Treasury Responds, Says Very Few Of Its Officials Use Taxpayer Money To Solicit Hookers So You Must AcquitSubmitted by Tyler Durden on 07/16/2012 21:11 -0400
From the Treasury: "Here are the facts. The Office of the Inspector General (OIG) recently released 11 investigative reports covering conduct that occurred as early as 2000. In four cases, the OIG concluded that there was no evidence to support the allegations. In one case, the misconduct was committed by a private citizen (a Treasury office was burglarized). That leaves six cases in question. Although any misconduct is unacceptable, this is a small number that does not fairly reflect a Department with tens of thousands of employees. None of the employees at issue were political appointees or senior officials, and there is absolutely no evidence of any pattern or trend."
Criminal Inquiry Shifts To JPMorgan's Mispricing Of Hundreds Of Billions In CDS: Is Dimon The Next Diamond?Submitted by Tyler Durden on 07/16/2012 20:09 -0400
On the last day of May, when we first learned via Bloomberg that there was even the scantest likelihood that JPM may have been massaging its CDS marks within the (London-based of course) CIO organization - the backbone of hundreds of billions in notional exposure, and thus a huge counterfeited benefit to trader bonuses and corporate earnings - we wrote, "The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps" in which we explained precisely how this activity would and did take place, precisely why other traders caught doing the same are on the verge of being thrown in jail, precisely why everyone else does it, and precisely why the biggest CDS self-reporting and client/banker owned-organization (this is where images of Libor should appear), MarkIt, may well be implicated in everything - very much in the same way that the BBA is the heart of Lie-borgate. Because unlike all other allegations of impropriety, most of which rely on Level 2 and Level 3 assets whose valuations are in the eye of the oh so very sophisticated beholder (in this case JPM) who has complex DCFs and speaks confidently when explaining marks to naive, stupid outsiders (in other words baffles with bullshit), when it comes to one of the last places where Mark to Market is still applicable and used: the OTC CDS market, and where daily P&L records are kept, it will take any regulator, enforcer, or criminal investigator precisely 1 minute to find out if there was fraud, or gambling, going on here. Most importantly, it opened up the firm to a criminal investigation. Which as Reuters reports, is precisely what has now happened.
Maybe I'd have more followers if I tore a page out of the BI playbook, but I think I'd rather try to keep following ZH's lead and just try to write well, succinctly, and - if possible - with a bit of novelty.
US Ship Mistakenly Fires On Friendly Boat Off Dubai, As Russia Condemns Saudi Treatment Of Religious ProtestersSubmitted by Tyler Durden on 07/16/2012 11:53 -0400
Those trigger happy US sailors are causing some diplomatic headaches again for Hillary Clinton who this time has no Syrian anti-aircraft missiles to blame, by firing on a friendly ship, killing one and injuring three, off the coast of Dubai. Per the AP: "A U.S. Consulate official in Dubai says an American vessel has fired on a boat off the coast of the United Arab Emirates, killing one person and injuring three. The official gave no further details, but it appears the boat could have been mistaken as a threat in Gulf waters not far from Iran's maritime boundaries. An Emirati rescue official confirmed the casualty toll. The officials spoke on condition of anonymity because of the sensitivity of the incident between the two allies. The U.S. Navy's 5th Fleet, which is based in Bahrain, said it was investigating the Monday shooting. The U.S. Embassy in Abu Dhabi had no immediate comment." So far so bad, but where it gets even worse is that over the weekend, Russia finally decided to make its own voice heard in the middle east, and after over a year of the west condemning Syrian "eradication" of its own insurgents and keeping Russia on the defensive, Russia has decided to shine a light on none other than America's favorite regional ally: Saudi Arabia, which as we reported recently, has once again taken to quelling religious protests in Qatif and other eastern cities. Apparently Russia has had enough of this one-sided reporting of regional "insurgencies."
By now it really, really should be obvious. While the insolvent "developed world" is furiously fighting over who gets to pay the bill for 30 years of unsustainable debt accumulation and how to pretend that the modern 'crony capitalist for some and communist for others' system isn't one flap of a butterfly's wings away from full on collapse mode, China is slowly taking over the world's real assets. As a reminder: here is a smattering of our headlines on the topic from the last year: ""World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System", "India and Japan sign new $15bn currency swap agreement", "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says", "India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees", 'The USD Trap Is Closing: Dollar Exclusion Zone Crosses The Pacific As Brazil Signs China Currency Swap", and finally, "Chile Is Latest Country To Launch Renminbi Swaps And Settlement", we now get the inevitable: "Central bank pledges financial push in Africa." To summarize: first Asia, next Latin America, and now Africa.
Why Don’t the Corrupt Players On Wall Street and In D.C. Show Remorse for Their Destructive Actions…And Why Don’t We Stop Them?Submitted by George Washington on 07/14/2012 10:57 -0400
Scandal After Scandal, Lie Upon Lie ... What's Going On?
As we wait anxiously for the not-too-hot and not-too-cold but just right GDP data from China this evening, we thought it instructive to get some sense of the reality in China. From both the property bubble perspective (as Stratfor's analysis of the record high prices paid just this week for Beijing property - by an SOE no less - and its massive 'microcosm' insight into the bubbliciousness of the PBOC's attempts to stave off the inevitable 'landing'); to the rather shocking insight that Diapason Commodities' Sean Corrigan offers that 'Hot Money Flows' have left China at a rates exceeding that during the worst of the Lehman crisis; take a range of key indicators – from electricity usage, to Shanghai container throughput, to nationwide rail freight ton-miles, to steel output – and you will notice that none of these shows a rate of growth during the second quarter of more than 4% from 2011, and some are as low as 1%. Whatever fictive GDP number we are presented with this week, the message is clear: “Brace! Brace! Brace!”
Portugal is a country that I’ve always enjoyed, full of warm, welcoming people, excellent wine, and great weather. I came to Porto, the country’s second largest city of some 1.5 million, to get a sense of what’s been happening since the eurocalypse...
Katrina is still the best argument for self-reliance. Oh, no! Here comes FEMA.
US Attorneys General Jump On The Lieborgate Bandwagon; 900,000+ Lawsuits To Follow, And What Happens Next?Submitted by Tyler Durden on 07/11/2012 21:00 -0400
The second Barclays announced its $450 million Libor settlement, it was all over - the lawyers smelled not only blood, but what may be the biggest plaintiff feeding frenzy of all time. Which is why it was only a matter of time: "State attorneys general are jumping into the widening scandal over whether banks tried to manipulate benchmark international lending rates, a move that could open a new front against the top global banks. A handful of state attorneys general said they are looking into whether they have jurisdiction over the banks, and are starting preliminary discussions to determine what kind of impact the conduct involving the Libor rate may have had in their states."
On occasion of the publication of his new gold report (read here), Ronald Stoeferle talked with financial journalist Lars Schall about fundamental gold topics such as: "financial repression"; market interventions; the oil-gold ratio; the renaissance of gold in finance; "Exeter’s Pyramid"; and what the true "value" of gold could actually look like. Via Matterhorn Asset Management.
This wouldn't be nearly as comical if it weren't for the fact that Frum is a distant cousin of none other than Paul Krugman
Josh Barro of Bloomberg has an interesting theory. According to him, conservatives in modern day America have become so infatuated with the school of Austrian economics that they no longer listen to reason. It is because of this diehard obsession that they reject all empirical evidence and refuse to change their favorable views of laissez faire capitalism following the financial crisis. Basically, because the conservative movement is so smitten with the works of Ludwig von Mises and F.A. Hayek, they see no need to pose any intellectual challenge to the idea that the economy desperately needs to be guided along by an “always knows best” government; much like a parent to a child. CNN and Newsweek contributor David Frum has jumped on board with Barro and levels the same critique of conservatives while complaining that not enough of them follow Milton Friedman anymore.
To put this as nicely as possible, Barro and Frum aren’t just incorrect; they have put their embarrassingly ignorant understandings of Austrian economics on full display for all to see.
We have discussed at length the need for the equity market to be significantly lower in order for Bernanke to step in with his munificence. Critically, this is less about the absolute level of the S&P 500 (though anyone expecting the Fed chairman to step in with the S&P 500 within a few percent of multi-year highs is dreaming) but, as Barry Knapp from Barclays notes - based on Bernanke's writings - additional monetary stimulus is a function of a significant drop in inflation expectations (as opposed to a shallow drop in the S&P 500). It is the risk of deflation that will trigger a policy reaction. Current conditions are not even close to levels that have warranted additional stimulus in the past - which we estimate to be a 2% 5Y5Y forward inflation breakeven rate. In order for that level to be triggered - based on the post-crisis relationship between equities and inflation expectations - the S&P 500 trailing earnings yield would need to rise over 8.2% implying an S&P 500 level near 1200. Tracking inflation expectations is critical to any NEW QE hope - and for now, there is none on the horizon, no matter how much everyone clamors for it.
Hmmm… Should we be impressed?