Posts Tagged ‘conflict of interests’

Bernanke’s Conflict of Interest

Bernanke’s Conflict of Interest

Courtesy of Bruce Krasting 

Thank heavens for the Federal Reserve. Were it not for them our deficit would have been 6% higher in the just ended fiscal 2010. The hard working folks at the Fed have contributed a net of $76 billion to the general revenue. They are now earning at a rate equal to 1/3 of all corporate tax revenues. Think of that, just a handful of people are making one third of what our largest corporations contribute. Talk about doing some heavy lifting!

I, and a few thousand others, have been bashing the Fed on a nearly daily basis. But actually we should be dishing out some praise for a job well done. $76b still goes a pretty long way these days. The even better news is that in 2011 the Fed will make us even more money than last. Way to Go Ben B! Here’s how they made the long green:

A graph of the Fed balance sheet as of 9/30. The total balance sheet comes to a modest $2.2 trillion. The net income generated from all these holdings is the $76b estimated by the CBO:

The net income number comes to an interest spread on the portfolio of 3.45%. There are some folks in the portfolio management business who would die for that result. The Fed did it the easy way. They borrowed money at no cost thanks to ZIRP. 

We know the Fed is going to be buying in more paper during 2011. Jon Hilsenrath at the WSJ tells us that just about every day. If you don’t believe him just read the Fed minutes. QE-2 is baked in the cake. The leaks and guesses suggest that we are looking at another Trillion of POMO buys over the next year. The thinking is that the Fed will acquire a portfolio with an average maturity of around seven years. The yield on that maturity today is about 1.8%. Based on that a pro-forma look at the Fed BS a year out:

Assets: 3.2 Trillion
Income: 94 billion


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Ex-Fed Governor Mishkin Caught in ‘Pay for Say’ Over Icelandic Economy

"HE WHO LOSES WEALTH LOSES MUCH; HE WHO LOSES A FRIEND LOSES MORE; BUT HE THAT LOSES COURAGE LOSES ALL." MIGUEL DE CERVANTES

Ex-Fed Governor Mishkin Caught in ‘Pay for Say’ Over Icelandic Economy

Courtesy of JESSE’S CAFÉ AMÉRICAIN

The Icelandic Chamber of Commerce commissioned ex-Fed Governor Mishkin to write a glowing report on their economy, even while the country was being destroyed from within by a rogue banking system and a corrupt regulatory regime.

 

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SEC Charges Goldman Sachs With Fraud On Subprime Mortgages, Paulson & Co. Implicated

SEC Charges Goldman Sachs With Fraud On Subprime Mortgages, Paulson & Co. Implicated

Courtesy of Zero Hedge  

Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party." 

Kenneth Lench, Chief of the SEC’s Structured and New Products Unit, added, "The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress."

The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.

According to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS 2007-AC1 (ABACUS) all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA), a third party with expertise in analyzing credit risk in RMBS. The SEC alleges that undisclosed in the marketing materials and unbeknownst to investors, the Paulson & Co. hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.

The SEC’s complaint alleges that after participating in the…
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Economists Opposing Fed Audit Have Undisclosed Fed Ties

Ryan Grim is the senior congressional correspondent for the Huffington Post, former staff reporter with Politico.com and Washington City Paper, and author of the book, "This Is Your Country on Drugs." Ryan won the 2007 Alt-Weekly Award for best long-form news-story. – Ilene

Economists Opposing Fed Audit Have Undisclosed Fed Ties

Courtesy of Ryan Grim

Article appears originally in the Huffington Post

As the debate over an audit of the Federal Reserve intensifies in the House, one camp is trotting out eight academics that it calls a "political cross section of prominent economists."

A review of their backgrounds shows they are anything but.

In a letter to the House Financial Services Committee earlier this month, all eight wrote that they support the type of amendment now being introduced by Rep. Mel Watt (D-N.C.). Watt’s approach purports to increase Fed transparency while it actually would tighten restrictions on any audits that could go forward.

The letter was sent around Wednesday by Watt’s staff to members of the committee in advance of a vote scheduled for Thursday.

Watt’s measure is in competition with an amendment cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), which would repeal the restrictions that Watt leaves in place.

But far from a broad cross-section, the "prominent economists" lobbying on behalf of the Watt bill are in fact deeply involved with the Federal Reserve. Seven of the eight are either currently on the Fed’s payroll or have been in the past.

The Fed connections are not outlined in the letter sent around to committee members on Wednesday, but are publicly discernible through a review of their resumes, which are all posted online.

In September, Huffington Post reported that the Federal Reserve has accomplished a soft form of effective control over the field of monetary economics simply by employing — and being the means for career advance — for an overwhelming proportion of the discipline.

Now that the Fed is locked in a legislative battle on the Hill, it can call on those economists to give their "unvarnished" opinions to lawmakers.

The connections that the seven economists lobbying Congress have to the Fed are not incidental and four of them maintain current positions.

Let’s run the traps:

Frederic Mishkin is a former board member, having served from 2006-2008. His career at the Fed…
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Geithner Aides Reaped Millions Working for Banks, Hedge Funds

More links in the most mind-boggling conflict of interest network ever. - Ilene

Geithner Aides Reaped Millions Working for Banks, Hedge Funds

web By Robert Schmidt, at Bloomberg

Oct. 14 (Bloomberg) — Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms.

The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.

As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations…

Continue reading Bloomberg article here. >>

Photo courtesy of Free Foto.

 


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Phil's Favorites

The Next Trillion Dollar Stocks: What Are Your Thoughts?

 

The Next Trillion Dollar Stocks: What Are Your Thoughts?

Courtesy of 

In this edition of What Are Your Thoughts, Michael Batnick and Josh Brown discuss:

* Gold vs Bitcoin, let the trolling begin!
* Google joins the Trillion Dollar Club, who’s next?
* Can Bill Simmons sell The Ringer podcast network for $200 million?
* Actively managed US stock mutual funds had a great year in 2019, but most still couldn’t catch the S&P 500. So what?
* Will direct indexing disrupt the ETF business?
* Warren Buffett’s preferred metric to gauge how exp...



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Zero Hedge

CVS, Walgreens Shares Slide As Amazon Files International Trademarks For Pharmacy Business

Courtesy of Zero Hedge. View original post here.

Amazon has just taken another step in its assault of the pharmacy industry. Since the company acquired PillPack, a disruptive online pharmacy, back in 2018, pharmacy mainstays like CBS and Walgreens Boots Alliance have been rattled by the e-commerce and cloud-computing giant's move into their territory. Their shares dipped on Tuesday as CNBC reported that Amazon had just filed trademarks for its 'Amazon Pharmacy' brand in several foreign markets, including Australia, Canada and the UK.

Amazon unveiled its plans to rebrand PillPack as 'Amazon Pharmacy' late last year, signaling to the market that it intended to pursue its pharmacy aims despite a high b...



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Kimble Charting Solutions

Hang Seng Index Double Topping At 2007 Highs?

Courtesy of Chris Kimble

Could the Hang Seng Index be “Double Topping” at its 2007 highs? Possible, yet not proven!

The Hang Seng Index attempted to break above its 2007 highs at (1), only to see a key reversal pattern take place the following month.

After the reversal pattern, the index has created a series of lower highs, just below falling resistance.

So far this month, the index is attempting to break above falling resistance, where it could be created a bearish reversal monthly pattern at (2).

What would it take to prove that a double top was i...



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Insider Scoop

Earnings Scheduled For January 21, 2020

Courtesy of Benzinga

Companies Reporting Before The Bell
  • Halliburton Company (NYSE: HAL) is projected to report quarterly earnings at $0.29 per share on revenue of $5.11 billion.
  • TAL Education Group (NYSE: TAL) is estimated to report quarterly earnings at $0.09 per share on revenue of $839.96 million.
  • Signature Bank (NASDAQ: ...


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The Technical Traders

Using the copy-paste formula in the Forex market

Courtesy of Technical Traders

In Forex there are many techniques available to boost up the profit factors. However, as there are millions of people trying to make a profit it is not easy to get the right tricks. There are many brokers offering high leverage trading account to the interested traders. They also provide useful insight into the market so that the traders can make a decent profit. In fact, some brokers often sell signals to their clients so that they can start earning money in the early stage of their careers.

At present, this method has earned a huge following as many investors don’t like to spend time staring at the chart. In this article, we are going to try to bust the myth about this infamous technique...



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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Chart School

SP500 Kitchin Cycle Review

Courtesy of Read the Ticker

The biggest known news date in the next 18 months is the US Election. The biggest unknown news date is when the US believes it is in a economic recession.

The Kitchin Cycle is still working.

We must conclude the major 900 period low is now in, and we are now in a up swing, which may top out ate 2020 or late 2021. Any future top out may only generate a 10% to 20% correction, of course this can be deemed very mild. This is expected, but the expected does always play out. 

Rolling the dice to get '7' does not always work. Post US elections seasonal's aligned with a poor start of the decade seasonal trends, add on high global recession risk, add on a stock market slump tends to occur in the years ending 9,1,2,3,4 (like 1973, 1...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

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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About Ilene:

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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