Just days after the NY Fed ousted an employee for providing confidential information to a Goldman Sachs banker (who formerly worked at the NY Fed - and has since been fired by Goldman), Bill Dudley - the president of the NY Fed - will face a very skeptical Senate Banking Committee this morning investigating so-called "regulatory capture." Of course, their eyes were finally opened after Carmen Segarra, a former employee, leaked 47.5 hours of taped conversation (as we discussed in detail here), exposing the dismal reality of the relationship between the 'regulator' and the 'regulated' as New York regulators were deferential to Goldman bankers for a supposedly "shady" deal. Dudley's defense (not denial) so far: "We understand the risks of doing our job poorly and of becoming too close to the firms we supervise. Of course, we are not perfect. We sometimes make mistakes."
As reported ealier this morning, here, courtesy of Bloomberg, are the nominees for the next European Commission under the presidency of Jean-Claude "If Serioues Then lie" Juncker, with one from each of the European Union’s 28 countries. Job assignments were announced today by the incoming president, Jean-Claude Juncker of Luxembourg. What do these appointments mean for the European Union? The attached flash analysis from Open Europe should answer most initial questions.
We knew the blowback from western sanctions against Russia would get serious - and Europe is already finding that out the hard way - but Vladmimir Putin appears to have gone 'cruel-and-unusual' in his latest step. As ITAR-TASS reports, Russian consumer-protection agency Rospotrebnadzor will decide in next few days whether to seize Jack Daniel’s Tennessee Whiskey and Honey Liqueur after 'reportedly' finding "suspicious" chemicals in batch of flavored whiskey on sale in Sverdlovsk stores. Luckily Jack Lew has told us this will not impact the US economy (unless of course, you are Jack Daniels).
Now that the the fourth dead cat bounce in US housing since the Lehman crisis is rapidly fading, and laundered Chinese "hot money" transfers into US luxury real estate no longer provides a firm base to the ultra-luxury segment, the US government is scrambling to find ways to boost that all important - and missing - aspect of any US recovery: the housing market. This is further amplified by the recent admission by the Fed that it is in fact encouraging asset bubbles, not only in stocks but certainly in all assets, such as houses. Well, the government may have just stumbled on the solution to kick the can yet again and force yet another credit-driven housing bubble, a solution so simple we are shocked some bureaucrat didn't think of it earlier: changing the definition of the all important FICO score, the most important number at the base of every mortgage application.
Despite Krugman's “Mission Accomplished” Announcement, the Giant Banks Are Worse Than Ever
Think only the US can engage in the farce known as "sanctions" (why theater, because until Obama sanctions Gazprom, yeah right... crickets... it is nothing but populist theater)? Think again. Overnight Russia's consumer protection agency, filed a lawsuit in a Moscow court - which clearly has nothing to do with recent geopolitical bickering between the former Cold War enemies - seeking to ban some of McDonald's Corp's burgers along with its milk shakes and ice cream, a court spokeswoman said on Friday. The reason for the ban: as Reuters reports, a regional branch of the consumer protection agency Rospotrebnadzor asked the court to declare production and sales of some products illegal due to "inappropriate physical-chemical parameters." The lawsuit's list of contested products named the fast-food chain's Royal Cheeseburger, Filet-o-Fish, Cheeseburger and Chicken Burger but not its Big Mac burger.
- Here come the gates which we predicted in 2010: SEC Is Set to Approve Money-Fund Rules (WSJ)
- Dick's cuts 400 jobs as golf now less popular (MW)
- Kerry arrives in Israel, pushes for peace (Reuters)
- Pay Penalty Haunts Recession Grads as U.S. Economy Mends (BBG)
- Appeals Courts Issue Conflicting Rulings on Health-Law Subsidies (WSJ)
- Rebel Stronghold Donetsk Holds Breath as Shellfire Mounts (BBG)
- Business executive wins Georgia Republican runoff in U.S. Senate race (Reuters)
- Five held in China food scandal probe, including head of Shanghai Husi Food (Reuters)
- Jobs Hold Sway Over Yellen-Carney as Central Banks Splinter (BBG)
UPDATE: This is now the biggest single-day rise in HLF's history...
Bill Ackman's "most important presentation of his career" is not going so well. The 'Death Blow' expectations Ackman created yesterday (that sent the stock down 13%) have been entirely wiped away as a 2-hour presentation, 100s of slides, and nothing really new sent stocks 16% higher today... It appears time is running out for Mr. Ackman as his massive put position (bleeding value every day that passes) is set to expire in six months... and we suspect Carl Icahn can outlast Ackman's view of market 'irrationality'.
Now that the World Cup is over, and following last week's global macro reporting slumber (aside for the Portuguese risk flaring episode of course), things pick up quite a bit in the coming week. Here are the key events.
So what’s a Peeping Tom, anti-democratic, Constitution-trampling intelligence crony to do after leaving decades of “public service?” Move into the private sector and collect a fat paycheck from Wall Street, naturally. So what is Mr. Alexander charging for his expertise? He’s looking for $1 million per month. Yes, you read that right. That’s the rate that his firm, IronNet Cybersecurity Inc., pitched to Wall Street’s largest lobbying group the Securities Industry and Financial Markets Association (SIFMA)
It seems like it was only yesterday (actually it was early November) when infamous CFTC commissioner, legendary threat to gold manipulators nowhere, and Alexander Godunov impersonator, Bart Chilton made a very dramatic exit stage left. At the time, we asked rhetorically if said dramatic depature was just for show. The rhetorical answer to the rhetorical question: of course it was, confirmed moments ago when Chilton became just the latest "regulator" to take the great revolving door out of a worthless public service Washington office into a just as worthless, but much better paying private-sector Washington office. Presenting the latest employee of DLA Piper, the largest law firm in the US, and possibly the world, by number of partners - Bart Chilton, poet.
For five long years, we have pursued the fantasy that we could return to "growth" without having to fix or change anything. The core policy of the fantasy is the consensus of "serious economists," i.e. those accepted into the priesthood of PhD economists protected by academic tenure or state positions: what we suffered in 2009 was not the collapse of leveraged crony-state financialization but a temporary decline of "aggregate demand" and productive capacity. The five-year fantasy that free money would fix all the distortions and systemic problems is drawing to a close. Why can't the fantasy run forever? The two-word answer: diminishing returns. Handing out subprime auto loans works at first because it pulls demand forward: anyone who wants or needs a new car buys one now, rather than put the purchase off a year or two. Eventually the marginal buyers default and demand falls off, and the distortions cause an even greater collapse in demand and auto loan quality.
So you want to be a mortgage banker? then listen now to what i say Just get liability insurance... and get ready to pay and pay...
UPDATE: Mt. Gox website and feed is now offline
Much as we are not surprised, given our previous discussion of the end of major Bitcoin exchange Mt. Gox, this evening's release by Coinbase must be the final nail in the final coffin of the Tokyo-based firm...
"The purpose of this document is to summarize a joint statement to the Bitcoin community regarding Mt.Gox. ... As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. "
So much for the strict, evil Volcker Rule which was a "victory for regulators" and its requirement that banks dispose of TruPS CDOs. Recall a month, when it was revealed that various regional banks would need to dispose of their TruPS CDO portfolios, we posted "As First Volcker Rule Victim Emerges, Implications Could "Roil The Market"." Well, the market shall remain unroiled because last night by FDIC decree, the TruPS CDO provision was effectively stripped from the rule. This is what came out of the FDIC last night: "Five federal agencies on Tuesday approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Volcker rule." In other words, the first unintended consequences of the Volcker Rule was just neutralized after the ABA and assorted banks screamed against it.