FINRA not only failed, but the question that needs to be fully explored is whether it acted on material, nonpublic information as it liquidated its ARS bonds in 2007, at the expense of the investors it was supposed to be protecting.
As more people realize that the fake title transfer aspect of foreclosure fraud is just the tip of the iceberg which runs, via MERS (Mortgage Electronic Registration Systems) conduits all the way to the core of the securitization system, and thus $10 trillion in first level debt (and who knows how much in 3rd and 4th level layering of debt on top of this: think CDO-squared and cubed), we expect an increasing number of denials from the enablers in the explosion of securitization over the past ten years. Such as MERS. Which is why it is not surprising that late last night, it was precisely MERS who not only acknowledged for the first time its involvement in this whole fiasco (by a press release and a "fact and rebuttal" session), but has made it all too clear just how deep the problem truly runs. We would like to highlight just how very alike is the defense prepared by the High Frequency Signing Lobby to that by the High Frequency Traders out there: it is all just technological advancement, and if you want to blame it on someone, blame it on Intel and their fast fast chips: "What we're seeing now is that the
foreclosure process itself was not designed to withstand the extraordinary
volume of foreclosures that the mortgage industry and local governments must now
handle." Obviously the volume only exploded once failed systems such as MERS appeared on the scene: it is precisely in this aspect that MERS served as an enabling catalyst to let loose the wave of exponential re-re-securitization. It continues: "The MERS process of
tracking mortgages and holding title provides clarity, transparency and
efficiency to the housing finance system." And here is where MERS basically puts the ball back in the corrupt legal system's court: "We are committed to continually
ensuring that everyone who has responsibilities in the mortgage and foreclosure
process follows local and state laws, as well as our own training and rules." Because why not blame the entire judicial system, when one could just acknowledge the burden of having failed at doing their own job properly... One thing is certain: someone is going down for this biggest snafu in the history of mortgages/securitization.
SITUATION: One indirect consequence of the Gulf of Mexico oil spill is the impact it may have on the financing of the many tourism projects that have sprouted along the Caspian Sea. Bordered clockwise from the North by Kazakhstan, Turkmenistan, Iran, Azerbaijan, and Russia, the Caspian Sea is one of the largest bodies of water and an object of strategic ambitions. Though the global financial crisis put may grandiose Caspian Sea tourism projects on hold, some of them are coming back to life, but investors should be alert to tourism trends, corruption, and unanswered questions about demand and potential profit.
We continue our bedside reading series started last week with with a presentation of Didier Sornette's terrific "Critical Market Crashes" with this week's even more entertaining, introspective and troubling "Psychology, Financial Decision Making, and Financial Crises" by Tommy Gärling and colleagues of the Universrity of Gothenburg. The volatile nature of "product markets" has long troubled thinkers, theoreticians and philosophers alike who have struggled to explain why something which should on its face be efficient, be able to experience such demoralizing and turbulently violent events as May 6, Black Monday, and other historical crashes. Gärling proposes: "In product markets with full competition, prices represent the true value of the products offered. This does however not seem to hold in stock markets where stock prices, due to excessive trading, are more volatile than they should be if reflecting the true value of the stocks. Psychological explanations include cognitive biases such as overconfidence and overoptimism, risk aversion in the face of sure gains and risk taking and loss aversion in the face of possible losses, and influences of nominal representation (the money illusion) of stock prices. If no cognitive biases (strengthened by affective influences) existed or only some actors were susceptible to such biases, individual irrationality in stock markets would possibly be eliminated. This is however not what evidence indicates."
Mark Pittman's last valiant effort to bring some transparency to the most destructive organization in the history of mankind has succeeded. According to testimony to be delivered to the House tomorrow, "under a framework established by
the act, the Federal Reserve will, by December 1, provide detailed
information regarding individual transactions conducted across a range
of credit and liquidity programs over the period from December 1, 2007,
to July 20, 2010. This information will include the names of
counterparties, the date and dollar value of individual transactions,
the terms of repayment, and other relevant information. On an ongoing
basis, subject to lags specified by the Congress to protect the efficacy
of the programs, the Federal Reserve also will routinely provide
information regarding the identities of counterparties, amounts financed
or purchased and collateral pledged for transactions under the discount
window, open market operations, and emergency lending facilities." Luckily this action by Bernanke will prevent the rioting that would have followed an appeal to the Supreme court, which would have certainly sided with the secretive group of Keynesian priests. If nothing else, the plethora of data will keep the blogosphere preoccupied for days upon days, rummaging through millions of pages of explicit corruption.
One of the last true defenders of a long lost honest and efficient market is riding away into the sunset. Today, at 2:15 PM Delaware Senator Ted Kaufman will deliver his farewell address on the Senate Floor. The full speech will be broadcast here. He will be sorely missed by everyone who laments the days when good news meant to buy stuff, while bad news did not mean to buy ten times more stuff. Alas, in the great race for technological supriority, the market broke some time ago, and the retail investing class, which accounts for a vast majority of the stock market's capitalization via its trillions in ever diminishing investments, has now lost all faith that stocks reflect anything but the Fed's desire to reflate the troubles of a few massively underwater bankers away. It is sad, but it is a fact. There is no more fair and efficient market. Which is why we know that those corrupt and captured cronies of the status quo at the SEC will be applauding Kaufman's departure - after all he was the last voice in Washington who dared to put up a fight for the little investor. Soon, everything will be back to normal, where the only guaranteed outcome of any stock trade is a loss. In the meantime, we present to you Senator Kaufman's last speech (of seven) on market structure issues and the unending scourge that is high frequency trading. We also present Carl "Shitty Deal" Levin's follow up comments to Kaufman's speech.
We have no chance. The regulators are stacked up against us.
For decades, public pension funds have bankrolled the private equity industry, investing billions of dollars with large firms like Apollo Global Management and the Blackstone Group. Is this about to change in a major way?
Having just returned from Greece, I can vouch that Canada's pension system is among the world's strongest, but that doesn't mean that we can't improve it.
Google unveiled a “transparency tool” that gives information about requests it receives for user data or content removal from government agencies. The most recent data set--Jan. 2010 to Jun. 2010--the U.S. reign supreme this time around with 4,287 data requests, up almost 20%.
If you think algos gone wild in stocks is bad, just wait until you see what happens when the same feedback-loop generating robots start frontrunning and churning all cotton, sugar, and other commodity contracts. According to this trader, this has already happened. Next up: plunging liquidity, and surging volatility, just in time for commodity prices to find that extra computerized "oomph" as they explode in expectation of Bernanke's reflation experiment gone wild to blow all fair value concepts to smithereens.
It is no longer fun being a hedge fund manager - first, up until the recent POMO-based rally in stocks, HFs were down for the year, and what is far worse, they were underperforming the broader market - a death sentence for pretty much every hedge fund, as this is proof a fund can not extract alpha and thus has no reason to collect 2 and 20. While the recent ramp in the market is welcome by all bulls, the question remains just how leveraged into the latest beta rally hedge funds have been. If after the nearly 10% rise in the past 2 weeks any individual HFs are still underperforming the market, it is a near certain "lights out." To everyone else: congratulations - you just bought yourself another 3 months of breathing room. Better hope the Fed makes good on its QE promises one day soon. In the meantime, Bloomberg Matthew Lynn and Ecclectica's Hugh Hendry both confirm that in these days of instantaneous liquidity demands, and cheap strategy replicators in the form of ETFs which provide the same beta capture as hedge funds, at a fraction of the price, it is only going to get worse and worse for the once high flying community. In fact, Hugh Hendry goes as far as suggesting that 10 years from now 80% of all hedge funds will be gone. Our personal view is that the target will be reached in a far shorter time frame.
Are "pension-protection bonds" the solution to the ongoing pension crisis? I don't think so...
A buddy of mine in Athens is a lot less optimistic on Greece's economic prospects...
What are the drivers of the recent heat-up in M&A activity in the past few weeks? A healthy prospect of the Global Economy? Cash burning holes in CEOs’ pockets? Valuation for the acquisition targets is compelling?