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January 30, 2010

Issue 81  -  Government Corruption  -
the Ultimate Growth Industry
 
Well, as the story I posted a couple of weeks ago stated, the SEC was considering changing the rules on money market funds.  This is always touted as the most liquid investment around.  This is where you are encouraged to put money if you're going to need it soon, like for a house down payment.  Well the SEC has ruled:  (from Zero Hedge)
 

Suspending Money Market Redemptions Is Now Legel; SEC Approves New Money Market Regulation In 4-1 Vote...Zero Hedge discussed a month ago the disastrous prospects of what would happen if the new proposal contemplated by the SEC, which would allow the suspension of redemptions from Money Market Funds, were to pass. Well, in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: "We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares." Too bad investors' hardships considerations ended up being completely irrelevant.

 
Yeah, it's a little too much to ask that the SEC consider YOUR hardships.  God forbid that a fund manager have to manage his fund to allow you easy access to your money at all times.  This just goes to show you that the government isn't always your "friend".  Certain steps must be taken to protect YOURSELF.  This ties in to my theme this week which is corruption.  This is one area of our "Economy" which is certain to take off.  Endless money printing and borrowing by the government really leave no other choice, BUT, corruption.  
 
There is just no way to watch that much money.  So the Securities and Exchange Commission (SEC), the "watchdog" of these scallywags, whose charter is to watch out for little guys.  Correct me if I'm wrong but this ruling doesn't seem to protect you or me.  If you think that ruling might be a one-off,  how about this:
 

SEC Mulled National Security Status for AIG Details

By Matthew Goldstein
Reuters
Sunday, January 24, 2010

NEW YORK -- U.S. securities regulators originally treated the New York Federal Reserve's bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.

The request to keep the details secret were made by the New York Federal Reserve -- a regulator that helped orchestrate the bailout -- and by the giant insurer itself, according to the emails.

The emails from early last year reveal that officials at the New York Fed were comfortable with AIG submitting a critical bailout-related document to the U.S. Securities and Exchange Commission only after getting assurances from the regulatory agency that "special security procedures" would be used to handle the document.

 The SEC, according to an email sent by a New York Fed lawyer on January 13, 2009, agreed to limit the number of SEC employees who would review the document to just two and keep the document locked in a safe while the SEC considered AIG's confidentiality request…
 
Just to make sure you understand, AIG was bailed out by the taxpayers and the SEC wanted to make SURE that no one saw their books?  Does that even begin to smell ok to you?  Me either.  Maybe there's more to this than we're seeing?  Wonder what the former Treasury Secretary, the one in charge at the time of these "deals", has to say?

Paulson: 25% unemployment rate without AIG bailout 

Alert Email Print Share By Ronald D. Orol WASHINGTON (MarketWatch) - Facing criticism on Capitol Hill, former Treasury Secretary Henry Paulson on Wednesday defended his decision to complete a $182 billion bailout of American International Group Inc., arguing that the unemployment rate would have risen easily to 25% without the bailout. "If the system had collapsed millions more in savings would have been lost," said Paulson, who was Treasury Secretary at the time of the bailout, at a hearing. "Industrial companies of all size would not have been able to raise funding and they would not have been able to pay employees, this would have rippled through the economy." Lawmakers grilled Paulson, arguing that government officials failed to obtain concessions for taxpayers.
 
Interesting.  Unemployment would be 25% if we hadn't bailed out AIG????  Seems like a pretty good estimate of something that is a complete hypothetical.  How did he figure that out?  Maybe he dressed up like this for that prediction?
 
 
 
 
I've got to tell you, this is same guy that said that the unemployment rate would go down if we passed TARP.  That didn't quite work out did it?  Sounds like there might be ulterior motives?  Let's first check how this was actually said:
 
 
 
 
This guy is clearly lying.  There is NO way he could know what was going to happen to unemployment or anything else for that matter.  But he did know what was going to happen to his Goldman Sachs buddies, they were going to lose billions.  You see, AIG was a counter party to various bets put on by Goldman.  If AIG had failed they wouldn't have gotten their money back.  Couldn't have that, could we?  No conflict of interest there.  Maybe these guys truly are altruistic and only had the taxpayers in mind.  Probably not:
 

Fed E-Mail to Geithner Cites Bank Benefit From AIG

Jan. 25 (Bloomberg) -- Timothy F. Geithner, who has denied that the financial condition of American International Group Inc.’s bank counterparties was a consideration in structuring the insurer’s bailout, was told by a senior colleague that the rescue was a way to remove "uncertainty" for the firms.

Buying mortgage-linked assets from banks was better "from a financial-stability perspective" than other plans to shield AIG from losses on contracts guaranteeing the bonds, Margaret McConnell, then a Federal Reserve Bank of New York vice president, wrote in an e-mail to Geithner on Oct. 22, 2008. Geithner, now Treasury secretary, led the New York Fed at the time of AIG’s rescue and McConnell’s e-mail.

  
Well, well, well, what have we here.  This does sound like a conflict of interest doesn't it?  How would you like to be able to remove "uncertainty" about your company or investments?  That would be nice.  Only the big wigs get to do that, and then deny that it helped them out and that REALLY the whole system was going to implode if I didn't help my friends.  And if your job is at risk, well just call up the banks you're supposed to be watching over, and have them pony up some campaign contributions:  (from GATA)
 

Dave from Denver…

Monday, January 25, 2010

Looks Like Bernanke Was Saved By Big Bank Payouts to Senate Republicans...

Big banks exercised their 1st Amendment right, as upheld by the Supreme Court last week, and utilized the funding of some Senate Republican flex-spending accounts to buy support for Bernanke:

Ben Bernanke's future as the leader of the Federal Reserve was in doubt late last week, but he's been bailed out by a strange coalition: The White House and the Senate Republican leadership. Here's the article: Bank Money For Republicans Saves Bernanke

If nothing else, this demonstrates the fact that Corporate America has become our Government. Based on polling conducted before Senate reconfirmation hearings, Americans strongly opposed the reappointment of Bernanke. Last week his reappointment was in serious doubt, but the Republicans, who mostly opposed him, now seem to have found Bernanke religion. You can connect the dots for yourself.

 
Remember, the BANKS run this country. It's really that simple.  Too bad they're running it into a hole while they save themselves......
 
 
 
and give out huge bonuses to themselves:
 

Goldman Sachs bonus pool trimmed to $16bn

Average bonus at Goldman Sachs will be $500,000
 
 
And that's "trimmed" down to deflect criticism?  Geez, what a bunch of crooks.  Don't worry they say, they don't make that much in salary, this is the main part of their salary.  I certainly hope so, as the average family makes 1/10 of what one of these guys' receives as a bonus . This is just becoming too routine.  Taxpayers holding the bag, while the banks protect themselves.
 
Another area of corruption is in the government agencies.  The government has raised the debt "limit" by 2 trillion and yet interest rates remain tame.  This has led some to voice some suspicions:
 

Treasury bids drive speculation

By Michael Mackenzie in New York

Published: January 14 2010 02:00 | Last updated: January 14 2010 02:00

Auctions of US Treasury notes this week have attracted extremely strong buying from domestic institutional investors, fuelling speculation that "one big bidder" has decided to defy the conventional wisdom on Wall Street that US government debt is due for a fall.

The surprising demand for Treasury notes has come in the form of "direct bids", the term used for US institutional investors who bypass the so-called primary dealers that underwrite government bond sales.

On Wednesday, direct bids accounted for 17 per cent of the sales of $21bn in 10-year Treasury notes, far higher than the recent average of 7.4 per cent. It was the highest percentage of direct bids in a 10-year Treasury auction since May 2005.

On Tuesday, direct bids accounted for a record 23.4 per cent of the bidding for $40bn in three-year notes, up from an average direct bid of 6 per cent.

Market participants say the unusually high level of direct bidding suggests that a large investor is looking to accumulate Treasuries without alerting the primary dealers on Wall Street to its intentions.

"It appears to us that someone is trying to hide their apparent interest in owning these auctions from the rest of the market," said David Ader, strategist at CRT Capital.

Rick Klingman, managing director at BNP Paribas, said: "It is unusual to see such a spike in the direct bid and I would imagine it is one big bidder. There is no way we will find out who it is, not now, or ever."

The surge in direct bidding is particularly notable because it comes after predictions that the record levels of Treasury debt issuance would exhaust investor demand, driving yields higher.

Among the most high-profile warnings came from Pimco, manager of the largest bond fund, which raised concerns about the escalating supply of US Treasury debt.

Attention will now focus on whether there is similar direct demand for Thursday's $13bn 30-year bond sale.

The 10-year notes were sold at a yield of 3.754 per cent on Wednesday, the highest rate awarded for a note sale since June, when they were issued at 3.99 per cent. At the start of the year the yield on 10-year notes briefly traded at 3.90 per cent, as many investors talked down the prospects for Treasuries. The note traded at about 3.70 per cent earlier this week and was at 3.70 per cent late on Wednesday.

Under the three main classifications of buyers in Treasury debt sales, direct bidders are generally domestic non-primary dealer banks and large institutional investors. Normally their presence at Treasury auctions is small, as they usually buy debt through the primary dealer network, which currently numbers 18 banks and broker/dealers.

 
Direct buys of treasuries are anonymous.  The amount of direct buys was up 150%.  Who could be buying what is obviously a safe investment in an anonymous way.  Why hide that you are The only entity that makes sense is the Fed.  They are doing this to keep interest rates low.  This type of game will only get worse as the situation plays out.  All of buying treasuries?  Because it IS the government doing the buying, that's why.  These shenanigans go on and on while our "leaders" do things like this:
 

Taxpayers pay $101,000 for Pelosi's in-flight 'food, booze'

Speaker's trips 'are more about partying than anything else'


Posted: January 29, 2010
12:20 am Eastern

By Bob Unruh
© 2010 WorldNetDaily


Part of the tab for alcoholic drinks on a congressional trip arranged by House Speaker Nancy Pelosi

It reads like a dream order for some wild frat party: Maker's Mark whiskey, Courvoisier cognac, Johnny Walker Red scotch, Grey Goose vodka, E&J brandy, Bailey's Irish Crème, Bacardi Light rum, Jim Beam whiskey, Beefeater gin, Dewars scotch, Bombay Sapphire gin, Jack Daniels whiskey … and Corona beer.

But that single receipt makes up just part of the more than $101,000 taxpayers paid for "in-flight services" – including food and liquor, for House Speaker Nancy Pelosi's trips on Air Force jets over the last two years. That's almost $1,000 per week.

Documents obtained under the Freedom of Information Act by Judicial Watch, which investigates and prosecutes government

corruption, show that the Pelosi incurred expenses of some $2.1 million for her use of Air Force jets for travel over that time.

"Speaker Pelosi has a history of wasting taxpayer funds with her boorish demands for military travel," Judicial Watch President Tom Fitton said today. "And these documents suggest the Speaker's congressional delegations are more about partying than anything else."

Pelosi, D-Calif., who joined President Obama on a list of Top 10 corrupt politicians, was added to that list for her "sense of entitlement," Judicial Watch said when the "honors" were announced not long ago.

"Politicians believe laws and rules (even the U.S. Constitution) apply to the rest of us but not to them. Case in point: House Speaker Nancy Pelosi and her excessive and boorish demands for military travel. Judicial Watch obtained documents from the Pentagon in 2008 that suggest Pelosi has been treating the Air Force like her own personal airline," the evaluation said.

(Story continues below)


 
 

And WND reported almost a year ago that Pelosi was shown to have been erratically canceling and rescheduling flights, like one would with an on-call taxi service.

Do the tone-deaf lawmakers in D.C. make your blood boil? Read all about Washington and its politics of corruption in "Breach of Trust."

"We have ... folks prepping the jets and crews driving in (not a short drive for some), cooking meals and preflighting the jets etc," said one Department of Defense e-mail then.

Another official sent an e-mail questioning a series of Pelosi's requests for aircraft.

"Any chance of politely querying [Pelosi's team] if they really intend to do all of these or are they just picking every weekend?" it stated. "[T]here's no need to block every weekend 'just in case'..."

The e-mail noted that the speaker's office had "a history of canceling many of their past requests."

Yet another e-mail exchange at that time revealed Pelosi's demand that jets pick her up at Travis Air Force Base rather than San Francisco's airport.

"She lives about 1.5 hours from SFO and much closer to Travis. … Whether it is the best use of assets is not the question. But instead is it worth upsetting the speaker…"

Said another, "This is a battle that we are bound to lose if we tell the speaker('s) office. In the end, this is what will happen. I wish that I could say this is a one-time request, but we know it will probably happen again in the future."

Yet another indicated a deep level of frustration:

"Here is the laydown: there are five G5s. Two are broke. Two off on CODELS. One slated for priority White House… we should keep on G-III for now for Tuesday afternoon and start sacrificing goats and chickens."

Judicial Watch said the newly obtained 2,000 pages of documentation show Pelosi's military travel cost the U.S. Air Force $2,100,744.59 over two years – including $101,429.14 which was for in-flight expenses, including food and alcohol.

Among the newest highlights revealed:

  • Pelosi used Air Force aircraft to travel back to her district at an average cost of $28,210.51 per flight. Of 103 Pelosi-led congressional delegations (CODEL), 31 trips included members of the House speaker's family.

  • One CODEL traveling from Washington, D.C., through Tel Aviv, Israel, to Baghdad, Iraq, May 15-20, 2008, "to discuss matters of mutual concern with government leaders" included members of Congress and their spouses and cost $17,931 per hour in aircraft alone. This flight included the purchase of the long list of alcoholic drinks.

  • According to a "Memo for Record" from a March 29-April 7, 2007, CODEL that involved a stop in Israel, "CODEL could only bring kosher items into the hotel. Kosher alcohol for mixing beverages in the delegation room was purchased on the local economy i.e. bourbon, whiskey, scotch, vodka, gin, triple sec, tequila, etc.

Pelosi's office could not be contacted for comment. The answering machine said the office would be closed until Monday, and the mailbox was full so no messages could be left.

Judicial Watch, Inc. is a constitutionally conservative, nonpartisan educational foundation that promotes transparency, accountability and integrity in government, politics and the law.

 
 
Does this not remind you of Rome? The leaders party while the little guy sinks.  Instead of gladiator fights we are given television with "prepackaged news" and "reality" shows.  Yes, the corruption business is in full growth mode and there is no signs of stopping and in case you are relying on the "numbers" being released by the government, stop.  They aren't reliable:
 

US Nov factory orders revised down due to Census error

WASHINGTON, Jan 27 (Reuters) - Orders for U.S. manufactured goods in November were lower than initially reported because of a processing error, the U.S. Census Bureau said on Wednesday. November factory orders rose by 0.6 percent from the previous month, not 1.1 percent as reported on Jan. 5.

Durable goods orders fell 0.7 percent in November. That figure had been reported as an increase of 0.2 percent.

"The Census Bureau identified a processing error that occurred when revising historic seasonally adjusted data for the November (data month) releases," Census said in a notice posted on its website. "The data have been corrected."

 
Wow, don't worry that our numbers are screwed up, we'll correct them....later.  This "error" was only 120%, that's not too bad.  Keep this in mind next time you see Wall Street hanging on to the edge of their seats waiting for the next data release.  It's all a show.  Everything is corrupted.  You're on your own.  Alternative news sources must be used to get at least some of the true story.  It's the sad truth.
 
Stock Market Notes
 
In my predictions blog I noted that the news for the first part of the year should be good for the economy and that has generally been true.  However, the reaction of the stock market has been luke warm at best.  This is a big red flag and has me on alert.  The Dow Jones fell below a key level on Friday, 10,120.  If it were to stay below this for two more days I will more than likely have to sell my broad market stock fund.  If the market were to rebound this week, then I would feel safe in holding.  I will advise as events demand.  I'll finish with a video that made me smile, have a great week!