STOCK MARKET WATCH -- Thursday, 1 March 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Thursday, 1 March 2012[font color=black][/font]

SMW for 29 February 2012

AT THE CLOSING BELL ON 29 February 2012
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Dow Jones 12,952.07 -53.05 (-0.41%)
S&P 500 1,365.68 -6.50 (-0.47%)
Nasdaq 2,966.89 -19.87 (-0.67%)


[font color=red]10 Year 1.97% +0.05 (2.60%)
30 Year 3.08% +0.04 (1.32%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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Financial Sector Officials Convicted since 1/20/09 = [/font][font color=red]12[/font]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS



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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Fuddnik]

1. Happy March!

We're all doomed anyway.

[Demeter]

2. thank you, I think

Where there's life, there's a good possibility of disappointment....

[DemReadingDU]

5. unfortunately, that is true

The trick is how to deal with all the disappointment and stress.

[Fuddnik]

26. A simple 5-part program.

1) V
2) O
3) D
4) K
5) A

And dogs always have a way of improving your outlook.

[Demeter]

3. Fannie Mae, Freddie Mac, and the MBS sleeper defense

http://newsandinsight.thomsonreuters.com/New_York/News/2012/02_-_February/Fannie_Mae%2c_Freddie_Mac%2c_and_the_MBS_sleeper_defense/

The Reuters legal team is blessed with several smart young reporters with recent-vintage law degrees. So as a little test, I asked three of them -- graduates of Harvard Law School, Stanford Law School, and the University of Texas School of Law -- what they remembered about the statute of repose. Their answers were all variations on the theme of "not much." Even in a profession that prides itself on obscurity (come on, you know you do) you have to be a special kind of geek to be an expert on the statute of repose.

That, or a lawyer working on mortgage-backed securities litigation.

The statute of repose, for those of you who never went to law school or, like some of my colleagues, have plain forgotten, sets an absolute deadline for certain causes of actions. Unlike the statute of limitations, which can be extended based on agreements between the parties or certain external circumstances, the statute of repose is drawn in permanent marker: If you don't file particular claims within the specified time period, you're flat out of luck. (Here's an analysis of a pair of recent decisions holding that a Supreme Court ruling that stops the clock on the statute of limitations in certain cases doesn't apply to the statute of repose.) SEE LINK AT ORIGINAL LINK

As it happens, state and federal securities laws usually include an absolute deadline for claims under statutes of repose. That's why the defense has become so popular in mortgage-backed securities cases. Remember, there was a lag between when a lot of these notes were sold in 2005 and 2006 and when they went bad in 2008, and another lag as investors figured out how to structure suits based on securities that weren't ordinary stocks or bonds. Those years between offering dates and suit filings have turned out to be a big issue: In a major ruling in the Countrywide MBS litigation before U.S. District Judge Mariana Pfaelzer in Los Angeles, for instance, the judge held that the statute of repose on federal securities claims is inviolable, leaving Countrywide MBS investors who haven't already filed claims on notes issued before 2008 out in the cold. On Friday, Skadden, Arps, Slate, Meagher & Flom filed a new brief in what is shaping up as the fight that will make the statute of repose a household phrase. I'm kidding, but not entirely. On behalf of UBS, Skadden filed a reply to the Federal Housing Finance Authority that lays out exactly why, in the bank's view, the conservator overseeing Fannie Mae and Freddie Mac didn't sue UBS for alleged MBS failings in time to comply with the statute of repose.

As I've explained, UBS is the lead case in FHFA's MBS onslaught against more than a dozen MBS issuers, so Skadden's argument on the statute of repose will have huge consequences. Essentially, the firm contends that when Congress enacted the law that created FHFA and sent Fannie Mae and Freddie Mac into conservatorship, it explicitly extended the statute of limitations on Fannie and Freddie's state law tort and contract claims, but did not address the statute of repose at all. And because the FHFA waited at least four years to sue UBS over mortgage-backed securities purchased by Fannie and Freddie, its federal securities claims should be barred the three-year statute of repose, according to Skadden....MORE

WHEW! ANOTHER FINE MESS....

[Demeter]

6. Lawmakers To The Rescue? Legislation Filed To Fix “Ibanez” Foreclosure Title Defects

http://www.massrealestatelawblog.com/2012/02/28/lawmakers-to-the-rescue-legislation-filed-to-fix-ibanez-foreclosure-title-defects/

Massachusetts Senate Bill 830 Addresses Toxic Foreclosure Titles

Finally, Massachusetts lawmakers have taken action to help innocent purchasers of foreclosed properties in the aftermath of the U.S. Bank v. Ibanez and Bevilacqua v. Rodriguez decisions, which resulted in widespread title defects for previously foreclosed properties. The legislation, Senate Bill 830, An Act Clearing Titles To Foreclosed Properties, is sponsored by Shrewsbury State Senator Michael Moore and the Massachusetts Land Title Association...

The bill, if approved, will amend the state foreclosure laws to validate a foreclosure, even if it’s technically deficient under the Ibanez ruling, so long as the previously foreclosed owner does not file a legal challenge to the validity of the foreclosure within 90 days of the foreclosure auction.

The bill has support from both the community/housing sector and the real estate industry. Indeed, the left-leaning Citizens’ Housing and Planning Association (CHAPA), non-profit umbrella organization for affordable housing and community development activities in Massachusetts, has filed written testimony in support of the bill.

Properties afflicted with Ibanez title defects, in worst cases, cannot be sold or refinanced. Homeowners without title insurance are compelled to spend thousands in legal fees to clear their titles. Allowing such foreclosed properties to sit and languish in title purgatory is a huge drain on individual, innocent home purchasers and the housing market itself.

[Demeter]

10. Yet Another Mortgage Scam: Homeowners Not Getting Cancelled Notes After Foreclosures

Yet Another Mortgage Scam: Homeowners Not Getting Cancelled Notes After Foreclosures, Hit by Later Claims

http://www.nakedcapitalism.com/2012/02/yet-another-mortgage-scam-homeowners-not-getting-cancelled-notes-after-foreclosures-hit-by-later-claims.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

As we’ve discussed the “where’s the note?” problem of mortgage securitizations, some readers who are old enough to have sold a home more than once have said that while they’d gotten a cancelled mortgage note back on their first sale, on a more recent one, they hadn’t. They were concerned, and as this post will show, they are right to be.

By way of background, the popular press has done the public a disservice by talking about “mortgages”. A “mortgage” consists of two instruments: a promissory note, which is a IOU, and a lien against the property, which is referred to as a mortgage (in non-judicial foreclosure states, they are typically called a deed of trust and confer somewhat different rights, but we’ll put that aside for purposes of this discussion).

What appears to be happening on all too often in Florida is that when borrowers signed warranty deeds in lieu of foreclosure when they can no longer keep these homes, they often get only a satisfaction of mortgage, not a cancelled note. This is not what is supposed to happen. When a borrower deeds his property to the bank, the objective of the exercise is to cancel the debt. If the note has not been extinguished, it is referred to as a “zombie note”. As the Fort Myers News-Press reported last year:

Carol Kaplan, a spokeswoman for the Washington-based American Bankers Association, said leaving the note off the satisfaction of mortgage is “not a practice we’ve ever heard of.”

Turns out that’s a bit disingenuous. The article quoted Jack Williams, resident scholar at the American Bankruptcy Institute and a bankruptcy professor at Georgia State University:

“We saw something very similar to this in the debacle in the ’80s, people buying notes from the government and suing,” Williams said. “I won’t rule out that could happen again. They sold the note to collection agencies and law firms and places like that.”

In the real estate meltdown of the ’80s, he said, it was the Resolution Trust Corp., set up by the federal government to liquidate mortgage loans and other real estate assets held by failed savings and loan associations.

“Let me tell you, people made millions of dollars suing homeowners back in the day,” Williams said.

Some of the debt was in the form of deficiency notes: court judgments saying a certain amount was owed even after the property was sold at public auction.

But in other cases, Williams said, it was the note, straight up.

BUT WAIT! IT GETS WORSE! SEE LINK FOR MORE

[Demeter]

23. Senators for Short Sale: Agree to sell immediately—or else!

http://online.wsj.com/article/SB10001424052970204653604577249142250412730.html?mod=dist_smartbrief

The best that can be said about the latest Congressional attempt to heal the housing market is that politicians have at least diagnosed a real problem: a glut of homes for sale. Like other proposed top-down fixes, however, the latest Beltway brainstorm would likely hurt more than help.

Republicans Lisa Murkowski and Scott Brown and Democrat Sherrod Brown want to speed up short sales, which occur when a lender agrees to let a homeowner pay off a mortgage by selling a home at a price below the outstanding loan balance...

[Demeter]

50. FHFA releases plan for Freddie, Fannie exit A MUST READ

http://www.washingtonpost.com/business/economy/fhfa-releases-plan-for-freddie-fannie-exit/2012/02/21/gIQAO8NTRR_story.html

A federal housing regulator on Tuesday released a plan for beginning to scale back mortgage giants Fannie Mae and Freddie Mac — just as the Obama administration is pressing the taxpayer-backed companies to do more to help homeowners.

The Federal Housing Finance Agency, which oversees Fannie and Freddie, laid out steps to wind down the companies, largely by increasing fees charged to borrowers who take out mortgages. The FHFA’s hope is that as the cost of receiving a taxpayer-backed mortgage goes up, more borrowers will turn to private lenders, whose loans do not carry government backing.

But the effort could conflict with measures being pursued by Fannie and Freddie — and the Obama administration — to increase the government’s role in housing.

A year ago, the administration released a white paper calling for a gradual wind-down of Fannie and Freddie, whose bad bets on risky home loans before the financial crisis have cost taxpayers more than $130 billion. But for much of the past year, the White House has been going in the opposite direction. Administration officials have been urging Fannie and Freddie to take steps to help homeowners in an effort to lift home values, free up cash in the economy and help borrowers avoid foreclosure...MORE

THIS IS WHERE OBAMA HAS DECIDED TO DRAW THE LINE, IT SEEMS...WE SHALL SEE IF IT IS A FIRM LINE, OR A SHAKY ONE..IF HE THINKS THIS WILL GET HIM RE-ELECTED, HE'S 3 YEARS TOO LATE...

[xchrom]

4. bon jour! so far march comes in like a lamb here ...

[Demeter]

7. Can Spring Be Far Behind?

http://player.vimeo.com/video/27920977?title=0&%3bbyline=0&%3bportrait=0href

[xchrom]

8. gasp! so pretty! nt

[Po_d Mainiac]

21. Spring?

12-16ins of the white stuff before the day is done, with another on deck for the weekend.

Good day to boil the last batch of sap down to the candy stage....

[Roland99]

30. Croissants dans le matin! mmmm

Bonjour!

About 70F and pure sun here so far this morning. On the way to the mid-80s. And the A/C techs will be on the way soon to replace our blower motor (A/C went out last Friday)

2nd time we've had the A/C unit worked on (first was the week after we closed on the *brand new* house in June 2010). They don't make 'em like they used to.

[xchrom]

31. already w/ the AC? oy. nt

[AnneD]

38. Ahhh....

the joy of home ownership. Better before the season than in the middle.

We are getting much needed rain (warm and humid). I always wait until the trail riders come in for the rodeo before I plant anything in the garden. The rodeo kick off was last week. My Brother lives north of Dallas so he waits til Easter weekend-earlier if it says to in the almanac

[Po_d Mainiac]

39. Whatza A/C?

That some sort of new widow that goes up and down?

Got up to 45F Tuesday, and had the door open half the day. Does that count?

[Warpy]

46. Aw, shaddap.

It was a gluten free donut and 42 degrees here and I've only had 5 hours of sleep.

At least heating this dump is cheaper than running refrigerated AC would be. And it's supposed to go up to the low 60s this afternoon.

I see the market is still sputtering along under 13,000, while it looks like the latest rise in oil future prices has stalled. My sincerest hope along that line is that the Koch boys bankrupt themselves trying to manipulate a crisis by fiddling futures prices. You know and I know that demand is down and any rise in prices will drive it farther down, especially coming into scooter and motorcycle season. I'm hoping for a repeat of the Bunky Hunt debacle in silver.

My own stuff has been doing well, as that rising market helps everything but especially the blue chip stuff my dad favored.

However, I got my 1099s last week and the first amended 1099 two days ago. April Fools Day as my tax day might be too soon at this rate.

[Demeter]

49. Warpy, These Guys Have So Much Dough

I don't think they CAN go bankrupt. And that worries me, a lot.

And then, if they should suffer even a trifling loss, they go whining to their bought-and-paid-for Congress-slaves for relief and bailouts and tax cuts and whatever.

And if they trip over the Constitution or one of the smaller legal barriers on their way to lunch, they have it erased.

We truly have no recourse other than the bloody revolution left. Since we are 99%, that is our only advantage.

As the Born Loser cartoon stated:

http://cdn.svcs.c2.uclick.com/c2/a25f80602dc6012f2fcd00163e41dd5b?width=900.0

http://cdn.svcs.c2.uclick.com/c2/d16699202dc6012f2fcd00163e41dd5b

[Roland99]

54. heh heh

my mortgage refi is being revived...I tried in September last year but I missed the timing by about a week.

hoping it finally hits this time. If not, I give up and I'll just keep the original one but I'd love to kiss Chase goodbye.

[Po_d Mainiac]

55. metal's are tougher than paper

http://www.finviz.com/futures_charts.ashx?t=SI&p=w1

[Demeter]

9. Brace Yourself for Election-Driven Enforcement Theater: Token Roughing Up of Crisis Bad Banksters

Brace Yourself for Election-Driven Enforcement Theater: Token Roughing Up of Crisis Bad Banksters, While Corzine Gets a Free Pass

http://www.nakedcapitalism.com/2012/02/brace-yourself-for-election-driven-enforcement-theater-token-roughing-up-of-crisis-bad-banksters-while-corzine-gets-a-free-pass.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

It’s bad enough that we are being subjected to relentless propaganda about how housing is just about to turn the corner and the state-Federal mortgage settlement is such a great deal for homeowners. In fact, as we’ve stressed, and bond investors such as Pimco have reiterated, the deal is above all a back door bailout of the banks. Bloomberg weighed in yesterday:

Bank of America Corp., Wells Fargo & Co. and three other banks that settled a nationwide probe of foreclosure practices this month will get a bonus from the deal: protection for $308 billion of home-equity loans they hold…

It’s “a gift to the banks, at investors’ expense,” said Goodman, a member of the Fixed Income Analysts Society’s Hall of Fame. “A proportionate write-down of the first and second represents a reversal of normal lien priority.”

But to add insult to injury, the chump public will be given bread and circuses enforcement theater to distract it from the fact that the banks are getting a sweetheart deal. The show is already on the road. The Financial Times tells us that Wells Fargo and Goldman have reported that they have received so-called Wells notices, which is an advanced warning that the SEC staff plans to file civil charges. SEC is pursing firms that it believes misrepresented the quality of loans that were bundled and sold as mortgage backed securities.

This all sounds great, right? Wrong. Take a look at your calendar.

The toxic phase of subprime issuance started in the late summer-early fall of 2005 and screeched to a halt in June 2007. But the statute of limitations for securities liability is five years. So the ONLY deals the SEC can pursue now are the last gasp transactions of March- June 2007, and on those, the clock is ticking. Those were particularly dreadful and no doubt would provide some colorful anecdotes, but who are we kidding? The SEC has sat on its hands until an election year need to Look Tough will lead to a filing of a few random lawsuits to rough up the usual suspects. But the reality is that the horses have left the barn and are now in the next county.

Contrast this with the flailing about on MF Global. From the New York Times, emphasis ours:

Federal authorities are struggling to find evidence to support a criminal case stemming from the collapse of MF Global, even after a federal grand jury in Chicago has issued subpoenas.

Investigators, unable to find a smoking gun amid thousands of e-mails and documents, increasingly suspect that chaos and poor risk control systems prompted the disappearance of more than $1 billion in customer money, according to several people involved in the case.

Have none of these people heard of Sarbanes Oxley? This sort of failure falls right in its crosshairs. As we wrote a year ago:

Contrary to prevailing propaganda, there is a fairly straightforward case that could be launched against the CEOs and CFOs of pretty much every US bank with major trading operations. I’ll call them “dealer banks” or “Wall Street firms” to distinguish them from very big but largely traditional commercial banks like US Bank.

Since Sarbanes Oxley became law in 2002, Sections 302, 404, and 906 of that act have required these executives to establish and maintain adequate systems of internal control within their companies. In addition, they must regularly test such controls to see that they are adequate and report their findings to shareholders (through SEC reports on Form 10-Q and 10-K) and their independent accountants. “Knowingly” making false section 906 certifications is subject to fines of up to $1 million and imprisonment of up to ten years; “willful” violators face fines of up to $5 million and jail time of up to 20 years.

The responsible officers must certify that, among other things, they:

(A) are responsible for establishing and maintaining internal controls;
(B) have designed such internal controls to ensure that material information relating to the issuer and its consolidated subsidiaries is made known to such officers by others within those entities, particularly during the period in which the periodic reports are being prepared;
(C) have evaluated the effectiveness of the issuer’s internal controls as of a date within 90 days prior to the report; and
(D) have presented in the report their conclusions about the effectiveness of their internal controls based on their evaluation as of that date;

These officers must also have disclosed to the issuer’s auditors and the audit committee of the board of directors (or persons fulfilling the equivalent function):

(A) all significant deficiencies in the design or operation of internal controls which could adversely affect the issuer’s ability to record, process, summarize, and report financial
data and have identified for the issuer’s auditors any material weaknesses in internal controls; and
(B) any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal controls

The premise of this requirement was to give assurance to investors as to (i) the integrity of the company’s financial reports and (ii) there were no big risks that the company was taking that it had not disclosed to investors.

This section puts those signing the certifications, which is at a minimum the CEO and the CFO, on the hook for both the adequacy of internal controls around financial reporting (to be precise) and the accuracy of reporting to public investors about them. Internal controls for a bank with major trading operations would include financial reporting and risk management.

It’s almost certain that you can’t have an adequate system of internal controls if you all of a sudden drop multi-billion dollar loss bombs on investors out of nowhere. Banks are not supposed to gamble with depositors’ and investors’ money like an out-of-luck punter at a racetrack. It’s pretty clear many of the banks who went to the wall or had to be bailed out because they were too big to fail, and I’ll toss AIG in here as well, had no idea they were betting the farm every day with the risks they were taking.

The nice thing about Sarbox is a lower risk civil filing can lead directly to a criminal case on the same issues. And based solely on news reports, there seem to be at least two general routes that could be pursued with MF Global. The first is the abject risk management failure that got them in the mess in the first place, the infamous “repo to maturity” trade on short-term Italian government debt. The fact that this was Corzine’s trade, and that he levered it up, and had no apparent understanding that it would be subject to a collateral posting requirement if the price of the debt move against him by more than 5% is managerial incompetence. Either MF Global’s risk management systems were deficient (which means his Sarbox certifications were false) or he overrode them, making them deficient (the fact that he got rid of one manager who insisted on briefing the board about the trade and reduced the independence of his successor supports that idea).

Second is the customer funds that went poof. This has never never never happened to a broker dealer or commodities broker ex fraud. Even in Refco’s embezzlement, accounts were transferred to new firms without a hitch. The media has repeatedly discussed how the staff was not sure of what was happening in the panic to save the firm. I’m sorry, but other firms have faced liquidity crises and the resulting high trading volumes as customers closed out trades and accounts without “accidentally” pilfering customer funds (start with Bear, which went down in a mere ten days). A trading firm needs to be robust enough to handle market turmoil and panicked trading and unexpected calls for collateral, both from a balance sheet and systems standpoint; that should be obvious after September-Octover 2008.

If no one can make an argument for prosecution on deficient controls using Sarbox in a case this egregious, that’s because no one is trying very hard. And that is no surprise.

[Demeter]

11. Bundesbank at odds with ECB over loans

European Central Bank injects €530bn as 800 European lenders seek to take advantage of cheap three-year funding

Read more >>
http://link.ft.com/r/6NPSBB/DW1YSG/4VXHZ/PFBRF4/GDHTAP/28/t?a1=2012&a2=3&a3=1

NOW, THIS SHOULD CHEAPEN THE EURO...AND BERNANKE REFUSED TO CHEAPEN THE DOLLAR YESTERDAY...

Wall St snaps 4-day advance after Bernanke comments

http://news.yahoo.com/stock-index-futures-point-firmer-start-101644225.html

U.S. stocks slipped on Wednesday, snapping a four-day winning streak after comments from U.S. Federal Reserve Chairman Ben Bernanke disappointed investors hoping for a strong signal of more stimulus.

The Fed chairman's comments drove the dollar <.DXY> up 0.7 percent against a basket of major currencies and sent materials lower. Gold fell 5 percent in late trading. The S&P Materials Index <.GSPM> lost 1.7 percent, making it the S&P 500's worst-performing sector.

Bernanke offered a tempered view of the U.S. economy, pouring cold water on the notion that recent upbeat signs herald a stronger recovery. But he gave no hint of new asset purchases, which the Fed has used in recent years to boost growth...Reports suggesting more improvement in the economy curbed the day's losses, however. The Nasdaq briefly topped 3,000 for the first time since mid-December 2000....

[Demeter]

12. Athens is set to back health cuts

The Greek government faces a second vote on health reforms as it races to meet deadlines set by lenders for launching €130bn second bail-out

Read more >>
http://link.ft.com/r/6NPSBB/DW1YSG/4VXHZ/PFBRF4/WTW4Q7/28/t?a1=2012&a2=3&a3=1

[Demeter]

13. Wall Street cash bonuses fell 14% last year

Decline led by weak performances in investment banking and a shift towards deferred compensation as an element of pay

Read more >>
http://link.ft.com/r/G8OTZZ/2OE22C/06MUC/087B74/SP7ZXQ/JY/t?a1=2012&a2=3&a3=1

[Po_d Mainiac]

22. the poor things

http://www.bloomberg.com/news/2012-02-29/wall-street-bonus-withdrawal-means-trading-aspen-for-cheap-chex.html

a couple candidates for the 2012 DBOYA

[TalkingDog]

36. Oh, the humanity.

http://billionairecharity.wordpress.com/2012/02/29/wall-st-bonus-drop-means-trading-aspen-for-discount-cereal/

“People who don’t have money don’t understand the stress,” said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. “Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”

[Demeter]

41. Unbelievable Stress of Making "Only" $200,000 After Taxes

http://globaleconomicanalysis.blogspot.com/2012/03/unbelievable-stress-of-making-only.html

People who have nothing to eat, no job, and are about to be tossed out of their homes in foreclosure, really do not know what stress is. To fully appreciate stress, please consider the sorry "plights" of Andrew Schiff, marketing director for Euro Pacific Capital, Daniel Arbeeny, a Wall Street headhunter, and hedge-fund manager Richard Scheiner. Bloomberg describes the out-and-out horror stories of all three in Wall Street Bonus Withdrawal Means Trading Aspen for Coupons

Andrew Schiff said the $350,000 he earns, enough to put him in the country’s top 1 percent by income, doesn’t cover his family’s private-school tuition, a Kent, Connecticut, summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex.

“People who don’t have money don’t understand the stress,” said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. “Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”

Wall Street’s cash bonus pool fell by 14 percent last year to $19.7 billion, the lowest since 2008, according to projections by New York state Comptroller Thomas DiNapoli.

“It’s a disaster,” said Ilana Weinstein, chief executive officer of New York-based search firm IDW Group LLC. “The entire construct of compensation has changed.”

Wall Street headhunter Daniel Arbeeny said his “income has gone down tremendously.” On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.

$17,000 on Dogs

Richard Scheiner, 58, a real-estate investor and hedge-fund manager, said most people on Wall Street don’t save.

Scheiner said he spends about $500 a month to park one of his two Audis in a garage and at least $7,500 a year each for memberships at the Trump National Golf Club in Westchester and a gun club in upstate New York. A labradoodle named Zelda and a rescued bichon frise, Duke, cost $17,000 a year, including food, health care, boarding and a daily dog-walker who charges $17 each per outing, he said.

He described a feeling of “malaise” and a “paralysis that does not allow one to believe that generally things are going to get better,” listing geopolitical hot spots such as Iran and low interest rates that have been “artificially manipulated” by the Federal Reserve.

Poly Prep

The malaise is shared by Schiff, the New York-based marketing director for Euro Pacific Capital, where his brother is CEO. His family rents the lower duplex of a brownstone in Cobble Hill, where his two children share a room. His 10-year- old daughter is a student at $32,000-a-year Poly Prep Country Day School in Brooklyn. His son, 7, will apply in a few years.

“I can’t imagine what I’m going to do,” Schiff said. “I’m crammed into 1,200 square feet. I don’t have a dishwasher. We do all our dishes by hand.”

He wants 1,800 square feet -- “a room for each kid, three bedrooms, maybe four,” he said. “Imagine four bedrooms. You have the luxury of a guest room, how crazy is that?”

Summer Rentals

The family rents a three-bedroom summer house in Connecticut and will go there again this year for one month instead of four. Schiff said he brings home less than $200,000 after taxes, health-insurance and 401(k) contributions.

“I wouldn’t want to whine,” Schiff said. “All I want is the stuff that I always thought, growing up, that successful parents had.”

Imagine the Stress

Imagine the stress of renting a three-bedroom summer home for only one month instead of four.
Imagine the stress of only making $350,000 pre-tax
Imagine the stress of making a mere $200,000 after tax and IRA contributions, and having to wash dishes by hand
Imagine the stress of being able to send your kids to the $32,000-a-year for the Poly Prep Country Day School in Brooklyn

Imagine the stress knowing full well that none of the above is enough, yet not being able to whine about it.

“I wouldn’t want to whine,” Schiff said. “All I want is the stuff that I always thought, growing up, that successful parents had.”

This is more than nauseating, so if you need to excuse yourself to take care of matters, please do so now.

[girl gone mad]

62. Can we start a collection fund for these guys?

Having to cancel an Aspen ski trip can be so devastating to one's psyche. A Wall Street maven might never recover his full 'Master of the Universe' mentality if he's forced to go without even common luxuries. The downward spiral begins. Who knows how long it will be before stealing candy from a baby loses its thrill as the pangs of a conscience start to creep in. Quelle Horreur! By god, we can't stand by and allow this to happen.

[Demeter]

63. I can, easily

In fact, I'll work night and day to make it happen.

[Demeter]

14. Rothschild’s Attara to liquidate operations

The hedge fund founded by Nat Rothschild is shutting as a result of adverse trading conditions and difficulty raising money from investors

Read more >>
http://link.ft.com/r/G8OTZZ/2OE22C/06MUC/087B74/KQ682B/JY/t?a1=2012&a2=3&a3=1

[Demeter]

15. Blackstone founder tops private equity pay league

Steven Schwarzman took home $213.5m in pay and dividends in 2011, a third more than the year before

Read more >>
http://link.ft.com/r/G8OTZZ/2OE22C/06MUC/087B74/MS0OZ4/JY/t?a1=2012&a2=3&a3=1

[Demeter]

16. RECKONING TIME! S&P Cuts Greece To Selective Default, Cites Collective-Action Clauses

http://online.wsj.com/article/BT-CO-20120227-715442.html?mod=dist_smartbrief

--Greece becomes first euro-zone country to be rated in default

--Collective-action clauses cited as a factor in downgrade

--S&P expects to rate new bonds triple-C

NEW YORK (Dow Jones)--Greece became the first euro-zone member to officially be rated in default Monday, 13 years after the single European currency was adopted in a program that was expected to strengthen the European Union.

Standard & Poor's on Monday cut Greece's long-term credit rating to selective default from double-CC. The move was expected, as S&P said earlier this month it would consider Greece in default if it retroactively added so-called collective-action clauses...

Greece In Selective Default, S&P Says

http://www.forbes.com/sites/afontevecchia/2012/02/27/greece-in-selective-default-sp-says/

Greece’s credit rating was cut to selective default by Standard & Poor’s after the bell on Monday, reflecting the implementation of collective action clauses (CACs) on its debt. Greece is in the middle of one of the largest sovereign debt restructurings ever and needs to secure significant private sector participation rate; CACs are designed to forcibly increase that rate.

According to S&P, the Greek government retroactively inserted CACs into the documentation of certain series of its sovereign debt on February 23, two days after the Troika agreed on the terms for a second bailout package. This retroactive implementation substantially changed the terms of the deal and diminished investors’ bargaining power in the face of a restructuring, causing the downgrade, S&P said.

Greece needs to fulfill certain conditions in order to receive the next tranche of money and avoid a disorderly default. Among those is the successful implementation of the so-called PSI (private sector involvement) deal, which is supposed to be voluntary. In practice, Greece is executing a bond restructuring that will see bondholders take an approximately 70% haircut on the net present value of their bonds while the average maturity will be significantly extended, reducing shorter-term funding requirements.

For the PSI to succeed, the Troika (made up by the EU Commission, the ECB, and the IMF) is expecting Greece to secure the participation of 95% of private bondholders. Experts at Barclays believe Greece could come short, and thus would use retroactive CACs that could require a 66% participation rate to force all bondholders to take the deal....“In our opinion, Greece’s retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring,” read S&P’s post-market release....MORE

[Demeter]

17. CALLING ALL WEASELS! ISDA to discuss whether Greek debt swap a "credit event"

http://www.reuters.com/article/2012/02/28/greece-isda-cds-idUSL2E8DSEGX20120228

The International Swaps and Derivatives Association, the arbiter of rules governing the sale and use of credit default swaps, said on Tuesday it will discuss whether Greece's debt swap should be considered a "credit event." ISDA said its European Determinations Committee will hold a conference call at 11 a.m. GMT (6 a.m. EST) on Thursday, March 1 "to determine whether a credit event has occurred."

One of the major concerns about Greece's debt restructuring was whether the hard-fought agreement with private debt holders would give Greek sovereign credit default swap investors a justification for demanding payment on the protection they bought. If the committee determines a credit event has occurred, it could lead to a payout on outstanding Greek CDS contracts following an auction process that can take a week or more to complete. Credit default swaps provide protection for an investor who holds an underlying security that suffers from a default or restructuring.

According to data from the Depository Trust and Clearing Corporation, a U.S. clearing house that tracks CDS contracts and other instruments, the maximum amount of money to be paid out on Greek CDS contracts is approximately $3.2 billion. This is referred to as the notional value. However, the likely amount paid out will be 73 to 74 percent of that, corresponding to the real loss on the face value of the bonds that came from the debt swap agreement settled last week. If that is the case, the actual payout would be in the area of $2.36 billion...DTCC's data, as of Feb. 17, indicates there are 4,263 actively traded contracts on Greek sovereign debt, which add up to a gross value of $69.9 billion. When the contracts are offset against each other, the notional value is reduced to the $3.2 billion....

[Demeter]

18. Support Is Offered to Greek Banks After Latest Downgrade

http://www.nytimes.com/2012/02/29/business/global/support-is-offered-to-greek-banks-after-latest-downgrade.html?_r=1

The European Central Bank acted on Tuesday to prevent a potential collapse of the Greek banking system after the country was declared by a large ratings agency to be in “selective default,” making Greek bonds ineligible as collateral for loans from the central bank. Standard & Poor’s issued the most recent downgrade late Monday because of the debt-reduction deal reached last week with Greece’s private sector creditors. Greece will pay back less than half the face value of its bonds under the agreement, which is ostensibly voluntary.

The central bank did not specifically mention the S.& P. downgrade on Tuesday, but it said in a news release that the agreement with creditors meant that Greek bonds could no longer be used as collateral to obtain cash from the central bank...But the European Central Bank said banks could continue to draw cash from national central banks temporarily under a separate program known as emergency liquidity assistance. The central bank said it would accept Greek bonds as collateral again in mid-March, when European governments will guarantee part of the value of Greek bonds under a new program.

In Athens, the Greek Finance Ministry said in a news release that “the downgrade has no impact in the Greek banking sector” because the Bank of Greece and the European bailout fund would step into the breach. Since the beginning of the financial crisis in 2008, the European Central Bank has been allowing banks in the euro zone to borrow as much money as they wanted at the benchmark interest rate, which stands at 1 percent. But banks must post collateral. Banks typically have large holdings of their own country’s debt, which they use as collateral. That makes them highly vulnerable if the debt is declared to be in default.

Greek banks would probably collapse if they could not use their holdings of domestic bonds as collateral to obtain cash, and banks in some other countries might also run into problems. If enough investors take part in the planned bond exchange, ratings agencies are expected to remove the “selective default” rating from Greece. They would then become eligible as collateral again, albeit at a steep discount....

[Po_d Mainiac]

24. The weasel list

EMEA Region

Voting Dealers
Bank of America / Merrill Lynch
Barclays
BNP Paribas
Credit Suisse
Deutsche Bank
Goldman Sachs
JPMorgan Chase Bank, N.A.
Morgan Stanley
Société Générale
UBS

Consultative Dealers
Citibank
The Royal Bank of Scotland

Voting Non-dealers
BlueMountain Capital (Second Term Non-dealer)
Citadel LLC(First Term Non-dealer)
D.E. Shaw Group (First Term Non-dealer)
Elliott Management Corporation (Third Term Non-dealer)
Pacific Investment Management Co., LLC (Second Term Non-dealer)

[FarCenter]

35. Greece Default SWAPS Don’t Have to Pay: ISDA

Default insurance on Greek debt won’t be paid out, the International Swaps & Derivatives Association said after it was asked to rule whether part of the nation’s $170 billion bailout was a credit event.

The group said the European Central Bank’s exchange of Greek bonds for new securities exempt from losses being imposed on private investors hasn’t triggered $3.25 billion of outstanding credit-default swaps. ISDA’s determinations committee, including JPMorgan Chase & Co. and Pacific Investment Management Co., said the switch didn’t constitute subordination, one of the criteria for a payout under a restructuring event.

http://www.bloomberg.com/news/2012-03-01/greek-default-insurance-doesn-t-need-to-pay-out-after-bailout-isda-says.html

[Demeter]

40. Foxes, Hen Houses, Fait Accompli

[FarCenter]

42. It's all bits on disks; reality is whatever they say it is.

[xchrom]

19. German Businesses Unwelcome in Postwar Libya

http://www.spiegel.de/international/world/0,1518,818336,00.html

Henning Schnaars, who works for a shipping company in the northern German port city of Bremen, is standing with his two trolley cases on the side of a road in Libya. He has just been handed his first setback.

Schnaars stands with his back to the Benghazi airport, looking at a billboard. It depicts Libyan revolutionaries with outstretched arms and making the V-for-victory sign with their fingers. At the bottom of the billboard are the words, written in capital letters, "Merci La France."

"Oh, well," Schnaars says. At the moment, the French aren't exactly his favorite people.

Schnaars landed in Benghazi an hour ago and has just finished meeting with the airport's new director. It was a short conversation, with not even enough time for the coffee he had expected to be served. The director, who returned to Libya from exile during the civil war, had cut the meeting short after apologizing profusely, saying that he unfortunately had another appointment.

[Demeter]

20. Two-thirds of economists say weather juicing data: $12 billion less in utilities bills

http://www.marketwatch.com/story/two-thirds-of-economists-say-weather-juicing-data-2012-03-01?siteid=YAHOOB

Two-thirds of Wall Street economists say abnormally warm weather is making the U.S. economy look stronger than fundamentals would suggest, according to a survey released Thursday. In a special question to the Blue Chip Financial Forecasts, 66% of those polled responded yes to a question asking “has unseasonably warm and dry winter weather in the U.S. led to an overstatement of the economy’s underlying strength in recent months.” That weather has had an impact on recent economic data is pretty clear after the fourth-warmest January on record in the U.S. Like a crocus in the snow, economic data has bloomed in the winter.

For example, utilities output slumped 7.5% on a seasonally-adjusted year-on-year basis in January as consumers didn’t need to heat their homes as much. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, says utilities usage is down about 10% on an annualized basis this quarter after a 12% drop last quarter. “We would not be surprised to see utility consumption down another $12 billion this quarter or possibly more. No doubt, this will provide a substantial buffer to rising gasoline prices, which is why we do not want to become too pessimistic on first half consumer spending,” he said in a note to clients.

And indeed, the available evidence is that spending has held up even with gasoline prices around $4 a gallon. Though slowing, the three-month average of retail sales in January ran over 6% above the prior-year period...

[Demeter]

25. Bending the Tax Code, and Lifting A.I.G.’s Profit

http://dealbook.nytimes.com/2012/02/27/bending-the-tax-code-and-lifting-a-i-g-s-profit/

Last week, the American International Group reported a whopping $19.8 billion profit for its fourth quarter. It was a quite a feat for a company that was on its death bed just a little over three years ago, so sick that it needed a huge taxpayer bailout. But if you dug into the numbers, it quickly became clear that $17.7 billion of that profit was pure fantasy — a tax benefit, er, gift, from the United States government. The company made only $1.6 billion during the quarter from actual operations. Yet A.I.G. not only received a tax benefit, it is unlikely to pay a cent of taxes this year, nor by some estimates, for at least a decade. The tax benefit is notable for more than simply its size. It is the result of a rule that the Treasury unilaterally bent for A.I.G. and several other hobbled companies in 2008 that has largely been overlooked. This rule-twisting could deprive the government of tens of billions of dollars, assuming the firm remains profitable. The tax dodge — and let’s be honest, that’s what it is — also will most likely help goose the bonuses of A.I.G.’s employees, some of whom helped create many of the problems that led to its role in the financial crisis.

“We suggest that Congress give its members standing to challenge such manipulation in court,” J. Mark Ramseyer, a Harvard professor, and Eric B. Rasmusen, a professor at Indiana University, wrote in a paper last year. The paper provocatively asked: “Can the Treasury Exempt Its Own Companies From Tax?” (While the paper addressed A.I.G, it focused on the tax treatment bestowed on another bailout recipient, General Motors. Citigroup, Fannie Mae and Freddie Mac also received similar treatment.)

Here’s the back story: A.I.G.’s tax benefit comes in large part from its immense “net operating losses” during its depths of despair in 2008 before its rescue. The government had to dump $182 billion into the company after it was crippled by bad bets it had made insuring mortgage-backed securities. The tax benefit comes in the form of something called net operating losses — NOLs in Wall Street parlance — that could be worth more than $25 billion, possibly more. Those losses can be very valuable, in part because companies can spread them over many years to lower or wipe out their income tax bills. However, according to longstanding tax laws, if a company files for bankruptcy or is taken over, it loses the ability to use its net operating losses. A.I.G. would fit that profile perfectly: on the verge of bankruptcy, the federal government took control of A.I.G., exchanging its bailout billions for shares in the company. The government — taxpayers — still own 77 percent of the company, down from 92 percent three years ago...Still, the Treasury issued “notices” exempting A.I.G. from losing its right to make use of its net operating losses. In total, the insurer estimated that those losses were worth $26.2 billion as of 2009, and it claimed almost $9 billion in other “unrealized loss on investments.”

Analysts at Bank of America and JPMorgan Chase last year estimated that the tax benefits from the losses propped up A.I.G. stock by $5 to $6 a share. Its shares closed at $28.66 on Monday, just shy of the $29 mark that the government says it needs to sell its shares to break even.A.I.G. believes that these losses are so valuable that it has a poison pill to bar a corporate takeover. All of this brings us to the inevitable questions: How did this happen? Why would Treasury exempt A.I.G. from the law? And if taxpayers own a majority of A.I.G., aren’t we the beneficiaries of the rule-bending? A Treasury spokeswoman declined to comment, as did a spokesman for A.I.G. However, senior Treasury officials said privately that they had exempted A.I.G. because they did not consider the rescue to be a traditional takeover. The original law preventing companies from using the losses after a takeover were intended to prevent corporations from buying failing companies with lots of losses simply for the tax benefits. Moreover, the officials said A.I.G.’s tax benefit would help taxpayers because it would raise the insurer’s share price. That may be true, but that assumes that the government is able to sell its shares and exit its investment. That’s still a big “if.” (Though I do bet it will eventually happen.)...

[Demeter]

27. Judge says to rule quickly on CFTC limit rules

http://www.reuters.com/article/2012/02/27/us-financial-regulation-cftc-idUSTRE81Q1KU20120227

A U.S. judge said on Monday he planned to rule quickly on whether to temporarily block controversial new regulations that were adopted by the Obama administration as part of an effort to reduce speculation in the commodities markets. The U.S. Commodity Futures Trading Commission and groups representing the financial industry clashed in federal court over whether the agency overstepped its bounds by imposing restrictions last year to limit the number of contracts traders can hold in 28-commodities, including oil, coffee and gold.

A lawyer for the Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association told the court the regulations would force their members to drastically alter their businesses, cost them tens of millions of dollars, and send customers fleeing. "It's indisputable that these long-term costs will occur," said Eugene Scalia, who argued on behalf of the financial industry. "Customers once lost can't be assumed to come back...That's a very significant cost of this rule," he said. Scalia noted that the CFTC's cost estimate of $50 million to comply with the rule each year was "a bit low" and warned that firms will likely have to shed business to meet the new regulations.

Judge Robert Wilkins of the U.S. District Court for the District of Columbia spent more than an hour hearing arguments over a motion for a preliminary injunction sought by the financial industry, which argued the regulations limiting the number of commodity futures and swaps contracts a trader could hold were not sufficiently justified...The judge declined to rule directly from the bench on whether to grant an injunction while he considers the merits of the regulations, but said that he "will try to get a ruling out to you as quickly as possible." A ruling could derail the CFTC's plans to gradually implement position limits, which it passed last October. Jonathan Marcus, who argued for the CFTC, said the agency could implement limits for the spot month by June, but the regulator must first finish its swaps definition before it can do so. The final limits for all contract months can only be set a few months after the agency has collected a year's worth of swaps data, a process that is expected to end in August.

The CFTC pinned its support for the new regulations on a 1981 law as well as a requirement from Congress under the 2010 Dodd-Frank law that the agency has argued mandated an expeditious implementation of position limits. "I think that would frustrate Congress' intent. Clearly Congress wanted limits," said Marcus. He told the court the groups failed to meet the threshold for a preliminary injunction saying "there is no way those numbers rise to irreparable harm." MORE

[Demeter]

28. Speculation Limits: Judge Says He’s ‘Skeptical’ of CFTC Rule

http://www.bloomberg.com/news/2012-02-27/cftc-speculation-rule-limits-are-called-skeptical-by-u-s-judge.html

U.S. Commodity Futures Trading Commission arguments in support of the agency’s limits on speculation are being questioned by the judge presiding over a challenge to the rule by two Wall Street groups. “I’m kind of skeptical about their position of Congress mandating position limits,” U.S. District Judge Robert Wilkins said during a hearing in Washington today.

The International Swaps and Derivatives Association Inc. and the Securities Industry and Financial Markets Association urged Wilkins to put the rule on hold while he considers their legal challenge. They argued financial firms including Barclays Plc and JPMorgan Chase & Co. (JPM) are losing millions of dollars preparing for a regulation that is likely to be found to overturned. The groups argue that the CFTC never studied whether the regulation was “necessary and appropriate” or quantified the costs tied to implementing the rule.

“This is not a country where we look at tens of millions of dollars in direct costs and the entire restructuring of an industry and say that’s not irreparable harm,” Eugene Scalia, a lawyer for the groups, told the judge.

The groups, in one of the financial industry’s highest- profile efforts to weaken 2010’s Dodd-Frank law, filed lawsuits in two federal courts in Washington in December challenging the rule setting caps on the number of contracts a trader can have....The rule is among the most controversial provisions of Dodd-Frank, and spurred more than 13,000 public comments to the CFTC from supporters including Delta Air Lines Inc. (DAL) and opponents such as Barclays. The agency voted 3-2 at an Oct. 18 meeting to approve the final regulation, with Jill E. Sommers and Scott O’Malia, both Republicans, voting in opposition.

[xchrom]

29. China locked out of Russia's far east

http://www.atimes.com/atimes/Central_Asia/NC02Ag01.html

Since the incorporation of the far east into the Russian empire in the 17th century, Russia has strived to keep the area under its rule. This is why Moscow sent not just millions of convicts there but also considerable funds to build towns, factories and roads.

After the end of the Soviet regime, nothing emerged in its place. The economy in the far east has declined and Moscow worries it will lose its influence there.

It plans to avoid this by luring foreign investment to the vast region, which located between Lake Baikal in Eastern Siberia and the Pacific Ocean includes the Far Eastern Federal District - a huge area covering 6,215,900 square kilometers.

China seemed to be the logical source. A few years ago, there



was a plan to rent part of Vladivostok to China in exchange for funds. However, that led to a public uproar and the plan was quickly shelved. Another plan was for China to have a lease to exploit the far east and Siberia's mineral riches, with the use of Chinese labor. One of the provisions of the treaty implied that Chinese workers would return to China at the end of the workday. Clearly utopian, it was also consigned to the deep freeze.

Finally, a recent plan was made to lease huge territories of the far east for farming. With its shortage of arable land and huge surplus labor force China should have been the prime candidate. But China was excluded. One could assume that Moscow is not happy with a Chinese presence due to an apparent dislike of Asians, or actually of any non-Europeans.

[Demeter]

32. FBI Fraud Probes Increase as Insider Trading ‘Widespread’

http://www.bloomberg.com/news/2012-02-27/fbi-securities-probes-increase-as-insider-trading-widespread-.html

Open FBI investigations into corporate, securities and commodity fraud increased 8.8 percent as of Sept. 30, compared to a year earlier, the agency said in a report. The Federal Bureau of Investigation had 2,572 such cases open at the end of last fiscal year, according to the report released today. That’s up from 2,364 on Sept. 30, 2010. The FBI report included data on financial crime probes during the last two fiscal years, including investigations related to the economic downturn that followed the 2008 market collapse.

There was an increase in insider trading probes, which are a “widespread problem” that has plagued the “fair and orderly operation” of securities markets, according to the report. “Insider trading has been a continuous threat to the fair and orderly operation of the U.S. financial markets and has robbed the investing public of some degree of trust that markets operate fairly,” according to the report.

The FBI is making greater use of wiretaps and undercover operations, which may provide the “best evidence” to prosecute financial crimes, said Timothy Gallagher, chief of the FBI’s financial crimes section, at a briefing in Washington. “You don’t want to sit in a room with a hundred filing cabinets,” Gallagher said. “You want to get people on tape talking about their crimes.” The FBI used wiretaps or undercover operations in more than 40 corporate, securities and commodity cases in 2011, compared to less than 20 in 2008.

...The number of pending mortgage fraud cases declined 14 percent to 2,691 in 2011 from the previous fiscal year. Fraud targeting distressed homeowners has displaced loan originations as the biggest source of fraud in many FBI field offices, the report said.

The FBI also had 2,690 pending health care fraud investigations at the end of fiscal 2011, up from 2,573 in 2010.

***********************************************************************

The FBI also released a public service announcement featuring actor Michael Douglas reprising his role from the 1987 movie, “Wall Street.” “The movie was fiction but the problem is real,” Douglas said in the 57-second ad, in which he asks the public to report insider trading and other securities crime to their local FBI field office.

[xchrom]

33. Me, My Money, and My Devices

http://www.technologyreview.com/business/39820/?p1=featured



Money is a common language we all agree to use to convey the of value of things. Since the Chinese starting using cowrie shells as an early form of currency more than 3,000 years ago, societies everywhere have been looking for forms of money that are portable, divisible, durable, and reasonably stable in supply. Over time, money has become less physical and more symbolic: tangible commodities such as gold have given way to tokenized paper and now to ephemeral digits in a computer.

The proliferation of digital communication technologies means we can now marshal our money with remarkable speed and ease—checking balances from a mobile phone, making a payment pretty much anywhere merely by showing a thin slab of plastic, buying and selling stock over the Internet. Yet beyond the transactional speed and convenience, our concept of money and the ways we handle it have not been radically transformed.

Personal Internet banking is convenient, for example, but the services you find online are the same ones that were available when you used to walk over to the branch. You still have to choose among prepackaged accounts. If you move money from your checking to your savings account, the bank remains oblivious to whether you are doing so to put aside money for your kids' schooling or for the family holiday. You can buy a certificate of deposit, but you can't choose the maturity date: why can't you set it to come due the same day you plan to leave on an expensive trip? The banks' failure of imagination is exposing them to disruptive entry by players specializing in customer management and user interface design. Examples include Mint.com, which consolidates all of a user's financial accounts and information in one place, and Simple, an alternative banking service that promises fewer fees and better customer service.

Mobile payments, meanwhile, still seem to many an unnecessary complication. But the appeal of being in constant contact with your money—and information about your money—will prove irresistible. Back in the days when electronic devices were expensive, someone had the clever idea of giving dumb plastic cards to all of us and the more expensive card readers only to merchants. Now that we have a virtual card and card reader right in our pocket in the form of a smart phone, who will be content to carry a credit card we cannot ourselves read?

[xchrom]

34. breitbart is dead

i find that i feel nothing at all about it.

[Tansy_Gold]

58. I feel about the way I feel

when someone finally shuts up their nasty yapping little dog.

[Demeter]

59. What are you talking about?

(just kidding) I've read the name, but not seen or heard anything about him until now...guess I didn't miss anything.

[Demeter]

37. Saudi investors warm to Goldman sukuk

http://www.reuters.com/article/2012/02/20/goldmansachs-sukuk-idUSL5E8DK5XX20120220

Saudi investors are warming to a sale of $2 billion of Islamic bonds by U.S. investment bank Goldman Sachs, banking sources told Reuters, lending support to a sukuk which has run into controversy over whether it complied with Islamic principles. The bank has also been criticised for naming at least three Islamic scholars as potential advisers on the sukuk even though none had seen the prospectus.

"Despite all the criticism, GS will have no difficulty selling the sukuk. They are in talks with Saudi investors and may do a private placement," a senior Gulf banker involved in the Islamic finance industry told Reuters on Monday. He declined to be named because of the commercial sensitivity of the subject. Another Gulf banker, who advises wealthy Saudi individual investors, said one of his clients had been approached. Saudi investors were prepared to buy the sukuk, the banker said.

Goldman Sachs in London said it had no comment. Goldman announced last October it would issue as much as $2 billion through sukuk, making it one of the first top Western banks to raise money in that way. Islamic finance is based on principles which ban the use of interest and pure monetary speculation. Although the sums involved are tiny in comparison to conventional international bond issuance, sukuk has been a relatively stable source of funding during the global financial crisis because of its conservative investor base. Goldman has said its sukuk could be denominated in United Arab Emirates dirhams, dollars, Saudi riyals or Singapore dollars. It has not disclosed a time frame for issuance and says Islamic scholars have given the programme sufficient certification to comply with sharia principles.

The first Gulf banker said Goldman believed enough wealthy individual investors in Saudi Arabia were prepared to accept the certification, despite the misgivings of some other investors. Controversy over the permissibility of financial instruments has characterised Islamic finance since it was born in its modern form in the 1970s. A range of scholars and industry bodies set product standards which are sometimes contradictory and act as guidelines rather than firm, enforceable rules. A private placement would allow Goldman to deal directly with a small number of investors, rather than offering the sukuk to the Islamic investment community at large.

[xchrom]

43. Explainer: Why Do We Need a Volcker Rule?

http://www.thenation.com/article/166500/explainer-why-do-we-need-volcker-rule

As the provisions of the Dodd-Frank financial regulatory law begin to go into effect, federal oversight agencies have issued the first draft of the “Volcker Rule.” Named for former Federal Reserve chairman Paul Volcker, the Volcker Rule says that commercial banks shouldn’t be able to make risky bets with federally insured deposits. The Roosevelt Institute’s Mike Konczal talked to The Nation about what the Volcker Rule is and why it’s necessary. Here’s Mike:
 
The Volcker Rule is best understood as an attempt to update the New Deal–era Glass-Steagall for the twenty-first century. Glass-Steagall called for a complete separation of investment banking—the activities of underwriting and dealing with stocks and debt—from deposit taking. Consistently weakened from the 1980s onward, Glass-Steagall was fully repealed in the late 1990s to allow Citicorp to merge with an insurance company.

The Volcker Rule seeks to keep activities essential to banking within a safety net, while excluding other, riskier, activities from this safety net. There are a variety of special regulations, and protections, banks get, ranging from federal deposit insurance (known as FDIC) to access to the Federal Reserve’s discount borrowing window, designed to keep the system working through panics. Banks currently engage in a wide variety of non-banking activities with safety net protection. For example, they speculate in currencies and run hedge funds and proprietary trading desks for their own benefit. These activities made the financial crisis worse; one estimate has the major Wall Street firms suffering $230 billion dollars in prop trading losses a year into the crisis. And right now, these activities are subsidized by access to the banking safety net.

The New York Times says, “A main element to the plan would bar banks from making proprietary trades—using their own money to place directional market bets that are unrelated to serving customers.” Can you break this down for us?

Proprietary, or “prop,” trading are directional bets made for a firms’ own accounts, with their own resources, for their own gain. This is different from trades done for clients on commission. Under a strong Volcker Rule, any securities market activities would have to be intended to serve customers—not market-making bets for the bank’s own profits. Prop trading is very common among the largest financial institutions, many of which were bailed out during the 2008 financial crisis, and among the firms that are targeted by Dodd-Frank. These large, systemically risky firms are also a big presence in hedge funds and private equity operations. Bank-affiliated funds were responsible for over a quarter of private equity investments over the past thirty years. Bear Sterns ran two hedge funds. Its collapse, the first major collapse of the financial crisis, resulted in part from those two hedge funds experiencing spectacular losses over a short time window.

[Demeter]

44. Larry Summers For World Bank: So Much Wrong, So Little Time

http://www.huffingtonpost.com/mark-gongloff/post_3060_b_1310577.html

What exactly does Larry Summers have to do to stop being offered important jobs? Hold up a liquor store? Kill a guy?

....Even if you give Summers a pass on his bad advice to the president, there are plenty of other reasons to oppose his nomination to the World Bank. His interpersonal skills fall somewhere on the scale between honey badger and Yosemite Sam with a urinary tract infection. He has a paleolithic attitude about women. As a World Bank economist, he once signed off on a memo that suggested, apparently in a Swiftian way, dumping toxic waste in poor countries.

And his aversion to floating a bigger stimulus package fits into a pattern of behavior that stretches back to his time in the Clinton administration, when he warned against going too far with financial regulation.

He supported the end of the Glass-Steagall act, which had kept commercial and investment banks successfully separated for decades after the Great Depression. In fact, he still supports the idea of super-size, do-everything banks, he recently told the BBC's Channel 4....

...by rewarding Summers with a plum posting at the World Bank, President Obama would be sending a signal that the Larry Summers Way -- of thinking small despite your apparent brilliance, of not trying to upset the powers that be, whether that be the banking industry or the bond market, or the president -- is a fine way to run an organization. That would demonstrate either that President Obama has not learned much at all from the past decade -- or that he is fully on board with the Larry Summers Way. Neither message would be very encouraging.

[Demeter]

45. MORE THAN YOU EVER WANTED TO KNOW ABOUT: LTRO II

http://www.macrobusiness.com.au/2012/03/ltro-ii/

...Interestingly, the number of institutions using the facility was up from 523 to 800. Of course, as with stage 1, the question is what the banks will do with the additional liquidity, and what effect it will have on the markets and the real economies of Europe. If stage 1 is anything to go by then we will see a broad rise in all markets, but a deleveraging in the real economy. However, it must be noted that this was always going to be at least a two stage operation and therefore the banks always knew they had a second bite of the cherry coming. Given that it is not clear whether there will be another round of these operations, the behaviour of these institutions may change in response to this second round of money. Obviously that behaviour will flow on to sovereigns, and one of my outstanding questions of these operations is: What happens after February given that banks now have less incentive to purchase sovereign paper over other assets?

What is clear is that the European banks still have a long way to go in order to meet their capital requirements under Basel III, which means we are likely to see a continuation of the “credit crunch” dynamics in the periphery, and therefore a continuation of the financial stress in the European system.

As I mentioned again yesterday, I am concerned that Portugal is well on the way to becoming the second Greece and action in the bond markets overnight suggests concern is spreading about the long term viability of the country.


....We already know that Ireland is to hold a referendum on the fiscal compact, but that is not the only push back occurring. It also seems, I assume under some steerage from the likes of Mario Monti, that Spain is joining in:

A push by Spain for more leeway in meeting its 2012 budget deficit has opened a rift between the European Commission and several EU member states, with the Commission adamant that countries’ targets should not be relaxed, senior EU officials said.

Spanish Prime Minister Mariano Rajoy is hoping major EU states will back him at a summit on Thursday and send a signal that Madrid’s target of cutting its deficit to 4.4 percent of GDP this year should not be binding.

Spain said this week its 2011 budget deficit was 8.5 percent of GDP, substantially higher than previously expected, making the 2012 target all the harder to achieve.

But the Commission, which is responsible for overseeing euro zone budgets, is not willing to show flexibility, at least until Spain explains why the 2011 deficit was so much higher than expected and puts forward new austerity measures.

“We are not talking about giving more flexibility to any member state when it comes to fulfilling commitments,” Commission spokesman Olivier Bailly reiterated on Tuesday.

But two senior officials told Reuters that Germany, France, Britain and a handful of other countries were supporting Rajoy’s push for a softening of the 2012 target.

[xchrom]

47. Global Manufacturing Sees Uneven Recovery

http://www.bloomberg.com/news/2012-03-01/u-s-manufacturing-expands-at-a-slower-pace-as-ism-index-declines-to-52-4.html

he Institute for Supply Management’s factory index dropped to 52.4 from 54.1 in January, the Tempe, Arizona-based group’s report showed today. Readings above 50 signal growth. The median forecast of economists surveyed by Bloomberg News called for a gain to 54.5.

The figure is at odds with regional manufacturing data for the month, showing the factory expansion accelerated. While gains in auto sales and increased exports are contributing to growth in the industry, higher fuel costs and less inventory expansion may be limiting orders.

“With energy prices rising and the lift from inventories fading, there is a good chance growth will slow into midyear,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report.

The median estimate of economists was based on 79 projections in the Bloomberg survey. Estimates ranged from 52 to 56.

[xchrom]

48. Buffett Poised to Win Wager on America With Burlington

http://www.bloomberg.com/news/2012-03-01/buffett-poised-to-win-wager-on-america-with-burlington-freight.html

When Warren Buffett bought North America’s second-biggest railroad, he called it an “all-in wager” on the U.S. economy. It’s turning out to be a pretty good bet on the oil industry, too.

Burlington Northern Santa Fe’s track network puts it among the best situated of its peers to meet shipping demand for fracking sand, pipe and crude in the northern U.S. Bakken region, where oil production has more than tripled since 2008, according to data compiled by Bloomberg.

Gains in mineral and chemical carloads helped Burlington Northern pay a $1 billion distribution to Buffett’s Berkshire Hathaway Inc. (BRK/B) last month. The railroad is the busiest in the U.S. in 2012 by traffic, positioning it to build on a 16 percent jump in 2011 sales that helped narrow the revenue lead of Union Pacific (UNP) Corp., which lacks tracks into the Bakken area.

“It’s kind of like if somebody discovers gold in your backyard but not your neighbor’s,” said John Anderson, advisory director at Greenbriar Equity Group, a private-equity firm based in Rye, New York, focused on the transportation industry. “It’s just good luck.”

[Demeter]

51. Fed Writes Sweeping Rules From Behind Closed Doors (WHERE ELSE?)

http://online.wsj.com/article/SB10001424052970204059804577225122892450312.html

The Federal Reserve has operated almost entirely behind closed doors as it rewrites the rule book governing the U.S. financial system, a stark contrast with its push for transparency in its interest-rate policies and emergency-lending programs.

While many Americans may not realize it, the Fed has taken on a much larger regulatory role than at any time in history. Since the Dodd-Frank financial overhaul became law in July 2010, the Fed has held 47 separate votes on financial regulations, and scores more are coming. In the process it is reshaping the U.S. financial industry by directing banks on how much capital they must hold, what kind of trading they can engage in and what kind of fees they can charge retailers on debit-card transactions.

The Fed is making these sweeping changes—the most dramatic since the Great Depression—almost completely without public meetings. Rather than discussing rules and voting in public, as is done at other agencies with which the Fed often collaborates, Fed Chairman Ben Bernanke and the Fed's four other governors have held just two public meetings since July 2010. On 45 of 47 of the draft or final regulatory measures during that period, they have emailed their votes to the central bank's secretary.



The votes, in turn, weren't publicly disclosed until last week, after The Wall Street Journal requested the information for this article. On Feb. 14, for the first time, the Fed posted on its website the names of the Fed governors voting for or against each closed-door regulatory action on Dodd-Frank since July 2010, when that law was enacted...The Fed isn't breaking any laws by not having open meetings. But it is breaking from a long tradition of airing regulatory matters at open meetings. Bipartisan critics—including lawmakers and former regulators—say the Fed's cloistered approach deprives the public of insight into how rules are being written and makes it harder for Congress and others to hold them accountable for their decisions.

[Demeter]

52. WEB COMMENTARY

The New World Order is a global banking dictatorship. http://whatreallyhappened.com/content/fed-writes-sweeping-rules-behind-closed-doors

[Demeter]

53. Eurozone finance ministers delay release of €130bn Greek bail-out (OF COURSE!)

Eurozone finance ministers on Thursday approved a debt restructuring for Greece but failed to release all of the €130bn of bail-out funds for the country after concluding Athens had not completed all 38 “prior actions” required to receive the second rescue in two years from the European Union.

The minister's approved about €93bn for the private sector Greek debt restructuring but held up aid directly intended to go directly to the Greek government.

Read more >>
http://link.ft.com/r/FG6LAA/EXLQTZ/K91WR/4CW0V4/GDH6SI/RF/t?a1=2012&a2=3&a3=1

ALL THE MONEY FOR THE BANKS, NONE FOR THE PEOPLE

[xchrom]

56. Greece May Default on Gov’ts: Kirkegaard

http://www.bloomberg.com/news/2012-03-01/greece-may-default-on-governments-this-year-kirkegaard-says-tom-keene.html

Greece will probably default this year on European governments’ holdings of its sovereign debt, according to Jacob Kirkegaard of the Peterson Institute for International Economics.

The country published the formal offer last week for its agreement to exchange bonds for new securities, with private- sector investors taking a loss of 53.5 percent. While the European Central Bank won’t take direct losses from the swap agreement, the writedown may make it more politically feasible for governments to lose money on Greek debt, Kirkegaard said.

“The key thing about this is it’s a political issue, and therefore sequencing matters tremendously,” Kirkegaard, a research fellow at the Peterson Institute in Washington, said today in a radio interview on “Bloomberg Surveillance” with Ken Prewitt and Tom Keene. “It’s going to be essentially one government defaulting against the taxpayers of another.”

Default insurance on Greek debt won’t be paid out even after the nation negotiated the biggest sovereign-debt restructuring in history, the International Swaps & Derivatives Association ruled today.

[DemReadingDU]

57. Saudi Oil Pipelines Destroyed In Explosion, Sends Crude Soaring

3/1/12 Saudi Oil Pipelines Destroyed In Explosion, Sends Crude Soaring

Among the many factors responsible for the jump in WTI to just shy of $109 over the past hour, and Brent to new records in various currencies, is the following news reported so far only by Iranian PressTV: "An explosion has hit oil pipelines in the flashpoint Saudi Arabian city of Awamiyah in the kingdom’s oil-rich Eastern Province."

And some more from Arabian Digest:
Saudi Arabia's Eastern Revolution hits the oil sector: pipeline under fire

For the first time in decades, the Eastern Saudi Arabian volatile situation has reached the vital oil sector. A pipeline between Awamiya and Safwa has been reportedly targeted, and is under fire. Saudi Arabia's Shiite minority, mostly residing in the oil rich east, has been protesting for years against State sponsored discrimination. They are treated as second class citizens, denied public sector jobs, and vital development for their oil rich areas. Saudi Arabia's powerful Wahhabi religious establishment considers Shiites heretics, and constantly incites against them.

Security forces have killed two protesters in Awamiya, Eastern Saudi Arabia. They are launching a series of arrests and raids on houses, schools and mosques.
This is Awamiya this evening, protesters have blocked the Police road after arrests in the town.

couple pictures at link
http://www.zerohedge.com/news/saudi-oil-pipelines-destroyed-explosion-sends-crude-soaring


Oil is up $2.23 to $109.30

[Demeter]

60. Welp, there goes the budget

Right on schedule, too.

[xchrom]

61. +1