing more than some separate, sinister entity that’s the root of all our problems, even as they do their best to gum up the works; or that tyranny always lurks just around the corner.  You should reject these voices   (again, I think you’re supposed to reject the bloggers – emphasis Dave).  Because what they suggest is that our brave, creative, unique experiment in self-rule is just a sham with which we can’t be trusted” (not sure who “we” is, but I don’t think it includes any bloggers, but Penny Pritzker is probably on the “we” list).  

The President circles back to the idea of pursuing nothing greater than your own individual ambition… with dogged determination and repairing things by shaking them.

“To repair the middle class; to give more families a fair shake; to reject a country in which only a lucky few prosper because it’s antithetical to our ideals and our democracy – that takes the dogged determination of citizens.”

Here’s the entire speech outlining “the larger bonds we share as one American family.”  Hard to say for sure, but I think he may be referring to those Treasury Bonds that keep changing hands between the Fed and the SecTreas (and BlackRock indirectly through $85 billion per month in mortgages).  They (they being “the bonds”) are most definitely getting “larger”, but when it comes to focusing on “how big we’ve been” as a commencement address inspiration, maybe we should rethink BIG.  Maybe small is the new BIG.

Maybe tranquil and big, although they appear helpful to the government are actually the problem.  Am I being sinister?  Then again small and not so tranquil could “gum up the works” for the new Secretary of Commerce and former chairman of Chicago’s failed Superior Bank which begs the question; How’s it working for you?  I guess calling Mom is always an option, but you will probably have to dial the phone yourself.

Archie Bunker – No doubt the originator of the All In The Tranquil Family ideal admonishing his grandson on listening to sinister voices.

http://www.washingtonpost.com/blogs/answer-sheet/wp/2013/05/05/i-dare-you-to-do-better-obamas-ohio-state-commencement-speech/

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Wikimedia Commons

Emerging from the bathwater, all appearances are the creature is looking to make a swap… by default. 

When the New York Times refers to America’s biggest bank, JP Morgan Chase, as a “problem child” it gets Dave’s attention. Sure it may be the spawn of the Creature from Jekyll Island, but childlike?… JP Morgan?  Have you seen that bank?

Ever since Citizens United vs. Federal Election Commission made its way through the Supreme Court we have all witnessed corporations proclaimed in your best Doctor Frankenstein voice as “It’s alive!”  What was once merely a piece of state chartered paper designed to limit liability has “creatured” into being fully human with all the rights and privileges of a U. S. Citizen.  Corporations conveniently lacked that one key motivator of moral hazard avoidance known as spending punitive years behind bars for their wrongdoings.  Instead, they merely paid financial fines.  We’ve all watched Too Big To Fail play out on the big screen as the crony engineered gravy train carrying the rule of law has gone right over a cliff while defying economic gravity for the moment and experiencing its own Wile E. Coyote suspended animation (cough, Dow 15,000).

Is someone finally going to be held “personally liable” for everything that is wrong with the Americanized global financial system simply because they were on the receiving end of a Powerpoint and some e-mails?  We’ll see shortly.  Being the head of global commodities for JP Morgan while attempting to convince your audience that you are not a proxy for the U. S. Government is no easy task.  Add to that the birthing of a product whose name was so ugly only a mother could love (the Credit Default Swap – mmmm where can I get some?) and life begins to imitate art for Blythe Masters as the media paints the picture of Chase Burning originally only conceived in the mind of Alex Schaefer, then chalked on sidewalks across America, sold on E-bay for $25,000+ (http://alexanderschaefer.blogspot.com/) and now playing out on the pages of New York Times Dealbook.  What’s the deal exactly?

At $1.2 quadrillion in notional value (http://www.nakedcapitalism.com/2013/03/worldwide-derivatives-market-estimated-as-big-as-1-2-quadrillion-as-banks-fight-efforts-to-rein-it-in.html) the world’s global derivative market would be quite a flock of birds should it decide to come home and roost on Blythe’s self-vaunted “platform.”

It was only August of 2010 when Ms. Masters described her competitors as “scared shi(r)tless of us”… “They’d better be, because this is a platform that is going to win.”  Will Ms. Masters be capable of taking some of her own advice as she exhorted here team in that same conference call by proclaiming “Don’t panic” and “No one is going to get screwed”?  (http://www.bloomberg.com/news/2010-08-03/blythe-masters-says-don-t-panic-over-jpmorgan-commodities-loss-job-cuts.html). 

Dave nearly fell off his platform when he read the words “personally liable” in relation to Blythe Masters in the New York times vegetable medley of an article covering everything from soup to nuts in the JP Morgan “model citizen” turned “problem child” enforcement actions expose’ (http://dealbook.nytimes.com/2013/05/02/jpmorgan-caught-in-swirl-of-regulatory-woes/).  Who leaked the government’s FERC document to the New York Times?  That’s a good question, but don’t count on finding the answer.  You may want to start your search for leaks in the executive washroom.  Certainly Blythe didn’t climb to the top of the commodities heap by failing to heed the just published words of her bosses progeny in regard to “going” at work.

CNBC on that journalistic taboo of failing to be “First In Business Worldwide”: http://www.cnbc.com/id/100706195

Laura Dimon on that office taboo of being “#2 In Business”.  No doubt she makes her father proud if for nothing more than the comedic timing of her article and the quotient of bath/toilet water as compared with the cost of a Duke diploma/value of Cyprus Bank credit default swap: http://www.thedailybeast.com/witw/articles/2013/04/27/the-last-office-taboo-for-women-doing-your-business-at-work.html

Don’t get Dave wrong, he’s written his share of blog posts about Ms. Masters and her claims that JP Morgan can’t be blamed for starting market forest fires because of its commitment to maintaining a “matched book” as covered by Dave a year ago (http://tradewithdave.com/?p=9855).  All along Dave has believed that somehow somewhere there was a connection between Bear Stearns short silver position and the London Whale trade and I have written as much more times than I care to count. If anyone is in a position to know the truth about that trade (at least the Glencore mining/Bear Stearns/London Whale/SLV-Lehman and throw in some Lyndon Larouche for good measure) it would be Ms. Masters and wrote as much on April 15th of this year (http://tradewithdave.com/?p=16171).   Dave doubts that Eric Holder or ninety year old judge Robert Patterson ate two bad pieces of pizza, grew a conscious and had their Jerry Maguire moment especially if Mike Bloomberg imposes his fictional but funny nonetheless single slice ban.  Why the sudden interest in the rule of law or enforcing personal liability on corporate executives for their actions after a half decade of free passes for everyone except low level traders and/or users of fully functional Goldman laptops discovered in New York garbage rooms?

No one has been held personally liable from the beginning of this entire fiasco. Not Dick fuld. Not Lloyd Blankfein. Not Jamie Dimon and most definitely not Carl “$#!%%^ deal” Levin the Israeli Citizen/U.S. Senator serving on the “permanent” subcommittee on investigations. Do you fail to understand the full meaning of permanent? Imagine that the power of enforcement over the entire financial system of the Western world was a blog and that it was named “Trade With Carl” and you get the picture.

In light of the recent post-White House conference orchestrated gold smackdown, who knows what financial crimes Blythe Masters may be guilty of, but “personally liability” is something that hasn’t been considered as an aspect of the commodity and futures regulation and enforcement regime since Bart Chilton’s mullet was knee high to a bitcoin ATM machine. What gives? Why suddenly is it not good enough to simply blame the multi-billion dollar global drug cartel laundering/LIBOR manipulating corporations and fine it a few hundred million in chump change and call it a day… or call it “Doing God’s work” while growing your Davos beard as an expression of new found confidence in the nine lives of a vampire squid.

It wasn’t that long ago when Dave ’bout fell off his platform again when he read the ridiculous Bloomberg piece by William Cohan where Bill called for “the death penalty” for UBS. Really? What do you do to execute a corporation; have Alex Schaefer pant a series of oils that not only show Chase Burning but buried too?  Is the art exhibition a series including one of the casket containing the corporation’s charter and then one of the shareholder’s grieving over their extinguishment as Adam Smith passes by the grave and drops invisible handfuls of dirt into the deep sixing of free market capitalism? Here’s the proof courtesy of Dave and Mayor Michael “single slice” Bloomberg’s website that playing rock, paper, scissors and getting blood out of “killed corporations” should refresh Thomas Jefferson’s tree of liberty and our current tyrannical system that is a charade of genuine prices discovery  http://tradewithdave.com/?p=15041

As Dave wrote…

The preposterous concept that a corporation can even break the law without the complicity and culpability of its management and employees is highlighted by William Cohan in his Bloomberg article that calls for the death penalty for UBS and their involvement in the LIBOR manipulation.

Don’t miss my point. Dave is all for allowing corporations to go bankrupt (starting with GS for Goldman Sachs, GE for General Electric and GW for Gee Whiz Hank Paulson couldn’t be trusted) and to go down the drain rather than to be rescued by Warren Buffet’s rubber ducky who goes by the name “Dwayne the bathtub I’m dwoning in dewivatives”. Dave would even like to see executives held personally responsible for breaking the law “as if” Eric Holder and ninety year old JPM Judge Robert Patterson were actually more concerned about upholding the rule of law than skipping stones between Cambridge and the beltway in hopes of avoiding Breurian ripple effects (that’s right Dave has 8 count ‘em posts on “ripple effects” http://tradewithdave.com/?s=%22ripple+effects%22+).

So what did the New York Times have to say about the “confidential government document” it reviewed?  Since when exactly does the New York Times get to review “confidential government documents?”  What is this Wikileaks?  Okay, back to the concept of banking on journalistic integrity as expressed by your choice of CNN’s coverage of the Boston Marathon bombings or other female executives who got hacked as a more than likely scapegoat for  their overlords such as News Corp’s Rebekah Brooks for Rupert Murdoch and possibly Blythe Masters for Jamie Dimon.  Clearly the New York Times “confidential” government report is not so confidential anymore, but more important is how selective the paper was in blending together the variety of complaints into the broadest possible brush stroke that sure seems to me designed for the sole purpose of making Blythe out to be the basted turkey dinner.

Regarding those energy traders in Houston and claims by the FERC investigators that they turned “money-losing power plants into powerful profit centers.”

Blythe Masters had “knowledge and approval of schemes.”  I would certainly hope so.  Since when is a scheme a bad thing?  Not since the dictionary defined “scheme” as follows: A large-scale systematic plan or arrangement for attaining some particular object or putting a particular idea into effect.  Alrighty then, at least she didn’t equate the energy trading to a teapot.  What else did she do?

She “falsely denied” under oath her awareness of the problems and said that JPMorgan had made “scores of false and misleading statements and material omissions.”  Alright, I’m confused.  Did Blythe make “scores of false and misleading statements and material omissions” or did investigators say that JP Morgan made “scores of false and misleading statements and material omissions.”  If JP Morgan made the statements then I plead Citizens United your honor.   As far as Ms. Masters knowing the scheme on one hand and denying that she knew the scheme on the other hand, which answer are investigators looking for?

If she knew the scheme then she’s guilty of doing her job.  If she didn’t know the scheme then she’s guilty of lying to investigators.  If Dave had to guess he would say that Blythe new the scheme (she is the mother of the credit default swap so she’s no dummy) but that she didn’t get involved in the details beyond being on the receiving end of emails and powerpoint presentations.  To tighten the noose, the Times is out with another vacuous biographical sketch that highlights just when the CDS was conceived, but Dave’s having a tough time determining if Blythe is the creature depicted in the movie poster or the screaming bathing beauty being carried off by the monster of moral hazard or maybe a little bit of both.

The latest from gray lady:

Derivatives seemed “creative” and also appealed to Ms. Masters because of her quantitative background, she once said. By separating certain risks from an underlying asset, derivatives seemed to offer a way for a bank to make more loans than it otherwise would be able to.

She made a breakthrough when Exxon, a longtime client, asked for a credit line, according to “Fool’s Gold.” To offload the risk without actually selling the loan, Ms. Masters arranged a deal with the European Bank for Reconstruction and Development in London, in which the bank would get fees in exchange for assuming the risk of default.  The deal was known as a credit default swap. 

http://dealbook.nytimes.com/2013/05/03/scrutiny-falls-on-a-pioneer-at-jpmorgan/

If you ask Dave, this smells like a set-up.  I’ve said it twice before and I’ll say it again, don’t get Dave wrong.  Blythe may only be guilty of doing her job, and a dirty one at that,  but if you’re planning to demolish the entire global derivative complex who better to blame for spawning the unsustainability of a teetering tower of a trillion dollar babies than the baby’s metaphorical mother – Blythe Masters.  But what about the father of this monster, the Federal Reserve.

Also from the gray lady:

Soon, the team at JPMorgan began talking to regulators about the new product. In 1996, the Federal Reserve essentially gave its blessing with a statement suggesting that banks could use credit derivatives to reduce their capital reserves. (yes that was a clickable link)

If the plan is, as Dave has suggested for years now, to separate liquidity from risk through a divorce  of the currency system and separate wealth from the double coincidence of needs (http://tradewithdave.com/?s=%22divorced+currency%22+) then somebody has to provide the Hegelian synthesis to Solomon’s solution of simply splitting the baby in half (1 Kings Chp. 3: 16-27).  Remember in Solomon’s day the corporation had not yet been born and if the New York Times is reading the “confidential government document” correctly it clearly states that prosecutors are considering holding Ms. Master’s “personally liable.”  The Times goes on to mention the words financial “fine” (as contrasted with criminal prison sentence) in relation to both JP Morgan and Ms. Masters, but “death penalty” is not included as an option in the iteration.

If we’re looking for a fall guy, or fall gal, for the global economy Dave is not so sure that Blythe Masters will suffice although she seems to be the problem child of choice at the moment.  What’s striking to Dave is not just that Ms. Master will be “personally liable” for collapsing the economy not to mention rolling blackouts in Boston this summer due to maxed out natural gas pipelines, but the chorus of economists, pundits and politicians all singing the same chorus.  Whether coming from the left, right or middle the cacophony of Roadrunner theme song serenaders is deafening in their effort to push the “Wile E” economy off the cliff (followed by that puff of smoke, whistling sound and ultimate hard landing known as Coyote ugly).

The bigger story isn’t just that Blythe Masters may be the next fall gal in line to take the fall for Too Big To Fail.  There seems to be an even bigger trend out there of people not only cancelling their plane/car/hotel reservations to Jackson Hole but an all out orchestration of a collapse of TWAWKI (the world as we know it… as in TEOTWAWKI or “the end of the world as we know it).  Take Jeffrey Sachs last week and his Palinesque closed circuit version of going rouge (“rouge” as in Estee Lauder make-up rather than going rogue as in going all John Galt) for example.  How about the CME Group’s Terry Duffy and his claim that no one wants paper gold anymore?  Pretty strange for a paper gold salesman wouldn’t you agree?  Maybe you heard former Fed governor Kevin Warsh’s proclamation that “There is no plan B.”

Along the lines of this plan, if you’re a Euro sceptic you could take Nigel Farage sharing the stage during his incitement to euro-violence with Ron Paul’s banging away at Boston’s Apple Dumplin’ Gangs and their drill testing of the repeal of posse comitatus and the convenience of warrantless house searches.  Maybe you’re a birdwatcher and spotted Nassim Taleb’s black swan crusade to pull the pillars right out from under the roof at the London School of Economics currently being supported by such existential pillars as George Bernard Shaw, Pygamalion or other Rosenthal Effected fabians.  Then there was one dilly of a statement the Dairy Queen convention as explained by the Operator of Omaha who claimed today that Berkshire’s 800# is the one to call “when there’s really sort of panic in markets” and you’re looking for a safe tub in which to float your boat.  Looks like a pattern to me.

If you ask Dave, we’re witnessing a media takedown the head of JP Morgan’s global commodity complex just after she finished building up the platform that was capable of executing the  unprecedented global takedown of precious metals, or at least an attempt at it.  She was the likely enabler of the judge-approved (http://tradewithdave.com/?p=14550 & http://tradewithdave.com/?p=14862) destruction of the price of paper silver and paper gold (also known as simply paper) not to mention creating workload for the eternally underfunded CFTC and ninety year old judges (Bart’s got a nice office for an underfunded regulator:  http://tradewithdave.com/?p=16315).  It’s clearly not necessary at this point to enforce the rule of law because the law is secondary to the “systemically important”.  From the looks of things from Dave’s perch atop this trading blog, the “scheme” is to sink the whole thing hook, line and sink-her.

Now that JP Morgan has removed most of their eligible gold from the vault and from all appearances the hot potato of “personal liability” has been passed to the one woman who wins the award for Most Likely Executive to Inspire Jamie Dimon’s Daughter to pen an article for The Daily Beast about “doing business at the office”, it would appear that the time has come to flush the evidence and the schemer along with it.

Does Dave believe that when Jamie Dimon was quote as saying “we expect we will have more” enforcement actions and issued an apology for letting “our regulators (i.e. Bart Chilton) down” that the JP Morgan Chase CEO was looking at his image in the executive washroom mirror?  Probably not.  It’s more likely that  Mr. Dimon was admiring that “It’s why I’m richer than you Mike Mayo” movie poster and dreaming of his own Jekyll Island vacation from the complete clogged and unsanitary sewer that is Wall Street and The City of London.  Dave would speculate that  Jamie’s pledge to “do all the work necessary to complete the needed improvements” includes a complete rehab of the executive suite down to the global commodities kitchen sink (bathwater and baby Blythe included).  That’s why the New York Times is dirtying the water so completely so you can’t tell if that thing floating in the water is animal, vegetable or mineral.

The apple doesn’t fall far from the tree and the chump rarely goes along with the change.  So, before you attempt to flush the problem child and her credit default swap baby out with the toilet water, make sure that you’ve got a plunger handy, because that piping that runs from the CME Group over to LCH Clearnet is prone to getting clogged (http://tradewithdave.com/?p=9641).

Here’s the coverage as expressed by the old gray lady which explains why when you blend black and white together you get gray.

http://dealbook.nytimes.com/2013/05/02/jpmorgan-caught-in-swirl-of-regulatory-woes/

Wondering how the Chump Game Changer works?  Well, yesterday’s DealBook was the JPM story, but today’s it’s all Blythe baby.

http://dealbook.nytimes.com/2013/05/03/scrutiny-falls-on-a-pioneer-at-jpmorgan/

Dave’s been on Blythe’s case since December of 2010 and she’s been a topic over twenty times here on the blog since:

http://tradewithdave.com/?s=%22blythe+masters%22

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Don’t miss the part where the CME’s Terrence Duffy says:

“What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real gold. That’s going to show you, people don’t want certificates, they don’t want anything else. They want the real product.”

Aaaand Duffy on Corzine and the “one employee that indicated Mr. Corzine knew”: http://tradewithdave.com/?p=8664

Aaaand from the Latin home of “My Word Is My Bond” (at least it was before your word got Corzined via the Jerry Maguire “Strong as Oak” method) the Chicago boys explain how everything works on a handshake including getting your pocket picked: http://www.youtube.com/watch?v=HFyk8byc9vA

Aaaand from Mr. Duffy regarding the collapse of MF Global, don’t forget that there are no conflicts of interest in the realm of the commodities industry. If you are a family farmer who got Corzined, they set up a “fund” to bridge the gap the next time a major commodities firm collapses, so you’re good to go: http://tradewithdave.com/?p=10050

So why exactly would the man whose company is most exposed to the paper gold ETF mirage go on Bloomberg to tout the resilience of non-counterparty gold coins stuffed in a sock drawer? That is an excellent question. Are they planning yet another deeper and more punitive takedown for gold? Maybe. Did Terry and friends already extract their physical gold from the vaults and so they are ready to detonate the proverbial thermite and to self-implode the CME levered balance sheet into its own footprint creating a hole the size of Jackson, Wyoming that even Bernanke won’t be able to fill even if he did attend? These are most excellent questions, but in the veritable words of Bill Murray from his motivational speech from the movie Meatballs… “It just doesn’t matter… It just doesn’t matter.”

“Camp Mohawk” and the Chicago boys at the CME may have beaten us twelve years in a row, but I tell ya it just doesn’t matter. You know why, it just doesn’t matter. There’s one guy from Chicago that they keep underestimating. They keep sticking their necks out thinking that he’s going to bail them out when the first chance he gets he cuts them off at the knees. Think about what it was like for that man as he walked the streets of Chicago as a “community organizer” in the shadows of buildings like the Chicago Board of Trade. Think about what that man learned from a mentor like Saul Alinsky. Think about what has happened to “bundlers” that thought they were entirely protected only to see their trade go the wrong way unexpectedly.

If you’re Jamie Dimon or Lloyd Blankfein or Brian Moynihan and somehow you think you’re special because you get invited to the White House and receive an advance notice of the gold takedown, you better think again. Like Terry Duffy, you’re a moth getting closer and closer to the flame. Like Icarus you’re flying high but there’s a guy who can go long or go short on you and all he’s waiting for you to do is to make a commitment, so it’s not his fault when you break.

I’m telling you that “he” is taking down capitalism even if all we have operating today is a price discovery mechanism that’s barely a shadow of its former self. One way or the other, it’s coming down and it just doesn’t matter, at least not to Saul & Co.

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