Frontrunning: August 30

Tyler Durden's picture
  • Merkel Adviser: Unlimited ECB Bond Purchases Would Violate Mandate (Dow Jones)
  • Illinois' credit rating downgraded after pension reform failure (Chicago Tribune)
  • Correspondence and collusion between the New York Times and the CIA (Guardian)
  • ECB action prospects underpin Italian bond auction (Reuters)
  • Ryan puts down calculator, picks up bullhorn (Reuters)
  • Barclays Names New CEO (WSJ)
  • Barclays’s New CEO: Analysts React (WSJ)
  • September Offers 15 Days to Cement Crisis Solutions (Bloomberg)
  • Iran's Nuclear-Arms Guru Resurfaces (WSJ)
  • Rocket blasts off to put NASA radiation belt probes into orbit (Reuters)
  • Citi to Settle Suit for $590 Million (WSJ)
  • Swiss-Style Latvian Banking Hub Thrives on Ex-Soviet Cash (Boomberg)

Overnight Media Digest


* Tropical storm Isaac dumped more than a foot of rain on parts of the Gulf Coast, leaving some residents stranded and hundreds of thousands of homes without power.

* Mitt Romney vowed Wednesday to expand employment and tuition assistance for veterans, taking a quick detour from the Republican National Convention to unveil new policy details in a speech here.

* Volkswagen signed an agreement to invest in the Chinese city Tianjin as part of a broad package of economic cooperation deals tied to Merkel's visit in China.

* In one of the largest settlements of suits tied to the financial crisis, Citigroup Inc agreed to pay $590 million over claims that it deceived investors by hiding the extent of its dealings in toxic subprime debt.

* WellPoint shares rose 7.7 percent in the wake of CEO Angela Braly's announced departure, signaling the extent of the dissatisfaction among investors about the company's performance.

* Mark Adelson, who pushed for tough rating criteria, including those that led to the unprecedented downgrade of U.S. debt last year, left Standard & Poor's Ratings Services on Monday.

* Bank of America Corp got off to a slow start in carrying out changes required by a landmark foreclosure settlement.

* European Union antitrust authorities plan to conduct an in-depth probe into Ryanair Holdings Plc's bid to buy the shares it doesn't already own in Aer Lingus Group PLC, the budget airline's third attempt to take over its Irish rival.

* Massachusetts Senate candidates Scott Brown and Elizabeth Warren vie for Boston Mayor Thomas Menino's coveted endorsement.

* Statoil said it is leasing more than 1,000 railroad cars to carry crude oil from fields in North Dakota to refiners across North America, in a bid to overcome pipeline bottlenecks that plague the booming oil-producing region.

* The GOP convention is providing super PACs access to a new group of potential donors to fund TV ads this fall attacking President Barack Obama and supporting Mitt Romney.

* Standard & Poor's Ratings Services cut its credit rating for Illinois amid continuing failure by elected officials to plug an $83 billion pension gap.

* The Texas Highway Patrol Museum was supposed to honor the memory of state troopers, but the Texas Attorney General's Office claimed it misspent millions of dollars in contributions it received.

* Housing authorities in Galveston, Texas, presented state officials with a plan to replace 569 units of public housing destroyed in a 2008 hurricane, the first step toward resolving a dispute with the federal government.

* Mangoes contaminated with salmonella have sickened 103 people in 16 states, the Centers for Disease Control and Prevention said. The majority of victims are in California, the CDC said.




Citigroup agreed to pay $590 million to settle a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets.


Virgin Rail has reaped higher profit margins on the west coast main line than most UK rail franchises since privatisation.


Mario Draghi rebuffed German criticism of his attempts to stem the euro zone debt crisis.


Britain's Serious Fraud Office has launched a second criminal investigation into Barclays.


Gazprom is to shelve one of the energy industry's most ambitious ventures in Russia's Barents Sea because of surging costs.


Asian financial regulators have warned the U.S. that plans to revamp global derivatives markets threaten to create systemic risks.


BT is preparing to sell the majority of its 23 percent stake in Tech Mahindra.


British finance minister George Osborne has rejected Deputy Prime Minister Nick Clegg's call for an emergency tax on the wealth of Britons.


Hedge funds moved one step closer to gaining permission to publicly solicit and advertise for business, under a rule change proposed by U.S. regulators.


20th Century Fox movie studio will distribute animated feature films from Dreamworks Animation for the next five years.


Mark Adelson, a former Standard & Poor's chief credit officer has left the ratings agency months after he was demoted.



* Global Silicon Valley, a closed-end mutual fund that offers ordinary investors a chance to own stakes in privately held companies, has been hit particularly hard by Facebook's troubles.

* Prosecutors say they have unearthed evidence in recent international money-transfer investigations that Chinese banks may have flouted United States sanctions against Iran.

* The Commerce Department raised its estimate of growth in the second quarter slightly, but the economy remained weak by historical standards.

* More than 130,000 people have benefited - mostly through short sales - in the first stage of relief promised by five banks in settling allegations of foreclosure abuses.

* As Japan moves to cut back on nuclear power after the disaster in Fukushima, it is finding that the cost of abandoning its reactors may be too high for some big utilities to shoulder.

* Chancellor Angela Merkel and Prime Minister Mario Monti sought to present a united front after meeting on Wednesday, but could not hide their divisions.

* A new proposal outlined on Wednesday by the Securities and Exchange Commission would remove a longtime restriction barring hedge funds from marketing themselves in public.




* Quebec's business community is holding its breath ahead of Tuesday's election, with the prospect of a Parti Quebecois victory and perhaps another referendum adding to the uncertainty that faces the province's already-suffering economy.

* A small but growing faction of angry teachers will withdraw voluntary services - from club supervision to coaching and directing plays - casting a cloud of uncertainty over the coming school year in Ontario. The move is not a directive from unions, but a decision by individual teachers who feel betrayed by the Ontario government. Educators are up in arms over legislation being pushed through at Queen's Park this week that dictates the terms of their next contract.

Reports in the business section:

* CNOOC Ltd applied for Investment Canada approval for its proposed C$15.1 billion acquisition of Calgary-based Nexen Inc on Wednesday, setting the clock ticking on a key decision for the federal government in its relations with China.

* Russel Metals Inc, making another move to strengthen its position in the energy sector in Western Canada and the U.S. Southwest, will purchase Apex Distribution Inc, a Calgary-based oilfield supply company.


* Mayor Rob Ford dismissed allegations that he breached the Municipal Conflict of Interest Act as "all politics" and vowed, if he is dismissed from office as a result of the court case, to run again.

* Police divers scoured a swamp area in Caledon on Wednesday, based on a tip in connection with the unsolved murder of 42-year-old Sonia Varaschin two years ago. The search centred on the area of Beechgrove Sideroad, near where Varachin's body was discovered on Sept 5, 2010, police said.


* Bank of Nova Scotia on Wednesday said it has agreed to buy ING Bank of Canada, popularly known as ING Direct, for $3.1-billion in cash.

* Canadian home prices rose in July from June to hit a record high for a third consecutive month, but the slower pace of gains and falling prices in Vancouver added to recent evidence the market is cooling


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Catullus's picture

From the article on IL Pension:

Illinois' credit rating was downgraded by Standard & Poor's on Wednesday, a move that came after Gov. Pat Quinn's inability to persuade lawmakers to cut costs in the state's debt-ridden public employee pension system.

The agency lowered the state's credit rating from A+ to A, citing a "lack of action" on changes aimed at decreasing the pension system's unfunded liability, which could hit $93 billion by next summer if nothing is done. Standard & Poor's also gave Illinois a "negative outlook," saying the state's budget future remains uncertain.

It's unclear what impact the new rating will have on Illinois' pocketbook, but it is likely that it will cost the state more to borrow money to finance construction projects including new schools, roads and bridges.

$93 Billion unfunded liability.  What a superior system than an individual savings account.  You get the promise of a politician, who doesn't get re-elected to actually make good on the promises other politicans made to you decades ago.

JustObserving's picture

"$93 Billion unfunded liability"

Unfunded liabilties of the Federal government are $120 trillion and rising at $6.75 trillion a year.  Illinois' share of that (based on population of 12.9 million) is $5 trillion and increasing at $277 billion each and every year.

So why worry about a paltry $93 billion?

JohnKozac's picture

"$120 trillion"'s going to take a heck of a lot of devaluation of this nominal amount to pay for all those unfunded soaring liabilities.

Catullus's picture

Because social security and Medicare aren't pensions and IL's debt is not used as collateral. Social security and Medicare don't run out of cash, they're just another tax scheme whose net cash is either remitted to the UST or a current cash obligation of the UST.

IL pension is a separate fund. It can and will run out of money and is not a cash obligation of the state of IL

zilverreiger's picture

Has anybody else heard the rumor that Morgan Stanley is about to go bankrupt? I wouldnt keep my trading account open with them if I had one there, they will rehypothecate your ass. (they have 16 million accounts)


The insider conversation, often called chatter when it become deafening in tone, is that Morgan Stanley faces imminent failure and ruin. Almost two weeks ago, the Jackass provided a tip to Bill Murphy of GATA to post on his popular LeMetropole Cafe that Morgan Stanley fund managers and high ranking employees were preparing for the firm's implosion. A subscriber to the Hat Trick Letter has a good friend whose father works as a fund manager and provided the story. It was not detailed, and bore no follow-up after my request. The older employees are selling all of their stock, some legacy stock from one or two decades ago. Many workers are making contingency plans for their next positions in another firm. When Lehman Brothers was killed, thousands of employees had to find new jobs, some without success. In the last week, the shock waves are being heard from internal Wall Street sources in an unequivocal manner. The implosion is in progress, like the collapse of several platforms and structural cables. The inside is caving in, and the ranking members recognize it, even talk about it openly...."

Bobbyrib's picture

I'll believe it when I see it.

Bob's picture

Active collusion documented between the CIA and NYT.  Appalling.

Canned news "competition" in the Post-Telecommunications Act of 1996 Age:

Of course, the NYT made its understanding of its role in serving the public interest explicit here:

Some, of course, will cackle about "libral" media, pretending they can get the full truth anywhere anymore . . . unfortunately, reality is not nearly so pleasant as that. 

Azannoth's picture

"An unmanned Atlas 5 rocket lifted off .. placing a pair of heavily shielded NASA science satellites into position to study Earth's radiation belts" -WTF we *sent* 2 dozen men to the Moon WITHOUT ANY shielding and they all came back alive and well and not a single 1 suffered any radiation side effects EVER, later Soviets said they can't send men to the Moon because the radiation would kill them, hmmmm makes you think does it!

JustObserving's picture

The Constellation Project was started by George W. Bush in 2005 to get men back on the moon by 2018.  By 2010, the completion date had slipped to 2028 and the project was cancelled by Obama.

"According to Bolden (NASA Administrator Charlie Bolden), things weren’t really going all that well anyway: “Currently, [Bolden] said, the 5-year-old Constellation program is burning through billions of dollars and falling further behind schedule. The program couldn’t get American astronauts back to the moon until at least 2028 … ‘So as much as we would not like it to be the case … the truth is that we were not on a path to get back to the moon’s surface,’ Bolden said.”


Well, were we at least on a path to put together a better simulation of landing on the Moon?


Taking into account that the Constellation Program was begun in 2005, and that the Apollo program allegedly landed men on the Moon in a mere eight years, it would appear that it wouldn’t actually take twice as long to get back to the Moon with today’s technology, as previously advertised, but would actually take at least three times as long!"