The FDIC Puts the Smack Down on Firstrust and JDA Asks Where's Trusty?

Monday, November 30, 2009 , , , 0 Comments

Oooooh, I bet they are really shaking in their boots. $10,000 is a whole shit ton of money.

Philadelphia Business Journal:

Firstrust Bank was fined $10,000 by the Federal Deposit Insurance Corp. for regulatory violations, according to information released by the FDIC Friday.

The FDIC said that it presented its findings to Conshohocken, Pa.-based Firstrust and the bank agreed to a civil penalty. The regulator did not specify the violations but it appears to be connected with mortgage lending. The FDIC said the violations involved sections of a Federal Reserve System regulation which require certain mortgage lenders to disclose data regarding their lending patterns.

Firstrust released a statement Monday afternoon.

“While the bank was operating in a good faith manner that we believe was consistent with regulations, the FDIC saw fit to assess a modest monetary penalty for technical loan application data reporting errors. These errors had no impact whatsoever on Firstrust’s customers. Firstrust has paid the penalty and revised its reporting process as requested by the FDIC examiners.”

Jr Deputy Accountant expresses her apologies for being unable to attend last year's search for a Firstrust mascot ("Trusty" - you can't make it up, people).

Play "Where's Trusty?" here. It'll make you feel better - if momentarily - about the crap these asshats get away with. Until you see Trusty's letter to reader "Susie" who wants to know why she should hand over her piggybank to the big bad bank.

Dear Trusty,
I’ve got a great stash of cash in my piggybank. I save my allowance to buy video games. What’s the point of moving my money to a bank?
Susie Saver

Dear Susie,
I’m so happy to hear you’re saving your allowance. The big difference between your oinker and a passbook account is something called interest. Interest is money a bank pays you for keeping your money with them. They pay you a percentage of what you deposit into your account. You earn money while saving money.
Firstrust doesn’t charge any fees for their youth passbooks FirstSavers account for the first two years. You can download a $5 TRUSTY FIRSTSAVERS COUPON for your new account, right here online! The minimum amount you need in the account is $25. Stop by Firstrust and start saving today!

P.S. When can I come over and play some of those video games?

Your friend,

Dear Susie,

I really hate to interrupt here but don't listen to that guy. He's a miserable dude who earns slightly more than minimum wage writing website copy for the bank.

The reason Trusty wants you to put your piggybank in his bank is because then he can turn around and use 90% of it to make loans - loans that apparently have broken the rules. Are you sure you want your piggybank to fund that kind of thing?

He's right that it's better to earn interest than leave your video game stash sitting in your piggybank but can you slip this note to your parents and ask them to research the bank they decide to help you put your money into?

And be sure to mention to them that the FDIC - like Santa and the Easter Bunny - is totally made up. You're welcome.

Jr Deputy Accountant

P.S. Don't let him come over and play video games. That's always how it starts. I'll tell you how it ends when you're older.


Tim Geithner Killed Treasurys!!!

Monday, November 30, 2009 , , , , 1 Comments

Pic credit:

Uh, that's how Bloomberg made it sound. I could be blowing it out of proportion but come on now, this is me we're talking about here.

In-Geithner-We-Trust Bond Market Gets Lowest Yield (way to report with fucking hilarious headlines Bloomberg!):

Less than a week after deflecting calls for his resignation, Timothy Geithner sold bonds on behalf of U.S. taxpayers at the lowest yields on record in a show of confidence in the Treasury Secretary’s policies.

Even as the nation’s debt increased by $1.15 trillion this year to $6.95 trillion in October, the government’s interest expense under Geithner dropped 15 percent, the biggest decrease since before 1989, according to data compiled by Bloomberg. The Treasury auctioned $44 billion of two-year notes Nov. 23 at a yield of 0.802 percent, the lowest on record.

Rising demand shows investors believe Geithner, 48, is striking a balance between policies to promote growth and the borrowing needed to finance a $1 trillion deficit. The economy will likely expand 2.6 percent in 2010, after the government and Federal Reserve lent, spent or committed almost $12 trillion to keep financial markets from collapsing, according to the median estimate of 63 analysts surveyed by Bloomberg. That’s in line with average growth of 2.63 percent from 2002 through 2007.

“There have been many criticisms of him, but he’s done a good job,” said Tsutomu Komiya, who invests in Treasuries for Tokyo-based Daiwa Asset Management Co., which oversees $77 billion. “He brought stability to the financial markets. We can’t help but invest in Treasuries because of their safety and liquidity.”

"we can't help but invest in Treasuries"

Have you guys ever seen that A&E show Intervention? Those people couldn't help it either but with a good intervention and some therapy, we can get you off those Treasurys and into some truly safe investments like mattresses, wheelbarrow companies, and of course gold.


What the Fed Can Learn from the Bank of Japan (Hint: It's Not "How to Have Large Cojones")

These numbers are too hard
let's do 0, it's way easier...

Pay attention, America, this is what happens when you have an impotent central bank who refuses to raise rates and pull in the reigns on sloppy, half-assed economic "recovery". This is exactly where we are headed, especially with an FOMC line-up for 2010 that promises to be chronically dovish and suspiciously absent of a few pairs of giant cojones. Throughout 2009, my consolation in watching FOMC minutes has been that there was at least one giant pair with a vote. Richmond Fed's Jeffrey Lacker is certainly not alone in having a pair but in the end it's the vote that matters. Hell, even Don Kohn shows a level of sense when it comes to the dollar when he isn't being a total sheisty douchebag. But this lineup for 2010 is nothing but trouble.

Maybe Bernanke should put down the Great Depression text book and read up on Japan? WTF, do something.


The Bank of Japan stepped closer to currency intervention on Friday than at any time in the last five years by checking exchange rates with commercial banks as the yen rallied to a 14-year high against the dollar.

Still, market sources said intervention was highly unlikely in the short term and that authorities were instead aiming to temper the sentiment driving the yen higher.

While the central bank made its presence known in the market, Japan's Finance Minister, Hirohisa Fujii, raised the prospect of a Group of Seven joint statement on currencies to cool the yen's rally.

The dollar slumped to a low of 84.82 yen as investors shunned riskier assets after news about Dubai's debt problems, but it pared its losses after Fujii's comments as his rhetoric was sharper than his remarks on Thursday.

G7 countries issued a statement in October 2008 when the yen rallied against other major currencies, so traders and analysts said a joint statement was possible.

But joint intervention was extremely unlikely, they said. Such action might send the wrong signal at a time when the G7 wants to encourage China to let the yuan rise by maintaining flexible currency markets.

Unilateral intervention by Japan was also unlikely because the yen's rise is largely the result of the dollar's broad weakness, and the BOJ would not have enough financial firepower to reverse the dollar's decline.

Unilateral intervention! WTF! It's the dollar, stupid.

What, we've allowed the Bank of Japan to shuffle its feet for this long, why start pressuring them now? Suddenly our problems with the US dollar - a direct symptom of our overall banking contagion, of course - are their problem? Pffft, even I can't get behind that.

Oh nevermind! The NY Fed research folks are totally on this one. Thank goodness, I was worried there for a second that maybe the Fed was completely fucking oblivious. No idea where I'd get an idea like that.


Removing the Stigma from Food Stamps (But Keeping the Same Scandalous Bloodsucking Bankers)

Monday, November 30, 2009 , , , 1 Comments

NYT has an interesting article on removing the stigma from the safety net of "food stamps" now that a pretty signifcant number of Americans rely on them to eat. The article doesn't get into specifics and much like unemployment numbers, I imagine "1 in 8" is hard to calculate precisely since from where I stand 75% of Americans are still in denial anyway. There is an incentive to fudge the numbers and exude an attitude of "we're fine, everything is ok" when the teevee says things are looking up. But we're not here to argue the definition of "hunger". We're here to talk about "food stamps" - more specifically, what the NYT article does not get into. While it briefly touches on the facelift traditional "food stamps" underwent during the Bushy Jr years, it does not say that JP Morgan is one of the country's largest providers of "EBT" benefit services to welfare organizations and recipients. But we'll get there.


With food stamp use at record highs and climbing every month, a program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.

It has grown so rapidly in places so diverse that it is becoming nearly as ordinary as the groceries it buys. More than 36 million people use inconspicuous plastic cards for staples like milk, bread and cheese, swiping them at counters in blighted cities and in suburbs pocked with foreclosure signs.

Virtually all have incomes near or below the federal poverty line, but their eclectic ranks testify to the range of people struggling with basic needs. They include single mothers and married couples, the newly jobless and the chronically poor, longtime recipients of welfare checks and workers whose reduced hours or slender wages leave pantries bare.

While the numbers have soared during the recession, the path was cleared in better times when the Bush administration led a campaign to erase the program’s stigma, calling food stamps “nutritional aid” instead of welfare, and made it easier to apply. That bipartisan effort capped an extraordinary reversal from the 1990s, when some conservatives tried to abolish the program, Congress enacted large cuts and bureaucratic hurdles chased many needy people away.

From the ailing resorts of the Florida Keys to Alaskan villages along the Bering Sea, the program is now expanding at a pace of about 20,000 people a day.

Awww, look at JP Morgan being so philanthropic, offering EBT cards to victims of Kentucky ice storms earlier this year! It really melts my heart:

J.P. Morgan has helped the Kentucky Cabinet for Health and Family Services (CHFS) deliver early food stamp benefits to Kentuckians recovering from the state’s recent devastating ice storm. CHFS’ Department for Community Based Services usually issues electronic monthly food benefits on a staggered schedule during the first ten days of each month. Due to the storm, nearly 252,000 food stamp recipients who typically receive funds between the third and tenth of the month were given early access to benefits on February 2nd. These benefits are delivered via J.P. Morgan-issued Electronic Benefits Transfer (EBT) cards.

The Kentucky ice storm is believed to be the worst natural disaster in modern Kentucky history. Beginning on Jan. 27, 2009 and continuing for several days, ice, snow and rain pummeled the state. Fallen trees, debris and power outages paralyzed parts of the state and left hundreds of thousands of Kentuckians without electricity, water and heat. As a result, food spoilage occurred.

Now if I were the conspiratorial sort, I would speculate that this food stamp facelift worked out well for one recipient of Bushy Jr's welfare in particular, but I don't know enough about what goes on in Florida to make wild stabs like that.

I do know that this is the same JP Morgan that bankrupted an entire Alabama county with really shitty derivatives contracts so I wouldn't go inviting Jamie Dimon to dinner just yet, Brangelina.

JP Morgan was also accused of a little skimming of EBT benefits right here in my homebase of San Francisco - which, as you may or may not be aware, has a large homeless population *cough* - as this 2007 article via NowPublic shows us:

J.P. Morgan EFS is the contracted EBT Card processor in several states but, they have been processing illegal charges for sales tax, card processing fees in several U.S. Cities, including San Francisco.

[ This article, from SFHomeless Yahoo! Group, is part of a series that addresses some dirty little secrets behind EBT Card Food Stamp programs. J.P. Morgan EFS is contracted to process EBT transactions for millions of EBT Card Holders and provide training for the employees of the stores, restaurants, markets and cafes that accept Food Stamp Food Benefits. ]

Due to an apparent lack of adequate training and oversight by J.P. Morgan EFS, participating stores; restaurants and our local and state government agencies, several million of dollars worth of taxes, processing fees and surcharges (card holder charged higher price for food than the menu or price tag states, for food and beverages only because they are using Food Stamps) have been taken away from EBT Card Holders' Food Benefits, over the past several years.

So yeah, you can take the "stigma" out of food stamps but apparently you can't exorcise the demons. That's a shame.

I would have dug through JP Morgan's SEC filings or what-have-you for numbers on how much they make off of EBT each year but the taste of bile began to rise in my throat and I had to cut this post short. Check out the NYT article. Personally I don't think there should be any stigma involved in needing help, and it's what makes things like Black Friday so hard for me to digest. How many people camped out at 3 in the morning in a Wal-mart parking lot couldn't afford any of that shit, let alone all of it? Priorities, people.

Anyway. If anyone wants to hear the story about 18 year old me, a wild hitchhiking trip across the Western US, Salt Lake City and one of these EBT cards, you know where to find me. So I do have practical experience with one myself, though that would have been the late 90s so maybe Bushy Jr hadn't sold off the food stamp facelift to JPM yet. Whatever, that's not the good part of the story.


Still Buying Nothing?

Monday, November 30, 2009 , , 0 Comments

First of all, Cyber Monday is a perfect example of why this country is as fucked up as it is. An entire day spent on the boss's dime surfing Online sales, as if standing in line at Wal-mart at 3 in the morning wasn't enough? Don't give me that "lunch hour" shit, it takes me at least an hour and 45 minutes to find the right color tube socks (might I recommend the pink and black striped cupcake crossbones? Fuck yeah).

Not sure if you guys noticed but most retailers started the Online sales early. On KTVU, I saw some asshat sleeping in front of Best Buy 3 days early so he could get a big screen for himself on Black Friday that was available Online for the same discounted price.

In fact the Black Friday theme this year seemed to be me, me, me with not-so-petrified shoppers heading out to get the crap they've been holding out for all year. Clothes. TVs. PlayStation 3s. Get 'em, consumer, retail is counting on your greedy, self-centered ass to end their year without a bloodbath!

Anyway. BF is gone. It's Monday, get to proceeding to checkout, you lazy bastards.


Nearly 100 million shoppers are projected to hit the web on Monday to seek out heavily discounted merchandise as retailers continue their efforts to build holiday momentum.

The record 96.5 million online shoppers that are expected would top the 85 million visitors during last year's Cyber Monday, according to, which coined the phrase five years ago and has been tracking the day's action since.

Just about all retailers plan some kind of promotion on their sites, whether it be pure online stores or web units of traditional brick-and-mortar retailers, with many offering free shipping.

Many shoppers are expected to do their online buying through their cell phones, a sharply growing phenomenon that was also seen during Black Friday.

Cyber Monday is one of the busiest online shopping days of the year, but generally not the biggest.

Raul Vazquez, chief executive of, the online unit of Wal-Mart Stores Inc. (WMT), expects a solid Cyber Monday and heavier traffic on days closer to Christmas., which is making a huge push this year, and Inc. (AMZN), the biggest online retailer by revenue, have been cited among those seeing some of the heaviest volume heading into Cyber Monday.

As they are doing in brick-and-mortar stores "customers will be very practical," as they shop online, said Michelle Kane, spokeswoman for online comparison shopping site "We've already been seeing so many people shopping for deep discounts," with favorite items including low priced kitchen appliances and toys.

You've got to give it to us kids and our devices, or maybe we just got spooked and anyone left with a job is smart enough to try and hang on to it:

According to a survey conducted for by BIGresearch, 96.5 million Americans plan to shop on Cyber Monday this year, up from 85 million in 2008.

According to the survey, 91.5 percent of Cyber Monday shoppers – or 88.2 million Americans – will shop from home on Cyber Monday while 13.5 percent, or 13 million people, will shop from work.

As Americans embrace the latest technology, 3.8 percent of Cyber Monday shoppers will shop from a mobile device like an iPhone or a Blackberry. In addition, a small fraction of shoppers (1.5 percent) said they will shop from another location like a coffee shop or a friend’s house.

“As the number of Americans with high-speed internet at home increases, fewer people feel the need to shop online from work,” said Phil Rist, executive vice president, Strategic Initiatives, BIGresearch. “While many companies don’t mind employees shopping online over their lunch hours, high unemployment and concerns over job security may cause more people to shop this Cyber Monday from the comforts of their own home.”

As a BlackBerry addict, I have to confess here that I don't plan to buy shit using my thumbs, are you insane? It's good for a lot of things but thanks, I have a computer at home for that.

The reality could be - and call me crazy if I am - that with unemployment pushing up, you have A) more people at home and therefore less to shop at work and B) more broke people and therefore less money to throw at shopping, at work or otherwise.

The magic of econ hard at work.

I will be doing my best to resist Cyber Monday since it'd be awfully hypocritical of me after evangelizing Buy Nothing Day but I have a vacation flight to catch in less than 2 weeks and only a few good shipping days left. Bitches.

The point has always been this: if you can afford it, by all means, please buy it. If you want it and you bust your ass to pay for it and it won't put you underwater to get it, have at it! Please!

I have "disposable income" down to a science and it doesn't take a mathlete to do so: take what you need (I should not have to define "need" for you) minus what you make, putting investments and savings in the "need" column instead of dividing the take after net income - needs and voila! Go buy some shit.


And watch those banner ads out there today, kids, some of them have really dangerous edges (like free shipping and $30 netbooks with 2 year commitments... fuck, I better hide my credit card).


China Would Be Funnier to Watch if I Weren't in the US

Monday, November 30, 2009 , , , 0 Comments

Is this offensive?

I sure hope it is. Happy motherfucking Monday, kids! Keep the finger off of the "buy now" button if you can, ok? It's just 8 hours, you'll live.


Chinese Premier Wen Jiabao rejected “unfair” calls for the yuan to appreciate and European leaders acknowledged that they had failed to shift the nation’s stance on its currency.

“Some countries are now calling for yuan appreciation while imposing trade protectionism on China, which is unfair and actually limits China’s development,” Wen said at a briefing in the Chinese city of Nanjing today. In the financial crisis, “a stable yuan is helpful to the development of the Chinese economy and the world’s economic recovery,” he added.

European officials indicated yesterday that they failed to convince China to loosen controls on the yuan that shelter Chinese exporters from the U.S. currency’s slide and make euro- region goods relatively less competitive. The euro has surged about 20 percent versus the dollar since Feb. 18, undermining the region’s recovery from the worst slump since World War II. The yuan is effectively pegged to the dollar.

“China will only adjust on its own terms and in its own time,” said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. “It’s decided that now is not the time to do that.”

Twelve-month non-deliverable yuan forwards rose 0.2 percent to 6.6275 per dollar as of 12:15 p.m. in Shanghai as the dollar declined against Asian currencies. China has kept the yuan at about 6.83 against the U.S. currency since July 2008. In the past year, the yuan fell more than 14 percent against the euro.

From a strategic standpoint, this is actually hilarious to watch. China isn't afraid of an easy game of chicken with the dollar and doesn't feel it is impolite to say as much. Fuck yeah, this would be more entertaining if it weren't a race to the bottom with the currency I get my paycheck in.

Or you can listen to Chinese human rights activist Fan Yafeng who said "Now on the Chinese mainland and internationally, it's widely believed that Obama's visit to China was a big failure."

Bwhahahahahaha. OMG! So what happened in China?!


An Apology to the People of Zimbabwe

Monday, November 30, 2009 , , , 3 Comments

It dawned on me today that it isn't fair to called that helicopter-cash-dropping hack Ben Bernanke "Zimbabwe Ben" as it could be considered offensive to an entire country. This is what did it:

You know, Zimbabwe.

So sorry, guys, didn't mean to offend anyone. Unless someone can get in touch with the Zimbabwe government media team and see if they'd be up for making an official statement on the matter?

I'd be fucking pissed if I were them.


It's a Miracle! The Bailout Will Save Us All!

Whew! Crisis averted!
Wait a second...

That must be an awesome central banker power. Just mention a bailout and suddenly everything is under control. Fuck! I want that power.

But I know my first thought after wielding it just once would be "oh shit, now I actually have to bail them out." Maybe that's just me.

Hey! Dubai is totally under control, fuck yeah, that was easy and convenient since it all happened over the holiday here in the US. If you are playing in the sandbox today, seeing as how it's our first full day back after this event which is supposed to cause a few ripples or two, I might recommend good protective eye wear and possibly a nut guard.


Asia stocks and currencies rose as the United Arab Emirates pledged support for its banks, easing concerns that losses from Dubai World will spread. Treasuries and the cost of protecting corporate debt fell.

The MSCI Asia Pacific Index climbed 3.5 percent to 117.84 as of 4:30 p.m. in Tokyo, the biggest gain since April 2. South Korea’s won strengthened the most in a month. Commonwealth Bank of Australia advanced after the country’s four biggest lenders said they don’t expect “material” losses from the possible default by Dubai World, an investment company burdened by $59 billion of liabilities. European futures fell.

Standard & Poor’s 500 Index futures added 0.6 percent and those on the Dow Jones Euro STOXX 50 index gained 0.2 percent after the Central Bank of the U.A.E. said it “stands behind” the country’s lenders, allowing them to borrow money for half a percentage point above the three-month local benchmark interest rate. Equities also gained after China’s government said it will maintain stimulus policies, lifting the MSCI World Index 0.8 percent from a three-week low.

“There is relief that things are not as serious as they might be,” said Matt Riordan, who helps manage about $5.1 billion at Paradice Investment Management in Sydney. “The risk of a serious contagion affecting the global financial system doesn’t now seem likely or probable.”

Dubai’s stock index fell 7.2 percent, the most in a year, while Abu Dhabi’s measure slumped 8.1 percent as the United Arab Emirates’s markets began trading for the first time after Dubai World announced plans to delay debt repayments. Emaar Properties PJSC, the U.A.E.’s biggest developer dropped 9.9 percent.

Yeah, yeah, yeah, forget about the bailout, how come Citigroup auditors (that's you, KPMG) didn't go "dude, what's up with all this money going to Dubai? Are these guys good for it?" way before this little hiccup?

Anyway, it's entirely strategic. Emerging Voice hits the nail on the head calling Abu Dhabi "the emirate of last resort" bwhahahaha. Throw some money around, get some payback. Nothing to see here...

Red flag, bitches, Google it.


I'll Give You $1 for That Failed Bank


People's United Financial Inc. wanted to buy failed banks on the cheap. Instead, it struck a deal to buy a healthy equipment-leasing company.

Last Monday's change of plans by the Bridgeport, Conn., bank-holding company underscores a problem with the growing pile of terminally ill U.S. banks being wrestled with by the Federal Deposit Insurance Corp.

Some are in such bad shape that potential buyers won't touch them at any price, even if the government agrees to eat losses on the failed bank's bad loans. In addition to their depleted capital, many seized banks operate in areas with sluggish growth prospects, are puny and are loaded with expensive deposits gathered through brokers that are likely to leave when the acquiring bank reins in interest rates, some bankers complain.

Philip Sherringham, chief executive of People's United, said it is getting harder to find the dream deal that bank officials hoped to hatch from a wrecked bank. The supply of ideal targets—sensible deposit-gatherers that fatally "overextended" their loan portfolio—is slim and the competition fierce, he said.

The company's roots go back to 1842. Its biggest deal was the 2008 purchase of Crittenden Corp., including six banks owned by the Burlington, Vt., company. The financial crisis has given People's United an appetite for dying banks that nevertheless might have some valuable pieces.

But of the 124 banks to fail so far this year, many of those put up for sale by regulators as part of the seizure process "are of very poor quality," said Norm Skalicky, chief executive of Stearns Financial Services Inc. "It's not as if you can walk in and you are in business."

Hahahahaha you don't say! Here I thought it would be totally easy to take a bank that was seized by regulators, pumped full of TARP, and bloated on bad commercial real estate loans and turn it into the next Bank of America.

Fifth Third's CEO even went so far as to imply recent FDIC seizures are total garbage:

Fifth Third Bancorp CEO Kevin Kabat complained at an investor conference recently that the "relative quality…of available FDIC transactions have really not been very attractive from our perspective."

Bwhahahahahaha LOL!

Uh, this might be a good time to plug Bank Fail Friday. *sigh*


The Fed is Not Your Punching Bag and It's Not Bernanke's Fault (No Really)

Don't end the sinister Fed! It's a Pandora's box of unawesomeness, or so says Robert J. Samuelson in the Washington Post:

Ever since its creation in 1913, the Federal Reserve has grappled with a daunting political contradiction. The Fed is charged with preventing the collapse of the banking and financial system, whose health is essential for the "real economy" of production and jobs. But financial bailouts usually occur when mistakes or misdeeds by bankers and investment professionals make them public pariahs. To do its job, then, the Fed protects -- or seems to protect -- an unpopular, disgraced and undeserving group. We are now witnessing this contradiction in full bloom.

The Fed has become a congressional scapegoat for assorted economic frustrations: 10.2 percent unemployment; expensive rescues of fragile financial institutions (AIG, Bear Stearns, Citigroup); outsize Wall Street bonuses; and the crisis itself. The denunciations transcend rhetorical outbursts. The House Financial Services Committee recently voted to require the Government Accountability Office (GAO) to "audit" the Fed's monetary policy -- its efforts to influence interest rates and credit conditions. In the Senate, Christopher Dodd, chairman of the Banking Committee, has proposed stripping the Fed of all powers to regulate financial institutions -- its actions to police lending and management practices. These powers would go to a new agency.

The Fed backlash is bipartisan. Rep. Ron Paul, a Republican and libertarian, proposed the GAO audit, which he sees as a first step toward abolishing the Fed ("End the Fed" is his latest book). Paul favors resurrecting the gold standard and combining it with private money; Wal-Mart could issue currency. His views are long-standing, principled -- and wholly impractical. Dodd, of course, is a Democrat. Much Fed-bashing simply indulges Congress's impulse to blame someone else for anything unpleasant.

Anyone remember Our Lady Peace? I lived off of the stuff in the 90s (sorry, I also had slap bracelets and went to a NKOTB concert - does that date me? Suck it, my side ponytail was rad and you know it) and lead singer Raine Maida later wrote a track called Careful What You Wish For that might be appropriate now.

Whatever, sometimes you need a musical interlude to chew on this stuff.

I reluctantly have to admit he's sort of right. Not that I'd let Bernanke's recent "please keep me" pitch cloud my judgment but if we dismantle or even significantly wound the Fed, the true nature of the United States' fiscal trouble will become painfully apparent to the rest of the world. From a tactical standpoint this would leave us exposed, a giant gaping wound where our central bank used to be. Are we at all prepared for that?

As is, we're the cancer patient trying to pretend like everything is going to be okay. It's obvious that we're not doing well, so which option is worse?

Eventually we're going to have to cut the tumor out. The question here is: are we ready for what comes after?

Ben Bernanke is taking all of the heat at the moment and not to (literally) position myself as Devil's advocate here but is it fair that he's the one in the frying pan? I sincerely doubt this guy knew what he was getting into in 2006, regardless of how long he'd been bumbling around on the inside as a Governor. So what? He was in denial as the housing market was collapsing before his face, you can't tell me Ben Bernanke came equipped with "Diabolical" as a setting. Someone broke the glass on that motherfucker and he's since turned that way but it was Tim Geithner engineering backdoor bailouts, not Zimbabwe Ben. That guy is a hack, it might be a bit misguided to direct all of our anger at him.

Anyway. Reuters:

Senator Bernie Sanders said on Sunday he will not vote to reconfirm Ben Bernanke as chairman of the Federal Reserve, in a preview of the rough treatment Bernanke may get this week on Capitol Hill.

The central bank chief will testify on Thursday before the Senate Banking Committee at a hearing on his nomination to a second four-year term. The session could be difficult, with the Fed under fire from across the political spectrum.

The open opposition of Sanders, an independent outside the political mainstream, is unlikely alone to derail Bernanke's renomination. But it reflects the Fed's challenges.

"I absolutely will not vote for Mr. Bernanke. He is part of the problem," Sanders said on ABC's "This Week" TV program.

I remind dear reader just how clueless Ben Bernanke was leading up to all of this:

"the fundamentals are strong" LOL!!

Anyway. Either way you look at it, it is a lose-lose. I highly suggest we figure out what we are going to do when we do bust down the joint and take back our country because we're going to have one hell of a mess to clean up and we'll need better auditors than KPMG (bwhahaha Dubai WTF!).

Is there a historical precedent for what we are attempting to do?

Totally. And it happened right here in the United States twice before. So someone hand me a crowbar and let's break into Pandora's fucking box and see just how bumbling Zimbabwe Ben is after all.

Thanks for the warning though, WaPo, we'll keep that in mind.


Not to Wildly Speculate But the Fed *Does* Have a Homicidal History

The Greenspan Body Count, the census worker found dead with "FED" scrawled on his chest, that whole JFK conspiracy... the Fed appears to have the homicidal track record to back up my wild speculation so maybe I am not that far out there.

Fuck, if Citigroup is still allowed to be in business, anything is possible.

h/t WC Varones. And yes, this has the dirty Fed all over it. They're becoming like the Green River Killer except without the sleazy mustache. That's not a win in my book, btw, so if someone over there could please get started on growing a really gross stache simply for my entertainment, I'd totally appreciate it. Richard Fisher? Please? You'd look rad with one. I'll give you a pass on your next weak ass speech if you do, just consider it.

Anyway. Anti-Fed media (or pro Fed transparency media, depending on how extreme you want to take this. You know me... more, more, more) lost a soldier and if I had more manners, I might not point out how suspicious this is.


Mark Pittman, the award-winning investigative reporter whose fight to open the Federal Reserve to more scrutiny led Bloomberg News to sue the central bank and win, died Nov. 25 in Yonkers, New York. He was 52.

Pittman suffered from heart-related illnesses. The precise cause of his death wasn’t known, said his friend William Karesh, vice president of the Global Health Program at the Bronx, New York-based Wildlife Conservation Society.

A former police-beat reporter who joined Bloomberg News in 1997, Pittman wrote stories in 2007 predicting the collapse of the banking system. That year, he won the Gerald Loeb Award from the UCLA Anderson School of Management, the highest accolade in financial journalism, for “Wall Street’s Faustian Bargain,” a series of articles on the breakdown of the U.S. mortgage industry.

“He was one of the great financial journalists of our time,” said Joseph Stiglitz, a professor at Columbia University in New York and the winner of the 2001 Nobel Prize for economics. “His death is shocking.”

Pittman’s fight to make the Fed more accountable resulted in an Aug. 24 victory in Manhattan Federal Court affirming the public’s right to know about the central bank’s more than $2 trillion in loans to financial firms. He drew the attention of filmmakers Andrew and Leslie Cockburn, who gave him a prominent role in their documentary about subprime mortgages, “American Casino,” which was shown at New York City’s Tribeca Film Festival in May.

It's unfortunate. Not only because we need as many as we can get.


HAMP: The Illusion of Loan Modifications Does Not Loan Modifications Make

Yesterday I did the farce of loan mods and coincidentally asked for some actual numbers. Well Market Ticker has kindly provided them and they are - as suspected - low. As in zero. It doesn't take a mathlete to figure out that something is not right here, or perhaps we are perfectly on schedule for financial doomsday and this is but one more reminder of how impotent and useless the government is at "rescuing" the poor sap of a homeowner.

See, HAMP Really Was a Scam (Market Ticker):

You have give these banksters credit - they'll lie and lie and lie some more....

More than 650,994 loan revisions had been started through the Obama administration’s Home Affordable Modification Program as of last month, from about 487,081 as of September, according to the Treasury. None of the trial modifications through October had been converted to permanent repayment plans, the Treasury data showed. That failure is getting the administration’s attention.

None? Out of 651,000 "trial" modifications none have turned into a permanent repayment plan?

That's all the borrower's fault, right? There's no collusion here, yes? No intent to screw the taxpayer, having taken their money? Nothing wrong here at all... it just calls for the administration's "attention."

Yeah, right.

“We are taking additional steps to enhance servicer transparency and accountability as part of a broader focus on maximizing conversion rates to permanent modifications,” Treasury spokeswoman Meg Reilly said in an e-mail yesterday. The Obama administration plans to announce additional steps tomorrow, including new private-public partnerships and resources for borrowers.


What's worse, Bank of America has only 14% of their "eligible" loans in a trial modification. Citibank has 40% under trial, and JP Morgan/Chase 32%.

All in all, only 20% of those "eligible" have been offered, accepted, and are in a trial but zero percent - zero - have actually turned into a permanent loan modification that the homeowner can count on.

The administration program requires banks that received federal aid from the Treasury’s Troubled Asset Relief Program, or TARP, as well as mortgage-finance companies Fannie Mae and Freddie Mac to lower monthly payments for borrowers at “imminent risk” of default.

That's some "requirement" eh? Zero percent completion from June to October? That's five months, and the "trial" period is supposedly 90 days, so this means that either (1) nobody did anything for the first two months, or (2) not one borrower successfully completed a trial between June and now.

If the Obama Administration and Treasury was serious about this "help" they would be seeking indictments.

Oh wait - they can't - there was no "or else" put into the law enabling HAMP, was there? Just looked again - nope - no criminal or civil sanction in there for banks who are allegedly "required" to do these things.

I repeat: A law without a punishment for failure to comply is no law at all - it is nothing other than a scam and a fraud perpetrated by the government to make you "feel good" while in fact doing exactly NOTHING.

As I said yesterday, the Treasury politely suggests TARP recipient banks do "the right thing" and offer loan modifications, it's not like Geithner is banging down Jamie Dimon's door with an AK-47 saying "you better modify or else..." - what the hell would the "or else" be?! Again, you can't have a sword fight if your sword is made of duct tape and cardboard.

I've said it before and I'll say it again: STOP PAYING.

(Legal disclaimer: Not paying your mortgage will result in more than a surface wound to your credit score. Perhaps this is something that is important to you, and therefore before taking my advice, make sure you weigh your options - keeping in mind that the Fairy of Free Money will not be flying through your window to save you from foreclosure - and get real advice from an actual professional, not just this shit disturbing hipster. But seriously. Just stop paying.)

Anyone else starting to feel like we're bearing witness to little more than a third rate Las Vegas magic show? Where's the part where they cut Geithner in half?


UAE Central Bank Pulls a Federal Reserve: It's Bailout, Dubai Edition!

Sunday, November 29, 2009 , , , , 0 Comments

Quick, better grease up Dubai with some cheap easy money before it seizes up like a 14 year old Islamic bride on her wedding night.


The United Arab Emirates' Central Bank has moved to calm fears of a bank run when markets and banks open on Monday by announcing a new funding facility for local and international lenders.

Local banks and stock markets have both been closed for four days for the Eid Al Adha holiday and have yet to feel the impact of the announcement late Wednesday that the giant state-owned Dubai World holding company was seeking a debt standstill which has hit investor confidence worldwide.

In an emailed statement, the U.A.E.'s regulator stressed Sunday that it "stands behind" the lenders, which face potentially heavy losses from their exposure to Dubai World, which is struggling with about $60 billion in liabilities.

"The facility from the Central Bank is certainly a move in the right direction," said Alia Moubayed, senior economist for the Middle East at Barclays Capital.

I have heard wild speculation that this entire Dubai mess is little more than a declaration of economic war against the US banking interests that pulled the trigger on a global disaster in the first place. I have even heard strange rumblings that this is somehow tied to salted gold but I'm going to go ahead and deflect that particular rumor lest I be pegged as one of those crazy gold people. Little late for that.

Anyway, what the hell, Dubai? Seriously, what is it? Sell off some of those assets and write Citigroup a little "I'm sorry" note and move on with your life, what's the big deal?

Apparently there is one and the UAE's central bank, like our friends at the Fed, has the monetary firehose at the ready should there be any executives named Pandit banging down Dubai World's door wanting their money.

What is this, a bad international version of The Godfather? No, it's more of a takeover. Nothing to see here, move along now...


United Commercial Bank of San Francisco: the Crime Scene

SF Gate did the autopsy of San Francisco's United Commercial Bank - which I sort of took personally when it failed on November 6th - and this is so familiar that it's sad.

SF Gate:

United Commercial Bank of San Francisco liked to boast that it was the first U.S. bank to buy a bank in China. Instead it will go down in history as the first U.S. depository institution to fail after its parent company took money from the Treasury's Troubled Asset Relief Program.

As investigators seek to uncover the exact causes of the bank's death, some big questions remain:

-- Should the government have done more due diligence before investing $300 million worth of taxpayer money in parent company UCBH Holdings?

-- Would it have made any difference if the Federal Reserve had allowed China Minsheng Bank to acquire a controlling interest in UCBH?

-- What role did fraud play?

When regulators shut down United Commercial Bank on Nov. 6 , "it was like deja vu," says Richard Newsom, a retired West Coast bank and thrift regulator.

United Commercial Bank grew from the ashes of United Bank, a San Francisco thrift that failed in the mid-1980s as a result of "reckless construction lending," Newsom says.

Likewise, the FDIC cited commercial real estate and construction loans as a cause of United Commercial Bank's failure, along with "alleged fraud."

Fraud and CRE in the same cause of death? Fantastic.

In November 2008, UCBH got a $300 million investment from the TARP-funded Capital Purchase Program. Then-Treasury Secretary Henry Paulson stressed that this was a program only for "healthy" banks, but UCBH had already posted a small loss for the third quarter that ended in September 2008.

Although companies had to be recommended for the program by their primary regulators, ultimately it was up to the Treasury to approve or disapprove TARP investments.

Can someone please be sure to write off that particular $300 million in TARP money? I'd hate for any Treasury mathletes to mistakenly apply that towards the "deficit paydown" they are planning for any TARP money they manage to get back.


The Treasury Plans to "Encourage" More Help for Homeowners

Saturday, November 28, 2009 , , , 0 Comments

Now perhaps I'm being a bit of a skeptic but based upon past performance, I have to admit that I'm not holding out for this latest scheme to amount to anything useful. But maybe that's just me.


The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.

Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

I am no expert on the process of a loan modification but I have had all four wisdom teeth removed (two by oral surgery and once involving a concoction that had to be 3 parts lidocaine and two parts cocaine/LSD/rubbing alcohol) and I imagine the two experiences are quite similar. In fact, from what I've heard, I'll take the 6 inch lidocaine needle and giant tooth-ripping claw in my jaw over a loan modification any day of the week.

Sorry if you're stuck in your home, underwater, and about to get foreclosed on, but here's some good news from the administration, they've officially extended the easy money for new homebuyers. It seems we will never learn our lesson and are simply sitting around hoping somehow this gets fixed.

Remax tells us (gee, wonder what their incentive might be to cover this?):

President Obama signed the legislation on Friday that extends and expands the U.S. tax credit for homebuyers. “It was the right thing to do – it will help millions of families achieve homeownership for the first time,” explains Liniger who actively worked for adoption of the new legislation by Congress. “The new tax credit will also go beyond first-time homebuyers and help current homeowners who want to move up, or need to downsize.” Earlier this week, both the Senate and the House overwhelmingly passed the Dodd-Lieberman-Isakson Amendment to extend and expand the homebuyer tax credit that was set to expire Nov.

“Normally, I wouldn’t favor such government involvement in real estate,” Liniger says. “But our economy and housing market remain fragile and we can’t afford to slip back into recession now.” He concluded, “This will have a significant impact on the real estate industry.” Liniger was joined by other real estate leaders, including NAR President Charles McMillan, in thanking Congress for the swift to put the new homebuyer tax credit in place before the earlier enacted First-Time Homebuyer tax credit expires at the end of November.

Yes, the significant impact is that realtors still have jobs. Were it not for a little clever intervention by our friends in Washington, the realtors might be the first ones with the flaming pitchforks. Meanwhile, how about those loan mods?

LA Times

In October 2008, JPMorgan Chase & Co. shaved 25% off Rick Mullen's mortgage payment by lowering his interest rate, helping him to stay in his Valencia home despite a downturn in his small business refurbishing large shipments of damaged shoes.

More than a year later, Mullen is grateful but frustrated, he says, because Chase has repeatedly lost his paperwork and never finalized what was supposed to be a three-month trial loan modification.

"I've talked to them at least 50 times, and it's always the same: . . . 'Oh, we're missing some documents, your modification is at risk,' " Mullen said. "How long are they going to keep me hanging?"

Loan-modification limbo is of high concern these days, not only to borrowers like Mullen but also to economists, consumer advocates and government officials pondering the fact that 1 in 7 U.S. mortgages is in foreclosure or past due.

JP Morgan Chase, you ought to be ashamed of yourselves. Why are you getting the pat on the head by the administration if you aren't actually doing anything?

Keep belting out that rally cry, OMGObama. It's working beautifully, obviously.

If anyone has actual loan mod numbers to share, do let me know. 1% is being a bit optimistic from where I'm standing but that's because I haven't read my JPM propaganda for the day.


Zimbabwe Ben Defending the Fed

Hey Zimbabwe Ben, starting to feel a tad uncomfortable? I've been watching you squirm for months now, motherfucker, and you're still in the frying pan.


Federal Reserve Chairman Ben S. Bernanke said a “strong case” can be made for keeping the central bank involved in bank supervision, and subjecting interest rate policy to congressional audits may undermine confidence in monetary policy. “There is a strong case for a continued role for the Federal Reserve in bank supervision,” the Fed Chairman said in a commentary released today on the Web site of the Washington Post. “Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks.”

Bernanke has presided over the most expansive use of Fed powers since the Great Depression. While the 55-year-old Fed chairman has said he averted a financial meltdown, lawmakers have voiced concern about potential taxpayer losses and proposed the most sweeping dismantlement of Fed authority since the creation of the institution in 1913.

The Fed chairman said legislation under consideration in Congress would impair the ability of the central bank to fulfill its basic functions.

“A number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions,” he said. “Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation.”

Translated from Fedspeak that means: "get the scissors away from my nuts"

Senate Banking Committee Christopher Dodd, a Democrat from Connecticut, has criticized the central bank for lax supervision and introduced legislation this month that would strip bank oversight from the Fed and create a single bank regulator. Dodd would also limit the central bank’s ability to loan to individual companies.

“Congress has a lot of public support for an attack on the Fed,” Allan Meltzer, a Fed historian and professor at Carnegie Mellon University in Pittsburgh, said in an interview Nov. 23. “They bailed out everybody in sight.”

The Standard & Poor’s 500 Index slid 1.7 percent to 1,091.49 in New York while two-year Treasury yields fell to the lowest level since December.

Dodd and Representative Barney Frank, chairman of the House Financial Services Committee, want to take away the Fed’s rule- writing power on consumer financial products and give it to a new Consumer Financial Protection Agency.

It depends on who is holding the scissors. I'd like to throw my fuzzy hat into the ring for that one.

This isn't the sort of thing that can be easily swept under the rug and I imagine Ben Bernanke is completely pissed right now. It's not exactly his bag. The guy didn't jump into the job knowing he'd be thrust into the spotlight - look at what a scrub he was when he started - and I don't think they prepped him very well for all of this. When your PR fluff girl comes from Enron, you're not really given much of a chance from the gate.

The Big Picture:

This mornings must read work is an article in the Sunday Washington Post by none other than Ben Bernanke, titled The right reform for the Fed.

It is a rational pushback against the like of Ron Paul and Chris Dodd’s programs to either hamstring or completely get rid of the Federal Reserve.

As I have previously noted, being the only country with out a Central Bank would be like unilateral disarmament.Its a nice theory, but you will eventually be destroyed by your enemies.

Here’s helicopter Ben:

“These matters are complex, and Congress is still in the midst of considering how best to reform financial regulation. I am concerned, however, that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions. Notably, some leading proposals in the Senate would strip the Fed of all its bank regulatory powers. And a House committee recently voted to repeal a 1978 provision that was intended to protect monetary policy from short-term political influence. These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States. The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation.

The proposed measures are at least in part the product of public anger over the financial crisis and the government’s response, particularly the rescues of some individual financial firms. The government’s actions to avoid financial collapse last fall — as distasteful and unfair as some undoubtedly were — were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society. (I know something about this, having spent my career prior to public service studying these issues.) My colleagues at the Federal Reserve and I were determined not to allow that to happen.”

The key line in Bernankes impassioned (or is that dispassionate?) defense is simply this: Independent does not mean unaccountable.

Burn, how much of it do you think Ben Bernanke actually believes?


Jr Deputy Accountant Interviewed by Liberty Pulse's The Pulse

Saturday, November 28, 2009 , , , 0 Comments

I had the pleasure of spending my Friday evening with The Pulse talking about the Fed, tungsten gold, Black Friday, Dubai, and of course Beavis and Butthead (our friends Geithner and Bernanke).

You can check out the podcast here.

Thanks again to Liberty Pulse for having me on and doing such a great job at trying to crack open the dam of American consciousness. I think we're getting there.


The Comparison is Undeniable

Friday, November 27, 2009 , , , 3 Comments

h/t Liberty Pulse (did I see this somewhere else?)

Some things need not be explained:


Duh, Dubai!

First of all, before I even go anywhere with this, who didn't see this coming from a million miles away? Obviously not the geniuses who gave them $80 billion in capital to play with.

Secondly, I sincerely hope my friend @harperpm is no longer clenching his buttocks in anticipation of me writing this at last. Sorry, dude, it's a day off for me and I was trying to get out of writing anything at all. That'll teach me.

There is quite a bit of bizarre Dubai news and it is being blamed for everything from the stock market tanking to gold taking a dive. Gold! LOL, Reuters, what are you doing?

Gold tumbles as Dubai triggers stampede to dollars

Gold rallied from a one-week low on Friday, helped by the dollar cutting gains as world leaders played down the possibility of a Dubai debt default, with investors betting the metal's unique appeal would stay intact. Spot gold cut losses to around 1.5 percent and traded at $1,174.65 an ounce by 1627 GMT, after hitting a low of $1,136.80 a troy ounce, the lowest since November 20.

It was still down from 1,192.60 quoted late on Thursday, when the precious metal hit $1,194.90 -- a record high.

"We've dropped around $60 today, which has given the people who haven't been able to join the first rally a chance to enter the market," said Ole Hansen, senior manager at Saxo Bank.

"The rally for now could be a little bit subdued as we will run into profit taking as we go into December. But, the strong way it's coming back up today could bode fresh highs next week."

Dubai said on Wednesday two flagship firms planned to delay repaying billions of dollars in debt. State-backed Dubai World has $59 billion of liabilities -- a big chunk of the emirate's total debt of $80 billion.

That has raised the specter of default and triggered a sell-off of risky assets such as commodities and stocks.

(Reuters, seriously, where is the "stampede into dollars"? I'm still looking for it...)


Stocks slumped Friday as investors reacted to a debt crisis in Dubai, with more repercussions likely on tap the next few days as traders return from major holidays in both the U.S. and Middle East.

Crude oil touched a six-week low, gold tumbled, and the dollar climbed as worried investors sought safe havens.

The stock market's slide began in Europe, continued in Asia, and then through the U.S. trading session after Dubai said it would delay debt repayments from its investment company, Dubai World. The decision raised broader questions about the safety of emerging-market debt and the strength of the global recovery.

The Dow Jones Industrial Average, which sank 233 points at its morning low, fell 154.48 points, or 1.5%, to 10309.92 in shortened post-Thanksgiving trading. U.S. stock markets closed at 1 p.m.

The best part of this entire tale is that Citigroup will be hit hardest as it is the US institution most directly exposed to a potential Dubai World default. I will try to refrain from laughing diabolically here, but it goes back to my first point - who didn't see this coming from a million miles away? Well $C U Next Tuesday obviously!

CNN Money:

New York-based Citigroup has the most exposure to default risk at Dubai World, which a J.P. Morgan equity research note estimated at $1.9 billion.

While the other major banks in the United States are believed to have little direct exposure, the ripple effect could be more crippling, according to Richard Bove, a bank analyst with Rochdale Securities.


Ok so seriously, can someone explain to me why this would be bad news for gold? If anything it furthers my belief that the dollar is screwed (anyone smell a $60 billion Citi bailout?) and we're a bunch of idiots.

CNN Money continues:

And while UK banks, such as Standard Chartered, HSBC, Royal Bank of Scotland and Barclays are much more exposed to Dubai World, with a total of more than $30 billion in default risk according to J.P. Morgan's note, U.S. banks have extensive dealings with UK institutions. Those include trading and guaranteeing debt, which could translate into losses for U.S. banks.

There's also U.S. banks' interactions with their German counterparts. Dubai has loaned a lot of money to Eastern European nations, as has Germany. Any losses from defaults there could expose U.S. banks to some risk.

Finally, there's the impact of already reeling commercial real estate markets worldwide.

"Dubai may have to unload some very prestigious properties at distressed prices, and
this will drive the price of all commercial real estate lower," said Bove. "That would clearly be a problem for American banks."

Bove also posited that the problems at Dubai World could add weight to the growing sentiment that is already strong in the U.S. Congress about beefing up regulation.

Have you heard the UK recession is worse than "experts" believed? So this one might hurt a bit.

I resent Dubai being blamed for any drop in gold and am incredibly skeptical of any claims that this event would cause investors to pile back into the dollar. In what dimension?!

Dubai has the assets to cover this, why is this such a big deal? They can just sell the shit off. Anyone want a sailboat-shaped hotel or a bunch of islands that look like the Earth?

Update: "It seems Dubai is a special case" so stop using the "markets are seizing in response" excuse, it's not working. Like I said, Dubai's assets > liabilities so what's there to seize about?


Credit Card Hangover?

Friday, November 27, 2009 , 0 Comments

So how did Black Friday go for all of you?

Buy Nothing Day blew up the news today and that's reassuring. Some of us made money today instead of spending it, hope you were one of them.


I'm Not Working Today But the Fed Has Some Post-Thanksgiving Headaches to Handle

While I get Friday off, I hear certain people may be working tomorrow. I guess that means I've got to entertain you, so let's see what we have for recent Fed failures, shall we? If there's something more entertaining, do let me know.

(Don't say I didn't try to warn you before)

The Fed is targeting moviegoers again, this time it's about how to responsibly use your credit card during the holiday season. I sincerely hope I do not have to point out why that's hilarious but I could give you a hint: the Fed has a bit of a spending problem itself.

Anyway. Good job for once, LA Times:

The Federal Reserve isn't too popular these days, what with its failure to predict or prevent the financial crisis and recession, not to mention its involvement in last year's bailouts. Rep. Ron Paul (R-Texas) has a bestselling book out called "End the Fed," and some lawmakers are looking to cut back the central bank's power.

It sounds like a perfect time for an ad campaign.

The Fed has made a 45-second public service announcement to help consumers use their credit cards wisely. The spot will run before movie previews at theaters in 12 U.S. cities, including Long Beach, from Friday through Dec. 3.

Over jazzy music, the announcer asks: "Want to use your credit card wisely? Here are some tips you can trust from the Federal Reserve." With the Fed logo featured prominently, the ad offers suggestions such as paying your bill on time and watching for changes in the terms of the account.

Bwhahahaha LMFAO! Did the Enron chick come up with this one? Because it's absolute PR genius. The Fed giving you warm and fuzzies before you sit down for... whatever, I don't pay attention to what's playing, you know what you've gone to see lately. Can someone please YouTube one? Maybe the Fed can mail me a DVD copy, surely they've got my address. Thanks.

Anyway. What else have they been up to lately?

The Big Picture shows us that the Fed is still confused as to what it has been doing. Barry calls it "endorsing 'Crony Communism' for the wealthy" so we can roll with that. I am partial to serial bubble blower myself.

They had End the Fed to deal with plus a secret Monday attack. So no one really terrorized them but that's still annoying and more paperwork to deal with.

Oh, and the Fed's approval rating - much like our dear OMGObama's - seems to be plummeting. The funniest part? They didn't even have one until recently and they started off on a pretty bad note. What am I talking about?


The pushback against an omnipotent Federal Reserve keeps growing.

A top Congressional leader said Thursday that the Fed will not have the power to override other federal regulators when it comes to policing firms whose size or activities pose a threat to the entire financial system. This is a sharp break from the proposal first put forward by the Obama administration.

In the Obama proposal, which was released in the House last week in the form of a draft bill, the Federal Reserve would have the authority to ignore the recommendations by a firm's primary regulator (be it a bank or securities regulator) and simply impose its own standards on the firm. The Fed would also have the power to examine the firm, and force the firm to comply with those standards if necessary.

In essence, if the other regulators didn't play ball the Fed's way, the Fed could shove them aside.

Not only did the affected agencies complain, but members of Congress did, too.

Comptroller of the Currency John Dugan, who heads the agency overseeing national banks, expressed reservations about the proposal last week, saying that the approach "has the twin risks of producing less effective standards and undermining the effectiveness of the primary banking supervisors."

In a totally related note, I caught the Comptroller of the Currency searching FRB Atlanta bank supervision late at night the other day, ooooooh I'd be scared if I were them. They're winning in the Bank Fail Friday race and may have some trouble filling the vacant head of Bank Supervision position. Hahahahahahaha, there are no jobs and no one wants to be that guy (see also: Bank of America).

Feeling the heat, I guess the Fed is putting the pressure on TARP banks because it is sick of hearing your shit, America. Good job. Keep going.

And fuck their PSAs. The problem is not what you do with your credit cards.

Did I miss anything?


Sorry, Arianna, but AIG Already Has Dibs on "Obama's Katrina"

Friday, November 27, 2009 , , 2 Comments

Um, unemployment?

I speculated in March that AIG would be Obama's Katrina. Hell, pick one, it could be anything. Anyone want to vote for Tim Geithner?



Thursday, November 26, 2009 3 Comments

In honor of a day that I guess is meant more for showing gratitude than stuffing your face and watching the Packers kick the Lions' ass (burn), there are a few things I am thankful for that I figured I'd share with you all here because, well, we're sort of like a big cozy dysfunctional family, right?

Sorry to my non-US readers but I'm sitting today out. The news will be back on Monday I'm sure, it's not like things will suddenly resolve themselves between now and then.

So here's my thanks, in no particular order.

Firstly, I'm thankful for all those bloggers over there ----->

I'd look like an idiot doing this all by myself. I am thankful for their time and effort, their wisdom, their talents, and oftentimes their company. This can be a strange hobby to explain to people ("I'm a financial blogger who rides the Fed's ass all day" doesn't go over well at cocktail parties, you know) so I'm grateful to have a sense that we are not alone in this crazy adventure.

I'm thankful to be employed. See also: number one. If it weren't for my day job, I'd never really have ended up on the accounting fringes and I'd have missed out on most of this. Reporting on unemployment for a year now, it makes me all that much more thankful for what I have; not only do I still have a job, I have an amazing job. I love what I do and it inspires me to do a lot of what happens here on JDA - who wouldn't be thankful for that?

I'm thankful for Ben Bernanke and those ridiculous Fed asshats who keep feeding me material. Let's face it, I love messing with you guys and now that you're opening up your eyes and paying attention, it's even more entertaining. So thanks go out to all of you for being so insane and imploding our entire financial system. In a really backwards way, I appreciate that.

I'm thankful for my family - both blood and extended - and specifically for them not messing with me too much. Reports are this holiday thing is a pain in the ass, could have fooled me.

And lastly I guess I should point out that I am thankful to all of you (especially the horribly addicted ones) who show up here on Jr Deputy Accountant every day, who tell me I made sense of financial madness that had baffled you up until I explained it in F-word terms, who obsessively refresh from 6a until midnight (give or take a few hours) and who poke back to let me know what's going on locally where you are. I love you guys and you keep me constantly and eternally entertained. Even moreso than those Fed asshats.

So Happy Turkey Day, turkeys. You all better be sitting out the 3a shopping tomorrow or we're going to have to have a talk...


Seriously WTF is Going on with Gold... Part 3? Is Anyone Else Seeing This?

Wednesday, November 25, 2009 , , , , , 1 Comments

It didn't come from me. Maybe it did. Whatever. We could all be wrong and this could all be wild gold bug speculation. Zimbabwe Ben and I will get one year older and the gold market will stay relatively stable come December. I'm not talking sane, I'm talking we get another month or two until it goes crazy.

I'm fixated on this at the moment. Sorry but I'm sick of watching Ben Bernanke act like a bitch so this will have to keep my attention for the time being.

Anyway. Further wild speculation: could the US Mint's announcement that it would resume delivery of Gold Eagles to dealers in mid-December have a single thing to do with this lingering rumor about some disaster in gold ETFs at the same point in time?

This whole tungsten thing can't be good for the larger picture, which naturally means further insanity. Zero Hedge gives us some actual numbers that appear reasonable (given the circumstances) but there's still time left in Q4 and if any of this is legit, this is when you're slipping off to the bunker with your stash.

I don't care what you think about rumors about salted bars and the Bank of England bailing out London OTC markets, some things are obvious and it's obviously getting weird over there.

The Golden Truth:

The situation in December gold on the Comex could get quite interesting. As of today's trade date, there are 94,544 open December gold futures contracts. Anyone holding one of those contracts who does not or can not take delivery (1 contract = 100 ozs, or roughly $118,000) of Comex gold needs to have that postion sold by the end of trading Friday. Tomorrow the Comex is closed and Friday will be a low volumn day. The reason for this is that Monday is what is known as "first notice day," which means that anyone long a gold contact (or silver) can be tagged with a delivery notice.

Now, the amount of gold being reported by the Comex as "registered" (not that we trust that number) - which is the amount that is available for delivery - is a little over 2.1 million ozs. If o/i (open interest) on Monday is any where over 21,000 contracts (2.1 million ounces), December could be a very interesting month for gold. In other words, if the open interest at the close of trading Friday is greater than 21,000 contracts, the Comex has a delivery problem. The price will go parabolic.

With the open interest at 94,000+ right now, and with Friday being a very low volumn day, we can expect that the number of contracts that potentially stand for delivery will far exceed the amount of gold available for delivery. Now, contracts can be tendered for cash instead of gold, and someone holding a contract can sell it after 1st notice day. But, anyone holding after Friday must have an account fully funded to accept delivery because, in theory, every single long position on Monday could be tagged with a delivery notice (this never happens but theoretically it is possible). We'll have to wait until Friday afternoon to know for sure, but I suspect the relentless move up in gold prices this week are sniffing out the possibility of a delivery issue as described above.

Like I said, maybe we're all out of our minds. Perhaps if the entire machinery of the gold market were more tangible and less made out of paper (by law, mind you), it wouldn't be 90% wild speculation and 10% actual physical metal.

Again, JP Morgan, Goldman Sachs, and I guess Deutsche Bank, this goes out to you sad, sad motherfuckers. I would say I wish you the best of luck but actually I hope we're all right and the fucking floor drops out of the Comex because of you pricks. Maybe it'll open that 8th portal to Hell we've been waiting for and you can all fuck off at last.

I dedicated that to you before but it was less critical then, it's almost funnier now.

This fraud could be a papercut or it could be a massive gaping wound:

In 1933, President Roosevelt made it illegal for U.S. citizens to own gold bullion. Most nations have made similar laws.

Basically, the only private gold ownership allowed to people is ownership in jewelry or coins like the English sovereign or South African Krugerrand.

The problem is that most "gold purchases" by private individuals are really paper purchases. If 'paper gold' is based/backed upon the tungsten 'fool's gold' that central banks and governments are trying to keep secret, how deep does this go? And if so, where did the real gold go and/or did it ever exist? Is this another gigantic fraud going on here, like the other ponzi and shadow/dark pool money scams of wal-street?

Many investors and commodity brokers are aware of the fraud in selling paper gold bullion (How much imaginary gold has been sold?).

Christ. Yeah, I'd say this is pee yourself worthy if you allow yourself to get worked up over this kind of stuff.

I guess that depends on if you actually have any.