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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Zero Hedge

GoLDMaN STRoNG...

Courtesy of ZeroHedge. View original post here.

...

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Phil's Favorites

Australia Central Bank Worried About Deflation - Does Study, Blames Aldi

Courtesy of Mish.

The Reserve Bank of Australia is so concerned about deflation that it did a study on why prices are so low despite a 33% collapse in the Australian dollar vs. the US dollar since June 2011.

The RBA blamed competition and discounters like Aldi.

Australian Dollar vs. US Dollar

Worrying Trend

Lower prices are precisely what consumers want and need. Nonetheless, this headline from “down under” reflects prevailing silliness: ...



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Market News

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Financial Markets and Economy

Worlds Top Fortunes Fall $196.2 Billion Since Brexit Bombshell (Bloomberg)

Global markets erased another $69.2 billion from the combined net worth of the worlds 400 richest people Monday, bringing the total since the U.K. shocked investors with a vote to leave the European Union to $196.2 billion in the last two trading days.

Global stocks extend l...



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Chart School

S&P 500 Snapshot: Brexit Selloff Continues

Courtesy of Doug Short's Advisor Perspectives.

Friday's global selloff continued today as the S&P 500 plunged at open and continued through the morning. The sell-off recovered slightly over the following hours, but hit its -2.24% intraday low in the final hour. The index continues in the red at -2.12% year-to-date.

The flight to treasuries continued today. The 10-year note closed at 1.46%, down 11 basis points from the previous session.

Here is a snapshot of past five sessions in the S&P 500.

Here is a daily chart of the index, which has dropped below its 50-day moving average. Volume, as we mentioned above, increased dramatically.

Here's a look at the VIX volatility index, the celebrated "fear gauge" market indicator. Today's selloff continued well...



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ValueWalk

Nigel Farage: Putin More Statesman Like Than Obama

By Jacob Wolinsky. Originally published at ValueWalk.

UKIP LEADER NIGEL FARAGE TELLS FOX NEWS CHANNEL THAT RUSSIAN PRESIDENT “VLADIMIR PUTIN BEHAVED IN A MORE STATESMAN-LIKE MANNER THAN PRESIDENT OBAMA DID IN THIS REFERENDUM CAMPAIGN”

In an interview on FOX News Channel’s Your World with Neil Cavuto this afternoon, the United Kingdom’s Independent Party (UKIP) leader Nigel Farage discussed the United Kingdom (UK) voting to leave the European Union, the international market reaction to the vote and the UK’s credit rating downgrade with guest host Trish Regan. Please see below for highlights.

Nigel Farage On comparing President Barack Obama’s response to the Brexit vote to Russian President Vladimir Putin’s:

...



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OpTrader

Swing trading portfolio - Week of June 27th, 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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Kimble Charting Solutions

Global Leading Indicators, testing 6-year rising support channels

Courtesy of Chris Kimble.

Long before last weeks Brexit vote, Germany’s DAX index has been an upside and downside global stock market leader, over the past few years. Below looks at the pattern the DAX has created over the past decade.

CLICK ON CHART TO ENLARGE

Since mid 2009 the DAX has remained inside of rising channel (A). The top of this channel was hit in April of 2015. Since hitting rising channel resistance, the DAX has ...



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Mapping The Market

Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....



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Digital Currencies

Bitcoin Tumbles 10%

Courtesy of ZeroHedge. View original post here.

One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...



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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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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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