Markets can't be manipulated...unless

[dlry]

you have an old news story and an algorithmic trading program.....what has Sinclair been saying....I know this an airline what does it have to do with the miners? Basically nothing other than it can and does happen!! Imagine what they can do when they try???

September 10, 2008
UAL Story Blame Is Placed on Computer
Events Remain Murky,
But Automated Search,
Trades Played Roles
By SHIRA OVIDE and JESSICA E. VASCELLARO
September 10, 2008

As Tribune Co. and Google Inc. pointed fingers at each other over the glitch that cratered UAL Corp.'s stock Monday, blame spread to the computers that robotically troll the Web for news stories and execute stock trades automatically.

An old article about UAL's 2002 bankruptcy-court filing resurfaced Monday as an apparently fresh report on Google's news service. Stock in the parent company of United Airlines quickly dropped to $3 a share from nearly $12.50 before the Nasdaq Stock Market halted trading and UAL issued a statement denying any fresh Chapter 11 filing.

Google
The Sun-Sentinel Web site's box for 'most viewed' business stories, where the 2002 article on UAL's Chapter 11 filing appeared.
UAL's stock price ended Tuesday's session at $10.60, down 2.8% on the day and nearly 13% off Monday's open.

Nasdaq and lawyers for Tribune and UAL are investigating the incident, and the circumstances of the glitch remain murky.

Google traces the appearance of the 2002 article in its search engine to a process that began late last Saturday night. At 10:36 p.m. PDT, Google's "crawler" -- the technology that finds Web pages -- discovered a new link on the Web site of Tribune's South Florida Sun-Sentinel newspaper in a section called "Popular Stories: Business." The article -- which didn't carry a date but was published by the Chicago Tribune in December 2002 -- hadn't appeared there when Google's crawler last visited the page at 10:17 p.m., the company said.

It remains unclear how the old story rocketed onto the list of most popular stories. Tribune said online traffic began to tick up beginning earlier Saturday evening. Some UAL investors suspected there were efforts to manipulate Web traffic in order to sow fears about UAL's financial condition.

There may be a more innocuous explanation, however: Amid serious storms in Florida and on the East Coast, Web surfers checking for news about travel delays may have stumbled onto the old UAL story by mistake, and a small number of fresh hits may have been enough to drive it onto the list. A Tribune spokesman declined to say how many hits the article received but said there was no indication of fraud.

From the Sun-Sentinel site, the article became available through Google News service, accessible if a user searched for keywords like "United Airlines." The article didn't appear in any of the headlines on Google News's home page, but it was picked up and sent via email to people who had created a custom Google News alert about UAL or related topics.

The stock market opened Monday with no drop in UAL shares, but the UAL story began circulating widely via a posting by research firm Income Securities Advisors Inc. that was made available to users of Bloomberg L.P., the financial-news service widely watched on Wall Street. Shortly after a headline from the outdated report flashed across Bloomberg screens at about 10:45 a.m., UAL shares began a precipitous drop. Over the next 15 minutes, before Nasdaq halted trading, they dropped as low as $3.

It's not the first time erroneous news reports have swung stock prices, but the increasing reliance on Google, Yahoo and other news aggregators ratchets up the speed with which information -- correct or incorrect -- can spread across the globe.

News-aggregation sites come in many flavors, and the number and variety of offerings continue to grow. Some sites, like Google News, decide what to display based on algorithms. Others, like Digg.com, rely heavily on how users rate articles. A number of startups continue to try new approaches, including delivering news that is likely to be personally relevant to users because people they have identified as their friends are reading it.

Online-only sites with news and opinion such as Slate and the Huffington Post are viewed with far more skepticism than print and broadcast sources, according to a recent study from the Pew Research Center for People & the Press. But sites that simply aggregate news from traditional media sources, such as Google and Yahoo news, received better marks, with users saying they believe them about as much as they believe their daily newspapers.

Search engines remain an important source of traffic to news sites. They accounted for 20% of traffic to news and media Web sites in August 2008, fairly flat from the previous year, according to market-research company Hitwise. Google led the referrals, responsible for 14% of traffic to news and media sites that month, up from 13% in August 2007.

To some, the UAL glitch points to a still incomplete understanding by traditional news outlets of how Google and other search engines pick up their stories. Search-engine experts said the snafu could have been avoided if the Sun-Sentinel had provided a publication date for the original Tribune article. In that case, Internet analysts and Google said, the automated Google news crawler would have been far more likely to reject the story as irrelevant.

"This appears to be the result of bad search engine optimization" on the part of the Sun-Sentinel, said Peter Hershberg, a managing partner at Reprise Media Inc., a search and social media marketing firm.

The damage was exacerbated by the growing use on Wall Street of automated programs that trigger stock trades without any human interaction. The so-called algorithmic trading mechanisms, which buy and sell stocks based on news headlines and earnings data, were responsible for roughly a quarter of New York Stock Exchange trades in the last week of August.

Investors said simple human scrutiny would have indicated the UAL story was old, but computerized trading systems don't make such determinations.

"A trader can pull back before proceeding, but some of these less sophisticated [automated trading systems] can't do that," said Bernie McSherry, a senior vice president with New York institutional brokerage Cuttone & Co.

-- Nat Worden, Geoffrey Rogow, and Kara Scannell contributed to this article.

[dow_3000]

SEC likes to go after people with "names" to show they are doing their job. Just ask Martha Stewart.
Meanwhile the crony insiders continue to make their own rules carte blanche.

It appears to this unwashed soul that most of managers on Wall Street are guilty of felony violations of our security laws on a routine basis. Their punishment is getting goverment backing of over a Trillion Dollars on their deals gone bad.

Maybe the next Administration will try to change that. I am not holding my breath. The game remains rigged.

[dlry]

I guess oil can be manipulated but gold can't. Boy all the same old names in every story with the same old games. Wonder if transparency works for or against gold markets in future?
http://greenlightadvisor.com/glablog/20 ... il-bubble/

[dlry]

Rigging of currency and gold markets?---NEVER--, a little noisy but worth a listen:
TruthFN Exclusive-GATA Update from the Vancouver Gold Show January 26, 2009

The you tube versions better than first video.

http://tinyurl.com/bo3re5

[dlry]

Did you see it? No. Why? What you can't see, can't hurt you....especially the writedowns
I think DeNiro played a banker in this and Mickey, well, from the fee, probably a member of FASB. http://tinyurl.com/cgxrbq
Just follow the slime....
Accounting Brothel Opens Doors for Banker Fiesta: Jonathan Weil

Commentary by Jonathan Weil

March 19 (Bloomberg) -- The banks demanded that the accountants give them leeway in how they report losses to investors. The accountants responded by giving away their souls.

This week, the Financial Accounting Standards Board unveiled what may be the dumbest, most bankrupt proposal in its 36-year history. If it stands, the FASB ought to change its name to the Fraudulent Accounting Standards Board. It’s that bad.

Here’s what the board is floating. Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.

All a company would need to do is say it doesn’t intend to sell them and that it probably won’t have to. In most cases, it wouldn’t matter how much the value was down, or for how long. In effect, a company would have to admit being on its deathbed before the rules would force it to take hits to earnings.

So, if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks’ price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks. The loss would get buried away from the income statement, in a balance-sheet line called “accumulated other comprehensive income.”

Desperate Bankers

These are the earnings we get when the people who write accounting standards give in to desperate bankers. And it’s no mystery why the three FASB members who voted for this -- Leslie Seidman, Lawrence Smith and Chairman Robert Herz -- did so. (The two who opposed it were Tom Linsmeier and Marc Siegel.)

Since the credit crisis began, the board’s members have been under assault by the banking industry and its wholly owned members of Congress. The most recent display came last week at a House Financial Services Committee hearing, where Democratic Representative Paul Kanjorski and other lawmakers beat Herz like a dog. Herz declined my request to be interviewed. A FASB spokeswoman, Chandy Smith, confirmed my understanding of how the rule change would work.

The banks want unfettered license to value their assets however they see fit, and to keep burgeoning losses out of their earnings and regulatory capital. The FASB had been holding its ground, for the most part. Now, though, the board has assumed the fetal position.

Differing Treatment

Under the current rules, securities get differing accounting treatments depending on how they are classified on the balance sheet. When labeled as trading securities, they must be assigned marked-to-market values each quarter, with all changes flowing through to net income. Otherwise, changes in value don’t hit the income statement, unless the securities have suffered what the accountants call an “other-than-temporary impairment.”

While the term may be cumbersome, the idea is that companies need to show losses in net income once they no longer can pretend that an asset’s plunge in value is only fleeting. Think of a man who gets sent to prison for 20 years. That’s not necessarily a permanent sentence. Yet it’s definitely not temporary.

The board’s proposal tosses the old principle aside. Even if a loss is deemed not temporary, companies still would be allowed to keep it out of net income. There’s one exception: If a company holding debt securities concludes some of the decline is due to credit losses, that portion would need to be included on the income statement. Otherwise, the losses stay off.

You just know how this will turn out: Debt holders will say their losses almost always are due to something other than credit losses, such as liquidity risk, because it’s impossible to prove their judgments wrong. So the dents to net income will be minimal. That’s exactly what the FASB is trying to accomplish.

Investor Protection

There is something investors can do to protect themselves: Ignore net income and start focusing on the real bottom line, a term called comprehensive income, which is found on a company’s statement of shareholder equity. General Electric Co., for example, reported $17.4 billion of net income for 2008 -- and a comprehensive loss of $12.8 billion.

For years, the FASB has used comprehensive income as a dumping ground for losses that it has decided are too politically radioactive to be included on the income statement. These include changes in the values of corporate pension plans, foreign currencies, certain derivative instruments, and securities classified as available for sale. That’s why investors should stop giving credence to net income.

They have done this already with Tier 1 capital, the government’s main solvency measure for banks, which ignores lots of losses and treats some types of debt as if they were assets. Nowadays, bank investors are obsessed with a no-frills capital benchmark called tangible common equity. This leaves out intangible assets, such as goodwill from past acquisitions, and preferred stock, which acts like debt and must be repaid before common stockholders can claim any share of a company’s assets.

What’s good for the balance sheet is also good for the income statement. Enough with the fluff. Net is dead.

The FASB might be, too, if it keeps this up.

(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)

[dlry]

We're all being gamed...think of the abusive practices inherent in this instrument...do they want us back in the market or out of it? I guess if your part of the select few who knows the direction 30 minutes before the bell this is a fun game...and btw where did all that last minute money come from?


Will Leveraged ETFs Put Cracks in Market Close?
· By JASON ZWEIG
At 3 p.m., do you get queasy just thinking about the toll that the final hour of trading might take on your portfolio?
New research suggests that on days when the indexes make big moves, leveraged exchange-traded funds could trigger a trading cascade, turning the market close into a buying or selling frenzy.
To be fair, there has been no meltdown -- yet. But as the financial crisis has intensified since last fall, the final hour of the trading day has felt rougher than ever.
Leveraged ETFs offer double or even triple the daily return of a market index. Some of them, called "inverse" ETFs, move opposite to the market -- for example, going up twice as much as an index goes down. Each day, they all adjust their exposure by rebalancing, or "releveraging," their positions.
Heath Hinegardner $3.4 billion of new money poured into ETFs that use leverage to magnify the returns on U.S. stocks.
These funds are the hottest thing on Wall Street. In March alone,
Further amplifying the ETFs' actions: Every day, trading desks at big banks and brokerage firms blast out customized spreadsheets to favored clients. These tools, linked to live data feeds, predict whether the leveraged ETFs will be buying or selling as 4 p.m. approaches. That enables hedge funds and other big investors to trade ahead of the ETFs.
The excessive trading set off by releveraging is perfectly legal -- but upsetting to many people. "The market doesn't seem like a fair, level playing field," says Andrew Brooks, head of U.S. equity trading at T. Rowe Price in Baltimore.
Now a respected analyst -- Ananth Madhavan, head of trading research at Barclays PLC's Barclays Global Investors -- has released a report arguing that the potential ripple effects of releveraging have been underestimated.
Leveraged ETFs usually generate a multiple of the market's daily return by using something called a "total-return swap." Imagine a fund with $100 million in net assets and 200% leverage, meaning that it seeks to deliver twice the market's daily return. That requires the fund to maintain $100 million in swap exposure.
In a long swap, a counterparty like a bank or brokerage firm agrees to pay the fund $2 for every $1 rise in the closing value of a market index that day. On the other hand, if the market falls, the fund must pay the counterparty 2-for-1.
Now let's say the fund's net assets grow by $10 million during the day, to $110 million. The fund must raise its swap exposure from $200 million to $220 million to honor its 2-for-1 investment objective. That is $20 million in extra buy orders, all coming into the market after 3:30 p.m., typically in the final 10 minutes.
An inverse fund also must buy on a day when the market is up; since the value of its hedge has gone down, the fund must increase its exposure to keep its leverage ratio constant. Thus, all these ETFs buy in lockstep in the last few minutes of an up day for their index -- and sell in a swarm at the end of a down day.
Mr. Madhavan estimates that if a market index moves 15% in a day, leveraged ETFs could constitute 75% of all volume at the close of trading. Remember, the Dow fell 23% on Oct. 19, 1987. A major move could send volatility through the roof, and prices through the floor, in a day's final minutes.
Narrower markets may already be feeling an impact. William Bernstein of Efficient Frontier Advisors says that between 2002 and 2007, there were only two days on which U.S. real-estate investment trusts went up or down by an average of more than 5%. Since the beginning of 2008 there have been 83 such days. That period includes the collapse of the real-estate market, of course, but also the rise of leveraged real-estate ETFs, which command $1 billion in assets. Trading in the largest of these funds averages about 8% of the total dollar volume in daily REIT turnover.
"I don't want to sound like a Cassandra," Mr. Madhavan says of the ETF releveraging, "but this could create a lot of problems. Could it lead to a systemic risk? We may not have seen the biggest effects yet."
Many people don't share Mr. Madhavan's concerns. (His employer is affiliated with iShares, an ETF outfit that competes against leveraged funds for market share.) Across the U.S. stock market, estimates portfolio strategist Phil Mackintosh of Credit Suisse, leveraged ETFs typically account for "less than 4% of total trading in the last hour."
Andy O'Rourke, head of marketing at Direxion Funds, says his firm has researched the potential impact of daily rebalancing by its leveraged ETFs, "and it hasn't really been significant enough to have a big impact." ProShare Advisors, the largest provider of leveraged ETFs, is studying Mr. Madhavan's report and hasn't had time to fully critique it. But Michael Sapir, ProShares' chairman, says: "Our initial view finds significant holes and unsubstantiated conclusions in the report."
The market's shrewdest players use the releveraging by ETFs to their own advantage. The rest of us are left reaching for the Rolaids. Here's hoping the side effects never get worse than that.
Write to Jason Zweig at intelligentinvestor@wsj.com
Corrections & Amplifications
A leveraged exchange-traded fund with $100 million in assets can achieve 200% exposure to an index with as little as $100 million in total-return swaps. A previous version of this column incorrectly said that this level of exposure would require $200 million in swaps.

[dlry]

World Gold Council: Gold conspiracy would dwarf Madoff

Speaking of those central banks, Grubb remarked to Mackinlay: "Why would they want the gold price to go down if 40-50 per cent of their reserves are in gold? There's no gain for central banks to force down gold."

But of course the first principle of Western central bank operations is not to preserve the value of their gold reserves, which they've long been dishoarding, but to preserve the value of their currencies and government bonds, which are worth infinitely more to them and are the reciprocals of the price of gold, a competitive currency and competitive financial asset. That is, gold is suppressed to keep currencies and government bonds up and interest rates down.

http://tinyurl.com/dhtwuq

[dlry]

Everything quoted here is attributable to another website but I thought was interesting enough to share for food for thought.

Some people are wondering why?

Will it take the Communist financial market press to expose the price manipulation scheme and anti-trust activity in the United States while our free press remains silent?
You can’t make this stuff up.

I turned off my screens after the first plunge, realizing there was no hope for gold and silver today, not wanting to be aggravated all day. What could be the reasons for this noticeable change, Gold Cartel swift dump programs, put into effect without the slightest bit of subtlety?
*They are desperate. Desperate people take desperate measures.
*They want gold under pressure for:
The Chrysler bankruptcy announcement today
The stress test results on Monday or Wednesday
The end of the month
To mollify the effects of the rising long dated US Treasury note and bond yields

The U.S. government added 2 new members to its subsidized debt club. According to Obama's announcement today regarding the Chrysler bankruptcy Chrysler Financial will be rolled into GMAC Financial Services, with the amalgamated stinkpot of loans to be subsidized by the U.S. taxpayer. No wonder car companies have been offering to pick up your payments if you lose your job. Hell, it'll be OUR money they're kicking in. Subsidizing GMAC is yet another bottomless pit of taxpayer money. Like Fannie and Freddie the government has now created "Gmackie". No doubt the derivatives of these (former) auto titans will disappear into the same black hole Fannie and Freddie jumped down. Translation: look for another jump in JPM derivatives on their next quarterly report. The usual gang of counterparties to GMAC's derivatives will once more skate on their real losses.
It is incomprehensible how the U.S. can be the ultimate guarantor for both home mortgages and auto loans. This takes moral hazard up several more notches. This is a significant development in my opinion, and hugely dollar bearish. It is one thing to bail out the U.S. automakers, going down the slippery slope of guaranteeing their auto and dealer loans is quite another. Patrick Heller might now be curious why gold didn't rise another $100 on the news the government just quasi-guaranteed Chrysler Financial / GMAC's loan portfolios. After all, the implied liability is only another couple trillion, excluding derivatives. If Bob Nardelli presides over many more failures (in addition to Chrysler and Home Depot) he'll be a billionaire at this rate of severance package deals.


CARTEL CAPITULATION WATCH

The DOW opened sharply higher and then gave it all back after Obama went on the tube regarding the Chrysler bankrupcty, closing down 18 to 8168. The DOG rose 3 to 1717.
Managing expectations is the name of the game for Obama’s gang. At his press briefing today, Obama sounded as if Chrysler going bankrupt was a big positive, leading the press to come with these headline bites:
Obama calls it 'new lease on life'
Obama: Process to be quick and efficient
Obama says Chrysler to be stronger after bankruptcy
***
This morning a colleague mentioned that the Obama Administration are Behavior Science devotees in that a main focus of this Administration is to talk the market/economy/events up in order to influence the actions of the general public … utilizing the notion if they do it enough that the public will consume and invest more, not fretting over the true state of affairs. To set the tone, rigging the markets is part of their regimen with The Gold Cartel sitting on top of the psychologically key price of gold, and the PPT crowd, led by Government Sachs, goosing the stock market.
Not that these performances are that different from what the Bush camp did, it’s just more noticeable because times are much direr these days, and the reasons for the price of gold to soar are that much greater.

[dlry]

Interesting comments below the ZH post. I wonder if the government in time will get into the market making business through Goldman? How would you know?

Goldman Sachs Principal Transactions Update: 1 Billion Shares
http://zerohedge.blogspot.com/2009/05/g ... tions.html

[dlry]

I thought Richard Russel's comment said it best. How they are spinning these required capital needs by the banks on cnbc is disgraceful....!

May 6 (May 5 prices) - Gold $903.70 up $3 - Silver $13.40 up 33 cents

Richard Russell:

"This government will stop at nothing even including manipulation … I think all three are now being manipulated."

"A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him." John Maynard Keynes, 1931
GO GATA!

What we are all witnessing regarding the efforts of The Gold Cartel to suppress the price is astounding. What is gradually becoming just as remarkable is the desire of big money to gobble up cheap gold when The Gold Cartel raids the market.
Yesterday when I got to London, gold was surging (and silver soaring) with gold taking out $915. Gold was moving up sharply at a time when it normally is mauled by the bombs … that being the early London trading hours going on into the Comex opening. The speed of the move up rivaled what happened on Monday.
It seemed to me The Gold Cartel was caught off guard again. Larry and Timmy must have bawled their hit men out, as they suddenly stopped gold in its tracks and then began to lean on the price through the PM Fix, which came in at $910. Then, it was Plan B and gold was pressured further throughout the Comex session. Silver, however, remained on fire.
Not satisfied with their inability to make an outside day key reversal to the downside, and also break psychological support at $900, The Gold Cartel called in their reserves with Plan C in the lightly traded Access Market and Japan closed for the week. I see gold was bombed down to $888 for no reason other than it was the wishes of the cretins. HOWEVER, the buyers were waiting in the wings for them. As I write this, gold is $902 bid.
What a battle we have developing here and what a time for GATA to be in London to carry on the battle for our side!
Perhaps the most important focus point this English morning was what the legendary Richard Russell said last night in his commentary from La Jolla, California:

"This government will stop at nothing even including manipulation. What the Fed does not want is a swooning stock market, surging gold, or sinking bonds. I think all three are now being manipulated. Pressure from various sources continues on gold, and we know the Fed is buying bonds. When an item is manipulated, the aftermath always ends unpleasantly. I expect "unpleasantness" ahead. In my opinion, big money and veteran investors have joined China in worrying about the dollar. It's a major reason why they trust this market."