Lehman Brothers

Exclusive Interview With Diapason's Sean Corrigan

Zero Hedge has the pleasure to bring its readers this extensive Q&A with one of the most prominent voices of "Austrian" economic sensibility, and foremost experts on capital markets and commodities: Diapason's Sean Corrigan, who has repeatedly graced our pages in the past and who always provides a much needed 'on the ground' perspective on his native Europe. Among the numerous topics discussed are the Eurozone, its collapse, its insolvent banks, and the EFSF as the Swiss Army Knife ex Machina; the 3rd year anniversary of Lehman's failure and what lessons have been learned (if any); how to fix the US economy; on Goldman's relentless attempts to intervene in, and define, US monetary policy; what the Fed's role should be (if any) in the economy and capital markets; his views on the Occupy Wall Street movement; his advice to an inexperienced 25 year old looking to make their way in the world; And lastly, the $64K question: what is the endgame. A fascinating must read.

Reggie Middleton's picture

Warning! Highly controversial post. Long. Thick (with information) & HARD [hitting]! Thus if you are easily offended by pretty women, intellectually aggressive brothers in cognitive war garb, government regulators selling you out to the highest European bidder, or cold hard facts borne from world class research not seen in the sell side or the mainstream media, I strongly suggest you stop reading here and move on. There is nothing further for you to see.

Rogue Government Traders

The reason the liberal mainstream corporate media demonized the Tea Party is because it threatens the status quo.  The reason the conservative corporate mainstream media demonizes Occupy Wall Street is because it threatens the status quo.  These are textbook divide and conquer strategies being used on the American people.  Do not fall for it.  Yesterday I read a really interesting gallup poll that stated: “Not surprisingly, Americans who consider themselves supporters of the Occupy Wall Street movement (26% of all Americans) are more likely to blame Wall Street than the federal government for the nation's economic problems. Supporters of the Tea Party movement (22% of Americans) are overwhelmingly likely to blame the government.”  What is most compelling to me is that 26%+22% = 48% so basically almost a majority.  All we need to do is teach people that Washington D.C. and Wall Street are now the same corrupt entity.  They are one gigantic rogue trader sucking the lifeblood out of America.  If we can unite these forces, which I can say with certainty agree on the important issues, we can put an end to the status quo and free ourselves of this bondage. 

Jim Chanos Mocks Latest Chinese Attempt To Support Its Stock Market, Sees It As Confirmation Of Deterioration

Yesterday we presented our cynical perspective on the latest Chinese intervention in its stock market, whose sole intention was to prop up the stock market, and create the illusion that the economy is stronger (following in the Chairman's footsteps, it appears that now the SHCOMP is the best proxy for economic prosperity) now that bank speculation of a Chinese hard landing has grown significantly louder (see here and here). Today, it is Jim Chanos' turn to jump on the, pardon the pun, cynical bandwagon, who, as Bloomberg reports "said a rally spurred by government purchases of the shares hasn’t changed his bearish outlook. The MSCI China Financials Index surged 6 percent today after state-run Central Huijin Investment Ltd. started buying shares in the four biggest Chinese lenders. The gauge of banks, insurers and developers had tumbled as much as 43 percent in 2011 through Oct. 4, sending its price-to-earnings ratio to a record low of 5.6 on concern that slowing economic growth will spur bad debts after a three-year credit boom. “The fact that people are even talking about the government stepping in to shore up the banks, when two months ago people thought there was nothing wrong with the Chinese banks, should tell you just how seriously this situation is deteriorating,” Chanos, founder of New York-based hedge fund Kynikos Associates, said in a Bloomberg Television interview." Needless to say this is glaringly obvious, which is why it will have no adverse impact and the only thing the markets will care about is how many trillions in additional government liquidity/purchases will come down the line to prop up the illusion that is the global economy.

Phoenix Capital Research's picture

The "powers that be" have lost control of the markets. Both the IMF and the Bank of England have warned we are facing a financial meltdown of historic proportions and possibly the worst ever in history. These are the very groups that are supposed to hold up the financial system... telling us that we're facing a "meltdown."

Update: EFSF Vote Delayed.... Liveblogging The Slovakian Parliamentary/EFSF-Vote Session

Update: Slovakia’s Lawmakers Delay European Bailout Fund Vote, WSJ Says. WSJ reports that Repeat vote on EFSF may be held later this week; unlikely to take place Wed. as more time for political talks needed, WSJ reports, without citing anyone. Govt expected to lose confidence vote, paper says. However, the confidence vote is expected to still pass, or rather, fail. Which would lead to a government reshuffle into a configuration that will pass the EFSF vote. All speculation.

In terms of binary events on today's docket, the most important for the euro and eurozone by a wide margin is the Slovakian EFSF-ratification vote which is set to begin shortly, and where hopes have faded that a favorable resolution can be reached, at least in the immediate horizon. Those who want to follow developments in real time can do so courtesy of the following live blog at sme.sk updated every several minutes.

Congressional Research Service Finds US Exposure To Europe At $640 Billion And "Could Be Considerably Higher"

If there is one thing that matches John Paulson's dramatic conversion to the anti-Midas of our times, it is Tim Geithner's uncanny ability to say something only to be proven to be a pathological liar within months if not weeks (who can possibly forget: "Is there a risk that the United States could lose its AAA credit rating? Yes or no?”  "No risk of that."). Now we can add hours. Because it was only yesterday that in testimony to Congress, he said in an attempt to be the latest to defend Morgan Stanley, that "The direct exposure of the U.S. financial system to the countries under the most pressure in Europe is very modest."  Really? That's funny because none other than the Congressional Research Service said that U.S. bank exposure to the European debt crisis is estimated at $640 billion, according to Dow Jones. Wait, that is impossible: even Morgan Stanley, the bank that stands to see a bear raid if the CRS' conclusion is valid, said that its net exposure is negligible. And none other than CNBC confirmed that gross exposure is irrelevant, regardless that AIG taught us that in a state of insolvency contagion net becomes gross, and bilateral netting can be thrown out of the window (what happens when that counterparty you hedged your exposure with... goes bankrupt? Ask Hank Paulson, Lloyd Blankfein and Joe Cassano, they know). But wait there's more: "The CRS says, however, there are two other factors that could cause a dramatic reassessment. The estimate doesn't include U.S. bank exposure to European bank portfolios that include assets in the weak member countries. Also, it doesn't account for euro-zone assets held by money market, pension, and insurance funds. "Depending on the exposure of non-bank financial institutions and exposure through secondary channels, U.S. exposure to Greece and other euro-zone countries could be considerably higher." So... someone is lying you say?