Archive - Oct 17, 2009

ZeroHedge recently highlighted the TPG raid on CDOs. This action puts into focus the alarming trend of the undermining of creditor rights. When even the Courts are in on the gang bang, what hope do we have?

Wikileaks has released the lawsuit filed by Nelnet former employee Rudy Vigil against Nelnet, JPMorgan and Citigroup, which alleges an extensive conspiracy between JPMorgan and Citi and the student servicer in order to steal millions of dollars from US taxpayers. In the lawsuit, Nelnet is accused of keeping "false records, statements and certifications of compliance with statutes, regulations and policies" as it was falsely stating the amount of US money Nelnet was entitled to receive from the US, on behalf of itself or the two other banks, it was administering FFELP loans not in compliance with HEA statutes, that it was providing wrong and misleading data, and other comparable reasons.

"Not only would use of the Reserve Banks for funding the BIF serve no apparent economic purpose, it could create potential problems of precedent and perception for the Federal Reserve. In particular, the proposal involves the Federal Reserve directly funding the government. The Congress has always severely limited and, more recently, has forbidden the direct placement ol Treasury debt with the Federal Reserve, apparently out of concern that such a practice could compromise the independent conduct of monetary policy and would allow the Treasury to escape the discipline of selling its debt directly to the market. Implementation of the proposal could create perceptions, both in the United States and abroad, that the nature or function of our central bank had been altered." - Alan Greenspan, 1991

The sad part in all of this is that pension contributions are funding this Casino Capitalism. Money is going to develop new ways to screw buyside clients that invest trillions in the markets. Pensioners don't stand a chance in a neo-Feudal world. I think it's time for a revolution, hopefully one without bloodshed, that will democratize the financial system by loosening the grip of the financial oligarchs.

The Iran-abandoning-the-dollar headline turned into an open thread yesterday---300 comments and counting. At this point it is getting to be difficult to navigate. There you go...

Even as efforts to recover from the current crisis go forward, the United States should launch new policies to avoid large external deficits, balance the budget, and adapt to a global currency system less centered on the dollar. - C. Fred Bergstein

Larry: So many of us really do appreciate your oft noted deep concern in regards to the unemployment situation in the USA as well as the big push to rein in the banks, but with thousands of comedians out of work, it just isn’t fair that you are delivering the best comedy and crowding out these comedians from their rightful work.

While it appears that Barclays will soon have to part with $5 billion (or more) to satisfy the increasingly loud chorus of people who claim the bank managed to literally steal Lehman's assets in those torrid days after the Lehman collapse, we use this opportunity to pore through a goldmine of just unsealed documentation to present some rare glimpses into the Federal Reserve's garbage laden balance sheet.

My version of link aggregation is slightly different from that of many other bloggers. I try to be highly selective in terms of what I link to and focus on themes that I think are really important for all investors. As such, I usually provide just a few links but include the most relevant excerpts and my own commentary. I hope enjoy the links I have selected for this week.

Next week, trading will begin on China’s new "little" stock market, catering to small companies. Think of it like the Dim Sum of stock exchanges. A little bit of this, a little bit of that. A "Buyers Beware" market "for Informed Investors..." Their words, not mine.

Lucky number 99 in ’09? Regulators shut down San Joaquin Bank yesterday, marking almost the hundredth of a federally insured bank. Relax, more to come!

We have forgotten what money is. Here is a fable for your weekend entertainment that explains what it is. You've had a hard week, enjoy some light reading. Lots of pictures, no big words. Have fun.