Banks paid good money to loot us and will not put up with reforms

It looks like Bernie Sanders’ message is reaching Wall Street bankers.

Recently none other than JPMorgan CEO Jamie Dimon warned that any changes to the status quo in banking could have horrible consequences for the U.S. banking industry. And if change does happen, well, it’s the end of U.S. dominance and the rise of China’s banks.

Basically, Dimon is threatening that the banks will not put up with reform. They paid good money to get the current system and they’re not interested in having anyone change it for the good of the people who give the system their money.

This is how bad it’s gotten. The banks are shaking down the future president of the United States.

But this shouldn’t be surprising. The banks did the same thing 2008 and they won then. Why not double down now?

Let’s look at a couple reasons why Dimon’s “warning” is more a threat of a tantrum by the power elites on Wall Street (i.e., no money for politicians and lobbyists) than it is a real concern to the global financial system.

First, in a healthy free enterprise economy, change is a constant. That is what makes companies that are nimble, customer-focused and well managed successful. If the banking system is changed for the 21^st century, it’s the weak and noncompetitive that will fall. As it should be. New opportunities will be met by new market entrants.

In my view, Dimon’s threat is the clearest sign that the “banksters” Bob Livingston has repeatedly warned you about are scared.

In a recent Outside the Box column, John Mauldin recalled a conversation he had with some major Wall St. players that have decades of perspective from which to draw.

The scary observation they made was there is less and less liquidity in the stock and bond markets. That means it’s harder to buy and sell for individual investors. And if there’s a crash in either (or both) market, then all hell will break loose.

And once again, the banksters have done it to us.

By getting rid of the floor traders (aka specialists) and going to sophisticated high frequency trading (HFT) and programmed trading, they have gutted the open market system in favor of a rigged system that favors HFT. The specialists’ job was to make markets in all the stocks on the exchange, so it was in their interest to find the best price to buy and sell shares.

HFT doesn’t work that way.  It’s built by and for the banksters.

By eliminating the specialists, the banksters are now free to trade in dark pools, through HFT and program trading. All harm the broader market.

The fact is, the market can’t sustain this rigged system. It’s like a river that can handle a certain amount of pollution, but there’s a point where the entire system seizes up.

Dimon may want to protect his bankster buddies, but it’s not banking reform that will be their demise; it will be their greed.

The second reason Dimon’s threat is so laughable is the fact that the Chinese banks are no real threat. They just embarked on an enormous shell game of debt-to-equity swaps (DES) to save its banks and many large industry players.  DES are one of those artificial tools to prop up weak banks that have bet wrong.

DES magically turn losses into assets. Does that sound healthy? It’s what started the financial meltdown in 2008, and now banks are back at it again, and not just in China, but around the world.

But in China, the government is now endorsing these DES deals to save utter ruin. Right now Chinese banks are staring at 2 trillion yuan (about $310 billion) of defaults on loans and lines of credit. The bad debt totals 160 percent of GDP, as of May 2015. This is deeply troubling.

Does this sound like a nation perched on the brink of global domination? The politicians and the financial geniuses that built this castle in the sky are now about to face their reckoning.

Also, the release of the Panama Papers  —  documents that reveal all the various drug lords and politicians and celebrities that were hiding money in offshore accounts  —  has shaken the Chinese government all the way to the top. There’s no way they have the time or energy or leverage to take over the global banking system at this point.

For us, this all means that exposure to the stock market is a very risky affair right now. I hoped that over time the banksters would unravel the mess they created. But instead they have made it far worse.

Now there’s no way Bernie Sanders is going to be elected and get his agenda enacted. Nor is Donald Trump. The establishment — the people who actually run things — in D.C. and Wall St have no interest in changing the game.

But change is coming, no matter how they fight to maintain the status quo. That’s why we need to be in a position of advantage going in to the next crisis and be well positioned to make a move when others are running in terror.

For now, stay liquid and hold hard assets. The dollar will be a solid long-term investment, as will gold. If you hold anything in the market, make sure it’s either blue chip slow growth stocks like utilities or quality big pharma or precious metals/gold exchange traded funds that aren’t leveraged.

At this point, the best investments are gold and silver. Don’t hang everything on them, but building or starting a position is the best choice right now.

–GS Early

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