Yes, I mean it.

Here's a "reprint" of my interview with Dylan Ratigan last night:

I, and FedUpUSA, ought to sue anyone using this moniker for their so-called "political affiliation" for defamation.

Yeah, that's a joke.

But so are you.

All of you.

Especially Sarah Palin, Newt Gingrich, Bob Barr, and douchebag groups such as the "Tea Party Patriots."

Let's look at their mission statement:

• Fiscal Responsibility
• Constitutionally Limited Government
• Free Markets

Really?  That sounds pretty good.  But did you read "Free Markets"?

Free Markets: A free market is the economic consequence of personal liberty. The founders believed that personal and economic freedom were indivisible, as do we. Our current government's interference distorts the free market and inhibits the pursuit of individual and economic liberty. Therefore, we support a return to the free market principles on which this nation was founded and oppose government intervention into the operations of private business.

Oh, oppose government intervention eh?  You mean, you oppose stringing up the people who break the law and steal people's homes and wealth?  Private business is only private up until it rips someone off.

Notice what's missing from this mission statement and principles: Any mention of why I and others led people to mail tea bags to Congress and our President in the first place: rampant theft of over taxpayer money propping up FAILED private businesses.

Then look at what's over at TeaParty.Org: you'll find the usual pablum.  Guns, gays, God.

Heh, I like talking about Guns, Gays and God too.  Let's talk about all of them within the context of The Constitution, which is what the Tea Party was supposed to be about.  In short:

• Guns.  What part of "shall not be infringed" didn't you bother to read?  That one's simple.  And yes, this means that under The Bill of Rights there should be no Brady Law nor any bar on a convicted felon who has served his time buying or owning a weapon!  I know what the current law says and I understand the reasoning behind it.  But you can't square it with the clear language in the Second Amendment.  Our entire system of criminal justice rests on the premise that if you are convicted of a crime and serve the time for it, your debt to society is paid.  If said convicted criminal is still dangerous to society (and thus shouldn't have a right to self-defense) why are we letting him out so he can victimize other people?  Sentences should reflect this; you should not be released until you are no longer a danger to society - period.   Prison is often debated as to whether it's about rehabilitation or punishment - I argue it is neither, it is and should be about removing those who harm others from society until they are no longer a threat to others.
  
  
• Gays. What part of "what you do in your bedroom is none of my damn business" didn't you bother with?  You can find that in the 4th Amendment as well as elsewhere.  In terms of public space what is your private sexual preference and life doing in the public space in the first place?  200 years ago we called such people perverts and stuck them in the stocks.  You want to address this problem?  It's simple: That's a gay (or straight) person's private life and its none of anyone else's damn business what two or more consenting adults do behind a closed door on private property.
  
  
• God.  What part of the Establishment Clause didn't you bother to read?  "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;"  You want prayer in the schools?  Not unless I can lead a prayer to Allah should I so choose; it is not Constitutional to favor one religion over another.  Therefore, you either keep it all out or you keep none of it out, and my preference is to keep all of it out, although I'll settle for none - either position is Constitutional.  No other position is, and that's the beginning and end of it.  The same applies to any other publicly-run and funded space.  What people do on their own private property with regard to how they worship is none of your damn business. 

Now that we've dispensed with Guns, Gays and God in the context of what one of the founders of the Tea Party Movement believes, I'll deal with the rest.

The Tea Party was initiated as a political protest against the unlawful and in fact unconstitutional usurpation of power from the Congress and The People in the form of extortion-led bailouts of enterprises that had engaged in acts that I, and many others, believe were at least civilly actionable and in many cases crossed the line into criminal activity.

This indictment is not limited to the nation's large banks, although it certainly starts there.  The corruption of our economic and monetary systems runs the gamut from Fannie and Freddie through their ties to Congress (including literal sexual encounters in some cases), banking interests selling trash securities to everyone from pension funds on down, judges who don't judge but rather protect monied interests on Wall Street, The Federal Reserve intentionally debasing our currency and monetizing government debt, government spending that is running 40% above revenues and much more.

In short, The Tea Party was and is about the the corruption of American Politics and the blatant and outrageous theft from all Americans that has resulted.  It is about personal responsibility and enforcement of the law against those who have robbed, financially raped and pillaged the nation.

Yet today we hear literally nothing about these issues among the so-called "Tea Party" candidates and their backers.  Sarah Palin has not said one word about locking up the banksters that brought up on the housing bubble and economic collapse.  Not one word about Bernanke's out-of-control Fed and the arguably unlawful monetization of Fannie and Freddie paper, not to mention the monetization of the Federal Debt.  Not one word about throwing judges such as this one:

in the dock - although that, ladies and gentlemen, is a statement of felony judicial corruption.  If you as an investor run into trouble with a commodity or futures trade and sue you will not get your day in court - a literal "green light" to rob the people by the big banks with official judicial sanction.  And you wonder how Hillary Clinton managed to "win" in her Cattle Futures trades eh?  Wonder no more.

Tea Party my ass.  This was nothing other than The Republican Party stealing the anger of a population that was fed up with The Republican Party's own theft of their tax money at gunpoint to bail out the robbers of Wall Street and fraudulently redirecting it back toward electing the very people who stole all the fucking money!

You want me to support The Tea Party as it is currently constituted? 

Do all of the above, do it now, and apologize for attempting to perpetuate the financial rape of this nation.

Publicize the following as your LEAD:

STOP THE LOOTING AND START PROSECUTING

And finally, one more:

ALL FIVE OF THE LARGEST BANKS ARE RESOLVED AS OUR FIRST ACT IN CONGRESS. 

They caused it, they pay for it.  Period.

Until and unless you do?

This ought to wake you up:

Household incomes plunged for the second year in a row in 2009, as fewer families earned over $100,000 a year and the ranks of the poor rose, according to census statistics released Tuesday.

...

....almost one in four families earned less than $25,000, an increase of one percentage point. "

Folks, either our wage and hour laws, along with our environmental protection laws, are defensible or they are not.

If they are, then they are for any product or service sold in the United States, irrespective of where it's produced.

If they're not, then they're not defensible for any product or service sold here, again, irrespective of where it's produced.

We have spent 20 years exporting our labor to places where effective slave-labor conditions are the order of the day and environmental standards are non-existent.

This is what rivers and lakes look like in China, where we source most of our "consumer goods" nowdays:

Who are we trying to kid here?

International corporations do this because it's cheaper.  They use the lack of these laws to evade our laws here.  We permit it, we allow them to import as "free trade", and in doing so we are just as responsible for the exploitation of the people, and destruction of the environment, as if it took place right behind your house.

But for our economic activity in this "trade" that pollution and slave-labor would not happen.

So cut the crap America.

Either our standards are valid or they are not.  If they are, then they are.  Enforce them.  Since we can't force other nations to conform with our laws, the solution is simple: we enact wage and environmental parity tariffs, thereby destroying the incentive for firms to poison the environment and exploit people elsewhere to evade our laws here.

The manufacturers now have a choice - either bring the jobs back here, in which case we now have a rising wage base, or our Treasury gets refilled with funds with which to pay welfare and other benefits in various forms to those who are displaced.

Neither political party wants to face this reality, of course.  But that doesn't make it less true.  To the contrary - it is absolutely the case, and we're hypocrites.

We as Americans, bluntly, are pigs.  We claim that "Minimum Wage" laws are both just and necessary, but we won't enforce that which we claim is just and necessary - instead we give manufacturers a simple way around the law by simply firing all the US workers involved and moving the plant to Mexico or China!

Likewise, we claim that environmental protection is important.  But instead of enforcing it, we then allow the manufacturers to do what you see above, so long as it happens to someone else.

Wake up America.  Either our laws are worth enforcing or they're not.  If they're just then they are, and for those who choose to evade them by offshoring, the proper response is to tariff everything that comes into this country using those means of bypass in the exact amount of the benefit so gained.

You're not going to want to hear this.

Nonetheless, you have to.

If you want to win - indeed, if you want to make any sort of serious inroad into the American Political Process, you need to read this, you need to listen, and you need to adopt this path.

If you do not, you will be marginalized into irrelevance, no matter what else you do.

Here it is:

You must discard - intentionally - all "wedge issues" as points of debate, discussion, or campaigning.  You know what these issues are - they fall broadly into the category of religion in one form or another.

These are issues such as abortion and gay rights (in all it's forms, including marriage debates), but is by no means limited to these two.  In short, if there's a religious basis for your position, you must not campaign on it, and indeed you must pointedly refuse to discuss it.

The Tea Party began as a protest over bailouts and handouts - that is, theft and corruption within our markets, government and economy.  This is a winning position with 90% of the American Body Politic. 

Any candidate who runs on these issues - and these issues alone, promising to stop it and lock up the scammers - all of them - wins.

As soon as you bring the other issues that everyone wants to talk about into this, you will lose.

Here's why.

These are called "wedge issues" for a reason.  There is about half the population, for example, that will rally around a position of "Abortion is Murder."  There is also about half the population that will say "well, maybe in some cases, but in others no", all the way down to "you can abort any time you want prior to the first breath."

What you personally believe is irrelevant to the political process.  These issues are used by the two main political parties to get the electorate to divide on a 50/50 basis - thus leaving them having to persuade exactly one person of their position on some other issue to win.

You cannot win such a contest.  At best you can force one of the other parties - the one that most agrees with you - to lose.  The reason is simple - you will split that half of the electorate, which means the other party - the one that disagrees with your position on those issues - wins the election.

Drill this into your head folks:

If you allow these issues to become part of your campaign, you will not only lose you will cause the party that most-agrees with you to lose.

I know this is going to be unpopular, but it needs to be said.  I've seen this happening in some of the local Tea Party groups, and it saddens me.  The local Niceville branch here featured people talking about "natural law" as an important qualifying factor for political candidacy, as just one of many examples. There were times I felt like I had walked into a Baptist sermon.

The Tea Party and other political expressions like it are, of course, free to run on whatever platform they'd like, and to back candidates based on whatever they'd like.  But if you're going to do this, then you'd be wise to try to take over the Republican Party instead of being "independent" or any other sort of "outside" influence, because it is the only way you can win with this approach.

That is, you can try to turn the Republican Party into The Tea Party, and then apply your litmus tests.  Now you have your 50%, and you need to persuade only one voter.  That's a winning strategy, if you can pull it off.  But to pull it off you will have to displace all of the "money men" who corrupted the Republicans - let us not forget that the Republicans were the ones who brought Henry Paulson into the Treasury after he, as Goldman's chief, set up lots of dodgy financial instruments, and then protected the banks who did those deeds from being smashed when it all blew up in their faces.

Not that the Democrats are blameless, of course. "Who is Chris Dodd and Barney Frank" would be a good starting question on that side of the aisle, and of course it doesn't stop there.  Nancy Pelosi and illegal immigrants anyone?

The Tea Party infiltrating The Republican establishment is a long shot.  Witness John McCain, who made a campaign spectacle out of bailing out the banks.  How's JD Hayworth doing in challenging him?  He lost, right?  How'd that happen?  The same way it always happens: Hayworth let the campaign's terms include those wedge issues, and then got tattoed by the guy with the bigger warchest and the ability to threaten people politically.

You either change the terms of the debate and the issues upon which the election is decided or you lose. 

It's that simple.

The candidate that says this to the TV cameras and his opponent wins:

I am running on fiscal responsibility which I define as (insert your platform), and on the removal of embezzlement and fraud from our government and financial system, (insert your platform), including the reversal of the bailouts my opponent voted for and supported.  Where fraud and embezzlement took place I will do everything in my power to see that each and every person involved goes to prison, starting with those at the top of these large corporations and, when necessary, current members of our government.

If you insist debating other issues the microphone is all yours, and you may monopolize it all you want.  We may agree or disagree on those issues, but that's not what I'm here to discuss, and it's not what I'm running on.

If you elect me you will get the following (list of corruption and fraud that you intend to excise, along with your fiscal responsibility promises, including charts, facts and figures.) 

I understand that these other issues are important to virtually everyone, but I also understand that almost exactly half of you who hear me speak now are on each side of these issues and none of you are going to change your mind.  Therefore, the question I ask you is this: Are those issues more important than getting rid of the fraud, corruption, and scamming in our government and economy?  If they are, no matter which side of those issues you happen to be on, then I'm probably not your candidate.  If, on the other hand, fixing our economy, locking up the fraudsters and putting a stop to the rampant theft from each and every citizen in this room, which has personally indebted each and every man, woman and child in America by more than $40,000 over the last three years, is the most-important issue before you as you head to the polls, then I ask for your vote.

If you don't do this as a third-party or "outsider" candidate, you lose.

You need to appeal to the 90% issues and ignore the 50/50 ones. 

On purpose.

Oh sure, there will be some people who won't vote for you without those answers to the questions you refuse to entertain and waste your time on.  The siren song from those organizations, whether they be "Focus on the Family" or "Planned Parenthood" is strong.  But their siren song is false, for every voter you attract by appealing to them comes with one who will vote against you with rabid furor, and the direction in which you declare your intentions on these issues doesn't matter - there is no winning in those points of debate no matter how you approach it.  You can only lose and worse, cause those most-aligned with you to lose.

In short those who think that $40,000 is less important than your stance on abortion will split their vote for and against irrespective of which side of that issue you come down on.  Your opponent that is closest to your personal position on abortion will thus lose, and so will you!

The only way you can avoid this happening is to not allow the debate to go down that road, and you must be steadfast and studious in rejecting all entreaties and attempts to get you to speak on those issues, because the two major political parties know this is how they get you to forfeit your ability to win - the fact that you stand and run on an issue they cannot agree with and yet which 90%+ of the population sees your way!

The Tea Party will not listen to this, but until they do, they will be insignificant, and the two primary political parties know it.

In pictures and words.

The original price action is here (top right corner of your screen); I have pulled the original Ticker and have decided the future Youtube's will be linked only through here, and that comments on Youtube itself will be disabled.

There are a number of reasons for this, not the least of which are the "it's all the Joos fault!" garbage I have to clean up on Youtube's comment area.  It's sad that people can't see the forest for the trees and have to look for a boogeyman behind every corner.

A few people also seemed to be unable to recognize the context.  Yes, the original clip appears to show blatantly improper (even unlawful) activity, and as I explain in the video above, Section 9 of the Securities Act of 1934 covers this sort of thing.

But the larger point was missed in the short five minutes (that's what I get for doing short takes, eh?) which is that it is confidence in the marketplace - that it is not just a bunch of computers fighting with one another, but rather is a valid price-discovery mechanism - that is critical to having a healthy securities market in the first place.

This confidence has been severely damaged to the point that even mainstream commentators like Cramer mention it, along with other well-respected tweeters such as this note sent to me this morning:

@tickerguy #marketticker Give it up Karl - those guys would get away with murder. Laws are not enforced, which is why it's a free-for-all.

That's a great sentiment to have about our capital markets, right?  That comment, incidentally, was in reference to this morning's article about all the "accidental" Repo-105-like transactions that are suddenly being admitted to (as the SEC looks at them), rather than having the SEC call people out.  Funny how it is that those "accidents" never are to the detriment of a firm's balance sheet posture, right?

The point is the same, however:

Confidence is all the markets have to sell to ordinary businesses - and people.

Without it the markets are departed by the "ordinary Joe":

"We just didn't want to put up with it any more," says Karen Potyk. She and her husband sold the last of their stock holdings on May 20, moving the money to bonds, certificates of deposit and bond-like annuities.

Small investors' faith in stocks, which surged in the 1990s, has collapsed since the technology-stock debacle and the Enron and WorldCom scandals of 2000-2002. The 2007-2009 financial crisis only made things worse. Now, the pullback among ordinary investors means they are a declining force in a market that is increasingly dominated by professionals.

Professionals?  Well, yeah, I suppose so.  We call a guy with a set of lock-picks a professional too, but when he's tooling around your house at 3:00 AM his title isn't usually "locksmith."

These professionals wield high-speed computers and have figured out how to, in many cases, circumvent the precise letter of the law and regulations - but not the spirit.  They operate in the shadow of what's permitted (and, I believe, well beyond it much of the time) even though the clear intent of regulations such as "Reg-FD" is to guarantee everyone an equal and fair bite at the apple.

Investors talk of a growing disillusionment with big institutions, including corporations, government, banks and political partiesas well as fears about the nation's heavy debt. Some people's confidence in stocks was seriously shaken by the volatility that returned in May. They worry that the May 6 flash crash, when the Dow Jones Industrial Average fell 700 points in eight minutes before rebounding, is a sign that ordinary people are increasingly at the mercy of anonymous companies that trade with powerful computers.

That's because they are.

If Wall Street wants to stop this, then it needs to actually stop it and quit yapping and making excuses.

Orders, for example, could be forced to be valid for two full seconds.  That is, if you expose an order in the market you have to take a genuine risk of being filled not only by those with other high-speed computers, but also by real people trading with their brain directing their keyboard and/or mouse in real time.  With a common round-trip time of ~100 milliseconds for messages nowdays on The Internet, a two-second exposure would allow human reaction time (~1.5 seconds) plus transport of the instruction to have a fighting chance against the machines.  The "fat-finger" mistake would still be able to be canceled - if it is, indeed, a fat-finger mistake.

We could, for instance, require that if you have an imbalanced pattern of orders then you need to be able to demonstrate that you were truly intending to be willing to take execution of either side.  This might be refuted rather easily if, for example, you have 100 contracts offered on the /ES at 1090, 2,000 bid at 1088, the tiny offer gets hit (and you pull the bid) and then a very short while later you show up with an opposite-side identical play.

And we could impose geometrically more-expensive fees as your percentage of cancel-to-execute rises.  First cancel, cheap.  Second, cheap.  Third with no execute, not so cheap.  Fourth, more expensive.  Tenth?  Damn expensive.  This too stops the game - now cancels aren't effectively "free" beyond one or two per order that actually matches and executes.

Of course doing these things (among others) would destroy the "near-sure thing" of picking ordinary investor's pockets via various HFT-linked schemes.  It would mean that you couldn't safely put 10,000 or 100,000 shares of orders into the system as "line standers" then cancel them as price approached.  You couldn't stick a 2,000 contract /ES order out there and cancel it a tiny fraction of a second later - if someone wanted to hit you they could do exactly that, dramatically raising the risk involved in playing this sort of game.  If the risk of losing at these games rises to a high enough level, people will stop doing it - simply because it's too dangerous.

There is nothing wrong with speculation - I do it daily. 

But there is something very wrong with a market that is rigged against the smaller investor by computers that can place 20 orders up and down the bid and offer ladder to "hold their place in line" and then cancel those they no longer want as price moves while you, sitting behind a screen, can't possibly replicate this sort of strategy - you get to stand at the end of the line of all the other shares at the same price. 

It is a documented fact that the cancel-to-execute ratio has shot the moon over the last few years.  These are not small investors issuing change orders, they are high-speed computer-driven algorithms that are "standing in line" and then quickly withdrawing their orders when they don't like the conditions, thereby reserving a trade in front of you, an (apparently legal) way to front-run order flow.  It is impossible for you, the small investor or trader, to compete in such a system as you do not have the colocated machine sitting 5' from a gigabit-level (or better) switch at the exchange itself - your terminal is connected to a brokerage, which must obtain the quotes from the exchange, disseminate them to you, then transmit back to the exchange your price order.  You, as an individual investor, are easily 100 times slower than the "arms race" folks - you can't win in such a game which is no small part of why some of these firms are able to put up "no lose" trading records.  Their "gains", if you're wondering, come from you - a fraction of a penny at a time, millions of times a day.

It's time to stop it folks.

Oh, so the banks don't just bilk investors and rip off municipalities, they also help Mexican Gangs run drugs?

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

That's nice.  Guns and ammunition cost money - lots of it.  Getting that money requires some means of transporting it and "laundering" it.  For that, we turn to the largest financial institutions in the world, who, it turns out, have never been prosecuted for these felonious acts.

Wachovias blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations, says Jeffrey Sloman, the federal prosecutor who handled the case.

Blatant disregard?  Sounds like something you'd say at a sentencing hearing, right?  Well, no....

No big U.S. bank -- Wells Fargo included -- has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.

No Capacity to Regulate

Large banks are protected from indictments by a variant of the too-big-to-fail theory.

Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.

The theory is like a get-out-of-jail-free card for big banks, Blum says.

Theres no capacity to regulate or punish them because theyre too big to be threatened with failure, Blum says. They seem to be willing to do anything that improves their bottom line, until theyre caught.

Indeed.

Facilitating drug-running is just one small part of it.  There's also ripping off municipal governments, such as the Jefferson County sewer deal in Alabama.  There's bid-rigging in the GIC market.  And, of course, there's laundering money for violent Mexican drug cartels, who used that money to buy automatic weapons (no, not from America - from China, Venezuela and even from corrupt Mexican law enforcement officials!) with which they then shoot civilians and government officials who refuse to be corrupted.

Oh, and it's not just Wachovia accused in this story.  It's also Western Union and Bank of America.

Workers in more than 20 Western Union offices allowed the customers to use multiple names, pass fictitious identifications and smudge their fingerprints on documents, investigators say in court records.

In all the time we did undercover operations, we never once had a bribe turned down, says Holmes, citing court affidavits.

Very impressive.

To make their criminal enterprises work, the drug cartels of Mexico need to move billions of dollars across borders. Thats how they finance the purchase of drugs, planes, weapons and safe houses, Senator Gonzalez says.

They are multinational businesses, after all, says Gonzalez, as he slowly loads his revolver at his desk in his Mexico City office. And they cannot work without a bank.

Yep.

And we have a banking system that, in the United States, has insulated itself from having to obey the law or be prosecuted for violating the law by threatening the government.

Henry Paulson and Ben Bernanke in 2008, remember?  "Tanks in the streets, martial law"?

Dateline September 21, 2008

Gee, it's not enough to steal from ordinary Americans, it's not enough to rip off state and city governments, it's not enough to rig bids in the municipal bond markets, we must sit still while these institutions literally make possible funding criminal gangs that are committing murder.

There's a name for this folks.

Formally this sort of thing is supposed to be called "Operating A Continuing Criminal Enterprise", or "OCCE":

The FBI defines a criminal enterprise as a group of individuals with an identified hierarchy, or comparable structure, engaged in significant criminal activity. These organizations often engage in multiple criminal activities and have extensive supporting networks. The terms Organized Crime and Criminal Enterprise are similar and often used synonymously. However, various federal criminal statutes specifically define the elements of an enterprise that need to be proven in order to convict individuals or groups of individuals under those statutes.

The Racketeer Influenced and Corrupt Organizations (RICO) statute, or Title 18 of the United States Code, Section 1961(4), defines an enterprise as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."

The Continuing Criminal Enterprise statute, or Title 21 of the United States Code, Section 848(c)(2), defines a criminal enterprise as any group of six or more people, where one of the six occupies a position of organizer, a supervisory position, or any other position of management with respect to the other five, and which generates substantial income or resources, and is engaged in a continuing series of violations of subchapters I and II of Chapter 13 of Title 21 of the United States Code.

WHERE ARE THE GODDAMN COPS AND WHY DO WE AS AMERICANS SIT STILL FOR THIS CRAP?