Posts Tagged ‘economic meltdown’

Time for Truth: Three Card Monte is for Suckers

Time for Truth: Three Card Monte is for Suckers

By Eliot Spitzer and William Black, courtesy of New Deal 2.0 

three-card-monte-150Eliot Spitzer and William Black call for an immediate Congressional investigation of Lehman’s accounting deception and the release of relevant emails and internal documents.

In December, we argued the urgent need to make public A.I.G.’s emails and “key internal accounting documents and financial models.” A.I.G.’s schemes were at the center of the economic meltdown. Three months later, a year-long report by court-appointed bank examiner Anton Valukas makes it abundantly clear why such investigations are critical to the recovery of our financial system. Every time someone takes a serious look, a new scandal emerges.

The damning 2,200-page report, released last Friday, examines the reasons behind Lehman’s failure in September 2008. It reveals on and off balance-sheet accounting practices the firm’s managers used to deceive the public about Lehman’s true financial condition. Our investigations have shown for years that accounting is the “weapon of choice” for financial deception. Valukas’s findings reveal how Lehman used $50 billion in “repo” loans to fool investors into thinking that it was on sound financial footing. As our December co-author Frank Partnoy recently explained as part of a major report of the Roosevelt Institute, “Make Markets Be Markets“, such abusive off-balance accounting was and is endemic. It was a major cause of the financial crisis, and it will lead to future crises.

According to emails described in the report, CEO Richard Fuld and other senior Lehman executives were aware of the games being played and yet signed off on quarterly and annual reports. Lehman’s auditor Ernst & Young knew and kept quiet.

The Valukas report also exposes the dysfunctional relationship between the country’s main regulatory bodies and the systemically dangerous institutions (SDIs) they are supposed to be policing. The NY Fed, the regulatory agency led by then FRBNY President Geithner, has a clear statutory mission to promote the safety and soundness of the banking system and compliance with the law. Yet it stood by while Lehman deceived the public through a scheme that FRBNY officials likened to a “three card monte routine” (p. 1470). The report states:

“The FRBNY discounted the value of Lehman’s pool to account for these collateral transfers. However, the FRBNY did not request that Lehman exclude this collateral from its reported liquidity pool. In the…
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Taleb on VaR

Taleb on VaR

Courtesy of George of Washington’s Blog

Nassim Nicholas Taleb gave a presentation yesterday to the House Subcommittee on Investigations & Oversight on The Risks of Financial Modeling: VaR and the Economic Meltdown.

His presentation is good, and well worth reading in its entirety.

If you’re too busy to read it, Taleb’s Figure 1 gives a good executive summary:

Value at Risk


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Zero Hedge

"These Numbers Are Ugly" - WTO Forecasts Collapse In World Trade, Recovery For 2021

Courtesy of ZeroHedge View original post here.

"World trade is expected to fall by between 13% and 32% in 2020 as the COVID 19 pandemic disrupts normal economic activity and life around the world," the WTO report said. 

The Geneva-based body does not see a recovery in global trade until 2021, and even then, the outcome of recovery is mainly dependent "on the duration of the outbreak and the effectiveness o...



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The Technical Traders

Adaptive Fibonacci Suggests Much Lower Prices Yet To Come - Part I

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system suggests a much deeper price move is in the works and the current price rally will likely end near resistance levels identified by the Adaptive Fibonacci Price Modeling system.  We are posting this research post for friends and followers to help them understand the true structure of price and to allow them to prepare for what we believe will become a much deeper downside price move in the future.

Fibonacci Price Theory teaches us that price moves in waves within up and down price cycles. The recent peak in price, near February 25, 2020, has resulted in a very deep -36% price collapse in the S&P 500 (ES) recently. This dow...



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Phil's Favorites

Striking Amazon, Instacart employees reveal how a basic economic principle could derail our ability to combat the coronavirus

 

Striking Amazon, Instacart employees reveal how a basic economic principle could derail our ability to combat the coronavirus

Samuel Diaz, a delivery worker for Amazon Prime, loads his vehicle with groceries from Whole Foods in Miami. AP Photo/Lynne Sladky

Leigh Osofsky, University of North Carolina at Chapel Hill

A series of recent protests by the workers preparing and delivering our essential foods and other goods highlights a key risk to our ability to combat the coronavirus.

Some employees at an Amazon warehouse and Instacart “shoppers” ...



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Biotech/COVID-19

In the rush to innovate for COVID-19 drugs, sound science is still essential

 

In the rush to innovate for COVID-19 drugs, sound science is still essential

Employees work on the production line of chloroquine phosphate, resumed after a 15-year break, in a pharmaceutical company in Nantong city in east China’s Jiangsu province Thursday, Feb. 27, 2020. Feature China/Barcroft Media via Getty Images

Christopher Robertson, University of Arizona; Alison Bateman-House, ...



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ValueWalk

Coronavirus symptoms, causes, prevention and cure

By Jacob Wolinsky. Originally published at ValueWalk.

The best case situation for Coronavirus or COVID-19 is that in a few weeks it dies down and things get back to normal. However, we must entertain the possibility of a far more frightening scenario.

Warmer weather may not hurt coronavirus

April 8, 2020 Update: The number of coronavirus cases in New York State has now topped the number in Italy. New York Gov. Andrew Cuomo said 779 people died of COVID-19 in the state in a single day, marking the highest one-day death total from the virus. More than 6,200 people have died of the virus in New York, which Cuomo said is double the number of people who died there in the Sept. 11, 2001 terrorist attacks.

Many experts have been counting on the warmer months providing some relief from the coronavirus. However, a National Academies of Sciences panel told the White House t...



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Kimble Charting Solutions

Market Crash Reversal Patterns "Experiment" With History!

Courtesy of Chris Kimble

S&P 500 Index versus “Inverted” 30 Year Yield “monthly” Chart

Stocks and treasury bond yields had a wild (and scary) month of March as the financial markets crashed to new lows.

In today’s chart, we highlight this by looking at long-term “monthly” chart of the S&P 500 Index versus an “inverted” 30 Year US Treasury Bond Yield.

Note that inverting charts offers a different perspective and reduces bias. For more on this, ...



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Chart School

The Big Short movie guides us to what is next for the stock market

Courtesy of Read the Ticker

There is nothing new in WallStreet, it is only the players that change. Sometimes a market player or an event gets ahead of the crowd and WallStreet has to play catch up.

Previous Post Dow 2020 Crash Watch Dow, Three strikes and your out!

It is important to understand major WallStreet players do not want to miss out on a money making moves.  







...

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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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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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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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