Monday, August 31, 2009

Cerberus...... Last Rights.

I am no clairvoyant with magical powers nor am I a deeply staffed (with deep pocketed parent re:GE) entity with inexhaustive resources. But what I do possess is a tad of common sense, coupled with a healthy dose of skepticism for the 'party line'. It is in this vain that the problems at Cerberus seem almost passe. I realize Cerberus and their attendant "liquidity" problems is news de jour on the pom pom network.

In a standard act of post mortem, 20/20 hindsight, "we saw it coming", "as we all know" investigative journalism that CNBC has become world renowned for, they are all over the story today!

One just might be inclined to ask the world leader in business the question; what took so long? I will offer 4 guesses as to why. Hint, the first 3 don't count.

1) David Faber too busy following the Ron Insana school of career counselling with a new book and hedge fund...oooops I got ahead of myself there.
2) Dennis Kneale too busy struggling with his own relevance, calling recession bottoms and fighting with "idiot bloggers".
3) Carl Qunitanilla too busy asking penetrating questions such as "What's it like being a billionaire", of disgraced ponzi scheme operators.
4) Petrified that any critical look at a Wall St. player or outfit will "shut down" Wall St. access and more importantly ad dollars.

Hey Bill Griffith, Cerberus' problems must be issues of liquidity and would have nothing to do with their Greenspan/Bernanke Fed sponsored "free money" influenced investment decision making now would it? Like a trained parrot, any and every problem is liquidity!

Given all the discussion, I thought I would take a peek back at my one, of my many posts on Cerberus, in particular the one back on July 2, 2007 Calling Bud Fox in which I stated the following;

"The more I read of the M&A activity of so and so buying this company and so and so buying that, I am reminded of the scene in the movie Wall Street when Gekko wants to buy BlueStar Airlines. Charlie Sheen, who plays Bud's dad, goes off on the deal and says sure "Buddy's qualified to run an airline, he worked as a baggage handler for 2 summers." I think about that line and wonder to myself if any of the marks who finance these leveraged buyouts, and believe you me they are marks, ever ask this question. For example, Cerberus starts its dog and pony show this week to raise over 7bill, yes bill with a B to buy Chrysler. Do you think any of these Ivy league sophisticates are gonna ask themselves the question, " if ze Germans could not turn this dog around how are these financial chemists gonna do it? Seems like a rational question to me.

Wasn't Cerberus the outfit that had reams of people going over the Rescap deal, like honeybees on a flower if memory serves me. But this is not about the quality of the steak, heck they don't care if there even is a steak. It's all about the sizzle and doing the deal. I read a study a while back that stated something like 90% of buying decisions are emotional. Ya think? oooops there is that bad word again. These institutional accounts and hedgies would sell their own mother(COD according to Larry Wildman) for 50 beeps in yield and we all know when you reach for yield you get your hand chopped off.
Knowing something is ridiculous (like lending money at peanuts over risk free rates with limited covenants, if any) and yet still doing it, well, the clinical psychologists may have a technical term for it, but my term for it is shit for brains!"

I bring this up, not because what I stated was ground breaking in any way, frankly I thought it was obvious at the time, rather I bring it up because CNBC purportedly claims to be a bastion of "fast, accurate, actionable, and unbiased" information.

I simply offer this as a counter argument to the claims made by the 'boobs and boobs in chairs at CNBC that the 'idiot bloggers', of which I am one, can write anything they want on a whim. For what it's worth Diana Olick, Rick Santelli, Mary Thompson, Phil Lebeau and Sue Herrera are hereby excluded from all above negative references to CNBC as they actually report instead of cheerlead.

Before I go I wanted to take an opportunity this morning to offer some congratulations. The Wall Street Cheat Sheet First Amendment Award for Outstanding Journalism are out and I want to offer congratulations to the winners.

Best Blog - Zero Hedge
Best Reporter - Matt Taibbi
Best Book - Bailout Nation by Barry Ritholz
Best News Anchor- Dylan Ratigan

In particular I want to offer congratulations to Dylan in particular as I was very aggressive in taking him to task early into the meltdown back when he was on CNBC. As the crisis evolved he started to show that he was and is one of the VERY FEW who not only see what is happening but is prepared to call "them" on it and ask the career threatening questions his "boobs and boobs in chairs" former colleagues back at CNBC are petrified to. Way to go Dylan!

Again well done to all the winners, my sincerest congratulations !

A reader, thx K.O. sent me a note which has been making the rounds on the net. Someone called it a CNBC stock market cheat sheet.

Cheat Sheet for Reacting to Market Data Releases:

weak data = Fed ease, stocks rally

consensus data = lower volatility, stocks rally

strong data = economy strengthening, stocks rally

bank loses $4bln = bad news out of the way, stocks rally

oil spikes = great for energy companies, stocks rally

oil drops = great for the consumer, stocks rally

dollar plunges = great for multinationals, stocks rally

dollar spikes = lowers inflation, stocks rally

inflation spikes = will inflate all assets, stocks rally

inflation drops = improves earnings quality, stocks rally

Absolutely spot on hilarious!

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71
Short 1 unit Abercrombie ticker ANF @ $33.23 stop @ $35.33
Short 1 unit Aeropostale ticker ARO @ $40.81 stop @ $42.36

Bubbles Upon Bubbles

I have not posted for a few days because, sometimes there is so much to say (circa 1999 Nasdaq), yet none of it matters as it is inconsequential, so why bother. No one wants to hear the same ol' same ol' as stocks gallop as on beats of earnings expectations so low it is unfathomable they cannot be beaten. No one cares that top line is shrinking continually, across multitudes of sectors.....all that matters is that the company in question can beat the expectations of a group of sell side analysts who,...... you can fill in the rest.

You have a Fed governor, Lockhart of Atlanta, admitting the 'real' unemployment rate is closer to 16%. But it matters not. Claims that housing is bottoming from all the "never saw it coming but now have their finger on it" pundits. Yet defaults continue to rise across the spectrum.

But don't worry our unelected officials, past and present, men like Bernanke, Geithner, got your back. So much so that the head of the Chinese Investment Fund, Lou Jiwei, in a piece carried by Reuters, can openly admitted the following;

"It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose,"

Yes, dear reader bubbles upon bubble. One big giant ponzi scheme! Paid for, coming and going by you the taxpayer. But why should we care so long as there is plenty of Prozac, Ritalin, American Idol and Survivor for the masses.

For everyone whose lives are so boring, so uninspired that their needs have fomented these shows popularity, just wait. I truly believe that we are in for one heck of a "real world" reality show in our near future. I dearly hope I am wrong on this call but when I sit here and remark that C, AIG, FNM, FRE are 25, 35 or 40% of our stock market volume and something is VERY seriously amiss, ( Maybe David "the brain" Faber of CNBC can investigate this for us?), it can be written off as the ramblings of a neophyte. Just ignore me as a tin foil hat wearing, black helicopter fearing, fear mongering, short selling, idiot blogging conspiratorialist.

Just remember this, when the smart boyz on CNBC, are paraded out, YET AGAIN to tell you, "they didn't see it coming".

Speaking of AIG and the like, can you imagine the screaming and whaling by the "big boyz" if these stocks were dropping instead of skyrocketing like they are? With the volume we have seen, to the downside? To quote Dick Enberg of NBC sports... "OH MY !!" For more on the quartet of C, AIG, FNM and FRE check out what Brett Steenbarger over at Trader Feed has to say here on the subject of the Four Horsemen.(did Jim Cramer trademark that?)

The screams for redress, the whaling for re-instatement of the uptick rule, the demands for short selling restrictions would be overwhelming. Funny how those brilliant stock picking crybabies have disappeared back to the comfort of the Hampton's the last few months with the rally. Coincidence maybe?

The government would NEVER intervene in the stock markets to prop up stocks, would they? My favourite term is quantitative easing. I love how that sounds so intellectually superior to the phrase market manipulation. I will say what so many others are scared to say, fearful their subscribers will bolt on them. Does it matter if the government does it directly or via one of their proxies on Wall St. ? Maybe it's time we start discussing these things, out loud so all can see. Instead of dismissing anyone who does. Tis a thought.

I heard that Richard Russell recently opined that where your are now, financially is the best you will be for the foreseeable future. But what would the old man know. He must have lost it right. He could never match wits with your, we don't pay you to think we pay you to sell, never met a stock that shouldn't be bought, I got 4 mouths to feed retail broker. But once again, I digress.

My apologies for jumping around this morning.

Housekeeping notes;

On Friday, on the back of Intel and Dells announcements/numbers position at $23.43 as it I was stopped out of my SSG gapped down, for a loss of just over 1.5 pts on 1 unit.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71
Short 1 unit Abercrombie ticker ANF @ $33.23 stop @ $35.33
Short 1 unit Aeropostale ticker ARO @ $40.81 stop @ $42.36

Wednesday, August 26, 2009

Charts - ARO and ANF

Daily view of Abercrombie & Fitch, ticker ANF. (above)

A 10 year view of Aeropostale, ticker ARO.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Long 1 unit Ultrashort Semiconductors ticker SSG @ $25.00 stop @ $24.32
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71
Short 1 unit Abercrombie ticker ANF @ $33.23 stop @ $35.33
Short 1 unit Aeropostale ticker ARO @ $40.81 stop @ $42.36

Short Some Retailers ANF and ARO

I realize the retailers have had a fabulous run. While some have enjoyed it more than others it has been quite the spectacle. I have my doubts about whether many of these retailers can deliver on these "lofty" expectations. Given my macro economic beliefs I highly doubt these "conspicuous consumption" retailers, as I like to call them, will.

My friend Dennis Gartman is fond of suggesting that when looking for short candidates we should put our rocks in the wettest bags as they break most easily. Translation, short the weaklings as they offer the least fight.

Following this vain I wish to short a unit of Abercrombie and Fitch ticker ANF here at $33.33 with a generous stop at $35.33

My struggle in just doing this is it fails to satisfy the inner Goldmanesque greed in me which draws me to the chart of Aeropostale, ticker ARO. Readers know I have been short this name previously, only to take my lumps.

So succumbing to my inner Goldman greed demons I wish to short ARO here at $40.91 with a stop at $42.36

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Long 1 unit Ultrashort Semiconductors ticker SSG @ $25.00 stop @ $24.32
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71
Short 1 unit Abercrombie ticker ANF @ $33.23 stop @ $35.33
Short 1 unit Aeropostale ticker ARO @ $40.81 stop @ $42.36

Couple of Items

Did you catch this news out of London this morning. The news that the banks in England are selling the worthless loans on their books to subsidiaries in "an effort to avoid billions in losses were they to sell them on the open market."

This is the kind of plan a Steve Forbes would absolutely just love. He must be just clicking his heels right now! Beautiful.

The big news yesterday was, I know, you're thinking "Ben Bernanke was re-appointed". Well, in my opinion that is wrong. The big news was, it come out on Monday by the way, where a judge ruled that the Fed must make public names of recipients of emergency loans from taxpayers. Funny how this wasn't discussed on the pom pom network.

Gotta love real reporting don't you. Ironically the blogs were on it though.

My next piece is going to offend many. The only thing I can say in my defense is that my wife refers to me as an equal opportunity offender. Before I get into this I want to remind you that I am a political atheist and believe politicians are all the same, no question.

Politics = WWF wrestling, got it now!

With that out of the way, this morning we received news that senator, standard bearer of the Kennedy family and lifelong feeder at the public trough, Ted Kennedy has passed away. I realize he is an icon among the limousine liberal set. You know the crowd many out there more commonly refer to as the "do as I say not as I do crowd".

As a lifelong spender of others' money Mr. Kennedy was a champion of those not born with a better pot to piss in unlike himself. I thought today would be as good a day as any to lend a little perspective to the whole matter.

This perspective shall come in the form of one word.... Chappaquiddick.

For those more concerned with American Idol, Dancing With the Stars and Survivor, this "icon" of American politics, this so called "champion of the less fortunate"was responsible for driving his car off a bridge and into a pond. Leaving the scene with one, (ultimately less fortunate) Mary Jo Kopechne trapped inside, to drown.

If this is what an "icon" is made of then please forgive me as I throw up. Forgive me again if I save my condolences for the family that truly deserves it, the Kopechnes'. I know not what is worse for that family, that he left their poor girl there to drown, or that he never did a day in prison for this heinous act.

As anyone who believes in a Higher Authority, as I do, I do want to take this opportunity to wish Mr. Kennedy well on Judgement Day before our Maker. I highly suspect he may need it.

Again, my apologies if I offend any with my rant but I needed to get that off my chest.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Long 1 unit Ultrashort Semiconductors ticker SSG @ $25.00 stop @ $24.32
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71

Charts - SMH and SSG

Daily view of the Semiconductor Holders ticker SMH (above).

Daily view of the Proshares Ultrashort Semiconductors ticker SSG (above).

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Long 1 unit Ultrashort Semiconductors ticker SSG @ $25.00 stop @ $24.32
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71

Short the Semi's

I have been watching the Semiconductors the past few weeks which one can do via either the Philly Semiconductor, ticker $SOX or the Semi holders, ticker SMH. Whichever you choose, they seem to have diverged, negatively, as the S&P500 has made new highs and yet they(semi's) have not. While the semis still may confirm, they have yet to do so.

Based on this I am prepared to punt the semiconductors short here. I will do this via the proshares ultrashort semiconductors ticker SSG. I am getting long the SSG here at $24.90 with a stop just below the recent lows.

I will post some charts shortly on this.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Long 1 unit Ultrashort Semiconductors ticker SSG @ $25.00 stop @ $24.32
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71

Tuesday, August 25, 2009

JP Morgan Weekly View

I want to bring your attention the weekly chart of JP Morgan, ticker JPM (above). As my notes indicate there is a significant, negative divergence going on between volume on JPM and price. As Art Cashin has often said, volume = validity. Govern yourself accordingly.

I am prepared to punt JPM short here, based on this, at $43.76 with a stop at $44.71

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94
Short 1 unit JP Morgan ticker JPM @ $43.66 stop @ $44.71

Monday, August 24, 2009

Long Some SRS

I have been closely watching the Ultrashort Real Estate ticker SRS, (how much that is worth I am not quite sure) and am prepared to punt it long, (hence short real estate) here at $11.83 with a stop at $10.94

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort Real Estate ticker SRS @ $11.93 stop @ $10.94

Sunday, August 23, 2009

Weekend Thoughts

Joe Saluzzi over at Themis Trading who has been all over the HFT (high frequency trading) issue had a very interesting post Friday over at his site. Joe says very little but it usually is quality and worth paying attention to.

Here is what he had to say in a post Friday, after the market close.

"Volume continues to be concentrated in just a few names. Today, in a universe of over 5000 stocks in the U.S. equity market, only 4 stocks contributed 20% of the volume.

Citigroup (C), Bank of America (BAC), Fannie Mae (FNM) and Freddie Mac (FRE) traded a total of 2.041 billion shares. Overall volume in the U.S equity market was only 10 billion shares."

I suggest you re-read the above a couple of times so it can sink in.

In other news it is Friday which means it is BFF, Bank Failure Friday, we get word that Guaranty Bank out of Texas, which was listing heavily to port has now gone under. Guaranty will be taken over by BBVA Compass with a cost to the taxpayer, errr... excuse me, the FDIC will be $3 billion. Yes billion with a 'B'.

Hey Sheila, how much ya got left in the kitty over there? You and the merry band of blind mice over at the Office of Thrift Supervision, (is Chris Cox working there now?) just keep looking the other way, spraying Fabreeze so the stench of the decomposing balance sheets of these banks you shoulda shut down quarters ago keep decomposing. Just make sure you have a gig lined up with one of em' after the mushroom cloud clears from the horizon. Standard operating procedure for you public service patriots.

Yesterday I caught Charlie Gasparino on CNBC regarding a discussion on Goldman Sachs and his self proclaimed "toughness"on them and their activities, to put it mildly, he stated this;

"Bear Stearns went under, then Lehman went under, can you imagine what would have happened had Goldman gone under?"

Well yes, Charlie I can. It would have been extraordinarily painful, excruciatingly so. Lots of favored children would have been left in the lurch. They would not have been the last to fail either but but we most probably would be coming out of this mess for real, with a sustainable basis to build upon. Not some smoke and mirrors fantasy world. Just as the heroin junkie who wishes to quit must go through a painful process so too must we as an economy and a nation.

It absolutely staggers this simpleton speculator/blogger's mind to hear purportedly smart people, men like Warren Buffett and the like, iterating that the bailout was necessary, the stimulus was necessary, blah, blah, blah. It is one thing to hear financial illiterates like Carl Quintanilla or Joe Kernan utter that blather but for Warren Buffett. Maybe it is just late life capitalist's remorse. I can say this for certain, the bailouts, the stimulus, the TARP, the TALF, etc., it all was ABSOLUTELY, UNEQUIVOCALLY NOT NECESSARY !!

Did I make myself clear on that. Crystal clear I trust !

While on the topic of Goldman Sachs, a friend sent me the following piece by Bruce Wiseman on Goldman Sachs which is a great read and which I have copied in its entirety below for your reading ease.

You can also get to Mr. Wiseman's site via this link.

Maybe "tough on Goldman Charlie" might want to have a read over Wiseman's piece. He might learn a little bit from yet just another 'idiot blogger', right?

The Goldman Connection

The Goldman Connection

There will be a war. I’m certain of it.

No, not with Iran, though I’d like to introduce Mahmoud – I refuse to wear a neck tie under any circumstances – Ahmadinejad to a woman I met several years ago. She and her twin sister had been experimental subjects of Nazi madman, Dr. Joseph Mengle. Mengle had tried to change the color of their eyes with dye. The woman was blind. Her sister died at Auschwitz.
Mahmoud, who thinks the Holocaust was a hoax, forgot to pay his brain bill.

And they are a few clowns short of a circus in Pyongyang. Still, I don’t think the Chinese will let Kim Jon Il and his newly appointed secret police chief son, Kim Jon Un, drag the West into a military confrontation on the Korean peninsula. It’s a little too close to home and a Korean War II is not part of Beijing’s master plan. At least not yet.

No, this is a war brewing between two iconic American institutions that couldn’t be more different: the voice of America’s rock culture, Rolling Stone Magazine, and the country’s premier, Armani clad investment bank, Goldman Sachs.

Rolling Stone recently published an article called The Great American Bubble Machine, a masterful expose by Matt Taibbi revealing Goldman’s greed and corruption in the creation of several investment “bubbles” that have made the firm and its partners – the term “filthy rich” comes to mind – but that have been devastating to Americans and to the US economy.

I rarely use those two words together. I have no problem with people making money – barrels of the stuff. Boat loads. But this needs to be done with some sense of ethics. Some sense of morals. Some sense of responsibility toward one’s fellow man.

I was informed that Goldman is preparing a response. One wonders if the Wall Street veneer will crack: if they’ll come out with their pinstripes pressed or PR guns blazing trying to marginalize Taibbi.

As those of you who have followed my recent articles on the financial crisis know, I have pointed out the all too coincidental participation of Goldman executives in the creation of the financial crisis. Machiavelli himself would be proud of what has been nothing less than a coup d’etat of the planet’s financial systems. The Guys from Goldman have played their part.

While I have previously drawn attention to a few of the key figures, Taibbi has peeled the onion on several of the investment bank’s schemes and has also laid bare the army of Goldman alumni that have turned up at critical decision points in the universe of credit, investment and finance.

His orientation was such that he omitted a few that I will cover below. But the article is exhaustively researched and ties Goldman to everything from the Great Depression to speculation in oil futures before last year’s election that sent gas prices to $5.00 a gallon here in the land of many freeways. My focus, on the other hand, has been exposing the actual cause of the worldwide financial crisis. And our paths have crossed at a few key junctures.

Junctures that bring to mind the great Gordon Gekko - Michael Douglas’ character in Oliver Stone’s Wall Street. Preening in front of the Board of Directors and up and down the aisle among the shareholders of Teldar Paper, Douglas shares the philosophy of the successful investment banker as if handing down commandments from Mount Wall Street: “Greed is good. Greed is right. Greed works. Greed clarifies and cuts through and captures the essence of the evolutionary spirit.”

Yeah, Baby.

But is it more than greed? Are Goldman Sachs alumni part of a broader agenda that has not only lined their pockets with the spoils of corruption that Taibbi has exposed, but has also helped facilitate an international financial coup – a coup that has put the control of the planet’s financial affairs into the hands of small group of central bankers that hold secret meetings at what is nothing less than the Vatican of international finance – The Bank for International Settlements located in Basel, Switzerland?

If you’ve had a suspicion that bankers are running Washington, then hang on to your Calvins because while it starts in DC, this story is global in reach and is rolling out before your eyes – if you are willing to look.


I could start this part of the story with Henry Fowler, who, after serving as the 35th Secretary of the Treasury, in 1969 became a partner at Goldman after leaving office. But that’s not how things worked in the nineties and beyond. Oh no. The current sequence is very different.

Pictures of Robert Rubin always remind me of the cartoon character, Droopy. He seems to be in a perpetual state of sad worry. Hard to know what he’s worried about, having received $50 million in compensation from his last employer (CitiBank). Perhaps it’s because the financial website Marketwatch recently named him as one of the "10 most unethical people in business."

More to the point of our story, having served 26 years with Goldman Sachs, ascending to the position of Co-Chairman, Rubin came to Washington with the Clinton Administration, as the Assistant to the President for Economic Policy. Bill must have dug the Wall Street touch, because in January of 1995, he appointed Rubin the 70th Secretary of the Treasury of the United States.

This could be called the start of the modern era of what the New York Times has referred to as the modern era of Government Sachs.

The hallmark of Rubin’s years in Washington was deregulation - specifically, deregulation of the financial industry. Turn the financial industry loose. Let the big dogs eat. Let them earn. They have Porsche payments to make.

Working with Greenspan, he kept interest rates implausibly low and ensured that regulatory safeguards were gunned down like victims in an LA drive-by shooting. The Glass-Steagall Act is a prime example. A piece of depression era legislation that kept investment banks and commercial banks from committing fiscal incest, it was repealed - charged with being out of touch with the global financial structure.

What it was out of touch with was an agenda to open the floodgates to unbridled speculation by banks that set the industry up for a financial Hiroshima.

It takes a great deal of power and influence to get a federal law repealed in this country – especially one that has served the country well for 70 years. But Rubin, with a little help from his friends – Larry Summers and Alan Greenspan – got it done.

These and other similar actions helped pave the way for an economic crisis that would soon engulf the entire planet.

“The housing bubble has burst. The financial services industry is a ward of the state. Insurance companies and automakers are tottering on the brink of bankruptcy. Consumer credit is drying up along with consumer confidence. Banks have stopped lending money, and big corporations have started laying workers off. The stock market is at a five-year low. But amid the greatest financial panic since the Great Depression, the market for one asset stubbornly resists correction: the immaculate reputation of Robert Rubin, former treasury secretary and pre-eminent economic wise man of the Democratic Party.

But the financial deregulation that allowed markets to boil over began well before President George W. Bush took office. Three decisions relevant to the market meltdown…can be attributed to Rubin.” By Timothy Noah, Robert Rubin’s Free Ride.


Let’s set aside for the moment that when Rubin was Co-Chairman of Goldman, the firm underwrote billions of dollars in bonds for the Mexican government. When the Mexican Peso tanked a few years later, Rubin, as Secretary of the Treasury arranged a multi-billion dollar taxpayer bailout which, according to reports, saved Goldman a cool $4 billion. Kind of a dress rehearsal for Hank Paulson’s trillion dollar raid on the US Treasury which channeled tens of billions into the womb from which he came – Mother Goldman. But we’ll get to that.

Rubin did more than pave the road to a financial Armageddon with Maestro Greenspan. His spawn have helped ensure that the crisis came off as planned and that it was solved with the creation of a global financial dictator, who – prepare to be shocked - is also a Goldman alum. But, again, I’m getting ahead of myself.



At Treasury, Rubin groomed two protégés that helped craft the multi-trillion dollar financial bailout and that are today in charge of US financial policy: Larry Summers and Timothy Geithner.

Summers, though not a formal Goldman alum, is a fully certified Rubin-deregulation clone. He was the Chief Economist for the World Bank in the early 90s and later served as Rubin’s Deputy Secretary of the Treasury. When the Rubin left, Summers took full control of Treasury for the last year and a half of the Clinton administration. Today, Summers is the Director of the National Economic Council, which means he is in the commanding position of being the senior advisor to President Obama on domestic and international economic policy.


Geithner, like Summers, worked for Rubin at Treasury during the Clinton administration and was a Rubin favorite. He stayed on during Summers’ tenure and then snagged the powerful presidency of the New York Federal Reserve Bank. It was Rubin who got Geithner the gig at the New York Fed and it was Rubin who hooked him up with Obama, who appointed him as his Secretary of the Treasury.

In case there is any doubt about Geithner’s loyalties, it is widely known on Wall Street and inside the Beltway, that Goldman filed adoption papers on him years ago.

In an interview on July 3rd, 2009 the Former US Assistant Secretary Of The Treasury, Dr. Paul Craig, was asked "Does the US Secretary of the Treasury work for the people or does he work for the banking system on Wall Street?" to which he replied "Geithner works for Goldman Sachs."

So, for those who thought that Rubin had left the stage of US economic policy, think again. Because not only has Rubin himself been named as an advisor to President Obama, but another of his groupies, Christina Romer has been named as the Chairman of the White House Council of Economic Advisors.

Even today then, Goldman’s former Co-Chairman is advising Obama behind the scenes and his acolytes are in charge of the US Treasury (Geithner), the White House Council of Economic Advisors and the National Economic Council. (The White House Council of Economic Advisors is made up of academicians who provide the President with economic statistics and other information on domestic and international financial matters [Romer]. The National Economic Council brings together key administration players and agency heads to coordinate and see to the implementation of the administration’s economic policy. The Chairman [Summers] is the President’s senior economic advisor. )

You’d think with this crew in place, Goldman would have had the White House covered. But Obama apparently went for their two-for-one sale. In addition to Rubin, another former Goldman Chairman, the controversial Jon Corzine, has been a top Obama economic advisor. In fact he was on the short list to become Secretary of the Treasury. But Rubin ruled and Geithner got the gig.

Given that Goldman employees gave more money to Obama ($994,000) than any other commercial enterprise in the United States, and that the White House is awash in Goldmanites, it is no surprise that 1600 Pennsylvania Avenue is viewed as one of the bank’s more important operating divisions.


Even with the White House under control, Geithner beefed up his G-man staff at Treasury. He named yet another Goldmanite as his Chief of Staff. Mark Patterson was selected to help him run the government’s financial circus. Patterson gave up his plum position as the Vice President for Government Relations at Goldman -meaning he was the investment bank’s chief Lobbyist - to become the number two man at Treasury.
I know, I know. Obama said no lobbyists in his administration, but well, Mark is family. Sort of a fiscal fraternity brother – Alpha Delta Goldman.


But before Obama was Bush. And with oh-so-propitious timing, before the news of the financial crisis began to go mainline in 2007, a new Goldman CEO descended from his throne on Wall Street to come to Washington and help his government manage the nation’s financial affairs.

We love you, Hank.

Viewed from the boardrooms of Wall Street, Henry Paulson’s blitzkrieg of the nation’s capital was nothing short of stunning: A George Patton in pinstripes – except Patton was fighting a real enemy, not one that he, himself, had created.


At first, he used PR spin to calm the multitudes. As the crisis began to unravel, in August, 2007 Paulson assured the American people that the subprime mortgage problems were nothing to be concerned about, that they would remain contained due to the strong global economy.
Reuters - U.S. Treasury Secretary Henry Paulson said on Wednesday that the market impact of the U.S. subprime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades.


The stock market peaked two months later followed by a crash that wiped out trillions.

In July of 2008, after the fall of Indymac bank, Paulson told the public that the banking system was safe and sound and that the situation was very “manageable.” Twenty-five banks failed in 2008. Sixty-four have gone under in the first six and a half months of 2009. Another 309 are now listed as “problem banks.”

In fact, according to FDIC Chairman, Shelia Bair, in March, 2009, unless the FDIC gets more revenue, they themselves are going to be broke.

“Without additional revenue beyond the regular assessments, current projections indicate that the fund balance will approach zero."

In a television interview on Meet The Press on August 10, 2008, Paulson stated that he would not be putting any capital into Fannie Mae or Freddie Mac. Three weeks later, he took them over and committed $200 billion in bailout funds. $60 billion has already been spent.

When I was growing up, we’d call this kind of guy a “bullshit artist.” But that didn’t stop him from staging a raid on the US Treasury in broad daylight that would have made Dillinger weep with envy. This, while Congress – a Democratic Congress at that - stood around with their thumbs up their butts.



Perhaps nothing so demonstrated this scam as the government bailout of American International Group (AIG), the country’s largest insurance company. On September 16th, Paulson coughed up $85 billion of your tax dollars to take control of AIG. The $85 billion loan got the government 80% ownership of the insurance giant. Just what I always wanted from my government, a bankrupt insurance company.

It turns out the $85 billion wasn’t enough. AIG has continued to hemorrhage losses and Uncle has now poured a total of $182 billion into the insurance company.

Jefferson and Adams weep.

Sticky constitutional issues aside, many have found it more than curious that when the government granted the loan, AIG turned right around and paid it out to the investment banks to which it owed money. The bank that got the largest payout was… of course, Goldman Sachs – a cool $13 billion. The money simply passed from your paycheck to the US Treasury, from the Treasury to AIG and from AIG to Goldman (and other banks).

Of course, Paulson didn’t provide the loan without ensuring that Goldman and fellow banksters would be repaid in full. No, no. He made sure the transfers would occur without any objection from AIG or unseemly negotiations with the banks. To do this, he tapped Goldman Sachs board member, Ed Liddy to be the new CEO of AIG.
The goodhearted Mr. Liddy took the gig for a dollar a year in salary from AIG. But he held on to his $3 million in Goldman stock.

Cute, eh?

Goldman made billions from AIG earlier as well. AIG didn’t know this. Neither did Goldman’s clients. You see, despite the fact that they had collected enormous fees selling financial products which were “insured” by AIG, Goldman simultaneously sold AIG short. You get this? On the one hand, they sold financial instruments to their clients, which carried high investment ratings because AIG insured the buyer against loss. At the same time, they made investment “bets” for their own account against AIG. Estimates are that they made $4.7 billion betting against AIG while selling the AIG guaranteed products to their clients.

“Greed clarifies and cuts through and captures the essence of the evolutionary spirit.” - Gordon Gekko.

AIG behind him, Hammering Hank marched on.


He had worked out strategies to have Bear Stearns purchased by JP Morgan in March of ’08 and had committed $200 billion to rescue Freddie and Fannie in early September, but when Goldman’s chief rival, Lehman Brothers, began to waver in mid Summer, he turned a blind eye. Lehman went bankrupt and sent the already declining stock market into a colossal rout. The next day, he helped arrange an $85 billion bailout for AIG.

Following Lehman’s collapse, Goldman and Morgan Stanley were the only remaining pure investment banks left on Wall Street.


Congress was next.

The Four Horsemen of the Apocalypse have nothing on Paulson and his lap dog Bernanke’s assault on Congress. With threats of riots and martial law as they fear-mongered the Troubled Asset Relief Program (TARP) through the House and Senate - winding up with a cool trillion dollars to “save” the banks.

Congresses’ actions remind me of a bad Godzilla movie with masses of panicked Japanese citizens fleeing the fire-breathing monster who is lumbering through the city toppling buildings and devouring cars.

The legislation drafted by our elected officials sounds like something issued to Stalin by the Politburo. They granted Paulson complete dictatorial powers over the bailout money. The TARP read in part:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

Calling the multi-billion dollar bailout a “stimulus” program is but a cruel joke. This was nothing more complicated than a coup - a transfer of hundreds of billions of dollars from American taxpayers into the Armani clad arms of major Wall Street banks.

You won’t be surprised to learn, I’m sure, that Goldman Sachs got a cool $10 billion of TARP funds. And if you followed the billions pouring from your paychecks to Wall Street, you might remember that Bank of America at first received $25 billion. Then, in the midst of the chaos, they agreed to purchase Merrill Lynch. As it turned out, however, Merrill’s losses were $15 billion more than B of A had expected. This was due in part to $4 billion in bonuses paid out by Merrill’s CEO, John Thain, who pushed the bonuses through his books just before the Bank of America deal closed.

Bank of America was taken by surprise by the losses and the purchase of Merrill Lynch started to go shaky to which Comrade Paulson coughed up another $20 billion of your tax dollars.

You guys are so cool bailing out these banks. I mean it. It brings tears to my eyes.

Oh, I should mention that John Thain, the guy who pushed through the last minute billions in bonuses, had been the President and Co-chief Operating Officer at Goldman Sachs before becoming the President of Merrill Lynch.


Another Goldman alum to drive his bank headlong into the merger- mania chaos of the financial crisis was Robert Steel. Steel had worked with Paulson at Goldman for 30 years and eventually rose to the position of Vice Chairman of the firm.

He followed Paulson to the US Treasury in 2006 and became his top financial policy adviser. In July of 2008, he left the government and became the CEO of Wachovia bank, the sixth largest bank in the country.

How did he wind up at Wachovia? Three weeks earlier, Wachovia - who had paid Goldman Sachs $77 million in fees for financial advice - also sought their assistance in finding a new CEO.

Steel was the man. Three short months later, Steel struck a deal with Citibank to buy Wachovia – a deal that required hundreds of billions in loan guarantees from the government. Then he changed his mind and sold Wachovia to Wells Fargo without the government involved and became a member of the Wells Fargo Board of Directors.
According to Taibbi’s article:

“…Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing.”

Other articles claim that Steel himself did not take a bonus.

Regardless, you have Goldman getting millions in fees to advise Wachovia on, among other things, the selection of a new CEO, who, it turns out is a former Goldman Vice Chairman. Nothing illegal about it, but the financial incest begins to smell pornographic.


Paulson is nothing if not thorough. While he ultimately called the shots, he brought in someone else to oversee the allocation of the TARP funds and take the Congressional heat. This was thirty-five year old Goldman Vice President, Neel Kashkari who, as the head of the Office of Financial Stability at Treasury, was in control of the $700 billion in bailout funds. It was Kashkari who had to testify about the TARP to Congress - a hot seat whose temperature started to soar shortly after Paulson’s scam began to dawn on the legislators.


There were others. In fact, Paulson brought so many former Goldman executives to Treasury the New York Times noted the

“…appearance that the Treasury Department has become a de facto Goldman division.”

These included:

Reuben Jeffrey, a former Managing Partner of Goldman’s European Financial Institutions Group in London;
Dan Jester, a former Goldman Vice President;

Steve Shafran, a long time Paulson associate at Goldman;

Kendrick Wilson III, a Managing Partner at Goldman in the Financial Institutions Group; and

Edward Forst, a former Executive Vice President and Chief Administrative Officer at Goldman

Current or veteran Goldman executives all, they worked on everything from the bailout of Fannie and Freddie to the capital restructuring of the nation’s banks.

All of which makes Andy Borowitz’s article in the Huffington Post this month all the more understandable. The lead reads:

In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the U.S. Department of the Treasury.
No surprise that the first two people I showed the article to thought it was real.


Paulson and his Goldman gladiators also had air cover from the White House. George Bush’s Chief of Staff during the bailout blizzard was none other than Josh Bolton. Bolton had become Chief of Staff in April of 2006 and is credited with persuading the President to recruit Paulson as the Treasury Secretary.

No surprise since Bolton had been the Executive Director, Legal & Government Affairs for Goldman Sachs International before joining the Bush 2000 presidential campaign.

Powerful friends. Powerful places.

But the Goldman virus has not been confined to the White House and the Treasury, not by a long shot.


The acknowledged boogie-man of the world’s financial crisis were mortgages, many of which were sub-prime, packaged up into investment products called mortgage backed securities - also called derivatives because the package, the security, derived its value from the underlying mortgages. There is much more to this story (See: The Financial Crisis: A Look Behind the Wizard’s Curtain) but the point here is that these mortgages were a critical component to the crisis.

For reasons we detail in a follow up article, The Financial Crisis: The Hidden Beginning, the explosive growth of these products was due in large part to the fact that the securities carried a AAA investment grade rating. That rating was granted because Goldman Sachs and other banks were able to purchase what was essentially credit insurance for the investment. In other words, if the investment went bad, it was “insured” against loss.

This kind of protection was called a credit default swap. Though “swaps” looked like insurance and acted like insurance, they were remarkably adjudicated not to be so, thus eliminating the need for the “insurer” to hold reserves against possible losses. This opened the door to a torrent of speculation in the derivatives.
Let Matt Taibbi tell it.

“AIG, a major purveyor of default swaps, approached the New York State Insurance Department in 2000 and asked whether default swaps would be regulated as insurance. At the time, the office was run by one Neil Levin, a former Goldman vice president, who decided against regulating the swaps. Now freed to underwrite as many housing-based securities and buy as much credit-default protection as it wanted, Goldman went berserk with lending lust. By the peak of the housing boom in 2006, Goldman was underwriting $76.5 billion worth of mortgage-backed securities - a third of which were subprime - much of it to institutional investors like pensions and insurance companies.”


But not to worry. We’re protected now. The regulation of many derivatives and other exotic financial instruments - the $5 trillion dollar commodity futures industry (gold, silver, oil, treasury bills, corn, cotton, sugar, etc.) - has recently been delegated by President Obama to Gary Gensler.

Gensler was confirmed as the head of the Commodity Futures Trading Commission (CFTC) in May, but it took a little arm twisting. Some members of Congress had misgivings.

You see, back in 2000, when he was at Treasury, Gensler advocated legislation, which eventually passed exempting - credit default swaps and some other derivatives from regulation.

Still, it’s hard to argue with his understanding of derivatives. He spent 18 years at Goldman Sachs, the most aggressive derivative trader on Wall Street, where he became a Partner. He subsequently went to the Treasury Department where he pushed for the deregulation of the industry. Now President Obama has put him in charge of it.

Change we can believe in…


Goldman alumni not only control the commodities markets, but the major stock markets of the world, as well. In May of 2007, the grand daddy of stock markets, the New York Stock Exchange (NYSE), bought Euronext (a pan-European stock exchange with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom) which, now branded as NYSE Euronext, operates the largest securities exchange on the planet.

To run the show, the newly combined entity brought in Duncan Niederauer and appointed him Chief Executive Officer. Niederauer had been a Partner and Managing Director at Goldman Sachs before joining NYSE Euronext.


The Federal Reserve System controls the country’s money supply. Nice gig if you can get it. It is made up of a Board of Governors (7) appointed by the President for 14 year terms, and 12 Federal Reserve Banks around the country. The New York Fed is a first among equals. An institution of awesome power, it supervises and controls the major money center banks in New York, the capital of the US financial industry.

The New York Fed worked closely with Treasury Secretary Paulson on numerous aspects of the bailout during the chaos of the financial meltdown in the Fall and Winter of ’08.

Much of this work was carried out by Timothy Geithner, then President of the New York Fed until Rubin helped get him the job as the Secretary of the Treasury. The Chairman of the New York Fed at this time was Stephen Friedman. He picked up the reins when Geithner left while looking for a replacement.

Friedman was a former CEO of Goldman Sachs, and later Chairman at Goldman. He’d left Goldman in 2002 to oversee economic policy in the Bush White House as the Chairman of the National Economic Council. Later, Bush appointed him to the Chairmanship of the President’s Foreign Intelligence Advisory Board.

In 2004, he returned to New York and the Chairmanship of the Fed. He also returned to Goldman to become its Chairman while he was also the Chairman of the Federal Reserve Bank of New York.


To replace Geithner as President of the NY Fed, Friedman selected William Dudley. Dudley had been a Partner and Managing Director at Goldman Sachs for ten years prior to the Fed appointment.

Incest doesn’t begin to say it.

From the White House to Treasury; from the New York Fed to AIG; from the Commodity Futures Trading Commission to the New York Stock Exchange, Goldman is there.


But it doesn’t stop at our shores. It’s a global economy today, which requires global control.
The World Bank was founded in 1945 to help with the reconstruction of Europe after the Second World War. Over the years, their mission changed.

Today they claim that their purpose is to eliminate world poverty. Kind of a pin-striped Mother Theresa for the planet. Unfortunately, this is at odds with what they actually do. If they were achieving their aims, the countries that they worked with would be prospering. But the reverse is true. In fact, an objective view of the results of the bank’s activities leads one to the inescapable conclusion that what the World Bank produces is indebted nations.

In their beneficence, the World Bank makes loans to third world countries, countries that can’t borrow elsewhere. The loans carry conditions that dictate domestic policy “adjustments” in health, education, tax policy, judicial matters, agriculture, manufacturing….

You get the picture. The Bank and its sister organization, The International Monetary Fund, have about ¾ of the planet in debt like this.

Medieval doctors always prescribed the same “cure”; no matter what the ailment, they applied leeches to patients and bled them. For the past decade and a half, critics have likened the World Bank and the International Monetary Fund (IMF) to these doctors.

The two institutions have thrown millions of people deeper into poverty by promoting the same harsh economic reforms… regardless of local culture, resources or economic context. Strapped with heavy debts, most developing countries have reluctantly accepted these reforms, know as Structural Adjustment Programs (SAPS), as a condition for receiving IMF or World Bank loans.
In recent years, the doctors’ harsh medicine has been exposed in dozens of studies and in increasingly vocal street protests. In response, the World Bank and the IMF have been attempting to revamp their public image into that of anti-poverty crusaders.

The President of the World Bank is Robert Zoellick. In this position, Zoellick walks in the shoes of great Humanitarians like uber-Neocon Paul Wolfowitz, “Architect of the Iraq War”, and Robert McNamara, the Johnny Appleseed of Agent Orange.

Zoellick is in charge of spreading loans around the world to eliminate poverty, not unlike McNamara’s blanketing of South East Asia with Agent Orange to stop Communism. Both agendas produce the same results – toxicity, and in some cases, death – of the corporal body or the body politic.

Prior to joining the World Bank, Zoellick served as Vice Chairman, International, of the Goldman Sachs Group.

You gotta love these guys.

The World Bank and the International Monetary Fund (whose most powerful Board member is our very own Timothy Geithner) are the key tacticians in ensuring that the planet’s smaller economies remain deeply in debt. But they are no longer at the apex of international finance today.

As I have made clear in our earlier articles, the purpose of this financial crisis was to take down the United States and the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority—a planetary financial control organization to “ensure this never happens again.”

This purpose has now been accomplished.

To explain how, I quote from an article I wrote on this subject a few weeks ago.


On April 2, 2009, the members of the G-20 (a loose-knit organization of the central bankers and finance ministers of the 20 major industrialized nations) issued a communiqué that gave birth to what is no less than Big Brother in a three-piece suit.

The communiqué announced the creation of the all too Soviet sounding Financial Stability Board (FSB).The Financial Stability Board. Remember that name well, because they now have control of the planet’s finances... and, when one peels the onion of the communiqué, control of much, much more.


While several press releases from the G-20’s London conclave reference these codes as though they were handed down from a fiscal Mount Sinai, finding the specifics takes some digging.

But then the Bank for International Settlements (BIS), out of which the FSB operates, has never seen transparency as one of its core values. In fact, given its fascist pedigree, transparency hasn’t been a value at all. Known as Hitler’s bank, the Bank for International Settlements worked arm in arm with the Nazis, facilitating the transfer of gold from Nazi-occupied countries to the Reichsbank, and kept their lines open to the international financial community during the Second World War.

The BIS is completely above the law.

It is like a sovereign state. Its personnel have diplomatic immunity for their persons and papers. No taxes are levied on the bank or the personnel’s salaries. The grounds are sovereign, as are the buildings and offices. The Swiss government has no legal jurisdiction over the bank and no government agency or authority has oversight over its operations.

In a 2003 article titled “Controlling the World’s Monetary System the Bank for International Settlements,” Joan Veon wrote:

“The BIS is where all of the world’s central banks meet to analyze the global economy and determine what course of action they will take next to put more money in their pockets, since they control the amount of money in circulation and how much interest they are going to charge governments and banks for borrowing from them. . . .
“When you understand that the BIS pulls the strings of the world’s monetary system, you then understand that they have the ability to create a financial boom or bust in a country. If that country is not doing what the money lenders want, then all they have to do is sell its currency.”

And if you don’t find that troubling, the “Key International Standards and Codes” just adopted by the Financial Stability Board cover such things as:

• specification of the structure and functions of government;(!)
• data gathering from ministries of education, health, finance and other agencies;
• matters dealing with personal savings accounts, retirement incomes.

Here’s an example of the FSB in action from an article written by former Clinton advisor and political strategist Dick Morris for The Bulletin on April 6, 2009.

“The FSB is also charged with ‘implementing . . . tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms.’
“That means that the FSB will regulate how much executives are to be paid and will enforce its idea of corporate social responsibility at ‘all firms.’”

Almost no one on the planet has grasped what has occurred here.

Most central banks are answerable to no one. The U.S. Federal Reserve, for instance, is a private bank. It is owned by shareholders. Yes, the President appoints the Chairman, and the Chairman must testify before Congress, but no one gives them orders or tells them what to do. Again, they are a private, not government, institution (a very good reason to support Ron Paul’s bill [H.R. 1207] calling for Congressional authority to audit the Fed – something they currently have no right to do.)

And it is the newly created Financial Stability Board, operating as an arm of the Bank for International Settlements, that now structures and dictates the rules and regulations to be carried out by the central banks of the world.

And given the fact that central banks essentially operate independently of their national congresses or parliaments, the FSB now controls the monetary policy of the planet.

It is now, for all practical purposes, the Politburo of international finance. And who is the Chairman of this little known entity based in Basel, Switzerland? Mario Draghi. Draghi was a Partner at Goldman Sachs, until, like Henry Paulson, he left Goldman in 2006. Paulson took over the U.S. Treasury and Draghi become the Governor of the Bank of Italy (Italy’s central bank) and in April of this year, Chairman of the Financial Stability Board.

Draghi is also a member of the Board of Directors of the Bank for International Settlements. In fact, the BIS board reads like a Goldman reunion committee. Mark Carney, had a thirteen year career with Goldman Sachs where he became the Managing Director of Investment Banking before becoming the Governor of the Bank of Canada and a member of the BIS Board.

William Dudley, President of the New York Fed and former Partner at Goldman Sachs is also a member of the Board, along with Draghi.

And there, you have it. Complete financial control of U.S. financial policy and markets, from the White House, Treasury, the New York Fed and the New York Stock Exchange and the Commodity Futures Trading Commission. Control of the World Bank, most powerful member of the International Monetary Fund and, at the top of the fiscal food chain, the Bank for International Settlements and its Financial Stability Board.

This is my fourth article in a series about the financial crisis. Despite our exposure of what some commentators have called Goldman’s economic terrorism, it is important to understand that they are but a part – soldiers in pin-stripes - of a more basic agenda, which is nearly complete at this point.

This agenda is set forth in my previous articles – A Peek Behind The Wizard’s Curtain, Hitler’s Bank Goes Global and The Hidden Beginning – which can be found at

But “nearly complete” is not a fait accompli. And so I am providing you here with the link to “Hitler’s Bank goes Global,” the closing paragraphs of which set out specific actions to take to help bring this situation under control.

Goldman is like a Rottweiler on a leash. The key is bringing the handler, the Bank for International Settlements, under control.


Yes sireee Charlie Gasparino, Michelle Caruso-Cabrera, Carl Quintinilla and the rest of the "boobs and boobs in chairs" gang over at CNBC, just yet another fabricated, factless article full of bullshit by yet another 'idiot blogger' who can just write whatever he wants. Keep repeating that over and over again to yourselves.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54

Friday, August 21, 2009

Please Ignore the Messenger

I came across the following article written by Larry Flynt, publisher of Hustler magazine and put forth by the Huffington Post. I strongly urge you to read it as it is powerful !

I fully realize most will ignore the piece, either because of the blog's name that carried it, The Huffington Post or the author, Larry Flynt's name and reputation, in yet another glaring example of why anonymity, which the mainstream loathes so much, ensures the message is THE issue and not the messenger.

Common Sense 2009
by Larry Flynt
via the Huffington Post

The American government -- which we once called our government -- has been taken over by Wall Street, the mega-corporations and the super-rich. They are the ones who decide our fate. It is this group of powerful elites, the people President Franklin D. Roosevelt called "economic royalists," who choose our elected officials -- indeed, our very form of government. Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.

This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment's hesitation, they took our money -- yours and mine -- to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don't care what you and I think about them. Henry Kissinger refers to us as "useless eaters."

But, you say, we have elected a candidate of change. To which I respond: Do these words of President Obama sound like change?

"A culture of irresponsibility took root, from Wall Street to Washington to Main Street."
There it is. Right there. We are Main Street. We must, according to our president, share the blame. He went on to say: "And a regulatory regime basically crafted in the wake of a 20th-century economic crisis -- the Great Depression -- was overwhelmed by the speed, scope and sophistication of a 21st-century global economy."

This is nonsense.

The reason Wall Street was able to game the system the way it did -- knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) -- was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.

Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight -- and we've all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.

Instead, Obama wants to increase the oversight power of the Federal Reserve. Never mind that it already had significant oversight power before our most recent economic meltdown, yet failed to take action. Never mind that the Fed is not a government agency but a cartel of private bankers that cannot be held accountable by Washington. Whatever the Fed does with these supposed new oversight powers will be behind closed doors.

Obama's failure to act sends one message loud and clear: He cannot stand up to the powerful Wall Street interests that supplied the bulk of his campaign money for the 2008 election. Nor, for that matter, can Congress, for much the same reason.

Consider what multibillionaire banker David Rockefeller wrote in his 2002 memoirs:

"Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure -- one world, if you will. If that's the charge, I stand guilty, and I am proud of it."

Read Rockefeller's words again. He actually admits to working against the "best interests of the United States."

Need more? Here's what Rockefeller said in 1994 at a U.N. dinner: "We are on the verge of a global transformation. All we need is the right major crisis, and the nations will accept the New World Order." They're gaming us. Our country has been stolen from us.

Journalist Matt Taibbi, writing in Rolling Stone, notes that esteemed economist John Kenneth Galbraith laid the 1929 crash at the feet of banking giant Goldman Sachs. Taibbi goes on to say that Goldman Sachs has been behind every other economic downturn as well, including the most recent one. As if that wasn't enough, Goldman Sachs even had a hand in pushing gas prices up to $4 a gallon.

The problem with bankers is longstanding. Here's what one of our Founding Fathers, Thomas Jefferson, had to say about them:

"If the American people ever allow private banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their father's conquered."

We all know that the first American Revolution officially began in 1776, with the Declaration of Independence. Less well known is that the single strongest motivating factor for revolution was the colonists' attempt to free themselves from the Bank of England. But how many of you know about the second revolution, referred to by historians as Shays' Rebellion? It took place in 1786-87, and once again the banks were the cause. This time they were putting the screws to America's farmers.

Daniel Shays was a farmer in western Massachusetts. Like many other farmers of the day, he was being driven into bankruptcy by the banks' predatory lending practices. (Sound familiar?) Rallying other farmers to his side, Shays led his rebels in an attack on the courts and the local armory. The rebellion itself failed, but a message had been sent: The bankers (and the politicians who supported them) ultimately backed off. As Thomas Jefferson famously quipped in regard to the insurrection: "A little rebellion now and then is a good thing. The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."

Perhaps it's time to consider that option once again.

I'm calling for a national strike, one designed to close the country down for a day. The intent? Real campaign-finance reform and strong restrictions on lobbying. Because nothing will change until we take corporate money out of politics. Nothing will improve until our politicians are once again answerable to their constituents, not the rich and powerful.

Let's set a date. No one goes to work. No one buys anything. And if that isn't effective -- if the politicians ignore us -- we do it again. And again. And again.

The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It's time we took back our government from those who would make us their slaves.

Well said Larry, very well said.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54

Divergences.... Who Cares

Over the last few days the gory details are starting to emerge on Colonial Bank's loan book and the marks they were taking. BB&T, the bank taking over the assets of Colonial is marking down Colonial's loans and real estate collateral by 37%. No, that is not a misprint. If you think they number is horrendous I have another one for you. BB&T is marking down Colonial's construction loans 67%.

Do you think Bob Pisani or anyone else on CNBC is going to discuss this? Larry Kudlow? Ha ha ha! No, that would take a real financial journalist to do something like that. Instead they will pump the good news because like zombies as that is all they know how to do. Where is Abbey Cohen when you need her.

It is onward on upward for this market. I heard someone on Bloomberg the other day say this is a "close your nose and buy it market". Funny, but I distinctly remember being told that about the Nasdaq back in 1999. That along with, buy it for em' (clients) what the f#%& do you care.

What does one say about all this. Bankers making loans that have no hope in hell of being paid back, then carrying these loans on their books at fantasy levels that would make Charles Ponzi blush. And as if this is not enough you have regulators with their bought and paid for house and senate overseers looking the other way as everyone cashing their paychecks and enjoys the good life.

At what point is sanity going to return? At what point is someone sober going to state the obvious and more importantly do something? We all know where the problem is yet we ignore the obvious.Remember the movie the Untouchables? Remember the scene where Elliot Ness played by Kevin Costner is talking with Chicago cop Jim Malone played by Sean Connery and Ness wanted to go after Capone. Malone talked about how everyone knew where the illegal booze was just that no one was prepared cross the line. Or as in the case of the movie, go through the door.

David Rosenberg put out a piece recently which I have pasted below. I have followed Rosie since his days when he was at Nesbitt Burns when I was there at the same time, then Merrill Lynch and now Gluskin Sheff back in Toronto.

"As for the inflation-phobes, gold demand hit a six-year low in 2Q, according to the World Gold Council (-8.6% YoY). What is most interesting is that since late July, the S&P 500 has managed to tack on 20 points even as the 10-year Treasury yield has declined roughly 25bps — both markets cannot possibly be right when it comes to depicting the macroeconomic outlook. Our money is with Mr. Bond. After all, we seem to recall that between mid-June 2007 and early October of that year, the 10-year note yield fell 60bps even as the S&P 500 jumped 70 points as it made a last-gasp move to a new high. And, we know who got that story right.

As we saw yesterday, the market responded to reports that another fiscal package was about to be unveiled — even though the last package has yet to fully percolate. This sounds more like desperation than anything else, but there is no question that greed is once again testing the long-term resolve of the marginal investor. Politics is emotional. Like religion, sports, family, house prices, it is emotionally charged and therefore gets a lot more press and the general public forms a strong opinion. After all, the government is doing things that fewer people are favouring, based on the polls, because it is spending other people’s money — that is what fiscal largesse boils down to. Spending our tax dollars. That's why everyone is so crystal clear about the inflationary impact of an increase in the government balance sheet. Deflationary forces are tougher for the masses to understand.

We have said often that just as society couldn't spell ‘inflation’ in 1937, it has no clue what causes deflation now. That's beginning to change in the aftermath of the housing and credit collapse, but try to explain the deflationary forces contained in debt liquidation or global manufacturing over capacity or a socio-economic trend towards savings, and the notion of ‘deflation’ gets fuzzy for most thinkers (even Warren Buffet). That doesn't change the fact that the deflationary forces are enormous (and current) and the policy-induced reflationary forces are a partial antidote.

To be sure, if the government fails to mop it up once the private sector debt liquidation ends, it does mean that an inflationary mistake lurks down the road. But as we have seen in other post-bubble credit collapse episodes, the initial period of deflation can last for years, during which the fundamental trend in bond yields will likely remain in one direction and that is down, to the surprise and dismay of the litany of bond bears that currently populate the capital market. The fact that a year ago, when the inflation rate was over 5% but core inflation was less than half that pace, the market mantra was that we should be focused on headline only — that the core would follow the headline. There was a plethora of Street research published on the topic; we recall that all too well. Today, the year-over-year headline price trend is running at a 60-year low of -2.0%, and now we are being told by the economics community to focus on “core” (which, by the way, has slowed to 1½%) because this is all an “energy story”.

So you see, most strategists and economists and market pundits claim that they are concerned about inflation, but in reality, everyone seems to want to see it. As long as we have a lack of pricing pressure, we will see bond yields trend lower, and as long as that happens, there will be a continued lack of confirmation over the growth rate in the economy that is embedded in equity market valuation. Energy prices may, for a short time, give a kick to the headline CPI numbers but rents are almost four times more important and comprise 30% of the index (and 40% of the core). To repeat — three variables: rents, wages and credit — will ultimately determine the trend in inflation. Down, in other words. If you are not yet convinced of that in the consumer arena deflation remains the primary intermediate-term risk, then go the article on page B8 of the WSJ and see if that changes your mind — discount coupon redemptions are up nearly 20% this year (Club Stores Accepting Coupons: Sam’s Club Joins BJ’s, Costco in Issuing Discount Chits to Members).

We should probably add here that even though the moves by the Fed have provided ample liquidity, they have not stopped the underlying fundamentals from deteriorating — see Corporate Bond Defaults Hit Record on page 19 of the FT. (S&P just reported that 201 companies with $453 billion of debt have defaulted this year, exceeding the entire tally of 126 defaults covering $433bln in ALL of 2008). The 12-month speculative-grade corporate default rate has risen to 8.58%, as of July, from 8.25% in June (the rating agency is forecasting that the default rate will rise to 14.3% by the first quarter of 2010, taking out the prior record of 12.54% set in July 1991).

By the way, we are sure that for a market grasping on to any good news it can get, there is bound to be a buzz over the article on page 11 of the FT — U.S. Office Prices Raise Hopes. But turn to the Lex column on page 10 of the FT and you will see that there is less to the story than meets the eye (commercial real estate values are down 36% from the peak, which makes this downturn even worse than what we saw in the residential market!)."

As usual spot on. Thanks for the insight Rosie.

The divergences between the underlying facts on the ground and in particular the equity markets has become striking. There is little one can do as arguing with the sentiment right now is futile as anyone and everyone who fights this tape is being steamrolled. I can assure you of one thing, if the underlying discrepancies are not rectified, the repercussions, again in the equity markets most probably are going to be breathtaking.

Housekeeping notes;

Yesterday I was stopped out of both units of my short SPY position, 1 unit at $100.55 and $100.87 for losses of about 1/2 pt on each unit.

This morning, I was stopped out of my long EEV position at $15.88 for a loss of about 1 pt on 2 units.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54

Wednesday, August 19, 2009

Adding To EEV Long and SPY Short

There seems to be a head and shoulders formed on a 60 minute chart of the Spiders (SPY) which we gapped down thru the neckline and appear to be rallying up from underneath. There also seems to be a short term up trend line from July 31 which wasgapped down thru and we seem to be now rallying up to kiss it from the underside.

I am prepared to use this rally today to get short a 2nd unit of the sS&P500 tracking stock more commonly known as the Spiders, ticker SPY, here at $100.15. This will leave me 2 units short at $100.25

I also want to get long a 2nd unit of the Ultrashort Emerging Mkts ticker EEV here at $16.86 which will give me 2 units long at $16.81

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 2 units Ultrashort MSCI Emerg Mkt ticker EEV @ $16.81 stop @ $15.88
Short 2 units Spiders ticker SPY @ $100.25 stops @ $100.54/$100.87

Monday, August 17, 2009

Charts as Promised

Daily view of Abercrombie & Fitch, ticker ANF above.

Daily view of Amazon, ticker AMZN above.

Daily view of American Express, ticker AXP above.

Daily view of Freeport McMoran, ticker FCX above.

Daily view of Goldman Sachs, ticker GS above

Daily view of U.S. Steel, ticker X above.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort MSCI Emerg Mkt ticker EEV @ $16.65 stop @ $15.88
Short 1 unit Spiders ticker SPY @ 100.45 stop @ $100.54

Adding to FXP

I was enjoying the remains of a long weekend so my apologies for a post so late in the day.

In my post Tuesday of last week entitled 'Short China', I indicated the following;

"For those who have been following China, the market there has been on a tear. I am punting the Ultrashort FTSE/Xinhua China 25, ticker FXP (chart above) here at $10.05 with a stop just below the recent lows. The stock seems to be taking out a short term top in the $10 area. A move up thru $10.40 will compell me to add a second unit to the position."

Based on this my on stop buy order was filled this morning at the open at $10.90 as FXP gapped up on on the overnight move down in Shanghai. This now leaves me with 2 units long at $10.58. I realize many are reticent to get chase a position on a gap but gaps are very powerful signals and are especially so when accompanied by large volume as was the case today.

You might also note that the gap up today on FXP took out not only the $10.40 level I mentioned prior but it also took out the intraday high made on July 22 of $10.90.

This is a start but lets not get too excited as we have been here before. I am noticing a lot of breakdowns and reversals on the charts. I will try to post some charts on this shortly.

Housekeeping notes;

I am prepared to raise my stop on the FXP position and am staggering them to $9.94 and $9.54 respectively.

I am also moving my stop on SP
Y down to breakeven at $100.54

I was stopped out of my UXG position today at $2.68 for a loss of just shy of a 1/2 pt on 1 unit.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $10.58 stops @ $9.94/9.54
Long 1 unit Ultrashort MSCI Emerg Mkt ticker EEV @ $16.65 stop @ $15.88
Short 1 unit Spiders ticker SPY @ 100.45 stop @ $100.54