Monday, May 31, 2010

Worrywort Round-up

Items of Interest:

Hundreds die in Indian heatwave -- Death toll expected to rise as India faces record temperatures of up to 122F in hottest summer on record

Times [UK]
Israel stations nuclear missile subs off Iran -- Three German-built Israeli submarines equipped with nuclear cruise missiles are to be deployed in the Gulf near the Iranian coastline.

The first has been sent in response to Israeli fears that ballistic missiles developed by Iran, Syria and Hezbollah, a political and military organisation in Lebanon, could hit sites in Israel, including air bases and missile launchers...
Washington Post:
Oil could spew until August, officials say -- As BP readied its latest fallback plan to stop oil gushing from one of its wells in the Gulf of Mexico, the Obama administration and the company warned that the crude could continue flowing until August, compounding threats to coastal wetlands, fisheries and beaches...
Jim Hoft / Gateway Pundit:
Breaking: Taliban Using Chemical Weapons Against US Troops? -- Five US troops serving in Afghanistan recently fell ill after a suspected chemical weapons attack. Four or five members fell ill after the attack. One soldier is very sick. They are having trouble breathing...
Wall St. Journal:
Back to the Future: Lessons From the Forgotten 'Flash Crash' of 1962 -- The 1962 flash crash stepped up public pressure on the SEC and Wall Street to clean up trading procedures. But by the summer of 1968, billions of dollars' worth of trades were going astray every month, and the major stock exchanges had to close down on Wednesdays so brokers could get a midweek breather to catch up on processing delays.

The crash of 1962 is a reminder that markets always have been messy and that investors' morale always has been fragile. What's more, the problems the regulators sought to solve nearly a half-century ago are still with us today. They probably will be tomorrow, too...
Business Week:
Chuck Schwab Is Worried About Small Investors. Should We Worry Too? -- Schwab is sitting in his San Francisco office—which has always been spare but these days seems downright spartan—looking out the window at the Bay Bridge and mulling the tortured psychology of the American investor. "Where are they?" he asks, then pauses and lets out a sigh. "This is the most violent period I've ever seen," he says finally. "It was the end of capitalism as we knew it. The whole definition of safety and soundness—what does it really mean any more?" ...
NY Times:
Placing the Blame as Students Are Buried in Debt -- According to the College Board’s Trends in Student Aid study, 10 percent of people who graduated in 2007-8 with student loans had borrowed $40,000 or more. The median debt for bachelor’s degree recipients who borrowed while attending private, nonprofit colleges was $22,380.

The Project on Student Debt, a research and advocacy organization in Oakland, Calif., used federal data to estimate that 206,000 people graduated from college (including many from for-profit universities) with more than $40,000 in student loan debt in that same period. That’s a ninefold increase over the number of people in 1996, using 2008 dollars...

Friday, May 28, 2010

The Nuclear Debt Bomb

David Einhorn / NY Times:
Easy Money, Hard Truths -- As we saw first in Dubai and now in Greece, it appears that governments’ response to the failure of Lehman Brothers is to use any means necessary to avoid another Lehman-like event. This policy transfers risk from the weak to the strong — or at least the less weak — setting up the possibility of the crisis ultimately spreading from the “too small to fails,” like Greece, to “too big to bails,” like members of the Group of 7 industrialized nations.

We should have learned by now that each credit — no matter how unthinkable its failure would be — has risk and requires capital. Just as trivial capital charges encouraged lenders and borrowers to overdo it with AAA-rated collateral debt obligations, the same flawed structure in the government debt market encourages and therefore practically ensures a repeat of this behavior — leading to an even larger crisis.

I don’t believe a United States debt default is inevitable. On the other hand, I don’t see the political will to steer the country away from crisis. If we wait until the markets force action, as they have in Greece, we might find ourselves negotiating austerity programs with foreign creditors.

Some believe this could be avoided by printing money. Despite the promises by the Federal Reserve chairman, Ben Bernanke, not to print money or “monetize” the debt, when push comes to shove, there is a good chance the Fed will do so, at least to the point where significant inflation shows up even in government statistics....
Zero Hedge:
Extend & Pretend: Its Either RICO Act Or Control Fraud -- After nearly two years since the greatest financial malfeasants in history and ten years since the last public example of financial crime, the public haven’t seen a single CEO sentenced to hard time for the financial meltdown. They have not had their thirst for revenge quenched by a single high level court case. Instead, the public infuriatingly witnesses politically crafted theater in congressional hearings that go nowhere, read watered down legislation that is replete with even richer lobbyist-authored loopholes and only occasionally see small headlines of quiet settlements with insulting token amends payments. Why? Were there no crimes committed? No laws broken?

The public is forced to accept excuses that we have enforcement agencies not enforcing, regulators not regulating and legislators not equipped to legislate properly in our modern fast moving financial world. The public is left with the gnawing concern of whether it is incompetence or something much deeper, more troubling, and more sinister. Confidence and trust in government and our democratically elected politicians continue to worsen from already pathetic levels.

The taxpayer while standing in long unemployment lines, reads in the newspapers of financial institutions that were making mind-numbing profits and paying horrendous executive bonuses suddenly being insolvent and needing taxpayer bailouts. Then as their unemployment benefits near exhaustion, they read of the banks’ profits soaring once again. These are the foundations of the emerging new age of public rage.

We have much more than a crisis of integrity. We have fraud that is so pervasive that it is now unknowingly institutionalized into our business and political culture...

Saturday, May 22, 2010

Blood in the Streets, Ash in the Air, Oil on the Water, and Retirement in the Toilet

 Retirement in the Toilet

The Federal Reserve is setting up the investing public for slaughter. By artificially keeping interest rates at 0% the Fed is driving people out of the safety of savings accounts, CD's, and money market funds into riskier assets. This will end badly.

Legendary investor, Seth Klarman, is sounding an alarm:

The government is now in the business of giving bad advice... By holding interest rates at zero, the government is basically tricking the population into going long on just about every kind of security except cash, at the price of almost certainly not getting an adequate return for the risks they are running. People can't stand earning 0% on their money, so the government is forcing everyone in the investing public to speculate.
And it's not easy to figure out what people should do, as Mr. Klarman told the Wall Street Journal:
I asked Mr. Klarman what he would suggest for smaller investors who share his worries.

"All the obvious hedges"—commodities and foreign currencies, for example—"are already extremely expensive," he warned.

Especially gold. "Near its all-time high, it's a very hard moment to recommend gold," said Mr. Klarman...
Wall Street Journal:  Legendary Investor Is More Worried Than Ever
Zero Hedge:
Seth Klarman Sees Another Lost Decade For Stocks, "Artificial" Market Reminds Him Of A "Hostess Twinkie"
Blood in the Streets

Washington Post:
Thai officials use a powerful visual to explain violence -- After regaining control of the Thai capital by force of arms, the military and government mobilized Saturday for a new battle that will help decide the outcome of the most tumultuous political struggle in Thailand's modern era...
Montreal Gazette:
B.C. filmmaker injured in Thailand protests awake after brain surgery -- Victoria filmmaker Chandler Vandergrift, who was seriously injured during the violent protests in Thailand this week, squeezed his doctor’s hand after making it through brain surgery, a friend and co-worker said late Thursday...
 Oil on the Water (how much?)

The Independent:
The black hole at the bottom of the Gulf -- Some 33 days, nearly a billion dollars of expenditure, and umpteen official statements after the Deepwater Horizon oil rig blew up in the Gulf of Mexico – and the world is still none the wiser about how many millions of gallons of oil are leaking into the ocean every day, how much has already been discharged into the sea, and – more to the point – how this, maybe the world's worst oil disaster, can be stopped.
Houston Chronicle:
New BP statement further clouds spill size estimates -- BP backed off of its statement that it had begun siphoning 5,000 barrels of oil a day from a leaking well on the Gulf of Mexico seabed, throwing into further confusion efforts to estimate how much crude is flowing...

Bloomberg BusinessWeek:
BP May Owe U.S. $1 Million a Day in Royalties on Spilled Oil

Washington Post:
Lessons from the Gulf oil spill
Ash in the Air

LA Times: 
For travelers, an Icelandic pain in the ash -- Figuring out whether travel insurance covers your canceled trip can be as hard to fathom as the pronunciation of the volcano causing all the trouble (Eyjafjallajokull)...
British travellers face 'ash tax'

Thursday, May 20, 2010

Today's 6 G's: Gulf, Grads, Greece, Goldman, Gold & Gwyneth

Items of Interest:

BP Capturing 5,000 Barrels a Day From Gulf Oil Leak -- BP Plc is capturing 5,000 barrels of oil a day from its leaking well in the Gulf of Mexico. The company couldn’t say whether that was all of the spill from the well, which has been estimated to be leaking at that rate.

“That’s 5,000 barrels a day of oil that is not going onto the sea bed,” said Mark Salt, a spokesman in Houston for BP. “We are continuing to optimize the flow.”

The oil is flowing into a drillship on the surface via a mile-long tube inserted May 16. The ship also is flaring natural gas from the well at a rate of 15 million cubic feet a day, said Salt. BP, based in London, yesterday estimated the daily flow to the drill ship at 3,000 barrels a day and 14 million cubic feet of gas...

NY Times:
Scientists Fault U.S. Response in Assessing Gulf Oil Spill -- Tensions between the Obama administration and the scientific community over the gulf oil spill are escalating, with prominent oceanographers accusing the government of failing to conduct an adequate scientific analysis of the damage and of allowing BP to obscure the spill’s true scope...
CBS News:
Heavy Sludge Oozes into Marshes of Louisiana

CBS News:
BP Bows to Pressure for Oil Leak Livestream -- Footage of Blown-Out Well to be Provided on Government Website 24 Hours a Day, Congressman Says...
College Grads Flood U.S. Labor Market With Diminished Prospects -- Schools from [Ohio State University] to Harvard University will soon begin sending a wave of more than 1.6 million men and women with bachelor’s degrees into a labor market with a 9.9 percent jobless rate, according to the Education and Labor departments. While the economy is improving, unemployment is near a 26-year high, rising last month from 9.7 percent in January-March as more Americans entered the workforce.

The graduates’ plight has been the subject of high-level discussions within President Barack Obama’s administration...
Greece, Shunned by Markets, Taps Bailout to Pay Debt -- Greece tapped emergency loans from the euro region today to repay 8.5 billion euros ($10.5 billion) of 10-year bonds, debt that threatened the euro-region’s first default and left the nation cut off from financial markets...
Financial Times:
Greek tourist minister sacked in tax dispute -- George Papandreou, the Greek prime minister, scrambled to shore up his crackdown on tax evaders by sacking his tourism minister yesterday after a newspaper revealed that her husband, a nightclub singer, owed €5.5m in unpaid income taxes...

Business Week:
Greek Unions Hold Fourth General Strike, Protest Pension Reform
Goldman now wants your 401k -- Ha! Goldman wants to do to 401k accounts what they've done to clients in the previous post- Goldman's Trading Advice: HORRIBLE!. Would you trust Goldman with your life's savings?
Gold rebounds but hovers below $1,200 an ounce -- Gold gained on Thursday but hovered around $50 below its record high, while the world's largest gold-backed ETF rose to a lifetime high as investors sought safety from turmoil in the financial markets...
NY Daily News:
Conservative pundit Glenn Beck should be 'ashamed' of Goldline endorsement: Rep. Anthony Weiner -- Rep. Anthony Weiner to Glenn Beck: You should be "ashamed" of yourself!

The New York Democrat is on the attack against the popular Fox News commentator over his association with Goldline International, a company that sells precious metals in the form of bars and coins.

According to a report released by the congressman's office on Tuesday, Goldline "rips off consumers, uses misleading and possibly illegal sales tactics, and deliberately manipulates public fears of an impending government takeover...
Gwyneth Paltrow sings Bette Davis Eyes... major league cute.

One last 'G' story: Global Cooling...

Fox News:
Global Cooling Is Coming -- and Beware the Big Chill, Scientist Warns -- Contrary to the commonly held scientific conclusion that the Earth is getting warmer, a scientist who has written more than 150 peer-reviewed papers has unveiled evidence for his prediction that global cooling is coming soon...

Tuesday, May 18, 2010

The 3 G's: Greece, Gold, and Goldman

Items of Interest:

Zero Hedge:
Ron Paul Discusses Contagion, Gold... --The man who will soon be proven to have been right all along, Ron Paul, was interviewed on CNBC earlier discussing topics such as the Greek contagion, Goldman Sachs, surging gold and, of course, the Fed. Asked if this is just the beginning, the response is "Yes, this shouldn't surprise anybody, how long should we have been anticipating this? I have anticipated it since 1971, because the system that replaced Bretton Woods was an unviable system and this is proving the point, so this is the unwinding of the system and until we replace it with something you are going to continue to see this... You can't correct the problem of debt with creating more debt, expecting the Fed to endlessly create more money and credit. We are in for a lot more trouble as far as I can see." Can we grow our way out of this debt? "You'd have to cut taxes drastically and cut spending drastically. Politically you can't do that. People will resort to more spending, more deficits and more inflation of the money supply. If you see a GDP number go up, it is about equivalent to the money we have created - you don't have any more growth than the artificial stimulus of the money that we put in. We have not allowed the liquidation of debt, we have not allowed the elimination of the malinvestment still in the system."

Ron also says anger at Goldman should be focused at the Fed: "When the history of this time is written people will say - how in the world did they believe that a few people in a secret room can decide what interest rates should be, how much the money supply should be, who should fail, what worthless assets taxpayers have to buy. It is absolutely bizarre."

I bought gold in 1971, knowing that paper would lose its value, and now its come to be and a lot of people are jumping on board...
ABC News:
Ron Paul's Legacy Lives on in His Son's Kentucky Senate Campaign -- Rep. Ron Paul did not win a single Republican primary in the 2008 presidential race. But his son, ophthalmologist Rand Paul, is poised to become the GOP Senate nominee from Kentucky in what is shaping up to be the second major Tea Party victory this month...

The Mess That Greenspan Made:
Rand Paul Set to Win in Kentucky Primary

The Big Picture: What’s Up with Goldman Sachs?

David Goldman / InnerWorkings:
More Financing of the US Deficit from Abroad -- The US will continue to remain dependent on the global banking system to support the Treasury market, which now appears to be shifting its portfolio away from Europe to the US. It’s an ill wind that blows nobody good, but it is an ill wind, and it is strange to imagine American prosperity founded upon European failure.

Greece’s Bailout Heroes Arrive in Leaking Boats -- [Bailout will lead to global recession]

John Cochrane / Wall Street Journal:
Greek Myths and the Euro Tragedy -- Letting someone lose money on sovereign debt is the acid test for the euro... The reasoning behind the Greek bailout is founded on several myths that need exploding...

Friday, May 14, 2010

Fascist Fed Cartel & Banksters Run the Financial System and the Country

Items of Interest:

This idea that our financial system is rigged to benefit the banksters keeps getting hammered home. David Goldman's definition of fascism, "control without ownership," perfectly describes the current Federal Reserve based financial system dominating the United States.

David Goldman / Inner Workings:
It’s all political now -- Now that the state and the banks have merged in a corporatist alliance, all market news is political news... the banks and governments are partners in the attempt to reflate the world economy through deficits comprising a double-digit proportion of GDP in most of the major economies. The banks finance the governments, with money that they borrow from the governments. That’s why many banks showed a profit during every single trading day of the first quarter: with a steep yield curve and nearly zero-cost funding, you have to go out of your way to lose money.

This symbiosis means that the banking system is in effective government control. As my friend Michael Ledeen – an expert on Italian fascism among many other fields – this is “control without ownership,” or fascism, rather than socialism. Governments and banks will wrangle over the spoils. When the banks look fat the government will use them as a political whipping boy or milk them for taxes; when the banks’ holdings of government securities threaten to topple them, as in Europe last week, the governments will pledge a trillion dollars–and borrow it from the banks.
Nelson Hultberg / The Daily Bell:
The Fed Is a Fascist Cartel

Zero Hedge:
First Fed Invoice For Bailing Out Europe Is In: The Damage - $9.2 Billion

Fascist Soup:
Ron Paul: Audit The Fed, End the Inflation Tax, Before It’s Too Late!

Dylan Ratigan /
We Need a Value-Creating Society as Opposed to a Value-Extracting Society – with Dylan Ratigan

Dan Pfeiffer / The White House Blog:
Putting the Economy at Risk to Protect Wall Street Profits

Todd Harrison / Minyanville:
Attack on Wall Street Heats Up

Socio-Economics History Blog:
Chomsky Warns Of Risk Of Fascism In America!
America's Ten Most Corrupt Capitalists -- The financial crisis has unveiled a new set of public villains—corrupt corporate capitalists who leveraged their connections in government for their own personal profit. During the Clinton and Bush administrations, many of these schemers were worshiped as geniuses, heroes or icons of American progress. But today we know these opportunists for what they are: Deregulatory hacks hellbent on making a profit at any cost. Without further ado, here are the 10 most corrupt capitalists in the U.S. economy...
Nassim Taleb calls out the trio of fraudsters: Geithner, Summers and Bernanke.

Louise Story / NY Times:
Cuomo Is Said to Question Banks’ Influence on Ratings -- The New York attorney general is said to be scrutinizing eight banks that may have provided misleading information to rating agencies to inflate the grades of securities.

Zachery Kouwe / Dealbreaker:   More Subpoenas for Big Banks, This Time from Cuomo
Credit rating agencies in the spotlight —  The New York attorney-general's office is investigating not only if Wall Street banks manipulated the process of achieving high ratings for mortgage-backed securities, but also if rating agencies allowed themselves to be co-opted...

Tomoeh Murakami Tse / Wash Post Business:
N.Y. Attorney General Cuomo opens probe to learn if 8 banks misled credit raters   —  NEW YORK -- New York Attorney General Andrew M. Cuomo has launched a probe into eight large banks to determine whether they provided misleading information to credit-rating agencies, according to sources with knowledge of the investigation...

Fascist Fat Police coming?

Penny Starr / CNSNews:
The Federal Fat Police: Bill Would Require Government to Track Body Mass of American Children  — A bill introduced this month in Congress would put the federal and state governments in the business of tracking how fat, or skinny, American children are.

Monday, May 10, 2010

The Great Euro Bailout

Items of Interest:

New York Times:
European Officials Act to Carry Out Rescue Package -- European officials on Monday took steps to tackle the widening sovereign debt crisis that has destabilized the Continent.

Just hours after leaders agreed to provide nearly $1 trillion as part of a huge rescue package, central banks began buying euro zone government bonds directly on Monday — an unprecedented move to inject cash into the financial system...

Michael Shedlock / Mish's Global Economic …: Shock and Awe Part II; Show of Force Rises to $962 billion …
David Goldman / Inner Workings:
The government bails out the banks who bail out the governments who bail out the banks who… -- The banking system really was about to come down. The reason is that sovereign debt is a bigger problem than subprime mortgages ever were. We know from available data that two-thirds of the US deficit, according to available numbers, has been financed by domestic as well as foreign banks during the last quarter of 2009 and the first quarter of 2010... It’s all been done by smoke and mirrors.
Spengler / Asia Times:
Ignore that Keynes behind the arras -- This was supposed to have been the final triumph of John Maynard Keynes, the crisis in which governments actually did what he urged them to do during the Great Depression, the proof that an elite of puppeteers in control of monetary and fiscal policy could make the innumerable actors in economic life march wide-eyed toward recovery...
Kevin Depew / Minyanville: EU Announces "Shock and Awe" Campaign for Fat City
Luigi Zingales / City Journal: Greece Needs a Restructuring, Not a Bailout
Ambrose Evans-Pritchard / Daily Telegraph: EU Rescue Could Doom the Euro
Robert Samuelson / Newsweek:  Greece Is the Welfare State's Death Spiral
Bill Frezza / RealClearMarkets: Are the Greek Riots A Peek Into Our Future?
ZeroHedge: Save The Euro By Destroying It Trillion Dollar Madness

Robert Samuelson / Real Clear Politics:
The Welfare State's Death Spiral — What we're seeing in Greece is the death spiral of the welfare state.  This isn't Greece's problem alone, and that's why its crisis has rattled global stock markets and threatens economic recovery.  Virtually every advanced nation, including the United States, faces the same prospect.

Jeff G. / protein wisdom:   “The Welfare State's Death Spiral”
Dean Baker /   Robert Samuelson Didn't Hear About the Recession

Jazz Shaw / Hot Air:
NYT Tells Greece to Abandon Socialized Medicine?
Ezra Klein:
Who is Europe really bailing out?  —  Tyler Cowen has some …
Tyler Cowen / Marginal Revolution:
Simple thoughts on Europe
Myglesias / Matthew Yglesias:   Europe Needs Growth
Real Time Economics:   The ECB Takes a Very Big Step
Mike Mandel / Mandel on Innovation and Growth:   Economics Statistics in an Alternative Universe
The Euro is trying to outrun the sovereign debt tornado.

Saturday, May 8, 2010

The Fed Roof Inn

Rep. Alan Grayson (D) of Florida tells the story of how the Federal Reserve became the "sucker of last resort" when it ended up with the Red Roof hotel chain when it took over bad assets from Bear Stearns.


Grayson is a co-sponsor of the Federal Reserve Transparency Act of 2009, which would provide addition provisions to audit the Federal Reserve, including removing several key exemptions

Friday, May 7, 2010

Wall Street has Glitchy Greek Day

Items of Interest:

Stock Selloff May Have Been Triggered by a Trader Error  —  In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses—all apparently due to a trader error.  —  According to multiple sources, a trader entered a "b" for billion instead of an "m" for million in a trade possibly involving Procter & Gamble …
Zero Hedge:
The Day The Market Almost Died (Courtesy Of High Frequency Trading) — In 20 minutes the market showed that it is as broken as it was at the nadir of the market crash. Through its inactivity to investigate the market structure, the SEC has made things a million times worse, as HFT-trading seminars for idiots are now rampant. HFT killed over 12 months of hard fought propaganda by the likes of CNBC which has valiantly tried to restore faith in our broken capital markets...
The Near 1,000 Point Slide of the DJIA Compels Further Investigation of the Wall Street Casino Scam -- Yesterday’s slide in the US stock markets provides further proof that the world’s financial markets are nothing more than a rigged casino where the house (Wall Street) holds by far the better odds in every game (currency markets, stock markets, derivative markets, commodity markets) it offers the mark (the retail investor). How else could the US DJIA lose 700 points in a 10-minute span and a number of blue chip stocks lose 25%, or 30% in a matter of minutes as well? The answer? Wall Street’s use of predatory algorithmic High Frequency Trading (HFT) programs that are designed to trigger cascade-like buying and selling. To believe that, as an individual investor, you have a snowball’s chance in hell of beating these Wall Street trading programs that front run your trades or block your trade executions faster than you can blink your eye is tantamount to believing that skill is involved in winning when you shimmy up to the slot machine stool at the Bellagio in Vegas...
related: Panic And Loathing From The S&P 500 Pits
Wall Street Journal
Dow Takes Harrowing 1,010.14-Point Trip  —  Biggest Point Fall, Before a Snapback; A Data Jumble  —  Traders work on the floor of the New York Stock Exchange May 6.  —  A bad day in the financial markets was made worse by an apparent trading glitch, leaving traders and investors nervous … 

Jeff Cox / CNBC:
Greek Debt Crisis On Verge Of ‘Going Global’: Pimco's El-Erian
Derek Thompson / The Atlantic Online:   Did Greece or a Glitch Cause the Stock Market Plunge?

Christine Hause / New York Times: 
Markets Plunge, Then Stage a Rebound
Scott Patterson / Wall Street Journal:   Did Shutdowns Make Plunge Worse?
Jack McHugh / The Big Picture:   Was Today's Plunge Really Just a Mistake?
Latest Open Salon Blog:   My Big, Fat Greek Default
Hamilton Nolan / Gawker:   It's Happening Again
Megan McArdle / The Atlantic Online:
What the Hell Just Happened in the Market?
James Joyner / New Atlanticist:   Greek Meltdown Sends Dow Plunging
Alexandra Twin /
Dow falls almost 1000, recovers 600
Dow Plunges Amid Europe Lending Worries 
Allahpundit / Hot Air:   Stock market in panic after Greece austerity bill passes; Update: Trading error?
J.D. Foster / The Foundry:   No US Taxpayer Dollars for Greek Bailouts
Brian Darling / RedState:   No More U.S. Taxpayer Funded Bailouts....for Greece
Scared Monkeys:   Stock Market Plunges with EU Lending Fears and Greece Bankruptcy …
Katherine Mangu-Ward / Hit & Run:   Used Car Prices Rise as Administration Declares Victory on Cash for Clunkers
Jen Chung / Gothamist:   Dow Falls Almost 1,000 Points Amid Europe Worries
Dylan Ratigan's Explanation For The Crash
NYSE Euronext CEO Niederauer Blames Electronic Markets

Monday, May 3, 2010

Wall Street's Criminal Sleaze

Matt Taibbi / Rolling Stone:
The Feds vs. Goldman -- The government's case against Goldman Sachs barely begins to target the depths of Wall Street's criminal sleaze ...

Just under a year ago, when we published "The Great American Bubble Machine," accusing Goldman of betting against its clients at the end of the housing boom, virtually the entire smugtocracy of sneering Wall Street cognoscenti scoffed at the notion that the Street's leading investment bank could be guilty of such a thing. Attracting particular derision were the comments of one of my sources, a prominent hedge-fund chief, who said that when Goldman shorted the subprime-mortgage market at the same time it was selling subprime-backed products to its customers, the bait-and-switch maneuver constituted "the heart of securities fraud."

CNBC's house blowhard, Charlie Gasparino, laughed at the "securities fraud" line, saying, "Try proving that one." The Atlantic's online Randian cyber-shill, Megan McArdle, said Rolling Stone had "absurdly" accused Goldman of committing a crime, arguing that "Goldman's customers for CDOs are not little grannies who think a bond coupon is what you use to buy denture glue." Former Wall Street Journal reporter Heidi Moore hilariously pointed out that Goldman wasn't the only one betting against the housing market, citing the short-selling success of – you guessed it – John Paulson as evidence that Goldman shouldn't be singled out.

The truth is that what Goldman is alleged to have done in this SEC case is even worse than what all these assholes laughed at us for talking about last year...

There is more fraud out there, and everyone knows it: front-running, manipulation of the commodities markets, trading ahead of interest-rate moves, hidden losses, Enron-esque accounting, Ponzi schemes in the precious-metals markets, you name it. We gave these people nearly a trillion bailout dollars, and no one knows what service they actually provide beyond fraud, gross self-indulgence and the occasional transparently insincere public apology...

Zero Hedge: Taibbi On Goldman: Part Deux Matt Taibbi mentions precious-metals Ponzi schemes

Naked Capitalism: The Age of The Trader

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