The Forecast: What we are experiencing is not a repeat of the past. The ability or, rather, audacity of the US government to manipulate the major financial markets is new. Can this trend continue?
Governments and economists take their hats off to free markets. Yet, the markets are rigged, not free. How long can stocks stay up in a lackluster or declining economy? How long can bonds pay negative real-interest rates when debt and money are rising? How long can bullion prices be manipulated down when the world’s demand for gold exceeds the annual production?
The government’s deception of the public relies on the public’s self-deception. If this self-deception survives the year 2015, economic collapse and war will be the most likely results.
Update: Rigging the markets to rake in profits and pump them up when in decline are not “conspiracy theories.” They are fact. And the facts show that our declaration of the Grand Manipulation as a Top Trend of 2015 well deserves its ranking.
In February, the US Justice Department began investigating some 10 major banks for allegedly rigging precious-metals prices. In March, the Federal Deposit Insurance Corp. sued 16 of the world’s largest banks, accusing them of manipulating the Libor interest rates (London Interbank Offered Rate). In May, five of the world’s largest banks, including JPMorgan Chase and Citigroup, pleaded guilty to felony charges for rigging the $5.3-trillion-a-day foreign-exchange markets. And UBS AG, besides paying a fine for foreign-exchange rigging, also agreed to plead guilty to manipulating the Libor and other benchmark interest rates, paying a $203 million criminal penalty.
Despite what the US attorney general termed “brazenly illegal behavior” on a “massive scale,” and their “breathtaking flagrancy” of stealing billions, the government, in case after case, gently hits banks with a slap-on-the-wrist fine — and not one top bankster is sent to jail.
In China, to rescue the equity markets’ sharp selloff that began in mid June, the government announced a series of schemes undreamed of. They include making short-selling illegal and pumping billions in “abundant” liquidity to brokers and instructing them and pension funds to buy stocks — while barring large shareholders from selling stocks for several months. And, in an attempt to stop the market plunge, nearly half of companies listed on the exchanges suspended trading.