I do 1000% agree with the senator

Excerpt

Senator Dorgan: "We Essentially Have Had Modern-Day Bank Robbers ... and There's Been No Accountability ... There's No Question the System Is Rigged"

Submitted by George Washington on 11/13/2009 15:05 -0500

→ Washington's Blog.

Senator Byron Dorgan has some harsh words for the too big to fails:

It's one of the most frustrating things. We essentially have had modern-day bank robbers -- except that they wore gray suits and not masks -- and there's been no accountability for it ...

Every day we see energy speculators, war profiteers, managed health-care providers, media propagandists, and/or financiers given some unfair advantage over the average consumers and taxpayers, and the cumulative effect of the American people watching selfishness prevail over the public interest has been an undermining of the public's trust in government.

This "anything goes" approach to capitalism has injured the very economy we have aspired to create.

I'm a big fan of the free-market system...This is not about a liberal or conservative philosophy. It is about making sure our economy and the free-market system work for everybody...

There's no question the system is rigged against the little guy. The bigger interests have a lot more information. They jerry-rig the system so that they always win.

Dorgan said 3 things are needed to fix the financial system:

One is to separate investment banks and FDIC-insured banks. Second, prohibit FDIC-insured banks from dealing in risky financial instruments on their own proprietary accounts... And third, abolish "too big to fail." If you're too big to fail, you're too big. Too big to fail is what I call no-fault capitalism.

Senator Dorgan was one of eight senators who stood up to oppose the repeal of the Glass-Steagall act in 1999, and said at the time:

I think we will in 10 years' time look back and say we should not have done this.

part 3

another good man, Ron Paul, puts things into the right perspective

part 2

3. Some really good comments from one of the few guys, Doug Kass, who called the bottom

Friday 13th brainstorming - part 1

1. Here some mind-fucking statistics piece of work from Europe who do report in a different way than America reports GDP numbers as their approach is to compare it to the last quarter and do not the number on an annualized basis. At first sight the number sounds not bad as it is also the second quarter with a positive number but in reality both numbers are still negative as the overall yearly comparison adds up to minus 4.8% which is disastrous. Reading the report you do not get such an impression only at the very end the reality hits as the crucial number is presented.

Excerpt from one of the cheerleading sources Bloomberg

By Jana Randow

Nov. 13 (Bloomberg) -- Germany’s economic recovery accelerated in the third quarter as government stimulus programs fueled company spending and a rebound in global trade boosted exports.

Gross domestic product increased a seasonally adjusted 0.7 percent from the second quarter, when it rose 0.4 percent, the Federal Statistics Office said in Wiesbaden today. The median estimate in a Bloomberg News survey of 35 economists was for growth of 0.8 percent. French GDP gained 0.3 percent in the quarter, Finance Minister Christine Lagarde said. That’s half the increase forecast by economists.

....

From a year earlier, the economy shrank 4.8 percent when adjusted for the number of working days. The government last month raised its economic outlook, forecasting expansion of 1.2 percent in 2010 after a 5 percent contraction in 2009.

2. Goldman confirms my assumption that a 2nd stimulus package will be thrown into the mix and as they rightly point out it will be done for opportunistic political means and not with the motivation to help the people. If the latter one was the motive America might never had ended up where it is and the first aid package had been structured differently. I do agree with Rosenberg and Whitney that we are not any close to the end of the job losses as they hint to a 12-13 % scenario for the official jobless rate - I rather think it could even go further unfortunately. Outright new hiring is hard to see since companies do adjustments with temp workers so far hence in best case they turn them in to full time employees but in the meantime we had many announcements of big companies doing more cuts. That should hit second tier and third tier suppliers double hard as they need to make adjustments as well and have as an adding negative momentum no chance for financing an expansion even if they wanted to. The job situation will deliver a poor holiday season sales against all high hopes which might lead to drastic adjustments in the 1st quarter next year. The numbers presented by Goldman would not do the trick though I see a much bigger flooding of the Mainstreet with printed money. They need to do a structural shift away from globalization back to jobs in America to create new jobs but instead they will allow Wallstreet to pay a record bonus as jobless rates rise towards the 11% mark this year.

Excerpt from zerohedge

Goldman On Why A Second Stimulus Is Merely Months Away

Earlier today, Goldman came out with a harbinger piece on why a second stimulus announcement is essentially a formality. The administration has already promptly forgotten the lessons from the recent elections which were a failure for the Democrats, and a resounding vote against incremental deficit spending. The people spoke, and they will have no more of it. Alas, Obama is now stuck: any action he does to create jobs and to rope consumers back into the clearance sale stores, will be met with increased political disapproval and risk of a major failure at both the mid-term and next presidential elections. Yet, courtesy of his economic think tank, he can not leave the status quo as the current situation leaves the economy on an untenable course of 12%+ unemployment. In this case the lesser of two evils is moot as both have the same likelihood of making the "change you can believe in" campaign one for the history books prematurely.

---

Two More Signs that Additional Fiscal Support Is Coming

Since Congress enacted the American Recovery and Reinvestment Act (ARRA) in February, there has been intermittent discussion of a “second stimulus bill” (never mind the fact that ARRA was in fact the second bill; the first one was enacted in 2008). However, officials who raised the possibility of additional stimulus always quickly backtracked or made clear that they were not actually proposing additional fiscal support. This has begun to change. We point to two particular statements in the last few days:

1. Senate Majority Leader Reid (D-NV) was quoted in The Hill newspaper (a Capitol Hill-focused publication) yesterday indicating that the Senate will consider a “jobs bill” in early 2010. It’s not clear what such a bill might include, or how large it might be.

2. President Obama announced this morning that the White House would convene a "job creation forum" in December. While the event clearly serves a public relations purpose, the scheduling of such a high profile event implies there probably will be some new proposals to go along with it.

This may be the set up for yet another round of springtime stimulus in 2010, to be crafted in December and considered by the Congress in its second session early next year. Interestingly, this is the same timetable we've seen in each of the last two years-- policy formulated internally in December, debated publicly in January, enacted in February. If we do see a replay late this year and early next year, it seems likely to take a bit longer, and meet more resistance than the last two stimulus packages, which moved surprisingly quickly through the legislative process due to broadly held bipartisan concerns over the state of the economy.

As outlined in last Friday's weekly, we expect $250 billion (bn) in further fiscal support over the next three years, including $75bn in 2010. However, we have generally assumed that most of this would come from extension of current law policies, as opposed to new stimulus measures, for two reasons: (1) over the last several months there has been little appetite for explicit "stimulus," though there remains broad support for certain targeted policies, like the homebuyer tax credit and unemployment benefits just enacted into law (worth $45bn of the expected $250bn); and (2) the prior stimulus package included most of the obvious ways to stimulate the economy, so extending them is a more natural next step than coming up with new provisions.

However, last week's employment report seems to have changed sentiment in Washington (and last week's election certainly played a role as well, insofar as it highlighted the electoral challenges for congressional Democrats that were already evident in public opinion polls). So while another explicit "jobs" bill looked like a long shot a week ago, the notion seems to have gained momentum since. While the path such a measure may take over the next few months is highly uncertain, among the (oversimplified) implications of a more explicit stimulus effort early next year we see the following:

1. New measures would become easier to pass. If Congress actually takes up a new stimulus package, it becomes somewhat easier to enact new measures, rather than just extending unemployment benefits or some of the other things under consideration. A hiring tax credit, lending incentives, and some way to provide additional timely benefits to consumers in 2010 appear to be front of mind for staff trying to present options to their members of Congress, though there don't seem to be many concrete ideas at this point.

EUR update

EUR has made a double top kind of formation as stocks phony upside move comes to an end for now. At some point though we will have a retest of the 1.60 mark but that rather seems to be an issue for 2010 as the bank regulation rules coming might upset the in God we trust fans it also can be triggered by an outside effect and the stars say we will get some ugly action like warfare. Its hard to say how deep the Dollar correction might run this year as the manipulators will defend their 1000 plus SPX mark for the yearend. The classic positive market window is Thanksgiving to Feb for markets their they usually make the most positive performance but that refers to regular typ of years and we are not in any such. MArkets are in topping out mode and the Dollar makes a short term bottom. We have the first Dem president with a weak Dollar policy and a weird market since fundamentally Europe is in a weaker position but if Trichet is stupid enough to think he can start an exit strategy already he might give the Euro the final boost to test the 1.60 level once again. In 2010 we will see a deep correction of stock markets before the second stimulus package will be triggered. It will depend a lot on Iran and Israel but rather more Israel as Iran will buy time clearly and Israel needs to attack at some point the nuc facilities. Hence in 2010 we will see the bigger Dollar recovery event in the first half. and that could be a substantial onelasting for months.

part 2

3. The really juicy news today are the new laws in the pipeline by Dodd and Kanjorski. At some point we will get some legislation to at least formally dismantle the banks but I am afraid it will be another camouflage action where to some degree one showcase like Citi will be broken into pieces since they are anyway bankrupt but the real evil boys like JPM and GS can even be in stronger positions thereafter. The crucial point is the supervisor question as Dodd pushes to disarm the FED but at some point those news will have an effect on the bullcamp. One of the reasons why the market manipulators keep pushing markets up beyond their economic interests is the political and sociological effect as markets keep rising the anger in the public should be less but the wrong approach is the rising jobless situation. Anyway the Saturn Pluto square which sits on the FED's position for almost 10 months going forward will bring tough regulations for supervisors and the financial industry to some degree but that will turn out into a mid term elections battle as attacking the financial industry might get the popular play for both. The tricky part will be that the Reps will try to steal the thunder from the Dems but if the Dems go to much into the right direction they rather block them as the bottom line is they all work for the same master and that's not the people.

Excerpt

Wall Street Faces ‘Live Ammo’ as Congress Aims to Unravel Banks

By Alison Vekshin and Robert Schmidt

Nov. 12 (Bloomberg) -- Seven Wall Street lobbyists trooped to Capitol Hill on Nov. 9, hoping to convince Representative Paul Kanjorski’s staff that his plan to dismantle large financial firms was a bad idea.

They walked out with a sobering conclusion, according to the accounts of two attendees who requested anonymity because the meeting was private. Not only was Kanjorski serious, he planned to offer the legislation as early as next week -- and it just might pass.

Today marks a decade to the day that President Bill Clinton signed the repeal of the Depression-era Glass-Steagall Act that split investment-banking from lending and deposit-taking. The repeal allowed the creation of Citigroup Inc., the financial colossus now propped up by $45 billion in taxpayer rescue funds. Financial firms are scrambling to prevent Congress from re- imposing the act.

“We’re playing with live ammo,” said Sam Geduldig, a lobbyist at Clark Lytle & Geduldig who represents financial- services firms and wasn’t at the Nov. 9 meeting. “The banking community is rightfully concerned.”

The Financial Services Forum, which represents chief executive officers of 18 of the largest financial firms and whose lobbyists organized the visit to Kanjorski’s office, has scheduled or met about a dozen lawmakers or aides with the House Financial Services Committee in the last week. The U.S. needs big financial firms to compete globally, said Rob Nichols, the group’s president.

‘Vocal and Persistent’ Presence

“Boeing and IBM can’t bank at the Silver Spring Community Bank,” Nichols said. He said he’ll be “vocal and persistent in the halls of Congress.”

Lawmakers are considering breakup proposals after public outcry over the $700 billion rescue of firms including Citigroup, Bank of America Corp. and American International Group Inc. Congress passed Glass-Steagall in 1933 after speculative activities by many banks brought the system close to collapse. One result: Morgan Stanley, the investment bank split off from what is now JPMorgan Chase & Co.

“You don’t ever want to be in the situation again where something is too big to fail,” Senate Banking Committee Chairman Christopher Dodd told Bloomberg Television yesterday. The Connecticut Democrat, who unveiled a regulatory overhaul proposal this week, said the government should have the power to break apart large institutions “as a very last resort.”

Edward Yingling, president of the American Bankers Association, which represents banks of all sizes in their dealings with the U.S. government, declined to comment on efforts to turn back pending legislation.

Frank Supports Both

Representative Barney Frank, chairman of the House Financial Services Committee, has proposed giving the Federal Reserve authority to force holding companies whose size threatens financial stability to sell assets or halt certain activities. Representative Ed Perlmutter, a Colorado Democrat, wants to amend Frank’s bill so that the Fed could impose Glass- Steagall on a case-by-case basis, said his spokeswoman, Leslie Oliver.

Kanjorski, a member of Frank’s panel and chairman of its capital markets subcommittee, would go further by allowing the U.S. to dismantle any large firm whose size and risk-taking threaten the financial system.

Frank supports both the Kanjorski and Perlmutter plans. “I believe both will be adopted,” he said on Nov. 3.

John Reed’s Apology

Senator Bernie Sanders, a Vermont independent, would give Treasury Secretary Timothy Geithner 90 days to come up with a list of banks, hedge funds and insurance companies deemed “too big to fail.” Geithner would have one year to break them up.

The proposals are a turnaround from 10 years ago, when Clinton signed the Gramm-Leach-Bliley Act. It gave rise to financial conglomerates active in retail banking, insurance, stock brokerage and proprietary trading.

Since then, the largest U.S. financial firms have more than tripled in size. In 1999, the five largest firms -- Citigroup, Bank of America, Chase Manhattan Corp., Morgan Stanley Dean Witter & Co. and Merrill Lynch & Co. -- held $2.5 trillion in assets. As of Sept. 30, Bank of America, JPMorgan, Citigroup, Wells Fargo & Co. and Goldman Sachs Group Inc., now the five largest financial companies, held $8.3 trillion in assets.

John S. Reed, who headed Citicorp for 14 years before the 1998 merger with Sanford “Sandy” Weill’s Travelers Group Inc. that created Citigroup, last week apologized for his role in creating the company. He said lawmakers were wrong to repeal Glass-Steagall, likening the separation it created to a ship with compartments so that a single leak doesn’t sink the whole vessel. Alan Greenspan, the former Federal Reserve chairman, also favors breakups in some cases.

Gramm’s View

Geithner testified on Oct. 29 that regulators need authority “to force the major institutions to reduce their size or restrict the scope of their activities” if they become too risky. The Obama administration hasn’t said whether it would support letting regulators preemptively shrink the size of large, healthy companies.

Phil Gramm, the former Republican Senator from Texas who co-wrote the act that undid Glass-Steagall, said, “I’ve never seen any evidence to substantiate any claim that this current financial crisis had anything to do with Gramm-Leach-Bliley,” Gramm said in a Nov. 10 telephone interview.

“In fact, you couldn’t have had the assisted takeovers you had,” said Gramm, now a vice chairman at the investment bank division of UBS AG, Switzerland’s biggest bank by assets. “More institutions would have failed.”

Shotgun Marriages

Federal regulators last year orchestrated shotgun marriages for large firms on the verge of failure, including Wells Fargo’s purchase of Wachovia Corp. and Bank of America’s acquisition of Merrill Lynch.

4. The unemployment situation from a real perspective and a sneak at the Industrial production - which wipes out all the recovery lies spread around. The lies on payroll statistics are unbelievable - read for yourself below why we rather are close to 22% right now. Imagine how the extreme scenario for banks stresstests was measured on a 10% unemployment and what the reality of their balance cheats may look like.

Excerpts from Shadow statistics





BLS Revision Nightmare: March 2009 Payrolls Overstated by 824,000 • Birth-Death Model Falsely Boosting Jobs Reporting in Recession Environment • Monthly Jobs Loss of 263,000 (Payroll Survey) versus Monthly Employment Decline of 710,000 (Household Survey) • September Unemployment Rates: U.3 = 9.8%, U.6 = 17.0%, SGS = 21.4%

Thursday Brainstorming - part 1

1 First of all some very obvious action on behalf of Goldman's religious work - they are definetely hunting the holy grail.

Excerpt 1from Zerohedge

Goldman And The 3Com "Insider Trading" Connection

Following up on our earlier disclosure about potential insider trading in 3Com stock, we have uncovered something interesting. Did Goldman (in)advertently tip off clients that 3Com was potentially in strategic negotiations? 3Com was previously supposed to present at Goldman's Data Center Techtonics Conference today at the Sheraton Hotel in New York (Agenda below). In a limited distribution note, Goldman yesterday advised selected clients that 3Com had withdrawn at the last minute from the Conference. As those in the industry are well aware, any last minute switches of this kind are indicative of imminent good or bad news dissemination, and more often than not are associated with some strategic announcement.

2. Someone clearly did it very bluntly again an excerpt from Zerohedge

$1.5 Million In Blatant Insider Trading Profit Following 3Com Acquisition (Or An Innocent Calendar Spread)

3Com's acquisition by Hewlett Packard for $7.90/share after the close today came as a surprise to many, but not all. Because someone bought 3 times the open interest in November $5 calls and 15 times the open interest of the December calls. In summary: 3,961 Nov $5 calls were purchased today (964 open interest) for $0.65, as were 3,269 December $5 Calls (210 open interest) for $0.85. The profit, assuming the insider action was by one entity, is about $870,000 on the Novembers and $650,000 on the December strikes, for a not too shabby illegal daily P&L of $1.5 million. This is so blatant it is sufficiently stupid that even the SEC will presumably catch the perpetrator. Here's to hoping the trader ends up being Galleon's Raj Raj buying options from his E-Trade account while on bail. Of course, we fully expect any prosecution case against the perpetrator to fall apart at the seams courtesy of a completely inept legal team at the SEC and the Justice Department.

part 2

3. The latest events marching into good old faschism - Democracy and the rights of citizens have been raped since 9/11 - still people think there is no conspiracy unbelievable.

Excerpt

More Attacks On Online Free Speech? Justice Department Subpoenas Site's Visitors IP Addresses

Submitted by Tyler Durden on 11/11/2009 11:51 -0500

CBS reports that the Justice department has submitted a subpoena request to Indymedia.us demanding the site turn over all reader visit details on June 25, 2008. Furthermore, the Justice Department had demanded that the site do so without even disclosing the existence of the subpoena. Without even bringing up the question of just how far into the "1984" rabbit hole our society has gone based on this development, this situation raises numerous questions about the anonymity of not only Internet browsing (at least that based in the US), but the transacting in visitor records behind the scenes. If this one case has made it to the public, one wonders how many other comparable gag order-cum-subpoeans the Justice Department has sent out to other websites?

Just who is this Indymedia? According to CBS it is a left-of-center amalgamation of journalists and advocates that – according to their principles of unity and mission statement – work toward "promoting social and economic justice" and "social change."

More from CBS:

"I didn't think anything we were doing was worthy of any (federal) attention," [Kristina Clair, a 34-year old Linux administrator living in Philadelphia who provides free server space for Indymedia.us] said in a telephone interview with CBSNews.com on Monday. After talking to other Indymedia volunteers, Clair ended up calling the Electronic Frontier Foundation in San Francisco, which represented her at no cost.

Under long-standing Justice Department guidelines, subpoenas to members of the news media are supposed to receive special treatment. One portion of the guidelines, for instance, says that "no subpoena may be issued to any member of the news media" without "the express authorization of the attorney general" – that would be current attorney general Eric Holder – and subpoenas should be "directed at material information regarding a limited subject matter."

4. Obviously some stuff has to be changed now that we know that bankers do god's work - if I only had learned that earlier that I was a knight fighting for the good boys.

Here is a severe pledge for a change we might have to teach kids before they go to sleep

By: Jane Wells
CNBC Correspondent

Funny Business reader Rick Ambrose has been "divinely inspired" to rewrite the Lord's Prayer as the 'Lloyd's Prayer':

CNBC.com LLoyd Blankfein testifying in Washington

The Lloyd's Prayer

Our Chairman,
Who Art At Goldman,
Blankfein Be Thy Name.

The Rally's Come.
God's Work Be Done,
We Have No Fear Of Correction.

Give Us This Day Our Daily Gains,
And Bankrupt Our Nearest Competitors,
Just As You Taught Lehman And Bear A Lesson.

And Bring Us Not Under Indictment.
For Thine Is The Treasury,
The House And The Senate
Forever And Ever.
Goldman.

Brainstorming Wednesday

1. This is rally weird even at the March lows we never went that low in the Rydex?? Can not get my head around that manipulation scheme. As we make new highs the Rydex makes new lows even some contrarians play a weird game or as we saw for the ISE options at the low insiders take positions. In June July the market ended up making a new upside wave.



2. The real reason why the FED wants the interest rates to stay at 0 is that they know how bad the balance cheats of the financial institutions are . The low interest rates do not benefit Mainstreet anyway as banks have even raised interest rates for them. The low rates are a pure carry trade financing instrument so banks can produce profits in order to compensate the losses of their old mistakes. This comes at a high cost for Mainstreet as they can not deliver any meaningful income for their savings - except they join the insane stock market rally. That is the other purpose of this game - completely sponsored by the Obama administration. The explanations below is just bullshiting propaganda as it looks insane to have interests at zero if the 'recession' was really over.

Excerpt

US Recovery to be Weak, Erratic: Top Fed Officials

High unemployment and reluctant consumers will likely make an incipient U.S. economic recovery weak and erratic, top Federal Reserve officials said in a string of speeches across the country on Tuesday.

iStockphoto

That means interest rates, currently at historic lows close to zero, should remain near that floor for the foreseeable future, the policymakers said.

"The strength and durability of the expansion is in question," said Janet Yellen president of the Federal Reserve Bank of San Francisco, in Phoenix, Arizona. "High unemployment, weak job growth and paltry wage increases are a recipe for sluggish consumer spending growth and a tepid recovery."

SPX update

The 'bulls' are running out of steam again since this was nothing else but short covering. There is a small margin for new highs within the next days as the 50% retracement level is at 1125 for the SPX - but just let me say - the longer the sucker rally lasts the steeper will be the correction. I had expected a retest of the highs for Dec and modest new highs probably. Scenario needs now to be altered after making some homework on the Saturn / Pluto square I saw that the effect the last 100 years was rather a bit after the exact day 1-3 weeks but the result was quite steep of 30-40% confirming my retest of the lows scenario. The worst case scenario for the stress tests was 10.2 % jobless rate in 2010 which we have reached already by Oct 2009. Reaching that mark far quicker than anticipated and the real rate being rather close to 20%. The losses in the bank balance cheats are much more disastrous than anticipated ( and stated by the banks) by the FED and we will see at some point those effects hitting the market but rather at a stage where it might be too late.