Assange or Corzine? [azizonomics]

Priorities are a bitch.

The United States won’t prosecute Corzine for raiding segregated customer accounts, but will happily convene a Grand Jury in preparation for prosecuting Julian Assange for exposing the truth about war crimes.

From the New York Times:

A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.


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Wall Street rises as central banks stand ready [Reuters]

(Reuters) – U.S. stocks jumped on Thursday after news major central banks are preparing coordinated action if the results of Greek elections this weekend generate turmoil in financial markets.

The central banks from major economies will take steps to stabilize markets and prevent a credit squeeze, Group of 20 officials told Reuters.

The news late in the trading day invigorated a market that has been highly volatile this week, whip-sawed by concerns the ballot in Greece on Sunday may set the stage for the country’s exit from the euro zone.

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Traders work on the floor of the New York Stock Exchange June 11, 2012. REUTERS-Brendan McDermid

Wall Street CEOs Got 20% Raises Last Year…Did You? [AllGov]

Even though the majority of the top firms on Wall Street did not perform well in 2011, their chief executives enjoyed a collective 20% raise.

As part of its annual ranking of top salaries, Bloomberg Markets found the compensation of CEOs of the 50 biggest financial companies increased 20.4% in 2011—“a year when most big banks and brokerages saw their revenues, profits and stock prices plummet,” according to Bloomberg News. In fact, 33 of the top 50 had negative share returns in fiscal year 2011.
The highest paid executive was Henry Kravis, head of the buyout company KKR, who earned $30 million.
Second on the list was George Roberts, Kravis’ cousin and co-chief executive officer, who made $29.9 million. Kravis and Roberts also gathered in another $64.2 million each in dividends and other distributions from companies owned by KKR.
Wall Street CEOs Got 20% Raises Last Year…Did You?

The Derivatives NIGHTMARE: A Fraud Far Beyond Fractional Reserve Banking [SGT]



Goldman: 75% chance the Fed will ease at next meeting [SoberLook]

Goldman’s latest research suggests that the Fed is likely to ease at the next meeting this month. This assesment is primarily based on their proprietary indicator called the GS Financials Conditions Index (GSFCI). As a backdrop, they point out that the US economy has slowed, as shown in the chart below. Both the nonfarm payroll growth and the CAI index (Goldman’s index of broad economic activity) have declined sharply.

At the same time the Financial Conditions Index has shown a substantial tightening.


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No Capitulation = No Bottom [FinancialSense]


Wash, rinse, repeat—that has been the script since 2010. Fading monetary and fiscal stimulus leads to a slowdown as economies can’t support themselves and then in come central banks to the rescue and off we go! We are currently in the period in which the third round of global monetary stimulus that began in 2011 is all but over and global markets and economies are weakening as a result.

According to Bridgewater Associates, the third round of monetary stimulus amounted to 2.8% of global GDP and at the end of May the remaining portion was down to 0.4% of global GDP. Unless policy makers step up for a fourth round of global monetary stimulus the path of least resistance appears down. In both 2010 and 2011 we saw major market capitulation in which investors threw in the towel and sent markets reeling. This causes central banks to spring into action and off markets go. Because we have not seen major capitulation and panic in the markets we may not see central bank action just yet, which leaves the markets in a precarious position. If we are to follow the 2010-2011 script we are likely to see lower prices ahead with less bearish participation (fewer stocks falling) which finally causes central banks to act followed by a strong market recovery. Until we see capitulation in the markets I would stay defensive and let the dust settle a bit.

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Catherine Austin Fitts : Deliberate Implosion of the U.S. Economy

Former Assistant Secretary of Housing under George H.W. Bush Catherine Austin Fitts blows the whistle on how the financial terrorists have deliberately imploded the US economy and transferred gargantuan amounts of wealth offshore as a means of sacrificing the American middle class. Fitts documents how trillions of dollars went missing from government coffers in the 90’s and how she was personally targeted for exposing the fraud.

Fitts explains how every dollar of debt issued to service every war, building project, and government program since the American Revolution up to around 2 years ago — around $12 trillion — has been doubled again in just the last 18 months alone with the bank bailouts. “We’re literally witnessing the leveraged buyout of a country and that’s why I call it a financial coup d’état, and that’s what the bailout is for,” states Fitts.


The last days of MF Global [CNNmoney]

How Jon Corzine’s return to Wall Street ended in spectacular calamity. A Fortunespecial report

By Peter Elkind with Doris Burke

Jon Corzine

Jon Corzine

FORTUNE — At about 9:30 p.m. on Tuesday, October 25, David Schamis, a director of a once-obscure futures brokerage company called MF Global, placed a call to his friend, Jacob Goldfield.

Goldfield, 52, was a former trading superstar who had spent 15 years at Goldman Sachs—brilliant and impeccably connected (Bob Rubin and Larry Summers loved him), but equally quirky and unassuming. Raised in the South Bronx, he’d majored in physics at Harvard before dropping out of law school there to start at Goldman, where he made partner in record time.

After leaving the partnership with a fortune in 2000, Goldfield helped manage U.S. Senator Jon Corzine’s blind trust and spent a year and a half as chief investment officer for George Soros’ $11-billion hedge fund. Now on his own, he periodically journeyed west to Stanford, where he conducted economics research at a university think tank.

Goldfield was a crisis junkie. He exuded a childlike fascination with economic events, especially disasters. He found himself summoned to the scene of each new meltdown—AIG, Bear Stearns, Lehman Brothers—by desperate men seeking his aid in the often-hopeless struggle to save a balance sheet under siege. Sometimes he stood to make some money, if a private rescue actually went through. Sometimes it was just volunteer work. Goldfield did it for his friends, or simply because he found it interesting.

Goldfield held a singular notion of how to think about a financial crisis. He viewed it as a predator, intelligent and merciless, hunting you. If you didn’t move fast enough, you’d meet a swift and certain end.

Now MF Global needed his advice.

The collapse of MF Global in October 2011 was a remarkably powerful event: It destroyed the reputation of a famous man; it elevated a firm that no one had ever heard of to infamy; and it shattered public trust in the belief that brokerage customers’ money is always safe.

In the months that followed, America’s eighth-largest bankruptcy has become a spectacle and public scandal. Jon Corzine, the former U.S. senator, governor, and chief of Goldman Sachs who rode MF Global into the abyss, finds his legacy in tatters. And the hunt for the money continues, with investigators chasing $1.6 billion in customer cash that went  missing—something that’snever happened before on Wall Street.

A six-month Fortune investigation into the failure of MF Global reveals a mismatch of tragic proportions: how a too-small company came together with a too-big CEO. Combining their mutual shortcomings—in ambition, controls, and discipline—simply proved toxic.

This story is based on more than seventy interviews with regulators, industry executives, legislators, lawyers, friends and family of Corzine, and people at all levels of MF Global. Fortunealso gained access to hundreds of pages of confidential board minutes, internal reports, company emails, and other documents.

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Keiser Report: Cuckoo Trading

SEC: Taking on Big Firms is ‘Tempting,’ But We Prefer Picking on Little Guys []


If you want to see a perfect example of how completely broken our regulatory system is, look no further than a speech that Daniel Gallagher, one of the S.E.C.’s commissioners, recently gave in Denver, Colorado.

It’s a speech whose full lunacy is hard to grasp without some background.

It’s by now been well-established that the S.E.C.’s performance in policing Wall Street before, after, and during the crash has been comically inept. It would be putting it generously to say that the top cop on the financial services beat has demonstrated particular incompetence with regard to investigations of high-profile targets at powerhouse banks and financial companies. A less generous interpretation would be that the agency is simply too afraid, too unwilling, or too corrupt to take on the really dangerous animals in this particular jungle.

The S.E.C.’s failure to make even one case against a high-ranking executive involved in the mass frauds leading to the 2008 crash – compare this to the comparatively much smaller and less serious S&L crisis twenty years earlier, when the government made 1,100 criminal cases and sent 800 bank officials to jail – became so conspicuous that by the end of last year, the “No prosecutions of top figures” idea became an accepted meme in mainstream news media coverage of the economic crisis.

The S.E.C. in recent years has failed in almost every possible way a regulator can fail to police powerful criminals. Failure #1 was that it repeatedly fell down on the job even when alerted to problems at big companies well ahead of time by insiders. Six months before Lehman Brothers collapsed, setting off a chain reaction of losses that crippled the world economy, one of Lehman’s attorneys, Oliver Budde, contacted the S.E.C. to warn them that the firm had understated CEO Dick Fuld’s income by more than $200 million; the agency blew him off. There were similar brush-offs of insiders with compelling information in cases involving Moody’sChase, and both of the major Ponzi scheme scandals, i.e. the Bernie Madoff and Allen Stanford cases.

The S.E.C.’s attitude toward whistleblowers at powerhouse companies has not just been aloof or indifferent, it’s been downright hostile at times. Whistleblowers commonly report being treated as though they’re the criminal. The most notorious example probably involved Peter Sivere, a compliance officer at Chase who years ago went to the S.E.C. to complain that Chase was withholding an incriminating email from the agency, which was investigating an illegal trading practice. When Sivere contacted the S.E.C. with the documents, he asked if he would be eligible for an award; they told him no, and he gave them the documents anyway. Subsequently, Sivere was fired by Chase because, in the words of Chase’s attorneys, Sivere had “sought payment from the SEC to provide documents and information to them.”


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America’s Total War [RT]

President Obama promised change, but there’s little of it in his war policies, which are harsher than those of George W. Bush.US drone bombings often target not just “terrorists” but all “military-age males in a strike zone as combatants.”

“Unless there is explicit posthumous intelligence proving otherwise”, that is.

As an extensive recent report in The New York Times explains, for all practical purposes Obama is applying what can best be described as a Total War Doctrine, bringing government, military and media propaganda PsyWar under one strategy.

The concept of “Total War” – war involving not just the military but all civilians irrespective of age or sex, together with the entire infrastructure of a country – became a horrible reality during the 20th century, driven for the most part by steering scientific discoveries and technological progress towards unlimited use in warfare.Total War is very much alive today and is being spearheaded by the United States and its Allies.

This is being abetted on all fronts by US, European and global mainstream media that willingly oblige.In the case of Obama’s Total War Doctrine, the media go along with US official policy, and describe the murder of innocent people who just happened to be in the wrong place at the wrong time when American democracy-building drone bombs fall, as “militant combatants”.

You see, Total War requires intense and constant psychological warfare to convince public opinion – both at home and abroad – that “our boys” fighting “to spread peace and democracy”, always do the “the right thing” by killing “the right people” who threaten America, Europe, Israel and the rest of the West; in other words, by only killing “militant terrorist combatants”.

That’s the way Orwellian Newspeak has described US-led wars since 1945 – whether fought by the US alone, or together with allies like Britain, EU countries and Israel, or by puppet proxies.The list is very long: Korea, Vietnam, Panama, Dominican Republic, Palestine, Egypt, Iraq, Afghanistan, Libya, Iran, Africa, South America, Cambodia, Laos, Cuba, El Salvador, Falklands, Nicaragua, Grenada, Serbia…The death-toll runs into the tens of millions and has kept rising and rising.

Who’s next?Syria, Iran? Sudan? North Korea? Venezuela?After 9/11, things went from bad to worse.


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647,762,000,000,000 Reasons to Worry: The Derivatives Time Bomb []

by John Galt from

The hits just keep coming and with $647 trillion reasons to worry, aka, the total notional derivatives now outstanding as of Q4 in 2011 per the Bank of International Settlements just released this afternoon and published officially on Monday (click here for the PDF of the full report).  The really, really good news is that our Federal Reserve has this completely under control and the trillions of dollars in Credit Default Swaps (CDS) and European Interest Rate Swaps will as always settle without concern.


Of course the problem is that as one can see in the graph above, the amount of Gross Credit Exposure has returned to 2008 levels, something the world might want to pay attention to. Once the lessons of the mistakes of the past are ignored, the risk factor increases proportionally and with Europe teetering on the edge of a Lehman event, the increase in interest rate derivatives might well indicate a new risk that has not been accounted for:

A sudden collapse of the Euro currency below the 1.20 or even parity level.

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The We-Fixed-Nothing Chickens Are Coming Home to Roost [charleshughsmith]

When the real problems are masked with fake “solutions,” the chickens eventually come home to roost, and we wake up to the reality that the fake “solutions” have only made things much worse.

The reality that the global Status Quo has fixed absolutely nothing in four years is finally coming to roost in the global economy. Though there is an endless array of complexity to snare the unwary, the source of instability is both visible and easily understood: too much debt that will never be paid back. Making matters much worse, much of the money that was borrowed–by sovereign governments, local governments, households and private enterprises–was squandered on consumption or malinvestments, and so there are precious few assets or collateral underlying the debt.

Even when there is an asset–for example, a vacant house in a vacant development in Spain, or a Greek bond–the market value is considerably lower than the purchase price.

The reality is that trillions of dollars, euros, yen and renminbi in phantom wealth will disappear when the losses that have already taken place are finally recognized. Everyone in the world with exposure to the global economy will become poorer in terms of abundant money floating around buying goods and services as credit dries up and deleveraging wipes out trillions of dollars, euros, yen and renminbi of phantom wealth.

Deleveraging is the process of the market discovering the true value of the asset underlying the debt and the difference between the debt and the proceeds of the asset sale being absorbed as a loss. If an entity needs to liquidate liabilities and/or raise cash to pay bills and interest, then assets will have to be sold. If the market value is less than the debt, then a loss must be booked. If a house carrying a $200,000 mortgage is sold for $100,000, the lender has to absorb a $100,000 loss.

Credit will dry up for a number of reasons, but the basic dynamic is that lenders no longer have enough collateral to generate new loans (except for those guaranteed by Central States) and in a world where assets are being sold to raise cash to stay solvent (the mighty engines of deleveraging), then prudent lenders are wary of loaning money to purchase assets that are declining in market value.

Lew Rockwell on Crooked Elections, Crooked Markets, and Crooked Numbers

USDX Pushing Higher as Money Flows into Treasuries [traderdannorcini]

From traderdannorcini.blogspot

The following chart I put together is interesting in the sense that it reveals exactly what is pushing the US Dollar Index Higher.

Normally, all things considered, the country which possesses the most solid fundamentals in terms of monetary policy, economic growth rate, fiscal policy and above all, YIELD or INTEREST PAID on its government debt, tends to have the strongest currency. At least that is the way it formerly was. These are broad principles and while there are always deviations, if two countries were pretty evenly matched in terms of the first three factors, the nation which had a higher yield on its government debt tended to attract more investment flows and thus had the stronger of the two currencies.

When we think about the US Dollar, we certainly do not think of a nation with sound monetary policy (reckless creation of nearly unlimited units of its currency called Dollars). Nor do we think of a nation with a strong economic growth rate (we were reminded of that today with the lowering of the original 1rst quarter GDP number). And lastly, fiscal policy here in the US is an unmitigated disaster given the enormous and never-ending budget deficits and huge amount of overall indebtedness (the US is now at levels on its GDP to Debt ratio of 100% or higher).

Why then the strength in the US Dollar? It is certainly not fundamentally based.

The truth is investors in Europe are terrified of what is taking place over there and have lost confidence in the bonds of many nations comprising the EuroZone. They are yanking their money and moving it into anything but the Euro which is giving the US Dollar the strength it is currently enjoying.


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Americans to wage civil war against capitalist one-percenters: Analyst

The people in the United States will eventually launch a civil war against the minority capitalist cartels who are making enormous profits at the cost of the people’s sufferings, a political analyst tells Press TV.

“Ultimately, people in the US are turning these international wars of aggression around and they are turning them into a civil war against the one percent that profits it as human suffering goes on,” said Caleb Maupin, with the International Action Center from New York, in a Wednesday interview with Press TV.

Maupin pointed to Washington’s resolve to continue its military adventurism across the world amid the deepening economic crisis in the country and the aggravating life conditions for the American public.

“Fundamentally, this is because the bankers and the one percent that run this country, the wealthy ruling class, have profits to be made from international aggression and from committing crimes and that is an outrage,” he added.

“People are realizing that here in the US and that is why we are seeing all these uprisings; that is why these demonstrations are happening,” the analyst pointed out.

Last week, the US Census Bureau’s annual report revealed that the poverty rate among American women and children reached a 17-year record high in 2010, standing at 14.5 percent.

This is while in the 2012 fiscal year, Washington has allocated USD 531 billion for its base military budget and USD 115 billion for overseas contingency operations.

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Bill Gross: The Global Monetary System Is Reaching Its Breaking Point [Zerohedge]

Tyler Durden's picture

Submitted by Tyler Durden

Think JPM is the “whale” in the market? Think again. Bill Gross exposes the real food chains on Wall Street, and you may be surprised just who is truly the biggest “whale” in the “developed” world. Hint- it is the creature controlled by a Princeton economics professor.

From Pimco’s Bill Gross

Wall Street Food Chain

  • Soaring debt/GDP ratios in previously sacrosanct AAA countries have made low cost funding increasingly a function of central banks as opposed to private market investors.
  • Both the lower quality and lower yields of such previously sacrosanct debt represent a potential breaking point in our now 40-year-old global monetary system.
  • Bond investors should favor quality and “clean dirty shirt” sovereigns (U.S., Mexico and Brazil), for example, as well as emphasize intermediate maturities that gradually shorten over the next few years. Equity investors should likewise favor stable cash flow global companies and ones exposed to high growth markets.?
The whales of our current economic society swim mainly in financial market oceans. Innovators such as Jobs and Gates are as rare within the privileged 1% as giant squid are to sharks, because the 1% feed primarily off of money, not invention. They would have you believe that stocks, bonds and real estate move higher because of their wisdom, when in fact, prices float on an ocean of credit, a sea in which all fish and mammals are now increasingly at risk because of high debt and its delevering consequences. Still, as the system delevers, there are winners and losers, a Wall Street food chain in effect.
These economic and/or financial food chains depend on lots of little fishes in the sea for their longevity. Decades ago, one of my first Investment Outlooks introduced “The Plankton Theory” which hypothesized that the mighty whale depends on the lowly plankton for its survival. The same applies in my view to Wall, or even Main Street. When examining the well-known wealth distribution triangle of land/labor/capital, the Wall Street food chain segregates capital between the haves and have-nots: The Fed and its member banks are the metaphorical whales, the small investors earning .01% on their money market funds are the plankton. Yet similar comparisons can be drawn between capital and labor. We are at a point in time where profits and compensation of the fortunate 1% – both financial and non-financial – dominate wages of the 99% and the imbalances between the two are as distorted as those within the capital food chain itself. “Ninety-nine for the one” and “one for the ninety-nine” characterizes our global economy and its financial markets in 2012, with the obvious understanding that it is better to be a whale than a plankton. Not only do Wall Street and Newport Beach whales like myself have blowholes where they can express their omnipotence as they occasionally surface for public comment, but they don’t have to worry as yet about being someone else’s lunch.

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