Posts Tagged ‘Merrill Lynch’

Bank of America Sets Up War Room, Hires Army of Lawyers

In Financial Markets, High Frequency Trading, International Econnomic Politics, Law & Regulations, National Economic Politics, Technology on 22.01.11 at 01:18

Wikileaks, and its founder Julian Assange, has certainly stirred up some murky waters releasing confidential documents and emails on government activities. Recently Assange stated that he has a large batch of confidential documents that could lead to problems for a major bank, and in at least one interview he has identified that bank to be Bank of America. And the bank are taking the possible threat serious – deadly serious! So does the US Securities and Exchange Commission.

“The nation’s largest bank has set up a war room and assembled a S.W.A.T.  team of lawyers.”

FOX Business Network

According to FOX Business, the largest US bank has set up a war room and assembled a S.W.A.T.  team of lawyers and company officials to deal with the matter if anything should arise. And now the US Securities and Exchange Commission (SEC) is focusing in on the case too.

The Securities and Exchange Commission is keeping a close eye on Bank of America’s (BAC) Wikileaks dilemma to determine whether anything that the info-leaking website might release should have already been turned over to regulators who have conducted numerous investigations into the bank’s activities, FOX Business Network has learned.

The same goes for WikiLeaks.

It is, in fact, illegal to withhold information about criminal activities.

See also: Wikileaks Obstruction of Justice?

If and when the document dump occurs, the SEC – Wall Street’s top cop –  will be examining the material to determine if Bank of America has failed to include the emails and other documents in demands for information the commission has made as part of its many investigations into BofA activities.

Bank of America has been the subject of several high-profile probes by the commission, including issues surrounding its Countrywide Financial subsidiary, and its ill-fated purchase of Merrill Lynch during the dark days of the financial crisis in 2008.

Countrywide, which was the largest issuer of so-called subprime mortgages, has been accused of issuing mortgages to people with little if any documentation of work history or  means to repay the loans.

Neither SEC’s spokesman or BofA’s spokesman had no immediate comment, FOX reports.

If Bank of America purposely failed to turn over documents involving an investigation, the bank could face possible criminal charges of obstructing justice.

But so far, BofA has said that despite all the talk about it being a target, it has no evidence that Assange’s organization has documents involving the bank.

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Bank of America vs. WikiLeaks, the inside story
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At The End of Another Decade

In Financial Engeneering, Financial Markets, Health and Environment, International Econnomic Politics, Law & Regulations, National Economic Politics, Philosophy, Quantitative Finance, Technology, Views, commentaries and opinions on 02.01.11 at 01:29

New Years Eve 2010 (around midnight): It’s not only another year, it’s also the beginning of a new decade. Looking back at the past 10 years, the stage is set for a mind-blowing decade of technological breakthroughs that have the potential to change or lives completely. unfortunately, we’re probably also in for a long period of financial instability and high levels of unemployment.

“It is possible that we are facing one of the most important decades in a very long time.”


I remember New Years eve of 2000; dot-com-mania, emerging markets,Y2K. However, I also remember 1990; deregulation, digital revolution and another collapse in our financial system. I think I’ve detected two major screw-ups over the last two decades.

I covered the stock market crash in 1987, as one of my first assignments as a financial reporter.

By 1989 economists and politicians had declared the troubles were over, the major  global economies was back on track, producing new jobs.

In my mind, the most memorable from headlines from 1991 was delivered by the Swedish newspaperDagens Industri.”

Like the page 2 editorial:

“Dear God, please cool down our economy.”

And the – now historical – headline from the day the Swedish bank central bank kicked up its key interest rate to 500%:

“Good Night, Sweden”

This was about six months before the crisis hit the Scandinavian banks like a Norwegian heat-seaking Penguin missile, and forced the governments in both Sweden, Denmark and Norway to take public control over the private banks.

They were downsized, sliced up, sold out and merged, and the result was five, six   major banks who orderly divided the Nordic home markets between them, and have so far managed to keep any serious competition out of the region.

All three governments still holds significant ownership in the Nordic banking sector.

The Scandinavian banking crisis was recently held up as an example on how to handle a crisis in the financial industry.

Well, we now have five or six banks in three small countries that have become so “systemically important” that they are “too big to fail,” and will have to be bailed out of “no matter what.”

On a global scale; the creation of financial companies that are of “systemically importance” so they cannot be allowed to default must be (at least one of the) “Biggest Screw-up of the Decade – 1990/2000.”

As for the decade now ending, not keeping up with the developments in the financial industry, allowing it to become an invisible, almost uncontrollable, monster, and not putting a stop to it, is a really heavy regulatory blunder.

In the aftermath of 2001, several financial companies and their executives were accused or convicted of fraud for misusing shareholders’ money, and the U.S. Securities and Exchange Commission fined top investment firms like Citigroup and Merrill Lynch millions of dollars for misleading investors.

Thinking back, it seems like we’ve been moving around in a circle.

Systemically we’re right back where we was in 1992, financially we’re in even deeper trouble.

The new international regulations, as they emerge in the final reports from the Basel Committee (Basel III), doesn’t provide anything that will make any significant and systemically changes.

So, my guess is that we’ll have to struggle with a dysfunctional financial market, debt and “systemically important”banks for still a long time – perhaps another decade.

Sadly, this means that the much debated economic recovery, in form of a helluva lot of new jobs, probably not is going to happen anytime soon.

I’m afraid it could take about another decade to get where we would like to be last year, in terms of labor market conditions.

But I’m also sure the next decade will bring a boom in one particular sector:

On this new years eve, we have more people using Facebook than Google, 60.000 new pieces of malware released on the internet every 24 hours and the banks are setting up high frequency information systems, with super fast connections from major central banks, financial authorities and government offices directly into their high frequency trading machines.

It’s all set for another golden age for computer engineers.

As far as the financial industry goes, it reflects the new market conditions imposed by law makers worldwide.

It’s not that amusing to engineer new financial derivatives, so the focus have shifted to the technical side.

The danger is that the financial markets grows even more complex and unpredictable, tied together in an unofficial, unregulated intranet of dark fiber cables.

And this goes beyond the markets and the economy.

Judging by the rapid pace of development over the last 10 years, the next 10 is definitively not gonna be slower.

With the so-called quantum computers just three to five years away, the computer technology, and our whole way of life, is destined for another evolutionary quantum leap, practically.

It is possible that we are facing one of the most important decades in a very long time.

I wish you all the very best.

Happy New Year!


I’d like to add a special greeting to all new readers/follower in 2010. Thanks for all your encouraging comments.

This summer the econotwis’t blogs (Swapper and Econotwist’s) blasted above  20.000 unique readers per month.

Many of you follow my Twitter, and I’m specially honored to welcome among my followers; the State of Israel, US Homeland Security and the EU Council.

Now that I got your attention; will you please tell the State of Kuwait to stop trying to hack into my computer!?


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HCA To Sell $1,5bn of Junk Bonds To Pay Shareholders Dividend

In Financial Markets, Health and Environment, National Economic Politics on 09.11.10 at 23:38

Hospital operator HCA Inc. says Tuesday it plans to sell $1.525 billion of junk bonds and put proceeds toward a $2 billion dividend payment to its private-equity owners. The offering of senior unsecured notes due 2021 is being handled by joint bookrunners Citigroup, Bank of America Merrill Lynch, J.P. Morgan Chase & Co, Barclays PLC, Credit Suisse Group, Deutsche Bank AG, Goldman Sachs Group, Morgan Stanley and Wells Fargo & Co.

“They’ve wiped out all the debt repayment that they’ve accomplished in two years and they’ve wiped out their cash flow.”

Vicki Bryan

Who? Me?

Price guidance is in the area of 7.75%, according to a person familiar with the deal, and books close at end of business Tuesday, with pricing expected Wednesday morning, Dow Jones Newswire reports.

Hospital Corporation of America (HCA) says its third-quarter profit rose 24% to $243 million from $196 million a year earlier, while revenue increased 1.5% to $7.6 billion as its bad-debt provisions fell 21%.

Moody’s Investors Service assigned a Caa1 rating to the bonds, deep in speculative-grade, or junk, territory, but confirmed its existing corporate ratings for HCA at B2 and revised its ratings outlook to positive. Moody’s says that HCA is adding incremental debt but has been able to offset industry pressures, such as increasing bad-debt expense and weak volumes, and realize solid earnings growth.

But Vicki Bryan, analyst at bond research firm Gimme Credit, says the improvements in uncompensated care and bad-debt provisions are due to changes in HCA’s accounting methodology–changes that the company will no longer benefit from next year.

Bryan also noted that it was the third dividend HCA will pay to its owners this year, following a $1.75 billion dividend in February and a $500 million dividend in May.

“They’ve taken $4.25 billion in dividends in a year at the expense of bondholders,” Bryan says.

“They’ve wiped out all the debt repayment that they’ve accomplished in two years and they’ve wiped out their cash flow.”

An HCA spokesman didn’t immediately return a phone call seeking comment.

HCA was taken private in 2006 in a $31 billion leveraged buyout by a private-equity consortium led by Bain Capital, Kohlberg Kravis & Roberts, Merrill Lynch, and Thomas Frist Jr., HCA’s co-founder.

The new notes will be sold through a newly minted parent company, HCA Holdings Inc. That company had been created recently as a subsidiary but will be converted into a parent company as part of a proposed corporate reorganization.

Moody’s credit analysts described the bond offering as covenant-lite, meaning it lacks certain customary bondholders protections that prevent the company from making restricted payments or incurring additional debt.

Since its LBO, HCA has taken periodic steps to refinance portions of its resulting debt burden, including selling $1.4 billion of bonds in March to pay down bank debt while pushing out the maturity on another $2 billion of bank debt to 2017 from 2013. The notes it sold then, which were secured bonds, also came with a 10.5-year maturity and yielded 7.375%.

HCA filed IPO plans earlier this year, projecting the sale of up to an estimated $4.6 billion of stock.

The large offering from HCA was one of several junk bond deals expected Tuesday, but secondary market prices didn’t weaken in the face of a deluge of supply, Dow Jones Newswire writes.

“In high yield, when you see a $1.5 billion new dividend deal, you think you’d see some pushback,” says Scott Grzankowski, analyst at KDP Investment Advisors. “But even though equities are down, overall the high yield market is firm.”

Blogger Censored By Google?

In Financial Markets, International Econnomic Politics, Law & Regulations, Technology, Views, commentaries and opinions on 19.10.10 at 21:23

I have just received the following newsletter from the founder and manager of the independent investment firm, SmartknowledgeU, JS Kim. The message is kinda disturbing, as it seems like one of the most popular articles ever written by Mr. Kim – “The Death of Capitalism” – have been removed, or made inaccessible, by major search engines like Google. If that’s the case, we’re looking at a serious violation of human rights, and the freedom of speech.

“Is Google censoring the information I’m trying to get out to the people in my articles? I’m not really sure, and maybe it’s just an innocent glitch, but it sure seems that way.”

JS Kim

“I’m not sure if I’m being censored here by Google but it sure seems like that is what is going on,” JS Kim at SmartknowledgeU writes in a newsletter posted about three hours ago.

JS Kim, who is a highly respected author, blogger and commentator with frequent appearances in major media like The Wall Street Journal, Reuters and Financial Times, tells about a rather disturbing discover he just made.
It seems like one his most read articles (“The Death of Capitalism”) has vanished from both Earth and cyberspace.
This is what he writes:
Recently one of my friends asked me to send me the link to one of the most popular articles I’ve ever posted on Zero Hedge called “The Death of Capitalism.”
So to find the link, I googled “Death of Capitalism, Zero Hedge” and the search engine returned zero results.
Okay, I thought, let me search “Capitalism, the Underground Investor (the name of my blog where the article is also posted).
Still nothing.
What makes this so odd is that when I first posted the article on Zero Hedge many months ago, the article eventually received nearly a hundred comments and more than 8,960 reads.
Because of the fair amount of attention my article received, I googled it to see who else had reprinted the article on their site.
I recall from this google search that the search returned the article not only on my blog and on the Zero Hedge blog, but also on dozens of other sites that had reprinted this article.
In fact, if memory serves me correct, there were about FIVE PAGES of returns for this search.
But today?
Google seems to have erased and purged all five pages of returns from their search engines.
So is Google censoring the information I’m trying to get out to the people in my articles? I’m not really sure, and maybe it’s just an innocent glitch, but it sure seems that way.
In any event, if you wish to read my latest article on Zero Hedge titled “Inside the Illusory Empire of the Banking Commodity Con Game,”
I consider this article to be on par with my article “The Death of Capitalism” in terms of importance to the future financial health of all investors.

Too Crazy To Be True?

Here at The Swapper we’re not quite sure to belive.
There’s a saying that goes; “If something seems too good to be true, it probably is”.
Well, that works both ways, I guess, if something seems too crazy to be true, it probably is, too…
However, I’ll wait a few hours to see if any Google representatives will make a comment, or someone comes up with another plausible explanation.
If not, we’ll contact the Google-people ourself.
By the way; when I was looking for an illustration to this post I googled “blogger censored by google” (picture mood) and, among others, the pic on the right came up as a thumbnail on the list.
But when I tried to open the original file at the original site, my internet connection fell out!?
It was impossible to download using Google with my Firefox browser.
The same happened with a several other “anti-google-pictures”.
Anyway – not too big of a problem, thou…
Meanwhile, here’s the full transcript of JS Kim’s article; “The Death of Capitalism”.
Let’s see if this one disappears too.

The Death of Capitalism

Bankers are destroying Capitalism. Unfortunately, most Westerners won’t realize this until five years from now, when the middle class has been forcibly relegated to the ranks of the poor. And this isn’t just a situation that will afflict America but it will likely afflict Japan and many countries in the EU such as the UK, Spain, and Greece just to name a few.  But for the purposes of this essay, let’s examine how bankers have destroyed capitalism in the USA.

In 2009, when almost every major US bank manufactured profits out of thin air and declared themselves financially healthy by (1) changing their regular reporting periods to exclude months in which huge losses occurred; (2) changing their definitions of bad debt, and (3) by revaluing their assets courtesy of FASB, particularly their commercial real estate portfolios, at fantasy land valuations that they will never receive in the open market, these events all marked the continuation of the Enronization of America that is ushering in the death of capitalism. The systemic injection of fraud and deceit into nearly every aspect of American life, has been unfolding for decades, even prior to the Enron scandal itself.  In 2009, Bank of America CEO Ken Lewis testified that former US Treasury Secretary and ex-Goldman Sachs CEO Hank Paulson instructed him to disobey securities law and conceal material losses in the Merrill Lynch merger from investors. Lewis additionally testified that Paulson threatened to fire him and his entire board if he tried to back out of the Merrill deal. These kinds of activities, devoid of all morals and ethics, have been occurring regularly within the financial industry for decades. It only seems as if such transgressions are more numerous today because of the recent attention given them in the media, but in reality, they have neither proliferated in frequency nor in expanded in their level of egregiousness.

Anyone that has ever worked for a Wall Street firm is well aware of the danger an analyst brings upon himself if he refuses to tow the official corporate party line regarding stock ratings for a company that is simultaneously closing a financially significant deal with another division of his firm.  Even though this atmosphere of “unspoken coercion” of inflated stock ratings existed for decades, when the bull was strong on Wall Street, very few journalists found this story newsworthy. Even though regulatory laws were passed many years ago to separate investment banking interests from securities interests within the same firm, the percent of US stocks covered by Wall Street firms rated as a “buy or hold” actually increased from 89% (2003) to 93% (2007) after the passage of new laws that were supposed to discourage firms from granting inflated stock ratings. Who in their right mind would ever believe that 93% of all stocks covered by Wall Street should be rated a “buy or hold” and that only 7% should be rated a “sell”? Of course, in Wall Street parlance, insiders know that “hold” really means “sell” but still, this is a level of deceit nonetheless.

When regulations are enforced through self-monitoring and self-policing as is too often the situation, and when all financial regulatory agencies are themselves lacking in integrity and transparency, new regulations can be enacted every day without effect. Self-regulations and regulations imposed by morally bankrupt people within a broken and corrupt system have never been effective. That’s why I have zero expectations about the efficacy of any new regulations being proposed today beyond their efficacy as a highly efficient smokescreen for politicians to hide behind. How quickly we forget that in 2002, UBS Paine Webber financial consultant Chang Wu was fired by branch manager Patrick Mendenhall no more than several hours after Enron executive Aaron Brown complained to Mr. Mendenhall about an email Mr. Wu had sent to his clients. In the email that Mr. Brown found “extremely disturbing”, Mr. Wu had advised all of his clients to sell Enron stock due to massive liquidity problems he had uncovered, even though UBS Paine Webber had rated it a strong buy. (Source:  CNN, “Financial Adviser Fired Over Enron Advice”, 26 March 2002).  After Mendenhall fired Wu, UBS sent an email to their clients retracting Mr. Wu’s statement, informing them that Enron stock was “likely heading higher than lower from here on out.” (Source: New York Post, 4 October 2006).  Of course, we all know that just several months later, Enron went bankrupt.

We should be cognizant that in light of the Enron scandal, this level of fraud has not been a recent development. In 2001-2002, a partial list of companies that had to re-declare earnings due to erroneous information contained in previous publicly released earnings announcements included the following companies: Adelphia, AOL Time Warner, Arthur Anderson, Bristol-Meyers, Squibb, Freddie Mac, ImClone, Citigroup, General Electric, JP Morgan, Tyco, Worldcom, Dynergy, Enron, General Motors, AIG and Hyundai.  Many of the company names on this list are the same companies that have been exposed as withholding material information from their investors about their financial health either in this year or in recent years. And let us not forget that in the early 2000’s, JP Morgan, Morgan Stanley, Goldman Sachs, Credit Suisse First Boston, Lehman Brothers, UBS Warburg,  and US Bankcorp Piper Jaffray all paid fines between $32,5000,000 and $400,000,000 for engaging in deceptive and unethical behavior (Source: PBS Frontline, “The Global Settlement, an Overview”, 28 April 2003).

In regard to such systemic fraud, unfortunately, little has changed today.  With the blessings of FASB and our current administration, almost every major bank in the US is cooking their books today (i.e. consider that, of $4.2 billion of Bank of America’s declared earnings during one quarter last year, $1.9 billion was attributable to a non-recurring event, the sale of China Construction Bank shares, and $2.2 billion was attributable to a fantasy-land valuation of Merrill Lynch structured notes).  As I previously stated, though the Enronization of America did not start with the Enron scandal, the consequences of systemic duplicity have finally caught up to its perpetrators and have now reached its tipping point today. If we take a moment to dwell on what aspects of our financial system have been infiltrated by fraud, it would include our financial ratings system led by Standard & Poors and Moodys, our mortgage system, our banking system, our equities analysts and financial analysts, our accounting system, our regulatory agencies including FASB, the SEC and the CFTC, our media, our politicians, our corporate executives, and lastly and most significantly, our monetary system. In fact, though the current media focus seems to be on morally bankrupt financial executives and institutions, the fact is that this scenario could not have proliferated over the past several decades if the problem did not run much deeper than just our financial infrastructure.  If other integral aspects of our society were uncompromised, they would have flushed out the dishonesty so prevalent in our financial industry many years ago. So the real question that needs to be examined is  the following – How exactly did fraud in America become so systemic?

The Fraud of our Legal System

The first phase of the Enronization of America occurred through our legal system. Most of us make the grave mistake of equating our legal system with morality, but law and morality are creatures that often reside at opposite ends of the spectrum under our current legal system.  Since those that make our laws are also the same immoral people that control our financial system, often our laws have very little concern with governing morality and much more focus on ensuring that the very elements that hold power maintain or expand their power.  Most Americans automatically equate a behavior as right or wrong depending on whether a law defines such behavior as legal or illegal without any critical thought, and this is a mistake. The fact is that today, many laws have nothing to do with morality.  In fact, our legal system is laden with such hypocrisy at times that it allows for the very same behavior to be defined as legal if a financial elite is engaging in the behavior but illegal if a  “regular Joe” is engaging in it.

Consider that Richard Strong, CEO of the former Strong Mutual Funds, admitted to skimming $1.8 million from his clients’ accounts that essentially was the equivalent of stealing, yet under the auspices of our current legal system, Mr. Strong was not sentenced to spend a single day in jail (Source: Washington Post, 23 June 2004). Yet there is little question that if a hungry, unemployed man steals food equivalent to a fraction of the money Richard Strong stole, he will go to jail if caught. How is this possible? It is possible because very little honor is left in our legal system. Stealing $1.8 million may be legal under our current legal system, but it certainly is not moral. In 2005 and 2006, CEOs from the 11 largest firms in America paid themselves $865,000,000 in salary even though their “leadership” caused a loss of $64,000,000,000 of market capitalization in their firms during the same equivalent time period (Source: BBC News, 22 June 2006).  Yet, if an employee of this firm performed as miserably as did their CEOs, their reward would almost certainly be a pink slip, not millions upon millions in bonuses, salaries and perks. Paying oneself hundreds of millions in salaries and hundreds of millions more in bonuses despite contributing to unemployment and the substantial loss of shareholder wealth is certainly unethical, yet it will always remain 100% legal. All you have to do is review the financial payouts from last year to know that not a single iota of decency has been injected into our financial system. When firms like Merrill Lynch went bankrupt and then took money from US taxpayers to pay their executives more than $4 billion of bonuses, this only added insult to the injury their bankruptcy inflicted upon many American families.

Were our legal system truly to regulate morality, the executive suites of America’s largest financial corporations would transform into ghost towns as a great percentage of these executives would be jailed. There are numerous actions that are considered “legal” today that would be illegal if moral and righteous men were making our laws, and even a handful of “illegal” behaviors that would be re-categorized as legal. Suffice it to say, if our legal system has been Enronized, our regulatory agencies by default, have also been Enronized. The Enronization of our Securities and Exchange Commission (SEC) was never more apparent in their failure to shut down Bernard Madoff and protect American families even though hedge fund manager Harry Markopoulos informed the SEC both in writing and by phone of the fraudulent nature of Madoff’s fund for nine years. During Congressional testimony regarding this matter, Mr. Markopoulos testified that when the SEC repeatedly ignored his warnings about the fraudulent nature of Madoff’s practices, that he feared for his, as well as his family’s safety, a damning indictment of not only the SEC’s abject failure to regulate, but also of their propensity to protect powerful men in the financial industry whether they are breaking the law or not. The continuing failure of other regulatory agencies such as the CFTC to act in the interests of American people is also apparent in their recent approval of financial products such as the E-mini Gold and Silver futures contracts introduced on April 19th, 2009 that settle strictly in cash. Futures contracts that specifically prohibit the delivery of the underlying commodity explicitly allow its participants to naked short a commodity with zero intention of every purchasing or holding the underlying physical asset in their possession and thus establishing a fraudulent market for a commodity that can never resemble the free market dynamics of its physical market.  The lesson here is this – if you are a small player, the regulatory agencies will still prosecute criminal activity, but if your rank is among the financial elites, they will do nothing.

The Fraud of our Media

The second phase of America’s Enronization has occurred through the mass media.  Ben Bagdikian, the author of the seminal work on media mergers and consolidation titled The Media Monopoly, has noted that almost all major media in the US is now under the control of five major conglomerates – Time Warner, Disney, Murdoch’s News Corporation, Bertelsmann of Germany, and Viacom.  To be fair and objective in this matter, there are a handful of major news organizations not controlled by the “big five”, including The New York Times, The Washington Post, The Chicago Tribune and Los Angeles Times. However, Badgikian’s basic premise that the problem with our media is “not one of universal evil among the corporations or their leaders” nor one of “a general practice of constant suppression and close monitoring of the content of their media companies”, but one of a contradiction between the values of free enterprise and the interests of giant conglomerates, is still valid. Today, many important news stories are reported on the internet by bloggers well before they attract the necessary viral proliferation to draw the attention of major media outlets.  Today, a strong case can be made for the argument that one will find a greater level of truth and integrity in internet reporting than through major information distribution channels such as CNBC.

The Destruction of Our Critical Thinking Skills

The fraud of our media has evolved into the fraud of our educational system. Though this is a topic that commands the devotion of an entirely separate article, the financial elites have heavily influenced the curriculum taught at leading American educational institutions for decades now. For example, over the last century, the Rockefeller family has donated millions upon millions of dollars to leading economic schools such as the University of Chicago and Harvard Business School. Perhaps it is the monetary influence of financial elites such as the Rockefellers that is largely responsible for erroneous economic beliefs about inflation and our monetary system that persist today. To squelch much of the skepticism that may arise around the suggestion that the financial elites would utilize their money to alter the educational curriculum of leading educational institutions in America, recall that in 2002, David Rockefeller stated in his own autobiographical memoirs the following:

“For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as “internationalists” and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”

The only difference today is that the cabal working against the best interests of the US and all American families is no longer secret, but well documented and well known.  Since the above statement is sure to stir up cries of conspiracy regardless of the fact that it is directly attributable to a member of the financial oligarchy, let us take a minute to consider the disappearance of our critical thinking skills. Why do those with a keen interest in suppressing the truth about the origins and nature of our current global financial crisis have great success in doing so merely by simply using the word “conspiracy” to marginalize the well-constructed arguments of others? Why do the people that attempt to discredit these truthful revelations never offer more than flimsy verbal accusations devoid of any evidence to validate their accusations?  And why do we rarely, if ever, challenge the fact that the vast preponderance of people that provide the strongest opposition to the dissemination of truth are those whose personal wealth depend upon delusional beliefs about the health of our stock markets and the soundness of our financial institutions and monetary system? Today, the fraud of our institutional education system has dulled our aptitude of critical thinking to such a degree that we now look to others to do our thinking for us. Instead of challenging the propaganda that makes zero sense, we are all too willing to be duped into believing erroneous concepts just because they are written in a textbook or a newspaper.

As a prime example of this, consider over the past decade, the propensity of Central Banks and the IMF to pre-announce massive gold sales that they rarely execute. From a purely logical standpoint, can anyone well versed in logic truly argue one beneficial reason for doing so?  In 1999, when now UK Prime Minister pre-announced the sale of 400 tonnes, or more than half of the Bank of England’s gold reserves, his announcement promptly caused gold to plummet to $250 an ounce, the lowest price in the last decade. For an institution interested in making profits, it is a foregone conclusion that pre-announced large sales of gold reserves will significantly depress prices; thus what is the reason behind such an announcement other than to purposefully depress prices? Yet, when skeptics are presented with such evidence and can offer no valid counter-argument, instead of intelligently considering the validity of another’s viewpoint, too often they shut off their brains and repeat beliefs that have been repeatedly rammed down their throats.

In the seminal book about warfare, The Book of Five Rings, legendary samurai Miyamoto Musashi wrote, “true enlightenment can be seen by what a person has done, not by what he says. Those who have missed the mark may chatter all day long about this and that, but they have never done anything. Anyone can make a good argument, but few can show good results.”  If we as Americans wish to prevent the death of capitalism and to reinstitute our rights of self-determination and our Constitutional rights to a sound monetary system that are paramount to a free society, we must judge people not by what they say but by what they do. We must listen not to those that present hollow arguments and that can demonstrate no positive track record of results, but rather focus on the thoughtful arguments of the few that have been able to illustrate the intelligence and validity of their views because their predictions have been vetted over time.

As a nation, we have become Enronized because we too often focus on the false arguments of those that are well versed in the art of persuasion yet persistently demonstrate a poor track record when it comes to results.  As a prime example, consider this Congressional testimony where former US Treasury Secretary Hank Paulson disingenuously claims that he advocates greater transparency in US markets when in fact, Goldman Sachs, under his direct leadership, aggressively lobbied to repeal laws that granted financial markets transparency. We are much too apt to accept the words of people rather than to take the more intelligent approach of analyzing their actions to judge the validity of their words.

The Fraud of Our Leaders

The final phase of the Enronization of America has occurred through our power structure and politics. The financial oligarchs that wish to suppress the truth about their role in this crisis have been very opportunistic in forming close relationships with the highest echelons of government and then using this inordinate power to polarize the masses and further consolidate their power.  The revolving door among Central Banks (i.e the Bank of Italy, the Bank of England, the US Federal Reserve), Goldman Sachs, the US Treasury, JP Morgan, and Citigroup has been well documented so I won’t  repeat the prolific work of others here. However, using politics or nationalism as a divisive maneuver is often a favored tactic of the financial elites, so we must remain vigilant against immoral attempts to deflect our attention away from the true causes of this crisis, such as the scapegoating of immigrants or other shameless tactics. In a recent outlook for 2010 that I sent to my paying subscribers, I stated:

“Though bankers and politicians tried to sell 2009 as a year of recovery, this is nothing more than massive deception of the worst kind and hot air. What they delivered to you was not recovery but a big deception.”

I further stated:

If the S&P 500 breaks the support level [of 1126-1128] and remains below it for several days or heavily breaks below it on a single day [on higher volume], then look for a downtrend reversal pattern to follow.”

The above indeed happened and triggered a two-day, 4%+ slide in the S&P 500 last week. I’ve informed my subscribers of the other indicators they must follow to know if this is just a correction or the beginning of a long-term slide.  However, with such rampant fraud in all major stock markets last year perpetrated by politicians and bankers, a big crash is inevitable in the world’s major stock markets and is a matter of “when” and not “if”.  It’s a little early to determine if what happened at the end of last week is the beginning of a long-term slide though initial appearances seem to project that right now. A long-term slide will manifest in time, whether now or later. When obfuscation of fact and misinformation systemically replace transparency and integrity as they have in our modern society, we have little chance of producing a favorable outcome to this current crisis. More than 140 US banks failed in 2009, and every single bank failure announcement occurred on a Friday afternoon after market close so that the revelations of these bank failures could not adversely affect markets while they were still open. Additionally, such announcements were timed to grant investors two weekend days to forget about these failures. America has been Enronized over the past several decades not because of Democrats and not because of Republicans, but because of the financial oligarchs that have ruled and continue to rule our country. The Enronization of America has happened under President Clinton’s watch, under President Bush’s watch and it is now progressing under President Obama’s watch.  If you think there has been a marked difference in monetary and fiscal policy in America during the last 20 years, then you do not truly understund our monetary and fiscal policy.

It amazes me that people still foolishly follow the words of this administration and not its actions. It amazes me that I still hear people praising Obama’s proposed plan (proposed being the key word here) to impose limits on the size and trading activities of the nation’s largest banks without awaiting the resultant actions from such talk. I read one financial journalist that stated high praise for this proposal as he inferred that banks have become too big and that a freeze on mergers and acquisitions in the US banking industry would be welcomed. Did this journalist even consider that the biggest consolidation of power on Wall Street in the last couple of decades just happened within the past two years when Goldman Sachs and JP Morgan virtually eliminated all of their competition and the US Federal Reserve utilized the very crisis they created to seize even more power? Did this journalist even pause to consider that this administration’s cabinet and advisory boards consist of more Wall Street executives than any administration in the last several decades? Did this journalist consider that the greatest theft of American taxpayer money occurred under this adminstration’s watch with the $850 billion bailout plan that is now morphing into trillions of dollars? Did this journalist bother to note that the Senate Finance Committee is now seeking to increase the debt ceiling by a radical $1.9 trillion after just approving a $290 billion increase at the end of last year that was necessary to avoid an unprecedented default on US Treasury bonds? And did this journalist miss the CFTC hearings regarding the imposition of position limits on energy commodities and somehow miss that the true nature of discourse during these hearings was not to ban speculators from creating and bursting bubbles in the commodity markets but only to ensure, in a round-about-manner, that Wall Street can continue this speculation?

And after all this, if this journalist still believes Obama’s comical statement that “the financial system is far stronger today than it was one year ago”, this is exactly what is wrong with our media today.  Because the deceit, lies and the shady accounting practices that cover up the true health of all banks in the Western hemisphere are far stronger today than they were a year ago, the people’s confidence in the US financial industry may be much stronger today than it was a year ago. But confidence and reality are two different animals, especially in today’s chaotic world. If true Glass-Steagall like reforms are indeed implemented, then I will be the first to commend this administration for acting differently than any administration in recent history when it comes to reining in financial greed and fraud. Furthermore, I am much too familiar with the political game of very public tough talk that often is granted the greatest media publicity that eventually morphs into a greatly watered down, very different-looking piece of legislation that somehow escapes the critical lens of the media. So forgive me if I always reserve my judgment regarding such tough talk until I see the final iteration of the legislation that passes into law. My skepticism of this process originates from the fact that administrations have spoken the same tough game in public for decades while continuing to sleep with the enemy behind closed doors.

Until we wake up and correct many of the flaws in our thinking and in our justice system, capitalism has zero chance of survival and any discussion of reviving free markets is moot. Arthur Shopenhauer, a noted German philosopher, once stated,

“All truth passes through three stages.  First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

We have already passed through the first stage where truth has been ridiculed. For several decades, those that attempted to reveal the price suppressions schemes executed by governments and Central Bankers against gold and silver were ridiculed as conspiracy loonies. Today, the evidence of this manipulation is so overwhelming that men that dwell firmly inside the confines of the mainstream, men that previously would never have dared to publicly state such sentiments just 10 years ago, are now stepping forward and publicly acknowledging the existence of price suppression schemes that interfere with free markets (i.e., Donald Coxe, chairman of Harris Investment Management in Chicago).

Today we have progressed to the second stage of truth, when truth is violently opposed. Former US Treasury Secretary Hank Paulson testified multiple times in Congress that it is not reality that is important to stock markets, but only what people think they know, even if what they think is wrong. Paulson regularly emphasized the vital importance of consumer confidence to the performance of capital markets.  In the end, confidence levels measure consensus belief and often have very little correlation to the reality of underlying economic fundamentals. In a bear market, such as the one in which we are currently engaged, it is safe to say that rising stock markets serve as a barometer of deceit. The greater the deceit by our leaders, the more likely stock markets will act irrationally and rise when there is no foundation to support the rise, including the most recent rally that we have witnessed in US markets throughout the latter half of 2009 into the very beginning of 2010. But when reality overcomes deceit, watch out below, because we will not see a correction, but a crash.

As long as markets react positively to lies that prevent the masses from understanding the grave situations of our faltering economy and monetary system, our government and financial leaders will continue to prevent people from knowing or understanding the truth. One merely has to acknowledge that last year, FASB conveniently altered mark to market regulations immediately prior to first quarter 2009 earnings season and immediately prior to stress tests that were to be conducted on financial institutions to realize that our current administration is not any more interested in disclosing the truth or increasing transparency than previous administrations. Again, we would be wise to remember Miyamoto’s sage advice to judge someone not by his or her words, but by his or her actions.

The fragility of America’s emotional state regarding the dire economic situations that existed during the last US Presidential campaign left America vulnerable to blindly accepting anybody that promised change, but again we must consider the actions, not the words, of this current administration.  We must look at the men appointed to “solve” this crisis and understand that almost all of these men were handpicked from the same institutions (Citigroup, Goldman Sachs, and JP Morgan) that were largely responsible for creating this crisis. The most efficient way to solve a crisis caused by lack of ethics and morals is not to put the most morally bankrupt people in the nation in charge. It should disturb us all that our current President appointed a man like Paul Volcker to lead a Presidential advisory board when Volcker once stated in reference to rising gold prices in the 1980’s the following:

“That day, the U.S. announced that the dollar would be devalued by 10%. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.”(Source: Volcker’s memoirs printed in the Nikkei Weekly, November 15, 2004).

Men that clearly state their opposition to free market mechanisms and the reliance on collusion as preferable to transparency and integrity should never be appointed to any position of leadership in our country. Despite the lack of leadership from the financial elites during this crisis, they have made it clear that their agenda of concealing the truth from us will not prevent them from shamelessly pinning us with the blame for their errors by increasing our taxes and devaluing the purchasing power of our dollars. And remember, devaluing major currencies, which no sane person can deny is happening all around the world, is the quickest way to destroy capitalism. It is for this reason that bankers are currently digging capitalism a shallow grave right now.

Though our governments have aided and abetted our global financial crisis which will soon enter its second phase, they have not been the root cause or the prime perpetrators. This honor belongs to the financial oligarchs and the fraudulent monetary system they have instituted. Today, governments have devolved into nothing more than an instrument of execution for the financial oligarchs. The late great John F. Kennedy was the last US President to understand and recognize the massive flaws and immorality of our modern day monetary system. Were the honorable President Kennedy still alive today, but a regular citizen, voicing the exact same displeasures against our current monetary system as he did half-a-century ago, I have little doubt that those in power would have already marginalized his arguments and labeled him as a “conspiracy buff” with a lack of sensibilities.

Can We Save Capitalism?

The lack of transparency and the veil of secrecy that has existed in our financial world for a very long time now have enabled the imminent death of capitalism. Just think about some of the parlance that now is commonplace in our global marketplaces like “dark pools”, where discovery of market prices has become opaque and difficult, yet grotesquely accepted as normal. Furthermore, the misinformation campaigns that the financial elite have engaged upon for decades have further supported and maintained the ignorance of the masses. If one merely focuses on gold and silver markets, one can uncover a mountain of deceit.  Consider that when Central Banks lease gold, they still claim it as an asset on their balance sheets, an obviously fraudulent practice.

In the end, let us not look to the words of our financial and government leaders for truth, but to their actions. If there has ever been another institution in the history of America with a persistently worse track record of accomplishing their stated mission than the US Federal Reserve (that of maintaining price stability), I cannot think of one. Thus, we should permanently shutter institutions that have a track record of utter failure and that have consistently failed to act in the interests of their citizens although they may repeatedly insist that they always act in the nation’s best interest.  We should all want results and supporting actions, not unfulfilled pledges and promises year after year, and decade after decade. Enough is enough. We should also permanently shutter those financial institutions led by corrupt executives that have cumulatively made billions from the purposeful deception and bankrupting of American families.  Finally, if you are a shareholder with voting rights, it is incumbent upon you to exercise your rights at general meetings to oust all corrupt directors and executives at corrupt firms. Because it is near impossible to regulate morality, the only sustainable solution to prevent the death of capitalism is to remove the very institutions and people responsible for this process. As current administrations of major governments all around the world have demonstrated an unwillingness to do so, it is patently clear that this movement must originate from the people.

If we all desire the freedom of self-determination that is impossible with a corrupt monetary system, this change will have to come from the people. If there is one thing about the monetary system that I believe with all my heart, it is this. The monetary system today, as it has been structured by Central Bankers, is immoral. The current monetary system stifles, not encourages free markets. If a free market system facilitated capitalism in the world’s major markets today, the middle class would be healthy and robust, the poor would be transitioning into the middle class, and the rich, while still a healthy component of society, would not increase their proportion of wealth relative to everyone else every year. Instead, in the absence of free markets and capitalism, the rich seize more and more resources every year, the middle class shrinks every year, and the poor become poorer. If every person in this world truly understood how the monetary system operates, whether a Muslim, a Christian, a Hindu, Buddhist, a Catholic, or of any other faith, I am 100% sure that that person would be opposed to our current monetary system based upon his sense of morality provided by the most important tenets of his or her religion. In The Economic Consequences of the Peace, John Maynard Keynes stated the following:

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

If you don’t understand the above statement, then I urge you to research Central Banks and how they operate until you do. And when you do, you will understand why I claim that no man or woman that calls himself a good Christian, a good Muslim, a good Catholic, or a good Hindu could support our monetary system or work for a bank today in good conscience. If you are skeptical of this comment, as you should be, then I urge you to investigate and understand how the monetary system truly operates before you declare your opposition to this statement. Try to explain in words, to another friend, the complete process of how money comes into existence from the first step of being printed by Central Banks until it ends up in your wallet, along with every party that is charged interest or taxed  along the way during this process (through multiple mechanisms) including the government and the government’s transfer of this “interest tax” to the people.  Until you can verbalize every step of this entire process, one should not claim that he or she understands our monetary system.  But when you can verbalize this entire process, it will become very clear to you why Lenin stated that the best way to destroy Capitalism is to destroy the purchasing power of money. You will understand the extreme hypocrisy of Goldman Sach’s CEO Lloyd Blankfein’s statement that bankers were doing “God’s work” when you realize that our modern monetary system breaks the 8th commandment of “Thou shall not steal.” Furthermore, you will understand that while Goldman Sachs undoubtedly deserved the bulk of criticism levied against it last year,  private banking families that established Central Banks, not Goldman Sachs, have created our fraudulent monetary system. As is the case with other large commercial banks, Goldman Sachs is just an enabler, participant and beneficiary of the corrupt system.

If we all desire free gold and silver markets that are not persistently rigged by the US Treasury, the US Federal Reserve, the Bank of England and the likely usual suspects Goldman Sachs, HSBC, and JP Morgan, then this change will have to come from the people. If we desire free markets of any kind, in any form, this change will have to come from the people. Too many times in the past decade, politicians have promised change only in word but no real change has ever resulted from their actions. This clearly demonstrates that the financial oligarchs are the real power backing all major governments today.  The alternative consequence of our inaction will be the manifestation of Shopenhauer’s third stage of “truth as self-evident” at a not-so-distant time in the future. Unfortunately, however, if truth becomes self-evident, this will undoubtedly mean that the bankers will have succeeded in transforming the middle class of many Western nations into the poor. In reality, if we enter the third stage of monetary truth when truth becomes self-evident, it will be too late for most to take any action that will have any consequence in assisting their families.  The time for action clearly is now – when we are still in Shopenhauer’s second stage of truth  – the stage when all truth is violently opposed. Two movements that provide actionable ideas to implement right now that will help reinstate capitalism and revive capitalism from its deathbed can be found at Move Your Money and Sound Money Now! Instead of just complaining that our lives are being ruined by bankers, all of us would do well to take countermeasures today in an attempt to save capitalism.

JS Kim is the Managing Director and Chief Investment Strategist for SmartKnowledgeU, LLC, a fiercely independent investment education, research, and consulting firm that provides visionary guidance and profitable strategies to deal with the ongoing systemic crisis of our monetary system and capital markets.

Related by The Swapper:

Where Exactly Is "Money Heaven"?

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 06.03.10 at 23:23

When one of the billionaires behind the collapsed internet bank Icesave in relations to a new film was asked what happened to all the money, his answer was astonishingly nonchalant: “A lot of money goes to money-heaven,” shrugged Björgólfur Thor Björgólfsson, the Londonbased investor who co-owned 41% of Icesave’s parent bank, Landsbanki.

“They have evaporated. It’s a common misunderstanding to ask;  where did the money go.”

Björgólfur Thor Björgólfsson

No wonder the people of Iceland are really pissed off. Sure, the money has “evaporated”, but Icesave’s €4 billion debts remain and are now the subject of fury in Mr. Björgólfsson’s home country.

Icelanders were set to become the world’s first rebels against the idea of clearing up after the mess made by a reckless private bank.

This popular insurrection has been watched anxiously by the governments in Greece, Ireland, eastern Europe – and even Britain – concerned that this defiance could become contagious.

Almost 18 months after its financial system, currency and government went into meltdown, the country is still spiralling downwards into what one economist has called a “vortex of debt default, unemployment, and an exodus of people”.

Public outrage has been brought to a peak by the fact that there are now 43 cases of alleged criminal activity under investigation in connection with the country’s scandal-hit financial institutions, including Landsbanki, and, in the country’s first referendum, the 320,000 people of the island were expected to vote against a deal to compensate the UK and the Netherlands for the failure of Icesave.

So,what really happened?

Here’s a little – but very interesting – piece of news broadcasted by Iceland Radio on October 15th 2008:

“Islands Radio reports that the Icelandic Finance Council was started to investigate a series of mysterious transactions prior to the collapse of Landsbanki.”

“17 percent of the bank’s shares changed hands on October 3. The price was 5 percent above market price. October 3, 2008 was the last day of trading with the shares of Landsbanki. The day after the authorities suspended trading, and four days later the bank was taken over by the Icelandic government. According to Icelandic radio, it is unclear who has bought or sold shares in Landsbanki.”

All the three major Icelandic banks, Landsbanki, Kaupthing and Glitnir, was later declared bankrupt.

We have never heard another word on what happened to the investigation of the mysterious transaction.

But it gets even better

“Landsbanki’s biggest owners, Mr. Björgólfur Thor Björgólfsson, and his father, the ex-owner of West Ham FC, Björgólfur Gudmundsson – two Icelandic businessmen with close links to the country’s ruling Independence Party benefited from Iceland’s move to privatize its banks in the early 1990s, despite the fact that Mr Gudmundsson had a conviction for false accounting, following the collapse of his shipping empire in 1985,” according to The Telegraph.

The pair had no experience in banking and were not the highest bidders. However, the privatization helped catapult Mr. Björgólfsson on to the Forbes list of richest people.

At the peak of his wealth he had an estimated fortune of $3.5bn – now an estimated $ 1 billion.

No one quite knows how Landsbanki and the other Icelandic banks managed to grow so big, so quickly. But it is now well-documented that some of the biggest shareholders of the banks were lending each other vast sums of money in a complex network of mutually beneficial business relationships.

This had begun to worry financial observers by March 2006.

Richard Thomas, an analyst at Merrill Lynch, said at the time: “We are seeing the classic signs of a over-leveraged banking system and this has flashed a red alarm signal.”

And there’s  more

In September last year The British Serious Fraud Office sent a team of investigators to Iceland to get to the bottom of the suspicion that there had been any criminal offense in connection with the collapse of the banks, and whether it had any connection to London.

As expected, very little have come out of this investigation, so far.

More than 30 houses on the Island have been ransacked by police and more than 60 people have been brought to interrogation.

The international corruption investigator, Eva Joly, who is brought in as a consultant for the Icelandic government, believe this might be the biggest criminal case Europe has ever seen.

Eva Joly told The Telegraph last year that the British authorities must take their share of responsibility because they have did not have a good enough supervision of the Icelandic banks.

“They received several warnings about banks, but they did nothing. In my opinion that has been very harmful,” she said.

Personally, I can’t wait for the next shoe to drop in this case, (and perhaps somebody finally will tell us where money-heaven is – that answer is long overdue.)

In the meantime; the hardworking people of Iceland needs our support.

Related by the Econotwist:

Iceland Refuse To Accept Debt

Iceland Voting Over Icesave Repayments

Iceland Debt Talks Collapse

På (litt) lenger sikt


Iceland rejects plan to repay Icesave debts

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Joe Biden: "USA er i en depresjon"

In Financial Markets, Health and Environment, International Econnomic Politics on 23.10.09 at 13:39
Joe Biden, U.S. Senator from Delaware.
Image via Wikipedia





















“My grandpop used to say: When the guy in Minooka’s out of work, it’s an economic slowdown. When your brother- in-law’s out of work, it’s a recession. When you’re out of work, it’s a depression.”

Det sier USAs visepresident Joe Biden på denne videoen som ble offentliggjort tirsdag av den konservative radioverten Sean Hannity på Fox News.

Opptaket er fra en debatt i Kongressen, men det er uklart når opptaket ble gjort.

På spørsmål om hvordan han vurderer dagens situasjon, svarte visepresidenten: 

“Well, it’s a depression. It’s a depression for millions of Americans, through no fault of their own.”

Bare storkjeftet?

Nå er Joe Biden kjent for å bruke store ord, men samtidig legger han ikke fingrene imellom når det gjelder å beskrive tingene som de er.

Hvorvidt USA nå er i en økonomisk depresjon eller ikke kan sikkert økonomene føre endeløse diskusjoner om.

Vi konstanterer at følgede personer mener, mer eller mindre, det samme som visepresident Joe Biden:


* Administrerende direktør Nicu Harajci hos N1 Asset Management.

* Nobelprisvinner i økonomi Paul Krugman.

* Tidligere sjeføkonom i Merrill Lynch, David Rosenberg.

* Tidligere sjef for den amerikanske International Trade Commision, professor Peter Morici.

* Nobelprisvinner i økonomi, professor Joseph Stigliz.

* Tidligere Secretary of Labor, professor Robert Reich.

* Statsminister i Storbritannia, Gordon Brown. (Har senere sagt at uttalelsene var “a slip of the tounge”)

* Investeringsrådgiver Ray Dalio.

* Investeringsrådgiver Dough Casey.


Les også: IMF: – Depresjonen er her.


Sjefene dumper egne selskaper

In Financial Markets, Views, commentaries and opinions on 02.09.09 at 12:50
NEW YORK - SEPTEMBER 15:   Traders work a near...
Image by Getty Images via Daylife

Amerikanske toppsjefer har benyttet siste måneds børsopptur til å dumpe sine aksjer i egne selskaper. Wall Street stuper inn i skrekkmåneden september.



Det amerikanske aksjemarkedet faller for tredje dag på rad tirsdag, og aksjeindeksen Standard & Poor’s 500 dupper under 1 000 poeng for første gang siden august i fjor.

Det er nok en gang finanssektoren som trekker ned med AIG i spissen. Den nasjonaliserte forsikringskjempen stuper 20 prosent, mens storbanken Bank of America faller 6,5 prosent.

Finanssektoren har stått for den største festen. AIG har bidratt betydelig med en kursoppgang på over 200 prosent i august.
Det har dratt S&Ps 500 opp nesten 50 prosent.

0 + 300 %

American International Group var en gang verdens største forsikringsselskap.

Men sammen med Goldman Sachs begynte AIG et storstil eksperiment med avanserte finansielle instrumenter, og da markedet kollapset ble selskapet så å si sittende med “svarteper”.

Den amerikanske staten har brukt nesten 200 milliarder dollar på å holde AIG i live. Først og fremst fordi man ikke aner hvem som er motpart i alle de avanserte avtalene som er gjort – bare at det dreier seg om andre globale storbanker.

Teoretisk er AIG-aksjen verdt tilnærmet 0. Likevel har kursen firdoblet seg i løpet av sommeren.

0 + 300 prosent blir uansett 0. Men investorer har gamblet på at myndighetene ville finne på noe lurt som ville gi selskapet reelle verdier igjen.

Det amerikanske finansdepartementet fått 80 prosent av aksjene i AIG i bytte mot krisepakkene.

Lignende avtaler er gjort med flere andre storbanker, som Bank of America og Citigroup.

Sjefene dumper

Ifølge en rapport fra analysebyrået Trim Tabs har toppledere i amerikanske aksjeselskaper benyttet august til å dumpe aksjer i egne selskaper.

Innsidere solgte aksjer for 6,1 milliarder dollar siste måned, det største beløpet siden mai 2008.

– Forholdet mellom kjøp og salg blant innsiderne er nå 30,6, forklarer administrerende direktør Charles Biderman hos Trim Tabs.
– Det er det høyeste siden vi begynte å følge innsiderne i 2004, sier han.

– Når selskapsinnsidere bailer ut, må shortselgerne dekke og investorene låner for å kjøpe. Generelt sett er det mer lønnsomt å selge aksjer enn å kjøpe, mener Charles Biderman.


Trim Tabs skriver ellers i rapporten at auksjonene av aksjer i amerikanske selskaper har vært negativ de siste fire månedene.

Aksjeselskapene har vært netto selgere av et rekordhøyt antall egne aksjer, tilsvarende 105,2 milliarder dollar.

– Investorer som tror at den amerikanske økonomien er i ferd med å bedres, vil få et stort sjokk i løpet av høsten, er meldingen fra Biderman.

– Både selskaper og selskapsinnsidere signaliserer at økonomien er i mye dårligere stand enn den konvensjonelle kunnskapen tror, fastslår han.


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Oljefondets ikke-rapport

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 22.08.09 at 00:09

Image of Norges Bank from Twitter
Image of Norges Bank

Oljefondet har lagt frem sitt beste kvartalsresultat noensinne, og NBIM-sjef Slyngstads strategi fremstår som en dundrende suksess. Aksjekupp, knallresultat og på toppen av det hele en rørende historie om barnearbeid. Her er det som ikke står i rapporten.

Statens pensjonsfond – Utland (Oljefondet) sitt resultat for andre kvartal i år ble mottatt med jubel forrige fredag.
Det er lenge siden NBIM.sjefen Yngve Slyngstad har kunnet smile så bredt.
Det har han også all grunn til. Ikke så mye på grunn av resultatet, men måten det ble presentert på.
Det må være tidenes PR-stunt fra Norges Bank og NBIM (Norges Bank Asset Management).
Kritikken har haglet over Oljefondet siden tapene på til sammen 633 milliarder kroner i fjor.
Nå er den bortimot forstummet. Et mer gyldent bilde at vår nasjonale gullkalv er vel knapt nok mulig å tegne.
Tallene først.
Til tross for en vekst på 309 milliarder (minus 40 milliarder i tilførsel fra Staten) så mangler det stadig et par hundre milliarder før fjorårets tap er innhentet.
Og riktignok er det fondets beste kvartalsresultat noensinne, men betyr det at det er godt?
Det meste skyldes en høyst unormal vekst i aksjemarkedet siden mars måned.
I USA har aksjene steget nesten 50 prosent i perioden, det globale aksemarkedet er opp 25 prosent og hovedindeksen på Oslo Børs har lagt på seg om lag 30 prosent.
Oljefondets avkastning på sin aksjeportefølje er 19,5 prosent.


Vi har et av verdens største investeringsfond. Selv om vi bare utgjør en promille av klodens befolkning så eier vi 1,75 prosent av alle aksjene i Europa og 1 prosent av alle i hele verden.
Betyr det at vi er kjempegode i å drive statlige investeringsfond, Souvereign Wealth Fund (SWF), som det heter?
Ifølge en rapport som Deutsche Bank la frem i forrige måned krympet de statlige fondene med gjennomsnittlig 18 prosent fra slutten av 2007 til begynnelsen av 2009.
Oljefondet ble barbert mer 23 prosent i 2008.
Ikke nom med det; analytiker Steffen Kern hevder at tapene trolig er større enn det som til nå er opplyst.
De statlige investeringsfondene har i løpet av det siste året kjøpt store mengder aksjer i de prominente finansinstitusjonene på Wall Street, som Citigroup, Merrill Lynch og Morgan Stanley.
Bankene hadde på det tidspunktet hvor aksjene ble kjøpt urealiserte tap som tilsvarte mellom 60 og 70 prosent av investeringene. Dette er nå blitt litt mindre, men de urealiserte tapene i bankene er fremdeles mellom 12 og 87 prosent av markedsverdien, ifølge Deutsche Bank.
I Oljefondets portefølje (per 31.desember 2008) finner vi både Citi, Merrill og Morgan Stanley. Blant de ti største investeringene er HSBC og Banco Santander (per 31.juli 2009).
Så var dette med risiko, da.

Hva er risiko?

Investor Øystein Stray Spetalen står fortsatt fast på at Slyngstad & Co tar for stor risiko.
Mens professor Thore Johnsen ved Norges Handelshøyskole mener man bør ta større risiko.
Risiko kan måles på mange måter, men det enkleste er å sette de investerte pengene opp mot landets valutareserver. (Foreign Exchange Reserve Ratio).
På Souvereign Wealth Fund Institues liste ligger Oljefondet på 6.plass med en FERR-grad på 7,1.
De fleste land har en FERR-grad på under 1, men på toppen av risikolisten ligger Irland med 36,6 fulgt av Abu Dhabi med 29,5.
Det er intet fasitsvar på debatten om risiko. Spørsmålet er bare; hvor mye er vi villig til å satse?

Hvor er fremtiden?

NBIMs fremtidsutsikter er i kvartalsrapporten er omgjort til en sukkersøt historie om hvordan Oljefondet har klart å overtale fire selskaper til å avskaffe barnearbeidere ved å true med å trekke investeringer for 1,5 milliarder kroner tilbake.
Et korstog som ridder Slyngstad og hans tapre menn sverger å videreføre.
I tillegg skal Norges oljeformue brukes til å sikre aktivt eierskap i verdens vannreserver, og på andre måter å være med å redde verden.
Realiteten er ganske annerledes enn det rapporten gir inntrykk av.
Ifølge studier som pågår ved University of Oxford er det i første rekke private investeringsselskaper (private-equity companies), store meglerhus og hedgefond som tjener penger på statsfondenes sterkt økende investeringer.
Og politisk styring av SWF-ene er lite populært.

Økende konkurranse

Forskerne Gordon L Clark og Ashby H. B. Monk har blant annet intervjuet 146 erfarne forvaltere fra USA, England, Canada og Australia som rutinemessig har kontakt med statlige investeringsfond.
62 prosent synes ikke et lands regjering skal ha noen innflytelse på investeringsfondets beslutninger.
Et flertall på 38 prosent mener de ikke passer seg at fondet skal rapportere direkte til den politiske ledelsen.
Bare 30 prosent mener de interne resursene i SWF-ene er tilpasset de krav som det globale markedet krever.
Ekspertene etterlyser mer innsyn og større investeringsfrihet. Ikke minst legger forvalterne vekt på at det må bli felles investeringsregler for alle fond av denne typen for å dempe uroen blant de andre investorene for hva disse fondene etter hvert kan finne på.
Og på spørsmål om det er viktig å ha et forhold til regjeringen i OECD-land – som for eksempel Norge, Irland og Australia – for å få mandat fra deres offentlige fond, svarer et flertall på 40 prosent ”enig”.

Viktigere enn noensinne

Det hersker ingen tvil om at både det norske Oljefondet og andre statlige fond vil bli større, mektigere og viktigere i verdensøkonomien fremover.
Konkurransen mellom dem vil øke. Enkelte land planlegger allerede å slå sammen sine statlige fond for å øke møte etterspørselen etter offentlig finansiering.
Dette er virkeligheten NBIM, Norges Bank og regjeringen må forholde seg til.
Som investor/skattebetaler kunne det være greit å vite hvordan Oljefondet og den politiske ledelsen tenker å møte disse reelle utfordringene.
Derfor er det viktigere enn noensinne å holde liv i debatten om hvordan fellesformuen bør forvaltes.
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