Archive - 2010 - Blog entry

Forget TARP, the AIG bailout and FDIC debt guarantees. The real bank bailout lives on courtesy of Helicopter Ben’s zero interest rate policy. Why should you care? Because low rates punish savers in the name of nursing the banks back to health. After all the trouble the banks have caused over the last 2 years this just adds insult to injury.

Japan's $1.36 trillion public pension fund, the world's largest, is seeking higher returns...

Q: Is Avatar a metaphor for "capitalism?" A: Yes, in James Cameron's populist vision of "capitalism." Q: Is the rape of another planet capitalism? A: No. Q: Is the movie left wing Hollywood schlock propaganda? A:Yes. Q: Is the movie marvelous entertainment? A: Yes. Q: Is it also something else? A: Yes.

Well, it looks like Blankein, Dimon, et. al. really should have tried harder to make that meeting with the President a couple of weeks ago. It appeared as if he may have had something important to discuss. Here is a clear break down of the how much principal and prop trading adds to the top and implied bottom lines of Goldman, Morgan Stanley, JP Morgan and Bank of America.

With regulation rising, fees shrinking, and taxes about to take a quantum leap up, who needs it? The scapegoating and demonization of hedge fund managers. Why become a witch, just as the Salem witch trials are starting? Have they no shame? You might as well pour sugar in the fuel tank of my Gulfstream.

One of the largest state-operated workers comp fund had massively misrepresented its performance. And you thought only Bernie could pull off multi-billion dollar scams...

The SEC / DoJ rewrite witness immunity rules 'to protect investors and the integrity of markets' ... yet, just one week after unilaterally 'updating' said rules, Hank Greenberg, AIG, Warren Buffett, Berkshire and Gen Re are each given a cursory slap on the wrist after the SEC charges General Re for its role in AIG and PRU accounting frauds. Protecting the public from egregiously rampant, market manipulating fraud sounds great; essentially letting Hank Greenberg, AIG, Buffett, Berkshire and Gen Re off the hook for egregiously rampant fraud doesn't look so hot.

If you accept situations such as AIG and other cases where Buy Side investors (and, indirectly, the US taxpayer) were defrauded through the use of OTC derivatives and/or structured assets as the archetype “problems” that require a public policy response, then the Volcker Rule does not address the problem. The basic issue that still has not been addressed by Congress and most federal regulators (other than the FDIC with its proposed rule on bank securitizations) is how to fix the markets for OTC derivatives and structured finance vehicles.

I have had a lot of problems with the way the last two adminstration have dealt with this financial crisis and Wall Street, but I must say "Kudos to Obama". Somebody had to do it. Call it politically motivated if you want to (he is a politician, isn't he?), nobody else bothered to contain the self reinforcing boom/bust risk cycle that is Wall Street.

...when volume support breaks, the cradle will fall.

I was not going to bother to comment further, but after hearing pundit after pundit attack Obama for the bank levy and Glass Steagal 'lite', after banks allegedly paid their dues... I just couldn't take it anymore. This short-term memory-itis is driving me nuts!

According to the SEC’s complaint against Gen Re, filed in U.S. District Court for the Southern District of New York, a foreign subsidiary of Gen Re entered into two sham “reinsurance” transactions with AIG in 2000 to improperly allow AIG to reverse the declining reserve trend and falsely report additions to both loss reserves and premiums written. Senior officials at Gen Re helped AIG structure the two sham transactions. The contracts show reinsurance transactions that appeared to transfer risk to AIG, but the transactions did not transfer risk.

Here is a glimpse at an internal debate between BoomBustBlog analysts on the merits of the China bubble short, and its comparison on the merits to a short in the EU and CEE contries. It appears as if the China bubble thing is about to heat up.

Forget the Isle of Man, Cayman Islands, Nauru, Liechtenstein, and like havens. The World Securities, Exchanges, and Financial Rules Commission is being planned by the Europeans and the Obama Administration. This is the theme of the World Economic Forum Annual Meeting in Davos.

A tidal wave of fiat paper currencies is now flooding the world financial system at an increasingly alarming rate. Pull a dollar bill out of your wallet and it’s as limp as ever. Linear growth in supply will get overwhelmed by a Malthusian, exponential growth in demand. The seventh in a series of seven on The Mad Hedge Fund Trader’s Annual Asset Allocation Review. (GLD), (DGP),(ABX), (SLV), (PALL)