Home » Creeping Fascism » As Trust Evaporates…

As Trust Evaporates…

by John Rubino on April 27, 2013 · 27 comments

Rolling Stone’s Matt Taibbi has once again put the world’s major hard news organizations to shame by describing, in comprehensible terms, the pervasive corruption at the heart of the financial system. Below are his concluding paragraphs from a much larger article that everyone with money at risk in a bank, brokerage account or business should read in its entirety.

Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere. From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we’re forced to trust.

“In all the over-the-counter markets, you don’t really have pricing except by a bunch of guys getting together,” Masters notes glumly.

That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.

All of these benchmarks based on voluntary reporting are now being looked at by regulators around the world, and God knows what they’ll find. The European Federation of Financial Services Users wrote in an official EU survey last summer that all of these systems are ripe targets for manipulation. “In general,” it wrote, “those markets which are based on non-attested, voluntary submission of data from agents whose benefits depend on such benchmarks are especially vulnerable of market abuse and distortion.”

Translation: When prices are set by companies that can profit by manipulating them, we’re fucked.

“You name it,” says Frenk. “Any of these benchmarks is a possibility for corruption.”

The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It’s not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever’s in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it’s only just coming into view.

Some thoughts
Knowing what we now know about the big banks, the idea that precious metals are not manipulated is absurd — which explains, if an explanation is needed — why the paper and physical markets are diverging. Paper gold is at the mercy of the manipulators, while physical gold is immune to them – and is in fact a threat to them. An ETF like GLD is emphatically not the same thing as a gold eagle in hand.

With the political and judicial systems now wholly-owned subsidiaries of the big banks, buying physical gold and silver might be an individual’s last effective weapon against an emerging meta-government run by and for the people profiled in Taibbi’s article.

In a broader sense this tracks with the concept, popularized by Automatic Earth’s Nicole Foss among others, of a shrinking trust horizon. As we discover that the people running the big systems from distant financial and political centers are “harvesting” us in ever-more-creative and hard-to-detect ways, the number of people and organizations we’re willing to trust shrinks and recedes towards our homes. We can’t trust dollars or euros or yen so we convert them to precious metals held outside the financial system. We can’t trust the big banks so we open accounts with local credit unions. We can’t trust Big Food to tell the truth about what they’re feeding us so we turn to local farmers markets and backyard gardens. In some ways this is good and right and as it should always have been. But as it progresses it becomes a threat to the systems we’re abandoning, raising the question of how they’ll respond, with what new lies and what kinds of coercion.

  • http://twitter.com/PanamaPat patrick faiola

    Well said.

  • Rich

    Ever since Satan birthed the the Federal Reserve in 1913, the big banks can make risky bets with impunity. If the bets pay off, they rake in the profits. If the bets blow up, the Federal Reserve swoops in as a lender of last resort and bails them. If blow-ups cluster and turn into a larger financial crisis, the politicians unite under bi-partisan banners and organize tax-payer funded bail-outs (and now apparently also bail-ins). The judicary is in collusion and squashes the occasional lawsuits brought against the criminals in high places.

    But the system is getting more and more fragile. There is increasing risk, that the next crisis is so large that no bail-out can cover a global derivative implosion.

    The bankers can manipulate paper. They can manipulate the paper price of gold and silver. They cannot however manipulate the real value of physical gold and silver in your possession.

    Alas, governments can steal your gold and silver. The liberal hero, Franklin Delano Roosevelt, has set the precedence in th 1930’s. Fortunately, there is time left to prepare yourself for various eventuallities.

    • Walther11

      I doubt they will try to take the gold again, too many people on to them, especially anyone who owns physical gold. If they do try it, I suspect compliance to be nil or worse case violent.

      • Mark Hebert

        Walther11 – You are right. On top of that right now 40% of USD are outside the USA (unlike 1933) and if the US Gov. even hints of gold confiscation the international rush to gold and away from USD will make the USD worthless in the blink of the eye. And I mean worthless at home and abroad. The Fed is boxed into a corner it can’t get out of and should know that what it tried once it can never try again.

        • rich

          I hope you are right. But consider that the US government does not hesitate for a nano second to kill innocent people with drone strikes. Do you really think, they would hesitate stealing your precious metals? All I am saying is expect that they might try and position yourself accordingly.

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  • http://www.facebook.com/people/David-Zuniga/1389494145 David Zuniga

    Matt Taibbi exhibits selective morals, selective shame — selective truth.

    There is no doubt about the accuracy of his attacks against the wicked banksters; indeed, the entire industry is a feckless gambling-house.

    The problem is, cheered on by the old hippies that comprise Rolling Stone’s core readership, Taibbi daily defends the indefensible — as measured by millennia of Western norms.

    Thus, as his indignation against the vile banksters rises to a fever pitch each day, it appears as the leering envy of a yellow-eyed old whore, rather than the righteous anger of a courageous crusader for truth.

    • JPSerino

      I was once a “hippie”, but not one of the anarchy loving crowd that became the politically involved monsters of today whose main agenda went from fighting “the power” to becoming the power and “the man”. I saw from early on that the “drop out, non-conformity” crowd was in fact itself entangled in another form of conformity. There may in fact be many of these types who still read the Rolling Stone, cheering on their agendas of “saving the planet” at the expense of mankind and their own souls. To them, truth is an agenda, a political choice and a matter of perspective. Personally, I don’t claim to know Matt Taibbi’s inner purity. But I suspect that a leering envious yellow eyed old whore would not be capable of the depth and clarity needed to write such an expose of the tangled satanic web of deceit of these criminals also known as global bankers and their henchmen political hacks who have betrayed their electorate for personal profit and gain.

    • http://pulse.yahoo.com/_KTGVSXMZJD4U57OZ5ALH6JZ2IQ Edward Cate

      Must folks always attack the messenger, rather than the message. The bullies have disabled the warning bells, so a non-sociopath brings in the message that the financial hurricane is getting worse by the minute, as well as closer to shore. But because the sun’s out today and we can’t quite see the storm clouds, most folks continue to party and flip off the messenger. Sigh. Nothing new under the sun.

    • PaperIsPoverty

      You fail to even mention whatever it is that is “indefensible” that he defends daily, unless you mean he’s sold out merely by writing for the establishment. That tends to be a rather adolescent point of view, so perhaps you meant something more specific.

      His analysis of the corporatocracy / bankster occupation is undoubtedly a net positive, whatever his flaws, for the simple reason that he can make complex financial matters understandable to the layperson, and his audience is not one that generally reads financial news. It doesn’t matter if he’s a Courageous Crusader for Truth in every respect (again, rather adolescent and black and white); on the whole he is doing us all a service. When things fall apart let’s hope people are smart enough to aim their anger at the bankers and politicians who deserve it, rather than misdirecting it toward this or that scapegoat group of common folks. In this regard, Taibbi is undeniably an ally.

  • Agent P

    For an answer (of sorts) to this dilemma, have another look – or two, or three even, at the events in Boston last week. I refer specifically to the spectacle of roving bands of para-military shock troops masquerading as ‘police’, going house to house – banging on doors, and hauling people out of their homes at the point of an (Evil) ‘Assault Weapon’… Replete with Hum-V’s, custom made armored , mine-proof vehicles outfitted with gun turrets, etc., the ‘show of force’ was an sober reminder of just what this government is willing and capable of doing in order to Force ‘compliance with the law’…

    • Fred Rockenberger

      You got it all wrong. The banks are subsidiaries of the government.

  • http://pulse.yahoo.com/_KTGVSXMZJD4U57OZ5ALH6JZ2IQ Edward Cate

    From the book (1889) at the http://GreatRedDragon.com
    “An Imperialism of Capital has grown up within the last two centuries from small beginnings, until it is now the mightiest power that has ever existed on earth. It is an Imperialism mightier than the empire of the Caesars, grander than the empire of Napoleon in the hour of his highest glory.”
    “The Imperialism of Capital, in our time, stretches the arms of its power over the whole earth: it alone sways the nations with pre-eminent rule. It buys all of the products of the earth: it fixes all prices of all commodities without regard to the law of supply and demand, by its own arbitrary will.”

    It’s never pleasant when history repeats.
    Thanks to Matt Taibbi, John Rubino and the others tryin’ to get the word out in these times.

  • seen2much

    Don’t get me wrong, I support this important message…
    My question is, does the author and you here reading it actually support the outrage as well and for the right reasons?
    I hear every day people b!t(hing and moaning about everything from the now obvious decline to the more in-depth complaining in places like this website.. Yet, VERY few are actually making any substantial changes to their lives, much less any serious resistance..
    No, I’m not talking about tossing molotovs and laying roadside bombs as “serious resistance”. How about just putting your money LITERALLY where your mouth is? Tax resistance, anybody? Though, honestly, anybody engaging in active tax resistance would likely get the same response as the active insurgent I described above…

    How about this? Why not just disengage from the empire? Stop working above the table. Work only under the table. At least only work some s#!t job above board, and use your best skills and talents under the table… Save up, buy a small farm, stay the hell away from the rest of the psychopathic, neurotic, mentally jacked-up imperial population… Sell your extras for gold and silver, or cash only once in awhile.. Or however you roll in your Liberty ride..

    • ComradeRutherford

      “Tax resistance, anybody?”

      I did that for years, didn’t file from 1989 to 2009, took ten exemptions on my W2s to minimize how much the Fed took out of my checks. It worked fine while I lived in NYC. I would get letters from the IRS every so often saying (paraphrasing), ‘Gee, we would really like to nail you to the wall for not filing your taxes, would you please return this form to confirm who you are so we can throw you in jail?”

      But then I moved to a small state with very few residents and their tax department spotted me right away, “we can’t help but notice that you did not file your tax returns with the state for the last 6 years…’ I would be happy to file with my state gov’t, but you can’t pick and choose…

      I wound up filing and it turns out that I am so poor that I get thousands of dollars back from the Fed and pay nothing in! Ha! Take that, murdering federal gov’t…

  • Bruce C.

    It’s nice to read that some supposedly reasonable and neutral reporter has begun to reveal what most people who visit sites like this have known for years but I’m afraid it’s not going matter. Far too many people won’t learn of this and/or not want to know this and/or will not want to do anything about it. The fact that things have gotten to this point largely by the SUPPORT of most citizens over the last few decades does not bode well for some grand epiphany.

    I’d like to believe that this is not an un-winnable battle, but I’m torn by the dilemma of thinking that so many Americans will fight for and deserve what’s coming to them, and the notion that ‘All that is necessary for ‘evil’ to prevail is for good men to do nothing.’

    Maybe Ann Barnhardt is right, that just because some one is stupid, ignorant, gullible, misinformed, corrupt, negligent, shallow, greedy, compliant, immature, and cowardly, he does not deserve to get a bullet in his head. But why would he deserve it? Would not one who holds opposite beliefs and values “deserve” his fruits too? I don’t think you can have it both ways and live in a just world.

    Watch the videos of the invasions in Massachusetts and then the reactions from the people, both as individuals and the mobs. As Franklin said, ‘those who are willing to surrender their freedom for their security deserves neither and will lose both.’


    The challenge will be how to live in such an environment. Owning gold and silver should ultimately be advantageous but I don’t see how it will help much as money if the vast majority have none. It will probably be most useful later on. That’s why I think you should only buy as much as you think you can afford to hold as true savings so you won’t be forced to sell/spend it when you don’t want to.

    • PaperIsPoverty

      Maybe the grand epiphany only comes with a collapse, when circumstances are so dire that even the least curious among us wonder what the hell happened. Even then, it’s likely that only a minority of the somewhat educated will be able to formulate an answer to that and a plan for how to fix things. But social revolutions generally do start with the middle class, and only a minority of the middle class. So perhaps Taibbi and others are planting a seed that will hang around in the back of people’s minds and will germinate when a systemic shock arrives. One can hope.

  • pipefitter9_3

    You can’t have your cake and eat it too. If everything’s manipulated (and it probably is), then technical and fundamental analysis don’t mean squat. You can’t run a story like this and turn around and say COT matters. Who approved the release of COT, lol?

  • http://www.facebook.com/people/Keith-Cossairt/1203480379 Keith Cossairt

    so, did you really think it all was’nt manipulated ?


    This is why guns and ammo are hard to find. So many sense something BIG is going to happen.

    I was in Bass Pro Shops this week end and every single handgun was sold. You can’t get 9mm ammo. Gone.

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  • Agent P’s a Dumbass

    You are an idiot. No one was “hauled” out of their homes last week. They were looking for a guy who had murdered several people, and had him cornered. What do you expect? The cops were behaving themselves……

  • Dr.Not Evil

    Are people really shocked and surprised by these types of articles? It seems to me that a lot of the comments on these stories ,reguarding precious metals, that people think that this is a new development. Politicians,bankers,and lawyers have always been corrupt. It’s been a widely accepted fact in my lifetime (and much longer) that a lot of these people are greedy,unscrupulous, liars. Most people just don’t realize the extent, or have decided not to think about it too much for fear of losing it like the Michael Douglas character in “Falling Down.” Folks who aren’t so bright to really intelligent people know they are getting screwed out of their money in a thousand different ways from insurance to gas prices to this new ” rain tax” that I’ve heard about. People have just been duped into blaming the “conservatives” and the “liberals” for their problems, while many others laugh all the way to the bank.

  • SC Striebeck

    You miss the real point: these folks are in bed with government to such an extent that the taxpayer foots any measurable loss on the premise that such entities are too big and too important to fail – but fail they will. It’s just question of when. Government is the common denominator in Big Anything. Do away with it and all suppliers are subject to same market forces of accountability. Too bad we didn’t learn the lesson sooner. With everyday the market fails to clear, the day of reckoning will be all the more painful in the world of electronic liquidity and paper investments.

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  • http://twitter.com/sgdonohue Evermore

    Too bad the MSM is owned by 5 companies which in turn are owned by the 1% who have no interest in anything resembling the truth about national or international finance,markets, commodities, or indeed anything wealth enhancing, and how its all rigged to benefit the Elite. That is why they operate without fear, that and the fact that they own politics and the judiciary. What have they to fear? Nothing. They are firmly in control. The little people will have to wait until the elite self destruct by the weight of their own avarice.

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