EXCLUSIVE: Cramer admits the markets are manipulated

It’s an oldie but a goodie.  Cramer says it right on camera.  He used to do it.  It’s illegal?  So whaaaat.. SEC doesn’t understand it.  Just remember this next time you turn on CNBC.

The markets are manipulated.  All markets are manipulated.  What’s the ‘take away’ ?  You have several choices:

  • A Get a job at one of the manipulators, break off and start your own manipulation firm
  • B Find out how they are doing it and do it yourself (if you have a really rich Uncle, otherwise this option won’t work for you)
  • C Find a crack in the market manipulation engine and exploit it
  • D Day Trading (but this is really, really, really tough and even if you can manage it, your years are limited.)

Ways to not win, or barely beat inflation:

  • X Buy and hold
  • Y Stock picking
  • Z Buy and hope

Both methods, statistically, will lead to ruin.  You would have been right buying and holding the Amazons (AMZN) and the Googles (GOOG) but how about the Worldcoms, the Enrons, the Kodaks.. The Refcos.. (we did HODL to Refco and we got a check for .30 cents on the dollar via bankruptcy court).  Stock Picking and Market Timing (when will the market bottom or top) is also dangerous because even if you’re a well funded Genius, you can’t be right all the time.

This blast from the past is inspired by an first screening of the original “Fight Club” with the family all together, the inspiration of the theme of this site.  We tried to cover this topic on a high level in our work Splitting Pennies – but although this video is still on youtube, the meme remains well hidden from the masses.  Even Zero Hedge, if you ask most people, think that we’re some political site.  Is it left?  Is it libertarian?  No man, it’s just free.  They don’t know what free is, being overwhelmed with thousands of ‘media missiles’ every day.  Democrats, Republicans, and all in between are brainwashed by their own propaganda, their own Dogmas.

This interview is just fascinating.. in many ways, most notably how Cramer easily switches from the ‘hedgie predator’ to ‘party line’ as if he’s 2 different people.  Cramer is a smart guy, one wonders what a smart guy is doing as a TV personality, but then again, a TV icon recently became president.

A Summary from Wikipedia:

In March 2007, a December 2006 interview from TheStreet, Inc’s “Wall Street Confidential” webcast stirred controversy after it appeared on YouTube.com.[31] In the video, Cramer described activities used by hedge fund managers to manipulate stock prices—some of debatable legality and others illegal. He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund. Cramer said, “A lot of times when I was short at my hedge fund…When I was positioned short—meaning I needed it down—I would create a level of activity beforehand that could drive the futures.” He also encouraged hedge funds to engage in this type of activity because it is “a very quick way to make money.”[32]

Cramer stated that everything he did was legal, but that illegal activity is common in the hedge fund industry as well. He also stated that some hedge fund managers spread false rumors to drive a stock down: “What’s important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it’s important to create a new truth, to develop a fiction.”[32] Cramer described a variety of tactics that hedge fund managers use to affect a stock’s price. Cramer said that one strategy to keep a stock price down is to spread false rumors to reporters he described as “the Pisanis of the world.” The comment was a reference to CNBC correspondent Bob Pisani, who reports from the trading floor of the New York Stock Exchange. “You have to use these guys,” said Cramer. He also discussed giving information to “the bozo reporter from The Wall Street Journal” to get an article published.[33][34] Cramer said this practice, although illegal, is easy to do “because the SEC doesn’t understand it.”[35] During the interview Cramer referred to himself as a “banking-class hero.”[36]

Think about that next time you pickup your mouse and want to go long.  And one other thought – if ‘Big Money’ or as Cramer calls it “Smart Money” is able to manipulate the stock market, then how much does it take to manipulate Bitcoin, or any other Crypto?  We all know about the not so secret Goldman Holdem Crypto desk, we can only imagine how deep their paws are into Crypto pies, as makers and takers.   Markets are manipulated.  Accept it, learn it, in case you forgot – repeat it.  Markets are Manipulated.

So consider this next time you’re watching a YouTube video by a 20 year old with multi colored hair talking about Bitcoin going to 1 Million.  Remember that more than 60% of the Bitcoin ‘float’ is controlled by 1,000 people who are all ‘White Libertarian Bros’ who are all friends.

Thanks DB for the reminder about the ‘Washing Machine’ so interesting!  The game evolves but it doesn’t change.  Crypto isn’t any different, it’s just window dressing, but without the regulation.

To learn more about Market Manipulation checkout Splitting Pennies and then Graduate to Splitting Bits.

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We've been closely watching the Crypto Currency Market if you can call it that, with all the fake data, fraud, and related problems.  One thing stands out - it's not so different than FX, commodities, futures, or stocks.  Market dyn...

Bitcoin and other cryptocurrencies flash-crashed Saturday night, one day after the US Commodity Future Trading Commission (CFTC) sent subpoenas four cryptocurrency exchanges in an ongoing probe into bitcoin manipulation that began in late July - following the launch of bitcoin futures on the CME, according to the Wall Street Journal
CME’s bitcoin futures derive their final value from prices at four bitcoin exchangesBitstamp, Coinbase, itBit and KrakenManipulative trading in those markets could skew the price of bitcoin futures that the government directly regulates.
In delay reaction, Bitcoin fell as much as $433 or 5.6% in Saturday night trading, with some noting that the flash crash happened shortly after a 90th ranked crypto exchange, Coinrail, had suffered a "cyber intrusion", and was likely the more relevant catalyst for the crypto price drop.
While major Cryptocurrencies were down from 4.5 - 5.5%, Bitcoin Cash dropped over 8.4%. 
The CTFC subpoenas were issued after several of the exchanges refused to voluntarily share trading data with the CME after being asked last December. Of note, the CFTC regulates the CTC. 
According to the WSJ, the CME, which launched bitcoin futures in December, asked the four exchanges to share reams of trading data after its first contract settled in January, people familiar with the matter said. But several of the exchanges declined to comply, arguing the request was intrusive. The exchanges ultimately provided some data, but only after CME limited its request to a few hours of activity, instead of a full day, and restricted to a few market participants, the people added.
What is curious, is that if there was indeed manipulation since the launch of bitcoin futures, it was to the downside, as the price of cryptos peaked around the time the crypto futures were launched, and are down well over 50% in the 6 months since.
Coinbase in particular has been under the watch government regulators. On February 23, Coinbase sent an official notice to around 13,000 customers to notify them they were legally required to turn over their information to the IRS
The IRS had initially asked Coinbase in July 2017 to hand over even more detailed information on every one of its then over 500,000 users in an attempt catch those cheating on their taxes. However, another court order in Nov. 2017 reduced this number to around 14,000 “high-transacting” users, which the platform now reports as 13,000, in what Coinbase calls a “partial, but still significant, victory for Coinbase and its customers.”
Coinbase told the around 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013-2015 to the IRS within 21 days. Coinbase’s letter to these customers encourages them “to seek legal advice from an attorney promptly” if they have any questions. Their website also states that concerns may also be addressed on Coinbase’s Taxes FAQ. The ongoing legal battle between Coinbase and the US government dates back to November, 2016, when the IRS filed a “John Doe summons” in the United States District Court for the Northern District of California.
On Feb. 13, personal finance service Credit Karma released data showing that only 0.04 percent of their customers had reported cryptocurrencies on their federal tax returns. 
And in April, former New York Attorney General, Eric "we could rarely have sex without him beating me" Schneiderman, launched a probe of 13 major cryptocurrency exchanges according to the Wall Street Journal - claiming that investors dealing in the fast-growing markets often don’t have the basic facts needed to protect themselves.
Former AG Schneiderman’s office said the program, called Virtual Markets Integrity Initiative,  is part of its responsibility to protect consumers and ensure the integrity of financial markets, and its goal is to ensure that investors can have a better understanding of the risks and protections afforded them on these sites.
CFTC Commissioner: Crypto is a "modern miracle"
While the CFTC, IRS and New York Attorney General's office are all cracking down on cryptocurrency exchanges, it seems to all be part of the government's embrace of virtual currencies.  Last week CFTC Commissioner Rostin Benham called cryptocurrencies a "modern miracleat the Blockchain For Impact Summit held at the UN in New York last week. 
But virtual currencies may – will – become part of the economic practices of any country, anywhere.  Let me repeat that:  these currencies are not going away and they will proliferate to every economy and every part of the planet.  Some places, small economies, may become dependent on virtual assets for survival.  And, these currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations.
We are witnessing a technological revolution.  Perhaps we are witnessing a modern miracle. -Rostin Benham
Rostin hinted at the upcoming legal action against the exchanges during his speech:
Under the CEA and Commission regulations and related guidance, exchanges have the responsibility to ensure that their Bitcoin futures products and their cash-settlement process are not readily susceptible to manipulation and the entity has sufficient capital to protect itself.  The CFTC has the authority to ensure compliance. In addition, the CFTC has legal authority over virtual currency derivatives in support of anti-fraud and manipulation including enforcement authority in the underlying markets.

Meanwhile, the official Bitcoin website removed references to Coinbase, Blockchain.com and Bitpay, according to Crypto News - only one of which, Coinbase, was subpoenaed. 
http://Bitcoin.org  just removed/censored the 2 largest US Bitcoin companies (@BitPay Payment processing and @coinbase Bitcoin Exchange). It’s a good move: Bitcoin Core is obviously no longer Bitcoin, and should ideally be removed from both @BitPay and @coinbase too.

The CFTC officially recognized bitcoin as a commodity in September of 2015 when it went after Coinflip for operating a platform for trading bitcoin options without the proper authorization. Since the agency effectively asserted its dominance over the bitcoin market with that decision, this is the first time it has given its blessing to an bitcoin options trading platform. Expect a burst of institutional trading activity to follow - especially since they approved institutional options trading in July
This post sponsored by Total Cryptos @ www.totalcryptos.com  

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