Andrew Ross Sorkin

Events in Cyprus stem from precisely the same source as the surge in US home prices, namely monetary expansion by the Fed.  

We couldn't have said it better: "Bank of America blocks users from accessing websites that present certain risks to the bank."

While the theater of the presidential election hits peak season, and InTrade odds for this candidate or that are approaching flash crash territory, the one person who truly runs not only the US, but the entire "developed" world, Ben Bernanke, is going nowhere. At least not until January 2014. At which point he may be going somewhere - retirement. Reuters cites the NYT: "U.S. Federal Reserve Chairman Ben Bernanke has told close friends he probably will not stand for a third term at the central bank even if President Barack Obama wins the November 6 election, the New York Times reported." In other words: the republican Fed Chairman who mysteriously became a Democrat president's bestest friend (and has been publicly threatened by every other GOP candidate, including Romney, although that would be merely to replace him with Bill Dudley, not Glenn Hubbard)  that $4 trillion that the Fed will have in assets at the time of Ben's departure, and $5 trillion at December 31, 2014, just became someone else's problem. Good luck to that someone else unwinding a Fed balance sheet which as we explained previously, will at one point in the next 2 years hold well over half of the marketable US Treasury debt inventory. How the sale of this inventory will happen in a time of spiking rates (because that's what the Fed wants - inflation) is literally anyone's guess, because in practice it will never happen.

The European Union has been, in a very real sense, like a masquerade ball. The intricately painted masks covering manipulated stress tests, hiding inaccurate debt to GDP ratios, falsified accounting practices, glossing over any sort of contingent liabilities as if the scars were not there and double counting assets however, like all extravaganzas of this type, is about to reach a conclusion. The night has been long and the hour is late but one by one the masks are being removed and the characters are seen for what they are; a less than pretty sight. There are negative yields in the short maturities for Germany, France and the Netherlands which might soon be found in the United States. We are not sure what Mr. Bernanke will make of institutions paying him to leave their money with the United States government but it will be a classic example of a point in time where “Return OF Capital” became much more important that “Return ON Capital” but as we have asserted time and time again, given the 36% loss of wealth during the American Financial Crisis, that “Preservation of Capital,” are manifestly the byword of the Faith at present.

Fraud ... What Fraud?

Remember the look on one's face when one hears there is no Santa Claus, or tooth fairy? That, more or less, is what the visage on everyone's favorite CNBC anchors Becky Quick, Joe Kernen and Andrew Ross Sorkin was, when Chris Whalen matter of fact (because it is a fact) let a rare glimpse of reality on the NBC Universal distraction and entertainment show, when he said "There is no Chinese Wall. Please. Come on. This is Wall Street." Awkward silence follows. And why not: if the banks officially call frontrunning an "Asymmetric Information Initiative" to mask the simple illegality from the idiot regulators, why not call a spade a spade, and expose one more aspect of the lies and crime that is shoved down investors' throats every single day.

"A few good banks is better than a lot of bad one."--Jim Cramer

Two years after the bailout, the Treasury Dept. already declared milestone reached in June, 2010 when  "Repayments to Taxpayers Surpass Tarp Funds Outstanding."   But a recent analysis done by the Center for Media and Decmocracy (CMD), pointing to an actual total still outstanding at $1.5 trillion.

The surprises of SEC's infinite revolving door conflicts of interest never cease to amaze (or, for that matter end). Andrew Ross Sorkin has taken some time from his busy media whirlwind tour schedule and conducted some actual investigative reporting for a change, discovering that the SEC's co-chief counsel in charge of helping write derivative rules, Adam Glass, who previously testified about Goldman's Abacus, the culprit for the biggest SEC settlement in history against a Wall Street firm, had some very specific inside knowledge vis-a-vis Abacus. He signed off on it. Writes Sorkin: "Before working on the financial crisis cleanup, he helped create the opaque securities that contributed to the mess...For many years, Mr. Glass served as the outside counsel to Paulson & Company...And yes, Mr. Glass, in that role, signed off on Abacus, which was created specifically for the hedge fund to short subprime mortgages. Mr. Paulson handpicked some of the underlying investments in the derivative...The government, in its complaint, claimed that Goldman had "misstated and omitted key facts regarding" Abacus, including disclosing Mr. Paulson's role in its creation. The firm paid $550 million to settle the case, without admitting or denying guilt...his role once again raises questions about the revolving door between Washington and Wall Street at a time when public distrust about the agency and its lack of enforcement action against the culprits of the crisis is running high..."If he was involved in Abacus, how is he supposed to police it?" We are not sure if we are more confused by the fact that Sorkin has actually done some actual research or that yet another SEC crony is exposed to be in the pocket of Wall Street's rich and powerful. Actually, the former. Certainly the former.

"It has become part of our day-to-day lexicon… something as American as apple pie. Whatever happens of an unpleasant or nefarious nature, it must have been caused or created by a “few bad apples.”--Ben Tanosborn

There's a reason yesterday's announcement that JPM Chase would 'settle' for a fine of $156.3 million, while neither admitting nor denying any wrong-doing, thereby forking over the whopping equivalent of a normal person's weekly grocery budget, pisses people off. Because it's a marginal fleabite on the teflon hand of the nation's second largest bank in terms of punitive pain, and absolutely meaningless in altering the grand scheme of toxic securities creation or complex financial institution business as usual.

Goldman's business model is designed around the exploitation of secrecy. Secrecy is organizing principle that governs modern credit markets. Credit default swaps, privately placed structured securitizations (e.g. CDOs), and hedge funds have all flourished-- they dominate the debt markets--because they are all designed to exploit secrecy. They all create extraordinary profits by keeping the rest of us in the dark. So in late 2006, if you wanted to find out what was happening in this newly created synthetic RMBS market, you couldn't find out much of anything. You couldn't find out anything about who bought or sold any CDO, or what was in any CDO, or how any CDO performed, unless Goldman or some other CDO underwriter deemed you sufficiently worthy of their selective disclosures. You couldn't learn anything from the sales or trading activity of mortgage bonds, because the related trading in credit default swaps was kept hidden beneath the surface. You didn't know anything about the trading activity related to the ABX indices, since that, also, was kept secret. And since the privately-held company that owned the ABX, CDS IndexCo LLC, operated in total secrecy, and since the privately-held company that published the price of the ABX, Markit Group Limited , operated in total secrecy, you had no way of knowing the extent to which the price of the ABX was manipulated through round-tripping, side deals with synthetic CDOs, or anything else. The only thing you knew, your only link to the illusory "reality " of market sentiment, was the quoted price of the ABX. And you might happen to know that the Chairman of CDS IndexCo was Brad Levy, a managing director at Goldman, which, along with a handful of other banks, controlled CDS IndexCo and Markit Group. Both the FCIC and the Levin subcommittee disclosed a wealth of information that others with a more skeptical bent can scrutinize in depth. This information poses a direct challenge to Goldman's dissembling, and to the moral hazard of access journalism, which is no substitute for the full transparency of a free and open marketplace of ideas.

• Fed Officials Discuss Explicit Inflation Target (Bloomberg)
• No Fed Shift Seen at June Gathering (Jon Hilsenrath)
• China Developers’ Outlook Lowered to ‘Negative’ by S&P as Credit Tightens (Bloomberg)
• SEC probes Merrill CDO sale (FT), Is Andrew Ross Sorkin already drafting explanation how Merrill was not, repeat NOT short anything? Or is Bank of America just not a Dealbook sponsor?
• The Economy Is Now Immune to Keynesian Crack (Peter Schiff)
• Rosenberg '99%' sure of U.S. recession (Forbes)
• China Inflation Heading for 6% Shows Danger for Wen Extending Rate Pause (Bloomberg)
• White House wants business to aid in debt cap fight (Reuters)

"You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."

The fact that the unveiling of Facebook was done with so much noise and fanfare by GS, a firm that never does anything rash you understand, suggests that there was a need to divert attention from the issue of valuation.