The silver miners are receiving the brunt of the manipulation but it is an ever increasing systemic problem. Bill is regarded as one Bay Street's top traders.

Regards - VHF

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Morning Report

Bill Cara

May 16, 2012

I am perplexed and so have given the matter much thought this month. What underlies the present malaise in global equity markets is not, in my view, caused by worries over Greece or even a slowing of the global economy. This time we don’t even have the banksters to blame. The causative factor of crashing prices in some sectors today is an entirely new one.

Leading to the 2008 crash, the sell-side was clearly at fault and, as we now understand, the sell-side, Humungous Bank & Broker (HB&B), had over a period of some 15 or 20 years set up legislators and regulators as their enablers.

This time it is the buy-side, the Humungous Asset Managers (HAM) that each direct in excess of a trillion dollars of Other People’s Money.

It is time for Congress and legislators everywhere to understand that fewer than ten HAM executive teams control almost all market prices in the world, and, because of the structure, rules and regulations of the market system, when HAM says BUY all prices rise, and when they say SELL all prices fall.

Today they are saying SELL. Politics in Greece or a slowdown in China are merely pretexts.

This problem is so bad that when these few people screamed “Sell Lehman Brothers!” – as they did in 2008 – the global financial system almost collapsed. Today they can destroy Greece and Portugal whenever they wish or even Spain and Italy. A junior trader on the HAM desk could destroy a McEwen Mining simply because he or she would like to have friends and family buy a stake at ridiculously low prices.

People need to understand that these gargantuan asset managers buy in order to control, not to establish a price that reflects economic value to the majority of us. At times they sell, which they do in order to develop a market condition that becomes a time to buy. Think about that. It’s happening today.

In other words, these people at HAM use the market as their tool. ‘Risk on’ and ‘risk off’ is a means to an end, and, as a result, the market is no longer a price discovery mechanism for the greater good. An oil company or a defense contractor, for instance, becomes no different than a famous piece of art, a collectable, in the hands of a very few people.

This is not a 99% vs 1% problem. Because HAM is so small in numbers, and managed by so few among us, this is a hundred million to one problem. The rest of us, whether we be Presidents or Prime Ministers, lawyers or accountants, financial advisors or hedge fund managers, factory owners-managers or factory workers, farmers, oilers or miners, or soccer moms, the situation is out of our control. If next Tuesday, HAM wants Apple (AAPL ~$563) to be selling at maybe $550 or maybe $575, that is what the price will be.

What is happening is a very bad thing. If left unchecked, the problem will lead to the end of capital markets and the destruction of major economies, including the US economy. I am not over-stating the case.

Here are the names of the enemy:

• BlackRock
• State Street Global Advisors
• Allianz/Pimco
• Fidelity
• Vanguard
• JP Morgan Chase
• BNY Mellon
• Prudential Financial

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That is not to point the finger at the fine people who work in the trenches in these companies; it is their executive offices that are the problem.

It is time for legislators to stop the asset hunter-gatherer process that is unfolding. Immediately.