WHY THE -2.9% FIRST QTR GDP IS EVEN WORSE THAN IT LOOKS
On 6/25/14 the first Qtr GDP was revised downward to -2.9%. Of course, this is catastrophic after all the unnatural interventions to invigorate the economy. But there is a crucial and overlooked reason why this report is even worse than it seems. A reason which will leave little chance that the second quarter will not be another negative print - triggering the definition of a new recession right on the heels of the "Great Recession".
It involves one of America's favorite institutions. Yes, our beloved IRS. They don't like to talk about it much, but the fact is that by far the most Americans with an income tax refund file their returns prior to March 31st. With today's age of computer generated returns this means that these people get their hands on their money for spending purposes prior to the beginning of the 2nd quarter.
With our economy being 70% consumption-driven, that means that the segment most prone to actually immediately spend the tax return "shot their wad" before March 31st. (The delayers either owe or are less inclined to rely on a tax refund to spend - hence the delay in filing in the first place).
Anyone who expects a better (or above zero) GDP revised print for the second quarter has surely not contemplated this simple fact. It's so simple that I'm flabbergasted I've not read it before.
- Birney K. Brown
Wednesday, June 25, 2014
Tuesday, October 15, 2013
Econorama: Supreme Court, McCutcheon, FEC, McConnell, and "St...
Econorama: Supreme Court, McCutcheon, FEC, McConnell, and "St...: One hopes the Supreme Court realizes the consequences of their "Citizens United" ruling and doesn't potentially blow a whole ...
Supreme Court, McCutcheon, FEC, McConnell, and "Straw Men" - A potential Catastrophe.
One hopes the Supreme Court realizes the consequences of their "Citizens United" ruling and doesn't potentially blow a hole in our democratic election process with another mistake. As it stands now with some restrictions in place, there exists an increasing many who believe elected politicians and those maneuvering for election already place the agendas of campaign donors above the wishes of their constituents.
The forthcoming Supreme Court decision on McCutcheon vs. FEC could be very narrow or profoundly wide ranging. If the latter, there is potential disaster ahead.
Senator Mitch McConnell (R-Ky and Senate Minority Leader) was allowed to present a "friend of the court" argument. Mr. McConnell is "famous" for leading the pack in campaign contributions from the financial, insurance and real estate industries. Also for his utterance that the most important thing was making Mr. Obama a one term president - seemingly more vital to him than any other existing matter of importance facing our nation.
Through his counsel, McConnell argued that all limits to campaign contributions - aggregate and individual - should be ended. If the Supremes address this stance in a favorable light and incorporate it in their decision, the impact on our election process would be ruinous. It would open the door for massive potential bribery and corruption.
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Consider the following potential "straw man" scenario as it theoretically could happen:
- The Koch brothers or similar individuals could target certain elections to put "their people" in place. Here is where the much-discussed $3.5 million restriction would come into play.
- These "Koch parties" realize they can only shovel $3.5 million to their candidate.
- So they set up "straw men" to whom they direct $3.5 million so each "straw man" can also contribute up to $3.5 million to the same candidate. If you get ten such "straw men" to do this, suddenly your talking $35 million. And if caught - just think of all the legal arguments that would tangle up any investigations or criminal charges for years.
- This is merely one example regarding targeted elections. Obviously, swaying results through actions like this can change the dynamic of the entire congressional body impacted - either the House or Senate. There are many other scenarios.
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Quite obviously the wealthy elite campaign donor crowd is preparing their strategy based on the exact nature and reach of the McCutcheon vs. FEC decision.
Given the current makeup and dismal record of our sitting Supreme Court, I suspect that these parties are thinking much deeper about their own opportunities and strategies than the myopic Judges who repeatedly show tunnel vision based on precedent and their interpretation of what the founding fathers meant in the Constitution.
If the Supreme Court really screws this one up - Watch out below because the election process will have been transferred to the least patriotic creatures in existence. The super wealthy elite as symbolized by the Koch brothers.
Wednesday, October 3, 2012
Former Bear Stearns Execs & Massive Fraud
J.P. Morgan contends that the Bear Stearns fraud MBS securitization activity leading to the just announced civil fraud lawsuit allegations occurred before they bought the company in May of 2008. It would be very far less than surprising for the case to be settled in the future with J.P. Morgan negotiating a settlement acknowledging violations or improper behavior - but also laying the blame on the executives of Bear Stearns as the parties running the outfit at the time. That another group of individuals did it - not us. We merely bought the company after the fact at the behest of the Federal Reserve and Treasury.
Which would leave a thinking individual to ponder the following questions:
"Whatever happened to the top executives at Bear Stearns responsible for this mess? Weren't they charged with violations as individuals?".
The quick answers are "nothing" and "no".
It seems J.P. Morgan (somehow) came up with $9 billion to set aside to cover a settlement with shareholders and other investors in Bear Stearns in June of 2012. Those hit with the impact of the $22.5 billion lost on securities issued in 2006 and 2007. Totally unaffected by this were the stellar group of people in charge at Bear - the ones who violated Sarbanes-Oxley regulations regarding SEC reporting and any other number of standards.
(Actually, I shouldn't say unaffected. Some were party to a $275 million agreement - apparently none of which they had to actually pay themselves).
Here they are: Alan D. Schwarz, President and CEO; James E. Cayne, Chairman of the Board; Jeffrey M. Farber, Sr. VP & Controller; Alan C. Greenberg, Chairman of the Executive Committee; Jeffrey Mayer, Executive VP & Co-Head of Fixed Income Division; Samuel Molinaro, Ex VP & COO; Michael Solender, General Counsel.
All thesefraudsters people are free as birds (ala Jon Corzine). Jeffrey Farber was even so highly thought of that he was appointed to a high level executive position at taxpayer-owned AIG. He and all the others are out just doing what the 1% generally do in this country.
It is patently absurd that our legal system would proceed against J.P. Morgan in a civil fraud lawsuit addressing the behavior of Bear Stearns without ever going after the principals of Bear Stearns itself. To basically allege fraud took place, but never take action against those who they contend perpetrated it.
I guess this makes about as much sense as anything else going on in today's world.
Which would leave a thinking individual to ponder the following questions:
"Whatever happened to the top executives at Bear Stearns responsible for this mess? Weren't they charged with violations as individuals?".
The quick answers are "nothing" and "no".
It seems J.P. Morgan (somehow) came up with $9 billion to set aside to cover a settlement with shareholders and other investors in Bear Stearns in June of 2012. Those hit with the impact of the $22.5 billion lost on securities issued in 2006 and 2007. Totally unaffected by this were the stellar group of people in charge at Bear - the ones who violated Sarbanes-Oxley regulations regarding SEC reporting and any other number of standards.
(Actually, I shouldn't say unaffected. Some were party to a $275 million agreement - apparently none of which they had to actually pay themselves).
Here they are: Alan D. Schwarz, President and CEO; James E. Cayne, Chairman of the Board; Jeffrey M. Farber, Sr. VP & Controller; Alan C. Greenberg, Chairman of the Executive Committee; Jeffrey Mayer, Executive VP & Co-Head of Fixed Income Division; Samuel Molinaro, Ex VP & COO; Michael Solender, General Counsel.
All these
It is patently absurd that our legal system would proceed against J.P. Morgan in a civil fraud lawsuit addressing the behavior of Bear Stearns without ever going after the principals of Bear Stearns itself. To basically allege fraud took place, but never take action against those who they contend perpetrated it.
I guess this makes about as much sense as anything else going on in today's world.
Tuesday, September 4, 2012
Thank the Courts for much of 2000-2012
Just some quick thoughts on how The Courts have contributed to the to our state of affairs since 2000 :
- Supreme Court hands election to George W. Bush (puppet of Dick Cheney and Karl Rove). Provides for invasion of Iraq under false pretenses for military contractors and oil companies.
- Supreme Court "Citizens United" decision opens the floodgates for further massive corruption in campaign funding and even further growth of lobbying interests.
- Lower courts generally uphold Republican driven Voter ID efforts (aka Jim Crow laws) to make it more difficult for Democratic-leaning citizens to vote.
- US Court of Appeals 8/9/12 decision in the Sentinel Group case holds that segregated accounts formerly considered sacrosanct are not. Rather, any titan-sized institution that financed loans backed by customer accounts has a secured position and is therefore entitled to payment before any segregated accounts at a brokerage.
- The above decision has basically established any defense that might be required by the Jon Corzine's of the world.
................................................................................................................
Thank You, Court System. One should ponder how vastly different the nation and world might be today in the absence of these rulings - starting with the placement of Bush as president and commander in chief. None of the above strike me as being "for the people" (unless you're one of "the people" in whose behalf the Courts and government act).
- Supreme Court hands election to George W. Bush (puppet of Dick Cheney and Karl Rove). Provides for invasion of Iraq under false pretenses for military contractors and oil companies.
- Supreme Court "Citizens United" decision opens the floodgates for further massive corruption in campaign funding and even further growth of lobbying interests.
- Lower courts generally uphold Republican driven Voter ID efforts (aka Jim Crow laws) to make it more difficult for Democratic-leaning citizens to vote.
- US Court of Appeals 8/9/12 decision in the Sentinel Group case holds that segregated accounts formerly considered sacrosanct are not. Rather, any titan-sized institution that financed loans backed by customer accounts has a secured position and is therefore entitled to payment before any segregated accounts at a brokerage.
- The above decision has basically established any defense that might be required by the Jon Corzine's of the world.
................................................................................................................
Thank You, Court System. One should ponder how vastly different the nation and world might be today in the absence of these rulings - starting with the placement of Bush as president and commander in chief. None of the above strike me as being "for the people" (unless you're one of "the people" in whose behalf the Courts and government act).
Thursday, December 15, 2011
Sandusky (Penn State) and Corzine (MF Global)
First and foremost, it must be realized by now that Jon Corzine has no respect whatsoever for the body in which he used to serve. It will soon be confirmed that he lied to former colleagues during the first Senate hearings on MF Global. Not only does he have no respect for the Senate, but he has no respect for the House of Representatives either (where he was similarly less than honest under oath). Which means he cares for no one but himself. Values nothing about our system of government or any principles on which our nation is based. How a person without honor could rise to such a position of preeminence is telling about our present state of circumstances.
There are many parallels between Sandusky and Corzine. Both crumpled the institutions with which they were associated. Sandusky brought down the venerable Joe Paterno, along with the president and some administrators of the university. Due to him, the number one recruit of the flagship football program has already de-committed, along with some others and further signees soon to follow. He has drastically lowered the perception of the institution and what it claimed to stand for in the eyes of the public. It would be hard to envision more destruction traced to the acts of one man. But he still maintains his innocence. And this scenario will soon be repeated at Syracuse with Bernie Fine, Jim Boeheim and probably others.
Corzine is a similar creature. He maintains his innocence and lack of knowledge about any of the violations by MF Global. Corzine, however. not only brought down MF, but has wrought severe damage to the entire commodities trading industry - if not the entire securities industry. When one's "secure, segregated accounts" are insecure and not segregated - trust properly vanishes. And this just intensifies the pre-existing lack of trust at the forefront of the financial industry.
...............................................................................................
I'm constantly amazed at the big picture corruption and morality issues that Americans consistently believe can't exist until they are shown over and over again that they are real and as described. How many confirmations does it take before we finally conclude that something is, in fact, very wrong in this world? The OWS movement knows it - but I've been reading articles that bemoan the costs associated in controlling & arresting these patriots and cleaning up after them - while ignoring the pillaging of trillions from the system by the true financial villains they are trying to identify and expose.
I grew up in the time of the Kennedy assassinations, the Vietnam deceit and Watergate. As time went by, I hoped that we had progressed beyond these types of things. But we never did - it was all an illusion. Perhaps now is the time when one's first reaction should be to mistrust everything they are told. To question the motives behind the main street media. If we develop a healthy questioning of authority, maybe these parties will think twice about what they try to force feed us. Maybe we can take back what has been taken away - or perhaps given up through lethargy. I fear it won't happen in this election cycle. Hopefully, the populace can derive a clear picture of our "supposed" democracy and come up with and agree to a strategy to bring about the true "hope and change"phrase that Mr. Obama utilized only for the purpose of getting elected.
There are many parallels between Sandusky and Corzine. Both crumpled the institutions with which they were associated. Sandusky brought down the venerable Joe Paterno, along with the president and some administrators of the university. Due to him, the number one recruit of the flagship football program has already de-committed, along with some others and further signees soon to follow. He has drastically lowered the perception of the institution and what it claimed to stand for in the eyes of the public. It would be hard to envision more destruction traced to the acts of one man. But he still maintains his innocence. And this scenario will soon be repeated at Syracuse with Bernie Fine, Jim Boeheim and probably others.
Corzine is a similar creature. He maintains his innocence and lack of knowledge about any of the violations by MF Global. Corzine, however. not only brought down MF, but has wrought severe damage to the entire commodities trading industry - if not the entire securities industry. When one's "secure, segregated accounts" are insecure and not segregated - trust properly vanishes. And this just intensifies the pre-existing lack of trust at the forefront of the financial industry.
...............................................................................................
I'm constantly amazed at the big picture corruption and morality issues that Americans consistently believe can't exist until they are shown over and over again that they are real and as described. How many confirmations does it take before we finally conclude that something is, in fact, very wrong in this world? The OWS movement knows it - but I've been reading articles that bemoan the costs associated in controlling & arresting these patriots and cleaning up after them - while ignoring the pillaging of trillions from the system by the true financial villains they are trying to identify and expose.
I grew up in the time of the Kennedy assassinations, the Vietnam deceit and Watergate. As time went by, I hoped that we had progressed beyond these types of things. But we never did - it was all an illusion. Perhaps now is the time when one's first reaction should be to mistrust everything they are told. To question the motives behind the main street media. If we develop a healthy questioning of authority, maybe these parties will think twice about what they try to force feed us. Maybe we can take back what has been taken away - or perhaps given up through lethargy. I fear it won't happen in this election cycle. Hopefully, the populace can derive a clear picture of our "supposed" democracy and come up with and agree to a strategy to bring about the true "hope and change"phrase that Mr. Obama utilized only for the purpose of getting elected.
Wednesday, December 14, 2011
A Few More Things About MF Global & Corzine
Corzine and his lackeys, while claiming utter lack of knowledge and denying any culpability whatsoever in the transfer of segregated client accounts, suggested the company's treasury operations would be the place to look. They repeatedly said that they couldn't answer questions without access to records. So lower level "treasury ops" personnel now get to join in on the subpoena/testimony congressional hearings show.
Any affected employee most definitely would not be overwhelmed with joy about this. Under Corzine's perverted leadership style (including determining what to invest in and ensuring his desires are carried out), it would seem treasury operations functions were largely limited to managing cash flows and balancing incoming payments with outflows. That they simply recorded and tried to reconcile what was done by others. It would be unlikely for them to question anything if they wanted to keep their jobs. Recall Corzine's ludicrous testimony about encouraging discussion and input. A former key executive did just that and was summarily fired and replaced. An autocratic work environment does not promote other than doing as told. Now that Corzine has left the company, these staffers might well have much to say about the real goings-on. Because a lot of stuff (responsibility) was deflected upon company treasury staff
..............................................................................
The testimony of Corzine and his top executives brought up a number of credibility issues. One was their flabbergasting decision not to check where the money came from for liquidity to pay off the margin calls. Which actual client accounts were impacted. Instead, they focused all their attention on resolving and reconciling the figures. As was mentioned, these money flows can later be identified and tracked backwards. Hopefully, this will expose who authorized and handled the actual transfers. Somebody or some persons actually transacted these transfers, you know.
.......................................................................................
Another under-reported item was testified to by the CFTC representative on the panel. She said that she only became involved in the audit/investigation later. That CFTC chairman Gensler was heading it until 10/26/11. That everything "was safe" through that date. Gensler worked at Goldman Sachs under Corzine as CEO. I suspect the continuing investigation will show that this "things were fine" was definitely not the case. Whether completely incompetent or covering up for his former boss, I don't think Gensler will be looking too good in the near future. A top regulator clueless or serving someone in this manner a mere 5 days before before the company blew up and filed for bankruptcy with $1.2 billion in segregated customer accounts confirmed as missing certainly isn't done with this matter yet.
............................................................................................
So far, we are left with the position of senior management contending that they knew nothing of "non Rule 1.25" usage of segregated client accounts when it undoubtedly happened. And apparently we are expected to believe that these unauthorized transactions were done by underlings without the knowledge or direction of senior management and against company policy and procures. Either this was one of the worst managed public companies in history with completely ineffective controls or a real juicy expose of a multilevel financial conspiracy will shortly hit the market. Just what we need with the world financial sector one "shock" from collapse.
And it all revolves around an individual whose resume somehow includes being elected as both a US Senator and New Jersey governor. And of course, his experience with The Squid went a long way towards making him what he is today. Finally, don't forget that this "person's" influence and standing resulted in the Federal Reserve's decision to add this outstanding corporation to its august list of Primary Dealers earlier in the year following thorough examination of all company practices.
Any affected employee most definitely would not be overwhelmed with joy about this. Under Corzine's perverted leadership style (including determining what to invest in and ensuring his desires are carried out), it would seem treasury operations functions were largely limited to managing cash flows and balancing incoming payments with outflows. That they simply recorded and tried to reconcile what was done by others. It would be unlikely for them to question anything if they wanted to keep their jobs. Recall Corzine's ludicrous testimony about encouraging discussion and input. A former key executive did just that and was summarily fired and replaced. An autocratic work environment does not promote other than doing as told. Now that Corzine has left the company, these staffers might well have much to say about the real goings-on. Because a lot of stuff (responsibility) was deflected upon company treasury staff
..............................................................................
The testimony of Corzine and his top executives brought up a number of credibility issues. One was their flabbergasting decision not to check where the money came from for liquidity to pay off the margin calls. Which actual client accounts were impacted. Instead, they focused all their attention on resolving and reconciling the figures. As was mentioned, these money flows can later be identified and tracked backwards. Hopefully, this will expose who authorized and handled the actual transfers. Somebody or some persons actually transacted these transfers, you know.
.......................................................................................
Another under-reported item was testified to by the CFTC representative on the panel. She said that she only became involved in the audit/investigation later. That CFTC chairman Gensler was heading it until 10/26/11. That everything "was safe" through that date. Gensler worked at Goldman Sachs under Corzine as CEO. I suspect the continuing investigation will show that this "things were fine" was definitely not the case. Whether completely incompetent or covering up for his former boss, I don't think Gensler will be looking too good in the near future. A top regulator clueless or serving someone in this manner a mere 5 days before before the company blew up and filed for bankruptcy with $1.2 billion in segregated customer accounts confirmed as missing certainly isn't done with this matter yet.
............................................................................................
So far, we are left with the position of senior management contending that they knew nothing of "non Rule 1.25" usage of segregated client accounts when it undoubtedly happened. And apparently we are expected to believe that these unauthorized transactions were done by underlings without the knowledge or direction of senior management and against company policy and procures. Either this was one of the worst managed public companies in history with completely ineffective controls or a real juicy expose of a multilevel financial conspiracy will shortly hit the market. Just what we need with the world financial sector one "shock" from collapse.
And it all revolves around an individual whose resume somehow includes being elected as both a US Senator and New Jersey governor. And of course, his experience with The Squid went a long way towards making him what he is today. Finally, don't forget that this "person's" influence and standing resulted in the Federal Reserve's decision to add this outstanding corporation to its august list of Primary Dealers earlier in the year following thorough examination of all company practices.
Tuesday, December 13, 2011
Duffy Says "Good Night", Mr. Corzine
It wasn't until towards the end of a long day when the Senate Agricultural Committee finally heard some truly meaningful testimony.
CME executive director Terrence Duffy had something to say and said it. And in so doing - he might well have opened up Corzine and perhaps his President/COO to charges of perjury. The Senators were simply unable to get the most basic of answers from Corzine and his chief officers about the simplest of matters. How and where did $1.2 billion in segregated customer account monies go? And how could it have happened? Assuredly Senators, viewers and listeners were appalled, if not angered, by these supposedly accomplished fiduciary experts hemming and hawing (and lying?) about having no knowledge whatsoever until 10/30/11 or so when they were so shocked to learn about it. They either were unwilling to or could not even identify who within the organization even had the ability to authorize or carry out such transfers. I mean, monies can't be transferred out of segregated customer accounts unless somebody can actually do it, right? And somebody has to say it's OK to do it, right? And somebody somewhere has to know it was done. Corzine spent much of his time addressing Rule 1.25 about ways a broker/dealer can actually legally use client funds for its own purposes when this wasn't even really the issue.
But Mr. Duffy laid out a neat time line including information his staffers received from an MF Global employee which contradicted Corzine's (testimony). And Mr. Duffy's statements made a whole lot more sense. His auditors received daily segregated account reconciliation records during the last few tumultuous days. On Thursday and Friday they were told by MF that the "seg accounts" had $200 million in excess funds and things were fine. Then they were told that this was in error and it actually had a $200 million shortfall. ( Corzine contends that everyone at MF was so shocked that they didn't even attempt to figure out what happened, but rather spent the next couple of days furiously trying to reconcile figures). Duffy testified that his staff was finally told on 10/29 that there was a $900 million shortfall. Later, on 10/31, his auditors were told that MF had transferred $950 million from segregated customer accounts to its the broker/dealer arm so they might as well stop looking for any error. This on top of learning that MF had asked a London affiliate to send back $175 million it had loaned to them from co-mingled accounts.. But worst for Corzine,a senior MF employee told his staff that Corzine knew of the transfers and they were directed by management. Mr. Duffy described these activities as illegal, violation of rules and, just as important, efforts to disguise what was going on. No wonder Mr. Duffy was so forthright - his staff had been intentionally misled. And one could easily figure what Mr. Duffy thinks of the (honorable) Mr. Corzine's performance which he witnessed earlier.
So the day was spent hearing from farmers, ranchers and other legitimate parties simply trying to use commodity hedges the way they were intended. They described what happened to their ability to conduct business by addressing agricultural risk factors when Corzine betrayed their trust. Then you had the "maybe lying perjurers" three top MF executives insulting everyone's intelligence. Then you had the CME executive chairman describe a thoroughly plausible scenario of what actually happened. In my mind, Corzine and his henchmen were exposed for what they are. Hopefully, this vitally important matter will continue through the system post-haste before everyone forgets about it or legislators let an ex-Senator and ex-Governor get a free pass. More hearings - quick! And for God's sake - will somebody put some heat on the Department of Justice to actually do something for once.
CME executive director Terrence Duffy had something to say and said it. And in so doing - he might well have opened up Corzine and perhaps his President/COO to charges of perjury. The Senators were simply unable to get the most basic of answers from Corzine and his chief officers about the simplest of matters. How and where did $1.2 billion in segregated customer account monies go? And how could it have happened? Assuredly Senators, viewers and listeners were appalled, if not angered, by these supposedly accomplished fiduciary experts hemming and hawing (and lying?) about having no knowledge whatsoever until 10/30/11 or so when they were so shocked to learn about it. They either were unwilling to or could not even identify who within the organization even had the ability to authorize or carry out such transfers. I mean, monies can't be transferred out of segregated customer accounts unless somebody can actually do it, right? And somebody has to say it's OK to do it, right? And somebody somewhere has to know it was done. Corzine spent much of his time addressing Rule 1.25 about ways a broker/dealer can actually legally use client funds for its own purposes when this wasn't even really the issue.
But Mr. Duffy laid out a neat time line including information his staffers received from an MF Global employee which contradicted Corzine's (testimony). And Mr. Duffy's statements made a whole lot more sense. His auditors received daily segregated account reconciliation records during the last few tumultuous days. On Thursday and Friday they were told by MF that the "seg accounts" had $200 million in excess funds and things were fine. Then they were told that this was in error and it actually had a $200 million shortfall. ( Corzine contends that everyone at MF was so shocked that they didn't even attempt to figure out what happened, but rather spent the next couple of days furiously trying to reconcile figures). Duffy testified that his staff was finally told on 10/29 that there was a $900 million shortfall. Later, on 10/31, his auditors were told that MF had transferred $950 million from segregated customer accounts to its the broker/dealer arm so they might as well stop looking for any error. This on top of learning that MF had asked a London affiliate to send back $175 million it had loaned to them from co-mingled accounts.. But worst for Corzine,a senior MF employee told his staff that Corzine knew of the transfers and they were directed by management. Mr. Duffy described these activities as illegal, violation of rules and, just as important, efforts to disguise what was going on. No wonder Mr. Duffy was so forthright - his staff had been intentionally misled. And one could easily figure what Mr. Duffy thinks of the (honorable) Mr. Corzine's performance which he witnessed earlier.
So the day was spent hearing from farmers, ranchers and other legitimate parties simply trying to use commodity hedges the way they were intended. They described what happened to their ability to conduct business by addressing agricultural risk factors when Corzine betrayed their trust. Then you had the "maybe lying perjurers" three top MF executives insulting everyone's intelligence. Then you had the CME executive chairman describe a thoroughly plausible scenario of what actually happened. In my mind, Corzine and his henchmen were exposed for what they are. Hopefully, this vitally important matter will continue through the system post-haste before everyone forgets about it or legislators let an ex-Senator and ex-Governor get a free pass. More hearings - quick! And for God's sake - will somebody put some heat on the Department of Justice to actually do something for once.
Thursday, December 8, 2011
Quick Thoughts on Corzine Testimony
- This man was CEO of Goldman Sachs before Hank Paulson "back-doored" him out. Corzine never forgot that in trying to return to his former glory.
- This man was on Obama's short list to be the new Treasury Secretary (despite furious denials).
- This man did not have the required current licenses to trade securities. They had expired while he
was a senator and governor of New Jersey. He was bounced from his governorship of NJ in favor of Chris Christie at the first opportunity NJ voters had to rectify their mistake. He was allowed by regulators to activate his security trading licenses without required examination. To take this a step
further, he acknowledged in his testimony that MF was hindered by old style phone transactions
versus competitor's high speed transactions (HFT). What better example of why an expired license
should not be re-granted through cronyism?
- As many representatives stated at the hearing, farmers and growers relying on commodity price
hedging were the primary victims of Corzine's CEO tenure. The only reason they established accounts with MF Global was to hedge future crops and prices. Protection and service to such
accounts and customers was MF Global's stated primary mission.
- Mr. Corzine altered the business model of MF Global from what he felt was a low growth business to a high return mindset. Of course, he acknowledged that company performance in a" high risk- high reward" scenario would increase the potential value of his stock options.
- Basically Mr. Corzine retroactively changed the company with which the farmers and growers were
doing business. I suspect they didn't realize that the focus changed to speculating in the foreign debt of every weak European stepchild other than Greece. Did he inform them in a manner which could be readily understood? Assuredly not.
- Instead, he fired the head risk officer and expanded accumulation of European sovereign risk instruments, He even acknowledged having to defend these bets to his own board of directors.
.....................................................................................................................
More on this later. But any thinking person should realize that THIS is the type of person and
thought process that permeates firms like Goldman Sachs. That THIS is the type of Goldman Sachs
former CEOs that two times out of three had been appointed Treasury Secretary. This man's performance in front of the committee was absolutely pathetic. No wonder our economy and the performance of those who oversee it is similarly pathetic.
- This man was on Obama's short list to be the new Treasury Secretary (despite furious denials).
- This man did not have the required current licenses to trade securities. They had expired while he
was a senator and governor of New Jersey. He was bounced from his governorship of NJ in favor of Chris Christie at the first opportunity NJ voters had to rectify their mistake. He was allowed by regulators to activate his security trading licenses without required examination. To take this a step
further, he acknowledged in his testimony that MF was hindered by old style phone transactions
versus competitor's high speed transactions (HFT). What better example of why an expired license
should not be re-granted through cronyism?
- As many representatives stated at the hearing, farmers and growers relying on commodity price
hedging were the primary victims of Corzine's CEO tenure. The only reason they established accounts with MF Global was to hedge future crops and prices. Protection and service to such
accounts and customers was MF Global's stated primary mission.
- Mr. Corzine altered the business model of MF Global from what he felt was a low growth business to a high return mindset. Of course, he acknowledged that company performance in a" high risk- high reward" scenario would increase the potential value of his stock options.
- Basically Mr. Corzine retroactively changed the company with which the farmers and growers were
doing business. I suspect they didn't realize that the focus changed to speculating in the foreign debt of every weak European stepchild other than Greece. Did he inform them in a manner which could be readily understood? Assuredly not.
- Instead, he fired the head risk officer and expanded accumulation of European sovereign risk instruments, He even acknowledged having to defend these bets to his own board of directors.
.....................................................................................................................
More on this later. But any thinking person should realize that THIS is the type of person and
thought process that permeates firms like Goldman Sachs. That THIS is the type of Goldman Sachs
former CEOs that two times out of three had been appointed Treasury Secretary. This man's performance in front of the committee was absolutely pathetic. No wonder our economy and the performance of those who oversee it is similarly pathetic.
Hank Paulson = Benedict Arnold
Most Americans would think that something unpleasant should happen to a person who commits treason. Within one month in 2008 Treasury Secretary Hank Paulson (former Goldman Sachs CEO) committed two acts of treason One involving a meeting in Russia in late June with the Goldman Sachs board of directors. Another when he willfully lied to reporters by saying that Fannie Mae and Freddie Mac must remain shareholder owned. He repeated this days later by stating a soon to be concluded examination of their books will instill investor confidence. Other parties personally received quite different information - the accurate information on what would be happening with the GSEs.
The position of Secretary of the Treasury obviously calls for a person with high moral principles. This individual is behind only the Federal Reserve Chairman as far as impact on the economy. In a correctly functioning society, a Treasury Secretary would never - under any circumstances - meet with a group of private bankers to give inside information. If the Secretary is too dishonorable to realize it himself, it must be mandated through legislation. But Paulson (who does not even meet the foremost criteria for the office as described above) did it not just once, but at least twice. And there's no reason to suspect it didn't happen on other occasions. I don't know how he defined his job, but these actions were certainly incompatible with any reasonable expectations. The Treasury Secretary position does not exist to alert demonic bankers of market moving measures in advance of the general investing public. To the detriment of the public. If this stuff is not the acts of a traitor, I don't know what is.
As a little background, Paulson - while CEO at Goldman - successfully used his authority and influence to strongly promote the easing of capital requirements so Wall Street banks could use more leverage. Right then, it might have been a good idea not to appoint a serial gambler to the job since this opened up the doors to a profound problem which still has not been reigned in. Paulson, Robert Rubin and Larry Summers pushed the concept of deregulation and convinced stupid people that the financial sector is self governing. That it acts in its own best interests, therefore will self correct any imbalances, and can ultimately be trusted to do the right thing automatically without unnecessary oversight. So George W. Bush instead nominated him and he was overwhelmingly confirmed in 2006. I would love to have seen him take his oath of office.
........................................................................................................................
By the end of June of 2008 Paulson was in office for about two years doing who-knows-what when he decided it would be a good idea to meet with the board of directors of his former company over in Moscow. He gave them the heads up on a major speech he was about to deliver. He also expressed his concerns about Lehman Brothers probably blowing up. What kind of non-traitor would come up with such an idea? This is telling his old company how to prepare. How to maneuver to the winning side. This is beyond poor judgment - this is flat out treason. Undeniably so.
Goldman Sachs was made privy to nonpublic information. And not for any purpose whatsoever other than to allow them to profit from it. A Treasury Secretary cannot do such things. Purposely violating one's oath of office is just cause for immediate termination proceedings - with further charges to follow. Why did this not happen?
But tipping Goldman Sachs off was not enough. On 7/13/08 Paulson told reporters that Fannie Mae and Freddie Mac must remain shareholder owned. As a result, the normal investing public starting bidding up the shares. On 7/21/08 he conned normal investors again by assuring reporters that an upcoming announcement on the GSEs would reassure everyone. Again the shares were bid up. Before he actually did this on the morning of 7/21, he had already scheduled an afternoon meeting the same day with a group of hedge fund managers. A bunch of these were Goldman Sachs-types. Paulson thought it would be a good idea to actually tell this particular group the truth. He described to them a scenario under which the GSEs would enter into receivership and their stock would become worthless. As has since been covered, at least one hedge fund manger contacted legal counsel who told him not to act as the information was in violation of any number of standards. Again, Paulson misled the public, who soon would get creamed on their GSE stock, while hedge fund managers potentially could reap millions shorting it. Again, why has Paulson not been charged with treason? Beyond that, if Eric Holder's Department of Justice and other regulators were not so corrupted, why on earth would it be so difficult to thoroughly examine trading records from 7/21 through the conservatorship announcement? It's only a period of about two months. Hey, maybe it's because Congressmen and other in-the-know federal employees also traded on the hidden news. Who knows? But it's basic stuff.
..................................................................................
Henry J. Paulson engaged in other questionable behavior outside of the above. Really questionable.
- He became phone buddies with NY Fed chief Timothy Geithner, Goldman's Lloyd Blankfein and Morgan Stanley's John Mack. As it turned out, this behavior happened to correspond with the instantaneous approval on 9/21/08 for Goldman and Morgan Stanley to join all the other TBTFs as a bank holding company to gain access to Fed emergency funds and favorable terms on any money desired.
- He bullied and coerced Congress to pass TARP, then turned around and used a substantial portion of the funds in a manner not described. On 10/13/08 he committed funds (cut checks) to nine banks totaling $125 billion. This was the infamous weekend when he called them all to the NY Fed and (supposedly) compelled them all to accept the money so that no one would know which banks really needed it. But the amounts varied. J.P. Morgan, Wells Fargo and Citigroup led the parade with $25 billion each. Then came Bank Of America with $15 billion - followed by Merrill Lynch, Goldman Sachs and Morgan Stanley at $10 billion. Bank of NY Mellon got a puny $3 billion, while State Street brought up the rear with a mere $2 billion. Contemplating the relative amounts certainly tells a tale. And what about all the smaller banks out there? The ones that fund Main Street small business expansion? I guess they're not considered part of the crucial Financial Sector.
- He had his hands all over the AIG counterparty bailout. Under his plan Goldman Sachs (shock!) benefited the most. He misled everybody by saying that AIG's liabilities must be covered to the tune of 100 cents on the dollar to protect the public. $182 billion worth. This was followed by Goldman executives probably perjuring themselves in front of Congress when testifying that monies were received solely to make their customer accounts whole. It was later found that Goldman Sachs profited by $2.9 billion on their own proprietary trades. Can one seriously believe ex-Goldman CEO Paulson had no idea about the firm's personal exposure?
.....................................................................................
Hank Paulson was no public servant. He was planted as the second Goldman Sachs'er out of three to serve Wall Street as Treasury Secretary. Revelations about his phone log history show an alarming amount of calls with the Wall Street titans. When you combine this with the series of steps taken in behalf of the parties who had created the crisis, you do have to wonder who serves whom. And keep in mind that the TBTFs rather quickly got back on firm footing to keep the bonuses flowing.
Look up the definitions of treason and traitor. They both involve violation or betrayal of trust and allegiance to one's country. An appointed official betrayed his trust by serving parties who have proven dangerous to the nation at the expense of the general population - this is one of the purest examples of treasonous activity by a traitor I can think of.
The position of Secretary of the Treasury obviously calls for a person with high moral principles. This individual is behind only the Federal Reserve Chairman as far as impact on the economy. In a correctly functioning society, a Treasury Secretary would never - under any circumstances - meet with a group of private bankers to give inside information. If the Secretary is too dishonorable to realize it himself, it must be mandated through legislation. But Paulson (who does not even meet the foremost criteria for the office as described above) did it not just once, but at least twice. And there's no reason to suspect it didn't happen on other occasions. I don't know how he defined his job, but these actions were certainly incompatible with any reasonable expectations. The Treasury Secretary position does not exist to alert demonic bankers of market moving measures in advance of the general investing public. To the detriment of the public. If this stuff is not the acts of a traitor, I don't know what is.
As a little background, Paulson - while CEO at Goldman - successfully used his authority and influence to strongly promote the easing of capital requirements so Wall Street banks could use more leverage. Right then, it might have been a good idea not to appoint a serial gambler to the job since this opened up the doors to a profound problem which still has not been reigned in. Paulson, Robert Rubin and Larry Summers pushed the concept of deregulation and convinced stupid people that the financial sector is self governing. That it acts in its own best interests, therefore will self correct any imbalances, and can ultimately be trusted to do the right thing automatically without unnecessary oversight. So George W. Bush instead nominated him and he was overwhelmingly confirmed in 2006. I would love to have seen him take his oath of office.
........................................................................................................................
By the end of June of 2008 Paulson was in office for about two years doing who-knows-what when he decided it would be a good idea to meet with the board of directors of his former company over in Moscow. He gave them the heads up on a major speech he was about to deliver. He also expressed his concerns about Lehman Brothers probably blowing up. What kind of non-traitor would come up with such an idea? This is telling his old company how to prepare. How to maneuver to the winning side. This is beyond poor judgment - this is flat out treason. Undeniably so.
Goldman Sachs was made privy to nonpublic information. And not for any purpose whatsoever other than to allow them to profit from it. A Treasury Secretary cannot do such things. Purposely violating one's oath of office is just cause for immediate termination proceedings - with further charges to follow. Why did this not happen?
But tipping Goldman Sachs off was not enough. On 7/13/08 Paulson told reporters that Fannie Mae and Freddie Mac must remain shareholder owned. As a result, the normal investing public starting bidding up the shares. On 7/21/08 he conned normal investors again by assuring reporters that an upcoming announcement on the GSEs would reassure everyone. Again the shares were bid up. Before he actually did this on the morning of 7/21, he had already scheduled an afternoon meeting the same day with a group of hedge fund managers. A bunch of these were Goldman Sachs-types. Paulson thought it would be a good idea to actually tell this particular group the truth. He described to them a scenario under which the GSEs would enter into receivership and their stock would become worthless. As has since been covered, at least one hedge fund manger contacted legal counsel who told him not to act as the information was in violation of any number of standards. Again, Paulson misled the public, who soon would get creamed on their GSE stock, while hedge fund managers potentially could reap millions shorting it. Again, why has Paulson not been charged with treason? Beyond that, if Eric Holder's Department of Justice and other regulators were not so corrupted, why on earth would it be so difficult to thoroughly examine trading records from 7/21 through the conservatorship announcement? It's only a period of about two months. Hey, maybe it's because Congressmen and other in-the-know federal employees also traded on the hidden news. Who knows? But it's basic stuff.
..................................................................................
Henry J. Paulson engaged in other questionable behavior outside of the above. Really questionable.
- He became phone buddies with NY Fed chief Timothy Geithner, Goldman's Lloyd Blankfein and Morgan Stanley's John Mack. As it turned out, this behavior happened to correspond with the instantaneous approval on 9/21/08 for Goldman and Morgan Stanley to join all the other TBTFs as a bank holding company to gain access to Fed emergency funds and favorable terms on any money desired.
- He bullied and coerced Congress to pass TARP, then turned around and used a substantial portion of the funds in a manner not described. On 10/13/08 he committed funds (cut checks) to nine banks totaling $125 billion. This was the infamous weekend when he called them all to the NY Fed and (supposedly) compelled them all to accept the money so that no one would know which banks really needed it. But the amounts varied. J.P. Morgan, Wells Fargo and Citigroup led the parade with $25 billion each. Then came Bank Of America with $15 billion - followed by Merrill Lynch, Goldman Sachs and Morgan Stanley at $10 billion. Bank of NY Mellon got a puny $3 billion, while State Street brought up the rear with a mere $2 billion. Contemplating the relative amounts certainly tells a tale. And what about all the smaller banks out there? The ones that fund Main Street small business expansion? I guess they're not considered part of the crucial Financial Sector.
- He had his hands all over the AIG counterparty bailout. Under his plan Goldman Sachs (shock!) benefited the most. He misled everybody by saying that AIG's liabilities must be covered to the tune of 100 cents on the dollar to protect the public. $182 billion worth. This was followed by Goldman executives probably perjuring themselves in front of Congress when testifying that monies were received solely to make their customer accounts whole. It was later found that Goldman Sachs profited by $2.9 billion on their own proprietary trades. Can one seriously believe ex-Goldman CEO Paulson had no idea about the firm's personal exposure?
.....................................................................................
Hank Paulson was no public servant. He was planted as the second Goldman Sachs'er out of three to serve Wall Street as Treasury Secretary. Revelations about his phone log history show an alarming amount of calls with the Wall Street titans. When you combine this with the series of steps taken in behalf of the parties who had created the crisis, you do have to wonder who serves whom. And keep in mind that the TBTFs rather quickly got back on firm footing to keep the bonuses flowing.
Look up the definitions of treason and traitor. They both involve violation or betrayal of trust and allegiance to one's country. An appointed official betrayed his trust by serving parties who have proven dangerous to the nation at the expense of the general population - this is one of the purest examples of treasonous activity by a traitor I can think of.
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