NDX weekly update - short game on confirmed

Almost perfect weekly close we broke below the uptrending support and gathered a Head & Shoulder formation. Producing plenty of sell signals with a test of the trendchannel and or 200 day MA around 1850 a minimum target. As I wrote 2 days ago sell any kind of strength as we will likely see on Monday again a brief rally with ISEE below 100 and a bailout Greece bull-shiting rally initially. The Astro pattern worked perfectely as the end of the Uranus /Saturn opposition week is followed by a decline the next weeks. Sentiments are in perfectly setup for a decline as well and we even have the sell in May psychology working in favor. Also very important is that AAPL the major driver of the NDX has topped out at 275 with a monthly 13 count.

part 2

3. Astro pattern shows (yesterdays full moon in square to Mars - combined with Uranus Saturn opposition) that the austerity deal will put Greece on the brink of civil war and trigger wild protests and outrage. The 6pack Greece Joe will pay the price for corruption by higher taxes and wage cuts. It is not a solution to go for this pathetic IMF plan which is nothing but a backdoor bailout of European banks again and will not help the country at all rather push it into a deeper crisis. Restructuring by a moratorium ( chapter 11 like) with austerity which makes sense is the only way to go but EU leaders will bribe Greece leaders to go for their version. We are pretty much repeating the same pattern as 1931 and are heading for the same results hyperinflation and WW3 are inevitable on this path. The package is reaching 140 bil as 20 bil will go into a bank stabilization fund and no one in the EU can afford to pay basically but still the taxpayer gets burdened again with the losses of banks.

4. America has a similar agenda as it is 2tril alone this year that is why no central bank can raise rates since it immediately would trigger a crash - the irresponsible part is rather that some SOB manipulator fabricate the rally to trap retail investors.

With $2 Trillion In 3 Year Funding Needs By the PIIGS, The IMF Is Helpless To Do Anything But Sit Back And Watch

Total PIIGS funding needs (defined as the sum of debt maturities and budget deficits) over the next 3 years amount to $2 trillion. Total PIIGS funding needs in 2010 alone amount to $600 billion. Total IMF bail out capacity: around $700 billion. Sorry - it simply does not compute.

Below is a table summarizing the funding needs of just the PIIGS.

Friday brainstorming - part 1

1. As I wrote last Monday the market is oscillating around those levels for a few days and we have 2 alternative scenarios for the recent top. First scenario implies the potential for 2 higher closes in respect to the recent highest close as a max followed by a 10-15% correction. Second is the whole process is dragged out by another 3-4 weeks of higher weekly closes but that would rather create an ultimate top scenario followed by a crash and is less likely.

excerpt

With Changes of Fortune

I need to clarify some thoughts concerning upcoming events around May 6 which will mark the turning zone from which we (the planet we) will start to really feeling 'building tension' going into July 11th. It will likely not be a single event. I know I don't need to say this, as long-time readers know that often the 'change of fortune' area in linguistics are not so much a change wrought by singular events, but rather by a change of fortune - which better describes things.

I was reminded of this in a brief conversation with Cliff on Wednesday who's been (thankfully) kind enough to notice when my monkey-mind simplifications of an incredibly complex future run out ahead of the data. Yes, a change of fortune and of course, the aware/astute person will notice the change of the 'feel' of events, but a single thing in a headline? Likely not.

The November 8-12th period, on the other hand is so big that it appears as a tipping point in data, after which things are really different, IS likely the kind of thing which will make headlines, bulletins, and maybe the cover of Time as story of the year kind of thing.

---

A fair number of people are already sending in their guesses about what the 'events' of November will be. One referred to the long-standing (and perhaps a year or two early) prediction of a 'summer of hell' and wondered if the deployment of an Army unit inside the US around election time might somehow be connected. We don't know...we can get that precise in predicting events.

Deploying military within the country would not come out of a sense of fun, sport and amusement. It would either anticipate events, or be in reaction to them. The ultimate failure of the US dollar, pegged for a November a year or two back, showing up this year, would qualify. And that might explain the Army troops to keep order if the financial system was to break down. But whatever this November period is seems to come out of the GlobalPop entity and be global in nature, so a global unhappy ending to the financial/derivatives madness might fit. Although it would be an unfortunate series of events, it would be far preferable to global war.

Any telltale signs to point in that direction? Depends what you think will happen when "More Than a Million in U.S. May Lose Jobless Benefits" this summer. A reader points out this key paragraph:

""They are quietly drawing the line at 99 weeks of aid, a mark that hundreds of thousands of Americans have already reached. In coming months, the number of those who will receive their final government check is projected to top 1 million."

Let me think...hmmm: "Could 1-million people losing benefits result in the "summer of hell" which has been in modelspace for a couple of years? Might it precede the collapse of the US dollar forecast 4-5 years ago in November?"

Answer that (as I have) and while it will bring GlobalRev and Global Depression Two along with it, it may also be a turning point for capitalism in general; time to renounce the Church of the Almighty Dollar and seeksomething a little less predatory.

Since folks like Jack Lessinger have written thoughtful books about what the other side of such a massive global change of mindset would be like (e.g. his Transformation Fall of the Consumer Economy Rise of the Responsible Capitalist), I have to assume the ultimate outcome might be nice, but it could be a 'bumpy road' getting there.

Getting there without WW 3 and without Alien Wars would be nice. Not that going hungry and having a global financial collapse would be a walk in the park. It's just that going into the weekend, I like to keep things on a cheerful & optimistic note. So yeah, tensions are going to build through July and then we should get some modest 'release events' - a series of headline grabbers over summer that will feel at first like big change is afoot, but the real game-changer comes in late fall.

2..What I suspected all along was that Paulson the HF was a master executor of the RR (Rothschild/Rockefeller)- gang strategy as is Soros. The Goldman boys even write that in 2 years they will have to be bailed out and that Paulson will be the prophet in hindsight.

excerpt from zerohedge

What we will focus on however, is Michael Swenson's response to Fab in early January 2007:

I can not believe it!!! Absolutely amazing.

Believe it Swennie. Less than two years later the government will have to come and bail you out, once again vindicating Paulson for being the most prophetic person on Wall Street in the 2005-2008 period.

And it continues. Fab next describes the GSC meeting in detail. And here is where you should pay very close attention.

The meeting itself was surreal. Am hearing that Paulson bought $2bn of [redacted] CDS protection, sucking all the liquidity on that name in the corporate CDS market. Also, on the side [redacted] mentioned to me that he had heard from many different sources that one reason why the ABX market was trading down so much in December was related to [redacted] building a sizable short and buying large amounts of ABX protection from the market.

The first bolded [redacted] is the 64k question as this would set off a chain of events of everyone copycatting Paulson into shorting whatever he was shorting. His Oracular star was ont he rise. And the anwer is provded by Michael Swenson's response following 4 minutes after the Fab email.

I wonder who gave bear the liquidity

In other words, who sold the protection... on Bear Stearns. Was Paulson massively short Bear as early as 2006? If so, the amount of money he made shorting RMBS may pale in comparison with how much he likely made on the short synthetic side in financials.

As the chart below demonstrates, Bear CDS in late 2006 was trading around 18 bps. Days before it was handed off to JPM for pennies it hit a record 751 bps.

As $2 billion notional has a DV01 of about $800,000, assuming that paulson sold at or near the top he made nearly $600 million by shorting Bear via purchasing its CDS. Surely, as Fab disclosed earlier, he did not stop there, and was long protection each and every bank he was trading with. That financial short trade alone likely netted about $3-4 billion in total.

What is funny, is that an ever ready to piggyback on any good idea Goldman Sachs, decided to do precisely what Paulson was doing. As disclosed on p. 765, by March 27 Goldman was accumulating a massive short in Bear share, to the tune of an $18.6 profit in Jump To Default, i.e., should the firm fail.

By July 27, this number had nearly doubled to $33. Yet observe which firm had the highest JTD value at this date: none other than rating agency Moody's, in which Goldman had accumulated a whopping short position.

part 2

3. What we have said all along although I put it a bit more radically as I call this pool 0f buyers the 'Rothschild-gang' which is more than just investment banks Blackrock, Soros and Paulson are part of this group as well.

excerpt

Equity rally not driven by the usual investors

By Leigh Skene

Published: April 28 2010 15:45 | Last updated: April 28 2010 15:45

The outperformance of risk assets over the past year suggests investors appear to believe that all credit problems have been solved – but nothing could be further from the truth, says Leigh Skene at Lombard Street Research.

“Rising stock markets and narrowing credit spreads depend on buyers being more anxious to buy than the sellers are to sell,” he says. “So who are the enthusiastic buyers of risk assets?”

Surprisingly, says Mr Skene, surveys show that the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. And he says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that major investment banks are the anxious buyers.

“Their buying would appear to be for one of two reasons. Firstly because they think the authorities will prevail in their (so far unsuccessful) efforts to inflate their way out of debt liquidation; or secondly because they are too big to fail and so can afford to take a huge gamble that enough buying will convince others to rush in and buy their inventory of risk assets at even higher prices.

“Huge economic slack in most developed nations and falling money supplies in the two biggest currency areas indicate that government efforts to inflate will continue to be unsuccessful – so reason number one is bearish for risk assets; number two is catastrophic.”

Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

4. Goldman will go for a settlement as they can not afford to have more internals published - another interesting point is why did Spark and Birnbaum leave the firm after the best year ever for them as they described it themselves in their evaluations after they received quite a handsome bonus. After they left Goldman lost 1.8 bil in 2008 Goldman claims which makes it even more obscure since the big money in being short was to be made in 2008.

excerpt

Goldman Sachs may soon settle its fraud case with the U.S. regulator, the New York Post reported on Thursday, opting to end a legal fight rather than endure a repeat of the public flogging it received this week.

Getty Images Daniel Sparks, Joshua Birnbaum, Michael Swenson and Fabrice Tourre

The Post report, citing sources familiar with the matter, said Wall Street's top investment bank was mulling closing the fraud case with the U.S. Securities and Exchange Commission (SEC) to limit damage to its reputation.

"It's almost a certainty that there will be a settlement," the paper quoted a source as saying.

Goldman Set to Settle SEC Fraud Case Soon: Report

Goldman Pressed for CDO Loss Settlement

Goldman Sachs is in talks over a potential settlement with an investor that claims that it lost money and went out of business after buying into a $1 billion mortgage-backed security that was later privately criticized by a senior executive at the bank.

CNBC.com Goldman CEO LLoyd Blankfein testifying before House Financial Services Committee

Basis Yield Alpha Fund, a hedge fund, is seeking compensation over its $100 million investment in Timberwolf, a complex security, say several people familiar with the matter.

Timberwolf plummeted in value months after it was launched in March 2007, at a time when Goldman [GS 159.86 2.85 (+1.82%) ] had already decided to cut its exposure to the housing market.

The talks are at a preliminary stage and there is no certainty they will lead to a settlement.

Brainstorming Thursday - part 1

1. Just putting the buzz about rising real estate into perspective some valuable thoughts from

http://urbansurvival.com/week.htm

More importantly, what the chart unveils - to those who didn't doze through finance classes - is that there has been very little recovery (2% or less) from last year's tragic levels. But wait! More revelations in the price chart. But before I tell you how that sausage hides, please review, class, the S&P Chart from their press release...

Don't see it? (This is why my friend Howard Hill grumbles about 'numeracy' amongst the financial press corps - a lack of 'gettin' it in math...)

A hint then: Looks to me like the 2003 20-City Index was (being generous) $145,000'ish. And with this latest report, the price is back to again, about $145,000'ish.

What's missing is....an Inflation adjustment.

---

Forget Numbers - What Will Your Dough Buy?

When we're in a period of history where financial acumen means something, you need to put away delusions of zeroes and think like my friends Hill, Jas Jain, Robin Landry, and other deep-thinkers on the direction to invest. Reduce everything to "purchasing power equivalents" - otherwise, you'll miss the whole point of inflations and deflations. Need an example?

CNNMoney reported the price of gasoline in March 2003 at $1.72 a gallon. So if I'd taken $145,000 (the 2003 price of a 20-City Index home back then - and bought gasoline - instead of the house, I could have bought 84,302 gallons of gasoline.

Fast forward to the present: the price of gasoline - even here at the ranch which is a one lane county road from a 600 acre oil production patch, and we're paying $3.17 a gallon for premium. But let's use apples - to -apples and apply the Triple A $2.87 a gallon this week.

If I had the $145,000 from a house sale I'd get only 50,522 gallons of gas. In terms of purchasing power of gasoline, I'd be down about 40%.

OK, about here you're thinking "Ure - you've taken things completely out of context - you can't use gasoline as a proxy!" Why not? Whose column is this? But let's say I grant you that. So, instead, how's about we use the Minneapolis Fed Inflation Calculator? Happier?

That little goodie says the $145,000 home in 2003 would need to fetch $171,478 worth of today's play money just to have kept even with inflation - and the government is prone to understating inflation, as anyone getting a military paycheck, or Social Security Cost of Laughing Adjustment, knows full well. Slapstick government at its finest, but I digress...

Hats off to S&P/Case-Shiller for putting real numbers out. Fine service they render us thinking people. AQt least we have ho9nest starting numbers for things like housing inflation studies and to Triple A for putting real fuel prices together.

---

Inflation is a Gas Sidebar: Market down 213 yesterday? Cheer up. On an inflation-adjusted basis, that's only have been a drop of 168.56...in early 2000.

Of course in 2000 gas was only 1.27 a gallon so a 168.56 drop would have cost you 132.7 gallons worth. Yesterday's little 213 point Dow drop cost a merely 70,7 gallons worth of gas.

Is government lying about inflation? (Who will rid us of this irksome data?)

Just because finished energy at the pump is up more than double since 2000 out here in the real world, the Fed inflation calculator shows (more or less "offishully") it should be retailing for only $1.60 a gallon based on inflation. Your mileage may vary.

2. As I stated yesterday (and many times before) the FED will and cannot change their zero interst rate policy but not in order to save the economy or create jobs - its rather a prove how deep the global banking system is still in distress or rather bankrupt and only balance cheat plus deep yield curves keep the zombies alive while some like Goldman rather can steal more money from Mainstreet.

excerpt

Fed Signals Sustained Job Gains Needed to End Low-Rate Pledge

EURGBP monthly update

Sterling had a temporary upswing within the consolidation pattern against the EUR (in the chart its a downmove) but will most likely now move towards the upper end of the triangle and even break out towards the ultimate 1.00 target. Britains AAA is not sustainable and the pressure on rating agencies phony rating system will build up ( one wonders why this criminal organization is allowed to proceed - not really politicians belong to the same breed of plutocrat-(b)gangsters). The upcoming elections carry a huge potential for disappointment in Britain with a hung parliament. Basically Britain is a mess with all its debt and had to be bailed out by the IMF a few decades ago and only the zero interest rate keeps it alive but does not deserve a AAA probably even a BBB would be too much rather but that is the best it should have if you bet on a global real recovery which I do not.

A real tough one on WW3

excerpt

http://www.halfpasthuman.com/index.html

Wolf and the Other Blitzers, the new War Season, a terrible choice…..

World War 3 is here. This war has already begun, at least the propaganda part intended to drive the emotions of the populace to support the ‘terrible choice’ that our ‘leaders’ will say they are forced to make to ‘safe guard our homeland’.

One of the ways that They plan on levering the planet into war begins with an Israeli attack on Iran. Within our work here at Halfpasthuman, we had thought that the attack by the zionist war machine on Iran would be a mistake. That opinion has now changed. The Israeli attack will be a planned ‘sacrifice’ of the ‘nation of israel’ in order to draw the larger nations into a global thermonuclear war. Of course, the Israeli’s don’t recognize that they are to be the sacrifice to Molock, Baphotep, and the other masonic (vatican/reptilian) gods of war.

World War 3 is here, and will most likely begin, according to one interpretation of the emotional tension sums that we have in our data, on November 8th, very early in the pre-dawn. That is when israel, the sacrifice, will be ‘led’ by its zionist ‘leaders’ to launch an attack on Iran. Within minutes of the launch, everything (for the israeli residents and silent backers of the zionist killing machines) will go wrong. The retaliation will be both swift and unexpected, though of course, the zionist ‘leaders’ of the sacrificial sheep of israel will be knowledgeable enough to not be in israel when they launch the attack.

As dawn on November 8th moves around the planet, so will the progression of the Global Thermonuclear War. Within minutes of the launch of the attack, death will rain on israel from a number of sides. As their killing machine streaks toward Iran, the zionist minions will already be fleeing as they know that retaliation will be swift. It is all part of the plan.

As the people in israel are dying of flames and gas and explosions, the propagandists here in the USofA will be parroting the ‘official line’, as promulgated by Wolf and Other Blitzers, that the ‘poor oppressed jews are being slaughtered by the hundreds of thousands and WE need to act now! The propaganda machine of the TPTB will of course have built up the hate and suspicion language around Iran for months prior to the actual attack. They will have used subliminal messages, repetitious themes endlessly repeated, and carefully crafted word imagery to get YOU ready to respond to their cry to ‘help save poor israel’.

The mental pathways prepared by the press minions of ThePowersThatBe will be most intense here in the USofA as we are the pin that holds the whole war machine together. As the mind controlled residents of the USofA rise to go work for their hidden slave masters on November 8th, they will be greeted with images of a world gone mad. That is until they turn on the sound, and tune into the messages of ThePowersThatBe pouring out from the prisoner press on mainstream media. Wolf and the Other Blitzers will weep on the screen accompanied by images of the horror of the poor israeli innocents unjustly killed by the evil-doers for no good reason at all. The propagandists will wail and cry, and bring your favorite celebrities to also wail and cry “poor israel, oh poor israel, done so low for merely launching a nuclear attack against Iran”….and other ‘woe to us poor zionists” language that is exactly calculated to support the rallying stance from the ‘leaders’ of the USofA as they shout “rise up christians, and go to battle to avenge the poor sacrificed israel”. Then they will cite individual lives within the millions of dead and soon to die merely for launching a nuclear attack against Iran, and cry ‘foul evil doers must be stopped’. Wolf and the Other Blitzers will confer with earnest and thoughtful criminals from congress, pedophiles from the vatican, cabalists from the CFR (council on foreign relations) and other parts of the control structure, who will all play their scripted part in releasing the triggers for prepared pathways in your mind.

The flaming eyes intensity of the Other Blitzers at the official channel of the opposition, Fox, will ratchet up several notches as the news readers begin to feel the blood engorging their pindars in anticipation of the beautiful horrors awaiting their lust for death and religious confrontation. Their shining eyes will seem to seek out viewers through the 1080 HD screens as they too shout the rallying cry of ‘rise up evangelical and fundamentalist christians! Rise up! Killing time is here! Be ready to die for our beloved israel!’

The reptilian ‘leaders’ of the americans, both visible and hidden, will also be tugging on their rigid penises, eyes and hearts flashing hot, and dense, as they too anticipate the sacrifice of israel and the coming orgy of blood. Their eyes blink rapidly, their jaws clench in rhythmic spasms as their tongues dart between quivering lips. They can already taste the coming ‘feeding’ upon humanity, and it smells good to their darting tongues even as it is brought so faintly on the future winds drifting into the now.

World War 3 is here. The aware observer sees the evidence as Wolf and the Other Blitzers carefully seed the linguistics of the propaganda channels here in the reptile owned anglo-american empire. They plant these seeds on orders of their masters such that we will all respond appropriately at the appointed time to act out our part in planned grand death ritual, World War 3.

World War 3 is here. The reptiles are even now planning the details of your death in their ritual sacrifice and feeding frenzy. Deny it, or accept it, your choice. A terrible choice, either way, with repercussions long lasting, and dread. A terrible choice, to acknowledge that omnihumanity is marching along to obediently yet-again to orders that will result in the deaths of billions in very short order, or to deny that such a possibility exists, to put to rest all the nagging worries that something is decidedly wrong, and to surrender to the mind-control, fully supporting the version of reality fostered on you by your ‘betters’.

A terrible choice, to own your position as one of very few aware and thus a member of the ‘insane conspiracy theory fringe’, or one of the masses, fully swallowing the lies and hoping that ‘this time is different’.

So, you are here now, watch Wolf and the Other Blitzers over the coming months noting their use of language and war symbols. Note who they speak with, and whom is ignored. See what subjects are brought up how often, and especially watch for what is not shown. Follow with conscious awareness as they attempt to lead your mind to death in their ritual wars. The aware observer will grasp the language changes over these coming months as they begin to introduce the plan to the unprotected minds of humans all around you. The new War Season starts May 6th….stay tuned.

As Wolf and the Other Blitzers’ slogans say, ‘watch, then decide’. It is, after all, their lies, and your terrible choice.

part 2

3. Sentiment confirms top - sell any strength the next days.

Date Published	Percent Bullish	Percent Bearish
04/28	54	18
04/21	53.3	17.4
04/14	51.1	18.9
04/06	48.9	18.9
03/31	48.3	19.1
03/24	48.9	20.5
03/17	46.1	21.3
03/10	44.9	23.6
03/03	42.1	22.7
02/24	41.1	23.3
02/17	35.6	27.8
02/10	34.1	26.1
02/03	38.9	22.2
01/27	40	23.3
01/20	52.2	18.9
01/13	53.4	15.9
01/06	48.3	16.9
12/30	51.1	15.6
12/23	52.2	16.7
12/16	52.2	16.7

4. without comment

Barney Frank Hypocrisy Hits New Record After Saying Republicans Ought To Be Embarrassed About Fannie And Freddie

The Mass legislator totally loses it after penning yet another angry letter (he is good at that; being unconflicted and actually passing sensible and Wall Street influence-free laws, not so much) in which he says that the $6 trillion extra toxic debt on the US Treasury's books from the GSEs (which the democrats refuse to recognize) is really the republicans' fault. The fact that Barney was instrumental to creating the parabolic phase of the housing bubble with his idiotic statements in 2005 that there is "no bubble", and that his commission currently refuses to deal with issues such as the GSEs and a repeat of the housing bubble is completely absent from his letter.

Barney's House Committee On Financial Services had the audacity to blast out the following letter a few minutes ago (an act beyond idiotic not because he is necessarily wrong, but because for someone living in a massively overpriced glass house, Frank should be the last person to throw stones). One wonders when Barney Frank's advice will filter through to those of his colleagues who still see the GSE debt (all $6 trillion of it) as being somewhere in no man's land: you know not really on the US books, so we can still pretend our debt to GDP is actually less than 150%.

House Republicans Ought to be Embarrassed about their Record on Fannie and Freddie
Failure is the only word to describe the House Republicans’ record on the GSEs

Washington, DC — Rep. Spencer Bachus should know better. In a long op-ed in Politico, the Alabama Republican talks at length about the supposed Democratic failure to reform the GSEs, but apparently President Bush’s “ownership society” doesn’t apply to Republicans taking responsibility for their own failures. The Republican record on Fannie and Freddie is clear and embarrassing:

• From 1995 to 2006 when the Republicans were in charge of Congress no bill to reform the GSEs passed Congress.
• Republicans only held one vote in the House to regulate the GSEs—and the bill was opposed by President Bush.
• Republicans in Congress did nothing when President Bush pushed Fannie and Freddie’s affordable housing goals to unsustainable levels.
• While in the majority, Republicans never passed legislation to restrict subprime lending. Rep. Bachus actually once believed in restricting subprime lending, even negotiating and compromising with Democrats in 2007, but he did not support the 2009 effort.

By contrast, House Democrats quickly spearheaded efforts to reform Fannie and Freddie after taking over the majority in 2007:

• After only three months in the majority, Democrats on the House Financial Services Committee produced a tough GSE reform bill that the Bush administration supported. The bill passed the House within five months of Democrats taking control. Rep. Bachus voted against the bill.
• House Democrats also pushed to include Fannie and Freddie reform in the 2008 stimulus bill, but their efforts were rejected by the Bush Administration. The GSE reform bill stalled in the Senate due to the narrow partisan divide but ultimately passed in July 2008.

Even prior to taking the majority, Democrats pushed for reform of Fannie and Freddie:

• In 2004, Democrats, while in the minority, objected to President Bush pushing Fannie and Freddie’s affordable housing goals. [“Fannie, Freddie to Suffer under New Rule, Frank Says,” Bloomberg, June 17, 2004]
• In 2005, House Democrats worked with then-Financial Services Committee Chairman Mike Oxley to pass the only Fannie and Freddie reform bill to pass the House. In fact, every Democrat voted for the bill in committee. Although some Democrats objected to unilateral changes when the bill reached the floor, the bill passed the House with overwhelming bipartisan support.
• Senate Democrats then offered the Oxley bill in the Senate. However, the bill died because the Bush administration and Senate Republicans were opposed.

Democrats initiated and led the fight on mortgage reform and anti-predatory lending:

• With Mel Watt and Brad Miller taking the lead starting in 2004, House Democrats pressed Republicans to adopt subprime lending rules in light of Federal Reserve Chairman Alan Greenspan’s refusal to use the HOEPA authority he had been given in 1994.
• The House of Representatives in 2007, and again in 2009, passed tough measures designed to protect consumers from predatory lenders and prohibit the type of “liar loans” that were so prevalent in the years leading up to President Bush’s homeownership failures.
• After House Democrats began working on anti-predatory lending legislation, the Federal Reserve in 2007 finally issued rules to regulate subprime lending pursuant to the 1994 Home Owners Equity Protection Act.

Democrats led the Fight for More Affordable Rental Housing:

• Fought for a greater balance between affordable rental housing and homeownership, so people are not pushed into homeownership because Republican federal policy says this is the only way to have a decent place to live.

But Rep. Bachus apparently longs for the good old days when Republicans unabashedly pushed homeownership whether people could afford it or not. Their record is clear.

President Bush on pressuring Fannie and Freddie:

• “And so, therefore, I've called -- yesterday, I called upon the private sector to help us and help the home buyers. We need more capital in the private markets for first-time, low-income buyers. And I'm proud to report that Fannie Mae has heard the call and, as I understand, it's about $440 billion over a period of time. They've used their influence to create that much capital available for the type of home buyer we're talking about here. It's in their charter; it now needs to be implemented. Freddie Mac is interested in helping. I appreciate both of those agencies providing the underpinnings of good capital.” [President Bush, June 18, 2002]

Can’t afford the down payment? President Bush: “We can deal with that.”

• “People take a look at the down payment, they say that's too high, I'm not buying. They may have the desire to buy, but they don't have the wherewithal to handle the down payment. We can deal with that. And so I've asked Congress to fully fund an American Dream down payment fund which will help a low-income family to qualify to buy, to buy.” [President Bush, June 18, 2002]

Even Bush appointees were concerned about the President’s agenda:

• In December 2005, [FHA Commissioner] Mr. Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst. It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.” [NY Times, December 20, 2008]

Not much to be said here. This clip below from 2005 starring Barney summarizes pretty much all you need to know.

Support the Sanders-Feingold-DeMint-Leahy-McCain-Vitter-Brownback Federal Reserve Transparency Amendment to the Financial Reform Bill

excerpt

Here is how Ryan Grim from the HuffPo describes the latest attempt to curb the thieves in charge of this country, or at least make their endless robbery a little more transparent.

As unusual a coalition as can be crafted in the Senate plans to fight for an amendment to the Wall Street reform bill that would open the Federal Reserve to a serious audit by the Government Accountability Office. Sponsored by Sen. Bernie Sanders (I-Vt.), the language is modeled after an amendment that passed the House, sponsored by Reps. Alan Grayson (D-Fla.) and Ron Paul (R-Texas).

Sanders is joined by four Republicans of varying politics: John McCain (Ariz.), Jim DeMint (S.C.), David Vitter (La.) and Sam Brownback (Kan.). If Democrats in the Senate back the measure, it would have at least 63 votes, but Banking Committee Chairman Chris Dodd (D-Conn.) is opposed and has argued against a broad audit.

The chairman of the Judiciary Committee, Sen. Pat Leahy (D-Vt.), is also a cosponsor, as is Sen. Russ Feingold (D-Wisc.). The group is actively gathering cosponsors as the Senate continues to vote to break a GOP filibuster which is preventing debate from beginning.

Needless to say, Zero Hedge fully endorses anything that will make the destruction of America at least a moderately more prolonged affair.

Full letter:

Support the Sanders-Feingold-DeMint-Leahy-McCain-Vitter-Brownback Federal Reserve Transparency Amendment to the Financial Reform Bill

The American people have a right to know who received over $2 Trillion in financial assistance from the Federal Reserve.

Since the beginning of the financial crisis, the Federal Reserve has provided over $2 trillion in taxpayer-backed loans and other financial assistance to some of the largest financial institutions and corporations in the world. Unfortunately, the Fed is still refusing to tell the American people or the Congress who received most of this assistance, how much they received or what they are doing with this money. This money does not belong to the Federal Reserve, it belongs to the American people, and the American people have a right to know where their taxpayer dollars are going.

Therefore, during the consideration of the financial reform bill, we will offer an amendment to increase transparency at the Federal Reserve. Specifically, our amendment:

* Requires the non-partisan Government Accountability Office (GAO) to conduct an independent and comprehensive audit of the Federal Reserve within one year after the date of enactment of the financial reform bill;

* Requires the GAO to submit a report to Congress detailing its findings and conclusion of their independent audit of the Fed within 3 months; and

* Requires the Federal Reserve within one month after the date of enactment to disclose the names of the financial institutions and foreign central banks that received financial assistance from the Fed since the start of the recession, how much they received, and the exact terms of this taxpayer assistance.

* Does not interfere with or dictate the monetary policies or decisions of the Federal Reserve.

59 Senators, 320 Members of Congress, and two federal courts have called on the Federal Reserve to become more transparent.

Our amendment is similar to an amendment that was offered to last year's Budget Resolution that passed the Senate on a bi-partisan vote of 59-39 on April 1, 2009; S.604, the Federal Reserve Sunshine Act that now has 33 bi-partisan co-sponsors; and the Federal Reserve Transparency Act (H.R. 1207) that has 320 bi-partisan co-sponsors (a version of which passed the House Financial Services Committee by a vote of 43-28 and was incorporated into the financial reform bill that passed the House last December).

In August of 2009, the United States District Court for the Southern District of New York also ordered the Fed to disclose the recipients of this taxpayer assistance as a result of a Freedom of Information Act lawsuit filed by Bloomberg News. This decision was upheld by the U.S. Court of Appeals in Manhattan on March 19, 2010.

The Senate Financial Reform Bill does not do enough to make the Fed more transparent.

While the Senate financial reform bill attempts to address the lack of transparency at the Fed, as currently drafted, much of the information regarding the details of who received this financial assistance could be kept secret forever.

As long as the Federal Reserve is allowed to keep the information on their loans secret, we may never know the true financial condition of the banking system. The lack of transparency at the Fed could lead to an even bigger crisis in the future.

We now know that the lack of transparency in credit default swaps led to the $182 billion taxpayer bailout of AIG; the collapse of Lehman Brothers and precipitated the worst financial crisis since the Great Depression.

We know who received TARP funding.

Anyone with access to the internet can go onto the Treasury Department's website and find out exactly who received a bail-out from the $700 billion TARP program. The American people have a right to know the same information from the Fed.

The Sanders Amendment does not undermine the Fed's independence.

This amendment does not take away the "independence" of the Fed and it does not put monetary policy into the hands of Congress.

This amendment does not tell the Federal Reserve when to cut short-term interest rates or when to raise them. It does not tell the Federal Reserve what banks to lend money to and what banks not to lend money to. It does not tell the Federal Reserve what foreign central banks they can do business with and which ones it cannot do business with. It does not impose any new regulations on the Federal Reserve nor does it take any regulatory authority away from the Fed.

This amendment simply requires the GAO to conduct an independent audit of the Fed and requires the Fed to release the names of the recipients of more than $2 trillion in taxpayer-backed assistance.

For nearly nine decades, the GAO has a proven track record of conducting objective, fact-based, nonpartisan, non-ideological, fair, and balanced audits. Through these audits, the GAO helped save the American taxpayers $50 billion last year alone by rooting out waste, fraud, and abuse in the federal government.

Let's not equate independence with secrecy. We cannot let the Fed operate in secrecy any longer. There is simply too much money at stake.

EUR weekly update

The weekly chart of the EUR is still on its way to test the lower band of the trading channel. a test of the 1.27-30 area is mandatory as Germany will find good reasons to delay the final bailout to-after the 9th may due to crucial elections. bailout of Greece is very unpopular with only 33 percent supporting it. I did not not due the math but a substantial portion of the current greece budget goes to paying interest on the debt about 50 percent. that can not be solved by the measures IMF or EU are demanding basically a default would be the healthy thing to do and pay 25-30 percent in a debt restructuring. Greece never really matched the EU criteria and everyone could have seen that. Anyway the question is can Greece do what is best for them BANKRUPTCY or will corruption arrange for them to be bailed out- actually its rather again a backdoor bailout of EU banks - mostly France, Germany and non EU member Swiss. ın any case the next 2 weeks will remain painful until we hear the final solution which in my opinion will be a bailout.

Brainstorming Wednesday - part 1

1. Art Cashin said months ago when Dow reaches 9000 better enter the nearest bomb shelter and now above 11000 he claims we are nowhere near a high - now he has sunk to the levels of UBS as one propriatary indicator of UBS mentioned a few days ago was crying for o top.

	Art Cashin: Markets Are 'Nowhere Near a Top' The rally is "long in the tooth," but market technicals show stocks have more room to run, said the director of floor operations for UBS Financial Services.

Well check this out Art and tell me if you stick to your call - I do not recall having seen rydex at this level. I have to admit though that after a severe correction which has started we might see another new high not that the market should go higher but the manipulators might have a chance to get it higher since the FED can not afford to raise rates at all - every 100 bp rise will cost the government additional 130 bil in interest payments on the one hand. the other is bankrupt banks like Citi an others need years to write off their bad loans against the free ride on the steep yield curve.

ate NAV Adjusted N/U Ratio 4/26/2010 1.602 4/23/2010 1.564 4/22/2010 1.272 4/21/2010 1.162 4/20/2010 1.185 4/19/2010 1.202 4/16/2010 1.174 4/15/2010 0.856 4/14/2010 0.845 4/13/2010 0.837

2. Yesterday I took the liberty to watch the goldman grilling and ı have to say the Goldman crowd was not looking that smart at all and the senators were not either. levin did by far the best job but missed to dig deeper at a crucial point where birnbaum got really nervous. first off all the self assesment showed the real culture of Goldman it was not graceful how they bragged about their achievements and they were quite competitive about each other. the crucial spot besides the obvious dumb the crab on any idiots bid you can find attitude was very clearly presented by levin but as he came across the fact that Birnbaum also used short bets on stocks to add momentum to his big short was thee point where levin missed or ignored the chance to nail goldman. he should have found out how big the short position was since by forcing the stock of competitors like bear or mer down he could also used as a strategic measure to force the shorts on ABX and single name CDS his way. The evil mind of Goldman was not displayed in full manner at all since the other Senators did not do their homework at all - the fact that ACA was the biggest buyer in the one Abacus deal was never really understood by them. the fact remains that goldman put himself first and dumbed all the crab on the other morons which is part of the wallstreet game between hedge funds and prop traders but it is criminal intend to do it with investors who are not sophisticated enough to grasp the risk. Basically the whole CDO operation was a criminal scheme they acted like phony car-salesman who take old cars who are close to crash down repaint them have them look classy and sell them as brand new state of the art cars from Germany.

VIX weekly update - game on

The long expected move has finally started - the price action speaks volume as weeks of low VIX were wiped out on a single day. The Uranus Saturn opposition worked as expected - as market turns happen within a few days after the exact position is reached. we will have more clues with the weekly close as we head for month end as well. at least the 30 level is a save call to make for the short term next 3-4 weeks. some sentiment indicators have reached insane levels and we can expect a substantial move but the manipulators will try to keep the bull campaign alive medium term to unload their big long lines but for the next weeks we can concentrate on playing the short side for stocks and long for VIX.

part 2

3. This is one possibility to identify the big pattern the other is as ı have presented in last weeks post rather a parallel to the events of 1900-1911. which comes to a similar conclusion after all.

excerpt from http://urbansurvival.com/week.htm

Before the chart, a little background:

Once upon a time, a long while ago, I observed during my quest for 'truth' in economics, that the PowersThatBe, the talking heads on the teeve, and the other information sources that actively engage in the programming of humans not to think, had conveniently swept several trillions of dollars that disappeared in the Internet Bubble's bursting (since spring 2000) under the rug. Surely, it wasn't unnoticed by the thousands of people who called brokers and said "Where is my money?" "Gone, but hang in there as you're a long term investor!" was about all they heard back.

So one of our charts for Peoplenomics subscribers oughta be widely circulated - it shows that if you line up the peak of the Dow in January 2000 with the peak in early September of 1929, we're on a very very close replay track. Much closer than even the chart shows if you were to back out inflation, and put in the effects of 1929 deflation, but that'd be real work, and I'm sort of lazy if the truth be told.

No, it's not a perfect replay of 1929, but history doesn't repeat exactly, it only rhymes. So think of this as the rhymes and the crimes chart:

4. The market may oscillate for a few more days around this lvels before entering the correction but the evidence of extreme levels in sentiment and price exhaustion is reached for now.

excerpt

Top Time?

A reader dropped a note yesterday wondering if the intraday high Monday of the Dow at 11,2558.01 would be sufficient for me to stand up and scream "The Top Is In - Run from the Street!"

After patiently disclaiming that this site doesn't offer financial advice (although I am short a bit of financial stock options in my personal account and may add to that position this week) I told this person that I'd address the topic in this morning's column, so here's the answer.

Yes, it's sufficient but a much better case would be made if we could have a weekly print close over 10,241 (Landry) or 11,244 (Ure) or toss your own darts as you will. I moved money from bank to my trading account this morning and may dollar cost average into more put options (the kind of option that can become profitable when the underlying security drops in price.

Oh, sure, futures are down a tad...but what do you expect? Could they continue to rally? Maybe, but AGAIN: "Old sayings on Wall Street like "Sell in May and Go Away!": don't become old sayings because they're full-o-crap, know what I mean?

We're also only 9-days from the predictive linguistics 'hot' date of May 6th which may present a pre-echo of things to come. Or, maybe British voters will come to their senses that day and turn out Gordo the Gold Seller and his ilk...although that's doubtful.

The British Isles are known for sheep production, or so I thought. But a quick glance at M.L. Ryder's work "The History of Sheep Breeds in Britain" doesn't mention Gordo's Labour cronies for reasons I can only guess.

---

Another reason the futures may not be so chipper this morning is that the so-called Financial Overhaul Bill looks to be stalled. Gee, golly, couldn't have happened to a nice bunch of people. NOT.

---

Then there's the thoughtful Eric Sprott piece (from Sprott Asset Management) that explains how problems like Greece propagate systemically: "Weakness Begets Weakness: from Banks to Sovereigns to Banks".

Can't help noticing the latest cover of Martin Armstrong's latest post "the Paradox of Solution" also features this circular reference problem.

Tuesday Brainstorming - part 1

1. Goldman was involved in every crucial part of this crash - one CDO it created other than the one todays hearing is about lost 80% of its value after it was created - which is criminal intend by all means as the boss of trading at Goldman calls it a shitty deal right from the start. Well that CDO was bought by Bear Stearns Hedge Fund which started the bear market campaign in 2007 as they bought 300 mio out of 1 bil. - is that all coincidence or rather a conspiracy.

excerpt

Goldman Sachs CDO Labeled ‘Shi**y Deal’ by Montag in E-Mail

April 27 (Bloomberg) -- Thomas Montag, the former head of sales and trading in the Americas at Goldman Sachs Group Inc., called a set of mortgage-linked investments sold by his firm “one shi**y deal,” according to an excerpt from internal e-mails released by Senate lawmakers.

The transaction was Timberwolf Ltd., a $1 billion collateralized debt obligation holding pieces of other CDOs, according to a statement from the Permanent Subcommittee on Investigations. The CDO also included optimistic side-bets on the performance of CDOs, derivatives in which the firm took the opposite pessimistic side in “many” cases, the panel said.

“Boy that timberwo[l]f was one shi**y deal,” Montag, who is now Bank of America Corp.’s president of global banking and markets, said in a June 22, 2007, e-mail to Daniel Sparks, who ran Goldman Sachs’s mortgage business at the time, according to the statement yesterday. Within five months of Timberwolf’s debut, the CDO had lost 80 percent of its value, and it was liquidated in 2008, according to the panel.

The CDO was among securities that Goldman Sachs sold to clients after deciding the New York-based firm needed to reduce its mortgage holdings, Carl Levin, a Michigan Democrat who leads the panel, said in the statement. Chief Executive Officer Lloyd Blankfein and six other current and former executives will testify today in front of the panel about practices in mortgage securities markets before they collapsed.

Truncated Text

The committee, which began to release documents before today’s hearing, didn’t release the full text of the e-mails. A person briefed on the Timberwolf e-mail confirmed that Montag was the author.

Montag, now 53, didn’t respond to a request for comment and Bank of America spokeswoman Jessica Oppenheim had no immediate comment. Blankfein, 55, will tell the panel his firm didn’t wager against clients, according to a prepared text of his remarks.

“We respectfully disagree with Chairman Levin’s statement,” according to an e-mail from Goldman Sachs spokesman Lucas van Praag. “We did not have a big bet against the housing market, as our performance in residential mortgages demonstrates, and we believe we at all times worked appropriately with our clients. We did try to manage our risk, as our shareholders and regulators would expect.”

The Timberwolf CDO was issued in March 2007, following a Goldman Sachs quarter that ended February 2007 in which one department of the bank shifted from $6 billion of bets that mortgage bonds would perform to $10 billion they would default, according to Bloomberg data and information the panel released.

Cioffi Buys

Bear Stearns Asset Management, the manager of two hedge funds overseen by Ralph Cioffi whose collapse in June 2007 roiled global markets, was among the buyers, purchasing about $300 million, according to the committee.

Sparks, who left the bank in 2008, in one e-mail urged “personnel working on a potential Korean sale to ‘[g]et ‘er done,’ and sent a mass e-mail to the sales force promising ’ginormous credits’ for selling” the debt, according to Levin’s statement. “A congratulatory e-mail was sent to an employee who sold a number of the securities: ‘Great job … trading us out of our entire Timberwolf Single-A position,’ ” the panel said, potentially referring to $36 million of A-rated notes.

...

The U.S. claims Goldman Sachs misled investors by failing to disclose that hedge fund Paulson & Co. -- which was betting against the U.S. mortgage market -- helped the Abacus CDO manager select securities to include in the portfolio. Goldman Sachs has called the SEC’s lawsuit “completely unfounded.” Paulson wasn’t accused of any wrongdoing.

CDO managers select the collateral going into the vehicles, and sometimes reinvest as the underlying positions pay down and trade in and out of holdings.

In Timberwolf’s case, the manager was Purchase, New York- based Greywolf Capital Management LP. The firm’s partners included the late Greg Mount, who joined in 2005 after nine years at Goldman Sachs, where he helped build its CDOs business, according to the prospectus and the firm’s website.

Greywolf, which focuses on corporate debt and says on its Web site it manages $848 million, planned to buy $41 million of the CDO’s junior-most tranches, according to the prospectus. In January 2007, Goldman Sachs underwrote a $502 million CLO managed by Greywolf tied to high-yield company loans, according to Bloomberg data.

Conflicts Disclosed

The conflicts of interest section of Timberwolf’s prospectus said that Greywolf might “take into consideration research and other brokerage services” from investment banks in its decision-making for the CDO and also make separate investments with “interests different from or adverse to” the CDO’s collateral.

“Under the terms of the Collateral Management Agreement,” Greywolf “will be permitted to take whatever action is in the Collateral Manager’s best interest regardless of the impact on the Collateral Assets,” according to the prospectus.

Mount died last April, the company said in a statement at the time. Shawn Pattison, a spokesman for Greywolf, declined to immediately comment. On Goldman Sachs’s role, the prospectus said the firm would act as the sole counterparty for the bullish derivative bets on CDOs that the vehicle was making through so-called credit- default swaps, “which creates concentration risk and may create certain conflicts of interest.”

The Goldman trader responsible for managing Timberwolf’s issuance later characterized the day that the CDO was created as “a day that will live in infamy,” according to part of an e-mail released by the panel.

2. Buffett tried to cheat again and twist an upcoming new regulation to his personal advantage but since it was too obvious it got rejected.

excerpt

Submitted by rc whalen on 04/26/2010 20:30 -0500

There is a lot of news this week on financials coming from Washington and the noise level is drowning out some of the detail. So when I heard that Berkshire Hathaway (BRK) CEO Warren Buffet was trying to slip an exception into the substitute legislation offered by Senator Blanche Lincoln (D-AK) to give his OTC derivatives book special treatment, I put aside my book project and picked up the short sword.

The "Buffet Amendment" would have exempted all of the existing OTC derivatives contracts from the new collateral requirements in the financial reform legislation. The fact that such a ruse was even necessary illustrates why we need to drive a wooden stake through the heart of OTC securities and derivatives, namely that some of the biggest corporates in the world are allowed to play at the roulette table without buying chips. The "AAA" rated BRK, Caterpillar (CAT) and the other big corporates can trade OTC without posting any collateral or initial margin.

What's wrong with this picture?

When you trade on a derivatives exchange, all of the customers must post margin. It does not matter whether you are Warren Buffet or Lloyd Blankfein or Joe Sixpack, you must "show us the money." But apparently Warren Buffet, the man who once called OTC derivatives "weapons of mass destruction," now needs to supplement BRK earnings by trading OTC derivatives without any collateral backing up the trades. Hmm.

Now we know why BRK, CAT and the other big corporate came oozing out of the woodwork last year to defend the OTC derivatives market. JPMorgan (JPM), Goldman Sachs (GS) and the other OTC dealers let Warren Buffet and the other "AAA" corporates play at the roulette table w/o any chips. Wouldn't you like to be able to sit at the big table and play poker alongside Mr. Buffet w/o actually putting up any cash to back your bets?

The best part of all is that Mr. Buffet called upon US Senator Ben Nelson (R-NE) to create a derivatives loophole that would benefit his company to the tune of billions, a proposal Senate Democrats quickly quashed. It is my impression from speaking to members of both parties in Congress that Nelson is viewed as a complete idiot by his peers in the Senate. Maybe the Sage of Omaha needs to find a new boy to carry his dirty laundry. Do you think?

In any event, keep an eye on Mr. Buffet and the gang who populate the BRK CSUITE. Despite their protestation of being conservative, "fundamental value" investors, it seem that Buffet and Co. are no different than the OTC derivatives dealer banks which enable his derivatives speculation.

And in case you find this opinion a little harsh, just remember that Mr. Buffet and his colleagues at BRK are the same folks who have been sanctioned by the SEC on several occasions for aiding and abetting the manipulation of corporate earnings using side letters and other canards taken from the insurance markets. The use of side letters in the case of American International Group (AIG) to falsify corporate financial statements is the functional equivalent of using OTC derivatives sans collateral or initial margin to goose BRK earnings. Do we see a pattern forming perhaps?

But of course the Big Media is probably going to ignore this story tomorrow. Other than a mention on WSJ (Damian Paletta who broke the story), CNBC earlier today (kudos to Michelle Caruso-Cabrera for enjoying the moment so) and MarketPlace radio, there has been virtually no press coverage of the Buffet Amendment.

I am attaching the revised OTC derivatives amendment that Chris Dodd (D-CT) and Senator Lincoln hope to put into the financial reform bill this week. One of these days I will tell you how Chris Dodd worked his way through "high" school. Is this a great country or what?

Be well -- Chris