Max Keiser takes offense to Goldman Sachs oligarchy (pt2 of 2)

http://www.youtube.com/watch?v=ZoQrYa_NKQQ&feature=related

http://www.huffingtonpost.com/ellen-brown/goldmans-profits-come-fro_b_349640.html

Goldman’s Profits Come from Our Pockets: Why We Need a Tobin Tax

Ellen Brown

November 9, 2009

“The homeless in America have Goldman Sachs to thank for their homelessness and starvation right now. They took the money from their pockets, they put it in their bonuses for this year. . . . That’s a financial terrorist crime.”
– Former stock trader Max Keiser in a France 24 interview

ADL covering up for crimes of financial elites

http://www.examiner.com/x-9462-LA-Nonpartisan-Examiner~y2009m11d16-ADL-covering-up-for-crimes-of-financial-elites

http://www.upi.com/Top_News/Analysis/2009/11/24/Commentary-Net-centric-Cassandras/UPI-56651259073027/

Commentary: Net-centric Cassandras
Published: Nov. 24, 2009 at 9:30 AM
By ARNAUD DE BORCHGRAVE, UPI Editor at LargeArticlePhotosListenVideos

WASHINGTON, Nov. 24 (UPI) — Reputable financial houses, as they are described online, are telling their clients how to prepare for potential “global collapse” over the next two years. France’s Societe Generale, according to the London Daily Telegraph’s chief investigative reporter, Ambrose Evans-Pritchard, is such a house that is now “mapping a strategy of defensive investments to avoid wealth destruction.”

A 68-page report, headed by the bank’s asset chief, Daniel Fermon, explores forthcoming dangers but does not forecast which of three possible outcomes of the ongoing crisis it sees coming. Under the gloomiest “Bear Case” scenario the dollar would slide further and global equities would retest the March lows, Evans-Pritchard wrote, adding that property prices would tumble again and oil would fall back to $50 per barrel in 2010 (but could shoot up to $200 or $300 if Israel were to bomb Iran’s nuclear facilities).

“Governments have already shot their fiscal bolts,” Evans-Pritchard writes. “Even without fresh spending, public debt would explode within two years to 105 percent of GDP in the United Kingdom, 125 percent in the United States and the European Union, and 270 percent in Japan. Worldwide state debt would reach $45 trillion, up 2 1/2 times in a decade.

“Inflating debt away might be seen by some governments as the lesser of two evils” and, if so, says the forecaster, gold would go “up, and up, and up” as the only safe haven from “fiat paper money.” “Even if the U.S. savings rate stabilizes at 7 percent” — highly doubtful — “and all of it is used to pay down debt, it will take nine years for households to reduce debt/income ratios to the safe levels of the 1980s,” Evans-Pritchard wrote.

Societe Generale advises “bear” clients to sell the dollar short and to “short” cyclical equities such as technology, auto and travel to avoid being caught in the “inherent deflationary spiral,” the item in the Daily Telegraph said. Fermon says his report has electrified clients on both sides of the Atlantic as “everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried.”

Peter Morici, a professor at the University of Maryland’s Business School and a prominent citizen of the Internet, says in his latest contribution, “Bigger than the budget deficit, America has a leadership gap. Despite last February’s $787 billion stimulus package, the economic recovery is not creating jobs; unemployment is rising (34 million, including those whose benefits have expired, out of a workforce of 153.9 million); and the president and Congress offer little more than nostrums and platitudes.”

Along with oil imports, cheap consumer goods from China account for nearly the entire trade gap, writes this former chief economist at the U.S. International Trade Commission. “China undervalues its currency to boost its U.S. sales, domestic employment and growth. Its economic miracle is engineered by Beijing buying hundreds of billions of U.S. dollars with freshly printed yuan, to keep the currency undervalued and Chinese products inexpensive in U.S. stores. Then China uses those dollars to buy U.S. Treasury securities.” And President Barack Obama, afraid China won’t buy more U.S. debt, failed to challenge China on currency and trade during his visit there last week.

“The Republicans offer little more than tort reform … and the Democrats,” concludes Morici, “fearful that unemployment, stagnant wages and their fiscal follies will result in big electoral losses in 2010, are cooking up another stimulus package. They will call it a … ‘jobs initiative.’ After both the Bush and Obama stimulus packages failed, it has few prospects of creating lasting jobs. All this calls to mind bread and circuses as in a declining Roman Empire. Those kept the crowds happy while the state was failing.”

The conservative Financial Intelligence Report says dollar devaluation is a done deal. “Since taking office almost a year ago,” FIR thunders, “the Obama administration has increased the monetary base by a staggering $10 trillion … and doubled the expected annual budget deficit to almost $2 trillion.” The Financial Times’ Martin Wolf, highly respected the world over, says shady trading activities destroyed the financial system. What Wolf regards as intolerable are huge rewards for those who have been rescued by the state and bear responsibility for the crisis in the first place. “Even more intolerable is that they have devastated the prospect of hundreds of millions of innocents all over the globe,” he wrote.

Today’s huge bank profits “are in large part the fruit of the free money provided by the central bank,” says Wolf, and thus “the state is giving banks a license to print money. In 2006 Goldman Sachs earmarked $16.7 billion for year-end bonuses. One top trader was awarded $70 million (which he deemed insufficient given his superior talents and resigned). Hyper-bonuses are already back: GS’s bonus pool at the end of 2009 was $20 billion.

The 1987 Oliver Stone movie “Wall Street,” in which Michael Douglas plays Gordon Gekko, now on the lecture circuit as a published financial author after 14 years in the slammer for insider trading and security fraud, is being reprised as “Wall Street II.” This time round the same sleazy track, Douglas, playing Gekko, fails in his attempt to warn people about the imminent fall of Wall Street. “Shakedown,” the first novel for Wall Street insider Andie Ryan, with 20 years of experience in senior management in major firms, is thinly disguised fiction. “The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System” by former Wall Street Journal reporter Charles Gasparino is climbing the best-seller charts.

Gasparino argues the meltdown — from 1,125 billionaires to 783 in a year — is just the latest calamity in a 30-year pattern of executive excesses, unsustainable leverage and unreliable computer models — and warns risk-takers could be doomed to repeat their errors. Because there is reluctance, bordering on paralysis, to concede what went wrong. And the ever widening gap between rich and poor in America is not seen as an inducement for social upheaval.

It was the criminal predatory lending scams for subprime mortgages in the United States in 2006 that ensnared the entire planet and triggered the worst financial and economic crisis since the Great Depression. The “back to square one” cliche springs to mind with the third-quarter delinquency rate now the highest since records were kept — up from one in 14 mortgage holders in the last quarter of 2008 to one in seven, or 14 percent in mid-November.

Yet purchases of previously owned homes soared 10.1 percent in October. Go figure.

END the FED Nov. 22 2009.wmv

http://www.youtube.com/watch?v=9JwolxxVYRE

End the Fed Rally LA 2009.wmv

http://www.youtube.com/watch?v=t5SRkfDcBOc

PHOTOS FROM “END THE FED” RALLY DOWNTOWN LA

http://gallery.me.com/capochic1111#102233

PHOTOS FROM LATER IN THE AFTERNOON AT
HOLLYWOOD BLVD. AND HIGHLAND

http://gallery.me.com/capochic1111#102235

http://www.kitco.com/ind/Hunter/dec042009.html

Ben Bernanke’s Hyperinflation And Economic Collapse
By Greg Hunter
Dec 4 2009 2:2
usawatchdog.com

Yesterday, Federal Reserve Chief Ben Bernanke was in front of the Senate Banking Committee trying to hold on to his job. Some Senators were complimentary on Bernanke’s job. Republican Senator Judd Gregg from New Hampshire gave the Fed Chairman a warm welcome. Judd said, “If you hadn’t been there, and hadn’t been willing to take extraordinary action last fall, last winter, and even early spring … it’s very likely we would be experiencing a depression…” I look at Bernanke’s performance during the financial crisis the same way I would look at a drunken bus driver who crashes and then stumbles around pulling a few children out of the wreckage. In my eyes, Bernanke is hardly a hero.

Republican Jim Bunning from Kentucky, on the other hand, couldn’t have given a colder reception if he greeted Bernanke in the North Pole. Bunning said, in part, “Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard.” Bunning, a former Major League pitcher, hurled another fast ball at Bernanke’s head when he said, “Because you bowed to pressure from the banks and refused to resolve them or force them to clean up their balance sheets and clean out the management, you have created zombie banks that are only enriching their traders and executives.” Senator Bunning vowed to do everything possible to stop Bernanke’s nomination and to “end the Fed’s failures.”
(Complete video of Senator Bunning’s comments below)

Nice speech, but according to economist John Williams of Shadow Government Statistics, it is too late. In Williams latest report he writes “The United States Economy and Financial System Face an Eventual Great Collapse.” Williams told me in an interview this week that because of all the bailouts, stimulus packages, giveaways and short-term debt, the U.S. has to finance nearly $5 trillion in 2010 alone. That’s about $96 billion in debt auctioned off each and every week!! Williams said, “Someone has to buy those Treasuries, and if no one does, then the Federal Reserve will become buyers of last resort.” The Fed buying that much in Treasuries is the same as printing huge amounts of money. Williams says that “is the tipping point that will start a dollar crisis.” According to Williams, this will produce a “high risk of an ultimate dollar crisis that will begin unfolding in year ahead.”

Inflation created by this “dollar crisis” will turn into hyperinflation within 5 years. Government and Fed actions have caused this problem and Williams sees “no way out,” and “hyperinflation is just a matter of time.” The hyperinflation forecasted by Shadow Government Statistics will look like Weimar Germany in the early 1920’s. The dollar will rapidly lose value to the point it will take a wheelbarrow full of cash to buy a loaf of bread or a gallon of gas. Anyone on fixed income or holding dollars will be wiped out according to Williams.

The Gold market seems to be reflecting the fear of inflation and a weakening dollar. Big central banks are buying Gold. India bought 200 metric tons of the yellow metal last month. Other countries, such as China and Russia, are also gold buyers. Retail investors are, likewise, beginning to flock to gold. Arthur Blumenthal of Stack’s Rare Coins in New York City has been in the gold and coin business since 1974. Stack’s opened its doors in 1934 and is the oldest coin dealer in America. Blumenthal saw the “go-go years” of the late seventies gold market firsthand. Blumenthal told me, “I have never seen anything like this before! There are only buyers.” He says many of his customers are “Wall Street types who are buying physical gold for the first time.”
Williams says buying gold and silver “long term” will be your best defense against a “great collapse…dollar crisis… and hyperinflation.” Williams also says you should stock up on food and other necessary supplies because the coming crisis will create shortages in all sorts of things.
I predict Mr. Bernanke will keep his job at the Federal Reserve. That might be poetic justice because this Fed Chief should witness his handy work firsthand. What is coming to America might go down in history as Ben Bernanke’s Hyperinflation and Economic Collapse.
Greg Hunter

Obama’s Big Sellout

The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/print

Something’s Not Right Here

By Bill Moyers – Mat Taibbi – Robert Kuttner

http://www.informationclearinghouse.info/article24269.htm

There will be a violent revolution in America (Max Keiser)

http://networkedblogs.com/p20776832

Person of the Year 2009 – Ben Bernanke

http://www.time.com/time/specials/packages/article/0,28804,1946375_1947251,00.html

http://www.nytimes.com/2010/01/10/business/10pay.html?dbk

http://dealbook.blogs.nytimes.com/2010/01/10/banks-prepare-for-bigger-bonuses-and-publics-wrath/?scp=5&sq=goldman%20sachs&st=cse

January 10, 2010
Banks Prepare for Big Bonuses, and Public Wrath
By LOUISE STORY and ERIC DASH
Everyone on Wall Street is fixated on The Number.

The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.

Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years. The haul, in cash and stock, will run into many billions of dollars.

Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.

Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history. Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average.

Many executives are bracing for more scrutiny of pay from Washington, as well as from officials like Andrew M. Cuomo, the attorney general of New York, who last year demanded that banks disclose details about their bonus payments. Some bankers worry that the United States, like Britain, might create an extra tax on bank bonuses, and Representative Dennis J. Kucinich, Democrat of Ohio, is proposing legislation to do so.

Those worries aside, few banks are taking immediate steps to reduce bonuses substantially. Instead, Wall Street is confronting a dilemma of riches: How to wrap its eye-popping paychecks in a mantle of moderation. Because of the potential blowback, some major banks are adjusting their pay practices, paring or even eliminating some cash bonuses in favor of stock awards and reducing the portion of their revenue earmarked for pay.

Some bank executives contend that financial institutions are beginning to recognize that they must recalibrate pay for a post-bailout world.

“The debate has shifted in the last nine months or so from just ‘less cash, more stock’ to ‘what’s the overall number?’ ” said Robert P. Kelly, the chairman and chief executive of the Bank of New York Mellon. Like many other bank chiefs, Mr. Kelly favors rewarding employees with more long-term stock and less cash to tether their fortunes to the success of their companies.

Though Wall Street bankers and traders earn six-figure base salaries, they generally receive most of their pay as a bonus based on the previous year’s performance. While average bonuses are expected to hover around half a million dollars, they will not be evenly distributed. Senior banking executives and top Wall Street producers expect to reap millions. Last year, the big winners were bond and currency traders, as well as investment bankers specializing in health care.

Even some industry veterans warn that such paydays could further tarnish the financial industry’s sullied reputation. John S. Reed, a founder of Citigroup, said Wall Street would not fully regain the public’s trust until banks scaled back bonuses for good — something that, to many, seems a distant prospect.

“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”

The power that the federal government once had over banker pay has waned in recent months as most big banks have started repaying the billions of dollars in federal aid that propped them up during the crisis. All have benefited from an array of federal programs and low interest rate policies that enabled the industry to roar back in profitability in 2009.

This year, compensation will again eat up much of Wall Street’s revenue. During the first nine months of 2009, five of the largest banks that received federal aid — Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley — together set aside about $90 billion for compensation. That figure includes salaries, benefits and bonuses, but at several companies, bonuses make up more than half of compensation.

Goldman broke with its peers in December and announced that its top 30 executives would be paid only in stock. Nearly everyone on Wall Street is waiting to see how much stock is awarded to Lloyd C. Blankfein, Goldman’s chairman and chief executive, who is a lightning rod for criticism over executive pay. In 2007, Mr. Blankfein was paid $68 million, a Wall Street record. He did not receive a bonus in 2008.

Goldman put aside $16.7 billion for compensation during the first nine months of 2009.

Responding to criticism over its pay practices, Goldman has already begun decreasing the percentage of revenue that it pays to employees. The bank set aside 50 percent in the first quarter, but that figure fell to 48 percent and then to 43 percent in the next two quarters.

JPMorgan executives and board members have also been wrestling with how much pay is appropriate.

“There are legitimate conflicts between the firm feeling like it is performing well and the public’s prevailing view that the Street was bailed out,” said one senior JPMorgan executive who was not authorized to speak for the company.

JPMorgan’s investment bank, which employs about 25,000 people, has already reduced the share of revenue going to the compensation pool, from 40 percent in the first quarter to 37 percent in the third quarter.

At Bank of America, traders and bankers are wondering how much Brian T. Moynihan, the bank’s new chief, will be awarded for 2010. Bank of America, which is still absorbing Merrill Lynch, is expected to pay large bonuses, given the bank’s sizable trading profits.

Bank of America has also introduced provisions that would enable it to reclaim employees’ pay in the event that the bank’s business sours, and it is increasing the percentage of bonuses paid in the form of stock.

“We’re paying for results, and there were some areas of the company that had terrific results, and they will be compensated for that,” said Bob Stickler, a Bank of America spokesman.

At Morgan Stanley, which has had weaker trading revenue than the other banks, managers are focusing on how to pay stars in line with the industry. The bank created a pay program this year for its top 25 workers, tying a fifth of their deferred pay to metrics based on the company’s later performance.

A company spokesman, Mark Lake, said: “Morgan Stanley’s board and management clearly understands the extraordinary environment in which we operate and, as a result, have made a series of changes to the firm’s compensation practices.”

The top 25 executives will be paid mostly in stock and deferred cash payments. John J. Mack, the chairman, is forgoing a bonus. He retired as chief executive at the end of 2009.

At Citigroup, whose sprawling consumer banking business is still ailing, some managers were disappointed in recent weeks by the preliminary estimates of their bonus pools, according to people familiar with the matter. Citigroup’s overall 2009 bonus pool is expected to be about $5.3 billion, about the same as it was for 2008, although the bank has far fewer employees.

The highest bonus awarded to a Citigroup executive is already known: The bank said in a regulatory filing last week that the head of its investment bank, John Havens, would receive $9 million in stock. But the bank’s chief executive, Vikram S. Pandit, is forgoing a bonus and taking a salary of just $1.

http://www.upi.com/Top_News/Analysis/2010/01/19/Commentary-Hyper-executive-compensation/UPI-73501263909868/

Commentary: Hyper executive compensation

By ARNAUD DE BORCHGRAVE
UPI Editor at Large

Wall Street’s sleights of hand are coming under the glare of multimedia exposure. The total 2009 bonus pool for the nation’s six biggest banks was $130 billion. For the first nine months of 2009 the banking industry spent more than $344 million on lobbying. Bankers denied any connection between lobbyists and their actions.

WASHINGTON , Jan. 19 (UPI) — In his classic “Bonfire of the Vanities , ” Tom Wolfe’s Masters of the Universe were thinly disguised Wall Street megalomaniacs suffering from gluttonous edacity. Today , there is no longer any need for disguise. They flaunt it openly before congressional committees , oblivious to growing public anger about what retired Master of the Universe Pete Peterson calls their “carnivorous , animalistic greed.” This time , the race to the trough supersedes party labels. Democrats and Republicans slurped in almost equal measure.

The total bonus pool at the end of 2009 for the nation’s six biggest banks was $130 billion (Goldman Sachs alone $23 billion). CEOs plead the need to pay staggering amounts to partners so they won’t be poached by rival houses. Yet some 200 , 000 jobs were lost in financial houses during the worst economic crisis since the Great Depression , including many senior executives. Others compare themselves to movie and sports stars , candidly confiding they also have to maximize their peak earning years.

The Treasury Department estimates total bank repayments from the Troubled Asset Relief Program , drawn from U.S. taxpayers , should exceed $175 billion by the end of this year. This would cut total taxpayer exposure to the banks by three-quarters. But Wall Street’s captains are now in high dudgeon over a government levy on the banking industry for losses Treasury says it will incur in the melee , or minus $120 billion to the taxpayer on the $700 billion in TARP lending to 21 financial institutions. Some of the major houses — including JPMorgan , Morgan Stanley and Bank of America — have long since repaid everything with interest.

Michael J. Boskin , one-time economic adviser to George H.W. Bush , says investors no longer trust economic and fiscal stats and are “increasingly inclined to disbelieve them.” To base decisions on misleading , biased or manufactured numbers , says Boskin , is “dangerous.” Cynicism over official stats is growing.

The lobbyists in orbit around Capitol Hill are making sure that whatever comes out of Congress to curb the Obama administration’s levy appetite will also be a No Lobbyist Left Behind Act , including the 3 , 000 (out of 13 , 200) who suddenly became consultants rather than face more elaborate reporting requirements — and potential criminal liabilities. It is now a crime for lobbyists to buy meals or provide gifts to lawmakers or their aides.

Meanwhile , the ranks of the unemployed , underemployed and those whose jobless benefits expired are around 27 million. These days , low-pay-no-benefits jobs are considered good deals.

The widening gap between “les miserables” and what looks like the old Soviet caricature of America ‘s uber-capitalist , chomping on a Havana cigar and flashing a pinky diamond , doesn’t seem to bother high-powered execs testifying before congressional committees. Some Wall Street CEOs even admitted their mistakes were partly responsible for the worst economic and financial conditions since the Great Depression.

Phil Angelides , chairman of the Financial Crisis Inquiry Commission and a man who lost the 2006 California governor’s race to Arnold Schwarzenegger , said after a day of hearings , “It sounds to me like selling a car with faulty brakes and then buying an insurance policy on the buyer.” But there is still a reluctance to see any connection between mansions in the Hamptons and the millions of houses still caught in subprime mortgage contagion.

Companies that downsized to weather the crisis are climbing back into black territory with fewer workers through offshoring and automation. Employers are looking for opportunities to downsize permanently. What a piece in “Bloomberg BusinessWeek” called “the era of the disposable worker” and “diminishing job security” means a “widening gap between the highest and lowest-paid workers.”

There is also a Conference Board survey released Jan. 5 that found only 45 percent of workers surveyed “were satisfied with their jobs , the lowest in 22 years of polling , (and) poor morale can devastate performance.”

Clearly , these stats and a new era of “temps” mean employers save on retirement plans and health costs. But all this also points to social upheaval. Part-timers who cannot find full-time employment are estimated at 10 million. Stock prices of temp agencies are booming; Manpower Inc.’s profits are up 50 percent.

Equilar , a compensation tracking firm , showed that Goldman Sachs’ Lloyd Blankfein earned $210 , 169 , 732 from 2003 to 2007. Asked about his company’s practice of betting against stocks it sold to clients , he explained that once they were held by others , they were no longer the property of the bank. Brilliant. But then why would they tout to their clients stocks they knew were about to head south because they planned to short them? Waffle machine clicks in again.

“We may trade , and may have existing positions , based on trading ideas before we have discussed these trading ideas with you , ” said an e-mail from Thomas C. Mazarakis , the head of Goldman Sachs’ Fundamental Strategies Group. Q.E.D.!

Betting against instruments that the same house recommended is not unusual. Aren’t those conflicts of interest? Congress is also investigating how major Wall Street firms bundled subprime mortgages , called them “collateralized debt obligations” and then sold them to investors while at the same time betting against them.

Both political parties have to gauge carefully how far they can push Wall Street. Its richly rewarded honchos also hold aces-high cards for expensive TV commercials come campaign time. For the first nine months of 2009 the banking industry spent more than $344 million on lobbying , giving Wall Street muscle on the Hill. Stealing a line from Captain Renault in Casablanca , the bankers were shocked that anyone could think there was any connection between their lobbyists and their actions.

Commentary: Hyper executive compensation written by Arnaud de Borchgrave published by UPI

Is a U.S. Default Inevitable? by Patrick J. Buchanan

http://buchanan.org/blog/is-a-u-s-default-inevitable-3488

AIG Probe Widens to Include Paulson, Friedman
House probe of AIG bailout widens to include Paulson, Friedman; GOP wants Bernanke affidavit

http://abcnews.go.com/Business/wireStory?id=9574782

“AIG-Gate: The World’s Greatest Insurance Heist”

http://www.opednews.com/articles/AIG-Gate-The-World-s-Grea-by-Ellen-Brown-100209-436.html

Wall Street’s Bailout Hustle

Goldman Sachs and other big banks aren’t just pocketing the trillions we gave them to rescue the economy – they’re re-creating the conditions for another crash

http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/

Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs

http://www.businessweek.com/news/2010-02-23/secret-aig-document-shows-goldman-sachs-minted-most-toxic-cdos.html

Armageddon

http://www.informationclearinghouse.info/article24831.htm

New U.S. Homes Sales Plunged to Record Low in January

http://www.foxnews.com/politics/2010/02/24/new-homes-sales-plunged-record-low-january/

Underwater Mortgages Hit 11.3 Million

http://247wallst.com/2010/02/23/underwater-mortgages-hit-11-3-million/

The global economy looks set to plunge back into recession as the sovereign debt pressure currently rocking Europe intensifies, Ashok Shah, CIO of London & Capital, told CNBC Wednesday.

http://www.cnbc.com/id/35558503

The Great Disconnect: Stocks 30% Overvalued and Still Going Up … and Housing Rolling Over

http://finance.yahoo.com/tech-ticker/the-great-disconnect-stocks-30-overvalued-and-still-going-up-…-and-housing-rolling-over-449718.html?tickers=dia,spy,%5edji,%5egspc,xlf,xhb,

Posted Mar 25, 2010 11:16am EDT by Henry Blodget in Investing, Recession, Banking, Housing

Related: dia, spy, ^dji, ^gspc, xlf, xhb,
Provided by The Business Insider, March 25, 2010:

We don’t mean to rain on the stockmarket parade (we’re enjoying it, too), but we’ll confess to being astonished by it.

We understand that the world’s governments are pumping money into their economies. We understand that that money has to go somewhere. We understand that, right now, that somewhere is often stocks.

We also recognize that the stock market is “forward looking,” meaning that stock investors couldn’t care less about 10% unemployment and other depressing facts about the economy. As far as stocks are concerned, as long as the situation is improving, it doesn’t matter how bad the present is.

But we’re looking forward, too, and here’s what we’re seeing:

The housing market, a huge engine of the U.S. economy via both direct spending and the wealth effect, may be rolling over and heading for a double-dip. This despite the fact that the government is still spending money hand over foot to keep house prices propped up.

In a week or so, the Fed is supposed to begin withdrawing some of this housing subsidy by winding up its mortgage-buying program. The Fed may or may not actually do this, but if it does, this move could further depress the housing market. And that, in turn, could put more pressure on strapped consumers who can no longer borrow from home-equity lines to fund current spending, no longer feel rich, don’t have much borrowing capacity, and, often, no longer have jobs. (And consumers still account for more than 70% of spending in the economy).

A falling housing market will also likely lead to more underwater homeowners, more “shadow” inventory, more foreclosures, more pressure on house prices, and, possibly, more bank write-offs. The more banks are worried about future write-offs, the less likely they are to lend, and bank lending has already fallen off a cliff.

So, basically, we think the apparent double-dip in the housing market is a big deal, and we’re surprised that the market is whistling Dixie in the face of it.

If stocks were cheap, we wouldn’t worry about it. We would just assume that the market was so forward-looking that it was gazing beyond the double-housing-dip to the eventual recovery. But stocks aren’t cheap. In fact, measured using our favorite valuation technique, Professor Robert Shiller’s cyclically adjusted PE analysis, they’re getting downright expensive.

According to Professor Shiller’s research, stocks are trading at about 30% above the long-term average.

Andrew Maguire exposes systemic fraud by CFTC and JPMorgan

http://www.itszone.co.uk/2010/04/03/andrew-maguire-exposes-systemic-fraud-by-cftc-and-jpmorgan/

Goldman Sachs accused of fraud by US regulator SEC

http://news.bbc.co.uk/2/hi/business/8625931.stm

http://english.aljazeera.net/business/2010/04/2010416163932747367.html

‘Looting Main Street’:-Matt Taibbi on How the Nation’s Biggest Banks Are Ripping Off American Cities with Predatory Deals

http://videocafe.crooksandliars.com/heather/matt-taibbi-how-nation-s-biggest-banks-are

Fraud charge deals big blow to Goldman’s image

http://news.yahoo.com/s/ap/20100418/ap_on_bi_ge/us_goldman_sachs_reputation

Fraud charge deals big blow to Goldman’s image
By STEVENSON JACOBS, AP Business Writer Stevenson Jacobs, Ap Business Writer
Sun Apr 18, 5:28 pm ET

.NEW YORK – While Goldman Sachs contends with the government’s civil fraud charges, an equally serious problem looms: a damaged reputation that may cost it clients.

The Securities and Exchange Commission’s bombshell civil fraud charge against Goldman has tarnished the Wall Street bank’s already bruised image, analysts say. It could also hurt its ability to do business in an industry based largely on trust.

Damage from the case could hit other big banks as well. The SEC charges are expected to help the Obama administration as it seeks to more tightly police lucrative investment banking activities.

Goldman has denied the SEC’s allegation that it sold risky mortgage investments without telling buyers that the securities were crafted in part by a billionaire hedge fund manager who was betting on them to fail. A 31-year-old Goldman employee is also accused in the civil suit that was announced Friday.

The charges could result in fines and restitution of more than $700 million, predicted Brad Hintz, an analyst at Sanford Bernstein. Yet, even if Goldman beats the charge, the hit to its reputation could carry a greater cost.

The company, founded in 1869, grew from a one-man outfit trading promissory notes in New York to the world’s most powerful, most profitable and arguably most envied securities and investment firm. From its 43-story glass-and-steel headquarters in Lower Manhattan, Goldman oversees a financial empire that spans more than 30 countries and includes more than 30,000 employees.

It has long attracted some of the world’s best and brightest. Some have gone on to lofty careers in public life, enhancing the firm’s aura of mystique and influence. Goldman alumni include former Treasury Secretaries Henry Paulson and Robert Rubin and former New Jersey Gov. Jon Corzine.

In its corporate profile, the company says its culture distinguishes it from other firms and “helps to make us a magnet for talent.” That culture is summed up in the firm’s “14 Business Principles,” which preach an almost militant philosophy of putting the client before the firm.

Now, it’s that very philosophy that has been questioned by the government.

So far, no Goldman clients have publicly condemned the bank’s alleged actions. But the negative publicity and regulatory scrutiny could cause some to distance themselves, said Mark T. Williams, a professor of finance and economics at Boston University.

Goldman earned a record $4.79 billion during the fourth quarter of last year and is expected to report blowout first-quarter results on Tuesday. A big chunk of its profits are from fee-based client businesses, such as investment advising, underwriting securities and brokering billion-dollar mergers.

“Goldman can really only truly be effective in the marketplace if it maintains a strong reputation,” Williams said.

Morgan Stanley, the No. 2 U.S. investment bank after Goldman, could be in a position to poach some Goldman clients, which include hedge funds, pension funds and other big institutional investors. Overseas, European rivals such as Deutsche Bank AG and UBS could benefit.

Investors are already betting the legal troubles will hurt Goldman’s finances. The company’s shares plunged 13 percent after the charges were announced Friday, erasing a staggering $12.5 billion in market value.

“Reputation risk is the biggest issue in our view,” Citigroup analyst Keith Horowitz wrote in a note to clients. He predicted the fraud case won’t be a “life-threatening issue” but that it “clearly seems like a black eye for Goldman.”

It’s not the first. The company came under criticism for receiving billions in bailout money that the government funneled into crippled insurer American International Group Inc. at the height of the financial crisis in 2008. Goldman was owed the money, but critics argued it should’ve been treated like other creditors and be forced to accept less.

Goldman CEO Lloyd Blankfein angered the bank’s critics last year after The Times of London quoted him as saying he was “doing God’s work” running the firm and handing out big employee bonuses. Blankfein himself got a $9 million stock bonus for 2009.

Mishaps like those have been surprising given how much attention Goldman pays to its image. “Our clients’ interests always come first,” the company says on its website under the heading, “Goldman Sachs Business Principle No. 1.”

It’s a sales pitch that few Wall Street firms always live up to. Some analysts blame that on a shift in the industry’s business model from traditional investment banking to one that focuses on making big bets for itself or clients.

That shift culminated in the rise of Blankfein, a former commodities trader, to the position of CEO in 2003. Today, trading accounts for nearly 70 percent of Goldman’s revenue. Most of that trading is done on behalf of clients, though Goldman generates about 10 percent of its revenue by trading for itself.

The heavy reliance on trading and Goldman’s peerless performance have left the firm open to criticism that it uses its market knowledge to game the system to benefit itself and a select group of clients.

The SEC charges seemingly support that assertion. Fabrice Tourre, the 31-year-old Goldman executive accused of shepherding the deal in question, boasted about the “exotic trades” he created “without necessarily understanding all of the implications of those monstrosities!!!,” according to the SEC complaint.

In another e-mail, he describes as “surreal” a meeting between his hedge fund client and another firm that allegedly wasn’t told that the bundle of securities it was buying were chosen with input from a third party who was betting they would fail.

“Once upon a time, Wall Street firm protected clients,” said Christopher Whalen, managing director of financial research firm Institutional Risk Analytics. “This litigation exposes the cynical, savage culture of Wall Street that allows a dealer to commit fraud on one customer to benefit another.”

In a lengthy rebuttal to the SEC charges Friday, Goldman insisted it was a middleman in the transaction and did nothing wrong by not disclosing bearish bets against the pool by Paulson & Co., a major hedge fund led by billionaire investor John Paulson. Goldman said it lost $90 million on the deal.

The SEC said Goldman had a duty to inform buyers of the mortgage investments that Paulson had played a major role in choosing the securities that went into the derivatives product and then bet that they would go bust.

Derivatives are complex financial products whose value is based on an underlying asset like mortgages or other types of debt. They’re not traded on a public exchange, allowing firms like Goldman to generate fees by brokering deals between buyers and sellers.

The charges strengthen the government’s case for increased regulation of derivatives like those Goldman is accused of using, analysts said.

Regardless, Goldman’s ability to weather the storm should not be discounted, said Janet Tavakoli, president of Tavakoli Structured Finance, a Chicago consulting firm.

“The benefits of the crisis have so far swamped the reputation risks for Goldman,” she said.

“If anything,” she added, “they may wind up getting more customers if people can’t avoid doing business with them.”

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AP Business Writer Chip Cutter contributed to this report from New York.