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 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 18:26 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.
Fri 2010-04-02 19:53 EDT
Haiti popped into the news again, and I decided it was time to tell the whole military history of the place. It's got to be the most amazing, bloodsoaked, heroic, messed-up story in the Western Hemisphere: slave armies defeating Napoleon's troops, huge castles built in the middle of the jungle, endless three-cornered war between whites, blacks and mulattos...Haiti's history isn't just a lot of killing, either. A lot of Haitian leaders were brilliant guys who weren't afraid of anybody -- not Napoleon, not Jesus, not nobody. These guys were self-made black Roman Emperors. They came up the hard way, out of slavery in the cane fields, and beat the European armies that tried to take the place back. All comers--French, British, Spanish -- the Haitians took them all on and put the fear into them.
naked capitalism Thu 2010-04-01 19:57 EDT
Edward Chancellor, author of the seminal book on financial speculation and manias ``Devil Take The Hindmost,'' is now turning his eyes to China. He sees a number of red flags which point to excess in China...The trouble is that China today exhibits many of the characteristics of great speculative manias. The aim of this paper is to describe the common features of some of the great historical bubbles and outline China's current vulnerability...Is China in a bubble blow-off top like Japan post-Plaza accord? I say yes. I believe anyone who thinks this will not end badly is in for a rude awakening.
Financial bubble; handing; know China; naked capitalism; reasons; Top.
naked capitalism Mon 2010-03-29 13:48 EDT
Conventional wisdom holds that the Chinese are due (as in overdue) for a revaluation of their currency, the renminbi...We question whether a revaluation is the right answer for them, and more important, whether the Chinese themselves see a revaluation as a plus. The government has engineered an enormous increase in money and credit in the past year. In fact, it seems to be as great as 5 years' growth in credit in the previous Chinese bubble. The increase in money and credit is so great and so abrupt that you tend to get a high inflation quite quickly even if there are under utilised resources. Add to this the fact that China simultaneously is providing massive fiscal stimulus...Inflation can take off and thereby begin to ERODE the competitiveness of Chinese exports. Nouriel Roubini pointed out this issue in 2007: if China didn't revalue, inflation would do the trick regardless. A continued high rate of inflation relative to its trade partners would push up the price of goods in home currency terms, which in turn translates into higher export prices. This might be the real reason why China is so reticent to revalue its currency. The Americans might go crazy if the Chinese devalued, but if the inflation is high enough, they might have to do it, as it will severely erode their terms of trade and cause their tradeables sector to collapse.
China Devalue; naked capitalism; renminbi; Think; unthinkable.
naked capitalism Fri 2010-03-19 15:02 EDT
...The Valukas report shows both regulators were monitoring Lehman on a day-to-day basis shortly after Bear's failure. They recognized that it has a massive hole in its balance sheet, yet took an inertial course of action. They pressured a clearly in denial Fuld to raise capital (and Andrew Ross Sorkin's accounts of those efforts make it clear they were likely to fail) and did not take steps towards any other remedy until the firm was on the brink of collapse (the effort to force a private sector bailout as part of a good bank/bad bank resolution)...Merrill warned both the SEC and the Fed in March 2008 that Lehman was engaging in balance sheet window dressing of a serious enough nature for it to put pressure on Merrill (as in it was making Merrill look worse relative to the obviously impaired Lehman)...
Fed Alerted; Lehman Balance Sheet Games; March 2008; Merrill; naked capitalism; SEC.
The Golden Truth Fri 2010-03-19 12:26 EDT
I've been getting a lot of inquiry as to when we can expect Banana Ben to announce the extension of the Fed using printed money and Taxpayer guarantees to continue bailing out Big Banks and the Treasury...QE will not end and the Fed will do whatever it takes to continue printing money at an accelerating rate, but in a way that will be insidiously devious...
Buy Treasuries/Bad Bank Assets; Fed announced; Golden Truth; money printing; QE.
Fri 2010-03-12 08:45 EST
...while US workers are now working more hours and have become dramatically more productive and profitable, our pay is actually declining and all the dramatic increases in wealth are going straight into the pockets of the Economic Elite...the average US citizen is forced to give up approximately 30% of our income in taxes. This tax system is now strategically designed to flow straight into the hands of the Economic Elite. A huge percentage of our tax dollars ultimately end up in their pockets. The past decade proves that -- whether it's the Republicans or the Democrats running the government -- our tax money is not going into our community, it is going into the pockets of the billionaires who have bought off both parties...most every serious economist knows that due to so much theft and debt created in the tax system, the only way to fix things, other than stopping the theft and seizing the trillions that have been stolen, will be for the government to cut important social funding and drastically raise our taxes...Trillions more in our spending on food and fuel has been stolen due to fraudulent stock transactions and overcharging...we have the most expensive health care system in the world and we are forced to pay twice as much as other countries, and the overall care we get in return ranks 37th in the world...The American worker is screwed over every step of the way, and it all starts with the explosion in the cost of a college education. This is one of the Economic Elite's most devastating weapons...The American dream has turned into a nightmare. The economic system is a sophisticated prison cell; the indentured servant is now an indebted wage slave; whips and chains have evolved into debts...
AlterNet; Captured America's Wealth; Go; richest 1; s; take.
Tue 2010-03-09 18:13 EST
A few weeks before he was assassinated, Gandhi the Mahatma had a conversation with his grandson Arun. He handed Arun a talisman upon which were engraved "Seven Blunders," out of which, said Gandhi, grows the violence that plagues the world. The blunders were: Wealth without work. Pleasure without conscience. Knowledge without character. Commerce without morality. Science without humanity. Worship without sacrifice. Politics without principles. Gandhi called these disbalances "passive violence," which fuels the active violence of crime, rebellion, and war. He said, "We could work till doomsday to achieve peace and would get nowhere as long as we ignore passive violence in our world." To his grandfather's list of seven blunders Arun later added an eighth: Rights without responsibilities. Gandhi gave the list to Arun in 1947. Almost 50 years later the blunders have been institutionalized, built into our corporations, our governments, our very culture. Not only are we no longer embarrassed by them; we actively practice them. In some of them we even take pride...
Tue 2010-03-09 17:33 EST
Yesterday, The Gartman Letter contained a comment from a Canadian "friend" who stated that according to his sources: ...an oil producer in [the Middle East] is converting about 200,000 BPD of oil sales into gold bullion - this offtake would equal about 6% of annual gold production...the quiet flight from dollars is accelerating ...Europeans have become extremely fearful of a global systemic collapse and many wealthy people there are buying as much gold/silver as they can and taking direct possession in order to avoid depository fraud...
big oil producers; Golden Truth; Middle East Hoovering Gold.
China Financial Markets Thu 2010-03-04 08:47 EST
...A few days ago I read a good article (``Stuck on Neutral'') about Japan [from] the Economist...about Japan's post-1989 rebalancing, ...discusses why, in spite of every attempt, Japan has not been able supposedly to rebalance the economy and achieve any real growth during the two lost decades after 1990. Private consumption never took off to drive economic growth...After many years of excess investment driving growth, Japan's rebalancing process, which occurred after corporate, bank and government debt levels prevented the investment party from continuing, locked the country into many years of slow growth because it had to grind through years of debt-fueled overinvestment...it doesn't matter what individual policies we take to boost consumption if these polices don't in the aggregate represent a real transfer of income to the household sector, as they did not in Japan...Japan's experience suggests one of the risks China faces...Chinese household consumption will undoubtedly rise as a share of Chinese GDP over the next decade or two, but the process nonetheless can be disappointing for growth. It depends on lots of other moving parts, most importantly perhaps the change in investment and the speed with which income is transferred to households. And the change in investment might depend on debt capacity constraints and the extent of earlier overinvestment.
China Financial Markets; Japan's rebalancing; neutral; stuck; teach.
Fri 2010-02-26 16:37 EST
...The nation's six largest banks -- all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry -- set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007..."What is the state of our moral being when Lloyd Blankfein taking a $9 million bonus is viewed as this great act of contrition, when every penny of it was a direct transfer from the taxpayer?" asks Eliot Spitzer...A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble? The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients...a brief history of the best 18 months of grifting this country has ever seen...
Fri 2010-02-26 16:26 EST
Over the last three decades, the US financial system has tripled in size, as measured by total credit relative to GDP (see Figure 1). Each time the system runs into problems, the Federal Reserve quickly lowers interest rates to revive it. These crises appear to be getting worse and worse -- and their impact is increasingly global. Not only are interest rates near zero around the world, but many countries are on fiscal trajectories that require major changes to avoid eventual financial collapse. What will happen when the next shock hits? We believe we may be nearing the stage where the answer will be -- just as it was in the Great Depression -- a calamitous global collapse. The root problem is that we have let a `doomsday cycle' infiltrate our economic system...
Bailout; commentary; doomsday cycle; leading economists; regulatory capture; research-based policy analysis; risk take; Vox.
Mon 2010-02-01 17:19 EST
Now on trial in US District Court in Tuscaloosa, Ala., on 60 counts of money laundering and bribery charges, Mr. Langford is at the center of a spectacular scandal where, prosecutors say, a popular mayor whose motto is ``Do something!'' gambled a city's future on a risky Wall Street scheme, all while taking bribes in the form of cash, Rolex watches, and designer clothes.
Christian science Monitor; com; CSMonitor; Larry Langford bet Birmingham's future; Wall Street schemes.
