This is a very good link to a great analysis of the silver markets.
www.sprott.com/Docs/MarketsataGlance/2011/MAAG-11-11-Silver-Producers-A-Call-to-Action.pdf
Wednesday, November 30, 2011
How Paulson Gave Hedge Funds Advance Word
Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns Cos. had sold itself for just $10 a share to JPMorgan Chase & Co. (JPM)
Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae (FNMA) and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue.
Paulson had been pushing a plan in Congress to open lines of credit to the two struggling firms and to grant authority for the Treasury Department to buy equity in them. Yet he had told reporters on July 13 that the firms must remain shareholder owned and had testified at a Senate hearing two days later that giving the government new power to intervene made actual intervention improbable.
“If you have a bazooka, and people know you have it, you’re not likely to take it out,” he said.
On the morning of July 21, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.
A Different Message
At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc. (GS), of which Paulson was chief executive officer and chairman from 1999 to 2006. In addition to Eton Park founder Eric Mindich, they included such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” -- a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Stock Wipeout
Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.
The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.
There’s no evidence that they did so after the meeting; tracking firm-specific short stock sales isn’t possible using public documents.
And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.
Rampant Rumors
At the time, rumors about Fannie and Freddie were tearing through the markets. The government-chartered firms’ mandate, which continues today, is to buy mortgages from banks and repackage them into securities either for their own portfolios or to sell to others. The banks can then use the proceeds from those transactions to write new mortgages.
By mid-2008, delinquencies and foreclosures were soaring, and the GSEs set aside billions of dollars against future losses. In the first six months of 2008, they racked up net losses of $5.46 billion as they slashed dividends and marked down the values of their huge inventories of mortgage-backed securities.
On Wall Street, confusion reigned. UBS AG analyst Eric Wasserstrom on July 10 cut his share price target on Freddie to $10 from $28. The next day, Citigroup Inc. (C) analyst Bradley Ball reiterated a “buy” recommendation on the two GSEs. On July 12, the Times of London, without citing a source, reported that Paulson was contemplating a $15 billion capital injection into the firms.
Shares Rally
At the time Paulson privately addressed the fund managers at Eton Park, he had given the market some positive signals -- and the GSEs’ shares were rallying, with Fannie Mae’s nearly doubling in four days.
William Black, associate professor of economics and law at the University of Missouri-Kansas City, can’t understand why Paulson felt impelled to share the Treasury Department’s plan with the fund managers.
“You just never ever do that as a government regulator -- transmit nonpublic market information to market participants,” says Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”
Janet Tavakoli, founder of Chicago-based financial consulting firm Tavakoli Structured Finance Inc., says the meeting fits a pattern.
“What is this but crony capitalism?” she asks. “Most people have had their fill of it.”
A Lawyer’s Advice
The fund manager who described the meeting left after coffee and called his lawyer. The attorney’s quick conclusion: Paulson’s talk was material nonpublic information, and his client should immediately stop trading the shares of Washington- based Fannie and McLean, Virginia-based Freddie.
Seven weeks later, the boards of the two firms voted to go into conservatorship under the newly created Federal Housing Finance Agency. The takeover was effective Sept. 6, a Saturday, and the companies’ stock prices dropped below $1 the following Monday, from $14.13 for Fannie Mae and $8.75 for Freddie Mac (FMCC) on the day of the meeting. Various classes of preferred shares lost upwards of 85 percent of their value.
A complete list of those at the Eton Park meeting isn’t publicly available. A Treasury Department roster of those expected to attend, obtained by Bloomberg News under the Freedom of Information Act, includes Ripplewood Holdings LLC CEO Timothy Collins, who says, through a spokesman, that he didn’t participate.
Storied Investors
At least one fund manager who wasn’t listed in the FOIA document, Daniel Stern of Reservoir Capital Group, did attend, says the manager who described the meeting.
The gathering comprised some of Wall Street’s most storied investors. Mindich, a former chief strategy officer of New York- based Goldman Sachs, started Eton Park in 2004 with $3.5 billion, at the time one of the biggest hedge-fund launches ever. Singh, a former head of Goldman’s proprietary-trading desk, also began his fund in 2004, in partnership with private- equity firm Texas Pacific Group Ltd.
Lone Pine’s Mandel worked as a retail analyst at Goldman before joining Julian Robertson’s Tiger Management LLC, one of the most successful hedge funds of the 1980s and 1990s. He started his own firm in 1997. Och was co-head of U.S. equity trading at Goldman before founding Och-Ziff in 1994. The publicly listed firm managed $28.9 billion in November.
Goldman Alums
One other Goldman Sachs alumnus was at the meeting: Frank Brosens, founder and principal of Taconic Capital Advisors LP, who worked at Goldman as an arbitrageur and who was a protege of Robert Rubin, who went on to become Treasury secretary.
Non-Goldman Sachs alumni who attended included short seller James Chanos of Kynikos Associates Ltd., who helped uncover the Enron Corp. accounting fraud; GSO Capital Partners LP co-founder Bennett Goodman, who sold his firm to Blackstone Group LP (BX) in early 2008; Roger Altman, chairman and founder of New York investment bank Evercore Partners Inc. (EVR); and Steven Rattner, a co-founder of private-equity firm Quadrangle Group LLC, who went on to serve as head of the U.S. government’s Automotive Task Force.
Another person in attendance: Michele Davis, then-assistant secretary for public affairs at the Treasury Department, who now represents Paulson as a managing partner at public relations firm Brunswick Group Inc. In an e-mail response to Bloomberg Markets, she referred all questions to Paulson’s book on the financial crisis, “On the Brink” (Business Plus, 2010), which makes no mention of the Eton Park meeting.
Paulson Thinktank
Paulson is now a distinguished senior fellow at the University of Chicago, where he’s starting the Paulson Institute, a think tank focused on U.S.-Chinese relations.
Eton Park’s Mindich, Lone Pine’s Mandel, TPG-Axon’s Singh and Och-Ziff (OZM)’s Och all declined to comment through spokesmen. Reservoir’s Stern didn’t return phone calls. Altman, through a spokesman, confirmed his attendance and declined to comment further.
Brosens confirmed in an e-mail that he had attended and said he couldn’t recall details. A spokesman for Rattner acknowledged he attended and said he didn’t trade in Fannie Mae- or Freddie Mac-related instruments after the meeting. Chanos declined to comment.
A Blackstone spokesman confirmed in an e-mail that GSO’s Goodman attended the meeting. Blackstone doesn’t believe market- sensitive information was discussed, and in any event Blackstone didn’t take any positions in Fannie or Freddie between the luncheon and Sept. 6, he wrote.
Strong Short Interest
Records show that many investors were betting against Fannie Mae and Freddie Mac at the time. According to Data Explorers Ltd., a London-based research firm, short interest in Fannie Mae shares rose sharply in July, to 163 million shares on July 14 from 86.3 million shares on July 9.
Short Interest continued to rise, to 240 million shares, on the day of the Eton Park meeting; it hit 262 million on July 24, its high for the year. Freddie Mac’s short interest showed a similar trajectory.
Revelations about the meeting come at a sensitive time.
“The optics are awful; there’s no doubt about it,” says professor Larry Ribstein of the University of Illinois College of Law in Champaign. “Everyone knows that insider trading is a huge issue.”
Rajat Gupta, the former head of McKinsey & Co. who was a member of Goldman’s board, was indicted by a federal grand jury on Oct. 26 for disclosing nonpublic information on Goldman and other companies to Raj Rajaratnam, a hedge-fund manager who earlier in October was sentenced to 11 years in prison for profiting from inside information provided by a web of industry insiders, including Gupta.
Gupta has pleaded not guilty.
LightSquared Probe
Several U.S. agencies face increased scrutiny in Congress for possible improper disclosures or ties to hedge funds. Senators are looking into whether the U.S. Department of Education divulged nonpublic details about new rules being considered to regulate for-profit educational institutions to outsiders, including Steven Eisman, former managing director of FrontPoint Partners LLC, who held short positions in the sector.
Education Department spokesman Justin Hamilton denies any impropriety. Eisman hasn’t been accused of any wrongdoing.
In October, Republican Senator Charles Grassley of Iowa asked hedge-fund manager Philip Falcone for copies of all communications between his Harbinger Capital Partners and the Department of Commerce, the Federal Communications Commission and the White House. Grassley is looking into whether Falcone improperly sought to influence regulators and the White House while seeking approvals for LightSquared Inc., the company constructing a broadband wireless network his fund is bankrolling.
‘Government Information’
Robin Roger, general counsel for the fund’s management firm, says any assertion that the fund or LightSquared tried to improperly influence regulators is unfounded.
For government officials, the leaking of market-sensitive information, even if inadvertent, represents an ethical minefield.
“There’s a lot of government information out there, and the hedge funds are trying to get it,” says Richard Painter, a law professor at the University of Minnesota who advised the Bush administration on Paulson’s sale of his Goldman stock when he became Treasury secretary. “It’s a huge problem that has to be addressed.”
The rules for what can or cannot be disclosed by government officials are often either unclear or nonexistent.
Tipping Hands
“The bottom line is that senior-level people in Washington, in the name of keeping in touch with their stakeholders, are tipping their hands,” says Adam Zagorin, a senior fellow at the Project on Government Oversight, a Washington watchdog group. “You can’t prosecute them for insider trading if they didn’t trade the shares. You may not be able to even reprimand them. What the hell are the rules?”
An official such as Paulson has no legal obligation to keep material nonpublic information to himself, says Phillip Kaplan, partner for litigation at Manatt Phelps & Phillips LLP, where he specializes in securities and class-action cases.
“I don’t think a government person is liable,” he says. “He didn’t profit from the information or trade on it.”
In the rapidly evolving world of insider-trading prosecutions, that could change, says the University of Illinois’s Ribstein, adding that the U.S. Securities and Exchange Commission is taking a broader view of what constitutes insider trading. SEC Enforcement Director Robert Khuzami, who can bring only civil cases, and the Justice Department, which can mount criminal prosecutions, have cast their net wide, Ribstein says.
Small Players Sued
In addition to going after big names like Rajaratnam and Gupta, the authorities are suing and indicting smaller players who might not have been prosecuted in the past, like accountants and analysts at so-called expert networks, who sell their expertise to hedge funds.
The University of Missouri’s Black says there’s no question that the plan to take over Fannie and Freddie -- however uncertain -- was material nonpublic information that could not be lawfully traded on. “What Paulson said put those managers in an untenable position,” he says. “They were exposed to all kinds of liabilities.”
The situation also generates some sympathy for Paulson.
“It seems to me, you’ve got to cut the guy some slack, even if he tipped his hand,” says William Poole, a former president of the Federal Reserve Bank of St. Louis. “How do you prepare the market for the fact that policy has changed without triggering the very crisis that you’re trying to avoid? What is he supposed to say without misleading these people?”
Market Insights
Poole says government officials need to communicate with industry participants in order to gain insights into market conditions and gauge likely reaction to interventions.
Black says the Eton Park meeting was the wrong way to communicate to the markets.
“Wink, wink, nod, nod is no way to approach sensitive information,” he says.
Paulson often contacted Wall Street participants throughout his tenure, according to his calendar. On that July trip to New York alone, he talked to Lehman Brothers Holdings Inc. CEO Richard Fuld, Washington Mutual Inc. CEO Kerry Killinger and Citigroup senior adviser Rubin.
Morgan Stanley and BlackRock Inc. both helped the Federal Reserve and OCC prepare the reports on Fannie Mae and Freddie Mac that Paulson told the New York Times would instill confidence the morning of the Eton Park meeting.
‘Unsafe and Unsound’
Paulson learned by mid-August that the Federal Reserve had found the GSEs “unsafe and unsound,” he told the Financial Crisis Inquiry Commission, which was appointed by President Barack Obama and Congress to probe the causes of the financial collapse.
“We’d been prepared for bad news, but the extent of the problems was startling,” he wrote in “On the Brink.”
On Sept. 6, when the GSEs’ boards agreed to have their companies placed in conservatorship, full-year 2008 losses were projected to reach as much as $50 billion for Fannie Mae and $32 billion for Freddie Mac. In October 2011, the FHFA estimated the cost to taxpayers of rescuing the firms at $124 billion through 2014.
The manager who described the Eton Park meeting says he also discussed it with an investigator from the FCIC. The discussion was confirmed by a former FCIC employee.
That manager says he ended up profiting from his Fannie Mae and Freddie Mac positions because he was already short the stocks. On his lawyer’s advice, he stopped covering his short positions and rode Fannie and Freddie shares all the way to the bottom.
How Paulson Gave Hedge Funds Advance Word - Bloomberg
Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae (FNMA) and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue.
Paulson had been pushing a plan in Congress to open lines of credit to the two struggling firms and to grant authority for the Treasury Department to buy equity in them. Yet he had told reporters on July 13 that the firms must remain shareholder owned and had testified at a Senate hearing two days later that giving the government new power to intervene made actual intervention improbable.
“If you have a bazooka, and people know you have it, you’re not likely to take it out,” he said.
On the morning of July 21, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.
A Different Message
At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc. (GS), of which Paulson was chief executive officer and chairman from 1999 to 2006. In addition to Eton Park founder Eric Mindich, they included such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” -- a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Stock Wipeout
Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.
The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.
There’s no evidence that they did so after the meeting; tracking firm-specific short stock sales isn’t possible using public documents.
And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.
Rampant Rumors
At the time, rumors about Fannie and Freddie were tearing through the markets. The government-chartered firms’ mandate, which continues today, is to buy mortgages from banks and repackage them into securities either for their own portfolios or to sell to others. The banks can then use the proceeds from those transactions to write new mortgages.
By mid-2008, delinquencies and foreclosures were soaring, and the GSEs set aside billions of dollars against future losses. In the first six months of 2008, they racked up net losses of $5.46 billion as they slashed dividends and marked down the values of their huge inventories of mortgage-backed securities.
On Wall Street, confusion reigned. UBS AG analyst Eric Wasserstrom on July 10 cut his share price target on Freddie to $10 from $28. The next day, Citigroup Inc. (C) analyst Bradley Ball reiterated a “buy” recommendation on the two GSEs. On July 12, the Times of London, without citing a source, reported that Paulson was contemplating a $15 billion capital injection into the firms.
Shares Rally
At the time Paulson privately addressed the fund managers at Eton Park, he had given the market some positive signals -- and the GSEs’ shares were rallying, with Fannie Mae’s nearly doubling in four days.
William Black, associate professor of economics and law at the University of Missouri-Kansas City, can’t understand why Paulson felt impelled to share the Treasury Department’s plan with the fund managers.
“You just never ever do that as a government regulator -- transmit nonpublic market information to market participants,” says Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”
Janet Tavakoli, founder of Chicago-based financial consulting firm Tavakoli Structured Finance Inc., says the meeting fits a pattern.
“What is this but crony capitalism?” she asks. “Most people have had their fill of it.”
A Lawyer’s Advice
The fund manager who described the meeting left after coffee and called his lawyer. The attorney’s quick conclusion: Paulson’s talk was material nonpublic information, and his client should immediately stop trading the shares of Washington- based Fannie and McLean, Virginia-based Freddie.
Seven weeks later, the boards of the two firms voted to go into conservatorship under the newly created Federal Housing Finance Agency. The takeover was effective Sept. 6, a Saturday, and the companies’ stock prices dropped below $1 the following Monday, from $14.13 for Fannie Mae and $8.75 for Freddie Mac (FMCC) on the day of the meeting. Various classes of preferred shares lost upwards of 85 percent of their value.
A complete list of those at the Eton Park meeting isn’t publicly available. A Treasury Department roster of those expected to attend, obtained by Bloomberg News under the Freedom of Information Act, includes Ripplewood Holdings LLC CEO Timothy Collins, who says, through a spokesman, that he didn’t participate.
Storied Investors
At least one fund manager who wasn’t listed in the FOIA document, Daniel Stern of Reservoir Capital Group, did attend, says the manager who described the meeting.
The gathering comprised some of Wall Street’s most storied investors. Mindich, a former chief strategy officer of New York- based Goldman Sachs, started Eton Park in 2004 with $3.5 billion, at the time one of the biggest hedge-fund launches ever. Singh, a former head of Goldman’s proprietary-trading desk, also began his fund in 2004, in partnership with private- equity firm Texas Pacific Group Ltd.
Lone Pine’s Mandel worked as a retail analyst at Goldman before joining Julian Robertson’s Tiger Management LLC, one of the most successful hedge funds of the 1980s and 1990s. He started his own firm in 1997. Och was co-head of U.S. equity trading at Goldman before founding Och-Ziff in 1994. The publicly listed firm managed $28.9 billion in November.
Goldman Alums
One other Goldman Sachs alumnus was at the meeting: Frank Brosens, founder and principal of Taconic Capital Advisors LP, who worked at Goldman as an arbitrageur and who was a protege of Robert Rubin, who went on to become Treasury secretary.
Non-Goldman Sachs alumni who attended included short seller James Chanos of Kynikos Associates Ltd., who helped uncover the Enron Corp. accounting fraud; GSO Capital Partners LP co-founder Bennett Goodman, who sold his firm to Blackstone Group LP (BX) in early 2008; Roger Altman, chairman and founder of New York investment bank Evercore Partners Inc. (EVR); and Steven Rattner, a co-founder of private-equity firm Quadrangle Group LLC, who went on to serve as head of the U.S. government’s Automotive Task Force.
Another person in attendance: Michele Davis, then-assistant secretary for public affairs at the Treasury Department, who now represents Paulson as a managing partner at public relations firm Brunswick Group Inc. In an e-mail response to Bloomberg Markets, she referred all questions to Paulson’s book on the financial crisis, “On the Brink” (Business Plus, 2010), which makes no mention of the Eton Park meeting.
Paulson Thinktank
Paulson is now a distinguished senior fellow at the University of Chicago, where he’s starting the Paulson Institute, a think tank focused on U.S.-Chinese relations.
Eton Park’s Mindich, Lone Pine’s Mandel, TPG-Axon’s Singh and Och-Ziff (OZM)’s Och all declined to comment through spokesmen. Reservoir’s Stern didn’t return phone calls. Altman, through a spokesman, confirmed his attendance and declined to comment further.
Brosens confirmed in an e-mail that he had attended and said he couldn’t recall details. A spokesman for Rattner acknowledged he attended and said he didn’t trade in Fannie Mae- or Freddie Mac-related instruments after the meeting. Chanos declined to comment.
A Blackstone spokesman confirmed in an e-mail that GSO’s Goodman attended the meeting. Blackstone doesn’t believe market- sensitive information was discussed, and in any event Blackstone didn’t take any positions in Fannie or Freddie between the luncheon and Sept. 6, he wrote.
Strong Short Interest
Records show that many investors were betting against Fannie Mae and Freddie Mac at the time. According to Data Explorers Ltd., a London-based research firm, short interest in Fannie Mae shares rose sharply in July, to 163 million shares on July 14 from 86.3 million shares on July 9.
Short Interest continued to rise, to 240 million shares, on the day of the Eton Park meeting; it hit 262 million on July 24, its high for the year. Freddie Mac’s short interest showed a similar trajectory.
Revelations about the meeting come at a sensitive time.
“The optics are awful; there’s no doubt about it,” says professor Larry Ribstein of the University of Illinois College of Law in Champaign. “Everyone knows that insider trading is a huge issue.”
Rajat Gupta, the former head of McKinsey & Co. who was a member of Goldman’s board, was indicted by a federal grand jury on Oct. 26 for disclosing nonpublic information on Goldman and other companies to Raj Rajaratnam, a hedge-fund manager who earlier in October was sentenced to 11 years in prison for profiting from inside information provided by a web of industry insiders, including Gupta.
Gupta has pleaded not guilty.
LightSquared Probe
Several U.S. agencies face increased scrutiny in Congress for possible improper disclosures or ties to hedge funds. Senators are looking into whether the U.S. Department of Education divulged nonpublic details about new rules being considered to regulate for-profit educational institutions to outsiders, including Steven Eisman, former managing director of FrontPoint Partners LLC, who held short positions in the sector.
Education Department spokesman Justin Hamilton denies any impropriety. Eisman hasn’t been accused of any wrongdoing.
In October, Republican Senator Charles Grassley of Iowa asked hedge-fund manager Philip Falcone for copies of all communications between his Harbinger Capital Partners and the Department of Commerce, the Federal Communications Commission and the White House. Grassley is looking into whether Falcone improperly sought to influence regulators and the White House while seeking approvals for LightSquared Inc., the company constructing a broadband wireless network his fund is bankrolling.
‘Government Information’
Robin Roger, general counsel for the fund’s management firm, says any assertion that the fund or LightSquared tried to improperly influence regulators is unfounded.
For government officials, the leaking of market-sensitive information, even if inadvertent, represents an ethical minefield.
“There’s a lot of government information out there, and the hedge funds are trying to get it,” says Richard Painter, a law professor at the University of Minnesota who advised the Bush administration on Paulson’s sale of his Goldman stock when he became Treasury secretary. “It’s a huge problem that has to be addressed.”
The rules for what can or cannot be disclosed by government officials are often either unclear or nonexistent.
Tipping Hands
“The bottom line is that senior-level people in Washington, in the name of keeping in touch with their stakeholders, are tipping their hands,” says Adam Zagorin, a senior fellow at the Project on Government Oversight, a Washington watchdog group. “You can’t prosecute them for insider trading if they didn’t trade the shares. You may not be able to even reprimand them. What the hell are the rules?”
An official such as Paulson has no legal obligation to keep material nonpublic information to himself, says Phillip Kaplan, partner for litigation at Manatt Phelps & Phillips LLP, where he specializes in securities and class-action cases.
“I don’t think a government person is liable,” he says. “He didn’t profit from the information or trade on it.”
In the rapidly evolving world of insider-trading prosecutions, that could change, says the University of Illinois’s Ribstein, adding that the U.S. Securities and Exchange Commission is taking a broader view of what constitutes insider trading. SEC Enforcement Director Robert Khuzami, who can bring only civil cases, and the Justice Department, which can mount criminal prosecutions, have cast their net wide, Ribstein says.
Small Players Sued
In addition to going after big names like Rajaratnam and Gupta, the authorities are suing and indicting smaller players who might not have been prosecuted in the past, like accountants and analysts at so-called expert networks, who sell their expertise to hedge funds.
The University of Missouri’s Black says there’s no question that the plan to take over Fannie and Freddie -- however uncertain -- was material nonpublic information that could not be lawfully traded on. “What Paulson said put those managers in an untenable position,” he says. “They were exposed to all kinds of liabilities.”
The situation also generates some sympathy for Paulson.
“It seems to me, you’ve got to cut the guy some slack, even if he tipped his hand,” says William Poole, a former president of the Federal Reserve Bank of St. Louis. “How do you prepare the market for the fact that policy has changed without triggering the very crisis that you’re trying to avoid? What is he supposed to say without misleading these people?”
Market Insights
Poole says government officials need to communicate with industry participants in order to gain insights into market conditions and gauge likely reaction to interventions.
Black says the Eton Park meeting was the wrong way to communicate to the markets.
“Wink, wink, nod, nod is no way to approach sensitive information,” he says.
Paulson often contacted Wall Street participants throughout his tenure, according to his calendar. On that July trip to New York alone, he talked to Lehman Brothers Holdings Inc. CEO Richard Fuld, Washington Mutual Inc. CEO Kerry Killinger and Citigroup senior adviser Rubin.
Morgan Stanley and BlackRock Inc. both helped the Federal Reserve and OCC prepare the reports on Fannie Mae and Freddie Mac that Paulson told the New York Times would instill confidence the morning of the Eton Park meeting.
‘Unsafe and Unsound’
Paulson learned by mid-August that the Federal Reserve had found the GSEs “unsafe and unsound,” he told the Financial Crisis Inquiry Commission, which was appointed by President Barack Obama and Congress to probe the causes of the financial collapse.
“We’d been prepared for bad news, but the extent of the problems was startling,” he wrote in “On the Brink.”
On Sept. 6, when the GSEs’ boards agreed to have their companies placed in conservatorship, full-year 2008 losses were projected to reach as much as $50 billion for Fannie Mae and $32 billion for Freddie Mac. In October 2011, the FHFA estimated the cost to taxpayers of rescuing the firms at $124 billion through 2014.
The manager who described the Eton Park meeting says he also discussed it with an investigator from the FCIC. The discussion was confirmed by a former FCIC employee.
That manager says he ended up profiting from his Fannie Mae and Freddie Mac positions because he was already short the stocks. On his lawyer’s advice, he stopped covering his short positions and rode Fannie and Freddie shares all the way to the bottom.
How Paulson Gave Hedge Funds Advance Word - Bloomberg
Notary who blew whistle on foreclosure fraud found dead
LAS VEGAS (KSNV MyNews3) -- The notary who signed tens of thousands of false documents in a massive robo-signing scandal case was found dead in her home on Monday.
The notary, 43-year-old Tracy Lawrence, was supposed to be in court at 8:30 Monday morning for her sentencing hearing. When her attorney did not hear from her for more than an hour, Sr. Deputy Attorney General Robert Giunta asked for a bench warrant to be issued for Lawrence. The judge denied the request.
Police were sent to Lawrence's house to check on her after her lawyer expressed concern for her client's well-being. They found her body inside her home.
Metro Homicide Detectives are working currently the case. It is unclear if her death was due to natural causes, or if it was a suicide.
Detectives said this afternoon that they have ruled out homicide as a cause of death.
Last Monday, Lawrence pled guilty to only one criminal charge of notary fraud.
Lawrence came forward earlier this month and admitted that she had notarized around 25,000 fraudulent documents as part of a foreclosure fraud scheme.
Title officers Gary Trafford and Geraldine Sheppard of California are allegedly behind the fraud that involved forging signatures on tens of thousands of notices of default between 2005 and 2008. The two were indicted on more than 600 charges in a 439-page indictment filed on November 16.
The Nevada Attorney General is negotiating the terms of surrender for the pair. Both are expected to surrender sometime in December.
Notary who blew whistle on foreclosure fraud found dead - My News 3 - KSNV, Las Vegas, NV
The notary, 43-year-old Tracy Lawrence, was supposed to be in court at 8:30 Monday morning for her sentencing hearing. When her attorney did not hear from her for more than an hour, Sr. Deputy Attorney General Robert Giunta asked for a bench warrant to be issued for Lawrence. The judge denied the request.
Police were sent to Lawrence's house to check on her after her lawyer expressed concern for her client's well-being. They found her body inside her home.
Metro Homicide Detectives are working currently the case. It is unclear if her death was due to natural causes, or if it was a suicide.
Detectives said this afternoon that they have ruled out homicide as a cause of death.
Last Monday, Lawrence pled guilty to only one criminal charge of notary fraud.
Lawrence came forward earlier this month and admitted that she had notarized around 25,000 fraudulent documents as part of a foreclosure fraud scheme.
Title officers Gary Trafford and Geraldine Sheppard of California are allegedly behind the fraud that involved forging signatures on tens of thousands of notices of default between 2005 and 2008. The two were indicted on more than 600 charges in a 439-page indictment filed on November 16.
The Nevada Attorney General is negotiating the terms of surrender for the pair. Both are expected to surrender sometime in December.
Notary who blew whistle on foreclosure fraud found dead - My News 3 - KSNV, Las Vegas, NV
Monday, November 28, 2011
Austrian Economics versus Mainstream Economics | Mark Thornton - YouTube
EXCELLENT video describing the differences between "traditional" economics and true free market economics (or Austrian economics)
State Sovereignty: An idea whose time has come (again!)
This is a great idea. Right now, the limits of federal power are determined by the USSC, which means in effect that whatever the federal government wishes to do is limited ONLY by what an arm of the federal government decides is "consititutional." If the USSC decides that the federal courts have no jurisdiction, then they don't (I am not making this up!). The Supreme Court has ruled(!) that it determines the limits to its own power.
This is a recipe for disaster and tyranny. The cake seems to be baking nicely.
As an alternative, here is a proposal for State Nullification of Federal acts of intrusion:
I like it. It will make for a nice brawl, which is what politics should be:
THE STATE SOVEREIGNTY AMENDMENT (Sample)
These United States of America are a Republic of Republics deriving its authority from the consent of the governed residing within their Sovereign State. Each Sovereign State is the agent of the people thereof. The federal government formed by the compact of the United States Constitution is the agent of the Sovereign States. Federal authority shall be supreme in all areas specifically delegated to it by the Constitution. All acts or legislation enacted pursuant to the Constitution shall be the supreme law of the land. The Sovereign State reserves an equal right to judge for itself as to the constitutionality of any act of the federal government.
Section I. The Sovereign State specifically reserves the right to interpose its sovereign authority between acts of the federal government and the liberties, property, and interests of the citizens of the state, thereby nullifying federal acts judged by the state to be an unwarranted infringement upon the reserved rights of the state and the people thereof.
1. State nullification of a federal act must be approved by a convention of the state.
2. Upon passage of an act of nullification, all federal authority for the enumerated and nullified act(s) shall be suspended.
3. Upon formal acceptance of nullification by three-fourths of the conventions of the states, including the original nullifying state, the enumerated federal act(s) shall be prohibited in the United States of America or its territories.
4. Upon formal rejection of nullification by three-fourths of the conventions of the states, the enumerated federal act(s) shall be presumed to be constitutional, notwithstanding any judgment of any federal or state court.
5. Until or unless there is a formal approval or rejection by the conventions of the states, the nullified federal act(s) shall remain non-operative as to the original and any additional nullifying states. A state that in its convention ratifies a particular act of nullification shall be construed to have nullified the same act as enumerated in the initiating state’s nullification.
6. No federal elected official, agent, or any individual working within or associated with any branch of the federal government may harass or attempt to harass, intimidate, or threaten a Sovereign State or the people thereof for exercising their rights under this amendment. No federal elected official, agent, or any individual working within or associated with any branch of the federal government shall attempt to influence or use their office to attempt to influence the deliberations of the people regarding the nullification of a federal act(s) or the acceptance or rejection of a nullified federal act(s).
7. Any United States military officer, noncommissioned officer or federal official or agent who carries out or attempts to carry out any order by a federal official, officer or agent to deny or hinder the people of a Sovereign State from exercising their rights under this amendment shall be subject to the offended state’s laws and may be tried accordingly. Jurisdiction in such cases is specifically denied to all federal courts, military courts, or any other court other than the courts of the offended state.
Section II. The government and people of these United States approve the principle that any people have a right to abolish the existing government and form a new one that suits them better. This principle illustrates the American idea that government rests on the consent of the governed and that it is the right of a people to alter or abolish it at will whenever it becomes destructive of the ends for which it was established. Therefore, the right of a Sovereign State to secede peacefully from the union voluntarily created by the compact of the Constitution is hereby specifically reserved to each state.
1. An act of secession shall be executed by a convention of the people of the state.
2. The seceded state shall appoint representatives to negotiate settlement of all debts owed the federal government, the purchase of federal properties within the Sovereign State, and the removal of federal military installations and personnel.
3. Upon acceptable arrangement for the payment of sums owed the federal government, the representatives may negotiate treaties of friendship, common defense, and commercial relations. Said treaties are subject to the same constitutional ratification as other treaties.
4. Readmission of a seceded state shall follow the same constitutional requirements as for any new state.
5. No federal elected official, agent, or any individual working within or associated with any branch of the federal government shall attempt to influence the people of the Sovereign State regarding their decision to secede from, remain with, or join this union.
6. Any United States military officer, noncommissioned officer, or federal official or agent who carries out or attempts to carry out any order by a federal official, officer, or agent to deny or hinder the people of a Sovereign State from exercising their rights under this amendment shall be subject to the offended state’s laws and may be tried accordingly. Jurisdiction in such cases is specifically denied to all federal courts, military courts, or any other court other than the courts of the offended state.
7. The inalienable right of the people of each Sovereign State to govern themselves is a right that existed before this formation of the federal government, and therefore nothing in this amendment shall be interpreted in such a manner as to deem the federal government to be the donor of the rights enumerated herein.
State Sovereignty: America’s Final Solution to Tyranny by Ron Holland
This is a recipe for disaster and tyranny. The cake seems to be baking nicely.
As an alternative, here is a proposal for State Nullification of Federal acts of intrusion:
I like it. It will make for a nice brawl, which is what politics should be:
THE STATE SOVEREIGNTY AMENDMENT (Sample)
These United States of America are a Republic of Republics deriving its authority from the consent of the governed residing within their Sovereign State. Each Sovereign State is the agent of the people thereof. The federal government formed by the compact of the United States Constitution is the agent of the Sovereign States. Federal authority shall be supreme in all areas specifically delegated to it by the Constitution. All acts or legislation enacted pursuant to the Constitution shall be the supreme law of the land. The Sovereign State reserves an equal right to judge for itself as to the constitutionality of any act of the federal government.
Section I. The Sovereign State specifically reserves the right to interpose its sovereign authority between acts of the federal government and the liberties, property, and interests of the citizens of the state, thereby nullifying federal acts judged by the state to be an unwarranted infringement upon the reserved rights of the state and the people thereof.
1. State nullification of a federal act must be approved by a convention of the state.
2. Upon passage of an act of nullification, all federal authority for the enumerated and nullified act(s) shall be suspended.
3. Upon formal acceptance of nullification by three-fourths of the conventions of the states, including the original nullifying state, the enumerated federal act(s) shall be prohibited in the United States of America or its territories.
4. Upon formal rejection of nullification by three-fourths of the conventions of the states, the enumerated federal act(s) shall be presumed to be constitutional, notwithstanding any judgment of any federal or state court.
5. Until or unless there is a formal approval or rejection by the conventions of the states, the nullified federal act(s) shall remain non-operative as to the original and any additional nullifying states. A state that in its convention ratifies a particular act of nullification shall be construed to have nullified the same act as enumerated in the initiating state’s nullification.
6. No federal elected official, agent, or any individual working within or associated with any branch of the federal government may harass or attempt to harass, intimidate, or threaten a Sovereign State or the people thereof for exercising their rights under this amendment. No federal elected official, agent, or any individual working within or associated with any branch of the federal government shall attempt to influence or use their office to attempt to influence the deliberations of the people regarding the nullification of a federal act(s) or the acceptance or rejection of a nullified federal act(s).
7. Any United States military officer, noncommissioned officer or federal official or agent who carries out or attempts to carry out any order by a federal official, officer or agent to deny or hinder the people of a Sovereign State from exercising their rights under this amendment shall be subject to the offended state’s laws and may be tried accordingly. Jurisdiction in such cases is specifically denied to all federal courts, military courts, or any other court other than the courts of the offended state.
Section II. The government and people of these United States approve the principle that any people have a right to abolish the existing government and form a new one that suits them better. This principle illustrates the American idea that government rests on the consent of the governed and that it is the right of a people to alter or abolish it at will whenever it becomes destructive of the ends for which it was established. Therefore, the right of a Sovereign State to secede peacefully from the union voluntarily created by the compact of the Constitution is hereby specifically reserved to each state.
1. An act of secession shall be executed by a convention of the people of the state.
2. The seceded state shall appoint representatives to negotiate settlement of all debts owed the federal government, the purchase of federal properties within the Sovereign State, and the removal of federal military installations and personnel.
3. Upon acceptable arrangement for the payment of sums owed the federal government, the representatives may negotiate treaties of friendship, common defense, and commercial relations. Said treaties are subject to the same constitutional ratification as other treaties.
4. Readmission of a seceded state shall follow the same constitutional requirements as for any new state.
5. No federal elected official, agent, or any individual working within or associated with any branch of the federal government shall attempt to influence the people of the Sovereign State regarding their decision to secede from, remain with, or join this union.
6. Any United States military officer, noncommissioned officer, or federal official or agent who carries out or attempts to carry out any order by a federal official, officer, or agent to deny or hinder the people of a Sovereign State from exercising their rights under this amendment shall be subject to the offended state’s laws and may be tried accordingly. Jurisdiction in such cases is specifically denied to all federal courts, military courts, or any other court other than the courts of the offended state.
7. The inalienable right of the people of each Sovereign State to govern themselves is a right that existed before this formation of the federal government, and therefore nothing in this amendment shall be interpreted in such a manner as to deem the federal government to be the donor of the rights enumerated herein.
State Sovereignty: America’s Final Solution to Tyranny by Ron Holland
Friday, November 25, 2011
How weird: Pravda the voice of freedom
How bizarre it feels to have RT (Russia Today), which is the reincarnation of the old "Pravda" be so clear and accurate on understanding the importance of FREEDOM and LIBERTY, while the mainline "conservatives" of America are resembling more and more the old communists. The old politburo were all for freedom and all that, but the enemies of the people were just too great a threat to let freedom run unrestrained. It is sad to me to see GOOD men like Rick Santorum advocate totalitarianism in the name of protection. They (RT) see the issues in the recent debate on national security so much more clearly than our own "conservatives" do, as this link spells out.
I also find it sad that in America the most vigorous advocates of traditional values cheer on an encroaching state and consequent destruction of liberties in the name of security. I would have thought that HERE in the country that has been a bastion of personal liberties and petulant folk who DEMAND freedom, we would be an entire culture of Tatiana Limanovas, not just to Obama, but to the entire intrusive, freedom destroying, hegemonistic, power grabbing, "we will take care of you" DC culture.
Instead, we have PRAVDA!! PRAVDA for goosness sake!!! ......reminding us that security cannot be found by surrendering our freedoms. We may wind up preventing "crimes" but then the ultimate crime will be the state brutalizing the people it is tasked to protect.
Weird how things change, ain't it?
Dirty Dozen: Iran Claims Arrest of 12 CIA Agents
I also find it sad that in America the most vigorous advocates of traditional values cheer on an encroaching state and consequent destruction of liberties in the name of security. I would have thought that HERE in the country that has been a bastion of personal liberties and petulant folk who DEMAND freedom, we would be an entire culture of Tatiana Limanovas, not just to Obama, but to the entire intrusive, freedom destroying, hegemonistic, power grabbing, "we will take care of you" DC culture.
Instead, we have PRAVDA!! PRAVDA for goosness sake!!! ......reminding us that security cannot be found by surrendering our freedoms. We may wind up preventing "crimes" but then the ultimate crime will be the state brutalizing the people it is tasked to protect.
Weird how things change, ain't it?
Dirty Dozen: Iran Claims Arrest of 12 CIA Agents
Are the OCCUPY crowd idiots? Sure! But they are so RIGHT on some things
Thanksgiving and Christmas. Two distinctively pious holidays, completely corrupted, imo.
Now we celebrate gluttony, football, and the beginning of a mad shopping spree, culminating in an orgy of materialism and advertisements for God-knows-what in the vain hope that diving into consumerism will give meaning to our otherwise pointless lives.
The "Occupy" crowd are gorgontually, fantasmally, epicononomously WRONG about their solutions to the problems, but they are dead on accurate in their criticisms. They are also accurate in the BASICS of how to rectify it. Just walk away. Say "no." (SCREAMING "NO!" is not inappropriate sometimes). Align with a counterculture. Think different and live different. Don't be afraid of the contemptuous dismissal of the lemmings, who allow others to think for them, form their values for them, erect codes of behavior for them, form their definition of "success" and finally force you to live your lives by proxy (watching them screw up their own lives on TV). Unplug. Drop out. Talk to your neighbors. Invite friends over for Yahtzee, or UNO, or gin rummy, or dominoes. Say "NO" to my latest lust object (for me it is a Saiga shotgun) and instead find some WORTHY charity that I can invest the time and money in.
This is something I am in the embryonic stages of forming for a New Year's Resolution for 2012. I want to do a prelim trial run by maybe actually redeeming two holidays from the clutches of those who would define them in terms of line items on a budget sheet. Thanksgiving is gone. Christmas is coming. If it really is true that the one gift beyond all value is what this thing is about, then I would like to make a stab at keeping the focus there this time.
My take on it, anyway.
Climategate 2.0: New E-Mails Rock The Global Warming Debate - Forbes
This is just one more example of how the pursuit of "science" has become, like most other stuff, completely compromised and politicized.
The idea that these guys are objective and reasoned purveyors of the best model based on the data is laughable. It has been for a while, really, but the evidence of the fraud just keeps rolling in.
Climategate 2.0: New E-Mails Rock The Global Warming Debate - Forbes:
'via Blog this'
The idea that these guys are objective and reasoned purveyors of the best model based on the data is laughable. It has been for a while, really, but the evidence of the fraud just keeps rolling in.
Climategate 2.0: New E-Mails Rock The Global Warming Debate - Forbes:
'via Blog this'
Sunday, November 20, 2011
Thursday, November 17, 2011
The Next Financial Crisis
“There is definitely going to be another financial crisis around the corner,” says hedge fund legend Mark Mobius, “because we haven’t solved any of the things that caused the previous crisis.”
We’re raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out. Today, we raise it again after seeing the remarks of Mr. Mobius, chief of the $50 billion emerging markets desk at Templeton Asset Management.
Speaking in Tokyo, he pointed to derivatives – the financial hairball of futures, options, and swaps in which nearly all the world’s major banks are tangled up.
Estimates on the amount of derivatives out there worldwide vary. An oft-heard estimate is $600 trillion. That squares with Mobius’ guess of 10 times the world’s annual GDP. “Are the derivatives regulated?” asks Mobius. “No. Are you still getting growth in derivatives? Yes.”
In other words, something along the lines of securitized mortgages is lurking out there, ready to trigger another crisis as in 2007-08.
What could it be? We’ll offer up a good guess – one the market is discounting.
Seldom does a stock index rise so much, for so little reason, as the Dow did on the open this morning: 115 Dow points on a rumor that Greece is going to get a second bailout.
Let’s step back for a moment: The Greek crisis is first and foremost about the German and French banks that were foolish enough to lend money to Greece in the first place. What sort of derivative contracts tied to Greek debt are they sitting on? What worldwide mayhem would ensue if Greece didn’t pay back 100 centimes on the euro?
That’s a rhetorical question, since the balance sheets of European banks are even more opaque than American ones. But whatever the actual answer, it’s scary enough that the European Central Bank has refused to entertain any talk about the holders of Greek sovereign debt taking a haircut – even in the form of Greece stretching out its payments.
That was the preferred solution among German leaders. But if today’s Wall Street Journal is to be believed, the ECB is about to get its way. Greece will likely get another bailout – 30 billion euros on top of the 110 billion euro bailout it got a year ago.
It will accomplish nothing. Going deeper into hock is never a good way to get out of debt. And at some point, this exercise in kicking the can has to stop. When it does, you get your next financial crisis.
And what of the derivatives sitting on the balance sheet of the Federal Reserve? Here’s another factor behind our heightened state of alert.
“Through quantitative easing efforts alone,” says Euro Pacific Capital’s Michael Pento, “Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS).”
Think about that for a moment. The Fed’s entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone – junk that the banks needed to clear off their own balance sheets.
“As the size of the Fed’s balance sheet ballooned,” continues Mr. Pento, “the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.
“Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out.”
Mr. Pento’s and Mr. Mobius’ views line up with our own, which we laid out during interviews on our trip to China this month.
Read more: An Eye on the Next Financial Crisis http://dailyreckoning.com/an-eye-on-the-next-financial-crisis/#ixzz1dyrIZwB7
http://dailyreckoning.com/an-eye-on-the-next-financial-crisis/
We’re raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out. Today, we raise it again after seeing the remarks of Mr. Mobius, chief of the $50 billion emerging markets desk at Templeton Asset Management.
Speaking in Tokyo, he pointed to derivatives – the financial hairball of futures, options, and swaps in which nearly all the world’s major banks are tangled up.
Estimates on the amount of derivatives out there worldwide vary. An oft-heard estimate is $600 trillion. That squares with Mobius’ guess of 10 times the world’s annual GDP. “Are the derivatives regulated?” asks Mobius. “No. Are you still getting growth in derivatives? Yes.”
In other words, something along the lines of securitized mortgages is lurking out there, ready to trigger another crisis as in 2007-08.
What could it be? We’ll offer up a good guess – one the market is discounting.
Seldom does a stock index rise so much, for so little reason, as the Dow did on the open this morning: 115 Dow points on a rumor that Greece is going to get a second bailout.
Let’s step back for a moment: The Greek crisis is first and foremost about the German and French banks that were foolish enough to lend money to Greece in the first place. What sort of derivative contracts tied to Greek debt are they sitting on? What worldwide mayhem would ensue if Greece didn’t pay back 100 centimes on the euro?
That’s a rhetorical question, since the balance sheets of European banks are even more opaque than American ones. But whatever the actual answer, it’s scary enough that the European Central Bank has refused to entertain any talk about the holders of Greek sovereign debt taking a haircut – even in the form of Greece stretching out its payments.
That was the preferred solution among German leaders. But if today’s Wall Street Journal is to be believed, the ECB is about to get its way. Greece will likely get another bailout – 30 billion euros on top of the 110 billion euro bailout it got a year ago.
It will accomplish nothing. Going deeper into hock is never a good way to get out of debt. And at some point, this exercise in kicking the can has to stop. When it does, you get your next financial crisis.
And what of the derivatives sitting on the balance sheet of the Federal Reserve? Here’s another factor behind our heightened state of alert.
“Through quantitative easing efforts alone,” says Euro Pacific Capital’s Michael Pento, “Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS).”
Think about that for a moment. The Fed’s entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone – junk that the banks needed to clear off their own balance sheets.
“As the size of the Fed’s balance sheet ballooned,” continues Mr. Pento, “the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.
“Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out.”
Mr. Pento’s and Mr. Mobius’ views line up with our own, which we laid out during interviews on our trip to China this month.
Read more: An Eye on the Next Financial Crisis http://dailyreckoning.com/an-eye-on-the-next-financial-crisis/#ixzz1dyrIZwB7
http://dailyreckoning.com/an-eye-on-the-next-financial-crisis/
Monday, November 14, 2011
Sunday, November 13, 2011
What is rhe REAL economy
http://www.fastcoexist.com/1678780/there-is-big-money-in-the-underground-economy
Very encouraging article. As De Soto in The Other Path pointed out, the real economy in Latin American countries is free and often underground. Government attempts to violate the rules of free trade only have the effect of hiding the true exchange of goods and services, not regulating it.
Over 10 trillion dollars per year in the underground economy worldwide.
Very encouraging article. As De Soto in The Other Path pointed out, the real economy in Latin American countries is free and often underground. Government attempts to violate the rules of free trade only have the effect of hiding the true exchange of goods and services, not regulating it.
Over 10 trillion dollars per year in the underground economy worldwide.
This is amazingly good.
I got this from a crosspost by a friend on a social network site.
The author is a guy named Charles Hugh Smith.
It can be found here http://www.oftwominds.com/blognov11/collapse-of-corrupt11-11.html
We are being throttled by the Big Lie: we're told that if the predatory financial system implodes, we'll all be ruined. The opposite is true: the only way to save our economy is to let the corrupt, pathological and flawed financial system implode.
I was recently challenged by a contributor to write something positive, and so I decided to write about the single most positive outcome of the current financial crisis in Europe: the complete collapse of the corrupt, predatory, pathological global banking sector and its dealers, the central banks. Exploring why this is so reveals the insurmountable internal conflicts in our current financial system, and also illuminates the systemic political propaganda which is deployed daily to prop up a parasitic, corrupting, pathologically destructive financial system.
Our first stop is modern finance itself. Modern financial "products" and "instruments" are often highly complex and abstract, but the entire edifice can be distilled down to this: the system is based on the assumption that all risk can be hedged, and the difference between the initial position's yield/gain (i..e. placement of capital at risk for a gain) and the cost of hedging the risk of the wager to zero can be skimmed from the system risk-free.
That is the entire system in a nutshell, and we can immediately see the advantages of this system over traditional Capitalism, where risk can be hedged but never to zero, and the return is correlated to the risk taken on.
In modern finance, high-risk "investments" (wagers) with high returns can be taken on without worry because any and all risk can be hedged to zero, even in super high-risk wagers.
And since even high-risk positions can be seamlessly hedged to zero, then there is no reason not to borrow money to increase the size of your wagers: since you can't lose, then why not? Wagering in risk-free skimming with borrowed or leveraged money is simply rational.
Put these together and we see how a system based on risk-free skimming eventually leverages itself to the point that the slightest disruption can bring down the entire over-leveraged, over-extended system.
Why is this so? Every hedge has a counterparty who is supposed to pay off if the initial wager blows up. A system based on risk-free hedging is ultimately a self-organizing system which maximizes return by increasing bet sizes, leveraging/borrowing to near infinity and hedging every hedge as well as every wager.
This creates long chains of hedges and counterparties. Here's an example based on an asset we all understand, a house. Let's say someone buys a house for $1,000 down, something that was common in the housing bubble. That $1,000 is leveraged up to buy a $200,000 house via a $200,000 mortgage.
The "owner" of the house then buys a hedge to protect himself from the house losing value, so the risk is reduced to zero: if the value rises, the owner reaps the gain and if it declines, then he collects the payoff of the hedge from the counterparty, for example, a Wall Street investment firm.
The counterparty calculated the risk of real estate declining and then priced the hedge accordingly. There is some small risk that the loss will exceed the cost of the hedge, so the issuer of that hedge bundles similar bets and then buys a hedge or "insurance" from another player, who makes the same calculations of risk and return.
Meanwhile, the mortgage has been tranched (sliced into principal and interest and into various pools of risk) and bundled with other "low-risk" mortgages and sold to investors, who also buy a hedge against any loss in the tranch, for example, a credit default swap (CDS) which pays out if a borrower defaults. Those hedges are sold or "insured" with another hedges.
All of this debt and all of these hedges are based on a mere $1,000 of actual capital. The players who originated each hedge are similarly leveraged, because since risk can be lowered to zero, who needs capital?
So what happens when one counterparty (issuer of a hedge) somewhere in the chain runs into trouble? The entire chain collapses. With razor-thin capital to cover any losses, then each link in the chain dissolves into insolvency if their counterparty fails to pay off.
This is how we get hundreds of trillions of dollars in "notational" derivatives: every hedged is hedged with another "instrument," "products" are bundled and insured, and so on. The system is based on the principle that risk can be reduced to zero, and so there is no need for capital.
Unfortunately, that premise is demonstrably false. Benoit Mandelbrot dismantled the notion that risk can be reduced to zero in his prescient masterpiece, The (Mis)behavior of Markets. The founder of fractal geometry showed that markets are fractal in nature, and are thus intrinsically prone to unpredictable disruptions. Simply put, risk cannot be massaged away.
Thus the fundamental premise of all modern finance is flat-out wrong, and this explains why systemic risk, rather than being eliminated, actually rises with every ratchet up in debt, leverage and counterparty hedging.
The entire global financial system is thus based on the equivalent of a perpetual motion machine: money can be borrowed or leveraged into existence in essentially unlimited quantities, and then deployed in risk-free skimming operations to harvest unlimited wealth.
What does this promise of using leveraged capital to skim risk-free fortunes do to the "real economy" of production and investment in plant and technology? It guts it. The risk of industrial Capitalism is real and cannot be hedged away; high-risk investments may blow up or they may return high yields. It literally makes no sense to risk real capital in productive Capitalism when a zero-risk skimming operation can be developed that essentially needs near-zero capital.
Thus financial capital has come to completely dominate industrial or productive capital. The pernicious consequences of this dominance have poisoned the economy and culture on multiple levels.
In the political sphere, the aggregation of hundreds of billions of dollars in skimmed profits gave Wall Street and the banking sector unlimited budgets to buy political influence. This created a monstrously pathological feedback loop: the more political influence Wall Street bought, the higher their returns on financialization skimming.
Consider housing as an example. Housing was once a simple, barely profitable long-term investment for both the buyer, who had to place substantial capital at risk (20% down payment) and the holders of mortgages, who took a modest yield for 30 years in trade for low risk.
Wall Street and the banks financialized housing via political influence. opening up a vast new territory to be exploited via skimming. Since capital wasn't necessary in no-risk skimming, then down payments were dispensed with to increase the pool of debtors, as they are the foundation of all skimming operations.
the cost of servicing that debt was manipulated via "teaser rates" and "interest only" loans, further leveraging up American home buyers' modest income streams. Mortgages were bundled, tranched and hedged, and the mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) were sold to trusting investors aroudn the world.
It was a bonanza of unprecedented wealth creation from financial skimming. $1,000 down and a few hundred dollars a month for a "teaser rate" interest-only loan was leveraged into a global chain of "products" and counterparties that could be skimmed all along the chain.
That deepened the political corruption that fed the skimming operation, and introduced the "no risk" pathology into Mainstream America. Since real estate never went down in value, then buying a second, third or fourth home on leverage was simply rational; in a Federal Reserve-controlled world of near-zero yields on cash, it was irrational not to.
But there were two intrinsic flaws in the skimming operation: while the Wall Street players were hedged (or so they reckoned), the average Americans buying homes with near-infinite leverage were not hedged. That meant that when their razor-thin capital went to zero, they were insolvent. Once they defaulted, then the income stream feeding the chain of skimming went away and the chain collapsed.
Once one counterparty failed in the chain, the entire chain collapsed as well. As Mandelbroit explained, such disruptions were an intrinsic feature of the system; though the timing of a systemic disruption could not be predicted, the fact that disruptions would occur on a regular basis could be predicted.
Some players knew this, of course, but that led to another pathology: those investment players who avoided the "no risk" skimming casino could not generate the yields being "earned" by the leveraged skimmers with legitimate investing, and so their investors abandoned them for the fully rational reason that "no risk" yields were higher elsewhere.
This too created a feedback loop, where the capital available to be leveraged grew rapidly, while the pool of capital available for "patient" risky investments in actual productive assets declined. Capital available for productive investment thus became costly and scarce, while capital available for leveraged skimming became cheap and abundant.
The Federal Reserve bankrolled the skimming to the hilt. Indeed, the entire pathology of low-interest, unlimited leverage skimming was based on the Federal Reserve's manipulation and intervention. That remains true today.
What happens when the whole chain blows up and the foundation of debt is impaired? Since the whole system is based on the debt and the income streams devoted to servicing it, the entire edifice collapses when the debt is impaired--debtors default and the system clogs with bad debt, i.e. uncollectable debt.
In a transparent Capitalist system, the debt would be written down and all the insolvent borrowers, lenders and counterparties would be wiped out. But the political corruption that enabled modern finance to poison the American economy and culture has stopped that cleansing from occurring.
Such a systemic writedown of bad debt in a system with only razor-thin capital to support a mighty edifice of leverage and debt would wipe out Wall Street and the banks and reveal the skimming operation of modern finance as an impossible perpetual motion machine rigged to enrich a thin crust of citizenry at the expense of the rest. And since they skim enough money to buy political protection, Capitalism has been strangled and tossed in a shallow grave lest it disupt the skimming and the political corruption that keeps the machine running.
What we end up with is artificial valuations, endless propaganda and a zombie economy. When borrowers are left dangling in default and the assets left on the books at full value, you end up with zombie debtors, zombie lenders, a zombie government that only has one lever to pull to keep the whole corrupt pathology going--borrow and squander more money-- and ultimately a zombie economy, drifting and decaying in a fetid pool of lies, shadow banking, ceaseless official propaganda, jury-rigged "fixes," manipulated statistics, corruption, predation, exploitation and pathology.
That's the U.S. economy, and indeed, the economies of the E.U., China and Japan in a nutshell.
The only way to clear a zombie economy is to write off uncollectable debt and liquidate all the assets, loans and hedges. That would collapse our financial system, but since it is the cause of our political and economic dysfunction, that would be the highest possible good and extremely positive.
There is a great final irony in the scare-mongering threats of the skimmers and their political toadies. If the taxpayers don't bail out the skimmers, then we'll have martial law by the weekend, the smouldering fires of Europe will rekindle into open warfare, and so on.
The irony is the propping up of a deeply, intrinsically pathological and destructive financial system is not saving the economy, it's the reason the economy is imploding. The Big Lie technique of propaganda is to reverse the polarity of reality: we are told up is down until we believe it.
We are told that liquidating the overhang of bad debt, leverage and hedges would "destroy the world as we know it." The truth is that keeping the zombie system from expiring and covering up the corruption with propaganda is what's actually destroying the world as we know it.
Thus the collapse of the current financial system of central banks, pathological Wall Street and insolvent banks would be the greatest possible good and the greatest possible positive for the global economy and its participants.
The author is a guy named Charles Hugh Smith.
It can be found here http://www.oftwominds.com/blognov11/collapse-of-corrupt11-11.html
We are being throttled by the Big Lie: we're told that if the predatory financial system implodes, we'll all be ruined. The opposite is true: the only way to save our economy is to let the corrupt, pathological and flawed financial system implode.
I was recently challenged by a contributor to write something positive, and so I decided to write about the single most positive outcome of the current financial crisis in Europe: the complete collapse of the corrupt, predatory, pathological global banking sector and its dealers, the central banks. Exploring why this is so reveals the insurmountable internal conflicts in our current financial system, and also illuminates the systemic political propaganda which is deployed daily to prop up a parasitic, corrupting, pathologically destructive financial system.
Our first stop is modern finance itself. Modern financial "products" and "instruments" are often highly complex and abstract, but the entire edifice can be distilled down to this: the system is based on the assumption that all risk can be hedged, and the difference between the initial position's yield/gain (i..e. placement of capital at risk for a gain) and the cost of hedging the risk of the wager to zero can be skimmed from the system risk-free.
That is the entire system in a nutshell, and we can immediately see the advantages of this system over traditional Capitalism, where risk can be hedged but never to zero, and the return is correlated to the risk taken on.
In modern finance, high-risk "investments" (wagers) with high returns can be taken on without worry because any and all risk can be hedged to zero, even in super high-risk wagers.
And since even high-risk positions can be seamlessly hedged to zero, then there is no reason not to borrow money to increase the size of your wagers: since you can't lose, then why not? Wagering in risk-free skimming with borrowed or leveraged money is simply rational.
Put these together and we see how a system based on risk-free skimming eventually leverages itself to the point that the slightest disruption can bring down the entire over-leveraged, over-extended system.
Why is this so? Every hedge has a counterparty who is supposed to pay off if the initial wager blows up. A system based on risk-free hedging is ultimately a self-organizing system which maximizes return by increasing bet sizes, leveraging/borrowing to near infinity and hedging every hedge as well as every wager.
This creates long chains of hedges and counterparties. Here's an example based on an asset we all understand, a house. Let's say someone buys a house for $1,000 down, something that was common in the housing bubble. That $1,000 is leveraged up to buy a $200,000 house via a $200,000 mortgage.
The "owner" of the house then buys a hedge to protect himself from the house losing value, so the risk is reduced to zero: if the value rises, the owner reaps the gain and if it declines, then he collects the payoff of the hedge from the counterparty, for example, a Wall Street investment firm.
The counterparty calculated the risk of real estate declining and then priced the hedge accordingly. There is some small risk that the loss will exceed the cost of the hedge, so the issuer of that hedge bundles similar bets and then buys a hedge or "insurance" from another player, who makes the same calculations of risk and return.
Meanwhile, the mortgage has been tranched (sliced into principal and interest and into various pools of risk) and bundled with other "low-risk" mortgages and sold to investors, who also buy a hedge against any loss in the tranch, for example, a credit default swap (CDS) which pays out if a borrower defaults. Those hedges are sold or "insured" with another hedges.
All of this debt and all of these hedges are based on a mere $1,000 of actual capital. The players who originated each hedge are similarly leveraged, because since risk can be lowered to zero, who needs capital?
So what happens when one counterparty (issuer of a hedge) somewhere in the chain runs into trouble? The entire chain collapses. With razor-thin capital to cover any losses, then each link in the chain dissolves into insolvency if their counterparty fails to pay off.
This is how we get hundreds of trillions of dollars in "notational" derivatives: every hedged is hedged with another "instrument," "products" are bundled and insured, and so on. The system is based on the principle that risk can be reduced to zero, and so there is no need for capital.
Unfortunately, that premise is demonstrably false. Benoit Mandelbrot dismantled the notion that risk can be reduced to zero in his prescient masterpiece, The (Mis)behavior of Markets. The founder of fractal geometry showed that markets are fractal in nature, and are thus intrinsically prone to unpredictable disruptions. Simply put, risk cannot be massaged away.
Thus the fundamental premise of all modern finance is flat-out wrong, and this explains why systemic risk, rather than being eliminated, actually rises with every ratchet up in debt, leverage and counterparty hedging.
The entire global financial system is thus based on the equivalent of a perpetual motion machine: money can be borrowed or leveraged into existence in essentially unlimited quantities, and then deployed in risk-free skimming operations to harvest unlimited wealth.
What does this promise of using leveraged capital to skim risk-free fortunes do to the "real economy" of production and investment in plant and technology? It guts it. The risk of industrial Capitalism is real and cannot be hedged away; high-risk investments may blow up or they may return high yields. It literally makes no sense to risk real capital in productive Capitalism when a zero-risk skimming operation can be developed that essentially needs near-zero capital.
Thus financial capital has come to completely dominate industrial or productive capital. The pernicious consequences of this dominance have poisoned the economy and culture on multiple levels.
In the political sphere, the aggregation of hundreds of billions of dollars in skimmed profits gave Wall Street and the banking sector unlimited budgets to buy political influence. This created a monstrously pathological feedback loop: the more political influence Wall Street bought, the higher their returns on financialization skimming.
Consider housing as an example. Housing was once a simple, barely profitable long-term investment for both the buyer, who had to place substantial capital at risk (20% down payment) and the holders of mortgages, who took a modest yield for 30 years in trade for low risk.
Wall Street and the banks financialized housing via political influence. opening up a vast new territory to be exploited via skimming. Since capital wasn't necessary in no-risk skimming, then down payments were dispensed with to increase the pool of debtors, as they are the foundation of all skimming operations.
the cost of servicing that debt was manipulated via "teaser rates" and "interest only" loans, further leveraging up American home buyers' modest income streams. Mortgages were bundled, tranched and hedged, and the mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) were sold to trusting investors aroudn the world.
It was a bonanza of unprecedented wealth creation from financial skimming. $1,000 down and a few hundred dollars a month for a "teaser rate" interest-only loan was leveraged into a global chain of "products" and counterparties that could be skimmed all along the chain.
That deepened the political corruption that fed the skimming operation, and introduced the "no risk" pathology into Mainstream America. Since real estate never went down in value, then buying a second, third or fourth home on leverage was simply rational; in a Federal Reserve-controlled world of near-zero yields on cash, it was irrational not to.
But there were two intrinsic flaws in the skimming operation: while the Wall Street players were hedged (or so they reckoned), the average Americans buying homes with near-infinite leverage were not hedged. That meant that when their razor-thin capital went to zero, they were insolvent. Once they defaulted, then the income stream feeding the chain of skimming went away and the chain collapsed.
Once one counterparty failed in the chain, the entire chain collapsed as well. As Mandelbroit explained, such disruptions were an intrinsic feature of the system; though the timing of a systemic disruption could not be predicted, the fact that disruptions would occur on a regular basis could be predicted.
Some players knew this, of course, but that led to another pathology: those investment players who avoided the "no risk" skimming casino could not generate the yields being "earned" by the leveraged skimmers with legitimate investing, and so their investors abandoned them for the fully rational reason that "no risk" yields were higher elsewhere.
This too created a feedback loop, where the capital available to be leveraged grew rapidly, while the pool of capital available for "patient" risky investments in actual productive assets declined. Capital available for productive investment thus became costly and scarce, while capital available for leveraged skimming became cheap and abundant.
The Federal Reserve bankrolled the skimming to the hilt. Indeed, the entire pathology of low-interest, unlimited leverage skimming was based on the Federal Reserve's manipulation and intervention. That remains true today.
What happens when the whole chain blows up and the foundation of debt is impaired? Since the whole system is based on the debt and the income streams devoted to servicing it, the entire edifice collapses when the debt is impaired--debtors default and the system clogs with bad debt, i.e. uncollectable debt.
In a transparent Capitalist system, the debt would be written down and all the insolvent borrowers, lenders and counterparties would be wiped out. But the political corruption that enabled modern finance to poison the American economy and culture has stopped that cleansing from occurring.
Such a systemic writedown of bad debt in a system with only razor-thin capital to support a mighty edifice of leverage and debt would wipe out Wall Street and the banks and reveal the skimming operation of modern finance as an impossible perpetual motion machine rigged to enrich a thin crust of citizenry at the expense of the rest. And since they skim enough money to buy political protection, Capitalism has been strangled and tossed in a shallow grave lest it disupt the skimming and the political corruption that keeps the machine running.
What we end up with is artificial valuations, endless propaganda and a zombie economy. When borrowers are left dangling in default and the assets left on the books at full value, you end up with zombie debtors, zombie lenders, a zombie government that only has one lever to pull to keep the whole corrupt pathology going--borrow and squander more money-- and ultimately a zombie economy, drifting and decaying in a fetid pool of lies, shadow banking, ceaseless official propaganda, jury-rigged "fixes," manipulated statistics, corruption, predation, exploitation and pathology.
That's the U.S. economy, and indeed, the economies of the E.U., China and Japan in a nutshell.
The only way to clear a zombie economy is to write off uncollectable debt and liquidate all the assets, loans and hedges. That would collapse our financial system, but since it is the cause of our political and economic dysfunction, that would be the highest possible good and extremely positive.
There is a great final irony in the scare-mongering threats of the skimmers and their political toadies. If the taxpayers don't bail out the skimmers, then we'll have martial law by the weekend, the smouldering fires of Europe will rekindle into open warfare, and so on.
The irony is the propping up of a deeply, intrinsically pathological and destructive financial system is not saving the economy, it's the reason the economy is imploding. The Big Lie technique of propaganda is to reverse the polarity of reality: we are told up is down until we believe it.
We are told that liquidating the overhang of bad debt, leverage and hedges would "destroy the world as we know it." The truth is that keeping the zombie system from expiring and covering up the corruption with propaganda is what's actually destroying the world as we know it.
Thus the collapse of the current financial system of central banks, pathological Wall Street and insolvent banks would be the greatest possible good and the greatest possible positive for the global economy and its participants.
Italy, too big to fail, but too big to save!
David Rosenberg, chief economist & strategist at Toronto-based investment manager Gluskin Sheff + Associates. Rosenberg has long been skeptical, to put it mildly, about the European Union’s ability to keep its Tower of Babel from tumbling into recession.
Rosenberg doesn’t claim to know how this debt crisis will be resolved. “The problem with Italy is that it is too big to save and too big to fail given the systemic risks to the banking sector,” he told clients in a research note on Wednesday.
Bingo. And what of the USA, whose debt structure is actually worse than Italy?
Buy gold......, and you might want to buy some ammo and guns with it. Just sayin'
Gold and bonds are all that’s left - The Tell - MarketWatch:
'via Blog this'
Rosenberg doesn’t claim to know how this debt crisis will be resolved. “The problem with Italy is that it is too big to save and too big to fail given the systemic risks to the banking sector,” he told clients in a research note on Wednesday.
Bingo. And what of the USA, whose debt structure is actually worse than Italy?
Buy gold......, and you might want to buy some ammo and guns with it. Just sayin'
Gold and bonds are all that’s left - The Tell - MarketWatch:
'via Blog this'
Thursday, November 10, 2011
If you are sick to death of the "patriots" who endlessly recycle clips of 9/11 as an excuse to engage in perpetual war, check out this guy's vids over on youtube.
He asolutely PWNS the neocon war mongering jackasses in the Republican Party.
I almost fell down laughing at these. They are the perfect parody.
The second vid with the editorial comments on Buchanan are a scream.
He asolutely PWNS the neocon war mongering jackasses in the Republican Party.
I almost fell down laughing at these. They are the perfect parody.
The second vid with the editorial comments on Buchanan are a scream.
The Reference Frame: Spain produces solar energy at night
LOL.
The subsidies for solar energy are so high that in Spain it is profitable to SHINE LIGHTS on solar panels at night to generate electricity.
This is so amusing.
The Reference Frame: Spain produces solar energy at night:
'via Blog this'
The subsidies for solar energy are so high that in Spain it is profitable to SHINE LIGHTS on solar panels at night to generate electricity.
This is so amusing.
The Reference Frame: Spain produces solar energy at night:
'via Blog this'
Tuesday, November 08, 2011
This is hype, but still very good
This is all glitzed up and hollywood smarmy, but the basic info in it is absolutely correct. I have known about Bill Murphy, GATA, and Alex McGuire for a while. His testimony where he brought out Alex McGuire in front to the CFTC is absolutely brilliant, and unbelievably brave. This testimony is as heroic and brave as anything in "Braveheart." The stuff about attempted retaliation is absolutely true. Ventura just puts what is pretty commonly known with the Lew Rockwell/Ron Paul/Pat Buchanan crowd. Like I said, he is all flashy and "tough guy investigator" for the drama, but it is why I have been so adamantly convinced this stuff is going to blow up in our face.
This is not only NOT an issue of Republican vs. Democrat, but the fact is that this infection has COMPLETELY infiltrated the upper levels of both parties. There comes a time when the blood of a patient is so affected by sepsis that no matter what you do, the patient is going to die.
It is worth 45 mins of your time to watch.
Conspiracy Theory with Jesse Ventura S02E03 Wall Street - YouTube
This is not only NOT an issue of Republican vs. Democrat, but the fact is that this infection has COMPLETELY infiltrated the upper levels of both parties. There comes a time when the blood of a patient is so affected by sepsis that no matter what you do, the patient is going to die.
It is worth 45 mins of your time to watch.
Conspiracy Theory with Jesse Ventura S02E03 Wall Street - YouTube
Sunday, November 06, 2011
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