Video 1: An interesting interview by Maria Bartiromo of Sir Evelyn de Rothschild on the financial crisis (December 2008). Here’s a quick break down of his main points: Continue reading
Tag Archives: wall street
Radio Interview: CFUV.UVIC.CA, May 10, 2010
Update: Here’s Chris Cook’s radio interview of me on University of Victoria Radio, May 10, 2010.
I’m in the last third. As it was, we didn’t talk much about the crisis, except a bit at the end. We talked mostly about how libertarians suddenly became too dangerous to be allowed across the border.
ORIGINAL POST:
I’ll be talking with Chris Cook of The Peace and Earth Justice website and University of Victoria Gorilla radio show about the financial crisis and the call for regulation; also, about Canada’s increasing unfriendliness to free speech on political matters.
A Preview of the Program:
GR 05-50 101.9 FM 104.3 Cable ‘cfuv.uvic.ca
Monday May 10, 2010
5:00:00 3:00 Welcome to GR, etc. Gordon Campbell’s Liberal party has promised it will enact the Harmonized Sales Tax, or HST come hell or high water; and he may get plenty of both. To call the opposition to the tax popular in B.C. merely scratches the surface of the deep dissatisfaction felt in Canada’s westernmost province. After watching nearly a decade of service cuts, and relentless tax relief to corporations and the wealthiest of British Columbia’s citizens, more tax rises for the working class is about as welcome here as as communicable disease. Resistance to the proposed HST has organized, and petitions currently making the rounds in every voting jurisdiction are piling up signatures, hoping to reach a level that will force the government to back down. Brad Slade is a long-time labor activist and he’s the Regional Organizer for the South Island and the Islands with Fight The HST. Brad Slade in the first half.
And; what lies behind the recent economic meltdown in the United States?
Years of deregulation on high-flying financiers and the introduction of increasingly exotic investment vehicles created a bubble economy whose collapse now threatens the entire global economy, but who is to blame? Lila Rajiva is a journalist and author, whose book titles include: ‘The Language of Empire: Abu Ghraib and the American Media,‘ and ‘Mobs, Messiahs, and Markets’, co-written with Bill Bonner. Her articles are available on the internet at CounterPunch, Dissident Voice, and Lew Rockwell.com, and in mainstream sources such as The Washington Post and The Hindu.
Lila Rajiva and the politics behind financial calamity in the second half.
And; Victoria Street Newz publisher and CFUV broadcaster, Janine Bandcroft will be here at the bottom of the hour to bring us up to speed on the view from Victoria’s burgeoning street society. But first, Brad Slade and B.C.’s tax revolt in the making.
5:03:00 21:00 Discussion w/ Brad Slade
“Welcome back to the show, Brad; it’s been a few months since your last visit here; what’s the latest on the Fight the HST front?”
5:24:00 1:00 Cart(s)
5:25:00 10:00 Janine Bandcroft
5:35:00 3:00 Music
5:38:00 21:00 Discussion w/ Lila Rajiva
Welcome back to GR, etc.
Just what lies behind the recent economic meltdown in the United States? Years of deregulation on high-flying financiers and the introduction of increasingly exotic investment vehicles created a bubble economy whose collapse now threatens the entire global economy, but who is to blame?
Lila Rajiva is a journalist and author, whose book titles include: ‘The Language of Empire: Abu Ghraib and the American Media,‘ and ‘Mobs, Messiahs, and Markets’, co-written with Bill Bonner. Her articles are available on the internet at CounterPunch, Dissident Voice, and Lew Rockwell.com, and in mainstream sources such as The Washington Post and The Hindu.
“Welcome back to the program, Lila; we initially planned to discuss an economics forum that took place in Vancouver over the weekend. What is that forum about, and why were you not in attendance?”
SEC’s Goldman Action: Democrat Political Theater?
Politico raises the ‘timing’ question about the SEC’s Goldman suit:
“The Commission approved the Goldman suit in a vote that spit along party lines – a rare occurrence for approvals of enforcement litigation.
—Before the Commission had released its announcement, the New York Times published on its website a story describing the suit.
–Less than half an hour after the Times story’s publication, Organizing for America, the successor organization to Obama for America and now a project of the Democratic National Committee (“DNC”), sent millions of supporters an e-mail message from President Obama urging support for “Wall Street Reform.”
–Within hours, the Democratic National Committee had purchased AdWords advertising from Google, Inc. The DNC’s Google campaign fundraising advertisement, headed “Fight Wall Street Greed,” appeared whenever a user ran a Google search for the phrase “Goldman Sachs SEC.” It read, “Help Pres. Obama Reform Wall Street and Create Jobs. Families First!” and included a link to www.BarackObama.com, the website of Organizing for America.
–Democrats in Congress and the Administration have heralded the Commission’s suit against Goldman as a welcome boost to their case for the legislation.
–Members of the media have already begun to question the timing of the Commission’s suit and the actions of the Democratic National Committee.
As supported by the Commission’s canons of ethics, and as frequently reiterated by you and other Commissioners, the unqualified independence of financial regulators is crucial to the health of the financial system and the U.S. economy. For this reason, doubts about whether the Commission has scrupulously guarded its independence from the Administration’s partisan political agenda and concerted efforts to manipulate Congressional action are very serious, and should be addressed with full transparency.”
The CIA, the Banks, and Drug Running
Opium and the CIA, Peter Dale Scott:
“Protection for Drug Trafficking in America
Thus it is not surprising that the U.S. Government, following the lead of the CIA, has over the years become a protector of drug traffickers against criminal prosecution in this country. For example both the FBI and CIA intervened in 1981 to block the indictment (on stolen car charges) of the drug-trafficking Mexican intelligence czar Miguel Nazar Haro, claiming that Nazar was “an essential repeat essential contact for CIA station in Mexico City,” on matters of “terrorism, intelligence, and counterintelligence.” When Associate Attorney General Lowell Jensen refused to proceed with Nazar’s indictment, the San Diego U.S. Attorney, William Kennedy, publicly exposed his intervention. For this he was promptly fired. Continue reading
Soros Says Eight More Years Before Next Crash
George Soros sings the siren song of “government,” while admitting that government is the problem: Continue reading
Rick Ackerman: Headlines Misread The Market
“Trader Rick Ackerman interprets the cheer-leading in the headlines:
“Could the newspapers simply be misinterpreting the signs? It would certainly seem that way. To take the headlines cited above, we see oil’s price surge as having absolutely nothing to do with a pick-up in demand. Rather, the push toward $90 a barrel represents speculative excesses in the futures markets, exacerbated by the reluctance of traders to take short positions.
How could they, when, on any given day, a terrorist with a missile launcher could cause the global price of crude to double instantly by scuttling a tanker in the Strait of Hormuz?
As for “bets on growth” pushing stocks higher, it is not bullish speculation that has been driving up shares for the last 13 months, but rather a vast excess of liquidity in the financial system.
As for the rise in T-Note yields to four percent, we seriously doubt this is being caused by competition from expansion-minded borrowers in the private sector; rather, it comes from the rising fear among lenders that they will be repaid in a currency whose value looks all but certain to fall precipitously in the years ahead.
If the central bankers truly believe that strong economic growth is about to trigger inflation, why do they continue to hold the federal funds rate near zero?“
Hedge Fund Lobby Steps Up The Lobbying..
The hedge fund lobby is stepping up the..er… whining and dining in DC, says, Crain’s:
“With all the political and media focus on healthcare reform over the past few months, the financial industry enjoyed a brief respite from attacks and, as would be expected, spent its time and money wisely.
The hedge fund lobby, called the Managed Funds Association, doubled its spending during the last three months of 2009, according to data recently released by the Federal Election Commission. The MFA strategically sprinkled more than $1 million around Washington in the fourth quarter, compared to just $520,000 spent during the same period in 2008.”
Apparently, the hedgies don’t mind registering. What they’re kicking at are some other things:
1. Treating compensation as regular income (with its higher tax rate) rather than capital gains (with its 15% tax rate)
2. The banning of proprietary trading by banks, until now a lucrative source of income, the so-called Volcker rule.
The part I found really interesting in the Crain’s piece is that industry CEO Richard Baker apparently thinks there is a “growing alignment between hedge funds and millions of Americans.”
Oh yeah.
That would be that trader-activist mystique thing where Loeb, Paulson, and Chanos are really doing it for the little guy…….the money is just a side dish.
Um. Yeah. I get that.
And talking about side dishes, I hear that Rachel Uchitel’s interests are just aligned with Joe Six-pack’s too. She isn’t an extortionist and a gold-digger. Oh no. That’s just what it looks like. She’s a conjugal activist. She trying to get Tiger and all those other rovin’ eyes out there to be better husbands…..
A Brief History Of The War On Gold
GATA posts a helpful compilation of links to articles on gold price manipulation and a page on the history of that manipulation at The Privateer.com. And excerpt from that (from the period after 1960):
“The End Of the “Fixed” Dollar
Gold War I – The “London Gold Pool” – 1961 to 1968
By the beginning of the 1960s, the $US 35 = 1 oz. Gold ratio was becoming more and more difficult to sustain. Gold demand was rising and U.S. Gold reserves were falling, both as a result of the ever increasing trade deficits which the U.S. continued to run with the rest of the world. Shortly after President Kennedy was Inaugurated in January 1961, and to combat this situation, newly-appointed Undersecretary of the Treasury Robert Roosa suggested that the U.S. and Europe should pool their Gold resources to prevent the private market price for Gold from exceeding the mandated rate of $US 35 per ounce. Acting on this suggestion, the Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the “London Gold Pool” in early 1961.The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in April 1968. But the demand for U.S. Gold did not abate.
By the end of the 1960s, the U.S. faced the stark choice of eliminating their trade deficits or revaluing the Dollar downwards against Gold to reflect the actual situation. President Nixon decided to do neither. Instead, he repudiated the international obligation of the U.S. to redeem its Dollar in Gold just as President Roosevelt had repudiated the domestic obligation in 1933. On August 15, 1971, Mr Nixon closed the “Gold Window”. The last link between Gold and the Dollar was gone. The result was inevitable. In February 1973, the world’s currencies “floated”. By the end of 1974, Gold had soared from $35 to $195 an ounce.
Gold War II – The IMF/U.S. Treasury Gold Auctions – 1975 to 1979
On January 1, 1975, after 42 years, it again became “legal” for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process. This had two results. It depressed the price of Gold, which fell to $US 103 in eighteen months. More important by far, it “burned” large numbers of small individual investors.But this “pre-emptive strike” against the Gold price did not solve the imbalances inherent in the floating currency regime. As the Gold price began to recover from its August 1976 low, the (US-controlled) IMF along with the Treasury itself, began a series of Gold auctions in an attempt to hold down the price through official means. But the problem of yet another free fall in the international value of the Dollar got in the way. Between January and October of 1978, the Dollar lost fully 25% of its value against a basket of the currencies of its major trading partners. By early 1979, due to this precipitous fall, the demand for Gold was overwhelming the amount that the IMF/Treasury dared supply, and the Gold auctions came to an end.
Gold regained its ($195) December 1974 level by July 1978. It then pressed on to new highs, hitting $250 in February 1979 and $300 in July. Also in July, Paul Volcker was appointed as Fed Chairman by a desperate Jimmy Carter. Gold continued to surge, hitting $400 in October. While this was happening, Mr Volcker was attending a conference in Belgrade. There the assessment was made that the global financial system was on the verge of collapse. When Mr Volcker returned to the U.S. from Belgrade, he took a momentous step. He announced that the Fed was switching its policy from controlling interest rates to controlling the money supply.
This new Fed policy took some time to have effect. In the meantime, Gold soared from $381 on Nov. 1, 1979 to $850 on Jan. 21, 1980. The public, who had been burned in 1975, were late on the scene. The great burst of public Gold buying came in the four weeks between Christmas 1979 and the Jan 21, 1980 high. As in 1975, they were “burned” again.
The Paper Era Begins
In early 1980, Mr Volcker’s new Fed policy began to bite. U.S. interest rates began to skyrocket. As they rose, the Dollar first slowed its descent, then stopped falling, and then began to rise. Both the public and the investment community which had stampeded into Gold was lured back into paper by this huge rise in interest rates – and by the prospect of a higher U.S. Dollar. The threat of financial meltdown was averted, but at a cost. The U.S. Prime rate hit 20% in April 1980 and stayed there (with a brief dive in mid-1980) until the end of 1981. There was a rush out of Gold and back to Dollars.Once interest rates began to come down, in early/mid 1982, the choice of where to put the Dollars faced investors once more. The initial solution was just as it had been in the 1970s. The Dow took off – rising from 776 to almost 1100 between mid August 1982 and late January 1983. Gold started earlier and took off even harder – rising from $296 in late June 1982 to $510 at the end of January 1983.
That’s where the similarity to the 1970s ended. Gold fell $105 in the last four trading days of February 1983. As it fell, the Dow broke above the 1100 point level for the first time. The long bull market in stocks, and the long stagnation of Gold, had begun…..”
Harvard Undergrad & Perlman Student, Intern Beats Wall Street Whizzes
Update (March 30):
If anyone claims that looking at gender and the way it inflects culture is inherently collectivist, I’d say they need to define collectivism more accurately. The way libertarians define it now, it’s more a term of abuse than a credible unit of analysis, unless it’s qualified pretty heavily.
There is a body of evidence that males are over-represented in highly aggressive behaviors of certain kinds. That isn’t an argument that men are “less moral” or that women are “more moral.” Not at all. For instance, women predominate in certain other kinds of crimes. In studies of child-killing/infanticide, women killers are often represented more heavily when considering certain age groups. Why? Perhaps because children are weaker than women physically and because women spend more time around them and usually have primary care of them. On the other hand, there are fewer female serial killers than male.
The richest financiers in the world are males. That’s a fact. Males are heavily over-represented in the financial industry and it’s a very male-dominated culture. There are complex reasons for that.
But they’re irrelevant to this post.
Do women benefit from welfare-state programs and set-asides and does that affect voting patterns, consumer culture, tax policy, and welfare policy? I’d say, with some caveats, probably yes.
[But conversely, men might benefit from crony capitalism on Wall Street and defense boondoggles, and indirectly, through set-asides from women that benefits families].
But, again, that doesn’t have much to do with this post…
For all I know, some of these financiers were pushed into reckless behavior because their wives were shopaholics or suing them for everything they had.
But, once again, that’s not this post.
So, this isn’t gender bigotry. It’s simply one way of looking at the influence of our own collectivist tendencies (masculinity as it’s constructed, as well as masculinity as a biological reality) on Wall Street culture.
Original Post
Deal Journal tracks down another outsider who spotted Wall Street’s corrupt practices ahead of the pros. Turns out she’s a woman too. There’s something about estrogen that doesn’t lend itself to mega financial swindles. We’re waiting for the Harvard thesis on the gender behind Wall Street’s agenda.
I hate to come to this conclusion, but a lot of the hot-air, recklessness, ego, hype, aggression, and cut-throat competition really does sound like the product of a culture that conflates masculinity with viciousness and braggadocio. Paulson, Weill, Rubin, Dimon…no women in the top sharks. But when you look at whistle-blowers and expose writers, women stand out: Ann Williamson, Padma Desai (both on the Russian crisis) Lucy Komisar, Meredith Whitney, Janet Tavakoli….
“Deal Journal has yet to read “The Big Short,” Michael Lewis’s yarn on the financial crisis that hit stores today. We did, however, read his acknowledgments, where Lewis praises “A.K. Barnett-Hart, a Harvard undergraduate who had just written a thesis about the market for subprime mortgage-backed CDOs that remains more interesting than any single piece of Wall Street research on the subject.”
“Barnett-Hart’s interest in CDOs stemmed from a summer job at an investment bank in the summer of 2008 between junior and senior years. During a rotation on the mortgage securitization desk, she noticed everyone was in a complete panic. “These CDOs had contaminated everything,” she said. “The stock market was collapsing and these securities were affecting the broader economy. At that moment I became obsessed and decided I wanted to write about the financial crisis.”
Back at Harvard, against the backdrop of the financial system’s near-total collapse, Barnett-Hart approached professors with an idea of writing a thesis about CDOs and their role in the crisis. “Everyone discouraged me because they said I’d never be able to find the data,” she said. “I was urged to do something more narrow, more focused, more knowable. That made me more determined.”
She emailed scores of Harvard alumni. One pointed her toward LehmanLive, a comprehensive database on CDOs. She received scores of other data leads. She began putting together charts and visuals, holding off on analysis until she began to see patterns–how Merrill Lynch and Citigroup were the top originators, how collateral became heavily concentrated in subprime mortgages and other CDOs, how the credit ratings procedures were flawed, etc.
“If you just randomly start regressing everything, you can end up doing an unlimited amount of regressions,” she said, rolling her eyes. She says nearly all the work was in the research; once completed, she jammed out the paper in a couple of weeks.”
More here about the young lady whose research probably played a big part in Michael Lewis’ new book, “The Big Short.”
[At least, Lewis acknowledged the research. That puts him several rungs above most celebrity authors].
Meanwhile, I really like that a violinist was involved in this. My own father was a very gifted amateur violinist and Perlman, Zukerman, Oistrakh, Elman, Kreisler, Menuhin and many others defined my childhood.
Perhaps a lifetime of being immersed in real virtuosity and creativity left Barnett-Hart immune to the glamor of the phony maestros of Wall Street …
Soros To Buy Stake In Bombay Stock Exchange, Goldman Seeks Commercial Banking License in India
Palak Shah at the Business Standard :
“US micro hedge fund legend George Soros and the world’s third biggest philanthropist George Kaiser are in the race to acquire close to 4 per cent in the Bombay Stock Exchange (BSE), Asia’s oldest stock exchange.
Soros has bid for the BSE stake, held by the embattled Dubai Financial Group LLC, through Soros Fund Management LLC, and Kaiser has done so through private equity fund, Argonaut.
Other investors who have bid for BSE stake include New York-based private equity majors J C Flowers and Caldwell Investment, promoted by Toronto investment broker Thomas Caldwell. Caldwell is a specialist investor in stock exchanges and bought 4.3 million shares of the New York Stock Exchange in 2006. Sources added that a private equity fund has bid Rs 370 for each share, valuing BSE at over Rs 3,800 crore. Avendus Capital is advisor to the deal.
Dubai Financial, part of sovereign fund Dubai Holding, holds 3.92 per cent stake in BSE, which it bought when the exchange was demutualised in 2007. BSE was then valued at Rs 3,780 crore. While BSE and Avendus could not be reached for comment, sources familiar with the developments said Dubai Financial felt the exchange deserved a higher valuation in the current situation.
In the recent past, the valuation of the exchange saw a sudden spurt after a new management team took over in 2009.
While some stock brokers sold BSE shares at around Rs 180 a piece some six months ago, a bank auctioned 0.27 million shares at Rs 320 a couple of months ago.
Under the new management, BSE changed its derivative trading cycle to compete with the National Stock Exchange, launched a mutual fund trading platform and is upgrading its technology platform. BSE currently has a near 28 per cent share of the equity spot market in the country and has been making efforts to develop its derivative trading segment, where National Stock Exchange is a monopoly player. BSE will launch currency derivatives in May and is also in the process of increasing its stake in Central Depository Services Ltd to 51 per cent.
Currently, six foreign investors hold 25.65 per cent of BSE and five Indian institutions hold 12 per cent.
A little under 62 per cent of BSE’s shares are widely held. Among the key Indian shareholders are firms such as Bajaj Holdings and Investment, which owns 2.94 per cent, Infosys Technologies CEO and MD S. Gopalakrishnan, who owns 1.04 per cent and media major Bennett, Coleman and Co, which owns 1.04 per cent.
BSE recently announced 12 bonus shares for every share held and the exchange currently has around Rs 2,000 crore of cash reserves, which translates into cash per share of at least Rs 190.
BSE posted a net profit of Rs 55.42 crore on revenue of Rs119.21 crore for the quarter ended December 2009.”
The launching of the mutual fund platform and the upgrading of the technology and expansion of derivative trading is exactly what Goldman Sachs introduced into the New York Stock Exchange in the 1990s. And we saw what happened in the 15 years following. And Goldman is in India, currently seeking a commercial banking license to operate there.
With the same players around (Soros, Goldman Sachs etc. ), there’s no reason to believe that what’s coming up for the Bombay Stock Exchange won’t take the same direction. Before the financial crisis, the Indians had little exposure to the highly levered derivatives and toxic debt that blew up the system elsewhere. Let’s see whether this upcoming round they’ll be as lucky. With economies stagnant elsewhere, Asia and some select African countries are the only places where there’s actual economic growth occurring.
I’m afraid the same handful of corrupt players will game the system there…
More here at The Economic Times:
“His hedge fund Quantum, which was reported to have posted earnings of over 30% last year, went on a buying- spree at a time, when most funds were dumping stocks in a sliding market. On July 4, Quantum Fund bought a 3.8% equity in Jain Irrigation Systems, and close to 1% of the holding of Jai Corp for a value consideration of Rs 167 crore. Since February, the fund has made investments valued at close to Rs 600 crore, or $ 140 million, in various companies, including Indiabulls Financial Services, Indiabulls Real Estate and Kalindee Rail Nirman. Quantum’s selective stock picking comes at a time, when institutional investors have been pulling out a large chunk of money amid concerns over a combination of factors such as weak global markets, soaring global oil prices and spiraling inflation in India. “Hedge funds normally are active, when there is some momentum in the market. Quantum may be trying to do some value-buying, but one has to see how long the fund stays invested, given the prevailing uncertain market conditions,” said a stock-broker..”
Remember Formula K (or, the First Law of Kleptocracy) :
s(B) + s(G) + s(S) v. EE where ‘s’ is always a positive integer
Some (s) of the big banks (B – eg. JP Morgan, Goldman Sachs, Citi etc.)
+
Some parts of government (G – eg. parts of the SEC/Treasury/Fed Reserve Chairman, IMF, World Bank etc.)
+
Some hedge-funds and speculators (S – eg. Soros, Paulson (?), Loeb, Cohen and others reportedly involved in manipulation and collusion with government)
Versus
Every one else (EE)