Wall St Rests Ahead of Employment Friday; The LIBOR Banking Scandal and Why It Matters
Happy Independence Day!
The Wall Street crowd has the day off en masse today for the 4th of July. Then, for the next two trading sessions of the week, a boney group of traders will be on duty: better known as the ‘skeleton crews’. The timing is interesting for the skeleton crews since this Friday (the first Friday of July) features the release of the monthly employment data for June. Given the recent data highlighting a slowdown in global manufacturing activity, any better than expected figures from the massaged employment series could spark another day at the races for Wall Street. IF the jobs numbers were to corroborate the weakness in PMI figures, then bets are off near term and stocks decline. As usual, much is at stake, but I expect that headline jobs numbers will conveniently portray latent improvement even if true U6 government calculated unemployment remains in the neighborhood of over 15%. It’s the smoke and mirrors headline jobs creation (non farm payrolls) and unemployment data (two separate surveys) that will count in the minds eye of both economy-officialdom and general public-sheepledom. This is all also relegated to guessing. We know well paid and schooled economists have enough trouble predicting what the payrolls number will end up being. I will react to the data on Friday and keep my powder dry until then. My Carnac suit is at the cleaners.
European equity markets were open today. Declines were generally under .5% as those folks worry about their debt crisis. The developing LIBOR scandal in London cast a pall over overall European banking stocks, which are a crucial part of Euro stock indices as is the case here in the U.S. The LIBOR manipulation somehow needs to either be swept under the rug now, or will shake faith in the banking system to its core. Fortunately it is appear that it is too late to make this little problem vanish from the front pages. It’s obvious that regulators were in on the scam and at best simply looked the other way. They were and are foxes guarding the hen houses. Lardarde of IMF infamy is a jokester to suggest that regulators be a, “little bit more intrusive and more inquisitive”. Ya think so?? Ha ha. Needless to say, shaken faith in the banking system and a broader awakening of the public to the ongoing chicanery and skullduggery of the “banksters” (a well earned title) would spur far more pushback to future bailouts and welfare for the banking industry to say nothing of the lawsuits that are now in the stage of coalescing. I have a mortgage fixed on the prevailing six month LIBOR rate – gosh, maybe I can sue?! This is just the start of what will be a giant quagmire due to bunk from the banks. Couldn’t have happened to a better bunch.
A very basic question may finally be answered. Were the actions of the bankers designed for the greater good – as in saving the financial system with phony drops in LIBOR rates to make the system appear as if crisis was ebbing thus staving off a disorderly implosion? Or have the bankers merely delayed the inevitable implosion of a system that is corrupt to the core and simply broken, rotten and faulty – it’s only salves being the creation of new debt and doing dishonest deeds behind the banks, or in cahoots with toothless regulators that became toothless from the ultra sweet (lots of play money) but distructive influence of the banks? Oh, and one other question. What else is rigged??
Today, the now former CEO of Barclays is before British parliament for potential grilling. Let’s face it, politicians and bankers are like magnets to steel. I DON’t expect much to come of today’s proceedings. This issue is going to be an on going process spurred by whatever discoveries are made in the many lawsuits that will be launched, or by whistleblowers who shall emerge. A good time will be had by some.
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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