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Banks Manipulating Markets & the End of an Era

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ECM Banking Proprietary Trading

I have been warning that there has been a “Club” that has been targeting market after market to make a quick buck. The LIBOR Scandal has caused the tide to turn as well as having to bail out the banks in 2008 that has fundamentally altered the course of everything. Now the Swiss regulators said they are investigating several Swiss financial institutions for possible manipulation of foreign-exchange markets, which is a dramatic expansion of the latest probe into potential rigging of widely used market benchmarks. The Swiss have come out and stated the they are now cooperating with authorities in other countries very closely. They have also stated publicly that “multiple banks around the world are potentially implicated.”  The UNTOUCHABLES have started to lose their standing because they constantly blow themselves up and turn to government to save them whenever they lose money.

Our models on this issue of “The Club” have been spot on. The crisis came in 2008, which was 8.6 x Pi or 27.004  years  from the date that Phibro took-over Salomon Brothers. That is the start date when the aggressive commodity trading culture infiltrated Wall Street. The full cycle for how long that would last should have been 31.4 years and that is when this trend came to an end idealized on February 24th, 2013. From here on out, the banks have pushed the envelope too far. We are starting to see J.P. Morgan charged criminally. When this ECM turns down again after 2015.75, the bankers will find that they are the escape-goats for politicians and will most likely be imprisoned.


The Year 1981 was truly monumental. It was the major peak on the 1981.35 Public Wave of the Economic Confidence Model. On January 20th, 1981, Ronald Reagan was sworn in as the 40th President. Iran freed the 52 hostages taken in 1979 on January 25th. By March 30th, 1981, Reagan was shot by a gunman in an attempted assassination along with his press secretary. On May 14th, 1981 Pope John Paul II was shot in an attempted assassination. On October 6th, 1981, Anwar el-Sadat was assassinated by Islamic extremists during a military parade in Cairo. Then, on December 14th, 1981, Israel annexed the disputed Golan Heights.

In 1981, seeking a larger and more permanent source of capital, Salomon Brothers agreed to its sale to Phibro for $554 million. Phibro was then one of the world’s largest commodities traders. John H. Gutfreund of Salomon Brothers became its chairman of the Salomon Brothers subsidiary and co-chief executive (along with the Philipp Brothers chairman, David Tendler) forming a new holding company, Phibro-Salomon Inc.

On September 28th, 1987, Warren E. Buffett, agreed to pay $700 million for a 12 percent stake in Salomon Inc., the parent company of Salomon Brothers Inc., Wall Street’s largest investment banking-house. That is how Buffett got into trading commodities instigated by Phibro.

This aggressive trading culture has led the world into all sorts of trading scandals and manipulations with numerous fine only prosecutions of the major players. This time, however, the LIBOR Scandal took place in London and the bankers do not control the Europeans as they do the Americans. This aggressive manipulating culture has now run its course and the cycle has changed direction.