Reibach, Rebbach

Profit.

After international news showed architect’s drawings of the thoughtless shopping center scheduled to replace one of Istanbul’s last green parks, people outside Turkey started wondering how much excess power the country’s developers might be exercising over the country’s democratic processes. And if developers could pull such strings, who else could?

Now a recent kerfuffle has exposed that the state might be one of the developers.

Last week Istanbul police made dawn arrests to bring in for questioning “scores” of people who included three sons of Erdoğan ministers, an Erdoğan-party mayor, three “lions of construction,” “the general manager of Turkey’s largest housing developer, the partly state-owned Emlak Konut GYO” and the boss of a government-owned bank; one of the construction tycoons “recently made headlines with controversial mega-projects and works for the notoriously opaque state housing agency (Toki),” according to the Guardian. At the time of the arrests, the accusations in the air were wild and wonderful: hoarding millions in shoeboxes, bribery, building illegally, illegally converting nature preserves into development land, money laundering, “dubious gold deals with Iran,” reported Süddeutsche.de.

Less than a day later, the heads of five Istanbul police departments involved in the arrests, which Süddeutsche.de described as an “anti-corruption fishing expedition,” had lost their jobs. The decapitated police departments included Financial Crimes, Organized Crime and Smuggling units, and the unsonned cabinet ministers were Interior, Economics and Environment & City Planning, according to the Guardian.

Süddeutsche.de said Gezi Park protesters had always claimed that large construction projects in Istanbul were corrupt and used to make “the big Reibach.” If you had connections to Mr. Erdoğan’s conservative-religious AKP (“Party for Justice and Development”).

The arrests and police firings may have been an outward symptom of a fight for influence between Mr. Erdoğan’s associates and the associates of a Turkish cleric named Fethullah Gülen, “who directs an international religious community from his U.S. exile,” warned Süddeutsche.de. The two religious groups used to “dominate” Mr. Erdoğan’s ruling conservative-religious AK party. Mr. Gülen could help persuade voters, while Mr. Erdoğan could protect Mr. Gülen’s business interests, wrote Spiegel.de, which included media outlets, a bank, schools and training centers that have helped millions of high school students pass college entrance exams (“repetitories” in German, dershane in Turkish). In any case, the increased international attention on Turkish news and better information about Turkish politics and business is welcome.

The strange variety in the accusations against the arrestees might make more sense were they to indicate pieces of networks once used for circumventing the old embargoes against Iran:

“The flight into conspiracy theories doesn’t change the fact that it still must be clarified whether the manager of the state-owned Halkbank helped an Iranian businessman with money laundering, with the sons of the Interior and Economy Ministers allegedly assisting in various ways. Washington [D.C.] people had been taking negative notice for some time of the fact that Turkey was using detour routes to pay for its gas and oil deliveries from Iran ever since sanctions had excluded Teheran from the interbank system. Again and again, couriers with suitcases full of gold were spotted in the Istanbul airport. That’s why it’s remarkable that Ankara people are denying they knew anything about these questionable activities, long ago.” –Süddeutsche.de article

“Suitcases full of gold” must be a metaphor in the Turkish press.

Update on 22 Dec 2013: Mr. Erdoğan has now fired 70 top police and justice officials. He might be not only firing them but having some arrested as well.

FAZ.net concluded its update with an assessment of Mr. Erdoğan’s current situation:

“[Mr.] Erdoğan, who has held this office since March 2003, has taken a hit. Presumably he would still win any election that took place now. But the once-charismatic prime minister has turned into a table-thumping/blustering choleric. For him, democracy means having elections; liberal values such as protecting minorities are not part of his idea of democracy. More and more people are objecting to the fact that [Mr.] Erdoğan is acting as the nation’s morals police, who wants to tell people what to eat and how many children to have. He’s lost from view the fact that the AKP, which has been ruling without a coalition partner since 2002, owes its rise among other things to the image of being a ‘clean party.’ The kemalist parties that ruled Turkey until 2002 were voted out of office for, among other things, corrupt business practices that drove Turkey to the edge of bankruptcy in 2001. In recent years, corruption around [Mr.] Erdoğan has begun spreading like a cancer again. The Gülen movement is ‘clean’ though, says [Mr.] Arinc. The Erdoğan vs. Gülen war will continue.”

Update on 24 Dec 2013: Spiegel.de wrote that Mr. Erdoğan has threatened to break the hands of troublemakers and that more journalists were imprisoned in Turkey than in any other country.

Update on 07 Jan 2013: Last night Mr. Erdoğan fired hundreds of police, 350 in Ankara alone, according to the Dogan press agency and CNN Turk, said Süddeutsche.de. Those relieved of their duties included police officers and 80 higher-ranked officials in the divisions of Financial Crimes, Organized Crime and the anti-smuggling authority.

Update on 08 Jan 2013: Mr. Erdoğan removed from their posts Turkey’s deputy police chief and the police chiefs of 15 provinces, including the capital city of Ankara. On Tuesday night his party submitted draft legislation to give the government more power in naming judges and prosecutors. The E.U. commission is concerned, the Financial Times said, “that government moves to remove, reassign and fire police officers and investigators ‘could undermine the current investigations and capacity of the judiciary and the police to investigate matters in an independent manner'” in Turkey.

(RYE bochh,   rebb ochh.)

Goldpreis, Silberpreis

Price of gold, price of silver.

In March 2013 the U.S.A.’s Commodity Futures Trading Commission was looking into, but not formally investigating, possible gold and silver price manipulations in London, the world’s largest gold market. The F.A.Z. mentioned they were especially interested in the “too-intransparent” way the spot price for a troy ounce of gold is set in London twice a day by five banks: Barclays, Deutsche Bank, HSBC Holdings, PLC, Bank of Nova Scotia and Société Générale S.A. The silver price in London is set once per day, at noon, by Bank of Nova Scotia, Deutsche Bank and HSBC. A March 2013 article in Rupert Murdoch’s Wall Street Journal mentioned that the market prices for these metals were important also for the estimated ~$198 million in derivative contracts held by commercial banks in the U.S.A. in September 2012, according to the Office of the Comptroller of the Currency (O.C.C.).

The C.F.T.C. started investigating whether the price of silver had been gamed in 2008 after the silver price fell sharply. No results were ever announced from that investigation, nor was it ever officially closed.

Update on 25 Sep 2013: The C.F.T.C. officially closed its five-year investigation into gaming of silver market prices “without bringing any enforcement actions” reported Bloomberg.com.

Update on 27 Nov 2013: Germany’s BaFin financial regulator announced they would be investigating possible manipulation of gold and silver prices, which Handelsblatt.com said would be called das Goldfixing and das Silberfixing in German. BaFin said that they could not comment on the ongoing investigation but that they were interested in benchmark manipulation in Europe, including benchmarks for the so-called noble metals, currencies and interest rates. Gold and silver prices had been being set by benchmarks controlled by only a handfull of European banks, the Handelsblatt said Wall Street Journal Deutschland said, and alleged that British financial authorities were looking into gold and silver price gaming as well.

Update on 09 May 2014: A wave of U.S. lawsuits is said to be rolling toward the five banks that set the gold price twice each day in London.
The Frankfurter Allgemeine reported on the findings of one analyst, who will be testifying for the plaintiffs, from examining publicly available gold price data from 2010 to 2013. The banks’ twice-daily phone conferences to set the price could take two minutes or two hours, but averaged 15 minutes. During that time, there were bigger fluctuations in the gold price than during the rest of the day when the phone conferences weren’t taking place. The price moved up and down but mostly downward. After the teleconference, the price settled back to where it was before the meeting. During the phone conferences, the banks had access to information their customers did not: the volume of gold being traded, and the prices at which they were trading. That information wasn’t supposed to be shared, but. The U.S. plaintiffs say, look at L.I.B.O.R.

Deutsche Bank is now withdrawing from the five banks, leaving four banks: Barclays, HSBC, Bank of Nova Scotia and Société Générale.

Update on 16 Aug 2014: The price of silver will now be set electronically by auction, in a service offered by the Chicago Mercantile Exchange and Thomson Reuters.

(GOALED prize,   ZILLLL beh prize)

Spotmarkt

Spot market, where financial instruments or commodities are sold for immediate delivery, unlike the futures market where they are sold for delivery at a later date. Wikipedia said a spot market can be an organized market, an exchange or over-the-counter (O.T.C.).

Regarding the spot market price of aluminum: Goldman Sachs was accused of bottlenecking aluminum at Goldman’s Metro International aluminum warehouses outside Detroit, increasing customers’ delivery wait times since purchasing M.I. in 2010 from six weeks to sixteen months by first lowering prices to attract a stockpile (“50,000 tons in 2008” to “~1.5 million currently”) and then, actually, trucking a minimum daily regulatory-defined shipment amount of 3000 tons back and forth among the 27 warehouses. There were also accusations of understaffing, reduced shifts and prioritizing putting aluminum into storage over taking it out. The shuttle-shuffled delays raised a premium added to the price of all aluminum, driving up the spot market price “according to an arcane formula” even for metals bought directly from mines or refineries to bypass these warehouses. While delaying delivery the warehouses also continued charging rent on the stored metal. Perfectly legal according to current international regulations, apparently set by the London Metal Exchange.

The London Metal Exchange might need more disentanglement from the entities it is supposed to regulate. According to the NYTimes.com article, it still receives 1% of the rents collected by the ~700 warehouses it regulates around the world. Until 2012 it was owned by its member regulees, including Goldman Sachs, JP Morgan Chase, Barclays and Citigroup. Many of its metals warehousing regulations were written by a board populated by executives from banks, trading companies and storage companies. In July 2012 the L.M.E. was sold to Hong Kong Exchanges and Clearing, part-owned by the Hong Kong government, for ~$2 billion. A NYTimes.com description of the 2012 sale said it “will allow the Asian company to control the world’s largest futures trading exchange for metals like aluminum, copper and zinc, as emerging market demand for commodities remains strong.” In 2012 Hong Kong Exchanges and Clearing was supposedly hoping to get an exemption from Chinese laws preventing foreign companies from owning these sorts of metals warehouses in China.

The U.S.’s Federal Reserve Board could, said NYTimes.com, quit extending exemptions that allow banks like Goldman Sachs to invest in nonfinancial enterprises. Though the Fed’s stated conditions in allowing banks to diversify into commodities investment were “only if there was no risk to the banking system” and if the deals “could ‘reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices,'” yet many people would say its deregulation achieves the opposite effects, that big “diversified” banks’ risk management still appears to endanger U.S. and world economies and now banks’ having bought up important infrastructure might be presenting them with irresistable temptations such as artificial bottlenecking or even information advantages not all traders always refrain from using.

Update on 25 Jul 2013: The U.S. Senate’s banking committee has criticized that the Federal Reserve is not communicating well with them. However, wrote the F.A.Z., the U.S. Congress could pass its own banking reregulation rules without waiting for the Federal Reserve.

It’s unclear whether shadow trades are involved here, but it’s also unclear why everyone hasn’t gone broke if this is how they’re doing business:

“Industry analysts and company insiders say that the vast majority of the aluminum being moved around Metro’s warehouses is owned not by manufacturers or wholesalers, but by banks, hedge funds and traders. They buy caches of aluminum in financing deals. Once those deals end and their metal makes it through the queue, the owners can choose to renew them, a process known as rewarranting.”

If Goldman is indeed paying aluminum owners, fellow speculators, to rewarrant their metal and leave it in the warehouses piling up rent owed to Goldman, that might indicate some creative profits or at least useful losses are being made.

Aluminum is economically important enough that Chancellor Angela Merkel’s government has been giving aluminum refineries, notoriously high-volume electricity consumers, various electricity rebates that must be paid for by individual consumers or “ratepayers” in their home electricity bills because, Germany’s government said, the preservation of the aluminium supply was that significant for their economy as a whole.

(SHPOTT mocked.)

Salzgemahlte Metallfarben

“Salt-ground metal paints,” a technique used by sixteenth-century Mughal artists, who learned their craft from Persian painters, to create gold, silver and copper paints by first pounding the metal flat between layers of leather and then grinding the foil with coarse salt in a mortar. The salt was removed by rinsing with water, leaving behind metal powder.

(ZOLTS geh MOLT eh   met OLL fah ben.)

Goldesel

“Gold donkey,” the German equivalent of a cash cow.

(GOLD eh zel.)

Kupferschmied

“Coppersmith” is a straightforward term in German, but surprisingly to me these craftsmen were also called brownsmiths in English because of the colors of the metals they worked.

According to London’s 1891 census, blacksmiths worked iron, redsmiths gold, whitesmiths tin, greensmiths lead, and brownsmiths copper or brass.

(COOP fer shmeed.)

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