Archive - Oct 2009 - Story

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 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.

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!

Developing story from BNO. Quotes state media reports.

Earlier Marla shared her views on peculiar option action and what the implication of this may be for the oil (and geopolitical) complex. We present some thoughts out of John Bougearel that takes a look at the argument from a more technical perspective.

A week ago the world was split into two camps: those who said Robert Fisk was an idiot and that anyone who believes him is a tinfoil hat wearing paranoid sociopath, and those who said Robert Fisk was brilliant and that anyone who does not believe him is an unimaginative, unintelligent, conservative boor. Yet nobody tried to confirm or deny his data. Today, Russia's Prime Minister and de facto viceroy Vladimir Putin finally made it clear that the presumably insane Fisk was not making stuff up.

The school that epitomizes the dangers of groupthink (especially by very intelligent people) and tends to get caught in both the virtues and vices of its own ingeniosity, saw just how expensive hubris can be in 2009. Harvard's endowment dropped 27.3% in 2009 to $27 after hitting roughly $10 billion higher the year before. And not only that, but the world's most famous university almost had a liquidity (and existential) crisis after it set out to prove all those who claim gross and net on an IR swap are never the same (45% is damn near close).

"That’s why I have urged the SEC to undertake a comprehensive “ground up” review of a broad range of market structure issues before more piecemeal changes occur. We have seen this horror movie before, and only timely regulatory examination can best prevent a sequel: When markets develop rapidly and are not transparent, effectively regulated or fair, the movie’s ending scene can be one of tragedy affecting millions of people." -Sen. Ed Kaufman

Even as we have anniversaried the Lehman collapse, the primary indicator of economic viability: intermodal traffic, continues to decline. In fact the weekly decline was slight worse, and came out at -17.2% YoY for week 40, nominally worse than the prior week's -17.1%. The categories most impacted were Primary Forest Products and Lumber and Wood Products, both instrumental in new housing construction. If there is a reason to be buying Centex, Lennar and Toll, sure don't look for it here.