Intellectually Corrupt Warren Buffett Says Jamie Dimon Best Person to Run US Treasury

I have been discussing extensively the lack of integrity of Warren Buffett of the years; who actually never misses an opportunity to talk up his book, or advocate for crony capitalism or even socialist measures. The latest from him is that he is now advocating for Jamie Dimon to run the US treasury. 

(Bloomberg) Nov 27, 2012 — JPMorgan Chase Chief Executive Officer Jamie Dimon would be the best person to lead the U.S. Treasury Department in a financial crisis, billionaire investor Warren Buffett said.

“If we did run into problems in markets, I think he would actually be the best person you could have in the job,” Buffett said in response to a question about Dimon from Charlie Rose, according to the transcript of an interview that was scheduled to air yesterday on PBS. “World leaders would have confidence in him.”

President Barack Obama is seeking to replace Treasury Secretary Timothy F. Geithner, who had said he planned to step down. Dimon, 56, testified before Congress and shuffled top managers this year after the bank disclosed a loss, now of more than $6.2 billion, stemming from a wrong-way bet on credit derivatives. Buffett has described Dimon’s annual letter to shareholders as a must-read.

First of all, advocating for the government to intervene in the markets "if we run into problems". So he is advocating for more bailouts and for a "Government Put" to be put in place in addition to the "Bernanke Put".

Second point is: Isn't Dimon the man under which JPMorgan just announced $6.2 billion losses on speculative positions build in the CDS markets? Does he deserve to be promoted Secretary of the Treasury? Or be fired from the company? I guess, like many things in corrupt institutions, any thing that goes well is his deed, but anything that goes wrong is others deeds...

David Stockman Presentation: "How Crony Capitalism Corrupts the Free Market"

Archived from the live Mises.tv broadcast (available in 720p on YouTube), this lecture by David Stockman was presented at the Mises Circle in Manhattan: "Central Banking, Deposit Insurance, and Economic Decline."

Bloomberg News Sues the ECB As ECB Tells Court Releasing Greek Swap Files Would Inflame Markets

I think this one is so obvious that I won't put any more comment than cheer Bloomberg for suing all these corrupt entities and try to spread the truth.

(Bloomberg)  June 14, 2012 — The European Central Bank said it can’t release files showing how Greece may have used derivatives to hide its borrowings because disclosure could still inflame the crisis threatening the future of the single currency.

Bloomberg News is suing the ECB to provide the documents under European Union freedom-of-information rules. The papers may help show the role EU authorities played in allowing Greece to mask its deficit for almost a decade before the nation’s troubled finances necessitated a 240 billion-euro ($301 billion) bailout and the biggest debt restructuring in history.

Disclosing the files when Bloomberg News first sought them in 2010 would have “fueled negative perceptions about Greece’s ability to honor its debt,” ECB lawyer Marta Lopez Torres said at a hearing of the European Union’s General Court in Luxembourg today. “It’s the same now with Spain” which “isn’t able to borrow money,” she said. “Markets are reacting in very volatile ways. It’s affecting the euro economy.”

[...] “Markets will perform better when they have transparency,” Timothy Pitt-Payne, lawyer for Bloomberg News, told the court. “The question is who knew what; and when did they know it?” 

Bloomberg’s lawsuit, filed in December 2010, requested access to two internal papers drafted for the central bank’s six-member Executive Board. They show how Greece used swaps to hide its borrowings, according to a March 3, 2010, note attached to the papers and obtained by Bloomberg News. 

The first document is entitled “The impact on government deficit and debt from off-market swaps: the Greek case.” The second reviews Titlos Plc, a securitization that allowed National Bank of Greece SA, the country’s biggest lender, to exchange swaps on Greek government debt for funding from the ECB, the Executive Board said in the cover note.

These documents “played a role” in shaping policy and “highlighted there were issues” when the ECB undertook a review of its eligibility criteria for collateral in its funding operations, the ECB lawyer told the court.

[...] “The public has a right to know how EU authorities may have allowed Greece to hide its deficit, which helped trigger Europe’s sovereign debt crisis,” said Matthew Winkler, editor- in-chief of Bloomberg News. “Greater transparency results in more accountability, and we seek this information to understand how this debt debacle unfolded in an effort to avoid repeating it.” 

The Greek government didn’t originally disclose the swaps, designed to help it comply with the deficit and debt rules it agreed to meet when it joined the euro in 2001. The swaps allowed the country to increase borrowings by 5.3 billion euros, Eurostat, the EU’s statistics agency, said in November 2010.

In April 2009 -- seven months before the Greek crisis erupted -- ECB officials spotted “a swap operation in unusual terms,” according to the March 2010 document. [...]

CDS Protection Buyers Burnt Second Time by Corrupt ISDA — How Much Longer Until That Product and the Markets Around It Disappear?

Is the whole CDS market a game of chicken? And smoke & mirrors?

Buyers of CDS on the Greek government bonds had to fight against the ISDA which was claiming that the "voluntary hair-cut" creditors were getting was not a credit event, and now, the subordination of the sovereign debt of Spain seems to be falling under the same category. Who are these people kidding? Would you keep on buying insurance if every time you have an incident the insurer asked you to go and Zuck yourself? Well it seems like the path the CDS is on is a slippery slope and most likely the whole market will disappear during the deflation of the financial product Great Mania.

Via ZeroHedge:

And just as ISDA was starting to become somewhat credible again, we get this from Bloomberg:

• Spanish CDS Trigger Unlikely on Subordination, Says ISDA *Dow Jones

From Reuters:

Credit default swaps on Spain are unlikely to trigger as a result of the 100 billion euro bail-out of the country's banking system announced over the weekend, according to leading derivatives lawyers.

The European Stability Mechanism's senior creditor status has led to questions over whether a subordination credit event will be triggered upon Spain receiving loans from the permanent bailout fund. In contrast to the IMF's preferred creditor status, which is implicit rather than legally documented, the ESM's treaty actually specifies its seniority to other creditors - a clause that some analysts reckon could trigger CDS.

There have been subsequent reports that Spain's emergency loans may be funneled through the temporary bailout fund, the EFSF, before the ESM becomes into force in July to avoid a potential credit event. Such measures may prove unnecessary, though, as derivatives lawyers have cast doubt on the possibility of ESM rescue money triggering CDS.

"I can't see any basis on which this would constitute a subordination credit event as it doesn't change the terms of the claims held by the other creditors," said Simon Firth, a partner in the derivatives practice at Linklaters.

"It's actually impossible to have a restructuring credit event based subordination without something that affects the rights of existing bondholders. In the absence of some kind of agreement or change of law, then I don't see anything that will [do that]," said Firth.

Australia's Treasurer Starts Class Warfare and Promotes Socialist Lies and Finger Pointing

Amazing story, and amazingly stupid behaviour by the politicians in Australia, biting the hand that feeds the whole bubble economy and starting a social warfare on the people and companies who basically run the country which would be wasteland without mining and agricultural companies.

March 2 (Bloomberg) -- Australian Treasurer Wayne Swan said resource tycoons including Gina Rinehart, Clive Palmer and Andrew Forrest are threatening the nation’s democratic process by using their wealth to shape policy to their interests.

They wouldn't be able to shape anything if:

1.  Politicians and the state didn't have so much power to being with, as libertarians have been promoting for hundreds of years
2. Politicians were not so corrupt, and wouldn't accept money, legally or under the table, to change their mind on any topic.

In an article in The Monthly magazine, Swan said the billionaires are undermining the Australian notion of a “fair go” -- where everyone has an opportunity to prosper. He cited a mining companies’ campaign against the resource profit tax in 2010 that contributed to the ouster of former Prime Minister Kevin Rudd.

Oh, now I see it. He wanted to tax them, take by force their property and wealth, and they fought against it. Should they just let the robbers create a low to legally expropriate them?

“The infamous billionaires’ protest against the mining tax would have been laughed out of town in the Australia I grew up in, and yet it received a wide and favorable reception two years ago,” Swan said. “A handful of vested interests that have pocketed a disproportionate share of the nation’s economic success now feel they have a right to shape Australia’s future to satisfy their own self-interest.”

When you fail on the ideological debate, make it personal against the people, and attack them on other grounds. Well done Swan.

The article is a signal of stepped up efforts by Prime Minister Julia Gillard’s administration to build public support for taxes on mining profits and carbon emissions due to take effect on July 1. Her government trails the opposition Liberal- National coalition by 10 percentage points, a margin that if replicated at the election due in the second half of next year would represent a landslide defeat.

 I can only hope that they will fail, and that voters will through these liars and corrupt politicians out. If they don't, well, the future of Australia — already extremely bleak — will be at stake.

“This government, if anything, has been too circumspect in criticizing vested interests,” said Paul Strangio, a senior lecturer on Australian politics at Melbourne’s Monash University, who primarily researches the Labor party. 

“These very wealthy people -- some have described them as oligarchs -- are throwing their weight around in public policy and if they do enter the public arena, and try to impose their influence over public policy, it’s within the government’s ambit to answer that,” Strangio said.

Of course, university professors, socialists and pro-government by definition, always will support attacks against the rich.

BHP Billiton Ltd., Rio Tinto Group and Forrest’s Fortescue Metals Group Ltd. campaigned against the government’s proposed 40 percent tax that helped turn public opinion against Rudd. The former prime minister’s weakening poll ratings were among reasons Labor lawmakers cited for his ousting in a late-night coup in June 2010. Gillard negotiated a lower tax rate to assuage the resource industry.

Seems like politicians will, once they have lost by the rules, try to hit under the belt.

Fortescue said in a statement that its board met earlier today to discuss the “unfounded attacks” by Swan on Forrest. 

The company said it will pay more than A$1 billion in taxes, royalties and other government assessments this year and is projected to pay more than A$2 billion next year. Fortescue described Swan’s comments on its taxes as an “irrational outburst.” 

Forrest “started with nothing and repeatedly put everything he had earned at risk in building one of the most important mining operations in the world,” the company said in response to the treasurer’s comments. “Andrew epitomizes the spirit of what an Australian can do if given a ‘fair go’.”

Who has built something valuable and useful? The "Mining Oligarch"? or the Politician? Who is creating thousands of jobs?

[...]“To be blunt, the rising power of vested interests is undermining our equality and threatening our democracy,” Swan said. “We see this most obviously in the ferocious and highly misleading campaigns waged in recent years against resource taxation reforms and the pricing of carbon pollution.”

How irritating is Swan...

[...] Swan criticized the nation’s four biggest banks last month after Australia & New Zealand Banking Group Ltd. boosted interest rates independent of central bank policy. The Reserve Bank of Australia kept its benchmark unchanged at 4.25 percent at its Feb. 7 policy meeting.
“For reasons that they can explain themselves, from time to time they decide that they want to give priority to their shareholders over their customers,” Swan told reporters Feb. 10. “The fact is that the major banks in this country are very profitable and their interest margins are back to where they were prior to the global financial crisis.”

The fact is that it's none of your business, Swan. Corporations belong to shareholders and ALWAYS give priority to them over their customers. Customers have the right to either go to competition, or decide to pay more.

[...] Rinehart, whose $18 billion fortune tops Forbes Asia’s rich list for women, is set to become the world’s wealthiest woman this year, surpassing Wal-Mart Stores Inc.’s Christy Walton. Forrest has a net worth of $5.3 billion, making him the third- richest Australian, Forbes said. Australia’s BRW magazine estimates Palmer’s wealth at A$5.05 billion ($5.5 billion). 

Australia’s economy is propelled by a mining boom predicted to last decades as the urbanization of hundreds of millions of people in China and India drives demand for iron ore, liquefied natural gas and coal. [...]

I'll cut short here.  Seems like politicians in Australia are as bad as those in France and Greece. God — or, more realistically, Voters — protects and saves the Australians from their destructive and dangerous ideas.

Henry Paulson Gave Hedge Funds Advance Word of Fannie Mae Rescue

Nothing surprising:

Nov. 29 (Bloomberg) — [...] 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., 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.  

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.

Where are the criminal charges?

A Great Shortcut To The End of the Euro and the UE

There are way too many questions remaining to be answered and it looks like markets are ignoring them, looking for further reasons to rebound and suck as many people in before correcting again.

Here's my personal list:

• 400€ billion leveraged X times doesn't equal to 1.0€ trillion. It remains 400€ billion X times leveraged. This means that they can still only allow themselves to take 400€ billion losses, and believe me, they will. But, it won't be as big as they think, and leverage will kill them sooner than they think too. How long will it take for people to realize this?
• Where will the money come from? 800€ billion is quite a massive amount, not too far from Spain's GDP or half of France's GDP. Who will they borrow it from? Certainly not the banks which are so capital impaired.
• Will the rating agencies finally decide to provide the much deserved downgrade to France and Germany?
• Will CDS holders just accept to take their losses and not react? This is highly unlikely. You can expect a lot of noise and reactions. The data publicly available shows that the notional outstanding for the CDS on Greece is $5 billion net notional. An amount probably worth probably fight for in courts. And who know how much CDS are traded OTC?
• What will be the impact of the ISDA decision on the CDS market? Does it make the instrument completely useless? What will the unintended consequence be? Investors who were trying to protect themselves because they were holding Greek debt will now take losses. Will this also drive the borrowing costs of all sovereigns higher?
• Greek banks shareholders will be most likely be wiped out. That would be another 3.6€ billion loss that someone will have to take. What is the amount of debt they have outstanding? Are there CDS contract on them?
• “The Greeks, who are seen to be behaving badly, get rewarded, whereas the Irish, the top boys in the class, get nothing.” When will the Irish, Portuguese, Spanish, Italian come and knock at the door?
• Forcing banks to reach 9% of capital reserves is a good step forward. It also shows how massively over-leveraged and insolvent the European banks are. If they could only force the banks to get to a ratio of 100% and get us rid of fractional reserve banking, it would be great! But in anyway, how much losses will the European banks impose to their shareholders by diluting them?
• Does it make sense for the Euro to rebound massively with such massively inflationary news flow?

I will be very interesting to find out what our corrupt politicians will come up with in order to move this crazy plan ahead. But rest reassure of one thing: Sarkozy and Merkel only want it to give them 6 extra months, so that they can put the general elections behind them.

While I am trying to find the answers to the previous quite important questions, the unintended consequences and secondary events are actually occurring:

• Euro Gyrates On Fitch Announcement Greek 50% Haircut To Be An Event Of Default
• Italian 10 Year Bond Auction Prices At Record, Over 6%
• German Constitutional Court Halts EFSF Approval, Issues Temporary Injunction On Further Bailout Decisions

Did the market give away the gains from the "news effect" of the bailout when the German Court halted the EFSF approval today? No. This confirms my point from the previous post today: markets bounced because they wanted to. Anything else is pure conjecture and rationalisation.

Here are some Bloomberg reports that I used as source.

Irish Spy Reward Opportunity in Greece’s Debt Hole

Oct. 27 (Bloomberg) -- Greece’s difficulty paying its debts may turn out to be Ireland’s opportunity.

Greece’s failure to cut spending and boost revenue by enough to meet targets set by the European Union and International Monetary Fund prompted bondholders to accept a 50 percent loss on its debt. While Ireland won’t seek debt discounts, the government might pursue other relief given to Greece, including cheaper interest payments on aid and longer to repay it, according to a person familiar with the matter who declined to be identified as no final decision has been taken.

[...]

“There’s a political problem for the government,” said Gavin Blessing, a bond analyst at Collins Stewart Plc in Dublin. “The Greeks, who are seen to be behaving badly, get rewarded, whereas the Irish, the top boys in the class, get nothing.”

[...]

While Irish bonds delivered the world’s best returns during the past three months, they have pared gains on concern slowing economic growth worldwide will derail the government’s efforts to revive the country’s fortunes through exports. The yield on debt due in 2020 rose 63 basis points in October to 8.26 percent yesterday, albeit down from 15.5 percent in July.

[...]

“Had a European bank resolution fund been in place, some of the resolution of Irish banks would have been part of that,” said Alan Ahearne, economics professor at Galway University, who acted as adviser to former Finance Minister Brian Lenihan. “The Irish government has a legitimate claim that there should be some sort of burden-sharing on a European level.”

Oct. 28 (Bloomberg) -- Owners of Greece’s banks may be wiped out over coming months as the government prepares to take over the lenders after bondholders agreed to 50 percent writedowns on the nation’s debt.

Greek Prime Minister George Papandreou said yesterday that the government will likely buy shares in some banks as a result of a planned writedown, without giving details. The 30 billion euros ($42 billion) already set aside for Greek bank aid should cover the lenders’ needs, the European Banking Authority said.
[...]
For shareholders in Greece’s publicly traded banks, led by National Bank of Greece SA and Alpha Bank SA, there may be little left once the companies end up in government control. The six biggest lenders, which have assets of 380.2 billion euros and a combined market value of about 3.6 billion euros, are unlikely to attract investors willing to bet on a turnaround.
[...]
“Greek banks never had choice on whether to buy Greek bonds, and they’re now being punished,” said Andreas Koutras an analyst at InTouch Capital Markets Ltd., a fixed-income adviser in London. “It is possible equity valuations will go to zero.”

Oct. 27 (Bloomberg) -- European leaders cajoled bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.
[...]
Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market.
[...]
“It’s long on words, short on detail,” said Peter Dixon, an economist at Commerzbank AG in London.

Sarkozy said the bankers were escorted in “not to negotiate, but to inform them on decisions taken by the 17 and then they themselves went on to think and work on it.” Luxembourg Prime Minister Jean-Claude Juncker said the banks’ resistance was broken by a threat “to move toward a scenario of total insolvency of Greece, which would have cost states a lot of money and which would have ruined the banks.”
[...]
The resulting “voluntary” losses by bondholders were the key plank in a second bailout for Greece, which was awarded 110 billion euros in May 2010 at the outbreak of the crisis. The new program includes 130 billion euros of official aid, up from 109 billion euros envisioned in July.
[...]
The Washington-based IMF, meanwhile, said it is ready to disburse its 2.2 billion-euro share of the next installment of Greece’s original bailout. The release of the euro zone’s 5.8 billion-euro share was approved last week
[...]
Leaders tiptoed around the politically independent ECB’s broader role in keeping the euro sound, making no mention of its bond-purchase program in a 15-page statement. The Frankfurt- based central bank has bought 169.5 billion euros in bonds so far, starting with Greece, Ireland and Portugal last year, then extending the coverage to Italy and Spain in August.

While Trichet didn’t mention the controversial purchases either, his successor, Mario Draghi of Italy, indicated that the policy will continue. Speaking in Rome yesterday, Draghi said the ECB remains “determined to avoid a poor functioning of monetary and financial markets.”
[...]
“It will be important to detail further the modalities of how this enhanced EFSF will operate and deliver the scale of support envisaged,” IMF Managing Director Christine Lagarde said.
[...]
Europe also struck a bank-recapitalization accord, setting a June 30, 2012, deadline for lenders to reach core capital reserves of 9 percent after writing down their sovereign-debt holdings. Banks below that target would face “constraints” on paying dividends and awarding bonuses, a statement said.

Greece Default Swaps Failure to Trigger Casts Doubt on Market

Oct. 27 (Bloomberg) -- The European Union’s ability to write down 50 percent of banks’ Greek bond holdings without triggering $3.7 billion in debt-insurance contracts threatens to undermine confidence in credit-default swaps as a hedge and force up borrowing costs.

As part of today’s accord aimed at resolving the euro region’s sovereign debt crisis, politicians and central bankers said they “invite Greece, private investors and all parties concerned to develop a voluntary bond exchange” into new securities. If the International Swaps & Derivatives Association agrees the exchange isn’t compulsory, credit-default swaps tied to the nation’s debt shouldn’t pay out.

“It will raise some very serious question marks over the value of CDS contracts,” said Harpreet Parhar, a strategist at Credit Agricole SA in London. “For euro sovereigns in particular, the CDS market is likely to remain wary.”

Politicians and central bankers came to a last-minute agreement after banks, the biggest private holders of Greece’s government bonds, were threatened with a full default on their debt, according to Luxembourg Prime Minister Jean-Claude Juncker. David Geen, ISDA’s general counsel in London, said that his organization considered the agreement to be voluntary, even if there may have been “a lot of arm twisting.”

G8 pledges to double their aid for Arab countries to $80 billions

My friend blbl sent me a link to this news, asking: "Where will they get the money from?"

Arab states that ousted their dictators got a financial shot in the arm Saturday with promises of tens of billion of dollars to help their rocky transformation into modern democracies.

G8 rich nations and institutions including the World Bank, the IMF, regional banks and the Arab Monetary Fund pledged nearly $80 billion in aid and loans over the next two years, doubling the amount promised earlier this year.

French Finance Minister Francois Baroin announced the massive increase at a Group of Eight finance ministers' meeting in Marseille, where close by up to 1,000 demonstrators gathered to protest against austerity measures.

Unfortunately, bankrupt money lending money to other bankrupt nations is generally not a great idea.

As usual, you can count on government to do exactly the opposite of what should be done and destroy any creative action taking place... These interventions from outside usually empties these actions of their spirit and legitimacy and creates even more corruption at a time of high instability.

Strip-Club Bills Paid With Union Cash as Corruption Cases Rise

Does that level of corruption among unions surprise anyone? Really?

Sept. 9 (Bloomberg) -- Shawn Clark, a New Jersey carpenters’ union officer, used his local’s credit card to run up $50,000 in bills over seven years at Double D’s, a Morristown strip club, according to an indictment. Now he’s in prison for 28 months. 

Clark, 46, is among an increasing number of U.S. union officials and members accused of stealing from organized labor to feed gambling habits, buy jewelry and show horses or pay personal bills, a review of U.S. Labor Department reports by Bloomberg Government found. Convictions of union leaders and staff on embezzlement and related criminal charges in fiscal 2010 were the most since 2006, the review showed. 

The department’s investigations led to convictions of 130 union members and staff in the year that ended Sept. 30, up from 121 in 2009 and the highest since 133 in 2006, according to agency data on federal and state prosecutions. The government won cases against 1,608 union members from fiscal 1998 through last year, an annual average of 123. [...]

The average for the 128 cases reviewed by Bloomberg Government was about $53,000.   

Union funds were spent at casinos and strip clubs, used to buy home-entertainment systems or laptop computers and pay personal bills, prosecutors said in federal court records. Convictions for embezzlement and related criminal violations led to about $105 million in restitution in the past 10 years, the Labor Department reported last year. 

Since fiscal 2007, union officials and staff have been ordered to pay about $30 million for financial crimes. “We’re talking about lots and lots of money they can play hanky-panky with” from union dues, Representative Phil Roe, a Tennessee Republican and chairman of a House Education and the Workforce Committee panel on health, employment, labor and pensions, said in an interview. “More oversight needs to be done, absolutely. Without oversight, the temptation to misuse funds is there.” Legislation may be needed to strengthen financial reporting requirements for unions, Roe said, without providing specifics.

As usual, politicians will always draw the wrong conclusions from simple facts.

Power leads to corruption. That's built into the human nature. Adding oversight will only add more corruption — or, let's see it in a positive way: transfer part of the corruption from the unions to the oversight group.

Only private companies fight internal corruption because they don't have votes to buy. Well, they do buy government officials, but that's a whole another story.

Game Over for Sino Forest — Shares Plummet Another 80% to below $2

(Source) — The Ontario Securities Commission has ordered senior officers and directors of Sino-Forest Corp to resign and has cease-traded the company’s shares. 

The commission said in a release Friday that it has reason to believe the company and certain of its officers and directors have “misrepresented some of its revenue and/or exaggerated some of its timber holdings” and that some of the officers and directors – including chief executive officer Allen Chan – appear to be engaging in acts “they know or reasonably ought to know perpetuate a fraud.”

So much for all the great hedge fund managers and asset managers and equity analysts and their multi-million yearly salary and their great research work.

And I'm not even mentioning those who doubled down on the crash, once Muddy Water revealed the fraud.

The fact that Chinese shares are still collapsing and people are still so bullish on that country is very telling. The state of denial in the equities market is amazing.

I've said it many times before, and I will keep on saying it:

• The massive bubble in China has spurred massive frauds, and many companies will get to $0.
• China will collapse anyway, so even real companies will collapse up to 80-90% from their peak, reached in 2007.
• This will end in tears.

S&P Has Spine — Buffett Confirms He Is A Greedy Pig — Fund Manager, CEOs, Government Employees Join Forces To Attack S&P And Protect the Hand That Feeds Them

Bill Gross seems to be the only fund manager with self-respect and integrity. I couldn't agree more with his statement:

Aug. 8 (Bloomberg) -- Bill Gross, manager of the world’s biggest bond mutual fund, said Standard & Poor’s showed “spine” by cutting the U.S. debt rating, contradicting Warren Buffett and Legg Mason Inc.’s Bill Miller, who said the rating company erred.

“I think S&P has demonstrated some spine; they finally got it right,” Gross said in a Bloomberg Television interview with Tom Keene yesterday. The U.S. has “enormous problems,” he said, referring to the country’s mounting debt.

S&P on Aug. 5 lowered the U.S. one level to AA+ while keeping the outlook at “negative” as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The U.S. merits a “quadruple A” rating, Buffett, 80, said in an interview with Betty Liu on Bloomberg Television. Legg Mason’s Miller said S&P was “precipitous, wrong and dangerous” in lowering the rating after last week’s stock market selloff.

Buffett keeps on calling the bull and asking for the government to channel money from the american's pockets to his hedge fund.

Aug. 7 (Bloomberg) -- Billionaire Warren Buffett said Standard & Poor’s erred when it lowered the U.S. credit rating and reiterated his view that the economy will avoid its second recession in three years.

The U.S., which was cut Aug. 5 to AA+ from AAA at S&P, merits a “quadruple A” rating, Buffett, 80, said yesterday in an interview with Betty Liu at Bloomberg Television. The downgrade followed the biggest weekly selloff in U.S. stocks in 32 months, with the S&P 500 slumping 7.2 percent to its lowest level since November.

“Financial markets create their own dynamics, but I don’t think we’re facing a double dip recession,” said Buffett, chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc. “Clearly what stock markets do have is an effect on confidence, and this selloff can create a lack of confidence.”

The Treasury obviously barks. But listen to Coburn below, could he be more spot on?

Aug. 7 (Bloomberg) -- The U.S. Treasury Department said there is “no justifiable rationale” for Standard & Poor’s move to downgrade the nation’s credit rating as global finance ministry officials prepared responses to the historic announcement.
[...]
The Treasury Department issued a statement saying S&P had acknowledged an “error” in its calculations and that the rating company made a $2 trillion mistake.

[...] Senator Tom Coburn, an Oklahoma Republican and a member of the so-called Gang of Six that has been working since early this year on a bipartisan deficit-reduction plan, said the S&P downgrade was “probably long overdue.”

“For decades, political careerism has trumped statesmanship in Washington,” Coburn said in a statement yesterday. “Both parties have done what is safe, not what is right. The dysfunction in Washington is the belief that we can live beyond our means forever. We can’t.”

S&P Seen Surrendering to Tea Party at Expense of U.S. Taxpayer — See how much negativity there is in this report (see emphasis):

Aug. 8 (Bloomberg) -- Standard & Poor’s, the rating company that downgraded the debt of the United States to AA+ from AAA for the first time, now finds itself assailed by investors led by billionaire Warren Buffett for making a political decision that has more to do with Tea Party politics than the financial stability of the U.S.
[...]
The New York-based subsidiary of McGraw Hill Cos., whose inflated grades of mortgage-backed investments -- paid for by the banks that created the toxic debt -- were blamed by Congressional investigators for fueling the financial crisis, rattled investors around the world and provided fodder for President Barack Obama’s rivals in the 2012 elections. U.S. equity futures and global stock markets tumbled, oil sank and gold rallied to a record.

“Clearly the ratings downgrade was a ‘political decision’ in the sense that the politics explained the timing of this, because the numbers have been irrefutable for a decade,” said Robert Litan, vice president for research and policy at the Kauffman Foundation in Kansas City, Missouri. “It gives an enormous amount of ammunition to the Tea Party. They said the deal didn’t go far enough and they’ll say ‘see.’”
[...]
S&P’s action may hurt the U.S. economy over time by increasing the cost of mortgages, auto loans and other lending tied to the interest rates paid on Treasuries. JPMorgan Chase & Co. estimated that a downgrade would raise the nation’s borrowing costs by $100 billion a year. The U.S. spent $414 billion on interest in fiscal 2010, or 2.7 percent of gross domestic product, according to Treasury Department data.
[...]
BlackRock Inc., the world’s biggest money manager, and Buffett, the chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., said the decision doesn’t reflect any inability of the U.S. to pay its debts.
[...]
John Bellows, the Treasury’s acting assistant secretary for economic policy, said in a blog post that S&P initially overestimated future deficits by $2 trillion over 10 years. “After Treasury pointed out this error -- a basic math error of significant consequence -- S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit-rating decision from an economic one to a political one,” he wrote.

S&P said in a statement that the revision lowered its forecast for the debt-to-gross domestic product ratio in 2015 by two percentage points and didn’t affect its ratings decision. S&P said in the Aug. 5 report that the ratio of debt to GDP would reach 77 percent in 2015 and 78 percent by 2021.
[...]
“The old fashioned ratings agencies where humans make the decision to downgrade are always wrong,” Christopher Whalen, managing director at Institutional Risk Analytics, said yesterday in a telephone interview.

S&P came under scrutiny for ratings of financial products linked to subprime mortgages after losses and writedowns by the world’s biggest financial institutions reached $2.1 trillion.

The Financial Crisis Inquiry Commission called S&P and Moody’s “key enablers of the financial meltdown” in its January report. In April, a Senate panel said that the rating companies engaged in a “race to the bottom” to assign top grades on mortgage-backed securities in order to win fees from banks.
[...]
“There is no reason to take Friday’s downgrade of America seriously,” Nobel Laureate Paul Krugman said in a New York Times column. “These are the last people whose judgment we should trust.”
[...]
“To downgrade you have to argue there’s an increased chance that we won’t pay our debts,” said Peter J. Solomon, founder of New York-based investment bank Peter J. Solomon Co. and a one-time counselor to the Treasury Secretary under President Jimmy Carter. “I don’t think that’s been proven, I think it’s been proven that we always will pay our debts.”

[...] Alice Rivlin, former President Bill Clinton’s budget director who served on a fiscal commission Obama set up last year, called the downgrade “entirely symbolic.”

S&has no inside information and has done no original research, so they aren’t telling anyone anything they didn’t know already,” Rivlin said in an e-mail. “It is not like downgrading a company or a complex security, where they might actually be contributing new information -- although their track record before the crisis doesn’t inspire confidence there either.”

Perma-Bull Carl Futia goes out of his way (usually ignoring market and political news) to join the herd and bark at S&P and being completely ignorant when it comes to economics knowledge, he makes quite a few silly and unwelcome personal attacks:

After Friday's close the credit raters at the S&P downgraded their ratings of US government debt securities from AAA to AA+.

I think the S&P rating folks are imbeciles and don't deserve to be taken seriously by adults. Why?

1. Their understanding of real estate economics led them to rate the vast majority of mortgage backed securities AAA back in 2005-07. This alone should be sufficient to destroy their credibility among thinking people.

2. Their downgrade of the US is based purely on predictions of what the politicians will or won't do. I find it hard to believe their political forecasts are better than their real estate forecasts.

3. As I have often pointed out it is impossible for the US to default on debt servicing and repayments. We borrow in our own currency which we can print at will.

4. RE 3. - If the world was worrying about US failure to repay why have treasury securities been rallying the past week as investors flee to quality?

Fed to Release Discount Window Borrowing Details During Crisis Today

While I do not expect any big surprises or even the slightest market reaction for this sort of "non-event", it's good to see that the pressure on the Fed is leading to some results. Hopefully, next time, they won't be able to delay things for 3 years before having to release the information.

March 31 (Bloomberg) -- For most of its 98-year history, the Federal Reserve has operated with all the transparency and enthusiasm for change of the Vatican. Now the ultra-secretive Fed is starting to change its ways, if somewhat grudgingly. Some of the new openness, such as Chairman Ben S. Bernanke’s plan for quarterly press briefings, is the central bank’s idea. Much of it comes under duress.

Today, the Fed is set to disclose which banks borrowed from its discount window during the darkest moments of the 2008-09 financial crisis. This unprecedented view of the emergency loans the Fed extended to hundreds of banks is the result of a March 21 Supreme Court decision that left intact lower court rulings ordering disclosure in lawsuits filed by Bloomberg LP, the owner of this magazine, and News Corp.’s Fox News Network. Still, the Fed won’t disclose the collateral it accepted, which would reveal the risks it took. Future discount window borrowings will be made public, though only after a two-year delay, thanks to the new Dodd-Frank financial reform law.
[...]
The discount window is the Fed’s oldest lending channel and traditionally its most secretive. Banks have been free to use it without publicly revealing the fact since the Fed’s 1913 birth. Loan demand varies, depending on market conditions and seasonal factors.

In January 2007, before the financial crisis erupted, banks owed the Fed just $1.3 billion for discount-window loans. By October 2008 borrowings peaked at $111 billion. One bank, Chicago-based Park National, owed the Fed $345 million before regulators shut it down in October 2009, according to data gleaned from a Freedom of Information Act request. The most recent data, for March 23, show banks owing just $13 million.
[...]
Banks traditionally have been reluctant to use the window, fearing that savvy investors could tell by following clues in Fed loan data and market activity. In 2003 the Fed said banks would no longer have to show an inability to raise private funds to tap the discount window, hoping to end the stigma. But when the initial wave of distress swept the financial industry in 2007, banks still shied away. “We had no luck in encouraging banks to use the window,” says Donald Kohn, a Fed vice chairman at the time.

During the worst of the financial crisis, banks paid extra to borrow to avoid the discount window’s taint by participating in a new Fed program, the Term Auction Facility. That allowed them to bypass the window and still get emergency money by bidding for it in group auctions. At its March 2009 peak, TAF provided banks with $493 billion in short-term credit--more than four times the highest volume of discount window lending, which occurred five months earlier.
[...]

Bank of Japan's Governor aka the Biggest Money Printer in the World Under Fire

The fact that the Bank of Japan's Governor Shirakawa, the biggest money printer in the world is under fire might seem a good news, until you look at the reasons why he is under fire actually: sadly, the government and the oppositions are complaining that he is not printing enough.

To be honest, I am happy to have lived long enough to attend such crazy situations — even if it's from very far, in order to have a false sense of security away from the radiation.

And I hope I'll leave long enough to see the fall of the JGBs, the collapse of the Yen to zero, and death of the BoJ.

March 25 (Bloomberg) -- Bank of Japan Governor Masaaki Shirakawa is under fire for refusing to consider 1930s-style purchases of government bonds to fund reconstruction from the nation’s record earthquake.

Shirakawa repeatedly attempted to quash direct buying of government debt, a step allowed in extraordinary circumstances with the permission of the Diet, in appearances before lawmakers this week. The policy would undermine confidence in the yen and provoke a surge in consumer prices, he said at parliamentary fiscal and finance committee hearings.

“If this isn’t a special situation, what is?” Kozo Yamamoto, a Diet member with the opposition Liberal Democratic Party, said in an interview this week. Yamamoto advocated a 20 trillion yen ($247 billion) reconstruction program funded by BOJ debt purchases. A group of ruling-party lawmakers submitted a similar proposal to Finance Minister Yoshihiko Noda on March 18, according to a web log posting by DPJ member Yoichi Kaneko.
[...]
Kaneko’s group cited Japan’s experience of the 1930s as evidence that BOJ purchases of public debt are an effective means of ending deflation.

“Bank of Japan bond underwriting is a policy that is evaluated highly worldwide because it helped Japan recover from the Great Depression before others,” when the policy was implemented by then-finance minister Korekiyo Takahashi, the Kaneko group’s proposal said.

Takahashi boosted spending by 34 percent in the 1932 fiscal year, financing it by doubling bond issuance, according to a report by the Japan Center for Economic Research. While the effort helped end deflation, much of the outlays were used for the military, and Takahashi made enemies when he later attempted to rein in inflation. He was assassinated in 1936.
[...]
The BOJ has purchased JGBs through the secondary market, and includes the securities in its 10 trillion yen asset- purchase plans. The Fed and ECB’s programs are also done through the secondary market.

Under Takahashi’s initiative, the BOJ’s underwriting continued for 14 years until the end of World War II, with the ratio of bonds bought by the central bank peaking in 1933 at 89.6 percent, according to a 2001 paper by the central bank.

Today, the Bank of Japan has a self-imposed rule of not holding more JGBs in its portfolio than banknotes outstanding. Shirakawa today said the BOJ is “currently buying a large amount of government bonds” to offer abundant cash to financial markets.

Nuclear Disaster Caps Decades of Faked Reports and Real Accidents — Tsunami Wall of Water Risk Well Known to Engineers and Regulators

Not a day passes with new stories about the corruption, incompetence and lies of the Japanese government about the nuclear disaster that their country, and more generally the whole planet is now facing. Amazingly, the government keeps on saying that the situation is under control and stabilizing, while radiations levels are getting higher and higher and the situation looks more dire than ever.

You gotta love that last sentence: “If only the tsunami had waited a little longer, we might have been ready.”

Japan Disaster Caps Decades of Faked Reports, Accidents

March 18 (Bloomberg) -- The unfolding disaster at the Fukushima nuclear plant follows decades of falsified safety reports, fatal accidents and underestimated earthquake risk in Japan’s atomic power industry.

The destruction caused by last week’s 9.0 earthquake and tsunami comes less than four years after a 6.8 quake shut the world’s biggest atomic plant, also run by Tokyo Electric Power Co. In 2002 and 2007, revelations the utility had faked repair records forced the resignation of the company’s chairman and president, and a three-week shutdown of all 17 of its reactors.
[...]
Nuclear engineers and academics who have worked in Japan’s atomic power industry spoke in interviews of a history of accidents, faked reports and inaction by a succession of Liberal Democratic Party governments that ran Japan for nearly all of the postwar period.

Katsuhiko Ishibashi, a seismology professor at Kobe University, has said Japan’s history of nuclear accidents stems from an overconfidence in plant engineering. In 2006, he resigned from a government panel on reactor safety, saying the review process was rigged and “unscientific.”
[...]
The 40-year-old Fukushima plant, built in the 1970s when Japan’s first wave of nuclear construction began, stood up to the country’s worst earthquake on record March 11 only to have its power and back-up generators knocked out by the 7-meter tsunami that followed.

Lacking electricity to pump water needed to cool the atomic core, engineers vented radioactive steam into the atmosphere to release pressure, leading to a series of explosions that blew out concrete walls around the reactors.
[...]
The cascade of events at Fukushima had been foretold in a report published in the U.S. two decades ago. The 1990 report by the U.S. Nuclear Regulatory Commission, an independent agency responsible for safety at the country’s power plants, identified earthquake-induced diesel generator failure and power outage leading to failure of cooling systems as one of the “most likely causes” of nuclear accidents from an external event.

While the report was cited in a 2004 statement by Japan’s Nuclear and Industrial Safety Agency, it seems adequate measures to address the risk were not taken by Tokyo Electric, said Jun Tateno, a former researcher at the Japan Atomic Energy Agency and professor at Chuo University.

“It’s questionable whether Tokyo Electric really studied the risks,” Tateno said in an interview. “That they weren’t prepared for a once in a thousand year occurrence will not go over as an acceptable excuse.”
[...]
Mitsuhiko Tanaka, 67, working as an engineer at Babcock Hitachi K.K., helped design and supervise the manufacture of a $250 million steel pressure vessel for Tokyo Electric in 1975. Today, that vessel holds the fuel rods in the core of the No. 4 reactor at Fukushima’s Dai-Ichi plant, hit by explosion and fire after the tsunami.

Tanaka says the vessel was damaged in the production process. He says he knows because he orchestrated the cover-up. When he brought his accusations to the government more than a decade later, he was ignored, he says.
[...]
The law required the flawed vessel be scrapped, a loss that Tanaka said might have bankrupted the company. Rather than sacrifice years of work and risk the company’s survival, Tanaka used computer modeling to devise a way to reshape the vessel so that no one would know it had been damaged. He did that with Hitachi’s blessings, he said.

“I saved the company billions of yen,” Tanaka said in an interview March 12, the day after the earthquake. Tanaka says he got a 3 million yen bonus ($38,000) from Hitachi and a plaque acknowledging his “extraordinary” effort in 1974. “At the time, I felt like a hero.”

That changed with Chernobyl. Two years after the world’s worst nuclear accident, Tanaka went to the Ministry of Economy, Trade and Industry to report the cover-up he’d engineered more than a decade earlier. Hitachi denied his accusation and the government refused to investigate.
[...]
In 1988, Hitachi met with Tanaka to discuss the work he had done to fix the dent in the vessel. They concluded that there was no safety problem, said Hitachi spokesman Yuichi Izumisawa. “We have not revised our view since then,” Izumisawa said.

In 1990, Tanaka wrote a book called “Why Nuclear Power Is Dangerous” that detailed his experiences.

Tokyo Electric in 2002 admitted it had falsified repair reports at nuclear plants for more than two decades. Chairman Hiroshi Araki and President Nobuyama Minami resigned to take responsibility for hundred of occasions on which the company had submitted false data to the regulator.
[...]
The dangers posed by a tsunami the size of the one generated by the 9.5-magnitude Valdiva temblor off Chile are described in a 2002 report by the Japan Society of Civil Engineers, Ito said.

“Tokyo Electric brought this upon itself,” said Ito, who now heads the National Center for the Citizens’ Movement Against the Nuclear Threat, based in Tokyo. “This accident unfolded as expected.”
[...]
Kansai Electric Power Co., the utility that provides Osaka with electricity, said it also faked nuclear safety records. Chubu Electric Power Co., Tohoku Electric Power Co. and Hokuriku Electric Power Co. said the same.

Only months after that second round of revelations, an earthquake struck a cluster of seven reactors run by Tokyo Electric on Japan’s north coast. The Kashiwazaki Kariwa nuclear plant, the world’s biggest, was hit by a 6.8 magnitude temblor that buckled walls and caused a fire at a transformer. About 1.5 liters (half gallon) of radioactive water sloshed out of a container and ran into the sea through drains because sealing plugs hadn’t been installed.
[...]
While Japan had never suffered a failure comparable to Chernobyl, the Fukushima disaster caps a decade of fatal accidents.

Two workers at a fuel processing plant were killed by radiation exposure in 1999, when they used buckets, instead of the prescribed containers, to eye-ball a uranium mixture, triggering a chain-reaction that went unchecked for 20 hours.
[...]
In 2004, an eruption of super-heated steam from a burst pipe at a reactor run by Kansai Electric killed five workers and scalded six others. A government investigation showed the burst pipe section had been omitted from safety checklists and had not been inspected for the 28 years the plant had been in operation.
[...]

Tsunami Wall of Water Risk Known to Engineers, Regulators

March 26 (Bloomberg) -- Japan’s nuclear regulators and the operator of the crippled Fukushima reactors were warned that a tsunami could overwhelm the plant’s defenses and failed to recognize the threat.

The Trade Ministry dismissed evidence two years ago from geologists that the power station’s stretch of coast was overdue for a giant wave, minutes from a government committee show. Tokyo Electric Power Co. engineers also didn’t heed lessons from the 2004 tsunami off Indonesia that swamped a reactor 2,000 kilometers (1,200 miles) away in India, even as they advised the nuclear industry on coping with the dangers.
[...]
“The Japanese system underestimated the natural threat from the earthquake and tsunami,” said Pierre Zaleski of University Paris Dauphine and a former French Atomic Energy Commission member. “They really haven’t taken these threats seriously enough, and they haven’t moved fast enough.”

Tokyo Electric’s sea-wall defenses for the Dai-Ichi plant were built under the assumption that the coastline on which it sat wasn’t prone to tsunamis higher than 5.5 meters, said Yoshimi Hitosugi, a Tokyo-based company spokesman.

An 8-meter tsunami that hit Japan’s northeast in 869 swept as far as 4 kilometers inland at Sendai Bay, stretching south toward the Dai-Ichi plant, according to at least half a dozen scientific studies spanning more than a decade.

A repeat could occur soon because sediment samples showed the tsunami had a pattern of recurring every 800 to 1,000 years, according to a 2001 report by a research team funded by the government’s Science Ministry.

Minutes of a committee meeting held by the Trade Ministry to assess reactor safety on June 24, 2009, show that Yukinobu Okamura, who heads the government-funded Active Fault and Earthquake Research Center, asked Tokyo Electric why it hadn’t taken on board evidence of the tsunami risk.
[...]
At the August 2005 forum, Tokyo Electric senior nuclear engineer Toshiaki Sakai delivered a report called “Tsunami Evaluation Method for Nuclear Power Stations in Japan,” according to the IAEA’s website. The company declined to make him available for an interview and Hitosugi said it cannot find the report.

Japan’s delegation gave guidance on coping with tsunami threats and developed a system to evaluate risks and protect reactors, the IAEA said in a report from the conference on its website.
[...]
Tohoku Electric Power Co.’s Onagawa nuclear power plant was about 75 kilometers closer to the epicenter of the quake, and suffered no critical damage because it was built 15 meters above sea level, spokesman Yoshitake Kanda said.

In both instances, reactors were safely shut down and cooling systems continued to operate.
[...]
Japan has suffered 195 tsunamis since 400, according to Japan’s Central Research Institute of Electric Power Industry, which produced a report on tsunami threats to nuclear plants on the opposite coast to Dai-Ichi in July 2008. Three in the past three decades had waves of more than 10 meters.

A 7.6-magnitude quake in 1896 off the east coast of Japan created waves as high as 38 meters, while an 8.6- magnitude temblor in 1933 led to a surge as high as 29 meters, according to the U.S. Geological Survey.

Geologist Masanobu Shishikura, a researcher under Okamura who has focused on the 869 tsunami, said he wasn’t surprised historical evidence wasn’t heeded to. When he presented to government officials from two towns on the coast north of Dai-Ichi, the urgency wasn’t clear even to him.

Today, those towns of Higashi Matshushima and Ishinomaki lie in ruins.

“At the time, we thought it was unfortunate they didn’t take us seriously, but we figured it was just a matter of making a better presentation,” Shishikura said. “If only the tsunami had waited a little longer, we might have been ready.”

Previous posts much related posts:

• Japan was warned two years ago that its nuclear power plants were not capable of withstanding powerful earthquakes
• Greed and Incompetence Are she Source of the Nuclear Catastrophe in Japan

Previous posts on Japan:

• Japan posts

The Creator of the Liberty Dollar and Activist Against the Fed and the IRS has been found "guilty" of conspiration against the US and faces 15 years imprisonment

ZeroHedge found this FBI report which state that Bernard von NotHouse, the creator of the Liberty Dollar and activist against the Fed and the IRS has been found "guilty" and faces 15 years imprisonment.

I believe that Bernard von NotHouse is actually the opposite of what the report is stating: instead of being conspiring against the US, he has been a true patriot, fighting to free his country for its current corrupt system.

Who more than Ron Paul can understand these actions? I hope Ron Paul will be able to assist in making an appeal or a case against this jugement.

(Thanks to SS for forwarding the link to me)

STATESVILLE, NC—Bernard von NotHaus, 67, was convicted today by a federal jury of making, possessing, and selling his own coins, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Following an eight-day trial and less than two hours of deliberation, von NotHaus, the founder and monetary architect of a currency known as the Liberty Dollar, was found guilty by a jury in Statesville, North Carolina, of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States. The guilty verdict concluded an investigation which began in 2005 and involved the minting of Liberty Dollar coins with a current value of approximately $7 million. Joining the U.S. Attorney Anne M. Tompkins in making today’s announcement are Edward J. Montooth, Acting Special Agent in Charge of the FBI, Charlotte Division; Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Division; and Sheriff Van Duncan of the Buncombe County Sheriff’s Office.

According to the evidence introduced during the trial, von NotHaus was the founder of an organization called the National Organization for the Repeal of the Federal Reserve and Internal Revenue Code, commonly known as NORFED and also known as Liberty Services. Von NotHaus was the president of NORFED and the executive director of Liberty Dollar Services, Inc. until on or about September 30, 2008.

Von NotHaus designed the Liberty Dollar currency in 1998 and the Liberty coins were marked with the dollar sign ($); the words dollar, USA, Liberty, Trust in God (instead of In God We Trust); and other features associated with legitimate U.S. coinage. Since 1998, NORFED has been issuing, disseminating, and placing into circulation the Liberty Dollar in all its forms throughout the United States and Puerto Rico. NORFED’s purpose was to mix Liberty Dollars into the current money of the United States. NORFED intended for the Liberty Dollar to be used as current money in order to limit reliance on, and to compete with, United States currency.

In coordination with the Department of Justice, on September 14, 2006, the United States Mint issued a press release and warning to American citizens that the Liberty Dollar was “not legal tender.” The U.S. Mint press release and public service announcement stated that the Department of Justice had determined that the use of Liberty Dollars as circulating money was a federal crime.

Article I, section 8, clause 5 of the United States Constitution delegates to Congress the power to coin money and to regulate the value thereof. This power was delegated to Congress in order to establish and preserve a uniform standard of value and to insure a singular monetary system for all purchases and debts in the United States, public and private. Along with the power to coin money, Congress has the concurrent power to restrain the circulation of money which is not issued under its own authority in order to protect and preserve the constitutional currency for the benefit of all citizens of the nation. It is a violation of federal law for individuals, such as von NotHaus, or organizations, such as NORFED, to create private coin or currency systems to compete with the official coinage and currency of the United States.

Von NotHaus, who remains free on bond, faces a sentence of up to 15 years’ imprisonment on count two of the indictment and a fine of not more than $250,000. Von NotHaus faces a prison sentence of five years and fines of $250,000 on both counts one and three. In addition, the United States is seeking the forfeiture of approximately 16,000 pounds of Liberty Dollar coins and precious metals, currently valued at nearly $7 million. The forfeiture trial, which began today before United States District Court Judge Richard Voorhees, will resume on April 4, 2011 in the federal courthouse in Statesville. Judge Voorhees has not yet set a date for the sentencing of von NotHaus.

“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” U.S. Attorney Tompkins said in announcing the verdict. “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she added. “We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.”

The case was investigated by the FBI, Buncombe County Sheriff’s Department, and the U.S. Secret Service, in cooperation with and invaluable assistance of the United States Mint. The case was prosecuted by Assistant United States Attorneys Jill Westmoreland Rose and Craig D. Randall, and the forfeiture trial is being prosecuted by Assistant United States Attorneys Tom Ascik and Ben Bain Creed.

Bloomberg Wins Again Against the Fed — The Supreme Court Gives 5 Days to Release the Records

We have been following this on this blog during the past 2 years, and I am happy to see that justice has won. It doesn't happen often, so we must celebrate.

Nothing much to add to the two following Bloomberg stories.

March 21 (Bloomberg) -- The Federal Reserve will disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view.

The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News’s parent company, Bloomberg LP. The Clearing House Association LLC, a group of the nation’s largest commercial banks, had asked the Supreme Court to intervene.

“The board will fully comply with the court’s decision and is preparing to make the information available,” said David Skidmore, a spokesman for the Fed.

The order marks the first time a court has forced the Fed to reveal the names of banks that borrowed from its oldest lending program, the 98-year-old discount window.
[...]
Under the trial judge’s order, the Fed must reveal 231 pages of documents related to borrowers in April and May 2008, along with loan amounts. News Corp.’s Fox News is pressing a bid for 6,186 pages of similar information on loans made from August 2007 to November 2008.

The records were originally requested under the Freedom of Information Act, which allows citizens access to government papers, by the late Bloomberg News reporter Mark Pittman.
[...]
Bloomberg initially requested similar information for aid recipients under three other Fed emergency programs. The central bank released details for those facilities and others in December, after Congress required disclosure through the Dodd- Frank law.

The legislation didn’t apply retroactively to the discount window lending program, which provides short-term funding to financial institutions. Discount window loans made after July 21, 2010, must be released following a two-year lag.
[...]

March 22 (Bloomberg) -- A Supreme Court order that forces unprecedented disclosures from the Federal Reserve ended a two- year legal battle that helped shape the public’s perceptions of the U.S. central bank.

The high court yesterday let stand a lower-court ruling compelling the Fed to reveal the names of banks that borrowed money at the so-called discount window during the credit crisis. The records were requested by Bloomberg LP, the parent company of Bloomberg News. In July, Congress passed the Dodd-Frank law, which mandated the release of other Fed bailout details.

Fed Chairman Ben S. Bernanke “now must finally understand that this money doesn’t belong to the Federal Reserve, it belongs to the American people and the American people have a right to know how their taxpayer dollars are being put at risk,” said Senator Bernard Sanders, a Vermont Independent who wrote Fed transparency provisions in Dodd-Frank.
[...]
The high court’s order means the Fed will have to reveal an unprecedented level of detail about its discount window lending during the financial crisis -- including borrowers’ names and amounts. Officials are preparing to comply, said David Skidmore, a spokesman for the central bank. He declined to elaborate.
[...]
Paul, who has called for abolishing the central bank, signed up more than 300 co-sponsors for a 2009 bill requiring a Fed audit. The measure passed the House before being dropped by the Senate. It was quite a difference from similar proposals in the 1970s that attracted little attention, he said.

“The Bloomberg lawsuit had a lot to do with the cultural change,” Paul said. “Bloomberg has credibility that politicians don’t have.”
[...]
Bloomberg LP sued for the records after the late Bloomberg News reporter Mark Pittman requested them under the Freedom of Information Act. The media company won at district and appellate courts.

The Fed declined to appeal the case to the Supreme Court; the Clearing House Association LLC, a group of the largest U.S. commercial banks, asked the high court to intervene.

Under the trial judge’s order, which the Supreme Court refused to reconsider, the Fed must reveal 231 pages of documents related to discount window borrowers in April and May 2008, along with loan amounts. After Bloomberg filed suit, News Corp.’s Fox News Network LLC requested similar records over a longer period of time and also filed suit. It stands to receive 6,186 pages of documents on loans made from August 2007 to November 2008.

The Fed must be forced to divulge such information, said Mark Williams, executive-in-residence at the Boston University School of Management and a former Fed bank examiner.

“The Fed has to be held to higher accountability,” Williams said. “It takes lawsuits like this to do that.”

Forbes World's Billionaires 2011

Forbes just published their yearly billionaires list for 2011. As expected with the massive transfer of wealth from the people to the well connected and happy few, the 2011 Billionaires List breaks two records: total number of listees (1,210) and combined wealth ($4.5 trillion). The BRIC countries are the big winners, thanks to massive inflationary policies in their countries, the commodities boom propelled by all the central banks, and I would also say, thanks to corruption which is extremely high in all these countries.

A few quotes:

This horde surpasses the gross domestic product of Germany, one of only six nations to have fewer billionaires this year. BRICs led the way: Brazil, Russia, India and China produced 108 of the 214 new names. [...] Before this year only the U.S. had ever produced more than 100 billionaires. China now has 115 and Russia 101.

Atop the heap is Mexico's Carlos Slim Helú, who added $20.5 billion to his fortune, more than any other billionaire. The telecom mogul, who gets 62% of his fortune from America Movil, is now worth $74 billion and has pulled far ahead of his two closest rivals. Bill Gates, No. 2, and Warren Buffett, No. 3, both added a more modest $3 billion to their piles and are now worth $56 billion and $50 billion, respectively. Gates, who now gets 70% of his fortune from investments outside of Microsoft, has actually been investing in the Mexican stock market and has holdings in Mexican Coke bottler Femsa and Grupo Televisa.
[...]
America's wealthiest still dominate the global ranks, but the U.S. is losing its grip. One in three billionaires is an American, down from nearly one out of two a decade ago. It has 10 more than last year but 56 fewer than its 2008 peak. The U.S. is adding new billionaires at a much slower pace; just 6% of its 413 billionaires are new this year compared with 47% of China's and 30% of Russia's.

Still there are plenty of inspiring newcomers who figured out clever ways to get rich. The most obvious example is the success of Facebook [...] has spawned six billionaires. Leading the group is Facebook's CEO Mark Zuckerberg, whose fortune jumped 238% to $13.5 billion in the past year. Also joining him in the world ranks are his cofounders Eduardo Saverin and Dustin Moskovitz, its first president Sean Parker and the Russian Internet investor Yuri Milner. Moskovitz, 26, is eight days younger than his former college roommate Zuckerberg, making him the world's youngest billionaire.

The frenzy among big investors for all things social pushed up private market values of online gaming outfit Zynga and online group-buying site Groupon, creating two more new billionaires, Mark Pincus (who taught people to farm on Facebook) and Eric Lefkofsky (who was Groupon's lead investor).

Other notable American newcomers include Do Won and Jin Sook Chang, the cofounders of Forever21, and Chris Cline, who owns 3 billion tons of coal reserves, mostly in Illinois.

Why do we spend so much time counting other people's money? Because these moguls have the power to shape our world. [...]

Where their inspiration leads, we will follow.

A note on methodology: More than 50 reporters in 13 countries worked on compiling the list this year, valuing individuals' public holdings, private companies, real estate, yachts, art and cash. Net worths were locked in using stock prices and exchange rates from Feb. 14.

For more details, and the specific bios and summary of the top 10 billionaires, please follow the link to Forbes.

Bridgewater Founding Partner Ray Dalio First Ever Interview on CNBC

BridgeWater Associates is one of the (if not the) biggest hedge fund on the planet, with more than $79 billion under management. Ray Dalio, the founding partner, appeared for the first time on CNBC for a 24 minute interview.

A few points from the interview:

• Believes we are in an inflationary environment and that gold is to hold. Dalio's not a deflationist.
• "Bernanke saved us from the Second Great Depression". Dalio's statement is plain silly, given that we merely postponed the liquidation of bad debt and made the general public bear the losses. This doesn't solve the issue, but only makes the problem bigger by driving the State further toward insolvency. We are still in the midst of the Greater Depression.
• "We need the deficits". Dalio's definitely a Keynesian. Sad.
• Dalio prefers to order monetize the debt than to mark the debt down and admit the losses. Dalio prefers the people bear his losses while he keeps his gains. This is nothing but crony capitalism. Sad sad sad.
• Dalio attributes the arrival of Hitler to power because people starting pay off debt or lenders to mark them down and the government didn't "orderly spread them out". He should read America's Great Depression and Reassessing the Presidency : The Rise of the Executive State and the Decline of Freedom in order to understand what really happened

Generally speaking, many of his statements make me sick. Pro-Keynesian, pro-Central Banking, pro-Government, pro-socialising losses while keeping profits to himself...

My conclusion is that you can be managing the biggest hedge fund on the planet, and yet be completely economics-illiterate and corrupt. Given that, I am wondering what kind of returns the fund will have, when deflation is finally recognised as the path we have been following.

Unfortunately, feed subscribers have to come on the post to be able to watch the video.

Goldman Sachs' Ben Broadbent appointed to the Bank of England's Monetary Policy Committee

We are and always have been doing business as usual, in the US, the UK, and most of all European Union countries, who all have former Goldman Sachs directors appointed for government roles such as the Treasury department or the Central Banks.

Here's the list from the report:

• New York Federal Reserve Bank President William Dudley
• Bank of Canada Governor Mark Carney
• Bank of Italy Governor Mario Draghi
• Former Treasury Secretary Henry Paulson
• Former Treasury Secretary Robert Rubin
• Adviser to George W. Bush, Stephen Friedman

So please don't tell me you are surprised, this should be just normal news flow, nothing out of the ordinary:

March 8 (Bloomberg) -- The Bank of England’s appointment of Goldman Sachs Group Inc. Senior European Economist Ben Broadbent to its Monetary Policy Committee shows governments are again looking to the firm for top decision makers, less than a year after it settled U.S. fraud claims.

Broadbent, who has worked at Goldman Sachs since 2000, will replace Andrew Sentance at the end of May, the Treasury in London said yesterday. He joins a panel that has split four ways on policy for the first time since the central bank’s independence in 1997.
[...]
Even the SEC has shown an interest in luring Goldman Sachs’ expertise. In January, it hired Eileen Rominger, who spent 11 years in the firm’s asset-management division, including as global chief investment officer. She now heads the SEC’s division of investment management.

In July, the firm paid $550 million to settle SEC civil claims that it misled investors in a mortgage-linked investment that was sold in 2007.

In a separate case last week, the agency accused Rajat K. Gupta, a former Goldman Sachs board member, of telling hedge- fund manager Raj Rajaratnam about Warren Buffett’s $5 billion investment in the bank in 2008 before the deal was announced. Gupta and Rajaratnam deny the insider-trading allegations. The firm wasn’t accused of wrongdoing.

Former Goldman Sachs employees hold key policy-setting positions worldwide. New York Federal Reserve Bank President William Dudley is the firm’s former chief U.S. economist. Bank of Canada Governor Mark Carney is a former managing director. Bank of Italy Governor Mario Draghi, the current frontrunner to become the next president of the European Central Bank, was vice chairman of the firm’s international arm.

Henry Paulson and Robert Rubin both headed the bank before becoming Treasury secretaries, while other former leaders include Stephen Friedman, who was an adviser to President George W. Bush, and Jon Corzine, who governed New Jersey.

Broadbent is the third Goldman Sachs employee to join the Monetary Policy Committee. Former U.K. rate-setters David Walton and Sushil Wadhwani had Goldman Sachs on their resumes before joining the central bank. Broadbent also has worked previously at the Treasury and the Bank of England.
[...]
Wall Street has provided other executives for government positions this year. In January, President Barack Obama named William Daley, 62, a JPMorgan Chase & Co. executive and former commerce secretary, as his chief of staff.

More on Broadbent below. Unfortunately, Sentance, who is leaving this position, was the most hawkish of the rate setters. Does it mean the government is looking for more monetization of their debt?

March 8 (Bloomberg) -- Britain’s economy can withstand the government’s budget squeeze and an interest-rate increase, according to research published this week by Ben Broadbent, the Goldman Sachs Group Inc. economist who will join the Bank of England’s rate panel in June.

“The fiscal adjustment that the government plans over the coming years is undoubtedly severe,” London-based economists including Broadbent wrote in an e-mailed note dated March 6. “Nevertheless, we take a more sanguine view than many of its impact over the medium term.”

Broadbent, who previously worked at the Treasury and Columbia University, will replace Andrew Sentance on the central bank’s Monetary Policy Committee on June 1, the Treasury said yesterday. He sees investment driving U.K. economic growth this year and his projections for expansion are above the median forecast of economists in a Bloomberg News survey.

While it’s “hard to see much growth” in incomes and consumer spending this year, the economic impact from any potential interest-rate increases by the Bank of England may be limited, Broadbent wrote in the note with economists Kevin Daly and Adrian Paul.

“Investors are concerned that any increase in interest rates would seriously threaten overall economic growth too, both directly, via the effects of cash-flow on consumer spending, and indirectly, by raising the rate of default in the mortgage market,” the economists said. “This concern is understandable but, in our view, it is routinely exaggerated.”
[...]
Broadbent will join a committee that has split four ways on policy for the first time since the central bank’s independence in 1997. With inflation at twice the bank’s target and the economic recovery threatened by the government’s fiscal squeeze, policy makers are divided on whether to increase interest rates or expand stimulus.

The bank’s rate-setting panel starts its next two-day policy meeting tomorrow. Last month, Sentance voted to increase the benchmark interest rate by 50 basis points from a record low of 0.5 percent. Martin Weale and Spencer Dale called for a 25 basis-point increase, while the remaining six opted to maintain the current rate. Adam Posen voted to expand the bank’s bond- purchase plan.

“Sentance was at the extreme hawkish end of the MPC but we do not think his loss will divert the focus of the committee,” said Jens Sondergaard, an economist at Nomura International Plc in London who previously worked at the Bank of England. “In our view, Mr. Broadbent will join the hawkish end of the MPC. His view has tended to be more optimistic than the consensus.”

Following Axel Weber's Resignation, the Leading Candidate to Succeed is Former Goldman Sachs Managing Director

Yesterday, when I wrote about the Italian Central Banker who is expect to succeed Trichet, I said "Given that it seems like an Italian might be succeeding Trichet, all red flags should be on". It looks like I couldn't be closer from reality and the sad truth.

While I didn't do my homework correctly, Mish investigated about Mario Draghi's background and he found on the Banca D'Italia Mr Draghi official bio:

Prior to taking the helm of the Bank of Italy, he was vice chairman and managing director of Goldman Sachs International and a member of the firm-wide management committee (2002-2005). He was director general of the Italian Treasury (1991-2001), chairman of the European Economic and Financial Committee, a member of the G7 Deputies, and chairman of OECD Working Party 3. He was appointed chairman of the Italian Committee for Privatisations in 1993, and, from 1984 to 1990, was an executive director of the World Bank.

Yes, Mario Draghi is a former Goldman Sach Managing Director. Aren't we living in a wonderful world!