dimelab: allowed Topic in The Credit Debacle Catalog at Feed-Adept

allowed Topic in The Credit Debacle Catalog

zero hedge Sun 2010-01-31 23:09 EST

Scandal: Albert Edwards Alleges Central Banks Were Complicit In Robbing The Middle Classes

Did the US and UK central banks collude with the politicians to `steal' their nations' income growth from the middle classes and hand it to the very rich?... the US and UK central banks were actively complicit in an aggressive re-distributive policy benefiting the very rich. Indeed, it has been amazing how little political backlash there has been against the stagnation of ordinary people?s earnings in the US and UK. Did central banks, in creating housing bubbles, help distract middle class attention from this re-distributive policy by allowing them to keep consuming via equity extraction? The emergence of extreme inequality might never otherwise have been tolerated by the electorate...

Albert Edwards Alleges Central Banks; complicit; middle class; Rob; scandal; Zero Hedge.

zero hedge Sun 2010-01-03 23:46 EST

This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied

...A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option to "suspend redemptions to allow for the orderly liquidation of fund assets."...In essence, the entire US capital market is now a hedge fund, where even presumably the safest investment tranche can be locked out from within your control when the ubiquitous "extraordinary circumstances" arise.

denied; government; legal right; Money-market accounts; redeemed; Zero Hedge.

naked capitalism Mon 2009-12-28 16:40 EST

Will Continued Stealth Bailout of Housing Produce Unwanted Side Effects?

The Treasury Department...considerably increased its Freddie and Fannie safety net, by removing all limits on the amounts on offer (an increase from a ceiling of $400 billion) and simultaneously allowing the two GSEs to increase their balance sheets near term. Previously, they had been required to shrink their portfolios by 10% per annum; now it is their ceiling which will be lowered by 10% a year, and that ceiling is much higher than their current exposures ($900 billion versus roughly $760 billion for Freddie and $770 billion for Fannie as of the end of November)...So one has to conclude that the agencies might well (ahem, are likely to) throw their firepower behind the ``prop up the mortgage market'' program, particularly with Obama's ratings plunging and mid-term elections coming this year. But if this comes to pass, what might the collateral damage be?

Continued Stealth Bailout; Housing Produce Unwanted Side Effects; naked capitalism.

zero hedge Thu 2009-12-17 10:37 EST

Is Selling US CDS A Risk-Free Way To Short The Dollar?

There has been much conjecture on whether using CDS is an effective way to hedge against US default risk. Many theoreticians, especially those of the post-March lows variety, have sprung up and are speculating that buying Credit Default Swaps on the US is ultimately a futile and pointless endeavor. The main argument: a US default would likely mean that interconnected dealers won't recognize contracts on a US default event, as they themselves will be out of business. Even if they continued to exist, like cockroaches in a postapocalyptic world, the collateral which backs derivatives is mostly US Treasurys: the same obligations that would end up being massively impaired...the US CDS seller syndicate could easily be one of the key sources of dollar short funding: with sellers pocketing euros and immediately going to market and selling dollars...a dollar-short unwind would probably have repercussions in the US CDS market. Not only would the dollar spike, but paradoxically US credit risk would probably widen dramatically...any unwind at the heart of the prevalent risk trade now: the massive dollar carry, would impact virtually every investment product, quite possibly in self-referential feedback loops. If correct, it merely shows how much more the Fed has at stake in keeping the dollar depressed than merely getting mom and pop to buy Amazon at $130/share. Losing control of the carry trade will be the systemic equivalent of allowing Lehman's book to be marked-to-market: a potentially complete collapse in systemic confidence, which would have such far ranging implications as the $300 trillion interest rate derivative market. And when sudden volatility reaches this product universe which is 6 times bigger than world GDP, the events from last year will seem like a dress rehearsal.

CDS; Dollar; Risk-Free Way; sell; short; Zero Hedge.

naked capitalism Tue 2009-12-08 18:26 EST

Guest Post: Woman Who Invented Credit Default Swaps [Blythe Masters] is One of the Key Architects of Carbon Derivatives, Which Would Be at the Very CENTER of Cap and Trade

...If the government allows massive carbon derivatives trading with as little oversight as over the CDS market, taxpayers will end up spending many trillions bailing out the giant banks and propping up the economy when the carbon market bubble bursts...(1) the giant banks will make a killing on carbon trading, (2) while the leading scientist crusading against global warming says it won't work, and (3) there is a very high probability of massive fraud and insider trading in the carbon trading markets.

Blythe Masters; capped; carbon derivatives; center; Guest Post; invented credit default swaps; key architect; naked capitalism; trading; Woman.

zero hedge Thu 2009-11-19 10:38 EST

An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility

the Federal Reserve established and refined a program that permitted banks to pledge virtually any security as collateral, including not just investment grade bonds and higher ranked securities, but also stocks of companies, the riskiest investment possible, and a guaranteed way for taxpayer capital to evaporate in the context of a disintegrating financial system, all with the purpose of bailing out Wall Street's major institutions. On two occasions last year: on March 16, 2008, and subsequently on September 14, 2008, the Federal Reserve first established what is known as the Primary Dealer Credit Facility (PDCF), and subsequently amended it, so that the Fed, in becoming the lender of last resort, would allow any collateral, up to and including stocks, to be funded by the Federal Reserve's credit facility, in order to prevent the $4.5 trillion repo financing system from imploding. By doing so, the Federal Reserve effectively gave a Carte Blanche to primary dealers to purchase any and all equities they so desired, with such purchases immediately being funded by the US taxpayer, via the PDCF. In essence, this was equivalent to the Fed purchasing equities by itself through a Primary Dealer agent.

equity markets; Fed's interventions; overview; Primary Dealers Credit Facility; Zero Hedge.

Ambrose EvansPritchard Finance and business comments Thu 2009-11-19 10:33 EST

It is Japan we should be worrying about not America

Ambrose Evans-Pritchard

Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's secondlargest economy has been able to borrow cheaply from a captive bond market feeding its addiction to Keynesian deficit spending - and allowing it to push public debt beyond the point of no return.

Ambrose EvansPritchard Finance; America; Business Comment; Japan; Worries.

Harper's Magazine Thu 2009-11-19 10:20 EST

An Object Lesson in Governmental Failure: Derivatives reform

KEN SILVERSTEIN

If you want to understand why Congress seems completely incapable of checking the power of Wall Street, look back to a hearing on the Hill last October 7, and the subsequent events surrounding it...he House Financial Services Committee hosted a panel on reform of the market for derivatives,...the committee, headed by Congressman Barney Frank (D-Wall Street), invited a panel of eight guests who were distinguished by their uniformly pro-industry positions...In response to complaints from Americans for Financial Reform, which represents hundreds of consumer groups and labor unions, the committee issued an invitation--the night before the hearing was held -- to Rob Johnson of the Roosevelt Institute. For the committee, the last minute inclusion of Johnson -- a former managing director at Bankers Trust Company and former economist at the Senate Banking Committee and Senate Budget Committee -- apparently constituted sufficient balance...About five days later Johnson submitted his full testimony to the committee, to be included on its website along with the statements of the other eight panelists...the committee's general counsel would not allow posting of the testimony because Johnson had not submitted it during the hearing. (Of course, since Johnson had been invited at the last minute it was impossible for him to fulfill this pointless requirement.)

Derivatives reform; Governmental Failure; Harper's Magazine; object lessons.

Jesse's Café Américain Tue 2009-11-03 19:36 EST

Obama's Economic Policy Has Doomed the US to Stagnation - Or Worse

Jesse

This was the very moment of Obama's failure, when he allowed Summers, Geithner and Bernanke to establish the principle of "Too Big To Fail" and set up a financial oligarchy at the expense of taxpayers. We would have expected this out of the Treasury under Hank Paulson, but to see this kind of policy error favoring Wall Street over the US taxpayers from a government elected on the promise of reform is inexcusable, a disgrace. ...(Bloomberg) Nobel Prize-winning economist Joseph Stiglitz said the world's biggest economy is suffering because of the U.S. government's failure to nationalize banks during the financial crisis.

doomed; Jesse's Café Américain; Obama s economic policy; stagnated; worse.

Mish's Global Economic Trend Analysis Fri 2009-10-23 08:47 EDT

Where The Hell Is The Outrage?

Michael Shedlock

The number of articles and opinions on Goldman Sachs earnings, bonuses, and influence pedaling over the past several days is quite stunning. Many have pointed out the problems; few have expressed outrage over what is happening in general, not just at Goldman Sachs... I am outraged and not just about Goldman Sachs, but about a process that allows, even encourages political pandering, by time and time again rewarding leveraged riverboat gamblers and failed institutions and at taxpayer expense...

hell; Mish's Global Economic Trend Analysis; Outrage.

Jesse's Café Américain Thu 2009-10-15 16:38 EDT

Thu 2009-10-01 10:14 EDT

Mortgage Electronic Registration Systems (MERS): A System Designed to Create the Mortgage Back Security Bubble. >> Dr. Housing Bubble Blog

Mortgage Electronic Registration Systems (MERS)...claims to be a privately-held company and their function is keeping track of a confidential electronic registry of mortgages and the modifications to servicing rights and ownership of the loans. However, if you dig deeper into MERS and their shareholders you will find the same crony bankers...shareholders include AIG, Fannie Mae, Freddie Mac, WaMu, CitiMortgage, Countrywide, GMAC, Guaranty Bank, and Merrill Lynch...MERS allowed for the mortgage backed security business to explode since it allowed mortgages to be shipped off to Wall Street to be minced into tiny tranches and sold off by the big investment banks...MERS is a front for the mortgage and banking industry. It is claimed as a system of convenience but in reality, it is nothing more than the grease to lube up the housing bubble...what is significant about the Kansas Supreme Court finding has to do with the actual legal ownership of the note and deed especially when it comes to foreclosure...MERS is a straw man...provides ``an opaque veil that clouds not only the actual real ownership of the promissory note, but title to the property.''

created; Dr. Housing Bubble Blog; MER; mortgage; mortgage Electronic Registration System; security bubble; Systems designed.

zero hedge Tue 2009-09-22 16:22 EDT

Top Goldman Lobbyist Barred From Communicating With House's Financial Services Committee

In a rare example of testicular fortitude, Barney Frank has "banished" Goldman's Michael Pease from communicating with the U.S. House of Representatives Financial Services Committee. According to Reuters, the Goldmanite, and former committee staffer, has been "asked" not to interfere with the Congressional panel for a period of 12 months. According to Barney Frank aide Steven Adamske: "Mr. Paese left our offices in September 2008, and was not allowed to communicate with any committee members or staff for a period of one year due to normal ethics restrictions that apply to all House and Senate employees. Out of an abundance of caution due to the nature of financial regulation reform, the chairman has extended Mr. Paese's recusal for another year." Pease "was the committee's deputy staff director before he quit to work for the Securities Industry and Financial Markets Association as a lobbyist. Goldman hired him in April.

communications; House's Financial Services Committee; Top Goldman Lobbyist Barred; Zero Hedge.

Taibblog Sun 2009-09-20 09:51 EDT

Will Obama listen to ex-Fed chief Paul Volcker's warnings?

Matt Taibbi

So former Fed chief Paul Volcker yesterday was spouting off about how nuts it is that certain ``too big to fail'' commercial banks that receive mountains of public money are allowed to run around acting like high-risk hedge funds...This would be meaningful if the Economic Recovery Board that Volcker runs for Obama were actually a chief policymaking center for the president. But the reality is that the Volcker group is a kind of show-pony the Obama administration kept on as a way to give consolation jobs to the more progressive economic advisers who led them through the campaign season, people like University of Chicago professor Austan Goolsbee...Obama did a bit of a bait-and-switch, hiring progressives to run his campaign and jettisoning them once he got into office. I hear about this phenomenon from different corners of the policymaking universe, from health care to defense and intelligence spending. But my sense is that the switch was most violent in the realm of economic policy...

ex-Fed chief Paul Volcker's warnings; Obama listen; Taibblog.