Jesse's Café Américain Mon 2010-04-19 15:19 EDT
A developer (Goldman) built houses that looking good, but were firetraps, using plans provided by an architect (Paulson). They were sold as being to code with certain characteristics represented and endorsed by the building inspectors (Ratings Agencies).After the sale, the developer and the architect bought huge amounts of fire insurance on the homes from a friendly insurance agent (AIG London)...
Sat 2010-04-17 14:12 EDT
... New York Times financial reporter Stephen Labaton] just announced he is taking a job with Goldman Sachs--a move that makes you wonder if Labaton watered down his Times coverage in order to get his new gig...Labaton knew Goldman probably wouldn't hire a muckraker who had been aggressively exposing bank transgressions. Then again, maybe Labaton did nothing wrong...
Jesse's Café Américain Mon 2010-04-12 18:11 EDT
This analysis from the Wall Street Journal indicates that most of the big US Banks are engaging in the same kind of repo accounting at the end of the quarter that Lehman Brothers was doing to hide their financial instability until deteriorating credit conditions and liquidity problems made them precipitously collapse, as all ponzi schemes and financial frauds do when the truth becomes known. The basic exercise is to hold big leverage and dodgy debt, but swap it off your books with the Fed at the end of each quarter for a short period of time when you have to report your holdings...
Fed; hide; Jesse's Café Américain; Risk; Wall Street Banks Using Lehman Style Accounting Trickery Enabled.
naked capitalism Mon 2010-04-12 18:08 EDT
I hesitated in posting on this subject, as I thought it might be too ``radical''. But after reading what economists Steve Keen, Michael Hudson and Murray Rothbard said about debt repudiation, I decided to post it. This essay rounds up arguments for debt repudiation, because that side is rarely heard. But feel free to post comments on why debt should not be repudiated -- the issue is still an open question in my mind.
bad things; Debt Repudiation; good thing; Guest Post; naked capitalism.
Jesse's Café Américain Mon 2010-04-12 14:18 EDT
...The crux of the scandal is that the Banks and hedge funds have been selling what they do not have in order to manipulate the price and cheat investors, in this market as they have been shown repeatedly to have done in other markets...the players filed a motion claiming immunity because they were acting in partnership with the Treasury and the Federal Reserve...Thanks to the NY Post [whistleblower commodities trader Andrew Maguire testimony]
gold; Jesse's Café Américain; NY Post; Silver Price Manipulation; Trader Blows Whistle.
Jesse's Café Américain Wed 2010-04-07 19:14 EDT
...almost all retail transactions for physical bullion in the US key off a 'spot price' that is derived from a paper market which is not based in the reality of physical supply, since the futures exchanges explicitly allow for the settlement in cash if physical bullion is not available. In fact, the vast majority of transactions are settled in cash, and are little more than derivatives bets it seems, and often hedges related to other things like another commodity or interest rates...As someone who approaches it as an amateur economist, and has been looking at its dynamics for the past few years, I may be missing something, but this seems less like an efficient market mechanism for price discovery and capital allocation, and more like a carney game.
Case; gold; Jesse's Café Américain; position limit; set; Silver; Spot Prices.
Jesse's Café Américain Wed 2010-04-07 19:06 EDT
The whole notion of bank bailouts is a tremendous injustice when not accompanied by personal bankruptcy and civil and criminal prosecution for those banks managers who created them and are found guilty of fraud. In addition, the owners of the banks, whether through debt or shares, should be wiped out and the bank placed in a proper receivership while its books are sorted out. The US is an accounting mirage. The notion that it will make money from its stake in Citi is a sleight of hand. The enormous subsidies to the banks both in terms of direct payments, indirect payments through entities like AIG, and subsidies such as the erosion of the currency and the deterioration of the real economy, will never be repaid. ...the facts seem to indicate that the US is still pursuing a policy of managed perceptions, accounting deceptions, and old fashioned insider dealing and other forms of corruption that always accompany government, but reach a feverish pitch in times of crisis. It is the establishment's form of looting.
Bailout; banking comes; Ireland; Jesse's Café Américain; managing perception.
Jesse's Café Américain Wed 2010-04-07 19:03 EDT
"The Biggest Fraud in the World" I do not know what to think about this, except to just offer it up to you for your own information. I am disappointed, however, that only the blogs, and almost no one in the mainstream media, have bothered to cover this story and to speak to the principals, and to either debunk them, support them, or even consider what they have to say. This really is like the Harry Markopolos story, trying to get a hearing on the Madoff ponzi scheme, and being repeatedly ignored, intimidated, and discouraged in every way possible by the establishment, and even fearing for his life... I have now listened to this tape five times, carefully. It is a bombshell. This has to be dealt with, one way or the other. Bring it out into the light of day, and let the facts be known. This is either the equivalent of the fictionalized testimony on the order of the Salem Witch trials, or one of the most damning accusations of malfeasance in office against quasi-governmental agencies, and probably US officials, since Teapot Dome...
Andrew Maguire; Jesse's Café Américain; King World Interview; silver markets; Whistleblower.
Jesse's Café Américain Wed 2010-04-07 19:00 EDT
Janet Tavakoli wrote an interesting essay that was just posted over at the Huffington Post called "How to Corner the Gold Market" which can be read in its entirety from her website here...What struck me as odd is that I just wrote a blog piece along similar lines on the same topic today, raising many of the same issues, but that is from the opposite perspective...there is little evidence that anyone is willing to take on the exchanges, even the big players, and try and force a corner or even a squeeze against what they perceive as mispricing, such as Soros and so many other big players did with the British Pound , and most recently other big hedge funds did with mispriced products from the latest bubble in the debt markets, and financial stocks...The piece I wrote today and reference above is about a situation in the precious metals markets which has the potential to become another serious problem for almost the same basic reasons as the debt markets in our most recent financial crisis: excessive leverage concentrated in a few TBTF institutions, lack of transparency, regulatory laxity, and a mispricing of risk...
corner; gold market; Janet Tavakoli; Jesse's Café Américain.
zero hedge Wed 2010-04-07 18:31 EDT
The Fed's response to the financial meltdown was twofold: Interest rates were effectively set at zero, and the monetary base was increased 140%. While it is not known exactly what formula the Fed used to arrive at the 140% increase of the monetary base, the expansion from roughly 800 billion to 2.2 trillion roughly correlates with the asset backed securities since purchased by the Fed...Rather than an attempt to spur bank lending, Bernanke, like Paulson before him, employed QE strictly to offload toxic assets from bank balance sheets in an attempt to make banks and other financial institutions whole, with the effect of preserving historically inflated asset valuations for residential real estate. As a result, massive increases in federal spending have been required to offset the erosion of private sector GDP...
economy; effect; Inflation; Quantitative Easing; Zero Hedge.
zero hedge Wed 2010-04-07 18:26 EDT
Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA's Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty..."The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur."...It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders' willingness to be diluted into perpetuity - when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.
Bullion Bank Gold Vault; Canada's; Latest Gold Fraud Bombshell; practically empty; Zero Hedge.
THE PRAGMATIC CAPITALIST Wed 2010-04-07 18:22 EDT
``Panics do not destroy capital -- they merely reveal the extent to which it has previously been destroyed by its betrayal in hopelessly unproductive works'' -- John Mills ...We should draw a distinct line in the sand between banks and diverse risk taking firms. There are always going to be Enron's in the economy, but why should we allow our entire banking sector to mirror Enron? Taking a 30,000 foot risk management view I say something must be done to ensure these banks can never do this again. Turn banks into true banks. Hedging and exotic business models are fine. Just don't commingle them under the same umbrella as a deposit taking ``bank''. With that, a few ideas come to mind: * Our banking system should be aligned with the goals of the nation to help ``grease'' the wheels of the economic growth engine of the United States. Banks should be more like utilities and less like hedge funds. Otherwise, banking becomes counter-productive and potentially destructive. * Banks should not be allowed to exact onerous fees on the public or enact a business model which is inherently dependent on driving their customers deeper and deeper into debt. This undermines the entire goal of productive economic growth. * ``Banks'' should be true lending institutions. Non-traditional banking operations and products such as CDS, ``off balance sheet'' finance, derivatives as collateral and such would be deemed illegal unless performed only by non banking/lending institutions (such as hedge funds) so as to insulate the public and true lending institutions from the risk taking, ``hedging'', and ``financial innovation'' of firms such as Lehman Brothers.
Mon 2010-04-05 15:16 EDT
Iceland's economic crisis has destroyed wealth equivalent to about seven times its GDP. The damage inflicted on foreign creditors, investors, and depositors amounts to about five times its GDP, while the asset losses thrust upon Icelandic residents account for the rest. These figures do not include the cost of Iceland's increased indebtedness. Iceland's gross public debt, domestic and foreign, is estimated to increase by more than 100% of GDP as a result of the collapse of the banks, or from 29% of GDP at the end of 2007 to 136% by the end of 2010. In 2009, the government spent almost as much on interest payments as on healthcare and social insurance, the single largest public expenditure item. The damage due to Iceland's tarnished reputation is harder to assess...the absence of checks and balances that had led to an unbalanced division of power between the strong executive branch and the much weaker legislative and judicial branches came to haunt the country when unscrupulous politicians put the new banks in the hands of reckless owners who then found themselves in a position to expand their balance sheets as if there were no tomorrow -- and no supervision. Politicians who privatise banks by delivering them on a silver plate to their friends are not very likely to subject the banks to stringent supervision or other such inconveniences...What can be done to reduce the likelihood of a repeat performance -- in Iceland and elsewhere?
zero hedge Mon 2010-04-05 15:14 EDT
When we put up a link to last week's CFTC hearing webcast little did we know that it would end up being the veritable (physical) gold mine (no pun intended) of information about what really transpires in the commodities market. First, we obtained direct evidence from Andrew Maguire (who may or may not have been the target of an attempt at "bodily harm" as reported yesterday) of extensive manipulation in the silver market. Today, Adrian Douglas, director of GATA, adds to the mountain of evidence that the commodities market, and the CFTC, stand behind what is potentially the biggest market manipulation scheme in the history of capital markets (we are assuming for the time being that all allegations of the Fed manipulating the broader equity and credit markets are completely baseless). Using the testimony of a clueless Jeffrey Christian, formerly a staffer at the Commodities Research Group in the Goldman Sachs Investment Research Department and now head and founder of the CPM Group, Douglas confirms that the "LBMA trades over 100 times the amount of gold it actually has to back the trades."
Goldman Commodities Research Analyst Confirms LMBA OTC Gold Market; paper gold; Ponzi; Zero Hedge.
Satyajit Das's Blog - Fear & Loathing in Financial Products Mon 2010-04-05 15:01 EDT
...Recent research indicates that MtM accounting may, in fact, distort the price of assets...The research highlights that MtM accounting is pro-cyclical and creates volatility of asset values through complex positive and negative feedback loops. Under normal market conditions where asset markets are liquid, MtM accounting works benignly. In volatile markets, where behaviour becomes linked by a common factor such as disclosure required by MtM accounting, co-ordinated actions of market participants can easily lead to sharp movements in asset prices. The process distorts market prices and ultimately the firm's financial position and value.
fears; financial products; lively; loath; Make-Believe; marked; prayers; Satyajit Das's Blog.
Mish's Global Economic Trend Analysis Mon 2010-04-05 14:50 EDT
Recent data shows the economic slump in the UK and Eurozone is accelerating to the downside at a rapid pace...The European recovery is on its last legs. The global recovery will soon follow. Prepare for an economic relapse.
10-year low; Bundesbank fears; credit crisis; Mish's Global Economic Trend Analysis; Party s; record pace; UK Business lending Falls; UK Mortgage Lending Drops 32; wave.
