-- Posted Monday, 20 July 2009 | | Source: GoldSeek.com
The following are some snippets from the most recent issue of the International Forecaster. For the full 22 page issue, please see subscription information below.
US MARKETS
Due to the fact that Goldman Sachs is currently the favorite of Washington they are raking in massive profits during a time when most banks and brokerage firms are struggling for survival.
Due to a very successful second quarter, Goldman has set aside $226,156 per employee in compensation – a 75% increase per employee. That means annualized compensation could be $1 million per employee for the year. We find this of great interest inasmuch as the recently converted bank received a $10 billion taxpayer bailout via Goldman’s connections in Washington. They also received a myriad of benefits from several other government schemes over the past two years. It is nice to know that in part American taxpayers made this possible while unemployment is running on a U6 basis at 20.5%, and Americans are losing their homes by the millions.
Pay surged 75% in the second quarter and compensation and benefits costs were $6.65 billion, up 37% from the equivalent quarter in 2008.
The immense profits of 33% were mainly due to trading profits of $2.7 billion. Goldman made up 24% of the Black Box program. Program trading made up 73% of all NYSE trading.
High frequency trading is one of the fastest-expanding strategies on Wall Street. The Street is no longer a place of raising capital, but a vast gambling casino. This is moral hazard at its utmost. Needless to say, the most egregious example is Goldman Sachs. A perfect example of too big to fail as an owner of the Fed. There is no question its activities distorts markets. They are leaders in credit default swaps and taxpayers bailed out Goldman via AIG for $13 billion that you were allowed to pay for. In addition, Goldman is the world’s largest insider-trading hedge fund and they are kings of crony capitalism. Almost everything this conglomeration of crooks are involved in is to the detriment of the US economy and the American people collectively. They rig markets with the complicity of our government who they have bought and paid for. They are master manipulators and creators of bankruptcies.
Then we have the arrest of Russian-American programmer Sergey Aleynikov, who allegedly tried to steal Goldman’s secret code to unlocking Goldman’s method of front-running stock, and commodity trades. This platform, that we were told came from the government, allowed rapid fire trading of stocks and commodities. In fact, the industry considers such activity as front running. In this process Goldman says there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways. If that is the case, what is to stop Goldman from doing the same thing? Did they manipulate markets? Their earnings say they did. Goldman was able to read data on trades before it’s committed, and place their own buys and sells according to that nanosecond, thus, allowing them to essentially steal boatloads of money every day from the traders and others worldwide. Goldman was able to front-run any transaction, stealing pennies in each transaction.
The criminals here may be both Sergey and Goldman or just Goldman. We’ll probably never know because the Illuminati protects their own. One thing is for certain and that is that Goldman won’t be using that program any more and markets could well return too normal. All such kinds of market manipulators have to be stopped. The FBI has to get to the bottom of what has really transpired here.
The bogus CPI figures were released for June up 0.7%, the largest increase since July 2008.
The surtax on incomes of $280+k for healthcare will kill small biz, which creates something like 70% of new jobs.
The surtax on wealthier Americans would be imposed based on adjusted gross income, meaning it would also apply to capital gains and dividends, which are currently taxed at a 15 percent rate.
Pollster Frank Lutz says public support for Obama Care has fallen 10 points in the past 3 weeks. That’s why Team Obama is trying to jam it through now – before public dissent chills Congress.
Wells quietly sells $600 million in troubled subprime loans The industry publication said the loans sold for 35 cents on the dollar, about double what most hedge funds were offering.
National Mortgage News: How exactly did the publicly traded Wells wind up with so many crummy non- prime loans from these once highflying firms? Answer: I don't know and Wells isn't talking.
Perhaps one reason the PPIP (Public-Private Investment Program) and the Federal Deposit Insurance Corp.'s 'Legacy Loan' sale initiative (involving whole loans, presumably residential and commercial mortgages) hasn't caught fire is 'sunshine,' that is, the concept of disclosure. If bankers and investment bankers use these government programs that means all the messy details of their crappy investments might see the light of day, which could anger shareholders — and maybe even board members who might lean toward being "activists.
No matter how you do the math, Wells is going to take a nice hit on the sale, if it hasn't done so already. Will the public ever get wind of the NPL sale price (outside this story)? That's hard to say. The Securities and Exchange Commission requires that publicly traded companies disclose "material events" in their 10-Qs and Ks but when you have a mega bank the likes of Wells a $600 million loan auction might garner a sentence in the next earnings report, at best.
Goldman’s record quarter was partly the result of increased leverage and exposure. Why was Goldman allowed to lever up? (Yeah, we all know why.) Zereo Hedge: Why Does Goldman Need A Fed Exemption For VaR Calculations? Lately the topic of Goldman's VaR has taken on significant prominence, not least because as Zero Hedge disclosed yesterday, it hit a record high.
The clue may come from a February 5 letter by the Federal Reserve to Goldman CAO Sarah Smith.
The letter had come in response to GS requests for "temporary exemptions from the application of certain aspects of the Board's Market Risk Rules for state member banks and bank holding companies and the Board's general risk-based capital rules for bank holding companies."
Citigroup is close to a secret agreement with one of its main regulators that will increase scrutiny of the US bank and force it to fix financial, managerial and governance issues.
Pacific Investment Management Co.’s Paul McCulley said the Federal Reserve should push inflation above its long-term target to coax consumers to spend money if the U.S. economy stays mired in recession.
“The way to make monetary policy effective is for the central bank to promise to be irresponsible,” McCulley wrote in a July commentary posted to Pimco’s Web site, citing a 1998 paper written by Princeton University economist Paul Krugman.
“Radically” different central-bank policy may be needed to change inflation expectations if the U.S. economy starts to resemble Japan’s era of deflation, McCulley wrote. He said the U.S. economy is not currently suffering from deflation. In addition to Krugman’s paper, McCulley cited a May 2003 speech by Fed Chairman Ben S. Bernanke as a blueprint for policy.
McCulley and his colleagues at Newport Beach, California- based Pimco, the world’s largest bond fund manager, have forecast a “new normal” in the global economy that will include heightened government regulation, lower consumption and slower growth. The U.S. government may need to enact a second stimulus plan to spur growth in the coming months, McCulley said July 7 in an interview with Bloomberg Radio.
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