Department of Justice

Those wondering if Steve Cohen is attending the most epic of "economic forum" boondoggles elsewhere known as Davos (where for some reason Derek Jeter is present and accounted for) was just to get a hot tip, or to interact with the Swiss branch of Gerson-Lehrman, the one where not every conversation is being recorded by the feds, the answer is neither. The man, whose fund as most by now have been made aware is one turned informant away from greeting the men in gray coats on its front porch at 72 Cummings Road, is in Davos to learn about... "Resilient Dynamism."

MARTIN SMITH: Is that really the job of a prosecutor, to worry about anything other than simply pursuing justice?

LANNY BREUER: Well, I think I am pursuing justice. And I think the entire responsibility of the department is to pursue justice. But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.

“I think there was a level of greed, a level of excessive risk taking in this situation that I find abominable and very upsetting,” says Breuer. “But that is not what makes a criminal case.”

Yesterday we broke the news of what is prima facie evidence, sourced by none other than the Federal Reserve's official August 16, 2007 conference call transcript, that then-NY Fed president and FOMC Vice Chairman Tim Geithner leaked material, non-public, and very much market moving information (the "Geithner Leak") to at least one banker, in this case then Bank of America CEO Ken Leiws, in advance of a formal Fed announcement - an act explicitly prohibited by virtually every capital markets law (and reading thereof). It was refreshing to see that at least several other mainstream outlets, including Reuters, The Hill and the NYT, carried this story which is far more significant than Season 1 of Lance Armstrong's produced theatrical confession and rating bonanza. What, however, the mainstream media has not touched upon, yet, is just how profound the market response to the Geithner Leak was, and by implication, how much money those who were aware of what the Fed was about to do, made. Perhaps, it should because as we show below, the implications were staggering. But perhaps what is even more relevant, is why the Fed's previously disclosed details of Mr. Geithner's daily actions at the time, have exactly no mention of any of this.

It is a “fraudulent transfer” to transfer assets with intent to leave the transferor with inadequate capital... Thus every bank “sale” done for the purpose of reducing regulatory capital is, by definition, fraud – a form of bank theft. 

• Just like last year: A Postholiday Letdown for Retailers (WSJ)
• Obama Fights Republicans on Debt as Investors Seek Growth (BBG)
• Housing a Sweet Spot for U.S. Economy as Recovery Expands (BBG)
• House chooses Boehner as speaker again despite dissent (Reuters)
• Backlash pushes Republicans to seek cuts (FT)
• Jobs Lost Hit 5 Million With Rigged Currencies (BBG)
• Chavez still has "severe" respiratory problem (Reuters)
• Paris promises flurry of economic reforms  (FT)
• Investors Sour on Pro Stock Pickers (WSJ)
• Abe moves to ease South Korea tensions (FT)
• Wildfires Hit Australia Amid Worst Heatwave in Decade (BBG)
• Monti attacks ‘extremist’ rivals (FT)

• Lawmakers, Obama in last chance talks on "fiscal cliff" (Reuters)
• Obama Summons Congress Leaders as Budget Deadline Nears (BBG)
• Hopes for fiscal cliff deal fade  (FT)
• Iran starts navy drills in Strait of Hormuz (Reuters)
• Looming Port Strike Deadline Pressures Obama to Intervene (BBG)
• Home Depot to Lowe’s Busiest Season Threatened by Strike (BBG)
• 'Whale' Capsized Banks' Rule Effort (WSJ)
• China tightens Internet controls, legalizes post deletion (Reuters)
• Goldman Sachs Buying Japan’s Exporters on Abe Policy Bets (BBG) and preparing one Goldman alumnus to take over the BOJ
• IPOs Slump to Lowest Level Since Financial Crisis After Facebook (BBG)
• Blackstone seen sticking with SAC despite insider trading probe (Reuters) - what a shock
• Mistry at Tata Helm as Investors Query $500 Billion Goal (BBG)
• High-Speed Traders Race to Fend Off Regulators (WSJ)

Presenting Dave Collum's now ubiquitous and all-encompassing annual review of markets and much, much more. From Baptists, Bankers, and Bootleggers to Capitalism, Corporate Debt, Government Corruption, and the Constitution, Dave provides a one-stop-shop summary of everything relevant this year (and how it will affect next year and beyond).

As the fallout of Liborgate escalates, the next big bank to be impacted in the fallout started by Barclays civil settlement "revelation" is set to be troubled UBS, already some 10,000 bankers lighter, where as many as three dozen bankers are reported by the implicated in the fixing of the rate that until 2009 was the most important for hundreds of trillions in variable rate fixed income products. Only instead of attacking the US or even European jurisdiction, where the next big settlement is set to hit is Japan: a country whose regulators as recently as half a year ago promised there were no major issues with Libor, or Tibor as it is locally known, rate fixings. And while this most recent development will have little material impact on UBS' ongoing business model, the one difference from previous settlements is that it will likely include criminal charges lobbed against some of the 36 bankers. From the FT: "UBS is close to finalising a deal with UK, US and Swiss authorities in which the bank will pay close to $1.5bn and its Japanese securities subsidiary will plead guilty to a US criminal offence. Terms of the guilty plea were still being negotiated, one person familiar with the matter said on Monday, adding that the bank will not lose its ability to conduct business in Japan. The pact between the bank and the US Commodity Futures Trading Commission, US Department of Justice, UK’s Financial Services Authority and UBS’s main Swiss supervisor Finma is expected to be announced on Wednesday, although last minute negotiations continue."

“The Government Has Bought Into the Notion that Too Big to Fail Is Too Big to Jail”

Update: The focus now shifts to the mother, the first casualty of her son's murderous rampage, who was a "big, big gun fan" as the NYT explains, and who went target shooting with her children, one of whom had Asperger's.

As we reported last night, buried inside the NYT biopic of Newtown shooter Adam Lanza was arguably one of the most important missing pieces in the story, at least so far, which could provide clues into partially explaining yesterday's tragic loss of young life, namely that the 20 year old man suffered from Asperger Syndrome, a high-functioning form of autism (two conditions which are being merged in the upcoming update of the Diagnostic and Statistical Manual (DSM-5) manual of mental disorders), which has been traditionally associated with social communication difficulties, including flat affect, and one which in some clinical studies has been shown to have a causal link to violence. In other words, in addition to the surge in the debate over national gun control and access limitations (ignoring that the perpetrator of the biggest school mass murder in US history - the Bath School disaster - used openly purchased dynamite and no guns, also ignoring that in the US there are roughly 300 million firearms), perhaps there should also be a broad discussion as to the risks of social misadoption of children with autism and other social and behavioral disorders.

Tim Geithner's time is almost done, but the former NY Fed head is only one of very many whose position is expected to be replaced in Obama's second term (just so there is a non-continuous chain of command if and when the time comes for the people to demand an explanation for the state of the US economy from the talented Mr. Geithner). Who else is out and who is expected to be in? The following list attempts to cover all upcoming rotations at the top of the US cabinet. What is not attempted is a prediction of where in the private sector people such as Geithner will end up: that is considered largely self-explanatory.

Western culture is presently defined by many things; one of which being an instilled sense of extreme jaundice toward wealth. Before the twentieth century and the ascendance of the all-intrusive state, sumptuous living was typically seen as something to aspire to. No doubt Karl Marx would beam with pleasure in seeing how the contemporary bourgeoisie is regarded with hateful suspicion. His plan of crippling class warfare is slowly taking hold. This isn’t for the reasons Marx envisioned however. The so-called “people” have been indoctrinated to see wealth as something to take by government force. A great deal of this can be attributed to the government granting of privilege to the well-connected. As long as the state exists, there will be a class of people who use political means to acquire vast swaths of riches. Coercive egalitarianism based on ill feelings of Schadenfreud is a cancer. There is no conceivable benefit in everyone being equal. There is only one moral social system and that is free, unadulterated capitalism which gives everyone the chance to improve their own standing. Anything less represents the triumph of the idiotic masses over good sense.

Linda Green Bitchez!!!

BP Employees Indicted for Manslaughter and Lying to Federal Investigators in Connection with the Gulf Oil Spill