In the aftermath of Goldman Sachs’ public flogging and on the very day that Congress was voting on the “break up the too big to fail banks” amendment and behind the scenes deals to gut the audit of the Federal Reserve, the stock market had its greatest sudden drop in history, plummeting 700 points in ten minutes.

Listening to the “experts” explain it away as a trading error – basically a “typo” – doesn’t wash. If you know anything about compliance, approving trades, and computer systems, blaming it on “fat fingers” or a single computer glitch is a joke.  Max Keiser has it right when he says, “This was a false-flag attack by the financial terrorists on wall-street.”

“May 6th was an unequivocal act of domestic financial terrorism in America. A day that will live in infamy. To scare the lawmakers, themselves large owners of the very banks and stocks that they are supposed to be regulating, a financial Weapon of Mass Destruction was put to their head and they acquiesced.

This is a Manchurian Candidate market where program trading bots start the ball rolling in whatever direction Wall St. wants the market to go – and then hundreds of thousands of day-traders watching Cramer on CNBC jump on the momentum bandwagon and commit the crime for the Wall St. financial terrorists, who then say, ‘It wasn’t us, it was ‘the market!’”

As the inventor of the technology these hackers used (VST tech. US pat. no. 5950176), Max Keiser knows a thing or two about what happened on May 6th and why. David DeGraw agrees:

If you think the massive sudden drop happened because one lowly trader hit one wrong button, if you actually believe that the entire stock market can plunge because of one mistaken key stroke by a low-level trader, you are stunningly naïve. I hate to burst yourbubble, but this was a direct attack.

James Carlini was first to come out and address the tax implication on those who dumped stocks a few days ago. Here is what he wrote on May 7, 2010: Dow drops 1000 points. Cyber warfare a possibility???

Many people had stop-loss orders on their stocks. If they started to slide down like they did, they would get sold off. For example, if you bought a stock at $40 and it has gone up to $50, you would put in a stop-loss order to sell it at $48 to make sure you did not lose much of that profit. If the stock went into a tailspin like many did yesterday, that stock would have been sold off automatically. So now, the person has a $8 per stock gain. They have to pay capital gains tax on that trade, whether they go back and buy the stock back at $48 today or if they leave it in cash.

Funny how this has to have created a windfall for capital gains taxes across millions of shares, especially for a stock like APPLE which someone could have bought for $125 last year and now it is around $240 but dropped for not even a couple of minutes to $225 which probably triggered many automated “sells”.

The trade stands because only trades with a 60% or more swing are being broken (like Accenture which went from $30 to ten cents for a time – those trades will be broken) so that means the APPLE transaction is still complete. That means there is the impact of capital gains of $100 per share. Wow.

Pay up. We need the tax revenues to pay down the big national deficit anyway. What an unexpected byproduct of this so-called “computer glitch”.

It is only reasonable to say the outcome was “unexpected” to one group of people, namely those who did not anticipate this kind of  event. One radio talk show host said, “This was a failure of imagination.” Where have we hard those words before? It was a familiar refrain coming from the Bush Administration in the week following the 9/11 terrorist attack. It took years before people began to question the lies our government told us in 2001, how long will it take for people to see the truth of that happened on May 6th 2010?

The fact is, more than half of daily stock market volume is conducted using high frequency trading strategies. Those who hacked the system did it to send a message to Congress, that action may have had unintended consequences but it seems to have worked in the favor of the conspiracy–by creating a tax revenue boon worth billions in only 15 minutes. Why should we assume the hackers who initiated this attack were unaware of this consequence?

The best analogy for traders? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade because they provide liquidity to the market.

Some are suggesting investment securities which do not promote capital formation and long-term investing need to be eliminated. The Casino capitalism needs to be severely circumscribed, whether its through the use of taxes on trades, or changing the capital gains tax structure, Wall Street must be pushed back to the business of creating capital for business.

A look at capital gains tax

However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won’t come from traders trying to hack the financial system for a few pennies per trade.

In my view, it does little good to talk about banning high frequency trading, that is not going to happen as long as Goldman Sachs has anything to say about it. The big houses have the best hackers in the business and they put together the Casino games managing Billions and Billions of dollars.  Ultimately, these hackers are selling their attacks to the highest bidder, regardless of which side they are on. Like it or not, this has become the new normal.

The bottom line: the United States has been taken over by a financial terrorism network. Let’s face it, we are all hostages of these financial terrorists and their puppet politicians would rather be in on the scam than defend our interests. If these terrorists don’t get their way at all times, they have the power to throw their tremendous weight around and turn millions of lives upside down in a matter of minutes and, as they have shown, they have no hesitation in executing that power, no matter how many millions of lives they destroy.

Is it too late follow Ron Paul’s advice and return to Constitutional money?

The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins. Under current federal law, coins are considered collectibles, and are liable for capital gains taxes. Short-term capital gains rates are at income tax levels, up to 35 percent, while long-term capital gains taxes are assessed at the collectibles rate of 28 percent. Furthermore, these taxes actually tax monetary debasement. As the dollar weakens, the nominal dollar value of gold increases. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases, the federal government considers this an increase in wealth, and taxes accordingly. Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals.

Ron Paul
Before the US House of Representatives, December 9, 2009

People may debate whether May 6th was another false-flag attack or not, but the lesson is unmistakable: the system is out of control. Let’s also not forget these financial terrorist have toxic assets and dirty debt bombs just waiting to be deployed upon the American public once there is any true growth in the economy. Their nuclear arsenal includes hundreds of trillions in secretive derivatives. The Federal Reserve extends one trillion to bails-out the Greek banks this week, what’s next? At what point will the American tax payer say enough is enough?


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