Saturday, October 16, 2010

Latest Financial News Summary by the Onion News Network

(or Network News, whatever...) And it's just about right. Or so I think. Whatever. Does it matter?

Something About Tax Cuts Or Earnings Or Money Or Something In Recent Economic News (9/29/2010 ONN)

WASHINGTON—Some sort of tax cut or earnings or money or something was reported in economic news this week in further evidence that a lot of financial- related things have been going on lately.

According to numerous articles and economics segments from major media outlets, experts on banks and such have become increasingly concerned over a new extension or rates or a proposal or compromise that could signal fewer investments, and dollars, and so on.

The experts confirmed that the stimulus has played a role.

"This is a clear sign of a changing cycle," some top guy at one of the big banks in New York said of purchasing power parity or possibly rate of return during a recent interview on CNN. "Which isn't to say that a sustained drop in wages couldn't still occur, even if the interest paid on reserves is lowered."

"In short, it's possible but not probable that growth could outpace our initial expectations," added the banking guy, who went on to say other money things, too. "It depends on investor sentiment."

The man, who also apparently mentioned the Nasdaq, the Dow, and the Japan one at some point or another, talked for a really long time about credit or reductions or possibly all these figures, which somehow relate to China.

Greece was also involved.

An analyst from Citigroup or Citibank announced on Monday that the Federal Reserve System is doing too much, while the Fed has failed to accomplish its goals to increase inflation or interest, which are different things. In addition, he was critical of the Fed's efforts to regulate the Bernanke.

"There might be a light at the end of the tunnel, but right now the markets are still struggling," the man who was wearing a blue suit and red tie said about some special money tunnel. "At this point, though, it's too early to say."

The head Treasury person, whose name sounds like Guyver or Meisner, appeared on every major network this week, either to assure Americans that everything was better or was going to get better or was never going to get better. Some other guy argued that it has never been that good. During interviews, the Treasury guy was observed on several occasions smiling or wincing.

According to a recent issue of The Wall Street Journal, there are currently a bunch of columns filled with a wide variety of numbers, letters, and symbols.

Geithner—that is the Treasury guy's name.

Another expert, Lawrence Kudlow, who hosts the CNBC program The Kudlow Report, was upbeat over the amount of points available in the industrial average or pleased with where the percentages were at.

"It's simple, actually, because the current dividend yield is equivalent to the most recent full-year dividend divided by the current share price," Kudlow said really quickly. "And that's basically the situation we're in now, for better or worse."

Paul Krugman, New York Times columnist and 2008 winner of the Nobel Prize for something in one of those economics categories, acknowledged in an editorial this week that the SEC must work closely with the stock market, Wall Street, and the New York Stock Exchange to maintain the bulls, bears, and opening bells. Krugman also said something could spur lending or trading or budgetary measures.

Although it has not been totally determined whether Krugman agrees with leading experts on assets or retail sales data or other fiscal things, reliable sources have confirmed that he has a beard.

Time or Newsweek recently published a cover story on the recession or the government debt or incomes or GDP or something similar to that, but kind of focused on how it's the fault of the rich, the middle class, and the poor.

In addition, mutual funds, probably.

Massive Demonstration in China against Japan over Senkaku Islands Incident

Japanese newspaper Yomiuri Shinbun puts the number of demonstrators at "tens of thousands". The demonstrations were held in at least three inland Chinese cities (Chengdu in Sichuan province, Xi'an in Shaanxi province, and Zhengzhou in Henan province).

In Chengdu, Japanese supermarkets and department stores were targeted and vandalized by the demonstrators. The demonstrators demanded Japanese get out of China.

Well, why not? Why bother being there, employing Chinese to produce crappy products while in Japan many people cannot find decent jobs and the number of people on state welfare is all-time high?

Apparently, the Japanese government has a video of the Chinese fishing boat deliberately ramming into the Japanese patrol boat. But the government is not releasing it, for fear of further deterioration of relationship with China, now (unfortunately) Japan's largest trading partner.

Demonstrators in Japan are equally angry at China and at their own government for their "soft" approach.

Friday, October 15, 2010

Paul Krugman Presses for Rule of Law in Foreclosuregate

I never thought I would agree with the Nobel laureate on anything economics or finance.

Well, well. Never say never.

In the Op-Ed column in New York Times titled "The Mortgage Morass", Krugman writes:

"American officials used to lecture other countries about their economic failings and tell them that they needed to emulate the U.S. model. The Asian financial crisis of the late 1990s, in particular, led to a lot of self-satisfied moralizing. Thus, in 2000, Lawrence Summers, then the Treasury secretary, declared that the keys to avoiding financial crisis were “well-capitalized and supervised banks, effective corporate governance and bankruptcy codes, and credible means of contract enforcement.” By implication, these were things the Asians lacked but we had.

"We didn’t.

"The accounting scandals at Enron and WorldCom dispelled the myth of effective corporate governance. These days, the idea that our banks were well capitalized and supervised sounds like a sick joke. And now the mortgage mess is making nonsense of claims that we have effective contract enforcement — in fact, the question is whether our economy is governed by any kind of rule of law.

"...Now an awful truth is becoming apparent: In many cases, the documentation doesn’t exist. In the frenzy of the bubble, much home lending was undertaken by fly-by-night companies trying to generate as much volume as possible. These loans were sold off to mortgage “trusts,” which, in turn, sliced and diced them into mortgage-backed securities. The trusts were legally required to obtain and hold the mortgage notes that specified the borrowers’ obligations. But it’s now apparent that such niceties were frequently neglected. And this means that many of the foreclosures now taking place are, in fact, illegal.

True to form, the Obama administration’s response has been to oppose any action that might upset the banks, like a temporary moratorium on foreclosures while some of the issues are resolved. Instead, it is asking the banks, very nicely, to behave better and clean up their act. I mean, that’s worked so well in the past, right?

The response from the right is, however, even worse. Republicans in Congress are lying low, but conservative commentators like those at The Wall Street Journal’s editorial page have come out dismissing the lack of proper documents as a triviality. In effect, they’re saying that if a bank says it owns your house, we should just take its word. To me, this evokes the days when noblemen felt free to take whatever they wanted, knowing that peasants had no standing in the courts. But then, I suspect that some people regard those as the good old days."

Well, it was not just fly-by-night lenders. All major banks did.

And it is not just the Obama admin or conservatives. State attorney generals have started a joint investigation into this foreclosuregate, but I was disappointed to hear what one of them had to say on CNBC today. The attorney general of Texas told Larry Kudlow that he and his colleagues are confident that they can move very quickly to resolve [how?] problems regarding foreclosure documentation so that this doesn't interfere negatively with the financial systems and that the housing market doesn't suffer. [What "housing market"?] See the video for yourself, here.

The Texas attorney general is basically saying this investigation is nothing but token to appease small people (us), and he and his colleagues will do their best not to inconvenience the big banks and big investors and powerful lobbies (banking and real estate).

So what if the notice of default or the affidavit you received was signed by someone pretending to be working for a trustee but in fact he/she is working for some fly-by-night outfit whose job is to pretend he/she is a VP of Bank of America, Chase, Wells Fargo, all at once and sign away the documents?

But isn't it an outright fraud, to pretend to be someone that they are not, and sign a document that will take away the biggest investment that we ever have in our lives?

Clearly, an outright fraud means nothing to the political class (you can call them the ruling class, if you like).

State and federal governments doing their best to put the welfare of an industry before that of the citizens, and ignore the rule of law or arbitrarily apply it as they see fit - as Krugman says, America no longer has any moral standing to lecture any country.

Countrywide's Angelo Mozilo Settles with SEC for $68 Million Fine

Criminal charges unlikely, no jail time.

Looks like it pays to have friends in high places, and particularly when you provide home loans to those friends on favorable terms.

Angelo Mozilo, CEO of Countrywide, of subprime fame, cut the deal with the SEC to settle the fraud charges by paying $67.5 million in fines.

CNN reports:

"NEW YORK (CNNMoney) -- Angelo Mozilo, the former co-founder of Countrywide Financial, has agreed to pay $67.5 million to the SEC to settle fraud charges.

"The settlement was announced Friday at a status conference in the case before U.S. District Judge John Walter in Los Angeles.

"Mozilo was slated to appear in the federal courthouse on Tuesday. But there were published reports in recent days that Mozilo and the SEC have been in confidential settlement negotiations over the past couple of weeks.

"Mozilo, along with former Countrywide president David Sambol and former CFO Eric Sieracki, were charged with defrauding investors by hiding the growing risks of the company's mortgages.
"The defendants denied the accusations, saying details about Countrywide loans were properly disclosed.

"The SEC accused only Mozilo of insider trading, alleging that he sold millions of dollars worth of Countrywide stock long after he knew the company was doomed.

"By settling the charges early, Mozilo could be more likely to avoid criminal charges that may have stemmed from standing trial on Tuesday."

Hillary Clinton to Pakistan: Raise Your Taxes, Otherwise We Won't Give You Flood Aid

Is it any wonder that anti-American sentiment is all-time high in Pakistan?'s Jason Ditz reported on October 14, 2010 [emphasis is mine.]:

"Following up on last month’s demands that Pakistan agree to yet another massive tax increase on “wealthy landowners,” Secretary of State Hillary Clinton has stepped the issue up even more, threatening to withdraw all humanitarian aid from the nation unless they comply.

"Today it was even worse, as Clinton pressured the European Union to do the same. Between them, the US and EU have contributed more than half of the $1.5 billion in humanitarian aid for this year’s disastrous floods.

"“It is unacceptable,” according to Secretary Clinton, “for those with means in Pakistan not to be doing their fair share to help their own people.” While rich Pakistanis have contributed to relief efforts, they have balked at donating to the official government aid program, citing corruption.

"The floods killed thousands and left roughly a fifth of the nation under water, doing major damage to Pakistan at a time when a decade of US-led war along its border had already brought it to the brink of collapse. One would think this would be a poor time to raise taxes, but the Obama Administration has repeatedly demanded Pakistan do so, and despite Pakistan already issuing a number of tax increases over the past year, it seems it isn’t enough."

The world has been eerily silent on the floods in Pakistan, which by the way are still ongoing, as millions remain homeless and millions in dire needs of basic necessities to survive. And Clinton and her boss want to force Pakistan to raise taxes while US killer drones continue to bomb innocent civilians.

Makes sense, doesn't it? In this bizzarro world?

I wonder if Clinton and Obama demanded the same to Haiti for the earthquake relief... Did Bush demand New Orleans to raise taxes in exchange for a federal aid?

Thursday, October 14, 2010

Bernanke Speaks at 8:15AM Friday

Watch out if you are still playing in the stock market. He may well talk about QE2, which may tank the market or may send it to a parabolic high. Place your bets. (Wouldn't it be wonderful for the TBTF banks if he simply announces QE2 tomorrow morning?)

From Bloomberg Econ Calendar:

10/15/2010 8:15:00 AM

Federal Reserve Chairman Ben Bernanke speech to the Boston Fed's conference on Revisiting Monetary Policy in a Low Inflation Environment.

It's Not Just About Foreclosure, Not Just About Mortgage Either

Here's from 'NoVa' at Yahoo Board:

"The foreclosure process triggers negative accounting events, like recognizing what they call Day 1 and Day 2 losses on repurchases and REO's.

"Banks relied on their internal controls to recognize these business events, er,, foreclosures that leads to accounting entries that leads to financial statements. They relied on the CONTROLS surrounding the robo-signers which have obviously failed to detect or prevent false transactions.
"Shouldn't we be hearing in the news soon about financial restatements ? Their books are wrong and have been wrong over many years...

"CFO and CEO's signed accuracy statements for their enterprise with every SEC filing ... Talk about the ultimate leverage card to play against any firm or the entire industry - SEC accusations always KILL a firm."

He's saying it is SOX (Sarbanes-Oxley) violations.

Don't hold your breath for the SEC crooks to do anything, but ...

Here's a good article by Gonzalo Lira titled "Second Leg Down of America's Death Spiral", discussing the implications of what the MSM has been trying to paint as "technical" glitches. (He doesn't mention SOX.)

Wednesday, October 13, 2010

Alex Jones Interviewed Jonathan Irish

and it is just sickening.

Mr. Irish's infant daughter was snatched by the child protection services from Concord Hospital in New Hampshire.

He called in the Alex Jones show tonight.

He said he and his fiancee were finally allowed to visit their baby with the CPS employee present. The baby was non-responsive. They thought, oh maybe she needs a diaper change, and proceeded to change her diaper. What they found was blood. The baby was bleeding from the vagina. Sheriff deputies were called in. They took the baby to a hospital.

The emergency room doctor told them to take the baby to a child abuse specialist doctor.

Nymex, Comex To Launch Gold, Crude Oil Volatility Index

just as gold hit all-time high today. As if they need more volatility heaped on top of it.

From Kitco News:

"Beginning Monday, the New York Mercantile Exchange and its Comex division will launch a gold volatility index and crude oil volatility index for trading on the CME Globex electronic trading platorm. Both indexes, using market data from Nymex and Comex, will trade as futures contracts on Globex and the Chicago Board Options Exchange Volatility Index. The gold volatility index will have a 60-day forward looking index and the crude oil index will have a 30-day look-ahead. Both contracts will be listed on Nymex and Comex, which are part of the CME Group."

Gold and oil already have:
Spot trade
Options on futures
ETF (unleveraged and leveraged; the latter relys on swap contracts)
Options on ETF (including Weeklys)

Now the volatility index will be added, you can trade futures or options on the index.

Nymex/Comex may or may not have physical gold to back their contracts. So what do they do? Obfuscate (aka smoke and mirror), and hope people won't notice.

And New York State Orders Stops on Foreclosures ...

(the link from Karl Denninger's Market Ticker)

Mortgage Servicers Must Suspend Foreclosures In NY, State Says
(Steven Meyerowitz, 10/13/2010 Financial Fraud Law)

"The N.Y. State Banking Department has suspended home foreclosure actions by mortgage loan servicers, requiring that they conduct internal reviews of their foreclosure practices.

"The servicers were also asked to respond to the Banking Department on the following issues: the steps the servicer is taking or has taken to review the foreclosure process in New York; the results of the review, including a description of the process for verifying affidavits; the corrective action, if any, the servicer has taken or intends to take in response to the review; the measures taken to ensure that affidavits filed in New York foreclosure actions are executed in compliance with New York law; and the status of pending foreclosure actions in New York and measures taken to suspend such actions pending review.

"The N.Y. Banking Department joins 47 state attorneys general and 37 banking and mortgage regulators as part of a multi-state group that is investigating the foreclosure practices of mortgages servicers throughout the country."

Obama sending Axelrod on Sunday to discourage the foreclosure moratorium and downplay the so-called Foreclosuregate as merely a minor technical glitch that they hope will swiftly resolved was surely effective (in letting citizens know which side the White House is on, not that it was any surprise).

And Silver Above $24...

Gold Hits $1,375.30

Tuesday, October 12, 2010

Goldman Raises Gold Target to $1,650 in 12 Months

From Kitco News:

"(Kitco News) - Goldman Sachs has raised its 12-month forecast for gold to $1,650 an ounce, citing expectations for further quantitative easing in the U.S. and prospects for long-term interest rates to continue falling.

"“With U.S. real interest rates pushing lower off the slowdown in the pace of the U.S. economic recovery and the growing prospect of another round of quantitative easing, we expect gold prices to continue to climb,” said the Goldman report, authored by David Greely and Damien Courvalin. “Despite the rebound in net speculative length, it remains well below levels consistent with the current low U.S. real interest rate environment.”

"Goldman said the decline in U.S. real interest rates is likely to persist, and rates could push even lower in the near term should the Federal Reserve undertake quantitative easing measures. Thus, Goldman said it is raising its gold price forecasts to $1,400, $1,525 and $1,650 on a three-, six- and 12-month horizon. Goldman said its updated forecasts point to an average of $1,575 an ounce in 2011, which is $175 higher than it previously expected.

"“The return to quantitative easing will likely be a strong catalyst to drive gold prices higher, and we expect the gold price rally to continue until U.S. monetary policy begins to tighten,” Goldman said.

"The bank’s economics team expects the Fed to return to quantitative easing with purchases of U.S. Treasury securities of $1 trillion, which in turn should keep U.S. bond yields depressed. Furthermore, the bank said it expects the announcement at the Federal Open Market Committee’s Nov. 2-3 meeting.

"Goldman said the rally since August came as the yield on 10-year U.S. Treasury Inflation-Protected Securities plummeted, with the yield now closer to the 0.50% than the 1.0% imbedded in prior forecasts. It also cites stronger demand for the metal for gold exchange-traded funds and from central banks." [The article continues.]

According to Goldman, 10-year TIPS yield is inversely correlated to the increase in speculative long positions in gold futures. In other words, the lower the 10-year TIPS yield, the higher the speculative longs. (For more about Goldman's reasoning, see their August paper here. Their August target of $1,300 was to be for the next 6 months...)

Monday, October 11, 2010

Political Tide Coming Fast and Furious at Obama

A quick look at Drudge headline... Good luck Mr. President. You need it.

Soros: I can't stop Republican 'avalanche'



HALPERIN: 'White House in over its head, isolated, insular, arrogant and clueless'...

GORE VIDAL: America headed for 'dictatorship'...

GREEN ECONOMY: Congressional Staffers Gain From Trading in Stocks...

GOP Leaders Slam Obama Over Foreign Contributions 'Lie'...

FLASHBACK: Obama Accepting Untraceable Donations...

Rising leaders in Chinese military 'view United States as the enemy'...

Obama hits links for 52nd golf day...

More on MERS

from Karl Denninger at Market Ticker:

The MERS Edifice Quavers.... (Karl Denninger, 10/11/2010 Market Ticker)

(h/t willsin)

Get to Know MERS, Your Robo-Signer and Signature Forgerer

From Zero Hedge Poster 'Bob', citing the info from another user 'careless whisper':

let's take a look at who owns MERS:

here's a deposition of an officer of MERS admitting zero employees for the past five years!

hey, all you wanna be fraudsters, for $95 per month you too can have a virtual office at the same address where MERS has their "global headquarters" with zero employees; 1818 library street, reston virginia 20190

It looks like MERS is a shell corporation founded and operated by the MBS banks. And, for just a little entertaining summary of the big picture:

MERS is owned by the nation's largest banks and mortgage companies.
MERS may not have any employee, is located at 1818 Library Street, Suite 300, Reston, VA 20190, in the same building as a virtual office run by Davinci Virtual Office Solutions with a live receptionist to take their call.


The Obama administration, some analysts, they are trying their best to dismiss the whole thing as just a minor technical mistake here and there.

It's FRAUD. has an excellent article uncovering Obama's mortgage documents clearly robo-signed, and signatures don't match... It's not just over foreclosure documents, but ALL mortgage related documents of the past decade, or two (or three?).

Even Barron's Laughs at SEC's Explanation of Flash Crash

Jim McTague of Barron's magazine wrote an article about the absurdity of the SEC blaming a single "mutual fund complex", aka Waddell & Reed, for the flash crash on May 6.

I thought I got the picture of how the flash crash happened and why, from reading knowledgeable blogsites like Zero Hedge, but there are some new pieces of information in Jim McTague's article I didn't know.

Here's one:

"Twenty thousand trades, totaling 5.5 million shares, were executed at a price 60% or more away from pre-Flash-Crash price levels, and thus later were deemed invalid. At least half those were retail orders."

And here's another, about how the retail investors' orders are handled:

"A brokerage firm will try to match one customer's order with that of another customer in-house. If the firm can't make the trade, it sends the order on to an executing broker. The big ones are Knight Capital, Citadel and UBS. The executing broker will generally take the opposite side of the customer order because retail customers tend to buy high and sell low, so it's easy to make money off them.

"In the rare instances when an executing broker demurs, he sends the trade to a dark pool, usually one owned by his firm. (Dark pools are electronic-trading venues where institutional investors trade stocks away from the public stock exchanges.) If the dark pool can't execute the trade, it is sent to one of the stock exchanges. This largely automated process occurs in sub-seconds.

"On May 6 when the market fell out of bed, the report says blandly, some of these players reduced executions of sell orders but continued to execute buy orders. In other words, they'd sell stock to a retail customer but wouldn't buy stock from a retail customer. They wanted to get rid of their own inventories, not accumulate more shares. So they sent the customer sell orders onto the swamped stock exchanges."

Let me recap the process:

1. Your brokerage firm tries to match your order with that of another customer in-house. If the firm can't match it, it sends your order to one of the executing brokers (Citadel, Knight, etc).

2. The executing broker usually takes the other side of the trade and profit handsomely. But if the executing broker refuses to take the other side, the order goes to a dark pool, usually owned by the executing broker's firm.

3. If there is no trade to be made in the dark pool, the order gets sent to the exchanges.

And so the exchanges were swamped with orders on May 6 when market makers, human or HFT bots, stopped making market.


"Retail stop-loss and market orders were converted to limit orders by internalizers prior to routing to the exchanges. A limit order requires the trade to be executed at a specific price, whereas a market order is the best price available. If the limit order wasn't filled because the stock's price had fallen, it was kicked back to the internalizer who, in turn, set a new, lower limit price and resubmitted it. Orders were kicked back multiple times because prices were collapsing so rapidly. They followed the prices down, "eventually reaching unrealistically low bids," as the report puts it."

And the SEC blames Waddell & Reed for all that.

No wonder the retails have been exiting ever since May 6.