Why Wall Street Does Not Like Anse Intendance

[Jesse]

Part 1

Disinformation Tactics - Giordano Bruno

http://neithercorp.us/npress/?p=251


Part 2

Rated 'R' for strong language and sexual metaphors

http://www.youtube.com/watch?v=8Cz4vcQKWfA

[Entendance]

AMDG
Ad majorem Dei gloriam
(To the greater glory of God)
viewtopic.php?f=16&t=668&p=9504#p9504

Thank you Jesse
http://jessescrossroadscafe.blogspot.com/

[GSIMMERLE]

...It is a fact that deception plays an important role in the market, where predators generate disinformation at timely periods when they seek to catch their prey. Wild game hunters use decoys; fishermen use lures. This is life. Regrettably, there are people and organizations in our society who carry on these practices in the capital markets. Those of us who understand the market as a game that plays people see evidence of this most every day.
Market scams are a terrible thing but they go on because the regulators and the courts understand that the markets operate on the basis of both qualitative as well as quantitative reasons, and since the qualitative aspect always involves a matter of degree, the authorities have a difficult time in judging whether a specific behavior, even if it can be isolated and recorded, is believed to have crossed the line...
http://caracommunity.com/content/%E2%80 ... s%E2%80%9D

[Entendance]

...Moral to the story: When listening to information from Wall Street or a Wall Streeter, make sure that you know that Wall Street has its own agenda -- one that can only be met by a rising market. And this can only be attained by you and me investing money into the market ... and that will only happen if we are confident that the market will go up.
Wall Street, in its insatiable quest to make the market go up, knows that this will only happen if the investor is confident. So, the news from Wall Street -- while not an outright lie -- is skewed bullish.
As an investor, we need to rely on news and information. When receiving information from Wall Street, make sure you consider the source.
http://tinyurl.com/yzo4guo

Sharks shunt you first.
Then they circle you and come back for the kill. Usually from underneath you.

Tigers bite your legs first, to stop you from running.
Then they bite your throat, to stop you from breathing. Then they all pile in and eat you.
Wolves knock you down first.
Then they stare at you for a while to see you're down for sure. Then they eat you.
Economic crises attack households first, then banks, after that currencies, because printing takes over, then states themselves.
That's when the depletion-wolf sinks its theeth in.
There's no coming back from this...as time will reveal.
-Wolf at the door.flv

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[dlry]

Are you a 3 percent'er?
by Anonymous
on Thu, 03/04/2010 - 17:53
#254218
http://tinyurl.com/yjjgg2k

Maybe after you read this you will be...

Must read interview by Kathryn Welling with James Rickards, former General Counsel of Long-Term Capital Management. His observation that the financial system is now as risky as it was back then is something that modern bankers will hear and thoroughly forget immediately, only to be reminded once everything collapses once again: "What strikes me now, looking back, is how nothing was changed: no lessons were applied. Even though the lessons were obvious, in 1998. LTCM used fatally flawed VaR risk models. LTCM used too much leverage. LTCM transacted in unregulated over-the-counter derivatives instead of exchange traded derivatives. So risk models needed to be changed, or abandoned. Leverage had to be slashed. Derivatives had to be traded on exchanges or cleared through clearinghouses. Regulatory oversight needed to be ramped up... The government did just the opposite. Glass-Steagall was repealed in 1999, so that banks could become hedge funds. The U.S., in effect stared near-catastrophe in the eye, with LTCM, and decided to double down.

http://tinyurl.com/yl3agaw

[Entendance]

<Propaganda is the deliberate, systematic attempt to shape perceptions, manipulate cognitions, and direct behavior to achieve a response that furthers the desired intent of the propagandist.>
With the global media concentrated in a scant few corporate hands (less than 10), this pulling away of the curtain is deleted/excised from media coverage in a ruthless campaign of pure "green shoots" propaganda.
THAT THINGS ARE GETTING WORSE more slowly is the essence of the bullish argument for the U.S. economy and, by extension, corporate profits.
Corporate earnings have been sustained by slashing jobs, hardly a recipe for recovery and IN AN ECONOMY PARALYZED BY THE EXCESS OF DEBT NEITHER MONETARY POLICY NOR FISCAL POLICY CAN REACTIVATE THE ECONOMY. Now, with wealth falling and households needing to rebuild their finances, monetary and fiscal stimuli are like throwing matches on so much wet wood. Only time can fix things.
"Every bubble creates useful idiots who justify it to the suckers who buy into to it. And crooks to take advantage of them. Once the bust comes, both are revealed."

THE BANKERS ARE STILL RUNNING THE SHOW
The masters of the financial circus are the bankers. Not only did they reap the benefits from manufacturing toxic financial products to the extent of receiving bonuses and stocks in the $trillions during the last 15-20 years. But they are also the only beneficiaries of the trillions of dollars that have been printed by governments to rescue the financial system. Why are the bankers benefiting from the rescue of their own banks? Because they are the ones controlling the governments, advising the government and making major contributions to the politicians.

...AND i HAVE A FEEL FOR BULLSHIT
http://www.marketwatch.com/story/how-to ... 2010-03-05
http://www.bloomberg.com/apps/news?pid= ... _AgY&pos=3


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[dlry]

We are caught in a Money trap!


Rob Johnson & Josh Rosner Talk Reform with Dylan Ratigan



http://tinyurl.com/ycs5xun

[defio70]

...because 2+2 never did equal 46, and it probably never will either. An objective look at each and every one of these situations shows that none of them added up. In each case, there was someone (or a lot of people) trying to get you to believe that 2=2=46.xxx. They justified it with theses that they alleged were too complicated for the average man to understand (and in business, if that is true, then it is probably just too complicated to work in the long run as well). They pronounced bold new eras, stating "This time is different", "There is a new math" (as if there was something wrong with the old math), etc. and so on and associated bullshit.

...Think about this for a second. You are in big financial trouble, you have only a $10 bill to your name, but your favorite congressman (whom you have given $10 bills to in the past) has given you the okay to erase that number 10 on the $bills and put whatever number on it you feel is "reasonable". So, when your creditors come a callin' , looking for $20 in collateral, what number would you deem reasonable to put on that $10 bill...

http://tinyurl.com/yfjf2al

[dlry]

On OTC Derivatives: Interview With Bill King

http://us1.institutionalriskanalytics.c ... RAMain.asp

Now to our feature. We spoke to Bill King last Thursday after the
close and spoke about OTC derivatives and old friends long gone. The
conversation was especially timely because of the release of the
report by the bankruptcy court examiner in the Lehman liquidation, a
staggering piece of forensic work that provides another piece of
evidence regarding the link between OTC derivative structures and
accounting fraud a la Enron and WorldCom. Now Lehman Brothers is added
to that proud pantheon, but it seems that the bankruptcy court
reporter's conclusions point only to possible civil claims.

The IRA: Bill, good to talk to you again after too many years. We
first connected with you when IRA co-founder Christopher Whalen was
writing regularly for Barron's. If memory serves us still it was John
Crudele at the New York Post who introduced us. Makes us also remember
our departed friend John Liscio, a great reporter who knew a good
conspiracy when he saw it. When we spoke yesterday, you started
talking about how the expansion of OTC derivatives had enabled a new
way for banks and corporations to essentially manufacturer earnings
synthetically, basically the same sort of fiscal operations as are
described in the report from the Lehman bankruptcy court examiner.

King: The interesting thing with derivatives is that it gives you the
ability to steal future earnings and bring them into the present. It
also allows you to push current earnings and push them into the
future.

The IRA: Sounds like securities fraud to us. Please continue.

King: Yes. In the 1980s, the big thing with commodity traders was
indefinitely rolling their income and not paying taxes on it.
Eventually the feds changed the tax laws to force the dealers to pay
taxes on part of the forward gain in the "roll." Part of earnings is
now LT cap gains and part is reported as regular income. The trading
in silver spreads was traditionally a favorite here, where you would
buy March silver and sell December. At some point you would get a big
up move in silver, so you would lift the losing trade and simply sell
another out month to roll the spread. So you are still hedged but you
have realized the loss. You can also do the opposite, left the leg
with the gain and take a LT cap gain on the proceeds. Either way, you
have the option. And these are exchange traded products I am using
about here. I have not even started to talk about OTC products.

The IRA: We remember clearing in Germany in the bunds years ago. That
was a party as well. You could play the float for weeks and nobody in
the Kassenverein would notice. Our clearing team enabled us to run a
naked short in bunds for weeks.

King: In Chicago, when you had a tough month and needed to pay the
bills, we used to short a large cap stock with a big dividend, a $1 or
$1.50 dividend. And we'd buy the stock synthetically to create a
straddle. So you were working for the spread between the two
positions. But what would happen in those days is that stock would go
ex-dividend and the stock would fall the $1.50 and your sheet with the
clearing house would show the gain. The dividend would sit there for a
couple of weeks and would not be debited, so you could use the float
to make payroll. These sorts of things were being done 30 years ago
with exchange listed Option Clearing Corp options.

The IRA: So, nothing has changed, just the magnitude of the game?

King: Correct. Another really funny example was the way in which
traders at the exchange would fight over closing prices. People would
put on spreads and they would try to tick their spreads in a favorable
direction. Prices were made in 1/8 point increments in those days, so
a tick either way could mean a lot of money. The exchanges tried to
limit the games, but there was always some give in the system. But
once you moved over-the-counter (OTC), you are off to the races. It is
not that these products are impossibly esoteric, that implies that
they cannot be understood. OTC products are complicated. In terms of
transparency, it is one thing to have a call on IBM and entirely
another for somebody to say that they want a call on the volumes from
IBM's mainframe business, with or without a knock-in provision, and I
want it denominated in Deustche marks.

The IRA: Yes, the endless peeling of the onion. We see these
instruments as deceptive gaming contracts, but people in the OTC
markets say we are old fashioned. Martin Mayer says the dealers which
sell them are "bucket shops" and we must agree. But you have described
a bigger game. How do Wall Street's dealers and fund synthesize
profits and losses with OTC?

King: Well the beauty of OTC is that these are typically considered
level two or three assets under the rules for fair value accounting,
so we are operating in the world of mark to model. This is the world
where both parties, say a dealer and a fund, have done an OTC trade in
a complex credit product. But because nobody in the house can describe
the optionality in the structure much less price it, each party does
their own valuation. And often times both parties use significantly
different prices and are even both reporting profits. In an exchange
traded product, you cannot do that. One side is down and one side is
up. OTC fuzzes up the pricing, makes it very inexact, and thereby
creates huge avenues for "interpretation" in terms of pricing and
therefore fraud.

The IRA: We have focused on lot on the issue of investor suitability,
but you are raising the old Enron problem, again, namely that the
combination of OTC contracts and the accounting rules do great evil.
It does not seem to matter which accounting rules are in place because
the dealers always figure out a new way to game the system. You
differ?

King: No, totally agree. In OTC, we live in a world of mark to model,
so obviously the dealers don't want to lose this business. Let me give
you another example. Going from the examples I gave you about "give"
in the exchange traded world, things go even better with OTC contracts
and credit default swaps. You have an agency relationship between a
broker dealer and a hedge fund, and then it could come out that the
dealer had an ownership stake in the fund. And people on both sides
are marking OTC positions using models.

The IRA: Maybe this is why the proposal by former Fed Chairman Paul
Volcker to outlaw investments in hedge funds go such a chilly response
from Goldman Sachs (GS), JPMorgan (JPM) and Citigroup (C). All of
these firms have historically been big investors in funds. And even
the funds that are truly arms length from the dealers in terms of
ownership are still effectively part of their inventory. The base of
clearing customers of a prime broker is effectively a storage and
sales for the dealer.

King: That is a great point and it makes me think of the issue of when
and why Alan Greenspan stepped on the monetary gas in 2002-2003. Paul
Volcker made a couple of speeches in 2003 around the time that Alan
Greenspan brought on Ben Bernanke at the Fed to assist in the crisis
management task. Chairman Bernanke was a member of the Board of
Governors of the Federal Reserve System from 2002 to 2005, and became
Chairman in 2006.

The IRA: Chairman Greenspan headed for the door just in time.

King: If you go back and look at the speeches on the Fed web site and
Google Paul Volcker, you will find that people were worried about a
financial system meltdown in the earlier period. Greenspan stepped on
the gas in terms of low interest rates to avoid a meltdown in the
banks and OTC, and in doing so goosed the housing sector. Remember
that there were people in the media and on the Street talking about
how much more weight in terms of economic benefit came from rising
housing prices as opposed to the stock market, so there was definitely
a deliberate effort to target housing.

The IRA: We seem to go from one speculative binge to another. You have
mentioned that this is a legacy of the era of free trade. Can you
expand?

King: Of course, our nation has exported its jobs to foreign countries
and attempted to make up the difference first in a tech bubble, then
with a bubble in housing, all fueled by cash settlement OTC
derivatives. The cynic in me believes that these were deliberate
efforts by our political class to buy time. In that same period, one
of the Fed banks, I think it was Dallas, speculated about the
appropriate policy response if the Fed created a lot of liquidity but
nobody wanted it.

The IRA: Well, that's where we are now, right? Nobody wanted the ABS
and the agency paper so the Fed came to the rescue with quantitative
easing. Solved a liquidity problem and a valuation process in one fell
swoop. But did not really solve the underlying problems.

King: The folks at the Fed were clearly worried about deflation in the
financial sector in 2002-2003, but if you run the charts on oil and
gold, both were starting to break out to the upside in that period.
When Bernanke cited Milton Freidman's helicopter speech in 2002,
"Deflation: Making Sure "It" Doesn't Happen Here," about that time
Volker also gave a speech about his years at the Fed and said that
Wall Street is always going to game whatever structures regulators put
in place.

The IRA: The boys can only game the system if there are no rules, like
the difference between an exchange and the OTC markets. Yes, you can
play games in the clearing house of an exchange, but they are not
games that will destroy the entire house and its members. Even with
the imperfections of any exchange you still have the discipline of
multilateral credit surveillance and joint and several liability.
There is collective risk sharing and risk monitoring.

King: Yeah, sometimes you'd pick up you sheet in the morning at the
exchange and see a loss because a price ticked down at the close. You
could swear that the price was higher, but the final price at the
close was what matters.

The IRA: So is it fair to say that the application of fair value
accounting to OTC has created rather than solved a problem?

King: No question. It is not just for the derivatives but also for the
structured investment vehicles. Each year a manager can recognize
enough gains to take the 2 and 20, or two points in management fees
and 20% of the profits, and simply collect fees for a couple of years,
then let the fund go to hell when losses are realized. The same thing
goes on at the investment banks because they can cherry pick the gains
and leave the losses to accumulate.

The IRA: Sounds like a pretty good description of Lehman Brothers and
even C and its Citi Holdings unit, which is in liquidation. Some of
those exposures go back more than a decade. You know as well as we do
that Wall Street is about plausible denial. They see a lot of profit
coming from one area and they highlight the winners but hide the
problems. The evolution of the big firms from being banking and
brokerage focused to trading focused highlights this issue.

King: In the old firms, the old white shoe Wall Street partnerships,
the number one partner was the big cheese, the banker, the guy with
the rolodex and the corporate relationships. He had all of the
corporate connections, belonged to the same clubs, etc. Partner number
two was the bond guy, who ran sales and trading and executed on
mandates that the banker brought in. And then partner number three was
equity sales trading. Where the old equation started to change was
when firms like Salomon and GS, which did not have the corporate
connections, got involved in all of the trading of cash and options.
These new firms forced their way into the game and supplanted the
Anglo, white shoe corporate bankers. These insurgents had started in
merchant banking.

The IRA: Look, in the early 1950s, when Henry Ford wanted to save his
family's fortune, he went to Sidney Weinberg, the managing partner of
Goldman Sachs. Weinberg designed the masterful scheme to split of vote
and economics in Ford Motor Co (F) asymmetrically between the Ford
family and the Ford Foundation. But the white shoe firms still owned
the equity business. The Boston stock brokers Blyth & Co. took out the
Ford IPO in 1956. It priced at $64.50, including $1.50 for the
dealers. Decades later, GS helped F to effectively restructure its
operations years before GM and Chrysler and without bankruptcy, so
that corporate banking relationship continues. There were two former
GS bankers on the F board until recently, Robert Rubin and John
Thornton. All of the great trading firms on Wall Street Salomon, GS,
Lehman and Bear, started out in the basic business discounting
commercial paper, essentially competing with the banks for the
commercial trade's business, but became some of the greatest bankers
before the age of the traders destroyed them.

King: In the 1980s, these new firms started to trade equities
aggressively and do risk arbitrage. They took the power away from the
old firms. Then Lehman went a step further and Lewis Gluckmans overtly
took control of Lehman Brothers from the bankers in 1983 in a very
bitter battle.

The IRA: Glucksman passed away in 2006. The New York Times obit quoted
Ken Auletta, whose book "Greed and Glory on Wall Street" (Random
House, 1986) depicted the struggle, as saying: "Symbolically, it was
the clash between bankers and traders carried to extremes. But it
became very personal on both sides."

King: He gave the traders the big bonuses and provoked a battle for
control over the firm. But of course Glucksman's mistake was that at
some point the traders blow up. And they did. Lehman blew up later in
the decade in the same way that John Gutfruend blew up at Phibro.

The IRA: So the move toward a more trading oriented business model for
the firms has actually encouraged more gaming with respect to earnings
and profits? This is an enormous problem for analysts and regulators
who follow banks.

King: We have forgotten the basic rules. In the old days, I am talking
the 1970s, when I traded OTC and then on Wall Street and finally
derivatives on the CBOE here in Chicago, is every trader every day
gets a statement. The first key thing is your hurdle rate, what your
leverage is costing you. Then you have your daily mark, your month to
date and your year to date. There are two columns. Your realized gains
and unrealized gains. And anybody who has money in a hedge fund or
another vehicle needs both of these numbers to understand what is
really going on.

The IRA: You only see part of that now. The gains and losses on the
trading book show you net marks, but you cannot see the type of games
you have described.

King: This is why having level two and level three assets under fair
value accounting causes such problems. I am convinced that is why the
Fed has put up the veil around the OTC markets, because they know that
these positions are so problematic and involve such leverage as to
threatened the entire system. The crisis of 2008 was really about the
Fed and Treasury losing control over the OTC game in a way that was
nor anticipated. The Fed does not want anybody to really look at the
inter-dealer positions on OTC credit products, for example, because
the valuations are such a mess.

The IRA: We have always believed that the Corrigan Group effort to fix
the back office issues with OTC credit contracts was a convenient
diversion from the nasty issues like valuation and counterparty risk
in the front office. The Fed of New York and the DTCC did fix the
operational issues to a degree, but nothing has been done to end the
practice of "mark to model" in the front office. This is why JPM, GS
and the other big banks fight so hard to avoid standardization of CDS.
If you standardize the contracts, the ability to game the pricing and
manipulate earnings also disappears.

King: I don't think you will ever see standardization. There are
trillions of dollars in notional involved and none of these contracts
are fungible. To make this work, you would need to mandate a degree of
standardization that this market would reject. There are thousands of
permutation of these contracts in the marketplace and that is
precisely the problem. The complexity creates a screen for financial
misdeeds. The customization is infinite. There is no way to display
all of the permutations on a screen. This is what killed floor
trading. You need to be in an office to trade OTC derivatives.

The IRA: So Bill, how did we as a nation convince ourselves that
running a bucket shop or a hedge fund was better than making steel or
other real goods? It seems like Washington believes that an
increasingly speculative financial market can be an engine for
economic growth.

King: To me, the country started to go to hell in the 1970s, with the
first oil shocks and the resulting inflation. Paul Volcker and Ronald
Regan bought us 20 years of stability and growth, but with Bill
Clinton and free trade, living standards began to slide and they have
not stopped. China came online, Brazil and the tigers, so now we have
been exporting jobs and growth for nearly two decades. The only
response by Washington has been a tech bubble and a housing bubble
financed with easy money from the Fed. The New Economy was not tech;
the new economy was financial engineering and speculation; leverage,
bubbles, swaps. I am convinced that the people who run our country saw
no alternative to gunning the markets because of the huge transfer of
wealth overseas which had occurred from the US to emerging countries.
We had this discussion in the 1980s. The Rockefeller wing of the
Republican Party never accepted that is was Volcker's attack on
inflation and Reagan's deregulation that boosted growth, not any
innate growth caused by the financial markets. The technocrats in
Washington decided that the stability of the financial markets was a
matter of national security.

The IRA: We have been hearing a lot from the intelligence community
lately. One of our friends in the economics profession just resurfaced
in the community with a mandate to focus on financial markets.

King: I think that the political class has decided that manipulating
financial assets and derivatives is the way to generate growth. You
are certainly not going to see job or wage growth in manufacturing so
long as we are exporting jobs and keeping the dollar artificially high
to please our foreign creditors. Tech, biotech are some of the few
areas where we still have world class companies, but we cannot run an
economy on these areas alone.

The IRA: We'll leave it there. Thanks Bill.

[sowhat]

Now The Truth On Greece Comes Out
viewtopic.php?f=7&t=748&p=9915#p9915