Why I am so silent:
I am currently working full time in the FIRE industry and have had to restrict my blogging as a result. Like so many others -- JJJ and Londonbanker, to mention some people much more distinguished than myself -- success has led to silence. I'm not under nondisclosure or any such nonsense, I'm just very busy orienting myself to my new position and responsibilities. I hope to resume more active posting in the future when I have more time. |
Iran Forces Occupy Iraqi Oil Well, Border Guard Says (Update2)
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By Maher Chmaytelli and Kadhim Ajrash
Dec. 18 (Bloomberg) -- Iranian forces yesterday entered Iraqi territory at dawn, and occupied well number 4 in the East Maysan field in al-Fakah region, 450 kilometers (280 miles) south of Baghdad, Border Guard General Zaser Nazmi said. The Iranian forces positioned tanks around the well.
The border guard’s comments couldn’t be immediately verified independently.
“They positioned tanks around it and dug trenches,” Nazmi said by phone from Basra. “They are still there, they raised the flag.”
East Maysan in southern Iraq is an old oil field that is no longer in production, according to Nazmi. Iraq is the third largest oil producer in the Middle East after Saudi Arabia and Iran.
Energy analysts and traders were surprised at the news, which comes days before Iran and Iraq meet fellow members of the Organization of Petroleum Exporting Countries at a Dec. 22 meeting in Luanda, Angola.
Crude oil for January delivery rose as much as $1.67, or 2.3 percent, to $74.32 a barrel on the New York Mercantile Exchange, before paring gains to trade at $73.85 a barrel at 1 p.m. London time.
Iran and Iraq waged a bloody eight-year war that ended in 1988, with much of the fighting along the border between southern Iraq and Iran. Iraq has this year signed contracts with several foreign companies to develop its oil fields to revive production.
“From a geopolitical perspective it is a surprising development in terms of timing considering the upcoming OPEC meeting,” said Harry Tchilinguirian, senior oil analyst with BNP Paribas SA in London.
“If verified, the incursion only goes to highlight the still very uncertain conditions on the ground in Iraq that have been impeding the recovery of the country’s oil sector,” Tchilinguirian said. |
Looks like it's starting to be a crisis. The first sovereign borrower defaults are starting to appear. Greece got their credit rating downgraded, Ireland is having interest rate troubles, and of course Dubai has disowned Dubai World and prepared to force haircuts on the people who invested in its sovereign endeavors. In a month or two, we should start to see some interesting developments on the sovereign borrowing front.
What's interesting to me is that we won't see lenders crushed, because of course they are all owned by their states and subject to unlimited bailout. What will happen, though, is a severe tightening of terms for sovereign borrowers. While the lenders won't be bankrupted, they also won't be willing to lend more.
Edit: Commentarians will remember I said, it's not even a crisis until the first sovereign borrower gets crushed by a forex crisis. It seems like this is starting to happen. I am not a gambling economist, but my gut tells me that people who are waiting to bet on the "Creditanstalt Moment" may want to start making their way toward the roulette table. |
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Nov. 25th, 2009 @ 02:52 pm
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Fed Revises Rules on Regional Directors’ Eligibility (Update1) Share Business
By Michael McKee
Nov. 25 (Bloomberg) -- The Federal Reserve Board changed its policy on the eligibility of directors for its 12 regional Fed banks, after questions were raised about the tenure of former New York Fed Bank board chairman Stephen Friedman.
The revisions are designed to tighten conflict-of-interest rules for members of regional Fed bank boards. Directors appointed to represent the public must end any association with a company that becomes a “financial affiliation company” or resign from the regional bank’s board, the Fed said today in a statement released in Washington.
Friedman, chairman of Stone Point Capital LLC and a member of the board of Goldman Sachs Group Inc., had received a waiver to continue serving on the New York Fed board after Goldman Sachs became a bank holding company, overseen by the New York Fed, in September 2008. Friedman bought additional stock in Goldman after receiving the waiver and while serving as chairman of the New York Fed’s board.
The New York Fed is one of 12 regional Fed banks which, along with the Board of Governors, make up the Federal Reserve system. They are private entities run by nine-member boards of directors. Together the directors nominate a president who is approved by the governors. The presidents have a rotating seat on the policy-setting Federal Open Market Committee and is responsible for supervising banks in the region.
The New York Fed president is the only one to have a permanent vote on the FOMC.
Class A directors are elected by and represent member banks. Class B directors are elected by member banks to represent the public. The chairman, vice chairman and one other seat on the board are Class C directors, chosen by the Fed’s board of governors to represent the public.
Under the new policy, if Class B or Class C directors have a role in any company that becomes a bank, a bank holding company, or in some other way is affiliated with a financial institution, they have 60 days to resign from the board or end the connection. During that period, the director would not be allowed to participate in board activities.
In addition, Class C directors who hold stock in a company that becomes a “financial stock issuer” during their term must sell their stock or resign from the Fed’s board, also within 60 days. Until the stock is sold, the director cannot participate in board activities. |
Dubai World Seeks to Delay Debt as Default Risk Soars
By Arif Sharif and Laura Cochrane
Nov. 25 (Bloomberg) -- Dubai World, with $59 billion of liabilities, is seeking to delay debt payments, sending contracts to protect the emirate against default surging by the most since they began trading in January.
The state-controlled company will ask all creditors for a “standstill” agreement as it negotiates to extend maturities, including $3.52 billion of Islamic bonds due on Dec. 14 from its property unit Nakheel PJSC, the builder of palm tree-shaped islands, Dubai’s Department of Finance said in an e-mailed statement. Moody’s Investors Service said it would consider the plan a default should bondholders be forced to accept the terms.
“Extending the maturity of Nakheel debt is feeding the market’s uncertainty on which debt Dubai will honor in full,” said Rachel Ziemba, a senior analyst covering sovereign wealth funds at New York-based Roubini Global Economics. “They look desperate and the market is concerned that in the long term Dubai’s indebtedness is rising not falling.”
Dubai accumulated $80 billion of debt by expanding in banking, real estate and transportation before credit markets seized up last year. Contracts protecting against default rose 116 basis points to 434 basis points today, the most since they began trading in January, ranking it the sixth highest-risk government borrower, according to credit-default swap prices from CMA Datavision in London. The contracts, which increase as perceptions of credit quality deteriorate, are higher than Iceland’s after climbing 131 basis points in November, the biggest monthly increase since January.
( Read more... ) |
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Nov. 25th, 2009 @ 09:07 am
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Dollar lurches to 16-month low
By Jamie Chisholm, Global Markets Commentator
Published: November 25 2009 07:09 | Last updated: November 25 2009 14:02
13:55 GMT. Gold leapt to another high on Wednesday as the dollar tumbled below significant support levels to hit near 16-month lows.
After trading within a tight range for nearly three weeks, the greenback suddenly lurched lower, breaching 74.50 on a trade-weighted basis and decisively cutting through the $1.5050 mark versus the euro. It also fell heavily against the yen, at one point touching a 10-month trough of Y87.40, in moves that are likely to have been exacerbated by thin trading ahead of Thursday’s US Thanksgiving holiday.
“It would be no surprise to see a panic acceleration lifting the euro by a further two or more cents while Americans feast on Thanksgiving Day turkey,” said Andrew Wilkinson senior market analyst at Interactive Brokers.
The dollar’s weakness provided further fuel to the gold price, pushing bullion to a new peak of $1,182.7. It was later up 0.9 per cent at $1,179.8. If these levels are maintained then the precious metal will be on track in November to enjoy its best monthly gains in a decade, an increase of nearly 13 per cent, according to Reuters data. |
http://www.bloomberg.com/apps/news?pid=20601087&sid=atWoGngEpam4&pos=3
Fed Officials Watch Asset Prices for Signs of ‘Excessive Risk’
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By Craig Torres
Nov. 25 (Bloomberg) -- Federal Reserve policy makers said for the first time that their decision to cut interest rates to zero may be fueling undue financial-market speculation even as they called the dollar’s decline “orderly.”
The Federal Open Market Committee said its policy of keeping rates low might cause “excessive risk-taking” or an “unanchoring of inflation expectations,” according to minutes of its Nov. 3-4 meeting released yesterday. Central bankers also said further dollar depreciation that might “put significant upward pressure on inflation would bear close watching.” |
Ben Bernanke:
“It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value,” Bernanke said in response to audience questions after a speech in New York. “It’s not obvious to me in any case that there’s any large misalignments currently in the U.S. financial system.”
( Read more... ) |
Using figures from the FDIC as reported via Calculated Risk:
Note that these figures are preliminary estimated by the FDIC and losses to the DIF can increase as the run-off of the bad assets continues:
Pacific Coast National Bank; San Clemente, California: Total assets of $134.4 million / The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $27.4 million. = 20% bad assets
Century Bank FSB; Sarasota, Florida: Total assets of $728 million / The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $344 million. = 47% bad assets
Orion Bank; Naples, Florida: Total assets of $2.7 billion (2,700 mm) / The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $615 million. = 22% bad assets.
"Assets" in bank accounting are loans while "deposits" are counted as liabilities. 20+% bad assets is shocking. The regulators "normally" shut you down after you breach capital adequacy. Lack of manpower and a desire to kick the can on this crisis has left these fellows to rot & bloat up to quite an impressive size. |
PC to Blame at Fort Hood?
Charges fly that 'political correctness' prevented officials from probing Fort Hood suspect's e-mails
Because as any Republican can tell you, nothing serves America like dividing the Republic in the face of its enemies. |
| » What Recovery? Consumer Credit Declines @ 7.2% Annual Rate |
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U.S. Consumer Credit Fell More Than Forecast in September
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By Vincent Del Giudice
Nov. 6 (Bloomberg) -- U.S. consumer credit fell in September for an eighth straight month, the longest series of declines on record, as thousands of Americans lost their jobs and banks tightened access to loans.
Borrowing fell more than economists predicted, declining by $14.8 billion, or 7.2 percent at an annual rate, to $2.46 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $9.86 billion in August, less than previously estimated. The consecutive declines were the most since records began in 1943.
A labor market that kept losing jobs in October threatens to limit consumer spending, which accounts for about 70 percent of the world’s largest economy. More than 100 banks have failed this year, and lenders are requiring tougher conditions for the credit they extend to consumers and businesses.
“Consumers are ratcheting back their purchases of goods and services made with credit cards as mounting job losses have made them very cautious about what the future holds,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York, before the report.
Economists had forecast consumer credit would drop by $10 billion in September, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from declines of $4 billion to $21 billion. The Fed initially reported that consumer credit declined in August by $12 billion.
Revolving debt, such as credit cards, declined by $9.93 billion in September, according to the Fed’s statistics. Non- revolving debt, including loans for autos and mobile home, dropped by $4.87 billion. The Fed’s report doesn’t cover borrowing secured by real estate.
Nov. 6th, 2009 @ 03:25 pm
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| » Irish Credit Rating Cut By Two Notches |
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LONDON (MarketWatch) -- Fitch Ratings on Wednesday cut Ireland's credit rating by two notches, reflecting the severity of the decline in the nation's gross domestic product and the "exceptional" rise in government liabilities. The rating agency said it had cut Ireland's long-term foreign and local currency issuer default ratings to AA- from AA+. "However, the agency notes the vigour of the government's fiscal consolidation response to date, the expectation of further aggressive budget tightening and the likely success of the National Asset Management Agency in rehabilitating the banking sector," Fitch said. "All these factors have helped stabilise the outlook for Ireland's creditworthiness," it added.
Nov. 6th, 2009 @ 07:24 am
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| » Everyone A Suspect: FBI Watch List Contains 400,000 Names, FBI So Suspicious It Cannot Even Recruit |
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http://www.washingtonpost.com/wp-dyn/content/article/2009/10/31/AR2009103102141.html
Newly released FBI data offer evidence of the broad scope and complexity of the nation's terrorist watch list, documenting a daily flood of names nominated for inclusion to the controversial list.
During a 12-month period ended in March this year, for example, the U.S. intelligence community suggested on a daily basis that 1,600 people qualified for the list because they presented a "reasonable suspicion," according to data provided to the Senate Judiciary Committee by the FBI in September and made public last week.
FBI officials cautioned that each nomination "does not necessarily represent a new individual, but may instead involve an alias or name variant for a previously watchlisted person."
The ever-churning list is said to contain more than 400,000 unique names and over 1 million entries. The committee was told that over that same period, officials asked each day that 600 names be removed and 4,800 records be modified. Fewer than 5 percent of the people on the list are U.S. citizens or legal permanent residents. Nine percent of those on the terrorism list, the FBI said, are also on the government's "no fly" list.
This information, and more about the FBI's wide-ranging effort against terrorists, came in answers from FBI Director Robert S. Mueller III to Senate Judiciary Committee members' questions. The answers were first made public last week in Steven Aftergood's Secrecy News.
Sen. Russell D. Feingold (D-Wis.), who has shown concern over some of the FBI's relatively new investigative techniques assessing possible terrorist, criminal or foreign intelligence activities, drew new information from the agency. Before the attacks of Sept. 11, 2001, the FBI needed initial information that a person or group was engaged in wrongdoing before it could open a preliminary investigation.
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Under current practice, no such information is needed. That led Feingold to ask how many "assessments" had been initiated and how many had led to investigations since new guidelines were put into effect in December 2008. The FBI said the answer was "sensitive" and would be provided only in classified form.
Feingold was given brief descriptions of the types of assessments that can be undertaken: The inquiries can be opened by individual agents "proactively," meaning on his or her own or in response to a lead about a threat. Other assessments are undertaken to identify or gather information about potential targets or terrorists, to gather information to aid intelligence gathering and related to matters of foreign intelligence interest.
Feingold pointed to a November 2008 Justice Department inspector general audit showing that in 2006, approximately 219,000 tips from the public led to the FBI's determination that there were 2,800 counterterrorism threats and suspicious incidents that year. "Regardless of the reporting source, FBI policy requires that each threat or suspicious incident should receive some level of review and assessment to determine the potential nexus to terrorism," the audit said.
In a different vein, the FBI was asked why it is losing new recruits as special agents and support personnel at a time when terrorist investigations are increasing. The FBI responded that failed polygraph tests rather than other factors, such as the length of time for getting security clearances, are the main reason recruits are ending their efforts to join the bureau. In the past year, polygraphs were the cause of roughly 40 percent of special-agent applicants dropping out, the records showed.
Nov. 1st, 2009 @ 11:09 am
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| » New Era of Transparency: Federal Regulators Attempt To Gag Former Freddie Mac Employees |
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http://www.nytimes.com/2009/10/23/business/23mortgage.html
Freddie Mac’s Secrecy Pacts Face Court Test
The Treasury has propped up Freddie Mac with more than $50 billion in taxpayer money since the company nearly collapsed more than a year ago, and officials warn that the company will probably need additional billions in the months ahead.
Federal prosecutors in Virginia and the Securities and Exchange Commission are already investigating whether the company misled investors about the risks it was taking with securities backed by subprime mortgages and no-document loans.
But in a battle that will surface on Friday in a federal courtroom in New York, the company and its primary government overseer, the Federal Housing Finance Agency, are trying to enforce secrecy agreements that scores of former employees signed as a condition for receiving severance payments when they left the company.
In their class-action lawsuit against Freddie Mac, three big union-based pension funds charge that Freddie Mac executives defrauded investors by concealing the company’s exposure to high-risk mortgages, its mounting losses and its inadequate capital position.
At the hearing on Friday, lawyers for shareholders will argue that Freddie Mac’s secrecy agreements amount to buying silence from willing witnesses who may have crucial information about what the company’s top executives knew at the time they were assuring investors that all was well. The lawyers will ask a judge to invalidate the restrictions, a move that Freddie Mac and federal regulators will say the court has no right to do.
“Federal dollars are being used to bribe people, to buy their silence,” said David George, a lawyer representing the pension funds in a class-action lawsuit.
Under the secrecy provisions, former employees would be permitted to answer questions from government prosecutors and investigators in any criminal case or in a regulatory proceeding.
But, barring a court order, the former employees are prohibited from cooperating with anyone involved in a civil lawsuit against Freddie Mac.
Several former employees, who insisted on anonymity, confirmed that they were eager to talk with the shareholder group and said they might have valuable information.
“I would say more, but I don’t want somebody knocking on my door and asking for $50,000 back,” said one former employee who worked on Freddie Mac’s internal financial controls. “It’s almost like bribery; I felt that I was supposed to sign the agreement, take the money and keep all their secrets.”
The severance deals were so strict, according to former employees, that they prohibited those who accepted them from saying almost anything about their old jobs or even about the secrecy pledges themselves.
“I was told that in volunteering to take a buyout, I couldn’t even talk about the agreement or it would be off the table,” said an 18-year veteran of Freddie Mac, who insisted on anonymity because of the restrictions. “I was told that you don’t talk about the terms of agreement, you don’t talk to the news media and you don’t talk to attorneys involved in lawsuits against the company.”
Lawyers for pension funds that have filed a class-action lawsuit against the company say the secrecy provisions have already muzzled at least two dozen former employees with potentially important information.
Spokesmen for both Freddie Mac and the Federal Housing Finance Agency said they could not comment on the case because it is in litigation.
In a legal brief filed in August, the Federal Housing Finance Agency refused to confirm that the secrecy pacts even existed, saying their existence was “hypothetical.” But if the restrictions did exist, the agency continued, neither shareholders nor the courts had any authority to interfere with them.
( Read more... )
Oct. 23rd, 2009 @ 10:42 am
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| » Dems Lock Republicans Out Of Oversight Committee To Prevent Publicity On Countrywide VIP Mortgages |
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Democrats lock Republicans out of committee room
By Susan Crabtree - 10/20/09 05:47 PM ET
Rep. Edolphus Towns (D-N.Y.) locked Republicans out of the House Oversight and Government Reform Committee room to keep them from meeting when Democrats aren’t present.
Towns’ action came after repeated public ridicule from the leading Republican on the committee, Rep. Darrell Issa (R-Calif.), over Towns’s failure to launch an investigation into Countrywide Mortgage’s reported sweetheart deals to VIPs.
For months Towns has refused Republican requests to subpoena records in the case. Last Thursday Committee Republicans, led by Issa, were poised to force an open vote on the subpoenas at a Committee mark-up meeting. The mark-up was abruptly canceled. Only Republicans showed up while Democrats chairs remained empty.
Republicans charged that Towns cancelled the meeting to avoid the subpoena vote. Democrats first claimed the mark-up was canceled due to a conflict with the Financial Services Committee. Later they said it was abandoned after a disagreement among Democratic members on whether to subpoena records on the mortgage industry’s political contributions to Republicans.
A GOP committee staffer captured video of Democrats leaving their separate meeting in private chambers after the mark-up was supposed to have begun. He spliced the video to other footage of the Democrats’ empty chairs at the hearing room, set it to the tune of “Hit the Road, Jack” and posted it on the Oversight and Government Reform Committee’s minority webpage, where it remained as of press time.
Towns’s staffers told Republicans they were not happy about the presence of the video camera in the hearing room when they were not present. Issa’s spokesman said the Democrats readily acknowledged to Republicans that they changed the locks in retaliation to the videotape of the Democrats’ absence from the business meeting even though committee rules allow meetings to be taped.
"It's not surprising that they would choose to retaliate given the embarrassment we caused by catching them in a lie on tape,” said Issa spokesman Kurt Bardella. “If only they
would use their creative energy to do some actual oversight rather than resorting to immature tactics, but I guess we're getting some insight into what lengths they'll go to avoid addressing the Countrywide VIP issue."
Towns’s office said in a statement the locks were changed on Republicans "because they don't know how to behave." As for the video the GOP made, Towns's office pointed out: "The minority is using taxpayer dollars to make these campaign style videos."
Oct. 21st, 2009 @ 05:56 am
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| » Two-Faced: Democrats Prepare Senate Bypasses Decried Under Bush Regime |
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A key House committee on Thursday quietly altered its health care legislation in a way that could allow the Senate to mow over Republican opposition to Democratic reforms by exploiting a budgetary loophole.
The Ways and Means Committee adjusted its health care overhaul package so that the Senate, down the road, could avoid a filibuster and pass health care reform with a smaller number of votes than normally required.
The long-discussed process, nicknamed the "nuclear option," is known as reconciliation. It's coming into potential play after the Senate Finance Committee on Tuesday became the last of five committees to approve health care reform legislation, sending the overhaul proposals a big step closer to the president's desk. Before it gets there, though, the bill has to pass from the committees to the floors of the House and Senate.
Under the normal process, senators can filibuster almost anything and the debate would only be cut off if at least 60 lawmakers vote to do so. For that reason, 60 is considered the magic number in the quest to pass health care reform out of the Senate.
But under reconciliation, typically used in the budget process, no filibusters are permitted and a bill can pass with just a simple majority.
Structuring the health care bill in this way allows it to be scooped up in the reconciliation process, which could torpedo the Republicans' trump card.
"The secret of the week is that Democrats pulled the trigger on the nuclear option," warned Rep. Paul Ryan, R-Wis., top Republican on the House budget committee and a senior member of the Ways and Means Committee. "They built their vehicle today."
But Ways and Means Chairman Charlie Rangel, D-N.Y., said the committee's maneuver "is strictly procedural."
He noted, however, that the "action was necessary because there is a possibility that a handful of Senate Republicans could choose to engage in partisan tactics to stall this important health reform bill."
Rangel added that this move was to "simply preserve the option of advancing health reform legislation."
Gosh, why doesn't Charlie just say they deserve a "straight up or down vote"? This is functionally identical to the Bushite Scum's attempts to ram their extremist judges through to confirmation except the people running roughshod over procedural niceties have "D"s after their names. Where are the righteous Democratic defenders of Congressional decorum now?
Oct. 15th, 2009 @ 07:59 pm
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| » Collapse: Dollar Captures Only 37% Of New Central Bank Holdings |
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Oct. 12 (Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.
Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.
“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”
Sliding Share
The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. Englander concluded in a report that the trend “accelerated” in the third quarter. He said in an interview that “for the next couple of months, the forces are still in place” for continued diversification.
Oct. 12th, 2009 @ 03:43 am
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| » 34 Banks Skip TARP Dividend Payments While America Sleeps |
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1: "Hey, bankers are robbing the Treasury!"
2: "Oh, it's just money, did you hear how Obama won the Nobel Peace Prize, which he totally [did / did not] deserve!"
http://www.nakedcapitalism.com/2009/10/34-banks-miss-tarp-dividends-and-almost-no-one-notices.html
Oct. 10th, 2009 @ 01:10 pm
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