Economy
Related: About this forumSTOCK MARKET WATCH -- Thursday, 19 January 2012
[font size=3]STOCK MARKET WATCH, Thursday, 19 January 2012[/font]
SMW for 18 January 2012
AT THE CLOSING BELL ON 18 January 2012
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Dow Jones 12,578.95 +96.88 (0.78%)
S&P 500 1,308.04 +14.37 (1.11%)
Nasdaq 2,769.71 +41.63 (1.53%)
10 Year 1.89% +0.06 (3.28%)
30 Year 2.95% +0.06 (2.08%)
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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]
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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
[/center][font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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Financial Sector Officials Convicted since 1/20/09 = [/font][font color=red]12[/font]
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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red]
Tansy_Gold
(17,860 posts)Anybody home?
Ruby the Liberal
(26,219 posts)Tansy_Gold
(17,860 posts)Fuddnik
(8,846 posts)I'm trying to watch CSI.
Tansy_Gold
(17,860 posts)turn off the computer and leave us alone!
sheesh.
Demeter
(85,373 posts)It's supposed to go down to 7F tomorrow, thank goddess the papers were tonight!
I think I had the flu. It's still lingering into a third week....
Po_d Mainiac
(4,183 posts)Demeter
(85,373 posts)When yesterday we presented the view from CLSA's Chris Wood that the February 29 LTRO could be 1 Trillion (compared to under 500 billion for the December 21 iteration), we snickered, although we knew quite well that the market response, in stocks and gold, today would be precisely as has transpired. However, after reading the report by Credit Suisse's William Porter, we no longer assign a trivial probability to some ridiculous amount hitting the headlines early in the morning on February 29. Why? Because from this moment on, the market will no longer be preoccupied with a 1 trillion LTRO number as the potential headline, one which in itself would be sufficient to send the Euro tumbling, the USD surging, and provoking an immediate in kind response from the Fed. Instead, the new 'possible' number is just a "little" higher, which intuitively would make sense. After all both S&P and now Fitch expect Greece to default on March 20 (just to have the event somewhat "priced in" . Which means that in an attempt to front-run the unprecedented liquidity scramble that will certainly result as nobody has any idea what would happen should Greece default in an orderly fashion, let alone disorderly, the only buffer is having cash. Lots of it. A shock and awe liquidity firewall that will leave everyone stunned. How much. According to Credit Suisse the new LTRO number could be up to a gargantuan, and unprecedented, 10 TRILLION!
Here is how the strawman is now put in place for what may the biggest liquidity injection in modern history in just under two months.
Februarys second 3-year LTRO looks set to be extremely large. Really extravagant claims (we have heard reports of 10 tn) are probably wide of the mark because this will not be a complete collateral free-for-all (unless NCBs choose to make it so, which for some of them is admittedly an open question; again, see rational player section below). But the idea of path-finder lightning springs to mind (High-speed cameras reveal that lightning evolves bang BANG, essentially); the last LTRO has removed any stigma, making managements who do not exploit the value on offer arguably careless at best. This is, on the face of it, very cheap protection indeed against any possibility of a liquidity crisis for three years.
Naturally, if indeed there is anything even remotely resembling a 10 trillion expansion in the ECB's sub 3 trillion balance sheet, all bets will be off as the ratio of the ECB to the Fed assets, a correlation which would imply a sub parity level on the EURUSD would gut corporate earnings in the US, all merely to prevent the disintegration of the Eurozone. And while this event will be welcomed by the Fed initially as it will send stocks exploding to potentially all time highs (and gold to well over $2000/ounce), it will cripple the US manufacturing model unless the Fed immediately responds in kind, and prints outright, and unsterilized, a non-trivial comparable amount. In other words, the world could very well enter the final round of global coordinated currency devaluation, aka FX war, together. Yes, that means coordinated printing by the SNB, BOE, PBoC, BOJ, etc, etc. Simply in a last ditch attempt to preserve the status quo. Which, unfortunately, after the knee jerk reaction, will fail. CS explains why:
But there are many problems, particularly at the systemic level. So, although an eye-catching number may trigger a rally (to be clear: 29 February is an eternity away in the current environment), Greece is a salutary reminder that treating a solvency problem as a liquidity problem, including buying time for solvency to be addressed and other dubious concepts, is a disaster for existing creditors, who are subordinated throughout by the senior rescue funds. It also shows that three years is an eternity and that timescales (such as the possible introduction of resolution regimes) are flexible. It remains unclear to us where the new capital for the European banking system is going to come from if not from existing bondholders and that, in some cases, that must involve senior, in our view. So the LTRO is another example of reducing idiosyncratic risk at the expense of systematizing risk, in our view.
The participating bank needs a plan for refinancing the LTRO; the lack of a plan means that financing will not be forthcoming, in a death spiral. So the massive provision of official liquidity will act as a long-term triage and increases the pressure (albeit over a longer period) to raise capital. It is a free lunch only for stronger banks, in some sense, and at the systemic level is anything but. Rather, it is paid for by those with senior exposure to weaker banks.
In fact, Credit Suisse is openly hunkering down as it now see the "endgame taking shape" - "We do not expect the downgrade of France to have an immediate impact, but it highlights very clearly to us the ultimate issue that has to be tested in the euro area. Will Germany hold together the euro as, when and if France becomes part of the periphery?"
Here is how the European endgame will look, through the prism of game theory....MORE AT LINK
Tansy_Gold
(17,860 posts)I mean, I know it's a freight train, but details, please?
Demeter
(85,373 posts)I think the Techno-idiots have so distorted every aspect of the economy that we will be lucky to escape with our lives. And if we are VERY lucky, the Tech-know-nothings won't.
Fuddnik
(8,846 posts)I'm not an economist. I can just run things through my head, as I read them, and try to interpret them.
Charts I've been looking at this week, look as though Europe will probably blow by April Fools Day. But there's a big smelly skunk in the room that nobody seems to even want to talk about. Britain. Their finances, debt to GDP ration and wealth disparity look like '70s Argentina. Something Citi would invest in, just to get another bail-out.
And, as usual, Roubini points out the obvious.
http://www.democraticunderground.com/11163697
The Romney's of the world keep sucking all of the money out of the economy, and dodging their rightful contribution to society.
We're officially a police state even with the latest, greatest signing statement.
I just calls 'em like I see's 'em.
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A couple of good things. I went to see my orthopedist on Monday, and he put me on a 6 day steroid program, and after the first day, all of my pain is gone, and I can move around normally. And with the temps in the mid 70's (sorry Demeter), I can start getting my garden in. I didn't think I'd be able to with my back. Hell, I couldn't even load the dishwasher last week. At least that's a guarantee of some food.
Then there's these.
She's really proud of herself.
Fuddnik
(8,846 posts)"I found this one alarmingly interesting, for instance, from James Hall in the Telegraph on January 4:
One million people take out emergency loans to pay mortgage
Almost one million Britons have taken out an emergency 'payday' loan to help pay their rent or mortgage in the last year, according to Shelter, the housing charity.
The high degree of borrowing highlights the 'spiral of debt' that people are falling into to keep a roof over their head, Shelter said. The charity also found that seven million Britons are relying on some form of credit to help pay their housing costs.
Campbell Robb, Shelters chief executive, said: 'These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.'
Ilargi: Payday loans to pay off your mortgage? Sounds like perhaps Britain has a substantial hidden real estate problem, a pre-shadow inventory one that could spiral out of control at a rapid clip.
On January 9, the same James Hall had this follow-up:
Six million households have only five days' savings
Around six million households would be unable to survive for more than five days if they stopped being paid, such are the low levels of savings among Britons, new research shows.
A new report from First Direct, the bank, warns that one in three UK households have less than £250 in accessible savings. A fifth of all households have no savings at all.
The bank said that £250 is the equivalent of three days average monthly household take-home pay. With average monthly outgoing currently at £1,536, these savings would last just five days."
Ghost Dog
(16,881 posts)is the next domino which, being thoroughly squid-infested, has been set up to fall lifeless once all the juice has been squeezed out. And behind that domino (and its offshore appendages) is your own dearly-loved police state.
But all this is no problem for those who control and manipulate the media-bubble most anglos inhabit. Most people will never know what hit them, so why worry? On with the show.
DemReadingDU
(16,000 posts)We know the owners and talk to them frequently. They have mentioned that in the slower winter months, they have sometimes need to get a short-term loan to pay their employees. Yikes!
AnneD
(15,774 posts)for the sake of the hairy children.
Secondly, I do believe that March is as good a guess as any. I say this because the Greek bonds come due. Max Keiser does an excellent piece on that very thing today. Please watch it.
http://rt.com/programs/keiser-report/episode-238-keiser-report/
And speaking of excellent reads, the thread yesterday was fantastic stuff-esp the MERS info. It is a BookMark piece. Great job.
I am so happy I have invested the way I have this last year. I can't predict the future, but I can be prepared. I actually look for something I have never seen in my life time....a banking holiday very soon. I was saying that very thing to my PM dealer last Saturday. Now what I know from what I have heard from folks that have gone through bank holidays-you are in or out. If you are out, you have your money. If you are in-you haved lost various amounts of your wealth once the banks reopen. There is no do overs. You are screwed. PERIOD.
I have been working like a dog to get all my excess money out since late December and it had been damn hard work. Road blocks have been thrown into my path. I can only imagine a Bank Holiday thrown into the mix. I just don't want to be caught with my pants down around my ankles. I am 3/4ths of the way getting about half of my IRA money back. Claw back doesn't even begin to describe it.
Ghost Dog
(16,881 posts)this passage from the CS analysts' research, which is an exercise in applying game theory to various models of the current macroeconomic situation, as perceived by same:
The opening page of the CS document ZH refers to, which I was able to find and save yesterday before ZH removed the link and CS put it behind their registration wall, reads:
Insights from Game Theory on the fate of the euro zone
Its all about incentives
In A Nash equilibrium for Greece, we established the idea of using Game
Theory for analysing the Greek PSI programme. In this note, we extend the
concept to the broader euro zone debt crisis in order to explain its dynamics and
likely future path.
The continued existence of the euro will hugely depend on the incentive
structure of its members to defend it. In order to do so, costs must be
appreciated and allocated. We therefore demonstrate how:
Incentives to deal with these costs are aligned only under certain conditions;
An imbalance of incentives could lead to a euro breakup;
Incentives evolve through time and interventions;
Brinkmanship and threats are used as tools to improve either partys outcome;
Market stress is a logical and intended consequence; and
Markets can be used as a mediator to improve each players outcome
Based on this Game Theory analysis, we see two scenarios for the future of the
euro:
1) A (catastrophic) breakup or (very expensive, probably catastrophic) exit of
at least one large member. We think this is possible but not likely. We
estimate the probability to be 10%-20%.
2) A long, painful and volatile continuation of the crisis that can only be
slowly improved by some type of inter European enforceable contract.
...
Having quickly scanned this, I see that they model the Eurozone situation in terms of two players, representing 'core' and 'peripheral' economies in the zone, and discuss, through their games theory methodology, interactions between:
of the costs for the euro on the periphery by demanding more austerity while the periphery
player wants to allocate the costs away from itself, i.e., in the core...
... There are varied ways that costs could materialize. To mention just a few: inflation, bank
rescues and wind-downs and debt mutualisation. The first would likely impose losses on the
savers, particularly pensioners in the core as, if and when the ECB cuts rates further and
embarks on QE. Costs via the banking sector could materialize if more peripheral debt
losses would be imposed on the banks, which in turn would bring costs to the core via bank
guarantees, recapitalizations or even a reduction in lending activity to corporates and
households. Even a bank failure could be possible. Finally, debt mutualisation, for example,
via some sort of Eurobond, would impose costs on the core via higher borrowing rates.
The main method of enacting cost allocation to the periphery is via increased austerity and
labor market reforms. Most common examples include higher taxes, lower social benefits
and pension age increases...
As for what's going on, my take-away so far for this morning for immediate practical application would be from the Rubini analysis The Fudd quoted:
- The dollar would have to weaken further, which is unlikely, because many other central banks have followed the Federal Reserve in additional quantitative easing, with the euro likely to remain under downward pressure and China and other emerging-market countries still aggressively intervening to prevent their currencies from rising too fast.
- Slower growth in many advanced economies, China, and other emerging markets will mean lower demand for US exports.
- Oil prices are likely to remain elevated, given geopolitical risks in the Middle East, keeping the US energy-import bill high.
It is unlikely that US policy will come to the rescue. On the contrary, there will be a significant fiscal drag in 2012, and political gridlock in the run-up to the presidential election in November will prevent the authorities from addressing long-term fiscal issues...
The EZ is being stabilized, with our without, temporarily, Greece and perhaps Portugal, to some people's chagrin, and a reinforced Euro at a lower international exchange-rate will do nicely, thanks.. The frenzy-feeders on the financial mediatic bubble battlefield will move on to question and then to attack both the Skunk and its transatlantic cousin, the Butcher himself. So plenty of distraction (and covert and overt action) will be required to keep the marks in their place.
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bread_and_roses
(6,335 posts)I know this much: the "1%" and their almost there wannabees (next few %s) have their ghoul grip on almost all the wealth and are determined to get the rest of it. Our bought and sold politicians serve them, and them only, and our police & military are deployed by said utterly corrupt politicians to guard the Oligarch interests. We peons are to be just that - peons/serfs/low-wage slaves/etc. The commons is to be entirely gutted, we are to be left to die if we're sick, to sink into abject poverty once we fall out of the workforce from age or illness, and our children are to be educated only to do their serf-ish duty.
Most of "the left" is fixated on maintaining their own comfy nests by tinkering techno-fixes designed to return us to the days when most people could get by and poverty was concentrated in the backwoods and city slums where most of us could ignore it. The Oligarchs are having none of even that - they want it all, and think they can get it.
The combination of vampire predation and the complicit "left" will eventually unleash the demons that lurk far back in our reptile brains - racism, fanaticism, power-hunger - opening the door for demagoguery, and then all bets are off.
Meanwhile, the seas are literally dying, along with the rest of the planet's life-sustaining systems, raising the spectre of mass famine on the near horizon.
All the rest is detail - the hows and whens. Interesting, sometimes even ironically amusing if one can detach oneself from the likely outcomes and watch it like a movie.
Ghost Dog
(16,881 posts)or since the French Revolution, or the Enlightenment, whatever, is all.
And thus Gaia serenely smiles/
While donning the mask of Kali.
happyslug
(14,779 posts)Bernanke in 2004 described what happen between March 1930 and March 1933:
The impact that the experience of the Depression has had on views about the role of the government in the economy is easily understood when we recall the sheer magnitude of that economic downturn. During the major contraction phase of the Depression, between 1929 and 1933, real output in the United States fell nearly 30 percent. During the same period, according to retrospective studies, the unemployment rate rose from about 3 percent to nearly 25 percent, and many of those lucky enough to have a job were able to work only part-time. For comparison, between 1973 and 1975, in what was perhaps the most severe U.S. recession of the World War II era, real output fell 3.4 percent and the unemployment rate rose from about 4 percent to about 9 percent. Other features of the 1929-33 decline included a sharp deflation--prices fell at a rate of nearly 10 percent per year during the early 1930s--as well as a plummeting stock market, widespread bank failures, and a rash of defaults and bankruptcies by businesses and households. The economy improved after Franklin D. Roosevelt's inauguration in March 1933, but unemployment remained in the double digits for the rest of the decade, full recovery arriving only with the advent of World War II. Moreover, as I will discuss later, the Depression was international in scope, affecting most countries around the world not only the United States.
http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm
How did FDR end the above decline? First he closed the banks and had Congress set up insurance for their deposits. Second he devalued the value of the Dollar by 75% (US Dollars in term of gold went from $20 an ounce to $35 an ounce, in affect any PAPER Assets lost over 42% of their value by that devaluation). Real assets had already dropped in value by over 40% (and would continue to drop for a few more years, bottoming out in 1938 devalued up to 90% of their 1929 value). FDR then expanded various job programs to get the economy going (and introduced Social Security to take care of those people over 65, giving them money to live on when they could no longer work).
As part of the Social Security Act, Congress provided for a National Unemployment Insurance Program (and the funding for it) AND improvements in Funding (Which would last till Welfare Reform of the 1990s made substantial changes in the program, through it should be noted unlike Unemployment and Social Security, which were 100% Federally funded, Welfare was and remains a 50% match with the state, i.e. for every dollar a State pays for Welfare the Federal Government will match with another Dollar and then only to families with Children, Adults without children never were eligible for any Welfare funded by the Federal Government. And lets not forget the Bonus Army Bonus money, authorized by Congress over FDR's Veto.
This one - two punch ended the deflation but notice it required a massive transfer of money from the 1% to the 99%. From March 1930 to March 1933 Hoover and the GOP opposed such a transfer in assets and tried every thing else to stop the deflation except what actually worked, massive transfer of financial assets from the 1% to the 99%.
In many ways, we are in a similar period to the period from March 1930 to March 1933. One of the reason it has seem longer is the Social Programs from the New Deal are kicking in and preventing further decay among the assets of the 99% (No run on banks do to Federal Deposit Insurance, no elderly starving in the Streets to to Social Security, and no adult dying do to the one FINANCIAL improvement done in the 1960s under LBJ's Great Society Program, The Food Stamp program (The rest of the Great Society Programs was improvements in access to various needs of low income people, housing, medical care and even legal advice have also helped, but the biggest help to most people has been the FINANCIAL assistance and that is all New Deal EXCEPT for Food Stamps).
Bernanke is trying to duplicate what FDR did with the devaluation of the Dollar, but Bernanke does NOT understand that the key was devaluation in real terms of the Assets of the 1% was what is needed. Given that the Dollar had NOT been pegged to Gold since 1971, the only way to devalue the dollar is through massive inflation. The present Congress is opposed to the spending needed to produce that inflation thus we are stuck in a pre- New Deal type situation. Slow and Steady Deflation of real assets, financial assets hold their value at lease in dollar terms and that conflict in assets values HAS to be addressed. Real assets has to increase in dollar terms AND Financial Assets DECLINE in value in real terms (via massive inflation).
FDR solution of devaluing the Dollars in term of Gold can NOT help us today, for Dollars are NOT valued in terms of gold, thus that leaves inflation. Congress is as fearful of inflation today as it was in the early 1930s thus refusing to spend what is needed to get that inflation started.
Demeter
(85,373 posts)The International Monetary Fund is seeking to boost its war chest by $600 billion to help countries reeling from the euro zone debt crisis, but some nations insist Europe must first do more to support its ailing members, international financial sources said on Wednesday. Group of 20 officials will discuss increasing IMF resources at a meeting in Mexico City on Thursday and Friday, the first under Mexico's 2012 presidency of the group of developed and emerging economies.
The IMF said it will need $500 billion to lend to member countries in need and IMF sources who were present at an IMF board meeting on the issue on Tuesday told Reuters that another $100 billion is needed as a "protection buffer." The IMF also estimated there would be a $1 trillion global financing gap over the next two years if global economic conditions worsened considerably, the sources added.
On foreign exchange markets, the reports of plans for increased IMF lending capacity helped boost the euro. Euro zone nations have already promised to inject an extra 150 billion euros ($200 billion) into the IMF, which is included in the total estimate. G20 officials in Mexico for the meeting of deputy finance ministers and central bank officials said there was still resistance in some quarters to increase funding.
Tansy_Gold
(17,860 posts)is this money coming from?
Seriously. Are they just printing it, euros, dollars, pounds, shekels, is it whatever it is just so much worthless paper, or WHAT?????
Demeter
(85,373 posts)Angela refuses to let the European Central Bank do what a Central Bank does. Sovereign nations would rather prostitute themselves to banksters and multinational Corporations than act like sovereigns. There are no adults left.
They all want the Chinese to do it. And at the same time, they want the Chinese to swear off Iranian oil.
The Chinese told them where to stick it.
Tansy_Gold
(17,860 posts)I have an unexpected but very welcome day off. I'm going to bed at a decent hour and I may allow myself to sleep past 5:30.
And then in the morning I will begin confronting my personal 10T Euro question -- whether to take the giant leap or not.
DemReadingDU
(16,000 posts)I don't expect any of it to trickle down to we the people.
Demeter
(85,373 posts)U.S. stocks tilted up Wednesday as investors considered better-than-anticipated results from Goldman Sachs Group Inc. Goldman Sachs broke a trend of earnings disappointments from the banking sector, said Fred Dickson, chief investment strategist at Davidson Cos. in Lake Oswego, Ore....
Goldman Sachs Post $1 Billion 4th Quarter Profit
http://www.npr.org/blogs/thetwo-way/2012/01/18/145415193/goldman-sachs-post-1-billion-4th-quarter-profit?ft=1&f=1001
The up and down markets from last year, took its toll even on Goldman Sachs, which is thought of as the rock star of investment banks.
Goldman posted a billion dollar profit during the last quarter of 2011. And while that may seem like a lot, it's 58 percent down. The AP reports that the profit follows a third quarter in which Goldman lost money for only the third time since it went public in 1999.
The AP adds:
"The bumpy financial markets hurt revenue in those parts of Goldman's business. Revenue from client services fell 16 percent to $3.06 billion for the quarter. Transactions in commodities, currency and fixed income fell 17 percent.
"Besides trading for those clients, Goldman has made big profits trading for itself especially when markets are volatile. In 2009, as the country grappled with a financial crisis and a deep recession, Goldman turned a record $13.4 billion profit. But regulations taking effect this year will reduce Goldman's ability to make those trades for the firm."
Bloomberg reports that at $1.84 a share, Goldman still beat investor's expectations. They were predicting a $1.23 profit.
And market took the news in stride. Goldman's stock was up 6.8 percent.
Goldman beats Street on lower expenses
http://news.yahoo.com/goldman-fourth-quarter-profit-falls-beats-estimates-130057965.html
Goldman Sachs Group Inc's fourth-quarter profit fell 56 percent as trading and investment banking revenue plunged, but the bank managed to beat analysts' expectations through cost cutting and lower taxes.
Goldman's results on Wednesday reflected the weakest year for Wall Street since the financial crisis. As politicians and policymakers battled over ways to handle Europe's sovereign debt burden, market volatility surged and Wall Street's clients pulled back on risk-taking, held off on acquisitions and delayed stock and bond offerings.
Wall Street banks cut tens of thousands of jobs and drained bonus pools to respond to the slowdown in business throughout 2011.
Goldman's payroll declined by 2,400 employees during the year, reflecting job cuts across trading, banking and back-office operations. The bank slashed compensation 21 percent to $12.2 billion, or $367,057 per employee, from $15.4 billion, or $430,700 per employee, in 2010. "Goldman is adjusting and continuing to operate reasonably well in a difficult environment," said Gary Townsend, president of Hill-Townsend Capital. "I would prefer to see them investing more in their operations, but clearly right now they have to right-size their staffing to be consistent with the revenues the market is allowing them to generate."
Goldman's profit for the full year was $2.5 billion, its weakest year since 2008, at the height of the financial crisis.
Goldman shares were up more than 2 percent in premarket trading immediately after the earnings report, but lost some of the gains as the morning wore on...Each of Goldman's business lines -- investment banking, trading, investment management and investing and lending -- reported double-digit revenue declines during the fourth quarter. All but investment management reported lower revenue for the full year. Goldman's return-on-equity, a key measure of profitability, was a meager 3.7 percent for 2011. In the years leading up to the financial crisis, it boasted returns of more than 30 percent.
Demeter
(85,373 posts)Aries
Jupiter rising in your sign is usually an indicator of prosperous ambitions, but when it just keeps coming right at you, it becomes downright terrifying.
Taurus
You have yet to find a love worthy of your unique affections and depth of spirit. You should strongly consider getting a goldfish.
Gemini
You're saving yourself for something, all right, but as the events of the next six weeks will definitively prove, it sure as hell isn't marriage.
Cancer
You'll discover a drug that allows people in committed relationships to open up to each other and have honest, meaningful conversations. The resulting bankruptcy will nearly kill you.
Leo
Due to an unusual coincidence, your fortune this week is the same as for Nov. 19, 2005. The bartender will even use the same ax.
Virgo
Your unfounded and irrational fear of being alone for the rest of your life is still completely inconsistent with your justifiable and sensible fear of other people.
Libra
There's little you can do to stop the inexorable unfolding of inevitable fate, but moving the charcoal lighter fluid away from the furnace wouldn't be a bad start.
Scorpio
You'll finally get around to catching up on your reading just as the men in lab coats resume their midnight visits and mess it all up again.
Sagittarius
Certainly it's disturbing that you have all those nurses chained up in your basement, but it's even more disturbing how much they all paid to be there.
Capricorn
Everyone's happy that you're finally off the drugs and high on life, but no one has the heart to tell you that you're putting out some of the shittiest music of your career.
Aquarius
This is a great time for romance in the workplace, but then again, when isn't it for the world's most deranged taco truck driver?
Pisces
No notable changes.
Demeter
(85,373 posts)A hedge fund co-founder, a hedge fund portfolio manager, four financial analysts and a Dell Inc. employee teamed up in a record-setting insider trading scheme that netted more than $61.8 million in illegal profits based on trades of a single stock, authorities said Wednesday as they described a cozy network of friends in finance who made the most of their connections with corrupt employees of technology companies. The scheme was outlined in a criminal complaint in U.S. District Court in Manhattan that charged four of the men with conspiracy to commit securities fraud and securities fraud, among other charges. Three analysts have already pleaded guilty and are cooperating with the government, according to the court papers...The insider trading plot as authorities portrayed it was noteworthy for its size. Last month, hedge fund founder Raj Rajaratnam began serving an 11-year prison term the longest ever given in an insider trading case for a scheme that prosecutors said produced as much as $75 million in profits on dozens of trades over a multi-year period. That prosecution resulted in more than two dozen convictions and led to a spinoff probe that produced even more arrests...In the new case, prosecutors again are highlighting its size, saying the co-conspirators netted more than $61.8 million in illegal profits based on trades of a single stock from 2008 through 2009.
Anthony Chiasson, a co-founder at former hedge fund group Level Global Investors LP, was among three men arrested early Wednesday. He surrendered to the FBI. In court papers, he was credited with a starring role in the securities fraud. Authorities said a hedge fund analyst fed Chiasson inside information about an upcoming announcement of Dell's earnings for the first and second quarters of 2008, allowing Chiasson and others at his hedge fund to make approximately $57 million in illegal profits through trades. Inside information about Dell earnings resulted in $3.8 million in illegal profits at another hedge fund and $1 million in illegal profits at a third hedge fund, the complaint said. The Dell inside information also allowed an investment firm to avoid losses of approximately $78,000, authorities said.
Jon Horvath, an analyst at Sigma Capital Management, an affiliate of hedge fund SAC Capital Advisors in Manhattan, was arrested at his New York City home while Todd Newman, a hedge fund portfolio manager, was arrested in Needham, Mass. It was not immediately clear if a fourth man charged in the complaint, analyst Danny Kuo, was in custody. Among those who have pleaded guilty to charges of conspiracy and securities fraud and are cooperating in the case was Sandeep Goyal, who worked from the summer of 2006 through May 2007 for Dell at its corporate headquarters in Round Rock, Texas, and obtained inside information from employees of Dell after he began working as an associate analyst for a global asset management firm in Manhattan, court papers said....According to court papers, Goyal benefited from his relationship with a co-conspirator who worked in Dell's investor relations department from March 2007 through March 2009 and in its corporate development office from March 2009 through April 2010. Authorities said a hedge fund with $4 billion in assets in 2009 paid Goyal about $175,000 for providing insider information about Dell. The illegal profits in the case were made after tips were shared among co-conspirators about upcoming earnings announcements regarding Dell and Nvidia Corp., according to court papers.
FBI Agent David Makol said in court papers that the government built its case through information provided by the three cooperators, consensually recorded conversations, court-authorized wiretaps, telephone records, trading records, electronic communications, documents provided by a cooperator and other documents obtained from two hedge funds. The hedge funds were not identified in court papers.
Demeter
(85,373 posts)Engineers conduct a block-by-block inspection of the exterior of the Washington Monument while suspended by ropes Sept. 28. The National Park Service closed the landmark in the nation's capital indefinitely due to damage caused by a 5.8 magnitude earthquake in August.
A billionaire history buff has stepped forward to donate the $7.5 million matching gift that's needed to start repairing cracks near the top of the Washington Monument from last summer's East Coast earthquake. Businessman David Rubenstein told The Associated Press he was inspired to help fund the repairs to the 555-foot obelisk when it became clear how severely damaged it was by a 5.8-magnitude quake on Aug. 23. The monument received about 1 million visitors a year before the famous landmark was closed to the public after the quake. The Park Service hopes to have a contractor begin work by the end of August. The repair work is expected to take a year to complete, likely keeping the monument closed for two years.
Congress allocated $7.5 million in December on the condition that private donations would match that amount. The National Park Service and nonprofit Trust for the National Mall are expected to announce Rubenstein's gift Thursday morning. It will be the largest gift to the nonprofit group, which aims to raise $350 million to restore the mall's grounds and facilities.
The combined $15 million in public and private funds is expected to cover the cost of repairing damage directly caused by the quake, said National Park Service spokeswoman Carol Johnson. Repairing water damage will cost more, as would a seismic study or reinforcements to strengthen the obelisk against future earthquakes, she said.
Rubenstein, a co-founder of The Carlyle Group, began building the private equity firm's business in Washington and said he wanted to restore a symbol of the nation and hasten repairs to reopen the landmark. "This Washington Monument is probably one of the most recognizable buildings in the United States next to the Capitol and the Empire State Building," he said. "It could use a little repair work, and I wanted people to get to see it as soon as possible." Experts have noted the monument needs more than just a little repair work, though it has been deemed structurally sound...Rubenstein has made large gifts in recent years to Washington's cultural institutions including the Smithsonian Institution, the National Archives, the Library of Congress and the Kennedy Center....The monument, which he visited recently, was built with private $1 donations eventually totaling over $1 million, Rubenstein said. Construction began in 1848, but funds ran out during the Civil War when the monument was left as an embarrassing stump for years. It was finally completed in 1884 and was the world's tallest man-made structure until it was eclipsed by the Eiffel Tower. It remains the tallest structure in Washington...Rubenstein owns a copy of the Magna Carta, among other historical documents, and reveres George Washington. "I like to remind people about American history," Rubenstein said. "George Washington is an incredible figure. When he was the head of the Revolutionary War Army, he could have stayed on as really the head of the government when we won the Revolutionary War, but he put down his arms."
...............................................................................
The earthquake caused numerous cracks to form in the obelisk, which was the tallest man-made structure in the world when it was completed in 1884. Surveillance video taken the day of the quake and later released by the park service showed the spire shaking violently. Daylight could be seen through some of the cracks, the largest of which was reported to be at least 4 feet long and about an inch wide. A report in December recommended extensive repairs and reinforcements to preserve the spire. It said some marble panels were cracked all the way through near the top portion of the monument. Cracks near its peak also have left the monument vulnerable to water damage from rain, engineers noted. Last fall, daredevil engineers on a "difficult access team" rappelled from the top to conduct a visual inspection of the exterior of the obelisk. Officials said it's unclear whether the work will require scaffolding to be built around the monument, similar to what was erected during a restoration project from 1999 to 2001.
___
Trust for the National Mall: http://www.nationalmall.org
rfranklin
(13,200 posts)"The war in Iraq does not seem to be over al all, but in the meantime the rebuilding has already started. This has unleashed fiercecompetition for contracts, which are mainly awarded to American (ed: U.S.) companies.
What is remarkable about these companies, is that they have people on their payroll from American politics and the military. Is this a conflict of interest, or is this the new global way of doing business?
[text in the screen at this time reads: 'the iron triangle']
One of the companies that operates in this manner is the Carlyle Group."
On their payroll are people like : George Bush (Sr.), James Baker III and old premier John Major.
http://www.informationclearinghouse.info/article3995.htm
Demeter
(85,373 posts)Demeter
(85,373 posts)European regulators believe Italys Monte dei Paschi di Siena and Germanys Commerzbank will fail to meet a looming deadline for capital plans
European regulators are convinced two of the continents banks - Commerzbank and Monte dei Paschi di Sienna - will fail to produce credible plans to plug capital deficits by Fridays deadline, exposing both to the risk of full or partial nationalisation
Read more >>
http://link.ft.com/r/8P1R88/TU2974/VTVRG/ZGVX8C/XHM01V/28/t?a1=2012&a2=1&a3=19
"This is only the beginning." YVES SMITH
Demeter
(85,373 posts)The Greek government on Wednesday appeared to have moved closer to a deal with private bondholders on a voluntary debt swap that would avert a threatened default by Athens and a dramatic escalation of the eurozone debt crisis.
Holders of 200bn of Greek debt have been offered a variable interest rate on their bonds to avoid default, amounting to a 68 per cent loss
The latest proposal calls for a step-up coupon starting at around 3% and rising to 4.5% as the bond approaches maturity, one banker said.
Read more >>
http://link.ft.com/r/VKY5JJ/R3CI0M/HI3M9/YBC7BL/MSGP6K/PJ/t?a1=2012&a2=1&a3=18
Demeter
(85,373 posts)The International Monetary Fund has asked its member countries for an extra $500bn to help fight what it says will be a $1tn global demand for bail-out loans over the next two years.
The estimate, presented by Christine Lagarde, IMF managing director, to the funds executive board earlier this week, would most likely be financed by voluntary ad hoc loans rather than requiring all IMF member countries to contribute. The IMF currently has $387bn in immediately available resources.
Read more >>
http://link.ft.com/r/9ULF66/97S8MR/7ZY85/2OZDDT/30D7D4/LE/t?a1=2012&a2=1&a3=18
Demeter
(85,373 posts)The Republican frontrunner retains a strong lead over Barack Obama in polls as an economic manager, which is likely to weigh more heavily with voters
Read more >>
http://link.ft.com/r/FG6LAA/4CYTY8/WH2F8/16AYAL/EX39K6/ZH/t?a1=2012&a2=1&a3=19
PROVING ONCE AGAIN WHAT H. L. MENCKEN SAID:
Nobody ever went broke underestimating the intelligence of the American public.
H. L. Mencken US editor (1880 - 1956)
Demeter
(85,373 posts)Mitt Romneys wealth and the industry in which he made his fortune have been thrust into the centre of presidential politics
Read more >>
http://link.ft.com/r/CTBPCC/OR65KD/B49CK/VL62BE/U1A1I0/9A/t?a1=2012&a2=1&a3=18
"INDUSTRY"? PIRACY IS AN INDUSTRY? VULTURE CAPITALISM IS AN INDUSTRY?
Demeter
(85,373 posts)DO TELL! NOBODY COULD HAVE PREDICTED...
http://www.nytimes.com/2012/01/19/us/politics/poll-shows-obamas-vulnerability-with-swing-voters.html?hp
President Obama opens his re-election bid facing significant obstacles among independent voters, according to the latest New York Times/CBS News poll, with the critical piece of the electorate that cemented his victory four years ago open to denying him a second term.
As Mr. Obama moves toward a full-throated campaign, delivering a State of the Union address on Tuesday and inching closer to directly confronting his Republican challenger, a majority of independent voters have soured on his presidency, disapprove of how he has dealt with the economy and do not have a clear idea of what he hopes to accomplish if re-elected.
The swing voters who will play a pivotal role in determining his political fate are up for grabs, the poll found, with just 31 percent expressing a favorable opinion of Mr. Obama. Two-thirds of independent voters say he has not made real progress fixing the economy....
Tansy_Gold
(17,860 posts)If they're disappointed with Obama, they won't see anything better in Romney in terms of fixing the economy, and that's apparently one of the major issues. And if they stay home, that's not good for Obama, because the core pukes will come out.
Demeter
(85,373 posts)The European Unions executive branch says three new Hungarian laws violate EU rules and votes to begin legal proceedings
Read more >>
http://link.ft.com/r/CTBPCC/OR65KD/B49CK/VL62BE/IILI29/9A/t?a1=2012&a2=1&a3=18
Demeter
(85,373 posts)Pace of pay-out process for failed futures broker angers investors as KPMG says only 82% of customer funds have been recovered
Read more >>
http://link.ft.com/r/R5WAEE/C4FG89/FDFZE/NJUBN7/DWNW8O/AZ/t?a1=2012&a2=1&a3=18
82% IS BETTER THAN NOTHING
Demeter
(85,373 posts)Last edited Thu Jan 19, 2012, 09:01 AM - Edit history (1)
Goldman Sachs, Barclays Capital, Bank of America and Credit Suisse will bid on the debt acquired by the New York Fed as part of the bail-out of AIG
Read more >>
http://link.ft.com/r/R5WAEE/C4FG89/FDFZE/NJUBN7/8Z9ZLN/AZ/t?a1=2012&a2=1&a3=18
YVES SMITH NOTE: Only four banks bidding does not smell right.
Demeter
(85,373 posts)The Obama administration has turned down the contentious Keystone XL pipeline project but will allow a revised application to be submitted, according to US lawmakers and lobby groups familiar with the decision.
The White House and the State Department, which is responsible for the ruling, refused to confirm any details on Wednesday afternoon but lawmakers, as well as energy industry and environmental lobbyists, were already predicting that the project would have to be modified.
Read more >>
http://link.ft.com/r/P75VYY/WT7J5F/IEP5S/2OZY0C/97SKFQ/9A/t?a1=2012&a2=1&a3=18
----------THE FEAR IS PALPABLE. [N]NOW[/N] I BET HE WISHES HE HADN'T THROWN ALL HIS LITTLE PEOPLE SUPPORTERS UNDER THE BUS...AND WITH ANY JUSTICE, RAHM WILL BE THE NEXT ILLINOIS POLITICIAN IN ORANGE.
Demeter
(85,373 posts)Oil demand is falling for the first time since the 2008-9 global financial crisis as a result of a mild winter, high crude prices and the European economic crisis, according to fresh estimates from the International Energy Agency.
The industrialised nations watchdog said oil demand dropped by 300,000 barrels a day in the final quarter of 2011. Such a fall is rare: over the last decade, oil demand has posted drops only in the financial crisis of mid-2008 to mid-2009.
Read more >>
http://link.ft.com/r/H60H77/DWNOHV/52KB7/TUGVAK/R3CTJX/1G/t?a1=2012&a2=1&a3=18
"Normally, a telling negative indicator but we are having a freakishly warm winter." YVES SMITH NAKED CAPITALISM
Demeter
(85,373 posts)Oil rose above $101 a barrel Thursday in Asia after the IMF promised to raise lending to mitigate a worsening financial crisis in Europe. Stronger U.S. economic data also gave oil a lift. Benchmark crude for February delivery was up 66 cents at $101.25 a barrel at late afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell 12 cents to end at $100.59 on Wednesday. "Trading has been choppy but the market recovered on news that the IMF will boost its lending capacity for Europe," said Natalie Robertson, commodities analyst with ANZ Banking Group in Melbourne...
..The IMF has put up about a third of the financing for Europe's bailouts over the past two years, but there are growing worries that non-European countries will also need more help given the worsening economic outlook.
Robertson said prices were also supported by the American Petroleum Institute's report Wednesday showing an unexpected drop in crude inventory last week. The government is expected to release its weekly data later Thursday. Strong U.S. housing figures, an improvement in U.S. manufacturing activity in December and increased orders and production also buoyed crude prices, she said. Bank of America Merrill Lynch predicted limited upside, with crude prices to average $101 a barrel this year. it cited weak oil global demand after the International Energy Agency cut its forecast for oil demand growth to 1.1 million barrels a day, down from an earlier estimate of 1.3 million barrels a day.
In other energy trading, heating oil rose 0.9 cent to $3.02 per gallon and gasoline futures rose 0.5 cent to $2.83 per gallon. Natural gas fell 3.7 cents to $2.43 per 1,000 cubic feet.
Demeter
(85,373 posts)The slowdown in Chinas economic growth last year has fostered mixed reactions. Some argue the recently-released 9.2 per cent annual rate exceeds expectations and is consistent with a soft landing. Others see the fall from 10.4 per cent in 2010 as an indication that a sharper drop is still to come.
But without actions to support growth, the pace may fall below 8 per cent this year, argues Yukon Huang
Read more >>
http://link.ft.com/r/YIQXNN/2OKT4V/Q38E1/ZGVK1F/AMJ9XL/CM/t?a1=2012&a2=1&a3=19
----------NO, I DON'T THINK THE CHINESE WILL BUY THAT ARGUMENT-----
Demeter
(85,373 posts)Capitalism earns its keep through Adam Smiths famous paradox of the invisible hand: self-interest, operating through markets, leads to the common good. Yet the paradox of self-interest breaks down when stretched too far. This is our global predicament today.
Read more >>
http://link.ft.com/r/YIQXNN/62ETNH/Q38E1/VL6ZKV/PFOLGX/E4/t?a1=2012&a2=1&a3=18
"MORALS"? I PUT MY FAITH IN REGULATION....OR THE "MORALS" OF THE RULE OF LAW.
Tansy_Gold
(17,860 posts)I am thinking very bad throughts this morning.
Demeter
(85,373 posts)Hedge funds have been known to use hardball tactics to make money. Now they have come up with a new one: suing Greece in a human rights court to make good on its bond payments. The novel approach would have the funds arguing in the European Court of Human Rights that Greece had violated bondholder rights, though that could be a multiyear project with no guarantee of a payoff. And it would not be likely to produce sympathy for these funds, which many blame for the lack of progress so far in the negotiations over restructuring Greeces debts. The tactic has emerged in conversations with lawyers and hedge funds as it became clear that Greece was considering passing legislation to force all private bondholders to take losses, while exempting the European Central Bank, which is the largest institutional holder of Greek bonds with 50 billion euros or so. Legal experts suggest that the investors may have a case because if Greece changes the terms of its bonds so that investors receive less than they are owed, that could be viewed as a property rights violation and in Europe, property rights are human rights.
The bond restructuring is a critical element for Greece to receive its latest bailout from the international community. As part of that 130 billion euro ($165.5 billion) rescue, Greece is looking to cut its debt by 100 billion euros through 2014 by forcing its bankers to accept a 50 percent loss on new bonds that they receive in a debt exchange. According to one senior government official involved in the negotiations, Greece will present an offer to creditors this week that includes an interest rate or coupon on new bonds received in exchange for the old bonds that is less than the 4 percent private creditors have been pushing for and they will be forced to accept it whether they like it or not. This is crunch time for us. The time for niceties has expired, said the person, who was not authorized to talk publicly. These guys will have to accept everything.
The surprise collapse last week of the talks in Athens raised the prospect that Greece might not receive a crucial 30 billion euro payment and might miss a make-or-break 14.5 billion euro bond payment on March 20 throwing the country into default and jeopardizing its membership in the euro zone. Talks between the two sides picked back up on Wednesday evening in Athens when Charles Dallara of the Institute of International Finance, who represents private sector bondholders, met with Prime Minister Lucas Papademos of Greece and his deputies. While both sides have tried to adopt a conciliatory tone, the threat of a disorderly default and the spread of contagion to other vulnerable countries like Portugal remains pronounced.
In my opinion, it is unlikely that this is the last restructuring we go through in Europe, said Hans Humes, a veteran of numerous debt restructurings and the president and chief executive of Greylock Capital, the only hedge fund on the private sector steering committee, which is taking the lead in the Greek negotiations. The private sector has come a long way. We hope that the other parties agree that it is more constructive to reach a voluntary agreement than the alternative. At the root of the dispute is a growing insistence on the part of Germany and the International Monetary Fund that as Greeces economy continues to collapse, its debt now about 140 percent of its gross domestic product needs to be reduced as rapidly as possible. Those two powerful actors which control the purse strings for current and future Greek bailouts have pressured Greece to adopt a more aggressive tone toward its creditors. As a result, Greece has demanded that bondholders accept not only a 50 percent loss on their new bonds but also a lower interest rate on them. That is a tough pill for investors to swallow, given the already steep losses they face, and one that would be likely to increase the cumulative haircut to between 60 and 70 percent. The lower interest rate would help Greece by reducing the punitive amounts of interest it pays on its debt, making it easier to cut its budget deficit. To increase Greeces leverage, the countrys negotiators have said they could attach collective action clauses to the outstanding bonds, a step that would give them the legal right to saddle all bondholders with a loss. This would particularly be aimed at the so-called free riders speculators who have said they will not agree to a haircut and are betting that when Greece receives its aid bundle in March, their bonds will be repaid in full. If the collective action clause is used and Greek officials say it could become law next week these investors, who bought their bonds at around 40 cents on the dollar, are likely to suffer a loss...MORE
.............................................................................................................................................................
YVES SMITH COMMENTS: This is the silliest threat I have seen in a very long time. Hedge funds suing in a human rights court when austerity is leading to suicides, an inability to import medicine, garbage piling up in the street, and a breakdown in services (like public transport and electricity). Id LOVE a really clever lawyer to turn the tables on these jerks and file a counterclaim.
And what are they going to do if they win? Ask NATO to send in tanks? Please.
Demeter
(85,373 posts)Greek prime minister Lucas Papademos gave an important interview to the NYT on Monday night. Think for a minute about the natural fractiousness of bondholders, and then read this:
It is something that has to be considered in the light of expectations about the degree of the participation to be achieved, Mr. Papademos said. It cannot be excluded. It is contingent on the percentage.
This is a pretty clear message: if the bondholders dont agree to Greeces terms, then Greece can simply force them to join the exchange. Greeces bonds are issued under Greek law, and Greece can change its own domestic law any time it wants. My guess is that this is exactly whats going to end up happening. Papademos has two sets of advisors: its bankers, Lazard, and its lawyers, Cleary Gottlieb. Lazards Greece team is headed by Mark Walker, the former managing partner at Cleary Gottlieb, and Clearys Greece team is headed by the dean of sovereign debt advisors, Lee Buchheit. Bondholders, in general, have a lot of experience going up against Walker, Buchheit, and Cleary generally. And whenever thats happened, the sovereigns have won, and the bondholders have lost. Just ask anybody who held Russian domestic debt in 1998: Russias lawyer, back then, was Mark Walker.
Meanwhile, the lead negotiator on the creditor side is the IIFs Charles Dallara, an amiable buffoon whose main purpose in life is to try to make sure that everybody likes him and thinks that hes important. When faced with hard-nosed and single-minded Cleary types, hell be useless especially given that the banks have already cut him off at the knees by refusing to let him negotiate on their behalf. He can wave his hands around and agree in principle to a deal, but he cant actually commit any bondholders to participating. Which means that the negotiations are really just an opportunity for Dallara to talk a lot (he likes doing that), and for Greece to flatter him into agreeing to whatever it is theyre going to do in any case.
In her interview with Papademos, Rachel Donadio says that European leaders are set against the idea that Greeces credit default swaps should be triggered, on the grounds that it could ignite a chain reaction with unpredictable and potentially catastrophic results for the world financial system. Shes wrong about that: it couldnt. The only thing a CDS trigger does is make sure that people who bought insurance on a Greek default get paid when Greece defaults. It would mean that the people doing the insuring lose money, of course. But anybody writing an insurance policy has to be willing to pay out on it especially when youre insuring a credit as risky as Greece. A CDS trigger would not be catastrophic at all, and theres really no reason to try to avoid one...The real negotiations are the ones which are certainly going on behind the scenes, between the troika (the EU, the ECB, and the IMF) and the Greeks. The one thing which Greece needs is for the troika to keep on funding Greeces deficits. And so its the troika the organizations who are actually providing money, here which holds all the cards. As in any bankruptcy, if you put up cash, you call the tune....But the big-picture game plan is clear. Greece is going to default, on March 20, and theres really nothing the banks can do to stop it. If youre not willing to accept whatever deal Greece comes up with, you probably shouldnt be holding Greek bonds at all.
Demeter
(85,373 posts)PODCAST INTERVIEW WITH LEO PANITCH AT LINK
Demeter
(85,373 posts)...Münchau says that Standard and Poors was right not necessarily about the ratings downgrades, but rather that Europe was fixated on the wrong problem, budget deficits. in his view and mine- this is only going to make things worse. Austerity has already led to a worsening outlook for Europe with even Germany now expecting 0.7% growth for all of 2012.
In Münchaus view, the reason for the downgrades was that Europe is fighting the wrong battle. S&P even said in their message on the downgrades that an austerity-centered approach would make matters worse. Wolfgang noticed that German Chancellor Merkel and her Finance Minister Schäuble responded to this message by exhorting Europe to push through their austerity packages more quickly. Clearly they dont get it.
Wolfgang goes on to say that the problem is not in the public sector but in the private sector, where high debt, deleveraging and then recession caused a gaping hole to open up in the public sectors balance sheets. Moreover, in what Münchau calls the single currency "strait jacket", the economies of Euroland have diverged rather than converged and that has meant current account imbalances and private debt accumulation in the periphery.
To me this situation looks pretty hopeless frankly. Policy makers in Europe just dont get it. The best we are going to get is austerity and partial monetisation by the ECB until the union breaks or sovereign debtors default and banks are recapped. The question is why are they leading us down the abyss. Wolfgang says its because the government deficit story is an easier narrative to tell and simpler to attack within the existing institutional limitations of Euroland. That makes some sense politically, but it tells me that this crisis will continue to get worse.
Ghost Dog
(16,881 posts)Eg. (Just substitute 'sovereign' for 'corporate' bond where appropriate):
...However, with a CDS, you can buy insurance even if you dont own the bond; this is called speculation. When you buy a CDS w/o owning the underlying bond, you are essentially betting that the corporation will go bankrupt. This is like buying car insurance for your friends shiny new Ferrari, hoping to collect in the event that he crashes. Some hedge funds even allegedly speculate in CDS while sabotaging their underlying corporate stocks to increase the chances of bankruptcy. This is the equivalent of cutting the brakes on your friends Ferrari.
The Problem with CDS
Uncontrolled greed and lack of regulation has allowed banks and other financial institutions to insure more corporate bonds than they can afford. There is no authority in the CDS market that ensures that people who are writing insurance can actually cover it in the event of a disaster. Another problem is that these policies can be bought, sold, and traded like stocks. Even if a sound, well capitalized institute originated the CDS, they could have sold the contract to a non-so-sound company that cant cover the cost of default. This is truly a ticking time bomb.
Chain Reaction
If a behemoth nationwide bank fails, company X, which has written far too many CDS contracts, will have to pay billions or trillions to cover the insurance. There is no company on the planet that has that much money, so company X would have to declare bankruptcy too. Whoever wrote CDSs for company X would have to cough up insurance money (that it doesnt have), setting off a domino of bankruptcies...
/... http://www.bankaholic.com/derivatives-credit-default-swaps/
But also:
/... http://www.ifre.com/derivatives-avoiding-greek-credit-event-questions-cds-value/632980.article
I've a feeling that sort of idea of what's supposed to be merely 'notional' is about to become... notional, as this particular leveraged and rehypothecated toxic derivative chain threatens to unravel.
Ghost Dog
(16,881 posts)"... bought their bonds at around 40 cents on the dollar, are likely to suffer a loss..." The poor dears.
xchrom
(108,903 posts)you're still feel the lingering effects of your Grunge.
Demeter
(85,373 posts)but that's what happens when the winter isn't cold enough to kill the germs, or at least, keep them home.
And I've been over-committed for months, maybe a year now. Not sure how to taper down, either.
xchrom
(108,903 posts)Demeter
(85,373 posts)One surefire way for money to provide happiness appears to be to spend it on other people. Karen Hopkin reports....
Can Money Buy Self-Esteem? By Ingrid Wickelgren SCIENTIFIC AMERICAN
http://blogs.scientificamerican.com/streams-of-consciousness/2012/01/17/can-money-buy-self-esteem/?WT_mc_id=SA_CAT_MB_20120118
...studies show that people do reap real psychological benefits from the purchase of high status items. Still, some people may gain more than others do, and studies also suggest that buying fancy stuff for yourself is unlikely to be the best way to boost your happiness or self-esteem....
Roland99
(53,342 posts)Roland99
(53,342 posts)* U.S. 2011 housing starts 606,900 vs 586,900 2010
* December starts much weaker than 695,000 expected
* U.S. Dec. housing starts down 4.1% to 657,000
Roland99
(53,342 posts)* U.S. weekly jobless claims sink 50,000 to 352,000
* Four-week claims average drops 3,500 to 379,000
* Continuing claims decline 215,000 to 3.43 million
* CPI minus food, energy rises 0.1% in December
* U.S. consumer prices rise 3.0% in 2011
* Inflation-adjusted hourly wages up 0.2% last month
* Consumer price index unchanged in December
Tansy_Gold
(17,860 posts)You're a life-saver!
:MWAH:
(And if your wife get jealous, tell her it's just a cyber kiss from an old lady on DU.)
Roland99
(53,342 posts)Roland99
(53,342 posts)DemReadingDU
(16,000 posts)1/19/12 Another Icon Files Bankruptcy
There are days that make you wonder whether what America has turned into, and whether "progress", really is progression or regression.
Today is one of those days.
click to read rest of the article, see some photos of Kodak cameras, and link to Paul Simon's song Kodachrome...
http://market-ticker.org/akcs-www?post=200768
1/19/12 Kodak Files for Bankruptcy Protection
http://www.bloomberg.com/news/2012-01-19/kodak-photography-pioneer-files-for-bankruptcy-protection-1-.html
Today is a sad day
xchrom
(108,903 posts)LONDON, Jan 19 (Reuters) - Gold climbed for a fourth session on Thursday as the euro hit a two-week high versus the dollar and European stock markets rose on hopes the IMF may boost lending resources, with markets also awaiting the outcome of crucial talks between Greece and its creditors.
Spot gold was up 0.2 percent at $1,661.99 an ounce at 1021 GMT, having earlier peaked at $1,669.75, its highest since Dec. 13. It has had a positive start to the year, up 6.4 percent since end December.
Gains in the euro have helped it this week. The single currency climbed to a two-week high against the dollar and the yen on Thursday, supported by better appetite for assets seen as higher risk.
"Rising risk appetite, a weak U.S. dollar and the breach of key resistances is giving gold the momentum to head towards the $1,700 an ounce level in the near term," said Pradeep Unni, senior analyst at Richcomm Global Services. Further resistance could be expected at $1,686, he added.
xchrom
(108,903 posts)he Spanish Treasury has today placed more than 6.6 billion of long term debt and at a lower interest rate than before.
It had wanted to place between 3.5 and 4.5 billion at four, seven and ten year bonds, according to the Bank of Spain, but managed to do better.
1.3 billion was placed in four year bonds at 4.25%, lower than the last similar auction in November when interest was 4.848%.
2.3 billion was placed in seven year bonds at 4.6%, compared to 5.11% last October.
And just over 3 billion was also placed in ten year bonds at 5.85%. Last time this denomination was auctioned, nearly 7% interest had to be paid.
The treasury had another successful auction of 4.9 billion just two days ago.
Read more: http://www.typicallyspanish.com/news/publish/article_33422.shtml#ixzz1jufxmNRd
*** this begs Miss Tansy's question -- where's it coming from?
xchrom
(108,903 posts)Latest statistics show that life expectancy in Spain has fallen, not by much, but still breaking an upward trend which has lasted nearly half a century.
For men the life expectancy now stands at 78.87 years, while for women it is 84.82 according to the National Statistics Institute. That makes the average for the country 81.87, down 0.8 on 2010.
Life expectancy ranges from 83.68 in Navarra and 83.43 in Madrid to 78.85 in Ceuta and 80.7 years in Andalucía.
Albert Esteve from the Centre for Demographic Studies at the Barcelona Autonomous University, said that although the reduction is very small and could be possibly irrelevant, we have to pay attention to it as it breaks the tendency of the last 50 years. He noted that in general, Spaniards have been gaining another year of life expectancy every four years, and have one of the longest life expectancies in the world.
Margarita Delgado from the CSIC, the Superior Council for Scientific Investigation, noted that the economic crisis is a negative factor when it comes to having children. The public powers are very busy trying to bring confidence to the markets, but we have to also give the citizens confidence, she said. They need confidence in the future in order to build a family and decide to have children.
The new numbers show that births were down 1.1% in the first half of 2011 compared to the year previously, and 35.5% of new mothers are not married.
Read more: http://www.typicallyspanish.com/news/publish/article_33423.shtml#ixzz1jugj63X7
Ghost Dog
(16,881 posts)In fact, last year for the first time since the Transition (from dictatorship to a democracy of sorts) Spain's population declined, as immigration fell and emigration rose. Both groups tend to consist of, um, fertile (and risk-taking) young people, and immigrants in particular have been contributing greatly to Spain's birth rates.
xchrom
(108,903 posts)Of emigration on the PIIGS.
xchrom
(108,903 posts)HONG KONG Japanese were being optimistic when they chose "kizuna"* (bond) as the word of the year for 2011, referring to people coming together after the triple disasters of earthquake, tsunami and nuclear plant meltdown.
We should regret that Prime Minister Yoshihiko Noda is going to skip the annual meeting of the World Economic Forum (WEF) next week in Davos. That is because he might hear some uncomfortable home truths about the lessons of Great East Japan Earthquake and its aftermath. He would also learn that one of the words of 2012 is "dystopia," and Noda might reflect on how he may be helping to create a modern dystopia.
"Dystopia" is the key word in the "Global Risks 2012" report just issued by the WEF. The main message of the report is that economic turmoil, financial stringency and social upheaval could not only roll back the gains the world has made from globalization but also could lead to a "dystopian future for much of humanity."
The report explains that: "Dystopia, the opposite of a utopia, describes a place where life is full of hardship and devoid of hope." The risks are not single, but come from the "constellation of fiscal, demographic and societal risks. ... The interplay among these risks could result in a world where a large youth population contends with chronic, high levels of unemployment, while concurrently, the largest population of retirees in history becomes dependent upon already indebted governments."
xchrom
(108,903 posts)The capital shortage at Commerzbank is apparently much larger than previously believed. The major German lender needs around 6 billion ($7.7 billion), daily Die Welt reported on Wednesday. Until now, the European Banking Authority (EBA) regulatory body had estimated the shortfall at 5.3 billion.
But that isn't the only bad news for Commerzbank -- ratings agency Moody's has said it may downgrade the bank's creditworthiness because of its exposure to troubled real estate lender Eurohypo.
According to Die Welt, the need for the extra funds is due to the ongoing negotiations for a debt 'haircut' for Greece. Germany's second-largest bank held Greek bonds worth 1.4 billion at the end of the third quarter last year, even though it had written off 50 percent of them in 2011.
That writedown may no longer be enough, however, as an even higher debt cut has reportedly been proposed in the negotiations between Greece and private creditors.
Such a debt write-off is apparently close to becoming a reality for Commerzbank, which is already working hard to find a solution to its huge capital gap. Banks must report their capital needs identified in stress tests to the EBA this Friday, while Commerzbank must obtain the necessary money by the end of June this year, otherwise it faces compulsory nationalization. The German government already holds 25 percent plus one share of the company.
Ghost Dog
(16,881 posts)Commerzbank AG (CBK), Germanys second- largest lender, said its more than halfway toward its goal of plugging a capital gap without using government aid. The shares surged.
The bank can strengthen capital by 6.3 billion euros ($8.1 billion) by raising funds and reducing risk-weighted assets by June 30, Frankfurt-based Commerzbank said today. Thats more than the 5.3 billion-euro shortfall the European Banking Authority told the lender to plug. The bank said it had fulfilled 57 percent of that requirement by the end of 2011...
... We stand by our word: we do not intend to make use of additional public funds, Eric Strutz, the companys chief financial officer, said in the banks statement. With the approved set of measures, the bank is showing that its able to meet the capital requirements of the EBA, relying on its own strength even in a difficult environment.
The stock jumped as much as 15 percent and was 13 percent higher at 1.60 euros at 11:05 a.m. local time, valuing the company at about 8.2 billion euros. It was the biggest increase in Germanys benchmark DAX Index. (DAX)
/... http://www.bloomberg.com/news/2012-01-19/commerzbank-halfway-to-plugging-capital-hole-won-t-need-aid-shares-soar.html
xchrom
(108,903 posts)Hotler
(11,425 posts)I show up Monday for work and I have no desk, no work area, no computer. The other drafting person was out sick Monday and Tuesday so I used their work station. They came back on Wednesday so my manager moved and let me draw at his computer while he did paper work in the conference room. We went down stairs to IT on Tuesday to get me a sign on password and ask about a computer. They had no idea who I was and what was going on. Went back down yesterday to ask again about the computer and they said they would be up with one before lunch. My boss set about clearing me a desk in the back corner to work at. IT came up with a machine and my password around 3:30 and just left it. I had to hook it up which was no big deal. I fire it up and there is no AutoCAD on it. I tell the boss and he emails IT downstairs. IT writes back that they have no more AutoCAD licenses and have to go through channels to buy more. These fuckers had more than two weeks to get their shit together and get me setup to come in and go to work. Big corporate structure here (kinda creepy) . They make a big deal about quality and improving quality and making the customer happy, ISO 9000 quality control blah, blah, blah, and how the workers better have their shit together. They hired me on part time so I worked 3/10's. I bet they won't have me setup on Monday. Maybe what they need is more fucking managers. They expect me to have my shit together, but I guess expecting a little professionalism and organization on their part might be asking to much. Fuckers!
Roland99
(53,342 posts)fun times, indeed.
AnneD
(15,774 posts)the check clears the bank Hotler.
Remember 'your' priorities. If they screw up and not take full advantage of your expertise, it is their problem not yours.
Hotler
(11,425 posts)Thanks for helping me stay grounded.
Tansy_Gold
(17,860 posts)Remember that you ALWAYS have us to rant to. When you're face to face with the assholes and you have to smile and bite your tongue in half to keep from telling the fuckers to jump, you can always come home, log in to DU, and rant to your heart's content.
Hotler
(11,425 posts)DemReadingDU
(16,000 posts)Demeter
(85,373 posts)when the Kid is having a really bad day, for example.
AnneD
(15,774 posts)we have good ears. But just remember "the check clears the bank". That thought is what has got me to retirement. My brief brush with unemployment also gave me a totally new outlook at bill paying which I still retain today. You never ever hear me complaining that I have to pay bills. I am thankful that I can even pay them.
Been there, don't want to go there again.
Hotler
(11,425 posts)I wrote that down and taped it to my kitchen cabinet. Thanks
AnneD
(15,774 posts)the simple things that can help the most.
When I started Nursing school...it was a mighty big mountian to climb. The first class they handed out a course syllabus with daily lesson topics and readings that we were expected to read BEFORE the class in calendar form. Now I had a full time job and half way through school got pregnant and had an infant daughter, saw my first marriage break up, and became a single mom, in that order.
The only way I could reduce my panic level and keep my sanity was to buy a red sharpie. At the begining of every class or at the end of the day-I would cross off that day. There were days when the only satisfaction I had was that I got to pull out the red sharpie and putting a big red X for the day. I even calculated the mid point. But slowly there were more days crossed off. When I hit the halfway point, I had a lift-I knew it was down hill from that point.
Thank God someone took pictures of my graduation-I don't even remember it. The bags under my eyes had bags under them-I was that sleep deprived. But the important thing was that ...I MADE IT.
So when things get tough for you remember this: tough times don't last but tough people do. The expression is to cowboy up or saddle up.
You have already gone through a trial by fire. You can put up with a little hiccup in your new job.
AnneD
(15,774 posts)I came across this academic economic history piece that I thought I would share. A bit dry but that can be part of it's charm-no hype or attempts to sell you a product......
http://eh.net/encyclopedia/article/wicker.banking.panics.us
Prior to the passage of deposit insurance legislation in 1933 banking panics were a recurrent feature of U.S. banking history. Three phases of that panic experience can be identified depending upon the type of regulatory framework in place: the pre-Civil War era, the National Banking era, and the era of the Federal Reserve System. Federal regulation was absent in the antebellum period with panics in 1819, 1837, 1857 and incipient panics in 1860 and 1861. During the National Banking era, banking panics occurred in 1873, 1893, and 1907 with incipient panics in 1884 and 1890. After the Federal Reserve Act was passed in 1913, there were four full-scale banking panics, one in 1930, two in 1931, one in 1933 and a localized panic in Chicago in 1932. This article will examine post-Civil War banking panics only.
Panics as Financial Shocks
Banking panics belong to a general class of financial shocks, which include panics in the stock market, the foreign exchange market and the acceleration of commercial bankruptcies. Banking panics are only one type of financial shock and certainly not the most frequent.
A banking panic may be defined as a class of financial shocks whose origin can be found in any sudden and unanticipated revision of expectations of deposit loss where there is an attempt, usually unsuccessful, to convert checking deposits into currency. In the past banking panics were regarded as examples of irrational or inscrutable behavior. That has changed. More recently they have been treated as a rational depositor response to an asymmetric information deficit. This revival of interest in banking panic theory has renewed scholarly interest in what happened in specific panic episodes.
<big snip>
Disappearance of Panics after 1933
The long era of banking disturbances finally ended in 1933 due partly to the introduction of deposit insurance, improved performance of the Federal Reserve, and a better understanding of the sources of systemic banking unrest. Knowledge alone, we have learned, is not a sufficient guarantee to forestall banking panics. Leadership and policymaker competence are important as well.
The last paragraph is my fav and demonstrates why I think we are at risk.
Fuddnik
(8,846 posts)Policymaker competence?
Stop it! You're killing me!
I know the punch line. I once spent about an hour talking to Chris Dodd.
AnneD
(15,774 posts)the good stuff. The fact it is a dry academic tome makes it even funnier.
I remember you once saying that Dodd was dumber than a box of rocks. When I saw him yesterday espousing SOPA and PIPA for the Hollywood interest groups about the bill he helped write (no conflict of interest there) I kept thinking about a box of rocks being smarter.
DemReadingDU
(16,000 posts)"The last paragraph is my fav and demonstrates why I think we are at risk."
Sure we all believe in that 'deposit insurance', only they neglect to tell us that there is not enough for everyone's money in their accounts to be paid at one time. Perhaps a token $100 every week for everyone while those 'policymakers' decide how and when to pay us the rest.
Fuddnik
(8,846 posts)Sounds like a job for Bain Capitol. Vultures are people too, my friend!
Ghost Dog
(16,881 posts)they lie.
Hotler
(11,425 posts)Ghost Dog
(16,881 posts)While the news that Mitt Romney has joined Warren Buffet in the "my secretary makes more than me" 15% tax club has come and gone, even as America appears largely confused or dismissive that Romney, at least on paper appears to be precisely the puppet that Wall Street wants put in charge, we are not so sure how it will react to discovering that in addition to all of the above, Romney also holds a substantial (portion) of his assets deep offshore, in the much maligned recently Cayman Islands. As a reminder, it has long been Obama's "tax-policy" to force repatriation of virtually all individual tax holdings held abroad, both legally and illegally, much to the detrimental collapse in the UBS business model. Yet apparently when it comes to potential future presidents, loopholes are quite welcome. Especially when as ABC reports, "the offshore accounts have provided him -- and Bain -- with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury." As a reminder: "Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens."
/... http://www.zerohedge.com/news/mitt-romneys-millions-cayman-island-offshore-tax-havens
Demeter
(85,373 posts)although there's some stuff I would like to try (germ warfare, dirty nuke bomb, mass arrests in prison camps, all the gifts they have or will be giving us), and BRAIN WASHING, Progressive style.
Demeter
(85,373 posts)One of the major themes that I have been discussing in Europe for a long period of time is the simple failure of logic in which the European periphery is being instructed to push deflationary policy onto their economies, yet at the same time expected to meet their existing, and growing, debt obligations. In the most extreme case this has led to what you now see in Greece, but I dont think Portugal or Spain are far behind. This failing policy is leading to the zombification of nations, in which they cant grow out off their debts yet arent being allowed to fail on them either. Kept alive by an ever-growing lifeline of foreign aid when the real solution is to let the beast die and re-build from the ashes. I think if we compare Iceland to Ireland we are beginning to get a clear picture of the benefits of writing off the debts and starting anew.
As I have also spoken about over the last month or so, what is happening in the real economies of Europe is being replicated in the banking system. This is most apparent in the interbank market, as I said:
Although the LTRO does seem to have done some good for short term sovereign debt via supporting direct purchases, or at least the perception of them, it doesnt appear to be helping in the area that central bank operations actually target. That is, interbank market stability.
The latest ECB data shows that banks parked a near record 446bn Euro in the ECBs deposit facility, but this in itself isnt a problem. What is the problem is that the increasing use of the ECBs marginal lending facility shows that not all of these parked reserves are actually excess to market requirements.
What appears to be occurring is that banks are hoarding reserves instead of providing them to the interbank market. If I took a guess I would suggest that this being caused by deposits flowing out of periphery banks into the core (and probably some non-Euro markets). These flows require the periphery banks to recoup some of their lost reserves which they would normally do in the interbank market. If this is correct then appears that the banks themselves have already decided that there are some Zombies in the system. Under these circumstances what should occur is that these banks are identified, assessed and broken up in a structured way in order to purge the financial system of entities that are no longer solvent. Yes, this would mean that investors in those entities would be out of pocket, but that is the risk of investing which is why you get paid a premium. Dividends I believe they are called ! However, as I have stated numerous times, the Europeans appear to believe that the normal tenants of investing need not apply on their continent so we continually see policies implemented across Europe to keep the poison in the patient. The ECBs 3-year LTRO is the latest incarnation of the band-aid to cover the ever-growing wound. Instead of properly stress testing the financial institutions to determine which ones are insolvent and in need of removal, we have an operation by the central bank to provide massive amounts of excessive liquidity. The hope is that this will stabilise the the interbank market and therefore banks will go on their merry way doing what banks do, that is providing credit to the private sector within the bounds of monetary policy.
This approach appears to be failing as, even Mr Draghi has admitted, the interbank market is still frozen. However, even if this wasnt the case I doubt very much whether periphery banks would be falling over themselves to lend because: Firstly the banks appear to be using the facility to re-capitalise while at the same time they shrink their asset base in order to meet capital requirements, and secondly, in a poor economy the appetite and/or desire for credit is low and the availability of credit-worthy customers is limited...
Demeter
(85,373 posts)You just cant get rid of zombie Larry Summers. He can get drummed out of Harvard. He can see the deregulation policies he pushed in the Clinton Administration lead to a financial meltdown. He can preside over a sluggish economy for two years during the Obama Administration, after which Congress flips to the opposition. And he just keeps falling upwards.
Summers has expressed his interest in the job to White House officials and has backers inside the administration, including Treasury Secretary Timothy Geithner and the current NEC Director, Gene Sperling, said one of the people. Secretary of State Hillary Clinton is also being considered, along with other candidates, said the other person. Both spoke on condition of anonymity to discuss internal White House deliberations.
There is literally nothing Larry Summers can do to get excommunicated from the ranks of the elite. That goes for most members of the ruling class, which, after all, rules.
Incidentally, Larry Summers has worked at the World Bank before as a vice president and chief economist. Thats where he signed off on a memo expressing support for having underdeveloped nations take pollution from the developed world:
The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. Ive always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
As this page explains, the former Secretary of the Environment for Brazil, Jose Lutzenburger, responded to Summers by calling the memo perfectly logical but totally insane and saying that Summers exhibited the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional economists concerning the nature of the world we live in. For his part, after writing this letter, Lutzenberger was fired.
You cannot stop Larry Summers.
UPDATE: On the merits of this, Felix Salmon is right that Larry Summers shouldnt come within 1,000 feet of any position that requires a diplomatic role.
Demeter
(85,373 posts)Class Action Lawsuit Alleges JP Morgan Engaged in Systematic Document Fabrication to Move Mortgage Losses from Its Books into Mortgage Backed Securities
http://www.nakedcapitalism.com/2012/01/class-action-lawsuit-alleges-jp-morgan-engaged-in-systematic-document-fabrication-to-move-mortgage-losses-from-its-books-into-mortgage-backed-securities.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
To our knowledge, the suit filed by Ernest Michael Bakenie against JP Morgan is the first to accuse a major bank of widespread, systematic residential mortgage documentation and fraud. I dont have a copy of the filing and am relying on the summary in Courtroom News Service (hat tip Jesse via reader Scott) but it is a doozy. (The case is described as a class action, but has yet to obtain class certification by the court).
Weve reported repeatedly of widespread evidence of grotesque procedural abuses as servicers and foreclosure mill lawyers try to cover up for the fact that in many cases, mortgage notes were not transferred properly to securitization trusts, and the rigid way these deals were structured makes it impossible to remedy those failures at this juncture. Absent creating a time machine, the only fix is to fabricate documents that make it appear than things were done correctly. Weve seen (as in in person) obvious forgeries submitted to the court (signatures obviously Photoshop shrunk to fit) and servicer personnel caught perjuring themselves, yet judges are remarkably unwilling to issue a ruling that hinges on finding that the plaintiff filed phony documents.
If this case moves forward, that reticence may change. Note that this case, which covers only the Central District of California, alleges that Chase engaged in over 7000 filings of motions of relief of stay in bankruptcy court using fabricated documents. Remember that filing for bankruptcy puts a stay or hold, on all creditor claims. They all go wait while the court determines which creditors get what from the under water borrower. A motion for relief of stay by a mortgage lender is tantamount to saying, Judge, let me grab the house. Motions for relief of stay are typically a costly nuisance for bankruptcy lawyers. It wastes the borrowers scarce money to shoo them away (and some plaintiffs lawyers will take advantage of inexperienced bankruptcy lawyers by getting them to sign a waiver in return for dropping the motion for relief of stay that looks innocuous but has a paragraph in it changes the burden of proof from the bank to the borrower, which almost always puts them at a fatal disadvantage and results in the loss of the home).
The other critical document discussed in this case is a proof of claim. Bankruptcy court is all about establishing whether the parties that want a pound of flesh from the borrower are really entitled to it. They are required to submit a proof of claim to substantiate their demand. Bankruptcy judges spend a considerable amount of time assessing the validity of these claims.The case asserts that fabricating documents was very helpful to JP Morgan, enabling it to file successful proofs of claim and motions for relief of stay 95% of the time....MORE
DemReadingDU
(16,000 posts)Uh oh
intentional fraud, again.
Demeter
(85,373 posts)An odd development today was that Christine Lagarde, the head of the IMF, put forward the idea of having members pony up $500 billion for rescue loans, since the agency said it foresees demand of $1 trillion over the next two years and it has only $387 billion uncommitted. It goes without saying that the most of the anticipated need is in Europe...There are two puzzling aspects of this story. One is that the IMF got a serious and predictable smackdown from the US, since any funding would be a fiscal outlay, which requires Congressional approval, which is just not happening with Washington embracing the new religion of deficit reduction. Even though Eurobanks are really big lenders in the US (they are the providers of cheap corporate loans) and they did get really sick from eating toxic US mortgage instruments, the message from the Administration was tart. Per the Financial Times:
The IMF cannot substitute for a robust euro area firewall, the US Treasury said in a statement. We have told our international partners that we have no intention to seek additional resources for the IMF.
The UK wasnt too keen either.
Since the objective was presumably to get some funds into Europe, that means the logical suspects are emerging economies. India and Brazil made positive noises, but advanced economies are cool on getting funding from China and the feeling is likely mutual. While some observers have suggested that China could simply recycle the annual amount it uses to maintain its currency-weighted peg (last estimate I saw was 70 billion euros, but growth and exchange rates have changed since then), the big stumbling block is that China wants concessions in return for its largesse. In addition, the Chinese want politically desirable but unrealistic assurances that its foreign currency holdings wont depreciate. Since China has said it plans to liberalize its peg, it is guaranteed losses on the currencies it is buying to manipulate its currency level...And thats even assuming the Chinese would play ball. They turned down a direct appeal by Sarkozy to invest in the EFSF. Why would China go through an international organization where it is chafing at its level of votes it has when it has the option of dealing directly?
All of the elements of this equation were known in advance. None of these reactions is a surprise. So why did Lagarde announce a measure that was likely to land like a lead balloon?
Lets consider the second puzzling part: Mr. Market is currently in a good mood because the ECB has been pretty aggressively lending to banks via its three year LTRO, and the banks can use the proceeds to buy government debt. So while the ECB cant lend to eurozone states directly, it can launder the loans through banks. And at least some readers of this blog have taken to arguing (effectively) that the ECB will act just as the Fed did in the 2007-2008 crisis, it will do what it takes to save the system, in particular, monetize debt...But if this were true, the IMF would NOT need to fund bailouts in the eurozone. The ECB has the capacity on its own. So Lagardes move would seem to say that the IMF does not think the ECB will go the distance, and the IMF will need to step up in a meaningful way. This is consistent with the take of some of my German-press-reading correspondents. Their interpretation of various official remarks is that while the ECB is clearly willing to do more than in the past, it is not willing to balloon its balance sheet to the degree the Fed did....So Lagardes request may indeed be a tacit admission that the IMF knows that the ECB wont go the distance, as well a precaution, not just on a practical level (to try to have as much firepower as possible) but on the political (to say she did what she could when the IMF is the target of blame-mongering, which is what will happen if/when a crisis breaks loose).
Demeter
(85,373 posts)By Paul Davidson, Americas foremost post-Keynesian economist. Davidson is currently the Holly Professor of Excellence, Emeritus at the University of Tennessee in Knoxville. In 1978 Davidson and Sydney Weintraub founded the Journal for Post-Keynesian Economics. Davidson is the author of numerous books, the most recent of which is an introduction to a post-Keynesian perspective on the recent crisis entitled The Keynes Solution: The Path to Global Prosperity.
Introduction by Philip Pilkington
YOUR LECTURE FOR THE WEEK--READ IT AT YOUR OWN PERIL
Demeter
(85,373 posts)Fund managers cannot possibly know what the future will bring, yet they have to commit today to holding assets that promise a return tomorrow. Such a commitment requires confidence -- confidence that is hard to find in the face of uncertainty. To cope with the uncertainty, fund managers rely on gut feelings and invent stories that justify their decisions. In the end, it is stories and emotions that drive financial markets. That is, in a nutshell, the theory of asset pricing developed by David Tuckett.
Some unconventional advice to monetary policy follows. Central banks, Tuckett says in this interview with INET Executive Director Robert Johnson, should create stories themselves. This is not to call for central bankers to tell fairy tales. No, what central banks can do is create their own stories -- stories that are anchored in meticulous observation and forensic analysis of new markets and new business opportunities...
VIDEO LECTURE AT LINK...TIES IN WITH PREVIOUS POST, I THINK
Demeter
(85,373 posts)Gonna rest up for Friday....