Walk This Way: The Anniversary Of A Dream

We are coming up on an anniversary of sorts.

It's been 50 years since Martin Luther King delivered his famous 'dream' speech, and 84 years since the Reverend Dr. was born. August 28th is really an anniversary of history itself. Much like the holiday we enjoy every January when we party on the civil rights' leader's birthday, the day he delivered the 'dream' to the American public will be celebrated with all due pomp and circumstance on the 28th.

In fact, throughout this month our nation's capitol will play host to a variety of civil rights groups honoring the occasion.

AFP/Getty Images, 1963

During the hot and sticky August of 1963, scores of Americans were drawn to protest in the nation's capitol. The beautifully interracial crowds marched on Washington D.C. demanding equal justice for all citizens under the law.

They congregated in front of the Lincoln Memorial which is located on the opposite end of the mall from the Capitol Building where President Barack Obama would be sworn into office a smidgen more than 45 years later. Martin Luther King predicted a time when freedom, harmony, and equality for all would become a reality in the U.S., and predicted his own death, leaving behind his “I Have a Dream” speech to speak to generations to come.

(Time, 2013)

In the eleven-year period between 1957 and 1968, King traveled over six million miles and spoke over twenty-five hundred times, appearing wherever there was injustice to protest and action to discuss.

He wrote five books and dozens of articles. He led a massive protest in Birmingham, Alabama, that caught the attention of the entire world. He formed the coalition of conscience, penned the "Letter from a Birmingham Jail", and planned drives in Alabama to register African American voters. He conferred with President John F. Kennedy and campaigned for President Lyndon B. Johnson, still managing to get arrested upwards of twenty times and assaulted at least four times. King was awarded five honorary degrees including The Nobel Peace Prize; was named Man of the Year by Time magazine in 1963; and became not only the symbolic leader of American blacks but a world figure, as well.

1963 Alabama Bombing

18 days after the March On Washington, four young girls were killed when a bomb exploded in the basement of the Sixteenth Street Baptist Church. Five years after giving the "I Have A Dream" speech, Revered Dr. Martin Luther King, Jr. was assassinated. Dead at the age of 39.

This Reverend, this leader of the hopeful, spoke directly to our souls. He articulated his vision so clearly, and with such moving prose, that it was through his eyes so many could see for the first time. The fact that The Struggle still continues today, that thriving racists still exist, is baffling to those of us who believe in equality.

In 1964 Congress passed the Civil Rights Act outlawing all forms of discrimination against racial, ethnic, national and religious minorities, and outlawing discrimination against women in the US. The fight isn't over. There always seems to be new and ingenious ways to strip Americans of their civil rights, and the ever vigilant have their work cut out for them decade after decade, Scotus decision after Scotus decision. Citizens United, Voting Rights Act. Work others died for being tossed around like Godzilla's playthings.

MLK's dream, once shared with the hundreds of thousands who listened to him live on the steps of the Lincoln Memorial, was recorded and replayed to generations. Today, the gift of his vision lives in the hearts of the American public.

There was talk of the MLK monument being "out of service" on the anniversary, as decisions had been made to change the inscription, but luckily those changes were completed, phew, just in time. No, they didn't give the statue a facelift, and they didn't decide to uncross those famously crossed arms of the civil rights leader. No, the text that was removed from Reverend Dr. King's monument was — “I was a drum major for justice, peace and righteousness."

(Time, 1963)

That snippet was taken from Dr. King’s "Drum Major Instinct" speech, given two months before the "Dream" speech, in Atlanta. Critics said the engraved quote made MLK sound arrogant, so the chisels came out.

In the full quote, Dr. King was alluding to his possible eulogy: “Yes, if you want to say that I was a drum major, say that I was a drum major for justice. Say that I was a drum major for peace. I was a drum major for righteousness. And all of the other shallow things will not matter.”

His words literally still vibrate today at a level apparently higher than any elephant can hear. Where those words were carved out of stone on the monument, there is now only sandblasted rock with no inscription at all.

Hoodie Truth, 2013

A week of events have been planned throughout the nation's capitol, which should be perfectly temperate this time around. If you decide to join this year's march from the Lincoln Memorial to the King Memorial on Aug. 24th, you'll find the weather around 80 degrees that day with only 10% humidity. It's an easy and delightful stroll from Lincoln to the MLK monument where there will also be an interfaith service on Aug. 28th.

Policy Geeks have put together a more complete guide to events, exhibits and attractions in the nation's capitol. Just check out our next blog post, Part II. Guide will be updated as more information becomes available. Feel free to add any items you know of, fun events to invite friends to, or meet ups here and there, below in the comments.

We recommend joining one of the many bus rides planning to descend on our nation's Capitol this week. If you need to know how to get around the city on Saturday, the Washington Post offers some advice and details. 

Rising from the floor of The Mall in the heart of Washington D.C., placed halfway between the Capitol and the Lincoln Memorial, MLK's monument tells the story of a nation torn by public bouts of racism, sexism, and blind hate.  Lessons as important today as they were then. So maybe come and visit. And be part of what stands between justice and injustice.

Come stand where he stood.

Come march for what he marched for.

The Policy Geek

Following Suit

(Venere, 2013)

Goldman Sachs, A Class Act.
Recently, The Policy Geek has been following a story on some key banking players. Not to ruin the ending for you, but spoiler alert....

USA Today, yesterday (article snippet):

"HONG KONG (AP) — AUGUST 5, 2013 — A class-action lawsuit has been filed in the U.S. against the London Metal Exchange (LME) and Goldman Sachs, alleging that their "anti-competitive and monopolistic behavior" in aluminum storage has unfairly influenced the price of the commodity.

Wall Street banks and the metal exchange are facing increased scrutiny of their involvement in businesses that store and transport commodities, such as oil and aluminum.

In July, a Senate committee held a hearing into whether banks should be allowed to control power plants, warehouses and oil refineries. The owner of the LME, Hong Kong Exchanges and Clearing, said in a statement Sunday (8/4/13) that it will fight the lawsuit, which it believes is without merit."

A class-action lawsuit. Who woulda thunk it possible to even attempt to take on the big banks? This step comes fast on the heels of our investigation into LME and Goldman Sachs. USA Today continues:

"In the past few days, Goldman announced it is taking measures to make more aluminum immediately available to customers at its Detroit metal storage facilities, which is run by Metro International and operates under LME regulations.

The bank pointed out in making its announcement that "the overall delivered price of aluminum is down nearly 40% since its 2006 peak levels."

Here's the problem with this lobbied press release. As we know, one great way to make money is to make bets predicting the future value of a product. In other words, betting market prices will go up, or down. We'll refer to these bets as Options, although depending on the side of the table you decide to sit on, you could be trading either "Put Options" or "Call Options".

A bank can afford to sell a commodity at a loss, because they make money on the peak sale, the low pick up, and all the storage related billing services in the middle. With the big bucks coming in from owning warehouses, guaranteed, rain or shine, and the associated hedge bets easily available to lay, and then fix, who cares if the price goes down?

The price goes down when a bank wants to buy a stock. The price goes up when the bank actually releases inventory or stock. There is only one conclusion to make, albeit hard to swallow. Our banks control the prices of the world's major commodities, especially a strong commodity that doesn't lose it's value over time when stored, like aluminum, and oil.

One by one, fraudulent practices, more easily hidden before the age of internet research, are being held up to massive public scrutiny. Though there may be few arrests, and small fines to be paid for now, at least the ponzi schemes are being taken down.

Deutsche accused of bankrolling illegal land grabs in Asia.

Everybody Wants To Rule The World.
Earlier this year, electricity prices were called out as unusually high in California and areas of the Midwest. On July 30th, The New York Times, and others, reported the results of an in depth investigation which revealed rampant big bank intervention, only this time it was JP Morgan accused of imposing extra costs on the system. Adding no value, this big bank interjected themselves as middlemen between power producers and the utility companies that actually sell power to consumers and businesses. JPMorgan struck a $410 million settlement. Well now, that seems fair, doesn't it?

You break it, you buy it.
Were JP Morgan's actions really all that bad? We must be talking about fractions of a cent per customer, right? In open court, the bank was accused of devising “manipulative schemes” to transform “money-losing power plants into powerful profit centers.

"You People"
When you are JP Morgan, you don't have to concern yourself with others' profits. It doesn't matter if you are dealing with an investor owned power producer, or a consumer owned utility. their success or failure is not your concern. This is not your grandfather's savings and loan.

Greed is all well and good, but Avarice, now that's a bedfellow. In the selective perception of a bank's radar, profit isn't profit unless it's huge, like Jabba The Hut huge. They take that avarice, dress it up as the holy grail, and make every move accordingly. As long as a bank makes bank on every transaction within a commodity's supply chain, they profit, and they're happy.

Utility companies, which directly serve all of humanity, could change hands a million times, they wouldn't care. Power suppliers whose products are necessary to humanity's basic survival, are not really their concern, and easily replaceable long term. And besides, we are just talking a percentage of a cent per transaction. Nothing to see here.

Asia Today, 2013

Settling down.
The settlement agreement reached on the 30th listed a dozen different strategies used by JP Morgan to fix prices. The settlement also details that the bank had believed their scheme would generate between $1.5 billion and $2 billion in profits by 2018. Now they'll just have to make some other plans.

Banking on America
Some commodities are not that easily recognized. Housing, for instance. Everyone needs housing. The American Dream is to own a house. Plain and simple. Unfortunately, the long fingers of the big banks can't reach far enough into your wallets with interest rates alone, no, since 2000, banking institutions started to double down on bundled mortgage derivatives.

The Obama Administration is starting to hold some of them to task. Among other major deals, after recent criminal banking fraud charges were filled against Bank of America, the finance giant agreed to an $8.5 billion settlement, a $1.6 billion settlement, and another settlement worth more than $10 billion. Heavy fines, but no hefty time in jail, for anyone. Last night, the Chicago Tribune reports that the U.S. government filed two civil lawsuits against Bank of America with accusations of bank investor fraud.

The financial outlays and fines hitting the headlines are a great start. At least someone is doing something, but it's a drop in the bucket compared to the profiteering our banks have been proliferating in like pirates on the high seas.

There oughta be a law against banks who invest in a commodity while controlling other parts of the supply chain. Tearing down our carefully constructed protections is not the exclusive property of the Right Wing Republicans in Congress, but it would seem the main heartbeat of the GOP meme itself. A glimpse of the big picture makes it clear, new and improved legislation is required to regain overall control of America's commodity distribution chain.

So when you see something, say something. It could just save the world.

The Policy Geek

UPDATE FROM REUTERS: August 8, 2013 ~ "Lawsuits alleging aluminum price fixing by big banks will shine an uncomfortable light on the role played by the London Metal Exchange, suggesting that the murky world of metal trading is likely to attract more attention from the authorities. Even if it successfully defends itself from class action lawsuits by aluminum manufacturers, the LME may have to accept greater external oversight into a trade that until now flourished with little external supervision.

The LME, which was sold last year by its member bank owners to the operator of the Hong Kong Stock Exchange, is a defendant in lawsuits which accuse Goldman Sachs (GS.N), JP Morgan (JPM.N) and Glencore-Xstrata of rigging the aluminum market. The lawsuits, brought by small aluminum manufacturers in the United States, accuse the banks and traders of hoarding metal in warehouses, driving up the prices of industrial products from soft-drink cans to aeroplanes.

Plaintiffs argue that the LME abetted the scam by writing rules that made it possible and ignoring calls to change. Although the LME insists its rules were made independently, at the time the actions took place Goldman and JP Morgan were its two biggest shareholders, with JP Morgan owning 10.8 percent and Goldman owning 9.5 percent."

UPDATE FROM REUTERS: August 26, 2013 ~ "A judge has dismissed London Metal Exchange Ltd as a defendant from U.S. antitrust litigation accusing banks and commodity companies of conspiring to drive up aluminum prices by restricting supply, hurting manufacturers and purchasers. In a decision made public on Tuesday, U.S. District Judge Katherine Forrest in Manhattan concluded that the LME was an "organ" of the UK government, and therefore immune from the lawsuit under the Foreign Sovereign Immunities Act.

Forrest acknowledged that her decision may at first glance seem "somewhat surprising and counterintuitive," noting that the LME is a privately-held, for-profit company subject to extensive regulation. But she said the relevant case law "tips decidedly" toward a grant of immunity, noting that the LME is required by law to perform "the decidedly public function of market regulation."

Established in 1877, the LME was bought in December 2012 by Hong Kong Exchanges and Clearing Ltd. The LME said more than 80 percent of non-ferrous metals futures business is transacted on its platforms, totaling $14.6 trillion in 2013.

The decision does not affect other defendants in the case, which include the large mining company Glencore Plc, Goldman Sachs Group Inc, JPMorgan Chase & Co, and various commodity trading, metals mining and metals warehousing companies."

UPDATE May 1, 2015 ~ "Citing jurisdictional issues, a New York federal judge on Thursday dismissed the London Metal Exchange, JPMorgan Chase & Co., Goldman Sachs Group Inc., Glencore International AG and others from multidistrict litigation accusing them of manipulating aluminum prices. U.S. District Judge Katherine B. Forrest denied a motion by direct-purchaser plaintiffs Agfa Corp., Agfa Graphics NV and Mag Instrument Inc. to reconsider the LME's dismissal, saying the LME was permanently dismissed due to sovereign immunity. Glencore PLC and other foreign entities were permanently dismissed due to lack of personal jurisdiction, according to the order. In all, the judge said, the LME, LME Holdings Ltd., Hong Kong Exchanges & Clearing Ltd., JPMorgan, Henry Bath & Son Ltd., Goldman, Glencore International, Glencore UK Ltd., Glencore PLC and Pacorini Metals AG were no longer parties in any of the MDL actions.

Plaintiffs Agfa, Mag Instrument and Eastman Kodak Co. are alleging similar antitrust violations — that between 2010 and 2013, several banks, affiliated warehousing companies, the LME and other financial institutions agreed to delay delivery of aluminum to customers producing products like drink cans. The plaintiffs said that the delay inflated rents on metal storage and that the trading companies profited from futures trading based on the resulting market conditions while the plaintiffs paid inflated prices for aluminum.

Judge Forrest nixed the complaints, finding that the plaintiffs lacked antitrust standing and hadn't sufficiently pled the existence of a conspiracy. She also dismissed the LME, finding that despite being privately owned, it was protected as part of the U.K. government."

So, we suppose, that is that. Will the practices stay the same? Or will some sort of  reform take place? Time will tell.

Heavy Meddle

The Ring at the LME

(bullionstreet.com)

Who runs the London Metal Exchange? Soooooo glad you asked.

There are currently 12 Ring members (and a few known associates), with dealing privileges at the LME. i.e.:

• UBS
• JP Morgan
• Morgan Stanley
• Koch Metals (of course The Kochs are in this story)
• Goldman Sachs
• Credit Suisse (Europe)
• MAREX Financial
• Deutsche Bank
• Citigroup

What's Past Is Prologue, My Friend.

(Cargo Ships, 1859)

Back in the day, after buying aluminum at The London Metal Exchange, it would take months and months to acquire it. Long voyages incurred extra costs that could really add up. And who knew what the market would bear when your ship came in. Prices would fluctuate, and that cargo might be bought and sold many times before it actually arrived.

Hedge Hogs
LME - with the six primary metals traded on the Exchange, provided investors access to futures (hedge bets) and traded options (hedge bets) during those windows in travel time. The trades are done without the physical delivery, storage and transaction costs associated with the underlying commodity contracts. At the LME, the member banks just trade pink slips around. Tracking the storage of metal stockpiles through a vast network of approved warehouses, the LME has flourished, though never more so than right now in terms of trading volume.  In addition to whatever effect hoarding has on hedging, a warehouse storing the actual commodity makes bank on their tinny tenants.
.

Who's keeping an eye on American metal prices?
(Franklin Mint, 2006)

"In the days when the system worked efficiently, you could get metal out of the LME warehouse network in 48 hours. In those days, small- to medium-sized consumers regularly used the LME as a source of supply." said Lisa Reisman of Metal Miner, a leading global metals market rag, in response to Goldman Sachs' press release from last week.

Fashionably Late
This week, Metal Miner reported that in 2013 the current wait time for metal delivery is, wait for it, 19 months. 19 Months!! Why? The report was talking about Detroit. The city that went that to sleep. It's not like the trucks are getting stuck in traffic!

When translated, the July 23rd Goldman Sachs' press release reads: 'These are warehouse issues. These things just take time. We are only talking about 3% of the metal market, really. Most of these warehouses don't own what they store, you silly journalists, you. Seriously, there is nothing to see here folks. The warehouses don't HAVE to move more than 1,500 tonnes a day per warehouse company, per city, anyway.'

"The cynic may suggest, what is to stop the warehouse owners, such as Goldman, from buying and selling their own inventory while in storage, thereby artificially decreasing the amount of metal in the system, artificially increasing the sale price, and artificially adding to the wait time?" suggested Metal Miner. When pressed, Ms. Reisman offered, "We don’t have hard evidence of this, but in a self-regulated market, such practices could proliferate."

Associate Members of The Ring are all big traders as well as finance players. Glencore owns vast quantities of metal, and also owns the warehouse giant Pacorini. JPMorgan works the same way.

Gaining Weight
According to Forbes, "in 2010, metal stockpiles held in depots registered with the LME swelled to 6 times that of 2007's reported levels – bringing in unprecedented storage revenues from clients who stockpile their metals in warehouse locations. Through its purchase of Metro International, in 2007, Goldman Sachs owns the biggest warehouse in the LME system. By 2010, these Detroit hangouts held a quarter of the aluminium stored in the Metal Exchange’s facilities." That's right 25% of the world's aluminum. Not 3%. And that was back in 2010.

"It's driving up costs for the consumers, and it's not being driven up because there is a true shortage in the market. It's because of an issue of accessing metal ... in Detroit warehouses," said Nick Madden, chief procurement officer for Novelis, the world's biggest maker of rolled aluminum products.

By 2011, Goldman was raking in $378,000 per day in storage costs from those sleepovers in Detroit, which were imposed on customers for months even after they had requested to have their metal removed. In other words, Goldman Sachs was charging (just for storage of the commodities they were also trading) more than $11 million a month, for month after month, to store aluminum they were supposed to deliver upon purchase. They even encouraged clients to buy metals as part of their portfolios, and kindly offered to warehouse those investments as well.

Hoarding Aluminum

The Pause That Refreshes
In 2011, the only one complaining loudly about aluminum shortages was Coca-Cola, and how much sympathy can you really feel for Coke? So no one really listened. This had the effect of driving the cost of aluminum in the US to the highest level in more than a decade.


Of course, that was then. And this is now. And now we know that there are trucks pretending to actually deliver "physical commodities" traveling in circles, in lower Detroit. And every time they pass go, they collect.

With each delay, they collect. With each side bet on futures, they collect. With each transaction fee, they collect.

He Ain't Heavy, He's My Banker.
The banks owning these warehouses make money on mining, distributing, warehousing, hedge betting, distributing, trading, selling, more warehousing, distribution, smelting, and price fixing. It's not just a cent on a can.

It's easier to think of our corporations as responsible marketers and distributors of goods and services to the people. Stewards of the world's consumers, do no harm sort of thing. But then, we should know better. For some reason, when Americans hear all the gory details of this syphoning of cash from the monetary system, we just let the info self destruct. We go on no mission. We make no signs. Our eyes glaze over, and we crack a can of beer, sitting back in our aluminum lawn chairs made in China, BBQing on our aluminum grills on these hot days, and generally enjoying the sounds of summer.

"Walmart has everything we need" you say, "everything's made in China and that's pretty cheap, so what's all the hubub about?" You should be happy to know that The London Metal Exchange was wholly acquired by Hong Kong Exchanges Clearing Limited last December.

Gilt Complex
Then JP Morgan announced they were quitting the physical commmodities business. That happened. The announcement came just three days after a powerful Senate banking committee heard from experts who said that metals warehouses owned by Wall Street and other commodities traders were distorting markets and even driving up the cost of aluminum cans for beer and soda. "Some said allowing them to trade in physical markets was a risk to the financial system." - Reuters. Does this also mean that Morgan Stanley, JP's long lost cousin, is stepping out of The Ring? We'll have to just wait and see.

On the 28th, Forbes recalculated their original 3% theory. Goldman Sachs Actually Holds Close To 25% Of The US Aluminum Supply, Maybe More, they headlined.

Too Big To Fail
In reality, an apples-to-apples comparison would contrast metal stored in US warehouses against US aluminum production in 2012. Last year, Goldman stored 1.5 million tons out of a possible 2.2 million tons, or 68% of total US aluminum primary supply. And that's just one metal, and one bank, storing in one city, they were to big to help.

They know we are waking up. So now it's up to you? Your mission, should you decide to accept it, is to share the information. Share it liberally. Break it down for those Republican friends of yours who think corporate tax rates are too high and it's stifling business growth.

This message will self destruct, only if you let it.

The Policy Geek