UNDERSTANDING THE
GREAT WALL STREET FRAUD (summarized)
*(12-30-07) The best
and easiest to understand analogy, though not perfect, to the wall street
markets is the kiting of checks at lightning computerized trading speed on
which commissions are taken although there is nothing of real value underlying
their fraudulent scheme.
*(12-31-07) The ubiquitous computerization of wall street functions, the
enhancement/advance/integration of the said computer equipment/peripherals in
terms of computing power and speed, along with the concomitant advance/sophistication
of the programming concerning same has enhanced the ability of the frauds on
wall street to effect their frauds with blinding speed vis-à-vis the funds
entrusted to their care by way of programmed trades, ie., buy, sell, stop
limits, etc.. An example (though not perfect) is illustrative: Dow drops 200 points as programmed sell
orders kick in with some not so fudged negative news. Nothing changes but the
following day the market rises 205 points on programmed buy orders (a little
higher despite the absence of any positive news). Hence, the huge swings which
have become ever so more prevalent. Though nothing has changed, hundreds of
millions of dollars without relation to any value added (in economic terms,
service, etc.) is taken in commissions (percentages, points, spreads) by the
frauds on wall street on huge computerized trading volume (hence, the
multi-billion dollar bonuses on top of huge salaries, etc.). The fact is that
these funds entrusted to them are so large that such computerized “buys” can
simulate other than rational demand causing prices to rise solely to generate
huge commissions to them and new funds coming in (as in a ponzi scheme). The
corrupt government has been complicit in terms of false economic reports,
legislation protecting the fraud (ie., exemption from RICO accountability,
etc.), while the courts are also corrupt facilitators (ie., new york, new
jersey, california, etc., and similarly don’t count on arbitration
panels). There was a time when
transaction costs mattered in financial investment decisions. The
trades/commissions are not a net positive for the economy but are indeed of
great benefit to the recipients of same (who like termites eat away at other
peoples’ money, and whose marginal propensity to consume is less than those
allocating their monies/pensions/401ks/savings etc.; hence, the mess to
follow). Finally, the NASDAQ/tech has become the “safe haven” but in reality as
in the dot.com bust days are just the great story without much fundamental
understanding that keeps the fraudulent ball rolling.
(1-01-08) Remember: more
contrived wasteful commissions to the wall street frauds, the level and
percentage of which should be examined in light of computerization and
decreased costs attendant to same especially since only A Very Small Fraction
Of What wall street Does Is A Net Positive For The Economy (New Investment
Capital via, ie., ipo’S), The Rest Is Tantamount To A (Economically)
"Wasteful Tax" (On The Economy) via 'churn and earn' computerized
programmed trades.
*(1-3-08)
$14 billion ($21 billion in 2006) in bonuses to the lunatic/frauds on wall
street for a commissionable (sub prime bundled) fraud well done, inflation up,
dollar down, oil prices up, manufacturing down; one analyst/reporter/journalist
from inside sources pegs the sub-prime dollar value of the shilled worthless
paper at $516 TRILLION (even a percentage of same renders the problem
unfixable-hence, culpable parties must be held accountable and disgorge their
ill-gotten gains from, ie., commissioning worthless paper, taking a point here
or there and fraudulently passing same on, ad infinitum, etc.). Of course there
are also a plethora of garden-variety frauds as always, ie., 10-B-5, insider
trading, etc..
*(10-10-08) Now to bring the initial check-kiting analogy
closer to the current crisis, realize as is the case of the worthless sub-prime
securities, there is no charge-off/debit as is ordinarily the case with a
cleared check and the worthless 'collateralized sub-prime security' is
repackaged, resold, recommissioned based upon (collateralized by) as collateral
the original worthless security which is in turn repackaged, resold,
recommissioned based upon as collateral the subsequent worthless security, and
so on (a geometric progression) to the
tune of (hundreds of) trillions of this worthless, fraudulent paper (blatent/flagrant
securities fraud which must be
prosecuted and fraudulently derived profits disgorged).
THE BAILOUT FRAUD/SCAM
This
is not brain surgery and the fraud, bonuses/compensation (mortgages, subprime
and otherwise, are only a relatively small portion of the fraud/scam providing
“cover/collateral” for the worthless but heavily commissioned paper over and
over again in a multiplicity of different forms of worthless paper) in the
mega-billions should first be disgorged before taxpayers are forced to pony up
and pay the frauds again for their fraud which caused the problem in the first
instance, must be prosecuted. It should also be noted that despite the
rhetoric, the wall street bailout will NOT solve the crisis or eliminate the
economic pain except to make permanent the fraudulent wealth transfer to the
most well healed heals/frauds/criminals in the nation who caused the so-called
crisis by their greed/corruption/fraud.
Some Economic Background to the
Current Crisis
CITIGROUP and MERRILL face
bigger writeoffs/dividend cuts, etc.....
CHEER: Ambrose
Evans-Pritchard: Bank Crisis may make '29 look 'walk in park'... As central banks continue to splash their
cash over the system, so far to little effect, Ambrose Evans-Pritchard argues
things are rapidly spiralling out of their control Twenty billion dollars here,
$20bn there, and a lush half-trillion from the European Central Bank at
give-away rates for Christmas. Buckets of liquidity are being splashed over the
North Atlantic banking system, so far with meagre or fleeting effects.
"Liquidity doesn't do anything in this situation," says Anna
Schwartz, the doyenne of US monetarism and life-time student (with Milton
Friedman) of the Great Depression."It cannot deal with ….. that lots of
firms are going bankrupt. The banks and the hedge funds have not fully
acknowledged who is in trouble. That is the critical issue," she adds…..
The
time-lines below highlight the four recessions in the US economy since
1980…..While the NBER was only a little late in its recognition of the
recession that began in Summer 1981, they were late to the game in the
remaining three. In fact, during the last two recessions, the NBER did not
officially declare the start to a recession until the recession had already
ended. The u.s. is already in recession, beyond the fake data/reports, with
much higher than reported inflation, etc..
Economic Expert
Says Global Crash Imminent
Echoes former world bank leader with prediction of global
recession Steve Watson
A leading economic expert has warned that a global crash and
recession is imminent on the back of record highs in real estate, stocks and energy,
combined with a devaluation of the dollar and continued speculative bubble
thinking. Robert Shiller, the Stanley B. Resor Professor of Economics at Yale
University told an audience at the annual Dubai International
Financial Centre (DIFC) Week that a sharp downward correction is due in the
global markets. Shiller stated: Perhaps we have gotten a little too confident
in the global economic growth, said Shiller. The problem is high oil, stock and
real estate prices. I believe that a substantial part is speculative bubble
thinking. We have gotten too confident of the prices in these markets.
Economic Outlook 2008: Darkening Clouds
Dom Armentano Lew
Rockwell.com Thursday December 6, 2007 Presidential election years usually
are not recessionary but next year will be an exception. Several economic
factors are colliding in an almost perfect storm to markedly slow the general
economy and the stock market. The most important signal flashing recession is,
of course, the sub-prime mortgage fiasco. After years of monetary inflation on
the part of the Federal Reserve, individuals and families with poor credit were
suckered into low-down-payment/low-interest adjustable mortgages that simply
cannot be maintained or repaid under current conditions. Their incentive is to
sell the property quickly before their equity evaporates and/or the financial
institution repossesses it. Yet the massive oversupply of homes and condos for
sale has pushed prices down at a record clip and made additional foreclosures
even more likely. Next year, unfortunately, will be the Year of the Auction.
The financial institutions have also been punished…well sort of. Various
institutions including hedge funds that hold these poorly performing debt
obligations have been forced (by accounting rules) to "write down"
the value of these assets, take huge paper losses in the bargain, and pull in
their financial horns. Thus, any near-term recovery in housing must now fight a
record supply availability, falling prices, higher insurance costs and
restricted credit…a near-term impossibility in my view. Moreover, the slowdown
in residential and commercial construction will send secondary ripple effects
throughout the economy. Laid-off construction workers don't spend money.
Construction and home furnishing suppliers sell less output and make fewer
investments. Even local governments will be pinched by declining property-tax
assessments and fewer developer fees. Things are likely to get worse before
they get any better. The second major factor indicating a near-term recession
is the sky-high price of crude oil and refined product. Pushed upward by
world-wide speculative Mid-East war fears and increases in demand (especially
from China), increasing energy prices act as an inflationary "tax" on
domestic production and consumption throughout the market economy. Higher costs
of production will lower profits; higher prices will reduce some consumption.
The only good news here is that any substantial economic slowdown in 2008 will
eventually moderate the price of oil and other commodity prices as well. The
third factor in the current recession scenario – and the real wild card – is
the continuing decline in the value of the dollar in international money
markets caused by our Iraq blunder and the Federal Reserve–generated oversupply
of dollars. Some economists would argue that a devalued dollar is good for U.S.
exports, and thus positive for the economy as a whole. I disagree for three
reasons. First, the bulk of crude oil purchases takes place in dollars; a
falling dollar translates into still higher crude oil prices. Second, the U. S.
dollar is the major reserve currency of the international monetary system and
dollar-paying investments (such as U.S. Treasury bills and bonds) are held in
massive amounts by foreign banks and governments. Dollar devaluation makes
these investments less attractive and any disinvestment in these areas would
sharply drive bond prices down and increase interest rates. The third reason
why dollar devaluation makes recession more likely is that it effectively
prevents the Federal Reserve from pushing U.S. interest rates much lower. Any
additional Fed easing (inflation) would be seen as a signal of even further
future dollar devaluation and even higher dollar prices for oil. Unfortunately,
we will not be able to "inflate" our way out of this recession this
time. We will simply have to take our lumps and let market forces liquidate the
bulk of the malinvestments caused by the unprecedented Greenspan money bubble.
This liquidation process will not be pretty but it is necessary to restore a
sustainable economic recovery in the years ahead.
Don’t forget: Criminal america has the
highest crime rates in the world. No other so-called ‘civilized’ nation even
comes close.
Euro gains on dollar
in official reserves...
FROM THE SUB-PRIME
TO THE RIDICULOUS: HOW $100B VANISHED...
PAPER: TOP
ECONOMIST SAYS AMERICA WILL PLUNGE INTO RECESSION...
TOP TRENDS 2008: PANIC AND FEAR http://www.trendsresearch.com
Economic 9/11
Just as the Twin Towers collapsed from the top down, so too will the
US economy from an Economic 9/11. When the high-stake speculators, banks,
brokerages, and buyout firms that leveraged billions with millions get hit ...
everything underneath them will turn to rubble.
The Panic of 08
Failing banks, busted brokerages, toppled corporate giants, bankrupt
cities, states in default, foreign creditors cashing out of US securities …
whatever the spark, the stage is set for panic in the streets. When the giant
firms fall, they'll crush the man on the street. ....
Conservation Engineers
More powerful than high tech and paying much better than the booming
health care sector, we forecast that "Conservation Engineers" and
"Conservation Specialists" that are skilled in providing enviro-smart
solutions will be among the most handsomely rewarded and sought after professions
for the next several decades.
Tax Revolts
It was a reason given for starting the first American Revolution and
as the trends add up, it will also be a reason for starting the second. Fed up,
and not willing – or able – to take it anymore, overtaxed Americans will begin
the battle against politicians and bureaucrats in the fight to lower and/or
repeal taxes… while demanding higher tax rates for those seen as paying too
little. .....
Bye, Bye Bucks
America’s going broke and the whole world knows it. Betting that its
economy will spiral down and that the dollar will fall with it, foreign
cdarkreditors are dumping dollars on the market … and even Third World street
vendors don’t want to take greenbacks any longer. The further it falls, the
less it’s worth. The less it’s worth, the less it buys. In the real world they
call it "inflation." In America they call it "good for
business." ......
Small is Big
Unlike the years of personal prosperity and business growth long
perceived a birthright … today, as America’s fortunes dwindle, its people will
be forced to adjust attitudes and alter practices to compensate for the losses.
Although the oncoming national downsizing trend may be a blow to egos and
painful to pocketbooks, if intelligently deployed and spiritually practiced,
the "Small is Big" trend can lead to more progressive advancement and
greater rewards than the supersizing trend that has been consuming much of the
nation.
Heal Yourself Health Care
Just as it took mountains of facts and bottom line realities to
finally convince a consumption prone public that energy saving tools and
environmentally sound practices bring bigger rewards and higher quality, the
oncoming "Heal Yourself Health Care" trend will be as widely embraced
and will prove equally rewarding. Evolving over the past two decades, along
with growing acceptance of seeking alternative medical options, the "Heal
Yourself Health Care" trend is being driven by both the lack of money and
the power of the mind.
TechnoSlaves.com
It’s a quickly spreading worldwide epidemic that will get much
worse. All colors, classes, creeds and races are addicted and they can’t break
the habit. Before 2008 ends, the TechnoSlave trend will be so pervasive and so
deeply embedded into the fabric of society that Old World communication styles
will be seen as quaint and ridiculed as stupidly boring by the high-tech
"hip." Across borders and around the world, blinking lights of blue
and red flash from human ears … electro-plastic appendages affixed to the body
and controlling the mind. So self-important have society’s members become that
they must be connected at all times … to be in touch and instant messaged … for
work, play and to fill the voids of idle time.
Hold on to Your Hats
2008 is going to be a wild ride. http://www.trendsresearch.com
Jeremy Grantham: All the World's a Bubble
By Brett
Arends
…..Grantham says we are now seeing the first worldwide bubble in history
covering all asset classes.
Everything is in bubble territory, he
says. Everything.
'The bursting
of this bubble will be across all countries and all assets.' -- Jeremy Grantham
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare timebomb
could send the economic superpower into insolvency, according to research by
Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a
leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its
creditors," he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"..... there are strong reasons to believe the United
States may be going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a
study by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise
for the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by 143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at
some point allow inflation to erode away its debts, they may reduce their
holdings of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too optimistic
Commentary: Newsletters react to stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not good.
Dow Theory Letters' Richard Russell wrote Friday morning: "If
the Dow breaks support at 10,760, I think we could have some nasty action, even
some crash-type action." But, perhaps significantly, Russell did not quite
hit the panic button when the Dow did indeed close at 10,739 Friday night.
He
simply remarked, supporting the contrary opinion view: "Three days in a
row with the Dow down over 100 points each day -- you don't see that very
often. But still no signs of real fear, no capitulation, no panic -- just down,
down, and down. The key consideration here is that there is still no sign of
big money coming into this market. In fact, the big money has been leaving this
market all year. ... The longer the market continues down without a panic decline,
the worse the ultimate panic will be when it arrives."
What is Wrong with the Stock
Market?
Dr. Khaled Batarfi
John D. Rockefeller was once asked
why he decided to sell all his stocks just months before the 1929 Wall Street
Crash. He explained: One morning, I was on the way to my office and stopped to
have my shoes polished. The guy asked my advice about the shares he bought. If
people with this kind of talent were now playing the market, I knew there was
something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds
and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
Analysts' Forecasts and Brokerage-Firm Trading
THE ACCOUNTING REVIEW Vol. 79, No. 1 2004 pp. 125–149 Analysts’ Forecasts
and
Brokerage-Firm Trading Paul J. Irvine Emory University University of
Georgia
Collectively, these results suggest that analysts can generate higher trading
commissions through their positive stock recommendations than by biasing their
forecasts.
WHISPERS OF MERGERS SET OFF
BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that
illicit trading ahead of deal announcements is becoming a systemic problem.
Sartre, Courtesy of
Etherzone.com, on the Typical Criminal american B**l S**t: "The official
rate of inflation is a lie. Look at the expense on essentials. The price tag of
food has gone through the roof. Energy, medical, insurance and education costs
are unbearable. As the rise in local and state taxes far out pace any minimal
reductions on the federal level. The huge balance of payments trade shortfall
is no accident. Government deficits grow, as massive debt piles up. No wonder
the laws of economic veracity require a loss of purchasing power in the value
of the currency".
YOU CAN'T BELIEVE A WORD THEY
SAY!