konane's Blog

"DON'T GET TOO COMFORTABLE

@ May 10, 2010 8:49 AM

Source Boortz.com 

Looks like the people of Utah have finally called the bluff. Senator Bob Bennett in Utah has been in Washington for 18 years. He was running for a fourth term. Key word .. "was." GOP delegates at the state convention voted for another guy by the name of Mike Lee, rather than sending Bob Bennett back to the statewide race.

Bennett's sin? Apparently the voters didn't appreciate his vote for the so-called Toxic Asset Relief Program (TARP). The voters evidently have this odd idea that it is not the role of government to bail out businesses that fail. Maybe they also realized that when the bill was passed the funds were supposed to be used to purchase toxic assets from troubled companies ... but were used instead to effect complete bailouts.

At any rate ... there are a lot of politicians on this Monday morning who received a rather rude wake up call over the weekend. Couldn't happen to a nicer crowd."

http://boortz.com/nealz_nuze/2010/05/dont-get-too-comfortable.html

http://market-ticker.org/archives/2294-KaBoom-Britain-And-Now-Germany.html

http://www.zerohedge.com/article/guest-post-your-senator-bankster

Since I've never played the stock market, no loss no gain for me.  My primary motivation posting financial market information is to hopefully bring back integrity to our financial system for the safety of eveyone's money.

Excellent article.

_________

Source Zero HedgeSubmitted by smartknowledgeu on 05/07/2010 02:39 -0500

"Yesterday’s slide in the US stock markets provides further proof that the world’s financial markets are nothing more than a rigged casino where the house (Wall Street) holds by far the better odds in every game (currency markets, stock markets, derivative markets, commodity markets) it offers the mark (the retail investor).  How else could the US DJIA lose 700 points in a 10-minute span and a number of blue chip stocks lose 25%, or 30% in a matter of minutes as well? The answer? Wall Street’s use of predatory algorithmic High Frequency Trading (HFT) programs that are designed to trigger cascade-like buying and selling. To believe that, as an individual investor, you have a snowball’s chance in hell of beating these Wall Street trading programs that front run your trades or block your trade executions faster than you can blink your eye is tantamount to believing that skill is involved in winning when you shimmy up to the slot machine stool at the Bellagio in Vegas.

Predatory algorithmic HFT programs aren’t called “predatory” without good reason. Not that yesterday’s selloff wasn’t partially the result of fear injected into a Fed Reserve inflated stock market bubble, because it was. But Wall Street deployed HFT programs had a lot to do with the cascading nature of the decline in yesterday’s trading. Continuing our casino analogy, HFT programs act in the same capacity as the thugs employed by casinos that take you to the back room to rain down their “thuggery” upon you if you start winning too much.  HFT programs are designed to block the retail investor from making successful trades against the trades of the house (Wall Street) and often prevent the retail investor from obtaining fair prices in the execution of trades in numerous financial markets.

Consider the following example. Stock A’s bid is $10.10 and the ask is $10.13.  An investor places an order to buy at $10.13. Instead of his order being filled and executed as it would if human traders were executing the trade, HFT programs often immediately step up the ask price to $10.14 and screw both parties in the trade.  Depending on the orders that HFT programs “see”, sometimes the HFT will see an order at $10.13, and step up the price to $10.18 so the bids follow higher and the bid price gets reset from $10.10 to $10.13 almost immediately.  Or, if the bid price does not follow higher, then the bid-ask spread becomes grotesquely distorted from $0.03 to $0.08 for no other reason than HFT programs are blocking liquidity.  Should the human trader withdraw his order to buy at $10.13, then often the bid-ask spread almost immediately returns to $0.03 and the ask will subsequently fall from $10.18 back to $10.13.  Should he place the order again seconds later, however, the bid-ask spread will often immediately increase again with the bid price increasing to a point higher than $10.13 again.

The HFT programs execute the shame shenanigans in the options markets depending on what side of the market they are manipulating. I have many times been forced to take a lower profit on options trades because of HFT programs. For example, if I placed an order to sell on option contracts at $2.50 when the bid is at $2.50 and the ask is $2.60, instead of my order filling, the bid often immediately falls to $2.40 and the ask becomes $2.50, blocking my order from filling.  HFT programs run amok in options markets as well.  This is Skynet from Terminator rigging markets, destroying liquidity and unfairly rigging prices of all possible financial instruments that trade in every conceivable market, all with the blessings of the SEC.

Wall Street has been running these types of scams ever since advances in technology have enabled them to develop algorithmic programs to manipulate markets. In fact, on my company’s website, I have stated the following message for a long time now:

“Today, when stock markets rise in the face of horrid economic fundamentals, fundamental and technical analysis are inadequate when making critical decisions about your financial future…If one expects to be profitable in today's investment world, one MUST realize that ALL MARKETS ARE RIGGED, including gold, silver, currency and stock markets…Without understanding the fraud and rigging games of the financial oligarchs, it is impossible to accurately predict long-term trends. It is a near certainty that future shocks to the economic system will catch the vast majority of all investors unprepared and we expect great shocks to hit the global economy at some point in 2010.”

The only difference is that when I started pushing this message a decade ago, people laughed off my proclamations and accused me of being enamored with conspiracy theories. Today, more and more people finally are awakening to the reality that such a message is not a conspiracy but a fact.

So this is how the Wall Street Casino Scam operates.

The ratings agencies like Moodys and Standard and Poors are the pretty <snip>tail waitresses that lure the mark (the retail investor) into the Casino (stock markets) with free alcoholic drinks (abominably horrible and deceitful credit ratings of financial instruments) to instill the mark with the false sense of confidence necessary to induce gambling in the rigged Casino.  The regulators like the CFTC and the SEC are the pit bosses that oversee the floormen (Wall Street firm CEOs) that oversee the table games dealers (the firm’s traders) and ensure the games (stock markets, currency markets, commodity markets) you are allowed to play possess a feature (HFT trading programs) that ensures that the odds will always enormously be in favor of the house.  The pit boss oversees all floor dealers and conspire with the regulators (the <snip>tail waitresses) to give gamblers (the investor) a sense that all dealings are legitimate even though the odds of every table game (currency markets, commodity markets, stock markets) are insanely rigged in favor of the house (Wall Street firms).  If we consider the table game of blackjack, in a real casino, should you receive a good hand, the dealer will pay out your bet. In the case of Wall Street, due to HFT programs, in many instances, should an investor receive a favorable hand (i.e., a favorable move in the stock market) in the game he or she is playing, HFT programs move in to prevent the bet from paying out in full or paying out at all (an investor’s sell order never executes at the price at which the market has informed the investor that he or she can cash out).

In essence, financial markets are rigged exactly like casinos except for one difference.   The predatory algorithms executed by HFT programs ensure the winnings of the house to a much greater extent than any Casino table game is able to accomplish.  It this sense, Wall Street is rigged to a greater extent than even casinos. In the instances when you win, they deploy HFT trading programs that prevent the bet from paying out full value so that the house (Wall Street firms) can step in and earn profits from a trade it spots AFTER an order has already been placed.  Or in the mirror example, HFT programs allow the house (Wall Street firms) to step in front of trades they “see” and front run them for their own profits, again screwing the retail investor out of a lower price in a buy transaction. In these cases, which must happen by the thousands every day, the HFT programs employed by Wall Street screw both the buyer and seller in the transaction as it always attempts to widen the losses or lessen the gains of both parties involved.  In some instances, frustrated traders leave the game tables so liquidity dries up which leads to the establishment of even more grossly distorted and unfair bid and ask prices. Despite this practice being commonplace, the pit bosses of the giant rigged Wall Street casino, men like Goldman Sachs’s Lloyd Blankfein, want us to believe that their enormous profits are derived because of their upstanding integrity and above-average intelligence of his firm’s employees.

Next on the list of financial weapons of mass destruction? The $600 trillion (notional value) of the derivatives market.  Oh, what joy we’ll experience when the banksters are eventually forced to unwind a fraction of this market and various parties will actually be forced to make good on these contracts when the financial instruments insured by them start heading south (or the true value of them are finally recognized, whichever comes first). It's no wonder that the price of gold has diverged from the behavior of the US dollar and US stock markets on multiple days for the last several weeks.  The next significant dip in gold/silver price that occurs may be the last best buying opportunity in "real" money for years."

About the author: JS Kim is the Chief Investment Strategist and Managing Director of SmartKnowledgeU, LLC

http://www.zerohedge.com/article/near-1000-point-slide-djia-compels-further-investigation-wall-street-casino-scam

"US to announce Mexico trucking plan soon-LaHood

"WASHINGTON, May 6 (Reuters) - President Barack Obama's adminstration will soon announce its plan to reopen the U.S. border to Mexican trucks and end a dispute that prompted Mexico to slap duties last year on $2.4 billion worth of U.S. goods, a top U.S. official said on Thursday. ..............."

http://www.reuters.com/article/idUSN0626694320100506

Submitted by Tyler Durden on 05/06/2010 20:13 -0500

Source Zero Hedge

"The Senate is officially bribed, paid for and in the pocket of the big banks. Too disgusted to even comment on this. This country deserves all that the "big banks" have in store for it.

Below is the full press release from Senator Kaufman:

WASHINGTON, DC – Senator Ted Kaufman (D-Del.) released the following statement after the Senate voted down the Brown-Kaufman amendment to Wall Street reform legislation, 33-61.

“I am disappointed. This is certainly a defeat for those who are concerned about the dangers of financial concentration in this country. 
 
“On the other hand, against the odds and starting from nowhere, I am proud that Senator Sherrod Brown and I helped to start a nationwide debate on the need to break up ‘too big to fail’ banks and succeeded in getting a vote on our amendment.
 
“The debate on the floor and around the country was not short – it lasted for weeks.  In the last month, this proposal and debate was met with favorable reaction from many respected policymakers, economists and former regulators.  I believe this idea was sound policy – and I further believe that a mainstream consensus will continue to grow that these megabanks are too large, too complex and too internally conflicted to regulate successfully.
 
“Some causes are worth fighting for, and for me, the concern about the risks ‘too big to fail’ banks pose to the American economy and people is deep and profound given the economic tragedy millions of American have endured.  I believe the debate itself – though failing to gain a majority of votes – has helped to change attitudes about the degree of financial concentration and power these megabanks now represent.  Going forward, I hope the Congress will work to strengthen the bill’s ban on proprietary trading by banks.  And I hope that regulators will understand that they should use their discretion under existing statutory authority to break up megabanks when the financial system is threatened.”

http://www.zerohedge.com/article/senate-rejects-brown-kaufman-proposal-break-largest-banks

May 6, 2010 Posted by Scott at 10:05 AM

"Based on a recent report in London's Telegraph, it appears that the financial crisis in Greece is awakening some festering European resentments dating back to World War II. Although Greece is in a position of great weakness, some Greeks think that now is the time to settle old scores:

The mayor of Athens, Nikitas Kaklamanis, led the call for Germany to pay reparations for the conquest and occupation, saying; "You owe us 70 billion euros for the ruins you left behind."

Greece's deputy prime minister, Theodoros Pangalos, also dragged up the war, stating; "The Nazis took away the Greek gold that was in the Bank of Greece, they took away the Greek money and they never gave it back."

Which reminds me. It was the Greeks who gave us the word for democracy. They also gave us the the words for demagoguery, tyranny, crisis and chaos.

The Wall Street Journal picks up on the latter two in "Crisis deepens; chaos grips Greece." Left-wing protesters wielding a fire bomb killed three bank employees yesterday when the bomb hit a bank in central Athens.

Sen. Jim Demint brings it all back home: "U.S. taxpayers are helping finance Greek bailout."   (article below)

Via Instapundit.

UPDATE: A reader forwards an interesting article from the Australian Business Spectator asking "Will German voters cut the cord?"

http://www.powerlineblog.com/archives/2010/05/026238.php

________

"The International Monetary Fund board has approved a $40 billion bailout for Greece, almost one year after the Senate rejected my amendment to prohibit the IMF from using U.S. taxpayer money to bailout foreign countries.

Congress didn’t learn their lesson after the $700 billion failed bank bailout and let world leaders shake down U.S taxpayers for international bailout money at the G-20 conference in April 2009. G-20 Finance Ministers and Central Bank Governors asked the United States, the IMF’s largest contributor, for a whopping $108 billion to rescue bankers around the world and the Obama Administration quickly obliged.

Rather than pass it as stand-alone legislation, President Obama asked Congress to fold the $108 billion into a war-spending bill to send money to our troops.

It was clear such an approach would simply repeat the expensive mistake of the failed Wall Street bailouts with banks in other nations. Think of it as an international TARP plan, another massive rescue package rushed through with little planning or debate. That’s why I objected and offered an amendment to take it out of the war bill. But the Democrat Senate voted to keep the IMF bailout in the war spending bill. 64 senators voted for the bailout, 30 senators voted against it.

Only one year later, the IMF is sending nearly $40 billion to bailout Greece, the biggest bailout the IMF has ever enacted.

Right now, 17 percent of the IMF funding pool that the $40 billion bailout is being drawn from comes from U.S. taxpayers. If that ratio holds true, that means American taxpayers are paying for $6.8 billion of the Greek bailout. Although the $108 billion extra that Congress approved for the IMF in 2009 hasn’t yet gone into effect, you can bet that once it does Greek bankers will come to the IMF again with their hat in hand. And, if other European Union countries see free money up for grabs they could ask the IMF for bailouts when they get into trouble, too. If we’ve learned anything from the Wall Street bailouts it’s that just one bailout is never enough.

To hide the bailout from Americans already angry with the $700 billion bank bailout, Congress classified it as an “expanded credit line.” The Congressional Budget Office only scored it as $5 billion because IMF agreed to give the United States a promissory note for the rest of the bill.

As the Wall Street Journal wrote at the time, “If it costs so little, why not make it $200 billion. Or a trillion? It’s free!”

Of course, money isn’t free and there are member nations of the IMF that won’t be in a hurry to pay it back. Three state sponsors of terrorism, Iran, Syria and Sudan, are a part of the IMF. Iran participates in the IMF’s day-to-day activities as a member of its executive board.

If the failed bank bailout and stimulus bill wasn’t enough to prove to Americans the kind of misguided, destructive spending that goes on in Washington this will: The Democrat Congress, aided by a few Republicans, used a war spending bill to send bailout money to an international fund that’s partially-controlled by our enemies.

America can’t afford to bail out foreign countries with borrowed dollars from China and certainly shouldn’t allow state sponsors of terror a hand in that process.

This has to stop if we are going to survive as a nation. Congress won’t act stop such foolishness on its own. The only way Americans can stop this is by sending new people to Washington in November who will."

Sen. Jim DeMint is a Republican U.S. Senator from South Carolina."

http://dailycaller.com/2010/05/06/u-s-taxpayers-are-helping-finance-greek-bailout/

All I can say is GW was NOT holding it when it broke. 

___________________

"Feds let BP avoid filing blowout plan for Gulf rig

By MICHAEL KUNZELMAN and RICHARD T. PIENCIAK, Associated Press Writers

Thursday, May 6, 2010

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/05/05/national/a165540D79.DTL

Posted by Karl Denninger in Regulatory at 14:41

What's your excuse now, CONgress?

May 5 (Bloomberg) -- Former Merrill Lynch & Co. Chief Executive Officer David Komansky said he regrets promoting the 1999 repeal of the Glass-Steagall Act that separated commercial and investment banks.

“Unfortunately, I was one of the people who led the charge to try to get Glass-Steagall repealed,” Komansky, 71, said in a Bloomberg Television interview today. “I regret those activities and wish we hadn’t done that.”

....

John S. Reed, former co-chief executive officer of Citigroup Inc., also said in January that U.S. lawmakers were wrong to repeal Glass-Steagall.

That's two.

Now do it Congress.

You were conned.  We won't hold it against you - if you put it back now.  If you pull the curtain down on Greenspan's meddling and your ex-post-facto legalization of his unlawful act of approving a merger he knew was illegal.

This is the solution to the problem and you know it.

It kept the banking system safe for 50 years.

It was 14 pages.

And you can put it back in force with one."

http://market-ticker.org/archives/2280-TWO-Former-IB-CEOs-Want-Glass-Steagall-Back.html

Source Business Insider

"A bill sponsored by Ron Paul and Alan Grayson to thoroughly audit the Fed, passed the House. However in a brazen move that ought to offend the sensibilities of every citizen, the Fed is lobbying Senate members to water down the bill so that it is meaningless.

The Huffington Post tells the story in Fed Privately Lobbying Against Audit.

The Federal Reserve is privately lobbying against a bipartisan Senate amendment that would open the central bank to an audit by the Government Accountability Office, according to documents distributed to Senate offices by a Fed official.

In order to obtain the documents, HuffPost agreed not to reveal the name of the Federal Reserve official who did the specific lobbying in question.

"As I mentioned, we believe that the bipartisan Corker-Merkley provision in the Dodd Bill is quite strong and addresses issues of transparency and disclosure without impinging on the independence of monetary policy," the official goes on.

Merkley teamed with Sen. Bob Corker (R-Tenn.) on an audit provision, but Merkley himself says he'd prefer to go further. "I appreciate Representative [Alan] Grayson's concerns over accountability at the Federal Reserve. I have been a strong proponent of Fed reform and voted against the re-confirmation of Ben Bernanke because the Fed has been so lax in using its regulatory powers," Merkley said in a statement to HuffPost, responding to an analysis from Rep. Alan Grayson (D-Fla.) showing that the Senate bill did not meaningfully expand transparency.

Dodd Bill Would Allow Fed To Hide Its Spending

Inquiring minds are reading Dodd Bill Would Allow Fed To Hide Its Spending.

The Wall Street reform bill headed for a test vote on the Senate floor Monday night will allow the Federal Reserve to continue to pump trillions of dollars into major banks largely in secrecy, the co-author of House language that would open the central bank to an audit charged in a memo to the Senate.

"The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn't do anything of the sort. I'm going to run down the details for you, and reprint the legislative language so you can read it yourself," writes Rep. Alan Grayson (D-Fla.).

It would not allow the GAO to look into the Fed's massive purchase of toxic assets, its hundreds of billions in foreign currency swaps with other central banks or its open market operations, among other restrictions.

Grayson and co-author Rep. Ron Paul (R-Texas) passed legislation through the House that would allow the Government Accountability Office (GAO) to audit the Federal Reserve and, after a delay, release the information to Congress. It was a remarkable victory, with a populist coalition beating back the combined lobbying efforts of the Treasury Department, the Fed and Wall Street banks. ....

What You Can Do

All you need to know is that if the Fed is for the Dodd bill or the Corker-Merkley provision, then you do not want either.

Please phone and fax your senators and tell them you want the Fed audited fully, and you do NOT want the watered down Dodd bill or the or the Corker-Merkley provision.

Tell them you do support the Grayson/Ron Paul bill exactly as passed by the house.

Here is a directory sorted by state of all the Senators of the 111th Congress.

You can also look up the phone numbers in the Online Directory For The 111th Congress but the first link may be easier to use for just senators. 

Send A Message

Call, Email, and Fax Now!"

http://www.businessinsider.com/fed-privately-lobbies-senate-to-kill-audit-2010-5#ixzz0n1cisTpV

Tuesday, May 4. 2010
Posted by Karl Denninger in Macro Economics at 12:45

"Does Anyone Remember 1931?
http://market-ticker.org/archives/2271-Does-Anyone-Remember-1931.html

http://www.wqad.com/news/whnt-explosion-redstone-arsenal-050410,0,4550942.story

We knew the bus was cranked headed in the taxpayers' direction for the ultimate cost of cleanup and higher energy costs.

______________

"Federal Law Could Limit BP's Liability Over Oil Spill

CHRIS KAHN | 05/ 3/10 06:28 PM |

Source The Huffington Post

NEW YORK — The oil spill spreading across the Gulf of Mexico has drained $32 billion from BP's stock market value. Lawsuits, fines, cleanup and reputation-repair are certain to cost the company billions more and could tie up BP for many years to come.

Yet the still-unfolding environmental disaster isn't likely to put one of the world's largest oil companies out of business.

BP PLC earned close to $40 billion in 2008 and 2009 combined, and more than $6 billion in the first three months of 2010.

Exxon Mobil – which shelled out more than $4 billion in cleanup costs and legal payouts after the Exxon Valdez spill in Alaska 21 years ago – managed to pull through the disaster just fine. Today it is the world's largest publicly traded oil company.

In the long run, BP will be fine too, said Mark Gilman, an analyst at The Benchmark Co.

"Let's not get hysterical here," he said. "They're going to survive this."

Still, London-based BP will face a litany of challenges as a result of last month's accident, not the least of which will be scrutiny from politicians and regulators in Washington. BP could find itself at a competitive disadvantage when vying for offshore drilling permits if the Obama administration moves ahead with plans to open vast swaths of the U.S. coast to oil exploration.

How much the disaster costs depends on how much worse the spill becomes, and how much fault is ultimately assigned to BP for the oil-rig explosion and fire that caused the spill. The oil company leased the offshore platform from Transocean Ltd. and hired subcontractors, including Halliburton Co., to help drill the well that is now spewing an estimated 200,000 gallons a day.

On Monday, BP gave assurances to shrimpers, oil workers and scores of others that they will be compensated for any "legitimate and objectively verifiable" claims.

BP is spending $6 million a day to contain the oil spill; the federal Oil Pollution Act requires BP to pay the cost of any cleanup work done by government agencies such as the Coast Guard and Homeland Security. But the real costs will come later, when BP starts paying for damage to wildlife, coastal businesses and tourism.

"The worst-case scenario is enormous," said Keith Hall, a New Orleans lawyer who represents oil and gas companies. "There are already a number of wrongful-death and personal injury cases out there. There will be no doubt more."

Fadel Gheit, a market analyst with Oppenheimer & Co., estimated that every day that oil seeps into the gulf, BP loses hundreds of millions of dollars in liability claims. Overall, Gheit estimated BP could pay anywhere between $5 billion and $15 billion for the cleanup, damage claims and lawsuits.

Federal law sets a $75 million limit how much an oil company has to pay for damages such as lost wages and economic suffering. But lawyers said the cap can be lifted if BP is found to have failed to meet federal safeguards or was otherwise grossly negligent.

People can also pursue claims in state court and file for damages through the Oil Spill Liability Trust Fund, which was established after the Exxon Valdez. The fund, which collects 8 cents from the industry for every barrel of oil produced or imported to the U.S., has about $1.6 billion available to cover damages.

BP, the largest oil and gas producer in the U.S., has been blamed for a number of big accidents in the past decade.

_ An explosion at a BP refinery in Texas City, Texas, in 2005 killed 15 people and injured 170. Regulators in October hit BP with a record $87 million fine for failing to correct safety hazards at the plant. BP is contesting the fine.

_ More than 200,000 gallons of oil spilled from a BP pipeline in Alaska in March 2006, the largest-ever spill on Alaska's North Slope. BP paid about $20 million in fines.

Now, a class-action lawsuit filed in federal court in New Orleans blames BP, Transocean, Halliburton and Cameron International Corp. – a maker of rig equipment – for faulty behavior before and after the April 20 accident.

BP has pointed the finger at its partners. CEO Tony Hayward – who took over BP after the Texas City blast – said Monday on ABC's "Good Morning America" that a failure of Transocean's equipment led to the spill.

David Kotok, chief investment officer of the Sarasota, Fla., money-management firm Cumberland Advisors, said early predictions are likely to understate the fallout from the disaster. Neither the 1969 Santa Barbara, Calif., offshore oil spill nor the Exxon Valdez is a useful comparison because the current slick could be much bigger and harder to contain.

"We're looking at maybe two to three months" of oil flowing into the gulf, he said. "The devastation is huge. This is like Three Mile Island."

Experts say the green image the company cultivated in its advertisements is vulnerable. Market researcher Eileen Campbell valued BP's brand at $17.3 billion, mostly because of its interest in the environment. BP invests in biofuels, wind and solar energy, and it supports capping carbon emissions.

The spill will probably make it tougher for BP to expand in U.S. waters, analysts say.

"BP is under watch now," Gheit said. "They may not be welcome in the area. So if I'm going to issue a permit for BP to drill a well, I'm going to take a much closer look at them."

___

AP Business Writer David Koenig in Dallas contributed to this report."

http://www.huffingtonpost.com/2010/05/04/bp-could-face-billions-in_0_n_562271.html

http://www.foxnews.com/world/2010/05/03/usama-bin-laden-living-comfortably-iran-documentary-asserts/