Banks Stifle First Amendment, Attempt To Create A Tiered Market Of "Clients" And "Everyone Else" As Theflyonthewall.com Is...Submitted by Tyler Durden on 03/18/2010 - 15:24
Theflyonthewall.com, which is a news aggregator service (much like most of the blogosphere these days, but without the snarky commentary), and is hosted on Zero Hedge, has just seen a major driver of its business model cut off, after several banks just won an injunction that blocks Fly from notifying its clients when a bank may have issued a research event such as an Upgrade or, on those extremely rare occasions nowadays, Downgrade. The banks who feel violated by everyone getting access to information about their sellside detritus contemporaneously, not just wealthy accounts and wire services, are Barclays, Bank of America Corp.’s Merrill Lynch, and Morgan Stanley. As Bloomberg reports, "U.S. District Judge Denise Cote in New York today granted a request for an injunction sought by the three banks. They argued at a March trial that Theflyonthewall.com, a Summit, New Jersey- based firm with about 30 employees, wrongfully obtains and sells reports on changes to the banks’ stock evaluations." This is merely a case of picking on the weakest: the next ones to lose their First Amendment right will be, in order of importance, StreetAccount, Thomson Street Events, Briefing, and, ultimately Bloomberg. The reason: keep the market as two-tiered as possible so that clients of the above three banks (which list will likely expand promptly as more banks join in) have an upper hand over all the slower retail and algo operations. With this forced lag in information (which is a joke because anyone who cares, knows the second a research report goes public anyway), and with the ever increasing transaction times courtesy of nanosecond collocation facilities, soon the self-cannibalizing market will only rely on stealing money from those accounts who are still willing to participate in a market that is now split into two distinct groups: those who make money, and are clients of MS, ML and Lehman (and the rest of Wall Street), and everyone else. This is a huge hit for not just traditional media, but for the blogosphere as well, which revels in the freedom of not just ridiculing banks' (Merrill Lynch) upgrades of horrendously shitty companies (REITs), but enjoys doing so in real time. We expect that the next step is that any blog or medium that has any negative things to say about Merrill, MS or Barclays (pretty much most independent media), will be served with a summons as soon as any criticism is made public.
A rumor is circulating that barely a month since the last hike, the Fed is about to hike the discount rate (which is completely irrelevant of course, due to the whole $1.2 trillion in excess reserves thing) as early as today. When aksed for commentary, the Fedspokesman had no comment.
In the aftermath of the Zachery Kouwe plagiarism fiasco, the last thing Andrew Ross Sorkin's Dealbook needs is another scandal. Yet this is precisely what may come out of a recent column by the TBTF author, in which ARS insinuated that Lehman whistleblower Matthew Lee came forth with incriminating Repo 105 evidence only after he was made aware he was about to be "downsized." The Columbia Journalism Review's Ryan Chittum debunks this story, after pointing out some potentially gross misrepresentations in the Sorkin column, which go to directly to motive and to the integrity behind Lee's actions. "The Times’s DealBook editor Andrew Ross Sorkin, who wrote the column, quotes the sources saying the whistle blower came forward only after “it became clear” he was to be replaced in his job. We’ll get to that peculiar phrasing in a minute, but the main problem is the Times story gives no indication that Lee was called for comment. In fact, he wasn’t called, according to Lee’s lawyer, Erwin Shustak, whom I talked to yesterday. “I’ve never spoken to the man (Sorkin) in my life,” Shustak says. “Nobody’s spoken to Matthew.” That doesn’t meet a basic fairness test. As it happens, Shustak tells us that Lee had no idea his job was in danger." If indeed Sorkin misstated facts, a retraction is the only recourse as the potential for legal escalation on all sides of the story is huge. We are confident that while to Lehman managing directors $50 billion may have been a drop in the ocean, legal prosecution going after either ARS (or Lee) to reclaim it in part (or in whole) will surely make the Dealbook editor's head spin, even after accounting for Paulson and Geithner's 10,000 purchases of TBTF each (exaggeration ours... we hope).
First 130 Congressmen, now Greece: the examples of people who have no idea what the definition of negotiating leverage means just don't stop. G-Pap has decided to go all in on 2-7off suit . The problem is everyone knows what his cards are, and his bluff is about to be promptly called by everyone; too bad the Cyclades are still not in the pot. Give them a few weeks... Bloomberg reports that: "Greek Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for Greece, challenging Germany to give up its doubts about a rescue package." And here we were thinking only Bernanke was clinically insane. G-Pap, it turns out, is shocked that someone can just say no to his generous offer of allowing someone else to bail him out. Act now, or in one month when you can buy Greece (and its islands) in a 363 sale, it will be too late (to overpay).
Is the fabled Greek bailout not happening? Will Greece be expelled from the Eurozone finally? Is China withdrawing too much liquidity? Did Bernanke say anything true or factual yesterday? Will Goldman ever upgrade a stock with less than 20% short interest? Will algos ever stop gunning the market higher: can we close green 30 days in a row? How about 300? Will we ever see a billion shares traded in one day again (in other words a down day)? For this and anything else, this is today's open thread.
Yet more rape and pillaging of US taxpayers as Portugal now plans to join the long and exalted list of nearly bankrupt countries who wish to join the dollar devaluation bandwagon, and issue debt denominated in dollars. The P in PIIGS is in the same position as the US, needing to plug a massive budget deficit, so it has decided to do what the US does so well - issue bonds with a $ sign on them. Bloomberg reports: "Portugal is selling bonds in dollars for the first time since November as part of a plan to issue 25 percent more debt this year to fund its budget deficit. The nation is marketing $1 billion of five-year bonds that may be priced to yield about 100 basis points more than the benchmark mid-swap rate." And this is merely the beginning: as most European countries are convinced the pain in Spain is nothing compared to what Washington is about to experience, we expect to see many more deficit whores attempting to jump on the dollar collapse bandwagon.
A smattering of the relevant headlines which are causing Greek spreads to widen as investors realize they have been lied to once again.
04:51 03/18 GREEK PM: GREECE WILL NOT DEFAULT
04:51 03/18 GREEK PM: NOT LOOKING FOR PARALLEL NATIONAL CURRENCY
04:50 03/18 GREEK PM: OFFER OF HELP ON TABLE WOULD HELP FIGHT SPECULATORS
04:50 03/18 GREEK PM: WOULD PREFER A EUROPEAN SOLUTION
04:49 03/18 GREEK PM: GREECE IS TALKING TO THE IMF
04:49 03/18 GREEK PM: MUST PURSUE REFORMS TO INCREASE COMPETITIVENESS
04:45 03/18 GREEK PM: IF NO SUCH PLAN IN PLACE, GREECE MAY NEED IMF HELP
04:44 03/18 GREEK PM: IMF-STYLE HELP COULD BE OFFERED ON "AD-HOC" BASIS
04:44 03/18 GREEK PM: EUROPE MUST BE PREPARED TO OFFER IMF-STYLE HELP
04:43 03/18 GREEK PM: GREEK NOT IN NEED OF IMF LOAN
04:32 03/18 GREEK 10-YR SPREADS WIDEN 6 BPS TO +306 BPS AS GREEK PM SPEAKS
05:40 03/18 GREECE PM:IMF SAYS OUR PLAN QUALIFIES US FOR IMF AID IF NEEDED
- Bernanke urges to let the Fed keep all of its banking oversight.
- BoJ's loan program may resound more with Government than economy.
- Brazil central bank leaves key rate at 8.75%.
- China conducts stress tests to gauge impact on industry of end to yuan peg.
- Euro weakens and Greek stocks and bonds fall due to bailout plan.
- Gov't bank regulators got big bonuses despite missing warnings signs of crisis.
- Greek PM Papandreou says austerity program not sustainable due to high borrowing costs.
Summarizing Today's Fed Chairman Q&A: Prepare To Vastly Exceed Your Recommended Daily Allowance Of Bernanke's PrevaricationsSubmitted by Tyler Durden on 03/17/2010 - 23:47
We comb through today's key Q&A by Ron Paul, Brad Sherman, Spencer Bacchus and Scott Garrett to find all the relevant instances in which Ben Bernanke either a) pleads the fifth, b) provides reasons to doubt his sanity, c) confuses what monetary policy is all about (not to mention cause and effect), d) forces Zero Hedge to send an Econ 101 textbook to the Marriner Eccles building c/o Ben Shalom Bernanke, or, e) lies outright.
A lot of people theorize or blog about the future of media. However, a handful of people actually walk the walk. One such person is Larry Kramer.
Larry spent 20 years as a reporter and editor at the San Francisco Examiner, the Washington Post, and the Times of Trenton. However, during the tech boom in the 90s, Larry seized the opportunity to become a successful media entrepreneur when he founded MarketWatch and managed the company as Chairman and CEO.
Clinical Proof Of Banker Psychopathology: Repo 105's "Pimply" Importance To A Few Managing Directors' Lehman Equity StakesSubmitted by Tyler Durden on 03/17/2010 - 19:57
What is $50 billion between a couple of psychopaths? It's basically “a drop in the ocean” according to Max Abelson's account of how the Repo 105 fiasco is seen by the other side. Several ex-Lehman bankers speak off the record in "The repo men's new Lehman shrug" and confirm that not only is Wall Street terminally deluded in its own self-importance, but that basically everyone in finance is a megalomaniac, with no sense of relative worth, or any worth, for that matter, unless it goes straight into their back pocket. “I’m like, whatever" says London managing director #1, when asked what his reaction to the Repo 105 disclosure is. So when is it not "whatever?" $500 billion? $500 trillion? In its pursuit of finding ever more complex ways of defrauding the middle class silly (without the latter even being aware its share of net global wealth is about to decline from 1% to half that), Wall Street's bankers have passed the clinical psychopathology barrier, and will stop at nothing to destroy the wealth of everyone else not only with impunity, but with a smirk and a smile. Now that's net worth change you can believe in.
Seek and ye shall find. Never has this been more true than combing through theStreet's (much delayed if at all available) financials. As investors may have been digging through the company's SEC reports to find out just what the financial website's unadjusted EBITDA is (hint: much, much less than its "adjusted" cousin), one stumbles upon this gem just filed in today's Form 12B-25:
As a result of the need for the Company and its independent registered public accounting firm to focus attention on matters related to the Company's previously-announced review of the accounting in its former Promotions.com subsidiary, which subsidiary the Company sold in December 2009 -- including matters related to the preparation and filing by the Company in February 2010 of a Form 10-K/A for the year ended December 31, 2008, a Form 10-Q/A for the quarter ended March 31, 2009 and Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009, respectively, and matters related to an investigation commenced by Securities and Exchange Commission in March 2010 -- the Company requires additional time to prepare its financial statements, assess its internal controls and file its Form 10-K for the year ended December 31, 2009 ("2009 Form 10-K").
Oops. We can't wait to see how Mr. Cramer will explain to the Mad Money faithful this particular twist on the hangover of the show's five year birthday bash. Also, we wonder if CNBC will finally cancel the ludicrous Jim "truth" Cramer campaign once this news breaks. We doubt it- in the quest for evaporating eyeballs, all is fair.
Today will be day 12 of 13 (or something just as silly) that the market has been melting up on no volume: yet another truly ridiculous statistic in the anals of momoism. As David Rosenberg points out: "the market has been able to digest California, Dubai, and Greece" - and this has all been offset by what? Merely promises of ever increasing liquidity and bailouts by the Fed, first domestically, and soon internationally. Have people really forgotten yet again that this is precisely what got us on the verge of a historic collapse in the first place? Yes, the Fed bailed capitalism out last time around (with about 3 hours to spare), but this time it has gone dodecatuple all in, and unless intelligent, and very rich life, on Mars is discovered pretty quickly, this will all end in ruins (certainly those of the Marriner Eccles building).
Due to some upcoming travel, posting over the next few days will be somewhat sporadic. We will attempt to provide recap thoughts on any major developments, although we have a sense the task will be pretty much comparable to the job of a weatherman in San Diego: "The market was... up. Back to you." Please use this post as an open thread for items of relevance. We leave you with this video in which Bruce Caldwell, a Professor of Economics and the Director of the Center for the History of Political Economy at Duke University and expert "Austrian," discusses a very relevant topic for our day and age: Friedrich Hayek's observations on the Road to Serfdom.
Today Ben Bernake and Paul Volcker will lead Panel 1 at a hearing of the House Financial Services Committee on "Examining the Link Between Fed Bank Supervision and Monetary Policy." With the just announced news that the Volcker Plan is dead after all, we fully expect this to be the last public appearance of the former Fed chairman before he is stuffed back in the closet for good. After all with 8.33 bid to cover for 1 year Ukranian bonds what can go wrong?
The hearing can be seen live at 2 PM eastern at the following link.