"End of Wall Street Boom" - Must-read history

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Re: "End of Wall Street Boom" - Must-read history

Postby beeline » Mon Oct 25, 2010 1:57 pm

http://online.wsj.com/article/BT-CO-20101025-711679.html

OCTOBER 25, 2010, 1:32 P.M. ET

5-Year TIPS Sold At Negative Yield For First Time

By Deborah Lynn Blumberg
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The government sold five-year Treasury inflation protected securities Monday at a negative yield for the first time ever, a sign of investors' strong conviction that the Federal Reserve will buy more bonds, which could stoke inflation.

The government sold $10 billion in previously sold five-year TIPS for negative 0.55% yield after selling them at a 0.550% yield when they were originally sold in April. Because the market expects inflation will be positive over the next five years though, the expected return for the five-year TIPS is still positive.

Investors have been buying TIPS, which provide protection against rising inflation, and pushing their prices up and their yields down, amid growing expectations that the Fed will launch another large scale bond buying program next month in an effort to help stimulate growth and to ward off deflation.

The auction "shows how a Fed expected to pursue a reflationary policy has increased demand for this asset class," said John Briggs, U.S. interest-rate strategist at RBS Securities Inc.

The auction was 2.84 time subscribed compared to April's 3.15. Indirect bidders--domestic and foreign institutions, including foreign central banks--though took a hefty 39% of the notes after taking just 23.1% in April, while direct bidders--large money managers and hedge funds as well as foreign investors, which have their own accounts with the Treasury--took 3% after 13% in April.

The five-year break-even rate was at 155 after the auction, signaling investors expect a 1.55% inflation rate in five years.

The good auction gives the green light to the Treasury to continue to ramp up its TIPS offering as a way to improve liquidity for the market and to better manage its massive debt sales. The Treasury is getting views from 18 primary dealers, the elite banks obligated to bid on Treasury auctions, about further expansion in TIPS sales and will provide more details next week. Barclays expects the Treasury will add to its five- and 30-year offerings.

"It was a strong auction," said Mike Pond, Treasury and inflation linked strategist at Barclays Capital in New York about the five-year sale, "and will likely encourage the Treasury to go ahead with plans to add to TIPS issuance next year."

Treasury prices remained up after the sale as investors continued to fixate on what will likely be an announcement of another bond buying next week from the Fed. The market, however, was off its best levels of the day as investors geared up for the week's remaining auctions. The government will sell $35 billion in two-year notes Tuesday, $35 billion in five-year notes Wednesday, and $29 billion in seven-year notes on Thursday.
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Re: "End of Wall Street Boom" - Must-read history

Postby Nordic » Thu Oct 28, 2010 2:20 am

Why Did Banks Give Home Loans to People Who They KNEW Couldn't Pay?

"'Banks made loans to borrowers who they knew couldn't really repay because the heads of the banks could make huge bonuses based on high volumes and fraudulent appraisals, and they didn't care if their own companies later failed.

In short, they looted their companies and the economy as a whole."


As usual, this guy is on a roll:

http://www.washingtonsblog.com/2010/10/ ... eople.html


William K. Black - professor of economics and law, and the senior regulator during the S & L crisis - explained last month before to the Financial Crisis Inquiry Commission why banks gave home loans to people who they knew couldn't repay. The whole piece is a must-read, but here are excerpts from the introduction:
The data demonstrate conclusively that most liar’s loans were fraudulent, which means that there were millions of fraudulent mortgage loans because liar’s loans became common (Credit Suisse estimates that they represented 49% of new originations by 2006). The data also demonstrate that even minimal underwriting of the loan files was sufficient to detect the overwhelming majority of such fraudulent liar’s loans. No honest, rational lender would make large numbers of liar’s loans. The epidemic of mortgage fraud was so large that it hyper-inflated the housing bubble, which allowed refinancing to further extend the life of the bubble (and the depth of the ultimate Great Recession.
***
In the cases where there have been even minimal investigations (New Century, Aurora/Lehman, Citi, WaMu, Countrywide, and IndyMac) senior lender officials were aware that liar’s loans were typically fraudulent. The lenders could not make an honest business out of selling overwhelmingly fraudulent mortgages.

Liar’s loans were done for the usual reason – they optimized (fictional) short-term accounting income by creating a “sure thing” (Akerlof & Romer 1993). A fraudulent lender optimizes short-term fictional accounting income and longer term (real) losses by following a four-part recipe:

A. Extreme Growth
B. Making bad loans at a premium yield
C. Extreme leverage
D. Grossly inadequate loss reserves
Note that this same recipe maximizes fictional profits and real losses. This destroys the lender, but it makes senior officers that control the lender wealthy. This explains Akerlof & Romer’s title – Looting: The Economic Underworld of Bankruptcy for Profit. The failure of the firm is not a failure of the fraud scheme. (Modern bailouts may even recapitalize the looted bank and leave the looters in charge of it.)
The first two “ingredients” are related. Home lending is a mature, reasonably competitive industry. A lender cannot grow extremely rapidly by making good loans. If he tried, he’d have to cut his yield and his competitors would respond. His income would decline. But he can guarantee the ability to grow extremely rapidly by being indifferent to loan quality and charging weaker credit risks, or more naïve borrowers, a premium yield.
In order to become indifferent to loan quality the officers controlling the lender must eviscerate its underwriting.
***
There is no honest reason for a secured lender to seek or permit inflated appraisal values. This is a sure marker of accounting control fraud – a marker that juries easily understand.
In other words, banks made loans to borrowers who they knew couldn't really repay because the heads of the banks could make huge bonuses based on high volumes and fraudulent appraisals, and they didn't care if their own companies later failed.

In short, they looted their companies and the economy as a whole.

Professor Black brings us current to where we are today:
History demonstrates that if the control frauds get away with their frauds they will strike again.

By allowing the banks to use their political power to gimmick the accounting rules to permit them to hide their massive losses on liar’s loans we have made it far harder to take effective administrative, civil, and criminal sanctions against the elite frauds that caused the Great Recession. Hiding the losses also adopts the dishonest Japanese approach that cripples economic recovery and public integrity.

Prosecuting the elites control frauds can be done successfully. Create a new “Top 100” priority list and appoint regulators that will make supporting the Justice Department a top agency priority. That’s how we obtained over 1000 priority felony convictions of elite S&L criminals. No controlling officer of a large, non-prime specialty lender has been convicted of running a control fraud. Only one has even been indicted.
The FBI has written that any discussion of the crisis that ignores the role of mortgage fraud is “irresponsible.”
On a related note, Chris Whalen (co-founder of Institutional Risk Analytics, who has been hailed by Nouriel Roubini as one of the leading independent analysts of the U.S. banking system) told me that the collection of credit default swap payouts might also have played into the banks extending loans to borrowers who couldn't repay:
There are some really bad incentive structures in this industry. Default increases servicing fees, etc. So yes, your example is not outlandish. And the wonder of CDS lets us all bet that the other’s home burns down. Speculative madness, but consistent for a culture that prizes sales about all else.

Whalen also notes that Freddie and Fannie helped to create the epidemic of mortgage fraud, and - like Black - blasts the government for covering it up:
The invidious cowards who inhabit Washington are unwilling to restructure the largest banks and GSEs. The reluctance comes partly from what truths restructuring will reveal. As a result, these same large zombie banks and the U.S. economy will continue to shrink under the weight of bad debt, public and private. Remember that the Dodd-Frank legislation was not so much about financial reform as protecting the housing GSEs.

Because President Barack Obama and the leaders of both political parties are unwilling to address the housing crisis and the wasting effects on the largest banks, there will be no growth and no net job creation in the U.S. for the next several years. And because the Obama White House is content to ignore the crisis facing millions of American homeowners, who are deep underwater and will eventually default on their loans, the efforts by the Fed to reflate the U.S. economy and particularly consumer spending will be futile. As Alan Meltzer noted to Tom Keene on Bloomberg Radio earlier this year: "This is not a monetary problem."

***
The policy of the Fed and Treasury with respect to the large banks is state socialism writ large, without even the pretense of a greater public good.

***
The fraud and obfuscation now underway in Washinton to protect the TBTF banks and GSEs totals into the trillions of dollars and rises to the level of treason.

***
And in the case of the zombie banks, the GSEs and the MIs, the fraud is being actively concealed by Congress, the White House and agencies of the U.S. government led by the Federal Reserve Board. Is this not tyranny?


Then there's this:

http://www.washingtonsblog.com/2010/10/ ... dging.html

How Did the Banks Get Away With Pledging Mortgages to Multiple Buyers?

I was telling a colleague about this the other day and he simply did NOT believe me!
"He who wounds the ecosphere literally wounds God" -- Philip K. Dick
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Re: "End of Wall Street Boom" - Must-read history

Postby vanlose kid » Thu Oct 28, 2010 10:30 am

Treasury: No Systemic-Risk Fears
Article
BY DEBORAH SOLOMON , DAMIAN PALETTA AND ROBBIE WHELAN

A Treasury Department official said "there is no evidence of a systemic risk" from potential repurchases of flawed mortgages by U.S. banks.

At a hearing Wednesday of the Congressional Oversight Panel, Phyllis Caldwell, Treasury's chief of homeownership preservation, said the Obama administration is monitoring the "put-back" risk of home loans packaged into securities that are being ...

[ http://online.wsj.com/article/SB2000142 ... 16602.html ]

really...?


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Re: "End of Wall Street Boom" - Must-read history

Postby vanlose kid » Thu Oct 28, 2010 10:36 am

A Paralyzed Fed Defers Decision On Monetary Policy To Primary Dealers In An Act That Can Only Be Classified As Treason
Submitted by Tyler Durden on 10/27/2010 23:23 -0500


As if there was any doubt before which way the arrow of control, and particularly causality, points in America's financial system, the following stunner just released from Bloomberg confirms it once and for all. According to Rebecca Christie and Craig Torres, the New York Fed has issued a survey to Primary Dealers, which asks for suggestions on the size of QE2 as well as the time over which it would be completed. It also asks firms how often they anticipate the Fed will re-evaluate the program, and to estimate its ultimate size. This is nothing short of a stunning indication of three things: i) that the Fed is most likely completely paralyzed due to the escalating confrontation between the Hawks and the Doves, and that not even Bernanke believes has has sufficient clout to prevent what Time magazine has dubbed a potential opening salvo into a chain of events that could lead to civil war: in effect Bernanke will use the PD's decision as a trump card to the Hawks and say the market will plunge unless at least this much money is printed, ii) that the Fed is effectively asking the Primary Dealers to act as underwriters on whatever announcement the Fed will come up with, and thus prop the market, and, most importantly, iii) that the PDs will most likely demand the highest possible amount, using Goldman's $2-4 trillion as a benchmark, and not only frontrun the ultimate issuance knowing full well what the syndicate of 18 will decide in advance of what the final amount will be, but will also ramp stocks on November 3 to make the actual QE announcement seem like a surprise. This also means that the Primary Dealers of America, which include among them such hedge funds as Goldman Sachs, such mortgage frauds as Bank of America, such insolvent foreign banks as Deutsche, RBS, UBS and RBS, and such middle-market excuses for banks as Jefferies, are now in control of US monetary, and as we explain below fiscal, policy.

It also means that the Fed has absolutely no confidence in its actions, and, more importantly, no confidence in how its actions will be perceived by the market which is why it is not only telegraphing its decision to the bankers, but is having its decision be dictated by them, an act so unconstitutional it would be seen as treason in any non-Banana republic! This is the last straw confirming that the only ones left trading the market are the Fed and the PDs, passing hot potatoes to each other, and the HFTs, churning the shit out of everything else to pretend someone is still trading.

And the saddest conclusion is that this is the definitive end of US capital markets: not only is the Fed's political subordination a moot point, but the Fed, and the middle class' purchasing power via the imminent dollar destruction that is sure to follow as the PDs seek to obliterate their underwater assets by raging inflation, is now effectively confirmed to be a bitch of Lloyd Blankfein and his posse.

The official explanation for this unprecedented incursion by the banking crime syndicate in US monetary policy is as follows:

Avoiding Disruption

Treasury officials say they want to avoid any disruption to the $8.5 trillion market in U.S. government debt, the world’s most liquid, as the Fed weighs restarting large-scale asset purchases. The Treasury also doesn’t want to give any impression to investors, particularly those based overseas, that it might be coordinating with the Fed to finance the national debt.

“Treasury debt-management decisions are designed to deliver the lowest cost of borrowing over time and are entirely independent from monetary-policy decisions made by the Federal Reserve,” Mary Miller, assistant secretary for financial markets, said in an e-mail to Bloomberg News yesterday. Before joining the Treasury last year, Miller was head of global fixed- income portfolio management at T. Rowe Price Group Inc. in Baltimore.

The Treasury is scheduled to hold its quarterly meetings with bond dealers tomorrow, ahead of the department’s Nov. 3 refunding announcement.


Fill in the blank: the Fed has essentially given PDs the option of $250BN, $500BN or $1 trillion in monetization over six months. It is now absolutely clear that the PDs will pick the biggest number possible... which incidentally amounts to $2 trillion per year, and is precisely what Goldman's downside case was, as we presented previously.

The New York Fed surveyed primary dealers required to bid in U.S. debt auctions. It asked dealers to estimate changes in nominal and real 10-year Treasury yields “if the purchases were announced and completed over a six-month period.” The amounts dealers can choose from are zero, $250 billion, $500 billion and $1 trillion.

Of course, since a $2 trillion purchase over 1 year means the Fed will have to monetize every single bond issued, the SOMA limit will have to be raised, another prediction we made months ago:

The Fed is unlikely to buy up the entire supply of new securities, although it may adjust its internal guidelines of how much it can hold of any given issue. The Fed limits itself to owning no more than 35 percent of any specific security it holds in its System Open Market Account, or SOMA.

“Our Treasury strategists point out it could also cause pricing distortions along the curve, if, for example, the Fed continues to target a 40 percent purchase concentration in the 6-10 year maturity bucket, as it has in its recent purchases,” analysts at JPMorgan Chase & Co., including Alex Roever, wrote in an Oct. 22 research report. The report predicts the Fed will buy about $250 billion a quarter during the easing campaign.


How about $500 billion?

And, incidentally, since the "independent" Treasury will be forced to issue more debt to fill all the demand for $2 trillion over the next 12 months, as there is not enough debt in the pipeline to fill $2TN worth of demand and prevent the entire curve pancaking at zero (i.e., the 30 year yielding precisely 0.001%) it also means that the government will be forced to come up with more deficit programs, which also means that primary dealers will now also determine US fiscal policy.

Which begs the question, why is anyone pretending that the political vote on November 3 matters at all?

Below are the 18 banks that, in a completely separate vote, will henceforth rule America, regardless of what particular puppets end up in the Congress and Senate:


BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J.P. Morgan Securities LLC
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
Nomura Securities International, Inc.
RBC Capital Markets Corporation
RBS Securities Inc.
UBS Securities LLC.


[ http://www.zerohedge.com/article/paraly ... ry-dealers ]

[see original for links, comments etc.]

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Re: "End of Wall Street Boom" - Must-read history

Postby seemslikeadream » Thu Oct 28, 2010 3:55 pm

Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
Don’t forget that.
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Re: "End of Wall Street Boom" - Must-read history

Postby seemslikeadream » Fri Oct 29, 2010 10:58 am

BizWeek Reports a Bank of America Threat to Fannie
Which corporate-welfare recipient will end up holding the bag on toxic mortgages?
By Ryan Chittum
Single PagePrintEmailCommentsDiggFacebookRedditStumbleUponDelicious
Bloomberg BusinessWeek’s cover story this week has a very interesting piece of reporting that has flown under the radar. No wonder: It’s buried deep in the long story.

It reports that Bank of America is threatening Fannie Mae to keep it from pushing BofA to buy back its crappy loans:

Bank of America, the nation’s largest lender, has resorted to tough tactics in resisting repurchases of bad loans. Facing pressure from Freddie Mac, one of the two government-controlled mortgage financing companies, to buy back money-losing home loans with problems like inflated appraisals, overstated borrower income, or inadequate documentation, Bank of America issued a blunt threat, according to two people with direct knowledge of the incident. If Freddie Mac did not back off its demands for the buybacks, Bank of America officials said, the bank would take more of the new, more profitable mortgages it is originating these days to rival Fannie Mae, these people said. Freddie and Fannie, known as GSEs (government-sponsored entities), need a steady supply of healthy new loans to climb out of their financial hole.

The claimed threat from Bank of America, which was not put into writing, according to one of these people, was taken seriously enough that it has been discussed at several Freddie Mac board meetings, including one in mid-October. Some officials have urged the Federal Housing Finance Agency—the government conservator that has controlled Fannie and Freddie since they were bailed out in 2008—to confront Bank of America and prevent it from trying to play one against the other, which may be infuriating but is not illegal. “If the tactic worked, I’d be shocked and appalled,” said Thomas Lawler, a former portfolio manager at Fannie Mae and now an economic consultant. “The GSEs are supposed to be run now to minimize losses to the taxpayers. Freddie ought to ignore the threat.”


What a spectacle: one massive corporate-welfare recipient blackmailing another public company-turned-government ward over who’s going to end up holding the bag (I’ll note that Fannie ought to win here: Bank of America underwrote the things).

Taxpayers can only sit and watch: We’re paying for it one way or another. BBW (Hey, I didn’t name the thing!) is good to point that out:

For policymakers, the dilemma is this: Enormous losses will cause problems wherever they end up. They could further harm Fannie and Freddie, which insure the vast majority of the nation’s mortgages and have already received nearly $150 billion in taxpayer support. Or, if Fannie and Freddie succeed in pushing the burden back to the banks, the losses could cripple some of the major institutions that have just emerged from a government bailout… “The Treasury is very aware that they can’t push too hard on this because if you do push too hard it might put the companies in negative capital again,” says Paul J. Miller, an analyst at FRB Capital Markets. “There’s a lot of regulatory forbearance going on.”

The BofA/Fannie info is the newsiest part of this excellent piece by Peter Coy, Paul M. Barrett, and Chad Terhune, and should have been put up higher in the story. But that’s a quibble—you should read the whole thing, which capably surveys the field on the foreclosure fraud scandal. It takes a look at MERS, has an excellent lede anecdote that shows the potential consequences if the banking industry has really destroyed much of the original paperwork, and it has a lot of great reporting on Lender Processing Services, which appears to be one of the key enablers and/or perpetrators in the scandal.

“We are killing our competition!” says Greg Whitworth. It’s a perfect October day on the Jacksonville, Fla., campus of Lender Processing Services (LPS), and Whitworth, a division president, is rallying a crowd of 200 employees inside a big white tent on the sun-drenched banks of the St. Johns River. The company is celebrating what it calls “the Year of the Megas”—key customers Bank of America, Wells Fargo (WFC), and JPMorgan Chase—with a picnic of Mediterranean chicken salad, lemon cooler cookies, and sweet tea.

One gray patch hovers over the celebration: The back-office technology provider’s runaway success means it is tangled up in the foreclosure crisis. “I was thinking about the dark clouds over the company,” Joe Nackashi, the chief information officer, tells the crowd. “Sure, we have made mistakes. But I don’t want to let that cloud this day.”


No, don’t do that, buddy! I mean after all, what are a few investigations when you’re pulling in money hand over fist?

LPS employees “seem to be creating and manufacturing ‘bogus assignments’ of mortgage in order that foreclosures may go through more quickly and efficiently,” the Florida Attorney General’s Office says in an online description of its civil investigation. “We’re concerned that people might be put out of their houses unfairly and unjustly,” Bill McCollum, the attorney general, told Bloomberg Businessweek. In a third investigation, the U.S. Trustee Program, the branch of the Justice Dept. that polices bankruptcies, is looking into whether LPS is “improperly directing legal action” to hasten foreclosures, according to a 2009 opinion issued by the bankruptcy court in Philadelphia. A Trustee spokeswoman declined to comment.

BusinessWeek describes the problems with Lender Processing Services better than I’ve seen elsewhere.

And this is just good context:

Wall Street’s unspoken strategy has been to kick mortgage losses down the road until an economic recovery reinflates the housing market. The faulty-foreclosure crisis has forced the issue back into the present tense, triggering a fight over who will bear the brunt of those losses. The combatants—all of whom are trying to minimize their share of the damage—include homeowners, lenders and mortgage brokers, loan servicers and the underwriters of mortgage-backed securities, the buyers of those securities, title insurers, rating firms, and the federally controlled mortgage buyers Fannie Mae (FNM) and Freddie Mac (FRD)


I always like it when journalists end their pieces on FUBAR situations with ideas to fix or at least ameliorate the situation. BusinessWeek does that here. And its kicker gets at one of the most critical points, noting that:

The longer it drags on, the more the foreclosure crisis corrodes Americans’ faith in their financial and legal systems. A pervasive sense of injustice is bad for the economy and democracy as well.

Amen to that.
.



Bank of America hires former Va. AG, former justice official for foreclosure defense
Former state and federal prosecutors are among the growing phalanx of lawyers being hired by Bank of America as it seeks to defend itself against accusations of wrongdoing in processing foreclosures.

Richard Cullen, former attorney general of Virginia, and Brian Boyle, who served as a deputy assistant U.S. attorney general during President George W. Bush's tenure, are among those who have been helping the company deal with a multistate probe launched by all 50 states.

Reuters reported that Cullen already has been communicating with the offices of various state attorneys general and that Boyle participated in a conference call between the bank and representatives from the Florida attorney general's office.

Cullen, chairman of the McGuireWoods law firm, was Virginia's attorney general from 1997-1998. Boyle is a partner in the D.C. office of O'Melveny & Myers.



Guest Post: The Tipping Point has Arrived
Submitted by Tyler Durden on 10/28/2010 10:24 -0500

Bill Gross Federal Reserve Fresh Start Guest Post PIMCO SWIFT Turkey

Submitted by Mike Krieger of KAM LP

The Tipping Point has Arrived

Our age is retrospective. It builds the sepulchres of the fathers. It writes biographies, histories, and criticism. The foregoing generations beheld God and nature face to face; we, through their eyes. Why should not we also enjoy an original relation to the universe? Why should not we have the a poetry and philosophy of insight and not of tradition, and a religion by revelation to us, and not the history of theirs? Embosomed for a season in nature, whose floods of life stream around and through us, and invite us, by the powers they supply, to action proportioned to nature, why should we grope among the dry bones of the past, or put the living generation into masquerade out of its faded wardrobe? The sun shines today also. There is more wool and flax in the fields. There are new lands, new men, new thoughts. Let us demand out own works and laws and worship.

- Ralph Waldo Emerson, Nature

I believe we have finally breached the tipping point in the socio-political landscape of the United States of America. There will be no going back from here. Everyone on all levels of society including the elites must make a choice. Will you stand for real reform and an end of the feudalistic rule of the oligarchs and their paid-off puppets that line the streets of Washington D.C., or will you keep your mouth shut and play the old and dying game in the context of a completely different cultural environment?

While many will disagree with what I am about to say, I believe the oligarchs and the Federal Reserve have already lost.

This will not be clear to the vast majority at this time because the powerful institutions that dominate and rob us will continue to fight for survival but the wind is already blowing in a different direction and cannot be reversed. The smart elites are starting to see this and are hedging their bets. The dumb or stubborn ones may want to start looking at countries with non-extradition treaties or start blowing the whistle on someone above them and fast. The window of opportunity to make the choice is closely quickly. “I was just following orders” will not cut it when the dollar collapses and Disneyland shuts down. There have not been any major arrests and people have seemingly gotten away with all their frauds and crimes. This too will change and 2011 will represent a change in trend in this regard. We have entered the terminal phase of this ponzi scheme economy and those responsible for its creation and its continued support at the expense of the vast majority of the populace will see their foul deeds rise to the surface.

Earlier this year I wrote two piece that I think are worth re-reading and I have attached links to them. The first was “A Time to Speak Out” http://www.zerohedge.com/article/time-speak-out and the second was the “The Elites Have Lost the Right to Rule” http://www.zerohedge.com/article/elites ... right-rule. When I wrote these articles many of the themes addressed were completely out of the mainstream, yet in an amazingly brief period of time many of the frustrations I voiced are now popping up everywhere I look. It’s strange and rewarding to see the topics I and countless others have been discussing on the “fringe” break into the light of day. Now that these concepts are out there is no stopping the avalanche that is about to hit the oligarchs smack in the face. As Gandhi said “An error does not become truth by reason of multiplied propagation, nor does truth become error because nobody sees it.”

This brings me to discuss what I think is one of the most important letters from an elite I have seen in 2010. I am referring to Bill Gross’ most recent piece. Now when I say he is an “elite” I am not saying he is part of some vast conspiracy to turn us further into serfs. What I mean is he is one of the most fabulously wealthy people in America. He also happens to have made his fortune in the financial services industry and runs the country’s largest bond fund. This is a person that has every reason and incentive to play nice with the other elites and their corrupt institutions at the top of which lies the Federal Reserve banking cartel. What he did in his latest letter was far from “playing ball.” Here are some of the notable quotes and the entire letter can be found here http://www.pimco.com/Pages/RunTurkeyRun.aspx.

“Was it relevant in 2004 that John Kerry was or was not an admirable “swift boat” commander? Will the absence of a mosque within several hundred yards of Ground Zero solve our deficit crisis? Is Christine O’Donnell really a witch? Did Meg Whitman employ an illegal maid? Who cares! We are being conned, folks; Democrats and Republicans alike.”

“Perhaps, as a vocal contingent suggests, our paper-based foundation of wealth deserves to be buried, making a fresh start from admittedly lower levels. The Fed, on Wednesday, however, will decide that it is better to keep the patient on life support with an adrenaline injection and a following morphine drip than to risk its demise and ultimate rebirth in another form.”

“Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic.”

“The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not.”

Ok, so what is Bill Gross up to you ask? I will give you my two cents. This guy is not as fabulously wealthy as he is for being a dope (although this cannot be said for a lot of people in this industry that are merely financial engineers that would become extinct overnight without 0% interest rates but that’s another story). Bill Gross sees the writing on the wall. He see the winds of change and is hedging his bets. He is throwing out a carrot to those that criticize the completely corrupt and ponzi scheme economy and financial system we have today which benefits only those that speculate on the taxpayers dime. We could end this fake and destructive economy by ending the Fed in its current form (at the very least everything they do must be transparent) and restoring the rule of law. He attacks the false left/right paradigm and rightly points out that both the Democrat and Republican establishment have sold out the people to line their own pockets. In the second quote he actually explores the notion that “our paper-based foundation of wealth deserves to be buried.” Then finally he points out what many others have but almost no one is the mainstream ever admits. The U.S. government is running a giant ponzi scheme with regard to its debt. Hmmm do you want to own gold or treasuries?

Truth be told, what Bill Gross did in this letter is to create the ultimate hedge for himself. He didn’t say these things earlier when they were just as true as they are today and certainly must have been clear to someone of his intelligence. He said it now. He said it now because he can see the writing on the wall. The important thing is not that he ultimately defends what the Fed is doing (which he unfortunately does) but that he felt the need to hedge himself and distance himself from the system. As he writes in the final paragraph, “We haven’t been around for 35+ years and not figured out a way to avoid the November axe. We are a survivor and our clients are not going to be Turkeys on a platter.” Indeed, the axe is going to fall on the oligarchs and if you don’t want to be a turkey on a platter you had better choose sides and fast. As the great Ralph Waldo Emerson wrote in his 1836 essay Nature, “There are new lands, new men, new thoughts. Let us demand out own works and laws and worship.” Well said sir, well said.

All the best,

Mike
Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
Don’t forget that.
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Re: "End of Wall Street Boom" - Must-read history

Postby JackRiddler » Sat Oct 30, 2010 12:17 pm

.

http://www.democraticunderground.com/di ... 89x9420208

Big Banks Told Not To 'Fix' A Fraud

(quotes fromWSJ, with commentary by bluerum at DU)
http://online.wsj.com/article/SB2000142 ... 87762.html

-/-

In two letters released Friday, Attorney General Richard Cordray criticized a number of banks and loan-servicing companies, including Wells Fargo & Co.; Ally Financial Inc.'s GMAC Mortgage; Bank of America Corp.; and J.P. Morgan Chase & Co. Mr. Cordray said the banks are trying to paper over fraud committed in foreclosures with temporary fixes that don't address underlying problems in the banks' practices.

"It is not acceptable for a party who believes they submitted false court documents to merely replace those documents. Wells Fargo and any other banks are not simply allowed a 'do-over,' " he wrote in the letter to Wells. The other letter was sent to Ohio judges, who were asked to notify Mr. Cordray when banks file substitute affidavits.

-/-



So that is what the banks meant by 'fixing the problem'. It looks like the banks are learning that they are in deeper doo-doo than they thought. It appears that their internal business cultures are not the same as the at-large legal system, and that not enough judges are on their payroll - yet.



-/-

Mr. Cordray's letters come as several banks say they have reviewed their foreclosure procedures and are resuming evictions. But his insistence that they go beyond replacing affidavits by employees who have been labeled "robo-signers"—who didn't adequately review underlying foreclosure documentation—threatens to upend banks' efforts to resolve their foreclosure problems.

-/-



Banks are trying to 'paper' over the depths of the fraud they committed and continue to perpetrate on the public.



-/-

"The banks are committing fraud on the court, essentially perjury, and then saying 'Whoops! You caught me! Here's some different evidence and use that instead,' " Mr. Cordray said in an interview Friday. "I know a lot of judges are not going to take kindly to that."

-/-




What!? You mean we can't taxpayer money, jobs AND their homes? What good is court system that doesn't rubber stamp organized crime activities?

Link to article on RICO Act:
http://en.wikipedia.org/wiki/Racketeer_ ... ations_Act

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To Justice my maker from on high did incline:
I am by virtue of its might divine,
The highest Wisdom and the first Love.

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Re: "End of Wall Street Boom" - Must-read history

Postby Col. Quisp » Sat Oct 30, 2010 11:10 pm

They think they can "fix" the fraud by filing new documents. However, the Pooling and Servicing Agreements usually specify how, when and who can deposit the notes into the trust. Those depositors are "shell" companies that are long gone. So if they never deposited the note into the trust as specified in the pooling and servicing agreement, the trust never owned the note.

The trust paid for something it did not get. The trust can demand the bank or whoever bundled the note into a MBS give back the money. If this starts happening, the whole house of cards will collapse and we'll all be in deeper doo doo than we already are.

Can you believe this shit is happening?

This is one of the best threads ever on RI, btw. It's interesting to go back and read it from the beginning and see the whole mess being revealed over the past 2 years.

I went to a consumer task force meeting yesterday hosted by a group of legal aid lawyers who specialize in foreclosure defense. One guy said the plaintiff's attorney admitted "we got nothing" after it was argued that they can't go back and fix the paperwork because the depositor never deposited the note into the MBS in time (they usually have 90 days to get it right). The plaintiff's attorney didn't even know what a pooling and servicing agreement was. The judge just said "you have 30 days to remodify the loan." Judges don't understand and don't want to - it's too complicated and they can't learn new tricks.

What will happen when the trusts (e.g., pension funds) start demanding their money back from the banks?

One county in KY just issued a new local rule to require foreclosure complaints to include the entire chain showing the transfer of the note, and all original docs. What does this mean? It sounds good, but probably just means it will be easier for the plaintiff to get summary judgment because allegedly they've "produced the note" in advance. Thus, the homeowner will be deprived of the ability to delay the foreclosure while trying to get back on their feet.

BUT, fraud is still fraud....we shall see.
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Swans | The Economy Is Not Coming Back | Part One

Postby Allegro » Sun Oct 31, 2010 12:39 pm

.
Swans Commentary | September 20, 2010

The Economy Is Not Coming Back
Part I: A Short History of the Maelstrom | by Gilles d'Aymery

    (Swans - September 20, 2010) Another mid-term election is looming in the United States. Next November, the electorate will choose the political team that in the midst of a recession and widely-held fears about the future will carry the day. One side will win. It matters not though, because neither of the two contesting political parties is willing to face reality: The U.S. is not in a so-called great recession. It is in a latent depression. What has stopped it from becoming a full-fledged depression has been the willingness of the elites, both under the Bush II and Obama administrations, to resort to age-old Keynesian policies to stem the hemorrhage -- soup kitchen lines have so far been substituted by government checks in the mail. Some argue that governments' actions have not been enough to stem the recessionary times. Others claim that too much has been done, and time has come to cut spending and taxes in order to let the economy run to its natural ever-growing self. Again, it matters not, whatever position is taken. Do or don't, the economy is not coming back, and it should not. The Republican plan to cut spending (an age-old endeavor) will only bring more pain and social devastation. The Democratic plan to pump up the economy through deficit spending will only delay the actuality that the bind we all are in is a Catch-22. The economy that we have been used to in the past half-century is simply not going to come back. This three-part analysis will attempt to show the historical making of the dire and deepening crisis we all face, then try to demonstrate why the past paradigm won't and shouldn't come back, and end with a few suggestions that hopefully will lead to a future that is not predicated on the dead end the few want the many to embrace.

Resume.
Art will be the last bastion when all else fades away.
~ Timothy White (b 1952), American rock music journalist
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Swans | The Economy Is Not Coming Back | Part Two

Postby Allegro » Sun Oct 31, 2010 12:43 pm

.
Swans Commentary | October 18, 2010

The Economy Is Not Coming Back
Part II: The Reasons it Won't | by Gilles d'Aymery

    (Swans - October 18, 2010) The thinking in some quarters where so-called "experts" abound is that the road to recovery and the creation of much needed jobs ought to be driven by demand. Consumption spending, goes that thinking, will lead businesses to invest in productive assets, banks to lend again, and bring the unemployed masses back into the workforce. Since the private sector is unable or unwilling to do its part, it is then up to the government to pick up the tab and stimulate the economy. As an economic mini-commentator has put it, "[G]overnment spending must increase to make up for the slack in demand and reduce unemployment. That means larger budget deficits until households have patched their balance sheets and can spend again at pre-crisis levels." (1) This is a perfectly reasonable Keynesian methodology that has worked in times past. However, it misses the fact that the economic crisis is the result of both over-production -- a tremendous overhang of productive assets -- and over-consumption fueled by cheap credit and ballooned household debt, compounded by the shenanigans of the financial sector (2) orchestrated at the highest levels of political power by "brilliant" men. (3) It also misses the point that this crisis is the "mother of all crises." It has hit production, consumption, public and private debts, ecological disasters, all in the midst of a financial system that remains in shambles, as Raghuram Rajan clearly explains in an October 12, 2010, Der Spiegel interview. (4)

Resume.
Art will be the last bastion when all else fades away.
~ Timothy White (b 1952), American rock music journalist
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Re: "End of Wall Street Boom" - Must-read history

Postby seemslikeadream » Mon Nov 08, 2010 2:55 am

Criticism of U.S. Fed move mounts ahead of G20
Sun Nov 7, 2010 11:40pm EST
Washington's latest move to print more money is a form of
indirect currency manipulation that could lead to a new round of
currency wars and even global economic collapse, a leading
Chinese newspaper warned on Monday.
The comments were the latest in a string of strongly-worded
criticisms of U.S. economic policies by Chinese economists ahead
of a G-20 summit in Seoul this week. A number of other nations
including Germany have also criticised the U.S. decision to
inject an extra $600 billion into the banking system.
Efforts to reduce imbalances that are destabilising the
global economy will top the agenda of the Nov. 11-12 summit.
Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
Don’t forget that.
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Re: "End of Wall Street Boom" - Must-read history

Postby 2012 Countdown » Tue Nov 09, 2010 11:34 am

Image


Image
George Carlin ~ "Its called 'The American Dream', because you have to be asleep to believe it."
http://www.youtube.com/watch?v=acLW1vFO-2Q
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Re: "End of Wall Street Boom" - Must-read history

Postby Nordic » Tue Nov 09, 2010 2:22 pm

2012 Countdown wrote:Image


Image



Yet another time in my life, always with money, where I'm right. 100% right. Hell maybe 500% right. And it does me NO GOOD.

I bought a lot of silver at $13.

It's all gone.
"He who wounds the ecosphere literally wounds God" -- Philip K. Dick
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Re: "End of Wall Street Boom" - Must-read history

Postby 2012 Countdown » Tue Nov 09, 2010 8:19 pm

Nordic wrote:
Yet another time in my life, always with money, where I'm right. 100% right. Hell maybe 500% right. And it does me NO GOOD.

I bought a lot of silver at $13.

It's all gone.



Still a little time, but not much according to this presentation. Its about to go 'parabolic' he claims-
http://www.youtube.com/watch?v=W62d-g-kKJQ&feature=sub
George Carlin ~ "Its called 'The American Dream', because you have to be asleep to believe it."
http://www.youtube.com/watch?v=acLW1vFO-2Q
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Re: "End of Wall Street Boom" - Must-read history

Postby smiths » Tue Nov 09, 2010 11:51 pm

i bought mine at about 16, and its looking good baby,

the fundamentals for silver and gold have not changed,

at the point that honest government returns delivering real monetary reform and banks are charged with fraud and scattered to the winds,
at the point that tax havens, derivatives and shadow banking are abolished,
at the point that destruction, collapse and looting are no longer profitable

at that point sell your silver and gold

until then its only direction is up
the question is why, who, why, what, why, when, why and why again?
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