Carmen Segarra said, “I come from the world of legal and compliance, we deal with hard evidence. It’s like, we don’t deal with, you know, perceptions.”
How ironic. Segarra worked at the Fed.
Bill Dudley Responds To Charges NY Fed Is Controlled By Goldman Sachs: "Nobody Should Question Our Motives "Submitted by Tyler Durden on 10/02/2014 14:15 -0400
“I completely stand behind the integrity and work of our supervision staff,” he said after a speech today in New York. “They are operating completely in the public interest.” Dudley said there has been a “significant reorganization” following a report commissioned by the regional Fed bank, and that “improving supervision has been and remains an ongoing priority for me.” “I don’t think anyone should question our motives and what we are trying to accomplish,” Dudley said today in defense of his institution. “Examiner independence is completely paramount.”
"The Markets Group at the Federal Reserve Bank of New York manages the size and composition of the Federal Reserve System’s balance sheet consistent with the directives and the authorization of the Federal Open Market Committee (FOMC), supports debt issuance and debt management on behalf of the U.S. Treasury, provides foreign exchange services to the U.S. Treasury and provides account services to foreign central banks, international agencies and U.S. government agencies. Markets Group is establishing a presence at the Federal Reserve Bank of Chicago and has openings for both experienced professionals and recent graduates.
I don't want to spoil the revelations of "This American Life": It's far better to hear the actual sounds on the radio, as so much of the meaning of the piece is in the tones of the voices -- and, especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman Sachs. But once you have listened to it -- as when you were faced with the newly unignorable truth of what actually happened to that NFL running back's fiancee in that elevator -- consider the following:
- You sort of knew that the regulators were more or less controlled by the banks. Now you know.
- The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.
So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over. It shouldn't.
"We're suffering from central-bank-induced bipolar disease, bouncing from joy to despair number by number."
Since it is the NY Fed, headed by an ex-Goldmanite, which will ultimately be tasked with exiting 6 years of "unconventional monetary policy" - at some point during this "recovery" if not now or any time soon for that matter - it is probably best to listen to Goldman for its post-mortem on what the chairwoman did or did not say. Which is why we present a "Q&A" with Goldman's head economist, Jan Hatzius, known to occasionally exchange a sandwich and the occasional policy guidelene, with NY Fed's Bill Dudley at the Pound and Pence, in which he explains how Yellen managed to be both more dovish and more hawkish than the "market" expected.
The US national debt continues to spiral out of control, seemingly without any plan to ever rein it in.
Compared to this time last year, the national debt has grown by over $1 trillion. At the end of September 2013, the cumulative debt stood at $16.74 trillion. Now it is over $17.76 trillion.
This represents a tectonic shift in the financial markets. It does not mean that Central Banks will never engage in QE again. But it does show that they are increasingly aware that QE is no longer the “be all, end all” for monetary policy.
"... it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally.... Never before have central banks tried to push so hard... Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms.... The temptation to go for shortcuts is simply too strong, even if these shortcuts lead nowhere in the end."
The S&P500 has now gone 47 days without a gain or loss of more than 1% - a feat unmatched since 1995, according to AP. Overnight markets are having a weaker session across the board (except the US of course). Even the Nikkei is trading with a weak tone (-0.7%) seemingly unimpressed by the Third Arrow reform announcements from Prime Minister Abe yesterday (and considering in Japan the market is entirely dictated by the BOJ, perhaps they could have at least coordinated a "happy" reception of the revised Abe plan). Either that or they have largely been priced in following the sizable rally in Japanese stocks over the past month or so. Abe outlined about a dozen reforms yesterday including changes to the GPIF investment allocations and a reduction in the corporate tax rate to below 30% from the current level of 35%+. Separately, the Hang Seng Index (-0.06%) and the Shanghai Composite (-0.41%) 98closed lower as traders cited dilutive IPOs as a concern for future equity gains.
Several months after it was revealed that Germany was able to only recover a miserable 5 tons of its gold in all of 2013 (under 10% of the 84 tons it was scheduled to repatriate), Germany appears to have given up entirely in its attempt to recover gold which simply is not there, and as Michael Krieger reports, citing Bloomberg, has decided to keep "it" (by "it" we don't mean the gold since that clearly has not been at the Fed for decades, but merely the paper promises of ownership: for more see China's gold rehypothecation scandal and how the unwind works) at the NY Fed after all. That is to say, in the "safe hands" of former Goldmanite Bill Dudley.
While Janet Yellen yesterday explained that low levels of realized and expected volatility in financials were not a signal of complacency; we suspect, like The Fed's Bill Dudley, some are concerned she is talking out of her academic ass... As JPMorgan warned, volatility currently is entirely dislocated from fundamentals, and the day of realization is approaching...
As the chart below shows, there’s much the Fed doesn’t understand, while at the same time showing that QE may have little purpose beyond providing a massive gift to wealthy traders and investors. With regard the question of where a dollar of QE goes, the answer is “not far.” Outside of pushing up asset prices and encouraging an occasional luxury purchase, it doesn’t seem to escape the financial sector. Liquidity that might otherwise be offered by private institutions is instead provided by the Fed, and – as Phil Collins might put it – that’s all.
While the last 2 weeks have seen numerous Fed heads, most vociferously Bill Dudley, warning of 'complacency' in markets, fearsome of low volatility and worried about low risk spreads. Of course, investors don't care - don't fight the fed unless the fed tells you to sell, appears the mantra-du-jour. Fed communications are not working... and so they have left it to their mouthpiece - WSJ's Jon Hilsenrath - to explain that they are indeed concerned at just how risk-free markets have become..."Federal Reserve officials, looking out at mostly calm financial markets, are starting to wonder whether tranquility itself is something to worry about."