Things haven’t changed much since Old Hickory‘s time, have they? The bankers were in sore need of strict regulation then, and they still do. Reflect on this… Wafflin’ Willy wants to let the bankers run free and play MORE games with your money. That’s a recipe for a disaster that’ll make the present mess seem a holiday…
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Editor’s Foreword:
This is important as reckless and unregulated derivative trading, along with two hellishly-expensive wars of aggression and a government choked of funds due to imprudent tax cuts to the affluent effluent, led directly to the Great Meltdown of ’07. Thus, the American failure to win control of this market was a godsend. As HH said, “The modern economy’s a fraud. Who’s going to pay for it all? Why, the ordinary worker shall”. Now, that’s TRUTH.
BMD
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At a time when Greece and Europe are hanging onto the edge of a cliff with their fingernails, and Iran and the 5 nations +1 are trying to stop another war in the Middle East, a turf war between the financial economy, the banks, and the real economy, the consumers and producers was fought and won. The winner was the real economy, and the battle was over the trading of the global metals market. The London Metal Exchange, known as the LME, is a 135-year-old member-owned exchange. It’s been the subject of a bitter bidding war between the US-based Intercontinental Exchange (ICE) and the Hong Kong Exchange and Clearing (HKEx). While ICE essentially represents Wall Street banks, and their derivative Ponzi trading schemes, the LME and HKEx represent real consumers and producers. The core difference is that under an ICE model, the interests of the intermediaries, the banks, come first, where transactions occur for the sake of profit to the intermediary. While under the HKEx model, the exchange is much more of a peer to peer system where HKEx acts in the interest of the end user, and facilitates real transactions, which represent real value.
With the centre of gravity for exchanges clearly moving east with the LME-HKEx deal, risk and risk management is a key consideration moving forward. The synergies between LME and HKEx have the clearing of trades at the core. HKEx already clears all their trades through the London Clearing House (LCH) as does the LME. In terms of spreading market risk, this is important, as there’ll be a much bigger pool of capital to support the clearing of market trades through LCH on behalf of real consumers, where of course the real capital is. Other bidders for HKEx wouldn’t make assurances that they wouldn’t move the clearing to a new clearing mechanism. Of course, the risk was that a clearing system would be set up by the banks, for the banks, using bank capital (credits) not real capital (“end user”… producer and consumer capital) with the result being market risk increasing as less capital is clearing more trades. Then, the market would be vulnerable to any large price movements, with the risk being banks running out of capital, a familiar story now to most of us. The key difference is that with the LCH, end consumers would be more supportive of the market risk; whilst under an alternative bid, intermediaries would be expected to support the market risk.
While all the other bidders for the LME, Intercontinental Exchange, CME Group and NYSE Euronext are US-based, the HKEx was the only non-US-based bid. Since the HKEx has pretty much gone from “zero to hero” in one swoop with the purchase of the LME, the LME also gets newfound market reach. As part of their bid, the HKEx promised to increase the participation of Chinese companies and traders on the LME. Of course, this would be no small addition, as China’s thirst for base metals is unrivalled in the world. However, it isn’t just consumers that HKEx is likely to attract. The Australian metals market is also likely to gravitate towards HKEx, as China is a key buyer of Australian metals so HKEx will also bring producers.
However, the benefits for the LME to scale its business don’t stop with just the increase of Chinese and Australian companies. The Hong Kong Mercantile Exchange (HK Merc) is also a new player on the block, trading gold and silver futures contracts, and they use the LCH to clear their trades. On top of this, the president of the HK Merc also sits on the board of the world’s largest Nickel producer, Norilsk Nickel, which happens to be Russian. Russia and Hong Kong have been going to great lengths to raise the profile of Russian companies in Hong Kong, including listing Norilsk Nickel for trading. It isn’t impossible to think that the HKEx and the HK Merc work in tandem in regards to products, or even merge the two groups.
HKEx pledged to tackle the problem of metals storage and delivery. Recently, storage of metals has become a big game, with banks and trading houses buying up all the available storage facilities and encouraging producers to send metal straight to storage. Of course, the banks and trading houses get huge storage fees, but they’ve also put a stranglehold on the delivery cycle of metals, with consumers bitterly complaining about the time taken for delivery, or being held ransom by the banks and the traders for spot delivery. This storage also hinders the real price of metals since the true state of supply and demand is kept hidden. Finally, and worst of all, this metal is funded by “Muppet” investors who have been sold “inflation hedging” funds by investment banks, who thereby cause the very inflation they wish to avoid. You couldn’t make it up. Nevertheless, unfortunately, the banks did.
The significance of the merger of the LME with HKEx shouldn’t be underestimated. In the development of 21st century resilient and networked markets, it’s a big step in the right direction and may mark the beginning of the end of the “Dark Side” of markets. This merger has created a link between real consumers and producers that will increase the participation of Russia, China, and Australia to the LME network, whilst reducing the role of the banks. This can only be positive for the markets going forward.
19 June 2012
Sam Barden
RIA-Novosti
http://en.rian.ru/columnists/20120619/174126488.html
Editor’s Note:
The largest role in the ’07 Meltdown was that played by vulture capitalists such as Willard Romney, who played games with financial paper that represented no real world economic activity (to think that he actually believes that such self-serving buccaneering fits him to be US President). HH has said that we need an economy where shares represent real-world assets and resources. I heartily agree. The action described in the article by Mr Barden above is a step in that direction. It’s time to dismantle the bubble capital edifice before it blows up and destroys the world economy. Oh, yes… the affluent effluent is going to take a bath… BOO HOO.
BMD
Voices from Russia 
America Has No Problems
Tags: Democratic Party, Democratic Party (United States), everyday life, FDR, Franklin D Roosevelt, Franklin Delano Roosevelt, Harry Truman, Hugo Black, John Travolta, Jon Bon Jovi, Julia Roberts, KKK, Ksenia Sobchak, Ku Klux Klan, Mariah Carey, Massachusetts, Middleborough, Middleborough MA, National Enquirer, New Jersey, political commentary, politics, profanity, Pussy Riot, Robert Byrd, Sex and the City, United States, USA, weird and wonderful
There are NO problems in America!
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Editor’s Foreword:
This is played for laughs, VERY tongue-in-cheek, which means it’s a total hoot. Rightwingers would repeat it, thinking that Mr Kalder (a Scotsman) is praising the USA. There are many ways to deflate an opponent… Kalder’s method is clever and subtle. Mr Kalder skewers his target whilst appearing to praise them. Hat tip…
BMD
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Problems, problems, everybody has problems. Look at Russia right now. Those protesters… they’ve got problems. If they don’t get prior permission for their rallies, they’ll now face fines of thousands of dollars. The opposition leaders have problems… the police raided their apartments, seized all their hi-tech gear, and “investigations are continuing”. Pussy Riot has problems. Ksenia Sobchak has problems… jeez… so many problems. Elsewhere it’s worse. Look at Egypt, where the Supreme Constitutional Court just dissolved parliament ahead of presidential elections between two decidedly unlovely candidates… its complete chaos; nobody knows what’s coming next… no wonder the folks are hopping mad! Then, there’s Europe, where the currency is about to slip down the drain. What about Libya, Syria, and Mali? The list goes on and on.
Thank goodness, I live in America, where we have no problems. You doubt me? Why, just look at a few recent news stories and you’ll be obliged to kneel before my Truth. Firstly, have you heard that in New Jersey the authorities just mandated seatbelts for cats and dogs? Oh, yes, my friends. If you don’t buckle up your beast, you get a fine of 250 to 1,000 dollars (8,160 to 32,640 Roubles. 200 to 800 Euros. 160 to 640 UK Pounds) for your callousness and disregard for public safety. That’s right… no longer will Fido be able to ride shotgun, fur flying in the breeze. See what I mean? Would the wise legislators of New Jersey be concerned about the seating arrangements of cats in trucks if they had serious issues, like homelessness, unemployment, or crime to think about? I don’t think so. Then, there’s the pleasant town of Middleborough in Massachusetts, where residents recently voted to approve a proposal from the local police chief to impose a 20 dollar (653 Roubles. 16 Euros. 12.75 UK Pounds) fine for public profanity. That’s right, life in Middleborough is so good that the sound of a teenager saying $#@! or &^%$#! is a big deal. Just try and imagine what kind of utopia the town must be. Oh, wait… you can’t, because you’ve so many problems. However, life is bliss, friends, and soon… with the disappearance of salty language from the streets… it’ll be perfection.
All right, I hear you cry, but what about John Travolta? He’s American and he’s got problems! This is true. Recently, the married Look Who’s Talking star faced accusations of pestering male masseurs for sex, and he was hit with sexual battery claims. This week, meanwhile, the National Enquirer reported that, in the 1980s, Travolta had an affair with his personal pilot, a man named Doug Gotterba. This could cause problems for Travolta in Hollywood, where producers have yet to green-light a film in which the action hero is gay. Compounding the actor’s woes, the Enquirer reports that Travolta’s lover objected to his fat, hairy body. On the other hand, the fact that anybody bothers to report this, and that I spent several minutes of my life reading about it, proves that in America we have no serious problems.
Which brings me to the Ku Klux Klan… you may have heard that a branch of the racist organisation wants to “adopt” a stretch of highway in Georgia, for which they would receive a little plaque thanking them for cleaning up the road. I’ll concede that this is a problem. Racists still exist. On the other hand, we can see improvement. Once upon a time, the KKK terrorised and murdered blacks, and people with links to the KKK infested the Democratic Party at the highest level. For instance, Hugo Black, Roosevelt’s first appointment to the Supreme Court joined the Klan in the 1920s, President Harry Truman was an ex-Klansman, and onetime Exalted Cyclops Robert Byrd… who filibustered the Civil Rights Act for 14 straight hours in 1964… only died in 2010. In 2008, however, the Democratic Party nominated a black man for president, and he subsequently won. KKK membership today consists largely of morons, sometimes married to their cousins, who meekly ask the state for permission to pick up litter on the highway. As it is, Georgia turned them down. America’s making great progress.
Lastly, you may have heard that America has a few economic problems. Nevertheless, this is a myth. How do I know this? Well, the president’s been spending a lot of time with his celebrity friends lately. In June alone, he attended at least six parties and dinners, where he rubbed shoulders with the likes of Mariah Carey, Julia Roberts, and the lady with the long face from Sex and the City. He even gave Jon Bon Jovi a ride on Air Force One! Now, cynics might say he only wants their money, but I know better. The president enjoys downtime with friends, like the rest of us. It’s just that he has richer and more beautiful friends! Everything is beautiful and nothing hurts, my friends. Good luck with your problems. We don’t have any.
15 June 2012
Daniel Kalder
RIA-Novosti
http://en.rian.ru/columnists/20120615/174053572.html