Posts Tagged ‘financial meltdown’

Geithner’s Crimes Through AIG – Will The Truth Come Out

Courtesy of The Daily Bail 

Geithner’s Crimes Through AIG – Will The Truth Come Out

Video – Max Keiser & Stacy Herbert

At issue is Tim Geithner’s criminal behavior in orchestrating the AIG bailout to favor Goldman Sachs through counterparty payouts at par, and then the massive cover-up.

Further reading…


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Has the Fed Painted Itself Into a Corner?

Has the Fed Painted Itself Into a Corner?

Courtesy of Yves Smith

[unclescrooge.jpg]A couple of articles in the Wall Street Journal, reporting on a conference at the Boston Fed, indicates that some people at the Fed may recognize that the central bank has boxed itself in more than a tad.

The first is on the question of whether the Fed is in a liquidity trap. A lot of people, based on the experience of Japan, argued that resolving and restructuring bad loans was a necessary to avoid a protracted economic malaise after a severe financial crisis. But the Fed has consistently clung to the myth that the financial meltdown of 2007-2008 was a liquidity, not a solvency crisis. So rather than throw its weight behind real financial reform and cleaning up bank balance sheets (which would require admitting the obvious, that its policies prior to the crisis were badly flawed), it instead has treated liquidity as the solution to any and every problem.

Some commentators were concerned when the Fed lowered policy rates below 2%, but there we so many other experiments implemented during the acute phases that this particular shift has been pretty much overlooked. But overly low rates leaves the Fed nowhere to go if demand continues to be slack, as it is now.

Note that the remarks by Chicago Fed president John Evans still hew to conventional forms: the Fed needs to create inflation expectations, and needs to be prepared to overshoot.

This seems to ignore some pretty basic considerations. First, the US is suffering from a great deal of unemployment and excess productive capacity. The idea that inflation fears are going to lead to a resumption of spending (ie anticipatory spending because the value of money will fall in the future) isn’t terribly convincing. Labor didn’t have much bargaining power before the crisis, and it has much less now. Some might content the Fed is already doing a more than adequate job of feeding commodities inflation (although record wheat prices are driven by largely by fundamentals).

From the Wall Street Journal, “Fed’s Evans: U.S. in ‘Bona Fide Liquidity Trap’”:

The Federal Reserve may have to let inflation overshoot levels consistent with price stability as part of a broader attempt to help stimulate the economy, a U.S. central bank official said Saturday.

“The U.S. economy is best described as being in a bona


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Inside Job, A Story of Economic Collapse

Courtesy of smartknowledgeu

I’m not in the habit of promoting films, but if the above documentary, an investigation of the root causes of the 2008 global financial meltdown, is anything like the director’s documentary on the Iraqi war, "No End in Sight", not only are we in for a relentless presentation of propaganda busting facts and an endless calling out of financial shills from Wall Street firms, but we will also be presented with a very sober reminder that our current administration, like the Dubya, Clinton, and Bush Sr. administrations that preceded it, has failed to address or fix in any substantive manner any of the root problems that created our first financial meltdown. Thus, get ready your popcorn ready for a front row seat to financial meltdown, part deuce, coming to your in-home theater in 2011. 


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Goldman Sachs: Too Big To Obey The Law

Call to break up the big banks – more to follow. – Ilene 

Goldman Sachs: Too Big To Obey The Law

13 Bankers Courtesy of Simon Johnson, co-author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, at Baseline Scenario 

On a short-term tactical basis, Goldman Sachs clearly has little to fear.  It has relatively deep pockets and will fight the securities “Fab” allegations tooth and nail; resolving that case, through all the appeals stages, will take many years.  Friday’s announcement had a significant negative impact on the market perception of Goldman’s franchise value – partly because what they are accused of doing to unsuspecting customers is so disgusting.  But, as a Bank of America analyst (Guy Mozkowski) points out this morning, the dollar amount of this specific allegation is small relative to Goldman’s overall business and – frankly – Goldman’s market position is so strong that most customers feel a lack of plausible alternatives.

The main action, obviously, is in the potential widening of the investigation (good articles in the WSJ today, but behind their paywall).  This is likely to include more Goldman deals as well as other major banks, most of which are generally presumed to have engaged in at least roughly parallel activities – although the precise degree of nondisclosure for adverse material information presumably varied.  Two congressmen have reasonably already drawn the link to the AIG bailout (how much of that was made necessary by fundamentally fraudulent transactions?), Gordon Brown is piling on (a regulatory sheep trying to squeeze into wolf’s clothing for election day on May 6), and the German government would dearly love to blame the governance problems in its own banks (e.g., IKB) on someone else.

But as the White House surveys the battlefield this morning and considers how best to press home the advantage, one major fact dominates.  Any pursuit of Goldman and others through our legal system increases uncertainty and could even cause a political…
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Are You Ready for the Next Crisis?

So we get the prize for extreme income inequality. The failure of our government – many people, over many years - to prevent the disaster is bad enough.  Now the non-effort to correct the factors leading up to the financial meltdown supports the view that there are few people in government who have any desire to do so. Because, it’s simple, people do what they want to do. – Ilene  

Are You Ready for the Next Crisis?

By PAUL CRAIG ROBERTS at CounterPunch 

Evidence that the US is a failed state is piling up faster than I can record it.

One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests.

Another conclusive hallmark is rising income inequality as the insiders manipulate economic policy for their enrichment at the expense of everyone else.

Income inequality in the US is now the most extreme of all countries. The 2008 OECD report, “Income Distribution and Poverty in OECD Countries,” concludes that the US is the country with the highest inequality and poverty rate across the OECD and that since 2000 nowhere has there been such a stark rise in income inequality as in the US. The OECD finds that in the US the distribution of wealth is even more unequal than the distribution of income.

On October 21, 2009, Business Week highlighted a new report from the United Nations Development Program concluded that the US ranked third among states with the worst income inequality. As number one and number two, Hong Kong and Singapore, are both essentially city states, not countries, the US actually has the shame of being the country with the most inequality in the distribution of income.

The stark increase in US income inequality in the 21st century coincides with the offshoring of US jobs, which enriched executives with “performance bonuses” while impoverishing the middle class, and with the rapid rise of unregulated OTC derivatives, which enriched Wall Street and the financial sector at the expense of everyone else.

Millions of Americans have lost their homes and half of their retirement savings while being loaded up with government debt to bail out the banksters who created the derivative crisis.

Frontline’s October 21 broadcast, “The Warning,” documents how Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, Deputy Treasury Secretary
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Has Central Bank Management of the Economy Failed?

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Has Central Bank Management of the Economy Failed? 

grand experiment, central banksCourtesy of Charles Hugh Smith, Of Two Minds

The conventional wisdom is that the current financial meltdown resulted from the failure of "capitalism" (As if crony/State capitalism was ever anything but a simulacrum of free market enterprise.)

But perhaps the current slow-moving collapse is merely the final failure of the Grand Experiment: that central banks can manipulate the economy to some steady-state "growth" without end.

It is an irony, to be sure, that the emergence of central banks in the early years of the 20th century was in reaction to short-lived but scary financial seizures like the 1907 Panic. The irony is that such panics were sharp but also short-lived. Now that the central banks have spent decades manipulating the economies of the world with mad "behind the scenes" pulling of monetary and fiscal levers, downturns are not getting shorter but longer, and not getting shallower but deeper.

I think the following charts make a good case that the Grand Experiment was ontologically doomed to fail. I would argue that policy is not a feedback loop like the market; you cannot eliminate feedback from the real world and substitute manipulation in its stead. This is akin to enforcing the "policy" that relieving the patients’ symptoms is equivalent to restoring their health.

Relieving symptoms is not equivalent to being healthy, as these charts suggest.

Job Losses

Courtesy of my astute colleague Karl Denninger at Market Ticker:

income, assets, debt

It is not coincidence that the deep recessions of 1974-75 and 1981-83 were followed by a rise in debt. Look at the first chart and then the second one. Note the ramp-up of debt after the Federal Reserve realized that its usual levers of monetary "loosening" were ineffectual.

Their "solution" was to create credit--lots of it. the credit machine started gaining speed and finally achieved lift-off when Greenspan countered the modest 2001 recession with a full-blown explosion of low-interest-rate credit expansion.

Predictably, this explosion of debt triggered an asset bubble in a variety of asset classes, most notably real estate. The results are visible here:

Easy margin requirements and free-flowing credit helped boost the dot-com boom in the late 90s, which resulted in a rise in equity. As that bubble burst, the Fed turned the spigots wide open and…
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Chart School

Moving Averages: Month-End Preview

Courtesy of Doug Short's Advisor Perspectives.

Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month. At this point, before the close on the last day of the month, all three S&P 500 strategies are signaling "invested" — unchanged from last month's triple "invested" signal. All five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI),Vanguard FTSE All-World (VEU), iShares' Barclays 7-10 Year Treasury (IEF), PowerShares DB (DBC) and Vanguard REIT Index ETF (VNQ), — are signaling "invested", unchanged from last month's triple invested signal.

...

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Zero Hedge

Friday Humor: "Wesley's Boobie Trap" Replaces Strippers With Robots

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

First fast-food workers, now exotic dancers... it appears the minimum-wage-driven robotization of the American economy is hitting everyone...

After talks of raising the minimum wage have stirred across the country, The Ostrich's Matt Mitchell reports that Wesley's Boobie Trap CEO David Sellers warned that a drastic increase to $15 an hour could force him to fire his staff and replace them with...



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Phil's Favorites

The Conditions You'd Want Are Already Here

 

The Conditions You’d Want Are Already Here

Courtesy of

Have we corrected through time, rather than through price, enough to spark the next leg higher for the bull?

Consider: No new high since last May, a flat market over two years (three years for small caps), median declines for individual stocks of 30% – not enough? Or plenty, to set up a new rally?

That’s the question on everyone’s mind now as the averages approach re-approach their former highs. The bears say May has been a short-squeeze. They say you’re risking 20% to make 2% to the upside. The bulls (and there aren’t a lot of them) don’t have much to...



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Kimble Charting Solutions

Gold Mining Stocks- Most dangerous time to own them in years?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The rally in mining stocks since the first of the year has been very impressive.

The rally has taken Gold Miners ETF GDX up to test the 23% retracement of the collapse over the past 5-years. At the same time it is hitting the 23% level, two other resistance lines are being put to a test, with momentum at the highest levels in the past 5-years.

Joe Friday Just The Facts...



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ValueWalk

TPP: FOIA Documents Reveal Coordinated Effort Between Obama Administration And Wall Street lobbyists, say Activists

By Jacob Wolinsky. Originally published at ValueWalk.

Rootstrikers Blasts Newly Revealed Collusion Between Obama Administration and Big Banks on Financial Provisions in TPP – presented without comment – we will let the readers decide what they think – just a note Rootstrikers is not independent or centrist and has a progressive outlook but tends to do good work regardless of bias. Additionally, they have emails between Gary Cohn (literally number two at Goldman Sachs) and Michael Froman (U.S. Trade Representative), of course big banks are going to be in touch with officials about policy issues related to regulation of banks and the economy but if the banks helped push TPP that is slightly more awkward.

FOIA documents reveal coordinated effort between Obama administration and Wall Street lobbyists to deliver unprecedented benefits for financial industr...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Strategist Jim Paulsen makes case for why stocks are about to hit record highs (CNBC)

"There's still a lot of pessimism," Paulsen said. "We're an eyelash away from all-time highs and there's a lot of people still in the bear market camp." If too many people shift to the bull camp, he said he might get more cautious.

The US economy was better than we thought in the first quarter (Business Insider)

US economic growth was better than first estimated in the first quarter, according to the Commerce Department.

...



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Insider Scoop

Graham Media Group To Buy WCWJ, CW affiliate In Jacksonville, NBC Affiliate in Roanoke

Courtesy of Benzinga.

Graham Media Group, Inc., a Graham Holdings Company (NYSE: GHC) subsidiary, said it struck a deal with Nexstar Broadcasting Group, Inc. and Media General, Inc. to purchase WCWJ, a CW affiliate television station in Jacksonville, Florida and WSLS, an NBC affiliate television station in Roanoke, Virginia for $60 million in cash and the assumption of certain liabilities.

The agreement to acquire Nextar Broadcasting included pension obligations. Graham Media Group, Inc. would continue to operate both stations under their current network affiliations.

Graham Media said the acquisition is subject to approval by the FCC, other regulatory appr...



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OpTrader

Swing trading portfolio - week of May 23rd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

The Biggest Bitcoin Arbitrage Ever?

Courtesy of Chris at CapitalistExploits

Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?

Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.

I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.

I was thinking of this since a buddy of mine recently started ...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

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News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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