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Frontrunning: August 25

Tyler Durden's picture




 
  • So Draghi was bluffing after all: ECB Said To Await German ESM Ruling Before Settling Plan (Bloomberg)
  • German finance ministry studying "Grexit" costs (Reuters) - it would be bigger news if it wasn't
  • Money Funds Test Geithner, Bernanke Resolve as Schapiro Defeated (Bloomberg)
  • Top Merkel MP says Greek deal can't be renegotiated (Reuters)
  • China Eyes Ways to Broaden Yuan's Use (WSJ)
  • Armstrong ends fight against doping charges, to lose titles (Reuters) - Dopestrong?
  • Need more socialism: Public confidence in France's Hollande slips (Reuters)
  • Seoul court rules Samsung didn't violate Apple design (Reuters)
  • France, Germany Unify Approach to Greek Talks (WSJ)
  • Stevens Sees Mining Boom Peaking, RBA Ready to Act (Bloomberg)
  • Colombia replaces finance minister in surprise move (Reuters)
  • RBI Says Weak India Growth Outlook Imperils Budget Deficit Goal (Bloomberg)

Overnight Media Digest:

WSJ

* Lance Armstrong said Thursday night he is finished fighting a barrage of drug charges from the U.S. Anti-Doping Agency, putting his unprecedented string of seven Tour de France titles at risk along with his legacy as one of the greatest cyclists in history.

* Sales of newly built homes rose briskly in July and inventories declined to the lowest level on record, a sign that builders may need to ramp up construction.

* A federal court ruled that the Tennessee Valley Authority is liable for damages caused by a 2008 spill of toxic coal because it failed to follow its own safety rules.

* Federal authorities accused an aspiring Hollywood actor of threatening the families of several wealthy individuals, including film executive Harvey Weinstein and the chairman and co-founder of Groupon Inc, according to people familiar with the investigation.

* The regulator who scuttled new rules on money market funds decided to vote against the proposal after he learned that SEC Chairman Mary Schapiro released copies of a report that the industry views as unfair and misleading.

* The competition for $4 billion contract to start replacing the U.S. military's Humvee trucks entered a new stage as the Pentagon awarded three development contracts.

* A Texas judge ruled in favor of TransCanada Corp's use of eminent domain in its effort to build an oil pipeline that could ultimately stretch from the Canadian tar sands to the U.S. Gulf Coast.

* Mitt Romney said Thursday that he would replace Federal Reserve Chairman Ben Bernanke, dismissing the advice of a top adviser who suggested this week that the chairman should be considered for a third term.

* The Federal Reserve Bank of New York closed the book on its crisis-era acquisition of AIG's most toxic assets, at a $6.6 billion profit in the latest sale of bonds.

* The number of U.S. workers filing applications for jobless benefits rose by 4,000 to a seasonally adjusted 372,000. Separately, sales of newly built homes in the U.S. rose in July

 

FT

ATHENS AND BERLIN IN SPAT OVER FUNDS

Leaders in Athens and Berlin wrangled publicly over how to deal with Greece's plea for further assistance on Thursday.

MURDOCHS AT ODDS OVER BBC

Elisabeth Murdoch on Thursday sought to distance herself from her brother James' hostility to the BBC, by hailing the public service broadcaster.

CAMERON PRESSED TO REPLACE GREENING

David Cameron is coming under increasing pressure to appoint a new transport secretary in next month's cabinet reshuffle.

BOE FINDS QE HURT DEFINED BENEFIT PENSIONS

Some pension groups have been harmed by side effects of QE, according to a Bank of England paper released on Thursday.

SEC FACES CALL TO REJECT FACEBOOK OFFER

U.S. regulators are facing pressure to reject Nasdaq OMX's proposed $62 million settlement for its members after Facebook's debut on its stock exchange.

BEST BUY AND FOUNDER RESUME BUYOUT TALKS

Best Buy and founder Richard Schulze have resumed talks about a potential buyout.

ASIL NADIR JAILED FOR 10 YEARS

Asil Nadir was sentenced to 10 years in prison on Thursday for stealing 20 million pounds ($31.77 million).

REPUBLICANS EYE RETURN TO GOLD STANDARD

The Republican party plans to adopt a "gold commission" set to become part of party policy.

BRC TO NAME ITS DIRECTOR-GENERAL

The British Retail Consortium will on Friday name Helen Dickinson, the head of retail at KPMG, as its director-general.

AVIVA WARNS IT MAY AXE UP TO 800 UK JOBS

Aviva has warned that as many as 800 jobs at its UK business are under threat as a result of a cost-cutting push by the FTSE 100 insurer's new chairman.

 

NYT

* After the failure of one effort to overhaul a major part of the mutual fund industry, top government officials worked on Thursday to find alternative ways to rein in what they see as a systemic threat to the financial system.

* The severity of China's inventory surplus has been masked by the blocking or adjusting of economic data by the government.

* Mitt Romney is proposing to end a century of federal control over oil and gas drilling and coal mining on government lands to court western voters and supporters from the energy industry.

* Three years after General Motors Co hobbled out of bankruptcy, it is betting that the new Cadillac ATS will become a global contender in luxury cars.

* Facebook Inc is trying to find ways to show lucrative ads to mobile users without cluttering up their hand-held screens and driving them away in frustration.

* The Federal Reserve Bank of New York said on Thursday that it had wound down the final remnant of its rescue of the American International Group Inc, generating a multibillion-dollar profit in the process.

 

Canada

THE GLOBE AND MAIL

* Canada is cancelling $130 million in debt owed by Cote d'Ivoire, erasing an old tab to help the African country dig itself out from a pile of debt.

Report in the business section:

* Some of the country's largest corporations are striking back at Bank of Canada Governor Mark Carney, arguing he is wrong to assert that domestic companies are hindering economic growth by socking away cash.

NATIONAL POST

* Some of Ontario's most powerful unions will fight the province in court if proposed legislation imposing new contracts on teachers becomes law.

FINANCIAL POST

* Research In Motion Ltd plans to soon begin commercial talks with Canadian wireless carriers such as BCE Inc and Rogers Communications Inc after showing them early versions of the BlackBerry 10 phone this week.

 

European economic update:

UK GDP -0.5% - higher than expected

 

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Fri, 08/24/2012 - 07:47 | 2733099 AngryGerman
AngryGerman's picture

Chancelorette with strap-on: the new greek position. pretty sure some italian squids are soiling themselves watching this

Fri, 08/24/2012 - 07:49 | 2733102 LongSoupLine
LongSoupLine's picture

Draghi - Once a Goldman, still a Goldman.

Fri, 08/24/2012 - 07:52 | 2733109 sabra1
sabra1's picture

401K WITHDRAWL PETITION TEMPLATE POSTED BY ANN BARNHARDT - AUGUST 23, AD 2012 7:22 PM MST This was drafted and sent in by a reader, and I think it is a great template for anyone who wants to petition their employer to let them out of their 401k. I would recommend sending it via certified mail - let them know you're dead serious, and try to get as many of your co-workers to do the same as you possibly can.

*****MAKE CERTAIN THAT YOU REPLACE THE BRACKETED AREAS WITH INFORMATION SPECIFIC TO YOU AND YOUR COMPANY. FAILURE TO DO THIS WILL RESULT IN YOU MAKING A FOOL OUT OF YOURSELF AND DRASTICALLY REDUCING THE CHANCES THAT ANYONE WILL LISTEN TO YOU OR TAKE YOU SERIOUSLY.******

 

To: [PLAN SPONSOR] 
[PLAN SPONSOR ADDRESS]

Dear Plan Sponsor,

I’m writing to petition that the [LEGAL NAME OF THE PLAN] be amended to allow in-service withdrawals. As the plan stands now, the only way for actively employed participants to retrieve money is through a 401K loan or a Hardship Withdrawal. Neither of these two options allow participants full access to their assets. While I understand the purpose of the [LEGAL NAME OF THE PLAN] is to encourage savings for retirement, I fear that my assets are not entirely safe from fraud and theft and will not be available to me at retirement.

Numerous recent examples indicate the financial markets are rife with fraud, often at the peril of the individual investor. From what I gather of recent events I do not feel that my money is safe and currently have no recourse to move my assets from the [LEGAL NAME OF THE PLAN] to other investment vehicles.

Examples of recent fraud and theft in the financial industry:

MF Global

MF Global was a global commodities brokerage that declared bankruptcy in October of 2011. It was discovered that approximately $1.6 Billion in customer segregated funds were stolen and used to meet capital requirements in the weeks leading up to bankruptcy. To date, no one stands to face criminal charges.

Peregrine Financial Group (PFGBest)

In July of 2012 it was discovered that PFGBest stole approximately $220 million of customer funds. While claiming to have over $200 million in bank accounts, it turned out that PFGBest held only close to $5 million. The fraud appears to have spanned multiple decades despite being regularly audited. The PFGBest government-backed auditors were not independently verifying the bank account balances and were instead using forged documentation provided not by the bank, but by the firm itself.

Sentinel Management Group (SMG)

In August of 2007, Sentinel Management filed for Chapter 11 bankruptcy protection. Investigators found that Sentinel leveraged over $500 million in customer funds as collateral for a loan from Bank of NY Mellon. This loan was used to fund in-house speculative trading. The National Futures Association (NFA) was the auditor of Sentinel, and has admitted to signing off on audits despite not fully understanding the books or the accounting method used. The NFA admits that it didn't audit SMG properly.

However, what is most frightening is the recent ruling in the Sentinel Management Group case by the 7th Circuit Court of Appeals. The court ruled that the Bank of NY Mellon be placed first in line ahead of customers seeking return of their money.

“That Sentinel failed to keep client funds properly segregated is not, on its own, sufficient to rule as a matter of law that Sentinel acted ‘with actual intent to hinder, delay, or defraud' its customers.” 
U.S. Circuit Judge John D. Tinder

This ruling shows that not only does the Bank of NY Mellon move to the front of the line, but that using customer segregated funds as collateral is no longer considered a crime, and that co-mingling customer segregated funds with proprietary funds is no longer considered fraud. This ruling implies that customer assets held at a bank or trust are the legal property of any counterparty to loans the depository institution takes.

LIBOR Rate Manipulation

Late last month, Barclay's Bank admitted that it tried to manipulate the LIBOR during the financial crisis in 2008. This rate is used as a reference for a range of financial products like car loans, adjustable-rate mortgages, student loans and credit cards. During the Barclay's Bank inquiry it was discovered that many other banks may have also been manipulating LIBOR rates. This means that hundreds of millions of consumers, investors and businesses have been paying a manipulated interest rate.

Guaranteed Retirement Accounts (Nationalizing 401K Assets)

In 2010 the Employee Benefits Security Administration solicited feedback from plan administrators and other fiduciaries on the idea of whether or not they “could or should enhance, by regulation or otherwise, the retirement security of participants in employer-sponsored retirement plans and in individual retirement arrangements (IRAs) by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement.” This idea has also been called “Guaranteed Retirement Accounts” and been proposed by Vice President Biden and others in the current administration, with preliminary Senate hearings having been held on this plan in 2010. The core of the proposal is to force IRA and 401K plans to offer an annuity of sorts so participants are guaranteed a return on their assets in perpetuity. The preferred investment asset would likely be United States Treasury notes. As America stares down almost $16 Trillion of debt, conservatively projected to increase to $20 Trillion in 2016, forcing 401K and IRA assets into Treasury notes would be a tempting solution to shore up our nation’s dire financial situation.

Source: 
http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=23512&Agen...

As you can see, despite stringent controls that were placed on the financial industry following the collapse of Enron (Sarbanes-Oxley) and the 2008 financial crisis (Dodd-Frank), rampant fraud not only still occurs, but has increased exponentially, and the regulators charged with protecting the investor are either complicit or negligent. When there is a collapse the individual investor cannot find justice through the courts.

I do not feel that my 401K assets are safe at this point and strongly believe that in the event of a collapse of the trustee [NAME OF THE TRUST WHERE ASSETS ARE HELD] I will have no recourse to recoup my investment. At this point I do not have the ability to withdraw any of my assets held by the plan. Therefore I petition you to consider adding an in-service withdrawal option to the [LEGAL NAME OF THE PLAN] that would enable participants like me to withdraw our assets entirely.

Thank you for your time and consideration. 
[NAME] 
[ADDRESS] 
[EMAIL] 
[PHONE]

Fri, 08/24/2012 - 07:55 | 2733120 ThirdWorldDude
ThirdWorldDude's picture

"Seoul court rules Samsung didn't violate Apple design"

 

Flush that crAPPL!

Fri, 08/24/2012 - 07:55 | 2733122 Archetype
Archetype's picture

And now the usual bullshit from the greece press conference. Same shit over and over and over again. And the most anoying comment is there as allways. "We need to regain confidence in the markets for the eurozone"

Excuse my french but what the fuck is wrong with these assholes? They got their heads so far up their own asses they dont even realize that the confidence is gone for ever. Its not about confidence at all, the markets are frustrated over more QE no more QE, more "belive me it will be enough" LTRO or not. This of course equals to market crash now or market crash later whatever the decision is.

Fri, 08/24/2012 - 08:06 | 2733138 Sofa King
Sofa King's picture

Lance Armstrong...after 15 years of being labeled guilty and having to prove his innocence day in and day out, he has told the establishment to Go Fuck Itself.

Atlas has Shrugged.

 

Fri, 08/24/2012 - 08:20 | 2733165 Sean7k
Sean7k's picture

Three cheers for Lance. Is there a better argument against government regulators that function outside the rule of law? One of my favorite pieces of hubris: "He must have cheated, because other cyclists were cheating and he beat them". 

Maybe they need an agency to determine when bankers cheat? Oh wait, they do- the SEC. Why aren't they as determined as these jerkoffs? Why can't they twist the law and make their own judgements? 

Couldn't have that, could we? 

Fri, 08/24/2012 - 08:31 | 2733195 AnAnonymous
AnAnonymous's picture

Armstrong is one perfect example of how sports work in 'American' societies: supposedly promoting a healthy way of life while being a drug addict who manipulated results (nothing wrong actually as in 'Americanism', everything works like that, promoting freedom while expanding slavery etc, been the same from day zero)

This guy has had solid evidences against him for years like blood samples showing he is a drug addict who cheated his way up (the 'American' way)

Free marketers as they are 'American' are showing their 'American' colours.
Armstrong, through free markets principles, should be sued for damage he caused to biking by various sports bike organization this 'American' disgraced by his presence and drug addiction.

Wont happen. This 'American' might be stripped from his title while laughing his way to the bank...

Fri, 08/24/2012 - 08:40 | 2733232 Sean7k
Sean7k's picture

Remind me again, how many chinese went home from the london olympics for drugs and poor performance to enhance their chances at weaker competitors? 

Fri, 08/24/2012 - 08:59 | 2733315 Sofa King
Sofa King's picture

I believe the technical term for what you have is called Inferiority Complex. Don't worry, there is help available.

Fri, 08/24/2012 - 08:25 | 2733173 disabledvet
disabledvet's picture

had a co-worker once who when stationed in Europe in the Army went to buy a bike. When the guy asked him what he'd be using it for he blurted out "to ride in the Tour De France." Needless to say the idea that he could even ride this bike to the end of the driveway was an entertaining thought. be interesting to see if France...with that massive trade deficit...goes all in on "French dishonor" on this one actually and "sticks it to the Yankee one more time." I thought the motto over there is "if you ain't cheatin' you ain't tryin'"? At least as it comes to the Tour de France of course. I'm sure it's all cleaned up now ever since they stripped the last American of his title.

Fri, 08/24/2012 - 08:36 | 2733223 AnAnonymous
AnAnonymous's picture

he has told the establishment to Go Fuck Itself.

__________________________________

What establishment is that?

Actually, that 'American' has had a senator or congressman specially intervened on his behalf.

Has an 'American' representative nothing else to do that siding with a well known drug addict? Aint there a deep economical crisis, several wars going, destruction of the environment, depletion of resources?

Armstrong is part of the establishment. His misbehaviour is only such he can no longer be protected.

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