Monday 4 April 2011

A Policy Mistake.

Baltic Dry Index. 1520 -10

LIR Gold Target by 2019: $30,000. Revised due to QE.

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Cary Grant. To Catch A Thief.

When fallen guru Greenspan started his last and fatal serial bubble in US real estate, to try to stave off the effects of his failed NASDAQ and US stocks bubble, little did he know just how crooked Wall Street and the giant US banks would turn the whole mortgage securitisation bubble into. Last night on US TV, the widely watched news program “60 Minutes” tackled the subject of the rampant mortgage fraudclosure. Thanks to the failure to follow the procedures set out in the prospectuses, title was never transferred to the trusts, as the banks and others tried to cut out title filing fees in America’s counties. About half of the MBS written 2004 onwards appears now to be merely unbacked securities of dubious value, if any. But confused titles made foreclosing on defaulting mortgages far from easy.

Step forward, document forgers, signature forgers, robo-signers of false affidavits. At first very few noticed, since the first defaulters were often fraudulent buyers, encouraged into the property market merely to keep up the volume of RMBS for Europe’s brain dead banksters and pension funds. The uncontested foreclosures had no one scrutinizing the documents. But all that ended when Greenspan’s failed bubble started blowing up real buyers. Some hired attorneys or defended in person. Soon a whole lot more fraud was uncovered. Fraud on the court systems across America. America was fast n its way to banana republic status. Rule of law was diminished and real estate title thoroughly clouded. In quick succession a party with no mortgage was foreclosed on. Two banks filed to foreclose on the same property claming the same but different title. European vacationers showed up to find their Florida home foreclosed by bank parties they didn’t know. So this morning we update of an ever growing scandal. Stay long precious metals. Correct real estate titles is what ultimately under pin the Anglo American capitalist model.

“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”

Vladimir Ilyic Lenin.

Fed-up judges crack down on foreclosure disorder in courts

By Christine Stapleton and Kimberly Miller Palm Beach Post

8:52 a.m. EDT, April 3, 2011

Angry and exasperated by faulty foreclosure documents, judges throughout Florida are hitting back by increasingly dismissing cases and boldly accusing lawyers of "fraud upon the court."
A Palm Beach Post review of cases in state and appellate courts found judges are routinely dismissing cases for questionable paperwork. Although in most cases the bank is allowed to refile the case with the appropriate documents, in a growing number of cases judges are awarding homeowners their homes free and clear after finding fraud upon the court.
Still, critics say judges are not doing enough.

---- In February, Miami-Dade County Circuit Judge Maxine Cohen Lando took one of the largest foreclosure law firms in the state to task in a public hearing meant to send a message. She called Marc A. Ben-Ezra, founding partner of Ben-Ezra & Katz P.A., before her to explain discrepancies in a case handled by an attorney in his Fort Lauderdale-based firm.
"This case should have never been filed," said Lando, who referred to the firm's work on the case as "shoddy" and "grossly incompetent." She called Ben-Ezra a "robot" who filed whatever the banks sent him, and held him in contempt of court. She then gave the homeowner the home - free and clear - and barred the lender from refiling the foreclosure.
Attorney Maria Mussari, who represents the homeowner, said she wasn't surprised.
"She has become a voice for other judges," Mussari said. "If judges crack down on following the rules, we'll still have foreclosures, but maybe the banks will pay attention and do it right."
Mussari said it's taken a while for the courts to wake up to the foreclosure disorder because homeowners were largely unrepresented and judges overwhelmed.
"It's not that they don't care," she said. "They have thousands of cases on their docket and it's the same thing over and over again."
Ongoing scrutiny by the FBI, the Florida attorney general, the Florida Bar, the media and defense attorneys has uncovered countless examples of forged signatures, post-dated documents, robo-signing and lost paperwork.
As a result, defense attorneys are filing more motions challenging the documents. That means judges must spend more time reviewing documents and holding hearings. The situation was complicated last week when attorney David J. Stern, who operated the largest so-called foreclosure mill in Florida, sent letters to the chief judges of Florida's 20 circuit courts announcing that he intended to violate court rules and dump 100,000 foreclosure cases without a judge's order.

---- Alan White, a law professor at Valparaiso University in Indiana, who has studied the foreclosure issue nationwide, said judges had few reasons to doubt banks in the beginning of the foreclosure avalanche.
"They had a lot of credibility," White said. "Now, when a bank says it owns a mortgage, judges are skeptical."
White said a smattering of "maverick" judges began poking holes in foreclosures years ago before the media and lawmakers seized on problems in the fall. The judicial momentum has built since then.

More

http://www.sun-sentinel.com/business/sfl-judges-crack-down-on-foreclosure-disorder-20110403,0,4800057,full.story

Up next, what is the cost of doing “God’s Work” on Wall Street? Ebenezer Squid is going to let us all know by this October. Perhaps it’s time for a modest deposit in the Vatican’s bank?

"If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."

Lloyd Blankfein. CEO Goldman Sachs. November 8, 2009

Nuns ask Goldman Sachs bosses whether they're really worth $69.5m

Goldman Sachs is facing a call from four leading orders of catholic nuns to review whether the pay awarded to chief executive Lloyd Blankfein and other top executives is excessive.

By Richard Blackden 6:00AM BST 04 Apr 2011

The proposal will be put forward at the Wall Street bank’s annual general meeting next month by the orders, who own shares in Goldman, the bank revealed in a filing with the Securities and Exchange Commission.

The Sisters of Saint Joseph of Boston, the Sisters of Notre Dame de Namur, the Sisters of St. Francis of Philadelphia and the Benedictine Sisters of Mt. Angel want Goldman’s compensation committee to report back by the beginning of October.

The bank’s pay practices have faced criticism from religious orders in the past, but this call comes as Goldman revealed last week that its five most senior executives were awarded $69.5m in pay last year despite a drop in the bank’s profits.

Mr Blankfein, who famously said in an interview in 2009 that the bank was doing “God’s work”, received a cash bonus of $5.4m as part of a total pay package of $14.1m for last year.

The Benedictine nuns, along with the US charity, The Nathan Cummings Foundation, also asked Goldman’s committee to explore “how sizeable layoffs and the level of pay of our lowest paid workers impact senior executive pay.”

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8425222/Nuns-ask-Goldman-Sachs-bosses-whether-theyre-really-worth-69.5m.html

In one size fits all Euroland news, Club Meds bums look all too likely to be getting rushed to the exit door.

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise."

Jerome F. Smith

Trichet Seen Burying Ailing Nations With Rate Rise on Inflation

By Simon Kennedy and Jana Randow - Apr 4, 2011

Jean-Claude Trichet’s shot against inflation may end up inflicting collateral damage on Europe’s most cash-strapped economies.

Primed to raise its benchmark interest rate this week for the first time in almost three years, President Trichet’s European Central Bank again faces the conundrum that its monetary policy rarely suits all 17 members of the euro area, where the kaleidoscope of growth ranges from record expansion to recession paired with a sovereign-debt crisis.

The upshot may be that the normalization of rates from a record low of 1 percent will disproportionately hurt Spain, Greece, Portugal and Ireland, while failing to nip inflation threats in Germany. Such uneven fallout risks exacerbating the two-speed European recovery and dealing further damage to the bonds of so-called peripheral nations. Credit Suisse Group AG is warning investors away from the region’s stocks and banks partly because of concern the ECB is making a policy mistake.

“As the ECB continues to tighten, it increases the risk that the sovereign-debt crisis comes back,” said Gavyn Davies, chairman of London-based hedge fund Fulcrum Asset Management LLP, which oversees about $1.5 billion in assets. “It will manifest itself with the troubled economies moving into slower growth rates, and the fiscal arithmetic will worsen again.”

Trichet and his 22 fellow policy makers convene in Frankfurt April 7, a month since he surprised investors by signaling an increase in the ECB’s key rate by a quarter of a percentage point as inflation accelerated to 2.6 percent in March, the fastest in more than two years.

http://www.bloomberg.com/news/2011-04-03/trichet-seen-burying-peripheral-economies-with-rate-rise-to-stem-inflation.html

Sensing what comes next, Spain’s Prime Minister quits while the quiting’s good. A summer of truble lies ahead, especially if the ECB raises interest rates to counter German inflation.

"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."

Henry Hazlitt

Spain’s Deficit Fight Risks Setback as Zapatero Quits Election

Spain’s efforts to reduce its budget deficit and rebuild investor confidence may suffer a setback as Prime Minister Jose Luis Rodriguez Zapatero bows out of next year’s election.

Zapatero, 50, said on April 2 he won’t seek a third four- year term, forcing his party to select a new candidate a year before March 2012 elections. The Socialists, which are trailing the opposition in opinion polls, will hold primaries after regional and local elections on May 22, Zapatero told party members in the capital Madrid.

“It means he’s no longer a relevant figure, so I think this may be really problematic from a policy-making perspective over the coming year,” said Ken Dubin, a political science professor at Carlos III University in Madrid.

----Spain is the latest in a list of euro-area countries facing political upheaval after voters in Ireland ejected the Fianna Fail government from office after its bank crisis left it in need of an 85 billion-euro ($121 billion) bailout. In Germany, Chancellor Angela Merkel’s Christian Democrats have been punished in local elections as voters balk at the prospect of funding bailouts elsewhere in Europe.

http://www.bloomberg.com/news/2011-04-03/spain-s-deficit-fight-risks-setback-as-zapatero-quits-election.html

Today we end with commodities. Did hard headed Canadian realism see of Australia’s carpetbaggers? From this side of the Atlantic it does.

Commodities column: Fertiliser demand show PotashCorp was right to reject hostile bid

It appears that Bill Doyle was right. PotashCorp of Saskatchewan really was worth a lot more than the $39bn (£24.4bn) BHP Billiton was prepared to pay for it.

By Garry White 9:30PM BST 03 Apr 2011

In August last year, the world’s largest miner launched a hostile bid for the Canadian producer of agricultural fertiliser. The offer was at $130 a share and BHP’s management, headed by chief executive Marius Kloppers, argued that this was a full and fair price taking into account the prospects for the business.

Mr Doyle, chief executive of PotashCorp, countered that the offer “grossly undervalued its business.” A few short months later, the market has priced PotashCorp significantly higher than the BHP bid.

“We’re not opposed to a sale of the company, but we certainly are opposed to someone stealing the company,” Mr Doyle said at the time. At $39bn, hindsight shows this would have been a steal.

The deal was ultimately scuppered by the Canadian authorities because it didn’t provide a “net benefit” to Canada. But shareholders should rejoice that the deal did not go through.

Today, PotashCorp’s market cap stands at $50.3bn – almost 30pc above the price BHP was willing to pay.

http://www.telegraph.co.uk/finance/newsbysector/industry/mining/8424861/Commodities-column-Fertiliser-demand-show-PotashCorp-was-right-to-reject-hostile-bid.html

At the Comex silver depositories Friday, final figures were: Registered 41.70 Moz, Eligible 63.68 Moz, Total 105.38 Moz.

+++++

Crooks and Scoundrels Corner.

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

Today, how a wounded failing giant US bank, looked the other way and enabled billions of Mexican drug cartel cash to flow from Mexico into the legitimate US banking system. Did Wachovia knowingly try to force out a whistleblower? Who protected Wachovia in America’s DOJ?

"It's strange that men should take up crime when there are so many legal ways to be dishonest. “

Al Capone

How a big US bank laundered billions from Mexico's murderous drug gangs

As the violence spread, billions of dollars of cartel cash began to seep into the global financial system. But a special investigation by the Observer reveals how the increasingly frantic warnings of one London whistleblower were ignored

Sunday 3 April 2011

On 10 April 2006, a DC-9 jet landed in the port city of Ciudad del Carmen, on the Gulf of Mexico, as the sun was setting. Mexican soldiers, waiting to intercept it, found 128 cases packed with 5.7 tons of cocaine, valued at $100m. But something else – more important and far-reaching – was discovered in the paper trail behind the purchase of the plane by the Sinaloa narco-trafficking cartel.

During a 22-month investigation by agents from the US Drug Enforcement Administration, the Internal Revenue Service and others, it emerged that the cocaine smugglers had bought the plane with money they had laundered through one of the biggest banks in the United States: Wachovia, now part of the giant Wells Fargo.

The authorities uncovered billions of dollars in wire transfers, traveller's cheques and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme. Of special significance was that the period concerned began in 2004, which coincided with the first escalation of violence along the US-Mexico border that ignited the current drugs war.

Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year's "deferred prosecution" has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine.

More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn – a sum equivalent to one-third of Mexico's gross national product – into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business.

More. Much More.

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

The monthly Coppock Indicators finished March:

DJIA: +160 UP 06. NASDAQ: +216 Down 01. SP500: +163 UP 6.

The Dow and SP 500 have reversed albeit by tiny margins, while the NASDAQ barely moved down. The Fed’s rigging of the indicators seems to have worked. Note: like all indicators, they were devised for normal markets not markets where the central bank is flooding the economy with new cash. In current conditions where risk is suspended by too big to fail, I doubt any indicators are showing more that where the Fed’s new cash is flowing in our world of casino capitalism.

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