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POSTS: FRIDAY 07-30-10
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
IRAN
ISRAEL
KOREA
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SOVEREIGN DEBT & CREDIT CRISIS |
Europe Crisis Is Not Over, May Lead to Fiscal Union, UBS Says
BL
GREECE
When Jail Threats Don't Work- Greek Government Punctuates Case
Against Strikers By Firing Tear Gas At Them ZH
SPAIN / PORTUGAL
Moody's Says Spain May Lose Aaa Rating; U.S. Needs `Clear Plan'
BL
FRANCE
GERMANY
ITALY
UK
ICELAND
Moody's Puts Iceland's Baa3 Rating On Outlook Negative, Next Stop - Junk,
As Island Nation Continues Giving Banks the Finger ZH
JAPAN
More Japan workers lose jobs, factory output falls
AP
CHINA
Property bubbles still a risk for China, says S&P official
China Daily
Where China Hides Its Debt
BL
The rising power of the Chinese worker
Economist
USA
GDP Up, Jobs Down Phil's Stock World
CLICK TO ENLARGE
Now The Selloff Is Gathering Steam, As Beige Book Confirms
Softening Economy BI
The Fed Reports A Sluggish Economy ZH
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The Fed came out with its Beige Book, a summary of economic
activity from June to mid-July. The report overall noted
"modest" growth if not slowing growth. Consumer confidence
declined and durable goods orders were also down.
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Today's GDP Report Will Confirm That The Slowdown Has Already
Begun BI
“Practically every Street economist took a knife to Q2 and
Q3
G.D.P. growth,” David A. Rosenberg, chief economist for
Gluskin Sheff, wrote last week in a note to clients, referring
to Wall Street forecasts for gross domestic product. For the
second-quarter results to be released Friday, economists
project a modest annualized gain of 2.6 percent, down from 2.7
percent in the first quarter and 5.6 percent in the final
quarter of last year.
That number may even be a tad high at this point. Some are
definitely closer to 2% in their forecast.
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Goldman's Leading Indicator Plummets To A Seven-Month Low,
Predicts An ISM Collapse Next Week BI
Nassim Taleb- "The Government Debt Is Becoming A Pure Ponzi
Scheme" ZH
| In an interview conducted with Business Week, Nassim Taleb
discusses his view of the biggest black swan in the market
currently, and isn't shy to call government debt a "Pure Ponzi
scheme." - When asked where he the biggest potential source of
systemic fragility is, he responds: "The massive one is government
deficits. As an analogy: You often have planes landing two hours
late. In some cases, when you have volcanos, you can land two or
three weeks late. How often have you landed two hours early?
Never. It's the same with deficits. The errors tend to go one way
rather than the other. When I wrote The Black Swan, I realized
there was a huge bias in the way people estimate deficits and make
forecasts. Typically things costs more, which is chronic.
Governments that try to shoot for a surplus hardly ever reach it.
The problem is getting runaway. It's becoming a pure Ponzi
scheme. It's very nonlinear: You need more and more debt just to
stay where you are. And what broke Madoff is going to break
governments. They need to find new suckers all the time. And
unfortunately the world has run out of suckers." Alas, Taleb is
wrong: Ponzi or not, today's UST auction will likely once again
come at a multi year high Bid To Cover as the suckers (especially
those who recycle Fed discount window money) just refuse to go
away. |
Los Angeles Investigates Voter Fraud In Suburb With Incredibly Well-Paid
Officials BI
In Advance Of The GDP Report, Goldman's Hatzius Sees 3% GDP Drag From
State, Local And Federal In Coming Year ZH
|
Tomorrow's GDP report will be a major market catalyst as it
will either confirm that an inflationary double dip has now
arrived and the Fed will have no option but to print, or it will
come "just better than expectations", once again sending the
market into a lithium-deprived paroxysm of intraday jerkiness. Yet
in the medium run, tomorrow's number is very much irrelevant,
especially if Jan Hatzius' latest analysis on the impact of
various trends at the local, state and federal level turns out to
be correct. Goldman's analysis is based on the following
assumptions: (1) Congress will not extend emergency unemployment
benefits beyond the current expiration date in November 2010, (2)
state governments will need to make do without any additional
federal fiscal aid beyond what was included in ARRA, and (3)
Congress extends the lower- and middle-income tax cuts of
2001-2003 as well as the Making Work Pay tax cut of 2009 but not
the higher-income cuts of 2001-2003. The latter is of particular
significance because as
Bloomberg reports, Obama is about to take populism into high
gear, as Geithner will next week bring the proposed tax cuts for
the rich directly to the masses (and the corrupt simians in the
Senate). Obviously the financial implications of that one move
alone will be disastrous and even if tomorrow's GDP number prove
better than expected, the market may ultimately trade off on the
devastating impact from the expiration of the most important
subset of tax cuts. Which is why, going back to Hatzius, the
Goldman economist states: "The overall impact of fiscal
policy (combining all levels of government) is likely to go from
an average of +1.3 percentage points between early 2009 and early
2010 to -1.7 percentage points in 2011, a swing of about -3
percentage points. We estimate that the boost to the level of GDP
starts to decline in mid-2010, first gently and then more
forcefully, setting up a significant negative impact on GDP growth
in late 2010 and 2011." The only thing Hatzius forgot to
add is brace yourselves for impact. Yet somehow Goldman's own
David Kostin projects that 2011 S&P EPS will grow by double
digits... even as the firm's own economic team anticipates an
economic crunch. This is precisely the conflicted double speak
that we have grown to love and expect from the Wall Street
sellside.
Full Goldman note below:
Today’s comment integrates state and local finances into
our analysis of the impact of fiscal policy on real GDP
growth. We include changes in spending and tax policy at
the state and local level—as discussed in last Wednesday’s
daily comment—directly in our analysis, instead of the
transfer payments from the federal government to state
governments in the American Recovery and Reinvestment Act of
2010 (ARRA). We believe that this results in a more
complete and realistic assessment of the overall stance of
fiscal policy at all levels of government.
These
estimates imply that the overall impact of fiscal policy
(combining all levels of government) is likely to go from an
average of +1.3 percentage points between early 2009 and early
2010 to -1.7 percentage points in 2011, a swing of about -3
percentage points. The main difference compared with our
federal-only estimates is a smaller positive impact of overall
fiscal policy in 2009 as well as a somewhat earlier weakening
in 2010. The reason is that state and local policies
have exerted a drag on growth all along, and this drag has
increased somewhat in early 2010.
Most analyses of the
impact of fiscal policy on GDP growth—those of the
Congressional Budget Office (CBO), the Council of Economic
Advisers (CEA), and numerous private-sector forecasters
including ourselves—have focused on the role of federal fiscal
policy. More precisely, they have estimated the impact
of the American Recovery and Reinvestment Act of 2009 (ARRA)
on GDP relative to what would have happened to GDP in the
absence of ARRA.
In general, these estimates are fairly
close to one another. The CEA’s latest quarterly update
summarizes three official and five private-sector estimates of
the cumulative impact of ARRA on the level of GDP as of
mid-2010, which are clustered in a reasonably tight range from
2.2% to 3.7%. (See Table 8 of the following report:
http://www.whitehouse.gov/files/documents/cea_4th_arra_report.pdf;
the preceding statement is based on the midpoint of the CBO’s
“low” and “high” estimate.) Our own estimate of the
impact is 2.6%, i.e. modestly below but fairly close to the
midpoint of these estimates. Moreover, we estimate that
the boost to the level of GDP starts to decline in mid-2010,
first gently and then more forcefully, setting up a
significant negative impact on GDP growth in late 2010 and
2011.
But while the impact of ARRA on GDP is an
important question from both an economic and political
perspective, it is not necessarily the best guide to the
overall impact of fiscal policy on GDP growth, for at least
three reasons.
First, there have been several
“follow-on” fiscal programs since the enactment of ARRA,
including the “cash for clunkers” program, the homebuyer tax
credit, and repeated extensions of unemployment benefits.
These need to be taken into account as well in gauging the
impact of fiscal policy. (We have been doing this in our
fiscal policy analysis already.)
Second, the potential
expiration of the 2001-2003 tax cuts has received increasing
attention in recent months (see Alec Phillips, “Extending the
Expiring Tax Cuts: What, How, When, and Why,” US Daily, July
26, 2010). This also needs to be taken into account in a
gauging the impact of fiscal policy. (We have been doing
this as well.)
Third, although the analysis of the GDP
boost from ARRA includes a line item for aid to state
governments, this does not appropriately capture the impulse
from state and local governments. In calendar 2009, ARRA
provided about $60 billion of funding for state governments,
which is equivalent to 0.4% of GDP. Including multiplier
effects, this implies a boost to real GDP growth of around 0.5
percentage point in the standard ARRA-related calculation.
But despite the ARRA funds, state and local governments have
exerted a significant drag on real GDP growth since 2009, as
we showed last week. (See “The State and Local Drag
Continues,” US Daily, July 21, 2010.) This does not mean
that the standard ARRA analysis is “wrong”—after all, if state
governments hadn’t received funds from the federal government,
they would have had to cut back even more. But if we are
interested in the overall fiscal impulse to GDP, we should
look at the impact of state and local governments on the rest
of the economy via their spending and tax policies, not at the
impact of the federal government on state government finances.
The chart below provides an integrated look at the GDP
growth impact of fiscal policy at the federal, state, and
local level. These numbers are based on our
current assumptions that (1) Congress will not extend
emergency unemployment benefits beyond the current expiration
date in November 2010, (2) state governments will need to make
do without any additional federal fiscal aid beyond what was
included in ARRA, and (3) Congress extends the lower- and
middle-income tax cuts of 2001-2003 as well as the Making Work
Pay tax cut of 2009 but not the higher-income cuts of
2001-2003.
Two additional comments are in order.
First, we have lengthened and smoothed out the impact of tax
changes on spending in order to reduce the volatility in
quarterly GDP impulses from fluctuations in tax refunds and
final settlements from one quarter to the next. Second,
we recognize that part of the impact from income replacement
measures, most prominently emergency unemployment benefits, is
not a completely “exogenous” consequence of a shift to more
generous benefit provision in ARRA but also partly an
“endogenous” consequence of weakness in the econom.
The upshot of the chart is that the overall fiscal impulse
to GDP growth is likely to go from +1.3 percentage points
between early 2009 and early 2010 to -1.7 percentage points in
2011. There are two main differences compared with our
federal-only estimates—(1) a smaller positive impact in 2009
and (2) a somewhat earlier turn into negative territory in
2010. The reason for both is that state and local
finances have been a drag on growth all along, and this drag
has increased somewhat in early 2010. The earlier turn
toward restraint may be one reason why growth has been
weakening noticeably over the past few months, although the
end of the positive inventory cycle has undoubtedly also been
an important factor.
However, the basic implication is
unchanged from our prior analysis—namely that fiscal policy
will result in a substantial “swing” from stimulus to
restraint. This is likely to contribute to slower GDP
growth of around 1½% (annualized) in the second half of 2010,
and it implies downside risks to our current forecast of 3%
growth (on a Q4/Q4 basis) in 2011.
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HUNGARY
IMF
Says Some Small US Banks May Need Capital
Reuters
In
Basel, Eternal Work In Progress
NYT
All
this makes it easy to conclude that the regulators are again giving in to
banks...
The Fed Has Not Run Out of Options, As Yet
NTrust
The Fed Flashes the Nuclear QE Trump Card
Dorsch
US banks in rush for cheap finance FT
Action amid low rates and rising demand
Swap rates fall below Treasury yields
FT
A historic relationship between US government bonds and interest rate swaps has broken down this week, for only the second time, as a flood of corporate debt issuance from banks pushed 10-year swap rates below Treasury yields. The
negative spread between swaps and “risk free” Treasuries
occurred for the first time in March and that inversion only
abated at the end of April
|
DODD FRANK ACT
SEC Says New Financial Regulation Law Exempts it From Public
Disclosure FOX Business
View SEC Financial Regulatory Law H.R. 4173 on Scribd
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So much for transparency.
Under a
little-noticed provision of the recently passed
financial-reform legislation, the Securities and Exchange
Commission no longer has to comply with virtually all requests for
information releases from the public, including those filed under
the Freedom of Information Act.
The law, signed last week by President
Obama, exempts the SEC from disclosing records or information
derived from "surveillance, risk assessments, or other regulatory
and oversight activities." Given that the SEC is a regulatory
body, the provision covers almost every action by the agency,
lawyers say. Congress and federal agencies can request
information, but the public cannot.
That argument comes despite the
President saying that one of the cornerstones of the sweeping new
legislation was more transparent financial markets. Indeed, in
touting the new law, Obama specifically said it would “increase
transparency in financial dealings."
The SEC cited the new law Tuesday in a
FOIA action brought by FOX
Business Network. Steven Mintz, founding partner
of law firm Mintz & Gold LLC in New York, lamented what he
described as “the backroom deal that was cut between Congress and
the SEC to keep the SEC’s failures secret. The only losers here
are the American public.”
If the SEC’s
interpretation stands, Mintz, who represents FOX Business Network,
predicted “the next time there is a
Bernie Madoff failure the American public will not be able to
obtain the SEC documents that describe the failure,” referring to
the shamed broker whose Ponzi scheme
cost investors billions.
"The new
provision applies to information obtained through examinations or
derived from that information," said
SEC spokesman John Nester. "We are expanding our examination
program's surveillance and risk assessment efforts in order to
provide more sophisticated and effective Wall Street oversight.
The success of these efforts depends on our ability to obtain
documents and other information from brokers, investment advisers
and other registrants. The new legislation makes certain that we
can obtain documents from registrants for risk assessment and
surveillance under similar conditions that already exist by law
for our examinations. Because registrants insist on confidential
treatment of their documents, this new provision also removes an
opportunity for brokers, investment advisers and other registrants
to refuse to cooperate with our examination document requests."
Criticism of the provision has been
swift. “It allows the SEC to block the public’s access to
virtually all SEC records,” said Gary Aguirre, a former SEC staff
attorney-turned-whistleblower who had accused the agency of
thwarting an investigation into hedge fund Pequot
Asset
Management in 2005. “It permits the SEC to
promulgate its own rules and regulations regarding the disclosure
of records without getting the approval of the Office of
Management and Budget, which typically applies to all federal
agencies.”
Aguirre used FOIA requests in his own
lawsuit against the SEC, which the SEC settled this year by paying
him $755,000. Aguirre, who was fired in September 2005, argued
that supervisors at the SEC stymied an investigation of Pequot – a
charge that prompted an investigation by the Senate Judiciary and
Finance committees.
The SEC
closed the case in 2006, but would re-open it three years later.
This year, Pequot and its founder, Arthur Samberg, were forced to
pay $28 million to settle insider-trading charges related to
shares of Microsoft (MSFT:
26.03 ,0.00 ,0.00%). The
settlement with Aguirre came shortly later.
“From November 2008 through January
2009, I relied heavily on records obtained from the SEC through
FOIA in communications to the FBI, Senate investigators, and the
SEC in arguing the SEC had botched its initial investigation of
Pequot’s trading in Microsoft securities and thus the SEC should
reopen it, which it did,” Aguirre said. “The new legislation
closes access to such records, even when the investigation is
closed.
“It is hard to imagine how the bill
could be more counterproductive,” Aguirre added.
FOX Business Network sued the SEC in
March 2009 over its failure to produce documents related to its
failed investigations into alleged investment frauds being
perpetrated by Madoff and R. Allen Stanford. Following the Madoff
and Stanford arrests it, was revealed that the SEC conducted
investigations into both men prior to their arrests but failed to
uncover their alleged frauds.
FOX Business made its initial request
to the SEC in February 2009 seeking any information related to the
agency’s response to complaints, tips and inquiries or any
potential violations of the securities law or wrongdoing by
Stanford.
FOX Business has also filed lawsuits
against the Treasury Department and Federal Reserve over their
failure to respond to FOIA requests regarding use of the bailout
funds and the Fed’s extended loan facilities. In February, the
Federal Court in New York sided with FOX Business and ordered the
Treasury to comply with its requests.
Last year, the network won a legal
victory to force the release of documents related to New York
University’s lawsuit against Madoff feeder Ezra Merkin.
FOX Business’ FOIA requests have so
far led the SEC to release several important and damaging
documents:
•FOX Business used the FOIA to obtain
a 2005 survey that the SEC in Fort Worth was sending to Stanford
investors. The survey showed that the SEC had suspicions about
Stanford several years prior to the collapse of his $7 billion
empire.
•FOX Business used the FOIA to obtain
copies of emails between Federal Reserve lawyers, AIG and staff at
the Federal Reserve Bank of New York in which it was revealed the
Fed staffers knew that bailing out AIG would result in bonuses
being paid.
Recently,
TARP Congressional Oversight Panel chair Elizabeth Warren told
FOX Business that the network’s Freedom of Information Act efforts
played a “very important part” of the panel’s investigation into
AIG.
Warren told the network the government
“crossed a line” with the AIG bailout.
“FOX News and the congressional
oversight panel has pushed, pushed, pushed, for transparency, give
us the documents, let us look at everything. Your Freedom of
Information Act suit, which ultimately produced 250,000 pages of
documentation, was a very important part of our report. We were
able to rely on the documents that you pried out for a significant
part of our being able to put this report together,” Warren said.
The SEC first made its intention to
block further FOIA requests known on Tuesday. FOX Business was
preparing for another round of “skirmishes” with the SEC,
according to Mintz, when the agency called and said it intended to
use Section 929I of the 2000-page legislation to refuse FBN’s
ongoing requests for information.
Mintz said the network will challenge
the SEC’s interpretation of the law.
“I believe this is subject to
challenge,” he said. “The contours will have to be figured out by
a court.”
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Look What Surprises They Snuck Into The Financial Reform Bill
TheEconomicCollapseBlog.com
|
Even just a decade ago, major pieces of legislation in the U.S.
Congress would be just a few dozen pages long. But today, it
seems like every time Congress passes an important bill it ends up
being over a thousand pages long. In fact, the final version
of the new financial reform law was over 2,300 pages.
Overall, as we wrote about extensively
in a previous article, this much-ballyhooed new law does a
whole lot of nothing, but it turns out that lobbyists and special
interests were able to insert a few nasty surprises that we are
just now finding out about. But it was the same thing with
the health care reform law. It was only after it was passed
that most of us learned that it contained a provision that
will force U.S. small businesses to collectively produce millions
more 1099 tax forms each year. Now small businesses from
coast to coast are screaming bloody murder about that provision
but it is too late - the law has already passed.
Unfortunately, there are some surprises in the recently
passed financial reform law that are nearly just as bad. So just
what are those surprises?
Well, first let's talk about what the financial reform law does
not do. The financial reform bill was supposed to "fix" Wall
Street and the financial system, but it did not do much of
anything....
-It does nothing to address the problems
with Fannie Mae and Freddie Mac.
-It does not eliminate "too big to fail".
-It does absolutely nothing to
eliminate the horrific bubble in the derivatives market.
-It does nothing to reform the
organization most responsible for the recent financial crisis -
the Federal Reserve. In fact, this new law actually gives
the Federal Reserve even more power.
But it does create a ton of new paperwork and a bunch of new
government organizations. Oh goody! But was there any
major law that Congress has passed over the last several years
that did not increase the size and scope of government?That is a
good question. In any event, let's get to some of the nasty
surprises contained in the new financial reform law....
*Barack Obama has been running around touting how this new law
will "increase transparency" in the financial world, but it turns
out that a little-noticed provision of the new law
exempts the Securities and Exchange Commission from virtually
all requests for information by the public, including those filed
under the Freedom of Information Act. Not that the SEC was
doing much good anyway. But now the SEC's incompetence and
the nefarious actions of those they are investigating will be
hidden from public view. So what makes the SEC so special
that they get to block the public from seeing their records while
other government agencies still have to comply with FOIA?
Talk about ridiculous.
But there is actually another little surprise contained in the
new law that is even more nasty....
*Another little-noticed section deeply embedded
in the financial reform law actually gives the federal government
the authority to terminate government contracts with any
"financial firm" that fails to ensure the
"fair inclusion" of women and minorities in its workforce.
This section of the law, written by U.S. Representative
Maxine Waters, is 1,261 words long and it establishes "Offices
of Minority and Women Inclusion" in the Treasury Department,
the Federal Reserve, the Securities and Exchange Commission
and more than a dozen other finance-related agencies.
The directors of these new departments are tasked with
developing standards that "ensure, to the maximum extent
possible, the fair inclusion and utilization of minorities,
women, and minority-owned and women-owned businesses in all
business and activities of the agency at all levels, including
in procurement, insurance, and all types of contracts."
The maximum extent possible? That sounds pretty
strong. So what kind of firms does this section apply
to?
Well,
according to Politico, this section is going to apply to
just about anyone who has anything to do with the financial
industry....
This applies to “services of any kind,” including
investment firms, mortgage banking firms, asset management
firms, brokers, dealers, underwriters, accountants,
consultants and law firms, the legislation states. Every
contractor and subcontractor must now certify that their
workforces reflect a “fair inclusion” of women and minorities.
The truth is that this small
section of the law represents a fundamental change in
employment law in the United States.
And it is written so vaguely that firms are going to be
tempted to go above and beyond in complying with it just so
they are safe. In fact, many analysts are already saying
that it could lead to an unofficial quota system.
In any event, hundreds of new federal government bureaucrats
will be watching to make certain that these vague new
regulations are fully implemented.
*It also looks like the new financial reform law is
going to end the era of free checking accounts.
Why?Well, it turns out that the new law really limits the
amount of fees that banks can charge and the way that
they charge them. So banks have got to make their money
somewhere. Wells Fargo and Bank of America
have already announced new fees on checking accounts, and
other banks are expected to follow their lead shortly.
What a mess.
Can't Congress do anything right these days? At this
point Congress is so incompetent that if they would just sit
there and do nothing that would be a vast improvement.
But that isn't going to happen.
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RATING AGENCIES
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RRESIDENTIAL REAL ESTATE - PHASE II |
Australian house prices fall as rate hikes bite
Dow Jones
Mortgage Originators Everywhere Seeing Red As Freddie 30 Year Mortgage
Hits Fresh All Time Low Of 4.54% ZH
|
The Fed came, saw, and conquered the mortgage market. The 30
year Freddie fixed just dropped another 2 bps from the prior
week to 4.54%, a fresh all time low, and more billions in
margins chopped off from the profit line of mortgage
originators everywhere, now that the Fed and Pimco are the
only two entities remaining in the mortgage market, even as
consumer cash flows are under more pressure than ever
confirming that in this bizarro market just as one wants to
buy, the right button to push is sell and vice versa.
|
Housing Bubble Not To Be Reblown- Foreclosures Increase In 75% Of Big
Metro Areas BI
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EXPIRATION FINANCIAL CRISIS PROGRAM/font>
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PENSION & ENTITLEMENTS CRISIS
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Why The Public Hates Corporate America Right Now BI
As the number of jobs in the U.S. have continued to
decline, profits have soared above pre-recession levels.
From The Atlantic:
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GOVERNMENT BACKSTOP INSURANCE |
Hank
Paulson Wants To Fix Fannie And Freddie By... Recreating Fannie And
Freddie
BInsider
QE 2.0 Or QE 1.999- GSEs And FHA Are Preparing Auto-Refi Program Taking
Millions To Current Market Rates Overnight ZH
| The main story making waves this afternoon is the presentation
by St. Louis Fed's James Bullard titled "Seven Faces of The Peril"
in which the Fed president pledges that the Fed should immediately
recommence purchasing Treasurys if the deflation scenario picks
up, which he notes is an increasingly likely probability. In the
paper, Bullard argues that the Federal Open Market Committee’s
extended period language may be increasing the probability of a
Japanese-style deflationary outcome in the U.S. within the next
several years, and concludes that an appropriate quantitative
easing policy offers the best hope for avoiding a low nominal
interest rate, deflationary outcome. "The U.S. is closer to a
Japanese-style outcome today than at any time in recent
history...A better policy response to a negative shock is to
expand the quantitative easing program through the purchase of
Treasury securities.” While of course keeping up a facade that the
Fed is in control, Bullard does speculate about the downside case:
“The most likely possibility from where we sit today is that the
recovery will continue through the fall, inflation will start to
move up and this issue will all go away. Suppose we get another
negative shock, another surprise. We have to be prepared in that
event to have a plan in place to do something." Yet all of this is
in the sphere of probabilities of QE2.0 and for now at least, is
something to consider in the intermediate future. Yet something
far more sinister may be brewing just below the immediate horizon.
As Mark Hanson suggests based on speculation by both MS and ML
(oddly enough released concurrently, MS report attached below),
the GSEs and the FHA may be preparing to imminently launch an
instant auto-refi program which would take millions of borrowers
to current market rates overnight! In the process $45 billion of
consumer savings would be created. Welcome QE 1.999. |
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
With Case Against The Wyly Brothers, The SEC Goes To War Against Offshore
Finance BI
SEC Brings GIGANTIC Insider Trading Case Against The Famous Wyly Brothers
Of Texas BI
Wyly Brothers Face SEC Fraud Charges WSJ
| Billionaire brothers Sam Wyly and Charles Wyly hid $550
million in trading profits by using an "elaborate sham system" of
offshore entities, the SEC charged. |
Never Heard Of Sam Wyly- Maybe You Know The Two George Bush Opponents Who
He Helped Destroy BI
Despite being mega-wealthy, it's possible that plenty of
folks have never heard of the Texas-based Wyly brothers,
who were
charged by the SEC with insider fraud yesterday. So
who are they? Well in addition to being boardmembers of
several companies, they're also big GOP boosters, and Sam in
particular did A LOT for George W. Bush. In 2000, he
backed a shadowy group "Republicans for Clean Air" that
pressed hard to defeat John McCain in the primary. And
in 2004.... well perhaps you remember the Swift Boat ads? Yep,
Sam was a backer of that, too.
|
Speculators Rediscover Agricultural Commodities
Spiegel
FLASH CRASH - HFT - DARK POOLS
MARKET WARNINGSEquity Market Being Propped Up As Market Remains Last Line Of Defense
Against Deflation ZH
|
Recent 1 to 1 Treasury to Equity correlation continues to break
down as we noted monday...note Treasuries holding near high of the
day as equities rally back into green...something is amiss in the
financial markets right now with one of these markets being
artificially skewed...again most likely culprit is equities as
this market is much more easily manipulated due to lower liquidity
profile relative to the treasury market....believe equities are
being artificially propped up as a defense against widespread
acceptance of deflationary pressures for if headlines start to
cross that equities are cratering due to deflation, consumer
spending will certainly come to a screeching halt (due to
perception of lower asset prices in the future) which will
certainly give deflation the green light to take hold of this
economy...ultimately believe equity market pricing is the last
line of defense against the reality of deflation which is why we
are seeing such a strong defense against lower prices....in the
end however, deflation is such a strong force that any attempt at
short-term manipulation of asset prices will fail.
http://www.matrixanalytix.com/live-market-analytix.html
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Stunner- 12th Sequential Domestic Equity Outflow (And $11 Billion In July
Alone) Invalidates Volumeless July Stock Surge ZH
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The latest update from
ICI is a doozy: in the week ended July 21, domestic
equity mutual funds saw a 12th sequential outflow of $1.5 billion.
Even as the market has surged 10% in the last three
weeks, just under $10 billion have been redeemed from mutual
funds, completely invalidating the move and further justifying the
skeptics who see absolutely no reflection to reality in the
volumeless ramp orchestrated by a few momentum HFTs and a couple
of Primary Dealers with some excess leftover Discount Window
change. Not to mention that 12 weeks in a row of outflows pretty
much marks game over as far as retail participation is concerned
in stocks. Regardless of what the market does, where it close, how
high it ramps, etc, retail just pulls money indiscriminately from
the market, without any regards for what the fraudulent and
fabricated current level of the DJIA may be: all mom and pop just
want is to get the hell out of stocks stat and get into fixed
income. The market is now completely disconnected from fund flows,
and the only thing potentially keeping it in the stratosphere in
addition to deranged binary concoctions are various
"self-fulfilling prophecy" high gamma ETFs, which continue to push
stocks away from fair value to the tune of several standard
deviations. However, just like on May 6, the rubberband will,
sooner or later, snap, and make May 6 seem like a dress rehearsal.
While technical difficulties prevent us from posting the latest
Domestic mutual fund flow-SPY chart, below we have recreated last
week's - fell free to use your imagination and fill the July
21 data point.
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GOLD MANIPULATION
BIS gold swaps mystery is unravelled FT
VIDEO TO WATCH
Jim Quinn of
The Burning Platform
"The Ruling Elite Called"
QUOTE OF THE WEEK
In
a Financial Times op-ed
dated July 25, Laurence Kotlikoff, economics professor at
Boston University
"Due to the “labeling problem”--governments can describe
receipts and payments in any way they like--we are essentially
“in a fiscal wonderland of measurement without meaning.”
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ZH - Zero Hedge - Business Insider,
WSJ - Wall Street Journal, BL -
Bloomberg, FT - Financial Times |
