Wednesday, 13 October 2010

The lifeboat marked “gold and silver".

Baltic Dry Index. 2719 +24
LIR Gold Target by 2019: $3,000.

"About three dozen of the top publicly held securities and investment-services firms—which include banks, investment banks, hedge funds, money-management firms and securities exchanges—are set to pay $144 billion in compensation and benefits this year, a 4% increase from the $139 billion paid out in 2009, according to the survey. Compensation was expected to rise at 26 of the 35 firms."

Wall Street Journal.

In today’s update on “fraudclosuregate”, my thanks to Reggie Middleton for coining the term, GMAC has joined Bank of America in expanding its review of its dodgy and outright criminal foreclosures to all 50 states. Needless to say, so far the three monkeys investigating for BoA have found nothing amiss.

"Deeply regret advise you TITANIC sank this morning after collision with iceberg, resulting in serious loss of life. Full particulars later."

J. Bruce Ismay, Director of the White Star Line

GMAC Mortgage Expands Review of Its Foreclosures

By ANDREW MARTIN Published: October 12, 2010

Amid growing inquiries by law enforcement into dubious paperwork by home lenders, one of the nation’s largest, GMAC Mortgage, said Tuesday that it was expanding its review of foreclosures to all 50 states.

The company said it was hiring legal and accounting firms to conduct “independent reviews of the foreclosure process.

In addition, GMAC, which is part of Ally Financial, said separate specialized teams of its own employees, along with hired lawyers, would scrutinize every one of its foreclosure cases in the nation to make sure they complied with the law and that “home preservation” options were considered.

GMAC had previously imposed a suspension on foreclosures in the 23 states with judicial review of the proceedings so it could ensure they were done properly. Several other major lenders subsequently announced suspensions of their own that were limited to foreclosures in those 23 states.

But last Friday, Bank of America announced that it was expanding its suspension of mortgages to all 50 states, and some lawmakers and consumer groups have pushed for other lenders to do the same.

GMAC’s announcement stops short of halting foreclosures in each of the states, favoring reviews instead. After each case is scrutinized, the foreclosure process will resume if everything is in order. To date, GMAC has not found any evidence of inappropriate foreclosures, officials there said.


Below, another warning on US banks from America’s best bank analyst. Get ready for the next Lehman even with what Mr Middleton wittily calls Fraudclosuregate.

As Earnings Season is Here, I Reiterate My Warning That Big Banks Will Pay for Optimism Driven Reduction of Reserves

Reggie Middleton

As those that follow me know, I have been bearish on US banks since 2007. That bearish outlook resulted in massive returns ensuing years, just to have nearly half of it returned due to rampant shenanigans and outright fraud. Needless to say, it pissed me off – but it did much more than that. It created a re-bubble before the bubble that was bursting had a chance to fully deflate. As a result, what we have now is one big mess that is getting messier by the minute.


With the banks deeply dependent on mark to the fantasy model accounting, extend and pretend, mortgage finance and deeply involved in aiding and abetting criminal activity in “fraudclosuregate”, America’s banksters are about to loot the system one more time.

Christmas is coming and the geese are getting fat

Please put a billion in the bankster’s hat

If you haven’t got a billion, a million will do

If you haven’t got a million, then God damn you!

Squid’s Christmas Appeal 2010

US bankers set for record pay and bonuses for second year

Pay and bonuses at US banks and hedge funds are set to rise 4% this year – outpacing the growth in revenues – study finds

Wednesday 13 October 2010

US bankers are set for record compensation for a second consecutive year, shattering both the illusion of pay-reform and the expectation that bank bonuses would be tempered while the US economy remains weak.

With third-quarter figures from JP Morgan expected to begin a bumper profit reporting season today, a study of more than three dozen banks, hedge funds, money-management and securities firms estimates they will pay $144bn (£90bn) in salary and benefits this year, a 4% increase on 2009.

The research, by the Wall Street Journal, found pay was rising faster than revenue, which gained 3% to $433bn, despite a slowdown in stock trading.

And while profits have fallen from their 2007 peak, the percentage directed to compensation has increased by 23%.

"Until the focus of these institutions changes from revenue generation to long-term shareholder value, we will see these outrageous pay packages and compensation levels," Charles Elson, director of the Weinberg Centre for Corporate Governance, told the WSJ.

----At Goldman Sachs, where revenue is projected to fall 13.5% this year to $39.1bn, compensation is expected to rise 3.7% to $16.8bn.

Still, compensation experts say regulation has successfully kept compensations "relatively flat" and pay may not rise in the near future as new rules come into effect governing capital requirements that will limit compensation pools.

Where revenue falls short, the study found, Wall Street firms will lay off employees in order to keep bonus pools high. UK-based Barclays Capital and Credit Suisse have cut some staff, while Morgan Stanley has a hiring freeze in place.

The report also found that bankers at closely regulated businesses are looking to join less closely monitored firms and hedge funds. At private equity firms Blackstone and Fortress Investment, compensation is projected to climb 12% and 29% respectively.

We close for today with America’s favourite villain, China. China isn’t just eating Uncle Sam’s lunch anymore, the unstoppable Panda is now taking his afternoon tea and eating his dinner too. It looks to me that the phony currency war is coming to its end. The real currency war is now about to get underway. Casualty number one, the value of a dollar, this war is designed to weaken the dollar after all, in order to protect what little is left of the fiat dollar reserve standard.

"'It became necessary to destroy the dollar to save it,'

With apologies to provincial capital Bến Tre, Vietnam.

China Currency Reserves Surge to Record $2.65 Trillion

Oct. 13 (Bloomberg) -- China’s foreign-exchange reserves, the world’s largest, surged to a record $2.65 trillion at the end of September, adding fuel to complaints that the nation’s currency intervention is undermining the global recovery.

Currency holdings rose about $194 billion, more than economists forecast, in the third quarter, today’s statement from the People’s Bank of China showed. That compared with a $7.2 billion gain in the previous three months, which was the smallest increase in 11 years.

“The massive build-up of the foreign-exchange assets would only give more ammunition to those China critics who call for a rapid appreciation of the yuan,” said Tom Orlik, a Beijing- based analyst for Stone & McCarthy Research Associates who formerly worked for the U.K. Treasury. He commented before the release of today’s data.

U.S. Treasury Secretary Timothy Geithner says a stronger yuan would stimulate demand in China, which replaced Japan in the second quarter as the world’s second-largest economy. Inflows of cash threaten to worsen inflation and asset-bubble risks in the Chinese economy and central bank Governor Zhou Xiaochuan said Oct. 8 that the nation needs to avoid the “shock therapy” of excessive appreciation.

The median forecast in a Bloomberg News survey of eight economists was for the reserves to increase to $2.5 trillion.

---- Chinese banks extended 595.5 billion yuan ($89 billion) in new local-currency loans last month, the People’s Bank of China said in today’s statement. That compared with the median 500 billion yuan forecast in a Bloomberg News survey of 18 economists.

M2, the broadest measure of money supply, rose 19 percent in September from a year earlier, the central bank added. That compared with economists’ 18.9 percent median estimate.

Exchange rates dominated the annual meeting of the International Monetary Fund in Washington on concern that officials are relying on cheaper currencies to aid growth, risking retaliatory devaluations and trade barriers. China was accused of undervaluing the yuan, while low interest rates in the U.S. and other rich nations were blamed for flooding emerging markets with capital.

Finance ministers and central bankers pledged to improve cooperation, yet did little to show how they would alter their ways beyond agreeing to let the IMF to study the matter.

Never in the field of human outsourcing was so much owed by so many to so few.

With apologies to Winston Churchill and the R.A.F.

At the Comex silver depositories Tuesday, final figures were: Registered 52.21 Moz, Eligible 60.66 Moz, Total 112.87 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Below, a must read article from a man who knows a thing or two about money. Trillion dollar deficits don’t matter, he writes sarcastically, until one day out of the blue, they do. Stay long precious metals. In America’s ever weirder attempt at defending the banksters in control of the Fed, the dollar is now expendable, to Mammon’s priests.

"The history of paper money is an account of abuse, mismanagement, and financial disaster."

Richard M. Ebeling

Monetizing all the debt, all the time

Commentary: Trillion-dollar deficits don’t matter

Oct. 13, 2010, 12:01 a.m. EDT

By David Stockman

GREENWICH, Conn. (MarketWatch) — The oracles at Goldman Sachs Group say that $750 billion of quantitative easing is priced in to the market, and possibly $1 trillion — a frightful prospect that was hardly diminished by last week’s lost jobs report.

On top of that, there’s $300 billion to $400 billion in annual GSE run-off that needs replenishment under QE1.5. So Brian Sack, the monetary apothecary who operates the New York Fed’s drive-thru window, is going to be giving Wall Street a lot of POMO. Call it $100 billion per month of Permanent Open Market Operations, and be done.

Not coincidentally, it appears that there’s also baked into the cake about $100 billion per month of new Treasury paper. According to CBO’s August update, the two-year, cumulative red ink under current law (FY 2011-2012) will total $1.7 trillion. But that doesn’t count the upcoming lame duck session’s predictable one-more-stimulus bacchanalia.

Juiced up by their election rout, the tax-side Keynesians in the GOP are certain to ram through a two-year extension of the Bush tax cuts for one and all.

In return, the hapless White House will insist this one-half trillion dollar gift to the “still haves” be matched with several hundred billion more in presently unscheduled funding for emergency unemployment benefits and other safety net programs for the “no-longer-haves.”

In combination, these measures — along with more realistic economic assumptions — mean that the FY2011-2012 deficit will be $700 billion higher than current projections, pushing the two-year total to at least $2.5 trillion. Read Minyanville’s “What a Republican Victory Means for Equity Markets.”

These considerations make one thing virtually certain: After the new Congress sinks into rancorous partisan stalemate and does absolutely nothing about this fiscal hemorrhage, the Treasury will be selling at least the $100 billion per month of new government paper for so long as the New York Federal Reserve is open to buy. Stated differently, national policy now amounts to monetizing 100% of the federal deficit.

In the olden times — say three years ago — the idea of 100% debt monetization would have been roundly denounced as banana republic finance. No more. Earlier this week, William Dudley, who occupies the Goldman Sachs permanent seat on the Fed’s Open Market Committee, helpfully clarified that the new-age Fed should be judged by what’s in its heart, not what’s on its balance sheet.


Run, do not walk, to the lifeboat marked “gold and silver”.

"If you don't trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 - $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?"

Kenneth J. Gerbino

Fed Considers Raising Inflation Expectations to Boost Economy

Oct. 13 (Bloomberg) -- Federal Reserve policy makers may want Americans to expect inflation to accelerate in the future so they spend more of their money now.

Central bankers, seeking ways to boost flagging growth after lowering interest rates almost to zero and buying $1.7 trillion of securities, are weighing strategies for raising inflation expectations as well as expanding the balance sheet by purchasing Treasuries, according to minutes of the Fed’s Sept. 21 meeting released yesterday.

Some Fed officials are concerned that expectations of lower inflation will become self-fulfilling, damping demand by increasing borrowing costs in real terms, the minutes said. By encouraging Americans to believe prices will start rising at a faster pace, the Fed would reduce inflation-adjusted interest rates and stimulate the economy. Chairman Ben S. Bernanke said in 2003 that Japan could beat deflation by using a “publicly announced, gradually rising price-level target.”

"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."

Leonard Read

The monthly Coppock Indicators finished September:

DJIA: +227 Down. NASDAQ: +321 Down. SP500: +221 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. September is the fourth down month in a row.

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