Archive - Mar 31, 2011

“Lisa Epstein, is an advocate for the People of Florida and her arena is the public. Her strengths are in her First Amendment rights as a journalist and an Advocate. That is why your letter and this response will be posted on her Blog, www.foreclosurehamlet.org, as well as, www.4closurefraud.org.”

Christine Harper, Michael Moore and Bob Ivry have been quite busy today. After poring through the lifetime legacy project of their late colleague Mark Pittman, the trio may have just made a discovery that in a non-banana republic could be enough to at least force a special hearing into whether Goldman COO Gary Cohn committed perjury while testifying to the FCIC on June 30. The culprit: Goldman's (ab)use of the discount window not once, not twice, but five times. Well everyone else was doing it, especially Goldman's insolvent peers like JPM, Merrill Lynch, Bear Stearns, Lehman Brothers, Bank of America, Wachovia, UBS, Credit Suisse and, well, everyone else. So what's wrong with that? Here's what: "Goldman Sachs President and Chief Operating Officer Gary D. Cohn told the Financial Crisis Inquiry Commission June 30 that “we used it one night at the request of the Fed to make sure our systems were linked with their systems, and it was for a de minimis amount of money.” Peter J. Wallison, a member of the Financial Crisis Inquiry Commission, then asked, “you never had to use it after that?” “No, and as I said, we used it on the Fed’s request,” Cohn replied. Alas, that is a lie. And last time we checked, lying to Congress under oath is not quite the right the way to conduct God's work (and yes, a perfectly innocuous "I don't recall" ala David Sokol from his CNBC interview would have sufficed). Alas no: Goldman just had to demonstrate how very immune from the legal process it is, by "risking" its credibility and reputation with the assumption that it is either never wrong, or, like Warren Buffett, that it can never be caught doing wrong. Well, it just was.

If ever there was an investment that deserved attention, by anyone trying to save and invest for the future, it is probably gold.

I can look back over the last 10 years and see how bubbles expanded and the economy soared due to a more than favorable credit environment.  I heard some gentlemen joking yesterday, about the way real estate used to be.  It used to be that you could buy anything, borrow more than it was worth and fantasize about your income in order to qualify.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 31/03/11

The mainstream financial media always tries to offer fundamental reasons for why stocks do what they do. If stocks rally it’s because on good earnings or improved consumer confidence or some other development. So don’t expect to ever hear any of these folks tell the truth, which is that that the market’s moves are in fact controlled by just three factors:

1) The Fed’s money pumps
2) High Frequency Trading Programs
3) The suspension of accounting standards and permission of endless fraud in the financial system

Alice Schroeder, who once upon a time was the current "Becky Quicky" of Buffett's inner circle (although to her not so great loss not allowed in the inner sanctum of the NetJets mile high club) until she turned rogue on the billionaire and wrote something not quite so flattering about the Octogenarian of Omaha, whose bubble of unparalleled hypocrisy has just popped, has now burned every last bridge to the annual borg collective meeting at Borsheims, writing the most scathing narrative of the revalations from the last 24 hours. Oh well, we can only advise Buffett and his sidekick Munger to suck it up, now that the dirty laundry of America's dream wealth creator is exposed for all to see.

Minneapolis Fed's Kocherlakota, who is not scheduled to speak today, and who in the past has exhibited both hawkish and dovish tendencies is on the wire, saying the the Fed Funds rate may need to rise 75 bps by late 2011. He is also quoted as saying that QE2 boosted inflation expectations more than he anticipated (oh look, another confirmation of Fed ineptitude but only in retrospect), and that higher short-term rates certainly possible in late 2011. In other words, the hawks in the Fed are once again getting very vocal... Just like in March of 2010, and before the market tanked, opening the door for QE2, and when all the hawks kept their mouths shut.

A systematic plan to create the illusion of stability and provide no-risk profits to the mega-Wall Street banks was implemented in early 2009 and continues today. The plan was developed by Ben Bernanke, Hank Paulson, Tim Geithner and the CEOs of the criminal Wall Street banking syndicate. The plan has been enabled by the FASB, SEC, IRS, FDIC and corrupt politicians in Washington D.C. This master plan has funneled hundreds of billions from taxpayers to the banks that created the greatest financial collapse in world history. The authorities had a choice. This country has bankruptcy laws. The criminally negligent Wall Street banks could have been liquidated in an orderly bankruptcy. Their good assets could have been sold off to banks that did not take their extreme greed based risks. Bond holders and stockholders would have been wiped out. Today, we would have a balanced banking system, with no Too Big To Fail institutions. Instead, the years of placing their cronies within governmental agencies and buying off politicians paid big dividends for Wall Street. Their return on investment has been fantastic.

While many will focus on the borrowings by various insolvent banks from the Discount Window (yes, we know Bank of America/Merrill Lynch was broke and went to town with taxpayer money after Lehman blew up, and it also was the bank most impacted by the quant blow up in August 2007 when it borrowed $500 million from the Fed on 3 occasions), a possibly far more important question is why does the Fed persist in its secrecy even when supposedly forced to disclose unredacted data. While total discount window borrowings peaked at just over $110 billion, this is nothing compared to FX swap lines between the Fed and other banks, which as we said before was the means by which the Fed bailed out the world (even as Belgian Dexia and German Defma were the biggest borrowers from the Discount Window in those days in early November) amounted to $529.4 billion at the peak. So we decided to look at just what the terms were on these various borrowings and to our surprise were met with a whole lot of "NR", aka redacted data. The data on par lent out, par received, net change, limit and undrawn available, which is critical to determine whether the Fed actually lost money on its FX swap transactions is not available. And what is even more stunning is that one of the banks in the list, which we believe can only be the Bank Of Canada is purposefully and diligently redacted out of the 977 pages in the document highlighting the currency swap data. We have a simple question: why? And why pretend that the Fed is following court transparency orders if it continues to censor such critical information on how it actually impacts markets through its operations.

Another "War On, War Off" day results in huge pain for all those who had expected oil to finally trend lower. Instead, the schizophrenic market decided to finally read the headlines from the past 3 days confirming that K-Daf is winning the war against Libyan rebels, even without an airforce, and despite the US' not so secret anymore CIA involvement, which among other things is likely funding and arming Al Qaeda. The end result was crude surging by nearly $3 intraday to the highest closing since August 2008, and Brent almost at $120 again while at the same time guaranteeing nosebleed(ing) inflation in Europe now that gasoline is on its way to $10/gallon. Within a day we will see just how serious OPEC was about that $120/barrel limit before it increases output, especially since it is now known that most of that excess capacity is a myth. What is far scarier, is that the annualized growth rate in Brent is higher since the Jackson Hole speech (at 127%) compared to the rate of rise entering into the Great Depression (104.25%) when the world had to blow up to bring energy prices lower. In other words, the Fed is once again back in the box where it needs to create a massive market crash to put energy prices back in their "deflationary" place.

There are so many Federal programs to aid housing it looks like a tag cloud graphic that you see on some web sites. Yet they all have one thing in common: failure. The more they try to keep the corpses of the housing boom alive, the worse the problem becomes. Every program to forestall a quick economic readjustment has only served to prolong the problem. Here's why.

If you trust the EPA to tell you if radiation levels are unsafe, then ignore this article. If you don't, wouldn't letting your water or milk sit for a couple of weeks before drinking it go a LONG way towards reducing risk?

The backdrop is pretty simple but is too terrifying for the brainwashed amongst us to admit. The old order, of corporatist/fascism is on its last legs and it clutching onto its power desperately. This includes the Central Banking system itself and by extension pretty much all governments around the world. When rats are cornered they attack and that is what is happening now. In their attempts to save a dead system they will do everything they need to try to survive. The well being of the citizenry is largely irrelevant. Keeping them quiet and subservient is much more important. Well, the problem here is that in order to do this various countries need to achieve conflicting goals. In the West, the governments are merely attempting to keep standards of living flat or masking the deterioration (inflation) and in the emerging economies they must continue to raise living standards rapidly. Both of these things cannot happen in a centrally controlled global economy where money is being spewed from spigots and no one is investing. Let’s get real, everyone I know with half a brain and a lot of money is hedging themselves. Whether this means precious metals, a second passport, growing their own food, buying land overseas or all of the above, one thing they are not doing is investing in this economy. So instead of trying to deal with the root of the problem (monopoly money, rampant corruption in D..C and no rule of law) they just print money. If the root problems were dealt with, the TBTF banks shut down and executives jailed, the Federal Reserve shutdown gradually and replaced with hard money I promise you after a very challenging recession the smartest Americans would put their money to work and this economy would boom. Of course this won’t happen because the rats are in charge so an uncontrollable collapse is more likely the outcome. They would rather bring us all down into the depth of Hades rather than lose their grip on power. - Mike Krieger

While Zero Hedge ploughs through 25,000 or so pages of just declassified information focusing on the Discount Window, but containing previously undisclosed information on the entire alphabet soup of systemic rescue facilities, and prepare to present our findings shortly, we would like to facilitate the crowdsourcing effort in perusing the data which the Fed has made prohibitively difficult to access (only distributed on physical CD), by uploading the entire data dump at the following link.

Our very preliminary question is whether the Fed really expects the US public to believe it does not keep track of the collateral it lends Discount Window money against, and if that rhetoric question is false, then why is collateral data not disclosed?

And the award for the most prosaic and "Field Marshall Obvious" statement of the day goes to Irish finance minister Michael Noonan, who just told the Dail that Irish sovereign debt is sustainable if the economy grows. We have just one question: how does the brand new minister, who therefore gets the benefit of the doubt for a few more hours, justify that statement, with the attached chart?