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Posts Tagged ‘Washington Post’

Verizon To Pay $78 Million For Overcharging Customers

In Financial Markets, International Econnomic Politics, Law & Regulations, National Economic Politics, Technology, Views, commentaries and opinions on 29.10.10 at 01:50

One of largest telecom companies in the world, wireless carrier Verizon, have agreed to pay $25 Million to the US government as a settlement after an investigation into the company’s billing practice by The Federal Communications Commission. In addition Verizone will pay back about $53 million to subscribing customers.  The payment is the largest settlement in the industry’s history.

“It will serve as a significant deterrent to others in the future.”

Julius Genachowski


The Federal Communications Commission says that it has reached a record $25 million settlement with Verizon Wireless over the company’s wrongly charging customers mysterious internet fees over the past several years.

The payment will go to the US Treasury.

It is the largest settlement in FCC‘s history, and marks the ending of FCC’s 10-month investigation into overcharges at Verizon Wireless, the agency says in a news release.

However, a FCC spokeswoman declined to comment on whether the settlement also ends the agency’s other billing inquiries, The Washington Post writes.

Verizon Wireless’s total costs associated with false fees have reached $77.8 million – one of the largest payouts for false business practices in the communications services industry.

Verizon said earlier this month that it would refund about 15 million subscribers $52.8 million for those unwanted data charges. Verizon partly attributed the problem to a software glitch in phones.

“In these rough economic times, every $1.99 counts.”

Julius Genachowski

“People shouldn’t find mystery fees when they open their phone bills — and they certainly shouldn’t have to pay for services they didn’t want and didn’t use,” FCC Chairman Julius Genachowski says in a statement. Adding: “In these rough economic times, every $1.99 counts.”

Verizon Wireless says in a news release that its overcharges were “inadvertent.”

“We accept responsibility for those errors, and apologize to our customers who received accidental data charges on their bills,” Verizone says.

Genachowski also says that the large settlement is meant to send a signal to other communications services providers.

According to telecom analysts, it seems like the FCC is ramping up regulatory pressure on companies to protect consumers.

“It will serve as a significant deterrent to others in the future.”

Genachowski has indicated that he will look into regulatory fixes for the growing fines associated with breaking long-term service contracts.

Earlier this month, the FCC began an exploration into regulations that would require cellphone service providers to alert users when they are close to going over their monthly allotted voice, text and data limits.

In a survey, the agency said 30 million cellphone users said they experienced “bill shock,” with extra charges on their monthly bills for data overcharges and other fees.

“It will serve as a significant deterrent to others in the future,” the FCC chairman says.

G20 meeting in Washington

.

On a personal account: I’m not quite sure who Genachowski is referring to when he says;  “every $1.99 counts.”

The customers? Or the US government?

And, by the way, the US government is not the only government in the world that is looking into “regulatory fixes” at the moment as national debt is mounting…

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EU Demand Explanation On US Plan To Monitor Money Transfers

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 28.09.10 at 23:43

The EU commission and several MEPs have requested clarifications from Washington on reported plans to expand an anti-terrorism program,  targeting financial transactions. A move that could end in an annulment of the the long-debated “Swift agreement” adopted in August.

“We are all getting a bit tired of being taken by surprise all the time. The US is our friend and ally, so we shouldn’t be treated this way.”

Sophie in’t Veld


The Washington Post reported Monday that the Obama-administration is looking into expanding the existing anti-terrorism programs targeting bank transfers to the extent that a long-debated so-called “Swift agreement” with the EU would no longer be valid.

“We urgently seek clarifications from the US if these plans are an infringement  of the Swift agreement and the EU commission promised to demand further information on it,” Dutch Liberal MEP, Sophie in’t Veld, said to the EUobserver.com on Monday evening after a closed-door meeting with commission officials.

Under the current rules, US officials can request European data relevant to a specific terrorist investigation from the Society for Worldwide Interbank Financial Telecommunication, known as “Swift”.

The request needs to be approved by the EU’s police co-operation unit, Europol, and has to meet certain requirements.

Need No Reason

But if the new plans comes into effect, the transactions between European and US banks would be captured “regardless of whether there is a substantiated need,” according to the Washington Post.

Responding to the news, Ms in’t Veld said:

We are all getting a bit tired of being taken by surprise all the time. The US is our friend and ally, so we shouldn’t be treated this way.

The Swift Network

Fooled Again?

Set up in the aftermath of the terrorist attacks on New York and Washington in 2001, the “Terrorism Finance Tracking Program” was initially a covert operation, tapping Swift data without the Europeans knowing about it.

It was only when the story broke, in 2006, that Washington engaged in basic negotiations with the EU, while keeping the program up and running.

How it used to work, between 2001 and 2006.

Using its new powers, acquired with the Lisbon Treaty, the European Parliament in February struck down the interim agreement, interrupting the data flow for half a year.

A final agreement was subsequently negotiated by the EU commission, with extra privacy and oversight provisions, and came into force on August 1th this year.

“We see so many data transfers – passenger name records (PNR), Swift data, credit card information connected to the travel fee – that we are wondering where all this ends,” the Dutch MEP said.

Ms. in’t Veld is responsible for drafting the Parliament’s position on the so-called PNR agreement, which, like the Swift programme, was put into place after the 2001 terrorist attacks and which requires all airlines who fly to or over the US to deliver personal data on their passengers to the American authorities.

The PNR agreement was already struck down once by the European Court of Justice for having the wrong legal basis and the current version is pending approval by the EU legislature.

A compromise solution designed to discourage the parliament form using its “nuclear option” veto is currently being prepared by the EU commission with extra data protection provisions in place.

How it's supposed to work, at the moment.

Sophie in’t Veld presented earlier this month guiding principles for new negotiations with Washington.

The talks could start by the end of this year, and are set to be approved by EU’s interior ministers in October.

“I am not blaming the US for asking us for so much data. They test where the limits are and unless the EU draws some lines, they will take as much as they can,” Ms in’t Veld said.

That may very well be true, but as regular readers of the Econotwist’s Blog know; this is a a really shady deal…

Remember?

Norway’s al-Queda: A Chinese Muslim, Some Baking Soda and Puff! There Goes Privacy…

Related by the Econotwist:

Copenhagen: One-Leg Suiscide Bomber Fail To Blow

Al-Qaeda Calls Off US Attack To Spare Life Of ‘Twilight’ Author

EU-US Top Leaders Agree To Meet In Lisboa On November 19th

EU To Host Freemason Summit

Europe: Cyber Criminals Attack Critical Water, Oil and Gas Systems

Dangerous Economic Misconceptions

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 07.09.10 at 20:01

This is one of the best blog posts I’ve read in a long time; written by  Giordano Bruno of Neithercorp Press, it takes on the whole economic circus – from economists, politicians to journalists – and the game show mentality that seems to permeate the the financial industry and everything related. When you’ve finished reading, pass it on.

“In economics, bad news encourages bad events, whereas the truth is hazardous. For the economy to remain healthy, the establishment must continue to lie.”

Giordano Bruno


For many years, economics in the U.S. has been approached with a ‘game show’ mentality. Wild and backwards speculations on financial growth have become the norm. The daily ‘Wall Street Journal’ and ‘Washington Post’ musings of international bankers and their servile lackeys are treated as divination, rather than the bamboozle they actually signify.

If you play along and contribute to the mechanics of the great casino, then you are treated as a “serious” economist or analyst, regardless of how many times your advice has been completely off the mark, or how many middle-class nest eggs you destroyed in the process.

If you question the conclusions of the pundits and talking heads, or, God forbid, question the validity of the system itself, you are immediately marginalized as a “kook” or “conspiracy theorist”. The workings of the mainstream financial world are more inbred than Hollywood and Washington D.C. combined.

Cable news providers like MSNBC and CNN have set the American people up for fall after fall; sometimes because they were blinded by their own bells and whistles, sometimes because they deliberately and blatantly lied in order to create engineered market sentiment.

In the wake of the initial credit market collapse of 2008, these people, who didn’t see it coming and denied it was happening, still have their jobs, still have their TV shows and news columns, and, are still generally blowing smoke up our posteriors.

It’s not that the inhabitants of this country continue to trust the MSM (some do; seniors on prescription medication, yuppies on prescription medication, ignorant day traders who are often self-medicated, etc.), it’s just that the well established opposing views and arguments we in the Liberty Movement are exposed to by honest alternative news sources have not been properly presented in a forum that is widely visible to the average citizen.

When was the last time you saw a Ron Paul, a Peter Schiff, a Gerald Celente, or a Max Keiser, etc. on a MSM financial program for any longer than ten minutes? When have we ever seen the opposing view given respectful consideration in a fairly moderated debate?

Would any high level ghoul from Goldman Sachs, JP Morgan, or the private Federal Reserve, submit to an unbiased hour long televised discussion with any analyst from our side of the line?

On the few occasions in which Ben Bernanke was cornered in the highly controlled environment of Congressional hearings, he was either completely unable or unwilling to give a coherent response of any substance to the questions of Ron Paul.

Anytime these men are taken out of the protective element of the worshipful MSM shell and actually challenged, their arguments fall apart.

In some fields of research, dishonesty and misconceptions can cost lives. In economics, dishonesty and misconceptions can cost MILLIONS of lives.

Mainstream financial analysts (and the MSM in general) have lost all sense of responsibility for what they do, and thus, continue to put our society at risk and continue to lose vaster portions of their audience year after year.

The problem is that the vacuum left behind by this mass exodus from the MSM has not yet been correctly filled with principled alternative news providers.

We are growing everyday, but the information void is still ever present, and the memory hole continues to be exploited by global bankers.

Some people don’t know where to turn, and have instead given up on looking for the truth altogether.

My only option has been to continue drilling away at the root points of disinformation, along with many other uncompromized researchers, and hope that consistency and perseverance win the day by accumulation and attrition.

With that strategy in mind, we will now examine the instabilities behind our current recession/depression. We will then follow by deconstructing the most prominent economic misconceptions surrounding them (often perpetuated by the MSM), along with those misconceptions you will probably hear in the near future…

Did Someone Say “Recovery”?

There are a handful of exceptions in history, but those aside, one of the safest generalizations one can make, is that governments lie. Why do they lie?

Simple; because they are afraid of how the public might react if they knew the truth. Governments are often composed of men with a strong sense of self-interest, and an even stronger sense of self preservation.

This drives them to put their own agendas over the well-being of the people they are supposed to serve. And, if it’s safe to bet that governments lie, it’s an even safer bet that international bankers, who have no principled ties to any country, lie more!

During the Great Depression, government officials, mainstream financial analysts, and global bankers, released press notices and interviews every year for over a decade, all claiming that “recovery” was just around the corner, that good times were back again.

Then, we witnessed a world war. A third of the planet was leveled, but America (unlike most countries) came out with its industrial base still intact, and so, we called it a recovery (actually just a reallocation of world assets into one of the few un-scorched nations left) and happily skipped on our way towards the comparably decadent 1950’s.

Today, we face a far more dangerous scenario than the Great Depression ever was, but the strategy of skewed statistics and denial by the elites has remained pretty much unchanged.

Unsupported talk of recovery fumes from every word and every pore of the establishment media, and the investment community to some extent has even been convinced that if they “wish” for recovery hard enough, if they think happy thoughts, it will materialize, all without any effort, any sacrifice, any suffering, like magic.

Unfortunately, fairy dust and fiat alone are not going to undo the slowly accumulated damage that our economy has sustained for the past several decades. Below, are the reasons why…

Employment Near Great Depression Levels

In the past week, the Obama Administration has preemptively claimed victory on two fronts; a military pullout in Iraq, and the American economy (and conveniently right in time for Labor Day I might add). Of course, he “exaggerated” the pullout in Iraq.

There are still 50,000 troops on the ground, and the troops he did pull out are merely being replaced with private mercenary contractors like those from Blackwater. So, in Iraq, nothing has changed.

The administration’s proclamation that they have “stopped the bleeding” in terms of the economy is a similar misrepresentation of the facts. Its not that they have stopped the bleeding, America has almost bled out!

Counting U-6 measurements of those not considered by the Labor Department as unemployed because they are either off jobless benefits or are working part time, the jobless rate of the U.S. has hovered near 20% for over a year at least.

During the Great Depression at its peak, unemployment reached 25%, but even this comparison is misleading. The population of the U.S. during the 1930’s was around 122 million, meaning far less working age adults than there are today in our population of 310 million people.

In fact, the actual number, not percentage, of unemployed and underemployed today far exceeds that of the Great Depression. The number of desperate people, the critical mass of poor in a country, can have a far more insidious effect on its social environment than the abstract historical “percentage”, at least in my view.

Given the real state of unemployment, why has there been such euphoria over the economy in the past few days? Well, August private employment numbers from the Labor Department of 67,000 jobs created “beat Wall Street estimates”, that’s why. Set aside the fact that 121,000 temporary government jobs were cut equaling an actual net loss of 54,000 jobs.

At least the privet sector is alive, right? Wrong. Here’s the rub…

Mainstream analyst estimates have become an incredibly pervasive delusion among investors and the public lately, a delusion that now has the financial sector dancing to whatever tune the government and the central banks wish to play.

Analysts forecast monthly unemployment reductions or increases based on….?

Certainly weekly unemployment benefits filings are a part of the prediction process, and perhaps a few other statistics which are questionable themselves, but at bottom, these estimates are a blind guess involving very little concrete math. A guess completely subject to the whims of the analysts themselves.

This “guess” is then for some reason treated as a legitimate reference point by the entire market for determining the health of the economy. It becomes a purely fabricated psychological indicator with no basis in reality.

Want to pump up the stock market for a couple weeks? Why not guess lower job creation than is liable to occur.

Or, if you are the Labor Department, tweak the numbers up a little above estimates and then “revise” them down in another month or two after everyone has forgotten.

Bankers and economists projected 40,000 new private sector jobs created in August. Labor Department numbers were 27,000 above that.

Result: stock market jubilee and a declaration that the recovery is in full swing.

The market has become so addicted to the use of arbitrary monthly analyst estimates that they have forgotten to look at the bigger picture, the real and fundamental reference points compiled over decades and used for gauging the actual state of the economy.

Below is a graph from Clusterstock which very clearly and concisely illustrates EXACTLY how our jobs market is doing by comparing the percent of job losses to peak employment today, along side the same statistics from every recession after WWII:

http://www.businessinsider.com/chart-of-the-day-percent-job-losses-in-post-wwii-recessions-2010-9?utm_source=Triggermail&utm_medium=email&utm_term=Clusterstock+Chart+Of+The+Day&utm_campaign=Clusterstock_COTD_090310

When one looks at the broader comparisons of our financial situation, he discovers that a 67,000 job boost isn’t even a drop in the bucket. In our current state, 300,000 to 400,000 jobs a month would have to be generated for at least three years straight in order to reach employment levels similar to those of 2006-2007, before the collapse was fully triggered.

Even if significant job loss has stopped (which is unlikely), no economy can recover without first reducing its static 20% unemployment rate.

The longer this portion of the populace remains out of work, the harder it will be for the government to continue welfare and unemployment programs (modern day soup kitchens). Once these programs falter, the rampant poverty they obscured will become highly visible.

Housing Market Is Never Coming Back

Some might consider this statement to be rather brash. I disagree. According to the data, it is highly unlikely that we will see the housing market return to even a semblance of its former glory in our lifetimes.

I often hear MSM analysts claim on a monthly basis that housing has bottomed, only to have home prices fall yet again, or mortgage rates hit record low after record low:

http://www.reuters.com/article/idUSTRE67P30X20100902

The establishment often tries to turn these numbers on their ear, as if they are a good thing. Record low mortgage rates are touted as investment candy.

“Surely”, they say, ”such low rates will lure homebuyers out in droves.”

However, as of the closing of August 2010, and the end of the homebuyer tax credit, there has been no real estate frenzy, and sales have fallen to the slowest pace on record, all during summer months when home buying is traditionally supposed to increase:

http://www.foxnews.com/us/2010/08/25/new-home-sales-fall-slowest-pace-record-july/

http://www.huffingtonpost.com/2010/08/24/existing-homes-sales-plun_n_692437.html

This long last gasp of the real estate sector is not just limited to residential property. Commercial property is also plunging in value and retail spaces are emptying at a substantial rate.

The overall property value of American malls and shopping centers fell 11% in the second quarter of this year alone:

http://www.bloomberg.com/news/2010-08-19/retail-spaces-lead-biggest-drop-in-u-s-commercial-property-prices-in-year.html

This has caused some to suggest even more government capitalization of banks to protect them from further property declines:

http://www.bloomberg.com/news/2010-08-27/banks-will-need-new-capital-to-withstand-renewed-housing-dip-whitney-says.html

So, no recovery in employment, and no recovery in real estate; the two most important factors necessary for a legitimate revitalization of the U.S economy.

Is there some golden bit of good financial news Obama knows that we don’t. I doubt it. But let’s continue…

FDIC Blackhole Bailout

Anyone who says the stimulus measures ever stopped doesn’t know what they are talking about. We actually have several “blackhole bailouts”; bailouts with undefined limits or no limits at all, draining money from the American taxpayer continuously.

One would be the endless bailout of Fannie Mae and Freddie Mac, which will require more and more stimulus every quarter as the housing market continues to disintegrate.

Another, would be the rarely spoken of bailout of the FDIC, which has been in the red for quite some time now.

Just as Fannie and Freddie’s bailout is dependent on the constant default of mortgage loans, the FDIC’s bailout is predicated on the constant default of banks.

Last year, analysts estimated that we would see approximately 140 bank closures in 2010.

It is now the beginning of September and already 118 banks have been shuttered, well on our way to surpassing the 140 bank estimate:

http://www.huffingtonpost.com/2010/08/21/shorebank-among-8-fdic-ba_n_689910.html

Keep in mind that all of these banks are closing while the FDIC is broke! Meaning, every penny the FDIC pays out to insured account holders is supplied by the Treasury, which is also broke! Where do they get the money? Where else?

The Federal Reserve issues the money out of thin air. Where is this leading? One of two scenarios: either the Fed ends its printing and the FDIC goes bankrupt, causing a run on the banks, or, the Fed continues to print more fiat until the dollar is rendered absolutely worthless on the world market.

For those who think healthier banking is just around the corner, the FDIC expanded its “secret” list of troubled banks this year to over 800!

http://www.investorplace.com/news-opinion/bank-failures-plague-financial-sector.html

This has some of the smarter investors questioning if the bailouts will EVER end. The answer is ‘no’. At least, not until the government defaults, or our currency implodes, which we will discuss in a moment.

Stock Market Hanging By A Thread

The stock market is perhaps the worst possible indicator of the true health of the economy.

No system is more prone to manipulation and engineered equity floods. Some Americans rarely if ever question why or how stocks increase or decrease in overall strength, all they know is, green means “good”, and red means “bad”.

As long as they see green once or twice a week, they are content.

In a market not under duress by central banks, the Dow is supposed to reflect the profit health and viability of the companies that make up its index.

However, in our current market, this is rarely the case. In fact, stock values for the past several months are far above what they should be when considering the low profits and massive debts of our corporate infrastructure. Some estimate using the P/E Ratio (price to earnings ratio), that stocks are at least 30% overvalued.

I think that if we take into account the fact that most banks and funds hold toxic equities worth nothing and count them as AAA rated assets, it is more likely that stocks are 50% to 60% overvalued, and the Dow could easily lose this much in the near future.

The number of investors actively trading in the Dow also affects its “moods”. The lower the market volume, the more wild stocks tend to swing. This is because more and more market value is being determined by fewer and fewer people.

The volume of this August was approximately 30% lower than the volume of August, 2009:

http://www.cnbc.com/id/38932472/August_Ends_With_Miserable_Volume

What this means is, many average investors are pulling out of stocks completely, leaving the big boys even greater dominance of the playing field, and greater ability to drive values up or down at will.

Larger corporations also use subversive tactics to drive up their short term stock value at the expense of long term stability. One such tactic is to forcefully expand through acquisitions of smaller companies in other fields that they cannot really afford.

A good example is HP and Dell’s crazed bidding war for 3Par, or BHP’s bid for Potash:

http://www.dailyfinance.com/story/company-news/heads-in-the-cloud-why-hp-and-dell-are-crazy-about-3par/19615943/

http://www.nytimes.com/2010/08/19/business/global/19potash.html?_r=1

These companies could easily develop along the same guidelines as the companies they are spending incredible sums to purchase, IF they had the long term capital to do so. They don’t. And so, we will see top corporations drive harder and harder to devour smaller companies in order to drive up their own share values all while knowing they cannot continue to sustain themselves in the long run.

Google alone has already announced 18 acquisitions so far this year:

http://www.businessweek.com/news/2010-08-11/google-steps-up-acquisitions-as-some-projects-falter.html

As for average investors, where is all their money going if not into stocks? Investors are snapping up bonds of all types (except municipals which are a death trap), and of course, gold, which is holding near record highs despite all the predictions made against it by the MSM:

http://www.bloomberg.com/news/2010-08-26/investors-redeem-7-1-billion-from-global-equity-funds-in-week-epfr-says.html

This trend has been developing for many months now, and it should come as no surprise that stocks have lost investor trust.

It should also come as no surprise that due to this trend the dreaded “Hindenburg Omen” recently reared its ugly head not once, but twice within the span of 30 days!

http://www.thestreet.com/story/10835851/hindenburg-omen-is-a-stock-market-crash-imminent.html

The indicator has a 92% success rate in predicting a considerable stock market decline, and the probability of a major stock market crash after a single Omen is around 24%.

*

Establishment analysts have attempted to shrug off the indicator, or apply a “modern take” to the definition of an actual Hindenburg Omen, so as to dilute its meaning and the warning.

*

But this is what they have always done from the Great Depression to today; plant the seeds of false hope in an economy clearly on the verge of failure.

Asia Will Not Pick Up U.S. Slack

The prevailing argument in the MSM is the globalist one; that the fall of the U.S. consumer is a natural part of global “harmonization”, and that devaluation of the U.S. dollar is a “good thing” because it will “force” the east to begin purchasing more U.S. goods, driving up our exports and manufacturing leading to an “industrial rebirth” in America.

There is absolutely no logical basis for this argument.

Essentially, establishment economists want us to believe that Asia is going to pick up where the American citizen left off as the new super-consumers, and we will jump right back into our post WWII role as manufacturing giants, all in time to head off any major crisis in the world economy.

This is a fantasy.

While it is true that America must eventually return to its industrial roots if we are to survive, our manufacturing capability is almost non-existent compared to what is required to make such a transition in the short term.

MSM talking heads argue that the U.S. has the greatest manufacturing capability on Earth, but what they fail to mention is that the vast majority of our factories are on foreign soil, not here in the U.S.!

After outsourcing all our manufacturing capability to the third world, it could take a couple decades to rebuild our home industry to effective levels, and this is a conservative estimate considering our country has no savings and is drowning in debt.

China has shown it has no intention of turning to the U.S. for goods they could easily make themselves or import through the new ASEAN trading bloc, which is really just the foundation for an Asian Union, eventually relying on the Yuan as its reserve currency.

Chinese trade has increased almost 50% this year with ASEAN, not the U.S.

http://english.peopledaily.com.cn/90001/90776/90883/7119280.html

While China’s non-bond investments in the U.S. have dropped 47%:

http://www.bloomberg.com/news/2010-08-26/china-reducing-risk-by-cutting-u-s-investments-heritage-foundation-says.html

If the Obama Administration is so interesting in building a better trade relationship with China and convincing them to purchase our exports, as they have claimed in the past, you would think they would try to involve themselves further in the activities of ASEAN.

Instead, Obama failed to name any ambassadors to the major ASEAN trade conference last month in Vietnam.

This only caused China and other Eastern nations to feel slighted and ignored by the U.S; always a good idea to thumb your nose at someone before asking them to buy your stuff:

http://www.bloomberg.com/news/2010-08-26/u-s-absence-at-southeast-asia-trade-meeting-draws-criticism-from-senator.html

The financial and political moves by China show not a reversal of roles as exporter nation and importer nation, but a complete separation of the two economies, an ending of substantial economic interaction or reliance.

The developments in Treasury bonds and the Chinese currency only reinforce this fact.

Japan, China, ASEAN, And The Dollar

The U.S. Dollar continues to exist for one reason and one reason only; habit. As the World Reserve Currency, the dollar has been entrenched across the globe as the primary trade mechanism.

It holds psychological significance among investors not because it is stable but simply because it has played this role for so long. The common assumption is that this role will not change anytime soon. What most Americans don’t know though, and what the MSM rarely talks about, is that the dollar’s role has already changed.

In light of endless quantitative easing measures, mushrooming U.S. debt, and Obama’s harebrained new plan for FDR-like public works programs which we cannot afford, the time has come to pay the piper.

Investors are abandoning the dollar as a safe haven and are now treating it as a “funding currency”, a middle-man investment for the purchase of higher yield assets, much like the Japanese Yen or the Swiss Franc.

It was only a matter of time:

http://www.reuters.com/article/idUSTRE67J4M920100820

The Chinese Government has now publicly warned that they will be diversifying out of U.S. Treasuries (they already have been for months) and that this will result in “some” devaluation in the dollar:

http://www.reuters.com/article/idUSTRE6820G520100903

China has ramped up cross-border Yuan transactions with other countries making their currency more viable as a trade mechanism, and making the dollar less necessary:

http://english.people.com.cn/90001/90778/90859/7126304.html

Both the U.S. and EU governments are practically begging China to allow a fast appreciation in the Yuan, which could only be precipitated by a dump of their Treasury reserves and a considerable devaluation of the dollar:

http://www.reuters.com/article/idUSTRE67R1H220100828

And most startling (but not all that unexpected), is the incredible amount of PR the Yuan is getting as a reserve currency from international banks and corporations. Global banks, including Citigroup and JP Morgan, are launching “roadshows” promoting trade using the Yuan or “Renminbi” instead of the U.S. dollar!

That’s right! Global bankers are now openly pushing for the dollar to be replaced by the Yuan in international trade:

http://www.gata.org/node/8961/print

(Special Note: The article above was also published on CNN.com in full, but has since been removed)

Even McDonald’s is now selling Yuan denominated bonds:

http://www.bloomberg.com/news/2010-08-19/mcdonald-s-yuan-bonds-set-standard-as-china-promotes-debt-credit-markets.html

There is absolutely no doubt, China is spreading the Yuan everywhere. Inflationary effects are already occurring because of this move:

http://www.bloomberg.com/news/2010-08-25/china-s-official-inflation-data-mask-surge-in-food-prices-medical-costs.html

The only way to avoid severe negative effects on the average Chinese citizen is to allow an unprecedented surge in the Yuan’s value in order to increase consumer buying power in line with inflation.

Again, the best and most efficient way for China to make this happen is to dump their U.S. Treasury Bond holdings.

It seems that Japan, the second largest holder of U.S. debt, may not be far behind China in this respect. The Yen has recently risen to a 15 year high against the dollar, causing the Japanese Government to discuss the possibility of a currency intervention.

However, Japan is well aware that if the U.S. is so adamant about Chinese currency manipulation, it will be just as disruptive over Japanese currency manipulation:

http://www.bloomberg.com/news/2010-08-27/japan-yen-intervention-may-fail-without-u-s-european-union-coordination.html

Without help from the U.S. and the EU, a currency intervention in Japan would surely fail. Japan, unlike China, has not re-engineered its economy for greater consumption and has maintained its traditional export relationship with the U.S.

This has resulted in dismal revenues and a continuous deflationary spiral in the Japanese economy. So what is Japan to do?

Every move by international banks to pump up China, along with the U.S. Government’s demand that China allow a quick appreciation in the Yuan despite the obvious negative effect it will have on the dollar suggests to me that there is a deliberate strategy by global bankers to end our currency’s world reserve status and debase our financial system, but, it also looks as though the Japanese people are being prepared at the same time to accept full membership in ASEAN.

This has been discussed by the Japanese for some time, but the cultural divide between China and Japan is still very strong.

Making the Japanese populace highly dependent on China for economic stability may not go over well without prompting:

http://www.reuters.com/article/idUSTRE6810LQ20100902

It appears that Japan, just like the U.S., is being positioned between the proverbial “rock and a hard place”.

If they continue to rely on poor U.S. consumption, if investors continue to pour into the Yen as a safer hedge than the dollar, Japan will face dire deflationary consequences, especially if the EU and the U.S. do not support a Yen intervention.

The only option left to them (rather conveniently) is to conform to the ASEAN trading bloc. Why is this bad for the U.S.? The side effect of this move would probably entail the Japanese dumping of U.S. Treasuries, right on top of China’s.

This means the end of the dollar.

The World Hurts More Without The Truth

My favorite propaganda trend in the mainstream media today is one directed at researchers like myself who expose the darker side of our economic and political environment.

The term “Apocalypse Porn”, or “Doomer Porn”, is rising as the preferred Ad hominem attack on Liberty Movement writers, in place of “conspiracy theorist” which doesn’t seem to be working for them anymore.

The MSM apparently spends more time trying to develop ‘memes’ like this than they do actually researching the so called news they propagate.

The insinuation is that we either embellish data to make it seem more frightening than it actually is, or, that by reporting on valid but terrible news, we are a “danger” to society, because we perpetuate fear.

Basically, it is the beginnings of an argument for suppression of 1st Amendment rights.

The reason the information we report on is disturbing is not because it is “bad”, but because it is TRUE.

There are children who could make the distinction, but some full grown men and women seem to have difficulty with the concept. When the establishment says that we as researchers and alternative media do not have a right to spread facts that might upset you, what they are also saying is that you as an American cannot be trusted to act responsibly and constructively with the facts you are given.

They are saying that they need to protect you from yourself. Who ever gave them permission to take on that job?

The Doomer Porn argument rings hollow because what I state here in these articles is entirely subject to your verification.

If I embellish, or lie, I will be caught, and thus, my writing becomes meaningless. If I tell the truth, the hard truth, it is not up to me or the MSM or anyone else accept yourself to decide what you will do with it.

Perhaps the greatest misconception of all, especially in economics, is that bad news encourages bad events. That the truth is hazardous, and for the economy to remain healthy, the establishment must continue to lie.

The presumption that our financial system is so dependent on our mass psychology is complete nonsense. The dollar is being fundamentally debased whether or not we blindly “believe” the dollar is fine.

Our country is facing unserviceable national debts whether or not we force ourselves to think positive thoughts. The stock market is exceedingly overpriced and primed for collapse even if you and I ignore all the warning signs and drink margaritas on white sandy beaches all day with big dumb smiles on our faces.

Two plus two equals four no matter what the psychological state of our society is.

The facts are not subject to my “good vibes” or “bad vibes”, and if this is the best argument MSM pundits can make against legitimate alternative financial analysts, then I think they need to pack it up and leave the thinking to more adequate men.

Without confronting the stark reality of our situation, be it economic, political, or social, we will never be able change things for the better. Ignorance is not bliss. The ignorant always end up paying a steep price.

The U.S. economy is going to experience some rather horrifying repercussions, for the actions of the elites who seek to derail our culture and replace it with another, and for the publics’ continued lack of vigilance to those actions.

In my next article, I will be discussing possible solutions to all of the dilemmas I describe above, but first and foremost on the list is developing the ability to accept the nature of the situation as it stands, and not as we would like it to be.

Life has never worked that way, and finance is no different.

By Giordano Bruno

giordano@neithercorp.us

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Signs Of Depression In The USA

In Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 12.08.10 at 16:57

Pessimism reigns with American public. The public is deeply dissatisfied with Congress, the two political parties and the broad direction of the country, according to a  new NBC/Wall Street Journal poll. Just one in five approve of the job Congress is doing while a whopping 72 percent disapprove. Some are even talking about an armed revolution.

“Voters dissatisfied with the direction of government should take to second amendment remedies.”

Sharron Angle


The numbers in the survey are stark, the Washington Post writes. Just one in five approve of the job Congress is doing while a whopping 72 percent disapprove. Six in ten say that this Congress’ performance has been either below average  or “one of the worst.”  Just six percent describe it as “one of the best” or “above average”.

The two political parties fare little better. Thirty-three percent of the sample view the Democratic party positively while 44 percent view it negatively; the news is even worse for Republicans who are seen in a positive light by by 24 percent and a negative one by 46 percent – the worst showing ever for the GOP in the NBC/WSJ poll.

Pessimism Is Everywhere

At a more macro level, evidence of a persistent pessimism is everywhere. Less than one in three people believe the country is headed in the right direction while 58 percent believe it is off on the wrong track.

Nearly two-in-three of respondents says there is “still a ways to go” in the economic downturn as compared to 29 percent who says the economy had already hit the “bottom”.

The extent of the dissatisfaction apparent in this poll is not new – surveys have shown a public growing increasingly unhappy with the state of affairs in the country and the Congress for some time now – but does reinforce the idea that the final three months (or so) of the midterm campaign will be extremely unpredictable.

While Democrats will almost certainly bear the brunt of the pessimism running rampant in the country due to the fact that a) they control all levers of power in Washington and b) they hold far more seats in the House and the Senate, it’s clear that the public is far from sold on Republicans, or any politicians.

Something Totally Different

In an election cycle like this one, volatility appears to be the name of the game.

Rick Snyder

Rick Snyder

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The more unhappy voters are with the state of affairs in the country and the less conviction they have that politicians or Washington can fix it, the more they are open to change – to trying something (or someone) totally different.

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Victories by people like Rick Snyder, the wealthy businessman who rode his “one tough nerd” slogan to victory in the Michigan Republican governor’s primary, are the leading edge of that “someone different” mentality.

The November election could produce many more Snyders if these numbers hold.

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Armed Resistance

Sharron Angle

Sharron Angle

Senate Majority Leader Harry Reid is up with a new TV ad slamming former Nevada Assemblywoman Sharron Angle (R) for comments in which she suggested that voters dissatisfied with the direction of government should take to “second amendment remedies.”

The ad features Bill Ames, the president of the Peace Officers Research Association of Nevada, calling Angle’s comments “way over the line.”

“It’s crazy, but what she’s actually talking about is armed resistance,” Ames says. “Look, I’m a member of the NRA and a Republican, but that kind of talk is dangerous and way too extreme.”

Angle’s camp shrugged off the ad. “Reid is desperate to talk about anything except the economy because his policies as Majority Leader have caused over 14 percent unemployment in Nevada and voters hate him for it,” said Angle spokesperson Jarrod Agen.

The commercial is the latest effort by Reid to paint Angle outside of the Nevada mainstream on issues; he has previously attacked Angle’s past statement on Social Security.

Government Is The Problem

Team Angle’s strategy on the airwaves, meanwhile, has been to blame Reid for Nevada’s record high unemployment while charging that “government is the problem” and “we, the people, are the solution.”

Angle has undoubtedly given Reid plenty of fodder for ads, but the new spot comes after the Senate Majority Leader made a gaffe of his own when he told a crowd earlier this week: “I don’t know how anyone of Hispanic heritage could be a Republican, okay?”.

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Reid’s camp later sought to clarify those remarks, saying that Reid’s “contention was simply that he doesn’t understand how anyone, Hispanic or otherwise, would vote for Republican candidates.”

A Reuters-Ipsos poll released last week showed Reid leading Angle 48 percent to 44 percent among likely voters – a much narrower lead than Reid’s 52 percent to 36 percent advantage among registered voters.

Polling conducted since Angle’s June 8th primary win has consistently shown her trailing Reid.

The Tonya Harding Of Florida Politics

Free-spending former health care executive Rick Scott is up with two new TV ads bashing state Attorney General Bill McCollum, his opponent for Florida’s Republican gubernatorial nod.

Bill McCollum

Bill McCollum

The first ad charges that McCollum “promised to spend tax dollars wisely, but then he spent $280,000 taxpayer dollars on chartered aircraft, even for personal use.” The second claims that McCollum has been “caught in a lie again” for conflicting statements he’s made on Arizona’s immigration law.

Both spots, which will be running statewide, refer to the gubernatorial hopeful as “career politician Bill McCollum.”

Scott has been relentless in attacking McCollum on his long tenure in politics as well as his position on the immigration law while McCollum has countered by taking aim at Scott’s political Achilles’ heel – the $1.7 billion fraud case involving his former company, Columbia/HCA.

This week has marked some of the more colorful developments for Scott and McCollum along the campaign trail. Scott held a press conference yesterday in order to defend himself from accusations regarding his current company, the Solantic walk-in clinic chain, but instead was hit with a subpoena in a new lawsuit.

At the same event, Scott decried McCollum as “the Tonya Harding of Florida politics.”
week.

A Mason-Dixon poll released late last week showed Scott leading McCollum 37 percent to 31 percent, with 29 percent undecided. Early voting ahead of the Aug. 24 primary began Monday.

State CFO Alex Sink will be the Democratic nominee.

Bud Chiles, the son of former Gov. Lawton Chiles (D), is running as an independent.

Will Fight For Them

Richard Blumenthal

Richard Blumenthal

Connecticut Attorney General Richard Blumenthal wasted little time in starting the general election fight against former World Wrestling Entertainment CEO Linda McMahon (R) by launching his first ad designed to re-introduce him to voters.

Blumenthal, who has very high approval numbers from his two decades as the state’s top cop, notes his battles against pharmaceutical companies, utilities and “big tobacco” in the ad. “The people of Connecticut know me, and one thing they know about me for sure is that I will fight for them,” Blumenthal says, as images flash of him visiting various constituents.

The ad plays to Blumenthal’s strengths and what has made him a popular figure in the state over the last two decades. While McMahon’s professional wrestling empire will be on trial in the coming weeks, Blumenthal is setting a tone that is above-the-fray, even as plenty of other Democrats have been going negative in their first ads.

It’s likely Republicans will work to quickly change that tone – perhaps bringing up Blumenthal’s exaggerations regarding his Vietnam service.

Blumenthal is also staffing up as the general election begins, adding Tyler Matsdorf, a communications operative for Montana Sen. Max Baucus (D), to his team.

A recent Quinnipiac University poll showed Blumenthal leading McMahon 50 percent to 40 percent, and she had been closing the margin in recent months thanks to her heavy spending in advance of Tuesday’s primary.

Political Handicappers

Washington State Democratic Sen. Patty Murray leads former gubernatorial candidate Dino Rossi (R) 41 percent to 33 percent in Washington’s top-two primary next week, according to a new SurveyUSA poll.

Patty Murray

Patty Murray

But Rossi and a pair of GOP candidates are combining to take nearly half the vote, which could be bad for Murray in the second round of voting a.k.a. the general election.

Washington features an unusual voting system in which all candidates are thrown into one field in the Aug. 17 primary with the top two vote-getters, regardless of party, advancing to the general election.

The poll suggests that Rossi faces little danger of not finishing in the top two; former NFL player Clint Didier (R) takes 11 percent and Paul Akers (R) receives five percent.

(Didier has the backing of former Alaska Gov. Sarah Palin and he and Akers are running an unorthodox joint campaign to take down Rossi as the establishment candidate.)

Murray, first elected in 1992, has consistently overperformed expectations in her re-election races. But, Rossi is widely seen as her most serious opponent yet and leading political handicappers rate the race as a toss up, the Washington Post concludes.

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The US FED Launch The QE2 – Beta Version

In Financial Markets, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 11.08.10 at 00:27

The US Federal Reserve announced Tuesday that it would spend a relatively small amount of money – about $10 billion a month, economists estimate – buying government debt in an attempt to lower interest rates and boost the alleged economic recovery. Just two months ago, the FED sounded optimistic about the economy. Now the central bank is clearly more worried, and economists say there’s not much more it can do to help.

“In our view, this marks a “baby step” toward renewed quantitative easing later this year.”

Goldman Sachs


In a statement after a one-day meeting, the FED says the pace of the recovery “has slowed in recent months.” After its last meeting in late June, the FED was a lot rosier, saying that the recovery was “proceeding” and the job market actually improving. We’ve heard that one a few times over the last six to 12 months, and as the Econotwist’ Blog and others have pointed out; it is just not true. However, today’s move it’s just a little trial version before the full release of the second round of massive quantitative easing.

The decision to buy government debt, using proceeds from FED investments in mortgage bonds, was a shift from earlier this year, when the US central bank was laying out plans to roll back some of the measures it took during the financial crisis.

At that time, the FED was also preparing a strategy to begin raising interest rates again, a step taken to keep a growing economy from overheating.

The FOMC Meeting

Now, however, the FED has decided to keep its benchmark interest rate near zero.

Other aspects of the statement reinforce the sense of increased uncertainty about economic prospects.

“I don’t think they are going to raise interest rates until it is very clear that unemployment is moving definitively lower and that doesn’t look likely until late 2011,” says Mark Zandi, chief economist at Moody’s Analytics, according to the Washington Post.

Economists points out that buying $10 billion of government debt in a $14 trillion economy is a relatively small move, and they say they do not expect it to have a dramatic impact.

“The FED talked loudly but carried a small stick,” Joel Naroff, president of Naroff Economic Advisors, says.

Adding that while the financial system has the money to lend, banks are unwilling or unable to find suitable loans to make.

Until they do, he says, “the recovery will be softer than anyone hoped for and there may be little the FED can do about it.”

Baby Step Toward The Real  QE2

Analysts ar Goldman Sachs says the FOMC takes a “baby step” toward renewed quantitative easing by deciding to reinvest principal repayments of agency and mortgage-backed securities.

Here’s the main points in Goldman’s comments:

1. The Federal Open Market Committee downgraded its assessment of US growth prospects and reacted, as we thought they might, by deciding to hold the size of their portfolio fixed by reinvesting principal repayments of agency and mortgage-backed securities in “longer-term Treasury securities.” (They already roll existing holdings of Treasury securities.) In an accompanying statement, the New York Fed’s Open Market Desk indicated that purchases would be concentrated in the 2- to 10-year sectors of both nominal coupons and TIPS.

2. In our view, this marks a “baby step” toward renewed quantitative easing later this year or early next, as discussed more fully in last Friday’s US Economics Analyst, though this obviously depends on a view that the economy remains as sluggish as we forecast . Technically, the step marks the removal of a slight bias toward tightening in the sense that it keeps the balance sheet fixed rather than letting it shrink over time. In March, Brian Sack, Manager of the Open Market Desk, indicated that this shrinkage would be in the neighborhood of $200bn from that time through the end of 2011 (roughly a 21-month period, so just short of $10bn per month), though of course this figure may have risen as lower interest rates would have instigated more mortgage refinancing. To our knowledge, the FED has not provided an updated estimate of this run-off.

3. This part of the decision has obscured other changes in the statement, most of which were in the direction anticipated. In particular, the opening statement recognizes a slowing in the pace of recover of both output and employment, the increase in equipment and software is downgraded to “rising” from “has risen significantly,” and the last sentence is revised to recognize that the pace of recovery is apt to be “more modest …. than had been anticipated.” On the other hand, the committee removed the statement that “financial conditions have become less supportive of economic growth.”

4. Changes in the inflation paragraph were inconsequential, removing references to declines in prices of energy and other commodities but continuing to note “measures of underlying inflation have trended lower.” The main thing to note here is that the committee chose to keep this idea in the statement despite upward revisions to the core PCE index. Those revisions preserve the sense of disinflation, but from a slightly higher position than previously.

5. Kansas City President Thomas Hoenig renewed his dissent to the “rate commitment language,” which remained unchanged word for word, and extended the objection to the decision to reinvest.

(Source: Zero Hedge)

FED Have Lost Confidence

Barclays’ analysts, who was among them who believed there were no chance in hell the the FED would don anything, says in today’s statement that the action shows that FOMC is loosing confidence in the strength of the recovery.

Here’s the statement from Barclays:

* Changes to the FOMC statement indicate that the Fed has lost some confidence in the strength of the recovery. In order to “help support the economic recovery,” the Committee voted to keep the Fed’s holdings of securities at its current level by “reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.” The statement, as expected, also retained the language indicating that the federal funds rate is likely to remain exceptionally low for an extended time.

* In respose to the incoming data received since the last meeting, the FOMC indicated that “the pace of recovery in output and employment has slowed in recent months.” The Committee continued to indicate that business spending remains robust while household spending remains constrained by “high unemployment, modest income growth, lower housing wealth, and tight credit.” The FOMC expressed its unease in the state of events by noting that “the pace of economic recovery is likely to be more modest in the near term than had been anticipated.” In other words, the Fed does not appear to view the recent slowing of activity as simply a soft patch in the recovery.

* On the inflation front, the statement removed the language suggesting that lower energy and commodity prices were pushing inflation lower in favor of past language stating that inflation is likely to remain subdued and with stable inflation expectations.

* The statement noted that the maturing principal and interest from agency debt and agency mortgage-backed securities will be reinvested into “longer-term” Treasuries. Subsequent guidance provided to the Open Market Desk at the FRBNY indicates that the Fed will concentrate its purchases in the two- to ten-year portion of the curve. This is similar to the operating procedures put in place under the original Treasury purchase program, which amounted to $300bn. Furthermore, the directive states that the Desk should keep holdings of securities at current levels, which was $2.054trn as of August 4, according to the most recent H.4.1 data.

* Finally, if the FED has indeed lost a measure of confidence in the strength of the recovery, the change in strategy towards keeping the balance sheet at an elevated level will likely lead to increased speculation about additional asset purchases at coming meetings. Our view is that simply reinvesting the proceeds from maturing agency securities will not provide much additional stimulus and, should the outlook continue to worsen, then the FED will likely initiate a new round of asset purchases, most likely in Treasury securities.

Oh yes, baby! There’s a big boat coming….

Related by the Econotwist:

USA Could Be Forced Into Another Trillion Dollar Bank Rescue

A Report To Make You Go “Hmmm…”

Meredith Whitney: Even More Bearish On Housing And Financials

Will Basel III Crush the Global Economy?

Helicopter Ben; Cleared For Take Off

US Congress Question Morals of Monetary Policy

The Dirty Little Secret Of The Dodd-Frank Legislation

The Failure Of A Culture

EU: Trading Bailouts For Weapons

Jim Rogers Says CNBC Is A PR Agency

Fitch: Banks Need More Capital Than Stress Test Shows

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Texas Billionaires Charged With Fraud

In Financial Markets, International Econnomic Politics, National Economic Politics on 30.07.10 at 12:19

Sam and Charles Wyly, billionaire Texas brothers who gained prominence spending millions of dollars on conservative political causes, committed fraud by using secret overseas accounts to generate more than $550 million in profit through illegal stock trades, the Securities and Exchange Commission said.

“They are among the biggest of the big when it comes to campaign bank-rollers, and their donors list is a who’s who of the Republican Party over the past decade.”

Dave Levinthal


The Wylys, who have been generous contributors to the Republican Party and GOP candidates, have spent the past several years facing questions, including from a Senate investigative committee, about whether they hid millions of dollars in tax shelters abroad.

Through their lawyer, the Wylys denied all charges.

According to the SEC, the brothers, who live in Dallas, created an elaborate and clandestine network of accounts and companies on the Isle of Man and in the Cayman Islands. The brothers then used these accounts and companies to trade more than $750 million of stock in four public companies on whose boards they served, not filing the disclosures required for corporate insiders, the SEC said.

Charles Wyly

In one case, the SEC alleges that the Wylys traded based on insider information they learned as board members, netting a profit of $32 million.

“The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws,” Lorin L. Reisner, deputy director of SEC enforcement, said Thursday in a statement announcing the civil charges.

The agency is seeking unspecified financial penalties and a variety of other sanctions, including barring the Wylys from serving as directors or top executives of public companies.

According to The Washington Post, William Brewer III, a lawyer representing the Wylys, said they intend to clear their name.

“After six years of investigations, the SEC has chosen to make claims against the Wyly brothers — claims that, in our view, are without merit,” Brewer said in a statement. “It will come as little surprise to those who know them that the Wylys intend to vigorously defend themselves — and expect to be fully vindicated,” he says.

“They are among the biggest of the big when it comes to campaign bank-rollers, and their donors list is a who’s who of the Republican Party over the past decade,” says Dave Levinthal, a spokesman at the nonpartisan Center for Responsive Politics.

“It’s almost hard to find prominent Republicans who haven’t been a beneficiary of their financial largess. They’ve definitely been very kind, financially speaking, to a number of Republicans,” Levinthal says.

Both brothers, according to Forbes magazine, are billionaires who amassed their fortune by founding a computer company and investing in a wide range of interests including oil, insurance and restaurants.

In 1979, Sam Wyly faced sanctions by the SEC for improper regulatory disclosures.

They have been the subject of probes into potential financial wrongdoing since then. In 2006, the Senate permanent subcommittee on investigations completed a report on tax havens that focused on the Wylys.

Over 13 years, the Wylys used an “armada” of lawyers, brokers and other professionals to manage hundreds of millions of dollars in transactions that amounted to “the most elaborate offshore operations reviewed by the Subcommittee,” according to the panel’s report.

The regulators alleges that the Wylys committed fraud and various other violations of securities laws while sitting on the boards of four companies over the course of a decade: Michaels Stores, Sterling Software, Sterling Commerce and Scottish Annuity & Life Holdings.

The SEC says that by using offshore accounts to trade shares of these public companies, the Wylys were able to escape filing the regulatory disclosures required of board members when they buy or sell shares.

By keeping their trading activity secret, the Wylys deprived outside investors of information they could use “to gauge the sentiment of public companies’ insiders and large shareholders about the financial condition and prospects of those companies,” the SEC says.

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Goldman Sachs Charged With Fraud – Here's The SEC filing

In Financial Markets, International Econnomic Politics, National Economic Politics on 16.04.10 at 18:03

I’ve checked; it’s not an April fool’s joke. The seemingly untouchable financial firm, allegedly the main bank behind the financial crisis, is charged  with fraud by the U.S. regulators. The story is just breaking. Here’s a copy of the original SEC filing, and a summary of what’s being reported so far.

“The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, civil penalties and other appropriate and necessary equitable relief from both defendants.”

The U.S. Security and Exchange Commission

This is a short message from The Washington Post:

“Federal regulators charge Wall Street firm with civil fraud for involvement in subprime mortgage securities.”

Here’s a copy of the SEC filing.

For more information, visit washingtonpost.com:
http://link.email.washingtonpost.com/r/BZYGW4/H446X/2AK9ZH/IUWCU6/LUKMM/E4/t

The Wall Street Journal have just published the following article:

The Securities and Exchange Commission on Friday charged Goldman Sachs Group Inc. with defrauding investors by allegedly marketing a financial product tied to subprime mortgages without telling them a big hedge fund was on the other side of the trade.

The SEC’s civil lawsuit is one of the biggest moves by authorities in response to the financial crisis of 2007-08, and it sent Goldman shares sharply lower. The firm’s shares were down about 12% around midday, and the Dow Jones Industrial Average was off more than 1%.

In a statement, Goldman said, “The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.”

The lawsuit is connected to trades that brought big profits to a hedge fund, Paulson & Co. The fund’s chief, John Paulson, bet that the housing market would collapse and risky mortgages would tumble in value. Paulson & Co. made $15 billion in 2007, a payday that put Mr. Paulson in the pantheon of some of Wall Street’s most successful traders.

Mr. Paulson wasn’t charged by the SEC. He didn’t immediately respond to a request for comment.

According to the SEC, Goldman structured and marketed a synthetic collateralized-debt obligation, or CDO, that hinged on the performance of subprime residential-mortgage-backed securities. The CDO was created in early 2007 when the U.S. housing market and related securities were beginning to show signs of distress, the SEC complaint said.

“Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc., with economic interests directly adverse to investors in the [CDO], played a significant role in the portfolio selection process,” the complaint said.

The complaint said Paulson had an incentive to stuff the CDO with mortgage-backed securities that were likely to get into trouble. SEC enforcement chief Robert Khuzami alleged that Goldman misled investors by telling them that the securities “were selected by an independent, objective third party.”

“The product was new and complex but the deception and conflicts are old and simple,” said Mr. Khuzami.

By January 2008, 99% of the CDO’s portfolio had been downgraded, the complaint said. As a result of that bet, Paulson made about $1 billion and investors lost more than $1 billion, SEC said. Goldman was paid $15 million for the deal with Paulson.

The complaint didn’t name Paulson because the firm didn’t make any disclosures to investors, said Mr. Khuzami. Most SEC complaints involve improper disclosures.

The SEC also named Goldman employee Fabrice Tourre in the complaint, saying he was “principally responsible” for creating the CDO. Mr. Tourre, 31 years old, currently works in London as an executive director of Goldman Sachs International. A lawyer for Mr. Tourre couldn’t immediately be reached.

Read the full article at online.wsj.com

Here’s More:

From Seeking Alpha:

GS Fraud Charge Crushes Financials

Woe to the Financials: SEC Complaint vs. Goldman Opens Pandora’s Box

GS Charges Having Wide Impact

Goldman’s CDO Troubles

Here’s Goldman Sachs’ response.

CNBC reports:

Goldman Defrauded Investors, Costing Them $1 Billion: SEC

Paulson’s Hedge Fund Made Billions on Subprime Crisis

Goldman CDS Cost Jumps on SEC Fraud Charges

GS Real Estate Fund Lost 98 Cents on the Dollar

From Zero Hedge:

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

Did Goldman Short Itself, Reuters Reports Goldman Was Told In Advance It Faced SEC Action

GOP Leader Calls Goldman “Obama’s Top Wall Street Ally” Asks “Just Whose Side Is President Obama On?”

Latest from Yahoo Finance:

Financial stocks take a hit after Goldman charges

Can the SEC Beat Goldman Sachs?

Video: Goldman says SEC charges unfounded

Goldman: Questions legitimate, answers unclear

More to come….

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U.S. Republicans To Spend $50 million on "Tea Party"

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics on 05.04.10 at 12:58

A group of prominent Republican strategists have combined to form “American Crossroads,” a committee that is aiming to spend upwards of $50 million on House and Senate races this fall. The group plans to take advantage of the Tea Party movement – a series of organized protests that’s sweeping across the United States at the moment.

“We intend to paint a very vivid picture of the fork in the road that this country faces – not merely a choice between two candidates, but a serious philosophical decision about the future of this country.”

Jim Dyke


According to The Washington Post, a group of prominent Republican strategists have combined to form “American Crossroads,” a 527 committee that is aiming to spend upwards of $50 million on House and Senate races this fall. If “American Crossroads” can reach their lofty fund-raising goals in 2010, it could be a major player in the 2012 presidential race.

“We intend to paint a very vivid picture of the fork in the road that this country faces — not merely a choice between two candidates, but a serious philosophical decision about the future of this country,” said Jim Dyke, a former Republican National Committee communications director and now a member of “American Crossroads” board of directors.

Dyke is joined by former RNC chairman Mike Duncan and vice chair Joanne Davidson on the board while Steven Law, a former executive director at the National Republican Senatorial Committee, will serve as president and CEO.

Former Republican National Committee chairman Ed Gillespie and former White House deputy chief of staff Karl Rove are serving as informal advisers to the group as well.

Dyke adds that the group is currently hiring operatives with state-specific campaign knowledge to bolster the operation.

The broader goal of “American Crossroads,” according to Dyke, is to help Republicans win races this fall and “then expand that model to play a decisive role in winning the presidential election two years from now.”

In that, “American Crossroads” is aiming to take a page from what Democrats did in 2004 — constructing a shadow party to spend hundreds of millions on the presidential election.

The Democratic effort — a three-headed beast that included the Media Fund, which handled ads, America Coming Together, which handled turnout, and America Votes, which coordinate between the two — was lauded for its broad reach but disbanded after the election in the wake of a series of campaign finance rulings.

Both parties have tried to recreate the fund-raising successes of 2004 but have never come close.

If “American Crossroads” can reach their lofty fund-raising goals in 2010, it could be a major player in the 2012 presidential race, The Washington Post writes.

Joining The “Tea Party”

The Tea Party protests are a series of nationally-coordinated protests across the United States that first emerged in the beginning of 2009.

The protests are part of a nascent, larger anti-tax political movement called the “Tea Party movement“.

Among other events, protests have been held on:

* April 15, 2009; to coincide with the annual U.S. deadline for submitting tax returns, known as “Tax Day”.

* July 4, 2009; to coincide with Independence Day.

* September 12, 2009; to coincide with the anniversary of the day after the September 11 attacks.

* February 8, 2010; the National Tea Party Convention was held in Nashville, Tennessee.

Most Tea Party activities in 2010 have been focused on opposing the efforts (supported by the Obama Administration) to enact a very broad program of changes to the health care and health insurance industries, and on recruiting, nominating, and supporting candidates for upcoming state and national elections.

A series of national polls conducted by Republican survey researcher David Winston over the past several months provides the fullest picture yet of the Tea Party movement and, as important, how its membership stacks up against the general populace:

1) Roughly one in five people (17 percent) consider themselves members of the Tea Party movement.

2) Of that 17 percent, roughly six in ten identify themselves as Republicans while 28 percent describe themselves as independents and 13 percent call themselves Democrats. Two-thirds self-identify as conservatives while 26 percent described themselves as moderates and just eight percent were liberals.

3) Tea parties are far more male (56 percent) than female (44 percent), a contrast to the general public (48 percent male/52 percent female).

4) Twenty-one percent of Tea Party movement say that the national debt/spending issues are the most important issue facing the country, more than double the number in the overall poll sample.

5) Just 15 percent of self-identifying Tea Party members believe the country is headed in the right direction while 83 percent said it was heading off on the wrong track; a similar 17 percent approved of how President Obama was handling his job while 81 percent disapproved.

The name “Tea Party” is a reference to the Boston Tea Party, whose principal aim was to protest taxation without representation.

The protests have sought to evoke images, slogans and themes from the American Revolution, such as tri-corner hats and “Don’t Tread on Me” flags.

The letters T-E-A have been used by some protesters to form the acronym “Taxed Enough Already”.

A $50 million budget would make up for a lot of hats, flags and tea bags.

But it remains to be seen if the original protesters are willing to join hands with one particular side of the political game board.

Related by the Econotwist:

AIG: What Did FED Bail Out and Why?

Italy Charge Foreign Banks With Fraud

The Bailout Package Under The Christmas Tree

Organizing Financial Rebellion

Greece Launch Critical Bond Sale; Protests Intensifies

Wave Of Protests To Hit Troubled E.U. States

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