The Agonist - The Markets

2 Former Bear Stearns Managers Arrested

Thu, 19 Jun 2008 07:20:59 -0700

New York | June 19

AP - Two former Bear Stearns managers have surrendered to face criminal charges in the wake of the collapse of the subprime mortgage market, the federal authorities said Thursday.
Good grief!

Update(NYT): Did Mr. Cioffi and Mr. Tannin know that their funds were losing money and keep pertinent details from large investors?

Lehman and Weekend Emergency Talks

Sun, 15 Jun 2008 13:59:47 -0700

Anyone who thinks the financial crisis that began last August with the collapse of those two Bear Stearns funds is over is deluded. Why would Lehman Brothers be having emergency weekend talks otherwise? Look to the Asian markets which open in a few hours for a hint as to Monday's action.

Don't Be Fooled by Wall Street's Happy Talk

Fri, 13 Jun 2008 08:04:41 -0700

The next phase of the financial and economic crisis is creeping up on us. You can see the signs in the U.S. stock market, where all the major indexes have reversed a three month rally and are now declining back to their March lows. This decline is led by the Dow and is in fact accelerating, taking with it last month’s cheerful prognostications that the U.S. not only has escaped a recession, but is bouncing back into full growth mode for the second half of this year.

The economic data do not confirm this picture at all. The employment situation continues to worsen, industrial production and factory utilization are lodged firmly in recessionary territory, and the only retail stores showing any sign of life are the deep discounters like Wal-Mart, benefiting temporarily from the tax rebates. Wall Street executives are telling us that the credit crisis is halfway over, but their behavior suggests otherwise. Lehman Brothers, for example, assured us last week that it was well-capitalized and fully in control of its future, but a few days later it announced a $2.8 billion loss and was forced to turn to the stock market and private investors to raise $6 billion more in capital. Where have we heard this story before?

Vote for this story at Buzzflash and at Digg

Speculation Or Not

Mon, 09 Jun 2008 08:33:09 -0700

Key line in this quote is in bold, as it really encapsulates my feelings about the whole 'speculators' are in control of the oil market meme:

If skyrocketing oil is the fault of speculators time will work it out, and some of the speculators will be burned. The risk we run is that in pointing fingers at market participants and blaming them for energy prices, we end up having our attention diverted from the fundamental issues that need to be addressed – energy exploration, governmental policy, energy conservation, improving energy efficiency and most importantly the need to develop energy technology and alternative energy sources to ultimately make oil a much less critical commodity.

The solution is not blaming speculators for the long-term failures of economic planning and policy. We're all--that includes me--guilty of not conserving more, thinking through our energy choices clearly and acting wisely. We can all do more, and absolutely no amount of hysterical screaming and yelling at those damn rogue speculators is going to make a bit of difference. It's about hard choices now.

Oil Experts: No Better than Chance

Sun, 08 Jun 2008 12:46:23 -0700

I just ran across this article about a survey of oil futures experts (via Bernard Chazelle at A Tiny Revolution). Chazelle points out something interesting that I'm going to reproduce here because... it's just too funny.

The linked article discusses the results of a Bloomberg News survey of 28 oil industry analysts who predict oil futures. The final sentence is the killer:

The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.

31 Days to Total Financial Hell - Gas Up Now!

Fri, 06 Jun 2008 16:38:45 -0700

Crossposted from Left Toon Lane, Bilerico Project & My Left Wing

click to enlarge

Oil Up $6, Actually Up $10

Fri, 06 Jun 2008 10:28:53 -0700

Oil rallied a full $6 a barrel today. Of course, the New York Times reported it was probably due to 'specualtion.' Never mind there is no evidence of said speculation--i.e. tankers parked off the coasts, full of oil, with no plans to be unloaded. Remember: in the futures markets, unlike stocks and bonds, people actually have to take delivery of said commodities.

Of course, towards the end of the Times article this throwaway line was included: "Comments by Israel’s transportation minister on Friday that an attack on Iranian nuclear sites looked “unavoidable” also sent investors into a frenzy."

"Also?"You think? Effing Einstein, no doubt.

You don't think that in itself wouldn't drive oil up? Possible fears of Iranian oil being pulled off the market just to spite the West? Hell, they've done it before. Silly business reporters.

Updated: Bloomberg gets it largely correct: "``The Iranian risk premium which had left the market for some time is likely to return and hover over the market in the next few weeks,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York. ``The knee jerk reaction to the comments by Mofaz will wear off quickly because Israel would not broadcast its intention in this fashion.''" And yet the risk premium in this case is still very real.

Updated: What a miserable day. As the old saw goes: Sell in May and Go Away! Oil up $11 at one point? Good lord. That's surprising, even to me.

Fed Governors Openly Question Bernanke's Competence

Thu, 05 Jun 2008 19:41:08 -0700

Mish Shedlock commenting on this from Bloomberg. Sounds like things are getting worse as described by SPK.

Bernanke Loses Support

The seeds of this crisis were sewn by the loosey goosey policies of Greenspan for which there was never a dissent from Bernanke, or that matter anyone else (at least in public). And what started as a minor revolt has now turned into a major question of confidence regarding the anything goes policies of Bernanke. That Congress is holding up votes on Fed nominees is also not helping Bernanke any.

S'happening?

Mon, 05 May 2008 17:52:20 -0700

Ballmer got 'em by the ying-yang? Or the reverse?

Yahoo CEO open to more Microsoft talks

NEW YORK (Reuters) - Yahoo Inc (NasdaqGS:YHOO - News) chief Jerry Yang signaled a more open stance towards Microsoft Corp (NasdaqGS:MSFT - News) on Monday, saying he had been seeking common ground when the software maker abruptly ended deal talks.

Yang told Reuters in an interview that he had "mixed feelings" about the weekend outcome, after investors showed their disappointment over the break-up of negotiations by sending Yahoo shares down 15 percent.

"We were negotiating a way to find common ground and then on Saturday they chose to walk away," said the 39-year-old co-founder of the pioneering Internet company. "They started it and they walked away."

Hey Corporate Execs: You Got a Bailout, Now Give It Back

Fri, 25 Apr 2008 12:19:01 -0700

Even when times are good, it's hard to believe that corporate CEOs can look you in the eye and tell you that they've truly earned their outrageous $10 million, $50 million, $100 million or more pay packages.

And right now, times aren't good.

But this week I saw another round of stories on corporate CEOs getting multi-million dollar "bonuses" even as their companies lose millions of dollars.

This is just another outrageous example of a corporate culture that is out of control and out of touch with most Americans. These corporations fight any kind of regulation designed to protect workers, the environment, or public health, yet when their irresponsible behavior bites them in the ass, they come crawling to us begging for a bailout, while continuing to lavish hefty paychecks on their top executives.

Who controls account number 990N?

Fri, 18 Apr 2008 08:49:48 -0700

from The Daily Reckoning

A Reader Writes…

"…My firm and I have contacted the Merc on three different occasions with video proof that I recorded of my trading. It shows blatantly this guy crossing his orders thousands of times a day. The first person we talked to in compliance admitted that he saw something there when they reviewed the video of the trades I taped of him. He was mysteriously fired the next day…"

Only have a minute, but will write more later but…The entire S&P price action in the Futures is being controlled by one counter party. All the guys strongly hate them: their CME clearing number is 990N and they clear through Gelber trading.

Citi and Goldman Need Real Accountants, Not Those of Arthur Andersen

Wed, 09 Apr 2008 17:47:47 -0700

Just too rich, from Mish:

"As a Citigroup investor you won't have to worry about more mark-to-market writedowns on these loans," said William B. Smith, senior portfolio manager at New York-based Smith Asset Management Inc., which oversees about $80 million, including about 66,000 Citigroup shares. "There's now a consortium of private-equity firms saying what they're worth."

One of Mish's pals replies:

William B. Smith needs to get his facts straight. Minyanville's Mr. Practical can help. Let's tune in to what Mr. P. has to say.

As investors bid up the Citigroup (C) stock price early on the news that the bank sold $12 billion of bad loans at not too much of a discount, perhaps they should look closer at the deal.

In order to get that price, C had to agree to indemnify the buyers of the first 20% of losses.

Citi obviously did the deal at this artificial price so that it would not have to mark down too significantly the rest of its portfolio. Not to let facts get in the way, but the price it sold the loans at, if you include the indemnification, is very poor.

Risk is high and growing.

Well said.

Interview on NPR: Our Confusing Economy, Explained

Fri, 04 Apr 2008 13:57:40 -0700

This is a very informative interview. Explains financial crisis in understandable terms. We are back to robber baron days.

Link Here.

The war against the New Deal has just won an Astounding Victory

Tue, 01 Apr 2008 20:58:34 -0700

Is there anything the Republican Party loathes more than FDR and the New Deal? How many times have people like Newt Gingrich and Grover Norquist vowed to dismantle the regulations, entitlement programs, and safety nets created by the New Deal? Time and again we’ve seen assaults on all aspects of FDR’s legacy, including a Social Security “reform” effort in 2005 that might have succeeded if George Bush hadn’t been hobbled by the Iraq War.

Last month the Republicans had a great victory in their effort to undo the New Deal, by eliminating completely any distinction between commercial banks and investment banks, while at the same time giving investment banks unfettered access to the public treasury with none of the responsibilities or burdens placed on commercial banks. All of this was accomplished in the same way as 9/11 allowed the administration to claim unheralded executive powers – by using an “emergency” to justify a power grab perpetrated with no reference to you the taxpayer, or your representatives in Congress.

The Paulson Plan

Tue, 01 Apr 2008 03:56:25 -0700

So Paulson has come out (pdf) with a plan. It's primarily a reorganization plan, pushing the Thrift regulator into the SEC, creating a federal mortgage regulator, giving the Fed the right to inspect the new firms that now have access to its liquidity. There's some talk about being objectives based. It's almost always a bad sign when the primary "reform" is to create new agencies or merge old ones and Krugman is right to ridicule it as The Dilbert Strategy. What don't I see here?