Hank Paulson Tipped Off The Goldman-Led "Plunge Protection Team" About Fannie Bankruptcy 7 Weeks In Advance

Today, BusinessWeek's Michael Serrill and Jonathan Neumann have released a blockbuster report based on a FOIA response by the Treasury, which proves that in America rules are only for little people, that this country has been a banana republic for years, that Animal Farm was spot on, and gives excruciating detail of how Hank Paulson tipped off a select group of Goldman diaspora hedge fund managers about the eventual failure of Fannie and Freddie 7 weeks ahead of this information becoming public knowledge. The report basically is a summary of a meeting that took place at the offices of Eton Mindich's Eton Park headquarters on July 21, 2008, 7 days after his famous '“If you have a bazooka, and people know you have it, you're not likely to take it out," speech and 7 weeks before both GSEs effectively filed for bankruptcy and were put into conservatorship. Now if it only ended there it would have been fine - a case of potential criminal collusion between the government (although nothing specific against Paulson as he didn't actually trade: he just made sure his former Goldman colleagues made money), and the 0.00001% in the face of a few multi-billionaires who most certainly did trade on material non-public information sourced by Hank. Where it however gets worse is when one considers the actual role of one Eric Mindich in the hierarchy of the Asset Managers' committee of the President's Working Group on Capital Markets, better known of course as the PPT: a topic we discussed first back in September 2009 when we asked "What Is Goldman Alum Eric Mindich's Role As Chair Of The Asset Managers' Committee Of The President's Working Group?" Back then we did not get an answer. Luckily, courtesy of a few answered FOIA requests, some real investigative journalism, and not reporting for the sake of brown-nosing just so one can get soundbites for their next name dropping "blockbuster" and straight to HBO movie, we are starting to get the full picture of just how high in US government the Goldman Sachs controlled "crony capitalist" adminsitration truly runs.

Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"

Pimco's Greg Sharenow has released a white paper on what the Newport Beach company believes are the 4 possible outcomes should Iranian nuclear facilities be struck as increasingly more believe will happen given enough time. The conclusion is sensible enough "Whenever the global economy is in a fragile state, as it is today, geopolitical concerns such as the possibility of a strike on Iran’s nuclear facilities become much more exaggerated. Although we cannot (and will not) predict whether an attack is imminent, or even likely, our experience and research tells us that any major disruption in the supply of oil from Iran could have either subtle or profound global repercussions – especially as excess capacity is virtually exhausted and we doubt that other OPEC nations would be able to compensate for a reduction in Iranian oil production." As for those looking for numbers associated with the 4 scenarios presented by PIMCO here they are: i) Scenario 1: Exports minimally effected. Concerns would drive initial price response; Oil could spike initially to $130 to $140 per barrel and then settle in a higher range, around $120 to $125; ii) Scenario 2: Iranian exports cut off for one month. In this case, we would expect prices could reach previous all-time highs of $145/bbl or even higher depending on issues with shipping; iii) Scenario 3: Iranian exports are lost for half a year. We think oil prices could probably rally and average $150 for the six months, with notable spikes above that level; iv) Scenario 4: Greater loss of production from around the region, either through subsequent Iranian response or due to lack of ability to move oil through Straits of Hormuz. This is the Armageddon scenario in which oil prices could soar, significantly constraining global growth. Forecasting prices in the prior scenarios is dangerous enough. So, we won’t even begin to forecast a cap or target price in this final Doomsday scenario. Needless to say, even the modest Scenario 1 is enough to collapse global economic growth by several percentage points to the point where not even coordinated global printing will do much.

Market Forces Are The Fulcrum of Change

Eric De Groot at Eric De Groot - 42 minutes ago

Heavy volume on the 11/11 weekly gap illustrates the wolf pack isolation of Italy (weak prey) from the EU (herd). 3x Italian Treas Bond ETN: Italy's borrowing costs are surging and France and Germany spreads are expanding at an alarming rate. Market forces have always been the fulcrum of change with in society regardless of what the headlines suggest. Infinite QE remains the only viable... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

 

 

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Currency Wars: The Anglo-American Century and Why the Financial Engineers Hate Gold and Silver

 

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Bloomberg Radio Interview

Admin at Marc Faber Blog - 2 hours ago

Latest Bloomberg Radio interview, November 26. *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

Financial Bonds Are Hit By Deleveraging - Basis At 2008 Levels

We have long discussed the relative changes in the bond, CDS, and equity markets and attempted to infer market sentiment from them. The last few weeks have seen financial stocks for instance sell-off and converge back to their CDS-inferred levels - after much poo-pooing of CDS in general. We have also pointed to the worrying drop in the basis (spread) between bonds and CDS. While there are a number of drivers for this basis, the current level (of basis) for investment grade bonds is akin to 2008 crisis levels and implies both inventory deleveraging and funding stresses in the markets. Bonds are underperforming CDS - the basis is dropping - as dealers are forced to unwind inventory impacting secondary prices in general (not just on risk aversion but wholesale deleveraging).

Guest Post: Unleashing the Future: Advancing Prosperity Through Debt Forgiveness (Part 2)

The demand for credit and debt is driven by generational values, historical habits, and psychological desires. These in turn are premised on evolving notions of the good life. If someone thinks material consumption equates with the good life, then chances are that person will get much farther into debt than another person that values non-material staples as supporting the good life— i.e. family, community, and friendship. Where you put your energy and money communicates something strong about the person you are and the way you will interact with the world. American baby boomers were born into a world of cheap oil, plentiful jobs, and expansionary foreign policy and were raised by Depression-era parents that wanted to give them the amenities that they never had the chance to enjoy. This engrained an historical sense that physical growth was unlimited and that the “world was there for me”. Today’s so-called Millennials (children of baby boomers) are growing up in a starkly different world of peak oil, global warming, shrinking jobs, and diminished material standard of living, but one with unprecedented interconnection. Material opportunities are contracting, but social opportunities are expanding. The new motto emerging is more like: “We are in the world and for each other.” A collapse of material prosperity has given way to the increasing possibility of experiential and social richness. Consequently, there has been a huge shift in attitudes about the “good life” between generations, largely unnoticed and unreported in traditional media. Only the symptoms of this shift are being reported—social media revolutions, Arab Spring, the Occupy Wall Street movement, young popular dissident authors in China, and pop-driven musical critique of conservative fundamentalism in Pakistan.

Muddy Waters Reiterates "Strong Sell" On Focus Media (FMCN), Says Shares Remain "Uninvestable"

The Muddy Waters boys continue their fight with their latest fraud target: "FMCN’s partial response to our 80-page November 21, 2011 report reinforces our Strong Sell rating.  FMCN’s response admitted that our estimate of fewer than 120,000 LCD screens showing full motion video advertisements is correct.  Despite this admission, FMCN denied that it was fraudulently overstating the number of displays in its network because the 178,382 displays it discloses include 62,656 digital picture frames.  FMCN’s response stated that it does not also count these digital picture frames in its poster segment.  There is strong evidence that FMCN does in fact double count these digital frames.  However, in response to our report and in contrast to previous 20-F filings, FMCN has expanded the definition of its LCD commercial display network beyond full motion video, which makes a clear and final resolution of this point unlikely.  Therefore, FMCN at best prompted investors to think it had more motion displays than it does, and at worst fraudulently overstated the size of its LCD commercial display network.  Both possibilities raise concerns about the health of this business line." We maintain our Strong Sell rating on FMCN mainly because our concerns regarding the viability of FMCN’s core LCD commercial location network remain.  This issue, combined with FMCN’s additional misrepresentations about the size of the network, FMCN’s opaque business model (on both the revenue and cost sides), and insiders’ penchant for self-dealing, render FMCN shares un-investable."

InTrade Odds On Euro Collapse By End Of 2012 Now At 50%

One can listen to Eurocrats promising the moon and the stars, and that the zEUR0.PK will survive come hell or high water, or one can trade the probability of the Eurozone's breakup based on reality. For those who opt for the latter, they should head over to Intrade where the contract pricing the possibility of "Any country currently using the Euro to announce their intention to drop it midnight ET 31 Dec 2012" is now trading at perfectly even odds or 50%. In other words, the "upside benefit" of the EFSF, the ECB, the IMF and ultimately the Fed have been reduced to coin toss odds. Naturally, if there is a break up in the Eurozone the fallout will be massive and will likely lead to a far worse outcome than the freezing of money markets in the aftermath of the Lehman bankruptcy. In other words, the odds of capitalism surviving for just over a year form now are exactly fifty/fifty.

EFSF - A Flowchart

Here is our best attempt at a flow chart for the EFSF that tries to capture everything it does.  If it looks complicated, that is because it is complicated.

Consumer Confidence Jumps Most In Eight Years, More Than 4 Standard Deviations

The somewhat incredible rise in consumer confidence this morning is the largest absolute jump since April 2003 from prior revised 40.9 to 56. On a percentage basis, only the April 2009 reversion was higher as this represents a 4 standard deviation elevation from its long-term mean. Of course, its all about expectations, as the sub-index jumped from 50 to 67.8 - which is still only back to July 2011 levels.

5th Consecutive Month Of House Price Drops As Case-Shiller Misses Expectations Again

The bottom-calling will continue of course but for the fifth month in a row, September's Case-Shiller home price index fell year-over-year as the Non-seasonally adjusted price index fell for the first time month-over-month since February. The overall index dropped 3.9% YoY, compared to expectations of a 3.1% drop. The more narrowly focused 20 City Index also missed expectations, falling 3.59% (relative to expectations of -3.00%) and saw its biggest drop in six months. The seasonally adjusted version of the index fell to a new low for the cycle, and prices are now at their lowest level since April 2003. Prices fell sharply in Atlanta (-4.1% mom, seasonally adjusted), and declined in 15 of the 20 cities in the index.

Iran Update: Six (Or Eight) UK Embassy Staff Taken Hostage: Iran Contra Redux?

Even more mysterious update #2:

• IRANIAN CENTRAL TV CONFIRMS THAT EIGHT UK EMBASSY STAFF TAKEN HOSTAGE

Mysterious update confirming that something very fishy is going on here:

• IRAN'S MEHR NEWS AGENCY REMOVES REPORT OF HOSTAGE TAKING FROM ITS WEBSITE - NO EXPLANATION GIVEN

Today's developments are rapidly turning into a repeat of Iran-Contra:

• SIX UK EMBASSY STAFF TAKEN HOSTAGE BY PROTESTERS IN NORTHERN COMPOUND OF TEHRAN EMBASSY - MEHR NEWS AGENCY

Expect a very formal, and very forceful UK response imminently.

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