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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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Phil's Favorites

3 Key Asset Classes That Are Mispriced

Dr. David Kelly, Chief Global Strategist, J.P. Morgan Funds, believes three assets are currently and temporarily mispriced: oil, the US dollar and bonds. He suggests that interest rates will be raised in June. Although cheap oil is suppressing inflation, Kelly argues, the Federal Reserve recognizes this as a temporary phenomenon and will "continue to prepare for a long-overdue monetary normalization."

3 Key Asset Classes That Are Mispriced

By Dr. David Kelly

Oil is in the basement, the dollar is in the attic and the bond market’s sleeping in. In short, the house of financial assets is a house of confusion. While the passage of time and a steady flow of new data should restore some order, this progress could yet be halted or even reversed by significant ...



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Zero Hedge

Greek Pensioners To Fund Ukraine's Government: Syriza Will Tap Pension Funds To Pay IMF

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Just yesterday we warned that, among the 'solutions' the Greek government was exploring in its scramble for cash to pay back The IMF loan, was 'borrowing' from the nation's pension funds. Today we get the sad confirmation that indeed Greece will raid cash reserves in pension funds and other public sector entities to cover its funding needs. As Reuters reports, Greece will use short-term repo transactions to transfer the cash, but one government official said they could not be used to repay the IMF. As the radical left-wing government takes from the implictly wealthier Greeks (pension funders), it is giving free electricity, a rent al...



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All About Trends

Mid-Day Update

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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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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.Date Found: Saturday, 31 January 2015, 07:04:10 PM

Click for popup. Clear your browser cache if image is not showing. Comment: Recessions are illegal! Banned by the central bankers. Wait whats this???

Date Found: Sunday, 01 February 2015, 12:47:52 PM

Click for popup. Clear your browser cache if image is not showing. Comment: Feliz Zulauf talks deflation and non producing debt, a great concern. kingworldnews.com...

Date Found: Sunday, 01 February 2015, 12:49:32 PM

Click for popup. Clear your browser cache if image is not s...



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Insider Scoop

Credit Suisse Reiterates Underperform, Lowers Price Target On CBOE Holdings As Volume Trends Remain Challenged

Courtesy of Benzinga.

Related CBOE 4 Stocks Wall Street Loves This Year...And 4 It Doesn't Simons-Founded Renaissance Technologies Buys Apple, Closes Facebook, Trims McDonald's In Q4

In a report published Tuesday, Credit Suisse analyst Christian Bolu reiterated an Underperform rating on CBOE Holdings, Inc. (NASDAQ: CBOE), but lowered the price target from $63.00 to $58.00.

In the report, Credit...



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Sabrient

Sector Detector: Stocks break out again but may be running on fumes

Courtesy of Sabrient Systems and Gradient Analytics

Despite low trading volume, a strong dollar, mixed economic and earnings reports, paralyzing weather conditions throughout much of the U.S., and ominous global news events, stocks continue to march ever higher. The world remains on edge about potential Black Swan events from the likes of Russia, Greece, or ISIS (or lone wolf extremists). Moreover, the economic recovery of the U.S. may be feeling the pull of the proverbial ball-and-chain from the rest of the world’s economies. Nevertheless, awash in investable cash, global investors see few choices better than U.S. equities.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...



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OpTrader

Swing trading portfolio - week of March 2nd, 2015

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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Market Shadows

Kimble Charts: Coal

Kimble Charts: Coal

By Ilene 

Chris Kimble's chart for KOL shows a recently beaten down ETF struggling to pull itself up from the ashes. As the chart shows, KOL has recently drifted down to levels not seen since the financial crisis of 2008-9.

Bouncing or recovering with energy in general, coal prices appear to have stabilized in the short-term. Reflecting coal prices, KOL has traded between $13.45 and $19.75 during the past year. Bouncing from lows, KOL traded around 2% higher yesterday from $14.26 to $14.48 on high volume. It traded another 3.6% higher in after hours to $15, possibly related to ...



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Digital Currencies

MyCoin Exchange Disappears with Up To $387 Million, Reports Claim

Follow up from yesterday's Just the latest Bitcoin scam.

Hong Kong's MyCoin Disappears With Up To $387 Million, Reports Claim By  

Reports are emerging from Hong Kong that local bitcoin exchange MyCoin has shut its doors, taking with it possibly as much as HK$3bn ($386.9m) in investor funds.

If true, the supposed losses are a staggering amount, although this estimate is based on the company's own earlier claims that it served 3,000 clients who had invested HK$1m ($129,000) each.

...



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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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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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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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